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HIGH COURT OF AUSTRALIA Matter No S191/2009 ADEELS PALACE PTY LTD APPELLANT AND RESPONDENT Matter No S192/2009 ADEELS PALACE PTY LTD APPELLANT AND ANTOIN FAYEZ BOU NAJEM RESPONDENT Adeels Palace Pty Ltd v Moubarak Adeels Palace Pty Ltd v Bou Najem [2009] HCA 48 10 November 2009 S191/2009 & S192/2009 ORDER Matter No S191/2009 Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales entered on 24 March 2009, and in lieu thereof order that: the appeal to that Court be allowed with costs; the orders of the District Court of New South Wales made on 25 January 2008, as amended by order 1 of the orders of that Court made on 14 February 2008, be set aside, and in lieu thereof there be judgment for the defendant with costs. Matter No S192/2009 Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales entered on 24 March 2009, and in lieu thereof order that: the appeal to that Court be allowed with costs; the orders of the District Court of New South Wales made on 25 January 2008 be set aside, and in lieu thereof there be judgment for the defendant with costs. On appeal from the Supreme Court of New South Wales Representation J E Sexton SC with M J Gollan for the appellant (instructed by Lee & Lyons Lawyers) B M Toomey QC with D R Campbell SC and D C Morgan for the respondent in S191/2009 (instructed by Leitch Hasson Dent Solicitors) S G Campbell SC with J W Catsanos for the respondent in S192/2009 (instructed Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Adeels Palace Pty Ltd v Moubarak Adeels Palace Pty Ltd v Bou Najem Torts – Negligence – Duty of care – Where gunman shot two men at New Year's Eve function – Where shootings occurred on licensed premises – Whether defendant owed duty of care to prevent injury from conduct of other patrons – Relevance of statutory requirements under Liquor Act 1982 (NSW). Torts – Negligence – Breach of duty – Where no licensed security personnel on premises – Whether licensed security personnel ought to have been provided – Relevance of size and type of function – Relevance of past incidents at premises. Torts – Negligence – Causation – Whether absence of licensed security personnel necessary condition for shootings taking place – Whether "but for" test of causation satisfied – Relevance of nature of damage sustained – Whether an exceptional case. Words and phrases – "necessary condition of the occurrence of the harm", "factual causation", "scope of liability", "an exceptional case". Civil Liability Act 2002 (NSW), ss 5B, 5C, 5D, 5E. Liquor Act 1982 (NSW), ss 2A, 103, 125. FRENCH CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The appellant in each appeal (Adeels Palace Pty Ltd – "Adeels Palace") carried on a reception and restaurant business at premises in Punchbowl, New South Wales. The premises were licensed under the Liquor Act 1982 (NSW) ("the Liquor Act"1). An "On-Licence (Restaurant)" licence permitted the service of alcohol on the premises on any day, between midday and 4.00 am on the day following. A condition of the licence limited the seating capacity of the premises to restaurant seating for 295 persons. The local council authorised the use of the premises as a place of public entertainment between midday and 4.00 am on the next day but limited the capacity of the premises to 283 persons. At the times relevant to these matters, a director of Adeels Palace was the licensee. On 31 December 2002, Adeels Palace was open for business and many came to celebrate the New Year. The restaurant was full. Exactly how many were there was never proved. Admission to the premises, collected at the door, cost $60 per person which included food but not alcoholic drinks. There was a band; there were singers and entertainers; patrons could dance. Seating was at long tables. The bar was open. Waiters brought drinks to the tables. At about 2.30 am on 1 January 2003, there was a dispute between some women dancing on the dance floor. One accused another of brushing her hand with a lighted cigarette. Words were exchanged. Relatives and friends intervened. Fighting erupted and onlookers joined in. Punches were thrown. Chairs, plates and bottles were thrown. One witness was later to agree that the disruption "got bigger and more ferocious very quickly". As he said, there were "[a] lot of egos out there". One man involved in the fight was hit in the face, drawing blood. He left the restaurant and returned soon after with a gun. Someone called out "Gun, gun, run away" and Mr Bou Najem (the respondent in the second appeal in this Court) did just that. He ran into the restaurant's kitchen but slipped over. The gunman came in. As Mr Bou Najem tried to get up, the gunman pointed the gun at him. Mr Bou Najem pleaded with him not to shoot, but shoot he did, wounding Mr Bou Najem in the leg. 1 The Liquor Act 1982 (NSW) has since been repealed and replaced by the Liquor Act 2007 (NSW). In relevant respects the 2007 Act contains generally similar provisions to those of the 1982 Act that are mentioned later in these reasons. Crennan The gunman left the kitchen and went back into the restaurant itself. There he found the man who had struck him in the face – Mr Moubarak (the respondent in the first appeal). The gunman shot Mr Moubarak in the stomach and then left the premises. The two men who were shot, Mr Bou Najem and Mr Moubarak, each brought proceedings in the District Court of New South Wales against Adeels Palace claiming damages for personal injury. Each alleged that they had suffered injury as a result of Adeels Palace's negligence in not providing any or any sufficient security during the function on New Year's Eve. In the District Court, the two actions were heard together, and each plaintiff obtained judgment for damages. Adeels Palace appealed to the Court of Appeal of New South Wales and that Court (Beazley, Giles and Campbell JJA) dismissed2 each appeal. By special leave, Adeels Palace appeals to this Court. Each appeal should be allowed. Consequential orders should be made entering judgment in each proceeding for Adeels Palace. The issues There was no dispute in these matters that both Mr Bou Najem and Mr Moubarak had suffered serious personal injury. The live issues in the case of each, at trial, on appeal to the Court of Appeal, and in this Court, were, however, whether Adeels Palace owed each a duty of care to prevent harm of the kind suffered, whether that duty had been breached, and whether the breach was a cause of the damage suffered. In Mr Moubarak's case, quantum of damages was a live issue at trial but not on appeal. In this Court, Adeels Palace submitted that it owed no duty to those attending its premises to prevent criminal conduct by third parties. It submitted that so much is established by this Court's decision in Modbury Triangle Shopping Centre Pty Ltd v Anzil3. It submitted further that, if it did owe some relevant duty of care to its patrons, it was not shown that the reasonable response to the risk of violent behaviour at the function would have been to employ licensed security personnel. Finally, it submitted that it was not shown that the want of licensed security personnel was a cause of the shooting of either plaintiff. 2 Adeels Palace Pty Ltd v Moubarak (2009) Aust Torts Reports ¶81-997. (2000) 205 CLR 254; [2000] HCA 61. Crennan Each plaintiff raised further issues in this Court, by notice of contention. Each submitted that he had entered the restaurant under a contract, and that accordingly, by operation of s 74 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act"), Adeels Palace impliedly warranted that the services it provided would be provided with due care and skill (including, in this case, by provision of suitable security services). As these reasons will later demonstrate, it will not be necessary to consider this contention in any detail. Mr Moubarak further sought to contend (by an amendment of his notice of contention first proposed at the hearing of the appeal to this Court) that causation was established in this case by demonstrating no more than that the failure of Adeels Palace to engage competent security staff "resulted in a material increase in an existing risk of injury to [him] from violent acts of other patrons and so materially contributed to the injuries suffered by him". In considering each of the issues of duty, breach and causation, it is of the first importance to identify the proper starting point for the relevant inquiry. In this case there are two statutes which require particular consideration: the Civil Liability Act 2002 (NSW) ("the Civil Liability Act") and the Liquor Act. If attention is not directed first to the Civil Liability Act, and then to the Liquor Act, there is serious risk that the inquiries about duty, breach and causation will miscarry. The Civil Liability Act The Civil Liability Act is taken to have commenced on 20 March 20024. At the relevant times, s 5A of the Act provided that Pt 1A5 "applies to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise". Part 1A of the Act included Div 2, entitled "Duty of care" (ss 5B and 5C), and Div 3, entitled "Causation" (ss 5D and 5E). Although ss 5B and 5C appear beneath the heading "Duty of care", that heading is apt to mislead. The sections provided: 5 As inserted in the Civil Liability Act 2002 (NSW) by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW). Crennan "5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and the risk was not insignificant, and in the circumstances, a reasonable person in the person's position would have taken those precautions. In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): the probability that the harm would occur if care were not taken, the likely seriousness of the harm, the burden of taking precautions to avoid the risk of harm, the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence: the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and Crennan does not of itself constitute an admission of liability in connection with the risk." Both provisions are evidently directed to questions of breach of duty. By contrast, Div 3 (ss 5D and 5E) is directed to the subject-matter described in the heading to the division – Causation. Those sections provided: "5D General principles (1) A determination that negligence caused particular harm comprises the following elements: that the negligence was a necessary condition of the occurrence of the harm (factual causation), and that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent: the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether Crennan or not and why responsibility for the harm should be imposed on the negligent party. 5E Onus of proof In determining liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation." These provisions of the Civil Liability Act are central to the questions of breach of duty and causation. The Liquor Act Consideration of provisions of the Liquor Act is central to the question of duty of care. Why that is so is revealed by the nature of the claims that were made. Each plaintiff sued Adeels Palace for damages for injury he had suffered on the premises of Adeels Palace. It was not disputed, in either matter, that "[a]t all material times [Adeels Palace] operated [the] licensed premises known as Adeels Palace"6. Nor was there any dispute that on 31 December 2002 the business conducted by Adeels Palace was controlled by two men: Mr Simon Bazouni and Mr Fouad Kouzi. Mr Bazouni was licensee. The central complaint each plaintiff made was that Adeels Palace had not regulated who came onto its premises, who stayed on those premises, and how those who were on the premises conducted themselves towards other patrons. Adeels Palace, as occupier of the premises, could control who came into and who stayed on the premises. But in conducting licensed premises (of which one of its directors was licensee) Adeels Palace was much affected by the duties which the Liquor Act cast on the licensee. 6 Liquor licensing and corporate records tendered in evidence at trial appear to suggest that a company called Adeel's Restaurant Pty Ltd was the owner of the business at the relevant time but in the light of the way in which the trial was conducted this suggestion need not be examined further. Those records, and a photograph, tendered in evidence at trial, of the sign advertising the business, suggest that the appellant's business was conducted under the name of "Adeel's Palace". It is convenient, however, to adopt the spelling used in the title of the proceedings in this Court. Crennan Section 125 of the Liquor Act regulated conduct on licensed premises. Section 125(1)(b) obliged a licensee not to permit on his or her licensed premises "any indecent, violent or quarrelsome conduct". Contravention of the provision was an offence. Section 103(1) of the Liquor Act permitted a licensee, or his or her employee, to "refuse to admit to the licensed premises" or to "turn out, or cause to be turned out, of the licensed premises any person ... who is then ... violent, quarrelsome or disorderly"7 or "whose presence on the licensed premises renders the licensee liable to a penalty"8 under the Act. Section 103(3A) permitted the use of "such reasonable degree of force as may be necessary ... to turn a person out" of the premises. Section 103(4) obliged a member of the police force, asked by the licensee or an employee to turn out or assist in turning out a person whom the licensee is entitled to turn out, to comply with the request and provided that the member of the police force may, for that purpose, use such reasonable degree of force as may be necessary. It is next important to recognise that the particular provisions made in the Liquor Act for controlling violent, quarrelsome or disorderly conduct on licensed premises take their place in a context set by two considerations. First, sale of liquor is controlled because it is well recognised that misuse and abuse of liquor causes harm, including what the Liquor Act refers to as "violent, quarrelsome or disorderly" conduct. Section 2A of the Liquor Act provided: "Liquor harm minimisation is a primary object of this Act A primary object of this Act is liquor harm minimisation, that is, the minimisation of harm associated with misuse and abuse of liquor (such as harm arising from violence and other anti-social behaviour). The court, the Board, the Director, the Commissioner of Police and all other persons having functions under this Act are required to have due regard to the need for liquor harm minimisation when exercising functions under this Act. In particular, due regard is to be had to the need for liquor harm minimisation when considering for the purposes of this Act what is or is not in the public interest." The second and related point to make is that the duties cast upon those responsible for the service of liquor on licensed premises can be understood as a s 103(1)(a). s 103(1)(c). Crennan part of the price that is exacted for the statutory permission granted under the Liquor Act. The permission granted is to do what otherwise the Act forbids9 – sell liquor – and to do that on premises to which members of the public may resort only in accordance with the conditions on which the licence is granted. In considering whether a common law duty of care should be held to exist in these cases, it is important to recognise that the provisions of the Liquor Act that have been mentioned have close analogies in other States and Territories. Though variously expressed, all States and Territories make provision for a licensee of licensed premises to remove from, or prevent the entry to, licensed premises of violent or quarrelsome persons10. All State and Territory liquor legislation forbids the sale of liquor without a licence. All State and Territory liquor legislation provides for the licensing of premises on which liquor may be sold and consumed, and not only regulates the sale and service of liquor in such places, but also (as already noted) directly or indirectly regulates the conduct of persons who are on the premises. It is against this statutory background that the question of duty of care must be considered, not for the purpose of developing the common law by analogy with statute law11, but to ensure that the imposition of a common law duty of reasonable care of the kind now in question would not run counter to the statutory requirements imposed on licensees in all Australian jurisdictions. Duty of care? Contrary to the submissions on behalf of Adeels Palace, this Court's decision in Modbury does not dictate the conclusion that Adeels Palace owed no relevant duty of care to the plaintiffs in the present cases. Like the claims now under consideration, the claim that was made in Modbury was for damages for personal injury suffered as a result of a criminal assault. The injured plaintiff in 10 Liquor Control Reform Act 1998 (Vic), s 114(2), and see also s 108(4)(b) of that Act; Liquor Licensing Act 1997 (SA), s 124(1); Liquor Act 1992 (Q), ss 165, 165A; Liquor Control Act 1988 (WA), s 115; Liquor Licensing Act 1990 (Tas), ss 62, 79A; Liquor Act (NT), ss 105, 121; Liquor Act 1975 (ACT), s 143. 11 cf Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 59-63 [18]-[28]; [1999] HCA 67. Crennan Modbury had been attacked in a shopping centre car park at night when the lights in the car park were off. He alleged that the shopping centre proprietor was negligent in not leaving the car park lights on. A majority of the Court12 held that the shopping centre did not owe the plaintiff a duty to take reasonable care to prevent injury to the plaintiff resulting from the criminal behaviour of third persons on the shopping centre's land. It is important to recognise, however, that the duty alleged in Modbury was said to be founded only on the defendant's position as occupier of the land controlling the physical state of the land (there the level of its illumination). What is said in Modbury must be understood as responding to those arguments. No complaint was made13 that the defendant should have controlled, but did not control, access by the assailants to the land it occupied. It is, of course, important to recognise that the decision in Modbury forms part of a line of cases in which consideration has been given to whether and when one person owes another a duty to take reasonable care to control the conduct of a third person14. And the fact that the conduct in question is criminal conduct is of great importance in deciding not only what, if any, duty is owed to prevent its commission, but also questions of breach and causation. Several considerations set the present case apart from Modbury and point to the conclusion that Adeels Palace owed each plaintiff a relevant duty of care. First, the complaint that was made in these cases was that the occupier of premises failed to control access to, or continued presence on, its premises15. Secondly, the premises concerned were licensed premises where liquor was sold. They were, therefore, premises where it is and was well recognised that care must be taken lest, through misuse and abuse of liquor, "harm [arise] from 12 (2000) 205 CLR 254 at 266-267 [29], 268-269 [36] per Gleeson CJ, 270 [42]-[43] per Gaudron J, 291-294 [108]-[118] per Hayne J, 302 [147] per Callinan J. 13 (2000) 205 CLR 254 at 290 [106]. 14 See, for example, Smith v Leurs (1945) 70 CLR 256 at 262 per Dixon J; [1945] HCA 27; Howard v Jarvis (1958) 98 CLR 177; [1958] HCA 19; New South Wales v Bujdoso (2005) 227 CLR 1; [2005] HCA 76; cf Stuart v Kirkland-Veenstra (2009) 237 CLR 215; [2009] HCA 15; CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47. 15 cf Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at Crennan violence and other anti-social behaviour"16. And thirdly, the particular duty said to have rested on the occupier of the premises (who was the operator of the business that was conducted on the premises) is a duty to take reasonable care to prevent or hinder the occurrence of events which, under the Liquor Act, the licensee was bound to prevent occurring – violent, quarrelsome or disorderly conduct. (And although variously expressed in the legislation of other Australian jurisdictions, the evident scheme of all liquor licensing laws in Australia is to minimise anti-social conduct both on and off licensed premises associated with consumption of alcohol.) In the circumstances reasonably to be contemplated before the restaurant opened for business on 31 December 2002 as likely to prevail on that night, Adeels Palace owed each plaintiff a duty to take reasonable care to prevent injury to patrons from the violent, quarrelsome or disorderly conduct of other persons. The duty is consistent with the duty imposed by statute upon the licensee and which was a duty enforceable by criminal processes. No question arises of translating a statutory power given to a statutory body into the common law "ought"17. The duty is not absolute; it is a duty to take reasonable care. It is not a duty incapable of performance. It is a duty the performance of which is supported by the provision of statutory power to prevent entry to premises and to remove persons from the premises, if needs be by using reasonable force. Although it is a duty directed to controlling the conduct of others (for the avoidance of injury to other patrons) it is a duty to take reasonable care in the conduct of activities on licensed premises, particularly with regard to allowing persons to enter or remain on those premises. Breach of duty? The question of breach of duty must be considered by reference to the relevant provisions of the Civil Liability Act – in particular s 5B. It may be accepted, for the purposes of argument, that there was a risk, of which Adeels Palace knew or ought to have known18, that there would be violent, quarrelsome or disorderly conduct in the restaurant. It may also be accepted that 16 Liquor Act 1982 (NSW), s 2A. 17 cf Pyrenees Shire Council v Day (1998) 192 CLR 330 at 375 [122]; [1998] HCA 3. 18 s 5B(1)(a). Crennan this risk "was not insignificant"19. The question then becomes whether a reasonable person in the position of Adeels Palace would have taken the precautions that the plaintiffs alleged should have been taken20. Those precautions were the provision of licensed21 security personnel who would act as crowd controllers or bouncers. Just how many security personnel the plaintiffs alleged should have been provided was not always made clear in argument. The plaintiffs pleaded their cases on the basis that there should have been not only security personnel controlling the entrance to the premises but also sufficient security personnel to intervene in any dispute that broke out within the restaurant. Because the restaurant was on the second floor of a building it seems to have been accepted that to supervise what was happening inside the restaurant would have required personnel who were different from those who controlled access to the premises. Some evidence led at trial suggested that as many as six or eight persons would have been necessary to supervise both the interior of, and the entrance to, the restaurant. Whether any, and how many, security personnel should have been provided to satisfy the duty of Adeels Palace to take reasonable care depended upon the considerations identified in s 5B(2) of the Civil Liability Act: the probability that the harm would occur, the likely seriousness of the harm, the burden of taking precautions to avoid the risk, and the social utility of the activity that created the risk. No doubt the chief focus of those inquiries in these cases would fall upon the first three of those considerations. Many different matters were relevant to the questions that thus were posed. They included, but were not limited to, such matters as the number of patrons expected to attend the restaurant, the atmosphere that could reasonably be expected to exist during the function, and whether there had been any suggestion of violence at similar events held in comparable circumstances, either at this restaurant or elsewhere. And all of those questions fell to be answered, and the probability of harm and other considerations mentioned in s 5B(2) assessed, 19 s 5B(1)(b). 20 ss 5B(1)(c) and 5B(2). 21 Under the Security Industry Act 1997 (NSW). Crennan prospectively22, not with the wisdom of hindsight. That is, they were to be assessed before the function began, not by reference to what occurred that night. The evidence led in these cases included evidence of the opinions of persons who described themselves as security consultants. The trial judge understood the evidence of the experts called by the plaintiffs and by Adeels Palace as accepting that there had been a "need for 'access control' as the 'front line of defence' ... having the purpose of discouraging at least, if not preventing, the return of unruly or troublesome patrons who [had] left the premises". Whether or to what extent this opinion of the experts was based on their consideration of what had happened on this occasion (an irrelevant inquiry), as opposed to the probability of violence if "access control" were not provided23, was not expressly considered by the trial judge. No finding was made below that there should have been security personnel supervising conduct in the restaurant. Both the trial judge and the Court of Appeal proceeded on the footing that it was sufficient to find that the failure to provide security personnel who would control access to the restaurant was a breach of the duty of care owed by Adeels Palace. That is, both the trial judge and the Court of Appeal concluded that the failure of Adeels Palace to provide licensed personnel to act as crowd controllers or bouncers at the door of the premises (in addition to whomever Adeels Palace used to take the cost of admission from patrons at the door) was a breach of the duty of care owed by Adeels Palace to its patrons. Having regard to the Civil Liability Act, this conclusion could be reached only if the probability of "unruly or troublesome patrons who [had] left the premises" returning to do violence to other patrons, or the probability of other persons likely to do violence to patrons seeking to gain entry to the premises, was such that a reasonable person in the position of Adeels Palace would have employed security personnel to control access to the restaurant. But why a reasonable person would have taken that step was never clearly articulated in argument or in the reasoning of the trial judge. Considered in isolation, the numbers attending the restaurant, and the type of customers (spread 22 Vairy v Wyong Shire Council (2005) 223 CLR 422 at 461-463 [126]-[129]; [2005] HCA 62. 23 Civil Liability Act 2002 (NSW), s 5B(2)(a). Crennan over a range of ages, with some in family or friendship groups extending over several generations), did not demonstrate a need for provision of security personnel controlling access to the restaurant. And despite the plaintiffs' attempt to prove at trial that the venue had a history of violent incidents, there appears to have been nothing in that history (which went no further than some reports of threatening conduct by passers-by outside the restaurant premises) which would have warranted the conclusion that there was the probability of violence erupting in or about the restaurant. No argument to that effect was advanced orally in this Court. Reference was made in argument in this Court on behalf of Mr Bou Najem to the possibility that security personnel supervising the floor of the restaurant may have been able to intervene in the dispute on the dance floor and prevent the rapid descent into general violence that followed. To do that would have required several more security personnel than the small number it was suggested should have been controlling access to the restaurant. The argument necessarily asserted that licensed security personnel were the appropriate response to this risk. That is, the argument was that any exchange of words between patrons at this function would require an immediate and decisive response by persons having what might be called the "presence" or "physical authority" of bouncers or crowd controllers. Of course there is always a risk that there will be some altercation between patrons at almost any kind of event. And the risk of that happening is higher if the patrons are consuming alcohol. But unless the risk to be foreseen was a risk of a kind that called for, as a matter of reasonable precaution, the presence or physical authority of bouncers or crowd controllers to deal with it safely, failure to provide security of that kind would not be a breach of the relevant duty of care. As noted earlier, there was no finding at trial or in the Court of Appeal that a risk of that kind should have been foreseen. The absence of consideration at trial of the matters prescribed by s 5B of the Civil Liability Act may have been reason enough to conclude that the question of breach of duty was not determined properly by the trial judge. It is, however, not profitable to examine that issue further. It is not profitable to do that because resolution of the issue of breach would necessarily depend only upon the evidence that was led at trial. The points to be made that are of general application are first, that whether a reasonable person would have taken precautions against a risk is to be determined prospectively, and second, that the answer given in any particular Crennan case turns on the facts of that case as they are proved in evidence. It follows from the second of these considerations that deciding the question of breach in these cases would not establish any rule about when or whether security personnel should be engaged by the operators of licensed premises. It is not useful24 in these circumstances for this Court to form a conclusion about whether breach was proved in these cases. In particular, it is not necessary to examine the evidence that was led at trial to determine whether the finding of breach could be supported. Instead, it is desirable to consider the question of causation. Examination of that issue reveals that the negligence found against Adeels Palace was not shown to have been a cause of the injuries suffered by the plaintiffs. Causation The first point to make about the question of causation is that, in these cases, it is governed by the Civil Liability Act. Section 5D(1) of that Act divides the determination of whether negligence caused particular harm into two elements: factual causation and scope of liability. Dividing the issue of causation in this way expresses the relevant questions in a way that may differ from what was said by Mason CJ, in March v Stramare (E & M H) Pty Ltd25, to be the common law's approach to causation. The references26 in March v Stramare to causation being "ultimately a matter of common sense" were evidently intended to disapprove the proposition "that value judgment has, or should have, no part to play in resolving causation as an issue of fact". By contrast, s 5D(1) treats factual causation and scope of liability as separate and distinct issues. It is not necessary to examine whether or to what extent the approach to causation described in March v Stramare might lead to a conclusion about factual causation different from the conclusion that should be reached by applying s 5D(1). It is sufficient to observe that, in cases where the Civil 24 cf Pokora v Wabash Railway Co 292 US 98 at 105-106 (1934) per Cardozo J. 25 (1991) 171 CLR 506 at 515; [1991] HCA 12. 26 (1991) 171 CLR 506 at 515 quoting from Fitzgerald v Penn (1954) 91 CLR 268 at 277; [1954] HCA 74. Crennan Liability Act or equivalent statutes are engaged, it is the applicable statutory provision that must be applied. Next it is necessary to observe that the first of the two elements identified in s 5D(1) (factual causation) is determined by the "but for" test: but for the negligent act or omission, would the harm have occurred? In the Court of Appeal, Giles JA, who gave the principal reasons, pointed out27, correctly, that the reasoning of the trial judge on the question of causation was "not fully articulated". The reasoning was reconstructed28 by Giles JA in the following terms: "From the evidence, security staff would have been aware of a significant fracas on the dance floor. Even if [the gunman] had not been identified at the time as the man who had got into a fight with Mr Moubarak, the presence of blood on his face would have caused the security staff at the street entrance, particularly with knowledge of the fracas, to deny him entry, or at least to require that he submit to search as a condition of being permitted to enter. On the balance of probabilities, security staff at the street entrance would have deterred or prevented [the gunman's] re-entry, and he therefore would not have shot Mr Moubarak and Mr Bou Najem." Security personnel may have been able to deter or prevent re-entry by the drunk or the obstreperous would-be patron willing to throw a punch. There was, however, no basis in the evidence for concluding that security staff at the entrance to the restaurant would have deterred or prevented the re-entry to the premises of a man armed with a gun when later events showed he was ready and willing to use the weapon on persons unconnected with his evident desire for revenge. The evidence at trial did not show that the presence of security personnel would have deterred the re-entry of the gunman. That conclusion could have been reached only if it was assumed that the gunman would have acted rationally. But, as was pointed out in Modbury29, "[t]he conduct of criminal assailants is not necessarily dictated by reason or prudential considerations". The gunman's 27 (2009) Aust Torts Reports ¶81-997 at 62,744 [107]. 28 (2009) Aust Torts Reports ¶81-997 at 62,744 [107]. 29 (2000) 205 CLR 254 at 291 [107]. Crennan conduct at the restaurant on this night was dictated neither by reason nor by prudential considerations. He shot the man who had struck him during the mêlée that broke out after the confrontation on the dance floor. And before shooting that man, the gunman had shot a man who had done nothing to him and who, defenceless, begged for mercy. Nor did the evidence show that security personnel could or would have prevented re-entry by the gunman: a determined person armed with a gun and irrationally bent on revenge. The evidence given at trial by the plaintiffs' expert security consultant did not go beyond the assertion that a security person confronting the gunman at the entrance to the restaurant "would have at least altered the chain of events and thereby likely altered the outcome". The security consultant called on behalf of Adeels Palace emphasised that the overriding principle which should govern the conduct of security personnel confronted by a gunman is "safety for all parties" and that "once a determined gunman is targeting a victim or victims there [is] no guaranteed safe or effective option". Recognising that changing any of the circumstances in which the shootings occurred might have made a difference does not prove factual causation. Providing security at the entrance of the restaurant might have delayed the gunman's entry; it might have meant that, if Mr Bou Najem was a random victim, as seemed to be the case, someone else might have been shot and not him. But neither plaintiff proved factual causation by pointing to possibilities that might have eventuated if circumstances had been different. Nor was "but for" causation established in these cases by observing that the relevant duty was to take reasonable care to prevent injury to patrons from the violent, quarrelsome or disorderly conduct of other persons. That is, the question of factual causation was not answered in these cases by pointing out that the relevant duty of care was to take reasonable steps to prevent violent assault, that each plaintiff was the victim of a violent assault, and that the damage sustained by the plaintiffs was "the very kind of thing" which the relevant duty obliged Adeels Palace to take reasonable steps to prevent30. That observation may bear upon questions about scope of liability31. Describing the injury as "the very kind 30 cf Home Office v Dorset Yacht Co Ltd [1970] AC 1004 at 1030 per Lord Reid; Stansbie v Troman [1948] 2 KB 48 at 51-52. 31 cf Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 638-639 [26]-[27], 641-642 [40]-[41]; [2005] HCA 69. Crennan of thing" which was the subject of the duty must not be permitted to obscure the need to prove factual causation. Unlike Home Office v Dorset Yacht Co Ltd32 and Stansbie v Troman33, these are not cases where the evidence demonstrated that the taking of reasonable care would probably have prevented the occurrence of injury to the plaintiffs. Counsel for the plaintiffs, in this Court, relied upon passages in Chappel v Hart34. But in that case the majority proceeded on the basis that but for the failure to warn the event would not have happened; the question then was whether certain additional factors, combined with the satisfaction of the "but for" test, were sufficient to establish causation35. In the present case, in contrast, the "but for" test of factual causation was not established. It was not shown to be more probable than not that, but for the absence of security personnel (whether at the door or even on the floor of the restaurant), the shootings would not have taken place. That is, the absence of security personnel at Adeels Palace on the night the plaintiffs were shot was not a necessary condition of their being shot. Because the absence of security personnel was not a necessary condition of the occurrence of the harm to either plaintiff, s 5D(1) was not satisfied. Did s 5D(2) apply? Section 5D(2) makes provision for what it describes as "an exceptional case". But the Act does not expressly give content to the phrase "an exceptional case". All that is plain is that it is a case where negligence cannot be established as a necessary condition of the harm; the "but for" test of causation is not met. In such a case the court is commanded "to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party". But beyond the statement that this is to be done "in accordance with established principles", the provision offers no further guidance about how the task is to be performed. Whether, or when, s 5D(2) is engaged must depend, then, upon whether and to what extent "established principles" countenance departure from the "but for" test of causation. 34 (1998) 195 CLR 232; [1998] HCA 55. 35 (1998) 195 CLR 232 at 238-239 [8], 257 [66]-[67], 269-270 [93]. Crennan At once it must be recognised that the legal concept of causation differs from philosophical and scientific notions of causation36. It must also be recognised that before the Civil Liability Act and equivalent provisions were enacted, it had been recognised37 that the "but for" test was not always a sufficient test of causation. But as s 5D(1) shows, the "but for" test is now to be (and has hitherto been seen to be) a necessary test of causation in all but the undefined group of exceptional cases contemplated by s 5D(2). Even if the presence of security personnel at the door of the restaurant might have deterred or prevented the person who shot the plaintiffs from returning to the restaurant, and even if security personnel on the floor of the restaurant might have been able to intervene in the incident that broke into fighting in time to prevent injury to anyone, neither is reason enough to conclude that this is an "exceptional case" where responsibility for the harm suffered by the plaintiffs should be imposed on Adeels Palace. To impose that responsibility would not accord with established principles. It may be that s 5D(2) was enacted to deal with cases exemplified by the House of Lords decision in Fairchild v Glenhaven Funeral Services Ltd38 where plaintiffs suffering from mesothelioma had been exposed to asbestos in successive employments. Whether or how s 5D(2) would be engaged in such a case need not be decided now. The present cases are very different. No analogy can be drawn with cases like Fairchild. Rather, it would be contrary to established principles to hold Adeels Palace responsible in negligence if not providing security was not a necessary condition of the occurrence of the harm but providing security might have deterred or prevented its occurrence, or might have resulted in harm being suffered by someone other than, or in addition to, the plaintiffs. As in Modbury39, the event which caused the plaintiffs' injuries was deliberate criminal wrongdoing, and the wrongdoing occurred despite society devoting its resources to deterring and preventing it through the work of police 36 March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506 at 509; Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 412-413, 418-419, 428; [1992] HCA 27; Chappel v Hart (1998) 195 CLR 232 at 238 [6], 255 [62]. 37 Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 413; Chappel v Hart (1998) 195 CLR 232 at 257 [66]-[67]. 39 (2000) 205 CLR 254 at 292-293 [113]. Crennan forces and the punishment of those offenders who are caught. That being so, it should not be accepted that negligence which was not a necessary condition of the injury that resulted from a third person's criminal wrongdoing was a cause of that injury. Accordingly, the submission that the plaintiffs' injuries in these cases were caused by the failure of Adeels Palace to take steps that might have made their occurrence less likely, should be rejected. The Trade Practices Act contention As noted earlier in these reasons, each plaintiff sought to support the orders made in his favour in the Court of Appeal by contending that s 74 of the Trade Practices Act was engaged. Even if that were so, each plaintiff could recover damages for breach of such an implied warranty only if he established at least that breach of the warranty was a cause of (in the sense of materially contributed to) his loss40. Whether more than material contribution to loss must be established to make good a claim for breach of an implied warranty need not be considered. For the reasons given earlier, a "but for" causal connection between absence of security and injury to either plaintiff was not established in these cases. It was not shown that absence of security materially contributed to either plaintiff being injured. The contention that the judgment below is to be supported by reference to s 74 of the Trade Practices Act should be rejected. Conclusion and orders Each appeal should be allowed with costs. In each case the orders of the Court of Appeal of the Supreme Court of New South Wales entered on 24 March 2009 should be set aside and in their place there should be orders that the appeal to that Court is allowed with costs, the judgment of the District Court of New South Wales set aside and in its place there be judgment for the defendant with costs. 40 See, concerning contraventions of the Trade Practices Act 1974 (Cth), I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 127-129 [54]-[58]; [2002] HCA 41.

HIGH COURT OF AUSTRALIA PHILIP RUDDOCK & ORS APPELLANTS AND RESPONDENT Ruddock v Taylor [2005] HCA 48 8 September 2005 ORDER Appeal allowed. Set aside paragraph 1 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 18 September 2003 to the extent to which it dismissed the appeal to that Court and in its place order that: the appeal to that Court is allowed; set aside paragraphs 1 and 3 of the orders of the District Court of New South Wales made on 18 December 2002 and in their place order that there be judgment for the defendants. Appellants to pay the costs of the respondent of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation: D M J Bennett QC, Solicitor-General of the Commonwealth with G T Johnson for the appellants (instructed by Australian Government Solicitor) C J Birch SC with D P M Ash for the respondent (instructed by Teakle Ormsby Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS transitional visa Statutes – Acts of Parliament – Statutory powers and duties – Power to detain – Respondent's permanent twice cancelled unlawfully – Respondent twice detained in immigration detention – Whether detention lawful under s 189(1) of the Migration Act 1958 (Cth) ("the Act") – Whether officers of the Commonwealth knew or reasonably suspected that the respondent was an unlawful non-citizen – Whether a reasonable suspicion may rest upon a mistake of law – Whether s 189(1) of the Act confers protection against mistakes concerning reach of Commonwealth power. False imprisonment – Unlawful cancellation of respondent's visa – Whether respondent's subsequent detention unlawful – Whether s 189(1) of the Act provides a defence to a claim for wrongful imprisonment. Words and phrases – "knows", "reasonable suspicion", "mistake of law", "unlawful detention", "false imprisonment". Migration Act 1958 (Cth), ss 189, 196, 501. GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. The respondent, born in the United Kingdom in 1959, came to Australia, with his family, in 1966. He is not an Australian citizen. Under the Migration Act 1958 (Cth) ("the Act") he has held a permanent transitional visa1 permitting him to remain in Australia. In 1996, the respondent pleaded guilty to eight sexual offences against children. He was sentenced to a term of imprisonment. Twice after he had been released from prison, steps were taken to cancel his visa under s 501 of the Act (a provision permitting cancellation of a visa "on character grounds"). Twice the decisions to cancel the respondent's visa were quashed by orders of this Court. The first decision, made in September 1999 by the first appellant, Mr Ruddock, then Minister for Immigration and Multicultural Affairs, was quashed by an order of Callinan J made by consent in April 2000. The second decision, made in June 2000, by the second appellant, Senator Patterson, then Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs, was quashed by order of the Full Court made on 7 December 20002. Following each decision to cancel his visa, the appellant was detained in immigration detention. The first period of detention lasted 161 days, the second 155 days. For some time during each period of detention he was kept in prison under arrangements made for detention of some persons subject to immigration detention. After his release he brought action in the District Court of New South Wales claiming damages for false imprisonment. He sued the Ministers who had made the two decisions to cancel his visa and the Commonwealth. He did not sue those officers of the Department of Immigration and Multicultural Affairs who had actually detained him. The respondent succeeded in the District Court. He obtained judgment for $116,000 and costs. The Ministers and the Commonwealth appealed to the Court of Appeal of New South Wales. Their appeal was dismissed3. 1 The legislative provisions leading to this result were not examined in argument. They are traced in Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 445 [161]-[162] per Gummow and Hayne JJ. 2 Patterson (2001) 207 CLR 391. 3 Ruddock v Taylor (2003) 58 NSWLR 269. By special leave the Ministers and the Commonwealth appeal to this Court. The appeal should be allowed. The respondent's detention was not unlawful. Consideration of the issues raised in this matter must begin with the relevant provisions of the Act – especially those provisions dealing with the subject of immigration detention – as those provisions stood at the times relevant to this matter. Detention and the Migration Act The operation of the Act hinged upon the distinction made in Div 1 of Pt 2 (ss 13-17) between "lawful non-citizens" and "unlawful non-citizens". A non-citizen in the migration zone (for present purposes the States or Territories4) who held a visa that was in effect was a lawful non-citizen5. Other non-citizens were unlawful non-citizens6. If a visa was cancelled the former holder of the visa, on the cancellation, became an unlawful non-citizen unless immediately after the cancellation that person held another visa that was in effect7. Part 2 of the Act (ss 13-274) dealt with control of arrival and presence of non-citizens. Division 7 of that Part (ss 188-197) provided for detention of unlawful non-citizens; Div 8 (ss 198-199) dealt with their removal from Australia. Chief attention in this appeal was given to s 189 of the Act. It was that provision upon which the appellants relied in their Notice of Grounds of Defence in the District Court as an answer to the respondent's allegations that the Ministers and the Commonwealth had wrongfully detained him. It provided: If an officer knows or reasonably suspects that a person in the migration zone is an unlawful non-citizen, the officer must detain the person. If an officer reasonably suspects that a person in Australia but outside the migration zone: is seeking to enter the migration zone; and (b) would, if in the migration zone, be an unlawful non-citizen; the officer must detain the person." An "officer" was defined in s 5 as: an officer of the Department, other than an officer specified by the Minister in writing for the purposes of this paragraph; or a person who is an officer for the purposes of the Customs Act 1901, other than such an officer specified by the Minister in writing for the purposes of this paragraph; or a person who is a protective service officer for the purposes of the Australian Protective Service Act 1987, other than such a person specified by the Minister in writing for the purposes of this paragraph; or a member of the Australian Federal Police or of the police force of a State or an internal Territory; or a member of the police force of an external Territory; or any other person authorised by the Minister, by notice published in the Gazette, to be an officer for the purposes of this Act."8 Section 189 must be understood in its statutory context, particularly the context supplied by the other provisions of Div 7 of Pt 2. Section 188 provided that an officer may require a person whom the officer knew or reasonably suspected of being a non-citizen "to show the officer evidence of being a lawful non-citizen". Section 196 fixed the period of detention. It provided: "(1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until he or she is: 8 Some amendments were made to this provision by the Migration Legislation Amendment Act (No 1) 2000 (Cth) but their detail need not be noticed. removed from Australia under section 198 or 199; or deported under section 200; or granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than for removal or deportation) unless the non-citizen has been granted a visa." Special provision was made in ss 190 and 191 for persons who were bound, on entering Australia, to seek immigration clearance but bypassed or tried to bypass that step, or could not or would not produce the required information or evidence. Section 192 provided for the detention of those whose visa may be cancelled and who it was reasonably suspected would attempt to evade officers or not co-operate with officers. Although the provisions of s 189 were central to the defence filed on behalf of the Ministers and the Commonwealth, the operation of that section was not the chief focus of the reasoning in either the District Court or the Court of Appeal. To understand why that is so, it is necessary to identify not only the way the respondent put his case but also some relevant decisions of this Court. The state of authorities in this Court The course of argument in the courts below, and in the appeal to this Court, must be understood against the background provided by the respondent's earlier litigation in this Court. In particular, it is necessary to understand the place occupied by the decision in Re Patterson; Ex parte Taylor9 (which culminated in the quashing of the second decision to cancel his visa) in the history of the Court's decisions about s 51(xix) and s 51(xxvii) of the Constitution, the aliens and immigration powers. (2001) 207 CLR 391. Some years before the first decision to cancel the respondent's visa was made, this Court had held in Nolan v Minister for Immigration and Ethnic Affairs10 and Pochi v Macphee11 that a person who had been born outside Australia to non-Australian parents and who had not been naturalised, was an alien. After the second decision to cancel the respondent's visa, some members of the Court concluded, in Patterson, that British subjects who had resided in Australia since before the enactment of the Australian Citizenship Amendment Act 1984 (Cth) (as the present respondent had) did not fall within either the aliens or the immigration power. Two years after Patterson was decided, and after the Court of Appeal had given judgment in the present matter, this Court held in Shaw v Minister for Immigration and Multicultural Affairs12 that a person born outside Australia to non-Australian parents, even if a British subject, was, if not naturalised, an alien. A majority of the Court also held13 that Patterson should be regarded as authority for what it decided respecting s 64 of the Constitution and the constructive failure in the exercise of jurisdiction by the Minister. The respondent's case The respondent made four submissions in this appeal. The first, in its simplest form, founded the respondent's claim upon three propositions: each decision to cancel the respondent's visa was legally infirm and, having been quashed by order of this Court, was to be treated as if never made; the respondent's detention was an inevitable consequence of the (invalid) decisions to cancel; and because the decisions that brought about the respondent's detention were not lawful, the detention was unlawful. 10 (1988) 165 CLR 178. 11 (1982) 151 CLR 101. 12 (2003) 78 ALJR 203; 203 ALR 143. 13 (2003) 78 ALJR 203 at 211 [39] per Gleeson CJ, Gummow and Hayne JJ, 235 [190] per Heydon J; 203 ALR 143 at 152-153, 187. This argument may be called the "unlawful decision contention". Against the possibility that the unlawful decision contention was rejected, the respondent advanced three other submissions. He submitted that the Court had held in Patterson that there was no power to cancel the respondent's visa and that "even if s 189 protected against mistake of law it could not protect against mistakes about the reach of Commonwealth power" (the "power contention"). He further submitted that an officer could not have reasonably suspected that the respondent was an unlawful non-citizen where the cancellation decision Section 189 was said not to "protect" officers in was legally infirm. circumstances where their belief or suspicion rested on a mistake of law (the "mistake of law contention"). Finally, it was submitted that, notwithstanding the Court's subsequent decision in Shaw14, the Court's decision in Patterson worked some estoppel against the appellants. The exact content of that estoppel was not elaborated in argument beyond a general assertion that the appellants were precluded from denying the respondent had succeeded in those proceedings and that it had thus been determined that "he was not a person in regard to whom power [under s 189] could be exercised" (the "estoppel contention"). The unlawful decision contention The simplest form of the respondent's argument did not depend upon identifying why the Minister's decision had been quashed. It was submitted that the relevant fact was that the decision had been quashed. It mattered not whether it was quashed for want of procedural fairness in making the decision, for want of power to make it or for constructive failure in the exercise of jurisdiction. In this form of the argument, reference was made to s 189 only to make good the second step: that detention was a direct and inevitable consequence of the decision to cancel. When it is recognised that s 189 requires an officer to detain a person whom the officer knows or reasonably suspects to be an unlawful non-citizen, the second step in the respondent's argument is readily taken. It may then be right to say, as the respondent did, that some analogy might be drawn between the position of the Minister and cases like Myer Stores Ltd v Soo15 14 (2003) 78 ALJR 203; 203 ALR 143. where a person directing the arrest of another may be liable for false imprisonment. But it is not necessary to consider the validity of those analogies. The argument breaks at its third step. The third step in the respondent's argument was that because the decision to cancel his visa pursuant to s 501 was unlawful, the detention was unlawful. This conflates two separate inquiries – one about the lawfulness of the decision to cancel; the other about the lawfulness of the detention. It treats the former inquiry as determinative of the latter. The first inquiry, about the lawfulness of the decision to cancel the respondent's visa, turned upon identifying valid legislative power to do so, and upon whether that power had been lawfully exercised. That directed attention, principally, to s 501 of the Act. By contrast, the lawfulness of the respondent's detention turned upon whether there was statutory or other authority to detain him. That required consideration of s 189. It may be accepted that in so far as s 189 required, and thus authorised, the detention of those who are unlawful non-citizens, a want of power to cancel a visa, or failure in lawful exercise of that power, would lead to the quashing of the decision to cancel. It would then be apparent that the person was not an unlawful non-citizen and not within that aspect of the operation of s 189. But that does not exhaust the operation of s 189. Section 189 is directed not only to cases where an officer knows that a person is an unlawful non-citizen, it extends to cases where the officer reasonably suspects that a person has that status. It follows that demonstrating that a person is not an unlawful non-citizen does not necessarily take the person beyond the reach of the obligation which s 189 imposes on officers. Had it been intended that those who were to be subject to detention by an officer should be confined to those who are in fact unlawful non-citizens, s 189 would have been much simpler. The section would have read, "an officer shall detain an unlawful non-citizen". The reference to an officer's state of mind is explicable only if the section is understood as not confined in operation to those who are, in fact, unlawful non-citizens. Further, the condition upon which the obligation to detain is premised, "[i]f an officer knows or reasonably suspects that a person … is an unlawful non-citizen", is not to be read as excluding from its reach the case where an officer is subjectively convinced that a person is an unlawful non-citizen but later examination reveals that opinion to have been legally flawed. The phrase "knows or reasonably suspects" is expressed disjunctively. Its primary reference is to the officer's subjective state of mind. But the disjunctive expression of the necessary state of mind does not leave, as a middle ground, falling outside the operation of the expression, a case where an officer's subjective opinion has passed from suspicion to certainty of belief but the subject-matter of the belief (what the officer "knows") is legally inaccurate. Rather, in such a case the officer "knows or … suspects" that the person is an unlawful non-citizen and the critical question would be whether the certainty of belief professed by the officer was reasonably based. That is, it follows from the considerations just mentioned that s 189 may apply in cases where the person detained proves, on later examination, not to have been an unlawful non-citizen. So long always as the officer had the requisite state of mind, knowledge or reasonable suspicion that the person was an unlawful non-citizen, the detention of the person concerned is required by s 189. And if the Minister brought about a state of affairs where an officer knew or reasonably suspected that a person was an unlawful non-citizen by steps which were beyond the lawful exercise of power by the Minister, it does not automatically follow that the resulting detention is unlawful. Rather, separate consideration must be given to the application of s 189 – separate, that is, from consideration of the lawfulness of the Minister's exercise of power. If it were suggested that the Minister had exercised power where the Minister knew or ought to have known that what was done was beyond power an action may lie for the tort of misfeasance in public office16. But that has never been the respondent's case in this matter. The Court of Appeal did not consider the application of s 189 separately from its examination of the lawfulness of the Minister's exercise of power. It is convenient to deal at this point with why the Court of Appeal's reasoning took the path it did. The Court of Appeal's reasons In the Court of Appeal, much attention was directed17 to whether the respondent's detention was a direct or inevitable consequence of the decision to cancel his visa. That was treated as the determinative issue. The premise for this reasoning was that the respondent's detention was necessarily unlawful. Thus, Spigelman CJ held18 that it followed from what had been decided in Patterson19 16 Northern Territory v Mengel (1995) 185 CLR 307. 17 (2003) 58 NSWLR 269 at 276-278 [25]-[40] per Spigelman CJ, 283-284 [72] per Meagher JA. 18 (2003) 58 NSWLR 269 at 274 [15]-[16]. that s 189 could have no valid application to the respondent. And although Meagher JA held20 that the officers who detained the respondent had reasonably suspected him to be an unlawful non-citizen, and presumably had therefore acted lawfully in detaining him, s 189 (and ss 196 and 501) "were inapplicable to the present case"21. In his Honour's view, this "inapplicability" followed from Patterson. Ipp JA agreed22 in the reasons of both Spigelman CJ and Meagher JA. And because the detention was thus assumed to be unlawful, the focus was upon whether the Ministers had brought it about. There is an additional reason why the Court of Appeal took the path it did. In their written submissions to the Court of Appeal, the Commonwealth and the Ministers submitted that: "[I]f the Ministers were seen as the relevant tortfeasors, for whom the Commonwealth is vicariously liable, s 189 would provide no defence, because that section applies only to an 'officer' and not to a 'Minister'." Further, in that submission, and it appears elsewhere in argument in the Court of Appeal, the Commonwealth and the Ministers repeatedly sought to characterise that part of s 189 which provided for detention where an officer reasonably suspects a person to be an unlawful non-citizen as a "defence" or "excusing provision". These submissions misstate the relevant operation of s 189. It is not an excusing provision. Treating s 189 as an excusing provision distracts attention from what the section does. It both authorised and required officers to detain certain persons. The resulting detention cannot be unlawful. The respondent contended that the written submission to the Court of Appeal, on behalf of the Commonwealth and the Ministers, about s 189 amounted to a concession from which they should not now be permitted to depart. Even if the submission is properly to be characterised as some form of concession, and we doubt that it is, there is no injustice in permitting the Commonwealth and the Ministers now to depart from it. It was not a concession 19 (2001) 207 CLR 391. 20 (2003) 58 NSWLR 269 at 285 [79]. 21 (2003) 58 NSWLR 269 at 285 [80]. 22 (2003) 58 NSWLR 269 at 285 [84]. of fact but an argument about the legal effect of the relevant provision23. The respondent is not prejudiced in any way if the Commonwealth and the Ministers are now permitted to make some other argument about the legal effect of that provision. The premise which underpinned the attention given in the Court of Appeal to whether the Ministers' decisions caused the respondent's detention is flawed. Patterson did not establish that s 189 could have no valid application to the respondent. After the Court of Appeal gave its judgment in this matter, this Court decided in Shaw24 that Patterson should be regarded as authority for what it decided respecting s 64 of the Constitution and the constructive failure in the exercise of jurisdiction by the Minister. Patterson established no principle about the reach of the aliens or immigration powers to which effect should be given. But altogether apart from the subsequent consideration of these matters in Shaw, the Court in Patterson did not examine, let alone decide, any question about the validity of s 189 in its application to the present respondent. In Patterson, the Court considered the validity of s 501 in its application to the present respondent. Even if Patterson were to be understood as holding that s 501 was invalid in that operation, it by no means follows that the respondent was beyond the valid operation of other provisions of the Act. Indeed, his holding a visa demonstrates why that is not so. And, in particular, whether or not the respondent was a person whose visa might lawfully be cancelled, and thus a person who might be removed from Australia as an unlawful non-citizen, it does not follow that s 189 could never have valid application to him. In this appeal the respondent did not submit that s 189 was invalid. So far as the appeal book reveals, that has never been the respondent's contention. Rather, the respondent contended in the courts below, and on appeal, that s 189 could not apply in his case because an officer could not entertain the necessary reasonable suspicion. That argument was an argument about the construction of the provision. It was elaborated by reference to the power contention, the 23 Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 36 [31] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ. 24 (2003) 78 ALJR 203 at 210-211 [35]-[39] per Gleeson CJ, Gummow and Hayne JJ, 212 [49]-[50] per McHugh J, 235 [190] per Heydon J; 203 ALR 143 at 152-153, 154-155, 187. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 185-188 [80]-[89] per McHugh J. mistake of law contention and the estoppel contention. We will turn to those shortly. Before doing so, however, it is necessary to say something further about the suggestion that Patterson decided that the respondent was a person to whom s 189 could have no application. There is no advantage to be gained by examining again what Patterson decided. On that particular question we adhere to the view expressed25 by five Justices in Shaw. But not only is this a question which was authoritatively settled in Shaw, its revival is an irrelevant distraction from the issues tendered for decision in the present matter. It is irrelevant because Patterson did not consider, and did not decide, any issue about the constitutional validity of s 189. It is a distraction because it suggests that it is useful to ask whether the Act, as a whole, applied to the respondent when the relevant question is whether a particular provision of the Act (s 189), when properly construed, validly applied to authorise and require the respondent's detention. Asking whether the Act applied to the respondent obscures the more precise question that must be asked in respect of each of the two periods of detention in issue in this case. And in doing that, it is necessary to recognise that the first period of the respondent's detention terminated when the first decision to cancel his visa was quashed for reasons which were not founded upon any allegation of constitutional invalidity. The power contention Upon analysis, the power contention depends upon the same conflation of two distinct questions which underpins the respondent's unlawful decision contention. That is, when it is said that s 189 "could not protect against mistakes about the reach of Commonwealth power" it is said, in effect, that s 189 can have no valid application to require detention of a non-citizen whose visa has not been lawfully cancelled. For the reasons given earlier, the conflation implicit in this form of the respondent's argument is impermissible. The power contention should be rejected. The mistake of law contention The respondent's third contention was that the Court's orders quashing each of the decisions to cancel the respondent's visa showed that each decision 25 (2003) 78 ALJR 203 at 210-211 [35]-[39] per Gleeson CJ, Gummow and Hayne JJ, 212 [49]-[50] per McHugh J, 235 [190] per Heydon J; 203 ALR 143 at 152-153, 154-155, 187. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 185-188 [80]-[89] per McHugh J. had been legally infirm. It followed, so the argument ran, that the belief or suspicion that the respondent was an unlawful non-citizen could not ultimately be considered "reasonable". That is, it was submitted that a belief or suspicion could not be reasonable if it was based on a mistake of law, even if the mistake was not then apparent and was identified only after the detention commenced. The contention was an argument about the construction of the Act and the word "reasonably" in particular. No constitutional reason was asserted for reading the section in the manner suggested. The short answer to the contention is that what constitutes reasonable grounds for suspecting a person to be an unlawful non-citizen must be judged against what was known or reasonably capable of being known at the relevant time. In this case, when each detention of the respondent was first effected, Nolan required the conclusion that his visa could lawfully be cancelled and it had been cancelled – in the first instance by the Minister, and in the second by the Parliamentary Secretary to the Minister. And as soon as the relevant decision to cancel the respondent's visa was quashed, he was released from detention. Even if Patterson were to be understood as overruling Nolan (and, as a majority of the Court in Shaw held, it is not) what were reasonable grounds for effecting the respondent's detention did not retrospectively cease to be reasonable upon the Court making its orders in Patterson or upon the Court later publishing its reasons in that case. And, as pointed out earlier, Patterson said nothing about the validity of s 189. There is, however, another reason to reject the mistake of law contention. The contention turns on distinguishing between cases in which the suspicion held by an officer that a person was an unlawful non-citizen is "reasonable", and those in which that suspicion is not. The distinction was said to be between suspicions which later were found to turn upon some mistake of fact, and those which were found to turn upon a mistake of law. This contention should be rejected. The asserted distinction should not be drawn. First, and foremost, there is nothing in the words of the Act that warrants drawing such a distinction. In particular, contrary to the respondent's submissions, nothing said in Little v The Commonwealth26 supports that conclusion. 26 (1947) 75 CLR 94. Little concerned legislative provisions cast in a form very different from s 189. The legislation considered in Little27 had two distinct elements. It provided for an officer to arrest a person whom an officer suspected of committing an offence against the Act and then, separately, provided that no action would lie against the Commonwealth or any Commonwealth officer who had acted in pursuance of the section, subject to the proviso that, if the Governor-General were satisfied that an arrest was made without reasonable cause, compensation might be paid. Dixon J held28 that the first part of the provision should be read as authorising arrest for doing acts or making omissions that amounted to an offence. Errors about what constituted an offence were to be covered by the later part of the provision. The two distinct elements of the section provided an evident textual basis for reading the provisions in this way. In s 189 there is no such textual basis for reading the provision in the same way as the section under consideration in Little. That there is no textual basis found in the Act for distinguishing between cases of mistake of law and mistake of fact is reason enough to reject the contention. There are, however, further reasons to reject it. The second reason to reject the contention is that there would be many cases under s 189 in which a distinction between mistake of law and mistake of fact could not readily be drawn, if drawn at all. Reference to cases like Collector of Customs v Agfa-Gevaert Ltd29 provides ready illustration of the difficulties. Especially is that task difficult where, as here, the subject-matter of the relevant suspicion is a statutory status – being an unlawful non-citizen. Errors about the conclusion cannot safely be divided between errors of law and errors of fact. Often, perhaps much more often than not, the error will be one of mixed law and fact. Thirdly, to draw such a distinction would generate great uncertainty about the application of an obligation evidently intended to be exercised in aid of the administration of the Act. Decisions about migration status must be made not only at the point of entry but subsequently. Decisions at the point of entry are, for the most part, governed by ss 190 and 191 and their provision for detention of 27 National Security Act 1939 (Cth), s 13. 28 (1947) 75 CLR 94 at 108. 29 (1996) 186 CLR 389. See also Ostrowski v Palmer (2004) 78 ALJR 957; 206 ALR certain persons bound to seek immigration clearance. But s 189 is evidently intended to have wider application than that, and is to be engaged in cases which include those emerging from the application of s 188 and its provision for requiring a person known or reasonably suspected of being a non-citizen to show evidence of being a lawful non-citizen. Lastly, there is no constitutional reason asserted for reading s 189 down in the manner suggested. The estoppel contention Finally, the respondent sought to take advantage of what was asserted to be an estoppel flowing from the decision in Patterson. The relevant determination in Patterson was said to be "the determination that he [the respondent] was not a person in regard to whom power [under s 189] could be exercised". The short and complete answer to the contention is that this point was not decided in Patterson. It is, therefore, not necessary to consider the more complex questions of whether or when doctrines of estoppel may find application Lawful detention At the trial of these proceedings, those officers who had been responsible for effecting the respondent's detention gave unchallenged evidence of the steps each had taken before detaining the respondent. Each officer had been provided with what, on its face, appeared to be a regular and effective decision of the Minister to cancel the respondent's visa. Each officer checked whether the respondent held any other visa. Upon finding that he did not, the officer concerned detained the respondent. Plainly, each suspected that the respondent was an unlawful non-citizen. It was not suggested that either had acted in bad faith. The conclusion that each reasonably suspected that the respondent was an unlawful non-citizen follows inevitably. It also follows from that fact, and the reasons given earlier, that the respondent's detention was lawful and required by the Act. Nothing was said to 30 cf Queensland v The Commonwealth (1977) 139 CLR 585 at 614 per Aickin J; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 564-565 [79] per McHugh J, 590-592 [156]-[162] per Gummow and Hayne JJ, 633 [297] per Callinan J. have occurred during either period of detention that would affect the conclusions that, until an order was made quashing the relevant decision to cancel the respondent's visa, those who detained the respondent reasonably suspected that he was an unlawful non-citizen, and that accordingly, his detention was lawful and required by the Act. Conclusion and orders The appeal should be allowed. Paragraph 1 of the orders of the Court of Appeal of New South Wales made on 18 September 2003 to the extent to which it dismissed the appeal to that Court should be set aside and in its place there be orders: appeal allowed; set aside the judgment and orders of the District Court of New South Wales made on 18 December 2002 (other than the order for costs) and in their place order that there be judgment for the defendants. The order of the Court of Appeal dismissing the respondent's cross-appeal should stand unaffected by these orders. In accordance with the undertaking given on the grant of special leave to appeal, the appellants should pay the respondent's costs of the appeal. The costs orders made in the courts below stand. McHugh 54 McHUGH J. The principal issue in this appeal is whether the Commonwealth, one of its Ministers and one of its Parliamentary Secretaries can justify the false imprisonment of Graham Ernest Taylor because Commonwealth officers thought they were required to detain him in accordance with decisions made by the Minister and Secretary, which were invalid. The issue arises in a context where officers of the Commonwealth detained Mr Taylor because they thought that he was an "unlawful non-citizen" present in the migration zone (s 189 of the Migration Act 1958 (Cth) ("the Act")). The Commonwealth contends that the officers reasonably suspected that Mr Taylor was an "unlawful non-citizen" within the meaning of s 189, that that suspicion constituted lawful authority for the detention and that, at common law, lawful authority for imprisonment is a complete answer to an action for damages for false imprisonment. In my opinion, the contention of the Commonwealth must be rejected. First, the trial judge made no specific finding that the relevant officers suspected that Mr Taylor was an unlawful non-citizen. And, on the facts, the more probable view is that they did not hold a suspicion to that effect. Rather, they believed or thought that they knew he was an "unlawful non-citizen", and a belief or supposed knowledge about a fact or conclusion is not a suspicion. Second, even if the mental state of the officers did constitute a suspicion, it was not a reasonable suspicion for the purpose of s 189 of the Act. That is because it was based on an erroneous belief that the Minister and Secretary had validly cancelled the visa issued to Mr Taylor with the result that he was an unlawful non-citizen who had to be detained in accordance with s 189 of the Act. A mistaken belief that a visa has been lawfully cancelled is a mistake of law, and there cannot be a reasonable suspicion within the meaning of s 189 where the suspicion is based on a mistaken belief as to the legal quality of the facts that led to the detention. Statement of the case Mr Taylor arrived in Australia with his parents in 1966. He was then aged seven. He has not taken out Australian citizenship. As from 1 September 1994, the Act deemed him to be a holder of a transitional (permanent) visa that permitted him to remain in Australia indefinitely. In 1996, he was convicted and imprisoned for offences against the Crimes Act 1900 (NSW). The first period of detention Acting under s 501(2) of the Act, the first appellant, the then Minister for Immigration and Multicultural Affairs, cancelled Mr Taylor's visa on the ground that he was not of good character. An officer of the Commonwealth, who was responsible for suspected "unlawful non-citizens" in the area in which Mr Taylor resided, examined his file and concluded that he was an "unlawful non-citizen" for the purpose of the Act. The officer had incorrectly assumed that the "cancellation" of Mr Taylor's visa made him an "unlawful non-citizen". On McHugh 4 November 1999, and purportedly acting under s 189 of the Act, two officers of the Commonwealth and two police officers, placed Mr Taylor in immigration detention for the purpose of deporting him. Mr Taylor was so detained for 161 days. He was not released until a Justice of this Court made a consent order on 12 April 2000 which caused the Court to issue a writ of certiorari quashing the cancellation decision and a writ of prohibition preventing further action on the decision of the Minister. The consent order procured Mr Taylor's release from detention and the restoration of his visa. The second period of detention On 30 June 2000, the second appellant in her capacity as Parliamentary Secretary to the Minister, and acting under s 501(3) of the Act, cancelled the restored visa on character grounds. On 6 July 2000, officers of the Commonwealth again detained Mr Taylor and took him into custody. He remained there until 7 December 2000 (a period of 155 days) when this Court quashed the cancellation order31. In reaching its decision, a majority of the Court held that the second appellant had fallen into jurisdictional error when she purported to cancel Mr Taylor's visa. A different majority of the Court also held that s 501(3) did not apply to Mr Taylor because he was not an alien but a subject of the Queen of Australia and could not be deported under legislation enacted under the aliens power of the Constitution. Two years after reasons were given in Mr Taylor's case, a majority of this Court overruled so much of the reasoning and decision in his case as held that persons such as Mr Taylor were not aliens for the purpose of the Constitution32. However, that overruling does not affect the quashing by this Court of the decision of the Minister in the first case and the decision of the Secretary in the second case. Both decisions were invalid on administrative law grounds quite apart from the constitutional ground that a majority of Justices relied on in the second case. After his release from the second period of detention, Mr Taylor commenced proceedings in the District Court of New South Wales seeking damages for false imprisonment. He sought aggravated compensatory and exemplary damages from the appellants for being "wrongfully detained" for the periods between 4 November 1999 to 12 April 2000 and 6 July 2000 to 7 December 2000. Mr Taylor pleaded that the appellants made decisions under s 501 of the Act that led to his detention, even though "[a]t all material times neither s 501 nor other relevant operative parts of the Act applied to [him]". Mr Taylor also pleaded that the Commonwealth (the third appellant), or its 31 Re Patterson; Ex parte Taylor (2001) 207 CLR 391. 32 Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203; 203 ALR 143. McHugh servants or agents, "was active imprisonments and is thereby jointly and severally liable". in promoting the respective wrongful In their Notice of Grounds of Defence, the appellants denied that Mr Taylor's detention was wrongful. They did so on the ground that the officers who took him into detention were "obliged ... to detain [him] under Section 189 of the Act." They asserted that s 189 applied to his detention because the "officer had such knowledge or reasonable suspicion because the officer knew or reasonably suspected that [his] visa had been cancelled and he had no operative visa. The said officer also knew, or reasonably suspected, that [Mr Taylor] was not an Australian Citizen." The case was tried by Murrell DCJ. Her Honour held that the appellants were guilty of the tort of false imprisonment in respect of both periods of detention. Judge Murrell held that s 189 of the Act did not authorise Mr Taylor's detention because: "Re Patterson; Ex parte Taylor establishes that ss 189 and 196 have no application to [Mr Taylor] and are invalid so far as any application to [him] is concerned." Her Honour ordered the appellants to pay damages of $116,000. The New South Wales Court of Appeal dismissed the appellants' appeal against her Honour's judgment and orders. The tort of false imprisonment The appellants concede that Mr Taylor was imprisoned for the purpose of the tort of false imprisonment. But, as the appellants claim, that tort is not made out if the defendant can prove33 that the plaintiff was imprisoned in the exercise of a statutory power of arrest or detention34. The appellants contend that s 189 of the Act authorised, and thereby justified, Mr Taylor's detention. The Migration Act At the relevant time, s 189(1) of the Act declared that: 33 Dumbell v Roberts [1944] 1 All ER 326 at 331; Lynch v Hargrave [1971] VR 99 at 108; Mailau v Riordan [2001] ACTSC 13 at [28]. 34 Little v The Commonwealth (1947) 75 CLR 94 at 105; Marshall v Watson (1972) 124 CLR 640 at 643-644; Cowell v Corrective Services Commission (NSW) (1988) 13 NSWLR 714. McHugh "If an officer knows or reasonably suspects that a person in the migration zone is an unlawful non-citizen, the officer must detain the person." Section 5 states that "unlawful non-citizen has the meaning given by section 14." Section 14(1) provides that: "[a] non-citizen in the migration zone who is not a lawful non-citizen is an unlawful non-citizen." The Act also defines elements of the s 14(1) definition. Section 5 defines "non-citizen" to mean "a person who is not an Australian citizen"; s 13(1) states that a "lawful non-citizen" is: "[a] non-citizen in the migration zone who holds a visa that is in effect". The net result of these definition provisions is that an officer must detain a person who is in the migration zone if the officer "knows or reasonably suspects that a person": (i) is "a person who is not an Australian citizen"; and (ii) does not "hold[] a visa that is in effect". The appellants' reliance on s 189 of the Act raises two questions of statutory construction. First, what state of mind constitutes reasonable suspicion? Second, if an officer's suspicion is grounded on a mistake of law as to the legal validity of a decision to cancel a person's visa, can the officer reasonably suspect that that person does not "hold a visa that is in effect"? Reasonable suspicion Legislatures often vest powers in administrative officers that are exercisable when the officer has a "reasonable suspicion" that specified factual circumstances prevail35. Under s 189 of the Act, an officer may (and must) 35 See, eg, Director of Public Prosecutions v Darby [2002] NSWSC 1157 (concerning s 37(4)(a) of the Drug Misuse and Trafficking Act 1985 (NSW)) and Birkett v Director-General of Family and Community Services unreported, Supreme Court of New South Wales, 3 February 1994 (concerning s 62A(1)(a) of the Children (Care and Protection) Act 1987 (NSW)); cf Marshall v Watson (1972) 124 CLR 640 (concerning s 42(3) of the Mental Health Act 1959 (Vic)). See also O'Hara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286 (concerning s 12(1) of the Prevention of Terrorism (Temporary Provisions) Act 1984 (UK)), s 14(1) of the Prevention of Terrorism (Temporary Provisions) Act 1989 (UK), s 2(1) of the Prevention of Terrorism Act 2005 (UK). McHugh exercise the power to detain a person if the officer "knows or reasonably suspects" that that person is an "unlawful non-citizen". The section authorises a drastic interference with the liberty of persons. It impinges on the liberty of persons such as Mr Taylor because "[l]iberty ends where the power of arrest begins."36 The liberty of the individual is "the most elementary and important of all common law rights"37 and is protected by the common law doctrine of false imprisonment. So far as its language permits, s 189 must be interpreted strictly and in a manner that preserves the liberty of the subject. In particular, it should not be given a purposive construction and its terms stretched to give effect to some policy thought to be inherent in the section. In Nolan v Clifford, "the common law and the Statute law should not be taken to be abrogated, especially on matters affecting the liberty of the subject, unless a plain intention on the part of the legislature to make so important a change was to be found." The need for a strict construction of s 189 is reinforced by the fact that otherwise a person could be deprived of liberty and left without remedy. Hence, s 189 should be construed, inter alia, so that a person cannot be lawfully detained unless the detaining officer holds one or other of the precise mental states referred to in the section. And, as will appear, it should not be construed to authorise the detention of individuals where the officer acts on a mistaken view as to the legal effect of acts or omissions. In George v Rockett39, this Court approved the definition of "suspicion" given by Lord Devlin in Hussien v Chong Fook Kam40: "Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking: 'I suspect but I cannot prove.'" 36 Webster v McIntosh (1980) 32 ALR 603 at 607. 37 Trobridge v Hardy (1955) 94 CLR 147 at 152. 38 (1904) 1 CLR 429 at 447. See also Baker v Campbell (1983) 153 CLR 52 at 122; Williams v The Queen (1986) 161 CLR 278 at 304; Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319 at 322, 331, 339, 346-347. 39 (1990) 170 CLR 104 at 115. 40 [1970] AC 942 at 948. McHugh The Oxford English Dictionary41 states that to "suspect" is to have a lower standard of knowledge, and merely "to have a faint notion or inkling of" something. In George42, the Court pointed out "suspicion and belief are different states of mind". And, as s 189 itself acknowledges, so are suspicion and knowledge. The Oxford English Dictionary43 states that to "know" is: "[t]o have cognizance of (something), through observation, inquiry, or information; to be aware or apprised of ...; to become cognizant of, learn through information or inquiry, ascertain, find out". In s 189, the distinction between suspicion, belief and knowledge is fundamental. The mental state of a person who believes something to exist is different from the mental state of a person who suspects that something exists or a person who knows something exists. In Homes v Thorpe44, Angas Parsons J, after examining various decisions and dictionaries, said: "According to the plain meaning of the words there is therefore a clear distinction between things that are 'suspected' of having a certain quality or characteristic, namely, in this case, of having been stolen or unlawfully obtained, and things which are believed to have this peculiarity. The gradation in mental assent is 'suspicion' which falls short of belief, 'belief' which approaches to conviction, and knowledge which excludes doubt." In Homes, the issue was whether a Magistrate had erred in law in dismissing a charge of possessing property which was reasonably suspected of being stolen or unlawfully obtained because the arresting officer had believed, and not merely suspected, that the property was stolen. Angas Parsons J upheld the dismissal of the charge. His Honour said45: "I think, therefore, that the learned Special Magistrate was correct in finding as a fact that Dayman did not suspect the goods were of the 41 2nd ed (1989), vol 17 at 317. 42 (1990) 170 CLR 104 at 115. 43 2nd ed (1989), vol 8 at 513. 44 [1925] SASR 286 at 291. 45 [1925] SASR 286 at 291. McHugh character stated in the charge, but, on the contrary, he believed them to be stolen". In Henderson v Surfield and Carter46, the Full Court of the Supreme Court of South Australia also recognised a clear distinction between suspicion and belief saying: "To feel absolutely certain of the guilt of a really innocent man is not to 'suspect' him. Suspicion lives in the consciousness of uncertainty." In George, the joint judgment of this Court cited Homes for the proposition "that suspicion and belief are different states of mind"47. However, a series of cases decided in State courts between 1927, when Henderson48 was decided, and 1990, when George was decided, assert that belief is not inconsistent with suspicion in enactments where a person is found in possession of property that is reasonably suspected of being stolen or unlawfully obtained. In Lenthall v Newman49, the Full Court of the Supreme Court of South Australia – one of the judges being Angas Parsons J – said: "we are unable to see anything, either in the Statute or in the authorities, which warrants the view that belief, in the sense of 'regarding as true' is at all inconsistent with the suspicion intended by the Statute. On the contrary, we think that the suspicion contemplated by sec 71 is a state of mind in which the witness thinks, or believes, that the property is, or, at the least, that it may be, stolen or unlawfully obtained." However, the Full Court thought that both Homes and Henderson were correctly decided. In respect of Homes, the Full Court said50: "[W]e agree with the view that a witness, who is able to testify of his own knowledge to a specific larceny of the property in question cannot be said to suspect that the goods are stolen property. If that is the substance of his evidence, the case is not brought within the spirit, or the words, of the section, in which it is implied that some element of doubt, or uncertainty in the proof, will remain, although the evidence for the prosecution is believed in its entirety." 46 [1927] SASR 192 at 196. 47 (1990) 170 CLR 104 at 115. 48 [1927] SASR 192. 49 [1932] SASR 126 at 132. 50 [1932] SASR 126 at 131-132. McHugh In Raynal v Samuels51, the Full Court of the Supreme Court of South Australia affirmed the approach in Lenthall saying: "Although we think that the state of mind of Constable Poole and Constable Beard had reached the stage of belief rather than mere suspicion in the non-technical sense of the word, Lenthall v Newman and Hewitt v O'Sullivan are authorities for the proposition that belief comes within the technical meaning of the word suspicion. We accept those authorities on this point, with which we respectfully agree. For reasons already given it is not necessary or desirable to go further in this case". In R v Grace52 – decided two years before Lenthall – the Court of Criminal Appeal of New South Wales also refused to accept that, for the purposes of legislation dealing with property "reasonably suspected of being stolen", a belief that the property was stolen did not constitute reasonable suspicion that it was stolen. "In our opinion Parliament did not intend that a nice distinction between suspicion and belief should be drawn in such a way as to limit the offence to cases of 'suspicion and no more.' We think that the words were intended to indicate a minimum and not a maximum as regards proof; that no man should be called upon to answer unless there were at least reasonable suspicion, but not that a man should be entitled to avoid answering, and go free of a charge, if there were some stronger feeling of mind than suspicion. In any case where there is belief there must be more than ground for suspicion, and we are of opinion that the legislature did not intend that the magistrate should embark on inquiry as to whether or not the mind of the person suspecting had passed from one stage to another – a matter which would necessarily vary according to the mental equipment and disposition of that person." Grace was cited53 and applied by Herring CJ in Fisher v McGee where his Honour said54: "The constable's suspicion with regard to the matter was not ... excluded, so far as the section is concerned, by his belief in the matter." However, Herring CJ said that knowledge will exclude suspicion and that the 51 (1974) 9 SASR 264 at 273 (footnotes omitted). 52 (1930) 30 SR (NSW) 158 at 163. 53 [1947] VLR 324 at 328. 54 [1947] VLR 324 at 331. McHugh degree of knowledge required is "accurately described by their Honours in the Full Court of South Australia in ... Lenthall v Newman"55. The view that knowledge did not constitute suspicion for the purposes of this class of legislation was also adopted by the Supreme Court of Western Australia in O'Brien v Reitze56. Wickham J said that, if the arresting officer "knew (or thought that he knew) that the goods were stolen and were stolen by the accused, a conviction under the section could not be supported." In Wicks v Marsh; Ex parte Wicks57, however, the Court of Appeal of the Supreme Court of Queensland refused to follow statements in the above cases to the effect that knowledge did not constitute suspicion for the purpose of this class of legislation. The Court of Appeal described58 the distinction as "illogical and incorrect". However, the Court of Appeal did not refer to this Court's statement in George v Rockett that there was a distinction between "suspicion" and "belief". Nor did counsel appearing for the parties cite that case to the Court of Appeal. The issue as to whether there was a distinction between suspicion and other mental states again came before the Court of Criminal Appeal of the Supreme Court of South Australia in R v Zotti59 in considering charges under s 82(1) of the Proceeds of Crime Act 1987 (Cth). That section made it an offence to have or dispose of property "that may reasonably be suspected of being proceeds of crime". After citing the passage from George v Rockett to which I have referred, Gray J said60: "A reasonable suspicion is something less than a belief, and a belief is something less than satisfaction beyond reasonable doubt." In Roderick v Police61, sitting in the Supreme Court of South Australia, Besanko J said that it was: 55 [1947] VLR 324 at 330. 56 [1972] WAR 152 at 154. 57 [1993] 2 Qd R 583 at 586. 58 [1993] 2 Qd R 583 at 587. 59 (2002) 82 SASR 554. 60 (2002) 82 SASR 554 at 574 [133]. 61 (2004) 88 SASR 47 at 53 [28]. McHugh "clear enough from the authorities that if the suspector has knowledge that the personal property has been stolen or obtained by unlawful means, then he or she does not have a reasonable suspicion. I think that it is also clear that knowledge has been narrowly defined to mean first-hand knowledge and does not include a state of mind based on information or belief. Belief is suspicion not knowledge." In McLennan v Campbell62, Pullin J, sitting in the Supreme Court of Western Australia, said that "the ordinary meanings of 'suspicion' and 'belief' and 'knowledge' reveal that the words are located on a graded scale of meaning." However, his judgment indicates, without deciding, that the reasons expressed in Wicks and Grace represent the better view of the law at least so far as concerns legislation dealing with goods suspected of being stolen. This extended discussion of the case law on legislation concerned with goods suspected of being stolen shows that the prevailing view among the State courts is that having a belief that property is stolen does not prevent a person having a reasonable suspicion that it is stolen. The State courts are divided, however, on the issue of whether knowledge in the sense described in Lenthall can constitute reasonable suspicion. Courts in South Australia, Victoria and probably Western Australia would answer this question in the negative. But courts in Queensland and New South Wales would answer it in the affirmative. However, the debate over issues concerning legislation dealing with property suspected of being stolen is not decisive of the issues in the present case. First, the courts of the various States have adopted a purposive interpretation of the suspected property legislation of their States in holding that belief – and, in the case of Queensland and New South Wales, knowledge – is not inconsistent with reasonable suspicion. They have expanded the literal meaning of the legislation to give effect to its purpose. Second, the suspected property legislation deals with only one mental state: reasonable suspicion. In contrast, s 189 deals with two states of mind: knowledge and reasonable suspicion. In that respect, s 189 is similar to the legislation considered by this Court in George, which dealt with both suspicion on reasonable grounds and belief. Given the terms of s 189, there can be no doubt that knowledge is not reasonable suspicion for the purposes of the section. The critical question is whether "belief" can constitute reasonable suspicion. In answering that question, a consideration of great weight is that, if the terms of the section are satisfied, a person can be deprived of his or her liberty by executive action with no appeal to the courts of law. In that context, ordinary principles of statutory construction require s 189 to be read strictly. To use the 62 [2003] WASCA 145 at [11]. McHugh words of Kitto J63, when confronted with an immunity provision that affected the rights of individuals, s 189: "operates, then, to derogate, in a manner potentially most serious, from the rights of individuals; and a presumption therefore arises that the Legislature, in enacting it, has chosen its words with complete precision, not intending that such an immunity, granted in the general interest but at the cost of individuals, should be carried further than a jealous interpretation will allow." Accordingly, s 189 must be read strictly and with the presumption that the Parliament has used the terms "knows" and "reasonably suspects" with complete precision. Because that is so, an officer who knows, believes or is convinced that a person is an "unlawful non-citizen" in the migration zone cannot reasonably suspect that that person is an "unlawful non-citizen" in the migration zone. The difference in meaning between the two alternate states of mind in s 189 is not one of degree, so that the disjunctive phrase of "knows or reasonably suspects" signposts the outermost states of mind that sit at either end of a sliding scale and thereby encompasses a middle ground of belief that falls within the operation of the expression. It is a condition of the state of mind of knowledge that the subjective belief as to a state of affairs matches the objective reality. In contrast, it is immaterial to the state of mind of suspicion whether the state of affairs that is suspected is real or not. While there may be different degrees of certainty with which a suspicion is held, there is no middle ground between a belief that is correct and a belief that is not borne out in reality. There is no middle ground between true and false. Where a belief is false, it does not constitute knowledge. And as a belief is a strongly held conviction, the absence of doubt makes the state of mind far removed from suspicion. Thus, a belief constitutes neither of the two alternate states of mind of s 189. The apprehending officers did not have a reasonable suspicion The learned trial judge made no finding as to the state of mind of either of the officers who were responsible for Mr Taylor's detention. In respect of Mr Crighton, the officer concerned with the first detention, her Honour said: "He examined the file to confirm that [Mr Taylor] was an 'unlawful non- citizen' and, inter alia, noted the minute signed by the first [appellant] which had the effect of cancelling [Mr Taylor's] visa. He understood that, 63 Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 at 116. McHugh pursuant to s 189 of the Act, he had a duty to locate and detain In respect of Ms Campbell, the officer concerned with the second detention, her Honour said: "She read the file and undertook checks of the DIMIA system to confirm the contents of the file. She noted the minute signed by the second [appellant], which evidenced the second [appellant's] decision to cancel [Mr Taylor's] visa. Having considered the file, Ms Campbell formed the view that [Mr Taylor] was liable to be detained under s 189 of the Act and decided to travel to Gunnedah to take [him] into immigration detention." In evidence, Mr Crighton had said he "had a reasonable suspicion at that time". But that evidence was struck out. Hence there was no evidence from him concerning his state of mind. In evidence, Ms Campbell said: "I suspected that Mr Taylor, not having citizenship of Australia, held no visa was liable for detention under section 189 of the Migration Act." Her Honour made no finding that her state of mind was that of suspicion. And in my view, it is far more probable than not that, having read the file, both Ms Campbell and Mr Crighton firmly believed that Mr Taylor was an "unlawful non-citizen". The probability is strengthened in the case of both officers by their evidence that they knew that a person whose visa has been cancelled under s 501 on character grounds is not eligible to apply for any other visa. The onus was on the appellants to establish that Mr Taylor's detention was made with lawful authority, and they failed to do so. The argument for the appellants assumed that the officers had "a reasonable suspicion". But the trial judge made no finding that the officers had either of the mental states referred to in s 189. It is far more probable than not they did not have either of the mental states that that section requires before a person can be lawfully detained. For the reasons I have given, an officer who believes or knows that a person is an "unlawful non-citizen" does not suspect that the person is an "unlawful non-citizen". The officers involved in this case did not "surmise or conjecture" that Mr Taylor was an "unlawful non-citizen". They had a belief – almost certainly amounting to a conviction having regard to the cancellation decision – that Mr Taylor was indeed an "unlawful non-citizen". Indeed, they probably thought that they knew he was an "unlawful non-citizen". Neither officer is likely to have had the slightest doubt that Mr Taylor was an "unlawful non-citizen". If, when detaining Mr Taylor, the officers had been asked whether they suspected that he was an "unlawful non-citizen", their answer would probably have been, "No. We know he is an unlawful non-citizen because the Minister has cancelled his visa." But whether their mental state at relevant times was belief or conviction or knowledge, it is impossible to conclude that it was McHugh merely suspicion, despite Ms Campbell's evidence that she "suspected" Mr Taylor was an "unlawful non-citizen". Nor, unless the term "knows" in s 189 includes erroneous states of mind – a construction that makes little, if any, sense – did the officers "know" that he was an "unlawful non-citizen". They could not "know" that he was an "unlawful non-citizen" when he was not an "unlawful non-citizen". Knowledge of something implies that it exists or has existed. Accordingly, the appeal must be dismissed because the appellants have failed to prove that the relevant officers held either of the mental states that is a condition precedent to the detaining of a person. "Reasonable suspicion" and mistakes of law Furthermore, if contrary to the view I have expressed, the officers' mental states can be described as a suspicion, it was not a reasonable suspicion for the purpose of s 189. If they did actually have a suspicion that Mr Taylor was an "unlawful non-citizen", they did not have a reasonable suspicion within the meaning of s 189. That is because their suspicion was based on the legally mistaken view that Mr Taylor's visa had been cancelled. Statutory provisions concerning powers of arrest or detention are often ambiguous as to whether the exercise of the power is conditioned upon the administrative officer not only making factual observations but also reaching correct legal conclusions concerning those facts. In Little v The Commonwealth, for example, s 13 of the National Security Act 1939 (Cth) empowered "any constable" to arrest any person "who is suspected of having committed, or of being about to commit ... an offence". Police officers had arrested the plaintiff because they believed that a ministerial order (which was not validly made) had been breached. Dixon J held that, in arresting the plaintiff, the officers had acted under the legally mistaken belief that the order was valid. Accordingly, the plaintiff could not be "suspected of having committed" an offence. His Honour said64: "I think that s 13(1) should be read as referring to the doing of acts or the making of omissions which amount to an offence. It means that, if a man is found doing such acts or making such omissions or is suspected of having done or made them or of being about to do or make, then he may be arrested without warrant. But it does not cover an erroneous belief on the part of the constable or officer as to the legal significance or quality of the acts or omissions, actual or suspected, past or threatened, of the 64 Little v The Commonwealth (1947) 75 CLR 94 at 108. McHugh persons arrested. An error on the part of the constable or officer as to what constitutes an offence is, in my opinion, covered by sub-s (3) of s 13[65] or not at all." Dixon J went on to hold that, although the police officers had made a mistake of law, they were "acting in pursuance of this section" within the meaning of s 13(3) with the result that no action would lie against them. His Honour said: "The truth is that a man acts in pursuance of a statutory provision when he is honestly engaged in a course of action that falls within the general purpose of the provision. The explanation of his failure to keep within his authority or comply with the conditions governing its exercise may lie in mistake of fact, default in care or judgment, or ignorance or mistake of law. But these are reasons which explain why he needs the protection of the provision and may at the same time justify the conclusion that he acted bona fide in the course he adopted and that it amounted to an attempt to do what is in fact within the purpose of the substantive enactment." Of these two passages, it is the one dealing with s 13(1) which is relevant in this case. It holds that an official is not acting under a provision that authorises the official to arrest a person on suspicion of committing an offence if the official's suspicion is based on a mistake as to the legal quality of the acts of which the official knows. In contrast, the second passage shows that, for the purpose of an immunity provision, an officer may still be "acting in pursuance of" the arrest power despite an erroneous belief as to the legal quality of the acts that induced the arrest. Section 189 is not an immunity provision. It is only indirectly concerned with whether the officer has legal immunity for his or her conduct in detaining a person. It is concerned with power and whether the officer's conduct was lawful, not whether the officer should escape liability because his or her conduct was unlawful. Like s 13(1), and unlike s 13(3), of the National Security Act 1939, it is an empowering provision. What Dixon J said about s 13(1) applies directly to s 189. In principle, his Honour's construction of s 13(1) applies to s 189. Indeed, the fact that s 189 refers to an officer who "reasonably suspects" and not merely "suspects" as in s 13(1) strengthens the case for applying the remarks of Dixon J. Because that is so, an officer of the Commonwealth cannot have a suspicion – let 65 Section 13(3) of the National Security Act 1939 (Cth) was a protective provision that provided that "[n]o action shall lie against the Commonwealth, any Commonwealth officer, any constable or other person acting in pursuance of this section". McHugh alone a reasonable suspicion – within the meaning of s 189 when the suspicion is not based on facts but on the erroneous legal quality of certain facts known to the officer. The distinction between mistakes of law and fact is implicit in the language of s 189 of the Act and is required by a fundamental principle of statutory construction. I have already referred to the statements of Griffith CJ in Nolan v Clifford66 and Kitto J in Board of Fire Commissioners (NSW) v Ardouin67 to the effect that a section like s 189 should not be construed so as to interfere with the rights of individuals unless the section evinces a plain intention to do so. The wording of s 189 does not evince an intention to permit an officer to detain a person when, as a matter of law, the person is not an "unlawful non-citizen". Indeed, it evinces a contrary intention. While a person may have "cognizance" or an "awareness" of a state of fact, it does not make sense to say that a person has cognizance or an awareness of a conclusion of law. Instead, a person has an understanding, or a satisfaction as to the correctness, of a legal conclusion. This is because a conclusion of law is not observed, but is reasoned on the basis of observations made. An officer may have had cognizance of a document that purports to record a decision to grant or to cancel a visa. But an officer cannot have had "cognizance" of the validity or invalidity of the decision. Accordingly, an officer cannot know that a person is an "unlawful non-citizen" when the person is not, as a matter of law, an "unlawful non-citizen". The inability of a person to have cognizance of the legal quality of a matrix of facts also provides a strong reason for concluding that the issue of suspicion in s 189 is concerned with the details of a person's identity and connections to Australia or lack of them and not the legal quality of those facts. In many cases, it is the absence of facts indicating that a person is a citizen or lawful non-citizen that enables the officer to reasonably suspect that the person is an "unlawful non-citizen". If, for example, an officer finds an adult person in the migration zone who cannot speak English, who appears to have no residential address or employment with Australia and who fails, when asked, to produce a visa, the officer may "reasonably suspect" that the person is an "unlawful non- citizen". If no more appears, that is a clear case of reasonable suspicion. Many less compelling facts may establish a reasonable suspicion. But in all such cases, the officer, although having no proof that the person is an "unlawful non-citizen", is aware of facts that do exist or is unable to ascertain facts that should exist and those facts or their absence reasonably suggest that the person is an "unlawful 66 (1904) 1 CLR 429 at 447. 67 (1961) 109 CLR 105 at 116. McHugh non-citizen". If the facts upon which the officer relies are incapable in law – for whatever reason – of making the person an "unlawful non-citizen", however, the officer cannot reasonably suspect that the person has that status. If the Parliament had intended the officer's power of detention to be exercisable even when the officer had inaccurately, though reasonably, concluded that the facts, of which the officer was aware, were legally sufficient to ground the conclusion that the person is an "unlawful non-citizen", the section would surely have been worded differently. It would empower (and require) officers to detain a person "[i]f an officer is satisfied that a person ... is an unlawful non-citizen". The officer's satisfaction – not his knowledge or reasonable suspicion – would trigger the detention power. In the absence of words such as "is satisfied", the section should not be interpreted to abrogate the common law doctrine of false imprisonment and restrict the liberty of Mr Taylor. Accordingly, s 189 of the Act authorises detention only when the officer has knowledge of, or a reasonable suspicion based on, facts that are sufficient in law to categorise a person as an "unlawful non-citizen". Section 189 does not authorise detention merely because the officer knows facts that the officer believes are sufficient in law to make the person an "unlawful non-citizen". Thus, s 189 does not authorise the detention of a person that an officer suspects to be an "unlawful non-citizen" when the suspicion is grounded in a mistaken assumption as to the legal validity of a Minister's decision to cancel the person's visa. The absence of clear words permitting the detention of persons who are not "unlawful non-citizens" strongly indicates that Parliament did not intend lawful non-citizens to be detained under s 189. Indeed, if the argument for the appellants is correct, s 189 would authorise the detention of an Australian citizen in cases where an officer acted on a reasonable but legally erroneous conclusion concerning facts. Accordingly, s 189 does not apply to an erroneous, even if reasonable, belief on the part of an officer or Minister as to what connections are sufficient to ground Australian citizenship or as to the legal validity of a decision to grant or cancel a visa. Accordingly, s 189 did not authorise the detention of Mr Taylor on either occasion. Responsibility for false imprisonment The first and second appellants are liable for Mr Taylor's wrongful detention if their decisions to cancel Mr Taylor's visa were an "active [step] in promoting and causing the imprisonment"68. In this case, the Court of Appeal held that "[t]he element of directness – the sufficiency of the nexus between the 68 Myer Stores Ltd v Soo [1991] 2 VR 597 at 629. McHugh defendant's act and the imprisonment – is satisfied, in the present case" because Mr Taylor's detention was "an inevitable step brought about by the self-executing operation of the statute, of which the Ministers must have been aware."69 The Court also held that "[t]here can be no doubt that each Minister had an intention that [Mr Taylor] be removed from Australia" because that removal "was the very point of the decision to cancel the visa"70. The appellants claim the Court of Appeal's decision was wrong for four reasons. First, the appellants contend that the detention of Mr Taylor was not an "inevitable consequence"71 of the Minister's decision because the Act was not "self-executing"72 or "virtually automatic"73. Section 189 of the Act required the officer to exercise a discretion independently of the Minister's decision to cancel a visa in order to determine whether the person was an "unlawful non-citizen". Second, they contend that the test to determine a defendant's liability in tort is not whether the plaintiff's detention is the "inevitable consequence" of the defendant's acts, but whether the defendant's acts "directly" caused the plaintiff's detention. They argued that this test was not satisfied in the present case because the officers' reasonable suspicion that Mr Taylor was an "unlawful non-citizen" intervened to make the Ministers' decisions an indirect cause of Mr Taylor's detention. Third, the appellants contend that there was no evidence that the first and second appellants had any intention to detain Mr Taylor. Fourth, the appellants contend that the tort of wrongful imprisonment should not: "extend to a case where a Minister does no more than engage in a bona fide exercise of power under section 501 that is unknowingly flawed by jurisdictional error. That is so because of public policy, as well as the elements of 'directness' and 'intention' and the distinction under the Act between cancellation and detention." Since the middle of last century, the common law has held that a defendant is liable for a ministerial officer's detention of a plaintiff whenever the defendant does an act that enlivens the officer's duty to detain the plaintiff. Proof of such an act satisfies the test of causation even though the officer ordinarily has a discretion to detain or arrest. If the complainant has issued the direction, then the officer need not independently assess the accurateness of the complaint. In 69 Ruddock v Taylor (2003) 58 NSWLR 269 at 277 [34], 278 [37]. 70 Ruddock v Taylor (2003) 58 NSWLR 269 at 277 [37]. 71 [2005] HCATrans 065 (2 March 2005) at line 1845. 72 Ruddock v Taylor (2003) 58 NSWLR 269 at 274 [12]. 73 Ruddock v Taylor (2003) 58 NSWLR 269 at 274 [12]. McHugh Dickenson v Waters Ltd, the defendant was liable for a constable's detention of the plaintiff because it was "extremely unlikely that Constable Pedler, if left to the exercise of his own discretion, would have taken the extreme step of arresting the plaintiff."74 The defendant was liable because the officer's power of detention was exercisable (and required to be exercised) whenever a complainant "desire[s] the police to arrest the plaintiff"75. So the question in such cases is whether a complainant has issued a direction to arrest the plaintiff or has merely complained of the plaintiff's behaviour. If the arrest of the plaintiff is the result of the officer's independent assessment of the evidence of the complainant, the defendant is not liable. But if the officer acts on a direction of the defendant, the defendant will be liable. In Hopkins v Crowe76, for example, the Court of King's Bench held that the defendant was liable when he had not only informed a police officer of the plaintiff's alleged criminal misconduct, but also told the policeman that he would charge the plaintiff. The defendant was liable because he had taken "upon himself to direct the officer to apprehend the plaintiff."77 Similarly, in Mooney v King78, the defendant had told the policeman: "I wish you to take action. I leave the matter in your hands. I'm afraid if you don't overtake him he may plant her, and you may have a difficulty in finding her." The Supreme Court of New South Wales upheld the jury's verdict as to the defendant's liability, because "there was more than a mere scintilla of evidence to go to the jury upon the question whether the defendant directed the sergeant to arrest or not." This case law is applicable to the power of detention that s 189 of the Act vests in the detaining officers. Once the officers were aware of the first and second appellants' "decisions" to cancel Mr Taylor's visa, s 189 imposed a duty on the officers to detain Mr Taylor. It is inaccurate to speak of officers having a discretion under s 189. Once an officer knows or reasonably suspects that a person is an "unlawful non-citizen" in the migration zone, the officer has a statutory duty to detain that person. Section 189 does not require the officers to assess the validity of the Ministers' decisions. Thus, it was the Ministers' purported cancellations of 74 Dickenson v Waters Ltd (1931) 31 SR (NSW) 593 at 596. 75 Dickenson v Waters Ltd (1931) 31 SR (NSW) 593 at 596. 76 (1836) 4 Ad & E 774 [111 ER 974]. 77 (1836) 4 Ad & E 774 at 777 [111 ER 974 at 975]. See also Webster v McIntosh (1980) 32 ALR 603 at 608 citing Austin v Dowling (1870) LR 5 CP 534 at 539. 78 (1900) 16 WN (NSW) 203 at 204. McHugh Mr Taylor's visa – erroneous though they were – that led the officers to believe that they had a duty to detain Mr Taylor. The Ministers were therefore "active in promoting and causing the imprisonment"79. Accordingly, the first and second contentions of the appellants must be rejected. The appellants' third contention must also be rejected. To say the least, it is highly probable that, by cancelling Mr Taylor's visa, the first and second appellants intended that he should be detained. Indeed, it is a near certainty that they had that intention80. The briefing notes provided to each appellant expressly stated that, upon cancellation of his visa, Mr Taylor would be detained in custody and deported from Australia. The Solicitor-General of the Commonwealth suggested that Mr Taylor might voluntarily leave the country when his visa was cancelled. The prospect of Mr Taylor, who had left England when he was seven years of age, voluntarily leaving Australia before he was taken into immigration detention was so remote that it can fairly be dismissed as fanciful. And after his High Court challenge to his first detention, no one could rationally think that he would voluntarily leave when his visa was cancelled for the second time. The bulk of the argument in support of the fourth contention was contained in the appellants' arguments in respect of the first and second contentions. In so far as the appellants relied on public policy to protect the appellants from what would otherwise be tortious conduct, neither principle nor authority supports the contention. As Gibbs CJ pointed out in A v Hayden81 "[i]t is fundamental to our legal system that the executive has no power to authorize a breach of the law". And in Re Bolton; Ex parte Beane82, Deane J declared: "The common law of Australia knows no lettre de cachet or executive warrant pursuant to which either citizen or alien can be deprived of his freedom by mere administrative decision or action. Any officer of the Commonwealth Executive who, without judicial warrant, purports to authorize or enforce the detention in custody of another person is acting lawfully only to the extent that his conduct is justified by clear statutory mandate." 79 Myer Stores Ltd v Soo [1991] 2 VR 597 at 629. 80 Cross on Evidence, (looseleaf service), vol 1 at [7255]; Vallance v The Queen (1961) 108 CLR 56 at 82. 81 (1984) 156 CLR 532 at 540. 82 (1987) 162 CLR 514 at 528. McHugh In the absence of a statute relevantly giving Ministers immunity from liability for tortious conduct, a Minister incurs the same liability for his or her torts as any other citizen. A Minister is not exempted from tortious liability because the Minister believed that he or she was bona fide acting within power. The only defence to the tort of false imprisonment is lawful authority. By their conduct in signing the cancellation order with its inevitable consequences for Mr Taylor, the appellants caused him to be detained. That detention constituted the tort of false imprisonment unless those responsible for detaining Mr Taylor had lawful authority to detain him. In the absence of a statutory command, a good faith exercise of power is not a defence to the tort of false imprisonment. Neither the appellants nor the officers who detained him had lawful authority to detain him. Because that is so, the appellants had no defence to Mr Taylor's action for false imprisonment. Order The appeal should be dismissed with costs. Kirby 124 KIRBY J. This appeal concerns executive detention and the remedies available to a person who establishes in court that he or she was wrongly detained pursuant to an unlawful administrative decision. It involves a claim by the respondent for damages for the tort of wrongful imprisonment. That claim was upheld in the District Court of New South Wales and the New South Wales Court of Appeal. By special leave, the appellants now appeal to this Court, submitting that the respondent's claim in tort should have been denied. In my opinion the appeal fails. The facts, legislation and common ground The facts: The facts up to the time of this Court's decision in Re Patterson; Ex parte Taylor appear in the report of that case83. In the present appeal, they are restated, and brought up to date, in other reasons84. More detail appears in the description of the matters in contest in the District Court of New South Wales85 and in the Court of Appeal86. It is unnecessary for me to repeat this material. Sufficient additional facts will be stated, as necessary to explain my conclusions. The legislation: Similarly, it is unnecessary for me to repeat the relevant provisions of the Migration Act 1958 (Cth) ("the Act"), as they appeared at the time of each of the detentions. Those provisions, and in particular ss 189, 196 and 501, are stated in other reasons87. I incorporate them by reference. The proceedings below: Following the decision in Re Patterson and his release from detention, Mr Graham Taylor (the respondent) commenced proceedings in the District Court of New South Wales for damages for wrongful imprisonment. The respondent's case had two limbs. First, he brought an action against each of the appellant Ministers, who had cancelled his visa, in relation to the first and second periods of detention. It was conceded below, and uncontested in this Court, that the third appellant, the Commonwealth, was liable 83 (2001) 207 CLR 391 at 421-423 [92]-[97] per McHugh J, 508 [351]-[357] per 84 See reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("joint reasons") at [1]-[5]; reasons of McHugh J at [56]-[63]; reasons of Callinan J at [184]-[189]. 85 See reasons of Callinan J at [190]-[191]. 86 Ruddock v Taylor (2003) 58 NSWLR 269. See reasons of Callinan J at [192]- 87 Joint reasons at [10]-[11]; reasons of McHugh J at [65]-[68]; reasons of Callinan J Kirby to the respondent for any tort of wrongful imprisonment proved by him against the appellant Ministers. Secondly, the respondent brought an action against the Commonwealth on the basis that it was liable for the conduct of the officers who physically effected the detention on both occasions88. To succeed in his action for damages, the respondent needed to make good only one of those arguments. The trial judge accepted both of the arguments89. She awarded the respondent $116,000 in damages. The Court of Appeal upheld this conclusion, on the basis, it appears, of the respondent's first submission only90. That is, the Court found that the appellant Ministers were liable to the respondent in the tort of false imprisonment because they had each caused the respondent's detention and did not have lawful justification for their actions. This therefore rendered the Commonwealth liable. It is from this decision that the appellants now appeal to this Court. As an added complication, after the Court of Appeal handed down its judgment, but before the appeal to this Court was heard, this Court pronounced its decision in Shaw v Minister for Immigration and Multicultural Affairs91. That decision, in my view, overruled the Court's earlier reasoning on the constitutional issue decided in Re Patterson92. However, as I will explain, this conclusion is not fatal to the respondent's case. The overruling of Re Patterson does not alter the orders made in that case. Those orders remain in force, as between the parties and as addressed to the world. They do so notwithstanding the supervening change in legal doctrine93. I shall return to this distinction94. It is critical to the continuing legal rights of the respondent in this appeal. As I shall 88 See Amended Ordinary Statement of Claim, 4 April 2002; cf joint reasons at [3]. 89 Taylor v Ruddock unreported, District Court of New South Wales, 18 December 2002 at [111]-[112], [115] per Murrell DCJ. 90 Ruddock (2003) 58 NSWLR 269 at 274 [12], 278 [40] per Spigelman CJ, 283-284 [72] per Meagher JA, 285 [84] per Ipp JA; cf at 275 [22] per Spigelman CJ, 285 [78]-[79] per Meagher JA. 91 (2003) 78 ALJR 203; 203 ALR 143. 92 Singh v Commonwealth (2004) 78 ALJR 1383 at 1437 [265]; 209 ALR 355 at 430- 93 See Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 656 [67], 661- 662 [80]; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 177-178 [20]-[23], 94 See below these reasons at [171]-[172]. Kirby show, those rights remain, despite the changed exposition of constitutional law in Shaw and in later decisions of this Court that have followed Shaw95. The common ground: Some issues were uncontested before this Court. It is useful to restate them. Chief amongst them are: (1) that the Commonwealth was liable to the respondent for any tort of wrongful imprisonment proved by him against the appellant Ministers; (2) that the Ministers acted as they did in "cancelling" the respondent's visa in the course of the performance of their duties as such; (3) that the detention of the respondent successively by Mr Crighton and Ms Campbell was effected by those members of the Ministers' department and they were "officers" within the meaning of ss 5 and 189 of the Act; (4) that neither of those officers had acted for improper personal motives or maliciously; and (5) that both of the Ministers had acted bona fide in proceeding to "cancel" the respondent's visa, in accordance with the then understanding of the Act as stated in Nolan v Minister for Immigration and Ethnic Affairs96 and in the application of that decision to persons in the class of the respondent97. There are two further issues that should, in my view, be taken to have been correctly decided below. They are (1) that the respondent was not prevented by any principle of issue estoppel98 from later pursuing against the Ministers or the Commonwealth his civil right to damages for wrongful dismissal in the District Court, although he had omitted to make such a claim in the proceedings for constitutional and administrative relief in this Court99; and (2) that there was no substance in the respondent's complaint about the damages awarded to him: a matter that was subject to a cross-appeal in the Court of Appeal but not pursued in this Court100. The appellants submitted that it was essential for the respondent to prove mala fides to recover damages from the Ministers or the Commonwealth. The 95 eg Singh (2004) 78 ALJR 1383; 209 ALR 355. 96 (1988) 165 CLR 178. 97 See reasons of Callinan J at [189]. See also Ruddock (2003) 58 NSWLR 269 at 98 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602-603. 99 Ruddock (2003) 58 NSWLR 269 at 278-279 [43]-[44] per Spigelman CJ, 285 [82] per Meagher JA, 285 [84] per Ipp JA. 100 Ruddock (2003) 58 NSWLR 269 at 279-280 [45]-[56] per Spigelman CJ, 285 [81] per Meagher JA, 285 [84] per Ipp JA. Kirby best authority that could be cited for this proposition was Sullivan v Moody101, a negligence case concerned with the alleged liability of social workers and department officers. I am unpersuaded by this argument. I would reject it as unsupported by authority and inconsistent with the basic principle that, in cases such as this, the Commonwealth and officers of the Commonwealth are in the same position as to their liability to persons such as the respondent as private persons and entities are – no better and no worse102. On this point, I agree with what McHugh J has written103. This brings me to the crux of the appeal. This is whether the respondent could make out his claim against the appellants in the tort of false imprisonment. More specifically, it is whether the fact that, as the law is now revealed104, ss 189 and 501 did apply to the respondent means that his claim must fail in this appeal. The issues The issues for the decision of this Court are straightforward: The liability of the Ministers: Whether the appellant Ministers are liable to the respondent for false imprisonment. That is, whether either or both of the Ministers caused the respondent's imprisonment on the relevant occasion in the requisite sense, and if so, whether the appellant Ministers can rely on one or more provisions of the Act (notably ss 189 and 501) as providing a defence of lawful justification for their actions; and The liability of the officers: Alternatively, whether the judgment against the Commonwealth may be upheld on the basis that the Commonwealth was liable to the respondent through its officers, because s 189 did not operate to protect the officers in circumstances where their respective beliefs or suspicions that the respondent was an unlawful non-citizen were the result of a mistake of law, namely a mistaken belief that the respondent's visa had been lawfully cancelled. The liability of the Ministers in tort A common law action: The respondent's claim was framed in the common law tort of false imprisonment. It was on this basis that the respondent recovered 101 (2001) 207 CLR 562 at 581 [55]-[56]. 102 Judiciary Act 1903 (Cth), s 64. 103 Reasons of McHugh J at [120]-[121]. 104 Following Shaw (2003) 78 ALJR 203; 203 ALR 143. Kirby judgment at trial, subsequently upheld by the Court of Appeal. Unless displaced by statute, it is the law of that tort that governs this appeal. It is open to the Federal Parliament, acting within its heads of power, to abrogate or modify the tort of false imprisonment. It could, for example, do so within the particular context of defined migration decisions. However, such a step would require clear and unambiguous action on the part of the Parliament. In Coco v The Queen, Mason CJ, Brennan, Gaudron and McHugh JJ stated that105: "Statutory authority to engage in what otherwise would be tortious conduct must be clearly expressed in unmistakable and unambiguous language." No argument was advanced by the appellants that the tort of false imprisonment had been abrogated, in whole or in part, by the Act. In my view, the provisions of that Act, including s 189, do not meet the strict standard required to do so106. This is especially so given the fundamental right of individual liberty that the tort protects. The respondent's claim must therefore be approached by the application of the common law, considered in light of any relevant statutory provisions that might have provided a defence to the appellants against the common law action. False imprisonment and executive detention: tort of false imprisonment has a long history107. It is a species of the tort of trespass to the person. It is concerned with direct and intentional forms of harm. It reflects the fundamental interest of the common law in protecting individual liberty and freedom of movement108. As Fullagar J observed in Trobridge v Hardy109: The 105 (1994) 179 CLR 427 at 436. See also Morris v Beardmore [1981] AC 446 at 455; Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 292-293. 106 cf Australian Postal Corporation Act 1989 (Cth), s 34; Superannuation Industry (Supervision) Act 1993 (Cth), s 378; Australian Crime Commission Act 2002 (Cth), s 59B; Banking Act 1959 (Cth), s 70A. 107 See Macpherson v Brown (1975) 12 SASR 184 at 190-191, 203-205; Trindade, "The Modern Tort of False Imprisonment", in Mullany (ed), Torts in the Nineties, 108 See eg Trindade, "The Modern Tort of False Imprisonment", in Mullany (ed), Torts in the Nineties, (1997) 229 at 229. 109 (1955) 94 CLR 147 at 152. See also Ruhani v Director of Police [No 2] [2005] HCA 43 at [63]-[65]. Kirby "The mere interference with the plaintiff's person and liberty constituted prima facie a grave infringement of the most elementary and important of all common law rights." This concern is especially significant in respect of a claim for wrongful imprisonment made against members or officers of the Executive Government. It is a fundamental principle of Australia's constitutional law that the executive may not interfere with the liberty of an individual without valid authorisation. In Re Bolton; Ex parte Beane, Deane J explained110: "The common law of Australia knows no lettre de cachet or executive warrant pursuant to which either citizen or alien can be deprived of his freedom by mere administrative decision or action. Any officer of the Commonwealth Executive who, without judicial warrant, purports to authorize or enforce the detention in custody of another person is acting lawfully only to the extent that his conduct is justified by clear statutory mandate. ... It cannot be too strongly stressed that these basic matters are not the stuff of empty rhetoric. They are the very fabric of the freedom under the law which is the prima facie right of every citizen and alien in this land. They represent a bulwark against tyranny." To similar effect, the House of Lords has described the tort of false imprisonment as one of the "important constitutional safeguards of the liberty of the subject against the executive"111. When a claim for false imprisonment is made in respect of a good faith, but mistaken and unlawful, attempt by an administrative decision-maker to apply the law, courts are forced to choose between two "stark alternatives"112. Should a claim for damages by the individual who has been wrongly detained be upheld? Or should the fact that the detention was effected bona fide, and in reasonable reliance on the law, be held to justify the defendant's conduct, thereby foreclosing liability? Throughout the common law world, the conclusion consistently reached by courts addressing this question is that, in the absence of statutory provisions that clearly afford an immunity or defence to the administrator, the result must individual whose rights have been violated113. favour Wrongful the 110 (1987) 162 CLR 514 at 528-529. 111 R v Governor of Brockhill Prison; Ex parte Evans (No 2) [2001] 2 AC 19 at 43. 112 Cowell v Corrective Services Commission (NSW) (1988) 13 NSWLR 714 at 717. 113 See eg Brockhill [2001] 2 AC 19; Cowell (1988) 13 NSWLR 714. Kirby imprisonment is a tort of strict liability114. Lack of fault, in the sense of absence of bad faith, is irrelevant to the existence of the wrong115. This is because the focus of this civil wrong is on the vindication of liberty and reparation to the victim, rather than upon the presence or absence of moral wrongdoing on the part of the defendant116. A plaintiff who proves that his or her imprisonment was caused by the defendant therefore has a prima facie case. At common law it is the defendant who must then show lawful justification for his or her actions117. The heavy burden placed on the defendant, at least in contrast to some other torts118, is explicable in two senses. First, the onus on the defendant to establish a lawful justification is mitigated to some extent by the fact that a plaintiff must prove that the defendant was a direct cause of the injury119, as well as prove the existence of the requisite intent120. Secondly, as discussed above, 114 Brockhill [2001] 2 AC 19 at 26, 27, 28, 32; cf The Laws of Australia, Title 33, "Torts", Subtitle 33.8, "False Imprisonment" at 81 [96]. 115 Marshall v Watson (1972) 124 CLR 640. Compare the tort of malfeasance in public office, which has bad faith as an element: see Northern Territory v Mengel (1995) 185 CLR 307. See also Eshugbayi Eleko v Government of Nigeria [1931] AC 662 at 670-671 (PC). 116 See Cane, "The Temporal Element in Law", (2001) 117 Law Quarterly Review 5 at 117 Trobridge (1955) 94 CLR 147 at 152; Marshall (1972) 124 CLR 640; Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 at 512; Spautz v Butterworth (1996) 41 NSWLR 1 at 13; Carnegie v Victoria unreported, Full Court of the Supreme Court of Victoria, 14 September 1989; Myer Stores Ltd v Soo [1991] 2 VR 597; Blundell v Attorney-General [1968] NZLR 341; Holroyd v Doncaster (1826) 3 Bing 492 [130 ER 603]; Hicks v Faulkner (1878) 8 QBD 167 at 170 per Hawkins J (affirmed (1882) 46 LT 127 (CA)). 118 Contrast the tort of negligence, in which the plaintiff bears the onus of establishing all of the ingredients of the tort, including establishing a duty of care and proving breach of that duty by the defendant. 119 Myer [1991] 2 VR 597; Spautz (1996) 41 NSWLR 1; Balkin and Davis, Law of Torts, 3rd ed (2004) at 60-61 [3.34]; Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 50; Fleming, The Law of Torts, 9th ed (1998) at 36. See Ruddock (2003) 58 NSWLR 269 at 276 [28]-[30]. 120 The requisite intent is an intention to cause the imprisonment: Williams v Milotin (1957) 97 CLR 465 at 474; McHale v Watson (1964) 111 CLR 384 at 388. See Trindade, "The Modern Tort of False Imprisonment", in Mullany (ed), Torts in the Nineties, (1997) 229 at 235-237. Kirby the principal function of the tort is to provide a remedy for "injury to liberty"121. It is not, as such, to signify fault on the part of the defendant. Damages are awarded to vindicate personal liberty, rather than as compensation for loss per In light of these principles, it is understandable why, if the respondent can show that the Ministers caused his imprisonment on each occasion, each Minister is obliged to point to a clear lawful justification for his or her actions in order to escape liability. It is also understandable why any asserted lawful justification must be strictly scrutinised by this Court. As explained by the House of Lords123: "The defence of justification must be based upon a rigorous application of the principle that the liberty of the subject can be interfered with only upon grounds which a court will uphold as lawful." The Ministers caused the detention: The question of causation, raised by the appellants, can be easily disposed of. I agree with what McHugh J has written on this issue124. Causation is a question of fact. On this factual question, the respondent has concurrent findings in his favour in the courts below. I accept such findings. For the purpose of the tort of wrongful imprisonment, the Ministers, by their successive acts in "cancelling" the respondent's visa, caused, and indeed intended to cause, the respondent's loss of liberty. Such loss of liberty, in the form of "detention" under the Act, was the inevitable consequence of each Minister's act of "cancelling" the respondent's visa under s 501 of the Act125. This was so notwithstanding the interposition of an administrative power belonging to the respective officers who effected the detention. In the words of Meagher JA in the Court of Appeal, the Ministers were "the real cause of that imprisonment"126. 121 Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 302. 122 Balkin and Davis, Law of Torts, 3rd ed (2004) at 62 [3.37]. Contrast the tort of negligence, where damages are awarded to compensate for loss or damage. 123 Brockhill [2001] 2 AC 19 at 35. 124 Reasons of McHugh J at [113]-[118]. 125 See Ruddock (2003) 58 NSWLR 269 at 276 [25]-[29], 277-278 [37] per Spigelman CJ, 283-284 [72] per Meagher JA, 285-286 [84] per Ipp JA. See reasons of Callinan J at [192]. 126 Ruddock (2003) 58 NSWLR 269 at 284 [72]. Kirby In addition, each of the officers acted in accordance with his or her perceived statutory duty, as that duty was understood to apply to persons in the class of the respondent. Because there was no real scope for a separate and different decision by the officers concerned, or either of them, following the ministerial "cancellations" of the respondent's visa rendering him an "unlawful non-citizen"127 (with no other basis to permit him lawfully to remain within Australia), no break in the causal chain was proved to exempt the Ministers from responsibility, in fact and law, for the imprisonment. This was so although the detention was physically effected by the officers concerned128. This is not a case where there was exercised a real and separate discretion or a power to reach a distinct and contrary conclusion. The need for lawful justification: By the common law, to escape liability, the Ministers must therefore show lawful justification for their actions, either under the common law or by statute129. The appellants relied on s 189 of the Migration Act as providing such a defence. The only other provision of the Act that might provide lawful authority for the Ministers' actions is s 501. I will consider each of these sections in turn. Neither, in my view, exempts the appellants from the liability found against them. Section 189 of the Migration Act: Following Shaw, it must now be accepted that s 189 of the Act is (and always was) valid in its application to the respondent130. Yet this is not the end of the matter. Even if it is accepted that, on each occasion, the conduct of the officers in detaining the respondent fell within the ambit of s 189, a further question arises as to whether that section is effective to afford a lawful justification for the anterior conduct of the Ministers. I am not convinced that s 189 has this effect. An application of the principles of statutory construction and consideration of the history and nature of the tort of false imprisonment lead me to this conclusion. 127 cf Goldie v Commonwealth (2002) 117 FCR 566 at 569 [6]. 128 Ruddock (2003) 58 NSWLR 269 at 283-284 [72]; cf Myer [1991] 2 VR 597 at 601, 617, 629 applying Aitken v Bedwell (1827) Mood & M 68 [173 ER 1084]. See also Spautz (1996) 41 NSWLR 1 at 26. The appellants conceded that the Ministers "would have appreciated that detention was likely or perhaps that it would be the natural and probable result" of their actions. 129 Marshall (1972) 124 CLR 640; Myer [1991] 2 VR 597; Holroyd (1826) 3 Bing 492 [130 ER 603]; Washburn v Robertson (1912) 8 DLR 183 (SC Sask). 130 See Singh (2004) 78 ALJR 1383 at 1437 [265], cf at 1412-1413 [127]; 209 ALR Kirby First, s 189 of the Act is directed in its terms to "an officer". "Officer" is defined by s 5 of the Act. The definition does not include a Minister. The appellants did not contend otherwise. Section 189, in fact, says nothing about the powers, duties or responsibilities of the Minister. To overcome this deficiency, the appellants submitted that, where the actual arrest by an officer was authorised by law (as here, by s 189), any person who instigated (or caused) that officer's action could not be liable for false imprisonment. Therefore, it was argued, if s 189 of the Act was valid in its application to the respondent and applied to the conduct of the officers in respect of the contested periods of detention, the Ministers would likewise not be liable for damages. This submission should not be accepted. It conflates the liability of the officers with that of the Ministers. It is contrary to authority. As an examination of the case law reveals, the question posed by the tort of wrongful imprisonment is not the lawfulness of the imprisonment at an abstract level131. What is required is a specific inquiry directed to the lawfulness of the conduct of the alleged tortfeasor. No statutory provisions, whether under the Act or otherwise, abrogate or modify this statement of the law. The tort of wrongful imprisonment contemplates that a person might be liable for damages notwithstanding that another person involved in the imprisonment can prove lawful justification for his or her actions. For example, in Cowell v Corrective Services Commission (NSW)132, a former prisoner brought proceedings for false imprisonment against the Corrective Services Commission of New South Wales and a nominal defendant representing the governor of the prison. The prisoner had been imprisoned for a period longer than was legally authorised. This was the result of miscalculations of the term of imprisonment. The incorrect calculation was based on an understanding of the applicable statute, subsequently overturned by this Court133. Both respondents relied on s 46 of the Prisons Act 1952 (NSW) as providing them with an immunity. That section stated: "No action or claim for damages shall lie against any person for or on account of anything done or commanded to be done by him and purporting to be done for the purpose of carrying out the provisions of this Act, unless it is proved that such act was done or commanded to be done maliciously and without reasonable and probable cause." 131 cf joint reasons at [18], [23]-[24], [28]. 132 (1988) 13 NSWLR 714. 133 Smith v Corrective Services Commission (NSW) (1980) 147 CLR 134. Kirby A majority of the Court of Appeal held that the governor of the prison was protected by s 46. Consequently the prisoner's action against the governor was dismissed134. However, the majority observed that "the unavailability of an action against the governor does not determine the liability of the [Commission] which also relies on s 46"135. Because that section was directed, in its terms, to a "person", it did not apply to protect the Commission136 which, it was held, had directed the continued detention of the prisoner. The prisoner was therefore entitled to succeed against the Commission. The decision in Cowell illustrates two points relevant to the present appeal. First, in considering statutory provisions in this context, courts read any nominated statute strictly, in deference to the high value placed on individual liberty which the tort of wrongful imprisonment helps to defend. Secondly, the fact that one party enjoys a type of statutory immunity for their tortious conduct is not an automatic defence for any other parties involved in the breach. Each party must prove a separate immunity or defence and the onus of doing so is a heavy one. Similar conclusions are also demonstrated by the long line of "police informant" cases. These concern the circumstances in which a person, who gives information to police that leads to a wrongful arrest, will be liable to the person falsely imprisoned for false imprisonment137. The liability of the informant remains open although the police officers concerned may be immune from liability under statutory provisions authorising them to arrest persons on the basis of reasonable suspicion. A clear example of this differentiation is Davidson v Chief Constable of North Wales138. The plaintiff in that case was arrested by police on suspicion of theft after police received information from a store "detective". The plaintiff had not committed any offence. She subsequently brought an action for false imprisonment against the police and the employers of the store detective. The 134 Cowell (1988) 13 NSWLR 714 at 731 per Clarke JA, with whom Priestley JA agreed; cf at 724 per McHugh JA, in dissent. 135 Cowell (1988) 13 NSWLR 714 at 731. 136 Cowell (1988) 13 NSWLR 714 at 739. 137 See eg Dickenson v Waters Ltd (1931) 31 SR (NSW) 593; Blundell [1968] NZLR 341; Myer [1991] 2 VR 597; Davidson v Chief Constable of North Wales [1994] 2 All ER 597. See also Bahner v Marwest Hotel Co Ltd (1969) 6 DLR (3d) 322 (BC 138 [1994] 2 All ER 597. Kirby English Court of Appeal held that the police involved in the arrest and imprisonment were not liable. They were protected by s 24(6) of the Police and Criminal Evidence Act 1984 (UK)139. However, the Court considered separately the liability of the store detective. The outcome ultimately turned on factual questions concerning causation. However, the Court of Appeal was not in doubt that it was necessary to consider the distinct liability of those who initiated the steps leading to imprisonment and those who effected it. This approach is obviously correct in principle. The submission of the appellants, that there is a general principle of law that whoever causes imprisonment cannot be liable if the conduct of the detaining officer is authorised by statute, must be rejected as inconsistent with authority and legal principle. In determining whether s 189 applies to excuse from liability the actions of the Ministers in respect of the respondent, it is also necessary to remember the basic principles of statutory construction which, from the very earliest days of this Court, have insisted that the fundamental rights of the individual may not be invaded by statute unless this is done with "irresistible clearness"140. The strictest approach will apply where rights such as liberty of the person and freedom of movement are in question141. On this basis, the terms of s 189 (which do not mention "a Minister") fall well short of affording the first and second appellants, or either of them, statutory authority to engage in conduct that would otherwise constitute wrongful imprisonment. The Commonwealth can be in no better position. If the Parliament had a purpose to provide the Ministers and the Commonwealth with immunity from a claim of wrongful imprisonment in the context of immigration detention, it might have enacted a specific provision to this effect142. This it did not do. Because of this, and in light of the fundamental right protected by the 139 Davidson [1994] 2 All ER 597 at 600-601, 605. That section provided, in terms similar to s 189, that: "Where a constable has reasonable grounds for suspecting that an arrestable offence has been committed, he may arrest ... anyone whom he has reasonable grounds for suspecting to be guilty of the offence." 140 Potter v Minahan (1908) 7 CLR 277 at 304. See also Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 555 [16], 577 [90], 578 [94]. 141 See eg Nolan v Clifford (1904) 1 CLR 429 at 447 per Griffith CJ. 142 cf Judicial Officers Act 1986 (NSW), s 48; Police Act 1990 (NSW), s 213; Sheriff Act 2005 (NSW), s 15; Police Regulation Act 1958 (Vic), s 123; Police Act 1998 (SA), s 65; Police Powers and Responsibilities Act 2000 (Q), s 193; Police Act 1892 (WA), s 137; Criminal Procedure (Summary) Act 1902 (WA), s 230; Justices Act 1959 (Tas), s 126. Kirby tort and the strict rules of statutory construction that apply when such a right is endangered, immunity for persons other than an "officer", referred to in s 189 of the Act, does not exist. Conclusion: the Ministers cannot rely on s 189: The appellants' submission, that s 189 provided lawful justification for the Ministers' actions sufficient to support a defence against the respondent's claim for wrongful imprisonment, must therefore be rejected. It follows that it is unnecessary to consider the respondent's separate argument that, earlier in the proceedings, the appellants conceded that s 189 could not apply to the Ministers and that they should not be allowed to resile from that concession143. The respondent does not need to rely on that argument. Section 501 and the cancellation decisions: But is an immunity afforded by s 501 of the Act? It was under this section that the decision of each Minister to cancel the respondent's visa was purportedly made. The issue thus arising is whether the Ministers may rely on that section to provide justification in law for their respective actions. Or do the earlier orders of this Court quashing both decisions, made under that section of the Act, prevent the Ministers from doing so in the circumstances of this case? The first period of detention: There were two relevant ministerial decisions. Each of them resulted in a period of detention. The two periods aggregated to the "imprisonment" for which the respondent brought his action in tort. The respondent first commenced proceedings in the original jurisdiction of this Court on 16 March 2000. Pursuant to s 75(v) of the Constitution, he sought a writ of prohibition (he also sought certiorari) on the ground of breach of the requirements of natural justice by the first appellant in deciding to cancel his visa on 4 September 1999 ("the first decision"). By consent, orders absolute for prohibition and certiorari were made by Callinan J on 12 April 2000144. The respondent was then released from detention. However, before his release he had spent 161 days in detention. He complained that this was unlawful and entitled him to damages. Certiorari renders the Minister's decision void: Where a writ of certiorari issues to quash an administrative decision, it operates with retrospective effect. 143 See Ruddock (2003) 58 NSWLR 269 at 275 [23]; cf joint reasons at [32]. 144 See Re Patterson (2001) 207 CLR 391 at 508 [355]. Kirby That is, it operates from the date of the decision itself145. The result of the writ is that the impugned decision has no legal effect146. In the eye of the law the decision is void ab initio147. It follows that the effect of Callinan J's order on 12 April 2000 was to render the first ministerial decision to cancel the respondent's visa under s 501 a legal nullity. Accordingly, in legal terms, the first decision was made without any lawful basis. It was not authorised by s 501. For this reason, the Minister is unable to rely on s 501 as providing a defence of lawful justification to a claim of wrongful imprisonment in respect of the first period of imprisonment, assuming the section otherwise provides such justification. Detention without legal authorisation is unlawful: Two decisions should be mentioned, consistent with this approach. The first is Park Oh Ho v Minister for Immigration and Ethnic Affairs148, a decision of this Court. In that case, following the making of a deportation order by a delegate of the Minister, the appellants were detained under s 39(1) of the Act. That sub-section provided: "Where an order for the deportation of a person is in force, an officer may, without warrant, arrest a person whom he reasonably supposes to be that person, and a person so arrested may, subject to this section, be kept in custody as a deportee in accordance with sub-section (6)." The deportation order in question was subsequently set aside because it was made for an impermissible purpose. One of the issues then arising was whether the period of detention, effected pursuant to the void deportation order, 145 Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 at 277; Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 at 718; R v Industrial Appeals Court; Ex parte Henry Berry & Co (Australasia) Ltd [1955] VLR 156 at 165; R v Muirhead and Bracegirdle; Ex parte Attorney-General [1942] SASR 226; Agua Marga Pty Ltd v Minister for the Interior (1973) 1 ACTR 27 at 40; Calvin v Carr [1980] AC 574; Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed (2004) at 693. 146 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 580, 595. See also Minister for Immigration and Multicultural Affairs v Bhardwaj (2001) 209 CLR 597 at 630-634 [101]-[110]. 147 Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147; Ackroyd v Whitehouse (1985) 2 NSWLR 239 at 249-250; Calvin v Carr [1980] AC 574; Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 at 718. 148 (1989) 167 CLR 637. Kirby was unlawful. Relying on Re Bolton149, this Court unanimously held that because the deportation order had been set aside and was void ab initio, the detention was not authorised by law150. It was, and always had been, unlawful. At the heart of this Court's reasoning in Park Oh Ho was an acceptance that "the voidness of the deportation orders removed the only lawful basis of the appellants' incarceration during the relevant period"151. The detention provision considered by the Court in that case was not identical to s 189, now appearing in the Act. Nevertheless, the Court's reasoning supports the principle that the quashing by a court of an administrative decision that forms the basis for detention has a retrospective effect on the legality of such detention. A similar approach was taken by the House of Lords in R v Governor of Brockhill Prison; Ex parte Evans (No 2)152. That case, like the case of Cowell153 mentioned earlier, concerned a claim of wrongful imprisonment by an applicant who, as the result of an incorrect calculation of her sentence, had been imprisoned beyond her correct release date. The prison governor had calculated the release date on the basis of judicial decisions that were subsequently overturned. Their Lordships rejected the prison governor's argument that lawful justification was to be assessed at the time the detention of the prisoner was effected on the basis of an earlier legal understanding. They held that the ultimate judicial decision, which correctly stated the law, operated with retrospective effect to make the applicant's imprisonment during the excessive period unlawful154. As such, the applicant was entitled to succeed in her claim for wrongful imprisonment. This was so notwithstanding that the governor was "blameless" in any moral sense155. It was so despite the fact that the governor had acted in reliance on the state of the law as earlier expounded by the courts. 149 (1987) 162 CLR 514 at 528-529. 150 Park Oh Ho (1989) 167 CLR 637 at 644. 151 Park Oh Ho (1989) 167 CLR 637 at 645. 153 Cowell (1988) 13 NSWLR 714 was referred to and approved by the House of Lords: see Brockhill [2001] 2 AC 19 at 29. 154 Brockhill [2001] 2 AC 19 at 26-27, 28-29, 32-33. 155 Brockhill [2001] 2 AC 19 at 27. Kirby Conclusion: the respondent succeeds for the first period: It follows that this Court's orders quashing the first decision deprived that decision of any statutory or other legal authority to ground a defence of lawful justification based on s 501 of the Act. The respondent's claim for wrongful imprisonment against the first appellant, in respect of the first period of detention, was therefore correctly upheld by the Court of Appeal. The Commonwealth is liable by its concession, which I accept. No error is shown warranting the intervention of this Court. Nothing that happened subsequently in Re Patterson, or in the later decisions of this Court on the legal questions decided in that case, alters this conclusion. The respondent was, and is, entitled to recover damages for wrongful imprisonment in respect of the first period of detention. Whatever decision is made with respect to the second period of detention, the respondent's entitlements in respect of the first are unassailable. The second period of detention: The respondent submitted that the same reasoning applied to the order in Re Patterson, quashing the decision of the second appellant made on 30 June 2000 to cancel the respondent's visa ("the second decision"). According to the respondent, because of that order, the second decision, too, was a legal nullity. Accordingly, the second appellant could not rely on s 501 as providing lawful authority for the decision. It is here that the complication arises in relation to the second period of detention because of the later decision in Shaw. Does the fact that the ratio decidendi of Re Patterson has been overruled by this Court in Shaw affect the validity or effectiveness of this Court's orders in Re Patterson? In my view it does not. Those orders remain binding and effective notwithstanding the Court's later holding in Shaw. First, the orders of this Court, even if made for reasons later held to have been incorrect, are binding until set aside or permanently stayed156. This principle flows from the constitutional character of the courts mentioned in Ch III of the Constitution, including this Court157, as well as longstanding authority of the common law. Orders of this Court, made in the exercise of its original jurisdiction under the Constitution, represent a final and binding disposition of the matters in a controversy between the parties158. As explained 156 Cameron v Cole (1944) 68 CLR 571 at 590, 598-599, 607; Re Macks (2000) 204 CLR 158 at 177-178 [20]-[23], 185-186 [53], 235-236 [216], 248 [255], 279 [343]. 157 Residual Assco (2000) 202 CLR 629 at 660 [76]; Re Macks (2000) 204 CLR 158 at 158 Constitution, s 75; Judiciary Act 1903 (Cth), s 32; cf Constitution, s 73: "and the judgment of the High Court in all such cases shall be final and conclusive". Kirby in Residual Assco Group Ltd v Spalvins159, finality of litigation is an hypothesis on which Ch III of the Constitution is founded160. The orders in Shaw made no reference to the respondent personally or to the orders made earlier in Re Patterson. The orders in Re Patterson therefore stand. They remain in force. Secondly, the effect of overruling the reasoning in a previous decision of this Court is that the ratio decidendi so overruled will no longer be considered a source of binding legal authority161. However, a distinction must be drawn between a court's reasons for judgment and the judgment (or order) itself. Following overruling, the reasons for judgment are deprived of effect as a legal precedent. However, the validity and effect of the orders are not, as such, affected. Those orders remain enforceable162. They are binding and effective unless further and different orders are made. It is easy to fall into the mistake of confusing the effect of overruling a holding in a case (as happened when Shaw overruled Re Patterson) with overruling or reversing the Court's actual orders and judgment in the earlier case. Accurate analysis requires that the distinction be carefully observed. It is one critical to the claims of the respondent against the first and second appellants and hence the outcome of this appeal. Any other consequence would be inconsistent with the function of a Ch III court to determine, finally and conclusively, matters brought before it163. It would be a "recipe for chaos"164. Particularly so, because it will often be impossible to state with certainty that the reasons for overruling legal doctrine remove any lawful basis for the orders made in the earlier decision. Before a party – or the community – is excused from compliance with the orders of this Court it is necessary for the Court to examine the question and itself set aside, or vary, any orders earlier made, if that course is justified. No person may decide for themselves to ignore orders of this Court or treat them as invalid so long as such orders remain in force. 159 (2000) 202 CLR 629. 160 (2000) 202 CLR 629 at 661 [79]. 161 See Consett Industrial and Provident Society v Consett Iron Co [1922] 2 Ch 135 at 162 Judiciary Act 1903 (Cth), s 77M, s 31, s 2 (definition of "judgment"); High Court Rules 2004, Pt 10. 163 Residual Assco (2000) 202 CLR 629 at 656-660 [68]-[76], 661-662 [79]-[80]. 164 See M v Home Office [1992] QB 270 at 299; Residual Assco (2000) 202 CLR 629 Kirby In any event, there were two bases for the orders that this Court made in Re Patterson. One was the constitutional reasoning that has subsequently been overturned in Shaw. The other was a second basis supported by a majority of the Court165. This was that the second decision was infected by a separate jurisdictional error. That basis for the orders in Re Patterson has never been overruled. It follows that there remains a lawful, indeed unquestioned, legal foundation for those orders, notwithstanding the decision in Shaw. The orders in Re Patterson, in their entirety, remain binding and effective. They were made within the jurisdiction and authority of this Court. They were made pursuant to this Court's constitutional function166. They must therefore be given full force and effect. It is the duty of this Court to uphold them when called upon to do so. It will sometimes be open to a party to apply for additional orders or remedies as may be appropriate in the light of a restatement of the law in a later case167. The power of this Court to reopen its judgments or orders is well established168. It is a power exercised in exceptional cases only. Particular restraint is observed where orders have been finally entered169. However, unless and until a correction or variation of this Court's orders occurs, those orders remain valid and effective. This is no less so because the reasons, or some of the reasons, that sustained those orders may have been subsequently overruled in later decisions of this Court. Conclusion: the respondent succeeds for the second period: From the foregoing analysis it is clear that the second decision was of no legal effect when made. The second appellant cannot rely on s 501 as providing authority for her conduct. The respondent was therefore also entitled to succeed in his claim for damages for wrongful imprisonment with respect to the second period of 165 Gleeson CJ, Gaudron, Gummow and Hayne JJ and myself. 166 Constitution, s 75(v). 167 cf British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 168 Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302; De L v Director- General, NSW Department of Community Services [No 2] (1997) 190 CLR 207 at 169 State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38; Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 308, 317; De L v Director-General, NSW Department of Community Services [No 2] (1997) 190 CLR 207 at 216. See also In re Harrison's Share Under a Settlement [1955] Ch 260, where orders were set aside following a decision of the House of Lords which overruled authorities on the basis of which the orders had been made. Kirby detention. The Court of Appeal was correct to so hold. Nothing in the decisions of this Court since Re Patterson alters that conclusion. The liability of the officers Section 189 does not provide a defence: The foregoing conclusions are strictly enough to dispose of this appeal in the respondent's favour. However, I will make some brief observations on the respondent's alternative submission that s 189 does not operate in circumstances where the suspicion of the officer is infected by an error of law. Constitutional error is not reasonable: Had the authority of this Court on the constitutional question decided in Re Patterson been maintained, and not overruled by Shaw, I would have rejected the possibility that the officers who detained the respondent could shelter behind provisions such as s 189 of the Act, claiming to have had a reasonable suspicion that the respondent was an "unlawful non-citizen". If such a status were rejected, as a matter of law, any belief on the officers' parts could not amount to a reasonable belief. No other approach would suffice to uphold the Constitution, to vindicate constitutional rights, to ensure the observance of the basic law by public officials, including Ministers, and to discourage unlawful detention, arrest and other deprivations of liberty170. In short, a provision such as s 189 could not have effect to contradict the Constitution. I would hesitate to embrace a legal doctrine that expanded official powers of detention, arrest or otherwise to deprive persons of liberty sourced not to a constitutional head of power but to opinions, beliefs or suspicions (reasonable or otherwise) of public officials. Where the Constitution denies a power to act, I would, like McHugh J in Coleman v Power171, resist the notion that it is permissible for the legislature to expand such a power on a footing so potentially personal, ephemeral and insubstantial. In my opinion this Court should not enlarge the scope of protected official detention, any more than it already has in its recent decisions172. 170 cf Trobridge (1955) 94 CLR 147 at 152 per Fullagar J. 171 (2004) 78 ALJR 1166 at 1192-1193 [142]-[143]; 209 ALR 182 at 217-218. 172 See eg Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs (2004) 78 ALJR 1056; 208 ALR 271 and Al-Kateb v Godwin (2004) 78 ALJR 1099; 208 ALR 124; cf Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 32; Rasul v Bush 159 L Ed 2d 548 at 562-563 (2004); A v Secretary of State for the Home Department [2005] 2 AC 68. Kirby Reasonable suspicion and mistake of law: Given that the authority of Re Patterson has been overruled in this respect by Shaw, and that I have accepted that the decision prevails until later enlightenment173, the respondent cannot rely, in this case, on an argument which excludes a constitutional error from the ambit of "reasonable suspicion" in s 189. However, I agree with McHugh J, for the reasons that he gives, that the respondent's alternative argument, that s 189 does not operate to protect against an error of law, should be accepted174. A "reasonable suspicion" within the meaning of s 189 does not cover a suspicion which is based on a mistake as to the legal validity of a ministerial decision. In this respect, the distinction between a provision that empowers or authorises a person to detain another (like s 189) and one that provides an immunity from liability, is critical. The reasons of Dixon J in Little v The Commonwealth on this issue are apposite175. This is a point that distinguishes the present case from Coleman176. That distinction warrants a different conclusion in this case. In addition, as I explained earlier in these reasons (and as McHugh J also observes), basic principles of statutory construction protective of fundamental rights and freedoms dictate that a section which purports to empower the Executive Government to deprive a person of his or her liberty must be strictly construed177. That construction, in this case, denies the officers of the Department, in detaining the respondent pursuant to a mistake of law, a statutory defence to the tort of false imprisonment. Conclusion and orders The respondent's claim for wrongful imprisonment against the appellants was therefore entitled to succeed. The appellant Ministers, by their purported decisions under s 501 of the Act, caused the respondent's detention on both occasions. Because of the orders of the Full Court of this Court in Re Patterson and earlier of Callinan J acting by consent, together quashing those decisions, neither Minister is entitled to rely on the Act as affording a defence of lawful 173 Singh (2004) 78 ALJR 1383 at 1437 [265]; 209 ALR 355 at 430-431. 174 Reasons of McHugh J at [101]-[110]. 175 (1947) 75 CLR 94 at 108; see reasons of McHugh J at [102]-[104]. 176 (2004) 78 ALJR 1166 at 1214 [263]-[264]; 209 ALR 182 at 248-249. In addition, the policy considerations relevant to the exercise of police powers of arrest and detention, mentioned by me in Coleman, do not apply to the regime of mandatory detention in the migration context. 177 See above these reasons at [135], [154]; reasons of McHugh J at [90], [106]. Kirby justification. The orders and judgment of this Court in Re Patterson remain valid and binding until set aside. They do so despite later decisions of this Court overruling part of the reasons that led to them. The respondent was, and is, entitled to succeed. No statutory provision displaces the application of the common law in this case or requires a different result. The Court of Appeal was correct to hold that the respondent had established his entitlement to the damages recovered for wrongful imprisonment. The appeal should be dismissed with costs. Callinan CALLINAN J. The ultimate question in this appeal is whether the appellants can resist a claim in tort for the wrongful imprisonment of the respondent on two separate occasions, on the asserted basis that at the time of the detentions, the appellants wrongly, but mistakenly, considered him to be an unlawful non-citizen for the purposes of s 189 of the Migration Act 1958 (Cth) ("the Act"), and therefore liable to deportation. The substantial issue is however of statutory interpretation, including whether, for the purposes of the provision in question, a "suspicion" based on a genuine misapprehension of the law, cannot, on that account, be a reasonable one. Facts The respondent was born in England on 26 September 1959 and migrated to Australia with his family when he was 7 years old178. He was granted a Transitional (Permanent) Visa on 1 September 1994. On 7 February 1996, he was convicted under the Crimes Act 1900 (NSW) for sexual offences involving young boys, and was sentenced to a term of imprisonment. On 4 September 1999, following the respondent's release from prison, the first appellant, who was then Minister for Immigration and Multicultural Affairs, cancelled the respondent's visa under s 501 of the Act on "character grounds". Acting under s 189 of the Act, Mr Crighton, an officer of the Department of Immigration and Multicultural Affairs ("the Department"), detained the respondent on 4 November 1999. He had earlier been provided with a file containing a copy of the minute recording the first appellant's decision to cancel the respondent's visa. The respondent was kept in detention from that date until 12 April 2000, when he was released on the making of consent orders by this Court. The orders included certiorari quashing the cancellation of the respondent's visa, and prohibition of any further action to give effect to that cancellation. On 30 June 2000 the respondent's visa was again cancelled, this time by the second appellant acting as the Minister179 pursuant to the power conferred under s 501 of the Act. On 6 July 2000, Ms Campbell, an officer of the Department, took the respondent into detention acting under s 189 of the Act. She too had earlier been provided with a copy of the minute recording the second 178 The circumstances of the respondent's migration to, and residence in Australia are referred to in Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 508 [351]- 179 The second appellant was the Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs: see Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 401 [9]-[10] per Gleeson CJ, 404 [21] per Gaudron J. Callinan appellant's decision to cancel the respondent's visa. The respondent remained in detention until 7 December 2000 when orders in his favour were made in contested proceedings in this Court in Re Patterson; Ex parte Taylor. The orders made were similar to the orders earlier made by consent. After the decision in Ex parte Taylor, the respondent sued for damages in the District Court of New South Wales for wrongful imprisonment. He alleged that the first and second appellants were jointly and severally responsible for that imprisonment. That the first and second appellants had been acting in the course of their duty and that the Commonwealth, the third appellant, would be vicariously liable for each of them, were not in dispute at the trial. There, the appellants argued that the respondent's detention had been effected on each occasion by an "officer" acting lawfully upon the basis of a reasonable suspicion within the meaning of s 189 of the Act. It was not contended that Mr Crighton and Ms Campbell were not "officers" as defined by the Act, or acted improperly or maliciously. It was also conceded by the respondent, at least in the Court of Appeal, that the first and second appellants had been acting bona fide in making the respective decisions to cancel the respondent's visa. Decision of the trial judge The trial judge, Murrell DCJ, allowed the respondent's claim, and awarded him $116,000 in damages. Her Honour accepted that the first and second appellants actively caused, or promoted, and were therefore liable for the wrongful imprisonment of the respondent. Her Honour found: "When the first and second [appellants] decided to cancel his visa, the [respondent] immediately became an apparent 'unlawful non-citizen' by virtue of s 15 of the Act. The actions of Mr Crighton and Ms Campbell could only occur because of the cancellation decisions. The inevitable consequence of communicating the cancellation decisions to DIMIA officers was that those officers would act in accordance with their perceived statutory duty and would detain the [respondent]. The conduct of the first and second [appellants] in cancelling the [respondent's] visa is analogous to the magistrate's issue of a warrant in Spautz180. Just as the arresting police officer in Spautz exercised some independent judgment in determining to arrest the plaintiff (eg a judgment 180 Spautz v Butterworth (1996) 41 NSWLR 1. Callinan that the [respondent] was the person named in the warrant and that the warrant was current), so Mr Crighton and Ms Campbell exercised judgment under s 189 of the Act. However, in each case, the police officer/DIMIA officer was essentially engaged in a checking process, which, all else being equal, would have the inevitable consequence that the [respondent] would be arrested/detained. There was no scope for the exercise of a discretion to alter the intended outcome of the original and critical administrative decision." The trial judge was of the view that Ex parte Taylor established that ss 189 and 196 of the Act could not apply to the respondent. Her Honour said that if the aliens power did not support s 501 of the Act insofar as that section purports to apply to a person who is neither an alien nor an Australian citizen, the aliens power could not support ss 189 and 196 insofar as they purported to apply to such a person. Her Honour said: "The legal situation is that, at the time that the s 189 decisions were made, there was no visa cancellation, the [respondent] had not become an unlawful non-citizen by reason of a visa cancellation, and there was no justification for detaining him under s 189." The trial judge also found that any mistake made by the officers of the Department who arrested the respondent was a mistake of law, rather than a mistake of fact, and that s 189 did not operate to protect them against the consequences of a mistake of law. The Court of Appeal The Court of Appeal (Spigelman CJ, Meagher JA and Ipp JA) rejected an appeal by the appellants181. Spigelman CJ was of the view that the scheme of the Act was "self-executing"182; that is, that once a decision to cancel a visa is made, the Act operates automatically so that detention of the person whose visa is cancelled will be an "inevitable consequence" of the decision183. His Honour accepted that the effect of Ex parte Taylor was to render s 189 inapplicable to the respondent184. His Honour said185: 181 Ruddock v Taylor (2003) 58 NSWLR 269. 182 (2003) 58 NSWLR 269 at 274 [12]. 183 (2003) 58 NSWLR 269 at 276 [27]. 184 (2003) 58 NSWLR 269 at 274 [15]. 185 (2003) 58 NSWLR 269 at 275 [18]. Callinan "When the High Court quashed the cancellation decision on the basis that the power to cancel could not constitutionally apply to the respondent, it necessarily decided that any other direct consequence of the cancellation could not constitutionally apply to him. In the circumstances of this case, and in the context of the specific statute under consideration, detention was such a direct consequence." The Chief Justice's opinion was that the first and second appellants intended the consequence (detention of the respondent) of their actions (cancelling the respondent's visa). His Honour said186: "There can be no doubt that [the first and second appellants] had an intention that the respondent be removed from Australia. That was the very point of the decision to cancel the visa and whether or not that should occur was the substance of the departmental paper before each Minister. Detention was an inevitable step brought about by the self-executing operation of the statute, of which the Ministers must have been aware." Spigelman CJ agreed with Meagher JA in rejecting the appellants' submission that the respondent was estopped from pursuing his claim for wrongful imprisonment because he did not raise it in Ex parte Taylor. His Honour also rejected an appeal and a cross-appeal on the issue of damages. Meagher JA too was of the view that the respondent's detention was the inevitable consequence of the first and second appellants' decisions to cancel the respondent's visa. His Honour said187: "By cancelling the visa, the [first and second appellants] immediately exposed [the respondent] as an apparent 'unlawful non-citizen' within the meaning of s 189, triggering an obligation to detain; they caused the detention, knowing their actions would lead to that result and could not lead to any other result. The [first and second appellants] did not 'actively promote' the detention, and perhaps did not 'participate' in it188. However they were the real cause of that imprisonment, and its proximate cause." Meagher JA was of the opinion that the officers of the Department had a "reasonable suspicion" that the respondent was an "unlawful non-citizen" but that 186 (2003) 58 NSWLR 269 at 277-278 [37]. 187 (2003) 58 NSWLR 269 at 283-284 [72]. 188 See Myer Stores Ltd v Soo [1991] 2 VR 597. Callinan the suspicion depended upon a misapprehension, that is, a mistake of law189. A mistake of law, according to his Honour, could ground a "reasonable suspicion", but even so the appellants should fail. Ipp JA, in a separate judgment agreed with the reasons and orders of Spigelman CJ and Meagher JA, adding some observations of his own with respect to the necessity of the existence of a connexion between the first and second appellants' actions and the respondent's imprisonment. The appeal to this Court The appellants' Notice of Appeal lists four grounds of appeal. "(a) The Court of Appeal erred in finding that the decision of each of Mr Ruddock and Senator Patterson, acting as Minister for Immigration and Multicultural Affairs, to cancel the respondent's visa: met the element of 'directness' or was the proximate cause of the respondent's detention; and/or involved an intention to detain the respondent; and/or (iii) rendered each Minister liable for wrongful imprisonment with respect to the subsequent detention of the respondent. The Court of Appeal ought to have found that the Migration Act 1958 delineates between decisions to cancel visas and decisions to detain and that a bona fide exercise of the power to cancel a visa under section 501, subsequently found to be beyond power, does not render the Minister personally liable for any imprisonment resulting from a separate exercise of power by an 'officer' under section 189 based on reasonable suspicion that the person whose visa has purportedly been cancelled is an 'unlawful non-citizen'. (c) The Court of Appeal erred in finding that Re Patterson; Ex parte Taylor decided that the detention provisions of the Migration Act 1958 did not apply to the respondent as a person who an officer reasonably suspected of being an unlawful non-citizen. Re Patterson; Ex parte Taylor was wrongly decided." 189 (2003) 58 NSWLR 269 at 284 [74]-[75]. Callinan Appellants' submissions The appellants made a number of submissions which I will briefly summarize. But as will appear, it is necessary to deal fully with one only of them, that is, that the respondent's detentions were not unlawful: they were authorized by s 189 of the Act because the officers who detained him on each occasion held the requisite reasonable suspicion for which the section provides, that the respondent was an unlawful non-citizen in the migration zone. The appellants submitted that the decision of this Court in Ex parte Taylor did not in some way, retrospectively render the respondent's earlier detentions unlawful or the first and second appellants liable for effecting the detentions, because, at all relevant times, they reasonably suspected the respondent to be an unlawful non- citizen. Something will also however need to be said about the appellants' submission that the respondent was an alien at the time when he was detained, by reason of the subsequent decision in Shaw v Minister for Immigration and Multicultural Affairs190. The appellants contended that the suspicion held by the officers who detained the respondent (the holding of which was not challenged) was reasonable and could not be affected or altered by the subsequent determinations that the decisions to cancel the respondent's visa may have involved jurisdictional error. The appellants argued that Ex parte Taylor does not affect the application of s 189 to the respondent because that decision was wholly concerned with the purported operation of s 501 of the Act upon the respondent. The appellants submitted that merely because the respondent could not be removed from Australia pursuant to s 501 did not necessarily mean that the respondent could not be detained pursuant to s 189. As to any constitutional challenge to s 189 of the Act, the appellants submitted that a law may still be constitutionally valid even if its operation depends upon a reasonable suspicion that a state of affairs is within Commonwealth legislative power. Accordingly, s 189 is constitutionally valid to the extent that it permits detention of persons who may not be unlawful non- citizens, because its operation depends upon the holding by the officer of a reasonable suspicion that the relevant person is an unlawful non-citizen. That sometimes the suspicion may turn out to be well-founded, and sometimes not, is not to the point. The appellants next submitted that the reasoning of the Court of Appeal, to the extent that it relied upon Ex parte Taylor as authority for the proposition 190 (2003) 78 ALJR 203; 203 ALR 143. Callinan that s 189 had no application to the respondent, cannot be correct in light of the Court's decision in Shaw. Finally the appellants submitted that an action for damages for the tort of wrongful imprisonment cannot lie against a Minister when an officer, holding a reasonable suspicion that a person is an unlawful non-citizen within the migration zone, detains that person under s 189 of the Act, following a bona fide decision by the Minister to cancel a visa, and the Minister's decision is subsequently determined to involve jurisdictional error. Respondent's submissions The respondent submitted that his detentions were unlawful on the basis that the provisions of the Act which were said to authorize them could not constitutionally apply to him as a result of the decision of this Court in Ex parte Taylor. He also submitted that the appellants are liable for his detentions because they were the direct and proximate cause of them; the arrests and detentions were not the product of independent decisions taken by the officers, but rather an automatic consequence of the first and second appellants' decisions to cancel the respondent's visa pursuant to the Act. The respondent also submitted that the appellants are not "protected" by s 189 of the Act, and are not relieved of liability on the basis that the officers reasonably suspected that the respondent was an unlawful non-citizen in the migration zone. He relied upon what was said in the Court of Appeal, that a mistake of law cannot ground a reasonable suspicion. The statutory scheme At the time of the decisions to cancel the respondent's visa, s 501 of the Act enabled the Minister to cancel a visa if a person did not satisfy the character test. "501 Refusal or cancellation of visa on character grounds Decision of Minister or delegate – natural justice applies The Minister may cancel a visa that has been granted to a person if: the Minister reasonably suspects that the person does not pass the character test; and the person does not satisfy the Minister that the person passes the character test. Callinan Decision of Minister – natural justice does not apply The Minister may: cancel a visa that has been granted to a person; the Minister reasonably suspects that the person does not pass the character test; and the Minister is satisfied that the refusal or cancellation is in the national interest. Character test For the purposes of this section, a person does not pass the character test if: the person has a substantial criminal record (as defined by subsection (7)); or Substantial criminal record For the purposes of the character test, a person has a substantial criminal record if: the person has been sentenced to a term of imprisonment of 12 months or more; or the person has been sentenced to 2 or more terms of imprisonment (whether on one or more occasions), where the total of those terms is 2 years or more ..." By the operation of s 15, the respondent became an unlawful non-citizen upon cancellation of his visa. "15 Effect of cancellation of visa on status To avoid doubt, subject to subsection 13(2) (certain inhabitants of protected zone), if a visa is cancelled its former holder, if in the Callinan migration zone, becomes, on the cancellation, an unlawful non- citizen unless, immediately after the cancellation, the former holder holds another visa that is in effect." Section 14 defined an unlawful non-citizen as follows: "14 Unlawful non-citizens (1) A non-citizen in the migration zone who is not a lawful non-citizen is an unlawful non-citizen. On each occasion that the respondent was detained, s 189 required an officer to detain a person whom the officer knew or reasonably suspected to be an unlawful non-citizen. That section relevantly provided: "189 Detention of unlawful non-citizens If an officer knows or reasonably suspects that a person in the migration zone is an unlawful non-citizen, the officer must detain the person. If an officer reasonably suspects that a person in Australia but outside the migration zone: is seeking to enter the migration zone; and (b) would, if in the migration zone, be an unlawful non-citizen; the officer must detain the person." Section 191 also provided: "191 End of certain detention A person detained because of section 190 must be released from immigration detention if: the person gives evidence of his or her identity and Australian citizenship; or an officer knows or reasonably believes that the person is an Australian citizen; or the person complies with section 166 and either: Callinan shows an officer evidence of being a lawful non- citizen; or is granted a visa." Section 196 provided that an unlawful non-citizen was not to be released from detention unless he or she was granted a visa. "196 Period of detention (1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until he or she is: removed from Australia under section 198 or 199; or deported under section 200; or granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than for removal or deportation) unless the non-citizen has been granted a visa." Section 5 relevantly provided as follows: Interpretation In this Act, unless the contrary intention appears: detain means: take into immigration detention; or keep, or cause to be kept, in immigration detention; and includes taking such action and using such force as are reasonably necessary to do so. Callinan migration zone means the area consisting of the States, the Territories, Australian resource installations and Australian sea installations ... non-citizen means a person who is not an Australian citizen." The case law from time to time In Nolan v Minister for Immigration and Ethnic Affairs191, six members of the Court192 confirmed the proposition stated by Gibbs CJ (with whom Mason and Wilson JJ agreed) in Pochi v Macphee193 that a person born outside of Australia, whose parents are not Australians, and who has not been naturalized as an Australian, is an alien for the purposes of the Constitution194. The Court also held that a person who was a British subject by birth, or a subject of the Queen by reason of birth in another country, but whose parents were not Australian, and who had not become a citizen of Australia could be classified as an alien for the purposes of the Constitution195. This Court, by a narrow majority overruled Nolan in Ex parte Taylor. The prosecutor in that case is the present respondent. In Ex parte Taylor, the four Justices in the majority (Gaudron, McHugh, Kirby and Callinan JJ) found that the constitutional power of the Commonwealth did not extend to the making of a law that could render the prosecutor liable to deportation pursuant to s 501 of the Act. Gaudron J held that the provisions of the Act relating to detention and removal did not apply to the prosecutor. Her Honour said196: "A law providing for the detention otherwise than upon conviction for a criminal offence and for the compulsory removal from Australia of persons who have been integrated into the Australian community cannot be supported as a law with respect to immigration and emigration ... It follows, therefore, that the provisions of the Act providing for the 191 (1988) 165 CLR 178. 192 Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ. 193 (1982) 151 CLR 101 at 109-110. 194 (1988) 165 CLR 178 at 185. 195 (1988) 165 CLR 178 at 184. 196 (2001) 207 CLR 391 at 412-413 [52]. Callinan detention and removal of prohibited non-citizens from Australia are valid only in their application to non-citizens who are also aliens." Despite granting an order for prohibition, Gaudron J would have declined to grant an order that the decision of the Minister be quashed. Her Honour said197: "Although the power to legislate with respect to immigration does not extend to laws for the detention and removal of persons who have been integrated into the Australian community, there is no reason, in my view, why that power does not enable the Parliament to legislate so as to provide for the conferral of visas on persons who have migrated to Australia. Nor in my view, is there any reason why, having legislated to confer visas on such persons, the Parliament cannot legislate to provide for their cancellation. That being so, s 501(3) is not, in my view, invalid and certiorari does not lie to quash the Parliamentary Secretary's decision on that account." McHugh J, with whom I agreed on the point, was of the view that a person who is a subject of the Queen for the purpose of the Constitution cannot also be an alien under it198. His Honour said199: "Until the commencement of [the Royal Style and Titles Act 1973 (Cth)] – and maybe later – all British subjects resident in Australia, whether born here or overseas, owed their allegiance to the Queen of the United Kingdom. That being so, those British subjects, born in the United Kingdom, who were living in Australia at the commencement of the Royal Style and Titles Act 1973 became subjects of the Queen of Australia as well as subjects of the Queen of the United Kingdom. Accordingly, they were not and did not subsequently become aliens within the meaning of s 51(xix) of the Constitution. The prosecutor migrated from the United Kingdom to Australia in 1966 and has lived here ever since. He is therefore a subject of the Queen of Australia, not an alien. Neither the Minister nor the Parliamentary Secretary had the power to deport him because s 501 of the Migration Act cannot constitutionally apply to him." 197 (2001) 207 CLR 391 at 413 [54]. 198 (2001) 207 CLR 391 at 435 [132]. 199 (2001) 207 CLR 391 at 436-437 [135]-[136]. Callinan Kirby J was of the view that the decision of the Minister to cancel the prosecutor's visa rested on a statutory provision that was beyond power because s 501(3) of the Act could have no application to the prosecutor200. His Honour's view, with which I also agreed, rested on the premise that the prosecutor was not an alien for the purpose of the Constitution because he was a British subject (a member accordingly of a class of persons not traditionally regarded as aliens) and had been absorbed into the Australian community. At the time of the first and second appellants' decisions to cancel the respondent's visa, the law was as stated in Nolan, and upon which it may fairly be assumed the first and second appellants proceeded. There has since however been another shift in the law, again by a narrow margin, in Shaw in which the majority (Gleeson CJ, Gummow, Hayne and Heydon JJ) held that Ex parte Taylor should not be followed. The practical result was the restoration of the legal position as it was held to be in Nolan. Disposition of the appeal It is of course always unfortunate when courts propound a different, particularly a radically different, principle of law, or interpretation of the Constitution from that which until then has been taken to be settled. Because courts cannot treat conduct and actions taken, or defences entered to them, before the new statement of the law, transitionally, as if the subsequent different legal view were not to apply to them, great inconvenience, uncertainty and hardship may be caused by shifts in judicial opinion and decisions201 of which this case is an example. In Kleinwort Benson Ltd v Lincoln City Council202, a case directly concerned with a mistake of law, Lord Browne-Wilkinson (dissenting) went so far as to say, in effect, that for some purposes, the fiction that the law has not been changed by a judicial decision should be seen as that, a pure fiction and should therefore be disregarded for the purposes of assessing the legal quality of conduct before the change. His Lordship said203: 200 (2001) 207 CLR 391 at 497 [318]. 201 Astley v Austrust Ltd (1999) 197 CLR 1 at 57-58 [158]; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 104-105 [164]; Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269 at 315-316 202 [1999] 2 AC 349 at 358-359. 203 [1999] 2 AC 349 at 359. Callinan "If that [transitional application of the law] be true of statutory legislation, the same must a fortiori be true of judicial decision. In my judgment, therefore, if a man has made a payment on an understanding of the law which was correct as the law stood at the date of such payment he has not made that payment under a mistake of law if the law is subsequently changed." As attractive as his Lordship's reasoning and conclusion are, they no more represent the law, as harsh or unfair as its operation may on occasions be, in this country than they do in England, Wales and Northern Ireland. It follows that this appeal must be approached upon the basis, despite the different decisions of this Court, to which I have referred, that the mistake that was made by the first and second appellants, was a mistake of law (if only so by reason of the subsequent decision in the respondent's case in this Court), no matter how well-founded in law at the time the relevant belief, and therefore the suspicion of each of the appellants was. At the time of each of the first and second appellants' decisions to cancel the visa, there was every reason to rely upon the decision in Nolan, and there can be no doubt that they in fact did so. The appellants' submission that they are not liable for the respondent's detention by reason of s 189 is correct. Section 189 has these features. It is directed to officers, in practice, officials of the Department. By referring to an "officer" in the way that it does, it contemplates the imposition of an obligation upon any officer holding the relevant reasonable suspicion, to act to detain. A person so detained may, pursuant to s 191, continue to be detained until the occurrence of one or more of the events referred to in that section, none of which is relevant here. The reasonable suspicion is a reasonable suspicion at large. There is nothing in the Act to suggest that a distinction may or must be made between a reasonable suspicion founded on a reasonable, but mistaken view of the relevant law, and one founded upon a reasonable but mistaken view of the relevant facts. It is simply impossible to say here that the understanding and belief of the first and second appellants and the Departmental officers involved, with respect to the relevant law, and, in consequence, the respondent's suspected status as an alien, and the consequential right, indeed obligation, to detain the respondent, was unreasonable. Throughout the period from the respondent's first detention until the moment that this Court published its decision in Ex parte Taylor, the decision in Nolan stood and was binding on everyone capable of being affected by it. Callinan The reliance in the courts below, and by the respondent here, on the decision of Dixon J in Little v The Commonwealth204 is misplaced. It does not in my opinion have anything conclusive to say about, or indeed of much relevance to a provision such as s 189 of the Act. In that case, his Honour said this205: "Protective provisions requiring notice of action, limiting the time within which actions may be brought or otherwise restricting or qualifying rights of action have long been common in statutes affecting persons or bodies discharging public duties or exercising authorities or powers of a public nature. In provisions of this kind it is common to find such expressions as 'act done in pursuance of this section' or 'statute,' 'anything done in execution of this statute' or 'of the powers or authorities' given by a statute, or 'under and by virtue of' a statutory provision. Such enactments have always been construed as giving protection, not where the provisions of the statute have been followed, for then protection would be unnecessary, but where an illegality has been committed by a person honestly acting in the supposed course of the duties or authorities arising from the enactment." What his Honour was doing was construing a protective provision of a familiar, but quite different kind from s 189 of the Act. He was not required to consider and accordingly had nothing to say about the effect and reach of such a provision as s 189. His Honour did not say that there were not other forms of provisions which would have the effect of justifying or excusing, or, as here, requiring persons to act in certain ways in certain circumstances. His Honour certainly did not hold that a mistake of law could not found a reasonable belief or suspicion, or that an enactment could not both alter the relevant common law, and provide an excuse or justification, or perhaps more accurately, create an obligation for certain persons to undertake a particular course. The respondent's primary response is that by final and conclusive orders of this Court, twice made, the first and second appellants' cancellations of the respondent's visa were quashed because the cancellations were unlawful. In consequence, the respondent's visa was legally extant at all times. And whilst the visa was extant, the respondent could not be regarded as, and was not an unlawful non-citizen liable to detention and deportation. It does not matter, indeed it is irrelevant, that Nolan and Shaw may have been to a different effect from Ex parte Taylor, or that Ex parte Taylor itself may now be regarded as having been wrongly decided. The orders for certiorari, having been duly made, cannot now be treated as not having been made, either in consequence of the 204 (1947) 75 CLR 94. 205 (1947) 75 CLR 94 at 108. Callinan decision in Shaw, or otherwise, and produce the irreversible result that throughout the period of detention, the respondent was not an unlawful non- citizen and should have been free. This is so, even if the application of Shaw would have produced a different result: this Court's orders are inviolate. These arguments fail however to come to grips with the language of s 189. The section does not require for its operation that persons act under it only upon the basis that they know and correctly understand in absolute terms all of the relevant facts and law. All it requires for its operation is that persons acting under it, hold a reasonable suspicion of a particular state of affairs, that is, that the person in question is an unlawful non-citizen. And as to that, the evidence and inferences from it are all one way, and in the appellants' favour. It can be seen therefore that much of the argument in the courts below was advanced with insufficient attention to the language of the Act and missed the point. True it may be, with hindsight, that the respondent can be seen to have been detained upon a basis that has turned out to be erroneous, but the basis was nonetheless a lawful one, because it did not require for its lawfulness, absolute certitude of the precise legal status of the respondent. In this regard, the respondent's position is not unique. Many people, who subsequently are acquitted of criminal charges are lawfully held in detention without bail pending that event, upon the basis of reasonable suspicions and available evidence as to possible guilt. The analogy is not of course a complete one. Aliens are not criminals, and appropriately, s 191 of the Act is directed to their release from detention if officers have mistaken their true status once evidence is available as to that status. The notion, that conduct based upon a mistake of law cannot be regarded as reasonable is patently absurd. Almost daily the courts assess, and often find such conduct to be reasonable. The trilogy of cases, including the respondent's earlier case in this Court, demonstrate just how uncertain the law, and therefore the outcome of cases, can be. Indeed mistake of law can now of itself found a claim for recovery of money or property206. What I have said so far really disposes of all of the respondent's other arguments except as to an estoppel, and the constitutionality of s 189. It may readily be accepted that there was a connexion between the first and second appellants' decisions, and the arrest and detention of the respondent by officers of the Department. The former led inevitably to the latter. The officers personally may have known little of the law, but could not be regarded as having acted improperly in proceeding upon the basis that the first and second appellants 206 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; see also Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 358-359. Callinan either knew, or had a reasonable suspicion about the respondent's status as an alien, which provided them with a basis for the raising of a sufficient, that is, a reasonable suspicion in their own minds. The decision in this Court in the respondent's own case does not provide a basis for some kind of plea in estoppel against the appellants. The fact that after the event, the detentions, a decision was made in his favour, has nothing to say about the matters leading to his detentions and the states of mind of the persons responsible for them at that time. In any event the respondent's earlier case in this Court was not directly concerned with the operation of s 189 upon him. What was in issue was the validity of s 501 of the Act so far as it applied or purported to apply to him. The steps in the respondent's "constitutional" argument in this Court were not entirely clear. The first plank of it seems to have been to the effect that attempts to immunize Commonwealth officers against liability for excesses of power were futile. That is not what s 189 does. It arms officers with a power and burdens them with an obligation, if, but only if they act reasonably, to do an act which is reasonably incidental to the aliens power. In view of the presence of s 191 in the Act, I cannot regard s 189 as being remote, or in any way disconnected from a reasonable exercise of the aliens power. It is important for its efficacy that there be means available to officers to act expeditiously, and in circumstances in which certainty of status cannot be quickly, or readily established. Al-Kateb v Godwin207 holds that, in some circumstances, indefinite detention is not unlawful in the exercise of the power. Detention of the kind contemplated here, terminable as mandated by s 191 must also at least equally be so. It is unnecessary to deal any further with the various arguments on either side. The appeal must be allowed. I agree with the orders proposed in the joint reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ. 207 (2004) 78 ALJR 1099; 208 ALR 124.

HIGH COURT OF AUSTRALIA APPELLANT AND MIGRATION AGENTS REGISTRATION AUTHORITY RESPONDENT Shi v Migration Agents Registration Authority [2008] HCA 31 30 July 2008 1. Appeal allowed with costs. ORDER Set aside the orders of the Full Court of the Federal Court of Australia made on 27 April 2007 and, in their place, order that: the appeal to that Court be allowed with costs; and the orders of the Federal Court of Australia made on 15 September 2006 and 27 November 2006 be set aside and, in their place, it be ordered that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation T A Game SC with N C Poynder for the appellant (instructed by KGA Lawyers) S J Gageler SC with S B Lloyd for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Shi v Migration Agents Registration Authority Administrative law – Application for review by Administrative Appeals Tribunal ("Tribunal") – Decision by Migration Agents Registration Authority ("the Authority") to cancel registration of migration agent – Tribunal's task to determine what was the correct or preferable decision – Whether Tribunal should determine what was the correct or preferable decision when the Authority made its decision, or whether Tribunal should determine the correct or preferable decision as at the time of its own decision – Necessity for close attention to the applicable legislative provisions. Immigration – Migration agents – Registration and cautioning of migration agents – Power of the Authority to set out one or more conditions for the lifting of a caution given to registered migration agents – Tribunal (exercising for itself the powers and discretions conferred on the Authority) cautioned a migration agent and imposed conditions for the lifting of that caution – Conditions imposed restricted migration agent from providing assistance with protection visas and from working without supervision of another registered migration agent – Whether conditions could be imposed that seek to qualify a registered migration agent's right to use that registration – Whether conditions imposed were inconsistent with the legislative scheme for registration of migration agents. Statutes – Construction – Powers of Tribunal to substitute its decision for a decision of an administrator – Proper approach to ambit and application of power – Necessity for close attention to the applicable legislative provisions – Necessity for attention to purpose and history of legislation – Whether any general presumption as to determination of the rights of parties – Relevance of the constitution, functions and general powers of Tribunal. Words and phrases – "correct or preferable decision", "decision made in substitution for the decision so set aside". Administrative Appeals Tribunal Act 1975 (Cth), ss 25, 43. Migration Act 1958 (Cth), ss 303, 304A, 306. KIRBY J. This appeal arises from a divided decision of the Full Court of the Federal Court of Australia1. In that Court, a majority (Nicholson and Tracey JJ; Downes J dissenting) affirmed orders made by the primary judge (Edmonds J)2. The primary judge had heard an "appeal" from a decision of the Administrative Appeals Tribunal ("the Tribunal"), constituted by Senior Member Kelly3. The Senior Member had set aside a decision of the Migration Agents Registration Authority ("the Authority"). In place of the Authority's decision to cancel the registration of Mr Nelson Guang Lai Shi ("the appellant") as a migration agent ("agent") under the Migration Act 1958 (Cth) ("the Migration Act"), the Tribunal substituted its own decision that the appellant be cautioned. The Tribunal then made orders providing for the "lifting" of that caution at a specified time, upon certain conditions. It took this course in purported pursuance of ss 303 and 304A of the Migration Act. The Authority contests the entitlement of the Tribunal to make the decision that it did. Its arguments are two-fold. First, it contends that the Tribunal erred in its approach by failing to limit its review to the facts and circumstances prevailing at the time of the Authority's decision, instead taking account of those subsisting at the time of review. Secondly, the Authority disputes the power of the Tribunal to give, and then lift, a caution pursuant to s 304A of the Migration Act and on the conditions specified. In the Federal Court, the Authority successfully argued that the Tribunal exceeded its jurisdiction and powers. These reasons will seek to demonstrate that the Tribunal was correct both in the approach that it adopted and in its conclusion that s 304A of the Migration Act authorised it to substitute its decision for that of the Authority. The dissenting opinion of Downes J in the Full Court on each of these points was correct. The appellant is entitled to succeed. The decision of the Tribunal should be restored. The facts and legislation Registration of migration agents: The appellant was first registered as an agent under the Migration Act in December 1995. Registration is governed by Shi v Migration Agents Registration Authority (2007) 158 FCR 525. 2 Migration Agents Registration Authority v Shi (2006) 43 AAR 424. 3 Re Shi and Migration Agents Registration Authority [2005] AATA 851; see also Re Shi and Migration Agents Registration Authority [2005] AATA 904. Kirby Div 3 of Pt 3 of that Act4. The ultimate purpose of registration is to uphold standards of integrity and competence on the part of agents. Responsibility for administering the Register of Migration Agents is reposed in the Authority5. It may cancel or suspend an agent's registration, or caution an agent, if it becomes satisfied, for example, that the agent is not a person of integrity, or is otherwise not a fit and proper person to give immigration assistance, or if the agent has breached the Code of Conduct prescribed under the Act6. Registration as an agent is important because only a registered agent may lawfully charge a fee to provide immigration assistance to visa applicants and sponsors7. The relevant legislation: Section 303(1) of the Migration Act provides: "The Migration Agents Registration Authority may: cancel the registration of a registered migration agent by removing his or her name from the register; or suspend his or her registration; or caution him or her; if it becomes satisfied that: the agent's application for registration was known by the agent to be false or misleading in a material particular; or the agent becomes bankrupt; or the agent is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance; or 4 Part 3 of the Migration Act was inserted by the Migration Amendment Act (No 3) 1992 (Cth). The registration scheme was substantially amended by the Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth), the relevant parts of which took effect on 1 July 2004. See (2007) 158 FCR 525 at 527 [4] citing (2006) 43 AAR 424 at 430 [8]. 5 Migration Act, s 287. 6 Migration Act, s 303(1). The Code of Conduct is prescribed pursuant to s 314. 7 Migration Act, s 281. Kirby an individual related by employment to the agent is not a person of integrity; or the agent has not complied with the Code of Conduct prescribed under section 314." By s 304A of the Act, it is provided: "The Migration Agents Registration Authority may set one or more conditions for the lifting of a caution it gives to a registered migration agent." And s 306 of the Act provides: "Subject to the Administrative Appeals Tribunal Act 1975, application may be made to the Administrative Appeals Tribunal for review of a decision by the Migration Agents Registration Authority made under this Division." The relevant provisions of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") include s 25(4): "The Tribunal has power to review any decision in respect of which application is made to it under any enactment." The powers of the Tribunal on a review under the AAT Act are relevantly provided by s 43, which includes the following: "(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: affirming the decision under review; varying the decision under review; or setting aside the decision under review and: making a decision in substitution for the decision so set aside; or remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal. Kirby (6) A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect." The decisional history Cancellation of the appellant's registration: The Authority cancelled the appellant's registration as an agent on 14 July 2003. The Authority's decision set out its factual findings and the evidence on which such findings were based, as well as its reasons for taking the course that it did. The Authority found several defects affecting the appellant's dealings with clients; his knowledge of the Migration Act and relevant Regulations; his control of his office, financial and other records; and his supervision of his staff. Many of the breaches of the Code of Conduct found by the Authority related to cases in which the appellant had provided assistance to non-citizens applying for protection visas, sought on the basis of claims to refugee status8. Having regard to these breaches, the Authority recorded that it was satisfied that the appellant was not a person of integrity or a fit and proper person to give immigration assistance9. On 31 July 2003, the cancellation decision was stayed by the Tribunal, subject to a condition that the appellant be supervised by another migration agent and comply with an undertaking not to engage in any business relating to protection visas10. In October 2003 and August 2004, the Authority refused applications by the appellant for repeat registration. In addition, in April 2004, in a separate decision, it suspended his registration for a period of three years, or until specified conditions had been satisfied. These further decisions of the Authority are not in issue in this appeal. Decision of the Tribunal: Pursuant to the Migration Act11, the appellant relevantly sought review by the Tribunal of the cancellation decision. The 8 See Migration Act, s 36. 9 Migration Act, s 303(1)(f). [2005] AATA 851 at [3]. 11 Migration Act, s 306. Kirby powers of the Tribunal on review were derived from the AAT Act. The Tribunal conducted a review and, following a hearing, in April 2005 published written findings to the effect that it was satisfied that the appellant had breached the Code of Conduct on some, but not all, of the occasions found by the Authority12. Having recorded these findings, the Tribunal relisted the application for disposition of the proceedings. On 2 September 2005, the Tribunal set aside the Authority's decision to cancel the appellant's registration as an agent. In place of that decision, it substituted a decision to caution him13. Considering all of the evidence as it stood at the date of its decision, the Tribunal then concluded14: "I am not satisfied that Mr Shi is not a person of integrity or otherwise not a fit and proper person to give immigration assistance within the meaning of s 303(f). My critical findings about his evidence were one factor to consider. However, there was no evidence that he had acted dishonestly in his practice and he has a number of very favourable references. His attitude to the Code and the consequential non-compliances … is also of concern. However, I take into account that he has had a supervising migration agent for over two years who is a knowledgeable and experienced migration agent and who holds Mr Shi in high regard. There has been no evidence of breaches since the first decision was made in 2003 and his rate of success has been very high in recent years. Most of the non-compliances with the Code related to protection visas which he has not dealt with since early in 2003." Having so concluded, the Tribunal decided that neither cancellation nor suspension pursuant to s 303(1) of the Migration Act was appropriate. It is clear from the reasons of the Tribunal that it based its conclusion, and decision in this regard, not on the state of the evidence as it stood at the time of the Authority's decision but on the circumstances prevailing at the date of the Tribunal's own decision. In consequence, the Tribunal substituted its own decision that the appellant be cautioned15. Having administered the caution, the Tribunal noted that it would "appear on the [Authority's] website until it is lifted, pursuant to the 12 See [2005] AATA 904. [2005] AATA 851. [2005] AATA 851 at [24]. 15 See Migration Act, s 303(1)(c). Kirby Act"16. The caution was given "subject to conditions imposed pursuant to s 304A" of the Migration Act17. These required that the appellant be supervised as an agent for a further period of three years from the date of the decision and that he not provide immigration assistance to protection visa applicants during As noted, the Authority contests both the approach of the Tribunal and its invocation of s 304A of the Migration Act to impose the conditions stated. Decisions of the Federal Court: The primary judge in the Federal Court upheld the Authority's submissions on both grounds. He concluded that the Tribunal had asked itself the wrong question, by reference to the evidence as it stood at the incorrect time. He considered that a "clear line of authority" obliged attention to the integrity or fitness of the appellant to give immigration assistance as at the date of the Authority's decision19. The Tribunal's decision was therefore found to be affected by error of law and jurisdictional error20. The primary judge also found that the conditions purportedly imposed by the Tribunal were outside the ambit of what was contemplated by s 304A. If "conditions" were to be imposed, they had to be consistent with continuing registration as an agent21. Requiring the appellant to submit to supervision, and excluding him from an important part of the work of an agent for an extended period, were held to be incompatible with such registration. This amounted to a second error of law and to further jurisdictional error22. In the result, the primary judge set aside the decision of the Tribunal. He remitted the matter to the Tribunal for redetermination. The appellant's appeal to the Full Court of the Federal Court was dismissed. Nicholson and Tracey JJ affirmed the approach of the primary judge on each of the issues that had been determined adversely to the appellant. On the [2005] AATA 851 at [25]. [2005] AATA 851 at [25]. [2005] AATA 851 at [26]. (2006) 43 AAR 424 at 443 [73]. (2006) 43 AAR 424 at 444 [77]. (2006) 43 AAR 424 at 445 [85]-[86]. (2006) 43 AAR 424 at 445 [89]. Kirby other hand, Downes J would have found in favour of the appellant on each of the grounds argued. The issues in the appeal There are two issues for decision by this Court: (1) Did the Full Federal Court err in holding that the Tribunal was limited to the facts and circumstances as they existed at the time of the Authority's decision? Or was the Tribunal obliged to consider the facts and circumstances as they existed at the time of its own decision? (2) Did the Full Federal Court err in holding that the Tribunal lacked the power under s 304A of the Migration Act to impose the conditions that it did on the caution given to the appellant? The proper approach of the Tribunal Focusing on the legislation: To resolve the question of whether the Tribunal has exceeded or mistaken its jurisdiction and powers a court must give close attention to the enabling legislation. It is undesirable to attempt universal or unqualified propositions. Here, the issue is how to define the jurisdiction and powers of the Tribunal in conducting a review of a decision of the Authority, having regard both to the general provisions of the AAT Act, affording the power of review, and to the more specific provisions of the Migration Act, defining the characteristics of the decision that is subject to review. Only when all of the relevant features of the two inter-related statutes are understood can a correct decision be arrived at as to the ambit of the review in question and the manner in which it should be conducted. The starting point is a recognition that the Parliament has not spelt out in explicit terms an answer to the first question in this appeal. There is nothing in s 43 of the AAT Act to indicate whether, "[f]or the purpose of reviewing a decision", the Tribunal is to have regard to the facts and circumstances at the time the "decision under review" was made or at the time of the Tribunal's making of a "decision in writing". It is this silence that necessitates examination of the inter-related legislation relevant to the particular case. The inter- relationship determines the character of the "decision" that is under review and the "powers and discretions" that the Tribunal is to exercise pursuant to s 43(1) of the AAT Act. In this Court, the Authority propounded a general presumption which, it said, applied in respect of administrative appeals to bodies such as the Tribunal. It argued that there was a presumption of law that the rights of parties to an appeal under an Act are to be determined on the basis of the materials that existed at the time of the decision subject to appeal, absent some explicit Kirby indication to the contrary. To support this suggested presumption, the Authority relied on a dictum of McHugh JA in Strange-Muir v Corrective Services Commission of New South Wales23. The status of the Authority's suggested presumption is not certain. In Strange-Muir, the Court of Appeal of New South Wales was divided and Priestley JA, who favoured the orders made by McHugh JA, expressly limited his concurrence to his construction of the particular legislation at issue24. He did not appear to embrace the propounded presumption. There are dangers for legal reasoning in the over-ready resort to presumptions25. However, it is unnecessary to resolve whether such a general presumption exists in this case. It is preferable to decide the issue by reference to the language of the interlocking legislation. Although, as is usually the case when contested questions of statutory construction reach this Court, there are arguments both ways, the preferable conclusion on the jurisdiction and powers of the Tribunal, and on the manner in which it should discharge its functions in cases of the present kind, is that favoured by the dissenting judge in the Full Court and urged upon this Court by the appellant. There are five factors, of varying degrees of significance, that combine to produce this conclusion. Nature of the Tribunal: First, it is essential to appreciate the radical objectives that lay behind the enactment of the AAT Act. That Act grew out of a in federal series of official reports directed administrative law and practice. The first (and possibly the most significant) of these reports was that delivered in 1971 by the Commonwealth Administrative Review Committee26. In the course of discussing the then applicable principles of judicial review, that Committee observed27: towards a major change (1986) 5 NSWLR 234 at 251. (1986) 5 NSWLR 234 at 246; cf Re Coldham; Ex parte Brideson [No 2] (1990) 170 CLR 267 at 274; [1990] HCA 36. 25 cf Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331 at 396-397 [202]-[204]; [2005] HCA 54. 26 Comprising Mr Justice J R Kerr of the Commonwealth Industrial Court; Mr Justice A F Mason, then of the New South Wales Supreme Court; Mr R J Ellicott QC, Solicitor-General of the Commonwealth and Professor H Whitmore. 27 Australia, Commonwealth Administrative Review Committee, Report, (August Kirby "It is generally accepted that this complex pattern of rules as to appropriate courts, principles and remedies is both unwieldy and unnecessary. The pattern is not fully understood by most lawyers; the layman tends to find the technicalities not merely incomprehensible but quite absurd. A case can be lost or won on the basis of choice of remedy and the non-lawyer can never appreciate why this should be so. The basic fault of the entire structure is, however, that review cannot as a general rule, in the absence of special statutory provisions, be obtained 'on the merits' – and this is usually what the aggrieved citizen is seeking." It was for this reason that the Committee recommended the establishment of what it called an "administrative review tribunal". Describing the jurisdiction and powers that should be given to such a general federal tribunal for administrative appeals, it proposed28: "[S]uch a Tribunal could be given jurisdiction to review on the merits certain administrative decisions made under Commonwealth law. The jurisdiction should be to hear and determine an application by a person who is aggrieved or adversely affected by a decision on the ground that the decision was erroneous on the facts and merits of the case. If such an application is made the Tribunal should also have power to deal with all questions of law necessary for its decision". The proposal to create such a tribunal, with the power to make decisions "on the merits", represented a bold departure from the pre-existing law, with its focus on constitutional and statutory "prerogative" remedies of judicial review. In so far as those remedies were invoked it was, and still is, commonly insisted that the court performing the review is not concerned, as such, with the factual merits of the matter, but only with legal merits, and then often only with any errors of a jurisdictional kind shown to exist at the time of the initial decision. But given the nature of the Tribunal, it is important to approach particular questions concerning its jurisdiction and powers with the history and purpose of its creation at the forefront of attention29. Function of the Tribunal: Secondly, in the earliest days of the operation of the Tribunal, questions naturally arose as to how, under s 43 of the AAT Act (not relevantly altered since), the Tribunal should proceed with its function of review. In 1981, in Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2)30, Davies J (then President of the Tribunal) explained that: 28 Australia, Commonwealth Administrative Review Committee, Report, (August 29 See also reasons of Hayne and Heydon JJ at [97]-[98]. (1981) 3 ALD 88 at 91. Kirby "Having regard to [its] provisions … it can hardly be doubted that the [AAT] Act gave effect to [the Commonwealth Administrative Review Committee's] recommendation. The Act provides for a tribunal some of the members of whom [sic] are not lawyers but are selected because of their special knowledge or skill in relation to a class of matters in respect of which decisions may be made. The Act confers upon the Tribunal fact- finding powers and confers the power to set aside a decision and to make a decision in substitution for the decision so set aside. The Act empowers the Tribunal to exercise all the powers and discretions that are conferred by any relevant enactment upon the person who made the subject decision. Clearly the Act established a tribunal whose function and duty it is to review administrative decisions on their merits." The grant of a power of decision "on the merits" presented questions similar to those to be addressed in the instant context. According to whose view of the merits? What weight, if any, should be given to the decision of the primary administrator with the ordinary responsibility for making such decisions? Upon what evidence should the Tribunal act? At what point of time are the "merits" to be examined? Davies J pointed out that, already by 1981, there was established authority in the Federal Court of Australia, and in the Tribunal, on many of these questions31: "In Drake v Minister for Immigration and Ethnic Affairs32, Bowen CJ and Deane J stated the function of the Tribunal as follows: 'The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.' In Collector of Customs (NSW) v Brian Lawlor Automotive Pty 'It is important to observe that the Tribunal is not constituted as a body to review decisions according to the principles applicable (1981) 3 ALD 88 at 91-92. (1979) 24 ALR 577 at 589 (emphasis added). (1979) 24 ALR 307 at 335. Kirby to judicial review. In essence the Tribunal is an instrument of government administration and designed to act where decisions have been made in the course of government administration but which are in the view of the Tribunal not acceptable when tested against the requirements of good government.'" Responding to a submission that the word "may" in s 43 of the AAT Act implied an element of discretion such as to authorise the Tribunal to limit its function as it saw fit, Davies J concluded34: "[T]he provision 'For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …' is not concerned to confer upon the Tribunal authority to limit its function but rather to confer upon it an amplitude of powers so that the Tribunal may exercise, if it is convenient and useful to do so, not only the decision- making power upon which the decision-maker relied, but all relevant powers and discretions which were conferred by the enactment upon the decision-maker. The provision extends the authority of the Tribunal so that it may more adequately exercise its function of reviewing on the merits the subject decision." Davies J acknowledged that regard might be had to the decision of the primary decision-maker as part of the "material before the Tribunal", particularly where it involved special expertise or knowledge35. But ultimately, it was for the Tribunal to reach its own decision upon the relevant material including any new, fresh, additional or different material that had been received by the Tribunal as relevant to its decision. In effect, this was no more than a consequence of the Tribunal's obligation to conduct a true merits review36. There was no error in this analysis. On the contrary, it represents the correct and preferable view of the legislation establishing the functions and powers of the Tribunal. Purpose of s 43 of the AAT Act: Thirdly, a conclusion that, ordinarily, the Tribunal might have regard to new, fresh, additional or different evidence in reaching its own decision is reinforced by the apparent purpose of s 43 of the AAT Act. Under that section, when the Tribunal decides to set the decision under review aside, it must consider whether to remit the decision to the Tribunal (1981) 3 ALD 88 at 92. (1981) 3 ALD 88 at 92-93. 36 See Brian Lawlor Automotive (1979) 24 ALR 307 at 335. Kirby for reconsideration (with or without directions or recommendations) or whether to make a fresh decision "in substitution for the decision so set aside"37. the Executive Government of Of necessity, any such fresh decision replaces the decision of the primary administrative decision-maker within the Commonwealth. In law, and in effect, it becomes the decision of the Executive Government. Many days, weeks, months or even a year or more might have passed since the original decision was made by the primary decision-maker. It would be theoretically conceivable that the Tribunal might make a decision which ought to have been made years, months, weeks or many days earlier, leaving it to the primary decision-maker then to update or alter that decision if any new facts and circumstances required, or warranted, that course. However, given the obvious purpose of having the Tribunal (as it is commonly put) "step into the shoes" of the primary decision-maker, so as to make the decision that ought to have been made "on the merits", this would appear to ascribe to the Tribunal an artificial function. It would not be the natural and appropriate function, given the role, purpose and powers of the Tribunal, viewed in its administrative setting. When making a decision, administrative decision-makers are generally obliged to have regard to the best and most current information available. This rule of practice is no more than a feature of good public administration. When, therefore, the Tribunal elects to make "a decision in substitution for the decision so set aside", as the Act permits, it would be surprising in the extreme if the substituted decision did not have to conform to such a standard. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Mason J, who had earlier been a member of the Commonwealth Administrative Review Committee, said this of an analogous question, in words applicable to the present issue38: "It would be a strange result indeed to hold that the Minister is entitled to ignore material of which he has actual or constructive knowledge and which may have a direct bearing on the justice of making the land grant, and to proceed instead on the basis of material that may be incomplete, inaccurate or misleading. In one sense this conclusion may be seen as an application of the general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made. But that principle is itself a reflection of the fact that there may be found in the subject-matter, scope and purpose of nearly every statute conferring power to make an administrative decision 37 AAT Act, s 43(1)(c)(i). (1986) 162 CLR 24 at 45; [1986] HCA 40. Kirby an implication that the decision is to be made on the basis of the most current material available to the decision-maker. This conclusion is all the more compelling when the decision in question is one which may adversely affect a party's interests or legitimate expectations by exposing him to new hazard or new jeopardy." Nature of the decision under review: Fourthly, although the foregoing considerations lead to a conclusion that the Tribunal is not ordinarily confined to material that was before the primary decision-maker, or to consideration of events that had occurred up to the time of its decision39, the fact that the review contemplated by s 43 of the AAT Act is one addressed to a "decision", inferentially arising under a different federal enactment, makes it necessary in each case to identify the precise nature and incidents of the decision that is the subject of the review. Sometimes, it may be inherent in the nature of a particular decision that review of that decision is confined to identified past events. If, for example, under federal legislation, a pension is payable at fortnightly rests, by reference to particular qualifications that may themselves alter over time, a "review" of an administrative "decision" to grant or refuse such a pension, by reference to statutory qualifications, may necessarily be limited to the facts at the particular time of the decision. That issue was raised in Jebb v Repatriation Commission40, another decision of Davies J, but this time in the Federal Court of Australia, deciding an "appeal" from a decision of the Tribunal on a suggested error of law. In that case, Davies J found that the Tribunal had fallen into error in considering the applicant's entitlement to certain benefits exclusively by reference to the state of the evidence at a particular time in the past. In the relevant statutory context, there was no warrant for doing so. His Honour said41: "[T]he general approach of the [T]ribunal has been to regard the administrative decision making process as a continuum and to look upon the [T]ribunal's function as a part of that continuum so that, within the limits of a reconsideration of the decision under review, the [T]ribunal considers the applicant's entitlement from the date of application, or other proper commencing date, to the date of the [T]ribunal's decision. That function was enunciated in Re Tiknaz and Director-General of Social 39 The Commonwealth v Ford (1986) 65 ALR 323 at 328. (1988) 80 ALR 329; cf Banovich v Repatriation Commission (1986) 69 ALR 395. (1988) 80 ALR 329 at 333-334. Kirby Services42. The approach there taken has since been generally adopted. In the repatriation jurisdiction, it was applied after Banovich[43] in Re Easton and Repatriation Commission44, where … the [T]ribunal … said[45]: 'The ambit of a review by the [Tribunal] is necessarily influenced by the ambit of the steps and proceedings that have taken place prior to its review, for the function of the [Tribunal] is to review a decision. But provided that the matter is within the ambit of its jurisdiction as a review authority, the general practice of the [T]ribunal is to take account of events that have occurred up to the date of the decision. Indeed, s 43(1) of the [AAT Act so implies].'" There is thus a general approach deriving in particular from the statutory function of substituting one administrative decision for another. Nevertheless, the particular nature of the "decision" in question may sometimes, exceptionally, confine the Tribunal's attention to the state of the evidence as at a particular time46. The nature and incidents of the decision under review in the present case do not support a contention that the review was limited to the particular time in the past when the decision was made by the Authority. The present was not a case where, of its nature, a decision was made falling to be determined by reference to the state of evidence at a particular time. Both the language of s 303 of the Migration Act and its purpose suggest otherwise. Section 303 of the Migration Act directs the Authority's attention, amongst other things, to whether an agent "becomes bankrupt"; whether he or she "is not a person of integrity" or "otherwise not a fit and proper person"; and whether "an individual related by employment to the agent is not a person of integrity". Each of these grounds is expressed in the present tense. Necessarily, the circumstances to which each is addressed could be altered by supervening events. Thus, the language in s 303 of the Migration Act clearly contemplates the possibility that circumstances may change between an initial decision of the (1981) 4 ALN N44. (1986) 69 ALR 395. (1987) 6 AAR 558. (1987) 6 AAR 558 at 561 referring to Lucas v Repatriation Commission (1986) 69 ALR 415. See also Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 46 See also reasons of Hayne and Heydon JJ at [99]. Kirby Authority and a subsequent decision of the Tribunal, performing the "review" which s 306 of the Migration Act contemplates and for which s 43 of the AAT Act provides47. Circumstantial changes may sometimes be adverse to an applicant before the Tribunal. Given the Tribunal's powers in certain circumstances to make a decision "in substitution for" a decision of the Tribunal which has been set aside upon review, it would be remarkable if the substituted decision could not take into account evidence of relevant, and even critical, supervening events. Such events might include the intervention of bankruptcy, or a criminal conviction for an offence of dishonesty of significance for the continued registration of the agent under the Migration Act. This reasoning is further strengthened by an appreciation that the fundamental object of the exercise of the Authority's power to cancel or suspend the registration of an agent under the Migration Act is the protection of the section of the public that deals with migration agents. It is not, as such, the punishment of agents48. This object is best achieved by the Tribunal making its decision upon the most up to date material available to it at the time of its own decision. It would be impeded if the Tribunal were confined to the facts and circumstances subsisting at the time of the Authority's original decision weeks, months or even years in the past. Moreover, to the extent that the essential function of the Tribunal is to provide a review "on the merits", conducting such a review on the basis of the most up to date evidence available is conformable with the basic objectives of the AAT Act. In this particular context, the contrary approach, urged by the Authority, would be likely to attract the very criticisms addressed to the law predating that Act in the report of the Commonwealth Administrative Review Committee49. Errors in the reasoning below: Fifthly, there are a number of particular defects in the reasoning of the majority in the Full Court which it is proper to 47 cf reasons of Kiefel J at [149]. 48 See Smith v NSW Bar Association (1992) 176 CLR 256 at 270; [1992] HCA 36 citing Ziems v The Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at 286, 289; [1957] HCA 46 and Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-202; [1960] HCA 40. 49 See above these reasons at [30]-[31]. Kirby mention. Thus, Nicholson J, having considered some of the provisions appearing in Div 3 of Pt 3 of the Migration Act, observed that50: "In my view the context in which s 303(1) appears shows a clear intent that conduct falling short of that required by the Act in relation to migration agents shall lead to the appropriate disciplinary result as at the date of the conduct being established." Nicholson J was correct to acknowledge that it is necessary to derive the meaning of s 303(1) from the context of the entirety of Div 3 of Pt 3 of the Migration Act, not just the sub-section read in isolation51. However, part of that context, not specifically referred to by Nicholson J, is the express provision in s 306 for review, on the merits, of decisions of the Authority by the Tribunal. There is nothing to suggest that such review should not be performed by the Tribunal with the benefit of any new, fresh, additional or different material. In this case, such material was received and found to warrant the setting aside of the decision under review and the substitution of a different decision. With respect, it was an error on the part of Nicholson J to interpret s 303(1) of the Migration Act without sufficient regard to the substantial powers of the Tribunal to review the subject decision and, where it so decided, to set it aside and to make a different decision in substitution. Likewise, Tracey J placed great emphasis on the fact that s 303(1) of the Migration Act was, as he saw it, predicated on a particular state of satisfaction on the part of the Authority, as distinct from the Tribunal52. This evidences the same error. It involves reading s 303(1) of the Migration Act without paying due regard to s 306 of that Act. That section affords significant powers to the Tribunal. These include the power to substitute its own decision for that of the Authority. Given the broad ambit of the power of substitution, as stated in the AAT Act and as upheld in judicial decisions over nearly 30 years, this Court would not be justified in endorsing such a narrow view of the Tribunal's powers. To do so would be incompatible with the history, purpose and object of the Act establishing the Tribunal, and the extension to it of broad powers of review "on the merits". Conclusion: the appellant succeeds: For the foregoing reasons, the majority of the Full Court erred in their construction of the powers of the Tribunal. The reasons of Downes J are to be preferred, in respect of the approach (2007) 158 FCR 525 at 533 [16]. 51 cf Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397; [1996] HCA 36. (2007) 158 FCR 525 at 541 [62]. Kirby that it was proper for the Tribunal to take and the materials upon which it was entitled and required to rely. The result is that the appellant is entitled to succeed on the first issue. The conditions for lifting the caution were applicable A contestable question: The Authority submitted that the "conditions" set by the Tribunal for lifting the appellant's "caution" were inconsistent, because they were incompatible with registration as an agent under the Migration Act. This submission is not without a certain forensic force. So much is self-evident given that it convinced the primary judge and the majority in the Full Court of the Federal Court, and has now persuaded Kiefel J in this Court. It must therefore be acknowledged that the position is not absolutely clear- cut. It falls to the courts, and now to this Court, to give the preferable, and therefore correct, meaning to the language of s 304A of the Migration Act. Whilst I acknowledge the arguability of the contrary interpretation, the better conclusion is that the Tribunal did not fall into jurisdictional or other legal error in invoking s 304A so as to impose the conditions that it specified for lifting the caution that it gave to the appellant. The majority of the Full Court erred in holding otherwise. Five considerations support this opinion. Timing of the Tribunal's decision: First, the stage at which the relevant administrative "decision" was made is important. The Authority had earlier exercised its powers and, relevantly, decided to cancel the appellant's registration as an agent. As was his right, the appellant, invoking s 306 of the Migration Act, sought review by the Tribunal. It concluded that, by reason of demonstrated errors, the decision under review should be "set aside". Its power to so decide arises from the AAT Act and has not been contested. The errors identified in the decision of the Authority are not presently disputed. Having elected to set the decision of the Authority aside, the Tribunal was empowered by the AAT Act either to remit the matter to the Authority for reconsideration or to make a decision "in substitution for" the decision set aside. The Tribunal opted to take the latter course. Once it is concluded that the Tribunal is authorised, in a case such as the present, to have regard to new, fresh, additional or different evidence and should make its decision on the basis of current facts and circumstances53, it necessarily follows that the Tribunal is able to utilise all of the powers enjoyed by the Authority at the time the Tribunal makes its decision, including powers that may have accrued to the Authority in the interval of time since the original decision 53 See above these reasons at [50]. Kirby was made. So much follows not only from general principles governing the accretion of powers affecting dispositions of bodies such as the Tribunal but also from the power of "substitution" granted by s 43(1)(c)(i) of the AAT Act. It was therefore proper for the Tribunal to consider a different order for disciplining the appellant in respect of findings of default on the appellant's part which the Tribunal upheld or itself made. In the result, the Tribunal decided to "caution" the appellant, in accordance with s 303(1)(c) of the Migration Act. However, it also decided to provide for the "lifting" of the caution in the manner described. In doing so, the Tribunal adhered closely to the language of the Migration Act. The power that s 304A of that Act affords was granted in the expectation that it would be used. Moreover, it was granted at large without any relevant statutory limitations. Ordinary canons of statutory construction would suggest that a power, granted at large, is available to be deployed by the Authority (or, in substitution, by the Tribunal) in a case such as the present. Nature of disciplinary powers: Secondly, it is proper to observe that the power conferred by s 304A was introduced into the Migration Act by amendment taking effect on 1 July 200454. By the amending provision, the power applied in respect of cautions given after that date55. The caution given to the appellant by the Tribunal, in substitution for the cancellation of his registration, was given after 1 July 2004. The Migration Act, as amended by the Parliament, contemplates the exercise of the power to caution following satisfaction of matters stated in s 303(1). There is nothing to preclude the administration of a caution even where, for example, the decision-maker becomes satisfied that the agent "is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance" at a given time56. Thus, the language and structure of s 303(1) of the Migration Act suggest that a caution is intended to be a significant disciplinary measure, especially given the provision for publicising disciplinary decisions and providing details to clients of the agent concerned57. 54 Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth), Sched 1, item 71. 55 Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth), Sched 1, item 180. 56 Migration Act, s 303(1)(f). 57 See Migration Act, ss 305A, 305B. See also reasons of Hayne and Heydon JJ at Kirby The exceptional power to "lift" a caution given to an agent was obviously intended to be applied. There is no reason to read down the ambit of the power to caution or the additional power to lift a caution conditionally, pursuant to the 2004 amendments to the Migration Act. To do so would defeat the apparent purpose of the Parliament expressed in the language that it enacted. Nature of powers of the Tribunal: Thirdly, the fact that the power to "lift" a caution in s 304A is reposed in an independent statutory entity such as the Authority58, with the facility for review by the Tribunal, supports construing that power in a broad and ample way. Analogies between the Tribunal and a court ought not to be pressed too far. Nevertheless, given the role of the Tribunal, some parallels can be drawn between the conventional approach of viewing powers conferred on courts amply, so that they may fulfil their functions, and the principles that ought to be applied in construing statutory powers granted to the Tribunal. Like a court, the Tribunal is entirely independent, and intended to be impartial in its decision- making. Its President must be a judge of the Federal Court of Australia59. Its Deputy Presidents can be, and are, judges also. It would therefore be contrary to principle to construe a power, conferred on the Tribunal for use in disposing of disciplinary proceedings, in a way that would narrow or curtail the power afforded when "stepping into the shoes" of the primary decision-maker60. On the contrary, the nature and statutory functions of the Tribunal argue for a broad and ample interpretation of its powers, because they are to be exercised in substitution for the Authority. Purpose of the review: Fourthly, once it is appreciated that the substituted decision of the Tribunal is intended to uphold discipline amongst agents, in accordance with the Migration Act, and thus to protect members of the public who deal with such agents, there can be no good reason for construing s 304A of that Act narrowly, particularly where a decision of the Tribunal is concerned. Still less can there be a reason to exclude recourse to s 304A where the only expressed precondition for its operation (the giving of "a caution") is fulfilled, as it was in the present instance. It is true that the Tribunal does not enjoy all of the investigatory powers afforded to the Authority by the Migration Act. This fact would be known to the 58 Migration Act, s 315. 59 AAT Act, s 7(1). 60 cf Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192 per Mason CJ and Deane J, 205 per Gaudron J; [1992] HCA 28. Kirby Tribunal. In given circumstances, it might afford a reason for the Tribunal, having set aside a decision under review for error, to elect to remit the matter to the Authority for reconsideration, in accordance with any directions or recommendations thought appropriate. In the present case, that course was not adopted. There is no indication in the reasons of the Tribunal that it felt constrained by a lack of relevant evidence, or otherwise that it was unable to reach a decision that it could properly substitute for that of the Authority. Given the broad powers afforded to the Tribunal for the purpose of bringing disputes over relevant administrative decisions to finality "on the merits", no ground is shown for narrowing the decision-making powers of the Tribunal, either generally or in the present case. Taking account of the circumstances: Fifthly, there is nothing in s 304A, or in any other provision of the Migration Act, that limits the power to "lift" a caution given to an agent, where such a course is appropriate, on "conditions" moulded to the particular circumstances of the case. This is what the Tribunal set out to do in the appellant's case. Mindful of the purpose of protecting the public, but also of the evidence concerning the appellant's recent conduct and experience, the Tribunal made an available and arguably a sensible disciplinary decision. It paid regard to the evidence provided to the Tribunal about the activities of the appellant after the decision to cancel his registration as an agent was made and after the stay of the operation of that order took effect. In the context of professional discipline in other fields, it is not unusual for conditional orders to practise, or to return to practise, to be made, fashioned so as to take into account particular impediments, arising from the evidence, to a full, immediate return to the entire range of professional duties61. Whilst it is true that the Migration Act does not comprehend qualified rights to practise as such, neither do the laws providing for the registration of medical practitioners or dentists, or the admission of legal practitioners. Yet in particular circumstances, the imposition of temporary conditions following disciplinary proceedings, here as an adjunct to a caution, might well be an entirely appropriate disciplinary response, protective of the public. In such cases, it would represent the "correct or preferable decision" on the merits of the case. Clearly, the Tribunal considered a decision of such a nature to be appropriate to its ultimate factual findings. This Court is not concerned with the factual merits of that conclusion. A decision that the Tribunal lacked the jurisdiction and power to fashion the order that it did is not required by the language, still less the 61 cf Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 639. Kirby purpose, of the Migration Act. It does not represent the better view of the meaning of the amended provisions of that Act. It is true, as Downes J acknowledged62, that the language of s 304A of the Migration Act is somewhat confusing and imperfect: "The concept of a caution subject to conditions is new to me. The idea that a condition could relate to the lifting of the caution itself seems even more novel. However, this is what ss 303 and 304A expressly provide. The novelty of a concept should not lead to a narrowing of its extent. … I can well understand that the legislature might have provided for a fourth disciplinary alternative within s 303(1), namely, the imposition of conditions on registration itself. That is how one would ordinarily expect conditions to operate. However, that is not what is provided by s 303(1)(c) and the rather inelegantly worded s 304A. Section 304A speaks of a 'condition for the lifting of a caution'. The concept of the lifting of a caution itself seems odd. After all, a caution is a single act of communication. It will usually have as its future consequence some more serious disciplinary action if the caution is not heeded, rather than the 'lifting' of the caution through compliance with conditions. How can a caution, once given, be lifted?" Whilst noting these concerns, Downes J, alone in the Full Court, gave proper meaning to the provision that the Parliament had enacted. Faced with the "strained use of the English language"63 in the Migration Act, the approach taken by Downes J was the correct one. When the relevant decision-maker (the Authority or the Tribunal, as the case may be) decides in a disciplinary matter to give a "caution", the special power of "lifting" the caution on conditions becomes available, as s 304A provides. That is the power that the Senior Member of the Tribunal decided to exercise in the appellant's case. There is no challenge (so far as one would be possible) to the factual premises upon which that decision rested. The Authority's contention that error of law affected the exercise of the Tribunal's jurisdiction and powers is not made out. Conclusion: the appellant succeeds: The conclusion reached, and the decision made, by the Tribunal were open to it after it found mistakes in the (2007) 158 FCR 525 at 539 [51]-[53]. (2007) 158 FCR 525 at 539 [53]. Kirby original decision of the Authority. The Tribunal having decided to "set aside" the Authority's decision and to make "a decision in substitution for the decision so set aside", the giving of a caution was permitted pursuant to s 303(1)(c) of the Migration Act. Its "lifting" on the stated conditions was permitted on the basis of s 304A of that Act. It follows that on the second issue also the approach and conclusion of Downes J are to be preferred. The result is that on this issue, the appellant is entitled to succeed. Orders The appeal to this Court should be allowed with costs. The judgment of the Full Court of the Federal Court of Australia should be set aside. In place of that judgment, it should be ordered that (a) the appeal to the Full Court is allowed with costs; (b) the orders of the primary judge (Edmonds J) are set aside and the appeal to the Federal Court is dismissed with costs. HAYNE AND HEYDON JJ. In July 2003, the Migration Agents Registration Authority ("MARA") cancelled the appellant's registration as a migration agent. Part 3 (ss 275-332B) of the Migration Act 1958 (Cth) ("the Migration Act") regulated the registration of migration agents and the provision of immigration assistance. MARA was satisfied that the appellant had not complied with the Code of Conduct prescribed under s 314 of the Migration Act, and that he was not a person of integrity, or was otherwise not a fit and proper person to give immigration assistance. Subsequently, MARA made a number of other decisions about the appellant's registration as a migration agent, including decisions not to re-register him. Section 306 of the the Migration Act provided Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), application might be made to the Administrative Appeals Tribunal ("the Tribunal") for review of certain decisions made by MARA, including a decision to cancel registration as a migration agent. The appellant applied to the Tribunal for review of the cancellation decision, and for review of the other decisions that MARA had made about his registration as a migration agent. that, subject Two questions about the Tribunal's review of the cancellation decision now come to this Court. One concerns the Tribunal's task. Was it, as MARA contended, to decide whether, at the time MARA made its decision, the correct or preferable64 decision was that the appellant was not a person of integrity, or was otherwise not a fit and proper person to give immigration assistance? Or was it, as the appellant contended, to decide what was the correct or preferable decision at the time the Tribunal made its decision? The second question in this Court concerns the powers of MARA. Could MARA (and could the Tribunal in exercising for itself "the powers and discretions that are conferred"65 by the Migration Act on MARA) impose certain conditions on the appellant about his future conduct as a migration agent when it cautioned him? To explain how those questions arise in this Court it is necessary first to refer briefly to the steps taken by MARA, next to describe the course of proceedings in the Tribunal and the courts below, and then to refer to the relevant legislative provisions. 64 The expression comes from Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589 per Bowen CJ and Deane J. 65 Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), s 43(1). The steps taken by MARA MARA cancelled the appellant's registration on 14 July 2003, refused to renew his registration on 8 October 200366, suspended his registration in April 2004, and again refused to renew his registration in August 2004. Each of these decisions was stayed, enabling the appellant to continue acting as a migration agent. But the stay that was granted in respect of the cancellation decision was conditional upon the appellant undertaking not to engage in any business relating to protection visas and upon his being supervised by another migration agent. Most of MARA's findings that the appellant had breached the Code of Conduct concerned applications for protection visas. The course of proceedings in the Tribunal On 6 April 2005, the Tribunal published the findings of fact it made about whether the appellant had breached the Code of Conduct. The Tribunal found 51 breaches of the Code. (MARA had found 98.) All of the breaches found by the Tribunal were constituted by acts or omissions that had occurred before MARA made its decision to cancel the appellant's registration. On 2 September 2005, the Tribunal published its decision on its review of the cancellation decision and the other decisions that MARA had made about the appellant's registration as a migration agent. The Tribunal concluded that it was not satisfied that the appellant was not a person of integrity or was not otherwise a fit and proper person to give immigration assistance. It set aside the cancellation decision and the other decisions under review. The Tribunal decided that the appellant should be cautioned and that the caution would be lifted on 1 September 2008 if the appellant did not, in the meantime, provide assistance with applications for protection visas, and if, further, his work as a migration agent during that time was supervised by another registered migration agent. In deciding whether the appellant was not a person of integrity, or was otherwise not a fit and proper person to give immigration assistance, the Tribunal took into account evidence of the appellant's conduct between July 2003 (when MARA had cancelled his registration) and September 2005 (when the Tribunal made its decision). 66 Section 299 of the Migration Act 1958 (Cth) ("the Migration Act") provided that, subject to a number of other provisions of the Act, including s 303, the registration of a registered migration agent "lasts for 12 months after the registration". Proceedings in the courts Being dissatisfied with the Tribunal's decision, MARA "appealed" to the Federal Court of Australia. That "appeal", brought pursuant to s 44(1) of the AAT Act, was confined to a question of law. First, MARA submitted that the Tribunal made an error of law by asking whether, in September 2005, at the time of the Tribunal's decision, the appellant was shown not to be a person of integrity or was otherwise not a fit and proper person to give immigration assistance. MARA submitted that the Tribunal should have considered whether, in July 2003, when MARA made its decision, the correct or preferable decision was to cancel the appellant's registration as a migration agent. Secondly, MARA submitted that the Tribunal's finding that the appellant should not do certain kinds of work as a migration agent, and that he should be supervised in the work he did, showed either that the Tribunal had concluded that the appellant was not yet a fit and proper person to be a migration agent or that it had misconstrued the relevant provisions of the Migration Act. MARA's appeal to the Federal Court was allowed67. The Tribunal's decision was set aside and the matter was remitted to the Tribunal to be determined according to law. The primary judge (Edmonds J) concluded68 that the question for the Tribunal was whether, at the date of MARA's decision, the appellant was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance. Because the Tribunal had considered the appellant's conduct during the period between MARA's decision to cancel his registration and the Tribunal conducting its review, the primary judge concluded69 that it had "asked itself the wrong question; and the Tribunal had regard to matters it was bound not to consider". The primary judge did not accept70 MARA's argument that the Tribunal's imposition of conditions about the appellant's future work as a migration agent showed either that the Tribunal had concluded that the appellant was not a fit and proper person to give immigration assistance, or that the Tribunal had misconstrued the Migration Act provisions about a migration agent being a fit and proper person to give immigration assistance. But the primary judge held71 67 Migration Agents Registration Authority v Shi (2006) 43 AAR 424. (2006) 43 AAR 424 at 443 [73]. (2006) 43 AAR 424 at 444 [77]. (2006) 43 AAR 424 at 445 [85]. (2006) 43 AAR 424 at 445 [85]-[89]. that neither MARA, nor the Tribunal on review of a decision of MARA, could set conditions for the lifting of a caution administered to a migration agent, if those conditions could not be imposed as conditions of registration as a migration agent. The primary judge concluded72 that the conditions imposed by the Tribunal in this case were beyond power. The appellant appealed to the Full Court of the Federal Court against the orders of Edmonds J. The Full Court, by majority (Nicholson J and Tracey J; Downes J dissenting), dismissed73 that appeal. By special leave, the appellant now appeals to this Court. The appeal to this Court should be allowed. The orders of the Full Court should be set aside and consequential orders made restoring the Tribunal's decision. The applicable legislation As this Court has so often emphasised74 in recent years, questions presented by the application of legislation can be answered only by first giving close attention to the relevant provisions. Reference to decided cases or other secondary material must not be permitted to distract attention from the language of the applicable statute or statutes. Expressions used in decided cases to explain the operation of commonly encountered statutory provisions and their application to the facts and circumstances of a particular case may serve only to mask the nature of the task that is presented when those provisions must be applied in (2006) 43 AAR 424 at 445 [89]. 73 Shi v Migration Agents Registration Authority (2007) 158 FCR 525. 74 See, for example, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 77 [9] per Gaudron, Gummow, Hayne and Callinan JJ, 89 [46] per Kirby J; [2001] HCA 49; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 526 [11] per Gleeson CJ, Gummow, Hayne and Callinan JJ, 545 [63] per Kirby J; [2001] HCA 53; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 37-39 [11]-[15] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, 111-112 [249] per Kirby J; [2001] HCA 56; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 6-7 [7]-[9] per Gleeson CJ, McHugh, Gummow and Hayne JJ; [2003] HCA 59; Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at 206 [30] per Gleeson CJ, Gummow, Hayne and Heydon JJ, 240-241 [167]-[168] per Kirby J; [2005] HCA 58; Weiss v The Queen (2005) 224 CLR 300 at 312-313 [31] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ; [2005] HCA 81. another case. That masking effect occurs because attention is focused upon the expression used in the decided cases, not upon the relevant statutory provisions. In this case, attention must be directed to provisions of both the AAT Act and the Migration Act. The task of the Tribunal in reviewing the cancellation decision was to be identified by considering the intersecting operation of ss 25 and 43 of the AAT Act, and ss 303 and 306 of the Migration Act. Section 25 of the AAT Act provided (so far as presently relevant) that: "(1) An enactment may provide that applications may be made to the Tribunal: for review of decisions made in the exercise of powers conferred by that enactment; or for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment. (3) Where an enactment makes provision in accordance with subsection (1), that enactment: shall specify the person or persons to whose decisions the provision applies; (b) may be expressed to apply to all decisions of a person, or to a class of such decisions; and (c) may specify conditions subject to which applications may be made. The Tribunal has power to review any decision in respect of which application is made to it under any enactment." Section 306 of the Migration Act was an enactment of the kind described in s 25(1) of the AAT Act. At the times relevant to this matter, s 306 of the Migration Act provided: "Subject to the Administrative Appeals Tribunal Act 1975, application may be made to the Administrative Appeals Tribunal for review of a decision by the Migration Agents Registration Authority made under this Division." The relevant decision by MARA "made under this Division"75 was a decision under s 303. After MARA made its decision to cancel the appellant's registration, s 303 was amended by the Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth) ("the 2004 Amendment Act"). Nothing turns on the amendments that were made to s 303. At the time the Tribunal made its decision, s 303 (as amended by the 2004 Amendment Act) provided: "(1) The Migration Agents Registration Authority may: cancel the registration of a registered migration agent by removing his or her name from the register; or suspend his or her registration; or caution him or her; if it becomes satisfied that: the agent's application for registration was known by the agent to be false or misleading in a material particular; or the agent becomes bankrupt; or the agent is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance; or an individual related by employment to the agent is not a person of integrity; or the agent has not complied with the Code of Conduct prescribed under section 314. Note 1: The Authority is required to caution a registered migration agent or cancel or suspend a registered migration agent's registration in certain circumstances: see Division 3AA. Note 2: If the Authority is considering making a decision under this section, it must invite the registered migration agent to make a submission: see sections 309 and 310. 75 Migration Act, s 306. Unpaid registration status charge The Authority may also suspend the registration of a registered migration agent if any registration status charge payable by him or her remains unpaid after the time when it becomes due for payment." Section 43 of the AAT Act governed the Tribunal's decision on review. So far as now relevant, s 43 provided: "(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: affirming the decision under review; varying the decision under review; or setting aside the decision under review and: making a decision in substitution for the decision so set aside; or remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal. (6) A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect." The decision which was the subject of the Tribunal's review, and which is at the centre of the present proceedings, was a decision of the kind identified in s 303(1)(a) of the Migration Act – a decision to "cancel the registration of a registered migration agent by removing his ... name from the register". The grounds on which MARA acted in exercising that power were those identified in s 303(1)(f) and (h) – that MARA was satisfied that the appellant "is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance" (par (f)) and that "the agent has not complied with the Code of Conduct prescribed under section 314" (par (h)). The Tribunal's task In reviewing MARA's decision to cancel the appellant's registration, the Tribunal was empowered (by s 43(1) of the AAT Act) to exercise all the powers and discretions conferred by the Migration Act on MARA. The questions for the Tribunal in reviewing the cancellation decision were first, whether the Tribunal was satisfied that either of the s 303(1) grounds said to be engaged in this case was made out, and secondly, whether the Tribunal should exercise the powers given by s 303(1) to cancel or suspend the appellant's registration or to caution him. That is, the first questions for the Tribunal were whether it was satisfied that the appellant "is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance" and whether it was satisfied that the appellant had not complied with the Code of Conduct. MARA's contention, in this Court and in the courts below, that the question for the Tribunal was whether the correct or preferable decision when MARA made its decision was to cancel the appellant's registration, should be rejected. It finds no footing in the relevant provisions. To frame the relevant question in the manner urged by MARA would treat the Tribunal's task as confined in administrative decision-making in a manner analogous to a form of strict appeal76 in judicial proceedings. But that is not the Tribunal's task. the correction of demonstrated error It has long been established77 that: "The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal." (emphasis added) 76 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 108-109 per Dixon J; [1931] HCA 34. 77 Drake (1979) 24 ALR 577 at 589 per Bowen CJ and Deane J. And MARA accepted in argument in this Court that in conducting its review the Tribunal was not limited to the record that was before MARA78. It submitted, however, that the Tribunal had to consider the circumstances "as appear from the record before it as they existed at the time of the decision under review". Once it is accepted that the Tribunal is not confined to the record before the primary decision-maker, it follows that, unless there is some statutory basis for confining that further material to such as would bear upon circumstances as they existed at the time of the initial decision, the material before the Tribunal will include information about conduct and events that occurred after the decision under review. If there is any such statutory limitation, it would be found in the legislation which empowered the primary decision-maker to act; there is nothing in the AAT Act which would provide such a limitation. The AAT Act provides for the review of decisions by a body, the Tribunal, that is given all of the powers and discretions that are conferred on the original decision-maker. As Brennan J rightly pointed out in an early decision of the Tribunal79, not all of the powers that the Tribunal may exercise draw upon the grant of powers and discretions to the primary decision-maker: "A decision by the Tribunal pursuant to s 43(1)(a) to affirm the original decision leaves the original decision intact, and that is the only decision which takes effect under the enactment: the original powers are not drawn upon by the Tribunal's order. Equally, a decision to set aside the decision under review and remit the matter for reconsideration pursuant to s 43(1)(c)(ii) requires the original repository of the powers and discretions to exercise them afresh: they are not exercised by the Tribunal. Section 43(1) grants the original powers and discretions to the Tribunal, but it does not require the Tribunal to exercise them unless the Tribunal is making a fresh order the effectiveness of which depends upon their exercise." But subject to that qualification, the Tribunal's task is "to do over again"80 what the original decision-maker did. 78 The Tribunal's powers to regulate its own procedures, to inform itself on any matter as it thinks appropriate, and to receive evidence are contained in ss 33 and 40 of the AAT Act. 79 Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1978) 1 ALD 167 at 175-176. 80 Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 at 502 per Kitto J; [1963] HCA 41. Nothing in the provisions of the Migration Act fixed a particular time as the point at which a migration agent's fitness to provide immigration assistance was to be assessed. Unlike some legislation providing for pension entitlements81, in which the critical statutory question is whether a criterion was met or not met at a particular date, such as the date of cancellation of entitlements, the provisions of s 303 of the Migration Act contained no temporal element. It follows that when the Tribunal reviews a decision made under s 303, the question which the Tribunal must consider (is the Tribunal satisfied that the person concerned is not a fit and proper person to give immigration assistance?) is a question which invites attention to the state of affairs as they exist at the time the Tribunal makes its decision. MARA's argument to the contrary should have been rejected in the courts below. Cautioning on condition? As noted earlier, after MARA made its cancellation decision, but before the Tribunal decided its review, the 2004 Amendment Act amended the Migration Act. In particular, the 2004 Amendment Act provided for the insertion of s 304A: "The Migration Agents Registration Authority may set one or more conditions for the lifting of a caution it gives to a registered migration agent. Note: Particulars of cautions are shown on the Register: see section 287." In the present case, the Tribunal concluded that the appellant's registration as a migration agent should be neither cancelled nor suspended. But it concluded that he should not be permitted to offer assistance in connection with applications for protection visas or to practise unsupervised before 1 September 2008. It was not disputed in the proceedings in this Court or in the courts below that, in reviewing the cancellation decision, the Tribunal could exercise the power given by s 304A. The tension between MARA's acceptance that the Tribunal could exercise the power given by s 304A and MARA's submission that the Tribunal should otherwise be confined to considering the state of affairs at the date of MARA's cancellation decision is evident. For the reasons given earlier, it is a tension that is resolved by the rejection of the latter submission. 81 See, for example, Freeman v Secretary, Department of Social Security (1988) 19 FCR 342. MARA submitted that the majority in the Full Court of the Federal Court and the primary judge had correctly concluded that s 304A did not authorise imposing conditions of the kind imposed in this case as conditions for the lifting of the caution administered to the appellant. In particular, MARA submitted that s 304A did not authorise "conditions for the lifting of a caution that seek to qualify the registered agent's right to use that registration". The power to "set one or more conditions for the lifting of a caution"82 is expressed in terms that do not expressly identify the kinds of condition that may be set. The limits to the power are therefore to be identified by reference to the subject-matter, scope and purpose of the legislation. In considering what are those limits, it is necessary to begin by identifying what is meant by a "caution" in the provisions of the Migration Act that dealt with the registration of migration agents. Section 303(1) provided that one of the three possible consequences of MARA being satisfied of one or more of the matters stated in pars (d) to (h) of that sub-section was for MARA to "caution" a migration agent. But administration of a "caution" was more than the formal communication of a warning to the agent concerned. Particulars of any caution given to an agent were to be recorded in the Register of Migration Agents83, and MARA was obliged84 to make that Register available for inspection by any person. Thus the administration of a caution was a matter of public record. The reference in s 304A to the "lifting" of a caution must be understood in that light. The "lifting" to which the section referred would be reflected in the Register. (The assumption in argument may have been that it would be reflected by removing from the Register any reference to the caution. Whether that was required or only a note that the caution was no longer continuing matters not for present purposes.) Reference to a form of "qualified registration" provides no useful criterion for distinguishing between conditions that can and those that cannot be lawfully imposed under s 304A as conditions for lifting a caution. The primary judge expressed85 the relevant criterion as being whether the conditions set for the lifting of a caution are "conditions which are consistent with the migration s 304A. s 287(2)(h). (2006) 43 AAR 424 at 445 [85]. agent's registration". That is, it was the view86 of the primary judge that conditions would not be set for lifting a caution "which could not be imposed as conditions of an individual's registration as a migration agent". the reference These statements in amplification of to "qualified registration" reveal why it provides no useful criterion for distinguishing between conditions that can and cannot be set as conditions for lifting a caution. The root of the difficulty in the asserted criterion is that the Migration Act did not provide for MARA to impose conditions in connection with the registration of a migration agent except as conditions for lifting a caution. If the use of the expression "qualified registration" was intended to invite a comparison between conditions that could be imposed on registration and those that could not, it is a comparison that could not be made. Any condition imposed as a condition for lifting a caution could be described as providing a form of "qualified registration" of a migration agent. The agent would be registered but the agent's registration would be "qualified" for so long as the condition applied. The qualification to the registration would be that the agent concerned was under caution until the condition was met. The power given by s 304A is not limited in the manner alleged by MARA. MARA accepted, correctly, that a caution could be administered to a migration agent on condition that the agent undertake a prescribed course of training. The Explanatory Memorandum for the 2004 Amendment Act had expressly given that as an example of the operation of the new s 304A. But no relevant distinction can be drawn between a condition that required an agent to undertake a course of instruction, and a condition that required an agent to work subject to supervision. No relevant distinction can be drawn because both are conditions that relate to the subject-matter, scope and purpose of the relevant provisions of the Migration Act and fall within the otherwise general words of s 304A. Likewise, a condition that a migration agent not undertake certain kinds of work relates to the subject-matter, scope and purpose of the relevant provision and falls within the words of s 304A. Contrary to MARA's submission, the provisions of the Migration Act which provide for and regulate the registration of migration agents are not to be read as if registration as an agent confers on the person registered an unfettered capacity to give migration assistance. The relevant provisions must be read together. The powers and duties of a migration agent are to be identified from the combined operation of all of those provisions. Section 280(1) of the Migration Act provides that a person who is not a registered migration agent (2006) 43 AAR 424 at 445 [87]. must not give immigration assistance. But what a registered migration agent may do in giving immigration assistance is regulated by other applicable provisions of the Migration Act, including s 304A. A failure to abide by the conditions for lifting a caution may well be a matter relevant to the annual exercise of the power to re-register an agent87. Failure to abide by such conditions may also be relevant to whether an agent is a fit and proper person to give immigration assistance. But a migration agent subject to a caution of the kind now in issue may continue to act as a migration agent. Imposition of conditions of the kind imposed in this case as conditions for the lifting of the caution administered to the appellant was not inconsistent with the scheme for which the relevant provisions of the Migration Act provided. Conclusion and orders For these reasons the appeal to this Court should be allowed with costs. The orders of the Full Court of the Federal Court of Australia should be set aside and in their place there should be orders that (a) the appeal to that Court is allowed with costs; and (b) the orders of Edmonds J made on 15 September 2006 and 27 November 2006 are set aside and in their place there are orders that the appeal to the Federal Court against the decision of the Administrative Appeals Tribunal is dismissed with costs. 87 Migration Act, s 299. Crennan CRENNAN J. There are two issues for decision by the Court in this appeal: 1. Whether, on a review by the Administrative Appeals Tribunal ("the Tribunal") of a decision of the Migration Agents Registration Authority ("the Authority") to cancel a migration agent's registration88, the Tribunal was restricted to considering evidence of the facts and circumstances as they existed at the time of the Authority's decision. 2. Whether the Tribunal, in substituting its own decision for that of the Authority, had the power89 to impose conditions in relation to future conduct, when it cautioned the migration agent. On the first issue, I agree with the reasons of Kiefel J for concluding that in the circumstances of this case the Tribunal was entitled to take into account the fresh evidence available to it. On the second issue, I agree, for the reasons given by Kirby J, that the Tribunal was empowered to impose the conditions it did when cautioning the migration agent. I agree with Kirby J that the appeal should be allowed and consequential orders made in the form that he proposes. 88 Under the Migration Act 1958 (Cth), s 303. 89 Under the Migration Act 1958 (Cth), s 304A. 119 KIEFEL J. The principal question on this appeal concerns the review by the Administrative Appeals Tribunal ("the Tribunal") of a decision of the Migration Agents Registration Authority ("the Authority") to cancel the appellant's registration as a migration agent. The question is whether, on that review, the Tribunal is restricted to a consideration of facts and events which had occurred at the time of the Authority's decision. The answer to it lies in the identification of the powers which are to be exercised by the Tribunal and the specific decision to which they are addressed. The Authority's decision Part 3 of the Migration Act 1958 (Cth) is concerned with migration agents and the immigration assistance they may render. Immigration assistance90 can only be given by a person who is registered as a migration agent91. Division 3 deals with registration and confers power upon the Authority92 to discipline registered migration agents. Section 303(1) provides: "The Migration Agents Registration Authority may: cancel the registration of a registered migration agent by removing his or her name from the register; or suspend his or her registration; or caution him or her; if it becomes satisfied that: the agent's application for registration was known by the agent to be false or misleading in a material particular; or the agent becomes bankrupt; or the agent is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance; or an individual related by employment to the agent is not a person of integrity; or 90 Defined, Migration Act, s 276. 91 Migration Act, s 280. 92 The Authority is appointed by the Minister: see Migration Act, ss 275, 315. It is currently the Migration Institute of Australia Limited. the agent has not complied with the Code of Conduct prescribed under section 314." On 14 July 2003 the Authority cancelled the appellant's registration, by reference to s 303(1)(h) and (f). Its decision records the investigatory steps taken by it subsequent to the receipt of a complaint about the appellant, including its request of the appellant for his files93 and its interviews of him94, culminating in its notice to him that it was contemplating taking the action referred to in s 303(1)(a) to (c) because of breaches of the Code of Conduct, which it specified by reference to the clauses concerned. Following upon the receipt of the appellant's submissions the Authority made findings of breaches of the Code of Conduct. The breaches included failures, on his part, to keep his clients informed, failures to control and supervise his staff, failures connected with applications which were vexatious or grossly unfounded, the making of misleading and inaccurate statements, failures to maintain and improve his knowledge of statutory amendments and failures to seek assistance and advice when necessary. The Authority also found that he was not a person of integrity or otherwise not a fit and proper person to give immigration assistance. This conclusion was arrived at by reference to the pattern of conduct evidenced by the breaches of the Code. The Authority made three further decisions relating to the appellant's registration as an agent, but they are not relevant to the appeal. Statutory provisions for review By s 25(1)(a) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), an enactment may provide for applications to be made to the Tribunal "for review of decisions made in the exercise of powers conferred by that enactment". Sub-section (4) provides that the Tribunal has power to review any decision in respect of which application is made to it under any enactment. The Tribunal may determine the scope of its review, by limiting questions of fact or the evidence and issues before it95. Section 306 of the Migration Act provides that application may be made to the Tribunal for a review of a decision of the Authority made under Div 3, subject to the AAT Act. The Tribunal's powers on review are provided by s 43(1) of the AAT Act, which is in terms: 93 Migration Act, s 308(1)(c). 94 Migration Act, s 308(1)(b). s 25(4A), inserted by the Administrative Appeals Tribunal Amendment Act 2005 (Cth), Sched 1, item 73; commenced 16 May 2005. "For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: affirming the decision under review; varying the decision under review; or setting aside the decision under review and: making a decision in substitution for the decision so set aside; or remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal." And s 43(6) provides: "A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect." The Tribunal is provided, in the first instance, with the evidence and materials upon which the original decision-maker's decision was based, and copies of all relevant documents in that person's possession96. The Tribunal may require other documents to be lodged, where it considers they may be relevant to its review97. Amongst the procedural powers given to the Tribunal is the power to require a person to give evidence and produce books, documents or things mentioned in the Tribunal's summons98. It may direct a party to the proceedings to provide further information in relation to the proceedings99. s 40(1A). s 33(2A)(a). The Tribunal's decision On 31 July 2003 the Tribunal granted a stay with respect to the Authority's decision100, subject to conditions that the appellant be supervised by another migration agent and that he undertake not to engage in any business relating to protection visas. Visas of this kind are granted where a non-citizen has established a claim to the status of a refugee101. The process undertaken by the Tribunal was to make findings as to the breaches by the appellant of the Code of Conduct, receive submissions with respect to those findings and then publish its decision. The Tribunal did not find that the appellant had breached the provisions of the Code to the extent that the Authority had. Nevertheless it found 51 breaches, 47 of which related to protection visa cases. In its decision of 2 September 2005 the Tribunal concluded, to the contrary of the conclusion reached by the Authority, that it was not satisfied that the appellant was not a person of integrity or was not otherwise a fit and proper person to give immigration assistance102. It made orders setting aside the decisions under review. It substituted, for the cancellation decision, a decision that the appellant be cautioned pursuant to s 303(1)(c) and that the caution would be lifted on 1 September 2008 if he complied with conditions in terms of those attaching to the stay it had granted. A further issue on appeal is whether the Tribunal has power to impose conditions of this kind. In reaching its decision the Tribunal took into account that the appellant had been supervised for two years and the supervisor, who was a knowledgeable and experienced migration agent, held the appellant in high regard. There had been no evidence of breaches since the Authority's decision in 2003 and his rate of success had been very high in recent years. Further, most of the non- compliances with the Code of Conduct related to protection visas and the appellant had not dealt with them since 2003. It is the Tribunal's consideration of these matters which gives rise to the principal question on the appeal, because they are referable to events occurring after the Authority's decision. 100 See AAT Act, s 41(2). 101 See Migration Act, s 36. 102 Shi v Migration Agents Registration Authority [2005] AATA 851 at [24]. The reasons of the Full Court A majority of a Full Court of the Federal Court (Nicholson and Tracey JJ)103 upheld the decision of the primary judge (Edmonds J)104, that the Tribunal was limited in its review powers to the facts and matters upon which the Authority's decision had been based. Edmonds J held that this was established by a "clear line of authority"105 in the Federal Court, commencing with Freeman v Secretary, Department of Social Security106. His Honour held that the question that the Tribunal had to ask itself was whether, on 14 July 2003, the correct or preferable decision was to cancel the appellant's registration; which is to say, whether at that date the appellant was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance107. The majority in the Full Court considered that s 303(1) was intended to operate so as to provide a disciplinary result at the date the conduct was established108. There was nothing to suggest that later evidence, of a rehabilitative kind or as to character, should be taken into account. Tracey J pointed to a further temporal element, arising from the consequence that an agent, whose registration is cancelled, cannot be registered within five years of the date of the cancellation decision109. Downes J dissented. In his Honour's view it is the satisfaction of the Tribunal to which s 303(1) of the Migration Act refers, once it becomes the decision-maker. The relevant conduct is therefore to be established at the time it makes its decision110. His Honour distinguished Freeman, for the reason that the statute there required the Tribunal to address the relevant circumstances at a particular point of time. There was nothing about the nature of the decision in the present case which caused his Honour to consider that there should be a 103 Shi v Migration Agents Registration Authority (2007) 158 FCR 525. 104 Migration Agents Registration Authority v Shi (2006) 43 AAR 424. 105 Migration Agents Registration Authority v Shi (2006) 43 AAR 424 at 443 [73]. 106 (1988) 19 FCR 342. 107 Migration Agents Registration Authority v Shi (2006) 43 AAR 424 at 443 [73]. 108 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 533 [16] per Nicholson J, Tracey J agreeing. 109 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 541 [62], referring to Migration Act, s 292. 110 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 538 [46]. departure "from the general principle that administrative review is conducted at the time of the review on the latest material available"111. The majority in the Full Court also upheld the conclusion reached by Edmonds J as to the Tribunal's power to condition the caution in the way it sought to do112. In the interval between the Authority's decision and that of the Tribunal, s 304A was added to the Migration Act113. It provides that the Authority may set one or more conditions for the lifting of a caution it gives to a migration agent. Edmonds J held that the conditions to which the section refers must be those which are consistent with the appellant's entitlement, upon registration, to provide immigration assistance. Neither the Authority nor the Tribunal could set conditions which could not be imposed upon an individual's registration as a migration agent114. Tracey J observed that the notion of conditional registration is foreign to the Act115. The appeal The appellant acknowledged a temporal element to be present with respect to the conduct constituting breaches of the Code of Conduct. He denied that considerations as to his integrity and fitness to provide immigration assistance could be limited in point of time. In addition to maintaining that there were temporal connections arising from the nature of the decision, the respondent's argument focused upon the nature of the review conducted by the Tribunal. The respondent contended that the Tribunal's role was to determine whether the original decision was erroneous. This was the enquiry, of which the cases speak, as to whether it was the "correct or preferable decision", it was submitted. On this view the Tribunal does not exercise the powers of the original decision- maker. It follows, the respondent contended, that the Tribunal is limited to a consideration of evidence which may inform it as to whether the original decision was correct when it was made. 111 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 539 [47]. 112 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 534 [26] per Nicholson J, Tracey J agreeing. 113 Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth), Sched 1, item 71; commenced 1 July 2004. 114 Migration Agents Registration Authority v Shi (2006) 43 AAR 424 at 445 [85]. 115 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 541-542 The nature of the review conducted by the Tribunal depends upon the terms of the statute conferring the right, rather than upon the identification of it as an administrative authority entrusted with a particular type of function116. The jurisdiction of the Tribunal, a statutory tribunal, depends upon there having been a decision made which it is authorised to review117. Section 25 of the AAT Act, together with s 306 of the Migration Act, provides that authority with respect to a decision under s 303(1) of the Migration Act. Section 25(4) of the AAT Act limits the Tribunal's powers to a review of that decision. Section 43(1) of the AAT Act provides for the powers that the Tribunal may exercise with respect to matters in respect of which it has jurisdiction. The exercise of the powers conferred by the sub-section is restricted to the Tribunal's purpose, of reviewing the decision in question118. As Sheppard J said in Secretary to the Department of Social Security v Riley119, it is not possible to apply s 43(1) to the facts of any case without determining, first of all, what is the decision under review. It may therefore be appreciated that the decision, and the statutory question it answers, should be identified with some precision, for it marks the boundaries of the review. Section 43(1) expresses clearly that the Tribunal may exercise all of the powers and discretions conferred upon the original decision-maker120. The Tribunal has been said to stand in the shoes of the original decision-maker, for the purpose of its review121. In Minister for Immigration and Ethnic Affairs v 116 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 621-622 per Mason J, Barwick CJ and Stephen J agreeing; [1976] HCA 62; applied in Re Coldham; Ex parte Brideson [No 2] (1990) 170 CLR 267 at 273-274 per Deane, Gaudron and McHugh JJ; [1990] HCA 36; and see Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 202-203 [11]-[12] per Gleeson CJ, Gaudron and Hayne JJ; [2000] HCA 47. 117 Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1978) 1 ALD 167 at 180 per Brennan J; on appeal Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307 at 313 per Bowen CJ, 334 per Smithers J; Secretary, Department of Social Security v Hodgson (1992) 37 FCR 118 Hodgson (1992) 37 FCR 32 at 40. 119 (1987) 17 FCR 99 at 104-105. 120 Hodgson (1992) 37 FCR 32 at 39-40. 121 Minister for Immigration and Ethnic Affairs v Pochi (1980) 31 ALR 666 at 671 per Smithers J; Hodgson (1992) 37 FCR 32 at 40; Liedig v Commissioner of Taxation (1994) 50 FCR 461 at 464. Pochi122 Smithers J said that, in reaching a decision on review of a decision of the original decision-maker, the Tribunal should consider itself as though it were performing the function of that administrator in accordance with the law as it applied to that person123. In Liedig v Commissioner of Taxation124, Hill J adopted, as applicable to the Tribunal, what Kitto J said of the Taxation Board of Review in Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation125, namely that its function is "merely to do over again … what the Commissioner did in making the assessment", within the limits of the taxpayer's objection. In Strange-Muir v Corrective Services Commission of New South Wales126 McHugh JA held that there was a presumption, which operated as a rule, that an appeal to an administrative tribunal against an administrative decision would not usually involve a grant of jurisdiction to make a fresh or original decision. The respondent relied upon this decision as supporting a more limited role for the Tribunal, one concerned with ascertaining whether the decision under review was attended with error. As McHugh JA acknowledged, however, any such presumption gives way to contrary statutory indications127. There can be little room for its operation where, as here, the Tribunal is expressly provided with the powers of the original decision-maker128 and its decision, to vary or substitute the original decision, is taken to be that of the original decision-maker129. The respondent argued that s 43(6), read with s 43(1), shows that the Tribunal is only intended to exercise the power of the original decision-maker when it discovers error. Error is the foundation for the power to vary or set aside the decision, under s 43(1)(b) or (c)(i). Where it affirms a decision130 it 122 (1980) 31 ALR 666. 123 (1980) 31 ALR 666 at 671. 124 (1994) 50 FCR 461 at 464. 125 (1963) 113 CLR 475 at 502; [1963] HCA 41. 126 (1986) 5 NSWLR 234 at 251. 127 (1986) 5 NSWLR 234 at 249, 250 and see Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 621-622; Re Coldham; Ex parte Brideson [No 2] (1990) 170 CLR 267 at 272-273 per Deane, Gaudron and 128 AAT Act, s 43(1). 129 AAT Act, s 43(6). 130 AAT Act, s 43(1)(a). determines that the decision is correct. In the case of remitter131, the further exercise of powers is left to the original decision-maker. The respondent's argument does not distinguish between the powers given to the Tribunal by s 43(1) "[f]or the purpose of reviewing a decision" and the making of a decision, under pars (a) to (c), following upon that review and to give effect to it. Indeed the argument tends to ignore the powers, which are to permit the Tribunal to consider for itself what the decision should be. Such powers are not consistent with a role limited to the ascertainment of error. The respondent conceded that its argument treats the function of the Tribunal as analogous to that of an appeal court. The question for a court on an appeal, in the strict sense, is whether the decision sought to be corrected was right or wrong, judged at the time it was given132. Even if a court is given power to receive further evidence, as the Tribunal is, its powers by way of rehearing would be construed on the basis that they were to be exercised for the correction of error, the respondent pointed out133. The respondent was concerned to distinguish the Tribunal's function from a function exercised by way of hearing de novo, where the matter is heard afresh and a decision given on the evidence presented at that hearing134. Professor Allars has observed that the judicial paradigm of procedure is such a familiar model for decision-making to lawyers, that it tends to overshadow the alternative choices which can be made for the procedures of tribunals135. 131 AAT Act, s 43(1)(c)(ii). 132 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 109 per Dixon J; [1931] HCA 34; Allesch v Maunz (2000) 203 CLR 172 at 180-181 [23] per Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 40; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [12] per Gleeson CJ, Gaudron 133 Relying upon Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [14] per Gleeson CJ, Gaudron and 134 Allesch v Maunz (2000) 203 CLR 172 at 180-181 [23] per Gaudron, McHugh, Gummow and Hayne JJ; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [13] per Gleeson CJ, 135 Allars, "Neutrality, the Judicial Paradigm and Tribunal Procedure", (1991) 13 Sydney Law Review 377 at 377-378. Professor Allars' comments have a clear application to the AAT Act. Provisions for more informal and expeditious procedures are a direct legislative response to the dominance of the judicial paradigm136. It was the need to overcome the complex and strict requirements of judicial review of administrative decisions that led to the recommendation for a general tribunal, which became the Administrative Appeals Tribunal137. the Kerr Report acknowledged that people affected by administrative decisions wanted a review of the merits of the decision138. The authors of The term "merits review" does not appear in the AAT Act, although it is often used to explain that the function of the Tribunal extends beyond a review for legal error, to a consideration of the facts and circumstances relevant to the decision. The object of the review undertaken by the Tribunal has been said to be to determine what is the "correct or preferable decision"139. "Preferable" is apt to refer to a decision which involves discretionary considerations140. A "correct" decision, in the context of review, might be taken to be one rightly made, in the proper sense141. It is, inevitably, a decision by the original decision-maker with which the Tribunal agrees. Smithers J, in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd142, said that it is for the Tribunal to determine whether the decision is acceptable, when tested against the requirements of good government. This is because the Tribunal, in essence, is an instrument of government administration. 136 Allars, "Neutrality, the Judicial Paradigm and Tribunal Procedure", (1991) 13 Sydney Law Review 377 at 378. 137 Report of the Commonwealth Administrative Review Committee, (August 1971) ("the Kerr Report") at 1 [5], 9 [20]-[21]. 138 Kerr Report at 9 [20]. 139 Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589, 591 per Bowen CJ and Deane J; Nevistic v Minister for Immigration and Ethnic Affairs (1981) 34 ALR 639 at 646 per Deane J, 651 per Lockhart J; Freeman (1988) 19 FCR 342 at 345; Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services (1992) 39 FCR 225 at 234. 140 McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at 427 [1] per Gleeson CJ and Kirby J; [2006] HCA 45. 141 Drake (1979) 24 ALR 577 at 601 per Smithers J. 142 (1979) 24 ALR 307 at 335. The reasons of the members of the Full Court of the Federal Court in Drake v Minister for Immigration and Ethnic Affairs143 confirm what is apparent from s 43(1), that the Tribunal reaches its conclusion, as to what is the correct decision, by conducting its own, independent, assessment and determination of the matters necessary to be addressed144. To the contrary of the argument put by the respondent on this appeal, that the Tribunal's exercise of power is dependent upon the existence of error in the original decision, Smithers J denied that the Tribunal was limited to something of a supervisory role. As his Honour said, the Tribunal is authorised and required to review the actual decision, not the reasons for it145. In considering what is the right decision, the Tribunal must address the same question as the original decision-maker was required to address146. Identifying the question raised by the statute for decision will usually determine the facts which may be taken into account in connection with the decision. The issue is then one of relevance, determined by reference to the elements in the question, or questions, necessary to be addressed in reaching a decision. It is not to be confused with the Tribunal's general procedural powers to obtain evidence. The issue is whether evidence, so obtained, may be taken into account with respect to the specific decision which is the subject of review. Where the decision to be made contains no temporal element, evidence of matters occurring after the original decision may be taken into account by the Tribunal in the process of informing itself. Cases which state that the Tribunal is not limited to the evidence before the original decision-maker, or available to that person, are to be understood in this light147. It is otherwise where the review to be conducted by the Tribunal is limited to deciding the question by reference to a particular point in time148. 143 (1979) 24 ALR 577. 144 (1979) 24 ALR 577 at 591 per Bowen CJ and Deane J, 599 per Smithers J; and see Nevistic v Minister for Immigration and Ethnic Affairs (1981) 34 ALR 639 at 648 145 (1979) 24 ALR 577 at 599. 146 Hospital Benefit Fund (1992) 39 FCR 225 at 234. 147 See eg Drake (1979) 24 ALR 577 at 589 per Bowen CJ and Deane J; Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 453; Jebb v Repatriation Commission (1988) 80 ALR 329 at 333-334; Hospital Benefit Fund (1992) 39 FCR 225 at 234; Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511 at 148 Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511 at 521. In Freeman, Davies J identified the importance of the nature of the decision under review, in determining what facts the Tribunal might take into account149. A decision had been made to cancel Mrs Freeman's widow's pension. The definition of "widow", in the Act providing for the pension, did not include a widow who was living with a man, as his de facto wife. That circumstance applied to Mrs Freeman at the time of the decision. That was sufficient to disentitle her from receipt of a pension. The statutory scheme was such that a pension, once cancelled on this ground, could only be reinstated on a further claim being made150. Subsequent to the cancellation decision Mrs Freeman's circumstances changed, such that she again qualified for the pension. His Honour held the Tribunal to have been correct to limit its consideration to the circumstances existing at the time the decision to cancel was made. The Tribunal was entitled to take into account all the facts placed before it, but the issue was whether the decision it was reviewing, to cancel the pension, was the correct or preferable decision when it was made. It was not whether Mrs Freeman had an entitlement to a widow's pension at the date of the Tribunal's decision151. The situation in Freeman was distinguished by Davies J from cases where the matter to be determined is a person's entitlement to a pension152. Where that was the decision to be reviewed the Tribunal might not be limited to facts existing at a particular time, since the entitlement might be a continuing one. His Honour did not suggest, by this comparison, that the ambit of the decision to be reviewed was to be determined by a general description of what the decision concerned – a grant or a cancellation of an entitlement. In each case what is entailed in a decision is to be ascertained by reference to the statute providing for The question which here arose for the Authority under s 303(1), which it answered, was whether it should exercise its powers, under pars (a) to (c) of the sub-section, because the grounds in pars (h) and (f) were established, in particular because the appellant had breached the Code of Conduct. That part of the decision which comprises the finding, that the ground in par (h) had been made out, was referable to conduct which had occurred to a point in time. That is the nature of the finding required by the provision. It follows that the Tribunal was restricted to a consideration of events to that point and not those occurring later, 149 (1988) 19 FCR 342 at 345. 150 As Davies J observed: (1988) 19 FCR 342 at 345. 151 (1988) 19 FCR 342 at 344. 152 (1988) 19 FCR 342 at 345. in determining for itself whether there had been non-compliance with the Code. The appellant accepted as much in his submissions. There is another restriction which operates with respect to the evidence the Tribunal may consider as to this ground. The effect of the restriction appears to have been assumed in argument. The Tribunal does not acquire all the powers of the Authority, but only those necessary to review the decision made by it153. The Authority's decision concerned particular conduct of the appellant, which it had investigated. The Tribunal does not have all the Authority's disciplinary powers, and does not have its investigatory powers for the purposes given by the Migration Act. The question for the Tribunal is not whether there has been a breach by the appellant of the Code in any respect, but whether those identified by the Authority are established. It may use its own evidence-gathering powers to further inform itself about those matters, but those powers do not translate to general investigatory powers and cannot be used to ascertain other, inculpatory, conduct. The ground in s 303(1)(f) involves the Tribunal in considerations of a different kind. The ordinary meaning of a person's "integrity" is plain enough. The expression "fit and proper" is one traditionally used with reference to an office or vocation, "fit" being referable to a person's honesty, knowledge and ability154. A person's knowledge of migration procedure is one of the matters listed in s 290(2) of the Migration Act, as necessary to be taken into account by the Authority in determining whether a person is not fit and proper or not a person of integrity. That section provides that a person must not be registered as a migration agent if the Authority is not satisfied that they have those characteristics. Section 303(1)(f) provides that the Authority may take disciplinary action if it "becomes satisfied" that a registered migration agent is not a person of integrity or otherwise not a fit and proper person to give immigration assistance. The Migration Act provides the Authority with an ongoing role, to monitor the conduct of agents and to take disciplinary action where necessary. The reference to the Authority becoming satisfied was considered by Tracey J to identify a point in time, one at which the Authority was no longer satisfied about the 153 Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 452. 154 Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board (2007) 81 ALJR 1155 at 1161 [23] per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; 234 ALR 618 at 624; [2007] HCA 23; Hughes and Vale Pty Ltd v The State of New South Wales [No 2] (1955) 93 CLR 127 at 156-157 per Dixon CJ, McTiernan and Webb JJ; [1955] HCA 28. agent155. The topic with which s 303(1)(f) is concerned is not, however, one which identifies particular conduct, as is the case with respect to breaches of the Code of Conduct. The enquiry posed by the paragraph is a general one, and it may be considered by the Tribunal in that way. It does not limit an assessment of an agent's integrity and fitness to what has been conveyed by any breaches. There is no reason why the Tribunal's review should not extend to any information which sheds light upon the presence or absence of the necessary characteristics in the migration agent. The list in s 290(2) is not exhaustive. There is good reason why the Tribunal should be in a position to consider the most recent material bearing upon the question of an agent's integrity and their fitness to continue to provide immigration assistance. By this means facts such as an agent's subsequent conviction for a serious offence could be taken into account. The relevance of such a factor, to the question of an agent's integrity and fitness, is confirmed by its specification in s 290(2), as a matter which must be taken into account by the Authority in connection with their registration. Tracey J also considered that the fact that an agent cannot be registered within five years from the date of a cancellation decision, focuses attention upon the point in time where the Authority is satisfied about an agent's conduct and shortcomings156. It may be accepted that the focus of s 292 is upon the date that cancellation takes effect; but it is not concerned with who made the decision. Where the Authority has made a decision to cancel and the Tribunal affirms that decision, time will continue to run from the date of that decision for the purposes of s 292. Where the Authority has decided not to cancel the registration, but the Tribunal considers that it was not the correct decision, and substitutes a decision to cancel, the effect of s 43(6) of the AAT Act is that time will run from the date of the Authority's decision or from the date that the Tribunal orders that the substituted decision will operate from. This does not suggest the date of the Authority's decision to be critical for this purpose. The effect provided for by s 292 upon cancellation, does not alter the nature of the question arising under s 303(1)(f). The Tribunal used the evidence of the appellant's subsequent conduct to determine that question. The Tribunal had observed that there was no evidence that the appellant had acted dishonestly. Nevertheless, it was concerned about the breaches of the Code and what that conveyed about him and his attitude. It may be inferred that the Tribunal considered his more recent conduct as a migration agent showed him in a different light. It was entitled to have regard to this evidence in answering the statutory question about his fitness and integrity. It was a matter for it what weight it gave to the evidence, having regard to the 155 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 541 [62]. 156 Shi v Migration Agents Registration Authority (2007) 158 FCR 525 at 541 [62]. nature and extent of the breaches found by it. The Tribunal did not say how it determined the appellant's fitness for the duties of a migration agent, given the restrictions and level of supervision he had operated under, but no issue arises as to its ability to reach the conclusion it did. It remained for the Tribunal to consider what disciplinary action ought to follow upon its being satisfied that the ground in s 303(1)(h) was made out. The decision for the Tribunal involved consideration of one of the three available courses of action, those referred to in pars (a) to (c): cancelling the appellant's registration, suspending it or cautioning him. It is not suggested that it was appropriate for the Tribunal to take no action, assuming for present purposes that that was an option. The Tribunal determined, in effect, that a continuance of the regime that had applied under the orders for a stay of the Authority's cancellation decision would be a sufficient protection for the public. It would ensure that the appellant could not provide assistance with respect to protection visas, an area where he had not performed satisfactorily in the past; and he would remain subject to the supervision of an experienced migration agent for the same period as the Authority had determined as applying to the cancellation of his registration. A caution would of course permit the appellant to continue to operate as a registered migration agent. The details of a caution made under s 303(1)(c) are required to be shown on the Register of Migration Agents157 and are removed when the caution ceases to have effect158. The notification serves as both a warning to the public and an admonition of the agent. A caution does not itself affect the entitlement of a migration agent, consequent upon registration, to provide immigration assistance of any kind. The conditions sought to be imposed by the Tribunal were not conditions "for the lifting of a caution", as s 304A permits. They did not involve some requirement, the fulfilment of which had the effect of permitting the removal of the caution. An example of a condition operating in this way is one requiring the completion of a course of relevant education by an agent159. The conditions in question were requirements by which it was sought to make the caution effective for other purposes. 157 Migration Act, s 287(2)(h). 158 Migration Act, s 287(6) and Migration Agents Regulations 1998, reg 3X. 159 Explanatory Memorandum, Migration Legislation Amendment (Migration Agents Integrity Measures) Bill 2003 at 66, item 71. It was not open to the Tribunal to continue the interim regime, established by the conditions to the stay decision, when making its decision under s 303(1). The enquiry for the Tribunal under the sub-section was what disciplinary action there provided for should be taken; it was not whether the appellant should be permitted to continue as a registered migration agent, subject to conditions limiting his entitlement to give advice and requiring him to be supervised in what advice he did give. The Migration Act does not, in any event, comprehend a restricted form of immigration assistance. A person is either qualified as a registered migration agent, and thereby entitled to continue as such, or they are not. That the Tribunal perceived a need for restrictions may suggest that it did not consider his continuance as a migration agent as appropriate. The critical matter, to this appeal, is that the Tribunal has not addressed the question of disciplinary action as provided by s 303(1). Conclusion It was open to the Tribunal to have regard to the evidence of conduct subsequent to the Authority's decision, so far as it concerned the question under s 303(1)(f), as to his integrity and fitness to continue as a registered migration agent. It was not open to the Tribunal to issue a caution upon the conditions in question. It follows that the Tribunal has not addressed the question, as to which of the disciplinary actions provided for in s 303(1)(a) to (c) should be applied. The Tribunal's decision is thereby attended with jurisdictional error and should be set aside. Edmonds J made orders setting aside the Tribunal's decision and remitting the matter to it, to be determined according to law. His Honour subsequently ordered the appellant to pay the respondent's costs. The decision of the Full Court left these orders undisturbed. The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA AND [2009] HCA 26 29 July 2009 ORDER The respondent have special leave to cross-appeal against order 3 of the orders of the Full Court of the Federal Court of Australia made 20 August 2008 ("the Full Court Orders"), upon the condition that he bear the appellant's costs of the proceedings in this Court. The respondent be deemed to have filed and served the Notice of Cross-Appeal on 21 May 2009. Upon the cross-appeal, order that: cross-appeal allowed; order 3 of the Full Court Orders be set aside and in place thereof: on the cross-claim by the respondent there be judgment entered for the respondent in the sum of $208,350.00, and all questions of the award of interest upon that sum be remitted to the Federal Magistrates Court. Set aside order 5 of the Full Court Orders, to the intent that there be no costs order in respect of the appeal to the Full Court, but otherwise dismiss the appeal to this Court. The respondent pay the costs of the appellant of the proceedings in this Court. On appeal from the Federal Court of Australia Representation G T Bigmore QC for the appellant (instructed by Watson Mangioni Solicitors) B A J Coles QC with B J Skinner for the respondent (instructed by Sparke Helmore) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bankruptcy – Notice – Official Receiver issued notice under s 139ZQ of the Bankruptcy Act 1966 (Cth) ("the Act") asserting certain property transactions void under s 120 of the Act – Notice asserted market value of properties at time of transfer – Failure to comply with notice may result in criminal sanctions under s 139ZT of the Act – Whether notice should be set aside under s 30 or s 139ZS if value stated incorrect. Bankruptcy – Notice – Whether value in s 139ZQ of the Act value at time of transfer or when notice given. Practice and procedure – Pleadings – Whether correctness of value traversed in defence or cross-claim – Effect of failure to make specific denial or specific non- admission in pleadings where trial conducted on basis that correctness of value was in issue. Words and phrases – "valuation", "value ". Bankruptcy Act 1966 (Cth), ss 5, 30, 40(1)(g), 115, 120, 127, 139K, 139ZQ, 139ZR, 139ZS, 139ZT. Federal Court Rules (Cth), O 11, r 13(2). Federal Magistrates Court Rules 2001 (Cth), rr 1.03, 1.05. Federal Magistrates Court Act 1999 (Cth), s 76. GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. The appellant, Mr Vale, is the husband of the bankrupt, Mrs Vale, in respect of whose estate a sequestration order was made on 24 April 2001 by the Federal Magistrates Court of Australia. The respondent ("the Trustee") is the trustee of the estate of This appeal from the Full Court of the Federal Court of Australia (Gray and Tracey JJ, Lindgren J dissenting)1 concerns the operation of the procedures contained in Pt VI, Div 4B, Subdiv J of the Bankruptcy Act 1966 (Cth) ("the Act"). Subdivision J (ss 139ZQ-139ZT) is headed "Collection of money or property by Official Receiver from party to transaction that is void against the trustee". The Full Court allowed an appeal by the present respondent against the decision of the Federal Magistrates Court (Lloyd-Jones FM)2. The litigation in both courts was conducted on the then unchallenged basis of the correctness of a line of Federal Court authority upon the construction of Subdiv J, and the dispute concerned other issues respecting the application of Subdiv J. In this Court, both parties now accept that what was said in the earlier authorities should not be followed. It will be necessary later in these reasons to consider the consequences of this acceptance for the outcome in this Court. But it is convenient first to deal with the other live issues. Section 120 The operation of Subdiv J in the present case is contingent upon the "undervalued transactions" provision in s 120 of the Act. This relevantly provides: "(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and 1 Sutherland v Vale (2008) 170 FCR 112. 2 Sutherland v Vale [2007] FMCA 1617. Crennan the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property. (3) Despite subsection (1), a transfer is not void against the trustee if: the transfer took place more than 2 years before the commencement of the bankruptcy; and the transferee proves that, at the time of the transfer, the transferor was solvent. The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee." For the purposes of s 120, "transfer of property" includes a payment of money, and the "market value of property transferred" is its market value at the time of the transfer (s 120(7)(c))3. An action under s 120 shall not be commenced by a trustee after the expiration of six years from the date of bankruptcy (s 127(3)). In Anscor Pty Ltd v Clout4, Lindgren J emphasised that s 120(1) requires the Court to be satisfied only that the value of the consideration was less than the market value at the date of transfer; it does not require the Court to assign any particular value to the consideration. His Honour added5: "the policy underlying s 120 is to enable the trustee in bankruptcy to recapture the amount of the 'shortfall in consideration'; not to go further by, in effect, requiring the transferee to pay more for the property than its market value at the time of the transfer". "The market value of property transferred" is given the same temporal connection in the other avoidance provisions in ss 121(9)(c) and 122(8)(c). (2004) 135 FCR 469 at 478-479. (2004) 135 FCR 469 at 479. Crennan In the present case, six years have passed and no such action was taken by the Trustee within time. Rather, the Trustee relied upon the remedies conferred by Subdiv J and thus upon the notice provisions it contains. If a transaction be void, by operation of provisions including s 120, then, upon application by the trustee, the Official Receiver is empowered by s 139ZQ(1) to take a certain step. The operation of s 120 upon the facts of this case is not disputed. The step then authorised by s 139ZQ(1) is the issue by the Official Receiver of a notice to a person who received property as a result of that transaction requiring that person to "pay to the trustee an amount equal to the money or the value of the property received". The term "value" in this provision has the meaning given by the definition of "value" in s 139K, namely "the market value of the property when the notice is given". The words "the property received" in s 139ZQ(1) identify that which is to be valued at the time the notice is given. The result is that any rise or fall in value since the date of the transaction is taken into account for the purposes of the notice provisions. In the present case there was a period of some three years between the transaction and the issue of the relevant notice. Nevertheless, a line of Federal Court authority, mentioned earlier in these reasons and to which Lindgren J referred6, treats the value in s 139ZQ(1) as that at the date of the transfer of the property under the avoided transaction. The authorities included Re Lucera; Ex parte Official Trustee v Lucera7 and Re Aley; Ex parte Sweeney v Aley8. They did not refer to s 139K, the definitions in which apply to Div 4B and thus to Subdiv J. The area of debate in this Court first assumed the need for valuation at the transfer date, and the dispute concerned the making of a proper finding of that value and the operation of the notice provisions. The notice must "set out the facts and circumstances because of which the Official Receiver considers that the transaction is void" (s 139ZQ(2)). Once a (2008) 170 FCR 112 at 132. (1994) 53 FCR 329 at 337-338. (1996) 63 FCR 294 at 300-301. Crennan notice has been issued the property is "charged with the liability of the person to make payments to the trustee as required by the notice" (s 139ZR(1)). Failure or refusal to comply with the notice is an offence (s 139ZT(1)). The amount payable to the trustee under the section is recoverable as a debt by action in a court of competent jurisdiction (s 139ZQ(8)). However, on application by the person subject to the notice, or any other interested person, a Court having jurisdiction in bankruptcy under the Act may set aside the notice where it is satisfied that Subdivision J does not apply to the person "on the basis of the alleged facts and circumstances set out in the notice" (s 139ZS(1)). These words are important in construing the section9. It will be necessary to set out the text of several of these provisions later in these reasons. The "jurisdictional fact", upon the existence of which depends the exercise of the power conferred by s 139ZQ, was identified by Carr J in Re McLernon; Ex parte SWF Hoists and Industrial Equipment Pty Ltd v Prebble10. His Honour said11: "the power to issue the notice is conditioned not upon the Official Receiver's opinion or satisfaction that the transaction is void against the trustee but upon the existence of certain circumstances in which a person has received money or property as a result of a transaction that is void against the trustee. The Official Receiver's power is 'dependent upon the existence of a jurisdictional fact'12 and must be subject to challenge in circumstances where the supposed existence of that fact is relied upon13." There is no provision to the effect that the s 139ZQ notice otherwise is conclusive. Further, the use in s 139ZS of the word "alleged" in the phrase "the cf Halse v Norton (1997) 76 FCR 389 at 399. 10 (1995) 58 FCR 391. 11 (1995) 58 FCR 391 at 401. 12 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 427; [1983] HCA 19. 13 cf R v Marks; Ex parte Australian Building Construction Employees and Builders Labourers' Federation (1981) 147 CLR 471 at 489; [1981] HCA 33. Crennan basis of the alleged facts and circumstances" is significant. Hence, Carr J held in "A hearing under s 139ZS is in my opinion a hearing de novo in which the Court may investigate and determine the correctness of the facts and circumstances stated in the notice and whether any defence to the liability asserted in the notice arises out of additional facts proved by the applicant." The issue of construction between the parties The general terms in which Carr J spoke conceal what in the present litigation is a disputed question of construction of Subdiv J. Sub-sections (1) and (2) of s 139ZQ state: If a person has received any money or property as a result of a transaction that is void against the trustee of a bankrupt under Division 3, the Official Receiver: if the Official Trustee is the trustee – on the initiative of the Official Receiver; or if a registered trustee is the trustee – on application by the trustee; may require the person, by written notice given to the person, to pay to the trustee an amount equal to the money or the value of the property received. The notice must set out the facts and circumstances because of which the Official Receiver considers that the transaction is void against the trustee." (emphasis added) Section 139ZS provides: If the Court, on application by a person to whom a notice has been given under section 139ZQ or by any other interested person, is satisfied that this Subdivision does not apply to the person on the basis of the 14 (1995) 58 FCR 391 at 403. Crennan alleged facts and circumstances set out in the notice, the Court may make an order setting aside the notice. (2) A notice that has been set aside is taken not to have been given." (emphasis added) The Trustee submits that (i) the ground for an application by the appellant under s 139ZS(1) is that Subdiv J "does not apply to [the appellant] on the basis of the alleged facts and circumstances set out in the notice", (ii) the facts and circumstances there identified correspond to those considered by the Official Receiver to render the transaction in question void against the Trustee and identified as required by s 139ZQ(2), (iii) those facts and circumstances do not, where s 120 is the ground of avoidance of a transaction, include the specification of any particular sum of money or value of property received as a result of the transaction, (iv) a notice which, as indicated by s 139ZQ(1), does specify for payment to the Trustee an amount equal to the money or the value of the property received, but is in error as to that amount, is not for that reason liable to attack on the sole ground which is provided by s 139ZS(1), (v) that is because s 139ZS(1) is linked back to s 139ZQ(2), and not s 139ZQ(1), and (vi) any dispute as to the accuracy of the amount to be paid to the Trustee is to be resolved in proceedings to recover the debt or to enforce the charge. On the other hand, the appellant, with the support of Lindgren J in the Full Court, submits that the amount claimed by the Trustee for payment under s 139ZQ(1) is included in "the alleged facts and circumstances set out in the notice", within the meaning of s 139ZS(1), and error in that amount founds a remedy under that sub-section. Both sides appeared to accept that in s 139ZS(1) the phrase "the Court may ..." was used in the sense indicated in authorities such as Leach v The Queen15, namely "the Court shall ...". The sub-section confers a power upon the Court with an obligation to exercise it if the ground specified in the sub-section is made out. Nor did there appear to be any dispute upon another question of construction of the Act. This concerns the interrelation between s 139ZS and s 30(1) of the Act. The latter endows courts of bankruptcy with "full power to decide all questions, whether of law or of fact, in any case of bankruptcy" and to 15 (2007) 230 CLR 1 at 17-18 [38]; [2007] HCA 3. Crennan make "such orders ... as the Court considers necessary for the purposes of carrying out or giving effect to this Act ...". Section 30 has a provenance which includes s 72 of the Bankruptcy Act 1869 (UK)16, s 105 of the Bankruptcy Act 1914 (UK) and s 25 of the Bankruptcy Act 1924 (Cth). It is to be generously construed17, but, consistently with the reasoning in cases such as Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia18, it does not authorise the making of an order which would bring about the Act19. a result which differs from Section 139ZS(2) states that a notice set aside under s 139ZS(1) "is taken not to have been given"; the sub-section does not contemplate severance, reading down or amendment of a notice. that prescribed elsewhere The result of that construction of the legislation is that s 30 could not be relied upon to qualify what otherwise would be the operation of s 139ZS for which the appellant contends. If his interpretation of that section be correct then an error in valuation will found an application to set aside the notice in question. Section 30 cannot save the notice from expungement under s 139ZS(2) by an order preserving its life as to that part of the amount which is accurately claimed. Valuation for the purposes of s 120 (and s 121 and s 122) involves market value at the time of the transfer. Valuation is a notoriously inexact science20. It is apparent from the reference in the opening words of s 139ZQ(1) to those provisions as rendering transactions void under Div 3 of Pt VI of the Act, that questions of the accuracy of particular valuations may be presented by Subdiv J. Section 139ZQ(8) makes allowance for this by using the phrase "recoverable ... as a debt", stating: 16 32 & 33 Vict c 71. 17 See Price v Parsons (1936) 54 CLR 332 at 354, 360; [1936] HCA 5. 18 (1932) 47 CLR 1; [1932] HCA 9. See also Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 586-589 [52]-[59], 615-616 [162]-[166]; [2006] HCA 50. 19 Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 at 597-598; [1984] HCA 44. 20 See Boland v Yates (1999) 74 ALJR 209; 167 ALR 575; [1999] HCA 64. Crennan "An amount payable by a person to the trustee under this section is recoverable by the trustee as a debt by action against the person in a court of competent jurisdiction." The provision requires treatment as a liquidated sum of an amount claimed by the trustee as being equal to the value received. In that sense it represents an adaptation and extension of the rule in Shepherd v Hills21 respecting statutory obligations to pay money and recovery on a liquidated claim. The scheme of Subdiv J encourages the saving of costs by, on the one hand, compliance with the notice by the transfer to the trustee of property in respect of the value of which the notice requires payment (s 139ZQ(7)) and on the other, by the revocation or amendment of notices to accommodate a settlement (s 139ZQ(4)). But s 139ZS does not provide the means for the determination of a dispute, not as to the engagement of the avoidance provision, here s 120, but as to the amount payment of which is required by the notice. Such disputes are to be resolved in proceedings to recover the debt or enforce the charge. In an action by the Trustee to recover that amount as a debt, the appellant would be at liberty to establish such matters of fact, from which the liability was alleged to arise, as were disputed22. The same would be so in any action to restrain the exercise of the power of sale conferred by s 139ZR(6). There remains for consideration s 139ZT. This revives the spectre of imprisonment for failure to pay a debt, namely the amount payment of which is required by the notice. But the section should not be construed so as to permit imprisonment for a period not exceeding six months for failure or refusal to pay that which could not have been recovered in full by civil action pursuant to s 139ZQ(8). When Subdiv J is read as a whole, it is apparent that the construction of s 139ZS for which the Trustee contends in steps (i)-(vi) set out above should be 21 (1855) 11 Ex 55 at 67 [156 ER 743 at 747]; see The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 313 [65]; [1998] HCA 20. 22 See Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51. Crennan accepted. With that in mind, it is convenient to turn to the facts and the course of the litigation. The facts and the litigation Mr and Mrs Vale were the registered proprietors as joint tenants of seven parcels of land registered under the Real Property Act 1900 (NSW). On 28 September 1998 Mr and Mrs Vale obtained a "valuation" ("the 1998 valuation") which was based upon the sum of the highest range of prices given, and gave a total valuation of $540,000.00. The sum of the lowest range of prices given was $520,000.00. This "valuation" contained a disclaimer that it was "an opinion of a reasonable asking price only and not to be taken as a sworn valuation". On 31 March 1999 a further valuation of the properties was obtained, giving a total value of $416,700.00 ("the 1999 valuation"). This valuation was obtained for the purpose of assessing the stamp duty payable on the proposed transfer of Mrs Vale's interests in the properties to Mr Vale. It was undertaken by a registered valuer and it did not contain a disclaimer. The interest of Mrs Vale as joint tenant in the properties was transferred to Mr Vale on 23 April 1999, the date certified on the transfer, in exchange for $2.00. On 26 February 2001 Mrs Vale committed an act of bankruptcy upon failure to comply with a bankruptcy notice (s 40(1)(g)). This marked the commencement of bankruptcy, for the purposes of the Act (ss 5 and 115). The transfer of Mrs Vale's interests in the properties occurred within two years of the commencement of her bankruptcy and was for less than the market value of the properties. The result is that the transfer was void by reason of s 120(1) of the Act and s 120(3) had no application. As remarked earlier in these reasons, the appellant does not deny the operation of s 120 to the facts of this case. On 27 May 2002 a notice was issued by the Official Receiver to Mr Vale and was expressed to be pursuant to s 139ZQ of the Act ("the Notice"). The Notice recited the 1998 valuation of $540,000.00 and Mrs Vale's ownership as joint tenant with Mr Vale. It stated that payment by him of one half of that sum, $270,000.00, was required 28 days after service upon him of the Notice. The charge created by s 139ZR in favour of the Trustee was registered upon the title to the properties. The dispute concerns not the satisfaction of the jurisdictional fact presented by s 120, but the amount claimed by the Notice. Several years passed. By Statement of Claim filed on 19 April 2006 in the Federal Magistrates Court (which is a court of bankruptcy identified in s 27 of the Act), the Trustee sought possession of the land against which the charge was registered, and also sought to recover by an action in debt with a claim for Crennan judgment against Mr Vale for $270,000.00 "together with interest". By his cross-claim, and his defence, Mr Vale sought an order under s 139ZQ setting aside the Notice. On 2 October 2007 Lloyd-Jones FM, on the cross-claim, set aside the Notice and, consequently refused the relief sought by the Trustee in this action. The Notice was set aside on the ground that it contained three "significant errors". These were that the Notice, (1) referred to the 1998 valuation as a "registered valuation" when, in fact, it was only a "market appraisal"; (2) valued the properties at $540,000.00 which was not established to be their "proper value" in light of the 1999 valuation; and (3) stated that the transfer of properties had taken place "within two years" of Mrs Vale's bankruptcy when in fact this was not the case. The Trustee appealed to the Full Court of the Federal Court of Australia. By majority (Gray and Tracey JJ, Lindgren J dissenting) the appeal was allowed, the orders of Lloyd-Jones FM were set aside and the proceedings were remitted "to be heard and determined according to law". The majority held that "it was not open to the Federal Magistrate to find that the asserted value of Mrs Vale's interest [in] the properties constituted a material error in the s 139ZQ notice"23 because none of the "significant errors" found by Lloyd-Jones FM had been pleaded or put in issue by Mr Vale's defence or cross-claim24. Furthermore, their Honours held that the first error was "of no consequence" and that the third error did not exist because the transaction in fact had occurred within two years of the commencement of Mrs Vale's bankruptcy. In relation to the second error their Honours observed that25: "Had the valuation been put in issue in Mr Vale's cross-claim or, perhaps, in his defence, the onus of satisfying the Court that the value of the transfer, said to be void against the trustee under s 120(1) of the Act, would have fallen on the trustee: see Halse v Norton26." 23 (2008) 170 FCR 112 at 122. 24 (2008) 170 FCR 112 at 119. 25 (2008) 170 FCR 112 at 119. 26 (1997) 76 FCR 389. Crennan However, they held, because Mr Vale had not put in issue the value given to the properties in the Notice, that the resolution of that issue could not form the foundation for an order setting aside the Notice. This holding in relation to the second error found at first instance forms the basis of the appeal by Mr Vale to this Court. Mr Vale submits that, given the course of the proceedings at first instance, the valuation had been put in issue both in the principal proceeding and also on his cross-claim under s 139ZS and that it was open to Lloyd-Jones FM, based upon the material before him, to conclude that the value of $270,000.00 asserted in the Notice constituted a significant error. However, as indicated earlier in these reasons, the Trustee counters this with the submission that s 139ZS did not provide a forum for the determination of the accuracy of the value asserted in the Notice. It is convenient to deal first with the submission by Mr Vale and then further with that by the Trustee. Was the trustee put to proof? The Trustee was put to proof of the value asserted in the Notice. Paragraph 3 of the statement of claim read as follows: "On or about 28 September 1998, [Mr and Mrs Vale] obtained a valuation of the properties from First National Real Estate. The market value at that time was $540,000." Mr Vale's defence responded that he: "(a) Admits that he received from Tony Riley of O'Brien McGregor First National Real Estate a letter dated 28 September 1998 which indicated a reasonable asking price for each of the Properties (b) On or about 31 March 1999, [Mr Vale] received an Appraisal and Report by Patrick James Wood, registered valuer, each dated 31 March 1999, in respect of each of the Properties." (emphasis added) It is clear from Mr Vale's response to par 3 of the statement of claim that, as Lindgren J rightly noted, Mr Vale did not admit that $540,000.00, the value given in the 1998 valuation, was a correct valuation of the properties' market value and, in light of (b) above, he intended to put the Trustee to proof in relation to that value. Further, in par 12 of his defence Mr Vale denied that he was Crennan obliged to pay any principal sum asserted. However, Gray and Tracey JJ noted that27: "[Mr Vale] acknowledged that the sum of $270,000, which was demanded in the notice, was 'properly payable'." This acknowledgment by Mr Vale was in response to par 11 of the Trustee's statement of claim: "As a result of this certificate, a charge in the sum of $270,000.00 in favour of [the Trustee] was created over the properties." Mr Vale's response was that he: "Admits paragraph 11 [above] to the extent that the amount $270,000.00 is properly payable." In light of the paragraphs disclaiming admission set out above, Lindgren J concluded that the words "the extent that" meant that if it should be found that $270,000.00 was properly payable then Mr Vale admitted that a charge was created as a result of the certificate28. This conclusion is supported by the submissions of counsel for Mr Vale in his final address: "So far as the statements made by [the Trustee's counsel] dealing with the effect of the registration of the charge is concerned, the charge has been lodged, the certificate has been lodged on its face. It is a charge. It's only a charge though for the amount that's properly due and owed. What is, I must admit, quite surprising is we have an officer of the Court being [the Trustee] who knowing that he has registered valuations in his possession of 30 March 1999 which bring the value in at $208,850 [sic] procures the official receiver to issue a notice for [$270,000.00] based on a valuation, which isn't a valuation, almost a year before." It is true that, as was noted by Lindgren J, nothing in the defence amounted to a "specific denial" or "a statement of specific non-admission", as 27 (2008) 170 FCR 112 at 119. 28 (2008) 170 FCR 112 at 130. Crennan required by the applicable court rules (Federal Court Rules (Cth) O 11, r 13(2))29 in order to avoid a deemed admission. Nevertheless, the hearing was conducted on the basis that the value of the properties at the time of the transfer which was stated in the Notice was in issue. Counsel for Mr Vale made it clear in his opening address that Mr Vale was challenging the amount stated in the Notice: "... the notice on its face is wrong. It's wrong (a) as to amount and (b) as to any evidentiary basis upon which you can substantiate what the value It is also clear from his closing address outlined above that value was in issue. Furthermore, the Trustee was cross-examined in relation to the value of the properties given in the Notice. Specifically, he was taken through the ramifications of the 1999 valuation, for example: "Then, on page 13, this is in respect of the lot 18 valuation, it values the property, with improvements, at $130,000? --- Yes, it does." Counsel for the Trustee did not object to this line of questioning. The evidence of the disparity between the valuations had been in the Trustee's possession and was in evidence. In his written submissions to this Court the Trustee contends that the determination of whether Mr Vale disputed the value asserted in the Notice "depends entirely" upon whether in his defence he made a "specific denial" or a statement of "specific non-admission" in accordance with the rules, as outlined above. However, in Banque Commerciale SA (En Liquidation) v Akhil Holdings "But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. ... cases are determined on the evidence, not the pleadings." 29 These rules were applicable by virtue of rr 1.03 and 1.05 of the Federal Magistrates Court Rules 2001 (Cth). 30 (1990) 169 CLR 279 at 296-297; [1990] HCA 11. Crennan Thus, whatever view is taken of the range of issues tendered by the pleadings, it was open to Lloyd-Jones FM to decide the case as he did. No unfairness results to the Trustee from such a result. The correctness of the valuation A Notice issued under s 139ZQ(1) can only require a person to pay to the Trustee "an amount equal to the money or the value of the property received". As observed earlier in these reasons, there was no challenge in the Full Court to the line of Federal Court authority that the value identified in this section is that at the date of receipt, rather than (as the definition in s 139K requires) at the date when the notice is given. Gray and Tracey JJ accepted that if the correctness of the value in the Notice had been put in issue by Mr Vale, which, as outlined above, was in fact the case, the onus of satisfying the court as to the value's correctness would have been upon the Trustee31. However, their Honours also stated that evidence adduced pursuant to this onus as to the value of the property, at the time of transfer, "will not be found wanting simply because the third party is able to tender evidence of another valuation of the property at the time of the transfer", given "the inherent imprecision of valuations of this kind"32. This gives insufficient weight to the evidence and the onus borne on the Trustee. The 1998 valuation was undertaken on 28 September, almost seven months prior to the date when the property was transferred, and was "an opinion of a reasonable asking price only and not to be taken as a sworn valuation". The 1999 valuation was undertaken on 31 March, less than one month prior to the date when the property was transferred, by a registered valuer for the purpose of assessing stamp duty. Furthermore, the figure of $540,000.00 marked the upper limit of the 1998 valuation, and no explanation was given as to why this figure was to be preferred to $520,000.00, the lower limit of the 1998 valuation. In these circumstances, the finding by Lloyd-Jones FM that the 1999 valuation was the "best evidence" of the "proper value" of the property at the time of transfer should not have been disturbed by the Full Court. 31 Halse v Norton (1997) 76 FCR 389. 32 (2008) 170 FCR 112 at 122. Crennan The result of the appeal to this Court The majority of the Full Court was correct in its conclusion that the Federal Magistrate had erred in allowing the counter-claim and setting aside the Notice. But the decision of the majority is to be supported on reasoning which differs from that on which they relied. This is because, for the reasons given above, under the heading "The issue of construction between the parties", the Trustee's submission respecting the scope of s 139ZS should be accepted. To that extent, the appeal to this Court should be dismissed. If no further order is made in this Court, the orders of the Full Court will stand. These involve remittal to the Federal Magistrates Court for hearing of the claim brought by the Trustee against the appellant. The relief sought by the Trustee in the statement of claim was an order for possession of the properties and judgment in the sum of $270,000.00 plus interest. The only reason given by the Federal Magistrate for refusing relief was that the Notice had been set aside. The majority in the Full Court expressed strong reservations as to whether the order for possession could be made33. That would leave the money claim for determination on remitter. On the second day of the hearing in this Court the Trustee sought special leave to cross-appeal against the order for remitter made by the Full Court. The question then arises whether, if special leave to cross-appeal is to be granted, it should be on terms respecting the carriage of costs by the Trustee of the Full Court appeal with the restoration of the costs order made by the Federal Magistrate. Written submissions on that question were filed pursuant to orders made at the conclusion of oral submissions. The Trustee as proposed cross-appellant seeks from this Court an order on the proposed cross-appeal for payment not of $270,000.00 but of $208,350.00 together with interest thereon from 28 May 2002. This involves belated acceptance of a proposition that the best evidence as to the value of the half share of the relevant properties was $208,350.00. 33 (2008) 170 FCR 112 at 124. Crennan However, it also assumes the erroneous identification of the temporal element in the valuation requirement, to which reference has been made. Accordingly, the Senior Registrar was directed by the Court to communicate with the parties as follows: "In addition to the questions about which the parties now have leave to make further submissions, the Court would be assisted by such submissions as the parties wish to make about the following questions: (a) Having regard to the definition of 'value' in s 139K, and the contrast that may be drawn between that definition and the provisions of ss 120(7)(c), 129(9)(c) and 122(8)(c), is the 'amount equal to ... the value of the property received' referred to in s 139ZQ to be determined by reference to the value of the property at the date it was transferred or at the date of the notice? That is, does the word 'received' in the phrase 'value of the property received' qualify 'property' or 'value'? Is the course of authority referred to in the reasons of Lindgren J in this matter ((2008) 170 FCR 112 at 132 [90]-[91]) correct? If the answer to (a) is that the value is that at the date of the notice, and to (b) is 'no', what then would be the proper outcome of the proceedings in this Court? In particular, should special leave to cross-appeal be refused (there being no evidence of value at the date of the notice), the appeal be dismissed, and the order of the Full Court for remitter for rehearing, stand?" The further written submissions from both parties correctly answer (a) that the value is that at the date of the Notice and answer (b) in the negative. Further, the appellant now accepts for the purposes of the appeal and any cross-appeal that the relevant value is that of the property at the date of the Notice, 27 May 2002, which was $208,350.00. The Trustee seeks judgment on the cross-claim for that amount. There remain contentions between the parties as to the terms upon which a grant of special leave to cross-appeal might be granted and the provisions for interest upon the $208,350.00 and for the costs of the litigation. The Trustee now seeks to be in the position that would have applied if he had provided the Official Receiver with direct evidence of the value of the properties in question at the date of the Notice. The application for special leave to cross-appeal should be granted but on terms that the Trustee bear the costs of the appellant of the appeal and cross-appeal. The Trustee has indicated acceptance of those terms. Crennan The appellant wishes to dispute the appropriateness of an order for interest and submits that the question of the appropriate rate for any award should be remitted to the Federal Magistrates Court. That submission should be accepted. Order 5 of the orders of the Full Court required the appellant to pay the Trustee's costs of the Full Court appeal. Order 4 provided for the Federal Magistrates Court to determine all questions of costs in that Court. Order 4 should not be disturbed. But order 5 calls for particular consideration. It favoured the Trustee but the Trustee is now held entitled to judgment for $208,350.00 on reasoning which differs from that upon which he succeeded in the Full Court. It would have been open to the Trustee to present to the Full Court the submissions which now have been accepted by this Court. In the circumstances, order 5 should be set aside, and in its place there should be no costs order upon the Full Court appeal. Orders The respondent have special leave to cross-appeal against order 3 of the orders of the Full Court of the Federal Court of Australia made 20 August 2008 ("the Full Court Orders"), upon the condition that he bear the appellant's costs of the proceedings in this Court. The respondent be deemed to have filed and served the Notice of Cross-Appeal on 21 May 2009. Upon the cross-appeal, order that: cross-appeal allowed; order 3 of the Full Court Orders be set aside and in place thereof: on the cross-claim by the respondent there be judgment entered for the respondent in the sum of $208,350.00, and all questions of the award of interest upon that sum be remitted to the Federal Magistrates Court. Crennan Set aside order 5 of the Full Court Orders, to the intent that there be no costs order in respect of the appeal to the Full Court, but otherwise dismiss the appeal to this Court. The respondent pay the costs of the appellant of the proceedings in this Court.

HIGH COURT OF AUSTRALIA INTERNATIONAL FINANCE TRUST COMPANY LIMITED & ANOR APPELLANTS AND NEW SOUTH WALES CRIME COMMISSION & ORS RESPONDENTS International Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49 12 November 2009 1. Appeal allowed. ORDER 2. Vary the orders of the Court of Appeal of the Supreme Court of New South Wales entered 6 November 2008: (a) By adding at the end of order 2, "and proceedings 12212 of 2008 be dismissed and the first respondent pay the costs of those proceedings of the appellants". (b) By adding an order declaring that s 10 of the Criminal Assets Recovery Act 1990 (NSW) is invalid. 3. First respondent to pay the costs of the appellants. On appeal from the Supreme Court of New South Wales Representation T E F Hughes QC with G J Jones and G A F Connolly for the appellants (instructed by Atanaskovic Hartnell) I D Temby QC with P F Singleton for the first respondent (instructed by New South Wales Crime Commission) No appearance for the second and third respondents Interveners S J Gageler SC, Solicitor-General of the Commonwealth with K M Richardson intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with C L Conley intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor for Western Australia) M G Sexton SC, Solicitor-General for the State of New South Wales with J G Renwick intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) P M Tate SC, Solicitor-General for the State of Victoria with K L Walker intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar intervening on behalf of the Attorney-General for the State of Queensland (instructed by Crown Law Queensland) M G Hinton QC, Solicitor-General for the State of South Australia with S T O'Flaherty intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS International Finance Trust Company Limited v New South Wales Crime Commission Constitutional law (Cth) – Judicial power of Commonwealth – Jurisdiction vested in State courts – Criminal Assets Recovery Act 1990 (NSW) ("Act") – Section 10(2) of Act allows New South Wales Crime Commission ("Commission") to apply to Supreme Court of New South Wales ("Supreme Court") ex parte for restraining order in respect of interests in property – Section 10(3) of Act requires Supreme Court to make restraining order in respect of interest of person suspected of engaging in serious crime related activity and in respect of interests in property suspected of being derived from serious crime related activity where affidavit of authorised officer contains reasonable grounds for suspicion – Restraining order prevents persons disposing of or dealing with the interest, or attempting to do so – Section 25 of Act allows for application to exclude interest in property from restraining order – Where restraining orders granted, upon ex parte application by Commission, in respect of various bank accounts, suspected of being derived from serious crime related activity – Whether basis for granting restraining order only positively displaced by exclusion application under s 25 of Act, where applicant bears burden of proving, on balance of probabilities, that interest in property not fraudulently or illegally acquired – Whether s 10 engages Supreme Court in activity repugnant in a fundamental degree to judicial process. Constitutional law (Cth) – Judicial power of Commonwealth – Jurisdiction vested in State courts – Section 22(2)(b) of Act requires Supreme Court, upon application by Commission, to make assets forfeiture order in respect of interests in property if more probable than not that the person whose suspected serious crime related activity formed the basis of restraining order has engaged in the last six years in serious crime related activity involving an offence punishable by imprisonment for five years or more – Whether s 22(2)(b) bill of pains and penalties – Whether s 22(2)(b) engages Supreme Court in activity repugnant in a fundamental degree to judicial process. Statutes – Interpretation – Whether plain intendment of Act the establishment of regime distinct from usual incidents of Supreme Court. Words and phrases – "ancillary orders", "confiscation", "ex parte", "fraudulently acquired property", "illegally acquired property", "reasonably plain intendment", "serious crime related activity". Criminal Assets Recovery Act 1990 (NSW), ss 10, 12(1), 22, 25. Introduction The Criminal Assets Recovery Act 1990 (NSW) ("the CAR Act") empowers the New South Wales Crime Commission1 ("the Commission") to apply to the Supreme Court of New South Wales for a restraining order in respect of some or all of the property of a person suspected of having committed a serious offence2. The provisions relating to restraining orders are in aid of the Commission's power to apply to the Court for forfeiture of the relevant property3. The Commission may apply to the Court for a restraining order without notice to the person affected. If the application is supported by an affidavit stating that the person affected is suspected of having engaged in "serious crime related activities", and setting out the grounds for that suspicion, and if the Court considers, having regard to the affidavit, that there are reasonable grounds for the suspicion, then the Court must make the order sought. The validity of the provisions of the CAR Act providing for restraining orders and assets forfeiture orders is challenged in this appeal from the Court of Appeal of the Supreme Court of New South Wales4. The basis of the challenge is that the CAR Act imposes upon the Supreme Court functions which so distort its institutional integrity as to be inconsistent with its status as a repository of federal jurisdiction, conferred pursuant to Ch III of the Commonwealth Constitution. The challenge relies upon the decision of this Court in Kable v Director of Public Prosecutions (NSW)5. On its proper construction, s 10 of the CAR Act requires the Supreme Court to hear and determine, without notice to the persons affected, applications for restraining orders made ex parte by the Commission. For that reason the section impermissibly directs the Court as to the manner of the exercise of its jurisdiction and restricts the application of procedural fairness in the judicial process and conditions its full application upon a discretion exercised by the Executive branch of the government of New South Wales. It is not to the point 1 Constituted under the New South Wales Crime Commission Act 1985 (NSW), s 5. 2 CAR Act, s 10. 3 CAR Act, s 22. International FinanceTrust Company Ltd v New South Wales Crime Commission (2008) 251 ALR 479. (1996) 189 CLR 51; [1996] HCA 24. that the restriction is temporary, nor that the scope of the order may subsequently be varied by an exclusion order, which can only be made if the party affected shows, on the balance of probabilities, that the affected property was not illegally acquired. In my opinion the section is invalid. Statutory framework The CAR Act sets out a statement of its principal objects, which include providing for the confiscation, without requiring a conviction, of a person's property if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities6. They also include the objective of enabling law enforcement authorities "effectively to identify and recover property."7 It is that object which is served, inter alia, by the provisions of the CAR Act which confer power on the Supreme Court to make restraining orders and ancillary orders requiring examination on oath of persons concerning the affairs of the owner of an interest in property subject to a restraining order8. Proceedings on an application for a restraining order or a confiscation order are not criminal proceedings9. The rules of construction applicable only in relation to the criminal law do not apply to the interpretation of the CAR Act10 (except in relation to an offence against the CAR Act). The rules of evidence applicable in civil proceedings apply, and those applicable only in criminal proceedings do not apply, to proceedings under the CAR Act11. Applications for restraining orders may be made under Pt 2 of the CAR Act. Section 10 provides, inter alia: "(1) A restraining order is an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order. 6 CAR Act, s 3(a). 7 CAR Act, s 3(c). 8 CAR Act, s 12(1)(b). 9 CAR Act, s 5(1). 10 CAR Act, s 5(2)(a). 11 CAR Act, s 5(2)(b). The Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of: specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or specified interests, or a specified class of interests, in property that are interests of any other person, or interests referred to in both paragraph (a) and paragraph (b). The Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating that: in the case of an application in respect of an interest referred to in subsection (2)(a) – the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and in the case of an application in respect of any other interest – the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based, and the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion." The term "serious crime related activity" is defined as "anything done by the person that was at the time a serious criminal offence, whether or not the person has been charged with the offence" or, if charged, had been tried, tried and acquitted, or convicted (even if the conviction had been quashed or set aside)12. The term "serious criminal offence" is defined by reference to a range 12 CAR Act, s 6(1). of specified offences13 including any offence under a law of the Commonwealth or of a place outside Australia which, if committed in New South Wales, would have been a "serious criminal offence"14. The Court may refuse to make a restraining order if the State fails to provide such undertakings as the Court considers appropriate with respect to the payment of damages or costs in relation to the making and operation of the order15. A restraining order made under s 10 is subject to a conditional time limit. After the first two working days of its operation, the order remains in force only while an application for an assets forfeiture order or an unsatisfied proceeds assessment order is pending before the Supreme Court, or if there is an unsatisfied proceeds assessment order in force against the person whose suspected serious crime related activities formed the basis of the restraining order16. If the Court does not make an assets forfeiture order in respect of the relevant property under s 22, then it may make an order in relation to the period for which the restraining order is to remain in force17. If the restraining order is made in respect of an interest in the property of a person, and the person was not notified of the application for the making of the order, notice of its making or variation is to be given by the Commission to the person18. The Supreme Court is empowered when it makes a restraining order or at any later time to make ancillary orders19. If the Commission or any other person 13 CAR Act, s 6(2). The specified offences include drug offences; offences involving money laundering, perverting the course of justice, and tax and revenue evasion, if punishable by more than five years imprisonment; and offences against s 197 of the Crimes Act 1900 (NSW) involving the destruction of or damage to property in excess of $500. Accessorial offences, and conspiracy, attempt or incitement to commit a serious offence are also covered by the definition. 14 CAR Act, s 6(2)(i). 15 CAR Act, s 10(6). 16 CAR Act, s 10(9). 17 CAR Act, s 20(1). 18 CAR Act, s 11(2). 19 CAR Act, s 12. applies for ancillary orders it must give notice of the orders to the person whose property interest is to be affected20. Section 22 provides for assets forfeiture orders to be made on application by the Commission. An application for such an order must be made on notice to a person to whom the application relates and that person may appear and adduce evidence at the hearing of the application21. The application may be made before or after or at the same time as an application for a restraining order but may not be determined prior to the grant of the restraining order22. The Supreme Court is required to make the assets forfeiture order if the condition set out in s 22(2) is satisfied. That condition is that the Court finds it to be more probable than not that the person on whose activities the restraining order was based was, at any time within six years before the application for the assets forfeiture order, engaged in serious crime related activity involving an indictable quantity, or punishable by imprisonment for five years or more. On an assets forfeiture order taking effect in relation to an interest in property, the interest is forfeited to the Crown and vests in the Public Trustee on behalf of the Crown23. A person whose interest in property is or may be the subject of an assets forfeiture order may apply to the Supreme Court for an "exclusion order", excluding the interest from the operation of the assets forfeiture order or any relevant restraining order24. Broadly speaking an exclusion order may only be made if the property interest to be excluded is not fraudulently or illegally acquired property25. The onus of proof is on the party applying for the order. The applicant must give the Commission notice of the application and notice of the grounds on which the exclusion order is sought26. If the Commission proposes to contest the application it must give the applicant notice of the grounds on which the application is to be contested27. 20 CAR Act, s 12(2) read with s 12(3). 21 CAR Act, s 22(9). 22 CAR Act, s 22(1A). 23 CAR Act, s 23(1)(a). 24 CAR Act, s 25(1). 25 CAR Act, s 25(2). The term "illegally acquired property" is defined in s 9, inter alia, as including the proceeds of "illegal activity", a term which is defined in 26 CAR Act, ss 25(5) and 25(6). 27 CAR Act, s 25(7). Factual and procedural history On 13 May 2008, the Commission commenced proceedings by summons filed in the Common Law Division of the Supreme Court of New South Wales against a defendant designated as the "beneficial owners of various bank and share trading accounts". By the summons, the Commission sought final relief in the form of an assets forfeiture order pursuant to s 22 of the CAR Act. The Commission also applied by the summons for a restraining order under s 10, and ancillary orders under s 12 of the CAR Act. The ancillary orders sought would require the Public Trustee to hold money and shares from the accounts specified in three schedules to the summons. The application for a restraining order was supported by the affidavit of an authorised person. It was heard ex parte by Hoeben J on 13 May 2008 and a restraining order was made on that day in the terms sought by the Commission along with the ancillary orders sought under s 12. There was no transcript of the proceedings before Hoeben J and no reasons delivered for making the orders. An amended summons adding a further account was filed on 16 May 2008. A restraining order and ancillary orders were made ex parte on the same day in respect of the interests of the beneficial owners of that account. The owners were joined as second defendant. Further ancillary orders were made on 16 May 2008 requiring the Public Trustee to open domestic and international share trading accounts with Commonwealth Securities Ltd and for shares in the specified accounts with Commonwealth Securities Ltd to be transferred to those accounts. On 13 June 2008, International Finance Trust Company Limited ("IFTC") was joined as third defendant in the proceedings and IFTC Broking Services Limited as fourth defendant. On 6 June 2008, IFTC and IFTC Broking Services filed a notice of intention to appeal against the orders made by Hoeben J on 13 May 2008. Three sets of restraining orders and extensive ancillary orders were made ex parte by Hislop J on 25 October 2008. A fourth amended summons was then filed on behalf of the Commission on 27 October 2008 seeking, inter alia, orders under s 22 in respect of funds and shares held in accounts set out in some seven schedules. On 6 November 2008, the Court of Appeal made orders allowing the appeal and setting aside the orders made on 13 and (with certain immaterial exceptions) 16 May 200828 save for joinder orders. Orders made on 20 and 28 (2008) 251 ALR 479 at 513. 27 May 2008 were also set aside. The appeal was allowed by majority (Allsop P, with Beazley JA agreeing, McClellan CJ at CL dissenting) on the basis that there was no admissible evidence before the primary judge that could provide the requisite reasonable grounds for the suspicion asserted by the authorised officer in the affidavit in support of the application29. However, the Court unanimously rejected a constitutional challenge to the validity of s 1030. This had the effect of leaving the proceedings in the Supreme Court on foot. Special leave to appeal against the decision of the Court of Appeal was granted on 13 March 200931. The appeal to this Court By their notice of appeal, the appellants contended that the Court of Appeal of New South Wales erred: in holding that section 10(3) of the Criminal Assets Recovery Act 1990 (NSW) was valid and not repugnant to the exercise by the Supreme Court of New South Wales of the judicial power of the Commonwealth under Chapter III of the Constitution of the Commonwealth of Australia; and in not dismissing the amended summons filed by the First Respondent in proceeding S12212 of 2008 of the Supreme Court of New South Wales on the ground of the constitutional invalidity of section 10(3) of the Criminal Assets Recovery Act 1990 (NSW)." The decision of the Court of Appeal It is sufficient for present purposes to refer to the reasons of the Court of Appeal on the challenge to the validity of s 10. Those reasons were given by McClellan CJ at CL. Allsop P agreed, as did Beazley JA. In upholding the validity of s 10, McClellan CJ at CL made the following points: It is common for a court to entertain an ex parte application when a matter is urgent, in particular when there is a need to protect assets in 29 (2008) 251 ALR 479 at 487 [39] per Allsop P, Beazley JA agreeing at 490 [56]. 30 (2008) 251 ALR 479 at 503 [101] per McClellan CJ at CL, Allsop P agreeing at 481 [2], Beazley JA agreeing with Allsop P at 490 [56]. 31 [2009] HCATrans 047. circumstances where alerting the defendant may cause the assets to be dissipated32. It is essential, given the nature of the Commission's functions, that it be permitted to make such an application33. Section 10 is the point at which the court process which may lead to the ultimate confiscation of property is initiated34. Restraining orders under s 10 are an incident of a comprehensive scheme, the principal object of which is to confer jurisdiction on the Supreme Court to make assets forfeiture orders35. Under s 10 the Court is required to ensure that the relevant officer holds the necessary suspicion and that there are reasonable grounds for that suspicion. Whether there is admissible evidence to support confiscation of restrained property is a matter determined after an inter partes hearing36. The Court is not bound to "rubber stamp" the affidavit supporting an application under s 10. Section 10(3) raises a justiciable issue and the Court thus has a "determinative role in the process of evaluating the application for the making of the order"37. . When the nature and purpose of the legislation are considered, the provision in s 10 allowing the Commission to elect an ex parte hearing does not so compromise the institutional integrity of the Supreme Court that s 10 is offensive to the Commonwealth Constitution38. 32 (2008) 251 ALR 479 at 502 [98]. 33 (2008) 251 ALR 479 at 502 [98]. 34 (2008) 251 ALR 479 at 502-503 [99]. 35 (2008) 251 ALR 479 at 503 [100]. 36 (2008) 251 ALR 479 at 503 [101]. 37 (2008) 251 ALR 479 at 503 [100]. 38 (2008) 251 ALR 479 at 503 [101]. His Honour held that under s 10(3) the Supreme Court was not free to proceed to hear and determine the application for a restraining order other than ex parte if the Commission had elected to bring the application ex parte39. Allsop P observed additionally that, although it had not been argued in the Court of Appeal, if it were to be concluded that the character of the task conferred upon the Supreme Court by s 10 was administrative and not judicial, the applicability of the Kable doctrine might arise. If it were to be considered that the judge hearing such an application should not, or must not, give reasons, again the applicability of Kable might arise40. Civil forfeiture of assets – a global phenomenon Forfeiture of assets by reason of criminal conduct has a long history in English law41. That history encompasses deodand, common law forfeiture of the property of felons and traitors and statutory forfeiture. Statutory forfeiture has been described by the Supreme Court of the United States as "likely a product of the confluence and merger of the deodand tradition and the belief that the right to own property could be denied the wrongdoer."42 There are broadly two classes of statutory forfeiture. One depends upon conviction and is generally referred to as "criminal assets forfeiture". The other depends upon unlawful conduct and is designated "civil assets forfeiture"43. The 39 (2008) 251 ALR 479 at 504 [104]. 40 (2008) 251 ALR 479 at 489 [52]. 41 See generally Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 279 per Brennan J, 289 per Dawson J; [1994] HCA 10; Blackstone, Commentaries on the Laws of England, (1766), bk 2 at 267-268 and (1769), bk 4 at 374-381; Freiberg and Fox, "Fighting Crime with Forfeiture: Lessons from History", (2000) 6 Australian Journal of Legal History 1; and the celebrated article by J J Finkelstein, "The Goring Ox", (1973) 46 Temple Law Quarterly 169. 42 Calero-Toledo v Pearson Yacht Leasing Co 416 US 663 at 682 (1974); Austin v United States 509 US 602 at 612-613 (1993). These judgments were concerned with the application to in rem civil forfeiture of the Eighth Amendment prohibition on imposition of excessive fines. 43 Early English customs statutes were precursors of criminal assets forfeiture laws, for example the Act of Frauds (1 Eliz c 11). See Harper, The English Navigation Laws: a Seventeenth-Century Experiment in Social Engineering, (1939) at 87; Freiberg and Fox, "Forfeiture, Confiscation and Sentencing", in Fisse, Fraser and Coss (eds), The Money Trail: Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction Reporting, (1992) 106 at 114. The distinction (Footnote continues on next page) first civil assets forfeiture law in Australia was enacted in 1977 when s 229A was introduced into the Customs Act 1901 (Cth). Civil assets forfeiture laws were first enacted in the United States in 178944. They provided for the forfeiture of ships and cargoes used in customs offences, piracy and slave trafficking. A general conviction-based forfeiture scheme was established in 1970 by the Racketeer Influenced and Corrupt Organizations Act ("the RICO Act")45. The Money Laundering Control Act 198646 became the primary civil assets forfeiture statute47. Civil assets forfeiture laws have been enacted in the past few decades in a significant number of countries, including Australia, Canada, the United Kingdom, Ireland and South Africa48. Royal Commissions of Inquiry into organised crime and corruption in Australia in the 1970s and 1980s recommended the development of effective mechanisms for depriving criminals of their profits49. The Standing Committee of Attorneys-General in 1983 initiated the development of model forfeiture legislation. In the event, the States and Territories enacted criminal assets forfeiture laws50. In the late 20th and early 21st centuries civil assets forfeiture between forfeitures and penalties was considered in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 216 CLR 161 at 172-173 [29]-[31] per Gummow J, 177-178 [52] per Kirby J, 195-198 [108]-[112] per Hayne J; [2003] HCA 49. 44 See discussion in United States v Bajakajian 524 US 321 at 340-341 (1998) per Thomas J for the Court, 345-346 per Kennedy J (dissenting). 45 Which amended title 18 of the United States Code by inserting, inter alia, Ch 96, entitled "Racketeer Influenced and Corrupt Organizations" (18 USC §§1961-1968). 46 Which amended title 18 of the United States Code by inserting, inter alia, a new Ch 46, entitled "Forfeiture" (18 USC §§981- 982). 47 See generally Cassella, "An Overview of Asset Forfeiture in the United States", in Young (ed), Civil Forfeiture of Criminal Property, (2009) 23 at 27-30. 48 See generally Young (ed), Civil Forfeiture of Criminal Property, (2009), Chs 3 to 49 Lusty, "Civil Forfeiture of Proceeds of Crime in Australia", (2002) 5 Journal of Money Laundering Control 345. 50 Crimes (Confiscation of Profits) Act 1986 (Vic); Crimes (Confiscation of Profits) Act 1986 (SA); Proceeds of Crime Act 1987 (Cth); Crimes (Confiscation of Profits) Act 1988 (WA); Crimes (Forfeiture of Proceeds) Act 1988 (NT); Crimes (Footnote continues on next page) statutes of general application were enacted by the Commonwealth and all States and Territories save for Tasmania51. The preceding history is mentioned by way of acknowledgment of the widespread acceptance by governments around the world and within Australia of the utility of civil assets forfeiture laws as a means of deterring serious criminal activity which may result in the derivation of large profits and the accumulation of significant assets. The law under consideration in this case is, in many respects, typical of the kind of civil assets forfeiture statutes enacted in other States and Territories of Australia and in other countries. The CAR Act – legislative history The CAR Act began its life as the Drug Trafficking (Civil Proceedings) Act 1990 (NSW) ("the 1990 Act"). It was directed to property of persons who had engaged in a "drug-related activity". This was defined in s 6 of the 1990 Act by reference to the commission of a "serious drug offence", itself a defined term. Section 10 of the 1990 Act provided for a restraining order which differed in content from the current form of order. The original definition of "restraining order" in s 10(1) was: "an order that no interest in property that is an interest to which it applies is to be disposed of, or otherwise dealt with, by the person whose interest it is or by any other person, except in such manner and in such circumstances (if any) as are specified in the order." The terms of sub-ss (2) and (3) have remained relevantly unchanged save for expansion of their application from drug related activities to serious crime related activities. The Premier of New South Wales, delivering the Second Reading Speech for the Bill for the 1990 Act, made it clear that it was influenced by the conclusions of the Moffitt Royal Commission and inspired by the American (Confiscation of Profits) Act 1989 (Q); Confiscation of Proceeds of Crime Act 1989 (NSW); Proceeds of Crime Act 1991 (ACT); Crime (Confiscation of Profits) Act 1993 (Tas). See discussion in Grono, "Civil Forfeiture – The Australian Experience", in Young (ed), Civil Forfeiture of Criminal Property, (2009) 125. 51 Proceeds of Crime Act 2002 (Cth); Criminal Assets Recovery Act 1990 (NSW); Confiscation Act 1997 (Vic); Criminal Property Confiscation Act 2000 (WA); Criminal Proceeds Confiscation Act 2002 (Q); Criminal Property Forfeiture Act 2002 (NT); Confiscation of Criminal Assets Act 2003 (ACT); Criminal Assets Confiscation Act 2005 (SA). RICO Act52. Little was said of the process for obtaining restraining orders save for an erroneous reference to the Commission as the body effecting the restraint and a reference to the requirement for an undertaking as to damages53. The 1990 Act was amended by the Drug Trafficking (Civil Proceedings) Amendment Act 1997 (NSW), which widened its application to serious crime related activity and changed its name to the Criminal Assets Recovery Act 1990 (NSW). Its coverage was extended to include property situated outside the State of New South Wales. The prohibition on dealing with property the subject of a restraining order was extended to include attempts to deal with such property. None of the extrinsic materials made any specific reference to the power of the Commission to make an ex parte application for a restraining order. Restraining orders and assets forfeiture Interim or interlocutory restraining or asset freezing processes go hand-in- hand with assets forfeiture. They have their origins deep in the history of this branch of the law. Processes akin to pre-conviction restraint mechanisms were available at common law against indicted persons, although they appear to have involved nominal seizure by a sheriff rather than by court order54. Today all civil assets forfeiture statutes in Australia make reference to restraining orders or freezing orders. Ex parte applications can be made in every jurisdiction. The forfeiture statutes of the Commonwealth, Victoria, Queensland and South Australia each make express provision for the application for a restraining order to be made ex parte. They also empower the court to which the application is made to direct that notice of the application be given to the person affected before the application is fully determined55. Western Australia's Criminal Property Confiscation Act 2000 provides for "freezing orders" to be made affecting "confiscable property". Applications may be made to the relevant court by the Director of Public Prosecutions and may be made ex parte. There is no express 52 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1990 at 2527-2528. 53 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1990 at 2530. 54 Dalton, Countrey Justice, (1619) at 267; Hale, The History of the Pleas of the Crown, new ed (1800), vol 1 at 363-364. 55 Proceeds of Crime Act 2002 (Cth), s 26(5); Confiscation Act 1997 (Vic), s 17(1); Criminal Proceeds Confiscation Act 2002 (Q), s 30A(3); Criminal Assets Confiscation Act 2005 (SA), s 25(5). provision for the court to require that notice of such applications be given to any party56. Fulfilment of the purposes of civil assets forfeiture laws almost inevitably requires provision to be made for ex parte applications for orders for the protection of targeted assets pending a substantive forfeiture hearing. There will be in some, and perhaps many cases, a real risk that the owner of the assets, if alerted to the making of an application for a protective order, will take steps to conceal or dispose of the subject assets. Such considerations are not novel in the exercise of the wider civil jurisdiction of courts particularly in relation to the grant of Mareva orders and Anton Piller orders. But the relevance of prudential considerations in favour of ex parte applications for a particular class of case does not mean that an ex parte application will be required in every case within the class. The construction of s 10 The construction of s 10 raises the following questions: Is the Supreme Court required to hear, without notice to the affected party, an ex parte application made by the Commission under s 10? Is the Supreme Court, in any event, required to decide the application only upon the material contained in the affidavit of an authorised officer supporting the application? Senior counsel for the appellants accepted that the proposition that s 10(3) does not allow the Court hearing an ex parte application for a restraining order to do other than hear it ex parte was critical to his argument. On any view of the section it cannot require the Court to hear ex parte an application for a restraining order in circumstances in which the CAR Act requires the Commission to give notice to the affected party. Such a requirement arises where a final assets forfeiture order is sought at the same time as the restraining order57. Assuming that requirement does not arise, the first 56 Criminal Property Confiscation Act 2000 (WA), ss 41-46. Similarly, the Proceeds of Crime Act 2002 (UK) provides that applications for restraint orders may be made ex parte (s 42(1)) and does not expressly empower the court to require that notice be given to any party. Under Ontario's Civil Remedies Act 2001, an application for a restraining order may be made on motion without notice for up to 30 days 57 CAR Act, s 22(9). constructional question invites a consideration of the words "ex parte" and the text and context of ss 10(2) and 10(3), as well as of the objects of the legislation. In its primary meaning, "ex parte" designates an application in a judicial proceeding made by a person who is not a party to the proceeding but has an interest sufficient to support the application. However, in the usage relevant to this appeal, "ex parte" refers to something done in judicial proceedings without notice to the party affected. That may be an application, or a hearing, or the making of an order. A party may file an application or motion against another party without giving notice that it has done so. The court may hear the application ex parte and may make an order without prior notice to the affected party. In New South Wales, r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) provides that the Supreme Court "may make [a freezing] order … upon or without notice to a respondent …". Ex parte procedures of the kind contemplated by r 25.11 of the UCPR are not unusual but should always be regarded as exceptional. They involve a departure, albeit temporary, from the general requirement of procedural fairness that no order adverse to a party's property, liberty, or any other interest should be made without that party first having an opportunity to be heard. That opportunity includes the right to test and/or rebut evidence relied upon by the moving party and to make submissions on matters of fact and law. Ex parte interlocutory injunctive relief may be sought where the urgency of the matter is such that there is no time to notify the respondent. Anton Piller orders and Mareva or assets preservation orders are often sought ex parte on the basis that notice to the affected party is likely to result in the destruction of evidence or the concealment or dissipation of assets which it is intended the proposed order will protect58. Nevertheless, courts have long had the power to require that notice of an application made ex parte be given to the party affected. The court may not accept that the matter is as urgent as claimed or that the subject matter of the application would be compromised if the affected party were to be alerted to it. Or it may be that the court does not find the affidavit in support of the motion "sufficiently positive"59. 58 The doctrinal basis of Mareva or assets preservation orders was discussed in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 399-401 [41]-[44] per Gaudron, McHugh, Gummow and Callinan JJ; [1999] HCA 18. 59 Joyce, The Law and Practice of Injunctions in Equity and at Common Law, (1872), vol 2 at 1306, referring to Byron (Lord) v Johnston (1816) 2 Mer 29 [35 ER 851]; for general discussion on ex parte applications, see Joyce at 1306-1307; and Paterson (ed), Kerr on the Law and Practice of Injunctions, 6th ed (1927) at 635. The appellants and the Commission were on common ground in submitting that if the Commission chooses to bring an ex parte application under s 10, the Court is required to hear and determine it ex parte. The Commission submitted that the contrary construction should be rejected unless such a construction is needed to render the provision constitutional, a need which it contended does not arise. The Solicitor-General of the Commonwealth supported the construction of s 10 advanced by the appellants and the Commission. The State of New South Wales, on the other hand, contended that on its proper construction s 10 would allow the Court to require the party affected to be given notice before hearing an application made ex parte. The process of statutory construction, including the identification of constructional choices, is informed by text, context and legislative purpose and, when applicable, the conservative principle that, absent clear words, Parliament does not intend to encroach upon fundamental common law principles, including the requirement that courts accord procedural fairness to those who are to be affected by their orders. Further, where there is a constructional choice that would place the statute within the limits of constitutional power and another that would place it outside those limits, the former is to be preferred60. There is a caveat which should be entered in relation to these principles. The court should not strain to give a meaning to statutes which is artificial or departs markedly from their ordinary meaning simply in order to preserve their constitutional validity. There are two reasons for this. The first is that if Parliament has used clear words to encroach upon the liberty or rights of the subject or to impose procedural or other constraints upon the courts its choice should be respected even if the consequence is constitutional invalidity. The second reason is that those who are required to apply or administer the law, those who are to be bound by it and those who advise upon it are generally entitled to rely upon the ordinary sense of the words that Parliament has chosen61. To the extent that a statutory provision has to be read subject to a counterintuitive judicial gloss, the accessibility of the law to the public and the accountability of Parliament to the electorate are diminished. Moreover, there is a real risk that, 60 See Interpretation Act 1987 (NSW), s 31(1); Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237 at 267 per Dixon J; [1945] HCA 30; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 14 per Mason CJ; [1992] HCA 64; New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 161 [355]; [2006] HCA 52; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 553 [11]; [2008] HCA 4. See also K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 519 [46]; [2009] HCA 4. 61 See Interpretation Act 1987 (NSW), s 34(3). notwithstanding a judicial gloss which renders less draconian or saves from invalidity a provision of a statute, the provision will be administered according to its ordinary, apparent and draconian meaning. In the context of the present case, that risk is enhanced where the provision, on the face of it, appears to require the Supreme Court to hear only from the moving party where that party chooses to make an ex parte application. Section 10 does not make any express provision for the Commission to apply to the Court on notice. Yet it and other provisions of the CAR Act are drafted on the premise that an application may be made on notice. Section 10 provides that a restraining order may make provision, out of the property to which the order applies, for reasonable legal expenses "incurred in connection with the application for the restraining order"62. Notice of the restraining order itself is to be given to the person affected if "the person was not notified of the application for the making of the restraining order"63. Moreover, an ancillary order may be made when the Court makes a restraining order and can be made on the application of the owner of the affected property64. Consideration of these provisions leads to the conclusion that the Commission may elect not to exercise its right to make its application ex parte. There is some limited textual support for that conclusion in the sense that the express authority conferred by the statute on the Commission to apply ex parte can be said to subsume the lesser authority to apply on notice. It does not follow from the preceding discussion that s 10 authorises the Court to require that the Commission give notice of the application to the affected party. The Court must make the order applied for on the Commission's application when the conditions set out in s 10(3) of the CAR Act are satisfied. There is no textual space in the section within which the Court may interpose a further condition requiring that notice first be given to the affected party. Nor is this a case in which, on the interpretative principles to which I have referred earlier, the Court should read such a power into the section by some form of implication unsupported by its text. Moreover, the general provisions of the UCPR relating to freezing orders are not apt to be grafted on to the legislative scheme of the CAR Act so far as it relates to restraining orders. The CAR Act contains its own procedural provisions. As Gummow and Bell JJ point out in their joint judgment65 and Heydon J shows in detail66, the CAR Act establishes a 62 CAR Act, s 10(5). 63 CAR Act, s 11(2)(b). 64 CAR Act, ss 12(1) and 12(2)(b). 65 See below at [79]-[80]. 66 See below at [162]-[165]. "distinct regime" excluding the general powers of the Supreme Court which might otherwise have applied. The question whether notice is to be given of an application for a restraining order is therefore at the Commission's discretion. It is left to the Commission to judge whether there is such a risk of concealment or dissipation of the assets the subject of the order that notice of the application should not be given to the person affected by it. The Court's discretion as to the conduct of its own proceedings in the key area of procedural fairness is supplanted by the Commission's judgment. It is a consequence of the preceding construction that if the Commission elects to apply ex parte there is no opportunity for the affected party upon the hearing of the application to test the authorised person's affidavit or to put before the Court evidence to rebut it. Upon an ex parte application, the Court is confined to a consideration of the sufficiency of the affidavit of the authorised officer. Section 10(3) conditions the Court's obligation to make the order sought upon the Court considering that, having regard to the matters contained in the affidavit, there are reasonable grounds for the suspicion which is asserted by the authorised officer. Although the Court can refuse the order on the basis that it considers that the authorised officer does not have the requisite suspicion, if the application is heard ex parte there will be no-one before the Court to question the existence of that suspicion. In most cases it will be sufficient, as a practical matter, that the suspicion is asserted and that there are reasonable grounds for it disclosed on the affidavit. If the application were made on notice, the affected party would be able to cross-examine the authorised officer on his or her affidavit with a view to demonstrating that he or she does not hold the requisite suspicion, or that there are parts of the affidavit which are so inherently unreliable as not to form reasonable grounds for that suspicion. Evidence in rebuttal could be directed to the same propositions. The party, if given notice, could also make submissions to the Court about the existence of the conditions upon the Court's powers under s 10. Such a process would be an unobjectionable exercise of the judicial function. It would not involve any intrusion by the legislature upon that function nor any usurpation of it by the Executive. The issue of validity arises with respect to s 10 because it authorises ex parte applications to the Court, which must be heard and determined ex parte by the Court. It was submitted that the person affected by a restraining order can apply to set it aside. The statute itself makes no such provision. Assuming, however, that such an application can be made, it is difficult to see any ground upon which the order could be set aside save for the following: want of the relevant suspicion on the part of the authorised officer; (ii) want of reasonable grounds for the asserted suspicion. In the absence of any discretion in the Court to refuse a restraining order when the conditions for making the order are satisfied, non-disclosure of a material fact by the authorised officer will be significant only if the fact is material to the criteria for the making of the order. The availability of a mechanism by which a party affected by a restraining order can apply to discharge it is not germane to the issue of validity. The question whether there has been an impermissible invasion of the judicial function of the Court is not to be resolved simply by engaging in a calculus of fairness and assessing whether prejudice to a party, flowing from denial to it of a hearing prior to a restraining order being made, can be remedied at some later time. In any event, in this case, as explained in the joint judgment of Gummow and Bell JJ67, a restraining order can only be displaced, pending the determination of an assets forfeiture order, by an application under s 25, which places upon the party affected by the restraining order the onus of demonstrating that the property the subject of the application is not illegally acquired property as defined in the CAR Act. The validity of s 10 The separation of legislative, executive and judicial powers reflected in the structure of Chs I, II and III of the Constitution does not prevent the Commonwealth Parliament from passing a law which has the effect of requiring a court exercising federal jurisdiction to make specified orders if certain conditions are met. If the satisfaction of a condition enlivening the court's statutory duty depends upon a decision made by a member of the Executive branch of government, it does not necessarily follow that the Parliament has thereby authorised the Executive to infringe impermissibly upon the judicial power68. On the other hand, Parliament cannot direct courts exercising federal jurisdiction as to the manner and outcome of the exercise of that jurisdiction. As was pointed out in Chu Kheng Lim v Minister for Immigration69, that would constitute an impermissible intrusion into the judicial power which Ch III vests 67 See below at [90]. 68 Palling v Corfield (1970) 123 CLR 52 at 58-59 per Barwick CJ, 62 per McTiernan J, 64-65 per Menzies J, 65 per Windeyer J agreeing with other members of the Court, 67 per Owen J, 69-70 per Walsh J, 70 per Gibbs J; [1970] HCA 53. 69 (1992) 176 CLR 1. exclusively in the courts which it designates70. In Nicholas v The Queen71, Brennan CJ observed that the acceptance of instructions from the legislature to exercise judicial power in a particular way was inconsistent with the duty to act impartially. Gaudron J said that the essential character of a court and the nature of judicial power necessitate that a court not be required or authorised to proceed in a manner that does not ensure, inter alia, the right of a party to meet the case made against him or her72. Gummow J put it thus73: "The legislative powers of the Commonwealth do not extend to the making of a law which authorises or requires a court exercising the judicial power to do so in a manner which is inconsistent with its nature." As his Honour said, quoting from a judgment of Windeyer J74, the concept of judicial power and that of impermissible intrusions upon the manner and outcome of its exercise "transcends 'purely abstract conceptual analysis' and 'inevitably attracts consideration of predominant characteristics', together with 'comparison with the historic functions and processes of courts of law'."75 His Honour again touched upon the question in APLA Ltd v Legal Services Commissioner (NSW)76 when he accepted that: "a law may not validly require or authorise the courts in which the judicial power of the Commonwealth is vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power." Whether that proposition could be subsumed in a concept of "due process" was left open. 70 (1992) 176 CLR 1 at 36 per Brennan, Deane and Dawson JJ. 71 (1998) 193 CLR 173 at 188 [20]; [1998] HCA 9. 72 (1998) 193 CLR 173 at 208 [74]. 73 (1998) 193 CLR 173 at 232 [146]. 74 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 394; [1970] HCA 8. 75 (1998) 193 CLR 173 at 233 [148]. 76 (2005) 224 CLR 322 at 411 [247]; [2005] HCA 44. In Bodruddaza v Minister for Immigration and Multicultural Affairs77, this Court noted that the Minister did not dispute that if s 486A of the Migration Act 1958 (Cth), which was then under challenge, "had the character of a law which purported to direct the manner in which the judicial power of the Commonwealth should be exercised, it would be invalid."78 The Court referred to the judgment in Chu Kheng Lim as demonstrating the point79. In their joint judgment in Thomas v Mowbray80, Gummow and Crennan JJ observed that the decisions of this Court had not gone so far as to imply something like a "due process" requirement from the text and structure of Ch III. I would add that the term "due process", imported from another constitutional setting, should be treated with some caution in relation to Ch III. Whether a more general implication may emerge from Ch III than has hitherto been made, and how it should be designated, is a matter for another day. It is sufficient, for the present, to accept as a proposition that which Gummow and Crennan JJ accepted, albeit as a working hypothesis, when they said in Thomas81: "it may be accepted for present purposes that legislation which requires a court exercising federal jurisdiction to depart to a significant degree from the methods and standards which have characterised judicial activities in the past may be repugnant to Ch III." The plaintiff in that case argued that provisions of Div 104 of the Criminal Code (Cth) providing for the issue of interim control orders were invalid. One of the grounds of the asserted invalidity was that "Div 104 provides for the routine making of interim control orders depriving a person of liberty on an ex parte basis and without notice."82 Gummow and Crennan JJ rejected that contention on the basis that83: 77 (2007) 228 CLR 651; [2007] HCA 14. 78 (2007) 228 CLR 651 at 669 [47]. 79 (2007) 228 CLR 651 at 669-670 [48]. 80 (2007) 233 CLR 307 at 355 [111]; [2007] HCA 33. 81 (2007) 233 CLR 307 at 355 [111]. 82 (2007) 233 CLR 307 at 312 (R Merkel QC in argument). 83 (2007) 233 CLR 307 at 355 [112]. "ex parte applications are no novelty, and the scheme of the legislation … is to provide in the very short term for a contested confirmation hearing if the person in question wishes to proceed in that way." The question whether Div 104 required a court to proceed ex parte upon receipt of a request for the issue of an interim control order was not agitated. Chu Kheng Lim, Nicholas and Thomas were concerned with courts exercising federal jurisdiction and the question whether duties or functions were imposed upon them which were inconsistent with their independence from the legislative and executive branches of government. Although it is right to say, as was recognised in Kable, that the Constitution provides for an integrated national court system, that does not mean that State courts or their judges and officers are to be assimilated with federal courts and their judges and officers84. On the other hand, as McHugh J explained in Kable85: "in some situations the effect of Ch III of the Constitution may lead to the same result as if the State had an enforceable doctrine of separation of powers. This is because it is a necessary implication of the Constitution's plan of an Australian judicial system with State courts invested with federal jurisdiction that no government can act in a way that might undermine public confidence in the impartial administration of the judicial functions of State courts." Procedural fairness or natural justice lies at the heart of the judicial function. In the federal constitutional context, it is an incident of the judicial power exercised pursuant to Ch III of the Constitution. It requires that a court be and appear to be impartial, and provide each party to proceedings before it with an opportunity to be heard, to advance its own case and to answer, by evidence and argument, the case put against it. According to the circumstances, the content of the requirements of procedural fairness may vary. When an ex parte application for interlocutory relief is made the court, in the ordinary course, has a discretion whether or not to hear the application without notice to the party to be affected. In exercising that discretion it will have regard to the legitimate interests of the moving party which have to be protected, whether there is likely to be irrevocable damage to the interests of the affected party if the order is made, and what provision can be made for the affected party to be heard to have the order discharged or varied after it has been made. In so saying, it is not intended to suggest that an official cannot validly be authorised by statute to 84 See Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 598 [36] per McHugh J; [2004] HCA 46. 85 (1996) 189 CLR 51 at 118. bring an application ex parte to a federal court or to a State or Territory court capable of exercising federal jurisdiction. The CAR Act takes the further step of requiring the Supreme Court to hear and determine such an application ex parte. To require a court, as s 10 does, not only to receive an ex parte application, but also to hear and determine it ex parte, if the Executive so desires, is to direct the court as to the manner in which it exercises its jurisdiction and in so doing to deprive the court of an important characteristic of judicial power. That is the power to ensure, so far as practicable, fairness between the parties. The possibility that a statutorily mandated departure from procedural fairness in the exercise of judicial power may be incompatible with its exercise was considered in Leeth v The Commonwealth86. Mason CJ, Dawson and McHugh JJ said87: "It may well be that any attempt on the part of the legislature to cause a court to act in a manner contrary to natural justice would impose a non- judicial requirement inconsistent with the exercise of judicial power, but the rules of natural justice are essentially functional or procedural and, as the Privy Council observed in the Boilermakers' Case, a fundamental principle which lies behind the concept of natural justice is not remote from the principle which inspires the theory of separation of powers." (footnote omitted) In my opinion the power conferred on the Commission to choose, in effect, whether to require the Supreme Court of New South Wales to hear and determine an application for a restraining order without notice to the party affected is incompatible with the judicial function of that Court. It deprives the Court of the power to determine whether procedural fairness, judged by reference to practical considerations of the kind usually relevant to applications for interlocutory freezing orders, requires that notice be given to the party affected before an order is made. It deprives the Court of an essential incident of the judicial function. In that way, directing the Court as to the manner of the exercise of its jurisdiction, it distorts the institutional integrity of the Court and affects its capacity as a repository of federal jurisdiction. The preceding conclusion involves a judgment about the quality of the Executive's intrusion, sanctioned by the legislature, into the judicial function. It is not to the point to say that in many, if not most cases of such applications, the Supreme Court would be likely, if it had the discretion, to hear and determine them ex parte. It is likely that, before deciding to proceed ex parte, the Court 86 (1992) 174 CLR 455; [1992] HCA 29. 87 (1992) 174 CLR 455 at 470. would first determine that procedural fairness could be accorded by provision for discharge on application. Alternatively, it might make the order limited in time so that the applicant would have to justify its continuation. Nor is it to the point to say that the particular intrusion upon the judicial function authorised by s 10 is confined in scope and limited in effect both in time and by the facility to seek ancillary or exclusion orders. Such a calculus will not accord sufficient significance to the quality of the intrusion upon the judicial function. An accumulation of such intrusions, each "minor" in practical terms, could amount over time to death of the judicial function by a thousand cuts. Even if, contrary to my primary conclusion, a facility for the party affected to seek discharge or variation of the restraining order within a short time would have been sufficient to save s 10 from invalidity, s 25, for the reasons explained by Gummow and Bell JJ, is not such a facility. In my opinion, s 10 is invalid. Although the authority it confers on the Commission to make ex parte applications subsumes the authority to make applications on notice, assumed in other provisions of the CAR Act, it cannot sensibly be read down to limit its operation to applications on notice. That operation is inextricably linked to the express authority which it confers and which, for the reasons outlined, thus spells invalidity. Such a reading down would impose a judicial gloss on the section at odds with its text. I agree with and respectfully adopt the observations in the joint judgment of Gummow and Bell JJ concerning the effect of the provisions of s 25 relating to exclusion orders and of the provisions of s 12 relating to ancillary orders88. I agree also with their Honours' rejection of the proposition that s 22 is a bill of pains and penalties and their observation that it does not operate independently of a judicial determination of liability89. I agree with their conclusion that the significance of s 22 lies in its interaction with s 10 and not otherwise90. Conclusion In my opinion the appeal should be allowed, the appellants' costs to be paid by the first respondent. There should be an order declaring that s 10 of the CAR Act is invalid. The proceedings in the Supreme Court of New South Wales should be dismissed, with costs as proposed by Gummow and Bell JJ. 88 See below at [90]-[97]. 89 See below at [99]. 90 See below at [99]. Bell GUMMOW AND BELL JJ. The appellants are companies incorporated in Vanuatu. The first appellant ("IFTC") is a Vanuatu government licensed trust company. The second appellant ("IFTCB") conducts share trading accounts. The appellants are entitled to exercise effective control over various accounts with ANZ National Bank Limited, Bank of New Zealand, Commonwealth Bank of Australia and Commonwealth Securities Limited which are the subject of the orders of the Supreme Court of New South Wales giving rise to this appeal. The untested case presented to the Supreme Court by the first respondent ("the Commission") was that IFTC is owned and managed by a firm of is Mr Robert Francis Agius. He is an Australian citizen, who stays regularly in Sydney, but resides in Vanuatu. The Commission suspects that Mr Agius has engaged in offences punishable by imprisonment for five years or more and involving fraud, contrary to ss 176, 176A and 178BA of the Crimes Act 1900 (NSW) ("the Crimes Act"). the senior partner of which The appellants appeal from so much of the judgment of the New South Wales Court of Appeal (Allsop P, Beazley JA and McClellan CJ at CL) given on 6 November 200891 as upheld the validity of the "restraining order" provision in s 10 of the statute enacted as the Drug Trafficking (Civil Proceedings) Act 1990 (NSW) but since 199792 titled the Criminal Assets Recovery Act 1990 (NSW) ("the Act"). In this Court, the Attorneys-General of the Commonwealth, New South Wales, Victoria, South Australia, Queensland and Western Australia intervened to support the validity of s 10. There has been no appearance for the second and third respondents. Part 2 of the Act (ss 10-21) is headed "Restraining orders", and Pt 3 (ss 22-32) is headed "Confiscation". Detailed definitions are found in Pt 1 (ss 1-9A). The orders with respect to the accounts of IFTC and IFTCB were made in reliance upon s 10. The Court of Appeal, by majority (Allsop P and Beazley JA; McClellan CJ at CL dissenting), set aside the orders on two grounds. These were that there had been no admissible evidence before the primary judge on which he could conclude that the suspicions held by the Commission were based on reasonable grounds, and that there had been a failure by the primary judge to discharge the obligation to provide reasons. 91 (2008) 251 ALR 479. 92 By amendment made by the Drug Trafficking (Civil Proceedings) Amendment Act 1997 (NSW). Bell However, the appellants remained exposed to the prospect of further proceedings under s 10 because the Court of Appeal unanimously upheld the validity of that section. Further, s 10 must be read with s 22, which provides for the making by the Supreme Court of an assets forfeiture order on the application of the Commission. The subject matter of such an order would be "all or any of the interests in property that are, or are proposed to be, subject to a restraining order when the assets forfeiture order takes effect" (s 22(1)). The scheme of the Act A restraining order continues in force for at least the first two working days after it is made; it continues thereafter, relevantly, so long as there is pending in the Supreme Court an application for an assets forfeiture order (s 10(9)). If the Supreme Court refuses to make the assets forfeiture order in respect of the interests bound by the restraining order, the Court may make such orders "as it considers appropriate in relation to the operation of the restraining order" (s 20(1)). This would include the making of an order to discharge the restraining order. However, the Act contains no provision limiting the period within which the assets forfeiture order application must be brought on for determination and no sanctions against delay in doing so. Section 25, which it will be necessary to consider in detail later in these reasons, does provide for the making, on application to the Supreme Court, of orders excluding interests in property from the operation of a current restraining order. But the applicant must prove that it is more probable than not that the property was not acquired by serious crime related activity (s 25(2)). The relationship between the restraining order and an application for an assets forfeiture order thus is not analogous to that between an interim injunction granted on an ex parte application, a contested application shortly thereafter for an interlocutory injunction and a suit for final relief. The scheme of the Act is more rigid and places the importance to the Commission in obtaining and retaining a restraining order above remedial flexibility. The construction of s 10 Section 10 has been amended since its enactment in 1990, and there have been expansions in some of the defined terms upon which it depends, but the essential structure of the provision has been retained. Section 10(1) identifies a "restraining order" as: "an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in Bell property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order." Section 10(2) states: "The Commission[93] may apply to the Supreme Court, ex parte, for a restraining order in respect of: specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or specified interests, or a specified class of interests, in property that are interests of any other person, or interests referred to in both paragraph (a) and paragraph (b)." (emphasis added) The orders against the appellants were based upon par (b) of s 10(2). The expression "serious crime related activity" in s 10(2) has a very wide reach. It extends to anything done by a person which at the time was "a serious criminal offence", whether or not the person has been charged or, if charged, has been tried, or tried and acquitted, or convicted, even if the conviction has been quashed or set aside (s 6(1)). The expression "a serious criminal offence" itself is given a comprehensive definition in pars (a)-(j) of s 6(2). It includes, for example, an offence under s 197 of the Crimes Act involving the destruction of or damage to property with a value of more than $500 (par (h)). Sections 176, 176A and 178BA of the Crimes Act, to which reference has been made, appear to fall within par (d) of s 6(2) of the Act94. 93 Provision also is made by s 19 of the Police Integrity Commission Act 1996 (NSW) for the exercise by that body of the functions of the Commission under provisions such as s 10 of the Act. 94 Paragraph (d) reads: "an offence that is punishable by imprisonment for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another, money laundering, extortion, violence, bribery, corruption, harbouring criminals, blackmail, obtaining or offering a secret commission, perverting (Footnote continues on next page) Bell In the course of argument in this Court questions were raised as to whether the expression in s 10(2) "may apply to the Supreme Court, ex parte, ..." necessitated an ex parte application or whether a particular application might be made on notice to those whose property interests would be bound by the order sought by the Commission. Other provisions, in particular s 11(2)(b) and s 25(4)(a), indicate that the Commission may decide to give notice of an application for the making of a restraining order. In this sense, the phrase "may apply" is permissive as to the procedure adopted in making an application. Section 10(2) also serves a distinct purpose of creating a new species of subject matter for adjudication by the Supreme Court, namely applications by the Commission for a "restraining order". Section 10(2) is to be read with s 10(3). Together they have the dual operation of creating that new subject matter for adjudication and of conferring on the Supreme Court the authority to exercise jurisdiction with respect to that subject matter. Section 10(3) states: "The Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating that: in the case of an application in respect of an interest referred to in subsection (2)(a) – the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and in the case of an application in respect of any other interest – the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based, and the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion." Section 10(3) is a provision of a familiar kind. It confers upon the Supreme Court a power with a duty to exercise it if the Supreme Court decides the course of justice, tax or revenue evasion, illegal gambling, forgery or homicide". Bell that the conditions attached to the power are satisfied95. A law of that description is not to be stigmatised on that ground alone as an attempt to direct the Supreme Court as to the outcome of the exercise of its jurisdiction96. However, the outcome is determined by the adequacy of the evidence in the affidavit of the authorised officer of the Commission. It is upon this material that the Supreme Court considers whether there are reasonable grounds for the suspicion expressed by the authorised officer. The result is that even where notice of an application is given there will be limited scope to contest the making of the order sought by the Commission. Relevantly for the construction of s 10, the Act stipulates that proceedings on a restraining order application are not criminal proceedings (s 5(1)) and that the rules of construction applicable only in relation to the criminal law do not operate (s 5(2)). However, two relevant principles of statutory construction are engaged. The first principle is that the legislature, in selecting the Supreme Court as the forum, may be taken, in the absence of contrary express words or of reasonably plain intendment, to take the Supreme Court as the legislature finds it, with all its incidents97. Three of those incidents which the Court of Appeal accepted as applicable to the jurisdiction to make restraining orders, and which the Commission did not seek to challenge in this Court, are the application of the rules of evidence respecting the use of affidavit evidence on interlocutory applications, the requirement that the primary judge provide adequate reasons, and the exercise of the appellate jurisdiction of the Court of Appeal with respect to challenges to interlocutory orders. However, as is explained later in these reasons and, in particular, in those of Heydon J, in other significant respects the Act displays a plain intendment to establish a distinct regime. That distinct regime invites application of the second principle of construction. This is that a particular provision which explicitly prescribes the mode of exercise of a power may exclude the operation of general provisions 95 Leach v The Queen (2007) 230 CLR 1 at 17-18 [38]; [2007] HCA 3; John Fairfax Publications Pty Ltd v Gacic (2007) 230 CLR 291 at 302 [28]; [2007] HCA 28. 96 Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 560 [39]; [2008] HCA 4. 97 Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486 at 491 [7]; [2006] HCA 38; Thomas v Mowbray (2007) 233 CLR 307 at 340 [55]; [2007] HCA 33. Bell which might otherwise have been relied upon for the exercise of the power98. Several such particular provisions may be noted. The power to make a restraining order is conferred in broad terms, but nevertheless an order does not apply to an interest acquired after the order is made, in the absence of express provision that it does so apply (s 10(2A)). Further, the Supreme Court may refuse to make a restraining order in the absence of such undertakings by the State as the Court considers appropriate, with respect to payment of damages or costs in relation to the making and operation of the order (s 10(6)); these undertakings may be given by the Commission on behalf of the State (s 10(7)). The principal objects of the Act In the Second Reading Speech on the Bill for the Act, given on 8 May 1990, the Premier observed that there was "no doubt the proposed legislation is tough"99. He added100: "The most innovative and controversial aspect of this legislation is that it will create a scheme of asset confiscation that will operate outside and completely independent of the criminal law process. All existing confiscation schemes in Australia, with the notable exception of the Commonwealth Customs Act, are conviction-based – that is to say, before a person's assets can be confiscated the person must have been convicted in the criminal courts. This legislation, like the Commonwealth Customs Act, treats the question of confiscation as a separate issue from the imposition of a criminal penalty. It essentially provides that a person can be made to account for and explain assets and profits whether or not the person has been convicted, and even if the person has been acquitted in the criminal courts. The critical thing that must be proved is that it is more probable than not that the person engaged in serious drug crime. Proof on the balance of probabilities is the same standard of proof as that used in ordinary civil litigation. The more stringent standard of proof beyond a reasonable doubt is a creature of the criminal law." 98 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 583-589 [44]-[59], 612 [149], 615-616 [162]-[165]; [2006] HCA 50; Director of Public Prosecutions v Vu (2006) 14 VR 249 at 267. 99 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1990 at 2528. 100 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1990 at 2528-2529. Bell The use of the term "confiscation" in legislation of this type is imprecise, if not inaccurate. Speaking of the United Kingdom legislation beginning with the Drug Trafficking Offences Act 1986 (UK) and including the Proceeds of Crime Act 2002 (UK), Lord Bingham of Cornhill observed in R v May101 that what is involved is "not confiscation in the sense in which schoolchildren and others understand it". He continued: "A criminal caught in possession of criminally-acquired assets will, it is true, suffer their seizure by the state. Where, however, a criminal has benefited financially from crime but no longer possesses the specific fruits of his crime, he will be deprived of assets of equivalent value, if he has them. The object is to deprive him, directly or indirectly, of what he has gained. 'Confiscation' is, as Lord Hobhouse of Woodborough observed in In re Norris102, a misnomer." These remarks apply with added force to application of the Act to the situation, of which the facts of the present case are an example, where there has been no conviction, and to the application of the Act in cases where there has been an acquittal. Again, in NSW Crime Commission v D'Agostino103, the Act operated upon a motor vehicle and a half share in a residential property owned by a person convicted of a single instance of shop-lifting. The issues which are before this Court do not call into question the legislative policy of which the Premier spoke. This policy is now, after the expansion of the statute beyond concern with drug trafficking, expressed in the statement in s 3 of the principal objects of the Act as being: to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities, and to enable the proceeds of serious crime related activities to be recovered as a debt due to the Crown, and to provide for the confiscation, without requiring a conviction, of property of a person that is illegally acquired property held in a false name or is not declared in confiscation proceedings, and 101 [2008] 1 AC 1028 at 1034. 102 [2001] 1 WLR 1388 at 1392; [2001] 3 All ER 961 at 966. 103 (1998) 103 A Crim R 113. Bell to enable law enforcement authorities effectively to identify and recover property." The issue in this Court What is in issue is the validity of the conscription of the Supreme Court as an essential actor in the provisions for the making of restraining orders. In the present case Allsop P, after referring to the above remarks of the Premier in 1990, continued104: "Balanced against that important public policy is the clear recognition in our legal and political system of the importance of the protection of individual rights, including the right to own and enjoy private property. Thus, the common law requires a degree of clarity in the wording of any statute which abrogates or confiscates property rights. This is rooted in the importance of such rights and their legitimate protection in civil society free from the exercise of arbitrary power, in particular prerogative or Executive power." His Honour went on to identify the use of the judicial branch of government as the mechanism chosen by the legislature "to mediate the relationship between the competing, and to a degree conflicting, policies to which I have referred"105. The Supreme Court, for over a century, has been invested with extensive federal jurisdiction. In the instant case, the Court of Appeal had before it a controversy respecting the validity of s 10 of the Act and so was exercising the judicial power of the Commonwealth in a matter arising under or involving the interpretation of the Constitution. In other cases, even where there is no issue of constitutional validity, an application under s 10 nevertheless may attract the exercise of federal jurisdiction106. For example, certain offences under the laws of the Commonwealth are classified by par (i) of s 6(2) of the Act as serious criminal offences and may found the suspicion spoken of in s 10(2)(a) of engagement in serious crime related activity. However, the case for invalidity has been conducted on a broader basis, looking to the operation of the legislation where the Supreme Court acts as the 104 (2008) 251 ALR 479 at 482. 105 (2008) 251 ALR 479 at 483. 106 See LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581-582; [1983] HCA 31. Bell highest judicial organ of the State and no exercise of federal jurisdiction is involved. The appellants accordingly contend in accordance with authority in this Court107 that s 10 is designed to engage the Supreme Court in activity which is repugnant to the judicial process in a fundamental degree and thereby impermissibly trenches upon its appearance as a tribunal which stands apart from the Executive Branch of the government of the State and its instrumentalities such as the Commission, and which is equipped to administer in disputes justice inter partes, with results openly arrived at by the Court. Consideration A starting point for consideration of the particular case presented by the appellants is provided by the following passage in the reasons of Crennan J in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police108: "In Kable [v Director of Public Prosecutions (NSW)], Gaudron J spoke of the power of indefinite detention, based on an opinion that a person is more likely than not to commit a serious act of violence in the future, as 'the antithesis of the judicial process'109. Six members of this Court described what is involved in judicial process in Bass v Permanent 'Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process. And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them.'" Applications entertained ex parte for orders with immediate effect upon the person or property of another are a well-established qualification to that 107 The most recent general statements of principle are found in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 551-552 [6]-[7], 552-553 [10], 594 [175] and K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 530 [89]-[90], 535 [111]; [2009] HCA 4. 108 (2008) 234 CLR 532 at 594 [175]. 109 (1996) 189 CLR 51 at 106; [1996] HCA 24. 110 (1999) 198 CLR 334 at 359 [56] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 9. Bell general principle111. One of the complaints respecting the processes for the making of the interim control orders under the legislation upheld in Thomas v Mowbray112 concerned the ex parte nature of those applications. But Gummow and Crennan JJ emphasised that the legislation provided in the very short term for a contested confirmation hearing113. That is not so with regard to the restraining orders, which have a life which follows the pendency of an assets forfeiture application. It is true that "at any later time" after the making of a restraining order, the Supreme Court may "make any ancillary orders ... that the Court considers appropriate". Section 12(1) so provides. However, Basten JA indicated in New South Wales Crime Commission v Ollis114 that the term "ancillary" in s 12(1) envisages orders in aid of a pending assets forfeiture application under s 22. Giles JA, with whom Mason P agreed, held in Ollis that the suspicion upon which a restraining order was founded may only be positively displaced by exclusion application made under s 25115. His Honour said116: "It is not consistent with this scheme of the Act that, when a restraining order is made, there can be a further hearing at which the same judge or another judge can be asked to determine on the same material whether there are reasonable grounds for the suspicion; nor that there can be a further hearing at which further material is put before the same judge or another judge by the defendant and the judge is asked to determine on the enhanced material whether there are reasonable grounds for the suspicion. The making of the restraining order can be challenged on appeal, on the contention that the judge was in error in determining that there were reasonable grounds for the suspicion; or application can be made for an exclusion order. Whatever the scope of s 12(1)(a) of the Act, however, it does not extend to reconsideration of the basis of the restraining order, and the variation sought in order 1 of the defendants' 111 cf Re Criminal Proceeds Confiscation Act 2002 [2004] 1 Qd R 40 at 55. 112 (2007) 233 CLR 307. 113 (2007) 233 CLR 307 at 355 [112]. See also at 509 [600] per Callinan J, 526 [651] 114 (2006) 65 NSWLR 478 at 493. 115 (2006) 65 NSWLR 478 at 486-487. 116 (2006) 65 NSWLR 478 at 487. Bell amended notice of motion can not be made by a single judge (or, for that matter, on appeal)." The reference to the limited nature of the appellate process is significant. No submission was made to this Court that Ollis be overruled. In any event, we agree with the construction given to the Act in that case. Before turning further to consider the exclusion application provision, it is convenient to refer in more detail to the United Kingdom "confiscation" legislation. This provides an instructive example of the use of ex parte procedures. In Jennings v Crown Prosecution Service117 Laws LJ said: "[P]recisely because the applicant is the Crown, the court must be alert to see that its jurisdiction is not being conscripted to the service of any arbitrary or unfair action by the state, and so should particularly insist on strict compliance with its rules and standards, not least the duty of disclosure." In England, RSC Order 115 is headed "Confiscation and Forfeiture in Connection with Criminal Proceedings". Rule 4(2) and (3) states: "(2) Unless the court otherwise directs, a restraint order made where notice of it has not been served on any person shall have effect until a day which shall be fixed for the hearing where all parties may attend on the application ... (3) Where a restraint order is made the prosecutor shall serve copies of the order and of the witness statement or affidavit in support on the defendant and on all other named persons restrained by the order and shall notify all other persons or bodies affected by the order of its terms." Rule 5(1) provides for applications to discharge or vary a restraint order, by any person or body on whom the order is served. These provisions were described by Lord Hobhouse of Woodborough in In re Norris118 as making explicit the availability of an inter partes hearing to determine applications to discharge or vary an ex parte order. 117 [2006] 1 WLR 182 at 198; [2005] 4 All ER 391 at 410; affd [2008] 1 AC 1046. 118 [2001] 1 WLR 1388 at 1394; [2001] 3 All ER 961 at 967-968. Bell The scheme of the restraining order provisions of the Act is quite different, not the least with respect to the absence of a clear means of curial supervision of the duty to disclose material facts on ex parte applications. The importance of that duty in the administration of justice is to be seen from the reasons given by Lingdren J in Hayden v Teplitzky119 for discharging certain assets preservation orders which had been made on an ex parte application. The English system described above clearly allows for the prompt enforcement of that duty. It may be that upon application for an exclusion order under s 25 it would be open to an applicant to agitate the question of the absence of full disclosure by the Commission. However, even if that be so, and it is unnecessary to form a concluded view on the matter, the disposition of the exclusion application will be controlled by the imperative terms of s 25(2). The application must fail unless the applicant discharges the burden imposed by that sub-section. Section 25(2) states: "The Supreme Court must not make the exclusion order applied for unless it is proved that it is more probable than not that: in the case of an order relating to fraudulently acquired property – the interest in property to which the application relates is not fraudulently acquired property or is not illegally acquired property, in any other case – the interest in property to which the application relates is not illegally acquired property." The phrase "fraudulently acquired property" is defined in s 9A so as to include interests held in a false name where a false instrument, identity document or signature was used knowingly for the purpose of its acquisition or for dealing with it. An interest in property is "illegally acquired property" if it is all or part of the proceeds of "illegal activity" or is in all or part the proceeds of a dealing with such property, or has been wholly or partly acquired using such property (s 9). The proceeds of a dealing do not lose their identity "merely as a result of being credited to an account" (s 9(7)). The expression "illegal activity" has a meaning which extends well beyond "serious crime related activity". It catches any act or omission which constitutes an offence at common law or against the laws of New South Wales or the Commonwealth (s 4(1)). The result is that the effect of the suspicion by an authorised officer of the Commission, evidence supporting which has been provided to the Supreme Court on the application under s 10, which founds a restraining order possibly may be 119 (1997) 74 FCR 7 at 11-13. Bell of considerable scope and may be displaced only when an application for an assets forfeiture order is no longer pending in the Supreme Court, or upon application under s 25. But that application cannot succeed unless the applicant proves to the Supreme Court that it is more probable than not that the interest in property for which exclusion is sought is not "illegally acquired property". The making of that proof by the applicant for an exclusion order requires the negating of an extremely widely drawn range of possibilities of contravention of the criminal law found in the common law, and State and federal statute law. Indeed, where a relevant act or omission occurred outside the State and is an offence in the place where it occurred, the applicant must show that had the act or omission occurred within the State it would not have been an offence against the common law or State or federal statute law (s 4(1)). The Supreme Court is conscripted for a process which requires in substance the mandatory ex parte sequestration of property upon suspicion of wrong doing, for an indeterminate period, with no effective curial enforcement of the duty of full disclosure on ex parte applications. In addition the possibility of release from that sequestration is conditioned upon proof of a negative proposition of considerable legal and factual complexity. Section 10 engages the Supreme Court in activity which is repugnant in a fundamental degree to the judicial process as understood and conducted throughout Australia. Conclusions The appellants have succeeded in establishing the invalidity of s 10. They also challenged the validity of s 22 on a distinct ground. This is that the assets forfeiture provision is a bill of pains and penalties. Section 22 is not a bill of pains and penalties; it does not operate independently of a judicial determination of liability120. As the Commonwealth Solicitor-General correctly submitted, the significance of s 22 lies in its interaction with s 10 and not otherwise. Orders The appeal should be allowed. The appellants' costs should be paid by the first respondent. The orders of the Court of Appeal of the Supreme Court of New South Wales entered 6 November 2008 should be varied (a) by adding at the end of Order 2 "and proceedings 12212 of 2008 be dismissed and the first 120 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 654-656 [218]-[219]; [2004] HCA 46. Bell respondent pay the costs of those proceedings of the appellants", and (b) by adding an order declaring that s 10 of the Criminal Assets Recovery Act 1990 (NSW) is invalid. HAYNE, CRENNAN AND KIEFEL JJ. The issue A State statute permits a law enforcement authority to seek from the State's Supreme Court, without notice to anyone, an order preventing any dealing with specified property. The Supreme Court must make that restraining order if a law enforcement officer suspects that the person who owns the property has committed one of a broad range of crimes, or the officer suspects that the property is derived from criminal activity, and the Court considers that there are reasonable grounds for the suspicion. The statute makes no express provision for any subsequent contested hearing about whether a restraining order should be made. On application by a law enforcement authority, the Supreme Court must order forfeiture of property subject to a restraining order if it is more probable than not that, at any time within the previous six years, the person whose conduct formed the basis of the restraining order had committed any offence punishable by five or more years' imprisonment. Subject to some exceptional cases where hardship would be caused to innocent others, property can only be excluded from the operation of a restraining order, or a forfeiture order, if it is shown to be more probable than not that the relevant interest in the property was not acquired as a result of any illegal activity. Do the statute's requirements that the Supreme Court freeze dealings in any property of a person on ex parte application by the executive, and proof of mere suspicion that the person has committed a crime (based on articulated grounds and found by the Court to be reasonable), require the Supreme Court to engage in activity repugnant to the judicial process to such a degree that the statute is beyond the legislative power of the State? These reasons will demonstrate that this question should be answered "no". The facts underlying this matter, and the history of proceedings in the courts below, are sufficiently described in the reasons of other members of the Court. The Criminal Assets Recovery Act 1990 (NSW) The principal objects of the Criminal Assets Recovery Act 1990 ("the CAR Act") include121: 121 s 3(a). "to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities". The CAR Act defines122 "serious crime related activity" very widely. It refers to "anything done by the person that was at the time a serious criminal offence" whether or not the person has been charged with the offence or, if charged, has been tried, tried and acquitted, or convicted (even if the conviction has been quashed or set aside). "[S]erious criminal offence" includes various drug and firearms offences123. It also includes any offence that is punishable by imprisonment for five years or more and that involves any of a wide variety of conduct including violence, theft, fraud, money laundering and tax or revenue evasion124. The CAR Act provides for the Supreme Court to make various forms of order including a "restraining order"125 and an "assets forfeiture order"126. As the name suggests, a restraining order: "is an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order"127. And as the name again suggests, an assets forfeiture order is: "an order forfeiting to, and vesting in, the Crown all or any of the interests in property that are, or are proposed to be, subject to a restraining order when the assets forfeiture order takes effect"128. 123 s 6(2)(a), (b), (c) and (e). 124 s 6(2)(d). If an assets forfeiture order has been applied for, a person whose interest in property is or might be subject to the order may apply to the Supreme Court for an order (an "exclusion order") excluding the interest from the operation of the assets forfeiture order or any relevant restraining order129. The Court must not make the exclusion order unless it is proved130 that it is more probable than not that the relevant interest was not "illegally acquired property" or, if the order relates to what the CAR Act identifies as "fraudulently acquired property", was not of that character and was not illegally acquired property. "[F]raudulently acquired property" is defined131, in effect, as property held in a false name, where a false instrument or signature, or an identity document of another person, was used for the purpose of acquiring or dealing with the property. The meaning of "illegally acquired property" is elaborated in s 9 of the CAR Act. At the risk of undue abbreviation, the expression encompasses the proceeds of any illegal activity, the proceeds of the disposal of or other dealing in illegally acquired property, and property wholly or partly acquired using illegally acquired property. "[I]llegal activity" is defined in s 4 in the broadest possible terms. It includes any act or omission that constitutes an offence (including a the common Commonwealth. It also includes any act or omission that occurs outside New South Wales, is an offence against the law of the place where it occurs, and is of a kind that, if it had occurred in New South Wales, would have been an offence against the laws of New South Wales or the Commonwealth. It follows that, to obtain an exclusion order, a person must prove, on the balance of probabilities, innocence of any wrongdoing in connection with the acquisition of the property which it is sought to exclude from restraint or forfeiture. laws of New South Wales or law offence) against the The CAR Act provides (s 10(2)) that the New South Wales Crime Commission ("the Commission") (a body constituted under the New South Wales Crime Commission Act 1985 (NSW)) "may apply to the Supreme Court, ex parte, for a restraining order" in respect of some or all of the interests in property "of a person suspected of having engaged in a serious crime related activity or serious crime related activities". The CAR Act further provides (s 10(3)) that the Supreme Court "must make the order applied for under subsection (2)" if, first, "the application is supported by an affidavit of an authorised officer stating that ... the authorised officer suspects that the person has engaged in a serious crime 131 s 9A. related activity or serious crime related activities and stating the grounds on which that suspicion is based", and secondly, "the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion". The CAR Act provides (s 10(6)) that the Supreme Court may refuse to make a restraining order if an appropriate undertaking with respect to the payment of damages or costs or both in relation to the making and operation of the order is not given. The CAR Act does not state any other basis for the Court to refuse to make the order sought. After the first two working days of its operation, a restraining order remains in force in respect of an interest in property only for so long as certain conditions are met132. The most relevant of those conditions is that an application for an assets forfeiture order is pending in respect of that interest133. The CAR Act provides (s 11(1)) for the giving of notice of the making of a restraining order to the Director of Public Prosecutions and to the Commissioner of Police. As to the person or persons whose interest is subject to the restraining order, s 11(2) provides that: a restraining order is made in respect of an interest in property of a person, and the person was not notified of the application for the making of the restraining order, notice of the making or variation of the order is to be given by the Commission to the person." The CAR Act further provides (s 12) for the Supreme Court to make any ancillary order the Court considers appropriate, either when it makes a restraining order or at any later time. Section 12(1) expressly provides that the power to make ancillary orders extends to an order varying the interests in property to which the restraining order relates and an order for examination on oath of the owner of an interest in property that is subject to the restraining order. Ancillary orders may be made134 on application by the Commission, the owner of the property, the Public Trustee (if the restraining order has directed the Public 133 s 10(9)(a). Trustee to take control of an interest in property), or (with the leave of the Supreme Court) any other person. The making of a restraining order provides the gateway to the making of an assets forfeiture order in respect of some or all of the property restrained. Section 22(2) provides that the Supreme Court must make an assets forfeiture order: "if the Court finds it to be more probable than not that the person whose suspected serious crime related activity, or serious crime related activities, formed the basis of the restraining order was, at any time not more than 6 years before the making of the application for the assets forfeiture order, engaged in: a serious crime related activity involving an indictable quantity, or a serious crime related activity involving an offence punishable by imprisonment for 5 years or more". The arguments against validity The central thrust of the appellants' argument against the validity of some or all of the provisions of the CAR Act that had been engaged in the present matter was that the Act required the Supreme Court to make orders sequestrating the assets of a person on the mere suspicion of the executive of commission of crime (and on no other evidence), and without the person having any sufficient opportunity to contest the basis upon which the order would be made. These features of the operation of the CAR Act, and in particular the provisions of s 10(2) regulating the making of a restraining order, were said to deprive the Supreme Court "of the reality or appearance of independence or impartiality that is essential to its position"135 as a court that exercises federal jurisdiction and for that reason to be so antithetical to the judicial process as to take the relevant provisions of the CAR Act beyond the legislative power of the State Parliament. If, as the appellants alleged, s 10 of the CAR Act was invalid, the whole structure 135 K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 535 [111]; [2009] HCA 4. See also Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24; H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547; [1998] HCA 54; North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146; [2004] HCA 31; Fardon v Attorney-General (Qld) (2004) 223 CLR 575; [2004] HCA 46; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532; [2008] HCA 4. of the Act collapsed because the making of both exclusion orders and assets forfeiture orders presupposed the valid making of a restraining order. It can be seen that the argument against the validity of s 10 had two distinct but related elements: one concerning the grounds for making a restraining order, and the other concerning the procedures to be followed by the Supreme Court in making an order of that kind. While it will be necessary, of course, to consider both elements of the argument in combination, it is convenient to begin examination of the argument by treating the two elements separately. The grounds for making a restraining order The three relevant forms of order for which the CAR Act provides (restraining order, assets forfeiture order and exclusion order) are to be made on different footings. A restraining order is founded on proof that a law enforcement officer suspects (on reasonable grounds) the commission of a serious crime; an assets forfeiture order is founded on the existence of a restraining order coupled with proof, on the balance of probabilities, of commission of any serious crime in the previous six years; an exclusion order is made only on proof, on the balance of probabilities, that the relevant property or interest in property was acquired without any illegality. A restraining order denies the owner of property the capacity to dispose of or deal with that person's property. It is to be made on no more evidence than evidence of the executive's suspicion of commission of crime and the Supreme Court's determination that there are reasonable grounds for the suspicion. But final disposition of interests in the property, whether by forfeiture or by exclusion from restraint and forfeiture, is to be made on proof of more than suspicion of commission of crime. Because a restraining order is a necessary but not sufficient precursor to making an assets forfeiture order, it is unsurprising that the facts to be established in order to obtain a restraining order differ from the facts that are to be established when an assets forfeiture order is made. Although the CAR Act provides136 for the exclusion of property from the reach of an assets forfeiture order after that order has been made, an assets forfeiture order is properly seen as intended (subject to that exception) to be the final disposition of rights in property. And the evident legislative intention of the CAR Act is that, without the necessity for conviction, and even in the face of an acquittal, a person who is found to have probably engaged in serious crime related activity is to have all of his or her property confiscated and forfeited to the Crown except to the extent 136 s 25(1)(b). that that person can show that the property was acquired without any form of wrongdoing. The chief weight of the appellants' argument fell upon the validity of s 10 of the CAR Act and its provisions regulating the making of a restraining order. The burden of the argument was that because the only issues for determination by the Supreme Court in an application for a restraining order are first, whether a law enforcement officer suspects that the owner of the property has committed a relevant crime or that the property is derived from criminal activity, and secondly, whether the stated grounds for that suspicion are reasonable137, the Supreme Court is, in effect, placed in the position of acting at the behest of the executive. The first of the issues identified (the holding of a relevant suspicion) may not often be capable of contradiction, yet it is possible to imagine cases where it could be said that the application was made in bad faith, no suspicion being genuinely entertained. The second issue, about whether the stated grounds give a reasonable basis for the asserted suspicion, may be arguable more often than the first. Certainly a judge called on to make a restraining order would be expected, even if the person interested in opposing the making of a restraining order was not, or could not be, heard, to pay close attention to this second aspect of the matter. But each element of the requirements that must be satisfied before a restraining order is made tenders an issue for decision. That is, a judge asked to make a restraining order must exercise judgment according to identified standards in deciding whether the grounds for making an order are established. If the application for a restraining order were to be made on notice (as s 11(2)(b) of the CAR Act inferentially acknowledges it may be138) both of the issues which must be decided by the judge asked to make the order would be open to controversy and argument. And as these reasons will later demonstrate, if the application for a restraining order is made without notice of the application being given to persons affected, any person who is affected by the order may apply for reconsideration of the restraining order by the judge who made the 137 cf George v Rockett (1990) 170 CLR 104; [1990] HCA 26. 138 So far as relevant, s 11(2)(b) obliges the Commission to give notice of the making or variation of a restraining order to a person in respect of an interest in whose property the order was made "[i]f ... the person was not notified of the application for the making of the restraining order". order or by another judge. On that application for reconsideration of the order made ex parte, the person seeking to argue against maintenance of the order may agitate any aspect of the issues that determine whether the Supreme Court must make a restraining order. It is true that, if the material advanced by the Commission in support of an application for a restraining order meets the requirements of s 10(3), the Court will have no choice but to make the order that is sought. But this is a commonplace in the judicial system. The principle applied in Finance Facilities Pty Ltd v Federal Commissioner of Taxation139 recognises that there are many cases where a statute confers a power on a court (and to that end uses the word "may") but does so in terms that make plain that the authority thus given must be exercised upon proof of the particular case out of which the power arises. In the present case, the CAR Act avoids the constructional difficulty that sometimes attends cases resolved by applying the Finance Facilities principle by saying that the Court must make a restraining order if the conditions for its making are established. But that does not deny that in every case where application is made for a restraining order the issue tendered for decision will be whether the relevant conditions are met. And the decision of an issue of that kind is an ordinary and unremarkable performance of the judicial function. Apart, then, from setting the relevant factual hurdle at the level of the existence of a reasonably grounded suspicion of criminal conduct, as distinct from proof of its commission, the provisions of s 10(3) of the CAR Act do not differ from any of a number of different statutory conferrals of jurisdiction upon courts which require the court to exercise a power if conditions prescribed for its exercise are met. And as pointed out earlier, a restraining order, though working a considerable effect on property rights, does not finally dispose of those rights. The final disposition of property by assets forfeiture order or exclusion order is not to be made on mere suspicion. The procedures for making a restraining order Do the procedures for exercise of the Supreme Court's powers to make a restraining order under the CAR Act differ in any relevant respect from the procedures usually followed in the judicial process? 139 (1971) 127 CLR 106; [1971] HCA 12. See also, for example, Leach v The Queen (2007) 230 CLR 1 at 17-18 [38]; [2007] HCA 3. The Court of Appeal of New South Wales has held140 that, if a restraining order is made on the ex parte application of the Commission, that order cannot thereafter be reconsidered by the judge who made the order, or by another single judge of the Supreme Court, whether by reference to the material advanced by the Commission or by reference to that material as supplemented by further evidence. The Court of Appeal held, in effect, that the only way in which a restraining order can be challenged is by appeal. It was on this understanding of the operation of the CAR Act that the appellants submitted that their property rights could be, and in this case had been, substantially curtailed in proceedings in which they had not been and could not be heard. The construction of the CAR Act which was the premise for this submission should not be adopted. The decision of the Court of Appeal in New South Wales Crime Commission v Ollis should be overruled. If the CAR Act did not expressly provide, as it does in s 10(2), that the Commission may apply ex parte for a restraining order, it may have been arguable that a person affected by such an order was entitled, as of right, to the setting aside of any such order made without notice to that party141. Section 10(2) puts beyond doubt that the argument just described is not available. But s 10(2) does not provide that the Supreme Court may make a restraining order only upon hearing the Commission in support of the application and without permitting any party affected to oppose the making of the order. Although the Commission may seek a restraining order without notice to any other person, s 11(2)(b) recognises, as already noted, that the Commission may give notice of its application to others, including a person or persons who may be thought to have an interest in the property that is to be restrained. It by no means follows that, because an application for a restraining order may be made ex parte, an order so obtained, unlike any other order made ex parte by the Supreme Court, cannot be reconsidered inter partes on the application of a person affected. That reconsideration can be undertaken by the judge who made the order, or by another judge. The grounds for reconsideration include, but are not limited to, an allegation that the Commission did not make full and frank disclosure of all matters bearing upon whether the order sought should be made. The material that may be examined on application for reconsideration of the order is not confined to the material that the Commission placed before the Court 140 New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478. 141 Cameron v Cole (1944) 68 CLR 571 at 589 per Rich J; [1944] HCA 5; Taylor v Taylor (1979) 143 CLR 1 at 7-8 per Gibbs J, 16 per Mason J; [1979] HCA 38. in support of its ex parte application. Nothing in the CAR Act expressly excludes the applicability of these propositions. The CAR Act should not be read as impliedly denying their applicability. It is necessary to make good the propositions just stated. Each is founded on the general proposition that the relevant provisions of the CAR Act take the Supreme Court as they find it. More particularly, because statutory construction is more than an exercise in literal comprehension, the relevant provisions of the CAR Act must be read in the setting provided by the common law system of adversarial trial administered in Australian courts142 and the processes ordinarily followed by the Supreme Court. As the whole Court said, more than 50 years ago, in Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW143, it is well established that when legislation refers a particular matter for hearing and determination to an existing court established as part of the judicial system of the State, "unless and except in so far as the contrary intention appears ... it is to the court as such that the matter is referred exercising its known authority according to the rules of procedure by which it is governed and subject to the incidents by which it is affected". As the Court went on to say144: "It may be remarked that the rule or principle invoked is but an expression of the natural understanding of a provision entrusting the decision of a specific matter or matters to an existing court. It is no artificial presumption. When the legislature finds that a specific question of a judicial nature arises but that there is at hand an established court to the determination of which the question may be appropriately submitted, it may be supposed that if the legislature does not mean to take the court as it finds it with all its incidents including the liability to appeal, it will say so. In the absence of express words to the contrary or of reasonably plain intendment the inference may safely be made that it takes it as it finds it with all its incidents and the inference will accord with reality." 142 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 343 [3]; [2000] HCA 63; Forge v Australian Securities and Investments Commission (2006) 228 CLR 45 at 76 [64]; [2006] HCA 44. 143 (1956) 94 CLR 554 at 559; [1956] HCA 22. 144 (1956) 94 CLR 554 at 560. Neither s 10(2), providing for a restraining order to be sought ex parte, nor the provisions of s 12, enabling the making of various forms of orders ancillary to the making of a restraining order, shows that the Act should be read as inferentially excluding application by the party affected by a restraining order, after the order has been made, to contest whether it should have been made or should continue and to adduce evidence in support of that party's case. Indeed, absent express and clear indication of that intention145 ("reasonably plain intendment"146), the CAR Act should not be construed as working such a fundamental alteration to civil procedure as would be required to conclude that an order made ex parte should not be open to subsequent review and reconsideration on the application of a party adversely affected by it147. An intention to effect such a change is not "to be assumed nor is it to be spelled out from indirect references, uncertain inferences or equivocal considerations"148. And neither the provision for making application ex parte nor any other feature of the Act engaged principles of the kind discussed in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia149 and, more recently, Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom150. As a general rule, since the late 19th century, a court or judge has had no power to review, rehear, vary or set aside any judgment after it has been passed and entered, or any order after it has been drawn up151. That is, as a general rule, a judgment or order, once formally recorded, can be discharged or varied only on 145 Cameron v Cole (1944) 68 CLR 571 at 589; Wentworth v NSW Bar Association (1992) 176 CLR 239 at 252; [1992] HCA 24. 146 Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560. 147 The Commissioner of Police v Tanos (1958) 98 CLR 383 at 395-396 per Dixon CJ and Webb J; [1958] HCA 6. 148 Tanos (1958) 98 CLR 383 at 396 per Dixon CJ and Webb J. 149 (1932) 47 CLR 1; [1932] HCA 9. 150 (2006) 228 CLR 566; [2006] HCA 50. 151 See, for example, Burrell v The Queen (2008) 82 ALJR 1221; 248 ALR 428; [2008] HCA 34; Grierson v The King (1938) 60 CLR 431; [1938] HCA 45; In re St Nazaire Co (1879) 12 Ch D 88. appeal. It is not necessary to stay to consider the recalling of an order that has been pronounced but not formally recorded, or the particular position of the orders of this Court as the court of final resort152. The general rule that a judgment or order that has been formally recorded cannot be reconsidered except by processes of appeal has long been recognised to be subject to some qualifications. In particular, it is a rule that does not apply to an order made ex parte153. As Griffith CJ rightly said, in Owners of SS Kalibia v Wilson154: "when a judicial order has been obtained ex parte the party affected by it may apply for its discharge. This is an elementary rule of justice, of the application of which familiar instances are afforded by writs of ca re and ex parte injunctions." And it is, therefore, unsurprising that rules of court, including the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"), provide expressly155 for applications of that kind in cases where a judgment or order given or made in the absence of a party has been entered. But as the UCPR also recognise156, the power of the Supreme Court of New South Wales to set aside judgments or orders made ex parte is not derived only from the Rules; it is a power necessarily implied as a part of the power of the Court to proceed ex parte. That is, as Griffith CJ put the point, it is "an elementary rule of justice". 152 See, for example, State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29; [1982] HCA 51; University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481; 60 ALR 68; [1985] HCA 28; Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300; [1993] HCA 6; Elliott v The Queen (2007) 234 CLR 38; [2007] HCA 51. 153 See, for example, Owners of SS Kalibia v Wilson (1910) 11 CLR 689 at 694 per Griffith CJ; [1910] HCA 77; Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; [1912] HCA 72; Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1972) 129 CLR 521 at 527 per Gibbs J; [1973] HCA 66; Bidder v Bridges (1884) 26 Ch D 1 at 9 per Lord Selborne LC, 12 per Cotton LJ. 154 (1910) 11 CLR 689 at 694. 155 r 36.16(2)(b). One particular basis for seeking to set aside an order obtained ex parte is exemplified by the decision of Isaacs J in Thomas A Edison Ltd v Bullock157. In that matter, Barton J had granted an interlocutory injunction on ex parte application by the Edison company. The defendant moved before Isaacs J to dissolve the injunction on grounds including that the Edison company had not disclosed material facts. Isaacs J held158 that a party asking for an injunction ex parte is duty bound "to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance". As Isaacs J went on to say159: "the party inducing the Court to act in the absence of the other party ... fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall." The decision in Edison can be understood as a particular application of the equitable maxim that a party who seeks equity must do equity. But the obligation to make proper disclosure when seeking relief from a court without notice to the opposite party should not be understood as confined to cases where equitable relief is sought. In the Supreme Court of New South Wales, the obligation might be seen as rooted in the requirement of s 56 of the Civil Procedure Act 2005 (NSW) that the overriding purpose of that Act and the UCPR is "to facilitate the just, quick and cheap resolution of the real issues" in proceedings. That statement of overriding purpose is certainly not inconsistent with the existence of an obligation to make proper disclosure when moving the Court ex parte, but the source of the obligation is better understood as lying in the very nature of the adversarial system administered in Australian courts, coupled with the emphasis given160 to the desirability of finality in litigation. Unless a party moving a court to make orders in the absence of parties having an interest to oppose their making is obliged to make proper disclosure of all relevant materials, hearings will be 157 (1912) 15 CLR 679. 158 (1912) 15 CLR 679 at 681-682. 159 (1912) 15 CLR 679 at 682. 160 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12. needlessly multiplied and prolonged. Courts should not be asked to make orders in the absence of opposing interests on material that is or should be known to be deficient. If an order is made in those circumstances, the consequences identified by Isaacs J in Edison161 should follow: "the order so obtained must almost invariably fall". But the power to set aside an order obtained ex parte for want of proper disclosure is not the only power to set aside an order obtained ex parte. A person affected by an order, but as to the making of which the person has not been heard, may move162 for reconsideration of the order either on the material before the judge at the time of making the order or on that material supplemented by further material. Whether or when it would be forensically possible to achieve a different result on reconsideration of an order, if the material on which the order was made was not supplemented, need not be considered. And whether a person who recognises that he or she may later be charged with an offence would think it wise to take a step which may expose the person to cross-examination about suspicions said to be held by authorities is likewise not to the point. What is presently important is that, because the CAR Act gives the Supreme Court the jurisdiction to make a restraining order, the Act takes the Court and its processes as it finds them, except to the extent the Act modifies or qualifies those processes. Any modification of, or qualification to, that rule would require the clearest language. There is no provision of the CAR Act that expressly modifies that "elementary rule of justice" that a party affected by a judicial order obtained ex parte may apply for its discharge. No implied modification or qualification of the rule can be spelled out from the terms of the CAR Act, whether by reference to the Act's provisions about ancillary orders or otherwise. The Commission expressly accepted, in argument in this Court, that the CAR Act does not inferentially exclude the ordinary power of the Supreme Court to reconsider an order made ex parte if it is alleged that the order was obtained without the applicant making full disclosure of relevant matters. As earlier observed, the CAR Act provides that the Commission may apply ex parte for a restraining order and that the Supreme Court must make that order if the conditions described earlier in these reasons are met. To that extent, the CAR Act provides its own distinct procedural regime for the exercise of the power to 161 (1912) 15 CLR 679 at 682. 162 cf Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 1 WLR 966 at 978; [1978] 3 All ER 164 at 174; Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1989) 89 ALR make a restraining order. But the question which then arises is whether, by permitting but not requiring the Commission to apply ex parte, the Act impliedly excludes the engagement of an important consequence that attaches to and ordinarily follows from a court's exercise of power ex parte. That question is presented, but not answered, by the observation that a restraining order may be made ex parte. Repugnance to judicial process? Neither the grounds for making a restraining order nor the procedures of the Supreme Court that are or may be engaged in the making or reconsideration of such an order, whether considered separately or in combination, are repugnant to the judicial process as understood and conducted in Australia. Section 10 of the CAR Act does not deny either the reality or the appearance of the impartiality of the Supreme Court of New South Wales. It is not invalid. As for the separate challenge to s 22 of the Act, which provides for the making of an assets forfeiture order, it is enough to make two points. First, we agree with Gummow and Bell JJ that, for the reasons their Honours give, s 22 is not a bill of pains and penalties. Second, whether, in particular operations of s 22, the section may be engaged in ways that do present issues about the intersection of that operation with principles of the kind usually grouped under the rubrics of double jeopardy or incontrovertibility of acquittals is a question that does not arise in this case. No factual footing for its consideration yet exists and no order has yet been made in this matter under s 22. It is neither necessary nor appropriate to consider further the validity of s 22. The challenge to the validity of s 10 failing, any broader issue about the validity of s 22 should await another day. Orders The appeal to this Court should be dismissed. The Commission sought no order as to costs. 139 HEYDON J. The background circumstances are set out in the judgment of Gummow and Bell JJ. The abbreviations there employed are employed below. The Kable doctrine and s 10 General. At least at the time when it was decided, Kable v Director of Public Prosecutions (NSW)163 had its critics. Whatever the force of their criticisms, there is no doubt that the decision has had extremely beneficial effects. In particular, it has influenced governments to ensure the inclusion within otherwise draconian legislation of certain objective and reasonable safeguards for the liberty and the property of persons affected by that legislation. It is true that apart from the Kable case itself there has been no successful invocation of the doctrine associated with that case in this Court, and no challenge to the correctness of that doctrine. In these very proceedings the parties did not challenge the correctness either of the Kable case or of anything said in it. It is accordingly not necessary to evaluate the criticisms. The case stands. It must thus be applied if circumstances which attract its operation arise. One central proposition in the Kable case which has never been challenged is Gummow J's statement that a provision in a State statute conferring an authority on a State court capable of exercising federal jurisdiction which is "repugnant to the judicial process in a fundamental degree" is not constitutionally valid164. The centrality of "hearings". One of the primary principles on which the judicial process in this country operates is the principle that before any judicial decision is made which has substantive consequences165 there generally should be a "hearing". A hearing takes place before a judge at a time and place of which the moving party has given notice to the defending party. At it both parties have an opportunity to tender evidence relating to, and advance arguments in favour of, the particular orders they ask for. This aspect of the rules of natural justice pervades Australian procedural law. It has several justifications, and their force is so great that exceptions to the hearing rule in judicial proceedings are very narrow. One justification is that the forensic system employed in the courts of this country in civil proceedings for remedies having substantive consequences is adversarial. Ex hypothesi, it is not possible for a court to operate an adversarial 163 (1996) 189 CLR 51; [1996] HCA 24. 164 (1996) 189 CLR 51 at 132. 165 This expression excludes ex parte procedural orders like those made shortening the time for service of initiating process and directing speedy timetables with a view to the matter being readied quickly for an early inter partes interlocutory hearing. system without the court having the evidence and arguments which each adversary wants to have considered. If the hearing rule were different, the system would be internally contradictory. Another justification is that to act only on the version advanced by one adversary is to risk reaching unsound conclusions, and thus to risk both injustice and inefficiency. Experience teaches that commonly one story is good only until another is told. Where a judge hears one side but not the other before deciding, even if the side heard acts in the utmost good faith and makes full disclosure of all that that side sees as relevant, there may be considerations which that side had not entertained and facts which that side did not know which, if brought to the attention of the judge, would cause a difference in the outcome. "The person most likely to have thought of cogent considerations, and to know the relevant facts, is the person whose interests are in jeopardy, that is the party opposing the decision. Therefore we shall avoid bad decisions best if we ensure that each potential decision, before it is finally decided, is exposed to what is likely to be the strongest possible criticism of it."166 Thus, hearing both sides before deciding tends to quell controversies and discontents. As Megarry J said in John v Rees167: "It may be that there are some who would decry the importance which the courts attach to the observance of the rules of natural justice. 'When something is obvious', they may say, 'why force everybody to go through the tiresome waste of time involved in framing charges and giving an opportunity to be heard? The result is obvious from the start.' Those who take this view do not, I think, do themselves justice. As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change." Of the last sentence Lord Hoffmann has observed168: "Most lawyers will have heard or read of or even experienced such cases but most will also know how rare they are. Usually, if evidence appears to an experienced tribunal to be 166 Lucas, The Principles of Politics, (1966) at 132. 167 [1970] Ch 345 at 402 (a case concerning the suspension by a national political party of one of its branches). 168 Secretary of State for the Home Department v AF (No 3) [2009] 3 WLR 74 at 102 [73]; [2009] 3 All ER 643 at 670. irrefutable, it is not refuted." Perhaps both Megarry J and Lord Hoffmann are guilty of a little exaggeration. But even if Lord Hoffmann's reasoning is completely correct, it does not destroy Megarry J's point. A further justification for the practice of hearing both sides is that it respects human dignity and individuality. "[S]ince men can talk, they should be allowed to, and not just bundled about like chessmen."169 "[W]e think we owe it to a man as a human being to engage in argument with him, and allow him to engage in argument with us, rather than take decisions about him behind his back, completely disregarding, as it were, his status as a rational agent, able to appreciate the rationale of our decisions about him, possibly willing to co-operate in carrying them out."170 Finally, there is what has been called an "argument from Political Liberty"171: "[E]ach man ought himself to have some say of his own in his own future, and … each man ought to count, to count as being himself, and not merely as one instance among many of the human species. We therefore think each man ought to be able to instruct his own counsel (or appear in person) to represent his own views, not merely those views which a benevolent authority might deem him to hold. … [O]n a matter on which he is likely to have very strong wishes, namely where a decision (judicial or administrative) is in danger of being taken adversely to his interests, he should have a chartered right of having a say, that is, the authority has a duty to hear him." Thus Megarry J also said in John v Rees172: "[T]hose with any knowledge of human nature who pause to think for a moment [are not] likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events." Illustrations. The courts are extremely solicitous about the interests of persons who have not been given an opportunity to be heard either at all or in respect of particular questions before judicial orders of a substantive kind are 169 Lucas, The Principles of Politics, (1966) at 269. 170 Lucas, The Principles of Politics, (1966) at 132. 171 Lucas, The Principles of Politics, (1966) at 270. 172 [1970] Ch 345 at 402. made against them. Many illustrations of the duty only to make substantive judicial orders after giving a hearing – that is, not to act ex parte or sua sponte – can be found. A court may not decide a case on a point not raised by one of the parties or by the court for the consideration of the parties173. Non-compliance by a court of trial with the duty to give a hearing on a question of law which "must clearly be answered unfavourably to the aggrieved party" will not lead to a new trial, but where no hearing is given on the question whether a finding of fact turning on witness credibility should be made, it is not easy to conclude that a new trial should be refused on the ground that even if a hearing had taken place, "it could have made no possible difference to the result."174 The court is not entitled to take into account factual material not in evidence without notice to the parties175. The court is not entitled to take judicial notice of particular matters of fact after inquiry without notifying the parties of the inquiry and giving them the opportunity to controvert or comment on the source in which the inquiry is made176. When local justices propose to use their local knowledge, it is "always wise" to make that fact known to the parties so as to give them an opportunity to comment on the knowledge claimed177. If, in determining whether the law should be developed in a particular direction, the court has recourse to learned works, it ought to give the parties an opportunity to deal with all matters which 173 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22; Friend v Brooker (2009) 83 ALJR 724; 255 ALR 601; [2009] HCA 21. 174 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145-146 per Mason, Wilson, Brennan, Deane and Dawson JJ; [1986] HCA 54. 175 Thomas v Thomas [1961] 1 WLR 1 at 6, 8 and 9; [1961] 1 All ER 19 at 22 and 24 (behaviour of a party in earlier proceedings); In re K (Infants) [1963] Ch 381 at 405-406 (report of guardian ad litem filed but not tendered: see also In re K (Infants) [1965] AC 201 at 237-238); Brinkley v Brinkley [1965] P 75 at 78-79 (evidence in earlier proceeding not tendered in later); In the Marriage of Dean (1988) 94 FLR 32 at 36-38 (textbooks on valuation of businesses not in evidence); Australian and Overseas Telecommunications Corporation Ltd v McAuslan (1993) 47 FCR 492 at 495-496, 506-512 and 517 (part of psychiatric reference work neither tendered nor the subject of cross-examination or re-examination); and the cases cited by Lord Bingham of Cornhill in R (Roberts) v Parole Board [2005] 2 AC 738 at 752-754 [16]-[17]. 176 Cavanett v Chambers [1968] SASR 97 at 101; Stokes v Samuels (1973) 5 SASR 18 at 26; Fairbank v Jones (1975) 10 SASR 367 at 370-371; Gordon M Jenkins & Associates Pty Ltd v Coleman (1989) 23 FCR 38 at 46-48. 177 Bowman v Director of Public Prosecutions [1990] Crim LR 600. the court regards as material178. The same is true where the court is concerned with matters of fact going to the constitutional validity of legislation, the construction of statutes, and the construction of the Constitution179. Juries180 and judges181 may take into account their observations of the behaviour of witnesses in the well of the court which could not have been made by counsel, but only if they reveal what they have seen to the parties. A court which acts on its understanding of a document in a foreign language without informing the parties commits a breach of the rules of natural justice182. Abuse of process following a proper hearing. the significance of the hearing rule is revealed by the fact that a hearing at which all parties were present may present an obstacle to future litigation. Thus it is an abuse of process to institute proceedings "for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made."183 Conversely, Interlocutory injunctions in equity. The sensitivity of the law towards the interests of parties who may be affected by ex parte substantive orders is illustrated by various aspects of equitable practice in relation to interlocutory injunctions. There is a general rule of practice that no injunction will be granted ex parte unless it takes one of two forms. One form of injunction is that granted for 178 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 511-512 [164]-[165]; [2002] HCA 9. 179 Thomas v Mowbray (2007) 233 CLR 307 at 513 [618]; [2007] HCA 33. 180 R v White (1987) 49 SASR 154 at 161-162. 181 Minagall v Ayres [1966] SASR 151 at 156; Jobst v Inglis (1986) 41 SASR 399 at 407-408; Angaston and District Hospital v Thamm (1987) 47 SASR 177; Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304; In the Marriage of J and K A Zantiotis (1993) 113 ALR 441; In Marriage of Chehab (1993) 113 FLR 94; Marelic v Comcare (1993) 47 FCR 437 at 448-450; Kappos v State Transit Authority (1995) 11 NSWCCR 386 at 390-392; R v Martin (No 4) (2000) 78 SASR 140; Arian v Nguyen (2001) 33 MVR 37 at 44 [27]. 182 Zoeller v Federal Republic of Germany (1989) 23 FCR 282 at 290-292. 183 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 541 per Lord Diplock. a very short period within which notice is given to the defendant of its existence, so that the defendant may oppose any extension of it beyond that very short period. The second form of injunction is that granted until further order, but with liberty for the defendant to make a speedy application for it to be set aside. The former type of order is usually regarded as the more desirable. But our equitable practice knows nothing of an ex parte injunction granted until trial without liberty to apply for speedy dissolution. Another instructive aspect of equitable practice is afforded in relation to the question of whether an ex parte injunction should be granted at all. It was summarised thus by Lord Hoffmann, delivering the opinion of the Privy Council in National Commercial Bank Jamaica Ltd v Olint Corpn Ltd184: "Although the matter is in the end one for the discretion of the judge, audi [alteram] partem is a salutary and important principle. Their Lordships therefore consider that a judge should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction (as in the case of a Mareva or Anton Piller order) or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act. … Their Lordships would expect cases in the latter category to be rare, because even in cases in which there was no time to give the period of notice required by the rules, there will usually be no reason why the applicant should not have given shorter notice or even made a telephone call. Any notice is better than none." (emphasis in original) Commissioner of Police v Tanos. Illustrations of the aversion of Australian judicial process to ex parte relief of a substantive kind could be multiplied extensively, but a final illustration is Commissioner of Police v Tanos. In that case Dixon CJ and Webb J said185: "[I]t is a deep-rooted principle of the law that before any one can be punished or prejudiced in his person or property by any judicial or quasi-judicial proceeding he must be afforded an adequate opportunity of being heard." Their Honours then said of this "general principle" that it was "hardly necessary to add that its application to proceedings in the established courts is a matter of course."186 That case concerned s 3(1)(b) of the Disorderly Houses Act 1943 (NSW), which provided that the Supreme Court of New South Wales "may declare" premises to be a disorderly house on the 184 [2009] 1 WLR 1405 at 1408 [13]. The other members of the Board were Lords Rodger of Earlsferry, Carswell, Brown of Eaton-under-Heywood and Mance. 185 (1958) 98 CLR 383 at 395; [1958] HCA 6. 186 Commissioner of Police v Tanos (1958) 98 CLR 383 at 396. affidavit of a police officer claiming reasonable grounds for suspecting one or more of various conditions. The Disorderly Houses Regulations, reg 1, gave the Court power to make the declaration "immediately and ex parte" if this seemed "necessary or desirable" or on notice and inter partes if the Court thought an opportunity should be given to the owner or occupier to oppose the making of the declaration. Their Honours thought that on its true construction the regulation meant that prima facie the second course should be followed, and that the former course should be followed "only in exceptional or special cases" – where there was "some special hazard or cause of urgency"187. The case affords an instructive contrast with the present, for no such judicial discretion is available here. Section 10(2)188 of the Act provides that the Commission "may" apply for a restraining order ex parte. Section 10(3)189 provides that if the Commission makes an application for a restraining order ex parte, the Supreme Court "must" make that order if the affidavit relied on by the Commission satisfies stipulated conditions. That is, the Supreme Court has no discretion to adjourn the hearing briefly while notice is given to the person affected. Although this is not by itself repugnant to the judicial process in a fundamental degree, it is relevant to whether one other aspect of the legislation is. The duration of restraining orders. Section 10(9)190 makes it plain that 187 Commissioner of Police v Tanos (1958) 98 CLR 383 at 396. 188 See [72]. 189 See [76]. 190 It provides: "After the first 2 working days of its operation, a restraining order remains in force in respect of an interest in property only while: (a) there is an application for an assets forfeiture order pending before the Supreme Court in respect of the interest, or (b) there is an unsatisfied proceeds assessment order in force against the person whose suspected serious crime related activities formed the basis of the restraining order, or (c) there is an application for such a proceeds assessment order pending before the Supreme Court, or (d) it is the subject of an order of the Supreme Court under section 20 (Effect on restraining order of refusal to make confiscation order)." once a restraining order has been made, unless it is set aside on appeal, it remains in force for two working days and continues to remain in force thereafter indefinitely until such time as all the states of affairs described in paragraphs (a)-(d) cease to exist. That period could be quite lengthy, since, for example, there is no statutory obligation on the Commission to prosecute the application for an assets forfeiture order described in s 10(9)(a) with any expedition. The extreme significance in the legislative scheme of the grant of a restraining order is highlighted by s 22(1A). It provides that an application for an assets forfeiture order under s 22(1) may be made "before or after or at the same time as an application for the relevant restraining order but may not be determined before the restraining order is granted." The scheme is that assets are to be frozen first and argued about afterwards – possibly a long time afterwards. Practical utility. It is understandable that the Act places a high significance on the importance of obtaining a restraining order without notice to defendants. No doubt many potential defendants are able to dispose of their assets very speedily, and would do so, if given notice of the application before the restraining order is made. A duty in the Supreme Court to grant an ex parte restraining order for a short period pending an application by the defendant to oppose its continuation, or dissolve it, is not repugnant to the judicial process in a fundamental degree. But the practical desirability of ensuring that assets not be disposed of before an application for a restraining order comes to court is one thing. Creating a capacity in the Commission to retain a restraining order it has obtained ex parte without there being any procedure by which the defendant may apply to have it speedily dissolved is another. The central issue. If there is no procedure by which the person subject to a s 10(2) restraining order made ex parte may approach the Court to have it set aside once that person has learnt of the order, the effect of s 10 is to compel the Supreme Court of New South Wales to engage in activity which is repugnant to the judicial process in a fundamental degree. The element which is repugnant is not the grant of a power to make restraining orders ex parte. That is a very well-known aspect of Australian judicial process in relation to injunctions, although the power should only be exercised in exceptional or special cases, where there is some special hazard or cause of urgency. A risk of dissipation of assets in such a fashion as to frustrate the objects of the law can be in that category. Nor is the element which is repugnant the creation of a duty on the Court to make the order, if the conditions in s 10(3) are satisfied. That too is a well-known aspect of Australian judicial process. Nor is the element which is repugnant to be found in the failure of the legislation to give the Court power to consider whether the circumstances are sufficiently extreme to justify a grant of ex parte relief or whether the order, if made, should be limited so as to last only for a short time. That is because that failure will cause little injustice if a wrongly made order is only made for a short time or can be dissolved speedily. The repugnance arises if the legislation ensures that there is no facility for the Court to entertain an application to dissolve an ex parte restraining order once the defendant has received notice of its grant pursuant to s 11(2). If that facility existed, the potential injustice flowing from the preceding three characteristics of s 10 would be nullified or mitigated. But if it does not exist, there is the potentiality for extreme injustice in a fashion repugnant to the judicial process in a fundamental degree. The crucial question is thus whether it is possible for a defendant to apply for speedy dissolution of the ex parte restraining order. The answer is "No". The Act does not expressly or implicitly grant defendants that facility. And its structure excludes it. No statutory grant of the facility. There is no provision in s 10 or any other part of the Act pursuant to which a person against whom an ex parte restraining order has been made can apply to the Supreme Court to have the order set aside, at least without much difficulty and delay. The extensive list of orders set out in s 12(1) and described as "ancillary orders" does not contain any order of that kind. Section 12(1)(a) refers to "an order varying the interests in property to which the restraining order relates", but that language does not include an order setting aside the restraining order in its totality. An order which is "ancillary" to another is an order which is subservient, subordinate, auxiliary or accessory to it. An order which sets aside another order is not "ancillary" to it. Further, s 12(1) contemplates that an "ancillary" order can be made either later than or at the same time as the restraining order: a set of orders comprising a restraining order and an "ancillary" order made at the same time as the restraining order and setting it aside would be internally contradictory, which suggests that an order setting aside a restraining order is not an ancillary order. Nor does s 25 assist191. For the reasons given by Gummow and Bell JJ the narrow potentiality s 25 affords for bringing the restraining order to an end – through a complex negative inquiry which is likely often to be very time- consuming – does not prevent s 10 from operating so as to compel the Supreme Court to engage in an activity which is repugnant to the judicial process in a fundamental degree192. The same is true of s 20, because the power it affords to terminate the restraining order is only triggered once the Court decides not to make an assets forfeiture order, and that decision may not be made for a long time. 191 See [93]-[94]. 192 See [93]-[97]. Statutory preclusion of the facility. In addition to the fact that there is no express provision in the Act permitting a speedy application to dissolve restraining orders granted ex parte, the relevant sections in Pt 2 of the Act read as a whole indicate that they constitute a self-contained and exhaustive regime. It is a regime which excludes any recourse to, or to an analogy with, the general law powers in the Supreme Court to permit an application by an affected person to dissolve ex parte interlocutory injunctions. The Commission made a contrary concession, but incorrectly. It is not open to it to advocate or accept particular constructions of the legislation in any fashion binding on this Court and thereby, as it were, to "concede" the legislation under which it operates into constitutional validity by converting it into a statute which is different from the one actually enacted by the legislature. The self-contained and exhaustive nature of the regime is demonstrated by the quite close detail to which Pt 2 of the Act descends in dealing with restraining orders. It would be wearisome to engage in unduly minute analysis, but the following matters may be noted. Section 10(1) and (2) provides for how the orders are to be applied for. Section 10(2), (2AA) and (2A) provides for the property in relation to which the orders may be applied for. Section 10(3) and (3A) provides for when the orders must be made. Section 10(4) provides for the Court to order the Public Trustee to take control of property to which the restraining order relates: see also ss 12, 18, 19 and 21. Section 10(5)(a) gives the Court power to ensure that a restraining order may make provision for meeting out of the property to which the order applies the reasonable living expenses of any person whose interests in property are subject to the restraining order (including the reasonable living expenses of any dependants). Section 10(5)(b) gives the Court power to ensure that a restraining order makes provision for the payment out of the property to which the order applies of the reasonable legal expenses of any person whose interests in the property are subject to the restraining order, being expenses incurred in connection with the application for the restraining order or an application for a confiscation order, or incurred in defending a criminal charge: see also ss 16A, 16B and 17. Section 10(6) and (7) provides for undertakings as to damages or costs. Section 10(8) provides that if a restraining order is in force in respect of an interest of a person in property, the order does not prevent the levying of execution against the property in satisfaction or partial satisfaction of the debt arising under a proceeds assessment order in force against the person, or, with the consent of the Supreme Court, the sale or other disposition of the interest to enable the proceeds to be applied in satisfaction or partial satisfaction of that debt, or, with the consent of the Supreme Court, the application of the interest in satisfaction or partial satisfaction of that debt. Section 10(9) provides for the duration of the orders. Section 10B provides for applications for restraining orders to be made by telephone and for notice of those orders to be given by telephone. Section 11 provides for notice of the restraining orders. Section 12 provides for the making of numerous ancillary orders. Sections 13 and 13A provide for the abolition of certain privileges. Section 14 provides for orders for sale of certain types of property. Section 15 provides for recording restraining orders on title registers. Section 16 provides for punishments for contravention of restraining orders. Section 20 provides that if while a restraining order is in force the Supreme Court does not make an assets forfeiture order in respect of interests in property to which the restraining order relates or a proceeds assessment order in respect of any person whose interests in property are affected by the restraining order, the Court may make an order in relation to the period for which the restraining order is to remain in force, and make such other order or orders as it considers appropriate in relation to the operation of the restraining order. In 1864 the Supreme Court of the United States said: "Parties whose rights are to be affected are entitled to be heard; and in order that they may enjoy that right they must first be notified."193 Under Pt 2 of the Act, there is notification only after the defendant's rights are affected, and no provision for any opportunity for defendants to argue that orders affecting them should be dissolved. In 1965 the Supreme Court of the United States said that the opportunity to be heard "must be granted at a meaningful time and in a meaningful manner."194 The meaningfulness of notice depends on its timeliness. If the Commission chooses to proceed ex parte, the statutory scheme under consideration grants no right to notice before the ex parte order is made, and the grant by s 11(2)195 of a right to notice of the ex parte order after it has been made is not a grant at a meaningful time because it can lead to no avenue by which the order can be dissolved before it causes more harm. In short, the strict, confined, specific and tight regulation of the powers granted excludes recourse by analogy or otherwise to the general powers and traditional procedures of the Supreme Court in its administration of equitable relief. The "reasonably plain intendment" of the legislation is that Pt 2 does not, in this respect at least, take the Supreme Court of New South Wales as it finds 193 Baldwin v Hale 68 US 223 at 233 (1864). 194 Armstrong v Manzo 380 US 545 at 552 (1965). 195 See [110]. 196 Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560 per Dixon CJ, McTiernan, Williams, Webb, Fullagar, Kitto and Taylor JJ; [1956] HCA 22. Bill of pains and penalties To some extent the appellants employed s 22(2)(b) as an aid to their arguments in support of the conclusion that s 10 was invalid by reason of the Kable doctrine. That conclusion has been accepted for reasons other than the existence of s 22(2)(b). But the appellants also advanced a distinct argument based on s 22(2)(b). They submitted that s 22(2)(b)197 exposes a person to punishment, in the form of forfeiture of property, for an offence for which that person has not been prosecuted, tried or convicted; that s 22(2) was void as being in substance a bill of pains and penalties antithetical to the exercise of judicial power under Ch III of the Constitution; and that s 10(3) fell with s 22(2)(b) because the making of a s 10(3) restraining order was a condition precedent to the making of an assets forfeiture order under s 22(2)(b). The submission must be rejected. Like a bill of attainder, a bill of pains and penalties "is a legislative enactment which inflicts punishment without a judicial trial"198. The key question is thus whether s 22(2)(b) provides for a judicial trial. The finding referred to in s 22(2)(b) can only be made after notice of the application for an assets forfeiture order has been given to the person described in s 22(2)(b): see s 22(9)199. That person has a right to appear and adduce evidence: s 22(9). And the rules of evidence apply to that process of adducing evidence: s 5(2)(b)200. Thus s 22(2)(b) provides for a judicial trial. The standard of proof to be satisfied by the Commission ("more probable than not") is lower than the conventional criminal standard. This may be an 197 See [111]. 198 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 535 per Mason CJ; [1991] HCA 32. 199 It provides: "Notice of an application under this section is to be given to a person to whom the application relates and the person may appear, and adduce evidence, at the hearing of the application." 200 It provides: "Except in relation to an offence under this Act: (b) the rules of evidence applicable in civil proceedings apply, and those applicable only in criminal proceedings do not apply, to proceedings under this Act." unamiable provision, but it does not entail constitutional invalidity201. The more extreme step of reversing the burden of proof itself has been held not to invalidate a federal statute202. Section 22(2)(b) does not adjudge any specific person or specific persons guilty of an offence: it leaves it to the Supreme Court to do so on that standard of proof, but otherwise in conformity with the rules of evidence. If any s 22(2)(b) order is made, it is made in exercise of judicial power, not legislative power. Section 22 does not undermine the protection of a criminal trial A final submission advanced for the appellants by reference to s 3(a) of the Act203 was that a s 22(2)(b) order amounted to confiscation of property without a conviction; that the proceedings for the s 22(2)(b) order were thus civil proceedings; that the forfeiture effected by the order was punishment; that the person against whom the order was sought was in peril of punishment without the procedural safeguards of a criminal trial; that this violated the essential requirements of the exercise of judicial power and usurped it; and that to punish a person only after a civil hearing was impliedly prohibited by the doctrine of the separation of powers. In substance, as emerged in oral argument, these submissions did no more than complain that it is not constitutionally possible for a State court to obtain an order for forfeiture of property unless the matters of fact constituting the conditions for forfeiture are proved beyond a reasonable doubt. For the reasons given above204, the stipulation of a lower standard of proof does not lead to that conclusion. Orders I agree with the orders proposed by Gummow and Bell JJ. 201 Silbert v Director of Public Prosecutions (WA) (2004) 217 CLR 181 at 186 [11]; [2004] HCA 9. 202 Nicholas v The Queen (1998) 193 CLR 173; [1998] HCA 9. See also Thomas v Mowbray (2007) 233 CLR 307 at 355-356 [113]. 203 See above at [83]. 204 See [167] above.

HIGH COURT OF AUSTRALIA COMCARE AND PVYW APPELLANT RESPONDENT [2013] HCA 41 30 October 2013 ORDER Appeal allowed. Set aside the orders, other than the costs order, of the Full Court of the Federal Court of Australia made on 13 December 2012 and, in their place, order that: the appeal to that Court be allowed; and the order and declaration, other than the costs order, of the Federal Court of Australia made on 19 April 2012 be set aside and, in their place, order that the appeal from the decision of the Administrative Appeals Tribunal dated 26 November 2010 be dismissed. The appellant pay the respondent's costs of this appeal. On appeal from the Federal Court of Australia Representation J T Gleeson SC, Solicitor-General of the Commonwealth with T M Howe QC and A P Berger for the appellant (instructed by Sparke Helmore Lawyers) L T Grey with J P Mrsic for the respondent (instructed by Pappas J Attorney) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Industrial law (Cth) – Workers' compensation – Employee injured during overnight stay at motel booked by employer – Employee injured whilst engaged in activity – Employee claimed compensation for injuries under Safety, Rehabilitation and Compensation Act 1988 (Cth) – Whether employee's injuries arose in course of employment – Whether employee's injuries sustained during interval or interlude within overall period of work. Words and phrases – "connection or association with employment", "injury … at and by reference to a place", "in the course of employment", "interval or interlude within an overall period or episode of work". Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 5A(1), 6, 14(1). FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. The respondent was at the relevant time employed by a Commonwealth government agency. She had been required to visit a regional office of the agency in New South Wales with another work colleague to observe the budget review process, meet the regional staff and undertake training. For that purpose, she stayed overnight at a nearby motel which had been booked by her employer. During the course of the evening at the motel, the respondent engaged in sexual intercourse with an acquaintance. In that process, the glass light fitting above the bed was pulled from its mount by either the respondent or her acquaintance and it struck the respondent on her nose and mouth. As a result, the respondent suffered physical injuries and a subsequent psychological injury. The respondent claimed compensation for her injuries under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SR&C Act"). It provides1 that Comcare is liable to pay compensation in respect of an "injury" suffered by an employee2. An injury for which compensation is payable includes a physical or mental injury "suffered by an employee … arising out of, or in the course of, the employee's employment"3. The question the respondent's claim for compensation raised for the Administrative Appeals Tribunal ("the AAT") and the courts below was whether her injuries were suffered "in the course of" her employment. It was argued for the respondent before the AAT that because she was at a particular place – the motel – at the instigation of her employer, her injuries were suffered in the course of her employment and were compensable, absent any gross misconduct on her part. It was not suggested that her actions amounted to misconduct. The AAT concluded4 that the respondent's injuries were unrelated to her employment. In the Federal Court, the primary judge (Nicholas J) set aside that decision5. A Full Court of the Federal Court (Keane CJ, Buchanan and 1 Safety, Rehabilitation and Compensation Act 1988 (Cth), s 14(1). 2 Defined in s 5(1) of the Safety, Rehabilitation and Compensation Act 1988 to include a person employed by a Commonwealth authority. 3 Safety, Rehabilitation and Compensation Act 1988, ss 4(1), 5A(1)(b). 4 Comcare v PVYW unreported, Administrative Appeals Tribunal, 26 November 2010 at [51] per Professor RM Creyke, Senior Member. 5 PVYW v Comcare (No 2) (2012) 291 ALR 302. Hayne Crennan Bromberg JJ) dismissed Comcare's appeal6. Comcare now appeals to this Court by special leave. The reasoning below In dismissing Comcare's appeal, the Full Court said7 that it was applying the principle which had been reformulated in Hatzimanolis v ANI Corporation Ltd8. The objective of Hatzimanolis, the Full Court said, was "to state the circumstances in which injuries to employees, which did not occur during periods of actual work, would nevertheless be treated as arising in the course of employment."9 The Full Court identified10 the following passage from the joint judgment in Hatzimanolis11 as containing the relevant tests: "[T]he modern cases show that, absent gross misconduct on the part of the employee, an injury occurring during such an interval or interlude will invariably result in a finding that the injury occurred in the course of employment. Accordingly, it should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. Furthermore, an injury sustained in such an interval will be within the course of employment if it occurred at that place or while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of employment. In determining whether the injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the employment 'and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen'." (footnote omitted) 6 Comcare v PVYW (2012) 207 FCR 150. 7 Comcare v PVYW (2012) 207 FCR 150 at 159 [31]. (1992) 173 CLR 473; [1992] HCA 21. 9 Comcare v PVYW (2012) 207 FCR 150 at 163 [44]. 10 Comcare v PVYW (2012) 207 FCR 150 at 155-156 [23]. 11 (1992) 173 CLR 473 at 484. Hayne Crennan The Full Court took the argument put by Comcare to involve the proposition that, in order to satisfy the tests in Hatzimanolis, an injured employee must establish two elements: that the injury occurred at a place he or she was encouraged to be and that the activity from which the injury arose was induced or encouraged by the employer, or was impliedly accepted 12. The Full Court rejected this proposition. It held that Hatzimanolis stated a single test, which may be satisfied on proof of either element13. Significantly, it held that it was sufficient for the satisfaction of that test to show that the injury occurred at a place which the employer had required or encouraged the employee to attend. It was not necessary to show that the employer had encouraged or required the employee to engage in the particular activity in which the employee was engaged when injury was suffered14. The AAT had reasoned that a connection between the activity undertaken by the respondent and her employment was required and that this connection was absent15. However, the primary judge considered that the relevant nexus or connection was present because the injuries were suffered by the respondent when she was in a motel room in which her employer had encouraged her to stay16. His Honour said that the principles stated in Hatzimanolis concerned a temporal relationship between the employment and the injury suffered by the employee. That relationship existed because the respondent's injuries were suffered whilst she was at a particular place where her employer had induced or encouraged her to be during an interval or interlude in an overall period of work17. The Full Court held that the primary judge had been correct to conclude that the AAT applied the wrong legal test18. 12 Comcare v PVYW (2012) 207 FCR 150 at 163 [41]. 13 Comcare v PVYW (2012) 207 FCR 150 at 164 [51]. 14 Comcare v PVYW (2012) 207 FCR 150 at 162-163 [40]. 15 Comcare v PVYW unreported, Administrative Appeals Tribunal, 26 November 16 PVYW v Comcare (No 2) (2012) 291 ALR 302 at 312 [50], [51]. 17 PVYW v Comcare (No 2) (2012) 291 ALR 302 at 313 [53]. 18 Comcare v PVYW (2012) 207 FCR 150 at 165 [56]. Hayne Crennan The question on the appeal Although the respondent was injured whilst engaged in an activity, she seeks to maintain the approach of the Full Court – that the relevant enquiry is not whether she had been induced or encouraged by her employer to engage in that activity. It is not disputed that the answer to that enquiry would be "no". On the approach for which the respondent contends, that enquiry does not arise, or is irrelevant, because she meets the condition of the alternative circumstance stated in Hatzimanolis, namely that she was required to be present at the place where she was injured. The respondent may be taken to draw the following from what was said in Hatzimanolis. The employer had directed her to be at a location away from her permanent place of work and her residence. While at that location, she is therefore seen as carrying out an overall period of work. Her presence at a particular place – the motel – creates an interval in that period whilst she is at that place. An injury occurring in that interval is in the course of employment. If this is what Hatzimanolis conveys, it means that, absent gross misconduct19 on the part of an employee, an employer who requires an employee to be present at a particular place away from their usual place of work will be liable for any injury which the employee suffers whilst present there. It means that the employer has become the insurer for the employee during the time that the employee is at the place. That would be so even though the injury was suffered in the course of an activity which was clearly unrelated to the employment. These are odd results, yet results which the respondent says must follow because Hatzimanolis makes liability for an injury depend upon it simply occurring within a period of time – that is, the interval. If this is the natural consequence of what was said in Hatzimanolis, that decision would need to be reconsidered. It would need to be reconsidered because it would otherwise effect an undue extension of an employer's liability to pay compensation under the SR&C Act. The joint reasons in Hatzimanolis make plain that it was not intended to do so. Those reasons were mindful of the limitation on an employer's liability 19 Section 14(3) of the Safety, Rehabilitation and Compensation Act 1988 refers to "serious and wilful misconduct". Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 was decided under a different statutory framework. Hayne Crennan which is inherent in the expression "in the course of" the employee's employment. It was said of an earlier test20 that, on the whole, it had enabled "a satisfactory line of demarcation to be drawn between those injuries which are work-related and those which are so remote from the notion of the worker's employment as not to call for compensation by the employer." It is unlikely that, mindful of this inherent limitation, Hatzimanolis nevertheless stated a principle to be applied in the way for which the respondent contends. These reasons will show that Hatzimanolis is not to be understood to have done so. Reading statements of principle Hatzimanolis was not the first occasion on which a general principle has been stated as to how it might be determined whether an employee who has suffered an injury has done so "in the course of" the employee's employment. This is understandable. It has never been suggested that the development of a statement of such a principle is an easy matter. Its application can prove even more troublesome. In Whittingham v Commissioner of Railways (WA)21, Dixon J observed that a decision of the House of Lords22 had pronounced finally on the words "in the course of the employment", but the application of that decision had not proved simple. Later, in Henderson v Commissioner of Railways (WA)23, his Honour said that the general principle governing the ascertainment of the "course of employment" appeared then to be settled. To be in the course of employment "the acts of the workman must be part of his service to the employer. But the difficulty lies in the application of this conception." Given changes which occur over time to the nature and conditions of employment24, it may be that the principle stated in Hatzimanolis may itself 20 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 479, referring to Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281; [1937] HCA 21 (1931) 46 CLR 22 at 29; [1931] HCA 49. 22 Charles R Davidson and Company v M'Robb or Officer [1918] AC 304. 23 (1937) 58 CLR 281 at 294. 24 As observed in The Commonwealth v Oliver (1962) 107 CLR 353 at 358, 364-365; [1962] HCA 38. Hayne Crennan require reformulation in the future. This case does not require that to be undertaken. However, a current principle may require further explication in light of a factual situation which the court settling the principle could not predict. This is especially so when the principle is stated in the abstract, as it was in Hatzimanolis. There is no doubt that the question on this appeal requires close attention to be paid to what was said in Hatzimanolis. However, a proper understanding of what was said in the joint reasons in Hatzimanolis and its application is not to be ascertained by construing its terms as if they were the words of a statute. The words of the principle articulated in Hatzimanolis are not to be applied literally to facts without further consideration of what is conveyed by the reasoning about the principle and without bearing in mind the terms of the SR&C Act and the limit it seeks to place upon an employer's liability for compensation. A caution about construing the terms of a judgment in this way is frequently stated25. As Gummow J observed in Brennan v Comcare26: "The concern is not with the ascertainment of the meaning and the application of particular words used by previous judges, so much as with gaining an understanding of the concepts to which expression was sought to be given." Here, that understanding necessitates an analysis of the passage in Hatzimanolis to which the Full Court referred27 in light of what preceded it in the joint reasons, including the cases to which reference was made. In particular, reference to the circumstances in Danvers v Commissioner for Railways (NSW)28 is essential to an understanding of what is involved in an injury which "occurred at that place". In gleaning an understanding of what was conveyed by the joint reasons in Hatzimanolis, it is also essential to bear in mind the association which must necessarily exist (by virtue of the "in the course of" limiter) between the 25 See for example Benning v Wong (1969) 122 CLR 249 at 299; [1969] HCA 58. 26 (1994) 50 FCR 555 at 572. 27 At [4] above. 28 (1969) 122 CLR 529; [1969] HCA 64. Hayne Crennan circumstances in which the employee was injured and the employment. This is discussed later in these reasons29. Hatzimanolis – reasoning and principle In Hatzimanolis, an employee who resided in New South Wales obtained a job with his employer at Mt Newman in Western Australia. He was told by the employer's supervisor, before leaving for Mt Newman, that he would be working for three months in the area. He would work some Sundays. Whilst at Mt Newman he was accommodated in a camp. On the third Sunday, some employees, including the employee in question, were not required to work and the employer organised a trip to Wittenoom Gorge for anyone who cared to come along, and provided vehicles for that purpose. The employee was seriously injured when the vehicle in which he was travelling overturned. The employee's appeal was allowed. In the joint reasons the conclusion was stated30: "that the appellant sustained injury during an interval occurring within an overall period or episode of work and while engaged, with his employer's encouragement, in an activity which his employer had organized." The approach reflected in this conclusion represented something of a departure from tests which had been stated in earlier cases. Nevertheless, it reflected much of what had been said in them. For example, in Hatzimanolis it was observed31 that it had early been recognised that the course of employment covered not only the actual work undertaken by an employee, but what was incidental to it. So much had been recognised in Whittingham, in which it was said that what was incidental to service involved "the sufficiency of the connection between the employment and the thing done by the employee" at the time he or she was injured, which was a matter of degree, in which time, place, practice and circumstance together with the conditions of employment had to be considered32. The difficulty with these approaches, as Hatzimanolis pointed out33, is that to say something is incidental 30 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 476. 31 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 478. 32 Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 at 29. 33 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 478-479. Hayne Crennan is to state a conclusion, not a test; and the matters referred to in Whittingham, whilst relevant, are not themselves determinative of the question whether an injury is suffered in the course of employment. The Henderson test Hatzimanolis therefore turned its attention to another test, developed in Henderson34: whether the employee was doing something which he was "reasonably required, expected or authorized to do in order to carry out his actual duties." Hatzimanolis observed35 that this test had, on the whole, enabled a satisfactory line to be drawn between those injuries which are work-related and those which are not. But the problem was that, in many cases, the words "in order to carry out his duties" had been given a rather strained interpretation36. Danvers was identified in Hatzimanolis as such a case37. In Danvers, a railway worker died when the van in which he was accommodated caught fire at night. The van had been provided by his employer and was fitted out to lodge two employees. The places at which employees worked were remote from their own homes and the van was moved from workplace to workplace. But, as Hatzimanolis pointed out38, the employee who was killed had finished work at about 4.00 pm and had no further duties to perform until the following morning. Nevertheless, Danvers held that it had been open to the tribunal of fact to find that the employee's death occurred in the course of his employment. In Danvers, Barwick CJ applied39 the test in Henderson in the following way. As discussed in the joint reasons in Hatzimanolis40, his Honour said that what is incidental to the performance of work includes what an employee is reasonably required, expected or authorised to do in order to carry out his actual 34 (1937) 58 CLR 281 at 294. 35 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 479. 36 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 479-480. 37 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 480. 38 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 480-481. 39 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 536-537. 40 (1992) 173 CLR 473 at 480-481. Hayne Crennan duties. This may include being at a place at which the employee's presence is so incidental or ancillary to the employment that, in being there, he is doing something in virtue, or in pursuance, of his employment. This statement should be applied to the facts and circumstances of a particular case "liberally and practically". Barwick CJ said that what may be in the course of the employment "is referable to the general nature and circumstances of the employment and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen."41 In Danvers, the employee's employment conditions required him to work at places remote from accommodation. It was necessary, in a practical sense, for him to live on the job. The employer provided the van and expected the employee to use it during his working week. These facts, his Honour found, were sufficient to support a conclusion that the use of the van was in the course of the employment42. Two cases upon which the joint reasons drew in Hatzimanolis – Henderson and The Commonwealth v Oliver43 – had in common that the injury was suffered by the employee during a lunch break, between periods of actual work. The circumstance that distinguished them was that in Henderson, rather like Danvers, the employee, a railway ganger, was living remotely in a camp for a period of time, whereas in Oliver the employee was injured at his permanent workplace. In Henderson, an employee was killed in his lunch break by a train whilst crossing the railway line on his way to the camp provided by the employer. Dixon J said that an accident may arise in the course of employment notwithstanding that it occurs during an interval in actual performance44 and went on to state the principle referred to above45, which had regard to the nature and terms of the employment and the circumstances in which the work is done in determining what an employee is "reasonably required, expected or authorized to do" (in order to carry out his duties). 41 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 537. 42 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 535, 538. 43 (1962) 107 CLR 353. 44 Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281 at 293, 294. Hayne Crennan In Oliver, employees were playing cricket in their lunch break at their place of work, when one employee was injured. He had tripped over a metal disc as he walked forward to pick up a ball. In a passage which is set out in Hatzimanolis46, Dixon CJ said47 that an inference could properly be drawn that the course of employment extended over the lunch break because of the circumstances of employment, including that employees were not expected to leave the premises and that playing games was a recognised practice. Menzies J48 explained that Whittingham, which had involved a similar situation to that in Oliver but reached a different conclusion, one denying compensation49, was not comparable to the "widely-accepted and sensible present-day practice" of employers encouraging workers to spend intervals between working hours in recreational activities. The joint reasons in Hatzimanolis concluded50 that, useful as the Henderson test had been, its formulation no longer adequately covered all relevant cases of injury. In reformulating the principle, Hatzimanolis identified as a striking feature of these cases that, where an injury occurred in an interval between periods of actual work, "the employer has authorized, encouraged or permitted the employee to spend his time during that interval at a particular place or in a particular way." Clearly enough, the reference to a case involving a "particular place" was to Danvers. It was the only case which turned on the employee's presence at a place. Oliver, like the earlier cases, was a case where the employee was engaged in a particular activity. 46 (1992) 173 CLR 473 at 480. 47 The Commonwealth v Oliver (1962) 107 CLR 353 at 358. 48 The Commonwealth v Oliver (1962) 107 CLR 353 at 364-365. that he would "nowadays" have viewed Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 as more naturally within the scope of employment: The Commonwealth v Oliver (1962) 107 CLR 353 at 357- 50 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 482. Hayne Crennan An interval between periods of actual work In what follows in the joint reasons51 the notion of an "interval" between periods of actual work in which an injury is sustained was explored. It was approached in the following way. In the ordinary situation, where work is performed at a permanent place of work, an injury occurring after the working day would not normally be regarded as occurring in the course of employment. An injury occurring between two discrete periods of actual work is less likely to be seen as in the course of employment. On the other hand, an injury occurring in a lunch break might be understood as occurring in an interval in an overall period of work. The reasoning continues. Where an employee is required to live in a remote location for a period until a particular work-related undertaking is completed, the notion of an overall period or episode of work could apply to that whole period. Thus, on the facts in Danvers, it might be concluded that the time spent at the remote location and in the accommodation provided by the employer constituted one whole period of work, rather than a series of discrete periods. In such a circumstance, an injury which occurs in an interval between periods of actual work might more readily be understood as being within the course of employment than one occurring after working hours in the ordinary situation. The joint reasons then observed, in the passage extracted above52, that Oliver and other cases show that an interval will ordinarily be accepted as being part of the course of employment if the employer has induced or encouraged an employee to spend the interval "at a particular place or in a particular way." Indeed, absent gross misconduct, injury occurring in such an interval will invariably result in a finding that it occurred in the course of employment. The principle in Hatzimanolis is then stated. "Accordingly", it is said, it should "be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way." To this it may be added "and the employee does so". That is implicit in what follows. 51 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483. Hayne Crennan An employer's inducement or encouragement may create an interval according to Hatzimanolis, but it is not itself a sufficient condition for liability. Further factual conditions necessary for the application of that principle are stated in the passage, following the word "Furthermore". There, it is said that an injury sustained in such an interval will be in the course of employment if it occurred at that place or while the employee was engaged in that activity. It will be so considered unless the employee has been guilty of gross misconduct. To these conditions it is added, in similar words to those used in Danvers53, that it will always be necessary to have regard to the "general nature, terms and circumstances of the employment" in determining the overall question, whether the injury occurred in the course of employment. Attention is not to be focused just upon the occasion giving rise to the injury. It is important to identify how Hatzimanolis sought to define the circumstances for, and the extent of, an employer's liability for compensation. Hatzimanolis sought to provide a legal justification for an injury, which occurred between periods of actual work, being regarded as occurring in the course of the employee's employment. It did so by characterising the interval by reference to the employer's inducement or encouragement. The employer's liability in such circumstances depends upon what the employer induced or encouraged the employee to do. Hatzimanolis did not seek to extend the employer's liability beyond that. Because the employer's inducement or encouragement of an employee, to be present at a particular place or to engage in a particular activity, is effectively the source of the employer's liability, the circumstances of the injury must correspond with what the employer induced or encouraged the employee to do. It is to be inferred from the factual conditions stated in Hatzimanolis54 that for an injury to be in the course of employment, the employee must be doing the very thing that the employer encouraged the employee to do, when the injury occurs. Moreover, it is an unstated but obvious purpose of Hatzimanolis to create a connection between the injury, the circumstances in which it occurred and the employment itself. It achieves that connection by the fact of the employer's inducement or encouragement. Thus, where the circumstances of the injury involve the employee engaging in an activity, the question will be whether the employer induced or encouraged the employee to do so. 53 (1969) 122 CLR 529 at 537. 54 See [32] above. Hayne Crennan That this must be so is confirmed by a consideration of the legal reasoning involved in applying the principle stated in Hatzimanolis to the facts of a case. That process of reasoning does not commence with the fact of the employer's inducement or encouragement. The joint reasons sought to direct attention to the new principle and therefore stated it out of the order in which the enquiries inherent in applying the principle would arise for consideration. Applying the Hatzimanolis principle The starting point in applying what was said in Hatzimanolis, in order to determine whether an injury was suffered in the course of employment, is the factual finding that an employee suffered injury, but not whilst engaged in actual work. The next enquiry is what the employee was doing when injured. For the principle in Hatzimanolis to apply, the employee must have been either engaged in an activity or present at a place when the injury occurred. The essential enquiry is then: how was the injury brought about? In some cases, the injury will have occurred at and by reference to the place. More commonly, it will have occurred while the employee was engaged in an activity. It is only if and when one of those circumstances is present that the question arising from the Hatzimanolis principle becomes relevant. When an activity was engaged in at the time of injury, the question is: did the employer induce or encourage the employee to engage in that activity? When injury occurs at and by reference to a place, the question is: did the employer induce or encourage the employee to be there? If the answer to the relevant question is affirmative, then the injury will have occurred in the course of employment. It follows that where an activity was engaged in at the time of the injury, the relevant question is not whether the employer induced or encouraged the employee to be at a place. An employer's inducement or encouragement to be present at a place is not relevant in such a case. Injury and place There is a further reason for rejecting the respondent's contention55. She was not injured whilst present at a place in the sense in which that expression is to be understood in the joint reasons in Hatzimanolis. An injury occurs at a place when the circumstance of the injury is referable to the place. The circumstances of Danvers, which was the basis of this criterion of liability, make this plain. They explain why the mere presence of an employee at a place in circumstances 55 See [7] above. Hayne Crennan where an injury is associated with that place may be sufficient to bring that injury within the course of the employee's employment. Most commonly, as the cases show, an employee will suffer an injury in the course of employment whilst engaged in an activity. It was because of the decision in Danvers that the Hatzimanolis principle was said to apply to a circumstance where injury occurred at a place where the employer induced or encouraged the employee to be. The circumstances of that case could not be explained by reference to activity, not least because the evidence did not permit a finding about what the employee was doing when the fire which killed him broke out. The cause of the fire in Danvers was also unknown. Menzies J speculated56 that the fire could have originated from a kerosene refrigerator in the van or might have been caused by a dropped cigarette. (If it had been the latter possibility, it might have raised a different question for the Court.) In the absence of direct evidence as to what the employee was doing at the relevant time, Barwick CJ was prepared to conclude57, perhaps benevolently, that the employee was asleep and that sleeping was a use of the van in the course of the employment. That finding enabled Barwick CJ to concentrate upon the employee's mere presence in the van as founding liability. The joint reasons in Hatzimanolis did not approve of the application of the test articulated in Henderson by Barwick CJ in Danvers, nor did they approve of the notion that the employee was to be seen as present in the van in order to carry out his employment. The principle in Hatzimanolis focuses instead upon what the employer might be taken to have induced or encouraged the employee to do. That question is to be determined by reference to the matters identified in Danvers and restated in Hatzimanolis as relevant: the general nature, terms and circumstances of the employment. Attention must then be directed to the circumstances of the employee's death in Danvers. He died because the van in which he was required to live caught fire. His death occurred by reference to that place and that circumstance. The place where an employee is required to be assumes particular importance when it is the cause of an injury or death. This is not to inject notions of causation into the application of the principle, just as the statement that an injury occurred as a result of being engaged in an activity does not involve such 56 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 541. 57 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 533, 535. Hayne Crennan notions. To identify the relevant connection does not raise any question about causation. It simply identifies the circumstance in which the injury is suffered. It is that circumstance which must be the subject of the employer's inducement or encouragement. An injury occurring to an employee by reference to or associated with a place where the employee is present may involve something occurring to the premises or some defect in the premises. For example, if the light fitting in this case had been insecurely fastened into place and simply fell upon the respondent, the injury suffered by her would have arisen by reference to the motel. The employer would be responsible for injury because the employer had put the respondent in a position where injury occurred because of something to do with the place. Liability in those circumstances is justifiable. Liability for everything that occurs whilst the employee is present at that place is not. No "unacceptable extension" to liability Nothing said in Hatzimanolis supports the notion that the employer is to be liable for an injury which occurs when an employee undertakes a particular activity, if the employer has not in any way encouraged the employee to undertake that activity, but has merely required the employee to be present at the place where the activity is undertaken. What was discussed, at two points in Hatzimanolis, suggests to the contrary. First, the joint reasons in Hatzimanolis noted58 the concession made in that case by the employer that the employee would have been in the course of his employment whilst working at the mine and travelling to and from it, and whilst eating, sleeping and enjoying recreational activity at the camp. The basis for the concession was not gone into, but it may be accepted that these are all things which an employer might be taken to have induced, encouraged and expected an employee, who was to work remotely at a mine and live at a camp provided by the employer, to do. But the employer in Hatzimanolis also contended that it did not follow that the employee would be in the course of his employment during the whole of the time that he was in the Mt Newman area. The joint reasons accepted this contention and said that he would not necessarily be in the course of his employment whilst engaged in an activity during an interval in his overall period of work unless the employer had expressly or impliedly induced or encouraged him to engage in that activity59. This statement confirms the 58 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485. 59 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485. Hayne Crennan necessary correspondence between activity and encouragement to undertake it, earlier referred to. Second, at an earlier point in the joint reasons it was said60 that it would be an "unacceptable extension" of the course of employment to hold that an employee was within the course of employment whenever the employer had authorised, encouraged or permitted the employee to spend time during an interval between periods of actual work at a particular place or in a particular way. To do so would be to extend liability for injuries occurring during intervals between periods of work which "could not fairly be regarded as within the course of employment." The example then provided was of an employee who was encouraged by his or her employer to see a doctor after working hours and was injured whilst visiting the doctor. In a literal sense the employee's injury would come within the formulation, but it would not ordinarily be considered that the injury was suffered in the course of employment. The reasoning in Hatzimanolis, when the principle there articulated came to be applied to the facts, does not suggest that any wide view is to be taken of an employer's liability in circumstances where the employer could be seen to have encouraged the employee to be at a particular place. The prospect that the employee might be regarded as having been injured because he was present at a particular place was not even mentioned. The employee was found to have been injured whilst engaged in a recreational activity which the employer had encouraged him to undertake. Association between circumstances of injury and employment It has earlier been observed61 that the Hatzimanolis principle, when it is appropriate to be applied, effects a connection between the circumstances in which the employee sustains injury and the employment. The principle may create a temporal element, in the notion of an interval, but it also creates a factual association or connection with the employee's employment. It does so by the fact of the employer's inducement or encouragement. The need for there to be a factual connection or association between the circumstances of the injury and the employment is implied by the definition of injury, as one suffered in the course of the employee's employment. This was recognised in the earlier authorities. Such an association may be identified in 60 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 482-483. 61 At [36] above. Hayne Crennan many of the circumstances listed in s 6 of the SR&C Act in which an injury is to be treated as having occurred in the course of employment. Section 6(1)(c)(i), for instance, expressly refers to the circumstance where the employee is temporarily absent from the employee's place of work and undertaking an activity "associated with the employee's employment". The relevant connection or association created by the Hatzimanolis principle is between that activity and the employer's encouragement to engage in it. Likewise, when an injury is sustained by an employee at a place and by reference to that place, in the sense earlier discussed62, the connection between that circumstance and the employment is provided by the fact that the employer induced or encouraged the employee to be present at that place. The connection or association spoken of is not the causal connection which is attributed to the expression "arising out of … the employee's employment"63 in the definition of "injury" in the SR&C Act64. It is accepted that compensation may be payable in respect of an injury which is suffered "in the course of" the employee's employment notwithstanding that there is no such causal connection65. The connection presently spoken of is by way of an association with the employment. In Kavanagh v The Commonwealth66, Dixon CJ said that "no direct … causal connexion … is proposed as an element necessary to satisfy the conception of an injury by accident arising in the course of the employment but only an association" with the employment. Dixon CJ expressed that association in two ways67. In a positive sense it might be said that, had it not been for the employment, the injury would not have been sustained. Put negatively, and perhaps more usefully for present purposes, 63 See Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281 at 293; Kavanagh v The Commonwealth (1960) 103 CLR 547 at 556, 558, 570; [1960] HCA 25; The Commonwealth v Oliver (1962) 107 CLR 353 at 355. 64 Safety, Rehabilitation and Compensation Act 1988, s 5A(1). 65 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 557; The Commonwealth v Oliver (1962) 107 CLR 353 at 359. 66 (1960) 103 CLR 547 at 557. 67 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 557. Hayne Crennan it requires that "the injury by accident must not be one which occurred independently of the employment and its incidents." The there being the necessary importance of inducement or encouragement on the part of the employer was referred to in Hatzimanolis68, by reference to Goward v The Commonwealth69. In that case, a railway employee was killed by a train at night, hours after work had ceased. It was acknowledged that living in the camp provided by the employer was an incident of the employment (and therefore connected to it)70. The difficulty was that it could not be ascertained why he was on the railway line at the time he was killed. It was held that his death "therefore cannot be assigned to any closer or other association with the employment than can be found in the proximity to the railway line". In Hatzimanolis, it was said that it was difficult to see that this case "would be decided differently today"71. It may also be inferred, by reference to the facts of Goward, that it was understood in Hatzimanolis that the inducement or encouragement by the employer would have provided the necessary association spoken of in that case. Another case referred to in Hatzimanolis which involved a rejection of the injury being in the course of employment was Humphrey Earl Ltd v Speechley72. The employee was injured in his lunch break. His work involved servicing machines at shops at various locations. He had commenced such a task at one shop and stopped for lunch. He desired a particular food which was not available nearby. To obtain it necessitated a journey to somewhere further away. He was injured in a road accident on the return journey. Dixon J73 said that the employee being at the shop for the purpose of his duties and having lunch would be in the course of his duties "provided that it was reasonably related to the exigency occasioned by his duties". However, his Honour said, "it should be reasonably connected with the particular situation 68 (1992) 173 CLR 473 at 485. 69 (1957) 97 CLR 355; [1957] HCA 60. 70 Goward v The Commonwealth (1957) 97 CLR 355 at 364. 71 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485. 72 (1951) 84 CLR 126; [1951] HCA 75. 73 Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 at 133. Hayne Crennan which the performance of his duty to his employer had created." Whilst the eating of lunch itself was not for the purpose of his duties, the conditions of the employment may make it incidental – but it "cannot be stretched to make everything he chooses to do during the interval … incidental to his employment."74 If he "so far deviates" on a purpose of his own, that purpose cannot be considered to be in the course of employment. McTiernan J considered75 that the facts were insufficient in law to establish the connection between the injury and the employment connoted by the words "in the course of the employment". Nothing said in Hatzimanolis suggests that an association between the circumstances in which injury is suffered by an employee and the employment is not necessary. In stating the purpose of earlier tests as being, properly, to limit compensation for injury which is work-related, the joint reasons in Hatzimanolis may be taken to acknowledge the need for that association or connection with the employment. This is not to suggest that there should be added to the application of the principle in Hatzimanolis a separate test of connection or association. That would run counter to what Hatzimanolis sought to achieve and the method by which it did so. Whilst the decision did not doubt the correctness of the object of earlier tests, it was able to effect the necessary connection by other means. Instead of testing for connection, as by the enquiry whether something done was incidental to employment, it enquired whether the employer had induced or encouraged that which was done. The connection or association it achieves with the employment is a by-product of the principle, but it is not itself a test. The principle in Hatzimanolis should nevertheless be understood to have sought, and achieved, a connection or association with employment. For present purposes that understanding is helpful to explain, if it be necessary, that for an injury occurring in an interval in a period of work to be in the course of employment, the circumstance in which an employee is injured must be connected to the inducement or encouragement of the employer. An inducement or encouragement to be at a particular place does not provide the necessary connection to employment merely because an employee is injured whilst engaged in an activity at that place. 74 Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 at 134. 75 Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 at 139. Hayne Crennan Conclusion It may be accepted that the purpose and the effect of the principle stated in Hatzimanolis was to create an interval between periods of actual work, to better explain the connection that an injury suffered by an employee in certain circumstances has to the employment. It did so by reference to the fact that the employer induced or encouraged the employee to do something or be somewhere in particular and the fact that the employee did so and was injured. The two circumstances identified by Hatzimanolis were where an injury was suffered by an employee whilst engaged in an activity in which the employer had induced or encouraged the employee to engage; or where an injury was suffered at and by reference to a place where the employer had induced or encouraged the employee to be. An injury sustained in these circumstances may be regarded as sustained in the course of the employee's employment. Properly understood, whilst the inducement or encouragement by the employer may give rise to liability to compensation, it also operates as a limit on liability for injury sustained in an overall period of work. Orders The appeal should be allowed and the order of the Full Court set aside. Instead, there should be an order allowing Comcare's appeal from the decision of the primary judge. An order for costs does not follow. In its application for special leave, Comcare undertook to pay the respondent's costs in this Court and not to seek to disturb the orders for costs made in the courts below. Bell BELL J. The facts are set out in the joint reasons and need not be repeated. Comcare's liability to compensate the respondent depends upon whether her injuries are correctly characterised as "arising ... in the course of [her] employment"76. The Administrative Appeals Tribunal ("the Tribunal") purported to apply the organising principle stated in Hatzimanolis v ANI Corporation Ltd77 ("the Hatzimanolis test") to the determination of that factual question. It found that the respondent was not in the course of her employment at the material time and affirmed Comcare's decision to reject her claim. The Full Federal Court (Keane CJ, Buchanan and Bromberg JJ) upheld Nicholas J's decision that the Tribunal erred in law by superimposing an additional element on the Hatzimanolis test. Comcare appeals by special leave. It contends that the Full Court misapprehended the principle for which Hatzimanolis stands. It does not challenge the authority of that decision. The course of employment Hatzimanolis identified a need to reformulate the principles applying to the determination of whether an injury occurring between periods of actual work is within the concept of "the course of employment"78. Before turning to the statement of the organising principle formulated in that decision, some reference should be made to the development of the concept in workers' compensation law. It has been long accepted that the course of employment extends beyond the work that the worker is employed to do to include the doing of things that are incidents of the employment79. In the early years of the last century one test of whether doing a thing was an incident of employment asked whether the employer would have been entitled to give an order to the worker and the worker obliged to obey it80. A more liberal test, stated in Pearson v Fremantle Harbour Trust, asked whether, when the accident occurred, the workman was doing 76 Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 5A(1), 14(1). 77 (1992) 173 CLR 473 at 484 per Mason CJ, Deane, Dawson and McHugh JJ; [1992] HCA 21. 78 (1992) 173 CLR 473 at 482 per Mason CJ, Deane, Dawson and McHugh JJ. 79 Charles R Davidson & Co v M'Robb [1918] AC 304 at 321 per Lord Dunedin; Pearson v Fremantle Harbour Trust (1929) 42 CLR 320 at 329; [1929] HCA 19. 80 Pearson v Fremantle Harbour Trust (1929) 42 CLR 320 at 328; St Helens Colliery Co v Hewitson [1924] AC 59 at 92 per Lord Wrenbury. Bell something in the exercise of his functions although it was no more than an adjunct to or an incident of his service81. Defining the scope of activities that are properly characterised as incidental to employment proved to be elusive. Whittingham v Commissioner of Railways (WA), that while there could be no doubt that the accident must happen while the employee was doing something incidental to his service, it was another matter to be sure of what was included within the conception82. Mr Whittingham was strolling across a yard at lunchtime when he was struck in the eye by a cricket ball. The ball had been hit by a fellow worker in a lunchtime cricket game played on the employer's premises. Dixon J identified the issue as whether Mr Whittingham's presence at the place where he was struck by the ball was connected with the actual performance of his duty in a sufficient degree83. In determining the sufficiency of that connection, "time, place and circumstance, as well as practice, must be considered together with the conditions of the employment"84. In Whittingham, Dixon J held that the connection with a lunchtime stroll on the employer's premises was too remote to be incidental to the employment85. The most that could be said was that if Mr Whittingham had not been an employee, he would have probably been elsewhere. The fact that his presence in the yard was not connected to his duties was determinative against liability86. Dixon J returned to the difficulty of determining whether an activity is incidental to employment in Henderson v Commissioner of Railways (WA)87. His Honour observed that the concept had not proved to be very helpful88. Mr Henderson, a railway ganger, was killed by a train as he crossed the railway 81 (1929) 42 CLR 320 at 329-330. 82 (1931) 46 CLR 22 at 29; [1931] HCA 49. 83 Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 at 29. 84 Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 at 29 per 85 Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 at 30 per 86 Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22 at 31 per 87 (1937) 58 CLR 281; [1937] HCA 67. 88 Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281 at 294. Bell line at lunchtime on his way to the railwaymen's camp. This activity was held to be incidental to the performance of his duties89. The test formulated by Dixon J in Henderson, to determine whether an accident occurring in an interval when work is suspended is in the course of employment, required consideration of the nature and terms of the employment, the circumstances in which work is done and what "the workman is reasonably required, expected or authorized to do in order to carry out his actual duties"90. The same test (absent the adjective "actual") was articulated in Humphrey Earl Ltd v Speechley91 ("the Henderson-Speechley test"). Mr Speechley was injured in a motor vehicle accident on his return to work after lunch. Obtaining and eating a meal, it was said, may be incidental to the performance of a worker's duties. However, not everything a worker chooses to do during the lunch interval would be incidental to employment92. Mr Speechley had made "a party of the occasion"93, leaving the premises at which he was performing his duties, and travelling some distance to find an establishment at which he and his companion could obtain a hot fish meal. The excursion was not in the course of In The Commonwealth v Oliver94 Dixon CJ applied the criteria that he had identified 30 years earlier in Whittingham to facts very much like the facts in Whittingham. The application of these criteria on this occasion produced a different result. Mr Oliver suffered injury while playing cricket at his workplace at lunchtime. He tripped on a metal disc as he moved forward to pick up the ball. His employer had posted a notice some years earlier, stating that games of any description must not be played. However, the prohibition was not enforced. The County Court at Melbourne allowed Mr Oliver's appeal against a determination that his injury was not compensable under s 9(1) of the Commonwealth Employees' Compensation Act 1930 (Cth) ("the 1930 Act"). The Commonwealth appealed unsuccessfully to this Court, contending that Whittingham was determinative against liability. 89 Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281 at 294 per Dixon J, 297 per McTiernan J. 90 (1937) 58 CLR 281 at 294 per Dixon J. 91 (1951) 84 CLR 126 at 134 per Dixon J; [1951] HCA 75. 92 Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 at 134 per Dixon J. 93 Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 at 134 per Dixon J. 94 (1962) 107 CLR 353; [1962] HCA 38. Bell The majority's conclusion in Oliver took into account the progressive enlargement of liability under workers' compensation legislation. This trend was exemplified by the amendment to the 1930 Act which substituted the alternative condition, that the injury arise either "out of or in the course of his employment", for the former cumulative condition, that the injury arise "out of and in the course of his employment" (emphasis added)95. The main object of changing the conjunction was to eliminate the necessity for a causal connection between the injury and the employment or its incidents96. The practical boundaries of the conception of what is incidental, ancillary or consequential to work had widened in the years since Whittingham97 and the proper inference was that the course of Mr Oliver's employment extended over the lunch break such that his accident was within it, notwithstanding that the accident arose from a game98. Dixon CJ in Oliver, referring to the earlier case of Kavanagh v The Commonwealth99, held that the question of whether an injury arises out of employment is causal, but the temporal question raised by the alternative condition of whether an injury arises in the course of employment is entirely independent of whether the employment contributed causally to the accident100. His Honour commented in Oliver on a habit of thought, which he characterised as "the instinctive feeling ... that the accident or injury must be in some measure occasioned by or related to the employment"101, and which he observed had nonetheless persisted after the amendment. As will appear, Comcare's submissions hark back to that habit of thought. 95 See The Commonwealth v Oliver (1962) 107 CLR 353 at 355-356 per Dixon CJ. 96 The Commonwealth v Oliver (1962) 107 CLR 353 at 359 per Dixon CJ, citing Kavanagh v The Commonwealth (1960) 103 CLR 547 at 558-559 per Fullagar J; [1960] HCA 25. 97 The Commonwealth v Oliver (1962) 107 CLR 353 at 356 per Dixon CJ, 364 per 98 The Commonwealth v Oliver (1962) 107 CLR 353 at 358-359 per Dixon CJ 364- 99 (1960) 103 CLR 547. 100 The Commonwealth v Oliver (1962) 107 CLR 353 at 355, 359, citing Kavanagh v The Commonwealth (1960) 103 CLR 547 at 556 per Dixon CJ, 558-559 per 101 The Commonwealth v Oliver (1962) 107 CLR 353 at 356. Bell The tension between the Henderson-Speechley test, which inquired what the workman was reasonably required to do in order to carry out his duties, and modern decisions reflecting a changed industrial setting, was the impetus for the development of the Hatzimanolis test. Oliver was one decision that was influential in this respect. Danvers v Commissioner for Railways (NSW)102 was another. Mr Danvers, a railway worker, died in a fire which destroyed the railway van that had been provided for his accommodation. He had completed his work sometime after 4.00 pm on the afternoon of his death and he had no further duties until the following morning. The cause of the fire was unknown and there was no evidence of what Mr Danvers was doing when it took hold. His widow brought a claim for compensation under the New South Wales statute103, contending that her husband's death occurred in the course of his employment. The Workers' Compensation Commission ("the Commission") found that Mr Danvers' death arose both out of and in the course of his employment. There was no elaboration of the Commission's reasons for concluding that either condition was established. The New South Wales Court of Appeal allowed an appeal from the Commission's determination. It was plain that Mr Danvers' fatal injury did not arise out of his employment. The majority in the Court of Appeal reasoned that neither the statutory language nor the principles developed by appellate courts justified interpreting the phrase "in the course of employment" to extend to the whole of the period of a worker's presence in and use of accommodation provided by the employer for the convenience of both the worker and the employer. The issue in this Court was whether it had been open to the Commission to find that Mr Danvers died in the course of his employment. He had been expected to live in the railway van on week nights while employed to do maintenance and repair work at places along the railway line 104. Barwick CJ said that the Henderson-Speechley test was satisfied in circumstances in which the worker's presence at a place is consequential upon or incidental or ancillary to the employment such that by being in the place the worker is doing something in 102 (1969) 122 CLR 529; [1969] HCA 64. 103 Workers' Compensation Act 1926 (NSW), s 6(1), s 7(1). 104 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 533 per Bell virtue, or in pursuance, of his employment105. The test was to be applied liberally and practically106. His Honour went on to say107: "What may be in the course of the employment is referable to the general nature and circumstances of the employment and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen." This statement underlined the liberal application of the test. On a strict view it had not been necessary for Mr Danvers to reside in the railway van at the time of his death. Hotel accommodation was available nearby. However, it was wrong to decide whether living in the van was in the course of Mr Danvers' employment simply by looking at the specific situation at the time of the accident. The general nature and circumstances of Mr Danvers' employment required him to work in places that were remote from all accommodation108. The circumstances that it was practically necessary for Mr Danvers to live on the job, and that the employer provided the van and expected Mr Danvers to use it as his living quarters during the working week, were sufficient to support the conclusion that his use of it for that purpose was in the course of his employment109. A third decision that was influential in the development of the Hatzimanolis test was Commonwealth v Lyon110. Deane J, then a member of the Federal Court, dismissed an appeal from a decision of the Commonwealth Employees' Compensation Tribunal making an award of compensation. Mr Lyon, a clerk in the Bureau of Customs, had sustained an injury while playing football for the Customs team at the Sydney Domain. The employer had encouraged the game. Deane J suggested that the Henderson-Speechley test, if employed as a criterion of exclusion, required a gloss on the words "in order to 105 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 536, citing Henderson v Commissioner of Railways (WA) (1937) 58 CLR 281 at 293 per 106 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 536 per 107 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 537. 108 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 537 per 109 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 at 538. 110 (1979) 24 ALR 300. Bell carry out his duties" so as to temper its prima facie intractability to accord with "current views" of what is within the scope of employment111. Hatzimanolis Mr Hatzimanolis was employed by ANI Corporation Ltd ("ANI") to work at a mine located near Mt Newman in Western Australia. He was required to work for six days each week and possibly on some Sundays. ANI provided accommodation for Mr Hatzimanolis at a camp located about 15 or 20 minutes' walk from the town of Mt Newman. It supplied vehicles to transport its employees to and from the workplace. Mr Hatzimanolis travelled in an ANI vehicle to Wittenoom Gorge on an excursion organised by ANI on a Sunday when he was not working. On the return journey the vehicle overturned and Mr Hatzimanolis suffered serious injury. The Compensation Court of New South Wales that Mr Hatzimanolis' injury was sustained in the course of his employment and awarded him compensation. The New South Wales Court of Appeal reversed the decision, holding that the journey had not been incidental to the performance of Mr Hatzimanolis' duties. Mr Hatzimanolis' appeal succeeded in this Court on the ground that his injury was sustained during an interval or interlude occurring within an overall period or episode of work and while he was engaged, with his employer's encouragement, in an activity which his employer had organised112. found The analysis in the joint reasons in Hatzimanolis commenced by observing that the conclusion that an injury is sustained while doing something that is incidental to employment reflects the application of some principle or standard113. The decisions of appellate courts upholding awards for injuries sustained between intervals of work were no longer consonant with the application of in Henderson and Speechley114. In many instances, the finding that the worker was doing the principle or standard articulated 111 (1979) 24 ALR 300 at 303. 112 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 476 per Mason CJ, Deane, Dawson and McHugh JJ. 113 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 478 per Mason CJ, Deane, Dawson and McHugh JJ, citing Charles R Davidson & Co v M'Robb [1918] AC 304 at 321 per Lord Dunedin. 114 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 482 per Mason CJ, Deane, Dawson and McHugh JJ. Bell something in order to carry out his duties at the time of injury was a fiction115. Their Honours endorsed Deane J's criticism of the Henderson-Speechley test when used as a criterion of exclusion116. They concluded that the rational development of the law required the reformulation of the principle to conform to the "current conception" of the course of employment117, evidenced by recent decisions and, in particular, by Oliver and Danvers. The analysis proceeded upon the view that an injury is more readily seen as occurring in the course of employment when it is sustained in an interval occurring within an overall period or episode of work than when it is sustained in an interval between two discrete periods of work118. A daily period of work ordinarily ends when the employee completes his or her ordinary or overtime hours for the day. The lunch break is an interval in a daily period of work which may be within the course of employment119, as was the case in Oliver. In the case of an employee who is required to work at a location that is distant from the permanent workplace, the time spent at the distant locality is likely to constitute one overall period of work120. Intervals between periods of actual work, including overnight, may be within the course of employment121, as was the case in Danvers. The principle formulated in Hatzimanolis applies to the identification of the intervals, whether in a daily period of work or in an overall period of work, that are within the course of the employee's employment. 115 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 482 per Mason CJ, Deane, Dawson and McHugh JJ. 116 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 481-482 per Mason CJ, Deane, Dawson and McHugh JJ, citing Commonwealth v Lyon (1979) 24 ALR 300 at 303. 117 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 482 per Mason CJ, Deane, Dawson and McHugh JJ. 118 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483 per Mason CJ, Deane, Dawson and McHugh JJ. 119 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483 per Mason CJ, Deane, Dawson and McHugh JJ. 120 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483 per Mason CJ, Deane, Dawson and McHugh JJ. 121 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483 per Mason CJ, Deane, Dawson and McHugh JJ. Bell The organising principle was stated in these terms122: "an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. Furthermore, an injury sustained in such an interval will be within the course of employment if it occurred at that place or while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of employment." A rider was added to it123: "In determining whether the injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the employment 'and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen'." (footnote omitted) The decision in Hatzimanolis turned on the fact that at the time of his injury Mr Hatzimanolis was participating in an excursion that had been arranged by ANI124. The organising principle that their Honours formulated applies generally to the determination of whether an interval in an overall period of work is within the course of employment. In this case, the Tribunal was obliged to apply that principle to the determination of whether the respondent's injuries arose in the course of her employment. The Tribunal It was common between the parties that the respondent's two day visit to the regional office constituted an overall period of work, that her employer had encouraged her to stay overnight at the motel and that her injuries occurred while she was in her room at the motel. It was also common between the parties that the respondent's choice to have sexual relations during the interval between the 122 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 484 per Mason CJ, Deane, Dawson and McHugh JJ. 123 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 484 per Mason CJ, Deane, Dawson and McHugh JJ. 124 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485 per Mason CJ, Deane, Dawson and McHugh JJ. Bell performance of her duties was not gross misconduct125. The Tribunal held that these undisputed facts were insufficient to establish her claim for compensation. The Tribunal said that the activities which led to the injuries must be induced or encouraged by the employer and the respondent's employer had not induced or encouraged her sexual conduct. The respondent's injuries were unrelated to her employment. Her sexual activity was of a private nature and it took place in her leisure time and not in an interval in an overall period of work, that interval having been "interrupted" by that conduct. The Tribunal distinguished activities such as showering, sleeping, eating or returning to a place of temporary residence from a social occasion, which were ordinary incidents of an overnight stay. It followed that the injuries did not arise in the course of employment. The proceedings in the Federal Court The respondent appealed to the Federal Court, contending that the Tribunal did not apply the correct legal test to the determination of liability126. Nicholas J found that the Tribunal erred in holding that it was necessary for the respondent to show that the activity which led to her injuries had been induced or encouraged by her employer127. The relevant connection between the injuries and the respondent's employment was that her injuries were sustained while she was in the motel room in which her employer had encouraged her to stay128. On appeal, the Full Court upheld Nicholas J's decision, observing that the Tribunal's approach treated the conditions stated in Hatzimanolis – "at a particular place or in a particular way" – as though they were conjunctive rather than disjunctive129. The Full Court said that there were two ways that an injury in an interval in an overall period of work would be compensable: inducement or encouragement to spend the interval between periods of actual work at a particular place; or inducement or encouragement to spend the interval in a particular way. In either case, the Full Court said that an injury sustained in the interval between periods of actual work would be within the course of employment unless the employee acted in a way amounting to gross misconduct 125 The Tribunal also found that the conduct was not "serious and wilful misconduct" under s 14(3) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) such as to disentitle the respondent to compensation. 126 Administrative Appeals Tribunal Act 1975 (Cth), s 44(1). 127 PVYW v Comcare (No 2) (2012) 291 ALR 302 at 313 [55]. 128 PVYW v Comcare (No 2) (2012) 291 ALR 302 at 312 [50]. 129 Comcare v PVYW (2012) 207 FCR 150 at 163 [43]. Bell and thereby taking him or her outside the course of employment130. In this instance it sufficed that the respondent's injuries occurred at a place at which she had been encouraged by her employer to stay131. On the undisputed facts Nicholas J had been correct to hold that the respondent was entitled to compensation132. Comcare's submissions On appeal in this Court, Comcare accepts that the Tribunal was bound to apply the organising principle stated in Hatzimanolis to its determination. It contends that the Tribunal did so, and that the Full Court erred by approaching the test in a mechanistic way that gave no work to the rider. It argues that, correctly understood, the organising principle formulated in the joint reasons does not reduce to a disjunctive test that looks only to employer induced or encouraged "place" or "activity". The reference to injury occurring at a "particular place" is to be understood in light of the stated intention to accommodate the decision in Danvers. It should not be taken as extending liability to every injury that occurs at a place that the employer has encouraged the employee to stay in an interval in an overall period of work. In "place" cases, Comcare argues, it is necessary to determine whether the injury arose "in circumstances which, fairly viewed, come within the ambit of the employer's encouragement or requirement of being away from work and at that 'place'" ("the circumstances of injury inquiry"). Comcare contends that, when the joint reasons in Hatzimanolis are read as a whole, it is plain that the mere occurrence of injury at the "particular place" is insufficient to conclude the question of liability. It points to their Honours' statement that133: "[Mr Hatzimanolis] would not necessarily be in the course of his employment while engaged in an activity during an interval or interlude in his overall period or episode of work if ANI had not expressly or impliedly induced or encouraged him to engage in that activity during that interval." 130 Comcare v PVYW (2012) 207 FCR 150 at 156 [24]. 131 Comcare v PVYW (2012) 207 FCR 150 at 162-163 [40]. 132 Comcare v PVYW (2012) 207 FCR 150 at 165 [56]. 133 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485 per Mason CJ, Deane, Dawson and McHugh JJ. Bell It also relies on the reference that follows in Hatzimanolis134 to Goward v The Commonwealth135, to which it will be necessary to return. Another reason, Comcare argues, for rejecting the Full Court's treatment of the Hatzimanolis test as disjunctive is that it creates an unjustified difference in the determination of liability in "interval cases" from "non-interval cases". In the latter category of case, Comcare observes that while presence at the workplace may be a strong factor in favour of compensation, it is not always a sufficient factor. Discussion It will be recalled that liability under the first of the alternative conditions under the statute – "arising out of ... employment" – requires proof of a causal relation between the injury and the employment. Liability under the second alternative condition – "arising ... in the course of ... employment" – requires proof of a temporal relation between the injury and the employment. Hatzimanolis is concerned with the determination of liability under the second, temporal, condition. This explains the focus in the joint reasons' analysis on identifying whether the injury occurs in an interval within an overall period of work. In the event that it does, the employer's inducement or encouragement to spend that interval at a particular place or in a particular way provides the nexus with the employment. Absent gross misconduct taking the employee outside the course of employment, an injury occurring in an interval that is spent in either of these ways is said to be compensable. Comcare's concern that the Full Court's approach to the Hatzimanolis test serves to expand employers' liability echoes the sentiments expressed by Windeyer J, in dissent, in Kavanagh. His Honour said that to construe the 1930 Act as entitling a worker to receive a payment in every case in which the worker falls sick or suffers any mishap is not to compensate "injuries that befall men because they are workers in industry, but rather an incomplete and erratic form of general health, accident and life insurance"136. It remains that the "circumstances of injury inquiry" for which Comcare contends does not sit readily with Kavanagh: the death of a Commonwealth employee from a ruptured oesophagus was held to be compensable137. This was so notwithstanding that the 134 (1992) 173 CLR 473 at 485 per Mason CJ, Deane, Dawson and McHugh JJ. 135 (1957) 97 CLR 355; [1957] HCA 60. 136 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 586. 137 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 557 per Dixon CJ, 558 per Fullagar J, 576-577 per Menzies J. Bell rupture was unconnected to the employment and might have occurred at any other time, at any other place and in any other external conditions138. Dixon CJ said that the words "arising in the course of the employment" do not imply even a Comcare disavows that the "circumstances of injury inquiry" is an inquiry respecting a causal relation. However, it does not embrace the Tribunal's analysis of an interruption of the temporal relation. Comcare acknowledges that, at least for some purposes, the respondent was within the course of her employment at the motel notwithstanding that she happened to be having sexual intercourse. The analysis is one which postulates that a person may be in the course of employment for one purpose and not in the course of employment for another purpose. The distinction is between purposes within the ambit of the employer's encouragement to be at the place and those that are not. On this analysis, if the light fitting had fallen of its own motion while the respondent was having sexual intercourse, any resulting injury would be compensable. In such an event, the circumstance of the injury – that it was occasioned by a defect in the premises – would be within the ambit of the employer's encouragement to stay at the motel. It would be an injury arising in the course of the respondent's employment. However, if the circumstances of the injury were occasioned by a lawful pursuit not within the ambit of the employer's encouragement to stay at the motel, it would not be compensable. The respondent would not have been in the course of employment. As earlier observed, Comcare is critical of the Full Court's application of the Hatzimanolis test without recourse to the rider. The Full Court noted that the rider is taken from Barwick CJ's judgment in Danvers and that its function was to make clear that an injury does not become non-compensable without reference to the overall circumstances of the employment140. Comcare submits that in every case the trier of fact must take the rider into account, and that in some cases it will expand liability, and in others such as the present it will confine liability. What Comcare does not explain is how consideration of the nature and the terms and conditions of the respondent's employment relevantly bears on the application of the Hatzimanolis test. Consideration of the matters under the rider does not import the "circumstances of injury inquiry" proposed by Comcare. 138 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 554 per Dixon CJ. 139 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 555. 140 Comcare v PVYW (2012) 207 FCR 150 at 156 [24]. Bell More than 20 years before Hatzimanolis, the New South Wales Court of Appeal in Baudoeuf v Department of Main Roads141 upheld an award of compensation for a worker who was injured when he slipped in the shower at his hotel. The employer argued that taking a shower is a personal activity of a kind that could not be regarded as occurring in the course of employment. The facts contained in the stated case included that the employer had arranged and paid for the hotel accommodation. The accident occurred after the end of the day's work. The worker was not subject to any direction from his employer as to the manner in which he spent his leisure hours. His employment did not occasion any special need for showering. There was no feature of the accommodation which served to differentiate the circumstance of showering at the hotel from the ordinary incidents of life unassociated with the worker's employment. Jacobs JA (as his Honour then was) observed that implicit in the employer's argument was a notion of the need for a causal relationship between the act leading to the injury and the employment142. He rejected the notion that the activity at the time of the injury must bear some special relationship to the employment or the employer143. It went too far to hold that an injury might not be compensable simply because, at the time of its occurrence, the worker was using the hotel premises in the same way that he would use his own home144. An employee who is required in connection with his or her employment to stay overnight at a motel will be compensated for an injury sustained by slipping in the shower145. Comcare accepts that in such a case the ambit of the employer's encouragement extends to using the facilities at the motel to shower because the employer has an interest in the employee presenting for work clean and refreshed. The same employee is not compensated for an injury sustained from slipping in the shower at his or her own home at the end of a daily period of work. Nonetheless, the employer has the same interest in the employee presenting for work clean and refreshed. One difference is that in the former case the employee is in an interval in an overall period of work and in the latter he or she is not. Consideration of the circumstances of the injury and its relation to the ambit of the employer's encouragement to be at the place is a distraction from the determination of the temporal question. It overlooks the point made in Hatzimanolis in the context of modern employment relations, which is that the 141 (1968) 68 SR (NSW) 406. 142 Baudoeuf v Department of Main Roads (1968) 68 SR (NSW) 406 at 413. 143 Baudoeuf v Department of Main Roads (1968) 68 SR (NSW) 406 at 413. 144 Baudoeuf v Department of Main Roads (1968) 68 SR (NSW) 406 at 413 per 145 Comcare v McCallum (1994) 49 FCR 199. Bell difference between an injury sustained by a worker such as Mr Danvers, and a non-compensable injury sustained by an ordinary employee after the day's work has ended, lies not so much in the employer's attitude to the way the interval is spent but in the characterisation of the period or periods of work146. The Hatzimanolis test provides, in terms, for the circumstances that will take the occurrence of injury outside the course of employment. The employee's gross misconduct will have that effect. That statement of the exclusion is otiose if, correctly understood, liability under the Hatzimanolis test does not attach to any injury occurring in circumstances that are outside the ambit of the employer's encouragement. Consideration of the connection between the circumstances of the injury and the employment relation is not within the organising principle formulated in Hatzimanolis. To incorporate it into that principle would be to return to refinements of a kind that Hatzimanolis laid to rest. The point is illustrated in Oliver by Menzies J. His Honour asked: if, in the course of the lunch break, obtaining and eating his lunch was incidental to Mr Oliver's employment, when had he ceased doing something incidental to that employment and commenced doing something merely for his own amusement147? He continued, "[i]f the answer to be offered is, when he began to play cricket, the retort might be made: 'But not if he happened to have been eating an apple at the same time'"148. There was no intrinsic connection between eating lunch and employment that other lunchtime activities lacked. Comcare's submission that the Full Court's application of the Hatzimanolis test produces differences in treatment of "interval cases" from "non-interval cases" provides no basis for revisiting the organising principle. The submission relies on decisions relating to injuries sustained during ordinary hours of work in which the fact of presence at the workplace was not determinative of liability149. Each concerned an injury sustained in an altercation at the workplace. As Comcare submits, in each the analysis centered on the circumstances at the time 146 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 483 per Mason CJ, Deane, Dawson and McHugh JJ. 147 The Commonwealth v Oliver (1962) 107 CLR 353 at 363. 148 The Commonwealth v Oliver (1962) 107 CLR 353 at 363. 149 McCord v The Commissioner for Railways [1943] WCR (NSW) 116; Kerr v Department of Prisons [1946] WCR (NSW) 81; Walsh v New South Wales Government Stores Department [1950] WCR (NSW) 1; Dunn v Macquarie Stevedoring Co Pty Ltd [1950] WCR (NSW) 19; Stojkovic v Telford Management Pty Ltd (1998) 16 NSWCCR 165; Martin v Bailey (2009) 26 VR 270. Bell of the injury150. In the earlier cases the focus was on the connection between the injury and the employment. Engagement in an altercation was in each case found to be outside the scope of employment151. The more recent cases approached the issue by considering whether the course of employment was interrupted or abandoned by the altercation152. The starting point in the analysis in these decisions was a presumption that a worker who is at work is within the course of employment. In Rantino v Collins & Moss Pty Ltd the New South Wales Court of Appeal considered the circumstance that injury was occasioned at work during working hours, in the absence of evidence of interruption or abandonment by the employee, as prima facie giving rise to entitlement to compensation153. The decision illustrates the point made by the Full Court in this case that liability for injury arising from an employee's unauthorised acts during periods of actual work is subject to strict tests before the employee is treated as acting outside the course of employment154. The more recent decisions suggest that where a worker starts a fight over a private matter at the workplace he or she will not be compensated for resulting injury155. Fault was central to the analysis in each case. 150 McCord v The Commissioner for Railways [1943] WCR (NSW) 116 at 117; Kerr v Department of Prisons [1946] WCR (NSW) 81 at 82; Walsh v New South Wales Government Stores Department [1950] WCR (NSW) 1 at 3; Dunn v Macquarie Stevedoring Co Pty Ltd [1950] WCR (NSW) 19 at 24; Stojkovic v Telford Management Pty Ltd (1998) 16 NSWCCR 165 at 175-176 [57]; Martin v Bailey (2009) 26 VR 270 at 279 [36] per Maxwell P, 280 [44] per Redlich JA. 151 McCord v The Commissioner for Railways [1943] WCR (NSW) 116 at 117; Kerr v Department of Prisons [1946] WCR (NSW) 81 at 82; Walsh v New South Wales Government Stores Department [1950] WCR (NSW) 1 at 3; Dunn v Macquarie Stevedoring Co Pty Ltd [1950] WCR (NSW) 19 at 24. 152 Stojkovic v Telford Management Pty Ltd (1998) 16 NSWCCR 165 at 187 [91]; Martin v Bailey (2009) 26 VR 270 at 279 [35] per Maxwell P, 280 [44] per 153 (1983) 57 WCR (NSW) 94 at 97 per Hope JA. 154 Comcare v PVYW (2012) 207 FCR 150 at 163 [43]. 155 Stojkovic v Telford Management Pty Ltd (1998) 16 NSWCCR 165 at 189 [97]; Martin v Bailey (2009) 26 VR 270 at 279 [35]-[37] per Maxwell P, 280 [44] per Bell The differences between "non-interval cases" and "interval cases" explain the differing approach to the analysis of liability. The concept of the interruption or abandonment of duties that may be material to liability where injury is sustained at work is not apt for the analysis of injury sustained in an interval between periods of actual work. Moreover, engaging in conduct of a private nature during work may have a different significance from engaging in the same conduct during an interval between periods of actual work. The Full Court's analysis was a correct and faithful application of the Hatzimanolis test. As the Full Court observed, the statement in the joint reasons acknowledging that Mr Hatzimanolis would not necessarily have been in the course of his employment while engaged in activities not encouraged by ANI did not qualify the statement of the test156. The whole of the period that Mr Hatzimanolis was working at the Mt Newman mine and living at the camp was an overall period or episode of work, but the whole of the Mt Newman region was not a place at which ANI had induced or encouraged him to be157. Mr Hatzimanolis would not have been in the course of his employment when he was engaged in activities outside the camp if the activities were not induced or encouraged by ANI. Contrary to this part of Comcare's argument, the acceptance in the joint reasons of a concession made by ANI's counsel is consistent with the Full Court's analysis. The concession was that Mr Hatzimanolis would have been in the course of his employment even while engaging in recreational activities at the camp158. The reference to Goward in the joint reasons does not support Comcare's submission. Their Honours considered that, while Goward had been decided before the modern approach evidenced by Oliver and Danvers, it was difficult to think it might have been decided differently159. Mr Goward, a railway employee, was living in a railway workers' camp at the time he suffered fatal injury. His body was found on the railway line some distance from the camp. He had been struck by a train. The evidence did not establish why he had left the camp or where he was going at the time of the accident. The focus in Goward appears to have been on whether, as the claimant widow maintained, the fatal injury was 156 Comcare v PVYW (2012) 207 FCR 150 at 164 [50]. 157 Comcare v PVYW (2012) 207 FCR 150 at 164 [50]. 158 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485 per Mason CJ, Deane, Dawson and McHugh JJ. 159 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 485 per Mason CJ, Deane, Dawson and McHugh JJ. Bell one arising out of Mr Goward's employment160. Mr Goward's death was held not to be compensable under the 1930 Act since his presence on the railway line could not be said to be an incident of his employment161. Applying the Hatzimanolis test, the same conclusion is reached because the fatal injury occurred at a time when Mr Goward was not at a place at which his employer had encouraged him to be, nor was he doing something that his employer had encouraged him to do162. Hatzimanolis may, in practice, have served to extend employers' liability respecting injuries occurring in intervals within an overall period of work. Appellate courts considered that it had that effect when applying the test shortly after the decision was delivered163. That was more than 20 years ago. As the respondent notes, the Safety, Rehabilitation and Compensation Act 1988 (Cth) has been amended in ways having the effect of extending liability in some respects and confining it in other respects. The amendments have not been directed to the Hatzimanolis test. The test provides clear and workable guidance for the tribunal of fact in the determination of the notoriously difficult question of whether injury is within the course of employment. To superimpose on the test consideration of the connection between the circumstances of the injury and the employment relation would be to add complexity at the cost of certainty and consistency. The Full Court was correct to conclude that, on the undisputed facts, the respondent's injuries were sustained in the course of her employment. The appeal should be dismissed with costs. 160 Goward v The Commonwealth (1957) 97 CLR 355 at 358, 364 per Dixon CJ, Williams, Webb and Kitto JJ. 161 Goward v The Commonwealth (1957) 97 CLR 355 at 358, 364 per Dixon CJ, Williams, Webb and Kitto JJ. 162 See further Inverell Shire Council v Lewis (1992) 8 NSWCCR 562 at 566-567 per 163 McCurry v Lamb (1992) 8 NSWCCR 556 at 558-559 per Handley JA; Inverell Shire Council v Lewis (1992) 8 NSWCCR 562 at 567 per Handley JA. Introduction The Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act") makes Comcare liable to pay compensation in respect of an "injury suffered by an employee" that "results in death, incapacity for work, or impairment"164. The only exceptions are in respect of an injury that is "intentionally self-inflicted"165 or that is "caused by the serious and wilful misconduct of the employee"166. The Act's definition of "injury" is expressed to include a physical or mental injury "arising out of, or in the course of, the employee's employment"167. Legislative refinement and judicial explication of the language of that definition in the context of workers compensation legislation in Australia has fixed its meaning and given that meaning a relatively stable content. The definition has two distinct limbs. The first limb, encompassing an injury "arising out of" the employee's employment, posits a connection which is wholly one of causation. The second limb, encompassing an injury "in the course of" the employee's employment, posits a connection which is wholly one of timing. This appeal is concerned with a question of the application of the second limb of the definition to an injury occurring in an interval between episodes of work. There is no novelty in the question. It is the subject of principles laid down in the joint reasons for judgment of four members of the High Court (Mason CJ, Deane, Dawson and McHugh JJ) in Hatzimanolis v ANI Corporation Ltd168. Hatzimanolis has stood for over 20 years. It has been applied on countless occasions by courts and tribunals throughout Australia. There is no challenge to its continuing authority. The appeal turns rather on the nature, content and application of the principles it expressed. 164 Section 14(1). 165 Section 14(2). 166 Section 14(3). 167 Section 5A(1)(b). 168 (1992) 173 CLR 473; [1992] HCA 21. Before Hatzimanolis Understanding Hatzimanolis begins with examining the course of authority that unfolded in the High Court and in other courts and tribunals in Australia over the previous 70 years. The principles articulated and revised during that period were framed consciously against the background of markedly changing conceptions of the nature and incidents of the employment relationship. The pre-Hatzimanolis course of authority also straddled a small but significant amendment to the definition of "injury" in workers compensation legislation in most Australian jurisdictions, which occurred around the middle of the twentieth century. The definition as drawn from antecedent English legislation referred originally to an injury "arising out of and in the course of the employment"169. The effect of the amendment was that the two limbs were detached (by the substitution of "or" for "and") so as to become distinct alternatives170. Only in the early 1960s, as the full implications of that detachment came to be assimilated into the case law, did the wholly temporal nature of the second limb come squarely to be recognised. The concept of injury "in the course of" employment was then held unequivocally to involve "nothing more … than time measured by activity of a particular character"171 and to be "independent altogether of the question whether the employment contributed causally to the accident"172. Earlier authorities need to be appraised in light of that development. What was required for an injury to be characterised as "in the course of" employment was first considered by the High Court in 1929 in Pearson v Fremantle Harbour Trust173. Reviewing English authorities to that date174, the Court (Knox CJ, Rich and Dixon JJ) noted that restrictive tests stated in the 169 Workmen's Compensation Act 1906 (UK), s 1. 170 See eg s 4 of the Commonwealth Employees' Compensation Act 1948 (Cth), amending s 9 of the Commonwealth Employees' Compensation Act 1930 (Cth). 171 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 570; [1960] HCA 25. 172 The Commonwealth v Oliver (1962) 107 CLR 353 at 355; [1962] HCA 38. See also Weston v Great Boulder Gold Mines Ltd (1964) 112 CLR 30; [1964] HCA 59; Bill Williams Pty Ltd v Williams (1972) 126 CLR 146; [1972] HCA 23. 173 (1929) 42 CLR 320; [1929] HCA 19. 174 (1929) 42 CLR 320 at 326-329, referring to St Helens Colliery Co v Hewitson [1924] AC 59; Lancashire and Yorkshire Railway v Highley [1917] AC 352; Howells v Great Western Railway (1928) 138 LT 544. House of Lords just five years earlier (namely, whether the workman at the time he sustained the injury was discharging a duty which he owed to his employer, and whether, at the moment of the accident, the employer would have been entitled to give the workman an order, and the man would have owed the duty to obey it) had by then already been tempered by the English Court of Appeal taking an expansive approach to the concept of "duty" (namely, not limiting that concept to the doing of things which the workman's contract of service obliged him to do). The Court stated that the result of the authorities was to show that the statutory language described "a condition which is satisfied if the accident happens while the workman is doing something in the exercise of his functions although it is no more than an adjunct to or an incident of his service"175. In 1931, as a member of the majority in Whittingham v Commissioner of Railways (WA)176 upholding a denial of liability in respect of an injury sustained during a lunch hour, Dixon J said that "[t]here can no longer be any doubt that the accident must happen while the employee is doing something which is part of or is incidental to his service"177. He went on to explain that "the sufficiency of the connection between the employment and the thing done by the employee cannot but remain a matter of degree, in which time, place and circumstance, as well as practice, must be considered together with the conditions of the employment"178. In 1937, as a member of the majority in Henderson v Commissioner of Railways (WA)179 upholding a finding of liability in respect of an injury sustained by an employee during a lunch hour, Dixon J was able to state that the "general principle governing the ascertainment of the 'course of employment' appears now to be settled": "[t]o be in the course of the employment, the acts of the workman must be part of his service to the employer" but "service consists in more than the actual performance of the work which the workman is employed to do" and "includes the doing of whatever is incidental to the performance of the work"180. 175 (1929) 42 CLR 320 at 329-330. 176 (1931) 46 CLR 22; [1931] HCA 49. 177 (1931) 46 CLR 22 at 29. 178 (1931) 46 CLR 22 at 29. 179 (1937) 58 CLR 281; [1937] HCA 67. 180 (1937) 58 CLR 281 at 294. He went on to formulate a test applicable to an injury occurring in an interval between episodes of work, which came to be taken up in later cases181: "Where the accident arises shortly before the beginning of actual work or shortly after its cessation, or in an interval when labour is suspended, and it occurs at or near the scene of operations, the question whether it arises in the course of the employment will depend on the nature and terms of the employment, on the circumstances in which work is done and on what, as a result, the workman is reasonably required, expected or authorized to do in order to carry out his actual duties." Essentially the same test was restated by Dixon J with the concurrence of other members of the Court in 1951 in Humphrey Earl Ltd v Speechley182, overturning a finding of liability in respect of an injury sustained by an employee who chose to go for a "special lunch". He said183: "Whatever is incidental to the performance of the work is covered by the course of the employment. When an accident occurs in intervals between work the question whether it occurs in the course of the employment must depend upon the answer to the question whether the workman was doing something which he was reasonably required, expected or authorized to do in order to carry out his duties". Dixon J went on to explain that "the satisfaction of a recurrent human want" may, but need not, satisfy that test of incidentality, depending on "the conditions of the employment"184. The questions raised by application of the test "must involve matters of degree"185. There was, he said, "a great difference" between a worker "acting in a way which is reasonably calculated to fulfil the purposes of his employment and at the same time provide for his own reasonable wants" (thereby acting in the course of his employment) and a worker "taking advantage of an allowable interval … in order to make it the occasion of an excursion for his own purposes" (thereby acting outside the course of his employment)186. 181 (1937) 58 CLR 281 at 294. 182 (1951) 84 CLR 126; [1951] HCA 75. 183 (1951) 84 CLR 126 at 133. 184 (1951) 84 CLR 126 at 134. 185 (1951) 84 CLR 126 at 134. 186 (1951) 84 CLR 126 at 134. The Henderson-Speechley test – whether the worker at the time of injury was doing something he was reasonably required, expected or authorised to do in order to carry out his duties – came to be applied "liberally and practically". The need for that to occur was made express by Barwick CJ in 1969 as a member of the majority in Danvers v Commissioner for Railways (NSW)187 upholding liability in respect of an injury sustained by a railway worker in a fire while he was sleeping or resting at night in employer-provided accommodation at a remote location. Barwick CJ emphasised that "[w]hat may be in the course of the employment is referable to the general nature and circumstances of the employment and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen"188. But the Henderson-Speechley test was by then under strain. In 1962 Dixon CJ had avoided all reference to the test as a member of the majority in The Commonwealth v Oliver189 upholding liability in respect of an injury sustained by an employee during a lunch hour in circumstances which he acknowledged to be practically indistinguishable from those in which liability had been denied three decades earlier in Whittingham. Dixon CJ noted instead the irrelevance of the presence or absence of any causal connection between the injury and the employment and alluded to the conception of the sphere of activity covered by "course of employment" having been "somewhat restricted" in and after Pearson. He quoted with approval an earlier but, at least in its verbal formulation, distinctly more expansive statement of Lord Loreburn LC in the House of Lords "Everything, of course, must depend upon the nature of what he has to do, but allowance should be made for the ordinary habits of human nature and the ordinary way in which those employed in such an occupation may be expected to act. A man may be within the course of his employment not merely while he is actually doing the work set before him, but also while he is where he would not be but for his employment, and is doing what a man so employed might do without impropriety." 187 (1969) 122 CLR 529 at 536; [1969] HCA 64. 188 (1969) 122 CLR 529 at 537. 189 (1962) 107 CLR 353. 190 (1962) 107 CLR 353 at 356, quoting Low or Jackson v General Steam Fishing Company Ltd [1909] AC 523 at 532. "The field covered by the general conception of what is incidental, ancillary or consequential to work but yet sufficiently within the sphere of the man's employment to make it proper to say that when he is within it he is in the course of employment has doubtless widened its practical boundaries with the enlarged conception of what belongs to the factory or other organized industrial unit in the amenities and welfare of the members of the staff or labour force." The "enlarged conception" to which Dixon CJ referred was evident in unanimous decisions of the Full Court, and Court of Appeal, of the Supreme Court of New South Wales in 1957192, 1968193 and 1980194, the second and third of which were cited in Hatzimanolis as examples supporting the general observation that intermediate appellate courts after Oliver upheld many awards of compensation in respect of injuries which occurred "away from the place of work, outside of or between working hours, and while the worker was engaged in an activity which is ordinarily performed for private necessity, convenience or enjoyment"195. The award of compensation upheld in the first case was in favour of a drover who was burnt while lying too close to a camp fire while he was "at a place, namely the camp, where his employment required him to be"196. The award of compensation upheld in the second case was in favour of a surveyor's assistant who slipped taking a shower after work while staying overnight at a hotel paid for by his employer. Highlighting the temporal nature of the critical inquiry, Jacobs JA (with the agreement of Sugerman JA) said197: "If the residing in the hotel is held to be incidental to the employment, it is then necessary to identify what is involved in the concept of residing in the hotel. If an injury occurs in the course of something which is identified as being within the concept of residing in the hotel, then the 191 (1962) 107 CLR 353 at 356. 192 Murray v Moppett [1958] SR (NSW) 59. 193 Baudoeuf v Department of Main Roads (1968) 68 SR (NSW) 406. 194 Qantas Airways Ltd v Kirkland unreported, Court of Appeal of the Supreme Court of New South Wales, 9 October 1980. 195 (1992) 173 CLR 473 at 480. 196 [1958] SR (NSW) 59 at 63. 197 (1968) 68 SR (NSW) 406 at 412. applicant is entitled to succeed, whatever the cause of the injury may be. There is no need for a causal relationship between the injury and either the employment or the condition or thing incidental to the employment". The award of compensation upheld in the third case was in favour of an international flight attendant who slipped on a wet floor in a restaurant in Greece during a 23 hour rest period after having completed a flight from Frankfurt to Athens via Belgrade and before returning to Sydney. By 1979, Deane J sitting alone as a judge of the Federal Court was able to refer to the Henderson-Speechley test as having been "applied by courts on innumerable occasions since its formulation". He stressed, however, that if used as a "criterion of exclusion" the Henderson-Speechley test needed to be "tempered to accord with the current views of what comes within the scope of employment which are more liberal than those prevalent at the time Dixon J formulated it"198. Hatzimanolis The precise question asked and affirmatively answered in Hatzimanolis was whether a worker who was employed to work ten hours a day six days a week at a mine at Mt Newman in Western Australia, near where he lived in employer-provided accommodation within a camp, was in the course of his employment when he was involved in a road accident on an 800 kilometre round trip sightseeing tour to Wittenoom Gorge on his day off. The affirmative answer was explained in the joint reasons for judgment on the basis that the injury was sustained "during an interval occurring within an overall period or episode of work and while [the worker was] engaged, with his employer's encouragement, in an activity which his employer had organized"199. The structure of the reasoning adopted to arrive at that answer repays close attention. The joint reasons started with an acceptance of the explanation given by Dixon J in Whittingham: that an injury, to be in the course of employment, must occur while the employee is doing something which is "part of" or is "incidental" to his employment; that the sufficiency of the connection between the employment and the thing done by the employee to found a conclusion that the employee was doing something "incidental" to his employment is one of degree; and that for the purpose of determining the sufficiency of the connection between the employment and the thing done by the employee in a particular case, considerations of time, place and circumstance, as well as practice, must be taken into account together with the conditions of the 198 Commonwealth v Lyon (1979) 24 ALR 300 at 303. 199 (1992) 173 CLR 473 at 476. employment. The difficulty identified in the joint reasons was in articulating a "principle or standard" by reference to which those considerations were to be evaluated: for "[w]ithout the assistance of an organizing principle, a tribunal of fact cannot know which of them is or are determinative"200. The joint reasons then turned to examine the Henderson-Speechley test in the light of the course of authority, ultimately to conclude that "its formulation no longer accurately covers all cases of injury which occur between intervals of work and which are held to be within the course of employment" and that in many cases in which the test had been applied the finding that the employee had been doing something "in order to carry out his duties" was "simply fictitious"201. It was said202: "Consequently, the rational development of this area of law requires a reformulation of the principles which determine whether an injury occurring between periods of actual work is within the course of the employment so that their application will accord with the current conception of the course of employment as demonstrated by the recent cases, particularly the decisions of this Court in Oliver and Danvers." Turning to undertake that "reformulation of principles", the joint reasons made two preliminary observations. The first was that "it would be an unacceptable extension of the course of employment to hold that an employee was within the course of employment whenever the employer had authorized, encouraged or permitted the employee to spend the time during an interval between periods of actual work at a particular place or in a particular way"203. The second was that the distinction between an injury of the kind sustained by the railway worker in Danvers and a non-compensable injury sustained by an ordinary employee in an overnight interval between daily periods of work lay "not so much in the employer's attitude to the way the interval between the periods of actual work was spent but in the characterization of the period or periods of work of those employees"204. The point was that "an injury is more readily seen as occurring in the course of employment when it has been sustained in an interval or interlude occurring within an overall period or episode of work 200 (1992) 173 CLR 473 at 478-479. 201 (1992) 173 CLR 473 at 482. 202 (1992) 173 CLR 473 at 482. 203 (1992) 173 CLR 473 at 482. 204 (1992) 173 CLR 473 at 482. than when it has been sustained in the interval between two discrete periods of work"205. The joint reasons continued206: "Moreover, Oliver and the cases which follow it show that an interval or interlude in an overall period or episode of work will ordinarily be seen as being part of the course of employment if the employer, expressly or impliedly, has induced or encouraged the employee to spend the interval or interlude at a particular place or in a particular way. Indeed, the modern cases show that, absent gross misconduct on the part of the employee, an injury occurring during such an interval or interlude will invariably result in a finding that the injury occurred in the course of employment." The joint reasons then reformulated the principles to determine whether an injury occurring between periods of actual work is within the course of the employment in the following terms207: "Accordingly, it should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. Furthermore, an injury sustained in such an interval will be within the course of employment if it occurred at that place or while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of employment." Adopting the language of Barwick CJ in Danvers, the joint reasons added208: "In determining whether the injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the employment 'and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen'". 205 (1992) 173 CLR 473 at 483. 206 (1992) 173 CLR 473 at 484. 207 (1992) 173 CLR 473 at 484. 208 (1992) 173 CLR 473 at 484. Applying those principles, the joint reasons noted with approval a concession of the employer that the worker "would have been in the course of his employment while working at the mine, travelling to and from the mine, eating and sleeping and even enjoying recreational activity at the camp" and went on to accept also the contention of the employer that "it did not follow that the [worker] was in the course of his employment 'during the whole of the time' that he spent in the Mt Newman area". The contention was said to be correct because the worker "would not necessarily be in the course of his employment while engaged in an activity during an interval or interlude in his overall period or episode of work if [the employer] had not expressly or impliedly induced or encouraged him to engage in that activity during that interval"209. The joint reasons noted in that respect the decision in Goward v The Commonwealth210, which in 1957 held that there was no entitlement to compensation in circumstances where a railway worker living in a camp as an incident of his employment was struck by a train on a nearby railway line some hours after the cessation of actual work. It was said that, although Goward was decided before Oliver and Danvers, "it is difficult to accept that it would be decided differently today, having regard to the primary findings of fact which were made in that case"211. The significance and extent of the reformulation of principles in the joint reasons in Hatzimanolis was highlighted six months later in 1992 in two cases decided by the Court of Appeal of the Supreme Court of New South Wales, each upholding a finding of injury in the course of employment. In one case, the employee was temporarily resident at a caravan park while attending a practical training course organised by his employer, when he was shot by a stranger while participating in an evening of social activity in another caravan within the park212. In the other case, the male employee was sleeping in the bed of a female employee in lodgings provided by the employer at a shearer's camp when he was shot by a deranged fellow employee 213. In each case the employee was found to have sustained his injury while "at a particular place", namely the park or the camp, where he had been induced or encouraged by his employer to be and while engaged in an activity which involved no misconduct. 209 (1992) 173 CLR 473 at 485. 210 (1957) 97 CLR 355; [1957] HCA 60. 211 (1992) 173 CLR 473 at 485. 212 Inverell Shire Council v Lewis (1992) 8 NSWCCR 562. 213 McCurry v Lamb (1992) 8 NSWCCR 556. In neither case could it be said, without extreme artificiality, that the particular activity in which the employee was engaged at the precise time of the injury was either undertaken "in order to carry out his duties" or in any way "induced or encouraged" by his employer. Handley JA recorded that the result in each case "may seem to some anomalous or even bizarre" but was "nevertheless Noting the reference in Hatzimanolis to Goward, and distinguishing the outcome in Goward from the outcome in Danvers, Handley JA usefully explained in the first case215: "The worker in Danvers died when a fire broke out in the van in which he was sleeping in a remote camp provided by the employer. The injury occurred in 'the particular place' where the worker had been encouraged to sleep close to his work. In Goward on the other hand the worker was killed when he was struck by a train near his camp. He was not at the camp itself, this being 'the particular place' where his employer, the Postmaster General's Department, had encouraged him to reside while he worked as a member of a linesmen's gang in a remote location in Western Queensland. Moreover the employer had not encouraged the deceased worker to undertake 'the particular activity' outside the camp in which he was engaged when he was killed. These facts no doubt explain why the case would be decided the same way today although the dependents' appeal in that case was only supported on the basis that the death of the deceased arose out of his employment." Two other cases, decided by the Federal Court in 1994 and 1995, also illustrate the significance and extent of the change wrought by Hatzimanolis. In the first case216, the Full Court (Lockhart, Hill and Whitlam JJ) upheld the conclusion of the Administrative Appeals Tribunal that an employee sustained an injury in the course of employment when she slipped in the shower in a hotel she had booked when required for the purposes of her work to travel to a country town where she had to stay overnight. Acknowledging that there might be activities in which an employee might engage during an overnight stay (such as attending a club) that might break the nexus with employment, Lockhart J 214 (1992) 8 NSWCCR 562 at 567; (1992) 8 NSWCCR 556 at 559-560. 215 (1992) 8 NSWCCR 562 at 566-567. 216 Comcare v McCallum (1994) 49 FCR 199. emphasised the artificiality of fragmenting the overall time the employee spent at the town into discrete episodes. He said217: "The old cases are replete with the making of fine distinctions about such matters as this; but the High Court has established the present law authoritatively in Hatzimanolis. The only sensible and realistic conclusion to draw on the facts of this case is that the injury was sustained by the [employee] in an interval or interlude during an overall period or episode of work which was part of the course of her employment." In the second case218, Tamberlin J held it not open to the Administrative Appeals Tribunal to conclude that an employee who was required to be away from his normal place of residence for the purposes of his work was not in the course of his employment when assaulted by strangers in a car park while returning to the hotel in which he had chosen to stay from another hotel to which he had gone to have "a few beers and watch the dogs on Sky channel". Rejecting the Tribunal's characterisation of the employee as having been at the time of the assault "on a frolic of [his] own", Tamberlin J said that the Hatzimanolis principles "should be applied in a commonsense and practical manner to accord with the realities of human behaviour"219. Nature Before turning to the content of the principles as reformulated in Hatzimanolis, it is desirable to say something of their nature. The statutory reference to a physical or mental injury "in the course of ... the employee's employment" is to a statutory standard or criterion. The application of that statutory standard or criterion to the facts of a particular case involves in every case the making of an evaluative judgment. Professor Zines has explained220: "Any standard or criterion will have a penumbra of uncertainty under which the deciding authority will have room to manoeuvre – an area of choice and of discretion; an area where some aspect of policy will inevitably intrude. The degree of vagueness or discretion will be affected 217 (1994) 49 FCR 199 at 204. 218 Kennedy v Telstra Corporation (1995) 61 FCR 160. 219 (1995) 61 FCR 160 at 169. 220 Zines, The High Court and the Constitution, 4th ed (1997) at 195, quoted in Thomas v Mowbray (2007) 233 CLR 307 at 351 [91]; [2007] HCA 33. by what is conceived to be the object of the law and by judicial techniques and precedents. Given a broad standard, the technique of judicial interpretation is to give it content and more detailed meaning on a case to case basis. Rules and principles emerge which guide or direct courts in the application of the standard." Appellate courts have a particular responsibility for the emergence of such rules and principles. The role of an appellate court in providing guidance as to the making of an evaluative judgment in the application of a statutory standard or criterion is no different in principle from the role of an appellate court in providing guidance as to the exercise of a judicial discretion. Of the latter, it has been observed221: "The authority of an appellate court to give guidance is not to be doubted. It is inevitable that the wisdom gained in continually supervising the exercise of a statutory discretion will find expression in judicial guidelines. That is not to invest an appellate court with legislative power but rather to acknowledge that, in the way of the common law, a principle which can be seen to be common to a particular class of case will ultimately find judicial expression. The orderly administration of justice requires that decisions should be consistent one with another and decision- making should not be open to the reproach that it is adventitious." While a rule or principle developed by an appellate court to guide the exercise of a statutory discretion does not itself have the force of law, "[t]here may well be situations in which an appellate court will be justified in setting aside a discretionary order if the primary judge, without sufficient grounds, has failed to apply a guideline in a particular case" and "[w]here there is nothing to mark the instant case as different from the generality of cases, the failure will suggest that the discretion has not been soundly exercised"222. Whatever its form, however, a rule or principle formulated by an appellate court through the accumulation of judicial experience is inherently provisional. The rule or principle is always able to be revised, in light of further accumulation of judicial experience, in accordance with rules of precedent applicable within the judicial hierarchy. The Henderson-Speechley test was an attempt to expound, at the ultimate appellate level, a principle capable of guiding the making of the necessary evaluative judgment across a spectrum of cases in which the statutory standard or The principles as reformulated in criterion might fall to be applied. 221 Norbis v Norbis (1986) 161 CLR 513 at 536; [1986] HCA 17. 222 (1986) 161 CLR 513 at 537. Hatzimanolis, in the light of the further accumulation of judicial experience, although more modest in their ambition, are principles of essentially the same nature. Appeal or review of the application of a statutory standard or criterion to the facts of a particular case in the context of workers compensation legislation is now, and almost always has been, limited to appeal or review on a question of law. Whether a particular evaluative judgment is reasonably open on the facts of a particular case is a question of law223. So too is whether a particular evaluative judgment has been reached by a legally permissible process of reasoning224. For so long as the principles as reformulated in Hatzimanolis stand unrevised by the High Court, a court or tribunal seeking to apply the statutory standard or criterion will err in law if it adopts a process of reasoning which departs from those principles or if it makes an evaluative judgment which is not reasonably open on the application of those principles to the facts of the particular case. Content The premise of the principles as reformulated in Hatzimanolis is that the question whether an injury is "in the course of" an employee's employment is always a question of the characterisation of the period of time during which the injury occurs. That must be so, given that the cause of the injury is wholly irrelevant. The principles do not deny the relevance to that ultimate question of characterisation of considerations of time, place, circumstance, practice and conditions of employment as identified by Dixon J in Whittingham. They do not deny the utility of the Henderson-Speechley test, if applied practically and liberally and if used as a criterion of inclusion. They reject that test as expressing a single, all-embracing criterion of liability and they are not framed to express a single, all-embracing criterion of liability in its place. The principles as reformulated in Hatzimanolis rather set out a framework for analysis by which considerations of time, place, circumstance, practice and conditions of employment are to be assessed as sufficient to provide an 223 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 450 [24]; [2001] HCA 12, citing Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126 at 138. 224 Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at affirmative answer to the ultimate question of characterisation in a category of case where an injury occurs in an interval or interlude between periods of work. It is critical to recognise that the analysis proceeds in two stages. As succinctly stated in the joint reasons for judgment of four members of the Court of Appeal of the Supreme Court of New South Wales (Allsop P, Beazley and McColl JJA and Handley AJA) in 2009 in Watson v Qantas Airways Ltd225, the "reformulation requires at the outset the process of characterisation of the period or periods of work to ascertain whether there is one overall period or episode of work or discrete periods of work"226. That is to say, it is "crucial first to characterise the period or periods of work, before focussing on how the interval between actual performance of work [is] spent"227. Where the correct characterisation at that first stage of the analysis is that there is one overall period or episode of work, the Hatzimanolis principles postulate at a second stage of analysis that it is sufficient to characterise an injury in an interval or interlude within that overall period or episode of work as occurring in the course of employment if either one of two further conditions is satisfied. The first is that the employee is, during that interval or interlude, at a particular place, at which the employer has expressly or impliedly induced or encouraged the employee to be. The second is that the employee is, during that interval or interlude, undertaking a particular activity, which the employer has expressly or impliedly induced or encouraged the employee to undertake. The exception, having the potential in some cases to interrupt the course of employment, is where the employee is engaged at the time of the injury in gross misconduct. It is also critical to recognise that the reformulation postulates no more than a test of sufficiency applicable to a limited category of case. There will inevitably be cases the facts of which do not fit squarely within the Hatzimanolis analytical framework and in which further analysis will therefore be required228. That does not detract from the appropriateness of, and, for so long as they stand, necessity for applying, the Hatzimanolis principles as a test of sufficiency in those many cases the facts of which do fit squarely within the Hatzimanolis analytical framework. 225 (2009) 75 NSWLR 539. 226 (2009) 75 NSWLR 539 at 548 [38]. 227 (2009) 75 NSWLR 539 at 546 [30]. 228 See eg Comcare v Mather (1995) 56 FCR 456; WorkCover Authority (NSW) v Walling (1998) 16 NSWCCR 527. Consistent with the Hatzimanolis principles, an injury that an employee sustains at a place where an employer has induced or encouraged the employee to be during an interval or interlude in an overall period or episode of work is, without more, properly to be characterised as an injury in the course of the employee's employment, unless the employee is engaged at the time of the injury in gross misconduct. It is not necessary that the employee, during that interval or interlude, also be undertaking a particular activity which the employer has expressly or impliedly induced or encouraged the employee to undertake. Nor, absent gross misconduct, is any inquiry into particular private activity of the employee relevant. The approach reflected in the Hatzimanolis principles accords with a contemporary understanding of the employment relationship, which respects the privacy and autonomy of an employee as consistent with continuation of employment. Gone is the artificial fragmentation of an interval or interlude in an overall period or episode of work spent by an employee at a particular place at the inducement or encouragement of an employer into yet shorter periods of time each of which is to be further separately accounted for and discretely related to the employment relationship. Gone also is the intrusive inquiry that such artificial fragmentation entails into personal choices made by an employee, hour- by-hour or minute-by-minute, during an interval or interlude. In its place, it is sufficient for an injury sustained by an employee during an interval or interlude in an overall period or episode of work to be in the course of the employee's employment that (to adapt Lord Loreburn's language) the employee is where the employee would not be but for his or her employment, and is doing what a man or woman so employed might do without gross impropriety. The central submission of Comcare in the appeal – that an injury that an employee sustains at a place an employer has induced or encouraged the employee to be during an interval or interlude in an overall period or episode of work is not compensable "unless the injury came about through the very use of the 'place' at the 'time' and for the work-related purpose that the employer encouraged or required the employee to be there" – is to be rejected. Not only is a test for compensation stated in those terms inconsistent with the Hatzimanolis principles; it is a return to the outmoded, artificial and intrusive form of analysis that the Hatzimanolis principles were formulated to overcome. An example given by Comcare, of the application of the test for compensation it proposes, illustrates the fine distinctions that test would entail and in so doing highlights its flaws. According to Comcare, an employee who was required by his or her employer to stay overnight in a hotel booked and paid for by the employer would be in the course of employment if and when the employee slipped in the shower (presumably on the basis that the employer encouraged or required the employee to be clean) and also would be in the course of employment if and when the employee slipped at breakfast or dinner in the hotel restaurant (presumably on the basis that the employer encouraged or required the employee to be fed). But, says Comcare, the employee would not be in the course of employment if and when the employee slipped in the hotel gymnasium unless the conditions of the employment were such that the employer expressly or impliedly encouraged or required the employee to be fit. Thus, the single overnight stay at the hotel would, on Comcare's mode of analysis, be broken up into a series of discrete events each to be parsed separately. The event of an employee slipping in the shower after using the hotel gymnasium would appear to be one of especial difficulty. Application In the proceeding which gave rise to the present appeal, the agreed facts before the Administrative Appeals Tribunal established that the present respondent was in 2007 instructed by her employer to work for two consecutive days away from her normal place of residence in a country town where she stayed overnight at a motel booked by the employer. She was injured in her motel room while having sex with an acquaintance when a light fitting above the bed was pulled from its mount and struck her on the nose and mouth. Affirming the decision of Comcare rejecting liability for compensation, the Tribunal formulated the principle to be applied in the following terms229: "[T]he Tribunal finds that it is insufficient for the employee simply to be at a particular location during an interval or interlude in an overall period or episode of work for liability for injury to arise. The activities engaged in during that interval which led to the employee's injury must be expressly or impliedly induced or encouraged by the employer. Although the connection need not be a close one, a nexus is essential before liability will be incurred." The Tribunal concluded230: "Applying these principles to the applicant, although it is conceded that the nexus should not be interpreted in any narrow fashion, the requisite connection is absent. The employer had not expressly or impliedly induced or encouraged the applicant's sexual conduct that evening. Nor did the employer know or could reasonably expect that such an activity was contemplated by her. The activity was not an ordinary incident of an overnight stay like showering, sleeping, eating, or returning 229 Comcare v PVYW unreported, Administrative Appeals Tribunal, 26 November 230 Comcare v PVYW unreported, Administrative Appeals Tribunal, 26 November to the place of residence from a social occasion elsewhere in the vicinity. Rather she was involved in a recreational activity which her employer had not induced, encouraged or countenanced." Setting aside the decision of the Tribunal in an appeal on a question of law, and going on to make a declaration that the injuries were suffered by the respondent in the course of her employment, Nicholas J in the Federal Court held: first that the principle formulated and applied by the Tribunal was wrong in law231; and secondly that the conclusion embodied in the declaration was the only conclusion open on the principles in Hatzimanolis232. The Full Court of the Federal Court (Keane CJ, Buchanan and Bromberg JJ) agreed233. So do I. The Tribunal was wrong in law to apply, as an exclusive criterion of liability, a test which merged the two conditions identified in Hatzimanolis as each sufficient to conclude that an injury occurring in an interval or interlude within an overall period or episode of work is within the course of the employment. Faithful application of the Hatzimanolis principles could have led the Tribunal to only one result: the opposite of the result it reached. The two consecutive days that the respondent was required by her employer to visit the country town were an overall period of work. The overnight stay between working hours was an interval within that overall period of work. The respondent was at a place (sufficiently identified for the purposes of the case as the motel) at which her employer had encouraged her to be. In the absence of any suggestion that she was engaged at the time of injury in misconduct, those facts were sufficient to conclude that the injury the respondent sustained during that interval, and when at that place, was sustained in the course of her employment. The particular activity in which the respondent was engaged at the time she was injured does not enter into the analysis. Conclusion The appeal should be dismissed. 231 PVYW v Comcare (No 2) (2012) 291 ALR 302 at 313 [55]. 232 (2012) 291 ALR 302 at 313 [55]. 233 Comcare v PVYW (2012) 207 FCR 150.

HIGH COURT OF AUSTRALIA AND FORESTRY TASMANIA RESPONDENT Coote v Forestry Tasmania [2006] HCA 26 13 June 2006 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Supreme Court of Tasmania made on 23 March 2005. Remit the matter to the Full Court of the Supreme Court of Tasmania for determination of the issues raised by pars 7 and 8 of the Notice of Appeal to that Court dated 28 July 2004. The costs of the trial of the action and of the appeal to the Full Court of the Supreme Court of Tasmania should be in the discretion of the Full Court. On appeal from the Supreme Court of Tasmania Representation J Ruskin QC with S A O'Meara for the appellant (instructed by Hilliard and Associates) D E Curtain QC with C M O'Neill for the respondent (instructed by Phillips Fox) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Coote v Forestry Tasmania Negligence – Breach of duty – Appellant tree feller rendered paraplegic after a branch fell from a tree and hit him – Respondent, by its forestry officer, gave the appellant a direction that he was not to fell pulp trees as he normally would – Whether respondent was negligent in giving that direction and so causing appellant to place himself in a position of danger. Appeal – Approach to issues of negligence and contributory negligence – Trial judge finds that respondent, by its forestry officer, gave the appellant tree feller a direction that he was not to fell pulp trees as he normally would – Centrality of finding to conclusion of negligence – Full Court does not disturb that finding but finds no negligence – Whether finding of no negligence open to Full Court in the circumstances – Whether any error of judgment of the appellant a matter relevant to contributory negligence. Forestry Act 1920 (Tas). Forest Practices Act 1985 (Tas). GLEESON CJ, KIRBY, HAYNE AND HEYDON JJ. In September 1998, the appellant was working as a tree feller in a logging coupe in a State forest at Roses Tier in northern Tasmania. He felled two sawlog trees. Both trees brushed another as they fell. After he had trimmed the sawlog trees, he walked under the tree that had been brushed. A branch fell from that tree and hit him. He was rendered paraplegic. The appellant contends that but for some directions given to him by a Senior Forestry Officer (Harvesting) employed by the respondent, Forestry Tasmania, he would have felled the tree brushed by the sawlog trees before felling the two sawlog trees. He did not do that because he believed the tree he left standing was not a sawlog tree but was a pulp tree. The appellant's claim In 2001, the appellant brought action in the Supreme Court of Tasmania claiming damages for negligence from a number of parties, including Forestry Tasmania. An order was made that questions of liability be determined separately from and before questions of quantum of damages. The appellant settled his claims against the defendants other than Forestry Tasmania. Questions of contribution between defendants remained unresolved by those settlements but they may be put to one side. On the trial of the remaining questions of liability (the liability of Forestry Tasmania to the appellant and whether the appellant had been contributorily negligent) the trial judge (Blow J) determined1 the issue of Forestry Tasmania's liability in the appellant's favour. He further determined that the damages recoverable in respect of the appellant's damage should be reduced by one-sixth due to his contributory negligence. Forestry Tasmania appealed against the orders answering the separate questions tried by Blow J. The Full Court of the Supreme Court of Tasmania (Underwood CJ, Crawford and Evans JJ) allowed the appeal2, set aside the orders made below, and entered judgment for Forestry Tasmania with costs. By special leave, the appellant now appeals to this Court. The essence of the appellant's case is, and at all stages of the litigation has been, that he left standing the tree from which a branch fell and injured him because he was required to do so by the instructions given to him by the Senior 1 Coote v AG & GR Padgett Pty Ltd [2004] Aust Torts Reports ¶81-758. 2 Forestry Tasmania v Coote [2005] TASSC 17. Kirby Hayne Forestry Officer (Mr Johnstone). Forestry Tasmania's answer is, and always has been, that the appellant could and should have felled that tree and that his failure to do so was an error of judgment on his part for which it was not responsible. The statutory framework It is as well to begin by mentioning something of the statutory framework within which the work being done by the appellant was to be undertaken. The principal element of that statutory framework was the Forest Practices Act 1985 (Tas) ("the Act") as it stood at the time of the appellant's injury. The harvesting operation at the coupe where the appellant was injured was the subject of a timber harvesting plan. (A coupe is a delineated area of the forest in which the felling operation takes place.) The Act gave certain powers to "forest practices officers" (and Mr Johnstone was such an officer) to ensure that "forest practices" (an expression which included3 harvesting timber) were conducted in accordance with the timber harvesting plan4. Little attention was given in the courts below, or on appeal, to the content of these powers. At all stages the litigation appears to have been conducted on the basis that it sufficed to recognise that Mr Johnstone had power to give the appellant some directions about what trees he might cut down. The precise nature and extent of those powers was not explored in argument. It was accepted, however, that s 21 of the Act made it an offence for the appellant to fail to comply with the provisions of the timber harvesting plan. The timber harvesting plan contained a number of specifications under the heading "FELLING". Two are of particular relevance. It was said that "the aim of this operation is [to] maximise sawlog production and minimise pulpwood", and that "[a]ll trees that are considered to be un-safe by the contractor are to be removed". The "contractor" was AG & GR Padgett Pty Ltd. That company ("Padgett") engaged the appellant as a tree feller. The appellant alleged that he was Padgett's employee or "contractor" for the purposes of s 9 of the Workplace Health and Safety Act 1995 (Tas). This appeal does not require any examination of that question. 3 Forest Practices Act 1985 (Tas), s 3(1). s 40(1)(a). Kirby Hayne The trial The evidence given at trial contained various features upon which each of the parties fastened in aid of the case each sought to make. These endeavours of the parties were both assisted and hindered by the fact that the evidence given of oral communications between the appellant and Mr Johnstone did not clearly articulate the substance of what was said in any particular conversation, let alone attempt to recapture the words that had been used. Much of the evidence led, without objection, from the appellant was directed to eliciting his understanding of what Mr Johnstone communicated to him rather than what Mr Johnstone said. The evidentiary basis on which the trial judge had to act in resolving the critical issue between the parties was, therefore, both diffuse and in some respects thin. It is, however, not necessary to set out the evidence that was given. The critical findings made by the trial judge about the directions given by Mr Johnstone to the appellant were not disturbed on appeal to the Full Court. The parties' (limited) exploration of what passed between the appellant and Mr Johnstone took place against a background of some undisputed matters. It was not disputed (the trial judge said it was common ground5) that the appellant's injury could have been prevented by him felling the tree from which the branch that struck him fell. The trial judge went on to say6: "[i]t is also common ground that the [appellant] had the right to fell any tree that he considered too much of a danger to leave standing, at least subject to any specific directions as to situations in which trees were not to be felled." The meaning to be given, and significance to be attached, to this proposition depends, in significant respects, upon what is meant by "too much of a danger", and upon the operation to be given to the final qualifying clause: "subject to any specific directions as to situations in which trees were not to be felled". What the trial judge meant by these expressions must be understood in the context of the whole of his reasons. In particular, what the trial judge said about the appellant's right to fell "any tree" is to be understood having regard to what the trial judge found to have been the substance of the communications between Mr Johnstone and the appellant about felling pulp trees. The trial judge prefaced his finding on this subject by saying that he thought that both Mr Johnstone and the appellant [2004] Aust Torts Reports ¶81-758 at 65,937 [8]. [2004] Aust Torts Reports ¶81-758 at 65,937 [8]. Kirby Hayne "seemed ... to be practical men, and men of reasonable intelligence"7. Recognising that there may have been some inaccuracies in the evidence that the appellant gave about his discussions with Mr Johnstone, the trial judge nonetheless concluded that he was "satisfied that Mr Johnstone did give the [appellant] a direction to the effect that he was not to fell pulp trees as he normally would; that the [appellant] rightly perceived Mr Johnstone's direction as prohibiting him from felling the pulp tree from which a branch ultimately fell and hit him; that when Mr Johnstone visited the [appellant] at the coupe from time to time, he did so for the purpose of checking that his direction was being complied with; and that the Mr Johnstone was supervising him with that purpose in mind."8 rightly perceived [appellant] that As the trial judge noted, this was a conclusion which was supported "to some extent by the expected sawlog and pulpwood production figures in the timber harvesting plan"9. The finding that Mr Johnstone gave the appellant a direction to the effect that he was not to fell pulp trees as he normally would was central to the trial judge's conclusion that the respondent had been negligent. It is a finding that was not disturbed on appeal to the Full Court. It is a finding that is critical to the disposition of the appeal to this Court. The trial judge expressed his conclusion about negligence in the terms of a particular of negligence appearing in the statement of claim in the action (failing to instruct the appellant to fell first any trees that potentially posed a danger and in failing, through supervision, to ensure that he did so10). Although the conclusion was expressed in this way, its essential basis was that Mr Johnstone's directions were rightly understood by the appellant as precluding him from acting as he normally would. [2004] Aust Torts Reports ¶81-758 at 65,938 [11]. [2004] Aust Torts Reports ¶81-758 at 65,938 [11]. [2004] Aust Torts Reports ¶81-758 at 65,938 [11]. 10 [2004] Aust Torts Reports ¶81-758 at 65,943 [33]. Kirby Hayne The appeal to the Full Court In the Full Court, Underwood CJ, who gave the principal reasons, held that the trial judge had fallen into error in concluding that Forestry Tasmania was negligent in failing to instruct the appellant "to fell first any trees that potentially posed a danger ... and in failing, through supervision, to ensure that he did so"11. This was held to be an error because Forestry Tasmania did not need to tell the appellant to first fell any trees that potentially posed a danger. This, in turn, was said to follow because it had been common ground at trial that the appellant had the right to fell any tree that he considered too much of a danger to leave standing. Rather, Underwood CJ concluded12: "The totality of the evidence leads to the conclusion that in the light of the instruction that this was a sawlog operation, the [appellant] assessed that the danger posed by leaving standing the tree from which the branch fell was not sufficiently high to require him to fell it first. It was an error of judgment on his part." In opening the appeal to this Court, counsel for the appellant put the principal weight of his argument on the contention that the Full Court erred when it said that Forestry Tasmania did not need to tell the appellant to "first fell any trees that potentially posed a danger". This, it was submitted, was too wide a proposition. Counsel said that it failed to give due weight to the need to give content not only to the expression "too much danger" but also to the trial judge's qualification of the general proposition that it was subject to any specific directions as to situations in which trees were not to be felled. In the course of oral argument, however, the focus of the appellant's argument shifted to the conclusion reached by Underwood CJ that the appellant "assessed that the danger posed by leaving standing the tree from which the branch fell was not sufficiently high to require him to fell it first" and that "[i]t was an error of judgment on his part" to leave it standing13. It would be wrong, however, to focus only on either of these propositions and consider their validity in isolation from the factual bases that were seen as underpinning them. 11 [2005] TASSC 17 at [55]-[56]. 12 [2005] TASSC 17 at [57]. 13 [2005] TASSC 17 at [57]. Kirby Hayne The issues in this Court The appellant's case in this Court, reduced to its essentials, was that the Full Court, wrongly, made the finding which it did about negligence upon an implicit assumption that the appellant had greater freedom to remove pulp trees than the trial judge found to be the consequence of the directions given by Mr Johnstone. The making of such an assumption was said to be revealed by the reference to it being common ground that the appellant had the right to fell any tree that he considered too much of a danger to leave standing, and the absence of immediate reference to, or taking into account of, what had been found to be the direction given by Mr Johnstone. As noted earlier, the Full Court did not disturb the trial judge's finding that Mr Johnstone gave the appellant a direction to the effect that he was not to fell pulp trees as he normally would. On the contrary, as Underwood CJ said14, this and the other findings made by the trial judge were "in accordance with the oral evidence and supported by the written evidence in the harvesting plan prescribing the proportion of sawlogs to pulp logs that were to be taken". Once the conclusion was reached that the trial judge's finding about the direction given to the appellant should not be disturbed, it followed that Forestry Tasmania, by its Senior Forestry Officer, had directed the appellant to work in a manner different from his normal pattern of work. In particular, rather than take out any and every pulp tree which would be brushed by a falling sawlog tree, the appellant was directed to leave pulp trees standing wherever possible. The direction that he not fell pulp trees "as he normally would" necessarily entailed that he was to leave standing a tree that would only be brushed by another falling tree. While it may have been an error of judgment on the part of the appellant to leave the particular tree standing, that is a matter that would bear upon questions of contributory negligence. But it remained open to the trial judge to conclude, as he did, that it was negligent to give a direction that, in effect, required the retention of pulp trees that would only be brushed by a falling sawlog tree. It was negligent because any tree that was brushed by another was a source of danger. That was why the appellant would ordinarily have felled any such tree. To require some to be left standing exposed the appellant to danger unnecessarily. There was no error in the trial judge's reasoning. The Full Court erred in disturbing the conclusion and orders that followed from it. 14 [2005] TASSC 17 at [48]. Kirby Hayne Orders The appeal must be allowed. The orders made by the Full Court of the Supreme Court of Tasmania on 23 March 2005 should be set aside. Because Forestry Tasmania's appeal to that Court against the findings made at trial about remains contributory negligence and contribution between defendants undetermined, the matter should be remitted to the Full Court of the Supreme Court of Tasmania for further consideration of the remaining aspects of Forestry Tasmania's appeal to that Court. The respondent should pay the appellant's costs in this Court. The costs of the trial of the action and of the appeal to the Full Court of the Supreme Court of Tasmania should be in the discretion of the Full Court. GUMMOW J. The appellant, the plaintiff in the action, was born in 1960 in New Zealand where he worked from about his 18th year as a tree feller. He settled in Tasmania in 1985 where he remained, save for a four year period beginning in 1993 when he returned to New Zealand. Throughout these years the plaintiff continued to work as a tree feller. He began to work for AG & GR Padgett Pty Ltd ("Padgett") in January 1998. On 14 September 1998, while working for Padgett as a tree feller at the Roses Tier coupe in a State forest in northern Tasmania, the plaintiff was struck by a branch that fell from a tree. He was rendered paraplegic. Shortly before the plaintiff sustained the injury he had felled two trees, each of which as it descended had brushed the tree from which the branch ultimately fell. The plaintiff had been aware of the possibility of felling the tree from which the branch dropped, but had refrained from doing so. This was because he believed that he was not allowed to fell that tree by reason of the requirements of the timber harvesting plan which applied to the forest coupe in which the plaintiff was working. The present respondent, Forestry Tasmania, a corporation constituted by s 6(1) of the Forestry Act 1920 (Tas) ("the Forestry Act") was relevantly the licensor of the Roses Tier coupe. It licensed the removal of wood from that area, and received royalties in consideration thereof. Its officer, Mr Peter Johnstone had held a commercial licence as a qualified tree feller since about 1984 and had attended the Roses Tier coupe and had discussions there with the plaintiff. The plaintiff brought an action in the Supreme Court of Tasmania for damages for breach of statutory duty and negligence against four defendants15. Forestry Tasmania was the third defendant. Before the trial, the plaintiff settled his claim against the first defendant, Padgett, and the second defendant, Wesley Vale Engineering Pty Ltd ("Wesley Vale"). Wesley Vale was the assignee of the original licensee and, at the relevant time, had held contractual rights to remove wood from certain areas of State forest; it had engaged Padgett to harvest timber from the coupe where the plaintiff was working. The fourth defendant was the State of Tasmania, but the action against the State was discontinued at an early stage. In the Supreme Court, Blow J, sitting without a jury, found that the plaintiff had been injured as a result of the negligence of Forestry Tasmania but reduced the damages recoverable by one-sixth for the plaintiff's contributory negligence. His Honour further adjudged that, for the purposes of s 3(3)(e) of the Wrongs Act 1954 (Tas), Padgett would have been liable to make a contribution to Forestry Tasmania to the extent of two-fifths if the total claim of the plaintiff had 15 Coote v AG & GR Padgett Pty Ltd [2004] Aust Torts Reports ¶81-758. been paid by Forestry Tasmania, and that Wesley Vale would have had no liability to make contribution to Forestry Tasmania. The trial was on the issue of liability alone without assessment of the quantum of damages. The Full Court of the Supreme Court (Underwood CJ, Crawford and Evans JJ) allowed an appeal by Forestry Tasmania and entered judgment for Forestry Tasmania against the plaintiff. The only parties to the Full Court appeal were Forestry Tasmania and the plaintiff. The Full Court did not determine the issue of contributory negligence raised by Forestry Tasmania. Consequently, that issue would remain outstanding should the appeal to this Court succeed. The issues on the appeal by the plaintiff (whom I shall hereafter call "the appellant") to this Court stem from the Full Court's conclusion that the "totality of the evidence" led to the conclusion that the danger to which the appellant succumbed was a consequence of "an error of judgment on his part", and that, consequently, the findings that Forestry Tasmania ("the respondent") breached its duty of care by failing to give a general instruction to the appellant to fell any tree that posed a danger, and by failing to supervise him to ensure that he complied with that instruction could not stand. For the reasons that follow, the appeal should be allowed and the decision The statutory setting Something first should be said respecting the statutory setting of this litigation. It received insufficient attention in the submissions to this Court, but is a matter of importance in a negligence case such as this16. The relevant statute is the Forestry Act, which has been amended considerably since the time of the appellant's injury17. In what follows, reference is made to the Forestry Act as it stood at that time. The respondent was charged by s 8 of the Forestry Act with functions including the development, control and delivery of land use and sustainable forest management policy (s 8(1)(a)), and the "exclusive management and control" of "all State forest" (s 8(1)(c)(i)), "all forest products on State forest ... including the processing, removal, selling or other disposition of those forest 16 See the authorities collected in Vairy v Wyong Shire Council (2005) 80 ALJR 1 at 19 [77]-[78]; 221 ALR 711 at 731-732. 17 See especially the Forestry Amendment (Miscellaneous) Act 1999 (Tas) which commenced on 1 January 2000 and repealed many of the provisions relevant to this case. products" (s 8(1)(c)(ii)), "the establishment and tending of forests, and all forest operations, on State forest" (s 8(1)(c)(iii)) and "the granting of all permits, licences, forest leases and other occupation rights, and the making of all contracts of sale" under the Forestry Act (s 8(1)(c)(iv)). Section 12T of the Forestry Act empowered the respondent to appoint persons as forest officers. Such persons could include employees of the respondent, persons employed in an Agency within the meaning of the Tasmanian State Service Act 1984 (Tas) or such other persons as the respondent considered appropriate. Forest officers were among those officials empowered by s 47 of the Forestry Act to enter and inspect land held under a permit or forest lease or other timber concession, lease or agreement. The making of inspections would appear to have facilitated the enforcement of s 46 of that Act, sub-s (1) of which created an offence for occupying, clearing or breaking-up any land in State forest without lawful authority. It may be taken for the purposes of this litigation that these provisions have a comparable effect to ss 40 and 41 of the Forest Practices Act 1985 (Tas) ("the Practices Act") dealing with the authority of forest practices officers18 in relation to compliance with that Act and with any applicable timber harvesting plans. Section 12X(1) and (2) of the Forestry Act established as a division of the respondent the Forest Practices Board, with such constitution, objectives, functions and powers as are conferred upon it by the Practices Act. Section 4C of the Practices Act provided that the Board had functions including issuing and maintaining the Forest Practices Code (s 4C(d)); overseeing standards for timber harvesting plans (s 4C(e)); and overseeing the training of forest practices officers (s 4C(g)). The Forest Practices Board was empowered by s 38(1) of the Practices Act to appoint any person employed by the respondent as an officer for the purposes of that Act. Section 39(1)(a) permitted the Board to authorise by warrant signed by the chairperson of the Board an officer appointed under s 38(1) to be a forest practices officer for the purposes of that Act. Section 39(5) provided that a forest practices officer "does not incur any personal liability for any act done or purported or omitted to be done by that officer acting as such in good faith under this Act". The functions and powers of a forest practices officer are comparable to those of a forest officer appointed under the Forestry Act, though relating specifically to compliance with the Forest Practices Code and any applicable timber harvesting plan. Further consideration of these functions and powers is not called for here, although it would appear that each of a forest officer and 18 Appointed pursuant to s 39(1) of the Practices Act. forest practices officer performed similar supervisory roles in relation to all forest operations. Division 1 of Pt III (ss 17-26) of the Practices Act dealt with timber harvesting plans. Section 18(1) permitted any person to "prepare, or cause to be prepared, a timber harvesting plan in relation to any land" and "make application to the Board for approval of that plan". Such a plan was to contain, among other things, specifications of forest practices to be carried out, an estimate of the period during which harvesting would be carried out, and the name of the timber processor by whom the harvested timber is expected to be processed (s 18(2)). The Board was empowered by s 19 to approve, refuse to approve, or amend the plan. Persons having the immediate right to process timber harvested on Crown land, and owners of private land or their assignees19, were forbidden by s 17(4) to "harvest timber, or cause or allow timber to be harvested, from land in respect of which there is not in existence at the time of harvesting an approved timber harvesting plan". Contravention of this provision was an offence punishable by fine. Section 20 provided: "An approved timber harvesting plan authorizes the carrying out or causing or permitting to be carried out of the harvesting of timber and any operations associated with the harvesting of timber on the land specified in the plan in accordance with the provisions of that plan during the period specified in the plan." Of central importance was s 21(1) which stipulated: "(1) Where a timber harvesting plan has been approved by the Board in respect of the harvesting of timber on any land and is in force under this Act: any person who in the process of harvesting timber on that land or in the process of carrying out any operations associated with the harvesting of timber on that land contravenes or fails to comply with the provisions of the plan 19 That is, persons falling within the definition of "responsible person" in s 17(1). See also the definition of "timber processor" in s 3(1). is guilty of an offence and is liable on summary conviction to a fine not exceeding 150 penalty units or a daily fine not exceeding 10 penalty units". The facts As indicated earlier in these reasons, by the time of his accident the appellant was a very experienced tree feller. Prior to August 1998, he felled trees for Padgett according to harvest plans requiring clear felling as well as plans requiring selective logging or "regrowth retention". The appellant was aware of the need to comply with timber harvesting plans. Mr Johnstone had been the appellant's "bush boss" or logging foreman when he began to work for Padgett. Each respected the skills and abilities of the other. Mr Johnstone ceased working for Padgett some two months before the appellant's accident. He was then appointed an officer of the respondent. In August 1998, Padgett engaged the appellant to fell trees in the logging coupe situated at Roses Tier in a State forest. He commenced that work in mid-August 1998. In this context, as before, he had occasion to work with Mr Johnstone. However, Mr Johnstone now exercised the respondent's statutory powers of supervision over the coupe in which the appellant was injured. Mr Johnstone visited the coupe regularly and saw it as his function to exercise the powers conferred on a forest officer by the Forestry Act and the applicable timber harvesting plan. The timber harvesting plan applicable to the coupe in which the appellant was working was an approved plan under Div 1 (ss 17-26) of Pt III of the Practices Act. The plan was approved on 15 August 1998, approximately one month before the appellant was injured. It was drafted and approved by employees of the respondent and was to apply until 30 June 2000. Mr Michael J Smith, who approved the plan, appears to have been a forest practices officer. Mr Smith did not give evidence. The operation prescribed by the plan was identified as an overstorey removal/shelterwood operation. These terms have a settled meaning in forestry parlance as synonymous with regrowth retention. This involves the forest overstorey, previously retained to provide protection for new regrowth from climatic extremes, being reduced by harvesting so as to allow further growth of the new crop. Within the timber industry trees may be categorised as sawlog trees or pulpwood trees. Sawlog trees consist of those the logs of which are of a quality suitable to be milled, whereas pulpwood consists of wood suitable only for pulping. The evidence of the appellant was that a sawlog tree is "healthy looking", whereas a pulp tree might be "twisty" or bent or have rotten segments. One could generally tell a sawlog tree from a pulpwood tree by looking at it. The appellant had assessed the tree from which a branch fell and hit him to be a pulpwood tree. Ordinarily, an overstorey removal/shelterwood operation would permit the removal of both sawlogs and pulpwood. The appellant gave evidence that this would involve removal of the pulpwood first. However, this timber harvesting plan contained terms described by Underwood CJ as "somewhat unusual" relating to the harvesting of sawlogs and pulpwood respectively. The plan required that: This [sic] overstorey treated removal/shelterwood operation, however sawlog production is to be maximised. Trees in the shelterwood section are to be retained at a basal area of 12m2 or approximately one tree every two tree lengths. These trees retained are to be pulpwood quality. to be coupe Category 2 & 8 sawlogs are to be maximised if markets exist. Remaining head logs are to be sold for pulp, however the aim of this operation is [to] maximise sawlog production and minimise pulpwood. Sections that are high in pulpwood are not to be logged. These areas are to be treated at future harvesting operations." (emphasis added) The plan specified a total volume of timber expected to be produced of 5850 cu m/t in the proportions of 2850 cu m/t of sawlog and 3000 cu m/t of pulpwood. Significantly, the plan also provided that "[d]irection from a Forest Officer will be supplied to help with selection" and "[a]ll trees that are considered to be un-safe by the contractor are to be removed". The appellant had seen the timber harvesting plan prior to commencing work at the coupe. It had been shown to him by Mr Johnstone, following which there was a discussion about it. When the appellant first saw the plan, he noticed the terms respecting pulpwood harvesting and thought they were unusual. He asked Mr Johnstone about the felling of pulp trees and the latter indicated that they were only there to take the saw logs, and another contractor was to take the pulpwood subsequently. The appellant "thought that was a bit strange" in that the plan said one thing and yet he was told another. The appellant insisted under cross-examination that what Mr Johnstone had said to him was that he was not to remove pulpwood trees unless he was going to "barrel" them, that is, hit them directly with another falling tree and that that was in fact what he had done. It was much more dangerous to barrel a tree than to brush it as a lot of broken material would be produced. Mr Johnstone did not at any stage during their conversations use the term "barrel", but the trial judge accepted that that was the effect of their discussions: "I am satisfied that Mr Johnstone did give the [appellant] a direction to the effect that he was not to fell pulp trees as he normally would". As previously indicated, the appellant said normal practice would involve removal of the pulpwood trees before the sawlog trees. The appellant understood the direction from Mr Johnstone to mean that if he was merely going to "brush" another tree or touch the branches of that tree, he was not to remove the second tree before felling the first. These instructions by Mr Johnstone were at the core of the understanding and direction by which the appellant was to interpret and follow the harvesting plan. Counsel for the appellant pointed to evidence that, prior to the accident on 14 September 1998, the appellant had adopted a systematic practice of not removing pulpwood trees he had determined would be brushed. A representative of Wesley Vale observed in a "forest operations report" that extensive limb damage was apparent "due to falling prescription", that this damage was not within acceptable limits and that some trees were "potentially dangerous". This practice was pursued despite the appellant's recognition that all pulpwood trees were potentially dangerous because "anything can happen with a pulp tree". The systematic nature of the appellant's conduct was at the heart of the trial judge's findings respecting Mr Johnstone's direction, and that he was satisfied that: "the [appellant] rightly perceived Mr Johnstone's direction as prohibiting him from felling the pulp tree from which a branch ultimately fell and hit him; that when Mr Johnstone visited the [appellant] at the coupe from time to time, he did so for the purpose of checking that his direction was being complied with; and that the [appellant] rightly perceived that Mr Johnstone was supervising him with that purpose in mind". Blow J found that the appellant's decision not to fell the tree by which he was injured was "consistent with obedience to Mr Johnstone's instructions". It will be recalled that the pulpwood tree from which a branch dropped and hit the appellant had been brushed by two sawlog trees the appellant had recently felled. It was well known in the timber industry that if trees were brushed and damaged, there was a possibility (indeed it was by no means unusual) that branches might fall. These branches are capable of causing death or severe injury and, significantly, were known in the industry as "widow- makers". Findings of the trial judge Blow J found that the respondent owed to the appellant a duty to take reasonable care for his safety in its supervision, management and control of the timber harvesting operations in which he was engaged. His Honour, relying on Crimmins v Stevedoring Industry Finance Committee20, founded this duty upon the circumstance that the respondent had or should have had knowledge of the special risks to which workers in the timber industry were subject and was in a position to exercise its statutory powers so as to minimise those risks. Officers of the respondent were well aware that harvesting operations were being undertaken in the area of forest in which the appellant was injured. The risk of injuries being caused when severed branches later fall from trees was known and was reasonably foreseeable, as was the risk of injury from falling trees. The Full Court rejected a challenge to the correctness of these findings and no further challenge is made in this Court. As to breach of duty, Blow J found the respondent negligent "in failing to instruct [the appellant] to fell first any trees that potentially posed a danger" of the kind which eventuated and in failing through supervision to ensure that he did so. His Honour observed that such an instruction would have been the only reasonable response to a foreseeable risk of injury. The particular injury sustained by the appellant was foreseeable because of the instructions given by Mr Johnstone and because of the obvious damage to the trees in the coupe observed by Wesley Vale's representative. The trial judge found that the appellant's act in walking under the damaged pulpwood tree "only minutes" after it had been brushed "went beyond misjudgement and inadvertence, and amounted to contributory negligence". The appellant was alert to the risk that there might be a loose branch in the damaged pulpwood tree and that such a branch might fall and hit him. When seeking to walk to another sawlog tree on the far side of the pulpwood tree, he could easily have taken a less direct route. Walking under a tree in such a situation would ordinarily be considered unsafe by workers in the timber industry. Blow J also found, "[l]ess significantly", that the appellant was negligent in failing to fell the pulpwood tree. The only reasonable course would have been for the appellant to have defied what he perceived to be the effect of Mr Johnstone's directions, and felled the tree for the sake of his own safety. 20 (1999) 200 CLR 1. The Full Court The critical conclusion of Underwood CJ, who gave the leading judgment in the Full Court, was that the reason why the appellant failed first to fell the tree from which the branch fell was not because he had been instructed not to do so by Mr Johnstone; it was because of the appellant's assessment that the danger posed by leaving the tree standing was not sufficiently high to require him to fell it first. This was characterised as an "error of judgment on his part" not on the part of the respondent. It appeared not to be disputed by the respondent before this Court that this finding was contrary to the factual basis of the decision of the trial judge. Underlying this conclusion reached by Underwood CJ was the supposition that it was "common ground" at trial that the appellant had the right "to first fell any trees that potentially posed a danger". The appellant had accepted during his cross-examination that if he considered any tree to be unsafe he could remove it and the trial judge had found that the appellant's experience suggested he should have felled the particular pulp tree that caused him injury. Resolution of the appeal The appellant's main contention is that the Full Court made a factual error by substituting the supposition that the appellant was at liberty to fell any tree that posed a potential danger for the finding of the trial judge, who accepted the case presented by the appellant, that he understood himself to be entitled only to fell any tree that posed too much of a danger. This contention should be accepted. By "trees that potentially posed a danger" Blow J meant "all pulpwood trees that were likely to have limbs torn out of them by other falling trees prior to felling those other trees". There was thus some overlap between the classes of trees likely to be "brushed" and trees that "potentially" posed a danger, but trees likely to be "barrelled" were well within the latter class. Ordinarily, the appellant would have felled any trees that potentially posed a danger and this would include some, but not all, trees likely to be brushed. However, on the facts as found by Blow J, the instructions given by Mr Johnstone required the appellant to restrict the class of pulpwood trees appropriate for felling on safety grounds to trees likely to be barrelled. This class of trees approximated the class of trees which it was "common ground" at trial that the appellant had the right to fell, namely, "any tree that he considered too much of a danger to leave standing" (emphasis added). This turned, as was submitted by counsel for the appellant's practical interpretation of the degree of danger upon which he might act to fell a pulpwood tree. The reasons of Underwood CJ reveal in some places, but not throughout, a recognition of this conceptual substructure. the appellant, upon It should be observed that Underwood CJ also recognised that "[t]he operation in which the [appellant] was engaged called for a considerable degree of judgment" about a number of matters. These matters included "whether safety considerations called for the felling of a pulpwood tree or trees before felling a sawlog tree". The nub of the issue is thus the exercise of judgment by the appellant which was required by the juxtaposition of the appellant's concern for his own safety with the perceived requirements of the timber harvesting plan. That exercise of judgment was necessarily informed by the "unusual" requirements that pulpwood production be maximised and that the appellant not fell pulpwood trees as he ordinarily would. The appellant was restricted by the requirement imposed upon him by Mr Johnstone and was obliged to adopt an attitude to felling of pulpwood trees less favourable to his own safety than he otherwise would have adopted. The Full Court erred in failing to accord significance to the unusual requirements of the timber harvesting plan with the gloss of Mr Johnstone's instructions to the appellant. Consequently there was a failure to differentiate between the class of trees the appellant would ordinarily have been entitled to fell and the class of trees the appellant believed himself entitled to fell in this case, a belief formed by the instructions of Mr Johnstone. The Full Court having held that it had been "entirely appropriate" for the trial judge to accept the appellant's evidence of what Mr Johnstone had said to him, it was not open to their Honours to treat the appellant's own conduct as in some way severing the causal connection between those instructions and the consequences of the appellant's exercise of judgment in relation to the pulp tree by which he was injured. To do so neglected critical elements of the evidence presented to, and accepted by, the trial judge. The legislative requirements respecting timber harvesting plans and the statutory powers exercised by Mr Johnstone underpinned the conclusion at which the trial judge arrived. Without the statutory authority with which Mr Johnstone's instructions were imbued the appellant would have been at liberty to fell any tree he considered potentially dangerous. In this Court, the respondent failed squarely to meet the appellant's arguments respecting the instructions of Mr Johnstone and the terms of the timber harvesting plan, as well as those asserting a conceptual error on the part of the Full Court. The respondent asserted the correctness of the Full Court's conclusion. The essence of the respondent's argument was that the danger to which the appellant succumbed was so great, and consequently his contributory negligence was of such a magnitude, that there remained no room for any liability to attach to the conduct of the respondent. However, this submission relies upon a selective use of the evidence and of the findings of the trial judge, resulting in a failure to keep the findings respecting the conduct of the appellant in a proper perspective. The appellant was correct to submit that the conclusion of Blow J respecting the respondent's negligence must be read in light of his Honour's acceptance that Mr Johnstone gave the appellant certain instructions and supervised their performance, and that those instructions required a variance to the system of work the appellant would otherwise have adopted. Conclusion The appeal should be allowed with costs. The orders of the Full Court made on 23 March 2005 should be set aside. The respondent should pay the appellant's costs of so much of the appeal to that Court as was determined by the orders of 23 March 2005. The matter should be remitted to the Full Court for determination of the issues raised by pars 7 and 8 of the notice of appeal to that Court dated 28 July 2004 with the question of the costs of the trial and of the further hearing of the appeal to the Full Court reserved to the Full Court.

HIGH COURT OF AUSTRALIA BRISBANE CITY COUNCIL APPELLANT AND RESPONDENT Brisbane City Council v Amos [2019] HCA 27 4 September 2019 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation S L Doyle QC with A L Wheatley for the appellant (instructed by Brisbane City Council) F L Harrison QC with P G Jeffery for the respondent (instructed by Keller Nall & Brown Solicitors) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Brisbane City Council v Amos Limitation of actions – Debts created by statute – Debts secured by charge – Where Council commenced proceeding against respondent for overdue rates and charges – Where overdue rates and charges secured by charge – Where respondent argued claim was an action to recover a sum recoverable by virtue of an enactment under s 10(1)(d) of Limitation of Actions Act 1974 (Qld) – Where Council argued claim was an action to recover a principal sum of money secured by a charge and subject to s 26(1) of the Act – Where proceeding falls within both ss 10(1)(d) and 26(1) – Whether s 26(1) applies to exclude operation of s 10(1)(d). Words and phrases – "Barnes v Glenton", "claim in rem", "limitation of actions", "overlap between limitation periods", "personal claim", "real claim", "sums secured by mortgage or charge", "what claims are within limitation statutes". Limitation of Actions Act 1974 (Qld), ss 10(1)(d), 26(1). KIEFEL CJ AND EDELMAN J. Introduction The appellant, the Brisbane City Council ("the Council"), is responsible for the local government of Brisbane. The respondent, Mr Amos, was the registered owner of rateable land on which the Council levied various rates and charges. The Council acted pursuant to its statutory duties and powers to levy rates and charges1. Legislation also provides that "overdue rates and charges are a charge on the land"2. The Council brought this proceeding relevantly to recover overdue and unpaid rates, with interest, levied upon Mr Amos' rateable land by rates notices issued in the period 30 April 1999 to 9 January 2012. Mr Amos resisted the Council's claim for a number of different reasons. Only one remains in this Court. It is which of two potentially applicable limitation periods, a six year limitation period or a 12 year limitation period, applies to the Council's claims. If the Council is correct that the only limitation period that applies is a provision that creates a 12 year limitation period, then there is a second question concerning the manner of operation of that provision in relation to the Council's claim for interest. The question of statutory interpretation on this appeal arises from two provisions in the Limitation of Actions Act 1974 (Qld) ("the 1974 Limitation Act"). The first provision is s 26(1), which contains a 12 year limitation period that applies to an action "to recover a principal sum of money secured by a mortgage or other charge on property". This provision applies to a wide range of debts including debts created by simple contract and secured by a mortgage or other charge, or vendor's lien3, whether over realty or personalty and debts created by covenant and secured by charge or mortgage; and historically it also applied to judgment debts, which were treated as charges upon land and "payable 1 City of Brisbane Act 1924 (Qld), ss 48, 62; City of Brisbane Act 2010 (Qld), s 96 and s 98, empowering City of Brisbane (Finance, Plans and Reporting) Regulation 2010 (Qld), s 59(1)(a), (b), now City of Brisbane Regulation 2012 (Qld), s 119(1)(a), (b). Rates levied under the earlier City of Brisbane Act 1924 (Qld) prior to the commencement of the City of Brisbane Act 2010 (Qld) are continued in force as if levied under the later Act: see City of Brisbane Act 2010 (Qld), s 257. 2 Local Government Act 1993 (Qld), s 1037A(1). See, now, City of Brisbane Act 2010 (Qld), s 97(2). 3 Williams, A Treatise on the Law of Vendor and Purchaser, 2nd ed (1911), vol 2 at Edelman out of any land"4. The provision also encompasses, relevantly to this appeal, debts created by statute and secured by charge. The second provision, which overlaps with s 26(1), is s 10. Section 10 creates overlapping limitation periods for a number of the debts relevant to s 26(1): a six year limitation period for an action founded on a simple contract5; and a 12 year limitation period for an action on a specialty6, including a covenant, and also for an action upon a judgment7. And, relevantly to this appeal, s 10(1)(d) provides a six year limitation period for "an action to recover a sum recoverable by virtue of any enactment". The correct approach to the overlap between s 26(1) and s 10(1)(d) of the 1974 Limitation Act cannot be understood without an appreciation of the history of interpretation of the predecessor provisions and the late nineteenth century solution to the issue of overlap, which had been settled for a century when the 1974 Limitation Act was enacted. As the reasons below explain, until the late nineteenth century the overlap between the provisions was resolved by confining the first limitation period, namely for sums of money secured by charge, to real or proprietary claims. The second group of limitation periods applied only to personal claims. This approach of separate pigeonholes was ameliorated from the late nineteenth century when it was held that the limitation period for sums of money secured by charge would also bar personal claims. In 1899, in Barnes v Glenton8, it was effectively held that the application of both limitation periods to personal claims meant that a defendant could plead the shorter limitation period. In oral submissions, the Council accepted that its claim was a personal claim. It was not "in rem" or a real claim. The Council urged this Court to depart from the decision in Barnes v Glenton. That submission should not be 4 Real Property Limitation Act 1833 (UK) (3 & 4 Will IV c 27), s 40; Real Property Limitation Act 1874 (UK) (37 & 38 Vict c 57), s 8. See Henry v Smith (1842) 4 Ir Eq Rep 502 at 504-505, 507; M'Donnell v Fitzgerald [1897] 1 IR 556 at 561. See, now, the same period specifically for judgments: 1974 Limitation Act, s 10(4), following Limitation Act 1939 (UK), s 2(4), which was "tidying up existing law": See United Kingdom, Parliamentary Debates, House of Commons, 2 February 1939, vol 343, col 489. 5 1974 Limitation Act, s 10(1)(a). 6 1974 Limitation Act, s 10(3). 7 1974 Limitation Act, s 10(4). Edelman accepted. Barnes v Glenton has been consistently followed by judicial authority and textbook writers, and hence practitioners, for more than a century. It was part of the understood fabric upon which the 1974 Limitation Act was enacted. It is a coherent approach. It was followed by a majority of the Court of Appeal of the Supreme Court of Queensland. The appeal must be dismissed. The overlap between s 10 and s 26 of the 1974 Limitation Act Section 10 of the 1974 Limitation Act relevantly provides as follows: "Actions of contract and tort and certain other actions The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose – subject to section 10AA, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person; an action to recover a sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of a penalty or forfeiture. (3) An action upon a specialty shall not be brought after the expiration of 12 years from the date on which the cause of action accrued. (3A) Subsection (3) does not affect an action in respect of which a shorter period of limitation is prescribed by any other provision of this Act." Although s 10(1) is expressed in terms that the action "shall not be brought", this has long been understood as barring the "remedy", that is, as permitting a good defence to be pleaded but not as extinguishing the underlying rights9. It has been accepted throughout this litigation that the Council's "action", 9 Courtenay v Williams (1844) 3 Hare 539 at 551-552 [67 ER 494 at 500]; In re Rownson; Field v White (1885) 29 Ch D 358 at 364; Jones v Bellgrove Properties Ltd [1949] 2 KB 700 at 704. See also The Commonwealth v Mewett (1997) 191 CLR 471 at 534-535; [1997] HCA 29. Edelman defined in s 5(1) of the 1974 Limitation Act as "any proceeding in a court of law", for unpaid rates will fall within s 10(1)(d), and thus permit a good defence to be pleaded by Mr Amos after the expiration of six years, unless that provision is excluded10. The issue is whether s 26, where it applies, excludes the operation of each of the limitation periods in s 10. Section 26 of the 1974 Limitation Act relevantly provides as follows: "Actions to recover money secured by mortgage or charge or to recover proceeds of the sale of land (1) An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on property whether real or personal nor to recover proceeds of the sale of land after the expiration of 12 years from the date on which the right to receive the money accrued. (5) An action to recover arrears of interest payable in respect of a sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land or to recover damages in respect of such arrears shall not be brought after the expiration of 6 years from the date on which the interest became due." It is also common ground that s 26(1) and (5) of the 1974 Limitation Act apply to the Council's claim for overdue rates and charges, which are a charge on the land11. The treatment of the overlap between the antecedent provisions before 1874 Historically, there were two areas of apparent overlap between the antecedent provisions to ss 10 and 26. The first area of overlap was in relation to an action to recover the principal sum of money in respect of a debt secured by a charge and created by specialty. The limitation provision for a specialty12 10 Brisbane City Council v Amos (2016) 216 LGERA 312 at 325 [59]; Amos v Brisbane City Council (2018) 230 LGERA 51 at 63 [28], 72 [61], 75 [74]. 11 Amos v Brisbane City Council (2018) 230 LGERA 51 at 59 [14], 75 [73]. See also Hornsey Local Board v Monarch Investment Building Society (1889) 24 QBD 1 12 Civil Procedure Act 1833 (UK) (3 & 4 Will IV c 42), s 3. Edelman included not merely covenants but also, until 193913, a debt created by statute14. The second area of overlap arose where arrears of interest were sought in respect of a debt created by covenant or specialty and secured by a mortgage or other charge. Prima facie, the antecedent provisions to ss 10 and 26 both appeared to be applicable to a claim for principal or interest, since the claim in each case appeared to be both an action to recover money on a covenant or specialty and an action for a sum secured by a mortgage or other charge. The apparent overlap in relation to claims to the principal The origins of the limitation period for an action to recover a principal sum of money secured by a mortgage or other charge lie in s 40 of the Real Property Limitation Act 1833 (UK)15 ("the 1833 Limitation Act"), which prescribed a 20 year limitation period for a mortgage debt from the time that the cause of action arose. This limitation period was the same period as that for actions of ejectment16 and was based upon the previous judicial assumption that if a mortgagor remained in possession of the land for more than 20 years without acknowledging the mortgage then that mortgage was deemed to have been satisfied17. If a debt was created by simple contract there was some overlap between the 20 year limitation period in s 40 of the 1833 Limitation Act and the six year limitation period in s 3 of the Limitation Act 1623 (21 Jac I c 16) in relation to claims to the principal sum of money. In those cases, the overlap was resolved by recognising a difference between a "real" claim and a "personal" claim. As Lightwood observed, "[w]ith respect to sums charged on land, there may be a real remedy against the land, and at the same time a personal remedy against the debtor"18. The real claims to recover money were by sale of the land or by rent 13 Limitation Act 1939 (UK), s 2(1)(d). See Great Britain, Law Revision Committee, Fifth Interim Report (1936) Cmd 5334 at 9. 14 The Cork and Bandon Railway Co v Goode (1853) 13 CB 826 at 835-836 [138 ER 1427 at 1431-1432]; Shepherd v Hills (1855) 11 Ex 55 at 67 [156 ER 743 at 748]. 15 3 & 4 Will IV c 27. 16 Sutton v Sutton (1882) 22 Ch D 511 at 515. 17 Wood, A Treatise on the Limitation of Actions at Law and in Equity, 4th ed (1916), vol 1 at 130, fn 53. See also Sutton v Sutton (1882) 22 Ch D 511 at 515. 18 Lightwood, A Treatise on Possession of Land (1894) at 190. See also Kibble v Fairthorne [1895] 1 Ch 219 at 224. Edelman obtained from occupation of the land19. It was held that the shorter six year limitation period applied to any personal action, with the longer 20 year limitation period applying to any real claims20. In the most common scenario of possible overlap, namely a debt created by covenant and secured by charge or mortgage, there was no issue before 1874. This was because a 20 year limitation period applied to both a claim to recover a principal sum of money secured by a mortgage or other charge under s 40 of the 1833 Limitation Act and a claim on a covenant under s 3 of the Civil Procedure Act 1833 (UK)21. The apparent overlap in relation to claims to arrears of interest In the nineteenth century the issue that arose from the apparent overlap in relation to arrears of interest was that there was a six year limitation period for real claims – that is, claims "against the land"22 – in s 42 of the 1833 Limitation Act and a 20 year limitation period for personal claims on a covenant in s 3 of the Civil Procedure Act23. This overlap was again resolved by treating the different provisions as concerned with different remedies. The six year limitation period for those claims in s 42 of the 1833 Limitation Act applied to real claims in Chancery. By contrast, the 20 year limitation period in s 3 of the Civil Procedure Act24, passed by Parliament only three weeks later25 "to deal with ... the personal 19 Levy v Williams [1925] VLR 615 at 625. 20 Toplis v Baker (1789) 2 Cox 118 at 123 [30 ER 55 at 57]. See also Brocklehurst v Jessop (1835) 7 Sim 438 at 442 [58 ER 906 at 907]; Barnes v Glenton [1899] 1 QB 21 3 & 4 Will IV c 42. 22 Kibble v Fairthorne [1895] 1 Ch 219 at 224. 23 3 & 4 Will IV c 42. 24 3 & 4 Will IV c 42. 25 Although, with retroactive operation, coming into effect earlier: see Civil Procedure Act 1833 (UK) (3 & 4 Will IV c 42), s 44; Paget v Foley (1836) 2 Bing NC 679 at 689 [132 ER 261 at 266]. Edelman action only"26, applied to personal actions on the covenant or specialty. Those actions were brought at common law and were not available in Chancery27. The leading case that recognised the different universes in which the two provisions operated was Hunter v Nockolds28. The issue arose in that case in relation to a real action brought against an alienee of the land29. The Lord Chancellor recognised that the generality of the words "action or suit" in s 42 of the 1833 Limitation Act30 was capable of encompassing both common law actions and Chancery suits, which suggested that the provision concerning claims to recover sums charged on land was a "general enactment"31 covering both real and personal claims. But the Lord Chancellor held that it was well established, in England and in Ireland32, that s 42 of the 1833 Limitation Act was concerned only with a real claim, and that the separate limitation period in s 3 of the Civil Procedure Act33 applied to a personal action34. Hence, the real claim in Hunter v Nockolds was subject to the six year limitation period35. By contrast, any 26 Hunter v Nockolds (1850) 1 Mac & G 640 at 652 [41 ER 1413 at 1417]. 27 In re Turner; Turner v Spencer (1894) 43 WR 153 at 154. 28 (1850) 1 Mac & G 640 [41 ER 1413]. 29 (1850) 1 Mac & G 640 at 648 [41 ER 1413 at 1416]. 30 (1850) 1 Mac & G 640 at 652 [41 ER 1413 at 1417]. 31 Paget v Foley (1836) 2 Bing NC 679 at 690 [132 ER 261 at 266]. 32 (1850) 1 Mac & G 640 at 653-654 [41 ER 1413 at 1418]. In Ireland see the decisions of Lord St Leonards in Harrisson v Duignan (1842) 2 Dr & War 295 and Hughes v Kelly (1843) 5 Ir Eq Rep 286. 33 3 & 4 Will IV c 42. 34 (1850) 1 Mac & G 640 at 653 [41 ER 1413 at 1417-1418]. See also Paget v Foley (1836) 2 Bing NC 679 [132 ER 261]; Strachan v Thomas (1840) 12 A & E 536 35 (1850) 1 Mac & G 640 at 654 [41 ER 1413 at 1418]. See also Harrisson v Duignan (1842) 2 Dr & War 295 at 303, 305-306; Hughes v Kelly (1843) 5 Ir Eq Rep 286 at 292-293. Edelman personal action on a covenant or specialty would be subject to a 20 year limitation period36. The treatment of the overlap in relation to claims to the principal after 1874 In 1874, s 8 of the Real Property Limitation Act 1874 (UK)37 ("the 1874 Limitation Act") reduced the limitation period for actions to recover a sum secured by a mortgage or other charge, previously in s 40 of the 1833 Limitation Act. The reduction was from 20 years to 12 years. In Jay v Johnstone38, Lindley LJ said that one "key" to the 1874 Limitation Act was to be found in the preamble, which provided that "it is expedient further to limit the times within which actions or suits may be brought for the recovery of land or rent, and of charges thereon". This was consistent with the object of the 1833 Limitation Act six years"39. Nevertheless, despite this view of the limited change effected by s 8 of the 1874 Limitation Act, within a decade of the passage of that Act the English Court of Appeal revisited the question of overlap in relation to claims to the principal within s 8 of the 1874 Limitation Act. "relieve charges beyond arrears from land This question of overlap was revisited in Sutton v Sutton40. The issue in that case was whether s 8 of the 1874 Limitation Act applied only to real actions to recover a sum secured by mortgage or other charge, leaving other limitation periods to apply to personal actions. The appellant relied upon the 12 year limitation period in a personal action for recovery of a principal sum secured by mortgage or other charge. The respondent demurred to that defence, alleging that the applicable limitation period was the 20 year limitation period for an action on a covenant. The Court of Appeal held that the 12 year limitation period applied. The Master of the Rolls pointed out that the opening words of s 8 of the 1874 Limitation Act stated that "[n]o action or suit or other proceeding shall be brought". This encompassed actions at common law (the personal actions) as 36 See Paget v Foley (1836) 2 Bing NC 679 at 690-691 [132 ER 261 at 266]; Strachan v Thomas (1840) 12 A & E 536 at 558-559 [113 ER 916 at 924]; Manning v Phelps (1854) 10 Ex 59 at 61-62 [156 ER 355 at 356-357]. See also Lightwood, The Time Limit on Actions (1909) at 156-157. 37 37 & 38 Vict c 57. 38 [1893] 1 QB 189 at 191. 39 Hunter v Nockolds (1850) 1 Mac & G 640 at 651 [41 ER 1413 at 1417]. 40 (1882) 22 Ch D 511. Edelman well as suits in equity (the real claims)41. Although this reasoning applied equally to claims for arrears of interest, Hunter v Nockolds was distinguished by Cotton LJ on the basis that the overlapping provisions concerning interest had been, and were still, located in two different Acts that had been passed only three weeks apart42. The consequence of the decision in Sutton v Sutton for claims to a principal sum, as Cotton LJ later explained, was to expand the operation of s 8 to personal claims43. The decision in Sutton v Sutton was said to have come as "a surprise to the profession generally"44. As the trial judge in Sutton v Sutton later observed, one reason why no appeal was brought to the House of Lords may have been that the respondent was nevertheless able to obtain payment of the money due under the covenant by way of amendments to the statement of claim45. Although the decision in Sutton v Sutton might have been controversial in applying a provision such as s 8 to personal claims, it would have been far more controversial if it had also disapplied any other, shorter, limitation period. It did not do this. In the words of Stirling J, the decision did not interpret s 8 as though it said that "an action or suit or other proceeding to recover money charged on land may be brought up to the end of twelve years, but not afterwards"46. If a shorter limitation period applied to the personal claim then, as Monroe J said in In re Conlon's Estate47, "the mere fact that the personal claim cannot be enforced does not deprive the creditor of his remedy against the land". Section 8 would apply a 12 year limitation period to that real claim. 41 (1882) 22 Ch D 511 at 516. 42 (1882) 22 Ch D 511 at 518-519. See also Carson and Bompas, Shelford's Real Property Statutes, 9th ed (1893) at 199; Lightwood, A Treatise on Possession of Land (1894) at 191. 43 In re Frisby; Allison v Frisby (1889) 43 Ch D 106 at 116. 44 In re Frisby; Allison v Frisby (1889) 43 Ch D 106 at 108. See also National Bank of Tasmania Ltd (In liq) v McKenzie [1920] VLR 411 at 419. 45 In re Turner; Turner v Spencer (1894) 43 WR 153 at 154. 46 Firth v Slingsby (1888) 58 LT 481 at 483. 47 (1892) 29 LR Ir 199 at 209. See also London and Midland Bank v Mitchell [1899] 2 Ch 161 at 165. Edelman This limited effect of Sutton v Sutton was confirmed in Barnes v Glenton48. In that case, a loan was given by simple contract and secured by a charge on land. No action was brought during the six year limitation period under the Limitation Act 162349 for a simple contract without specialty. However, the lender argued that the limitation period that governed the simple contract was the 12 year limitation period for actions to recover a sum secured by charge. The Court of Appeal unanimously rejected this submission. Each of A L Smith and Collins LJJ explained that Sutton v Sutton was concerned with a covenant (so that s 8 of the 1874 Limitation Act would provide a shorter limitation period) rather than a simple contract (which had a shorter limitation period than s 8 of the 1874 Limitation Act)50. This difference was material because the limitation period for an action on a covenant (20 years) was longer than the limitation period for an action to recover a sum secured by mortgage (12 years). The shorter limitation period of 12 years had been applied. As Collins LJ said in Barnes v Glenton51: "The words of the section debar the creditor from proceeding after twenty years; they do not confer any right of suit upon him which he did not before possess. The statutory prohibition against taking proceedings after the period named is not a statutory permission given to take them within that period". The same point was made by Romer LJ in Barnes v Glenton, who added that the two Acts did not conflict: the shorter limitation period of six years applied to personal actions to enforce a simple contract debt and the limitation period of 12 years applied to any claims against the land or on a covenant for a sum of money secured by a mortgage or other charge on land52. The effect of the decision in Barnes v Glenton was thus to confirm that in personal claims to recover a sum secured by mortgage or other charge there could be overlapping limitation periods, but any longer limitation period would not extend a shorter limitation period. However, the potential application of both the shorter and the longer limitation periods to a personal claim to recover a 49 21 Jac I c 16, s 3. 50 [1899] 1 QB 885 at 888, 890. 51 [1899] 1 QB 885 at 889. 52 [1899] 1 QB 885 at 891. Edelman principal sum secured by a charge did not mean that the longer limitation period was redundant. The longer limitation period would still apply to a real action "against the land", such as an action for an order for sale of the land. It might also apply if an exception such as disability or acknowledgement of the debt applied to the shorter limitation period but not to the longer limitation period53. in Barnes v Glenton, As A L Smith LJ had observed the concurrent operation of shorter limitation periods for personal claims was supported by the textbooks as well as judicial authority54. And for more than a century after Barnes v Glenton, until judges and academic authors consistently took the same view. The effect of the decision in Barnes v Glenton was stated judicially in 189955, 192956, and 200457. And prior to the 1974 Limitation Act it was reiterated by all the leading authors, including: in 1899 by Williams and Crowdy58, and also by Jackson and Gosset59; in 1904 by Edwards60, and also by Whitcombe and Cherry61; in 1906 by Brown62; in 1909 by Harnett63, and also by Lightwood64; in 1910 by Davidson and litigation, this 53 Sykes and Walker, The Law of Securities, 5th ed (1993) at 935; National Bank of Tasmania Ltd (In liq) v McKenzie [1920] VLR 411 at 423-424. 54 [1899] 1 QB 885 at 888. 55 London and Midland Bank v Mitchell [1899] 2 Ch 161 at 165. 56 Dennerley v Prestwich Urban District Council [1930] 1 KB 334 at 343, 351. 57 Wilkinson v West Bromwich Building Society [2004] EWCA Civ 1063 at [31]. 58 Williams and Crowdy, Goodeve's Modern Law of Personal Property, 3rd ed (1899) 59 Jackson and Gosset, Investigation of Title, 2nd ed (1899) at 219. 60 Edwards, A Compendium of the Law of Property in Land and of Conveyancing relating to such Property, 4th ed (1904) at 425. 61 Whitcombe and Cherry, Prideaux's Precedents in Conveyancing, 19th ed (1904), vol 1 at 559. 62 Brown, The Law of the Limitation of Actions, 3rd ed (1906) at 201. 63 Harnett, A Handbook on the Law of Mortgages (1909) at 216. 64 Lightwood, The Time Limit on Actions (1909) at 158, 356. Edelman Wadsworth65; in 1911 by Webster66, and also by Williams67; in 1912 by Stephenson68; in 1927 by Law69, and also by Ramsbotham70; in 1931 by Lightwood71; in 1936 by Ball72; in 1959 by Franks73; and in 1973 by Sykes74. The 1974 Limitation Act When Parliament enacts legislation by adopting words that have an established and understood meaning in predecessor provisions, then it will generally be assumed that Parliament has intended the words to have that meaning75. This is particularly so if the legislation adopts a model in which those words have been given an established meaning, and other provisions, or other parts of the provision, are amended but the relevant words are not76. 65 Davidson and Wadsworth, Concise Precedents in Conveyancing, 19th ed (1910) at 242, fn (e). 66 Webster, Ashburner's Concise Treatise on Mortgages, Pledges, and Liens, 2nd ed 67 Williams, A Treatise on the Law of Vendor and Purchaser of Real Estate and Chattels Real, 2nd ed (1911), vol 2 at 1046-1047. 68 Stephenson, A Study of the Law of Mortgages, 2nd ed (rev) (1912) at 85. 69 Law, Carson's Real Property Statutes, 3rd ed (1927) at 219. 70 Ramsbotham, Coote's Treatise on the Law of Mortgages, 9th ed (1927), vol 2 at 71 Lightwood, Fisher and Lightwood's Law of Mortgage, 7th ed (1931) at 330. 72 Halsbury's Laws of England, 2nd ed (1936), vol 20 at 657 [838]. See also Halsbury's Laws of England, 3rd ed (1958), vol 24 at 264 [510]. See further Halsbury's Laws of England, 5th ed (2016), vol 68 at 330 [1103]. 73 Franks, Limitation of Actions (1959) at 164. 74 Sykes, The Law of Securities, 2nd ed (1973) at 763-764. 75 Attorney-General for NSW v Brewery Employes Union of NSW (1908) 6 CLR 469 at 531; [1908] HCA 94. See also Aubrey v The Queen (2017) 260 CLR 305 at 323 [34]; [2017] HCA 18. 76 Platz v Osborne (1943) 68 CLR 133 at 141, 146-147; [1943] HCA 39. See also Thompson v Judge Byrne (1999) 196 CLR 141 at 157 [40]; [1999] HCA 16. Edelman Section 26(1) of the 1974 Limitation Act re-enacted in Queensland, in relevantly identical form, s 24(1) of the Limitation Act 1960 (Qld). In turn, s 24(1) of the Limitation Act 1960 (Qld) had re-enacted s 18(1) of the Limitation Act 1939 (UK). And, with one substantive change to the expression concerning a "sum of money secured by any mortgage ... or otherwise charged upon or payable out of any land", the 1939 provision was in essentially the same terms as that part of s 8 of the 1874 Limitation Act and s 40 of the 1833 Limitation Act and its colonial Queensland derivative77. The change was that prior to 1939, s 8 had been applied only to charges on land; an extension by analogy had been denied to charges over personalty78. The provision was extended to personalty in 1939 following a recommendation by the Law Revision Committee, which had noted the anomaly of excluding personalty, particularly since charges were sometimes given over a mixed fund of land and personalty79. The consistent interpretation and understanding of s 8 of the 1874 Limitation Act and its successor provisions over nearly a century formed part of the fabric upon which s 26(1) of the 1974 Limitation Act was enacted with amendments that did not affect that understanding. It was understood that although s 26(1) applied to both real and personal claims, it did not extend other applicable limitation periods for personal claims. Indeed, the Law Revision Committee recommended a change to the predecessor provision to s 26(5) so that this provision would operate in the same way80. Prior to 1939, the decision in Sutton v Sutton had not been applied to the predecessor provision to s 26(5). Hence, the six year limitation period under s 42 of the 1833 Limitation Act for actions to recover arrears of interest payable in respect of a sum of money secured by a charge was confined only to real claims, with the longer limitation period of 20 years under s 3 of the Civil Procedure Act applying to personal claims to arrears by an action on the covenant81. The Law Revision Committee 77 Statute of Frauds and Limitations 1867 (Qld), s 18. 78 Weld v Petre [1929] 1 Ch 33 at 48. See also In re Powers; Lindsell v Phillips (1885) 30 Ch D 291 at 295, 296, 297-298; Mellersh v Brown (1890) 45 Ch D 225 79 Great Britain, Law Revision Committee, Fifth Interim Report (1936) Cmd 5334 at 80 Great Britain, Law Revision Committee, Fifth Interim Report (1936) Cmd 5334 at 81 Darley v Tennant (1885) 53 LT 257 at 258. See also Lightwood, A Treatise on Possession of Land (1894) at 191-192. Compare Fisher, The Law of Mortgage and other Securities upon Property, 4th ed (1884) at 900-901. Edelman described this as an anomaly and recommended that a six year limitation period should apply to both the real and the personal claim82. That was the origin of the provision that became s 10(3A) in the 1974 Limitation Act83. The interpretation consistently adopted since Barnes v Glenton is also reflected in the decision concerning the overlap between s 10(3) and s 26(1) of the 1974 Limitation Act by the Full Court of the Supreme Court of Queensland in Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd84. In that case, a building construction company owed money to the bank. The building construction company became insolvent. Douglas Morris Investments had undertaken to pay, on written demand by the bank, the balance owing or unpaid by the building construction company or itself. The debt of Douglas Morris Investments was secured by instruments described as scrip liens, executed by Douglas Morris Investments in favour of the bank. The bank demanded payment from Douglas Morris Investments. When Douglas Morris Investments did not pay, the bank brought an action for various declarations including declarations that the scrip liens were valid and that the bank was entitled to possession of share certificates and a cash sum, which were consideration for a takeover of some of the secured shares by the third defendant. The trial judge declared that the scrip liens were effective to charge the shares and that the bank was entitled to possession of the share certificates85. When the Full Court considered whether the declarations should have been made, an issue arose as to whether "the bank's right to the share scrip is statute-barred"86. The expression of this issue by the Full Court, the terms of the declarations sought, and the joinder of the third defendant make it plain that the bank's underlying claim was a proprietary claim on the charge, to enforce its entitlement to the scrip. The bank was seeking to recover a principal sum of money, and interest, secured by a charge as a "real" claim to the share scrip. Following the approach consistently recognised in relation to land since at least 1850 in Hunter v Nockolds, and undisturbed by Sutton v Sutton, such a "real" claim would fall within the antecedents to s 26(1) but not within the antecedents 82 Great Britain, Law Revision Committee, Fifth Interim Report (1936) Cmd 5334 at 83 Originally contained in s 10(3) of the 1974 Limitation Act. 84 [1992] 1 Qd R 478 ("Douglas Morris Investments"). 85 [1992] 1 Qd R 478 at 481. 86 [1992] 1 Qd R 478 at 482. Edelman to s 10, which were concerned with personal claims. This was the conclusion of the Full Court. In the Full Court, McPherson J, with whom Connolly and Williams JJ agreed, held that the relevant limitation period provision for "an action on the scrip lien" was s 26(1), "to the exclusion of those [provisions] specified in s 10(1) and s 10(3)"87. The reason the personal claims in s 10(1)(a) (simple contract) and s 10(3) (covenant) were excluded was that the claim was a real claim: McPherson J referred to the first instance decision in Barnes v Glenton88, in which Lord Russell of Killowen CJ had characterised the claim as a real claim "payable out of land"89. Although that decision was overturned by the Court of Appeal, which characterised the claim as a personal claim, the Court of Appeal did not cast any doubt upon the long-standing position that real claims were governed only by the equivalent of s 26. The character of the claim in Douglas Morris Investments as a real claim was made even plainer when McPherson J described the consequences of a lapse in time barring actions for the principal or interest. His Honour said that because the limitation period barred the personal action but not the underlying right: "[t]he barring of proceedings to recover the debt which the charge was intended to secure does not touch that [equitable proprietary] interest"90. Later, he concluded that the action "is more akin to an action for recovery of possession, or for specific performance of an agreement that the bank shall have possession"91. The more recent English authorities The Council relied upon the decision in Douglas Morris Investments and two English decisions that were said to be directly applicable. The first English decision is Bristol and West Plc v Bartlett92. In each of three cases heard together, borrowers defaulted on loans. The loans were secured by charges over their houses so that upon default of payment the lender obtained possession of and sold the properties. Although there was a shortfall, the lenders delayed in service of claims for the outstanding amounts. In the lead case in the Court of 87 [1992] 1 Qd R 478 at 482. 89 [1898] 2 QB 223 at 230. 90 [1992] 1 Qd R 478 at 493. 91 [1992] 1 Qd R 478 at 496. 92 [2003] 1 WLR 284; [2002] 4 All ER 544. Edelman Appeal, that of the Bartletts, the delay was for more than six years93. The limitation period for an action to recover a sum of money secured by a charge, in the equivalent of s 26(1), was 12 years. The limitation period for an action on a specialty, including a debt created by deed94, in the equivalent provision of s 10(3), was 12 years. And the limitation period for a simple contract, in the equivalent provision to s 10(1)(a), was six years95. The Court of Appeal, in reasons delivered by Longmore LJ, rejected the submission that the sale of the land meant that the debt became only a simple contract debt96. So the remaining question was whether the relevant limitation period was that for an action upon a specialty or that for a sum of money secured by a charge97. Although both provisions contained a limitation period of 12 years for the principal, the limitation period for an action to recover interest in respect of money secured by a charge, in the equivalent of s 26(5), was only six years. The lenders argued that the equivalent of s 26(5) did not apply because the money was no longer secured by a charge98. The Court of Appeal rejected that submission, concluding that the shorter limitation period in s 26(5) applied to the claims for interest because the limitation period for an action in respect of a sum of money secured by a mortgage or other charge applied to charges existing at the date when the right accrued, not the date when the action was brought99. The Court of Appeal applied the limitation period in the equivalent of s 26(5) rather than the limitation period with respect to specialties because it considered that the "specific" limitation period in respect of a sum of money secured by a mortgage or other charge took "precedence over the general provisions relating to specialties"100. This assumption was precisely the opposite of the position that had prevailed before 1874, where the "general enactment" 93 [2003] 1 WLR 284 at 290-291 [7]; [2002] 4 All ER 544 at 548. 94 In re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1980] Ch 95 [2003] 1 WLR 284 at 289-290 [4]; [2002] 4 All ER 544 at 547. 96 [2003] 1 WLR 284 at 294 [18]; [2002] 4 All ER 544 at 551. 97 [2003] 1 WLR 284 at 296 [27]; [2002] 4 All ER 544 at 552. 98 [2003] 1 WLR 284 at 296-297 [29]; [2002] 4 All ER 544 at 553. 99 [2003] 1 WLR 284 at 297 [30]-[31]; [2002] 4 All ER 544 at 553. 100 [2003] 1 WLR 284 at 296 [27]; [2002] 4 All ER 544 at 553. Edelman concerning a sum of money secured by charge did not apply to the circumstances of a personal claim based upon a covenant or specialty, which was said to be "so express and clear in its language" and "so plain and unequivocal that it must prevail"101. But this point had not been argued in the Court of Appeal, was not in issue, and was therefore not necessary for the conclusion. The same result would have ensued whether the limitation period in respect of interest on a sum of money secured by a charge (six years) took precedence over the limitation period in respect of a specialty (12 years) or whether they both applied so that the action was limited by the shorter period. relied upon by The other English decision the Council was West Bromwich Building Society v Wilkinson102. In that case, the Wilkinsons defaulted on a loan from the West Bromwich Building Society. The loan was secured by a mortgage over their property so the building society obtained possession and sold the property. Although there was a shortfall, the building society did not serve a claim for the outstanding amount for more than 12 years. The Wilkinsons relied upon the 12 year limitation period for a sum of money secured by a mortgage. The building society submitted that the applicable limitation period was the 12 year period for a specialty and its main submission, repeating the unsuccessful argument from Bristol and West Plc v Bartlett, was that the period ran only from the time when the property was sold. this rejected The House of Lords unanimously submission. Lord Hoffmann, with whom the others agreed, observed that it might make little difference whether the limitation period is that for a claim to a debt secured by mortgage or a claim upon a specialty103. In both cases the limitation period was 12 years. Consistently with Sutton v Sutton, Lord Hoffmann approached the submissions on the basis that either limitation period might apply. In either case, he rejected the submissions of the building society104. Lord Hoffmann also rejected the submission of the building society that sought to overturn Bristol and West Plc v Bartlett. He said that if the cause of action "when it arose was a claim to a debt secured on a mortgage" then the lender cannot "stop time running by his own act in exercising the power of sale"105. There was no issue, and nothing was 101 Paget v Foley (1836) 2 Bing NC 679 at 690-691 [132 ER 261 at 266]. 102 [2005] 1 WLR 2303; [2005] 4 All ER 97. 103 [2005] 1 WLR 2303 at 2305 [6]; [2005] 4 All ER 97 at 100. 104 [2005] 1 WLR 2303 at 2309 [21]; [2005] 4 All ER 97 at 104. 105 [2005] 1 WLR 2303 at 2306 [10]; [2005] 4 All ER 97 at 101. Edelman decided, about whether the limitation period for a specialty also ran from that time. The decisions of the primary judge and the Court of Appeal in this case At the heart of the reasons of the majority of the Court of Appeal of the Supreme Court of Queensland (Dalton J, with whom Philippides JA agreed) was the statutory history of s 26(1) of the 1974 Limitation Act. As explained above, the history of s 26(1) is one in which the provision and its antecedents have been understood for a century as applying concurrently with limitation periods for personal claims in s 10 and its antecedent provisions. This means that, where both limitation periods apply, it is open to the defendant to plead the shorter period. In this way, the provisions operate consistently with their historical foundations and coherently. The contrary view was expressed clearly in the judgments of the primary judge (Bond J) and Fraser JA in dissent in the Court of Appeal. Their Honours relied upon the decision of the Full Court of the Supreme Court of Queensland in Douglas Morris Investments to conclude that s 26(1), as the more "specific" provision, had excluded s 10(1)(d), which is the more "general" provision, in the sphere of operation of s 26(1)106. The Douglas Morris Investments decision was properly afforded considerable weight. In the Court of Appeal, the submissions had treated that decision as turning upon the difficult question of how to apply the maxim generalia specialibus non derogant, a general language convention that applies to resolve an inconsistency107 by preferring the specific provision to the general provision. However, it had not been argued before the Court of Appeal that, as explained above, the description by McPherson J of s 26(1) as the "specific" provision should be better seen not as an invocation of the maxim but as a reference to the operation of s 26(1) in the specific circumstances of a "real" claim to the exclusion of the personal claim in s 10(3). Understood in that way, the Council is not assisted by either the maxim or the Douglas Morris Investments case. A related submission, also contrary to the approach of the majority of the Court of Appeal, was urged by the Council in oral submissions on this appeal. The Council submitted that ss 10(1)(d) and 26(1) should be interpreted to apply to actions that meet different descriptions even if the same facts were pleaded, in the same way that although the same pleaded facts could constitute an action for negligence or trespass those actions could have different 106 Brisbane City Council v Amos (2016) 216 LGERA 312 at 326 [64]; Amos v Brisbane City Council (2018) 230 LGERA 51 at 69 [45]. 107 Purcell v Electricity Commission of NSW (1985) 59 ALJR 689 at 692; 60 ALR 652 at 657; [1985] HCA 54. Edelman limitation periods108. This attempt to create wholly distinct spheres of operation for ss 10 and 26(1) is the same as the approach that was taken to the antecedents to ss 10 and 26(1) before the decision in Sutton v Sutton. At that time, the antecedents to s 26(1) were confined to real claims and the antecedents to s 10 applied to personal claims. The Council sought to draw a different, but novel, division between personal actions that involved a mortgage or other charge and other personal actions. Whatever the merit of this approach, it is too late now to turn back the clock. The 1974 Limitation Act was enacted against a long history of acceptance that both sections apply to personal claims. That approach is coherent. Conclusion The Council's submission that s 26(1) excludes the operation of s 10(1)(d) is not supported by the language of s 26(1). Nor is there anything in the history of the provision to support such a proposition. The proposition would contradict almost every decision and every text that has considered the point for more than a century. The one suggestion to the contrary is a sentence of obiter dicta in Bristol and West plc v Bartlett which was not the subject of argument. The appeal must be dismissed with costs. In light of this conclusion it is unnecessary to consider the second issue, concerning the claim for interest. 108 See Williams v Milotin (1957) 97 CLR 465 at 473-474; [1957] HCA 83. The determinative question in this appeal from a decision of the Court of Appeal of the Supreme Court of Queensland109 is whether the majority in that Court was correct to hold that an action in debt110 by Brisbane City Council against a registered owner of land to recover overdue rates and charges levied under the City of Brisbane Act 2010 (Qld) is subject to the limitation period of six years applicable under s 10(1)(d) of the Limitation of Actions Act 1974 (Qld) to "an action to recover a sum recoverable by virtue of any enactment". The contention of the Council that the majority was incorrect reduces to the proposition that the circumstance that overdue rates and charges are made a charge on rateable land by s 97 of the City of Brisbane Act has the result that the limitation period of 12 years applicable under s 26(1) of the Limitation of Actions Act to "[a]n action ... to recover a principal sum of money secured by a ... charge on property" applies to the exclusion of that imposed by s 10(1)(d) of the Limitation of Actions Act. To support the proposition that the 12-year limitation period under s 26(1) of the Limitation of Actions Act applies to the exclusion of the six-year limitation period under s 10(1)(d), the Council relies on two mutually reinforcing arguments. First, it argues that the structure of the Limitation of Actions Act requires that for any action there can be only one applicable limitation period. Second, it argues that the category of actions that are subject to a 12-year limitation period under s 26(1) is a more specific category of actions than those referred to in s 10(1)(d). The first argument sits uncomfortably with the traditional understanding that a limitation period of the kind imposed by the Limitation of Actions Act operates only as a defence to an action and only if invoked at the option of the defendant111. Nothing said in Williams v Milotin112, on which the Council principally relies, supports the argument. The question asked rhetorically in that case was "Why should the plaintiff's action be limited by any other period of time than that appropriate to the cause of action on which he sues?"113. The question was framed to emphasise the ability of a plaintiff, on a given set of facts, to 109 Amos v Brisbane City Council (2018) 230 LGERA 51. 110 Section 66(1) of the City of Brisbane (Finance, Plans and Reporting) Regulation 2010 (Qld). 111 The Commonwealth v Mewett (1997) 191 CLR 471 at 534-535; [1997] HCA 29; WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420 at 433 [30]; [2010] HCA 34. 112 (1957) 97 CLR 465; [1957] HCA 83. 113 (1957) 97 CLR 465 at 474. choose from the range of available causes of action to rely on a cause of action to which a shorter limitation period is inapplicable. The framing of the question within the context of Williams v Milotin cannot be taken to suggest that only one limitation period can ever be applicable to one cause of action. What Williams v Milotin usefully illustrates is that a plaintiff is free to choose to rely on that cause of action which is most advantageous to the plaintiff. In the event that more than one limitation period is applicable to the cause of action on which the plaintiff chooses to rely, a defendant is correspondingly free to choose to invoke by way of defence that limitation period which is shortest and therefore most advantageous to the defendant. The reasons for judgment of Kiefel CJ and Edelman J demonstrate that the second argument is belied by an understanding of the scope of the actions to which ss 10(1)(d) and 26(1) respectively refer. Just as the actions founded on simple contract, quasi-contract and tort to which s 10(1)(a) refers and the actions on specialties to which s 10(3) refers are personal actions as distinct from real actions, so the actions to which s 10(1)(d) refers are confined to actions to recover sums recoverable by virtue of enactments that are personal actions. The actions to which s 26(1) relevantly refers extend to actions that are either personal or real actions to recover a principal sum of money secured by a charge on property. The actions referred to in s 26(1) overlap with the actions referred to in s 10(1)(d); neither category of actions is a mere subset of the other; neither is more specific. Significantly, both arguments are contradicted by the holding in Barnes v Glenton114 to the effect that the English progenitor of s 10(1)(a)115 was available to be invoked as a defence to a personal action to recover a debt that was secured by a charge over property notwithstanding that the English progenitor of s 26(1)116 was in terms applicable. As the reasons for judgment of Kiefel CJ and Edelman J again demonstrate, the holding in Barnes v Glenton appears never to have been the subject of significant criticism, and nothing in the legislative history of the Limitation of Actions Act gives the slightest hint of a legislative intention to depart from it. Although I had initially thought otherwise, the reasons for judgment of Kiefel CJ and Edelman J and of Keane J combine to persuade me that the result in Australia and New Zealand Banking Group Ltd v Douglas Morris Investments 115 Section 3 of the Limitation Act 1623 (21 Jac I c 16). 116 Section 8 of the Real Property Limitation Act 1874 (37 & 38 Vict c 57). Pty Ltd117 is not inconsistent with Barnes v Glenton. The relevant claim in Douglas Morris having been real as distinct from personal, the case was one to which s 26(1) in terms applied and to which ss 10(1)(a) and 10(3) in terms had no application. The stability of the law demands that re-enacted statutory provisions ordinarily be taken to retain judicially settled meanings absent some judicially cognisable indication that some different meaning was legislatively intended118. None is here present. The limitation periods under ss 10(1)(d) and 26(1) are capable of concurrent operation in relation to the same action. Both provisions apply to the Council's action. The result is that the registered owner of rateable land who is the defendant to that action, Mr Amos, is free to invoke by way of defence that limitation period which is shorter and more advantageous to him. The appeal must be dismissed with costs. 117 [1992] 1 Qd R 478. 118 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106; [1994] HCA 34; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 496 [3], 502-503 [15]-[16]; [2015] HCA 10. KEANE J. I have had the advantage of reading in draft the reasons for judgment of Kiefel CJ and Edelman J. Their Honours' review of the legislative and judicial history of ss 26(1) and 10(1) of the Limitation of Actions Act 1974 (Qld) ("the Queensland Act") supports the approach of Dalton J (with whom Philippides JA agreed) in the Court of Appeal119. It must be accepted that these provisions were enacted on the settled understanding that s 26(1) was concerned, as were its predecessors, with actions to recover a principal sum by recourse to rights against the property against which the debt was secured. It may be said that to understand s 26(1) in this way is to gloss the actual language of the provision to an extent not consistent with the language used by the legislature. But limitation statutes have a long history, in the course of which the courts have glossed the statutory language to an extent that might not now be regarded as acceptable in terms of the separation of the roles of the legislature and judiciary120. It has, for example, long been settled by judicial decision that legislative provision that an action "shall not be brought" is not to be taken literally, and that the provision merely provides a defence to the action that must be pleaded by a defendant if the expiration of the limitation period is to be given effect121. When the Queensland Act was passed in 1974, it was well settled that s 26(1) was concerned to impose a limitation period applicable to actions to enforce rights against the property against which the debt was secured. No judicial decision concerning analogous provisions is inconsistent with this view. Importantly, in this regard, the decision of the Full Court of the Supreme Court of Queensland in Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd122 did not involve a departure from the settled judicial view of the operation of provisions in the terms of s 26(1) of the Queensland Act. The appellant emphasised that in Douglas Morris, McPherson J (with whom Connolly and Williams JJ agreed) said123: 119 Amos v Brisbane City Council (2018) 230 LGERA 51. 120 Compare Pipikos v Trayans (2018) 92 ALJR 880 at 894-895 [73]; 359 ALR 210 at 225; [2018] HCA 39. 121 Courtenay v Williams (1844) 3 Hare 539 at 551-552 [67 ER 494 at 500]; Dawkins v Lord Penrhyn (1878) 4 App Cas 51 at 58-59; Ketteman v Hansel Properties Ltd [1987] AC 189 at 219; The Commonwealth v Verwayen (1990) 170 CLR 394 at 405, 473-474; [1990] HCA 39. 122 [1992] 1 Qd R 478. 123 [1992] 1 Qd R 478 at 482-483. "I am in no doubt that, in an action on the scrip lien to recover the amount due to the bank, s 26(1) is the applicable limitation provision to the exclusion of those specified in s 10(1) and s 10(3). Both s 10(3) and s 26(1) do, in any event, prescribe a 12 year period, but the latter is the specific and therefore governing provision." It is to be noted that in Douglas Morris the plaintiff did not seek judgment for the repayment of the debt, but sought declarations that the scrip liens were valid, that the lienee was entitled to possession of the share certificates and cash sum, and that it had an equitable charge over the shares124. In that context, the statement by McPherson J was directed specifically to "an action on the scrip lien", and not to a personal action to recover payment of the debt. The question did not arise whether, the limitation period applicable under s 10(3) to an action for recovery of money under a specialty having expired, the plaintiff might still avail itself of the longer period provided by s 26(1) in relation to such an action as distinct from a claim against the secured property. In addition, the review by Kiefel CJ and Edelman J of the legislative and judicial history of these provisions provides an answer to the query which might otherwise arise as to the intention of the legislature given the difficulty of discerning the utility of differentiating, in terms of the limitation period applicable to the action, between personal actions to recover payment of a debt and actions to enforce creditors' rights against secured property. While such utility as there is in the differentiation may not be readily apparent now, there can be no doubt that the differentiation was marked and acted upon by the courts prior to the enactment of the Queensland Act. I agree with the orders proposed by Kiefel CJ and Edelman J. 124 [1992] 1 Qd R 478 at 481, 501-502. Nettle NETTLE J. I have had the advantage of reading in draft the reasons for judgment of Kiefel CJ and Edelman J. As their Honours demonstrate, most comprehensively, the construction which the majority in the Court of Appeal of the Supreme Court of Queensland attributed to ss 26(1) and 10(1)(d) of the Limitation of Actions Act 1974 (Qld) accords to the long history and understanding of the legislative predecessors of those provisions, and so, therefore, to the evident statutory purpose of their enactment. Consequently, although s 26(1) prescribes a limitation period of 12 years for actions to "recover a principal sum of money secured by a mortgage or other charge on property", and so, in terms, is capable of application to both real and personal actions for the recovery of statutory rates, upon the proper construction of s 26(1) – as informed by the history and understanding of its predecessor provisions125 – s 26(1) does not exclude or enlarge the shorter limitation of six years applicable under s 10(1)(d) to "a sum recoverable by virtue of any enactment" that applies to personal actions for the recovery of statutory rates. Inasmuch as each provision sets a limit on the time in which action may be brought, as opposed to authorising the bringing of action at any time up to the limit, the shorter limit prevails. That was the unquestioned understanding of the predecessor provisions of ss 26(1) and 10(1)(d) ever since Barnes v Glenton126, and, until this matter arose, it was the unquestioned understanding of ss 26(1) and 10(1)(d). Properly understood, nothing held in Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd127 in any way gainsays that. In the result, I agree in the orders proposed. 125 See Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 324-325 [8] per Gleeson CJ; [2004] HCA 40; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 502-503 [15]-[16] per French CJ, Hayne, Kiefel, Gageler and Keane JJ; [2015] HCA 10. 127 [1992] 1 Qd R 478.

HIGH COURT OF AUSTRALIA DOW JONES & COMPANY INC APPELLANT AND RESPONDENT Dow Jones & Company Inc v Gutnick [2002] HCA 56 10 December 2002 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Victoria Representation: G R Robertson QC with T F Robertson SC for the appellant (instructed by Gilbert & Tobin) J L Sher QC with M F Wheelahan for the respondent (instructed by Schetzer, Brott & Appel) Intervener: B W Walker SC with S E Pritchard intervening on behalf of Amazon.com Inc & Ors (instructed by Blake Dawson Waldron) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Dow Jones & Company Inc v Gutnick Torts – Defamation – Publication – Internet – Computer server – Material complained of housed on computer server in United States of America – Uploaded to World Wide Web – Viewable at subscription news site on World Wide Web – Downloaded to computer in Victoria – Whether material complained of was published in Victoria. Torts – Defamation – Publication – Single publication rule. Private international law – Choice of law – Law of the place of the tort (lex loci delicti) – Defamation – Damage to reputation – Where material complained of was published – Material complained of made comprehensible when downloaded in Victoria – Place of plaintiff's reputation – Victorian law governs substantive rights. Private international law – Service out of jurisdiction – Rules of Court – Service permitted without leave of Court – Conditions of service – Action brought in respect of tort committed in Victoria – Action brought in respect of damage suffered in Victoria – Action limited to damage to reputation in Victoria – Service validly effected – Victoria a convenient forum. Words and Phrases – "publication", "single publication rule". Supreme Court (General Civil Procedure) Rules 1996 (Vic), rr 7.01(1)(i), GLEESON CJ, McHUGH, GUMMOW AND HAYNE JJ. The appellant, Dow Jones & Company Inc ("Dow Jones"), prints and publishes the Wall Street Journal newspaper and Barron's magazine. Since 1996, Dow Jones has operated WSJ.com, a subscription news site on the World Wide Web. Those who pay an annual fee (set, at the times relevant to these proceedings, at $US59, or $US29 if they are subscribers to the printed editions of either the Wall Street Journal or Barron's) may have access to the information to be found at WSJ.com. Those who have not paid a subscription may also have access if they register, giving a user name and a password. The information at WSJ.com includes Barron's Online in which the text and pictures published in the current printed edition of Barron's magazine are reproduced. The edition of Barron's Online for 28 October 2000 (and the equivalent edition of the magazine which bore the date 30 October 2000) contained an article entitled "Unholy Gains" in which several references were made to the respondent, Mr Joseph Gutnick. Mr Gutnick contends that part of the article defamed him. He has brought an action in the Supreme Court of Victoria against Dow Jones claiming damages for defamation. Mr Gutnick lives in Victoria. He has his business headquarters there. Although he conducts business outside Australia, including in the United States of America, and has made significant contributions to charities in the United States and Israel, much of his social and business life could be said to be focused in Victoria. The originating process in the action which Mr Gutnick brought against Dow Jones was served on it outside Australia. The writ recorded that service was effected in reliance upon two of the provisions of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) ("the Victorian Rules") (rr 7.01(1)(i) and 7.01(1)(j)) providing for service of process outside Australia. Under those Rules, the scheme of which is broadly similar to that considered in Agar v Hyde1, a plaintiff may serve originating process without first obtaining the leave of the Court. If the defendant does not submit to the jurisdiction by filing an unconditional appearance, demonstrating that the originating process makes claims of a kind which one or more of the paragraphs of r 7.01(1) mention. If the defendant wishes to contend that the Court should decline to exercise its jurisdiction or should set aside service, the defendant may enter a conditional appearance and apply for either or both of two forms of order – an order staying further proceedings in the matter or an order setting aside service of the originating process. the plaintiff must obtain leave (2000) 201 CLR 552 at 574-575 [53]-[54]. McHugh The principal issue debated in the appeal to this Court was where was the material of which Mr Gutnick complained published? Was it published in Victoria? The answer to these questions was said to affect, even determine, whether proceedings in the Supreme Court of Victoria should, as Dow Jones contended, be stayed on the ground that that Court was a clearly inappropriate forum for determination of the action3. The procedural steps which give rise to that issue can be described as follows. The proceedings below Dow Jones entered a conditional appearance to the process served upon it. It applied to a Judge of the Supreme Court of Victoria (Hedigan J) for an order that service of the writ and statement of claim be set aside or an order that further proceedings in the matter be permanently stayed. In the course of the proceedings before the primary judge, Mr Gutnick proffered an undertaking to sue in no place other than Victoria in respect of the matters which founded his proceeding. The primary judge recorded in his reasons that Mr Gutnick "seeks to have his Victorian reputation vindicated by the courts of the State in which he lives [and that he] is indifferent to the other substantial parts of the article and desires only that the attack on his reputation in Victoria as a money-launderer should be repelled and his reputation re-established". A deal of evidence was led before the primary judge seeking to establish the way in which, and the place at which, information found at a website like WSJ.com is published. It will be necessary to say something more about what that evidence revealed. His Honour concluded that the statements of which Mr Gutnick sought to complain were "published in the State of Victoria when downloaded by Dow Jones subscribers who had met Dow Jones's payment and performance conditions and by the use of their passwords". He rejected Dow Jones's contention that the publication of the article in Barron's Online occurred at the servers maintained by Dow Jones in New Jersey in the United States. Being therefore of the opinion that the defamation of which Mr Gutnick complained had occurred in Victoria, Hedigan J concluded that Victoria was not a clearly inappropriate forum for trial of the proceeding and dismissed Dow 3 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. McHugh Dow Jones sought leave to appeal to the Court of Appeal of Victoria but that Court (Buchanan JA and O'Bryan AJA) refused leave to appeal, holding that the decision at first instance was plainly correct. By special leave, Dow Jones now appeals to this Court. The appeal to this Court should be dismissed. Undisputed principles Argument of the appeal proceeded from an acceptance, by both parties, of certain principles. First, it is now established that an Australian court will decline, on the ground of forum non conveniens, to exercise jurisdiction which has been regularly invoked by a plaintiff, whether by personal service or under relevant long-arm jurisdiction provisions, only when it is shown that the forum whose jurisdiction is invoked by the plaintiff is clearly inappropriate4. Secondly, it is now established that in trying an action for tort in which the parties or the events have some connection with a jurisdiction outside Australia, the choice of law rule to be applied is that matters of substance are governed by the law of the place of commission of the tort5. Neither party sought to challenge either proposition. Rather, argument focused upon where was the place of publication of the statements of which Mr Gutnick complained. Dow Jones contended that the statements were published in New Jersey and that it was, therefore, the law of that jurisdiction which would govern all questions of substance in the proceeding. This was said to have two consequences: first, that the claims made in the originating process were not of a kind mentioned in any of the relevant paragraphs of r 7.01(1) of the Victorian Rules and, secondly, that because the law governing questions of substance was not Victorian law, Victoria was a clearly inappropriate forum for the trial of the proceeding. "Jurisdiction" and "publishing" Two of the terms that must be used in considering the questions that arise in this matter are terms that can give rise to difficulty. "Jurisdiction", as was pointed out in Lipohar v The Queen6, is a generic term7 that is used in a variety of senses. In the present matter there are two distinct senses in which it is used – 4 Voth (1990) 171 CLR 538. 5 Regie National des Usines Renault SA v Zhang (2002) 76 ALJR 551; 187 ALR 1. (1999) 200 CLR 485 at 516-517 [78] per Gaudron, Gummow and Hayne JJ. 7 Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087 at 1142 per McHugh first, as referring to the amenability of a defendant to process in such a way as will give a court authority to decide the controversy which that process seeks to agitate and, secondly, as referring to a particular territorial or law area or law district. "Publishing" and its cognate words is also a term that gives rise to difficulty. As counsel for the interveners pointed out it may be useful, when considering where something the is published (publisher's) act of publication and the fact of publication (to a third party), but even that distinction may not suffice to reveal all the considerations relevant to locating the place of the tort of defamation. to distinguish between WSJ.com Since so much was made in argument, both in this Court and in the courts below, of what was said to be the unusual features of publication on the Internet and the World Wide Web, it is necessary to say something about what the evidence revealed about those matters. For present purposes, it is convenient to adopt what was said in that evidence without diverting to consider what qualification to, or amplification of, that evidence might be necessary to give a complete and entirely accurate description of the Internet or the World Wide Web. (There was, for example, no evidence adduced that revealed what electronic impulses pass or what electronic events happen in the course of passing or storing information on the Internet.) One witness called by Dow Jones, Dr Clarke, described the Internet as "a telecommunications network that links other telecommunication networks". In his opinion, it is unlike any technology that has preceded it. The key differences identified by Dr Clarke included that the Internet "enables inter-communication using multiple data-formats … among an unprecedented number of people using an unprecedented number of devices [and] among people and devices without geographic limitation". The World Wide Web is but one particular service available over the Internet. It enables a document to be stored in such a way on one computer connected to the Internet that a person using another computer connected to the Internet can request and receive a copy of the document. As Dr Clarke said, the terms conventionally used to refer to the materials that are transmitted in this way are a "document" or a "web page" and a collection of web pages is usually referred to as a "web site". A computer that makes documents available runs software that is referred to as a "web server"; a computer that requests and receives documents runs software that is referred to as a "web browser". McHugh The originator of a document wishing to make it available on the World Wide Web arranges for it to be placed in a storage area managed by a web server. This process is conventionally referred to as "uploading". A person wishing to have access to that document must issue a request to the relevant server nominating the location of the web page identified by its "uniform resource locator (URL)". When the server delivers the document in response to the request the process is conventionally referred to as "downloading". Dow Jones has its editorial offices for Barron's, Barron's Online and WSJ.com in the city of New York. Material for publication in Barron's or Barron's Online, once prepared by its author, is transferred to a computer located in the editorial offices in New York city. From there it is transferred either directly to computers at Dow Jones's premises at South Brunswick, New Jersey, or via an intermediate site operated by Dow Jones at Harborside, New Jersey. It is then loaded onto six servers maintained by Dow Jones at its South Brunswick premises. Dow Jones's contention The principal burden of the argument advanced by Dow Jones on the hearing of the appeal in this Court was that articles published on Barron's Online were published in South Brunswick, New Jersey, when they became available on the servers which it maintained at that place. In the courts below, much weight appears to have been placed by Dow Jones on the contention that a relevant distinction was to be drawn between the apparently passive role played by a person placing material on a web server from which the would-be reader had actively to seek the material by use of a web browser and the (comparatively) active role played by a publisher of a widely circulated newspaper or a widely disseminated radio or television broadcast. In this Court, these arguments, though not abandoned, were given less prominence than policy arguments based on what was said to be the desirability of there being but a single law governing the conduct of a person who chooses to make material available on the World Wide Web. Dow Jones submitted that it was preferable that the publisher of material on the World Wide Web be able to govern its conduct according only to the law of the place where it maintained its web servers, unless that place was merely adventitious or opportunistic. Those who, by leave, intervened in support of McHugh Dow Jones8 generally supported this contention. The alternative, so the argument went, was that a publisher would be bound to take account of the law of every country on earth, for there were no boundaries which a publisher could effectively draw to prevent anyone, anywhere, downloading the information it put on its web server9. The rule propounded by Dow Jones may have a greater appearance of certainty than it would have in fact. "Adventitious" and "opportunistic" are words likely to produce considerable debate. Does a publisher's decision to have a server in a country where the costs of operation are low, or the benefits offered for setting up business are high, warrant either of these descriptions? Does a publisher's decision to have servers in two, widely separated, states or even countries warrant either description, or is it simply a prudent business decision to provide security and continuity of service? How is the user to know which server dealt with a particular request? Is the fact that one rather than the other server met the request "adventitious"? To the extent that the suggested rule would require reference only to the law of the place in which the server is located, it is a rule that would evidently be convenient to the party putting material on a web server. But that does not conclude debate. The convenience of one party is important to it, but how would such a rule fit with other, no less relevant, considerations? In particular, how would it fit with the nature of the competing rights and interests which an action for defamation must accommodate? It is necessary to begin by making the obvious point that the law of defamation seeks to strike a balance between, on the one hand, society's interest in freedom of speech and the free exchange of information and ideas (whether or not that information and those ideas find favour with any particular part of society) and, on the other hand, an individual's interest in maintaining his or her reputation in society free from unwarranted slur or damage. The way in which those interests are balanced differs from society to society. In some cases, for example as between the States in Australia, the differences in substantive law might be said to be differences of detail rather than substance, although even then 8 The interveners, some of whom were based in the United States, some in the United Kingdom and some in Australia, published material on the World Wide Web. Some operated subscription web sites; some operated open access, non-subscription web sites. cf Ashcroft v American Civil Liberties Union 122 S Ct 1700 at 1708 (2002). McHugh it may be doubted that this is an accurate characterisation of the effect of the differences in the defamation laws of the Australian States. Whether or not that is so, comparing the law of defamation in different countries can reveal differences going well beyond matters of detail lying at the edge of debate. It follows that identifying the law which is to govern questions of substance, in an action for defamation where there is some foreign element, may have substantial consequences for the resolution of the proceeding. No less importantly, those who would seek to order their affairs in a way that will minimise the chance of being sued for defamation must be able to be confident in predicting what law will govern their conduct. But certainty does not necessarily mean singularity. What is important is that publishers can act with confidence, not that they be able to act according to a single legal system, even if that system might, in some sense, be described as their "home" legal system. Activities that have effects beyond the jurisdiction in which they are done may properly be the concern of the legal systems in each place. In considering where the tort of defamation occurs it is important to recognise the purposes served by the law regarding the conduct as tortious: purposes that are not confined to regulating publishers any more than they are confined to promoting free speech. Defamation The tort of defamation, at least as understood in Australia, focuses upon publications causing damage to reputation. It is a tort of strict liability, in the sense that a defendant may be liable even though no injury to reputation was intended and the defendant acted with reasonable care10. Yet a publication made in the ordinary course of a business such as that of bookseller or news vendor, which the defendant shows to have been made in circumstances where the defendant did not know or suspect and, using reasonable diligence, would not have known or suspected was defamatory, will be held not to amount to publication of a libel11. There is, nonetheless, obvious force in pointing to the need for the publisher to be able to identify, in advance, by what law of defamation the publication may be judged. But it is a tort concerned with damage to reputation and it is that damage which founds the cause of action. Perhaps, as Pollock said in 188712, the law went "wrong from the beginning in making the damage and not the insult the cause of action" for slander but it is 10 Lee v Wilson & Mackinnon (1934) 51 CLR 276. 11 Lee v Wilson & Mackinnon (1934) 51 CLR 276 at 288 per Dixon J. 12 The Law of Torts, (1887) at 210. McHugh now too late to deny that damage by publication is the focus of the law. "It is the publication, not the composition of a libel, which is the actionable wrong."13 Harm to reputation is done when a defamatory publication comprehended by the reader, the listener, or the observer. Until then, no harm is done by it. This being so it would be wrong to treat publication as if it were a unilateral act on the part of the publisher alone. It is not. It is a bilateral act – in which the publisher makes it available and a third party has it available for his or her comprehension. The bilateral nature of publication underpins the long-established common law rule that every communication of defamatory matter founds a separate cause of action14. That rule has found reflection from time to time in various ways in State legislation15 and it would be a large step now to depart from it. If the place in which the publisher acts and the place in which the publication is presented in comprehensible form are in two different jurisdictions, where is the tort of defamation committed? That question is not to be answered by an uncritical application of some general rule that intentional torts are committed where the tortfeasor acts16 or that they are committed in the place where the last event necessary to make the actor liable takes place17. Nor does it 13 Lee v Wilson & Mackinnon (1934) 51 CLR 276 at 287 per Dixon J. 14 Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]; McLean v David Syme & Co Ltd (1970) 72 SR (NSW) 513 at 519-520, 528. 15 For example, Defamation (Amendment) Act 1909 (NSW), s 7; Defamation Act 1974 (NSW), ss 9(2), 48; Wrongs Act 1958 (Vic), s 12; Wrongs Act 1936 (SA), s 11; Defamation Act 1889 (Q), s 24; Defamation Act 1957 (Tas), s 25; Australian Broadcasting Corporation v Waterhouse (1991) 25 NSWLR 519 at 537 per Samuels JA. See also Loutchansky v Times Newspaper Ltd (Nos 2-5) [2002] QB 16 A rule identified as the dominant civil law rule: Rabel, The Conflict of Laws, 2nd ed (1960), vol 2 at 303-304; cf Jackson v Spittall (1870) LR 5 CP 542 at 552; Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 466-467. 17 Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 466-467; Restatement of the Conflict of Laws, (1934) at §377; cf Eastern Air Lines Inc v Union Trust Co 221 F 2d 62 at 80 (DCC 1955) and Restatement of the Conflict of Laws, 2d, (1971) at §145. McHugh require an uncritical adoption of what has come to be known in the United States as the "single publication" rule, a rule which has been rejected by the Court of Appeal of New South Wales in McLean v David Syme & Co Ltd18. Single publication rule Some 27 States of the United States, including California, Illinois, New York, Pennsylvania and Texas, by legislation19 or by judicial decision have adopted what is identified as the single publication rule20. That rule is set out in §577A of the Restatement of Torts, 2d, (1977), which is headed "Single and Multiple Publications", and reads: "(1) Except as stated in Subsections (2) and (3), each of several communications to a third person by the same defamer is a separate publication. (2) A single communication heard at the same time by two or more third persons is a single publication. (3) Any one edition of a book or newspaper, or any one radio or television broadcast, exhibition of a motion picture or similar aggregate communication is a single publication. (4) As to any single publication, only one action for damages can be maintained; the one action; and all damages suffered in all jurisdictions can be recovered in a judgment for or against the plaintiff upon the merits of any action for damages bars any other action for damages between the same parties in all jurisdictions." 18 (1970) 72 SR (NSW) 513 at 520, 528. 19 Adopting the Uniform Single Publication Act promulgated in 1952. 20 Particulars are given in Wood, "Cyber-Defamation and the Single Publication Rule", (2001) 81 Boston University Law Review 895 at 899. McHugh In Firth v State of New York21, the New York Court of Appeals decided that the one-year statute of limitation in New York runs from the first posting of defamatory matter upon an Internet site and that the single publication rule applies to that first posting. To trace, comprehensively, the origins of the so-called single publication rule, as it has come to be understood in the United States, may neither be possible nor productive. It is, however, useful to notice some of the more important steps that have been taken in its development. Treating each sale of a defamatory book or newspaper as a separate publication giving rise to a separate cause of action might be thought to present difficulties of pleading and proof. Following early English authority holding that separate counts alleging each sale need not be pleaded in the declaration22, American courts accepted that, where the defamatory matter was published in a book or newspaper, each publication need not be pleaded separately23. Similarly, proof of general distribution of a newspaper was accepted as sufficient proof of there having been a number of separate publications. It was against this background that there emerged, at least in some American States by the late nineteenth century, the rule that a plaintiff could bring only one action against a defendant to recover damages for all the publications that had by then been made of an offending publication24. The expression "one publication" or, later, "single publication" was first commonly used in this context25. In the early decades of the twentieth century, the single publication rule came to be coupled with statements to the effect that the place of that single 21 775 NE 2d 463 (Ct App 2002). 22 Baldwin v Elphinston (1775) 2 Black W 1037 [96 ER 610]. See also, as to duplicity of pleading, in a single count, publication in more than one State, McLean (1970) 72 SR (NSW) 513 at 519-523. 23 See, for example, Brian v Harper 80 So 885 (La 1919); Fried, Mendelson & Co v Edmund Halstead Ltd 196 NYS 285 (App Div 1st Dept 1922). 24 See, for example, Leonard v Pope 27 Mich 145 at 150 (Mich 1873); Galligan v Sun Printing & Publishing Assn 54 NYS 471 (Sup Ct NY 1898). 25 See, for example, Bigelow v Sprague 5 NE 144 at 145 (Mass 1886); Julian v Kansas City Star Co 107 SW 496 at 500 (Mo 1907). McHugh publication was the place where the newspaper or magazine was published26. The source of this added proposition was given as a case of prosecution for criminal libel27 where the question was that raised by the Sixth Amendment to the United States Constitution and its reference to the "state or district wherein the crime shall have been committed". Despite this difference in the context in which the question of location arose, the statement that the place of publication was where the newspaper or magazine was published was sometimes taken as stating an element of (or at least a consequence of) the single publication rule applied to civil defamation suits28. This single publication rule was understood as having consequences for the application of statutes of limitation which, in many States in the United States, provided only a short time before action for defamation was statute barred29. The time of the "single publication" was fixed as the time of the first publication30, it being thought that "[I]f the bar of the statute of limitations can be lifted by [later sales] we may no longer term it a 'statute of repose' which makes effective a purpose which the Legislature has conceived to be imperative"31. It was not until the middle of the twentieth century and the advent of widely disseminated mass media of communication (radio and nationally distributed newspapers and magazines) that choice of law problems were identified. In some cases, the law of the forum was applied without any explicit 26 Fried, Mendelson & Co v Edmund Halstead Ltd 196 NYS 285 at 287 (App Div 1st Dept 1922). 27 United States v Smith 173 Fed 227 (DC Ind 1909). 28 Fried, Mendelson & Co v Edmund Halstead Ltd 196 NYS 285 at 287 (App Div 1st Dept 1922); Zuck v Interstate Publishing Corp 317 F 2d 727 at 730 (2nd Cir 1963). But cf Kelly v Loew's Inc 76 F Supp 473 at 483 (D Mass 1948) per Judge Wyzanski and Mattox v News Syndicate Co 176 F 2d 897 at 900 (2nd Cir 1949) per Chief Judge Learned Hand. 29 A 1946 edition of Angoff, Handbook of Libel, said that the applicable period was one year in nearly two-thirds of American jurisdictions. See Zuck v Interstate Publishing Corp 317 F 2d 727 at 731 (2nd Cir 1963). 30 Gregoire v G P Putnam's Sons 81 NE 2d 45 (NY 1948). 31 Wolfson v Syracuse Newspapers Inc 4 NYS 2d 640 at 642 (App Div 4th Dept 1938); (aff'd) 18 NE 2d 676 (NY 1939). McHugh recognition of the possible application of some other law32. But then, by a process of what was understood as logical extension of the single publication rule, the choice of law to be applied came to be understood as largely affected by33, perhaps even to be determined by34, the proposition that only one action could be brought in respect of the alleged defamation, and that the place of publication was where the person publishing the words had acted. For present purposes, what it is important to notice is that what began as a term describing a rule that all causes of action for widely circulated defamation should be litigated in one trial, and that each publication need not be separately pleaded and proved, came to be understood as affecting, even determining, the choice of law to be applied in deciding the action. To reason in that way confuses two separate questions: one about how to prevent multiplicity of suits and vexation of parties, and the other about what law must be applied to determine substantive questions arising in an action in which there are foreign elements35. Clearly, the common law favours the resolution of particular disputes between parties by the bringing of a single action rather than successive proceedings. The principles of res judicata36, issue estoppel37, and what has come to be known as Anshun estoppel38, all find their roots in that policy. The application of that policy to cases in which the plaintiff complains about the publication of defamatory material to many people in many places may well lead 32 See, for example, Spanel v Pegler 160 F 2d 619 (7th Cir 1947); Holden v American News Co 52 F Supp 24 (ED Wash 1943). Again, however, cf Mattox v News Syndicate Co 176 F 2d 897 at 900 (2nd Cir 1949) per Chief Judge Learned Hand. 33 Hartmann v Time Inc 166 F 2d 127 (3rd Cir 1948); Dale System Inc v Time Inc 116 F Supp 527 at 529-530 (DC Conn 1953). 34 Restatement of the Conflict of Laws, 2d, (1971) §150. See also Zuck v Interstate Publishing Corp 317 F 2d 727 at 734 (2nd Cir 1963). 35 Note, "The Single Publication Rule in Libel: A Fiction Misapplied", (1949) 62 Harvard Law Review 1041. 36 Jackson v Goldsmith (1950) 81 CLR 446. 37 Blair v Curran; Curran and Perpetual Trustee Co Ltd v Blair (1939) 62 CLR 464. 38 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. McHugh judgment, by application of to the conclusion that a plaintiff may not bring more than one action in respect of any of those publications that have occurred before the proceeding is instituted or even, perhaps, before trial of the proceeding is complete. Effect can be given to that policy by the application of well-established principles preventing vexation by separate suits39 or, after the equally well-established principles about preclusion, including principles of Anshun estoppel. Conversely, where a plaintiff brings one action, account can properly be taken of the fact that there have been publications outside the jurisdiction and it would be open to the defendant to raise, and rely on, any benefit it may seek to say flows from applicable foreign law40. If some of the publications of which complaint is or could be made are publications that have occurred outside Australia, or if action has been instituted outside Australia in respect of publications made in this country, or overseas, there is no evident reason why the questions thus presented are not to be answered according to the established principles just mentioned. The application of these principles, however, says nothing about questions of jurisdiction or choice of law. In particular, the application of these principles does not require that a single place of publication be identified in every defamation case no matter how widely the defamatory material is disseminated. Publications within Australia, but in different States or Territories, may require consideration of additional principles. Although the choice of law to be made in such a case is again the law of the place of the tort41, questions of full faith and credit42 or other constitutional questions43 may well arise. It is unnecessary to pursue those matters further at the moment and we return to cases in which there are international rather than solely intranational aspects. 39 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 and, in relation to defamation, see also Maple v David Syme & Co Ltd [1975] 1 NSWLR 97 at 100-102; Australian Broadcasting Corporation v Waterhouse (1991) 25 NSWLR 519 at 537; Meckiff v Simpson [1968] VR 62 at 65 and [1968] VR 69; Thomson v Lambert [1938] 2 DLR 545. 40 Meckiff v Simpson [1968] VR 62 at 64-65. 41 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. 42 Constitution, s 118. 43 For example, Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. McHugh Widely disseminated publications In the course of argument much emphasis was given to the fact that the advent of the World Wide Web is a considerable technological advance. So it is. But the problem of widely disseminated communications is much older than the Internet and the World Wide Web. The law has had to grapple with such cases ever since newspapers and magazines came to be distributed to large numbers of people over wide geographic areas. Radio and television presented the same kind of problem as was presented by widespread dissemination of printed material, although international transmission of material was made easier by the advent of electronic means of communication. It was suggested that the World Wide Web was different from radio and television because the radio or television broadcaster could decide how far the signal was to be broadcast. It must be recognised, however, that satellite broadcasting now permits very wide dissemination of radio and television and it may, therefore, be doubted that it is right to say that the World Wide Web has a uniquely broad reach. It is no more or less ubiquitous than some television services. In the end, pointing to the breadth or depth of reach of particular forms of communication may tend to obscure one basic fact. However broad may be the reach of any particular means of communication, those who make information accessible by a particular method do so knowing of the reach that their information may have. In particular, those who post information on the World Wide Web do so knowing that the information they make available is available to all and sundry without any geographic restriction. Because publication is an act or event to which there are at least two parties, the publisher and a person to whom material is published, publication to numerous persons may have as many territorial connections as there are those to whom particular words are published. It is only if one starts from a premise that the publication of particular words is necessarily a singular event which is to be located by reference only to the conduct of the publisher that it would be right to attach no significance to the territorial connections provided by the several places in which the publication is available for comprehension. Other territorial connections may also be identified. In the present case, Dow Jones began the process of making material available at WSJ.com by transmitting it from a computer located in New York city. For all that is known, the author of the article may have composed it in another State. Dow Jones is a Delaware corporation. Consideration has been given to these and indeed other bases of territorial connection in identifying the law that might properly be held McHugh to govern an action for defamation where the applicable choice of law rule was what came to be known as the proper law of the tort44. Many of these territorial connections are irrelevant to the inquiry which the Australian common law choice of law rule requires by its reference to the law of the place of the tort. In that context, it is defamation's concern with reputation, and the significance to be given to damage (as being of the gist of the action) that require rejection of Dow Jones's contention that publication is necessarily a singular event located by reference only to the publisher's conduct. Australian common law choice of law rules do not require locating the place of publication of defamatory material as being necessarily, and only, the place of the publisher's conduct (in this case, being Dow Jones uploading the allegedly defamatory material onto its servers in New Jersey). Reference to decisions such as Jackson v Spittall45, Distillers Co (Biochemicals) Ltd v Thompson46 and Voth v Manildra Flour Mills Pty Ltd47 show that locating the place of commission of a tort is not always easy. Attempts to apply a single rule of location (such as a rule that intentional torts are committed where the tortfeasor acts, or that torts are committed in the place where the last event necessary to make the actor liable has taken place) have proved unsatisfactory if only because the rules pay insufficient regard to the different kinds of tortious claims that may be made. Especially is that so in cases of omission. In the end the question is "where in substance did this cause of action arise"48? In cases, like trespass or negligence, where some quality of the defendant's conduct is critical, it will usually be very important to look to where the defendant acted, not to where the consequences of the conduct were felt49. In defamation, the same considerations that require rejection of locating the tort by reference only to the publisher's conduct, lead to the conclusion that, 44 Palmisano v News Syndicate Co 130 F Supp 17 (SDNY 1955). 45 (1870) LR 5 CP 542. 47 (1990) 171 CLR 538. 48 Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 468; Voth (1990) 171 CLR 538 at 567. 49 Voth (1990) 171 CLR 538 at 567. McHugh ordinarily, defamation is to be located at the place where the damage to reputation occurs. Ordinarily that will be where the material which is alleged to be defamatory is available in comprehensible form assuming, of course, that the person defamed has in that place a reputation which is thereby damaged. It is only when the material is in comprehensible form that the damage to reputation is done and it is damage to reputation which is the principal focus of defamation, not any quality of the defendant's conduct. In the case of material on the World Wide Web, it is not available in comprehensible form until downloaded on to the computer of a person who has used a web browser to pull the material from the web server. It is where that person downloads the material that the damage to reputation may be done. Ordinarily then, that will be the place where the tort of defamation is committed. Set aside service or stay proceedings? It is convenient to deal at this point with Dow Jones's contentions that service of the originating process in the proceeding brought by Mr Gutnick should be set aside, and that further proceedings should be stayed on the ground that Victoria was a clearly inappropriate forum for trial of the action. Rule 7.01(1) of the Victorian Rules provided that: "(1) Originating process may be served out of Australia without order of the Court where – the proceeding is founded on a tort committed within Victoria; the proceeding is brought in respect of damage suffered wholly or partly in Victoria and caused by a tortious act or omission wherever occurring". in Victoria when Because Mr Gutnick alleged that he suffered damage in Victoria as a result of the the Barron's Online article was publication made comprehensible to a reader, r 7.01(1)(j) was plainly engaged. Mr Gutnick's proceeding was brought in respect of damage alleged to have been suffered at least partly in Victoria and alleged to have been caused by a tortious act or omission. As r 7.01(1)(j) makes plain, that paragraph of the rule has operation wherever the tortious act or omission is alleged to have occurred. It matters not, in this case, whether par (i) of the rule applied. It follows from the fact that par (j) was satisfied that the jurisdiction of the Supreme Court McHugh of Victoria was regularly invoked by service of the proceeding on Dow Jones. Was Victoria, nevertheless, a clearly inappropriate forum? Dow Jones contended that Victoria was a clearly inappropriate forum because the substantive issues to be tried would be governed by the laws of one of the States of the United States. Although reluctant, at first, to identify whether the state whose laws applied was New Jersey or New York, in the end Dow Jones submitted that the defamation had occurred in New Jersey and that the substantive issues in the proceeding were, therefore, to be governed by the law of that State. As has been noted earlier, Mr Gutnick has sought to confine his claim in the Supreme Court of Victoria to the damage he alleges was caused to his reputation in Victoria as a consequence of the publication that occurred in that State. The place of commission of the tort for which Mr Gutnick sues is then readily located as Victoria. That is where the damage to his reputation of which he complains in this action is alleged to have occurred, for it is there that the publications of which he complains were comprehensible by readers. It is his reputation in that State, and only that State, which he seeks to vindicate. It follows, of course, that substantive issues arising in the action would fall to be determined according to the law of Victoria. But it also follows that Mr Gutnick's claim was thereafter a claim for damages for a tort committed in Victoria, not a claim for damages for a tort committed outside the jurisdiction. There is no reason to conclude that the primary judge erred in the exercise of his discretion to refuse to stay the proceeding. Actions for publications in several places More difficult questions may arise if complaint were to be made for an injury to reputation which is said to have occurred as a result of publications of defamatory material in a number of places. For the reasons given earlier, in resolving those difficulties, it may be necessary to distinguish between cases where the complaint is confined to publications made in Australia, but in different States and Territories, and cases where publication is alleged to have occurred outside Australia, either with or without publication within Australia. Several kinds of difficulty may arise and each requires separate identification and consideration, even if the treatment of one may have consequences for some other aspect of the matter. First, there may be some question whether the forum chosen by the plaintiff is clearly inappropriate. If there is more than one action brought, questions of vexation may arise and be litigated either by application for stay of proceedings or application for anti-suit injunction. McHugh Secondly, a case in which it is alleged that the publisher's conduct has all occurred outside the jurisdiction of the forum may invite attention to whether the reasonableness of the publisher's conduct should be given any significance in deciding whether it has a defence to the claim made. In particular, it may invite attention to whether the reasonableness of the publisher's conduct should be judged according to all the circumstances relevant to its conduct, including where that conduct took place, and what rules about defamation applied in that place or those places. Consideration of those issues may suggest that some development of the common law defences in defamation is necessary or appropriate to recognise that the publisher may have acted reasonably before publishing the material of which complaint is made50. Some comparison might be made in this regard with the common law developing by recognising a defence of innocent dissemination to deal with the position of the vendor of a newspaper and to respond to the emergence of new arrangements for disseminating information like the circulating library51. In considering any of these matters, it should go without saying that it is of the first importance to identify the precise difficulty that must be addressed. In particular, in cases where the publisher of material which is said to be defamatory has acted in one or more of the United States, any action that is brought in an Australian court in respect of publications that were made in America, would, in applying the law of the place of commission of the tort, have to give effect to the rather different balance that has been struck in the United States between freedom of speech and the individual's interest in reputation. Furthermore, it may well be that the resolution of a claim for publications made in one or more of the United States would be affected by the application by the law of the relevant state of a form of the single publication rule. Three other matters should be mentioned. In considering what further development of the common law defences to defamation may be thought desirable, due weight must be given to the fact that a claim for damage to reputation will warrant an award of substantial damages only if the plaintiff has a reputation in the place where the publication is made. Further, plaintiffs are unlikely to sue for defamation published outside the forum unless a judgment obtained in the action would be of real value to the plaintiff. The value that a 50 cf Lange (1997) 189 CLR 520. 51 Emmens v Pottle (1885) 16 QBD 354; Vizetelly v Mudie's Select Library Ltd [1900] 2 QB 170. See also Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 585-590, 591-596, 617-620. McHugh judgment would have may be much affected by whether it can be enforced in a place where the defendant has assets52. Finally, if the two considerations just mentioned are not thought to limit the scale of the problem confronting those who would make information available on the World Wide Web, the spectre which Dow Jones sought to conjure up in the present appeal, of a publisher forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe is seen to be unreal when it is recalled that in all except the most unusual of cases, identifying the person about whom material is to be published will readily identify the defamation law to which that person may resort. The appeal should be dismissed with costs. 52 cf Yahoo! Inc v La Ligue Contre Le Racisme Et L'Antisemitisme 145 F Supp 2d 1168 at 1178 (ND Cal 2001) and 169 F Supp 2d 1181 (ND Cal 2001); Matusevitch v Telnikoff 877 F Supp 1 (DDC 1995); Bachchan v India Abroad Publications Inc 585 NYS 2d 661 (Sup Ct NY 1992). GAUDRON J. I agree with Gleeson CJ, McHugh, Gummow and Hayne JJ, for the reasons their Honours give, that the appeal in this matter should be dismissed. I also agree with their Honours' observations under the heading "Actions for publications in several places". In respect of one aspect of those observations, I would wish to add some comments of my own. Much of the argument in the present case was concerned with the possibility of several actions being brought in several different jurisdictions in respect of the same defamatory matter. Seemingly, it was to overcome that possibility that the "single publication" rule was adopted in several of the American States. That rule has been described as "a legal fiction which deems a widely disseminated communication ... to be a single communication regardless of the number of people to whom, or the number of states in which, it is circulated."53 It may be accurate to apply the description "legal fiction" to a rule that deems multiple publications to be a single publication. However, it is not apparent that the single publication rule set out in § 577A of the Restatement of Torts, 2d, (1977) deems that to be the case. Rather, as stated, the rule selects "single publication" as a device to define the circumstances in which a plaintiff can be prevented from bringing more than one action. For many years it has been usual in this country for defamation plaintiffs to bring a single action in respect of nationwide or multi-state publications. Gorton v Australian Broadcasting Commission54 is an example of that practice. In an action of that kind, the ordinary choice of law rules apply so that, in respect of each State or Territory in which the material was published, it is open to the parties to rely on the law of that State or Territory55. It may be that the practice exemplified in Gorton v Australian Broadcasting Commission is not simply a practice but the necessary consequence of the principle that underlies the decision in Port of Melbourne Authority v Anshun Pty Ltd56. In that case it was held that the Port of Melbourne Authority was estopped from maintaining a separate action under a contract of indemnity 53 Cohen, "The single publication rule: one action, not one law", (1966) 62 Brooklyn Law Review 921 at 924. 54 [1973] 1 ACTR 6. 55 See McLean v David Syme & Co Ltd (1970) 72 SR (NSW) 513; Gorton v Australian Broadcasting Commission [1973] 1 ACTR 6 at 7-8; Jones v TCN Channel Nine Pty Ltd (1992) 26 NSWLR 732. 56 (1981) 147 CLR 589. by reason that the claim for indemnity could have been pursued in earlier proceedings brought by an injured workman against the parties to the contract and, in which proceedings, the contracting parties claimed contribution against each other as tortfeasors. In Anshun, the estoppel was said to arise, not because of res judicata or issue estoppel57, as those concepts are traditionally understood, but because the claim for indemnity was "a defence to [the] claim [for contribution] in the first action ... [and] so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery"58. In this regard, the estoppel was seen to be an aspect of "the extended principle expressed by Sir James Wigram VC in Henderson v Henderson59"60. It was said in Henderson v Henderson that: "where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case."61 For present purposes, it is unnecessary to explore the circumstances in which an estoppel will be held to arise in consequence of a failure to raise a matter in earlier proceedings. Rather, it is important to note that the principle as stated in Henderson v Henderson stems from the nature of judicial power. The purpose of judicial power is the final determination of justiciable controversies and such controversies are not finally determined unless all issues involved in a controversy are submitted for determination or, if they are not, are treated as no longer in issue. 57 (1981) 147 CLR 589 at 597 per Gibbs CJ, Mason and Aickin JJ. 58 (1981) 147 CLR 589 at 604 per Gibbs CJ, Mason and Aickin JJ. 59 [1843] 3 Hare 100 at 115 [67 ER 313 at 319]. 60 (1981) 147 CLR 589 at 598 per Gibbs CJ, Mason and Aickin JJ. 61 [1843] 3 Hare 100 at 115 [67 ER 313 at 319]. If a plaintiff complains of multiple and simultaneous publications by a defendant of the same defamatory matter there is, in essence, a single controversy between them, notwithstanding that the plaintiff may have several causes of action governed by the laws of different jurisdictions. Accordingly, if, in such a case, an issue arises as to whether an Australian court is a clearly inappropriate forum62, a very significant consideration will be whether that court can determine the whole controversy and, if it cannot, whether the whole controversy can be determined by a court of another jurisdiction. As the respondent has limited his controversy with the appellant to the publication of defamatory matter in Victoria, the controversy is one that can be determined in its entirety by the Supreme Court of that State and there can be no question of multiple suits in different jurisdictions. 62 See Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. Kirby KIRBY J. Lord Bingham of Cornhill recently wrote that, in its impact on the law of defamation, the Internet will require "almost every concept and rule in the field … to be reconsidered in the light of this unique medium of instant worldwide communication."63 This appeal enlivens such a reconsideration. The facts are set out in other reasons64. Essentially, Dow Jones & Company Inc, a corporation registered in the United States of America ("the appellant"), published material on the Internet that was allegedly defamatory of Mr Gutnick ("the respondent") who sued in the Supreme Court of Victoria to recover damages to vindicate his reputation. The issues of jurisdiction, applicable law and forum History of the proceedings: Hedigan J ("the primary judge") dismissed a summons by which the appellant had sought an order for the stay or dismissal of proceedings brought against it by the respondent65. This appeal comes from the refusal of the Court of Appeal of the Supreme Court of Victoria66 to grant leave to the appellant to appeal from the judgment of the primary judge. The Court of Appeal concluded that the decision was not attended by sufficient doubt to warrant its intervention67. It confirmed the judgment of the primary judge. The attention of this Court has therefore been addressed to that judge's reasons. Three issues: The appeal concerns issues that commonly arise where a non-resident foreign party seeks a stay, or the setting aside, of process that brings it involuntarily before an Australian court68: The jurisdiction of the Australian court to decide the action; 63 Collins, The Law of Defamation and the Internet, (2001) at v (Foreword); cf American Civil Liberties Union v Reno 929 F Supp 824 at 844 [81] (E D Pa 1996). 64 Reasons of Gleeson CJ, McHugh, Gummow and Hayne JJ at [1]-[3] ("the joint reasons"), reasons of Callinan J at [169]-[172]. 65 Gutnick v Dow Jones & Company Inc [2001] VSC 305 ("Gutnick"). 66 Dow Jones & Company Inc v Gutnick [2001] VSCA 249 per Buchanan JA and O'Bryan AJA. 67 Dow Jones & Company Inc v Gutnick [2001] VSCA 249 at [11]. 68 cf John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 562 [154] ("Pfeiffer"). Kirby If jurisdiction exists, the law that will apply, in accordance with the principles of private international law, in the exercise of such jurisdiction; and (3) Having regard to the resolution of those questions, whether the proceedings should be stayed, or the process set aside, on the ground that the Australian jurisdiction selected by the plaintiff is an inconvenient forum when compared to another jurisdiction propounded by the resisting party. The arguments of the parties: Although these three issues are separate and distinct, they are closely related. One vital question, relevant to the answer to each issue, is where the cause of action, identified by the respondent, arose. The respondent sues for defamation by the appellant. He submits that the essential elements of the tort of defamation are: (1) publication; (2) in a form comprehended by a third party; (3) causing damage to the plaintiff which, in the case of proof of publication of defamatory matter, is presumed69. Upon this basis the respondent asserts that his proceedings were "founded on a tort committed within Victoria"70. If Victoria is identified as the place of the tort, that finding would provide a strong foundation to support the jurisdiction of the Supreme Court of Victoria71; and to sustain a conclusion that the law to be applied to the proceedings, as framed72, is the law of Victoria. These conclusions would, in turn, provide the respondent with powerful arguments to resist the contention that the proceedings should be stayed, or set aside, on inconvenient forum grounds73. It is unsurprising that the thrust of the appellant's argument was that this Court should re-examine the common law of defamation in Australia so as to 69 Berezovsky v Michaels [2000] 1 WLR 1004 at 1012; [2000] 2 All ER 986 at 993. 70 Supreme Court Rules (Vic) ("SCR"), r 7.01(1)(i). The relevant rule is set out in the joint reasons at [46]. 71 Pursuant to SCR, rr 7.01(1)(i) or (j). 72 This refers to the concession that the respondent would not sue for damage out of Victoria: Gutnick [2001] VSC 305 at [127], [130]. 73 SCR, r 7.05(2)(b) and Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 564-570 ("Voth"); Henry v Henry (1996) 185 CLR 571 at 586-587; Regie National des Usines Renault SA v Zhang (2002) 76 ALJR 551 at 556-557 [24]-[25]; cf 579- 580 [144]-[149], 591-592 [192]-[193]; 187 ALR 1 at 8-9; cf 39-41, 55-57 ("Zhang"). Kirby reformulate its elements, either generally or specifically, for the law as it applies to publication on the Internet. In particular, the appellant urged this Court to re- express the common law so as to abolish the "primitive" rule74, that every publication of defamatory material constitutes a new and separate tort75. At least in respect of publications appearing on the Internet, the appellant submitted that the Court should express the common law to treat defamation as "one global tort (rather than a multiple wrong committed by every single publication and every internet hit)"76. If the common law were re-expressed in this way, the appellant's argument proceeded, the "publication" in this case had occurred, and the tort had been completed, in the United States. Specifically, this had occurred in the State of New Jersey where the matter complained of was uploaded on the appellant's website or in the State of New York where it was composed and finally edited. Practical considerations: Behind these arguments of legal authority, principle and policy lay the forensic advantages perceived by the respective parties. That is not unusual. Nor is it in any way reprehensible77. But it should be recognised at the outset. The respondent was entitled to regard the law of defamation in Victoria as more favourable to his interests than the law in the United States. The latter is greatly influenced by the jurisprudence of the First Amendment to the Constitution of that country78. That jurisprudence is more favourable to the appellant79. The jockeying over the issues in this appeal is thus not concerned only with large questions of law. For the parties, the stakes are more basic and more urgent. Reformulation of the common law of Australia Reasons for restraint: The responsibilities of this Court extend to the re- expression of the common law of Australia. However, the Court is bound by the Constitution. No principle of the common law may be inconsistent with its 74 Robertson & Nicol on Media Law, 4th ed (2002) at 103 ("Robertson & Nicol"). 75 Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]. 76 Robertson & Nicol at 102. 77 cf Jenner v Sun Oil Co Ltd [1952] 2 DLR 526 at 540. 78 New York Times Co v Sullivan 376 US 254 (1964). 79 cf Yahoo!, Inc v La Ligue Contre Le Racisme Et L'Antisemitisme 145 F Supp 2d 1168 at 1178 (N D Cal 2001); 169 F Supp 2d 1181 at 1194 (N D Cal 2001). Kirby language or implications80. Nor may the common law be inconsistent with valid applicable legislation, whether federal, State or of a Territory81. In re-expressing the common law from time to time, regard may be had to the general developments of statute law82. Sometimes, asked to reformulate an established principle of the common law, this Court will decline the invitation, considering that any alteration of the law should be left to the legislature. Factors relevant to such decisions have included the effect on competing interests that should be consulted before any alteration of the law83; the existence of significant economic implications of any change84; the enactment of legislation evidencing parliamentary attention to the subject85; the perceived undesirability of imposing retrospective liability, especially criminal liability, on persons86; and the desirability, in particular cases, of not making any change until after intensive analysis of social data and public consultation, facilities typically unavailable to a court87. The fundamental restraint upon substantial judicial innovation in the expression of the law is imposed by the character of a court's functions as such and an acceptance that, under the Constitution, major legal changes in the Australian Commonwealth are the responsibility of the other branches of government, not of the courts88. 80 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562-567. 81 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 602 [231]-[232]; Conway v The Queen (2002) 76 ALJR 358 at 371 [65]-[66]; 186 ALR 328 at 345- 346; Zhang (2002) 76 ALJR 551 at 579 [143]-[145]; 187 ALR 1 at 39-40. 82 Gray v Motor Accident Commission (1998) 196 CLR 1 at 25-27 [80]-[83]; cf Lamb v Cotogno (1987) 164 CLR 1 at 9. 83 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633. 84 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 402; Jones v Bartlett (2000) 205 CLR 166 at 237-238 [244], 240-241 [252]; cf Dietrich v The Queen (1992) 177 CLR 292 at 312, 323. 85 eg Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 667-668. 86 cf Lipohar v The Queen (1999) 200 CLR 485 at 561-564 [194]-[199]. 87 eg State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633; cf Brodie v Singleton Shire Council (2001) 206 CLR 512 at 549 [79]-[80], 570-572 [130]-[133], 591-600 [203]-[225]; cf Kirby, "Judging: Reflections on the Moment of Decision", (1999) 4 The Judicial Review 189 at 200-207. 88 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 29. Kirby Reasons for action: Despite these expressions of restraint, important reformulations of the common law have been made by this Court, including in recent times89. Some of these have had very great significance. They have reversed long held notions of common law principle. Sometimes they have been stimulated by contemporary perceptions of the requirements of fundamental human rights90. In the present case, in support of its arguments, the appellant invoked the "revolutionary" features of the technology that supplies the Internet. It submitted that those features permitted, and required, a reconsideration of the law governing the elements of the tort of defamation. The features of the Internet and the World Wide Web The Internet: The history of the Internet, its ubiquity, universality and utility have been described in the reasons of many courts in the United Kingdom91, the United States92, Canada93, Australia94 and elsewhere95. In the expert evidence before the primary judge in this case, there was no relevant dispute about the main features of the Internet and of the World Wide Web specifically. Some additional evidence relevant to those features was placed before this Court, without objection, in support of the application of a number of organisations which were granted leave to intervene96. Although the supporting 89 eg Brodie v Singleton Shire Council (2001) 206 CLR 512. 90 eg Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. 91 Godfrey v Demon Internet Ltd [2001] QB 201 at 204-205; Bonnier Media Ltd v Smith unreported, Court of Session (Scotland), 1 July 2002 per Lord Drummond Young. 92 Zippo Manufacturing Co v Zippo Dot Com, Inc 952 F Supp 1119 at 1123-1124 (W D Pa 1997); American Civil Liberties Union v Reno 929 F Supp 824 at 830-844 [1]-[81] (E D Pa 1996). 93 Braintech Inc v Kostiuk (1999) 171 DLR (4th) 46. 94 Macquarie Bank Ltd v Berg (1999) A Def R ¶53, 035. 95 League Against Racism and Antisemitism v Yahoo! Inc unreported, County Court of Paris, 20 November 2000 per Gomez DJ; Judgment No 4741, Italian Court of Cassation, 27 December 2000 per Calabrese J. 96 The interveners included a number of large, mostly overseas, corporations operating open access, non-subscription websites but some provided services to registered users or individuals given access for a fee. The interveners included Amazon.com, Inc; Associate Press; Cable News Network LP, LLLP; Guardian (Footnote continues on next page) Kirby affidavits were not part of the record in the appeal, and cannot be so treated97, most of the features of the Internet there described confirm the evidence given at trial. They are, in any case, readily ascertainable from standard works that describe the Internet's basic elements. It is important to consider these features because they afford the foothold for the appellant's argument that the Internet is such a new and different medium of human communication that it demands a radical reconceptualisation of the applicable common law, specifically with respect to the tort of defamation. It has been estimated that, by the end of 2002, the number of Internet users will reach 655 million98. The number continues to grow exponentially. It is estimated that in some countries, the number of users doubles every six months99. The Internet is essentially a decentralised, self-maintained telecommunications network. It is made up of inter-linking small networks from all parts of the world. It is ubiquitous, borderless, global and ambient in its nature. Hence the term "cyberspace"100. This is a word that recognises that the interrelationships created by the Internet exist outside conventional geographic boundaries and comprise a single interconnected body of data, potentially amounting to a single body of knowledge. The Internet is accessible in virtually all places on Earth where access can be obtained either by wire connection or by wireless (including satellite) links. Effectively, the only constraint on access to the Internet is possession of the means of securing connection to a telecommunications system and possession of the basic hardware. Newspapers Ltd; The New York Times Company; News Limited; Time, Inc; Tribune Company; The Washington Post Company; Yahoo! Inc and John Fairfax Holdings Ltd. 97 Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 107-110, 112-113; Mickelberg v The Queen (1989) 167 CLR 259 at 265-271, 274-275, 298-299; Eastman v The Queen (2000) 203 CLR 1 at 12-13 98 United Nations Conference on Trade and Development, E-Commerce and Development Report, 2002: Executive Summary (2002) at 1. 99 United Nations Conference on Trade and Development, E-Commerce and Development Report 2001: Trends and Executive Summary, (2001) at 56. 100 The term was coined by Gibson, Neuromancer, (1984) at 51: see Harasim (ed), Global Networks, (1993) at 9; and Kirby, "The Globalization of the Media and Judicial Independence", in Martin (ed), Speaking Freely: Expression and the Law in the Commonwealth, (1999) 19 at 20-22. Kirby The World Wide Web: The Web is a forum consisting of millions of individual "sites". Each site contains information provided by, or to, the creator of that site. When a publisher of information and opinion wishes to make its content available on the Web, it commonly does so by creating a "website" and "posting" information to that site. Such a website is a collection of electronic messages maintained on a type of computer known as a "web server". Typically, this is controlled either by the publisher concerned or by a third party contracted by the publisher to provide "web hosting" services. An Internet user may access the information maintained on a website provided the user knows, or can ascertain, the Internet address of the relevant website. By entering that address into the user's web browser, the user will be directed to that website. Once the user locates the website in this way, the user may be required to take additional steps to access information stored on the web server associated with the website. Thus, to post an article to a website, a publisher must prepare a version in digital (computer readable) format. Such an article becomes part of the digital collection of data known as a web page. Such a web page is transmitted to a web server. It, along with the other web pages, comprises the website. By posting information on a website, the publisher makes the content available to anyone, anywhere, having access to the Web. However, accessibility will depend on whether there is open access (under which any web user can access the site); subscription access (under which only web users who register, and commonly pay, for the service can secure access); combination access (where only a portion of a site may be accessed after registration and/or payment of a fee) and restricted access (access limited to specified users authorised by the website operator to view the website, eg employees of a particular company). Difficulty of controlling access: The nature of the Web makes it impossible to ensure with complete effectiveness the isolation of any geographic area on the Earth's surface from access to a particular website. Visitors to a website automatically reveal their Internet Provider ("IP") address. This is a numerical code that identifies every computer that logs onto the Internet. The visitor may also disclose certain information about the type of browser and computer that the visitor uses. The IP addresses of users are generally assigned to them by an Internet Service Provider ("ISP"). The user's IP address will remain the same whenever and wherever the user "surfs" the Web. But some ISPs do not assign a permanent IP address. Instead, they assign a new IP address every time a user logs onto the Web. Because of these features, there is presently no effective way for a website operator to determine, in every case, the geographic origin of the Internet user seeking access to the website. For similar reasons, with respect to subscription accounts, checking the issuing location of a credit card provided by a user would not afford a universally reliable means of ascertaining the geographic location of a user seeking access to Kirby a website. Thus, even assuming that a geographic restriction could be introduced isolating Australia (and hence Victoria) by reference to the origin of the visitor's credit card, a resident of Australia with a credit card issued by a United States bank, would be able to access sites that might be denied to an Australian resident with an Australian credit card, although both users were physically located in Australia. In addition to these difficulties of controlling access to a website by reference to geographic, national and subnational boundaries, the Internet has recently witnessed a rapid growth of technologies ("anonymising technologies") that enable Internet users to mask their identities (and locations). By reason of these developments, the provision of cost effective, practical and reliable identity verification systems, that could afford a universally reliable recognition of the point of origin of an Internet user, has not emerged. This is why the nature of Internet technology itself makes it virtually impossible, or prohibitively difficult, cumbersome and costly, to prevent the content of a given website from being accessed in specific legal jurisdictions when an Internet user in such jurisdictions seeks to do so. In effect, once information is posted on the Internet, it is usually accessible to all Internet users everywhere in the world. Even if the correct jurisdiction of an Internet user could be ascertained accurately, there is presently no adequate technology that would enable non-subscription content providers to isolate and exclude all access to all users in specified jurisdictions. These special features of the Internet present peculiar difficulties for the legal regulation of its content and, specifically, for the exclusion of access in defined jurisdictions. Such difficulties may have a bearing on the question of whether a particular jurisdiction has an advantage in regulating content published and accessed on the Internet101. This does not mean (and no party before the Court suggested) that the Internet is, or should be, a law-free zone. However, in considering what the law, and specifically the common law of Australia, should say in relation to the contents of the Internet, particularly with respect to allegedly defamatory material on a website, the appellant argued that regard had to be taken of these elementary practical features of the technology. Novel features of the Web: The crucial attributes, so it was said, include the explosion in the availability of readily accessible information to hundreds of millions of people everywhere, with the consequent enhancement of human knowledge, and the beneficial contribution to human freedom and access to information about the world's peoples and their diverse lives and viewpoints that the Internet makes available, thereby contributing to human understanding. It was argued that the law should generally facilitate and encourage such advances, 101 cf Spinozzi v ITT Sheraton Corp 174 F 3d 842 at 844-845 per Chief Judge Posner (7th Cir 1999). Kirby not attempt to restrict or impede them by inconsistent and ineffective, or only partly effective, interventions, for fear of interrupting the benefit that the Internet has already brought and the greater benefits that its continued expansion promises. This Court has made reference to the fact that modern development in mass communications and particularly the electronic media may influence the continued relevance or reformulation of established legal principles102. The appellant contested the respondent's suggestion that the Internet was merely the latest of many technologies that have enhanced the spread of information. It submitted that the Internet involved a quantum leap of technological capacity and the ubiquitous availability of information that demanded a root and branch revision of some of the earlier legal rules in order to take into account the Internet's special features. The appellant accepted that it was requesting this Court to take a large step in re-expressing the principles of the common law. However, it argued that the Court should seek a bold solution because of the revolutionary character of the technology that had produced the need to do so. Because the common law adapts even to radically different environments, this Court was asked to be no less bold than the technologists who had invented and developed the Internet. We were reminded of Judge Learned Hand's observation103: "The respect all men feel in some measure for customary law lies deep in their nature; we accept the verdict of the past until the need for change cries out loudly enough to force upon us a choice between the comforts of further inertia and the irksomeness of action." In Theophanous v Herald and Weekly Times Limited104, Brennan J, citing these remarks, noticed that some judges "find the call to reform more urgent". In the context of the development of the Internet, the unique features that I have described and the many beneficial advantages which I acknowledge, I am one of those to whom Brennan J referred. The idea that this Court should solve the present problem by reference to judicial remarks in England in a case, decided more than a hundred and fifty years ago, involving the conduct of the manservant of a Duke, despatched to 102 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 565. 103 Hand, "The Contribution of an Independent Judiciary to Civilisation", in Winters (ed), Handbook for Judges, (1975) 43 at 44. 104 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 142-143. Kirby procure a back issue of a newspaper of minuscule circulation105, is not immediately appealing to me. The genius of the common law derives from its capacity to adapt the principles of past decisions, by analogical reasoning, to the resolution of entirely new and unforeseen problems. When the new problem is as novel, complex and global as that presented by the Internet in this appeal, a greater sense of legal imagination may be required than is ordinarily called for. Yet the question remains whether it can be provided, conformably with established law and with the limited functions of a court under the Australian constitution to develop and re-express the law. Jurisdiction: the Victorian Supreme Court Rules The applicable Rule of Court: It is convenient now to deal with an issue of construction that lies at the threshold and concerns the applicability of the Supreme Court Rules of Victoria ("SCR") invoked by the respondent to establish jurisdiction, given that his process was served on a foreign corporation out of Australia which had no apparent presence or assets in this country. The relevant rule, r 7.01, is set out in other reasons106. Upon one available interpretation, r 7.01 applies in the present case wherever it might be held that the tort of defamation has occurred. If this is a good argument it is unnecessary, in resolving the first issue (jurisdiction), to address any of the foregoing large questions about the Internet. If the respondent's point on the construction of the nominated rule is valid, he has demonstrated jurisdiction in any case. This conclusion would get the respondent over the first hurdle. The primary judge held that the respondent had established jurisdiction of the Supreme Court of Victoria on each of the two provisions of r 7.01(1) upon which he relied, namely pars (i) and (j). Each of those paragraphs was referred to in the endorsement on the originating process. The primary judge held that the proceeding "was founded on a tort committed within Victoria and alternatively the proceeding is brought in respect of damage suffered wholly or partly in Victoria caused by a tortious act and omission occurring in New Jersey"107. The first relevant ground on which the appellant challenged the primary judge's assumption of jurisdiction concerned the interpretation of the cited rule. 105 Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]; cf Robertson & Nicol at 101. 106 The joint reasons at [46]. 107 Gutnick [2001] VSC 305 at [83]. Kirby The appellant disputed that the tort for which it was being sued had been committed in Victoria within par (i). This argument enlivened its call for a departure from previous expressions of the common law on the basis of the lack of locality of the Internet. But if the primary judge is correct and par (j) also applies, there is no need, for the purposes of the jurisdiction issue, to embark on the exploration of such novel questions. Jurisdiction will be established. The parties' arguments: The appellant's argument took two steps. The first was that, in judging the meaning of par (j), it is necessary to classify the claim of the party filing the originating process, ie the respondent. As pleaded, his claim was solely that the tort of defamation alleged had been committed in Victoria. Originally this claim was made only by virtue of the Internet publication. Subsequently it relied, in addition, on evidence that five copies of the journal, containing the matter complained of, had been sold on news stands in Victoria. The primary judge gave the respondent leave to amend his statement of claim to add a new cause of action based on the publication of Barron's magazine in Victoria. However, in his reasons on the jurisdiction issue, the judge concluded that the issue of jurisdiction could be decided without reference to the alleged publication of the printed versions in Victoria. He said that any such publication was minimal and that his decision on the argument of Internet publication would, in substance, conclude the issue of the court's jurisdiction108. It is appropriate for this Court to proceed on the same basis. The second step in the appellant's argument was that par (j) did not, as a matter of construction, extend to torts that had occurred in Victoria. It was submitted that this was so because the paragraph was not necessary in order to afford jurisdiction over local torts. That had already been achieved by par (i). It followed, according to the appellant, that par (j) related only to a case where the pleaded cause of action was alleged to be a wholly foreign tort. It was submitted that this construction was reinforced by the history of the revision of the SCR, of their origins and adoption and of the consecutive appearance within r 7.01(1) of pars (i) and (j)109. Conclusion: I reject this submission. It involves reading pars (i) and (j) too narrowly when those paragraphs are viewed in context. Each of them affords "long-arm" jurisdiction to the Supreme Court of Victoria based on specified, and Whereas par (i) addresses attention to the different, factual premises. 108 Gutnick [2001] VSC 305 at [6]. 109 cf Williams, "The New Supreme Court Rules", (1984) 58 Law Institute Journal Kirby propounded foundation of the proceeding in question, par (j) is not concerned, as such, with the pleading of the tort. It is concerned with the characterisation of the proceedings as brought "in respect of damage suffered wholly or partly in Victoria". Whatever else is in doubt, it is uncontested that the respondent's proceedings alleged that the respondent had suffered damage in Victoria. Once this is shown, the only question to be answered, to attract par (j), is whether such damage was "caused by a tortious act or omission wherever occurring". The language used requires nothing more than "damage" caused by a tort. For the purpose of par (j), the place of the occurrence of the tort (whether in Victoria, New Jersey or anywhere else) is irrelevant110. Because it is irrelevant, it is an issue that does not have to be resolved in order to determine whether r 7.01(1)(j) attaches to the respondent's originating process. It might be complained that "long-arm" rules such as that in r 7.01(1)(j), providing jurisdiction based upon the mere happening of damage within a jurisdiction, conflicts with the ordinary principle of public international law obliging a substantial and bona fide connection between the subject matter of a dispute and the source of jurisdiction of a national court over its resolution111. The validity of the relevant rule has not been challenged in the present proceedings112. The rule in question in this case has overseas equivalents. The law in the United States itself contains many provisions for long-arm jurisdiction113. It follows from my analysis that the primary judge was correct to decide the first issue (jurisdiction) in favour of the respondent. Having found 110 The reason for this is evident. In order to found proceedings properly in the Supreme Court of Victoria, that Court needs jurisdiction over the defendant. The long-arm rules specify circumstances in which originating process may be served on a defendant who is not present in the territory of the Court. 111 Compania Naviera Vascongado v SS Cristina [1938] AC 485 at 496-497; Tolofson v Jensen [1994] 3 SCR 1022 at 1047; Zhang (2002) 76 ALJR 551 at 570-571 [105]-[106]; 187 ALR 1 at 27-28; cf Zippo Manufacturing Co v Zippo Dot Com, Inc 952 F Supp 1119 at 1122 (W D Pa 1997). 112 In Flaherty v Girgis (1985) 4 NSWLR 248 at 267-270 the New South Wales Court of Appeal held that the equivalent rule in the Supreme Court Rules 1970 (NSW) was a law for the peace, welfare and good government of New South Wales and therefore constitutionally valid. No appeal was taken on this issue to the High Court: see Flaherty v Girgis (1987) 162 CLR 574. 113 eg Hsin Ten Enterprise USA, Inc v Clark Enterprises 138 F Supp 2d 449 (S D N Y 2000). See also Juenger, "Traveling to The Hague in a Worn-Out Shoe", (2001) 29 Pepperdine Law Review 7. Kirby jurisdiction on the basis of par (j), it was strictly unnecessary to decide whether another basis for jurisdiction was established under par (i). The appellant's appeal against this part of the primary judge's reasoning fails. As a result of this conclusion, the respondent enjoys the advantage of properly constituted proceedings in an Australian court. The objections that the appellant is not present in this country, has no office or assets here (as I would be prepared to infer); has only minimal commercial interest in the sale of Barron's magazine or online services in Victoria or to Australians; and publishes them principally for the benefit of, and sale to, United States readers, are considerations irrelevant to the issue of jurisdiction once the propounded long- arm rule is found valid and applicable. It remains to decide whether the foregoing considerations, or any of them (and any other considerations) are relevant to the remaining issues which are presented in these proceedings: First, the appropriate identification of the place of the tort and consequently the applicable law; and secondly, whether the primary judge's discretion miscarried on the issue of the appropriateness or otherwise of the Victorian forum for the determination of the cause of action. For the resolution of those issues, it is now necessary to address in more detail the appellant's submission that the conventional requirements of the law of defamation should be altered to recognise that the publication of the allegedly defamatory material on the Internet, and therefore the tort of defamation, occurred in this case in New Jersey (or New York) in the United States. Choice of law: the law of the place of the wrong Jurisdiction and applicable law: The decision that the Victorian Court has jurisdiction over the parties does not resolve the law that such a Court must apply. The distinction between jurisdiction and choice of law is repeatedly made in decisions of this Court. It has insisted that such issues be kept separate and distinct114. A court may have jurisdiction, but it may equally be bound by the applicable rules of private international law to exercise its jurisdiction by giving effect to the law of a foreign jurisdiction. Where necessary, this is done by receiving evidence to prove what that foreign law is. The mere fact that foreign law is applicable, and must be proved, does not, of itself, decide the third (convenient forum) issue. In Regie National des Usines Renault SA v Zhang115, this Court held that "[a]n Australian court cannot be a clearly inappropriate 114 Zhang (2002) 76 ALJR 551 at 553-554 [10], 570 [105]; 187 ALR 1 at 4-5, 27-28 applying Pfeiffer (2000) 203 CLR 503. 115 (2002) 76 ALJR 551 at 566 [81]; cf at 559 [39] quoting Anderson v Eric Anderson Radio & TV Pty Ltd (1965) 114 CLR 20 at 41; 187 ALR 1 at 21-22; cf at 12. Kirby forum merely by virtue of the circumstance that the choice of law rules which apply in the forum require its courts to apply foreign law as the lex causae." The majority in Zhang agreed that the principle, earlier accepted in John Pfeiffer Pty Ltd v Rogerson116 with respect to intra-Australian torts, extended equally to "international torts"117. This was so, despite the absence, in the case of international torts, of the federal consideration that had encouraged this Court in Pfeiffer to abandon the "double actionability" rule in Phillips v Eyre118 and to depart from local decisions that had applied that rule119. The rule for the ascertainment of the applicable law is therefore that it is the law where the tort was committed (lex loci delicti)120. In Zhang, I acknowledged that it will sometimes be "debatable as to where precisely the 'wrong' occurred"121. Neither Pfeiffer nor Zhang dealt precisely with the issue raised by the present proceedings. Here, depending upon the identification of the elements of the tort alleged by the respondent, they could be categorised as referring to an Australian tort, an international tort, or both. The present is a case where each party urges the contrary locus. The parties' arguments: The respondent, invoking what he asserted to be "hundreds of years" of defamation law, submitted that the conclusion of the primary judge was correct. This was so because of two basic principles: First, that each publication of defamatory material represents a separate tort for which a plaintiff could sue122 and this rule applies to publications on the Internet as much as to those in any other medium; and 116 (2000) 203 CLR 503. 117 (2002) 76 ALJR 551 at 563 [60] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ and at 577 [133] of my own reasons. The position was reserved by Callinan J at 596 [214]; 187 ALR 1 at 17, 37, 63. 118 [1870] LR 6 QB 1 at 28-29. 119 eg Breavington v Godleman (1988) 169 CLR 41; McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1. 120 Zhang (2002) 76 ALJR 551 at 576 [129]-[130]; 187 ALR 1 at 35-36. 121 (2002) 76 ALJR 551 at 577 [133]; 187 ALR 1 at 37; cf Juenger, "Tort Choice of Law in a Federal System", (1997) 19 Sydney Law Review 529 at 531. 122 Invoking Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]. Kirby Secondly, that the "publication" for the purposes of the law of defamation did not occur when the offending words were written, committed to digital the United States). form, "uploaded" or otherwise processed (in Potentiality to harm, reasonable expectations that this would be a consequence and even an intention to have that result were not enough. For defamation, it was necessary that the plaintiff's reputation should be damaged in fact. Relevantly to the impugned material and the tort as pleaded, this had happened at the time and place the matter complained of was received and comprehended by a person (other than the publisher and the plaintiff) in Victoria, ie when the material sued for appeared on the appellant's website and was "downloaded" (or when the hard copies of the magazine distributed in Victoria were acquired and read)123. For its part, the appellant, supported by the interveners, invited this Court to reformulate, at least in the context of publications on the Internet, the legal ingredients of the tort of defamation; and to adopt, at least in respect of such publications, a single publication rule expressed in terms of the place of "uploading". Alternatively, the appellant argued the place of the wrong for choice of law purposes should be ascertained by reference to where in substance the cause of action rose124. If that question were asked in the present case, the appellant suggested that the answer would be New Jersey (or New York), not Victoria. Interrelationship of issues: The interrelationship of the three issues in the appeal can be seen immediately. Each of the foregoing submissions would be relevant to the jurisdiction issue (if jurisdiction were determined only by whether a tort had been committed within Victoria). It is only because of the wider criterion of jurisdiction contained in r 7.01(1)(j) of the SCR that such arguments are not determinative of the jurisdiction issue in this case. However, they are clearly relevant for the choice of law issue. And this, in turn, is important for the convenient forum issue and, in a sense, foreshadows that issue. Defamation and the Internet: a new paradigm? A novel development: The fundamental premise of the appellant's arguments concerning the reformulation of the applicable rules of defamation depended on the technological features of the Internet. According to the appellant, those features were sufficiently different from pre-existing technology to demand a substantial reconsideration of the relevant law that had been stated 123 eg Isaacs & Sons Ltd v Cook [1925] 2 KB 391; Bata v Bata [1948] WN 366. 124 Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 466 ("Distillers"); cf Voth (1990) 171 CLR 538 at 567. Kirby in a different context in earlier times. If a more general revision were thought inappropriate or unnecessary, the task should at least be undertaken for any allegedly defamatory imputations published on the Internet. I accept that a number of arguments support this proposition. Involved in responding to it are important questions of legal principle and policy. The proposition cannot be answered by an enquiry limited to expressions of past law. When a radically new situation is presented to the law it is sometimes necessary to think outside the square. In the present case, this involves a reflection upon the features of the Internet that are said to require a new and distinctive legal approach. First, the Internet is global. As such, it knows no geographic boundaries. Its basic lack of locality suggests the need for a formulation of new legal rules to address the absence of congruence between cyberspace and the boundaries and laws of any given jurisdiction125. There are precedents for development of such new legal rules. The Law Merchant (lex mercatoria) arose in medieval times out of the general custom of the merchants of many nations in Europe. It emerged to respond to the growth of transnational trade. The rules of the common law of England adapted to the Law Merchant. They did so out of necessity and commonsense126. Effective legal responses: The general principle of public international law obliging comity in legal dealings between states suggests that arguably, with respect to the legal consequences of the Internet, no jurisdiction should ordinarily impose its laws on the conduct of persons in other jurisdictions in preference to the laws that would ordinarily govern such conduct where it occurs. At least this should be so unless the former jurisdiction can demonstrate that it has a stronger interest in the resolution of the dispute in question than the latter127. In 125 Perritt, "Jurisdiction in Cyberspace: The Role of Intermediaries", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 122 at 122; Jew, "Cyber Jurisdiction – Emerging Issues and Conflicts of Law When Overseas Courts Challenge Your Web", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 186 at 187. 126 Johnson and Post, "Law and Borders – The Rise of Law in Cyberspace", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 123 at 123. Other analogies have been suggested, including the common law invention of the postal exception to delivery upon the advent of reliable postal services: Cowan v O'Connor (1888) 20 QBD 640 127 Johnson and Post, "And How Shall the Net be Governed? A Meditation on the Relative Virtues of Decentralised, Emergent Law", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 123 at 129. Kirby conformity with this approach, the advent of the Internet suggests a need to adopt new principles, or to strengthen old ones, in responding to questions of forum or choice of law that identify, by reference to the conduct that is to be influenced, the place that has the strongest connection with, or is in the best position to control or regulate, such conduct128. Normally, the laws of such a place are those most likely to be effective in securing the objectives of law, such as here, the protection of the right to free expression and access to information and the defence of reputation. Effectiveness of remedies: Any suggestion that there can be no effective remedy for the tort of defamation (or other civil wrongs) committed by the use of the Internet (or that such wrongs must simply be tolerated as the price to be paid for the advantages of the medium) is self-evidently unacceptable. Instruments of international human rights law recognise the right of "[e]veryone … to hold opinions without interference" and to enjoy "the right to freedom of expression … [including] freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers … through any … media of his choice"129. However, such instruments also recognise that those rights carry "duties and responsibilities". They may therefore "be subject to certain restrictions, but these shall only be such as are provided by law and are necessary … [f]or respect of the rights or reputations of others"130. The International Covenant of Civil and Political Rights also provides that "[n]o one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation". And that "[e]veryone has the right to the protection of the law against such interference or attacks"131. Accordingly, any development of the common law of Australia, consistent with such principles132, should provide effective legal protection for the honour, reputation and personal privacy of individuals. To the extent that our law does not do so, Australia, like other 128 Spinozzi v ITT Sheraton Corp 174 F 3d 842 at 844-845 (7th Cir 1999). 129 International Covenant on Civil and Political Rights done at New York on 19 December 1966, ATS 1980 No 23, Arts 19.1, 19.2 ("ICCPR"). Arguably, such provisions of the ICCPR can be said to reflect customary international law. In any case, as a state party Australia is subject to legally binding obligations under the ICCPR. 130 ICCPR, Art 19.3 and see Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 at 575. 131 ICCPR, Arts 17.1 and 17.2. 132 cf Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. Kirby nations so obliged, is rendered accountable to the relevant treaty body for such default133. The law in different jurisdictions, reflecting local legal and cultural norms, commonly strikes different balances between rights to information and expression and the protection of individual reputation, honour and privacy. These disparities suggest the need for a clear and single rule to govern the conduct in question according to pre-established norms. If it is to be effective, such a rule must be readily ascertainable. To tell a person uploading potentially defamatory material onto a website that such conduct will render that person potentially liable to proceedings in courts of every legal jurisdiction where the subject enjoys a reputation, may have undesirable consequences. Depending on the publisher and the place of its assets, it might freeze publication or censor it or try to restrict access to it in certain countries so as to comply with the most restrictive defamation laws that could apply. Or it could result in the adoption of locational stratagems in an attempt to avoid liability. A new rule for a unique technology: In response to the suggestion that similar questions have existed at least since telegraph and international shortwave radio and that such potential liability is a commonplace in the world of global television distributed by satellite, the appellant pointed to the peculiarities of Internet publication. Viewed in one way, the Internet is not simply an extension of past communications technology. It is a new means of creating continuous relationships in a manner that could not previously have been contemplated134. According to this view, the Internet is too flexible a structure to be controlled by a myriad of national laws, purportedly applied with no more justification than is provided by the content of such laws, usually devised long before the Internet arrived135. For stored information, accessible in cyberspace, the new technology was said to demand a new approach. This would be true as 133 Pursuant to the first Optional Protocol to the ICCPR. See Mabo v Queensland [No 2] (1999) 175 CLR 1 at 42. 134 Jew, "Cyber Jurisdiction – Emerging Issues and Conflicts of Law When Overseas Courts Challenge Your Web", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 186 at 135 Draft Report by the ABA Global Cyberspace Jurisdiction Project on "Global Jurisdiction Issues Created by the Internet", in Fitzgerald and Fitzgerald, cyberlaw, Kirby much for the law of taxation136, commercial transactions137 and other areas, as for the law of defamation. The urgency of a new rule: To wait for legislatures or multilateral international agreement to provide solutions to the legal problems presented by the Internet would abandon those problems to "agonizingly slow" processes of lawmaking138. Accordingly, courts throughout the world are urged to address the immediate need to piece together gradually a coherent transnational law appropriate to the "digital millennium"139. The alternative, in practice, could be an institutional failure to provide effective laws in harmony, as the Internet itself is, with contemporary civil society – national and international. The new laws would need to respect the entitlement of each legal regime not to enforce foreign legal rules contrary to binding local law or important elements of local public policy140. But within such constraints, the common law would adapt itself to the central features of the Internet, namely its global, ubiquitous and reactive characteristics141. In the face of such characteristics, simply to apply old rules, created on the assumptions of geographical boundaries, would encourage an inappropriate and usually ineffective grab for extra-territorial jurisdiction142. 136 Draft Report by the ABA Global Cyberspace Jurisdiction Project on "Global Jurisdiction Issues Created by the Internet", in Fitzgerald and Fitzgerald, cyberlaw, 137 Hill, "Flogging a Dead Horse – The Postal Acceptance Rule and Email", (2001) 17 Journal of Contract Law 151. 138 Johnson and Post, "And How Shall the Net be Governed? A Meditation on the Relative Virtues of Decentralised, Emergent Law", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 123 at 124; see Dinwoodie, "A New Copyright Order: Why National Courts Should Create Global Norms", (2000) 149 University of Pennsylvania Law Review 469. 139 Fitzgerald, "Software as Discourse: The Power of Intellectual Property in Digital Architecture", (2000) 18 Cardozo Arts and Entertainment Law Journal 337 at 385; Fitzgerald, "An Emerging Liberal Theory of International Law and the Non- Enforcement of Foreign Public Laws", (1995) 16 Australian Year Book of International Law 311 at 319. 140 eg Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30. 141 Bonnier Media Ltd v Smith unreported, Court of Sessions (Scotland), 1 July 2002 at 142 Johnson and Post, "And How Shall the Net be Governed? A Meditation on the Relative Virtues of Decentralised, Emergent Law", in Fitzgerald and Fitzgerald, (Footnote continues on next page) Kirby The adoption of a single publication rule, expressed in terms of the place of uploading of material on the Internet might, in this case, favour the jurisdiction of the courts and the law of the United States. However, it would not always be so. Thus, if the liability propounded concerned an Australian who had uploaded material on the Internet within Australia, had taken pains to conform to Australian defamation law but was sued for defamation in some other jurisdiction whose defamation laws were more restrictive than Australia's, respect for the single global publication rule, if it became internationally accepted, could help reduce the risks of legal uncertainty and the excessive assertion of national laws. Enforceability of judgments: Any rule adopted with respect to publication of defamatory matter on the Internet must eventually face the practical question concerning the enforceability of a judgment recovered in such proceedings. The balance that is struck between freedom of expression and access to information and protection of individual reputation, honour and privacy tends to be a subject about which divergent views exist in the laws of different countries. Sometimes such laws are reinforced by domestic constitutional provisions143. A judgment of a country's courts, recovered in defamation proceedings, may be enforced against any property of a foreign judgment debtor that exists within the jurisdiction. But if it is necessary to enforce the judgment in another jurisdiction, the difficulty or impossibility of such enforcement may amount to a practical reason for providing relief to the objecting foreign party on one or more of the grounds of objection raised in this case144. By reference to these and like considerations, the appellant submitted that this Court should look afresh at the common law of defamation. It argued that we, as one of the first final courts asked to consider this problem, should adjust cyberlaw, (2002) 123 at 124; cf Fitzgerald, "Life in Cyberspace: A Simulating Experience", in Fitzgerald and Fitzgerald, cyberlaw, (2002) 131. 143 Desai v Hersh 719 F Supp 670 (ND Ill 1989); Bachchan v India Abroad Publications 585 NYS 2d 661 (1992); Yahoo!, Inc v La Ligue Contre Le Racisme Et L'Antisemitisme 169 F Supp 2d 1181 (N D Cal 2001). 144 Telnikoff v Matusevitch 702 A 2d 230 (Md 1997); cf Maltby, "Juggling Comity and Self-Government: The Enforcement of Foreign Libel Judgments in US Courts", (1994) 94 Columbia Law Review 1978; Kyu Ho Youm, "Suing American Media in Foreign Courts: Doing an End-Run Around US Libel Law?", (1994) 16 Hastings Communications and Entertainment Law Journal 235; Sanders, "Extraterritorial Application of the First Amendment to Defamation Claims Against American Media", (1994) 19 North Carolina Journal of International Law and Commercial Regulation 515. Kirby previously stated law to the new technological and legal realities. The adoption of a simple universal rule apt to the new medium, to the effectiveness of law as an influence upon publishing conduct and realistic about the prospects of recovery upon judgments against foreign defendants, was the approach that the appellant invited this Court to take. Reasons for declining an Internet-specific single publication rule Limits to judicial innovation: The foregoing considerations present a persuasive argument for the formulation of a new rule of the common law that is particular to the publication of allegedly defamatory matter on the Internet. For myself, I do not regard them as mere slogans145. They present a serious legal issue for decision. Judges have adapted the common law to new technology in the past146. The rules of private international law have emerged as a result of, and remain alive to, changes in the means of trans-border communication between people. The Internet's potential impact on human affairs continues to expand and is already enormous. Later judges, in a position to do so, can sometimes reformulate the law in order to keep it relevant and just. Specifically they may re-express judge-made rules that suit earlier times and different technologies. For a number of reasons I have concluded that this Court would not be justified to change the rules of the Australian common law as would be necessary in this case to respond to the submissions of the appellant. First, a starting point for the consideration of the submission must be an acceptance that the principles of defamation law invoked by the respondent are settled and of long standing. Those principles are: (1) that damage to reputation is essential for the existence of the tort of defamation147; (2) that mere composition and writing of words is not enough to constitute the tort; those words must be communicated to a third party who comprehends them148; (3) that 145 cf Gutnick [2001] VSC 305 at [70]. 146 Libman v The Queen [1985] 2 SCR 178 at 213-214 per La Forest J cited in Lipohar v The Queen (1999) 200 CLR 485 at 558-559 [183]-[184]; cf Zhang (2002) 76 ALJR 551 at 576-577 [132]; 187 ALR 1 at 36-37. 147 Holdsworth, A History of English Law, 3rd ed (1945), vol 5 at 206-207; cf Lee v Wilson & MacKinnon (1934) 51 CLR 276 at 287. 148 Webb v Bloch (1928) 41 CLR 331 at 363; Lee v Wilson & MacKinnon (1934) 51 CLR 276 at 287; Evans & Co v Stein & Co 1904 12 SLT 462 at 463; Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188 at 191-192; Toomey v Mirror Newspapers Ltd (1985) 1 NSWLR 173 at 177; Holdsworth, A History of English Law, 2nd ed (1937), vol 8 at 371; Gatley on Libel and Slander, 9th ed (1998) at Kirby each time there is such a communication, the plaintiff has a new cause of action149; and (4) that a publisher is liable for publication in a particular jurisdiction where that is the intended or natural and probable consequence of its acts150. Where rules such as these are deeply entrenched in the common law and relate to the basic features of the cause of action propounded, their alteration risks taking the judge beyond the proper limits of the judicial function. Rules should be technology-neutral: Whilst the Internet does indeed present many novel technological features, it also shares many characteristics with earlier technologies that have rapidly expanded the speed and quantity of information distribution throughout the world. I refer to newspapers distributed (and sometimes printed) internationally; syndicated telegraph and wire reports of news and opinion; newsreels and film distributed internationally; newspaper international articles and photographs television telefacsimile; including programmes; motion pictures; videos and digitalised television transmission; and cable television and satellite broadcasting151. Generally speaking, it is undesirable to express a rule of the common law in terms of a particular technology. Doing so presents problems where that technology is itself overtaken by fresh developments152. It can scarcely be supposed that the full potential of the Internet has yet been realised. The next phase in the global distribution of information cannot be predicted. A legal rule expressed in terms of the Internet might very soon be out of date. syndicated images; instantaneously by reproduced shortwave radio; radio, The need for legislative reform: There are special difficulties in achieving judicial reform of the multiple publication rule in Australian law, even if one that it should be reformed to meet the technological were convinced 149 R v Carlisle (1819) 1 Chitty 451 at 453. This was also originally the law in the United States: Ogden v Association of the United States Army 177 F Supp 498 at 499-500 (1959); cf Australian Broadcasting Corporation v Waterhouse (1991) 25 NSWLR 519 at 535; Gatley on Libel and Slander, 9th ed (1998) at 154 [6.30]; Dicey and Morris on the Conflict of Laws, 13th ed (2000) at 1567-1568 [35-136]. 150 cf Voth (1990) 171 CLR 538 at 568; Pullman v Walter Hill & Co Ltd [1891] 1 QB 524 at 527; Sadgrove v Hole [1901] 2 KB 1 at 4-5; Sims v Wran [1984] 1 NSWLR 317 at 320; Rheinstein, "The Place of Wrong: A Study in the Method of Case Law", (1944) 19 Tulane Law Review 4 at 28. 151 Prosser, "Interstate Publication", (1953) 51 Michigan Law Review 959 at 959-960; Meldrum v Australian Broadcasting Co Ltd [1932] VLR 425 at 440-441; Jenner v Sun Oil Co Ltd [1952] 2 DLR 526; Hartmann v Time, Inc 166 F 2d 127 (1947). 152 The postal rule is an example: see Hill, "Flogging a Dead Horse - The Postal Acceptance Rule and Email", (2001) 17 Journal of Contract Law 151. Kirby characteristics of the Internet. Legislation in at least one Australian State is expressed in terms that assume the existence of the multiple publication rule153. In Australian Broadcasting Corporation v Waterhouse154, Samuels JA stated his opinion that a single publication rule could only be introduced throughout Australia by statute. Whilst that remark was not essential to his Honour's reasoning, was made before the particular features of the Internet were known and does not bind this Court, it reflects the recognition of a judge with much experience in defamation law of the limits that exist on judicial alteration of basic principles to fit the apparent needs of a new technology. Because of such limits other means have been adopted within Australia to reduce the inconvenience of the multiple publication rule155. Some, or all, of these would be available in the case of an Internet publication to reduce the suggested inconvenience of that rule. The defects of the multiple publication rule have been considered by the Australian Law Reform Commission ("ALRC"). In successive reports, the ALRC has proposed different solutions to the problem156. In its report on defamation law, the ALRC recommended legislation to abrogate the rule157. However, its recommendations have not so far been enacted. Whilst this is not 153 Defamation Act 1974 (NSW), sub-ss 9(2), (3). See Australian Law Reform Commission, Unfair Publication: Defamation and Privacy, Report No 11, (1979) 154 (1991) 25 NSWLR 519 at 537. 155 In Australian Broadcasting Corporation v Waterhouse (1991) 25 NSWLR 519 at 537, Samuels JA instanced four "mechanisms": (1) relief against abuse of process; (2) aggregation of damages; (3) consolidation of proceedings; and (4) the application of statutory provisions against double compensation. He might also have mentioned the surviving cross-vesting legislation and Anshun estoppel, the latter mentioned in the reasons of Gaudron J at [60]-[63], see also the other considerations noted in the joint reasons at [36], [50]-[54]. 156 Australian Law Reform Commission, Unfair Publication: Defamation and Privacy, Report No 11, (1979) at 60-61 [113]; Australian Law Reform Commission, Choice of Law, Report No 58, (1992) at 57 [6.53]-[6.54]. 157 Australian Law Reform Commission, Unfair Publication: Defamation and Privacy, Report No 11 (1979) at 208, 218-219: Draft Commonwealth Bill for an Unfair Publication Act, cl 7(1) (definition of "multiple publication") and cll 34(1) and 35. Kirby necessarily a reason for this Court to stay its hand158, it is appropriate to recall that in a parliamentary democracy such as that established by the Australian Constitution, this is a reason for caution in judicial alteration of basic and long held legal rules. Such caution is reinforced by the consideration that recently, when invited to do so, the House of Lords rejected the global theory of defamation liability. One of the reasons of the majority was that any such change would be incompatible with the long established principle in the Duke of Brunswick's Case which, by inference, their Lordships felt to be beyond judicial repair159. There are a number of difficulties that would have to be ironed out before the settled rules of defamation law that I have mentioned could be modified in respect of publication of allegedly defamatory material on the Internet. Take for example the suggestion that, before proof of damage or comprehension by anyone (apart from the author), the place and law of "publication" was fixed by the jurisdiction in which the text was first uploaded (as the appellant proposed) or in which the publisher last exercised control over dissemination (as the interveners proposed). The respondent complained that either of these rules, if substituted for the present law, would lead to "chaos". Even allowing for an advocate's overstatement, there are indeed difficulties. Publishers could easily locate the uploading of harmful data in a chosen place in an attempt to insulate themselves from defamation liability. They might choose places with defamation laws favourable to publishing interests. Just as books are now frequently printed in developing countries, the place of uploading of materials onto the Internet might bear little or no relationship to the place where the communication was composed, edited or had its major impact. As if to recognise this problem, the appellant postulated various exceptions to its criterion of the place of uploading. These included exceptions for "adventitious or opportunistic" conduct; or conduct that "targeted" a particular place; or which existed where the website was "promoted". Apart from raising the question of whether the appellant's own publications would, in this case, fall within exceptions of the latter kind, it will be observed that we are already involved in overthrowing established legal rules for new ones that would 158 It did not prevent the reformulation of the choice of law in tort rule in Pfeiffer notwithstanding the publication of the ALRC's reports and the absence of legislative action: see (2000) 203 CLR 503 at 559-560 [148]. 159 Berezovsky v Michaels [2000] 1 WLR 1004 at 1011-1012, 1024, 1026-1027; [2000] 2 All ER 986 at 993, 1005, 1007-1008; cf Robertson & Nicol at 103. See also Loutchansky v Times Newspapers Ltd (No 2-5) [2002] QB 783 at 814-818 Kirby require great precision in the formulation of detailed exceptions if a satisfactory judicial reformulation were to be achieved. The uploading approach would also oblige a plaintiff to discover matters of conduct normally exclusively within the knowledge of the persons involved in processing the data. The plaintiff would have to find such facts in advance of the commencement of the proceedings. There are many similar practical problems. However, I have said enough to show that the propounded reformulation presents many complex questions. They are not appropriate for solution in judicial proceedings addressed to deciding a controversy between particular parties mainly or only interested in the outcome of their own dispute. Attractions of alternative formulations: A connected issue demands consideration. If the place of uploading were adopted as the place of publication which also governs the choice of applicable law, the consequence would often be, effectively, that the law would assign the place of the wrong for the tort of defamation to the United States. Because of the vastly disproportionate location of webservers in the United States when compared to virtually all other countries (including Australia) this would necessarily have the result, in many cases, of extending the application of a law of the United States (and possibly the jurisdiction and forum of its courts) to defamation proceedings brought by Australian and other foreign citizens in respect of local damage to their reputations by publication on the Internet160. Because the purpose of the tort of defamation (as much in the United States as in Australia) is to provide vindication to redress the injury done to a person's reputation161, it would be small comfort to the person wronged to subject him or her to the law (and possibly the jurisdiction of the courts) of a place of uploading, when any decision so made would depend upon a law reflecting different values and applied in courts unable to afford vindication in the place where it matters most. At least in the case of the publication of materials potentially damaging to the reputation and honour of an individual, it does not seem unreasonable, in principle, to oblige a publisher to consider the law of the jurisdiction of that person's habitual residence162. In its review of this subject, the ALRC expressed the opinion that "[i]n the case of defamation of a natural person, the law to be applied would normally be that of the place where the person was ordinarily 160 cf Digital Equipment Corporation v Altavista Technology, Inc 960 F Supp 456 at 462-463 (D Mass 1997). 161 Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 69. 162 cf Telco Communications v An Apple a Day 977 F Supp 404 (E D Va 1997). Kirby resident"163. In its subsequent report on choice of law, the ALRC concluded that "residence is the best option for a choice of law rule for defamation"164. The ALRC went on to recommend that it was "unnecessary to qualify residence as 'usual' or 'habitual' for the purposes of this rule, since to do so might take the rule further away from the place of loss of reputation"165. In his reasons in Australian Broadcasting Corporation v Waterhouse166, proposing the need for legislative reform of defamation law within Australia, Samuels JA suggested much the same. He said that the criterion of the habitual residence of the subject of the publication would present an objective criterion. It would discourage forum shopping. It would also give "effect to the expectations of the parties" on the basis that the place of residence would be where "[a] plaintiff will generally suffer most harm"167. His Honour's analysis shows how deeply embedded in the concept of the tort of defamation are the ideas of proof of damage to reputation; comprehension of the matter complained of; and acknowledgment that the sting is felt each time a publication is repeated. When this point is reached it is natural, and proper, for a court such as this to refuse the invitation to re-express the common law, even if persuasive criticism of the present law has been advanced, as I think it has. Although the ALRC's reports proposing relevant reforms168 have not been implemented, it is not true to suggest that the parliaments of Australia have neglected regulation of liability for particular aspects of Internet content169. Further, while the 163 Australian Law Reform Commission, Unfair Publication: Defamation and Privacy, Report No 11, (1979) at 191. 164 Australian Law Reform Commission, Choice of Law, Report No 58, (1992) at 58 165 Australian Law Reform Commission, Choice of Law, Report No 58, (1992) at 59 166 (1991) 25 NSWLR 519. 167 (1991) 25 NSWLR 519 at 539. 168 Australian Law Reform Commission, Unfair Publication: Defamation and Privacy, Report No 11, (1979) and Australian Law Reform Commission, Choice of Law, Report No 58, (1992); cf Australian Law Reform Commission, Censorship Procedure, Report No 55, (1991) at 33 [3.36]. There have also been Parliamentary Research Papers eg Griffith, Censorship in Australia: Regulating the Internet and other recent developments, Briefing Paper 4/2002 (2002). 169 eg Broadcasting Services Act 1992 (Cth), s 216B and Sched 5 ("Online services"); Crimes Act 1914 (Cth), s 85ZE(1)(a). The Victorian Parliament has also enacted (Footnote continues on next page) Kirby recommendations of the ALRC may provide guidance to the identification of the place of the tort of defamation for choice of law purposes in light of this Court's decisions in Pfeiffer and Zhang, they do not assist the argument of the appellant. International developments, involving multilateral negotiations, must also be considered if there is to be any chance of the adoption of a uniform approach suitable to the world-wide technology, as the appellant urged170. In other sensitive areas of the law requiring international agreement, the Australian Parliament has recently moved with proper speed to implement the emerging international consensus171. Change exceeds the judicial function: Although, therefore, the appellant (and interveners) have established real defects in the current Australian law of defamation as it applies to publications on the Internet, their respective solutions for altering the elements of the tort and expressing it in terms of conduct substantially in the control of the publisher or its agents (and out of the control of the plaintiff whose reputation is alleged to have been damaged) are too simplistic. It would exceed the judicial function to re-express the common law on such a subject in such ways. This is a subject of law reform requiring the evaluation of many interests and considerations that a court could not be sure to cover. Subject to what follows, I, like the other members of this Court, do not think that a single publication rule should be adopted in terms of the place of uploading as the place of publication of allegedly defamatory material on the Internet, which would also govern the choice of applicable law. Internet-related laws: eg Electronic Transactions (Victoria) Act 2000 (Vic), see esp s 13. 170 For a discussion of the negotiations toward the Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children done at The Hague on 19 October 1996, [1996] ATSD 4416 see Fitzgerald and Fitzgerald, cyberlaw, (2002) at 198-215. See esp Art 10 at 202. 171 eg Family Law Amendment (Child Protection Convention) Act 2002 (Cth), implementing the ratification of the Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children done at The Hague on 19 October 1996, [1996] ATSD 4416. Kirby The place of the wrong and the applicable law The applicable test: The appellant then submitted that, even if a single publication rule were not adopted for defamatory publications on the Internet by reference to its special features, the result that it sought still followed from an existing principle of Australian private international law concerning the place of wrongs that have connections with two or more jurisdictions. In particular, the appellant argued that, in such circumstances, the applicable test obliged a court to look "over the series of events constituting [the tort] and ask the question, where in substance did this cause of action arise?"172 The issue of the test for localising a tort, particularly in situations such as the present where the cause of action has connection with more than one jurisdiction, did not need to be resolved by this Court either in Pfeiffer or in Zhang173. Simply adopting the law of the place of the wrong as the applicable law in international tort claims does not answer that question. It is not the end of the inquiry, it is merely the beginning. It leads immediately to the additional question of identifying the place of the wrong. In Pfeiffer, all of the elements of the cause of action were in the same place. In Zhang, some elements occurred in France (design and manufacture of the motor car) while some in New Caledonia (the accident itself), however both these jurisdictions were governed by French law. While the law of the place of the wrong was adopted as a simple rule which can be applied with certainty and predictability174, this appeal illustrates the fact that much controversy can exist in relation to the proper identification of where the place of the wrong is. The parties' arguments: The appellant urged that the test from Distillers Co (Biochemicals) Ltd v Thompson175 provided the correct approach to resolving the foregoing issue. This was so because it was said to involve a process of judicial evaluation of factors that the parties could not easily manipulate, and therefore it could be said to avoid many of the problems discerned in the alternative criteria propounded, such as the place of uploading on the Internet or the place of the last exercise of control by the publisher. 172 Distillers [1971] AC 458 at 468; Voth (1990) 171 CLR 538 at 567; cf Davis v Costa-Gavras 580 F Supp 1082 (1984). 173 cf Pfeiffer (2000) 203 CLR 503 at 563 [158]. 174 Zhang (2002) 76 ALJR 551 at 564 [66], cf 573 [115]; 187 ALR 1 at 18, cf 31. Also Pfeiffer (2000) 203 CLR 503 at 528 [44], 539 [83], 555 [136]. 175 [1971] AC 458 at 468. Reference was also made to the earlier case of Jackson v Spittall (1870) LR 5 CP 542. Kirby The judgment for the Privy Council in Distillers, on appeal from New South Wales, before all such Australian appeals were finally abolished in 1986, was delivered by Lord Pearson. After examining a number of alternative ways of answering "where in substance did the cause of action arise", his Lordship expressed a preference for identifying the locality of the tort as the place where "the act on the part of the defendant which gives the plaintiff his cause of complaint"176 occurred. In Voth, this Court applied Lord Pearson's test from Distillers in answering the question whether the tort alleged was a "foreign tort"177. Lord Pearson's formulation appears, at least on the face of things, to assist the appellant. This is because it focuses attention on the act of a defendant. Thus, it can be said that in this case the last act of the appellant that gave the respondent his cause of action took place at the point of uploading, which occurred in New Jersey. Furthermore, the appellant and the interveners submitted that the "substance" or "common sense" criterion applied to the subject matter of the present proceedings would clearly assign the place of the alleged wrong to New Jersey (or New York178). That was where the matter complained of was composed, finally edited and uploaded on the appellant's website to be made available all over the world. The place where the overwhelming majority of those who could be expected to (and did) have access to the matter resided, was also in the United States. As well, that was the place where any law addressed to changing conduct (and sanctioning a civil wrong) would enjoy its principal impact. It represented the place where the actors involved, who made the material available to the world would, normally, have access to legal advice and be subject to laws that they could reasonably be expected to ascertain and comply with. The issue in Distillers was whether the plaintiff in that case had a "cause of action which arose within the jurisdiction" of the Supreme Court of New South Wales for the purposes of s 18(4) of the Common Law Procedure Act 1899 (NSW)179. In that sense, the case was concerned with the first of the three issues 176 [1971] AC 458 at 467. 177 Voth (1990) 171 CLR 538 at 566-570. 178 This controversy is not immaterial or unforeseen. The reason the ALRC rejected the place of origin of the statement as the choice of law criterion was precisely because the material may be compiled in different legal jurisdictions: Australian Law Reform Commission, Choice of Law, Report No 58, (1992) at 57 [6.54]. 179 Distillers [1971] AC 458 at 463. Kirby raised in this appeal, namely jurisdiction180. Neither Distillers nor Voth were addressed to the issue of identifying the applicable law. In these proceedings, as I have already found, the long-arm jurisdiction of the Supreme Court of Victoria would be properly invoked by reference to r 7.01(1)(j) (because the respondent suffered damage in Victoria). Therefore, it was not essential or even necessary to localise the tort in Victoria for jurisdiction purposes181. In David Syme & Co Ltd v Grey182 Gummow J suggested that there was no compelling reason why the "process of identification and localisation is to be performed in the same way in relation to both jurisdiction and choice of law". His Honour went on to cite the following passage from Cheshire and North183: "It has always been questionable whether jurisdictional cases should be used as authority in the choice of law context … [W]hilst a court may be prepared to hold that a tort is committed in several places for the purposes of a jurisdictional rule, it should insist on one single locus delicti in the choice of law context." Even if one were to accept that Distillers provides the applicable test for identifying the place of the tort for choice of law purposes, in that case the Privy Council emphasised the need to characterise properly the act or wrong-doing of the defendant that gives rise to the plaintiff's cause of action. In Distillers, an Australian plaintiff sued the English manufacturer of the drug Distaval whose principal ingredient was Thalidomide, in the Supreme Court of New South Wales. The drug was manufactured in the United Kingdom, while the consequences in human loss and suffering were felt in many other countries. The alleged negligent act on the part of the defendant was not in the design or manufacture of the drug. Instead it was its unsuitability for pregnant women because of the potential to cause defects and deformities in the unborn foetus. The Full Court of the Supreme Court of New South Wales, held that it was not the manufacture of the drug (in England), but the placing of the drug on the New 180 There being no equivalent long-arm rule to the Victorian r 7.01(1)(j) in NSW at the time. See Phegan, "Conflict of laws – Rules for service out of jurisdiction – Damage suffered in jurisdiction", (1983) 57 Australian Law Journal 471 at 471. 181 Whether or not the tort is local may bear upon the issue of whether the Victorian forum is convenient. 182 (1992) 38 FCR 303 at 314. 183 Cheshire and North, Private International Law, 11th ed (1987) at 540; cf Distillers [1971] AC 458 at 469. Kirby South Wales market without the appropriate warning that constituted the wrong184. The Privy Council affirmed that conclusion. Similarly, in Voth, Lord Pearson's test was applied by this Court in the context of identifying whether New South Wales was a clearly inappropriate forum for the proceedings there in question. One of the relevant considerations in that case (which involved a statement, or more precisely an omission, made in Missouri but directed to an Australian company) was whether the alleged tort of negligent misstatement was a foreign or a local tort. It may be argued that Voth is also helpful to the appellants. In that case this Court held that a negligent statement by the defendant made in Missouri directed at Australian companies that relied upon such statements in New South Wales (which was also where the loss resulted) was in fact a foreign tort. However, the Court there characterised the act of the defendant that gave rise to the plaintiff's cause of action as the provision of accountancy services to the plaintiff companies. That act was said to have been initiated and completed in Missouri185. This brings me to the second problem of using the test from Distillers for the purposes of identifying the place of the tort for choice of law purposes in these proceedings. Both in Distillers and in Voth, the tort alleged was negligence. In the present proceedings, it is defamation. The act on part of the appellant (defendant) complained of is the publication of material that allegedly damaged the respondent's reputation, not the making of a negligent statement. Formulating the act in this way brings attention back to the place of publication, which, as I have held, included Victoria. Even if, for the purposes of the choice of law rule in Zhang, the right approach to localisation of the tort is "when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise?"186, I agree that no single overly-generalised criterion such as the place of injury or damage, or the place where the defendant acted would be appropriate for identifying the place of the wrong in all actions of tort. Rather, the place of the wrong needs to be ascertained in a principled fashion, based on an analysis of the relevant legal issues in view of the rights, interests and legitimate expectations of the parties. 184 See Distillers [1971] AC 458 at 465-466. 185 Voth (1990) 171 CLR 538 at 569. 186 Distillers [1971] AC 458 at 468; see also the discussion by the Court of Appeal in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at Kirby In a cause of action framed in defamation, the publication of the material which damages the reputation of the plaintiff is essential. Merely creating and making the material available is insufficient. The material has to be accessed or communicated in a jurisdiction where the plaintiff has a reputation. That will usually be the place where the plaintiff is resident. Unlike product liability or some other negligence claims, damage to reputation cannot occur "fortuitously" in a place outside of the defendant's contemplation187. Where a person or corporation publishes material which is potentially defamatory to another, to ask the publisher to be cognisant of the defamation laws of the place where the person resides and has a reputation is not to impose on the publisher an excessive burden. At least it is not to do so where the potential damage to reputation is substantial and the risks of being sued are commensurately real. Publishers in the United States are well aware that few, if any, other jurisdictions in the world observe the approach to the vindication of reputation adopted by the law in that country. The foregoing approach may pose problems, particularly in cases where the plaintiff has a substantial reputation in more than one legal jurisdiction and seeks to recover for the damage in all such jurisdictions in a single proceeding. In such a case, potential liability in defamation for the publication of material relating to such a person on the Internet may indeed have a chilling effect on free speech merely because one of those jurisdictions has more restrictive defamation laws than the others. This approach could subject Australian defendants to the more restrictive defamation laws of foreign jurisdictions188. However, such problems are the result of the absence of uniformity in defamation laws, combined with an ability to access and broadcast material across national boundaries (which is not limited to the Internet) and the absence of international treaties or reciprocal laws to govern those issues. Problems of a similar nature will arise whatever test is adopted for choice of law purposes unless this Court were to revert to a parochial approach of answering all questions in proceedings properly founded in an Australian forum by reference only to the law of that forum. Conclusion: The present case does not present an acute example of the foregoing difficulties. To the knowledge of the appellant, the respondent 187 This was Lord Pearson's concern in Distillers [1971] AC 458 at 468. 188 This was the reason why the United Kingdom Parliament maintained the common law double actionability rule from Phillips v Eyre [1870] LR 6 QB 1 in actions for defamation, despite abolishing it in other tort claims: Private International Law (Miscellaneous Provisions) Act 1995 (UK), ss 9(3) and 13. For the background see Clarkson and Hill, Jaffey on the Conflict of Laws, (1997) at 259-260. Kirby ordinarily resided in Victoria. He had his business address there. He was an officer there of several companies listed on the Australian Stock Exchange. He was prominent in the local Jewish (Lubavitcher) community. He was also well known there for charitable and sporting interests. True, some readers of Barron's Online, or Barron's magazine with access to the appellant's website in New Jersey (or in New York), would have known of the respondent. Arguably, an action based on the tort of defamation could therefore also be brought in those jurisdictions of the United States. However, in this case it could not be suggested that the respondent had resorted to Victoria only in order to invoke the process of its courts or in an exercise of forum shopping. So far as damage to his reputation was concerned, Victoria, as the place of his residence, was where most such damage would be done, rather than amongst business, religious or other acquaintances in North America or with the very large number of strangers there who might read about the respondent in the appellant's Internet publications. Importantly, in the proceedings before the primary judge the respondent confined his claim to the recovery of damages and the vindication of his reputation in Victoria. He also undertook not to bring proceedings in any other place. The conclusion is therefore overwhelming that the proceedings in the Supreme Court of Victoria were based on a local cause of action, and the applicable law in those proceedings would be the defamation law of Victoria. It follows that no error has been shown in the conclusions of the primary judge in this respect. The Victorian court as a convenient forum The applicable test: The appellant finally challenged the primary judge's conclusion concerning the provision of relief pursuant to r 7.05(2)(b). That rule permits the Supreme Court of Victoria to stay proceedings such as the present on the ground "that Victoria is not a convenient forum for the trial of the proceeding". I have made it clear in earlier cases that I prefer the expression of the common law on this question in the terms adopted by the House of Lords in England in Spiliada Maritime Corp v Cansulex Ltd189. In my view, the issue is (as the terms of the Victorian rule suggest) whether the court in which the proceedings are pending is the natural forum for the trial or whether there is 189 [1987] AC 460 at 478; cf Oceanic Sunline Special Shipping Co Inc v Fay (1987) 8 NSWLR 242 at 258-262. See Voth v Manildra Flour Mills Pty Ltd (1989) 15 NSWLR 513 at 533-535. Kirby another forum that is "more appropriate"190. However, although the formulation by the House of Lords has found favour in most Commonwealth jurisdictions, and is more harmonious with the rules of public international law respectful of comity between nations and their courts, I must accept that this Court has adopted an approach more defensive of the exercise of properly invoked jurisdiction by Australian courts191. In my view it is a mistake to re-express the rule, having been made under statutory power192, in terms of past common law formulae. In this respect, I adhere to the view that I expressed in Zhang193. However, upon this point, my opinion (shared by Callinan J194) was a minority one. The majority of this Court concluded, in respect of the equivalent provision in the Supreme Court Rules 1970 (NSW) that, notwithstanding the language of the rule in that case, the test to be applied was whether the party objecting to the forum had shown that the court selected was a "clearly inappropriate forum"195. The relevant rules of the Supreme Court of Victoria are somewhat different from those of the Supreme Court of New South Wales considered in Zhang. However, the divergence is presently immaterial. In resolving the convenient forum issue, the primary judge was bound to apply the "clearly inappropriate forum" test196. The primary judge accepted, and applied, this Court's approach197. There was therefore no error of principle in his consideration of the third issue. In accordance with established appellate principles, this Court is not authorised to disturb a discretionary conclusion on the convenient forum issue, unless error is shown that warrants such disturbance. There was no error in the identification of the applicable test. 190 Zhang (2002) 76 ALJR 551 at 568 [94]; 187 ALR 1 at 24. 191 Zhang (2002) 76 ALJR 551 at 568 [93]-[95]; 187 ALR 1 at 24-25. 192 Supreme Court Act 1986 (Vic), s 25. 193 (2002) 76 ALJR 551 at 579 [143]-[144]; 187 ALR 1 at 39-40. 194 (2002) 76 ALJR 551 at 591-592 [193]; 187 ALR 1 at 56-57. 195 (2002) 76 ALJR 551 at 556-557 [24]-[25]; 187 ALR 1 at 8-9 (emphasis added). 196 cf Voth (1990) 171 CLR 538 at 564-565. 197 Gutnick [2001] VSC 305 at [102]-[104]. Kirby The parties' arguments: The principal argument of the appellant on this last point of challenge rested on its contention that error had occurred in the earlier legal mistakes concerning jurisdiction and the identification of the applicable law. The appellant criticised the weight given by the primary judge to the undertaking of the respondent not to sue elsewhere and disclaiming any damages in any other place198. However, the essential ground for the disturbance of the primary judge's conclusion was that the applicable jurisdiction and law of the wrong alleged was either New Jersey or New York in the United States. When those submissions are rejected, as I have held they properly were, the foundation for interfering in the conclusion at first instance is knocked away. In Oceanic Sun Line Special Shipping Company Inc v Fay199, Gaudron J remarked that "the selected forum should not be seen as an inappropriate forum if it is fairly arguable that the substantive law of the forum is applicable" to the proceedings. In Voth, this Court accepted that the applicability to the proceedings of the substantive law of the forum was a very significant, although not decisive, factor in the exercise of the Court's discretion on the convenient forum issue200. Conclusion: Once jurisdiction and the place of the wrong are established in Victoria, the submission of error on the convenient forum issue becomes much more difficult to accept201. The primary judge applied the correct test. The present proceedings were founded on a local cause of action, and it is more than just "arguable" that the applicable law was the law of Victoria. No basis has been shown to disturb the conclusion that the proceedings in Victoria should not be stayed on the ground that the Supreme Court of that State was not a clearly inappropriate forum for the trial of those proceedings. Even if I were of a different inclination in the balance of evidentiary considerations, I would not be entitled to give effect to that view in the absence of a demonstrated error. None has been shown. It follows that the appeal fails. The outcome: a result contrary to intuition The dismissal of the appeal does not represent a wholly satisfactory outcome. Intuition suggests that the remarkable features of the Internet (which is still changing and expanding) makes it more than simply another medium of 198 Gutnick [2001] VSC 305 at [130]. 199 (1988) 165 CLR 197 at 266. 200 (1990) 171 CLR 538 at 566. 201 Berezovsky v Michaels [2000] 1 WLR 1004 at 1019-1020; [2000] 2 All ER 986 at Kirby human communication. It is indeed a revolutionary leap in the distribution of information, including about the reputation of individuals. It is a medium that overwhelmingly benefits humanity, advancing as it does the human right of access to information and to free expression. But the human right to protection by law for the reputation and honour of individuals must also be defended to the extent that the law provides. The notion that those who publish defamatory material on the Internet are answerable before the courts of any nation where the damage to reputation has occurred, such as in the jurisdiction where the complaining party resides, presents difficulties: technological, legal and practical. It is true that the law of Australia provides protections against some of those difficulties which, in appropriate cases, will obviate or diminish the inconvenience of distant liability. Moreover, the spectre of "global" liability should not be exaggerated. Apart from anything else, the costs and practicalities of bringing proceedings against a foreign publisher will usually be a sufficient impediment to discourage even the most intrepid of litigants. Further, in many cases of this kind, where the publisher is said to have no presence or assets in the jurisdiction, it may choose simply to ignore the proceedings. It may save its contest to the courts of its own jurisdiction until an attempt is later made to enforce there the judgment obtained in the foreign trial. It may do this especially if that judgment was secured by the application of the enforcement of which would be regarded as unconstitutional or otherwise offensive to a different legal culture. laws, However, such results are still less than wholly satisfactory. They appear to warrant national legislative attention and to require international discussion in a forum as global as the Internet itself202. In default of local legislation and international agreement, there are limits on the extent to which national courts can provide radical solutions that would oblige a major overhaul of longstanding legal doctrine in the field of defamation law. Where large changes to settled law are involved, in an area as sensitive as the law of defamation, it should cause no surprise when the courts decline the invitation to solve problems that others, in a much better position to devise solutions, have neglected to repair. Order The appeal should be dismissed with costs. 202 Robertson & Nicol at 102. Callinan CALLINAN J. The question which this case raises is whether the development of the Internet calls for a radical shift in the law of defamation. Facts The appellant publishes for profit the Wall Street Journal, a daily financial newspaper, and Barron's, a weekly magazine, which is also concerned with financial matters. The edition of Barron's dated Monday, 30 October 2000, but which was available publicly two days earlier, contained an article by a journalist working for the appellant, Bill Alpert, headed "Unholy Gains" and sub-headed "When stock promoters cross paths with religious charities, investors had best be on guard." A large photograph of the respondent appeared on the first page of the magazine. The article, of about 7,000 words, also contained photographs of other persons including Mr Nachum Goldberg. Barron's has a large circulation in the United States. Altogether, it was likely that 305,563 copies of the magazine were sold. A small number of them entered Australia, some of which were sold in Victoria. Barron's also put the article on the Internet. The relevant article appeared on the appellant's website on 29 October 2000. Subscribers who paid an annual fee were able to obtain access to that site at its address wsj.com. The site had about 550,000 subscribers. The appellant has an office that it calls a "corporate campus" in New Jersey where it has a web server on which its website is stored. It was conceded by the appellant that it could not identify the addresses of all of its subscribers but that 1,700 or so of them paid subscription fees by credit cards whose holders had Australian addresses. The respondent is a businessman. He is involved in philanthropic, political, sporting and religious affairs. His business activities have extended beyond Australia. He lives in Victoria and has many friends and associates there. He is the chairman of a corporation, shares in which are traded in the United States. He has sought investment in that corporation from investors in the United States. It is unnecessary to set out the whole of the article. The first three paragraphs sketch some of the interests of the respondent. The fourth states that some of his business dealings with religious charities raise "uncomfortable questions"203. The author then uses some language that the media have appropriated from the law courts, implying that a balanced trial with equal opportunity to participate by all concerned has taken place: that a "Barron's investigation found that several charities traded heavily in stocks promoted by Gutnick."204 (emphasis added) The article associates the respondent with Mr 203 Alpert, "Unholy Gains", Barron's, 30 October 2000 at 24. 204 Alpert, "Unholy Gains", Barron's, 30 October 2000 at 24. Callinan Nachum Goldberg who is apparently a convicted tax evader and another person awaiting trial for stock manipulation in New York. A detailed discussion of various of the respondent's religious and political activities and business dealings follows. One paragraph of the article claims that an intercepted communication from the convicted tax evader was taken by Australian prosecutors to mean that the respondent was the former's "biggest money-laundering customer"205. The proceedings in the Supreme Court of Victoria The respondent brought proceedings against the appellant in defamation in the Supreme Court of Victoria. After an amendment of his statement of claim he alleged publication both online and by hard copies sold in Australia. He pleaded that the article meant, and was understood to mean that he: "(a) was a customer of Nachum Goldberg who had recently been imprisoned for tax evasion and money laundering; and (b) was Nachum Goldberg's biggest customer; and (c) was masquerading as a reputable citizen when he was, in fact, a tax evader who had laundered large amounts of money through had bought Nachum Goldberg's silence so as to conceal his identity as one of Goldberg's customers." He also claimed punitive damages in reliance upon the following allegations: "(a) The [appellant] is a large corporation listed on the New York Stock Exchange with its headquarters at 200 Liberty Street, New York. The [appellant's] principal area of business is publication. The [appellant] publishes, amongst other things, 'Barron's' and the 'Wall Street Journal', both in print and as on-line services. In 1999 the [appellant's] revenue was US$2 billion and its net income was US$272 million. (b) At all relevant times the [appellant] published the internet service 'Barron's Online' as a subscription service for profit and published its journal 'Barron's' for profit. 205 Alpert, "Unholy Gains", Barron's, 30 October 2000 at 30. Callinan The imputations alleged … were seriously defamatory of the [respondent]. The [appellant] published the words without any honest belief in the truth of the imputations alleged, … alternatively, recklessly, not caring whether the imputations were true or false. The [appellant] published the words for commercial advantage and in order to attract readers to its subscription services and journal and in circumstances where the commercial advantage to the [appellant] outweighed the risk that as a result of defaming the [respondent] the [appellant] might have to pay damages to the [respondent]. The [appellant] has failed and refused to apologise to the [respondent]." Another paragraph of the respondent's pleading contained the following allegations: "The publication of the article in Victoria … was the intended consequence, alternatively the natural and probable consequence of the following acts of the [appellant] – securing subscriptions to its wsj.com and Barron's Online websites from persons resident within Victoria; (b) writing the article or causing the article to be written; editing the article; formatting the article into a web page file for Barron's Online; transferring the file containing the article from New York to the [appellant's] server in South Brunswick, New Jersey; placing the file containing the article onto the [appellant's] web servers in New Jersey; creating links to the article (both direct and indirect) on the wsj.com and Barron's Online websites; and thereby making the article available for downloading in Victoria by the [appellant's] subscribers from time to time to the wsj.com and Barron's Online websites." On service of the writ and statement of claim in the United States, the appellant entered a conditional appearance and applied to have service of the writ Callinan and statement of claim set aside, or alternatively, to have the respondent's action permanently stayed. The appellant undertook, in the event of a stay of the Victorian action, to raise no limitations or jurisdictional objections there if the respondent were to sue in the United States. The application was supported by copious affidavit material and oral evidence on behalf of the appellant describing the nature of the Internet and access to it, and the law of New Jersey and elsewhere in the United States, relevant aspects of which were referred to by Hedigan J who heard the applicant's application. The primary judge summarized that publication was effected in New Jersey and not Victoria; that no act was committed in Victoria to ground service of Victorian proceedings out of Victoria without an order of the Court pursuant to Order 7 of the Rules of Court of that State; and, thirdly that Victoria was not a convenient forum for the trial of the respondent's action. the appellant's arguments: His Honour rejected all of the appellant's arguments and dismissed its application. The appellant applied for leave to appeal to the Court of Appeal of Victoria. Buchanan JA and O'Bryan AJA who constituted that Court also rejected the appellant's arguments. Their Honours said: "The authorities establish that defamatory material is published at the time and in the place where it is made manifest in a form capable of being comprehended by a third party. That is sufficient to dispose of this case, although we think that publication is not constituted by delivery without comprehension. The principle has been applied to speech, writing, television, radio and telephone. For the most part those authorities pre-date the internet, but in our view the established principles are appropriate to this new form of communication. In our view that conclusion largely disposes of the submissions of the applicant based upon O 7. The service of the writ out of Australia was justified by paragraphs (i) and (j) of R 7.01(1). The proceeding is founded upon a tort committed within Victoria and is brought in respect of damage suffered in Victoria. The later amendment of the statement of claim after the writ was served to plead defamation resulting from the publication of printed copies of the magazine in Victoria could not detract from the force of the unamended allegations based upon the publication of the article by means of the internet, which had earlier rendered service out of Victoria valid. As to the plea of forum non conveniens, we perceive no appellable error in the exercise of the judge's discretion. Indeed we think the decision was plainly correct. Publication took place in Victoria. The [respondent] resides and carries on business in Victoria. He wishes to restore his reputation in Victoria, and has undertaken to sue in no other Callinan place. The illegal activities in which the [respondent] is said to have participated took place principally in Victoria. The [respondent] has sued in respect of a section of the article which stands by itself. The [appellant] may well try to broaden the debate. However, a defence based upon Polly Peck v Trelford206 as that decision has been interpreted in David Syme v Hore-Lacy207 is hardly likely to lead to a case principally concerned with events in the United States of America." Leave was therefore refused on the basis that the trial judge's decision was plainly correct. The appeal to this Court In this Court, the appellant repeated the arguments rehearsed in the courts below. The Internet, which is no more than a means of communication by a set of interconnected computers, was described, not very convincingly, as a communications system entirely different from pre-existing technology. The nature and operation of the Internet and the World Wide Web were explained by two highly qualified experts, Mr Barry Hammond BSc, Internet consultant to leading Australian companies, and Dr Roger Clarke, Visiting Fellow (formerly Reader in Information Systems) in the Computer Science Department, Australian National University. They described the Internet as a set of interconnexions among computers all over the world to facilitate an exchange of messages. Using their computers, people can communicate with one another, and gain access to information. They claimed that it was a unique telecommunications system defying analogy with pre-existing technology. The description however, by the appellant of the server as passive is inaccurate. It also overlooks the legal significance, indeed the essential role of all participants in, and enablers of, the dissemination of defamatory matter which is to be found in longstanding jurisprudence of this country. In Webb v Bloch208 Isaacs J said this: "The meaning of 'publication' is well described in Folkard on Slander and Libel209, in these words: 'The term published is the proper and technical term to be used in the case of libel, without reference to the precise degree in which the defendant has been instrumental to such publication; since, if he has intentionally lent his assistance to its existence for the purpose of being published, his instrumentality is evidence to show 208 (1928) 41 CLR 331 at 363-364. 209 5th ed (1891) at 439. Callinan a publication by him.' In Starkie on the Law of Slander and Libel210, it is said: 'The declaration generally avers, that the defendant published and caused to be published; but the latter words seem to be perfectly unnecessary either in a civil or criminal proceeding; in civil proceedings, the principal is to all purposes identified with the agent employed by him to do any specific act' …. In Parkes v Prescott211, Giffard QC quotes from the second edition of Starkie: 'All who are in any degree accessory to the publication of a libel, and by any means whatever conduce to the publication, are to be considered as principals in the act of publication: thus if one suggest illegal matter in order that another may write or print it, and that a third may publish it, all are equally amenable for the act of publication when it has been so effected.' In R v Paine212 it is held: 'If one repeat and another write a libel, and a third approve what is wrote, they are all makers of it; for all persons who concur, and show their assent or approbation to do an unlawful act, are guilty: so that murdering a man's reputation by a scandalous libel may be compared to murdering his person; for if several are assisting and encouraging a man in the act, though the stroke was given by one, yet all are guilty of homicide.'" (original emphasis) A publisher, particularly one carrying on the business of publishing, does not act to put matter on the Internet in order for it to reach a small target. It is its ubiquity which is one of the main attractions to users of it. And any person who gains access to the Internet does so by taking an initiative to gain access to it in a manner analogous to the purchase or other acquisition of a newspaper, in order to read it. The appellant contends that the Internet is not "pushed" into any particular jurisdiction. The contention ignores the commercial and social realities that greater publication produces both greater profit and broader persuasion. Indeed, the appellant's arguments would suggest that all of its objectives were exclusively high-minded. Revenues from increased advertising and circulation, and the word "profit" never passed the appellant's advocate's lips. It may well be that "firewalls" to deny access to the unintended or non-subscribing reader are at present perhaps imperfect. So be it. Publishers are not obliged to publish on the Internet. If the potential reach is uncontrollable then the greater the need to exercise care in publication. 210 (1830), vol 2 at 29. 211 (1869) LR 4 Ex 169 at 173. 212 (1696) 5 Mod 163 at 167 [87 ER 584 at 587]. Callinan The appellant adopted the criticism of the application of traditional rules relating to publication on the Internet made by Dicey and Morris in The Conflict of Laws213, that to localize a defamatory statement is "somewhat unrealistic", and that "[i]t might therefore, be more appropriate to regard the place of commission, in such cases, as the country in which, in the light of all the circumstances of the case, the substantial events which give rise to the claim have occurred." I disagree. The most important event so far as defamation is concerned is the infliction of the damage, and that occurs at the place (or the places) where the defamation is comprehended. Statements made on the Internet are neither more nor less "localized" than statements made in any other media or by other processes. Newspapers have always been circulated in many places. The reach of radio and television is limited only by the capacity of the technology to transmit and hear or view them, which already, and for many years, has extended beyond any one country. In any event, a "publisher", whether on the Internet or otherwise, will be likely to sustain only nominal, or no damages at all for publication of defamatory matter in a jurisdiction in which a person defamed neither lives, has any interests, nor in which he or she has no reputation to vindicate. Furthermore, it may be that an action inadvisably brought in such a jurisdiction might be met by a finding that the jurisdiction is not a convenient or appropriate forum214. The appellant argued that the respondent, having set out to make money in the United States, must expect to be subjected to lawful scrutiny in that country. No doubt the fact of lawful scrutiny in that country, if such the publication was, would provide a defence to the appellant to defamation proceedings there. That fact does not however have anything to say about unlawful publication in this country. The Court was much pressed with arguments about the ubiquity of the Internet. That ubiquity, it was said, distinguished the Internet from practically any other form of human endeavour. Implicit in the appellant's assertions was more than a suggestion that any attempt to control, regulate, or even inhibit its operation, no matter the irresponsibility or malevolence of a user, would be futile, and that therefore no jurisdiction should trouble to try to do so. I would reject these claims. Some brands of motor cars are ubiquitous but their manufacturers, if they wish to sell them in different jurisdictions must comply 213 13th ed (2000) at 1568 [35-137]. 214 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 466 and contra, Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, which posits the "more appropriate forum" test. Callinan with the laws and standards of those jurisdictions. There is nothing unique about multinational business, and it is in that that this appellant chooses to be engaged. If people wish to do business in, or indeed travel to, or live in, or utilise the infrastructure of different countries, they can hardly expect to be absolved from compliance with the laws of those countries. The fact that publication might occur everywhere does not mean that it occurs nowhere. Multiple publication in different jurisdictions is certainly no novelty in a federation such as Australia. The appellant invited the Court to prefer, in effect, a United States jurisdiction to an Australian one because the latter would deprive it of the Constitutional protection available in the former. This was the essence of one of the respondent's arguments in Regie National des Usines Renault SA v Zhang215, that he might be deprived of legitimate juridical advantages available to a plaintiff in New South Wales if he were compelled to sue elsewhere. I do not think my opinion there, to which I would adhere here, was affected by my dissent in that case. In Zhang I said216: "… it is erroneous to give, as the Court of Appeal did, undue weight to a perception of advantage to the respondent by allowing the proceedings in New South Wales to continue, rather than to assess the advantages and disadvantages accruing to both sides in each jurisdiction in considering whether New South Wales was an inappropriate one." Australian defamation law, and, for that matter, English defamation law also, and the policy underlying them are different from those of the United States. There is no doubt that the latter leans heavily, some might say far too heavily, in favour of defendants. Nor has the metaphor for free speech developed by Holmes J in a series of cases and beginning with his dissenting judgment in 215 (2002) 76 ALJR 551; 187 ALR 1. 216 Regie National des Usines Renault SA v Zhang (2002) 76 ALJR 551 at 594 [206]; 187 ALR 1 at 59. Callinan Abrams v United States217, a marketplace of ideas, escaped criticism in the United States. Writing in The New Criterion, Robert H. Bork pointed out218: "The market for ideas has few of the self-correcting features of the market for goods and services." Later he added219: "In a word, what the Constitution says, as interpreted by today's Court, is that one idea is as good as another so far as the law is concerned; only the omnipotent individual may judge." (original emphasis) Quite deliberately, and in my opinion rightly so, Australian law places real value on reputation, and views with scepticism claims that it unduly inhibits freedom of discourse. In my opinion the law with respect to privilege in this country, now and historically, provides an appropriate balance which does justice to both a publisher and the subject of a publication. The appellant acknowledges that in order to succeed it has to persuade this Court that it should depart from a line of authority beginning with the Duke of Brunswick's case220 in 1849 and applied consistently since that year. The departure, it is submitted, is justified by this consideration: "In the context of global dissemination of information by a technology which has no clear or close comparison with any other, a publication rule 217 Abrams v United States 250 US 616 (1919). See also Gitlow v New York 268 US 652 (1925). In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 76 ALJR 1 at 55 [261]; 185 ALR 1 at 75 I said: "The expression 'marketplace of ideas' has been used as a justification for 'free speech', as if the two expressions were synonymous. The concept of a marketplace is of a place to which access is readily available to everyone. The notion of a 'marketplace of ideas' conveys an idea of an opportunity for everyone with ideas to put these into currency for entry into the public domain, and for them to be exchanged for other ideas. The concentration of media control and the absence of rights of reply to which I have referred deny these opportunities in practice." (footnotes omitted) 218 Bork, "Adversary Jurisprudence", The New Criterion, May 2002 at 7. 219 Bork, "Adversary Jurisprudence", The New Criterion, May 2002 at 10. 220 Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]. Callinan which does not expose publishers to liability in every jurisdiction, or at least in multiple jurisdictions, but which nonetheless provides plaintiffs with access to a court which can compensate them for all damage suffered, strikes the most acceptable balance." I reject this submission. Comparisons can, as I have already exemplified, readily be made. If a publisher publishes in a multiplicity of jurisdictions it should understand, and must accept, that it runs the risk of liability in those jurisdictions in which the publication is not lawful and it inflicts damage. innocent enablers, The appellant sought to equate its placement of matter on the Internet with the placement of books on library shelves. The comparison is, self-evidently, not well made. In addition, it overlooks that, in respect of booksellers, libraries and innocent other dissemination221. A "subordinate distributor" who is "innocent'" is not taken to have published the defamatory material, and is therefore not liable in a defamation action at common law or under the Codes. A subordinate distributor will generally be treated as "innocent" if the subordinate distributor establishes that: there will usually be a defence of the subordinate distributor did not know that the publication contained the defamatory material complained of; the subordinate distributor did not know that the publication was of a character likely to contain defamatory material; and such want of knowledge was not due to negligence on the part of the subordinate distributor. Whether such a defence may be available to publishers on the Internet will depend upon the particular facts and circumstances of the case, but it seems rather unlikely that a person in the position of the appellant here could ever persuasively mount it. The decision at first instance was criticised by the appellant on the basis that his Honour erroneously treated the tort as a Victorian domestic tort by regarding the place of the last event that completed the tort as conclusive, instead 221 See, for example Defamation Act 1889 (Q), ss 25-27; Defamation Act 1957 (Tas), ss 26, 27; Defamation Act 1974 (NSW), s 36; Emmens v Pottle (1885) 16 QBD 354 at 357 per Lord Esher MR, at 358 per Bowen LJ; Vizetelly v Mudie's Select Library Ltd [1900] 2 QB 170; Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 585-586 per Brennan CJ, Dawson and Toohey JJ, at 592-593 per Gaudron J, at 618-619 per Gummow J. Callinan of looking over the series of events constituting it and asking the question: where in substance did the cause of action arise? The submission repeats the language of Lord Pearson delivering the judgment of their Lordships in Distillers Co (Biochemicals) Ltd v Thompson222 which was largely adopted in this Court in Voth v Manildra Flour Mills Pty Ltd223. That language was however used in a different context, and has no application to the rules relating to publication of defamatory matter which are specific to that tort, have developed over a long period, and have frequently been the subject of detailed legislation. Each publication under current law gives rise to a separate cause of action224. This is entrenched in Australian and English law. The principle was recently confirmed by the English Court of Appeal225. Samuels JA rightly observed in Australian Broadcasting Corporation v Waterhouse226, a single publication rule could only be introduced throughout Australia by statute. As Hedigan J held, the torts of libel and slander are committed when and where comprehension of the defamatory matter occurs227. The rules have been universally applied to publications by spoken word228, in writing229, on 222 [1971] AC 458 at 467-468. 223 (1990) 171 CLR 538 at 567. 224 Duke of Brunswick v Harmer (1849) 14 QB 185 [117 ER 75]; Pullman v Hill & Co [1891] 1 QB 524 at 527; McLean v David Syme & Co Ltd (1970) 72 SR (NSW) 513 at 520, 528; Emmerton v University of Sydney [1970] 2 NSWR 633 at 634, 639; Toomey v Mirror Newspapers Ltd (1985) 1 NSWLR 173 at 177; Australian Broadcasting Corporation v Waterhouse (1991) 25 NSWLR 519 at 535; Berezovsky v Michaels [2000] 1 WLR 1004 at 1012; [2002] 2 All ER 986 at 993; Godfrey v Demon Internet Ltd [2001] QB 201 at 208. 225 Loutchansky v Times Newspapers Ltd (Nos 2-5) [2002] QB 783. 226 (1991) 25 NSWLR 519 at 537. 227 Webb v Bloch (1928) 41 CLR 331; Lee v Wilson & Mackinnon (1934) 51 CLR 276; Jones v Amalgamated Television Services (1991) 23 NSWLR 364; Beitzel v Crabb [1992] 2 VR 121; Gambrill v Schooley 48 A 730 (1901). 228 Gambrill v Schooley 48 A 730 (1901); Fleetwood v Curle (1620) Cro Jac 558 [79 ER 478]; Jones v Davers (1596) Cro Eliz 496 [78 ER 747]; Price v Jenkings (1601) Cro Eliz 865 [78 ER 1091]; Amann v Damm (1860) 8 CB(NS) 597 [141 ER 1300]. 229 Bata v Bata [1948] WN 366. Callinan television230, by radio transmission231, over the telephone232 or over the Internet233. In Browne v Dunn234 the House of Lords held that there was no publication of a defamatory petition to a person (Mrs Cook) who had signed but not read the petition. The appellant's submission that publication occurs, or should henceforth be held to occur relevantly at one place, the place where the matter is provided, or first published, cannot withstand any reasonable test of certainty and fairness. If it were accepted, publishers would be free to manipulate the uploading and location of data so as to insulate themselves from liability in Australia235, or elsewhere: for example, by using a web server in a "defamation free jurisdiction" or, one in which the defamation laws are tilted decidedly towards defendants. Why would publishers, owing duties to their shareholders, to maximise profits, do otherwise? The place of "uploading" to a web server may have little or no relationship with the place where the matter is investigated, compiled or edited. Here, the State where the matter was uploaded was different from the State in which the article was edited. Matter may be stored on more than one web server, and with different web servers at different times. Different parts of a single web page may be stored on different web servers in different jurisdictions. Many publications in this country, whether by television, radio, newspaper or magazine originate in New South Wales. The result of the adoption of a rule of a single point of publication as submitted by the appellant, is that many publications in Victoria, South Australia, Tasmania, Western Australia and Queensland would be governed by the Defamation Act 1974 (NSW) which provides, in its present form, for a regime by no means commanding general acceptance throughout this country. Choice of law in defamation proceedings in this country raises a relatively simple question of identifying the place of publication as the place of comprehension: a readily ascertainable fact. I agree with the respondent's submission that what the appellant seeks to do, is to impose upon Australian residents for the purposes of this and many 230 Gorton v Australian Broadcasting Commission [1973] 1 ACTR 6; Pindling v National Broadcasting Corp (1985) 14 DLR (4th) 391. 231 Jenner v Sun Oil Co Ltd [1952] 2 DLR 526. 232 State ex rel Advanced Dictating Supply Inc v Dale 524 P 2d 1404 (1974). 233 Godfrey v Demon Internet Ltd [2001] QB 201. 235 Australian Law Reform Commission, Choice of Law, Report No 58, (1992) at 57 Callinan other cases, an American legal hegemony in relation to Internet publications. The consequence, if the appellant's submission were to be accepted would be to confer upon one country, and one notably more benevolent to the commercial and other media than this one, an effective domain over the law of defamation, to the financial advantage of publishers in the United States, and the serious disadvantage of those unfortunate enough to be reputationally damaged outside the United States. A further consequence might be to place commercial publishers in this country at a disadvantage to commercial publishers in the United States. There is another relevant consideration. The law of defamation has some elements in common with the law of injurious falsehood, copyright and contempt. With respect to the last, as Windeyer J in Australian Consolidated Press Ltd v Morgan236 pointed out, "[t]he power [of punishing for contempt] has been not infrequently exercised in Australia in a salutary way against newspaper companies for publishing matter calculated to prejudice the fair trial of pending proceedings." It would be anomalous if an international publisher might be liable for contempt in this country but not in defamation. Finally, Victoria is a clearly appropriate forum for the litigation of the respondent's claim to vindicate his reputation which has been attacked in Victoria, as well, plainly as elsewhere. For myself I would see no immediate reason why, if a person has been defamed in more than one jurisdiction, he or she, if so advised might not litigate the case in each of those jurisdictions. However, that issue does not arise here as the respondent has offered an undertaking to proceed in Victoria only. The proceedings should be neither stayed nor set aside. The appeal should be dismissed with costs. 236 (1964) 112 CLR 483 at 497.

HIGH COURT OF AUSTRALIA WET044 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT WET044 v The Republic of Nauru [2018] HCA 14 11 April 2018 ORDER Leave to amend the notice of appeal is refused. Appeal dismissed. On appeal from the Supreme Court of Nauru Representation W A Harris QC with M L L Albert and E R Tadros for the appellant (instructed by Russell Kennedy Pty Ltd) R C Knowles for the respondent (instructed by the Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS WET044 v The Republic of Nauru Migration – Refugees – Appeal as of right from Supreme Court of Nauru – Where Secretary of Nauru Department of Justice and Border Control determined appellant not refugee and not entitled to complementary protection – Where Refugee Status Review Tribunal affirmed Secretary's determination – Where Tribunal adopted reasoning of Secretary – Whether Tribunal failed to consider country information before it – Whether Tribunal acted in way that was procedurally unfair by failing to put to appellant nature and content of country information it relied upon. Words and phrases – "appeal", "country information", "procedural fairness". Appeals Act 1972 (Nr), s 44(a). Refugees Convention Act 2012 (Nr). KIEFEL CJ, GAGELER AND KEANE JJ. The appellant is an Iranian citizen of Faili Kurdish ethnicity. He arrived by boat at Christmas Island in 2013 and was subsequently transferred to Nauru. There he applied under the Refugees Convention Act 2012 (Nr) ("the Refugees Act") to be recognised as a refugee or, alternatively, as a person to whom Nauru owed complementary protection under its other international obligations. The appellant's application was refused by the Secretary of the Department of Justice and Border Control ("the Secretary"). That decision was reviewed by the Refugee Status Review Tribunal ("the Tribunal") and affirmed. The Supreme Court of Nauru dismissed the appellant's appeal. The appellant appeals to this Court pursuant to s 44(a) of the Appeals Act It was an important aspect of the appellant's claims to refugee status and to complementary protection that he had been harmed by the Iranian authorities, denied basic rights, and discriminated against because he is a stateless Faili Kurd who held no identity documentation. The Secretary and the Tribunal did not accept that he was stateless and found that he is an Iranian citizen who had completed military service in his country and had lawfully departed it on a genuine Iranian passport. That claim is no longer pursued. The Secretary and the Tribunal accepted that the appellant is of Kurdish ethnicity and would be identified as such in Iran. The Tribunal was not satisfied that the appellant had suffered serious harm in the past on account of his ethnicity and did not consider that there was a real possibility that such harm would befall him in the foreseeable future. The Tribunal observed that the appellant had only two brief encounters with the Iranian authorities in 30 years with no adverse consequences. The Secretary and the Tribunal accepted that Kurds, like other minorities in Iran, may face some discrimination, but not discrimination amounting to persecution. The Tribunal observed that serious, systematic discrimination is directed to non-Shia ethnic minorities, which Faili Kurds are not. The Secretary also considered country information concerning the treatment of failed asylum seekers who are returned to Iran. The Secretary accepted that there have been instances of detention and mistreatment of such persons but that "analysis of those reports indicates that, overall, those returnees had some profile of interest other than simply being a failed asylum seeker". The country information suggested that a person's activities while overseas and the person's potential to engage in protest action on their return would be the main considerations of the authorities in determining whether to take action against the person on return. The Tribunal agreed with and adopted the reasoning of the Secretary on this issue. It said that, in light of the country information set out in the Secretary's reasons, it was prepared to accept that failed asylum seekers might constitute a particular social group in Iran. However, it did not accept that mere membership of the group gives rise to a well-founded fear of being persecuted. Having left Iran lawfully, there was nothing to suggest that the appellant would come to the adverse attention of the authorities. The appellant filed a notice of appeal in this Court contending that the Tribunal erred in law by failing to deal with submissions and country information provided by the appellant with respect to the risk of returning to Iran as a failed asylum seeker. The appellant subsequently filed a summons seeking leave to amend his notice of appeal in order to expand the first ground of appeal and insert a new ground contending that the Tribunal acted in a way that was procedurally unfair by failing to put to him the nature and content of country information it relied upon concerning the risk of harm to Kurds who are Shia Muslim. The respondent submits that leave to amend the notice of appeal should not be granted because the grounds lack any merit. Neither ground was raised before the Supreme Court of Nauru1. Ground 1 – the failed asylum seeker claim In the period following the Secretary's decision, and prior to the hearing before the Tribunal, the appellant's legal representative sent a letter to the Tribunal which contained a further statement by the appellant, further submissions on his behalf, and material in support of those submissions. It was submitted that independent country information indicated that failed asylum seekers are at risk if returned to Iran. The country information upon which the appellant relied was contained in an appendix to the submissions. The appellant identifies six pieces of country information as relevant to the Tribunal's statutory function of considering and evaluating information under the Refugees Act. He contends that most of the information was not before the Secretary. He further argues that it may be inferred that the Tribunal did not consider this information and relied only upon the Secretary's opinion and the material upon which it was based because the Tribunal did not expressly refer to the information when much of it contradicts the Secretary's findings. In its reasons the Tribunal identified the evidence before it to include the appellant's further statement and the written submissions which had been 1 WET044 v The Republic [2017] NRSC 66. received by it to which the country information was appended. It recorded that, in the course of the hearing, it put to the appellant that "the available country information tends to show that ordinary failed asylum seekers do not suffer harm amounting to persecution on return: while they will be questioned by the authorities, the only ones who would suffer harm would be those with a profile such as political activists" and, it observed, the appellant had made no such claim. The appellant and his legal representative were given an opportunity to consider these observations before responding. The response of the legal representative was to again refer the Tribunal to the written submissions and reiterate the appellant's claim that he would suffer harm if he was returned because of the political opinion which would be imputed to him as a failed asylum seeker. It is not readily to be inferred in these circumstances that the Tribunal, having read the appellant's statement and the further submissions, would ignore the material to which they referred. In any event the information upon which the appellant relies is not such as to have required the Tribunal to comment upon it. Most of it was before the Secretary in one form or another and does not contradict the opinions stated by the Secretary. One report by Amnesty International to which the appellant refers suggests that returned asylum seekers can be prosecuted in Iran for falsifying accounts of alleged persecution and contains observations made by an unnamed Iranian judge that failed asylum seekers are interrogated on their return to Iran. It was before the Secretary. Accepting that the Secretary had this report and cited it, the appellant contends that it was not referred to in the context of asylum seeker claims. It is not shown how this report could be said to contradict the conclusions reached by the Secretary that several European countries (he named six, including the United Kingdom) reported having forcibly returned failed asylum seekers to Iran and that no information could be located to suggest that there had been any adverse treatment of such persons upon return to Iran. It may be correct that the Secretary did not cite the Iran Human Rights article to which the appellant refers, but he did refer to another news article containing the same story about the imprisonment of a young male Kurdish asylum seeker who was detained on his return from Norway. The Secretary made specific mention of this story. Further, the Secretary referred to a report by the Immigration and Refugee Board of Canada which summarised the Iran Human Rights statement. The Secretary did not refer to the 2014 report of the United States Department of State to which the appellant draws attention. It predated the Secretary's determination by only a few months. However, it contains only general information concerning the treatment of detainees in Iran. It does not touch upon the question whether failed asylum seekers are to be detained. In any event, the Secretary referred to the Department of State's 2013 report, which contained substantially the same information. Another Amnesty International report to which the appellant refers would not appear to have been before the Secretary. Like the report just discussed, it contains only general information about detention conditions and the ill- treatment of detainees in Iran. A report by the Austrian Centre for Country of Origin and Asylum Research and Documentation (ACCORD) refers to the Swiss Refugee Council describing the Iranian authorities' practice of dealing with returned asylum seekers as "arbitrary" and "unpredictable". The report further provides two examples of returned asylum seekers being arrested after their deportation back to Iran, despite apparently having no political profile. As the appellant contends, it was not before the Secretary. However, the material referred to in the report was. The same source cited by the report was referred to by the Secretary, as were the two examples. The only part of the report that was not before the Secretary would appear to be the opinion about how the Iranian authorities deal with returned asylum seekers. The last article relied upon by the appellant was not before the Secretary. It is entitled "Iran Needs Guarantee of Human Rights, Not Retweets" and was published by Article 19. It cites a case of a political activist who was returned to Iran and imprisoned. It is relied upon by the appellant as contradicting a piece of country information cited by the Secretary which reported an Iranian Minister announcing the formation of a committee to facilitate the return of political activists to Iran but guaranteeing that "any individual who has not committed a violation will not have a problem". Rather than contradict the article relied upon by the appellant, this information is consistent with the Secretary's opinion, with which the Tribunal agreed, that the persons at risk on return to Iran are failed asylum seekers with a pre-existing political profile. There is no substance to Ground 1. Ground 2 – want of procedural fairness The Tribunal did not accept the appellant's claim to be stateless, as mentioned earlier, and was therefore not satisfied that he had a well-founded fear of being persecuted in Iran by reason of his nationality. The Tribunal then turned to consider whether he may nevertheless suffer serious harm or discrimination on account of his race or, more particularly, his ethnicity. The Tribunal noted2 two pieces of country information, which said: "It was considered that generally, no matter what ethnic or religious background, an individual has, if he or she plainly accepts and lives by the Islamic regime, he or she will be left alone. However, there is institutional discrimination in Iran and it would for example be harder for a Kurd to get a job compared to a Persian Iranian … it was considered that Kurds would be subject to harsher treatment from the authorities than ethnic Persians". "While the constitution grants equal rights to all ethnic minorities and allows for minority languages to be used in the media and in schools, minorities did not enjoy equal rights, and the government consistently denied their right to use their languages in school. In addition, the Gozinesh (selection) law prohibits non-Shia ethnic minorities from fully participating in civic life. The law and its associated provisions make full access to employment, education, and other areas conditional on devotion to the Islamic republic and the tenets of Shia Islam". The Tribunal went on to make the point that whilst Kurds and other ethnic minorities may face discrimination in Iran, the more serious discriminatory provisions are directed to non-Shia Muslims. It observed that: Shia Muslims are in the majority in Iran; the appellant is part of that majority; the appellant has been dutiful to the State in the military service that he had undertaken; and there was nothing to suggest that he does not accept and live by the Islamic regime. The appellant contends that he was denied procedural fairness by the use made of this country information by the Tribunal. In particular, he was not given an opportunity to respond to whether he was in fact, and would be identified as, devoted to the Islamic Republic and Shia Islam or to respond to the country information in so far as it demonstrated that Faili Kurds are not subject to discrimination to the same extent as other minorities. He had had no notice of the Tribunal's reliance on his religious identification because the Secretary had not rested his opinion concerning the discrimination of Kurds in Iran upon it. The appellant himself relied upon his ethnicity as a Faili Kurd to support his claim to systematic persecution and the Secretary and the Tribunal dealt with it on this basis. The material which the appellant put before the Tribunal acknowledges that Faili Kurds are Shia Muslim Kurds. The appellant identified himself as a Shia Muslim in the form he completed at his initial Transfer Interview with the assistance of an interpreter. He made the same statement in 2 WET044 unreported, Refugee Status Review Tribunal, 1 February 2016 at [90]. his Application for Refugee Status Determination. These statements no doubt account for the Secretary's finding to this effect. The appellant suggests that an inference was nevertheless open that he might not be religiously observant given that he declined to take an oath when giving evidence before the Tribunal and selected the "non-religion" option. This is not to the point. So far as concerns the possible treatment of the appellant in Iran, the question is not whether he is in fact religious but rather whether he is perceived to be part of an ethnic group which is identified with Shia Islam. The appellant's argument that he was not referred to the country information upon which the Tribunal relied also founders. The first piece, quoted above, was set out in the reasons of the Secretary when dealing with the question of discrimination against Kurds. The second piece of country information was known to the appellant. It was contained in a report to which the appellant referred in his submissions to the Tribunal. Whilst the appellant did not cite this passage, his legal representative, who prepared the excerpts from the country information, must be taken to be aware of it. The rules of natural justice did not require the Tribunal to bring it to the appellant's attention. There is no merit to this ground. Conclusion and orders Leave to amend the notice of appeal should be refused. The appeal should be dismissed.

HIGH COURT OF AUSTRALIA APPELLANT AND EUGENE LEPORE & ANOR RESPONDENTS [2017] HCA 13 29 March 2017 ORDER Appeal allowed from the Supreme Court of New South Wales Court of Appeal's decision in relation to the second respondent. Set aside the orders of the Supreme Court of New South Wales Court of Appeal made on 21 May 2015 and 1 June 2015 insofar as they apply to the second respondent and, in lieu thereof, order that the appeal against the second respondent to the Supreme Court of New South Wales Court of Appeal be allowed and the orders made by District Court Judge Taylor SC on 16 May 2014 insofar as they relate to the second respondent be set aside and in lieu thereof order that the Notice of Motion filed by the second respondent on 31 July 2013 in the District Court of New South Wales be dismissed. The second respondent pay the appellant's costs of and incidental to the second respondent's Notice of Motion filed in the District Court of New South Wales on 31 July 2013. The second respondent pay the appellant's costs of and incidental to the application for leave to appeal and the appeal to the Supreme Court of New South Wales Court of Appeal below against the judgment and orders made by District Court Judge Taylor SC in favour of the second respondent. The second respondent pay the appellant's costs of and incidental to the application for special leave to appeal and the appeal to the High Court of Australia against the judgment and orders made by the Supreme Court of New South Wales Court of Appeal on 21 May 2015 and 1 June 2015 in favour of the second respondent. Remit the balance of the matter to the District Court of New South Wales. On appeal from the Supreme Court of New South Wales Representation B W Walker SC with D M C Aquilina for the appellant (instructed by Longton Legal) No appearance for the first respondent J V Agius SC with A M Hawkins for the second respondent (instructed by Carneys Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Legal practitioners – Negligence – Advocates' immunity from suit – Where settlement offer made and rejected on first day of trial – Where rejection of settlement offer followed by judicial decision – Where damages awarded lower than settlement offer – Where solicitor and barrister alleged to have given negligent advice in relation to settlement offer – Whether advice affected conduct of case in court by bearing upon court's determination of case – Whether advocate immune from suit. High Court – Stare decisis – Whether Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572; 331 ALR 1; [2016] HCA 16 should be reopened. Words and phrases – "advocates' immunity", "affecting the conduct of the case", "finality", "judicial "intimately determination", "possibility of challenge to findings". connection", connected", "functional KIEFEL CJ. I agree with Edelman J. Bell BELL J. I agree with Edelman J. I agree with Edelman J. KEANE J. I agree with Edelman J. Nettle NETTLE J. I agree with Edelman J that, in light of the majority's reasoning in Attwells v Jackson Lalic Lawyers Pty Ltd1, this appeal must be allowed. With all respect, however, I do not agree that Mr Kendirjian's negligence action against the respondents does not give rise to a possibility of a challenge to the findings of the District Court. Where an advocate's advice to a plaintiff to reject an offer of settlement of the plaintiff's claim results in the claim proceeding to a judgment which is less favourable than the offer, a later claim by the plaintiff that the advocate was negligent in so advising will call into question whether the advocate had a reasonable basis to advise rejection of the offer. I remain of the view I expressed in Attwells that2, where that occurs, it is likely to result in the re-litigation of issues that were determined at trial, including the strength of the plaintiff's claim; the weight to be given to evidence, taking into account considerations of credibility and reliability of witnesses; and the correct application of legal principle and authority. I accept of course, as Edelman J observes, that the assessment of whether the advocate's advice was negligent is to be undertaken as at the time the advice was given and not at the time of the unfavourable judgment. But in the scheme of things, it is not improbable that one or other side might attempt to demonstrate the way things were, or should have appeared, when the advice was given by reference to the way things were during and at the conclusion of the trial. For example, an advocate faced with such a negligence claim might contend that the trial judge's assessment of the plaintiff's credit and reliability was so unlikely or unwarranted that it could not reasonably have been anticipated at the time of advice, or that the trial judge's assessment of damages was so remarkably parsimonious by reference to current practice that it could not reasonably have been foreseen. Equally, a plaintiff might contend that the trial judge's assessment of the issues in the case was so predictable that the advocate's failure to anticipate it was negligent. Such examples can be multiplied. Of course, as between Mr Kendirjian and the defendant to the District Court proceedings, issues of that type have now been conclusively determined by the Court of Appeal's dismissal3 of Mr Kendirjian's appeal from the judgment of the District Court. But such issues have not yet been determined conclusively as between Mr Kendirjian and the respondents. And although, as the pleadings stand in this matter, it is not clear that either of the respondents is advancing a defence of the kind alluded to above, the negligence claim has not yet proceeded (2016) 90 ALJR 572; 331 ALR 1; [2016] HCA 16. (2016) 90 ALJR 572 at 586 [72]; 331 ALR 1 at 17-18. 3 Kendirjian v Ayoub [2008] NSWCA 194. Nettle very far and the possibility of further amendments to the pleadings cannot be excluded. This view notwithstanding, in light of the majority's reasoning in Attwells I agree with the orders proposed by Edelman J. GORDON J. I agree with Edelman J that, in accordance with the reasoning of the majority in Attwells v Jackson Lalic Lawyers Pty Ltd4, this appeal must be allowed. I also agree with the additional reasons of Nettle J. Those reasons are consistent with the view I expressed in Attwells5. In Attwells, the majority said that it was "not necessary to determine whether the [advocate's] immunity attaches only to the kinds of decision which a lawyer charged with the conduct of a case in court may make without instructions from the client"6 (emphasis added). The central allegation in this appeal is that the lawyers charged with the conduct of Mr Kendirjian's case in earlier personal injury proceedings made a decision (to reject an offer of settlement) that could not be made without instructions from the client. Where a court has been asked to make an order to carry a compromise into effect, the court may refuse to give effect to the compromise, and may set aside an order already made, where counsel has acted contrary to instructions, at least before the order has been perfected7. Accordingly, in some, perhaps many, cases where it is alleged that a lawyer has acted without instructions, it will be necessary to first explore whether the result of which the client complains can be, or could have been, set aside before considering issues about immunity from suit. Here, according to Mr Kendirjian, the matter went to judgment because, among other things, counsel rejected a settlement offer as being "too low" without his express instructions. It was not submitted in this Court that the judgment ultimately entered could have been set aside on account of the alleged conduct of counsel for Mr Kendirjian. Counsel purported to act as the agent of Mr Kendirjian in rejecting the offer. Just as an agent gives an implied warranty of authority to the third party with whom they deal8, it is arguable that there will be an implied contract that (2016) 90 ALJR 572; 331 ALR 1; [2016] HCA 16. (2016) 90 ALJR 572 at 594 [129]; 331 ALR 1 at 28. (2016) 90 ALJR 572 at 582 [45]; 331 ALR 1 at 12. 7 Harvey v Phillips (1956) 95 CLR 235 at 243; [1956] HCA 27. See also Neale v Gordon Lennox [1902] AC 465; Shepherd v Robinson [1919] 1 KB 474. 8 Collen v Wright (1857) 8 El & Bl 647 at 657-658 [120 ER 241 at 245]; Brownett v Newton (1941) 64 CLR 439 at 445, 448-451, 457; [1941] HCA 14. makes an agent liable to their principal for exceeding their actual authority9. On that hypothesis, liability for an agent's breach of a duty to act only as authorised and without exceeding authority would arise under that implied contract10. And both the nature and extent of the duty, and the resulting breach, would fall to be considered and determined by reference to the law of contract11. The central allegation would be that the agent acted without authority, not that the agent was negligent in the exercise of their authority. That is not to say anything about whether such a case might also support a claim sounding in tort, based on a breach of some differently formulated duty12. Because, as this Court now holds, there is no immunity from suit in this case, and there has yet to be a trial of Mr Kendirjian's claim against his lawyers, these are matters about which no concluded view can or should be expressed. And how the point expressly left open by the majority in Attwells should be determined is not decided in this appeal. 9 OBG Ltd v Allan [2008] AC 1 at 41-42 [93]. 10 See OBG Ltd v Allan [2008] AC 1 at 41-42 [93]. 11 See, eg, Watts and Reynolds, Bowstead and Reynolds on Agency, 20th ed (2014) at 12 See Astley v Austrust Ltd (1999) 197 CLR 1 at 20-23 [44]-[47]; [1999] HCA 6; Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 193-194; Watts and Reynolds, Bowstead and Reynolds on Agency, 20th ed (2014) at 185-186 [6-003]. Edelman EDELMAN J. This appeal concerns the scope of advocates' immunity from suit. The appellant, Mr Kendirjian, brought a claim against his solicitor (Mr Lepore, the first respondent) and barrister (Mr Conomos, the second respondent). Mr Kendirjian alleged that the respondents were negligent in advising him in relation to an offer for settlement in a proceeding in which they represented him. Mr Kendirjian's allegations included that the respondents advised him that a settlement offer had been made but that they did not advise him of the amount of the offer, and that they rejected the offer as being "too low" without his express instructions. The primary judge granted summary judgment on the basis that the respondents were immune from the alleged liability for negligence. That decision was upheld by the Court of Appeal of the Supreme Court of New South Wales. Subsequent to the decisions of the primary judge and the Court of Appeal, this Court decided Attwells v Jackson Lalic Lawyers Pty Ltd13. In Attwells, a majority of this Court held that the advocates' immunity from suit did not extend to negligent advice which leads to a compromise of litigation by agreement between the parties. As the majority joint judgment explained, by the same reasoning it is difficult to envisage how the immunity could ever extend to advice not to settle a case14. Following the decision in Attwells, the first respondent in this matter consented to orders in this Court including allowing the appeal insofar as it related to him. However, the second respondent submitted that the reasoning in Attwells could be distinguished or, alternatively, that part of the decision should be reopened. The reasoning of the majority in Attwells cannot be distinguished in this case. Attwells should not be reopened. The appeal in respect of the second respondent must also be allowed. The personal injury proceedings and appeal In November 1999, Mr Kendirjian was injured in a car accident with a car driven by Ms Ayoub. In 2004, he commenced legal proceedings against Ms Ayoub in the District Court of New South Wales. Ms Ayoub admitted liability so the trial concerned only the assessment of damages. On the first day of the District Court trial, in August 2006, Ms Ayoub's legal representatives made an offer of settlement to the respondents, offering Mr Kendirjian $600,000 plus costs. This offer was not accepted so the trial proceeded. Ultimately, Mr Kendirjian obtained judgment for $308,432.75 plus costs, although on appeal it was common ground that the proper quantum was $10,000 more, when an omission of damage for future domestic help for heavier 13 (2016) 90 ALJR 572; 331 ALR 1; [2016] HCA 16. 14 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [48] per French CJ, Kiefel, Bell, Gageler and Keane JJ; 331 ALR 1 at 13. Edelman household tasks was included. An appeal to the Court of Appeal was dismissed with costs. In the Court of Appeal, McColl JA (with whom Beazley JA agreed) observed that Mr Kendirjian's credibility had been at the heart of the issues to be determined at trial15. The primary judge had relied substantially upon video recordings of Mr Kendirjian in the years after the accident to conclude that Mr Kendirjian had exaggerated or misstated the extent of his medical condition. The negligence proceedings against the respondents In October 2012, Mr Kendirjian commenced proceedings against the respondents in the District Court. His allegations included numerous particulars of negligence in the advice given to him by the respondents. Central to his claim were allegations that the respondents did not advise him of the amount of the settlement offer, "but merely of the fact that an offer had been made". Mr Kendirjian also pleaded that the respondents rejected the offer "absent any express instructions" from him but "based upon the advice of the [second respondent] that the offer ... was 'too low'". Mr Kendirjian alleged that he first discovered the amount of the offer from the solicitor for Ms Ayoub in January 2009. The second respondent's pleaded defence included the plea that either he or the first respondent, or both of them, informed Mr Kendirjian of the settlement offer but that Mr Kendirjian provided instructions to reject the offer and to make a counter-offer of $1.2 million. The second respondent also pleaded that Mr Kendirjian's instructions for the counter-offer were contrary to his advice to make a counter-offer of $800,000 inclusive of costs. In Mr Kendirjian's claim against the respondents, he sought damages of $312,567.25 plus interest and costs. This was said to have been calculated by subtracting the amount recovered after the personal injury trial from the settlement offer of $600,000 plus costs. Mr Kendirjian's claim against the respondents therefore relied upon the amount awarded by the District Court in the personal injury proceedings in order to quantify the loss that he allegedly suffered. Other particulars of Mr Kendirjian's claim also appeared to rely on the District Court judgment, such as his allegations against each respondent of a failure to advise that the District Court could award damages in an amount lower than the "lower range of $415,984". The decisions of the District Court and Court of Appeal The respondents successfully brought an application in the District Court for summary judgment. The District Court held that the respondents were immune from liability in negligence. This conclusion was upheld by the Court of Appeal. Both the District Court and the Court of Appeal relied upon seriously 15 Kendirjian v Ayoub [2008] NSWCA 194 at [95]. Edelman considered obiter dicta in the earlier decision of the New South Wales Court of Appeal in Donnellan v Woodland16. In the Court of Appeal in this case, Macfarlan JA (with whom Leeming JA and Bergin CJ in Eq agreed) held that the decision in Donnellan extended to the circumstances of this case, and that the decision in Donnellan was not plainly wrong17. The decision of the Court of Appeal in Donnellan was an appeal from R S Hulme J18. That case concerned advice given by a solicitor, Mr Donnellan, to his former client, Mr Woodland, regarding proceedings to obtain a court- imposed drainage easement under s 88K of the Conveyancing Act 1919 (NSW). The easement proceedings failed and Mr Woodland was ordered to pay the costs of the Council, including on an indemnity basis from the date of one of the Council's offers of compromise. The allegations of negligence against Mr Donnellan included that he was negligent in relation to advice concerning offers to compromise the easement proceedings by the Council. The claim of negligence was upheld by the primary judge. In the Court of Appeal in Donnellan, Beazley JA (with whom Barrett and Hoeben JJA and Sackville AJA agreed) allowed the appeal on the ground that Mr Donnellan had not been negligent. Nevertheless, their Honours also considered that even if Mr Donnellan had been negligent he would have had the benefit of the immunity. The reason given by Beazley JA was that the immunity would attach if the giving of advice, or the omission to give advice, led to a decision to continue with the case, or meant that the case was continued. The immunity was said to apply because the omission or conduct had affected the conduct of the case in court by requiring the case to continue19. A different approach to the same conclusion was taken in Donnellan by Basten JA, who considered it contrary to principle to determine the question of negligence before the issue concerning the immunity because the rationale of the immunity is to avoid the reopening of the dispute, and to avoid a challenge to a final determination involving the exercise of the judicial power of the State. To determine the issue of negligence before the issue concerning immunity could undermine that rationale if the immunity existed. His Honour therefore considered that the immunity attached because, based upon the pleadings rather than the course of trial, Mr Donnellan might have argued that the advice given 16 (2013) ANZ ConvR ¶13-001; [2012] NSWCA 433. 17 Kendirjian v Lepore [2015] NSWCA 132 at [28]. See also at [51] per Leeming JA. 18 Woodland v Donnellan [2011] NSWSC 777. 19 Donnellan v Woodland (2013) ANZ ConvR ¶13-001 at 35 [198]. Edelman was reasonable because the orders made were improbable at the date the advice was given, thus casting doubt upon the correctness of the decision20. In applying the decision in Donnellan in this case, Macfarlan JA in the Court of Appeal correctly observed that there is no difference in principle between an allegation that negligent advice was given about the amount of likely damages (as alleged in this case) and an allegation that negligent advice was given to reject an offer of a disclosed amount (as alleged in Donnellan)21. However, the conclusions of the Court of Appeal in this case and the Court of Appeal in Donnellan, that both instances engage the immunity from suit, are inconsistent with the course of the development of the principle of advocates' immunity. The decisions in Giannarelli, Attwells and D'Orta In Giannarelli v Wraith22, a majority of this Court upheld the common law immunity from suit of an advocate. In the majority, Mason CJ described the boundaries of the immunity in the following terms23: "Preparation of a case out of court cannot be divorced from presentation in court. The two are inextricably interwoven so that the immunity must extend to work done out of court which leads to a decision affecting the conduct of the case in court. But to take the immunity any further would entail a risk of taking the protection beyond the boundaries of the public policy considerations which sustain the immunity. I would agree with McCarthy P in Rees v Sinclair24 where his Honour said: '... the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing.'" Sixteen years later, in D'Orta-Ekenaike v Victoria Legal Aid25, a majority of this Court rejected a submission that the decision of the majority in 20 Donnellan v Woodland (2013) ANZ ConvR ¶13-001 at 46 [273]-[274]. 21 Kendirjian v Lepore [2015] NSWCA 132 at [28]. 22 (1988) 165 CLR 543; [1988] HCA 52. 23 Giannarelli v Wraith (1988) 165 CLR 543 at 559-560. 24 [1974] 1 NZLR 180 at 187. 25 (2005) 223 CLR 1; [2005] HCA 12. Edelman Giannarelli should be reconsidered. A joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ said that there was no reason to depart from the test described in Giannarelli. The joint judgment summarised that test in terms which included work done in court and, quoting from part of the passage above from Mason CJ, "work done out of court which leads to a decision affecting the conduct of the case in court"26; or, to express the approach in relation to work done out of court in another way, "'work intimately connected with' work in a court"27. A further eleven years later, in Attwells, this Court again unanimously rejected a submission that the immunity should be abolished. The majority declined to extend the immunity to acts or advice of an advocate which do not move litigation towards a determination by a court. In the joint majority reasons, French CJ, Kiefel, Bell, Gageler and Keane JJ reiterated the remarks from the joint judgment in D'Orta that there was no reason to depart from the test described in Giannarelli, and quoted the whole of the passage from Mason CJ set out above28. The joint reasons of the majority in Attwells explained the rationale for the immunity when declining to extend it to compromises. Since the immunity attaches by the "participation of the advocate as an officer of the court in the quelling of controversies by the exercise of judicial power", it followed that the immunity did not extend to advice that leads to a settlement between the parties29. Advice leading to a compromise of a dispute cannot lead to the possibility of collateral attack upon a non-existent exercise of judicial power to quell disputes. For this reason, the expression of the test concerning work done out of court which "leads to a decision affecting the conduct of the case in court"30, or which is "intimately connected with"31 work in court, is not engaged 26 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 31 [86]. 27 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 31 [86], quoting the Explanatory Memorandum for the Bill that became the Legal Practice Act 1996 (Vic). 28 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 575 [2]; 331 ALR 29 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 581 [38]; 331 ALR 1 at 11. 30 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 575 [2]; 331 ALR 1 at 3, citing Giannarelli v Wraith (1988) 165 CLR 543 at 560. 31 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 575 [2]; 331 ALR 1 at 3, citing Giannarelli v Wraith (1988) 165 CLR 543 at 560. Edelman merely by "any plausible historical connection"32 between an advocate's work and a client's loss. The test requires that the work bear upon the court's determination of the case33. There must be a "functional connection" between the work of the advocate and the determination of the case34. In Attwells, the respondent submitted that an anomaly would arise if the immunity did not extend to negligent advice which leads to a compromise of the proceeding, but did extend to negligent advice not to compromise a proceeding which leads to a judicial decision. The joint reasons of the majority explained that the assumption underlying the respondent's submission was that the immunity would extend to negligent advice not to compromise a proceeding because that advice was intimately connected with the ensuing judicial determination35. The joint reasons rejected this assumption on the basis that negligent advice not to compromise a proceeding gives rise only to an historical connection between the advice and the continuation of the litigation36. As the joint judgment concluded, the giving of advice either to cease or to continue litigating does not itself affect the judicial determination of a case37. Attwells cannot be distinguished The primary submission of the second respondent was that the decision in Attwells should be distinguished. He relied upon the reasoning of Macfarlan JA in the Court of Appeal, handed down prior to Attwells, where his Honour said that Mr Kendirjian's negligence action could involve departing from the views expressed in the District Court and Court of Appeal judgments in the personal injury proceedings38. The second respondent submitted that a departure from the 32 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [46]; 331 ALR 1 at 12. 33 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [46]; 331 ALR 1 at 12. 34 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [49]; 331 ALR 1 at 13. 35 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [48]; 331 ALR 1 at 13. 36 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 582 [49]; 331 ALR 1 at 13. 37 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 90 ALJR 572 at 583 [50]; 331 ALR 1 at 13. 38 Kendirjian v Lepore [2015] NSWCA 132 at [40]. Edelman reasoning in the personal injury proceedings could arise because the respondents might seek to use the adverse findings about Mr Kendirjian's credibility to explain why the judgment awarded was much lower than the settlement offer of $600,000 plus costs. With respect, the negligence action by Mr Kendirjian against the respondents does not give rise to the possibility of any challenge to the findings of the District Court concerning Mr Kendirjian's credibility or otherwise. From Mr Kendirjian's perspective, he relies on the decision of the District Court in order to prove his alleged loss. From the perspective of the second respondent, issues concerning the reasonableness of advice given will be assessed at the time the advice was given, not at the time of the District Court judgment. The assessment of reasonableness will not involve any consideration of whether the decision of the District Court, affirmed by the Court of Appeal, was right or wrong whether in relation to credibility or otherwise. It was not suggested that any questions of reasonable foreseeability of loss could conceivably lead to a challenge to the reasoning or decision in the District Court. Indeed, nothing in the second respondent's pleaded defence raises any suggestion of a challenge to the reasoning or decision in the District Court. In oral submissions, senior counsel for the second respondent submitted that the respondents might challenge the credibility of Mr Kendirjian concerning "what [Mr Kendirjian] said to the lawyers about his disability". However, a credibility challenge of that nature, in separate proceedings based on separate evidence, is independent of the different credibility findings by the District Court concerning Mr Kendirjian's evidence in the personal injury proceedings. It does not call any of those findings into question. For these reasons, the reasoning in the majority joint judgment in Attwells requires that the appeal be allowed. The application to reopen Attwells As an alternative to the second respondent's submission that Attwells should be distinguished, he sought to reopen that part of the decision in Attwells where the joint judgment approved the remarks of Mason CJ, which had relied upon the remarks of McCarthy P in Rees v Sinclair39. The second respondent submitted that that part of the quotation from Mason CJ in Giannarelli had not been approved by the joint judgment in D'Orta. It followed, he argued, that the scope of the immunity should extend to "work done out of court which leads to a decision affecting the conduct of the case in court" but not work done "affecting the way that cause is to be conducted when it comes to a hearing". The second 39 [1974] 1 NZLR 180. Edelman respondent's submission was based upon the reasoning of Macfarlan JA in the Court of Appeal in this case but, as I have explained, that decision was given prior to Attwells. The second respondent did not refer to any of the principles commonly considered by this Court when deciding whether to reopen a previous decision40. But, in any event, his submission is premised upon an illusory distinction. In relation to work done out of court, there is no real distinction between work done which leads to a decision affecting the conduct of the case in court and work done affecting the way that case is to be conducted at a hearing. A decision affecting the way that a case is conducted is the principal method, or perhaps the only method, by which an advocate affects the conduct of a case in court. Even if some artificial distinction between these formulations could be drawn, it is not evident in the joint judgment in D'Orta. The passage from Mason CJ, which was quoted in part by the joint judgment in D'Orta, was part of a single paragraph of integrated reasoning explaining why the immunity should not cease at the courtroom door41. No submission had been made in D'Orta that some parts of the passage from Mason CJ, such as the words "affecting the conduct of the case", should be accepted but other parts, such as the words two sentences later, "the way that cause is to be conducted", should not. The second respondent's submission that Attwells should be reopened to revisit this point should not be accepted. Conclusion On 11 November 2016, this Court made orders by consent to give effect to allowing the appeal in respect of the first respondent and remitting that part of the appeal to the District Court of New South Wales. For the reasons above, the appeal should also be allowed the second respondent. Corresponding orders should be made in relation to the second respondent as follows: in respect of Appeal allowed from the Supreme Court of New South Wales Court of Appeal's decision in relation to the second respondent. Set aside the orders of the Supreme Court of New South Wales Court of Appeal made on 21 May 2015 and 1 June 2015 insofar as 40 See Queensland v The Commonwealth (1977) 139 CLR 585 at 599 per Gibbs J, 602 per Stephen J, 620 per Aickin J; [1977] HCA 60; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ; [1989] HCA 5. 41 Giannarelli v Wraith (1988) 165 CLR 543 at 559-560 per Mason CJ. Edelman they apply to the second respondent and, in lieu thereof, order that the appeal against the second respondent to the Supreme Court of New South Wales Court of Appeal be allowed and the orders made by District Court Judge Taylor SC on 16 May 2014 insofar as they relate to the second respondent be set aside and in lieu thereof order that the Notice of Motion filed by the second respondent on 31 July 2013 in the District Court of New South Wales be dismissed. The second respondent pay the appellant's costs of and incidental to the second respondent's Notice of Motion filed in the District Court of New South Wales on 31 July 2013. The second respondent pay the appellant's costs of and incidental to the application for leave to appeal and the appeal to the Supreme Court of New South Wales Court of Appeal below against the judgment and orders made by District Court Judge Taylor SC in favour of the second respondent. The second respondent pay the appellant's costs of and incidental to the application for special leave to appeal and the appeal to the High Court of Australia against the judgment and orders made by the Supreme Court of New South Wales Court of Appeal on 21 May 2015 and 1 June 2015 in favour of the second respondent. Remit the balance of the matter to the District Court of New South Wales.

HIGH COURT OF AUSTRALIA MOBIL OIL AUSTRALIA PTY LIMITED APPELLANT AND TRENDLEN PTY LIMITED RESPONDENT Mobil Oil Australia Pty Limited v Trendlen Pty Limited [2006] HCA 42 30 August 2006 ORDER Appeal allowed with costs. Set aside the orders of the Supreme Court of New South Wales made on 27 July 2005 and in their place order that: the plaintiff's notice of motion filed on 13 May 2005 be dismissed with costs; the proceedings not be continued as representative proceedings; and the plaintiff pay the defendant's costs of the defendant's notice of motion filed on 7 October 2003. On appeal from the Supreme Court of New South Wales Representation J T Gleeson SC with J K Kirk for the appellant (instructed by Blake Dawson Waldron Lawyers) S J Gageler SC with M J Leeming for the respondent (instructed by Robert Richards & Associates) Intervener H C Burmester QC with R A Pepper for the Attorney-General of the Commonwealth intervening (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Mobil Oil Australia Pty Limited v Trendlen Pty Limited Practice – Representative proceedings – Supreme Court Rules 1970 (NSW), Pt 8 r 13 – Representative proceedings brought by petroleum retailer to recover licence fees paid to wholesaler – Proceedings financed by litigation funder – Whether proceedings champertous – Whether provisions for representative proceedings in the Supreme Court Rules were validly engaged – "Same interest" – Common interest of fact or law – Whether there were, at the time the proceedings were commenced, numerous persons who had the same interest in the proceedings – Proceedings intended to be conducted on behalf of those retailers who subsequently "opted-in" – None had "opted-in" when proceedings commenced. Practice – Representative proceedings – Stay of proceedings – Abuse of process – Public policy – Proceedings financed by litigation funder – Litigation funder sought out possible claimants – Retailer gave up to funder one-third of its claim – Whether the representative proceedings should be stayed as contrary to public policy or an abuse of process – Maintenance, Champerty and Barratry Abolition Act 1993 (NSW). Words and phrases – "abuse of process", "maintenance and champerty", "public policy", "representative proceedings", "same interest", "trafficking in litigation". Maintenance, Champerty and Barratry Abolition Act 1993 (NSW). Supreme Court Rules 1970 (NSW), Pt 8, r 13. GLEESON CJ. Subject to one qualification, this appeal raises substantially the same issues as were raised by Campbells Cash and Carry Pty Limited v Fostif Pty Limited1. The qualification concerns the rejection by McDougall J of certain evidence concerning the conduct of the promoter of the litigation. The evidence is referred to in the reasons of Kirby J. I agree that the evidence, even if admitted, would not have altered the conclusion to be drawn on the matter of abuse of process. Viewed in one way (but not the only possible way) it is an example of the less attractive features of commercial promotion and funding of litigation, but nobody suggests there are not such features. The Supreme Court of New South Wales has the capacity to recognise, and the power to guard against, abuse of its process. The appeal should be dismissed with costs. [2006] HCA 41. Crennan GUMMOW, HAYNE AND CRENNAN JJ. This appeal was heard at the same time as the several appeals dealt with in Campbells Cash and Carry Pty Limited v Fostif Pty Limited2. The appellant, Mobil Oil Australia Pty Limited ("Mobil"), sold petroleum products by wholesale. Immediately before this Court decided Ha v New South Wales3, legislation in five States4 and the Australian Capital Territory5 provided for the licensing of sellers of petroleum products in terms that the respondent to the present appeal, Trendlen Pty Limited ("Trendlen"), contends were not materially different from the legislation considered in Ha. (It is not necessary to decide whether, or to what extent, the legislation relevant to these proceedings does differ from that considered in Ha.) Immediately before Ha was decided, Trendlen was a retailer of petroleum products. It alleges that it bought petroleum products from Mobil, that pursuant to the impugned legislation, Mobil paid licence fees to the State of New South Wales referable to the value of petroleum products sold, that Mobil passed that fee on to its retailers, including Trendlen, and that Trendlen is entitled to recover the amount that Mobil charged it for fees but which Mobil did not have to pay to the State because of the decision in Ha. Trendlen brought proceedings in the Equity Division of the Supreme Court of New South Wales against Mobil. The proceedings were commenced as representative proceedings pursuant to Pt 8 r 13 of the Supreme Court Rules 1970 ("the 1970 Rules"). Two other representative proceedings were commenced in the Equity Division by petroleum retailers at the same time as the proceedings commenced by Trendlen. All three proceedings were commenced by retailers whom Mr Adrian Firmstone, the sole director of Firmstones Pty Ltd ("Firmstones"), said that his company represented. Mobil contends that the proceedings begun by Trendlen (and the other two proceedings commenced by petroleum retailers) were promoted and maintained by Firmstones on champertous terms. Firmstones was per cent of any amounts received by the plaintiffs from the to receive 331/3 [2006] HCA 41. (1997) 189 CLR 465. 4 Business Franchise Licences (Petroleum Products) Act 1987 (NSW), Business Franchise (Petroleum Products) Act 1979 (Vic), Petroleum Products Regulation Act 1995 (SA), Transport Co-ordination Act 1966 (WA), Petroleum Products Business Franchise Licences Act 1981 (Tas). 5 Business Franchise (Tobacco and Petroleum Products) Act 1984 (ACT). Crennan defendants, would meet any costs orders made against the plaintiffs, but would retain any amounts awarded as costs. The proceedings commenced by Trendlen took substantially the same form as the proceedings considered in Fostif. That is, the summons recorded that Trendlen claimed the relief set out in the summons on behalf of itself and a class of unnamed persons that was described in the summons. The summons provided for an opt-in procedure and the persons whom Trendlen sought to represent were those petroleum retailers who would later choose to be represented. Trendlen sought discovery revealing the names and addresses of those petroleum retailers with whom Mobil had dealt between 1 July 1997 and 5 August 1997. Mobil gave notice of motion for orders that the proceedings be dismissed, struck out or stayed, or that the proceedings not continue as representative proceedings. These applications were heard by a single judge (McDougall J) after the Court of Appeal of New South Wales had decided Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd6. In the light of what had been decided by the Court of Appeal in Fostif, McDougall J dismissed Mobil's application for orders terminating the proceedings, and dismissed Mobil's application for an order that the proceedings not continue as representative proceedings. An order was made obliging Mobil to provide Trendlen with a verified list of the names and last-known business addresses of the petrol retailers to whom Mobil had supplied petroleum products in New South Wales, Victoria, South Australia, Tasmania, Western Australia and the Australian Capital Territory during the period 1 July 1997 to 5 August 1997. By special leave, Mobil appealed directly to this Court. Mobil contended that the proceedings "are tainted by maintenance and champerty ... constitute trafficking in litigation [and] an abuse of process". The proceedings being in federal jurisdiction (as a matter arising under the Constitution or involving its interpretation7), Mobil further contended that the circumstances surrounding the commencement of the proceedings, and in particular the role played by Firmstones, were "inconsistent with the requirement that the judicial power of the Commonwealth be exercised in accordance with the judicial process". (2005) 63 NSWLR 203. 7 Constitution, s 76(i). Crennan Mobil made a number of further, more particular, challenges to the primary judge's decision. It complained of the primary judge's rejection of evidence of the content of a without prejudice offer made by Firmstones to compromise all claims that petroleum retailers may have had against Mobil for sums allegedly due to them in respect of fees paid under the impugned legislation. Mobil further contended that the primary judge should have found that by making this offer Firmstones breached a fiduciary duty owed to those retailers whom it represented. In this connection, Mobil pointed to some other compromises that Firmstones had reached with other suppliers of petroleum products which, so Mobil contended, revealed other breaches of fiduciary duty and thus revealed that Firmstones and Trendlen were inappropriate persons to have control of the proceedings. It is unnecessary to consider these particular complaints, or to consider Mobil's further complaint that the primary judge erred in finding that there was no basis in the evidence for concluding that Firmstones would be unable to meet certain undertakings as to costs. These complaints need not be considered because, for the reasons given in Fostif, the proceedings commenced by Trendlen did not meet the requirements of Pt 8 r 13(1) of the 1970 Rules. When the proceedings were instituted and considered by McDougall J there were not numerous persons having the same interest in the proceedings that had been commenced. The relief sought was confined to Trendlen. The only person who then had an interest in the proceedings was Trendlen. That being so, Mobil was entitled to an order that the proceedings not continue as representative proceedings and no order should have been made in the proceedings, as then constituted, requiring Mobil to provide a verified list of retailers with whom it had dealt. It is not necessary to consider Mobil's contentions about the exercise of the judicial power of the Commonwealth. As presented, the arguments founded in Ch III of the Constitution raised no consideration separate from those examined in Fostif but it is neither necessary nor appropriate to decide how, if at all, those considerations intersect with Ch III. Mobil's appeal should be allowed with costs. The orders of McDougall J made on 27 July 2005 should be set aside and in their place there be orders that: The plaintiff's notice of motion filed on 13 May 2005 is dismissed with costs. The proceedings not continue as representative proceedings. The plaintiff pay the defendant's costs of the defendant's notice of motion filed on 7 October 2003. Kirby KIRBY J. This appeal was heard concurrently with Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd8. Exceptionally, the appeal was brought directly from orders made by the primary judge in the Commercial List of the Equity Division of the Supreme Court of New South Wales (McDougall J)9. This unusual course was taken because the primary judge had dismissed the application before him by Mobil Oil Australia Pty Ltd ("the appellant"), by the application of the principles stated in the decision of the Court of Appeal of New South Wales in Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd10. The issues in this appeal As appears from the reasons of Gummow, Hayne and Crennan JJ11, most of the issues raised in this appeal repeat the arguments advanced for the appellants in the Fostif litigation. That is why this Court granted special leave to the appellant so that it would be heard before those questions were decided by us, affecting the appellant's interests12. Originally, there were two additional issues in this appeal, beyond those argued in the Fostif proceedings. One of these was a constitutional issue, presented by the appellant's challenge to the constitutionality of the proceedings brought against it. Initially, no constitutional objection was raised in the Fostif proceedings, either at first instance or in the Court of Appeal. However, when special leave was granted to the appellant in this appeal, the appellants in the Fostif proceedings sought, and were granted, leave to add the same constitutional challenges to their proceedings. Indeed, they relied, in large part, upon the oral submissions advanced for the appellant in these proceedings, to support the constitutional objections advanced in theirs. This left only one separate issue in this appeal. It concerned the appellant's challenge to the conduct of Mr Adrian Firmstone and the evidence of a "without prejudice" letter which his company, Firmstones Pty Ltd ("Firmstones") had written to the appellant, offering to compromise the proceedings on specified terms. The primary judge rejected the tender of this letter. The appellant contested that ruling. It sought to rely on the letter to advance both its common law and constitutional arguments that the conduct of 8 See [2006] HCA 41. 9 Trendlen Pty Ltd v Mobil Oil Australia Pty Ltd [2005] NSWSC 741. 10 (2005) 63 NSWLR 203 ("Fostif"). 11 Reasons of Gummow, Hayne and Crennan JJ at [11]-[13]. 12 [2005] HCATrans 680. Kirby Firmstones, as the litigation funder in the proceedings, constituted a serious abuse of process or abuse of the jurisdiction that the proceedings purported to invoke. Although the issues that arise in this appeal can be traced to the invalidation of the business franchise licensing legislation concerned with petroleum products13 and not the tobacco products considered in Ha v New South Wales14 and Fostif, it is proper to assume that the point of constitutional principle that invalidated the tobacco licensing fees as an invalid duty of excise reserved by the Constitution to the Federal Parliament, applies equally to similar licensing fees in State and Territory legislation enacted in respect of petroleum products. The design and purpose of the respective State and Territory laws was the same. There may be points of particularity and difference that warrant scrutiny in the particular circumstances of this case. However, the proper place for such scrutiny would be in the litigation as it unfolds, not in these proceedings where the appellant seeks peremptory termination of the litigation. Common issues: common resolution So far as the common issues in the respective appeals are concerned, it is my view that the primary judge correctly decided those issues in favour of the respondent. Because I would uphold the decision of the Court of Appeal in Fostif15, it follows that I would uphold the primary judge's orders refusing to terminate these proceedings on the grounds that they constituted an abuse of process at common law; or fell outside the requirements of Pt 8 r 13 of the Supreme Court Rules (NSW) then applicable; or because the remedies of discovery and interrogatories were oppressive or should otherwise be denied to the respondent outright16. Similarly, I would reject the appellant's submissions that the proceedings were constitutionally invalid. My reasons for these several conclusions are sufficiently stated in the reasons published concurrently in Campbells Cash and Carry Pty Limited v Fostif Pty Limited17. There is no need for me to repeat, 13 Notably the Business Franchise Licences (Petroleum Products) Act 1987 (NSW) and equivalent State and Territory licensing schemes. 14 (1997) 189 CLR 465. 15 (2005) 63 NSWLR 203. 16 (2005) 63 NSWLR 203 at 260 [289] per Mason P (Sheller and Hodgson JJA concurring). 17 [2006] HCA 41. Kirby elaborate upon or distinguish them for the purposes of the present appeal. Particular residual points of distinction (if any) would remain open to the appellant to be argued in the representative proceedings and to be decided (and made the subject of appeal) in the usual way. Separate issue: the "without prejudice" letter This leaves the separate argument that was pressed upon this Court in relation to the complaint about the refusal of the primary judge to receive into evidence the "without prejudice" letter written by Firmstones. I am not convinced that the primary judge erred in his ruling in this respect. In any case, the letter is ultimately relevant, if at all, only to the issue of whether the proceedings constitute an abuse of process, or abuse of jurisdiction, because of Firmstones' involvement with them. Explanations of the letter, understood at the time it was written, have been advanced for the respondent. The letter has no relevance for any real constitutional issue. Its only significance is that it might strengthen the arguments for relief at common law against an abuse of process. That issue raises larger and more fundamental questions which I would decide against the appellant. Nothing in the "without prejudice" letter would cause me to revise or change that conclusion. Furthermore, this Court is a court of error. It would not ordinarily concern itself in a contest over the admission of a particular item of evidence. Such questions rarely engage appellate courts, still less a final court, unless the admission or rejection of the evidence in question would have resulted in a different outcome at the trial18. On the issue for which the letter was arguably relevant, that is not, in my view, the case here. It follows that the submissions on this separate issue should be rejected. Orders It also follows that the appeal should be dismissed with costs. 18 cf Balenzuela v De Gail (1959) 101 CLR 226 at 233 per Dixon CJ, 239 per CALLINAN AND HEYDON JJ. The circumstances are set out in the reasons for judgment of Gummow, Hayne and Crennan JJ. Part 8 r 13(1) of the Supreme Court Rules (NSW) The summons relied on before the primary judge had the same characteristics as those of the summonses in the seven proceedings considered in Campbells Cash & Carry Pty Limited v Fostif Pty Limited. For that reason the respondent failed to satisfy Pt 8 r 13(1) as it then was, and the orders proposed in the joint judgment should be made. Abuse of process Although, in view of that conclusion, it is not necessary to decide this issue, most of the characteristics which made the seven proceedings considered in Campbells Cash & Carry Pty Limited v Fostif Pty Limited an abuse of process exist here, and with the same result. Other issues In view of what has been said about Pt 8 r 13(1), it is not necessary to deal with the submissions advanced about other aspects of Pt 8 r 13, about whether there was a "matter" within the meaning of Ch III of the Constitution, about whether the proceedings are statute barred, about whether the letter of 9 March 2005 was properly excluded, and about whether, if it was not, it demonstrated that the true character of the proceedings from the outset was that they were an abuse of process. Orders We agree with the orders proposed by Gummow, Hayne and Crennan JJ. The respondent submitted that the appellant should bear the cost of any time by which the hearing of the appeal was extended by reason of intervention on the constitutional argument. There is no need for this order, since both this appeal and the appeals in Campbells Cash & Carry Pty Limited v Fostif Pty Limited were heard together and completed within a single day.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Fennell v The Queen [2019] HCA 37 Date of Hearing: 11 September 2019 Date of Order: 11 September 2019 Date of Publication of Reasons: 6 November 2019 ORDER Appeal allowed. Set aside the order made by the Court of Appeal of the Supreme Court of Queensland on 21 July 2017 and in its place order that: the appeal be allowed; the appellant's conviction for murder be quashed; and a verdict of acquittal be entered. On appeal from the Supreme Court of Queensland Representation S C Holt QC with K B W Gover for the appellant (instructed by Anderson Fredericks Turner) M R Byrne QC with C W Wallis for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fennell v The Queen Criminal law – Murder – Appeal – Appeal against conviction – Where appellant convicted by jury – Where Crown case based entirely on circumstantial evidence – Where circumstantial evidence related to opportunity and motive and miscellany of other inculpatory matters – Where evidence of opportunity and motive extremely weak – Where evidence connecting accused to alleged murder weapon based on glaringly improbable identification evidence – Whether verdict unreasonable or cannot be supported having regard to evidence. inference", "circumstantial case", Words and phrases – "basis for an reliability", "glaringly "contamination of improbable", "identification evidence", "identification of object", "motive", "murder weapon", "opportunity", "unreasonable verdict". recollection", "credibility and Criminal Code (Qld), s 668E(1). KIEFEL CJ, KEANE, NETTLE, GORDON AND EDELMAN JJ. Introduction On either Monday 12 November 2012 or Tuesday 13 November 2012, Mrs Liselotte Watson was murdered in her home on Macleay Island, a small community of around 2,500 people in Moreton Bay, Queensland. At the scene of the murder, and in Mrs Watson's house generally, most of the drawers had been opened, the contents of cupboards were dishevelled, bags had been pulled out, and a large suitcase was left open. Numerous witnesses gave evidence of the common knowledge that Mrs Watson kept large sums of money in her house but only $290 was located. Mr Fennell was tried and convicted for her murder. An appeal to the Court of Appeal of the Supreme Court of Queensland was dismissed. In this Court, Mr Fennell's only ground of appeal was that the Court of Appeal erred by failing to conclude that the verdict was unreasonable or cannot be supported having regard to the evidence1, in part because it made significant errors of fact. Mr Fennell's house was searched and his bank accounts were examined. No excess cash was found nor were any excess deposits identified. There was no evidence directly linking Mr Fennell to the crime scene. Neither his DNA nor his fingerprints were found at the bloody crime scene. His glasses, clothes, shoes, "postie" motorbike and utility vehicle were all examined, with nothing incriminating found. He was excluded from being a possible contributor of the DNA profiles found on a shaving bag containing Mrs Watson's bank documents which was found near other belongings of hers and a claw hammer in a mangrove area at Thompson Point, on the island. The Crown case against Mr Fennell relied upon opportunity, motive, and a miscellany of other matters said to be inculpatory. The most significant of the two witnesses, from miscellany of other matters was the hammer that was Mr and Mrs Matheson, who purported discovered belongings. area Mr and Mrs Matheson said that the hammer had been lent by Mr Matheson to Mr Fennell. That evidence was very significant because a hammer was the likely murder weapon. evidence to identify the mangrove 1 Criminal Code (Qld), s 668E(1). Nettle Gordon Edelman The Crown case concerning opportunity and motive was extremely weak. Mr Fennell's opportunity was, at best, a very small window of time which required an assumption about the time of the murder that was contradicted by other evidence. Even with that opportunity, the evidence of opportunity and motive did not put Mr Fennell in a relevantly different position from any of the numerous other people who shared the common knowledge that Mrs Watson kept large sums of money in her house. As the Crown properly accepted in this appeal, once that conclusion is reached the evidence from Mr and Mrs Matheson linking Mr Fennell to the hammer became essential evidence that a reasonable jury would have been required to accept before convicting Mr Fennell. To use Wigmore's metaphor, the evidence from Mr and Mrs Matheson became by far the most significant of the "strands in a cable" supporting the conviction2. But the evidence of Mr and Mrs Matheson should have had so little weight that, at best, it was barely admissible. At the conclusion of the hearing of this appeal, this Court unanimously ordered that the appeal be allowed, the order of the Court of Appeal be set aside and in its place order that: (i) the appeal be allowed; (ii) Mr Fennell's conviction for murder be quashed; and (iii) a verdict of acquittal be entered3. The Court said that reasons would be published at a later date. These are our reasons for making those orders. Uncontroversial facts and unchallenged evidence Mrs Watson was an 85-year-old lady who lived in a two-storey house on Alistair Court which she kept very neat, and which one friend described as "immaculate". In the years before her death, Mrs Watson's mobility had become limited. She could walk, but not as far as the shops. She was assisted by the local Lions Club on Macleay Island, whose members do shopping and chores for elderly people. One member who had helped Mrs Watson, including delivering money for her to her daughter, Helen, on Lamb Island, was the then President of the local Lions Club, Mr Crook. Mr Fennell was a founding member of the local Lions Club. He was involved with the charitable activities of that club. For one to two years before Shepherd v The Queen (1990) 170 CLR 573 at 579. Criminal Code (Qld), s 668E(2). Nettle Gordon Edelman her death, he also assisted Mrs Watson. Numerous witnesses gave evidence that Mr Fennell visited Mrs Watson, usually for 15 to 20 minutes, with accounts of his visits being almost every day or even up to twice a day. He would have conversations with her and assist her with her shopping and banking and, until another person took over, Mr Fennell also maintained her yard. Mr Fennell was contracted by various businesses in Moreton Bay to deliver pamphlets, which he did in his utility vehicle or on his "postie bike", which was a Honda CT110 motorbike. On Sunday 11 November 2012, a neighbour saw Mr Fennell delivering a pamphlet to Mrs Watson as part of his deliveries. On Mr Fennell's account, this was the last time that he saw two witnesses, Ms Uzzell Mrs Watson was seen outside her house at around 9.30 am on Monday 12 November 2012 by and Mr Barker. They respectively described her as wearing a grey house dress with shoes or a blue nylon dressing gown. That was the last time that Mrs Watson was seen alive. In the afternoon of Monday 12 November 2012, Mrs Watson did not answer telephone calls at 2.53 pm (from a caller with an international call prefix), 4.14 pm (from a caller with an international call prefix) and 4.22 pm (from Mr Fennell). On Tuesday morning, 13 November 2012, a friend, Ms Bowen, delivered newspapers to Mrs Watson's front verandah at 7.00 am or a little earlier. Those newspapers were never collected by Mrs Watson. At around 3.30 pm to 3.45 pm on Tuesday 13 November 2012, Mr Fennell drove to the residence of the Macleay Island police officer, Sergeant McDougall. He told Sergeant McDougall's wife that he had gone to see Mrs Watson that afternoon as he had missed an appointment to catch up earlier that day. Mr Fennell said that she had not answered her door. Mr Fennell said that he was concerned that she may have had a fall and might be injured in the house. Sergeant McDougall's wife told Sergeant McDougall that he may need to do a "welfare check". Sergeant McDougall accompanied Mr Fennell to the house. The aluminium windows on the front verandah were open about 5 cm but the front door was closed. Sergeant McDougall entered the kitchen of the house from a side door that was open. Sergeant McDougall said to Mr Fennell "It looks like a break. Don't touch anything ... Keep your hands in your pockets". Most of the drawers in her bedroom had been opened. Her television was lying on the floor. Mrs Watson's granddaughter gave evidence that there were a few cupboards where things were "dishevelled" and bags that were "pulled out that shouldn't have been or would not normally have been", and that a large suitcase, which Mrs Watson had Nettle Gordon Edelman described as her "storm bag", was open on a dining table at the far end of the lounge room. Sergeant McDougall discovered Mrs Watson on the floor in the main bedroom at the end of a hallway. The sheets were missing from the bed and an AM radio was playing with a lot of static. A forensic examination of her house with the assistance of an Australian Federal Police cash dog handler and cash dog found only $290 in the house although many witnesses gave evidence that Mrs Watson kept large sums of money in her house. Mrs Watson was found by Sergeant McDougall. She had been killed violently with a blunt murder weapon while in bed wearing her nightdress. She had "defensive" injuries to her wrist, forearm and fingers, including some with a crescent shape suggestive of the head of a hammer. She had been struck repeatedly on the back of the head, at least four and possibly six times. There was a lot of blood on her pillow. There were bloodstains on the bed, the floor, the wall behind the bed, and the curtain to the left of the bed. She was found lying on a towel on the floor, next to her bed, with a quilt partially wrapped around her. Both the towel and the quilt were saturated with blood. There were also blood splatters on the wall, on a table, on a clock radio, and on a tissue box on the table. The police later found two hammers in the house. Both of them were found in a box on a table in the entry to the kitchen. One was a standard claw hammer with a rubber handle and the other was a "mallet" type of hammer. The claw hammer had a transferred bloodstain on the handle with a DNA profile that matched Mrs Watson. At trial neither the Crown nor the defence suggested that this hammer was the murder weapon. The murder weapon was alleged by the Crown to be the claw hammer found at Thompson Point. Prior to the murder, on Saturday 10 November 2012, Ms Jensen was walking her dogs and stopped near the mangroves at Thompson Point. She saw a shaving bag sitting in the mud at low tide. It contained a rock and a folder of Westpac bank documents with Mrs Watson's name on them. The Westpac folder in the shaving bag contained a book of deposit slips and a book of withdrawal slips, each for Mrs Watson's accounts. There were printed customer receipts for withdrawals of $3,000 on 22 August 2012, $7,000 on 17 September 2012 and $3,000 on 28 September 2012. At midday on Thursday 15 November 2012, a police diver searching the water in the mangroves discovered a green Translink wallet, a black purse, and, 15 metres away, the claw hammer. The green Translink wallet contained a green transit card, two Medicare cards and two pension cards. The Medicare and pension cards were in Mrs Watson's name. The black purse was identified by Mrs Watson's granddaughter as belonging to Mrs Watson. Nettle Gordon Edelman An analysis of the DNA profiles found on the fabric adjacent to the zip of the shaving bag excluded Mr Fennell as a possible contributor of the DNA but found slight support for DNA profiles that matched three other people: Ms Jensen (who found the shaving bag), Ms Uzzell and Mr Cornell. Ms Jensen and Ms Uzzell were both called as witnesses at the trial. It was not suggested that either of them was responsible in any way for Mrs Watson's death. Mr Cornell, a postman who rode a red postie bike similar to Mr Fennell's, had died by the time of trial and it was also not suggested that he was responsible for It was not disputed at trial that, as Mr Fennell told the police, Mr Fennell had a brain injury from 1980 or 1981 from a house explosion which had left him badly burned and caused short-term memory loss. His wife also gave evidence of his memory problems. One witness, Mr Barker, gave evidence that Mr Fennell would often write things down and that Mr Fennell had explained that he did this because he had a bad memory. Mr Fennell provided the police with a typed timeline of his movements that he compiled with the help of his wife and by reference to a daily diary that he kept at home. Mr Fennell's timeline was as follows. He said that on Monday 12 November 2012, he telephoned Mrs Watson. After telephoning Mrs Watson and not receiving an answer, he went to her house and knocked on the door. She still did not answer. He said that he left a biscuit tin at the front door that he had brought to return to her. He then returned home, hung out washing, cleaned the kitchen, and made some telephone calls, including a long call to Redland Bay Hospital, before his wife returned from her craft class at 12.30 pm. He said that he then went out in the afternoon at around 3.00 pm to return a DVD and saw a friend, Mr Crook, in the late afternoon before returning home for dinner at 6.00 pm. The next day, Tuesday 13 November 2012, from 6.10 am he engaged in a number of tasks off Macleay Island including delivering pamphlets on Lamb Island and attending a motorcycle shop in Redland Bay. His timeline recorded that before leaving Macleay Island, he left a note in Mrs Watson's letterbox at 6.00 am saying that he would be away for the day and that he would see her that afternoon upon his return. His case was that this was informing her that he would be unable to meet her for tea at 10.30 am. Mr Fennell's account of his movements on Monday 12 November 2012 was corroborated by independent evidence. A summary of phone records showed a phone call from Mr Fennell's mobile to Mrs Watson's land line at 9.29 am which was unanswered. In his opening and closing addresses, counsel for the Crown suggested that her presence outside, as seen by Ms Uzzell and Mr Barker, might have been the reason that this phone call was unanswered. A neighbour, Nettle Gordon Edelman Mrs Doolan, gave evidence that she saw Mr Fennell come to Mrs Watson's house on his postie bike on Monday 12 November 2012 but that Mr Fennell "only stayed for a little while". Mrs Doolan said that he did not seem to stop in at Mrs Watson's house. A friend, Ms Vaney, gave evidence that, when taking a walk that Monday with her husband, which he confirmed, she saw Mr and Mrs Fennell and spoke with Mr Fennell at some time between 2.30 pm and 3.30 pm. Mr and Mrs Crook gave evidence, accepted by the Crown as "[n]ot controversial", that Mr Fennell visited them in the afternoon for a cup of tea and a chat, staying for half an hour to an hour, during a television show and leaving as the news came on at 6.00 pm. Finally, evidence of the use of the computer at Mr Fennell's home strongly supports the presence of Mr Fennell at his home from 6.20 pm. That evidence is discussed in detail later in these reasons. independent evidence. Mr Doolan's evidence was Mr Fennell's movements in his timeline on Tuesday morning were also corroborated by that Mr Fennell arrived at around 5.45 am on Tuesday 13 November 2012, and then "scooted off" within two to five minutes. The note that Mr Fennell described leaving in Mrs Watson's letterbox on Tuesday 13 November 2012 was recovered from the letterbox by Detective Senior Constable Strang. It read: "Mrs Watson, I telephoned yesterday to tell you that I have to go to the mainland today. I will call in on my return to get you any shopping that you need". At around 7.30 am to 7.45 am, after he had completed his deliveries, Mr Fennell was seen on Lamb Island by the owner of a convenience store on that island, for whom Mr Fennell delivered pamphlets. Around 11.00 am he was seen by the owner of a motorcycle repair business wearing a high-vis vest when Mr Fennell brought his postie bike in for repair. Mrs Fennell's evidence concerning Monday 12 November 2012 was also consistent with Mr Fennell's timeline. Her evidence was that she returned home from her craft class and Mr Fennell was at home with her until around 2.30 pm when he left, saying that he was going to return a DVD and to see Mr and Mrs Crook. Mrs Fennell also gave evidence that she had remained at home from the time Mr Fennell left until he returned at around 5.45 pm in time for their usual dinner at 6.00 pm and then Mr Fennell went through his usual routine before going to sleep. However, there was a clear omission from the timeline that Mr Fennell gave to the police. For years, Mr Fennell had gambled money and concealed his gambling from his wife. On Monday 12 November 2012, he was captured on closed-circuit television stills at Pub Paradise at times between 3.49 pm and 4.43 pm. He was wearing a high-vis vest and he placed bets in the TAB area and was embraced by others. Nettle Gordon Edelman to 19 November 2012. No excess cash deposits were After Mr Fennell was arrested on Friday 16 November 2012, the police conducted a search of his house. Nothing linking him to the murder was identified. The police also examined his bank accounts for the period from July identified. Police installed a listening device in his house and in the motel in which he stayed while his house was being searched. Nothing incriminating was heard. Police conducted forensic examinations of Mr Fennell's glasses, his clothes, his shoes, his postie bike and his utility vehicle. They had Mr Fennell's fingerprints on file and took DNA samples from him. They examined Mr Fennell's head, face, arms, upper body and legs, and took a series of photographs of him. Again, nothing linking Mr Fennell to the murder was located from any of these searches or examinations. A fingerprint of Mr Fennell's was located on the outside of Mrs Watson's kitchen window but, with the frequency of Mr Fennell's visits to Mrs Watson's house and the innocuous location of the fingerprint, the Crown did not suggest that the fingerprint was incriminating. The Crown case and its weaknesses The Crown case at trial was that Mr Fennell had stolen money from Mrs Watson and that he murdered her to avoid detection. The Crown case relied on three strands of circumstantial evidence: opportunity, motive, and a miscellany of other matters. Opportunity The Crown case was that Mrs Watson was murdered sometime after she had been seen at 9.30 am on Monday 12 November 2012 but sometime before Mr Fennell was captured on CCTV at Pub Paradise at 3.49 pm. A pathologist gave evidence that in estimating when, in the period between 9.30 am on 12 November 2012 and 4.00 pm on 13 November 2012, Mrs Watson was killed, he "preferred" a time of death at some time on Monday 12 November 2012 but he was unable to be precise about the time of death on that day. The Crown told the jury that they might think that Mr Fennell's movements on Tuesday 13 November 2012 were "reasonably well accounted for". Mr Fennell's movements were also well accounted for from 3.49 pm on Monday 12 November 2012. As explained above, the CCTV evidence placed Mr Fennell at Pub Paradise between 3.49 pm and 4.43 pm. The evidence of Mr and Mrs Crook placed Mr Fennell at their house between around 5.00 pm and shortly before 6.00 pm. The evidence of Mrs Fennell was that Mr Fennell returned home for dinner on Monday 12 November 2012 at the usual time of 6.00 pm and stayed at home that night. The evidence of computer usage Nettle Gordon Edelman associated with Mr Fennell provided a further strong basis for an inference that he was at home from 6.20 pm and left home at around 5.45 am the next day. There were therefore substantial obstacles to any conclusion that Mr Fennell had murdered Mrs Watson at any time after 3.49 pm. The Crown case was that Mrs Watson was murdered during the day on Monday 12 November 2012 in a window of time when Mr Fennell had the opportunity of committing the murder. Although Mrs Watson was found on the floor next to her bed in her nightdress, the Crown case was that this did not necessarily mean that the murder occurred at night. She was located with her dentures, or false teeth, intact in her mouth and her treating general practitioner gave evidence that there were occasions in 2012, including one in October 2012, when Mrs Watson was in her nightdress when a house call was made. Counsel for the Crown also pointed to the lack of any forced entry into the house and to three unanswered phone calls, at 2.53 pm and 4.14 pm (both with an international call prefix and suggested to be from "overseas telemarketers") and at 4.22 pm (from Mr Fennell). However, on this appeal, senior counsel for Mr Fennell pointed to Mrs Watson's limited mobility in a two-storey house as another possible explanation for the unanswered calls. There was also evidence of Mrs Watson's frustration with phone calls. In the days prior to her murder she told her neighbour, Ms McKie, that she had been receiving threatening calls and she had previously told her general practitioner that she had been receiving nuisance phone calls. Apart from the discovery of Mrs Watson on the floor next to her bed and wearing her nightdress, a further difficulty for the Crown theory that Mrs Watson was murdered during the daytime, and before 3.49 pm, was the evidence of Mr Matheson on this subject. Mr Matheson gave evidence that at 1.30 am or 2.00 am on Tuesday 13 November 2012 his dog woke him and his wife up by barking and standing underneath that faces Alistair Court. Mr Matheson said that was unusual because his dog had been trained not to bark and that it took a couple of hours to quieten her down. He said that while in bed, at around 2.30 am or 3.00 am, he heard the sound of a car travelling at great speed down Alistair Court and straight to the end of his street, which is opposite Alistair Court. He said that the car was a six-cylinder Holden or Ford, not a Japanese car with a "tinny exhaust note". This would have excluded Mr Fennell's Mitsubishi utility vehicle. In closing, counsel for the Crown said to the jury that Mrs Watson was "certainly not killed at 1 am or 2 am on the Tuesday" because her dentures were still in her mouth. the window The Crown theory that Mrs Watson was killed in the daytime also required the jury to conclude that evidence from Ms Dobson was mistaken. Nettle Gordon Edelman Ms Dobson lived three doors down from Mrs Watson and they spoke from time to time. In between Ms Dobson's house and Mrs Watson's house were Mr Dallas' house and Ms McKie's house. Ms Dobson said that at about the time in the afternoon of Monday 12 November 2012 that Mrs Watson would usually feed the birds, which was about 4.00 pm, she heard a car arrive and a dialogue between a man and a woman. She recognised the man's voice as Mr Dallas' and thought that the woman's voice sounded like Mrs Watson's (whose distinctive accent Ms Dobson knew). Ms Dobson glanced through her window and saw Mr Dallas at the corner of his property with a lady with grey hair. She saw the lady from behind and thought that she was Mrs Watson. Ms Dobson said that she identified the day as Monday because it was a nice sunny day, unlike the previous day, which was very windy. In his closing address to the jury, counsel for the Crown suggested that it was likely that Ms Dobson had seen and heard Mr Dallas on Sunday 11 November 2012, not Monday 12 November 2012, and that Mr Dallas had been speaking to his mother, not Mrs Watson. Mr Dallas' evidence was that his mother had visited on the weekend before Mrs Watson died. His mother left at midday on Sunday and he had a conversation at the front of his house that Sunday afternoon with Mrs Watson. The Crown case relied upon three occasions on Monday 12 November 2012 when witnesses said that they saw Mr Fennell, or his bike or his utility vehicle, at Mrs Watson's house, including two occasions when it was said that he could have been there for more than an hour. The evidence of those two occasions came from Mr Robinson and Mrs Doolan. The evidence of the other occasion came from Ms McKie, who suggested that Mr Fennell had been at Mrs Watson's house for 20 minutes. Mr Robinson's evidence was extremely problematic. By closing submissions the Crown case concerning opportunity placed little reliance upon him. The focus of the Crown case was that (i) Mr Fennell had killed Mrs Watson in her bed at around 2.00 pm in the 20-minute interval when he was seen by Ms McKie, and (ii) Mr Fennell had returned to the scene of the crime at 6.00 pm, when he was seen by Mrs Doolan, to "search or clean or tidy or do whatever else was necessary in order to put the crime scene into the shape in which it was found". (1) Mr Robinson Mr Robinson's evidence was that he saw a utility vehicle parked outside Mrs Watson's house at about 11.00 am on Monday 12 November 2012. Mr Robinson's alleged sighting of Mr Fennell's utility vehicle occurred, on his account, in the brief moment that he was driving past the end of Alistair Court, Nettle Gordon Edelman the street on which Mrs Watson lived. Any sighting would have been fleeting, of a vehicle 80 to 100 metres away, in circumstances in which there was no particular importance to it and in which Mr Robinson acknowledged that he "didn't pay any attention to it". Mr Robinson recognised the vehicle more than a year later in March 2014. On appeal to this Court, senior counsel for the Crown abandoned any reliance upon the evidence of Mr Robinson. He was correct to do so for four reasons. First, apart from the fleeting nature of the 11.00 am observation by Mr Robinson that was said to be of Mr Fennell's utility vehicle, there were significant discrepancies between Mr Robinson's description of the vehicle and Mr Fennell's utility vehicle. In particular, Mr Robinson described the utility vehicle that he saw as having Mr Fennell's name on the back of it. Mr Fennell's vehicle did not have his name on it. Secondly, it was more than a year after Mr Robinson saw the vehicle that he claimed to have subsequently recognised and identified it as Mr Fennell's vehicle. Thirdly, Mr Robinson's evidence was contrary to the unchallenged evidence of Mrs Fennell that she drove the utility vehicle that morning to the craft group that she attended every Monday from 8.45 am until 12.30 pm. Fourthly, and perhaps most significantly, in cross- examination Mr Robinson accepted that his purported recognition of the vehicle was "simply a reconstruction after the event". (2) Ms McKie The second witness that the Crown relied upon for opportunity was Ms McKie. Ms McKie had known Mrs Watson for 15 years. Ms McKie's house was separated from Mrs Watson's by one other house. Ms McKie's evidence was that at about 2.00 pm on Monday 12 November 2012 she looked out her bathroom window and saw a man whom she did not know, but whom she had seen delivering pamphlets and attending Mrs Watson's house regularly, arrive at Mrs Watson's front gate, park his "little red bike", and go into Mrs Watson's house. She did not see him leave but she said that she heard his bike start about 20 minutes later. to Mr Fennell's The evidence of Ms McKie which suggested that Mr Fennell was at Mrs Watson's house at around 2.00 pm on Monday 12 November 2012 was contrary timeline, which did not record him visiting Mrs Watson's house on Monday afternoon. It was also contrary to the evidence of Mrs Fennell and Ms Vaney, who were with Mr Fennell until at least 2.30 pm. One reason Ms McKie placed the 2.00 pm visit on Monday was that she said that she thought that she had heard Mr Fennell say to Mrs Watson on Sunday that he would be there on the Monday afternoon. Nettle Gordon Edelman Although Mr Fennell's counsel informed the trial judge that he was going to be running the argument that Ms McKie "clearly" was mistaken, it was not put to Ms McKie in cross-examination that the arrangement that she overheard was for Mr Fennell to meet Mrs Watson on Tuesday, about which Mr Fennell left a note of his apologies in Mrs Watson's letterbox at 6.00 am on Tuesday. Indeed, on Mr Fennell's timeline he said that he had gone to Mrs Watson's house on Tuesday 13 November 2012 shortly after he arrived back on Macleay Island from the mainland at 2.00 pm, knocked on the front door and walked around the back to see if she was hanging out washing. (3) Mrs Doolan The third witness who gave evidence relied upon by the Crown for opportunity was Mrs Doolan. Mrs Doolan also lived on Alistair Court and she could see Mrs Watson's house from her front patio. As discussed above, Mrs Doolan gave evidence, which supported Mr Fennell's timeline, that she saw him at Mrs Watson's house where he stayed very briefly in the morning of Monday 12 November 2012. However, she said that she also saw Mr Fennell again at 6.00 pm while she was watching the news and cooking tea. She said that she recognised his utility vehicle and saw him walk inside the gate. She said that she saw the utility vehicle leave at 7.30 pm when the X Factor television program started. One difficulty with this evidence from Mrs Doolan was that Mrs Fennell said that Mr Fennell had returned home for dinner at 5.45 pm and that they stayed at home. A further, and seemingly insurmountable, difficulty was the evidence of a police computer analyst. That evidence provided an extremely strong basis for an inference that Mr Fennell was at home, as Mrs Fennell had said, at the times described by Mrs Doolan. At 6.11 pm a user of the computer at Mr Fennell's home, who the Crown suggested was probably Mr Fennell's son, had logged out of the website Moshimonster.com. Then, between 6.20 pm and 7.25 pm, the Fennells' home computer was used in a manner from which a powerful inference could be drawn that the user was Mr Fennell: (i) at 6.21 pm a user logged in to the home computer with the username Steven and the ID islandlife59; (ii) the user logged in to a linkedin account with the name of Steven Fennell, and viewed and replied to messages in the inbox associated with that linkedin user; and (iii) the user visited various websites, conducted searches for burns recovery news and visited a website associated with fire burns. Mr Fennell had told the police in his record of interview that he had been burned in the explosion in 1980 or 1981 and had third degree burns to both legs. Nettle Gordon Edelman Summary of the weakness of the Crown case concerning opportunity No reasonable jury could have accepted the evidence from Mr Robinson or Mrs Doolan concerning opportunity. That left only the evidence of Ms McKie, who may have been mistaken about the day. But even if Ms McKie's evidence were accepted, the state of the crime scene casts serious doubt upon whether Mr Fennell could have had the opportunity to commit the crime in the short period of time that she described. Ms McKie also said that the man she saw did not take anything in with him and that she heard no noises or anything unusual during the 20-minute period when she thought he was in the house. Yet, on the Crown case, Mr Fennell must have gone to Mrs Watson's house at 2.00 pm with a hammer to commit a premeditated murder of Mrs Watson in her bed wearing her nightclothes. Within that 20-minute period, he must have done the following: committed the murder, caused the disturbance to the drawers and the house, and either driven off in bloody clothes on his postie bike or disposed of his clothes in a place where they were not found. On this appeal, senior counsel for the Crown also properly accepted that Mr Fennell would necessarily have had to shower and clean himself up despite Mrs Fennell being present in his house and not seeing him. He would also need to have concealed or disposed of the hammer before arriving at Pub Paradise, where he was captured on CCTV at 3.49 pm wearing a high-vis vest that he would sometimes wear to the hotel. He was again wearing a high-vis vest when he delivered pamphlets the next day, Tuesday 13 November The short period of time identified by Ms McKie, combined with the CCTV footage at 3.49 pm, made the evidence of Mrs Doolan particularly important to the Crown case concerning opportunity. The Crown relied upon the evidence of Mrs Doolan to show that Mr Fennell had returned to the crime scene at 6.00 pm for more than an hour. But that evidence was contradicted by the evidence of computer usage at Mr Fennell's house, Mrs Fennell's evidence, and Mr Fennell's timeline. At best, the evidence of opportunity showed only that Mr Fennell had briefly visited Mrs Watson's house on Monday 12 November 2012. For two reasons, that evidence of opportunity was, at best, a very weak strand in the Crown's circumstantial case against Mr Fennell. First, Mr Fennell's presence in Mrs Watson's house was entirely unremarkable since he visited her up to twice daily. Secondly, since the Crown case was that Mrs Watson was killed during the daytime on 12 November 2012, the same opportunity existed for any person who could have attended Mrs Watson's house on that day. Any opportunity that Mr Fennell had was a factor that barely set him apart from other members of the population of Macleay Island. Nettle Gordon Edelman Motive The Crown alleged that Mr Fennell's motive to murder Mrs Watson was to conceal thefts from Mrs Watson that she was soon to discover. First, in closing submissions to the jury counsel for the Crown observed that Mr Fennell was a gambler and that he had suffered gambling losses, such as $1,207 on Monday 12 November 2012. Secondly, the Crown pointed to withdrawals from Mrs Watson's bank account by Mr Fennell totalling $24,000 over three months. Thirdly, the Crown relied upon a withdrawal of $8,000 from Mrs Watson's account on 2 November 2012 where the withdrawal slip appeared to have been altered from $3,000 to $8,000. Fourthly, the Crown relied upon the disposal at Thompson Point of banking documents belonging to Mrs Watson. (1) Mr Fennell's gambling In his closing address to the jury, counsel for the Crown relied upon expert accounting evidence that had shown that Mr and Mrs Fennell's expenditures were almost equal to their income. He invited the jury to consider where the additional money could have come from to fund Mr Fennell's gambling. Witnesses gave evidence of regular gambling for at least five years by Mr Fennell at the TAB in Pub Paradise, usually on Monday or Tuesday, and anywhere from $50 to $500 although usually $50 to $100; he rarely drank alcohol and would sometimes win a couple of thousand dollars. The difficulty with this aspect of the Crown case was that there was no evidence from which conclusions could be drawn about Mr Fennell's net position from gambling prior to the time when he commenced Mrs Watson's banking or during that period. Large wins of $500 to $1,000 or more would be paid by the TAB into Mr Fennell's EFTPOS card but smaller wins would be paid in cash. As to the larger amounts paid electronically, the forensic accounting evidence from Ms McKinnon was that between July 2010 and November 2012 there was $25,880 transferred electronically from the TAB into Mr Fennell's account based upon staked amounts of $12,608. While some evidence was led as to cash bets placed at the TAB at Pub Paradise on Friday 9 November 2012, the Crown only relied upon evidence of amounts of cash that were gambled by Mr Fennell between 3.51 pm and 4.35 pm on Monday 12 November 2012. On that occasion there were 12 transactions at the TAB in Pub Paradise for a total amount of $1,357. Only one of those bets, for $80, was successful, returning a dividend of $149. But the results of one afternoon can hardly be taken as representative of a net position for months, still less over a period of years. Nettle Gordon Edelman The only broad conclusions that can be drawn from the evidence are that Mr Fennell's general gambling habits had not apparently changed and that any overall losses that Mr Fennell suffered over the period of his gambling appeared to be sustainable. By 12 November 2012, Mr and Mrs Fennell had paid more than $4,500 in additional voluntary payments of their mortgage and they had around $2,700 available to access across their accounts. (2) The withdrawal of $24,000 from Mrs Watson's account As to the withdrawal of $24,000 over three months between August and early November 2012, it occurred in amounts of $3,000, $7,000, $3,000, $3,000, and $8,000. Although the total of $24,000 withdrawn in those months was larger than usual, it was not extravagantly so. An exhibit summarising Mrs Watson's bank statements from November 2007 until November 2012 showed that over those five years she withdrew $148,297, usually in amounts between $2,000 and $5,000. Ms McKie also gave evidence that shortly before Mrs Watson was murdered Ms McKie had overheard Mrs Watson in her backyard speaking to tradespeople about "doing a pergola". The withdrawals amounting to $24,000 in the three months before her death in November 2012 had, after taking into account some deposits, reduced Mrs Watson's net balance from around $25,000 to around $8,000. But this was not novel. Between March and May 2010, she withdrew $18,000, which, after taking some deposits into account, reduced her net balance from around $22,500 to around $10,900. One of the withdrawals in the period from March to May 2010 was of $11,000. Mrs Watson told various of her friends that she had lent $11,000 to a Mr Holden and he had not repaid the money, although he eventually did. Most fundamentally, however, the evidence pointed to a significant likelihood that each of the five withdrawals that amounted to $24,000 was authorised by Mrs Watson. Although Mr Fennell asked the bank for authority to sign for withdrawals from Mrs Watson's account, he was never given that authority. The parties to this appeal helpfully presented an agreed position covering all of the evidence, including that of the handwriting expert called by the Crown. That agreed position can be summarised as follows: i. 22 August 2012: Mr Fennell wrote on "22 / 08 / 12", "THREE THOUSAND DOLLARS ONLY". front the Nettle Gordon Edelman Mrs Watson signed the front and back of the slip. On the reverse side, she wrote "Permission given to Steven Fennell to cash this withdrawal". Mr Fennell wrote on "17 / 9 / 12", "SEVEN THOUSAND DOLLARS ONLY". front the ii. 17 September 2012: Mrs Watson signed the front and back of the slip. On the reverse side, she wrote "Please pay my agent". iii. 28 September 2012: Mr Fennell wrote on the reverse side "PLEASE PAY MY AGENT STEVEN FENNELL". iv. 5 October 2012: Mrs Watson signed the front and back of the slip. On the front, Mrs Watson wrote "3000", "28 / 9 / 12", "three thousand dollars". Mrs Watson signed the front and back of the slip. On the front she wrote "3000", "5 / 10 / 12", "three thousand dollars". On the reverse side, she wrote "Please pay my Agent". v. 2 November 2012: On the front, Mr Fennell wrote "02 / 11 / 12" and "EIGHT THOUSAND DOLLARS ONLY". The author of the figure "8000.00" on the front of the slip was indeterminable. Mrs Watson signed the front and back of the slip. On the reverse side, Mrs Watson wrote "PLEASE PAY Further evidence of Mrs Watson's authority for the $24,000 of withdrawals between late August and early November was given by various employees of the Westpac branch where her account was held. One bank teller said that she telephoned Mrs Watson to confirm the first ($3,000) transaction and identified a note that she made to that effect on the back of the cheque. That teller also permitted the second ($7,000) withdrawal but she was not asked whether she had telephoned Mrs Watson on that occasion. Another teller gave evidence in relation to the fourth withdrawal ($3,000) that she waited with Mr Fennell while her supervisor telephoned Mrs Watson, although she could not recall whether she had telephoned Mrs Watson in relation to the third withdrawal ($3,000). Nettle Gordon Edelman A further teller, Ms Kershaw, was responsible for the final ($8,000) withdrawal. Ms Kershaw approached her supervisor, Ms Kickert, to discuss the transaction. Ms Kickert authorised the transaction but said that she believed that she had told Ms Kershaw to telephone Mrs Watson to verify the amount. Ms Kershaw confirmed from the words "sol auth" on the cheque that she looked up the computer to check Mrs Watson's signature. She recalled speaking with Ms Kickert about the withdrawal but could not recall whether she had telephoned Mrs Watson as instructed. The reasonable inference is that she would have made the telephone call as instructed. There was also evidence from a friend of Mr Fennell's, Mr Leahy, who went with him to the mainland on several of the occasions when one stop was for Mr Fennell to do Mrs Watson's banking. It was never suggested that Mr Leahy was part of a conspiracy to steal from Mrs Watson. Although Mr Leahy did not go into the bank, he described how Mr Fennell would bring with him a black pencil case. On one occasion, after the banking, Mr Leahy saw Mr Fennell go into Mrs Watson's house with the black pencil case and return without it. (3) The alteration of the $8,000 withdrawal slip Evidence was given by the handwriting expert that an amount of $3,000 on the 2 November 2012 withdrawal slip had been altered to $8,000 by changing the number three to an eight. The expert evidence was the subject of a strong attack but the likelihood of alteration seems apparent from ordinary examination of the withdrawal slip. The expert could not say who had changed the number or in what circumstances. However, before a conclusion could be reached that Mr Fennell had made that alteration and withdrawal without authority it would be necessary to reject the reasonable inference that Mrs Watson was telephoned Other matters also militate against a conclusion that Mr Fennell made the alteration without authority. One matter is the likelihood of discovery. Mr Fennell knew that Mrs Watson had been telephoned to confirm her authority on most, if not all, previous occasions, including the occasion immediately prior to him presenting the $8,000 withdrawal slip. He was also aware that, although very generous with her money, Mrs Watson paid close attention to it. Before she involved the police, Mrs Watson had also enlisted Mr Fennell's assistance to recover the $11,000 that she lent to Mr Holden. In Mr Fennell's record of interview with the police he said that Mrs Watson was "both extraordinarily generous and extraordinarily cheap ... to the tune of thriftiness of things". Nettle Gordon Edelman Counsel for the Crown also observed in his closing address that the $8,000 withdrawal occurred on the same day, 2 November 2012, that the new manager of the Russell Island IGA store, Mr Jones, cancelled Mr Fennell's pamphlet delivery contract, which deprived Mr Fennell of about $347 a week in income for his business. That observation was incorrect. The evidence from Mr Jones was that he spoke with Mr Fennell on Monday 5 November 2012 and paid him later that week. However, Mr Fennell had been on notice from Mr Jones since 22 October 2012 that the IGA contract could be lost. But the loss of the income from that contract, while significant, would not have been devastating and there was no evidence concerning whether Mr Fennell could have replaced that contract with other work. Conclusions about motive Ultimately, the evidence led by the Crown in relation to motive placed Mr Fennell in a position that was little different from any of the others on Macleay Island who had the common knowledge that Mrs Watson kept significant cash in her house and who might have had the opportunity to steal from her, but about whom there was never any suggestion of suspicion. The miscellany of other matters The third strand to the Crown case was a miscellany of allegedly inculpatory matters: (1) Mr Fennell's failure to mention to the police that he was gambling at the TAB in Pub Paradise on the afternoon of Monday 12 November 2012; (2) Mr Fennell's statements in his timeline and police interview about the biscuit tin that he said that he returned to Mrs Watson; (3) evidence that Mr Fennell clicked on a link on the Yahoo homepage; (4) the $290 in cash left in an envelope in an opened drawer at Mrs Watson's house; (5) the items belonging to Mrs Watson that were discovered at Thompson Point; and (6) the evidence of Mr and Mrs Matheson about the hammer that was found at Thompson Point. The sixth point was of particular importance. As the Crown properly accepted in this appeal, once the conclusion is reached that the Crown case on opportunity and motive was weak, Mr and Mrs Matheson's evidence about the hammer became essential evidence that a reasonable jury would have been required to accept before convicting Mr Fennell. Before dealing with that evidence, it is necessary to deal with the other allegedly inculpatory matters. (1) Mr Fennell's failure to mention his gambling at the TAB One matter, upon which counsel for the Crown relied as placing "serious doubt" upon Mr Fennell's accounts to the police of his movements, and reiterated Nettle Gordon Edelman by the trial judge in his directions to the jury as an allegation of a "telling omission", was the failure of Mr Fennell to mention in his police interview his visit on the Monday afternoon to the TAB. There is an obvious explanation for this omission that was not inculpatory. That explanation is the uncontradicted evidence of Mr Fennell's desire to conceal his gambling from his wife. Mr Papps was a good friend of Mr and Mrs Fennell for more than ten years. At about the time of Mrs Watson's murder, Mr Papps had a discussion with Mr Fennell in which Mr Fennell expressed concern that his wife would find out about his gambling. The obvious reason for the omission is that Mr Fennell's wife had assisted him to prepare the timeline for police and he was anxious to conceal his gambling from her. In any event, in light of the weakness of the Crown case concerning motive, the omission tended to undermine the Crown case rather than to support it. The CCTV footage provided Mr Fennell with an alibi from 3.49 pm for what ultimately became the Crown case that he murdered Mrs Watson on Monday 12 November 2012 in the period after he left home at 2.30 pm and before he arrived at the home of Mr and Mrs Crook between 5.00 pm and 5.30 pm. Mr Fennell's choice not to mention information that could have provided him with this partial alibi is not a circumstantial fact that could support any inference of guilt. (2) The biscuit tin The Crown also relied on what was described as "key" evidence from Mr Crook and Mrs Watson's granddaughter concerning the biscuit tin returned by Mr Fennell. In Mr Fennell's timeline and recorded interview, he said that on Sunday 11 November 2012, Mrs Watson had given him biscuits in a tin and that he washed the tin and put the biscuits in a container. He said that he visited Mrs Watson to return the tin at his wife's suggestion. His evidence in this respect was corroborated by Mrs Fennell, although she described the tin as containing cake rather than biscuits. There was a photograph referred to in evidence at trial, but not reproduced on this appeal, showing a receipt on the kitchen bench in Mrs Watson's house which referred to a purchase of two packets of chocolate biscuits on Sunday 11 November 2012. Ms McKie also described how Mrs Watson would serve biscuits in a deep container. However, counsel for the Crown, in closing, queried why Mrs Watson would use an antique tin to put biscuits in for Mr Fennell. In Mr Fennell's timeline he said that he had left the tin at Mrs Watson's house on the morning of Monday 12 November 2012 after his wife left for her Nettle Gordon Edelman craft class at 8.50 am. In his record of interview he was unsure whether he returned the tin in the morning of Monday 12 November 2012 or on Tuesday 13 November 2012. He said in his record of interview that he left the tin on top of a newspaper, which he assumed was Monday's newspaper. Mrs Watson's newspapers were delivered by a friend, Ms Bowen, before 7.00 am on both Monday and Tuesday. On Tuesday, Ms Bowen delivered Mrs Watson's newspapers, a local paper and the Courier Mail, to Mrs Watson's front verandah. She did not notice the presence of a tin or the Courier Mail newspaper she delivered on Monday but when shown a photograph of the front verandah taken after the murder she said that there were more papers on the verandah than she had left on Tuesday. The biscuit tin was seen by Sergeant Airlie when she conducted a forensic examination of the front entrance to the house. She described a copy of the Courier Mail newspaper, dated Tuesday 13 November 2012, next to the tin with the local paper, also dated Tuesday 13 November 2012, on top of the tin "with just a little bit [of the tin] poking out", showing as a "tiny corner" in a photo which was not tendered at trial. A photo that was tendered clearly showed the biscuit tin but that photo was described by Sergeant Airlie as having been taken after someone had moved the papers. Mrs Watson's granddaughter identified the tin as one that had been used "at one point" to keep receipts and other things in and said that she had not seen it with biscuits or food in it. Mr Crook also said that a tin that he saw on one occasion containing money and papers was one that "looked the same" as the tin that Mr Fennell had returned although he could not "verify that it was exactly the same tin". One difficulty with the Crown evidence in relation to the tin was the evidence from Mrs Watson's granddaughter that there were probably more than ten tins that Mrs Watson kept around her house of different shapes and sizes. Further, Mr Crook described the occasion that he saw the tin, when there was money and banking related documents in it, as being concerned with Mrs Watson's granddaughter's 18th birthday. That birthday was in August 2010, more than two years before Mrs Watson was killed. Even more importantly for the defence, the Crown submissions concerning the tin tended to undermine, rather than to reinforce, the Crown theory that Mr Fennell had stolen from Mrs Watson and disposed of her belongings in the mangroves at Thompson Point. As senior counsel for Mr Fennell expressed the point on this appeal: "Why steal the tin and then return it?" Nettle Gordon Edelman (3) The click on a link on the Yahoo homepage The Crown also relied upon evidence from the police computer analyst that a person logged in to the Fennells' home computer at 7.03 am on Monday 12 November 2012 with the username Steven and the ID islandlife59. At 7.47 am the user clicked on a link on the Yahoo homepage for an article entitled "Weird Places People Hide Money Around the Home". The Crown alleged, and there seems little doubt, that the user was Mr Fennell. The evidence that Mr Fennell clicked briefly on an article about money being hidden in the home is of almost no weight. He had not searched for that article. The article was dated 10 November 2012. Its gist was that hiding money around the home, including in false walls, could lead people to miss out on "great capital gains from investment accounts". The user navigated back to the Yahoo homepage within a second, although it is possible that the article could have remained open in a different tab. (4) The $290 in cash left in an envelope in an opened drawer forensic examination of Mrs Watson's house conducted by Detective Senior Constable Strang with the help of an Australian Federal Police cash dog handler and cash dog found only $290 in an envelope in the top drawer of a chest of drawers in the master bedroom of Mrs Watson's house. In closing submissions, the Crown relied upon the discovery of $290 to suggest to the jury that the scene had been staged by Mr Fennell as a burglary to disguise his true motive of killing Mrs Watson so that she would not discover that he had stolen from her bank account. Counsel for the Crown said: "[w]hat kind of incompetent killer/burglar misses something like that, unless the motivation of the person doing this is something other than searching for jewellery or cash or things that might be able to quickly be pawned at the local hock shop in order to make some money?" The discovery of only $290 tended to support the likelihood of a burglary rather than undermine it. This is because of the substantial evidence that Mrs Watson kept large sums of money in the house. Properly characterised, the evidence suggested that the killer was likely to have taken large sums of cash and to have left behind only $290. The considerable evidence that Mrs Watson kept large sums of cash in her house was as follows. Mrs Watson's granddaughter, Emma, said that she knew there was a large sum of money in Mrs Watson's house. Emma gave evidence that four or five times a year, at Mrs Watson's house, Mrs Watson would give Nettle Gordon Edelman Emma's mother (Mrs Watson's daughter) amounts of money of between $1,000 and $3,000. Mr Robinson, who had come to know Mrs Watson well over the years, said that he knew that she had a lot of money in her house. He said that he had told her several times that she should put her money in the bank, although he knew that she did not trust banks. Mr Uzzell, who delivered groceries to Mrs Watson, said that she paid him in cash, sometimes from an envelope kept in a drawer and sometimes from cash kept in the drawer. Mrs Doolan remembered an occasion when she saw ten or more bundles of $50 notes on Mrs Watson's kitchen bench. Ms McKie said that it was common knowledge that Mrs Watson kept lots of money in her house. Mr Doolan said that Mrs Watson had told him and his wife that she had lent $11,000 to a person (presumably Mr Holden) who had done work for her at her house and that the money was repaid after she spoke to the police. (5) The items discovered at Thompson Point Counsel for the Crown relied upon the discovery by Ms Jensen at Thompson Point, prior the shaving bag containing the murder, of Mrs Watson's bank deposit and withdrawal slips (including the withdrawal slips dated 22 August 2012, 17 September 2012 and 28 September 2012 but not the withdrawal slips dated 5 October 2012 and 2 November 2012) and the discovery after the murder by police divers of the green Translink wallet and the black purse belonging to Mrs Watson. The significance of the discovery of Mrs Watson's belongings at Thompson Point, near a hammer which might have been the murder weapon, went no higher than to give rise to the possibility that the murder was associated with theft from Mrs Watson. This might have increased the strength of a circumstantial case against Mr Fennell if there had been any force in the Crown case that he had stolen from her. But, as explained above, the allegation that Mr Fennell stole from Mrs Watson was no stronger than one that could have been made against any of the other persons who shared the common knowledge that she had substantial sums of money in her house and who could have accessed her home. Further, although Mr Fennell mentioned in his record of interview that Mrs Watson "was the sort of person" to pay a tradesperson from money that she kept in the shaving bag, there was no evidence that he had ever been in possession of the shaving bag, and his DNA was excluded as a possible contributor of the DNA profiles found on that bag. Nettle Gordon Edelman (6) The Thompson Point hammer There was evidence given at trial concerning a number of different hammers. Two hammers were found at Mrs Watson's house: a standard claw hammer with a rubber handle (which had a transferred bloodstain of Mrs Watson's blood on the handle) and a "mallet" type of hammer. A further five hammers were found at Mr Fennell's house; four of them were in the shed with lots of other tools and were sent for analysis. Another "quite rusty" timber- handled hammer was found under the slats of his house, photographed but not sent for any analysis. There was no suggestion at trial that any of these hammers was the murder weapon. The alleged murder weapon was the claw hammer found at Thompson Point, which was also an ordinary or generic claw hammer. The Crown relied upon the location of the hammer, about 15 metres from Mrs Watson's belongings, to associate it with the murder. Neither DNA nor fingerprints were found on the Thompson Point hammer. A photograph of the claw of the hammer shows extreme rust. Counsel for the Crown submitted that the salt water "would account for some of that". But no tests were done on the hammer to determine whether to the extent that the rust came from salt water it was possible to have occurred over the less than three days between the time that the Crown alleged that the hammer had been thrown into the water (at the earliest in the afternoon of Monday 12 November 2012) and the time when the hammer was discovered (around 12.00 noon on Thursday 15 November 2012). The location of the hammer at Thompson Point provided only an extremely weak basis to associate Mr Fennell with the murder. It showed only that a hammer consistent with the murder weapon was discovered within 15 metres of banking documents belonging to Mrs Watson to which Mr Fennell once had access – although there was no evidence that he had ever possessed the shaving bag in which they were found, and he was excluded as a possible contributor of the DNA profiles located on that bag. The evidence which was relied upon to establish a real connection between Mr Fennell and the hammer came from Mr and Mrs Matheson. In his closing address, counsel for the Crown described the evidence from Mr and Mrs Matheson as "important" and of "particular significance". He said: "Once you conclude that that's [Mr Matheson's] hammer as indicated to you by [Mr] Matheson, ladies and gentlemen, then you might think that it's very comfortable from that point to draw the conclusion that Mr Fennell was involved and, indeed, was the killer of Mrs Watson." Nettle Gordon Edelman The trial judge then directed the jury that "[t]he case against the defendant depends to a significant degree on the correctness of the identification of this hammer by each of Mr and Mrs Matheson". Mr Matheson gave evidence that he was watching the 6.00 pm news on 21 January 2013 when a photo of a hammer "flashed up" on the screen. He said that there was no context in the news report such as an investigation into a death on Macleay Island. Nevertheless, he said that he immediately recognised the hammer in the photograph as a hammer that his wife and children had bought for him in the mid-1990s. Mrs Matheson described the hammer that she had purchased as part of a second-hand purchase of a whole toolbox for $5 or $10 which contained an old hammer in reasonably good condition. Mr Matheson said that he had lent the hammer to Mr Fennell a year or two before Mrs Watson was murdered and that he asked Mr Fennell to return the hammer the week after he had lent it to Mr Fennell but that Mr Fennell had replied "I don't know where it is, I've lost it, couldn't find it". seeing the hammer on Twelve days after the news, when Mr and Mrs Matheson gave their statements to the police, they were shown the hammer. Both gave very precise accounts of the cause of various imperfections in the second-hand hammer that Mrs Matheson had acquired. Mr Matheson described slight damage to the head of the hammer as caused by knocking "dags" off the welding on some farm machinery. He described a mark on the shaft of the hammer, imperceptible in the photographs of the hammer, as having been caused by him dropping the hammer approximately 40 feet. He described chips in the claw of the hammer as having arisen from pulling out nails. The evidence from Mr and Mrs Matheson identifying the hammer was glaringly improbable for numerous reasons. Mr Matheson's evidence of his identification was from a photo that was "flashed" briefly on a television screen without any context. It was a photo of a hammer of a type that was mass produced and generic. Also, Mr Matheson had not seen the hammer that he claimed to identify for one to two years (on his evidence) or four to five years (on Mrs Matheson's evidence). The Thompson Point hammer had been submerged in salt water for a period of time and it was common ground that this had contributed to rust that was discovered on it. An accurate identification in those circumstances would have required an astonishing visual memory. This is particularly so given the precision of Mr Matheson's recollections of the most minuscule defects in the second-hand hammer. Yet in contrast with his recollections in relation to the appearance of the hammer, Mr Matheson was unable to recall the brand of the hammer and was unable to identify his own tool belt, screwdrivers and chisels from a line-up conducted by police. Nettle Gordon Edelman the the Secondly, considerable detail evidence of both Mr and Mrs Matheson was in fact inconsistent. Their evidence differed in that Mrs Matheson said: (i) it was her who first identified the hammer from the photograph on the news, with Mrs Matheson's evidence being that it was her who "looked up at the TV" and said "that's your hammer"; (ii) the news report had provided the context of a murder on Macleay Island; (iii) the hammer had been lent to Mr Fennell in 2008 or 2009 after they had moved to Macleay Island in 2007; (iv) the damage to the head of the hammer had arisen when she caught her foot on a screw and "belted the nail", and damage to the claw of the hammer was caused by a boyfriend of her daughter, who "was trying to pull out a screw with the hammer". Thirdly, the identification of the hammer and its particular defects by Mr and Mrs Matheson occurred in a context that was prone to cause errors in memory. They did not identify the hammer for 12 days after the photo flashed up in the news report and potentially years after they had last seen it. They were aware of the context in which the identification was taking place, namely the murder of Mrs Watson. They identified the hammer by only being shown the single hammer by In particular, neither Mr Matheson nor Mrs Matheson was shown any other hammers, including any of the five hammers that were located at Mr Fennell's house. the police. Where a court of criminal appeal is called upon to decide whether it considers that, upon the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty of the offence charged, the court must not disregard or discount either that the jury is the body entrusted with primary responsibility of determining whether the prosecution has established the accused's guilt or that the jury has had the benefit of having seen and heard the witnesses4. At the same time, however, the court may take into account the realities of human experience, including the fallibility and plasticity of memory especially as time passes, the possibility of contamination of recollection, and the influence of internal biases on memory5. The court can also take into account the well-known scientific research that has revealed the 4 M v The Queen (1994) 181 CLR 487 at 493. 5 Bingham, "The Judge as Juror: the Judicial Determination of Factual Issues" (1985) 38 Current Legal Problems 1 at 16-18. Nettle Gordon Edelman difficulties and inaccuracies involved in assessing credibility and reliability6. And especially is that so in a case like this where the jury has been subjected to the seductive effects of a species of identification evidence that has in the past led to miscarriages of justice7. For the reasons we have given, and without impugning the honesty of Mr and Mrs Matheson in any way, their evidence was glaringly improbable. The decision of the Court of Appeal In an appeal where a ground of appeal is that the verdict was unreasonable or cannot be supported having regard to the evidence, and particularly where the Crown case is based upon a number of matters of circumstantial evidence, it is necessary for the appellate court to assess the whole of the case and to weigh that case as a whole. A circumstantial case cannot be considered in a piecemeal fashion8. A corollary of this principle, particularly in cases in which the conclusion is not clear-cut, is that a substantial error, or errors, by an intermediate court of appeal in the process of assessing the case as a whole can infect the entire process. The Court of Appeal (Gotterson JA, with whom Philippides JA and Byrne SJA agreed) properly engaged in a consideration of the case as a whole when assessing Mr Fennell's submission that the jury verdict was unreasonable or cannot be supported having regard to the evidence. However, and with genuine respect for an experienced judge, the reasoning of Gotterson JA involved errors in four areas which infected his conclusion. It is likely that a different process of reasoning in relation to any one of these areas would have led to a different conclusion. 6 Fox v Percy (2003) 214 CLR 118 at 129 [31]. See also Devlin, The Judge (1979) at 63; Bingham, "The Judge as Juror: the Judicial Determination of Factual Issues" (1985) 38 Current Legal Problems 1 at 7-8, 10-11; R (G) v Governors of X School [2012] 1 AC 167 at 196-197 [80]. See R v Clout (1995) 41 NSWLR 312. See and compare Domican v The Queen (1992) 173 CLR 555 at 561. 8 R v Hillier (2007) 228 CLR 618 at 638 [48]. Nettle Gordon Edelman Mr Fennell did not say that he gave $8,000 to Mrs Watson's daughter His Honour said that Mr Fennell claimed to have taken some of the $8,000 withdrawn on 2 November 2012 to Mrs Watson's daughter on Lamb Island and that Mrs Watson's granddaughter had denied this9. It appears that this was part of his Honour's reasoning towards the conclusion that there was an "evidential basis for concluding that he had stolen at least $5,000 from the deceased and was at risk that his theft would soon be discovered"10. Mr Doolan gave evidence that Mr Fennell had said that Mrs Watson had given Mr Fennell a "couple of thousand dollars here and there to take over to Lamb Island to her granddaughter or her daughter". But when Mr Fennell was asked in his record of interview whether he had given any of the $8,000 withdrawal to Mrs Watson's daughter, Mr Fennell was emphatic that he had not. Mrs Fennell also said that Mr Fennell had told her that he had withdrawn $8,000 and given it to Mrs Watson. The conclusions from the accounting evidence were not open The conclusions drawn by Gotterson JA from the forensic accounting evidence given by Ms McKinnon were not open. His Honour said that the evidence revealed a lack of commensurate withdrawals from Mr Fennell's bank account in order to fund his gambling habit11. His Honour also had regard to evidence from Ms McKinnon that there was a likelihood that Mr Fennell had relied upon an external source of money in order to fund an alleged deficiency of $10,833.50 for the period between 1 July 2010 and 19 November 201212. This reasoning was important to his Honour's conclusions about motive. If Mr Fennell had had sufficient financial resources, his Honour reasoned, this would have "negatived any need to steal from the deceased to make ends meet"13. 9 R v Fennell [2017] QCA 154 at [19]. 10 R v Fennell [2017] QCA 154 at [86]. 11 R v Fennell [2017] QCA 154 at [24]. 12 R v Fennell [2017] QCA 154 at [111], a typographical error recorded the amount 13 R v Fennell [2017] QCA 154 at [112]. Nettle Gordon Edelman There are several reasons why this analysis was in error. First, there is no lack of commensurate withdrawals when all of Mr Fennell's accounts during the relevant period are considered. Between August 2012 and November 2012 he withdrew $15,280 from his own personal and business accounts. Further, the alleged deficiency of $10,833.50 arose in a context where Mr Fennell's business received cash payments for which accounting may not have been entirely accurate. Over the period of almost two and a half years, $4,500 of approximately $102,000 business income banked in Mr Fennell's business account was recorded as having been received in cash. Ms McKinnon acknowledged that her analysis could not take into account all of the cash the business received. Secondly, this financial analysis could only have relevance to motive if it were confined to the period over which Mr Fennell was doing Mrs Watson's banking. During that period the alleged deficiency, according to Ms McKinnon, was only $859, which was consistent with the pattern over the remainder of the period. Thirdly, the "deficiency" which was suggested to exist amounted to only $80 per week in the context of earnings of more than $100,000 a year. Since Mr and Mrs Fennell had been living within their means during the period of the "deficiency" and getting ahead on their mortgage, any such relatively small deficiency could not be a strong basis for an inference of a motive to steal. The reasoning concerning the Thompson Point hammer After his Honour's discussion of the significance of the Thompson Point hammer, Gotterson JA said that Mr Matheson's account that he lent a hammer to Mr Fennell, who did not return it, was "quite credible". That reasoning can be accepted. Indeed, that account was never challenged by counsel for Mr Fennell. that Mr Matheson's evidence of However, Gotterson JA also identification of the hammer as the Thompson Point hammer was "detailed and consistent" and "had an appealing practicality to it", and "[t]he jury could well have regarded it as convincing proof linking [Mr Fennell] to that hammer"14. For the reasons explained above, that conclusion cannot be accepted. reasoned 14 R v Fennell [2017] QCA 154 at [84]. Nettle Gordon Edelman The opportunity reasoning Finally, the reasoning of Gotterson JA concerning opportunity involved errors. His Honour said, in apparent reliance upon the evidence of Mr Robinson, that it was open to the jury to accept that Mrs Watson was killed at around the time when Mr Fennell's vehicle "was sighted at about 11.00 am". His Honour correctly observed that this evidence "had its imperfections"15. However, those imperfections were so substantial that the evidence should have been rejected by any reasonable jury. It does not appear that the Crown, which was represented by different counsel in the Court of Appeal, made the same concession about Mr Robinson's evidence as was made in this Court or that the Court of Appeal was directed to the fundamental problems with that evidence. Conclusion It was not open to the jury to be satisfied of Mr Fennell's guilt beyond reasonable doubt. The Court of Appeal should have allowed the appeal, quashed the conviction, and entered a verdict of acquittal. For the reasons above, we made orders to that effect. 15 R v Fennell [2017] QCA 154 at [83].

HIGH COURT OF AUSTRALIA Matter No M102/2010 AND THE QUEEN Matter No M11/2009 AND THE QUEEN APPELLANT RESPONDENT APPLICANT RESPONDENT Dickson v The Queen [2010] HCA 30 22 September 2010 M102/2010 & M11/2009 Matter No M102/2010 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 18 December 2008 and, in lieu thereof, order that: leave to appeal to that Court against conviction and sentence be granted; the appeal to that Court be allowed; and the presentment preferred against the appellant and his conviction entered on 21 February 2008 be quashed, and the sentence imposed on 17 April 2008 be set aside. Matter No M11/2009 Application for special leave to appeal dismissed in relation to the remaining proposed grounds of appeal. On appeal from the Supreme Court of Victoria Representation T F Danos with J E McLoughlin for the applicant (instructed by Tony Danos Solicitor) at the hearing on 27 July 2010 T F Danos with P D Herzfeld for the appellant/applicant (instructed by Tony Danos Solicitor) at the hearing on 31 August 2010 G J C Silbert SC with B L Sonnet for the respondent (instructed by Solicitor for Public Prosecutions (Vic)) Interveners S J Gageler SC, Solicitor-General of the Commonwealth with K C Morgan intervening on behalf of the Attorney-General of the Commonwealth in M102/2010 (instructed by Australian Government Solicitor) M G Hinton QC, Solicitor-General for the State of South Australia with S A McDonald intervening on behalf of the Attorney-General for the State of South Australia in M102/2010 (instructed by Crown Solicitor (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Constitutional law – Inconsistency between Commonwealth and State laws – Direct inconsistency – Appellant convicted under State law of conspiracy to steal property belonging to a company – Commonwealth law made conspiracy to steal property belonging to Commonwealth an offence – Property stolen belonged to Commonwealth within meaning of Commonwealth law – Whether State law inconsistent with Commonwealth law – Whether State law altered, impaired or detracted from operation of Commonwealth law – Discussion of indirect inconsistency and intention to cover the field. Words and phrases – "conspiracy". Constitution, s 109. Crimes Act 1914 (Cth), s 4C. Criminal Code (Cth), ss 11.5, 131.1, 261.1. Crimes Act 1958 (Vic), ss 72, 321. FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. On 21 February 2008 the appellant was convicted at a trial in the County Court of Victoria upon a presentment by the Director of Public Prosecutions of Victoria ("the Director"), who prosecuted on behalf of the Crown in right of Victoria1. The presentment stated the offence as conspiracy to steal contrary to s 321(1) of the Crimes Act 1958 (Vic) ("the Victorian Crimes Act"). Section 321(1) states: "Subject to this Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which will involve the commission of an offence by one or more of the parties to the agreement, he is guilty of the indictable offence of conspiracy to commit that offence." A jury of 15 had been empanelled on 30 January 2008 but a jury of 12 had retired to consider their verdict, two jurors having been balloted off and one discharged for reason of illness. The Juries Act 2000 (Vic) ("the Juries Act") provides for the continuation of criminal trials with a reduced jury of no less than 10 jurors (s 44). It also provides in certain circumstances for a majority verdict where there has been failure to reach a unanimous verdict (s 46). In the events that happened, there was no occasion to invoke the provisions of s 46 at the trial of the appellant. But, as will appear, they have a significance for the issues on this appeal, given the unanimity required by s 80 of the Constitution in respect of trials upon indictment for offences against Commonwealth law2. The appellant had been a member of the Australian Federal Police and had worked as an excise officer in the Australian Taxation Office. The particulars of the offence stated that at Melbourne and divers other places in Victoria between 22 December 2003 and 20 January 2004 the appellant had conspired with three named persons "and/or" a person or persons unknown to the Director, and that they had agreed to pursue a course of conduct which would involve the commission by them of an offence, "namely to steal a quantity of cigarettes belonging to the Dominion Group (Vic.) Proprietary Limited". Section 72 of the 1 Public Prosecutions Act 1994 (Vic), s 22(1); Interpretation of Legislation Act 1984 (Vic), s 38. 2 Cheatle v The Queen (1993) 177 CLR 541; [1993] HCA 44. Crennan Bell Victorian Crimes Act contains what the heading describes as the "Basic definition of theft". The section states: "(1) A person steals if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it. (2) A person who steals is guilty of theft; and 'thief' shall be construed accordingly." The term "property" includes money and all other real or personal property including things in action and other intangible property (s 71(1)). The phrase "belonging to" in s 72(1) is to be read with s 71(2), which stipulates that: "property shall be regarded as belonging to any person having possession or control of it, or having in it any proprietary right or interest (not being an equitable interest arising only from an agreement to transfer or grant an interest)". A person guilty of theft is liable to a maximum of 10 years imprisonment (s 74(1))3. This also is the maximum penalty upon conviction for a conspiracy to commit theft (s 321C(1)(a)). On 17 April 2008 the appellant was sentenced to imprisonment for five years and six months with a non-parole period of four years and six months. The relevant and unchallenged evidence at the trial included the following. The Australian Customs Service was defined in s 4(1) of the Customs Act 1901 (Cth) ("the Customs Act")4 as "Customs". It had a storage facility in Port Melbourne within the warehouse of Dominion Group (Vic) Pty Ltd ("Dominion"). The storage area was "leased by Customs", which paid storage fees. The storage area was padlocked and was not shared by Customs with anyone else. The keys were held in safekeeping at the investigations branch of Customs at other premises. The personnel of Dominion went into the storage area only with the authorisation of officers of Customs and to assist them. The warehouse itself was locked at night by a security gate accessible by a security 3 See Sentencing Act 1991 (Vic), s 109(1). 4 The references to the Customs Act that follow are to Reprint No 14, dated 25 September 2002. Crennan Bell company and certain Dominion personnel. If Customs wished to have access out of hours it was necessary to pre-arrange a time with the personnel of Dominion. On 24 December 2003 some 7,870,000 cigarettes were seized by Customs upon a warrant issued under s 203 of the Customs Act. One requisite ground for the issue of such a warrant was that there were reasonable grounds for suspicion that the goods were forfeited goods under that statute (s 203(1)(a)(i)). The cigarettes were located at a container x-ray facility. Section 204 of the Customs Act required that as soon as practicable the goods be taken to a place approved by a Collector of Customs as a place for storage of goods of that kind. After seizure the goods were transferred to the Dominion storage facility. Dominion issued a receipt dated 30 December 2003 for the receipt of 40 pallets in storage. On the morning of 20 January 2004 the cigarettes were removed from the storage area by cutting the padlock which secured it. The trial judge directed the jury that they could assume that the cigarettes had been under the control of and thus belonged to Dominion. Importantly, the count upon which the appellant was convicted was not particularised in terms referring to property belonging to the Commonwealth. The respondent accepts that the prosecution was not conducted on any basis that there had been an offence against a law of the Commonwealth rather than, or as well as, the law of Victoria. On 18 December 2008 the appellant's application for leave to appeal against his conviction and sentence was refused by the Court of Appeal of the Supreme Court of Victoria. In this Court, the appellant sought special leave to appeal upon the ground that the Court of Appeal erred in refusing him leave to appeal against the conviction and sentence. On 23 April 2010 the application, as to several of the proposed grounds, was dismissed by Gummow, Hayne and Crennan JJ. However, the remaining grounds were referred for further consideration by an enlarged Bench of this Court. Upon these grounds coming on for hearing, the appellant sought and obtained special leave to appeal on a ground based upon the operation of s 109 of the Constitution. The appeal was fully argued in advance of any further consideration of the balance of the special leave application. The balance of the special leave application must be dismissed if the appeal upon the constitutional point is successful. Shortly expressed, the appeal to this Court is brought on the ground that conspiracy to steal the cigarettes was not an offence against the law of Victoria so that the presentment preferred against the appellant should have been quashed. Crennan Bell This conclusion is said to follow because (a) the cigarettes referred to in the presentment were property belonging to the Commonwealth to which the theft provision in s 131.1 of the Criminal Code (Cth) ("the Commonwealth Criminal Code")5 applied, in respect of which the conspiracy provision in s 11.5 attached; and (b) by operation of s 109 of the Constitution, the relevant provisions of the Victorian Crimes Act were pro tanto invalid in the sense of "suspended, inoperative and ineffective"6. This issue was not raised at trial or in the Court of Appeal but, it being a constitutional point going to whether the appellant was charged with an offence known to law, no party or intervener suggested that it could not be taken for the first time on appeal to this Court7. Submissions in support of the respondent, asserting the lack of inconsistency, were presented by the Attorneys-General of the Commonwealth and for South Australia upon their interventions under s 78A of the Judiciary Act 1903 (Cth). For the reasons which follow the submissions as to "direct inconsistency" which were made by the appellant should be accepted and the appeal allowed. Chapter 2 of the Commonwealth Criminal Code, which includes s 11.5, is headed "General principles of criminal responsibility". Chapter 7, which includes s 131.1, is headed "The proper administration of Government". For the offence of theft, the maximum penalty is imprisonment for 10 years (s 131.1(1)). The property in question must be property which "belongs to" a "Commonwealth entity" (s 131.1(1)(b)), an expression which is defined in the Dictionary as including the Commonwealth itself and bodies established by a law of the Commonwealth, Customs being one such body8. The cigarettes in question in this prosecution belonged to the Commonwealth if, on 20 January 2004, they were in the "possession" of Customs (s 130.2(1)(a)). In this Court, the 5 The references to the Commonwealth Criminal Code which follow are to Reprint No 3, dated 1 November 2004. 6 Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 464-465; [1995] HCA 47. 7 Crampton v The Queen (2000) 206 CLR 161; [2000] HCA 60. 8 See Customs Administration Act 1985 (Cth), s 4(1). Crennan Bell respondent accepts that to have been the case. Further, for the purposes of the theft provisions in the Victorian Crimes Act, property is regarded as "belonging to" any person having "possession" of it (s 71(2)). Thus, if the Victorian provisions had a relevant valid operation, for those purposes the Commonwealth also had possession of the cigarettes on 20 January 2004. The effect of s 11.5 of the Commonwealth Criminal Code is that the offence of conspiracy is committed by a person who conspires with another person to commit the offence under s 131.1, and the conspiracy offence is punishable as if the offence to which the conspiracy relates had been committed. Section 4G of the Crimes Act 1914 (Cth) ("the Commonwealth Crimes Act")9 so operates that the offence of conspiracy in such a case is an indictable offence, to the trial of which s 80 of the Constitution attaches. The statement of principle respecting s 109 of the Constitution which had been made by Dixon J in Victoria v The Commonwealth10 was taken up in the joint reasons of the whole Court in Telstra Corporation Ltd v Worthing11 as follows: "In Victoria v The Commonwealth12, Dixon J stated two propositions which are presently material. The first was: 'When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid.' The second, which followed immediately in the same passage, was: 9 The references to the Commonwealth Crimes Act that follow are to Reprint No 9, dated 1 January 2004. 10 (1937) 58 CLR 618 at 630; [1937] HCA 82. 11 (1999) 197 CLR 61 at 76-77 [28]; [1999] HCA 12. See also Local Government Association of Queensland (Incorporated) v State of Queensland [2003] 2 Qd R 354 at 373 [51]; Loo v Director of Public Prosecutions (2005) 12 VR 665 at 688 12 (1937) 58 CLR 618 at 630. Crennan Bell 'Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent.' The second proposition may apply in a given case where the first does not, yet, contrary to the approach taken in the Court of Appeal, if the first proposition applies, then s 109 of the Constitution operates even if, and without the occasion to consider whether, the second proposition applies." The first proposition is often associated with the description "direct inconsistency", and the second with the expressions "covering the field" and "indirect inconsistency". The primary submission of the appellant is that the first proposition applies to the interaction in the present case between the State and Commonwealth conspiracy laws so that this is an instance of "direct inconsistency". The passage in Telstra which is set out above was introduced by a discussion of earlier authorities which included the following13: "Further, there will be what Barwick CJ identified as 'direct collision' where the State law, if allowed to operate, would impose an obligation greater than that for which the federal law has provided14. Thus, in Australian Mutual Provident Society v Goulden15, in a joint judgment, the Court determined the issue before it by stating that the provision of the State law in question 'would qualify, impair and, in a significant respect, negate the essential legislative scheme of the Life Insurance Act 1945 13 (1999) 197 CLR 61 at 76 [27]. 14 Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 258-259; see also at 270 per Taylor J, 272 per Menzies J; [1968] HCA 2; Australian Broadcasting Commission v Industrial Court (SA) (1977) 138 CLR 399 at 406; [1977] HCA 51; Dao v Australian Postal Commission (1987) 162 CLR 317 at 335, 338-339; [1987] HCA 13. 15 (1986) 160 CLR 330 at 339; [1986] HCA 24. Crennan Bell (Cth)'. A different result obtains if the Commonwealth law operates within the setting of other laws so that it is supplementary to or cumulative upon the State law in question16. But that is not this case." It was held in Telstra that because the compensation payable to an injured worker under State legislation differed in a number of respects from that payable to the worker under federal law, the State law had the effect of qualifying, impairing and, in some respects, negating the effect of the federal law and that s 109 of the Constitution operated to the extent of that inconsistency. In Blackley v Devondale Cream (Vic) Pty Ltd17, where Barwick CJ referred to "direct collision", it may be noted that the litigation had been instituted by way of a charge upon information laid by Blackley, an inspector, that the employer had failed to pay an employee at the appropriate rates under the Labour and Industry Act 1958 (Vic); the issue in the High Court turned upon the effect to be given by s 109 to an award made under the Conciliation and Arbitration Act 1904 (Cth) which imposed lesser obligations on the employer and made these enforceable both civilly and criminally under Pt VI of the federal statute18. Three further points should be made at this stage. The first is the importance, stressed by Gaudron, McHugh and Gummow JJ in Croome v Tasmania19, and earlier by Gibbs CJ and Deane J in University of Wollongong v Metwally20, of s 109 not only for the adjustment of the relations between the legislatures of the Commonwealth and States, but also for the citizen upon whom concurrent and cumulative duties and liabilities may be imposed by laws made by those bodies. 16 Ex parte McLean (1930) 43 CLR 472 at 483; [1930] HCA 12; Commercial Radio Coffs Harbour v Fuller (1986) 161 CLR 47 at 57-58; [1986] HCA 42. 17 (1968) 117 CLR 253. 18 See (1968) 117 CLR 253 at 258. Cf R v El Helou (2010) 267 ALR 734 at 738-739 19 (1997) 191 CLR 119 at 129-130; [1997] HCA 5. 20 (1984) 158 CLR 447 at 457-458 and 476-477 respectively; [1984] HCA 74. Crennan Bell The second point is that, as Isaacs J indicated in Hume v Palmer21, the case for inconsistency between the two conspiracy provisions with which this appeal is concerned is strengthened by the differing methods of trial the legislation stipulates for the federal and State offences, particularly because s 80 of the Constitution would be brought into operation. In the present case, the jury trial provided by the law of Victoria under s 46 of the Juries Act did not require the unanimity which, because s 4G of the Commonwealth Crimes Act would have stipulated an indictment for the federal conspiracy offence, s 80 then would have mandated at a trial of the appellant. The third point concerns the significance of s 4C(2) of the Commonwealth Crimes Act. This provision provides that where an act or omission constitutes an offence under both a law of the Commonwealth and that of a State, and the offender has been punished for that offence under the State law, the offender shall not be liable to be punished for the Commonwealth offence. Of such a provision, Mason J (with the concurrence of Barwick CJ and Jacobs J) observed in R v Loewenthal; Ex parte Blacklock22 that it: "plainly speaks to a situation in which the State law is not inoperative under s 109, as for example when there is an absence of conflict between the provisions of the two laws and the Commonwealth law is not intended to be exclusive and exhaustive". The direct inconsistency in the present case is presented by the circumstance that s 321 of the Victorian Crimes Act renders criminal conduct not caught by, and indeed deliberately excluded from, the conduct rendered criminal by s 11.5 of the Commonwealth Criminal Code. In the absence of the operation of s 109 of the Constitution, the Victorian Crimes Act will alter, impair or detract from the operation of the federal law by proscribing conduct of the appellant which is left untouched by the federal law. The State legislation, in its application to the presentment upon which the appellant was convicted, would undermine and, to a significant extent, negate the criteria for the existence and adjudication of criminal liability adopted by the federal law. No room is left for 21 (1926) 38 CLR 441 at 450-451; [1926] HCA 50. 22 (1974) 131 CLR 338 at 347; [1974] HCA 36. Crennan Bell the State law to attach to the crime of conspiracy to steal property in the possession of the Commonwealth more stringent criteria and a different mode of trial by jury. To adapt remarks of Barwick CJ in Devondale Cream23, the case is one of "direct collision" because the State law, if allowed to operate, would impose upon the appellant obligations greater than those provided by the federal law. To explain why this is so it is necessary to say something more respecting certain aspects of the common law crime of conspiracy which are picked up without alteration by s 321 of the Victorian Crimes Act. In R v Caldwell24 "The criminal law is ordinarily concerned with conduct, usually prohibited acts, but sometimes the failure to perform required acts. At common law, conspiracy differs in that the prohibited act is the entry into an unlawful agreement, which need never be implemented25. Nothing need be done in pursuit of the agreement. The offence of conspiracy is complete the moment that the offenders have entered into the agreement. Repentance, lack of opportunity and failure are all immaterial, and withdrawal goes to mitigation only26. Accordingly, an overt act performed that agreement is not an ingredient, or element, of the offence itself. Evidence of overt acts is admissible to prove the existence of the conspiracy, and sometimes to assist in the identification of the participants. However, it must always be borne in mind that particulars of overt acts, and indeed particulars in general, are not elements of the offence27." implementing 23 (1968) 117 CLR 253 at 258. See also at 272 per Menzies J. 24 (2009) 22 VR 93 at 99-100 [62]-[63]. 25 Meyrick (1929) 21 Cr App R 94. 26 R v Aspinall (1876) 2 QBD 48. 27 R v Theophanous (2003) 141 A Crim R 216 at 249. Crennan Bell Section 11.5 of the Commonwealth Criminal Code received detailed consideration by this Court in R v LK28. The extrinsic material considered in R v LK29 indicated that the narrower scope of s 11.5 reflects a deliberate legislative choice influenced by the work of what in R v LK were identified as the Gibbs Committee and the Model Criminal Code Officers Committee. What is immediately important is the exclusion by the federal law of significant aspects of conduct to which the State offence attaches. There are significant "areas of liberty designedly left [and which] should not be closed up", to adapt remarks of Dixon J in Wenn v Attorney-General (Vict)30. First, the effect of s 11.5(1) is that the Commonwealth conspiracy provision applies only where there is a primary offence which is punishable by imprisonment for more than 12 months or by a fine of 200 penalty units or more31, whereas s 321 of the Victorian Crimes Act applies to agreements which will involve "the commission of an offence". Secondly, in accordance with the settled principles explained by Weinberg JA in Caldwell, the offence under s 321 is complete upon the making of the agreement without proof of overt acts, whereas par (c) of s 11.5(2) requires that for the person to be guilty that person, or at least one other party to the agreement, must have committed an overt act pursuant to the agreement. Thirdly, a person cannot be found guilty of conspiracy under s 11.5 if, before the commission of an overt act pursuant to the agreement, that person has withdrawn from the agreement and taken all reasonable steps to prevent the commission of the primary offence (s 11.5(5)). There is no such provision in s 321. Further, sub-s (7) of s 11.5 states: 28 (2010) 84 ALJR 395; 266 ALR 399; [2010] HCA 17. 29 (2010) 84 ALJR 395 at 412-413 [51]-[58], 421-424 [96]-[107]; 266 ALR 399 30 (1948) 77 CLR 84 at 120; [1948] HCA 13. 31 A penalty unit means $110: Commonwealth Crimes Act, s 4AA(1). Crennan Bell "Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of conspiracy to commit that offence." There is no equivalent provision in Victoria. The situation in the present case may be contrasted to that presented in McWaters v Day32. The Queensland legislation, s 16 of the Traffic Act 1949 (Q), created an offence of driving a motor vehicle while under the influence of liquor. Section 40(2) of the Defence Force Discipline Act 1982 (Cth) required for liability that the defence member drive a vehicle on service land whilst under the influence of intoxicating liquor "to such an extent as to be incapable of having proper control of the vehicle". It was, as emphasised by the Attorney-General for New South Wales in the course of his intervention in support of Queensland33, difficult to construe s 40(2) as conferring a liberty on a drunken defence member to drive a vehicle on service land provided he or she was still capable of controlling the vehicle. Hence, perhaps, the emphasis in argument by the defence member, in the event unsuccessful34, upon establishing that the defence discipline legislation was exclusive of, rather than supplementary to, the ordinary criminal law respecting traffic offences. The result in the present case is that in its concurrent field of operation in respect of conduct, s 321 of the Victorian Crimes Act attaches criminal liability to conduct which falls outside s 11.5 of the Commonwealth Criminal Code and in that sense alters, impairs or detracts from the operation of the federal legislation and so directly collides with it. In reaching that conclusion it is unnecessary to have regard to notions expressed in terms of "covering the field" and "indirect inconsistency". In particular it is unnecessary to determine the appeal on the footing, which the appellant also advances, that s 11.5 of the Commonwealth Criminal Code is an 32 (1989) 168 CLR 289; [1989] HCA 59. 33 (1989) 168 CLR 289 at 292. 34 (1989) 168 CLR 289 at 299. Crennan Bell "exhaustive" provision for the law of conspiracy to commit offences injurious to the proprietary and other governmental interests of the Commonwealth35. When deciding questions of "indirect inconsistency" it often has been said that the "intention" of the Parliament is determinative, or at least indicative, of the characterisation of the federal law as one which "covers the field" in question or does not do so. Some caution is required here, with regard to what was said in Zheng v Cai36 as follows: "It has been said that to attribute an intention to the legislature is to apply something of a fiction37. However, what is involved here is not the attribution of a collective mental state to legislators. That would be a misleading use of metaphor38. Rather, judicial findings as to legislative intention are an expression of the constitutional relationship between the arms of government with respect to the making, interpretation and application of laws. As explained in NAAV v Minister for Immigration and Multicultural and Indigenous Affairs39, the preferred construction by the court of the statute in question is reached by the application of rules of interpretation accepted by all arms of government in the system of representative democracy." That constitutional relationship is further informed by the operation of s 109 in the federal structure of government. It is with this in mind that there are to be read the references to "intention" in a well-known passage in the reasons of Mason J in R v Credit Tribunal; 35 Cf R v Loewenthal; Ex parte Blacklock (1974) 131 CLR 338; Kelly v Shanahan [1975] Qd R 215. 36 (2009) 239 CLR 446 at 455-456 [28]; [2009] HCA 52. 37 Mills v Meeking (1990) 169 CLR 214 at 234; [1990] HCA 6; Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 at 339-340; [1991] HCA 28. 38 Singh v The Commonwealth (2004) 222 CLR 322 at 385 [159]; [2004] HCA 43. 39 (2002) 123 FCR 298 at 410-412. Crennan Bell Ex parte General Motors Acceptance Corporation40, recently repeated in John Holland Pty Ltd v Victorian Workcover Authority41. Mason J said: it deals, thereby bringing s 109 "[A]lthough a provision in a Commonwealth statute which attempts to deny operational validity to a State law cannot of its own force achieve that object, it may nevertheless validly evince an intention on the part of the statute to make exhaustive or exclusive provision on the subject with Equally a which Commonwealth law may provide that it is not intended to make exhaustive or exclusive provision with respect to the subject with which it deals, thereby enabling State laws, not inconsistent with Commonwealth law, to have an operation. Here again the Commonwealth law does not of its own force give State law a valid operation. All that it does is to make it clear that the Commonwealth law is not intended to cover the field, thereby leaving room for the operation of such State laws as do not conflict with Commonwealth law." into play. The federal legislation considered in John Holland was an example of the first class which Mason J had described in General Motors. It contained a statement that in certain specified respects it was to apply to the exclusion of State laws. Other examples of federal laws of that character were discussed in Bayside City Council v Telstra Corporation Ltd42. More difficult questions of statutory construction arise in cases where an identified "field" is said to be "covered" by reason of no more than implications found in the text of the federal law43. But the issue here must turn upon the proper interpretation of the federal law in question, having regard to its subject, scope and evident purpose. It is this form of "indirect inconsistency" upon which the appellant relies for his alternative argument respecting s 11.5 of the Commonwealth Criminal Code. The respondent and the interveners would counter the case for "indirect 40 (1977) 137 CLR 545 at 563; [1977] HCA 34. 41 (2009) 239 CLR 518 at 527-528 [21]; [2009] HCA 45. 42 (2004) 216 CLR 595 at 627-629 [35]-[39]; [2004] HCA 19. 43 See Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 433; [1997] HCA 36. Crennan Bell inconsistency" by reference to the second class of express statement identified by Mason J in General Motors. This involves an express form of words to pull back from what otherwise might be an implication that the federal law was an exhaustive statement upon a particular subject or "field". But, as will now appear, close attention is necessary to the place of such a statement in the particular statutory framework in which it is to be found. In the Commonwealth Criminal Code, Ch 4 (ss 70.6, 71.19, 72.5), Ch 7 (s 261.1), Ch 8 (ss 268.120, 270.12), Ch 9 (s 360.4), and Ch 10 (ss 400.16, 472.1, 475.1, 476.4)44, contained provisions so expressed as to deny for the Chapter in question, or particular portions of it, an "inten[tion] to exclude or limit" the operation of any other Commonwealth law, and also of any law of a State or Territory45. However, s 11.5 appeared in Ch 2, which did not contain any such statement. Those opposed to the appellant sought to rely upon the presence of such a provision (s 261.1) in Ch 7. The theft provision (s 131.1) appears in Ch 7. The presence of s 261.1, whatever else its effect in considering the application of s 109 to charges under State law of theft of the property of the Commonwealth, a matter upon which it is unnecessary to enter here, could not displace or avoid the direct collision between the conspiracy provisions with which the appeal is concerned. The balance of the special leave application should be dismissed. The appeal should be allowed and the order of the Court of Appeal of the Supreme Court of Victoria made 18 December 2008 set aside. In place thereof, leave to appeal against conviction and sentence should be granted, the appeal allowed, the 44 The Commonwealth Criminal Code in its current form additionally contains such provisions in Ch 4 (s 72.32), Ch 5 (ss 80.6, 115.5), Ch 8 (ss 271.12, 272.7, 273.4, 274.6), and Ch 9 (s 300.4). 45 Chapter 4 is headed "The integrity and security of the international community and foreign governments", Ch 8 "Offences against humanity and related offences", Ch 9 "Dangers to the community" and Ch 10 "National infrastructure". Chapter 5, headed "The security of the Commonwealth", contained its own complex concurrent operation provision (s 100.6). Crennan Bell presentment preferred against the appellant and his conviction on 21 February 2008 quashed, and the sentence imposed on 17 April 2008 set aside.

HIGH COURT OF AUSTRALIA APPLICANTS AND RESPONDENT Karpany v Dietman [2013] HCA 47 6 November 2013 ORDER Special leave to appeal granted. Appeal allowed with costs. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 11 May 2012 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of South Australia Representation I C Robertson SC with S G Berg for the applicants (instructed by Berg Lawyers) M G Evans QC with A P Rodriquez and D F O'Leary for the respondent (instructed by Crown Solicitor (SA)) Interveners M G Evans QC with A P Rodriquez and D F O'Leary for the Attorney- General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) V B Hughston SC with J A Waters for South Australian Native Title Services Limited, intervening (instructed by South Australian Native Title Services Limited) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Karpany v Dietman Native title – Native title right to take fish – Fisheries Act 1971 (SA) prohibited taking fish without licence or except as provided by the Act – Fisheries Act permitted taking fish by certain means without licence for non-commercial purposes – Whether statute inconsistent with continued existence of native title right to take fish – Whether native title right extinguished by pre-1975 State fisheries legislation. Native title – Native title right to take fish – Native title holders charged with possessing undersize abalone contrary to s 72(2)(c) of Fisheries Management Act 2007 (SA) – Section 115 of Fisheries Management Act provided for ministerial exemption – Whether ministerial exemption "licence, permit or other instrument" for the purposes of s 211 of Native Title Act 1993 (Cth). Words and phrases – "extinguishment", "inconsistent with the continued existence of a native title right", "licence, permit or other instrument", "native title rights and interests". Fisheries Act 1917 (SA), ss 39, 48. Fisheries Act 1971 (SA), ss 28, 29, 42, 47. Fisheries Management Act 2007 (SA), ss 3, 5, 72, 115. Native Title Act 1993 (Cth), ss 11, 211, 223. FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ. Introduction The applicants, who are Aboriginal and are members of the Narrunga People, successfully defended a summary prosecution under the Fisheries Management Act 2007 (SA) ("the FMA 2007") for having in their possession a quantity of undersize abalone. The charge was heard in the Magistrates Court at Kadina. There was no dispute that they had in their possession undersize abalone. Nor was there any dispute that the abalone were taken in accordance with the traditional laws and customs of the Narrunga People. On that basis the applicants successfully invoked s 211 of the Native Title Act 1993 (Cth) ("the NTA"). Section 211 of the NTA provides that a law which "prohibits or restricts persons" from fishing or gathering "other than in accordance with a licence, permit or other instrument granted or issued to them under the law" does not prohibit or restrict the pursuit of that activity in certain conditions where native title exists1. As was noted in Yanner v Eaton2: "By doing so, the section necessarily assumes that a conditional prohibition of the kind described does not affect the existence of the native title rights and interests in relation to which the activity is pursued." The terms of s 211 are considered more closely later in these reasons. The underlying assumption of the subsistence of native title rights and interests conceded in the Magistrates Court was held by the Full Court of the Supreme Court of South Australia to be wrong3. The Court held by majority that the relevant native title rights, which, absent extinguishment, would have embraced the taking of the undersize abalone, had been extinguished by the 1 NTA, s 211(1)(b) and (2). (1999) 201 CLR 351 at 373 [39] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; [1999] HCA 53. 3 Dietman v Karpany (2012) 112 SASR 514. Hayne Crennan Bell Fisheries Act 1971 (SA) ("the FA 1971"). The applicants sought special leave to appeal to this Court and their application was referred to an enlarged bench4. Special leave should be granted. The appeal must be allowed. In summary, this is for the following reasons. First, the FA 1971 did not extinguish the applicants' native title right to take fish. The FA 1971 prohibited5 a person taking fish except as provided by the Act or unless the person held a licence. But the FA 1971 permitted6 a person without holding a licence to take fish by certain means and "otherwise than for the purpose of sale". Further, the FA 1971 gave7 the Minister power to grant any person a special permit to take fish during such period and in such waters and subject to such terms and conditions as were specified in the permit. For the reasons given in Akiba v The Commonwealth8, and the cases there cited9, the FA 1971 regulated, but was not inconsistent with, the continued enjoyment of native title rights. Second, s 211(2) of the NTA applied. The exercise or enjoyment of native title rights and interests in relation to the relevant waters included carrying on the activity of fishing for or gathering abalone10. A law of a State, the FMA 2007, prohibited or restricted persons from fishing for or gathering abalone "other than in accordance with a licence, permit or other instrument"11 and the [2012] HCATrans 210. 5 FA 1971, s 29(1). 6 FA 1971, s 29(2). 7 FA 1971, s 42(1). (2013) 87 ALJR 916; 300 ALR 1; [2013] HCA 33. Including, in particular, Yanner v Eaton (1999) 201 CLR 351 and Western Australia v Ward (2002) 213 CLR 1; [2002] HCA 28. 10 NTA, s 211(1)(a), (3)(a) and (3)(c). 11 NTA, s 211(1)(b). Hayne Crennan Bell FMA 2007 was not said to be a law of a kind described in s 211(1)(ba) or (c). Accordingly, the FMA 2007 did not prohibit or restrict the applicants, as native title holders, from gathering or fishing for abalone in the waters concerned12 where they did so for the purpose of satisfying their personal, domestic or non- commercial communal needs13 and in exercise or enjoyment of their native title rights and interests14. Factual and procedural background The applicants, father and son, were jointly charged that, on 12 December 2009, near Cape Elizabeth in the waters of South Australia, they had joint possession or control of an aquatic resource of a prescribed class, namely undersize Greenlip abalone (Haliotis laevigata), fish of a priority species. The offence with which they were charged was a summary offence created by s 72(2)(c) of the FMA 2007, read with reg 8(1)(a) of the Fisheries Management (General) Regulations 2007 (SA). It was alleged in particulars of the charge that the applicants were in joint possession or control of 24 Greenlip abalone that were less than 13 cm and thus undersize. By agreement between prosecution and defence, the evidence relied upon by the prosecution was tendered in the form of a booklet of documents and a DVD recording. The documents included statements by a number of fisheries officers and several photographs. It was not in dispute that the applicants, when interviewed by fisheries officers, admitted to having taken 32 abalone, 24 of which were undersize. It was their intention to divide the catch equally and to eat them at a banquet with about 15 family members. They told the officers that their Aboriginal background and entitlements allowed them to take the abalone. They said the abalone looked as though they were big enough, but they did not measure them. They did not have a measurement device and saw no reason to have one. 12 NTA, s 211(2). 13 NTA, s 211(2)(a). 14 NTA, s 211(2)(b). Hayne Crennan Bell Counsel for the applicants informed the Magistrates Court that the prosecution materials established the elements of the offence charged. He told the Court, however, that each of the applicants would be relying upon s 211 of the NTA. He said that the applicants would give evidence and call witnesses to establish that their fishing activity was done in a traditional manner and was consistent with the requirements of the NTA. The purpose of the catch was to feed their family. Further, the defence would establish a connection with the Point Pearce area in which the applicants had taken the abalone and would establish familial lineage on the first applicant's mother's side demonstrating a continuous unbroken traditional fishing practice. Counsel for the prosecution indicated that the prosecution would not put the applicants to proof of those matters of fact. The Magistrates Court held that s 211 did apply. That was on the basis that ministerial exemptions from the application of the FMA 2007 to any particular person or group of persons, which could be granted under s 115, fell within the category of "licence, permit or other instrument" within the meaning of s 211. The learned magistrate's reasons concluded: "Accordingly in the present case I would conclude that the so- called 'Native Title' defence is available to both defendants with respect to the present charge. The Prosecution indicates that they do not wish to put the defendants to proof as to the matters previously referred to. It follows from that concession that I would find them not guilty of the charge. I do so." The respondent, who was the informant in the Magistrates Court, instituted an appeal in the Supreme Court of South Australia. The first substantive ground of appeal was that the magistrate had erred in his characterisation of exemptions granted under s 115. The second substantive ground was that any native title right to take undersize abalone enjoyed in the past by the Aboriginal group to which the applicants belonged had been extinguished under earlier State law and for that reason s 211 of the NTA could not apply. That point had not been taken in the Magistrates Court. On 6 October 2011, Kelly J of the Supreme Court of South Australia referred the appeal to the Full Court of the Supreme Court pursuant to s 42(2)(b) Hayne Crennan Bell of the Magistrates Court Act 1991 (SA). The appeal was heard on 14 October 2011. On 11 May 2012, the Full Court allowed the appeal and remitted the matter to the Magistrates Court for resentencing and, in particular, for consideration as to whether the magistrate should exercise his discretion to Gray J, with whom Kelly J agreed, held that the native title right of Aboriginal persons to fish in the area had been extinguished by operation of the FA 1971 and was replaced by a statutory right available to all persons in the State of South Australia. Blue J disagreed. However, his Honour held that the provision for exemptions under s 115 of the FMA 2007 did not constitute a provision for the granting of a licence, permit or other instrument within the meaning of s 211 of the NTA. No other form of licence or permit being available to authorise the taking of undersize abalone under the FMA 2007, s 211 could not be invoked by the applicants. The applicants applied for special leave to appeal to this Court and on 7 September 2012 that application was referred (French CJ and Kiefel J) to an enlarged bench. The grounds of the application The referred application for special leave was limited to two grounds, which raised the following questions: First, whether the FA 1971 extinguished the native title rights of the Narrunga People to take fish from the relevant waters which, absent such extinguishment, would have embraced the conduct the subject of the charge ("the extinguishment question"). Second, whether, if the answer to the first question is in the negative, s 211 applied to render the prohibition in s 72(2)(c) of the FMA 2007 inapplicable to the applicants in respect of the conduct the subject of the charge ("the s 211 question"). 15 (2012) 112 SASR 514. Hayne Crennan Bell The applicants' native title rights It is necessary to identify the native title rights and interests which the applicants asserted and which were conceded at first instance, in the Full Court and in this Court subject to the question of extinguishment. The concession by the prosecutor in the Magistrates Court incorporated, by reference, what the defence counsel said he was going to prove as reported in the magistrate's reasons for judgment. In the Full Court, Gray J said16: "For the purposes of the trial, the prosecution accepted that both defendants were members of an Aboriginal group whose customary native title rights included fishing in the waters where the abalone were taken." And further17: "The complainant and appellant, Peter John Dietman, accepted at trial and on appeal that the abalone were taken for a bona fide non- commercial, domestic or communal need; that the customary rights of the Aboriginal group to which the defendants belonged included fishing; and that the customary rights of the Aboriginal group, judged apart from the effect of prior State legislation, included the taking of abalone described as 'undersized' under present State law." (footnotes omitted) The respondent, in his written submissions to this Court, made a concession in similar terms. The conceded native title right of the applicants was therefore a right to take fish from the relevant waters. That right comprehended the taking of abalone, including undersize abalone. The extinguishment question The first question for determination is whether the applicants' native title right to fish in the relevant waters was extinguished by the FA 1971. It was not suggested that the FA 1971 had any effect upon the factual elements of native title rights and interests set out in pars (a) and (b) of the definition in s 223(1) of the NTA. The question therefore was whether the conceded native title rights, 16 (2012) 112 SASR 514 at 517 [5]. 17 (2012) 112 SASR 514 at 517–518 [7]. Hayne Crennan Bell subsisting before the enactment of the FA 1971, ceased, by reason of that Act, to be "recognised by the common law of Australia" within the meaning of s 223(1)(c). Section 11(1) of the NTA provides that "[n]ative title is not able to be extinguished contrary to this Act." It is prospective in its operation. In Western Australia v The Commonwealth (Native Title Act Case) the Court held s 11(1) to be valid and that its effect was that "any future State law which purports to extinguish native title contrary to the Act is inoperative by reason of s 109 of the Constitution."18 It has no application to the question of extinguishment under the FA 1971. Further, as in Akiba, it was not said in this case that the enactment of the FA 1971 was a "past act" within the meaning of s 228 of the NTA19. The inquiry, as in Akiba, is whether or not the FA 1971 was "effective at common law to work extinguishment of native title"20. That question is answered by determining whether or not the provisions of the FA 1971 were inconsistent with the continuing recognition by the common law of the Narrunga People's native title right to fish, which the applicants said they were exercising when they took the abalone in respect of which they were charged. That directs attention to the provisions of the FA 1971. The long title of the FA 1971 characterised it as a statute "relating to the management, and conservation of fisheries and the regulation of fishing, and to matters incidental thereto." The Act repealed the Fisheries Act 1917 (SA) ("the FA 1917") and eight amending Acts and related provisions in two other Acts21. Section 39 of the FA 1917 had provided that: "No person shall take or have in his possession or sell any fish or oysters of less than the prescribed weight." 18 (1995) 183 CLR 373 at 468 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ; [1995] HCA 47; see also Jango v Northern Territory (2006) 152 FCR 150 at 164 [34] per Sackville J. 19 (2013) 87 ALJR 916 at 931 [58] per Hayne, Kiefel and Bell JJ; 300 ALR 1 at 20. 20 (2013) 87 ALJR 916 at 931 [58] per Hayne, Kiefel and Bell JJ; 300 ALR 1 at 20– 21 citing Western Australia v Ward (2002) 213 CLR 1 at 62 [5]. 21 FA 1971, s 4(1), Schedule. Hayne Crennan Bell However, s 48 contained what were described in the marginal note to that section as "special exemptions". Relevantly, the section provided: "Nothing in this Act shall apply to— any full-blooded aboriginal inhabitant of this State taking fish for his household consumption: provided that no explosive or noxious matter is used in the taking of such fish". Such exemptions were also provided in earlier South Australian fisheries statutes22. They were common in the fisheries legislation of other States and Territories23. There was no such exemption in the FA 1971. Section 29(1) of the FA 1971 provided: "Except as is provided in this Act, a person shall not take fish unless he hold a fishing licence." The definition of "fish" in the Act covered "fish, mollusc, crustacean and aquatic animal of any species"24. The word "take" was also broadly defined: "'take' in relation to fish means to fish for, catch, take or obtain fish from any waters by any means whatever, and includes to kill or destroy fish in any waters". The FA 1971 only provided for two classes of fishing licence. They were designated in s 28 as a class A fishing licence and a class B fishing licence, both of which related to commercial fishing operations25. Section 29(2) provided: 22 Fisheries Act 1878 (SA), s 14; Fisheries Amendment Act 1893 (SA), s 8; Fisheries Act 1904 (SA), s 22. 23 Sweeney, "Fishing, Hunting and Gathering Rights of Aboriginal Peoples in Australia", (1993) 16 University of New South Wales Law Journal 97 at 99, fn 5. 24 FA 1971, s 5(1). 25 FA 1971, s 30(1). Hayne Crennan Bell "A person may without holding a licence, but subject to the other sections of this Act— take fish otherwise than for the purpose of sale by means of a rod and line, hand line, hand fish spear or declared device; take crabs otherwise than for the purpose of sale, by a hoop net; take garfish, otherwise than for the purpose of sale, by a dab net." Read as a whole, the FA 1971 (and s 29 in particular) regulated rather than prohibited fishing in the waters governed by that Act. The prohibition in s 29(1) was subject to the exceptions otherwise provided by the Act and recognised that licences could be granted for commercial fishing. Section 29(2) permitted but regulated fishing "otherwise than for the purpose of sale". Section 29(2) may not have permitted the taking of abalone by hand, but neither s 29 nor the FA 1971 more generally amounted to prohibition of the exercise of a native title right to fish in waters governed by the Act. Because neither s 29 nor the FA 1971 more generally prohibited the exercise of a native title right to fish, the FA 1971 was not inconsistent with the continued existence of, and did not extinguish, then existing native title rights to fish. That the FA 1971 did not wholly prohibit fishing generally (or the taking of abalone in particular) is reinforced by reference to the statutory mechanisms under ss 42 and 47 by which such activities should be permitted. Counsel for the respondent submitted that it was a consequence of s 29 that nobody other than a commercial fisher with a licence could take abalone under the FA 1971. Section 29 was also to be read with the prohibition in s 47(2) on taking undersize fish as declared by proclamation pursuant to s 47(1). By a proclamation made under the FA 1971 on 30 November 1971, all species of abalone less than 10.2 cm were undersize26. That proclamation continued in force until the FA 1971 was repealed in 198427. 26 South Australian Government Gazette, No 54, 30 November 1971 at 2262–2263. 27 Fisheries Act 1982 (SA); South Australian Government Gazette, No 29, 14 June Hayne Crennan Bell There was, however, provision in s 47(4) for an exemption from the prohibition on taking undersize fish. The Governor, by proclamation, could declare that it would "be lawful for any person or any person of a specified class of persons to take undersize fish in accordance with such limitations or conditions as are set out in the proclamation". In addition to the possibility of an exempting proclamation under s 47(4), s 42(1) conferred upon the Minister, notwithstanding any other provision of that Act, a power to "grant to any person a special permit to take fish during such period and in such waters and subject to such terms and conditions as are specified in the permit". Any such permit would render lawful any act done in accordance with its terms and conditions28. Counsel for the respondent submitted that the use of the word "special" in relation to a permit granted under s 42 imported some kind of constraint on the discretion conferred on the Minister by that section. He also accepted, however, that it was open to construe the term "special" as a designation of permits granted under s 42 in order to distinguish them from the licences otherwise specifically provided for in the Act. The better view perhaps is that permits under s 42 were properly so designated because they could be tailored to authorise otherwise prohibited fishing activity under particular conditions relating to place and time, the kind of taking of fish to be permitted, the species to which the authorisation was to apply, and size and catch limits. There was nothing in the text or context of s 42 to constrain the Minister's discretion in relation to the grant of a special permit, or the conditions to be attached to it, other than the general requirement, implicit in any statutory power, that the power be exercised consistently with the scope, purpose and subject matter of the Act. There was nothing in the Act which would preclude the grant of such permits to members of Aboriginal communities to enable them to exercise traditional fishing rights, subject to such conditions as might be imposed in connection with such a grant. The FA 1971 not only did not generally prohibit non-commercial fishing in the relevant waters, it contained a mechanism by which Aboriginal people could continue to exercise their native title right to fish by taking abalone, including undersize abalone, for communal purposes in accordance with their traditional practices. 28 FA 1971, s 42(3). Hayne Crennan Bell The Full Court's reasoning on extinguishment In the Full Court, Gray J referred to the South Australian fisheries legislation which predated the FA 1971 and concluded that under those regimes "the Aboriginal customary right to fish for personal purposes was largely unaffected."29 Citing the absence of any general exemption in the FA 1971 with respect to the Aboriginal customary right to fish, his Honour said30: "It may be reasonably inferred that a decision had been taken to bring to an end the exclusion of Aboriginal people from the purview of the new regime enacted in 1971." The question whether a statute extinguishes a native title right or interest is, of course, not to be answered by inferences about "decisions" taken by the executive responsible for the introduction of the legislation into parliament or otherwise somehow attributed to the parliament. The question whether a statute enacted prior to the NTA and outside the application of its "past act" provisions extinguishes native title is answered by asking whether the legislation is inconsistent with the subsistence of that native title right. His Honour correctly went on to pose that question. He characterised the FA 1971 as imposing a general prohibition on the taking of undersize fish and, in particular, Greenlip abalone. His Honour said31: "This was not a case like Yanner v Eaton where there was a prohibition subject to an exemption. The substantive effect of the legislation was to place all persons, including Aboriginal persons, under the regime of the statute and to treat all persons as subject to the rights and obligations set out in the statute. As a consequence, the native title right to fish was extinguished and was replaced by a statutory right available to all persons in the State. That right is to fish and take fish not for sale, subject to limitations contained in the Act, including limitations as to size." (footnote omitted) 29 (2012) 112 SASR 514 at 522 [24]. 30 (2012) 112 SASR 514 at 522 [25]. 31 (2012) 112 SASR 514 at 525 [35]. Hayne Crennan Bell Kelly J agreed with Gray J32. Blue J, who disagreed with their Honours, considered that the reasoning of this Court in Yanner applied directly to s 29(1) of the FA 1971. His Honour said33: "The mere fact that the 1971 Act regulated the right to fish by requiring the fisher to hold a licence was not inconsistent with the continued existence of a native title right to fish and did not extinguish that right." The respondent's submissions depended critically upon the proposition that the FA 1971 abrogated all rights to take fish cognisable by the common law and replaced them with new statutory rights. For the reasons already stated, that submission cannot be accepted. Nor can the submission that the source of any right to fish had to be found in the FA 1971. As appears from the words of exception with which s 29(1) opened and from s 29(2), the FA 1971 did not abrogate all rights to take fish for non- commercial purposes. In respect of activities not covered by s 29(2), it provided for licences for commercial fishing operations34 and for special permits under s 42. Moreover, the prohibition on taking undersize fish, imposed by s 47, was qualified by the provision for exemptions from that prohibition under s 47(4). The FA 1971 provided a mechanism, specifically the special permit, by which it could be administered consistently with the continuing exercise of native title rights. It cannot be said to have been inconsistent with the recognition by the common law of those rights. The FA 1971 did not extinguish the applicants' native title rights to fish. The applicants succeed on the first ground. The s 211 question The second question for determination is whether s 211 provided a defence to the offence with which the applicants were charged under the FMA 2007. 32 (2012) 112 SASR 514 at 525 [38]. 33 (2012) 112 SASR 514 at 533 [79]. 34 FA 1971, ss 28, 30. Hayne Crennan Bell The Native Title Act and native title rights The significance of the prosecution concession is to be ascertained by reference to s 211 of the NTA, which was invoked by the applicants in their defence to the charge. It is also to be ascertained by reference to s 223 of the NTA, which defines the terms "native title" and "native title rights and interests" for the purposes of the NTA, including s 211. Section 211 provides: "(1) Subsection (2) applies if: the exercise or enjoyment of native title rights and interests in relation to land or waters consists of or includes carrying on a particular class of activity (defined in subsection (3)); and a law of the Commonwealth, a State or a Territory prohibits or restricts persons from carrying on the class of activity other than in accordance with a licence, permit or other instrument granted or issued to them under the law; and the law does not provide that such a licence, permit or other instrument is only to be granted or issued for research, environmental protection, public health or public safety purposes; and the law is not one that confers rights or interests only on, or for the benefit of, Aboriginal peoples or Torres Strait Islanders. If this subsection applies, the law does not prohibit or restrict the native title holders from carrying on the class of activity, or from gaining access to the land or waters for the purpose of carrying on the class of activity, where they do so: for the purpose of satisfying their personal, domestic or non- commercial communal needs; and in exercise or enjoyment of their native title rights and interests. Hayne Crennan Bell Note: In carrying on the class of activity, or gaining the access, the native title holders are subject to laws of general application. Each of the following is a separate class of activity: hunting; fishing; gathering; a cultural or spiritual activity; any other kind of activity prescribed for the purpose of this paragraph." The term "native title holder" in relation to native title is relevantly defined by s 224(b) as "the person or persons who hold the native title." The terms "native title" and "native title rights and interests" are defined in s 223. That section provides, inter alia: "(1) The expression native title or native title rights and interests means the communal, group or individual rights and interests of Aboriginal peoples or Torres Strait Islanders in relation to land or waters, where: the rights and interests are possessed under the traditional laws acknowledged, and the traditional customs observed, by the Aboriginal peoples or Torres Strait Islanders; and the Aboriginal peoples or Torres Strait Islanders, by those laws and customs, have a connection with the land or waters; and the rights and interests are recognised by the common law of Australia. (2) Without limiting subsection (1), rights and interests in that subsection includes hunting, gathering, or fishing, rights and interests." Hayne Crennan Bell The operation of s 211 was described in the Native Title Act Case35: "If the affected law be a law of a State, its validity is unimpaired, but its operation is suspended in order to allow the enjoyment of the native title rights and interests which, by s 211, are to be enjoyed without the necessity of first obtaining 'a licence, permit or other instrument'. Again, the effect of s 211 is not to control the exercise of State legislative power, but to exclude laws made in exercise of that power (inter alia) from affecting the freedom of native title holders to enjoy the usufructuary rights referred to in s 211." The concession made by the prosecution and accepted in the Full Court and in this Court, subject to the question of extinguishment, left open the further question whether a provision in the FMA 2007 for the granting of ministerial exemptions from the application of provisions of that Act was a provision for a "licence, permit or other instrument" for the purposes of s 211. Statutory framework — Fisheries Management Act 2007 The offence with which the applicants were charged was created by s 72(2)(c) of the FMA 2007. Subject to any limitations expressly prescribed in the FMA 2007, that Act applies in relation to all waters that are within the limits of the State of South Australia36. Section 5(3) provides: "Native title and native title rights and interests are not affected by the operation of this Act except to the extent authorised under the Native Title Act 1993 of the Commonwealth." Counsel for the respondent contended that this was an interpretive provision but did not develop that submission. It is not necessary for present purposes to consider the substantive operation of s 5(3). Part 6 of the Act deals with regulation of fishing and processing. Division 1 concerns commercial fishing and effectively prohibits a person from 35 (1995) 183 CLR 373 at 474. See also Yanner v Eaton (1999) 201 CLR 351 at 399 36 FMA 2007, s 5(1)(a). Hayne Crennan Bell engaging in fishing for a commercial purpose unless the person holds a licence or permit in respect of the fishery, or acts as the agent of a licence or permit holder37. Boats and devices used in commercial fishing are required to be registered38. Licences, permits or registrations may be subject to such conditions as the Minister thinks fit. Licences and permits are not transferable39. Division 2 of Pt 6 deals with Aboriginal traditional fishing and, in particular, the creation of Aboriginal traditional fishing management plans under indigenous land use agreements in a specified area of waters. Such plans must, inter alia, specify the classes of Aboriginal traditional fishing activities that are authorised by the plan40. Aboriginal traditional fishing management plans are required to be gazetted41. There was no suggestion that there was in existence any Aboriginal traditional fishing management plan relevant to this appeal. Section 72(2)(c) appears in Pt 7 of the Act, which deals with offences and prohibits persons from engaging in various fishing activities. Section 72(2)(c), under which the applicants were charged, provides: "Subject to this section, if a person sells or purchases, or has possession or control of— an aquatic resource of a prescribed class, the person is guilty of an offence." "Undersize fish" are designated as "an aquatic resource of a prescribed class" by reg 8(1)(a) of the Fisheries Management (General) Regulations 2007 (SA). The 37 FMA 2007, s 52. 38 FMA 2007, s 53. 39 FMA 2007, s 57(1). 40 FMA 2007, s 60(2)(f). 41 FMA 2007, s 60(3). Hayne Crennan Bell term "undersize fish" is defined in reg 3(1) to mean "fish that is undersize as determined in accordance with Schedule 2". That Schedule provides that Greenlip abalone is undersize if taken in waters of the State, other than the Western Zone, if less than 13 cm in length42. The definition of undersize abalone, including Greenlip abalone, in cl 6 of Sched 2 applies only in relation to abalone taken by an unlicensed person43. Central to the applicants' argument about the application of s 211 of the NTA was s 115 of the FMA 2007. It appears in Pt 10 of the Act, entitled "Miscellaneous", and in Div 1 of that Part, entitled "General". It relevantly provides: "(1) Subject to this section, the Minister may, by notice in the Gazette— exempt a person or class of persons, subject to such conditions as the Minister thinks fit and specifies in the notice, from specified provisions of this Act; or vary or revoke an exemption, or a condition of an exemption, under this section or impose a further condition. The Minister may not exempt a person or class of persons from a provision of a management plan or regulations for a fishery or an aboriginal traditional fishing management plan or regulations relating to aboriginal traditional fishing. (5) An exemption under this section operates for a period (not exceeding 12 months) specified in the notice of exemption. (6) A person who contravenes a condition of an exemption is guilty of an offence." 42 Fisheries Management (General) Regulations 2007, Sched 2, cl 6(2)(b)(i). 43 Fisheries Management (General) Regulations 2007, Sched 2, cl 6(4). Hayne Crennan Bell The Minister is required to keep a number of registers including a register of "authorities" and a register of "exemptions"44. The term "authority" is defined in s 3(1) of the Act as: "a licence, permit, registration, authorisation or other authority under this Act". The respondent sought to characterise s 115 as a "miscellaneous power ... that sits outside the rest of the regulatory licensing scheme provided for in Pt 6." The exemption power, it was said, was "exceptional" and could not be used to effect a de facto licensing regime not envisaged by the Act. That was an unexplained conclusionary statement. In any event, that submission was an answer to the wrong question. The question here is not whether an exemption differs from a licence within Pt 6 of the FMA 2007. Nor is it whether the exemption power is constrained by a requirement that it be exercised only in exceptional circumstances. The question is whether it is a "licence, permit or other instrument" for the purposes of s 211 of the NTA. That characterisation depends upon the construction of s 211, not upon the construction of the FMA The application of s 211 The determination of whether s 211(2) of the NTA afforded a defence to the charge against the applicants depends upon whether an exemption under s 115 of the FMA 2007 was "a licence, permit or other instrument granted or issued to them" under that law within the meaning of s 211(1)(b). The reduction of this aspect of the application to that narrow question of statutory characterisation arises because none of the other criteria for the application of s 211(2) in the circumstances of this application is in dispute. The exercise or enjoyment of the applicants' native title rights in relation to the relevant waters consists of carrying on fishing or gathering abalone, each of which is a particular "class of activity" within the meaning of s 211(1)(a) and as defined in s 211(3). The condition created by s 211(1)(a) is satisfied. It is not in dispute that the FMA 2007 prohibits or restricts persons from fishing for or gathering undersize abalone. The question in contention is whether it does so "other than in accordance with a licence, permit or other instrument granted or issued" under 44 FMA 2007, s 116(1). Hayne Crennan Bell the FMA 2007. Subject to that question, the condition in s 211(1)(b) is satisfied. It is also not in dispute that the FMA 2007 does not provide that exemptions are only to be granted or issued for research, environmental protection, public health or public safety purposes. Thus, s 211(1)(ba) is satisfied. Finally, it is not in dispute that the FMA 2007 is not a law that confers rights or interests only on or for the benefit of Aboriginal peoples or Torres Strait Islanders. Thus, s 211(1)(c) is satisfied. It was common ground that the conduct of the applicants in taking the undersize abalone the subject of the charge was done for the purpose of satisfying their personal, domestic or non-commercial communal needs within the meaning of s 211(2)(a). It was also common ground that, subject to the question of extinguishment pursuant to the FA 1971, the applicants took the abalone in the exercise or enjoyment of their native title rights and interests within the meaning of s 211(2)(b). The respondent disclaimed any suggestion the FMA 2007 extinguished native title fishing rights. Any such contention would have raised a question about the interaction between that Act and the NTA. Such a contention would, in any event, have been difficult to maintain in light of the conclusion already reached about the effect of the FA 1971 upon native title rights. that In the Native Title Act Case45, this Court considered and rejected a challenge to the validity of s 211(2). The construction of the term "licence, permit or other instrument granted or issued … under the law" in s 211 was not in issue in that case. The term is not to be read narrowly. It has application to a category of laws which prohibit or restrict activities, including fishing and gathering. Such laws may provide a variety of schemes for permitting some people or groups of people to conduct otherwise prohibited or restricted activities subject to terms and conditions which may be specified by law or lie within the discretion of the grantor or issuer of the "licence, permit or other instrument". Those terms accommodate a large range of possible statutory regimes. They are apt to cover any form of statutory permission issued to individuals or classes or groups of people to carry on one or other of the classes of activities described in 45 (1995) 183 CLR 373. Hayne Crennan Bell The exemption for which s 115 of the FMA 2007 provides may be granted to individuals or classes of persons for specified activities, on specified conditions and for a specified time. Such exemptions are at least a form of "other instrument" granted or issued under the relevant law of the State and fall within s 211(1) of the NTA. The defence under s 211 was available to the applicants. Conclusion The applicants should be granted special leave to appeal from the decision of the Full Court of the Supreme Court of South Australia. The appeal should be allowed. The decision of the Full Court should be set aside and in lieu thereof the appeal to the Supreme Court from the Magistrates Court should be dismissed. The respondent should pay the applicants' costs in the Full Court of the Supreme Court of South Australia and in this Court.

HIGH COURT OF AUSTRALIA APPELLANTS AND QUEENSLAND NEWSPAPERS PTY LTD & ANOR RESPONDENTS Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 27 September 2005 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of Queensland made on 30 April 2004 and, in their place, order that the appeal to that Court be allowed with costs, the orders of Helman J made on 31 October 2003 be set aside, and that the application of the respondents be remitted to a judge of the Supreme Court of Queensland for further consideration in accordance with the reasons of this Court. The costs of the proceedings before Helman J be left for the decision of the judge dealing with the amended application. On appeal from the Supreme Court of Queensland Representation: G O'L Reynolds SC with R J Anderson and J C Hewitt for the appellants (instructed by Gail Malone & Associates) R A Mulholland QC with D C Spence for the respondents (instructed by Thynne Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Favell v Queensland Newspapers Pty Ltd Defamation – Pleading and practice – Application for summary judgment or alternatively to strike out part of a pleading – Test to be applied – Whether matter published capable of conveying defamatory imputations. Words and phrases – "defamatory meaning". GLEESON CJ, McHUGH, GUMMOW AND HEYDON JJ. The issue in this appeal is whether a newspaper article, published by the first respondent and written by the second respondent, was capable of bearing certain defamatory meanings. The article was published in The Sunday Mail, a newspaper with a wide circulation mainly in Queensland, on Sunday 19 January 2003. It was in the following terms: "DEVELOPMENT SITE DESTROYED – FIRE GUTS RIVERSIDE MANSION A MULTIMILLION-dollar Brisbane home which is the subject of a controversial development application burned down early yesterday morning. Owners of the house on the Brisbane River at New Farm, which has views across the city, had applied to build a five-storey block of units. Barrister Paul Favell, his lawyer wife Diana and his three teenage children will return home from holiday in Rome to find the Griffith St home gutted. Firefighters took almost two hours to extinguish the blaze which started about 4 am yesterday morning and caused severe structural damage. Speaking from Rome, a distressed Ms Favell told The Sunday Mail: 'We are devastated and we're just trying to get home as soon as possible. 'We had some cousins house-sitting and we're just so glad they weren't in the house at the time.' Relatives arrived to see the multi-storey house – which has security gates and a private river pontoon and boat – gutted. Mr Favell's sister, who did not wish to be identified, said: 'I'm just in shock. The women who were house-sitting would usually have been home but they decided to stay somewhere else instead.' It is understood neighbours had planned a meeting to protest against the impending unit development. Neighbour Margaret Morrisey said: 'None of us are happy about the application. 'The ambience of New Farm is being destroyed because of all these units going up.' Another neighbour, Peter Campbell, said about a dozen residents had planned to attend the meeting. 'People want to keep the character of the street and keep it the way it is,' he said. McHugh Asked whether the planned meeting would go ahead Mrs Morrisey said: 'No, the meeting won't go ahead now. It's all gone.' Asked about the reaction from neighbours to the application for development on the property Ms Favell said: 'We provided copies of the plans to both neighbours and they were fine about it.' Police said investigations into the cause of the fire were continuing. the arson Detective Senior Constable John Kilburn from investigation unit said the cause of the fire was not known. 'All fires are treated as suspicious until otherwise disproved and we will follow all lines of inquiry,' he said. A Queensland Fire and Rescue spokesman said security, the location of the house and debris had hindered firefighters." One of the most obvious features of the article is the connection it makes between the destruction of the appellants' house and the existence of what is said to have been a controversial plan to redevelop the site. Although the article does not say so in terms, it appears that the redevelopment proposal involved demolition of the existing house. The article may be taken to imply that the destruction of the house by fire facilitated the redevelopment, and thwarted local opposition to it. The headline, and the first paragraph, link the two topics, and a substantial part of the article is devoted to the development proposal. It is that link that is at the centre of the appellants' case. The appellants commenced proceedings for defamation in the Supreme Court of Queensland. An Amended Statement of Claim, in pars 19, 20 and 21, pleaded a large number of imputations, the differences between some of them being trivial. Not surprisingly, there were complaints about prolixity and a Those failure properly complaints remain unresolved. The respondents' primary contention, addressed to the three most serious imputations pleaded, was that the words complained of were incapable of conveying the defamatory meanings alleged. Those three imputations are: to distinguish between alternative imputations. the appellants committed the crime of arson; the appellants were reasonably suspected by the police of committing the crime of arson; and the second appellant (Mrs Favell) lied about neighbourhood reactions to the proposed development of the Griffith Street property. McHugh The respondents pursued that contention in an interlocutory application heard by Helman J. The orders sought in the application were, relevantly, twofold. First, the respondents sought an order that pars 19, 20 and 21 of the Amended Statement of Claim be struck out. This application was made under r 171 of the Uniform Civil Procedure Rules (Q), which empowers the court to strike out a pleading or part of a pleading which discloses no reasonable cause of action. Additionally, the respondents sought an order under r 293(2), which empowers the court to give summary judgment for a defendant if satisfied that no reasonable cause of action is disclosed. The first part of the application was successful; the second failed. Helman J struck out pars 19, 20 and 21, but did not enter summary judgment against the appellants. It appears to be common ground that he contemplated that the appellants would re-plead. This reflects a view that there may have been some defamatory imputations conveyed by the article, but not those pleaded, and, in particular, not any of the three imputations set out above. The appellants appealed to the Court of Appeal of Queensland1. The appeal was heard by McPherson and Jerrard JJA and Philippides J, and was dismissed. However, the Court of Appeal considered that an imputation similar to that set out in (b) above was capable of being conveyed. Jerrard JA, with whom the other members of the Court of Appeal agreed, concluded that the article was "capable of conveying to an ordinary reasonable reader the imputation that there are reasonable grounds for suspecting that the Favells may have been responsible for causing the fire to happen, because of their apparent motive and the circumstances in which the fire occurred." No doubt it was contemplated that, subject to any challenge to the decision of the Court of Appeal, that imputation would appear in any re-pleading of the case. It will be necessary to return to the question whether there is any difference in substance between imputation (b) as framed by the appellants, and the imputation framed by Jerrard JA. Bearing in mind the dual nature of the application to Helman J, seeking both a striking out of certain paragraphs in the Amended Statement of Claim, and the entry of summary judgment for the respondents, on the ground that the pleading disclosed no reasonable cause of action, the question for decision was whether the material published was capable of giving rise to the defamatory imputations alleged. In the Court of Appeal, McPherson JA correctly said: 1 Favell & Anor v Queensland Newspapers Pty Ltd [2004] QCA 135. McHugh "Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out. But once the conclusion is firmly reached, there is no justification for delaying or avoiding that step [at] whatever stage it falls to be taken." Helman J's reasoning was less favourable to the appellants than that of the Court of Appeal. His main reason for rejecting imputations (a) and (b) (in the sense of concluding that the article was not capable of conveying those meanings) was that "[t]he article reports the fact of, and the circumstances surrounding, the fire without comment, and records that an investigating police officer had said that investigations were proceeding and that all fires were treated as 'suspicious' until it could be demonstrated otherwise." He said that "the article goes no further than recording that the fire was under investigation by the arson investigation unit and that its cause was an open question." With respect to the learned judge, this reasoning is factually erroneous. The article does not simply report the fire without comment. On the contrary, the main thrust of the article is to link the fire with the contentious development proposal. What could have been the relevance of the development proposal to the story about the fire? The development proposal was not just an interesting background fact. The headline makes clear the point of the story: "Development site destroyed". The first paragraph repeats that emphasis. The article does not simply give an account of the fire "without comment". And if, by "the circumstances surrounding" the fire, Helman J had in mind the development proposal and the surrounding controversy in the neighbourhood, an ordinary reasonable reader might well ask why that was given such prominence. If the fact of the fire and the fact of the controversial development proposal were merely coincidental, and not causally related, then no inference of wrongdoing would follow. Newspapers can, and do, report coincidences. On the other hand, if the two were not just coincidental, but there was a connection, there was at least a possible inference that the connection was sinister. McHugh In Jones v Skelton2, the Privy Council said: "It is well settled that the question as to whether words which are complained of are capable of conveying a defamatory meaning is a question of law, and is therefore one calling for decision by the Court. If the words are so capable then it is a question for the jury to decide as to whether the words do, in fact, convey a defamatory meaning. In deciding whether words are capable of conveying a defamatory meaning the Court will reject those meanings which can only emerge as the product of some strained, or forced, or utterly unreasonable interpretation ... The test of reasonableness guides and directs the Court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense." In determining what reasonable persons could understand the words complained of to mean, the Court must keep in mind the statement of Lord Reid in Lewis v Daily Telegraph Ltd3: "The ordinary man does not live in an ivory tower and he is not inhibited by a knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of worldly affairs." Lord Devlin pointed out, in Lewis v Daily Telegraph Ltd4, that whereas, for a lawyer, an implication in a text must be necessary as well as reasonable, ordinary readers draw implications much more freely, especially when they are derogatory. That is an important reminder for judges. In words apposite to the present case, his Lordship said:5 "It is not ... correct to say as a matter of law that a statement of suspicion imputes guilt. It can be said as a matter of practice that it very often does so, because although suspicion of guilt is something different [1964] NSWR 485 at 491; [1963] 1 WLR 1362 at 1370-1371; [1963] 3 All ER 952 [1964] AC 234 at 258. [1964] AC 234 at 277. [1964] AC 234 at 285. McHugh from proof of guilt, it is the broad impression conveyed by the libel that has to be considered and not the meaning of each word under analysis. A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. They can convey a meaning of suspicion short of guilt; but loose talk about suspicion can very easily convey the impression that it is a suspicion that is well founded." A mere statement that a person is under investigation, or that a person has been charged, may not be enough to impute guilt6. If, however, it is accompanied by an account of the suspicious circumstances that have aroused the interest of the authorities, and that point towards a likelihood of guilt, then the position may be otherwise. There is an overlap between providing information and entertainment, and the publishing of information coupled with a derogatory implication may fall into both categories. It may be that a bare, factual, report that a house has burned down is less entertaining than a report spiced with an account of a suspicious circumstance. At this preliminary stage of the proceedings, the respondents have not yet had an opportunity to indicate why it was considered relevant to the story about the fire to link it with the development application. For that matter, the occasion has not yet arisen for a jury to decide what meanings the article would convey. We are concerned only with the anterior question of what the article is capable of conveying. The Court of Appeal considered that the article was capable of conveying an imputation similar to (b). There are two differences that were explained by Jerrard JA. First, the imputation framed by Jerrard JA was that there were reasonable grounds for suspecting that "the Favells may have been responsible for causing the fire to happen", as distinct from reasonable grounds for suspecting that the Favells caused arson to occur. The distinction is elusive. Under the criminal law of Queensland, a person who procures another to burn down a house is guilty of arson7. Secondly, Jerrard JA, while accepting a possible imputation of reasonable grounds for suspicion, did not consider that the article could convey the meaning that such suspicion was entertained by the police. Yet the article says that the police treat all fire as suspicious. Once it is accepted that the article could convey that there were reasonable grounds for 6 Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293. 7 Criminal Code (Q) s 7. McHugh suspicion, why could not a reader conclude that the police were aware of those grounds, and entertained that suspicion? If the police are investigating a fire, and there are reasonable grounds for suspicion, and those grounds relate to a neighbourhood controversy that the police would be likely to have found out about, it would be natural for the police to be suspicious. There is no convincing reason to prefer the imputation accepted by Jerrard JA to imputation (b) above. As to imputation (a), an article which is capable of conveying the meaning that there are reasonable grounds for suspicion of arson, and which also states and elaborates those grounds, taking as the introduction to an account of the fire the existence of the controversial development proposal, and developing the story by giving the neighbours' point of view, could reasonably be found by a jury to convey that the suspicion is well-founded and that the suspects are guilty. An article which gives otherwise irrelevant prominence to the existence of smoke may be found to suggest the existence of fire. Thus, a jury could reasonably conclude that several of the following grounds pointed to the fire being deliberately lit and that it was more likely than not that the appellants were responsible for it because they had a motive for destroying the existing building: the appellants wished to build a five-storey block of units and knew that the development would be strongly opposed by residents of the surrounding neighbourhood; the prospect of getting approval for building the units would be improved if there were no existing building on the site; the absence from the premises of relatives of the appellants who were supposed to be minding the house was unexplained; the fire started at 4 am; the security gates at the premises made it unlikely that, if the fire was deliberately started, the person or persons responsible could have gained access to the premises without the assistance of the appellants or their agents; the second appellant had attempted to create the false impression that the development was not controversial; and the appellants were absent overseas when their house was burnt down. McHugh When all these matters are taken into account, a jury could reasonably conclude that "it would put an incredible strain on human experience"8 if the appellants' proposal to redevelop their property was not facilitated by the fortuitous occurrence of a fire. As to the third suggested imputation, there is an apparent inconsistency between what the second appellant was reported to have said ("We provided copies [of the development plans] to both neighbours and they were fine about it") and what the neighbour Margaret Morrisey said ("None of us are happy about the application"). The second appellant's bland assurance that the neighbours "were fine about" the development is presented by way of contrast with general disapproval and indignation on the part of the neighbours. There is also a possible suggestion that, in a context where she was attempting to deflect attention from the development proposal, the second appellant was seeking to mislead. The development proposal was categorically stated, in the first paragraph, to be "controversial". It seems highly improbable that the second appellant would have been unaware of the controversy. The unhappiness of all the neighbours was a substantial theme of the article. Each alleged imputation is to be considered in the context of the entire article. A report that the second appellant gave an account of neighbourhood reaction to the development proposal different from that of her neighbours, if it stood alone, might mean no more than that there were two different points of view. However, when that report appears in the context of an account of a suspicious fire, the grounds for suspicion being based on the development proposal, a different impression may be created. Ultimately, the question is what a jury could properly make of it. In Lewis v Daily Telegraph Ltd9, Lord Reid said: "Ordinary men and women have different temperaments and outlooks. Some are unusually suspicious and some are unusually naïve. One must try to envisage people between these two extremes and see what is the most damaging meaning they would put on the words in question." The matter published was capable of conveying all three of the imputations set out above. There remain, however, other unresolved issues about 8 Plomp v The Queen (1963) 110 CLR 234 at 243. [1964] AC 234 at 259. McHugh the form of the pleading. This Court should make the following orders. The appeal is allowed with costs. The orders of the Court of Appeal of Queensland made on 30 April 2004 should be set aside. In their place, it should be ordered that the appeal to that Court be allowed with costs, that the orders of Helman J of 31 October 2003 be set aside, and that the application of the respondents be remitted to a judge of the Supreme Court of Queensland for further consideration in accordance with the reasons of this Court. The costs of the proceedings before Helman J should be left for the decision of the judge dealing with such amended application. Kirby KIRBY J. I agree with the conclusion expressed in the reasons of Gleeson CJ, McHugh, Gummow and Heydon JJ ("the joint reasons"). The matter complained of in these proceedings was capable of conveying each of the three imputations explained in the joint reasons10. I agree generally with the reasons of my colleagues and I concur in the orders proposed. Excessive refinement over pleaded imputations My approach to this appeal is affected by the considerations explained by me in Drummoyne Municipal Council v Australian Broadcasting Corporation11. Defamation procedure in Australia, including pre-trial applications of the kind that occurred in this case, have become unnecessarily complex12: "A plaintiff who alleges that it has been defamed must run a gauntlet of interlocutory proceedings ... which … are illustrated by the numerous skirmishes in Hepburn13, the repeated reports of other cases and the proceedings in the instant case. The result may be satisfactory to most lawyers who specialise in [defamation law]. It cannot but be discouraging to a plaintiff with a legitimate complaint forced into a system of interlocutory hearings which may occasionally even be used to exhaust or discourage those on the receiving end of defamation … [This] is a risk inherent in what Hutley JA14 rightly called the 'search for excessive precision in pleading in defamation actions' … [S]uch 'excessive precision' is to be avoided". In considering the imputations pleaded alongside the matter complained of, it is important that courts, deciding issues such as the present, should keep in mind the practical burdens and consequences that flow from excessive refinement in such matters. They should remember that the tribunal established by law (whether a jury or a judge) to decide claims in defamation will normally have a large capacity of its own to deal with far-fetched and remote imputations in a commonsense way. It is a mistake to consider that this capacity is confined 10 Joint reasons at [3], [18]. 11 (1990) 21 NSWLR 135 at 149-151. 12 (1990) 21 NSWLR 135 at 149. 13 Referring to Hepburn v TCN Channel Nine Pty Ltd [1983] 2 NSWLR 682; Hepburn v TCN Channel Nine Pty Ltd [1984] 1 NSWLR 386. 14 Referring to Hepburn v TCN Channel Nine Pty Ltd [1983] 2 NSWLR 682 at 692. Kirby to the practice court and appellate judges, stimulated by imaginative pleaders "armed with a bank of dictionaries and a Thesaurus"15. A reflection on this consideration confirms my support for the conclusion reached in the joint reasons. Those reasons correct what I take to have been an approach of excessive refinement on the part of the primary judge and of the Queensland Court of Appeal. Such an approach, in such matters, is to be discouraged. Overwhelmingly, it favours one side, namely defendants. It exhausts the means of the plaintiffs, including those with just claims. It delays the trial. And it undermines the utility of the tort of defamation as a practical means for defending respect in our society for the reputation of others16. For ordinary Australians, suing a media defendant in defamation is a very risky way of vindicating wrong to one's good name. Usually, it is only the foolhardy who try. Part of the reason is the resulting trial by interlocutory ordeal. If the remedy of defamation is to be fair to both sides, courts must do something to discourage, or minimise, such impediments. The fiction of the "ordinary reasonable reader" This observation is relevant to the only reservation that I feel concerning the reasoning of the other members of this Court. In the conventional way, their Honours have invoked the fiction of the "ordinary reasonable reader"17 to reinforce the conclusion which they have reached. The resort to this fiction has led appellate courts to define, and refine, the "ordinary reader" whom the judges have in mind. This has led, in turn, to almost ludicrous elaborations concerned with where the notional "reasonable, ordinary reader" lives (it is not in an ivory tower18) and how he (only recently has a female reader been postulated) will approach the hypothetical task. Older formulae have it that the reader is "the ordinary good and worthy subject of the King"19. Others, more recent, emphasise 15 Drummoyne MC (1990) 21 NSWLR 135 at 150. 16 This is a purpose recognised by international human rights law as a necessary and justifiable derogation from rights to freedom of expression: see International Covenant on Civil and Political Rights, Art 19(3)(a), [1980] ATS 23; cf Joseph, Schultz and Castan, The International Covenant on Civil and Political Rights: Cases, Material and Commentary, 2nd ed (2004) at 541 [18.40]-[18.41]. 17 Joint reasons at [5], citing the reasons of the Court of Appeal. 18 Lewis v Daily Telegraph Ltd [1964] AC 234 at 258; Lang v Australian Consolidated Press Ltd [1970] 2 NSWR 408 at 412. 19 Byrne v Deane [1937] 1 KB 818 at 833. Kirby the ordinariness of the reader20 or a capacity for what is called "right-thinking"21 (whatever that may be). The reader (or listener or viewer) is a person of fair, average intelligence22, who is neither perverse, nor morbid or suspicious of mind23. However, the "ordinary reasonable reader" is a layman, not a lawyer, with a capacity for implication that is much greater than that of a lawyer24. United States authority conceives of the reader as a disembodied member of the "respectable" community generally, as distinct from a member of any sub- group25. The list is nearly endless. It would be preferable to drop this fiction altogether. Judges should not hide behind their pretended reliance on the fictitious reasonable recipient of the alleged defamatory material, attributing to such a person the outcome that the judges actually determine for themselves. Appellate judges and judges in the practice list working under their supervision, should acknowledge candidly the reserve function that judges perform in our legal system in rejecting pleaded imputations that are not reasonably arguable by reference to the matter complained of. If the third party fiction were dropped, it is likely that a new formulation would emerge to explain more precisely and accurately the considerations according to which one imputation is accepted and goes to the tribunal of fact for its decision, and why another is not, so that that tribunal is spared the necessity of considering it. Or why one imputation is held defamatory and another is not. Behind the verbiage of the judicial formulae conventionally used lies a notion related to the respective functions of the judge deciding the acceptability and adequacy of pleadings and the judge or jury deciding the substance of the wrong of which a plaintiff complains26. When such activities are subjected to a functional analysis, the inadequacies of the current incantations emerge in a stark light. 20 Consolidated Trust Co Ltd v Browne (1948) 49 SR (NSW) 86 at 88. 21 Sim v Stretch [1936] 2 All ER 1237 at 1240; Tolley v J S Fry & Sons Ltd [1930] 1 22 Slatyer v The Daily Telegraph Newspaper Co Ltd (1908) 6 CLR 1 at 7. 23 Keogh v Incorporated Dental Hospital of Ireland [1910] 2 IR 577 at 586. 24 Lewis v Daily Telegraph Ltd [1964] AC 234 at 277; Lang v Australian Consolidated Press Ltd [1970] 2 NSWR 408 at 412. 25 Gatley on Libel and Slander, 10th ed (2004) at 42-43 [2.12]. 26 cf Naxakis v Western General Hospital (1999) 197 CLR 269 at 291-294 [61]-[68]. Kirby Because the parties to this appeal presented their arguments by reference to the conventional formulation, this is not the occasion to explore a different approach. However, generally speaking, the law is moving away from fictions and in the direction of substance and reality27. Acknowledging that the formulations of the imputation will have differing significance for the cause of action in defamation in different Australian jurisdictions28, in a proper case, a new explanation for judicial decisions on such questions should emerge. It would abandon fictions and face squarely the purpose of pleading imputations in defamation, and of sometimes disallowing them. Orders Approaching the matters argued in this appeal in the presently accepted (and defective) way, the conclusion stated in the joint reasons is the correct one. I therefore agree in the orders there proposed. 27 cf Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 169-170. 28 cf Drummoyne MC (1990) 21 NSWLR 135 at 149.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Koani v The Queen [2017] HCA 42 Date of Order: 17 August 2017 Date of Publication of Reasons: 18 October 2017 ORDER Appeal allowed. Set aside the order of the Supreme Court of Queensland (Court of Appeal) dated 11 November 2016 and in lieu thereof order that: the appellant's appeal to that Court be allowed; the appellant's conviction be quashed and a new trial be had. On appeal from the Supreme Court of Queensland Representation S C Holt QC with B J Power for the appellant (instructed by Legal Aid Queensland) V A Loury QC with M J Hynes for the respondent (instructed by Office of the Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Koani v The Queen Criminal law – Murder and manslaughter – Act causing death – Where appellant convicted of murder – Where death occasioned by discharge of shotgun held by appellant – Where alternative prosecution case for murder put to jury on basis that shotgun may have discharged as result of unwilled act – Whether unwilled, criminally negligent act or omission can result in conviction for murder where jury satisfied accused possessed intention to kill or inflict grievous bodily harm – Whether breach of duty to use reasonable care and to take reasonable precautions in use and management of dangerous thing can found conviction of murder. Words and phrases – "act causing death", "breach of duty", "criminally negligent", "intention", "intentional offence", "manslaughter", "murder", "omission", "reasonable care", "unwilled act". Criminal Code (Q), ss 289, 302(1)(a). KIEFEL CJ, BELL, GAGELER, NETTLE AND GORDON JJ. On 17 August 20171, at the conclusion of the hearing, the Court made orders allowing the appeal and setting aside the order of the Court of Appeal of the Supreme Court of Queensland dated 11 November 2016. The appellant's conviction was quashed and a new trial was ordered. These are the reasons for making those orders. The question raised by the appeal is whether an unwilled, criminally negligent act can found a conviction for murder under s 302(1)(a) of the Criminal Code (Q) ("the Code") in a case in which the jury is satisfied that the accused possessed the intention to kill or to do some grievous bodily harm. As will appear, the answer is that criminal responsibility for murder under the Code, as under the common law, cannot be founded upon an unwilled act. As will also appear, and contrary to the way the matter was left below, identification of the act that gives rise to criminal responsibility for murder under the Code is not determined on a more confined basis than under the common law. Procedural history and the evidence On 28 October 2015, the appellant was arraigned in the Supreme Court of Queensland (Dalton J) on an indictment that charged him with the murder of his de facto partner, Natalie Leaney, at Rochedale South on 10 March 2013. The appellant pleaded that he was not guilty of murder but guilty of manslaughter. It was common ground that the death of the deceased was occasioned by a single gunshot wound to the head fired from a shotgun, which the appellant was holding. The appellant's plea acknowledged that his failure to use reasonable care and to take reasonable precautions in his use or management of the gun was a gross breach of the duty imposed by s 289 of the Code2. That section provides: "It is the duty of every person who has in the person's charge or under the person's control anything … of such a nature that, in the absence of care or precaution in its use or management, the life, safety, or health, of any person may be endangered, to use reasonable care and take reasonable precautions to avoid such danger, and the person is held to have caused 1 Special leave was granted on 6 April 2017: see [2017] HCATrans 070 per Bell and 2 See Callaghan v The Queen (1952) 87 CLR 115 at 124 per Dixon CJ, Webb, Fullagar and Kitto JJ; [1952] HCA 55. Bell Nettle Gordon any consequences which result to the life or health of any person by reason of any omission to perform that duty." The prosecution declined to accept the appellant's plea in discharge of the indictment and a jury was empanelled and the trial proceeded. On 4 November 2015 the jury returned a verdict of guilty of murder. On 19 November 2015, the appellant was sentenced to life imprisonment for this offence. The evidence at the trial was of a deterioration in the relationship between the appellant and the deceased in the days leading up to her death. The deceased had told a friend that the relationship was over and that the appellant had told her to pack her things. She said she wanted to leave but she was concerned that the appellant would take her property. For his part, the appellant had complained to an acquaintance that he had "found out about [the deceased] screwing around". On Saturday 9 March, the deceased told a work colleague that she and the appellant had had a "huge fight" on the previous day. The next day she sent a message to the same colleague saying that she would not be at work on Monday. On that day the deceased also sent a text message to a friend complaining that the appellant had locked her in their unit. The friend, the friend's partner and the appellant were together at a hotel when the message was received. Following this, the appellant and the deceased exchanged mutually abusive and angry text messages in which the deceased asserted that the lease of the unit was in her name and that she had paid the bond. The appellant returned to the unit, where he was heard arguing with the deceased. An associate, Shea Fenton, arrived, and on entering the unit saw a broken vase on the floor. Fenton heard the appellant say that he would rather "go back to jail or something, I'll shoot you". He saw the appellant pick up a sawn-off shotgun and cartridges from some shelving, open the barrel and load the gun. The appellant and the deceased continued arguing and Fenton heard the appellant say, "I don't give a fuck, I'll kill you … I'll go back to jail". The appellant walked towards the deceased and out of Fenton's sight. Fenton heard a gunshot. He jumped up, entered the loungeroom and saw that the deceased had been shot. In the immediate aftermath of the discharge of the weapon the appellant showed evident signs of distress. He rang the Triple 0 emergency number but was too distraught to complete the call. He was still hysterical when the police arrived. He told the police that he did not know who had shot the deceased but that it was "over drugs". He said that he had accidentally locked the deceased in the unit when he went out. He denied that they had been fighting. He gave an Bell Nettle Gordon elaborate, false, account of two men who had come to the unit to rob him of drugs and money. He said that one was armed with a shotgun which had discharged when he, the appellant, endeavoured to take hold of it. The police found a knife on the floor near a discharged cartridge. They found two other discharged cartridges on the other side of the neighbouring fence. It was the prosecution case that the appellant had placed the knife on the floor and thrown the two shotgun cartridges over the fence to bolster his false account of the robbery. Expert evidence established that the spur of the hammer of the gun had been shortened. This alteration reduced the grip on the hammer and made it more difficult to control when cocking the gun. The gun failed the "hammer slip test": it was prone to discharge when the hammer was released before being fully cocked. To fully cock the gun it was necessary to pull the hammer back 16.8 millimetres. The modifications to this gun, however, meant that it would discharge when the hammer was drawn back as little as 10 millimetres. The rebound safety, which prevents the hammer from falling unless the trigger is simultaneously depressed, was also compromised. The gun could be deliberately fired when cocked by pulling the trigger or it could be deliberately fired by releasing the hammer when it was pulled back by at least 10 millimetres. The shortened hammer spur presented the risk that the shooter's finger might slip off it when cocking the gun, thereby releasing the hammer. The firing pin impression on the discharged, fatal cartridge established that the cartridge had been fired from the gun when the gun was in the fully, or almost fully, cocked position. The gun was between 15 centimetres and 1.25 metres from the deceased, most likely between 45 and 75 centimetres, at the time of discharge. The appellant did not give or call evidence. The way the prosecution case was put at trial The prosecution's principal case at trial was that the appellant discharged the gun deliberately in a fit of rage intending to kill the deceased. The evidence of the capacity of the gun to discharge when not fully cocked as the result of the shooter's finger slipping off the hammer spur led the prosecution to particularise a novel, alternative case: in the event the jury was not satisfied that the discharge of the gun was occasioned by the appellant's willed act, but was satisfied that the deceased's death was caused by the appellant's failure to use reasonable care and Bell Nettle Gordon to take reasonable precautions in his use or management of the gun3, and at the time he intended to kill or to do some grievous bodily harm to the deceased, his guilt of murder would be proved. Defence counsel objected to the prosecution's alternative case, submitting that it was not open to "prove the causation by means of a negligent or reckless act and, at the same time, couple that with an intention to cause a specific result". The trial judge considered that there was a real possibility that the jury might find that the appellant intended to kill the deceased and, to this end, he had loaded and presented the gun at her, and commenced cocking it, but that because of the peculiarities of this gun it may have discharged without him deliberately pulling the trigger or releasing the hammer. Consistently with the way the prosecution case had been particularised, her Honour concluded that under the Code the act for which an accused bears criminal responsibility in a prosecution for murder based on the discharge of a firearm is limited to the pulling of the trigger or another act that deliberately causes the weapon to discharge. Despite her initial reluctance to accept the analysis of the alternative case, her Honour concluded that "it is legitimate for the Crown ... to use section 289 as a component of its murder case essentially to plug the gap left by a reasonable doubt about a willed act". Her Honour was fortified in this conclusion by the 1904 decision of the Full Court in R v Macdonald and Macdonald4. The directions The trial judge distributed a flowchart to the jury encapsulating, relevantly, the two ways in which it was open to reason to the appellant's guilt of murder: 3 Code, s 289. [1904] St R Qd 151. Bell Nettle Gordon 1. Has the Crown satisfied you beyond reasonable doubt that it was by a willed act that the defendant discharged the shot which killed Ms Leaney? Has the Crown satisfied you beyond reasonable doubt that the gun was something that, if care or precaution was not its use or management, the life, safety or health of a person might be endangered? taken Yes Yes Has the Crown satisfied you beyond reasonable doubt that at the time he discharged the shot, the defendant intended either to kill Ms Leaney, or to do her grievous bodily harm? Yes Guilty of murder End of deliberations Not guilty of murder Guilty of manslaughter End of deliberations Has the Crown satisfied you beyond reasonable doubt that the defendant failed to use reasonable care and take reasonable precautions around that danger and that failure caused death? Yes Not guilty of murder Not guilty of manslaughter End of deliberations Not guilty of murder Not guilty of manslaughter End of deliberations Has the Crown satisfied you beyond reasonable doubt that, at the time the gun defendant intended either to kill Ms Leaney, or to do her grievous bodily harm? discharged, the Yes Guilty of murder End of deliberations Not guilty of murder Guilty of manslaughter End of deliberations The jury was instructed that the expression "willed act" was a "pretty specific concept" and her Honour instanced the muscular action of squeezing the trigger. With respect to Question 1, the jury was directed that it was incumbent on the prosecution to exclude beyond reasonable doubt that the gun discharged as the result of the appellant's finger slipping on the shortened spur and releasing the hammer. Bell Nettle Gordon The oral directions concerning the alternative case concluded in these terms: "[I]f you ended up looking at this third question in column 2, you have done it because you had a reasonable doubt about the willed act. You are satisfied that the gun was dangerous. You are satisfied there was not proper care taken. You are satisfied that caused death. And then the Crown case is, well, if at the time the gun discharged there was an intention to kill or do grievous bodily harm, that still results in a murder conviction. … [T]he third question in the second column's almost the same as the intention question in the first column. So I am certainly not going to go through all that evidence again, but it is the same question really except that the question in the second column, the time you have to be satisfied – and this is very important – is the time the gun discharged. Okay. So that is the time you are looking at to find an intention. So it might just be split seconds after, but it is after the cocking of the gun." (emphasis added) The Court of Appeal The appellant appealed against his conviction to the Court of Appeal of the Supreme Court of Queensland (Gotterson JA and Atkinson J; McMurdo P dissenting), contending that it was an error to invite the jury to consider finding him guilty of murder in the event it was not satisfied that the gun was discharged by his willed act. The majority approached the determination of the appeal upon a view that the Code does not expressly confine liability for an unlawful killing caused by a breach of the s 289 duty to manslaughter rather than murder5. In their Honours' view, the fact that a contravention of s 289 does not depend on the existence of murderous intent does not mean that where that intent is present the contravention may not be classified as murder6. Their Honours saw no incongruity in conduct falling below a standard of objective reasonableness being coupled with a specific intent7. In this respect, their Honours considered 5 R v Koani (No 2) [2017] 1 Qd R 273 at 293 [69]. 6 R v Koani (No 2) [2017] 1 Qd R 273 at 293 [71]. 7 R v Koani (No 2) [2017] 1 Qd R 273 at 293-294 [72]. Bell Nettle Gordon objective reasonableness to be quite distinct from the intention with which acts constituting a breach of duty are carried out8. They concluded9: "Where a person who holds a murderous intent towards another picks up a gun to shoot the other person and, as a result of a failure on the person's part to take reasonable care and precaution, the gun discharges, it would be incongruous that, because the gun discharged earlier and not in precisely the way the person intended, the person who kills is guilty of manslaughter and not murder. Such an outcome would be almost paradoxical and would fail sufficiently to take into account the fact that the person unlawfully killed, intending to kill." McMurdo P, in dissent, observed that it was for the jury to determine what willed act or acts were done or not done by the appellant and, if done, whether those acts caused the death10. Her Honour questioned the capacity of a criminally negligent act to result in a conviction for an intentional offence11. In her Honour's view a breach of the objective standard applicable to the duty imposed by s 289 can support only a conviction for manslaughter under s 303, and not murder under s 302(1)(a)12. Murder under the Code It is axiomatic that criminal responsibility is founded on the offender's acts or omissions13. And it is axiomatic in an offence of specific intent that the act or omission and the intent must coincide14. Nothing in the scheme of the Code suggests that it is to be interpreted as departing from either principle. The first is 8 R v Koani (No 2) [2017] 1 Qd R 273 at 294 [72]. 9 R v Koani (No 2) [2017] 1 Qd R 273 at 294 [77]. 10 R v Koani (No 2) [2017] 1 Qd R 273 at 285 [32]. 11 R v Koani (No 2) [2017] 1 Qd R 273 at 285 [37]. 12 R v Koani (No 2) [2017] 1 Qd R 273 at 287 [40]. 13 Ryan v The Queen (1967) 121 CLR 205 at 213; [1967] HCA 2. 14 Ryan v The Queen (1967) 121 CLR 205 at 215-218; Royall v The Queen (1991) 172 CLR 378 at 393, 401, 414, 420-421; [1991] HCA 27; Meyers v The Queen (1997) 71 ALJR 1488 at 1489; 147 ALR 440 at 441-442; [1997] HCA 43. Bell Nettle Gordon expressly recognised in s 2, which states that an act or omission which renders the person doing the act or making the omission liable to punishment is called an "offence"15. A difficulty with the prosecution's alternative case is illustrated by the instructions in the second column of the flowchart. On this case, the omission which caused the death of the deceased was the appellant's failure to use reasonable care and to take reasonable precautions in his use or management of the gun (the second question). Nonetheless, the jury was directed that the time at which it was necessary to be satisfied that the appellant possessed the intention to make his omission murder was the time the gun was discharged (the third question). The temporal shift from the negligent omission to the discharge underscores that the intention of which the jury was required to be satisfied was unrelated to the negligent failure which caused the death of the deceased. Section 23(1)(a) states a general principle of criminal responsibility in these terms: "Subject to the express provisions of this Code relating to negligent acts and omissions, a person is not criminally responsible for – an act or omission that occurs independently of the exercise of the person's will; …" A person who causes the death of another, directly or indirectly, is deemed to have killed that other person16. A killing that is not authorised, justified or excused by law is unlawful17. An unlawful killing is a crime which is either murder or manslaughter depending on the circumstances of the case18. 15 See R v Falconer (1990) 171 CLR 30 at 38 per Mason CJ, Brennan and McHugh JJ; [1990] HCA 49. 16 Code, s 293. 17 Code, s 291. 18 Code, s 300. Bell Nettle Gordon The only circumstances in which an unlawful killing constitutes the crime of murder are the five circumstances stated in s 302(1); an unlawful killing in any other circumstance is manslaughter19. Relevantly, s 302(1)(a) provides: "Except as hereinafter set forth, a person who unlawfully kills another under any of the following circumstances, that is to say – if the offender intends to cause the death of the person killed or that of some other person or if the offender intends to do to the person killed or to some other person some grievous bodily harm; is guilty of 'murder'." Section 302(1)(a) is not the statement of a free-standing mental element of criminal responsibility that can be attached to a negligent act or omission. The elements of the offence of murder for which s 302(1)(a) provides require the prosecution to prove that the unlawful killing was caused by an act or omission of the accused that was done or omitted to be done with the intention thereby of to some other person. causing death or some grievous bodily harm Section 302(1) is not an express provision of the Code relating to negligent acts or omissions for the purposes of s 23(1)(a): the offence of murder is not exempted from the rule that a person is not criminally responsible for an act or omission that occurs independently of the exercise of the person's will. Macdonald and Macdonald provides no support for the contrary conclusion. Mr and Mrs Macdonald were convicted of wilful murder of Mr Macdonald's 14-year-old daughter from a previous marriage in circumstances in which they were found to have intentionally starved the child to death in breach of the duty imposed by s 285 of the Code to provide her with the necessaries of life20. As Lucas J observed in R v Young, the conduct in Macdonald and Macdonald involved a deliberate, as opposed to a negligent, breach of duty21. By contrast, it is incongruous, as McMurdo P recognised, to attach a requirement for proof of intent to conduct which is made an offence 19 Code, s 303. 20 R v Macdonald and Macdonald [1904] St R Qd 151. 21 R v Young [1969] Qd R 417 at 442. Bell Nettle Gordon because it is conduct that falls short of an objectively determined standard of reasonableness22. It was an error of law to leave the prosecution's alternative case for the jury's consideration. Since there is to be a new trial it is appropriate to say something about the trial judge's ruling on the identification of the "act" to which criminal responsibility attached. The act causing death As the appellant's submissions in this Court acknowledge, the perceived need to leave the alternative case in order to "plug [a] gap" in the Code was based on a misconception that the "act" to which criminal responsibility attaches under the Code in a firearms case is confined to the act of pulling the trigger or, in the case of this gun, the act of releasing the hammer. the act for Identification of the purpose of attributing criminal responsibility for the consequences of the discharge of a firearm has been variously formulated in decisions concerned with the common law requirement that the accused's act is voluntary23 and in the Griffith Code jurisdictions under provisions equivalent to s 23(1)(a)24. As Windeyer J observed in Vallance v The Queen, to wound a person by discharging a firearm is "a complex act, involving loading the piece, cocking it, presenting it, pressing the trigger"25. His Honour returned to this analysis in Ryan v The Queen, observing that26: "The conduct which caused the death was of course a complex of acts all done by the applicant – loading the rifle, cocking it, presenting it, 22 R v Koani (No 2) [2017] 1 Qd R 273 at 286 [39]. 23 Ryan v The Queen (1967) 121 CLR 205. 24 Vallance v The Queen (1961) 108 CLR 56; [1961] HCA 42; R v Falconer (1990) 171 CLR 30. 25 (1961) 108 CLR 56 at 80. 26 (1967) 121 CLR 205 at 245. Bell Nettle Gordon pressing the trigger. But it was the final act, pressing the trigger of the loaded and levelled rifle, which made the conduct lethal." The issue in Ryan was whether a reflex action in pressing the trigger of a loaded rifle which was being pointed at the deceased was Ryan's willed act. Windeyer J considered that phrases such as "reflex action" and "automatic reaction" had no application to the case of a fully conscious man who had put himself in a situation in which he had his finger on the trigger of a loaded rifle levelled at another27. His Honour held that, in such a circumstance, pressing the trigger in an immediate response to a sudden threat did not deprive the act of its voluntary character. Barwick CJ's preference was for the discharge of the rifle as the act causing death since it would be open to consider that a reflex action, pressing the trigger, was not Ryan's willed act28. Nonetheless, his Honour emphasised that the choice of the act causing death is a factual one for the jury29, and it was open to find that Ryan's act in presenting the gun in all circumstances might be found to be the act causing death. In their joint reasons, Taylor and Owen JJ said that it was impossible to isolate the act of pressing the trigger from the other circumstances and to contend that it alone had caused the death of the deceased. Their Honours doubted that it was open to the jury to conclude that the act causing death was other than voluntary30. This conclusion took into account that an attempt at resistance by the deceased might have been expected. Menzies J rejected that the act causing death could be confined to "the mere pressing of the trigger to discharge the rifle"31. The issue arose in R v Falconer in the context of a provision of the Criminal Code (WA) that is in the same terms as s 23(1)(a). In their joint reasons, Mason CJ, Brennan and McHugh JJ rejected that the act causing death is confined to "merely a muscular movement of the accused's body (the contraction 27 Ryan v The Queen (1967) 121 CLR 205 at 245. 28 Ryan v The Queen (1967) 121 CLR 205 at 217-218. 29 Ryan v The Queen (1967) 121 CLR 205 at 218. 30 Ryan v The Queen (1967) 121 CLR 205 at 231. 31 Ryan v The Queen (1967) 121 CLR 205 at 233. Bell Nettle Gordon of the trigger finger)"32. The "act" was characterised as the discharge of the loaded gun33. Falconer was concerned with non-insane automatism and no more precise analysis of the act giving rise to criminal responsibility was required. As Gaudron J observed in Murray v The Queen, to describe the act causing death in a firearms case as the discharging of the firearm is to conceal a number of difficulties34. It was Gaudron J's analysis in Murray which led the trial judge to conclude that the "act" for the purposes of attributing criminal responsibility in a firearms case is more narrowly confined under the Code than the "act" causing death which was considered in Ryan. The trial judge referred in this respect to Gaudron J's statement35: "Unlike s 18(1) of the Crimes Act 1900 (NSW), as it stood at the time of the decision in Ryan, the definition of murder in s 302(1) of the Code contains no provision permitting a person to be convicted of murder simply for an act done with reckless indifference to human life or done in an attempt to commit or during or immediately after the commission of an act obviously dangerous to human life. Thus, if the act causing death in this case were to be identified as simply presenting the loaded shotgun, that might constitute manslaughter by negligent act, but it would not constitute murder." (footnotes omitted) In this passage Gaudron J was distinguishing Taylor and Owen JJ's conclusion, which it will be recalled took into account that the circumstances in which the gun was discharged in Ryan included that an attempt at resistance by the deceased might well have been expected36. Gaudron J did not suggest that the act causing death in a firearms case was confined to the pulling of the trigger. Like Barwick CJ in Ryan, her Honour was of the view that "it is for the jury to determine what act or acts were done by the 32 R v Falconer (1990) 171 CLR 30 at 39. 33 R v Falconer (1990) 171 CLR 30 at 39. 34 (2002) 211 CLR 193 at 197 [9]; [2002] HCA 26. 35 Murray v The Queen (2002) 211 CLR 193 at 199 [15]. 36 Murray v The Queen (2002) 211 CLR 193 at 199 [14] citing Ryan v The Queen (1967) 121 CLR 205 at 231. Bell Nettle Gordon accused and whether they or any of them caused death"37. Consistent with that view, her Honour's analysis was posited on the importance of considering the operation of s 23(1)(a) in the context of the precise facts of a given case. Shortly stated, the facts on Murray's account of the fatal shooting were that he was holding a loaded rifle at waist height, intending to frighten the deceased, when as the result of a sudden movement by the deceased and something striking Murray on the head, the rifle discharged38. Far from doubting the application of Windeyer J's analysis of the voluntary nature of the "act" in Ryan to criminal responsibility under the Code, Gaudron J expressed her preference for it39. Indeed, Gaudron J said that the directions given to the jury were unduly favourable to the defence because they excluded consideration of whether, if Murray pressed the trigger as the result of a "reflex or automatic motor action", it was an unwilled act40. Kirby J characterised the relevant "acts" in Murray as "whatever [Murray] did to cause the gun to discharge"41. Callinan J considered that everything that had relevantly occurred before the "act", including the earlier relations between Murray and his victim, and Murray's acts in placing himself in the position that he did, said much about whether the act was a willed act or not42. His Honour considered that there may be cases in which a sequence of acts is so interconnected, or an act in the sequence has so inevitable an outcome, that to treat the ultimate act as the "act" for the purposes of s 23(1)(a) would be artificial and unrealistic43. Gummow and Hayne JJ in their joint reasons cautioned against an overly refined analysis of the "act". Their Honours observed that the discharge of a gun comprises a number of movements: loading it, cocking it, presenting it and firing it. In their Honours' view, there was no basis for a 37 Murray v The Queen (2002) 211 CLR 193 at 198 [13]. 38 Murray v The Queen (2002) 211 CLR 193 at 204 [32]. 39 Murray v The Queen (2002) 211 CLR 193 at 200 [16]. 40 Murray v The Queen (2002) 211 CLR 193 at 201 [22]. 41 (2002) 211 CLR 193 at 219 [78(3)]. 42 Murray v The Queen (2002) 211 CLR 193 at 236 [148]. 43 Murray v The Queen (2002) 211 CLR 193 at 236 [149]. Bell Nettle Gordon conclusion that, taken as a whole, the set of movements in that case was not willed44. Whether it is necessary to direct the jury in the terms of s 23(1)(a) will depend upon the facts of the case. Here, the evidence of the peculiarities of the gun was considered to require the direction. It remains that the determination of what constituted the act causing death was a factual one for the jury. The directions wrongly confined the jury's consideration of the issue. The unchallenged evidence was that the appellant presented a loaded gun to the deceased at a distance of not more than 1.25 metres and that the resulting discharge could not have occurred unless the appellant had exerted pressure on the hammer, pulling it back at least to the almost fully cocked position. As McMurdo P recognised, it was open to the jury to find that the appellant's actions in loading the gun, presenting it to the deceased and pulling back the hammer were connected, willed, acts, which caused the death of the deceased, notwithstanding that the prosecution had not excluded the possibility that the appellant's finger slipped on the shortened spur of the hammer before he completed the action. In this event, it was necessary for the jury to consider whether on the whole of the evidence the prosecution had excluded the reasonable possibility that the appellant acted only to frighten the deceased and not with murderous intention. Plainly enough, the capacity of the gun to discharge as the result of the appellant's finger slipping from the hammer spur was also relevant to the latter determination. 44 Murray v The Queen (2002) 211 CLR 193 at 210-211 [50]-[53].

HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT RESPONDENT The Queen v Abdirahman-Khalif [2020] HCA 36 Date of Hearing: 3 September 2020 Date of Judgment: 14 October 2020 ORDER Appeal allowed. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 31 October 2019 and, in their place, order that the respondent's appeal against conviction be dismissed. On appeal from the Supreme Court of South Australia Representation S M McNaughton SC with P J Doyle and C J Tran for the appellant (instructed by Director of Public Prosecutions (Cth)) M E Shaw QC with B J Doyle for the respondent (instructed by Caldicott Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Abdirahman-Khalif Criminal law (Cth) – Terrorism – Membership of terrorist organisation – Where respondent convicted of offence of intentionally being member of terrorist organisation contrary to s 102.3(1) of Criminal Code (Cth) – Where s 102.1 provided "member" of terrorist organisation includes person who has taken steps to become member of organisation – Where respondent detained attempting to travel to Turkey – Where respondent's seized electronic devices contained extremist material produced by and expressing support for Islamic State – Where respondent accessed websites containing practical advice for women travelling to Islamic State-controlled territory – Where expert evidence adduced at trial as to nature, aims and ideology of Islamic State – Where conviction quashed on appeal – Whether Crown required to adduce evidence of process by which Islamic State recruited, inducted and accepted members – Whether trial judge misdirected jury as to physical and mental elements of offence – Whether summing up unbalanced. Words and phrases – "absence of a constitution or rules of membership", "criteria of membership", "elements of the offence", "Islamic State", "member of a terrorist terrorist organisations", organisation", "membership process", "nature of "organisation", "physical and mental elements", "preparatory or anticipatory acts", "proof of membership", "steps to become a member", "terrorism", "terrorist act", "terrorist organisation", "unbalanced summing up". Criminal Code (Cth), ss 100.1, 102.1, 102.3. BELL, KEANE, NETTLE AND GORDON JJ. This is an appeal against a judgment and orders of the Full Court of the Supreme Court of South Australia, sitting as the Court of Criminal Appeal (Kourakis CJ and Parker J, Kelly J dissenting), quashing the respondent's conviction of an offence of intentionally being a member of a terrorist organisation contrary to s 102.3(1) of the Criminal Code (Cth) ("the Code"). The principal issue arising on the appeal is whether the majority of the Full Court erred in holding that the evidence that the Crown adduced at trial was incapable of sustaining the conviction because it did not establish how members of the organisation were recruited or selected, or the process by which members were inducted and finally accepted into the organisation. For the reasons which follow, the majority did so err, and the appeal should be allowed. The facts The respondent was born in Kenya, in a refugee camp in Utanga, on 1 January 1995. She later moved with her family to Kakuma Refugee Camp in Northern Kenya, where she remained until she immigrated to South Australia with her mother and brothers in 2009. She lived with her mother and brothers in an Adelaide suburb and was schooled, first, at the Adelaide Secondary School of English, then at the Islamic College of South Australia and, finally, in years 11 and 12, at the Roma Mitchell Secondary College. She completed year 12 at the end of 2013. While attending the Islamic College, she was generally regarded as a high achiever, and a very high achiever in Arabic, with a genuine interest in Islamic religious studies. She identified as a Sunni Muslim. In January 2014, she began to study for a Diploma in Science and Technology (which is a pathway toward studying nursing) at the University of South Australia, but in March 2016 she ceased study before completion of the course. She became an Australian citizen on 6 May 2015. On 13 July 2016, unbeknown to her family, and using almost all her savings, the respondent purchased a one-way ticket for a flight from Adelaide to Istanbul, Turkey, departing the next day, at a cost of approximately $1,200. On the next day, without telling her mother and brothers, she went to Adelaide Airport with only carry-on luggage, her passport and her certificate of Australian citizenship. She had with her just $180 in cash, and, with only $14.38 remaining in her bank account, she had no means of purchasing a return ticket. She was detained by Australian Border Force officers at the airport and interviewed by Australian Federal Police ("AFP") officers. When asked why she was intending to fly to Turkey, she answered that she was going on a holiday and had booked two nights' accommodation in a hotel at a cost of $74, which she Bell NettleJ intended to pay out of the cash she had with her. She also said that she had watched videos on YouTube (a video streaming website) of people working for aid organisations and suggested that she might find work of that nature, although she did not know any more details of it than that. The respondent's mobile phone was seized by the AFP and found to contain propaganda and other extremist material produced by and expressing support for Islamic State1. For example, in a blog post downloaded to the respondent's phone, dated 23 November 2014, appeared the following: "We believe in humbling ourselves before the Prophet Muhammad, and that it is haram to ignore his words. And it is haram to make Takfeer upon those who have earned the highest of degrees and the noblest of positions, of which are the four rightly-guided caliphs (Abu Bakr, Umar, Uthman [and] Ali ), the Sahabah (companions of the Prophet), and members of his household. We believe that Jihad fisabilillah (fighting in the path of Allah) is an obligation upon every single Muslim in the effort to liberate occupied Muslim lands. And that the obligation of jihad is one that is constant, to be performed under the commands of a righteous leader or even one that is a sinner, and the biggest sin after Kufr (disbelief in Allah ) is to reject or hinder Jihad fisabilillah at a time when it is made Wajib (obligatory) upon every single Muslim. Imam Ibnu Hazm said: 'There is not a sin after (the sin of) Kufr which is worse, than the sin of one who prevents Jihad against the disbelievers when it is commanded by Islam, and that is the hindering of the Muslims to perform Jihad against the disbelievers with the excuse that a Muslim may be a Fasiq (venial sinner), though this (character of a Fasiq) is not considered as a justification (to prevent jihad).' Islamic State is a terrorist group based predominantly in Iraq and Syria that adheres to an extreme Salafist ideology and advocates, by way of dissemination of propaganda, for violent global jihad against the kuffar (non-believers) and enemies of Islam: see [29]-[33], [47] below. Bell NettleJ And since the Muslim countries of today are ruled by the laws of the Tawagheet (tyrants) and disbelief, we are convinced of the Kufr and apostasy of the rulers of these lands and their military forces. And to fight them is more obligatory than to fight the leaders of the cross (Crusaders), and we give warnings and reminders that we will fight the forces (whose apostasy and loyalty to the disbelievers are clear) that fight the Islamic State, even if they call themselves with the names of the Arabs or Islam. We hold that those who preceded us in (leaving for) Jihad, they are those who are honoured, and it is our responsibility to support (taking care and be of service to) the families of the Mujahideen and their properties. Rasulullah said: 'Whoever provides for a fighter in the cause of Allah has actually fought, and whoever takes care of the family of a fighter has actually fought.'" AFP investigators identified 1,614 image files, 379 audio files and 127 video files of interest on the respondent's mobile phone. One image file depicted the respondent in Islamic dress with a right index finger raised, which evidence adduced at trial established is a salute used by Islamic State members. It was also ascertained that, before purchasing the ticket to Turkey, the respondent had used her mobile phone on a number of occasions to communicate with three Kenyan women referred to as "the Baaqiya sisters". After examination, the mobile phone was returned to the respondent and she was allowed to leave the airport. Within 20 minutes of the phone being returned to her on 18 July 2016, the respondent used it to warn one of the Baaqiya sisters not to contact her. On 11 September 2016, the Baaqiya sisters committed a terrorist attack at Mombasa police station in the name of Islamic State, in which they were killed. Islamic State later claimed responsibility for the attack. On 22 September 2016, a search warrant was executed at the respondent's home and investigators again seized her mobile phone, as well as a laptop computer. Analysis of the seized phone revealed that, since the respondent's release from the airport, she had used the phone to download more Islamic State material and extremist propaganda, and analysis of the seized laptop established that, at least between 21 July 2015 and 27 July 2015, the respondent had used another device to access blogs about Islamic State, hijrah (religious migration to the territory controlled by Islamic State) and practical advice for women travelling Bell NettleJ to Islamic State-controlled territory, which at that time included regions of Syria and Iraq. Among the many discovered blog posts discussing hijrah downloaded by the respondent, the following appeared as part of a blog post dated 17 June 2015 authored by Abu Sa'eed Al-Britani (from a video entitled "Message Of A Mujahid"): "Due to the heavy propaganda of the western media, many sisters start to question whether it is safe to live in Sham as a Muhajirah. ... Every Muhajir is treated with honor by the State and is provided for in all spheres of life. We get free medical care, free hospitals, free schooling for kids, free accommodation, free healthcare, no water and electricity bills, monthly stipends to all Muhaajirs (both males and females), and the list goes on." In a further post, of 22 July 2015, appeared the following, apparently also authored by Abu Sa'eed Al-Britani (also from a video entitled "Message Of A Mujahid"): "In migrating to Sham you are benefitting yourself both in this life and in the hereafter. Allaah has commanded us to migrate to Dar Al-Islam from Dar Al-Kufr, and this is an obligation which we are sinning if we do not do. ... In Dar Al-Kufr, a Muslimah is subjugated to the many oppressive laws which control her ... In Sham however, a Muslimah is given her full rights and she is not seen as an object of enjoyment by the public but rather as a dignified sister. ... There are many questions which a sister needs to reflect upon if she is in doubt about doing hijrah to Dar Al-Islam. I hereby present to you the following cases for you to ponder over. Ask yourself ... Would you want to live in a society where the police and MI5 are constantly hassling your family, or would you want to live in a place where you can openly talk about Jihad without any repercussion? These are just some of the questions which a sister needs to ponder over if she is having any second thoughts about doing Hijrah to Dar Al-Islam here in Sham. ... Furthermore, by migrating to Sham you are not just benefitting yourself but you are also benefitting the Islamic State in its expansion and advancement. By raising your kids here, you are increasing its population and hence creating more Mujaahideen of the future. A society cannot survive without inhabitants and just by you living in Sham you are helping its economy grow. Likewise, by living in Dar Al-Kufr, you are indirectly helping the society advance. ... So Bell NettleJ come to the aid of your religion and State and secure an Islamic lifestyle for yourself and your future offspring here in Dar Al-Islam." Among the posts containing practical advice for women undertaking hijrah was a post of 28 March 2015 containing the following: "Heres a list me and group of sisters here made of what you should pack on your hijrah to the Islamic state. May Allah bring anyone who is sincere here safe and welll yar rab. [There followed an extensive list of clothes and other personal effects.] Make sure you put a lock on your suitcase and would recommend you take a hard suitcase ~ some brothers and sisters had stuff stolen from their suitcases at the crossover don't uninstall your whatsapp/telegram [Telegram is an instant messaging service for the transmission of encrypted messages] for the journey you won't be able to get it back for a long while until you get a new number. ... Dont worry about bringing food you'll be fed well here ... Put your khimars abayas niqabs gloves etc in your HAND LUGGAGE very important cos when you get to dawlah you'll be putting it on straight away in sha Allah. When you arrive you'll be taken straight to the maqqar females stopped off first. Remember to bring some turkish money with you~ for taxis, food etc depending how long you'll be staying there For amniyaat delete all your islamic stuff from your electronics (its hard I know) rip up any Islamic notes or anything incriminating at home so ur family won't figure out where you went the minute you've gone. Remember you will be running in your hand luggage across the border so be smart~ you need back pack. And if you have a suitcase DONT carry many items as hand luggage.. you will regret it. handbags will only weigh you down. The night we crossed the border it has rained during the day so running in deep wet mud tripping every so often isn't fun so good boots is a must. Bell NettleJ Keep your quran audios this will keep you saneee (delete everything else islamic tho)". In another post, dated 22 July 2015, apparently by the same author, appeared the following: "2. WHAT HAPPEN NEXT AFTER I'VE CROSSED THE BORDER? Staying in Makkar is quite challenging due to many factors. Sometimes it can be overcrowded. Less privacy, sharing restroom and etc. But you'll be taken care. As long your stay in Makkar, you're not allowed to go out and this is due to many reasons. Although it's safe to go out, but the authority has responsible over you until your mahram comes to you. Lets say if you need something, you can simply tell to the sister-in-charge and she will get it for you. I would like to advice you to be patient because sometimes the stay prolonged but you have to keep in mind that Dawlah really have set some paperwork regarding this matter. Alhamdulillah, dawlah able to infiltrate true muhajir and undercover spy during their stay in Makkar. 3. SO IF I'M NOT MARRIED I CAN'T GET OUT FROM MAKKAR? Sisters, first and foremost I would like to remind you that you have pledge allegiance to Caliph and to obey him is a must *unless he disobey Allah and His Messenger* The caliph has set some protocols and there are reasons behind it. So rather than provoking, accept it." A covert listening device was installed in the respondent's bedroom and later captured the respondent listening to lectures and sermons containing extremist Islamic teachings, nasheeds (Islamic chants)2, with which the respondent sometimes sang along, and conversations in which the respondent expressed views consistent with conservative extremist Salafist beliefs and support for the Baaqiya sisters. During one of the captured conversations, the respondent said that one of 2 Dr Roger Shanahan gave evidence that, more particularly, a nasheed is a "sung version of Arabic poetry" that had been appropriated by Islamic State for use in its propaganda materials. Bell NettleJ the Baaqiya sisters had provided advice about "hiding the passport somewhere, checking things all the house, she gave me all ideas". The listening device also captured the respondent swearing a bay'ah (a pledge of allegiance) to Abu Bakr al-Baghdadi, then the leader of Islamic State, in these terms: "I give my allegiance Sheik Abu Bakr al Baghdadi to listen and to obey in good time and bad time, prosperous time, in time of hardship we apply altruism for him and we will not to try to take the authority from the leaders, unless we see a clear disbelieving from them, and we got a clear evidence from god. We give our allegiance to migration and jihad. ... The Islamic State is lasting, lasting ..." On 8 February 2017, the respondent was interviewed again by AFP officers and was asked about various documents which had been located during the earlier execution of the search warrant on her home, including as to why she was in possession (on her laptop and mobile phone) of graphic material that was branded as "al-Hayat" (the Islamic State media outlet) and marked as having emanated from the leader of Islamic State. The respondent denied that her Islamic beliefs accorded with the way in which Islamic State operated. On 23 May 2017, the respondent was arrested and interviewed again by the AFP and ultimately charged with intentionally being a member of a terrorist organisation, namely, Islamic State, between 14 July 2016 and 23 May 2017, contrary to s 102.3(1) of the Code. Relevant statutory provisions Section 100.1(1) of the Code defines an "organisation" as a body corporate or an unincorporated body, whether or not the body: is based outside Australia; or consists of persons who are not Australian citizens; or is part of a larger organisation." A "terrorist organisation" is defined in s 102.1(1) as: an organisation that is directly or indirectly engaged in, preparing, planning, assisting in or fostering the doing of a terrorist act; or Bell NettleJ an organisation that is specified by the regulations for the purposes of this paragraph (see subsections (2), (3) and (4))." A "terrorist act" is relevantly defined in s 100.1 as "an action or threat of action" to cause serious harm that is physical harm to a person or serious damage to property, cause death, endanger life, create a serious risk to health or safety of the public or a section of the public, or seriously interfere with or disrupt an electronic system, where, relevantly, the action is done or the threat is made with the intention of "advancing a political, religious or ideological cause" and "coercing, or influencing by intimidation" the government of the Commonwealth or of a State, Territory or foreign country, or intimidating the public or a section of the public. Section 102.1(1) of the Code defines "member of an organisation" as including: a person who is an informal member of the organisation; and a person who has taken steps to become a member of the organisation; and in the case of an organisation that is a body corporate – a director or an officer of the body corporate." Section 102.3 creates the offence of membership of a terrorist organisation in the following terms: "(1) A person commits an offence if: the person intentionally is a member of an organisation; and the organisation is a terrorist organisation; and the person knows the organisation is a terrorist organisation. Penalty: Imprisonment for 10 years. (2) Subsection (1) does not apply if the person proves that he or she took all reasonable steps to cease to be a member of the organisation as soon as practicable after the person knew that the organisation was a terrorist organisation." Bell NettleJ The Crown case at trial The Crown case at trial was that the respondent had intentionally taken steps to become a member of Islamic State, and was thus a member of Islamic State in contravention of s 102.3(1) of the Code by reason of para (b) of the definition of "member" in s 102.1(1) of the Code. It was not in issue that Islamic State was a "terrorist organisation" within the meaning of s 102.1 of the Code. There were agreed facts that Islamic State was an organisation and a terrorist organisation; that from approximately 2006 onwards, including in its predecessor organisations, it did, on an ongoing basis, directly and indirectly engage in preparing, planning, assisting in or fostering the doing of various terrorist acts; and that, during the period encompassed by the charge, Islamic State was lawfully specified under the Criminal Code (Terrorist Organisation – Islamic State) Regulation 2014 (Cth) as a terrorist organisation. The Crown provided six particulars of conduct in which the respondent was alleged to have engaged as constituting the steps that she had intentionally taken to become a member of Islamic State. They were: Attempting to travel on a one-way ticket to Istanbul, Turkey in order to engage with Islamic State. Possessing and accessing material promoting Islamic State and violent jihad. Communicating with members of Islamic State. Pledging an oath of allegiance (bay'ah) to the then leader of Islamic Expressing support for Islamic State and violent jihad including by recitation of Islamic State and extremist nasheeds. Self-identification as a "muwahideen", a term used as an identifier by Islamic State members. In proof of those particulars, the Crown adduced evidence of the respondent's purchase of the international flight to Turkey, her detention at the airport, the records of her interviews with AFP officers, transcripts of audio files captured by listening devices and the fact of the seizure and analysis of the contents of her electronic devices. The Crown also tendered a representative sample of videos drawn from 62 video files depicting extreme violence found on the respondent's mobile phone and two representative samples of image files stored in Bell NettleJ the respondent's mobile phone. The representative sample of the video files was played to the jury. The files consisted of Islamic State propaganda containing exhortations to migrate to Islamic State and join Islamic State's jihad, as well as extreme violence, including numerous executions. The two representative samples of images also largely consisted of Islamic State and other jihadist propaganda. The Crown adduced further evidence, extracted from the respondent's electronic devices, that the respondent had engaged in Telegram "chat groups" with the Baaqiya sisters and that, in those "chat groups", the respondent used an image of an assault rifle nestled in flowers as her profile picture (as noted above, Telegram is an instant messaging service for the transmission of encrypted messages). The Crown tendered the records of each of the respondent's three interviews with AFP officers. As will be recalled, in the first of those interviews, the respondent said she was going to Turkey for a holiday and possibly to do aid work, and added that she "wasn't planning to go like into Syria". In the second, she confirmed that she had Arabic language skills, and answered questions about a document seized from her possession which bore the handwritten words "Syria" and "I love you". In the third interview, she was asked about various files found on her seized devices and her use of certain apps, including Telegram. She denied attempting to travel to join Islamic State, supporting it, or believing in its version of Islam. The Crown also adduced expert evidence from Dr Roger Shanahan about the nature and activities of Islamic State. As will be seen, the capacity of Dr Shanahan's evidence to sufficiently illuminate what may or may not amount to membership of Islamic State was a matter of contention before the Full Court and this Court. In brief substance, Dr Shanahan's testimony was that Islamic State was an organisation that saw the world in conflictual terms, as divided between Islam and the enemies of Islam. Its members followed an extreme Salafist ideology according to which it is each member's individual religious obligation to wage jihad against the enemies of Islam, with the aim of imposing strict Sharia law on the territory controlled by Islamic State, as it was then, and as it was aimed to expand through offensive global jihad and strategic alliances. Members saw themselves as literally building a state in which Islamic law would prevail, which was to be populated by believers and in which services and support would be provided to members. Hence, the Islamic State motto, "remaining and expanding". As Dr Shanahan put it: "[T]hey wanted to control and administer this rump territory that they had won by force of arms and they wanted to expand it, expand it on the ground militarily but also expand it through achieving allegiance from groups in other countries." Bell NettleJ Dr Shanahan further explained that Islamic State sought to call Muslims from abroad to come to the areas controlled by Islamic State to help build Islamic State, and sought not just fighters (jihadis) but also doctors, engineers, and women. Migration to Islamic State was conceived of as a religious duty for both men and women. The women were recruited to provide support to the jihadis, and produce and raise children in the appropriate Islamic way in order to build up Islamic State with the indoctrinated youth of the next generation. As Dr Shanahan explained, that accorded to the motto "remaining and expanding", because, "[i]f you've got children as part of your organisation, you're looking at generations of Islamic State not just the here and now". And, as he said, "if you're trying to produce the ideal Islamic society, you also want the ideal Islamic woman as well ... somebody who is ideologically attuned to creating the Islamic State". In order to communicate with its followers and attract recruits, Islamic State used social media and had "online recruiters for other women to travel to Islamic State held territory". Dr Shanahan referred to evidence that women who had found their way to Islamic State-held territory maintained social media profiles for the purposes of being contacted by and recruiting other women. Dr Shanahan further gave evidence that, although there was no template for the pledge of allegiance (bay'ah) that the respondent recited to Abu Bakr al-Baghdadi – it is "an individual oath of allegiance" – the effect of a bay'ah is to undertake to follow the directions of the person to whom it is given, and Islamic State had asked that the bay'ah be given to Abu Bakr al-Baghdadi, as the respondent did. Dr Shanahan also explained the significance of the respondent's one-finger salute to be that the notion of "tawheed" – the unity of God – is central to Islam in general, and to Salafists in particular. "Muwahideen" are people who follow the notion of tawheed, and, although "muwahideen" is not a very common term, members of Islamic State in particular refer to themselves often as muwahideen. The one-finger salute with the right index finger upwards is imagery for identifying as a muwahideen and asserting the tawheed. Dr Shanahan stated that the Telegram app, which was found on the respondent's mobile phone, was "often used by Islamic State" as a mode of communication between members of Islamic State and as a means of publicly claiming responsibility for jihadist attacks. Dr Shanahan also referred to the significance of nasheeds. Dr Shanahan explained that they have "a traditional function" as a form of chanted Arabic poetry, but "[w]hat Islamic State has done has taken that form and turned it into another social media platform for them". On the basis of that evidence, the Crown went to the jury in closing address as follows: Bell NettleJ "In the circumstances of this organisation, the Crown says that a person can be a member without undertaking any formal process, without being on a register, without submitting themself for approval of the membership of the organisation. What the Crown [says is that] a person can be a member and is a member of [Islamic State] if that person knows of and agrees with and embraces the ideology and aims of the organisation and participates or takes steps to participate in advancing those aims and ideology and goals for the organisation. So if a person knows of, agrees with and embraces the ideology and aims of the organisation and with intention, for example, puts into place steps to head off to Syria and Iraq or undertakes a pledge to participate in the advancement by offering obedience to the directives of the leaders, the Crown says that that person is taking steps to become a member of the organisation. [T]he Crown says the effect of [Dr Shanahan's evidence] is that the goals – the initial, the primary aim of Islamic State was literally to build a State operating on the basis of Shariah law to gain, to hold and expand physical territory in the area of the Middle East, in particular parts of Syria and Iraq and also some surrounding areas through allegiances that it makes or receives from other organisations but primarily to take an area of land, a patch of dirt in the Middle East and say 'This is our State. It's going to operate in the way in which we want it to operate and it's going to remain and expand' and you'll recall the motto I think Dr Shanahan used, the [Islamic State] motto was 'baqiya wa tatamadad', remaining and expanding. In order to establish that State on the ground in the Middle East the leadership of Islamic State required people, it required members and obviously it required fighters, people who would come to Islamic State and fight to gain territory, fight to hold territory and it also needed other people to come. I think Dr Shanahan mentioned engineers, doctors and nurses but it also needs women ... If you're going to develop a State you need women to, according to the notions of this organisation, you need women to participate in this State, whether as wives of fighters, nurses or whatever. They need the participation of female members of Islamic State. The second part or the second arm, if you like, of the dual aims was this notion of engaging in offensive jihad and that is the sort of thing that we hear about in the West all too often, that is taking the fight to the West and the sorts of calls or exhortations that are made by the leadership to kill Bell NettleJ Westerners in the same way that Westerners were killing Muslims and you will remember the speech that Dr Shanahan referred to by a person by the name of Abu Mohammad al-Adnani where he said this, this is al-Adnani said in September 2014: 'You must strike at the West. If you can kill a disbelieving American or European, especially the filthy French or an Australian or a Canadian, or any other disbeliever from the disbelievers waging war then you should do it and kill them in any way that you could.' So bearing in mind those ideologies ... Let me say this: if a person who wholly embraced the ideology and aims of [Islamic State] in its development of an Islamic State in the territory it took by force and violence in Syria and Iraq actively participated in achieving those aims by going to Syria, Iraq, to assist in holding or expanding the territory by being a fighter, that person would be a member. Likewise if a woman, who agreed with and embraced the ideology and goals of [Islamic State] and the creation of the Islamic State and was a participant in those goals within the territory taken by Islamic State by, for example, marrying or supporting a fighter, or nursing fighters, or otherwise actively assisting in the creation, functioning and operation of that State, she would likewise be a member of Islamic State for the purposes of the offence that you're considering. That is what the Crown says. Now bearing in mind the expanded definition of membership, the Crown says that if a woman took steps to do just that, that is to go to Islamic State-held territory with a view to actively participating in the territorial aims of Islamic State in the way in which I've just suggested, if [s]he took steps to do that, well, for the purposes of the charge that you are considering, she would be a member of Islamic State. What the Crown says is that she took steps to become a member on 14 July 2014 by attempting to leave Australia with the intention of entering Islamic State territory. ... [S]he strongly and persistently identified with the view or version of Islam espoused by [Islamic State], that is the extreme right spectrum or Salafist Islamic interpretation which involves ... acting, by taking ... the sorts of measures suggested by Islamic State. That is, in the first place, by establishing its own Sharia society in Iraq and Syria ... [which] she knew ... would involve the harsh dealings with those people described as rafidah, donkeys or filth ... the Shi'a who, amongst the other opponents of [Islamic State], have borne the brunt of Islamic State's terror. Bell NettleJ Those are the ones who have been killed by this group and whose property has been possessed. Let me make this clear: whilst it may seem extraordinary that a person in this country could wholly embrace those ideas, the Crown says that is not enough to make her a member of Islamic State. You need more. The Crown says there is more and that is you need to act, you need to take steps. For once a person takes steps to become a member of Islamic State, then she is a member because then she moves off the sidelines and she moves onto the playing field ... In other words, she steps away from the internet, from a digital reality and she moves into real [life]. ... [T]he Crown says that once you act, you are a member of Islamic State, remembering always the other elements of the offence. The Crown says that she acted or in other words took steps to become a member of Islamic State. The most important thing, the Crown says, is that she set off to go to Turkey, to engage with terrorists with a view of lending her support to Islamic State's venture. In doing so, she became a member of Islamic State. The Crown says that you can be satisfied beyond reasonable doubt that that was her intention when she set off to the airport and walked through towards the outward Customs area, but was then stopped. She intended to participate in the advancement of Islamic State in Syria and Iraq and she intended and knew that she would be a member of that organisation which was carrying out the terrorist activities in the lands that we have spoken of." (emphasis added) The defence case at trial The defence did not call any evidence but argued that the jury could not exclude the reasonable possibility that the respondent intended to go to Turkey for a holiday and to do aid work, as she had told the police. As defence counsel put the argument: "So what I say to you about the prosecution theory, the Crown says that this notion of a holiday is a lie, the notion of her doing aid work is a lie, all of that sort of thing, that's said because it doesn't fit the Crown's case concept. But when you actually look at it, it sort of fits the picture of what this young lady is all about. Bell NettleJ If she were going to Istanbul to meet up with someone and then troop from Istanbul – I don't know how far it is, you would have to look at an atlas I guess, but it would certainly be more than a couple of thousand kilometres from north to south Turkey – where is the evidence that she had these contacts that the prosecution speculate that she would have had? There is not the slightest hint of evidence that she had contacts to get her across Turkey. ... If she's running off to join [Islamic State], you may well wonder – maybe not – why would she go to Turkey? On the prosecution's own case, why would this woman go to Turkey? ... [I]f she wants to join [Islamic State], and this is all a big plan and these people from Kenya [the Baaqiya sisters] are involved, why in Heaven's name isn't she going to Kenya? Why go to Turkey?" The defence also contended that many of the images which had been downloaded to the respondent's devices via the Telegram app may have downloaded automatically or were otherwise capable of innocent explanation by reference to the respondent's deeply held Islamic beliefs; there was no evidence that the respondent had disseminated or distributed any of that sort of material as opposed to merely looking at it; and the fact that "she has a group of internet friends who turn out to be active, crazy terrorists, if you like, is not actually something which advances the Crown case at all because there is no link between that terrorist act that they do on the other side of the world and the [respondent], other than they have this common internet friendship". The trial judge's summing up The trial judge gave the jury an aide memoire, or jury memorandum, settled in consultation with the prosecutor and defence counsel, setting out the elements of the alleged offence. It included the following: "'member' of an organisation includes: a person who is an informal member of the organisation; and a person who has taken steps to become a member of the organisation The term 'member of an organisation' is not here limited to what might be thought to be the usual meaning of a 'member of an organisation'; namely a clear relationship between a person and an organisation with obvious indicia such as ceremonies, official records, membership cards and the like to verify it. Rather, Parliament has laid down a more expansive Bell NettleJ 'inclusionary definition' because of the nature of these organisations. While traditionally preparatory acts are not often made into criminal offences, the prevention of terrorism requires criminal responsibility to arise at an earlier stage than is usually the case for other kinds of criminal conduct. Parliament has here created an offence that may apply at an early stage of a person's movement towards membership, and potentially participation in the activities, of a terrorist organisation. There is no 'bright line' which enables one to say that there are sufficient characteristics of a member of an organisation present to conclude that the [respondent] is intentionally a member of an organisation; nor is there any set of necessary conditions, the absence of one of which would render the term 'member of an organisation' inapplicable. Rather, it is a question of fact and degree. 'A person who has taken steps to become a member of the organisation' As to the second part of the inclusionary definition of member, namely 'a person who has taken steps to become a member of the organisation', there is a continuum along which, at a certain point, one may conclude that a person has intentionally behaved in such a way as to demonstrate that he or she intentionally 'has taken steps to become a member of the relevant organisation' within the meaning of the legal definition reproduced above. In the present case, the prosecution proceed by reference to this second part of the definition and have specified the particulars of the types of conduct upon which they rely in order to establish this element of the offence thus: Attempting to travel on a one way ticket to Istanbul, Turkey in order to engage with the terrorist organisation, Islamic State; Possessing and accessing material promoting Islamic State and violent jihad; Communicating with members of Islamic State; Pledging an oath of allegiance (bay'ah) to the leader of Islamic State, Abu-Bakr Al Baghdadi; Bell NettleJ Expressing support for Islamic State and violent jihad including by recitation of Islamic State and extremist Nasheeds; and Self-identification as 'muwahideen', a term used as an identifier by Islamic State members. Consideration of the prosecution particulars As to Particular One above, conduct of the [respondent] in booking her flight, keeping it secret from her family, packing, travelling to the airport and attempting to board the flight (if you find such conduct to be proven) are within the required time-frame. It is for the jury to consider whether or not: first, those acts were done in order to fly to Istanbul, Turkey 'in order to engage with the terrorist organisation, [Islamic State]' and, secondly, were 'steps to become a member of [Islamic State]'. As to Particulars Two to Six above, it is for the jury to consider whether or not conduct of these types by the [respondent] occurred between about 14 July 2016 and 23 May 2017 and, if so, whether or not such conduct constitutes 'steps to become a member of [Islamic State]'. However, the matter of the attempt to fly to Turkey is such an important part of the prosecution case that I direct you that you can only find that the [respondent] 'took steps to become a member of [Islamic State]' and is guilty of the charge before the Court if you are satisfied beyond reasonable doubt that the [respondent] intended to travel to Turkey 'in order to engage with the terrorist organisation [Islamic State]' (Particular One)." (footnote omitted) His Honour then took the jury through the aide memoire orally, explaining and expanding upon it as he went, and then summarised the evidence adduced by the Crown by reference to the elements of the offence. At one point in the course of summarising the Crown case, defence counsel complained that the summing up was one-sided and that the trial judge was effectively aligning himself with the Crown case. But after the trial judge had later summarised the defence case, the exception appears to have been abandoned and was not repeated or renewed at the end of the summing up when the trial judge invited exceptions. After deliberating for just over three hours, the jury returned a unanimous verdict of guilty. Bell NettleJ The appeal to the Full Court Despite defence counsel's concurrence in the trial judge's directions, the respondent then appealed to the Full Court on amended grounds of appeal as follows: The trial judge erred in his directions as to what was required, and/or as to what was sufficient, to establish that a person is intentionally a member of a terrorist organisation for the purposes of s 102.3(1) of the Code, having regard to the definition of "member" in s 102.1 of the Code. (1A) Alternatively to ground one, the trial judge erred in failing to direct, either at all or adequately, the jury as to how they might apply the evidence relied upon by the Crown as to the proof of intentional membership of a terrorist organisation and as to the legal elements they needed to consider. The fair trial of the respondent miscarried as a result of the unbalanced summing up by the trial judge. (2A) Alternatively, the fair trial of the respondent miscarried as a result of failure by the trial judge to properly present the defence case. (2B) Alternatively, the fair trial of the respondent miscarried as a result of the trial judge not directing the jury in terms which avoided choice reasoning and in failing also to direct the jury that it was necessary but not sufficient that they reject the respondent's innocent explanations as reasonably possibly true. The verdict is unreasonable and cannot be supported having regard to the evidence. Kourakis CJ, with whom Parker J substantially agreed, considered3 that the evidence adduced at trial was capable of supporting an inference that the respondent was a supporter of Islamic State, its extremist ideology and its terrorist activities. His Honour also found4 that the evidence supported an inference that the respondent had intended to travel to Turkey to make contact with members or supporters of Islamic State in Turkey, with the intention of travelling into the areas 3 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [8]. 4 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [8]. Bell NettleJ of Syria, Iraq and Turkey controlled by Islamic State, either for the purposes of providing medical assistance to fighters and others or to marry an Islamic State fighter. His Honour took the view5, however, that there was no evidence as to how members other than fighters participated in the organisation, no evidence as to how members were recruited or selected, and no evidence of any process by which prospective members were inducted and finally accepted into the organisation. On that basis, his Honour concluded6 that there was "no evidence against which to evaluate any connection between the proved conduct of the [respondent], her communications, pledge of allegiance, singing and attempt to travel to Turkey, with formal or informal membership of Islamic State". It followed, his Honour held7, that the respondent's conviction could not be supported on the evidence. His Honour further explained8 that conclusion thus: "Importantly, the very notion of a step implies a membership process. That process can only be determined by the organisation – not by its prospective members. If every prospective member were free to design his or her own path to membership, whatever it is that he or she ultimately joins can hardly be described as an organisation, or at least will not be an organisation for the purposes of Part 5.3 of the Criminal Code. To put it another way, an organisation cannot be constituted by an otherwise disorganised group of people who share an intention or wish to be a member of it. The idea of a step towards becoming a member also serves to distinguish a mere supporter from someone who has taken some or all of the steps necessary to become a member or informal member. Whether or not a person has embarked on a process towards membership cannot be decided in a vacuum. Something must be known about the organisation's rules, formal or informal, or at least its common practices. 5 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [9]. 6 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [10]. 7 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [14]. 8 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [20]-[21], [63], [76], [79], Bell NettleJ The call to Muslims described by Dr Shanahan is not a recruitment of members of Islamic State, the organisation, but an invitation to migrants to live, work and fight for its utopian Islamic State. Dr Shanahan was never asked to explain whether ... he meant to draw a distinction between supporters and members of Islamic State, the organisation, or whether he meant that all supporters were members. If the former, the prosecution led no evidence from which the jury could distinguish supporters from members, formal or informal, of Islamic State, and in particular from which the jury could find that the [respondent] was one or the other. If the latter, the prosecution must necessarily fail, because, if that were the case, Islamic State could be no more than an amorphous group of people. In his closing address, the prosecutor [put that]: '[I]f a person knows of, agrees with and embraces the ideology and aims of the organisation and with intention, for example, puts into place steps to head off to Syria and Iraq or undertakes a pledge to participate in the advancement by offering obedience to the directives of the leaders, the Crown says that that person is taking steps to become a member of the organisation. The organisation so described by the prosecutor is an amorphous body of people. The prosecution case so framed was bound to fail for two reasons. First, the dearth of evidence adduced on this issue was incapable of establishing that all persons with those attributes were, even informal, members of Islamic State. Secondly, and even if all such persons, together presumably with all fighters, engineers, doctors and others who contributed useful skills to the insurgency, were members of some entity, that entity was an unstructured mass of people and not an organisation." Bell NettleJ Kelly J, in dissent, came to the opposite conclusion. As her Honour reasoned9: "[M]uch of the argument on appeal focussed on [the] theoretical proposition ... whether wives or nurses or residents of territory occupied by Islamic State, would or would not be members of the organisation known as Islamic State. To my mind, that argument distracted from the critical issue on this appeal, which is whether [the respondent], by engaging in the conduct proved against her, committed the offence against s 102.3. ... The critical issue that needed to be decided was this: what was her intention when she booked her one-way flight to Turkey, went down to the Adelaide Airport and attempted to board that plane with nothing but her carry-on bag and insufficient funds to get back to Australia? ... The Judge was right to direct the jury that they could only find that the [respondent] took steps to become a member of Islamic State if they were satisfied beyond reasonable doubt that she intended to travel to Turkey in order to engage with what she knew to be the terrorist organisation Islamic State. ... In my view, to assume that wives and nurses could not be members of Islamic State as much as any fighter is to oversimplify the matter ... [and] ignores two critical matters that emerged on the evidence at trial about Islamic State practices. Firstly, there was evidence from Dr Shanahan that at the time of the alleged offending, Islamic State (the organisation) was encouraging women to travel to Islamic State (the newly claimed territory) to assist in the building of the Caliphate. The role for women anticipated by such a call to action was that they assist to populate and expand and consolidate a physical presence in the claimed territory. Dr Shanahan also gave evidence that women were being used as online recruiters to persuade other women to join the organisation in conflict areas. Secondly, ... there was evidence of an attempted terrorist attack, carried out by three women with whom the [respondent] had some ongoing contact, for which Islamic State claimed responsibility. In consideration of that fact alone, there was clearly a role for women in Islamic State beyond that of marriage, nursing and motherhood. 9 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [214]-[216], [219], [220]. Bell NettleJ So, in my view, regardless of what role a woman takes in or on behalf of the Islamic State, whether it is as a fighter, a nurse, a wife, a recruiter or all of the above, it is her intention in doing so that may or may not bring her within the provisions of the Criminal Code ... [I]t is the specific actions and, crucially, the specific intentions of each of those women that will be determinative of membership. ... A female supporter of Islamic State the organisation, who relocates to Islamic State the territory, marries a solider, and raises her children in that State is demonstrating a commitment to one of the goals of Islamic State, namely to consolidate a physical population stronghold over land. Providing that she had the requisite fault element, that woman would be no less a member of Islamic State than a woman who makes a commitment to further a different goal of Islamic State, namely to engage in jihadist acts of violence." As will be seen, her Honour was correct. Member of a terrorist organisation The offence created by s 102.3(1) appears in Div 102 of Pt 5.3 of the Code. Division 102 is headed "Terrorist organisations" and creates a series of offences which, to varying degrees, depend upon proof of an accused's affiliation with a "terrorist organisation" as defined in s 102.1. In addition to the membership offence created by s 102.3(1), they include directing the activities of a terrorist organisation10, recruiting for a terrorist organisation11, providing, receiving or participating in training with a terrorist organisation12, getting funds to, from or for a terrorist organisation13, providing support for a terrorist organisation that would help the organisation engage in a terrorist act14 and intentionally and knowingly associating with a member or members of a terrorist organisation15. As has 10 Code, s 102.2. 11 Code, s 102.4. 12 Code, s 102.5. 13 Code, s 102.6. 14 Code, s 102.7. 15 Code, s 102.8. Bell NettleJ elsewhere been observed16, the offence-creating provisions in Pt 5.3 of the Code, including Div 102, reflect a legislative judgment that the prevention of terrorism requires certain preparatory or anticipatory acts to be subject to criminal sanction notwithstanding that such acts would not usually fall within the range of conduct generally regarded as criminal. This legislative choice is apparent in the extended definition of "member of an organisation" in s 102.1 as encompassing "tak[ing] steps to become a member of the organisation", and in the broad definition of "organisation" in s 100.1 as a body corporate or unincorporated body, whether or not the body is based outside Australia, consists of persons who are not Australian citizens, or is part of a larger organisation. In the Explanatory Memorandum on the Security Legislation Amendment (Terrorism) Bill 2002 (Cth) it was said that this extended definition was included to "defeat any argument that a group of persons is not an organisation because it does not have a particular formal attribute or structure"17. Although it was not in issue at trial that, during the period encompassed by the charge, Islamic State was a "terrorist organisation" within the meaning of s 102.1 (having been lawfully designated as such under the Criminal Code (Terrorist Organisation – Islamic State) Regulation 2014), it is apparent that a central strand of Kourakis CJ's reasoning was that an essential feature of an "organisation" under s 100.1 of the Code is the existence of a structure that delineates members from non-members. In particular, Kourakis CJ posited18 that, having regard to the "ordinary meaning" of the word "organisation", there cannot be an "organisation" absent a group of people who have, relevantly, expressly or by implication "agreed to ... control the membership of their group in order to promote success in achieving their objects". And because, as Kourakis CJ interpreted the evidence, there was no evidence as to Islamic State's organisational structure or its membership, including how members were inducted and accepted 16 Lodhi v The Queen (2006) 199 FLR 303 at 318 [66] per Spigelman CJ (McClellan CJ at CL and Sully J agreeing at 324 [96], 327 [111]); Ul-Haque v The Queen [2006] NSWCCA 241 at [37] per McClellan CJ at CL (Kirby and Hoeben JJ agreeing at [46], [47]); Lodhi v The Queen (2007) 179 A Crim R 470 at 489 [79] per Spigelman CJ, 531 [229] per Price J; Benbrika v The Queen (2010) 29 VR 593 at 615 [65]-[66] per Maxwell P, Nettle and Weinberg JJA. 17 Australia, House of Representatives, Security Legislation Amendment (Terrorism) Bill 2002, Explanatory Memorandum at 9. 18 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [26], [29]. Bell NettleJ into the organisation, his Honour concluded19 there was no evidence against which to evaluate any connection between the proved conduct of the respondent and formal or informal membership of Islamic State. The problem with his Honour's reasoning, however, is that it is unsupported by the statutory text, context and purpose of the terrorist provisions. As was observed in Benbrika v The Queen20, to which Kelly J referred but Kourakis CJ did not, the concept of an "organisation" under s 100.1 of the Code is not amenable to an exhaustive or rigid definition. It raises a question of fact and degree about which there cannot always be an unequivocal and objective answer. The same is true of membership of an organisation. Some organisations may be so constituted that the criterion of membership and the steps that are sufficient or necessary to become a member are clear21. More probably, however, in the case of terrorist organisations, such details may be shrouded in mystery. Hence, as the trial judge correctly directed the jury, it was for the jury to discern the nature of the organisation and, in effect, from the nature of its membership as it emerged from the evidence, to decide whether the steps which the respondent was proved to have taken were steps intentionally taken to become a member of Islamic State. It is apparent from the expert and other evidence that the Crown adduced at trial that Islamic State was an organisation that combined association with polity. As has been seen22, it existed to remain and expand through the acquisition of territory by violent jihad, the formation of alliances, natural population increase, and the extermination of the kuffar (non-believers) elsewhere throughout the world. To that end, it deployed member jihadis to wage violent jihad, and it deployed the remainder of its members to support and sustain those jihadis and expand its population. As the evidence disclosed, its ideology was that both jihadis and those who so supported the jihadis were fighters for the cause. And for those purposes, it sought out prospective members from around the world, through online recruiting, with posts and other propaganda designed to induce candidates 19 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [9]. (2010) 29 VR 593 at 620-621 [80]-[84] per Maxwell P, Nettle and Weinberg JJA. 21 See generally, eg, Woodford v Smith [1970] 1 WLR 806; [1970] 1 All ER 1091 (note); Lawton v Bidgerdii Aboriginal & Torres Strait Islanders Corporation Community Health Service Central Queensland Region [2004] FCA 1474; Pettit v South Australian Harness Racing Club Inc (2006) 95 SASR 543. 22 See [29]-[33] above. Bell NettleJ to subscribe to the Salafist ideology, to accept that it was their religious obligation to use violence against non-believers, to give effect to that obligation by pledging allegiance to the Caliph, Abu Bakr al-Baghdadi, and ultimately, in obedience to that obligation, to migrate to the territory controlled by Islamic State to serve as a member of Islamic State society either as a jihadi or in support of jihadis. It is true, as Kourakis CJ observed23, that Dr Shanahan did not state explicitly that the combination of embracing the Salafist ideology, swearing allegiance to the Caliph, and answering the call to go to Sham (Islamic State- controlled territory) to serve in support of the jihadis were the criteria of "membership" of Islamic State or passed beyond the realm of mere support of and for Islamic State to the point of taking of steps to join Islamic State. But that does not mean that it was not open to the jury to be satisfied that they were steps intentionally taken to become a member of Islamic State. As was held in Benbrika in effect, the nature and purpose of the provisions found in Pt 5.3 and, in particular, Div 102 of the Code dictate that they must be taken to extend to groups devoid of structural hierarchy that function in secrecy, with little formality, without a written constitution or set of rules, and without a contractual relationship between members. In such cases, the existence of the terrorist organisation is thus more readily proved by evidence of what it does than by abstract analysis of its structure. And where such evidence does establish that persons have so informally associated together for the purposes of carrying out terrorist acts or supporting those who carry out terrorist acts, it is open to a jury to find that they are members of that terrorist organisation despite the absence of a constitution or rules of membership. This construction of the provisions found in Div 102 is consistent with the approach adopted in other jurisdictions that have criminalised membership of terrorist organisations. For example, in the United Kingdom, in the context of the largely equivalent offence under the Terrorism Act 2000 (UK) of "belong[ing]" or "profess[ing] to belong to" a proscribed organisation24, it has been observed25 that: 23 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [9]-[10]. 24 Terrorism Act 2000 (UK), s 11(1). 25 Attorney-General's Reference (No 4 of 2002) [2005] 1 AC 264 at 275 [23] per Latham LJ. As to the role of proscription in facilitating ease of proof of a range of offences aimed at the prevention of terrorism, see generally Lynch, McGarrity and Bell NettleJ "The intention [of the provision] is to criminalise membership of a proscribed organisation in the light of the statutory purpose to which we have referred. Proof of membership may sometimes be difficult; hence profession of membership is itself a criminal offence." In Sheldrake v Director of Public Prosecutions, Lord Bingham of Cornhill subsequently observed26 that the meaning of "profess" was so uncertain that some persons liable to be convicted and punished for professing to belong to a proscribed organisation might be guilty of no conduct which could reasonably be regarded as blameworthy or such as should attract criminal sanctions. His Lordship referred by way of illustration to someone who, in jest, claimed to be a member of a proscribed organisation, as well as someone who joined a proscribed organisation not knowing that it was so proscribed27. It followed, as it was held28, that the provision would thus be such a clear breach of the presumption of innocence enshrined in Art 6(2) of the European Convention on Human Rights that, in order to comply with Strasbourg jurisprudence as interpreted by the United Kingdom courts, the defence provision29 had to be read as imposing an evidential, as opposed to legal, burden of proof on the accused. The offence of taking steps to become a member of a terrorist organisation in s 102.3(1) of the Code operates differently, in that it requires the Crown to prove that a person both intentionally takes steps to become a member of a terrorist organisation and knows that the organisation is a terrorist organisation30. But, like the United Kingdom offence provision, it allows for the practical difficulties associated with the penetration of the unstructured and opaque nature of terrorist organisations to be surmounted by proof falling short of demonstration of a written Williams, "The Proscription of Terrorist Organisations in Australia" (2009) 37 Federal Law Review 1 especially at 2-3. [2005] 1 AC 264 at 312 [48]. 27 Sheldrake v Director of Public Prosecutions [2005] 1 AC 264 at 311-312 [47]-[48]. 28 Sheldrake v Director of Public Prosecutions [2005] 1 AC 264 at 314 [53]. 29 Terrorism Act 2000 (UK), s 11(2). 30 See [22] above. Bell NettleJ constitution or set of rules, the existence of a contractual relationship between members, or manifestations of some form of structural hierarchy. Contrary to Kourakis CJ's reasoning, it is also to be remembered that it was a formally admitted fact that Islamic State was a terrorist organisation31. Hence, whatever the degree of Islamic State's unstructuredness relative to other, more formally constituted organisations, there was no a priori reason why persons who embraced the Salafist ideology, swore allegiance to the Caliph, and answered the call of the Islamic State online recruiters to leave surreptitiously and travel to Sham to serve Islamic State in support of the jihadis, could not be regarded as members of Islamic State. Still less should it be accepted that, if so, Islamic State would be such "an unstructured mass of people" as to be incapable of recognition as an organisation and thus fall outside the scope of the definition of a "terrorist organisation". And finally, and just as importantly, as Kelly J observed32 in effect, it is hardly to the point that, in addition to the steps that the respondent was shown to have taken, there might have been other steps that the respondent would need to have taken in order to be admitted to membership of Islamic State. Nor should it be regarded as significant that whatever steps the respondent took or might have taken, she might ultimately have failed to achieve membership of the organisation. The question was not whether the respondent had taken all, or even any, of the steps necessary to become a member, but whether, by taking the steps that she was shown to have taken, she had intentionally taken steps to become a member. And as Kelly J rightly observed33, "[t]here [was] no reason why, in determining whether the physical element of the offence is proved, the jury [could not] have regard to the [respondent's] state of mind". Given the evidence of the contents of the respondent's electronic devices and of the listening device intercepts, given the respondent's evident embrace of the Salafist idea that "[w]hoever provides for a fighter in the cause of Allah has actually fought, and whoever takes care of the family of a fighter has actually fought", and given the evidence of the steps that the respondent was shown to have taken, which included swearing allegiance to the Caliph, and answering the call to go to Sham to serve in support of the jihadis by attempting to fly to Turkey by one- way flight without informing her family and without the resources to return, it 31 See [24] above. 32 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [212]-[215]. 33 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [208]. Bell NettleJ cannot reasonably be doubted that it was open to the jury to conclude that the respondent thereby intentionally took steps to become a member of Islamic State. Notice of contention Ground 1.1 – misdirection with respect to elements (1) Essential link Under cover of a notice of contention, it was contended on behalf of the respondent that the trial judge erred in directing the jury as to the elements of the offence, by conflating the physical and mental elements thus: "[T]he matter of the [respondent's] attempt to fly to Turkey is such an important part of the prosecution case that I direct you that you can only find that the [respondent] 'took steps to become a member of Islamic State' and is guilty of the charge before the court if you are satisfied beyond reasonable doubt that the [respondent] intended to travel to Turkey 'in order to engage with the terrorist organisation Islamic State' ... [I]f you accept the prosecution case beyond reasonable doubt that these steps surrounding the attempt to fly to Turkey were taken intentionally to become a member of Islamic State, then the charge would be made out because you have the definitions, you have the elements, I have explained those to you, and if you found beyond reasonable doubt that those steps surrounding the attempt to travel to Turkey were intentionally taken by the [respondent] to become a member of Islamic State then, if you are satisfied beyond reasonable doubt, would establish the charge. Now, with possibly one exception I understand that the issue here is not really as to what the [respondent] did, in other words not really as to her intentionally doing something in the sense of deliberately doing something, but rather the real issue is as to whether or not she had the intention to become a member of Islamic State, whether she was taking steps to become a member of Islamic State, to use the words of the offence. [T]he rest of the things [in the list of particulars relied upon by the Crown] from 1-6 are basically events that do not appear to be disputed as such, are not said to be accidental rather than deliberate but the area of contention, of Bell NettleJ course, is whether they were taken as steps to become a member of [Islamic State], as I understand the issues in the case." Counsel for the respondent submitted that by so directing the jury, the trial judge conveyed that the real issue was the respondent's purpose in attempting to fly to Turkey "whereas the question of intention was irrelevant unless it was established beyond reasonable doubt that making arrangements to travel to Turkey constituted steps to become a member of Islamic State". That submission is without merit. The direction was formulated by the trial judge with the active encouragement of defence counsel in order to bring home to the jury, as defence counsel put it in his submissions to the trial judge, that the episode giving rise to the respondent's arrest at the airport in July was "[t]he indispensable link ... the very linchpin of the prosecution case ... and because it occupies such pre-eminence as the Crown case, then we'd say that's something that would have to be proved beyond reasonable doubt"34. There is no question that the attempted trip to Turkey was at the centre of the Crown case. As defence counsel argued in his submissions to the trial judge in support of the trial judge directing the jury in the way that his Honour did: "If one harks back to the prosecution opening and the way this matter has been packaged before the jury, the great emphasis in the trial has been the episode giving rise to the [respondent's] arrest at the airport in July. Your Honour coined the phrase 'The indispensable link' ... Well we would grab that and run with it." The trial judge was accordingly right to direct the jury that they could not convict unless satisfied beyond reasonable doubt that the steps surrounding the attempt to travel to Turkey were intentionally taken by the respondent to become a member of Islamic State. (2) Guidance as to what constituted steps It was further contended on behalf of the respondent that the trial judge erred in failing to give the jury sufficient guidance on how they might approach the question of what constituted steps to becoming a member by inviting them to relate the evidence regarding membership of Islamic State to the concept of "steps 34 See and compare Shepherd v The Queen (1990) 170 CLR 573 at 583-585 per Bell NettleJ to become a member". That is not correct either. The trial judge specifically directed the jury as to how they might approach that question, as follows: "[The] conduct of the [respondent] in booking her flight, keeping it secret from her family, packing, travelling to the airport and attempting to board the flight (if you find such conduct to be proven) are within the required time frame. It is for the jury to consider whether or not: first, those acts were done in order to fly to Istanbul, Turkey, 'in order to engage with the terrorist organisation Islamic State' and secondly, were 'steps to become a member of Islamic State'. As to particulars 2-6 above, it is for the jury to consider whether or not conduct of these types by the [respondent] occurred between about 14 July 2016 and 23 May 2017 and, if so, whether or not such conduct constitutes 'steps to become a member of Islamic State'. The prosecution case ... has ... stressed the position that it does not suggest that in flying to Turkey in order to engage with Islamic State the [respondent] had it in mind to equip herself with some sort of armaments, assault rifle or what have you, and join the Mujahideen on the battle field or indeed engage in any other violent conduct there or elsewhere. That is not the prosecution case, as I understand it. Rather it is that Islamic State, consistently with propaganda actually found to have been on the phones of the [respondent] ... promoted its caliphate, and that is the land it was physically occupying in Syria, the caliphate. Promoted its caliphate as a State – an actual State, you know, passports and so forth, I mean, the accoutrements of a State – as a State and a society with Shari'ah law, strict Shari'ah law and which actively urged Sunni Muslims of conservative Muslim religious view, and particularly females and particularly medical students, who were both in short supply, to perform hijrah; that is to say, to come home, as it were, to Islamic State and join in and be part of that society. And that if a female wishes, become married and have children within that society and be supported by it." (3) No bright line Counsel for the respondent complained that the trial judge had directed the jury that there is: "no 'bright line' which enables one to say that there are sufficient characteristics of a member of an organisation present to conclude that the Bell NettleJ [respondent] is intentionally a member of an organisation; nor is there any set of necessary conditions, the absence of one of which would render the term 'member of an organisation' inapplicable. Rather, it is a question of fact and degree." And that: "While traditionally preparatory acts are not often made into criminal offences, the prevention of terrorism requires criminal responsibility to arise at an earlier stage than is usually the case for other kinds of criminal conduct. Parliament has here created an offence that may apply at an early stage of a person's movement towards membership, and potentially participation in the activities, of a terrorist organisation." It was submitted that so to direct the jury wrongly encouraged the jury to take the view that "what might seem a radical conclusion (that an act such as booking a flight to Turkey with a particular thought in mind might amount to membership of a terrorist organisation, an offence more serious than associating with a terrorist organisation) ought not to trouble them". That submission distorts the reality of the trial in two respects. First, as both the prosecutor and the trial judge emphasised in their respective addresses to the jury, it was not the Crown case that merely booking a ticket to Turkey with the thought of becoming a member of Islamic State was sufficient in itself to constitute taking steps towards becoming a member of Islamic State. As has been seen, the Crown case was that it was the combination of embracing the Salafist ideology, swearing allegiance to the Caliph, and answering the call of Islamic State to go to Sham to serve as a member of Islamic State in support of the jihadis, which took the respondent's actions beyond the realm of mere support of Islamic State to the point of intentionally taking steps to join Islamic State. Nor was there any doubt about that on the part of defence counsel. In final address to the jury, as has been seen, he told them that it was a matter for them whether the acts identified by the Crown were steps taken to become a member. Secondly, it was common cause at trial, and it was correct to observe, as the trial judge did, that, although preparatory acts are not ordinarily proscribed as criminal offences, the prevention of terrorism led Parliament to create an offence of taking steps to become a member of a terrorist organisation which is capable of applying at an early stage of a person's movement towards membership, and Bell NettleJ potentially participation in the activities, of a terrorist organisation35. The jury needed to be made to understand that the offence is one that is designed to embrace preparatory acts which in the case of most other offences would be conceived insufficient even to amount to an attempt to commit an offence36. It would have been preferable for the trial judge not to refer to what it was that led Parliament to legislate as it did. But it was not incorrect and evidently defence counsel did not consider that it needed correction or qualification. (4) No necessary conditions Counsel for the respondent further contended that the trial judge had erred in directing the jury that there was no set of necessary conditions from which the absence of any one condition would render the term "member of an organisation" inapplicable. Invoking observations of McHugh J in Fingleton v The Queen37, counsel submitted that it was incumbent on the trial judge to direct the jury specifically as to the criteria to be applied and as to the distinctions to be observed in determining whether any particular conduct was within the terms of s 102.3(1), particularly given that the offence created by the provision is a novel one. That submission is also unpersuasive. McHugh J's observations in Fingleton (which were not reflected in the judgments of the other members of the Court) centred on what his Honour considered to be the failure on the part of the trial judge in that matter to direct the jury to consider whether the Chief Magistrate's beliefs about the Co-ordinating Magistrate's lack of loyalty and confidence in her leadership constituted "reasonable cause" for her issue of a show cause letter to the Co-ordinating Magistrate – in short, a failure sufficiently to alert the jury to the possibility of a defence not taken but open on the evidence38. That did not occur in this matter. As has been seen, the "defences" in this matter were 35 See [44] fn 16 above. 36 cf R v Cheeseman (1862) Le & Ca 140 at 145 per Blackburn J [169 ER 1337 at 1339]; R v Borinelli [1962] SASR 214 at 218-219 per Napier CJ, Mayo and Travers JJ; Director of Public Prosecutions v Stonehouse [1978] AC 55 at 68 per Lord Diplock. (2005) 227 CLR 166 at 197-198 [80], 199 [84]. 38 See Fingleton v The Queen (2005) 227 CLR 166 at 198 [81]-[82], 200-202 [87]-[90]. See and compare Pemble v The Queen (1971) 124 CLR 107 at 117-118 Bell NettleJ that the acts on which the Crown relied were insufficient to amount to acts to become a member, and that the respondent did not intend to become a member. Both were the subject of detailed directions. Ground 1.2 – failure to relate evidence to elements It was also contended that the trial judge erred in failing to relate the evidence to the legal issues by failing "to identify the evidence as to what constituted steps to becoming a member of Islamic State, the terrorist organisation, and then to relate the evidence as to what the [respondent] did to that evidence". That contention is misplaced. It is premised on the erroneous notion already dealt with39 that the Crown could not succeed in establishing that the respondent had intentionally taken steps to become a member of Islamic State without adducing expert evidence as to the steps that a prospective member of Islamic State must take in order to be admitted to membership of that organisation. As the trial judge correctly directed the jury, the matter was to be decided by bearing in mind the nature of a terrorist organisation like Islamic State, as it emerged from the evidence, and deciding by reference to that whether the jury were satisfied that the acts on which the Crown relied went sufficiently far to constitute taking steps to become a member of that organisation: "[W]e will be shortly turning to a different and critical element of the charge, namely that the person or the [respondent] is intentionally a member of a terrorist organisation. Now, I think you are probably ahead of me here because when you are trying to assess whether a person is a member of something you need to know what that something is, the nature of it, because the indicia, the accompaniments, the things you look for in relation to membership are going to be quite different [for] ... a cricket club ... on one hand and a terrorist organisation on the other. You do not exactly have membership cards and membership rolls, do you, in the latter situation. So it is that when you come to assess whether a person is a member of an organisation that assessment will have to pay regard to the type of organisation we are talking about and so, in order to do that, you have got, for what help it will be to you, those definitions and the process of defining how you get to a terrorist organisation. 39 See [46]-[55] above. Bell NettleJ As to the second part of the inclusionary definition of member, namely, 'a person who has taken steps to become a member of the organisation', there is a continuum along which, at a certain point, one may conclude that a person has intentionally behaved in such a way as to demonstrate that he or she intentionally 'has taken steps to become a member of the relevant organisation' within the meaning of the legal definition reproduced above." Ground 2.1 – unbalanced summing up Finally, it was contended that the trial judge's directions to the jury were unbalanced, because of the cumulative effect of the matters already mentioned and several further contentions, some of which substantially overlap, being: (1) the direction that the jury could not convict unless satisfied beyond reasonable doubt that the respondent intended to engage with Islamic State tended to suggest that it was sufficient to convict to be satisfied of that intention beyond reasonable doubt and thus the trial judge should have drawn the jury's attention to the possibility that they might find the offence not proved irrespective of the respondent's state of mind; (2) the assertions of innocence made by the respondent in her records of interview were supported by positive assertions of intention to seek out aid work, and, whereas the trial judge focussed on the question of whether the respondent's innocent explanations were lies, his Honour should have directed the jury that they could not convict unless they could exclude those innocent explanations beyond reasonable doubt; (3) although the trial judge had referred to the defence case in terms of defence counsel's final address, his Honour invited the jury to consider and contrast two rival submissions of whether the respondent's intention on 14 July 2016 was "completely innocent" or "something more sinister", without stressing that it was open to acquit even if the respondent had a sinister intention; (4) the trial judge used language such as "real clues" and "real help" and "real continuing pattern" with respect to the evidence, thereby tending to suggest that there was a particular correct answer implicitly known to his Honour which the evidence might reveal; (5) the trial judge subtly endorsed the Crown case as comprehensive by commenting "my goodness, it has put a lot of evidence before you"; (6) the trial judge undermined the defence case when summarising defence counsel's arguments, by observing in relation to one of the arguments: "[t]hat was put with all seriousness, I assume, by [defence counsel], this is a serious case"; (7) the trial judge discouraged the jury from applying the onus of proof by requiring defence counsel to identify and establish any innocent hypotheses and commented that the defence had not called any witnesses responsive to the Crown witnesses; (8) the trial judge encouraged the jury to think that there might be other evidence not available to police by suggesting that it was easy to overestimate the degree to which police may be able to recover evidence in a given case; and (9) the trial Bell NettleJ judge had identified the matters that his Honour considered supported the Crown case and thus aligned himself with the Crown case in the course of summing up. Nothing about the matters previously mentioned was unbalanced and, subject to what must later be said about the sixth of the further contentions paraphrased above, the summing up, generally, was not unbalanced. (1) Intention to engage with Islamic State The direction that the jury could not convict unless satisfied beyond reasonable doubt that the respondent intended to engage with Islamic State did not suggest that it was enough to convict to be satisfied that the respondent had that intention. As has been mentioned40, the trial judge explained the facts that the Crown had to prove in order to establish guilt beyond reasonable doubt and the direction in relation to the respondent's intention to travel to Turkey was crafted with the aid of defence counsel for the respondent's benefit. The trial judge dealt explicitly with the respondent's assertion of innocence. (2) Innocent explanations and lies It is true that the trial judge did not specifically refer to the respondent's statement to police that she was interested in seeking aid work. But his Honour emphasised that the jury should take into account all that the respondent said in the interviews, both for and against the respondent, giving it all such weight as the jury considered appropriate; and in the context in which that direction was given, the jury can have been in no doubt that they were to have regard to all of the respondent's answers to police questions. The trial judge's reference to lies was conventional and necessary. The Crown had emphasised in final address that the jury should treat the respondent's explanations of why she sought to travel to Turkey as lies, and, although the Crown did not go as far as suggesting that the lies were evidence of consciousness of guilt41, the trial judge was bound to give the jury a Zoneff direction42, as his Honour did, in order to avoid the risk of the jury conceiving of them in that fashion. 40 See [56]-[59] above. 41 cf Edwards v The Queen (1993) 178 CLR 193. 42 See Zoneff v The Queen (2000) 200 CLR 234 at 245 [23]-[24] per Gleeson CJ, Gaudron, Gummow and Callinan JJ. Bell NettleJ (3) Completely innocent or more sinister The complaint about the trial judge's formulation of whether the attempted trip to Turkey was "completely innocent" or "something more sinister" is captious. Read in the context of the explanation of drawing inferences of intent of which that description formed part, it would surely have been regarded by the jury as nothing more than a quick and not tendentious way of drawing the contrast between the Crown and defence cases. Just as importantly, it was followed immediately by a direction to look at everything that led up to the attempt and everything that went after it, to provide clues as to what was really happening at the time. (4) "Real help" and "real clues" There is also no merit in the complaint that the trial judge suggested a "correct answer" by referring to "real clues" and "real help". What his Honour in fact said was this: "Because sometimes, when you are trying to work out what did happen on an occasion, what later happens sometimes gives you real clues, indeed sometimes real help, as to really what was happening at that earlier time." That was entirely neutral. (5) Large volume of evidence The complaint that the trial judge endorsed the Crown case by referring to the large volume of evidence adduced by the Crown is unfounded. The remark formed part of a conventional direction that the Crown did not have to prove everything of which the Crown had adduced evidence and contained no suggestion of endorsement of the Crown case. It was as follows: "Ladies and gentlemen, the prosecution do not have to, as it were, establish all of the things that it puts before you and my goodness, it has put a lot of evidence before you. It certainly does not have to prove each and every aspect of it. Nor does it have to prove each of the potential or possible steps that it alludes to. What it does have to prove beyond reasonable doubt to your satisfaction is that the [respondent] did in fact take steps, some steps to become a member of an organisation. As I say, that is a matter for you to decide in the light of all of the evidence when looking at the continuum that I have mentioned to you." Bell NettleJ (6) Assumed to be put in all seriousness The trial judge's remark that he assumed that a submission made by defence counsel was put "with all seriousness" was as follows: "[W]ithout going into the detail at all at this stage, I just draw your attention to a contrast, as it were, between the defence and the prosecution and you always have to look at both sides of the coin. So yesterday in the context of the Mombasa matter ... and the question of the [respondent's] knowledge of it beforehand, [defence counsel] said this to you ...: 'if [the respondent] knew about it, members of the jury, if she's in some kind of conspiracy with these girls [the Baaqiya sisters], you may well ask why did she not go to Kenya? Why go to Istanbul? When she knows all of this is going to be happening, she would be off to Kenya to be with her mates to blow up the police station and become a green bird.' That was put with all seriousness, I assume, by [defence counsel], this is a serious case." (emphasis added) That was exceptionable. The tone of the remark was snide, and, as this Court has indicated more than once in recent times, it is not the proper function of trial judges to pass comments, particularly snide comments, regarding the quality of counsel's arguments43. That said, however, the argument as put by defence counsel was evidently so jejune that it cannot reasonably be supposed that the trial judge's remark might have led the jury to a different perception of the argument, or of the defence case more generally, than they would have arrived at in any event. Despite the impropriety of the remark, it was in effect no more than an unfortunate observation in the course of a detailed summing up, and, therefore, not productive of a miscarriage of justice. (7) Innocent hypotheses By contrast, there is no substance in the complaint that the trial judge subtly discouraged the jury from applying the onus of proof by requiring the defence positively to identify and establish any innocent hypotheses. Relevantly, what his Honour said was this: 43 See Castle v The Queen (2016) 259 CLR 449 at 470-471 [61] per Kiefel, Bell, Keane and Nettle JJ. See also, eg, RPS v The Queen (2000) 199 CLR 620 at 637 [42] per Gaudron A-CJ, Gummow, Kirby and Hayne JJ; McKell v The Queen (2019) 264 CLR 307 at 324 [48] per Bell, Keane, Gordon and Edelman JJ. Bell NettleJ "Finally on this general approach to circumstantial evidence and speaking in a general way here, I am not referring to particular facts, particular cases, I speak in a general way, you are entitled to use common sense in the jury room, and I am sure you will. You are entitled to carefully consider the hypothesis of innocence that is being suggested by the defence to be applicable in the case. In other words, what is the theory that the defence are really putting forward and saying the prosecution can't negate this, can't disprove it? What are they really saying? What did it entail?" There is no suggestion in that passage of reversing the onus of proof, and, if there were any doubt about it, the trial judge later further directed the jury as follows: "The third matter is that in the area of circumstantial evidence, I directed you that the evidence must be such as to be inconsistent with any reasonable hypothesis of innocence. That, of course, is correct. In what I said following that I did not mean to suggest that it was up to the [respondent] to formulate such an hypothesis because the position is that if you the jury consider there is such an hypothesis of innocence after all of the evidence has been thoroughly considered, then you must acquit." (8) Evidence not available to police The trial judge did encourage the jury to think that it was easy to overestimate the degree to which police may be able to recover evidence in a given case. His Honour's remark was as follows: "[Defence counsel] went on to say that if there was any trace of a contact the police would have found it and that they have vast resources and can do all sorts of things. He later stated: 'You might ask yourselves, members of the jury, "Is this young woman that good at planning and then hiding it?", when you know the resources that could look into what she's been up to.' Ladies and gentlemen, of course you take those submissions into account and give them what regard you consider appropriate. But if I can just say this, it is entirely a comment by myself which you can entirely take or leave as you please, but it may be fair to say as a matter of balance that it is easy to overestimate the degree to which police may be able to recover evidence in a given case." (emphasis added) As his Honour made clear, however, his observation was a comment that the jury were free to ignore. And while it was arguably unwise to make any such Bell NettleJ comment, it was not wrong as such44. Evidently, it was justifiable as a means of responding to an extravagant defence submission45, and it did not create any risk of imbalance by depriving the jury of an adequate opportunity of understanding and giving effect to the defence and the matters relied upon in support of the defence46. (9) Identifying matters relied on by the Crown Finally, there is no substance in the complaint that the trial judge's summing up was unbalanced by reason of his Honour identifying matters that he considered supported the Crown case. The passage of the summing up which is impugned was as follows: "So very briefly, and again not saying all that [the prosecutor] said, but if you go through the Tumblr blogs ... they include the following advice: take no check-in baggage, just hand luggage; travel light so as to be able to get across the border, that is illegally get across the border into [Islamic State] lands; three, do not tell your family of your plans to leave; four, take conservative female Muslim wear; five, do not take Apple phones, only Android phones; six, delete all incriminating material from your phone; seven, bring any certificates you have concerning medical studies; eight, you do not have to speak fluid Arabic; nine, general advice 'to the sisters' and you can look at that for yourselves, what all of that is about. So [the prosecutor] invites you to look at the contents of those blogs and compare the advice you see in there with what the [respondent] actually did and, for example, the state of her baggage as recorded in the photographic exhibits that we have at Adelaide Airport and, on the basis of all of that, he contends to you that it becomes quite clear that this was not a last-minute sightseeing holiday to Turkey." 44 See Azzopardi v The Queen (2001) 205 CLR 50 at 69 [49] per Gaudron, Gummow, Kirby and Hayne JJ; Mahmood v Western Australia (2008) 232 CLR 397 at 403 [16] per Gleeson CJ, Gummow, Kirby and Kiefel JJ. 45 See and compare Castle v The Queen (2016) 259 CLR 449 at 470-471 [61] per Kiefel, Bell, Keane and Nettle JJ. 46 See B v The Queen (1992) 175 CLR 599 at 605 per Brennan J. Bell NettleJ That was no more and no less than an accurate summary of an aspect of the prosecutor's argument which it was incumbent upon the trial judge to summarise for the benefit of the jury. Conclusion It follows that the appeal should be allowed. The orders of the Full Court made on 31 October 2019 should be set aside, and, in their place, it should be ordered that the respondent's appeal against conviction be dismissed. I would uphold the contention of the respondent that the trial judge failed adequately to direct the jury as to the application of the evidence relied on by the prosecution to prove intentional membership of a terrorist organisation. On that basis, I would dismiss the appeal. Against the background of the evidence and procedural history recounted by the majority, I can explain my reasons quite briefly. In doing so, I adopt the nomenclature and abbreviations of the majority. Departing in some respects from the standard scheme of the general principles of criminal responsibility set out in Ch 2 of the Code47, s 102.3 spells out exhaustively and compendiously the "physical elements" and "fault elements" of the offence it creates. A person commits the offence of "membership of a terrorist organisation", without more, if three specified elements of the offence are satisfied. The first element is that "the person intentionally is a member of an organisation". For that element to be satisfied, the state of affairs that the person is in fact a member of an organisation must exist, that state of affairs must be the product of an exercise of the person's will48, the person must be capable of exercising control over that state of affairs49, and the person must mean that state of affairs to exist50. The second element is that "the organisation is a terrorist organisation". The third is that "the person knows the organisation is a terrorist organisation". The second and third of those elements were not in issue in the trial. As to the second, the character of "Islamic State" as a "terrorist organisation" was the subject of formal agreement. The agreement was that "Islamic State" met each of the two alternative limbs of the definition of "terrorist organisation" in s 102.1(1) of the Code. It was an organisation directly and indirectly engaged in preparing, planning, assisting in or fostering the doing of terrorist acts within the meaning of para (a) of the definition. And it was the organisation specified in the Criminal Code (Terrorist Organisation – Islamic State) Regulation 2014 (Cth) for the purposes of para (b) of the definition. The second part of the agreement brought to the identification of "Islamic State" a measure of precision lacking from the first part of the agreement. That was because the Attorney-General, as the Minister administering the Code, was 47 See McSherry, "Terrorism Offences in the Criminal Code: Broadening the Boundaries of Australian Criminal Laws" (2004) 27 University of New South Wales Law Journal 354. 48 Sections 4.1(1)(a), 4.1(2), 4.2(1) and 4.2(2) of the Code. 49 Sections 4.1(1)(a), 4.1(2), 4.2(1) and 4.2(5) of the Code. 50 Sections 4.1(1)(a), 4.1(2), 4.2(1) and 5.2(1) of the Code. required by s 102.1(2) of the Code to be satisfied on reasonable grounds that the organisation to be specified was one that either directly or indirectly engaged in preparing, planning, assisting in or fostering the doing of a terrorist act or advocated the doing of a terrorist act before the Governor-General was permitted to make the Regulation. The grounds for the Attorney-General's satisfaction as to both of those matters in relation to "Islamic State" were set out in a Statement of Reasons. The Statement of Reasons became an attachment to an Explanatory Statement to the Regulation51 which was registered on the Federal Register of Legislation maintained under the Legislation Act 2003 (Cth). The Explanatory Statement, including the Statement of Reasons, was therefore available to be considered in confirming the meaning of "Islamic State" as specified in the Regulation or in fixing that meaning to the extent that the meaning was ambiguous or obscure52. The Statement of Reasons identified "Islamic State" as the "Iraq and Syria- based Sunni extremist group and former al-Qa'ida affiliate" that had originally been specified in 2005 for the purposes of para (b) of the definition of "terrorist organisation" under the Arabic name "Tanzim Qa'idat al-Jihad fi Bilad al-Rafidayn"53 and that had been re-specified in 2013 for the purposes of para (b) of the definition of "terrorist organisation" under the name "Islamic State of Iraq and the Levant (ISIL)"54. The Statement of Reasons explained that "[o]n 29 June 2014, the group proclaimed an Islamic caliphate in areas it controls and changed its name to Dawla al-Islamiya, or the Islamic State". "The use of the name Islamic State", it explained, "does not represent a change in the leadership, membership or methods of the group that was originally proscribed in 2005, but reflects the expansion of its operating area and its announcement of an Islamic caliphate". The Statement of Reasons identified "Islamic State's current leader and proclaimed caliph" as "Ibrahim Awwad Ibrahim Ali al-Badri ... usually known as Abu Bakr al-Baghdadi or Abu Du'a". As to the leadership of "Islamic State", the Statement of Reasons stated: "The Islamic State has a hierarchical structure, featuring an overall leadership council and provincial governments in both Iraq and Syria. 51 Explanatory Statement, Select Legislative Instrument No 108, 2014. 52 Section 13(1) of the Legislation Act 2003 (Cth) read with s 15AB of the Acts Interpretation Act 1901 (Cth). 53 See Criminal Code Amendment Regulations 2005 (No 1) (Cth). 54 See Criminal Code (Terrorist Organisation − Islamic State of Iraq and the Levant) Regulation 2013 (Cth). Regional and specialist cells act with relative autonomy under general direction from senior leaders." Under the heading "Membership", the Statement of Reasons continued: "The Islamic State has several thousand members in Iraq, mostly young Iraqi Sunni men. Its numbers have been boosted in 2014 by its success in capturing Iraqi cities and coercing or convincing Sunni tribes to ally with the group. It has also claimed responsibility for several mass prison breaks throughout Iraq that have freed hundreds of its members, most of whom are still at large. In Syria, the Islamic State has several thousand additional members drawn from both Syrian nationals and foreign fighters. Due to the Islamic State's Iraqi origins, a large number of its Syria-based senior operatives and leadership are Iraqi nationals. Fighters in both countries are able to pass freely across the border, which is no longer recognised by the Islamic State." The agreement that the organisation specified in the Regulation as "Islamic State" was the relevant "terrorist organisation" served to frame the critical issue in the trial as to whether the respondent was "intentionally ... a member of an organisation". The issue was whether the respondent was intentionally a member of the organisation specified in the Regulation as "Islamic State", being the particular organisation described in the Explanatory Statement. The prosecution case that the respondent was intentionally a member of the terrorist organisation identified as "Islamic State" was not put on the basis of the ordinary meaning of the term "member" as applied to that organisation. The prosecution case was put rather on the basis that the respondent fell within para (b) of the extended definition of "member" in s 102.1(1) of the Code because the respondent was "a person who [had] taken steps to become a member of the organisation". The prosecution sought to rely for the taking of the requisite "steps" on the respondent having engaged in six categories of conduct, ranging from "[a]ttempting to travel on a one-way ticket to Istanbul, Turkey in order to engage with the terrorist organisation, Islamic State" to "[s]elf-identification as 'muwahideen', a term used as an identifier by Islamic State members". Drawing on observations in Lodhi v The Queen55 concerning the policy adopted by the Commonwealth Parliament in enacting the Security Legislation Amendment (Terrorism) Act 2002 (Cth) to insert Pt 5.3 into the Code in the (2006) 199 FLR 303 at 318 [66]. aftermath of 11 September 2001, the trial judge directed the jury in relation to para (b) of the extended definition of "member" in s 102.1(1) as follows: "While traditionally preparatory acts are not often made into criminal offences, the prevention of terrorism requires criminal responsibility to arise at an earlier stage than is usually the case for other kinds of criminal conduct. Parliament has here created an offence that may apply at an early stage of a person's movement towards membership, and potentially participation in the activities, of a terrorist organisation." Drawing on observations in Benbrika v The Queen56 concerning the breadth and flexibility of the term "organisation" in the context of Pt 5.3 of the Code, the trial judge went on to direct the jury as follows: "There is no 'bright line' which enables one to say that there are sufficient characteristics of a member of an organisation present to conclude that the [respondent] is intentionally a member of an organisation; nor is there any set of necessary conditions, the absence of one of which would render the term 'member of an organisation' inapplicable. Rather, it is a question of fact and degree." Those directions were not wrong. They correctly stated the law so far as they went. The problem is that they did not go far enough in identifying for the jury the factual issues that needed to be determined by the jury if it was to be satisfied beyond reasonable doubt that the respondent had intentionally taken steps to become a member of the particular organisation specified in the Regulation and described in the Explanatory Statement. The directions were insufficient in that respect to discharge the overarching responsibility of the trial judge "(1) of deciding what [were] the real issues in the particular case, and (2) of telling the jury, in the light of the law, what those issues [were]"57. The deficiency in the directions was exacerbated by the abstracted and overbroad way in which the prosecution chose to put its case in its closing address. The prosecution put to the jury that "a person can be a member and is a member of [Islamic State] if that person knows of and agrees with and embraces the ideology and aims of the organisation and participates or takes steps to participate in advancing those aims and ideology and goals for the organisation". From that it followed, according to the prosecution, that "if a person knows of, agrees with and embraces the ideology and aims of the organisation and with intention, for (2010) 29 VR 593 at 607-623 [32]-[98]. 57 Alford v Magee (1952) 85 CLR 437 at 466. See also Fingleton v The Queen (2005) 227 CLR 166 at 196-198 [77]-[80]. example, puts into place steps to head off to Syria and Iraq ... that person is taking steps to become a member of the organisation". The trial judge went some way towards correcting the overreach of the prosecution submission when his Honour directed the jury that it could only find that the respondent "took steps to become a member of [Islamic State]" if it was satisfied beyond reasonable doubt that the respondent intended to travel to Turkey "in order to engage with [the] terrorist organisation Islamic State". But the direction did not go far enough. The problem that remained was a problem that lurked in the unexplicated content of the word "engage". Section 100.1(1) of the Code contains a definition of "organisation" for the purposes of Pt 5.3. The definition makes clear that an organisation is a "body" that "consists of persons". No doubt, as the prosecution argued in an earlier case, the body must be "a standing body of people with a particular purpose; not a transient group of conspirators who may come together for a single discrete criminal purpose"58. A "member" of an organisation in that statutory context – even an "informal member" within para (a) of the extended definition of "member" in s 102.1(1) – is necessarily a person who is identifiable by reference to objective circumstances as one of the body of persons of whom that organisation consists. A person can sympathise with or support an organisation, agreeing with and embracing the ideology and aims of the organisation and even taking steps to promote that ideology or to advance those aims, without thereby becoming identified as one of the body of persons of whom the organisation consists. the United Kingdom Parliament Though it is true that "[a] policy judgment has been made that the prevention of terrorism requires criminal responsibility to arise at an earlier stage than is usually the case for other kinds of criminal conduct"59, the Commonwealth Parliament has not gone so far in enacting and maintaining Pt 5.3 of the Code as the did Terrorism Act 2000 (UK) that "[a] person commits an offence if he belongs or professes to belong to a proscribed organisation". "The scope of 'profess'", Lord Bingham of Cornhill remarked in Sheldrake v Director of Public Prosecutions60, was "so uncertain that some of those liable to be convicted and punished for professing to belong to a proscribed organisation may be guilty of no conduct which could reasonably be regarded as blameworthy or such as should properly in s 11 of in providing 58 R v Ul-Haque (unreported, New South Wales Supreme Court, 8 February 2006) at 59 Lodhi v The Queen (2006) 199 FLR 303 at 318 [66]. [2005] 1 AC 264 at 312 [48]. attract criminal sanctions". The offence-creating provision was held in that case to infringe the presumption of innocence guaranteed by Art 6(2) of the European Convention on Human Rights, requiring it to be "read down" in accordance with the Human Rights Act 1998 (UK). The underlying purpose of the offence of "membership of a terrorist organisation" created by s 102.3 of the Code was and remains that identified by the Parliamentary Joint Committee on Intelligence and Security in its Review of Security and Counter Terrorism Legislation conducted in 2006 under the Intelligence Services Act 2001 (Cth) following its receipt of the Report of the Security Legislation Review Committee as required by s 4 of the Security Legislation Amendment (Terrorism) Act. The purpose, as then identified by the Parliamentary Joint Committee, is "to stop people from participating in entities/organisations that engage in or promote terrorism"61. In my opinion, a person cannot be said to be a person who has intentionally "taken steps to become a member of the organisation" within para (b) of the extended definition of "member" in s 102.1(1) of the Code unless two conditions can be shown to have been met. The first is that the person has engaged in conduct intending that conduct to be a step in causing a state of affairs to come into existence. The second is that, were that state of affairs to come into existence, the person would be identifiable by reference to that state of affairs as one of the body of persons of whom the particular "organisation" in question consists. Adequately to identify the factual issues to be determined in order for the jury to be satisfied beyond reasonable doubt that the respondent had intentionally taken steps to become a member of the organisation identified in the Regulation as "Islamic State" therefore required more than that the trial judge instruct the jury that it needed to be satisfied beyond reasonable doubt that the respondent had attempted to travel to Turkey intending to "engage" with "Islamic State". The trial judge needed to go on to instruct the jury that it needed to consider the nature of the intended engagement with "Islamic State" and to be satisfied beyond reasonable doubt that engagement of that nature, were it to occur, would result in the respondent becoming objectively identifiable as one of the body of persons of whom the organisation identified in the Regulation and described in the Explanatory Statement consists. In the Full Court of the Supreme Court, Kourakis CJ took the view that the only evidence from which any conclusions could be drawn about the structure of 61 Australia, Parliament, Parliamentary Joint Committee on Intelligence and Security, Review of Security and Counter Terrorism Legislation (2006) at [5.76]. "Islamic State" and about the nature of its membership was that of Dr Shanahan62, whose evidence did not squarely address the place of women within its organisational structure63, did not clearly distinguish the organisation from the caliphate it had proclaimed64, and did not clearly distinguish supporters from members65. In taking that view, his Honour appears to have given no weight to inferences available to be drawn from material shown to have been downloaded by the respondent from the internet which had been tendered by the prosecution. The prosecution appeal to this Court proceeded on the basis, uncontradicted by the respondent, that the material had been admitted into evidence at the trial without relevant restriction as to its use. The extracts from that material quoted by the majority in this Court sufficiently illustrate that it was open to the jury on the totality of the evidence to be satisfied that the respondent intended more than just to live in the "Sham" as a "Muhajirah" (immigrant girl) and there either to marry a "Mujahid" (fighter) or to act as a nurse tending to "Mujahideen" (fighters). The inference was open that she intended from the time she arrived in Turkey to pledge her allegiance to the Caliph and voluntarily to subject herself to the direction and discipline of "Islamic State" operatives. The same material also left it open to the jury to have concluded that doing so would have rendered her identifiable as one of the body of persons of whom the organisation identified in the Regulation and described in the Explanatory Statement consists. That conclusion would have been open to the jury whether or not the respondent would have been formally recognised as a member of the organisation by the leadership of the organisation, a topic on which the evidence is silent. My concern, however, is not that the evidence did not leave it open to the jury to convict but that the directions given to the jury did not adequately identify the issues of fact of which the jury needed to be satisfied beyond reasonable doubt on the evidence in order to convict. In my opinion, the directions were inadequate in consequence of which there occurred a miscarriage of justice in that the respondent was deprived of a chance of acquittal fairly open to her. The ground of appeal in s 158(1)(c) of the Criminal Procedure Act 1921 (SA) being established, the orders of the Full Court allowing the appeal against conviction and quashing the conviction must stand. The circumstance that the respondent has now served nearly the whole of the sentence imposed on her for 62 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [56]. 63 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [68]. 64 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [62]-[63]. 65 Abdirahman-Khalif v The Queen [2019] SASCFC 133 at [75]-[76]. the offence with which she was charged has the consequence that the discretion conferred by s 158(3) is in my opinion appropriately exercised to leave undisturbed the judgment and verdict of acquittal which the Full Court ordered to be entered rather than to substitute an order for a new trial66. 66 cf Parker v The Queen (1997) 186 CLR 494 at 520, 530-531.

HIGH COURT OF AUSTRALIA Matter No S395/2002 APPELLANT S395/2002 AND APPELLANT MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS RESPONDENT Matter No S396/2002 APPELLANT S396/2002 AND APPELLANT MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS RESPONDENT Appellant S395/2002 v Minister for Immigration and Multicultural Affairs Appellant S396/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 9 December 2003 S395/2002 and S396/2002 ORDER In each matter: 1. Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court dated 20 February 2002 and, in place thereof, order that: the appeal be allowed with costs; and the orders of Lindgren J dated 26 July 2001 be set aside and, in place thereof, order that: the application be granted with costs; the decision of the Refugee Review Tribunal dated 5 February 2001 be set aside; and (iii) the matter be remitted to the Tribunal for re-determination. On appeal from the Federal Court of Australia Representation: B Levet with P de Dassel for the appellants (instructed by Bharati Solicitors) S J Gageler SC with S B Lloyd for the respondent (instructed by Australian Government Solicitor) Intervener: J W K Burnside QC with S E Pritchard appearing as amicus curiae on behalf of Amnesty International Australia (instructed by Allens Arthur Robinson) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Appellant S395/2002 v Minister for Immigration and Multicultural Affairs Appellant S396/2002 v Minister for Immigration and Multicultural Affairs Immigration – Refugees – Particular social group identified as homosexual men in Bangladesh – Whether well-founded fear of persecution – Whether error of law by Refugee Review Tribunal in finding that no real chance of persecution because appellants conducted themselves discreetly and would continue to do so – Whether finding had effect of requiring appellants to act discreetly to avoid persecution – Whether need to act discreetly to avoid serious harm constituted persecution. Migration Act 1958 (Cth), s 476(1)(e). GLEESON CJ. The system of judicial review of administrative action, as it operates in relation to visa applications by people seeking acceptance as refugees, often means that, by the time a case reaches this Court, it is at the fifth level of decision-making. It may be, as in this case, that there have been adverse decisions at the first and second levels (the Minister's delegate and the Refugee Review Tribunal ("the Tribunal")) and that the Tribunal's decision has been upheld at the third (Federal Court of Australia) and fourth (Full Court of the Federal Court) levels. It may not be surprising that, at the fifth level, an appellant will look for a new way of putting a case that has already failed on four occasions. The case put to this Court may bear little relationship to what was previously advanced, considered, and rejected. There is a risk that criticism of the reasoning of a decision-maker at an earlier stage might overlook the forensic context in which such reasoning was expressed; a context that may have changed almost beyond recognition. Proceedings before the Tribunal are not adversarial; and issues are not defined by pleadings, or any analogous process. Even so, this Court has insisted that, on judicial review, a decision of the Tribunal must be considered in the light of the basis upon which the application was made, not upon an entirely different basis which may occur to an applicant, or an applicant's lawyers, at some later stage in the process1. The reasons for judgment of other members of the Court set out the general background to the present appeals, and it is unnecessary to repeat them. In considering whether the decision of the Tribunal involved error, it is necessary to be clear about the case which the appellants sought to make to the Tribunal, and the reasons why that case was rejected. The appellants based their claim that they had a well-founded fear of persecution if they returned to Bangladesh upon a series of assertions as to what had happened to them in the past. Their claim failed because those assertions were comprehensively disbelieved. The appellants told the Tribunal that they were homosexuals who had been living in Bangladesh in a domestic relationship, and that they had been ostracised by their families. The Tribunal accepted that much, but very little else, of what they had to say. The appellants claimed they had been sentenced to death by a religious council. They said they feared that, if they returned to Bangladesh, they would be killed or suffer other serious harm. That was the essence of their case before the Tribunal. That was the form of persecution in question. The appellants supported that case by evidence of threats and violence which they said they had experienced over many years. 1 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 77 ALJR 437 at 443 [31]; 195 ALR 1 at 8. In its reasons, the Tribunal, before recording the history of threats and violence given by the appellants, and for the purpose of evaluating the evidence of the appellants, set out, by way of background information, what it described as "the situation of homosexual men in Bangladesh". That information concluded with a summary to the effect that homosexuality is not accepted or condoned by society in Bangladesh, that it is not possible to live openly as a homosexual, but that people prefer to ignore the issue rather than confront it, and that "Bangladeshi men can have homosexual affairs or relationships, provided they are discreet". That information was to be used to evaluate the reliability of the account of threats and violence given by the appellants. The Tribunal then turned to that account. The first appellant said that his problems began in 1994 when, while he was living at home with his parents, some Islamic fundamentalists entered his bedroom and found him having sex with a male servant. He was told to leave home. Soon afterwards, he met the second appellant, and went to live with him. He said that local people abused, insulted, bashed and tortured him. When he and the second appellant moved to another locality, they were attacked and beaten, and their possessions were destroyed. They then came to Australia. They made a return visit to Bangladesh, but the first appellant's employer humiliated him and forced him to leave his job. Local fundamentalists issued a fatwa, which decreed that he should be stoned to death. He returned to Australia. For reasons that were explained in detail, the Tribunal found that information internally inconsistent and unconvincing. Those reasons are not in issue in these appeals, and it is unnecessary to go into them. The Tribunal also found the evidence difficult to reconcile with the background information referred to earlier. It is to be emphasised that the first appellant's claim of fear of future persecution was based upon an account of violence, torture, and condemnation to death, and a prediction of death or serious injury, not upon any supposed concern about being obliged, against his will, to behave discreetly. The second appellant's account of what had happened to him was at least as graphic, but, in the judgment of the Tribunal, even more difficult to accept. He said he left his family in 1980, when they suspected he would never marry. In 1980 or 1981, he raped several young men at his workplace. This resulted in the loss of his job (only). Before he met the first appellant, he had a relationship with another man. They were attacked on a number of occasions by Islamic fundamentalists. He was sentenced by the fundamentalists to 300 lashes of a whip with a stone on the end. He said the lashing left him scarred. The Tribunal asked to inspect the scars, and could find none. After the two appellants began to live together, they were mobbed on the street and beaten. The second appellant also was condemned to death by stoning. Again, for reasons set out in considerable detail, the Tribunal found the second appellant's evidence unworthy of credit. Again, it is presently immaterial to go into the detail of the Tribunal's reasons for rejecting the second appellant's account of what had happened to him. At the conclusion of the outline of the case made by the appellants, the evaluation of their evidence, and the explanation of the reasons for disbelieving that evidence, the Tribunal made the following statement, which is the foundation of the present appeal: "[The first appellant] and [the second appellant] did not experience serious harm or discrimination prior to their departure from Bangladesh and I do not believe that there is a real chance that they will be persecuted because of their sexuality if they return. As discussed above, while homosexuality is not acceptable in Bangladesh, Bangladeshis generally prefer to ignore the issue rather than confront it. [The appellants] lived together for over 4 years without experiencing any more than minor problems with anyone outside their own families. They clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now." When that passage is considered in the context of the claim advanced by the appellants, their evidence, the Tribunal's evaluation of the evidence, and the reasons given for rejecting that evidence, it is clear that the Tribunal was neither counselling nor requiring discretion on the part of the appellants. The statement that they had conducted themselves in a discreet manner in the past was made in the course of giving reasons for disbelieving their account of what had occurred to them in Bangladesh. It was part of a finding that they had not been attacked, beaten, tortured, or condemned to death, as they alleged. It was a finding of a fact relevant, and damaging, to their claim that they had reason, based on past events, to fear that they would be killed or seriously injured if they were to return to Bangladesh. The observation that they would behave in the future as they had in the past was no more than an expression of the conclusion that they had not been persecuted (in the manner they described) in the past, and there was no reason to believe that (as they claimed) they would be killed or seriously injured in the future. In this Court, the appellants fasten onto the Tribunal's reference to discreet behaviour as indicating that the Tribunal fell into the error of concluding, or assuming, that persecution does not exist if a person, by concealing opinions or behaviour likely to attract retribution and serious harm, can avoid such retribution. In truth, a fair reading of the reasons of the Tribunal shows that it made no such assumption, and reached no such conclusion. Indeed, any such assumption or conclusion would have had nothing to do with the claim advanced by the appellants. The appellants' argument, in my view, depends upon a misreading of the Tribunal's reasons. In particular, it depends upon taking the reference to discreet behaviour entirely out of context. It was never part of the claim advanced by the appellants to the Tribunal that the persecution they had experienced in the past, and apprehended in future, took the form of repression of behaviour about which they desired to be more open, and that they escaped harm only by concealing their relationship. If such a claim had been made, it would have raised factual and legal questions beyond the scope of the case put to the Tribunal. For example, the Tribunal had before it background information noting that the Penal Code of Bangladesh makes homosexual intercourse a criminal offence (s 377). A Bangladeshi lawyer was quoted as saying that he was not aware of any prosecutions of homosexuals in Bangladesh. This does not necessarily mean that the law is a dead letter2. If the case had been about enforced and unwilling conformity to external pressure to be discreet, the fact that there is a law against the behaviour in question would need to be taken into account. The Penal Code also makes adultery, and enticement, illegal (ss 497, 498). Presumably this affects the openness of some heterosexual behaviour. Standards of openness, and discretion, in sexual matters vary with time and place, and are influenced by a variety of legal and cultural factors. There was no argument in this Court about whether the existence and potential enforcement of s 377 of the Penal Code might itself constitute persecution. If a view is to be expressed on that matter, it should await a case in which the point is raised and argued. All this is far removed from any contention that was raised for decision by the Tribunal. The appellants did not claim that the law of Bangladesh itself involves persecution of homosexuals. They did not claim that they wanted to behave less discreetly about their sexual relationship, and that their inability to do so involved persecution. Their claim was that they had been subjected to extreme violence, and sentenced to death, and, for that reason, they feared that if they returned to Bangladesh they would be killed or seriously injured. That claim was rejected, and the Tribunal's reference to their discreet behaviour was no more than a factual element in the evaluation of their claim. The decisions of Lindgren J in the Federal Court and of the Full Court of the Federal Court were correct. The appeals should be dismissed with costs. cf Nur Mohammad @ Bog Master v The State 1989 BLD 314. 16 McHUGH AND KIRBY JJ. The 1951 Convention relating to the Status of Refugees3 declares4 that for the purpose of the Convention a refugee is a person who: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country The Refugee Review Tribunal ("the Tribunal") found that homosexual men in Bangladesh constituted a "particular social group" for the purpose of the Convention. But in that country, it is not possible to live openly as a homosexual. If a homosexual male – and perhaps a homosexual female – does so, that person runs the risk of suffering serious harm including the possibility of being bashed or blackmailed by police officers or "hustlers". The Tribunal found5 that, while living in Bangladesh, the appellants had conducted themselves discreetly with the result that they had escaped serious harm in the past. The Tribunal held that, if they were returned to Bangladesh and continued to conduct themselves discreetly in the future, they would not suffer serious harm by reason of their homosexuality. The questions in these appeals are whether the Tribunal erred in law: by impliedly dividing homosexual men into two particular social groups – discreet and non-discreet homosexual men; by failing to consider whether the need to act discreetly to avoid the threat of serious harm constituted persecution; and by failing to consider whether the appellants might suffer serious harm if members of the Bangladesh community discovered that they were homosexuals. In our opinion, the Tribunal erred in law in each of these respects. 3 As amended by the 1967 Protocol relating to the Status of Refugees. 4 Article 1A(2). 5 RRT Reference N99/28381; RRT Reference N99/28382. McHugh Kirby Statement of the case In February 1999, the appellants arrived in Australia from Bangladesh. Within two weeks of their arrival, they applied for protection visas, claiming that they were refugees because they feared persecution in Bangladesh by reason of their homosexuality. Under s 36(2) of the Migration Act 1958 (Cth), a non- citizen qualified for the grant of a protection visa if, among other matters, that person was a person to whom Australia owed protection obligations under the Convention. In April 1999, a delegate of the Minister for Immigration and Multicultural Affairs refused the appellants' applications. The Tribunal rejected their applications for a review of the delegate's decisions. The Tribunal found that the appellants were homosexuals and that in Bangladesh homosexual men are a particular social group for the purpose of the Convention. It also found that, while living in Bangladesh, the appellants had suffered no serious harm by reason of their homosexuality. The Tribunal said they had "clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now." Accordingly, the Tribunal held that the appellants had no well-founded fear that they would be persecuted if they returned to Bangladesh and that therefore they were not refugees within the meaning of the Convention entitled to a protection visa under the Migration Act. The Federal Court (Lindgren J) dismissed6 an application made by the appellants under s 476(1) of the Migration Act for a review of the decision of the Tribunal. Lindgren J held that, given the finding that the appellants had lived together discreetly, they "are able to return to Bangladesh and to resume living there in a homosexual relationship as they did previously without a well-founded fear of being persecuted for reason of their homosexuality". His Honour also noted that the appellants "did not complain that they had to modify their behaviour so as not to attract attention". The Full Court of the Federal Court (Black CJ, Tamberlin and Allsop JJ) dismissed7 an appeal against the order of Lindgren J. The Full Court held that, with one exception, the questions raised by the appellants were not matters that could be the subject of an application for review under s 476(1) of the Migration Act. The Full Court refused to allow the appellants to raise the remaining question – "whether modifying behaviour in order not to attract attention and so to prevent persecution would itself constitute persecution such as to found a claim under the Convention." The Full Court said: [2001] FCA 968. [2002] FCA 129. "They did not put this case forward to the Tribunal and it would be wrong to allow it to be raised now in an appeal from an application for judicial review." Subsequently, this Court granted the appellants special leave to appeal against the order of the Full Court. The appellants now appeal against that order on a single ground. They contend that the Tribunal erred in rejecting their applications because its decisions "involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the Tribunal". The material findings of the Tribunal The Tribunal found that the appellants were homosexual males who had lived together at various places in Bangladesh from 1994 to 1996. They came to Australia for several months in 1998. They came back to Australia in February 1999 and applied for protection visas in March 1999 on the ground that they had a well-founded fear of persecution their homosexuality. The Tribunal accepted that "homosexual men in Bangladesh constitute a particular social group under the Convention." The Tribunal found: in Bangladesh by reason of "[H]omosexuality is not accepted or condoned by society in Bangladesh and it is not possible to live openly as a homosexual in Bangladesh. To attempt to do so would mean to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police. However, Bangladeshi men can have homosexual affairs or relationships, provided they are discreet. Bangladeshis generally prefer to deny the existence of homosexuality in their society and, if possible, will ignore rather than confront it. It is also clear that the mere fact that two young men held hands or hugged in the street would not cause them to be seen as homosexuals, and that being caught engaging in sexual activity on one occasion would be most unlikely to cause a young single man to be labelled a homosexual." However, the Tribunal rejected various claims by the appellants that they had suffered persecution or any serious harm as the result of their homosexuality. The Tribunal "found much of the evidence given by both men regarding the problems which they faced during their time together to be lacking in credibility." The Tribunal rejected the appellants' claim that: McHugh Kirby they were attacked in the street in July 1998 and forced to leave their home and live in Dhaka "because they were having problems because of their sexuality"; they had come "to Australia in 1998 because it had been discovered that they were a homosexual couple and they had been attacked and threatened"; they had lost their jobs during 1998-1999 because they were homosexual; and a religious court had issued a fatwa (or an authoritative ruling) sentencing them to death by stoning. The Tribunal also rejected claims by one of the appellants that, because of his homosexuality: he had not been able to get work between 1980 and 1991; he was sentenced in 1985 to 300 lashes with a whip and whipped until he was unconscious; he and his then partner were tried and sentenced by a religious court in 1985; he and his then partner were attacked in their home in 1990; and he and the other appellant had been seen having sex in their home because they forgot to shut the door. However, the Tribunal accepted that the appellants: were shunned by their families because of their homosexuality; and may have been the subject of gossip and taunts from neighbours who suspected they were homosexuals. The Tribunal found that the shunning and any gossip or taunts did not constitute "serious harm amounting to persecution". The Tribunal said that the appellants: "did not experience serious harm or discrimination prior to their departure from Bangladesh and I do not believe that there is a real chance that they will be persecuted because of their sexuality if they return. As discussed above, while homosexuality is not acceptable in Bangladesh, Bangladeshis generally prefer to ignore the issue rather than confront it. [The appellants] lived together for over 4 years without experiencing any more than minor problems with anyone outside their own families. They clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now." (emphasis added) Persecution In a case like the present, defining the particular social group and the type of harm feared is fundamental in determining whether a member of that group has a well-founded fear of persecution. Only by defining the group and its characteristics or attributes, actual or imputed, can a tribunal of fact determine whether the harm feared is well-founded and is causally related to the particular social group8. So in determining whether there is a real chance that a discreet or non-discreet homosexual man in Bangladesh will suffer persecution, consideration must be given to: the characteristics and attributes of the particular social group; the nature, severity and likely repetitiveness of the harm feared; the extent to which, if at all, the individual will encounter the harm feared; the existence of a causal relationship between the harm feared and one or more of the characteristics or attributes, real or imputed, of the social group; and the extent to which the individual can be expected to tolerate the harm without leaving or refusing to return to the country of nationality9. The claims of the appellants In the statements that they filed in support of their claims for protection visas, each appellant said: 8 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092-1093 [26]-[27], 1099 [69]-[72]; 197 ALR 389 at 394-395, 9 Minister for Immigration and Multicultural Affairs v Haji Ibrahim (2000) 204 CLR McHugh Kirby "We realized Bangladesh is not a safe place for us at all. Our ideology and perceptions were wrong in the eyes of the 99% people in Bangladesh. We were captives in our homeland. There are no rights for us in the state Constitution. ... I have a real fear of persecution. If I return to Bangladesh I will be killed. My life is not safe. I will be killed not only by the fundamentalists but also by the general masses." Each appellant supported these claims with assertions of harm and discrimination that he had suffered while living in Bangladesh. With the exception of matters that the Tribunal regarded as minor, it rejected these claims. Although rejecting the appellants' claims of past acts of persecution, the Tribunal nevertheless considered what might happen to them if they returned to Bangladesh. It concluded that there was no "real chance that they will be persecuted because of their sexuality if they return." Central to that conclusion was the assumption or implicit finding of the Tribunal that homosexual men in Bangladesh will not be subjected to persecution if they act discreetly. The need to act discreetly Much of the appellants' argument in this Court was directed to the claim that the Tribunal had required them "to be 'discreet' about their membership of a group." In answer, the Minister submitted that the Tribunal had imposed no such requirement. He contended that it merely found that the appellants would live discreetly in the future, as they had done in the past, because "there is no reason to suppose that they would not continue to do so if they returned home now." It was for that reason, so the Minister contended, that the Tribunal found the appellants had no well-founded fear of persecution. In our view, these contentions of the Minister are correct. The reasons of the Tribunal show, however, that it did not consider whether the choice of the appellants to live discreetly was a voluntary choice uninfluenced by the fear of harm if they did not live discreetly. It did not consider whether persons for whom the government of Bangladesh is responsible condone or inculcate a fear of harm in those living openly as homosexuals, although it seems implicit in the Tribunal's findings that they do. Nor did the Tribunal's reasons discuss whether the infliction of harm can constitute persecution where an applicant must act discreetly to avoid that harm. Nor did they discuss whether, if the appellants wished to display, or inadvertently disclosed, their sexuality or relationship to other people, they were at risk of suffering serious harm constituting persecution. If the Tribunal could not have properly exercised its jurisdiction without considering these matters, it has fallen into jurisdictional error and the Federal Court should have set aside the Tribunal's decisions. Either expressly or by necessary inference, the Minister argued that the appellants cannot raise in this Court any of the matters referred to in the previous paragraph. Moreover as we earlier indicated, the Full Court of the Federal Court, having noted that the appellants had not claimed before the Tribunal that they had suffered harm by reason of having to live discreetly, held that they could not raise that issue in the Full Court. The Minister supported the correctness of this finding by reference to what Gummow and Hayne JJ had said in Abebe v Commonwealth10 in a passage with which Gaudron and Kirby JJ agreed11: "It is for the applicant to advance whatever evidence or argument she wishes to advance in support of her contention that she has a well-founded fear of persecution for a Convention reason. The Tribunal must then decide whether that claim is made out." The Minister also relied on a passage in the judgment of Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/200212. In that case, their Honours said13 that the Tribunal had "to consider the application and the criteria which that application had to meet, not the criteria for an application, never made, which might have been put on another basis." Reliance on these cases might be persuasive if the Tribunal had rejected the appellants' claims for a protection visa simply because the appellants' evidence lacked credibility. But the Tribunal went further than rejecting the appellants' claims on credibility grounds. It examined the general issue of homosexuality and persecution in Bangladesh by using "country information" from the Department of Foreign Affairs and Trade, by making enquiries of various people and organisations and by taking into account various publications concerned with the subjects of homosexuality and persecution. It was this information, and not the evidence or arguments of the appellants, that led the Tribunal to conclude that "it is not possible to live openly as a homosexual in Bangladesh." It was this information that also led the Tribunal to conclude that "[t]o attempt to do so would mean to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police." And it seems 10 (1999) 197 CLR 510 at 576 [187]. 11 (1999) 197 CLR 510 at 546 [90] and 584 [212] respectively. 12 (2003) 77 ALJR 437; 195 ALR 1. 13 (2003) 77 ALJR 437 at 443 [31]; 195 ALR 1 at 8. McHugh Kirby likely that it was this information that led the Tribunal to conclude that the appellants would not be persecuted if they acted discreetly in the future. On a number of occasions this Court has said that proceedings before the Tribunal are inquisitorial in nature. The arguments and evidence of applicants or the Minister cannot narrow the Tribunal's jurisdiction to investigate the generality of a claim for a protection visa. Whatever the arguments or evidence of an applicant, the Tribunal is entitled, but not bound, to look at the issue generally. If the Tribunal elects to exercise its jurisdiction more widely than the applicant or the Minister has asked, however, it must do so in accordance with law. Given that the appellants claimed that Bangladesh was "not a safe place for [them] at all" and that they had "a real fear of persecution", the Tribunal was entitled to go beyond examining whether the appellants faced persecution because of their personal history. Notwithstanding that it rejected the particular claims of the appellants, it was entitled to investigate the matter more fully and determine whether the appellants' more general fear of persecution was well- founded. Rejection of an applicant's specific claims of persecution and the failure to identify other forms of harm provide a reason for holding that the applicant has no fear of persecution. But that is all. In the present case, for example, although the appellants did not raise any issue of modifying their behaviour because they feared persecution, it seems highly likely that they acted discreetly in the past because they feared they would suffer harm unless they did. If it is an error of law to reject a Convention claim because the applicant can avoid harm by acting discreetly, the Tribunal not only erred in law but has failed to consider the real question that it had to decide – whether the appellants had a well-founded fear of persecution. Living openly as a homosexual The purpose of the Convention is to protect the individuals of every country from persecution on the grounds identified in the Convention whenever their governments wish to inflict, or are powerless to prevent, that persecution. Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to State sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. But persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The Convention would give no protection from persecution for reasons of religion or political opinion if it was a condition of protection that the person affected must take steps – reasonable or otherwise – to avoid offending the wishes of the persecutors. Nor would it give protection to membership of many a "particular social group" if it were a condition of protection that its members hide their membership or modify some attribute or characteristic of the group to avoid persecution. Similarly, it would often fail to give protection to people who are persecuted for reasons of race or nationality if it was a condition of protection that they should take steps to conceal their race or nationality. History has long shown that persons holding religious beliefs or political opinions, being members of particular social groups or having particular racial or national origins are especially vulnerable to persecution from their national authorities. The object of the signatories to the Convention was to protect the holding of such beliefs, opinions, membership and origins by giving the persons concerned refuge in the signatory countries when their country of nationality would not protect them. It would undermine the object of the Convention if the signatory countries required them to modify their beliefs or opinions or to hide their race, nationality or membership of particular social groups before those countries would give them protection under the Convention. As Simon Brown LJ stated in Secretary of State for the Home Department v Ahmed14: "It is one thing to say ... that it may well be reasonable to require asylum seekers to refrain from certain political or even religious activities to avoid persecution on return. It is quite another thing to say that, if in fact it appears that the asylum seeker on return would not refrain from such activities – if, in other words, it is established that he would in fact act unreasonably – he is not entitled to refugee status." (original emphasis) Simon Brown LJ went on to say: "[I]n all asylum cases there is ultimately but a single question to be asked: is there a serious risk that on return the applicant would be persecuted for a Convention reason? If there is, then he is entitled to asylum. It matters not whether the risk arises from his own conduct in this country, however unreasonable." The notion that it is reasonable for a person to take action that will avoid persecutory harm invariably leads a tribunal of fact into a failure to consider properly whether there is a real chance of persecution if the person is returned to the country of nationality. This is particularly so where the actions of the persecutors have already caused the person affected to modify his or her conduct by hiding his or her religious beliefs, political opinions, racial origins, country of nationality or membership of a particular social group. In cases where the applicant has modified his or her conduct, there is a natural tendency for the tribunal of fact to reason that, because the applicant has not been persecuted in the past, he or she will not be persecuted in the future. The fallacy underlying 14 Unreported, United Kingdom Court of Appeal, 5 November 1999 at 8. McHugh Kirby this approach is the assumption that the conduct of the applicant is uninfluenced by the conduct of the persecutor and that the relevant persecutory conduct is the harm that will be inflicted. In many – perhaps the majority of – cases, however, the applicant has acted in the way that he or she did only because of the threat of harm. In such cases, the well-founded fear of persecution held by the applicant is the fear that, unless that person acts to avoid the harmful conduct, he or she will suffer harm. It is the threat of serious harm with its menacing implications that constitutes the persecutory conduct. To determine the issue of real chance without determining whether the modified conduct was influenced by the threat of harm is to fail to consider that issue properly. Subject to the law, each person is free to associate with any other person and to act as he or she pleases, however much other individuals or groups may disapprove of that person's associations or particular mode of life. This is the underlying assumption of the rule of law. Subject to the law of the society in which they live, homosexuals as well as heterosexuals are free to associate with such persons as they wish and to live as they please. If a person claims refugee status on the ground that the law of the country of his or her nationality penalises homosexual conduct, two questions always arise. First, is there a real chance that the applicant will be prosecuted if returned to the country of nationality? Second, are the prosecution and the potential penalty appropriate and adapted to achieving a legitimate object of the country of nationality15? In determining whether the prosecution and penalty can be classified as a legitimate object of that country, international human rights standards as well as the laws and culture of the country are relevant matters. If the first of these questions is answered: Yes, and the second: No, the claim of refugee status must be upheld even if the applicant has conducted him or herself in a way that is likely to attract prosecution. In some countries, there may be little or no chance of a law against homosexual conduct being enforced. In Bangladesh, for example, s 377 of the Penal Code makes it an offence to have "carnal intercourse against the order of nature with any man, woman or animal". The offence carries various penalties, one of which is "imprisonment for life". However, a person who had practised law for 20 years told the Tribunal that prosecutions under the section were "extremely rare". That person had never known or heard of a person being prosecuted under the section during that time in practice. No doubt for that reason, the appellants did not suggest that the existence of s 377, and its potential application to them, constituted persecution for a Convention reason. 15 Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at Even where a law such as s 377 is not enforced, however, there may be a real chance that a homosexual person will suffer serious harm – bashings or blackmail, for example – that the government of the country will not or cannot adequately suppress. That appears to be the position in Bangladesh. If the harm is inflicted for a Convention reason and is serious enough to constitute persecution, the homosexual person is entitled to protection under the Convention. It is immaterial that the conduct of the applicant for refugee status disclosed his or her identity as a homosexual and attracted the attention of the persecutors. The Federal Court has recognised that taking steps to hide political opinions and activities is no answer to a claim for refugee status where the applicant claims he or she will be persecuted for those opinions or activities16. But in a series of cases concerned with homosexual applicants, the Federal Court and the Tribunal have assumed, decided or accepted that the capacity of an applicant to avoid persecutory harm is relevant to whether the applicant faces a real chance of persecution17. Thus, in WABR v Minister for Immigration and Multicultural Affairs18, the Full Court of the Federal Court said: "[I]t was open to the Tribunal to conclude, on the material that was before it, that there was no active program for the prosecution of homosexuals in Iran, so long as they were discreet and conducted their affairs privately. It was also open to the Tribunal to conclude that it was reasonable to expect that the appellant would accept the constraints that were a consequence of the exercise of that discretion." Whether or not WABR was rightly decided on its facts, this statement of the Full Court should have played no part in the Court's reasoning process. In WABR, the appellant, an Iranian, alleged that he was a homosexual and claimed that he feared persecution because homosexual conduct was illegal in Iran and that penalties ranged from death to flogging to imprisonment. Thus, the issues 16 Win v Minister for Immigration and Multicultural Affairs [2001] FCA 132. 17 RRT Reference V96/05496; RRT Reference N97/14489; RRT Reference N98/21362; RRT Reference N98/24718; RRT Reference N98/23955; Khalili Vahed v Minister for Immigration and Multicultural Affairs [2001] FCA 1404 – on appeal SAAF v Minister for Immigration and Multicultural Affairs [2002] FCA 343; Nezhadian v Minister for Immigration and Multicultural Affairs [2001] FCA 1415; WABR v Minister for Immigration and Multicultural Affairs (2002) 121 FCR 18 (2002) 121 FCR 196 at 205 [27]. McHugh Kirby were whether there was a real chance of the appellant being prosecuted for homosexuality and, if so, whether the prosecution and any potential penalty were so inappropriately adapted to achieving a legitimate object of Iranian society as to amount to persecution19. The reasonableness of the appellant's conduct was not relevant to either issue. In determining whether the appellant faced a real chance of prosecution, the Tribunal was entitled to consider not only the prosecuting policies of the Iranian authorities, but also the likelihood that inadvertently or deliberately the appellant might attract their attention. But the reasonableness of his conduct did not bear on the issue. In so far as decisions in the Tribunal and the Federal Court contain statements that asylum seekers are required, or can be expected, to take reasonable steps to avoid persecutory harm, they are wrong in principle and should not be followed. The Tribunal misdirected itself on the issue of discretion Central to the Tribunal's decision was the finding that the appellants had not suffered harm in the past because they had acted discreetly. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, the Tribunal failed to determine whether the appellants had acted discreetly only because it was not possible to live openly as a homosexual in Bangladesh. Because of that failure, the Tribunal, unsurprisingly, failed to give proper attention to what might happen to the appellants if they lived openly in the same way as heterosexual people in Bangladesh live. The Tribunal did find, however, that to attempt to live openly as a homosexual in Bangladesh "would mean to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police." That finding appears to be based on an acceptance of the evidence of Mr Khan, the Executive Director of the Naz Foundation. In its reasons, the Tribunal recorded "[T]he consequences of being identified as homosexual vary enormously, from acceptance and tolerance, to harassment, physical abuse or expulsion from the community. Most of the harassment of males who have sex with males takes the form of extortion by local police and hustlers who threaten to expose them to their families if they do not cooperate." 19 Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at The Tribunal's findings on the attitude of Bangladesh society and the statements of the appellants indicate that they were discreet about their relationship only because they feared that otherwise they would be subjected to the kinds of discrimination of which Mr Khan spoke. If the Tribunal had found that this fear had caused them to be discreet in the past, it would have been necessary for the Tribunal then to consider whether their fear of harm was well-founded and amounted to persecution. That would have required the Tribunal to consider what might happen to the appellants in Bangladesh if they lived openly as a homosexual couple. Would they have suffered physical abuse, discrimination in employment, expulsion from their communities or violence or blackmail at the hands of police and others, as Mr Khan suggested were possibilities? These were the sorts of questions that the Tribunal was bound to consider if it found that the appellants' "discreet" behaviour in the past was the result of fear of what would happen to them if they lived openly as homosexuals. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, however, the Tribunal disqualified itself from properly considering the appellants' claims that they had a "real fear of persecution" if they were returned to Bangladesh. It follows that the Tribunal has constructively failed to exercise its jurisdiction and its decision must be set aside. The Federal Court therefore erred in rejecting the appellants' claim for judicial review of the Tribunal's decision under s 476(1)(e) of the Migration Act. Particular social group and persecution In our opinion, the Tribunal also fell into jurisdictional error by failing to consider the issue of persecution in relation to the correct "particular social group"20. As we have indicated, the Tribunal found that homosexual men in Bangladesh constituted a "particular social group" for the purpose of the Convention. As a matter of law, this finding was open to the Tribunal21. Indeed, if the Tribunal had held otherwise, its decision would arguably have been perverse. However, by declaring that there is no reason to suppose that the appellants would not continue to act discreetly in the future, the Tribunal has 20 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092-1093 [26]-[27], 1099 [69]-[72]; 197 ALR 389 at 394-395, 21 Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 265, 293-294, 303-304; MMM v Minister for Immigration and Multicultural Affairs (1998) 90 FCR 324 at 330; R v Immigration Appeal Tribunal; Ex parte Shah [1999] 2 AC 629 at 652. McHugh Kirby effectively broken the genus of "homosexual males in Bangladesh" into two groups – discreet and non-discreet homosexual males in Bangladesh. This inevitably invited error. It leads to the Federal Court and the Tribunal examining a claim for refugee status in the way that Ryan J did in Applicant LSLS v Minister for Immigration and Multicultural Affairs22 when his Honour said: "I have therefore confined my examination of this issue to considering whether the applicant had a well-founded fear of persecution if he were to pursue a homosexual lifestyle in Sri Lanka, disclosing his sexual orientation to the extent reasonably necessary to identify and attract sexual partners and maintain any relationship established as a result." (emphasis added) Similarly, in this case, consciously or unconsciously, the Tribunal directed its mind principally to the consequences of the sexual behaviour of the non- discreet members of the particular social group. Certainly, it made only passing reference to other forms of harm to members of the social group generally. And it failed to consider whether the appellants might suffer harm if for one reason or another police, hustlers, employers or other persons became aware of their homosexual identity. The perils faced by the appellants were not necessarily confined to their own conduct, discreet or otherwise. If the Tribunal had placed the appellants in the non-discreet group, it appears that it would have found that they were likely to be persecuted by reason of their membership of that group. Conversely, by placing the appellants in the discreet group, the Tribunal automatically assumed that they would not suffer persecution. But to attempt to resolve the case by this kind of classification was erroneous23. It diverted the Tribunal from examining and answering the factual questions that were central to the persecution issues. Even if the Tribunal had classified the appellants as non-discreet homosexual men, it did not necessarily follow that they would suffer persecution. Conversely, it did not follow that discreet homosexual men would not suffer persecution. Whether members of a particular social group are regularly or often persecuted usually assists in determining whether a real chance exists that a particular member of that class will be persecuted. Similarly, whether a particular individual has been persecuted in the past usually assists in determining whether that person is likely to be persecuted in the future24. But 22 [2000] FCA 211 at [24]. 23 cf R v Immigration Appeal Tribunal; Ex parte Shah [1999] 2 AC 629 at 663. 24 Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559. neither the persecution of members of a particular social group nor the past persecution of the individual is decisive. History is a guide, not a determinant. Moreover, helpful as the history of the social group may be in determining whether an applicant for a protection visa is a refugee for the purpose of the Convention, its use involves a reasoning process that can lead to erroneous conclusions. It is a mistake to assume that because members of a group are or are not persecuted, and the applicant is a member of that group, the applicant will or will not be persecuted. The central question is always whether this individual applicant has a "well-founded fear of being persecuted for reasons of ... membership of a particular social group". It follows that whether or not a Bangladeshi male homosexual applying for a protection visa has a well-founded fear of persecution cannot be determined by assigning him to the discreet or non-discreet group of homosexual males and determining the probability of a member of that group suffering persecution. An applicant claiming refugee status is asserting an individual right and is entitled to have his or her claim considered as an individual, not as the undifferentiated member of a group. By declaring that there was no reason to suppose that the appellants would not continue to act discreetly in the future, the Tribunal effectively broke the genus of "homosexual males in Bangladesh" into two groups – discreet and non- discreet homosexual men in Bangladesh. By doing so, the Tribunal fell into jurisdictional error that renders its decision of no force or effect. Order The appeal should be allowed. The order of the Full Court of the Federal Court in each case should be set aside. In place thereof, this Court should order that the appeal to the Full Court be allowed and the orders of Lindgren J be set aside. In place thereof, it should be ordered that the application be granted, the decision of the Tribunal be set aside and the matter remitted to the Tribunal to re- determine its review of the decision of the Minister's delegate. The Minister should pay the costs of the appeal to this Court, the proceedings before Lindgren J and the appeal to the Full Court of the Federal Court. GUMMOW AND HAYNE JJ. The appellants arrived in Australia from Bangladesh in 1999. They applied for protection visas claiming that they feared persecution in Bangladesh because they were homosexual. The delegate of the respondent Minister refused their applications. In February 2001, the Refugee Review Tribunal ("the Tribunal") affirmed the delegate's decisions. In July of that year, a single judge of the Federal Court of Australia (Lindgren J) dismissed their applications for review of the Tribunal's decisions25. On 20 February 2002, the Full Court of the Federal Court (Black CJ, Tamberlin and Allsop JJ) dismissed the appellants' appeals from the orders of Lindgren J26. By special leave they now appeal to this Court. The sole ground of appeal advanced by each appellant was that the Federal Court should have held that the ground of review specified in s 476(1)(e) of the Migration Act 1958 (Cth) ("the Act"), as it stood at the relevant time, was made out. That is, each appellant alleged that the Tribunal's decision "involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found" by the Tribunal. The essential issue in this Court was whether the Tribunal had properly applied the Convention27 definition of "refugee". At the times relevant to this matter, the Act provided (by s 36(2)) that a criterion for a protection visa was that the applicant was a non-citizen in Australia to whom Australia had protection obligations under the Convention. Australia had protection obligations under the Convention to those who, within Art 1 of the Convention, were refugees. It was not disputed that the amendments made to the Act by the Migration Legislation Amendment Act (No 6) 2001 (Cth), which changed the Act's provisions dealing with refugees in a number of ways, had no application in the determination of the appeals28. The question for the Tribunal was, therefore, were the appellants, being outside their country of nationality, persons who "owing to well-founded fear of being persecuted for reasons of ... membership of a particular social group" were 25 [2001] FCA 968. 26 [2002] FCA 129. 27 The Convention relating to the Status of Refugees done at Geneva on 28 July 1951 as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 28 The Minister contended that on remitter to the Tribunal those provisions will apply – Migration Legislation Amendment Act (No 6) 2001 (Cth), Sched 1, Item 7(c). unable, or owing to such fear, were unwilling, to avail themselves of the protection of their country of nationality. It is important to note that the Tribunal found, and it has not since been disputed, that each appellant was a member of a particular social group identified as homosexual men in Bangladesh. The fundamental question which then arises is: did the Tribunal address the correct question in relation to well-founded fear of persecution? The term "persecution" is not defined in the Convention, and in the decisions of this Court there has been no precise tracing of the metes and bounds of its meaning in the Convention definition of "refugee" applied in the Act. It is not of great assistance and is apt to mislead to approach the matter by saying, as did an English court, that "persecution" is a "strong word"29. However, it is clear from the decision of this Court in Minister for Immigration and Multicultural Affairs v Haji Ibrahim30 that a systematic course of conduct is not required. Further, in the joint judgment of six members of this Court in Minister for Immigration and Ethnic Affairs v Guo31, an approving reference was made to the proposition stated by McHugh J in Chan v Minister for Immigration and Ethnic Affairs32 that measures in disregard of human dignity may, in appropriate cases, constitute persecution. In the present appeals, there was no challenge to those propositions. The Tribunal The Tribunal concluded that there was not a real chance that the appellants would be persecuted because of their sexuality if they were to return to Bangladesh. It did not accept a number of particular contentions which the appellants made. In particular, it did not accept that a judgment by a local religious council (a fatwa) had been issued condemning the appellants to death. Nonetheless, the Tribunal accepted that "homosexuality is not accepted or condoned by society in Bangladesh and [that] it is not possible to live openly as a homosexual in Bangladesh". The consequences of attempting to do so were said to be "to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police". 29 R v Secretary of State for the Home Department; Ex parte Zia Mehmet Binbasi [1989] Imm AR 595 at 599 per Kennedy J. 30 (2000) 204 CLR 1 at 4 [1], 7 [16], 20 [60], 30 [95], 44 [133], 67 [192], 72 [203], 79 31 (1997) 191 CLR 559 at 570. 32 (1989) 169 CLR 379 at 430. The material before the Tribunal included reference to s 377 of the Penal Code of Bangladesh. That section provided that: "Whoever voluntarily has carnal intercourse against the order of nature with any man, woman or animal, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine." This information was obtained from The International Lesbian and Gay Association and provided by The Naz Foundation in response to inquiries by the Tribunal. The author of the document sent to the Tribunal said that instances of prosecution under the section were "extremely rare" and that, in 20 years of law practice, "I have not known or heard of a case where a person has been prosecuted for or convicted of homosexuality" under s 377. Presumably, it was for this reason that neither the appellants in their submissions to the Tribunal, nor the Tribunal in its reasons, mentioned the possible enforcement of s 377 as an adverse consequence feared by the appellants. Central to the Tribunal's reasoning rejecting the appellants' claims were three propositions: (i) that although homosexuality is not acceptable in Bangladesh, Bangladeshis "generally prefer to ignore the issue rather than confront it"; (ii) the appellants had lived together in Bangladesh for over four years "without experiencing any more than minor problems with anyone outside their own families"; and (iii) the appellants "clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now". The appellants submitted both in the courts below, and in this Court, that the Tribunal's error lay in the third of these three propositions. They contended that the Tribunal had, in effect, required that they act discreetly in order to avoid what otherwise would be persecution. The respondent Minister contended that the Tribunal had made no such requirement. The Minister submitted that the Tribunal had made a finding about what the appellants would do on their return and that, based on that finding, it had concluded that there was not a real chance of persecution. On its face, the immediate dispute between the parties was about how the Tribunal's reasons should be understood. To resolve it, however, it is necessary to recall some fundamental principles. Applicable principles It is well established that the Convention definition of "refugee" has subjective and objective elements. Does the applicant fear persecution for a Convention reason (the subjective element)? Is that fear well founded (the objective element)? The fear will be well founded if there is a real chance that the applicant would face persecution for a Convention reason if the applicant returned to the country of nationality33. The objective element requires the decision-maker to decide what may happen if the applicant returns to the country of nationality. That is an inquiry which requires close consideration of the situation of the particular applicant. It requires identification of the relevant Convention reasons that the applicant has for fearing persecution. It is necessary, therefore, to identify the "reasons of race, religion, nationality, membership of a particular social group or political opinion" that are engaged. Because the question requires prediction of what may happen, it is often instructive to examine what has happened to an applicant when living in the country of nationality. If an applicant has been persecuted for a Convention reason, there will be cases in which it will be possible, even easy, to conclude that there is a real chance of repetition of that persecution if the applicant returns to that country. Yet absence of past persecution does not deny that there is a real chance of future persecution. Again, because the question requires prediction, a decision-maker will often find it useful to consider how persons like the applicant have been, or are being, treated in the applicant's country of nationality. That is useful because it may assist in predicting what may happen if the applicant returns to the country of nationality. But, as with any reasoning of that kind, the critical question is how similar are the cases that are being compared. Because reasoning of the kinds just described is often employed, it is perhaps inevitable that those, like the Tribunal, who must deal with large numbers of decisions about who is a refugee, will attempt to classify cases. There are dangers in creating and applying a scheme for classifying claims to protection. Those dangers are greatest if the classes are few and rigidly defined. But whatever scheme is devised, classification carries the risk that the individual and distinctive features of a claim are put aside in favour of other, more general features which define the chosen class. Further, there is a serious risk of inverting the proper order of inquiry by arguing from an a priori classification given to the applicant, or the applicant's claim, to a conclusion about what may happen to the applicant if he or she 33 Chan v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379; Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 571-573. returns to the country of nationality, without giving proper attention to the accuracy or applicability of the class chosen. That is, there is a real risk of assuming (wrongly) that a particular applicant will be treated in the same way as others of that race, religion, social class or political view are treated in that country. It would, for example, be wrong to argue from a premise like "homosexuality is generally ignored in Bangladesh" to a conclusion that "this applicant (a homosexual) will not be persecuted on account of his sexuality", without paying close attention to the effect of the qualification of the premise provided by the word "generally". Thus it would be necessary in the example given to consider whether, on return to Bangladesh, the applicant would stand apart from other homosexuals in that country for any reason. "Discretion" and "being discreet" The central question in any particular case is whether there is a well-founded fear of persecution. That requires examination of how this applicant may be treated if he or she returns to the country of nationality. Processes of classification may obscure individual and fact-specific inquiry which must be made34. the essentially The dangers of arguing from classifications are particularly acute in matters in which the applicant's sexuality is said to be relevant. Those dangers lie within the notions of "discretion" and "being discreet": terms often applied in connection with some aspects of sexual expression. To explain why use of those terms may obscure more than they illuminate, it is useful to begin by considering Convention reasons other than membership of a social group defined in terms of sexual identity. If an applicant holds political or religious beliefs that are not favoured in the country of nationality, the chance of adverse consequences befalling that applicant on return to that country would ordinarily increase if, on return, the applicant were to draw attention to the holding of the relevant belief. But it is no answer to a claim for protection as a refugee to say to an applicant that those adverse consequences could be avoided if the applicant were to hide the fact that he or she holds the beliefs in question. And to say to an applicant that he or she should be "discreet" about such matters is simply to use gentler terms to convey the same meaning. The question to be considered in assessing whether the applicant's fear of persecution is well founded is what may happen if the 34 R (Sivakumar) v Secretary of State for the Home Department [2003] 1 WLR 840 at 841 [2] per Lord Bingham of Cornhill, 843 [7] per Lord Steyn, 854 [42] per Lord Rodger of Earlsferry; [2003] 2 All ER 1097 at 1099, 1101, 1112. applicant returns to the country of nationality; it is not, could the applicant live in that country without attracting adverse consequences. It is important to recognise the breadth of the assertion that is made when, as in the present case, those seeking protection allege fear of persecution for reasons of membership of a social group identified in terms of sexual identity (here, homosexual men in Bangladesh). Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity. That two individuals engage in sexual acts in private (and in that sense "discreetly") may say nothing about how those individuals would choose to live other aspects of their lives that are related to, or informed by, their sexuality. Saying that an applicant for protection would live "discreetly" in the country of nationality may be an accurate general description of the way in which that person would go about his or her daily life. To say that a decision-maker "expects" that that person will live discreetly may also be accurate if it is read as a statement of what is thought likely to happen. But to say that an applicant for protection is "expected" to live discreetly is both wrong and irrelevant to the task to be undertaken by the Tribunal if it is intended as a statement of what the applicant must do. The Tribunal has no jurisdiction or power to require anyone to do anything in the country of nationality of an applicant for protection. Moreover, the use of such language will often reveal that consideration of the consequences of sexual identity has wrongly been confined to participation in sexual acts rather than that range of behaviour and activities of life which may be informed or affected by sexual identity. No less importantly, if the Tribunal makes such a requirement, it has failed to address what we have earlier identified as the fundamental question for its consideration, which is to decide whether there is a well-founded fear of persecution. It has asked the wrong question. Addressing the question of what an individual is entitled to do (as distinct from what the individual will do) leads on to the consideration of what modifications of behaviour it is reasonable to require that individual to make without entrenching on the right. This type of reasoning, exemplified by the passages from reasons of the Tribunal in other cases, cited by the Federal Court in Applicant LSLS v Minister for Immigration and Multicultural Affairs35, leads to error. It distracts attention from the fundamental question. It leads to confining the examination undertaken (as it was in LSLS) merely "to considering whether the applicant had a well-founded fear of persecution if he were to pursue a homosexual lifestyle in [the country of nationality], disclosing his sexual 35 [2000] FCA 211 at [20]-[21]. orientation to the extent reasonably necessary to identify and attract sexual partners and maintain any relationship established as a result"36. That narrow inquiry would be relevant to whether an applicant had a well-founded fear of persecution for a Convention reason only if the description given to what the applicant would do on return was not only comprehensive, but exhaustively described the circumstances relevant to the fear that the applicant alleged. On its face it appears to be an incomplete, and therefore inadequate, description of matters following from, and relevant to, sexual identity. Whether or not that is so, considering what an individual is entitled to do is of little assistance in deciding whether that person has a well-founded fear of persecution. This case It is against the background of these principles that these appeals must be determined. Much attention was given in argument to the sentence appearing near the end of the reasons of the Tribunal which we have set out above: that the appellants "clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now". Taken in isolation, it is far from clear that the Tribunal is there to be understood as seeking to impose any requirement on the appellants. The better view is that that sentence records the Tribunal's conclusion about what the appellants were likely to do if they did return to Bangladesh. Of more concern is the Tribunal's statement that "it is not possible to live openly as a homosexual in Bangladesh". It went on to say that: "To attempt to do so would mean to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police." (emphasis added) The Tribunal further found that "Bangladeshi men can have homosexual affairs or relationships, provided they are discreet". (emphasis added) Nowhere in the reasons of the Tribunal is any consideration given explicitly to whether there was a real chance that the appellants would be subjected to any of the "more serious forms of harm" to which the Tribunal alluded. Nowhere in the reasons is any consideration given explicitly to whether the appellants would be subjected to ill-treatment by police. Nowhere is there consideration of whether subjection to any of these "more serious forms of harm" would amount to persecution. 36 [2000] FCA 211 at [24]. The primary judge37 and the Full Court38 understood the Tribunal as finding that "[i]t is only if a homosexual couple force Bangladeshi society to confront their homosexual identity that they will encounter problems". That may be accepted. Both the primary judge39 and the Full Court40 held further, however, that the finding about how the appellants were likely to live on their return to Bangladesh supported the Tribunal's finding that the appellants' fears of persecution were not well founded. That is, the primary judge and the Full Court both read the Tribunal's reasons as finding that the appellants were likely to live in a way that would not cause Bangladeshi society to confront their homosexual identity. This reveals the error made by the Tribunal. The Tribunal did not ask why the appellants would live "discreetly". It did not ask whether the appellants would live "discreetly" because that was the way in which they would hope to avoid persecution. That is, the Tribunal was diverted from addressing the fundamental question of whether there was a well-founded fear of persecution by considering whether the appellants were likely to live as a couple in a way that would not attract adverse attention. That the Tribunal was diverted in that way is revealed by considering the three statements in its reasons that are referred to earlier: first, that it is not possible to "live openly as a homosexual in Bangladesh"; secondly, that "[t]o attempt to [live openly] would mean to face problems"; and, thirdly, that "Bangladeshi men can have homosexual affairs or relationships, provided they are discreet". Nowhere did the Tribunal relate the first and second of these statements to the position of the appellants. It did not consider whether the adverse consequences to which it referred sufficed to make the appellants' fears well founded. All that was said was that they would live discreetly. The Tribunal did not deal with the question presented by s 36(2) of the Act – did Australia owe protection obligations to the appellants? It either did not correctly apply the law to the facts it found, or its decision involved an incorrect interpretation of the applicable law. The ground of review specified in s 476(1)(e) of the Act was made out. Further, as the reasons of McHugh and Kirby JJ demonstrate, the Tribunal can also be seen as falling into error by dividing the genus of homosexual males 37 [2001] FCA 968 at [17]. 38 [2002] FCA 129 at [15]. 39 [2001] FCA 968 at [17]-[20]. 40 [2002] FCA 129 at [16]. in Bangladesh into two groups – discreet and non-discreet homosexual males in Bangladesh. That false dichotomy also appears to have provided a basis for the reasoning of Kennedy J in R v Secretary of State for the Home Department; Ex parte Zia Mehmet Binbasi41. The Full Court of the Federal Court should in each case have allowed the appellant's appeal with costs, both in that Court and in the court below, set aside the orders of the primary judge and, in their place, made orders setting aside the decision of the Tribunal and remitting the appellant's application for review of the decision of the Minister's delegate to the Tribunal for redetermination. In each case the appeal to this Court should be allowed with costs, the orders of the Full Court set aside and, in their place, there be orders in the terms we have set out. 41 [1989] Imm AR 595 at 598-599. CALLINAN AND HEYDON JJ. The question in this case was not, as the appellants contended, whether, absent imposed or enforced discretion as to their homosexuality, they would be likely to be persecuted in their country of nationality and residence, but whether their mode of conduct was voluntarily chosen, and had and would not provoke persecution of them. The facts The appellants, who are homosexuals, are Bangladeshi nationals. They have lived together since 1994. According to one of them, in Bangladesh, "homosexuality is not open and not acceptable like many other countries in the world." His family is of the Muslim faith. The other appellant's history included an account of his loss of a position that he had held in Bangladesh and in respect of which the Refugee Review Tribunal ("the Tribunal"), in affirming the decision of the delegate of the respondent to refuse them Protection Visas, said this42: "When his 1981 dismissal was discussed, [that appellant] said that he had lost his job because he had raped young men from the office who came to visit him in his room. These people had complained and he lost his job. I asked him to clarify that he had forced these men to have sex with him when they did not want to. He said that this was correct and confirmed that this was the reason that he had lost his job. He said that no other action had been taken against him." There was evidence before the Tribunal that s 377 of the Penal Code of Bangladesh provides as follows: "Whoever voluntarily has carnal intercourse against the order of nature with any man, woman or animal, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine." The appellants did not suggest that they were likely to be prosecuted under this provision and placed no reliance on it. This was probably because there was evidence before the Tribunal from a knowledgable lawyer that he could not recall a prosecution under the section during the last 20 years. The appellants entered Australia in February 1999. They applied to the respondent for Protection Visas on 4 March 1999. Their applications were 42 RRT Reference N99/28381; N99/28382, 5 February 2001 at 12. refused. They applied to the Tribunal for a review of that refusal on 17 May 1999. In order to obtain a Protection Visa the appellants had to satisfy the Tribunal that they were refugees who43: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence, is unable or, owing to such fear, is unwilling to return to it." The Tribunal refused the applications for review. It referred first to some evidence as to the position generally of homosexuals in Bangladesh and concluded44: "From this evidence it is clear that homosexuality is not accepted or condoned by society in Bangladesh and it is not possible to live openly as a homosexual in Bangladesh. To attempt to do so would mean to face problems ranging from being disowned by one's family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police. However, Bangladeshi men can have homosexual affairs or relationships, provided they are discreet. Bangladeshis generally prefer to deny the existence of homosexuality in their society and, if possible, will ignore rather than confront it. It is also clear that the mere fact that two young men held hands or hugged in the street would not cause them to be seen as homosexuals, and that being caught engaging in sexual activity on one occasion would be most unlikely to cause a young single man to be labelled a homosexual." The Tribunal was concerned about a number of discrepancies in the evidence of the appellants. It found that much of it was not credible45. As to the older of the appellants, it made these findings46: 43 Article 1A(2) of the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 44 RRT Reference N99/28381; N99/28382, 5 February 2001 at 6. 45 RRT Reference N99/28381; N99/28382, 5 February 2001 at 16. 46 RRT Reference N99/28381; N99/28382, 5 February 2001 at 17-18. "I am extremely sceptical of the claim that [one of the appellants] was dismissed from his job in 1980 because he had raped a number of young men from his office. It seems most unlikely that someone who had raped a number of young men would merely have been dismissed from his job and suffered no further consequences. On the other hand, if it is true, then his dismissal was for rape, not because he is a homosexual, and the lack of more serious consequences suggests that Bangladeshis prefer to ignore the issue of homosexuality, even if it involves rape, rather than confront it. And the claim that [this appellant] did not suffer more serious consequences for assaulting some young men in 1980 does not sit well with latter claims that people face being lashed or killed merely because they are homosexual. I do not believe that [this appellant] was unable to find work between 1980 and 1991 because of his homosexuality. This is at odds with his evidence that he was able to conceal his sexuality from most people in his home area until 1985, after which he moved to another area where people did not know about his sexuality, and where his partner, who was also allegedly exposed as a homosexual in 1985, was able to find work. His ability to find a good job in 1991 with the help of a friend suggests that he could have obtained work earlier if he had wished. If [this appellant] was unable to find work during this time, it was for some other reason, not his sexuality. I do not believe that [this appellant] was sentenced to 300 lashes with a whip with a small stone attached and whipped until he was unconscious in 1985. At the hearing he claimed that he was scarred by this, but there are no scars on his back. When I pointed this out, he maintained that he had been sentenced to 300 lashes, but said not all of them had been administered because he would have been killed if he had received the full punishment. In light of [his] lack of credibility in relation to other claims put forward in support of his case, and the evidence set out above which suggests that the issue of homosexuality is more likely to be ignored than confronted in Bangladesh, I do not believe that [he] and his then partner were tried and sentenced to any form of punishment by a religious court in 1985. And even if I am wrong and they did face some kind of problem in 1985 because of their sexuality, this was over 15 years ago and [this appellant] has not experienced serious continuing problems because of it. I do not believe it would have any serious impact on his treatment if he returned to Bangladesh now, nor that it indicates that homosexuals in Bangladesh generally face a real chance of being punished by fundamentalists or other religious figures because of their sexuality. Given [this appellant's] tendency to exaggerate or concoct claims, I am not satisfied that he and his partner were attacked in their home in 1990. [His] claim that the attack occurred because one of [his then lover's] relatives saw them in the street after they had fled their home area in 1985 does not sit well with the evidence that [the latter's] family had known about his sexuality since before they moved in together in 1980 and, while they had ostracised him, there is no suggestion that they had attacked him or instigated attacks by other people previously. The claim is also at odds with the evidence set out above that Bangladeshis prefer to ignore the issue of homosexuality if at all possible. Furthermore, even if I accept this claim, it appears that the main target of the attack was [the other man], who was taken away by the attackers. [This appellant] was able to re-establish himself in another area and, as discussed below, I do not believe that he had any problems during that time because of his sexuality." We need not set out the details of the adverse findings that the Tribunal similarly made against the other appellant. It is sufficient to say that, among other things, their respective versions of relevant events contradicted each other. The Tribunal held that they concealed the true situation. It concluded47: "After considering all of the evidence, I accept that [the appellants] are homosexuals and that they lived together in Bangladesh from 1994 until their departure from the country in early 1999. I also accept that they were shunned by their families because of their homosexuality. They may also have been the subject of gossip and perhaps even some taunts from neighbours who suspected they were homosexuals. However, I do not believe that this constitutes serious harm amounting to persecution under the definition. [The appellants] did not experience serious harm or discrimination prior to their departure from Bangladesh and I do not believe that there is a real chance that they will be persecuted because of their sexuality if they return. As discussed above, while homosexuality is not acceptable in Bangladesh, Bangladeshis generally prefer to ignore the issue rather than confront it. [The appellants] lived together for over 4 years without experiencing any more than minor problems with anyone outside their own families. They clearly conducted themselves in a discreet manner and there is no reason to suppose that they would not continue to do so if they returned home now." The appellants' application to the Federal Court The appellants applied for a review of the Tribunal's decision by the Federal Court under s 476(1) of the Migration Act 1958 (Cth) ("the Act"). They 47 RRT Reference N99/28381; N99/28382, 5 February 2001 at 19-20. sought to rely on pars (b), (c), (e) and (g) of that sub-section which provided, at the relevant time, as follows: "(1) Subject to subsection (2), application may be made for review by the Federal Court of a judicially-reviewable decision on any one or more of the following grounds: that the person who purported to make the decision did not have jurisdiction to make the decision; that the decision was not authorised by this Act or the regulations; that the decision involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the person who made the decision, whether or not the error appears on the record of the decision; that there was no evidence or other material to justify the making of the decision." Lindgren J, who heard the applications, was not persuaded that the appellants had made out any grounds for review. His Honour said this48: "The [appellants] did not complain that they had to modify their behaviour so as not to attract attention: cf Cho v Minister for Immigration & Multicultural Affairs49; Win v Minister for Immigration & Multicultural Affairs50; Oo v Minister for Immigration & Multicultural Affairs51. Apparently, therefore, they lived together in the way in which they wished to do. In sum, in living together in the way in which they did, they were 48 [2001] FCA 968 at [19]-[22]. 49 (1998) 55 ALD 487. 50 [2001] FCA 132 at [25]-[26] per Madgwick J. 51 [2001] FCA 348 at [42]-[48] per Lindgren J. naturally 'discreet' and not 'open', according to the meanings those words had for the RRT. According to this understanding of the passage set out ... above[52], which, I think is correct: the [appellants] are able to return to Bangladesh and to resume living there in a homosexual relationship as they did previously without a well-founded fear of being persecuted for reason of their homosexuality; and Bangladeshi society's antipathy towards those who 'live openly as' homosexuals is not inconsistent with the RRT's rejection of the [appellants'] allegations of specific instances of persecution. But what is to be made of the implicit finding referred to ... above[53]? The RRT was dealing with a claim that people in Shantipura taunted and harassed the [appellants] in their home and that [one appellant] complained to the police and told him that he and [the other appellant] were homosexuals. The gravamen of the finding is that if, contrary to another finding of the RRT, the [appellants] had been living openly (non-discreetly) in a homosexual relationship, that is, in a relationship which challenged Bangladeshi society and to which it could not turn a blind eye and which was therefore apt to prompt persecution, [that appellant] would not have told the police that he was being harassed as a homosexual because it is likely that the police would have 'joined in'. But the RRT's finding was that the [appellants] 'conducted themselves in a discreet manner' and so there was no taunting by the local people and nothing about which [that appellant] had cause to complain to the police. 52 That is, the passage commencing "From this evidence" quoted at [96] above. 53 The "implicit finding" was said by counsel for the appellants before Lindgren J to arise out of the following passage in the Tribunal's reasons: "[G]iven the attitude towards homosexuals in Bangladesh, of which [one appellant] was clearly aware, it is not plausible that he would have told the police he was being harassed because he was a homosexual. He might have complained about being harassed, but I do not believe he would have told the police that he was a homosexual." The passage was said by counsel to demonstrate "an implicit finding that the police shared 'the attitude towards homosexuals in Bangladesh' and would not have protected [the appellant] or would themselves have harmed him if he had revealed his homosexuality, and that [the appellant] knew this to be the case." According to my understanding, outlined above, of the passage in question, there is no unreasonableness, illogicality or inconsistency in the RRT's Reasons for Decision, and the occasion does not arise for me to consider whether, if there had been, a ground of relief identified in para (b), (c) or (e) of subs 476(1) is made out; cf Australian Broadcasting Tribunal v Bond54; Minister for Immigration & Multicultural Affairs v Epeabaka55; Minister for Immigration & Multicultural Affairs v Anthonypillai56; Gamaethige v Minister for Immigration & Multicultural Affairs57; Minister for Immigration & Multicultural Affairs v Yusuf58. I am, however, of the view that the supposedly inconsistent findings of fact would not have established any of those grounds. There is no substance in the par 476(1)(g) ground. The RRT did not base its decision that the [appellants] did not have a well-founded fear of persecution on account of their homosexuality on the existence of a particular fact which did not exist. The RRT gave reasons for not accepting instances of persecution." [appellants'] allegations of specific the The appeal to the Full Court of the Federal Court An appeal by the appellants to the Full Court of the Federal Court (Black CJ, Tamberlin and Allsop JJ) was unanimously dismissed59. It is unnecessary to set out the Court's reasons because, in substance, it adopted the reasoning of the judge at first instance. The appeal to this Court Each appellant appeals to this Court on the following grounds: 54 (1990) 170 CLR 321 at 356-357 per Mason CJ. 55 (1999) 84 FCR 411 at 420-422 [20]-[26] per Black CJ, von Doussa and Carr JJ. 56 (2001) 106 FCR 426. 57 (2001) 109 FCR 424. 58 (2001) 206 CLR 323 at 338-340 [36]-[44] per Gaudron J, 349-352 [76]-[83] per McHugh, Gummow and Hayne JJ, with whom Gleeson CJ agreed. 59 [2002] FCA 129. "The Court erred in failing to hold that the decision of the Refugee Review Tribunal made 5th February 2001 involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the Tribunal Section 476(1)(c) of the Migration Act 1958. Particulars: Having determined: that the Appellant was a homosexual who had lived in a permanent Homosexual relationship since 1994; and that 'homosexuality is not accepted or condoned by society in Bangladesh. To attempt to do so would mean serious problems ranging from being disowned by one's family and shunned by friends to more serious forms of harms, for example the possibility of being bashed by the police'; the Tribunal erred in holding that the Appellant did not have a well- founded fear of persecution." The appellants' argument may be shortly stated. It is that the Tribunal found that the group to which the appellants belonged was of homosexuals who were disposed, perhaps required – it is not entirely clear whether their argument went so far – to conduct themselves so discreetly as not to attract the attention of the authorities, or other persons who would persecute them with the acquiescence of the authorities. This, it was submitted, was tantamount to the imposition of a requirement of discretion on the part of the appellants. The submission continues that if an applicant is required to be "discreet" about his or her membership of a relevant group, and there is present even the slightest chance that the applicant is able to comply with such a requirement, then effectively that applicant would be disqualified from achieving the status of a refugee in Australia. That test, the appellants claim, would effectively reverse the Convention requirement that a state give protection from persecution: in practical terms it would require an applicant to ensure his or her safety personally by concealing the fact of membership of the social group. The appellants contend that the Federal Court repeated the errors that were made by the Tribunal. The respondent's argument In dealing with these, and indeed all cases in which applicants seek Protection Visas, the Tribunal and the courts must be careful to avoid generalisations, and to keep in mind that membership of a social group some members of which are persecuted, does not necessarily mean that a particular applicant has been, or will be. Every case depends on its own facts. The facts, the respondent submits, of this case, do not show that these appellants satisfy the criteria for which the Convention makes provision: that each appellant have a subjective fear of being persecuted, and, that any such fear be objectively "well founded". The respondent referred to a statement of Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Guo60: "[N]o fear can be well-founded for the purpose of the Convention unless the evidence indicates a real ground for believing that the applicant for refugee status is at risk of persecution." (emphasis added) The respondent submits, contrary to the assertion of the appellants, that the Tribunal did not impose a requirement of discretion: that neither in form nor in substance did the Tribunal find that the appellants were bound to, or must, for their own protection, live discreetly in Bangladesh. The appellants had in fact, and would in all likelihood continue to live, as a matter of choice, quietly without flaunting their homosexuality. These were not men who wished to proclaim their homosexuality. Living as they did, they were not oppressed. Discretion, it was put, was purely a matter of choice and not of external imposition. No one required them, as Lindgren J pointed out, ever to modify their behaviour. The decision The submissions of the respondent should be accepted. It is clear that the appellants did not seek to make a case that they wished to express their homosexuality in other than a discreet, indeed personal, way. There may be good reason, divorced entirely from fear, for this. They may have wished to avoid disapproval of the, or a significant section of the, society in which they lived, perhaps even marked disapproval. There is a great difference however between persecution and disapproval, even strongly expressed disapproval. As Kennedy J in R v Secretary of State for the Home Department; Ex parte Zia Mehmet Binbasi61 points out, persecution is a strong word. In 1951 those who drafted the Convention were not seeking to guarantee all human rights. Rather they were seeking to deal with refugees in the context of the immediate aftermath 60 (1997) 191 CLR 559 at 572. 61 [1989] Imm AR 595 at 599. On the other hand, it has been accepted in the United States that the harm inflicted on homosexuals in some other countries has been so damaging that it clearly amounts to persecution. See the summary in Anker, Law of Asylum in the United States, 3rd ed (1999) at 394-395. in Europe of the Second World War62. More likely, as is the case with many, the appellants here regarded their sexual preference and activities as personal and not public matters, and ones therefore that required no public or overt expression. The appellants were unable to satisfy the Tribunal that there were any expressions or manifestations of their homosexuality which had, or were likely to provoke persecution of them. It was not suggested that they had or wished to engage in "sexual politics" or other politics, to secure greater toleration of homosexuality in the society in which they lived, or indeed that they had any interest in living in other than a relatively private, domestic way. This is by no means unusual. In many societies, both heterosexual and homosexual couples regard their domestic and sexual arrangements and activities as entirely private. So too, in all societies, there are greatly varying views, and indeed laws, about what is or is not acceptable, conventional, or proper sexual conduct or practice, both heterosexual and homosexual. And the same may readily be said about other expressions of identity, not merely sexual. These may well be matters of cultural and national interest in respect of which there may be great divergence of opinion and, in consequence, laws, from nation to nation. For example, in Ireland the Offences Against the Person Act 1861, s 58, makes abortion a felony punishable by imprisonment for life and other legislation has restricted access to contraceptive devices63 and also access to information about abortion64. It is not necessarily beyond argument that sexual inclination or practice necessarily defines a social class65, a matter which was not raised here but seems to have been assumed. Nor, as we have said, did the appellants contend that the presence on the statute books of Bangladesh of s 377 of the Penal Code mean that they were, in consequence, members of a persecuted social group. Until 1997, the year in last relevant criminal provision was repealed66, homosexual which intercourse was illegal in at least parts of Australia. Did that repeal mean that the 62 See the original definition of "refugee" in Art 1 of the Convention. 63 See the Health (Family Planing) Act 1979 (Ireland). 64 See the Regulation of Information (Services Outside the State for Termination of Pregnancies) Act 1995 (Ireland). 65 In R v Secretary of State for the Home Department; Ex parte Zia Mehmet Binbasi [1989] Imm AR 595 at 599, Kennedy J neither rejected nor accepted an argument to that effect. 66 See ss 4 and 5 of the Criminal Code Amendment Act 1997 (Tas) which amended ss 122 and 123 of the Criminal Code (Tas). homosexuals in other countries in which a similar law may still have applied immediately became potential refugees under the Convention? Many countries (for example Australia67 and Canada68) without qualification make bigamy a criminal offence. Others do not69. Does that mean that would-be polygamists in Australia, Muslim or otherwise, might seek refuge in other countries which are subscribers to the Convention where polygamy is not necessarily criminal? The distinction between criminal sanctions and persecution is not yet a settled one70. These are not questions which need to be more than noted. Pursuit of them should be left to another case in which the actual issues in suit cause them to arise. On the Tribunal's findings, no fear of such harm as could fairly be characterized as persecution imposed a need for any particular discretion on the part of the appellants: such "discretion" as they exercised, was exercised as a matter of free choice. The outcome of these proceedings might have been different – it is unnecessary in this case to decide whether that is so – if that position were different. This case then turns on its own facts. The appellants' case was not improved by the stories of homosexual rape which one of them, the elder, recounted. On the version which he gave of it, that he escaped criminal sanction entirely, despite the extended knowledge of its occurrence, the appellants could not possibly have maintained that there was persecution of a homosexual social group of which they were members. 67 See s 94 of the Marriage Act 1961 (Cth). 68 See s 293 of the Criminal Code, RSC 1985 c C-46. 69 See Art 260 of the Codigo Penal 1980 (Colombia) which imposed a penalty of one to four years imprisonment for bigamy and which was repealed by the enactment of a new penal code coming into effect on 24 July 2001. The new Codigo Penal does not make bigamy a criminal offence. See also: the Recognition of Customary Marriages Act 1998 (South Africa) which recognises the validity and lawfulness of certain polygamous marriages; s 6(1) of the Muslim Family Laws Ordinance 1961 (Pakistan) which allows polygamy in Pakistan in some circumstances; and the Law Reform (Marriage and Divorce) Act 1976 (Malaysia) which creates a criminal offence of bigamy but exempts Muslims and those married under Muslim law from the application of the Act. 70 See the discussion in Hathaway, The Law of Refugee Status (1991) at 169-179. See also Canada (Attorney General) v Ward [1993] 2 SCR 689. The great difficulties for the appellants were that the accounts of their experiences in Bangladesh and the attitude of society and officials there to homosexuality, were not only full of inconsistencies but also of improbabilities. That is why the Tribunal found against them. The occasion for an imposition of "discretion" upon their return to Bangladesh simply did not arise. It was an irrelevance to the issue actually decided against them, whether they had a well-founded fear that their homosexual way of life had, or was likely to provoke persecution. To this question, involving as it did both a subjective and an objective element, the Tribunal properly addressed itself. The inquiry which the Tribunal made was not a narrow one. Its careful attention to the facts and personal circumstances of the appellants, complicated as this was by the implausibility and contradictions of much of their evidence, shows this to be so. Furthermore, the Tribunal found that although their way of life may have been the subject of disapproval by much of Bangladeshi society and even the authorities of that country, that disapproval fell well short of persecution. The appellants had every opportunity to state to the Tribunal the grounds on which they claimed refugee status and the background facts – both the facts relating to their personal lives and the facts relating to the political and social environment of Bangladesh. They gave quite detailed accounts of the facts they saw as relevant to their claims. Those accounts may have sufficed to make out an entitlement to refugee status, if the appellants had been believed. In large measure they were not believed. If they had wished to, the appellants could have advanced a claim that their decision to live as they had been living and would live on their return to Bangladesh was influenced by a fear of harm if they did not; or that persons for whom the government of Bangladesh is responsible induce or inculcate a fear of harm in those living openly as homosexuals; or that they are at risk of suffering serious harm constituting persecution if they wished to display, or inadvertently disclosed, their sexuality or relationship to other people. They did not advance any claims of this kind beyond those connected with the factual accounts advanced by them to the Tribunal and rejected in large measure by the Tribunal. The Tribunal accordingly did not err in not dealing with them. The appeals should be dismissed with costs.

HIGH COURT OF AUSTRALIA BROADCAST AUSTRALIA PTY LTD APPELLANT AND MINISTER ASSISTING THE MINISTER FOR NATURAL RESOURCES (LANDS) RESPONDENT Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands) [2004] HCA 4 10 February 2004 ORDER Appeal allowed with costs. The orders of the Court of Appeal of New South Wales dated 24 May 2002 are set aside, and in lieu thereof, it is ordered that: the question raised by the Notice of Motion filed by the respondent in the Land and Environment Court of New South Wales dated 16 May 2000, namely: "Whether the permissive occupancy granted by the Minister was revoked by reason of the declaration and made Administration on 29 April 1999?" the Minister for Finance be answered: "No"; the appeal to the Court of Appeal be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: D F Jackson QC with A E Galasso for the appellant (instructed by Minter Ellison) B A J Coles QC with N Perram for the respondent (instructed by Crown Solicitor for the State of New South Wales) S J Gageler SC with K M Richardson intervening on behalf of the Attorney- General of the Commonwealth (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands) Real property – Permissive occupancy – Commonwealth was granted permissive occupancy over a parcel of New South Wales Crown land – Condition of permissive occupancy that it not be transferred or sold without the prior consent of the respondent – Commonwealth law declaring that the permissive occupancy would vest in the appellant as its successor – Respondent's prior consent not obtained – Whether permissive occupancy an asset capable of being vested in another by statute – Whether permissive occupancy revoked by reason of the Commonwealth declaration. Constitution, s 109. National Transmission Network Sale Act 1998 (Cth), ss 3, 9, 12. Crown Lands Consolidation Act 1913 (NSW), ss 6, 136K. Crown Lands (Continued Tenures) Act 1989 (NSW), ss 5, 11, Sched 2 Pt 6, Sched 5 cl 11. McHUGH, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. Background This appeal turns upon the interrelation between federal "privatisation" legislation, the National Transmission Network Sale Act 1998 (Cth) ("the Commonwealth Act") and New South Wales legislation providing for "permissive occupancies" of Crown lands in that State. The appellant contends that there has been vested in it by operation of law such an interest previously held by the Commonwealth in respect of land where a television transmitting station was erected and operated. Though the point at the heart of this appeal is a short one, it is desirable to set out the background in some detail. In New South Wales for many years before 1958 it had been the practice of the Lands Department to grant "permissive occupancies" of Crown lands for various purposes, including grazing, boatsheds, jetties, slipways and the extraction of sand and gravel. The Department assumed that it had the power to do this, and that assumption was shared by Parliament in various pieces of legislation, but there was thought to be no express legislative authority for it, and in particular not in the Crown Lands Consolidation Act 1913 (NSW) ("the 1913 Act")1. In 1958 challenges to the validity of two permissive occupancies were brought respectively in the Equity Court and the Land and Valuation Court of New South Wales. The government thereupon introduced a Bill on 22 October 1958 in order to place beyond doubt the "title" which it was intended to create by those and all other permissive occupancies, which numbered 16,500, and the right of the relevant Minister to continue the practice of granting them2. Further, though the matter was not referred to in the course of debate in the Legislative Assembly, less than eight months earlier, on 4 March 1958, Sugerman J had pointed out that there was no reference in the 1913 Act or its precursor to a permissive occupancy, despite the fact that the practice of granting them was a "well recognised practice which has gone on for a very great number of years and has led to a very large number of such occupancies being granted".3 He found it necessary to analyse the jurisdiction of the Land and Valuation Court 1 Second Reading Speech of the Minister for Lands relating to the Crown Lands (Permissive Occupancies) Amendment Bill 1958, New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 1958 at 1561. 2 Second Reading Speech of the Minister for Lands relating to the Crown Lands (Permissive Occupancies) Amendment Bill 1958, New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 22 October 1958 at 1499. 3 Barrow v Brooksby (1958) 37 LVR 14 at 18. The account in the Second Reading Speech of the challenge in the Land and Valuation Court does not in its details match the facts of Barrow v Brooksby. of New South Wales to entertain appeals by persons who were unsuccessful or partially unsuccessful in their applications for permissive occupancies to the Local Land Board at Nyngan on alternative hypotheses. One hypothesis was that grants of permissive occupancies contravened the prohibition contained in s 6 of the 1913 Act against dealings in Crown lands outside that Act. The other was that grants of permissive occupancies were not dealings because they conferred no more than "a mere personal licence".4 Sugerman J did not have to decide between these hypotheses, but on either of them, permissive occupancies were not supported by the 1913 Act. In consequence Sugerman J's judgment has been described as expressing5, or causing the expression of6, doubts on the practice of granting permissive occupancies. The matter proceeded with haste. On 22 October 1958 the Bill was read a first time in the Legislative Assembly; on 23 October 1958 it was read a second time, went into Committee and was read a third time; on 28 October 1958 it returned from the Legislative Council without amendment; and on 3 November 1958 royal assent was given. The effect was to amend the 1913 Act by the insertion of s 136K. Sub-section (1), in its current form, provides: "The Minister may grant permissions to occupy Crown lands, whether above or below or beyond high water mark, or whether reserved from lease or license or not, for such purposes and, subject to this section, upon such terms and conditions as to him may seem fit." Sub-section (5) relevantly provides: "… [A] permission to occupy Crown lands granted under subsection (1) shall be terminable at will by the Minister." In 1961 approval was given to the Commonwealth to occupy a parcel of Crown land at Mt Sugarloaf, near Newcastle, for the purpose of constructing and operating a national television transmitting station ("the 1961 permissive occupancy"). The station was constructed and began to operate. 4 Barrow v Brooksby (1958) 37 LVR 14 at 18. 5 Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154 at 159 per McHugh JA, 166-167 per Clarke AJA. 6 Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154 at 156 per Kirby P. Among the conditions of the 1961 permissive occupancy were the following: The rent for each year shall be paid in advance to the Under Secretary for Lands, Sydney. The Minister, upon giving at least three (3) months notice to the tenant, may review and alter the amount of the rental. The Permissive Occupancy is terminable at will by the Minister. The tenant shall not sublet or part with possession of the premises, or any part thereof, or sell or transfer the Permissive Occupancy herein referred to, without the consent of the Minister for Lands having first been obtained. On termination of the Permissive Occupancy the tenant shall deliver up quiet and peaceable possession of the premises." Although the 1913 Act was repealed by the Crown Lands Act 1989 (NSW), the tenures in force under the 1913 Act immediately before its repeal remained in force pursuant to ss 5 and 11 and Sched 2 Pt 6 of the Crown Lands (Continued Tenures) Act 1989 (NSW) ("the Continued Tenures Act"). On 29 June 1998 a notice of redetermination of the rent was given under Sched 5 cl 11 of the Continued Tenures Act. On 21 September 1998 the Commonwealth lodged an objection pursuant to cl 11(2). On 2 March 1999 the rent was redetermined in the sum of $74,000 per annum. On 12 April 1999 the Commonwealth appealed to the Land and Environment Court of New South Wales pursuant to Sched 5 cl 11(3)(b) of the Continued Tenures Act. On 29 April 1999 an event took place which triggered the present controversy. The Minister for Finance and Administration published a declaration ("the Commonwealth Ministerial declaration") pursuant to s 9 of the Commonwealth Act. That Act was expressed to bind the States (s 4(1)). It provided, by s 9(1): "(1) The Minister for Finance and Administration may, by notice in the Gazette, declare all or any of the following, in relation to a company specified in the notice: a specified Commonwealth asset vests in the company at a time specified in the notice (the transfer time), without any conveyance, transfer or assignment; the transfer the Commonwealth's successor in law in relation to the transferred asset; the company becomes time, a specified instrument relating to the transferred asset continues to have effect after the transfer time as if a reference in the instrument to the Commonwealth … were a reference to the company." Section 3 defined "Commonwealth asset" as meaning "an asset of the Commonwealth". Section 3 also defined "asset" as meaning: any legal or equitable estate or interest in real or personal property, including a contingent or prospective one; and any right, privilege or immunity, including a contingent or prospective one." Section 9(2) made similar provision for Commonwealth liabilities as that made in s 9(1) for Commonwealth assets. Section 9 continued: "(3) Declarations in relation to both assets and liabilities may be included in the same notice. The same notice may include declarations in relation to more than one asset or liability. (4) A declaration under this section has effect according to its terms." The Commonwealth Ministerial declaration defined as a "Specified Asset" an asset in Pt 1 of Sched A, which included "any legal or equitable estate or interest or right or entitlement which the Commonwealth has in, or in relation to" numerous specified sites. One of these sites was the Mt Sugarloaf site the subject of the 1961 permissive occupancy. The Commonwealth Ministerial declaration proceeded to declare, pursuant to s 9(1) of the Commonwealth Act, that at 30 April 1999 "Each Specified Asset vests in the [appellant] without any conveyance, transfer or assignment". On 25 May 1999 the National Transmission Company Pty Ltd, which was later called NTL Australia Pty Ltd before becoming Broadcast Australia Pty Ltd, the appellant in these proceedings, was substituted for the Commonwealth in the Land and Environment Court proceedings. The State Minister, who was the respondent in those proceedings and is the respondent in this Court, filed a Notice of Motion in the Land and Environment Court which led to the formulation of a preliminary question as to whether the 1961 permissive occupancy was "revoked" by reason of the Commonwealth Ministerial declaration. The Land and Environment Court (Pearlman J) answered that question in the negative7. A majority of the New South Wales Court of Appeal (Mason P and Sheller JA; Hodgson JA dissenting) were of the contrary view8. It was common ground that the grant of the 1961 permissive occupancy was a valid exercise of the power given by s 136K(1) of the 1913 Act, and that the conditions imposed did not go beyond what s 136K(1) permits; that the Commonwealth Act was a valid exercise of the legislative powers conferred by s 51(v) and (xxxix) of the Constitution; that there was no problem under s 51(xxxi) of the Constitution; and that s 52 of the Constitution had no application. While agreements of these kinds are not binding on this Court, on various grounds there is no reason not to accept them for present purposes. The State Minister's argument To some degree the issues as presented to this Court are different from those considered by the courts below. An effort was made in the submissions for the State Minister in the Court of Appeal to locate analogues in the general law to the statutory regime of "permissive occupancies" and then to treat the most forensically convenient analogue as a substitute for fuller statutory analysis. For example, attention was invited to the analysis of tenancies at will by Jordan CJ in Commonwealth Life (Amalgamated) Assurance Ltd v Anderson9 and to the early nineteenth century English authorities to which Jordan CJ referred. On the other hand, despite one or two passing references, the courts below were not invited to analyse the matter in the light of s 109 of the Constitution. 7 NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403. 8 Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53. (1945) 46 SR (NSW) 47 at 49-50. The argument put by the State Minister in this Court was that while the 1961 permissive occupancy was in a sense an asset in the hands of the Commonwealth, it was not an asset capable of being vested by statute in some other person's hands. While the Commonwealth Act was capable of transferring any rights which the Commonwealth had immediately before a Commonwealth Ministerial declaration was made to the fullest and most ample extent of their transmissibility, the 1961 permissive occupancy was not transmissible. The State Minister again attempted to draw analogies between the 1961 permissive occupancy and tenancies at will; between the results that would flow if the Commonwealth had attempted by contract to transfer the benefit of the 1961 permissive occupancy to the appellant without the State Minister's consent, and the results of the Commonwealth Ministerial declaration; and between the Commonwealth Act and the operation of the Bankruptcy Act 1966 (Cth), s 58 or the Wills, Probate and Administration Act 1898 (NSW), s 44. Immaterial issues Various issues that were referred to in the courts below and, briefly, in argument in this Court are interesting but immaterial. Thus it is immaterial whether if, independently of the Commonwealth Act the Commonwealth had attempted to assign the benefit of the 1961 permissive occupancy to the appellant, that would have given the appellant rights against the State Minister10. 10 That is a proposition denied in the Court of Appeal (Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 56-57 [7]) on the authority of Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (and Re Turner Corporation Ltd (In Liq) (1995) 17 ACSR 761, which followed it). But in Linden Gardens Trust at 104 Lord Browne-Wilkinson, with whom all other members of the House of Lords agreed, was prepared to accept that the issue was one of contractual construction, and that a possible construction, though cases of it were "very unlikely to occur", was that an assignment in breach of a covenant against assignment was not invalid as between obligor and assignee, though it gave the obligor a right to sue the assignor for damages. The same possibility, without any limitation as to likelihood, was identified in Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 236 per Northrop, Gummow and Hill JJ. Bruce v Tyley (1916) 21 CLR 277 at 289 and Starke, Assignments of Choses in Action in Australia, (1972) at 65-67 were also cited by the Court of Appeal majority; but those passages related to the special area of contracts having an element of personal skill or personal confidence in the assignor, and Starke's work at 66 is to the same effect as the Devefi case. It is immaterial whether the 1961 permissive occupancy is to be characterised as a tenancy or a "personal licence such as would afford a defence to an action for trespass"11. It is immaterial whether in Condition 6 of the 1961 permissive occupancy the "consent" of the State Minister is a consent which cannot be unreasonably withheld. It is immaterial whether a breach of Condition 6 by a private dealing would automatically terminate the 1961 permissive occupancy12. It is immaterial whether the transfer of rights under the 1961 permissive occupancy with the State Minister's consent pursuant to Condition 6 creates a new permissive occupancy or effects a continuation of the existing permissive occupancy13 or whether the Commonwealth Act created new rights14. It is immaterial whether various propositions asserted by Jordan CJ15 and relied on by the majority in the Court of Appeal16 about purported assignments of tenancies at will are supported by the authorities he cited17. These issues were not fully 11 As the majority said (Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 58 [14], referring to McHugh JA's quotation in Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154 at 161 of the words of Sugerman J in Barrow v Brooksby (1958) 37 LVR 14 at 19); Hodgson JA spoke to the contrary at 71 [62]-[63]. The question would depend on a close analysis of the Conditions of the 1961 permissive occupancy, which may have been different from those applying to the permissive occupancies in Barrow v Brooksby. The question would also depend on whether it is appropriate to seek to refer the rights created by the 1961 permissive occupancy under s 136K of the 1913 Act to categories found in the common law. 12 As the majority thought: Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 59-60 [21]. 13 Hodgson JA favoured the latter view: Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 71 [64]. 14 As Hodgson JA said: Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 72-73 [71]. 15 Anderson v Toohey's Ltd (1937) 37 SR (NSW) 70 at 74; Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 at 49-50. 16 Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 58-59 [17]. 17 Buckworth v Simpson (1835) 1 CM&R 834 [149 ER 1317]; Pinhorn v Souster (1853) 8 Ex 763 [155 ER 1560]. argued, because the appellant, at least, did not see it as necessary to resolve most of them. In this it was correct. Conclusion The operation of s 9 of the Commonwealth Act, read in the light of the definition of "asset" in s 3, is clear and wide. The width of its operation is supported by s 12, which relevantly provides: "The operation of this Part is not to be regarded as: placing a person in breach of any contractual provision prohibiting, restricting or regulating: the assignment or transfer of any asset or liability …" The State Minister accepted that the Commonwealth Act was valid. It follows that effect must be given to it according to its terms. The State Minister also accepted that just before the Commonwealth Ministerial declaration the Commonwealth had an asset as defined in the Commonwealth Act, for even if the 1961 permissive occupancy did no more than create an immunity in the Commonwealth against being sued for trespass, it fell within par (b) of the definition of "asset" contained in s 3 of the Commonwealth Act. The State Minister's argument rested on one basic proposition: that the 1961 permissive occupancy was in its nature as the creation of particular statute law of the State, incapable of being the subject of a transfer by operation of law of the type purportedly effected by the Commonwealth Ministerial declaration under the Commonwealth Act. If this proposition is false, and the 1961 permissive occupancy was susceptible to such a transfer, there is no reason in State law why the Commonwealth Act and the Commonwealth Ministerial declaration could not take effect. There would be no contrariety between the two laws and no occasion for the operation of s 109 of the Constitution. But if the proposition is true, it can be true only because there is some provision of State law − some term of the 1961 permissive occupancy created under s 136K(1) of the 1913 Act and preserved by the Continued Tenures Act − preventing the Commonwealth law from taking effect according to its terms and insulating the 1961 permissive occupancy from the Commonwealth law. If a provision of State law did have that effect, it would have altered, impaired or detracted from the operation of the Commonwealth law. It would thus be invalid under s 109 of the Constitution to the extent of the inconsistency18. Hence, on neither view of the proposition advanced by the State Minister, do the Commonwealth Act and the Commonwealth Ministerial declaration fail to take effect according to their terms. Orders There is a procedural curiosity in the position of the State Minister in this Court. The State Minister's Notice of Motion in the Land and Environment Court of New South Wales sought a declaration: "That the permissive occupancy granted by the Respondent was revoked by reason of the declaration made by the Minister for Finance and Administration on 29 April 1999." The primary judge then formulated the following question19: "Whether the permissive occupancy granted by the Minister was revoked by reason of the declaration made by the Minister for Finance and Administration on 29 April 1999?" The State Minister sought an affirmative answer to that question. One of the arguments advanced to the primary judge was20: "The purported assignment by the Commonwealth pursuant to the Minister's declaration followed by the giving up of the site to the applicant 18 Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128 at 136 per Dixon J; Victoria v The Commonwealth (1937) 58 CLR 618 at 630 per Dixon J; Botany Municipal Council v Federal Airports Corporation (1992) 175 CLR 453 at 464 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76-77 [28] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. 19 NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403 at 406-407 [3]. 20 NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403 at 415 [38]. terminated Commonwealth by virtue of the permissive occupancy." right of occupation formerly the residing the That argument does not match the terms of the question. In any event, the Land and Environment Court answered the question in the negative. The State Minister's Notice of Appeal in the Court of Appeal requested an affirmative answer to the question. The State Minister supported that request by repeating the argument advanced to the primary judge21. The majority reasoning in the Court of Appeal accepted the State Minister's argument22. It was for those reasons that the majority of the Court of Appeal ordered that the question should be answered affirmatively. In this Court the State Minister's submissions wavered. While accepting that "one way of putting it" was to say that the Commonwealth Ministerial declaration caused the Commonwealth's right to come "to an end", the State Minister also said of the Commonwealth's right: "It is interesting but not necessarily ultimately to the point to analyse how the right came to fall away. It is probably correct to say that once the Commonwealth went out of occupation then the purpose of the permission went away with it. In other words, the Commonwealth gave up the right, therefore, there was no either desire on the Commonwealth's part or intention on the Minister's part that the right should continue to subsist." That raises different questions from the question which the State Minister asked the courts below to consider. One different question is: "Was the 1961 permissive occupancy terminated by the departure of the Commonwealth from occupation?" Another question is: "Does the appellant have the benefit of the 1961 permissive occupancy, or some permissive occupancy carrying the same rights?" However, the parties did not seek to alter the question which the courts below were invited to answer. Each appeared content, for practical purposes, 21 Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 70 [55]. 22 Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 57 [8], 59-60 [21], 60 [25] and 60-61 [26]. with the respective answers for which each contended. There is no point in reformulating the question now. The following orders should be made. The appeal is allowed. The orders of the Court of Appeal of New South Wales are set aside. The question raised by the Notice of Motion filed by the State Minister in the Land and Environment Court of New South Wales dated 16 May 2000, namely: "Whether the permissive occupancy granted by the Minister was revoked by reason of the declaration made by the Minister for Finance and Administration on 29 April 1999?" is answered: "No". The State Minister is to pay the costs of the appellant in the Court of Appeal and in this Court.

HIGH COURT OF AUSTRALIA ATTORNEY-GENERAL FOR THE STATE OF VICTORIA APPELLANT AND KEVIN JAMES ANDREWS, MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS & ORS RESPONDENTS Attorney-General (Vic) v Andrews [2007] HCA 9 21 March 2007 ORDER Appeal dismissed. Appellant to pay the costs of the first, second and third respondents. Representation P M Tate SC, Solicitor-General for the State of Victoria with M K Moshinsky for the appellant (instructed by Victorian Government Solicitor) D I Star for the first and second respondents (instructed by Australian Government Solicitor and Phillips Fox) Submitting appearance for the third respondent P J Hanks QC with R J Orr for the fourth respondent (instructed by Corrs Chambers Westgarth) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth with D I Star intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia and R M Mitchell intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor's Office (Western Australia)) M G Sexton SC, Solicitor-General for the State of New South Wales and M J Leeming intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia with S A McDonald and J-A Lake intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office (South Australia)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Attorney-General (Vic) v Andrews Constitutional law (Cth) – Inconsistency of laws – The third respondent, Optus Administration Pty Ltd, was granted a licence under Pt VIII of the Safety, Rehabilitation and Compensation Act 1988 (Cth), which subjected it to the scheme of liability contained in that Act – Whether the Accident Compensation Act 1985 (Vic) and the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) were invalid to the extent that they altered, impaired or detracted from the operation of the Safety, Rehabilitation and Compensation Act 1988 (Cth). Constitutional law (Cth) – Legislative power – Insurance – Meaning of "other than State insurance" – Whether ss 104(1), 108(1), 108A(7)(a) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) were invalid as laws with respect to "State insurance" within the meaning of s 51(xiv) of the Constitution – Whether the scheme established by the Accident Compensation Act 1985 (Vic) and the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) constituted "State insurance". Constitutional law (Cth) – Legislative power – Insurance – Meaning of "other than State insurance" – Whether the Safety, Rehabilitation and Compensation Act 1988 (Cth) was invalid for indirectly circumventing the exclusion of "State insurance" in s 51(xiv) of the Constitution. Statutes – Interpretation – Interaction between the Safety, Rehabilitation and Compensation Act 1988 (Cth) and the Accident Compensation Act 1985 (Vic) and the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) – Whether the operation of s 44(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) is such as to remove liabilities or obligations to which s 82 of the Accident Compensation Act 1985 (Vic) and s 7(1)(a) of the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) would otherwise attach. Words and phrases – "alter, impair or detract", "at common law or otherwise", "other than State insurance". Constitution, ss 51(xiii), 51(xiv), 109. Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 44, 45, 104(1), 108(1), 108A(7); Pts II, VIII. Accident Compensation Act 1985 (Vic), ss 5(1), 82(1), 134AB; Pt IV, Div 8A. Accident Compensation (WorkCover Insurance) Act 1993 (Vic), ss 5, 7(1). GLEESON CJ. The issue in this appeal is whether ss 104(1), 108(1) and 108A(7) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Commonwealth Act") are invalid. They are said to be invalid because they infringe what has been described as the proviso, concerning State insurance, in s 51(xiv) of the Constitution. The impugned provisions, and the wider statutory context in which they are contained, appear from the reasons of Gummow, Hayne, Heydon and Crennan JJ. Those reasons also explain the intersection between those provisions and Victorian legislation which provides for workers compensation, deals with common law entitlements of injured workers, provides for compulsory insurance in respect of employers' liabilities, and gives the Victorian WorkCover Authority, in effect, a monopoly in respect of that insurance business. The Commonwealth provisions, if valid, enable the third respondent ("Optus") to operate, not under the Victorian compensation scheme, but under the Commonwealth compensation scheme. Optus is a competitor of Telstra Corporation Ltd ("Telstra"), a corporation that was previously a Commonwealth authority, and is within the class of potential eligible corporations described by s 100 of the Commonwealth Act. Because Optus is a competitor of Telstra, and because Telstra is covered by the Commonwealth Act, Optus applied to be made an eligible corporation, and to be licensed under the Commonwealth Act, arguing that, in the interests of a "level playing field", it should be subject to the same workers compensation scheme as Telstra. The Attorney-General for the State of Victoria, and the Victorian WorkCover Authority, argue that, insofar as the Commonwealth Act purports to permit that, it is invalid. They maintain that Optus must remain subject to the Victorian scheme, and must insure with the Victorian WorkCover Authority. More specifically, they argue that the impugned provisions are beyond Commonwealth legislative power to the extent that they purport to authorise the grant to Optus of a licence under the Commonwealth Act, authorise Optus to accept liability for workers compensation, and remove Optus from "the scheme of State insurance" established by the Victorian legislation. The reference to a "scheme of State insurance" is legally tendentious, but it is apt to express the practical interests that are at stake. The impugned provisions are contained in Pt VIII of the Commonwealth Act, which deals with "Licences to enable Commonwealth authorities and certain corporations to accept liability for, and/or manage, claims". Section 104(1) empowers the second respondent, the Safety, Rehabilitation and Compensation Commission, to grant a licence to a Commonwealth authority or an eligible corporation. If a licence is granted to an eligible corporation, the Commonwealth Act applies in relation to employees of the corporation in a way similar to the way in which it applies to employees of the Commonwealth, but such application is subject to the acceptance by the corporation of liability under the Commonwealth Act for payments in respect of injury or death of employees, and the acceptance by the corporation of the function of managing claims under the Commonwealth Act (s 98A). Section 108(1) provides that a licence may provide the Act in respect of that a licensee is authorised to accept liability to pay compensation or other amounts under injury or death of employees. Section 108A(1) provides that if a licensee is so authorised, the licensee is liable to pay compensation under the Act in respect of injury or death. Section 108A(7) provides that, after a licence comes into force, no law of a State relating to workers compensation applies to the licensee in respect of injury or death the subject of the liability accepted by the licensee under the Commonwealth Act. Liability under State law before the licence came into force is unaffected. Sections 104(1) and 108(1) do not deal with the subject of insurance, other than in the colloquial sense that a licensed corporation is sometimes referred to as a self-insurer. It is left to the corporation to decide for itself what, if any, insurance cover it arranges in respect of its liabilities for death or injury of workers. Subject to the argument in this appeal, the power to enact those provisions is conferred by s 51(xx) of the Constitution (the corporations power) and, in their application to Optus, perhaps also by s 51(v) (dealing with postal, telegraphic, telephonic, and other like services). It may be that, subject to the same qualification, in respect of part of its operation (the part that would concern a State law relating to compulsory insurance) s 108A(7) is also supported by s 51(xiv) (the insurance power). Section 51 of the Constitution empowers the Parliament to make laws with respect to: "(xiv) insurance, other than State extending beyond the limits of the State concerned". insurance; also State insurance The expression "State insurance" means the business of insurance conducted by an insurer owned or controlled by a State, that is to say, a business of State government insurance1. (It is unnecessary to decide the extent of the concept of control in this context. It is accepted that the Victorian WorkCover Authority's business constitutes State insurance.) As a matter of history, State governments, through government insurance offices of various kinds, have conducted insurance business. It is, however, important to distinguish between a State legislative scheme which makes insurance of a certain kind compulsory, and a State owned or controlled business of insurance. In New South Wales, for example, for most of the twentieth century workers compensation insurance was compulsory, but the insurers were mainly private insurers subject to statutory oversight and regulation. The same is true of Victoria. The Court was told, in the course of argument, that Victoria established a State insurance office in 1914, when compulsory insurance for workers compensation liability was introduced, 1 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 52, 65, 70, 78, 86, 97; Bourke v State Bank of New South Wales (1990) 170 CLR 276 at 284. but that office was only one of many insurers, and its principal function was to regulate authorised insurers. The Government Insurance Office of New South insured some State government authorities, but most workers Wales compensation insurance policies were written by non-government insurance companies. Paragraph (xiv) of s 51 shows that, at the time of the framing of the Constitution, it was contemplated that States might wish to set up State insurance offices. It does not show, and there is nothing in the historical material to suggest, that it was proposed, or was regarded as necessary, to confer on those offices a monopoly in respect of any particular kind of insurance business. At the time of Federation, none of the Australian colonies carried on any kind of insurance business. New Zealand, which was considered as a possible State, carried on a government life assurance business. During the Convention "It was suggested that colonies might undertake State insurance, as was done in New Zealand, and it was held that State insurance should not come under the general [Commonwealth] laws." Mr Higgins said3: "My idea is this: That the Federal Parliament should be allowed to deal with all insurance matters, with only one limitation. I would refrain from dealing with State insurance in the colony establishing it, but if that colony extends its operations to other colonies, I do not see why it should not be treated like an ordinary company." That explains the reference to "State insurance extending beyond the limits of the State concerned". State insurance does not mean the market for insurance in a State, or a State's regulatory scheme concerning insurance. If it meant those things, it may not be capable of extending beyond the limits of the State concerned. State insurance means a State owned or controlled business which undertakes insurance of a certain kind. To use the words of Mr Higgins, it is something that is capable of being treated like an ordinary company if it extends its business activities beyond the limits of the State concerned. The business of the Victorian WorkCover Authority is State insurance. The market for insurance in Victoria is not State insurance within the meaning of par (xiv), although in a different context it could have that meaning; neither is the legislative regime governing some particular form of insurance in Victoria. 2 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 779. 3 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 781. Furthermore, although workers compensation insurance became compulsory in Victoria in 1914, the State owned insurance business was, for most of the twentieth century, a very small participant in the Victorian market for workers compensation insurance. No single insurer enjoyed a monopoly in that market, and no such monopoly was necessary to sustain viability. Compulsory insurance is one thing; a State monopoly of a certain kind of insurance business is another. If a State, by setting up an insurance business and legislating to require residents of the State both to effect insurance of a certain kind and to effect such insurance with the State's insurance office, could effectively withdraw that kind of insurance from Commonwealth control on the basis that the monopoly was part of the relevant "State insurance", then it is difficult to see what scope would be left, in the case of that kind of insurance, for Commonwealth legislative power. Although accepting that State insurance means a business of insurance owned or controlled by a State, the appellant and the fourth respondent, in their arguments, drifted towards the idea that the expression covered the market for insurance of a certain kind, or the legal regime governing such a market, with the consequence that any derogation from the State insurer's monopoly of workers compensation insurance would infringe the protection conferred by the words of qualification in par (xiv). Section 51(xiv) does not confer on the States an exclusive power to make laws with respect to State insurance. So much was established by the decision of this Court in Bourke v State Bank of New South Wales4 in relation to the cognate provisions of s 51(xiii) concerning State banking. The central issue in the appeal concerns the nature and extent of the protection of State insurance conferred by the qualification to par (xiv), but it does not go so far as to give the States exclusive power to enact any law that can be described as a law with respect to State insurance. The decision in Bourke also establishes that the restriction imposed by the proviso in par (xiv) applies to Commonwealth legislative power generally, provided the Commonwealth law in question is, or is also, a law with respect to insurance5. The qualification at the end of the preceding sentence accords with the second part of what was said by Dixon CJ in Attorney-General (Cth) v Schmidt6. The application of both parts of what Dixon CJ said was important to the reasoning in Bourke. In its bearing on the present case, it means that a law supported by the corporations power is subject to the restriction imposed by the proviso to par (xiv), if it is also a law with respect to insurance. (1990) 170 CLR 276 at 288. (1990) 170 CLR 276 at 289. (1961) 105 CLR 361 at 371-372. Much of the argument on the appeal was devoted to a consideration of what further light Bourke throws on the present problem. That case concerned par (xiii) of s 51, which provides that the Parliament may make laws with respect "banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money". As has been noted, it was held that "State banking" does not mean banking in a State; it means a State owned or controlled business of banking. A number of the paragraphs of s 51 confer on the Commonwealth Parliament power to enact laws that could affect such a business. Three obvious examples are pars (xii) (currency, coinage, and legal tender), (xvi) (bills of exchange and promissory notes) and (xvii) (bankruptcy and insolvency). A Commonwealth law enacted under any of those heads of power could affect, at least incidentally, a business of banking, including a business conducted by a State bank. The Commonwealth legislation in question in Bourke was ss 52 and 52A of the Trade Practices Act 1974 (Cth). Those sections prohibited misleading or deceptive, trade or commerce. and unconscionable, conduct by corporations "Corporation" was defined to include a financial corporation, and "financial corporation" was defined to include a bank. The State Bank of New South Wales carried on State banking. The issue in the case, as identified in the Court's reasons for judgment, was whether the legislative power of the Commonwealth extended to regulate a State banking transaction taking place wholly within the limits of the State concerned7. Sections 52 and 52A of the Trade Practices Act were enacted in reliance on the corporations power. The Court held that, in their application to the conduct of the State Bank in its banking business, they were also laws with respect to banking8. Therefore the proviso to par (xiii) applied and protected the State Bank from Commonwealth regulation of its banking transactions9. There was debate about the meaning of some of what was said by the Court in explaining its reasons10. It is important to observe the way in which the Court formulated the issue it was deciding. It was a question of Commonwealth (1990) 170 CLR 276 at 284. (1990) 170 CLR 276 at 290. (1990) 170 CLR 276 at 288-289, 290-291. 10 The paragraph at the foot of page 288 and to the top of page 289 was subjected to particular scrutiny. power to regulate a State banking transaction, that is, a banking transaction carried out by a State bank. It has already been noted that there are various powers conferred by s 51, the exercise of which could affect State banks, or State banking transactions. Sections 52 and 52A of the Trade Practices Act, in their application to the banking business of a State bank, were held to be laws with respect to banking, and that regulation of State banking was held to infringe the protection conferred by the proviso to par (xiii). Bourke did not decide that a State may confer on a State bank a monopoly on banking business within the State, free from Commonwealth interference. It declared a limit to the capacity of the Commonwealth to regulate banking transactions entered into by a State bank. In the present case, the impugned provisions do not seek to regulate insurance transactions entered into by the Victorian WorkCover Authority. They do not prohibit the conduct of State insurance, and they have not been shown substantially to impair the capacity of Victoria to conduct State insurance. They do not invade the area of protection given by the proviso to par (xiv). By creating a Commonwealth scheme which applies to Commonwealth authorities and certain eligible corporations (being corporations that fall within a confined class) and their employees, the Commonwealth detracts from the comprehensiveness of the Victorian legislative scheme concerning compensation of workers, and insurance against compensation liability. In that respect, the Victorian WorkCover Authority has never enjoyed a monopoly. However, the Victorian scheme is not "State insurance"; nor is the Victorian workers compensation insurance market. The circumstance that it is the current policy of the Victorian Parliament that there be a single insurer of employers who are subject to the Victorian scheme of liability (a relatively new policy), and compulsory insurance of such liability, does not alter the case. Some of the argument for the appellant appeared to treat "State insurance" as meaning the state of affairs in Victoria concerning insurance. The proper meaning of that expression is, relevantly, the insurance business of the Victorian WorkCover Authority. The Constitution does not preclude the Commonwealth Parliament from enacting any laws which might incidentally affect that business. As in the case of State banking, there are various powers conferred by s 51 the exercise of which could affect that business. The impugned laws do not regulate the Authority's insurance transactions, and they do not prohibit Victoria from conducting, or substantially impair its capacity to conduct, insurance business. No question arises in this case as to the extent of the power of the Commonwealth to legislate, in a manner that binds a State insurance office, with respect to matters such as accounting standards, financial viability, or internal organisation. Furthermore, the question of the practical application of what might be called the proviso to the proviso, that is to say, the qualification concerning a State insurance office which has activities extending beyond State boundaries, does not arise. The decision of Selway J was correct. The appeal should be dismissed with costs. Crennan GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. On 7 July 2004, the first respondent ("the Minister") made a declaration that the third respondent ("Optus") was eligible to be granted a licence under Pt VIII of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Commonwealth Compensation Act"). On 1 November 2004 that licence was granted to Optus by the second respondent11 ("the Commission"). The licence came into operation on 30 June 2005. The fourth respondent, the Victorian WorkCover Authority ("the VWA"), is established as a body corporate by s 18 of the Accident Compensation Act 1985 (Vic) ("the Victorian Compensation Act"). Among its objectives and functions stated in ss 19 and 20 are the administration of that statute and the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) ("the Victorian Insurance Act") (s 19(b)), the payment of compensation to persons entitled under the Victorian Compensation Act (s 20(b)) and the provision of insurance for the purposes of that statute and of the Victorian Insurance Act (s 20(f)). The VWA has power conferred by s 252 of the Victorian Compensation Act to institute prosecutions for offences against both statutes. It is not in dispute that the VWA answers the description of the "State" in the relevant provisions of the Constitution12. The purpose of the Victorian Insurance Act, as stated in s 1, is: "to provide for compulsory WorkCover insurance for employers under WorkCover insurance policies and the payment of premiums for WorkCover insurance policies". Optus held such insurance under the Victorian Insurance Act and, for the year ended 30 June 2004, paid premiums totalling $1,377,412 for that insurance. Optus had over 9,000 employees across Australia, 60 per cent of whom were based in New South Wales and a further 20 per cent in Victoria. Optus expected that the pre-tax financial benefits to it of being licensed under Pt VIII of the Commonwealth Compensation Act compared to its obligations to pay premiums under the Victorian legislation to be $186,000 per month. 11 The members of the Safety, Rehabilitation and Compensation Commission, established by s 89A of the Commonwealth Compensation Act. 12 cf SGH Ltd v Federal Commissioner of Taxation (2002) 210 CLR 51. Crennan The dispute Does the grant to Optus of the licence under Pt VIII of the Commonwealth Compensation Act produce the result that Optus no longer is subject to the compulsion imposed by the law of Victoria to insure with the VWA? The VWA, by action instituted in the Federal Court of Australia, sought declaratory relief that certain provisions of the Commonwealth Compensation Act upon which Optus relied for that result were invalid. Section 51(xiv) of the Constitution provides that the Parliament shall, subject to the Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to "insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned". In short form, the contention of the VWA and of the Attorney- General for Victoria, who intervened in the Federal Court in support of the VWA, was that the federal laws in question fell outside the legislative power of the Commonwealth by reason of the words "other than State insurance" in s 51(xiv). The text of par (xiv) may be compared with that of par (xiii): "banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money". This provision, particularly the phrase "other than State banking", was construed in Bourke v State Bank of New South Wales13, and it will be necessary to refer further to Bourke later in these reasons. The application to the Federal Court was heard by Selway J who dismissed it14. His Honour's conclusion respecting the construction of s 51(xiv) appears from the following passage15: "It is clear from the mischief to which the proviso was directed, that what was envisaged was the continuing capacity of the State insurance business to operate in a commercial marketplace. The use of the words 'State 13 (1990) 170 CLR 276. 14 Victorian WorkCover Authority v Andrews [2005] FCA 94. 15 [2005] FCA 94 at [70]. Crennan insurance business' to describe the meaning of 'State insurance' needs to be understood in that context16. There is no basis for treating the words 'State insurance' as extending to State laws requiring persons to insure with a State insurer or to State laws conferring an economic monopoly on a State insurer. In my view such State laws are not themselves 'State insurance'." An appeal to the Full Court of the Federal Court was instituted by the Attorney-General for Victoria. Upon application then made by the Attorney- General to this Court under s 40 of the Judiciary Act 1903 (Cth), the whole of that cause was removed into this Court. The cause removed was then set down for argument before the Full Court of this Court. In that argument the appellant, the Attorney-General for Victoria, was supported by the VWA, and by the intervening Attorneys-General for New South Wales, South Australia and Western Australia. The Attorney-General of the Commonwealth intervened in support of the Minister and the Commission and the Attorney-General's submissions were adopted by them. Optus submitted to any order save as to costs. In this Court, as in the Federal Court, much of the argument turned upon the construction and application of the phrase "other than State insurance" in s 51(xiv) of the Constitution. Much attention was given to the development in the last quarter of the nineteenth century of compulsory workers compensation insurance systems, particularly in Imperial Germany, and to what had been said on the subject in the Convention Debates. However, as the oral argument for the appellant proceeded, it became apparent that there were associated, and in some respects anterior, issues respecting the application of s 109 of the Constitution to the State legislation in question. For the reasons that follow, which differ in their focus somewhat from that in the reasons of Selway J, the appeal should be dismissed. To understand the reasons for that outcome in this Court, it is necessary to begin with further consideration of the federal and State legislative schemes and particular provisions of the legislation. 16 See NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 116 [66] and Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 51-52, 86; Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 193-194, cf at 331. Crennan The Commonwealth Compensation Act It is necessary to begin with the position of Comcare in the federal compensation scheme. Comcare is established as a body corporate by ss 68 and 74 of the Commonwealth Compensation Act. Comcare is required to determine the amount of premiums (s 97) from which, as "Comcare-retained funds" (s 90C(5)), it discharges liabilities in relation to compensation incurred by Comcare under the Act (s 90C(1)). Part II of the statute (ss 14-33) is headed "Compensation". Subject to the other provisions of that Part, Comcare is rendered by s 14 liable to pay compensation in accordance with the statute "in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment". In particular, s 24 provides for compensation for injuries resulting in a permanent impairment, s 25 for interim payment of compensation for such injuries and s 27 for compensation for non-economic loss for such injuries. The term "employee" is defined in s 5(1) in such a fashion as to include those employed by the Commonwealth or by a Commonwealth authority or by "a licensed corporation". The reference to licensed corporations is to the provisions of Pt VIII (ss 98A-108G). Part VIII is headed "Licences to enable Commonwealth authorities and certain corporations to accept liability for, and/or manage, claims". Part IV (ss 42-52A) is headed "Liabilities arising apart from this Act". Section 44(1) states: "Subject to section 45, an action or other proceeding for damages does not lie against the Commonwealth, a Commonwealth authority, a licensed corporation or an employee in respect of: an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth, Commonwealth authority or licensed corporation would, but for this subsection, be liable (whether vicariously or otherwise) for damages; or the loss of, or damage to, property used by an employee resulting from such an injury; whether that injury, loss or damage occurred before or after the commencement of this section." Crennan Section 45(1) confers a right of election and provides: "Where: compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and the Commonwealth, a Commonwealth authority, a licensed corporation or another employee would, but for subsection 44(1), be liable for damages for any non-economic loss suffered by the employee as a result of the injury; the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth, the Commonwealth authority, the licensed corporation or other employee for damages for that non-economic loss." In an action or proceeding for damages for non-economic loss which is instituted as a result of such an election under s 45(1), the court shall not award the employee damages for any non-economic loss in an amount exceeding $110,000 The Commonwealth licensing provisions Further reference should now be made to Pt VIII of the Commonwealth Compensation Act which empowers the Commission to grant certain licences to Commonwealth authorities or eligible corporations. The funds derived by Comcare from premiums and which are applied by Comcare to meet its obligations are not provided by licensees; they become "self-insurers" and the capacity of eligible corporations to act as such is taken into account in issuing their licences under Pt VIII. Of course, a particular licensee may wish nevertheless to carry insurance under arrangements it concludes with third parties. At the heart of the case presented by Optus in this litigation is the complaint that the compulsory insurance system applying in Victoria denies it that liberty; for their part, the appellant and the VWA deny the validity of the federal legislation whence Optus derives that liberty of action. The term "eligible corporation" means a corporation declared by the Minister by notice in writing to be eligible for the grant of a licence under Pt VIII (ss 99, 100). The Minister is empowered to make such a declaration if satisfied that it would be desirable for the Commonwealth Compensation Act to apply to employees of a corporation that has one of the following characteristics: first, the corporation is, but is about to cease to be, a Commonwealth authority (s 100(a)); Crennan secondly, the corporation was previously a Commonwealth authority (s 100(b)); or, thirdly, the corporation "is carrying on business in competition with a Commonwealth authority or with another corporation that was previously a Commonwealth authority" (s 100(c)). Optus satisfied the Minister that, as a competitor of Telstra, it answered the third criterion, that in par (c) of s 100. The history of Telstra and its origins as a Commonwealth authority were explained in Telstra Corporation Ltd v Worthing17. In his reasons for judgment, Selway J18 explained that Optus had put its successful submission to the Minister on the basis that Optus was in competition with Telstra, that Telstra was covered by the Commonwealth Compensation Act and that it was desirable in the interests of achieving a "level playing field" that Optus be subject to the same workers compensation scheme as Telstra. Upon application to the Commission under s 102, s 104 then empowered it to grant a licence to Optus. In respect of "eligible applicants", being Commonwealth authorities and "eligible corporations" declared to be such by the Minister under s 100 (s 99), the Commission is obliged by s 103(2) to determine certain matters respecting the scope of the licence. These include determination in accordance with Div 3 of Pt VIII (ss 108-108A) of the scope of the licence so far as concerns "the degree to which, and the circumstances in which, the licensee may accept liability for compensation" (s 103(2)(a)). A licensee may be a Commonwealth authority or an "eligible corporation" (s 99). Section 4(10A) has a particular effect for the purposes of the application of the Commonwealth Compensation Act to an employee employed by a licensed corporation, or a dependant of such a person. This is that references to Comcare in provisions of the statute, including ss 14, 24, 25 and 27 (dealing with the payment of compensation and compensation for permanent impairments), are to be read as references to that licensed corporation. Hence s 14 imposes upon Optus the liability to pay compensation under the scheme described earlier in these reasons. Further, it should be noted that the treatment of "common law" liabilities by ss 44 and 45 applies, in the terms of those sections themselves, directly to Optus as "a licensed corporation". 17 (1999) 197 CLR 61 at 71 [8]-[9]. 18 [2005] FCA 94 at [9]. Crennan The relief sought by the appellant In this Court, the appellant reformulated the terms of the declaratory relief he seeks. In addition to a declaration of the invalidity of the licence granted to Optus under Pt VIII of the Commonwealth Compensation Act on 1 November 2004, the appellant seeks a declaration that: "ss 104(1), 108(1) and 108A(7)(a) of the [Commonwealth Compensation Act], to the extent that those provisions: (iii) authorise [the Commission] to grant an eligible corporation a licence under Part VIII of the [Commonwealth Compensation Act]; authorise the eligible corporation to accept liability to pay compensation in respect of injury, loss or damage suffered by or in respect of the death of its employees under the [Commonwealth Compensation Act]; and remove the obligation of a licensed corporation to obtain and keep in force a policy of insurance with the [VWA] in accordance with the [Victorian Insurance Act] and relieve such a corporation of its liabilities as an employer to pay compensation under the [Victorian Compensation Act] and to pay damages at common law as preserved and regulated by the [Victorian Compensation Act], are outside the legislative power of the Commonwealth and are invalid". Section 104(1) is the provision empowering the Commission to grant the licence sought by an eligible applicant. Section 108(1) is included in Div 3 of Pt VIII and states: "A licence may provide that the licensee is authorised to accept liability to pay compensation and other amounts under this Act in respect of particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees under this Act." As remarked above, such a licensee may be a Commonwealth authority or it may be an "eligible corporation". Section 104(1) and s 108(1) speak generally to the position of both species of licensees. Particular attention in argument was given to two sub-sections of s 108A dealing with the consequences of the authorisation of a licensee to accept liability. Section 108A(1) also speaks generally of "licensees", and locates in Crennan licensees, rather than Comcare, liability "to pay compensation and other amounts under this Act". The sub-section provides: licensee is authorised to pay compensation and other amounts under this Act in respect of particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees; and to accept liability such injury, loss, damage or death occurs; then: the licensee is liable to pay compensation and other amounts under this Act in respect of that injury, loss, damage or death; and Comcare is not liable to pay compensation or other amounts under this Act in respect of that injury, loss, damage or death." However, s 108A(7) speaks specifically to those licensees which are corporations and which have a particular authorisation under Div 3 to accept a certain head of liability. The sub-section does not apply to those licensees which are Commonwealth authorities. The sub-section also has a particular temporal operation. Section 108A(7) states: "If a licensee who is a corporation is authorised to accept liability to pay compensation and other amounts under this Act in respect of a particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees after the licence comes into force then: no law of a State or Territory relating to workers compensation applies to a licensee in respect of such injury, loss, damage or death; and any liability or obligation of the corporation under a law of a State or Territory in respect of such injury, loss or damage suffered, or death occurring, before the licence came into force is unaffected." (emphasis added) Crennan The declaration of invalidity sought by the appellant, with the support of the VWA, fixes upon par (a) of s 108A(7). However, no declaratory relief is sought in respect of s 108A(1). Yet, if sub-ss (1) and (7) of s 108A are read sequentially and with respect to Optus as a licensed corporation, it will be apparent that they operate together. Section 108A(1) both relieves Comcare of liability it otherwise might have in respect of injuries, losses, damage and death suffered by employees of Optus, and obliges Optus to make the payments required by the Commonwealth Compensation Act. These also include the amounts that may be payable under the election provisions of s 45, but otherwise and by operation of s 44 do not include amounts in respect of "common law" actions. Provisions of a State law which required Optus to meet liabilities under a State compensation scheme, or which preserved or modified common law liabilities of Optus otherwise than as provided by ss 44 and 45, would, if s 108A(1) otherwise be valid, alter, impair or detract from the essential legislative scheme of that federal law. The State law provisions, to the extent of what thus would be inconsistency within the meaning of s 109 of the Constitution, would be invalid19. Section 108A(7) is directed to those licensees which are corporations (rather than Commonwealth authorities) which are authorised to accept the liability to pay compensation in respect of the injury, loss, damage and death of employees, as already spelled out in the same form of words appearing as par (a) of s 108A(1). Those licensees retain, unaffected by the grant of the licence under the federal statute, such liability in respect of that injury, loss, damage and death occurring before the licence came into force as they carried under a law of a State or Territory relating to workers compensation. That is the effect of par (b) of s 108A(7). In respect of such injury, loss, damage or death occurring after the licence comes into force, no State or Territory law with respect to workers compensation applies to the licensee. That is the effect of par (a) of s 108A(7). In this way, for licensed corporations such as Optus, s 108A(7) gives a particular and temporal operation for the more generally expressed provisions made for all licensees by s 108A(1). The declaratory relief sought by the 19 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [27]. Crennan appellant thus, if its case otherwise be made good, appears to focus too narrowly upon par (a) of s 108A(7). Commonwealth authorities As noted above, s 108A(7) of the Commonwealth Compensation Act does not apply to those licensees which are Commonwealth authorities. The legislative assumption on the part of the Parliament appears to have been that State (and Territory) laws relating to workers compensation most likely, on the proper construction of those laws, would not have sought to bind those bodies answering the description of "Commonwealth authority"20. A further legislative 20 The term "Commonwealth authority" is the subject of a lengthy definition in s 4(1) of the Commonwealth Compensation Act. This reads: "Commonwealth authority means: a body corporate that is incorporated for a public purpose by a law of the Commonwealth, other than a body declared by the Minister, by notice in writing, to be a body corporate to which this Act does not apply; a body corporate that is incorporated for a public purpose by a law of a Territory (other than an ACT enactment or a law of the Northern Territory) and is declared by the Minister, by notice in writing, to be a body corporate to which this Act applies; a body corporate: that is incorporated under a law of the Commonwealth or a law in force in a State or Territory; in which: the Commonwealth has a controlling or substantial interest; or a Territory (other than the Australian Capital Territory or the Northern Territory) or a body corporate referred to in paragraph (a) or (b) has a controlling interest; and (Footnote continues on next page) Crennan assumption may have been that, to the extent that a State law purported to do so, it would be invalid to the extent of inconsistency, pursuant to s 109 of the Constitution, with the federal law providing for the Commonwealth authority in question. Of course, s 109 does not operate where, on its proper construction, the federal statute assumes the operation of the common law as modified by State statute law21; in that situation, the federal law operates within the setting of other laws so that it is supplementary to, or cumulative upon, the State law in question22. It will be necessary to refer again to these matters later in these reasons. The position of Commonwealth authorities apart, and from the viewpoint of Optus, the interrelation of sub-ss (1) and (7) of s 108A is significant for the operation of s 109 of the Constitution upon the Victorian legislation. The Victorian legislation Section 5(1) of the Victorian Compensation Act contains a definition of "worker" which applies in particular to those working under a contract of service. Part IV is headed "PAYMENT OF COMPENSATION". Section 82(1) states: (ss 80-138B) (iii) that is declared by the Minister, by notice in writing, to be a body corporate to which this Act applies; or a body corporate: in which a body corporate declared under paragraph (c) has a controlling interest; and that is declared by the Minister, by notice in writing, to be a body corporate to which this Act applies; or if a declaration is in force under section 4A, the Australian Capital Territory." 21 cf Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 432-433, 449, 462; Commonwealth v Western Australia (1999) 196 CLR 392 at 416-417 [59], 441 [145]. 22 Dobinson v Crabb (1990) 170 CLR 218 at 231; Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [27]; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 401 [208]-[209], 449 [375]. Crennan "If there is caused to a worker an injury arising out of or in the course of any employment, the worker shall be entitled to compensation in accordance with this Act." This statutory entitlement to compensation is not conferred other than in respect of employment connected with the State of Victoria (s 80(1)). What amounts to sufficient connection is detailed in the remaining sub-sections of s 80. Division 8A of Pt IV (ss 134AA-134AG) deals with actions for damages in respect of injuries arising on or after 20 October 1999. In particular, a worker who is, or the dependants of a worker who are or may be, entitled to compensation in respect of an injury arising out of or in the course of, or due to the nature of, employment on or after 20 October 1999, have restrictions or "caps" placed upon those common law actions by s 134AB, in respect of the recovery of damages for both pecuniary and non-pecuniary loss. With reference to the federal and State legislation, Selway J observed23: "There are significant restrictions under both schemes upon the entitlement of employees to sue for common law damages. Nevertheless, under the Victorian scheme damages for economic loss are 'capped' for serious injury at $1,006,760 and $438,000 for non economic loss. In contrast the maximum payable under the [Commonwealth Compensation Act] is $110,000 for non economic loss. Of course, there may be other benefits to employees in being subject to the Commonwealth scheme, rather than the Victorian scheme." The Victorian Insurance Act is, by s 5 of that statute, to be "read and construed as one" with the Victorian Compensation Act. The central provision for the accomplishment of the purpose of the Victorian Insurance Act requiring compulsory WorkCover insurance is s 7(1) of that statute. This is a penal provision. It states: "An employer who in any financial year employs a worker within the meaning of section 5(1) of the [Victorian Compensation Act] – (a) must obtain and keep in force a WorkCover insurance policy with [the VWA] in respect of all of the employer's liability under the [Victorian Compensation Act] and at common law or otherwise in 23 [2005] FCA 94 at [9]. Crennan respect of all injuries arising out of or in the course of or due to the nature of all employment with that employer on or after 4 pm on 30 June 1993; and (b) must not at any one time keep in force more than one such policy. Penalty: 100 penalty units." It may be assumed for present purposes that Optus is an employer which employs workers within the meaning of s 5(1) of the Victorian Compensation Act. The term "WorkCover insurance policy" is defined in s 3(1) of the Victorian Insurance Act as meaning an insurance policy issued in accordance with that statute. A WorkCover insurance policy must contain only such provisions as are prescribed by the Victorian Insurance Act and any other provisions approved by the VWA (s 9). One such prescribed provision is that the VWA as well as the employer is directly liable to pay the compensation under the Victorian Compensation Act and "at common law or otherwise" for which the employer is liable (s 9(2)(a)). Under risk of penalty, a person other than the VWA must not issue or renew a WorkCover insurance policy or a purported WorkCover insurance policy (s 10(1)). Thus, not only does the Victorian legislation compel the taking out of insurance; it also requires the selection of the VWA as insurer and thus denies any choice between insurers. The obligation of compulsory WorkCover insurance imposed by s 7(1) of the Victorian Insurance Act arises in respect of the liability of the employer under the Victorian Compensation Act and, secondly, in respect of the employer's liability "at common law or otherwise". What then are the liabilities of Optus under this legislation in so far as it validly applies to Optus? The position of Optus under the Victorian legislation As indicated earlier in these reasons, the central provisions respecting liability under the Victorian Compensation Act are those to satisfy the entitlement to compensation given to workers by s 82 and the "capping" of common law claims by s 134AB. Optus, as a licensed corporation, is subjected by the Commonwealth Compensation Act to the liability in s 14 to pay compensation under the federal scheme. Further, the "common law" liabilities of Optus are removed by s 44 of that statute, subject to the election provision of s 45. The operation of the compensation system thus applying to Optus by virtue of the federal law would be, in the sense of the authorities referred to earlier in these reasons, qualified and impaired by s 82 and by the "capping" provisions of Crennan the Victorian Compensation Act. To that extent, those provisions are rendered invalid by s 109 of the Constitution. If attention then be redirected to s 7 of the Victorian Insurance Act, it is apparent there is no liability imposed upon Optus under s 82 of the Victorian Compensation Act in respect of which there may be attached the compulsory insurance requirement by s 7(1)(a) of the Victorian Insurance Act. Section 7(1)(a) also imposes an obligation to insure compulsorily in respect of liability of the employer "at common law or otherwise". What is the meaning of those terms and what is the range of their operation? If a State law such as s 7(1)(a) of the Victorian Insurance Act is to be so construed as to impose an obligation by reference to a liability under the common law, that State law is not, in the absence of a contrary indication, to be construed as addressed to liabilities as they exist after the operation upon the common law of ss 44 and 45 of the federal statute. No such contrary indication appears. Further, s 7 is a penal provision. The Court should not strain to discern such an indication. A better reading of the expression "the employer's liability ... at common law" in s 7(1)(a) would include the common law liability as modified by the "capping" provisions of the Victorian Compensation Act. But, if so, nothing then turns upon the point. This is because those "capping" provisions in their application to Optus are rendered invalid by s 109 of the Constitution. The words "or otherwise" in s 7(1)(a) of the Victorian Insurance Act are apt to include obligations of strict liability arising from State statute, particularly laws imposing safety requirements in the workplace such as those considered in the well-known authorities of O'Connor v S P Bray Ltd24 and Sovar v Henry Lane Pty Ltd25. No such State legislation has been said in argument to have any relevant application to Optus. The form of words in s 44(1) of the federal statute includes any "other proceeding for damages" and so is apt to remove both the "common law" liability and liability arising "otherwise" within the sense of s 7(1)(a) of the Victorian 24 (1937) 56 CLR 464. 25 (1967) 116 CLR 397. Crennan Insurance Act26. It is true that s 44 does not apply where the election is made under s 45 of the Commonwealth Compensation Act but what is then permitted is the limited form of action spelled out in s 45. As remarked earlier in these reasons, in some instances federal law may assume the continued operation of State law and the common law of Australia as modified by State law27. However, here the common law upon a particular topic, including the responsibilities of Optus to its employees and its liability to an action or other proceeding for damages, has been removed by s 44 of the federal law, subject to the election regime established by s 45. The federal law cannot be said to assume the continued operation of the common law, so as to preserve it for the attachment of obligations imposed by State law. The result thus is reached that there is no obligation of Optus to which s 7(1)(a) of the Victorian Insurance Act attaches the requirement of compulsory WorkCover insurance in respect of an injury, loss or damage suffered by, or in respect of the death of, an employee of Optus after the licence under the Commonwealth Compensation Act came into force. That is not to say that s 7(1)(a) is invalid. But that section must be read having regard to the federal law's impact upon the common law and upon the Victorian Compensation Act, especially upon s 82 and the "capping" provisions of s 134AB. When it is observed that a corporation licensed under the Commonwealth Compensation Act is liable to pay compensation and other amounts under the federal Act in respect of injury, loss or damage suffered by, or in respect to the death of, its employees which occurs after the licence comes into effect, but is not otherwise liable at common law or under the Victorian Compensation Act, the premise for the engagement of s 7(1)(a) of the Victorian Insurance Act is to that extent not satisfied. It is to be noted, however, that s 7(1)(a) of the Victorian Insurance Act specifies the liabilities with which it deals not only by reference to their nature but also by reference to time. Thus, s 7(1)(a) identifies the relevant liability of an employer as liability "in respect of all injuries arising out of or in the course of or due to the nature of all employment with that employer on or after 4 pm on 26 In this second aspect of s 44(1), questions of inconsistency with State law giving rise to actions for breach of statutory duty might then arise under s 109 but no point of that nature arises in this case. 27 See APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at Crennan It follows from s 108A(7)(b) of 30 June 1993". the Commonwealth Compensation Act that a corporation licensed under that Act would remain subject to liabilities of the kind identified in s 7(1)(a) if the relevant death, injury, loss or damage occurred before the licence came into effect. Whether that was, or may be, the case with respect to Optus was not explored in this Court or at first instance. Nor was there any exploration of how the Victorian Insurance Act would operate in respect of an employer whose only liability to be insured concerned injuries or death occurring before the employer was granted a licence under the Commonwealth Compensation Act. For present purposes, it suffices to observe that in respect of injuries or death occurring after the grant of a licence under the Commonwealth Compensation Act there is nothing to attach to Optus the requirement of compliance with s 7(1)(a). The application to Optus of the licensing provisions of Pt VIII of the Commonwealth Compensation Act has the consequence that Optus is at liberty to be a "self-insurer" in respect of its liabilities under that statute for injuries or death suffered by its employees after the grant of the licence. The use of the term "self-insurer" is apt to mislead when used in this context. The constitutional support for the operation of the legislation relating to Optus is not to be found in the insurance power (s 51(xiv)). The contrary was not asserted, at least by VWA. Rather, it was accepted in argument that relevant sources of power respecting Optus might be found in the posts and telegraphs power (s 51(v)) or the corporations power (s 51(xx)). The issues respecting validity Bourke28 established that the corporations power (and other heads of power in s 51) is subjected to the limitation or exception found in the words "other than State banking"; the upshot is that a law which on its face is supported by s 51(xx) nevertheless is beyond power if it answers the description "State banking". The Commonwealth accepts that this outcome applies to the insurance power, though it disputes some of the statements made in Bourke. The question in the present appeal then becomes whether the provisions of the Commonwealth Compensation Act which render invalid, by the operation of s 109 of the Constitution, provisions of the Victorian Compensation Act and which transmogrify the common law are denied any such valid operation by the expression "other than State insurance" in s 51(xiv). 28 (1990) 170 CLR 276. Crennan The appellant submits that s 51(xiv) of the Constitution does not permit the valid operation of the Commonwealth Compensation Act to "remove" by "indirect" means the liabilities of Optus in relation to which the State law imposes the compulsory obligation to obtain and keep in force a WorkCover insurance policy. The impugned provisions were said to have "the effect of dissolving or removing the obligation imposed by [s 7(1)(a) of the] State law to hold insurance with a State insurer". The presence of the State law and the effect which, if valid, the federal law would have upon it were said to render invalid the federal law so as to deny it that effect. Accordingly, in so far as the federal law "annihilated" the application of s 82 of the Victorian Compensation Act to Optus, it was restricting and altering the obligation of Optus to take out State insurance and so was invalid. Conclusions These submissions should not be accepted. It is necessary in that regard first to return to Bourke. That case decided two further points of present importance. First, the Court rejected any suggestion that the protection by s 51(xiii) of "State banking" amounts to what is "an exclusive State power preventing Commonwealth law from touching or affecting State banking in any way"; this suggestion was said to have "strong overtones of the discredited reserved powers doctrine"29. Secondly, Bourke decided that the phrase in s 51(xiii) "other than State banking" requires that a law of the Parliament which can be characterised as a law with respect to banking (whether or not it can also be characterised as a law with respect to any other subject-matter of legislative power) nevertheless "does not touch or concern State banking, except to the extent that any interference with State banking is so incidental as not to affect the character of the law as one with respect to banking other than State banking"30. In the above formulation of principle respecting s 51(xiii), the Court relied expressly upon the well-known statement by Kitto J in Fairfax v Federal Commissioner of Taxation31, namely: 29 (1990) 170 CLR 276 at 288. 30 (1990) 170 CLR 276 at 286, 288-289. 31 (1965) 114 CLR 1 at 7. Crennan "Under [s 51 of the Constitution] the question is always one of subject matter, to be determined by reference solely to the operation which the enactment has if it be valid, that is to say by reference to the nature of the rights, duties, powers and privileges which it changes, regulates or abolishes; it is a question as to the true nature and character of the legislation: is it in its real substance a law upon, 'with respect to', one or more of the enumerated subjects, or is there no more in it in relation to any of those subjects than an interference so incidental as not in truth to affect its character?" That case also is authority for affirming the rejection of reserved powers notions which had influenced the majority decision in R v Barger32. What then is the nature of the rights, duties, powers and privileges which, with respect to Optus, the licensing provisions of Pt VIII of the Commonwealth Compensation Act change, regulate or abolish? Does the answer indicate that the substance of those provisions is a law with respect to insurance of any description? The licensing provisions oblige a licensee such as Optus to make the payments stipulated by the Commonwealth Compensation Act in respect of injury, loss, damage and death suffered by its employees; and no State law with respect to workers compensation applies to such occurrences after the licence comes into force. These licensing provisions are laws supported in their application to Optus at least as laws with respect to a trading corporation formed within the limits of the Commonwealth (s 51(xx))33. It is unnecessary to decide whether they are also supported by s 51(v). Undoubtedly, as Fullagar J put it in Insurance Commissioner v Associated Dominions Assurance Society Pty Ltd34, "the whole relation of insurer and insured" is within the scope of the federal legislative power. However, the licensing provisions leave Optus at liberty to decide whether to take out insurance, and, if so, on what terms, or to remain a "self-insurer". They do not touch and concern insurance in any more than an incidental fashion. Still less do 32 (1908) 6 CLR 41. 33 See New South Wales v Commonwealth (2006) 81 ALJR 34 at 86-87 [177]; 231 ALR 1 at 54. 34 (1953) 89 CLR 78 at 87. Crennan the licensing provisions touch and concern "State insurance" as must be made good if the appeal is to succeed. The federal licensing provisions have full legal effect and operation regardless of what, at any given time, amounts to "State insurance". Hence, it is unnecessary to determine whether Selway J was correct in holding that a mandatory requirement of State law that employers be insured, in relation to a particular species of liability, with a designated insurer which is a "State insurer" does not answer the Constitution35. the description "State insurance" in s 51(xiv) of It is here that a further point must be made concerning Bourke. No State law was involved in that case beyond the State Bank Act 1981 (NSW), which established the respondent as a body corporate with banking as its principal business. The issue decided by this Court was that ss 52 and 52A of the Trade Practices Act 1974 (Cth) were invalid to the extent that they purported to apply to a State bank in the conduct of its banking business not extending beyond the limits of the State concerned36. As was pointed out by Gleeson CJ and Heydon J in APLA Ltd v Legal Services Commissioner (NSW)37: "Inconsistency between a State law and a federal law does not spring from the political motives of the respective law-making authorities. Section 109 is concerned with inconsistency of laws, not inconsistency of political opinion." In the present case, s 109 of the Constitution is engaged in the manner described earlier in these reasons. The result of the operation of s 109 upon the Victorian Compensation Act is that there remains no obligation on the part of Optus to which there can attach the requirement of compulsory WorkCover insurance. While the authorities confirm an understanding term "inconsistency" in s 109 of the Constitution may bring about the invalidity of a State law which does not necessarily have the same subject-matter as the federal that the 35 [2005] FCA 94 at [70]-[72]. 36 See (1990) 170 CLR 276 at 292. 37 (2005) 224 CLR 322 at 355 [45]. Crennan law in question38, that does not assist the appellant's case. The provisions of the Victorian Compensation Act which are rendered invalid to the extent of inconsistency with the federal licensing provisions share the character of laws with respect to workers compensation. The federal provisions also have the character of laws with respect to trading corporations and this sustains their validity with respect to Optus. Neither federal nor State laws to which s 109 applies bear any character of laws with respect to insurance, let alone "State insurance". It is true, as the appellant stressed, that the obligation of compulsory insurance under the Victorian law is connected with the legislative system in Victoria for the provision of workers compensation. But the link never appears where, as in the case of Optus, s 109 has operated to negate any relevant operation of the State workers compensation system. Contrary to the submission by the appellant, that outcome does not mean that it is the federal laws which restrict or alter the obligation of Optus to take out State insurance and so must be invalid to that extent. It is s 109 which so operates upon State law as to lead to the result that Optus has no obligation of compulsory WorkCover insurance. The federal laws retain after the operation of the mechanism of s 109 a character which supports their validity under the corporations power without those laws touching or concerning State insurance. To adapt what was said in Bourke39: "[I]f a law is not one with respect to [insurance], it is not subject to a restriction that it must not touch or concern State [insurance]." The Commonwealth disputed, as broadening rather than merely restating that restriction, the following passage in Bourke40: "Put another way, the connexion with State banking must be 'so insubstantial, tenuous or distant' that the law cannot be regarded as one with respect Melbourne Corporation [v The Commonwealth]41." to State banking: 38 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 78 [32]. 39 (1990) 170 CLR 276 at 289. 40 (1990) 170 CLR 276 at 289. 41 (1947) 74 CLR 31 at 79. Crennan That passage should be read in its context, preceded as it is by the citation of the later passage in Fairfax42, which has been set out earlier in these reasons. If that be done, it may be understood that the Court in Bourke was not further attenuating the sufficiency of necessary connection with State banking for the restriction in s 51(xiii) to apply. A law does not touch and concern State banking or State insurance merely because State legislation is so drawn that the invalidation of one State law by the operation of s 109 produces a consequence that in some circumstances a State law of banking or insurance lacks subject- matter for its operation. Orders The appeal removed into this Court should be dismissed, with the costs of the first, second and third respondents to be paid by the appellant. 42 (1965) 114 CLR 1 at 7. Kirby KIRBY J. The most important function entrusted to this Court is to maintain the Constitution and specifically the federal arrangements that it secures43. The grants of legislative power provided by the Constitution to the Federal Parliament are large and broad. They are to be interpreted with the amplitude appropriate to a national instrument of government and to the functional needs, envisaged by the constitutional language and presented by changing times44. Nevertheless, the federal component of our Constitution is one of its central elements. By dividing governmental power, federalism reinforces representative democracy and tends to protect liberty, to encourage experimentation and reform and to promote local decisions on issues of local importance45. The federal idea is especially important where, exceptionally, the Constitution has carved out from what is otherwise a legislative subject matter granted to the Federal Parliament, a sphere of lawmaking that is denied to that Parliament and thus left with the lawmakers of the States. The proceedings and the controversy These proceedings were heard and dismissed in the Federal Court of Australia by the primary judge (Selway J)46. In addition to lodging an appeal to the Full Court of the Federal Court, the Attorney-General for the State of Victoria ("the State") applied for the removal of the cause into this Court. That application succeeded. The proceedings were returned before a Full Court of this Court. The Full Court effectively heard the proceedings as a challenge to the validity of the provisions of federal law. That law authorised the effective removal of a private corporation employing workers in the State of Victoria from the operation of a Victorian statute. The impugned federal law purported to excuse the corporation from having to conform to Victorian legislation otherwise 43 New South Wales v Commonwealth (2006) 81 ALJR 34 at 167-168 [611]-[613]; 231 ALR 1 at 164; cf Victoria v The Commonwealth and Connor (1975) 134 CLR 81 at 118 per Barwick CJ; Saunders, "Legislative, Executive, and Judicial Institutions: A Synthesis", in Le Roy and Saunders (eds), Legislative, executive, and judicial governance in federal countries, (2006) 344 at 368. 44 Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367; Herald and Weekly Times Ltd v The Commonwealth (1966) 115 CLR 418 at 434. 45 New South Wales v Commonwealth (2006) 81 ALJR 34 at 133-134 [446]; 231 ALR 46 Victorian WorkCover Authority v Andrews [2005] FCA 94. Kirby applicable to it in respect of the provision of workers' compensation benefits to its employees and their dependants. It exempted the corporation from securing compulsory State insurance to cover that risk, as generally applicable to employers in the State. The Attorney-General of the Commonwealth intervened in this Court to support the validity of the federal law under which the corporation concerned, Optus Administration Pty Ltd ("Optus"), secured the purported exemption from the State workers' compensation and insurance obligations. The Commonwealth nominated, as the constitutional foundations for the federal law, the lawmaking powers provided to the Federal Parliament under s 51(xx) (trading corporations), s 51(v) (postal, telegraphic, telephonic and other like services), and s 51(xiv) of the Constitution. In this Court, a majority concludes that the corporations power is sufficient to uphold, as valid, the relevant federal law47. The corporations power is one of many powers provided by s 51 of the Constitution. It is expressed to be "subject to this Constitution". So is s 51(xiv). Hitherto, par (xiv) has been a little-noticed provision. It is expressed in unusual terms. By it, there is granted to the Federal Parliament the power to make laws with respect to: "insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned". The State (supported by Victorian WorkCover Authority ("VWA"), the fourth respondent, and by the States of New South Wales, South Australia and Western Australia intervening) argues that the legislative powers to make federal laws with respect to trading corporations must be read harmoniously with the exclusion expressed in s 51(xiv) of the Constitution that prevents the Federal Parliament from making laws with respect to "State insurance". That, say the State and VWA, is what in substance the Victorian laws governing compulsory workers' compensation and obligatory insurance constitute. To the extent, therefore, that the Federal Parliament purports to exempt a private trading corporation, such as Optus, from its obligations under such Victorian laws, it has intruded into legislative territory expressly marked out by s 51(xiv) as forbidden to federal lawmaking. In support of these arguments, the State and VWA rely on the conclusions and reasoning of this Court in Bourke v State Bank of New South Wales48. 47 Reasons of Gummow, Hayne, Heydon and Crennan JJ ("joint reasons") at [74], 48 (1990) 170 CLR 276. Kirby Although not a decision concerned with s 51(xiv), that case concerned s 51(xiii) – the power with respect to banking – which, by analogy, excludes State banking but includes State banking "extending beyond the limits of the State concerned". Save for the matters argued by the State and VWA, in deciding these proceedings, this Court can assume the sufficiency of the corporations (and perhaps the postal) power otherwise to support the exempting licence granted to Optus by federal authorities under federal law, to permit the effective transfer of that corporation to federal regulation. The Court is not here concerned with the validity of federal laws with respect to workers' compensation and connected benefits; insurance and self-insurance so far as they relate to actual federal employers and employees; or the employees of privatised federal corporations or of trading corporations like Telstra Corporation Ltd49 which amount to a type of continuation of a federal agency formerly operating pursuant to federal legislation50. Such bodies present other and different issues from those raised in these proceedings. Those issues can be put to one side. It was not contested that Optus is, and at all times has been, a trading corporation. It is not a manifestation of the Commonwealth or, relevantly, of federal law. It is a private corporation in competition with Telstra but operating in an open marketplace containing other private competitors. Until the events occurred which gave rise to these proceedings, Optus maintained a compulsory insurance policy with VWA pursuant to the relevant Victorian State law. Pursuant to that policy, in the year ended 30 June 2004, Optus paid VWA premiums amounting to $1,377,412. Those sums were paid into an account maintained by VWA, along with all other premiums so paid, at the Victorian Treasury. They therefore constituted part of the pool from which the integrated scheme of State workers' compensation benefits and compulsory insurance obligations was maintained in respect of the entitlements of workers in the State of Victoria and their dependants. If Optus, a private corporation, could so easily be shifted from State legal regulation to federal, the consequence in practical terms for VWA and for the viability of the integrated State compensation and insurance legislation, would obviously be significant. Thus, it is reasonable to ask whether any corporation within the Commonwealth could, by analogy, be rendered subject to federal workers' compensation and insurance provisions displacing State compensation and insurance obligations. Would this shift strike at the viability of the State legislation on workers' compensation with its integrated component of universal 49 See Telstra Corporation Ltd v Worthing (1999) 197 CLR 61. 50 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 70-72 [6]-[11]. Kirby insurance compensation benefits? inferentially necessary to support the payment of statutory These were the features of the present proceedings that brought Victoria, the intervening States and VWA to this Court to challenge the validity of the federal to federal workers' their dependants and compensation consequential exemption from the State law with its integrated workers' competition and insurance obligations. to authorise Optus's shift for laws purporting regulation its employees and The resonances of these proceedings with the recent decision of this Court in the Work Choices51 case are obvious. There are differences; but some parallels. This appeal and its outcome demonstrate the constitutionally disruptive journey that began with the decision in Work Choices. Once again, we have proof of the judicial indifference to established authority of this Court. Such indifference seriously disturbs the federal balance which the Constitution was designed to achieve. Undeniably, Chapter III courts play a vital role in upholding the federal compact. I see little point in repeated declarations about the vital need to protect the integrity of Chapter III courts and federal jurisdiction under the Constitution52 if, whenever an appeal is made to this Court to fulfil that role, the party making that appeal is rebuffed and seemingly never-ending accretions to federal legislative power are upheld and enhanced. The facts, legislation and common ground The facts: The background facts of these proceedings are described in the joint reasons. Set out there is an account of the course of the proceedings in the Federal Court and the decision of Selway J, who dismissed VWA's challenge to the extension to Optus of the federal compensation legislation, the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the federal Act")53. 51 New South Wales v Commonwealth (2006) 81 ALJR 34; 231 ALR 1. 52 See eg R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 267-268, 274-276; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 12-16; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 102-103, 116-117, 134; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 569 [94], 574-575 [110]-[111]. 53 Joint reasons at [21]-[30]. Kirby in addition There were attractions for Optus (and distinct disadvantages for its employees) in moving from State regulation of workers' compensation entitlements of employees in Victoria to regulation under the federal Act. Importantly, as the primary judge found, entitlements to sue for "common law" damages, to statutory workers' compensation benefits, are significantly larger under the Victorian scheme54. The "cap" on the amount payable for non-economic loss under the federal Act was, at the relevant time, $110,000. By comparison, the maximum amount payable for non-economic loss under the Accident Compensation Act 1985 (Vic) ("the State Compensation Act") was $438,000. As well, there are severe election requirements under the federal Act, as a pre-condition to the pursuit of a claim for "common law" damages. These introduce traps and burdens for insured employees seeking compensation for civil wrongs by their employer. Inferentially for these and other reasons, on 10 June 2004, the federal Minister for Employment and Workplace Relations ("the Minister"), the first respondent, was presented with an application by Optus requesting a declaration under s 100 of the federal Act that Optus was entitled to the grant of a licence under Pt VIII of that Act. On 7 July 2004, the Minister declared that Optus was so eligible. In consequence, on 1 November 2004, the Safety, Rehabilitation and ("the Compensation Commission established under Commission"), the second respondent, authorised its chairman to sign a licence under ss 103 and 104 of the federal Act, granting Optus authorisation to accept liability and to manage claims under the federal Act commencing from 1 December 2004. This authorisation was twice varied, effectively such that the licence to Optus came into operation on 30 June 2005. It is that licence, with the purported effect it had to exempt Optus from the operation in Victoria of the State Compensation Act and the integrated provisions of the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) ("the State Insurance Act"), that occasioned these proceedings. federal Act the To the extent that the federal Act purported to give authority to the Minister and the Commission to authorise the application of the federal law to Optus, the State and VWA challenge the validity of ss 104(1), 108(1) and 108A(7)(a) of the federal Act. They assert that, constitutionally speaking, such laws are laws with respect to State insurance. They submit that, even if otherwise the federal Act and steps taken under it would be sustained in the case of Optus (eg under s 51(xx) on the basis that Optus was a trading corporation and the law was one with respect to such a corporation), the express exclusion of federal lawmaking power with respect to "State insurance" modified the otherwise substantial grant of lawmaking power to the Federal Parliament. It qualified the ambit of the corporations power in this respect and excluded the 54 Victorian WorkCover Authority v Andrews [2005] FCA 94 at [9]. Kirby availability of that head of power (and any other), once it was concluded that the character of the federal law in its operation in this respect, was that of a law with respect to State insurance. The legislation: The joint reasons contain relevant provisions of, or reference to, the federal Act, the State Compensation Act and the State Insurance Act55. There is no necessity for me to repeat any of this statutory material. I incorporate it by reference. The common ground: Having regard to the arguments of the parties, certain matters represent common ground between them in these proceedings: The impugned provisions of the federal Act, as defined in the submissions of the State and VWA (common in this respect), namely ss 104(1), 108(1) and 108A(7)(a) so far as they purported to apply to Optus, are properly characterised as laws with respect to "insurance"; (2) VWA is the "State" within the meaning of that phrase for the purpose of the Constitution, including as that word is used in s 51(xiv); The business of VWA includes "State insurance" for the purpose of s 51(xiv) of the Constitution; The exclusion in s 51(xiv) of the Constitution of federal lawmaking power in respect of "State insurance" is to be treated in the same way as the like exclusion in relation to "State banking" contained in s 51(xiii) of the Constitution; The exclusion in relation to "State insurance" in s 51(xiv) imposes a restriction upon federal legislative power generally, and not only a restriction in respect of federal laws that could be characterised as laws with respect to insurance; and (6) When the Federal Parliament enacts a law that may be characterised as a law with respect to insurance, to be a valid law of the Commonwealth, that law must not touch or concern State insurance, except to the extent that any interference with State insurance is so incidental as not to affect the character of the law as one with respect to insurance other than State insurance. 55 Joint reasons at [33]-[42], [44]-[47], [56]-[57], [59]-[62]. Kirby The propositions contained in pars (5) and (6) above draw their validity from the reasoning of this Court in Bourke56. As will appear, it is that reasoning that lies at the heart of the challenge by the State and VWA to the validity of the purported steps taken to transfer Optus to the federal workers' compensation régime with its associated provisions for compulsory insurance and self- insurance to sustain that scheme. Both as a practical matter, and as a consequence of legal analysis of the federal and State workers' compensation legislation, the State and VWA argued that the intent and purported effect of the federal Act was to shift Optus wholly out of the State workers' compensation scheme into the federal one and, although it is a private corporation, to clothe it with a federal character in a way destructive of the application to it of the relevant State laws, notably the State law with respect to State insurance whose operation is protected from federal interference by the exception specifically expressed in s 51(xiv) of the Constitution. For the State and VWA, the interference complained of was not an "incidental" or a peripheral or insubstantial consequence of the operation of the federal Act in this respect, such as might pass muster despite the exclusion from federal lawmaking of "State insurance" in s 51(xiv)57. On the contrary, the federal law touched or concerned State insurance in a way that was substantial, immediate and essential, striking at the heart of the operation and effectiveness of such State law and thus attracting the exemption from federal legislative power contained in s 51(xiv). That this was so, the State and VWA asserted, was inherent in the operation of ss 108(1) and 108A of the federal Act in the case of a private corporation, such as Optus, employing employees in the State of Victoria. But any doubt about this conclusion was dispelled, according to their arguments, by the terms of s 108A(7) of the federal Act. Although that provision appears in the joint reasons58, because it makes plain an essential purpose of the federal Act, it is worth repeating the critical provisions: "If a licensee who is a corporation is authorised to accept liability to pay compensation and other amounts under this Act in respect of a particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees after the licence comes into force then: 56 (1990) 170 CLR 276. 57 Bourke (1990) 170 CLR 276 at 288-289. 58 Joint reasons at [47]. Kirby no law of a State or Territory relating to workers compensation applies to a licensee in respect of such injury, loss, damage or death". The reference in s 108A(7)(a) of the federal Act is to a State (or Territory) law relating to workers' compensation. No express reference is made in the paragraph to such a law relating to insurance. However, according to the State and VWA this omission is immaterial. The State law relating to workers' compensation, by its terms and necessary operation, was inextricably linked to the State law on insurance and to the activities of VWA, a provider of State insurance established under State law. Hence the attraction of the constitutional exclusion in s 51(xiv). The issues The following issues arise for decision by this Court within the arguments addressed by the parties: The requirements of Bourke: This Court has not previously elaborated the meaning of the exception "State insurance" in the federal head of power provided by s 51(xiv) of the Constitution. However, in Bourke it explained the exception of "State banking" in s 51(xiii) which is agreed to be analogous. So the issue arises as to the requirements established by Bourke for the ambit of s 51(xiv) that must be applied in judging the validity of the federal Act challenged in this case, as it concerns or affects the State insurance conducted by VWA pursuant to the provisions of the State Compensation Act and the State Insurance Act as they relate to Optus; The suggested modification of Bourke: No party to these proceedings challenged the correctness of this Court's unanimous holding in Bourke. However, the Commonwealth contested one passage in the reasoning of the Court in that case where it explained that, to be permissible as a federal law which nonetheless touched and concerned State banking (and hence insurance), the connection with, or effect on, that activity must be "'so insubstantial, tenuous or distant' that the law cannot be regarded as one with respect to State banking"59. This test is expressed in a passage in the Court's reasons prefaced by the words "Put another way". The Attorney-General of the Commonwealth submitted that the alternative expression, supported by the Court by reference to the Melbourne 59 Bourke (1990) 170 CLR 276 at 289. Kirby Corporation case60, was erroneous. It was over-broad and was in any case subject to the following sentence explaining that the tests propounded are those appropriate to "the familiar process of characterization". Applying that familiar process, the Commonwealth urged that the impugned provisions could not be characterised as laws with respect to "State insurance". They did not infringe the exclusion expressed in s 51(xiv) of the Constitution. They were thus laws made under other relevantly unqualified paragraphs of s 51 (notably par (xx)). Accordingly, they were constitutionally valid and took primacy over the inconsistent State laws by force of s 109 of the Constitution. The second issue, therefore, concerns the correctness of the second expression of the applicable test for the validity of a federal law in such circumstances, as stated in Bourke; and The application of Bourke: Depending on the answers to the foregoing issues, the issue remains whether, applying this Court's authority in Bourke to the analogous problem presented by s 51(xiv) of the Constitution, the challenged provisions of the federal Act impermissibly intruded in this case upon the forbidden territory marked out in s 51(xiv) and were thus invalid as an attempt by the Federal Parliament to make laws on a subject of State insurance expressly excluded from the grant of that legislative power Parliament's powers. the Federal Parliament and so beyond The requirements of the decision in Bourke Implied reserved powers: The starting point of analysis is a need to rid the judicial mind of irrelevant phobias concerning the "discredited reserved powers doctrine"61. That doctrine is mentioned in the joint reasons62 as it was in Work Choices63. It harks back to the notion, embraced in the earliest days of the Commonwealth and of this Court, that the federal character of the Constitution, and the limited grants of legislative powers to the Federal Parliament, impliedly reserved certain powers to the States so that the grants of lawmaking powers to 60 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 79. See Bourke (1990) 170 CLR 276 at 289. 61 Bourke (1990) 170 CLR 276 at 288. 62 Joint reasons at [78]. 63 New South Wales v Commonwealth (2006) 81 ALJR 34 at 68-69 [82], 71-72 [94], 89 [190], 140-141 [470]; 231 ALR 1 at 29-30, 33, 57, 127. Kirby the Federal Parliament, as in s 51 of the Constitution, were to be read, by implication, as subject to such (State) "reserved powers"64. The provenance of this doctrine may be traced to early decisions of the Supreme Court of the United States concerning analogous provisions of that country's Constitution65. After an early tussle between this Court and the Privy Council, which had rejected the doctrine in early Canadian cases, the doctrine was eventually overthrown by this Court's decision in the Engineers' case66. Nevertheless, that decision could not (nor did it purport to) erase the federal features that permeate the Australian Constitution and lie in its bedrock. The Engineers' case was concerned with a doctrine of reserved State powers that depended upon an implication said to be found in the Constitution, although not expressed there in terms. Some such implications, protective of the essential governmental functions of the States, continue to be upheld by this Court67. It is not, therefore, true to suggest that the Federal Parliament can do anything it wishes under its own grants of power without consideration of the consequences for the States. However, that is not an issue presented by these proceedings. No one in this case, certainly not the State or VWA or any of the States intervening, sought to revive the implied doctrine of reserved State powers. Their concerns lay elsewhere. Here, the limitation invoked by the State and VWA was not an implied but an express one. It was the one specifically included in the grant to the Federal Parliament of what was otherwise an ample federal lawmaking power with respect to insurance. By express provision of that paragraph of the Constitution, no federal law might be enacted that might be characterised as a law with respect to "State insurance". This Court is therefore dealing here with an express constitutional limitation, not an implied one. The Engineers' decision says 64 D'Emden v Pedder (1904) 1 CLR 91 at 111; Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087. 65 McCulloch v State of Maryland 17 US 316 (1819); The Collector v Day 78 US 113 at 124 (1871). For later decisions see Helvering v Gerhardt 304 US 405 (1938). The doctrine was finally explicitly overruled in the United States in Graves v New York ex rel O'Keefe 306 US 466 (1939). 66 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 67 Melbourne Corporation (1947) 74 CLR 31; Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188; Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416; Austin v Commonwealth (2003) 215 CLR 185. Kirby nothing in relation to such express limitations. Given the constitutional text, there is no justification for judge-made doctrine, whether in Engineers or anywhere else, to excuse this Court from its duty to uphold the exclusion of federal laws on "State insurance". By explicit command of the Constitution, that exclusion must be observed. Express State insurance exclusion: What is the reason for the grant of the powers in s 51(xiv) in the terms provided? Clearly, the business of insurance was well known in Australia at the time of federation. In fact, private insurance companies had operated in the Australian colonies for some time. They had assumed an important place as public financial institutions68. At first, they were largely unregulated. However, after the failure of a number of significant life assurance companies in the United Kingdom during the 1860s, the Imperial Parliament enacted the Life Assurance Companies Act 1870 (UK)69. That legislation had the objective of regulating the insurance industry in ways that were quickly copied in the Australian colonies, including Victoria70. Further regulation of insurance followed before, and after, federation. Also by that time, governments in the Australasian colonies began to show an interest in the conduct of insurance business themselves where that was considered necessary or useful to sustain social and legislative policies71. Thus, the establishment by the government of the New Zealand colony of its own insurance office72 attracted favourable attention during the Australasian Convention Debates73. At the time of federation it was anticipated that the Australian States might follow the New Zealand example74. Specifically, at the 68 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 20 May 1873 at 78 (Mr Langton). 69 33 & 34 Vict c 61; see also the 1872 amending Act: Life Assurance Companies Act 1872 (UK) (35 & 36 Vict c 41). 70 The Life Assurance Companies Act 1873 (Vic) (37 Vict No 474). 71 cf reasons of Callinan J at [173]-[174]. 72 Government Annuities Act 1869 (NZ) (32 & 33 Vict No 60). See also New Zealand Government Insurance and Annuities Act 1870 (NZ) (33 & 34 Vict 73 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 779-780. 74 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 779-780. See also Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 27 August 1913 at 977-985. Kirby time of federation, the concept of State insurance of employers' workers' compensation liabilities, to reinforce and protect the effectiveness of such liabilities, fell within the subject to which the language of s 51(xiv) was directed. In 1910, the Commonwealth Statistician, Mr G H Knibbs, delivered a report to the Federal Parliament on Social Insurance ("the Knibbs Report")75. His report described the "remarkable development in the application of the principles of insurance" in Europe, notably with respect to social insurance extending to insurance against "sickness, accident, death, old age, or other adversity"76. The report recounted developments in the law of Prussia, and of the later German and Austrian Empires, in the latter part of the nineteenth century. By those developments social insurance, applicable to workers (originally miners in Prussia), was made feasible by the enactment of laws "making compulsory the creation of such funds" as would render such compensation a practical possibility77. It was out of such developments, which Mr Knibbs traced to the Prussian law of 10 April 1854, that the later legislative innovations of Imperial Germany, under the chancellorship of Prince Otto von Bismarck, saw the enactment of the world's first compulsory workers' compensation laws78. These developments were well known to the framers of the Australian Constitution. They reflected the developments in Europe, later copied in New Zealand, which were expected to spread to the Australian States in accordance with the text of the Constitution. The meaning, ambit and purpose of s 51(xiv) needs to be considered against this Integrated benefits and social insurance: The foregoing historical excursus does not suggest that s 51(xiv) should be given a meaning today according to the original intent of those who framed, and adopted, the paragraph. But it does indicate the functional purpose for which the paragraph was provided: a function in any case clear enough from the paragraph's terms. The Knibbs Report explained specifically80: 75 Parliament of the Commonwealth of Australia, Social Insurance: Report by the Commonwealth Statistician, G H Knibbs, (1910). 76 Knibbs Report at 11 [1]. 77 Knibbs Report at 12 [3]. 78 Knibbs Report at 16-17 [1]. 79 See also reasons of Callinan J at [173]-[174]. 80 Knibbs Report at 14 [6]. Kirby "As matters then stood [before the enactment of workers' compensation laws], the workman could recover damages by action at law only, with costly investigations ensuing each case of accident and with tedious legal procedure and its consequent delays and uncertainties. The desire for more certain and immediate compensation in cases of accident grew apace. It is at this point that the agency of insurance has been invoked. By this agency it is sought to compel employers either to insure their employés in a State or private insurance institution, or themselves to maintain insurance funds, and to thus secure the position of the workmen by establishing in advance the amount and nature of the compensation to be granted, and by ensuring its immediate payment. From a merely legal question, therefore, the liability for accidents to workmen has, by a natural process of evolution, passed into a social question, viz, that of workmen's insurance." Describing the state of the law as he found it in Germany in the first decade of the twentieth century, Mr Knibbs insisted that compulsory insurance was a principle that was fundamental to the German system of workmen's compensation81. He added, presciently so far as later developments in Australia were to unfold82: "According to the German law each insurance organization, whatever form it may have adopted, must be under the supervision of the State, and in Germany it appears to be an open question whether all such organizations will not in course of time be transformed into institutions wholly organized by the State." Contemporaneous texts in the United States of America made similar points83. As anticipated at the time of Australian federation, and later in the Knibbs integrated workers' Report, State Parliaments quickly moved compensation and compulsory insurance legislation. Thus, the Parliament of Victoria did so by enacting the Workers' Compensation Act 1914 (Vic)84. That to enact 81 Knibbs Report at 22 [3]. 82 Knibbs Report at 22 [3] (emphasis in original). 83 eg Boyd, Workmen's Compensation and Industrial Insurance, (1913), vol 1, §§11, 84 4 Geo V No 2496. Kirby Act established a State Accident Insurance Office for Victoria85. All employers in the State, subject to State regulation, were thereupon required to insure their workers' compensation liabilities either with the Insurance Commissioner86 or with a (private) insurer approved by the Commissioner by reference to solvency and integrity criteria. Activities of this kind were thus clearly within the contemplation of the anticipated features of "State insurance" as excluded from the ambit of federal legislative power with respect to insurance in the terms of s 51(xiv) of the Constitution. It was so at the time of federation87. It has remained so ever since. It is envisaged in the language of the constitutional grant of power. Moreover, as the history demonstrates, it was expressly contemplated and quickly put into force by the creation of State Insurance Commissions and Offices throughout Australia. These are the type of bodies, now including, in Victoria, VWA, that fell within the description of "State insurance" as used in the Constitution. The history and practice of State insurance since federation denies any sharp bifurcation between State laws with respect to workers' compensation and State laws with respect to compulsory insurance to fund the compensation so provided. Typically, the two laws were, from the start, fully integrated. Often, they were contained in the one statute88. Their provision in companion legislation is immaterial to the necessary and intended inter-relationship89. Evolution of the applicable test: The meaning of the exclusion of "State insurance" in s 51(xiv) of the Constitution can only be understood by analogy with the treatment of the like exclusion of "State banking" expressed in s 51(xiii). The latter question, but not the former, has come before this Court in two cases. 85 By s 32. This was one of the first State Accident Insurance Offices established in Australia. Others quickly followed. 86 Appointed pursuant to s 32(2) to manage and control the State Accident Insurance Office of Victoria. 87 See reasons of Callinan J at [173]-[174]. 88 Provisions relating to insurance could be found, for example, in the Workers' Compensation Act 1914 (Vic), s 32 and the Workers' Compensation Act 1926 (NSW), ss 18-30. See also Mills, Workers Compensation (New South Wales), 89 Which is also demonstrated by the short title to the State Insurance Act, namely Accident Compensation (WorkCover Insurance) Act 1993 (Vic). Kirby The first was the Melbourne Corporation case90. The matter in issue in that case was the validity of s 48 of the Banking Act 1945 (Cth). That section purported to forbid a bank, except with the consent in writing of the Federal Treasurer, to conduct any banking business for a State or for any authority of a State, including a local government authority. The validity of the prohibition was challenged by the Melbourne City Council. This Court, by majority, held that the section was not a valid exercise of the power to make laws with reference to "banking", conferred on the Federal Parliament by s 51(xiii) of the Constitution. In the course of reasoning, two views were propounded as to the ambit of the exception for State banking. In his reasons, as part of the majority in Melbourne Corporation, Latham CJ explained the exception as preventing the Federal Parliament from enacting laws with respect to the establishment, management and conduct of banks by a State or by an authority established under State law and representing the State, or with respect to the conduct of customers of such banks in their capacity as such customers91. On the other hand, Dixon J, also a member of the majority, adopted a more stringent view92: "The purpose of the exception was, I have no doubt, to ensure that State banks should not be affected by any law which the Parliament of the Commonwealth might make about banking and that the exclusive power to regulate them should remain with the States. The exception of State banking means that a general law of the Commonwealth governing the business of banking cannot affect the operations of a State bank within the State concerned. The express inclusion in the federal legislative power of State banking extending beyond the limits of the State concerned gives added point to the exception. For it shows that State banking was contemplated as a possible function of government which should be excluded from the operation of federal law within the territorial limits of the authority of the government concerned." 90 (1947) 74 CLR 31. 91 (1947) 74 CLR 31 at 52. 92 (1947) 74 CLR 31 at 78. Kirby The controversy concerning the ambit of the legislative power in s 51(xiii) re-emerged in Bourke. In the result, it was the approach of Dixon J that was followed by this Court in the unanimous reasons of Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ in that decision. At the outset of its reasons in Bourke, the Court postulated the alternative views as to the nature and extent of the restriction imposed by the exception. The first possibility was that the Federal Parliament was prohibited from making laws with respect to State banking, in which case the ordinary tests of characterisation would not be adequate to determine whether a federal law intruded upon the exception93. The second possibility was that the federal legislative power did not extend to the enactment of laws with respect to banking (even if those laws were also laws with respect to another subject matter of legislative power) to the extent that those laws "touched or concerned" State banking. It would, theoretically, have been possible to confine the scope of the exclusion of laws concerning State banking in s 51(xiii) of the Constitution to cases where it could be shown that the federal law in question was "aimed at" or "singled out" or "discriminated against" State banking. However, in Bourke, this Court rejected that narrower view of the exemption94. Similarly, the Court concluded that the ambit of the exclusion could not be decided by adopting a simple criterion of whether the sole or dominant character of the impugned federal law was a law with respect to State banking95. Such an approach, the Court held, would not give adequate effect to the explicit exclusion of "State banking" to which full force had to be applied. The broad principle in Schmidt: It was at this point in its reasoning in Bourke96 that the Court explained the way in which the question, presented by the exemption of the specified State business, had to be answered. In order to make the application of the propounded test clearer, with respect to the issue presented in these proceedings, I will substitute throughout the quoted passage a reference to par (xiv) for par (xiii) and to "insurance" in the place of "banking". So modified, the test was stated as follows97: 93 (1990) 170 CLR 276 at 286. 94 (1990) 170 CLR 276 at 288. 95 (1990) 170 CLR 276 at 286-288. 96 (1990) 170 CLR 276 at 289. See also at 285. 97 (1990) 170 CLR 276 at 288-289. Kirby "The only satisfactory solution to this problem is to accept that there is no exclusive State power to make laws with respect to State [insurance]. But the words of s 51[(xiv)] still require that, when the Commonwealth enacts a law which can be characterized as a law with respect to [insurance], that law does not touch or concern State [insurance], except to the extent that any interference with State [insurance] is so incidental as not to affect the character of the law as one with respect to [insurance] other than State [insurance]: see Fairfax v Federal Commissioner of Taxation98. Put another way, the connexion with State [insurance] must be 'so insubstantial, tenuous or distant' that the law cannot be regarded as one with respect to State [insurance]: Melbourne Corporation99. Of course, these are the tests used in the familiar process of characterization. But they are employed in the context of an embracing Commonwealth power expressed as one to make laws with respect to [insurance] other than State [insurance]. They are not employed in the context of an exclusive State legislative power with respect to State [insurance]. So, if a law is not one with respect to [insurance], it is not subject to a restriction that it must not touch or concern State [insurance]." for this The foundation the Court reasoning, as immediately acknowledged, was the highly influential analysis of Dixon CJ in Attorney- General (Cth) v Schmidt100. Writing in that case on the relationship between the requirement for just terms for federal acquisitions of property in s 51(xxxi) and other heads of power as potential sources of such acquisition which could otherwise easily evade the requirement of just terms, Dixon CJ explained why no narrow view could be taken of the safeguard, restriction or qualification on the specified grant of federal power101: "It is hardly necessary to say that when you have … an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so 98 (1965) 114 CLR 1 at 7. 99 (1947) 74 CLR 31 at 79. 100 (1961) 105 CLR 361 at 372. See also New South Wales v Commonwealth (2006) 81 ALJR 34 at 147-148 [504]-[508]; 231 ALR 1 at 137-138. 101 Schmidt (1961) 105 CLR 361 at 371-372 cited in Bourke (1990) 170 CLR 276 at Kirby authorized the same kind of legislation but without the safeguard, restriction or qualification." It is this general principle of construction, adopted in Schmidt, and applied to the heads of legislative power in s 51 of the Constitution, that explains the unanimous ruling of this Court in Bourke. That ruling held that s 52(1) of the Trade Practices Act 1974 (Cth), prohibiting a corporation from engaging in misleading or deceptive conduct, did not apply to the defendant in that case, State Bank of New South Wales, a manifestation of "State banking" within the Constitution. True, the federal law in question was one of complete generality. True also, it did not "single out", "target" or "discriminate against" the defendant State Bank or State banking as an activity. Nor was the Trade Practices Act, in its generality, an Act, as such, entirely with respect to State banking, any more than the federal Act in question in this case is an Act, as such, entirely with respect to State insurance. However, in Bourke, this Court concluded that, in its operation, the Trade Practices Act could not be said only to touch or concern the State banking operations of the State body involved in that case in a way that was no more than "incidental" and so that it did not "affect the character of the law as one with respect to banking other than State banking". The State's case: apply Bourke: Applying the alternative expression of the test of impermissible effect, this Court concluded in Bourke that the connection with State banking of the federal Trade Practices Act was not "so insubstantial, tenuous or distant" that the latter could not be regarded as a law "with respect to" State banking. The Court thus held that the Trade Practices Act intruded into the forbidden territory. As a federal law, it impermissibly invaded the field of State banking. It was therefore constitutionally invalid. By analogous reasoning, the State and VWA invoked the same result in these proceedings. The reasoning of this Court in Bourke has been criticised as erroneous in so far as the Court concluded that the prohibition in the Trade Practices Act was relevantly a "law with respect to banking"102. However, save for the criticism by the Attorney-General of the Commonwealth of the alternative formulation, to which I will now turn, no party to these proceedings challenged the correctness of the decision in Bourke or the expression of the test for validity of the impugned federal law stated in that case. On the face of things, subject to what follows, that decision should therefore be given effect. It is a recent, unanimous and single opinion of the entire Court, similar in this respect to the 102 Rose, "Judicial Reasonings and Responsibilities in Constitutional Cases", (1994) 20 Monash University Law Review 195 at 199-200. Kirby decision in Brown v West103, invoked by the challenges in Combet v The Commonwealth104. It represented the fulcrum of my reasoning concerning the intersection of the nominated heads of federal legislative power in the Work Choices case105. To the full extent that the exclusion of "State insurance" is analogous to the exclusion of "State banking", considered in Bourke, the same reasoning should be applied with the same outcome. In every way the unanimous holding in Bourke applies even more clearly in this case than it did in Work Choices. The suggested modification of Bourke The Commonwealth's submission: The Commonwealth challenged the second way in which, in this Court's reasoning in Bourke106, the Court explained the criteria of impermissible connection to the State activity (there of banking) that would justify a conclusion that the impugned federal law had passed beyond its permissible ambit and had intruded into the territory of State activity excluded from federal lawmaking. This is what the Court said: "Put another way, the connexion with State banking must be 'so insubstantial, tenuous or distant' that the law cannot be regarded as one with respect to State banking". The Commonwealth was prepared to accept that, "correctly understood", the principles in Bourke were to be applied in these proceedings to determine whether the provisions of the federal Act challenged by the State and VWA were valid. However, it was in the "correct understanding" of Bourke that the dispute lay. The Attorney-General of the Commonwealth suggested that the adoption of criteria for connection with the accepted State activity as being "so insubstantial, tenuous or distant", imposed on the Federal Parliament too strict a test for invalidity. It cast a disproportionately broad protection upon the State business concerned. It deflected attention from the essential requirement which was to consider whether the federal law might, amongst other things, be characterised as a law with respect to insurance and, if so, whether it touched or concerned State insurance in an impermissible way. 103 (1990) 169 CLR 195. The Court's reasons in Brown's case involved five Justices (Mason CJ, Brennan, Deane, Dawson and Toohey JJ). The reasons in Bourke were those of the entire Court. 104 (2005) 224 CLR 494. 105 New South Wales v Commonwealth (2006) 81 ALJR 34 at 145-146 [496]-[498]; 231 ALR 1 at 134-135. 106 (1990) 170 CLR 276 at 289. Kirby Conclusion: Bourke criteria stand: In my view, the Commonwealth has not made good its criticism of the second passage in Bourke with which it cavils. The passage appears in the unanimous reasons of all of the then members of the Court. It is grounded, as the text shows, in the reasons of Dixon J in the Melbourne Corporation case107. There is no reason to doubt the correctness of the expression of the reasons in Bourke, or their application, by analogy, to the similar constitutional issue now in hand. I accept that, ultimately, the task for the Court is one involving "the familiar process of characterization" as the joint reasons acknowledged in Bourke108. I also accept that verbal explanations of the requirements for characterisation are not themselves part of the Constitution or immutable formulae. They represent judicial attempts to explain a complex process involving ultimately matters of assessment and judgment. Explanations in terms of connections that are "so insubstantial, tenuous or distant" are only marginally in Victoria v The preferable Commonwealth109, cited in Bourke110, when the Chief Justice said: the explanation given by Barwick CJ "[W]hen a law may possibly be regarded as having either of two subjects as its substance, one of which is within Commonwealth power and the other is not, a decision must be made as to that which is in truth the subject matter of the law." Characterisation notoriously involves classification and assignment of legislation by reference to considerations that are inherently disputable and upon which informed and reasonable observers can quite often reach different conclusions. Those who think otherwise deceive themselves. Nowadays, they are unlikely to mislead others. However, one reason for endorsing, in this context, the formulation derived from the explanation of Dixon J in Melbourne Corporation is that the Court is here dealing with an express exclusion from a grant of federal power in terms that are obviously designed to protect a State activity. The general doctrine of the implied immunity of instrumentalities has been overthrown. But this is 107 (1947) 74 CLR 31 at 79. See also Austin v Commonwealth (2003) 215 CLR 185 at 108 (1990) 170 CLR 276 at 289. 109 (1971) 122 CLR 353 at 372-373 (emphasis added). 110 (1990) 170 CLR 276 at 286. Kirby one case where the Constitution has taken the pains, exceptionally, to provide an express immunity. Far from being an instance which, as the Commonwealth submission urged, should be strictly construed so as to limit the impairment of the grant of federal lawmaking power111, the unusual and exceptional character of the exclusion from the operation of federal law of "State banking" and "State insurance" suggests the need to take the express constitutional exception seriously. It was provided for a purpose designed to protect both State banking and State insurance from the operation and interference of federal laws, except (relevantly) where any such operation was "incidental" or "insubstantial, tenuous or distant". Otherwise, such State banking and State insurance was intended, by the terms of the Constitution, to be left to State regulation112. It is often said that federal systems of government permit healthy experimentation and innovation at the State level. Indeed, in Australia there have been notable instances of this. One such area, which was clearly within contemplation of the founders at the time of federation and has emerged since, has been the field of State insurance underpinning policies of social insurance reflected in the successive provisions of State law. Such innovations were contemplated in the early decades of federation, as indicated in the Knibbs Report, mentioned above. The criteria of impermissible intrusion by federal law, accepted by this Court in Bourke and challenged by the Commonwealth in these proceedings, are therefore protective of State innovation. They are apt to the express exclusion from the effects of federal lawmaking in s 51(xiv) that forbids a federal law that may be characterised as one with respect to insurance from touching upon or concerning "State insurance" in any way that is not "so incidental" or "so insubstantial, tenuous or distant"113. Even if it were open to me to do so, I would not therefore overrule, or excise, the criteria expressed by the unanimous Court in Bourke. I would apply them to this case. The application of Bourke to the present case The task of characterisation: The foregoing reasons leave this Court with the task of characterising the impugned provisions of the federal Act and asking whether, relevantly, they are laws with respect to insurance and, if so, whether they touch or concern State insurance, to the degree forbidden by Bourke. 111 By reference to a supposed principle in Attorney-General (Vict); Ex rel Black v The Commonwealth (1981) 146 CLR 559 at 614-615, 635, 652-653. 112 See also reasons of Callinan J at [175]-[178]. 113 Bourke (1990) 170 CLR 276 at 288-289. Kirby Both sides to the contest invoked the description by Kitto J in Fairfax v Federal Commissioner of Taxation114 of what is involved in this process. The approach to the operation of the phrase "with respect to" in s 51 may be "settled"115. However, the process of characterisation still leaves much room for differences of opinion and outcome, doubtless influenced by unexpressed, and even possibly unperceived, constitutional notions regarding the borderline of federal lawmaking power and, hence, the residual State lawmaking power that remains. The majority of this Court has now concluded that no invalidity has been shown in the operation of the federal Act so far as it affects VWA as a State insurer and Optus as (formerly) an insured of such a State insurance business. With respect, I find the majority reasoning unconvincing. Especially so when that reasoning is compared to the reasoning and outcome endorsed by every member of this Court as it was when Bourke was decided. The basic flaw in the majority reasoning, as it seems to me, lies in the willingness to separate the insurance and the workers' compensation provisions of the State and federal Acts and to sever the relationship of insurer and insured from the substantive obligations imposed respectively by the federal Act and by the State Compensation and Insurance Acts116. It is only in that way that the majority can arrive at its conclusion that the federal laws "retain after the operation of the mechanism of s 109 [of the Constitution] a character which supports their validity under the corporations power without those laws touching or concerning State insurance"117. legal and practical inter-connection between This approach to the intersection of the federal and State laws ignores the essential the substantive compensation provisions and the provisions for insurance (or self-insurance) that underpin both the federal and State compensation schemes. As the Prussian lawmakers learned in providing for compensation for miners in that country in 1854, and as Chancellor Bismarck taught in respect of his innovative general workers' compensation laws for Germany in the 1890s (and as Australian laws on the subject have repeatedly demonstrated in the decades since federation), the substantive rights to compensation and to "common law" damages are intimately, practically and directly inter-connected with the mechanisms, by way of 114 (1965) 114 CLR 1 at 7. See joint reasons at [80]. 115 Bourke (1990) 170 CLR 276 at 287. 116 Joint reasons at [78]-[90]. 117 Joint reasons at [88]. Kirby premiums, for providing the fund out of which such compensation and damages will be paid, namely compulsory insurance. To divorce the substantive rights to workers' compensation from the insurance obligations involves a degree of unreality that ill-becomes this Court. Especially so where, as in the case of Victoria, the State law has provided not only that the relevant form of insurance by employers is compulsory in the State but that it must be effected with VWA, a State instrumentality that carries on "State insurance" business within s 51(xiv) of the Constitution. Intrusion on the State insurance relationship: In these circumstances, having regard to the statutory rights and obligations of VWA under the State Insurance and Compensation Acts, the federal Act, by purportedly authorising the transfer of Optus to regulation by federal legislation, specifically intrudes into the relationship between Optus and VWA, in respect of VWA's activities in State insurance within the limits of the State concerned118. The legal and practical effect of s 108A(7)(a) of the federal Act is to render an eligible private corporation, granted a licence under s 104(1) of that Act (which, pursuant to s 108(1), authorises the licensee to accept liability to pay compensation under the federal Act), immune from the obligation to insure any longer with VWA against the liabilities established by the State Compensation and Insurance Acts. The result is that, from the operative date of the licence under the federal Act, employees employed by that licensee who suffer employment injuries, and their dependants, cease to be entitled to compensation and damages in accordance with the State Compensation Act. The licensee is not then liable to pay compensation or damages in accordance with the State Compensation Act. The licensee is not obliged to obtain and keep in force an insurance policy with VWA in respect of any such liability. The licensee is not obliged to pay insurance premiums under the State Insurance Act to VWA. The statutory indemnity afforded to the licensee, pursuant to the State Compensation and Insurance Acts, purportedly ceases. All of these consequences amount, both in law and in practical effect, to a purported conferral on Optus, as an employer of employees in the State of Victoria, of a statutory immunity from obligations to insure with the State insurer as otherwise the law of that State would require in respect of the Victorian employees of Optus. 118 Specific argument was not addressed to any extra-territorial operation of the Victorian legislation in particular cases or the effect that such cases might separately have, if any, on the operation of the federal Act. Kirby A stronger case than Bourke: Now compare the federal legislation that was invalidated in Bourke, with that in question here. There can be no doubt that the federal Act in issue in these proceedings involves a much more direct instance of federal intrusion into the excepted State activity (here of insurance), excluded by the constitutional provisions. In Bourke, nothing more was involved than the operation of a federal law of general application (the Trade Practices Act). That law was nonetheless held to be an impermissible federal burden on the conduct by the State banking institution in respect of its activities of banking. Here, the impact of the federal law, if valid, is much more direct and deliberate: It impinges on the previously existing, and otherwise subsisting, obligations of Optus, a private corporation, under the State Compensation Act and thus the State Insurance Act; It directly affects the rights and obligations of third parties (employees of Optus and their dependants) under the same Acts; It terminates the rights and obligations of the State insurer (VWA) and intrudes directly into its statutory indemnity policy with its insured, Optus; It strikes at the viability of the State insurance business of VWA by depriving it of its source of premium income in respect of its insured, Optus; It sets a precedent for other similar moves of private employers to the federal régime which contains "caps" and other provisions less beneficial to employees than the State régime provides119; and It alters the compensation and insurance relationship between Optus and its employees (and their dependants) effectively from one regulated with the State insurer under State law to one in which Optus becomes a self- insurer under federal law with significantly diminished obligations when compared to those applicable under State law. In these circumstances, it would be remarkable if the principle endorsed by all members of this Court in Bourke should remain standing but its application to the present case could result in an exactly opposite conclusion. Either Bourke should be overruled and its principle restated and narrowed or it should be applied with a result favourable to the State and VWA in the much stronger circumstances of this case. 119 Above these reasons at [107]. Kirby Conclusion: the State succeeds: Distinct questions might arise as to the validity, under the federal Constitution, of State legislation rendering it compulsory to insure with a State insurer. However, such issues were not directly argued in these proceedings. In the approach that I favour, if they were to be advanced, they would have to be postponed to be dealt with specifically on another day. Within the arguments of the parties in these proceedings, the State and VWA are entitled to the application to their case of the principle expressed in Bourke. The federal Act does touch or concern State insurance. The interference with State insurance that it occasions is not so incidental as not to affect the character of the federal law as one with respect to insurance other than State insurance. Put another way, the connection with State insurance cannot be said to be "so insubstantial, tenuous or distant" that the federal law cannot be regarded as one with respect to State insurance. In the outcome, the State and VWA are entitled to succeed120. The fact that the State fails in this appeal is another illustration of the extent of the current disposition of this Court to uphold federal legislative power whenever it is challenged by reference to the constitutional position of the States. The current expansion of federal power is demonstrated once again121 even where, exceptionally, the Constitution carves out an express exclusion protective of State lawmaking. As in Combet, where the unanimous authority of Brown was circumvented, so here the unanimous authority in Bourke is neutered. This is another discouraging decision for federalism in Australia122. But also for the observance of unchallenged past authority of this Court. Orders In my opinion, the appeal from the Federal Court of Australia (Selway J) should be allowed. The judgment of that Court should be set aside. In place of that judgment, this Court should: (1) Declare that ss 104(1), 108(1) and 108A(7)(a) of the Safety, Rehabilitation and Compensation Act 1988 (Cth), to the extent that those provisions 120 See also reasons of Callinan J at [167], [175]-[179]. 121 New South Wales v Commonwealth (2006) 81 ALJR 34 at 168 [615]; 231 ALR 1 at 122 cf Saunders and Le Roy, "Commonwealth of Australia", in Le Roy and Saunders (eds), Legislative, executive, and judicial governance in federal countries, (2006) Kirby remove the obligation of a licensed corporation, otherwise so liable, to obtain and keep in force a policy of insurance with the fourth respondent in accordance with the Accident Compensation (WorkCover Insurance) Act 1993 (Vic) and relieve such a corporation of its liabilities as an employer to pay compensation under the Accident Compensation Act 1985 (Vic) and to pay damages at common law as preserved and regulated by the Accident Compensation Act 1985 (Vic), are invalid as beyond the legislative powers of the Parliament; (2) Declare that the licence granted by the second respondent under Pt VIII of the Safety, Rehabilitation and Compensation Act 1988 (Cth) on 1 November 2004 is invalid and of no force and effect; and (3) Order, by way of certiorari, that the decision of the second respondent to grant the licence be quashed; I would order the first respondent to pay the costs of the appellant and the fourth respondent in this Court. I would also order the costs of the fourth respondent in the Federal Court (where it was the applicant) to be borne by the first respondent. Callinan CALLINAN J. There is no doubt, in my opinion, that the laws in question are largely and substantially laws with respect to insurance, and relevantly "State insurance". I therefore agree with the reasons and conclusions of Kirby J, subject to the following matters. Not all of the laws of the Commonwealth in question however, may necessarily be characterizable exclusively as laws with respect to insurance. That this is so appears, for example, from the statutory functions of Comcare, established by and under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act"), and set out in s 69 of it: "Functions Subject to this Act, Comcare has the following functions, in addition to its other functions under this Act: to make determinations accurately and quickly in relation to claims and requests made to Comcare under this Act; to minimise the duration and severity of injuries to its employees and employees of exempt authorities by arranging quickly for the rehabilitation of those employees under this Act; to co-operate with other bodies or persons with the aim of reducing the incidence of injury to employees; to conduct and promote research into the rehabilitation of employees and employees; incidence and prevention of injury the to promote the adoption in Australia and elsewhere of effective strategies and procedures for the rehabilitation of injured workers; to publish material relating to any of the functions referred to in paragraphs (a), (c) and (d) and relating to the rehabilitation of employees under this Act; in respect of actions for non-economic loss – to take over the conduct of such actions under section 52A on behalf of the Commonwealth, Commonwealth authorities or employees against whom such actions were taken; such other functions as are conferred on Comcare by any other Act. Callinan Note: Functions have also been conferred on Comcare by other Acts, such as the Asbestos-related Claims (Management of Commonwealth Liabilities) Act 2005 and the Occupational Health and Safety (Commonwealth Employment) Act (emphasis added) A number of the functions at least arguably relate to the avoidance of injury to, and the rehabilitation of workers, who have sustained injury, workplace safety generally, and industrial relations. Section 44 of the Act should also be set out: "Action for damages not to lie against Commonwealth etc in certain cases Subject to section 45, an action or other proceeding for damages does not lie against the Commonwealth, a Commonwealth authority, a licensed corporation or an employee in respect of: an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth, Commonwealth authority or licensed corporation would, but for this subsection, be liable (whether vicariously or otherwise) for damages; or the loss of, or damage to, property used by an employee resulting from such an injury; whether that injury, loss or damage occurred before or after the commencement of this section. Subsection (1) does not apply in relation to an action or proceeding instituted before the commencement of this section. an employee has suffered an injury in the course of his or her employment; and that injury results in that employee's death; subsection (1) does not prevent a dependant of that employee bringing an action against the Commonwealth, a Commonwealth authority, a licensed corporation or another employee in respect of the death of the first-mentioned employee. Callinan Subsection (3) applies whether or not the deceased employee, before his or her death, had made an election under subsection 45(1)." Section 45 of the Act imposes, in some circumstances, restrictions and limitations upon the rights of employees of a licensee under it, to sue and recover damages sustained in the course of, or arising out of employees' employment. Sections 46 and 47 make provision, as a condition precedent to certain actions for damages the giving of notices, and s 48 is concerned with, among other things, the consequences of the acceptance by employees of compensation, the pursuit by them of damages, and the relationship between them. And s 52 provides that compensation cannot be recovered under both the Act and an award. Reference should also be made to s 52A, which confers rights upon licensed corporations, and imposes obligations in respect of certain actions for damages for non-economic loss. The joint reasons also touch upon the inferior position in which injured employees of licensed corporations may be placed, with respect to the quantum of some heads of damages, to the position of employees of others in Victoria123. It follows that some, at least, of the Act may arguably also be characterizable as laws, with respect to actions in Victoria and damages recoverable there under State law, both written and the common law, purporting to limit not only those employers who obtain a licence under the Act, but also, necessarily involuntarily, those persons otherwise able to make claims and bring actions, the employees. These are certainly not matters readily to be seen as within a head of Commonwealth constitutional power. This matter assumes a further significance in relation to a matter of choice which I discuss later. For reasons which I stated in New South Wales v Commonwealth124, I propose to look to the founders' intent in drafting the Constitution125. That the founders clearly did not contemplate an intrusion of the kind which this Act, if valid, would make upon State insurance, is readily discernible from what was said during the Convention Debates. Subject to a matter earlier stated by him, 123 Reasons of Gummow, Hayne, Heydon and Crennan JJ at [58]. 124 (2006) 81 ALJR 34 at 224-226 [812]; 231 ALR 1 at 238-241. 125 cf reasons of Kirby J at [122]. 126 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 781. Callinan "I think my friend is under a misapprehension as to this. I am limiting insurance matters for the Federal Parliament to have control over. I propose to exclude certain matters from federal control. The expression then will be to the effect that the Federal Parliament is to have power to make laws for insurance, but it is not to have power to make laws as to insurance effected within the limits of a colony by that colony." (emphasis added) The matter earlier stated by him was this127: "The intention is to have the federal law only to apply to insurance which is general over the colonies." It is suggested that if the result contended for by Victoria were allowed, each State might then legislate for a monopoly in State insurance and "effectively withdraw that kind of insurance from Commonwealth control"128. That was a possibility clearly anticipated, and ultimately accepted with equanimity, by the founders, as appears from the Convention Debates129: "Mr O'CONNOR: ... Supposing every State adopted a system of State insurance, according to this exception each State would be able to adopt a different method, so long as it kept within its own boundaries, and you might have five different systems of insurance outside the general law. Mr ISAACS: Is that not States rights? Mr O'CONNOR: No; because you start with the proposition that general insurance laws must be the same throughout the colonies. Mr SYMON: The object of this, I understand, is to exercise a federal control over any State undertaking the business of insurance outside its own boundaries. I agree, and most people will too, that if a State enters upon a commercial undertaking it should have no privileges and exemptions from which ordinary individuals are not 127 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 780 (emphasis added). 128 Reasons of Gleeson CJ at [10]. 129 Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 779-780. Callinan free; but the language used here seems to be open to the criticism of Mr Higgins[130]. Mr WISE: By keeping it in you give special privileges within its boundaries. Mr SYMON: To that I do not object. If South Australia chooses to establish a system of State insurance, I do not see why she should not within her own limits. It affects her own subjects only, and we should diminish the rights of self-government if we decided otherwise; but if South Australia opens agencies in Victoria, then the federal law should be able to say, 'If South Australia chooses to enter into commercial rivalry with those companies outside her own territory, she should be subject to the conditions imposed in other countries.' I think that is the extent to which this provision was intended to go. Mr O'CONNOR: Hear, hear. Mr SYMON: It seems to me that these words: 'Including State insurance extending beyond the limits of the State concerned' ought to be, in the sense in which they were inserted – – Mr SYMON: No; retained. But I doubt with Mr Higgins whether they exactly and clearly give effect to that sense. ... Mr HIGGINS: I agree thoroughly in principle with Mr Symon as to his intentions, but I would suggest that what is wanted here is an excluding phrase, and not an including phrase. Insurance covers all kinds of insurance. You want an excepting phrase. 'Insurance' will be the general expression, and then will follow: 'Except State insurance confined to the limits of the particular State.' Mr SYMON: That is the better way." (emphasis added) 130 Mr Higgins had expressed some concern about whether "State" meant a particular colony, or whether it meant "the State as distinct from the individual": see Official Record of the Debates of the Australasian Federal Convention, (Adelaide), 17 April 1897 at 779. Callinan It is also suggested131 that because the Act leaves it to Optus (and others) to decide whether to effect insurance, or to self-insure under the Act, the Act, in its operation, is so incidental to "State insurance" as not to affect the power over insurance of the Victorian legislature that it possesses, or, is so insubstantial, tenuous or distant from the relevant Victorian legislation that it cannot be regarded as a law with respect to "State insurance". With respect, I am unable to accept, that because Optus might have a choice between insuring under the Commonwealth or insuring under the State scheme, the Commonwealth legislative scheme does not enter the excluded territory of "State insurance" for the purpose of s 51(xiv), despite that if Optus chose the Commonwealth scheme the State laws would, under the Commonwealth legislation, be completely excluded. What would seem to follow if this is correct is that, when the States appear to enjoy, even by express provision in the Constitution, an immunity from Commonwealth control132, the Commonwealth may nonetheless intrude and dominate the field, if two conditions are satisfied: that the legislation be concerned with a stated head of general power of the Commonwealth; and, that those who may be affected by, or subject to the Commonwealth legislation are given a choice between the regime for which it provides and the State's regime. There is a further significant aspect to this. The "choice" is the choice of the employer alone. It is one thing to say that anyone should be free to choose his or her insurer, or whether to self-insure. It is an entirely different, and, I am disposed to think, unconstitutional thing to say, that in consequence of that choice, employees not party to the choice, who may have been wronged and injured by their employers, should become disentitled to seek remedies and damages in the ways, of the kinds, and subject to the limitation periods, for which State laws otherwise applicable to them and their employers provide. It is, in my view, an unlikely proposition that whether a State constitutional immunity should be given effect, might depend upon the whim or the interests of someone, neither the State nor the Commonwealth: that, in effect, a person might be permitted to contract out of the Constitution, and more, to do so on behalf of others, its employees, as well. A further consequence of all of this is to preclude a State, engaged as the State was here, by the authority created by it, in the business of insurance, from exercising any real power and control over an area of "State insurance", despite that the Constitution expressly grant those133. Power is meaningless if it does not 131 Reasons of Gummow, Hayne, Heydon and Crennan JJ at [83]. 132 See, eg, ss 91, 100, 104 and 114 of the Constitution. 133 s 51(xiv). Callinan include a power of control. As Kirby J puts it134, the express constitutional exception of "State insurance", as with "State banking"135, must be taken seriously. I would allow the appeal and join in the consequential orders proposed by 135 s 51(xiii).

HIGH COURT OF AUSTRALIA NORTHERN LAND COUNCIL & ANOR APPELLANTS AND KEVIN LANCE QUALL & ANOR RESPONDENTS Northern Land Council v Quall [2020] HCA 33 Date of Hearing: 12 & 13 August 2020 Date of Judgment: 7 October 2020 ORDER Appeal allowed. Set aside the declaration and order 3 of the orders made by the Full Court of the Federal Court of Australia on 19 June 2019 and, in their place, order that the cross-appeal be dismissed. Set aside orders 1 and 2 of the orders made by the Full Court of the Federal Court on 19 June 2019 and remit to the Full Court of the Federal Court the unresolved appeal to that Court and the unresolved application for leave to adduce fresh evidence in that appeal. In accordance with undertakings given as a condition of the grant of special leave to appeal, the appellants are to bear the first and second respondents' costs of the appeal limited to one set of costs. In accordance with undertakings given as a condition of the grant of leave to intervene, the Attorney-General of the Commonwealth and the Northern Territory are to bear jointly with the appellants the first and second respondents' costs of the appeal as limited pursuant to order 4. On appeal from the Federal Court of Australia Representation S A Glacken QC with R W Kruse for the appellants (instructed by Northern Land Council) B W Walker SC with A K Flecknoe-Brown for the first respondent (instructed by Robert Welfare & Associates) P F McIntyre for the second respondent (instructed by McQueens Solicitors) R J Webb QC with C I Taggart for the Attorney-General of the Commonwealth, (instructed by Australian Government Solicitor) intervening N Kidson QC with L S Peattie for the Northern Territory, intervening (instructed by Solicitor for the Northern Territory) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Northern Land Council v Quall Aboriginal and Torres Strait Islander peoples – Native title – Representative Aboriginal/Torres Strait Islander bodies – Indigenous land use agreements ("ILUAs") – Where s 203BE(1)(b) of Native Title Act 1993 (Cth) confers on representative body function of certifying applications for registration of ILUAs – Where s 203BE(5) prohibits representative body from certifying application for registration of ILUA unless satisfied that all reasonable efforts made to ensure all persons who hold or may hold native title have been identified and authorised making of agreement – Where s 27(1) of Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) provides that a Land Council may do all things necessary or convenient to be done for or in connection with performance of its functions – Where Northern Land Council ("NLC") a representative body – Where CEO of NLC signed certificate purportedly as delegate of NLC certifying application for registration of ILUA and stating NLC satisfied that identification and authorisation requirements met – Whether certification function conferred by s 203BE(1)(b) capable of delegation by NLC to CEO – Whether CEO can perform certification function conferred by s 203BE(1)(b) as agent of NLC. Words and phrases – "Aboriginal and Torres Strait Islander peoples", "agency", "agent", "authorised", "body corporate", "certification", "certification function", "delegability", "delegable", "delegate", "delegation", "identified", "indigenous land use agreement", "Land Council", "native title", "natural person", "necessary or convenient", "power of delegation", "representative Aboriginal/Torres Strait Islander body", "representative body". Aboriginal Land Rights (Northern Territory) Act 1976 (Cth), ss 27, 28. Acts Interpretation Act 1901 (Cth), ss 34A, 34AB. Native Title Act 1993 (Cth), ss 203BE, 203BK, 203FH. KIEFEL CJ, GAGELER AND KEANE JJ. The ultimate question in this appeal is whether the Northern Land Council ("the NLC") has power to delegate to its Chief Executive Officer ("the CEO") the function conferred on it as a representative body by s 203BE(1)(b) of the Native Title Act 1993 (Cth) ("the NT Act") of certifying an application for registration of an indigenous land use agreement ("ILUA") relating to an area of land or water wholly or partly within the area for which it is a representative body subject to satisfaction of the precondition imposed by s 203BE(5) of the NT Act that it is of the opinion that all reasonable efforts have been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the ILUA have been identified and that all of the persons so identified have authorised the making of the ILUA. The answer is that the NLC has that power of delegation under s 27(1) of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) ("the ALR Act"). If the NLC exercises that power to delegate the certification function to the CEO, the CEO is empowered by s 34A of the Acts Interpretation Act 1901 (Cth) ("the AI Act") to perform the certification function on the basis of the CEO's own opinion in relation to the matters in s 203BE(5) of the NT Act, and certification by the CEO in performance of the delegated function is attributed to the NLC by force of s 34AB(1)(c) of the AI Act. Process for registration of an ILUA Under Div 3 of Pt 2 of the NT Act, a future act affecting native title is valid if, but only if, the parties to the ILUA consent to it being done and, at the time it is done, the ILUA is registered on the Register of Indigenous Land Use Agreements1. Registration of an ILUA that is an area agreement under Subdiv C of Div 3 of Pt 2 can occur only on application made by a party to the Native Title Registrar, who is also responsible for the Register of Indigenous Land Use Agreements2. One requirement for the making of an application for registration of such an ILUA concerns identification of persons who hold or may hold native title in relation to land or waters in the area covered by the ILUA and authorisation by Section 24AA(3) of the NT Act. Section 24CG(1) of the NT Act. those persons of the making of the ILUA3. The requirement can be met in either of two ways. The first way the requirement can be met is by the application for registration having been certified by all representative bodies for the area in the performance of their functions under s 203BE(1)(b)4. If the application has been so certified, any person claiming to hold native title in relation to land or waters in the area covered by the ILUA is entitled within a specified period to object to registration5 and the Registrar at the end of that period must make a decision6 to register the ILUA if specified conditions are met or not to register the ILUA if any specified condition is not met7. One of the specified conditions on which registration depends involves absence of any unwithdrawn objection8 or, in the face of an unwithdrawn objection, non-satisfaction on the part of the Registrar that the requirements as to identification and authorisation set out in s 203BE(5) were not met in relation to the certification of the application by any representative body9. Faced with an unwithdrawn objection, the question for administrative determination by the Registrar is whether (having regard to information provided by the person making the objection and the representative body concerned10) the Registrar is satisfied by the objector that all reasonable efforts have not been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the ILUA have been identified or that one or more Section 24CG(3) of the NT Act. Section 24CG(3)(a) of the NT Act. Section 24CI of the NT Act. Section 24CJ of the NT Act. Section 24CK(1) of the NT Act. Section 24CK(2)(a) and (b) of the NT Act. Section 24CK(2)(c) of the NT Act. 10 Section 24CK(4) of the NT Act. of the persons who have been identified have not authorised the making of the ILUA11. If the Registrar is so satisfied, the Registrar must not register the ILUA. The second way the requirement can be met is by the application for registration including a statement to the effect that all reasonable efforts have been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement have been identified and that all of the persons so identified have authorised the making of the agreement together with a statement briefly setting out the grounds on which the Registrar should be so satisfied12. Where those statements appear in an application, the Registrar must decide either to register the ILUA if other specified conditions are met or not to register the ILUA if any specified condition is not met13. A specified condition then is that the Registrar affirmatively considers (having regard to the statements in the application and any information provided by any representative body or any other body or person14) that all reasonable efforts have been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the ILUA have been identified and that all of the persons so identified have authorised the making of the ILUA15. If the Registrar does not affirmatively so consider, the Registrar must not register the ILUA. Depending on how an application for registration of an ILUA is made the Registrar can therefore come under a duty to exercise either of two relevant powers as a precondition to registering the ILUA: a power to determine any unwithdrawn objection by re-examining the matters about which a representative body has formed an opinion under s 203BE(5), where an ILUA has been certified; or a power to form an independent opinion about the same matters as those about which a representative body would be required to form an opinion under s 203BE(5), where an ILUA has not been certified. Those powers can be exercised personally by the Registrar, who is a statutory officer appointed under the NT Act16. Those 11 Accord Kemppi v Adani Mining Pty Ltd [No 2] (2019) 271 FCR 423 at 454-455 12 Section 24CG(3)(b) of the NT Act. 13 Section 24CL(1) of the NT Act. 14 Section 24CL(4) of the NT Act. 15 Section 24CL(3) of the NT Act. 16 Section 95 of the NT Act. powers can alternatively be exercised by a Deputy Registrar or by any member of the staff assisting the National Native Title Tribunal, who are persons engaged under the Public Service Act 1999 (Cth)17, under delegation from the Registrar18. The nature and delegability of the powers so conferred on the Registrar bear on the nature of the certification function conferred on a representative body by s 203BE(1)(b) in ways to which it will be necessary to return. The CEO's certification of the Kenbi ILUA The NLC in 2016 made an ILUA in relation to land and waters at the Cox Peninsula near Darwin which was varied in February 2017. The ILUA as varied is known as the Kenbi ILUA. In March 2017, the CEO signed a certificate in connection with the making of an application for registration of the Kenbi ILUA. The certificate signed by the CEO states that "the NLC hereby certifies" the application for registration of the Kenbi ILUA pursuant to s 203BE(1)(b) of the NT Act. The certificate goes on to state that "[t]he NLC is of the opinion" that the requirements of s 203BE(5) about identification of the native title holders and their authorisation of the agreement have been met, namely that all reasonable efforts have been made to ensure that all persons who hold native title in relation to land or waters in the area covered by the Kenbi ILUA have been identified and that all of the persons so identified have authorised the making of the Kenbi ILUA. It is common ground that the CEO signed the certificate purporting to act as a delegate of the NLC. The decision to issue the certificate was in fact made by the CEO alone and the opinion set out in the certificate was in fact formed by the CEO alone. Judicial review of the CEO's certification of the Kenbi ILUA Mr Quall and Mr Fejo each brought judicial review proceedings against the NLC and the CEO in the Federal Court of Australia challenging the efficacy of the certificate on grounds that the NLC's certification function under s 203BE(1)(b) of the NT Act is not delegable or, if delegable, was not validly delegated by the NLC to the CEO. The primary judge (Reeves J)19 rejected the first ground but accepted the second, finding that the instruments on which the NLC and the CEO then relied as 17 Section 130(1) and (3) of the NT Act. 18 Section 99 of the NT Act. 19 Quall v Northern Land Council [2018] FCA 989. instruments of delegation were ineffective. His Honour in each application made a declaration to the effect that the certificate signed by the CEO did not amount to certification pursuant to s 203BE(1)(b). The NLC and the CEO appealed to the Full Court. They did not challenge the finding that the instruments on which the NLC and the CEO had relied before the primary judge were ineffective. Instead, they applied for leave to adduce fresh evidence to attempt to prove the existence of other effective instruments of delegation. Mr Quall and Mr Fejo cross-appealed, reiterating their primary argument that the NLC's certification function is not delegable. The Full Court (Griffiths, Mortimer and White JJ)20 was persuaded that, as a matter of the construction of the NT Act, the certification function conferred on a representative body by s 203BE(1)(b) of the NT Act is incapable of delegation. The Full Court on that basis allowed the cross-appeal and made an additional declaration to the effect that the NLC "did not have power to delegate" its certification function to the CEO. The cross-appeal being allowed, the issues in the appeal did not arise. The Full Court on that basis dismissed the appeal without addressing the merits of the application to adduce fresh evidence. Appeal to this Court The NLC and the CEO now appeal to this Court. The sole ground of appeal on which special leave to appeal has been granted21 is that the Full Court erred in holding that the NLC did not have power to delegate the performance of the certification function conferred on it under s 203BE(1)(b) of the NT Act. Determination of the appeal on that ground necessitates consideration of two overlapping issues. One concerns the extent, if at all, to which any delegation of the certification function is compatible with the scheme of the NT Act. The other concerns the source of the power, if any, for the NLC to delegate the certification function to the CEO. The public importance of the issue of the compatibility of delegation of the certification function with the scheme of the NT Act has led to the Attorney- General of the Commonwealth and the Northern Territory seeking and being 20 Northern Land Council v Quall (2019) 268 FCR 228; Northern Land Council v Quall [No 2] [2019] FCAFC 101. 21 Northern Land Council v Quall [2019] HCATrans 232. granted leave to intervene in the appeal. The interveners broadly support the NLC and the CEO in arguing that there is no applicable impediment to delegation. They differ between themselves as to the source of the power to delegate. Scheme of Pt 11 of the NT Act Consideration of whether, and if so to whom, delegation of the certification function conferred by s 203BE(1)(b) might occur consistently with the scheme of the NT Act cannot be undertaken without close attention to the text and structure of Pt 11. Introduced as part of the NT Act as originally enacted in 1993, Pt 11 was substantially amended in 199822 and again in 200723. Eligibility for the status of a representative body is governed by the definition of "eligible body" located within Div 1 of Pt 1124. Within that definition is a "body corporate" registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) the objects of which enable it to perform the functions of a representative body25, a "body corporate" established by or under any other law of the Commonwealth or of a State or Territory prescribed by regulation for the purpose of the definition26, any "company" incorporated under the Corporations Act 2001 (Cth)27, as well as a "body corporate" that is already a representative body28. Two features of the definition are significant. The first significant feature of the definition is that an eligible body, as either a "body corporate" or a "company", is in every case a corporation constituted by or under other Commonwealth, State or Territory legislation. Being a 22 Native Title Amendment Act 1998 (Cth). 23 Native Title Amendment Act 2007 (Cth). 24 Section 201B of the NT Act. 25 Section 201B(1)(a) of the NT Act. 26 Section 201B(1)(c) of the NT Act. 27 Section 201B(1)(ba) of the NT Act. 28 Section 201B(1)(b) of the NT Act. corporation, an eligible body is an "artificial person"29 which (leaving prospective advances in artificial intelligence out of account) is inherently constrained to perform its functions through natural persons who act within the scope of authority granted to them by or under its constating statute. Any repository of a statutory function can delegate performance to a natural person if, but only if, permitted by statute30. In the absence of permitted delegation, however, a corporate repository can only perform a statutory function through natural persons who constitute the corporation, or who constitute emanations or authorised agents of the corporation, acting in the manner and within the limits set by or under the constating statute of the corporation31. The second significant feature of the definition stems from the capacity for Commonwealth, State or Territory legislation to "create a juristic person without identifying an individual or a group of natural persons with it, as the living constituent or constituents of the corporation"32. There is simply no reason to consider that an eligible body constituted by or under other Commonwealth, State or Territory legislation must be constituted by natural persons. Much less is there reason to consider that it must be constituted by natural persons in a manner that is representative of persons holding or claiming to hold native title in an area. How an eligible body becomes a representative body for an area or areas is in consequence of applying to and being recognised by the Commonwealth Minister administering the NT Act as a representative body in a legislative instrument under Div 2 of Pt 1133. Once recognised, the eligible body remains a 29 See Co Lit 2a; Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 1 at 119; Maitland, "The Corporation Sole" (1900) 16 Law Quarterly Review 335 at 30 Racecourse Co-operative Sugar Association Ltd v Attorney-General (Q) (1979) 142 CLR 460 at 481. 31 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 171- 172. See also Dainford Ltd v Smith (1985) 155 CLR 342 at 349. 32 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 361. See also Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Queensland Rail (2015) 256 CLR 171 at 193- 33 Section 203AD(1) of the NT Act. representative body for a period specified in the instrument of recognition34 unless the Commonwealth Minister sooner withdraws its recognition by further legislative instrument35. The Commonwealth Minister cannot recognise an eligible body as a representative body for an area or areas unless the Commonwealth Minister is satisfied that it would be able to perform satisfactorily the functions of a representative body36 and, in the case of a renewal of or change to the recognition of an existing representative body, that it is currently satisfactorily performing its functions as a representative body37. The Commonwealth Minister correspondingly empowered to withdraw recognition of a representative body for an area if the Commonwealth Minister is satisfied that it is not satisfactorily performing its functions38. In considering for the purpose of recognition or withdrawal of recognition whether an eligible body will satisfactorily perform its functions as a representative body or is satisfactorily performing its functions as a representative body, the Commonwealth Minister is required to form and take into account an opinion as to whether it will comply with or is complying with s 203BA39, which deals with how the functions of a representative body are to be performed and to which it will be necessary in due course to turn. For so long as an eligible body is recognised as a representative body, Div 3 of Pt 11 confers on it functions that are cumulative upon any functions it might have under any other law of the Commonwealth or of a State or Territory40. Leaving to one side the "certification functions" referred to in s 203BE, which will be examined separately in more detail, the functions conferred on a representative body are remarkable for the expansiveness and practicality of their content. Prime amongst them are "facilitation and assistance functions" (involving representing and otherwise assisting native title holders and persons who may hold native title 34 Section 203AD(3A) of the NT Act. 35 Section 203AH of the NT Act. 36 Section 203AD(1)(d) of the NT Act. 37 Section 203AD(1)(c) of the NT Act. 38 Section 203AH(2)(a) of the NT Act. 39 Section 203AI of the NT Act. 40 Section 203B(2) of the NT Act. in consultations, mediations, negotiations and proceedings relating to native title applications and to ILUAs)41, "dispute resolution functions" (involving promoting agreement and mediating between native title holders and persons who may hold native title)42 and "notification functions" (involving ensuring that relevant notices are brought to the attention of native title holders and persons who may hold native title)43. A representative body also has an "agreement making function" (involving itself being a party to ILUAs)44 and "internal review functions" (involving providing and publicising a process for native title holders and persons who may hold native title "to seek review by the representative body of its decisions and actions, made or taken in the performance of its functions or the exercise of its powers, that affect them")45. Section 203B(3) provides that, except as mentioned in s 203BB (which relevantly allows a representative body performing facilitation and assistance functions to "brief out" the representation of a person or body by entering into an arrangement with another person46) or as mentioned in s 203BD (which allows a representative body to perform facilitation and assistance functions in relation to an adjoining area if it is acting in accordance with a written arrangement with the representative body for that area) or as mentioned in s 203BK, "a representative body must not enter into an arrangement with another person under which the person is to perform the functions of the representative body". Section 203BK, which s 203B(3) flags as mentioning an exception to its operation, relevantly provides: "(1) A representative body has power to do all things necessary or convenient to be done for or in connection with the performance of its functions. (2) Without limiting subsection (1), a representative body has power to enter into arrangements and contracts to obtain services to assist in the performance by the representative body of its functions." 41 Section 203BB of the NT Act. 42 Section 203BF of the NT Act. 43 Section 203BG of the NT Act. 44 Section 203BH of the NT Act. 45 Section 203BI of the NT Act. 46 Section 203BB(5) of the NT Act. Section 203B(4)(b) allows for a representative body to "allocate resources" in the way it thinks fit in order "to be able to perform its functions efficiently", giving priority to the protection of the interests of native title holders, and s 203BA mandates how the functions of a representative body are to be performed. To the detail of s 203BA it is now appropriate to turn. Section 203BA(1) provides that "[a] representative body must use its best efforts to perform its functions in a timely manner". Section 203BA(2) provides: "A representative body must perform its functions in a manner that: (a) maintains organisational structures and administrative processes that promote the satisfactory representation by the body of native title holders and persons who may hold native title in the area for which it is the representative body; and (b) maintains organisational structures and administrative processes that promote effective consultation with Aboriginal peoples and Torres Strait Islanders living in the area for which it is the representative body; and ensures that the structures and processes operate in a fair manner, having particular regard to: (iii) the opportunities for the Aboriginal peoples or Torres Strait Islanders for whom it might act to participate in its processes; and the extent to which its processes involve consultation with those Aboriginal peoples or Torres Strait Islanders; and its procedures for making decisions and for reviewing its decisions; and its rules or requirements relating to the conduct of its executive officers; and the nature of its management structures and management processes; and its procedures for reporting back to persons who hold or may hold native title in the area, and to the Aboriginal peoples or Torres Strait Islanders living in the area." The "organisational structures and administrative processes" of the representative body to which s 203BA(2) refers are the structures and processes through which natural persons or groups of natural persons perform its functions within the scope of the authority conferred on them (whether as delegates or as agents or emanations of it) by or under its constating statute. The "executive officers" of the representative body, to which s 203BA(2)(c)(iv) refers, are defined to extend beyond the members of its "governing body" (in turn defined to mean the group of persons who are responsible for its "executive decisions") to include any person who is concerned or takes part in its management at a senior level47. The considerations required by s 203BA(2)(c)(iii), (iv) and (v) to inform assessment of the fairness of the manner in which the organisational structures and administrative processes of a representative body operate tell against a representative body being confined to perform its functions only through such group of natural persons as may constitute its membership or as may constitute its governing body. Those considerations tell rather in favour of those functions being able to be performed by persons or groups at other levels within its organisational structure. So too do the internal review functions, the very existence of which implies that the other functions of the representative body might be exercised and re-exercised by persons or groups at multiple levels within its organisational structure. Having regard to the range and content of the functions conferred on a representative body under Div 3, to the recognition in s 203B(4)(b) of the need for a representative body to allocate resources to enable efficient performance of those functions, and to the standards imposed by s 203BA(2), the distinction drawn in s 203B(3) between "a representative body", on the one hand, and "another person" with whom the representative body must not enter into an arrangement under which the person is to perform its functions, on the other hand, cannot be a distinction between the representative body as an artificial person and all other natural or artificial persons. Nor can it be a distinction between the membership or governing body of the representative body and all other persons. The distinction drawn in s 203B(3) between a representative body and another person must instead be a distinction between the representative body, including all natural persons or groups of natural persons having authority to perform its functions within the organisational structures and administrative processes established by or under its constating statute, and all persons (natural or artificial) who are external to the organisational structures and administrative processes established by or under its constating statute. The natural persons or 47 Section 201A of the NT Act, definitions of "director", "executive officer" and "governing body". groups of natural persons who can perform the functions of a representative body are limited by s 203B(3) to the former category. The power conferred on a representative body by s 203BK(1) in the familiar terms of a power "to do all things necessary or convenient to be done for or in connection with the performance of its functions", though "broad"48, is "strictly ancillary", authorising "the provision of subsidiary means of carrying into effect what is enacted in the statute itself" and encompassing "what is incidental to the execution of its specific provisions"49. The power does "not support the doing of a thing which departs from the scheme of the enactment by which the power is conferred"50. That limitation is important. The scheme of Pt 11 of the NT Act, as has been seen, involves taking an eligible body recognised as a representative body as it exists under its constating statute subject to the organisational structures and administrative processes established by or under that constating statute for the performance of its functions as a representative body complying, or at least being seen by the Commonwealth Minister to comply, with the requirements of s 203BA(2). And the scheme of Pt 11, as has been seen, involves confining by s 203B(3) the natural persons or groups of natural persons through whom the eligible body can perform its functions as a representative body to those within its organisational structures and administrative processes upon whom authority is conferred by or under its constating statute to perform those functions as its delegates or as its agents or emanations. Section 203BK(1) does not empower a representative body to transgress those limits. Section 203BK operates as an exception to s 203B(3) only to the extent that s 203BK(2) makes clear that s 203B(3) does not prevent a representative body from engaging external service providers to assist natural persons within the organisational structures and administrative processes established by or under its constating statute to perform its functions. 48 Palmer v Australian Electoral Commission (2019) 93 ALJR 947 at 955 [44]; 372 ALR 102 at 112. 49 Shanahan v Scott (1957) 96 CLR 245 at 250. 50 Palmer v Australian Electoral Commission (2019) 93 ALJR 947 at 958 [65]; 372 ALR 102 at 115, citing Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402 at 410. Contrary to the view of the primary judge51 and contrary to the principal arguments of the NLC and the CEO and of the Northern Territory, s 203BK(1) cannot be treated as an independent source of power to delegate the performance of a function of a representative body. If the representative body has power under its constating statute to delegate performance of the function within its organisational structures and administrative processes, no further power is needed. If the representative body has no power under its constating statute to delegate performance of the function, s 203BK(1) cannot overcome that limitation on its power. The conclusion to which that leads is that, unless the certification function conferred by s 203BE(1)(b) can be seen to exhibit some special feature confining performance of that function to the members or governing body of a representative body, delegation of the certification function to a natural person within the organisational structures and administrative processes established by or under its constating statute is not incompatible with the scheme of the NT Act but the power to delegate must be found, if at all, in the constating statute. Before turning to examine whether the certification function can be seen to exhibit some such special feature, something needs to be said of s 203FH in deference to the prominence given to that provision in the arguments of the interveners. For anything meaningful to be said about s 203FH, more must first be said about the structure of Pt 11. Following on from Div 3 within Pt 11 are four more Divisions which impose numerous obligations on a representative body. Division 4 deals with provision of Commonwealth funding. Division 5 deals with financial accounting and corporate accountability. Division 6 deals with conduct of directors and other executive officers. Division 7, headed "Miscellaneous", contains provisions explaining those obligations and facilitating their enforcement. Section 203FH is within Div 7. Within that context, s 203FH(1) imputes to a body corporate the "state of mind" of a director, employee or agent of the body corporate who engaged in "conduct" within the scope of his or her "actual or apparent authority". Section 203FH(2) deems "conduct" engaged in by a director, employee or agent of the body corporate within the scope of his or her "actual or apparent authority" to have been also engaged in by the body corporate unless the body corporate can establish that it "took reasonable precautions and exercised due diligence to avoid the conduct". The imputation in s 203FH(1) and the deeming in s 203FH(2) are both expressed to be "for the purposes of this Part". Section 203FH(6) specifies that an 51 Quall v Northern Land Council [2018] FCA 989 at [23]-[28]. opinion is a "state of mind" within s 203FH(1). Section 203FH(8) specifies that "conduct" within the whole of s 203FH includes failing or refusing to engage in conduct. It is noteworthy that, in a piece of legislation that makes express reference to the "executive officers" and the "governing body" of a representative body, the certification function is not reposed in either of these groups of natural persons but in the representative body itself. Beyond the obvious point that s 203FH is framed on the assumption that an eligible body will do things related to the performance of its functions as a representative body through natural persons, s 203FH has no bearing on the question of which natural persons are authorised to perform any function of a representative body or on the question of by which natural person or persons an opinion required to be held by a representative body as a precondition to the exercise of a function might be formed52. As is indicated by its placement within Div 7, its unqualified references to an "agent" of a body corporate (who might well be an external service provider such as an accountant), its similarly unqualified refences to "conduct" (which need not be the doing of anything in the actual performance or purported performance of any function conferred under Div 3 and can be the doing of nothing at all), its extension beyond "actual authority" to "apparent authority" (a concept based on estoppel which cannot give legal efficacy to a purported exercise of authority that is in excess of a statutory limitation on the permitted scope of authority53), and its inclusion within s 203FH(2) of a "due diligence" defence, not to mention its provenance in earlier provisions of the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth)54 which were unmistakeably directed to corporate responsibility, s 203FH is directed not to the capacity of any natural person to perform any function conferred on a representative body under Div 3 but to the liability of a representative body 52 Contra McGlade v South West Aboriginal Land & Sea Aboriginal Corporation [No 2] (2019) 374 ALR 329 at 419 [333]. 53 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 159-160, 172-175. See also Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 54 Section 199 of the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth). See Australia, House of Representatives, Aboriginal and Torres Strait Islander Commission Bill 1989, Explanatory Memorandum at 116; Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 306-307. See earlier s 84 of the Trade Practices Act 1974 (Cth), as discussed in Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 at 738-739; Walplan Pty Ltd v Wallace (1985) 8 FCR 27 at 35-37. for non-compliance with an obligation imposed on the representative body by or under Div 4, 5, 6 or 7 by reason of any act or omission of a natural person. Certification function or functions The function of certifying an application for registration of an ILUA relating to an area of land or water wholly or partly within the area for which it is a representative body conferred by s 203BE(1)(b) is one of two certification functions conferred on a representative body by s 203BE. The other is the function conferred by s 203BE(1)(a) of certifying an application for a determination of native title relating to such an area. The precondition set out in s 203BE(5) to performance of the certification function conferred by s 203BE(1)(b) is mirrored by an equivalent precondition set out in s 203BE(2) to performance of the certification function conferred by s 203BE(1)(a). Section 203BE(5) provides: "A representative body must not certify under paragraph (1)(b) an application for registration of an indigenous land use agreement unless it is of the opinion that: all reasonable efforts have been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement have been identified; and all the persons so identified have authorised the making of the agreement." Persons holding native title in relation to land or waters "authorise" the making of the ILUA within the meaning of the NT Act if those persons authorise its making in accordance with a process of decision-making required by their traditional laws and customs or otherwise in accordance with a process of decision-making agreed to and adopted by them55. Likewise, persons in a native title claim group "authorise" the making of an application for a determination of native title within the meaning of the NT Act if those persons authorise its making in accordance with a process of decision-making required by their traditional laws and customs or otherwise in accordance with a process of decision-making agreed to and adopted by them56. 55 Section 251A of the NT Act. 56 Section 251B of the NT Act. The Full Court was persuaded to the conclusion that the certification function conferred by s 203BE(1)(b) is incapable of delegation having regard to two main considerations. The first was an apprehension, which would logically apply equally in relation to all other functions conferred on a representative body under Div 3, that s 203B(3) read together with s 203BK(2) tells against delegation57. That apprehension is not well founded for reasons that have been addressed58 and that need not be revisited. The second was an apprehension addressed by the Full Court specifically to the certification function conferred by s 203BE(1)(b) having regard to the precondition set out in s 203BE(5), although there appears to be no reason to think that it would not apply equally to the certification function conferred by s 203BE(1)(a) having regard to the equivalent precondition set out in s 203BE(2). The apprehension was that the nature of the opinion required to be formed as a precondition to performance of the function is peculiarly adapted to performance by the members of a representative body in plenary session by reason of the representative nature of the membership of the representative body59. That apprehension is also not well founded. The Full Court's conception of the representative nature of the membership of a representative body resonates with the regime of Pt 11 of the NT Act in its original form, which allowed the Commonwealth Minister to determine any "body" to be a "representative Aboriginal/Torres Strait Islander body for an area" if satisfied that the body was "broadly representative of the Aboriginal peoples or Torres Strait Islanders in the area"60. The 1998 and 2007 amendments combined to replace the regime for determination of a "body" to be a "representative Aboriginal/Torres Strait Islander body for an area" with the current regime of recognition of an "eligible body" as a "representative body" and made provisions for bodies which had been determined to be representative Aboriginal/Torres Strait 57 Northern Land Council v Quall (2019) 268 FCR 228 at 257-259 [101]-[104], 265 58 See above at [26]-[35]. 59 Northern Land Council v Quall (2019) 268 FCR 228 at 256-257 [98]-[100], 266 60 Section 202(3)(a) of the NT Act as originally enacted. Islander bodies to apply as eligible bodies for recognition as representative bodies61. To continue to conceive of a representative body as taking its essential character from the representative make-up of its membership fails to accommodate the range of eligible bodies now capable of being recognised by the Commonwealth Minister as representative bodies. It also fails to accommodate the range of organisational structures and administrative processes by which a representative body might perform its representative functions consistently with s 203BA(2). The decisions of differently constituted Full Courts in Kemppi v Adani Mining Pty Ltd [No 2]62 and McGlade v South West Aboriginal Land & Sea Aboriginal Corporation [No 2]63 illustrate that a certification function performed by a representative body that is a company incorporated under the Corporations Act might in practice fall to be performed through its chief executive officer. Moreover, the subject matter of the opinion required by s 203BE(5) to be formed by a representative body as a precondition to performance of the certification function conferred by s 203BE(1)(b) is a question of fact. As has already been explained64, it is a question of fact about which the Registrar or a delegate of the Registrar may be required to form his or her own opinion, which can prevail over that of a representative body in the event of objection to a certified application for registration, and a question of fact about which the Registrar or delegate of the Registrar must form his or her own opinion in the event of an uncertified application for registration of an ILUA. The process of making and registering an application for a determination of native title has complexities which are unnecessary to explore. Suffice it to note that the subject matter of the opinion required by s 203BE(2) to be formed by a representative body as a precondition to performance of the certification function conferred on it by s 203BE(1)(a) is a similar question of fact, about which each of 61 See Sch 3 to the Native Title Amendment Act 1998 (Cth); Sch 1 to the Native Title (2019) 271 FCR 423 at 447 [56]. (2019) 374 ALR 329 at 419 [329]-[330]. 64 See above at [5]-[7]. the Federal Court65, the Registrar or delegate of the Registrar66 and the National Native Title Tribunal67 can be required to form and act on their own opinions. Not only is a question of fact of the nature posed by s 203BE(5) and by s 203BE(2) not peculiarly adapted to determination by the membership or governing body of a representative body, but there are reasons to consider that such a question of fact might be peculiarly ill-adapted to determination by the membership or governing body of a representative body. The burden of receiving and assessing extensive and potentially contentious evidence is one. The potential for conflicts of interest to occur is another. The notion that some special feature of the certification functions conferred by s 203BE or of the specific certification function conferred by s 203BE(1)(b) confines performance to the membership or governing body of a representative body must therefore be rejected. Delegation under the ALR Act Axiomatically, a statutory corporation's "power and authority to do any particular thing" is to be found, if at all, "in the language of the statute, in what it expressly provides and what it inferentially provides as a matter of necessary implication"68. Proceeding upon that premise, there remains finally to examine the ALR Act to determine whether the NLC can delegate to the CEO a function conferred on the NLC as a representative body by the NT Act. The NLC is one of four Land Councils that have long been established under Pt III of the ALR Act each for a distinct area of the Northern Territory69. Three of those Land Councils were determined under the NT Act to be representative Aboriginal/Torres Strait Islander bodies for an equivalent area in 65 Section 84C of the NT Act. See eg Quall v Risk [2001] FCA 378; Bodney v Western Australia [2003] FCA 890. 66 Section 190C(4) of the NT Act. 67 Section 190E(12) of the NT Act. 68 Kathleen Investments (Australia) Ltd v Australian Atomic Energy Commission (1977) 139 CLR 117 at 130. 69 Section 21 of the ALR Act. They are the NLC, the Central Land Council, the Tiwi Land Council and the Anindilyakwa Land Council. 199370. Two of those Land Councils (the NLC and the Central Land Council), on application, were recognised as representative bodies under Div 2 of Pt 11 of the NT Act in its current form in 201871. Under Pt III of the ALR Act, a Land Council is a body corporate with perpetual succession72, the functions of which include but are not confined to functions conferred by Pt III of the ALR Act73, the members of which are Aboriginal people living in the area or who are registered as traditional owners of the area74 who have been chosen by Aboriginal people living in the area in accordance with a method or methods of choice from time to time approved by the Minister or who are co-opted by the Land Council with the approval of the Minister75, and the Chair of which is a member chosen by members at a meeting of the Land Council76. The Chair of a Land Council is obliged to convene such meetings of the Land Council "as are, in his or her opinion, necessary for the efficient conduct of its affairs"77. At a meeting of the Land Council, attendance by at least half of its 70 Determination of Representative Aboriginal/Torres Strait Islander Bodies (Commonwealth of Australia Gazette, No S 402, 30 December 1993 at 9-12). Those Land Councils were the NLC, the Central Land Council and the Tiwi Land Council. The determination took effect on 1 January 1994. 71 Native Title (Recognition as Representative Body − Northern Land Council) Instrument 2018; Native Title (Recognition as Representative Body − Central Land Council) Instrument 2018. 72 Section 22 of the ALR Act. 73 Section 23 of the ALR Act. 74 Under s 24 of the ALR Act. 75 Section 29 of the ALR Act. 76 Section 30 of the ALR Act. 77 Section 31(1) of the ALR Act. members is needed to constitute a quorum78 and any question arising is required to be decided by a majority of the votes of members present and voting79. Part III of the ALR Act empowers a Land Council to "appoint a committee or committees of its members to assist [it] in relation to the performance of any of its functions"80. A committee so appointed must consist of a minimum number of members81 and must operate under rules for the convening and conduct of meetings that are made by the Land Council82, given to the Minister83, and open to inspection by the traditional Aboriginal owners of Aboriginal land in its area and by other Aboriginal people living in the area84. Mirroring the permission given to a representative body by the NT Act, the ALR Act permits a Land Council to allocate resources in the way it thinks fit in order to be able to perform its functions efficiently85. And mirroring the requirements of the NT Act as to how the functions of a representative body are to be performed, the ALR Act obliges a Land Council to use its best efforts to perform its functions in a timely manner86 and in a manner that "maintains organisational structures and administrative processes the satisfactory representation by [it] of, and promote effective consultation with, the traditional Aboriginal owners of, interested in, Aboriginal land in [its] area" and that "ensures that the structures and processes operate in a fair manner"87. and other Aboriginals that promote 78 Section 31(4) of the ALR Act. 79 Section 31(5) of the ALR Act. 80 Section 29A(1) of the ALR Act. 81 Section 29A(3) of the ALR Act. 82 Section 29A(4) of the ALR Act. 83 Section 29A(5) of the ALR Act. 84 Section 29A(7) of the ALR Act. 85 Section 23AA(2) of the ALR Act. 86 Section 23AA(4) of the ALR Act. 87 Section 23AA(5) of the ALR Act. Section 27(1) of the ALR Act provides that "[s]ubject to this Act, a Land Council may do all things necessary or convenient to be done for or in connexion with the performance of its functions and, without limiting the generality of the foregoing, may: (a) employ staff ...". The CEO is a member of the staff of the NLC employed in the exercise of the specific power conferred by s 27(1)(a). Section 28(1) provides that a Land Council may delegate to its Chair, to another of its members, or to a member of its staff "any of the Council's functions or powers under this Act" other than functions which that sub-section specifically excludes. Section 28(2) provides in materially identical terms that a Land Council may delegate to a committee that it has appointed "any of the Council's functions or powers under this Act" other than functions which that sub-section specifically excludes. Understanding the scope and interrelationship of ss 27(1) and 28(1) and (2) is assisted by reference to two well-established principles of statutory construction. One is that "when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power"88. The other is that "a court construing a statutory provision must strive to give meaning to every word of the provision"89. Having regard to the first of those principles of statutory construction, the general power conferred on a Land Council by s 27(1) to "do all things necessary or convenient to be done for or in connexion with the performance of its functions" is to be read as excluding any power to delegate "any of the Council's functions or powers under this Act" which s 28(1) and (2) identify as the subject matter of the special powers of delegation which they confer subject to the limitations and qualifications they specify. Having regard to the second of those principles of statutory construction, however, the unqualified reference in s 27(1) to a Land Council's "functions" is to be read as extending beyond the references in s 28(1) and (2) to a Land Council's "functions ... under this Act" to include functions conferred on a Land Council by or under another Commonwealth Act. 88 Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 678, referring to Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7. 89 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71]. See also Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 679. The result is that no impediment appears on the face of the ALR Act to the power conferred by s 27(1) being available to support delegation of a function conferred on a Land Council by or under another Commonwealth Act if delegation of that function can be characterised as something "necessary or convenient to be done for or in connexion with the performance" of that function or other functions of the Land Council. A "necessary or convenient" power of that nature has already been emphasised to be ancillary, subsidiary or incidental. That which is necessary or convenient to be done for or in connection with the performance of one or more functions conferred on a Land Council by or under one or more Commonwealth Acts extends, but is limited, to that which conduces to "the more effective administration"90 of one or more of those functions. Whether the doing of a thing meets that requirement of conducing to more effective administration is an objective question of fact and degree91. The bounds of the power conferred by s 27(1) are set by the need for the circumstances of its exercise to yield a positive answer to that question. There is no a priori reason why delegation of a function to a member of staff engaged under s 27(1)(a) cannot fall within those bounds. The presumption of statutory interpretation reflected in the maxim delegatus non potest delegare, that a statutory function is to be performed by none but the statutory repository of the function, yields to "any contrary indications found in the language, scope or object of the statute"92. In Bayly v Municipal Council of Sydney93 the Supreme Court of New South Wales held that a statutory provision conferring power on a Municipal Council to engage and assign duties to officers and servants94 permitted the Council to delegate to a senior officer the appointment and discharge of junior employees, observing that the provision "cannot be construed so as to impose upon the Council the duty of itself appointing every officer or servant that may be necessary from the highest to the lowest" given 90 cf Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402 at 410. 91 Kathleen Investments (Australia) Ltd v Australian Atomic Energy Commission (1977) 139 CLR 117 at 145-146, 153-154, 160; Palmer v Australian Electoral Commission (2019) 93 ALJR 947 at 958 [68]; 372 ALR 102 at 116. 92 Willis, "Delegatus Non Potest Delegare" (1943) 21 Canadian Bar Review 257 at (1927) 28 SR (NSW) 149. 94 Section 59(1) of the Sydney Corporation Act 1902 (NSW). that "[s]uch a requirement would be intolerable and impracticable in the management of the affairs of a corporation such as that of the City of Sydney"95. Much later, in Ex parte Forster; Re University of Sydney96, the Supreme Court held that a power conferred on the Senate of the University of Sydney to "act in such manner as appears to them to be best calculated to promote the purposes of the University" in the "management of and superintendence over the affairs ... of the University"97 empowered the Senate to delegate to committees established within Faculties of the University specific power to exclude students who repeatedly failed courses of study within those Faculties. In so holding, the Supreme Court observed that "the application of the maxim, and its extent, must be considered with due regard to the purpose and objects of the statute, the character of the power which is conferred, the exigencies of the occasions which may arise with respect to its exercise, and other relevant considerations"98. That the power conferred on a Land Council by s 27(1) encompasses power to delegate to a member of its staff a function conferred on the Land Council by or under another Act, to the extent that delegation conduces to the more effective administration of that function or other functions, is indicated by the constitution of the Land Council as a corporation and by the specific power conferred on the Land Council by s 27(1)(a) to engage staff. The specific power necessarily carries with it power to assign responsibilities to members of staff. Power to delegate such functions to a member of its staff is further indicated by the concurrent ability of the Land Council under s 28(1) to delegate to a member of its staff functions conferred on the Land Council under the ALR Act itself, by the variety of functions which might potentially be conferred on the Land Council under other Acts, and by the capacity for those other Acts to exclude or limit delegation in a manner tailored to the achievement of their specific objects. More specifically, power to delegate to a member of the staff of a Land Council functions conferred on the Land Council as a representative body under Div 3 of Pt 11 of the NT Act is indicated by the complementary provision that is made in Pt III of the ALR Act and in Div 3 of Pt 11 of the NT Act for a Land (1927) 28 SR (NSW) 149 at 153-154. [1963] SR (NSW) 723. 97 Section 14(2) of the University and University Colleges Act 1900 (NSW). 98 Ex parte Forster; Re University of Sydney [1963] SR (NSW) 723 at 733. See also Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 at 93. Council that is also a representative body to allocate resources in the way it thinks fit in order to enable efficient performance of the totality of its functions. The power conferred on a Land Council by s 27(1) is therefore to be interpreted, consistently with the argument of the Attorney-General of the Commonwealth, as encompassing power to delegate to a member of staff engaged under s 27(1)(a) a function conferred on the Land Council under Div 3 of Pt 11 of the NT Act to the extent that delegation of that function is objectively necessary or convenient to be done for or in connection with the performance of that function or other of the Land Council's functions. Whether delegation of the certification function by the NLC to the CEO is or was at any relevant time objectively necessary or convenient to be done for or in connection with the performance of the certification function or of any other function or functions of the NLC is beyond the scope of the issues raised in the appeal. To the extent that s 27(1) encompasses such a power of delegation, exercise of the power of delegation attracts the operation of ss 34AB and 34A of the AI Act. By operation of s 34AB(1)(c), a function performed by a member of staff as delegate of the Land Council is deemed for the purposes of the ALR Act to have been performed by the Land Council. And by operation of s 34A, if performance of the function is dependent upon the Land Council's opinion in relation to a matter, the member of staff as delegate can perform that function upon his or her own opinion in relation to that matter. Conclusion The result is that the NLC has power under s 27(1) of the ALR Act to delegate to the CEO the certification function conferred on the NLC as a representative body by s 203BE(1)(b) of the NT Act if and to the extent that delegation is objectively necessary or convenient to be done for or in connection with performance of the certification function or other functions of the NLC. If the certification function is duly delegated by the NLC to the CEO under s 27(1) of the ALR Act, the CEO in performing that function is allowed by s 34A of the AI Act to form his or her own opinion about the subject matter of s 203BE(5) of the NT Act. Performance of the certification function by the CEO is then deemed by s 34AB(1)(c) of the AI Act to amount to performance of that function by the NLC for the purposes of the ALR Act. Because performance of the certification function by the CEO amounts to performance of the certification function by the NLC for the purposes of its constating statute, performance by the CEO also amounts to performance of the certification function by the NLC for the purposes of the NT Act. Orders The appeal to this Court must be allowed. The declaration made by the Full Court must be set aside and with it the order made by the Full Court allowing the cross-appeal. They are to be replaced with an order dismissing the cross-appeal. The orders made by the Full Court dismissing the application for leave to adduce fresh evidence in the appeal to it and dismissing the appeal to it must also be set aside. The unresolved appeal to the Full Court, including the unresolved application for leave to adduce fresh evidence in that appeal, is to be remitted to the Full Court. Lest there be any doubt, it should be made clear that the issue remaining for determination in the remitted appeal is whether the certification function conferred on the NLC as a representative body by s 203BE(1)(b) of the NT Act was in fact duly delegated by the NLC to the CEO under s 27(1) of the ALR Act. In accordance with undertakings given as a condition of the grant of special leave to appeal, the NLC and the CEO are to bear Mr Quall's and Mr Fejo's costs of the appeal limited to one set of costs. In accordance with undertakings given as a condition of the grant of leave to intervene, the Attorney-General of the Commonwealth and the Northern Territory are to bear jointly with the NLC and the CEO Mr Quall's and Mr Fejo's costs of the appeal as so limited. Nettle Edelman Introduction We have had the benefit of reading in draft the joint reasons of Kiefel CJ, Gageler and Keane JJ, which set out, in considerable detail, the legislative provisions and the history of this litigation, which need not be repeated. We agree that if it is consistent with the Northern Land Council's ("NLC's") constitutive statutes and instruments, the NLC can perform the functions conferred upon it as "a representative body" under s 203BE(1)(b) of the Native Title Act 1993 (Cth) to certify in writing particular applications for registration of indigenous land use agreements ("ILUAs") through its Chief Executive Officer ("CEO"). This conclusion was expressed in the reasons of the primary judge, and in submissions of the appellants in this Court, in the language of "delegation". The proper expression, and process of reasoning, however, should be in terms of agency. As Brennan J has explained99, the terms "agency" and "delegation" have a "confusing similarity". He added that they are sometimes used in a loose and interchangeable manner that is "radically mistaken"100 as they connote different sources of validity for acts. An agent, in a strict or precise sense, acts on behalf of another and generally in the name of that other. The agent's acts are attributed to the other. A delegate, in a strict or precise sense, acts on their own behalf and generally in their own name. Hence, a non-delegable duty or function is one that must only be performed by the nominated person or their agent. The functions conferred by the Native Title Act upon a representative body are substantial and specialised. One specialised function is the certification of ILUAs in an area for which the specific representative body has been recognised by the Commonwealth Minister. Unsurprisingly, apart from some instances of facilitation and representation or obtaining services to assist in the performance of its functions, or an incidental power to do all things that are necessary or convenient to be done for or in connection with the performance of its functions, a representative body is prohibited from "enter[ing] into an arrangement with another person under which the person is to perform the functions of the 99 Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 at 94. 100 Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 at 94, quoting Blackpool Corporation v Locker [1948] 1 KB 349 at 377. Nettle Edelman representative body"101. Even without such an express non-delegation provision, the functions of the representative body, including certification, are almost a textbook example of functions that would be non-delegable by implication102. However, the power to act personally through an agent is a different matter. A representative body can, and indeed must, act through natural persons, as agents. In the case of the NLC, those persons include the CEO if its constituting statutes and instruments so permit. At times the submissions in this Court were like ships passing in the night. With the exception of the precisely tailored submissions made by the respondents, the parties and intervenors oscillated in their use of "delegation" from the loose sense that includes agency to the precise sense in which the delegate does not act for another. Re-expressed in the more precise language of agency, the essential submission made by the Attorney-General of the Commonwealth, intervening in support of the appellants, should be accepted. That submission relied by analogy upon the following reasoning of the Full Court of the Federal Court of Australia in McGlade v South West Aboriginal Land & Sea Aboriginal Corporation [No 2]103 concerning an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth): "In conducting its business, which includes performing any functions conferred on it and exercising its powers, an ATSI corporation does so through its directors and/or its authorised employees and agents. A function so performed is properly characterised as the performance of the function by the ATSI corporation itself, not a CEO or anyone else ... [Such performance] does not amount to the delegation by the ATSI corporation of its function or a power to another person; rather, it has the limited effect of altering how and through whom the ATSI corporation fulfils its function". A recognition that the representative body can perform its certification function through agents removes the need to draw an implication from s 27(1) of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) ("the ALR Act") of a power to delegate the functions of a Land Council under the Native Title Act. 101 Native Title Act, s 203B(3), read with ss 203BB, 203BD, 203BK. 102 See and compare Racecourse Co-operative Sugar Association Ltd v Attorney- General (Q) (1979) 142 CLR 460 at 481. 103 (2019) 374 ALR 329 at 419 [329]-[330]. Nettle Edelman Such an implication of delegation, in its precise sense, would contradict the scheme and the terms of both the ALR Act and the Native Title Act. Agency and delegation In Kennedy v De Trafford104, in an observation repeated in this Court by Dixon J105, Lord Herschell said that "[n]o word is more commonly and constantly abused than the word 'agent.'" A close second might be the word "delegate". In its most precise description, the concept of "agency" should be used "to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties"106. As suggested by the maxim qui facit per alium facit per se107 the acts of an agent are, in law, attributed to the principal108. A company director or chief executive who has authority to bind the company in its legal relations with third parties is an agent in this strict sense. Since a company "'cannot act in its own person for it has no person' ... it must of necessity act by directors, managers, or other agents"109. Rules of attribution such as those in s 203FH of the Native Title Act, considered below, are concerned with attributing the acts of agents to the company. These rules of 104 [1897] AC 180 at 188. 105 Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 50. See also Scott v Davis (2000) 204 CLR 333 at 408 [227]. 106 International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 at 652. See also Scott v Davis (2000) 204 CLR 333 at 408 107 "He, who acts by another, acts by himself". See Story, Commentaries on the Law of Agency, 9th ed (1882) at 517, 548; Dal Pont, Law of Agency, 4th ed (2020) at 5 [1.2]; Watts and Reynolds, Bowstead and Reynolds on Agency, 21st ed (2018) at 20 [1-027]. See also Christie v Permewan, Wright & Co Ltd (1904) 1 CLR 693 at 700; Petersen v Moloney (1951) 84 CLR 91 at 94. 108 The maxim is also expressed as qui facit per alium, per seipsum facere videtur. See Story, Commentaries on the Law of Agency, 9th ed (1882) at 2. 109 O'Brien v Dawson (1942) 66 CLR 18 at 32, quoting Ferguson v Wilson (1866) 2 Ch App 77 at 89. See also Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 198-199; Watts and Reynolds, Bowstead and Reynolds on Agency, 21st ed (2018) at 21-24 [1-028]; Dal Pont, Law of Agency, 4th ed (2020) at 30 [1.41]. Nettle Edelman attribution for corporate acts have been said to be "completely irrelevant" to any vicarious liability of a company110. Any liability of the representative body that arises from attribution of the acts of agents is primary, not derivative or vicarious111. As to delegation, that concept is sometimes used loosely to describe only an authorisation to act. In that loose sense, a delegation to act in a way that will bind another can sometimes be indistinguishable from agency. Hence, in a passage relied upon by the appellants from Huth v Clarke112, Wills J said that "the word 'delegate' means little more than an agent". That definition has been subject to polite expressions of great doubt113. In a more precise sense, the concept of delegation involves an authorisation to act personally rather than as an agent. in Commissioner of Inland Revenue v Chesterfields Preschools Ltd114, a delegate exercises "power as their own. They do not exercise the delegator's power through the delegator ... The delegate must exercise their own independent discretion in the exercise of their delegated power." That is why a delegate exercises the powers delegated to them by acting in their own name115 but an agent acts in the name of the authority116. That is also why the lack of a high 110 Worthington, "Corporate Attribution and Agency: Back to Basics" (2017) 133 Law Quarterly Review 118 at 125. 111 Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd (2016) 250 FCR 136 at 147-149 [48]-[56], cited in IL v The Queen (2017) 262 CLR 268 at 285 [34]. 112 (1890) 25 QBD 391 at 395. 113 Blackpool Corporation v Locker [1948] 1 KB 349 at 391. 114 [2013] 2 NZLR 679 at 702 [61]. 115 Owendale Pty Ltd v Anthony (1967) 117 CLR 539 at 562, 611; Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 at 94; R (King) v Secretary of State for Justice [2016] AC 384 at 410 [49]. 116 London County Council v Agricultural Food Products Ltd [1955] 2 QB 218 at 223-224; Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 Nettle Edelman degree of legal control over the person exercising the act will mean that the person exercises it as a delegate and not as an agent117. A case that illustrates the difference between agency and delegation in their more precise senses is O'Reilly v State Bank of Victoria Commissioners118. In that case it was common ground that (i) the Commissioner of Taxation and his delegate, the Deputy Commissioner, had power to issue a particular notice in writing but (ii) the Deputy Commissioner could not further delegate that power119. Gibbs CJ, with whom Murphy J agreed, accepted that the notice in writing could nevertheless be issued "through a properly authorized officer", named Mr Holland, who acted "on behalf of the Deputy Commissioner" with his acts being the acts of the Deputy Commissioner120. Mr Holland was an agent. He was not a delegate. "There has been no transfer to Mr Holland of any power vested in the Deputy Commissioner. The power which Mr Holland has been authorized to exercise remains a power delegated to the Deputy Commissioner; it can be exercised only in his name and on his behalf." Some of the most significant potential differences between an agent and a delegate at common law have been removed by the Acts Interpretation Act 1901 (Cth). For instance, it had been held at common law that a delegation of substantial power by an authority prevents the exercise of that power by the authority while the delegation subsists122. The consequences of that conclusion are ameliorated by s 34AB(1)(d) of the Acts Interpretation Act, which provides that "a delegation by the authority does not prevent the performance or exercise of a function, duty or power by the authority". Further, since a power exercised by a delegate is exercised personally, the usual common law rule was that it be exercised in the name of the delegate, and not on behalf of the delegating authority 117 Ex parte Forster; Re University of Sydney [1963] SR (NSW) 723 at 733. 118 (1982) 153 CLR 1. 119 O'Reilly v State Bank of Victoria Commissioners (1982) 153 CLR 1 at 10, 30. 120 O'Reilly v State Bank of Victoria Commissioners (1982) 153 CLR 1 at 13. See also Lee v Commissioner of Taxation (1962) 107 CLR 329 at 335. 121 O'Reilly v State Bank of Victoria Commissioners (1982) 153 CLR 1 at 30. 122 Blackpool Corporation v Locker [1948] 1 KB 349 at 377-378; Department for Environment Food and Rural Affairs v Robertson [2004] ICR 1289 at 1321 [45]. Nettle Edelman as principal123. But the consequences of this conclusion are ameliorated by s 34AB(1)(c) of the Acts Interpretation Act, which provides that the statutory power, "when performed or exercised by the delegate, shall, for the purposes of the Act, be deemed to have been performed or exercised by the authority". Notwithstanding the narrowing of the difference in legal effect between an act of an agent and that of a delegate, the distinction can be important. It is important to the analysis in this case. There is a long-established principle – delegatus non potest delegare – which has the effect that a repository of statutory power has no power to delegate that statutory power. Although the principle is subject to express or implied statutory provision to the contrary, it is very unlikely to be displaced by implication where, as here, a specialised power is vested in a specific person, namely a representative body, chosen due to its capacities and attributes. But before that analysis is undertaken, an anterior question must be how the repository of the statutory power would itself exercise its powers. For instance, if the Native Title Act permits a representative body, consistently with its constitution, to exercise its certification functions through its CEO as agent then there could be little room for any statutory implication of a power to delegate its specialised functions to its CEO. In short, where the repository of a statutory power is a body corporate, which can only act through natural persons, issues of agency should generally be considered before issues of delegation. No issue arises in this appeal as to what is sometimes described as the Carltona doctrine124, by which legislation is sometimes construed, for reasons including administrative necessity, to permit one person to perform the acts assigned by statute to another. Whether the person who so performs is properly regarded as an agent or a delegate need not be considered. No argument based on this principle was run before the Full Court of the Federal Court of Australia125, and this principle was not ultimately pressed in the application for special leave to appeal to this Court. 123 Owendale Pty Ltd v Anthony (1967) 117 CLR 539 at 562, 611; Re Reference under Section 11 of the Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86 at 94; R (King) v Secretary of State for Justice [2016] AC 384 at 410 [49]. 124 Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 at 563. And see R v Adams [2020] 1 WLR 2077. 125 Northern Land Council v Quall (2019) 268 FCR 228 at 242 [46], 243 [52]. Nettle Edelman The specialist functions of a representative body and its agents The specialist functions of a representative body As originally conceived by the Native Title Act, a representative body was required to be "broadly representative of the Aboriginal peoples or Torres Strait Islanders in the area" for which it was determined that the body was representative126. The current regime is a careful process, subject to ongoing protections, which requires the selection of a representative body with requirements that it be an "eligible body" with a continuing entitlement to perform specialist functions including facilitation and assistance, dispute resolution, notification, agreement making, internal review, and certification127. To be a representative body, the first requirement is that the body is a corporation that falls within s 201B, including a company incorporated under the Corporations Act 2001 (Cth)128 and, as in this case, a body corporate established by or under a law of the Commonwealth129. The NLC was established under the ALR Act. Before a corporation can become a representative body that can perform these specialist functions it must apply for recognition in relation to a particular area and must be recognised for that area by the Commonwealth Minister after the Minister is satisfied that the body would be able to perform satisfactorily the functions of a representative body130. It will remain a representative body for the period provided by the instrument of recognition, which cannot exceed six years131, or until the Minister withdraws recognition, for reasons which include the Minister's satisfaction that the body is not satisfactorily performing its functions132. These detailed rules cast serious doubt upon the submission that the functions of a representative body could be performed personally by any other body. 126 Native Title Act, s 202(3)(a) (as originally enacted). 127 Native Title Act, s 203B(1). See ss 203BB, 203BE, 203BF, 203BG, 203BH, 203BI, 128 Native Title Act, s 201B(1)(ba). 129 Native Title Act, s 201B(1)(c). 130 Native Title Act, s 203AD(1)(d). 131 Native Title Act, s 203AD(3A). 132 Native Title Act, s 203AH(2)(a). Nettle Edelman The Native Title Act does not merely regulate the manner in which a representative body is to be selected and the conditions of it remaining as a representative body. It also requires that its functions be performed in a timely manner133, and that it maintain "organisational structures and administrative processes" which promote satisfactory representation of native title holders and persons who may hold native title in the area for which the body is representative, promote effective consultation with Aboriginal peoples and Torres Strait Islanders living in that area, and operate in a fair manner134. The representative body must itself determine its priorities for the performance of its functions and may allocate resources for the performance of functions but must give priority to the protection of the interests of native title holders135. There is no hint of a suggestion that these functions could, or should, be performed by any person other than the representative body. The certification function conferred upon a representative body is a substantial undertaking. It requires certification in writing of applications for determinations of native title as well as applications for registration of ILUAs. The process for registration of an ILUA is described in the reasons of Kiefel CJ, Gageler and Keane JJ. The certification function of a representative body is not a mere rubber-stamping function. Its certification function is confined to the particular area for which a representative body is certified136. It requires the representative body, amongst other things, and if requested to do so137, to consult with persons including native title holders, to be satisfied they understand and consent to the course of action taken on their behalf in accordance with the traditional decision-making customs of that group138, and to make all reasonable efforts to achieve agreement, relating to native title applications over the land or waters, between the persons in respect of whom applications would be made139. 133 Native Title Act, s 203BA(1). 134 Native Title Act, s 203BA(2). 135 Native Title Act, s 203B(4). 136 Native Title Act, s 203BE(1). 137 Native Title Act, s 203BB(2). 138 Native Title Act, s 203BC(1) and (2). 139 Native Title Act, s 203BE(3). Nettle Edelman The representative body is required to be a party to an ILUA that is proposed to be registered140. Section 203BE(5) provides that a representative body must not certify an application for registration of an ILUA unless it is of the opinion that: all reasonable efforts have been made to ensure that all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement have been identified; and all the persons so identified have authorised the making of the agreement." In certifying an application for registration of an ILUA, a representative body must include a statement of its opinion that these requirements have been met, with brief reasons for that opinion141. The specialist functions can be performed by agents including the CEO During oral argument on this appeal, the respondents conceded that where a representative body was a company incorporated under the Corporations Act the representative body could perform many, if not all, of its important functions by agents, including its managing director or CEO. That concession was properly and rightly made. Given the myriad functions of a representative body, there exists a practical necessity that those functions be performed by officers of the corporation acting as its authorised agents rather than requiring those functions to be performed by the corporation in general meeting or always by decision of its entire governing body142. It would reduce the exercise of a representative body's functions to chaos if a representative body could not perform its functions by its duly authorised officers, and the Parliament must be taken to have known that this was so when it enacted s 203B(3). The respondents' concession is also supported by s 203FH. That section provides for rules of attributing to a body corporate the conduct and state of mind of its agents. It relevantly provides as follows: 140 Native Title Act, s 24CK(3). 141 Native Title Act, s 203BE(6). 142 See and compare O'Reilly v State Bank of Victoria Commissioners (1982) 153 CLR Nettle Edelman "State of mind of directors, employees or agents of bodies corporate If, for the purposes of this Part, it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is sufficient to show: that the conduct was engaged in by a director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; and that the director, employee or agent had the state of mind. Conduct of directors, employees or agents of bodies corporate (2) Any conduct engaged in on behalf of a body corporate by a director, employee or agent of the body corporate within the scope of his or her actual or apparent authority is taken, for the purposes of this Part, to have been engaged in also by the body corporate unless the body corporate establishes that the body corporate took reasonable precautions and exercised due diligence to avoid the conduct." This is a general attribution provision in similar terms to provisions in many Commonwealth statutes143. The provision is concerned with attribution for all purposes, not merely for the purposes of establishing liability of the representative body. The Native Title Act avoids the alternative common form of drafting where the only relevant purposes for attribution might be establishing liability for the attributed act: "Where, in proceedings for an offence against this Act ... it is necessary to establish the state of mind of a body corporate ..."144. It was, however, contended on behalf of the respondents that this general principle should not apply here for two reasons: (i) the NLC is not a company or other corporate body to which the s 203FH attribution principles of agency apply; and (ii) the importance of the certification function places that function in a separate category from other functions. The respondents submitted that the certification function, including the opinion to be formed by the representative body, should be carried out at the most "nuanced level", namely a consensus by a 143 For example, Disability Discrimination Act 1992 (Cth), s 123(1) and (2); Environment Protection and Biodiversity Conservation Act 1999 (Cth), s 498B(1) and (2); Water Act 2007 (Cth), s 170(1) and (2). 144 For instance, Migration Act 1958 (Cth), s 493; Privacy Act 1988 (Cth), s 99A; Therapeutic Goods Act 1989 (Cth), s 55. See also Air Navigation Act 1920 (Cth), s 24A. Nettle Edelman majority vote of Council, rather than through the agency of a person such as the CEO. The difficulty with the latter submission concerning the specialised nature of the certification function is that there is no textual foundation for treating the attribution rules for a representative body that is a company or other corporation falling under s 201B(1)(ba) differently from the attribution rules for a corporation, such as the NLC, established by or under a Commonwealth law falling under s 201B(1)(c). Both must have been intended to be subject to the same attribution rules of agency in s 203FH. That conclusion conforms also to the expressed goal of Div 3 of Pt 11 for a representative body to "use its best efforts to perform its functions in a timely manner"145 and, in doing so, to have choice as to how it maintains its organisational structures and administrative processes, albeit that they must be maintained in a manner that: promotes "the satisfactory representation by the body of native title holders and persons who may hold native title in the area for which it is the representative body"146; promotes "effective consultation with Aboriginal peoples and Torres Strait Islanders living in the area for which it is the representative body"147; and "ensures that the structures and processes operate in a fair manner" having regard to a variety of matters148. As for the former submission, it can be immediately accepted that the NLC is not a company or akin to some of the other classes of eligible body identified in s 201B. But there is no basis in the ALR Act from which a conclusion could be drawn that the s 203FH attribution principles of agency should not apply to the NLC in its certification or other functions. The NLC is a gazetted Land Council and body corporate under the ALR Act149 and recognised as a representative body for its area in the Northern Territory150. Its functions under the ALR Act include ascertaining and expressing "the wishes and the opinion of Aboriginals living in 145 Native Title Act, s 203BA(1). 146 Native Title Act, s 203BA(2)(a). 147 Native Title Act, s 203BA(2)(b). 148 Native Title Act, s 203BA(2)(c). 149 Determination of Representative Aboriginal/Torres Strait Islander Bodies (Commonwealth of Australia Gazette, No S 402, 30 December 1993 at 9, 11). See ALR Act, ss 21, 22. 150 Native Title (Recognition as Representative Body – Northern Land Council) Instrument 2018. Nettle Edelman the area of the Land Council as to the management of Aboriginal land in that area and as to appropriate legislation concerning that land"151. The ALR Act provides for the performance of those functions in very similar terms to the provisions in the Native Title Act, including the performance of functions in a timely manner152 and the maintenance of organisational structures and administrative processes for very similar purposes as in s 203BA of the Native Title Act153. And, perhaps most relevantly, s 77B of the ALR Act contains the same attribution rules of agency, in very similar language, as the rules contained in s 203FH of the Native Title Act. The inability of a representative body to delegate its functions The application of the scheme of Pt 11 of the Native Title Act to representative bodies, described in broad terms above, requires that the functions of those bodies are non-delegable. The functions are specialised. The priorities for the performance of those functions, and the allocation of resources for the performance of functions, are expressly provided to be matters for the representative body. The representative body must be recognised by legislative instrument before it can perform those functions. The recognition can be withdrawn in circumstances including the unsatisfactory performance by the representative body of its functions. There is no necessity for delegation of the functions of a representative body since its functions can be performed by agents. All of these matters point unequivocally to the inability of any other person to perform the functions of a representative body as a delegate. Although it would otherwise have been implied, the Native Title Act provides expressly for the non-delegation of the specialist functions of a representative body: a representative body "must not enter into an arrangement with another person under which the person is to perform the functions of the representative body"154. The plain contrast is between the performance of functions by "a representative body" and "another person". This express prohibition on delegation by representative bodies can be contrasted with the position of the Native Title Registrar, who is required to register ILUAs in some circumstances where they have not been certified by a representative body. The Native Title Act provides for a power of delegation by the Registrar of all or any of the Registrar's powers under the Act, "by signed instrument" and only to "one or more of the 151 ALR Act, s 23(1)(a). 152 ALR Act, s 23AA(4). 153 ALR Act, s 23AA(5). 154 Native Title Act, s 203B(3). Nettle Edelman Deputy Registrars of the Tribunal, or the members of the staff assisting the Tribunal"155. Section 27 of the ALR Act neither contradicts nor alters the requirement in the Native Title Act of non-delegability. Section 27 provides that, subject to the ALR Act, a Land Council has power to "do all things necessary or convenient to be done for or in connexion with the performance of its functions", citing examples without limiting the generality of the provision, including the employment of staff and obtaining (presumably by arrangement or contract) the advice and assistance of experts. Section 27 thus makes very similar provision for these incidental powers to s 203BK of the Native Title Act, which provides that a representative body has power "to do all things necessary or convenient to be done for or in connection with the performance of its functions" with an example given of entering "into arrangements and contracts to obtain services to assist in the performance by the representative body of its functions". The inclusion of s 203BK in the Native Title Act is consistent with the realisation on Parliament's part that some bodies might lack power under their constitutive statutes to appoint officers and agents to discharge functions and thus Parliament taking the precaution of expressly providing power by way of s 203BK in order to place such bodies in the same position as those with power under their constitutive statutes to do that. For what is likely to be the avoidance of any doubt, this limited incidental "necessary or convenient" power in s 203BK is expressly excluded by s 203B(3) from its prohibition against delegation. Unlike the limited, incidental power in s 27 of the ALR Act, s 28 of the ALR Act confers an express power of delegation to a limited set of people within or employed by a Land Council in precise terms in relation to a limited range of functions. In that respect, s 28 contrasts with the prohibition against delegation in s 203B(3). But the powers of delegation in s 28 do not extend to those functions of a representative body that s 203B(3) prohibits from delegation. In particular, the power of delegation concerns the Land Council's functions or powers "under this Act" (ie the ALR Act, not the Native Title Act). It follows that the enumeration of delegable powers and functions under the ALR Act does not extend to the power of certification under s 203BE of the Native Title Act. Hence, even if the limited, incidental power in s 27 were capable of being construed as a general delegation provision, the natural implication arising as a "necessary elaboration intended by 155 Native Title Act, s 99. Nettle Edelman the legislator"156 would be that the power to delegate other functions is excluded157. That inference would be fortified by the absence from s 28 of any express stipulation that s 28 does not limit the generality of s 27158. The CEO of the NLC purported to act as agent, not as delegate The CEO of the NLC did not perform the certification function as a delegate in the precise sense in which that term should be used. The certification began with the words "This document is the certification by the Northern Land Council (NLC) ...". It contained a statement that "the NLC hereby certifies the attached application for registration of the Agreement as an indigenous land use agreement". It described the opinion required by s 203BE(6)(a) as having been formed by the NLC. The reasons for that opinion were described as being held by the NLC. Although the document was signed by the CEO, it plainly purported to be a certification made by him as agent for, and on behalf of, the NLC. Conclusion The appeal should be allowed, and orders made as proposed by Kiefel CJ, Gageler and Keane JJ. Consistently, however, with the manner in which submissions were made on behalf of the appellants and those intervening in support of the appellants, the appellants' ground of appeal, that the Full Court erred by holding that the NLC did not have power to delegate the performance of its certification function, should be understood as using "delegate" in the imprecise sense which includes acting through an agent. It is plain that the CEO of the NLC purported to act only as an agent and not personally in accordance with a delegated power, properly so understood. Thus, the unresolved question in the Full Court, of whether the NLC had effectively "delegated" its certification function to its CEO, should be understood as being whether the NLC's constitutive statutes and instruments permitted its CEO to exercise that function, and, as so understood, should be remitted to the Full Court for determination. 156 Eastman v Commissioner for Superannuation (1987) 15 FCR 139 at 148. 157 Bailey and Norbury, Bennion on Statutory Interpretation, 7th ed (2017) at 576 [23.12]; Pearce, Statutory Interpretation in Australia, 9th ed (2019) at 174-175 158 cf Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 679, quoted in Pearce, Statutory Interpretation in Australia, 9th ed (2019) at 183

HIGH COURT OF AUSTRALIA Matter No S143/2018 BIANCA HOPE RINEHART & ANOR APPELLANTS AND HANCOCK PROSPECTING PTY LTD & ORS RESPONDENTS Matter No S144/2018 BIANCA HOPE RINEHART & ANOR APPELLANTS AND GEORGINA HOPE RINEHART (IN HER PERSONAL CAPACITY AND AS TRUSTEE OF THE HOPE MARGARET HANCOCK TRUST AND AS TRUSTEE OF THE HFMF TRUST) & ORS RESPONDENTS Rinehart v Hancock Prospecting Pty Ltd Rinehart v Rinehart [2019] HCA 13 8 May 2019 S143/2018 & S144/2018 ORDER Matter No S143/2018 The appeal be dismissed with costs. The third party companies' application for special leave to cross- appeal be allowed. The cross-appeal be treated as instituted and heard instanter and allowed. Orders 5, 6 and 8 of the orders of the Full Court of the Federal Court of Australia made on 15 December 2017 be set aside and, in their place, it is ordered that: "5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order: that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against Mulga Downs Investments Pty Ltd; and the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, to Mulga Downs subject Investments Pty Ltd paying the costs related to the question of whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act. The claims made by the applicants in the underlying proceedings against Mulga Downs Investments Pty Ltd be stayed on the same terms as the stay in order 5. The first and second respondents pay the appellants' costs of appeal including the costs of the application for leave to appeal, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question as to whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act." The respondents to the cross-appeal pay the cross-appellants' costs of the cross-appeal. Matter No S144/2018 The appeal be dismissed with costs. On appeal from the Federal Court of Australia Representation B W Walker SC and G E S Ng for the appellants in both matters (instructed by Yeldham Price O'Brien Lusk Lawyers) N C Hutley SC with I C Colquhoun and J J Hutton for the first to eighth respondents in S143/2018 and the third to tenth respondents in S144/2018 (instructed by Corrs Chambers Westgarth) P J Brereton SC with C N Bova and S A Lawrance for the ninth and eleventh respondents in S143/2018 and the first and second respondents in S144/2018 (instructed by Speed and Stacey Lawyers) Submitting appearances for the twelfth and thirteenth respondents in both matters No appearance for the tenth, fourteenth and fifteenth respondents in S143/2018 and the eleventh, fourteenth and fifteenth respondents in The Australian Centre for International Commercial Arbitration appearing as amicus curiae in both matters, limited to its written submissions Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Rinehart v Hancock Prospecting Pty Ltd Rinehart v Rinehart Contract – Construction – Dispute resolution clause – Arbitration – Where arbitral clause in deeds provided for confidential arbitration in event of any dispute "under this deed" – Where deeds came into existence against background of claims and threats of litigation made publicly by one party to deeds against others – Where deeds contained releases, acknowledgments and covenants not to sue, and promises not to make further claims – Where deeds contained assurances they were entered into without undue influence or duress – Where appellants brought proceedings alleging breaches of equitable and contractual duties against other parties to deeds – Where appellants asserted they were not bound by deeds because their assent procured by misconduct of other parties to deeds ("validity claims") – Where respondents sought orders that matter be referred to arbitration and proceedings be dismissed or permanently stayed – Whether validity claims subject to arbitral clause. Arbitration – Parties – Where s 8(1) of Commercial Arbitration Act 2010 (NSW) ("NSW Act") provided that court before which action is brought in matter which is subject of arbitration agreement must in certain circumstances refer parties to arbitration – Where s 2(1) of NSW Act defined "party" to include any person claiming "through or under" party to arbitration agreement – Where trustees and beneficiaries party to arbitration agreement – Where beneficiaries alleged breaches of trust against trustees and knowing receipt against third party companies as assignees of trust property – Where third party companies asserted beneficial entitlement of trustees to property as essential element of defence – Where third party companies sought order that claims against them be referred to arbitration pursuant to s 8(1) of NSW Act – Whether third party companies claiming "through or under" party to arbitration agreement. Words and phrases – "arbitral clause", "arbitration agreement", "claiming through or under a party", "confidential processes of dispute resolution", "context and purpose of deed", "dispute under this deed", "party", "privity of contract". Commercial Arbitration Act 2010 (NSW), ss 2, 8. KIEFEL CJ, GAGELER, NETTLE AND GORDON JJ. The appellants in these appeals, Ms Bianca Rinehart and Mr John Hancock (who is referred to in these reasons as Mr Hancock), are two of Mrs Gina Rinehart's four children. Mrs Rinehart is the daughter of Mr Lang Hancock, the founder of the Hancock Group of companies, which were involved in the discovery and acquisition of substantial iron ore deposits in the Pilbara region of Western Australia. The Hancock Group includes Hancock Prospecting Pty Ltd ("HPPL"), which was incorporated in 1955, Hancock Family Memorial Foundation Limited ("HFMF"), Hancock Resources Limited ("HRL") and Zamoever Pty Ltd ("Zamoever"). Mr Lang Hancock controlled the Hancock Group until his death in 1992. The Federal Court proceedings The appeals arise out of proceedings brought in the Federal Court of Australia by the appellants in which they make a number of claims concerning conduct of Mrs Rinehart, HPPL and others which is said to have diminished the assets of trusts which were established prior to Mr Lang Hancock's death and of which the appellants and their two siblings are beneficiaries. No defence has as yet been filed to the appellants' statement of claim and no findings with respect to the claims have been made. Central to the appellants' claims is an agreement said to have been made between Mr Lang Hancock and Mrs Rinehart in 1988 concerning arrangements for future shareholdings of Mrs Rinehart and the children in HPPL and HFMF consequent upon Mr Lang Hancock's death ("the 1988 Agreement"). It is alleged that on 20 March 1992, in furtherance of the 1988 Agreement, Mr Lang Hancock executed a deed by which he formally declared in writing that he held the whole of his legal and beneficial interests in his two shares in Zamoever upon trust for Mrs Rinehart's four children as tenants in common in equal shares ("the HFMF Trust"). It also is alleged that as well as being equal beneficiaries of the HFMF Trust, the children were equal beneficiaries of "the HMH Trust" (the Hope Margaret Hancock Trust, a reference to Mr Lang Hancock's deceased wife). The HMH Trust is said to have a substantial shareholding in HPPL. The HFMF Trust, through the medium of HFMF and Zamoever, is said to have owned one- third of the shares in HPPL and shares in companies within the Hancock Group which own valuable mining tenements, including the tenements known as the Roy Hill Tenements, the Hope Downs Tenements and the Mulga Downs Tenement. There may be an issue as to the existence of the HFMF Trust. The appellants' statement of claim avers that Mr Lang Hancock was the trustee of both trusts during his lifetime and that Mrs Rinehart became trustee upon his death. The children were all minors at that time. The trusts were to vest Nettle Gordon when Mrs Rinehart's youngest child attained the age of 25, which occurred in The appellants further allege that Mrs Rinehart became the controlling mind of HPPL, HFMF and other relevant companies in the Hancock Group and that, in breach of the trusts and of other equitable and contractual duties, Mrs Rinehart dealt with the companies and their assets to her benefit and that of HPPL and to the detriment of the children as beneficiaries. These allegations were referred to in the proceedings below as "the substantive claims". It is not necessary to detail them more fully for present purposes. The appeals concern orders made on interlocutory applications brought by Mrs Rinehart, and HPPL and other related parties ("the HPPL respondents"), in the proceedings. Mrs Rinehart sought an order pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) ("the NSW Act") that the matters the subject of the proceedings be referred to arbitration. That sub-section provides: "A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed." Both Mrs Rinehart and the HPPL respondents sought an order that the proceedings be dismissed or permanently stayed and certain other orders. The applications brought by Mrs Rinehart and the HPPL respondents relied upon a number of deeds entered into between one or both of the appellants and various of the respondents between September 2003 and November 2010. Three are the subject of these appeals ("the Deeds"): the confidential Deed of Obligation and Release which was entered into with Mr Hancock in April 2005; the Hope Downs Deed entered into with Ms Rinehart and her two sisters in August 2006; and a further deed entered into with Mr Hancock in April 2007 in which he adopted the Hope Downs Deed ("the April 2007 Deed"). Argument on these appeals tended to focus upon the Hope Downs Deed because of the disputes it allegedly resolved and its provision for the process of dispute resolution at issue in this matter. The Deeds came into existence against the background of and were addressed to claims and threats of litigation made publicly by Mr Hancock about wrongdoing on the part of Mrs Rinehart, HPPL and others which are reiterated in the substantive claims in the proceedings. The Deeds contain releases or abandonment of claims, expressed in wide terms, and promises not to make Nettle Gordon further claims. They contain assurances that they were entered into without undue influence or duress. The arbitral clauses Each of the Deeds contains an arbitral clause. Clause 20 of the Hope Downs Deed provides that "[i]n the event that there is any dispute under this deed" there is to be a confidential arbitration. Clause 9 of the April 2007 Deed and cl 14 of the Deed of Obligation and Release are in relevantly similar terms1. The appellants do not deny that they executed the Deeds but assert that they are not bound by their terms because their assent to them was procured by misconduct on the part of Mrs Rinehart, HPPL and others. They seek declarations in the proceedings that the Deeds are void as against them. These claims were referred to below as "the validity claims". The appellants' "validity claims" are not discrete from the appellants' "substantive claims". The validity claims incorporate and rely upon the substantive claims. An example serves to illustrate the point. Paragraph 288.5 of the appellants' statement of claim attacks the validity of the arbitral clause in the Hope Downs Deed, including on the basis that the purpose of the arbitral clause was to prevent public disclosure of the facts pleaded at sections 8-16 of the statement of claim; however, sections 8-16 of the statement of claim contain the substantive claims made by the appellants. It is also necessary to mention certain principles stated in the NSW Act in connection with the arbitral clauses. There is no dispute that the NSW Act applies to the clauses even though the Deeds pre-date the Act2. The Act is part of an integrated statutory framework for international3 and domestic4 arbitration 1 Noting that cl 14 of the Deed of Obligation and Release refers "all disputes hereunder" to arbitration (emphasis added). 2 NSW Act, Sch 1, cl 2(1)(a). International Arbitration Act 1974 (Cth). 4 The domestic arbitration regime is governed by the NSW Act, which has been enacted in substantially the same form in each State and Territory as the applicable supervisory law for domestic arbitrations seated within those jurisdictions: see Commercial Arbitration Commercial Arbitration Act 2011 (SA); Commercial Arbitration Act 2011 (Tas); (Footnote continues on next page) (National Uniform Legislation) Act 2011 Nettle Gordon which implements the UNCITRAL Model Law on International Commercial Arbitration. The Act adopts principles such as that which recognises an arbitration agreement as distinct and limits attacks upon its validity (the separability principle) and the related principle by which an arbitral tribunal is competent to rule on its jurisdiction (kompetenz-kompetenz)5. Those principles are not determinative of the issues in these appeals and it is not necessary to resort to them, for the reasons which follow. The proceedings below The question before the primary judge which is relevant to these appeals is whether the validity claims are subject to the arbitral clauses. The primary judge held that they were not. Central to her Honour's reasoning was a perceived limitation on the scope of the clause resulting from the words "under this deed". Accordingly, whilst the substantive claims may be the subject of arbitration, the validity claims are to be determined by the court under the proviso to s 8(1) of the NSW Act. The Full Court (Allsop CJ, Besanko and O'Callaghan JJ) disagreed with the primary judge's construction of cl 20 of the Hope Downs Deed, holding that it should be given a liberal, not a narrow, interpretation6. The Full Court stayed the proceedings, permitting the arbitrator to deal with all issues, including validity. When regard is had to the context of the Deeds, including the circumstances in which they were made as reflected in the text of the Deeds, it is apparent that the conclusion reached by the Full Court that the validity claims fell within the scope of the arbitral clauses is correct. The reasons of the Full Court A significant part of the Full Court's reasons was taken up with arguments as to the approach taken by the House of Lords to the construction of arbitral Commercial Arbitration Act 2011 (Vic); Commercial Arbitration Act 2012 (WA); Commercial Arbitration Act 2013 (Qld); Commercial Arbitration Act 2017 (ACT). 5 NSW Act, s 16. 6 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 489 [166]-[167], Nettle Gordon clauses in Fiona Trust & Holding Corporation v Privalov7. This was understandable, given the way in which the matter had been dealt with by the primary judge. But, as will be explained, these appeals can be resolved in the application of orthodox principles of interpretation, which require consideration of the context and purpose of the Deeds, without reference to Fiona Trust. Fiona Trust In Fiona Trust the House of Lords was referred to cases which had considered various forms of wording in arbitral clauses. As noted by Lord Hoffmann8, with whom the other Law Lords agreed, some drew a distinction between disputes "arising under" and those "arising out of" agreements. Some held that disputes which arise "under" the contract concern only rights and obligations which are created by the contract itself, whereas disputes "arising out of" refer to a wider class. On the other hand, it had been held that a clause in an insurance policy submitting disputes "arising thereunder" to a foreign jurisdiction was wide enough to extend to the question whether the contract could be avoided for non-disclosure9. In yet another case judges expressed the view that they could not see the difference between the two phrases10. Lord Hoffmann was of the view that the distinctions made in those cases "reflect[ed] no credit upon English commercial law"11. He considered that the time had come to "draw a line under the authorities to date" and "make a fresh start"12. In his Lordship's view, the construction of an arbitral clause should "start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal"; and that the clause should be construed in accordance with that presumption "unless the [2007] 4 All ER 951 ("Fiona Trust"). 8 Fiona Trust [2007] 4 All ER 951 at 957-958 [11]. 9 Mackender v Feldia A G [1967] 2 QB 590. 10 Union of India v E B Aaby's Rederi A/S [1975] AC 797 at 814 per Viscount Dilhorne, 817 per Lord Salmon. 11 Fiona Trust [2007] 4 All ER 951 at 958 [12]. 12 Fiona Trust [2007] 4 All ER 951 at 958 [12]. Nettle Gordon language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction"13. The approach adopted in Fiona Trust may not assume so much importance for courts in the future given the likelihood that arbitral clauses such as the UNCITRAL Arbitration Clause in different and arguably wider terms are now recommended for use by commercial parties. In any event it is unnecessary to consider the correctness of the approach in Fiona Trust. It is clear that the arbitral clauses in the Deeds, construed in context, include as their subjects the validity claims raised by the appellants. Rinehart v Welker Before leaving the decision in Fiona Trust, however, it is necessary finally to note that the primary judge eschewed14 the approach in Fiona Trust in favour of the construction of the arbitral clauses in the Deeds advanced by the Court of Appeal of the Supreme Court of New South Wales in Rinehart v Welker15. Her Honour considered it to be determinative of the meaning to be given to the words "under this deed". That case concerned proceedings brought by Ms Rinehart, Mr Hancock and their sister Ms Welker, seeking information about the trusts and orders under the Trustees Act 1962 (WA) including the removal of Mrs Rinehart as trustee. An application to stay the proceedings was brought to enforce the arbitral clauses in the same Deeds the subject of these proceedings. Bathurst CJ (Young JA agreeing) held that the approach adopted in Fiona Trust is contrary to the approach taken to the construction of commercial contracts in Australia16. Bathurst CJ said the phrase "under this deed" has consistently been given a narrower meaning17. A dispute is "under" a deed if its outcome is governed or controlled by the deed or invokes some right created by 13 Fiona Trust [2007] 4 All ER 951 at 958 [13]. 14 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 424-425 [583]-[584]. 15 (2012) 95 NSWLR 221. 16 Rinehart v Welker (2012) 95 NSWLR 221 at 247 [121] . 17 Rinehart v Welker (2012) 95 NSWLR 221 at 248 [123]. 18 Rinehart v Welker (2012) 95 NSWLR 221 at 248-249 [125]. Nettle Gordon Applying that approach, the primary judge reasoned that the existence of a dispute "under" the Hope Downs Deed depends on the existence of the deed itself. The Hope Downs Deed cannot be said to govern or control the outcome of a dispute about its validity19. Nevertheless, as the Full Court recognised, Fiona Trust was not critical to the resolution of these appeals. It is unnecessary to consider, or rely upon, Fiona Trust, or the observations of Bathurst CJ in Rinehart v Welker concerning Fiona Trust, to dispose of these appeals. The background to and purpose of the Deeds As the Full Court concluded: "[c]ontext will almost always tell one more about the objectively intended reach of such phrases than textual comparison of words of a general relational character"20. There may be cases which have to be resolved largely, if not entirely, by reference to the language of the arbitral clause in question. But this is not such a case. The background to and the purposes of the Deeds, as reflected in their terms21, point clearly to arbitral clauses of wide coverage with respect to what was to be the subject of confidential processes of dispute resolution. The Full Court treated the context and purposes for which the Deeds were made as important to their construction. Their Honours identified the context for the making of the Deeds as the growing number of claims being made. One of the fundamental purposes of the Deeds, their Honours said, was the quelling of 19 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 436 [645]. 20 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 496 [193]. 21 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348, 352 per Mason J; [1982] HCA 24; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11] per Gleeson CJ, Gummow and Hayne JJ; [2001] HCA 70; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at 52-53 [10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; [2002] HCA 5; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 35; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 178-179 [38] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 52; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656 [35] per French CJ, Hayne, Crennan and Kiefel JJ; [2014] HCA 7. Nettle Gordon disputes about the title to assets, which was of great commercial importance to the prospective arrangements with a joint venturer22. We respectfully agree. It is necessary to consider each of the Deeds in further detail. The Deed of Obligation and Release The background to the Deed of Obligation and Release was investigations undertaken by Mr Hancock around 2003, or perhaps earlier, and the possibility he had raised of commencing litigation against Mrs Rinehart. In October 2004 Mr Hancock's solicitors sent a copy of an affidavit by him, unsworn, which contained many of the allegations concerning wrongful conduct on the part of Mrs Rinehart as trustee which now form part of the substantive claims. Mr Hancock's unsworn affidavit and correspondence entered into leading up to the execution of the Deed of Obligation and Release refer to proposals to buy Mr Hancock's interests in the HMH Trust or achieve some kind of settlement. In March 2005 Mrs Rinehart commenced proceedings in the Supreme Court of Western Australia seeking her discharge as trustee of the HMH Trust and the appointment of her nominee. In April 2005 Mr Hancock signed the Deed of Obligation and Release together with a deed of loan. The recitals to the Deed of Obligation and Release referred to "[s]erious and substantial differences" which had arisen between Mr Hancock and the Hancock Group which were to be settled. Mr Hancock was the sole covenantor to the deed. The other signatories included Mrs Rinehart, in various capacities, HPPL, HFMF, and Mr Hancock's sisters. The effect of the deed was the provision of releases and discharges by him to the other parties. They were expressed in wide terms which included the abandonment of any claims and a covenant not to make further claims or bring proceedings. In return Mr Hancock was to receive certain payments, a loan repayable on the vesting of the HMH Trust and certain other benefits. At the time the Deed of Obligation and Release was entered into it was known to all the parties to it that a joint venture between the Hancock Group and the Rio Tinto group of companies concerning the Hope Downs Tenements ("the Joint Venture") was being negotiated. It is to be inferred from the recitals to the deed, as the Full Court observed23, that it was considered necessary to stabilise the question of claims to ownership of tenements to provide a safe foundation for 22 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 498 [203]. 23 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 459 [64]. Nettle Gordon what was to be a long-term commercial venture. The parties to the deed acknowledged that "the primary nature of the HPPL business, is very long-term, complex, large-scale mining projects … necessitat[ing] long term consistent business plans, and many dealings with third parties on a strictly confidential basis". Confidentiality was plainly a serious concern at this point. The recitals referred to Mr Hancock's use of "sensationalist media" to publicise his claims and the potential for him "to negatively seek exposure with the public or with the media" particularly during periods of negotiation. HPPL and the Hancock Group were desirous of obtaining undertakings from him to "wholly retract, cease and desist from any such activities now and in the future". Accordingly, the HPPL board had resolved that the payments to Mr Hancock provided for in the deed were necessary "to protect the confidential nature of information". The recitals bear out the primary judge's findings24 that the deed was intended to address the risk of commercial damage to HPPL and the Hancock Group by public statements which might be made by Mr Hancock and the risk of disclosure of confidential information. These are circumstances which bespeak the object of cl 14 in providing for confidential mediation and arbitration of "all disputes hereunder". The resolution of them was to be non-public and confidential. In this respect it is to be observed that whilst the Deeds were commercial arrangements and concerned claims concerning commercial dealings, the disputes also involved members of a family. That, too, is consistent with the need for confidentiality. It is also of relevance to the background to and provisions made in the Hope Downs Deed that, by cl 11 of the Deed of Obligation and Release, Mr Hancock acknowledged that he had received independent advice "on all matters relating to or which are the subject of this Deed" and that he acted wholly without duress – notwithstanding that he was to assert the contrary soon thereafter. The Hope Downs Deed The Joint Venture was announced in July 2005. Co-operation agreements were signed by the parties. Shortly after the announcement of the Joint Venture, a newspaper in Western Australia published an article in which Mr Hancock was said to be pressing ahead with his "legal claim" against his mother after the Hope Downs "deal" was completed. Mr Hancock through his solicitors gave notice of his intention to become a party to the proceedings brought by his mother with 24 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 382 [328]. Nettle Gordon respect to the HMH Trust and said that he considered himself to be free of the releases given by the Deed of Obligation and Release because they were the product of undue influence. In September 2005 he filed an affidavit in those proceedings in which he alleged that his mother had committed "grave breaches of trust". That affidavit exhibited a later version of the unsworn affidavit referred to earlier, which raised allegations about Mrs Rinehart's extraordinary exertion of control and influence over Mr Hancock and others. In March 2006 the Hope Downs Joint Venture Agreement ("the Joint Venture Agreement") was executed. Correspondence between HPPL and Mr Hancock in March and April 2006 evidences an ongoing dispute between him and Mrs Rinehart and HPPL. In August 2006 the Hope Downs Deed was signed by Ms Rinehart and her two sisters, Mrs Rinehart, HPPL and other parties. Mr Hancock was not a party to it but later adopted it by the April 2007 Deed. A purpose of the Hope Downs Deed, the Full Court observed, was to quell disputes as to title concerning the mining tenements, especially the Hope Downs Tenements. The parties to the Hope Downs Deed acknowledged that the Hancock Group interests, including the Hope Downs Tenements, had always been beneficially owned by HPPL and are now owned by HPPL and another company, Hope Downs Iron Ore Pty Ltd ("HDIO"), which is referred to in greater detail later in these reasons. They acknowledged the obligations of the Hancock Group to finalise the required financing for the Joint Venture and they reaffirmed and ratified the Deed of Obligation and Release. The Hope Downs Deed contains releases from any "Claims", a term which was defined to include any claim of breach of fiduciary duty with respect to actions taken prior to the date of the deed and any claim made in the proceeding in the Supreme Court of Western Australia to which the HMH Trust and Mrs Rinehart are parties and Mr Hancock was seeking to be joined as a party and any claim made in Mr Hancock's draft affidavit. The parties undertook not to do anything which would have an adverse impact on the Hancock Group's interests including the Joint Venture, not to disparage, and not to challenge the rights of any party to the deed so far as concerns their interest in any of the companies in the Hancock Group or any trust in which they or any member of the Hancock Group is a beneficiary. They covenanted not to advance, encourage or assist or facilitate the institution or prosecution of any claim the subject of a release under the deed. In return for the releases and undertakings, HPPL agreed to pay dividends on a quarterly basis. The terms of the deed were to be kept confidential. Nettle Gordon Clause 20 of the Hope Downs Deed provided that in the event that there is "any dispute under this deed" the party disputing is to notify the other parties with whom there is a dispute and all other parties to the deed, and "the parties to this deed shall attempt to resolve such difference" in the manner provided. In the first place a confidential mediation was required to take place. If the parties could not agree upon a mediator, or the mediation was abandoned, a confidential arbitration was to take place. Provision was made for settling any disagreement about the appointment of arbitrators. The award of the arbitrator or arbitrators was to be non-appealable, conclusive and binding on the parties to the extent permitted by the law (cl 20.2(e)). By cl 12 each party acknowledged that the deed was entered into freely and without duress or undue influence. A similar provision had been made in the earlier deed, but the Hope Downs Deed went further. Each party also declared that he, she or it had obtained legal advice or waived the right to obtain it and this was to be confirmed in writing. Each of the children was required, on the execution of the deed, to provide a letter from a lawyer to the effect that he or she had advised the lawyer that he or she had read the deed, was executing it without duress or undue influence and has agreed to be bound to it irrespective of the "mother/child/beneficiary any employer/employee relationship with the Hancock Group. the HMH Trust aspects" and The April 2007 Deed With the execution of the Hope Downs Deed, all four of Mrs Rinehart's children had signed wide releases: Mr Hancock in the Deed of Obligation and Release and his three sisters in the Hope Downs Deed. However, Mr Hancock had shown that he was prepared to continue to challenge his mother by his actions in 2005 in the Supreme Court proceedings brought by Mrs Rinehart. Accordingly, Mrs Rinehart was anxious to have Mr Hancock commit to a settlement. This led to the April 2007 Deed. Recital B of the April 2007 Deed stated that the parties to the Hope Downs Deed wished to facilitate Mr Hancock becoming a party to the Hope Downs Deed. Clause 2 achieved that aim, providing that Mr Hancock "Covenants and Agrees with all and singular the parties hereof … that he will observe perform and fulfil all … terms … of the Hope Downs Deed". The meaning of cl 20 of the Hope Downs Deed Even on an approach which focuses only on the language of cl 20 it might be argued that the validity claims are disputes "under" the deed. The question whether the substantive claims are the subject of releases and covenants may be Nettle Gordon seen to depend upon the question whether the validity claims are available and if so whether they are made out. And the challenges to validity may depend upon the effect given to the acknowledgment in the Deeds concerning duress, undue influence and the receipt of legal advice. This is a further example of how the substantive claims and the validity claims are intertwined in these appeals. It is well established that a commercial contract should be construed by reference to the language used by the parties, the surrounding circumstances, and the purposes and objects to be secured by the contract25. It could not have been understood by the parties to these Deeds that any challenge to the efficacy of the Deeds was to be determined in the public spotlight. Especially is this so with respect to the Hope Downs Deed. The Hope Downs Deed was an attempt to put to rest the issues regarding ownership of property which had motivated Mr Hancock in the first place. Although the Joint Venture Agreement had been signed by this time, the Hancock Group of companies were undertaking negotiations for financing it in accordance with their contractual obligations. The need for commercial confidence remained. Accordingly, a critical object of the Hope Downs Deed was the maintenance of confidentiality about the affairs of the Hancock Group, the trusts, the intra-family dispute and the provisions of the Deeds themselves. This object could not be clearer. Contrary to the submissions for the appellants, the parties were indeed agreeing to avoid public scrutiny. The fact that the claims made by Mr Hancock involve the administration of trusts does not affect the meaning persons in the parties' position must have understood the arbitral clause to have. By the time the Hope Downs Deed was executed, Mr Hancock had shown that he was intent on pursuing claims respecting the trusts. It was more than possible that he might challenge the Hope Downs Deed as he had done with respect to the Deed of Obligation and Release. This in large part explains the requirements of cl 12, including that as to lawyers' assurances, which were addressed to the possibility of a dispute about the validity of the deed. A person in the position of the parties to the Hope Downs Deed would have appreciated that disputes might once again arise, not only with respect to the claims made by Mr Hancock concerning the trusts but also concerning the 25 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35] per French CJ, Hayne, Crennan and Kiefel JJ. Nettle Gordon validity of the deed. It is inconceivable that such a person would have thought that claims of the latter kind, raising allegations such as undue influence, were not to be the subject of confidential dispute resolution but rather were to be heard and determined publicly, in open court. The meaning of cl 14 of the Deed of Obligation and Release The same may be said of the Deed of Obligation and Release. The Deed of Obligation and Release was brought about by Mr Hancock's public statements, which were considered to have the potential to cause damage to the commercial interests of the Hancock Group. The need to avoid this and to ensure the confidentiality of information was critical because of the Joint Venture which was then being negotiated, which would have long-term implications for the Hancock Group. The evident object of the deed was to ensure that there was no further public airing of the claims made by Mr Hancock. It is inconceivable that a party to the deed could have thought that any challenge to it would be determined publicly, in court. Orders on the appeals The appeals should be dismissed with costs. Applications for leave to intervene and to be heard as amicus curiae At the outset of the hearing of these appeals the Court confirmed that the Australian Centre for International Commercial Arbitration Limited had been granted leave to file written submissions as amicus curiae but that the applications by Wright Prospecting Pty Ltd ("WPPL") to intervene in the proceedings had been refused. These are the reasons for that refusal. WPPL brought actions against HPPL and HDIO in the Supreme Court of Western Australia in which it claimed royalties payable on iron ore from the Hope Downs mine and a legal interest in the Hope Downs Tenements. Because the appellants alleged that certain of the Hope Downs Tenements form part of the trust assets of the HFMF Trust, of which they and their siblings are beneficiaries, WPPL joined them as necessary parties to the proceedings. HPPL and HDIO applied for orders under s 8(1) of the Commercial Arbitration Act 2012 (WA) ("the WA Act"), which is in the same terms as s 8(1) of the NSW Act, for a stay of those proceedings on the basis that whilst WPPL is not a party to the Hope Downs Deed, it claims "through or under" HPPL and therefore fell within the extended definition of "party" in s 2(1) of the WA Act. The application was adjourned pending the determination of the Full Court in the proceedings below and remains adjourned. Nettle Gordon WPPL was granted leave to intervene before the Full Court on a limited basis, to argue that each of HDIO and two other companies are not a "party" as defined by s 2(1) of the NSW Act. That issue is addressed by the respondents to the proposed cross-appeal. There is therefore no need for further submissions from WPPL on that point. WPPL also seeks to make submissions about the construction of cl 20 of the Hope Downs Deed, to the effect that the substantive claims are not within its scope. It seeks to do so because, if that is correct, much of the basis for HPPL's and HDIO's stay application in WPPL's proceedings falls away. It points out that there is no submission put to the Court on this point. The submission overlooks the reason that is so: there is no issue before this Court as to the substantive claims and cl 20. Special leave was confined to whether the validity claims fell within the scope of that clause. Further, the reason for WPPL's intervention does not accord with the basis upon which leave to intervene will be granted, namely when a person's legal interest in, for example, pending proceedings is likely to be substantially affected by the outcome of the proceedings26. WPPL asserts this as the basis for its intervention, but in reality the principal effect with which it is concerned is the potential for its proceedings to be delayed, which does not rise to the level of a substantial effect. The cross-appeal The sixth, seventh and eighth respondents, Roy Hill Iron Ore Pty Ltd ("RHIO"), HDIO and Mulga Downs Iron Ore Pty Ltd ("MDIO") ("the third party companies"), cross-appeal in proceeding S143 of 2018 and seek, pursuant to s 8 of the NSW Act, to stay claims brought against them by the appellants. They are not parties to the Deeds and in this Court they confined their submissions on the cross-appeal to the arbitration agreement in the Hope Downs Deed because that deed contains releases, acknowledgements and covenants on which they seek to rely. At first instance each of them applied27 to the primary judge for an order that the claims made against them be referred to arbitration pursuant to s 8(1) of the NSW Act on the basis that each of them is a person claiming "through or 26 Roadshow Films Pty Ltd v iiNet Ltd [No 1] (2011) 248 CLR 37 at 38-39 [2]-[3]; [2011] HCA 54. 27 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 414 [518]. Nettle Gordon under" a party to the Hope Downs Deed, and, therefore, is a party within the definition of "party" in s 2(1) of the NSW Act. That definition is as follows: "party means a party to an arbitration agreement[28] and includes: any person claiming through or under a party to the arbitration agreement, and in any case where an arbitration does not involve all of the parties to the arbitration agreement, those parties to the arbitration agreement who are parties to the arbitration." (emphasis added) In brief substance, the appellants' claim against the third party companies is that HPPL received the Roy Hill Tenements and the Hope Downs Tenements and, indirectly through HRL, the Mulga Downs Tenement as a knowing participant in Mrs Rinehart's alleged fraudulent and dishonest design, breaches of trust and breaches of fiduciary duty; that HPPL and HRL thereafter transferred those tenements to RHIO, HDIO and MDIO respectively, in breach of trust; and that each of RHIO, HDIO and MDIO received the tenements so assigned with knowledge of the breach of trust, with the result that they now hold the tenements as constructive trustees for the appellants. The third party companies contend that they are claiming through or under HPPL and HRL, and therefore are parties to the arbitration agreement in the Hope Downs Deed, because it is an essential element of their defence to the appellants' claims that HPPL and HRL were beneficially entitled to the tenements, and further or alternatively that HPPL and HRL obtained releases under that deed, to the benefit of which the third party companies are entitled as assignees of the tenements. The primary judge rejected the third party companies' application29. The Full Court upheld30 the rejection of the third party companies' application, primarily on the bases31 that in order for a defence to qualify as a defence claimed through or under a party it must generally be a "derivative defence"; that the third party companies' invocation of HPPL's and HRL's releases and other 28 The definition and form of "arbitration agreement" is provided for in s 7 of the NSW Act. 29 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 417 [535], 418 [540], [541]. 30 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 522-523 [323]. 31 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [317]. Nettle Gordon covenants in the relevant deeds was not a derivative defence "in the ordinary sense of that term"; and that the third party companies' invocation of HPPL's and HRL's releases was not an essential element of the third party companies' defences. The Full Court added32 that there was no legal relationship between HPPL or HRL and the third party companies "relevant to the defence" and, in any event, as no defences had been filed33, it was not certain that the third party companies would plead those defences. For the reasons which follow, the third party companies' application for leave to cross-appeal should be granted and the cross-appeal should be allowed. The Full Court's reasoning In this country, the leading authority as to the meaning of "through or under" in its application to s 8 of the NSW Act is this Court's decision in Tanning Research Laboratories Inc v O'Brien34. In this matter, the Full Court reasoned according to what their Honours perceived Tanning Research to have decided. The reasoning of the Full Court proceeded by four steps, as follows. The first was to identify35 what their Honours described as the "critical passage" in the joint judgment of Brennan and Dawson JJ in Tanning Research, "In the first place, as sub-s (2) speaks of both parties to an arbitration agreement, a person who claims through or under a party may be either a person seeking to enforce or a person seeking to resist the enforcement of an alleged contractual right. The subject of the claim may be either a cause of action or a ground of defence. Next, the prepositions 'through' and 'under' convey the notion of a derivative cause of action or ground of defence, that is to say, a cause of action or ground of defence derived from the party. In other words, an essential element of the cause of action or defence must be or must have been vested in or exercisable by 32 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [317]. 33 See Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 514 [290]. 34 (1990) 169 CLR 332; [1990] HCA 8. 35 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 519-520 [309]. 36 (1990) 169 CLR 332 at 342. Nettle Gordon the party before the person claiming through or under the party can rely on the cause of action or ground of defence[37]. A liquidator may be a person claiming through or under a company because the causes of action or grounds of defence on which he relies are vested in or exercisable by the company; a trustee in bankruptcy may be such a person because the causes of action or grounds of defence on which he relies were vested in or exercisable by the bankrupt." The second was to consider38 the submission put to the Full Court that the liability of a knowing assistant or knowing recipient is "not indirect or derivative". The Full Court continued39: "Although a knowing assistant or recipient's liability may be described as accessorial liability, that only means that an element of the liability is a breach of fiduciary duty. As the [appellants] correctly submitted, these propositions in the case of a knowing assistant are supported by the decision of the High Court in Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [100]-[106] per Gummow A-CJ, Hayne, Crennan and Bell JJ. We agree with the [appellants] that there is no reason why a similar analysis does not apply in the case of a knowing recipient. In our opinion, the nature of a knowing recipient's liability does support the conclusion that the third party companies are not claiming through or under the defaulting fiduciaries." That led the Full Court to conclude40 that the third party companies did not have a derivative defence "in the ordinary sense of that term". The third step was to acknowledge that the notion of claiming through or under a party is not limited to cases of assignment or transfer, but to say that it was beside the point because the only relationship between HDIO, RHIO and MDIO and the party to the Hope Downs Deed under or through whom they purported to claim was not a "legal relationship" but "purely factual"41: 37 The emphasis is that of the Full Court. 38 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [316]. 39 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [316]. 40 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [317]. 41 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [317]. Nettle Gordon "We recognise that the cases have made it clear that the extended definition of 'party' is not restricted to cases where there has been an assignment or other means of transfer, but it is relevant that there is no legal relationship between the party to the arbitration agreement and the third party companies relevant to the defence. The fact that they are related parties might explain why the transfer of property took place, but is in itself not sufficient. The only relationship is purely factual, being the transfer of the property from a party to an arbitration agreement to a third party company." The fourth step was to reject that the covenants and releases in the Hope Downs Deed were an essential element in the third party companies' defences, on the basis that the third party companies were not "bound" to raise those releases and covenants as a defence42: "[W]e do not consider that the releases and other covenants in the deeds are an essential element of the defences of a party to the arbitration agreements and of the third party companies in the relevant sense. It may be accepted that, as a matter of fact, they are highly likely to raise the defences, but they are not bound to do so. A defaulting fiduciary and a knowing recipient may raise different defences". The Full Court's reasoning should be rejected. Beginning with the first and second steps of it, it should be understood that, although Brennan and Dawson JJ stated at one point in their reasons in Tanning Research that "through" and "under" convey the notion of a derivative cause of action or ground of defence, their Honours' ultimate formulation of the test was, relevantly, whether an essential element of the defence was or is vested in or exercisable by the party to the arbitration agreement. That accorded to the protean quality of the phrase "through or under" and their Honours' view43 that its meaning was to be "ascertained not by reference to authority but by reference to the text and context of" the provision in which it appeared44. When their Honours' judgment is properly understood in that way, it will be seen that the 42 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 521 [317]. 43 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 342. 44 See also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 128 [96] per Kiefel and Keane JJ; [2015] HCA 37. Nettle Gordon relevance of the observation45 of the plurality in Michael Wilson that a knowing assistant's liability "depends upon establishing … that there has been a breach of fiduciary duty by another" – an observation that applies mutatis mutandis to a knowing recipient – is that, putting aside any debate as to whether the liability of a knowing recipient is to be characterised as "accessorial", the statutory conception of "claiming through or under" applies to an alleged knowing recipient of trust property who invokes as an essential element of its defence that the alleged trustee was beneficially entitled to the subject property. To similar effect, but more explicitly, Deane and Gaudron JJ reasoned that whether a party to proceedings is advancing a defence through or under a party to an arbitration agreement is necessarily to be answered by reference to the subject matter in controversy rather than the formal nature of the proceedings or the precise legal character of the person initiating or defending the proceedings46: "To ascertain whether s 7(2) [of the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth)] operates in respect of proceedings pending in a court it is necessary to first identify the subject matter of the controversy which falls for determination in those proceedings. Only when that has been done is it possible to identify whether the proceedings 'involve the determination of a matter … capable of settlement by arbitration': s 7(2)(b). That process of identification is also necessary to ascertain whether, if a party to the proceedings is not a party to the arbitration agreement, he or she is a person 'claiming through or under a party': s 7(4)." (emphasis added) Further, as Deane and Gaudron JJ went on to explain, it is unnecessary that the issues that the defence puts in controversy in the proceedings be limited to the matter capable of settlement by arbitration. The two need not be co- extensive. It is sufficient that the defence puts in issue, among other things, some right or liability which is susceptible of settlement under the arbitration agreement as a discrete controversy47: "By requiring that the proceedings or so much of the proceedings as involves the determination of a matter capable of settlement by arbitration 45 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 457 [106] per Gummow A-CJ, Hayne, Crennan and Bell JJ; [2011] HCA 48. 46 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 350, 353. 47 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 351-352. Nettle Gordon be stayed, s 7(2) clearly contemplates that the proceedings may encompass issues additional to those constituting 'a matter … capable of settlement by arbitration'. … The word 'matter' is not defined in the Act. … In the context of s 7(2), the expression 'matter … capable of settlement by arbitration' may, but does not necessarily, mean the whole matter in controversy in the court proceedings. So too, it may, but does not necessarily encompass all the claims within the scope of the controversy in the court proceedings. Even so, the expression 'matter … capable of settlement by arbitration' indicates something more than a mere issue which might fall for decision in the court proceedings or might fall for decision in arbitral proceedings if they were instituted. … It requires that there be some subject matter, some right or liability in controversy which, if not co-extensive with the subject matter in controversy in the court proceedings, is at least susceptible of settlement as a discrete controversy. The words 'capable of settlement by arbitration' indicate that the controversy must be one falling within the scope of the arbitration agreement and, perhaps, one relating to rights which are not required to be determined exclusively by the exercise of judicial power. … The substance of the controversy between TRL and the liquidator is the amount, if any, enforceable as a debt for goods sold and delivered to Hawaiian under the licence agreement. That controversy is susceptible of settlement as a discrete controversy. And, when stated in those terms, the controversy is readily seen as one arising out of or relating to the licence agreement and thus encompassed within the agreement to arbitrate contained in cl 10."48 Turning to the third step of the Full Court's reasoning, it is unclear what their Honours meant in describing the relationship between the third party companies and any party to the arbitration agreement as "purely factual" as opposed to "legal". Presumably, it was intended to emphasise that the third party companies are not privy to the arbitration agreement. But for present purposes, that is beside the point. Relevantly, as has been seen, the allegation against the 48 See also Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 105-106 [235], 107 [238] per Allsop J; Autoridad del Canal de Panamá v Sacyr SA [2017] 2 Lloyd's Rep 351 at 376-377 [125]-[127]; cf City of London v Sancheti [2009] 1 Lloyd's Rep 117 at 121 [29] per Lawrence Collins LJ (Richards LJ and Laws LJ agreeing at 123 [40], [41]). Nettle Gordon third party companies is that they took the mining tenements as assignees from a party to the arbitration agreement (HPPL or HRL) with knowledge that the tenements had been assigned to HPPL or HRL in breach of trust. The third party companies admit that they took the tenements as assignees from HPPL and HRL. The controversy is as to whether HPPL and HRL were beneficially entitled to the mining tenements and so free to assign the mining tenements to the third party companies without breach of trust. The first and potentially determinative issue is, therefore, whether HPPL and HRL were beneficially entitled to the mining tenements. That is a discrete matter of controversy capable of settlement by arbitration under the arbitration agreement and, as between the appellants and HPPL, has been referred to arbitration in accordance with the Hope Downs Deed49. There is then the fourth step of the Full Court's reasoning: that the releases and other covenants in the Deeds are not to be regarded as an essential element of the defences of a party to the arbitration agreements and of the third party companies in the relevant sense because, although the third party companies are "highly likely" to raise the defences, they are not bound to do so. That is not so either. It is not a case of the third party companies being "highly likely" to raise the defences. The third party companies have raised the defences. The application for stay of the proceedings was made on the basis that the third party companies raised the defences and therefore that the proceedings as against them should be stayed and the issue raised by the defences referred to arbitration. It is true that the third party companies had not filed and served a defence at the time of making application. But, as counsel for the third party companies submitted, that was due to the requirement for the third party companies to make application for stay under s 8 of the NSW Act no later than making their first statement on the dispute. The primary judge did not consider50 it necessary to formalise the controversy by ordering that the third party companies file their defences before the determination of the stay application (although her Honour could have and probably should have done so). Nor did any party suggest before the primary judge or in argument before the Full Court that the third party companies had not invoked the defences in a manner in which they could be relied upon. Rather, as the parties had proceeded on the assumption that HPPL, HRL and Mrs Rinehart denied every material allegation 49 cf nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790 at [45]. 50 Rinehart v Rinehart [No 3] (2016) 257 FCR 310 at 360 [169]. Nettle Gordon of wrongdoing51, the matter was argued as if the defences had been raised. Indeed, the appellants had anticipated that the releases and covenants not to sue in the Deeds would be raised in defence to the claims, and so challenged the validity of the Deeds in their statement of claim, albeit in effect by way of reply52. And, if there were any doubt about it (which there was not), the order for stay could have been conditioned on the issue being referred to arbitration and the third party companies undertaking to use all reasonable endeavours to In Tanning Research, Brennan and Dawson JJ reasoned as follows54: "A liquidator who resists a claim made by a creditor against the assets available for distribution on the ground that there is no liability under the general law thus stands in the same position vis-à-vis the creditor as does the company. If the creditor and the company are bound by an international arbitration agreement applicable to the claim, there is no reason why the claim should not be determined as between the creditor and the liquidator in the same way as it would have been determined had no winding up been commenced. To exclude from the scope of an international arbitration agreement binding on a company matters between the other party to that agreement and the company's liquidator would give such agreements an uncertain operation and would jeopardize orderly arrangements: see Scherk v Alberto-Culver Co55." Likewise here, where an assignee of mining tenements is alleged to have taken the assignment with knowledge that the tenements were held by the assignor upon trust for the claimant and assigned to the assignee in breach of trust, and the assignee contests the claim on the ground that there was no breach of trust or if there were that, by reason of a deed of settlement, the assignor was absolved of responsibility for the breach of trust, the assignee takes its stand upon a ground which is available to the assignor and stands in the same position 51 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 448 [3]-[4]. 52 See Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 506 [245]. 53 See, eg, Flint Ink NZ Ltd v Huhtamaki Australia Pty Ltd (2014) 44 VR 64 at 74 [41] per Warren CJ, 92 [118] per Nettle JA. 54 (1990) 169 CLR 332 at 342-343. (1974) 417 US 506 at 516-517. Nettle Gordon vis-à-vis the claimant as the assignor. Accordingly, since the assignor and the claimant are bound by an arbitration agreement applicable to the claim of breach of trust, there is no good reason why this claim should not be determined as between the claimant and the assignee in the same way as it will be determined between the claimant and the assignor. To exclude from the scope of the arbitration agreement binding on the assignor matters between the other party to that agreement and the assignee would give the arbitration agreement an uncertain operation. It would jeopardise orderly arrangements, potentially lead to duplication of proceedings and potentially increase uncertainty as to which matters of controversy are to be determined by litigation and which by arbitration. And ultimately it would frustrate the evident purpose of the statutory definition. It should be concluded that the third party companies are persons claiming through or under HPPL or HRL and, therefore, are parties within the meaning of s 8 of the NSW Act. In England, it appears still to be doubted that a non-party invoking a defence dependent on the position of a party to an arbitration agreement should be recognised as a person claiming through or under that party56: the suggestion being that the only defensible approach would be to stay an action brought against the party to the arbitration agreement in favour of arbitration and then decide whether in all the circumstances it would be just to order a stay against the non-party. That doubt in England stems from the reasoning in Roussel-Uclaf v G D Searle & Co Ltd57, referred to in the reasons of Brennan and Dawson JJ in Tanning Research58, and the subsequent English cases that have treated59 Roussel-Uclaf as holding that a "mere legal or commercial connection" between 56 See Joseph, Jurisdiction and Arbitration Agreements and their Enforcement, 3rd ed (2015) at 233-234 [7.50]. See generally Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 at 837 [105]-[106] per Lord Collins of Mapesbury JSC. 57 [1978] 1 Lloyd's Rep 225. 58 (1990) 169 CLR 332 at 341-342. 59 See, eg, Alfred McAlpine Construction Ltd v Unex Corporation Ltd (1994) 38 Con LR 63; Grupo Torras SA v Al-Sabah [1995] 1 Lloyd's Rep 374; City of London v Sancheti [2009] 1 Lloyd's Rep 117. Nettle Gordon a parent company and subsidiary is a sufficient basis for the subsidiary to claim "through or under" the parent60. For present purposes, two points only need be made. In Roussel-Uclaf, Graham J did not suggest that a "mere legal or commercial connection" between the parent company and the subsidiary was sufficient for the subsidiary to claim "through or under" the parent. Rather, as Mance J61 characterised the ratio of Roussel-Uclaf in Grupo Torras SA v Al-Sabah, it was that a licence agreement was central to the issues against both the parent company and subsidiary and the position of the subsidiary depended on the entitlement of the parent company under the licence agreement. Secondly, if the parent company were blameless under the licence agreement, the subsidiary as purchaser from the parent would be equally blameless, and, therefore, by invoking the parent company's averred blamelessness under the licence agreement, the subsidiary was "claiming through or under" the parent company. Understood in that way, the approach taken in Roussel-Uclaf accords with the Tanning Research test. Four things remain to be mentioned. First, Edelman J observes in his dissenting judgment on the cross-appeal that the position of the third party companies is comparable to that of guarantors. The analogy is inapt. This is not a case of a creditor attempting to bind a guarantor to admissions, or an arbitration between creditor and principal debtor, by which the guarantor has not agreed to be bound62. This is a matter in which the defendant third party companies claim a defence through or under parties to an arbitration agreement – that those parties were beneficially entitled to mining tenements which they assigned to the defendant third party companies – in circumstances where the appellants agreed with those parties to the arbitration agreement that any dispute as to those parties' beneficial title to the mining tenements would be determined by arbitration. And although there is no privity of contract as such between the defendant third party companies and the appellants, it is not in any sense exceptionable that the defendant third party companies are entitled to hold the appellants to an arbitration agreement by which the appellants agreed with the defendant third party companies' predecessors in title that the appellants would be bound. The statutory expansion of privity effected by the extended definition of "party" in 60 City of London v Sancheti [2009] 1 Lloyd's Rep 117 at 121-122 [30]-[34] per Lawrence Collins LJ (Richards LJ and Laws LJ agreeing at 123 [40], [41]). 61 [1995] 1 Lloyd's Rep 374 at 451. 62 cf Ex parte Young; In re Kitchin (1881) 17 Ch D 668. Nettle Gordon s 2(1) of the NSW Act accords with the precept that a claimant who takes the benefit of an agreement must accept "the burden of [its] stipulated conditions"63. Secondly, whether Tanning Research applies to contracts of guarantee is not an issue that arises in this matter and it was not the subject of argument. Nor is there any question here more generally of whether, in cases involving more than one contract, a defendant's purported reliance on an arbitral clause in a contract to which the defendant is not party is precluded by the absence of an arbitral clause from the contract to which it is party. It might be (although it need not now be decided) that the nature of a contract of guarantee is such of itself to preclude a guarantor invoking an arbitration agreement between creditor and principal debtor, and so preclude the application of Tanning Research to contracts of guarantee. Suffice it to say for present purposes that contracts of guarantee and possibly other securities raise special considerations that do not apply to claims of the kind in issue. When and if the appropriate case arises, the application of Tanning Research to guarantees and other securities may be considered with the benefit of full argument and a thorough examination of the English decisions regarding guarantees to which Edelman J refers. It should also be understood that no party made submissions regarding the wider and complex issues of arbitral consent and privity and third party claims more generally, still less submissions regarding how different jurisdictions have approached such issues64 and how comparative the Australian framework. Consistently with the common law imperative of incremental development of the law on a case by case basis, attempts to resolve issues raising separate considerations capable of discrete controversy must be eschewed as beyond the boundaries of the resolution of the question of law raised on the cross-appeal. jurisprudence bears upon Thirdly, the third party companies do assert the rights of HPPL and HRL, as established or confirmed by the Hope Downs Deed, to pass HPPL's and HRL's beneficial title to the mining tenements to the third party companies, free and 63 See and compare Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 588-589 [57] per Gummow, Hayne and Kiefel JJ; [2008] HCA 57. 64 See and compare Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763; Gouvernement du Pakistan – Ministère des Affaires Religieuses v Société Dallah Real Estate and Tourism Holding Company, Court of Appeal of Paris, 17 February 2011 (Case No 09/28533). Nettle Gordon clear of the appellants' claims of breach of trust65. In the language of Tanning Research, the rights of HPPL and HRL under the deed is an "essential element"66 of the third party companies' defences said to be vested in and exercisable by the parties to the deed and they are the "subject matter"67 of the controversy. Finally, Tanning Research was not decided on the basis that the liquidator was resisting enforcement of a duty owed by the company. Precisely because "a liquidator is not the company and legal title to the assets of the company is not vested in him", the liability immediately at issue in a proceeding to reverse or modify a liquidator's decision is a liability of the liquidator, albeit one that he or she is allowed to defend on grounds available to the company and to satisfy out of property of the company68. The statutory rights and duties of the liquidator in Tanning Research depended on, but could not be identified with, the contractual rights and duties of the insolvent company. For the reasons earlier stated, the recognition that the liquidator was claiming through or under the company is dispositive of this cross-appeal. Orders on the cross-appeal The third party companies' application for special leave to cross-appeal should be allowed. The cross-appeal should be treated as instituted and heard instanter and allowed. Orders 5, 6 and 8 of the orders of the Full Court made on 15 December 2017 should be set aside and, in their place, it should be ordered that: The orders of the Court made on 26 May 2016 be set aside and in that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further 65 cf [99] below. 66 (1990) 169 CLR 332 at 342 per Brennan and Dawson JJ. 67 (1990) 169 CLR 332 at 350 per Deane and Gaudron JJ. 68 (1990) 169 CLR 332 at 341 per Brennan and Dawson JJ. Nettle Gordon order, save and except for those claims made against Mulga Downs Investments Pty Ltd; and the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question of whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act. The claims made by the applicants in the underlying proceedings against Mulga Downs Investments Pty Ltd be stayed on the same terms as the stay in order 5. The first and second respondents pay the appellants' costs of appeal including the costs of the application for leave to appeal, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question as to whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act." The respondents to the cross-appeal should pay the cross-appellants' costs of the cross-appeal. Edelman EDELMAN J. I agree with the reasons in the joint judgment for refusing the applications for leave to intervene and for dismissing the appeals. Every clause in a contract, no less arbitration clauses, must be construed in context. No meaningful words, whether in a contract, a statute, a will, a trust, or a conversation, are ever acontextual. As the joint judgment in this Court explains, the Full Court of the Federal Court of Australia was correct to treat a fundamental purpose of the Deeds as the quelling of disputes about the title to important commercial assets69. That purpose is plain from the context of the Deeds. The context of the Deeds also reveals the importance to the parties of confidential resolution of such disputes, including validity disputes similar to those which the appellants submitted lay outside the scope of the arbitration agreements. This context requires that the words "any dispute under this deed" and "all disputes hereunder" be construed broadly to include the validity claims. For that reason, it is unnecessary in this case to consider the amount of additional weight that should be placed upon the usual consideration of context that reasonable persons in the position of the parties would wish to minimise the fragmentation across different tribunals of their future disputes70 by establishing "one-stop adjudication" as far as possible71. I have, however, reached a different conclusion from the joint judgment in relation to the cross-appeal. Whatever might be the effect of the principle of privity upon other issues in arbitration in jurisdictions without a classical commitment to privity72, or in jurisdictions where the contractual principle of privity has been altered by legislation73, the cross-appeal unavoidably and directly requires consideration of that principle in Australian law in the limited context of whether New South Wales legislation has required some persons who would not otherwise be parties to an arbitration agreement to sue, and be sued, 69 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 498 [203]. 70 Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951 at 958 [13]. 71 Openyd Ltd v G J Lawrence Dental Ltd [2018] NZHC 1618 at [33]. 72 See Mayer, "The Extension of the Arbitration Clause to Non-Signatories – The Irreconcilable Positions of French and English Courts" (2012) 27 American University International Law Review 831 at 836, discussing Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 and Gouvernement du Pakistan – Ministère des Affaires Religieuses v Société Dallah Real Estate and Tourism Holding Company, Court of Appeal of Paris, 17 February 2011 (Case No 09/28533). 73 Contracts (Rights of Third Parties) Act 1999 (UK). "The Contracts (Rights of Third Parties) Act 1999" (2004) 120 Law Quarterly Review 292 at 315-317. Edelman upon it. I conclude that the Parliament of New South Wales did not intend to depart from the principle of privity of contract by the use of the century-old formula concerning "claiming through or under a party", which had a long- standing meaning consistent with privity. In the reasons which follow, I adopt the same terminology as the joint judgment. The cross-appeal The cross-appeal concerns the extended meaning of "party" in s 2(1) of the Commercial Arbitration Act 2010 (NSW). That extended meaning includes "any person claiming through or under a party to the arbitration agreement". In my view, the Full Court was correct to conclude that the third party companies do not claim "through or under" HPPL and HRL74. To stretch the words of s 2(1), giving them a wide and liberal construction, would be antithetical to the global "fundamental principle that arbitration is a matter of contract"75 and, consequently, that "parties may specify with whom they choose to arbitrate their disputes"76. However laudable may be the pragmatic considerations of reducing expense and increasing convenience, there is no basis for an extended meaning of "party" in s 2(1) that would compel a third party to submit its independent claim or defence to arbitration77, without the third party having consented to the procedure, without an arbitrator to whose appointment the third party had consented78 in the exercise of its own "voice in the choosing of the 74 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 522 [323]. 75 Rent-A-Center West Inc v Jackson (2010) 561 US 63 at 67. See also Desputeaux v Éditions Chouette (1987) Inc [2003] 1 SCR 178 at 198 [22]; Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 at 810 [24], 837 [106]; Seidel v TELUS Communications Inc [2011] 1 SCR 531 at 545 [7]; TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 550 [17], 554 [29], 575 [108]-[109]; [2013] HCA 5; American Express Co v Italian Colors Restaurant (2013) 570 US 228 at 233. 76 Stolt-Nielsen S A v AnimalFeeds International Corp (2010) 559 US 662 at 683 (emphasis omitted). See also Equal Employment Opportunity Commission v Waffle House Inc (2002) 534 US 279 at 289, 293-294. 77 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 341; [1990] HCA 8, citing Bonnin v Neame [1910] 1 Ch 732 at 738. 78 Bonnin v Neame [1910] 1 Ch 732 at 738. Edelman arbitrators"79, and possibly by a reference to a legal system that would not have been chosen by and would not otherwise have applied to the third party. The meaning of "any person claiming through or under a party to the arbitration agreement" At its heart, commercial arbitration is based upon the agreement of the parties to a form of alternative dispute resolution80. An arbitration clause, in which the parties consent to the resolution of disputes by arbitration, will often be part of a package of rights and duties agreed by the parties. As a general rule, therefore, third parties who do not incur the burdens of the other provisions of the contract should not be entitled to take the benefit of an arbitration clause. Nor should a third party be compelled to go to arbitration by a clause to which it has not agreed. This general rule is not unique to arbitration clauses. It is a basic tenet of justice that a voluntarily assumed obligation should not be imposed upon a person without some manifestation by the person of an undertaking to be bound by the obligation. When considering a motion for an order under s 11 of the Common Law Procedure Act 1854 (UK) (17 & 18 Vict c 125), which is the origin of the extended definition of "party" in provisions such as s 2(1) of the Commercial Arbitration Act, in Piercy v Young81, Jessel MR said: "The great object of these [arbitration] clauses is to prevent the delay and expense of litigation, but we must not forget in deciding upon them that they do deprive one of the parties, that is, the one who objects to the arbitration, of the right to resort to the ordinary tribunals of the country, and he is entitled to say, 'Shew me that I have agreed to refer this matter to an arbitrator.'" In other words, the predecessor provision to s 2(1) did not represent an alteration of the basic rules of privity of contract. This context reinforces the meaning of the definition of "party" in s 2(1) of the Commercial Arbitration Act. The meaning of s 2(1) requires that, for a third party's claim to be "through or under" a party, the third party seek to enforce or to resist the enforcement of a right held or duty owed by the party82. So understood, this is not an exception to privity of contract, because if a third party's claim relies upon or resists a right of 79 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co (1910) 11 CLR 1 at 24; [1910] HCA 33. 80 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 558-559 [45]. 81 (1879) 14 Ch D 200 at 208. 82 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 342. Edelman the party to the arbitration agreement, then the third party is agitating the right of a party and not agitating its own right. Circumstances in which the third party seeks to rely upon the right of a party, and is therefore bound by the arbitration clause, include where the third party's claim is based upon an assignment or novation of the rights of the party83: "[t]he assignee takes the assigned right with both the benefit and the burden of the arbitration clause"84. The circumstances also include where the third party claim asserts those rights as the principal of the party85 or where the third party is the trustee asserting the rights of a bankrupt estate86. These third party claims within s 2(1) could "equally be introduced pursuant to traditional contract law theories"87. An interpretation of s 2(1) that maintains the rules of privity of contract is further supported by the consequence that otherwise a person who had not agreed to arbitration could unilaterally be deprived of her, his, or its right of access to the courts. Parliament should not lightly be found to have had such an intention in these circumstances88. There are, of course, some express statutory exceptions to privity. One of those is s 11(2) of the Property Law Act 1969 (WA). 83 The "Leage" [1984] 2 Lloyd's Rep 259 at 262. See Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 341. See also Freshwater v Western Australian Assurance Co [1933] 1 KB 515 at 522; Dennehy v Bellamy [1938] 2 All ER 262 at 265-266; Smith v Pearl Assurance Co Ltd [1939] 1 All ER 95 at 96-97; The "Padre Island" [1984] 2 Lloyd's Rep 408 at 414; The "Jordan Nicolov" [1990] 2 Lloyd's Rep 11 at 15; The "Baltic Strait" [2018] 2 Lloyd's Rep 33 at 84 Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading GmbH [1997] 2 Lloyd's Rep 279 at 285. 85 The "Scaplake" [1978] 2 Lloyd's Rep 380 at 384; Electrosteel Castings Ltd v Scan-Trans Shipping & Chartering Sdn Bhd [2003] 1 Lloyd's Rep 190 at 196 [19]; The "Elikon" [2003] 2 Lloyd's Rep 430 at 441-442 [57]. 86 Piercy v Young (1879) 14 Ch D 200. See Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 341, 342. 87 Brekoulakis, Third Parties in International Commercial Arbitration (2010) at 88 Compare Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 92 ALJR 248 at 258 [34]; 351 ALR 225 at 233; [2018] HCA 4, citing Hockey v Yelland (1984) 157 CLR 124 at 130-131, 142; [1984] HCA 72, Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 at 160; [1991] HCA 33, and Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492-493 [32], 505 [72], 516 [111]; [2003] HCA 2. Edelman The third party companies relied on that exception in the courts below but their submissions on s 11(2) were rejected by the Full Court and those conclusions were not challenged in this Court. The approach consistent with privity of contract was taken by at least three of the five Justices in Tanning Research Laboratories Inc v O'Brien89. In that case, a liquidator rejected a creditor's proof of debt and the creditor appealed against that rejection to the Supreme Court of New South Wales. The liquidator sought to defend his decision but since the legal title to the assets is vested in the company rather than the liquidator, the liquidator was required to rely upon the rights of the company. The liquidator was entitled to assert the rights of the company because, as Brennan and Dawson JJ (with whom Toohey J agreed90) said, the liquidator had the right to say "[i]t is my business to see that those who seek to rank against this estate are persons who are really creditors of that estate"91. Although title to the company's assets did not vest in the liquidator as it would for a trustee in bankruptcy, the liquidator had custody and control over the assets and the powers of dealing with the company's assets and therefore the power to assert the rights of the company92. In this respect, there was "no reason to distinguish between the position of a liquidator and that of a trustee in bankruptcy"93. One question was whether the liquidator was "claiming through or under" the company in liquidation, within s 7(4) of the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth), so that he could rely upon an arbitration clause in a contract for the sale of goods to the company. Counsel for the liquidator argued that s 7(4) "is designed to apply to privies, that is third parties whose rights or title in respect of property or contract are derived or claimed ... through the party"94. As the joint judgment in this Court later said in Tomlinson v Ramsey Food Processing Pty Ltd95, the "basic requirement of a privy in interest is that the 89 (1990) 169 CLR 332. 90 (1990) 169 CLR 332 at 354. 91 (1990) 169 CLR 332 at 340, quoting In re Van Laun; Ex parte Chatterton [1907] 2 KB 23 at 31. 92 Ayerst v C & K (Construction) Ltd [1976] AC 167 at 177, cited in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 339. 93 (1990) 169 CLR 332 at 339. 94 (1990) 169 CLR 332 at 335. 95 (2015) 256 CLR 507 at 515 [17]; [2015] HCA 28, quoting Ramsay v Pigram (1968) 118 CLR 271 at 279; [1968] HCA 34. Edelman privy must claim under or through the person of whom he is said to be a privy". Since the third party liquidator must be a privy, the legal "relationship between [the third party and the party] must be an essential ingredient of the claim"96. The legal relationship between the third party liquidator and the company establishes the basis upon which the liquidator, as a privy, can assert the rights of, or resist rights claimed against, the company. In Tanning Research Laboratories Inc v O'Brien, the liquidator's argument was accepted by Brennan and Dawson JJ (with whom Toohey J agreed). Their Honours explained that "a person who claims through or under a party may be either a person seeking to enforce or a person seeking to resist the enforcement of an alleged contractual right"97. In either case, the issue must involve the enforcement, by or against the third party, of the alleged contractual right that is part of the package that includes the arbitration clause. Their Honours then continued98: "Next, the prepositions 'through' and 'under' convey the notion of a derivative cause of action or ground of defence, that is to say, a cause of action or ground of defence derived from the party. In other words, an essential element of the cause of action or defence must be or must have been vested in or exercisable by the party before the person claiming through or under the party can rely on the cause of action or ground of defence." The test of a "derivative action"99 that was proposed by their Honours is consistent with the basic notion of justice that a person is not bound by new duties to which he or she had not consented. Although their Honours then explained this test "[i]n other words"100, the further explanation did not limit or qualify the test. The further explanation was that a third party's cause of action will be derived from a party where an essential element of the third party's cause of action was previously vested in the party. Similarly, a third party's defence will be derived from the party where an essential element of the third party's 96 Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] 1 NZLR 720 at 725. 97 (1990) 169 CLR 332 at 342. 98 (1990) 169 CLR 332 at 342. 99 See also nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790 at [45]. 100 (1990) 169 CLR 332 at 342. Edelman defence was previously exercisable by the party. As Bingham J put the point in relation to an assignee in The "Leage"101: "The entitlement of the assignor is an essential ingredient of the assignee's claim, to be properly pleaded and proved. The derivative nature of the assignee's claim is underlined by the rule that an assignee takes subject to equities and by the practice of joining the assignor as either plaintiff or defendant in bringing suits on an equitable assignment of a legal chose in action." Their Honours in Tanning Research Laboratories Inc v O'Brien concluded that the liquidator, in resisting the proof of debt made by the creditor "against the assets available for distribution", was relying upon the company's rights102. But, as their Honours recognised, the position would be different if the liquidator sought to rely upon an entitlement of "him, and him alone"103, such as the power to go behind a judgment. However efficient, however convenient, and however practical it might be for an arbitration to include all disputes concerning the same proof of debt, the objects of the extended definition of party, and their roots in the tenet of justice that I have mentioned, require "a discriminatory operation"104 between those disputes that involve the assertion of the company's rights and those that do not. One authority that is contrary to this approach is the "long unpopular"105 decision of Graham J in Roussel-Uclaf v G D Searle & Co Ltd106. That decision was overruled in 2008107. In Roussel-Uclaf, the plaintiffs were an exclusive patent licensee of the second defendant under a licence agreement containing an arbitration clause. The second defendant sold and distributed products through its subsidiary, the first defendant. The plaintiffs sought to restrain both defendants from selling a derivative product. Graham J held that the subsidiary 101 [1984] 2 Lloyd's Rep 259 at 262. 102 (1990) 169 CLR 332 at 342. 103 (1990) 169 CLR 332 at 343. 104 (1990) 169 CLR 332 at 343. 105 Joseph, Jurisdiction and Arbitration Agreements and their Enforcement, 3rd ed (2015) at 234 [7.50]. See also Brekoulakis, Third Parties in International Commercial Arbitration (2010) at 108 [3.51]. 106 [1978] 1 Lloyd's Rep 225. 107 City of London v Sancheti [2009] 1 Lloyd's Rep 117 at 122 [34]. Edelman company was "claiming through or under" the parent company by asserting a right to sell the derivative product, which it had obtained from, and been ordered to sell by, the parent company108. In Grupo Torras SA v Al-Sabah109, Mance J said that it was not easy to extract any principle from the reasoning in Roussel-Uclaf that, in some circumstances, a person can be said to be claiming through or under a party "even though he is not himself privy to the agreement by virtue of agency, operation of law, assignment or novation". Although Mance J concluded that Roussel-Uclaf could be distinguished on the basis that the licence agreement in that case was central to the issues against both defendants, his Honour certainly did not suggest that a common central issue in dispute was sufficient to constitute a third party as claiming through or under a party. Mustill and Boyd attempted to re-explain the decision as one in which the subsidiary was an agent of the parent, saying that "otherwise it is difficult to see how the [subsidiary] could have taken any part in the arbitration"110. But no submission of agency had been made and, in City of London v Sancheti111, Lawrence Collins LJ (with whom Richards and Laws LJJ agreed112) held that the decision in Roussel-Uclaf was "wrongly decided on this point and should not be followed". The third party companies do not claim through or under a party The circumstances of the third party companies (RHIO, HDIO, and MDIO) are explained in detail in the joint judgment. The issue concerns the Hope Downs Deed, which was signed by, amongst others, HPPL, HRL113 and Mrs Rinehart in August 2006. It contains an arbitration clause ("the arbitration agreement"). Each third party company submits that it is a party to the arbitration agreement within the definition of "party" in s 2(1) of the Commercial Arbitration Act. This would mean that each third party company would be a party to "an agreement ... to submit to arbitration all or certain disputes which 108 [1978] 1 Lloyd's Rep 225 at 231. 109 [1995] 1 Lloyd's Rep 374 at 450-451. 110 Mustill and Boyd, The Law and Practice of Commercial Arbitration in England, 2nd ed (1989) at 137 fn 2. See also Alfred McAlpine Construction Ltd v Unex Corporation Ltd (1994) 38 Con LR 63 at 70. 111 [2009] 1 Lloyd's Rep 117 at 122 [34]. 112 [2009] 1 Lloyd's Rep 117 at 123 [40]-[41]. 113 Which had by then changed its name to Westraint Resources Pty Ltd. Edelman have arisen or which may arise between them in respect of a defined legal relationship"114. Although the third party companies in this case seek to take advantage of the arbitration agreement in the Hope Downs Deed, if the third party companies were "parties" within s 2(1) then they would also be bound by the arbitration agreement. In broad terms, the appellants allege that the third party companies were either "knowingly involved in" or "participated in" a fraudulent and dishonest design by Mrs Rinehart amounting to a breach of fiduciary duty. That design is said to have involved the transfer of mining tenements115 from parties to the Hope Downs Deed to the third party companies. The relief sought against the third party companies includes declarations that they hold the mining tenements on constructive trust, an account and disgorgement of profits, and equitable compensation. The claims against the third party companies are assertions of direct liability116; the concern is with a remedy against them, not HPPL, HRL, or Mrs Rinehart117. The third party companies defend the claims on the basis that they hold unencumbered legal title to the mining tenements. They make no assertion in defence that any of their rights to the mining tenements are derivative. The third party companies' defences include claims that the parties to the Hope Downs Deed had acknowledged in that Deed that HPPL or HRL had full legal and beneficial title to the mining tenements and were entitled to the benefit of releases and covenants not to sue in that Deed, and so were in a position freely to transfer the tenements to the third party companies. None of the third party companies signed the Hope Downs Deed containing the arbitration agreement. RHIO had not even been incorporated at the time of the arbitration agreement118. None of the third party companies allege that it took any novation or assignment of any right under the Hope Downs Deed. 114 Commercial Arbitration Act, s 7(1). 115 The Hope Downs tenements, the Roy Hill tenements, and the Mulga Downs tenement. 116 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 457 [106]; [2011] HCA 48. 117 See Gummow, "Dishonest Assistance and Account of Profits" 74 Cambridge Law Journal 405 at 406. 118 RHIO was incorporated on 1 February 2007: Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 515 [292]. Edelman None of the third party companies allege that any party to the Hope Downs Deed acted as its agent. There is no dispute about the power of HPPL and HRL to transfer legal title to the mining tenements to the third party companies. Although there is a dispute about whether HPPL and HRL held their legal rights to the mining tenements on trust for the appellants, the denial of this trust by the third party companies involves no reliance by them upon the rights of HPPL or HRL. As Maitland said more than a century ago, a trust does not involve two competing, and co-existing, titles in the subject matter119. The third party companies merely deny that the appellants had any equitable proprietary rights against HPPL and HRL in relation to the mining tenements. The issue would not be any different if the third party companies were alleged to have been knowingly involved in a destruction of rights allegedly held on trust rather than knowingly involved in a transfer of those rights. In both cases, the third party companies would be denying the rights of an alleged beneficiary rather than relying upon the rights of the alleged trustee. In summary, although the third party companies' defences rely upon establishing some of the same matters as a defence that could be made by HPPL or HRL, who are signatories to the Hope Downs Deed, the third party companies do not assert any of the rights of HPPL or HRL. They are not bound by any admissions by HPPL or HRL. They defend an independent claim against them by relying upon their own rights. The position of the third party companies can be compared with the established law concerning a third party guarantor who seeks to avoid liability under a guarantee by proving that there was no liability under a principal contract of loan, between a creditor and a debtor, where the principal contract of loan contains an arbitration agreement but the guarantee does not. Like the position of the third party companies and the alleged trustee, the dispute between the creditor and the guarantor might involve the same issue that arises in a dispute between the creditor and the debtor. Also like the position of the third party companies and the alleged trustee, that issue may be capable of being settled by arbitration between the creditor and the debtor under the arbitration agreement. And, again like the position of the third party companies and the alleged trustee, the issue may have been referred to arbitration in accordance with the arbitration agreement. It may be the only issue in dispute between (i) the creditor and the guarantor and (ii) the creditor and the debtor. But, again, like the position of the third party companies and the trustee, the guarantor – who is not a party to the arbitration agreement – is not privy to that agreement because the guarantor does 119 Maitland, Equity: also The Forms of Action at Common Law (1910) at 17-18. See also Maitland, Equity: A Course of Lectures, 2nd ed (1936) at 17-18. Edelman not claim "through or under" the debtor120. And although the guarantee proceedings might be stayed pending in exceptional circumstances, such as where the guarantor had agreed to be bound by the result of the arbitration121, the guarantor, like the third party companies, is not entitled to the benefit of, nor is to be bound by, the arbitration agreement. It is not the case that a person "who is not bound by any admission of the principal debtor, should be bound by an agreement between the creditor and the principal debtor as to the mode in which the liability should be ascertained"122. the arbitration Conclusion The application for special leave to cross-appeal should be granted but the cross-appeal should be dismissed with costs. 120 Daunt v Lazard (1858) 27 LJ Ex 399 at 400; Alfred McAlpine Construction Ltd v Unex Corporation Ltd (1994) 38 Con LR 63 at 70, 75. See also Ex parte Young; In re Kitchin (1881) 17 Ch D 668 at 671-672, 673; The "Vasso" [1979] 2 Lloyd's Rep 412 at 418-419; Sabah Shipyard (Pakistan) Ltd v Government of Pakistan [2008] 1 Lloyd's Rep 210 at 228 [143]; Classic Maritime Inc v Lion Diversified Holdings Berhad [2010] 1 Lloyd's Rep 59 at 63-64 [21]-[24]. 121 Roche Products Ltd v Freeman Process Systems Ltd (1996) 80 BLR 102 at 130; Stemcor UK Ltd v Global Steel Holdings Ltd [2015] 1 Lloyd's Rep 580 at 590 [53]. 122 Ex parte Young; In re Kitchin (1881) 17 Ch D 668 at 672.

HIGH COURT OF AUSTRALIA APPELLANT AND MARTA JUNKOVIC RESPONDENT Neindorf v Junkovic [2005] HCA 75 8 December 2005 ORDER Appeal allowed. Set aside pars 1, 2 and 3 of the orders of the Full Court of the Supreme Court of South Australia made on 15 October 2004 and, in their place, order that the appeal to that Court be dismissed. Appellant to pay the respondent's costs in this Court. On appeal from the Supreme Court of South Australia Representation: R J Whitington QC with K G Nicholson for the appellant (instructed by S Walsh QC with A Rossi for the respondent (instructed by Moody Rossi & Co) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Neindorf v Junkovic Negligence – Occupiers' liability – Breach of duty of care – Appellant invited the public to attend a garage sale – Garage sale conducted on the driveway of her residence – Driveway surface was uneven – Respondent entered premises and tripped on driveway – Whether risk posed by the uneven surface of the driveway was obvious and relatively minor and whether such considerations justified conclusion that there was no breach of duty of care. Negligence – Occupiers' liability – Whether appellant owed a duty of care to the respondent – Scope of duty – Relationship between the duty of care and other elements of the tort of negligence – Relevance of obviousness of the risk. Negligence – Occupiers' liability – Standard of care – Whether appellant breached duty of care – Nature and extent of the premises – Nature and extent of the danger – Significance of economic relationship between the parties – Significance of the respondent's age – Significance of the appellant's knowledge of the danger – Absence of any precautionary measures – Reasonableness of taking precautionary measures – Relevance of obviousness of the risk – Relevance of inattention by the respondent – Relevance of the application to the evidence of the Wrongs Act 1936 (SA). Words and phrases – "obvious risk". Civil Liability Act 1936 (SA), s 20. Wrongs Act 1936 (SA), s 17C. GLEESON CJ. The outcome of this case turns upon the application, to an uncomplicated set of facts, of a provision of the Wrongs Act 1936 (SA) ("the Act"), which prescribes the matters a court is to take into account in determining the standard of care to be exercised by the occupier of premises. The facts, and the relevant provision of the Act (s 17C), are set out in the reasons of Callinan The respondent suffered injury when she tripped on an uneven surface in the driveway of the appellant's home while attending a garage sale, and fell. It is common ground that the appellant, as occupier of the premises, owed the respondent a duty of care. The issue concerns the standard of care owed by the appellant to the respondent, and whether there was, in the circumstances of the case, a breach of duty. In former times, the common law would have approached that issue by seeking to fit the respondent into one of a number of fixed categories by reference to which an appropriate standard of care was determined. The approach was described by Professor Fleming in 1957 as follows1: "Liability for physical injuries caused by the dangerous condition of land, though a branch of the law of negligence, has attracted its own, highly complex, pattern of legal rules and has so far withstood the general tendency to measure the existence and scope of duties of care by the broad standards of foreseeability of injury and reasonable conduct. Instead, the judicial approach to this problem, which was formulated during the nineteenth century prior to the final settlement of the conditions of liability for actionable negligence, divides persons entering on land into their visit, with classes, fixed by reference corresponding standards of care owed to each category. Starting from the basic premise that ordinarily a man should be allowed to do with his land as he pleases, the courts have been prepared to qualify this privilege only in favour of persons who have, so to speak, earned their right to protective care. The distinction between different classes of visitors is, therefore, drawn according to the degree of benefit derived by the occupier from their presence, and corresponding to it, in rough correlation, is an ascending standard of care in the preparation of the premises which may be expected by each class for its reception. … Thus, the accepted technique employed in these cases is, first, to determine the legal category to which the individual visitor belongs, and secondly, to apply a precisely defined standard of duty prescribed for the benefit of that class." the purposes of 1 Fleming, The Law of Torts, (1957) at 428. That was the approach of the common law in Australia until well past the middle of the twentieth century. Far from enshrining notions of protective communalism, it began, as Professor Fleming said, with the basic premise that ordinarily a person should be able to do with his or her land what that person pleases. Very few occupiers keep their land in perfect repair. People are permitted to occupy, and some people can only afford to occupy, premises that are in a state of some disrepair. Legislative and regulatory incursions upon the general proposition that a landowner may use land as the landowner sees fit, extensive as they have been, have never gone to the point of requiring people to remove all potential hazards from their land. It would not be possible to comply with such a requirement. Professor Fleming went on in the same passage to point out that the categorical approach to issues of standard of care in cases of occupiers' liability produced unrealistic distinctions and capricious results. The present case provides an example. Invitees used to be distinguished from licensees, and invitees included persons who entered land for business dealings, such as the customers of a shop. Why the standard of care owed to somebody who attends a garage sale at a suburban dwelling house should be different from that owed, for example, to someone who attends the same premises for a gathering to raise funds for charity, or for a purely social occasion, is not clear. A garage sale at a suburban house must be very close to the borderline, if there is to be a borderline, between commercial and social activity. It was not until the 1980s that the common law of Australia abandoned the approach described by Professor Fleming. In 1987, in Australian Safeway Stores Pty Ltd v Zaluzna2, this Court approved what, in 1984, had been said by Deane J in Hackshaw v Shaw3: "... it is not necessary, in an action in negligence against an occupier, to go through the procedure of considering whether either one or other or both of a special duty qua occupier and an ordinary duty of care was owed. All that is necessary is to determine whether, in all the relevant circumstances including the fact of the defendant's occupation of premises and the manner of the plaintiff's entry upon them, the defendant owed a duty of care under the ordinary principles of negligence to the plaintiff. A prerequisite of any such duty is that there be the necessary degree of proximity of relationship. The touchstone of its existence is that there be reasonable foreseeability of a real risk of injury to the visitor or to the class of person of which the visitor is a member. The measure of the (1987) 162 CLR 479 at 488. (1984) 155 CLR 614 at 662-663. discharge of the duty is what a reasonable man would, in the circumstances, do by way of response to the foreseeable risk." The reference in that passage to proximity as a test for determining the existence of a duty of care has been overtaken by later authority, but that is beside the present point. This is not a case about whether there was a duty of care. Ordinary dwelling houses contain many hazards which give rise to a real risk of injury. Most householders do not attempt to eliminate, or warn against, all such hazards. This development in the common law resulted in a generalised standard of care, described as what a reasonable person would, in the circumstances, do by way of response to a foreseeable risk. Developments in legal principle do not, however, alter the practical realities to which legal principle must be applied. The same problems of everyday living that were sought to be addressed by the old, categorical approach to liability still had to be accommodated by the new approach. Those practical realities include the following. Not all people live, or can afford to live, in premises that are completely free of hazards. In fact, nobody lives in premises that are risk-free. Concrete pathways crack. Unpaved surfaces become slippery, or uneven. Many objects in dwelling houses could be a cause of injury. People enter dwelling houses for a variety of purposes, and in many different circumstances. Entrants may have differing capacities to observe and appreciate risks, and to take care for their own safety. An ordinary kitchen might be reasonably safe for an adult, and hazardous to a small child. The expression "reasonable response in the circumstances" raises a question of normative judgment which has to grapple with all the practical problems that the law had earlier attempted to solve in the manner described by Professor Fleming. The problems did not disappear. They now require consideration under a somewhat different rubric. The fundamental problem remains the extent to which it is reasonable to require occupiers to protect entrants from a risk of injury associated with the condition of the premises. That problem is no longer addressed by prescriptive legal rules which attempt to establish precise and different standards of care for different classes of entrant. Yet the problem remains. It is a matter upon which different views are legitimately open. When courts refer to "community values", they may create an impression that such values are reasonably clear, and readily discernible. Sometimes a judge might be attributing his or her personal values to the community with little empirical justification for a belief that those values are widely shared. Reasonableness, however, is not a matter of legal prescription. That was the fundamental weakness of the old approach to occupiers' liability. It was for the very purpose of avoiding that error that the new, more flexible, approach was adopted. It has been many years since questions such as these were resolved in South Australia by juries. The jury system had the advantage of committing a judgment on reasonableness to the collective wisdom of a group of citizens chosen at random from the community. The divergence of judicial opinion in the present case upon what is essentially a question of the reasonableness of the behaviour of a householder probably reflects a diversity of opinion that would exist through the whole community. Such diversity is exposed when decisions are made by judges, who give reasons for their decisions, rather than by jurors, who simply deliver an inscrutable verdict. In South Australia, the Parliament has intervened to an extent. Rather than rest with a standard of care at the level of generality expressed in Hackshaw and Zaluzna, the South Australian Parliament, in Pt 1B of the Wrongs Act 1936 (SA)4, gave directions to courts as to what was to be taken into account in determining the standard of care to be exercised by an occupier of premises. Section 17C(2) listed a series of matters, all of which go to questions of reasonable response to risk, and concluded by referring to "any other matter that the court thinks relevant". The matters listed in pars (a) to (g) of s 17C(2) included factors that, in one way or another, were taken into account in the old common law categories, but the inflexibility of the old approach was not revived. Section 17C(3) then provided: "(3) The fact that an occupier has not taken any measures to eliminate, reduce or warn against a danger arising from the state or condition of premises does not necessarily show that the occupier has failed to exercise a reasonable standard of care." That, from one point of view, is a statement of the obvious. If doing nothing about a hazard were of itself sufficient to constitute negligence, there would probably not be an occupier of land in South Australia who could pass that test. It is, however, a useful reminder to decision-makers. The kind of hazard involved in the present case illustrates why that is so. The hazard was an unevenness in the surface of land which could cause a person to trip and fall. There would be few, if any, suburban houses that do not contain hazards of that kind. A similar reminder is to be found in par (g) of s 17C(2), which requires the court to take account of: the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger." (emphasis added). 4 Now Pt 4 of the Civil Liability Act 1936 (SA). The response of most people to many hazards in and around their premises is to do nothing. The legislature has recognised, and has reminded courts, that, often, that may be a reasonable response. Whether, in any particular case, it is a reasonable response is not a matter of legal doctrine. It is not a question of law. It is a question that, historically, courts committed to juries as a question of fact. Judges will have their own opinions about reasonableness, but they are not opinions of law5. In the Supreme Court of South Australia, two judges (Besanko J at first instance, and Doyle CJ in dissent on appeal) considered that the conduct of the appellant did not constitute a failure to take reasonable care for the safety of the respondent. The unevenness of the surface on which the respondent tripped was so ordinary, and so visible, that reasonableness did not require any action on the part of the occupier. Two judges (Nyland J and Gray J) came to a different view. Like Hayne J and Callinan and Heydon JJ, and substantially for the reasons given by them, I agree with the conclusions reached by Besanko J and I agree with the orders proposed by Hayne J. cf Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 474 [44]-[45], Kirby KIRBY J. This appeal concerns the law of negligence. It comes from a judgment of the Full Court of the Supreme Court of South Australia6. That Court, by majority7, found in favour of the plaintiff, Ms Marta Junkovic (the "respondent"). It reversed the decision of Besanko J who had found in favour of the defendant, Ms Sandra Neindorf (the "appellant")8. That decision had, in turn, reversed the orders of the primary judicial officer, Mr A A Grasso SM9. He had found for the respondent. By special leave, the appellant appeals to this Court seeking restoration of the judgment ordered by Besanko J. Such disparity in judicial outcomes in an otherwise unremarkable case suggests that legal doctrine in this field of law has become uncertain or unstable. In recent years, such uncertainty and instability has been introduced by changes in the basic rules applicable to negligence liability. Such changes are, in no small part, the product of legislation enacted in all Australian jurisdictions since 200110, designed to effect "tort law reform"11. But, in part, the changes have also come about as a result of decisions of this Court. Changing attitudes in this Junkovic v Neindorf (2004) 89 SASR 572. 7 Gray J and Nyland J concurring; Doyle CJ dissenting. 8 Neindorf v Junkovic (2004) 88 SASR 162. Junkovic v Neindorf unreported, Magistrates Court of South Australia, 26 November 2003. 10 In South Australia see for example Wrongs (Liability and Damages for Personal Injury) Amendment Act 2002 (SA), amending the Wrongs Act 1936 (SA) ("Wrongs Act"), and Law Reform (Ipp Recommendations) Act 2004 (SA), resulting in the renaming of the Wrongs Act as the Civil Liability Act 1936 (SA). Elsewhere see Trade Practices Amendment (Liability for Recreational Services) Act 2002 (Cth); (Personal Civil Liability Act 2002 Responsibility) Act 2002 (NSW); Wrongs and Other Acts (Law of Negligence) Act 2003 (Vic); Wrongs and Other Acts (Public Liability Insurance Reform) Act 2002 (Vic); Civil Liability Act 2003 (Qld); Personal Injuries Proceedings Act 2002 (Qld); Civil Liability Act 2002 (WA); Civil Liability Act 2002 (Tas); Volunteers (Protection from Liability) Act 2002 (WA); Civil Law (Wrongs) Act 2002 (ACT); Personal Injuries (Liabilities and Damages) Act 2003 (NT); Personal Injuries (Civil Claims) Act (NT). (NSW); Civil Liability Amendment 11 See Skene and Luntz, "Effects of tort law reform on medical liability", (2005) 79 Australian Law Journal 345 at 345-348; Underwood, "Is Ms Donoghue's snail in mortal peril?", (2004) 12 Torts Law Journal 39; Cane, "Reforming Tort Law in Australia: A Personal Perspective", (2003) 27 Melbourne University Law Review Kirby Court to the content of the common law of negligence have resulted in a discernible shift in the outcomes of negligence cases12. According to Professors Skene and Luntz, "[t]he common law, as emanating from the High Court of Australia, was already moving to a much more restrictive attitude towards the tort of negligence."13 Now the shift has been accelerated by statute. This trend was reflected in the rejection by this Court of the Caparo test for the establishment of a duty of care14. That test is followed in most other jurisdictions of the common law15; but not in Australia16. One reason for rejecting Caparo, for the ascertainment of the existence (and hence the scope) of a duty of care in negligence, was said to be that it involves the courts too directly in addressing expressly questions of legal and social policy17 – matters that should be left to Parliament. Yet the shift in judicial outcomes in negligence cases plainly derives from a shift in legal policy, albeit one that is not usually spelt out by judges as Caparo would require. Now, another case presents a defendant's attempt to have this Court alter course, this time from an approach expressed in 198218. Because this change of 12 Luntz, "Editorial Comment: Round-up of cases in the High Court of Australia in 2003", (2004) 12 Torts Law Journal 1 at 1-2; Luntz, "Turning Points in the Law of Torts in the Last 30 Years", (2003) 15 Insurance Law Journal 1 at 22; Luntz, "Torts Turnaround Downunder", (2001) Oxford University Commonwealth Law Journal 95. 13 Skene and Luntz, "Effects of tort law reform on medical liability", (2005) 79 Australian Law Journal 345 at 363. 14 After Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618; cf Pyrenees Shire Council v Day (1998) 192 CLR 330 at 420-427 [246]-[254]; Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 476-477 [117]-[121], 484- 485 [138]-[140]; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 286-291 [289]- [302]; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 80-86 [223]-[235]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 604- 15 Including recently in the Fiji Islands Supreme Court: Pacoil Fiji Ltd v Attorney- General (Fiji) unreported, (Gault, Mason and French JJ), 11 July 2003. 16 Sullivan v Moody (2001) 207 CLR 562 at 579 [49]; cf Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 626 [238] and Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 572-573 [158]-[159]. 17 cf Woolcock (2004) 216 CLR 515 at 593 [229]. 18 Webb v South Australia (1982) 56 ALJR 912; 43 ALR 465. Kirby course would involve a departure from previous doctrine; undermine responsibility towards legal neighbours that lies at the heart of the modern tort of negligence19; and weaken attention to accident prevention20, I cannot agree with In my view, the approach of the majority in the Full Court to the law of negligence was correct. This appeal should be dismissed. This Court should call a halt to the erosion of negligence liability and the substitution of indifference to those who are, in law, our neighbours. The erosion, and the indifference, has gone far enough. This appeal therefore involves important questions of legal The facts On 3 February 2000, the appellant placed an advertisement in the Trading Post, a specialist newspaper, advertising a garage sale to be conducted at her home in the weekend 5-6 February 2000. According to the evidence, the appellant had previous experience in conducting garage sales22. Such activities are common in the suburbs of Adelaide, where the appellant's home was situated, and elsewhere throughout Australia. The incident out of which the respondent's claim arose happened on 5 February 2000 at about 8.40 am. The day was clear and sunny. The appellant's property included a concrete driveway extending from a carport annexed to the house to the public footpath and road. The driveway comprised sections of concrete joined in an expansion joint which extended throughout its length23. The appellant placed a variety of domestic articles for sale on a trestle table situated on the southern side of the driveway close to the carport. Prospective purchasers had no alternative but to approach the goods by walking over the driveway. The appellant expected a volume of pedestrian traffic to attend the sale. She knew, or ought reasonably to have known, of the disparity in the levels of the adjoining concrete slabs in the forecourt of her home. Although the 19 See Linden, "Torts Tomorrow–Empowering the Injured" in Mullany and Linden (eds) Torts Tomorrow: A Tribute to John Fleming (1998) 321 at 330. 20 See esp McLean v Tedman (1984) 155 CLR 306 at 313; Bankstown Foundry Pty Ltd v Braistina [1985] Aust Torts Reports ¶80-713 at 69,127 quoted in Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 at 307. 21 Contra reasons of Hayne J at [92] and Callinan and Heydon JJ at [99]. 22 (2004) 89 SASR 572 at 598 [106] per Gray J. 23 (2004) 89 SASR 572 at 574 [2] per Doyle CJ, 581 [52] per Gray J. Kirby respondent was questioned in a manner suggesting that she had visited the property on the evening before the sale, this suggestion was rejected at trial. It was not pursued in this Court and can be ignored. The respondent entered the appellant's premises wearing slip-on shoes. She walked towards the trestle table. To do this, she had to cross the divide in the concrete slabs. An object caught her eye, presumably one of the garden or other items for sale on the trestle table. At that point, her right foot rolled on the elevation of one concrete slab as it adjoined the adjacent slab. The respondent, a woman then aged 53, fell towards the ground, touching it but then regaining her footing. In the course of this motion, she felt a crack in her right foot. This was later diagnosed as having caused a fracture. The decision at first instance The respondent sued the appellant in the Magistrates Court of South Australia claiming damages for negligence. At trial, the appellant's counsel successively suggested that the respondent had fallen on the public footpath, at another point in the forecourt or in or near a drain hole. All of these suggestions were rejected. The magistrate accepted the veracity of the respondent's version of events and was unimpressed by evidence tendered in the appellant's case. Although the division between the concrete slabs constituting the driveway was clear enough, the respondent had not noticed the variation in the height of the adjoining slabs. This discrepancy measured 10-12 mm (approximately half an inch on the old scale). Her failure to notice the uneven surface was ascribed by the magistrate to inadvertence occasioned by the fact that the appellant was not looking at her feet but was attracted by one of the items displayed for sale, just as the appellant intended her to be. The magistrate concluded that the appellant, having invited visitors such as the respondent who would be unfamiliar with the premises to enter the forecourt and, having placed goods in a position where they could distract attention from the unevenness of the driveway, owed a duty of care to prevent injury from reasonably foreseeable hazards. The magistrate also concluded that simple and inexpensive steps could and should have been taken to diminish, or eliminate, the particular hazard presented to the respondent. He found that such steps included placing a strip of paint along the uneven sides of the slabs to draw attention to them or placing the trestle table over the expansion joint so that persons, such as the respondent, approaching the table, would not have to traverse the uneven surfaces. Accordingly, the magistrate entered judgment in favour of the respondent for $24,464. He rejected the defence of contributory negligence. One might say an unremarkable outcome to an unremarkable case. But, truly, these are remarkable times for the tort of negligence in Australia. Kirby The decisions of the Supreme Court of South Australia Decision of the single judge: The appellant appealed to the Supreme Court24. In that Court, Besanko J reversed the finding of the magistrate. In his reasons, Besanko J considered that the respondent's case was most closely analogous to the decision of this Court in Ghantous v Hawkesbury City Council25. That was a case where an elderly pedestrian sued a local government authority for negligence in respect of the maintenance and upkeep of a public footpath. The plaintiff, Mrs Ghantous, who had moved to the side of the footpath in question, slipped on a verge of 50 mm which had developed at one point where the footpath joined the nature strip. She fell and injured herself. Besanko J applied the following statement in the joint reasons in Ghantous of Gaudron, McHugh and Gummow JJ26: "As Callinan J points out in his reasons ... persons ordinarily will be expected to exercise sufficient care by looking where they are going and perceiving and avoiding obvious hazards, such as uneven paving stones, tree roots or holes." Extrapolating from this statement, which he regarded to be a legal principle of general application, Besanko J found that the duty of care of the occupier of a domestic property did "not extend to include risks which are obvious and which it is well known are likely to be encountered and which, in all the circumstances, an entrant may reasonably be expected … to notice and avoid"27. Applying this finding to the case, Besanko J held that the unevenness at the point at which the respondent had fallen "was not an uncommon or unexpected feature of a domestic property, and it was clearly visible and obvious"28. His Honour accepted that different considerations might arise where a defendant was conducting a commercial enterprise29. But he considered that the instant case was not to be so classified and that the appellant's commercial activity "was a one-off activity, and a low level activity in the sense that large numbers of people were not likely to enter the property"30, emphasising that the 24 Pursuant to the Magistrates Court Act 1991 (SA) s 40(1). 25 (2001) 206 CLR 512. See (2004) 88 SASR 162 at 167 [20]. 26 (2004) 88 SASR 162 at 167 [22] referring to (2001) 206 CLR 512 at 581 [163]. 27 (2004) 88 SASR 162 at 169 [34]. 28 (2004) 88 SASR 162 at 171 [42]. 29 (2004) 88 SASR 162 at 171 [43]. 30 (2004) 88 SASR 162 at 171 [43]. Kirby property was at all times a domestic property. Accordingly, he declined to "expand the scope of the duty of care so as to include within it the unevenness at the point where the plaintiff fell"31. Cognisant of the possibility of a further appeal, Besanko J considered and rejected the appellant's argument that, if there were a duty of care, with a scope extending to the present case, the respondent's claim failed on the basis of causation. He said that, upon this hypothesis, assuming the existence of a duty of care, there was no error in the magistrate's finding that the preventative measure of placing the table over the point of unevenness in the concrete would have avoided the respondent's fall and damage32. However, Besanko J held that, upon an assumption of a duty of care, the respondent had failed to take reasonable care for her own safety. He would have reduced her damages by 30 per cent for contributory negligence33. But the outcome of the appeal was dismissal of the respondent's claim. Decision of the Full Court: In the Full Court, the majority reasons were given by Gray J (with whom Nyland J agreed). His Honour started his analysis by reference to the provisions of the Wrongs Act, Pt 1B, introduced in 198734. In that Part of the Act, the Parliament of South Australia has redefined, and expressly provided for, an "occupier's duty of care". Gray J found that the duty of South Australian courts was to approach the liability of the appellant by reference to the "code" expressed in the Wrongs Act which, he concluded, substantially reflected concurrent changes in the common law introduced by the decision of this Court in Australian Safeway Stores Pty Ltd v Zaluzna35. This coincidence of legal developments was subject to the duty of South Australian courts to address specifically the considerations relevant to the existence and non-existence of a duty of care, and the standard of such duty, as spelt out in s 17C of the Wrongs Act36. 31 (2004) 88 SASR 162 at 172 [44]. 32 (2004) 88 SASR 162 at 172 [49]. 33 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 at 484 following Hackshaw v Shaw (1984) 155 CLR 614 at 662. 34 See Wrongs Act Amendment Act 1987 (SA). 35 (1987) 162 CLR 479. 36 (2004) 89 SASR 572 at 588-591 [80]-[84]; 598 [109]. Kirby In Gray J's opinion, Ghantous did not govern this case, being concerned with the different issue of the liability owed by a public authority in respect of public places37. Addressing the liability of the appellant, Gray J concluded that the open invitation to members of the public, including the very young, the mentally or physically disabled, the elderly and the frail, imposed on the appellant a duty of care the scope of which extended to the cause of the respondent's injury. This was especially so, in his Honour's opinion, taking into account considerations of accident prevention38 and the commercial interest which the appellant had in opening her property to all comers. Because there were simple steps that could have been taken to guard against the danger in the premises, of which the appellant would have been aware and with which the respondent was unfamiliar, Gray J concluded that the judgment for the respondent should be restored39. However, he agreed with Besanko J's assessment of contributory negligence and, accordingly, favoured the entry of judgment for the respondent in a sum reduced by 30 per cent40. That sum was later reflected in the judgment of the Full Court. In his dissenting reasons, Doyle CJ accepted that the appellant owed the respondent a duty of care of some kind41. He also accepted that Ghantous was a special case, delivered concurrently with Brodie v Singleton Shire Council42, and addressed fundamentally the previously anomalous immunity of highway authorities for nonfeasance in respect of the upkeep of highways43. 37 (2004) 89 SASR 572 at 597 [103]. 38 (2004) 89 SASR 572 at 599 [113] referring to the decisions of this Court in McLean v Tedman (1984) 155 CLR 306 at 313; and Braistina (1986) 160 CLR 301 39 (2004) 89 SASR 572 at 599-600 [113]-[115] referring to my own reasons in Brady v Girvan Bros Pty Ltd (1986) 7 NSWLR 241 at 246-248. 40 (2004) 89 SASR 572 at 600 [117]. 41 (2004) 89 SASR 572 at 577-578 [21]. 42 (2001) 206 CLR 512. 43 (2004) 89 SASR 572 at 578 [23]-[24]. This immunity has been restored by legislation, in a modified form, in all jurisdictions except the Northern Territory: see Civil Liability Act 2002 (NSW) s 45; Wrongs Act 1958 (Vic) s 85; Civil Liability Act 2003 (Qld) s 37; Civil Liability Act 1936 (SA) s 42; Civil Liability Act 2002 (WA) s 5Z; Civil Liability Act 2002 (Tas) s 42; Civil Law (Wrongs) Act 2002 (ACT) s 113. Kirby Doyle CJ agreed that the occupier of private premises could exercise a greater degree of control over those premises than might be expected of a statutory authority responsible for public roads and footpaths44. However, whilst acknowledging matters that supported the conclusion reached by the majority in the Full Court, Doyle CJ held that the appellant owed no duty of care to the respondent in respect of the "hazard" which he took the uneven surface of the concrete slabs to present to entrants such as the respondent45. The factors that influenced Doyle CJ's conclusion included the modest character of the garage sale conducted by the appellant; the fact that such activities are a "normal and common use of residential premises"; the self-evident character of the "hazard"; and its "everyday nature" which was such that it presented a low magnitude of risk and a low degree of probability that a fall would occur46. If, contrary to his conclusion, a duty of care was established of a scope that included a requirement to address the uneven surface that caused the respondent's fall, Doyle CJ agreed in the conclusion of the other judges that the respondent's damages should be reduced by 30 per cent for contributory negligence. However, he added his own opinion that this reduction was "rather high"47. The appeal to this Court Before this Court, the appellant conceded that she owed a duty of care of some form to the respondent but contended that that duty did not extend to the risk of injury which materialised. In the alternative, it was argued that even if a duty of care, the scope of which extended to include the risk in question, existed, there was no breach of that duty. No issue was taken with respect to causation. The respondent, for her part, did not contest the reduction for contributory negligence. Perhaps, taking the hint following a grant of special leave to appeal on conditions that protected her from the appellant's costs of the appeal48, the respondent thought it wiser to confine her endeavours to hold on to her modest recovery. Accordingly, the questions that require determination by this Court are as follows: 44 (2004) 89 SASR 572 at 578 [25]. 45 (2004) 89 SASR 572 at 579 [36]. 46 (2004) 89 SASR 572 at 579-580 [39]-[43]. 47 (2004) 89 SASR 572 at 580 [45]. 48 Neindorf v Junkovic [2005] HCATrans 430 (17 June 2005). Kirby (1) Did the appellant owe the respondent a duty of care which required her to exercise reasonable care to guard against the risk of injury which materialised? If so, was that duty of care breached? Before considering these questions, it is necessary to take account of the relevant legislation. The applicable provisions of the Wrongs Act Correct starting point: The magistrate made no reference to the provisions of the Wrongs Act. Although adverting to the 1987 amendments to that Act, neither Besanko J49 nor Doyle CJ50 elaborated upon the applicable provisions. Nor did they consider expressly the application of those provisions to the facts of this case. This Court has repeatedly said in recent times that, where a statute of relevant operation has been enacted, it is the duty of Australian courts to start their analysis of the legal liability of parties affected not with the pre-existing common law but with the statutory prescription51. The reason for this requirement Legislation of a Parliament, acting within its constitutional powers, has an authority that displaces the common law to the extent of the statutory provisions. Where Parliament has spoken, it is a mistake to start with common law authority. is simple. With respect, it was only Gray J, in the Full Court, who recognised this principle and considered the statutory provisions at any length52. This may have been because of the way the respondent's claim had been pleaded and presented below, as if it were wholly based on the common law. However, this was not 49 (2004) 88 SASR 162 at 166 [18]. 50 (2004) 89 SASR 572 at 574 [1]. Doyle CJ referred to the Civil Liability Act 1936 (SA). At the relevant time the Wrongs Act applied. 51 Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 89 [46]; Victorian Workcover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 544-545 [62]-[64]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 111-112 [249]; Trust Co of Australia Ltd v Commissioner of State Revenue (2003) 77 ALJR 1019 at 1033 [92]; 197 ALR 297 at 316; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 10 [24]; R v Lavender (2005) 79 ALJR 1337 at 1357 [107]; 218 ALR 521 at 548. 52 (2004) 89 SASR 572 at 588-589 [80]. Kirby correct once Pt 1B was inserted in the Wrongs Act in 1987. That Part was in force at the time of the respondent's injury53. In his reasons Besanko J noted that the 1987 amendments to the Wrongs Act came into operation at about the same time as "a similar position had been reached at common law" in the decision of this Court in Zaluzna54. Nevertheless, to the extent that there are any differences of content, emphasis and instruction, the approach of Gray J was the correct one. The statute was the starting point. Provisions of the Wrongs Act: The provisions of Pt 1B of the Wrongs Act relevantly include the following: "17B In this Part, unless the contrary intention appears – 'dangerous' includes unsafe; 'occupier' of premises means a person in occupation or control of the premises …; 'premises' means – land; or a building or structure … Occupier's duty of care 17C(1) Subject to this Part, the liability of the occupier of premises for injury, damage or loss attributable to the dangerous state or condition of the premises shall be determined in accordance with the principles of the law of negligence. In determining the standard of care to be exercised by the occupier of premises, a court shall take into account – the nature and extent of the premises; and 53 Pt 1B of the Wrongs Act is now contained verbatim in Pt 4 ("Occupiers Liability") (ss 19-22) of the Civil Liability Act 1936 (SA) which came into force on 1 May 54 (1987) 162 CLR 479. See (2004) 88 SASR 162 at 166 [18]. Kirby the nature and extent of the danger arising from the state or condition of the premises; and the circumstances in which the person alleged to have suffered injury, damage or loss … became exposed to that danger; and the age of the person alleged to have suffered injury, damage or loss, and the ability of that person to appreciate the danger; and the extent (if at all) to which the occupier was aware, or ought to have been aware, of – the danger; and the entry of persons onto the premises; and the measures (if any) taken to eliminate, reduce or warn against the danger; and the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger; and any other matter that the court thinks relevant. The fact that an occupier has not taken any measures to eliminate, reduce or warn against a danger arising from the state or condition of premises does not necessarily show that the occupier has failed to exercise a reasonable standard of care. Exclusion of conflicting common law principles 17E(1) Subject to subsection (2), this Part operates to the exclusion of any other principles on which liability for injury, damage or loss attributable to the state or condition of premises would, but for this Part, be determined in tort. This Part does not apply to a case where an occupier causes a dangerous state or condition of premises, or allows premises to fall into a dangerous state or condition, intending to cause injury, damage or loss to another." Kirby As appears from extracts from the Second Reading Speech of the Minister introducing the Bill which, when enacted, inserted Pt 1B into the Wrongs Act55, the objects of the measure were (1) to reduce the complexities of the differing categories that had previously existed at common law governing the duties owed to different classes of entrants upon land; (2) to allow courts to take into account the size of landholdings, so that a breach of duty would be less likely to be inferred for an event occurring in a remote part of a large rural landholding than in a "corner of a suburban backyard"; and (3) to relieve an occupier from liability where the danger is "simple, not hidden, and an easy manner for avoiding it is readily apparent"56. Because of the concurrent re-expression of the common law by this Court in Zaluzna, and because of the instruction in the Wrongs Act to determine the liability of an occupier of premises "in accordance with the principles of the law of negligence"57, it is easy to overlook the provisions of the Act and to proceed directly to judicial expressions of the common law of negligence58. This mistake is facilitated by the fact that, after Zaluzna, the particular considerations mentioned in s 17C(2) and (3) substantially reflect the standards of the common law. However, where Parliament has provided a list of considerations, instructing a court to take that list "into account"59, it is essential that the court do so. Especially is this so because of the enactment of the specific instruction that the provisions of Pt 1B of the Wrongs Act operate to the exclusion of any other principles for determining liability for injury60. The duty issue The appellant's contention: The appellant submitted that the scope of her duty of care did not extend to protecting the respondent from injury arising from the uneven surface of the driveway. Essentially, she expressed three reasons to 55 Part 1B of the Wrongs Act substantially followed amendments introduced into the law of Victoria by the Occupiers' Liability Act 1983 (Vic) which inserted a new Pt IIA into the Wrongs Act 1958 (Vic). 56 South Australia, Legislative Council, Parliamentary Debates (Hansard), 9 April 1987 at 4013 per Hon C J Sumner, Attorney-General. 57 Kocis v SE Dickens Pty Ltd [1998] 3 VR 408 at 409-410 per Ormiston JA, 411 per Phillips JA, 427 per Hayne JA. 58 Wrongs Act, s 17C(1). 59 Wrongs Act, s 17C(2). 60 Wrongs Act, s 17E(1). See also s 17C(1). Kirby support her proposition. They were that (1) the gap in the concrete was obvious and the duty owed did not extend to protecting entrants from obvious risks; (2) the case was analogous to Ghantous where the plaintiff had failed; and (3) the venue and activity in which the appellant was engaged was domestic, modest and so commonplace that imposition of a legal duty of the propounded kind would offend community standards of reasonableness, reflected in the ambit of liability in negligence at common law. The appellant's approach is flawed: In my opinion, by taking issue with the existence of a duty of care that extended to the risk which materialised, the way in which the appellant prosecuted her appeal was misconceived. The error in this approach (which is becoming all too common in this area of law) was attempting to elevate considerations that properly concern the breach element of the tort of negligence into the evaluation of the existence or absence of a duty of care. It is true that it is neither possible nor desirable to attempt to consider the duty of care issue independently of the breach element or, indeed, the other elements relevant to a decision on liability for negligence61. The questions that the successive stages of negligence doctrine pose are not entirely free standing. They are interrelated. Negligence is a unified concept. Its subdivision into issues is adapted for convenience and to promote consistency of approach and accurate analysis. The parts should not divert attention from the whole. Thus, in deciding whether or not a duty of care exists, it is necessary to ask what the scope of the purported duty is62. However, by and large, the relevant inquiries in this regard are conducted at a relatively general level of abstraction. Identifying the scope of an alleged duty of care requires consideration of, among other things, the nature of the damage suffered63 and whether the damage was caused by a third party64 or results from pure omission on the part of the defendant. 61 Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at 350 [98]-[99]; Roe v Minister of Health [1954] 2 QB 66 at 85. 62 Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 at 478 [122]-[123]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 620 [286]; Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at 349-350 [97]; Luntz and Hambly, Torts: Cases and Commentary, 5th ed, (2002) at 154. 63 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 487; Hawkins v Clayton (1988) 164 CLR 539 at 576. 64 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; Dorset Yacht Co v Home Office [1970] AC 1004. Kirby The appellant, while admitting that she owed a duty of some kind to the respondent, denied that the duty included within its ambit an obligation to take reasonable care to protect against the risk of physical injury occasioned by the unevenness in her driveway. However, defining the scope of the duty with this degree of specificity is likely to raise serious problems. Professor Fleming advanced two reasons why defining the scope of the duty of care in an overly specific fashion should be avoided65: "The general standard of conduct required by law is a necessary complement of the legal concept of 'duty'. There is not only the question 'Did the defendant owe a duty to be careful?' but also 'What precisely was required of him to discharge it?' Indeed, it is not uncommon to encounter formulations of the standard of care in terms of 'duty', as when it is asserted that a motorist is under a duty to keep a proper lookout or give a turn signal. But this method of expression is best avoided. In the first place, the duty issue is already sufficiently complex without fragmenting it further to cover an endless series of details of conduct. 'Duty' is more appropriately reserved for the problem of whether the relation between the parties (like manufacturer and consumer or occupier and trespasser) warrants the imposition upon one of an obligation of care for the benefit of the other, and it is more convenient to deal with individual conduct in terms of the legal standard of what is required to meet that obligation. Secondly, it is apt to obscure the division of functions between judge and jury. It is for the court to determine the existence of a duty relationship and to lay down in general terms the standard of care by which to measure the defendant's conduct; it is for the jury to translate the general into a particular standard suitable for the case in hand and to decide whether that standard has been attained." The first reason identified by Professor Fleming for rejecting the appellant's approach to the duty issue is compelling. As an element of the tort of negligence, the duty of care is already overworked. It is problematic enough66 without imposing the additional burden of particularising, in a detailed fashion, all of the specific risks against which defendants must take care. In relation to the second reason, while it is now uncommon, in most parts of Australia, for juries to decide negligence cases, it is still desirable that 65 Fleming, The Law of Torts, 9th ed (1998) at 117-118 (footnotes omitted); cf Luntz and Hambly, Torts: Cases and Commentary, 5th ed (2002) at 213. 66 See Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 616-617 Kirby questions of law and questions of fact should be properly quarantined, so far as that is practicable. One reason why this is so is because different principles apply to appellate review of determinations regarding questions of law and decisions turning on the facts. There is a third reason, not identified by Fleming, that militates against the appellant's approach. Generally speaking, each of the constituent elements of the tort of negligence – duty, breach and damage – considered seriatim, progressively increases the specificity of the inquiry into how the incident occurred and the way in which damage was sustained67. The broadest and most general level of analysis occurs at the duty stage68. Here, the inquiry is primarily concerned with whether injury to the plaintiff or a class of persons to whom the plaintiff belongs, was reasonably foreseeable69. With respect to the breach element, the inquiry is directed, in part, to whether a reasonable person in the defendant's position would have foreseen the risk of injury to the plaintiff. Finally, the damage element is the most specific. The issue here is whether the damage sustained as a result of the breach of duty was of a kind which was reasonably foreseeable70. Attempts to force more content into the duty element, by defining the obligation created with greater specificity, turns the traditional analysis of the tort of negligence on its head. It blurs the distinction between its constituent elements. It may also lead to the decision as to breach being pre- empted71. This Court should avoid such an error. A duty of the relevant scope existed: A relevant duty of care existed in this case. It is firmly established that an occupier owes a duty of care to entrants in respect of risks of physical injury arising out of the condition of the occupier's premises72. There is no need for the scope of this duty to be defined with any greater precision than this in the instant case73. This Court has said on several 67 Minister Administering the Environmental Planning and Assessment Act 1979 v San Sebastian Pty Ltd [1983] 2 NSWLR 268 at 295-296; Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 347. 68 Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 639. 69 Chapman v Hearse (1961) 106 CLR 112 at 120-121. 70 Hughes v Lord Advocate [1963] AC 837. 71 Jones v Bartlett (2000) 205 CLR 166 at 184-185 [57]. 72 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 263 [17], 289 [102]; Tame v New South Wales (2002) 211 CLR 317 at 355 [103]; Vairy v Wyong Shire Council [2005] HCA 62 at [27]. 73 See Vairy v Wyong Shire Council [2005] HCA 62 at [25]-[27]. Kirby occasions that, in so far as cases involving physical injury are concerned, provided that the test of reasonable foreseeability is satisfied, the elusive additional element needed to establish the existence of a duty of care will also be satisfied74. There is no suggestion in this case (and it could not be suggested) that the "undemanding"75 requirement of reasonable foreseeability was not met by the respondent's case. The standard of care Approach of the Wrongs Act: In the light of the applicable legislation, discussed above76, it must be accepted that the "principles of the law of negligence", in their generality, as defined by the common law of Australia, are applicable in determining the legal liability of the appellant for the injury to the respondent77. Likewise, in determining the standard of care to be exercised by the appellant, as occupier of the premises which the respondent entered, a court is authorised to take into account "any … matter that the court thinks relevant"78. These considerations afford a court a broad mandate to perform its task of determining contested claims brought against occupiers by persons who have entered their premises and been injured there. However, it follows from the foregoing analysis79 that, in determining the standard of care that must be observed, it is essential first to address the list of specific matters that the Court is required by the Wrongs Act to "take into account" in s 17C(2). What relevance do those listed considerations have for the present case? Nature and extent of the premises: As to the "nature and extent of the premises"80, it was a domestic dwelling in the suburbs of Adelaide. This consideration cuts both ways. The appellant suggested that it reduced the 74 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 44; Jaensch v Coffey (1984) 155 CLR 549 at 581-582; Hawkins v Clayton (1988) 164 CLR 539 at 576. 75 Inverell Municipal Council v Pennington [1993] Aust Torts Reports ¶81-234 at 62,403; Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 641; Tame v New South Wales (2002) 211 CLR 317 at 351-352 [96]; Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at 352 [104]. 76 See above these reasons at [45]. 77 Wrongs Act, s 17C(1). 78 Wrongs Act, s 17C(2)(h). 79 See above at [42]-[47]. 80 Wrongs Act, s 17C(2)(a). Kirby standard of care to be expected because of the modest character and size of the premises. That was an argument that weighed with Doyle CJ81. On the other hand, as the Minister explained when introducing the legislation to amend the Wrongs Act, the imposition of a legal duty of care in respect of "the corner of a suburban backyard" is not per se unreasonable82. This was not, after all a remote part of a large landholding. The driveway and forecourt of a domestic dwelling would be well known to the occupants. Imposing an obligation in respect of them, at least for some entrants, would not be unreasonable or unduly burdensome. In my view, the nature and extent of the premises, or the relevant part of the premises in question, is a consideration pointing towards a higher standard of care. Nature and extent of the danger: The "nature and extent of the danger arising from the state or condition of the premises"83 is also a consideration favouring the respondent. Whilst it is true, as Doyle CJ observed, that unevenness of residential paths and surfaces represent common hazards for those entering private property84, in the present case, there was nothing that would have rendered the "hazard" a secret from the appellant. The uneven surface was something that she and her family had to traverse every day. Other entrants onto their property, such as the respondent, would not be so familiar with the uneven surface of the concrete. This would be particularly so if they were old, of poor eyesight, frail, disabled or young and boisterous. Whilst the appellant made much of the expectation and suggested duty on the part of the respondent to watch out for the surface conditions, the whole point of the respondent's coming onto the appellant's property was to view and possibly purchase goods placed on display on a table at hip height. Distraction was a clear danger for entrants with such a purpose, as a moment's thought on the part of the appellant would have indicated to her. Exposure to the danger: As to the "circumstances" in which the respondent "became exposed to that danger"85, it is relevant to take into account the character and purpose of the relationship between the parties. The appellant emphasised the potential for the Full Court's decision to be applied so as to create obligations in respect of entrants onto private domestic property such as charity collectors, friendly neighbours and dinner party guests. However, in each such 81 (2004) 89 SASR 572 at 579 [32], 580 [39]. 82 See above at [46]. 83 Wrongs Act, s 17C(2)(b). 84 (2004) 89 SASR 572 at 579 [32]-[33]. 85 Wrongs Act, s 17C(2)(c). Kirby case the nature of the relationship of the entrants with the occupier would be different from that in question here. In the respondent's case, she entered pursuant to an express invitation from the appellant. Moreover, as Gray J pointed out, it was an invitation addressed to the public at large, in all of its variety86. Having extended an invitation to every category of entrant from the public, the appellant could not now complain about the variety of abilities, capacity and attention of those who had accepted her invitation. Neither by her advertisement, nor by the conduct of her garage sale, did she attempt to limit entry or impose on entrants preconditions of special vigilance. Moreover, the appellant had an economic interest in attracting the respondent to her premises. In Brady v Girvan Bros Pty Ltd87, a case concerned with a common passageway in a shopping mall, I drew attention to the continuing relevance of this consideration for the standard of care that could be expected of the occupier: "The respondent was in charge of a large commercial enterprise. Undiscriminatingly, it invited members of the public to do business in that enterprise. It derived, by inference, an economic advantage from their presence in its mall. It must anticipate the presence there of members of the public of all ages, inclinations and capacities. … If the inherent likelihood of spills is great, it is entirely reasonable that those coming onto the premises should be able to look to the occupier for a very high degree of care indeed." The appellant's modest dwelling was no shopping mall. Her sale of household bric-a-brac was scarcely a major commercial enterprise. Although the occasion on which the respondent was injured was the fourth time that the appellant had conducted a garage sale, the number of days on which she did so was limited in comparison to the other more usual uses to which her uneven driveway was put. Nevertheless, this was not a case of a relationship established by charity collection or neighbourly visit. Still less was it an occasion of a visit of friends who might have been expected to have witnessed the concrete fault line on an earlier visit, been warned of it by the host or had no proffered distractions such as caught the respondent's eye. Whilst the former categories into which the entrants onto premises were historically divided have been abolished by the Wrongs Act (and by the common law) the relationship of the entrant and the occupier is still relevant. It was that relationship that lay behind the former categories. It explained why, in some 86 (2004) 89 SASR 572 at 598 [107]. 87 (1986) 7 NSWLR 241 at 246-247. Kirby cases, the common law assigned a higher standard of care than in others. The same is true of the Wrongs Act. It is reflected in s 17C(2)(c). To this day, the common law continues to recognise that, all other things being equal, a higher standard of care is owed by those with contractual or economic interests in the presence of an entrant on their premises. In Calin v Greater Union Organisation Pty Ltd88, this Court made it plain that "the principles of the common law governing the liability of an occupier of premises who agrees for reward to allow a person to enter the premises for some purpose" had not been overruled by the decision in Zaluzna. Specifically, the category of duty owed to persons who enter upon premises by virtue of a contractual right In the present case, the respondent did not argue that she had entered the appellant's premises pursuant to contract, even an implied one. However, that still leaves the standard of care owed by the appellant to be defined. Such standard depends on a full understanding of the relationship between the parties. That relationship was one established by the appellant's invitation to the public to do business with her from which the appellant stood to make a modest economic gain. In such circumstances, there is a higher standard of care than can be expected in relation to total strangers, unexpected visitors or uninvited charity collectors. Those who invite for economic gain can be expected, at the very least, to turn their attention to dangers that will be faced by those who accept their invitation. Moreover, realistically, they may be expected as a practical matter to turn their attention to securing insurance in order to provide indemnity in the event of accidents. The danger of unexpectedly burdening uninsured occupiers may sometimes, subconsciously, influence judicial expositions of the standard of care which occupiers are required to achieve. Respondent's age: As to the age of the injured person90, the respondent was 53 years old when she suffered injury. The specific requirement to consider the age of the injured person stands in the respondent's favour. Whilst a person of her age is not classified as elderly, it is common knowledge that older visitors may have less than perfect vision, stability and alertness. The appellant must have expected this when she extended her invitation to the world at large. 88 (1991) 173 CLR 33 at 38. 89 As in Watson v George (1953) 89 CLR 409. See also Hoyts Pty Ltd v Burns (2003) 77 ALJR 1934 at 1942 [46]; 201 ALR 470 at 480-481. 90 Wrongs Act, s 17C(2)(d). Kirby Appellant's awareness of the danger: So far as the extent of the appellant's awareness of the danger and entry of persons onto her premises is concerned91, the appellant was certainly aware of the respondent's entry because she had invited it by advertisement and display and was present when it occurred. Moreover, all of the judges below accepted that the appellant was aware, or ought to have been aware, of the danger presented by the uneven surface of her driveway. This was a feature of her home which, whilst not unique, was clearly evident to her. It was a characteristic to be taken into account in the decision to conduct a garage sale on the driveway and in the way that the appellant displayed the goods for sale there. Prophylactic steps taken: As to the measures to eliminate, reduce or warn against the danger92, no such measures were taken. None at all. To this day, the appellant simply asserts that the respondent was on her own; being obliged to look after herself. If the statutory considerations "eliminate, reduce or warn" are taken into account, as an indication of what might be done in the attainment by occupiers of a reasonable standard of care, the measures that were available to the appellant were several. They were relatively obvious. And they were inexpensive. They included, as the magistrate pointed out93, the placement of the table in a position straddling the fault in the concrete so as to prevent or diminish the need for members of the public to cross the fault line at its deepest point. They also included the placement of a painted line (or some other perhaps removable strip of identifying material) to highlight the gap in, and change of, the surface. Such markings are now quite common. They are extremely cheap to install. Alternatively, the simple expedient of placing a section of linoleum or a thick mat over the join of the concrete in front of the display table would have reduced the danger inherent in the uneven surface. A warning to elderly entrants to mind their step might have been given. Not one of these elementary and inexpensive precautions was taken. Reasonableness of taking precautions: As to the extent to which it would have been reasonable and practicable to take such measures94, the identified precautions are so modest, inexpensive and obvious that, if the appellant had given fractional attention to making her premises safe for potential entrants such as the respondent, it would not have been a large burden upon her. There is no 91 Wrongs Act, s 17C(2)(e). 92 Wrongs Act, s 17C(2)(f). 93 See above these reasons at [28]. 94 Wrongs Act, s 17C(2)(g). Kirby objective evidence to indicate that any attention was given by her to the issue of accident prevention. The question for decision is therefore whether, within the Wrongs Act criteria and the general principles of the law of negligence that the Act reflects, this is the standard that we have reached in Australia in the exhibition of neighbourly care on the part of persons such as the appellant towards persons such as the respondent. I think not. Obviousness of the risk: As the appellant pointed out, it is certainly true that passages appear in many judicial reasons to the effect that, in defining the standard of care in a particular case, it is appropriate to take into account whether the suggested risk is "obvious"95. In Romeo96, I wrote that "[w]here a risk is obvious to a person exercising reasonable care for his or her own safety, the notion that the occupier must warn the entrant about that risk is neither the reasonable nor circumstances of that case. The case involved a manifestly dangerous cliff edge in a nature reserve with a large drop. The statement was qualified97 by the need of the occupier to take account of "the possibility of inadvertence or negligent conduct on the part of entrants". It could not constitute, and was not intended to constitute, a universal proposition of law, applicable whatever the facts and circumstances of a case98. And it said nothing about precautions other than warnings – such as taking practical steps to prevent or reduce the risks of avoidable injury. that statement was particular However, just." through Based on a misunderstanding of dicta of the kind described in Romeo, the idea has spread that occupiers, with the courts of Australia responsibilities for the safety of premises can totally ignore those responsibilities because of the alleged obviousness of the risk to entrants. In principle, that is not and cannot be the law99. In a sense, the obviousness of risk speaks chiefly to those who are in charge of the source of the risk and who have the opportunity, and prime responsibility, to reduce or eliminate it. The respondent had no entitlement to change the appellant's premises. She could not re-arrange the 95 See, eg, Bressington v The Commissioner of Railways (NSW) (1947) 75 CLR 339 at 349; Foufoulas v FG Strang Pty Ltd (1970) 123 CLR 168 at 170; Phillis v Daly (1988) 15 NSWLR 65 at 74 per Mahoney JA. 96 (1998) 192 CLR 431 at 478 [123]. 97 (1998) 192 CLR 431 at 478 [123]. 98 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 474 [45]; 499-500 99 Vairy v Wyong Shire Council [2005] HCA 62 at [40]; contra Tomlinson v Congleton Borough Council [2004] 1 AC 46 at 85 [45]-[46]. Kirby trestle table. Nor could she take steps so as to make the premises safer for members of the public, like herself, entering to do business there. In some circumstances, the more obvious the risk, the greater the responsibility of those with the relevant power to protect others from it100. Entrants might (like the respondent in the present case) be momentarily distracted. The occupier will generally have more time and occasion to consider issues of risk and safety than short-term entrants. Further, a danger of placing so much emphasis on suggested obviousness is that, in a given case, it will distort proper consideration of a defence of contributory negligence101. It will take that factor of alleged carelessness on the part of the plaintiff up into the negation of a breach of duty, instead of reaching it at the conclusion of conventional negligence analysis102. The mischief of this approach, which is spreading like wildfire through the courts of this land and must be arrested if proper negligence doctrine is to be restored, is that it can effectively revive the ancient common law position so that effectively, contributory negligence, of whatever proportion, becomes again a complete defence to an action framed in negligence and debars that action. That consequence would reverse the universal enactment of apportionment legislation. That legislation recognises that, in many cases, a plaintiff's inadvertence or momentary carelessness is much less significant in the responsibility for accidents than a defendant's indifferent neglect of considerations of accident prevention which are substantially the defendant's own obligation. If I could expunge the quoted passage from my reasons in Romeo, I would gladly do so103. I would take it out, not because it was incorrect as a factual observation in the context of that case but because it has been repeatedly deployed by courts as an excuse to exempt those with greater power, knowledge, control and responsibility over risks from a duty of care to those who are vulnerable, inattentive, distracted and more dependent. The present case is a good illustration. Most people do not normally walk, even on unfamiliar surfaces, looking constantly at their feet. The fact that there was a division in the slabs of concrete in the appellant's driveway was obvious. But the distinct unevenness in surface levels of the adjoining slabs may not have been obvious to a person, like the respondent, who had no warning of it and no reason to 100 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 500 [128]. 101 Vairy v Wyong Shire Council [2005] HCA 62 at [46], [162]. 102 Lunney, "Personal responsibility and the 'new' volenti", (2005) 13 Tort Law Review 103 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 500 [127]. Kirby anticipate it. Especially if the respondent was distracted, as her accepted testimony said, the chances of overlooking the danger or "hazard" (as Doyle CJ described it104) was great. The appellant had the knowledge, the power and the economic interest to protect the public at large whom she had invited onto her property. In terms of fault, for failure to act in the circumstances, the responsibility fell mainly on the appellant. It is against risks of the kind that materialised that people such as the appellant can be expected to take precautions (and against the chance that they may fail, they can be expected normally to secure householders' insurance as thousands do). The supposed Ghantous analogy: I would not deny that some of the statements of legal principle in Ghantous have application to injuries happening on private property105. Nevertheless, Doyle CJ was clearly right in pointing to the significant factual differences between Ghantous and the present case106. The relationship of the respondent to the appellant was much closer, more direct and with greater economic mutuality than was Mrs Ghantous' relationship with the local government authority. What might reasonably be expected of the repair and upkeep or precaution and warning in the context of a driveway and forecourt in confined suburban premises to which the public was invited could not reasonably be expected for the maintenance of all verges beside the entire network of a municipality's footpaths. This is precisely the consideration to which Pt 1B of the Wrongs Act was addressed and, in particular, the considerations mentioned in pars (a), (b) and (e) of s 17C(2). A closer analogy to the present case than Ghantous is the decision of this Court in Webb v South Australia107. Although that was an instance, like Ghantous, concerned with the liability of a public authority for the condition of the edge of a footpath and was decided by reference to the common law as it was understood before it was restated in Brodie and Ghantous, the issue concerned a "false kerb" to a footpath that was likely to present the risk of injury to a class of persons that included the plaintiff. 104 (2004) 89 SASR 572 at 579 [36]. 105 Discussed above at [29]. 106 (2004) 89 SASR 572 at 578 [22]-[25]; cf 597 [103] per Gray J. 107 (1982) 56 ALJR 912; 43 ALR 465. Webb was referred to and applied in the joint reasons of Gaudron, McHugh and Gummow JJ in Brodie (2001) 206 CLR 512 at Kirby As in the present case, the defendant in Webb relied on the propositions that the intervening space, occasioned by the structure of the footpath, was "a very obvious feature" that was therefore not dangerous so that it deprived the plaintiff of a right to recovery. In this Court, these considerations proved persuasive for Wilson J and Dawson J who each dissented. They favoured affirming the conclusions of the trial judge and Full Court below. However, the majority of this Court (Mason, Brennan and Deane JJ) reached the opposite conclusion. They rejected the argument of "obviousness"108. It is instructive to recall what the majority said in Webb: "This finding [below] seems to have been based on its obviousness and on the circumstance that in the seven years that elapsed since its construction there was no record of any previous accident. But obviousness and the absence of accident over this period does not mean that the construction presented no risk of injury. As the false kerb was adjacent to a bus stop there existed the distinct possibility that a pedestrian, because he was in a hurry to catch a bus or was intent on observing an approaching bus or because his attention was distracted for some other reason, would fail to take sufficient care to avoid injury to himself. The happening of the accident demonstrated, if demonstration was needed, that the construction had the potential to cause injury. Of course a pedestrian could avoid the possibility of injury by taking due care. However, the reasonable man does not assume that others will always take due care; he must recognize that there will be occasions when others are distracted by emergency or some other cause from giving sufficient attention to their own safety. It seems to us that the courts below gave undue emphasis to the circumstance that injury could be avoided by a pedestrian who took reasonable care for his own safety." The present case is factually different in some respects, as is the way with negligence cases. There was no complaint about the original construction of the concrete slabs in the appellant's premises. Nevertheless, the issues of approach, the consideration of obviousness and the relevant place of contributory negligence in the sequence of the analysis of the legal responsibilities of the parties are all common to this appeal. The arguments of the appellant in this appeal harken back to the opinions of the dissenting judges in Webb. For my own part, I would adhere to the approach and reasoning of the majority in Webb for it correctly states the doctrine of the law of negligence which this Court has 108 (1982) 56 ALJR 912 at 913; 43 ALR 465 at 466-467. Kirby Conclusion: a breach of the duty of care Reasonableness of burden: This brings me to the essential reason that led Doyle CJ to his dissent in the Full Court. His Honour considered that to impose liability on the appellant would be unreasonable having regard to the modest character of the garage sale and the burden that would be involved in assigning a legal duty on suburban household occupiers of the kind propounded for the respondent. I cannot agree with this conclusion. I consider that the approach of the majority in the Full Court is more consonant with this Court's past legal authority and approach. Whilst the common law of negligence is reflective of notions of reasonableness of outcome, the only safe way to judge particular cases is to approach them by reference to the relevant criteria. The approach of Doyle CJ (and of Besanko J) failed, in my respectful opinion, to pay due attention to three considerations of legal principle identified by Gray J in his reasons109. These were first, the need to determine the case primarily by the application of the criteria expressed by Parliament in terms of the Wrongs Act. Secondly, to take into particular account the relationship of the parties, established in this case, because the appellant had invited the public at large to enter upon her premises and had an economic interest in their doing so. And thirdly, to consider the fact that apparently the appellant gave no thought whatever to accident prevention, which earlier decisions of this Court had repeatedly emphasised and required. In his reasons, Gray J referred to the reasons of McHugh JA and myself in the New South Wales Court of Appeal in Brady110. There, McHugh JA said111: "Equally important in determining what reasonable care requires is the importance to the community of accident prevention. The High Court has recently stated that accident prevention is unquestionably one of the modern responsibilities of an employer: McLean v Tedman112; Bankstown Foundry Pty Ltd v Braistina113. … Likewise, accident prevention is one of the responsibilities of those who for reward, direct or indirect, invite or permit members of the public to attend their premises. … A real risk of 109 (2004) 89 SASR 572 at 599 [113]-[115]. 110 (1986) 7 NSWLR 241. 111 (1986) 7 NSWLR 241 at 254-255. 112 McLean (1984) 155 CLR 306 at 313. 113 Braistina (1986) 160 CLR 301 at 308-309. Kirby injury should be eliminated unless the cost of doing so is disproportionate to the risk." Adhering to settled doctrine: This Court, if it pleases, can now turn its back on communitarian notions in the law, such as accident prevention. It can hold that the world, like ground surfaces, is not a level playing field114. It can conclude that the common law imposes no relevant duty of care on householders who invite strangers and the public at large to enter their premises to do business there. It can subsume considerations logically applicable to the breach element into the duty of care. It can effectively restore contributory negligence to its former status as a complete defence to liability. However, the Court must be aware that so concluding involves an important change of legal policy. It involves rejection of earlier approaches of this Court and its exposition of the affirmative duties of occupiers (and others) to turn their minds to accident prevention (and hence to insurance). To the extent that the Court turns away from the earlier principles, in my respectful view it endorses notions of selfishness that are the antithesis of the Atkinian concept of the legal duty that we all owe, in some circumstances, to each other as "neighbours"115. This is a moral notion, derived originally from Scripture, that has informed the core concept of the English law of negligence that we have inherited and developed in Australia. It is the notion that, in the past, encouraged care and attention for the safety of entrants on the part of those who invite others onto their premises. (It also encouraged such persons to procure insurance against risk). To the extent that these ideas are overthrown, and reversed, this Court diminishes consideration of accident prevention. (It also reduces the utility and necessity of insurance). From the point of view of legal policy, these are not directions in which I would willingly travel. It is true that in Thompson v Woolworths (Q'land) Pty Ltd116, five members of this Court, including myself, observed that there are "no risk-free dwelling houses" and that "[t]he community's standards of reasonable behaviour do not require householders to eliminate all risks from their premises, or to place a notice at the front door warning entrants of all the dangers that await them". I do not resile from these comments. In their generality, they remain true117. It is 114 Ghantous (2001) 206 CLR 512 at 639 [355] per Callinan J (dissenting) applied by Besanko J (2004) 88 SASR 162 at 167 [25]. 115 Referring to Lord Atkin's speech in Donoghue v Stevenson [1932] AC 562 at 580 citing, in turn, St Matthew's Gospel. 116 (2005) 79 ALJR 904 at 911 [36]; 214 ALR 452 at 460-461. 117 See also Jones v Bartlett (2000) 205 CLR 166 at 177 [23]. Kirby not necessary to compile a list of every potential source of danger in and around the house and to install warnings at every possible point of entry to the land. Self-evidently, such a course could not be justified and would probably be futile118. However, these comments do not address the risks of the present case which were beyond the ordinary, which were known or knowable to the householder and which were properly enlivened in her mind by her invitation to the public at large to come onto her premises to buy her goods. Conclusion: What it is reasonable to expect of householders living in the citadel of their domestic premises, behind a closed gate that excludes the world at large, is different from what may reasonably be expected of those who invite the public to enter for desired economic advantage to the occupier. In the latter class of case it is not unreasonable to expect considerations of visitor safety (and in many cases insurance) to attract the occupier's attention. Had that been done in the present case, the precautions that should have been taken were obvious, inexpensive and comparatively trivial. The fact that the appellant did not take any measures at all to eliminate, reduce or warn against the danger did not necessarily show that she had failed to exercise a reasonable standard of care119. But the fact that she invited the public at large and failed to attend to a known or knowable danger establishes breach of the appellant's duty of an applicable scope that results in legal liability in accordance with the principles of the law of negligence hitherto accepted by this Court120. Orders The appeal against the Full Court's judgment should be dismissed with costs. 118 Tame v New South Wales (2002) 211 CLR 317 at 332 [14]. 119 See Wrongs Act, s 17C(3). 120 Wrongs Act, s 17C(1). Hayne HAYNE J. The facts and circumstances that give rise to this appeal are set out in the reasons of other members of the Court. The appellant, as occupier of the land on which the respondent entered and was injured, owed the respondent a duty to take reasonable care for her safety121. Part 1B of the Wrongs Act 1936 (SA) (ss 17B-17E) (now Pt 4 of the Civil Liability Act 1936 (SA) – ss 19-22) which deals with occupiers liability assumes that to be so. Section 17C(1) (now s 20(1)) provides that the liability of an occupier for injury, damage or loss attributable to the dangerous state or condition of premises shall be determined in accordance with the principles of the law of negligence. The determinative question in this case is presented by s 17C(2)122: what was the standard of care to be exercised by the appellant? In deciding that question, s 17C(2) requires a court to take into account the matters that are identified in the eight paragraphs of that sub-section, recognising, of course, that the last of those ("any other matter that the court thinks relevant") is open-ended. Account must be taken of each of the matters that is identified. But in doing so it is important to recall that s 17C(3)123 makes plain that there are cases in which doing nothing to eliminate, reduce or warn against a danger is consistent with exercising reasonable care. In particular, demonstrating that an occupier "was aware, or ought to have been aware of" both "the danger" that led to an entrant being injured and "the entry of persons onto the premises"124 does not require the conclusion that the occupier should have taken some step to eliminate, reduce or warn against that danger. Rather, it is necessary to take account of all of the matters specified in s 17C(2), including "the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger"125 (emphasis added). When the matter is analysed, as it must be126, by reference to the applicable statutory provisions, it is readily apparent that it raises no point of 121 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479; Jones v Bartlett (2000) 205 CLR 166. 122 Now s 20(2). 123 "The fact that an occupier has not taken any measures to eliminate, reduce or warn against a danger arising from the state or condition of premises does not necessarily show that the occupier has failed to exercise a reasonable standard of care." 124 s 17C(2)(e). 125 s 17C(2)(g). 126 See, for example, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 77 [9] per Gaudron, Gummow, Hayne and (Footnote continues on next page) Hayne principle. It raises no point of principle about developments (recent or historical) in the law of negligence; it raises no point of principle about other aspects of the law. It requires no revisiting of the well-trodden paths of the argument, settled in Australia in Sullivan v Moody127, that the "Caparo test" is, as its author Lord Bridge of Harwich said128, a test whose ingredients "are not susceptible of any such precise definition as would be necessary to give them utility as practical tests". And the decision that is reached in the matter marks no departure from previous doctrine, whether by erosion or tectonic shift. That is because the decision turns on the assessment of what would have been reasonable and practicable for the occupier to do. This inquiry about what would have been reasonable and practicable is not to be undertaken in hindsight129. Nor is it to be confined to what could have been done to eliminate, reduce or warn against the danger. Asking what could have been done will reveal what was practicable. It is necessary to ask also: would it have been reasonable for the occupier to take those measures? In the present case, the relevant danger was presented by the uneven surface of the appellant's driveway. Neither the fact that the driveway paving was uneven nor the degree of unevenness (a difference of about 12mm between two sections of the concrete) is or was at all uncommon in the driveways of suburban housing. Would it have been reasonable for the occupier to eliminate or reduce the risk of tripping or stumbling on or over the unevenness, or to warn all entrants to watch their step? It may be that some means of reducing the danger could readily have been found. It was suggested that to paint a stripe along the lip of the concrete or to cover it over with a piece of carpet would have done so. Perhaps the danger could even have been eliminated by displaying the goods which were for sale in Callinan JJ, 89 [46] per Kirby J; Victorian Workcover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 526 [11] per Gleeson CJ, Gummow, Hayne and Callinan JJ, 545 [63] per Kirby J; Commonwealth v Yarmirr (2001) 208 CLR 1 at 37-39 [11]-[15] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, 111-112 [249] per Kirby J; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 6-7 [7]-[9] per Gleeson CJ, McHugh, Gummow and Hayne JJ; Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 79 ALJR 1850 at 1856 [30] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 127 (2001) 207 CLR 562. 128 Caparo Industries Plc v Dickman [1990] 2 AC 605 at 618. 129 Vairy v Wyong Shire Council [2005] HCA 62. Hayne some different way. But would it have been reasonable for an occupier embarking upon a garage sale to take any of these measures? When that question is examined from the proper perspective, without knowing what in fact happened to the respondent, the answer is no. Any suburban house presents many features that can lead to injury130. In that sense any suburban house presents many dangers. The appellant, as occupier, was not required to reduce or eliminate the danger presented by an unevenness in the driveway that was no larger than, and no different from, unevenness found in any but the most recently installed suburban concrete driveway. Nor was the occupier required to give some warning to entrants by telling them: "Be careful, the driveway upon which you are to walk is no different from most other driveways." The fact that the appellant had invited the public to attend a garage sale, and displayed the goods for sale as she did, requires no different conclusion. It is only when the particular event of the respondent's stumble is known to have happened that it appears reasonable to take steps to reduce or eliminate the danger presented by unevenness in the driveway surface. Only with that knowledge does it appear reasonable to point out or cover that irregularity. But that is to look at the problem with hindsight. That is not the question the statute (or the common law131) presents. That question is what would have been the reasonable response of the occupier before the accident happened. The respondent's claim for damages should have been dismissed. The appeal should be allowed, pars 1, 2 and 3 of the orders of the Full Court of the Supreme Court of South Australia made on 15 October 2004 set aside, and in their place there be an order that the appeal to that Court is dismissed. Consistent with the undertaking given by the appellant when granted special leave to appeal, the appellant should pay the respondent's costs in this Court and the orders for costs made by the Full Court should not be disturbed. 130 Jones v Bartlett (2000) 205 CLR 166 at 177 [23] per Gleeson CJ; Thompson v Woolworths (Q'Land) Pty Ltd (2005) 79 ALJR 904 at 911 [36]; 214 ALR 452 at 131 Vairy v Wyong Shire Council [2005] HCA 62. The issue This appeal raises no question of principle. It simply presents a question whether under the Wrongs Act 1936 (SA) ("the Act"), an occupier of residential premises owes entrants a duty of care to prevent a minor and obvious risk of injury which an entrant, exercising reasonable care for his or her own safety, could reasonably be expected to notice and avoid. The facts The appellant was the owner and occupier of a house located at 217 Kelly Road in one of the suburbs of Adelaide. She advertised and held a garage sale at the house on Saturday 5 February 2000 to which the respondent came. A garage sale is a familiar event in Australian suburbia. It provides an opportunity for householders to sell, and others to acquire, used household goods. It is an event undertaken informally in circumstances remote from the conduct of retail trade in general commerce, and, by a vendor or vendors infrequently. The appellant here had held four such sales during the previous two years. Adjacent to the house was a carport. A concrete driveway extended from the carport to the road. An expansion joint ran along the length of the driveway. On the left side of the joint the concrete driveway was about 10-12 mm higher than the right. The respondent walked up the driveway towards a table under the carport. As she did, she tripped over the joint. The difference in height was clearly visible and obvious. The driveway was of a type no different from many concrete driveways on residential properties throughout South Australia. The differential in height could in no way be regarded as uncommon, or unexpected of a suburban residence in South Australia. Indeed, as the photographs tendered by the parties unmistakably show, there were even greater irregularities in the surface of the footpath in front of the appellant's residence. The respondent had been, at the time, looking at or towards the goods on offer and paying no attention to the driveway. The weather was fine, and the surface upon which the driveway was constructed was generally flat and open. The proceedings at first instance The respondent sued the appellant in the Magistrates Court of South Australia. The Magistrate found that the unevenness in the driveway was a matter of which the appellant, who had lived on the property for some years, would have been aware. The Magistrate said: "In my view it was reasonably foreseeable that the unevenness in the path posed a risk to the attendees at the garage sale." The Magistrate was also influenced by evidence from an expert received over objection, which included the preposterous contention that "a lot of expecting people would view it [the driveway] in the same way as they viewed a shopping mall for example." The Magistrate identified two means by which the risk could have been reduced, the painting of a line along the joint to draw attention to it, or the placing of a table with goods on it over the uneven part. The Magistrate pointed out that the cost of reducing the risk of injury was low. He accordingly found that the appellant was in breach of a duty of care which she owed to the respondent. He rejected a submission that the respondent was guilty of contributory negligence, excusing her by holding that she would have been distracted by the goods to her right, and therefore not looking where she was placing her feet. He said that the situation may well have been different were it not for the goods placed on display. The Supreme Court The appellant successfully appealed to a single judge of the Supreme Court of South Australia (Besanko J) on both liability and quantum, as to the latter of which this Court is not concerned. His Honour said this132: "In my opinion, the duty of care of the occupier of a domestic property in relation to the static condition of the property does not extend to include risks which are obvious and which it is well known are likely to be encountered and which, in all the circumstances, an entrant may reasonably be expected in all the circumstances to notice and avoid." He added133: "I think the unevenness at the point where the [respondent] fell was not an uncommon or unexpected feature of a domestic property, and it was clearly visible and obvious." His Honour correctly ruled that the expert's evidence was substantially inadmissible and generally unhelpful134 (the respondent made no attempt to rely upon it in the Full Court or this Court135). 132 Neindorf v Junkovic (2004) 88 SASR 162 at 169 [34]. 133 (2004) 88 SASR 162 at 171 [42]. 134 (2004) 88 SASR 162 at 172 [45]. 135 cf Fox v Percy (2003) 214 CLR 118 at 167 [50]. His Honour also dealt with contributory negligence136: "As to contributory negligence, and assuming the [appellant] was in breach of a duty of care which she owed to the [respondent], the latter was not looking where she was going, and the presence of the goods to the right of the driveway does not excuse her failure to take reasonable care for her own safety. Had I held that the [appellant] was liable to the [respondent], I would have reduced the damages awarded to her by 30% by reason of her contributory negligence." The Full Court of the Supreme Court The respondent then appealed, by leave, successfully, to the Full Court of the Supreme Court (Nyland and Gray JJ, Doyle CJ dissenting)137. Gray J, with whom Nyland J agreed, was of the view that the appellant foresaw, or ought to have foreseen that entrants to her property might not perceive the dangerous state of the driveway and could readily fall, trip or stumble as a result138. His Honour said139: "The present case involved an advertised garage sale. The [appellant] invited the public at large to attend her premises. She chose to display goods above ground level at a point proximate to her driveway. Intending purchasers had no alternative but to approach the goods for sale by using the driveway. In the ordinary course, it could be expected that the attention of entrants might be drawn to the goods on display and away from the state of the driveway. As a result, through lack of awareness, an entrant could trip, stumble or fall and suffer injury. All this was readily foreseeable. [The appellant] could have taken a number of steps to safeguard against such an occurrence. A simple warning at the entrance to her property 'take care – dangerous [or uneven] driveway' could have been erected. The two persons stationed near the goods could have been 136 (2004) 88 SASR 162 at 172 [48]. 137 Junkovic v Neindorf (2004) 89 SASR 572. 138 (2004) 89 SASR 572 at 598 [105]. 139 (2004) 89 SASR 572 at 598 [105], [108]. directed to provide a warning to visitors. Some form of barrier could have been placed over or around the dangerous area. The dangerous area could have been marked in some way. All of these were practical, inexpensive, and easy steps to take. The [appellant] did nothing." His Honour also dealt with contributory negligence. Gray J said140: "The [respondent] failed to take reasonable care for her own safety. She entered an unfamiliar driveway and failed to look carefully where she was walking. The judge's assessment of the [respondent's] contribution was appropriate." Doyle CJ was of the view that the duty of care owed by the appellant to the respondent did not extend to the taking of precautions to prevent injury attributable to the unevenness in the driveway. The Chief Justice said141: "The [appellant] was aware of the hazard. The hazard could not easily be removed. To remove it would probably involve relaying part of the driveway. A painted strip might have reduced the danger, by calling attention to the presence of the hazard. Whether there were other measures available to the [appellant] that would, more or less permanently, reduce the hazard is not clear. I agree that it was foreseeable that a visitor might stumble or fall because of the unevenness, and might suffer injury. Although the unevenness was easily to be seen, it was foreseeable that a particular type of visitor, such as a young child or an elderly person with limited vision, might fail to see the hazard. It was equally foreseeable that in particular lighting conditions the hazard might not be seen. But there is a significant factor pointing the other way. The unevenness in the paving was of a kind and of an extent that pedestrians on roads and footpaths, and entrants on private property, encounter daily. Tree roots, erosion, soil movement and other factors all play a part in producing this state of affairs. In many residences a visitor will encounter the precise kind of hazard that the [respondent] encountered. A visitor is equally likely to encounter undulations in paving due to tree roots, pavers 140 (2004) 89 SASR 572 at 600 [117]. 141 (2004) 89 SASR 572 at 578-579 [28]-[36]. that have lifted or dropped slightly, cracking in concrete paving, erosion at the edge of hard paving such as Mrs Ghantous[142] encountered. Such hazards (it cannot be denied that they are hazards) are encountered daily by people entering private property. They are usually easily seen. Sometimes they are not. When encountered they usually do not cause injury, although clearly enough sometimes they do. They are accepted as an everyday aspect of life. This kind of unevenness in paving and paths is a normal hazard of daily life. I consider that the law of negligence would depart from the concept of fault according to everyday standards, and from the concept of taking reasonable care for one's neighbours, if it imposed a duty to protect entrants on private property against such a hazard. It needs to be borne in mind that if a duty of care is imposed in respect of such a hazard, it applies to each and every hazard on those parts of private property where visitors can reasonably be anticipated. Removing or neutralising all such hazards could be a significant burden on the occupier of a property. It would be an ongoing task. It is this factor that makes me incline against finding that the [appellant] owed a duty of care to the [respondent] in respect of the hazard." Although the Chief Justice was of the view that the appeal should be dismissed, he agreed with Gray J that if the appeal were to be allowed, then a reduction of 30 per cent for contributory negligence, although high, was appropriate143. The appeal to this Court The case in the courts below was conducted largely on the basis of the common law rather than the Act. No one suggested that the appellant did not owe a duty of care to the respondent. The duty was a duty however to take reasonable care only. It did not extend to a duty to adopt any measures of the kind canvassed, of warning, differently locating the table, or placing a mat on the driveway, or otherwise the levelling out of the difference in height at the joint. 142 see Brodie v Singleton Shire Council (2001) 206 CLR 512. 143 (2004) 89 SASR 572 at 580 [45]. The application of the Act, which in general reflects the common law, and which governed the action, demands no different conclusion. Sections 17B, 17C and 17E of the Act provide as follows: "Interpretation 17B In this Part, unless the contrary intention appears – 'dangerous' includes unsafe; 'landlord' includes a landlord under a statutory tenancy; 'occupier' of premises means a person in occupation or control of the premises, and includes a landlord; 'premises' means – land; or a building or structure (including a moveable building or structure); or a vehicle (including an aircraft or a ship, boat or vessel). Occupier's duty of care 17C(1) Subject to this Part, the liability of the occupier of premises for injury, damage or loss attributable to the dangerous state or condition of the premises shall be determined in accordance with the principles of the law of negligence. In determining the standard of care to be exercised by the occupier of premises, a court shall take into account – the nature and extent of the premises; and the nature and extent of the danger arising from the state or condition of the premises; and the circumstances in which the person alleged to have suffered injury, damage or loss, or the property of that person, became exposed to that danger; and the age of the person alleged to have suffered injury, damage or loss, and the ability of that person to appreciate the danger; and the extent (if at all) to which the occupier was aware, or ought to have been aware, of – the danger; and the entry of persons onto the premises; and the measures (if any) taken to eliminate, reduce or warn against the danger; and the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger; and any other matter that the court thinks relevant. The fact that an occupier has not taken any measures to eliminate, reduce or warn against a danger arising from the state or condition of premises does not necessarily show that the occupier has failed to exercise a reasonable standard of care. Subject to any Act or law to the contrary, an occupier's duty of care may be reduced or excluded by contract but no contractual reduction or exclusion of the duty affects the rights of any person who is a stranger to the contract. (5) Where an occupier is, by contract or by reason of some other Act or law, subject to a higher standard of care than would be applicable apart from this subsection, the question of whether the occupier is liable for injury, damage or loss shall be determined by reference to that higher standard of care. (6) An occupier owes no duty of care to a trespasser unless – the presence of trespassers on the premises, and their reasonably consequent foreseeable; and danger, were exposure the nature or extent of the danger was such that measures which were not in fact taken should have been taken for their protection. Exclusion of conflicting common law principles 17E(1) Subject to subsection (2), this Part operates to the exclusion of any other principles on which liability for injury, damage or loss attributable to the state or condition of premises would, but for this Part, be determined in tort. This Part does not apply to a case where an occupier causes a dangerous state or condition of premises, or allows premises to fall into a dangerous state or condition, intending to cause injury, damage or loss to another." We will now explain why application of s 17C(2) of the Act compels the same conclusion as the common law here. suburban shows, encountered unexceptionally on The premises in question were modest residential premises (s 17C(2)(a)). The nature and extent of the danger were minor, obvious, and of a kind, as the evidence footpaths (s 17C(2)(b)). The circumstances of the injury did include that the occasion involved the selling of goods, and an invitation to the respondent to come on to the appellant's premises to buy them. But such an occasion is far removed from the selling of goods on a daily basis by a commercial retailer. It remains however a matter, indeed one of the very few, weighing in the respondent's favour. There is no suggestion that the respondent's age (53 years at the time of the accident), or any infirmity on her part, precluded her from appreciating the differential in height, to the extent if any that it could fairly be described as a "danger" within the meaning of s 17C(2)(d) of the Act. It is true that there was a finding by the Magistrate and the majority in the Full Court that the appellant was, or ought to have been, aware of the danger, which is a factor of relevance under s 17C(2)(e). Knowledge of the joint and the unevenness of it is not the same however as an appreciation of it as a danger. There was no evidence of any previous problem or accident caused by the joint. The unevenness in question was of a kind often encountered. But in any event it is in our opinion an overstatement to describe the slightly raised concrete on one side as a "danger" of which the appellant was, or should have been aware. It was therefore not unreasonable for the appellant not to have taken measures to guard against the slight risk at most that it presented (s 17C(2)(f)). Accordingly, it is not necessary to explore what could or might have been done in that regard (s 17C(2)(g)). Section 17C(2)(h) contemplates that other matters may be relevant and should be taken into account. One of these is that on the day, and before the respondent injured herself, no fewer than six to eight people had safely walked up the driveway to the table. On the application of the Act, the correct result is that the respondent's case should have failed. In our opinion the conclusion of Doyle CJ is therefore to be preferred. We would allow the appeal. In accordance with the appellant's undertaking given on the application for special leave to appeal to this Court, the appellant should pay the respondent's costs of that application and the appeal, and the orders for costs made in the courts below should not be disturbed.

HIGH COURT OF AUSTRALIA ERNEST VAIRY AND APPELLANT WYONG SHIRE COUNCIL RESPONDENT Vairy v Wyong Shire Council [2005] HCA 62 21 October 2005 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: P C B Semmler QC with L T Grey for the appellant (instructed by Carroll & O'Dea) B W Walker SC with D F Villa for the respondent (instructed by Minter Ellison) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Vairy v Wyong Shire Council Torts – Negligence – Duty of care – Breach of duty – Foreseeability of risk of injury – Local authority – Power of care, control and management of natural reserve – Person suffered injury when diving into a body of water – Whether a reasonable local authority would have erected signs warning against the dangers of diving – Relevance of obviousness of risk to questions of duty and breach. Local Government Act 1919 (NSW). Ordinance No 52 under the Local Government Act 1919 (NSW), cll 8, 29(a)-(b). GLEESON CJ AND KIRBY J. This appeal was heard together with Mulligan v Coffs Harbour City Council1. Both cases were actions for damages for negligence brought by young men who suffered serious injury in consequence of diving or plunging into water and striking their heads or necks on the sand below. Both plaintiffs sued public authorities, complaining of a failure to warn of the risk which materialised. In each case, the trial judge accepted that the plaintiff was owed a duty to take reasonable care to protect him from unnecessary risk of physical harm. In the present case, the trial judge (Bell J) held that there had been a breach of that duty, although she reduced the damages substantially on account of contributory negligence. In the case of Mulligan, the trial judge (Whealy J) held that there had been no breach of duty. The issue of breach of duty in an action framed in negligence is one of fact, although its resolution involves the application of normative standards2. The central question concerns the reasonableness of the defendant's behaviour. It is understandable that, in a search for consistency, comparisons with similar cases will be made. However, as Lord Steyn said in Jolley v Sutton London Borough Council3, decided cases in this area are fact-sensitive, and it is a sterile exercise, involving a misuse of precedent, to seek the solution to one case in decisions on the facts in other cases. The proper use of precedent is to identify the legal principles to apply to facts as found. Decided cases may give guidance in identifying the issues to be resolved, and the correct legal approach to the resolution of those issues. But a conclusion that reasonableness required a warning sign of a certain kind in one place is not authority for a conclusion about the need for a similar warning sign in another place. The decision of this Court in Nagle v Rottnest Island Authority4 is not authority for the proposition that the coastline of Australia should be ringed with signs warning of the danger of invisible rocks. That was a decision about the legal principles relevant to the existence of a duty of care. The majority also held that the primary judge had been correct to find a breach of duty. That was a conclusion of fact, turning upon the circumstances of the particular case. The decision in Nagle did not establish that reasonableness requires a warning sign in all places where there are submerged rocks, any more than the decision in [2005] HCA 63. 2 Swain v Waverley Municipal Council (2005) 79 ALJR 565 at 567 [6]; 213 ALR [2000] 1 WLR 1082 at 1089; [2000] 3 All ER 409 at 416, cited in Tomlinson v Congleton Borough Council [2004] 1 AC 46 at 55 [18]. (1993) 177 CLR 423. Kirby Romeo v Conservation Commission (NT)5 established that reasonableness never requires a warning sign at the top of a cliff. Where this Court upholds, or overrules, a decision of a trial judge or an intermediate court of appeal about whether a particular defendant has or has not behaved reasonably, the reasons given for the Court's decision may provide guidance as to the relevant legal principles, if those principles are in doubt, but the ultimate factual judgment will depend upon the evidence and circumstances in the particular case. In these two cases, there was no legal inconsistency between the decisions of Bell J and Whealy J. They came to different conclusions on the facts. There was no material difference in their respective views of the law. As will appear, in each case we would uphold the decision of the trial judge. Both cases involve the tortious liability of public authorities responsible for the areas in which the diving accidents occurred. They were areas of recreational land, open to the general public. Many forms of outdoor recreation involve a risk of physical injury. In some cases, while the risk of injury may be small, the consequences may be severe. Swimming is a popular recreational activity along the Australian coast. It involves certain risks, and sometimes results in injury, or even death. The level of risk varies according to the locality, the conditions at any given time, and the capabilities of the swimmers. Short of prohibiting swimming altogether, public authorities cannot eliminate risk. A general prohibition in a given locality may be a gross and inappropriate interference with the public's right to enjoy healthy recreation. Swimmers often enter the water by diving, or plunging head-first. This, also, is risky. Diving into water that is too shallow, or diving too deeply into water in which only a shallow dive is safe, can have catastrophic results. Again, short of a total prohibition, it is impossible to eliminate such risks; and no one suggests that swimmers should be prohibited generally from entering the water head-first. In each case, the breach of duty alleged was a failure to warn. A defendant's duty of care is owed to an individual plaintiff, but it is a duty to do what is reasonable in all the circumstances. The fact that a defendant is a public authority with the responsibility of managing large areas of recreational land may be a circumstance material to a judgment about the reasonableness of its conduct. As Brennan J pointed out in Nagle6, the duty owed to the plaintiff is, in the ordinary case, owed to him or her as a member of the public. The nature of the premises, and the right of public access, will have an important bearing on what (1998) 192 CLR 431. (1993) 177 CLR 423 at 435-441. Kirby reasonableness requires by way of a response to risks associated with the use and enjoyment of the land. Warning signs only serve a purpose if they are likely to inform a person of something that the person does not already know, or to draw attention to something that the person might have overlooked or forgotten. The obviousness of a danger can be important in deciding whether a warning is required. Furthermore, a conclusion that a public authority, acting reasonably, ought to have given a warning ordinarily requires a fairly clear idea of the content of the warning, considered in the context of all the potential risks facing an entrant upon the land in question. When a person encounters a particular hazard, suffers injury, and then claims that he or she should have been warned, it may be necessary to ask: why should that particular hazard have been singled out7? If a public authority, having the control and management of a large area of land open to the public for recreational purposes, were to set out to warn entrants of all hazards, regardless of how obvious they were, and regardless of any reasonable expectation that people would take reasonable care for their own safety, then signs would be either so general, or so numerous, as to be practically ineffective. If the owner of a ski resort set up warning signs at every place where someone who failed to take reasonable care might suffer harm, the greatest risk associated with downhill skiing would be that of being impaled on a warning sign. Observation confirms that, in this community, it is accepted that there may be some circumstances in which reasonableness requires public authorities to warn of hazards associated with recreational activities on land controlled by those authorities. Most risky recreational activities, however, are not the subject of warning signs. It is impossible to state comprehensively, or by a single formula, the circumstances in which reasonableness requires a warning. The question is not answered by comparing the cost of a warning sign with the seriousness of possible harm to an injured person. Often, the answer will be influenced by the obviousness of the danger, the expectation that persons will take reasonable care for their own safety, and a consideration of the range of hazards naturally involved in recreational pursuits. The facts of this case are set out in the reasons of Callinan and Heydon JJ. As has been noted, Bell J found that there had been a breach of duty8. The Court 7 Commissioner of Main Roads v Jones (2005) 79 ALJR 1104; 215 ALR 418. 8 Vairy v Wyong Shire Council (2002) 129 LGERA 10. Kirby of Appeal was divided on the point9. Beazley JA agreed with the decision of Bell J. The majority (Mason P and Tobias JA) took a different view. In addressing the central question of fact in this particular case, we do not find it helpful to characterise the danger confronting the appellant at the level of diving into water of unknown depth. Such a practice, described in that general fashion, is always risky. There are, however, degrees of risk, and some risk of that kind exists every time a swimmer enters water head-first without knowing exactly how deep it is. Even if a swimmer knows the depth of water exactly, there are few people who could calculate with any accuracy the risk involved in diving or plunging into it. Most people who plunge head-first into the surf are taking some degree of risk and, if the risk materialises, the consequences may be devastating. The appellant dived into the sea from a rocky platform, close to a popular surfing beach. There were various levels in the rock formation. The appellant dived from a height of about 1.5 metres above water level. The trial judge could not find the exact depth of the water into which he dived, but at a nearby location from which he was recovered the depth of water was also about 1.5 metres. Diving from a height of 1.5 metres into water of approximately the same depth is very dangerous, depending, perhaps, on the angle of the dive. Yet the evidence shows that, on the day in question, many other people, with apparent safety, were doing what the appellant did. Diving from the rock platform was a popular activity that had been going on for years. The appellant, a competent swimmer who was familiar with the locality, knew that. The trial judge found that the appellant assumed that it was safe to dive from the rock platform because, on the day of his injury, and many times previously, he had seen people doing so. He did not attempt to assess the depth of the water into which he dived. He simply followed common practice. He said of the rock platform that it was "the place to go, to dive in or to jump in or whatever". The very practice which reassured the appellant was, as the respondent knew, a practice that had alarmed others. Members of the local surf life saving club had often warned people of the dangers of jumping or diving off the rock platform, sometimes going to the platform by boat in order to do so. In 1978, a young man who dived from the highest part of the platform became a quadriplegic. The incident received wide publicity in the area. A local newspaper reported that the beach inspector intended to recommend to the respondent the placing of a "danger" sign on the platform. From one point of 9 Wyong Shire Council v Vairy; Mulligan v Coffs Harbour City Council (2004) Aust Torts Reports ¶81-754. Kirby view, the most surprising feature of the evidence in the case was that so few serious injuries had resulted from diving from the rock platform over the years. At the trial, the respondent pressed Bell J with the argument that the respondent was responsible for about 27 kilometres of coastline, and that it was unreasonable to expect warning signs to be erected on every outcrop of rock from which someone could dive into the ocean. However, she accepted the evidence of a local government engineer that the rock platform adjoining Soldiers Beach was "most unusual", both in its formation and in its ready accessibility to members of the public attending a popular surfing beach. She also found as a fact that the respondent knew or ought to have known that there could, from day to day, be significant variations in the depth of water adjacent to the rock platform and that, in that respect, the respondent "was armed with knowledge that the [appellant] did not have concerning the danger of diving from the rock platform." She said: "The [respondent] was aware that members of the public commonly dived from the rock platform and that this activity was a dangerous one." The popularity of the activity in a sense increased the danger because it created a misleading appearance of safety. The trial judge concluded that the respondent should have erected signs prohibiting diving from the rock platform. Alternatively, she found that, at the least, the respondent was required to erect signs warning of the danger of diving from the rock platform. The appellant said that, if diving from the rock platform had been prohibited by the respondent and a sign to that effect had been erected, he would not have dived. He also said that if a warning sign, that it was dangerous to dive from that location, had been erected he would not have done so. Bell J accepted that the erection of a sign that served to bring the risk of diving from the rock platform to the appellant's attention would probably have led the appellant not to run that risk. She gave reasons for this conclusion, particular to the case. The conclusion was one of fact dependent, in part, on an assessment of the appellant. Like Beazley JA in the Court of Appeal, we find no error in Bell J's reasoning on what was essentially a matter of factual judgment, and we see no reason to interfere with her ultimate conclusion. There being no appealable error on the part of the primary judge, the majority of the Court of Appeal erred in disturbing Bell J's conclusions and the orders giving them effect. We would allow the appeal with costs, set aside the orders of the Court of Appeal, and in their place order that the appeal to that Court be dismissed with costs. McHugh 17 McHUGH J. Wyong Shire Council is a public authority vested with the statutory care, control and management of the land on which there is a rock platform from which the appellant dived into the Pacific Ocean and was injured. The issue in this appeal is whether, in all the circumstances of the case, the Council breached the duty of care that it owed to the appellant when it failed to warn him of the risk of injury associated with diving in that area. The Supreme Court of New South Wales (Bell J) held that the Council had breached its duty by failing to give that warning and that the breach was causally connected with the injury that the appellant sustained. The Supreme Court entered a verdict for the appellant and awarded him a substantial sum of damages. The Court of Appeal of the Supreme Court reversed the decision of the trial judge and entered a verdict for the Council. In my opinion, the trial judge correctly held that the Council had breached the duty that it owed to the appellant. The area where the appellant dived was one where many people dived. Diving in that area was fraught with the risk of serious injury to divers. The Council knew of the risk and, in any event, ought to have known that it existed. The large number of people that used the area for diving increased the probability that, sooner or later, the risk of striking the ocean floor would result in serious injury to one or more divers. So far as the evidence revealed, no other area under the Council's control exposed divers to as high a probability of injury occurring as did this particular area. Erecting a warning sign was a simple precaution that, on the trial judge's findings of fact, would have avoided the catastrophic injuries suffered by the appellant. The Court of Appeal erred in finding that the risk of injury was so obvious that the Council was not negligent in failing to erect a warning sign. Seldom will the obviousness of a risk created or permitted by a defendant who owes a duty of care require no action by that party. Ordinarily, when the obviousness of a risk requires no action, the magnitude and likelihood of the risk will be so insignificant and so expensive or inconvenient to avoid that reasonable care requires neither the risk's elimination nor a warning concerning its propensity. Hence, the Court of Appeal erred in finding that the Council did not breach the duty of care that it owed to the appellant. It follows that the appeal must be allowed and the appellant's verdict restored. The duty of care At the trial and in this Court, the Council correctly conceded that "as a public authority vested with statutory care, control and management of public land [it] owed a duty to take reasonable care" to safeguard the appellant from physical harm. When a person such as the appellant lawfully enters an area that a public authority controls and manages as an exercise of statutory power, the public authority has a legal obligation to take reasonable care to protect that McHugh person from physical injury10. What is required to discharge that duty depends on all the circumstances of the particular case. As the argument of the Council accepted, the issue in the appeal was not the existence of a duty of care but whether the Council had breached that duty. That was a question of fact. And, like all questions of fact that a court determines, it is resolved within its own parameters without comparing the facts of the case to the categories of facts in other cases. However, at times during the argument, statements were made which seemed, probably unconsciously, to confuse breach of duty with the existence of duty. Jurisprudentially, a duty of care is a notional pattern of conduct11. It arises in the context of a relationship between individuals and "imposes upon one a legal obligation for the benefit of the other ... to deal with particular conduct in terms of a legal standard of what is required to meet the obligation."12 Today, duty is an essential element of the tort of negligence13. Yet it was not recognised as such until well into the 19th century. Sir Percy Winfield has traced the history of the rise of duty as an integer of the tort of negligence14, and it is unnecessary to repeat it. It was the decision of the English Court of Appeal in Heaven v Pender15 that finally ensured that the concept of duty would be an element of the tort of negligence. There, Brett MR (as Lord Esher then was) said16: 10 Nagle v Rottnest Island Authority (1993) 177 CLR 423; Swain v Waverley Municipal Council (2005) 79 ALJR 565; 213 ALR 249. 11 Dias, "The Duty Problem in Negligence", (1955) Cambridge Law Journal 198 at 12 Prosser and Keeton on the Law of Torts, 5th ed (1984) at 356. 13 Some academic writers have maintained that the issue of duty is superfluous and that the factors relevant to it can be adequately dealt with under the issues of causation and carelessness (negligence). See, eg, Green, "The Duty Problem in Negligence Cases", (1928) 28 Columbia Law Review 1014 at 1028-1029; Winfield, "Duty in Tortious Negligence", (1934) 34 Columbia Law Review 41 at 61-64; Buckland, "The Duty To Take Care", (1935) 51 Law Quarterly Review 637 at 644; Stone, The Province and Function of Law, (1946) at 181-182; Atiyah's Accidents, Compensation and the Law, 6th ed (1999) at 58. 14 "Duty in Tortious Negligence", (1934) 34 Columbia Law Review 41. 15 (1883) 11 QBD 503. 16 (1883) 11 QBD 503 at 507. McHugh "But want of attention amounting to a want of ordinary care is not a good cause of action, although injury ensue from such want, unless the person charged with such want of ordinary care had a duty to the person complaining to use ordinary care in respect of the matter called in question." Ten years later in Le Lievre v Gould17, Lord Esher MR reaffirmed the need to establish a duty of care when he said: "The question of liability for negligence cannot arise at all until it is established that the man who has been negligent owed some duty to the person who seeks to make him liable for his negligence ... A man is entitled to be as negligent as he pleases towards the whole world if he owes no duty to them." Forty years later, the speech of Lord Atkin in Donoghue v Stevenson18 finally put beyond doubt the necessity for the existence of a duty in the tort of negligence: "You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question." As these quotations indicate, the duty in negligence is generally described as a duty to take reasonable care. In some areas of the law of negligence, however, the duty is expressed in more limited and specific terms. Until the decision of this Court in Zaluzna19, for example, the duty owed to entrants upon privately owned land varied according to the category of the entrants. They were classified as invitees, licensees and trespassers. Similarly, the duty in respect of negligent statements is more specific and limited than a simple duty to take reasonable care in all the circumstances of the case. In negligence cases involving physical injury, however, the duty is always expressed in terms of 17 [1893] 1 QB 491 at 497. 18 [1932] AC 562 at 580. The dissenting speeches of Lord Buckmaster and Lord Tomlin show that the need for a duty outside contract and certain defined situations was a live issue as late as 1932. Lord Buckmaster said (at 576) of Heaven v Pender that it "should be buried so securely that [its] perturbed spirits shall no longer vex the law." 19 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. McHugh reasonable care. As Prosser and Keeton have pointed out, "the duty is always the same – to conform to the legal standard of reasonable conduct in the light of the apparent risk."20 As a result, the duty owed by motorists to other users of the highway, for example, is expressed in terms of the duty to take reasonable care for the safety of other users of the highway having regard to all the circumstances of the case. The duty is not subdivided into categories such as a duty to keep a proper lookout or sound a warning or to keep a safe distance away from the car in front. In the particular circumstances of the case, failure to do one or more of these things may constitute a breach of the duty to take reasonable care. But they are not themselves legal duties for the purpose of the law of negligence. If they were, a trial judge would be bound to direct a jury in the circumstances of a particular case that the defendant had a duty to keep a proper lookout or sound his or her horn, as the case may be. Given such a direction, the only question for the jury would be whether or not a motorist had complied with the duty specified by the judge. But it is the jury, not the judge, that determines whether reasonable care required the motorist to keep a proper lookout or to sound the horn. The present case fell within the familiar category of cases where the plaintiff was a member of a class of persons to whom the defendant had a duty – according to a body of common law precedent – to take reasonable care for the safety of members of that class. Teachers and students21, doctors and patients22, occupier and entrant23, employer and employee24, jailer and prisoner25 are examples of established categories of cases in which the common law imposes a duty on the former class of person to take care of the latter. Similarly, public authorities and lawful entrants on land under the control of those authorities are another category26. But this categorisation of relationships that attract a duty of care is irrelevant to the issue of breach of the standard of care that the duty 20 Prosser and Keeton on the Law of Torts, 5th ed (1984) at 356. 21 Geyer v Downs (1977) 138 CLR 91. 22 Rogers v Whitaker (1992) 175 CLR 479. 23 Zaluzna (1987) 162 CLR 479. 24 Hamilton v Nuroof (WA) Pty Ltd (1956) 96 CLR 18; Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301. 25 Howard v Jarvis (1958) 98 CLR 177. 26 Nagle v Rottnest Island Authority (1993) 177 CLR 423; Swain v Waverley Municipal Council (2005) 79 ALJR 565; 213 ALR 249. McHugh demands. While the principles laid down in Wyong Shire Council v Shirt27 continue to state the common law of Australia, the standard of care that discharges the duty of reasonable care is determined according to the well-known formula set out in the judgment of Mason J in that case. In a case concerned with negligently inflicted physical injury, the most assistance that a judge can draw from legal precedent when determining whether a defendant has breached a duty of care is the basic and general principle that the duty that the defendant owed the plaintiff was a duty to take reasonable care. Since Perre v Apand Pty Ltd28 and the rejection of "proximity" as a doctrine, this Court has accepted that the concept of reasonableness cannot be factorised further into any other statements of principle. Judicial attempts to specify the content of a duty of care are destined to be as fruitless as attempts to specify the full set of values to which the reasonable traveller on the Bondi bus subscribes. Both attempts are bound to lead to error because the standard of reasonableness – and reasonable care – depends upon the facts of each case. There are a range of factors – I referred to some of them in Perre v Apand29 – that determine when the common law will impose on a defendant a duty to take reasonable care for the safety of a plaintiff. But there are no factors other than the Shirt formula by which the common law defines the standard of reasonable care required in a particular case. That is an evaluative task for the tribunal of fact – assuming that there is some evidence on which the tribunal of fact could find negligence. As I have already indicated, at times during the present appeal and the appeal of Mulligan v Coffs Harbour City Council30 heard at the same time, the argument for various parties did not keep the issues of duty and breach distinct. The arguments were often clouded by reference to phrases such as "the scope and content of duty" and "duty to warn". Judges and lawyers often use such phrases. When they are understood as commensurate with the standard of care required to discharge the defendant's duty of reasonable care, they cause no harm. But often enough they are used as if they themselves define or were the duty, or part of it. Using them creates the risk that they will be treated as stating legal propositions and convert what is a question of fact into a question of law. Hence, their use invites error in analysis, particularly the analysis of judicial precedents. 27 (1980) 146 CLR 40 at 47-48. 28 (1999) 198 CLR 180 at 194 [10], 202 [41], 233-235 [142]-[145], 304 [341]. 29 (1999) 198 CLR 180 at 231 [133]. 30 [2005] HCA 63. McHugh During the argument, the risk of error surfaced in a number of ways but nowhere more sharply than in the analysis of Nagle31. Except in so far as that case recognised "that the Board was under a general duty of care at common law to take reasonable care to avoid foreseeable risks of injury to visitors lawfully visiting the Reserve"32, it involved nothing more than a question of fact. It is not a precedent in favour of the appellant or anybody else except Mr Nagle. It lays down no principle of law other than that the Board had a duty to take reasonable care for lawful visitors on its Reserve. It is a binding authority in so far as it affirms that bodies such as the Board owe a duty to take reasonable care for the safety of lawful visitors on land under their control. The Court also upheld33 the trial judge's "finding that the failure to warn of the danger of diving from the eastern rock ledge into the Basin due to the presence of rocks was a breach of the [Board's] general duty of care." But that finding and the Court's upholding of it were questions of fact and bind no one. Given a similar case, the most junior judicial officer may disregard its reasoning, if the officer disagrees with it. As Barwick CJ pointed out in Conkey & Sons Ltd v Miller34, "a statement by an eminent judge ... is entitled to respect by those who have themselves to decide a question of fact upon the evidence of the case before them. But its persuasion rises no higher: and certainly does not bind in point of precedent." The common law has no need to – and does not – categorise the cases in which the defendant was held to have breached a standard of care. It is unlikely that "diving cases" will ever constitute such a category. The common law categorises cases – for the purposes of ascertaining the circumstances in which a defendant owes the plaintiff a duty of care – according to the relationship between plaintiff and defendant and not the activity that caused the plaintiff harm. In cases where the defendant is a public authority, the act of diving is not apt to place the diver in a relationship with the defendant. It is not the act of diving, but the act of entering onto the land that the respondent had a statutory power to control and manage, that made the appellant a member of a class to whom, in accordance with precedent, the Council owed a duty to take reasonable care. Thus, in determining whether the Council breached the standard of care that it owed to the appellant, references to other diving cases – like this Court's decision in Nagle – are not decisive. Their reasoning is "entitled to respect" and may be useful. But that is all. The appellant's reliance on Nagle was misplaced. 31 Nagle v Rottnest Island Authority (1993) 177 CLR 423. 32 (1993) 177 CLR 423 at 429-430. 33 (1993) 177 CLR 423 at 432. 34 (1977) 51 ALJR 583 at 585; 16 ALR 479 at 485. McHugh Equally misplaced was the analysis by the majority judges in the Court of Appeal of a large number of diving cases decided by courts in this country and the United States. Those cases turned on their own facts. They provided no assistance in determining the issue of fact in the present proceedings – whether on the evidence in this case the Council should have erected a sign warning of the danger of diving from the rock platform at Soldiers Beach. The Council breached its duty No one reading the evidence in this case and examining the photographic exhibits could doubt that diving from the rock platform adjoining Soldiers Beach gave rise to a serious risk of injury that was reasonably foreseeable. As long ago as 1978, Mr Errol von Sanden dived from the platform, struck the ocean bed and was rendered tetraplegic. The General Manager of the Council knew of Mr von Sanden's accident and the place and circumstances in which it occurred. Indeed it was a matter of common knowledge within the Council. The section from which Mr von Sanden dived was known as the "high rock" area. It was between 3.36 metres and 2.24 metres higher than the section from which the appellant dived, which was 1 to 1.5 metres above the surface of the water35. No doubt the risk of injury in diving from the high rock area was greater than that involved in diving from the lower section. But the risk of diving from the lower section was still significant. Mr John Edwards, who was the Beach Inspector at Soldiers Beach in 1978, testified that over the years much sand had accumulated around the platform and that the water was shallower than it once was. Two expert witnesses testified that it could be dangerous to dive from the platform because the height of the seabed changed from time to time. They favoured prohibiting diving or at least erecting a sign telling divers to beware of shallow water when diving. A few days after Mr von Sanden's accident, a local newspaper reported that Mr Edwards was intending to recommend to the Council that it place a "Danger: No Diving" sign at Soldiers Point. No sign was erected. But the evidence established that, from time to time, members of the Soldiers Beach Surf Lifesaving Club often told intending jumpers and divers not to jump or dive at this spot. The Council's General Manager knew that many people visited the platform and that on weekends, especially, young people would jump and dive from the platform. The General Manager said he had seen as many as 10 to 15 young people, perhaps even more, jumping and diving from the platform on particular days. Another witness said that, during the summer holidays, up to 30 people would be jumping and diving from the rock platform. 35 (2004) Aust Torts Reports ¶81-754 at 65,869 [36]. McHugh Upon this evidence, the learned trial judge correctly found that the Council breached the duty that it owed to the appellant. In determining what was a reasonable response by the Council to the perceived danger at Soldiers Point, a tribunal of fact had to take into account other competing responsibilities of the Council36. But the existence of other dangers at other places within the Shire that arguably required the institution of precautions did not itself automatically displace the Council's responsibility to deal with particular dangers at particular places. Situations may sometimes occur where, in an area under the control of the defendant, the totality of the magnitude of each risk of injury and the probability of its occurrence are outweighed by the expense or inconvenience of taking precautions to reduce or eliminate the totality of those risks. But each case depends on its own facts and circumstances, and the existence of other risks and competing obligations is not an automatic gateway to negligence immunity. One relevant circumstance in a case like the present is that the public authority usually has statutory powers that enable it to prohibit or regulate activity in particular locations. Hence, given the evidence in this case, it is no answer to the appellant's claim to contend that the boundaries of Wyong Shire include a coastline of about 27 kilometres with other potential hazards. There may or may not have been other areas along the coastline or within the Shire that were dangerous to swimmers or divers – the Council led no evidence that there were. Given the known danger of diving from this platform and the large number of people using it, then, this contention of the Council borders on the irrelevant. What it overlooks is that the probability of a risk causing injury increases with the number of persons coming into contact with the risk. At Soldiers Beach, there were a large number of divers using the rock platform on a regular basis. There was no evidence as to particular dangers in other areas of the Shire. Nor, even more importantly, was there any evidence as to the number of persons exposed to those dangers, if they existed. In any event, whatever other dangers may be present to swimmers and others in other areas of the Shire, one may be pardoned for thinking that there would be few, if any, areas where there was a higher chance of an injury occurring to divers than at Soldiers Point. The numbers using the platform for diving and jumping make that thought inevitable. Indeed, in the absence of evidence to the contrary, the risk of an injury occurring at Soldiers Point was probably hundreds of times greater than at isolated spots along the coastline or within the Shire. There may have been more dangerous places in the Shire. But in the absence of evidence concerning their user, it would be speculation to 36 Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 460 [75]. McHugh conclude that they required attention equal to, or more urgently than, the proven probability of injury occurring at Soldiers Point. The learned trial judge held that a reasonable response to the risk of injury was the erection of a warning sign. Whether a warning sign is a reasonable response to a perceived risk of harm depends on a number of factors. They include the nature and obviousness of the risk, the probability of its occurrence, the age and maturity of those exposed to it, the actual or imputed knowledge of those persons and the likelihood that the warning will be effective to eliminate or reduce the harm resulting from the risk. Most importantly, they include the likelihood that inadvertence, familiarity with the area or constant exposure to the risk will make those coming into contact with the risk careless for their safety. It follows that I cannot accept that Lord Hoffmann's statement in Tomlinson v Congleton Borough Council37, that "[a] duty to protect against obvious risks ... exists only in cases in which there is no genuine and informed choice", accurately represents the common law of Australia. In the present case, the evidence established that, despite the danger lurking below the seductive waters lapping the rock formation that contained the platform, many young people dived from the platform into the ocean, either oblivious to or reckless of the risk. From time to time, lifesavers warned them of the risk of injury. Some continued to dive and jump despite the warning. But nothing in the evidence suggests that the lifesavers were at or near the platform day after day warning of the risk. To those not aware of the risk of their heads or necks striking the ocean floor at this spot, the continual stream of diving without incident must have made diving from the platform seem no more dangerous than diving from a three metre springboard in a standard Olympic-sized pool. It is one thing to know that diving into water of unknown depth may cause injury. But a different area is reached where large numbers are known to dive into water without apparent harm. If the water does contain a risk of injury, its apparent safety will make it a trap for the unwary. When such a situation arises it is almost always imperative for the controller of the land to warn swimmers of the danger. Given the reaction of some divers to the warnings of lifesavers, a warning sign may not have deterred all. But at the least it must have made many stop and think of what might happen to them. The trial judge found that it would have deterred the appellant. Given that the Council, the authority that controlled this land, permitted diving to continue at this spot, despite its knowledge of the dangers, reasonable care required that it give a warning to those who did not have the Council's knowledge or who had become desensitised to the risk. 37 [2004] 1 AC 46 at 85 [46]. McHugh In finding that the Council had not breached its duty, the majority judges in the Court of Appeal emphasised the obviousness of the risk. Giving the majority judgment, Tobias JA said38: "In my opinion, this knowledge (or assumed knowledge) on the part of the [Council] is neutralised by the fact that [the appellant was] aware that the water into which [he was] diving was not only of variable depth but also of unknown depth. It was those factors, as I have said, which made the risk of injury from diving into such water, obvious. As such, in the present circumstances, a reasonable response from the [Council] did not require a duty to warn. The duty of care owed to the [appellant] was not breached by the failure of [the Council] to give any warning: the giving of a warning was not within the scope of [its] duty of care." With great respect to the learned judges in the majority, this passage appears to betray a fundamental misunderstanding of this branch of the law of negligence in its application to diving cases. It appears to be based on the premise that, where a risk from diving is obvious, the defendant has no duty to warn of it even when the defendant knows of the risk. It is true that earlier in his judgment Tobias JA recognised that "[o]n a given set of facts it could be the case that a warning may not go far enough to satisfy the duty." His Honour said that "[p]erhaps in a given entrant-occupier case a prohibition upon entry, or a class of entrants such as children, may be the minimum action necessary to discharge the duty."39 His Honour had also said that "this is not to say that in every case where an obvious danger presents itself there can never be a duty to warn."40 However, the block quotation set out in the previous paragraph appears to suggest that, where prohibition is not an issue, the obviousness of the risk negates the need for a warning in a diving case. Leaving aside cases of volenti, however, it is not the law that a defendant has no duty to take reasonable care for the safety of the plaintiff or that no warning is required if the risk of injury is, or ought to be, obvious to the plaintiff. The logical consequence of such a proposition would be that, except in those cases where the danger was unknown to or unobservable by the plaintiff, the defendant would not be required to take any action to eliminate the most dangerous risk of injury. In most cases, the greater the danger, the more obvious is the risk of injury. 38 Wyong Shire Council v Vairy; Mulligan v Coffs Harbour City Council (2004) Aust Torts Reports ¶81-754 at 65,900 [206]. 39 (2004) Aust Torts Reports ¶81-754 at 65,894 [171]. 40 (2004) Aust Torts Reports ¶81-754 at 65,900 [202]. McHugh Discharge of the defendant's duty requires the defendant to eliminate a risk – whether or not it is obvious – whenever it would be unreasonable not to do so. That proposition applies in all cases of alleged negligence including diving cases. The obviousness of the risk goes to the issue of the plaintiff's contributory negligence, rarely to the discharge of the defendant's duty. In the vast majority of – maybe all – cases, obviousness of the risk is relevant to the discharge of the defendant's duty only where the taking of precautions, other than giving a warning, is not a reasonably practicable alternative for the defendant. As I have indicated, whether a warning is a reasonable response to a perceived risk of harm depends on a number of factors. In a small number of cases, the obviousness of a risk may not require a warning. But ordinarily that will be because the magnitude and likelihood of the risk are both so insignificant and so relatively expensive or inconvenient to avoid that reasonable care requires neither the elimination, nor a warning concerning the propensity, of the risk. Exceptionally, there may also be cases where the risk is so well known and so likely to be present in the minds of those who are likely to come into contact with it that a defendant does not act unreasonably in failing to warn of it. The risk of injury in the present case was not insignificant. Nor was its likelihood of occurrence so small that a reasonable person in the position of the Council could reasonably ignore it. Nor was erecting a sign an expensive or inconvenient course of action to impose on the Council. To fail to erect a warning sign was an unreasonable response to a risk known to the Council but which may not at times – in some cases at any time – be known to entrants on the Council's land. The majority judges in the Court of Appeal erred in finding that the risk of injury was so obvious that the Council did not breach the duty of care that it owed to the appellant. The majority judges in the Court of Appeal also found that Bell J had erred in holding that it was relevant that the appellant had been misled, by others diving safely, into believing that the depth of water was sufficient to allow safe "the fact that ... other people to [the appellant's] observation ... had dived safely on other occasions did not neutralise or otherwise detract from the obvious risk of diving into water of unknown depth particularly where each was aware that the water depth was variable, that that variability related (at least in part) to the condition of the seabed ... and that [he] well knew that it was dangerous to dive into water of variable depth. In such factual circumstances the reasonable response to the exercise of the 41 (2004) Aust Torts Reports ¶81-754 at 65,901 [209]. McHugh [Council's] duty of care did not require the erection of a warning sign or signs." With great respect to both Bell J and the majority judges in the Court of Appeal, the belief of the appellant was irrelevant to what was required to discharge the Council's duty of care. That has to be determined by looking at the situation before the accident, not after. This was not a case where a positive act of the defendant had misled the plaintiff. Such a representation gives rise to a different duty than that owed to the ordinary entrant on land. Moreover, the above passage in the Court of Appeal judgment discloses two errors. First, whether or not the appellant was misled by others diving safely goes to the issue of contributory negligence not to the discharge of the defendant's duty. It is true that the fact that people have been safely diving in this area is relevant to the discharge of duty. But that is because the Council knew or ought to have known that entrants to the land may be misled by the apparent safety of the platform as a diving area. It is therefore relevant to what the Council ought to have done to eliminate or reduce the risk of injury to entrants generally on the Council's land. Second, the passage proceeds on the erroneous assumption, to which I have already referred, that the obviousness of the risk eliminates the need for a defendant to give a warning. In another passage, Tobias JA also placed some weight on the "inherent danger" involved in what the appellant did. His Honour said42 that "where the dive is to be undertaken in an environment where the depth of water is subject to change at short notice and without reasonable warning, then the danger (individual circumstances depending) will generally be an inherent danger." His Honour went on to say that if the danger is both obvious and inherent, then it may add weight to the claim that the reasonable response was to do nothing. His Honour said43 that "[t]he reason for such a response is that no amount of due care through warning could have removed the danger". But to speak of inherent risks or dangers is to invite error. It is reminiscent of the argument that held the field in employer's negligence cases about 40 years ago – that there were inherent risks in certain forms of employment that prevented an employee succeeding in a negligence action. But the only risks or dangers that are inherent in activities are those that cannot be avoided by the exercise of reasonable care. Describing an activity as inherently dangerous records the result of the application of the Shirt formula. It is of no assistance whatever to characterise an activity as inherently dangerous or risky before one determines whether it could have been avoided by the exercise of reasonable care. Moreover, where a risk of injury can not be eliminated by other reasonable measures it will ordinarily call for a warning. In 42 (2004) Aust Torts Reports ¶81-754 at 65,893 [167]. 43 (2004) Aust Torts Reports ¶81-754 at 65,893 [168]. McHugh medical negligence cases, for example, the patient will generally need to be warned against the "inherent risks" of the procedure44. That is to say, where there is an "inherent danger" in the correct sense of that term, a warning will usually be required. The trial judge correctly held that the Council breached the duty that it owed to the appellant. The Court of Appeal erred in setting aside the appellant's verdict. Order The appeal should be allowed. 44 cf Rogers v Whitaker (1992) 175 CLR 479; Chappel v Hart (1998) 195 CLR 232. GUMMOW J. This appeal and that in Mulligan v Coffs Harbour City Council45 were heard consecutively. What is said in these reasons to some degree informs the reasons in Mulligan. The facts in both cases are detailed by Hayne J and Callinan and Heydon JJ. The circumstance disclosed by those facts that opposed to public authorities are "vulnerable victims" unlikely to have protection from insurance against the risk of serious injury in recreational pursuits, should not skew consideration of the legal issues. Both appeals concern serious injury sustained by plaintiffs engaged in the dangerous recreational or sporting activity of diving into water, the South Pacific Ocean in the case of Mr Vairy and a creek not far from the sea in the case of Mr Mulligan. The care, control and management of areas adjacent to the site of the injuries was vested by or pursuant to statute in the defendant or, in the case of Mulligan, one or more of the defendants. The plaintiffs alleged a failure by the defendants sufficiently or at all to warn them of the hazards involved. There was much debate in submissions as to the form an adequate warning would have taken. In the Vairy appeal, these and other factual matters were emphasised in a fashion which tended (as appears to have happened at trial and in the Court of Appeal) to telescope secondary questions of breach with the primary questions of duty of care and its content. Something further should be said at this stage respecting the somewhat confused state in which the issues in Vairy came to this Court and were argued here. The plaintiff lost in the Court of Appeal the verdict recovered at trial before Bell J. The leading judgment of Tobias JA placed great weight upon the significance of the notion of obviousness of risk as destructive of the plaintiff's case. In his appeal to this Court, the plaintiff complained of this as displaying error in principle. This point also was stressed in the submissions to this Court in Mulligan. From a reading of the reasons of Tobias JA, there is room for debate as to how determinative of the outcome that weight was. But, in any event, I agree with Hayne J, for the reasons he gives, that reference to a risk being "obvious" cannot be used as a concept necessarily determinative of questions of breach of duty or, I would add, of questions of the existence and content of duty itself. The significance of Nagle v Rottnest Island Authority46 The defendant ("the Council"), perhaps anticipating in this Court that view of the notion of obviousness of risk, sought to trim its sails accordingly. It stated in its written submissions that the first issue was whether its duty of care required 45 [2005] HCA 63. 46 (1993) 177 CLR 423. it to warn the plaintiff against conduct involving a risk of injury presented by natural features of the site of injury. Both at trial and in the Court of Appeal, there had been much discussion of Nagle47. There, in a "diving case", the plaintiff had succeeded. That might be thought to pose a hurdle for the Council. In argument the Council dealt with that by confession and avoidance. No attempt was made to seek leave to re-open Nagle. Rather, counsel fixed upon those passages in the joint judgment appearing under the heading "Breach of duty"48 and correctly identified the outcome in favour of Mr Nagle as an answer to a jury question of no precedential value. That left on one side and bypassed the significance, if any, of the earlier finding in Nagle, again favourable to the plaintiff, respecting the existence and content of a duty of care. In this way the Council sought to fix the battle ground on the present appeal on the application of the so-called Shirt calculus49. Any apprehension respecting the present force of the holding in Nagle respecting duty of care was exaggerated. It is important to note that Nagle was decided whilst the "proximity" requirement was the doctrine of this Court. The trial in Nagle had been conducted on that basis. In concluding that the parties were in a relationship of proximity, the trial judge had attached importance to the activities of the defendant Authority in fostering attendance of swimmers at the site of the accident, known as the Basin, by promoting attendance there and providing facilities50. Mason CJ, Deane, Dawson and Gaudron JJ did likewise. By encouraging the public to swim in the Basin, the defendant brought itself under a duty of care to those who swam there, and that duty "would naturally require that they be warned of foreseeable risks of injury associated with the activity so encouraged"51 (emphasis added). In substance, the present plaintiff sought to bring his case within those words. The duty of care The essential issue on the Vairy appeal was the content of the duty of care, namely, the alleged requirement of a warning or a prohibition by the Council. But this re-emerged as part of the Shirt calculus, without the Council expressly seeking to re-locate it at its place of origin. It will be necessary to return later in these reasons to the question whether in those circumstances the Council can rely 47 (1993) 177 CLR 423. 48 (1993) 177 CLR 423 at 431. 49 Shirt v Wyong Shire Council [1978] 1 NSWLR 631; affd (1980) 146 CLR 40. 50 (1993) 177 CLR 423 at 427. 51 (1993) 177 CLR 423 at 430. upon any favourable consideration of the content of the duty of care. In Mulligan these other considerations do not arise. The trial judge in Mulligan made an express finding that "the obligation to warn the plaintiff about the risk of diving in the creek due to its variable depth did not fall within the scope of the duty of care imposed upon each of the defendants"52. But it is convenient to begin consideration of the appeal in Vairy by looking to the question of duty of care. In Graham Barclay Oysters Pty Ltd v Ryan53, Gleeson CJ observed that, if it is not possible to identify the content of an asserted duty of care, this may cast doubt upon the existence of the duty. An example is provided by Agar v Hyde54. In Romeo v Conservation Commission (NT), Kirby J remarked55: "It is one thing to hold that a person owes a duty of care of some kind to another. But the critical question is commonly the measure or scope of that duty. The failure to distinguish these concepts can only lead to confusion." The determination of the existence and content of a duty is not assisted by looking first to the damage sustained by the plaintiff and the alleged want of care in that regard by the defendant56. There is a particular danger in doing so in a case such as the present. The focus on consideration of the issue of breach necessarily is upon the fate that befell the particular plaintiff. In that sense analysis is retrospective rather than prospective. In his reasons in this appeal, Hayne J explains why an examination of the causes of an accident that has occurred does not assist, and may confuse, in the assessment of what the reasonable person ought to have done to discharge the anterior duty of care. Moreover, an assessment of what ought to have been done, but was not done, critical to the breach issue, too easily is transmuted into an answer to the question of what if anything had to be done, a duty of care issue. 52 (2003) Aust Torts Reports ¶81-696 at 63,875. 53 (2002) 211 CLR 540 at 555 [8]. Gleeson CJ had spoken to similar effect in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 13 [5]. 54 (2000) 201 CLR 552 at 578-582 [70]-[83]. 55 (1998) 192 CLR 431 at 478 [122]. 56 cf Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 290 [105]; Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at 367 [158]. Whether in the given circumstances there exists a duty of care in negligence is a question of law. After all, Donoghue v Stevenson57 itself was decided upon a demurrer type procedure used in Scotland. Of course, the existence of some or all of those "given circumstances" may depend upon issues of fact to be tried by the jury58. In many well-settled areas of the law of negligence, the existence of a duty of care presents no challenge. After Donoghue v Stevenson it was accepted that manufacturers of mass produced goods intended for human consumption owed a duty of care to ultimate consumers. Other examples of particular categories of relationship include motor vehicle accident cases and cases of physical injury to workers where there is an unsafe system of work. Likewise, as indicated by Tepko Pty Ltd v Water Board59, the special circumstances that call into existence a duty of care in utterance by way of information or advice can be articulated. But "diving cases" are not yet a discrete category. Nagle did not make them so. In a case such as the action brought by Mr Vairy, if the primary issue of the content of the duty of care is masked by a vague generalisation, the jury questions associated with breach tend to control the formulation of the legal criterion against which the allegation of breach is to be measured. While it is true that the trials giving rise to this appeal and to that in Mulligan were by judge alone, the day yet has to arrive where juries have been removed in all Australian jurisdictions in which these actions are tried. Swain v Waverley Municipal Council60 is a recent reminder of the different considerations that apply in appellate review of the two forms of trial adjudication. In any event, whilst the distinction between duty and breach is most clearly understood in the context of trial by jury, preservation of the separation of the conceptually distinct issues of duty and breach is, as this appeal shows, of general importance61. 58 Alchin v Commissioner for Railways (1935) 35 SR (NSW) 498 at 501-502; Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202 at 221; Rootes v Shelton (1967) 116 CLR 383 at 388. 59 (2001) 206 CLR 1 at 16-17 [47], 22-23 [73]-[75]. 60 (2005) 79 ALJR 565; 213 ALR 249. 61 See Derrington, "Theory of negligence advanced in the High Court of Australia", (2004) 78 Australian Law Journal 595 at 602-606. Shifts in authority In England, particularly after the judgments of Lord Reid in Dorset Yacht Co Ltd v Home Office62 and of Lord Wilberforce in Anns v Merton London Borough Council63, acceptance appeared likely of an equation between reasonable foreseeability of injury and duty of care in negligence, at least in cases of physical injury; the equation would apply unless there was some justification or sufficient explanation for its exclusion. But that state of affairs did not come to pass. Instead, in England there has been a trek from Anns to the "incrementalism" of Caparo Industries Plc v Dickman64 and Murphy v Brentwood District Council65, and now towards a vision of adjudication of negligence cases as a dialogue between the muses of "distributive justice" and "corrective justice"66. This Court has insisted that a defendant will be liable in negligence for failure to take reasonable care to prevent a certain kind of foreseeable harm to a plaintiff only if the law imposes a duty to take such care67. Nor has this Court adopted the requirement, also associated with Caparo68, that the court consider it "fair, just and reasonable" that the law impose a duty of care of a given scope69. In addition, the case law in this Court70 charts the rise, followed in the decade since Nagle by the decline, in the use of "proximity" as a distinct and general 62 [1970] AC 1004 at 1027. 63 [1978] AC 728 at 751-752. 66 See McFarlane v Tayside Health Board [2000] 2 AC 59 at 82-83. 67 Sullivan v Moody (2001) 207 CLR 562 at 576 [42]; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 555 [9]; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 524 [5]-[6]. The House of Lords spoke to the same effect in D v East Berkshire Community Health NHS Trust [2005] 2 WLR 993 at 1023-1024, 1025; [2005] 2 All ER 443 at 474-475, 476-477. 68 [1990] 2 AC 605 at 617-618. 69 Sullivan v Moody (2001) 207 CLR 562 at 579 [49]. 70 The authorities are collected by Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at limitation upon the test of reasonable foreseeability, and as a necessary relationship between plaintiff and defendant before a relevant duty of care can arise. The quietus was delivered by McHugh J in Tame v New South Wales71. The same fate befell the fiction of "general reliance"72. What the above-mentioned shifts in authority over fairly short periods demonstrate is the unlikelihood that any writer who tackles the subject, even in a final court of appeal, can claim thereafter a personal revelation of an ultimate and permanent value against which later responses must suffer in comparison. The post "proximity" authorities The recent authorities in this Court which discounted the search for "proximity" in cases approaching the frontiers of the law of negligence gave much attention to the particular features of the instant situations of the parties which did or did not call for the imposition by law of a duty of care. Thus, in Perre v Apand Pty Ltd73, the existence of the duty of care which was found depended upon the combination of foresight of the likelihood of harm, knowledge or means of knowledge of an ascertainable class of vulnerable persons unable to protect themselves from harm, and control of the occurrence of activity from which the damage flowed; it was also significant that the imposition of a duty of care would not impede the legitimate pursuit by the defendant of its commercial activity. On the other hand, the duty alleged in Sullivan v Moody74 did not exist. The appellants were family members who were actual, or potential, suspects in allegations of child sexual abuse. They complained of negligent investigation upon these allegations by the medical practitioners, social workers, Department of Community Welfare officers and hospitals involved. It was held that a duty of the kind alleged would not be found if it would not be compatible with other duties owed by the respondents, as matters of statutory and professional obligation. The nature and extent of those obligations and of the apprehended 71 (2002) 211 CLR 317 at 355-356 [106]-[107]. See also the judgment of Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ in Sullivan v Moody (2001) 207 CLR 562 at 578-579 [48]. 72 See the discussion by Callinan J in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 659 [310]. 73 (1999) 198 CLR 180; cf Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 533 [31], 557-559 [106]-[113], 592-593 [222]-[231]. 74 (2001) 207 CLR 562. incompatibility were considered in some detail by the Court in its joint Level of abstraction The approach in the above authorities to the question of duty of care is consistent with that taken by Glass JA in his influential judgment in Shirt v Wyong Shire Council76. He isolated77 the three issues: first, whether there was no evidence capable of showing that the Council owed a duty of care to the plaintiff; secondly, whether, if a duty was owed, there was no evidence capable of establishing its breach; and, thirdly, if there was such evidence of breach, whether there was no evidence of a causal relationship between breach and the plaintiff's injuries. As will be apparent from the way in which the issues were framed, that was an appeal from a jury verdict against the Council, after the trial judge had ruled that the Council had owed a duty of care to the plaintiff. Glass JA said that the existence or non-existence of a duty of care fell to be considered at "a higher level of abstraction" than some factual considerations which were entirely relevant to the breach question78. His Honour then specified several considerations as distinctly pertinent to the "more general level" that was appropriate with the duty issue79. The Council had dredged the bed of the Tuggerah Lake in an area where it then knew members of the public engaged in various water sports including water skiing; there was a foreseeable danger to water skiers if the bed were left in a condition which presented concealed hazards for boats towing them. A duty to exercise due care in the interests of the indeterminate class of skiers was generated by their foreseeable exposure to the risk of injury if care were not taken, both in performing the dredging work and in relation to the permanent state of affairs obtaining on its completion. Glass JA went on to state it was more debatable whether the evidence at trial on the second issue, that of breach, had been sufficient to go to the jury80. (These doubts were 75 (2001) 207 CLR 562 at 582-583 [60]-[63]. The same result was reached by the House of Lords, albeit by a consideration of what was "fair, just and reasonable", in D v East Berkshire Community Health NHS Trust [2005] 2 WLR 993; [2005] 2 All 76 [1978] 1 NSWLR 631. 77 [1978] 1 NSWLR 631 at 639. 78 [1978] 1 NSWLR 631 at 639. 79 [1978] 1 NSWLR 631 at 640. 80 [1978] 1 NSWLR 631 at 640. later entertained by Mason J81.) The evidence to a substantial degree concerned the steps taken by the Council employee responsible for the placement and wording of warning signs. In the end, Glass JA was persuaded by the "undemanding test of foreseeability" to be attributed to a reasonable man in the position of the employee82. In the appeal in Shirt to this Court, the issues concerned not duty but breach. This appears both from the report of argument83 and from the judgments of Mason J and Wilson J84. However, in respect of breach, the close attention required to the totality of the circumstances by what has become known as the "Shirt calculus" propounded by Mason J85 made good the distinction which Glass JA had drawn respecting levels of abstraction in dealing with duty and breach questions. It should also be observed in this connection that Mason J emphasised that the references in the "Shirt calculus" to foreseeability were made "in the context of breach of duty, the concept of foreseeability in connexion with the existence of the duty of care involving a more generalized enquiry"86. The foregoing analysis shows the care needed to distinguish between considerations going to the existence of duty and those going to breach. It also indicates that to speak as Glass JA did of the higher level of abstraction in dealing with that first step does not support a formulation of duty in the terms conceded by the Council in the present appeal but devoid of meaningful content. The concession by the Council At trial and in this Court, the Council conceded that "as a public authority vested with statutory care, control and management of public land [it] owed a duty to take reasonable care to [Mr Vairy]". The trial judge saw the real issue as the scope of that admitted duty the Council owed to lawful entrants upon the Norah Head Reserve, of whom the plaintiff had been one. On his part, the plaintiff relied upon what had been said by the majority in Nagle as to the "natural" requirement of the duty of care respecting warning of foreseeable risks of injury. The Council countered with reference to the statement by Kirby J in 81 (1980) 146 CLR 40 at 48. 82 [1978] 1 NSWLR 631 at 641. 83 (1980) 146 CLR 40 at 42. 84 (1980) 146 CLR 40 at 44, 52. 85 (1980) 146 CLR 40 at 47-48. 86 (1980) 146 CLR 40 at 47. Romeo v Conservation Commission (NT)87 to the effect that it was neither reasonable nor just to require a warning by the public authority of a risk obvious to a person exercising reasonable care for that person's own safety. The trial judge deferred consideration of the reasonable response by the Council to her consideration of the breach of the duty of care. Whilst this appeared to be the practical course, the result was the telescoping of questions of duty and breach with the consequence referred to earlier in these reasons. In the passage in Nagle88 upon which the plaintiff particularly relied, their Honours indicated that the generally formulated duty would "naturally require" warning of foreseeable risks of injury. But, as Callinan and Heydon JJ point out in their reasons on the present appeal, the majority did not take the matter any further. Their Honours did note89 that the failure of the plaintiff to identify the content of an adequate warning sign had not been a subject of contention at trial. The present appeal cannot be resolved in a conceptually coherent manner unless the question respecting scope of duty, which was left at large in Nagle, is taken further. The point may be put another way by saying that the submissions on the appeal respecting the need for warning signs present a dispute as to whether this is the relevant content of the duty of care accepted by the Council. I will now proceed on that footing. The content of the duty of care In the judgment of this Court in Sullivan v Moody, the following "Different classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care. Sometimes the problems may be bound up with the harm suffered by the plaintiff, as, for example, where its direct cause is the criminal conduct of some third party. Sometimes they may arise because the defendant is the repository of a statutory power or discretion. Sometimes they may reflect the difficulty of confining the class of persons to whom a duty may be owed within reasonable limits. Sometimes they may concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships. The relevant problem will 87 (1998) 192 CLR 431 at 478 [123]. 88 (1993) 177 CLR 423 at 430. 89 (1993) 177 CLR 423 at 432. 90 (2001) 207 CLR 562 at 579-580 [50]. then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle." (footnotes omitted) For the first example (nature of harm), the Court referred to Modbury Triangle Shopping Centre Pty Ltd v Anzil91; for the second (statutory powers) to Crimmins v Stevedoring Industry Finance Committee92 and Brodie v Singleton Shire Council93 (to which may be added Graham Barclay Oysters Pty Ltd v Ryan94); for the third (class indeterminacy) to Perre v Apand Pty Ltd95 (to which may be added Woolcock Street Investments Pty Ltd v CDG Pty Ltd96); and for the fourth (coherence) to Hill v Van Erp97 (to which may be added Koehler v Cerebos (Australia) Ltd98). What then, in the sense of the passage in Sullivan v Moody, are the problems in determining the scope of a duty of care owed to the plaintiff in this case? A starting point is suggested by the path taken by Brennan J in his dissenting judgment in Nagle99, namely, looking to the nature of the danger, assessed prior to the accident, with reference to such matters as the functions of the public authority, the obviousness of the danger, and the care ordinarily exercised by members of the public. 91 (2000) 205 CLR 254. 92 (1999) 200 CLR 1. 93 (2001) 206 CLR 512. 94 (2002) 211 CLR 540. See also Commissioner of Main Roads v Jones (2005) 79 ALJR 1104; 215 ALR 418. These cases illustrate the point made by Lord Nicholls of Birkenhead that identification of the parameters of the law of negligence is especially difficult in fields involving the discharge of statutory functions by public authorities: D v East Berkshire Community Health NHS Trust [2005] 2 WLR 993 at 1023; [2005] 2 All ER 443 at 475. 95 (1999) 198 CLR 180. 96 (2004) 216 CLR 515. 97 (1997) 188 CLR 159 at 231. 98 (2005) 79 ALJR 845; 214 ALR 355. 99 (1993) 177 CLR 423 at 440. The Council in this case had the control and management of a large area of land used for public recourse and enjoyment. There were 27 kilometres of coastline, with extensive sandy beaches interrupted by prominent headlands with rocky foreshores. The area of Wyong Shire also includes the extensive Tuggerah Lakes system where the accident with which Shirt was concerned took place. The danger of diving off the rock ledge from which the plaintiff dived was apparent. In that respect, reference is apt to the formulation of duty in Brodie. This was to the effect that, even in the case of public roads, the use of which is "a matter of basic right and necessity"100, the duty of the public authority requires that "a road be safe not in all circumstances but for users exercising reasonable care for their own safety"101. An observation by Callinan J in Agar v Hyde102 is also apposite; the site from which the appellant dived as a recreational pursuit was of a different character "from the workplace, the roads, the marketplace, and other areas into which people must venture"103. The basis upon which a duty of care, owed to members of the public who use public premises, is imposed upon statutory authorities responsible for the control and management of those premises was explained by Hayne J in Romeo104: "It has now long been held by this Court that the position of an authority ... which has power to manage, and does manage, land which the public use as of right is broadly analogous to that of an occupier of private land. It is the management of the land by the authority which provides the necessary relationship of proximity between authority and members of the public." (footnote omitted) However, to observe the existence of the analogy thus drawn is not to say, as the Council's concession referred to above appears to assume, that the mere circumstance that a statutory authority has powers of management over public lands, which are in turn used as of right by members of the public, is alone sufficient to enliven the duty of care in question. Such a proposition fails to take into account the emphasis given by this Court to the notion that where, as in the present case, those powers of management may be said to be quasi-legislative in 100 (2001) 206 CLR 512 at 574 [141]. 101 (2001) 206 CLR 512 at 581 [163]. 102 (2000) 201 CLR 552. 103 (2000) 201 CLR 552 at 600 [127]. 104 (1998) 192 CLR 431 at 487-488 [152]. nature, their exercise cannot be compelled or constrained by a common law duty of care105. Indeed, for the majority in Nagle, it did not suffice to found the duty of care that the defendant Authority was under a duty to manage and control for the benefit of the public the reserve in which the plaintiff had suffered his injury. Instead, as noted earlier in these reasons, the notion of "proximity" as then understood was decisive. Proximity was created by the circumstance that the defendant Authority had encouraged members of the public to swim in the particular basin where the injury eventually occurred106. It might be noted for the present appeal that, whilst there was an adjacent car park at the Norah Head Reserve, the Council did not promote the rock platform as a diving point in the same manner in which the defendant in Nagle both promoted the basin within the reserve as a swimming area and sought to derive revenues from its use by members of the public. To the contrary, the evidence was that, when surf life-savers on patrol at the nearby Soldiers Beach had warned the youths and young men jumping and diving from the rock platform, the surf life-savers had been verbally abused. At trial, Mr Vairy's case was conducted primarily on the basis that the Council "was negligent by its failure to erect signs prohibiting diving reinforced by signs warning of the dangers of diving by reason of the depth of the water" (emphasis added). As at the date of Mr Vairy's accident, the Council had power to prohibit diving by use of such signs under s 354(2) of the Local Government Act 1919 (NSW) or under cl 8 or cl 21 of Ordinance 52 made under that statute. Given that failure to comply with a notice or warning made under Ordinance 52 was made an offence pursuant to the terms of cl 29, such a prohibition would have had the force of law. It would have represented the exercise by the Council of a quasi-legislative power. At trial, the Council had relied upon Crimmins v Stevedoring Industry Finance Committee107 to submit that it "could not be in breach of a duty of care owed to [Mr Vairy] by reason of failure to exercise quasi-legislative powers". Bell J rejected this submission, saying: 105 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 20-21 106 (1993) 177 CLR 423 at 430. 107 (1999) 200 CLR 1. "If the Council has the power to prohibit members of the public from engaging in a dangerous activity, such as diving from a rock platform located in a reserve the subject of its care, control and management and to prohibit that activity does not occasion undue expense, difficulty or inconvenience, then it seems to me that its failure to do so may show a want of reasonable care for the safety of visitors to the reserve. To say this does not seem to me to trench on the core policy-making functions of the Council." Her Honour thus adverted to the notion that a failure to exercise a quasi-legislative power may constitute a breach of a duty of care where questions concerning "core policy-making functions" are not involved. This notion finds some support in the following statement by Deane J in Sutherland Shire Council v Heyman108: "The existence of liability on the part of a public governmental body to private individuals ... will commonly, as a matter of assumed legislative intent, be precluded in cases where what is involved are actions taken in the exercise of policy-making powers and functions of a quasi-legislative character". However, as appears from the passage just quoted, his Honour saw "assumed legislative intent" as the basis for such an exclusion of liability. That proposition can no longer be said to provide a complete representation of the present state of the law in Australia. In Crimmins, Hayne J said109: "Put at its most general and abstract level, the fundamental reason for not imposing a duty in negligence in relation to the quasi-legislative functions of a public body is that the function is one that must have a public rather than a private or individual focus. To impose a private law duty will (or at least will often) distort that focus. This kind of distinction might be said to find reflection in the dichotomy that has been drawn between the operational and the policy decisions or functions of public bodies. And a quasi-legislative function can be seen as lying at or near the centre of policy functions if policy and operational functions are to be distinguished. But as more recent authority suggests, that distinction may not always be useful". (footnotes omitted) Three points may be extracted from this passage. First, it is not so much an assumed legislative intent, as it is the public focus of a quasi-legislative function, which limits the private law duties of a public body. Secondly, the distinction 108 (1985) 157 CLR 424 at 500. 109 (1999) 200 CLR 1 at 101 [292]. between the operational and policy functions of such a body is of dubious utility110. And, thirdly, to the extent that this distinction nonetheless is useful and should be preserved, the mere circumstance that a function is quasi-legislative should suffice as a basis upon which to describe it as a policy function. Hayne J was one of the minority in Crimmins but these points were all reflected in the various other judgments, both of the majority and minority111. When seen in this light, the reasoning of the learned trial judge discloses error. The Council's failure to erect signs prohibiting the act of diving from the rock platform cannot attract liability in tort. This conclusion, however, does not touch Bell J's view that the Council "was, at the least, required to erect signs warning of the danger of diving from the rock platform". To that issue I now turn. Reference has been made above to the geographic reach of the Council's responsibilities. It is doubtful whether the rock platform may properly be described as "a distinct and unusual natural formation". The finding on that issue by the trial judge was based upon evidence concerning the geography of the Warringah Shire. Indeed, one may doubt whether there is anything to distinguish the rock platform from the other areas of coastline or shoreline which the Council had been charged with the task of managing. The Council submitted, for example, that evidence of the frequency with which members of the public are injured as a result of activities associated with the rock platform is of little assistance in this case because "[t]here was no attempt on [Mr Vairy's] part to show that there was something special [in this] in relation to [the] rock platform". The Council also sought in oral argument to diminish the significance of the accessibility of the rock platform from Soldiers Beach and the substantial bituminised car park provided to beach visitors. No doubt, although no explicit reference was made to it, this submission drew some support from the finding in Romeo that there was nothing distinctive about the part of the cliff from which the appellant fell, not even in the circumstance that there was a car park nearby112. These submissions by the Council should be accepted. Weight is also to be given to the Council's submission in this Court that members of the public are exposed to a multiplicity of dangers when they attend beaches or rock headlands, including sharks, the possibility of being washed off 110 See Pyrenees Shire Council v Day (1998) 192 CLR 330 at 393-394 [180]-[182]. 111 (1999) 200 CLR 1 at 20-21 [32], 39 [93], 62 [170]. 112 (1998) 192 CLR 431 at 455 [54]. rocks, dangerous currents and sandbars. It is true that some years before Mr Vairy's accident, another person had been seriously injured after diving from the same rock platform and that this was known to the Council. But many others had dived or jumped there without injury. And the risk of spinal injury brought about by the impact upon the swimmer of natural phenomena would be present in many other areas of the Shire. The question must then be asked: if, as Mr Vairy contends, the Council had a duty to warn of the risks associated with diving from the rock platform, why did it not also have a duty to warn of these other risks both on the platform and at every point along the coastline and shoreline for which it was responsible? A similar question was posed by Gleeson CJ in Woods v Multi-Sport Holdings Pty Ltd in relation to the risks that arise from indoor cricket113: "The case was that there should have been a warning of the dangers associated with indoor cricket and, in particular, the danger of serious eye injury. It is useful to reflect upon what exactly might have been the content of the warning. There was no reason to limit it to the risk of head injury, much less eye injury. There was one particular respect in which the type of eye injury suffered at indoor cricket can be different from the type suffered at outdoor cricket, but there were probably also a number of respects in which the risk of back injury, or concussion from collisions, might be different from the risks associated with outdoor cricket. The risk that, in the confined space in which the game was played, any player, batsman or fielder, might receive a severe blow to any part of the head, including the eye, was, the trial judge found, obvious, and well known to the appellant. It was argued that the appellant was not aware of the precise nature, and full extent, of the risk. But warnings of the kind here in question are not intended to address matters of precision." The Council did not put Mr Vairy in harm's way in the sense that it required or invited or encouraged him to dive from the rock platform. It is of no relevance that the Council could have prohibited diving from the rock platform – that is, that it could have, by legal coercion, directed Mr Vairy out of harm's way. The exercise of the Council's powers of prohibition was, as discussed above, incapable of being compelled or constrained by a common law duty of care, and the existence of those powers cannot be taken to establish the measure of control required to found such a duty. Nor was the Council's control over the rock platform such that it could be said to have created the risk of injury to which Mr Vairy was exposed on the day of his accident. Both littoral drift and the normal movements of the tide are natural phenomena. Therefore, to the extent that the Council owed Mr Vairy a duty of care requiring a warning, that duty 113 (2002) 208 CLR 460 at 473-474 [43]. must have been founded upon the concept of control. But the control exercisable by the Council over both Mr Vairy and the rock platform did not rise to such a level that the content of the duty should have included an obligation to issue the sort of warning for which Mr Vairy now contends. The conduct of the plaintiff Some emphasis was placed in the reasons of the learned trial judge upon the circumstance that Mr Vairy had, on the day of his accident, observed other people diving and jumping into the water from the rock platform without suffering adverse consequence. In a similar fashion, it was submitted for Mr Vairy in this Court that those observations gave him "reasonable grounds for believing ... that the water was deep enough for him to dive into in safety". One might doubt, however, whether reliance upon this circumstance is of any real assistance to Mr Vairy in the present appeal. After all, it is not pertinent to the question of duty whether or not he had reasonable grounds for believing that the water adjacent to the rock platform was of sufficient depth to allow for safe diving. Indeed, to fix upon this issue would be to overlook what has already been said concerning the proper approach to determining the content of the Council's duty of care. The scope of that duty must be assessed, not by exclusive reference to the risk which resulted in Mr Vairy's accident, but against the background of the whole multitude of risks that may crystallise over the length of shoreline, the care, control and management of which is the responsibility of the Council. The reasonableness of Mr Vairy's belief that it was safe to dive from the rock platform goes only to the question of breach, and specifically to the obviousness or otherwise of the risk to which he was exposed. To accept, as dispositive of this appeal, the contention that that belief was founded upon reasonable grounds is to assume, as the Court of Appeal did, that the determinative issue in this case is the obviousness of the risks associated with diving into a body of water of unknown depth. For the reasons given by Hayne J, that assumption should not be made. And, once that assumption is rejected, it is difficult to see what weight, if any, may be given, in deciding this appeal, to the reasonableness of Mr Vairy's belief concerning the safety of diving from the rock platform. That he observed others diving safely before diving himself, thus displaying a modicum of caution, does not make any more or less reasonable the Council's response to the multitude of apparent risks to which members of the public are exposed along the coastline in the Shire of Wyong, namely, its omitting to place along that coastline signs warning of all of those risks. It might be said, given the legal principles already outlined, that Mr Vairy's observations on the day of his accident can only be relevant if this Court were to quarantine from review the findings and holdings of the learned trial judge on the ground that they relate entirely to matters of fact. However, as Gleeson CJ noted in Swain v Waverley Municipal Council114, a jury case, the concept of reasonable care has a normative content. Where the application of normative standards to a given set of facts is required of a judge, so much more pressing is the need for reasoning which displays soundness and cogency. Conclusions The trial judge erred in merging the question of the scope or content of the conceded duty of care and the question of breach. The content of the duty did not include, whatever else it may have included, an obligation to warn (still less to prohibit) of the kind contended for by the plaintiff. However, given the course pursued by the Council in its appeal to this Court, it would be wrong to uphold on that basis the decision of the Court of Appeal which deprived the plaintiff of the verdict he recovered at trial. Upon that footing, the appeal must be determined by reference to the Shirt calculus. In that regard, I agree that the appeal should be dismissed, not to support the reasoning of the Court of Appeal, but for the particular reasons appearing in the judgment of Hayne J under the headings "Warning?" and "Prohibition". Orders should be made dismissing the appeal with costs. 114 (2005) 79 ALJR 565 at 567 [8]; 213 ALR 249 at 252. Hayne 101 HAYNE J. A person entering a body of water, by diving or plunging into it, can suffer catastrophic spinal injury. The appellant in this case, and the appellant in the case heard immediately after this115, each suffered such an injury. This appellant suffered irreversible tetraplegia when he dived into the sea from a natural rock platform at Soldiers Beach, a popular surfing beach on the central coast of New South Wales. He hit his head on the sea bed. The appellant sued the respondent ("the Council") in the Supreme Court of New South Wales. The Council is a local government authority constituted under the Local Government Act 1919 (NSW). The appellant alleged that the Council had been negligent in not erecting a sign prohibiting diving from the rock platform or warning of its dangers. The circumstances of the accident and the place where it happened are sufficiently described in the reasons of Callinan and Heydon JJ. I need not repeat that description. At trial, the appellant obtained judgment for damages116. The primary judge (Bell J) found the Council to have been negligent but the appellant to have been contributorily negligent. Her Honour assessed the reduction in the damages to be awarded to the appellant, on account of contributory negligence, as 25 per cent. The amount of damages to be allowed to the appellant had been agreed by the parties as $6,739,671. Judgment was entered for $5,054,753.25. The Council appealed to the Court of Appeal. That Court (Mason P, Beazley and Tobias JJA) delivered reasons dealing not only with the Council's appeal but also with an appeal that had been brought in the matter of Mulligan v Coffs Harbour City Council117. In the present matter, the Court concluded (Mason P and Tobias JA, Beazley JA dissenting) that the Council had not breached its duty of care. Tobias JA, with whose reasons Mason P agreed, directed much attention to whether the risk of injury was "obvious" and, concluding that it was, determined that there had been no breach of duty. The judgment entered below was set aside and judgment entered for the Council. By special leave, the appellant now appeals to this Court. The issue The central issue in the appeal is whether the Council breached a duty of care it owed to the appellant by not erecting one or more signs warning against, 115 Mulligan v Coffs Harbour City Council [2005] HCA 63. 116 Vairy v Wyong Shire Council (2002) 129 LGERA 10. 117 Wyong Shire Council v Vairy; Mulligan v Coffs Harbour City Council (2004) Aust Torts Reports ¶81-754. Hayne or prohibiting, diving from the rock platform. Resolving that question, a question of fact, hinges critically upon recognising that what has come to be known as the "Shirt calculus"118 is not to be undertaken by looking back at what has in fact happened, but by looking forward from a time before the occurrence of the injury giving rise to the claim. The several questions described by Mason J in Wyong Shire Council v Shirt are to be asked and answered with that perspective. Thus, before the appellant was injured, would "a reasonable man in the [Council's] position … have foreseen that his conduct involved a risk of injury to the [appellant] or to a class of persons including the [appellant]"119? If the answer to that question is affirmative, "it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk"120. As Mason J went on to point out121: the reasonable man's response calls for a "[t]he perception of consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have." In the present appeal (and in the matter of Mulligan v Coffs Harbour) it is this second set of inquiries (about response to a risk that is foreseeable) which is critical. That is because foreseeability of risk of injury, at least since Shirt122, if not before123, includes risks which, although quite unlikely to occur, are not far-fetched or fanciful. Diving or plunging into water carries a risk of catastrophic spinal injury if the water is too shallow. That risk is always present, and foreseeable, wherever there is a body of water into which someone may dive or plunge. The diver may strike his or her head on the bottom or on some obstacle in the water. But it does not follow because an injury is foreseeable that the person who has the care, control and management of the land from which a person may enter the water in that way must in every case take steps to warn against, or prohibit, such conduct. 118 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48 per Mason J. 119 (1980) 146 CLR 40 at 47. 120 (1980) 146 CLR 40 at 47. 121 (1980) 146 CLR 40 at 47-48. 122 (1980) 146 CLR 40 at 46-47 per Mason J. 123 Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty (The Wagon Mound [No 2]) [1967] 1 AC 617 at 643-644 per Lord Reid. Hayne The parties' contentions The appellant's case, accepted at trial124, depended upon a number of elements which can be marshalled as followed: The Council had the care, control and management of the rock platform and the land giving access to it. (Council's powers) The Council knew that people often dived off the rock platform. (Knowledge of diving) The Council had built carparks and steps which gave people ready access not only to Soldiers Beach, where there was a patrolled surf beach, but also to the rock platform. (Encouragement) The Council knew not only that persons had suffered some relatively minor injuries as a result of diving from the rock platform, but also that there had been a previous case of catastrophic spinal injury. (Knowledge of previous injuries) The Council knew, or ought reasonably to have known, that as a result of littoral drift, sand accumulated on the sea bed near the rock platform, thus affecting the depth of the water. (Littoral drift) A warning sign near the rock platform would have cost very little. (Warning signs) The appellant would have heeded a warning sign and not have dived into the water as he did. (Causation) The facts of the present case were not different in any material respect from those considered by the Court in Nagle v Rottnest Island Authority125. There the Court held that the respondent Authority had breached its duty of care by not warning those whom it encouraged to swim in the waters off Rottnest Island of the risks of diving into the water even though "'it may have reasonably been considered foolhardy or unlikely' for a person to dive as the appellant [in that case] did"126. 124 Vairy v Wyong Shire Council (2002) 129 LGERA 10. 125 (1993) 177 CLR 423. 126 (1993) 177 CLR 423 at 430-431 per Mason CJ, Deane, Dawson and Gaudron JJ. Hayne In the appeal to this Court the Council accepted that it owed a duty of care. It sought to answer the appellant's case by contending that when assessed before the happening of the appellant's injury, foreseeability of the risk of such an injury did not reasonably require the Council to take steps at or near the rock platform to prohibit diving, or warn against its dangers. What the Council knew or ought to have known about the frequency of diving and the severity of the injuries that might be sustained bore also upon these questions of breach. Although the focus of the debate must finally be directed to questions of breach, it is necessary to begin by examining more closely what duty the Council owed. To do that it is necessary to begin from an understanding of the Council's statutory powers and responsibilities. Council's powers In 1954, the Minister for Lands, acting under the Crown Lands Consolidation Act 1913 (NSW), temporarily reserved from sale an area of about 50 acres, which included Soldiers Beach, for the purposes of public recreation and camping. The Council was appointed trustee of this land, known as the Norah Head Reserve, pursuant to the Public Trusts Act 1897 (NSW). Thereafter, some changes were made to the area of the Reserve, but it is not necessary to trace those changes. At the time the appellant suffered his injury, the rock platform from which he dived formed part of the Reserve. The platform was land vested in the Council and the legislation applying at the time of the appellant's injury127 charged the Council with the care, control and management of that land. When the appellant dived off the rock platform he left land under the care, control and management of the Council. At the time the appellant suffered his injury, s 344(1) of the Local Government Act provided that the Council should have the care, control and management of certain public reserves, of which the Norah Head Reserve was one. Part XIII of the Local Government Act conferred certain powers on councils in respect of public reserves and parks. Division 3 of Pt XIII (and, in particular, s 354) empowered the Council to control and regulate public bathing in public reserves and the sea adjacent to a public reserve. Provision was made128 for Ordinances to be made in relation to public bathing. One such Ordinance, in force at the time of the appellant's accident, provided129 that "[a] person shall not 127 Crown Lands Act 1989 (NSW), s 92(5). 128 Local Government Act 1919 (NSW), s 367. 129 Ordinance No 52 under the Local Government Act 1919, cl 8. Hayne bathe in any public bathing reserve … in respect of which a warning has been given that it is dangerous to bathe therein". The same Ordinance130 empowered the Council "by notices exhibited in or in the vicinity of a public bathing reserve" to "indicate where bathing shall be prohibited". To fail to comply with a warning given under that Ordinance was an offence131 and an offender was liable132 to be removed forthwith from the reserve by (among others) a servant of the Council. It may be assumed that the Norah Head Reserve was not the only reserve over which the Council had care, control and management. How many other reserves there were under the Council's care, control and management at the relevant times was not explored in evidence. What was demonstrated was that, at the time of the appellant's accident, Wyong Shire was about 827 square kilometres. It had 27 kilometres of coastline described as being "largely sandy beach with intermittent prominent headland[s] with rocky foreshores". There were six patrolled beaches on the coastline and at least another six, unpatrolled, beaches. In addition, the Tuggerah Lakes system lay within the Shire. Those lakes were said to be "very popular" recreation areas within the Shire. As a local government authority, the Council had many obligations. Even if attention is confined to the subject of Public Recreation, the Table of Provisions in Pt XIII of the Local Government Act reveals that the Council, like other councils, had powers and functions that ranged from care of parks (s 344) and the provision of parking areas on public reserves (s 351A), to the provision, control and management of baths and bathing facilities (ss 353-356), to the provision, control and management of libraries (s 357), schools of arts and mechanics' institutes (s 358), and gymnasia (s 361), to the control and regulation of skating rinks (s 362), and places of public amusement (s 363), to the protection, acquisition, preservation and maintenance of "places of historical or scientific interest and natural scenery" (s 365). In addition, of course, the Council had many other functions to perform. What duty did the Council owe the appellant? Duty of care It is sometimes said that a statutory authority having the care, control and management of a reserve is in a position analogous to that of an owner of private 131 cl 29(a). 132 cl 29(b). Hayne land133. Like all analogies, however, it is dangerous to assume that the analogy is perfect. For example, a statutory authority having the care, control and management of land may not be able to control entry on the land in the same way as a private owner. It may or may not be able to close the area or part of it. And its task of care, control and management of the various areas committed to its care may be much larger and more complicated than any obligations a private owner of land may encounter. It is long established, however, that a statutory authority, having the care, control and management of land to which the public has access, owes a duty of care to those who enter134. To this extent, the analogy with private land owners is apt135. But what reference to the breadth of a council's obligations reveals is that the analogy is not perfect. In particular, the content of the duty is not necessarily identical. That may suggest that an attempt should be made to define the content of the Council's duty of care more precisely. Subject to one qualification, that would not be a useful exercise. The qualification is that it is necessary to recognise that the duty of care, owed by a statutory authority to those who enter land of which the authority has the care, control and management, is not a duty to ensure that no harm befalls the entrant. It is a duty to take reasonable care. Beyond that, however, it is not possible to amplify the content of the duty without reference to particular facts and circumstances. In each case, the content of the duty will turn critically upon the particular facts and circumstances. Breach of duty Recognising that the Council owed those who entered the Norah Head Reserve, including the appellant, a duty to take reasonable care, the central question in this case is what performance of that duty required. The appellant sought to answer that question by referring to the several matters mentioned earlier in these reasons: knowledge of diving, encouragement, knowledge of 133 Aiken v Kingborough Corporation (1939) 62 CLR 179 at 190-191 per Latham CJ, 199-200 per Starke J, 205-206, 209 per Dixon J; Schiller v Mulgrave Shire Council (1972) 129 CLR 116 at 120 per Barwick CJ, 124-128 per Walsh J, 134 per Gibbs J; Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 428 per Mason CJ, Deane, Dawson and Gaudron JJ; Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 487-488 [152] per Hayne J. 134 Aiken (1939) 62 CLR 179; Schiller (1972) 129 CLR 116; Nagle (1993) 177 CLR 423; Romeo (1998) 192 CLR 431. 135 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. Hayne previous injuries and littoral drift. These were said to require the conclusion (like that reached in Nagle) that the Council should have warned against diving from the rock platform or should have prohibited that practice. It is necessary to examine more closely the way in which the question of breach should be approached in this case. Although it was not disputed that this is a task requiring the application of the so-called Shirt calculus, there are some particular aspects of the way in which that is to be done which require further elucidation. Those matters can be grouped under two headings: the particularity of the inquiry; and look forward or look back? The particularity of the inquiry All the matters relied on by the appellant in connection with breach of duty took as the focus of their attention what was to be done about diving from the rock platform near Soldiers Beach. Is that question too confined? A plaintiff in a negligence action must prove that the defendant owed the plaintiff a duty of care. That duty may be proved to exist by showing that the defendant owed a duty of care to a class of persons of whom the plaintiff was one. But the duty thus established is a duty which the defendant owed to the particular plaintiff. If the analysis is interrupted at this point, the focus in the present case upon what, if anything, the Council ought to have done about diving from the rock platform is well justified. It is well justified because the question is whether the Council breached the duty of care which it owed to the appellant. And it is clear, therefore, that to ask what was to be done about diving from the rock platform near Soldiers Beach was a relevant, indeed a central, question to ask and answer. But, as Romeo v Conservation Commission (NT) demonstrates136, while it is necessary to look at what ought to have been done in relation to activities on the rock platform, attention cannot be confined to the precise place at which the events in question took place. In deciding what the response of a reasonable council would have been to the risk of diving injuries it is necessary to recognise that that council would be bound to consider all of the land of which the council had the care, control and management. That consideration may yield different answers for different places but all would have had to be considered. And it is a consideration that must be set into a much wider context than is provided by focusing only upon diving injuries. The duty of care which a council owes to those who enter land of which it has the care, 136 (1998) 192 CLR 431 at 455 [54] per Toohey and Gummow JJ, 491 [164]-[165] per Hayne control and management is a duty which is not limited to taking reasonable care to prevent one particular form of injury associated with one particular kind of recreational activity. At once it can be seen that the inquiry may not be simple. The risks of injury may differ from place to place. They may differ because of the number of people who resort to one place rather than another; they may differ because one place differs from another in relevant respects; there are many reasons why the risks may differ. But the question for a council having the care, control and management of land to which members of the public may resort is: what is to be done in response to the various foreseeable risks of injury to those persons? Again, because the inquiry is prospective, it would be wrong to focus exclusively upon the particular way in which the accident that has happened came about. In an action in which a plaintiff claims damages for personal injury it is inevitable that much attention will be directed to investigating how the plaintiff came to be injured. The results of those investigations may be of particular importance in considering questions of contributory negligence. But the apparent precision of investigations into what happened to the particular plaintiff must not be permitted to obscure the nature of the questions that are presented in connection with the inquiry into breach of duty. In particular, the examination of the causes of an accident that has happened cannot be equated with the examination that is to be undertaken when asking whether there was a breach of a duty of care which was a cause of the plaintiff's injuries. The inquiry into the causes of an accident is wholly retrospective. It seeks to identify what happened and why. The inquiry into breach, although made after the accident, must attempt to answer what response a reasonable person, confronted with a foreseeable risk of injury, would have made to that risk. And one of the possible answers to that inquiry must be "nothing". There are fundamental reasons why the inquiry cannot be confined to where the accident happened or how it happened. Chief among them is the prospective nature of the inquiry to be made about response to a foreseeable risk. Look forward or look back? When a plaintiff sues for damages alleging personal injury has been caused by the defendant's negligence, the inquiry about breach of duty must attempt to identify the reasonable person's response to foresight of the risk of occurrence of the injury which the plaintiff suffered. That inquiry must attempt, after the event, to judge what the reasonable person would have done to avoid what is now known to have occurred. Although that judgment must be made after the event it must seek to identify what the response would have been by a person looking forward at the prospect of the risk of injury. Hayne There may be more than one place where this risk of injury may come to pass. Because the inquiry is prospective there is no basis for assuming in such a case that the only risk to be considered is the risk that an injury will occur at one of the several, perhaps many, places where it could occur. Romeo was just such a case and so is this. In both cases there were many places to which the public had access and of which the Commission (in Romeo) and the Council (in this case) had the care, control and management. In Romeo, there were many places where a person could fall off a cliff; here, there were many places where a person could dive into water that was too shallow. Because the inquiry is prospective, all these possibilities must be considered. And it is only by looking forward from a time before the accident that due weight can be given to what Mason J referred137 to in Shirt as "consideration of the magnitude of the risk and the degree of the probability of its occurrence". It is only by looking forward that due account can be taken of "the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have"138. If, instead of looking forward, the so-called Shirt calculus is undertaken looking back on what is known to have happened, the tort of negligence becomes separated from standards of reasonableness. It becomes separated because, in every case where the cost of taking alleviating action at the particular place where the plaintiff was injured is markedly less than the consequences of a risk coming to pass, it is well nigh inevitable that the defendant would be found to have acted without reasonable care if alleviating action was not taken. And this would be so no matter how diffuse the risk was – diffuse in the sense that its occurrence was improbable or, as in Romeo, diffuse in the sense that the place or places where it may come to pass could not be confined within reasonable bounds. To approach the inquiry about breach in this prospective way is to apply long-established principle. In Aiken v Kingborough Corporation139, Dixon J described the test to be applied in determining whether a statutory authority had breached a duty of care owed to a person entering land as being that a member of the public, entering public land as of right, "is entitled to expect care for his safety measured according to the nature of the premises and of the right of access vested, not in one individual, but in the public at large". No doubt this statement of the content of the duty must now be understood, taking proper account of subsequent developments in the common law concerning the duty of care owed 137 (1980) 146 CLR 40 at 47. 138 (1980) 146 CLR 40 at 47-48. 139 (1939) 62 CLR 179 at 209. Hayne to entrants by those who occupy land140 or have the care, control and management of public land141. But those later developments do not affect the conclusion which underpins the passage cited from Aiken that the inquiry about breach must be made looking forward, not looking back at what happened to the particular plaintiff. Further, as earlier explained, Shirt is consistent with only that approach to the problem. And later decisions of the Court, notably Romeo142 and Commissioner of Main Roads v Jones143, can be understood only in that way. Before the appellant suffered his injury, a reasonable council would have recognised that there was a risk that a person diving or jumping off the rock platform would suffer catastrophic spinal injury if the water was too shallow. That this was foreseeable was amply demonstrated by the fact that, before the appellant suffered his injury, another man (Mr von Sanden) had sustained spinal injury when he dived off that rock platform. The occurrence of this accident was found to have been "common knowledge within the Council", but the Council took no steps to warn or prevent others diving from the rock platform. It may be that Mr von Sanden leapt off a point on the platform higher than the point from which the appellant dived. It matters not whether that is so. What matters is that it was reasonably foreseeable that a person entering the water from this point could suffer injury if the entry was head first and the water was too shallow. In this connection it is important to notice that it was not alleged in this case that the Council had done anything to make the risk of diving injury at Soldiers Beach any greater than it was. Nor (subject to the contentions about littoral drift) was it alleged that there were any particular hidden dangers of which the Council was or ought to have been aware but a visitor to the area would not. Rather, the essential complaint of the appellant was that the Council should have warned that the water near the rock platform may be too shallow. The depth of the water into which the appellant dived was, therefore, the critical fact which contributed to his suffering the injury he did. The courts below made no finding about the depth of the water into which the appellant dived. That is not a matter for criticism. The water at this point was tidal and subject to the ordinary ebbs and flows of the open sea meeting the coast. The depth of the water, therefore, varied from moment to moment according to the state of the sea. No doubt, as the appellant sought to emphasise, the phenomenon of littoral drift provided a further cause of significant variation in water depth 140 Zaluzna (1987) 162 CLR 479; Jones v Bartlett (2000) 205 CLR 166. 141 Romeo (1998) 192 CLR 431. 142 (1998) 192 CLR 431. 143 (2005) 79 ALJR 1104; 215 ALR 418. Hayne over periods of days or weeks. This may well have meant, as the appellant alleged, that a person who had checked the conditions near the rock platform on one day could not be sure that the conditions were likely to be the same on another day. But much more significant in their effect on the depth of the water into which the appellant dived than any effect of littoral drift were the effects of tide and of surge or swell. Immediately before the appellant suffered his injury, others had safely entered the sea from the rock platform. Whether they did so by diving head first was not explored in evidence. Whether, having dived in, those who had done so stood up and walked away from the point where they entered the water was again not explored in evidence. Some photographs of the scene taken many weeks after the accident, but tendered in evidence, suggested that there might be conditions where the water was no deeper than hip height at the point where persons jumping from the rock platform would enter it. And those who came to the appellant's rescue seem to have been able to stand on the sea bed, supporting him. Again, however, the fact that conditions of this kind might be encountered is not significant to the inquiry about breach. What matters is that, because the water could be too shallow, there was a risk of injury. Applying Shirt The particular risk to be considered in the Shirt calculus was, then, the risk that a person would be injured by diving or plunging into water that was too shallow. That was a risk that could come to pass if someone dived or plunged off the rock platform at the end of Soldiers Beach, but it was a risk that could come to pass at many other places of which the Council had the care, control and management. Indeed, as the facts in Swain v Waverley Municipal Council144 all too tragically show, it was a risk that could come to pass at any beach, if a person dived into the surf and hit a sand bar or other obstacle. It was a risk that could come to pass if a swimmer was dumped by a wave. If littoral drift had any influence on either the magnitude of the risk or the probability of its occurrence at this place, it was very slight. The effect of littoral drift was gradual and occurred over comparatively long periods. Of course, account must be taken of the number of people who used this rock platform as a place from which to enter the water. Account must be taken of the fact that, although very many seemed to have made their entry into the water from this place without harm, some had not, and one, Mr von Sanden, had suffered a catastrophic injury. And account had to be taken of the fact that a person standing on the rock platform may very well be unable to judge the depth of the water or may misjudge it. All of these are features of the case that bore upon the 144 (2005) 79 ALJR 565; 213 ALR 249. Hayne magnitude of the risk of injury and the degree of probability of its occurrence at this place. Nonetheless, the probability of occurrence of the risk of spinal injury at this place was low. What would the reasonable council's response to that risk have been? It was not and could not be suggested that a reasonable council would have marked every point in its municipal district from which a person could enter a body of water, and warned against or prohibited diving from that point. The principal case that the appellant sought to make was that the Council should have erected a warning sign, warning against diving from the rock platform. He also contended that the Council should have prohibited diving. The contentions that a reasonable authority would have warned against diving and that a reasonable authority would have prohibited the activity are distinct. They should be dealt with separately. Before doing that, however, it is necessary to deal with Nagle. The appellant submitted that Nagle required the conclusion that the primary judge's judgment for the appellant should be restored; the Council submitted that Nagle was to be understood as no more than a factual decision having no relevant precedential value. What did Nagle decide? Nagle v Rottnest Island Authority The majority of the Court concluded145 that the failure to warn of the danger of diving from a rock ledge into the Basin on the northern coast of Rottnest Island due to the presence of rocks was a breach of the respondent Authority's duty of care. The critical step taken towards that conclusion was described146 by the majority in the following terms: "As occupier under the statutory duty [to manage and control the public reserve on the Island's coast for the benefit of the public], the Board [of the Authority], by encouraging persons to engage in an activity, came under a duty to take reasonable care to avoid injury to them and the discharge of that duty would naturally require that they be warned of foreseeable risks of injury associated with the activity so encouraged." Why discharging the duty "would naturally require" giving a warning was not examined. This lack of examination suggests that a question about duty of care was understood to be the main subject for debate and decision in the case. 145 (1993) 177 CLR 423 at 432 per Mason CJ, Deane, Dawson and Gaudron JJ. 146 (1993) 177 CLR 423 at 430 per Mason CJ, Deane, Dawson and Gaudron JJ. Hayne And examination of the written and oral arguments of the parties in Nagle confirms that duty of care was indeed the chief focus of argument in the case. Little or no separate argument was advanced in Nagle, in the appeal to this Court, about breach of duty. That argument took this course may be explained by referring to the decision from which the appeal was brought. The majority in the Court below (the Full Court of the Supreme Court of Western Australia) had held147 that the Authority did not owe the plaintiff a duty of care. One member of the majority in the Full Court, Kennedy J, had reached148 that conclusion on the basis that "there was, relevantly, no reasonable foreseeability of a real risk that injury of the kind sustained would be sustained by persons swimming at the Basin". On appeal to this Court, most attention was directed in argument to the correctness of this conclusion. By contrast with the majority's reasons, Brennan J, who dissented in Nagle, held149 that whether the Board of the Authority was under a duty to the plaintiff to erect a warning sign depended on "whether such a duty was owed to the public at large". The answer to that question was said150 to depend on whether the danger of diving off the particular wave platform "was apparent and not to be avoided by the exercise of ordinary care". These conclusions were identified151 by Brennan J as following from the flexibility available in determining the response of the reasonable man, and from the application of the test expressed by Dixon J in Aiken for determining whether a statutory authority had breached the duty of care it owed to those entering land of which the authority had care, control and management. The principal question about breach of duty that was agitated in Nagle was understood by the majority of the Court152 as being whether the plaintiff had sufficiently specified what action the Authority had failed to take in response to the risk. That some response was required appears to have been treated by the 147 Nagle v Rottnest Island Authority (1991) Aust Torts Reports ¶81-090 at 68,764 per Kennedy J, 68,771 per Rowland J. 148 (1991) Aust Torts Reports ¶81-090 at 68,764. 149 (1993) 177 CLR 423 at 440. 150 (1993) 177 CLR 423 at 440. 151 (1993) 177 CLR 423 at 440. 152 (1993) 177 CLR 423 at 431-432. Hayne majority as accepted; it was treated as following "naturally" from the conclusion that the Authority owed the plaintiff a duty to take reasonable care to avoid injury to those who used the Basin. What does not emerge from Nagle is any rejection of what had been decided in Shirt. The majority made passing reference153 to Shirt for the proposition that a risk that is unlikely to occur may be foreseeable, but did not expressly or impliedly reject Shirt. Brennan J relied154 on Shirt. Nor is there to be found in Nagle any implicit rejection of the need to view questions of breach prospectively. Rather, the actual decision in Nagle must be understood as responding to the arguments of the parties in that case focusing, as they did, almost entirely upon questions of duty and foreseeability. The arguments of the parties said nothing about how the Shirt calculus was to be applied beyond making the assertion155 that "it [was] going beyond a reasonable response to the postulated foreseeable risk to conclude that a sign warning [that diving was dangerous] was called for". If, contrary to that view, the difference between the majority and Brennan J were to be understood as depending upon some difference of principle as distinct from a difference of application of identical principles governing the question of breach of duty, Brennan J was right to emphasise two points. Attention must be focused upon the nature of the danger assessed prior to the event156 and account must be taken of the breadth of the obligations owed by a statutory or public authority (obligations which Brennan J referred157 to as the authority's duty "to the public at large"). Nagle neither supports the appellant's case nor detracts from the Council's case. It is properly to be seen as a case turning upon its own facts and the way in which it was argued, not as establishing any new principle about breach of duty or departing from established principles. 153 (1993) 177 CLR 423 at 431. 154 (1993) 177 CLR 423 at 439-440. 155 (1993) 177 CLR 423 at 425. 156 (1993) 177 CLR 423 at 440. 157 (1993) 177 CLR 423 at 440. Hayne Warning? In the present case, would a reasonable council have erected a warning sign? It was found that the appellant would have heeded a warning sign and would not have dived off the rock platform. A warning sign seeks to convey information which an observer would not or may not otherwise have known, or seeks to remind the observer of something that otherwise would not or may not be considered. In this case the subject of the warning would be diving into water the depth of which is unknown or is too shallow. A warning would remind those considering diving of this risk. It may inform the young or the ill-informed of something they did not know or understand. But just such a warning would be apt to many other places. There are many places along the coast or beside the Tuggerah Lakes where the water may sometimes appear to be deep but be too shallow to dive into safely or conceal some obstruction which a diver may strike. Of course, it is relevant and important to know that one person had been seriously injured after diving off the rock platform at Soldiers Beach. But showing that the risk against which the proposed warning would be offered is one which has come to pass does not mean that a reasonable council would conclude that it should provide the warning. If the fact of occurrence sufficed to lead to that conclusion, there would be many points along the roadside where an accident has happened and a sign would read "speed kills" or "inattention can be fatal". What is more important is that many people came to Soldiers Beach, and of those there seem to have been many who used the rock platform as a point from which to dive or jump into the water. The frequency of the activity reveals an aspect of the matter that must be taken into account. It reveals that the rock platform was only sometimes an unsafe place from which to dive or jump because the water was only sometimes too shallow in at least some places or some circumstances. Yet the more that people used the rock platform, the greater the chance one would suffer an accident; the greater the chance that one of those accidents would be very serious. It may readily be accepted that the Council, by providing car parks and ready access to Soldiers Beach, encouraged persons to come there. The beach was popular and one reason for that popularity was, no doubt, that the beach was patrolled sometimes by lifeguards employed by the Council and at other times by surf lifesavers from the Surf Lifesaving Club whose clubhouse looked on to the beach. But it is not right to say that the Council encouraged persons to use the rock platform as a place from which to enter the water. Indeed, when the beach was patrolled, as it was when the appellant had his accident, to enter the water Hayne from the rock platform was to act contrary to the basic prudential rule which governs swimming at a patrolled beach: swim between the flags. Further analysis of the facts beyond this point is then neither necessary nor fruitful. The probability of the risk occurring was very low. But if it did, the consequences could be catastrophic. What is required is a judgment of what would have been the reasonable response to that risk in the circumstances that have been identified. There is no doubt that the consequences of the risk occurring could be catastrophic. Did that possibility, judged in the light of the probability of its occurrence, reasonably require the response of erecting a warning sign? Attaching the qualitative description "low", to the probability of occurrence of the risk, must not be understood as conveying some normative judgment about whether the risk may reasonably be ignored. But the likelihood of occurrence is an important factor to consider. Nor should the use of words like "calculus" be permitted to suggest that what is then required is some mathematical or mechanical analysis. In the end, the question is what response was reasonable? One possible answer is "none was needed". In the present case, there are several reasons which require the conclusion that the reasonable response did not require the erection of a warning sign. They can be expressed in a number of different ways but can be brought together under two headings. First, to mark out this place as especially dangerous, and this particular form of danger as especially worthy of warning, was neither reasonably necessary nor appropriate. Secondly, neither the frequency with which people used the rock platform as a launching pad, nor its evident suitability for that use, sufficiently distinguished this place from others in which there was a risk of spinal injury if a person dived or plunged into water that was too shallow. Every form of physical recreation carries some risk of physical injury. The more energetic the activity, the greater are those risks. Fatigue, lack of fitness, slowness of reaction, general ineptitude can all contribute to injury. The magnitude and probability of occurrence of those risks rise if the activity is one in which there may be a collision between the participant and others, or between the participant and his or her surroundings. That risk of collision is evidently present in contact sports, but the solitary bike rider pedalling along a dedicated cycle track may fall from the bike and suffer serious injury. So too, the solitary swimmer may collide with an obstacle or strike the sea bed. There are many dangers associated with bathing in the sea – not least the danger of drowning. The form of danger with which this case is concerned – the danger of diving into water that is too shallow – is only one of the risks that Hayne attend this form of recreation. And the Council had to consider many forms of recreation conducted in many different areas of which the Council had the care, control and management. Swimming was but one of these many forms of recreation, every one of which had its risks and dangers. And even if attention could be confined to the risks associated with swimming, the risk of spinal injury brought about by a swimmer's collision with his or her surroundings is not confined to those who dive or plunge into the sea from a natural launching pad like the rock platform158. Only by looking back at what actually happened in this case would it be right to confine the attention of a reasonable council to the foreseeable risks of swimming in the sea. When judged from the proper standpoint – looking forward at all forms of risk associated with all forms of recreation on or from land of which the Council had the care, control and management – what would the response of a reasonable council have been to the foreseeable risk of a diving injury like the appellant suffered? It was not reasonable to expect the Council to warn of this particular danger. The Council had done nothing to make the danger worse and had no knowledge of some feature of this particular area that was not readily discovered by someone contemplating diving or plunging into the water at this point. "Obviousness" The conclusion that a reasonable council would not have warned of this danger does not depend upon what the Court of Appeal referred159 to as the obviousness of the risk. Reference to a risk being "obvious" is apt to mislead and cannot be used as a concept determinative of questions of breach of duty. Not least is that because obviousness of risk may divert attention from what would have been the reasonable response to foreseeable risk to consideration of how someone other than the plaintiff could have avoided injury. Inquiries of this latter kind will be relevant when considering questions of contributory negligence. They are not useful, however, when considering breach of duty. That is not to deny the importance of considering the probability of occurrence of the risk in question. The probability of occurrence of a risk that is not apparent on casual observation of a locality or of a set of circumstances may be higher than the probability of occurrence of a risk that is readily apparent to 158 cf Swain v Waverley Municipal Council (2005) 79 ALJR 565; 213 ALR 249; Mulligan v Coffs Harbour City Council [2005] HCA 63. 159 Wyong Shire Council v Vairy; Mulligan v Coffs Harbour City Council (2004) Aust Torts Reports ¶81-754. Hayne even the casual observer. But the focus of inquiry must remain upon the putative tortfeasor, not upon the person who has been injured, and not upon others who may avoid injury. And in looking at the reasonable response to a foreseeable risk it is necessary to recall that there will be times when others do not act carefully or prudently. That is why, as the Court of Appeal recognised160, what it referred to as "the obviousness factor" is not to be elevated into some doctrine or general rule of law. It is why little if any assistance is to be gained from considering the several American cases to which the Court of Appeal referred in connection with what was identified as the "open and obvious doctrine" sometimes applied in several jurisdictions in the United States. Prohibition Finally, it is necessary to deal with the appellant's alternative contention that the Council should have prohibited diving from the rock platform. The reasons which lead to the conclusion that a reasonable council, having foreseen the risk of diving accidents, would not have warned against diving from the rock platform require the conclusion that such a council would not have prohibited the activity. That conclusion can only be reinforced by considering what prohibition would entail. If a reasonable council would have concluded that the activity should be prohibited it would follow that the Council would have had to take steps to enforce that prohibition whether by attempting to preclude the activity by physical barriers or by having the area supervised. Yet the appellant did not, in the end, contend that enforcement of a prohibition was appropriate. Rather, the appellant's case depended upon the contention that what was called for was a sign near the rock platform which either warned of the dangers of diving or, as an emphatic form of warning, prohibited the activity. Understood in that way, the appellant's contention of prohibition fails with his contention about warning. Order The appeal should be dismissed with costs. 160 (2004) Aust Torts Reports ¶81-754 at 65,899 [195]. CALLINAN AND HEYDON JJ. This appeal raises questions as to the nature and extent of the liability of a local authority to participants in physical recreational activities within its boundaries. It was heard in conjunction with Mulligan v Coffs Harbour City Council161, which should be read together with the reasons in this appeal. Facts The boundaries of the respondent Shire include a coastline of about 27 kilometres. Soldiers Beach forms part of that coastline. At the northern end of that beach there is an outcrop of rock that extends around the base of a headland which separates Soldiers Beach from Pebbly Beach. At the southern end of the outcrop there is another rock formation, "the platform", separated by a small channel from an area of flat rock adjoining the sand of Soldiers Beach. The platform is a long expanse of rock of varying heights. It is most elevated at the northern end. The platform, the channel and the area of flat rock adjoining the beach were shown on a plan, and in a series of photographs and films which were in evidence. Some of those photographs show people walking out of the water near the platform. Standing upright they are immersed to no more than waist height. It is not clear however what the state of the tide was when these photographs were taken. Soldiers Beach is a popular surfing beach. It is one of six patrolled beaches within the Shire of Wyong. Near to it is a car park with marked spaces for cars. A set of concrete steps leads from the car park to the beach into which the platform intrudes. The platform can also be reached from the car park by descending a set of low wooden steps to a gravel path leading directly to it. Adjacent to the car park is a kiosk. A substantial Surf Life Saving Association clubhouse stands at the northern end of the beach. It offers an unobstructed view of the platform. The height of the platform varies between 1.91 metres and 5.27 metres above sea level. It is not disputed that the land from which the appellant dived was within the Norah Head Reserve ("the Reserve"), an area vested in the respondent as trustee and over which it exercises care, control and management. The ocean floor is however outside the area of the Reserve. 161 [2005] HCA 63. By s 92(5) of the Crown Lands Act 1989 (NSW), a trustee of a reserve is charged with its care, control and management. Section 98 of the Crown Lands Act also provides that a council, as manager of a public reserve, has all the functions of a council under the Local Government Act 1919 (NSW) in relation to the reserve. Section 344(1) of the Local Government Act is as follows: "(1) The council shall have the care, control and management of – public reserves which are not under the care of or vested in any body or persons other than the council, and are not held by any person under lease from the Crown; and public reserves which the Governor by proclamation places under the care, control, and management of the council." Part XIII of the Local Government Act confers powers on councils in respect of public reserves and parks. Division 3 of Pt XIII of the Local Government Act deals with baths and bathing. Section 354 provides: "(1) The council may control and regulate public bathing and the conduct and costume of bathers – in any public baths under the care, control, and management of the council; in any private baths open to the public view; in any river, watercourse, or tidal or non-tidal water; in the sea adjacent to though outside the area; and in any public place or public reserve adjacent to any of the aforesaid places. The council may prohibit bathing in any specified locality by notices erected in the vicinity of such locality." The appellant places much weight upon the powers of the respondent to regulate, and in particular to prohibit by notice, bathing in dangerous places. Ordinance 52 made under the Local Government Act relevantly provides: "Bathing in dangerous places A person shall not bathe in any public bathing reserve or in any part thereof in respect of which a warning has been given that it is dangerous to bathe therein. For the purposes of this Ordinance a warning may be given by an inspector, or by a flag, signal, or notice exhibited or given in or in the vicinity of the bathing reserve or part thereof. Regulation – notices The Council may, by notices exhibited in or in the vicinity of a public bathing reserve, public baths or public swimming pool, regulate the lighting of fires, require animals and vehicles to be kept off places indicated, indicate where bathing shall be prohibited, regulate vehicular and pedestrian traffic, regulate the conduct of persons, and generally regulate the use of the reserve, baths or swimming pool by the public. Penalties (a) Any person not complying with or offending against any of the provisions of this Ordinance or the terms of any notice, order, direction, warning, or signal exhibited, issued, or given thereunder shall be guilty of an offence, and shall where no other penalty is provided be liable for every such offence to a penalty not exceeding $20. (b) Any person guilty of an offence may be forthwith removed from the bathing reserve or bath by a servant of the Council, or the lessee or caretaker of the bath or the dressing sheds (as the case may be), or by an inspector, or by a constable or officer of police, without affecting his liability to be subsequently prosecuted for such offence." The appellant was thirty-three years old in 1993. He had left school at fifteen. He was by occupation a fencing contractor. In 1989 he had moved to San Remo which is near to Soldiers Beach. The appellant was a frequent visitor to Soldiers Beach in summer. He swam, snorkelled and fished there. It was his practice to park his car in the car park. He often saw people diving and jumping from the platform into the ocean although he had not dived from it himself before he was injured. He had occasionally however sat on the edge of the rock platform and "rolled" backwards from it into the water. He would then swim out to a nearby rock shelf where he snorkelled to look for octopus and other marine life. The appellant said that he had made no assessment of the depth of the water adjacent to the platform on any occasion when he entered the water from it. He must however have had some consciousness of it, unless he had always swum rather than walked away from it, as people shown in the photographs appear to have been doing. On the day before his accident the appellant had snorkelled on the western side of the southern tip of the platform. He had duck-dived in an attempt to pick up a necklace on the seabed. He was unable to say how deep the water was there beyond saying that it was "a fair way down". On the morning of Sunday 24 January 1993 the appellant and his sister's family decided to visit Soldiers Beach. It was a hot day. The appellant parked his car in the car park and made his way down to the northern end of the beach where he had arranged to meet the others who had made their own way there. A surf carnival was in progress at the southern end of Soldiers Beach. The appellant and his brother-in-law went for a swim. His sister joined them. She left the water first. Following his swim, the appellant walked to the platform with his young niece. It was his intention to dive into the water from it. By then a number of people were on the platform. Over the ensuing five minutes he saw two or three people safely dive into the water. There was uncontradicted evidence that many people on other occasions had dived from the platform. Further confirmation of this appears in the photographs to which we have referred. The appellant said at the time that he entered the water it was lapping over the platform where he was standing. The platform was flat at that point. The appellant was able to see the water but he could not see the seabed. He did nothing to assess the depth of the water adjacent to the platform before he dived. His assumption was that it was safe to dive because other people repeatedly jumped and dived there. The appellant did notice that the surface of the rock immediately in front of him was wet and slippery. He accordingly moved three steps backwards to avoid the slippery edge. He dived into the water at an angle of forty-five degrees with his arms outstretched in front of him. As he passed through the water he felt a bump on the top of his head. He soon floated to the surface. As he floated he noticed that his arms and legs were limp. He was unable to lift his head. He thought that he had broken his neck and believed that he was dying. He began to inhale water. He was conscious of noises. He then passed out for a short time. As soon as possible he was taken by helicopter to an intensive care unit at Royal North Shore Hospital in Sydney. We will discuss other relevant factual matters when we come to the disposition of the appeal. The trial The appellant sued the respondent in the Supreme Court of New South Wales. His action came on for hearing before Bell J. The respondent sought to defend it on several bases. One was that the evidence did not establish that the appellant suffered injury as the result of an impact with the seabed. This argument had two bases, first that the appellant's head was unlikely to have hit the ocean floor while his arms were outstretched as for a conventional dive as he had said that they were. Secondly, his description of the impact, as if he had been "struck by a soft pillow", was inconsistent with an impact of such force as to cause the serious injury that he had suffered which was a burst fracture at C5 causing irreversible tetraplegia. It was, the appellant said in evidence, his belief that his head had hit the sand because there was a quantity of sand in his hair. He denied any collision with another person. Some support for this contention was to be found in the absence of abrasions or bruising to his head or forehead. It was the respondent's submission that a collision with another person was a much more likely explanation. The trial judge preferred the appellant's evidence on this aspect of the case and held that he had in fact struck his head on the floor of the sea. Not surprisingly, it was accepted, as is common knowledge, that the level of the ocean floor may and does change because of the movement of sand along the coast caused by currents and wind. It was not possible to say precisely what the depth of the water adjacent to the platform was on 24 January 1993 at the time of the appellant's accident, although a lifesaver on duty at Soldiers Beach then who was very familiar with the beach, and with the platform, said that the shallowest that he had seen the water at about the point of the appellant's entry into it was one metre or even less. The greatest depth there of which he was aware was around three metres. The best estimate that he was able to make of the depth where the appellant was floating when, as he did, he went to assist him was about 1.5 metres. By reference to tidal charts and other evidence, the trial judge concluded that the distance between the position from which the appellant dived, and the top of the water, absent any concurrent swell or surge, was less than 1.6 metres. The trial judge undertook a view of the beach and the platform. It did not however assist her to assess visibility or depths on the day. We return to the evidence of the appellant which was generally accepted by the trial judge. He said that he had been unable to see the ocean floor although it was a bright day and there was no weed or foam in or on the water. He recalled that the water was quite dark blue and said that "it looked deep". Another witness said he could see the bottom but not judge its depth. He described the water as being fairly clear. Rock shelves were "here and there". He was unable to estimate the depth of the water where the appellant was floating when he was removed from it. A further witness who was very familiar with Soldiers Beach said that on a clear sunny day when there was no weed, one could see the ocean floor from the platform from which the appellant dived. He added, "you wouldn't be able to estimate the actual depth, but you would possibly see it". So, in your experience, without being able to estimate the depth when the water was that high, I assume you would have formed the view it was too dangerous to dive? Depending. Maybe if other people had gone into the water before me, I would assume from that." There had been a tragic, similar, earlier accident, in 1978, when another diver from the platform, Errol von Sanden, had struck the ocean bed and had been rendered tetraplegic. Following it, The Advocate, a newspaper circulating in the locality, published an article on 18 January 1978 under the heading "Action call after injury": "The Soldiers Beach Inspector will recommend that Wyong Shire Council be asked to place a 'Danger: No Diving' sign at Soldiers Point following a weekend accident in which a young man [Errol von Sanden] was seriously injured." Mr Dawson, the General Manager of the respondent, gave evidence on its behalf. He had been the Council's chief executive officer since 1972. He was the Shire Clerk throughout the period of the litigation in Wyong Shire Council v Shirt162, and at the time of Mr von Sanden's accident. In 1993, although his title had changed to "General Manager", Mr Dawson's duties remained substantially the same. He was aware of Mr von Sanden's accident around the time of its occurrence. He was also aware of its location and the circumstances of it. These were matters of common knowledge within the Council. Her Honour thought it was probable that the Council gave some consideration to the implications for it arising from Errol von Sanden's accident in the following months. Mr Edwards, the inspector referred to in the newspaper article extracted above, had himself dived from the high rock on many occasions in the past. He had stopped diving from it well before Mr von Sanden's accident. The adjacent 162 (1980) 146 CLR 40. water had been quite deep in the early 1970s, but thereafter much sand had accumulated around the platform: in consequence it was more shallow than in his youth. He said, "I certainly wouldn't dive off there now". It had been unsafe, he said, to dive, at least from the high rock, from the late 1970s onwards. There was also evidence that lifesavers had warned divers from the platform not to dive. They had generally been ignored or rebuffed, sometimes aggressively so, by the divers. Three engineers gave evidence which was said to be expert evidence although we would have thought much of what they said obvious. The basic tenor of it was that it could be dangerous to dive from the platform, and that the height of the seabed changed from time to time. One of them said that he, as an engineer, would recommend, or cause prohibition signs to be erected stating "Diving is prohibited" or "Beware of shallow water when diving". Another of the experts similarly favoured the erection of signs. The respondent had adopted a policy about warning signs which was explained by Mr Dawson as follows: "In broad terms the Council placed warning signs where it had created a hazard. For example, if it dredged the Entrance channel; or where there was an activity that of itself didn't present risks but there may have existed at that particular location a risk that would not be evident to someone using the area." In 1993 the Council employed a Risk Manager. Mr Dawson explained the Council's approach in 1993 in this way: "Our approach was one of where if the risk was evident to the user then it was not – Council was not derelict in its duty of care by not erecting signs. For example, beach fishing; everyone knows there are risks inherent in beach fishing. Surfing on unpatrolled beaches. There are numerous others. They are activities that take place on a daily basis up and down our coastline, and they are frequently on Council property or property vested in the Council, but are risks where the person concerned would be able to detect that there was that risk, there was that hazard and danger. And that's the distinction I'm attempting to draw." Mr Dawson was aware that people of all ages visited the platform. He was aware that on weekends young people would jump and dive from it. He had seen groups of as many as ten to fifteen, or perhaps more young people engaging in these activities. Mr Dawson explained why the Council had not erected warning signs at natural locations such as Soldiers Point in this way: "It comes back to the Council's duty of care. You have to draw the line somewhere because it is a physical impossibility for the Council to warn every user. We have twenty-seven kilometres of coastline, all of which is dangerous, all of which is accessible to the public, and all of which contains specific dangers from sand moving, to rips, to sharks, to blue bottles, to sunbathing if you like. The Council – it is a physical impossibility for anyone to sign post all of those risks, because most of them ought to be evident to the user, and Council attempts to deal with that issue by having a number of beaches which are patrolled in the major swimming seasons." At the trial the appellant submitted that as the respondent had the care, control and management of the Reserve and provided facilities to encourage the public to make use of the area, it owed to him a common law duty of care to take reasonable care for his safety as a visitor. The appellant relied on the joint judgment of this Court in Nagle v Rottnest Island Authority163, contending not only that the facts of that case had much in common with this one, but also that the principles stated in it were applicable here. The respondent accepted that, "in its capacity as manager of the reserve trust, and having the care, management and control of the Reserve, it owed certain duties to entrants upon the Reserve". It pointed out that it was important to distinguish between an occupier of private land, and of a local government authority charged with statutory powers and responsibilities in respect of public land. The scope of its duty, having regard to the powers and responsibilities conferred upon it by the Local Government Act, did not encompass a duty to warn the appellant of obvious risks of which diving from the platform was clearly one. Nonetheless, the trial judge was satisfied that the risk that a person might sustain severe injury in diving from the platform was foreseeable, in that it was neither a far-fetched nor a fanciful possibility. The erection of signs prohibiting diving or, at least, warning of the dangers of it, would have been relatively inexpensive. The trial judge referred to the facts and reasoning in many other cases. Her Honour then went on to hold that the risk of sustaining severe injury by diving from the platform was not so obvious that it was reasonable for the Council to take no step to warn of it. The reasonable response of the respondent to a risk of the magnitude of the one that was realized here, required that it take 163 (1993) 177 CLR 423 per Mason CJ, Deane, Dawson and Gaudron JJ. steps to eliminate, or reduce the danger by erecting signs at the access points identified actually prohibiting diving from the platform. Her Honour added that if she were wrong about that, the application of Nagle required that she hold that the installation of warning signs was required as a minimum. Her Honour then found that such a sign or signs would have deterred the appellant from diving, and accordingly, that foreseeability, negligence and causation were all made out, with the result that the appellant's action succeeded. The trial judge did however regard the appellant as having negligently contributed to his injuries164: "It seems to me that the plaintiff failed to take reasonable care for his own safety by not making any independent assessment of the depth of the water before he dived. The fact that he had frequently seen people diving on other occasions and that he saw some persons diving from it on this day I do not consider to relieve him of responsibility, as a person taking reasonable care for his own safety, for ensuring that the depth of the water was sufficient to make diving on this occasion safe for a person of his height. I do not accept the Council's submission that the plaintiff's culpability as between it and him was by far the greater nor that the proximate and significant cause of his injury was his own carelessness. I consider the appropriate reduction in the award of damages on account of the plaintiff's own negligence to be one of 25%." Judgment was accordingly entered in favour of the appellant in the reduced sum of $5,054,753.25 with costs. The Court of Appeal The respondent appealed to the Court of Appeal of New South Wales (Mason P, Beazley JA and Tobias JA). At the same time, that Court also heard an appeal in Mulligan v Coffs Harbour City Council165 and pronounced a single judgment in respect of both cases166. The Court of Appeal was divided in this appeal and unanimous in Mulligan. Mason P and Tobias JA upheld the appeal, Beazley JA would have dismissed it. 164 (2002) 129 LGERA 10 at 50 [222]-[223]. 165 (2003) Aust Torts Reports ¶81-696. 166 (2004) Aust Torts Reports ¶81-754. The majority were in no doubt that the risk should have been obvious to the appellant, and that the trial judge erred by defining the risk at too narrow a level of abstraction: the knowledge of the respondent as to the danger, actual or assumed, was neutralised by the obviousness of the risk of injury attaching to diving into water of variable and unknown depth, a risk apparent to the appellant. In those circumstances the scope of the respondent's duty did not include a duty to warn or prohibit diving. That the appellant had seen others dive without mishap on numerous occasions may have detracted from the obviousness of the risk of diving into water of unknown and variable depth, but the appellant, having regard to his knowledge of the serious injury suffered by a relative in an earlier diving accident, should have been especially cautious and careful. The appeal to this Court It is not only unnecessary but also unhelpful to refer to a multiplicity of cases in order to resolve this appeal, as, for the most part, each turns on its own facts. We will however refer at the outset to the case upon which the appellant seeks to place the greatest weight, Nagle, and the correctness of which the respondent seeks to challenge. It too was a diving case. The plaintiff there hit a submerged rock when he dived into a pool of water in a reserve administered by the defendant. The basis upon which the majority of this Court upheld the plaintiff's appeal and found for him, was that it was clearly foreseeable that a person might dive into the water as he did, and, to meet that contingency, the defendant Authority should have erected an appropriate warning sign167. Unfortunately the reasons of the majority do not descend to the detail of the actual contents and location(s) of a sign or signs which would have been likely to present a sufficient deterrent to the plaintiff168. Notwithstanding this, their Honours rejected the trial judge's finding that the erection of a sign "giving an appropriate warning" would not have prevented the plaintiff's injury169. On one view, Nagle depends on its own facts but as this case at first instance shows, it has been taken to have precedential significance in diving cases generally. In our opinion however, the dissenting judgment of Brennan J is persuasive and should be regarded as stating the relevant principles, particularly in this passage in which the hypothetical circumstances alluded to by his Honour correspond with this case170: 167 (1993) 177 CLR 423 at 431. 168 (1993) 177 CLR 423 at 432. 169 (1993) 177 CLR 423 at 433. 170 (1993) 177 CLR 423 at 442. "The danger of diving into one of the rocks adjacent to the wave platform on the eastern perimeter was not the only foreseeable danger of diving into the Basin. In other parts of the Basin, a diver might hit other rocks – there are several standing on the floor of the Basin – or might dive into shallow water and hit the sandy floor. Or a diver who does not look before diving might dive on top of another swimmer. All of these possibilities are foreseeable and are fraught with the risk of serious consequences but it is not suggested that the Board should have erected a sign forbidding all diving. To have erected a sign forbidding diving from the wave platform on the eastern perimeter or warning of the danger of diving from there might have conveyed the false impression that diving from or into other parts of the Basin was safe. Diving is safe only if the diver takes reasonable care." His Honour's reasons, unlike those of the majority, confront the problem of the location, number and content of a warning sign or signs. In another passage which also strikes a chord in this appeal, his Honour answered a rhetorical question that he posed for himself "Would a warning have prevented the plaintiff from diving?" in this way171: "To answer this question, one must hypothesize about the type and location of the warning for which the plaintiff contended. Clearly a warning that did no more than inform the plaintiff of what he already knew would have been ineffective. A warning which read 'Caution – submerged rocks' would have been quite ineffective, for the plaintiff already knew that caution was required by reason of the existence of submerged rocks lying close to the wave ledge from which he dived. But obviously he was unaware at the moment when he dived of the position of the particular rock which he struck. ... If he were to be deterred from diving, the warning would have had to alert him either to the position of [the submerged rock] or to the risk of diving when submerged rocks might not be observed by an intending diver from the wave platform. What was suggested is that some sign should have been erected on or near the wave platform warning of the risk of diving from any part of the wave platform on the eastern perimeter of the Basin into the water." Reference has already been made to the fact that this respondent was the unsuccessful defendant in an action arising out of injuries suffered by a water skier on other waters in the Shire172. A jury before whom that case was tried 171 (1993) 177 CLR 423 at 443. 172 Wyong Shire Council v Shirt (1980) 146 CLR 40. returned a verdict for the plaintiff. In this Court, the Council argued that before a plaintiff could succeed he must show that the event or risk against which a defendant had failed to guard must be one that was "not unlikely to happen". This submission echoed what had been said and applied in this Court in Caterson v Commissioner for Railways173. That submission was rejected. Mason J, with whom Stephen and Aickin JJ agreed, said that a risk which is not far-fetched or fanciful is real and therefore foreseeable174. Murphy J was of a similar opinion, and drew an analogy between the conduct of road users, saying that although almost every car is driven unsafely close to the car in front, few accidents occur because of that conduct175, an example which may have as much to say, in our opinion, about the futility of some prohibitions on the part of the authorities, as it has about the question of the likelihood or unlikelihood of the occurrence of an accidental injury. As Callinan J recently pointed out in Koehler v Cerebos (Australia) Ltd176, the fact that the test of foreseeability as stated in Wyong Shire Council v Shirt is so undemanding has the consequence that too much emphasis has come to be placed upon some of the other elements of liability for negligence. Having concluded that an event is foreseeable, as almost every occurrence can be, a court then has to consider as a related matter "the reasonable man's response" to it, having regard to the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of alleviating action, and other competing demands upon a potential defendant177. These are all matters in respect of which the maintenance of absolute objectivity and the statement of norms or standards are very difficult. Included in those matters is an assessment of, in effect, the extent of the non-fancifulness of the occurrence, or, as is put, "the degree of probability of the occurrence"178. It might have been better to retain the law as it was stated to be in Caterson179 by Barwick CJ and 173 (1973) 128 CLR 99 at 101-102. 174 (1980) 146 CLR 40 at 48. 175 (1980) 146 CLR 40 at 49. 176 (2005) 79 ALJR 845 at 854 [54]; 214 ALR 355 at 367-368. 177 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48 per Mason J. 178 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47. 179 (1973) 128 CLR 99 at 101-102. before Wagon Mound (No 2)180 was decided, the case which was very influential in the reasoning of the majority in Wyong Shire Council v Shirt181. On the basis of the law as it was propounded in Shirt, which was not challenged in this appeal, there could be no doubt that an injury of the kind, and the circumstances in which he might sustain it, here were foreseeable. What then was the response that a reasonable council was obliged to take in fulfilment of the duty of care which the respondent correctly conceded it owed to the appellant? In our opinion the duty did not include an obligation to erect a warning sign or signs, to prohibit entry into the water from the platform, whether by signs or otherwise, or to construct, as it was at one stage suggested, a fence or other barrier to seek to deny access to the platform entirely. The Council was not obliged to adopt any of these measures to protect the appellant for these reasons. The appellant was engaged in a physical recreational activity. This does not mean that the respondent owed him no duty of care but it does mean that the duty was conditioned very much by the fact that the appellant set out to extend himself physically, albeit not in any excessive way, against the elements, in particular, the sea. Callinan J said in Agar v Hyde182, that when adults voluntarily participate in sport they may be assumed to know the rules, and to have an appreciation of the risks of the game. The same may be said of diving into the sea from a rock platform, particularly when the dive is undertaken by a person of mature years, with a considerable experience and knowledge of the waters which he was entering. The game in which the plaintiff in Agar v Hyde injured himself was notoriously a dangerous one, but the seas too are dangerous and have been understood to be so for thousands of years183. And, despite their allure, the sea waters of Australia, notoriously, are far from benign. Depending on how far north the traveller goes, sea lice, flotsam and jetsam, weed, blue bottles, stingers, quicksand, sea snakes, crocodiles, unpredictable waves, sand bars, sharks, absence of effective netting, shifting sea beds, broken bottles on the beach or in the water, sunstroke from sun bathing, 180 Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty [1967] 1 AC 617 at 181 (1980) 146 CLR 40 at 46-47 per Mason J. 182 (2000) 201 CLR 552 at 600 [127]. 183 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161; see footnote 329 at 229-230 [184]. and unpredictable tides and currents constitute a non-exhaustive catalogue of the risks a bather runs. Indeed, swimming itself, without more, can be hazardous. Much was made in this case of the tragic case of another tetraplegic within the relatively recent corporate memory of the respondent, but it would be interesting to know how many people have suffered injuries of different kinds from one or other of the risks to which we have referred, including merely swimming itself, an activity in which people of greatly varying abilities participate. We do not think it could be seriously suggested that a shire should erect a multiplicity of signs in the vicinity of its beaches saying "swimming can be dangerous". But the point in particular that we wish to make here is simply that the respondent could reasonably expect that a person of the appellant's age, knowledge and experience would not need a warning that to dive from the platform could be a dangerous thing to do. It is not without significance that according to the appellant, he had never dived there before, and had on other occasions chosen to enter the water from the platform in what clearly was a more cautious manner. Again, as Callinan J pointed out in Agar184 places of recreation are not places to which people are compelled to resort, and nor are they obliged, if they do, to participate in physical activities there. We have already touched upon the second reason why we do not think the respondent was obliged to erect a warning or prohibitory signs. It is that it has within its control 27 kilometres of coastline along which there inevitably would be many places of natural hazard. Just how many of these there are was not, and would not in the nature of things be likely to be able to be proved: it would be very difficult, and probably in the end fruitless to attempt to do so. Some of the hazards are likely however to be greater hazards than the platform, and capable of causing injuries as serious as those suffered by the appellant. Having regard to their existence, and the other demands upon the respondent, and in the light of the other matters that we have referred and will refer to, the respondent should not be seen as having been negligent in not singling out the platform for a special warning, or prohibition of diving. The primary judge seems to have been impressed by a submission by the appellant that he had seen other people diving safely from the platform on the day of his injury, and on earlier occasions. That submission says as much against the appellant's case as it does for it. As we have noted, Murphy J pointed out in Shirt that drivers of motor cars customarily follow too close behind cars in front of them185. That is true, but his Honour could equally have pointed out that this conduct, prohibited and criminalized by law as it was, demonstrated that people 184 (2000) 201 CLR 552 at 600 [127]. 185 (1980) 146 CLR 40 at 49. will continue to do it, and are not deterred by the relatively infrequent, but nonetheless occasional catastrophic accident that it causes. Having regard to this, and to the other matters to which we have referred, the respondent was not obliged in our view to erect a warning sign. The same reasoning refutes the view that there should have been a prohibitory sign or signs, and the consequential criminalizing, pursuant to, for example, cll 8 and 29(a) of Ordinance 52, of diving from the platform. There is a further reason why a prohibitory sign was not warranted. It is that authorities should not lightly criminalize recreational conduct, particularly conduct, unlike that of the motorist driving too close to the preceding vehicle, which is unlikely to harm others. Even in times of increasing intrusions by governments and local authorities upon personal autonomy, some degree of latitude of choice in conduct must be allowed. In a similar vein to what we have just said, and of relevance to any question of contributory negligence also, we would seek to make the point that it is not right to say, without qualification, that the difference between the duties of an injured plaintiff, and those of a tortfeasor, is that the former owes absolutely no duties to others including the defendant186, while the latter owes duties to all of his "neighbours". The "duty" to take reasonable care for his own safety that a plaintiff has is not simply a nakedly self-interested one, but one of enlightened self-interest which should not disregard the burden, by way of social security and other obligations that a civilized and democratic society will assume towards him if he is injured. In short, the duty that he owes is not just to look out for himself, but not to act in a way which may put him at risk, in the knowledge that society may come under obligations of various kinds to him if the risk is realized. Because it can be disposed of shortly, it is convenient to deal at this point with the suggestion that access to the platform should have been prevented by the erection of a wall, fence or barrier. That is not a response which the respondent was required to make. It is not clear by any means that it could have been done completely, and if it could, at what cost? Access may still perhaps have been available from the water itself at low tides, unless in some way, as seems unlikely, a wall within the sea could have been built around the headland, as well as across the access to it from the shore. But in any event it would seem to us to be unreasonable, that careful recreational users should be prevented from using the platform. It was argued by the appellant that even if the risk could and should have been obvious to him, he was still entitled to succeed. A corollary of this 186 cf Commissioner of Railways v Ruprecht (1979) 142 CLR 563 at 570-571 per Mason J; Nance v British Columbia Electric Railway Co Ltd [1951] AC 601 at 611 per Viscount Simon. argument was that to attach too much weight, indeed all the weight, to obviousness, was to disregard, among other things, and in particular, the possibility of inadvertence. As to that, we would point out first that the dividing line between inadvertence and negligence, indeed even gross negligence, can be very much in the eye of the beholder, and is often assessed almost entirely subjectively. This was, on no view however, a case of mere inadvertence. It was a very clear duty of the appellant, and one which any responsible authority would expect him to fulfil, to make some soundings at least of depth, and accordingly of risk to himself before diving from the platform. As to the question of obviousness generally, and its significance to the attribution of liability in a negligence case, we have nothing further to add to what we say in our judgment in Mulligan v Coffs Harbour City Council187. Some reliance was sought to be placed by the appellant on the decision of this Court in Crimmins v Stevedoring Industry Finance Committee188. That reliance is misplaced. Crimmins was a case of a workplace injury and not a recreational one. It was in other respects also a very different case. In particular, the plaintiff there was effectively incapable of taking any steps to protect himself or indeed of even knowing of the risk to which his employment subjected him. The industry in which he was working was a uniquely organized one and the defendant was in a special relationship with the plaintiff189. The law has always been alert to the difference between omission and commission, in an appropriate case taking a more critical view of the latter190. Despite the fact that paths led from various places to the platform, it largely remained in a state of nature. This is a relevant, but far from decisive, consideration in favour of the respondent. 187 [2005] HCA 63. 188 (1999) 200 CLR 1. 189 (1999) 200 CLR 1 at 114-117 [345]-[360]. 190 Blyth v Birmingham Waterworks Co (1856) 11 Ex 781 at 784 [156 ER 1047 at 1049] per Alderson B who said: "Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do." There is only one further matter to which we should refer. The trial judge held that had warning or prohibitory signs been erected, the appellant would have been likely to have seen, heeded and obeyed them. Accordingly, causation had, the trial judge held, been made out. In Rosenberg v Percival191, Callinan J referred to the very limited utility, indeed practical uselessness, of reliance by a court upon an answer by a plaintiff denying that he or she would have run a particular risk had he or she known about it. Her Honour here did not rely simply upon such a denial. Quite properly, she looked to supporting objective factors such as an innate cautiousness on the part of the appellant, and his awareness of a serious accident in water in which a relative had suffered injury. We are not convinced that these factors provide a complete answer to the essential anterior question, whether the appellant would have actually seen or read the contents of the sign or signs on the day, however many there were and wherever they were located. The appellant was, he said, influenced by the sight of others diving from the platform, a matter which the trial judge accepted. There was also uncontradicted evidence that other divers on other occasions had rudely rebuffed requests by lifesavers that they cease diving from the platform which might suggest that they would equally have ignored prohibitory signs and might be seen to be diving despite them. Her Honour did not weigh up these matters with the potential deterrent effect of signs had the appellant seen them. Nor was the question of the enforcement of any prohibition by signs, its expense, and practicality explored in this particular context. These are by no means decisive matters but they are relevant ones which detract from the appellant's arguments. For the reasons that we have given, we would dismiss the appeal with costs. 191 (2001) 205 CLR 434 at 504-505 [221].

HIGH COURT OF AUSTRALIA DEREK MULDROCK APPELLANT AND THE QUEEN RESPONDENT Muldrock v The Queen [2011] HCA 39 5 October 2011 ORDER 1. Appeal allowed. Set aside paragraphs 2 and 3 of the orders of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 14 May 2010 and in their place order that: the applicant, Derek Muldrock, have leave to appeal against the sentence imposed upon him by Black DCJ in the District Court of New South Wales on 28 July 2009; and the appeal be treated as instituted and heard instanter and allowed. 3. Remit the matter to the Court of Criminal Appeal for the appellant to be re-sentenced consistently with the reasons for judgment of this Court. On appeal from the Supreme Court of New South Wales Representation M Thangaraj SC with D P Barrow for the appellant (instructed by Catherine C K Maxwell QC with A J Robertson for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Muldrock v The Queen Criminal law – Sentencing – Mentally retarded appellant pleaded guilty to offence of sexual intercourse with a child under 10 years – Appellant sentenced to nine years' imprisonment and non-parole period of 96 days – Standard non- parole period for offence 15 years – Relevance of statutory provision of a standard non-parole period in sentencing of offenders – Whether "two-stage approach" to sentencing of offenders for offences with standard non-parole periods required or permitted – Whether R v Way (2004) 60 NSWLR 168 correctly decided with respect to operation of standard non-parole periods. Criminal law – Sentencing – Offender suffering mental retardation – Relevance of mental retardation – Relevance of availability of rehabilitative treatment. Criminal law – Sentencing – Community protection – Relevance of availability of orders under Crimes (Serious Sex Offenders) Act 2006 (NSW). Words and phrases – "objective seriousness", "standard non-parole period". Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A, 54A(2), 54B. FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The appellant is mentally retarded. As a child he was subject to homosexual sexual abuse. As an adult he has shown a sexual interest in male children. In March 2007, he befriended a nine year old boy and took advantage of an opportunity when the two were alone to suck the boy's penis. He was charged with the offence of sexual intercourse with a child aged under 10 years. The maximum sentence for the offence is 25 years' imprisonment1. The standard non-parole period for the offence is 15 years2. The appellant pleaded guilty to the offence before the District Court of New South Wales (Black DCJ). He had been assessed as eligible for admission to a residential treatment facility run by the Community Justice Program of the Department of Ageing, Disability and Home Care. The facility, known as Selwood Lane, operates a program that is designed to assist intellectually handicapped individuals to moderate their sexually inappropriate behaviour. Black DCJ sentenced the appellant to a term of nine years' imprisonment after allowing a 25% reduction in the otherwise appropriate sentence to reflect the appellant's plea of guilty3. The appellant had been in custody for three months at the date of the sentence hearing. Black DCJ backdated the sentence to give credit for the period served on remand. He specified a non-parole period of 96 days, which expired on the date of its imposition. He directed, as a condition of release on parole, that the appellant reside at Selwood Lane until the Parole Authority, acting in consultation with the Community Justice Program, determined that he be discharged. Black DCJ acknowledged that the proportion between the non-parole period and the term of the sentence was unusual. His Honour correctly concluded that the provision of a standard non-parole period for the offence did not preclude the imposition of a sentence for which a very short non-parole period was specified. However, his sentencing discretion miscarried because he 1 Crimes Act 1900 (NSW), s 66A. 2 Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act"), Table to Div 1A of Pt 4. 3 Sentencing Act, s 22. Crennan Bell did not have the power to impose conditions on a parole order respecting a sentence of nine years' imprisonment. That power is confined to sentences of three years' imprisonment or less4. Release on parole and the terms of the parole order are matters solely for the Parole Authority in the case of sentences exceeding three years' imprisonment5. The respondent appealed against the inadequacy of the sentence. The challenge was directed to the length of the non-parole period. It was submitted that the structure of the sentence reflected Black DCJ's erroneous view that he had power to impose conditions on the appellant's release on parole. It was also submitted that his Honour had erred by failing to "properly consider the relevance of the standard non-parole period of 15 years in determining the appropriate non-parole period"6. imprisonment. The appellant sought leave to appeal against the severity of the term of nine years' that Black DCJ had given He submitted disproportionate weight to the need to protect the community in circumstances in which that concern may be addressed by orders made under the Crimes (Serious Sex Offenders) Act 2006 (NSW) ("the Sex Offenders Act"). The New South Wales Court of Criminal Appeal (McClellan CJ at CL, Howie and Harrison JJ) refused the appellant's application for leave to appeal. The Crown's appeal was upheld and the appellant was re-sentenced to a non- parole period of six years and eight months and a balance of sentence of two years and four months. The appellant appeals to this Court by special leave. He submits that the Court of Criminal Appeal erred in its consideration of the standard non-parole period. He also complains that the Court of Criminal Appeal wrongly rejected Black DCJ's finding that he is "significantly intellectually disabled". Allied to this complaint is the contention that the Court was wrong to reject Black DCJ's emphasis on rehabilitation over denunciation, punishment and deterrence in 4 Sentencing Act, ss 50 and 51. 5 Crimes (Administration of Sentences) Act 1999 (NSW), ss 134 and 135. 6 R v Muldrock [2010] NSWCCA 106 at [4]. Crennan Bell structuring the sentence. He submits that the Court of Criminal Appeal erred in failing to find special circumstances warranting a departure from the statutory proportion between the non-parole period and the balance of the term in re-sentencing him7. Specifically, he complains of the Court's finding that treatment was or may be available to him in custody. The appellant maintains his challenge that the sentence of nine years' imprisonment is excessive. For the reasons that follow, the Court of Criminal Appeal erred by refusing leave to challenge the severity of the sentence. It was conceded below that Black DCJ's sentencing discretion had miscarried. This enlivened the Court of Criminal Appeal's power in its discretion to vary the sentence and to impose such sentence as seemed proper8. In re-sentencing the appellant the Court of Criminal Appeal should have taken, but did not take, sufficient account of the appellant's mental retardation9. The appeal should be allowed and the proceedings should be remitted to the Court of Criminal Appeal for that Court to re-sentence the appellant. The proceedings below Black DCJ found that the appellant is "significantly intellectually disabled". He took into account that the appellant had been convicted of a similar offence committed in similar circumstances seven years earlier. The appellant was sentenced by the Queensland District Court for that offence to 12 months' imprisonment to be served by way of an intensive correctional order. His Honour observed that, whatever treatment had been administered in consequence of that order, it had not cured the appellant. In the circumstances, he considered that the protection of the community was to be given weight in the sentence. His Honour found that the appellant's disability was a "highly relevant" factor in sentencing. It was a factor that made it inappropriate to reflect consideration of general deterrence in the sentence. He considered that the 7 Under s 44(2) of the Sentencing Act, the balance of the term of the sentence must not exceed one-third of the non-parole period unless the court decides that there are special circumstances for it being more. 8 Criminal Appeal Act 1912 (NSW), s 5D(1). 9 R v Muldrock [2010] NSWCCA 106 at [26]-[28]. Crennan Bell protection of the community would be promoted in the long term by the appellant undergoing treatment at Selwood Lane. The Court of Criminal Appeal was critical of Black DCJ's failure to consider the "objective seriousness" of the offence and the part that the standard non-parole period should play in the determination of the appropriate sentence10. It said11: "It is apparent that having regard to the sentencing regime for many offences a non-parole period of 15 years is considerable. Some persons sentenced for murder receive less. However, the responsibility of the courts is to be faithful to the sentences defined by Parliament which includes proper recognition of the standard non-parole period provided for particular offences." The Court referred to three cases involving the sentencing of an offender for sexual intercourse with a child aged under 10 years12. It said that these cases confirmed that the non-parole period imposed upon the appellant was "entirely inappropriate"13. None involved a mentally retarded offender. The Court said that it was constrained by the head sentence of nine years, which had not been the subject of the respondent's challenge14. The Court was not persuaded that there were special circumstances to justify a departure from the statutory proportion between the non-parole period and the term of the sentence15. 10 R v Muldrock [2010] NSWCCA 106 at [29]. 11 R v Muldrock [2010] NSWCCA 106 at [35]. 12 R v Muldrock [2010] NSWCCA 106 at [36]-[40] citing Eedens v The Queen [2009] NSWCCA 254; R v AJP (2004) 150 A Crim R 575; MLP v The Queen (2006) 164 A Crim R 93. 13 R v Muldrock [2010] NSWCCA 106 at [41]. 14 R v Muldrock [2010] NSWCCA 106 at [41]. 15 R v Muldrock [2010] NSWCCA 106 at [45]. Crennan Bell Standard non-parole periods – the legislative regime The provision of standard non-parole periods for the sentencing of offenders in New South Wales was introduced by the Crimes (Sentencing Procedure) Amendment (Standard Minimum Sentencing) Act 2002 (NSW) ("the Amending Act"), which inserted Div 1A of Pt 4 into the Sentencing Act. Division 1A governs the sentencing of offenders for offences to which standard non-parole periods apply. These are the offences specified in the Table to the Division. The standard non-parole period is the non-parole period set out for each offence in the Table16. Section 54A(2) provides: "For the purposes of sentencing an offender, the standard non-parole period represents the non-parole period for an offence in the middle of the range of objective seriousness for offences in the Table to this Division." Section 54C(1) should also be noted. It provides: "If the court imposes a non-custodial sentence for an offence set out in the Table to this Division, the court must make a record of its reasons for doing so. The court must identify in the record of its reasons each mitigating factor that it took into account." Section 54B applies when a court sentences an offender to imprisonment for an offence listed in the Table17. At the material time, s 54B relevantly provided18: (2) When determining the sentence for the offence, the court is to set the standard non-parole period as the non-parole period for the offence unless the court determines that there are reasons for 16 Sentencing Act, s 54A(1). 17 Sentencing Act, s 54B(1). 18 Section 54B has since been amended to take into account the provision for imposing an aggregate sentence of imprisonment: see Crimes (Sentencing Procedure) Amendment Act 2010 (NSW). Crennan Bell setting a non-parole period that is longer or shorter than the standard non-parole period. (3) The reasons for which the court may set a non-parole period that is longer or shorter than the standard non-parole period are only those referred to in section 21A. The court must make a record of its reasons for increasing or reducing the standard non-parole period. The court must identify in the record of its reasons each factor that it took into account. Sub-section (3) directs attention to s 21A. A new s 21A was inserted into the Sentencing Act at the same time as Div 1A19. It is sufficient to set out s 21A(1): "General In determining the appropriate sentence for an offence, the court is to take into account the following matters: the aggravating factors referred to in subsection (2) that are relevant and known to the court, the mitigating factors referred to in subsection (3) that are relevant and known to the court, any other objective or subjective factor that affects the relative seriousness of the offence. The matters referred to in this subsection are in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law." Further, regard is not to be had to the aggravating and mitigating factors if to do so "would be contrary to any Act or rule of law"20. 19 Amending Act, Sched 1[2]. 20 Sentencing Act, s 21A(4). Crennan Bell Since the reasons for imposing a non-parole period that is longer or shorter than the standard non-parole period are to be found in s 21A, it is necessary to consider the scope of the matters that, in addition to those within sub-ss (1)(c), (2) and (3), are embraced by the concluding sentence of sub-s (1). The provisions introduced by the Amending Act focused upon the fixing of non-parole periods. It remained, and remains, essential to recognise, however, that the fixing of a non-parole period is but one part of the larger task of passing an appropriate sentence upon the particular offender. Fixing the appropriate non- parole period is not to be treated as if it were the necessary starting point or the only important end-point in framing a sentence to which Div 1A applies. At common law the exercise of the sentencing discretion is the subject of established principles. These include proportionality21, parity22, totality23, and the avoidance of double punishment24. In R v Way, the Court of Criminal Appeal held that s 21A(1) preserves the entire body of judicially developed sentencing principles, which constitute "law" for the purposes of both s 21A(1) and s 21A(4)25. No question of the correctness of that interpretation was raised in this appeal and it may be accepted. In this statutory context the principles of the common law respecting the sentencing of offenders answer the description of "matters that are required … to be taken into account by the court under any … rule of law"26. 21 Veen v The Queen [No 2] (1988) 164 CLR 465; [1988] HCA 14. The Sentencing Act contains explicit recognition of proportionality as the fundamental precept of sentencing in ss 22A(2) and 23(3). 22 Lowe v The Queen (1984) 154 CLR 606; [1984] HCA 46. 23 Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70. 24 Pearce v The Queen (1998) 194 CLR 610; [1998] HCA 57. 25 R v Way (2004) 60 NSWLR 168 at 183 [56]-[57]. 26 Cf R v Hoar (1981) 148 CLR 32 at 38 per Gibbs CJ, Mason, Aickin and Brennan JJ; [1981] HCA 67; Pearce v The Queen (1998) 194 CLR 610 at 623 [41] per McHugh, Hayne and Callinan JJ. Crennan Bell Under common law sentencing practice, factors that do not affect the assessment of the relative seriousness of the offence may nonetheless be relevant to the determination of an appropriate sentence. Such factors include that the sentence may be served under conditions of segregation27 or that imprisonment will be particularly burdensome because of the offender's physical condition28. Considerations of this character, which have been recognised by courts as bearing relevantly on the exercise of the sentencing discretion in this context, answer the description of "matters that are … permitted to be taken into account by the court under any … rule of law"29. The appellant submits and the respondent correctly accepts that s 21A permits the court to take into account all of the factors that, under the common law, are relevant to the determination of sentence30. This recognition is important to understanding the operation of Div 1A. It should also be noted that the introduction of standard non-parole periods was accompanied by the incorporation of a statutory statement of the purposes of sentencing31. The purposes there stated are the familiar, overlapping and, at 27 R v Totten [2003] NSWCCA 207. 28 R v Smith (1987) 44 SASR 587. 29 R v Way (2004) 60 NSWLR 168 at 183 [56]-[59]; Elyard v The Queen (2006) 45 MVR 402 at 407 [18]. 30 R v Way (2004) 60 NSWLR 168 at 183 [57]; Elyard v The Queen (2006) 45 MVR 31 Section 3A of the Sentencing Act, inserted by Sched 1[1] of the Amending Act, provides that: "The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (Footnote continues on next page) Crennan Bell times, conflicting, purposes of criminal punishment under the common law32. There is no attempt to rank them in order of priority and nothing in the Sentencing Act to indicate that the court is to depart from the principles explained in Veen v The Queen [No 2]33 in applying them34. (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community." 32 Veen v The Queen [No 2] (1988) 164 CLR 465 at 476-477 per Mason CJ, Brennan, 33 (1988) 164 CLR 465 at 476 per Mason CJ, Brennan, Dawson and Toohey JJ. 34 In his second reading speech for the Bill for the Amending Act, the Attorney-General said: "A fair, just and equitable criminal justice system requires that sentences imposed on offenders be appropriate to the offence and the offender, that they protect the community and help rehabilitate offenders to prevent them from offending in the future. The imposition of a just sentence in the individual case requires the exercise of a complex judicial discretion. The sentencing of offenders is an extremely complex and sophisticated judicial exercise. The High Court has described the various purposes and the necessary complexity of the sentencing exercise in the following terms …" He went on to quote the passage from the joint reasons in Veen v The Queen [No 2] (1988) 164 CLR 465 at 476 referred to above: New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 2002 at 5815. Crennan Bell The Court of Criminal Appeal's criticism of Black DCJ's failure to consider the objective seriousness of the offence35 reflected that Court's earlier analysis of the operation of Div 1A in Way. The appellant submits that Way was wrongly decided to the extent that it held that the standard non-parole period operates as a benchmark or guidepost in sentencing for a Div 1A offence that does not fall within the middle of the range of objective seriousness. The respondent, while not critical of the analysis in Way, submits that later decisions purporting to apply that decision have evidenced a "more categorical" two-stage approach to the sentencing of offenders for Div 1A offences36. The respondent acknowledges that this approach is apt to distort the exercise of the sentencing discretion and that it is not required by the terms of Div 1A. R v Way The Court of Criminal Appeal in Way took as its starting point that s 54B(2) is expressed in "mandatory terms"37. In order to give "sensible meaning" to sentencing for Div 1A offences the Court said that s 54B(2) is to be construed so as to include, as a reason for departing from the standard non-parole period, that the offence is outside the middle range of objective seriousness for such offences38. This required the Court to determine what would constitute an abstract offence in the middle of the range of objective seriousness39. In performing this task, the Court considered that the expression "objective 35 R v Muldrock [2010] NSWCCA 106 at [29]. 36 R v Reyes [2005] NSWCCA 218 at [44]; R v Reid (2005) 155 A Crim R 428 at 435 [19]; R v Knight (2007) 176 A Crim R 338 at 341 [4] and 346 [39]; R v McEvoy [2010] NSWCCA 110 at [75]-[87]; R v Sellars [2010] NSWCCA 133 37 R v Way (2004) 60 NSWLR 168 at 183 [62]. This Court (Gummow and Callinan JJ) refused special leave on the ground that, on any view of the construction of the legislation, there were insufficient prospects of a different result on any re-sentencing of the applicant: [2005] HCATrans 147. 38 R v Way (2004) 60 NSWLR 168 at 184 [67]. 39 R v Way (2004) 60 NSWLR 168 at 185 [74]-[76]. Crennan Bell seriousness" was not to be narrowly confined40. Rather, it was to be understood as taking into account the physical acts of the offender and their consequences, together with circumstances personal to the offender that are causally connected to the commission of the offence41. The Court instanced duress, provocation, robbery to feed a drug addiction, mental state (intention being more serious than recklessness), and mental illness or intellectual disability (where the latter are related to the commission of the offence) as such circumstances42. These were to be distinguished from those more accurately described as circumstances of the offender and not of the offence43. The Court held that the standard non-parole period only applies to sentencing for an offence after conviction at trial44. This is because the Sentencing Act provides that a sentencing judge may impose a lesser sentence on an offender to take into account the fact of a plea of guilty45. In sentencing for a Div 1A offence after trial, the Court said that the sentencing judge must ask and answer the question: "are there reasons for not imposing the standard non-parole period?"46. In answering that question, the Court said that the sentencing judge should consider the objective seriousness of the offence (taking into account any facts explaining why the offence was committed) in order to determine whether the offence is within the midrange of seriousness47. 40 R v Way (2004) 60 NSWLR 168 at 186 [85]. 41 R v Way (2004) 60 NSWLR 168 at 186-187 [86]. 42 R v Way (2004) 60 NSWLR 168 at 186-187 [86]. 43 R v Way (2004) 60 NSWLR 168 at 187 [86]. 44 R v Way (2004) 60 NSWLR 168 at 185 [71]. 45 R v Way (2004) 60 NSWLR 168 at 184 [69], referring to s 22 of the Sentencing Act. 46 R v Way (2004) 60 NSWLR 168 at 191 [117]. 47 R v Way (2004) 60 NSWLR 168 at 191 [118]. Crennan Bell The parties' submissions The appellant's submission, that the standard non-parole period has no role in sentencing for an offence in the low (or high) range for offences, assumes that s 54B(2) "prima facie mandates" the specification of the standard non-parole period for a midrange offence. The respondent correctly submits that there is nothing in the scheme of Div 1A to suggest that the provisions respecting standard non-parole periods apply only to a particular category of offending, whether low, middle or high range. The respondent submits that: "Section 54B(2) has been said to be 'mandatory' because it is in terms that 'the court is to set the standard non-parole period' [respondent's emphasis] but the effect of the section is not to mandate a particular [non-parole period] for a particular category of offence rather it preserves the full scope of the judicial discretion to impose a non-parole period longer or shorter than the [standard non-parole period]. This is especially evident when read in the context of s 54C where the provisions contemplate that the court may impose no custodial sentence at all: s 54C(1)." The respondent's submission should be accepted. It follows from that acceptance that Way was wrongly decided. As will appear, it was an error to characterise s 54B(2) as framed in mandatory terms. The court is not required when sentencing for a Div 1A offence to commence by asking whether there are reasons for not imposing the standard non-parole period nor to proceed to an assessment of whether the offence is within the midrange of objective seriousness. Sentencing of offenders pursuant to s 54B(2) Section 54B applies whenever a court imposes a sentence of imprisonment for a Div 1A offence48. The provision must be read as a whole. It is a mistake to give primary, let alone determinative, significance to so much of s 54B(2) as appears before the word "unless". Section 54B(2), read with ss 54B(3) and 21A, requires an approach to sentencing for Div 1A offences that is consistent with the approach to sentencing described by McHugh J in Markarian v The Queen49: 48 Sentencing Act, s 54B(1). 49 (2005) 228 CLR 357 at 378 [51]; [2005] HCA 25. Crennan Bell "[T]he judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case." (emphasis added) Section 54B(2) and s 54B(3) oblige the court to take into account the full range of factors in determining the appropriate sentence for the offence. In so doing, the court is mindful of two legislative guideposts: the maximum sentence and the standard non-parole period. The latter requires that content be given to its specification as "the non-parole period for an offence in the middle of the range of objective seriousness"50. Meaningful content cannot be given to the concept by taking into account characteristics of the offender. The objective seriousness of an offence is to be assessed without reference to matters personal to a particular offender or class of offenders. It is to be determined wholly by reference to the nature of the offending. Nothing in the amendments introduced by the Amending Act requires or permits the court to engage in a two-stage approach to the sentencing of offenders for Div 1A offences, commencing with an assessment of whether the offence falls within the middle range of objective seriousness by comparison with an hypothesised offence answering that description and, in the event that it does, by inquiring if there are matters justifying a longer or shorter period. A central purpose of Div 1A is to require sentencing judges to state fully the reasons for arriving at the sentence imposed. The reference in s 54B(4) to "mak[ing] a record of its reasons for increasing or reducing the standard non- parole period" is not to be understood as suggesting either the need to attribute particular mathematical values to matters regarded as significant to the formation of a sentence that differs from the standard non-parole period, or the need to classify the objective seriousness of the offending. It does require the judge to identify fully the facts, matters and circumstances which the judge concludes bear upon the judgment that is reached about the appropriate sentence to be imposed. The obligation applies in sentencing for all Div 1A offences regardless of whether the offender has been convicted after trial or whether the offence 50 Sentencing Act, s 54A(2). Crennan Bell might be characterised as falling in the low, middle or high range of objective seriousness for such offences. The full statement of reasons for the specification of non-parole periods either higher or lower than the standard assists appellate review and in this way promotes consistency in sentencing for Div 1A offences. It may also increase public awareness of the sentencing process51. The maximum penalty for a statutory offence serves as an indication of the relative seriousness of the offence52. An increase in the maximum penalty for an offence is an indication that sentences for that offence should be increased. It appears that for most, if not all, Div 1A offences, the standard non-parole period exceeds the mean non-parole period for the offence recorded in the statistics kept by the Judicial Commission of New South Wales in the period before the enactment of Div 1A53. As the Court of Criminal Appeal correctly pointed out in Way, it is necessary to treat this circumstance with care54. The standard non- parole period represents the non-parole period for an hypothetical offence in the middle of the range of objective seriousness without regard to the range of factors, both aggravating and mitigating, that bear relevantly on sentencing in an individual case. It may be, as the Court of Criminal Appeal observed in Way, that for some Div 1A offences there will be a move upwards in the length of the non-parole period as a result of the introduction of the standard non-parole period55. This is the likely outcome of adding the court's awareness of the 51 In his second reading speech for the Bill for the Amending Act, the Attorney- General said that "[t]hese reforms are primarily aimed at promoting consistency and transparency in sentencing and also promoting public understanding of the sentencing process": New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 2002 at 5813. 52 R v Tait (1979) 24 ALR 473 at 483-484; Ibbs v The Queen (1987) 163 CLR 447 at 451-452; [1987] HCA 46; Gilson v The Queen (1991) 172 CLR 353 at 364; [1991] HCA 24. 53 R v Way (2004) 60 NSWLR 168 at 194 [139]. 54 R v Way (2004) 60 NSWLR 168 at 194 [140]. 55 R v Way (2004) 60 NSWLR 168 at 195 [142]. Crennan Bell standard non-parole period to the various considerations bearing on the determination of the appropriate sentence. It is not because the standard non- parole period is the starting point in sentencing for a midrange offence after conviction56. An offence of sexual intercourse with a child aged under 10 years falling within the middle of the range of objective seriousness has a standard non-parole period of 15 years. That circumstance says little about the appropriate sentence for this mentally retarded offender and this offence. The Court of Criminal Appeal erred by treating the provision of the standard non-parole period as having determinative significance in sentencing the appellant. That error necessarily affected the Court's determination of the appellant's application for leave to appeal against the severity of the sentence. The determination that the challenge to the sentence was without merit57 was wrong. To explain why that is so, it is necessary to say something more about the offence and the appellant's disability. The facts The appellant was aged 30 years at the date of the offence. The victim was living with his mother in a granny flat attached to the house in which the appellant was living. The appellant fixed the boy's bike and offered to go for a test ride with him. The boy's mother agreed. When the appellant and the boy were alone together, the appellant asked the boy if he wanted to go to the lake to see the animals. They cycled a distance of one or two kilometres to the lake. They decided to go swimming. The boy had no swimming costume or underwear and he went into the lake naked. The appellant joined him, wearing his underpants or Speedos. He repeatedly tried to touch the boy's penis and bottom, but each time the boy pushed him away. Eventually he succeeded in touching the boy's bottom and the area around his penis. This activity was 56 Cf R v Way (2004) 60 NSWLR 168 at 194 [140]. 57 R v Muldrock [2010] NSWCCA 106 at [15]-[18]. Crennan Bell charged as an offence of aggravated indecent assault58. Black DCJ took this offence into account in sentencing the appellant for the principal offence59. The boy got out of the water and the appellant pushed him to the ground, pinning him down by kneeling on his legs. He sucked the boy's penis twice for about 10 seconds. The boy kicked him in the shoulder or chest and the appellant fell back. The boy got dressed and rode off. The appellant yelled out, "Come back, you wussy. You're just too scared to come back". The boy rode to a nearby house. He was in a very distressed state and he told the occupant, Mr Fuzzard, that a man had touched his private parts. Mr Fuzzard drove him home, by which stage the boy was "sobbing hysterically and shaking". A short time later, the mother answered a knock at the door and saw the appellant standing there, holding a bike pump. She closed the door on him and contacted the police. The appellant was interviewed by the police in the presence of a Salvation Army officer, who acted as a support person. He gave an account that he had planned to go swimming by himself and that the boy had invited himself on the excursion. The appellant said that he thought the boy's mother had "set him up" by allowing the boy to go with him and that the mother would have viewed him as an "easy target". He maintained that the boy had falsely accused him of touching him. He denied any wrongdoing. The offence occurred on 19 March 2007. The previous offence took place in 2000, when the appellant was living with his parents in Cairns ("the 2000 offence"). The victim of the 2000 offence was also a neighbouring male child. As earlier noted, the facts of the 2000 offence were similar to those presently under consideration. The appellant was referred to Dr Muir, a psychiatrist, for treatment following the commission of the 2000 offence. Dr Muir initially prescribed Androcur, a testosterone suppressant that reduces the sex drive. Androcur is known to have severe complications. Dr Muir ceased prescribing it for the 58 Crimes Act 1900 (NSW), s 61M(1). The maximum penalty for the offence is imprisonment for seven years. The standard non-parole period for the offence is five years: Sentencing Act, Table to Div 1A of Pt 4. 59 Sentencing Act, s 33. Crennan Bell appellant some time before the sentence hearing in the Queensland District Court because he did not consider that its continued use was warranted. He assessed the appellant as having been significantly traumatised by his arrest and court appearances. Dr Muir thought that it was likely that the experience would "contain" the appellant's behaviour. It is not known what, if any, treatment the appellant received during the 12 months that he was subject to the treatment order. The appellant had not previously been sentenced to a term of full-time custody at the time he appeared for sentence before Black DCJ. The expert evidence The respondent tendered the reports of Dr Muir and Ms Daniels, a clinical psychologist, in the proceedings before Black DCJ. These reports had been prepared in connection with the proceedings before the Queensland District Court in 2000. Dr Muir concluded that the appellant was "undoubtedly mentally retarded". The likely cause of the condition was cerebral anoxia at birth. The appellant had been placed in special classes throughout his school career. He could barely read or write and was only able to tell the time by the use of a digital watch. The appellant was sexually abused at the age of 10 by a young adult male who performed oral sex on him. Dr Muir said that the appellant's retarded development was the cause of his difficulty in managing his impulses and controlling his actions. Ms Daniels assessed the appellant's Performance IQ as within the category of mentally retarded and his Full Scale IQ as within the borderline range. She considered that his "maladaptive sexual behaviour" appeared to be the manifestation of his own childhood sexual abuse and his mental retardation. In her view, the appellant had little control over his "acting out behaviour". The appellant was also assessed by Professor Hayes, a psychologist, in connection with the present offence. Professor Hayes reported that the appellant's IQ Composite Standard Score of 62 was indicative of a mild intellectual disability. The appellant functions at a level lower than 99% of the population. His receptive and expressive language is equivalent to that of a child aged five and a half years. Test results measuring the appellant's ability to communicate, daily living skills and level of socialisation (adaptive behaviour) Crennan Bell confirmed the diagnosis of mild intellectual disability. The appellant functions in the lowest 0.1% of the population in terms of his adaptive behaviour. Professor Hayes observed that: "Mr Muldrock has deficits in empathy, that is, understanding how another individual is thinking and feeling. Although he has been sexually assaulted himself, he says that he cannot recall how he felt at the time, and he cannot understand how his victim would feel. He also holds a number of cognitive distortions regarding the offences, including the view that 'I'm not purposely like that'." Professor Hayes considered that the appellant would benefit from a program designed for a sex offender with an intellectual disability. She commented on the lack of availability of programs for intellectually disabled sex offenders in custody. She suggested that the appellant needed to learn practical skills for dealing with situations in which he is in the proximity of children. She commented on his lack of appropriate social and recreational outlets for a man of his age and ability, suggesting that he required a comprehensive program to address the areas of deficit in his adaptive behaviour. Selwood Lane is a six bedroom facility located in a semi-rural setting. There is limited access to the neighbouring premises. Locks are installed on all windows and doors and there is perimeter sensor lighting. Staff are directed to maintain "line of sight supervision [of residents] at all times". The staff have experience in working with intellectually handicapped individuals who display "challenging and highly sexualised behaviours". At the date of the appeal to the Court of Criminal Appeal, the appellant was being held in an Additional Support Unit, a facility accommodating offenders who require placement outside the mainstream prison environment. He had been moved to this unit because of his "challenging behaviour" towards staff and inmates. His poor behaviour had culminated in him being held in segregation for two weeks. It was not known how long he would remain in the Additional Support Unit. The Manager of the Long Bay Parole Unit reported that no sex offender treatment options for inmates with intellectual disabilities were available to the appellant. An affidavit sworn by a principal prison officer stated that a treatment Crennan Bell program aimed specifically at sexual offenders with intellectual disability and other cognitive impairments had been written and was "being finalised". A departure from Black DCJ's factual finding? The appellant contends that the Court of Criminal Appeal erred in holding that Black DCJ's finding that he is "significantly intellectually disabled" was not "justified by the contemporary evidence". It is not clear that the Court rejected the factual finding of intellectual disability. The relevant passage is in the reasons of McClellan CJ at CL (Howie and Harrison JJ concurring)60: "[27] In the present case the sentencing judge concluded that the [appellant] 'was significantly intellectually disabled' and that accordingly general deterrence 'was inappropriate', although his Honour accepted that personal deterrence was still relevant. In my judgment this finding was not justified by the contemporary evidence. Although Professor Hayes in her report dated 25 September 2008 expressed the opinion that the [appellant] suffered from 'a mild intellectual disability' he has sufficient capacity to have obtained a driver's licence and has undertaken some paid employment. Professor Hayes concluded that the [appellant] does have 'deficits in empathy' which are likely to be a result of his intellectual functioning. [28] The evidence clearly establishes that the [appellant] knew that what he had done was wrong. This is apparent from the fact that when confronted by the police he originally denied any suggestion of wrong- doing and claimed that he had in effect 'been set up.' Dr Muir concluded that the [appellant] understood the nature and wrongfulness of his conduct with respect to the earlier offence and that the circumstances confirmed that he was aware that his actions were a breach of the law." McClellan CJ at CL had noted earlier in his reasons that the respondent did not put in issue that the appellant had a mental disability nor that the disability was a relevant factor in sentencing him61. Paragraph [27] is ambiguous. On one view, his Honour was rejecting Black DCJ's conclusion that 60 R v Muldrock [2010] NSWCCA 106 at [27]-[28]. 61 R v Muldrock [2010] NSWCCA 106 at [23]. Crennan Bell general deterrence was not a relevant factor (as distinct from rejecting the factual finding of intellectual disability). Another view is that his Honour considered that the contemporary evidence (Professor Hayes' report) did not support Black DCJ's finding that the appellant's intellectual disability was "significant". On either analysis, the Court of Criminal Appeal erred in its approach to the evidence of the appellant's disability in re-sentencing him. Sentencing mentally retarded offenders The assessment that the appellant suffers from a "mild intellectual disability" should not obscure the fact that he is mentally retarded. The condition of mental retardation is classified according to its severity as mild, moderate, severe or profound62. Mental retardation is defined by reference to both significantly subaverage general functioning and significant limitations in adaptive functioning63. "Significantly subaverage intellectual functioning" is defined as an intelligence quotient (IQ or IQ-equivalent) of about 70 or below64. The position is well explained in a discussion paper published by the New South Wales Law Reform Commission65: intellectual "A person's intellectual disability can be classified as 'mild', 'moderate', 'severe' or 'profound', based upon certain IQ (intelligence quotient) ranges. A further category, 'borderline', is also used to indicate people just above the mild range in terms of intellectual functioning. A person with a 'severe' or 'profound' disability may be unable to learn basic social skills such as speech, walking and personal care, and is likely to require supported accommodation. The majority of people with an intellectual 62 American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders, 4th ed (text rev) (2000) ("DSM-IV-TR") at 42. 63 DSM-IV-TR at 41. 64 DSM-IV-TR at 41. A measurement error of approximately five points is allowed in assessing IQ: DSM-IV-TR at 41. The appellant obtained a Full Scale IQ of 64 in a test conducted in October 2007 at the Tweed Valley Clinic. 65 New South Wales Law Reform Commission, People with an Intellectual Disability and the Criminal Justice System: Courts and Sentencing Issues, Discussion Paper Crennan Bell disability have a 'mild' level of intellectual disability and 'can learn skills of reading, writing, numeracy, and daily living sufficient to enable them to live independently in the community.' These classifications have limited utility and can sometimes be misleading. For example, such terms may suggest justice personnel, who do not have a full understanding of the disability involved, that a 'mild' intellectual disability is inconsequential." (footnotes omitted) to criminal The fact that the appellant had engaged in some paid employment and that he held a driver's licence does not detract from the assessment of his retardation. The evidence was that he had "enormous difficulty with employment". He was unemployed at the time Ms Daniels assessed him. She recommended that he would benefit from "a properly supervised sheltered workshop environment". He was in receipt of a disability support pension in mid-2008 and had been so for some time when he was assessed by Dr Westmore to determine whether he had sufficient capacity to be fit to be tried. Dr Muir's assessment that the appellant understood the wrongfulness of his conduct respecting the earlier offence was qualified by the observation that this was "only a superficial awareness". Dr Muir also said: "In the interview situation, it is readily apparent that Mr Muldrock is significantly mentally retarded. His speech is very slow and measured and in a monotone." lay terms, the appellant's intellectual disability is "significant", was apt. It was an error for the Court of Criminal Appeal to reject the finding, if that is what it did. Alternatively, it was an error for the Court to find that Black DCJ's determination, that general deterrence had no place in sentencing the appellant, was not justified by the evidence. One purpose of sentencing is to deter others who might be minded to offend as the offender has done. Young CJ, in a passage that has been frequently that 66 R v Mooney unreported, Victorian Court of Criminal Appeal, 21 June 1978 at 5, cited in R v Anderson [1981] VR 155 at 160. Crennan Bell "General deterrence should often be given very little weight in the case of an offender suffering from a mental disorder or abnormality because such an offender is not an appropriate medium for making an example to others." In the same case, Lush J explained the reason for the principle in this way67: "[The] significance [of general deterrence] in a particular case will, however, at least usually be related to the kindred concept of retribution or punishment in which is involved an element of instinctive appreciation of the appropriateness of the sentence to the case. A sentence imposed with deterrence in view will not be acceptable if its retributive effect on the offender is felt to be inappropriate to his situation and to the needs of the community." The principle is well recognised68. It applies in sentencing offenders suffering from mental illness, and those with an intellectual handicap. A question will often arise as to the causal relation, if any, between an offender's mental illness and the commission of the offence69. Such a question is less likely to arise in sentencing a mentally retarded offender because the lack of capacity to reason, as an ordinary person might, as to the wrongfulness of the conduct will, in most cases, substantially lessen the offender's moral culpability for the offence. The retributive effect and denunciatory aspect of a sentence that is appropriate to a person of ordinary capacity will often be inappropriate to the situation of a mentally retarded offender and to the needs of the community. In this case, there was unchallenged evidence of the causal relation between the appellant's retardation and his offending in the reports of Dr Muir The fact that the appellant possessed the superficial and Ms Daniels. 67 R v Mooney unreported, Victorian Court of Criminal Appeal, 21 June 1978 at 8, cited in R v Anderson [1981] VR 155 at 160-161. 68 Veen v The Queen [No 2] (1988) 164 CLR 465 at 476-477. See also R v Anderson [1981] VR 155; Scognamiglio (1991) 56 A Crim R 81; R v Letteri unreported, New South Wales Court of Criminal Appeal, 18 March 1992; Engert (1995) 84 A Crim R 67; Wright (1997) 93 A Crim R 48. 69 See Engert (1995) 84 A Crim R 67 at 71. Crennan Bell understanding of a mentally retarded adult that it was wrong to engage in sexual contact with a child and that he told childish lies in the hope of shifting the blame from himself were not reasons to assess his criminality as significant70, much less to use him as a medium by which to deter others from offending. Treatment in prison and special circumstances The Court of Criminal Appeal acknowledged that the rehabilitation of the appellant was a significant consideration71. It said that the non-parole period would "allow for his treatment if it is available within the prison system"72. The Court was not persuaded it should find that special circumstances justified a departure from the statutory proportion between the non-parole period and the term of the sentence. In coming to this conclusion, it said, "[i]t is plain that the [appellant] requires effective treatment if he is ever to be a responsible member of the community. That treatment is available within the prison system."73 The latter finding approaches inconsistency with the earlier finding, for it asserts as a fact that about which the earlier finding may have raised a doubt. And it was not supported by the evidence. In any event, it was an error to determine the structure of the sentence upon a view that the appellant would benefit from treatment while in full-time custody. Full-time custody is punitive. The non-parole period is imposed because justice requires that the offender serve that period in custody74. Furthermore, the availability of rehabilitative programs within prisons is a matter for executive determination. There can be no confident prediction that an offender will be accepted into a program or that the program will continue to be offered during the term of the sentence. 70 R v Muldrock [2010] NSWCCA 106 at [34] 71 R v Muldrock [2010] NSWCCA 106 at [44]. 72 R v Muldrock [2010] NSWCCA 106 at [44] (emphasis added). 73 R v Muldrock [2010] NSWCCA 106 at [45] (emphasis added). 74 Power v The Queen (1974) 131 CLR 623 at 628-629 per Barwick CJ, Menzies, Stephen and Mason JJ; [1974] HCA 26; Bugmy v The Queen (1990) 169 CLR 525 at 536 per Dawson, Toohey and Gaudron JJ; [1990] HCA 18. Crennan Bell The desirability of the appellant undergoing suitable rehabilitative treatment was plainly capable of being a special circumstance justifying a departure from the statutory proportion between the non-parole period and the term of the sentence. The Court of Criminal Appeal was wrong to hold that Black DCJ had been diverted by the evidence concerning Selwood Lane, and that he failed to carry out the task required of a sentencing judge75 in focusing on rehabilitation and not on denunciation, punishment and deterrence76. As explained, punishment, in the sense of retribution, and denunciation did not require significant emphasis in light of the appellant's limited moral culpability for his offence. And there was no requirement for general deterrence. It was open to Black DCJ to view personal deterrence as likely to be advanced by a sentence that required the appellant to undergo appropriately tailored treatment in a secure facility such as Selwood Lane. The Court of Criminal Appeal erred in finding that there were no special circumstances within s 44(2) of the Sentencing Act77. The term of the sentence Black DCJ fixed the term of nine years (reduced from 12 years) because he considered that the protection of the community required it. The appellant submits that he exceeded the bounds of discretion in so doing. It is not the function of this Court to determine challenges to sentences that are said to be excessive. However, since special leave was granted to consider an important question concerning the standard non-parole period and since the resolution of that question has revealed error in the Court of Criminal Appeal's refusal of leave it is appropriate to deal with the challenge to the severity of the sentence. A fundamental precept of the criminal law is that a sentence should not be increased beyond that which is proportionate to the crime in order to extend the 75 R v Muldrock [2010] NSWCCA 106 at [31]. 76 R v Muldrock [2010] NSWCCA 106 at [34]. 77 R v Muldrock [2010] NSWCCA 106 at [45]. Crennan Bell period of protection of the community78. The distinction between extending a sentence to protect society and taking into account society's protection in determining the appropriate sentence may not always be easy to draw79. The expert evidence did not provide a foundation for the conclusion that the appellant's sexually aberrant behaviour could not be controlled by treatment and a program addressing the matters identified in Professor Hayes' report. The appellant's mental retardation and the fact that he has not previously served a sentence of full-time custody, together with the circumstances of the offence, the nature of the intercourse, its short duration and the absence of accompanying threats or other intimidating behaviour, did not warrant the imposition of a term of nine years' imprisonment (after reduction for the plea of guilty). The sentence was manifestly excessive. This conclusion does not depend upon acceptance of the submission that the availability of orders under the Sex Offenders Act is to be taken into account. The Sex Offenders Act The Sex Offenders Act empowers the Supreme Court on the application of the State of New South Wales to order the continuing detention in custody or the extended supervision of a sex offender following the expiration of the offender's sentence80. Section 24A(1)(b) of the Sentencing Act provides that a court must not take into account as a mitigating factor the fact that the offender has or may become the subject of an order under the Sex Offenders Act81. The appellant 78 Veen v The Queen [No 2] (1988) 164 CLR 465 at 472 per Mason CJ, Brennan, Dawson and Toohey JJ; Baumer v The Queen (1988) 166 CLR 51 at 57-58 per Mason CJ, Wilson, Deane, Dawson and Gaudron JJ; [1988] HCA 67. 79 Veen v The Queen [No 2] (1988) 164 CLR 465 at 474 per Mason CJ, Brennan, 80 Sex Offenders Act, ss 9 and 17. 81 In sentencing, the court must also not take into account as a mitigating factor the fact that the offender has or may become a registrable person under the Child Protection (Offenders Registration) Act 2000 (NSW) as a consequence of the offence or that the offender has or may become the subject of an order under the Child Protection (Offenders Prohibition Orders) Act 2004 (NSW): Sentencing Act, s 24A(1). Crennan Bell submits that it remains open to the sentencing court to have regard to the availability of orders under the Sex Offenders Act, not as a mitigating factor, but because the statutory scheme provides the means for protecting the community from those sex offenders who pose a continuing risk of harm. From this it is said to follow that there is less justification for incorporating consideration of the protection of the community in the sentence imposed on a sex offender. The notion that a sentence might be reduced to take into account the existence of a regime outside the criminal law providing for the detention of sex offenders may be thought to have little to commend it as a matter of principle. The Court of Criminal Appeal was right to reject the submission. The expression "mitigating factor" in s 24A refers to a factor that is taken into account to reduce the sentence that would otherwise be appropriate. It is the function of the court sentencing an offender for a criminal offence to take into account the purposes of criminal punishment in determining the appropriate sentence. A purpose of punishment is the protection of the community from the offender82. A court may not refrain from imposing a sentence that, within the limits of proportionality, serves to protect the community in a case that calls for it because at some future time the offender may be made the subject of an order under the Sex Offenders Act. Conclusion In the written submissions filed on the appellant's behalf, senior counsel proposed that this Court should set aside the orders made by the Court of Criminal Appeal, allow his appeal to that Court and sentence him to a term of less than three years, specifying a non-parole period of one day, on the condition that the appellant reside at Selwood Lane for the duration of the sentence (or as the Parole Authority determines). On the hearing of the appeal, senior counsel informed the Court that a place for the appellant at Selwood Lane was no longer available. He acknowledged the force of the respondent's submission that the proceedings should be remitted to the Court of Criminal Appeal for re- sentencing. Fresh evidence concerning the appellant's circumstances and treatment options may be led on that occasion. This is the appropriate course. The Court of Criminal Appeal's orders determined both the appellant's leave application and the respondent's appeal. The respondent's complaint is confined to the length of the non-parole period and the appellant's complaint is 82 Sentencing Act, s 3A(c). Crennan Bell confined to the term of the sentence. The appellant has now been in custody for over two years and five months. Nonetheless, to preserve the Court of Criminal Appeal's discretion to frame an appropriate sentence consistently with the reasons for judgment of this Court, both the respondent's and the appellant's appeals should be the subject of the remitter. For these reasons there should be orders: Appeal allowed. Set aside pars 2 and 3 of the orders of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 14 May 2010 and in their place order that: the applicant, Derek Muldrock, have leave to appeal against the sentence imposed upon him by Black DCJ in the District Court of New South Wales on 28 July 2009; and the appeal be treated as instituted and heard instanter and allowed. Remit the matter to the Court of Criminal Appeal for the appellant to be re-sentenced consistently with the reasons for judgment of this Court.

HIGH COURT OF AUSTRALIA APPELLANTS AND AUSTRALIAN EXECUTOR TRUSTEES (SA) LIMITED RESPONDENT Korda v Australian Executor Trustees (SA) Limited [2015] HCA 6 4 March 2015 ORDER Appeal allowed with costs. Set aside paragraphs 1 and 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 10 April 2014 and, in their place, order that: the appeal to that Court is allowed; paragraphs 1, 2 and 3 of the orders of the Supreme Court of Victoria made on 1 March 2013 be set aside and, in their place, declare that: the respondent is not entitled to any of $33,999,998 payable to the fourth appellant pursuant to the Tree Sale Agreement, being the agreement dated 15 March 2012 to which the third appellant, the fourth appellant, the fifth appellant, and the respondent, amongst others, were parties; and the respondent is not entitled to any of $53,356,000 payable to the third appellant under the Land Sale Contracts, being two contracts dated 15 March 2012 to which the third appellant, amongst others, was a party; and the respondent pay the appellants' costs of the proceedings before the primary judge and the Court of Appeal. On appeal from the Supreme Court of Victoria Representation P D Crutchfield QC with R G Craig for the appellants (instructed by Ashurst Australia) J R J Lockhart SC with M I Borsky and I J M Ahmed for the respondent (instructed by Sparke Helmore) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Korda v Australian Executor Trustees (SA) Limited Trusts – Express trust – Two companies, "the Forest Company" and "the Milling Company", operated timber plantation investment scheme – Forest Company sought investment in scheme – Forest Company entered into Trust Deed with Trustee Company as trustee for holders of interests Forest Company issued – Whether proceeds of the sale of standing timber and scheme land payable to Forest Company and Milling Company subject to express trust in favour of scheme investors. Words and phrases – "express trust". Companies Act 1962 (SA), s 80. Companies (South Australia) Code, s 168. Introduction The first and second appellants are the receivers and managers appointed pursuant to securities over two companies which had operated a timber plantation investment scheme for many decades. Australian Executor Trustees (SA) Ltd ("AET"), the corporate trustee of the scheme, claimed on behalf of the investors that the proceeds of a sale of standing timber and scheme land which were payable to the companies were subject to an express trust in their hands in favour of the investors, and thus not available to the receivers and managers. It succeeded in the Supreme Court of Victoria and declarations were made that it was beneficially entitled to the tree sale proceeds and a proportion of the land sale proceeds1. An appeal to the Court of Appeal of the Supreme Court of Victoria was dismissed by majority (Maxwell P and Osborn JA, Robson AJA dissenting)2. The appeal to this Court is by special leave granted on 15 August The transactions said to have given rise to the trust were reflected in scheme documents comprising individual "Covenants" between the plantation management company and investors, a Trust Deed establishing AET as corporate trustee, and a Tripartite Agreement between the management company, which owned or leased the land, a milling company, which was a company associated with the management company, and AET. The transactions were contractual. Nevertheless, contract provides "one of the most common bases for the establishment or implication and for the definition of a trust"3. The question whether an express trust exists must always be answered by reference to intention4. An express trust cannot be created unless the person or persons creating it can be taken to have intended to do so5. Absent, as in this 1 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454. 2 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65. 3 Gosper v Sawyer (1985) 160 CLR 548 at 568–569 per Mason and Deane JJ; [1985] HCA 19 quoted with approval in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 603 [27] per Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 25. 4 Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 502 per 5 Garrett v L'Estrange (1911) 13 CLR 430 at 434 per Griffith CJ, Barton and O'Connor JJ agreeing at 435; [1911] HCA 67. case, an explicit declaration of such an intention, the court must determine whether intention is to be imputed. It does so by reference to the language of the documents or oral dealings6 having regard to the nature of the transactions and the circumstances attending the relationship between the parties7. For the reasons that follow, the necessary intention cannot be imputed. The scheme documentation, having regard to the commercial and regulatory context, does not support the existence of a trust or trusts of the tree and land sales proceeds in the hands of the two companies. The appeal to this Court should be allowed and orders made accordingly. Finding an express trust It has rightly been observed that "many express trusts are not express at all. They are implied, or inferred, or perhaps imputed to people on the basis of their assumed intent."8 The American Law Institute's Restatement Third, Trusts uses the term "trust" to refer to an express trust as distinct from a resulting or constructive trust and defines it as9: "a fiduciary relationship with respect to property, arising from a manifestation of intention to create that relationship and subjecting the person who holds title to the property to duties to deal with it for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee". The seventh edition of Jacobs' Law of Trusts in Australia offers the usefully succinct observation that the creator of an express or declared trust will have used language which expresses an intention to create a trust10: 6 Byrnes v Kendle (2011) 243 CLR 253 at 286 [103] per Heydon and Crennan JJ; [2011] HCA 26. 7 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 605 [34] per Gaudron, McHugh, Gummow and Hayne JJ citing Walker v Corboy (1990) 19 NSWLR 382. 8 Parkinson, "Chaos in the Law of Trusts", (1991) 13 Sydney Law Review 227 at 231; see also Costigan, "The Classification of Trusts as Express, Resulting, and Constructive", (1914) 27 Harvard Law Review 437 at 438–439; Cope, Constructive Trusts, (1992) at 5–6. 9 Restatement Third, Trusts, §2. 10 Jacobs' Law of Trusts in Australia, 7th ed (2006) at 44 [306]. "The author of the trust has meant to create a trust, and has used language which explicitly or impliedly expresses that intention, either orally or in writing. The fact that a trust was intended may even be deduced from the conduct of the parties concerned but if there is any uncertainty as to intention, there will be no trust." (footnote omitted) In the present case, neither text nor context could elevate the propounded intention to the level of certainty. The express trust found by the primary judge and the Court of Appeal was imputed by reference to the contractual arrangements comprising the investment scheme. It was not a trust created by statute of the kind recently discussed in Wellington Capital Ltd v Australian Securities and Investments Commission11. Neither party argued otherwise. And although this Court has held that a trust may arise from legislation which does not expressly so provide12, AET did not contend so in relation to the provisions of the Companies Act 1962 (SA) ("the Companies Act") and the Companies (South Australia) Code ("the Companies Code"), which regulated the offering of interests and prescribed interests in 1964 and 1984 respectively, and which thereby regulated the transactions comprising the scheme. Nor did this appeal require a consideration of the evolution of the use of trust relationships by statute and contract13 and its effect on the "classic duality of legal and equitable interests in property, overlain by equity's regime of prudential management"14. The appellants did not dispute that the trust in contention, if it existed, would be an express trust. Given the need for AET to show an intention to create such a trust, it was not in the appellants' interests to dispute its classification. Certainty of intention is one of the three certainties necessary to an express trust 11 (2014) 89 ALJR 24; 314 ALR 211; [2014] HCA 43. 12 Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165–166 per Mason CJ, Deane, Toohey and Gaudron JJ; [1993] HCA 1; Clay v Clay (2001) 202 CLR 410 at 427 [35]; [2001] HCA 9. 13 For an account of that evolution see D'Angelo, Commercial Trusts, (2014) at 38– 14 Bryan, "Reflections on Some Commercial Applications of the Trust", in Ramsay (ed), Key Developments in Corporate Law and Trusts Law: Essays in Honour of Professor Harold Ford, (2002) 205 at 208. See also the discussion of the "classic duality" in Edelman, "Two Fundamental Questions for the Law of Trusts", (2013) 129 Law Quarterly Review 66. — the others being certainty of subject matter15 and certainty of object16. The necessary intention is imputed when made manifest by an explicit declaration as in Byrnes v Kendle17. In the case of a written text an "express trust" depends upon the construction of the written instrument. It does not arise from any inference of the law imposing a trust upon the conscience18. The implication of intention precedes the ascertainment of an express trust. Failure to appreciate that sequence may lead to the imputation of a trust without proper consideration of intention. The ascertainment of an express trust may come to resemble the imposition of a constructive trust, which has been described by this Court as "a remedy which equity imposes regardless of actual or presumed intention"19. Although it has been suggested that "unconscious express trusts", like constructive trusts, are "imposed by the court, in truth, in recognition of a factor affecting the conscience of the common law owner of the property"20, ascertainment is not a vehicle for imposition. The boundaries between express and constructive trusts have not always been clear21 and have sometimes varied according to their significance for 15 Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246 at 283–284, 286 per Higgins J; [1927] HCA 49; Kauter v Hilton (1953) 90 CLR 86 at 97 per Dixon CJ, Williams and Fullagar JJ; [1953] HCA 95; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 604 [29] per Gaudron, McHugh, Gummow and Hayne JJ; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 524 [116] per Bell, Gageler and Keane JJ; [2013] HCA 35. 16 Morice v Bishop of Durham (1804) 9 Ves Jun 399 at 404–405 [32 ER 656 at 658]; Kinsela v Caldwell (1975) 132 CLR 458 at 461; [1975] HCA 10; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 524–525 [117] per Bell, Gageler and Keane JJ. Charitable trusts are not held void for uncertainty of objects if there is a clear indication of a general purpose of charity: see Jacobs' Law of Trusts in Australia, 7th ed (2006) at 190 [1061]. 17 (2011) 243 CLR 253. 18 Cunningham v Foot (1878) 3 App Cas 974 at 984 per Lord Cairns LC. 19 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 584 [40]; [1998] HCA 59 referring to Baumgartner v Baumgartner (1987) 164 CLR 137 at 148 per Mason CJ, Wilson and Deane JJ, 152 per Toohey J, 157 per Gaudron J; [1987] HCA 59. 20 Hudson, Equity & Trusts, 3rd ed (2003) at 961 [36.3.2]. 21 Once described as a "fundamental mystery": Heydon, "Recent Developments in Constructive Trusts", (1977) 51 Australian Law Journal 635 at 635. particular statutory provisions22. But while there may be overlap in their application, the requirement of an imputed intention marks a conceptual distinction between them23. Imputed intention is the focus of this appeal. AET submitted that the intention of the parties to create a trust over the timber and land sale proceeds was "manifested" in several ways, one of which was that the documents conferred upon the investors a beneficial proprietary interest in the timber and land itself. The management company held those assets on trust for the investors. In those circumstances, there was an intention to create a trust over the sale proceeds as well. The objects were the investors from time to time. In Bahr v Nicolay [No 2]24, which concerned a contract for the benefit of a third party, Mason CJ and Dawson J found that an express trust had been created25. Their Honours held that if the parties to a contract intended to create or protect an interest of a third party and the trust relationship is the appropriate means of creating or protecting that interest, there is no reason why in a given case an intention to create a trust should not be inferred. They referred to the observation of Fullagar J in Wilson v Darling Island Stevedoring and Lighterage Co Ltd26 that it was difficult to understand the reluctance which courts had sometimes shown to infer a trust in cases involving a promise made for the benefit of a third party27. Again, in the context of a contract for the benefit of a 22 Matthews, "The Words Which Are Not There: A Partial History of the Constructive Trust", in Mitchell (ed), Constructive and Resulting Trusts, (2010) 3 especially at 6; Swadling, "The Nature of the Trust in Rochefoucauld v Boustead", in Mitchell (ed), Constructive and Resulting Trusts, (2010) 95 at 95 and 100; Jacobs' Law of Trusts in Australia, 7th ed (2006) at 42 [301] and 44 [306]. See also the observations of Bowen LJ in Soar v Ashwell [1893] 2 QB 390 at 396–397. 23 Intention may nevertheless be relevant to the imposition of a constructive trust where, for example, the expectations of one party are affected by the conduct of another, or where a trust is imposed by operation of law as an element of a wider property transaction which the parties intended to enter: Bryan, "Constructive Trusts", in Ford and Lee (eds), Principles of the Law of Trusts, (looseleaf service), vol 2 at [22.600]. 24 (1988) 164 CLR 604 at 619; [1988] HCA 16. 25 Wilson and Toohey JJ and Brennan J found a constructive trust: (1988) 164 CLR 604 at 638 per Wilson and Toohey JJ, 654–656 per Brennan J. 26 (1956) 95 CLR 43 at 67; [1956] HCA 8. 27 (1988) 164 CLR 604 at 618–619. third party, in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd28, Mason CJ and Wilson J, speaking of express trusts, stated that: "the courts will recognize the existence of a trust when it appears from the language of the parties, construed in its context, including the matrix of circumstances, that the parties so intended". The courts would look to "the nature of the transaction and the circumstances, including commercial necessity, in order to infer or impute intention"29. That approach is not limited to contracts for the benefit of a third party. In each case it is a question of fact for the courts to determine whether an intention to create a trust is sufficiently evinced30. The finding made by the primary judge that the arguments for the implied intention were "finely balanced"31 should have raised a cautionary concern about the certainty of that intention. The process of ascertaining whether the necessary intention to create a trust should be imputed is one of construction of the relevant text or oral dealings in their context. What was said in Bahr v Nicolay [No 2] should not be misconstrued. A trust is not to be inferred simply because a court thinks it is an appropriate means of protecting or creating an interest. Factual and procedural overview AET is the corporate trustee for investors in a number of timber plantations acquired, developed and managed by the third appellant, SEAS Sapfor Forests Pty Ltd ("the Forest Company"), over many years. The trees were felled, milled, marketed and sold by the related company SEAS Sapfor Harvesting Pty Ltd ("the Milling Company"), the fourth appellant. Prospectuses were issued from time to time seeking investment in the scheme. Investors, referred to as "Covenantholders", entered into agreements called "Covenants" with the Forest Company. The principal scheme documentation comprised the Prospectus, the Covenants, a Trust Deed between AET and the Forest Company made on 6 March 1964, and a Tripartite Agreement between AET, the Forest Company and The Covenantholders agreed to be bound by the provisions of those agreements. the Milling Company made on the same date. 28 (1988) 165 CLR 107 at 121; [1988] HCA 44. See also at 147–148 per Deane J, 29 (1988) 165 CLR 107 at 121. 30 Bloch v Bloch (1981) 180 CLR 390 at 396 per Wilson J, Gibbs CJ, Murphy and Aickin JJ agreeing at 392; [1981] HCA 56. 31 (2013) 8 ASTLR 454 at 472 [75]. The Covenants relevant to this appeal were offered under a Prospectus issued in 1984 ("the 1984 Prospectus") which set out their terms. Classes of Covenants offered interests in relation to various areas covered by trees planted in 1977, 1978 and 1981. Other classes offered interests in relation to 1982 and 1983 plantings. Each of the Covenants entitled the Covenantholder to the net proceeds from the sale of the timber, after various deductions and payments to the Forest Company and the Milling Company were made. The 1982 and 1983 Covenants also entitled each Covenantholder to a payment calculated by reference to the increase in the value of the planted land between the time it was planted and the time when the timber on it was clear-felled or the Covenant ceased. In 2008, Gunns Ltd, the fifth appellant, effected a takeover of the Forest Company and the Milling Company. Each company granted a fixed and floating charge over its assets to financiers of the Gunns Group32. In March 2012, the Forest Company and the Milling Company sold trees on their plantations under a Tree Sale Agreement for approximately $34 million payable to the Milling Company. That sum was paid into a Gunns Ltd overdraft account. At about the same time, the Forest Company and other entities sold scheme land situated in South Australia and Victoria for $53.356 million payable to the Forest Company. In September 2012, the financiers appointed the first and second appellants as the joint receivers and managers of each of the companies. On 30 October 2012, AET filed an originating motion in the Supreme Court of Victoria naming the appellants and others as defendants, and claiming declarations as to what, if any, right it had to the proceeds of the sale agreements. The primary judge, whose decision was upheld in the Court of Appeal, found AET to be beneficially entitled to the Tree Sale Agreement proceeds less certain expenses, and to a proportion of the land sale proceeds. The Trust Deed created an express trust, in the hands of AET, of the net proceeds of the sale of milled timber and "land value" payments made by the Forest Company to AET. The principal issue for determination in the Supreme Court and in this Court was whether an intention to create a trust in favour of the Covenantholders was to be imputed in relation to the timber and land sale proceeds in the hands of the Forest Company and the Milling Company. AET sought to support the decision of the Court of Appeal in this Court on the basis of a trust of both sets of proceeds, evidently underpinned by a trust or trusts of the 32 ANZ Capel Court Ltd, as security trustee for the Gunns Financing Security Trust, held registered security interests over all, or substantially all, of the assets and undertakings of each of the Gunns companies, including the Forest Company and the Milling Company: (2013) 8 ASTLR 454 at 457 [5] fn 1. planted trees and the scheme land. Ambiguities in the identification of the propounded trust (or trusts) and subject matter are discussed in the joint reasons of Hayne and Kiefel JJ33 and the reasons of Keane J34. The disposition of this appeal on the basis of the trust of the proceeds propounded by AET is sufficient to dispose of the variants. The relevant documentation is described in detail in the reasons for The statutory framework Regulatory legislation in force in 1964 and 1984 concerning the offering and issue of "interests" (other than shares or debentures) and "prescribed interests" were to be found in the Companies Act and the Companies Code respectively. Those statutes required that a scheme such as that in issue in this appeal provide for a management company35 and a trustee approved by the Minister36. There was a prohibition upon the issue or offer of a widely defined "interest"37 or "prescribed interest"38 absent an approved deed in force39 which contained specified covenants40. The dual structure contemplated by the statutory scheme was reflected in the function of the Forest Company as the management company and AET as the trustee. It did not require that the management company be a trustee in any respect. Nor did it require that of any other company carrying out functions under the scheme. The obligations of the management company as contemplated by the legislation were in covenant and 33 Reasons for Judgment at [78]. 34 Reasons for Judgment at [135]. 35 Companies Act, s 76(1), definition of "management company"; Companies Code, s 164(1), definition of "management company". 36 Companies Act, s 77(b); Companies Code, s 165(1)(b). 37 Companies Act, s 76(1), definition of "interest". 38 Companies Code, s 5(1), definition of "prescribed interest". 39 Companies Act, s 83(1); Companies Code, s 171(1). 40 Companies Act, ss 78(2), 80(1); Companies Regulations (SA) (as at 6 March 1964, "1964 Regulations"), reg 12(1); Companies Code, ss 166(2), 168(1); Companies (South Australia) Regulations (as at 1984, "1984 Regulations"), reg 50, Sched 5. not in trust. The functions of the management company and the trustee under the legislation could not be performed by the same entity41. The Trust Deed, the Tripartite Agreement and the Covenants defined the scheme into which the Covenantholders entered. The regulatory framework was capable of accommodating a variety of interests and arrangements, but did not mandate any trusteeship on the part of the Forest Company or the Milling Company. The absence of any such mandate was acknowledged in a discussion paper published in 1987 by the Companies and Securities Law Review Committee under the chairmanship of the late Professor Ford, which observed42: "At present the Companies Act Part IV Division 6 shows no explicit intention to treat the management company as a fiduciary." Section 80(1)(d) of the Companies Act required the inclusion in the approved deed of a covenant, binding the management company and the trustee, that no monies available for investment under the deed would be invested in or lent to the management company or to the trustee. AET submitted that in the absence of a trust over the timber and land sale proceeds, the investment monies contributed by the Covenantholders would have been used to purchase assets that became part of the assets of the Forest Company or the Milling Company. Any amounts realised on their sale would also form part of the assets of those companies. That would make the Covenantholders direct stakeholders in the Forest Company and the Milling Company, and expose them to those companies' financial fortunes. On that basis it was submitted that the statutory framework supported the existence of an intention to create a trust in respect of the timber and land sale proceeds. However, as the appellants pointed out in their reply, the effect of that submission was that any investment scheme which did not ensure that investment monies were the subject of additional or broader trust protection during the life of the scheme would be in breach of the statutory regime. To the extent that the statutory framework applicable in 1964 and 1984 required a dual structure involving a management company and either a trustee or an investors' representative acting as trustee, that structure did not impress upon the assets of the scheme or their proceeds in the hands of the Forest Company or the Milling Company any trust in favour of the Covenantholders. Nor was it otherwise supportive of the implication, from the scheme documentation, of the intention necessary to the existence of an express trust. The question for determination remains whether the arrangements between the Forest Company and the Milling Company on the one hand, and the Covenantholders on the other, 41 See, for example, Companies Act, ss 80, 87; Companies Code, ss 168, 175. 42 Companies and Securities Law Review Committee, Prescribed Interests, Discussion Paper No 6, (1987) at 104. can be characterised on the application of general principles as having given rise to a trustee and beneficiary relationship between them in connection with the planted trees and land and the proceeds of their sale. The 1984 Prospectus The 1984 Prospectus, as a marketing and informational document, did not define the rights and obligations of the parties. It was not a transactional document incorporating substantive provisions to which a relevant intention might be attached. It nevertheless formed part of the context in which the question of the intention underlying the transactional documents fell to be ascertained. The Prospectus offered each prospective investor a Covenant providing him or her with "an interest in a Radiata Pine plantation entitling you to the net timber proceeds apportionable to your interest in the particular planting year for which you apply"43. AET relied upon that language, and similar phraseology in the Covenants, for the proposition that each of the Covenantholders was entitled to a proportion of the actual timber and land sale proceeds. That characterisation of the interest was said to support the implication of a clear intention to create a trust of the proceeds. That submission should not be accepted. There is no reason to suppose that the concept of "interest" as used in the Prospectus, which was a marketing document, was to be understood as referring to a proprietary interest in land or trees. The term "interest" was defined far more widely in the Companies Act44, which was in force when the Trust Deed and the Tripartite Agreement were made in 1964. So too was the term "prescribed interest" in the Companies Code as it stood when the 1984 Prospectus was published45. The nature of the "interests" acquired by the Covenantholders was determined by the substantive provisions of the Covenants read in the light of the Tripartite Agreement and the Trust Deed. As appears from those provisions, and as Robson AJA observed, the Covenantholders had a contractual right to a numerical proportion of the output from a much larger area of land than was referable to the individual Covenants46. That contractual right did not translate into a proprietary interest in the land or the trees. 43 1984 Prospectus at 3. 44 Companies Act, s 76(1), definition of "interest". 45 Companies Code, s 5(1), definition of "prescribed interest". 46 [2014] VSCA 65 at [257]. The 1984 Prospectus also stated that the 1982 and subsequent Covenants provided for the Covenantholder "an interest in the value of land"47. That was not an interest in the land. The offer provided for payment to Covenantholders of a sum assessed by independent valuation as the increase per Covenant area in the value of the land upon which the relevant Covenant was issued between the year of planting and the year in which the land was clear-felled48. That provision was relied upon by AET but, as appears later in these reasons dealing with the Covenants, did not indicate an intention to create a trust of interests in the land in the hands of the Forest Company. The taxation benefit of investment in the scheme was highlighted under the headline "Tax Free Timber Proceeds"49. The Prospectus referred to a decision of this Court to support the proposition that distributions from the Forest the Company Covenantholders under the Income Tax Assessment Act 1936 (Cth). That decision, Milne v Federal Commissioner of Taxation50, followed the decision of Clowes v Federal Commissioner of Taxation51, which antedated the Trust Deed and the Tripartite Agreement. to Covenantholders were not assessable income of In Clowes, this Court held52 that the proceeds of forestry "bonds" were not income in the sense of "profit arising ... from the carrying on or carrying out of any profit-making undertaking or scheme" within the meaning of s 26(a) of the Income Tax Assessment Act. As Dixon CJ characterised the scheme53: "the taxpayer did nothing but lay out his money on the faith of the contract and await the result. The company was in no sense his agent. The money which he paid in pursuance of the contracts became part of the general funds of the company. Its obligations to him were simply contractual." 47 1984 Prospectus at 3. 48 1984 Prospectus at 4. 49 1984 Prospectus at 23. 50 (1976) 133 CLR 526; [1976] HCA 2. 51 (1954) 91 CLR 209; [1954] HCA 10. 52 The Court of four was equally divided so that the opinion of Dixon CJ pursuant to s 23(2)(b) of the Judiciary Act 1903 (Cth) prevailed. Kitto J agreed with Dixon CJ. Webb and Taylor JJ dissented. 53 (1954) 91 CLR 209 at 217. The facts in Milne were relevantly indistinguishable54. Barwick CJ, with whom Gibbs and Stephen JJ agreed, also rejected a submission that the power of the trustee in Milne to direct realisation of the plantation lands involved the bondholders in any participation in the management company's business55. The business was for the sale of the company's covenants under the bonds. However, that conclusion was said by Barwick CJ to be unaffected by whether or not the bonds effected the acquisition of an interest in land56. As appears below, AET relied upon that observation. The appellants submitted that the propounded trust was inconsistent with the purpose of securing a taxation benefit, which was an obvious selling point for the scheme. They argued, as Robson AJA found in the Court of Appeal57, that the trust would have exposed the Covenantholders to a risk of characterisation as participants in a common profit-making undertaking or scheme with the Forest Company and the Milling Company. That risk was said to arise from the dissenting the taxpayer/investor had acquired "not choses in action but interests in particular timber in respect of which he was paid, on the basis of his lot-holding"58. From that premise, his Honour concluded that the taxpayer's interest established a relationship between the proceeds and their source which negated their treatment as a capital receipt59. The risk was that a similar characterisation of the Covenantholders' interest might have been available if they had a beneficial interest in the timber and land. in Clowes. that The existence of a significant taxation risk arising from the propounded trust would have been at least plausible in 1964, when the Trust Deed and the Tripartite Agreement were made60. To the extent that the imputed intention necessary to the existence of the propounded trust depended upon those 54 Milne v Federal Commissioner of Taxation (1976) 133 CLR 526 at 532 per 55 (1976) 133 CLR 526 at 534. 56 (1976) 133 CLR 526 at 535. 57 [2014] VSCA 65 at [260]. 58 (1954) 91 CLR 209 at 219. 59 (1954) 91 CLR 209 at 219. 60 That risk was unaffected by the later observation by Barwick CJ in Milne that the characterisation of the management company's business was unaffected by whether the bondholders acquired an interest in land. documents, it was not supported by and was to some degree at odds with the promise of a taxation benefit in the 1984 Prospectus. That consideration cannot be discounted on the basis that the propounded trust would serve the purpose of protecting the Covenantholders against investment risk in the event of the insolvency of the Forest Company and/or the Milling Company. As appears later in these reasons, that purpose cannot be attributed to the parties. The taxation benefit offered by the Prospectus was not determinative but tended against the imputation of an intention to create the propounded trust. The Covenants Each Covenant stated that it was issued subject to the provisions of the Trust Deed and the Tripartite Agreement and that the Covenantholder agreed to be bound by those provisions61. The Covenantholder would receive "his due proportion of the benefits obtained from the sale of the timber harvested by the Milling Company from the planting in respect whereof his Covenant is issued in accordance with the terms and conditions set out in the Covenant"62. Each Covenant set out the way in which money received by the Milling Company from the sale of standing timber or timber felled, cut, milled, manufactured and sold pursuant to the Tripartite Agreement was to be applied63. After recoupment of its expenses and a fee64, the balance of the proceeds was to be paid to the Forest Company, which, after further deductions including a commission65, was required to66: "pay the balance to the Trustee for the Covenantholders for distribution by the Trustee amongst the Covenantholders entitled thereto in accordance with their respective holdings". The 1982 and 1983 Covenants contained the "land interest" provisions promised in the Prospectus. The obligation on the Forest Company to pay to the Covenantholders the appreciation in the value of the land covered by their Covenants was conditional upon one or other of the events that the timber on the 61 1977, 1978 and 1981 Covenants, cl 4; 1982 and 1983 Covenants, cl 4. 62 1977, 1978 and 1981 Covenants, cl 4; 1982 and 1983 Covenants, cl 4. 63 1977, 1978 and 1981 Covenants, cl 4; 1982 and 1983 Covenants, cl 4. 64 12 per cent per annum on the issued and fully paid capital of the Milling Company. 65 5 per cent of the sum paid to it by the Milling Company. 66 1977, 1978 and 1981 Covenants, cl 4(e); 1982 and 1983 Covenants, cl 4(e). land was clear-felled or that the land ceased to be subject to the Covenant because of fire damage to the timber or otherwise67. The obligation to make those payments was not referable to the sale of the land. It was not defined in such a way as to support the inference that the Covenantholder had a beneficial interest in the land. As Robson AJA put it in his dissenting judgment in the Court of Appeal68: "[t]he invitation [to invest] made it clear that the interest was in the value of the land, and not in the land itself". Moreover, the trust found to exist by the Supreme Court was applicable to Covenantholders in respect of the 1977, 1978 and 1981 planting years69, for which no land interest provisions were made. It was not dependent upon the "land interest" provisions for the 1982 and 1983 planting years. Those provisions do not support the existence of the trust. The Forest Company undertook, "[i]n order to adequately secure its due compliance with the terms" of the Covenant, that, until the timber was cut and disposed of, it would not sell the land of which it was the proprietor nor, without the consent of AET, encumber such land70. It made a similar covenant with respect to its interest in leased land and promised that it would not, without the consent of AET, encumber the timber planted on the land71. It also undertook to deposit the Certificates of Title and leases of the relevant land in a safe deposit jointly held by itself and AET. AET was to register a caveat in respect of such land prohibiting any dealing with it except in the interests of the Covenantholders in relation to such lands72. That provision was reflected in the Trust Deed. Its significance is discussed in the next section of these reasons. The Trust Deed The Trust Deed created an express trust in the hands of AET of the proceeds of timber sales paid to AET in accordance with the scheme. It also 67 1982 and 1983 Covenants, cl 1. 68 [2014] VSCA 65 at [272]. 69 1977, 1978 and 1981 Covenants, cl 1. 70 1977, 1978 and 1981 Covenants, cl 6(i); 1982 and 1983 Covenants, cl 8(i). 71 1977, 1978 and 1981 Covenants, cl 6(ii)–(iii); 1982 and 1983 Covenants, cl 8(ii)– (iii). 72 1977, 1978 and 1981 Covenants, cl 6; 1982 and 1983 Covenants, cl 8. imposed contractual obligations as between the Forest Company and AET. Under cl 1 of the Trust Deed, the Forest Company appointed AET and AET covenanted and agreed: "to be and act as Trustee for the Covenantholders for the time being upon and subject to the trusts terms covenants and conditions hereinafter contained". The Forest Company undertook to perform its obligations under the Covenants, which included planting trees on allocated areas of land, and to prepare plans of the planted and allocated areas73. It also agreed to plant a reserve area74 as a provision against timber losses75 and to issue Covenants to be held by AET on behalf of the Forest Company in relation to those reserve areas76. The undertakings by the Forest Company, made in the Covenants, in relation to the encumbrance or disposition of the land or timber and the deposit of Certificates of Title and leases in a joint safe deposit with AET, were replicated in the Trust Deed77. So too was the provision for AET to register a caveat over the titles to the relevant land78. AET submitted that those provisions reflected a clear intention79 to confer on Covenantholders a proprietary interest and thereby an intention to create a trust over the land. As the appellants pointed out, however, the prefatory words of the provisions in the Covenants and the Trust Deed indicated that their purpose was to secure the Forest Company's compliance with its contractual obligations. AET, they argued, held a "security interest" in the land and trees which was consistent with the Forest Company's continuing beneficial ownership. The precise nature of the "security interest" was not explained in argument. It seems to have been used in the sense of 73 Trust Deed, cl 2(a)–(b). 74 5 per cent in excess of the area covered by the Covenants. 75 Trust Deed, cl 2(c)(i). 76 Trust Deed, cl 2(c)(ii). 77 Trust Deed, cl 2(d). 78 Trust Deed, cl 2(d)(v). 79 Referring to s 191 of the Real Property Act 1886 (SA), which provides for lodgement of a caveat by a "settlor of land or beneficiary claiming under a will or settlement, or any person claiming to be interested at law or in equity, whether under an agreement, or under an unregistered instrument, or otherwise howsoever in any land". anything that entitles an obligee to resort to a fund or property to ensure performance of an obligation80. The creation of a security interest does not import the creation of a trust. An apposite distinction was made between the grant of a charge and the creation of a trust in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq)81. The caveat provision rested upon the premise that the transactional arrangements gave rise to a caveatable interest. Whether they did is debatable. In any event, the provision does not establish its premise. The question of estoppel aside, a common assumption about the legal effect of a transaction does not necessarily support an inference that it had that legal effect82. Having regard to their context, the caveat provisions and the prohibitions on alienation and encumbrance which appeared in the Covenants and the Trust Deed were not indicative of an intention to create a trust over the land or trees or their proceeds in the hands of the Forest Company or the Milling Company. The Forest Company was required, by the Trust Deed, to make payments to a Maintenance Fund controlled by AET83 in accounts established in respect of each plantation. Subject to compliance with its obligations, the Forest Company was entitled to be repaid annually a percentage of each Maintenance Fund account until it had received one hundred per cent thereof84. The net aggregate income derived from the investment of the Maintenance Fund by AET was payable to the Forest Company85. The appellants submitted that that provision was not consistent with the imposition of fiduciary obligations upon the Forest Company. That submission should not be accepted. The fact that a proportion of 80 See the discussion in General Motors Acceptance Corporation Australia v Southbank Traders Pty Ltd (2007) 227 CLR 305 at 312–313 [20]–[21]; [2007] HCA 19. 81 (2000) 202 CLR 588 at 595–596 [5]–[6] per Gaudron, McHugh, Gummow and 82 Southern Cross Assurance Co Ltd v Australian Provincial Assurance Association Ltd (1935) 53 CLR 618 at 636 per Rich, Dixon, Evatt and McTiernan JJ; [1935] HCA 56; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352 per Mason J; [1982] HCA 24. 83 Trust Deed, cl 2(e). 84 Trust Deed, cl 4(b). 85 Trust Deed, cl 7. a sum of money from which the subject of a trust is to be drawn is used for another purpose does not negate the existence of a trust86. The Forest Company was also required to indemnify AET and the Covenantholders against claims in respect of the tending, supervision, protection and preservation of the land and trees and in respect of outgoings in relation to the land87. That indemnity was said by the appellants to be at odds with the existence of a trust. If the Forest Company and the Milling Company were trustees as contended, they would be entitled to an indemnity over the trust estate by way of reimbursement for expenses incurred by them as trustees and exoneration in respect of undischarged liabilities incurred in their capacity as trustees88. The capital contributed by the Covenantholders would be exposed to the risk created by that indemnity. To that extent the suggested commercial imperative for the propounded trust as a protection against investment risk is of diminished significance. The appellants' submission should be accepted. The indemnity provision was inconsistent with the asserted status of the Forest Company as a trustee. AET pointed to cl 20B(a) of the Trust Deed, which provided for the non- removal of the Forest Company from "the management of the Trust". The latter reference was said to be explicable only on the basis of an intention to create a trust to exist throughout the flow of funds provided for in the documents (particularly the Tripartite Agreement). The short answer to that submission on the part of the appellants was that the provision in question was mandated by regulation89. The explicit trust provision in relation to AET appeared in cl 4(a) of the Trust Deed. AET covenanted that it would hold all monies paid into the Maintenance Fund or received by AET and Covenants and other securities: "upon and subject to the trusts and for the purpose and upon and subject to the terms and conditions stated declared or contained therein". 86 See, for example, Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 604 [30]–[31]. 87 Trust Deed, cl 3(c). 88 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 per Stephen, Mason, Aickin and Wilson JJ; [1979] HCA 61; Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 245–246 [47]; [1998] HCA 4; CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98 at 120–121 [50]; [2005] HCA 53; Trustee Act 1936 (SA), s 35(2). 89 1964 Regulations, reg 12(1)(d)(ii); 1984 Regulations, Sched 5, cl 4(b). The explicit provision for the creation of that trust highlights the significance of the absence of any such provision for the trust asserted by AET against the Forest Company and the Milling Company. The Tripartite Agreement Under the Tripartite Agreement, the Milling Company was subject to directions by the Forest Company in relation to the thinning of the plantations90 and cutting and removing fully grown trees91. AET, when it thought proper, was to authorise the Forest Company to make thinnings and fully grown trees available to the Milling Company, which was to market and sell them92. Money received by the Milling Company from the sale of the timber was to be retained and applied as set out in the Covenants, the Trust Deed and the Tripartite Agreement. After the five per cent commission payable to the Forest Company, the balance of the net proceeds was to be paid by instalments to the Forest Company, which in turn was to pay it93: "to the Trustee for distribution amongst the Covenantholders entitled thereto in manner provided by the Trust Deed". The two companies were required to keep accounts and records to enable them, at all times, to specify the class of Covenantholders and the series of Covenants to which the net proceeds were to be allocated and apportioned, and in what proportions94. The Milling Company had to submit its books and annual accounts for audit by the Forest Company's auditors95. AET submitted that the Tripartite Agreement required the Forest Company and the Milling Company to treat the proceeds as a fund, indicating an intention to create a trust of the fund. At no time were the Forest Company and the Milling Company to deal with the funds as their own. They were obliged to treat them separately from other funds which they held. That submission should not be accepted. As the appellants pointed out, the provisions of the Tripartite 90 Tripartite Agreement, cl 2. 91 Tripartite Agreement, cl 3. 92 Tripartite Agreement, cll 6, 7. 93 Tripartite Agreement, cl 10A. 94 Tripartite Agreement, cl 8. 95 Tripartite Agreement, cl 8. Agreement facilitated the performance of AET's obligations under the Trust Deed and the Forest Company's obligations under the statutory regime. Under the Trust Deed, AET was required to open a bank account for the Covenantholders of each planting year for the purpose of holding the net proceeds96. The Forest Company was required by the relevant legislation to keep a register of the holders of interests under the Trust Deed and to enter into it the extent of the holding of each Covenantholder97. The Milling Company was not required to keep the sale proceeds intact as a fund. The accounting arrangements are explicable by reference to the statutory and contractual obligations of AET and the companies and do not import an intention to create a trust. Admissions against interest AET sought to support the decision of the Court of Appeal by reference, in a Notice of Contention, to statements made in 2012 by the company secretary of the Forest Company and the Milling Company. The statements, contained in emails, referred to the holding of funds by the Milling Company in relation to Covenantholders' interests and their segregation from other funds. They were made more than a month before the appointment of administrators and of the receivers and managers98. The primary judge found it unnecessary to determine whether they could be taken into account, although he thought it "unlikely that an admission [could] create an express trust with retrospective operation ... where none was intended or found to exist"99. The majority in the Court of Appeal, like the primary judge, found it unnecessary to evaluate the evidence. Robson AJA, assuming (without deciding) the admissibility of the evidence, concluded that it was "of little value in deciding the question to be addressed where there are indicators for and against the imputation of an express trust contained in an array of documents"100. Robson AJA was correct so to conclude and that conclusion is sufficient to dispose of the Notice of Contention. The reasoning in the Supreme Court and the Court of Appeal The primary judge focussed upon what he described as the interrelated and integrated steps in the handling of the proceeds of timber sales as required by 96 Trust Deed, cl 20A(b). 97 Companies Act, s 84(1); Companies Code, s 172(1). 98 (2013) 8 ASTLR 454 at 476–477 [92]. 99 (2013) 8 ASTLR 454 at 477 [95]. 100 [2014] VSCA 65 at [241]. the scheme documentation101. The relevant documents in context evidenced "an intention to create and preserve a fund for the benefit of Covenantholders at all relevant stages"102. That proposition was central to the submissions put on behalf of AET in support of the decisions of the primary judge and the Court of Appeal. His Honour acknowledged that there was no specific obligation on the Forest Company or the Milling Company to set aside funds in a separate account. He also acknowledged that a contractual obligation to deal with funds in a particular way does not necessarily determine "their proprietary character"103. On the other hand, the obligation to pay net proceeds to AET was not expressed as merely a contractual obligation to pay a certain amount104. His Honour's reasons for concluding that a trust existed, as summarised in his judgment105, may be condensed further: The nature of the transaction and relationship between the parties was highly suggestive of a relationship of trustee and beneficiary. A relationship of trustee and beneficiary was consistent with the detailed obligations contained in the relevant documents. The relevant documents were required pursuant to the relevant legislation under the division dealing with interests other than shares and debentures. That division was directed towards the protection of investors. The detailed provisions of the documents were directed to managing other people's funds. The obligations imposed on the Forest Company and the Milling Company were covenants and undertakings to act in the interests of identified others at all stages. In the Court of Appeal, Maxwell P and Osborn JA agreed with the primary judge's conclusions. Their Honours found support for those conclusions in the language of the scheme documents and in the "commercial necessity that the investments made by covenantholders not be at risk by reason of extraneous activities of the operating companies"106. The provision in the Trust Deed of an 101 (2013) 8 ASTLR 454 at 473 [76]. 102 (2013) 8 ASTLR 454 at 462 [26]. 103 (2013) 8 ASTLR 454 at 472 [74]. 104 (2013) 8 ASTLR 454 at 472 [72]. 105 (2013) 8 ASTLR 454 at 475 [88]. 106 [2014] VSCA 65 at [33]. express trust only of the sale proceeds in the hands of AET did not deflect their Honours from that finding107: "So strong were the assurances (express and implied) in the prospectus — that the investors would have a secure interest in, and entitlement to, the sale proceeds — that the parties to the investment contract must have intended those assurances to override any inconsistent provisions in the formal documents." There was nothing in the Trust Deed or the Tripartite Agreement to stand in the way of the primary judge's findings108. Robson AJA, dissenting, considered that the taxation planning aspect of the scheme was consistent with an intention that the Covenantholders' rights as against the Forest Company and the Milling Company with respect to the timber sale proceeds were contractual only prior to their payment to AET109. Moreover, there was no relevant distinction drawn in the scheme documentation between the treatment of money paid under the Covenants taken out in respect of pre- planted areas and money paid under the Covenants relating to land and/or trees yet to be acquired and planted. His Honour accepted that there were some aspects of the scheme that might support recognition of a trust on the basis that the produce of the timber harvest was the property of the Covenantholders110. In any event, his Honour's preferred characterisation of the obligations of the Forest Company and the Milling Company was that they were contractual, and did not give rise to a trust of the scheme funds. Whether an express trust existed AET submitted that this Court has recognised that there should be no reluctance in inferring the existence of an express trust. The "reluctance" thus eschewed was that said by Fullagar J, in Wilson111, to have been applied by English courts in connection with finding trusts based on a promise for the benefit of a third party. To eschew an historical reluctance is one thing. To construct intention out of straws plucked from textual and contextual breezes, some blowing in different directions, is quite another. 107 [2014] VSCA 65 at [40]. 108 [2014] VSCA 65 at [44]. 109 [2014] VSCA 65 at [261]. 110 [2014] VSCA 65 at [293]. 111 (1956) 95 CLR 43 at 67. AET invoked the "innate flexibility of the law of trusts", a term used by Deane J in Trident112 referring to the judgment of Cardozo J in Adams v Champion113. What Cardozo J said, in apparently rejecting the imposition of a constructive trust in that case, was: "Equity fashions a trust with flexible adaptation to the call of the occasion." Deane J said that an intention to create an express trust of a promise for the benefit of a third party should be inferred if the intention of the promisee to entitle the third party to insist upon the performance of a promise "clearly appears"114. Relevantly to the present case, his Honour added115: "A fortiori, equity's requirement of an intention to create a trust will be at least prima facie satisfied if the terms of the contract expressly or impliedly manifest that intention as the joint intention of both promisor and promisee." While the Trust Deed and the Tripartite Agreement might be seen as embodying promises made to AET by the Forest Company and the Milling Company for the benefit of the Covenantholders, the provisions of the Covenants themselves included promises by the Forest Company to perform its obligations under the Trust Deed and the Tripartite Agreement. The Milling Company was a company associated with the Forest Company. In the circumstances, the scheme documents are best treated as at least analogous to a multilateral agreement between all parties, with the Forest Company and the Milling Company on one side as promisors and AET and the Covenantholders on the other as promisees. It is an imputed joint intention of promisors and promisees which has to be ascertained in relation to the creation of the propounded trust. AET's submissions in relation to the language of the transaction documents, as indicative of an intention to create the propounded trust, have been dealt with in the preceding consideration of those documents and have not been accepted. Nor have its submissions in reliance upon the statutory framework. AET further submitted that the intention to create the trust was supported by the commercial objectives of the parties. It did not contend that the trust was 112 (1988) 165 CLR 107 at 147. 113 294 US 231 at 237 (1935). 114 (1988) 165 CLR 107 at 147. 115 (1988) 165 CLR 107 at 147. a commercial necessity. A commercial purpose, not amounting to a "necessity", might be relevant to the existence of the requisite intention to create a trust. But that which is commercially desirable for one party is not, on that account, a commercial purpose of both. AET argued that the purpose of the Covenants was to allow an investment in a scheme in relation to forest plantations. That is indisputable. It further argued that the investment was marketed as long-term, conservative and non-speculative. That too is indisputable. Then it was said that the propounded trust would ensure that the investors were exposed only to an investment in the underlying forestry scheme, and not the financial fortunes of the Forest Company and the Milling Company or their subsequent acquirer. To say that is to say nothing about the intention of the parties. No doubt the creation of a trust would have been favoured by the Covenantholders if they had been asked about it. So too would the creation of a trust in favour of many investors in commercial undertakings. The advantages of a trust, which might have enhanced the desirability of the investment from the point of view of the Covenantholders, do not support an inference that the creation of the trust would have reflected the joint intention of promisors and promisees. AET's argument in that respect almost amounted to an invitation to the Court to imply a trust in order to reinforce marketing promises found in the Prospectus. That approach would conflate the ascertainment of an express trust with the imposition of a constructive trust. The invitation should not be accepted. Conclusion For the preceding reasons the primary judge and the Court of Appeal erred in finding that the express trust propounded by AET existed. The appeal must be allowed and orders made as proposed by Keane J. HAYNE AND KIEFEL JJ. The critical facts giving rise to this appeal may be stated shortly. A company ("Forest Co") planted pine trees on land it owned or leased. When the trees were mature, they were felled and the logs were sold. To finance its operations, Forest Co issued what the relevant companies legislation first called "interests other than shares"116, and at the times most immediately relevant to these proceedings called "prescribed interests"117. As the companies legislation required118, Forest Co made a deed with a company (the respondent to this appeal, "the Trustee Co") as trustee for the holders of the interests Forest Co was to issue. The holders of those interests were called "Covenantholders". The parties agree that the provisions of Ch 5C of the Corporations Act 2001 (Cth) are not engaged and that the interests which were issued are not affected by those provisions. The Trust Deed By the Trust Deed, Forest Co covenanted with the Trustee Co to perform all of the terms and conditions of the covenants it was to issue. Each covenant recorded that it entitled the holder to "the net proceeds from the timber apportionable" to one acre or hectare, or one half of an acre or hectare or one quarter of a hectare (as the case required) of the area planted by Forest Co in the year stated in the Covenantholder's application. The Trust Deed recorded that the Trustee Co agreed to hold certain moneys on trust. In particular, the Trust Deed required the Trustee Co to establish a separate bank account "for the Covenantholders of each planting year into which proceeds from the sale of timber and any other moneys to which the Covenantholders may be entitled shall be paid by [Forest Co]". The Trust Deed also obliged Forest Co to pay part of the amounts it received from Covenantholders into a maintenance fund and, again, the Trust Deed recorded that the Trustee Co would hold the maintenance fund upon the trusts stated in the Trust Deed. The Trust Deed contained no provision expressly declaring or providing that Forest Co was, or was to act as, a trustee. The Trust Deed imposed numerous other obligations on Forest Co, including obligations to maintain and supervise the forests it planted. But the 116 Companies Act 1962 (SA), Pt IV Div V (ss 76-89). 117 Companies (South Australia) Code, Pt IV Div 6 (ss 164-177). 118 Companies Act 1962, s 78; Companies (South Australia) Code, s 166. detail of only two of these further obligations need be noticed. The Trust Deed expressly provided that Forest Co would indemnify and keep indemnified the Trustee Co and the Covenantholders from and against "all and all manner of claims demands actions proceedings in respect of the tending supervision protection and preservation" of the land and the trees, as well as all outgoings and impositions payable in respect of the land. And the Trust Deed also provided that "no Covenantholder shall by reason of holding a [c]ovenant or by reason of the relationship thereby created with the [Trustee Co] or [Forest Co] be under any obligation personally to indemnify the [Trustee Co] or [Forest Co] or the creditor of either of them for any debt incurred by them or either of them in connection with the powers and obligations" vested in them or created by the Trust Deed. These provisions are consistent with Forest Co carrying on its own business for its own profit. They are not consistent with Forest Co being no more than the promoter or manager of some common enterprise between the Covenantholders. The Tripartite Agreement Forest Co and the Trustee Co made a further written agreement ("the Tripartite Agreement") with a company associated with (if not controlled by) Forest Co ("Milling Co"). By the Tripartite Agreement, Milling Co was bound, as and when directed by Forest Co, to fell trees grown on Forest Co's plantations, mill the timber and sell it. The Tripartite Agreement regulated what was to be done with the proceeds of selling felled and milled timber. It provided that all moneys received by Milling Co from the sale of logs it felled "shall be retained by [Milling Co] and applied" in the manner provided by the succeeding six sub-paragraphs of the agreement. The first three sub-paragraphs provided for allowances to Milling Co. Those allowances were (a) the amount necessary to recoup Milling Co for all expenses incurred in connection with felling, milling and selling the timber, including rates, taxes, insurance, overheads and bad debts; (b) an annual amount for depreciation of Milling Co's buildings, plant and machinery and other specified deductions; and (c) an annual amount equal to 12 per cent of the issued and fully paid capital of Milling Co. After the allowances described had been made in favour of Milling Co, five per cent of the balance was to be paid to Forest Co and retained by it as commission and remuneration for its services. Only then was Milling Co bound to pay the residue in respect of any year ending 30 September to Forest Co by five instalments due at the end of April, May, June, July and August of the following year. Upon Forest Co receiving from Milling Co sums payable in accordance with the provisions that have been described, Forest Co was to reimburse itself and retain all expenses it was entitled to retain under the Trust Deed. Within 30 days of Forest Co receiving money from Milling Co, Forest Co was to "pay the balance to [the Trustee Co] for distribution amongst the Covenantholders entitled thereto in manner provided by the Trust Deed". The Tripartite Agreement provided that Milling Co must submit its books and accounts to audit by Forest Co's auditors. And it further provided that the auditors were to be authorised to disclose to Forest Co such information as Forest Co reasonably required "to accurately and adequately comprehend, appreciate and understand the financial position" of Milling Co. Covenantholders Covenantholders subscribed money in response to prospectuses issued by Forest Co. Argument proceeded in this Court, as it had in the Court of Appeal, on the basis that the covenants offered in the 1984 Prospectus were typical of the two types of covenants that had been offered. All covenants entitled the Covenantholder to receive a rateable share of the net proceeds of the sale of timber referable to a particular planting year. Some covenants offered an additional right to receive an amount calculated by reference to the value of the land on which the trees were grown. The Trust Deed provided that, in respect of the 1982 and 1983 years of planting, a covenant would entitle the holder, when the timber was clear felled or the land ceased to be subject to the covenant, to a rateable share of the then assessed value of the land. To obtain this right, the Covenantholder had to pay, as part of the subscription price, a rateable share of the value of the land assessed at the time of planting. Hence, the amount which the Covenantholder stood to gain from taking such a covenant was a rateable share in the change in value of the land as assessed at planting and its value as assessed after harvesting. Prospectuses issued by Forest Co described this arrangement as enabling "[C]ovenantholders to participate in the capital appreciation of the land on which the trees are planted" by providing "a beneficial interest in the land value". The issue Forest Co and Milling Co gave security over their assets to lenders to other companies in the corporate group of which they are now part. The lenders have appointed receivers and managers to Forest Co and Milling Co. Are the proceeds of a sale of timber made in March 2012 (and other proceeds of sale of timber) and the proceeds of a sale of land on which timber was grown assets which are subject to the receivership? Or are those proceeds held by Forest Co or Milling Co on trust for Covenantholders? The proceedings The Trustee Co applied to the Supreme Court of Victoria for declarations that it was entitled to those proceeds as trustee for Covenantholders. At first instance, Sifris J held119 that the relevant parties intended the proceeds from the harvesting of the timber (or, where relevant, from the sale of plantation lands) to be held on trust for the Covenantholders upon receipt. The receivers and managers appealed. By majority, the Court of Appeal of the Supreme Court of Victoria (Maxwell P and Osborn JA, Robson AJA dissenting) dismissed the appeal, holding120 that the primary judge was right and that "it was a matter of commercial necessity that the investments made by [C]ovenantholders not be at risk by reason of extraneous activities of the operating companies"121. By special leave the receivers and managers appeal to this Court. The appeal should be allowed and consequential orders made in the form proposed by Whether a trust should be found to exist depends upon the particular documents in issue. It is those documents which record the parties' transactions. The central debate in the appeal to this Court was whether a trust was to be spelled out from the terms of the Trust Deed, the Tripartite Agreement, the Prospectuses issued by Forest Co or the form of covenants it issued to Covenantholders. No party submitted in this Court that any of those documents explicitly provided that Forest Co or Milling Co was trustee for all or any part of the proceeds from harvesting timber or all or any part of the proceeds of sale of land on which timber had been grown or harvested. Rather, in its written submissions, the Trustee Co submitted that "[h]aving regard to all of the relevant circumstances, it is apparent that a trust over the timber and land sale proceeds was intended". The circumstances to which it referred were said to include "the language used in the relevant documents and the statutory and commercial context". The majority in the Court of Appeal decided, and the Trustee Co submitted in this Court, that the subject-matter of the trust was sufficiently 119 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454; [2013] VSC 120 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [2]. 121 [2014] VSCA 65 at [33]. identified as "the timber sale proceeds" and "the land sale proceeds". And much of the reasoning of the majority in the Court of Appeal, and the Trustee Co's argument in this Court, proceeded from the premise that the documents were to be read as evincing an "intention" to create a trust in respect of those proceeds. But who was trustee? And what was the subject-matter of the trust? These reasons will show that, considered separately or together, none of the relevant documents (the Trust Deed, the Tripartite Agreement, the Prospectuses or the covenants) contained or constituted any agreement or declaration by Forest Co or Milling Co that it (or they) held or would hold identified property on trust for Covenantholders. Some preliminary observations It will be convenient to deal first with "the timber sale proceeds". Before doing so, some preliminary observations must be made. What was described in the proceedings as "the timber sale proceeds" had been reduced to an identified fund at the time the proceedings were commenced in the Supreme Court of Victoria. Argument in this Court, and in the courts below, proceeded on the basis that rights in respect of the fund are those that would arise from the harvesting, milling and sale of timber in the ordinary course of events. Accordingly, no distinction was drawn in argument between the rights in respect of the fund and the rights that are claimed to exist in respect of the proceeds of sale of timber planted in the 1981 and 1982 planting years. It is, therefore, not necessary to describe the transactions which gave rise to the fund now constituting "the timber sale proceeds". When identifying what rights would arise from the harvesting, milling and sale of timber, it remains important, however, to determine whether the trust which it is said that the documents recorded or established would attach to the gross proceeds of sale of timber or some lesser sum. As will later be shown, the Trustee Co's arguments in this Court might be understood as not always making plain whether the trust for which it contended was a trust in respect of gross or net proceeds. A trust in respect of timber sale proceeds? The description which has been given of the provisions of the Tripartite Agreement is sufficient to indicate the variety of questions which arise when it is said that there was a trust in respect of the (gross or net) proceeds of sale of timber. Did Milling Co receive the gross proceeds of its sale of timber on trust? If Milling Co was a trustee of the gross proceeds, why was it entitled to retain or deduct from those proceeds amounts attributable to its cost of doing business including an amount providing it with a 12 per cent annual return on its fully paid capital? If Milling Co was a trustee, why was it not obliged to keep the proceeds of sale (whether the gross receipts or those receipts net of allowed deductions and retentions) separate from its own moneys? Why was Milling Co bound to pay the net amounts to Forest Co only by instalments well in arrears of receipt? And if Milling Co was a trustee of the moneys for Covenantholders, why did the the Tripartite Agreement make elaborate provision for Forest Co (not Trustee Co, which was appointed as the interests of Covenantholders) to have access to Milling Co's books of account? trustee for the Who owned the timber that Milling Co felled, milled and sold? Forest Co had planted the trees on land which Forest Co owned or leased. It was not, and could not be, suggested that any Covenantholder had any proprietary interest in any identified part of the plantation or any identified trees. If Milling Co sold Forest Co's timber, why was Milling Co a trustee of the proceeds for Covenantholders? Did Forest Co receive the amount which remained after Milling Co had made the several deductions and retentions allowed by the Tripartite Agreement on trust? If it did, why was Forest Co not bound to keep the whole of the net amount it received (or that amount less the further deductions contemplated by the Tripartite Agreement) separate from its own moneys? None of these questions can be answered satisfactorily except on the footing that the obligations undertaken by both Forest Co and Milling Co under the Tripartite Agreement were contractual obligations, not obligations as trustee. Contrary to the central submission made on behalf of the Trustee Co, the Trust Deed, the Tripartite Agreement, the Prospectuses and the covenants did not provide that the Covenantholders "were to receive not merely a particular amount of money, but rather a proportion of a particular fund". (It may be noted that the reference to a "proportion" of a particular fund suggests a trust with respect to net, not gross, proceeds of sale, but the consequences of that observation need not be pursued to their conclusion.) The documents (separately or together) do not indicate122 that either Forest Co or Milling Co was to hold the money it received (or any part of that money) for the benefit of Covenantholders. On the contrary, the documents demonstrate that the amounts which Forest Co and Milling Co received could, and would, be mixed with the company's own 122 cf Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165-166 per Mason CJ, Deane, Toohey and Gaudron JJ; [1993] HCA 1. moneys and that payments due from Milling Co to Forest Co and from Forest Co to the Trustee Co would be made out of the relevant company's own moneys. The Trustee Co rightly submitted that the documents were to be construed in their commercial context. But that was not a context in which it could be assumed that the interests of Covenantholders were to be preferred or protected to any particular degree or in any particular way. The documents took the form they did according to choices made by parties other than the Covenantholders. Covenantholders acquired the interests they did in accordance with the arrangements and agreements recorded in those documents. They became parties to agreements which took a form prepared by the companies, not by investors. And, as has been observed, the Trust Deed was drawn in a way that was consistent with Forest Co carrying on its own business for its own profit rather than with it being the promoter or manager of some common enterprise between the Covenantholders. Hence, to ask, as the majority in the Court of Appeal did123, what a "representative of the commercial interests of investors [participating] in the drawing-up of the scheme documents in 1964" would have done to protect the interests of investors was to ask an irrelevant question. It was a question which looked to circumstances that not only did not occur but, more importantly, could never have occurred. Contrary to the conclusion reached124 by the majority in the Court of Appeal, it was not "a matter of commercial necessity that the investments made by Covenantholders not be at risk by reason of extraneous activities of the operating companies". This was not a case where commercial necessity required imputing a trust, and the Trustee Co did not submit to the contrary. The Trustee Co pointed to various statements to be found in the documents which emphasised that the parties undertook obligations which, if the commercial purposes of all concerned. performed, would serve Unsurprisingly, the prospectuses that were prepared for persons contemplating investment were cast in reassuring terms designed to emphasise the desirability of making an investment in the hope of eventual profit. The prospectuses (and all of the other documents) were prepared on the assumption that the scheme would be successful. But it by no means follows that the documents must be understood as providing protection to Covenantholders against the consequences of commercial adversity. And, in particular, nothing in the documents supports 123 [2014] VSCA 65 at [37] per Maxwell P and Osborn JA. 124 [2014] VSCA 65 at [33] per Maxwell P and Osborn JA. the conclusion125 that "the only risks to which the parties intended that the investors [would] be exposed were risks intrinsic to the enterprise being funded by their investment moneys" (emphasis added). It may be accepted that this Court's decision in Clowes v Federal Commissioner of Taxation126 formed part of the commercial background against which the Trust Deed and the Tripartite Agreement were drafted. Clowes concerned the taxation consequences for investors in a pine plantation investment scheme generally similar to the arrangements now in issue. In Clowes, the Court held that sums distributed to investors from the proceeds of the marketing of the timber were not to be included in the taxpayer's assessable income as "profit arising from the sale by the taxpayer of any property ... or from the carrying on or carrying out of any profit-making undertaking or scheme"127. The Court held that the operations which produced the profit were not carried on by or on behalf of the taxpayer, but by the company on its own behalf. Prospectuses which Forest Co issued emphasised that this Court had held that distributions which Forest Co made to Covenantholders in respect of timber proceeds are not assessable income of the Covenantholders and referred, indirectly, not only to Clowes but also to the later decision of this Court in Milne v Federal Commissioner of Taxation128. (In Milne, the Court held that amounts received by investors in a generally similar pine plantation investment scheme were not income according to ordinary conceptions and were not profits arising from the carrying on or carrying out of a profit-making undertaking or scheme.) It may be accepted, then, that taxation considerations were seen as important for investors. It may also be accepted that the decisions in both Clowes and Milne point towards the conclusion that the documents in issue in this case gave Covenantholders only contractual and not proprietary rights. But neither Clowes nor Milne can be treated as determining the present appeal. The documents in this case are generally similar to those that were in issue in those cases. But they are not identical. And because they are not identical, they are to be construed according to their own terms. What was said in Clowes (or in Milne) cannot be treated as if it provides some exposition (contemporaneous or otherwise) of the construction of the relevant documents. The most that can be said is that those decisions provide an important element of the commercial 125 [2014] VSCA 65 at [34] per Maxwell P and Osborn JA. 126 (1954) 91 CLR 209; [1954] HCA 10. 127 Income Tax Assessment Act 1936 (Cth), s 26(a). 128 (1976) 133 CLR 526; [1976] HCA 2. context in which those documents were prepared and are not inconsistent with the conclusions reached in these reasons. Two other aspects of the argument in this Court may be noticed but dealt with shortly. They are the regulatory framework and some alleged admissions made by Forest Co. Regulatory framework the that Both parties rightly emphasised interests acquired by Covenantholders are to be understood in the light provided by the applicable regulatory framework. The Trust Deed and the Tripartite Agreement were prepared at a time when the interests which Forest Co wished to issue were regulated by Div V of Pt IV of the Companies Act 1962 (SA) ("the 1962 Act"). The covenants issued in respect of the planting years which yielded both the timber sale proceeds and the land sale proceeds were regulated by Div 6 of Pt IV of the Companies (South Australia) Code ("the Code"). The Trustee Co submitted that the regulatory framework "contemplated a sharp distinction between investment in a management company (which would be subject to the financial fortunes of the management company) and investment in a particular scheme to be managed by a management company (which would not)". The Trustee Co submitted that this scheme was of the latter and not the former kind. It may greatly be doubted that either the 1962 Act or the Code drew a distinction of the kind asserted. Both kinds of scheme fell within the very general definitions of an "interest" in the 1962 Act and a "prescribed interest" in the Code. But even if a distinction of the kind drawn by the Trustee Co was consistent with the applicable regulatory framework, the Trustee Co's assignment of this scheme to one rather than the other category assumed, rather than demonstrated, the answer to the central issue in the case. Admissions? The Trustee Co filed a Notice of Contention alleging that, during 2012, an employee of Forest Co, Milling Co and their holding company had admitted that both the timber sale proceeds and the land sale proceeds were held by Milling Co on behalf of Covenantholders. But the critical question in this case is not what employees of Forest Co or Milling Co (let alone its holding company) thought or assumed the documents mean. The issues in the case are to be decided by the proper construction of the documents. If the statements relied on by the Trustee Co as admissions bear the construction for which it contends, and if the statements are admissible against Forest Co and Milling Co, their making neither requires nor permits any different conclusion about the construction of the documents. It is therefore not necessary to examine any issue about what the statements meant or whether any of the statements was admissible. Neither Forest Co nor Milling Co was a trustee of the timber sale The obligations which Forest Co and Milling Co owed proceeds. Covenantholders were contractual, not obligations as trustee. There remains for consideration the land sale proceeds. A trust in respect of land sale proceeds? In addition to the matters relied on in support of its argument that trust for Forest Co or Milling Co held Covenantholders, the Trustee Co pointed to two further matters as supporting its argument that the land sale proceeds were held on trust for Covenantholders. It referred first to a provision of the Trust Deed permitting the Trustee Co to lodge a caveat over land, and second to some particular statements made in prospectuses. timber sale proceeds on the The Trust Deed obliged Forest Co, "until the timber growing thereon is so cut and milled and disposed of and the proper proceeds thereof paid to the Trustee [Co]", to take certain steps with respect to land that it owned or leased "in order to secure due compliance by [it] with the terms and conditions [of the Trust Deed]". Those obligations included depositing certificates of title to the land planted in any preceding planting year (in respect of which 75 per cent of the amount intended to be raised by the issue of covenants for that year had been raised). The certificates of title were to be deposited with a nominated bank in the joint names (and to the joint order) of Forest Co and the Trustee Co. The Trust Deed provided that: "The Trustee [Co] shall cause a Caveat or Caveats to be registered in respect of such land prohibiting any dealings therewith except in the interests of the Covenantholders in such lands." The Trust Deed did not identify what interest the Trustee Co would claim in such a caveat. As already noted, some prospectuses Forest Co issued offered Covenantholders "a beneficial interest in the land value" (described elsewhere in the same documents as an "interest in the value of land"). Investigating accountants' reports included in the prospectuses also referred to covenants land value" "[t]o enable providing "for a beneficial [C]ovenantholders to participate in the capital appreciation of the land on which the trees are planted". interest the Neither the provision permitting the lodging of a caveat nor any of the several statements made in the prospectuses about the land altered or added to the rights and obligations created by the Trust Deed in respect of covenants giving the holder a right to receive an amount referable to the assessed value of land after harvesting of the trees. The Covenantholder's right was to an amount of money. The statements made in the prospectuses about a "beneficial interest" concerned the "value" of the land, not the land itself. The Covenantholder did not acquire any interest in the land. Neither Forest Co nor the Trustee Co agreed or declared that it would hold the land on trust for Covenantholders. Conclusion and orders For these reasons, the appeal to this Court should be allowed. Neither Forest Co nor Milling Co is a trustee of the timber sale proceeds or the land sale proceeds. Orders should be made in the form proposed by Keane J. 104 GAGELER J. The factual and procedural background of this proceeding is exhaustively set out in the reasons for judgment of other members of the Court. The ultimate issue is whether Forest Co and Milling Co hold the proceeds of the sale of timber harvested in 2012 (and of the land on which it was grown) on trust for the Covenantholders, having regard to the circumstances in which Forest Co issued covenants in 1984. I am unable to accept the conclusion of the majority of the Court of Appeal that a trust over the proceeds arose as a matter of "commercial necessity" to ensure that Covenantholders' investments would "not be at risk by reason of extraneous activities"129. I am equally unable to accept the argument of the respondent that such a trust over the proceeds arose "by reference to the outward manifestation of the intentions of the parties within the totality of the relevant circumstances". In Hospital Products Ltd v United States Surgical Corporation130, after identifying the relationship of trustee and beneficiary as one of the accepted categories of fiduciary relationship131, and before stating that "it is altogether too simplistic, if not superficial, to suggest that commercial transactions stand outside the fiduciary regime" and that "every … transaction must be examined on its merits with a view to ascertaining whether it manifests the characteristics of a fiduciary relationship"132, Mason J said133: "That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction." 129 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [33]. 130 (1984) 156 CLR 41; [1984] HCA 64. 131 (1984) 156 CLR 41 at 96. 132 (1984) 156 CLR 41 at 100. 133 (1984) 156 CLR 41 at 97. Jacobson J has explained the consequence to be that "where a fiduciary relationship is said to be founded upon a contract, the ordinary rules of construction of contracts apply"134: "Thus, whether a party is subject to fiduciary obligations, and the scope of any fiduciary duties, is to be determined by construing the contract as a whole in the light of the surrounding circumstances known to the parties and the purpose and object of the transaction". Mason CJ and Wilson J should not be taken to have been suggesting a wider or different inquiry when, in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd135, they referred to a court inferring or imputing an intention to create a trust from "the language which the parties [to a contract] have employed" by looking to the "nature" and "circumstances" of a transaction, including "commercial necessity". That statement followed by way of explanation from their Honours' immediately preceding statement that "courts will recognize the existence of a trust when it appears from the language of the parties, construed in its context, including the matrix of circumstances, that the parties so intended". As Heydon and Crennan JJ pointed out in Byrnes v Kendle136, that reference to the "matrix of circumstances" was plainly an adoption of the standard terminology used to describe the overall context within which contractual intention is objectively discerned. Where there is no reason to consider that parties entering into a contract have not said what they meant or meant what they said, an express term in the contract that one party is to hold property on "trust" for another party, or for a third party, will be recognised and enforced in equity as a trust137. Conversely, where parties to a contract have refrained from contractual use of the terminology of trust, an intention to create a trust will be imputed to them only if, and to the extent that, a trust is the legal mechanism which is appropriate to give legal effect to the relationship, between the parties or between a party and a third party, as established or acknowledged by the express or implied terms of the contract138. 134 Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) (2007) 160 FCR 35 at 77 [281]. 135 (1988) 165 CLR 107 at 121; [1988] HCA 44. 136 (2011) 243 CLR 253 at 288 [108]; [2011] HCA 26. 137 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at 605- 606 [34]; [2000] HCA 25. 138 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 147-149; Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 618-619; [1988] HCA 16; Pettitt v Pettitt [1970] AC 777 at 823. Cf South Sydney District Rugby League (Footnote continues on next page) The question is whether recognition and enforcement of a trust is appropriate to give effect in law to entitlements and obligations which the parties, according to ordinary principles of contractual interpretation, can be taken together to have intended to exist in fact. Those cases in which one party takes action beyond the terms of a contract sufficient to manifest a unilateral intention to constitute a trust can for present purposes be put to one side139. Amongst the numerous and otherwise largely equivocal indications of contractual intention to which the parties to the present appeal have drawn attention in argument, one contractual omission is, in my view, decisive. It is the acknowledged absence of any contractual indication that Forest Co and Milling Co should hold the proceeds separately from other moneys of their own. As Robson AJA pointed out in dissent in the Court of Appeal, not only were those companies not contractually obliged to hold the proceeds in separate accounts, but the delay of between seven and eleven months permitted by cl 9(f) of the Tripartite Agreement in payment by Milling Co to Forest Co carried with it the implication that Milling Co "was able to use those moneys as it saw fit in the interim"140. A duty to hold trust money separate from one's own is the "automatic consequence of the imposition of a trust"141 and "is a hallmark duty of a trustee"142. An intention that money be held in a separate fund is for that reason indicative, although not conclusive, of an intention to create a trust over that money143. For the same reason, although failure in fact to hold money in a separate fund need not negate the existence of an express trust otherwise Football Club Ltd v News Ltd (2000) 177 ALR 611 at 646 [135]-[136]; Garnac Grain Co Inc v H M F Faure & Fairclough Ltd [1968] AC 1130 at 1137. 139 Eg In re Kayford Ltd [1975] 1 WLR 279; [1975] 1 All ER 604. 140 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [251]. 141 Finn, Fiduciary Obligations, (1977) at 103. 142 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at 605 [34], quoting Puma Australia Pty Ltd v Sportsman's Australia Ltd (No 2) [1994] 2 Qd R 159 at 162. 143 Cohen v Cohen (1929) 42 CLR 91 at 101; [1929] HCA 15, referring to Henry v Hammond [1913] 2 KB 515 at 521; Puma Australia Pty Ltd v Sportsman's Australia Ltd (No 2) [1994] 2 Qd R 159 at 162. See also Jessup v Queensland Housing Commission [2002] 2 Qd R 270 at 273-274 [8]-[9]. conclusively established144, absence of a contractual intention that money be held in a separate fund must surely be fatal to the imputation of a contractual intention to create a trust over that money145. I agree with Keane J as to the disposition of the notice of contention and as to the orders to be made in the appeal. 144 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at 605- 606 [34]; Stephens Travel Service International Pty Ltd (Receivers and Managers Appointed) v Qantas Airways Ltd (1988) 13 NSWLR 331 at 341. 145 Walker v Corboy (1990) 19 NSWLR 382 at 398. See also Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 498; Salvo v New Tel Ltd [2005] NSWCA 281 at [65]; In re Goldcorp Exchange Ltd [1995] 1 AC 74 at 100. 113 KEANE J. For many years Southern Australia Perpetual Forests Limited ("the Forest Company") carried on business developing plantations of pine trees. To finance these operations, the Forest Company raised funds from investors ("Covenantholders") through the issue of interests ("Covenants") offered by prospectus. Sapfor Timber Mills Limited ("the Milling Company"), a company related to the Forest Company, provided tree felling and milling services to the Forest Company, and sold the timber products from the Forest Company's plantations. Australian Executor Trustees (SA) Limited ("AET") is the trustee of the Southern Australia Perpetual Forests Trust ("the SAPF Trust"), which was established by a trust deed made between the Forest Company and what is now AET on 6 March 1964 ("the Trust Deed"). AET represents the Covenantholders in the proceedings in this Court. On the same day as the SAPF Trust was established, an agreement was made between the Forest Company, the Milling Company and AET ("the Tripartite Agreement") pursuant to which it was agreed that the Milling Company would pay the proceeds of its sale of timber products, net of specified deductions, to the Forest Company. The Forest Company agreed to pay those proceeds, net of further deductions, to AET, which would then account to the Covenantholders. Each Covenantholder was entitled to an aliquot share in the net proceeds of the sale of the products of timber grown from trees planted in a specified year on an identified area of land. For some, but not all, planting years, a Covenantholder also became entitled to a payment in respect of an aliquot share in any appreciation in the value of the land on which the trees were planted during the term of the Covenant. The amount of the appreciation in value was calculated at the date of the clear felling of the trees, or termination of the Covenant. In 2008, the Forest Company and the Milling Company were taken over by the fifth appellant, Gunns Limited. Subsequently, each of the Forest Company and the Milling Company encumbered its assets (by way of fixed and floating charge) to lenders to the companies of the Gunns Group146 to secure the repayment of moneys lent to the Gunns Group. No question has been raised in these proceedings as to the propriety of these loans or the granting of security to the lenders. On 15 March 2012, the Forest Company, the Milling Company, AET and others entered into a Tree Sale Agreement for the sale of trees owned by the 146 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 457 [5]. Forest Company ("the Tree Sale Agreement"). Some of these trees were from planting years in the early 1980s in respect of which Covenants had been issued by the Forest Company. The price payable under the Tree Sale Agreement to the Milling Company amounted to $33,999,998 ("the Tree Sale Proceeds"). On the same day, the Forest Company entered into contracts for the sale of identified land to The Trust Company (Australia) Limited ("the Land Sale Contracts") for a total consideration payable to the Forest Company of $53,356,000 ("the Land Sale Proceeds"). Thereafter, competing claims arose to the Tree Sale Proceeds and the Land Sale Proceeds (together, "the Relevant Proceeds"). On 25 September 2012, the lenders to the Gunns Group appointed the first and second appellants as the receivers and managers of the Forest Company and the Milling Company. These proceedings concern competing claims to the Relevant Proceeds. AET instituted proceedings in the Supreme Court of Victoria claiming that the Forest Company and the Milling Company hold the Relevant Proceeds on trust for Covenantholders. The first and second appellants claimed the Relevant Proceeds on behalf of the Forest Company and the Milling Company. The proceedings did not involve any suggestion that the making and completion of the Tree Sale Agreement and the Land Sale Contracts involved a breach by the Forest Company or the Milling Company of any provision of the Trust Deed or the Tripartite Agreement. It should also be noted that the litigation did not involve any contest of priority between the interests asserted by AET and the rights of secured creditors under their securities. It may also be noted that it was common ground between the parties that at the times the Covenantholders' moneys were subscribed, the trees to which the subscription related had been planted on land already acquired by the Forest Company147. AET's claim was upheld in the Supreme Court of Victoria. The primary judge declared that AET is beneficially entitled to the Tree Sale Proceeds, less the expenses payable to the Forest Company and the Milling Company in accordance with the Trust Deed and the Tripartite Agreement. The primary judge also declared that AET is beneficially entitled to the Land Sale Proceeds referable to the value of the land subject to the 1982 planting year, the 1983 planting year and the Supplementary Covenants (as defined in cl 30 of the Trust Deed) calculated in accordance with the Trust Deed. 147 This common ground between the parties is not consistent with the suggestion by the primary judge as to the use of Covenantholders' contributions at Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 460-461 [17]. The decision of the primary judge The primary judge (Sifris J) held that the language used in the Trust Deed, the Tripartite Agreement and the Covenant: "when assessed in the context and circumstances of the transaction, sufficiently indicates an intention to provide, at all stages, protection to the interests of the Covenantholders beyond a mere contractual obligation to account, despite the fact that the funds were not required to be placed in a separate account. The presumed intention of the parties was that the funds would not form part of the assets of either the Forest Company or the Milling Company. Rather, those companies were entrusted with looking after the funds of Covenantholders."148 His Honour's conclusion was that, from the moment a Covenantholder's subscription money was received by the Forest Company, it was held beneficially for the Covenantholder, both by the Forest Company and by the Milling Company: "the entire process was to be individually and specifically recorded and accounted for" and so the absence of a separate fund was not material149. The decision of the Court of Appeal The Court of Appeal, by majority (Maxwell P and Osborn JA), granted leave to appeal, but dismissed the appeal150. While it is not entirely clear, it would seem that the majority in the Court of Appeal accepted the primary judge's all-encompassing view of the subject matter of the trust151. Robson AJA, in dissent, held that the Forest Company and the Milling the the Relevant Proceeds as trustees for Company did not hold Covenantholders152. 148 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 472-473 149 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 473 [79]. 150 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65. 151 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [8]-[9]. 152 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [89], [248], The majority in the Court of Appeal considered that, in the circumstances of the present case, considerations of "commercial necessity" warranted the inference that the objective intention of the parties was that the Covenantholders' investments "would be safe"153. Their Honours said that: "it was a matter of commercial necessity that the investments made by covenantholders not be at risk by reason of extraneous activities of the operating companies. Had there been any suggestion that such a risk existed, prospective investors would have been much less likely to invest."154 The majority in the Court of Appeal attributed particular significance to the language of the prospectus, which emphasised that the investment in the scheme was a secure one155. Their Honours noted that a prospective investor was "invited to acquire 'an interest … in a pine plantation'."156 Their Honours also noted that "the language was simple and unambiguous, representing that an investor who purchased a covenant would acquire a beneficial interest in land."157 No party suggested that there was any significant inconsistency between the terms of the prospectus and the operative provisions which established the Covenantholders' interests. It is to the latter that one must look in order to ascertain the objective expression of the parties' intentions, and, in particular, whether the security of the Covenantholders' investments was assured by contractual promises or the creation of proprietary rights. While the prospectus may indicate "the relevant circumstances attending the relationship between" the parties158, the provisions which gave effect to the intentions of the parties as the "outward manifestation"159 of their promises and expectations in respect of the scheme are to be found in the Trust Deed, the Covenant, which expressly adopted the terms of the Trust Deed, and the Tripartite Agreement. 153 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [30]. 154 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [33]. 155 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [6]. 156 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [13]. 157 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [29]. 158 Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 503. 159 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [7], [242]. Referring to the provisions of the Trust Deed and the Tripartite Agreement, the majority in the Court of Appeal held that these instruments created "trust protection" for Covenantholders in respect of their interest in the timber "until the investment returns were paid out in full."160 In relation to the land on which the trees were grown, the majority said161: "In substance, if not in form, these provisions imposed trust obligations on the Forest Company with respect to its freehold and leasehold interests in the benefit of the covenantholders." land, obligations expressly imposed for The appeal to this Court The appellants were granted special leave to appeal to this Court by Hayne and Crennan JJ on 15 August 2014162. In this Court, AET did not seek to support the conclusion that the trusts for which it contended were required as a matter of "commercial necessity". Nevertheless, AET did seek to support the conclusion of the Court of Appeal on the basis that the operative provisions of the relevant documents made manifest an intention to protect the Covenantholders' investments by keeping them separate from the general business of the Forest Company and the Milling Company. This protective intention was said to warrant the conclusion that the Covenantholders' entitlements under the relevant documents163 took effect, not merely as rights enforceable in contract, but as proprietary entitlements held for their benefit in trust by the Forest Company and the Milling Company. the Forest Company and The primary judge and, it would seem, the majority in the Court of Appeal discerned in the relevant documents an intention that Covenantholders' subscriptions would give rise "at all stages" to proprietary entitlements to be held the Covenantholders. In this Court, AET supported a more modest view to the effect that it was only from the moment when the net proceeds of timber sales for the relevant year of planting were held by the Milling Company that a trust fixed upon those proceeds, and then it operated subject to the deductions authorised by the Milling Company on trust for 160 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [49]-[52]. 161 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [48]. 162 [2014] HCATrans 175. 163 For the purposes of this judgment, the "relevant documents" include the Trust Deed, the Tripartite Agreement and the applicable Covenant. the relevant documents. It is difficult to see how that more modest claim could support AET's claim to the Land Sale Proceeds. With that difficulty in mind, perhaps, AET did not abandon the more ambitious claim that beneficial interests in the trees and land were held on trust at all times after the Covenantholders paid their subscriptions. For the reasons which follow, the appeal should be allowed. Close consideration of the text of the relevant documents demonstrates that the conclusions of the primary judge and the majority in the Court of Appeal cannot be sustained. It is significant that the relevant documents, pursuant to which the Covenantholders made their investments, made no express provision for the trust relationships for which AET contends. The absence of such provision gains added significance from the circumstance that the Trust Deed did make express provision for certain funds to be held on trust. In addition, the relevant documents contained provisions predicated on an understanding that the contributions of the Covenantholders would not be segregated from the general funds of the Forest Company and the Milling Company but would be used in their businesses. The operation of the relevant documents may be summarised by reference to the conclusion of Kitto J in Clowes v Federal Commissioner of Taxation164 in relation to similar arrangements: "Upon payment to the company, the lot-holders' money was gone, and it was not repayable in any circumstances. … The essence of the matter simply was that the company bound itself to follow, over an indefinite period of years, a course of action which it expected would yield substantial net proceeds, and, in consideration of an immediate payment by the [lot-holder], it promised to pay him a proportion of those net proceeds if and when they should come in." This understanding of the operation of the relevant documents is consistent with the statutory framework which regulated the investment. To the extent that Covenantholders were exposed to the risk of the failure of the Forest Company and the Milling Company, that was a risk which the regulatory framework sought to address by measures which did not require that moneys invested by members of the public should be held and preserved separately from the business of the Forest Company. The conclusion of the majority in the Court of Appeal was based on the commercial consideration that Covenantholders' interests would be better protected if the obligations of the Forest Company and the Milling Company were held to give rise to obligations in trust rather than contract. Considerations of commercial necessity may afford assistance in discerning the objective 164 (1954) 91 CLR 209 at 223; [1954] HCA 10. intentions of the parties where the language of their written agreements is not explicit165. Such considerations afford little assistance in cases where the language of the parties is explicit. The present is such a case. But even if regard were to be had to considerations of "commercial necessity"166, those considerations would not support the conclusion of the primary judge and the majority in the Court of Appeal. While the creation of an all-embracing trust relationship might have been better calculated to preserve the Covenantholders' investments, it might also have exposed them to personal liability to external creditors for the debts incurred by the Forest Company and the Milling Company as trustees of what, on the Court of Appeal's view, is a trading trust. Even if it were legitimate to construe the relevant documents to give effect to the supposed commercial preferences of Covenantholders, that speculation would not support the view of the majority in the Court of Appeal as to the "substance"167 of the provisions of the relevant documents. The terms of the Covenantholders' investment The parties' arguments in this Court focused closely upon the terms of the Trust Deed, the Tripartite Agreement, and the Covenant issued pursuant to the 1984 Prospectus. In order to appreciate the strength of those arguments, it is necessary to consider the terms of the relevant documents at length and in detail. This course is also necessary to avoid the misunderstandings which can occur when a word or a phrase is isolated from its context. In order to put the provisions made by the relevant documents in context, it is desirable to refer first to the statutory framework within which they had their genesis. The statutory framework Schemes for the management of collective investments such as those undertaken by the Covenantholders have, since the Managed Investments Act 1998 (Cth), been operated by a single licensed "responsible entity"168. Prior to 165 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 121; [1988] HCA 44; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 605 [34]; [2000] HCA 25; Byrnes v Kendle (2011) 243 CLR 253 at 272 [49], 287-288 [108]-[110]; [2011] HCA 26. 166 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 121; Byrnes v Kendle (2011) 243 CLR 253 at 287-288 [108]. 167 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [48]. 168 The current provision is Corporations Act 2001 (Cth), s 601FB. that time, the States regulated such schemes by legislation which operated through the mechanism of an "approved deed"169, which was required to contain a number of statutory covenants. These statutory covenants were intended to provide minimum standards of accountability to investors. The legislation also required the management company, as the entity issuing the interests to the public, to make disclosure of information pertaining to the scheme by a prospectus. The covenants required by the legislation established, and distinguished between, the roles of the manager of the investment scheme (an entrepreneurial company which issued interests to investors) and a trustee (whose role was to protect investors). Consistently with the entrepreneurial role of the manager of an investment scheme, the management company was not required by the legislation to assume the self-denying obligations of a trustee in that the legislation contemplated that it would carry on business in pursuit of its own profit170. At the date of the Trust Deed and the Tripartite Agreement in 1964, the governing legislation was the Companies Act 1962 (SA) ("the Companies Act"). Although the Relevant Proceeds related to trees and land relevant to Covenants for a number of planting years, the parties were content to treat the 1984 Prospectus and Covenant as containing the provisions relevant to the case171. The Companies (South Australia) Code ("the Companies Code") provided the relevant statutory framework as at the date of the 1984 Prospectus and Covenant. Consistently with the distinction drawn by the legislation between the functions and obligations of the "trustee for or representative of the holders of interests"172 and the functions and obligations of the "management company"173, the roles of the management company and trustee were not performed by the same entity. The Trust Deed conformed to these requirements. 169 See Companies Act 1962 (SA), ss 77 and 83; Companies (South Australia) Code, ss 165 and 171. 170 Parkes Management Ltd v Perpetual Trustee Co Ltd (1977) 3 ACLR 303 at 171 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [11] and fn 6. 172 Companies Act, ss 78 and 80; see also Companies Code, ss 166 and 168. 173 Companies Act, s 80; Companies Code, s 168. The Forest Company was the management company "by or on behalf of which the interests have been or are proposed to be issued"174. The Companies Act and the Companies Code applied to the issue of "interests" and "prescribed interests", respectively, to members of the public175. Under the legislation, an "interest" and a "prescribed interest" were defined to include a right to participate in any interest, whether enforceable or not, and whether actual, prospective or contingent, in profits or assets of an undertaking, or in a common enterprise. The statutory definition of "interest" and "prescribed interest" also included a right to participate in a contract, scheme or arrangement whereby the investor acquired an interest in property which would or might be used in common with rights of others acquired in like circumstances176. The legislation thus contemplated that the issue of an "interest" or a "prescribed interest" might, or might not, involve the acquisition of an interest of a proprietary nature, as opposed to an interest in the nature of a contractual right. The nature of the "interest" or "prescribed interest" was left to be determined by the terms of the arrangements effected by the parties in any given case. To the extent that investors in managed investment schemes were at risk of the failure of the management company, the Companies Act and the Companies Code sought to moderate those risks by the requirement of the interposition of a trustee to protect the interests of holders of interests or prescribed interests, and by the requirement of covenants from the trustee and the management company; but they did not require the segregation of investment moneys from the general funds of the management company. Section 80(1)(a) of the Companies Act and s 168(1)(a) of the Companies Code proceeded on the assumption that such segregation would not occur, in that each required a covenant: "binding the management company that it will use its best endeavours to carry on and conduct its business in a proper and efficient manner and to ensure that any undertaking, scheme or enterprise to which the deed relates is carried on and conducted in a proper and efficient manner". The Companies Act, by s 80, and the Companies Code, by s 168, also required that an approved deed contain certain covenants. These provisions included a covenant by the management company that it would, within a specified time, pay to the trustee money which was payable to it. The trustee was 174 Companies Act, s 76(1); see also Companies Code, s 164(1). 175 Companies Act, s 76(1); Companies Code, s 5(1). 176 Companies Act, s 76(1), definition of "investment contract"; Companies Code, s 5(1), definition of "investment contract". required to covenant that it would exercise all due diligence and vigilance in carrying out its functions and in watching the rights and interests of holders of interests, and that it would keep proper books of account and cause those accounts to be audited annually177. Section 80(1)(d) of the Companies Act was relevantly re-enacted by s 168(1)(d), which provided that an approved deed should contain a covenant: "binding the management company and the trustee ... respectively, that no moneys available for investment under the deed will be invested in or lent to the management company [or] the trustee ... or any person … who is associated with the management company or with the trustee". AET argued that these sections required a covenant obliging the Forest Company to segregate the investments of Covenantholders from the general conduct of its business. That argument mistakes the effect of the sections. These provisions did not require a covenant from the management company that the moneys subscribed by investors not be mixed with the general funds of the management company. They did not seek to prevent the investment being mixed with the funds of the management company, or to quarantine the investment against the risk that the management company might fail because of risks of business not peculiar to the particular investment scheme. Rather, they were concerned to prevent the trustee or the management company from using subscriptions raised from the public in order to enhance its equity or loan capital. Finally in relation to the statutory framework, it should be said that it was well known that the kind of investment presently in issue was risky178. It is ironic that a consequence of the conclusion of the courts below is that the investments by the Covenantholders would now be afforded trust protection against risks which, at the time the investments were made, were sufficiently a matter of public knowledge that this kind of investment was not one which trustees were authorised to make under the Trustee Act 1936 (SA)179. 177 Companies Act, s 80(1)(b) and (c)(i), (ii) and (iii); Companies Code, s 168(1)(b) and (c)(i), (ii) and (iii). 178 Clowes v Federal Commissioner of Taxation (1954) 91 CLR 209 at 221-222. 179 Section 5, which was repealed by the Trustee (Investment Powers) Amendment Act The Trust Deed The Trust Deed recited that the Tripartite Agreement was made to ensure the performance by the Forest Company of its obligations to Covenantholders. It was readily apparent that the Milling Company was not a party to the Trust Deed, and that this was deliberate, given the Milling Company's role under the Tripartite Agreement. That there was no trust relationship between the Milling Company and Covenantholders under the Trust Deed was the conclusion which one would expect to be drawn. Clause 1 of the Trust Deed provided that the Forest Company appointed AET as trustee, and AET agreed "to be and act as Trustee for the Covenantholders for the time being upon and subject to the trusts terms covenants and conditions hereinafter contained." Once again, given the express provision that AET is the trustee for the Covenantholders, the conclusion which one would ordinarily expect to be drawn is that the Forest Company is not. The question then becomes whether the detailed provisions of the Trust Deed and the associated instruments manifest a different intention. Clause 2 of the Trust Deed contained covenants by the Forest Company to perform faithfully its obligations in relation to the maintenance of the plantations. On the face of things, the Forest Company's obligations to Covenantholders in this regard are matters of contract. An exception to that general observation is cl 2(d)(v) of the Trust Deed, which provided that, "in order to secure due compliance by the Forest Company with the terms and conditions" of the Trust Deed, the Forest Company would "cause to be deposited in [a bank] … in the joint names" of the Forest Company and AET "all Certificates of Title and Lessee's copies of all leases free from encumbrances" used in plantings and that the: "Trustee shall cause a Caveat or Caveats to be registered in respect of such land prohibiting any dealings therewith except in the interests of the Covenantholders in such lands." AET argued that because a caveat could only be lodged to protect a proprietary interest in land180, cl 2(d)(v) must be taken to manifest an intention to create a proprietary interest in the land on which the trees were planted. That argument should not be accepted. Clause 2(d)(v) was directed to preventing the Forest Company engaging in dealings with interests of land which might adversely affect Covenantholders. Contrary to AET's argument, however, it is apparent that cl 2(d)(v) did not confer upon Covenantholders an absolute beneficial interest in the the 180 Real Property Act 1886 (SA), s 191. the land and trees growing thereon as distinct from a security interest the extent of which is commensurate with the Covenantholders' contractual entitlements. It may be181 that the basis for the caveat182 was AET's interest by way of equitable charge created by the deposit of instruments of title183, which, in turn, was expressly "to secure due compliance by the Forest Company with the terms and conditions" of the Trust Deed. Be that as it may, the express provision for security for the performance of the Forest Company's contractual obligations falls far short of the creation of a beneficial interest in the assets of the business of the Forest Company asserted by AET. It was not suggested by AET that any contravention of the security provided by cl 2(d)(v) occurred in the making and completion of the Tree Sale Agreement and the Land Sale Contracts. It was not explained how the Tree Sale Agreement and the Land Sale Contracts were made and completed consistently with this security interest; but it would not be fair to assume that any such contravention occurred, especially given that AET was itself a party to the Tree Sale Agreement. By cl 2(e) of the Trust Deed, the Forest Company covenanted to pay into: "a fund to be called 'the Maintenance Fund' such amount … as agreed from time to time … and the Trustee shall credit such amount to the appropriate Maintenance Fund account in respect of each planting." This provision, and cl 20A, expressly contemplated the keeping of the Maintenance Fund separately from the assets of the Forest Company. The significance of cl 2(e) is that this express provision sits ill with the broad contention to keep Covenantholders' contributions separate from its own funds in trust for the benefit of Covenantholders. the Forest Company was generally obliged that 181 It was common ground that the evidence did not disclose whether a caveat was, in fact, lodged, and, if it was, the nature of the interest which it claimed. 182 Avco Financial Services Ltd v White [1977] VR 561; Re Universal Management Ltd [1983] NZLR 462. 183 Russel v Russel (1783) 1 Bro CC 269 [28 ER 1121]; Bank of New South Wales v O'Connor (1889) 14 App Cas 273 at 282; UTC Ltd (In liq) v NZI Securities Australia Ltd (1991) 4 WAR 349 at 351. By cl 3(a) of the Trust Deed, the Forest Company agreed to: "[t]end maintain and supervise the said land and the trees planted thereon in accordance with the principles of afforestation approved by the officer of the Company for the time being responsible to the Board for forestry operations". By cl 3(b) of the Trust Deed, the Forest Company covenanted to: "[p]ay and discharge all rent rates taxes charges outgoings and impositions assessed imposed upon and payable in respect of the said land and in the case of Leased Land pay all or any further amounts as may be payable by the lessee pursuant to the terms of the lease". By cl 3(c) of the Trust Deed, the Forest Company covenanted to: "[i]ndemnify and keep indemnified the Trustee and the Covenantholders from and against all and all manner of claims demands actions proceedings in respect of the tending supervision protection and preservation of the said land and trees and in respect of all such rent rates taxes charges outgoings and impositions and further amounts aforesaid." AET drew attention specifically to provisions of the Trust Deed which were said to oblige the Forest Company to account to AET and the Covenantholders. By cl 3(ca) of the Trust Deed, the Forest Company was obliged to: "[f]urnish quarterly to the Trustee not later than the last days of April July October and January in every year a report in writing in respect of the period of three calendar months ended on the last day of the preceding month signed on behalf of the Board of Directors of the Forest Company by two Directors thereof:– (ii) whether the Forest Company has observed and performed all the covenants and conditions binding on it pursuant to the terms of the said Covenants and the Trust Deed as amended from time to time; (iii) whether any event which is or should be known to the Forest Company has happened which has caused or could cause the said Covenants or any of them or any provision of the Trust Deed as amended from time to time to become enforceable by reason of any breach or default by the Forest Company; (iix) whether the Forest Company and, to the best of the knowledge, information and belief of its Directors, [the Milling Company] have each kept and performed all their covenants and agreements respectively to be kept and performed by them pursuant to the terms of the Tripartite Agreement." Further, in this regard, by cl 3(d)(i) of the Trust Deed, the Forest Company was obliged to furnish to AET: "upon request such information relative to the financial position and affairs generally of the Forest Company … as shall reasonably be required by the Trustee to enable the Trustee to accurately and adequately comprehend appreciate and ascertain the financial position of the Forest Company." By cl 3(f) and (g) of the Trust Deed, the Forest Company covenanted to: [b]etween the first day of October and the last day of November in each and every year cause its Forestry Superintendent ... having charge of the lands allocated to cover the obligations of the Forest Company to the Covenantholders, a report setting forth:– to be made by The extent to which the operations of the Forest Company in respect of the area so allocated have advanced. (ii) Whether or not the Forest Company is discharging efficiently its obligations in respect of such area and in respect of the planting thereof and of the plantings thereupon. Prior to the thirty-first day of December following the receipt of the report referred to in the preceding sub-paragraph hereof (herein referred to as 'the said report') the Forest Company will at its own cost and expense deliver a copy thereof to the Trustee and will within six (6) weeks of receiving from the Trustee a copy of any report which the Trustee may wish to make to the holders of Covenants relating to the period covered by the said report ... at its own cost and expense cause the said report and the report of the Trustee (if any) to be printed and a copy thereof forwarded to each holder of Covenants." The terms of cll 3(ca), 3(d)(i), 3(f) and 3(g) did not oblige the Forest Company to keep Covenantholders' contributions in accounts separate from its general accounts. Indeed, these provisions reflect an appreciation that the "financial position and affairs generally of the Forest Company" were matters of importance to AET and the Covenantholders because those matters affected the safety of the Covenantholders' investments, and that these undertakings were required precisely because the Covenantholders' contributions were not to be kept separately from the general funds of the Forest Company. Clause 3(h) required that the Forest Company was to: "[e]xecute and perform all such acts deeds matters and things as may be reasonably required by the Trustee for the purpose of giving full due and proper effect to these presents according to the true spirit intent and meaning thereof." Clause 10 of the Trust Deed provided that the Forest Company "will do all in its power … to secure reasonable financial returns to the Covenantholders" and that: "the Forest Company shall not be liable for any loss which may be sustained by the Covenantholder provided the Forest Company has used its best endeavours to obtain reasonable returns for the Covenantholders from such measures the in accordance with Covenantholder." the contract with This provision is a significant indication, both that the Forest Company's obligations to the Covenantholders are a matter of contract, and that they do not extend to the stewardship of the timber and lands as assets held for the benefit of the Covenantholders. That indication is confirmed by cl 12 of the Trust Deed, which contained the following undertakings on the part of the Forest Company: "(a) The Forest Company undertakes to plant with pine trees ... the number of acres or hectares (as the case may require) of land cleared and fenced (where necessary) equal in each case to the total area comprised in the ... Covenants issued ... and to tend and supervise the principles of in accordance with the afforestation". trees Clause 12 of the Trust Deed also provided: "(b) Each Covenant in respect of which a Fully Paid Certificate has been issued will entitle the holder thereof to the net proceeds from the timber appropriate to [the] ... Covenant planted by the Forest Company with trees as stated in the application signed by the applicant. The Covenantholder will receive his due proportion of the benefits obtained from the sale of timber harvested from the planting in respect whereof his Covenant is issued in accordance with the terms and conditions set out in the Covenant and within recited Tripartite Agreement. The Forest Company shall be entitled to retain the amount of five per centum of the balance of the proceeds from the sale of timber as provided by Clause 9(d) of the Tripartite Agreement as amended for its commission and remuneration for its services." These provisions cannot sensibly be read as declaring a trust "entitlement" to the "net proceeds from the timber". Rather, they state the content of the Forest Company's contractual obligations (and also its entitlements) in respect of the proceeds of the realisation of timber. In contrast, cl 12 of the Trust Deed did make express provision for the creation of a second trust fund, providing relevantly: "(e) The Trustee will, upon receipt of such net proceeds above described, hold the same in the interest of the respective Covenantholders and shall open accounts in the Trustee's ledger which shall be called 'Timber Proceeds Accounts', such accounts being kept separate to each planting. Details of such Timber Proceeds Accounts shall be shown on an audited statement which shall be attached to the Trustee's Balance Sheet at the end of the financial year. (f) When the sum standing to the credit of any one of such Timber Proceeds Accounts becomes sufficiently large to render it, in the opinion of the Directors of the Forest Company, economically capable of distribution amongst the Covenantholders in whose interest such Account shall have been opened, the Forest Company shall recommend to the Trustee that a specified sum per covenant out of the moneys to the credit of such Timber Proceeds Account shall be distributed amongst the said Covenantholders. The Trustee shall thereupon notify the Forest Company the sum (not greater than the sum so recommended by the Forest Company) which the Trustee requires to be so distributed." It is clear from cl 12(e) and (f) that AET's obligation to create and keep separate a fund for the benefit of Covenantholders arose only upon receipt of the net proceeds from the Forest Company and not otherwise. Once again, the limited scope of this obligation is inconsistent with a more expansive trust relationship attaching to the Forest Company's assets for the benefit of the Covenantholders at earlier points in the generation of the proceeds of the enterprise. Clause 13 of the Trust Deed provided that, in the event of default on the part of the Forest Company in the observance of its obligations, AET could "take charge of and manage the business conducted by the Forest Company on the … land allocated to the … Covenants". Clause 14 of the Trust Deed provided that, in the event of default by the Forest Company, the Maintenance Fund "shall … be applied by the Trustee … in the same manner as the Forest Company could have applied the same." By cl 20A, the Trust Deed made express provision declaring trusts in respect of the Maintenance Fund, the Covenantholders' Distribution Accounts and the security deposits: "The Trustee declares that it will hold the following assets in trust for the Covenantholders that is to say – (a) Maintenance Fund From the purchase money received by the Forest Company from the Covenantholders a sum fixed by the Trustee as agreed from time to time shall in manner provided in Clause 2(e) hereof be deposited with the Trustee by the Forest Company as and when Covenants are paid in full as a form of guarantee or insurance that the Forest Company will carry out its maintenance commitment under the contract. … (b) Covenantholders' Distribution Accounts A separate banking account shall be maintained by the Trustee at ANZ Banking Group Ltd … for the Covenantholders of each planting year into which proceeds from the sale of timber and any other moneys to which the Covenantholders may be entitled shall be paid by the Forest Company. These funds shall be distributed by the Trustee to the Covenantholders from time to time pursuant to the terms of the relevant Covenants. Titles to Planted Land All such Certificates of Title and Lessee's copies of leases for any land the subject of such plantings as shall pursuant to Clause 2(d) hereof have been deposited in the Savings Bank of South Australia Head Office Safe Deposit … and the Trustee will cause to be registered a Caveat or Caveats in respect of such lands prohibiting any dealings the covenantholders in such lands." therewith except interests of the It may be noted here that cl 16 of the Trust Deed provided that if a Covenantholder should default in his or her purchase obligations, he or she would "cease to be cestui que trust hereunder." It should be borne in mind that Covenantholders were "cestuis que trust" both of AET and of the trusts expressly declared by cl 20A. Clause 16 does not suggest that the rights of a Covenantholder as "cestui que trust", vis à vis the Forest Company, went beyond the trusts expressly declared by the Trust Deed. Clause 27 of the Trust Deed stated the Covenantholders' rights with respect to the land on which trees were planted. It relevantly provided that: "each Covenant in respect of which a Fully Paid Certificate has been issued will entitle the holder thereof to the value ... of the freehold land or land held under perpetual lease ... planted in respect of the Covenant and to the net proceeds from the timber in each case ... planted by the Forest Company with trees as stated in the application signed by the applicant." This provision related to the value of the appreciation in the valuation of the land between the date of the planting to which the Covenant related and the clearing of timber from the land. The entitlement of the Covenantholder was to the payment of an amount being an increase in value of land to be determined by valuation; it was distinctly not an aliquot share in the land itself. Clause 30 of the Trust Deed authorised the issue of Supplementary Covenants in respect of: "any planting year prior to the 1982 planting year … which will entitle the holder thereof to an interest in the value of the land subject to the Covenant for such year." The Trust Deed was amended by the addition on 26 August 1986 of cl 34, which purported to relieve a Covenantholder from personal liability to indemnify AET or the Forest Company for any debt incurred by either of them "in connection with [their] powers and obligations" under the Trust Deed. This provision was not operative in respect of Covenantholders under the 1984 Covenant or earlier Covenants. Accordingly, if the amendment were otherwise effective to exclude the liability of Covenantholders to indemnify the Forest Company for debts incurred in the course of the enterprise, it would not protect Covenantholders who acquired their interests before 26 August 1986 from any obligation which might arise under the general law to indemnify the Forest Company in respect of liabilities to third parties for such debts. The Tripartite Agreement The Tripartite Agreement provided for the proceeds of the milling of trees and manufacturing of timber products by the Milling Company, net of identified deductions, to be paid to the Forest Company to be dealt with in accordance with the Forest Company's covenants in the Trust Deed. The lengthy preamble to the Tripartite Agreement contained the following recitals: "WHEREAS the Forest Company was formed for the purpose (inter alia) of acquiring lands and planting the same with forest trees and preserving the forests so planted and tending and cultivating the same until such time as the same should become marketable AND WHEREAS for the purpose of acquiring the funds necessary for the carrying out of its purposes the Forest Company intends from time to time to issue prospectuses inviting the public to subscribe for and purchase the covenants referred to in such prospectuses on the terms and conditions in any such prospectus and in the printed form of Covenant more particularly set forth AND WHEREAS by … 'the Trust Deed' ... the Forest Company appointed the Trustee and the Trustee undertook … to be and act as Trustee for the holders for the time being of the said Covenants subject to the trusts terms and covenants and conditions in the Trust Deed contained and the Forest Company covenanted and agreed with the Trustee as in the Trust Deed is more particularly mentioned AND WHEREAS the Milling Company was duly incorporated having for its objects (inter alia) the felling, milling, manufacturing and marketing of grown timber and thinnings the property of Covenantholders of the Forest Company". AET focused upon the last of these recitals as an indication of the proprietary nature of the interests of the Covenantholders. This recital relates, in terms, to the objects for which the Milling Company had been incorporated; whether or not its objects had been altered since its incorporation184, the reference to the original objects of the Milling Company sheds little light on the terms of the relationship actually established between the Covenantholders and the Forest Company by the Trust Deed and the Covenant. It was to overstate the effect of the preamble to say, as the primary judge said185: "The preamble records that the object [scil of the Tripartite Agreement] is to fell the trees 'the property of the Covenantholder'." By cl 7 of the Tripartite Agreement, it was provided that: "The Milling Company shall market and sell and at all time [sic] use its best endeavours to market and sell all logs or timber standing or milled and manufactured by the Milling Company … as soon as possible after the same shall have been cut or milled and manufactured and shall use its best endeavours to obtain the best market price from time to time obtainable for the said timber." 184 There was no evidence in this regard. 185 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 459 By cl 8, the Tripartite Agreement provided for the keeping of accounts by the Forest Company and the Milling Company but not for the keeping of separate accounts for the benefit of Covenantholders: "The Milling Company and the Forest Company and each of them shall keep such books accounts vouchers and records as shall enable them at all times to ascertain and specify to which class of Covenantholders and in respect of which series of Covenants and in what proportions the balance of moneys referred to in Clause 10A shall be allocated and apportioned. The Milling Company shall also submit their books and annual accounts for audit or check audit by the Forest Company's Auditors." The terms of cl 8 are that Covenantholders' payments were not intended to be mixed with the funds of either the Forest Company or the Milling Company. Further, it is to be noted that the Milling Company's obligation to submit its accounts for audit was owed, not to AET on behalf of the Covenantholders, but to the Forest Company. inconsistent with the contention The Tripartite Agreement imposed obligations on the Milling Company in favour of the Forest Company, not in favour of AET, in respect of the payment of the net proceeds of the Milling Company's operations: "9. All moneys received by the Milling Company from the sale of such logs or milled and manufactured timber shall be retained by the Milling Company and applied in manner following:– In recouping to the Milling Company all expenses of whatsoever nature necessarily incurred in connection with the felling cutting milling manufacturing and selling of the said thinnings and fully grown trees and the logs or timber milled and manufactured therefrom ... In payment immediately to the Forest Company of an amount equal to five per centum of the balance of such moneys, to be retained by the Forest Company for its commission and remuneration for its services herein specified. In payment to the Forest Company of the balance then remaining of such moneys. All moneys payable by the Milling Company to the Forest Company pursuant to Sub-clause (e) of this Clause ... shall be payable by the Milling Company to the Forest Company by five instalments on the last days of the months of April, May, June, July and August then next following." As an assurance of the performance by the Milling Company of its payment obligations, the Tripartite Agreement provided: "10. The Milling Company shall not ... declare or pay any dividend to its shareholders unless all moneys which shall have become due and payable by the Milling Company to the Forest Company pursuant to sub-clauses (d), (e) and (f) of Clause 9 ... have been fully paid." Clause 10A provided for payment by the Forest Company to AET: "The Forest Company upon receipt from the Milling [C]ompany of any moneys payable to it pursuant to sub-clauses (e) and (f) of Clause 9 of this Agreement shall re-imburse itself and retain all such expenses as it may be entitled to deduct in terms of the Trust Deed and shall within thirty days after the receipt of such moneys pay the balance to the Trustee for distribution amongst the Covenantholders entitled thereto in manner provided by the Trust Deed." This provision speaks of an obligation to pay money generated by the activities of the Forest Company and the Milling Company, not of the realisation of assets held for the benefit of Covenantholders. This understanding is confirmed by cl 14 of the Tripartite Agreement. Clause 14 provided relevantly that, during the currency of the Tripartite Agreement: "The Milling Company shall … have the sole and exclusive right to … in conjunction with others … mill and process the thinnings and fully grown trees planted by the Forest Company … and sell the products therefrom". This provision is noteworthy for the absence of any qualification upon the Milling Company's "sole and exclusive right" which might support the contention that it was operating for the exclusive benefit of the Covenantholders. The provisions of cl 15 should also be noted: "The Milling Company shall not during the currency of this agreement fell cut mill manufacture or sell any trees other than trees and timber planted or acquired by the Forest Company for the benefit of Covenantholders without the joint written consent of the Trustee and the Forest Company first had and obtained. Such consent may be refused without assigning any reason for such refusal." It was not suggested that the Tree Sale Agreement was made or completed in breach of this provision. AET fastened upon the reference to the "benefit of Covenantholders", but that reference is consistent with benefits that are contractual in nature. The Covenant The 1984 Covenant by the Forest Company described, by cl 1, the "entitlement" of each Covenantholder in terms which reflected the obligations undertaken by the Forest Company under the Trust Deed. Clause 4 of the Covenant was expressed in terms which identified the "entitlement" of a Covenantholder to the payment of money as a return upon the investment. Its provisions are concerned with the quantification of the amount of the payment to Covenantholders by way of return upon their investment rather than the realisation of their assets. That can be seen when it is set out at length. "The Covenantholder will receive his due proportion of the benefits obtained from the sale of the timber harvested by the Milling Company from the planting in respect whereof his Covenant is issued in accordance with the terms and conditions set out in the Covenant and determined in manner following that is to say: All moneys received by the Milling Company from the sale of standing timber or timber felled, cut, milled and manufactured and sold pursuant to the Tripartite Agreement will be applied as follows: in recouping to the Milling Company all expenses of whatsoever nature necessarily incurred in connection with the felling, cutting, milling, manufacturing and selling of the thinnings and fully grown trees and the timber milled and manufactured therefrom, including rents, rates, taxes … and insurance, overhead charges and bad debts actually written off; in providing an annual amount for the depreciation of the Milling Company's buildings, plant and machinery and other deductions as specified in the Schedule to the Tripartite Agreement; in paying to the Milling Company a sum equal to $12 per centum per annum upon the issued and fully paid capital of the Milling Company; in paying immediately to the Company 5% of the net balance of such moneys, to be retained by it as its commission for its services, and in paying the balance then remaining of such moneys to the Company in accordance with the terms of the said Tripartite Agreement. The Company, after deducting from the said remaining balance of such moneys so received by it from the Milling Company (iii) the cost to the Company of labour and material involved in the spreading of further fertilizer …; the cost of any other treatment carried out on the advice of the Company's Technical Superintendent with the approval of the Trustee …; and the excess amount (if any) by which the total estimated expense to the Forest Company during the … period of twenty (20) years of maintaining and tending the trees in the plantation or plantations of the planting year to which the relevant covenants relate … shall exceed the total sum estimated by the Forest Company … for the purposes of sub-paragraph (iii) of sub-clause (a) of Clause 20D of the Trust Deed as amended; will pay the balance to the Trustee for the Covenantholders for distribution by the Trustee amongst the Covenantholders entitled thereto in accordance with their respective holdings." This provision does not speak of the realisation of assets held for the benefit of Covenantholders, but of a payment by way of return from the activities of the Forest Company and the Milling Company. The 1984 Covenant provided, by cl 6, for the payment of a sum in respect of "the value" of land, calculated as the increase in the valuation of the land appropriated to a given year's planting and its valuation when the timber on the land is clear felled. The Covenant also made provision, by cl 8, for the security of Covenantholders which adopted the substance of the provisions of cll 2(d) and 20A of the Trust Deed. Textual considerations Principles of construction In Kauter v Hilton186, Dixon CJ, Williams and Fullagar JJ referred to: "the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries." The need for clarity as to the intention to create a trust and its subject matter is of particular importance in a commercial context where acceptance of an assertion that assets are held in trust is apt to defeat the interests of creditors of the putative trustee. The traditional inclination of the courts is to protect creditors against the use of a straw company as a trading trustee187. AET placed considerable reliance upon the following observations of Bell, Gageler and Keane JJ in Legal Services Board v Gillespie-Jones188: "'[U]nless there is something in the circumstances of the case to indicate otherwise, a person who has "the custody and administration of property on behalf of others" or who "has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit" is a trustee in the ordinary sense'189 (footnotes omitted). A legal practitioner who receives money from a client to be held for and on behalf of the client or another person archetypally answers that description." This passage identifies the nature of the inquiry which must occur in order to determine whether a person is a trustee; it does not suggest an affirmative answer to the critical questions in this case, namely whether the Forest Company or the Milling Company had "the custody and administration of property on 186 (1953) 90 CLR 86 at 97; [1953] HCA 95. See also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 604 [29]. 187 Re The Exhall Coal Co Ltd (1866) 35 Beav 449 [55 ER 970]; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367, 372; [1979] HCA 61. 188 (2013) 249 CLR 493 at 523-524 [113]; [2013] HCA 35. 189 Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165-166; [1993] HCA 1, quoting Taylor v Davies [1920] AC 636 at 651 and Cohen v Cohen (1929) 42 CLR 91 at 100; [1929] HCA 15. See also Mann v Hulme (1961) 106 CLR 136 at 141; [1961] HCA 45. behalf of" the Covenantholders, or had "received, as and for the beneficial property of [the Covenantholders], something which [they were] to hold, apply or account for specifically for [their] benefit". Indeed, the contrast between the receipt of moneys by a legal practitioner to be held specifically for the benefit of a client or a third party and the receipt of investment funds by the Forest Company tells against an affirmative answer. The language of the relevant documents is not to be strained to discover an intention to create a trust of the broad scope for which AET contends. In Byrnes v Kendle190, Gummow and Hayne JJ noted the approval by Mason CJ and Dawson J in Bahr v Nicolay [No 2]191 of the proposition stated earlier by du Parcq LJ192 that: "unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention." "Interests" and "entitlements" AET's argument fastened upon words and phrases in the relevant documents such as "interests" and "entitlements to proceeds", which were said to indicate an intention to vest in the Covenantholders a proprietary interest in the timber and land193. AET argued that the relevant documents reveal a "painstaking attempt" to ensure that the Covenantholders' investments were at all times dealt with by the Forest Company and the Milling Company in the interests of the Covenantholders by creating a trust of assets held for the benefit of the Covenantholders194. As has been seen, the terms of the Trust Deed lend little support to the argument that it created any trusts of which the Forest Company was trustee for the Covenantholders. The Trust Deed, which does create express trusts of limited scope, nowhere expresses a trust of the broad scope for which AET contends. 190 (2011) 243 CLR 253 at 272 [49]. 191 (1988) 164 CLR 604 at 618; [1988] HCA 16. 192 In re Schebsman [1944] Ch 83 at 104. 193 1984 Prospectus at 3, 4, 16, 24. See also Trust Deed, cl 20A(c); Tripartite Agreement, preamble and cl 15. 194 Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165-166. In the relevant documents, references to the "interests" and "entitlements" of the Covenantholders are not to proprietary interests as opposed to contractual entitlements, any more than references in the Companies Act and the Companies Code to "interests" and "prescribed interests" were to proprietary interests rather than matters of contract. It is the context in which these terms are used which controls their meaning. It has long been recognised that, in the context of managed investment schemes similar to the present, these terms do not indicate an interest of a proprietary nature held on trust by the manager for the investor. In Clowes, this Court was concerned with whether an investor, described as a "lot-holder", who had entered into two agreements with a timber growing company, had a beneficial interest in the timber getting enterprise. The first of those agreements recited195 that: "the lot-holder is desirous of becoming possessed of a beneficial interest in the produce of one acre of timber lands (hereinafter referred to as a lot or lots) forming portion of four hundred and fifty acres of land … in South Australia". The agreement provided196 that the lot-holder pay to the company £25 per lot, and, in return, the timber growing company agreed to transfer the land into the name of a trustee company, which was to hold the land upon trust to "compel the company to fairly and faithfully carry out all the obligations entered into by it with respect to planting and maintaining the said land with pine trees". The trustee company was also obliged to: "hold the whole of the said land as security for the performance … [of] the trust deed … and to hold the produce of the said land and net proceeds thereof in trust for the company and the lot-holders as to nine-tenths thereof for the lot-holders … and as to one-tenth thereof in trust for the company." The timber growing company also agreed197 that it would: "as soon as the forest or growing timber on the said land or any part of it has reached maturity or otherwise become marketable make such arrangements as it considers necessary or advisable for marketing the produce thereof either standing or cut and after deducting all costs and 195 (1954) 91 CLR 209 at 210. The second agreement was in materially the same terms but related to different land. 196 (1954) 91 CLR 209 at 211. 197 (1954) 91 CLR 209 at 212. expenses and the company's one-tenth share of the net proceeds … will distribute the remaining nine-tenths amongst the lot-holders in the proportion of one-four hundred and fiftieth part for every fully paid up lot in full and final settlement of the claims of such lot-holders under this contract." Dixon CJ explained the effect of the agreement in the following terms198: "[A lot-holder] laid out a sum of money entitling him at the end of a protracted period of time to an uncertain return in a lump sum which he hoped might prove larger than his outlay though it might well prove smaller. In the event, when a period of fifteen to eighteen years had elapsed, he received back a sum equal to his outlay and an additional forty per cent. But [he] did nothing but lay out his money on the faith of the contract and await the result. The company was in no sense his agent. The money which he paid in pursuance of the contracts became part of the general funds of the company. Its obligations to him were simply contractual. It made the contract for its own advantage and in performing it acted independently of the direction or control of any lot-holders, whose relationship to the company was simply that of persons providing it with money on special terms." Dixon CJ went on to make the point that the agreement did not have the effect that the business of planting and harvesting pine trees was carried on by the lot-holder or on his or her behalf. His Honour said199: "[T]he operation giving rise to the profit … was the planting of pine trees, the cultivation of the plantation and the logging and disposal of timber. These appear to me to have been both in fact and in law the operations of the company conducted on its own behalf and not on behalf of the lot-holders. True it is that the company had contracted with the lot-holders to plant the trees, market the timber and pay over the stipulated portion of the proceeds. But these were contractual terms on which the money was raised by the company. From the [lot-holder's] standpoint the only profit in contemplation was an increase in the amount he invested with the company when the money became repayable as a result of the operations of the company, operations which as part of the terms of the investment the company became bound to carry out. To enter into a contract to provide a specified sum on such terms, to pay it and then to await results cannot in my opinion be properly described as 'carrying on or carrying out a scheme or undertaking'." 198 (1954) 91 CLR 209 at 216-217. 199 (1954) 91 CLR 209 at 218. The point of this passage was that, notwithstanding the terms of the recital, which spoke of the lot-holder "becoming possessed of a beneficial interest in the produce of one acre of timber lands", the lot-holder acquired only contractual rights. Kitto J made the same point200: "The active duties to be performed by the company were laid down in cll 5 and 8. Without troubling to set out the detail of these provisions it may be said that, first, cl 5 bound the company to plant the land with pine trees in a proper and husband-like manner; and cl 8 obliged it, as soon as the forest or growing timber on the land or any part of it should have reached maturity or otherwise become marketable, to make arrangements for marketing the produce thereof, either standing or cut, and, after deducting all costs and expenses and its own one-tenth of the net proceeds, to distribute the remaining nine-tenths amongst the lot-holders in proportion to their lot-holdings, in full and final settlement of their claims under the agreement. It will be observed that what each lot-holder was to become entitled to ultimately was an aliquot share in nine-tenths of the net proceeds of marketing; and it is in this sense that the recital must be understood when it refers to a beneficial interest in 'the produce' of an acre, or two acres, forming portion, but an undivided portion, of the specified parcel of land." These observations have particular relevance to cl 12(b) and (d) of the Trust Deed, cll 9 and 10A of the Tripartite Agreement and cl 4 of the Covenant. Counsel for the appellants put these passages from Clowes, the force of which is evident, in the forefront of their argument in this Court. It is noteworthy that counsel for AET did not attempt any response directed to this important aspect of the appellants' argument. The contemporaneous exposition in Clowes of the effect of an agreement cast in language with evident similarities to the arrangements effected by the relevant documents is significant. The reasons of Dixon CJ and Kitto J afford powerful guidance as to the correct interpretation of the relevant documents. Their Honours' exposition of the effect of similar language in a similar commercial context affords a compelling indication as to the contemporary understanding of the relevant documents201. In the Court of Appeal, the appellants argued that the investment scheme was promoted to investors on the basis that any return was not assessable for 200 (1954) 91 CLR 209 at 221. 201 "Contemporanea expositio est optima et fortissima in lege" (a contemporary interpretation is the best and strongest statement of legal meaning): 2 Co Inst 11. income tax. It was said that, having regard to the reasoning in Clowes, there was a significant risk that the relevant proceeds would in fact become assessable to income tax if a trust relationship were inferred because it might be said that the business was being conducted by the Covenantholders or on their behalf, so that the profits of the business were assessable in their hands. For that reason, so it was said, the Court of Appeal should be slow to accept the trust argument propounded by AET. The majority in the Court of Appeal rejected the appellants' argument that the decision in Clowes supported an inference that it was the parties' "deliberate decision" not to impose trust obligations on the Forest Company or the Milling Company202. Their Honours considered that "[t]he scheme … had all of the characteristics identified in Clowes as leading to the conclusion that the investment return in that case was non-assessable."203 It may be observed that among those characteristics was that the holder of an interest in the enterprise was not the principal on whose behalf the enterprise was conducted by the management company204. The majority in the Court of Appeal, in focusing upon the likely tax consequences for Covenantholders, did not fully acknowledge the significance for the interpretation of the relevant documents of the meaning assigned by Dixon CJ and Kitto J to similar language used in a context analogous to the present. The majority in the Court of Appeal also referred205 to the observation of Barwick CJ, with whom Gibbs and Stephen JJ agreed, in Milne v Federal Commissioner of Taxation206: "Whether or not an acquisition of an interest in land be regarded as involved in the purchase of a bond, it seems to me that the [investors] had no scheme or plan other than to participate in the result of the company's covenanted activities on the land by way of capital increment to the amount invested in the bond." That observation is consistent with the view that the "company's covenanted activities" were not conducted as agent or trustee for bondholders. 202 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [54]. 203 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [63]. 204 (1954) 91 CLR 209 at 216-217, 221; for a contrary view see at 219. 205 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 at [182]-[185]. 206 (1976) 133 CLR 526 at 535; [1976] HCA 2. It is also noteworthy that Barwick CJ adverted to, and expressly rejected, an argument which sought to characterise the bondholders in that case as principals in relation to the timber growing company's profit-making scheme rather than merely persons who provided the company with money albeit on "special terms"207. Barwick CJ said208: "I am unable to accept that the trustees' power to direct realization of the lands of the plantations involved the bondholders in any participation in the company's business." Separate accounts A significant textual consideration is that no provision in any of the relevant documents required either the Forest Company or the Milling Company to create and maintain an account separate from its general funds to safeguard the timber proceeds from the vicissitudes of their business. AET argued that the protective intent of the relevant documents was manifested by cll 3(ca), 3(d)(i), 3(f) and 3(g) of the Trust Deed and cl 8 of the Tripartite Agreement. But these provisions fell far short of requiring that the moneys invested by Covenantholders not be used as part of the assets of the Forest Company. In Jessup v Queensland Housing Commission209, the Queensland Court of Appeal rejected a submission that a provision of an agreement which required that a recipient of funds keep an accounting system capable of identifying income emanating from the funds was indicative of a trust. Such a provision, said McPherson JA, with whom Davies JA and Philippides J agreed: "ill accords with the notion that [the provider] was, from the beginning and throughout, the beneficial owner of the funds it supplied and that [the recipient] was simply the legal title holder of those funds for [the provider]." The Tripartite Agreement provided, by cl 8, for the keeping of records by the Forest Company and the Milling Company to enable Covenantholders' entitlements to be identified. Jessup v Queensland Housing Commission210 is 207 (1976) 133 CLR 526 at 534. 208 (1976) 133 CLR 526 at 534. 209 [2002] 2 Qd R 270 at 274-275 [12]-[13]. 210 [2002] 2 Qd R 270 at 273-274 [8]-[9]. again of assistance. In that case, McPherson JA considered provisions, at least as rigorous as cl 8, for the keeping of records of moneys received by a putative trustee, and said: "All of these are or resemble obligations like those imposed by equity on a trustee in similar circumstances. In the end, however, they tell against rather than in favour of the existence of a trust. If [the provider] as settler had intended to create a trust, it would have been simple to have said so, instead of descending to the detail it did in the Agreement; or, if the reason for including the detail was to point up the specific obligations of [the recipient] as trustee, it would have been cautionary to have done both. It is true, said du Parcq LJ in Re Schebsman211, that: 'by the use possibly of unguarded language, a person may create a trust, as Monsieur Jourdain talked prose, without knowing it, but unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention.' If the purpose of [the provider] was to inspire the poetry of trusts, it is odd that it chose to express itself in common law prose." Those observations apply with even greater force to the present case. In particular, cll 3(ca), 3(d)(i), 3(f) and 3(g) of the Trust Deed and cl 8 of the Tripartite Agreement all tell against, rather than in favour of, the existence of the trust for which AET contends. They provide necessary aid to the identification and enforcement of the contractual entitlements of the Covenantholders precisely because their investments were to be mixed with the general funds of the Forest Company when they were received by it. Commercial considerations The reasons of the majority in the Court of Appeal do not come to grips with two important commercial consequences of the conclusion that the Forest Company and the Milling Company are trustees for the Covenantholders. First, to declare the beneficial entitlement of AET as trustee for the Covenantholders in respect of the Relevant Proceeds may be of limited utility given the consequent entitlement of the Forest Company and the Milling Company, as newly declared trustees, to indemnity from the Relevant Proceeds in respect of liabilities 211 [1944] Ch 83 at 104. properly incurred by them in carrying on the enterprise for the benefit of the Covenantholders212. In Octavo Investments Pty Ltd v Knight213, Stephen, Mason, Aickin and "If the trustee has incurred liabilities in the performance of the trust then he is entitled to be indemnified against those liabilities out of the trust property and for that purpose he is entitled to retain possession of the property as against the beneficiaries. The trustee's interest in the trust property amounts to a proprietary interest, and is sufficient to render the bald description of the property as 'trust property' inadequate." The second difficulty bears upon the perceived need for commercial protection of the Covenantholders as the basis for discerning a trust relationship. In this regard, the primary judge, and, it would seem, the majority in the Court of Appeal, came to a conclusion that the investments of the Covenantholders were trust property used in the conduct of the business of the plantation. Their Honours did not advert to the possibility that their conclusion as to what the parties intended might expose Covenantholders, as beneficiaries of a trading trust, to personal liability, beyond the amount of their investments, to the creditors of the Forest Company and the Milling Company for debts incurred by the Forest Company and the Milling Company in the course of their management of the enterprise for the benefit of the Covenantholders214. Neither the primary judge nor the majority in the Court of Appeal took into account the personal right of a trustee to indemnity from the beneficiaries of a trading trust recognised in Hardoon v Belilios215. As Lord Lindley said216: 212 Re Enhill Pty Ltd [1983] 1 VR 561 at 564-565, 570-571; Young v Murphy [1996] 1 VR 279 at 303. 213 (1979) 144 CLR 360 at 369-370. 214 J W Broomhead (Vic) Pty Ltd (In liq) v J W Broomhead Pty Ltd [1985] VR 891 at 215 [1901] AC 118 at 123-125. See also Trautwein v Richardson [1946] ALR 129 at 134-135; Marginson v Ian Potter & Co (1976) 136 CLR 161 at 175-176; [1976] HCA 35; Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 244 [42]; [1998] HCA 4; Jessup v Queensland Housing Commission [2002] 2 Qd R 270 at 275 [14]. 216 [1901] AC 118 at 123. "The plainest principles of justice require that the cestui que trust who gets all the benefit of the property should bear its burden unless he can shew some good reason why his trustee should bear them himself." In this regard, it is instructive that, in Clowes, Webb J, who dissented, holding that the receipt was assessable to income tax, took the view that the agreements there in question did create a trading trust. His Honour said that: "there is enough on the face of the agreements to indicate that the [lot-holder] acquired not choses in action but interests in particular timber in respect of which he was paid, on the basis of his lot-holding, his due proportion of the profits from the timber grown on his lots and other lots, and thus to establish the necessary relationship between the [lot-holder] and the source of the income and to prevent the latter from being held to be a capital receipt. … Here the source of the income in question is in the cultivation of the lots So regarded the [lot-holder] was as much a party to this profit-making undertaking or scheme as was the company which operated on his lots. … As to nine-tenths, the profits from his lots were made for him and not for the company. The company received the remaining one-tenth as its share of the proceeds of the joint venture."217 That passage echoes the view of the relevant documents taken by the majority in the Court of Appeal. On that view, the Forest Company and the Milling Company were trustees of a trading trust, and so would be entitled to be indemnified from the Covenantholders against their respective indebtedness to external creditors insofar as those liabilities were properly218 incurred in the course of the trust219. Accordingly, to hold that the Forest Company and the Milling Company were acting as trustees for the Covenantholders because necessary protection of their commercial interests required that conclusion would be to expose them to a risk of personal liability to external creditors. It is far from self-evident that Covenantholders would have welcomed such a risk. 217 (1954) 91 CLR 209 at 219. 218 Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439 at 441-442. 219 Hardoon v Belilios [1901] AC 118 at 123-125; Jessup v Queensland Housing Commission [2002] 2 Qd R 270 at 275 [14]. See also McPherson, "The Insolvent Trading Trust", in Finn (ed), Essays in Equity, (1985) 142 at 144-150. In this Court, AET argued that cll 34 and 3(c) of the Trust Deed were sufficient to defeat any personal right of indemnity which the Forest Company might have asserted against the Covenantholders. That argument is not compelling. As noted above, cl 34 of the Trust Deed did not operate before 26 August 1986. Further, cl 3(c) of the Trust Deed, which was in operation earlier, was not cast in terms which were apt to exclude an equitable obligation which rests upon the "plainest principles of justice". And, in any event, these provisions could not affect the rights of the Milling Company because it was not a party to the Trust Deed. In the end, speculation about the adequacy of the protection afforded to the Covenantholders by the relevant documents against the various commercial risks to which their investment exposed them cannot alter the substance of the terms of the investment upon which the parties agreed. For the foregoing reasons, the provisions of the relevant documents did not warrant the conclusion that the Forest Company or the Milling Company owed obligations to Covenantholders beyond the contractual obligations undertaken by the Forest Company. The notice of contention In a notice of contention, AET argued that aspects of the recent conduct of the appellants should be regarded as admissions capable of establishing the trusts for which AET contends. AET relied upon correspondence involving the Company Secretary of the Forest Company and the Milling Company to suggest that those companies followed a practice of segregating and protecting the investment funds or their proceeds for the benefit of the Covenantholders. It was argued that this practice amounted to an admission of the existence of a trust relationship. This contention was not accepted by either of the courts below. It should be noted that the appellants adduced evidence denying the existence of any such practice. That evidence was not contradicted or indeed challenged. It is simply not open to this Court to conclude that either the Forest Company or the Milling Company declared itself trustee by the adoption of a practice of keeping investment funds separately from its other assets. In these circumstances, there is no reason to doubt that the primary judge was correct when he said that: "If I am wrong and there is no trust it is unlikely that the admissions, such as they are, would be capable of creating an express trust."220 220 Australian Executor Trustees (SA) Ltd v Korda (2013) 8 ASTLR 454 at 477 [95]. Conclusion The appeal should be allowed with costs. It should be ordered that paragraphs 1 and 2 of the orders of the Court of Appeal made on 10 April 2014 should be set aside. In their place, it should be ordered: the appeal to that Court is allowed; paragraphs 1, 2 and 3 of the orders of the Supreme Court of Victoria made on 1 March 2013 be set aside and, in their place, declare that: the respondent is not entitled to any of $33,999,998 payable to the fourth appellant pursuant to the Tree Sale Agreement, being the agreement dated 15 March 2012 to which the third appellant, the fourth appellant, the fifth appellant, and the respondent, amongst others, were parties; and the respondent is not entitled to any of $53,356,000 payable to the third appellant under the Land Sale Contracts, being two contracts dated 15 March 2012 to which the third appellant, amongst others, was a party; and the respondent pay the appellants' costs of the proceedings before the primary judge and the Court of Appeal.

HIGH COURT OF AUSTRALIA HUNT & HUNT LAWYERS APPELLANT/APPLICANT AND MITCHELL MORGAN NOMINEES PTY LTD & ORS RESPONDENTS Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 3 April 2013 S270/2012 & S95/2012 ORDER Appeal allowed with costs. Application for special leave dismissed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales dated 15 March 2012 and, in lieu thereof, order that: interest be allowed on the sum assessed by the Supreme Court of New South Wales to be payable by Hunt & Hunt Lawyers at the rates applied by the Court of Appeal in its orders of 15 March 2012; the appeal by Mitchell Morgan Nominees Pty Ltd and Mitchell Morgan Nominees (No. 2) Pty Ltd (together "Mitchell Morgan") from the orders made on the second cross-claim by the Supreme Court on 3 July 2009 otherwise be dismissed; and (c) Mitchell Morgan pay Hunt & Hunt Lawyers' costs in the Court of Appeal. On or before 17 April 2013, Hunt & Hunt Lawyers and Mitchell Morgan file a joint minute stating what further consequential orders should now be made by this Court including an order substituting the amount for which judgment should have been entered by the Court of Appeal in favour of Mitchell Morgan. In default of agreement, each of Hunt & Hunt Lawyers and Mitchell Morgan, on or before 17 April 2013, is to file and serve its proposed minute of order together with written submissions not exceeding two pages in support of its proposed order. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with N Kabilafkas for the appellant/applicant (instructed by King & Wood Mallesons) B A J Coles QC with S B Docker and L Walsh for the first and second respondents (instructed by Mills Oakley Lawyers) Submitting appearance for the third and fourth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd Proportionate liability – Loan and mortgage transaction – Fraudsters induced lender to advance monies on security of mortgage – Solicitors negligently drafted mortgage – Lender unable to recover monies advanced – Whether damage or loss the subject of lender's claim against solicitors caused or materially contributed to by fraudsters' conduct – Whether solicitors concurrent wrongdoer together with fraudsters within Pt 4 of Civil Liability Act 2002 (NSW). Words and phrases – "apportionable claim", "causation", "caused or materially contributed to", "concurrent wrongdoer", "damage", "damages", "factual causation", "proportionate liability", "scope of liability". Civil Liability Act 2002 (NSW), Pt 4, ss 5D(1), 5D(4), 34, 35(1), 36. FRENCH CJ, HAYNE AND KIEFEL JJ. Mr Angelo Caradonna and Mr Alessio Vella entered into a business venture relating to a boxing event in late 2005 and opened a joint bank account for that purpose. On the same day, Mr Vella, in the company of Mr Caradonna, attended upon his solicitors and took possession of certificates of title to three properties. Subsequently, and unknown to Mr Vella, Mr Caradonna obtained possession of the certificates of title and used them fraudulently to obtain money for his own purposes. The first and second respondents (referred to collectively as "Mitchell Morgan") advanced $1,001,748.85 to the joint account of Messrs Caradonna and Vella in January 2006 on the security of a mortgage over one of the properties, the "Enmore property". It was Mitchell Morgan's policy at that time to require a borrower's solicitor to certify that the solicitor had identified the borrower and to witness the borrower's signature on all loan and mortgage documents. Mr Caradonna's cousin, Mr Lorenzo Flammia, acted as his solicitor and dishonestly so certified. Mr Caradonna had forged Mr Vella's signature on the documentation. On the basis of the forged documents and the certification, a mortgage was registered over the Enmore property and the funds advanced. The mortgage secured the debt owed to Mitchell Morgan by reference to a loan agreement. Both the mortgage and the loan agreement were drawn by the appellant, Hunt & Hunt Lawyers ("Hunt & Hunt"), a firm of solicitors which acted for Mitchell Morgan on the transaction. Mr Caradonna withdrew the loan money from the joint account by forging Mr Vella's signature on numerous cheques. By the time proceedings instituted by Mr Vella against Mitchell Morgan and others were heard in the Supreme Court of New South Wales1, both Mr Caradonna and Mr Flammia (referred to together as "the fraudsters") were bankrupt. The reasoning of the primary judge, Young CJ in Eq, with respect to the claim brought by Mitchell Morgan against Hunt & Hunt in those proceedings is summarised in the reasons of Giles JA in the Court of Appeal2. In essence, the loan agreement was void by reason of the forgery and Mr Vella was not liable to Mitchell Morgan under it. The mortgage over the Enmore property, also forged, had gained the benefit of indefeasibility of title3, but because it purported to secure Mr Vella's indebtedness by reference to the void loan agreement, it secured nothing and was liable to be discharged. Young CJ in Eq held that Hunt 1 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343. 2 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,194- 3 Real Property Act 1900 (NSW), s 42. Hayne & Hunt breached its duty of care to Mitchell Morgan. It was negligent because it should have prepared a mortgage containing a covenant to repay a stated amount. These matters are not in issue on this appeal. In the Civil Liability Act 2002 (NSW), s 35(1) in Pt 4 provides that in any proceedings involving an "apportionable claim": the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and the court may give judgment against the defendant for not more than that amount." Section 34(1)(a) provides that apportionable claims include: "a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care" but do not include a claim arising from personal injury. More important to the issues on this appeal is the definition of a "concurrent wrongdoer" for the purposes of Pt 4, and s 35(1) in particular. Section 34(2) provides: "In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim." His Honour the primary judge held that Mitchell Morgan's claim against Hunt & Hunt was an apportionable claim4. It is to be inferred, because it was not expressly stated, that his Honour accepted Hunt & Hunt's submission5 that the fraudsters were, independently of each other or jointly, a cause of the loss or damage claimed by Mitchell Morgan. His Honour held that Hunt & Hunt's liability should be limited to 12.5 per cent of Mitchell Morgan's loss. 4 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 at 25,404 [575]. 5 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 at 25,404 [576]. Hayne Mr Caradonna was taken to be primarily liable, to the extent of 72.5 per cent, and Mr Flammia held liable for 15 per cent6. The Court of Appeal (Bathurst CJ, Giles, Campbell and Macfarlan JJA and Sackville AJA) allowed Mitchell Morgan's appeal from that decision, holding that Hunt & Hunt was not a concurrent wrongdoer because the fraudsters' acts did not cause the loss or damage which Mitchell Morgan claimed against Hunt & Hunt7. The principal issue on this appeal involves the proper identification of that loss or damage. These reasons will show that Mitchell Morgan's claim against Hunt & Hunt was an apportionable claim. The loss or damage which Mitchell Morgan suffered was its inability to recover the monies it advanced. Mitchell Morgan's claim against Hunt & Hunt was based on a different cause of action from the claims it would have had against Mr Caradonna and Mr Flammia. But the claims against all of Hunt & Hunt, Mr Caradonna and Mr Flammia were founded on Mitchell Morgan's inability to recover the monies advanced and the acts or omissions of all of them materially contributed to Mitchell Morgan's inability to recover that amount. Proportionate liability and Part 4 Part 4 of the Civil Liability Act represents a departure from the regime of liability for negligence at common law (solidary liability), where liability may be joint or several but each wrongdoer can be treated as the effective cause and therefore bear the whole loss. Under that regime, a plaintiff can sue and recover his or her loss from one wrongdoer, leaving that wrongdoer to seek contribution from other wrongdoers8. The risk that any of the other wrongdoers will be insolvent or otherwise unable to meet a claim for contribution lies with the defendant sued. By comparison, under a regime of proportionate liability, liability is apportioned to each wrongdoer according to the court's assessment of the extent of their responsibility. It is therefore necessary that the plaintiff sue all of the wrongdoers in order to recover the total loss and, of course, the risk that one of them may be insolvent shifts to the plaintiff. 6 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 at 25,406 [598]. 7 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,199 [44]. 8 Under the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5. Hayne The final report of the inquiry into the law of joint and several liability completed by Professor Davis in 19959 ("the Davis Report") focused upon the liability of concurrent, but independent, wrongdoers10. An example there given was of damage resulting to a house by three separate wrongful acts: the builder negligently constructing the house with inadequate foundations; the architect negligently failing to supervise that part of the construction; and the local authority negligently failing to notice the inadequacy of the foundations. Although these acts were independent of each other, the end result is that the house is defective and needs to be underpinned. The act or omission of each wrongdoer was a cause of that damage. It was observed in the Davis Report11 that the common law approach to the liability of several concurrent tortfeasors, as distinct from joint tortfeasors, was to regard only the last of the wrongdoers to be liable and to then deny that wrongdoer the right to claim from others who had been involved. This approach was largely attributable to the "traditional preoccupation [of the common law] with finding a sole responsible cause"12. There were legislative moves away from this position in Australia in the 1940s and 1950s13, which permitted rights of contribution between concurrent wrongdoers and abolished the rule that judgment against one barred a subsequent action against another who was jointly liable. However, the legislation providing for contribution operated only as between the defendant and other tortfeasors. A principal recommendation of the Davis Report was that "joint and several liability be abolished, and replaced by a scheme of proportionate liability, in all actions in the tort of negligence in which the plaintiff's claim is for property 9 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995). 10 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 8. 11 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 15. 12 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 15, referring to Fleming, The Law of Torts, 8th ed (1992) at 220 (emphasis in original). 13 Such as Pt III of the Law Reform (Miscellaneous Provisions) Act 1946. Hayne damage or purely economic loss"14. It was suggested that arguments in favour of joint and several liability in the context of property damage and economic loss were less compelling than in the area of personal injury claims15 and that it was fair that a defendant's liability should be limited to his or her degree of fault, unaffected by matters beyond the defendant's control16. The background to the inquiry into the law of joint and several liability was a perceived crisis regarding the cost of liability insurance. The fear had been expressed that such insurance would become unobtainable17. The terms of reference of the inquiry required, in particular, that consideration be given to the issue of professional liability18. The Davis Report noted that professional people are usually insured against liability to clients and as a result are often the sole target of legal action when losses are suffered despite the involvement of 14 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 34. The "Ipp Report" recommended the solidary liability regime be retained in relation to personal injury or death claims: Commonwealth of Australia, Review of the Law of Negligence: Final Report, (2002) at 178 [12.17]-[12.19]. It did not consider the question whether a regime of proportionate liability should be introduced in relation to property damage or economic loss: Commonwealth of Australia, Review of the Law of Negligence: Final Report, (2002) at 173 [12.2], 175 [12.8]. 15 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 14-15. 16 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 4. 17 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 11. 18 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 7, 10. 19 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 11. Hayne the Civil Liability Amendment The Davis Report was not mentioned in the Second Reading Speech20 or (Personal Responsibility) Act 2002 (NSW), which introduced Pt 4 of the Civil Liability Act22. This may be because some seven years had passed since the release of the Davis Report. In the Second Reading Speech it was suggested that the provisions were directed not only to problems regarding insurance but also, as the title to the amending Act suggested, to defining the limits which should be placed on personal responsibility23. Nevertheless, there is a clear connection between the Davis Report and Pt 4 of the Civil Liability Act. In 1996, the Standing Committee of Attorneys-General released draft model provisions which reflected the recommendations of the Davis Report24. The draft model provisions were eventually adopted, in substantially the same form, in Pt 4 of the Civil Liability Act in New South Wales and by the other States and Territories25. The evident purpose of Pt 4 is to give effect to a legislative policy that, in respect of certain claims such as those for economic loss or property damage, a defendant should be liable only to the extent of his or her responsibility. The court has the task of apportioning that responsibility where the defendant can show that he or she is a "concurrent wrongdoer", which is to say that there are others whose acts or omissions can be said to have caused the damage the plaintiff claims, whether jointly with the defendant's acts or independently of 20 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 2002 at 5764; see also New South Wales, Legislative Council, Parliamentary Debates (Hansard), 19 November 2002 at 6896. 21 New South Wales, Civil Liability Amendment (Personal Responsibility) Bill 2002, Explanatory Notes. 22 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), Sched 1 [5]. 23 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 2002 at 5765. 24 Standing Committee of Attorneys-General, Draft Model Provisions to Implement the Recommendations of the Inquiry into the Law of Joint and Several Liability, 25 Wrongs Act 1958 (Vic), Pt IVAA; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), Pt 3; Civil Liability Act 2003 (Q), Ch 2, Pt 2; Civil Liability Act 2002 (WA), Pt 1F; Civil Liability Act 2002 (Tas), Pt 9A; Proportionate Liability Act 2005 (NT); Civil Law (Wrongs) Act 2002 (ACT), Ch 7A. Hayne them. If there are other wrongdoers they, together with the defendant, are all concurrent wrongdoers. The purpose of Pt 4 is achieved by the limitation on a defendant's liability, effected by s 35(1)(b), which requires that the court award a plaintiff only the sum which represents the defendant's proportionate liability as determined by the court26. For that purpose, it is not necessary that orders are able to be made against the other wrongdoers in the proceedings. Section 34(4) provides that it does not matter, for the purposes of Pt 4, that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died. Thus under Pt 4 the risk of a failure to recover the whole of the claim is shifted to the plaintiff. It is not disputed that Mitchell Morgan's claim against Hunt & Hunt is an "apportionable claim" within the meaning of s 34(1)(a). The claim was based upon Hunt & Hunt's breach of an implied term of its retainer that it exercise proper skill, diligence and care. Section 34(1A) provides that there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action, whether of the same or a different kind. There is no express limitation on the nature of the claim which might have been brought by the plaintiff against a concurrent wrongdoer, except the requirement of s 34(2) that the acts or omissions of all concurrent wrongdoers have caused the damage in question. Section 34(2) poses two questions for the court: what is the damage or loss that is the subject of the claim? Is there a person, other than the defendant, whose acts or omissions also caused that damage or loss? Logically, the identification of the "damage or loss that is the subject of the claim" is anterior to the question of causation. "Damage" is not a defined term, but damage to property and economic loss are included in the definition of "harm" in s 5. Something more needs to be said concerning the words "the damage or loss that is the subject of the claim" in s 34(2). Similar words appear in s 35(1). It is necessary because it was the view of the Court of Appeal27, following a decision of the Victorian Court of Appeal in St George Bank Ltd v Quinerts Pty Ltd28 ("Quinerts"), that, so far as concerns concurrent wrongdoers, the loss or damage they caused must be "the same damage". This would be consistent with 26 Under the Civil Liability Act 2002 (NSW), s 35(1)(a). 27 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,199- Hayne the requirement in s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)29, with respect to contribution as between joint tortfeasors, that a tortfeasor would if sued have been liable in respect of the same damage. It is difficult to see that, as between concurrent wrongdoers, the damage they have caused can be other than the same for the purposes of s 34(2), since it is identified in each case as that which is the subject of the plaintiff's claim. Moreover, s 34(1A) refers to there being a single apportionable claim "in proceedings in respect of the same loss or damage". However, it is generally considered preferable, on settled principles of construction, to adhere to the language of the statute in question unless there is a warrant for doing otherwise. None is evident from the provisions of Pt 4, which have a different purpose and operation from the provisions of the Law Reform (Miscellaneous Provisions) Act. The relationship between the contribution provisions of the Law Reform (Miscellaneous Provisions) Act and Pt 4 of the Civil Liability Act is expressed in s 36 of the latter Act. It provides that if judgment is given under Pt 4 against a concurrent wrongdoer, that defendant cannot be required to contribute to any damages recovered from any other concurrent wrongdoer or to indemnify that wrongdoer. In any event, it would seem that the purpose of the Court of Appeal in this case, and of the Victorian Court of Appeal in Quinerts, in referring to "the same damage", was merely to draw attention to the fact that in some cases the acts or omissions of wrongdoers may result in different damage to the same plaintiff. So much may be accepted. So far as concerns causation, s 5D(1) in Pt 1A of the Civil Liability Act contains general principles to be applied in determining whether negligence caused particular harm. Two elements are stated as necessary for such a finding: that the negligence was a necessary condition of the occurrence (factual causation); and that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability) 30. Section 5D(4) requires the court to consider, amongst other relevant things, whether or not and why responsibility for the harm should be imposed on the negligent party. 29 And the Wrongs Act 1958 (Vic), s 23B. 30 Strong v Woolworths Ltd (t/as Big W) (2012) 86 ALJR 267 at 272 [19]; 285 ALR 420 at 425; [2012] HCA 5, explaining that the division of these elements in s 5D(1) of the Civil Liability Act 2002 is in line with the recommendations of the "Ipp Report" (Commonwealth of Australia, Review of the Law of Negligence: Final Report, (2002) at 114-119 [7.41]-[7.51]). Hayne Where a defendant is found to be a concurrent wrongdoer, within the meaning of s 34(2), s 35(1)(a) requires the court to determine the proportion of the damage or loss claimed that the defendant should bear, having regard to the extent of the defendant's responsibility for that damage or loss. The damage or loss In the identification of the damage or loss that is the subject of the claim, it is necessary to bear in mind that damage is not to be equated with what is ultimately awarded by the court, which is to say the "damages" which are claimed by way of compensation and which are assessed and awarded for each aspect of the damage suffered by a plaintiff. Damage, properly understood, is the injury and other foreseeable consequences suffered by a plaintiff31. In the context of economic loss, loss or damage may be understood as the harm suffered to a plaintiff's economic interests. It has already been observed32 that the Civil Liability Act equates "harm" with damage to property and economic loss which results from a failure to exercise reasonable care and skill. Mitchell Morgan's pleading does not expressly state the loss and damage it claims to have suffered. However, it claims that the loss and damage is continuing and that it has lost the sum advanced, together with interest and other expenses. Taken together this might suggest that Mitchell Morgan claims to be unable to recover those monies. In Hawkins v Clayton33, Gaudron J pointed out that in an action for negligence causing economic loss it will almost always be necessary to identify, with some precision, the interest infringed by the negligent act34. In that case, it was necessary to identify the interest in order to answer the question as to when the cause of action accrued. Its identification is also necessary for a proper understanding of the harm suffered and for the determination of what acts or omissions may be said to have caused that damage. As her Honour observed35, 31 Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527; [1985] HCA 37. 32 See at [19] above. 33 (1988) 164 CLR 539 at 601; [1988] HCA 15. 34 See also Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527; [1992] HCA 55; The Commonwealth v Cornwell (2007) 229 CLR 519 at 525 [16]; [2007] HCA 16. 35 Hawkins v Clayton (1988) 164 CLR 539 at 601. Hayne economic loss may take many forms. In Wardley Australia Ltd v Western Australia36, it was said that the kind of economic loss which is sustained, as well as the time when it is sustained, depends upon the nature of the interest infringed and in some cases, perhaps, upon the nature of the interference to which it is subjected. An interest which is the subject of economic loss need not be derived from proprietary rights or obligations governed by the general law. The interest infringed may be in the value of property or its physical condition. Thus in The Commonwealth v Cornwell37, the respondent's interest was an entitlement conferred by federal statute to participate in a Commonwealth superannuation fund. An economic interest must be something the loss or invasion of which is compensable by a sum of money38. One such interest identified in the cases is a lender's interest in the recovery of monies advanced39. One of the issues in Kenny & Good Pty Ltd v MGICA (1992) Ltd40 concerned the economic loss suffered by a lender in consequence of a negligent property valuation of the proposed security for the loan. Gaudron J pointed out that the interest of the lender which it had sought to protect by obtaining the valuation was that, in the event of default, the lender should be able to recover the amount owing under the mortgage by the sale of the property41. It would follow that the harm to the lender's economic interest as a consequence of the negligent valuation was the lender's inability to recover that sum. The nature of Mitchell Morgan's economic interest is much the same. The harm it suffered is that it is unable to recover the sums advanced. That is its loss or damage for the purposes of s 34(2). Mitchell Morgan's plea that it continues 36 (1992) 175 CLR 514 at 527. 37 (2007) 229 CLR 519 at 526 [18]. 38 Cane, Tort Law and Economic Interests, 2nd ed (1996) at 5. 39 Hawkins v Clayton (1988) 164 CLR 539 at 601; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 425 [16]; [1999] HCA 25; The Commonwealth v Cornwell (2007) 229 CLR 519 at 525 [16]. 40 (1999) 199 CLR 413. 41 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 425 [16]. Hayne to suffer loss and damage is explicable on the basis that it continues to be unable to recover those sums. The Court of Appeal did not identify Mitchell Morgan's loss and damage in this way. In the reasons of Giles JA, with whom the other members of the Court of Appeal agreed, it is said42: "The loss, or the harm to an economic interest, is in the one case paying out money when it would not otherwise have done so, and in the other case not having the benefit of security for the money paid out. The losses the subject of the claims for economic loss against Messrs Caradonna and Flammia and the loss the subject of the claim for economic loss against Hunt & Hunt are different." Mitchell Morgan's loss or damage, the harm to its economic interest, is not identified in these statements. Rather, Giles JA points to the immediate effects of the fraudsters' conduct and of the negligence of Hunt & Hunt, that is to say, Mitchell Morgan's payment of the money and the inefficacy of the security. It is undeniable that these effects are important in establishing how the loss or damage ultimately came to be suffered and therefore to the issue of causation. However, they cannot be equated with that loss and damage. In Wardley Australia Ltd v Western Australia, a distinction, in principle, was drawn between the legal concept of loss and damage, and the detriment which a plaintiff may be said, in a general sense, to have suffered upon being induced by a misrepresentation to enter an agreement which proves to be disadvantageous43. Entry into a loan agreement in these circumstances does not necessarily mean that a plaintiff has suffered damage, because it will not immediately be self-evident that the value of the chose in action acquired, the right to repayment of the monies advanced, is worth less than the amount paid44. A mortgage negligently drawn is also not necessarily productive of loss, except perhaps in the case of a mortgagor whose equity of redemption is affected 42 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,198- 43 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527; see also Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 447 [86]. 44 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 528. Hayne immediately on its execution45. Recourse to a mortgage will not be necessary in every case. In general terms, in a case involving a loan of monies, damage will be sustained and the cause of action will accrue only when recovery can be said, with some certainty, to be impossible46. There are good reasons for a principled analysis of actual damage. One reason is that it would be unjust to compel a plaintiff to commence proceedings before the existence of his or her loss is ascertainable47. At a later point in his reasons, Giles JA identified Mitchell Morgan's loss as the monies paid and said that the loss occurred immediately the monies were paid48. His Honour may have assumed that loss had occurred because the loan agreement was unenforceable and the mortgage ineffective. Nonetheless, that is not a complete analysis of loss and damage. At the time the monies were paid there was a serious risk that loss would accrue. But when the agreement and the mortgage were entered into and the payment made, it could not be said that Mitchell Morgan's rights of recovery against the fraudsters, one of whom was a solicitor, were valueless. The approach of Giles JA to the question of Mitchell Morgan's loss or damage was influenced by that taken in Quinerts, with which his Honour expressed general agreement. Quinerts involved a loan by a bank secured by a mortgage where Quinerts, the valuer, had negligently overvalued the property the subject of the security. The borrower defaulted and the property fetched less than the amount of the advance at sale. Nettle JA, with whom the other members of the Court of Appeal49 agreed, held, by reference to Pt IVAA of the Wrongs Act 1958 (Vic), which is in terms similar to Pt 4 of the Civil Liability Act, that the 45 Forster v Outred & Co [1982] 1 WLR 86 at 100; [1982] 2 All ER 753 at 765, as explained in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 46 Hawkins v Clayton (1988) 164 CLR 539 at 601; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 425 [16]. 47 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527. 48 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,206 [80]. 49 Mandie JA and Beach AJA. Hayne borrower and guarantor were not concurrent wrongdoers with Quinerts because the damage they had caused was not the same. His Honour said50: "The loss or damage caused by the borrower and the guarantor was their failure to repay the loan. Nothing which Quinerts did or failed to do caused the borrower or the lender to fail to repay the loan. The damage caused by Quinerts was to cause the bank to accept inadequate security from which to recover the amount of the loan. Nothing which the borrower or the lender did or failed to do caused the bank to accept inadequate security for the loan." In this passage, his Honour characterises the loss or damage caused by the borrower and the guarantor on the one hand and the valuer on the other as different by reference to two circumstances, neither of which can be equated with loss or damage. In the first place, his Honour identifies the default by the borrower and the guarantor under their separate agreement as loss or damage. This identifies the act or omission which may be causative of loss, rather than the harm which results from it. The loss or damage caused by the valuer is said to be the immediate effect of the valuer's negligence, namely the bank taking inadequate security. This is properly to be seen as a step in causation of damage, as it was in this case. Nettle JA referred to two decisions in reaching his conclusion that the damage caused by Quinerts and that caused by the borrower and guarantor were different. Each of those decisions concerned contribution legislation. Neither is applicable to the facts of this case. The firstmentioned case was Royal Brompton Hospital NHS Trust v Hammond51 ("Royal Brompton Hospital"). As can be seen from the explanation given in Alexander v Perpetual Trustees WA Ltd52 of the kinds of damage there in question, it is a case far removed from the facts of this case. The Royal Brompton Hospital NHS Trust sued its architects for damages arising from their negligent issue under a building contract of certificates which permitted the builder extensions of time. The architects sought to claim contribution, in respect of the hospital's claim against them, from the builder. The architects were unsuccessful because the hospital's claim against the builder was for its loss 50 St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 687-688 [76]. 51 [2002] 1 WLR 1397; [2002] 2 All ER 801, referred to by Nettle JA in St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 686-687 [71]-[75]. 52 (2004) 216 CLR 109 at 124-125 [37]; [2004] HCA 7. Hayne which had been caused by the delay in completion of the building, whilst its claim against the architects was for the impairment of its ability to proceed against the builder. The damage was not the same. The builder could not be said to have contributed to the damage claimed to arise from the architects' breach of duty. The other case referred to by his Honour53 was Wallace v Litwiniuk54, which had been cited in Royal Brompton Hospital55. That case concerned a plaintiff who suffered physical injuries as a consequence of another driver's negligent driving. Her solicitors, the defendants, also failed to institute proceedings within time. Unsurprisingly, the Alberta Court of Appeal concluded that the damage caused by each wrongdoer was different: the physical injuries the plaintiff suffered were damage distinct from the harm to her economic interests by reason of her inability to recover damages for those injuries56. The judgment at first instance in this case was delivered prior to the decision in Quinerts. However, Nettle JA was unable to agree with the conclusion reached by the primary judge in this case57. To explain the difference Nettle JA saw in the damage caused by the fraudsters and that caused by Hunt & Hunt, his Honour provided the following hypothetical case, which he considered to be analogous to the facts of this case. A thief steals money from a bank. Because of negligence on the part of its insurance brokers, the bank finds that the risk of theft is not covered by its insurance. Nettle JA opined that "the damage caused by the thief would be the loss of the bank's money". However, the insurance brokers did not cause the theft. Nettle JA considered that "the loss or damage caused by the insurance brokers would be the bank's inability to obtain indemnity from an insurance company for the loss suffered by reason of the theft. But nothing done by the thief would have caused the bank's insurance cover to be inadequate."58 53 St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 687 [74], 688 [76]. 54 (2001) 200 DLR (4th) 534. 55 [2002] 1 WLR 1397 at 1411-1412 [29]; [2002] 2 All ER 801 at 814-815. 56 Wallace v Litwiniuk (2001) 200 DLR (4th) 534 at 543 [32]. 57 St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 688 [79]. 58 St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 689 [82]. Hayne In that analogy, it is correct to describe the damage or loss suffered by the bank as its inability to recover the monies stolen. One source of recovery could have been its insurer, hence the brokers were a cause of its loss. The other possible source of recovery is the thief. The harm to the bank's economic interests, at a certain point, is the inability to recover from either source. In the passage quoted, his Honour tests the damage so identified by reference to causation. In doing so his Honour appears to have assumed that there is some requirement that one wrongdoer contribute to the wrongful actions of the other wrongdoer in order that they cause the same damage. There is no such requirement in Pt 4 of the Civil Liability Act. To the contrary, Pt 4 acknowledges, as does the common law59, that a wrongdoer's acts may be independent of those of another wrongdoer yet cause the same damage. Hunt & Hunt also submits that the claim to proportionate liability in Quinerts may have been decided on a narrower basis, namely that the liability of the borrower and of the guarantor did not qualify as damage or loss the subject of the claim against the valuer, for the purposes of Pt IVAA of the Wrongs Act. They are liable in debt, for the payment of the monies retained60. It is not necessary to determine this question. Causation The proper identification of damage should usually point the way to the acts or omissions which were its cause. Causation is largely a question of fact, to be approached by applying common sense to the facts of the particular case61. This is not to deny that value judgments and policy have a part to play in causation analysis at common law62 and, as has been observed63, both factual causation and scope of liability elements are referred to in s 5D(1) of the Civil Liability Act. 59 Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527. 60 See Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567, 569; [1956] HCA 51. 61 Stapley v Gypsum Mines Ltd [1953] AC 663 at 681, cited in March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515, 523; [1991] HCA 12; see also Chappel v Hart (1998) 195 CLR 232 at 238 [6]; [1998] HCA 55. 62 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 516-517. 63 See [22] above. Hayne In March v Stramare (E & MH) Pty Ltd64, it was observed that courts are no longer as constrained as they once were to find a single cause for a consequence and to adopt an "effective cause" formula. Courts today usually recognise that there may be wrongdoers whose acts or omissions occur successively, rather than simultaneously, and who may be liable for the same damage, even though one may be liable for only part of the damage for which the The law's recognition that concurrent and successive tortious acts may each be a cause of a plaintiff's loss or damage is reflected in the proposition that a plaintiff must establish that his or her loss or damage is "caused or materially contributed to" by a defendant's wrongful conduct66. It is enough for liability that a wrongdoer's conduct be one cause67. The relevant enquiry is whether the particular contravention was a cause, in the sense that it materially contributed to the loss68. Material contribution has been said to require only that the act or omission of a wrongdoer play some part in contributing to the loss69. There can be no doubt, on the findings of the primary judge, that Hunt & Hunt was a wrongdoer whose actions were a cause of Mitchell Morgan's inability to recover the monies advanced. The question under s 34(2) of the Civil Liability Act is whether the fraudsters' acts, independently of Hunt & Hunt, also caused that damage. 64 (1991) 171 CLR 506 at 512. 65 Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527; March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 512. 66 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 514, referring to Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410 at 417; 1 ALR 125 at 138; Tubemakers of Australia Ltd v Fernandez (1976) 50 ALJR 720 at 724; 10 ALR 303 at 310; Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 620; McGhee v National Coal Board [1973] 1 WLR 1 at 4, 6, 8, 12; [1972] 3 All ER 67 Henville v Walker (2001) 206 CLR 459 at 469 [14]; [2001] HCA 52. 68 Henville v Walker (2001) 206 CLR 459 at 480 [60], 493 [106]; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 128 [56], 130 [62]; [2002] HCA 41; Roads and Traffic Authority v Royal (2008) 82 ALJR 870 at 887 [85]-[86], 897-898 [143]; 245 ALR 653 at 675, 689; [2008] HCA 19. 69 Gould v Vaggelas (1984) 157 CLR 215 at 236; [1984] HCA 68. Hayne The word "caused", in a statutory provision in terms similar to s 34(2), has been read as connoting the legal liability of a wrongdoer to the plaintiff70. The language of liability is used in contribution legislation71, but not in Pt 4 of the Civil Liability Act. Nevertheless, it would usually be the case that a person who is found to have caused another's loss or damage is liable for it. References to the liability of a wrongdoer should not, however, distract attention from the essential nature of the enquiry at this point, which is one of fact. In determining the question of causation, it is necessary to keep clearly in mind the harm suffered by Mitchell Morgan: its inability to recover the monies advanced. Merely to then state the obvious facts – that the monies were advanced under the loan agreement and on the security of the mortgage – is to acknowledge that the harm suffered has more than one cause. Because Mitchell Morgan's damage is its inability to recover monies, it is understandable that attention is focused upon the immediate consequence of Hunt & Hunt's negligence, namely the mortgage's inefficacy as security against the property, as causative of the damage. However, as Hunt & Hunt points out in its submissions, there were two conditions necessary for the mortgage to be completely ineffective: (a) that the loan agreement was void; and (b) that the mortgage document did not itself contain the debt covenant, but did so solely by reference to the loan agreement. Hunt & Hunt was responsible for (b), but the fraudsters were responsible for (a). It should not be overlooked that the effect of the fraudsters' conduct was that Mitchell Morgan entered into the transaction and was left with an unenforceable loan agreement. Mitchell Morgan had no promise to repay upon which it could sue and it was unable, in a practical sense, to recover from the fraudsters when the fraud was discovered. The fraudsters' conduct must therefore be seen as contributing to Mitchell Morgan's inability to recover. More generally, it is plain that the fraudsters' conduct induced Mitchell Morgan to enter into the transaction, of which the taking of a mortgage was a foreseeable element. The advance of the monies by Mitchell Morgan may have been made on the faith of an ineffective security, but Mitchell Morgan would never have had the need to take a mortgage, nor Hunt & Hunt to draw one, had Mitchell Morgan not been induced to enter into the transaction. The advance was also made on the faith of forged documents and the false certification of a 70 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510 at 523 [62], which concerned the Trade Practices Act 1974 (Cth), s 87CB(3). 71 For instance, the Law Reform (Miscellaneous Provisions) Act 1946, s 5(1)(c). Hayne solicitor. On any view, the fraudsters' conduct in inducing Mitchell Morgan to enter into the transaction and pay the monies must be regarded as a material cause of the harm which resulted. The importance of the part the fraudsters' conduct played is reflected in the extent to which the primary judge found them to be responsible for Mitchell Morgan's loss72. Giles JA found that Mitchell Morgan would not otherwise have paid the monies out but for the fraud and that it could have sued the fraudsters to recover the monies73. In the same passage, however, his Honour expressed the view that the forged loan agreement was merely "part of the occasion" for the loss, arising from the ineffective mortgage, to sound in damages. This view would appear to deny that the forged documents had any causative effect. Mitchell Morgan in its submissions interprets his Honour's reasoning to be that the forged loan agreement did not cause the mortgage security to be ineffective. In this regard, Mitchell Morgan may be taken to be referring to Hunt & Hunt's negligent drawing of the mortgage as unconnected with the situation the fraudsters had brought about. But as has already been pointed out74, it is not a requirement of proportionate liability that the actions of one independent concurrent wrongdoer contribute to the negligence of another. The question is whether each of them, separately, materially contributed to the loss or damage suffered. It would appear that Giles JA was influenced to a view that the fraudsters' conduct was not causative of the damage because he considered that Hunt & Hunt's duty extended to protecting Mitchell Morgan from the fraud which occurred75. It may be doubtful that Hunt & Hunt's duty is properly described in these terms. It was certainly to protect Mitchell Morgan's economic interests and as such would require any security drawn to be effective76, but this is so regardless of the reasons why monies advanced might not be recovered. Hunt & Hunt could not have foreseen that the documentation, certified as correct by another solicitor, was forged. In determining the extent of Hunt & Hunt's duty, care must be taken not to deprive the fraudsters' wrongdoing of any content. 72 Referred to at [7] above. 73 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,206 [80]. 74 See at [45] above. 75 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,206 [80]. 76 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 424-425 [16]. Hayne His Honour's approach harks back to a preference for there to be an effective or sole cause; an approach which predated apportionment legislation generally77. It denies that wrongdoers' acts may occur successively yet be a cause of the same damage. On this view, "but for" Hunt & Hunt's negligence, loss would not have been suffered. But the same can be said "but for" the fraudsters' conduct. In March v Stramare (E & MH) Pty Ltd78, it was observed that certain commentators subdivided the issue of causation into two questions: causation in fact, to be determined by the "but for" test; and whether a defendant should be held responsible in law for the damage which his or her negligence played some part in producing. The approach was criticised. The "but for" test, although useful for some purposes, has its limitations. The approach placed too much weight on that test, to the exclusion of the common sense approach, which the law has always favoured79. As to the second question, as has been observed above80, it is accepted that value judgments and policy considerations have a part to play in determining whether an act is sufficient to bring about the harm suffered by a plaintiff81. Section 5D(1)(b) and (4) of the Civil Liability Act may be thought to involve such considerations, requiring to consider whether and why the court responsibility for the harm should be imposed on the negligent party. These considerations are necessary because a finding of causation invariably involves liability on the part of a defendant. Such a finding does not, however, involve a determination as to whether a defendant should bear sole responsibility or whether and to what extent it should be apportioned between other wrongdoers. If a finding of causation is made with respect to other wrongdoers, so that a defendant is a concurrent wrongdoer within the meaning of s 34(2), s 35(1) then requires the court to determine the extent of the defendant's responsibility. The value judgments involved in that exercise differ from, and are more extensive than, those which inform the question of causation. 77 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515. 78 (1991) 171 CLR 506 at 515. 79 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515. 80 See at [22] and [43] above. 81 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515; Strong v Woolworths Ltd (t/as Big W) (2012) 86 ALJR 267 at 272 [19]; 285 ALR 420 at Hayne So far as concerns Hunt & Hunt, it is clearly appropriate that its negligence be adjudged a cause and that it be held liable for Mitchell Morgan's damage. However, it is not consistent with the policy of Pt 4 that Hunt & Hunt be held wholly responsible for the damage, when regard is had to the part played by the fraudsters' conduct. Consistent with that policy, Mitchell Morgan should not recover from Hunt & Hunt any more than that for which Hunt & Hunt is responsible, as found by the primary judge. Application for special leave The remaining issue concerns the rate of interest which the Court of Appeal determined that Hunt & Hunt should pay by way of compensation to Mitchell Morgan, which is the subject of an application for special leave to appeal. The Court of Appeal held that Hunt & Hunt should pay interest at the rates specified in the loan agreement forged by Mr Caradonna82. Hunt & Hunt contends that the rate should be limited to that allowed under s 100 of the Civil Procedure Act 2005 (NSW). This contention requires reference to s 5D(1) of the Civil Liability Act. Hunt & Hunt accepts that the element of factual causation is met. It does not accept that the second element, that of scope of liability, is met. Hunt & Hunt's argument centres upon the very high rate of interest that was the subject of the loan agreement and describes Mitchell Morgan as "lenders of last resort". It submits that the scope of its liability should not extend to what is described as a "windfall profit", one which Mitchell Morgan has not shown would have been the subject of agreement by a genuine borrower. The Court of Appeal did not accept the submission83. Macfarlan JA considered that Hunt & Hunt undertook the preparation of a mortgage to protect the interests of its client as a lender. Hunt & Hunt was fully aware of the terms of the loan agreement, which it drafted. In these circumstances, his Honour could not see why Hunt & Hunt's liability should not extend to the rates charged by the client, when the loss was caused by its own negligence. No error is identified in the reasoning of the Court of Appeal. Special leave should be refused. 82 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189 at 30,208 [91]; Mitchell Morgan Nominees Pty Ltd v Vella (No 2) [2012] NSWCA 38 at [16]. 83 Mitchell Morgan Nominees Pty Ltd v Vella (No 2) [2012] NSWCA 38 at [16] per Macfarlan JA, Sackville AJA agreeing at [20]. Hayne Orders The appeal should be allowed with costs. The application for special leave should be dismissed with costs. The orders of the Court of Appeal dated 15 March 2012 should be set aside and, in lieu thereof, it should be ordered that the appeal by Mitchell Morgan from the orders made by the Supreme Court on 3 July 2009 be dismissed, except in so far as the sum assessed to be payable by Hunt & Hunt included interest calculated pursuant to s 100 of the Civil Procedure Act. Instead, interest should be allowed on the sum assessed by the Supreme Court at the rates applied by the Court of Appeal in its orders of 15 March 2012. The first and second respondents should pay the appellant's costs in the Court of Appeal. The parties should provide the Court with minutes of order in accordance with these reasons within 14 days. Bell Introduction Part 4 of the Civil Liability Act 2002 (NSW) ("the Act") enacts a regime of proportionate civil liability. The central provision of the regime is in the following terms84: "In any proceedings involving an apportionable claim: the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and the court may give judgment against the defendant for not more than that amount." The expression "apportionable claim" is defined to encompass "a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care" other than a claim "arising out of personal injury"85 as well as "a claim for economic loss or damage to property in an action for damages" for contraventions of certain statutory prohibitions against engaging in misleading or deceptive conduct86. The expression "concurrent wrongdoer" is defined as follows87: "... a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim." The liability of "excluded concurrent wrongdoers" is not limited by the Part88. Excluded concurrent wrongdoers include concurrent wrongdoers who 84 Section 35(1) of the Act. 85 Section 34(1)(a) of the Act. 86 Section 34(1)(b) of the Act. 87 Section 34(2) of the Act. 88 Section 34A of the Act. Bell intended to cause, or fraudulently caused, the economic loss or damage to property that is the subject of the claim89. The liability of any other concurrent wrongdoer is to be determined in accordance with the Part90 and it "does not matter" for that purpose "that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died"91. This appeal concerns the construction and application of the definition of "concurrent wrongdoer". It concerns, in particular, the application of that definition to a solicitor who is claimed to have caused economic loss to a client by negligently failing to protect the client from the consequences of fraud committed by another person. Is the solicitor a concurrent wrongdoer with the fraudster? Our answer is "No". Facts: real and hypothesised Alessio Vella and Angelo Caradonna formed a joint venture in pursuance of which they opened a joint bank account. Unknown to Mr Vella, Mr Caradonna obtained certificates of title to properties owned by Mr Vella and used them to borrow for his own purposes. One of the loans Mr Caradonna obtained was from Mitchell Morgan Nominees Pty Ltd and Mitchell Morgan Nominees (No 2) Pty Ltd (together, "Mitchell Morgan"). Mr Caradonna obtained that loan by forging Mr Vella's signature on documents. Those documents included a loan agreement and a mortgage over one of Mr Vella's properties. Mr Caradonna was assisted by a solicitor, Mr Flammia. Mitchell Morgan retained Hunt & Hunt Lawyers ("Hunt & Hunt") to prepare the loan and mortgage documents. Hunt & Hunt prepared a loan agreement and a separate "all moneys" mortgage. Immediately after Hunt & Hunt registered the mortgage, Mitchell Morgan paid the amount of the loan into the joint bank account. Mr Caradonna immediately withdrew that amount from the joint bank account, again by forging Mr Vella's signature. In proceedings in the Supreme Court of New South Wales, the primary judge held that Mr Vella was not liable to Mitchell Morgan on the loan agreement, on which Mr Caradonna had forged Mr Vella's signature, with the result that the registered mortgage secured nothing92. The primary judge held 89 Section 34A(1)(a) and (b) of the Act. 90 Section 34A(3) of the Act. 91 Section 34(4) of the Act. 92 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 at 25,374 [269], Bell that Hunt & Hunt was liable to Mitchell Morgan in negligence on the basis that the duty of care Hunt & Hunt owed to Mitchell Morgan included a duty to protect Mitchell Morgan from fraud and that the reasonable discharge of that duty required Hunt & Hunt to have included a covenant to repay in the mortgage instrument itself93. Those holdings were not the subject of appeal. The primary judge went on to hold that Hunt & Hunt was a concurrent wrongdoer with Mr Caradonna and Mr Flammia and that the liability of Hunt & Hunt should be limited under Pt 4 of the Act to 12.5 per cent of the amount "which Mitchell Morgan paid out in respect of the forged mortgage"94. On appeal by Mitchell Morgan, the Court of Appeal of the Supreme Court of New South Wales (Bathurst CJ, Giles, Campbell and Macfarlan JJA and Sackville AJA) held that Hunt & Hunt was not a concurrent wrongdoer with Mr Caradonna and Mr Flammia with the result that Pt 4 of the Act had no application95. According to Giles JA, with whom the other members agreed, Mr Caradonna and Mr Flammia were not persons whose acts or omissions caused the economic loss that was the subject of Mitchell Morgan's claim against Hunt & Hunt. The economic loss caused to Mitchell Morgan by Mr Caradonna and Mr Flammia was "paying out money when it would not otherwise have done so"; the economic loss caused to Mitchell Morgan by Hunt & Hunt was "not having the benefit of security for the money paid out"96. That result, as Giles JA pointed out97, was consistent with the reasoning of the Court of Appeal of the Supreme Court of Victoria (Nettle and Mandie JJA and Beach AJA) in St George Bank Ltd v Quinerts Pty Ltd98, which concerned the construction and application of equivalent proportionate civil liability provisions in Victoria99. There a bank had lent on a negligent valuation of mortgaged property. The bank claimed against the valuer after the borrower and guarantor defaulted on the loan and after the mortgaged property realised less 93 (2008) 13 BPR 25,343 at 25,400 [543], 25,402 [559]-[562]. 94 (2008) 13 BPR 25,343 at 25,404-25,406 [575]-[598], 25,414 [680]. 95 Mitchell Morgan Nominees Pty Ltd v Vella (2011) 16 BPR 30,189. 96 (2011) 16 BPR 30,189 at 30,198-30,199 [41]. 97 (2011) 16 BPR 30,189 at 30,199-30,204 [45]-[68]. 99 Part IVAA of the Wrongs Act 1958 (Vic) ("the Victorian Act"). Bell than the valuation. The Court of Appeal held that the valuer was not a concurrent wrongdoer with the borrower and the guarantor. According to Nettle JA, with whom the other members agreed, that was because the borrower and the guarantor could not be said "to have caused or be liable for 'the same damage' as [the valuer]": "[t]he loss or damage caused by the borrower and the guarantor was their failure to repay the loan" but "[n]othing which [the valuer] did or failed to do caused the borrower or the lender to fail to repay the loan"100; conversely "[t]he damage caused by [the valuer] was to cause the bank to accept inadequate security from which to recover the amount of the loan" but "[n]othing which the borrower or the lender did or failed to do caused the bank to accept inadequate security for the loan"101. In Quinerts, Nettle JA drew an analogy with the hypothetical case of a thief stealing money from a bank and the bank finding that risk of theft is not covered by its insurance because of negligence on the part of an insurance broker. In such a case: "the damage caused by the thief would be the loss of the bank's money" but "[n]othing ... the insurance brokers did or failed to do in effecting appropriate insurance cover would have caused the theft of the bank's money"; and conversely, "the loss or damage caused by the insurance brokers would be the bank's inability to obtain indemnity from an insurance company for the loss suffered by reason of the theft" but "nothing done by the thief would have caused the bank's insurance cover to be inadequate". Accordingly, "the thief would not be a concurrent wrongdoer in relation to any claim which the bank might make against its insurance brokers for failing to arrange appropriate insurance cover"102. Hunt & Hunt's arguments Hunt & Hunt argues that the New South Wales Court of Appeal in the present case and the Victorian Court of Appeal in Quinerts each proceeded on a wrong construction of the definition of "concurrent wrongdoer". All that the definition requires, argues Hunt & Hunt, is first an identification of the damage or loss that is the subject of the plaintiff's claim against the defendant and second a finding that the acts or omissions of the plaintiff and one or more other persons were in fact a cause of that damage or loss. 100 St George Bank Ltd v Quinerts Pty Ltd (2009) 25 VR 666 at 687 [76]. 101 (2009) 25 VR 666 at 687-688 [76]. 102 (2009) 25 VR 666 at 689 [82] (emphasis in original). Bell Hunt & Hunt argues that the damage or loss of Mitchell Morgan in the present case is properly characterised as Mitchell Morgan's inability to recover the amount loaned. That inability had two causes: one was the manner in which Hunt & Hunt drafted the mortgage; the other was the fraud of Mr Caradonna and Mr Flammia. Hunt & Hunt argues in the alternative that, if the damage or loss of Mitchell Morgan is properly characterised as Mitchell Morgan not having the benefit of security for the amount loaned, the fraud of Mr Caradonna and Mr Flammia was a cause of that damage or loss because the mortgage would not have been registered and the loan would not have been made but for that fraud. Hunt & Hunt suggests that Quinerts, although wrongly reasoned, was correctly decided. That is because the default of the borrower and the guarantor could not be described as causing any "damage or loss" to the bank at all; the bank's claim against each of the borrower and the guarantor was in debt not damages. As to the case hypothesised in Quinerts, Hunt & Hunt accepts that the insurance broker would not be a concurrent wrongdoer with the thief but argues that the analogy to the present case is "imperfect". Legislative context Part 4 of the Act was inserted in 2002103, and amended in 2003104, before it was proclaimed to commence in 2004105. Its enactment, amendment and commencement formed part of a co-ordinated national response to what was seen as an unavailability of reasonably priced insurance to indemnify against liability for negligence106. The equivalent Victorian proportionate liability regime was introduced as part of that response107, as were proportionate liability regimes in each other State as well as the Northern Territory and the Australian Capital 103 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW). 104 Civil Liability Amendment Act 2003 (NSW). 105 New South Wales Government Gazette, No 187, 26 November 2004 at 8549-8550. 106 Commonwealth of Australia, Treasury, Joint Communique: Ministerial Meeting on Public Liability Insurance, Brisbane, 15 November 2002; Council of Australian Governments, Communique, Canberra, 6 December 2002; Commonwealth of Australia, Treasury, Joint Communique: Ministerial Meeting on Insurance Issues, Perth, 4 April 2003; Commonwealth of Australia, Treasury, Joint Communique: Ministerial Meeting on Insurance Issues, Adelaide, 6 August 2003; Standing Committee of Attorneys-General, Annual Report 2003-04. 107 Wrongs and Limitation of Actions Acts (Insurance Reform) Act 2003 (Vic). Bell Territory108. Co-ordinate Commonwealth legislation109 introduced proportionate liability in respect of claims for damages for economic loss or damage to property caused by conduct in contravention of Commonwealth legislative proscriptions of engaging in misleading or deceptive conduct110. identical The definition of "concurrent wrongdoer" in the Act is replicated in substantially terms in the proportionate liability provisions so introduced into legislation of the Commonwealth111 and of each Territory112 and of each other State113 with the exception of South Australia114 and Queensland115. The origins of the definition can be traced to draft model provisions, released for public comment by the Standing Committee of Attorneys-General of the Commonwealth and the States and Territories ("SCAG") in 1996, to implement recommendations of an inquiry into the law of joint and several liability completed by Professor J L R Davis of the Australian National University in 108 Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA); Civil Liability Act 2003 (Q); Civil Liability Amendment Act 2003 (WA); Civil Law (Wrongs) (Proportionate Liability and Professional Standards) Amendment Act 2004 (ACT); Civil Liability Amendment (Proportionate Liability) Act 2005 (Tas); Proportionate Liability Act 2005 (NT). 109 Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth). 110 Subdivision GA of Div 2 of Pt 2 of the Australian Securities and Investments Commission Act 2001 (Cth); Div 2A of Pt 7.10 of the Corporations Act 2001 (Cth); Pt VIA of the then Trade Practices Act 1974 (Cth). 111 Section 12GP(3) of the Australian Securities and Investments Commission Act 2001 (Cth); s 1041L(3) of the Corporations Act 2001 (Cth); s 87CB(3) of the Competition and Consumer Act 2010 (Cth). 112 Section 6(1) of the Proportionate Liability Act (NT); s 107D(1) of the Civil Law (Wrongs) Act 2002 (ACT). 113 Section 24AH(1) of the Victorian Act; s 5AI of the Civil Liability Act 2002 (WA); s 43A(2) of the Civil Liability Act 2002 (Tas). 114 Section 3(2)(b) of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA). 115 Section 30(1) of the Civil Liability Act 2003 (Q). Bell 1995 ("the Draft Model Provisions")116. To place the drafting and eventual adoption of those model provisions in perspective, it is necessary to note the previously existing law and the recommendations made by Professor Davis. The common law of Australia, following the common law of England, knew only "solidary liability": a defendant whose tortious conduct caused loss or damage to a plaintiff was liable to compensate the plaintiff for the whole of that loss or damage117. The common law knew no general principle of contribution between those who were liable for tortious conduct: a defendant liable to compensate a plaintiff for the whole of the plaintiff's loss or damage ordinarily had no right to contribution from other persons whose tortious conduct also caused that loss or damage to the plaintiff. That was so irrespective of whether those persons acted in concert with the defendant ("jointly") 118 or separately from the defendant ("severally")119 to cause the loss or damage that the plaintiff suffered. Legislation providing for contribution was enacted first in England in 1935120 and was replicated in each Australian State and Territory121. That standard form contribution legislation, as it remains in force in New South Wales, provides122: 116 SCAG, Draft Model Provisions to Implement the Recommendations of the Inquiry into the Law of Joint and Several Liability, (1996). 117 See eg Dougherty v Chandler (1946) 46 SR (NSW) 370 at 375. 118 Merryweather v Nixan (1799) 8 TR 186 [101 ER 1337]. 119 The Koursk [1924] P 140. 120 Law Reform (Married Women and Tortfeasors) Act 1935 (UK). 121 Section 25(c) of the Wrongs Act 1936 (SA), inserted by the Wrongs Act Amendment Act 1939 (SA); s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW); s 7(1)(c) of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA); s 2(1)(c) of the Wrongs (Tort-feasors) Act 1949 (Vic); s 5(c) of the Law Reform (Tortfeasors Contribution, Contributory Negligence, and Division of Chattels) Act 1952 (Q); s 3(1)(c) of the Tortfeasors and Contributory Negligence Act 1954 (Tas); s 11(4) of the Law Reform (Miscellaneous Provisions) Ordinance 1955 (ACT); s 12(4) of the Law Reform (Miscellaneous Provisions) Ordinance 1956 (NT). 122 Section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Bell "Where damage is suffered by any person as a result of a tort (whether a crime or not): … any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort- feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought." The amount of contribution recoverable from any person is "such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage"123. Two limitations on the contribution for which the standard form contribution legislation provides are apparent on its face. One is that contribution is confined to contribution between persons each liable to the same person in respect of "the same damage". The other is that contribution is confined to persons so liable in tort. The second of those limitations, but not the first, was removed by revised contribution legislation enacted in England in 1978124. That revised contribution legislation was substantially mirrored in legislation enacted in Victoria in 1985125 but was not taken up in other Australian States and Territories. The revised contribution legislation, as it remains in force in Victoria, provides that "a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise)"126 and explains that for this purpose127: "a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependents of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise." 123 Section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). 124 Civil Liability (Contribution) Act 1978 (UK). 125 Wrongs (Contribution) Act 1985 (Vic). 126 Section 23B(1) of the Victorian Act. 127 Section 23A(1) of the Victorian Act. Bell The amount of contribution recoverable remains such as may be found by the court or jury "to be just and equitable having regard to the extent of that person's responsibility for the damage"128. The common law principle of solidary liability remained unaltered in Australia until legislation in Victoria, South Australia and the Northern Territory in 1993 introduced a limited regime of proportionate liability for defendants found to be jointly or severally liable in an action for loss or damage arising out of or concerning defective building work: in such a case, a court was required to "give judgment against each defendant ... for such proportion of the total amount of damages as the court considers to be just and equitable having regard to the extent of that defendant's responsibility for the loss or damage"129. The inquiry which Professor Davis completed in 1995 was commissioned in 1994 by the Attorneys-General of the Commonwealth and New South Wales. The terms of reference required Professor Davis to "consider whether it [was] desirable and feasible to alter the present rules on joint and several liability" having regard to recent developments but excluded examination of personal injury claims130. In his final report, Professor Davis pithily explained the critical difference between joint and several (or solidary) liability and proportionate liability in terms of their differential impact "if one of the defendants does not have significant assets, is insolvent or untraceable": "joint and several liability puts that risk, in the first instance, on the other defendants, proportionate liability includes the plaintiff as bearing some or all of that risk"131. He said that132: "the fairness or justice of a legal rule must be questioned when its effect is to place full liability on a defendant who may have been only marginally at fault, and to provide full compensation to a plaintiff who is able to find one on whom to fix the blame for the loss." 128 Section 24(2) of the Victorian Act. 129 Section 131(1) of the Building Act 1993 (Vic). See also s 72 of the Development Act 1993 (SA); s 155 of the Building Act 1993 (NT). 130 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 7. 131 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 2. 132 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 33. Bell He recommended that joint and several liability in negligence actions for property damage or purely economic loss be replaced by proportionate liability, liability in all such cases being proportionate to each defendant's degree of fault133. He also recommended that statutory liability for loss arising from misleading conduct be proportionate to each defendant's degree of responsibility for that loss134. The Draft Model Provisions were explained to be drafted to reflect the recommendations of Professor Davis and as having as their object "to provide for a scheme of proportionate liability for certain types of claims for damages ('actionable claims') instead of joint or several liability"135. The central provision of the draft limited the liability of a defendant who was a "concurrent wrongdoer" in proceedings involving an "apportionable claim" in terms substantially identical to those subsequently taken up in the central provision of Pt 4 of the Act136. The definition of "concurrent wrongdoer" in the draft was "a person who is one of two or more persons whose individual acts or omissions would, independently of each other, have caused the damage or loss that is the subject of the claim"137. The only substantive alteration made to the definition as subsequently taken up in Pt 4 of the Act was to change "would, independently of each other, have caused" to "caused, independently of each other or jointly". The purpose of that change was evidently better to reflect the recommendations by squarely capturing persons who engaged in joint action as well as persons who engaged in several actions rather than by hypothesising several actions in all cases. Construction Lord Bingham of Cornhill observed in 2002 that it has been "a constant theme of the law of contribution from the beginning that B's claim to share with others his liability to A rests upon the fact that they (whether equally with B or 133 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 4. 134 Commonwealth of Australia, Inquiry into the Law of Joint and Several Liability: Report of Stage Two, (1995) at 5. 135 "Explanatory note" in the Draft Model Provisions at ii. 136 Clause 2 of the Draft Model Provisions. 137 Clause 1(2) of the Draft Model Provisions. Bell not) are subject to a common liability to A"138. He noted that the questions that arise in any claim for contribution are: "(1) What damage has A suffered? (2) Is B liable to A in respect of that damage? (3) Is C also liable to A in respect of that damage or some of it?"139 He pointed out that it does not matter greatly "whether, in phrasing these questions, one speaks ... of 'damage' or of 'loss' or 'harm', provided it is borne in mind that 'damage' does not mean 'damages'"140. The key to the construction of the definition of "concurrent wrongdoer" lies in recognising that the proportionate liability provisions, of which the definition forms part, are a variation on that "constant theme". The proportionate liability provisions are a different means of apportioning the liability of B for the harm B has caused to A amongst persons who are (or would be if they continued to exist) liable to A for causing that same harm. The proportionate liability provisions fall to be engaged where B is liable to A on an apportionable claim. The definition is then applied to determine whether or not the liability of B is limited. The liability of B to A on the apportionable claim means that B necessarily answers the description in the definition of "a person … whose acts or omissions (or act or omission) caused ... the damage or loss that is the subject of the claim". What is determined through the application of the definition is whether there is another person – C – who also answers that description. The application of the definition starts with an identification of the "damage or loss" that is the subject of the claim by A against B. The damage or loss that is the subject of the claim by A against B is distinct from the "damages" that A claims from B141: the damage or loss is the harm that A claims to have been caused by one or more wrongful acts or omissions of B, which harm is to be compensated in an award of damages. To answer the description of "a person … whose acts or omissions (or act or omission) caused" that damage or loss or harm, C (in common with B) must be (or have been) legally liable to A for the damage or loss that is the subject of 138 Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397 at 1401 [5]; [2002] 2 All ER 801 at 805-806. 139 [2002] 1 WLR 1397 at 1401 [6]; [2002] 2 All ER 801 at 806, quoted in Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109 at 122 [26]; [2004] HCA 7. 140 [2002] 1 WLR 1397 at 1401 [6]; [2002] 2 All ER 801 at 806. 141 Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527; [1985] HCA 37. Bell the claim. The reference in the definition to "acts or omissions (or act or omission)" is to one or more legally actionable acts or omissions. The reference in the definition to acts or omissions having "caused ... the damage or loss that is the subject of the claim" is not, as has correctly been held142, merely to causation in fact. "Questions of causation are not answered in a legal vacuum" but "are answered in the legal framework in which they arise"143. The reference here is to causation that results, or would result, in legal liability. Once the damage or loss or harm that A claims to have been caused by one or more wrongful acts or omissions of B is identified, the question posed by the definition can be translated in simple terms: is (or was) C also liable to A for the same harm? The identification of the harm that A claims to have been caused by a wrongful act or omission of B "invites comparison between what would have been and what is"144: it involves making a comparison between the position of A that would have existed had the act or omission of B not occurred and the position of A as it has come to exist. The question is: how is A worse off? The answer to that question is informed by the nature of the act or omission of B and by the nature of the right or interest of A that has been affected by that act or omission145. To answer the question merely by pointing out that A is out of pocket may be appropriate in some circumstances, but in other circumstances may involve a conflation of the concept of damage or loss or harm with the distinct concept of damages. Where the wrongful act or omission of B is to breach a duty of care that B has to protect A from the consequences of a possible wrongful act or omission on the part of C, the harm to A that is caused by that act or omission on the part of B lies in the absence of protection in the event that the wrongful act or omission on the part of C occurs. The consequences of the wrongful act or omission on the part of C are not themselves part of that harm. Those 142 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510 at 521-523 [59]-[62]. See also Quinerts (2009) 25 VR 666 at 682 [58], 684 [64]. 143 Chappel v Hart (1998) 195 CLR 232 at 238 [7]; [1998] HCA 55. 144 Harriton v Stephens (2006) 226 CLR 52 at 104 [168]; [2006] HCA 15. See also The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 116; [1991] HCA 54. 145 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 424 [15]; [1999] HCA 25; The Commonwealth v Cornwell (2007) 229 CLR 519 at 525-526 [16]-[19]; [2007] HCA 16. Bell consequences are the coming home of the risk that it is the duty of B to take reasonable care to prevent. Were B to become a concurrent wrongdoer with C in circumstances where B has failed to take reasonable care to protect A from the consequences of a possible wrongful act or omission on the part of C, the impact of proportionate liability would extend well beyond the impact explained by Professor Davis. The proportionate liability regime would not be transferring to A some or all of the risk of B or C being impecunious, insolvent or untraceable. It would be transferring to A some or all of the very risk against which it was the duty of B to protect A. It would be altering rights and duties to an extent not necessary to achieve the identified statutory purpose. It would be doing so in a manner not compelled by the statutory language. That is the point that is illustrated by the analogy drawn by Nettle JA in Quinerts to the hypothetical case of a thief stealing money from a bank where risk of theft is not covered by the bank's insurance because of negligence on the part of an insurance broker. The decided cases provide other illustrations of much the same point. Three will suffice. One is the case of a solicitor whose negligent omission leads to his client's claim for personal injuries being dismissed for want of prosecution146 or becoming statute barred147. It has been pointed out that in such a case the loss that is caused by the solicitor's negligence is "the loss of a cause of action for personal injuries" and that what is compensated in damages is the value of that lost cause of action148. The fault of the person who was or would have been the defendant in the actual or putative action for personal injuries gives rise to the cause of action that is lost. Through the combined faults of that person and the solicitor, the client may be out of pocket. But the harm caused by that person and the harm caused by the solicitor are separate and distinct. The harm caused by that person is personal injuries. The harm caused by that person is not the loss of the cause of action. The harm caused by the solicitor is the loss of the cause of action, not the personal injuries149. The analysis would be no different if the cause of action that is lost by reason of the negligence of the 146 Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64. 147 Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394; [1989] HCA 11. 148 Johnson v Perez (1988) 166 CLR 351 at 360. 149 Wallace v Litwiniuk (2001) 200 DLR (4th) 534 at 543 [32], approved in Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397 at 1411-1412 [29]; [2002] 2 All ER 801 at 814-815. Bell solicitor, instead of being for personal injuries, is for damage to property or for economic loss. Another illustration is the case of a solicitor acting for a vendor whose negligent omission is to fail to procure a guarantee from the directors of a corporate purchaser which later defaults on the contract of sale. In such a case, it has correctly been held that the purchaser is not a concurrent wrongdoer with the solicitor on the basis that "[t]he damage caused by [the solicitor] was to deprive the [vendor] of the opportunity to obtain security for the purchaser's obligations under the contract" and "[n]othing which the purchaser did or failed to do caused the [vendor] to accept inadequate security for the purchaser's obligation to pay the price"150. The analysis would be no different if the purchaser induced the vendor to enter into the contract of sale through fraudulent or misleading or deceptive conduct. Yet another illustration, like Quinerts, is the case of a negligent valuation of a property that is to be mortgaged to secure a loan. It has been pointed out that in such a case: the interest that a mortgagee seeks to protect by obtaining a valuation "is that, in the event of default, [the mortgagee] should be able to recoup, by sale of the property, the amount owing under the mortgage"; "the risk that recoupment might not be possible ... calls the valuer's duty of care into existence"; "it is the interest in recoupment that is infringed by breach of that duty"; and the time at which "loss occurs (and hence the time when the tort is complete) is when recoupment is rendered impossible"151. The harm caused to the mortgagee by the negligent valuation lies in the inadequacy of its security in the event of non-payment of the loan by the borrower. The non-payment of the loan by the borrower may be the event which crystallises the loss but non- payment of the loan by the borrower does not cause the inadequacy of the security152. Application In the present case, Hunt & Hunt was found to have breached its duty of care to Mitchell Morgan by failing to protect Mitchell Morgan from the fraud of Mr Caradonna and Mr Flammia. Had Hunt & Hunt not breached that duty, 150 Ashbrooke Institute Pty Ltd v Holding Redlich [2010] VSC 579 at [126]. 151 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 424-425 [16]. 152 Cf Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397 at 1413 [33]; [2002] 2 All ER 801 at 816-817, overruling Hurstwood Developments Ltd v Motor & General & Andersley & Co Insurance Services [2002] Lloyds Rep IR Bell Mitchell Morgan would have included a covenant to repay in the mortgage instrument with the result that Mitchell Morgan would have had the security of the mortgage over Mr Vella's property for the money paid into the joint bank account notwithstanding the fraud of Mr Caradonna and Mr Flammia. Mitchell Morgan was worse off as a result of the negligence of Hunt & Hunt because it had no security. Nothing done by Mr Caradonna or Mr Flammia caused that lack of security. The fact that the loan transaction would not have occurred at all but for the fraud of Mr Caradonna or Mr Flammia is not to the point. The New South Wales Court of Appeal was correct to hold in the present case that Mr Caradonna and Mr Flammia were not persons whose acts or omissions caused the economic loss – the lack of security – that was the subject of the claim by Mitchell Morgan against Hunt & Hunt. Hunt & Hunt is not a concurrent wrongdoer. The Victorian Court of Appeal was also correct to reason in Quinerts that the borrower and the guarantor were not persons whose acts or omissions caused the economic loss – the inadequate security – that was the subject of the claim by the bank against the negligent valuer. It is unnecessary to decide whether the same result might have been reached in Quinerts on the basis, suggested by Hunt & Hunt, that the omissions of the borrower and guarantor caused to the bank no "damage or loss" at all within the meaning of the proportionate liability provisions. Whether, and if so in what circumstances, a failure to discharge an obligation to pay under a loan or a guarantee might be said to have caused "damage or loss" to a lender gives rise to potentially complex issues153. They should not be decided tangentially. A separate question about damages? There is before the Court, in addition to the appeal, an application by Hunt & Hunt for special leave to appeal from a separate and subsequent decision of the New South Wales Court of Appeal concerning the assessment of Mitchell Morgan's damages154. The Court of Appeal held that Mitchell Morgan should be compensated for the time value of the amount it paid out on the loan for the period between the date of the loan and the date on which Mitchell Morgan would have first had the opportunity to sell the mortgaged property had the loan been secured by the mortgage. On the basis that a non- negligent solicitor would have drawn the mortgage with a covenant to repay the amount lent with interest at mortgage rates, the Court of Appeal calculated the 153 See Jackson and Powell, Professional Liability, 7th ed (2012) at 132 [4-008]; Howkins & Harrison v Tyler [2001] Lloyd's Rep PN 1. 154 Mitchell Morgan Nominees Pty Ltd v Vella (No 2) [2012] NSWCA 38. Bell amount of that compensation by reference to the rates of interest specified in the loan document prepared by Hunt & Hunt on which Mr Caradonna came to forge Mr Vella's signature. The ground on which Hunt & Hunt seeks special leave to appeal concerns the Court of Appeal's choice of that rate of interest. Hunt & Hunt seeks to argue that the choice is precluded by the "scope of liability" requirement of a section of the Act which states155: "A determination that negligence caused particular harm comprises the following elements: that the negligence was a necessary condition of the occurrence of the harm (factual causation), and that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability)", and which goes on to explain156: "For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party." In circumstances where Mitchell Morgan adduced no evidence that the loss of the use of the money advanced on the loan caused it special loss, Hunt & Hunt seeks to argue that Mitchell Morgan was adequately compensated by the application of the lower statutory rate of interest157. The argument was described in the Court of Appeal, by Macfarlan JA, with whom Sackville AJA agreed, as lacking in substance. His Honour pointed out that Hunt & Hunt "undertook to prepare a mortgage to protect the interests of its client lender" and that "[i]t was fully aware of the terms of the loan transaction, including the interest rates payable, as it drafted the relevant Loan Agreement". In those circumstances, his Honour concluded there was "no reason 155 Section 5D(1) of the Act. 156 Section 5D(4) of the Act. 157 Section 100 of the Civil Procedure Act 2005 (NSW). Bell why its liability should not extend to a loss of interest calculated at the rates contained in that document where that loss was caused by its own negligence"158. That response to the argument was manifestly sound in principle. The point is not simply that the rates of interest set out in the loan document would have been set out in the mortgage instrument but for the negligence of Hunt & Hunt. The point is that the duty of Hunt & Hunt to take reasonable care to protect the interests of Mitchell Morgan required Hunt & Hunt to ensure that the rates of interest set out in the loan document were set out in the mortgage instrument. It is appropriate for the scope of Hunt & Hunt's liability to correspond with the scope of the failure of Hunt & Hunt to perform that duty. Special leave should be refused. Orders The appeal and the application for special leave to appeal should each be dismissed with costs. 158 Mitchell Morgan Nominees Pty Ltd v Vella (No 2) [2012] NSWCA 38 at [16].

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND SHANE DAY RESPONDENT Commissioner of Taxation v Day [2008] HCA 53 12 November 2008 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation D H Bloom QC with K J Deards for the appellant (instructed by Australian Government Solicitor) M L Brabazon with A H Rider for the respondent (instructed by Leitch Hasson Dent Solicitors) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Day Income tax – Allowable deductions – Respondent taxpayer incurred legal expenses in defending charges under the Public Service Act 1922 (Cth) – Income Tax Assessment Act 1997 (Cth) ("ITAA"), s 8-1(1) allowed deductions from assessable income of losses or outgoings incurred "in gaining or producing … assessable income" – Whether legal expenses incurred "in gaining or producing" assessable income – Connection requisite – What is productive of income. Public service – Disciplinary procedures – Standards of conduct required of an "officer" of the Australian Public Service ("the Service") – Role and duties of officer of the Service – Relevance of incidents of public office to whether legal expenses incurred in gaining or producing assessable income. Income tax – Allowable deductions – ITAA, s 8-1(2) provided that losses or outgoings of "private or domestic nature" could not be deducted – Whether legal expenses incurred by respondent of private nature. Words and phrases – "deductibility", "incurred in gaining or producing … assessable income", "in the course of", "legal expenses", "private or domestic nature". Income Tax Assessment Act 1997 (Cth), s 8-1. Public Service Act 1922 (Cth), Pt III, Div 6. GUMMOW, HAYNE, HEYDON AND KIEFEL JJ. The respondent was a senior compliance officer with the Australian Customs Service between 1997 and 1999. The Public Service Act 1922 (Cth), in force at the relevant time1, provided that an officer may be charged with failure to fulfil his duty as an officer2. In that event an inquiry was to be held3, and the officer charged could be suspended from duty pending the hearing and determination of the charge4. The officer holding the inquiry, if satisfied that the charge was made out, could direct that action be taken in relation to the officer the subject of the charge. Such action included deduction of salary, demotion or dismissal from the Australian Public Service5 ("the Service"). The respondent was charged with failure of duty in 1998 ("the first charge") and in 1999 ("the third charges"). A second set of charges notified to the respondent is not relevant to this appeal. The respondent sought and obtained legal advice and representation in connection with the first and third charges (together, "the charges"). In his objection to the Commissioner of Taxation's notice of assessment of his income to taxation, for the year ended 30 June 2002, the respondent claimed that $37,077 should have been allowed as a deduction from his assessable income. That figure represents the balance of the legal expenses incurred by the respondent with respect to the charges, after recovery of costs under an order of the Federal Court with respect to the first charge. On 19 April 2005 the Commissioner disallowed that objection. The respondent appealed to the Federal Court under s 14ZZ(a)(ii) of the Taxation Administration Act 1953 (Cth). Section 8-1(1) of the Income Tax Assessment Act 1997 (Cth) ("the ITAA") provides: "(1) You can deduct from your assessable income any loss or outgoing to the extent that: 1 Repealed by Sched 1 to the Public Employment (Consequential and Transitional) Amendment Act 1999 (Cth). 2 Public Service Act 1922, s 61(2). 3 Public Service Act 1922, s 62(1). 4 Public Service Act 1922, s 63B(1)(d). 5 Public Service Act 1922, s 62(6). it is incurred in gaining or producing your assessable income; or it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: it is a loss or outgoing of capital, or of a capital nature; or it is a loss or outgoing of a private or domestic nature." The primary judge held that the legal expenses incurred with respect to the charges were not deductible within the meaning of sub-s (1)(a), but also held the Commissioner to be estopped from contending that to be the case so far as concerned the expenses relating to the third charges6. The Full Court of the Federal Court, by a majority (Spender and Edmonds JJ, Dowsett J dissenting), allowed the Commissioner's appeal on the issue of estoppel but allowed the respondent's cross-appeal, holding the expenses to have been properly deductible under s 8-1(1)(a), and remitted the matter to the Commissioner for determination according to law7. The focus of this appeal is upon the requirement for deductibility of expenses in s 8-1(1)(a), that they be "incurred in gaining or producing … assessable income". It is the Commissioner's principal contention that the legal expenses were incurred in defending charges of conduct extraneous to the performance of the respondent's income-producing activities and therefore cannot be said to have been incurred in the course of gaining or producing assessable income. The charges Section 56 of the Public Service Act 1922 provided that an officer shall be taken to have failed to fulfil his duty as an officer if and only if: 6 Day v Federal Commissioner of Taxation (2006) 62 ATR 530 at 541-542 [52], 546 7 Federal Commissioner of Taxation v Day (2007) 164 FCR 250. he wilfully disobeys, or wilfully disregards, a direction given by a person having authority to give the direction, being a direction with which it is his duty as an officer to comply; he is inefficient or incompetent for reasons or causes within his own control; he is negligent or careless in the discharge of his duties; he engages in improper conduct as an officer; he engages in improper conduct otherwise than as an officer, being conduct that affects adversely the performance of his duties or brings the Service into disrepute; the officer engages in conduct (including patronage, favouritism or discrimination) in breach of section 33; he contravenes or fails to comply with: a provision of this Act, of the regulations or of a subsection 9(7A) or force under determination section 82D, being a provision that is applicable to him; or the terms and conditions upon which he is employed; or he has, whether before or after becoming an officer, wilfully supplied to an officer or another person acting on behalf of the Commonwealth incorrect or misleading information in connexion with his appointment to the Service." The first charge, notified to the respondent on 23 September 1998 by an authorised officer of the Customs Service, was of improper conduct (s 56(d)). The respondent was suspended from duty. The particulars of that charge were that the respondent had breached the standard of conduct for officers set out in the Customs Code of Ethics and Conduct "Official Identification and Security Items" in that he presented his Customs identification card to a Clerk of the Downing Centre Local Court in New South Wales in order to obtain information with respect to a search warrant which had been executed on the Customs Service on 28 July 1998. The warrant had authorised the Australian Federal Police to search the respondent's workstation and the respondent had attempted, unsuccessfully, to obtain a copy of the search warrant. The officer conducting the inquiry found that it was improper for the respondent to have conveyed that his purpose was official. The inquiry officer directed that the respondent be demoted and his salary consequentially reduced. The respondent exercised his right of appeal to the Disciplinary Appeal Committee8, which found the charge proved, but varied the direction so that the respondent was to be transferred to a position and salary higher than the inquiry officer had directed. In proceedings for judicial review of that decision, brought in the Federal Court, Gyles J found that the Disciplinary Appeal Committee was able to conclude that the conduct of the respondent was conduct of an officer for the purposes of s 56(d) of the Public Service Act 1922, but that the conduct was not improper. His Honour set aside the decision and remitted it to the Committee for hearing according to law9. A Full Court dismissed the Commonwealth's appeal from his Honour's decision10. The Disciplinary Appeal Committee set aside the direction of the inquiry officer and ordered the Commonwealth to pay the respondent's costs. The respondent's other entitlements were restored as a consequence of the decision. The seven charges making up the third set of charges were also referable to conduct described in s 56(d). On notification of these charges the respondent was suspended without salary. Three of the charges related to the respondent's conduct in connection with a claim for a diesel fuel rebate by the partner of another Customs officer. It was alleged that the respondent failed to inform Customs of relevant information, that he had lent the other officer improper support and assistance and that he was knowingly concerned in the creation of a false diary which supported the claim. The fourth charge was that he had secured access to, and acquired the use of, a work vehicle. The use included the collection and transportation of his daughter, by a fellow officer, for a non-work-related purpose. Two further charges involved his actions to conceal his absences from work. On one occasion he had asked a colleague to provide an excuse to his supervisor, to abstain from recording his absence and to switch his computer on. On another he submitted an attendance record which was false. The seventh charge involved a failure to communicate certain information concerning an investigation into an individual. The charges were notified to the respondent on 22 March 1999. The respondent commenced proceedings in the Federal Court on 24 August 1999, in 8 Public Service Act 1922, s 63D. 9 Day v Douglas [1999] FCA 1444. 10 Commonwealth v Day [2000] FCA 474 (Drummond, Whitlam and North JJ). which it was alleged that information contained in telephonic communications, which had been intercepted by the Australian Federal Police as part of a criminal investigation, had been made available to officers of Customs including the officer who gave notice of the third charges, and that that communication was unlawful. He sought orders that the third charges be set aside and that the inquiry under s 62 of the Public Service Act 1922 be stayed, and a declaration. That application11, an appeal to a Full Court12, and an application for special leave to appeal to this Court were refused with costs. The decisions of the Federal Court Emmett J's holding, that the Commissioner was estopped from asserting that the legal expenses incurred by the respondent with respect to the third charges were not deductible, was based upon an order made by the Federal Court in earlier proceedings, to which the Commissioner consented, which allowed a deduction for fees paid to one counsel for legal advice in connection with the third charges. His Honour took the view that the Court must be taken thereby to have determined the deductibility of the other legal expenses referable to those charges13. It is not necessary to consider that aspect of his Honour's reasoning further. The Full Court upheld the Commissioner's appeal in that regard, and the respondent does not seek to raise that aspect of the Court's decision. This appeal is concerned solely with the question of the deductibility of the legal expenses by reference to s 8-1(1). The judges in the Federal Court were divided in their opinions on the issue of deductibility. Dowsett J, in his dissenting judgment in the Full Court, agreed with the primary judge, Emmett J, that the legal expenses were not deductible because the conduct the subject of the charges comprised acts unconnected to the duties to be performed by the respondent in the course of earning assessable income14. The misuse of the respondent's identity card was unrelated to the performance of his duties and none of the conduct referred to in the third charges 11 Day v Commissioner of Australian Federal Police (2000) 96 IR 240. 12 Day v Commissioner, Australian Federal Police (2000) 101 FCR 66. 13 Day v Federal Commissioner of Taxation (2006) 62 ATR 530 at 546 [71]-[72]. 14 Day v Federal Commissioner of Taxation (2006) 62 ATR 530 at 540 [43], 541-542 [52] per Emmett J; Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 259 [52], 267 [73] per Dowsett J. was performed by the respondent in the discharge of his duties as a customs officer15. The majority in the Full Court held that the expenditure was allowable as a deduction but differed in their reasoning to that conclusion. Spender J considered it to be irrelevant whether the conduct the subject of the charges was extraneous to the discharge of his duties16. Because the expression "incurred in gaining or producing … assessable income" is to be given a very wide application17, it was necessary to consider the purpose of defending the charges, his Honour reasoned. The purpose of the respondent was to protect himself from the consequences of s 62(6) of the Public Service Act 1922, and therefore to protect his recurrent employment income from diminution or loss18. Expenditure in defence of a taxpayer's employment satisfies the test in s 8-1(1)(a)19. His Honour's reasoning20 was to the contrary of Emmett J, who considered that the expenses were properly characterised by reference to the activity or conduct that made it necessary to incur the expenses, rather than the object sought to be achieved in the proceedings in which they were incurred. It was therefore not sufficient to say that the proceedings were taken in order to protect one's reputation or keep one's job. Dowsett J was of the same opinion. His Honour considered that it followed from the decision of this Court in Federal Commissioner of Taxation v Payne21, that purpose alone would not suffice to permit allowance of an outgoing as a deduction. 15 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 268 [77], 269 16 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 257 [34]. 17 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 256 [25], citing Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303 per Latham CJ; [1935] HCA 81. 18 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 256 [27]-[28]. 19 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 257 [31]. 20 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 257 [35]. 21 (2001) 202 CLR 93; [2001] HCA 3. The other member of the majority in the Full Court, Edmonds J, referred to the following passage from the majority judgment in Payne22: "The connection which must be demonstrated between an outgoing and the assessable income, in order to fall within the first limb of s 51(1), is that the outgoing is 'incurred in gaining or producing' that income. The subsection does not speak of outgoings incurred 'in connection with' the derivation of assessable income or outgoings incurred 'for the purpose of' deriving assessable income. It has long been established that 'incurred in gaining or producing' is to be understood as meaning incurred 'in the course of' gaining or producing23. What is meant by being incurred 'in the course of' gaining or producing income was amplified in Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation24 where 'to come within the initial part of [s 51(1)] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income.'" In his Honour's view, the test in Ronpibon Tin was helpful in the present case. On that test it was the employment of the taxpayer which was the occasion of the incurrence of the expenditure26. The respondent's performance and observance of the duties of the employment were productive of assessable 22 (2001) 202 CLR 93 at 99 [9] per Gleeson CJ, Kirby and Hayne JJ. 23 Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303 per Latham CJ, 309 per Dixon J; Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 56-57; [1949] HCA 15; Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 at 350; [1956] HCA 77. 24 (1949) 78 CLR 47. See also, eg, John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 426; [1989] HCA 5; Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 17; [1991] HCA 42; Steele v Deputy Commissioner of Taxation (1999) 197 CLR 459 at 467 [22]; [1999] HCA 7. 25 (1949) 78 CLR 47 at 57. 26 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 271 [91], 273 income. Those duties extended to all those duties listed in s 56 of the Public Service Act 1922, non-compliance with which could lead to a charge of misconduct under s 6127. With respect to the charges, the respondent incurred legal expenses defending his performance and the observance of the duties of his employment. Expenditure incurred in defence of either is occasioned by the Special leave to appeal was granted in this matter on the Commissioner's undertaking to pay the costs of the respondent of the appeal and not to seek to disturb the orders for costs in the Federal Court. The Commissioner's argument – s 8-1(1)(a) of the ITAA On the Commissioner's argument, the task to be undertaken under s 8-1(1)(a) is to identify the activity that is productive of assessable income and then to determine whether the outgoing in question can properly be regarded as having been incurred "in the course of" that activity. The argument draws upon references in the majority judgment in Payne to the words "in the course of" as relevant in establishing the requisite connection between expenditure and the activity which is productive of income. The Commissioner submits that expenses of a legal nature have been held deductible where they were necessitated by an activity which was part of, or incidental to, the business of the taxpayer29. An employee's legal expenses, in connection with charges of misconduct, have been held deductible because they reflected the day-to-day aspects of the employment or because the employee could be said to be defending the manner of performance of his duties of employment30. The expenses here in question were incurred in defending conduct outside the performance of the respondent's duties, and cannot be said to 27 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 273 [102]. 28 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 at 274 [104]. 29 Referring to Herald & Weekly Times Ltd v Federal Commissioner of Taxation (1932) 48 CLR 113; [1932] HCA 56; Federal Commissioner of Taxation v Snowden & Willson Pty Ltd (1958) 99 CLR 431; [1958] HCA 23; Putnin v Commissioner of Taxation (1991) 27 FCR 508; Magna Alloys and Research Pty Ltd v Federal Commissioner of Taxation (1980) 33 ALR 213. 30 Referring to Commissioner of Taxation v Rowe (1995) 60 FCR 99 at 109 per Beaumont J, 113 per Burchett J. have been incurred "in" or "in the course of" gaining or producing assessable income for the purposes of s 8-1(1)(a). The Commissioner accepts that the respondent was also under an obligation, imposed by s 56(d) of the Public Service Act 1922, not to engage in improper conduct, but submits that the observance of that duty was not itself an activity which was productive of the respondent's income and was therefore not relevant. The Commissioner submits that a positive obligation to perform tasks of employment is different from one not to engage in certain other conduct, particularly where the conduct proscribed involves private misbehaviour. The Commissioner argues that the dichotomy between conduct undertaken in performance of the tasks for which the respondent was employed and improper conduct in breach of s 56(d) of the Public Service Act 1922, which was rejected by Edmonds J, is a distinction that s 8-1(1)(a) makes necessary. In the Commissioner's submission, the questions arising under the provision cannot be answered by identifying the occasion of the outgoing as the respondent's employment which, in a general sense, was productive of the respondent's income. The Commissioner says that the attention of s 8-1(1) is directed to specific activities which can be said to be productive of assessable income. Consideration of the Commissioner's argument The terms of s 8-1(1)(a) of the ITAA and its predecessors31 have not been regarded as materially different32. They refer to a relationship between expenditure incurred and what is productive of assessable income, which is to say the connection necessary for deductibility33. The words "incurred in gaining or producing … assessable income", appearing in the section, have long been held to mean incurred "'in the course of' gaining or producing" income, as was observed in Payne34. In Amalgamated Zinc (De Bavay's) Ltd v Federal 31 Section 51(1) of the Income Tax Assessment Act 1936 (Cth); s 23(1)(a) of the Income Tax Assessment Act 1922 (Cth). 32 Federal Commissioner of Taxation v Citylink Melbourne Ltd (2006) 228 CLR 1 at 30 [90] per Crennan J; [2006] HCA 35. 33 Payne (2001) 202 CLR 93 at 99-101 [9]-[13] per Gleeson CJ, Kirby and Hayne JJ, 112 [51] per Gaudron and Gummow JJ. 34 (2001) 202 CLR 93 at 99 [9] per Gleeson CJ, Kirby and Hayne JJ (emphasis added), referring to Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303 per Latham CJ, 309 per Dixon J; (Footnote continues on next page) Commissioner of Taxation35, Latham CJ explained that it was necessary to read "losses and outgoings … incurred in gaining or producing the assessable income" as incurred "in the course of" gaining or producing that income, in order to make the section36 intelligible. Outgoings may have an effect in gaining income, but losses cannot, as they simply reduce income37. In Commissioner of Taxation v Cooper38 Hill J observed that an outgoing might be referable to a year of income other than that in which it was incurred39. That was a reason why s 51(1) of the Income Tax Assessment Act 1936 (Cth) did not express the right to a deduction in terms of outgoings incurred to earn income40. The words "in the course of" therefore facilitate the application of s 8-1(1)(a). They do not require a direct connection between the expenditure in question and an activity itself productive of income. Dixon J in Amalgamated Zinc said that the expression "incurred in gaining or producing the assessable income" should be given a very wide application41, although in that case the taxpayer company's continuing liability to pay monies to a compensation fund for miners it had employed lost any connection to assessable income when its business ceased. In Payne the majority confirmed that the words require more than a causal connection between the expenditure and the derivation of income; something closer and more immediate. The expenditure must be incurred "in the course of" gaining or producing the assessable income42. Their Honours' reference to the words "in the course of" Ronpibon Tin (1949) 78 CLR 47 at 56-57; Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 at 350. 35 (1935) 54 CLR 295. 36 Section 23(1)(a) of the Income Tax Assessment Act 1922 (Cth). 37 Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303 per Latham CJ. 38 (1991) 29 FCR 177. 39 (1991) 29 FCR 177 at 197, referring to Federal Commissioner of Taxation v Smith (1981) 147 CLR 578; [1981] HCA 10. 40 Commissioner of Taxation v Cooper (1991) 29 FCR 177 at 197. 41 (1935) 54 CLR 295 at 309. 42 Payne (2001) 202 CLR 93 at 101 [13] per Gleeson CJ, Kirby and Hayne JJ. should not be taken to suggest a closer or more direct connection between expenditure and that which is productive of assessable income than the words of the provision43 themselves convey. Rather the words draw attention to the connection made necessary by the provision, which the majority considered on the facts of that case to be too remote. Payne was concerned with expenses incurred by the taxpayer in travelling between his place of employment as a pilot and between the place where he conducted a deer farm. The majority held that the expenditure was not incurred in the course of either income-producing activity. Adapting the language of Ronpibon Tin, their Honours held that neither the taxpayer's employment nor the conduct of the business of a deer farm occasioned the outgoings for travel expenses. Rather they were occasioned by the need for the taxpayer to be in a position where he could set about the tasks from which income would be derived44. The expenditure was incurred in the interval between income-earning activities45. In Cooper, Hill J referred to an outgoing which preceded an income-earning operation or activity and which came at a point too soon to be an incident of, or relevant to, that activity. His Honour described the expenditure as referable to getting the work, rather than doing it46. The facts in Payne and Cooper are far removed from this case. It may also be observed that no issue arose in those cases concerning what tasks or duties are encompassed in what is productive of assessable income, as it does here. The references in those cases to the taxpayer's activities were to all that might be encompassed in an income-producing business or employment, not to discrete tasks. Those cases were concerned with the degree of connection to such a business or employment necessary for an expense to be deductible. The Commissioner also sought support from cases which had dealt with the deductibility of legal expenses – being payments for legal services or of awards for damages – for both the closeness of the connection for which he contended and the identification of that which might be considered to be a necessary part of a business or employment. 43 Section 51(1) of the Income Tax Assessment Act 1936 (Cth). 44 Payne (2001) 202 CLR 93 at 102 [14] per Gleeson CJ, Kirby and Hayne JJ. 45 Payne (2001) 202 CLR 93 at 102 [15] per Gleeson CJ, Kirby and Hayne JJ. 46 Cooper (1991) 29 FCR 177 at 198. In Herald & Weekly Times Ltd v Federal Commissioner of Taxation47 it was held that a newspaper publisher's liability for defamation had the necessary connection to the business, publication being the common source of both revenue and the liability which gave rise to the expenditure48. McTiernan J observed that only cessation of business would free the business from such expenditure49. Gavan Duffy CJ and Dixon J distinguished the case from others by reference to the degree of connection present between the business carried on and what gave rise to the liability for damages50. Their Honours referred to statements by Lord Loreburn LC in Strong & Co v Woodifield51 that such losses can be deducted as are connected with the business, in the sense that they are really incidental to the trade itself. The illustration provided by his Lordship was the deductibility of losses sustained by a railway company in compensating passengers for accidents whilst travelling with the railway. On the other hand injury caused to a man walking in the street by a window shutter falling from a house associated with a grocer's shop would not be deductible as an expense of the grocery business. And, as his Lordship observed, there will be cases at the margin52. Expenses of advertising, to counter press reports, and legal costs before a Royal Commission incurred by a company the subject of allegations as to its business practices were held to be deductible in Federal Commissioner of Taxation v Snowden & Willson Pty Ltd53. Dixon CJ there identified the carrying on of the business as the source of the attacks and said that the taxpayer company "could do nothing else but defend itself, if it was to sustain its business"54. And 47 (1932) 48 CLR 113. 48 (1932) 48 CLR 113 at 119 per Gavan Duffy CJ and Dixon J, 121 per Rich J. 49 Herald & Weekly Times Ltd v Federal Commissioner of Taxation (1932) 48 CLR 50 Herald & Weekly Times Ltd v Federal Commissioner of Taxation (1932) 48 CLR 51 [1906] AC 448 at 452. 52 Strong & Co v Woodifield [1906] AC 448 at 452. 53 (1958) 99 CLR 431. 54 Federal Commissioner of Taxation v Snowden & Willson Pty Ltd (1958) 99 CLR in Magna Alloys and Research Pty Ltd v Federal Commissioner of Taxation55, a case concerned more with the relevance of a taxpayer's subjective purpose in relation to the expenditure, the legal expenses paid by the company for the defence of its directors from criminal charges, relating to the receipt of secret commissions, were held deductible because they were incurred in carrying on the business56. It may be thought that the directors' conduct there had qualities which might take it outside the scope of their proper tasks as directors. Nonetheless the connection with the taxpayer's business and the production of income is apparent. Closer to the position of an employee are the decisions in Commissioner of Taxation v Rowe57 and Shokker v Commissioner of Taxation58. In Rowe a shire engineer incurred legal expenses connected with an inquiry into complaints of his misconduct. A Full Court of the Federal Court held the expenses allowable as a deduction, but for reasons which differed in their identification of the connection with the taxpayer's employment. Beaumont J considered that it lay in the inquiry being concerned with the day-to-day aspects of his employment59; Burchett J because they were expended defending the manner in which he had performed his duties60; and Drummond J because they were incurred to preserve his existing contract of employment so that he could retain the recurrent benefit of his salary61. In Shokker62 an employee of the Commissioner of Taxation had been charged with a criminal offence, in relation to his claim for sick leave in his employment. Drummond J considered that the factors that the charge was instigated by the employer, and that it could result in his dismissal, were matters 55 (1980) 33 ALR 213. 56 Magna Alloys and Research Pty Ltd v Federal Commissioner of Taxation (1980) 33 ALR 213 at 225 per Brennan J, 238-239 per Deane and Fisher JJ. 57 (1995) 60 FCR 99. 58 (1999) 92 FCR 54. 59 Rowe (1995) 60 FCR 99 at 109. 60 Rowe (1995) 60 FCR 99 at 113, 114. 61 Rowe (1995) 60 FCR 99 at 116, 117. 62 (1999) 92 FCR 54. to be taken into account in determining whether the necessary connection was present63. Expressions used in the cases, such as "incidental and relevant", as referable to a business, should not be thought to add more to the meaning of provisions such as s 8-1(1)(a) of the ITAA, or to narrow its operation. They should be taken to describe an attribute of an expenditure in a particular case, rather than being an exhaustive test for ascertaining the limits of the operation of the provision64. Reference in some cases to the expenditure having an "essential characteristic" must likewise be treated with some care. As Gaudron and Gummow JJ observed in Payne, the use of the term may avoid the evaluation which the section requires65. It is perhaps better understood as a statement of conclusion than of reasoning. Section 8-1(1)(a) is couched in terms intended to cover any number of factual and legal situations in which expenditure is incurred by a taxpayer. Its language and breadth of application do not make possible a formula capable of application to the circumstances of each case66. Cases are helpful to show the connection found on the facts there present, but not always to explain how the search for the requisite connection is to be undertaken. Payne directs attention to the statement made in Ronpibon Tin, as to the question posed by a provision such as s 8-1(1)(a), as correct and appropriate to be applied. The question, as restated in Payne, is: "is the occasion of the outgoing found in whatever is productive of actual or expected income?"67 That inquiry will provide a surer guide to ascertaining whether a loss or expenditure has been "incurred in [the course of] gaining or producing … assessable income". 63 Shokker (1999) 92 FCR 54 at 62 [27]. 64 Lunney v Commissioner of Taxation (1958) 100 CLR 478 at 497 per Williams, 65 (2001) 202 CLR 93 at 110-111 [45]-[48], citing Professor Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting 66 See Lunney v Commissioner of Taxation (1958) 100 CLR 478 at 495-496 per Williams, Kitto and Taylor JJ. 67 (2001) 202 CLR 93 at 100 [11]. Essential to the inquiry is the determination of what it is that is productive of assessable income. The dichotomy to which the Commissioner's argument refers, that between proper conduct and that which is proscribed, may pose some difficulty in the delineation of tasks which the Commissioner would describe as falling within or without the scope of a person's occupation. The present case furnishes an example. It is not clear where the Commissioner would place expenses incurred with respect to charges of inefficiency, incompetence or negligence under s 56 in the carrying out by an officer of ordinary day-to-day tasks. It is not necessary to consider further the difficulties inherent in this aspect of the Commissioner's argument. The dichotomy may be relevant in other spheres of the law, but is not useful to determine the question arising under s 8-1(1)(a), as to what it is that is productive of a person's assessable income. It does little more than characterise conduct by reference to wrongdoing. In some cases a reference to conduct which is wrongful may be to that which is remote from a person's occupation. In others, such as the present case, it will be to that which is a breach of a duty imposed by the employment itself. A determination as to what is productive of assessable income in a particular case may need to take account of any number of positive and negative duties to be performed or observed by an employee or other salary-earner. It is that determination which provides the answer as to whether the occasion is provided for the expenditure in question. That no narrow approach should be taken to the question of what is productive of a taxpayer's income is confirmed by cases which acknowledge that account should be taken of the whole of the operations of the business concerned in determining questions of deductibility68. A similar approach should be taken to what is productive of a salary-earner's income, whether it be described as employment or by reference to a bundle of tasks to be performed and duties to be observed. In some cases those duties to be observed may extend beyond what is contained in a contract of employment. In Cooper, Hill J, referring to the statement in Ronpibon Tin, observed that it will often be necessary to analyse with some care the operations or activities regularly carried on by the taxpayer69, 68 Amalgamated Zinc (1935) 54 CLR 295 at 309 per Dixon J; W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 at 307 per Dixon J; [1937] HCA 9; Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 at 349-350. 69 (1991) 29 FCR 177 at 198. and Lockhart J referred to the need to have regard to the terms and conditions of a taxpayer's employment70. A reference to the "day-to-day" activities undertaken by a taxpayer may not be a sufficient description of what their position involves. So, in Commissioner of Taxation v Finn71 expenses of a senior design architect in the public service incurred in travelling in order to improve the taxpayer's knowledge were considered in the context of his employment by the government in accordance with his conditions of service72, and as referable to his prospects of promotion73. The essential difficulty with the Commissioner's argument in this case is that it does not fully recognise the scope of the respondent's role as an officer of the Public Service and what his office exposed him to. The Public Service and the Public Service Act 1922 The incurring of legal expenses with respect to charges against an officer of the Service for failure of duty must be considered in the context of the special position which such an officer holds, the extent of the duty owed by the officer and the legislative provision for the enforcement and regulation of such duty. The public service legislation in Australia has served and serves public and constitutional purposes as well as those of employment, as Finn J observed in McManus v Scott-Charlton74. Such legislation facilitates government carrying into effect its constitutional obligations to act in the public interest75. For reasons of that interest and of government the legislation contains a number of strictures and limitations which go beyond the implied contractual duty that would be owed to an employer by many employees. In securing values proper to a public service, those of integrity and the maintenance of public confidence in that integrity, the legislation provides for the regulation and enforcement of the private conduct of public servants76. This extension, to what might be called 70 (1991) 29 FCR 177 at 182. 71 (1961) 106 CLR 60; [1961] HCA 61. 72 (1961) 106 CLR 60 at 67 per Dixon CJ. 73 (1961) 106 CLR 60 at 65-66 per Dixon CJ. 74 (1996) 70 FCR 16 at 24. 75 McManus v Scott-Charlton (1996) 70 FCR 16 at 24, referring to Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86 at 191. 76 McManus v Scott-Charlton (1996) 70 FCR 16 at 25. private conduct, was evident in s 56(d) and (e) of the Public Service Act 1922, which provided that an officer may be taken to have "failed to fulfil his duty as an officer" if he engages in improper conduct as an officer or in improper conduct otherwise than as an officer, in the latter case the conduct "being conduct that affects adversely the performance of his duties or brings the Service into disrepute". It is noteworthy that in McManus Finn J rejected as untenable, as a generalisation, the submission that the only limiting directions that could be given to a public servant were those which have a nexus with the performance of The chief object of the Public Service Act 1922 was "to constitute a public service for the efficient, equitable and proper conduct, in accordance with sound management practices, … of the public administration of the Australian Government"78. The provisions relating to disciplinary action were referable to the maintenance of those standards of conduct. An "employee" was defined by the Act, but the definition of an "officer" did not include an employee79, whose position and terms and conditions of employment were dealt with elsewhere in the Act80. Part III, Div 6 of the Act was concerned with the discipline of officers of the Service. It provided, in s 55, that "misconduct", in relation to an officer, meant a failure of the officer to fulfil his81 duty as an officer. Subdivision C was referable to disciplinary action with respect to officers other than Secretaries of Departments. Section 61(2) of the Subdivision provided for the bringing of charges against such an officer by an officer authorised by the relevant Secretary82. Section 62(1)-(5) provided for the 77 (1996) 70 FCR 16 at 25. 78 Section 6. Similar objects are stated in the current public service legislation. Whilst it does not refer to the bringing of charges, it provides for a Code of Conduct and a range of sanctions consequent upon its breach: see ss 13, 28 and 29 of the Public Service Act 1999 (Cth). 79 Public Service Act 1922, s 7. 80 Part III, Divs 10 and 10A. 81 The language of the Act. 82 The hearing of such charges does not involve the judicial power of the Commonwealth: see, eg, Medical Board of Victoria v Meyer (1937) 58 CLR 62 at 105 per Evatt J; [1937] HCA 47. See also Comptroller-General of Customs v Disciplinary Appeal Committee (1992) 35 FCR 466 at 474 per Gummow J; (Footnote continues on next page) holding of an inquiry into the charge, by an officer other than the officer who gave notice of the charge, and for the procedures to be undertaken and applied to statements before the inquiry officer. Where the inquiry officer was satisfied that there had been a failure, on the part of the officer, to fulfil his duty, sub-s (6) provided that he be counselled or that other action be taken. That action extended to admonition83; the deduction of a sum from salary84; reduction of salary85; transfer, with or without deduction of a sum from salary86; transfer to an office with reduction of salary for a period87; and transfer to a specified office at a lower classification88. The power exercised by the inquiry officer extended to dismissal89. In the period during which the hearing of the charge was undertaken, the officer charged might be subject to a directive that he be suspended from duties, if the relevant Secretary was of the opinion that it would be prejudicial to the effective operation of the Service, and to the interests of the public, if the officer was to continue to perform his duties90. An appeal to a Disciplinary Appeal Committee was provided by s 63D. The occasion of the respondent's legal expenses The respondent's position as an officer subject to the Public Service Act 1922 obliged him to observe standards of conduct extending beyond those in the performance of tasks associated with his office and exposed him to disciplinary R v White; Ex parte Byrnes (1963) 109 CLR 665 at 670-671 per Dixon CJ, Kitto, Taylor, Menzies and Windeyer JJ; [1963] HCA 58; Kariapper v Wijesinha [1968] AC 717 at 737-738 per Sir Douglas Menzies, delivering the judgment of the Board. 83 Public Service Act 1922, s 62(6)(a)(i). 84 Public Service Act 1922, s 62(6)(a)(ii). 85 Public Service Act 1922, s 62(6)(a)(iii). 86 Public Service Act 1922, s 62(6)(a)(iv) and (v). 87 Public Service Act 1922, s 62(6)(a)(vi). 88 Public Service Act 1922, s 62(6)(a)(vii). 89 Public Service Act 1922, s 62(6)(b). 90 Public Service Act 1922, s 63B. procedures within the Service which might have consequences for the retention of his office or his salary. What was productive of his income must be understood in this light. It is neither realistic nor possible to excise from the scope of the respondent's service as an officer elements which may be associated with tasks and so identify them as income-producing. What was productive of his income by way of salary is to be found in all the incidents of his office in the Service to which the Act referred, including his obligation to observe standards of conduct, breach of which might entail disciplinary charges. The respondent's outgoings, by way of legal expenses, followed upon the bringing of the charges with respect to his conduct, or misconduct, as an officer. He was exposed to those charges and consequential expenses, by reason of his office. The charges cannot be considered as remote from his office, in the way that private conduct giving rise to criminal or other sanctions may be91. It was necessary for the respondent to obtain legal advice and representation in order to answer the charges and to preserve his position, in the same way that the company in Snowden & Willson92 was obliged to act defensively. Whether the charges were well-founded, a fact which had not been established by the time the Full Court determined this matter, is not relevant to the question of deductibility93. The incurring of expenditure by an employee to defend a charge because it may result in his or her dismissal may not itself be sufficient in every case to establish the necessary connection to the employment or service which is productive of income. Much will depend upon what is entailed in the employment and the duties which it imposes upon an employee. In the present case the requisite connection is present. Purpose In many, if not most, cases the objective relationship between an expenditure and that which is productive of income will provide a sufficient answer to the inquiry posed by the section94. In many cases questions as to a taxpayer's motives, beyond what may be the outcome sought, may introduce an 91 See Herald & Weekly Times Ltd v Federal Commissioner of Taxation (1932) 48 CLR 113 at 120. 92 (1958) 99 CLR 431. 93 See Federal Commissioner of Taxation v Snowden & Willson Pty Ltd (1958) 99 CLR 431 at 436. 94 Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 18 per curiam. unnecessary evidentiary complication into the statutory inquiry. In Finn Dixon CJ left open the question whether motive might be relevant95. In Magna Alloys Brennan J considered that the reference in some of the cases to a taxpayer's state of mind should not be taken as a statement of what the section required, but rather as an observation upon the evidence96. However Fletcher v Federal Commissioner of Taxation accepts that it may be relevant in the context of a voluntary expenditure97. In such a circumstance explanation may be seen as necessary. In most cases the reason for the expenditure will be apparent and it will not be necessary to inquire further. The question whether the expenditure has been incurred "in gaining or producing" income will look to the scope of the operations or activities and their relevance to expenditure, rather than to a taxpayer's reason for the expenditure98. In the present case it does not assume importance. Conclusion The respondent's duties as an officer of the Service, and the possible consequences to him of internal disciplinary proceedings and action with respect to the continuation or termination of his service, form part of what was productive of his assessable income in that capacity. Applying the inquiry as to connection posed by the section, as explained by Ronpibon Tin, the occasion of the legal expenses is to be found in his position as an officer. It follows that the expenses were properly allowable as deductions. Much of the expense incurred with respect to the third charges was associated with the respondent's pre-emptive legal challenge to the evidentiary basis for those charges. It was not contended by the Commissioner that the expenses were remote from the charges so that they could not qualify for deductibility on that account. Consideration of the respondent's position as an officer of the Service also provides the answer to the Commissioner's remaining contention, which relies upon the terms of s 8-1(2)(b) of the ITAA. The expenses cannot be viewed as of 95 (1961) 106 CLR 60 at 67. 96 (1980) 33 ALR 213 at 217. 97 (1991) 173 CLR 1. 98 Amalgamated Zinc (1935) 54 CLR 295 at 309. a private nature, in the way that some fines and penalties unconnected to a person's service may be. Orders The appeal should be dismissed and the Commissioner pay the respondent's costs, on the Commissioner's undertaking to do so. Kirby KIRBY J. Mr Shane Day (the respondent) was an officer of Customs and of the Australian Public Service ("the Service"). He claimed that certain legal expenses incurred by him, in defending disciplinary charges brought against him pursuant to the provisions of the Public Service Act 1922 (Cth) ("the PSA")99, were deductible from his taxable income for the relevant tax years. The Commissioner's assessment of the taxable income allowed no such deduction. The respondent's objection to the assessment was disallowed. He then "appealed" to the Federal Court of Australia100. At first instance, the primary judge (Emmett J) found, in substance, that the expenses were not deductible101. On further appeal to the Full Court of the Federal Court, a majority102 allowed the appeal and held that the expenses were deductible. Orders were made that the matter be returned to the Commissioner for re- determination according to law. By special leave, the Commissioner appeals to this Court. A majority of this Court has concluded that the respondent's legal expenses were deductible and hence that the appeal should be dismissed. Consistently with what I take to be the meaning and purpose of the provisions of s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the ITAA"), and the authority of this Court in Federal Commissioner of Taxation v Payne103, it is my opinion that the appeal should be allowed and the decision of the primary judge restored. The meaning of the word "in" The outcome of this appeal turns on the meaning and application of the preposition "in" appearing in s 8-1(1)(a) of the ITAA. It is not unusual for large 99 The provisions have been repealed by Sched 1 to the Public Employment (Consequential and Transitional) Amendment Act 1999 (Cth). 100 Taxation Administration Act 1953 (Cth), s 14ZZ(a)(ii). 101 Day v Federal Commissioner of Taxation (2006) 62 ATR 530. There was a complication based on a conclusion of the primary judge that the Commissioner was estopped from alleging that charges incurred in the 2001 taxation year were deductible. That conclusion was unanimously reversed by the Full Federal Court. It is not in issue in this Court. 102 Federal Commissioner of Taxation v Day (2007) 164 FCR 250 (Spender and Edmonds JJ; Dowsett J dissenting). 103 (2001) 202 CLR 93; [2001] HCA 3. Kirby questions of frequent legal application to depend upon such little words104. When such problems arise, where the Parliament has packed into a single word the operation of legislation in multiple circumstances, it is to be expected that courts will endeavour to elaborate and explain the operation of the word for the benefit of later decision-makers. Courts will proffer "principles" and synonyms in an endeavour to ensure that the legislation is applied consistently, so as to achieve its imputed parliamentary purposes105. In their particular applications of the word, and of such "principles" and synonyms, courts and other decision-makers will sometimes differ when considering new factual situations. In the uncontested facts of this case, it cannot be said that the respondent incurred his legal expenses "in" (in the sense of "in the course of") gaining or producing his assessable income. The matters giving rise to his expenditure on legal expenses lacked the requisite temporal or other connection with gaining or producing his assessable income106. The conduct of the taxpayer that gave rise to the necessity of legal expenses was "quite beyond anything contemplated as being involved in the taxpayer's duties"107. Alternatively, the expenditure was a loss or outgoing of a private nature. The Commissioner was therefore correct in deciding that the expenses were not deductible. The Full Court erred in concluding otherwise. incurring The facts and legislation The background facts of this case are explained in the reasons of Gummow, Hayne, Heydon and Kiefel JJ ("the joint reasons")108. In considering those facts it is necessary to appreciate that, in some cases, conduct contrary to express or implied prohibitions in a contract of service or (as here) contrary to the provisions of s 56 of the PSA109 (as then applying) will nonetheless be "closely 104 For example, the preposition "by" in s 82 of the Trade Practices Act 1974 (Cth). See eg Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 645 [53] of my reasons, 653 [79] per Callinan J; [2005] HCA 69. 105 cf Federal Commissioner of Taxation v Payne (2001) 202 CLR 93 at 105 [24]. 106 cf Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 310 per Dixon J; [1935] HCA 81. The passage is cited by Dowsett J in Day (2007) 164 FCR 250 at 262 [58]. 107 (2007) 164 FCR 250 at 269 [84] per Dowsett J. 108 Joint reasons at [2], [6]-[10]. 109 PSA, s 56, set out in the joint reasons at [6]. Kirby connected to the performance of particular duties so that the infringing conduct may accurately be so described"110. the Service into disrepute113; patronage, This would most obviously be so where the alleged infringements of the officer, as charged, amounted to inefficiency or incompetence111; negligence or carelessness112; improper conduct that affects adversely the performance of duties or brings favouritism or discrimination114; failure to comply with provisions of the Act or terms and conditions of employment115; or the provision of incorrect or misleading information in connection with the appointment to the Service116. Even particular cases of wilful disobedience or wilfully disregarding directions given by a person in authority might conceivably, to an inappropriate way of endeavouring to perform duties having a relevant connection with the duties of an officer in the Service. in some circumstances, amount In the present case, however, as Emmett J recorded at first instance, the respondent did not suggest that any of the conduct that led to the charges involved the performance by him of his duties and functions as a Customs officer117. This conclusion, unchallenged in the appeals (including before this Court), throws light on the statutory characterisation of the legal proceedings initiated by the respondent, in which he incurred the legal expenses for which he claims deduction. In this as in other cases the facts are crucial. They require the application of the ITAA so as to fulfil its purposes. They demand that a conclusion which seems factually odd or unlikely (especially one that appears grounded in a construction that favours a special group of taxpayers, viz officers of the Service) should be carefully measured against the criteria expressed in the legislation, as explained in earlier decisions. 110 (2007) 164 FCR 250 at 267 [73]. 111 PSA, s 56(b). 112 PSA, s 56(c). 113 PSA, s 56(d) and (e). 114 PSA s 56(ea). 115 PSA, s 56(f). 116 PSA, s 56(g). 117 Noted (2007) 164 FCR 250 at 269 [82] per Dowsett J. Kirby The charges The 1998 charge ("the first charge"), brought pursuant to s 61(2) of the PSA, concerned a particularised breach of the Customs Code of Ethics and Conduct ("the Code") applicable to "official identification and security items". This charge related to an allegation that the respondent had presented his Customs identification card in order to gain access to an officer of the Local Court of New South Wales. The purpose of such use was to obtain information about a search warrant of interest to the respondent personally which had been executed on the Service in July 1998. It was uncontested that this conduct did not involve the performance of any of the respondent's duties or functions as a Customs officer. Self-evidently, to misuse a Customs identification card in such a way and for personal purposes (which did not, in the event, succeed) was seriously "improper conduct" on the part of the respondent. Save for a possible approach that will shortly be mentioned118, the undisputed circumstances that occasioned the subsequent legal representation of the respondent had nothing to do with the gaining or producing of his assessable income. The costs of the legal representation were thus incurred in defending the respondent from charges arising out of personal and extraneous conduct, not in the course of income-producing conduct of any kind. So far as the 1999 charges ("the third charges") are concerned, the position was the same. Those charges were, in every particular, related to the defence of the respondent upon charges that in no way constituted a misguided, foolish or even stupid mode of performing his employment duties or functions as an officer of the Service. In a similar way (subject to what follows), if the circumstances of the third charges are relevant to throw light on whether the resulting legal defence of the respondent was a loss or outgoing incurred by him in the course of gaining or producing his assessable income, the only conclusion on the uncontested facts was that the legal expenses exhibited an "entire lack of connection between the assessable income and the expenditure"119: Three of the seven charges in the third charges related to false claims allegedly lodged by the respondent for a diesel fuel rebate made by the partner of a Customs officer. It was contended that the respondent had lent improper support and assistance in relation to such claims; had failed 118 These reasons, below at [70]-[74]. 119 cf Amalgamated Zinc (1935) 54 CLR 295 at 310 per Dixon J. Kirby to inform the Service of the false claims; and was knowingly concerned in creating a diary entry in connection with a later audit of the claims; The fourth charge in the third charges was that the respondent secured access to, and organised the use of, a work vehicle for a non-work-related purpose; The fifth charge was that the respondent signed and submitted a Customs Attendance Record which he knew to be false; The sixth charge was that the respondent took steps to mislead the Service into believing that he had attended work on a day on which he did not in fact attend work; and The seventh charge was that the respondent failed to inform his employer of matters relating to an investigation into a suspect, in circumstances where the respondent knew, or ought to have known, that the matters could be relevant to that investigation. The third charges, so described, arose out of a criminal investigation undertaken by the Australian Federal Police (AFP) which involved the interception of telephonic communications with the respondent120. Transcripts of the intercepted communications had been provided by the AFP to the Service for use in connection with the investigation into the events leading to the charges. That step resulted in the charges against the respondent, giving rise to an inquiry under s 62 of the PSA. The legal proceedings in respect of which the professional fees were incurred were designed to secure a declaration that the provision of the transcripts to, and their use by, the Service were unlawful. Effectively, the respondent sought a decision excluding their use. He also claimed damages for the alleged unlawfulness121. Given the circumstances that gave rise to the charges occasioning the legal proceedings and representation, the fact that the respondent did not suggest that any of this conduct involved the performance by him of his duties as a Customs Officer is not surprising. On the face of things, the respondent was defending only his personal conduct and position. There was no arguable, or even conceivable, connection of any of the circumstances in the third charges to the respondent's performance of his income-producing activities for the Service. 120 (2006) 62 ATR 530 at 535. 121 (2006) 62 ATR 530 at 536. Kirby Whilst a defence along the lines undertaken was the respondent's right as a citizen and an accused, the consequential expenses were not incurred by the respondent in the course of the gaining or producing of his assessable income. The only real connection with the respondent's activities in the Service was so far as the legal representation might succeed in excluding the telephonic interception evidence, or otherwise defend the respondent's entitlement to continue receiving future income from the Service, and to avoid termination or other income- reducing consequences of his conduct. The legislation The relevant provisions of s 8-1 of the ITAA are set out in the joint reasons122. The critical words, presented by the alternative ways in which the Commissioner argued this appeal, state: "(1) You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income; or (2) However, you cannot deduct a loss or outgoing under this section to the extent that: it is a loss or outgoing of a private or domestic nature". These paragraphs express both the "positive" and "negative" limbs of the deductibility provisions. Those features were present in the language of the predecessor provision, namely s 51(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). It was common ground that there was no material difference between the succeeding provisions of the two statutes. The authorities on s 51(1) of the 1936 Act are available to help elucidate the meaning of s 8-1 of the ITAA. The joint reasons describe the relevant provisions of the PSA and the Code123. There is no need for me to repeat any of these provisions. 122 Joint reasons at [3]. 123 Joint reasons at [6]-[7]. Kirby The decisional history The joint reasons also explain the history of the litigation in which the respondent became embroiled, once he faced the successive charges of failure to fulfil his duties as an officer of the Service124, including the decisions of the judges of the Federal Court, both at first instance and on appeal125. It is unnecessary for me to repeat that chronicle. Essentially, the majority in the Full Court of the Federal Court concluded that the legal expenses claimed by the respondent were of the requisite positive character to allow deductibility from the respondent's assessable income under s 8-1(1)(a) of the ITAA and lacked the negative characteristics mentioned in the disqualifying provisions of s 8-1(2)(b) of the ITAA. However, the judges in the majority in the Full Court of the Federal Court reached their respective conclusions by different lines of reasoning. The presiding judge, Spender J, explained his reasons without referring to the most recent decision of this Court in Payne's case126 on the ambit of deductibility. Edmonds J, on the other hand, referred to and extracted, passages from Payne's case at the forefront of his reasons127. Correctly, he accepted that it was necessary for the respondent, in order to establish deductibility, to bring his case within the reasoning of the majority in Payne. In the result, Edmonds J concluded this could, and should, be done. He said128: "[T]he test for deductibility of legal expenses is not whether the employee's conduct of activity that resulted in the need to take defensive proceedings was conduct or activity engaged in for the purpose of producing assessable income …; rather, as explained in Payne, it is whether the expenditure was incurred in the course of gaining or producing the assessable income, in the sense that the occasion of the expenditure is to be found in what is productive of assessable income. … [I]t is the taxpayer's employment which is the occasion of the expenditure and the taxpayer's performance and observance of the duties of that employment is undoubtedly productive of assessable income. 124 Joint reasons at [7]-[10]. 125 Joint reasons at [11]-[17]. 126 (2001) 202 CLR 93. 127 (2007) 164 FCR 250 at 270 [88]-[89]. 128 (2007) 164 FCR 250 at 273-274 [101]-[102], [105] (citations omitted). Kirby … In the case of defensive expenditure such as the legal expenses incurred here, it is the 'occasion' of the incurrence of these expenses which is determinative, rather than the identification of the antecedent activities which gave rise to the proceedings and the bifurcation of those activities into duties of performance, expenditure on the defence of which is deductible, and duties of observance, expenditure on the defence of which is not deductible." Although in his reasons at first instance Emmett J did not specifically refer to Payne his general approach was, in my view, consistent with the analysis of this Court in that case129. In the Full Court, Dowsett J, in his dissent, also placed Payne at the forefront of his reasons130. He affirmed the duty to apply Payne to the extent that it was, or might appear to be, different from earlier authority of this Court131 or other and different authority in the Federal Court132. The issues From the foregoing, it follows that two issues are presented to this Court. They concern whether the Full Court erred in upholding the respondent's claim to the deductibility of legal expenses he incurred in defending himself against the first and third charges: By concluding that such legal expenses were a loss or outgoing "incurred in gaining or producing [his] assessable income"; or By deciding that such loss or outgoing was not of a "private or domestic nature". A cross-appeal, raising a different issue, originally propounded by the respondent was not ultimately pressed133. 129 It should be noted that Emmett J was not referred in argument to this Court's decision in Payne. 130 (2007) 164 FCR 250 at 266-267 [70]-[73]. 131 (2007) 164 FCR 250 at 264 [62] referring to W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 at 304-305, 308; [1937] HCA 9. 132 See eg W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 133 See also joint reasons at [11]. Kirby The common applicable principles I agree with many of the principles referred to in the joint reasons. Thus, I agree that: The governing obligation of the decision-maker is to give effect to s 8-1 of the ITAA, specifically, by reference to sub-s (1)(a) and sub-s (2)(b). The foundation for the resolution of all questions presented by the law, when expressed in legislation, is the legislation. For the sake of consistency it is proper and natural that courts and administrators will examine earlier decisions involving the application of the legislation, in order to endeavour to arrive at compatible conclusions in analogous circumstances. However, the essential duty is to apply the law as enacted by the Parliament134. This requires scrutiny of the enacted words in their context and in the light of any relevant considerations of history or of legislative purpose135; the course of explaining the outcomes in succeeding factual circumstances, courts have sometimes offered synonyms, explanations and suggested tests or "principles" for applying the statute to the case in hand. Such endeavours, however well meaning, have to be approached with care136. The decision-maker is ultimately driven back to the application of the statutory test, rather than judicial or other reasoning; (3) Given the very large variety of circumstances to which the abbreviated language of s 8-1 of the ITAA needs to be applied, it remains the case that "[a] very wide application should be given to the expression 'incurred in gaining or producing the assessable income'"137; 134 See eg Central Bayside General Practice Association Ltd v Commissioner of State Revenue (Vic) (2006) 228 CLR 168 at 198, fn 86 and cases there cited; [2006] HCA 43. 135 eg CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112-113; [1997] HCA 53; Project Blue Sky Inc v Australian Broadcasting Corporation (1998) 194 CLR 355 at 381 [69], 384 [78]; [1998] HCA 28. 136 As explained by Gaudron and Gummow JJ (dissenting) in Payne (2001) 202 CLR 93 at 110 [42], 111 [48] citing Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting (1985) at [8.62]. See joint reasons at 137 Amalgamated Zinc (1935) 54 CLR 295 at 309 per Dixon J. See joint reasons at Kirby The result of an intersection of a myriad of often complex facts and an extremely brief statutory criterion is that whether the loss or outgoing is deductible will often be contestable. Informed decision-makers will sometimes reach contradictory opinions on the subject. Many decisions will arise at the margin138. Certainty of outcomes cannot be assured; For a very long time, this Court has adopted a view of the preposition "in", appearing in s 8-1 of the ITAA, as meaning "in the course of". Thus, in Payne, Gaudron and Gummow JJ pointed out that139: "Long before Lodge [v Federal Commissioner of Taxation140] the preposition 'in' was said in this Court here to have the force of 'in the course of' and to look to the relevance of the expenditure to the operations or activities in question rather than to purpose in itself." The majority in Payne141 drew attention to the fact that the statute142: "does not speak of outgoings incurred 'in connection with' the derivation of assessable income or outgoings incurred 'for the purpose of' deriving assessable income. It has long been established that 'incurred in gaining or producing' is to be understood as meaning incurred 'in the course of' gaining or producing143." 138 Strong & Co v Woodifield [1906] AC 448 at 452 per Lord Loreburn LC ["Many cases might be put near the line, and no degree of ingenuity can frame a formula so precise and comprehensive as to solve at sight all the cases that may arise"]. 139 (2001) 202 CLR 93 at 105 [25]. 140 (1972) 128 CLR 171 at 175; [1972] HCA 49. 141 Gleeson CJ, Hayne J and myself at (2001) 202 CLR 93 at 99 [9]. 142 Referring to s 51(1) of the 1936 Act having the same application as s 8-1(1) of the ITAA. 143 Amalgamated Zinc (1935) 54 CLR 295 at 303 per Latham CJ, 309 per Dixon J; Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 56-57; [1949] HCA 15; Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 at 350; [1956] HCA 77. Kirby What is meant by incurred "in the course of" gaining or producing income was amplified in Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation144: "[T]o come within the initial part of [s 51(1)] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income." (6) Having regard to the purpose of s 8-1(1), and to the context (including s 8-1(2)(b)) essential to whether a loss or expenditure has been "incurred in [the course of] gaining or producing assessable income" is the determination of what it is that is productive of assessable income145. However, the interposition of the words "in the course of" in the legislation places emphasis upon a temporal and functional connection between the gaining or production of the assessable income and the incurring of the propounded deduction. It is not enough that the deduction claimed has some general, even causative, connection with the derivation of income. Nor is it enough that the outgoings were incurred for the purpose of deriving, or continuing to derive, the income. This has not been the discrimen accepted by this Court in decisions going back three- quarters of a century. Neither party in this appeal suggested that this Court should revisit the correctness of its decision in Payne. Given that equivalent language was adopted in the ITAA, substantively re-enacting the approach of s 51(1) of the 1936 Act, there are overwhelming reasons why this Court would not re-open the foregoing approach but should apply it; and So far as the provisions of s 8-1(2)(b) of the ITAA are concerned, it can be accepted that there will rarely be a case where an outgoing, incurred in gaining or producing assessable income, is also an outgoing of a purely "private" [or "domestic"] nature146. Whatever may be the case in other circumstances, in the present instance the issue to be decided is to be resolved by the application first of s 8-1(1)(a) of the ITAA and not by s 8-1(2)(b) of that Act. By the same token, the language of the latter 144 (1949) 78 CLR 47 at 57 (emphasis added). 145 cf joint reasons at [30]. 146 See Federal Commissioner of Taxation v Hatchett (1971) 125 CLR 494 at 498; [1971] HCA 47. See also John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 431; [1989] HCA 5; cf Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting (1985) at [8.2]. Kirby provision, being part of the immediate textual context of the legislation to be applied, may be taken into account in giving meaning to an immediately preceding statutory provision. The minimum contextual consideration for deriving meaning, certainly in the English language, is the sentence and its surrounding provisions. It is not a contested word taken out of context147. The reference to "private" losses or outgoings (inferentially by contrast to notions such as "working expenses"148) may throw light on what the Parliament was intending by providing for deductions in s 8-1(1)(a). So may the indication in s 8-1(1)(b) providing for a deduction where "it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income". The emphasis is upon a relationship between the income and the loss or outgoing. But what precisely must that relationship be? An alternative approach Justice Spender's approach: In his reasons in the Full Court, Spender J adopted an approach significantly different from that adopted by any of the other judges. In effect, Spender J concluded that the legal expenses incurred by the respondent were incurred in order to resist the potential consequences of the disciplinary charges against the respondent that might destroy, or adversely affect, his income source. It was on that footing that his Honour concluded that the respondent's legal costs were losses incurred in gaining or producing his assessable income. If there were no employment (or different or lesser employment following demotion, suspension or damage to career prospects) an obvious financial consequence would follow both for the respondent and for the revenue. Each was dependent on the continuing flow of the respondent's income derived from its source. For a time, during argument, I found this approach attractive. I shall therefore explain Spender J's reasoning and indicate why, ultimately, I reject it. Justice Spender's reasoning: In the course of his reasons, Spender J said149: 147 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397; [1996] HCA 36 applying R v Brown [1996] 1 AC 543 at 561 per Lord Hoffmann. 148 See Handley v Federal Commissioner of Taxation (1981) 148 CLR 182; [1981] HCA 16; Federal Commissioner of Taxation v Forsyth (1981) 148 CLR 203; [1981] HCA 15; Federal Commissioner of Taxation v Cooper (1991) 29 FCR 177. 149 (2007) 164 FCR 250 at 256-257 [23]-[38]. The quotations have been compressed. Kirby tax purposes the expenditure for "Where the case concerns the payment of legal expenses, the proper turns on a characterisation of consideration of the circumstances with which the legal proceedings were concerned … In my judgment, the objective purpose of defending the … charges … was to protect the respondent from the consequences specified under s 62(6) of the [PSA], or to diminish their severity. The purpose was, therefore, to seek to protect the respondent's recurrent employment income from diminution or loss, or other adverse impact … In my opinion, expenses incurred in the defence of employment from that which threatens to destroy or diminish its income earning satisfies the positive test for deductibility. … The object in view in respect of the incurring of legal expenses in relation to the … charge[s] was to resist direct threats to the diminishing of, or the destruction of, the income-earning ability of the taxpayer. The situation which impelled the taxpayer to undertake the outlaying of those expenses was the fact that he had been charged under the [PSA] and the consequence of those charges being successful would be that his income would be diminished or lost. It is quite irrelevant whether the content of the charges related to activities of his employment, or were extraneous to the proper discharge of his duties. There would be no difference if a public servant was charged with being rude to customers in answering complaints, which is conduct engaged in by the public servant in the course of his or her duties, or a charge that he or she had downloaded child pornography from his or her office computer, conduct which is extraneous to the discharge of his or her duties as a public servant. The consequence of either charge being sustained is that the public servant's income might be diminished or lost. The legal expenses in defending either charge fall within the test set out by Dixon J in [Hallstroms Pty Ltd v Federal Commissioner of Taxation]150 … [and] by Drummond J in Federal Commissioner of Taxation v Rowe151 … Drummond J said that [such] expenses had the requisite nexus because 'they were incurred to preserve his entitlement to receive in return for his services, assessable income'." Attractions of the theory: Spender J's approach to the problem presented in this appeal has undoubted attractions: It offers a test for the recovery of legal expenses which is much simpler and more straightforward than that accepted by Edmonds J, the other judge in the majority in the Full Court of the Federal Court. Edmonds J's 150 (1946) 72 CLR 634 at 645-652; [1946] HCA 34. 151 (1995) 60 FCR 99 at 115-116. Kirby criterion for the deductibility of legal expenses was whether the taxpayer's employment was "the occasion of the expenditure and the taxpayer's performance and [whether] observance of the duties of that employment [was] … productive of assessable income"152. However, identifying the "occasion", as distinct from the motive and purpose, necessarily takes a court into a verbal analysis that is illusory or self-fulfilling. Spender J's approach avoids this; . Spender J's approach also, upon one view, reflects a purposive analysis of the provision of s 8-1(1) of the ITAA. If the underlying object of that provision is to permit a taxpayer to offset losses and outgoings that have been incurred in the gaining or producing of assessable income, there can be no such more important loss or outgoing than that incurred in attempting to ensure that the flow of assessable income will continue, or remain at its previous level; . Spender J's approach also arguably takes into account the particular perils of employment discipline faced by federal officials, including officers of the Service. Whilst all employment involves possible action resulting in dismissal, suspension, demotion and loss of benefits, employees who are officers of the Service face an additional and special danger in maintaining the source of their income. This included (at the applicable time) defending disciplinary proceedings under the PSA. To protect the income source in such proceedings might thus be seen as a particular incident of this particular type of employment ("office"); . The approach favoured by Spender J also avoids pre-judgment or collateral assessment of the antecedent conduct of the officer concerned, before allowing a deduction for any legal expenses. At the time of the claim for deduction, in many cases (as in that of the respondent himself), the full facts and evidence of the disciplinary proceedings will not be known when the claim for deduction is made. Similarly, at the time of the Commissioner's assessment, it must be decided a priori. It could not therefore depend upon a final resolution of the antecedent conduct or the charges based upon it. It is not part of the function of the ITAA, or taxation law generally, to add to the punishment of an office-holder embroiled in disciplinary proceedings; 152 See Day (2007) 164 FCR 250 at 274 [105] (emphasis added). The reference to the "occasion" of the occurrence of these expenses appears to derive from the passage in this Court's reasons in Ronpibon Tin NL (1949) 78 CLR 47 at 57 cited above these reasons at [69]. Kirby . To the extent that there is uncertainty about the operation of s 8-1(1)(a), it to defend is appropriate, in a society such as ours, to favour an interpretation of legislation that upholds the rule of law. This includes the practical entitlement of employees/officers themselves against disciplinary charges, some of which may be contested on the facts. Some of those facts may also be disputed as to their seriousness or significance for continued employment, income and promotion. Even in disobedience and misconduct cases, the line between "purely private" wrongdoings and those that have some relevant nexus with the employment, will sometimes be difficult to draw. Spender J's approach concentrates on whether, in the circumstances, it can be concluded that the purpose (and hence the character) of the "loss or outgoing" expended on legal expenses, is to protect income source: a relatively simple and straightforward criterion to apply; and . If the Parliament were dissatisfied with this approach to the meaning of s 8-1(1)(a), and concerned that it might over-extend the entitlement to deduct legal expenses for unmeritorious defences of purely private non- employment conduct giving rise to disciplinary charges against an employee or officer, it would be open to it to enact a more precise disqualifying provision. This, in effect, is what the Parliament did when, in 2005, it enacted s 26-54 of the ITAA. That amendment followed a decision of this Court refusing special leave to appeal from the judgment of the Full Court of the Federal Court in Commissioner of Taxation v La Rosa153. The Parliament enacted a special provision disallowing deductions for "a loss or outgoing to the extent that it was incurred in the furtherance of, or directly in relation to, a physical element of an offence against an Australian law of which you have been convicted if the offence was, or could have been, prosecuted on indictment". A special enactment could, if desired, be enacted to disallow deductions for legal expenses incurred in defending purely personal conduct having no relevant nexus to the employment and relating to purely personal activities of the taxpayer. Flaws in the alternative theory: There is a fundamental difficulty in the alternative theory propounded by Spender J. Ultimately it is a difficulty that leads me to reject his Honour's analysis. The problem is exposed in the reasons of Dowsett J in the Full Court of the Federal Court. Essentially, it flows from the long-standing interpretation by this Court of s 8-1(1)(a) of the ITAA, and its predecessor provision. Specifically, it flows from the insistence, repeated most recently in Payne, that the word "in", as stated in s 8-1(1)(a), is to be read as 153 (2003) 129 FCR 494. Kirby equivalent to "in the course of". It is not to be read as "in connection with" or "for the purpose of" deriving the relevant assessable income154. Payne was a case concerned with a claim to deduct travelling expenses incurred by the taxpayer in travelling between two unrelated places of work, from each of which, separately, the taxpayer derived income. It was in that context that it became necessary for this Court to examine the theory of deductibility of expenses that are based upon the relevant purpose of the outgoings incurred or their connection with the derivation of assessable income. If such criteria had been adopted, the taxpayer in Payne would have had a very strong argument to be entitled to deduction. Clearly enough, the purpose of incurring the expenses in that case, of travelling from his residence on a rural farm to his place of employment as an airline pilot at the Sydney airport was to be able to earn both incomes. Moreover, the travel involved expenses incurred "in connection with" the latter employment and "for the purpose of" deriving assessable income from it. The majority in Payne acknowledged the concerns that have been expressed over the years regarding the interpretation of deductibility under s 51(1) of the 1936 Act, specifically of travelling expenses incurred to get to and from a place of employment, particularly if the employment is remote from the taxpayer's ordinary residence. In Lunney v Commissioner of Taxation155, Dixon CJ confessed to misgivings about the rule established by this Court for the interpretation of the provision of the Act in this respect. Dixon CJ even hinted that the rule might not be logically supportable and that "if the matter were to be worked out all over again"156, a different approach might be taken. This notwithstanding, the Court in Lunney adhered to its insistence that "in", in the statutory provision, meant "in the course of" deriving the assessable income. It did not mean "for the purpose of" doing so or "in connection with" doing so. In Payne, the majority of this Court reaffirmed that approach. They did so notwithstanding the problems and obscurities that it presented. Moreover, they did so knowing full well that the ruling had application far beyond travelling expenses, such as were in issue in that case157: "[T]he distinction has long been made and it is now too late for the Court to 'rip it up' and treat the section as allowing any and all deductions having 154 Payne (2001) 202 CLR 93 at 99 [9]. 155 (1958) 100 CLR 478; [1958] HCA 5. 156 (1958) 100 CLR 478 at 486. 157 Payne (2001) 202 CLR 93 at 102-103 [17]. Kirby some causal connection with the derivation of assessable income. [The] cases … show [that] the distinction between outgoings incurred in the course of deriving income and other outgoings is a distinction which applies generally, not just in relation to travel expenses158. Once the distinction is recognised, it follows that the expenditure which was in issue in this case could not be held to be an allowable deduction." Whilst the authority culminating in Payne stands, it is fatal to the basis upon which Spender J sought to justify the deductibility of the legal expenses incurred by the respondent. Even if it were conceded that such legal expenses were incurred "for the purpose of" ensuring the continuation of the derivation of the respondent's income or "in connection with" that purpose or the income that it produced, in the undisputed facts of the respondent's case it could not be said that the expense was incurred in the course of deriving the assessable income. The only way that that characteristic of the applicable loss or outgoing could be adopted would be to treat all such legal expenses as incurred in the course of deriving the relevant income. However, that approach would render the requirement of having to demonstrate the relationship between the loss or outgoing and the gaining or producing of the income meaningless. All of this was well said by Dowsett J in the Full Court of the Federal "With all due respect, I am concerned that a test which focuses on whether costs were incurred to defend the taxpayer from loss of employment or diminution in income is a test based on purpose, and therefore inconsistent with the decision in Payne … I find it difficult to construe the language in the cases as necessarily establishing that conduct contrary to express prohibitions in a contract of service, and unconnected to the duties to be performed by the taxpayer, will be conduct in the course of earning assessable income. In some cases, the relevant prohibited conduct may be closely connected to the performance of particular duties so that the infringing conduct may accurately be so described. Negligence in such performance is a possible example. However, when the conduct is completely beyond the scope of the contract, and even forbidden by it, it does violence to language to describe that conduct as being in the course of earning assessable income." 158 Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 17; [1991] HCA 42. 159 (2007) 164 FCR 250 at 267 [72]-[73] (emphasis added). Kirby Conclusion: alternative theory rejected: Freed from earlier authority, there might be arguable reasons of textual analysis, legal principle and policy to support the approach favoured by Spender J. However, his Honour's reasoning cannot be accepted consistently with the unchallenged approach expressed by the majority in Payne. This being so, one of the two judicial opinions relied on in the Federal Court to sustain the majority orders must be rejected. But can the decision be supported on the reasoning of the other judge in the majority, Edmonds J, or upon any other view of the legislation, read consistently with Payne? Conclusion: the legal expenses are not deductible The analysis of Justice Edmonds: In his reasons, Edmonds J looked to whether the respondent's employment was the "occasion" of the expenditure on the legal expenses. If this protean word were intended to mean the reasons for the circumstance giving rise to the need to pay legal expenses, it would run into the same difficulties as were explained in Payne. If "occasion" is a synonym for "purpose", such that the respondent was entitled to defend the ongoing employment as the source of his income, it evidences the same error as that of The essential reasons that Edmonds J gave for his conclusion appears in the following passage of his reasons160: "[T]he taxpayer is incurring expenditure (legal expenses) defending … his performance of duties of his employment, and … his observance of duties of his employment. The performance of one kind of duty and the observance of the other kind of duty equally contribute to the taxpayer's continued employment which is productive of assessable income, and expenditure incurred in defence of either performance or observance of a duty is, in my view, occasioned by that employment. For that reason such expenditure is an allowable deduction." As Dowsett J remarked, this reasoning in substance involves the adoption of a test based on purpose. It ignores the need for the taxpayer claiming the deduction, where it is contested, to demonstrate that the expenditure of the propounded deductions was incurred in the course of gaining or producing the assessable income. The nexus is rejected: At least in the uncontested facts of this case, once this error is identified it is impossible to characterise the respondent's losses and 160 (2007) 164 FCR 250 at 274 [104] (emphasis added). Kirby outgoings as incurred in the course of gaining or producing the assessable income. The character of the respondent's legal proceedings is inescapably coloured by their subject matter which was to defend, or explain, the respondent's identified conduct which was never suggested to have involved the performance of his duties as a Customs officer. In that sense, within the authorities, the respondent's expenditure on legal representation cannot be classified as "incidental and relevant" to the winning or producing of the assessable income161. Instead, it must be classified (as Spender J had recognised) as a legal expense incurred so as to protect the respondent from dismissal, reduction in rank or reduction in pay. That is not sufficient to render the losses and outgoings incurred deductible. I agree with Dowsett J162: "Whilst such expenses are incurred for the purpose of deriving assessable income, they are not incurred in the course of doing so. [W]here the conduct in question is quite beyond anything contemplated as being involved in the taxpayer's duties, it will be very difficult to apply the test established in Payne in such a way as to render the outgoings deductible." Justification of the conclusion: The foregoing conclusion can, in my opinion, be readily justified in the application of s 8-1(1)(a) to the circumstances of the present case: . It gives effect to the decision and reasoning of this Court in Payne and to . Once the focus of attention is placed, as Payne requires, on the "course" of the longstanding earlier authority affirmed there; the gaining or producing of the assessable income, it is fatal to the respondent's argument on the facts of this case. The alternative proposition, that all legal expenses incurred by officers are deductible, is mistaken. It would involve an entitlement to legal expenses (and possibly others) disjoined from "the course of" income gaining and producing activities. That is not only contrary to authority. It is alien to the ascertained purpose and intention of s 8-1(1)(a) of the ITAA. Logically, it would extend deductibility of legal expenses to cases of the kind mentioned by Spender J163 (or to other purely private circumstances, such 161 Ronpibon (1949) 78 CLR 47 at 56 cited in Lunney v Commissioner of Taxation (1958) 100 CLR 478 at 497. 162 (2007) 164 FCR 250 at 268 [78], 269 [84]. 163 See (2007) 164 FCR 250 at 257 [35] per Spender J. Kirby as a courier who becomes intoxicated in his own time and therefore risks losing his driving licence essential to his continuing employment). To allow deductibility in such cases would ignore the requirement of demonstrating a link to "the course of" the gaining or production of the assessable income. Once Spender J's alternative thesis is rejected, as Payne demands, circumstances such as the present is made clear; the unlikelihood of allowing a deduction . Any suggestion that, because the respondent was an officer of the Service, they are caught doing he thereby secured a special and privileged position for deduction of legal expenses should be firmly rejected. Many private employees face procedures their employment. These may not involve procedures as formal as the statutory inquiry under the PSA but they may just as readily involve other procedures that occasion legal expenses to defend the employee's position. With respect, the distinction drawn in the joint reasons is not justified. It is certainly not desirable because it creates for a limited class of taxpayers a privileged position that is not spelt out in, or suggested by, the ITAA; things extraneous . As Dowsett J acknowledged, and as past decisions show, expenses incurred in the course of deriving assessable income will be deductible. Clear examples of such expenses are the legal costs incurred by a media publisher in defending defamation proceedings brought against it164 (an ordinary expense of such a business) or legal costs incurred by a company obliged, exceptionally, to defend itself from public attack165. Securing legal representation incompetence, negligence or even sometimes improper and wilful activity on the part of an employee might also attract deductibility by the Payne criterion. But in the uncontested facts of the present case, the requisite nexus is not established; in proceedings concerned with . Whatever may be the entitlement of the taxpayer in other cases, the respondent's legal expenses related to circumstances disjoined from "the course of" the income-producing activity. They were purely personal to the respondent. They were correctly so classified by the primary judge166. 164 Herald & Weekly Times Ltd v Federal Commissioner of Taxation (1932) 48 CLR 113 at 127; [1932] HCA 56. 165 Federal Commissioner of Taxation v Snowden & Willson Pty Ltd (1958) 99 CLR 431 at 437; [1958] HCA 23; cf Magna Alloys and Research Ltd v Federal Commissioner of Taxation (1980) 33 ALR 213. 166 Day (2006) 62 ATR 530 at 538. Kirby Whilst it may be conceded that difficult and contestable decisions will occasionally fall to be decided by the application of the Payne criterion, the present is not such a case given that the respondent did not suggest that any of his conduct resulting in his legal representation, involved the course of the performance of his duties as a Customs officer; and . If the foregoing conclusion is reached, derived from an application of s 8-1(1)(a) of the ITAA read in the light of Payne, the outcome causes neither inconvenience nor surprise. Inconvenience and surprise are considerations often taken into account to check the correctness of a statutory interpretation reached by a process of legal analysis. To the contrary, the opposite conclusion would cause surprise, and even astonishment. Whatever may be the justification of permitting deductions from assessable income for legal expenses necessarily incurred in the course of deriving the income, to provide such deductions where the "occasion" of the proceedings involving the legal representation had nothing to do with the course of the income-producing employment (or "office") appears fundamentally alien to the purposes of the deductions for which s 8-1(1)(a) of the ITAA provides. Why, it might be asked rhetorically, should the revenue (and therefore effectively other taxpayers) support legal proceedings brought by a Customs officer in respect of conduct on his part which, if proved, was concededly unconnected with the performance of his functions and duties and wholly alien to such duties? This was not a case of an arguably relevant connection with "the course of" the respondent's income producing employment. The only connection was that of defending and protecting the income stream. Once that justification is set aside, as incompatible with the language of s 8-1(1)(a) as explained by Payne, the character of the deductions claimed is revealed in stark relief. There is no relevant connection between the assessable income and the expenditure167. The payment for the legal expenses was "independent of the production of the income, not an expenditure incurred in the course of its production"168. It therefore fell outside the positive limb of s 8-1(1). It follows that the deduction was correctly disallowed. The negative limb – private losses or outgoings There remains the Commissioner's alternative reliance on s 8-1(2)(b) of the ITAA. He argued that, if, contrary to his submission, a deduction arose under s 8-1(1)(a) it would nonetheless be disallowed by virtue of the disqualification 167 Amalgamated Zinc (1935) 54 CLR 295 at 310. 168 (1935) 54 CLR 295 at 310. Kirby expressed in s 8-1(2)(b) of losses or outgoings "of a private … nature". The interconnection between the two paragraphs is plain. If I had been of the view (otherwise than by way of the inadmissible reasoning of defending the income stream) that the respondent's legal expenses were incurred in some way in the course of gaining or producing his assessable income, I would have concluded that such losses or outcomes were nevertheless of a private nature and so precluded from deduction. Given the statutory dichotomy between outgoings incurred in gaining or producing assessable income (deductible) and outgoings of a private nature (non- deductible), the respondent's legal expenses fell on the "private" side of the line. The language and structure of s 8-1 of the ITAA supports this conclusion. Payment for legal representation to defend purely personal conduct is clearly of a "private" nature within the category stated in s 8-1(2)(b) of the ITAA. If it can somehow fall within the first (positive) limb of the section (as sub-s (2) necessarily postulates will sometimes occur), it nonetheless falls outside deductibility if its essential character is "private". The situation might have been different if the basic facts were being contested by the respondent; or where some of them were disputed and others not; or where the respondent sought to throw a new and different light on his conduct or somehow to associate the conduct with "the course of" his duties as an officer. However, all such complications can be disregarded in the circumstances of the respondent's case. It was clear and simple. Either on the positive or negative limb of s 8-1(1) or (2) of the ITAA, the deductions were correctly disallowed by the Commissioner. It follows that on one or other of the Commissioner's arguments he was entitled to succeed. Orders Because of the conditions as to costs attached to the grant of special leave, the following orders should be made. The appeal from the judgment of the Full Court of the Federal Court of Australia should be allowed. Orders 1 and 2 of that court, made on 21 December 2007, should be set aside. In their place, this Court should order that the appeal to that court and the cross-appeal be dismissed. The appellant should pay the costs of the respondent in this Court.

HIGH COURT OF AUSTRALIA AUSTRALIAN COMMUNICATIONS AND MEDIA AUTHORITY APPELLANT AND TODAY FM (SYDNEY) PTY LTD RESPONDENT Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd [2015] HCA 7 4 March 2015 ORDER Appeal allowed with costs. Set aside paragraphs 1 to 3 of the orders of the Full Court of the Federal Court of Australia made on 14 March 2014 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation J T Gleeson SC, Solicitor-General of the Commonwealth with N J Williams SC and A M Mitchelmore for the appellant and for the Attorney-General of intervening (instructed by Australian Government Solicitor) the Commonwealth, N C Hutley SC with R C A Higgins for the respondent (instructed by Holding Redlich Lawyers) M G Hinton QC, Solicitor-General for the State of South Australia with A C Wells for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) G R Donaldson SC, Solicitor-General for the State of Western Australia with K H Glancy for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) P J Dunning QC, Solicitor-General of the State of Queensland with the State of Queensland, A D Keyes for intervening (instructed by Crown Solicitor (Qld)) the Attorney-General of Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd Statutes – Statutory construction – Clause 8(1)(g) of Sched 2 to Broadcasting Services Act 1992 (Cth) ("BSA") conditioned commercial radio broadcasting licence on licensee not using broadcasting service in commission of offence against another Commonwealth Act or a law of a State or Territory – Authority's functions taking enforcement action under BSA – Authority authorised to conduct investigations for purposes of its functions – Where, as part of investigation, Authority made finding that licensee used broadcasting service to commit offence against State law and thereby breached cl 8(1)(g) licence condition – Whether Authority had power to do so in absence of criminal court finding offence proven. included suspension and cancellation of licences and Constitutional law (Cth) – Judicial power – Where ss 10 and 12 of Australian Communications and Media Authority Act 2005 (Cth), ss 5, 170 and 178 of BSA and cl 8(1)(g) of Sched 2 to BSA authorised Authority to find licensee of commercial radio broadcasting licence breached cl 8(1)(g) licence condition and to take enforcement action under ss 141 and 143 of BSA prior to criminal court finding offence proven – Whether provisions thereby impermissibly confer judicial power on Authority. Words and phrases – "adjudging and punishing criminal guilt", "administrative enforcement action", "judicial power", "used in the commission of an offence". Australian Communications and Media Authority Act 2005 (Cth), ss 10, 12. Broadcasting Services Act 1992 (Cth), ss 5, 141, 143, 170, 178, 179; Sched 2, FRENCH CJ, HAYNE, KIEFEL, BELL AND KEANE JJ. The Australian Communications and Media Authority ("the Authority") is established by the Australian Communications and Media Authority Act 2005 (Cth) ("the ACMA Act")1. The Authority is charged with regulating broadcasting services in accordance with the Broadcasting Services Act 1992 (Cth) ("the BSA")2. Providers of commercial radio broadcasting services in Australia must hold a licence under the BSA3. Clause 8(1)(g) of Sched 2 to the BSA imposes a condition ("the cl 8(1)(g) that a commercial radio licence condition") broadcasting licensee will not use the broadcasting service in the commission of an offence against another Commonwealth Act or a law of a State or Territory ("a relevant offence"). The issue in the appeal is whether the Authority is precluded from finding that a licensee has breached the cl 8(1)(g) licence condition and from taking any enforcement action arising out of the breach until a court exercising criminal jurisdiction finds the commission of the relevant offence proven. If there is no such preclusion, a second issue is whether the provisions of the BSA empowering the Authority to determine that a licensee has used the broadcasting service in the commission of a relevant offence, and to take consequential enforcement action, are an invalid attempt to confer the judicial power of the Commonwealth on the Authority. The legislative scheme The Authority the broadcasting industry in order to achieve the objects of the BSA in a way that is consistent with the regulatory policy set out in s 4 of the BSA4. Relevantly, s 4(2) of the BSA provides: is charged with responsibility for monitoring "The Parliament also intends that broadcasting services ... be regulated in a manner that, in the opinion of the [Authority]: 1 Section 6. 2 ACMA Act, s 10(1)(a). 3 BSA, s 12(1). 4 BSA, s 5(1). Hayne Bell enables public interest considerations to be addressed in a way that does not impose unnecessary financial and administrative burdens on providers of broadcasting services ..." The objects of the BSA include providing a regulatory environment that facilitates the development of a broadcasting industry in Australia that is efficient, competitive and responsive to audience needs5. Other objects are the promotion of high quality and innovative programming6, and the encouragement of broadcasting services providers to be responsive to the need for fair and accurate coverage of matters of public interest7 and to respect community standards in the provision of program material8. In the balance of these reasons, references to legislative provisions unless otherwise stated are references to the BSA. Licences Commercial broadcasting services are broadcasting services that are made available to the general public for free and which generally are funded by advertising revenue9. Commercial radio broadcasting licences are subject to the conditions set out in cl 8 of Sched 2 to the BSA and to such other conditions as may be imposed by the Authority10. Fourteen conditions are set out in cl 8(1). They include: the licensee will not, in contravention of the Tobacco Advertising Prohibition Act 1992, broadcast a tobacco advertisement within the meaning of that Act; 5 BSA, s 3(1)(b). 6 BSA, s 3(1)(f). 7 BSA, s 3(1)(g). 8 BSA, s 3(1)(h). 9 BSA, s 14(1). 10 BSA, s 42(2). Hayne Bell the licensee will comply with program standards applicable to the licence under Part 9 of this Act; the licensee will not use the broadcasting service or services in the commission of an offence against another Act or a law of a State or Territory". The Authority's functions include the allocation, renewal, suspension and cancellation of licences and taking enforcement action under the BSA11; assisting broadcasting services providers to develop codes of practice that accord with community standards12; monitoring compliance with those codes of practice13; developing program standards14; monitoring compliance with those standards15; and monitoring and investigating complaints concerning broadcasting services16. If the Authority is satisfied that allowing a company to provide, or to continue to provide, commercial broadcasting services would lead to a significant risk of the commission of an offence against the BSA or regulations made under the BSA ("the regulations"), the breach of a civil penalty provision or breach of the conditions of the company's commercial broadcasting licence, it may decide that a company is not a suitable licensee (or that it is not a suitable applicant for a licence)17. The Authority is to exercise the powers conferred on it under the BSA in a manner that in its opinion will deal effectively with breaches of the rules 11 ACMA Act, s 10(1)(c). 12 ACMA Act, s 10(1)(i). 13 ACMA Act, s 10(1)(j). 14 ACMA Act, s 10(1)(k). 15 ACMA Act, s 10(1)(l). 16 ACMA Act, s 10(1)(m). 17 BSA, s 41(2). Hayne Bell established by that Act18. In these respects, the Authority may act on its own motion19, or in response to a direction made by the Minister20 or a complaint made by a member of the public21. Any person may complain to the Authority if the person believes that the provider of a broadcasting service has committed an offence against the BSA or the regulations, or breached a civil penalty provision or the condition of a licence22. In such a case, the Authority was required to investigate the complaint and notify the complainant of the results of its investigation23. Investigations The Authority may conduct investigations for the purposes of its broadcasting functions and related powers24. It may summon a person to appear before it25 and examine the person on oath or affirmation26. It may require the person to answer questions27. The examination must take place in private28. The 18 BSA, s 5(1)(b)(ii). 19 BSA, s 170. 20 BSA, s 171. 21 BSA, s 149. 22 BSA, s 147. 23 BSA, s 149, since repealed and replaced by item 6 of Sched 2 to the Omnibus Repeal Day (Autumn 2014) Act 2014 (Cth). The provision now reads: "The [Authority] may investigate the complaint if the [Authority] thinks that it is desirable to do so." 24 BSA, s 170. 25 BSA, s 173. 26 BSA, s 174(1). 27 BSA, s 174(3). 28 BSA, s 175. Note that, under Div 3 of Pt 13 of the BSA, the Authority may hold hearings for the purposes of the performance or exercise of any of its broadcasting, content and data casting functions and related powers (s 182). These hearings must be held in public unless evidence that may be given, or a matter that may arise, is (Footnote continues on next page) Hayne Bell Authority may, but is not required to, save in the case of an investigation conducted at the direction of the Minister, prepare a report on an investigation29. Again, save in the case of an investigation directed by the Minister, the Authority may choose whether or not to publish its report on an investigation30. Enforcement of licence conditions Breach of a condition of a commercial radio broadcasting licence is subject to a range of enforcement mechanisms. The breach may be prosecuted as a criminal offence under s 139(3)31, or made the subject of a civil penalty order under s 140A(3) or administrative action. Administrative action may take the form of a remedial direction issued under s 141(1) or the suspension or cancellation of the licence under s 143(1). Failure to comply with a requirement of a remedial notice issued under s 141 is itself an offence32 and subject to a civil penalty order33. The selection of the appropriate enforcement mechanism, if any, to apply to breach of a condition of a commercial broadcasting licence is largely at the discretion of the Authority. Only the Authority may apply for a civil penalty order34. The Authority is required to use its powers in dealing with breaches of the BSA or the regulations in a manner that in its opinion is commensurate with the seriousness of the breach35. The Authority's decision to of a confidential nature or the Authority is satisfied that holding the hearing in public would not be conducive to the due administration of the BSA (s 187). 29 BSA, s 178(1). 30 BSA, s 179(1). 31 Section 139(3A) creates an offence of lesser seriousness in the case of a licensee who engages in conduct breaching cl 8(1)(ha) of Sched 2 to the BSA, which condition requires the licensee to comply with the maintenance of financial accounts. 32 BSA, s 142(3). 33 BSA, s 142A. 34 BSA, s 205G(1). 35 BSA, s 5(2). Hayne Bell suspend or cancel a licence is subject to merits review by the Administrative Appeals Tribunal ("the AAT")36. The factual background Today FM (Sydney) Pty Ltd ("Today FM") holds a commercial radio broadcasting licence. On 4 December 2012, Today FM recorded a telephone call between two presenters of its "Summer 30" program and two members of the staff of the King Edward VII Hospital in London, at which the Duchess of Cambridge was an in-patient. The presenters represented that they were Queen Elizabeth II and Prince Charles and they inquired about the Duchess. One of the staff, apparently accepting the callers as genuine, provided some information about the Duchess' condition. The recording was broadcast during the "Summer 30" program some hours later and re-broadcast the following day. The Authority initiated an investigation into the broadcast. It invited Today FM to make submissions directed to whether, among other things, it had breached the cl 8(1)(g) licence condition by the commission of the offence in s 11(1) of the Surveillance Devices Act 2007 (NSW) ("the SDA")37. Today FM acknowledged that, before the segment was broadcast, it had not obtained the consent of either of the hospital staff to the recording, but it did not accept that it had committed any offence. The Authority prepared a preliminary investigation report, which contained the following "preliminary finding": "The [Authority] is of the view that the licensee, in broadcasting the recording of the private conversation (which was made in contravention of subsection 7(1) of the SDA), has contravened subsection 11(1) of the SDA. Furthermore, because the licensee has used its broadcasting service in the commission of an offence under subsection 11 of the SDA, the 36 BSA, s 204. 37 Section 11(1) of the SDA provides that a person "must not publish, or communicate to any person, a private conversation or a record of the carrying on of an activity, or a report of a private conversation or carrying on of an activity, that has come to the person's knowledge as a direct or indirect result of the use of a listening device, an optical surveillance device or a contravention of a provision of this Part". tracking device Hayne Bell licensee has breached a condition of paragraph 8(1)(g) of Schedule 2 to the BSA." its licence as set out On 4 June 2013, the Authority provided Today FM with a copy of the preliminary investigation report. The proceedings before the primary judge On 18 June 2013, Today FM commenced proceedings in the Federal Court of Australia (Edmonds J)38 seeking declaratory relief arising out of the Authority's investigation and the preliminary investigation report. Today FM contended that the Authority was not authorised to find that it had breached the cl 8(1)(g) licence condition unless and until a competent court adjudicated that it had committed the SDA offence39. In the alternative, Today FM contended that, if the ACMA Act and the BSA authorised the Authority to find that it had breached the cl 8(1)(g) licence condition, the empowering provisions are an invalid purported conferral of judicial power on the Authority40. Orders were sought to permanently restrain the Authority from making any determination that Today FM has committed any criminal offence and from the preparation of any report purporting to determine, or express any opinion, that Today FM used its broadcasting service in the commission of an offence under the SDA41. Edmonds J dismissed Today FM's application. His Honour reasoned that, in determining that a licensee has breached the cl 8(1)(g) licence condition, the Authority is not making a judgment of the licensee's criminal guilt; rather, the product of its investigation is no more or less than its conclusion as an 38 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447. 39 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 454 [25]. 40 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 457 [40]. 41 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 451-452 [14]. Hayne Bell administrative body of an issue relevant to the determination of the breach of the Today FM's constitutional challenge identified ss 10 and 12 of the ACMA Act, ss 5, 170 and 178 of the BSA and cl 8(1)(g) as impermissibly conferring judicial power on the Authority. Edmonds J rejected this characterisation, taking into account that the Authority's broad regulatory functions are to be discharged in accordance with the objects of the BSA43; that it may act on its own motion in conducting an investigation44; that the investigation is non-adversarial45 and has as its purpose uncovering facts and circumstances that may support action under the BSA46; and that the determination did not involve the resolution of a legal controversy between it and Today FM47. 42 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 454 [27]. 43 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 458 [42], citing Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 552 [6] per Gleeson CJ; [2008] HCA 2. 44 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 458 [43], citing R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 289 per Dixon CJ; [1957] HCA 81. 45 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 458 [43], citing R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374 per Kitto J; [1970] HCA 46 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 458 [44]. 47 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2013) 218 FCR 447 at 458 [44], citing TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 553-554 [28] per French CJ and Gageler J; [2013] HCA 5. Hayne Bell The appeal to the Full Court Today FM appealed to the Full Court of the Federal Court of Australia (Allsop CJ, Robertson and Griffiths JJ)48. Before the hearing of the appeal, the Authority notified Today FM that it had finalised its investigation and had determined that Today FM had breached the cl 8(1)(g) licence condition49. The Authority advised that it would "consider the compliance issues raised by the investigation, as well as any other appropriate remedial measures, in due course"50. The final investigation report contained the same findings with respect to breach of the cl 8(1)(g) licence condition as in the preliminary investigation report51. The Full Court rejected the primary judge's construction of cl 8(1)(g), holding that, absent clear language, the legislature is not to be taken to have intended to confer upon the Authority the power to make an administrative determination or finding of the commission of a criminal offence52. In light of its conclusion, it was unnecessary for the Full Court to address Today FM's constitutional challenge53. The appeal was allowed, the orders made 48 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461. 49 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 465 [17]. 50 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 465 [18]. 51 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 465-466 [19]. 52 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 486 [106]. 53 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 489 [116]. Hayne Bell by Edmonds J were set aside and, in their place, the Full Court set aside the Authority's determination54. Special leave to appeal On 15 August 2014, French CJ and Keane J granted the Authority special leave to appeal. The appeal is brought on three grounds. The first ground asserts that the Full Court erred in construing cl 8(1)(g) as requiring, for the purposes of enforcement action under s 141 or s 143, that the Authority may only find that a relevant offence has been committed upon a conviction by a criminal court (or a finding by a criminal court that the offence is proved). The second ground asserts that the Full Court erred in construing cl 8(1)(g) as requiring the Authority to defer administrative enforcement action until after (if at all) the conclusion of the criminal process and in holding the Authority bound by the outcome of that process. The third ground asserts that the Full Court erred in construing the expression "commission of an offence" in cl 8(1)(g) as extending to the commission of offences by persons other than the commercial radio broadcasting licensee. By notice of contention, Today FM seeks to have the Full Court's decision affirmed on the strength of its constitutional challenge. For the reasons to be given, the Authority's appeal should be allowed on its first and second grounds and Today FM's constitutional challenge rejected. The Full Court's statement of general principle The Attorneys-General of the Commonwealth and for the States of South Australia, Western Australia and Queensland intervene in support of the Authority respecting the resolution of the constitutional issue. Their submissions overlap with the parties' submissions on the construction issue. The overlap is explained by the Full Court's embrace of an interpretative approach sourced in constitutional principle. The starting point in the Full Court's analysis was the statement in the joint reasons in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs of the exclusively judicial character of the adjudgment and 54 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 490 [118]. Hayne Bell punishment of criminal guilt under Commonwealth law55. The Full Court took from Lim a wider general principle56: "As a matter of general principle it is not normally to be expected that an administrative body such as the [Authority] will determine whether or not particular conduct constitutes the commission of a relevant offence. It may be open to the legislature, subject to relevant constitutional constraints, to make clear that such a body is empowered to undertake that or a similar task. But under our legal system the determination of whether or not a person has committed a criminal offence can generally only be determined by a court exercising criminal jurisdiction." This "general principle" informed the Full Court's construction of the provision. The Full Court said57: "The text of cl 8(1)(g) does not state that the [Authority] is to form an opinion on whether or not a relevant offence has been committed, let alone an opinion which is based on the balance of probabilities and not the normal criminal standard of beyond reasonable doubt. We see no warrant for reading those words into the text". (emphasis added) It will be recalled that cl 8(1)(g) conditions the licence on the licensee not using the broadcasting service in "the commission of an offence". The Full Court considered that the ordinary meaning of this phrase connotes that "a court exercising criminal jurisdiction has found that an offence has been committed"58. The Full Court said the phrase has this connotation because, conformably with 55 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 478 [76], citing (1992) 176 CLR 1 at 27 per Brennan, Deane and Dawson JJ; [1992] HCA 64. 56 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 478 [76]. 57 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 479 [78]. 58 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 479 [80]. Hayne Bell the statement in the joint reasons in Lim, "that matter is one for determination only by a criminal court"59. The Full Court considered that the weight of contextual matters favoured a narrower construction of cl 8(1)(g) than the construction adopted by the primary judge60. The Full Court referred to s 178(2), which provides that, if the Authority's report on an investigation relates to conduct that could constitute an offence under the BSA or another law of the Commonwealth, the Authority may give a copy of the report to the Director of Public Prosecutions61. The Full Court said that s 178(2) evinces the "plain object" of involving the Director of Public Prosecutions in deciding whether to commence a prosecution, as distinct from "simply leav[ing] the matter in the hands of the [Authority]"62. The Full Court also referred to s 179(3), which provides that the Authority is not required to publish a report (or part of a report) if the publication would be likely to prejudice the fair trial of a person63. The Full Court said that s 179(3) demonstrates an "overarching concern to preserve the due administration of the criminal justice system"64 and is against a conclusion that the Authority "would make any findings itself on criminal liability"65. 59 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 479 [80]. 60 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [94]. 61 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [95]-[96]. 62 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [96]. 63 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [98]. 64 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 471 [46]. 65 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [97]. Hayne Bell In the Full Court's view, it is unlikely that the legislature intended to empower the Authority to make findings that a licensee has committed an offence against any State or Territory law66. The Full Court considered the unlikelihood of that intention to be "all the more stark" when it is appreciated that the Authority might make an administrative finding that a person other than the licensee has committed an offence67. The Full Court also considered it incongruous that the Authority might determine that a licensee has breached cl 8(1)(g), and cancel the broadcasting service licence, in circumstances in which the licensee may be subsequently acquitted of the relevant offence68. These matters were said to underline the unlikelihood, in the absence of clear language, that the legislature intended to confer power on the Authority to make an administrative determination or finding that a licensee has committed a criminal offence69. The Full Court considered that its approach accorded with the statements made by this Court in Balog v Independent Commission Against The "general principle" The Authority submits, correctly, that the "general principle" stated by the Full Court and set out at [26] above is expressed too widely and does not follow from the constitutional constraint stated in the joint reasons in Lim on the adjudgment and punishment of criminal guilt under Commonwealth law. Not uncommonly, courts exercising civil jurisdiction are required to determine facts 66 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [98]. 67 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484-485 [99]. 68 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 485-486 [104]. 69 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 486 [106]. 70 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 487-488 [109]-[112], citing (1990) 169 CLR 625 at 633, 635-636; [1990] HCA 28. Hayne Bell which establish that a person has committed a crime71. Satisfaction in such a case is upon the balance of probability72. In Helton v Allen, Mr Helton's acquittal of the murder of the testatrix was no bar, on the trial of the civil suit arising out of the will, to the finding that he had unlawfully killed her73. More generally, and contrary to the "normal expectation" stated by the Full Court, it is not offensive to principle that an administrative body is empowered to determine whether a person has engaged in conduct that constitutes a criminal offence as a step in the decision to take disciplinary or other action. The decisions of this Court in Attorney-General (Cth) v Alinta Ltd74 and Albarran v Companies Auditors and Liquidators Disciplinary Board75 accept so much76. There is no reason to suppose that a Commonwealth public housing authority might lack the capacity to terminate a lease on the ground of the tenant's use of the premises for an unlawful purpose notwithstanding that the tenant has not been convicted of an offence arising out of that unlawful use. 71 Helton v Allen (1940) 63 CLR 691; [1940] HCA 20; Miller v Miller (2011) 242 CLR 446 at 464 [47], 483 [106] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 9; White v Director of Public Prosecutions (WA) (2011) 243 CLR 478; [2011] HCA 20; Olbers Co Ltd v Commonwealth (2004) 136 FCR 67, upheld on appeal at (2004) 143 FCR 449; Habib v Commonwealth (2010) 183 FCR 62 at 66 [3] per Black CJ, 70-71 [21]-[22] per Perram J. 72 Hocking v Bell (1945) 71 CLR 430 at 500 per Dixon J; [1945] HCA 16; Rejfek v McElroy (1965) 112 CLR 517 at 521; [1965] HCA 46. 73 (1940) 63 CLR 691. 74 (2008) 233 CLR 542 at 576 [90], 578-579 [96] per Hayne J, 594-595 [160] per Crennan and Kiefel JJ, citing Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at 149 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; [1987] HCA 29. 75 (2007) 231 CLR 350 at 361 [28] per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; [2007] HCA 23. 76 In its written submissions, Queensland instanced a number of legislative schemes that condition administrative action on satisfaction that a person has committed an offence: Corrective Services Act 2006 (Q), ss 200(1)(f), 201(1)(a) and 205(2)(a)(i); Liquor Act 1992 (Q), ss 134(1)(a) and 136(1)(a); Mineral Resources Act 1989 (Q), s 267(a). Hayne Bell It was an error to construe cl 8(1)(g) in light of the posited principle that "it is not normally to be expected that an administrative body such as the [Authority] will determine whether or not particular conduct constitutes the commission of a relevant offence"77. The construction of cl 8(1)(g) and allied provisions of the BSA It will be recalled that cl 8(1)(g) states: "[T]he licensee will not use the broadcasting service or services in the commission of an offence against another Act or a law of a State or Territory". The prohibition is upon the use of the broadcasting service in the commission of a relevant offence. Today FM argues that the phrase "the commission of an offence" is ambiguous. As enacted, Today FM submits, the BSA evinced "a very clear distinction" between the words "guilty of [an] offence" and the words "committing [an] offence"78, the former being used to identify the objective facts constituting a wrong and the latter being used to convey the conclusion (that the offence has been committed) in the opinion of some third party79. The submission is strained. The words "guilty of an offence" in the BSA as enacted (and now) are used in offence-creating provisions. As a matter of ordinary English, the phrase "the commission of an offence" is to be distinguished from the phrase "conviction for an offence". The former refers to the fact of the commission of the offence and the latter to the finding of the criminal court. There is no warrant for holding that the words "the commission of an offence" in cl 8(1)(g) convey that the licensee (or other person) has been convicted of an offence (or that a court exercising criminal jurisdiction has found the offence proven). Today FM supports the Full Court's adoption of a narrow construction of the Authority's power to investigate and report on the breach of the cl 8(1)(g) 77 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 478 [76]. 78 [2014] HCATrans 246 at lines 1705-1707. 79 [2014] HCATrans 246 at lines 1777-1781. Hayne Bell licence condition having regard to the gravity of a finding of criminal conduct and resulting reputational damage. It submits that it is not to the point to observe that administrative enforcement mechanisms under ss 141 and 143 are not expressed to depend upon conviction. These provisions are engaged by the breach of any of the licence conditions. The condition in cl 8(1)(g) is said to stand apart. The submission does not address cl 8(1)(a), to which there should be some reference. Clause 8(1)(a) conditions the licence on non-contravention of the Tobacco Advertising Prohibition Act 1992 (Cth) ("the TAP Act") by the broadcast of a tobacco advertisement. Broadcasting a tobacco advertisement in contravention of the TAP Act is an offence80. It follows that conduct in breach of cl 8(1)(a) will also be in breach of cl 8(1)(g). The anomaly may be explained by the legislative history. As enacted, cl 8(1)(a) stated a prohibition on the broadcasting of an advertisement or sponsorship announcement for cigarettes or other tobacco products. The TAP Act amended the BSA by the insertion of cl 8(1)(a) in its present form without apparent advertence to cl 8(1)(g). Today FM's submission must apply to cl 8(1)(a) as well as cl 8(1)(g). Acceptance of the submission carries with it that the Authority is precluded from radio taking administrative enforcement action against a commercial broadcasting licensee that advertises tobacco products unless and until the licensee is convicted of the offence under the TAP Act. Today FM's submissions call in aid statements in Balog v Independent Commission Against Corruption81. In that case, it was held that New South Wales' Independent Commission Against Corruption ("the ICAC") is not authorised under its statute to include in its report of an investigation a finding that a person was or may have been guilty of a criminal offence or corrupt conduct. Although this construction was arrived at upon application of ordinary principles of interpretation, the Court endorsed recourse to the principle of legality as appropriate in light of the risk of reputational damage and prejudice to any criminal proceedings that might follow publication of a finding of corrupt conduct82. 80 TAP Act, s 13(1). 81 (1990) 169 CLR 625. 82 Balog v Independent Commission Against Corruption (1990) 169 CLR 625 at Hayne Bell As the Full Court acknowledged, there are significant differences between the functions of the ICAC under its statute and those of the Authority under the ACMA Act and the BSA83. The ICAC is primarily an investigative body whose investigations are intended to facilitate action by others in combating corrupt conduct84. By contrast, the Authority is charged with the regulation of broadcasting services including by the enforcement of licence conditions. As earlier noted, the mechanism for enforcement of those conditions, including the conditions stated in cl 8(1)(a) and (g), may, depending upon the Authority's opinion of the seriousness of the breach, be by administrative action, application for a civil penalty order or prosecution for the criminal offence. The risk of damage to reputation that may arise in consequence of an adverse finding in the Authority's report of an investigation is addressed under the BSA by ss 179(3) and 18085. As Today FM acknowledges, the meaning of cl 8(1)(g) cannot vary depending on the means selected for its enforcement. In seeking to support the Full Court's construction of the provision, Today FM is driven to the submission that in the case of a prosecution for the offence created by s 139(3), particularised as a breach of the cl 8(1)(g) licence condition, the prosecution must prove the earlier conviction of a person for the relevant offence86. So, too, on this analysis would it be necessary to prove the conviction of a person for the relevant offence before the court trying an application under s 140A(3) arising out of the breach of the cl 8(1)(g) licence condition may make a civil penalty order. Whether a licensee has used the broadcasting service in the commission of a relevant offence is a question of fact. It is a determination that may be made by the Authority as a preliminary step to the taking of administrative enforcement action, or by the court in civil penalty proceedings or in a prosecution for the 83 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 486-487 [107]. 84 Balog v Independent Commission Against Corruption (1990) 169 CLR 625 at 636. 85 Section 180 provides that "[i]f publication of matter in a report or part of a report would or would be likely to adversely affect the interests of a person, the [Authority] must not publish the report or the part of the report until it has given the person a reasonable period, not exceeding 30 days, to make representations, either orally or in writing, in relation to the matter". 86 [2014] HCATrans 246 at lines 1523-1528. Hayne Bell offence under s 139(3) of the BSA. In each case the question is the same: did the licensee use the broadcasting service in the commission of a relevant offence? It is only in the last-mentioned instance that the determination is made on the criminal standard. To construe cl 8(1)(g) as conditioning the power of the Authority to determine that the licensee has used the broadcasting service in the commission of an offence, and to take administrative enforcement action, upon a finding by a court exercising criminal jurisdiction that the offence is proven, would significantly confine the Authority's enforcement powers. There is nothing in the text of cl 8(1)(g) to support that confinement. Nor do the objects of the BSA or the contextual matters identified by the Full Court support that confinement. Section 178(2) allows the Authority to give a copy of its report to the Director of Public Prosecutions in a case in which it becomes aware of conduct that could constitute an offence against Commonwealth law. The provision allows the Authority to give a copy of its report in the case of a use of a broadcasting service in the commission of an offence against Commonwealth law, but the provision's purpose is not confined to the report of an investigation into a breach of the cl 8(1)(g) licence condition. In the course of an investigation, the Authority may become aware of conduct that could constitute an offence against Commonwealth law that does not involve the use of the broadcasting service. Additionally, breach of the cl 8(1)(g) licence condition may involve an offence against State or Territory law, in which case no question of supplying the Director of Public Prosecutions with a copy of the report will arise. The point to be made is that there is no reason to take from s 178(2) a legislative purpose to involve the Director of Public Prosecutions in deciding whether to prosecute for a relevant offence so as not to leave the matter in the hands of the Authority and permit it to form an administrative opinion that a relevant offence has been committed87. Section 179(3) does not provide contextual support for the narrow construction of cl 8(1)(g) and the allied provisions of the BSA adopted by the Full Court. The evident purpose of s 179(3)(b) – to protect the fair trial of a person from prejudice that may flow from the publication of the Authority's report or part of its report – is not confined to investigations into suspected breaches of the cl 8(1)(g) licence condition. Section 179(3) says nothing about 87 cf Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 484 [96]. Hayne Bell the Authority's power to determine that administrative enforcement is appropriate to the seriousness of the breach of any licence condition, including the conditions stated in cl (8)(1)(a) and (g). The Full Court was right to hold that the express terms of cl 8(1)(g) do not confine the condition to the commission of offences by the licensee88. However, this recognition does not support the Full Court's construction of the statutory scheme. It is the Authority's function to monitor and regulate broadcasting services throughout Australia. There is no incongruity in empowering the Authority to take administrative enforcement action against a licensee who uses the broadcasting service in the commission of an offence, whether the offence is against Commonwealth, State or Territory law. Nor is it incongruous that the Authority may suspend or cancel a licence based upon its determination that the broadcasting service has been used the commission of an offence notwithstanding the licensee's (or a third person's) subsequent acquittal of the offence. The court trying the criminal offence is required to determine guilt upon admissible evidence beyond reasonable doubt. In determining that a licensee has breached the cl 8(1)(g) licence condition, as a preliminary to taking enforcement action, the Authority is not adjudging and punishing criminal guilt. It is not constrained by the criminal standard of proof and it may take into account material that would not be admitted in the trial of a person charged with the relevant offence. It may find that the broadcasting service has been used in the commission of an offence notwithstanding that there has been no finding by a court exercising criminal jurisdiction that the offence has been proven. Where a person is prosecuted for the relevant offence, the Authority is not bound by the outcome of the criminal proceeding and may come to a contrary view based upon the material and submissions before it89. It follows that the provisions of the BSA which empower the Authority to investigate the breach of a licence condition, report on the investigation and take administrative enforcement action do not require, in the case of the cl 8(1)(g) licence condition, that any such action be deferred until after (if at all) a court exercising criminal jurisdiction has found that the relevant offence is proven. 88 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 485 [99]. 89 General Medical Council v Spackman [1943] AC 627. Hayne Bell The judicial power of the Commonwealth By its Notice of Contention, Today FM asserts that if, upon its proper construction, cl 8(1)(g) authorises the Authority to find that the licensee has breached the condition and to take enforcement action under ss 141 and 143 prior to a competent court finding that the relevant offence has been committed, the provisions of the BSA that purport to authorise that conduct are invalid to that extent because they are inconsistent with the separation of executive and judicial power under the Constitution. Today FM's constitutional argument in its written submissions was consistent with the way its challenge was advanced before the primary judge. The submissions invoked Kitto J's statement of the attributes of judicial power in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd90: "[A] judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons." A number of features of the statutory scheme were relied upon for the conclusion that "the Authority is purporting to exercise judicial power". It was asserted that the Authority has purported to: resolve "a controversy" relating to "pre-existing and fundamental rights", being Today FM's "legal rights and interests in licence 3032"; exercise a discretion by applying legal criteria to facts as found by it91; and have the capacity to make consequential decisions with immediate effect depriving Today FM of its "property rights" in the licence. Finally, it was said that the subject-matter on which the Authority has made findings of fact is "quintessentially a subject-matter of the exercise of the judicial power" – the function of adjudicating and punishing criminal guilt. 90 (1970) 123 CLR 361 at 374. 91 R v Gallagher; Ex parte Aberdare Collieries Pty Ltd (1963) 37 ALJR 40 at 43 per Kitto J; [1963] ALR 641 at 646. Hayne Bell To date, the Authority has carried out an investigation92 and prepared a report on the investigation93. It has not determined whether it will publish the report or what, if any, enforcement action it will take in light of its findings. The point at which the Authority is said to exercise judicial power was not identified in Today FM's written submissions. On the hearing of the appeal in this Court, Today FM's constitutional argument was refined. Today FM acknowledges that it is open to an administrative body to form an opinion as to the legal rights of an individual as a step in that body's ultimate determination. It accepts that the formation of such an opinion does not involve the exercise of judicial power. It does not contend that the Authority's finding in its report is a final determination giving rise to any issue estoppel or merger. Rather than characterising that finding and any consequential enforcement action as possessing all or any of the attributes of judicial power within Kitto J's classic statement, Today FM now relies upon the exception his Honour allowed in the concluding passage of his analysis94: "It is right, I think, to conclude from the cases on the subject that a power which does not involve such a process and lead to such an end needs to possess some special compelling feature if its inclusion in the category of judicial power is to be justified." (emphasis added) The "special compelling feature" on which Today FM relies is the power under s 143 to suspend or cancel a commercial broadcasting licence when that power is enlivened by a claimed breach of the cl 8(1)(g) licence condition. The predicate of the power in this event is the finding of the commission of the relevant offence. That finding is the essential step to the imposition of what is said to be in substance a penalty. To gainsay the finding in proceedings in the AAT, the licensee is required to discharge an onus of demonstrating that it, or a third person, did not commit the relevant offence. In this limited sense, Today FM submits that the Authority's finding has a "quasi-finality" to it. Although no determination to suspend or cancel Today FM's licence has been made, the challenge to the validity of the Authority's finding is put on the footing that the 92 BSA, s 170. 93 BSA, s 178(1). 94 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374-375. Hayne Bell cl 8(1)(g) licence condition is part of the "integrated structure" of Pt 10 of the BSA, governing the enforcement of licence conditions. It adds nothing to the constitutional challenge to describe the Authority's finding of breach of the cl 8(1)(g) licence condition, where it is the foundation for suspension or cancellation of a commercial broadcasting licence, as possessing a quality of "quasi-finality". Nor do the submissions that characterise a commercial broadcasting licence as a "pre-existing and fundamental right" and its suspension or cancellation as akin to the imposition of a penalty. Commercial broadcasting licences are issued subject to conditions, the breach of any one of which may result in suspension or cancellation. The characterisation of the Authority's enforcement power under s 143 does not depend upon whether the Authority is acting on the breach of the condition that the licensee will comply with program standards under cl 8(1)(b) or the condition that the licensee not use the broadcasting service in the commission of a relevant offence under cl 8(1)(g). The finding that Today FM's broadcasting service was used in the commission of an offence does not resolve a controversy respecting pre-existing rights or obligations95. It is a step in the determination of breach of the cl 8(1)(g) licence condition96 and is the foundation for the Authority to institute civil penalty proceedings in the Federal Court of Australia or to take administrative enforcement measures, including imposing licence97, accepting an enforceable further conditions on Today FM's 95 Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189; [1991] HCA 58; Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 110 [41] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 28; Luton v Lessels (2002) 210 CLR 333 at 345-346 [22] per Gleeson CJ, 360 [76] per Gaudron and Hayne JJ; [2002] HCA 13. 96 Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at 149 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350 at 361 [28] per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; Visnic v Australian Securities and Investments Commission (2007) 231 CLR 381 at 386 [16] per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ, 395 [46] per Kirby J; [2007] HCA 24; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 576 [90], 578-579 [96] per Hayne J, 594-595 [160] per Crennan and 97 BSA, s 43(1). Hayne Bell undertaking98, issuing a remedial direction99, or suspending or cancelling Today FM's licence100. It is well settled that functions may be judicial or administrative depending upon the manner of their exercise101. Edmonds J rightly concluded that none of the features of the power conferred on the Authority to investigate and report on breach of the cl 8(1)(g) licence condition and to take consequential administrative enforcement action support the conclusion that it is engaged in the exercise of judicial power. Orders For these reasons, the following orders should be made: Appeal allowed with costs. Set aside paragraphs 1 to 3 of the orders of the Full Court of the Federal Court of Australia made on 14 March 2014 and, in their place, order that the appeal to that Court be dismissed with costs. 98 BSA, s 205W. 99 BSA, s 141(1). 100 BSA, s 143(1). 101 Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189. I agree that the appeal must be allowed, the decision of the Full Court of the Federal Court set aside, and the appeal to the Full Court from the decision of Edmonds J dismissed. In the reasons which follow, I adopt the explanation of the facts and legislation as well as the abbreviations set out in the joint reasons for judgment. The Full Court reasoned from the premise that a statute is not ordinarily interpreted as empowering an administrative body to inquire into and determine whether or not a person has committed a criminal offence. The Full Court derived that premise from Ch III of the Constitution102 and explained it also to be consonant with the common law103. The premise cannot, in my opinion, be derived from Ch III of the Constitution. The function of judging and punishing criminal guilt, which is exclusively judicial in character and no part of which can be conferred by Commonwealth legislation on a body that is not a Ch III court, is the function of conclusively determining a controversy about criminal liability and the punitive consequences of that criminal liability104. An administrative body does not perform any part of that exclusively judicial function merely by making its own inquiry and determining for itself that a person has committed a criminal offence. This Court has repeatedly held that a power of inquiry and determination takes its legal character from the purpose for which it is undertaken, and that a power of inquiry and determination undertaken for a non-curial purpose (be it arbitral, administrative, executive or legislative) can encompass formation and expression of an opinion about an existing legal right or obligation105. No distinction has been drawn in that respect between an opinion about an existing legal obligation sounding only in civil liability and an opinion about an existing legal obligation sounding only, or also, in criminal liability. It has been held, for 102 Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 218 FCR 461 at 478 [76], 479-480 [80]. 103 (2014) 218 FCR 461 at 486-489 [107]-[114]. 104 Magaming v The Queen (2013) 87 ALJR 1060 at 1073 [65]-[67]; 302 ALR 461 at 474-475; [2013] HCA 40. 105 Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656 at 666; [1987] HCA 63; Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189-190; [1991] HCA 58; Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350 at 361 [28]; [2007] HCA 23; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR HCA 2. example, that a commission of inquiry established under Commonwealth legislation can be authorised to inquire into and report on whether or not a person has committed an offence, for the purpose of informing the exercise or performance of a power or function of the Commonwealth Parliament or of the Commonwealth Executive106. That is not to say that a question may not arise as to whether or not judicial power is invalidly conferred on a particular administrative body by the terms of a particular statute under which that body might be authorised or required to form and give effect to an opinion that a person has committed a criminal offence. The point of significance for present purposes is that the fact that such a question can arise is not a reason for a statute ordinarily to be interpreted as not empowering an administrative body to inquire into and determine whether or not a person has committed a criminal offence. The fact that such a question does arise in relation to a particular statute is also no reason for interpreting that statute as not empowering a particular administrative body to undertake such an inquiry or to make such a determination. In Australia, unlike the United States107, the view has not been adopted that a statute is to be interpreted to avoid constitutional doubt. Here the "fundamental rule of construction [is] that the legislatures of the federation intend to enact legislation that is valid and not legislation that is invalid"108. Here also interpretation provisions enacted by each Australian legislature provide for legislation to be read down if, and to the extent that, the legislation would exceed constitutional power109. Those provisions, of their nature, assume that questions of validity may arise. There is no room for a presumption that any Australian legislature intends to enact only legislation the validity of which is beyond dispute. 106 Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25; [1982] HCA 31. 107 Eg United States ex rel Attorney General v Delaware and Hudson Company 213 US 366 at 408 (1909). 108 Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 644 [28]; [2000] HCA 33. 109 Section 15A of the Acts Interpretation Act 1901 (Cth); s 31 of the Interpretation Act 1987 (NSW); s 6 of the Interpretation of Legislation Act 1984 (Vic); s 22A of the Acts Interpretation Act 1915 (SA); s 9 of the Acts Interpretation Act 1954 (Q); s 7 of the Interpretation Act 1984 (WA); s 3 of the Acts Interpretation Act 1931 (Tas); s 59 of the Interpretation Act (NT); s 120 of the Legislation Act 2001 (ACT). The Full Court identified the premise of its reasoning as consonant with the Australian version of the common law principle of statutory construction which has come to be known in the United Kingdom as the "principle of legality"110, and which has long been known in the United States as the "clear statement rule"111. The principle insists on a manifestation of unmistakable legislative intention for a statute to be interpreted as abrogating or curtailing a right or immunity protected by the common law or a principle recognised by the common law to be important within our system of representative and responsible government under the rule of law112. Outside its application to established categories of protected common law rights and immunities, that principle must be approached with caution. The principle should not be extended to create a common law penumbra around constitutionally imposed structural limitations on legislative power. The common law principle of construction does operate to insist on the manifestation of unmistakable legislative intention for a statute to be interpreted as empowering an administrative body publicly to inquire into and determine whether or not a person has committed a criminal offence, but the trigger for the operation of the principle is more narrowly focussed. It is in part because of the potential for such an exercise of power adversely to affect the person's reputation; "the law proceeds on the basis that reputation itself is to be protected"113. It is also in part because of the risk that such an exercise of power can pose to established processes by which criminal liability and its punitive consequences are determined by a court. That more narrowly focussed application of the common law principle of construction is the enduring significance of Balog v Independent Commission Against Corruption114. This Court there determined, on close analysis of its empowering statute, that the Independent Commission Against Corruption was not entitled to include, in a report to be laid before each House of the Parliament of New South Wales of its investigation into alleged corrupt conduct, a finding 110 R v Secretary of State for the Home Department; Ex parte Simms [2000] 2 AC 115 111 United States v Fisher 6 US 358 at 390 (1805). 112 Coco v The Queen (1994) 179 CLR 427 at 437; [1994] HCA 15; Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 307-311 [307]-[314]; [2013] HCA 39. 113 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 577; [1992] HCA 10. 114 (1990) 169 CLR 625; [1990] HCA 28. that a person was guilty of a criminal offence. This Court added, however, that even if the statute admitted of a wider construction, "then the narrower construction is nevertheless to be adopted upon the basis that where two alternative constructions of legislation are open, that which is consonant with the common law is to be preferred"115. That said, I am unable to agree with the Full Court that the common law principle assists in the construction of cl 8(1)(g) of Sched 2 to the BSA. That is because the clause is not directed to defining the scope of the functions of the Authority. The clause is directed instead to prescribing a norm of conduct to which a commercial radio broadcasting licensee must adhere as a condition of its licence116. The significance of that distinction requires elaboration. The norm of conduct prescribed by cl 8(1)(g) is applicable at all times throughout the period of a commercial radio broadcasting licence. Breach can result in the Authority giving a notice under s 141 directing the licensee to take remedial action to ensure compliance, accepting an enforceable undertaking from the licensee under s 205W that it will take remedial action to ensure compliance, or cancelling or suspending the licence by reference to s 143(1)(b). Quite independently of any action on the part of the Authority, however, a breach constitutes a criminal offence which is committed each day during which the contravention continues117. The criminal offence for which the licensee is liable can be prosecuted by the Director of Public Prosecutions in the Federal Court118 or in a State or Territory court of competent jurisdiction119. Breach also renders the licensee liable to a civil penalty for each day during which the contravention continues120. That civil penalty can be recovered by the Authority121 in proceedings in the Federal Court122. And where the Authority does give a notice under s 141 directing the licensee to take remedial action to ensure compliance, contravention of that direction itself constitutes a criminal offence which is 115 (1990) 169 CLR 625 at 635-636. 116 Section 42(2)(a) of the BSA. 117 Sections 139(3) and 140 of the BSA. 118 Section 209 of the BSA. 119 See ss 39(2) and 68 of the Judiciary Act 1903 (Cth). 120 Section 140A(3), (7) and (8) of the BSA. 121 Section 205G of the BSA. 122 Section 205F of the BSA. committed each day during which the contravention continues123 and itself renders the licensee liable to a civil penalty for each day during which the contravention continues124, in addition to being able to result in the Authority taking further action by reference to s 143(1)(a) to cancel or suspend the licence. If compliance or non-compliance with the norm of conduct prescribed by cl 8(1)(g) were not capable of objective determination from time to time and at each point in time throughout the period of a commercial radio broadcasting licence, the norm itself would be deprived of much of its force, and the provisions of the BSA providing for its day-to-day enforcement would be unworkable. The licensee's compliance or non-compliance is rendered capable of objective determination from time to time and at each point in time throughout the period of the licence if the phrase "the commission of an offence" in cl 8(1)(g) is read as referring to the doing of acts which constitute the commission of an offence. The The difficulty with the Full Court's reading of the phrase "the commission of an offence" in cl 8(1)(g), as connoting that a court exercising criminal jurisdiction has found an offence to have been committed, is that it would make compliance or non-compliance with the norm of conduct specified by the clause incapable of contemporaneous objective determination. compliance or non-compliance at any point in time within the period of the licence would always be subject to two future contingencies. One would be the contingency of the appropriate Commonwealth, State or Territory prosecuting authority choosing to prosecute the offence constituted by past or present conduct. The other would be the entry of a subsequent conviction for that offence by the federal, State or Territory court which exercised criminal jurisdiction in respect of the matter pertaining to that prosecution. Only once those two contingencies had come to pass could it then be seen, retrospectively, that the licensee was in breach of the licence condition. In the meantime, neither the Authority nor the Director of Public Prosecutions could take any action in relation to breach of the licence condition. Pending prosecution and conviction for the offence, the Authority could not even direct the licensee to take remedial action to ensure that the conduct constituting the commission of the offence did not continue or recur. When attention is turned from the norm of conduct prescribed by cl 8(1)(g) to the powers of investigation conferred on the Authority by Div 2 of Pt 13 of the BSA, it is tolerably clear that the concerns of the common law which invoke the common law principle of construction are specifically addressed and 123 Section 142 of the BSA. 124 Section 142A of the BSA. given a precise statutory measure of protection. Reputation is addressed and protected by the requirement that any examination by the Authority is to be in private125 and the Authority being prohibited from publishing in a report any matter, disclosure of which would be likely to adversely affect the interests of a person, until the Authority has given the person a reasonable period to make representations in relation to the matter126. Integrity of the criminal process is addressed and protected by the Authority not being required to publish any part of its report, disclosure of which would be likely to prejudice the fair trial of a person127. The Authority's decision to publish or not to publish would be subject to the standard implied conditions that the decision be made according to a process which is fair and that the decision not be unreasonable128. The existence of those provisions, addressed specifically to the powers of investigation conferred on the Authority, militates further against cl 8(1)(g) being read in a manner which would deprive the Authority, in investigating a contravention of that provision, of any power to inquire into or determine whether or not a person has committed a criminal offence. To do so would be to introduce indirectly into the conduct of an investigation by the Authority a different and more stringent measure of protection than that for which the BSA has specifically provided. In construing cl 8(1)(g), the Full Court placed some weight on the terms of the specific power conferred on the Authority to give to the Director of Public Prosecutions a copy of a report "[i]f a report on an investigation relates to conduct that could constitute an offence under [the BSA] or another law of the Commonwealth"129. The existence of that power is unsurprising given that the Director of Public Prosecutions and not the Authority is empowered to prosecute offences under the BSA and other laws of the Commonwealth. The purpose of the power is evidently to allow the Director of Public Prosecutions to be given information relevant to the performance of its independent statutory function of deciding whether or not to prosecute. The language in which the power is expressed does not, in my opinion, assist in the construction of cl 8(1)(g). It is not directed to whether or not the Authority can include in a 125 Section 175 of the BSA. 126 Section 180 of the BSA. 127 Section 179(3) of the BSA. 128 Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 370-371 [88]-[92]; [2013] HCA 18. 129 Section 178(2) of the BSA. See (2014) 218 FCR 461 at 484 [95]-[96]. report its own finding as to whether or not an offence has been committed. It says nothing about an offence against a State or Territory law. It fairly encompasses all conduct which has the potential to constitute an offence against the BSA or another Commonwealth law, irrespective of whether or not the Authority has formed its own view for the purpose of performing its own statutory functions that the conduct does constitute such an offence. The preferable conclusion is therefore that the phrase "the commission of an offence" in cl 8(1)(g) refers to conduct which constitutes the commission of an offence. The powers of investigation conferred on the Authority by Div 2 of Pt 13 of the BSA permit the Authority to form and report its own view as to whether conduct constitutes the commission of an offence within the scope of cl 8(1)(g) for the purpose of the Authority going on to perform other statutory functions or to exercise other statutory powers. That conclusion makes it necessary to address a constitutional question, which the Full Court did not reach, as to whether it would amount to an exercise of judicial power for the Authority to act on its own view that conduct constitutes the commission of an offence within the scope of cl 8(1)(g) in exercising a particular statutory power. As narrowed in the course of oral argument before this Court, the question came down to whether the Authority would exercise judicial power were it to act on its own view that conduct constitutes the commission of an offence in going on to exercise the power conferred on it by s 143(1) to suspend or cancel a commercial radio broadcasting licence on the basis of breach of the condition of that licence in cl 8(1)(g). The short answer is that there is no basis on which the Authority, in so acting, could be said to exercise judicial power. None of the indicia of exclusively judicial power would be present. The Authority's cancellation or suspension of the licence would not be, in form or in substance, the imposition of punishment for the commission of an offence against a Commonwealth, State or Territory law. The Authority would not be declaring or enforcing any existing criminal licensee or of anyone else. The Authority would not be resolving, conclusively or at all, any controversy between parties. liability or civil liability of the The Authority would need to satisfy itself that there was or had been conduct constituting the commission of an offence within the scope of cl 8(1)(g) as an element of satisfying itself that it had power to cancel or suspend the licence by reference to s 143(1). That is because the fact of breach of a licence condition is, for the purpose of s 143(1), a "jurisdictional fact" in the sense that it is a fact which must exist as a precondition to the valid exercise of the discretion of the Authority to cancel or suspend a licence130. But the Authority's own view that there was or had been conduct constituting the commission of an offence within the scope of cl 8(1)(g) would have no operative legal effect. The objective existence of that fact could be conclusively determined for legal purposes only by a decision of a court. Were the validity of the Authority's purported cancellation or suspension of a licence under s 143(1)(b) to be the subject of judicial review, it would thereafter be for the Ch III court undertaking that review to be satisfied for itself whether or not the licence condition had been breached. The applicant for judicial review would ordinarily have the burden of proving that the licence condition had not been breached in order to establish invalidity on the ground that the factual precondition to the exercise of the power conferred on the Authority by s 143(1) did not exist. The gravamen of the constitutional argument as presented orally on behalf of Today FM in this Court was to focus on that ordinary forensic burden. The argument was that it would operate to render the Authority's own view that the licence condition had been breached close to conclusive in practice. It would not. The Authority's own view would remain just that; it would bind no one and conclude nothing131. The constitutional character of the Authority's cancellation or suspension of the licence would remain that of administrative action. 130 Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at 64 131 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 376, 399; [1970] HCA 8.

HIGH COURT OF AUSTRALIA Matter No S168/2012 ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LTD & ORS APPLICANTS AND GLOBAL GAMING SUPPLIES PTY LTD & ORS RESPONDENTS Matter No S169/2012 ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LTD & ORS APPLICANTS AND RIAD ALLAM & ORS RESPONDENTS Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd Aristocrat Technologies Australia Pty Ltd v Allam [2013] HCA 21 Date of Order: 2 May 2013 Date of Publication of Reasons: 10 May 2013 S168/2012 & S169/2012 ORDER In each matter, special leave refused with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with J M Hennessy SC for the applicants in both matters (instructed by Gilbert + Tobin Lawyers) M L D Einfeld QC with A C Harding for the respondents in S168/2012 and the second to fifth respondents in S169/2012 (instructed by Paul Bard Lawyers) M Green for the first and sixth respondents in S169/2012 (instructed by Bruce & Stewart Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd Aristocrat Technologies Australia Pty Ltd v Allam Evidence – Tendency rule – Section 97(1) of Evidence Act 1995 (Cth) – Failure to comply with tendency rule where evidence not characterised as tendency evidence at first instance – Applicants alleged that respondents refurbished and sold machines that incorporated pirated copies of material in which applicants held copyright, thereby infringing ss 36 and 38 of Copyright Act 1968 (Cth) – Email communications of respondents relied upon by primary judge to prove that respondents had knowledge of infringing conduct – Full Court of Federal Court held that email communications relied upon by primary judge to establish tendency to engage in infringing conduct without compliance with s 97(1) of Evidence Act 1995 (Cth) – Whether open to Full Court to conclude that email communications were relied upon by primary judge to establish tendency. Words and phrases – "tendency evidence". Copyright Act 1968 (Cth), ss 36, 38. Evidence Act 1995 (Cth), ss 94(1), 95(1), 97(1), 136. FRENCH CJ, CRENNAN, KIEFEL, GAGELER AND KEANE JJ. Introduction By orders made on 25 May 2012 the Full Court of the Federal Court of Australia allowed appeals by the respondents against a judgment of a single judge awarding damages against them for infringement of the applicants' copyright. The copyright related to literary and artistic works in and on components of electronic gaming machines manufactured by the applicants. The applicants sought special leave to appeal to this Court against the decisions of the Full Court. Their applications for special leave were referred to an enlarged Bench by orders of French CJ and Heydon J made on 16 November 2012. After hearing argument on 2 May 2013 this Court made orders dismissing the applications for special leave with costs and stated that reasons for its decision would be published subsequently. The question upon which special leave was sought was whether the Full Court had erred in characterising the primary judge's reasoning about evidence of email communications as inferring a "tendency" on the part of the respondents to engage in infringing conduct. Section 97 of the Evidence Act 1995 (Cth) ("the Evidence Act") provides that, absent compliance with conditions including reasonable notice, evidence of a tendency that a person has or had is not admissible to prove that a person has or had a tendency to act in a particular way. The applicants argued that the Full Court was wrong to say that the primary judge used the email evidence to infer tendency and that the appeal to that Court should not have been allowed on that basis. As appears from the reasons that follow, this Court was of the opinion that the Full Court's characterisation of the primary judge's reasoning was open to it and not attended with sufficient doubt to warrant the grant of special leave. The case was one of some complexity factually and procedurally. It is helpful to outline the background as appears from the judgments both at first instance and in the Full Court of the Federal Court. Factual and procedural background The applicants manufactured and sold electronic gaming machines and game software. Each of the applicants' gaming machines incorporated computer programs that play games of chance displayed on a video screen. The computer programs that embodied the games, and compliance plates and artwork displayed on the machines, were literary and artistic works within the meaning of s 10 of the Copyright Act 1968 (Cth) ("the Copyright Act"). Copyright subsisted in those works and was owned by the applicants. Crennan The respondents Global Gaming Supplies Pty Ltd ("Global") and Impact Gaming Pty Ltd ("Impact") were in the business of selling second hand gaming machines to overseas markets. The respondents Anthony Andrews and Francis Cragen were the sole directors and shareholders of Global and Impact respectively. Those parties are referred to collectively as the Global and Impact respondents. The other corporate respondent is Tonita Enterprise Pty Ltd. Riad Allam is its principal. He and his company are referred to in these reasons as the Tonita respondents. Mr Allam is a gaming technician who provided gaming machine refurbishment services to Global. From at least October 2004 there was a joint venture between the Global and Impact respondents for the supply of refurbished gaming machines to overseas markets. The Tonita respondents carried out significant technical work for the joint venture. The applicants' gaming machine software was stored in removable memory chips known as erasable programmable read only memory chips ("EPROMs"). The compliance plates were attached to the applicants' gaming machines to meet regulatory requirements. The essence of the applicants' case, as the primary judge described it, was that the Global and Impact respondents were in a joint venture together "to counterfeit and sell, principally in South America, second hand gaming machines assembled in Australia using pirated copies of materials in which the applicants hold the copyright." The principal question as his Honour put it, was whether he could infer copyright infringement "in the absence of direct evidence of the gaming machines which are said to have been counterfeited." The applicants alleged 54 transactions in which some or all of the respondents were said to have exported "counterfeit gaming machines to South America." These involved a total of 618 machines. The applicants were not in a position to identify which components in the gaming machines in the impugned transactions involved infringements of any copyright of the applicants. In the end the primary judge was satisfied that 11 of the 54 impugned transactions involved gaming machines which contained infringing components. It was not possible, however, to conclude on the evidence precisely which components in the machines, the subject of those transactions, were "counterfeit" components. The primary judge's findings of infringement were based upon what he described as "five essential propositions". They were: The Tonita respondents (specifically Mr Allam) had copied the applicants' game software onto blank EPROMs. Crennan The Tonita respondents (specifically Mr Allam) manufactured counterfeit compliance plates. 3. Mr Andrews and Mr Cragen were aware that Mr Allam was copying the applicants' game software onto blank EPROMs. 4. Mr Andrews and Mr Cragen were aware that Mr Allam was manufacturing counterfeit compliance plates for export to foreign markets. 5. Mr Andrews and Mr Cragen sent, or were aware that the joint venture had sent, original and digital artwork to South America for the purpose of having it copied. The first two propositions involved findings that the Tonita respondents without the licence of the applicants did acts comprised in the applicants' copyright within the meaning of s 36 of the Copyright Act and thereby infringed that copyright. His Honour also found that the Global and Impact respondents had authorised copyright infringements, either as participants in the joint venture which had commenced at least by 1 October 2004, or before that date individually. His Honour found that the nature of the joint venture contemplated the very infringing acts alleged to have taken place. In addition to the claims of primary infringement under s 36, the applicants alleged that by dealing with infringing copies of the works with knowledge or constructive knowledge of the infringements the respondents infringed copyright pursuant to s 38 of the Copyright Act. As the applicants pointed out in their written submissions, his Honour's findings of infringement against the respondents did not specifically refer to s 38 or satisfaction of the knowledge element of that section in making findings but "clearly enough found that element was satisfied." At trial the applicants tendered, over objection, a number of business communications including six chains of email correspondence said by them to constitute "instances of unguarded communications that make plain the true nature of the joint venture's trade (a counterfeiting operation)." The email communications, as the Full Court found, were used by the primary judge as an essential part of his reasoning process leading to his findings of infringement. The emails involved exchanges between or copied to Mr Andrews, Mr Cragen, Mr Allam and customers of the Global and Impact respondents. Some of the emails, along with much other evidence tendered at the trial, had been the subject of rulings by the primary judge under s 136 of the Evidence Crennan Act limiting their admissibility to the case against particular respondents. After the close of evidence and at the time of final submissions, the applicants applied for a variation of those rulings. The primary judge then admitted all evidence on a provisional basis subject to relevance. His Honour subsequently made orders revoking all previous orders made pursuant to s 136 that had had the effect of limiting the admissibility of that evidence to the case against particular respondents. The Full Court held that the primary judge had erred in revoking his s 136 rulings. The Full Court's conclusion on those rulings was not challenged in the application for special leave. It was nevertheless invoked by the respondents as the basis for an argument that there would be insufficient prospects of success on an appeal to this Court if special leave were to be granted on the ground advanced by the applicants. For even if the applicants were to succeed on the question raised in their proposed amended grounds of appeal, they would still be faced with the consequences of the Full Court's finding that, in effect, evidence that had been admitted against some respondents only should not later have been treated as evidence against all. It was not necessary to consider that argument, as the point upon which the applicants seek special leave relating to the Full Court's characterisation of the primary judge's use of the email correspondence did not warrant the grant of special leave. The primary judge's treatment of the emails The relevant email communications were made between November 2004 and November 2005. There was also reference to an earlier email chain in 2002. The primary judge observed that the emails "were not tendered as proof of the facts stated in them", but said that "the contents of the communications are revealing." His Honour made a number of findings based on the emails. He found that: Mr Andrews had offered to provide a customer with artwork that was digitally copied from the applicants' artwork. This was plain from an email he sent to "Aldo" in 2002. Mr Andrews offered to send to another customer in South America artwork which could be matched to games that could be copied in South America. Crennan As to the offers mentioned in those findings, his Honour observed that they were not offers to do an act which would have constituted an infringement of the applicants' copyright pursuant to ss 36 or 38 of the Copyright Act. He said: "[b]ut they do indicate Mr Andrews' willingness to assist the 'serial counterfeiters' in South America in carrying out their actions." It would be difficult to find a clearer indication of the use of the evidence as indicative of a tendency. His Honour observed that there were other offers to the same effect, including in an email chain dated 21 and 25 October 2005 and in a request from South America for artwork to be translated into Spanish as appeared from an email of 10 November 2005. The email chain of 21 and 25 October 2005 was said to be an example of Mr Cragen's "tacit acceptance of the joint venture's role in the South American counterfeiting operations." His Honour found, on the basis of the emails, that Mr Andrews had offered to arrange for the applicants' compliance plates with fake serial numbers to be made for a customer of the Global and Impact joint venture. Mr Andrews did so following a conversation between Mr Cragen and the customer about the supply of gaming machines. That third finding was said to be clear from an email chain of 12 and 15 November 2004. Implicit in the email communication and a concession by Mr Cragen in cross-examination that he had had a discussion about the topic of compliance plates with a customer, Mr Mendelson, was: "the acceptance by Mr Cragen that the Global/Impact Joint Venture was prepared to supply gaming machines with false Aristocrat compliance plates." Again, it is not difficult to see how this observation could be characterised as a use of the email evidence to establish a tendency to act in a particular way. His Honour made three further findings based on the emails: Mr Allam gave Mr Walter Di Palma, an Argentinian gaming technician, a CD containing game software belonging to the applicants which Mr Allam had "burned" onto the CD. Mr Allam was requested by Mr Nuevo, a South American customer, to provide blank EPROMs for the applicants' gaming machines and Mr Allam knew that the purpose of the request was to enable the customer to copy the applicants' game software onto EPROMs in South America. Crennan Mr Andrews adopted protocols to avoid detection of the Global and Impact joint venture's involvement in copyright infringement in particular by the adoption of a web-based Yahoo email address. After considering the email chains and other aspects of the evidence, his Honour found the first and second of his essential propositions made out, namely, that the Tonita respondents had copied the applicants' game software onto blank EPROMs and had manufactured counterfeit compliance plates. In relation to each of the third, fourth and fifth "essential propositions", which directly concerned the Global and Impact respondents, his Honour's findings may be summarised as follows: It was clear from the email correspondence that Mr Andrews and Mr Cragen were aware of the fact that Mr Allam was burning the applicants' game software onto blank EPROMs. His Honour rejected their explanations of the emails. Mr Andrews and Mr Cragen were aware that Mr Allam was manufacturing counterfeit compliance plates for export to foreign markets. Mr Andrews had told Mr Mendelson that he could organise counterfeit compliance plates in an email in November 2004, which was copied to Mr Cragen. The email was sufficiently clear on its face to reveal what Mr Andrews had in mind. Even before the Global and Impact joint venture Mr Andrews had engaged in discussion about the supply of digital artwork panels as appeared from an email of August 2002. In an undated email Mr Andrews had made the unequivocal statement that he could send a set of artwork to South America and that the customer, Mr Nevada, could "just copy the game chips" and make some new artwork. Emails sent after the establishment of the Global and Impact joint venture showed that both Mr Andrews and Mr Cragen were aware that the applicants' artwork was being sent by them to South America for the purpose of copying. His Honour found on the basis of "the extensive email correspondence" that the Global and Impact joint venture was in operation by November 2004 and had commenced by at least 1 October 2004. His Honour found that the Global and Impact respondents as parties to the joint venture had authorised any copyright infringements committed by the joint venture in the carrying out of its activities from that date forward. The requirements of s 36 were satisfied because Mr Andrews and Mr Cragen each had power to prevent the other from doing the acts concerned and the nature of the joint venture contemplated the Crennan very acts alleged to have taken place in the proceedings in the Federal Court. Neither Mr Andrews nor Mr Cragen took reasonable steps to prevent the infringements which his Honour found to have been committed. His Honour referred to a "studied and deliberate course of action" in which each of the Global and Impact respondents had decided to ignore the rights of the applicants "with knowledge that there was likely to be an infringement of copyright". He said: "Moreover, the email correspondence to which I have referred at some length makes it plain that the Global and Impact respondents sanctioned, approved or countenanced the infringements of copyright carried out by the Tonita respondents … Indeed, whilst there was no joint venture between the Tonita respondents and the other respondents to the proceedings, there was, in my view, something in the nature of concerted action or agreed common action; it was not necessary for the Aristocrat companies to prove an express plan mapped out by the primary offenders. The evidence more than sufficiently establishes 'tacit agreement' between the parties". It was open to the Full Court to regard the path by which his Honour reached that conclusion as one which involved treating the email correspondence as evidence of a "similar fact" or tendency character. So to characterise his reasoning process did not involve any logically difficult suggestion that what he found, sub silentio, was a "tendency to know". The applicants submitted that the reasoning of the Full Court erroneously attributed that illogicality to the primary judge. That submission should be rejected. The Full Court's treatment of the primary judge's reasoning In the Full Court the respondents challenged the primary judge's use of the email chains in relation to the third, fourth and fifth of his "essential propositions". Those propositions were regarded by the Full Court as establishing the "knowledge" requirement of s 38 of the Copyright Act. The Full Court observed: "The Aristocrat parties' case on infringement by dealing could not and cannot succeed without that requirement being established with respect to the Global/Impact parties." The emails had been the subject of objection before the primary judge in relation to the purposes for which they could be admitted and their relevance to the infringing transactions alleged by the applicants. The Full Court identified the issues raised before it as: Crennan whether the emails held to be admissible only against the respondents from whom they derived under the "usual s 136 ruling" could then be admitted against all respondents (subject to relevance) after the close of evidence; and whether the primary judge could rely on the contents of the emails to establish the connection between the joint venture and the conduct constituting the alleged copyright infringement. In relation to the first issue the Full Court noted that, while not all of the emails were subject to the usual s 136 ruling, most of those relied upon by the primary judge as essential to his conclusions were subject to such rulings. The Full Court correctly emphasised the centrality of the emails to the conclusions reached by the primary judge. They had been treated as relevant to findings about credit, the joint venture, the existence of a "tacit agreement" between the parties, and the primary judge's satisfaction as to "the counterfeiting operation". Their Honours said: "As such, without the emails being relied upon by the primary judge, he could not have connected the particularised infringing transactions with the joint venture and 'tacit agreement' as to the counterfeiting operations that His Honour found existed." Their Honours considered each of the email chains in detail and the findings made by the primary judge on the basis of those communications. The Full Court observed that it was apparent throughout the trial that the email correspondence was admitted on a limited basis and that this did not change by reason of the cross-examination. In this respect their Honours' consideration of the revocation of the s 136 rulings generally intersected with their consideration of the way in which the email evidence was used by the primary judge. The applicants' application to vary the s 136 rulings was, in effect, an application to reopen their case. The Full Court said: "[T]o allow the emails to be introduced as evidence against respondents who had not been required to respond in any way to the email evidence, even their contents revealed against other respondents, was to put the respondents in an unsatisfactory position." tendered for what The Full Court then gave separate consideration to the use of the evidence by the primary judge. Their Honours concluded that the emails should not have been relied upon by his Honour to find that the infringing transactions occurred Crennan as alleged by the applicants. The question whether the primary judge had impermissibly treated the email evidence as tendency evidence was raised by the Full Court in the course of argument. No procedural fairness point was taken by the applicants in this respect. The applicants' case in this Court turned on the correctness of the way in which the Full Court viewed the primary judge's reasons. In holding that the primary judge should not have relied upon the emails to find that the alleged infringing transactions occurred, the Full Court made the following observations: The applicants' case at trial was primarily based upon circumstantial evidence which the applicants sought to relate to a number of transactions in which some or all of the respondents were said to have exported counterfeit gaming machines to Latin America. The significant emails tendered did not relate to the alleged infringing transactions. They appeared to have been tendered to discredit witnesses and/or prove the existence of a joint venture. The primary judge treated the contents of the emails as going beyond questions of credit and the existence of the joint venture. The only way the primary judge could have made the necessary connection between the infringing transactions and the joint venture was to draw an inference, based on the content of the emails, that the respondents had the tendency to act in a particular way, which involved dealing with articles, the making of which infringed copyright of the applicants, with the requisite knowledge. Having thus characterised the primary judge's use of the emails, the Full Court looked to Pt 3.6 of the Evidence Act, and in particular s 97(1), which provides: "Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind unless: the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party's intention to adduce the evidence; and Crennan the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value." Section 97(2) provides that the notice requirement does not apply if the evidence is adduced in accordance with directions made by the court under s 100 or to explain or contradict tendency evidence adduced by another party. Neither of those conditions applied in this case. Section 97 must be read with s 95(1), which provides: "Evidence that under this Part is not admissible to prove a particular matter must not be used to prove that matter even if it is relevant for another purpose." That provision in turn must be read with s 94(1), which provides: "This Part does not apply to evidence that relates only to the credibility of a witness." The email evidence did not relate only to credibility. It was also relevant to prove the existence of the joint venture. It could not be used to show a tendency on the part of the respondents to act in a particular way without compliance with s 97(1). The Full Court said: "The primary judge was right in saying that he should not rely on the contents of the emails for the truth of their contents, but fell into error in doing just that in relying upon evidence that did not relate to the particularised infringing transactions. Used in this way, the evidence in the emails could show nothing more than a tendency on the part of the respondents at trial to engage in infringing transactions." The primary judge was found to have erred in treating the emails as probative of the particularised infringing transactions and in using the contents of the emails to demonstrate the connection between the joint activity and those transactions. The Full Court held that without the emails the primary judge could not have found such connection to the infringements as was alleged. His third, fourth and fifth "essential propositions" could not be supported. Even accepting proof of the existence of a joint venture the applicants had failed to prove the alleged infringing transactions. The Full Court added: "No attempt was made by the Aristocrat parties before the primary judge or before us to prove the 'essential propositions' without reference to the Crennan emails relied upon by the primary judge. It seems to be accepted that without reliance upon the emails, the third, fourth and fifth 'essential propositions' cannot be supported, and the case brought by Aristocrat must fail." On that basis the Full Court allowed the respondents' appeals. Contentions and conclusions The first ground of appeal in the applicants' proposed notice of appeal alleged error on the part of the Full Court in finding that the applicants had failed to demonstrate that the Global and Impact respondents knew, or ought reasonably to have known, that the making of the gaming machines involved an infringement of copyright. The applicants' notice referred to matters of fact said to go to the relevant awareness of the Global and Impact respondents. That ground of the proposed appeal appeared to invite a conclusion that the findings of infringement could and should have been made independently of any use of the email evidence as tendency evidence. The respondents in their written submissions argued that the applicants should not be permitted to contend in this Court that the knowledge element in s 38 of the Copyright Act was satisfied without reliance upon evidence erroneously admitted. As to that, the issue about the email evidence was not that it was erroneously admitted. It was properly admitted as relevant to credit and the existence of a joint venture. It was the use of the email evidence by the primary judge, albeit sub silentio, to infer a tendency to act in a particular way that was central to the reasoning of the Full Court. Be that as it may, senior counsel for the applicants at the hearing of the referred application for special leave expressly disclaimed any reliance upon the proposition that concurrent findings of fact by the primary judge and the Full Court were sufficient to establish the requisite knowledge without reference to the emails. The applicants made detailed written submissions criticising the Full Court's characterisation of the primary judge's use of the email evidence. They contended that there was nothing said in the primary judge's reasons which indicated that his Honour had used the emails as tendency evidence. While the primary judge did not use the word "tendency" nor refer to s 97 of the Evidence Act his Honour, as already pointed out, used the email evidence in such a way as to justify the Full Court's view of his reasoning process. The applicants referred to elements of his Honour's reasoning which, it was said, did not link his findings about the infringing transactions to evidence of a tendency. However, the inferences that his Honour drew, that the Global and Impact respondents Crennan "sanctioned, approved or countenanced the infringements of copyright carried out by the Tonita respondents", did not appear to have been based upon conduct related directly to the particularised infringing transactions. Once that much is accepted, and having regard to other findings of the primary judge mentioned earlier, it must also be accepted that it was open to the Full Court to characterise his Honour's reasoning as based upon discernment of a tendency on the part of the respondents to act in a particular way which involved dealing with articles, the making of which infringed copyright of the applicants. Conclusion It is sufficient to say that the Full Court's view of the approach taken by the primary judge to the use of the email evidence was reasonably open. The applications did not involve a question of law of public importance1. The applicants did not contend that they involved such a question. They argued, in effect, that the interests of justice, either generally or in this particular case, required consideration by the High Court of the Full Court's judgment2. For the reasons given, the Court did not accept that argument and special leave was refused with costs in each application. Judiciary Act 1903 (Cth), s 35A(a)(i). Judiciary Act 1903 (Cth), s 35A(b).

HIGH COURT OF AUSTRALIA GREGORY IAN ATTWELLS & ANOR APPELLANTS AND JACKSON LALIC LAWYERS PTY LIMITED RESPONDENT Attwells v Jackson Lalic Lawyers Pty Limited [2016] HCA 16 4 May 2016 ORDER Appeal allowed. Set aside orders 3, 4 and 5 of the Court of Appeal of the Supreme Court of New South Wales made on 1 October 2014 and in their place order that: the appeal be allowed; the orders of Harrison J made on 17 October 2013 be set aside, and in their place order that the separate question of whether the plaintiffs' claim is defeated entirely, because the defendant is immune from suit, be answered: "No". Set aside the orders of the Supreme Court of New South Wales made on 28 October 2014. The respondent pay the appellants' costs of the proceedings on the separate question in the courts below and of the appeal to this Court. The Law Society of New South Wales pay the costs of the appellants and the respondent occasioned by its intervention in the proceedings. On appeal from the Supreme Court of New South Wales Representation G O'L Reynolds SC with R C A Higgins, R A Yezerski and D W Robertson for the appellants (instructed by L C Muriniti & Associates) A S Bell SC with P D Herzfeld for the respondent (instructed by Sparke Helmore Lawyers) R P L Lancaster SC with N J Owens for the Law Society of New South Wales, intervening (instructed by Allens) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Attwells v Jackson Lalic Lawyers Pty Limited Legal practitioners – Negligence – Advocate's immunity from suit – Advice given out of court – Where advice given by advocate led to agreed settlement of proceedings – Where terms of settlement reflected in consent orders made by court and court's noting of agreement – Where negligence proceedings issued in respect of advice – Whether advocate immune from suit. High Court – Stare decisis – Whether D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 and Giannarelli v Wraith (1988) 165 CLR 543 should be reconsidered. Words and phrases – "advocate's immunity", "collateral attack", "consent orders", "finality", "intimately connected", "judicial determination", "judicial power", "statement of agreed facts". Civil Procedure Act 2005 (NSW), ss 90, 133(1). Uniform Civil Procedure Rules 2005 (NSW), Pt 36. FRENCH CJ, KIEFEL, BELL, GAGELER AND KEANE JJ. In these proceedings, the appellants claim that earlier litigation to enforce a guarantee was settled on terms unfavourable to the first appellant as a result of the negligent advice of the respondent, his solicitor at the time. The respondent has raised the advocate's immunity from suit as a complete answer to the appellants' claim. The respondent contends that the advocate's immunity extends not only to negligent advice which leads to a final judicial determination, but also to negligent advice which leads to an agreed settlement. The advocate's immunity In D'Orta-Ekenaike v Victoria Legal Aid1, this Court held that the advocate's immunity from suit under the common law of Australia in respect of his or her participation in the judicial process extends to protect a solicitor involved in the conduct of litigation in court. In reaching that conclusion, the Court declined to reconsider its earlier decision in Giannarelli v Wraith2, in which it was held that the advocate's immunity extends to "work done out of court which leads to a decision affecting the conduct of the case in court."3 That extension of the scope of the immunity was justified by the view that, as Mason CJ said4: "it would be artificial in the extreme to draw the line at the courtroom door." But the immunity was not extended to all work in any way connected to litigation. Mason CJ explained5: "Preparation of a case out of court cannot be divorced from presentation in court. The two are inextricably interwoven so that the immunity must extend to work done out of court which leads to a decision affecting the conduct of the case in court. But to take the immunity any further would entail a risk of taking the protection beyond the boundaries of the public (2005) 223 CLR 1; [2005] HCA 12. (1988) 165 CLR 543; [1988] HCA 52. (1988) 165 CLR 543 at 560. (1988) 165 CLR 543 at 559. (1988) 165 CLR 543 at 559-560. Bell policy considerations which sustain the immunity. I would agree with McCarthy P in Rees v Sinclair6 where his Honour said: '… the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing.'" This statement of the scope of the immunity by Mason CJ was confirmed in D'Orta, in which Gleeson CJ, Gummow, Hayne and Heydon JJ said of the boundary of the immunity7: "there is no reason to depart from the test described in Giannarelli as work done in court or 'work done out of court which leads to a decision affecting the conduct of the case in court'8 or … 'work intimately connected with' work in a court. (We do not consider the two statements of the test differ in any significant way.)" The issue The present case raises the question whether the immunity extends to negligent advice which leads to the settlement of a case by agreement between the parties. The appellants contend that D'Orta does not support that extension. In the alternative, they argue that the immunity should be abolished. The abolition of the immunity would require this Court to overrule its decisions in D'Orta and Giannarelli. For the reasons which follow, the appellants' argument in this regard should be rejected. On the other hand, the appellants' argument as to the scope of the immunity should be accepted. The authoritative test for the application of the immunity stated in D'Orta and Giannarelli is not satisfied where the work of the advocate leads to an agreement between parties to litigation to settle their dispute. No doubt an advice to cease litigating which leads to a settlement is connected in a general sense to the litigation which is compromised by the agreement. But the intimate connection required to attract the immunity is a functional connection between the advocate's [1974] 1 NZLR 180 at 187. (2005) 223 CLR 1 at 31 [86]. (1988) 165 CLR 543 at 560. Bell work and the judge's decision. As Mason CJ said in Giannarelli, the required connection is between the work in question and the manner in which the case is conducted in court. Both D'Orta and Giannarelli were concerned with claims which impugned a judicial determination to which the allegedly negligent work of the advocate contributed. As will be seen from a closer consideration of the reasoning in D'Orta, the public policy, protective of finality, which justifies the immunity at the same time limits its scope so that its protection can only be invoked where the advocate's work has contributed to the judicial determination of the litigation. In short, in order to attract the immunity, advice given out of court must affect the conduct of the case in court and the resolution of the case by that court. The immunity does not extend to preclude the possibility of a successful claim against a lawyer in respect of negligent advice which contributes to the making of a voluntary agreement between the parties merely because litigation is on foot at the time the agreement is made. That conclusion is not altered by the circumstance that, in the present case, the parties' agreement was embodied in consent orders. The guarantee proceedings The first appellant and Ms Barbara Jane Lord ("the guarantors") guaranteed payment of the liabilities of a company to a bank. Ms Lord is not a party to the present litigation. The second appellant is a party to the current proceedings by virtue of an assignment to him by the first appellant's trustee in bankruptcy of the first appellant's rights against the respondent9. The company defaulted on its obligations to the bank, and the bank commenced proceedings against the company and the guarantors ("the guarantee proceedings"). In April 2010, the guarantors and the company retained the respondent to advise and act for them in relation to the guarantee proceedings. The action came on for trial before Rein J in the Supreme Court of New South Wales. The amount of the company's indebtedness to the bank was almost 9 The proceedings were in federal jurisdiction as the cause of action assigned to the second appellant had vested in the first appellant's trustee in bankruptcy by operation of s 58(1) of the Bankruptcy Act 1966 (Cth). No party adverted to the federal character of the jurisdiction and it was not suggested that it would have made any difference in this case. Bell $3.4 million. That debt was secured by various securities given by the company in favour of the bank. The guarantors' liability under the guarantee was limited to $1.5 million. On the opening day of the trial, the bank certified that the total amount owing under the guarantee, including interest and enforcement costs, was Later that day, counsel for the guarantors informed the Court that the proceedings had been settled on terms to the effect that judgment would be entered against the guarantors and the company for the full amount of the company's indebtedness to the bank, being $3.4 million, and the bank would not seek to enforce the order for payment of that amount if the guarantors paid to the bank the sum of $1.75 million on or before 19 November 2010, a date approximately five months after the settlement. Those terms were reflected in a consent order for judgment in the amount of $3.4 million made by the Court and the Court's noting of the conditional non-enforcement agreement between the parties, which was not itself embodied or reflected in an order of the Court. In the event, the guarantors failed to meet their initial payment obligation. A subsequent attempt to set aside the settlement as an unenforceable penalty was dismissed11. The appellants then issued proceedings in the Supreme Court of New South Wales against the respondent alleging that it was negligent in advising the guarantors to consent to judgment being entered against them in the terms of the consent orders, and in failing to advise them as to the effect of the consent orders ("the negligence proceedings"). The current proceedings Upon the application of the respondent pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW), and with the consent of the first appellant, Schmidt J ordered that the question whether the respondent is immune from suit by virtue of the advocate's immunity be determined separately from the other issues in the negligence proceedings12. The parties agreed to a document, described as "Proposed Agreed Facts" but treated as a statement of agreed facts 10 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [5]. 11 Attwells v Marsden (2011) 16 BPR 30,831. 12 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 925. Bell by the parties and the courts below, as the basis on which the determination of the question should proceed. The decision of the primary judge Before the primary judge (Harrison J), the appellants argued that they did not seek to impugn the consent orders. On the contrary, it was said that the consent orders were relied upon to calculate the amount of their loss, being the difference between the undisputed amount for which the guarantors were liable under the guarantee and the amount of the judgment, in the form of the consent orders, entered against these circumstances, the finality of the judgment in the guarantee proceedings was not impugned and, accordingly, their claim was beyond the scope of the immunity14. The appellants argued them13. that, The primary judge rejected that argument, holding that the appellants did, in truth, seek to assert that "the judgment that was entered against [the guarantors was] not an accurate reflection or measure of their liability to the bank."15 The "[T]he plaintiffs in [the negligence proceedings] will be asserting that the judgment in [the guarantee proceedings] is wrong and does not represent [the guarantors'] genuine liability to the bank, whereas the defendants will be asserting that the judgment in [the guarantee proceedings] is correct and by force of that judgment unquestionably establishes [the guarantors'] actual legal liability to the bank." Nevertheless, his Honour declined to answer the separate question17. His Honour was concerned that, without further evidence in relation to the 13 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [16], [22]. 14 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [23]. 15 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [28]. 16 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [28]. 17 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [38]. Bell respondent's alleged negligence, he could only form a view about the application of the advocate's immunity on a hypothetical basis18. The decision of the Court of Appeal The Court of Appeal (Bathurst CJ, Meagher and Ward JJA) granted leave to appeal, and held that the primary judge erred in declining to answer the separate question19. Their Honours then proceeded to answer that question adversely to the appellants. The Court of Appeal held that the respondent's advice was within the immunity recognised in Giannarelli20 as "work done in court or work done out of court which leads to a decision affecting the conduct of the case in court."21 Bathurst CJ, with whom Meagher and Ward JJA agreed, said22: "In the present case, in my opinion, the work fell within categories of work done out of court affecting the conduct of the case in court. The alleged breach occurred in advising on settlement of the guarantee proceedings … The advice … led to the case being settled. Put another way it was intimately connected with the conduct of the guarantee proceedings." The Court of Appeal concluded that the negligence proceedings would necessarily involve a re-agitation of the issues determined in the guarantee proceedings; and a reconsideration of those issues in order to determine whether the respondent had been negligent would offend the principle of finality23. 18 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [37]. 19 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [30]-[32]. 20 (1988) 165 CLR 543 at 560. 21 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [36]. 22 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [37]-[38]. 23 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [41]. Bell Accordingly, the respondent was immune from suit24, and judgment was entered for the respondent in the proceedings25. The appellants appealed to this Court pursuant to a grant of special leave26. In this Court, the Law Society of New South Wales ("the Law Society") sought leave to intervene. That leave was granted on the condition that the Law Society pay the costs of the parties occasioned by the intervention27. The agreed facts As already noted, the hearing before the primary judge proceeded on the basis of a statement of agreed facts. These reflected the allegations of fact, including the negligence of the respondent, set out in the statement of claim. It appears clear that they were "agreed" in the sense that the separate question was to be determined on the assumption, made only for the purposes of that determination, that they were established. If the procedure for determination of a separate question is to be useful, it is necessary for those managing the case at the stage when a question is posed for separate determination to ensure that the facts on which the question is to proceed are "the facts … which the [plaintiff] will seek to establish at trial."28 If the parties are unable to state facts which, if found, will lead to a judgment in the plaintiff's favour, doubts as to the utility of the determination of the proposed separate question may lead a court to decline an application to determine that question separately. In the present case, as appeared from the terms of the statement of agreed facts upon which the separate question was posed for resolution, it must be said, as the appellants' Senior Counsel acknowledged in argument in this Court, that "there is a measure of opacity … on the issues of negligence and causation" in the appellants' claim. 24 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [47]. 25 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [48]. 26 Bell, Gageler and Gordon JJ, 7 August 2015. 27 Levy v Victoria (1997) 189 CLR 579 at 603, 615, 628; [1997] HCA 31; Roadshow Films Pty Ltd v iiNet Ltd [No 1] (2011) 248 CLR 37 at 39 [3]; [2011] HCA 54. 28 Director of Public Prosecutions (Cth) v JM (2013) 250 CLR 135 at 155 [34]; [2013] HCA 30. Bell The agreed facts stated that the respondent advised the guarantors to sign the consent order containing the terms of settlement "because, if they defaulted in payment of the sum of $1,750,000 by 19 November 2010, it would not make any difference if the judgment in favour of the bank was for $3,399,347.67 or any other sum ('the advice')." The statement of agreed facts then asserted, among other things, that the respondent was negligent: (iii) in giving the advice when the guarantors did not have a liability to the bank for $3,399,347 or anything like that sum; in failing to advise the guarantors that if they defaulted in payment of the sum of $1,750,000 by 19 November 2010, there would be a judgment against them for $1,543,225 more than the guaranteed amount of $1,856,122; and in failing to advise the guarantors that no legally binding settlement came into existence unless the terms of settlement were signed, and that there were alternatives that they could pursue, including making a counteroffer reflecting the guaranteed sum of $1,856,122 in lieu of $3,399,347 and, failing acceptance of that offer by the bank, resuming the hearing. There is a tension between the appellants' contention that the respondent was negligent in failing to advise the guarantors that they did not have a liability to the bank for $3,399,347 and the advice which, it is an agreed fact, was given. The statement of agreed facts asserted that the fact of a liability to the bank under the settlement for $3,399,347 was expressly adverted to before the guarantors signed the consent order. The terms of the advice which is alleged to have been given to the guarantors clearly assumed the disparity between the larger liability which would arise in the event of default in payment on 19 November 2010, and the guarantors' liability under the guarantee. It also appears to be the case that the advice was not advice to the guarantors as to their liability under their guarantee. The consent orders and associated agreement appear, on their face, to have created a new charter of rights between the parties. The liability which the guarantors assumed under that new charter was distinctly not their liability under the guarantee. If the guarantors met their liability under the guarantee within the extended time for which the settlement agreement provided, they would be released from all liability to the bank. In return for extra time to pay their true debt, the guarantors agreed to consent to a judgment for the total indebtedness of the company with a collateral agreement that the judgment would not be enforced should the amount they owed under the guarantee be paid within that extended time. Bell That having been said, the appeal to this Court is concerned solely with whether the advocate's immunity is, as the respondent contends, a separate and complete answer to the appellants' claim. This Court has not been invited to hold that the weakness of the appellants' claim on the issues of negligence and causation of loss is so clear that there is no utility in deciding the issue presented for determination. The decision of the Court of Appeal, while it stands, precludes any investigation of the strengths and weaknesses of the appellants' claim. The issue as to the effect of the immunity was raised by the respondent, and, the issue having been decided by the Court of Appeal in the respondent's favour as a complete answer to the appellants' claim, should be decided by this Court. The appellants submitted that this Court should exercise its undoubted authority29 to reconsider its previous decisions in Giannarelli and D'Orta. The appellants argued that the decisions in Giannarelli and D'Orta do not rest upon a principle carefully worked out from the authorities. The appellants also argued that the judgments in D'Orta left the scope of the immunity unclear, and that there is such a degree of inconsistency between the immunity and its rationale that this Court should follow other common law systems and abolish the immunity. The decision whether to reconsider Giannarelli and D'Orta must be made in light of the "grave danger of a want of continuity in the interpretation of the law."30 The decision must be informed by "a strongly conservative cautionary principle, adopted in the interests of continuity and consistency in the law"31. To overturn Giannarelli and D'Orta would generate a legitimate sense of injustice in those who have not pursued claims or have compromised or lost cases by reference to the state of the law as settled by these authorities during the years 29 Queensland v The Commonwealth (1977) 139 CLR 585 at 599, 602, 620; [1977] HCA 60; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-440, 450-453; [1989] HCA 5; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 350 [65], 352-353 [70], 357-359 [82]-[86]; [2009] HCA 2; Beckett v New South Wales (2013) 248 CLR 432 at 454 [52]; [2013] HCA 17. 30 The Tramways Case [No 1] (1914) 18 CLR 54 at 58; [1914] HCA 15. 31 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352 [70]. Bell when they have stood as authoritative statements of the law. An alteration of the law of this kind is best left to the legislature. It must also be said that the questions agitated here as to the rationale for the immunity and its scope were fully argued in Giannarelli and D'Orta. No argument of principle or public policy was advanced by the appellants which had not been addressed in Giannarelli and D'Orta. It is true that, since the decision in Giannarelli, courts in other legal systems have come to a different view as to how competing considerations of principle and policy should be resolved32, but those decisions do not reveal an insight into any issue of principle or policy that was not appreciated in Giannarelli and D'Orta. More importantly, the decision in D'Orta states a rule which is consistent with, and limited by, a rationale which reflects the strong value attached to the certainty and finality of the resolution of disputes by the judicial organ of the State. To explain why that is so, it is necessary to consider more closely the reasons given by the plurality for their decision in D'Orta. The decision in D'Orta In D'Orta33, the plurality noted that the immunity as stated in Giannarelli was consistent with the decisions of the House of Lords in Rondel v Worsley34 and Saif Ali v Sydney Mitchell & Co35 and with the reasons said in those decisions to underpin the immunity. The plurality noted36 that the House of Lords had reconsidered its earlier decisions in Arthur J S Hall & Co v Simons37 and observed that this alteration of the common law might be understood in the light of the "then imminent coming into operation of the Human Rights Act 1998 32 Arthur J S Hall & Co v Simons [2002] 1 AC 615; Lai v Chamberlains [2007] 2 NZLR 7. 33 (2005) 223 CLR 1 at 14-16 [25]-[29]. 36 (2005) 223 CLR 1 at 23-24 [56]. 37 [2002] 1 AC 615 at 678, 684, 688, 709-710, 728, 736-737, 752-753. Bell (UK)"38. The plurality also discussed the state of the law in other common law jurisdictions39. The plurality, in considering the reasons advanced to support the immunity, referred to the "chilling" effect of the threat of legal action upon advocates and the consequent prolongation of trials40. The prospect of such a chilling effect was not thought to "provide support in principle for [the] existence" of the immunity41. In their Honours' view, in the search for the true rationale of the immunity, "[c]hief attention must be given to the nature of the judicial process and the role that the advocate plays in it."42 Their Honours referred to the various reasons for the immunity discussed in Giannarelli43, and said44: "Of the various factors advanced to justify the immunity, 'the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings' (emphasis added)45 was held to be determinative46." The plurality in D'Orta accepted that the rationale of the immunity was rooted in the role of the advocate engaged, as an officer of the court, in the exercise by the court of judicial power to quell a controversy, and went on to 38 (2005) 223 CLR 1 at 23-24 [56]. 39 (2005) 223 CLR 1 at 25-26 [61]-[64]. 40 (2005) 223 CLR 1 at 15-16 [29]. 41 (2005) 223 CLR 1 at 16 [29]. 42 (2005) 223 CLR 1 at 16 [30]. 43 (1988) 165 CLR 543 at 554-555. 44 (2005) 223 CLR 1 at 16 [31]. 45 (1988) 165 CLR 543 at 555. 46 See also (1988) 165 CLR 543 at 574 per Wilson J, 579 per Brennan J, 595-596 per Bell emphasise the binding nature of judicial decision-making as an aspect of the government of society. Their Honours said47: "[T]he central concern of the exercise of judicial power is the quelling of controversies. Judicial power is exercised as an element of the government of society and its aims are wider than, and more important than, the concerns of the particular parties to the controversy in question … No doubt the immediate parties to a controversy are very interested in the way in which it is resolved. But the community at large has a vital interest in the final quelling of that controversy. And that is why reference to the 'judicial branch of government' is more than a mere collocation of words designed to instil respect for the judiciary. It reflects a fundamental observation about the way in which this society is governed." To speak of the exercise of judicial power to quell controversies as an aspect of government is to make it clear that the immunity is not justified by a general concern that disputes should be brought to an end, but by the specific concern that once a controversy has been finally resolved by the exercise of the judicial power of the State, the controversy should not be reopened by a collateral attack which seeks to demonstrate that that judicial determination was wrong. "[T]he central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society." Their Honours explained49 that, where a final order has been made resolving litigation, a claim that "but for the advocate's conduct, there would have been a different result" is objectionable as a matter of public policy. That is because the consequences of the decision about which the claimant wishes to complain are "consequences flowing from … a lawful result … lawfully reached."50 The advocate's immunity is, therefore, justified as an aspect of the 47 (2005) 223 CLR 1 at 16 [32]. 48 (2005) 223 CLR 1 at 20-21 [45]. 49 (2005) 223 CLR 1 at 27 [70]. 50 (2005) 223 CLR 1 at 27 [70] (emphasis in original). Bell protection of the public interest in the finality and certainty of judicial decisions by precluding a contention that the decisions were not reached lawfully51. This review of the reasons of the plurality in D'Orta is sufficient to demonstrate that, contrary to the appellants' argument for abolition, there is a clear basis in principle for the existence of the immunity. As to the soundness of the decision in point of authority, the statement of the common law immunity in D'Orta (and Giannarelli) reflects what had been established as the law in the United Kingdom before the change wrought by the decision of the House of Lords in Arthur J S Hall v Simons. The common law of Australia, as expounded in D'Orta and Giannarelli, reflects the priority accorded by this Court to the values of certainty and finality in the administration of justice as it affects the public life of the community52. The foregoing is a sufficient basis to reject the appellants' invitation to reconsider the decisions in D'Orta and Giannarelli. At the same time, however, this review of the reasons of the plurality in D'Orta, and the identification of the public policy on which the immunity is based, serve to show that the scope of the immunity for which D'Orta and Giannarelli stand is confined to conduct of the advocate which contributes to a judicial determination. Extending the immunity to compromises It is apparent from the passages set out above from D'Orta that it is the participation of the advocate as an officer of the court in the quelling of controversies by the exercise of judicial power which attracts the immunity. Because that is so, the immunity does not extend to acts or advice of the advocate which do not move litigation towards a determination by a court. In particular, the immunity does not extend to advice that leads to a settlement agreed between the parties. As McHugh J said in D'Orta53: "[I]t is possible to sue a practitioner for the negligent settlement of proceedings or for the negligent loss or abandonment of a cause of action … even though there is a public interest in the finality achieved through 51 (2005) 223 CLR 1 at 30-31 [84]. 52 Recently discussed in Achurch v The Queen (2014) 253 CLR 141 at 152-154 [14]-[18]; [2014] HCA 10. 53 (2005) 223 CLR 1 at 56 [166]. Bell the statutes of limitations and the promotion of out-of-court dispute settlement. But where a trial has taken place, as the judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ demonstrates, public confidence in the administration of justice is likely to be impaired by the re-litigation judicially determined." in a negligence action of issues already While the plurality in D'Orta did not state explicitly that advice leading to an out of court settlement was outside the scope of the immunity, it is apparent on a fair reading of their Honours' reasons that the rationale of the immunity does not extend to advice which does not move the case in court toward a judicial determination54. The respondent relied upon the decision of the Court of Appeal of New Zealand in Biggar v McLeod55 to support the contention that the immunity does extend to an agreed settlement of proceedings after a hearing has commenced. In that case, it was said56 that: "The giving of advice as to the compromise of proceedings, involving as it does the question of their continuation or termination, is an inherent feature of the conduct of the cause by counsel." But to say that is not to identify conduct by counsel which affects the judicial determination of the case. This expansive view of the scope of the immunity was expressed by a court in New Zealand before the immunity was abolished in that country by the decision of the Supreme Court of New Zealand in Lai v Chamberlains57. It may be observed, with the greatest respect, that by allowing an expansive view of the scope of the immunity so that its operation was wider than was "absolutely necessary in the interests of the administration of justice"58, the decision in Biggar v McLeod effectively strengthened the case for the abolition of the immunity in New Zealand. To accept that the immunity 54 (2005) 223 CLR 1 at 16 [32]. 55 [1978] 2 NZLR 9. 56 [1978] 2 NZLR 9 at 14. 57 [2007] 2 NZLR 7. 58 Rees v Sinclair [1974] 1 NZLR 180 at 187. Bell extends to advice which leads to a settlement of litigation is to decouple the immunity from the protection of the exercise of judicial power against collateral attack. Such an extension undermines the notion of equality before the law by enlarging the circumstances in which lawyers may be unaccountable to their clients. The appellants argued that the immunity is confined to those decisions which a lawyer may make in the conduct of a case without the specific instructions of the client. In response to that argument, the respondent drew attention to the conclusion by the plurality in D'Orta59: "Because the immunity now in question is rooted in the considerations described earlier, where a legal practitioner (whether acting as advocate, or as solicitor instructing an advocate) gives advice which leads to a decision (here the client's decision to enter a guilty plea at committal) which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account." The respondent sought to argue that this statement shows that advice by a lawyer which leads to a decision by a client is within the scope of the immunity. So much may be accepted, to the extent that such advice affects the judicial determination of the proceedings. But negligent advice to plead guilty, as had been allegedly given in D'Orta, when accepted by the client, does affect the determination of the case by the court. The court cannot proceed to conclude its function until a conviction is recorded. In D'Orta, McHugh J explained60: "A decision about a plea of guilty cannot be described other than as intimately connected with the conduct of a criminal cause. It is a decision made preliminary to the hearing of a charge which affects the conduct of the accused's matter before the court. … The connection of a plea of guilty at committal with the conduct of a criminal matter is intimately connected with the hearing of that matter 59 (2005) 223 CLR 1 at 32 [91]. 60 (2005) 223 CLR 1 at 51-52 [152]-[153]. Bell because the timing of the plea affects the sentence imposed, in particular, whether the plea was entered at the first reasonable opportunity61." In addition, the judicial function is squarely engaged in determining whether to accept a plea of guilty. A court may not accept the plea of guilty unless it is satisfied that it is freely made by the accused62. For present purposes, however, it is not necessary to determine whether the immunity attaches only to the kinds of decision which a lawyer charged with the conduct of a case in court may make without instructions from the client. It is sufficient to conclude that the immunity does not extend to negligent advice which leads to the settlement of a claim in civil proceedings. Once it is appreciated that the basis of the immunity is the protection of the finality and certainty of judicial determinations, it can be more clearly understood that the "intimate connection" between the advocate's work and "the conduct of the case in court" must be such that the work affects the way the case is to be conducted so as to affect its outcome by judicial decision. The notion of an "intimate connection" between the work the subject of the claim by the disappointed client and the conduct of the case does not encompass any plausible historical connection between the advocate's work and the client's loss; rather, it is concerned only with work by the advocate that bears upon the judge's determination of the case. An anomaly? The respondent argued that it would be anomalous to hold that the immunity does not extend to advice which leads to a disadvantageous compromise but does extend to negligent advice not to compromise which leads to a judicial decision less beneficial to the client than a rejected offer of compromise. It was argued that in each case the advice is intimately connected with the proceedings. Further, it was said that to differentiate between these cases may discourage lawyers from giving frank advice in favour of settlement because settlement itself would put them outside the zone of immunity. The Law 61 Cameron v The Queen (2002) 209 CLR 339 at 345-346 [19]-[25] per Gaudron, Gummow and Callinan JJ; [2002] HCA 6. 62 Meissner v The Queen (1995) 184 CLR 132 at 141-142; [1995] HCA 41; GAS v The Queen (2004) 217 CLR 198 at 210-211 [29]; [2004] HCA 22. Bell Society supported this argument, emphasising that public policy favours the settlement of litigation. The assumption on which the respondent's argument depends, that is, that negligent advice not to settle is "intimately connected" with the ensuing judicial decision of the court so as to attract the immunity, is not sound. The respondent cited no authority in support of this assumption. That is not surprising, given that it is difficult to envisage how advice not to settle a case could ever have any bearing on how the case would thereafter be conducted in court, much less how such advice could shape the judicial determination of the case. The respondent's assumption depends on the view that a merely historical connection between the advice and the outcome of the case, in the sense that one event precedes another as a necessary condition of its occurrence, is the intimate connection on which Giannarelli and D'Orta insist. As has been said, it is a functional connection between the work of the advocate and the determination of the case by the court which is necessary to engage the immunity. Just as it is true to say that advice to settle is "connected" to the case in the sense that the advice will, if accepted, lead to the end of the case, so it is true to say that advice not to settle a case is "connected" to the case in the sense that the advice will, if accepted, lead to the continuation of the case. But to say either of these things is to speak of a merely historical connection between events. That is to fail to observe the functional nature of the intimate connection required by the public policy which sustains the immunity. The insufficiency of a mere historical connection between an advocate's work and a litigious event may be illustrated by reference to negligent advice to commence proceedings which are doomed to fail. No one suggests that the immunity is available in such a case. Likewise, advice to cease litigating or to continue litigating does not itself affect the judicial determination of a case. The respondent argued that where a client has accepted advice not to settle a claim and the matter proceeds to a judgment which is less advantageous for the client than the rejected offer it could be expected that the legal adviser when sued would be disposed to defend himself or herself by arguing that the judgment was wrong and his or her advice was right. That submission is not accepted. It is difficult to conceive of any circumstance in which the correctness of the court's decision would be put in issue. The central question would not be whether the court was right or wrong, but whether the advice was reasonable in all the circumstances known to the adviser at the time the advice was given. Secondly, if the judgment were erroneous, one would expect that this would be demonstrated on appeal; and if the error cannot be demonstrated on appeal from Bell the record of proceedings in court in the earlier case, that would tend to confirm that the negligent advice had nothing to do with the judgment reached by the court. As to the argument advanced by the Law Society, the immunity is not attracted simply because its existence might encourage lawyers to advise their clients to settle their claims. While it is no doubt true that there is a public interest in the resolution of disputes63, the public policy which justifies the immunity is not concerned with the desirability or otherwise of settlements, but with the finality and certainty of judicial decisions. Decisions by the courts, as the judicial organ of the State, are necessary precisely because the parties cannot achieve a compromise of their disputes. The advocate's immunity is grounded in the necessity of ensuring that the certainty and finality of judicial decisions, values at the heart of the rule of law, are not undermined by subsequent collateral attack. The operation of the immunity may incidentally result in lawyers enjoying a degree of privilege in terms of their accountability for the performance of their professional obligations. But this incidental operation is a consequence of, and not the reason for, the immunity. Because this incidental operation of the immunity comes at the expense of equality before the law, the inroad of the immunity upon this important aspect of the rule of law is not to be expanded simply because some social purpose, other than ensuring the certainty and finality of decisions, might arguably be advanced thereby. Accordingly, it should be accepted that in the present case there was no occasion for the operation of the immunity in relation to advice which led to the settlement of the guarantee proceedings on terms disadvantageous to the guarantors. That said, the question which now must be addressed is whether the circumstance that the settlement was embodied in consent orders was sufficient to attract the operation of the immunity. The consent order The respondent argued that a judgment that reflects a compromise reached by consent is no less effective to quell a controversy than if it followed a 63 As reflected in the maxim "interest reipublicae ut finis sit litium" (it is in the public interest that there be an end to suits). Bell contested hearing. It was said to be important in this regard to recognise that the parties' antecedent rights merged in the consent judgment64. In Newcrest Mining Ltd v Thornton65, French CJ said that although a consent order may, by the rules of the court, be given the same legal effect as an order made after a hearing in the court, "[t]hat does not impute any finding to the court." Here, the primary judge made no finding of fact or law which resolved the controversy between the parties. And the circumstance that the appellants' claim against the respondent relates, not to the resolution of the issues which arose in the guarantee proceedings, but to the terms of a new charter of rights between the parties to those proceedings, also tends to confirm that this is so. For the respondent, reliance was placed on the decision of this Court in Chamberlain v Deputy Commissioner of Taxation66 in support of an argument that the negligence proceedings involved an impermissible attack on a judgment of a court because the settlement agreement had merged in the consent order so that the appellants' claim impugned a subsisting decision of a court. In Chamberlain, the settlement in question was, in terms67: "By Consent … Judgment for the Plaintiff in the sum of $25,557.92 together with costs to be assessed and agreed at $115.00. … The settlement monies to be paid by the Defendant to the Plaintiff forthwith." The judgment which was entered in that case recited that the terms of settlement had been filed and "adjudged" accordingly that "the Plaintiff recover against the Defendant the sum of $25,557.92 for debt and $115.00 for costs." When the plaintiff discovered that the amount for which judgment had been entered was less than the amount actually due, and brought an action to recover the balance, this Court held that the action was not maintainable on the footing that the cause of action upon which the plaintiff relied had merged in the 64 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508; [1988] HCA 21. 65 (2012) 248 CLR 555 at 564 [17]; [2012] HCA 60. 66 (1988) 164 CLR 502. 67 (1988) 164 CLR 502 at 505. Bell judgment of the court "thereby destroying its independent existence so long as that judgment stood."68 The decision in Chamberlain does not assist the respondent. The present case is not concerned with whether the bank's original cause of action had merged in the judgment of the court, or even with whether the bank's rights under the settlement agreement had merged in the consent order of the court. Whether or not the settlement agreement has a legal existence independent of the consent order, such as for the purposes of its enforcement, has nothing to do with the substantive content of the rights and obligations established by it. The substantive content of those rights and obligations was determined by the parties without any determination by the court. The public policy which sustains the immunity is not offended by recognising the indisputable fact that the terms of the settlement agreement, by reason of which the appellants claim to have been damaged, were not, in any way, the result of the exercise of judicial power. The respondent also argued that cases involving settlements may involve a collateral challenge to judicial conduct because, in some cases where a case is resolved by settlement, the judge is required to be satisfied that the orders should be made. It may be acknowledged that there are many cases where, although the parties have agreed upon the terms of the order which a court is asked to make, the making of the order itself requires the resolution of issues by the exercise of judicial power. Examples include where representative proceedings are settled69, or where proceedings on behalf of a person under a legal incapacity are to be compromised70, or where agreements are made in relation to proceedings under ss 86F, 87 and 87A of the Native Title Act 1993 (Cth). Other examples include the exercise of the judicial discretion to allow an agreement to amend a patent granted under the Patents Act 1900 (Cth)71, and the compromise of certain debts under ss 477(2A) and 477(2B) of the Corporations Act 2001 (Cth). It is not necessary to consider such cases here. 68 (1988) 164 CLR 502 at 510. 69 Federal Court of Australia Act 1976 (Cth), s 33V; Civil Procedure Act 2005 (NSW), s 173; Supreme Court Act 1986 (Vic), s 33V. 70 Somerset v Ley [1964] 1 WLR 640 at 643; [1964] 2 All ER 326 at 328. 71 Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71 at 75 [14]. Bell In the present case, the consent order and associated notation by the Court reflected an agreement of the parties for the payment of money in circumstances where no exercise of judicial power determined the terms of the agreement or gave it effect as resolving the dispute. The consent order may have facilitated the enforcement of the compromise, but it was the agreement of the parties that settled its terms. Orders The following orders should be made. Appeal allowed. Set aside orders 3, 4 and 5 of the Court of Appeal of the Supreme Court of New South Wales made on 1 October 2014 and in their place order that: the appeal be allowed; the orders of Harrison J made on 17 October 2013 be set aside, and in their place order that the separate question of whether the plaintiffs' claim is defeated entirely, because the defendant is immune from suit, be answered: "No". Set aside the orders of the Supreme Court of New South Wales made on 28 October 2014. The respondent pay the appellants' costs of the proceedings on the separate question in the courts below and of the appeal to this Court. The Law Society of New South Wales pay the costs of the appellants and the respondent occasioned by its intervention in the proceedings. Nettle NETTLE J. I have had the advantage of reading the reasons for judgment of Gordon J and I agree with her Honour for the reasons she gives that the appeal should be dismissed. I wish to add something concerning the reasoning of the majority. As the majority observe, on a fair reading of D'Orta-Ekenaike v Victoria Legal Aid72, it may be said that the rationale of an advocate's immunity from suit does not extend to advice unless it is advice which "move[s] the case in court toward a judicial determination". Contrary to the majority's reasoning, however, it does not follow that the immunity may not apply to advice to settle a proceeding or to advice not to settle a proceeding. The purpose of the advocate's immunity is to avoid the re-litigation in collateral proceedings for negligence, or other civil cause of action, of issues determined in the principal proceedings. As Gordon J explains, it is based in policy that a controversy should not be re-opened by a collateral attack which seeks to demonstrate that a judicial determination was wrong. Where, therefore, a final order has been made resolving litigation, a claim that, but for an advocate's conduct, there would have been a different result is necessarily objectionable. When a matter is settled wholly out of court, the settlement does not move the litigation toward a determination by the court. Consequently, advice to enter into such a settlement does not attract the immunity. But where a matter is settled out of court on terms providing for the court to make an order by consent that determines the rights and liabilities of the parties, the settlement plainly does move the litigation toward a determination by the court. It is true that, in the latter class of case, the determination will largely be the result of agreement as opposed to a working out by the court of the parties' rights and liabilities. But even where the parties are agreed on the orders which should be made for the determination of their rights and liabilities, it remains for the court to be satisfied that it is appropriate so to order73. Thus, for one party later to contend that it was negligent of an advocate to advise in favour of such a settlement will involve calling into question the rectitude of the court's order. To take a simple case for example, suppose that a plaintiff's claim is for $200,000 and that the proceeding is settled on terms that the defendant pay the plaintiff $150,000 and that the parties consent to an order that the plaintiff's claim 72 (2005) 223 CLR 1; [2005] HCA 12. 73 The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113 at 127-128 [57] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; 326 ALR 476 at 491; [2015] HCA 46. Nettle be struck out or dismissed without an adjudication upon the merits74. In such a case, the order to strike out or dismiss the proceeding without any adjudication on the merits would not, in any sense, determine the rights and liabilities of the parties. Hence, a claim that an advocate was negligent in advising the defendant to settle on those terms would not involve any attack on the order. The attack would be confined to the defendant's contractual obligation under the terms of settlement to pay the plaintiff $150,000. In those circumstances the immunity would not apply. By contrast, if the plaintiff's claim were settled on terms that the parties consent to an order that the defendant pay the plaintiff $150,000, and such an order were made, the order would determine the rights and liabilities of the parties. It would determine that the extent of the defendant's liability to the plaintiff was $150,000. And, in such a case, a claim that the advocate was negligent in advising the defendant to consent to the order would involve a collateral attack on the order. It would require the defendant to establish that, but for the advocate's negligence in advising the defendant to consent to the order, the court would have determined that the defendant's liability to the plaintiff was less than $150,000, and thus that the order that the defendant pay the plaintiff $150,000 was, in that sense, wrong. It would be similar if the plaintiff's claim were settled on terms that the defendant pay the plaintiff $150,000, the proceeding be struck out and, in default of timeous payment, the defendant consent to judgment for $200,000; and if, following default by the defendant, the plaintiff successfully moved for judgment for $200,000 on the terms of settlement75. The court's order that the defendant pay the plaintiff $200,000 would determine the rights and liabilities of the parties, namely, that the defendant was liable to the plaintiff for $200,000. In those circumstances, a claim that the defendant's advocate was negligent in advising the defendant to enter into the terms of settlement would also involve a collateral attack on the order. It would require the defendant to establish that, but for the advocate's negligence in advising the defendant to enter into the terms of settlement, the court would have determined that the defendant's liability to the plaintiff was less than $200,000, and thus that the order that the defendant pay the plaintiff $200,000 was, in that sense, wrong. By further contrast, however, advice to reject an offer of settlement will, if accepted, invariably affect the conduct of the case in court. To persist with the example of the claim for $200,000, if an advocate advised the defendant against 74 See, eg, Uniform Civil Procedure Rules 2005 (NSW), rr 12.1(1), 12.3. 75 See Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555. Nettle accepting an offer to settle for $150,000 and at the conclusion of the trial the court gave judgment for the plaintiff for $190,000, a subsequent claim by the defendant that the advocate was negligent in advising against settlement would call into question whether the advocate had a reasonable basis for so advising. As the majority observe, in principle that might not necessitate establishing that the judgment was wrong. But it would necessitate re-litigation of issues determined at trial, including: the strength of the plaintiff's case; probably, the appropriate weight into account considerations of credibility and reliability of witnesses; and the correct application of legal principle and authority. That is the kind of exercise which D'Orta was calculated to avoid and, in my view, it is not one which should now be sanctioned. the evidence, to be given taking Conclusion In this case, the determination of the appellants' claim would necessitate re-opening the controversy between the first appellant and Australia and New Zealand Banking Group Limited ("the Bank") and receivers appointed by the Bank by way of a collateral attack which seeks to demonstrate that, in the circumstances of this case, the judicial determination comprised of the consent order that there be judgment for approximately $3.4 million was not a just determination of the first appellant's liability to the Bank. That being so, I consider that the Court of Appeal of the Supreme Court of New South Wales was right to hold that the immunity applied. I would dismiss the appeal. Introduction The first appellant, Mr Gregory Ian Attwells ("Mr Attwells"), was a defendant in proceedings commenced by Australia and New Zealand Banking Group Limited ("the ANZ Bank"), and receivers appointed by the ANZ Bank, in the Supreme Court of New South Wales ("the Recovery Proceedings"). The Recovery Proceedings were settled. A "Judgment/Order" was entered on 16 June 2010 ("the Order"), pursuant to r 36.11 of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"). It was in the terms of a "Consent Order" signed by the parties ("the Consent Order"). The Order comprised two sections. The first section, headed "BY CONSENT, THE COURT ORDERS THAT", contained nine orders. Order 1 of the Order was verdict and judgment for the ANZ Bank against Mr Attwells and others in the sum of $3,399,347.67. Orders 2 to 7 of the Order provided, amongst other things, that Mr Attwells and Ms Barbara Lord ("Ms Lord") give possession of certain land, water rights and goods to the ANZ Bank and the the receivers. cross-defendants on the Amended Cross-Claim and order 9 of the Order dismissed the Amended Cross-Claim. the Order was verdict and Order 8 of judgment for In the second section of the Order, "THE COURT NOTES … THE AGREEMENT BETWEEN" the ANZ Bank and the receivers and Mr Attwells, Ms Lord and another defendant that, amongst other things: the ANZ Bank and the receivers would not enforce orders 1 to 9 of the Order if Mr Attwells, Ms Lord and another defendant paid the ANZ Bank $1,750,000 on or before 19 November 2010; and in the event that Mr Attwells, Ms Lord and another defendant failed to comply with particular obligations (including paying the ANZ Bank $1,750,000 on or before 19 November 2010), the ANZ Bank and the receivers would be "at liberty to enforce [orders 1 to 9] forthwith" (emphasis added). Under r 36.1A of the UCPR, the court may "give judgment, or order that judgment be entered, in the terms of an agreement between parties in relation to proceedings between them". Jackson Lalic Lawyers Pty Limited, a company carrying on legal practice under the name "Jackson Lalic Lawyers", had advised Mr Attwells and Ms Lord to sign the Consent Order and to consent to judgment in the terms recorded in that Consent Order. A verdict and judgment was made or given, and entered, in the sum of $3,399,347.67 by the Supreme Court of New South Wales. The appellants sued Jackson Lalic Lawyers in negligence. For the purposes of determining whether Jackson Lalic Lawyers was entitled to the benefit of the advocate's immunity in respect of that advice, the parties agreed that the advice was given and that it was negligent. Argument in this Court has proceeded on the assumption that the full extent of the liability of Mr Attwells and Ms Lord to the ANZ Bank was only $1,856,122.28. Was Jackson Lalic Lawyers able to be sued in damages in a civil action for that advice? In the circumstances of this appeal, the answer is "No", because the giving of the advice is covered by the advocate's immunity. Facts The appeal in this Court and the decisions below proceeded upon "Proposed Agreed Facts". They are as follows. Mr Attwells and Ms Lord were guarantors of certain advances made by the ANZ Bank to a company, Wilbidgee Beef Pty Limited ("the Company"). The Company defaulted and the Recovery Proceedings against Mr Attwells and Ms Lord on the guarantee. The second appellant, Mr Noel Bruce Attwells, is the assignee of the rights of Mr Attwells against Jackson Lalic Lawyers. the ANZ Bank commenced In about April 2010, Mr Attwells, Ms Lord and the Company retained Jackson Lalic Lawyers to act for and advise them in relation to their dealings with the ANZ Bank and Mr Attwells and Ms Lord retained Jackson Lalic Lawyers to conduct their defence of the Recovery Proceedings. On 15 June 2010, counsel for the ANZ Bank and the receivers opened the trial of the Recovery Proceedings before Rein J in the Supreme Court and acknowledged in open court that: the claim by the ANZ Bank against Mr Attwells and Ms Lord on the guarantee was limited; the ANZ Bank accepted that the debt due by Mr Attwells and Ms Lord on the guarantee was $1.5 million plus interest plus enforcement costs ("the guaranteed debt"); and the amount of the guaranteed debt, as at 15 June 2010, as certified by the ANZ Bank, was $1,856,122.28. On 15 June 2010, senior counsel briefed by Jackson Lalic Lawyers to appear for Mr Attwells and Ms Lord negotiated a settlement of the Recovery Proceedings on terms that there would be judgment for the ANZ Bank for $1,750,000, inclusive of costs, and Mr Attwells and Ms Lord would have until the end of November 2010 to pay that amount. Shortly after the luncheon adjournment on 15 June 2010, senior counsel approached Mr Attwells, Ms Lord and Mr Faris Shehabi of Jackson Lalic Lawyers and said words to the effect, "I have got you $1,750,000 and November to pay. Is that OK?" Mr Attwells and Ms Lord gave instructions to settle the proceedings on that basis. At about 2.30 pm on that day, the Court was informed that the Recovery Proceedings had been settled, subject to terms. The hearing of the Recovery Proceedings was adjourned by the Court to permit terms of settlement to be prepared and subsequently handed up the next day. During the afternoon of 15 June 2010, draft terms of settlement, in the form of the Consent Order, were prepared by the solicitors for the ANZ Bank and forwarded to Mr Shehabi of Jackson Lalic Lawyers. At or about 7.30 pm on 15 June 2010, during a conference at the offices of Jackson Lalic Lawyers, Mr Shehabi on behalf of Jackson Lalic Lawyers advised Mr Attwells and Ms Lord that they should sign the Consent Order and consent to judgment against themselves, in favour of the ANZ Bank, in the sum of $3,399,347.67 because, if they defaulted in payment of the sum of $1,750,000 by 19 November 2010, it would not make any difference if the judgment in favour of the ANZ Bank was for $3,399,347.67 or any other sum. Mr Attwells and Ms Lord signed the Consent Order. The Consent Order was submitted to the Court on 16 June 2010. The Order The Order was entered by the Court on 16 June 2010. The Order comprised two sections – orders of the Court and the recording of an agreement between the parties. Relevantly, it was in the following terms: "BY CONSENT, THE COURT ORDERS THAT: Verdict and judgment for [the ANZ Bank] against [Mr Attwells, Ms Lord and the Company] in the sum of $3,399,347.67. [Mr Attwells and Ms Lord] give to [the ANZ Bank and the receivers] possession of [identified] land … [Mr Attwells and Ms Lord] give to [the ANZ Bank and the receivers] possession of the water rights … [The ANZ Bank and the receivers] have leave to issue writs of possession forthwith. [Mr Attwells, Ms Lord and the Company] deliver up to [the ANZ Bank and the receivers], or as [the ANZ Bank and the receivers] direct, the items detailed in Annexure 'A' to these Consent Orders ('the Goods'). [The ANZ Bank and the receivers] have leave to issue a writ for the delivery of goods in respect of the Goods forthwith. Verdict and Judgment for the cross-defendants on the Amended Cross-Claim. The Amended Cross-Claim is dismissed. THE COURT NOTES THAT THE THIRD DEFENDANT IS IN LIQUIDATION AND THE AGREEMENT BETWEEN [THE ANZ BANK AND THE RECEIVERS] AND [MR ATTWELLS, MS LORD AND THE COMPANY] THAT: [The ANZ Bank and the receivers] shall not enforce orders 1 to 9 above ('the Orders') provided that: [Mr Attwells, Ms Lord and the Company] pay to [the ANZ Bank] the sum of $1,750,000 on or before 19th November In the event that [Mr Attwells, Ms Lord and the Company] fail to comply with any of their obligations under paragraph 11 above, [the ANZ Bank and the receivers] shall be at liberty to enforce the Orders forthwith. The parties to these Consent Orders acknowledge and agree that: these Consent Orders embody the entire agreement between the parties; … 17. …" (emphasis added) The $1,750,000 was not paid to the ANZ Bank on or before 19 November 2010, thereby allowing the ANZ Bank to enforce the orders in accordance with the parties' agreement as recorded in pars 11(a) and 12. By reason of order 1 of the Order, Mr Attwells was indebted to the ANZ Bank in the sum of An attempt by Mr Attwells, Ms Lord and the Company to set aside the settlement as a penalty was dismissed by Pembroke J on 11 February 201176. That order was not the subject of challenge in this appeal. Previous decisions Mr Attwells and the second appellant sued Jackson Lalic Lawyers for negligence in the Supreme Court of New South Wales. On 10 July 2013, Schmidt J ordered that the question of whether that claim was defeated entirely because Jackson Lalic Lawyers was immune from suit should be decided The primary judge (Harrison J) declined to answer the separate question78, although his Honour's preliminary conclusion was that the losses claimed by Mr Attwells and the second appellant were within the scope of the advocate's immunity. Jackson Lalic Lawyers sought leave to appeal to the Court of Appeal of the Supreme Court of New South Wales. The application for leave to appeal was heard concurrently with the proposed appeal. The first two issues considered by the Court of Appeal were procedural – whether leave to appeal should be granted and whether the primary judge should have answered the separate question. They may be put to one side. The third issue was whether the claim against Jackson Lalic Lawyers fell within the scope of the advocate's immunity. Bathurst CJ (Meagher and Ward JJA agreeing) held that Jackson Lalic Lawyers was immune from suit in respect of the claim of Mr Attwells and the second appellant79. His Honour concluded that80: "[T]he work fell within categories of work done out of court affecting the conduct of the case in court. The alleged breach occurred in advising on settlement of the guarantee proceedings during the luncheon adjournment on the first day of the hearing and more importantly on the evening of that day. The Agreed Facts also state that the consent order [Mr Attwells] and 76 Attwells v Marsden (2011) 16 BPR 30,831. 77 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 925. 78 Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510. 79 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335. 80 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [37]-[41]. Ms Lord were advised to sign were signed on that evening and submitted to the Court on the following day. The advice thus led to the case being settled. Put another way it was intimately connected with the conduct of the guarantee proceedings. [T]he current proceedings do involve a re-agitation of the issues raised in the earlier litigation. It is fundamental to the claim that the judgment entered was wrong and the incorrect result was due to the negligence of [Jackson Lalic Lawyers]. This necessarily involves consideration of the issues raised in the earlier litigation to determine whether in fact [Jackson Lalic Lawyers'] advice was negligent. In that sense it offends against the principle of finality of litigation." The Court of Appeal therefore answered the separate question as follows: "The advocate's immunity from suit is a complete answer to the claim made by [Mr Attwells and the second appellant]"81. Issues on appeal to this Court Three issues were raised on the appeal to this Court: first, whether the Court of Appeal applied the wrong test for the application of the advocate's immunity or, in the alternative, misapplied the correct test; second, whether the Court of Appeal made an error in holding that the immunity applied to a negligently advised or effected settlement where the claim did not involve any collateral challenge to a judicial determination on the merits; and third, whether this Court should reconsider its decisions in Giannarelli v Wraith82 and D'Orta-Ekenaike v Victoria Legal Aid83. The advocate's immunity In D'Orta, the plurality said that "at common law an advocate cannot be sued by his or her client for negligence in the conduct of a case in court, or in work out of court which leads to a decision affecting the conduct of a case in court"84. The second class of work was also described as "'work intimately 81 Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 at [48]. 82 (1988) 165 CLR 543; [1988] HCA 52. 83 (2005) 223 CLR 1; [2005] HCA 12. 84 (2005) 223 CLR 1 at 9 [1] summarising the holding in Giannarelli (1998) 165 CLR 543. See also at 14 [25]. connected with' work in a court"85. The plurality in D'Orta did not consider that the two statements of the test differed in any significant way86. The phrase "intimately connected" had been used by McCarthy P in Rees v Sinclair87 in limiting the extent of the protection afforded by the immunity to "only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing". The plurality in D'Orta grounded the retention of the immunity in two matters of principle – "the place of the judicial system as a part of the governmental structure" and "the place that an immunity from suit has in a series of rules all of which are designed to achieve finality in the quelling of disputes by the exercise of judicial power"88. After considering those two matters of principle in some detail, the plurality said89: "[T]he central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society." (emphasis added) Of course, the law does not assume the processes or outcomes of judicial determination are perfect. That is not the reason the immunity attempts to protect judicial determinations. Rather, it does so because there must be finality in the resolution of disputes. As the plurality in D'Orta stated90: "Of course, there is always a risk that the determination of a legal controversy is imperfect. And it may be imperfect because of what a party's advocate does or does not do. The law aims at providing the best and safest system of determination that is compatible with human fallibility. But underpinning the system is the need for certainty and 85 D'Orta (2005) 223 CLR 1 at 31 [86]. See also at 33-34 [93]-[95]. 86 (2005) 223 CLR 1 at 31 [86]. See also at 33-34 [93]-[95]. 87 [1974] 1 NZLR 180 at 187. 88 (2005) 223 CLR 1 at 15 [25]. See also at 20-21 [45], 30-31 [84]. 89 D'Orta (2005) 223 CLR 1 at 20-21 [45]. See also at 30 [84]. 90 (2005) 223 CLR 1 at 31 [84]. finality of decision. The immunity of advocates is a necessary consequence of that need." (footnote omitted) It was for that reason that the plurality in D'Orta explained why the re-litigation of disputes already judicially quelled is a threat to finality wherever a client alleges that, but for their lawyer's negligence, a judicial determination "In every case the complaint must be that a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in which the client was engaged. That consequence may take a number of forms. For the moment, it will suffice to identify what may appear to be the three chief consequences: (a) a wrong final result; (b) a wrong intermediate result; and (c) wasted costs. What unites these different kinds of consequence is that none of them has been, or could be, wholly remedied within the original litigation. The final order has not been, and cannot be, overturned on appeal. The intermediate consequence cannot be repaired or expunged on appeal. The costs order cannot be set aside; the costs incurred cannot be recovered from an opposite party. And in every one of these cases, the client would say that, but for the advocate's conduct, there would have been a different result." (emphasis added) Does the advocate's immunity apply here? For the purposes of this appeal, Jackson Lalic Lawyers accepts that it was negligent in advising Mr Attwells and Ms Lord to sign the Consent Order and consent to a judgment against them in the sum of $3,399,347.67 and that a verdict and judgment was made or given, and entered, for the ANZ Bank against Mr Attwells, Ms Lord and the Company for $3,399,347.67, when the full extent of their liability to the ANZ Bank was only ever the lesser sum of $1,856,122.28. Did the advocate's immunity extend to that negligent advice? The issue is resolved by understanding that there was a final quelling of the controversy between the parties by the Order. There are two points of chief importance which together dictate that the advocate's immunity extended to that negligent advice. 91 (2005) 223 CLR 1 at 26-27 [66]-[70]. First, as D'Orta demonstrates, the immunity revolves around finality – the final quelling of a controversy by the exercise of judicial power92. A legal practitioner is not liable for "work done in court or 'work done out of court which leads to a decision affecting the conduct of the case in court' or … 'work intimately connected with' work in a court"93. Work that contributes to the final quelling of a controversy by the exercise of judicial power is "work intimately connected with" work in a court. That conclusion is fortified by the fact that the "test" for whether the immunity applies must be considered in light of the principles which underpin it. A challenge to finality is not permitted, except in a few narrowly defined circumstances. It is not permitted for the reasons addressed in D'Orta, to which reference has already been made94. It was for those reasons that the plurality said in D'Orta95: "[W]here a legal practitioner (whether acting as advocate, or as solicitor instructing an advocate) gives advice which leads to a decision (here the client's decision to enter a guilty plea at committal) which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account." Here, there was a similar final outcome to that in D'Orta – "Verdict and judgment for [the ANZ Bank] against [Mr Attwells, Ms Lord and the Company] in the sum of $3,399,347.67"96. That final outcome was entered by consent. It is no different, in effect, from the core complaint made in D'Orta. The applicant in D'Orta complained that he had been advised to plead guilty – that is, to admit the allegations made against him. In this appeal, Mr Attwells' complaint is that he agreed to verdict and judgment being entered against him for $3,399,347.67. Both admissions were given legal effect by authority of the court; in one case by entry of conviction, in the other by entry of verdict and judgment. Entry of verdict and judgment by admission or consent is as much the exercise of judicial 92 (2005) 223 CLR 1 at 16 [32]. 93 D'Orta (2005) 223 CLR 1 at 31 [86] (footnote omitted). 94 See [100]-[102] above. 95 (2005) 223 CLR 1 at 32 [91]. 96 Order 1 of the Order; cf Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508; [1988] HCA 21. power as entry of judgment after trial97. In both, there is a final outcome – the final quelling of a controversy by the exercise of judicial power. is difficult Judicial power to define exhaustively98; however, "[a]n exercise of judicial power, it has been held, involves 'as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons'"99. The quelling of the controversy between the parties and the creation of a new charter of rights – by an exercise of judicial power – is recorded in a conclusive, binding and enforceable judgment or order of the court. A judgment or order "quells" the controversy between persons. Both in D'Orta and in the Recovery Proceedings, the pre-existing rights and liabilities of the parties were determined and the controversy was quelled, as it was, not only because the advocate advised the client to consent to the controversy being resolved in that manner but because the controversy was quelled by an exercise of judicial power by the court, which made a conclusive, binding and enforceable judgment or order – conviction and sentence100 in D'Orta, verdict and judgment entered in the Recovery Proceedings. The conviction and sentence, and the verdict and judgment, were both final. Indeed, as the Court recently observed in Tomlinson v Ramsey Food Processing Pty Ltd, "[t]he rights and obligations in controversy, as between those persons, cease to have an independent existence: 97 The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113 at 127-128 [57]; 326 ALR 476 at 491; [2015] HCA 46. See also Newcrest Mining Ltd v Thornton (2012) 248 CLR 555 at 575 [48]; [2012] HCA 60. 98 Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188-189; [1991] HCA 58; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 267; [1995] HCA 10; Luton v Lessels (2002) 210 CLR 333 at 373 [124]; [2002] HCA 13; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 577 [93]-[94], 592 [151]; [2008] HCA 2. 99 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 89 ALJR 750 at 756 [20]; 323 ALR 1 at 6; [2015] HCA 28 quoting R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374; [1970] HCA 8. See also Duncan v New South Wales (2015) 89 ALJR 462 at 471-472 [41]-[42]; 318 ALR 375 at 386-387; [2015] HCA 13. 100 See Crump v New South Wales (2012) 247 CLR 1 at 26 [58]; [2012] HCA 20; Pollentine v Bleijie (2014) 253 CLR 629 at 656 [71]; [2014] HCA 30. they 'merge' in that final judgment [and that] merger has long been treated in Australia as equating to 'res judicata' in the strict sense"101. Second, Mr Attwells says, in effect, that, although he cannot set aside the liability incurred by that verdict and judgment, he wants to moderate its effect, or affect the result, by challenging the bases on which the judgment was entered. Attempts to set the judgment aside have failed. It stands unimpeached. Yet central to the claim against Jackson Lalic Lawyers is the contention that Mr Attwells was not indebted to the ANZ Bank in the amount recorded in that judgment. That is, the claim necessarily disputes the judgment that has been entered in respect of the dispute commenced by the ANZ Bank – the Recovery Proceedings. That is a direct challenge to finality. It is impermissible. The conclusion that the claim against Jackson Lalic Lawyers is an impermissible challenge to finality is fortified by understanding the structure of the Order, the reasons why the Order was structured in the manner it was and the significant consequences of the Order being entered. As seen earlier, the Order, which was entered by the Court, comprised two sections – one containing orders made by the Court and the other "noting" an agreement between the parties. The distinction between the orders (orders 1 to 9) and the agreement between the parties noted in the Order (pars 10 to 17) is important. Most importantly, order 1 provided that there was verdict and judgment for the ANZ Bank against Mr Attwells, Ms Lord and the Company in the sum of $3,399,347.67. The effect of the agreement between the parties noted in pars 10 to 17 was, amongst other things, merely to record that enforcement of that verdict and judgment would be delayed. The fact that a judge notes an agreement between the parties, and that note is entered in the court's record, neither adds to nor detracts from the nature of the agreement. It is an agreement between the parties, not an order of the court102. As Campbell JA correctly explained in Beck v Weinstock103: "A characteristic of judgments and orders of a court that belong in the mandatory part of the court order is that they take effect through the authority of the court. A court order produces legal consequences through 101 (2015) 89 ALJR 750 at 756 [20]; 323 ALR 1 at 6-7. 102 cf directions as to enforcement, by order, given under s 135 of the Civil Procedure Act 2005 (NSW). 103 [2012] NSWCA 289 at [61]-[63] (McColl and Meagher JJA agreeing). the very fact that it is made by the court. … It happens when the court gives a judgment that A pay $X to B, where the judgment itself is a source of the liability to pay the $X. A court order that commands that some act be done is itself a source of an obligation to perform that act. Special enforcement procedures appropriate to judgments and orders can be invoked to achieve the effect that the judgment or order is obeyed. By contrast, an agreement inter partes that the court has noted creates obligations that are merely contractual ones, not obligations based in any way on the authority of the court. The enforcement mechanisms available concerning it are the same as would have been available if the agreement had been made, but not noted by the court. An agreement that is noted by a court, but does not result in a court order being made that gives the court's authority to the agreement does not result in a res judicata." Here, order 1 of the Order was "Verdict and judgment for [the ANZ Bank] against [Mr Attwells, Ms Lord and the Company] in the sum of $3,399,347.67". This was an order of the Court that took effect through the authority of the Court. That order was made or given, and entered, consistent with the Civil Procedure Act 2005 (NSW) ("the CPA") and the UCPR. It is worth considering each in greater detail. The CPA Section 90 of the CPA, entitled "Judgments generally", provides that104: "(1) The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires. If there is a claim by a plaintiff and a cross-claim by a defendant, the court: (a) may give judgment for the balance only of the sums of money awarded on the respective claims, or (b) may give judgment in respect of each claim, and may give judgment similarly where several claims arise between plaintiffs, defendants and other parties." (emphasis added) 104 See also s 91 of the Supreme Court Act 1970 (NSW). Section 133(1) of the CPA provides that a judgment or order of the court may not be enforced until it has been entered in accordance with the UCPR. Here, the judgment was entered. Enforcement was delayed. The UCPR Part 36 of the UCPR deals with "Judgments and orders". It comprises four divisions. The general rules are in Div 1. Rule 36.1, entitled "General relief", provides that "[a]t any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion". Unsurprisingly, it is in similar terms to s 90 of the CPA. Consent orders are dealt with in r 36.1A of the UCPR. Rule 36.1A(1) provides that "[t]he court may give judgment, or order that judgment be entered, in the terms of an agreement between parties in relation to proceedings between them" (emphasis added). The Consent Order was filed under r 36.1A. There is no question that the Court could refuse to make a consent order under r 36.1A105. Rule 36.1A, and the discretion its terms provide, recognises that there is a distinction between agreements that a court will, if asked, give effect to by pronouncing an order (here, orders 1 to 9 of the Order) and agreements that a court is willing to note, but not include in an order (here, pars 10 to 17 of the Order). That is what occurred here. Paragraphs 10 to 17 of the Order "can properly be described as an order which expresses an agreement in a more formal way than usual"106. Paragraphs 10 to 17 record an agreement between the parties – they are not orders of the Court which "impute any finding to the court"107. However, orders 1 to 9 of the Order record a verdict and judgment that was made or given, and entered on 16 June 2010. That judgment or order took effect as of the date on which it was given or made108. Setting aside or varying judgments and orders is dealt with in Div 4 of Pt 36 of the UCPR109. A power exists to set aside a judgment or order "if the 105 See, eg, Ryde City Council v Petch [2012] NSWSC 1246 at [5]-[11]. 106 cf Newcrest Mining (2012) 248 CLR 555 at 564 [17]. 107 cf Newcrest Mining (2012) 248 CLR 555 at 564 [17]. 108 r 36.4(1)(a) of the UCPR. 109 Subject to s 14 of the CPA, which permits the court to dispense with the UCPR in certain circumstances. judgment was given or entered, or the order was made, irregularly, illegally or against good faith"110 or if the parties to the proceedings consent111. It is not suggested here that the Order was obtained by fraud, or otherwise improperly. Rule 36.16 contains further limited powers to set aside or vary a judgment or order. Under r 36.16(1), the court may set aside or vary a judgment or order if the notice of motion for the setting aside or variation is filed before entry of the judgment or order. The circumstances in which a court may set aside or vary a judgment or order after it has been entered are limited to where it is a default judgment, the judgment or order was given or made in the absence of a party, or in proceedings for possession of land, where the judgment or order was given or made in the absence of a person whom the court had ordered to be added as a defendant112. The court may also "set aside or vary any judgment or order except so far as it"113: determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief." Any application to set aside or vary a judgment or order must be filed within 14 days after the judgment or order is entered114. The court may not extend that time limit115. Nothing in r 36.16 affects any other power of the court to set aside or vary a judgment or order116. These restrictions in the UCPR upon reopening of orders after they have been formally given or made, and entered, reflect the general principle of finality 110 r 36.15(1) of the UCPR. 111 r 36.15(2) of the UCPR. 112 r 36.16(2) of the UCPR. 113 r 36.16(3) of the UCPR. 114 r 36.16(3A) of the UCPR. See also r 36.16(3B). 115 r 36.16(3C) of the UCPR. 116 r 36.16(4) of the UCPR. Correction of a judgment or order under the "slip rule" is provided for in r 36.17. of litigation which underpins the immunity as explained in D'Orta117. They also have a related point – that the principle of finality "serves as the sharpest spur to all participants in the judicial process, judges, parties and lawyers alike, to get it right the first time"118. Mr Attwells' verdict and judgment The verdict and judgment made or given and entered against Mr Attwells on 16 June 2010 was final. Orders 1 to 9 of the Order (as distinct from the agreement noted in pars 10 to 17) recorded the final quelling of a controversy by the exercise of judicial power. To observe that the judgment was entered by admission or consent of Mr Attwells in no way denies that the controversy between the parties was finally quelled by verdict and judgment. And the rights of the parties merged in that "final" judgment119. The work done by Jackson Lalic Lawyers, which is now the subject of challenge, was done directly for the final quelling of the Recovery Proceedings, by the exercise of judicial power. It was "work intimately connected with" work in a court. The case ended when the verdict and judgment, recorded in order 1 of the Order, was made or given and entered by the Court. The conclusion reached in this case is consistent with the view that the advocate's immunity (and the principles which underpin it) does not extend to negligent advice to commence proceedings which are doomed to fail. Advice of that kind is not work done for the final quelling of a controversy by the exercise of judicial power. Advice of that kind starts a controversy. By contrast, advice not to settle a proceeding which proceeds to judgment on the merits is covered by the immunity. In a case of that kind, there will have been a contested hearing in which the judge makes factual findings and applies the law to those facts. Adapting the language of the plurality in D'Orta120, the complaint of the client must be that "a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in 117 See Burrell v The Queen (2008) 238 CLR 218 at 223 [15]; [2008] HCA 34; Achurch v The Queen (2014) 253 CLR 141 at 152-154 [14]-[18]; [2014] HCA 10. 118 Burrell (2008) 238 CLR 218 at 223 [15]-[16]. See also Achurch (2014) 253 CLR 119 Chamberlain (1988) 164 CLR 502 at 508; Tomlinson (2015) 89 ALJR 750 at 756 [20]; 323 ALR 1 at 6-7. 120 (2005) 223 CLR 1 at 26 [66]. See also at 27 [70]. which the client was engaged". There has been a final quelling of the controversy. That challenge to finality cannot be permitted. For these reasons, the Court of Appeal applied the right test and answered the separate question correctly. I agree with the reasons of French CJ, Kiefel, Bell, Gageler and Keane JJ that this Court should not reconsider its previous decisions in Giannarelli121 and D'Orta122. Orders The appeal should be dismissed. The appellants should pay the respondent's costs of the appeal to this Court. The intervener should pay the costs of the parties occasioned by the intervention. 121 (1988) 165 CLR 543. 122 (2005) 223 CLR 1.

HIGH COURT OF AUSTRALIA ELECTROLUX HOME PRODUCTS PTY LIMITED APPELLANT AND THE AUSTRALIAN WORKERS' UNION & ORS RESPONDENTS Electrolux Home Products Pty Ltd v Australian Workers' Union [2004] HCA 40 2 September 2004 S245/2003, A211/2003 and A212/2003 1. Appeals allowed. ORDER 2. Set aside the orders of the Full Court of the Federal Court of Australia made on 21 June 2002 and, in place thereof, order that each of the appeals to the Full Court Nos S6/2002, S11/2002 and N18/2002 be dismissed. On appeal from the Federal Court of Australia Representation: F Parry SC with C B O'Grady for the appellant (instructed by Cutler Hughes & Harris) S C Rothman SC with S J Howells for the first to seventh respondents (instructed by Lieschke & Weatherill, Taylor & Scott and Moloney & Partners) H J Dixon SC with M P McDonald for the eighth respondent (instructed by Blake Dawson & Waldron) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Electrolux Home Products Pty Ltd v Australian Workers' Union Industrial law (Cth) – Industrial action – Whether industrial action protected action – Industrial action in support of claims in respect of proposed certified agreement – Where proposed agreement included bargaining agent's fee payable to unions – Where bargaining agent's fee to be paid by all employees including non-union members – Whether bargaining agent's fee provision about matter pertaining to the relationship between employer and employee – Whether proposed agreement an agreement about matters pertaining to the relationship between an employer and its employees – Whether "protected action" in s 170ML of the Workplace Relations Act 1996 (Cth) includes industrial action in support of a proposed agreement that is not capable of certification under Div 4 of Pt VIB. Industrial law (Cth) – Industrial action – Whether prohibition on industrial action in s 170NC of the Workplace Relations Act 1996 (Cth) includes industrial action in support of a proposed agreement that is not capable of certification under Div 4 of Pt VIB – Legislative objective of s 170NC. Statutes – Interpretation – Presumption against abrogation of common law rights – Presumption against depriving persons of access to courts – Scope of interpretative presumptions – Application of presumptions to ss 170ML and 170MT of the Workplace Relations Act 1996 (Cth). Workplace Relations Act 1996 (Cth), ss 170LI, 170ML, 170MT, 170NC. GLEESON CJ. The outcome of these appeals turns upon three questions of construction of Pt VIB of the Workplace Relations Act 1996 (Cth) ("the Act"). The first question is whether a claim by a trade union that an employer should agree to deduct from the wages of future employees who do not join the union a "bargaining agent's fee", and pay it to the union, is a matter pertaining to the relationship between the employer and persons employed in the business of the employer, within the meaning of s 170LI of the Act. If the answer to that question is in the affirmative, the other questions do not arise. The second question is whether, if the answer to the first question is in the negative, an agreement containing a term providing for such deduction and payment can satisfy the description of "an agreement ... about matters pertaining to the relationship between ... an employer ... and ... all persons who ... are employed in [the employer's] business" within the meaning of s 170LI. If the answer to that question is in the affirmative, the third question does not arise. The third question is whether, if the first and second questions are answered in the negative, industrial action by a union in support of claims made for a proposed agreement including a bargaining agent's fee is "protected action" within the meaning of s 170ML of the Act. The answer to that question has consequences for the operation of the immunity conferred by s 170MT, and the prohibition in s 170NC. The relevant facts, and the history of the proceedings, are set out in the reasons of other members of the Court. The first question A negative answer to the first question is required by the decisions of this Court in R v Portus; Ex parte ANZ Banking Group Ltd1, and Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees2. There is no occasion to depart from those authorities, and every reason to follow them. In Alcan the Court, applying Portus, deciding unanimously3 that a demand by a union that an employer deduct union dues from employees' wages and remit (1972) 127 CLR 353. (1994) 181 CLR 96. 3 Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. them to the union did not pertain to the relationship between employer and employees. The Court said4: "There are, in our view, three matters which tell persuasively against reconsideration of Reg v Portus. The first is that the principle on which it proceeds, namely, that for a matter to 'pertain to the relations of employers and employees' it must affect them in their capacity as such, has been accepted as correct in a number of subsequent cases, with no question ever arising as to whether the principle was correctly applied in the case. The second is that Parliament re-enacted, in s 4(1) of the Act, words which are almost identical with those considered in Reg v Portus. There is abundant authority for the proposition that where the Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the meaning already 'judicially attributed to [them]', although the validity of that proposition has been questioned. But the presumption is considerably strengthened in the present case by the legislative history of the Act. The Committee of Review into the Australian Industrial Relations Law and Systems, whose report preceded the enactment of the Act, recommended that the jurisdiction of the tribunal be extended to the limits of the constitutional power under s 51(xxxv). Yet Parliament adopted, in almost identical terms, the language of the former Act into the Act, and the Minister acknowledged in his Second Reading Speech that the jurisdiction was to be limited by 'the requirement that disputes relate to matters concerning employers and employees'. These considerations reinforce the presumption that Parliament did not intend to overturn Reg v Portus. The third matter that tells against a reconsideration of Reg v Portus is that, academic criticism notwithstanding, there is no reason to think it is in any way affected by error. The considerations which lead to the conclusion that a dispute as to deduction of union dues (at least, where authorized by individual employees) is an industrial dispute within s 51(xxxv) of the Constitution, tend in favour of the conclusion that the subject matter does not pertain to the relationships of employers and employees in their capacity as such. Those considerations, which depend on the nature and role of trade unions in Australia, show that although the subject matter pertains to a relationship between employers and employees, it is a relationship involving employees as union members and not at all as employees. That appears even more clearly if, as earlier suggested, the industrial character of the claim for the purposes of s 51(xxxv) comes about only in the case of a claim for employee- authorized deductions. Finally and so far as the statutory definition of (1994) 181 CLR 96 at 106-107. 'industrial dispute' is concerned, the character of a claim for the deduction of union dues is not altered simply because it is bound up with a claim for a wage increase equivalent to the dues to be deducted." (footnotes omitted) The second of the matters referred to in those passages applies with at least equal force in the present case. Two years after the decision in Alcan, and in the light of the long legislative history there considered, Parliament, in defining in s 170LI the nature of an agreement that may be a certified agreement for the purposes of Pt VIB, used the expression "an agreement, in writing, about matters pertaining to the [employment] relationship". No doubt there are circumstances in which it is artificial, and unpersuasive, to attribute to Parliament a consciousness of a judicial interpretation which might have been placed upon an expression, perhaps years before, and in some different context. But it is hard to think of a clearer case of parliamentary adoption of an expression, with a judicially settled meaning, to be applied in a particular context, than the present. In one sense, anything that is capable of being made the subject of an agreement between an employer and employees could be said to be a matter pertaining to their relationship. An employer could agree, for example, to make regular donations to a particular political party. The established principle, however, is that, in the context with which this legislation is concerned, it is matters which affect employers and employees in their capacity as such that "pertain to the relations of employers and employees". Furthermore, a particular application of the principle, settled by authority, is that a proposal that an employer deduct amounts from the wages of future employees and remit them to a trade union is not one that affects employers and employees in their capacity as such. In Portus5, Barwick CJ said: "In my opinion, the demand that the employer should pay out of earned wages some amounts to persons nominated by the employee is not a matter affecting the relations of employer and employee. It does not seem to me to advance the matter that the intended payee is the organization registered under the Act of which the employee is a member." The Court6 approved statements in R v Kelly; Ex parte State of Victoria7 to the effect that "the relations of employers and employees" refers to the industrial relationship, and not to matters having an indirect, consequential and remote effect on that relationship. The actual decision in Portus, approved and applied (1972) 127 CLR 353 at 357. (1972) 127 CLR 353 at 359 and 362. (1950) 81 CLR 64 at 84. in Alcan, was that for an employer to collect money from employees and remit such money to a third party on behalf of the employees had an insufficient connexion with the industrial relationship to fall within the statutory description. The dispute in Portus was held not to be "with respect to a matter pertaining to the relations of employers and employees"8. The words "with respect to" are no narrower than the word "about"9. The use of the preposition "about" does not widen the scope of the expression "matters pertaining to the [employment] relationship" beyond that identified in Portus and Alcan. And the introduction into industrial legislation of the concept of certified agreements does not create a new context in which it can be said, with any degree of conviction, that the expression takes on a new and different meaning. The second question The second question must be considered in the wider context of Pt VIB, the object of which is to facilitate the making, and certifying by the Australian Industrial Relations Commission, of certain agreements, particularly at the level of a single business or part of a single business (s 170L). Applications may be made to the Commission to certify certain agreements. Where an application is made to the Commission in accordance with Div 2 or Div 3 to certify an agreement, the Commission must certify the agreement if, and must not certify the agreement unless, it is satisfied that certain requirements, set out in s 170LT, are met. An agreement comes into operation when it is certified (s 170LX). While in operation it prevails over an award or order of the Commission (s 170LY), and over terms and conditions of employment specified in a State law (s 170LZ). The binding effect of a certified agreement is prescribed by Div 6. Division 8 of Pt VIB deals with negotiations for certified agreements, bargaining periods and, in s 170ML, "protected" industrial action. Section 170MT provides: "(2) Subject to subsection (3), no action lies under any law (whether written or unwritten) in force in a State or Territory in respect of any industrial action that is protected action unless the industrial action has involved or is likely to involve: personal injury; or (b) wilful or reckless destruction of, or damage to, property; or the unlawful taking, keeping or use of property. (1972) 127 CLR 353 at 357-358 per Menzies J. 9 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186 per Latham CJ. Subsection (2) does not prevent an action for defamation being brought in respect of anything that occurred in the course of industrial action." A central provision of Pt VIB is s 170LI, which defines the nature of an agreement which may be a certified agreement. It provides: "(1) For an application to be made to the Commission under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between: an employer who is a constitutional corporation or the Commonwealth; and all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement." Reference has already been made, in the course of answering the first question, to authorities on the meaning of the concept of an industrial dispute with respect to matters pertaining to the relationship of employers and employees. Here we are concerned with the concept of an industrial agreement about matters pertaining to that relationship. The context is not materially different. It is argued that, even if a claim, a dispute, or a term of a proposed agreement, about a bargaining agent's fee is not about a matter pertaining to the relationship referred to in s 170LI, that does not necessarily require a conclusion that an agreement containing a term about a bargaining agent's fee is not an agreement of the nature described in s 170LI. It is true that, theoretically at least, it might be possible to describe an agreement as one about matters pertaining to the relationship referred to if it contained even one term that was about a matter pertaining to the relationship, regardless of whatever else was in the agreement. No party contended for this construction of s 170LI, and the reason is obvious. When regard is had to the statutory context in which s 170LI appears, to the purpose of certification, to the powers and procedures of the Commission in respect of certification, and to the legal consequences of certification, it is impossible to conclude that s 170LI bears such a meaning. The contention of the appellant, and of the Minister for Employment and Workplace Relations, is that, for an agreement to be of the nature described in s 170LI, it must be wholly about matters pertaining to the relationship referred to. This contention, which was accepted by Merkel J at first instance, is consistent with the context, and, in particular, the purpose and effect of certification of an agreement. It is also consistent with the legislative history reflected in decisions such as Portus and Alcan. Part VIB does not provide for certification of part of an agreement. The focus of the legislative provisions about the certification procedure, and the consequences of certification, is upon matters pertaining to the employment relationship. If an agreement contains terms about matters extraneous to that relationship it is difficult to accommodate that agreement to the scheme of Pt VIB. Counsel for the union respondents argued for an intermediate position. It was submitted that an agreement which contains a term or terms about matters pertaining to the employment relationship, and a term or terms about other matters, must be subjected to a process of characterization, by which its real or essential nature can be determined, and, in some cases, the requirements of s 170LI can be satisfied. There are at least two difficulties with this argument. The first is that it leaves unanswered the problem of what is to be done, in relation to the certification procedure, and in relation to the legal effect of a certified agreement, about those parts of the agreement which, by hypothesis, are not about matters pertaining to the employment relationship. The second is that it gives no guidance as to how the process of characterization is to proceed. There may be cases in which a matter extraneous to the employment relationship may be so trivial that it should be disregarded as insignificant. Putting such cases to one side, all the terms of an agreement ordinarily constitute part of the consideration flowing from one side or the other, and there is no way of knowing whether, or what, the parties would have agreed about the other terms if one term were excluded from the legal operation of the agreement. The argument appears to amount to the proposition that, if an agreement is mainly about the matters referred to in s 170LI, then the fact that it is partly about other matters as well is immaterial. In many cases, it will be impossible to say what an agreement is mainly about, but, in any event, there is no support, either in the text, or in the scheme of Pt VIB, for a conclusion that an agreement that is, in part, about matters other than the matters referred to in s 170LI may be a certified agreement. If it were otherwise, it is difficult to see any logical stopping place short of a proposition that an agreement would fall within the section if it contained even one term about the relevant matters. The third question Protected action is defined in s 170ML. Sub-sections (2) and (3) of s 170ML protect action, during the bargaining period, by employees and employers, for the purpose of supporting or advancing claims made in respect of the proposed agreement, that is to say, the proposed certified agreement the subject of negotiations (s 170MI). Section 170NC prohibits coercion in respect of certified agreements, but the prohibition does not apply to protected action (s 170NC(2)). Reliance was placed in argument upon what was said to be a general principle of construction that, where a statute takes away or interferes with common law rights, then it should be given, if possible, a narrow interpretation10. The generality of that assertion of principle requires some qualification. It is true that courts do not impute to the legislature an intention to abrogate or curtail fundamental rights or freedoms unless such an intention is clearly manifested by unmistakable and unambiguous language11. It is also true that there is a presumption, relevant for example to the construction of privative clauses, that the legislature does not intend to deprive the citizen of access to the courts, other than to the extent expressly stated or necessarily to be implied12. However, as McHugh J pointed out in Gifford v Strang Patrick Stevedoring Pty Ltd13 modern legislatures regularly enact laws that take away or modify common law rights. The assistance to be gained from a presumption will vary with the context in which it is applied. For example, in George Wimpey & Co Ltd v British Overseas Airways Corporation14, Lord Reid said that in a case where the language of a statute is capable of applying to a situation that was unforeseen, and the arguments are fairly evenly balanced, "it is ... right to hold that ... that interpretation should be chosen which involves the least alteration of the existing law". That was a highly qualified statement and, if it reflects a presumption, then the presumption is weak and operates only in limited circumstances. In Coco v The Queen15, Mason CJ, Brennan, Gaudron and McHugh JJ said: "The insistence on express authorization of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with 10 See, for example, Melbourne Corporation v Barry (1922) 31 CLR 174 at 206. 11 Coco v The Queen (1994) 179 CLR 427 at 437; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30]. 12 Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 at 160; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492-493 [32]. 13 (2003) 214 CLR 269 at 284 [36]. 14 [1955] AC 169 at 191. 15 (1994) 179 CLR 427 at 437. fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights." (footnote omitted) The joint judgment in Coco went on to identify as the rationale for the presumption against modification or abrogation of fundamental rights an assumption that it is highly improbable that Parliament would "overthrow fundamental principles, infringe rights, or depart from the general system of law" without expressing its intention with "irresistible clearness"16. In R v Home Secretary; Ex parte Pierson17, Lord Steyn described the presumption as an aspect of the principle of legality which governs the relations between Parliament, the executive and the courts. The presumption is not merely a common sense guide to what a Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law. We are here concerned with the meaning of provisions (ss 170ML and 170MT) which have as their immediate purpose and effect the conferring of an immunity from civil liability for a certain kind of conduct. The legislature, recognizing that parties to disputes, and third parties, might suffer actionable damage as a result of such conduct, has conferred a limited immunity from action. The immunity given by s 170MT(2) is qualified by pars (a)-(c). The rights of action taken away are common law rights of a kind frequently modified by statute in the industrial context with which the legislation is concerned. The present case gives rise to no issue concerning the principle of legality or the rule of law. Furthermore, there is no uncertainty in the meaning of the statute that is not capable of being resolved by an examination of the legislative text and purpose. The Full Court of the Federal Court, overruling the decision of Merkel J, held that action is protected by s 170ML(2) even if it is partly in support of claims that are not matters pertaining to the employment relationship, and even if the presence of those claims means that the proposed agreement in support of which the action is taken does not satisfy the requirements of s 170LI.18 The 16 The quotation is from Potter v Minahan (1908) 7 CLR 277 at 304, where O'Connor J cited a passage from Maxwell on Statutes, 4th ed (1905) at 122. 17 [1998] AC 539 at 587, 589. 18 (2002) 118 FCR 177 at 195. reasoning was that s 170ML(2) requires only the existence of a genuine intention of supporting or advancing claims made in respect of a proposed agreement. On that approach, if there is a proposed agreement, if claims are made in respect of it, and if the industrial action is undertaken with a genuine purpose of supporting or advancing those claims, the statutory protection applies. The reference in s 170ML(2) to "the proposed agreement" is a reference to an agreement of the nature identified in s 170LI. The fact that parties to industrial action may be acting under a mistake of law as to whether a proposed agreement is of that nature is no more relevant to the protection given by s 170ML(2) than would be the fact that they neither knew nor cared whether the proposed agreement was of that nature. The protection conferred by s 170ML(2) is attracted by a combination of two circumstances: the purpose of supporting or advancing claims the subject of a proposed agreement; and the nature of the proposed agreement. The kind of proposed agreement being supported is not at large. It is not merely the fact of the proposal and support that is sufficient to gain protection; the nature of that which is proposed is also material. Section 170ML appears in Div 8 of Pt VIB, which deals with negotiations for certified agreements. It relates to action taken during the bargaining period. The bargaining period is for the negotiation of an agreement under Div 2 or Div 3 (s 170MI). Reference has earlier been made to s 170L, which identifies the object of Pt VIB as the facilitation of the making and certifying by the Commission of certain agreements. That is the statutory purpose which is furthered by the protection and immunity in question, and that protection and immunity does not extend beyond action in support of agreements of the nature of the agreements with which Pt VIB is concerned, that is to say, agreements of the kind identified in s 170LI. Counsel for the union parties argued that, on this approach, when it comes to the application of s 170NC, the appellant is hoist with its own petard. If an agreement the object of concern is not an agreement under Div 2 or Div 3, then, so it is argued, the prohibition against taking action with intent to coerce cannot apply. That does not follow. The elements of the conduct prohibited by s 170NC, so far as presently relevant, are action, or threats of action, with intent to coerce another to agree, or not to agree, to the making of an agreement under Div 2 or Div 3. An accurate appreciation of the legal nature of the agreement in question is not an element of the intent required by s 170NC. It is possible to intend to coerce another person into making, or not making, a certified agreement, even if the agreement the object of the coercive intent, as a matter of law, is not capable of being certified. Conclusion The decision of Merkel J was correct. The appeals should be allowed. The orders of the Full Court of the Federal Court should be set aside, and it should be ordered that the appeals to that Court be dismissed. McHugh 28 McHUGH J. These appeals concern the interpretation and application of Pt VIB of the Workplace Relations Act 1996 (Cth) ("the Act") and, in particular, Divs 2 and 8 of that Part, including ss 170ML and 170LI. In negotiations with the appellant, an employer, the respondent trade unions claimed that the appellant should: advise new employees that a bargaining agent's fee would be payable to the union by non-union members; require new employees to pay the fee; and provide a direct debit facility to enable the payment of the fee (together, "the bargaining agent's fee claim"). The employer rejected the claim. As a result, the unions took industrial action against the employer and claimed that it was "protected action" within the meaning of s 170ML of the Act and immune from civil action. The Full Court of the Federal Court upheld the unions' claim19. Subsequently, this Court gave the employer special leave to appeal against the decision of the Full Court. The questions in these appeals are: whether the bargaining agent's fee claim is "about matters pertaining to the relationship between an employer ... and all persons who ... are employed in a single business ... of the employer" within the meaning of s 170LI(1) of the Act; whether the presence of a term in a proposed agreement that is not "about matters pertaining to the relationship" between an employer and its employees within the meaning of s 170LI of the Act makes the agreement not one about such matters for the purposes of that section and therefore not capable of being the subject of an application for certification by the Australian Industrial Relations Commission ("the Commission"); whether industrial action taken by a union in support of claims in respect of a proposed agreement under Div 2 of Pt VIB of the Act constitutes "protected action" within the meaning of s 170ML(2)(e) of the Act where one of the claims does not pertain to the relationship between an employer and its employees; and 19 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 ("AMWU"). McHugh whether industrial action taken by a union in support of a claim in respect of a proposed agreement under Div 2 of Pt VIB of the Act about a matter that does not pertain to the relationship between an employer and its employees within the meaning of s 170LI(1) constitutes a breach of s 170NC of the Act. In my opinion, these questions should be answered: (2) Yes. (4) Yes. Statement of the case In April 2001, the respondent unions ("the Unions") commenced the appellant, Electrolux Home Products Pty Ltd negotiations with ("Electrolux"), concerning a new certified agreement. During the negotiations the Unions produced a draft proposed national agreement. The draft contained a claim for a bargaining agent's fee: "46.0 BARGAINING AGENTS FEE 46.1 The company shall advise all employees prior to commencing work for the company that a 'Bargaining Agents' Fee of $500.00 per annum is payable to the union. 46.2 The relevant employee to which this clause shall apply shall pay the 'Bargaining Agents fee' to the union in advance on a pro rata basis for any time which the employee is employed by the company. By arrangement with the union this can be done in quarterly instalments throughout the year. 46.3 The employer will, at the request of the employee to whom this clause applies, provide a direct debit facility to pay the bargaining agents fee to the union." The negotiations failed. In September 2001, the Unions notified Electrolux that they intended to take industrial action. They believed that this action would be "protected action" within the meaning of s 170ML of the Act. Later, the Unions took industrial action falling within the terms of the notices. McHugh Electrolux instituted proceedings in the Federal Court against the Unions alleging that the industrial action was not "protected action". Whether the industrial action was "protected action" depended on whether it fell within s 170ML. In turn, that depended on whether the Unions had undertaken the action "for the purpose of supporting or advancing claims made in respect of the proposed agreement" within the meaning of s 170ML(2)(e) of the Act. In the proceedings, Electrolux accepted that the Unions' claim in respect of the bargaining agent's fee was genuinely made. However, Electrolux claimed that the industrial action was not protected because cl 46 of the proposed agreement was not about a matter pertaining to the relationship between Electrolux and its employees. That was because the inclusion of this term in the proposed agreement meant that the proposed agreement did not satisfy the requirements of s 170LI of the Act and was therefore not capable of being certified. This in turn meant that the industrial action taken by the Unions could not be "protected action" within the meaning of s 170ML(2)(e) of the Act. The primary judge, Merkel J, accepted Electrolux's contentions20. His Honour found that the bargaining agent's fee claim was "substantive, discrete and significant" and that the claim did not pertain to the relationship between Electrolux and its employees21. Merkel J held that the proposed agreement, containing the claim, was not an agreement that would comply with s 170LI of the Act and could not be certified. Accordingly, he held that industrial action taken for the purpose of supporting or advancing such a claim was not "protected action" under the Act. Merkel J subsequently made declarations to the effect that the action taken by the Unions was not protected action within the meaning of s 170ML of the Act and that the action breached s 170NC of the Act22. The Unions appealed to the Full Court of the Federal Court against Merkel J's decision. The Full Court (Wilcox, Branson and Marshall JJ) allowed the Unions' appeals. The Full Court held that, for the purposes of s 170ML(2)(e) of the Act, the only essential matter is that the claim be genuinely made "in respect of the proposed agreement"23. In a joint judgment, their Honours held that, because the Unions' claim in respect of the bargaining agent's fee was genuinely made, "whether or not the insertion of a provision along the lines of the bargaining fee 20 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600. 21 Electrolux [2001] FCA 1600 at [52]-[54] . 22 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1840. 23 AMWU (2002) 118 FCR 177 at 194. McHugh claim would give rise to a certification difficulty under s 170LI(1)"24 did not matter. Hence, because the Unions' claim was genuinely made, the Court concluded that the purpose of the Unions' industrial action fell within s 170ML(2). Although it was not necessary to decide the issue, the Full Court also held that, for the purpose of s 170LI, the presence of one or more provisions that do not pertain to the relationship of employer and employee does not necessarily take an agreement outside the description embodied in s 170LI(1). That is, the presence of a term in the agreement that does not pertain to the relevant employment relationship does not mean that the agreement itself does not so pertain25. The Act The critical provisions of the Act for the purposes of these appeals are ss 170LI and 170ML, located in Pt VIB of the Act. Part VIB, entitled "Certified agreements", provides for formalised collective agreements, known as "certified agreements", made between employers and unions or made directly between employers and employees. Part VIB sets out a regime for the making and certifying of agreements. Part VIB therefore furthers the principal object of the Act of providing "a framework for cooperative workplace relations" by "enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances"26. Division 1 of Pt VIB deals with preliminary matters and sets out the object of the Part. Section 170L states the object of the Part "is to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business." Division 2 is entitled "Making agreements with constitutional corporations or the Commonwealth". The Division sets out requirements that must be satisfied for applications to be made to the Commission to certify certain agreements between employers who are constitutional corporations and either organisations of employees or employees27. Electrolux is a "constitutional corporation" as defined in s 4 of the Act. The Unions are "organisations of employees". 24 AMWU (2002) 118 FCR 177 at 195. 25 AMWU (2002) 118 FCR 177 at 196-197. 26 Section 3(c). 27 Section 170LH. McHugh Section 170LI sets out two important requirements in relation to an application for certification of an agreement under Div 2 of Pt VIB. First, the agreement must be in writing. Second, the agreement must be one that is about matters pertaining to the relationship between the employer and the persons employed in the single business or part of the business of that employer to which the agreement relates28. Section 170LI(1) provides: "For an application to be made to the Commission under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between: an employer who Commonwealth; and is a constitutional corporation or the all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement." Division 3 of Pt VIB covers agreements concerning industrial disputes and industrial situations. The Division sets out requirements that must be satisfied for applications to be made to the Commission to certify certain agreements to settle, further settle or maintain the settlement of, or to prevent, industrial disputes; or to prevent industrial situations from giving rise to industrial disputes29. Division 4 prescribes the process for certification. Where an application is made to the Commission in accordance with Div 2 to certify an agreement, the Commission must certify the agreement if, and must not certify the agreement unless, it is satisfied that the requirements of s 170LT are met30. The Commission must also refuse to certify an agreement in certain other circumstances31, but may certify an agreement that contains certain non- compliant provisions upon the acceptance of undertakings from the parties to the agreement32. 28 Australia, Workplace Relations and Other Legislation Amendment Bill 1996 (Cth) Senate Explanatory Memorandum, (1996) at 69 ("Explanatory Memorandum"). 29 Section 170LN. 30 Section 170LT(1). 31 See, eg, ss 170LT and 170LU. 32 Section 170LV(1)(a). McHugh Division 5 sets out the effect of certified agreements. An agreement comes into operation when it is certified33. While an agreement is in operation, it prevails over an award or order of the Commission to the extent of any inconsistency34. With a number of limited exceptions, a certified agreement also prevails over conditions of employment specified in a State or Territory law35. For enforcement purposes, a certified agreement has an effect similar to an award36. The finding by the Full Federal Court37 that the "only" effect of certification is that prescribed by ss 170LY and 170LZ of the Act is, with respect, incorrect. Division 6 prescribes the binding effect of certified agreements. Relevantly, a Div 2 certified agreement binds the employer and the employees who are the subject of the agreement38. It also binds unions if the unions made the agreement with the employer in accordance with s 170LJ or s 170LL39. Division 7 provides for certified agreements to be varied. Significantly, the Commission must not approve a variation unless the Commission "would be required to certify the agreement as varied if it were a new agreement whose certification was applied for under [Pt VIB]."40 The Commission may approve a variation of an agreement, in respect of which the Commission otherwise has grounds to refuse, on the acceptance of an undertaking in relation to the operation of the agreement as varied41. Division 8 is headed "Negotiations for certified agreements etc". The Division outlines when, how and by whom a "bargaining period" may be 33 Section 170LX(1). 34 Section 170LY(1). 35 Section 170LZ. 36 See, eg, ss 178 and 179. 37 AMWU (2002) 118 FCR 177 at 196. 38 Section 170M(1). 39 Section 170M(2). 40 Section 170MD(3)(b). 41 Section 170ME(1)(a). McHugh initiated and when a bargaining period commences42. The Division also permits unions which are negotiating parties to take "protected action" during a bargaining period. Each Union was a "negotiating party". Section 170ML is located in Div 8. The section identifies particular types of industrial action, termed "protected action", which attract certain legal immunity from civil action under s 170MT. Section 170ML(1) provides: "This section identifies certain action (protected action) to which the provisions in section 170MT (which confers certain legal immunity on protected action) are to apply." Section 170ML(2) deals with employee action during a bargaining period and provides: "During the bargaining period: an organisation of employees that is a negotiating party; ... is entitled, for the purpose of: supporting or advancing claims made in respect of the proposed agreement; ... to organise or engage in industrial action directly against the employer and, if the organisation, member, officer or employee does so, the organising of, or engaging in, that industrial action is protected action." Division 9 prohibits coercion of persons to make, vary or terminate certified agreements. Section 170NC relevantly prohibits persons from taking or threatening to take industrial action (other than "protected action") with intent to coerce another person to agree to the making of an agreement under Div 2. Division 10 deals with enforcement and remedies. The Division provides that whilst a breach of s 170NC is not an offence, an eligible court such as the Federal Court may impose a penalty on a person who is found to have contravened s 170NC43. Injunctive relief is also available in relation to a contravention44. 42 Sections 170MI-170MK. 43 Sections 170ND, 170NE, 170NF(1). McHugh The issues Electrolux contends that the immunity in respect of "protected action" conferred by ss 170ML and 170MT of the Act does not apply where a proposed agreement under Div 2 contains a provision that is not "about matters pertaining to the relationship between an employer … and … all persons who, at any time when the agreement is in operation, are employed in a single business … of the employer and whose employment is subject to the agreement" ("the requisite relationship"). Electrolux contends that a bargaining agent's fee claim is not such a matter. This contention involves four propositions: that the bargaining agent's fee claim is not a "[matter] pertaining to the relationship between an employer … and … all persons who, at any time when the agreement is in operation, are employed in a single business … of the employer and whose employment is subject to the agreement" within the meaning of s 170LI(1); that an agreement or proposed agreement which contains such a term is not "an agreement … about matters pertaining to the relationship between an employer … and … all persons who, at any time when the agreement is in operation, are employed in a single business … of the employer and whose employment is subject to the agreement" within the meaning of s 170LI(1); that industrial action by a union in support of a claim in a proposed agreement that includes a bargaining agent's fee claim is not "protected action" within the meaning of s 170ML; and that in the circumstances of the case the Unions breached s 170NC by taking industrial action that was not "protected action" within the meaning of s 170ML. It is appropriate to consider each proposition in turn. Characterisation of the bargaining agent's fee claim The bargaining agent's fee claim consists of three elements: an obligation on the employer to advise employees prior to commencing work for the company that a so-called "bargaining agent's fee" is payable to the Union; an obligation on the employee to pay an annual fee to the Union, apparently for the provision of bargaining services by the Union; and an obligation on the employer, at the McHugh employee's request, to provide a payment facility to pay the bargaining agent's fee to the Union. Merkel J at first instance described the first and second elements of the bargaining agent's fee claim as follows45: "The claim, implicitly if not explicitly, is that Electrolux is to act as the union's agent in entering into a contract with new employees which requires the employees, who are not union members, to employ the unions as their bargaining agent to reflect the unions' service in negotiating agreements with Electrolux under the Act. The relationship between the employer and the employee that would be created were the claim acceded to is, essentially, one of agency; Electrolux is to contract with its employees on behalf of the relevant union, as its agent. The agency so created is for the benefit of the union, rather than for the benefit of the employee upon whom the contractual liability is to be involuntarily imposed. The resulting involuntary 'bargaining' agency is, as a matter of substance, if not form, a 'no free ride for non-unionists' claim, rather than one by which the union is undertaking its traditional role of representing the interests of union members in respect of the terms of employment of employees. Although the claim was argued as if it were a claim for future services, it may also be characterised as a claim for payment for the unions' services in securing the new employee's terms and conditions of employment in the proposed certified agreement, notwithstanding that the new employee will only have commenced employment after the date of the agreement. ... Thus, payments claimed for bargaining 'services' prior to re-negotiation of a new agreement would appear to relate, primarily, to bargaining services rendered prior the non-union member having commenced employment." (original emphasis) His Honour described the third element of the bargaining agent's fee claim as follows46: "The other aspect of the claim, the bargaining fee debit facility, is analogous to a demand by unions that an employer pay its employees' union dues by making deductions and payments from salary due and payable to employees in accordance with authorities provided by them." 45 Electrolux [2001] FCA 1600 at [40]-[41]. 46 Electrolux [2001] FCA 1600 at [42]. McHugh Merkel J described the claim for payment of a bargaining agent's fee as "substantive, discrete and significant (ie, in the sense that it is substantial) … [and] was treated by [the parties] as such."47 He held that the claim was not a matter pertaining to the relationship between an employer and persons employed by the employer48 and concluded that the bargaining agent's fee claim "relates to a substantive, discrete, and significant matter that does not pertain to the employment relationship."49 The Full Federal Court disagreed with Merkel J's conclusions. The Full Court acknowledged that everything depends upon the precise formulation of the claim or term50. However, their Honours held that, because the words of s 170LI(1) differed significantly from those contained in the definition of "industrial dispute" in previous enactments, "[c]ases decided with reference to that definition may not apply."51 Without expressing a concluded view, their Honours said that the claim by the Unions that Electrolux impose a requirement (being a condition of their employment) upon future employees "might give rise to a matter pertaining to the relationship between Electrolux and those employees, notwithstanding that the relevant Union, and its members, will benefit from the imposition"52. In addition, the requirement of a direct debit facility seemed to their Honours "to be merely facilitative and intended to be there for the benefit of those who wish to use it."53 This Court has consistently held that the rejection of demands of an academic, political, social or managerial nature does not create a dispute about matters pertaining to the relationship between employer and employee54. Neither 47 Electrolux [2001] FCA 1600 at [53]. 48 Electrolux [2001] FCA 1600 at [45]. 49 Electrolux [2001] FCA 1600 at [54]. 50 AMWU (2002) 118 FCR 177 at 196. 51 AMWU (2002) 118 FCR 177 at 196. 52 AMWU (2002) 118 FCR 177 at 196-197. 53 AMWU (2002) 118 FCR 177 at 197. 54 See, eg, Australian Tramway Employes Association v Prahran and Malvern Tramway Trust ("Union Badge Case") (1913) 17 CLR 680 at 705 per Higgins J, 718 per Powers J; R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 at 371 per Stephen J; R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153 at 163-164 per Stephen J. McHugh does the rejection of a demand that the employer act as a financial agent for employees in their dealings with the union55. The cases emphasise that "matters pertaining" to the relations of employers and employees must pertain to the relation of employees as such and employers as such, that is, employees in their capacity as employees, and employers in their capacity as employers56. The Court has not followed statements in earlier cases – Australian Tramway Employes Association v Prahran and Malvern Tramway Trust ("Union Badge Case")57 and Federated Clothing Trades of the Commonwealth of Australia v Archer58 – that an industrial dispute arises whenever employers refuse union demands to do something that is within the power of the employers to concede and carry out59. However, all the cases rejecting this approach were decided before the enactment of Pt VIB of the Act. The Unions claim that they are not decisive of the issues arising under Pt VIB of the Act. It is necessary, therefore, to examine the reasoning in those pre-Act cases. In Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees60, decided two years before the enactment of the Act, the Court held that a demand by a union that an employer deduct union dues from its employees' wages and remit them to the union did not pertain to the relationship between employers and employees. The issue in Re Alcan was whether a dispute about such a demand was an "industrial dispute" within the meaning of the Industrial Relations Act 1988 (Cth). Section 4(1) of that Act defined "industrial dispute" as "an industrial dispute ... that is about matters pertaining to the relationship between employers and employees". The 55 Portus (1972) 127 CLR 353; Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96. 56 See, eg, Portus (1972) 127 CLR 353 at 357 per Menzies J (Barwick CJ and McTiernan J agreeing), 368 per Walsh J; Coldham (1976) 137 CLR 153 at 163-164 per Stephen J; Federated Clerks' Union (Aust) v Victorian Employers' Federation (1984) 154 CLR 472 at 481-482 per Gibbs CJ, 488 per Mason J; Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 353; Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic) Pty Ltd (1993) 178 CLR 352 at 363 per Mason CJ, Deane, Toohey and Gaudron JJ; Re Alcan (1994) 181 CLR 96 at 106-107. 57 (1913) 17 CLR 680. 58 (1919) 27 CLR 207. 59 See R v Kelly; Ex parte State of Victoria (1950) 81 CLR 64 at 85; Portus (1972) 127 CLR 353 at 358-359 per Menzies J. 60 (1994) 181 CLR 96. McHugh Court described the expression "matters pertaining to the relationship between employers and employees" as relating to matters "pertaining to the employment relationship involving employers, as such, and employees, as such."61 The Court said that "for a matter to 'pertain to the relations of employers and employees' it must affect them in their capacity as such."62 It also said that the matter must "pertain to the relationships of employers and employees in their capacity as such."63 It concluded that a dispute about the deduction of union fees pertained to "a relationship involving employees as union members and not at all as employees"64. The Court said that a claim directed to strengthening the position of a union or union members is not, without more, a matter pertaining to the employment relationship involving employers, as such, and employees, as such65. In Re Alcan, the Court refused to reconsider its previous decision in R v Portus; Ex parte ANZ Banking Group Ltd66, handed down over 20 years earlier, for the following reasons67: "The first is that the principle on which it proceeds, namely, that for a matter to 'pertain to the relations of employers and employees' it must affect them in their capacity as such, has been accepted as correct in a number of subsequent cases, with no question ever arising as to whether the principle was correctly applied in the case. The second is that Parliament re-enacted, in s 4(1) of the Act, words which are almost identical with those considered in R v Portus. There is abundant authority for the proposition that where the Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the meaning already 'judicially attributed to [them]', although the validity of that proposition has been questioned. But the presumption is considerably strengthened in the present case by the legislative history of the [Industrial Relations Act]. The Committee of Review into the Australian Industrial Relations Law and Systems, whose report preceded the enactment of the [Industrial Relations Act], recommended that the jurisdiction of the 61 Re Alcan (1994) 181 CLR 96 at 106. 62 Re Alcan (1994) 181 CLR 96 at 106. 63 Re Alcan (1994) 181 CLR 96 at 107. 64 Re Alcan (1994) 181 CLR 96 at 107. 65 Re Alcan (1994) 181 CLR 96 at 106. 66 (1972) 127 CLR 353. 67 (1994) 181 CLR 96 at 106-107. McHugh tribunal be extended to the limits of the constitutional power under s 51(xxxv). Yet Parliament adopted, in almost identical terms, the language of the former [Conciliation and Arbitration Act 1904 (Cth)] into the [Industrial Relations Act], and the Minister acknowledged in his Second Reading Speech that the jurisdiction was to be limited by 'the requirement that disputes relate to matters concerning employers and that These considerations reinforce employees'. Parliament did not intend to overturn R v Portus. the presumption The third matter that tells against a reconsideration of R v Portus is that, academic criticism notwithstanding, there is no reason to think it is in any way affected by error. The considerations which lead to the conclusion that a dispute as to deduction of union dues (at least, where authorized by individual employees) is an industrial dispute within s 51(xxxv) of the Constitution, tend in favour of the conclusion that the subject matter does not pertain to the relationships of employers and employees in their capacity as such. Those considerations, which depend on the nature and role of trade unions in Australia, show that although the subject matter pertains to a relationship between employers and employees, it is a relationship involving employees as union members and not at all as employees. That appears even more clearly if, as earlier suggested, the industrial character of the claim for the purposes of s 51(xxxv) comes about only in the case of a claim for employee- authorized deductions. Finally and so far as the statutory definition of 'industrial dispute' is concerned, the character of a claim for the deduction of union dues is not altered simply because it is bound up with a claim for a wage increase equivalent to the dues to be deducted." (footnotes omitted) In Portus, the Court held that a demand by a union that an employer make deductions and payments from the salaries due and payable to its employees in accordance with authorities provided by them did not affect the industrial relationship of employers and employees. Accordingly, the refusal of the demand did not give rise to a dispute about an "industrial matter" within the meaning of s 4 of the Conciliation and Arbitration Act, which defined "industrial matters" to mean "all matters pertaining to the relations of employers and employees". Menzies J (with whom Barwick CJ and McTiernan J agreed), pointed out that not every dispute between a union and employers is an industrial dispute. That was so even if employers refuse a demand from a union or employees to do something that is within the power of the employer to do. His Honour said that "[t]o fall within that description the dispute must, in the most general terms, be with respect to a matter pertaining to the relations of employers and McHugh employees"68. He said that the relationship that would be created by the obligation sought to be imposed would be: "a financial relationship of debtor and creditor arising from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association."69 "[W]hilst the Court has laid stress on the requirement that the relationship to which an industrial matter must pertain is that between an employer as employer and an employee as employee, a narrow view is not to be taken of what may arise out of that relationship or may be sufficiently connected with it to bring a demand within the description of an industrial matter."70 (emphasis added) Nevertheless, Walsh J found that71: "[A] provision for the payment by employers of subscriptions due by their employees to their union has no real connexion with the relations of the employers and the employees. The payment of subscriptions is a matter pertaining to the relationship between the employees and their union. In my opinion it is not a matter with which the employer, as such, has any concern and it does not become an 'industrial matter' merely because the association makes a demand upon the employers to which they are not willing to accede." His Honour also found that any benefit or privilege that accrued to an employee by having the employer deduct union dues from the employee's salary was "not a benefit or privilege of a kind which has any relevant connexion with the relationship of employer and employee."72 68 Portus (1972) 127 CLR 353 at 357-358, citing Kelly (1950) 81 CLR 64, see also at 69 Portus (1972) 127 CLR 353 at 360. 70 Portus (1972) 127 CLR 353 at 363. 71 Portus (1972) 127 CLR 353 at 364. 72 Portus (1972) 127 CLR 353 at 365. McHugh Walsh J noted that among the employers there was no practice where the deduction of union dues from employees' salaries was a term of employment of each employee or each employee who belonged to a particular union. He therefore concluded that73: "From the employer's point of view, there is not an obligation owed by the employer to each employee because he is an employee. The making of the deductions depends upon an authority given by an employee, who is free to withdraw the authority if he wishes to do so. The system should, therefore, be regarded, in my opinion, as pertaining primarily to the relationship between an employee and his own union, from which relationship arises the obligation which is discharged by the payment made to the union by the employer. In so far as the practice also involves any relationship between an employee and his employer, this is not, in my opinion, a relationship between the employer as employer and the employee as employee, but is one in which the employer acts as agent for an employee in the making of a payment at his request and on his behalf from money to which he has become entitled." His Honour also noted that, notwithstanding the important functions that unions have, this did not support "a conclusion that anything which serves to benefit one of them and to give it additional strength, by increasing its financial stability or otherwise, is to be regarded as an industrial matter within the meaning of the [Conciliation and Arbitration Act]."74 Stephen J said that a dispute about an "industrial matter" must "concern either of the broad aspects with which the relations of employers and employees are concerned, namely the performance of work by the employee and the receipt of reward for that work from the employer."75 His Honour found that a matter with respect to a demand for reward for 73 Portus (1972) 127 CLR 353 at 368. 74 Portus (1972) 127 CLR 353 at 369. 75 Portus (1972) 127 CLR 353 at 370. 76 Portus (1972) 127 CLR 353 at 371. McHugh "must always pertain to the employer-employee relationship ... The necessary quality of a subject matter demanded which is concerned with reward for work performed is, I think, that it be, of itself, inherently associated with the relationship of employer and employee and not with some other type of relationship." Accordingly, his Honour took the view that there was77: "no necessary connexion between the service which the association, on behalf of employees, demands should be rendered by the employer banks for their employees and the relationship between them of employer and employee. The subject matter of the demand is concerned with a service to be performed by the employer which, viewed in the abstract and without knowledge of the existing relationships of the parties to the demand, does not bear any appearance of association with the employer- employee relationship. This is because the demand does not seek to operate within the sphere of that relationship but instead would create a new relationship between the parties, in which the employer is agent or debtor and the employee is principal or creditor." Stephen J compared the union's demand with one that the employer accept back a portion of the employees' wages, retain that portion and then pay it to a third party. He held that "such a demand would be seeking to create a new, distinct relationship between the employer and its employees, having no relationship."78 connexion with employer-employee pre-existing the "The fact that the present demand is made to operate at a slightly earlier stage, before salary is in fact paid over to employees, thereby obviating one step in the imaginary demand I have postulated, that of the acceptance of money back from employees, does not appear to me to convert a transaction foreign to the relationship of employer and employee into one which pertains to that relationship. There may, no doubt, be instances where the subject matter of a demand appears to have no connexion with the employer-employee relationship but is nevertheless ancillary to a matter forming part of that relationship and is, for that reason, an industrial matter. This cannot, however, be said of the present case." 77 Portus (1972) 127 CLR 353 at 371-372. 78 Portus (1972) 127 CLR 353 at 372. 79 Portus (1972) 127 CLR 353 at 372. McHugh The question then is whether the reasoning in Re Alcan and Portus applies to the present claim of the Unions in the context of Pt VIB of the Act and, in particular, to s 170LI. If so, the related question arises whether this Court should depart from that line of authority. The Unions suggest that a number of matters justifies this course. Constitutional foundation for Div 2 of Pt VIB The constitutional basis of Div 2 of Pt VIB of the Act is one feature that distinguishes it from the enactments considered in the earlier cases. Unlike the provisions considered in Re Alcan and Portus, the constitutional foundation for Div 2 is "primarily" the corporations power80, not the conciliation and arbitration power81. The corporations power provides a broader basis upon which s 170LI may operate. In so far as it affects a constitutional corporation, a bargaining agent's fee clause in an agreement between a corporation and a third party is a matter capable of regulation under the corporations power. In Re Alcan, however, the Court's construction of "matters pertaining to the relationship between employers and employees" did not depend upon or involve the scope of the conciliation and arbitration power in s 51(xxxv). The Court said82: "The question is not one involving s 51(xxxv); it is simply a question of the meaning of the definition of 'industrial dispute' in s 4(1) [of the Industrial Relations Act]. And although there are some minor differences between that definition and the relevant definitions previously found in the Conciliation and Arbitration Act, the requisite nature of the subject matter of a dispute remains precisely the same, namely, that it pertain to the employment relationship involving employers, as such, and employees, as such." The Court also noted that each judgment in Portus was based on the statutory definition of "industrial matters" in the Conciliation and Arbitration Act and not the meaning of "industrial disputes" in s 51(xxxv) of the Constitution83. 80 Constitution, s 51(xx). See Explanatory Memorandum at 68; AMWU (2002) 118 FCR 177 at 180. 81 Constitution, s 51(xxxv). 82 Re Alcan (1994) 181 CLR 96 at 105. 83 Re Alcan (1994) 181 CLR 96 at 101. The Court held that a dispute as to the deduction of union dues from the wages of employees who authorise that course would constitute an "industrial dispute" for the purposes of s 51(xxxv) of the Constitution: at 103-104, applying R v Coldham; Ex parte Australian Social Welfare Union ("CYSS Case") (1983) 153 CLR 297.) The Court said (at 104): (Footnote continues on next page) McHugh The terms of s 170LI show that the section is not intended to be commensurate with the scope of the corporations power. The constitutional basis of Div 2 is therefore neither determinative of the scope of the Division nor of itself a reason for distinguishing the earlier cases. The Full Bench of the Commission (Polites SDP, Watson SDP and Larkin C) in Re National Union of Workers ("Health Minders") took the view, correctly in my opinion, that the incorporation of s 170LI into the Act was intended to confine the broad extent of the corporations power84. Text of s 170LI differs from sections considered in Re Alcan and Portus Unlike the provisions considered in Re Alcan and Portus, s 170LI is not concerned with the meaning of "industrial dispute" or "industrial matter". The expression "matters pertaining to the relationship between an employer … and … all persons who, at any time when the agreement is in operation, are employed in a single business … of the employer and whose employment is subject to the agreement" differs from the expressions considered in those cases. In those cases, the relevant expressions were "matters pertaining to the relationship between employers and employees" and "matters pertaining to the relations of employers and employees". Hence, the matters being assessed fell to be determined by reference to a more generalised notion of the relationship between employers and employees. Section 170LI, however, does not refer to the relationship between employers and employees generally, but rather to the relationship between the employer bound by the agreement and all persons employed in a single business of that employer. As the Full Bench of the Commission (Giudice J, McIntyre VP "In an industrial relations system involving the active participation of trade unions as the recognized representatives of their members, a claim that employers should deduct union dues is, in our view, inherently industrial in character. Certainly, that is so where the claim is for deductions authorized by individual employees." The Court queried (at 104) whether the constitutional term "industrial dispute" would cover a claim for the deduction of union dues where the deductions are not in some way authorised by at least some of the employees. In such a situation the union would be acting in its own interest, not that of its members as employees, and the Court observed that it may be necessary for the employees' interests to be seen as coinciding with the union's if the matter is to be regarded as industrial. 84 (2003) 120 IR 438 at 452. McHugh and Whelan C) observed in Re Atlas Steels Metals Distribution Certified Agreement 2001-200385: "The terms of s 170LI(1) indicate that the nature of the matters is to be assessed by reference to the relationship between the employer and the employees to whom the agreement applies rather than by reference to a generalised notion of the relationship between employers and employees." For example, there may be matters particular to the relationship between an individual employer and the persons employed in a single business of that employer. Those matters may not pertain to the relationship between employers and employees generally in their capacity as such. But they may pertain to the requisite relationship in that workplace and require an examination of the issue or issues between the parties that give rise to the claims86. The analytical framework that the Court adopted in Re Alcan and Portus to determine what is a matter that pertains to the relationship between an employer and its employees is whether the matter affects the relationship of employers and employees in their capacity as such. Such an approach applies both to employers and employees generally and to particular employers and the persons employed in their business. Nothing in the Act suggests that this approach is no longer applicable. The Act still defines "industrial dispute" in s 4(1) as a dispute "about matters pertaining to the relationship between employers and employees". Division 3 agreements operate in respect of "industrial disputes"87. These provisions give rise to the inference that Div 2 and Div 3 agreements have a common element, namely, that for such an agreement to be certifiable, it must be about matters pertaining to the requisite relationship or to "the relationship between employers and employees" in their capacity as such. Because the Federal Parliament enacted the Act two years after the Re Alcan decision, the drafters of the Act almost certainly knew of the decision and the interpretation applied by this Court to the expression "about matters pertaining to the relationship between employers and employees". The principle that the re-enactment of a rule after judicial consideration is to be regarded as an endorsement of its judicial interpretation has been criticised, and the principle may not apply to provisions re-enacted in 85 (2002) 114 IR 62 at 66. 86 See Re Printing and Kindred Industries Union; Ex parte Vista Paper Products Pty Ltd (1993) 67 ALJR 604 at 609, 612 per Gaudron J (Brennan, Dawson and Toohey JJ agreeing), 617-618 per McHugh J; 113 ALR 421 at 428, 432, 439-440. 87 See, eg, s 170LN. McHugh "replacement" legislation88. However, industrial relations is a specialised and politically sensitive field with a designated Minister and Department of State. It is no fiction to attribute to the Minister and his or her Department and, through them, the Parliament, knowledge of court decisions – or at all events decisions of this Court – dealing with that portfolio. Indeed, it would be astonishing if the Department, its officers and those advising on the drafting of the Act would have been unaware of Re Alcan. The bargaining agent's fee claim in question appears to be too general to constitute a matter pertaining to the requisite relationship in Electrolux's workplace. First, the bargaining agent's fee clause requires Electrolux to inform the new employee of a debt due by that person to the Union for purposes which the clause does not specify. Nothing in the clause suggests that the debt relates to the employment relationship. Second, even if a broad view is taken of the requisite relationship and matters pertaining to that relationship, the bargaining agent's fee clause appears to relate to the relationship between the Unions and non-members to be employed at Electrolux's workplace. Third, the claim appears to be directed to strengthening the position of the Unions at Electrolux's workplace, but this, without more, does not make such a clause a matter pertaining to the requisite relationship. Fourth, Electrolux does not undertake to deduct the fee from the employee's wages. Rather, the fee is payable "in advance". Consequently, there is not even an agreement or authorisation from the employee that Electrolux deal with the employee's wages in a particular manner. In other words, there is no nexus between the obligation imposed on Electrolux by the clause and the requisite relationship89. (c) The use of the word "about" Predecessor legislation to the Act required that there be a dispute "as to" a matter pertaining to the relationship between employers and employees. Section 170LI requires that there be an agreement "about" matters pertaining to the requisite relationship. Mason CJ, Deane, Toohey and Gaudron JJ observed in Re Amalgamated Metal Workers Union; Ex parte Shell Co of Australia Ltd that90: 88 See, eg, Flaherty v Girgis (1987) 162 CLR 574 at 594 per Mason ACJ, Wilson and Dawson JJ; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329 per Toohey, McHugh and Gummow JJ. 89 See, eg, Health Minders (2003) 120 IR 438 at 454; but see Atlas Steels (2002) 114 IR 62 at 68-72. 90 (1992) 174 CLR 345 at 357. McHugh "As has been seen, the present definition of 'industrial dispute' is satisfied if there is a dispute 'about [a] matter ... pertaining to the relationship between employers and employees'. And that is satisfied by a less direct relationship than might be necessary in the case of a requirement that a dispute be as to an industrial matter." Nevertheless, in Re Alcan the Court rejected the argument that a dispute arising from a demand by a union that an employer deduct union dues from its employees' wages and remit them to the union was a dispute "about" a matter pertaining to the relationship between employers and employees. This suggests that the term "about" does not significantly expand the scope of the matters that must fall within s 170LI for the purpose of obtaining certification of a Div 2 agreement. Expanding conceptions of employment It was suggested that expanding conceptions of employment may justify a broader reading of s 170LI, in particular, whether a matter pertains to the requisite relationship. This Court's decision in Hollis v Vabu Pty Ltd91 was cited as an example. The Unions also referred to the expanded application of Div 2 of Pt VIB of the Act. However, neither the majority decision in Hollis nor the expanded application of Div 2 supports the proposition for which the Unions contend. In Hollis, the majority (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) found that a courier engaged to deliver articles by a company which operated a courier business was an employee of the company. At issue was what constitutes a relationship of employment between a courier and the courier company, rather than whether a particular matter pertained to that relationship. Division 2 of Pt VIB has an expanded application in respect of: an agreement about matters pertaining to the relationship between an employer who is carrying on a single business or part of a single business in a Territory and employees employed in the single business of the employer or part of same92; an agreement about matters pertaining to the relationship between an employer (being one of the three specified types of employers: a waterside employer, an employer of maritime employees and a flight crew 91 (2001) 207 CLR 21. 92 Section 5AA(2). McHugh officers' employer), and the counterpart employees employed in a single business of the employer, or part of same, so far as the matters relate to trade and commerce between Australia or elsewhere, within a Territory or between the States93; and an agreement about matters pertaining to the relationship between an employer in Victoria who is carrying on a single business or part of a single business and employees employed in the single business or part94. Each of the extended applications of Div 2 of Pt VIB has the common feature that the primary requirement for the certification of a Div 2 agreement is that each agreement be about matters pertaining to the requisite relationship. Thus, notwithstanding the expanded application of Div 2 to certain other classes of persons, an application for certification nevertheless falls to be determined according to the "requisite relationship" test95. (e) Academic criticism The test of sufficient direct effect on the employment relationship remains the key to the statutory limitation in s 170LI. This test has been criticised. Mr Graeme Orr argues that the test has required the Court to affirm a "pedantic distinction" between the employee as employee and the employee as creditor, and between the employer as employer, and the employer as debtor96. He contends that bargaining agents' fees are "necessarily incidental to the bargaining 93 Section 5AA(3). 94 Section 494. 95 See Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Unilever Australia Ltd (Unreported, PR940027, Australian Industrial Relations Commission, 31 October 2003, Munro J, Drake SDP and Larkin C) at 96 Orr, "Agency Shops in Australia? Compulsory Bargaining Fees, Union (In)Security and the Rights of Free-Riders", (2001) 14 Australian Journal of Labour Law 1 at McHugh and enforcement process without which certified agreements would not exist."97 On this view, a bargaining agent's fee clause is about98: "each employee, in relation to their particular workplace, mutually insisting that each other (and themselves) contributes to the cost of bargaining and enforcing wages and conditions applicable to that place and class of employment. ... An arrangement mandating that employees contribute to funding [a process of collective negotiation and continuing representation and oversight] is of direct relevance to each employment relationship, whether the representative is a union or an enterprise association." Notwithstanding that a bargaining agent's fee may contribute indirectly to the enforcement of employment conditions and may be relevant to each employment relationship, this does not alter the characterisation of the relationship created between employer and employee by the bargaining agent's fee clause as an "agency" relationship in which the employer effectively acts as the union's agent in making the relevant payment. Mr Orr also acknowledges that "there is little by way of precedent to suggest that the courts will take such a realistic line in interpreting the federal employment matters requirement"99, despite the broader constitutional foundation for Div 2 of Pt VIB and the Act itself. Subsequent amendments to the Act Since the enactment of the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 (Cth), the Act now stipulates that "a provision (however described) of a certified agreement that requires payment of a bargaining services fee" is an "objectionable provision"100. By reason of s 170LU(2A), the Commission must now refuse to certify an agreement that contains "objectionable provisions". The Commission must vary a certified 97 Orr, "Agency Shops in Australia? Compulsory Bargaining Fees, Union (In)Security and the Rights of Free-Riders", (2001) 14 Australian Journal of Labour Law 1 at 98 Orr, "Agency Shops in Australia? Compulsory Bargaining Fees, Union (In)Security and the Rights of Free-Riders", (2001) 14 Australian Journal of Labour Law 1 at 99 Orr, "Agency Shops in Australia? Compulsory Bargaining Fees, Union (In)Security and the Rights of Free-Riders", (2001) 14 Australian Journal of Labour Law 1 at 100 Section 298Z(5)(b). McHugh agreement so as to remove the objectionable provisions, where it is satisfied that a certified agreement contains objectionable provisions101. In addition, s 298Y(2) provides that "[a] provision of a certified agreement is void to the extent that it requires payment of a bargaining services fee." The term "bargaining services fee" is defined in s 298B as follows: "bargaining services fee means a fee (however described) payable: to an industrial association; or to someone else in lieu of an industrial association; wholly or partly for the provision, or purported provision, of bargaining services, but does not include membership dues". Neither the Explanatory Memorandum to the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Bill 2002 (No 2) (Cth) nor the second reading speeches for the Bill mention the decision of the Full Federal Court. However, the enactment of the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act does not suggest that the Full Court's decision is correct. Accordingly, none of the matters relied on to distinguish the earlier cases justifies a departure from their holdings. The bargaining agent's fee clause does not concern a matter pertaining to the requisite relationship. Certification of an agreement which contains a term that is not a matter pertaining to the requisite relationship If the bargaining agent's fee clause is not a matter pertaining to the requisite relationship, can the Commission certify an agreement that contains such a clause? Merkel J held that s 170LI "does not require that all of the terms of the proposed agreement must pertain to the requisite relationship" between employer and employee102. In his Honour's view, the section103: 101 Section 298Z. 102 Electrolux [2001] FCA 1600 at [50] (original emphasis). 103 Electrolux [2001] FCA 1600 at [50]. McHugh "requires that the agreement be characterised as one that is about matters pertaining to the relationship. If a term of the agreement does not pertain to that relationship it does not follow that the agreement is not about matters pertaining to the relationship. For example, the term may be ancillary or incidental to, or a machinery provision relating to, a matter pertaining to the employment relationship. Thus, an agreement may be about the requisite matters notwithstanding that some of its terms may not, strictly, be about such matters." (original emphasis) However, Merkel J held that104: "If one of the substantive matters provided for in the agreement is not within the required description and that matter is discrete and significant then the proposed agreement may properly be characterised as about matters that are within the relationship and a matter that is not. While it is arguable that s 170LI only requires that the agreement in question be characterised as one that is 'substantially' or 'primarily' about the requisite matters it would be inappropriate to add those words absent a clear legislative purpose in favour of that construction: see Saraswati v The Queen (1991) 172 CLR 1 at 22 per McHugh J." (original emphasis) Thus, Merkel J distinguished between ancillary, incidental or machinery provisions in an agreement – which for the purposes of certification need only relate to a matter pertaining to the employment relationship – and a substantive matter that is both discrete and significant – which must pertain to the employment relationship. Such an approach is consistent with the decision of this Court in Shell105 and an obiter statement of Stephen J in Portus106 about an ancillary aspect of a claim. In contrast, the Full Federal Court suggested (without deciding the issue) that while it may be necessary to consider an agreement "as a whole"107: "We do not see why the presence of one or more provisions that do not pertain to the relationship necessarily takes an agreement outside the description embodied in s 170LI(1). As counsel for the Unions pointed out, s 170LI(1) does not refer to the terms of an agreement. It talks about 104 Electrolux [2001] FCA 1600 at [51]. 105 (1992) 174 CLR 345 at 359. Shell concerned a machinery provision in a claim, rather than a term of an agreement. 106 (1972) 127 CLR 353 at 372. 107 AMWU (2002) 118 FCR 177 at 196. McHugh 'an agreement ... about matters pertaining to the relationship'. So it is necessary to characterise the agreement itself, considering it as a whole. An agreement for the sale of a house is an agreement pertaining to real estate, notwithstanding it includes a provision regarding furniture. Nothing in the statutory scheme suggests that a certified agreement that, considered as a whole, answers the description of s 170LI(1) may not include a particular term that does not." Whether an agreement containing a term that is not a matter pertaining to the relationship between an employer and employees may be certified under Pt VIB depends upon the proper construction of s 170LI. Integral to the construction of the section is whether it is directed to the nature of the agreement proposed for certification, looked at as a whole, or to each substantive provision by which, in aggregate, such an agreement is comprised108. Critical to the operation of s 170LI is that, for the purposes of certification under Div 2 of Pt VIB, there must be "an agreement, in writing, about matters pertaining to the relationship between an employer … and all persons who, at any time when the agreement is in operation, are employed in a single business … of the employer". Nothing in Pt VIB nor in the rest of the Act suggests that s 170LI should not be given its plain and literal meaning. The statutory context in which s 170LI appears, the purpose of certification, the powers and procedures of the Commission in respect of certification and the legal consequences of certification suggest that s 170LI only permits the certification of an agreement where all the terms of the agreement are about matters pertaining to the requisite relationship or about matters ancillary or incidental to those matters or machinery provisions with respect to those matters. Part VIB does not provide for the certification of part of an agreement made under Div 2. Subject to one exception109, if the Commission is satisfied that the requirements of ss 170LT and 170LU are met, the Commission must 108 See Unilever (Unreported, PR940027, Australian Industrial Relations Commission, 31 October 2003, Munro J, Drake SDP and Larkin C) at [91]. 109 The Commission may certify a non-compliant agreement – that is, where not all the terms meet the requirements of Pt VIB and the Commission has grounds to refuse certification under ss 170LT and 170LU – on the acceptance of undertakings from the parties in relation to the operation of the agreement: s 170LV(1). McHugh certify the agreement. If not, the Commission must not certify the agreement110. Section 170LT requires that the agreement, viewed as a whole, pass the "no-disadvantage test" (or not be contrary to the public interest), and include certain provisions, such as a procedure for settling disputes arising under the agreement. Under s 170LU, an agreement may not be certified if any provision contravenes certain sections of the Act, for example, is inconsistent with the termination provisions in Div 3 of Pt VIA of the Act111, is discriminatory112 or permits conduct that would contravene Pt XA (the freedom of association provisions)113. With one exception, each of the matters identified in ss 170LT and 170LU pertains to the employment relationship between the employer and the employees114. The focus of Pt VIB is therefore on matters pertaining to the employment relationship. There is nothing in the statutory scheme which suggests that a certified agreement should not be considered as a whole. Indeed, the Commission is expressly required to characterise the overall effect of the agreement when applying the "no-disadvantage test" in s 170LT(2)115. Section 170LU requires the Commission to have regard to each of the provisions of the agreement. The agreement "as a whole" may pertain to the requisite relationship, but if it contains a single proscribed provision, then, absent an undertaking given under s 170LV, the entire agreement must not be certified. To the extent that the parties agree that non-compliant terms of an agreement are to have legal effect, the efficacy of those provisions depends on the general law116, not the Act. The Commission may certify such an agreement only if the non-compliant terms may be made the subject of undertakings under s 170LV(1) or if the non-compliant terms are deleted. 110 Sections 170LT(1) and 170LU. 111 Section 170LU(2). 112 Section 170LU(5), (6). 113 Section 170LU(3). 114 Section 170LT(9). The exception relates to the circumstances in which the agreement is made: the Commission must refuse to certify an agreement made under s 170LK if the employer coerced or attempted to coerce any employee not to request or to withdraw a request that a union negotiate the agreement on the employee's behalf. 115 See also Pt VIE, especially s 170XA(2). 116 Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645 at 658 [31]. McHugh Thus, the scheme suggests that – ancillary, incidental and machinery provisions aside – the entire agreement must be "about matters pertaining to the [requisite] relationship". This is consistent with the Explanatory Memorandum to the Workplace Relations and Other Legislation Amendment Bill 1996 (Cth) ("the Bill"), which states that the provisions of the new Pt VIB: "are intended to give employees and employers, particularly at the single business level, greater responsibility for developing the terms and conditions of their employment relationship, and to make agreements more accessible, more easily made, and clearly distinct from awards."117 The emphasised phrase supports the conclusion that an agreement under Pt VIB is concerned with the employment relationship between employers and employees and not matters extraneous to the employment relationship. The above construction of s 170LI is also consistent with the principal object of the Act expressed in s 3. The Act has the purpose of providing a framework for co-operative workplace relations by: ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for [under the] Act"118. The reference in s 3(b) to matters "affecting the relationship between employers and employees" impliedly supports the contention that the focus of the Act and, by analogy, Pt VIB of the Act, is that requisite relationship. Section 3(c) recognises that employers and employees may choose "the most appropriate form of agreement" and expressly acknowledges that such an agreement may be one for which the Act does not necessarily provide. This suggests that not all agreements between employers and employees will be covered by the Act. Such an inference is also supported by the Explanatory Memorandum to the Bill, which explains that the purpose of the Act is to provide119: 117 Explanatory Memorandum at 60 (emphasis added). 118 Sub-sections 3(b) and (c). 119 Explanatory Memorandum at 6. McHugh a more direct relationship between employers and employees and greater emphasis on wages and conditions being determined as far as possible by agreement at the enterprise or workplace level [paragraphs (b), (d), (h)]; [and] more effective choice and flexibility as to the appropriate form of agreement for parties reaching agreements, including forms not provided by the Act (such as unregistered over award agreements) [paragraph (c)]". The following comments of the Full Bench of the Commission in Atlas Steels are pertinent120: "In the first place, it appears to us that an agreement which contains provisions some of which are about matters pertaining to the relationship and some of which are about matters which do not so pertain cannot be described, at least without straining language, as an agreement about matters pertaining to the relationship. Secondly, this construction gives rise to uncertainty in the application of the section and of the Division. It requires a weighing-up or balancing of provisions which are about matters which do pertain and those which do not in order to reach a conclusion as to whether the agreement as a whole is about matters which pertain. That might involve difficult value judgments in particular cases. Thirdly, the construction contended for might lead to some irreconcilable results. Some agreements deal only with one or two matters. Others deal comprehensively with the terms and conditions of employment. An agreement containing one or two matters only, being matters which do not pertain to the relationship, could not be the subject of a valid application for certification. An agreement containing the same one or two matters, but also containing a large number of matters that do pertain to the relationship, could be the subject of a valid application for certification. The legislature is unlikely to have intended the section to operate in such a capricious way. All of these considerations tell against the submission." The Full Federal Court said that121: "The only effect of certification is that prescribed by ss 170LY and 170LZ. Certification provides a statutory override of certain inconsistent awards and orders. A term dealing with matters outside the employer- employee relationship is unlikely to be inconsistent with, and therefore to override, any award or order". 120 (2002) 114 IR 62 at 67. 121 AMWU (2002) 118 FCR 177 at 196. McHugh With respect, certification is significant. Even if a term dealing with matters outside the employer-employee relationship is unlikely to be inconsistent with an award or order, certification confers other statutory privileges. The effects of certification include that the agreement: overrides awards and certain orders of the Commission to the extent of any inconsistency122; may be varied only in certain circumstances123; is available for enforcement by way of the penalty provisions124; permits an employee to sue for payment of any amounts due to the employee under the agreement125; gives a right of entry into the workplace for certain union officials126 and third parties127; comes within Part XA which contains certain prohibitions128; binds a new employer in the case of a transmission of business129; operates to restrict employers' common law rights of contract, tort and property; and prevails over terms and conditions of employment specified in certain prescribed Commonwealth laws130 or in a State or Territory law, award or employment agreement to the extent of any 122 Section 170LY. 123 Division 7 of Pt VIB. 124 Section 178. 125 Section 189. 126 Section 285B. 127 See, eg, s 86. 128 See, eg, ss 298K and 298L(1)(h). 129 Section 170MB. 130 Section 170LZ(4). McHugh inconsistency131, subject to certain exceptions. The exceptions relate to State and Territory occupational health and safety laws, workers' compensation laws, unfair dismissal laws and the like132. It would seem anomalous if the Act conferred such statutory privileges in relation to substantive matters that did not pertain to the requisite relationship. Moreover, while it is understandable that Parliament wishes to enforce penalties against those who breach certified agreements, it seems unlikely that Parliament would want to enforce, by way of penalties, breaches of other provisions which do not relate to the requisite relationship. In addition, the Act does not provide any guidance as to the characterisation of individual provisions and the characterisation of agreements. For example, the Act does not specify when, or even stipulate any criteria to assess whether, a discrete and significant term or terms renders the agreement not an agreement that "as a whole" is about matters pertaining to the requisite relationship. The Act is also silent on the procedure for certifying an agreement which contains terms about matters that do not pertain to the requisite relationship, and on the effect of certification of such an agreement. Even if such a term would be effective under the general law133, a question would remain as to whether the parties would have agreed to the term if it did not have legal operation as a term in a certified agreement. Accordingly, when characterised as a whole, the agreement must be an agreement about matters pertaining to the requisite relationship. It may not include discrete and substantive matters that do not so pertain. Whether industrial action in support of a proposed (non-certifiable) agreement is "protected action" If a proposed agreement containing a bargaining agent's fee clause cannot be certified under Div 2, is industrial action taken by a negotiating party during a bargaining period in support of such a proposed agreement "protected action" within the meaning of s 170ML(2) with the result that such action attracts the legal immunity conferred by s 170MT? In the present case, each Union was a negotiating party and the bargaining period was the period for negotiating the proposed agreement in question. To determine this issue, it is necessary to construe s 170ML(2) in the context in which it appears and in light of the objects and purposes of Pt VIB and the Act. 131 Section 170LZ(1). 132 Sections 170LZ(2) and (3). 133 See CFMEU (2001) 203 CLR 645 at 658 [34]. McHugh Section 170ML(2)(e) protects action for the purpose of supporting or advancing claims made in respect of the "proposed agreement". The "proposed agreement" is identified in s 170MI(1) as that which the initiating party "wants to negotiate", being "an agreement under Division 2". It is the agreement proposed to be certified under Div 2 that is the subject of negotiations134. The reference in s 170ML(2) to "the proposed agreement" is a reference to an agreement of the nature identified in s 170LI. In the context of Pt VIB, the term "under" must be understood to mean meeting the requirements or specifications set out in Div 2. This conclusion is reinforced by s 170LH, which provides that Div 2 "sets out requirements that must be satisfied for applications to be made to the Commission to certify certain agreements" between the relevant parties. The stated requirements are those that must be met for a certification application to be made to the Commission. Accordingly, the "proposed agreement" identified in s 170ML(2) must be an agreement which would satisfy the requirements for the making of an application to the Commission for certification. Those requirements include the nature of the agreement that is mandated by s 170LI(1). The protection conferred by s 170ML(2) operates if the following two criteria are satisfied: the action has the genuine purpose of supporting or advancing claims the subject of a proposed agreement; and the nature of the proposed agreement satisfies the requirements of s 170LI. This construction is consistent with the objects and purposes of Pt VIB and the Act. Section 170L identifies the object of Pt VIB as facilitating the making and certifying by the Commission of certain agreements, such as certified agreements. The Part also has the purpose of protecting certain industrial action taken in support of claims made in respect of a proposed agreement during the bargaining period. However, the legal immunity conferred by ss 170ML and 170MT is confined to industrial action taken in furtherance of the stated statutory purpose. Hence, the protection and immunity do not extend beyond action in support of a proposed agreement that would satisfy the requirements of s 170LI. The immunity has two important consequences: the Commission cannot make an order under s 127 to stop or prevent the action135; and 134 Section 170MI. 135 Section 170MT(1). McHugh subject to certain exceptions136, no action lies under any law – whether written or unwritten – in force in a State or Territory in respect of that action137. The "no action" immunity precludes not only actions sought to be brought by the negotiating parties, but also by any third parties who may be affected by and suffer actionable damage as a result of the protected action. Thus, by conferring specific immunity from civil liability, ss 170ML(2) and 170MT effectively abrogate the common law rights both of participants to the negotiations and of third parties who may suffer actionable damage as a result of such action. A basic principle of statutory construction is the presumption that legislatures do not intend to abrogate or curtail fundamental common law rights or freedoms unless such an intention is clearly manifested by unmistakable and unambiguous language138. Another basic principle of statutory construction is that, in the absence of express words or necessary implication, courts presume that legislatures do not intend to deprive persons of access to the courts139. Given that modern Parliaments routinely enact laws which adversely affect or modify common law rights, the application of each presumption varies according to its context. In Gifford v Strang Patrick Stevedoring Pty Ltd140 I said: "There is a presumption – admittedly weak these days – that a statute is not intended to alter or abolish common law rights unless the statute evinces a clear intention to do so. In Malika Holdings Pty Ltd v Stretton, however, I warned of the need for caution in applying this 136 The immunity does not apply if the industrial action has involved or is likely to involve personal injury, wilful or reckless destruction of, or damage to, property or the unlawful taking, keeping or use of property: s 170MT(2). In addition, the immunity does not prevent an action for defamation being brought in respect of anything that occurred in the course of industrial action: s 170MT(3). 137 Section 170MT(2). 138 See Coco v The Queen (1994) 179 CLR 427 at 437 per Mason CJ, Brennan, Gaudron and McHugh JJ; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [30] per Gleeson CJ. 139 See Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 at 160 per Dawson and Gaudron JJ; Plaintiff S157/2002 (2003) 211 CLR 476 at 492-493 [32] per Gleeson CJ. 140 (2003) 214 CLR 269 at 284 [36]. McHugh presumption: nowadays legislatures regularly enact laws that infringe the common law rights of individuals. The presumption of non-interference is strong when the right is a fundamental right of our legal system; it is weak when the right is merely one to take or not take a particular course of action. Courts should not cut down the natural and ordinary meaning of legislation evincing an intention to interfere with these lesser rights by relying on a presumption that the legislature did not intend to interfere with them. Given the frequency with which legislatures now abolish or amend 'ordinary' common law rights, the 'presumption' of non-interference with those rights is inconsistent with modern experience and borders on fiction. If the presumption still exists in such cases, its effect must be so negligible that it can only have weight when all other factors are evenly balanced." (footnotes omitted) In the present case, the natural and ordinary meaning of the legislation evinces an intention to curtail the common law rights of negotiating parties and third parties who suffer actionable damage as a result of certain industrial action to take civil action against the person who took the industrial action. However, the curtailment is not absolute. The protection conferred by ss 170ML(2) and 170MT operates only if the action has the genuine purpose of supporting or advancing claims the subject of a proposed agreement and the nature of the proposed agreement satisfies the requirements of s 170LI. Given these limiting conditions, the natural and ordinary meaning of s 170ML is consistent with the two presumptions of statutory construction to which I have referred. Indeed, those presumptions support the proposition that the scope of "protected action" is limited and that industrial action is only protected if it is in support of a claim in a proposed agreement that is capable of being certified under Div 2 of Pt VIB. An honest and reasonable, but mistaken, belief that a proposed agreement satisfies the requirements of s 170LI is a mistake as to the operation of the Act. If a person takes industrial action in respect of such a proposed agreement, it does not assist the person who makes the mistake that he or she believed that the proposed agreement was one which fell within the meaning of Div 2 of Pt VIB and was capable of being certified under Div 4 of Pt VIB. The Act does not refer to a "purported" proposed agreement; nor does it refer to an "honest and reasonable, but mistaken, belief" that a proposed agreement under Div 2 is an agreement capable of certification under Div 4. On the contrary, the nature of the proposed agreement is expressed as an element of the protection conferred by s 170ML. Accordingly, industrial action in support of a claim for the inclusion of a bargaining agent's fee clause in a proposed agreement that does not meet the requirements for certification "under Div 2" is not "protected action" within the meaning of s 170ML(2). McHugh Whether the industrial action taken by the Unions in the present case amounted to a breach of s 170NC If industrial action does not constitute "protected action" when taken in support of a proposed agreement that is not capable of certification as a "certified agreement" under Div 4, did the industrial action taken by the Unions in the present case breach s 170NC? Section 170NC prohibits coercion in respect of certified agreements but does not apply to protected action. Section 170NC relevantly provides: "(1) A person must not: take or threaten to take any industrial action or other action; refrain or threaten to refrain from taking any action; with intent to coerce another person to agree, or not to agree, to: (c) making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or approving any of the things mentioned in paragraph (c). Subsection (1) does not apply to action, or industrial action, that is protected action (within the meaning of Division 8)." In the present context, the following elements must exist for a contravention of s 170NC(1) to occur: the taking of or threatening to take industrial action, or the refraining or threatening to refrain from taking any action; with an intention to coerce another person to agree, or not to agree, to; the making of; an agreement under Div 2 of Pt VIB. It is erroneous to construe the expression "an agreement under Division 2" in s 170NC(1)(c) as applying only in relation to an agreement that meets the requirements of Div 2 of Pt VIB and is an agreement that is capable of certification. If such a construction were accepted, s 170NC would not be contravened by the taking of industrial action by a person who has the intent to coerce another person to agree or not to agree to the making of an agreement that McHugh was not capable of certification. Such a result would be anomalous. The Full Federal Court said it would be a lacuna in the law141: "Section 170NC points up the undesirability of narrowly reading s 170ML(2). We think counsel for the appellants are correct in submitting that, on their opponent's argument, there would be a lacuna in the operation of this section. If the making of a claim about a matter that did not pertain to the employment relationship was enough to take a proposed agreement outside the description 'an agreement under Division 2', coercive action in support of such a claim, that was undertaken outside a formal bargaining period, or without a valid s 170MO(2) notice, would not be a contravention of a 'penalty provision'. It would not attract a penalty under s 170NF or injunctive relief under s 170NG." Although such a construction is possible on a literal reading of the section, it is inconsistent with the legislative objective of the section and the mischief at which the section is directed. The Explanatory Memorandum states that the section "prohibits coercion in relation to making, varying, extending or terminating an agreement [subsection (1)]. An agreement does not have to be made or certified for this to apply."142 This indicates that the mischief at which the section is directed is the taking of industrial action with the intent to coerce another person to agree to (or not to agree to) a proposed Div 2 agreement. The fact that the agreement may not be capable of certification is not relevant: if an agreement does not have to be made or certified for s 170NC(1) to apply, the inference may be drawn that the section applies notwithstanding that the agreement is not capable of being certified. For the penalty provision to operate, it is sufficient if it can be shown that the person regards the proposed agreement as an agreement of the type which satisfies the requirements of s 170LI for an application for certification under Div 2 of Pt VIB. The requirement that the agreement actually be capable of certification is not a necessary element of the offence. Accordingly, the industrial action in which the Unions engaged was not "protected action" within the meaning of s 170ML of the Act with the result that such action amounted to a contravention of s 170NC(1). Order Because the decision of Merkel J was correct, the appeals must be allowed. As a result, the orders of the Full Court of the Federal Court should be 141 AMWU (2002) 118 FCR 177 at 195. 142 Explanatory Memorandum at 92 (emphasis added). McHugh set aside. In their place should be substituted an order that the appeals to that Court be dismissed. GUMMOW, HAYNE AND HEYDON JJ. The certified agreement provisions These appeals (which were heard together) concern the construction of provisions in Pt VIB (ss 170L-170NI) of the Workplace Relations Act 1996 (Cth) ("the Act")143 relating to certified agreements and the inclusion therein of what have been called "bargaining service fees". Whilst in operation (and with some qualifications), agreements certified by the Australian Industrial Relations Commission ("the AIRC") prevail over inconsistent federal awards (s 170LY), and State laws, awards and employment agreements (s 170LZ). This emphasises the importance for industrial law of the certified agreement provisions of the Act. The previous provisions made with respect to certified agreements and what then were called enterprise flexibility agreements by the Industrial Relations Act 1988 (Cth) ("the 1988 Act") were considered in the Industrial Relations Act Case144. The principal object of the Act, stated in s 3, is the provision of "a framework for cooperative workplace relations" by, among other things: ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act". The term "employee" includes any person whose usual occupation is that of employee (s 4(1)). Division 2 (ss 170LH-170LM) of Pt VIB deals with the requirements for applications for certification by the AIRC of agreements in writing "about matters pertaining to the relationship" between certain employees and an employer such as the appellant ("Electrolux"), which is a constitutional corporation (an expression defined in terms reflecting, but not limited to, those of 143 The Act is in the form of Reprint 4. 144 Victoria v The Commonwealth (1996) 187 CLR 416 at 533-542. s 51(xx) of the Constitution). The construction of the phrase just emphasised (which appears in s 170LI) is critical for this case. Division 3 (ss 170LN-170LS) of Pt VIB is headed "Making agreements about industrial disputes and industrial situations". The provisions of Div 3 are not of central importance for present purposes but in argument were compared with and contrasted to those of Div 2. Division 4 (ss 170LT-170LW) sets out the powers and responsibilities of the AIRC in certifying the two species of agreement. There are requirements in s 170LU(1), (2) which apply only to Div 3 agreements. Division 5 (ss 170LX- 170LZ) details the effect of certified agreements. Reference has been made above to the primacy given over inconsistent awards, State and federal, and State laws and employment agreements. Division 6 (ss 170M-170MB) identifies the persons bound by certified agreements. A certified Div 2 agreement binds all persons whose employment, at any time whilst the agreement is in operation, is subject to that agreement (s 170M(1)(b)). Division 8 (ss 170MI-170NB) provides for the initiation by written notice of bargaining periods for the negotiation of proposed agreements and protects certain industrial action, taken after the giving of notice and during bargaining periods, against what otherwise would be actions lying at common law or State or Territory law. The present immunity provision (s 170MT) is in terms resembling those of s 170PM(3) of the 1988 Act. The validity of the provision was upheld in the Industrial Relations Act Case145. On one view of the case, that to which the parties directed much of their submissions, the ultimate issue is whether the immunity in respect of protected industrial action is attracted where a bone of contention between the parties is the inclusion in a proposed Div 2 agreement of a provision which is not about matters pertaining to the relationship between employer and employee. The "bargaining service fee", to the inclusion of which Electrolux objected, is said by it to be outside the particular class of matters. However, as will appear, the issues in this litigation cannot be resolved at that level of generality. Particular attention is required to various statutory provisions, notably those identified in the declaratory relief granted by the primary judge, s 170ML and s 170NC. The Act since amendments made by the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 (Cth) ("the 2003 Act") now specifies as an "objectionable provision" a provision (however described) of a 145 (1996) 187 CLR 416 at 558-560. certified agreement that requires payment of a "bargaining services fee" (s 298Z(5)(b)). The AIRC now must refuse to certify an agreement that contains an objectionable provision (s 170LU(2A)). The AIRC is obliged to act in this way even if the application to it for certification was made before the commencement of the 2003 Act146. However, these appeals concern declarations made by the Federal Court in respect of the Act as it stood before the 2003 Act. If the appeals are upheld, one consequence thereof may be to confirm that the changes made by the 2003 Act with respect to bargaining service fees reflected what, upon its true construction, already was the operation of the Act. The facts Electrolux is a corporation which manufactures whitegoods under the brand names "Westinghouse", "Simpson", "Chef" and "Kelvinator". It is a party to the Email National Manufacturing Agreement 1999 ("the 1999 Agreement") which was certified by the AIRC under the provisions of Pt VIB of the Act. The first, second and third respondents ("the AWU", "the AMWU" and "the CEPU" respectively) are organisations of employees who are registered pursuant to the Act and are collectively referred to as "the Unions". They are parties to the 1999 Agreement. The individuals who are the fourth, fifth and sixth respondents are officers respectively of the CEPU, the AWU and the AMWU. The eighth respondent ("the Minister") was added as a party by order of this Court in conformity with s 471 of the Act, and made submissions in support of the appeal. The 1999 Agreement had a nominal expiry date of 30 June 2001 but, pursuant to s 170LX of the Act, did not cease to be in operation at the time of the events giving rise to this litigation. In April 2001, the parties to the 1999 Agreement commenced discussions for the conclusion of a new certified agreement and the negotiations continued until September 2001. Notices were given under s 170MI to initiate bargaining periods for the negotiation of a proposed Div 2 agreement. In the course of those negotiations, the AMWU presented a draft on its behalf and that of the other unions. The document included as cl 46, the following provisions under the heading "Bargaining Agents Fee": The company shall advise employees prior to commencing work for the company that a 'Bargaining Agents' fee of $500.00 per annum is payable to the union. 146 Sched 1, Pt 2, Item 13. The relevant employee to which this clause shall apply shall pay the 'Bargaining Agents fee' to the union in advance ... on a pro rata basis for any time which the employee is employed by the company. By arrangement with the union this can be done in quarterly instalments throughout the year. The employer will, at the request of the employee to whom this clause applies, provide a direct debit facility to pay the bargaining agents fee to the union." The apparent rationale of such a fee was said in argument in this Court to include the fairness in contributions by non-union members to the Unions securing benefits which, as s 170M recognises, are enjoyed by all employees and the differential net wage receipts that otherwise would apply between those employees who pay and those who do not pay union dues. In the course of the negotiations, Electrolux made it clear that it would not negotiate about bargaining agents fees in any form. The litigation Following the issue of notices under s 170MO of the Act of their intention to take industrial action, the Unions threatened and purported to take industrial action allegedly protected under the Act in support of their claims concerning the terms of the proposed agreement. The term "industrial action" is the subject of a detailed definition in s 4(1) of the Act but nothing immediately turns upon those details for present purposes. However, the Unions contended, and Electrolux denied, that this industrial action was protected by the provisions of Div 8. Litigation was commenced by Electrolux in the Federal Court on 17 September Section 412 of the Act confers jurisdiction on the Federal Court with respect to matters arising under the Act in relation to which applications may be made to it under that statute. The Federal Court (Merkel J)147 granted declaratory relief in similar terms against each of the Unions. The declarations referred to the industrial action by the Unions on designated dates in September 2001 and to the notices previously issued by them and declared that the action: 147 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600; [2001] FCA 1840. "(a) was not protected action within the terms of s 170ML of the [Act]; and breached s 170NC(1) of that Act." Section 170ML(2) classifies as "protected action" activity identified as follows: "During the bargaining period: an organisation of employees that is a negotiating party; or a member of such an organisation who is employed by the employer; or an officer or employee of such an organisation acting in that capacity; or an employee who is a negotiating party; is entitled, for the purpose of: supporting or advancing claims made in respect of the proposed agreement; or responding to a lockout by the employer of employees whose employment will be subject to the agreement; to organise or engage in industrial action directly against the employer and, if the organisation, member, officer or employee does so, the organising of, or engaging in, that industrial action is protected action." (emphasis added) The reference in s 170ML(2) to "the bargaining period" directs attention to s 170MI(1). This states: an employer; or an organisation of employees; or an employee acting on his or her own behalf and on behalf of other employees; wants to negotiate an agreement under Division 2 or 3 in relation to employees who are employed in a single business or a part of a single business, the employer, organisation or employee (the initiating party) may initiate a period (the bargaining period) for negotiating the proposed agreement." Section 170NC, the other provision to which the declarations were directed, comprises the whole of Div 9 of Pt VIB. The Division is headed "Prohibition of coercion in relation to agreements". Section 170NC(1), the primary provision, does not apply to protected action within the meaning of Div 8. Sub-section (2) of s 170NC so provides. Accordingly, if the Unions be correct that the industrial action was for the purpose of advancing their claims made in respect of the proposed Div 2 agreement, within the meaning of s 170ML(2)(e), then s 170NC could have no application. Sub-sections (1) and (2) of s 170NC state: "(1) A person must not: take or threaten to take any industrial action or other action; or refrain or threaten to refrain from taking any action; with intent to coerce another person to agree, or not to agree, to: (c) making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or approving any of the things mentioned in paragraph Subsection (1) does not apply to action, or industrial action, that is protected action (within the meaning of Division 8)." Section 170NC is a "penalty provision" for the enforcement provisions of Div 10 (ss 170ND-170NH), but contravention of s 170NC is not an offence (s 170NF(1)). An injunction may be granted to restrain contravention of a penalty provision (s 170NG). No relief was given by Merkel J under Div 10; rather, reliance was placed upon the declaratory remedy provided by the general terms of s 21 of the Federal Court of Australia Act 1976 (Cth). The Full Court The declarations made by Merkel J were set aside by the Full Court of the Federal Court (Wilcox, Branson and Marshall JJ)148. The Full Court had before it three appeals, the principal appellant in each of which was respectively the AWU, the AMWU and the CEPU. Electrolux then took, by special leave, three appeals to this Court, seeking the reinstatement of the relief granted by Merkel J. The Full Court doubted, but did not find it necessary to decide, the correctness of two propositions advanced by Electrolux. These their Honours identified as follows149: "[F]irst, that each individual term of an agreement presented to the the [AIRC] for certification must concern matters pertaining relationship between the employer and the employer's employees from time to time; and, second, that a term along the lines of the [Unions'] bargaining fee claim would not concern such a matter." The Full Court decided that, even if Electrolux be correct in these respects, the industrial action necessarily was protected by s 170ML(2). This was because, in terms of that sub-section, the action was "for the purpose of: (e) supporting or advancing claims made in respect of the proposed agreement". The reasoning of the Full Court may be seen in two passages. The first is150: "Electrolux does not suggest the industrial action organised by the Unions in September 2001 was organised otherwise than for the support or advancement of the claims they were making against the company, including the bargaining fee claim. And Electrolux accepts that all the claims were genuinely made, in the sense that the Unions genuinely wished the substance of these claims to be included, in some form or other, in one or more certified agreements with the company. That being so, it seems to us the purpose of the industrial action clearly fell within the terms of par (e) of s 170ML(2); it does not matter whether or not the insertion of a provision along the lines of the bargaining fee claim would give rise to a certification difficulty under s 170LI(1)." 148 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177. 149 (2002) 118 FCR 177 at 196. 150 (2002) 118 FCR 177 at 195. The reference to "a certification difficulty under s 170LI(1)", as will appear, indicates misunderstanding of the provisions mentioned. The above passage was preceded by the other passage151: interrelation between the "Provided the claims are genuinely made, it does not matter that others may think them unrealistic. In the industrial relations area, as in other spheres of life, extravagant claims are often made. Mostly, an extravagant claim is unsuccessful; but sometimes it is conceded, perhaps in a modified form. There are sound policy reasons for reading par (e) literally. Fundamental to Pt VIB of the Act is the notion that, within strict and objectively definable limits, organisations, employees and employers are entitled to engage in industrial warfare." (emphasis added) The scope and purpose of Pt VIB The reference by the Full Court to engagement in industrial warfare is to be deprecated. Insofar as Pt VIB (particularly Div 3) is supported by the power conferred by s 51(xxxv) of the Constitution, the constitutional purpose in terms is the prevention and settlement of certain industrial disputes by means of conciliation and arbitration. The power with respect to trading and financial corporations (important for Div 2 agreements) is differently cast. But the evident purpose of Pt VIB as a whole is to further the objective stated in s 3 of the Act of providing "a framework for cooperative workplace relations" by enabling employers and employees "to choose the most appropriate form of agreement for their particular circumstances". It is to that end that Div 8 specifies the steps necessary for the initiation of a bargaining period for the negotiation of a Div 2 or Div 3 agreement, and confers certain legal immunity on protected action during the bargaining period. The legislatively favoured objective of a certified agreement has been taken by the Parliament to justify the conferral of the immunity at the expense of loss or injury suffered by parties to the negotiation in the bargaining period and third parties. Construction of s 170ML With these matters in mind, it is convenient to turn to the first declaration made by the primary judge, that the industrial action by the Unions was not 151 (2002) 118 FCR 177 at 195. protected action within the terms of s 170ML. Paragraph (e) of s 170ML(2) identifies the purpose of advancing or supporting particular claims, namely those made "in respect of" what is "the proposed agreement". Claims made for the inclusion of particular terms therein are made "in respect of" the proposed agreement. But what is conveyed by the phrase "the proposed agreement"? The "proposed agreement" is identified in s 170MI(1) as that which the initiating party, in this case the Unions, "wants to negotiate", being "an agreement under Division 2 or 3". What then for the present case is indicated by the phrase "an agreement under Division 2"? The term "under" is employed in the sense of meeting the specifications laid down in Div 2. That usage is consistent with the terms of the first provision in Div 2, s 170LH. That states: "This Division sets out requirements that must be satisfied for applications to be made to the [AIRC] to certify certain agreements between employers who are constitutional corporations or the Commonwealth and: organisations of employees; or employees." The requirements are those to be met for a certification application to the AIRC. If the application be in order then the exercise by the AIRC of its power (or duty) of certification of a Div 2 agreement, which is provided in Div 4 (ss 170LT- 170LW), is enlivened. It is true that one of the provisions in Div 4, namely s 170LV, empowers the AIRC to certify an agreement in respect of which it has grounds to refuse certification if undertakings are accepted as to the operation of the agreement. But otherwise the power or duty of certification may be exercised only if the requirements of s 170LT are met. That section specifies two matters which the agreement must include. One is procedures for the promotion and settlement of disputes about matters arising under the agreement (s 170LT(8)). The other (in s 170LT(10)) is the specification of a nominal expiry date for s 170LX(2). The AIRC is obliged to refuse certification if the agreement contains certain provisions. The proscribed categories include provisions permitting or requiring conduct that would contravene, in some respects, Pt XA (dealing with freedom of association) (s 170LU(2A)), and provisions discriminating in certain respects against an employee whose employment will be subject to the agreement (s 170LU(5), (6)). Section 170LU thus distinguishes between the agreement as a whole, which may or may not be certified, and particular provisions thereof. It is drafted in a way which is in contrast with s 170LI, the critical provision for this case. The text of s 170LI is set out below. What is of further importance is that these requirements of inclusion and exclusion of provisions for the discharge by the AIRC of its certification function are with respect to subject-matters which pertain to the relationship between employer and employee. jurisdictional requirements of s 170LI as to the nature of the agreement put before the AIRC. But that is not the end of the matter because the provisions are then to be dealt with by the AIRC as the Act requires. If provisions are included but objectionable, then an agreement with those provisions may not be certified. Its efficacy will be no more than that given it by the general law152. Those provisions answer the The exercise by the AIRC of its authority under Div 4 to certify is conditioned upon satisfaction of s 170LI. That appears from the terms of s 170LI(1). This states: "For an application to be made to the [AIRC] under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between: an employer who is a constitutional corporation or the Commonwealth; and all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement." The phrase "about matters pertaining to the relationship between" also appears in s 5AA(2), (3). These give additional operation to Div 2 in circumstances reflecting legislative reliance on the Territories power (s 5AA(2)), and the commerce power and the Territories power (s 5AA(3)). In the present case, "the proposed agreement" identified in s 170ML(2) is not simply that which the Unions wished to negotiate. There must be an agreement which would, as indicated in s 170LH, satisfy the requirements for the making of an application to the AIRC for certification. Those requirements, to attract the jurisdiction or authority of the AIRC, include the nature of the agreement mandated by s 170LI(1). Hence the critical nature for this case of the phrase "about matters pertaining to the relationship" between Electrolux and its employees whose employment is subject to the proferred agreement. 152 cf Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235. "Matters pertaining" This phrase has a long history in the industrial relations law of this country, and in the decisions of this Court, including Australian Tramway Employés Association v Prahan and Malvern Tramway Trust153; R v Portus; Ex parte ANZ Banking Group Ltd154; and Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees155. All of these decisions predate the enactment of Pt VIB of the Act. It is true that the definition of "Industrial matters" in s 4(1) of the Conciliation and Arbitration Act 1904 (Cth) ("the 1904 Act"), which stated that the defined term: "means all matters pertaining to the relations of employers and employees", was a cognate definition to that of "Industrial dispute" and this was so drawn as to reflect reliance by the Parliament on the head of power in s 51(xxxv) of the Constitution. The provisions of Pt VIB respecting Div 2 agreements are not so based. However, in the judgment of the whole Court in Alcan, their Honours said156: "The question is not one involving s 51(xxxv); it is simply a question of the meaning of the definition of 'industrial dispute' in s 4(1). And although there are some minor differences between that definition and the relevant definitions previously found in [the 1904 Act], the requisite nature of the subject matter of a dispute remains precisely the same, namely, that it pertain to the employment relationship involving employers, as such, and employees, as such." Earlier, in Portus, the Court had held that a demand by a union that an employer make deductions and payments from salaries due and payable to its employees in accordance with authorities provided by them did not affect the industrial relationship of employers and employees. Walsh J said157: 153 (1913) 17 CLR 680. 154 (1972) 127 CLR 353. 155 (1994) 181 CLR 96. 156 (1994) 181 CLR 96 at 105. 157 (1972) 127 CLR 353 at 364. "The payment of subscriptions is a matter pertaining to the relationship between the employees and their union. In my opinion it is not a matter with which the employer, as such, has any concern and it does not become an 'industrial matter' merely because the association makes a demand upon the employers to which they are not willing to accede." Stephen J, after observing that the present demand was sought to be attached to the regular cycles of work and payment therefor, continued158: "If, in the existing circumstances of employment, it was demanded of the employer that it accept back from employees a part of the remuneration paid, retain it for a period of time and then pay it over to a third party, the association, such a demand would be seeking to create a new, distinct relationship between the employer and its employees, having no connexion with the pre-existing employer-employee relationship. The fact that the present demand is made to operate at a slightly earlier stage, before salary is in fact paid over to employees, thereby obviating one step in the imaginary demand I have postulated, that of the acceptance of money back from employees, does not appear to me to convert a transaction foreign to the relationship of employer and employee into one which pertains to that relationship." In Alcan, the Court held that a demand made by a union that an employer deduct union dues from the wages of its employees and remit the deductions to the union did not pertain to the relationship between employer and employees. The Court emphasised159 that a dispute as to the deduction of union dues pertained to a relationship involving "employees as union members and not at all as employees". That reasoning is applicable to the phrase "about matters pertaining to the relationship between" the employers and employees identified in s 170LI. Moreover, there are the powerful considerations which were adverted to in Alcan when dealing with the significance to be attached to Portus in the light of supervening legislation and judicial decisions. Their Honours in Alcan referred to two matters telling against reconsideration of Portus as follows160: 158 (1972) 127 CLR 353 at 372. 159 (1994) 181 CLR 96 at 107. 160 (1994) 181 CLR 96 at 106. "The first is that the principle on which it proceeds, namely, that for a matter to 'pertain to the relations of employers and employees' it must affect them in their capacity as such, has been accepted as correct in a number of subsequent cases161, with no question ever arising as to whether the principle was correctly applied in the case. The second is that Parliament re-enacted, in s 4(1) of the [1988] Act, words which are almost identical with those considered in R v Portus." The phrase "about matters pertaining to the relationship" appears not only in s 170LI and with respect to Div 2 agreements. The provisions respecting Div 3 agreements (in particular s 170LN) draw in the definition of "industrial dispute" in s 4(1). This still contains the phrase "about matters pertaining to the relationship between employers and employees". The inference that, in this respect, Div 2 and Div 3 share a basic precept is very strong, and the weight of authority construing the definition of industrial dispute is considerable. The field of industrial relations legislation in Australia is not one where the Parliament may readily be taken to have legislated without awareness of the interpretation placed by this Court on pivotal definitions162. Nor can it be said that to apply to the terms of Div 2 (and Div 3) the reasoning in Portus and Alcan is merely to perpetuate an erroneous construction163. Finally, the phrase in question contains no words of severance to permit a distributive operation. The text does not read "including or containing matters pertaining". Yet, to succeed, the submissions for the Unions must have it so and displace the qualifier "about" by such an explanation. The word "about" by itself does not perform that work. Conclusions respecting s 170ML The chain of provisions in Pt VIB, from the phrase "wants to negotiate an agreement under Division 2" in s 170MI(1) to the requirements of Div 2 (in 161 See, eg, in relation to R v Portus: R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153 at 162, 163-164; Federated Clerks' Union (Aust) v Victorian Employers' Federation (1984) 154 CLR 472 at 482, 488; Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 352-353. See also Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic) Pty Ltd (1993) 178 CLR 352 at 363 and the cases there cited. 162 cf Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 328-329. 163 cf Flaherty v Girgis (1987) 162 CLR 574 at 594. s 170LH and s 170LI) for the making of certification applications to the AIRC, produces the result that the protected action afforded by s 170ML will not exist where the agreement the initiating party seeks to negotiate is not of a nature that meets the criterion in s 170LI that it be about matters pertaining to the relationship between employer and employees. The reference by the Full Court164 to "a certification difficulty under s 170LI(1)" as something beside the point thus misconceived the point. The reasoning why, on that footing, the proposed agreement in question here failed that criterion appears sufficiently in the following passage in the judgment of Merkel J165: "The claim [in respect of the bargaining agents fee], implicitly if not explicitly, is that Electrolux is to act as the [Unions'] agent in entering into a contract with new employees which requires the employees, who are not union members, to employ the [U]nions as their bargaining agent to reflect the [U]nions' service in negotiating agreements with Electrolux under the Act. The relationship between the employer and the employee that would be created were the claim acceded to is, essentially, one of agency; Electrolux is to contract with its employees on behalf of the relevant union, as its agent. The agency so created is for the benefit of the union, rather than for the benefit of the employee upon whom the contractual liability is to be involuntarily imposed. The resulting involuntary 'bargaining' agency is, as a matter of substance, if not form, a 'no free ride for non-unionists' claim, rather than one by which the union is undertaking its traditional role of representing the interests of union members in respect of the terms of employment of employees. Although the claim was argued as if it were a claim for future services, it may also be characterised as a claim for payment for the [U]nions' services in securing the new employee's terms and conditions of employment in the proposed certified agreement, notwithstanding that the new employee will only have commenced employment after the date of the agreement." (original emphasis) It follows that the declaration as to contravention of s 170ML was properly made. 164 (2002) 118 FCR 177 at 195. 165 [2001] FCA 1600 at [40]-[41]. Conclusions respecting s 170NC There remains for consideration the declaration respecting s 170NC(1). The denial to the industrial action in question of the character of protected actions under s 170ML(2) removes the barrier to the operation of the section imposed by s 170NC(2). But, that being allowed, was there a contravention of the terms of s 170NC(1)? In that respect, the Full Court gave to this provision a construction which it said supported the reading of s 170ML(2) urged by the Unions. Their Honours said166: "Section 170NC points up the undesirability of narrowly reading s 170ML(2). We think counsel for [the Unions] are correct in submitting that, on their opponent's argument, there would be a lacuna in the operation of this section. If the making of a claim about a matter that did not pertain to the employment relationship was enough to take a proposed agreement outside the description 'an agreement under Division 2', coercive action in support of such a claim, that was undertaken outside a formal bargaining period, or without a valid s 170MO(2) notice, would not be a contravention of a 'penalty provision'. It would not attract a penalty under s 170NF or injunctive relief under s 170NG." There is no lacuna of the nature identified by the Full Court. Section 170NC(1) falls into two parts. The first forbids the taking or threatening to take action, whether industrial action or otherwise, and forbids the refraining or threatening to refrain from taking any action. The second part is governed by the phrase "with intent"; the text, as a whole, identifies the mental element with which the person takes or refrains from the action indicated in the first part of the sub-section. In the Federal Court, differing views have been expressed as to what is involved in proving the presence of the necessary intent for s 170NC167, but it is unnecessary for this appeal to discuss them. An intention to coerce another to agree (or not to agree) to the making of what the actor regards as an agreement of the nature required by s 170LI for an application for certification of a Div 2 agreement will meet the criterion specified 166 (2002) 118 FCR 177 at 195. 167 See Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2001) 109 FCR 378 at 386-388. in the second part of s 170NC(1). If the action identified in the first part of that provision meets the requirements for it to be protected action for Div 8, then s 170NC(2) takes the action outside s 170NC(1). If the action not be protected action, because, for example, of failure to comply with the notice provisions, then s 170NC(1) may apply even though the proposed agreement is otherwise of the nature required for Div 2 agreements by s 170LI. If the proposed agreement, as is this case, does not have that requisite nature, then s 170NC(1) may apply, if there be the necessary intent described above. The declaration respecting contravention of this provision was properly made. Orders The appeals should be allowed, the orders made by the Full Court of the Federal Court on 21 June 2002 set aside and in place thereof it should be ordered that each of the appeals to the Full Court Nos S6/2002, S11/2002 and N18/2002 be dismissed. There should be no order for costs in this Court or the Full Court. Kirby 173 KIRBY J. These three appeals from orders of the Full Court of the Federal Court of Australia168, setting aside declarations made in that Court at first instance by Merkel J169, concern primarily the meaning and operation of provisions of the Workplace Relations Act 1996 (Cth) ("the Act") relating to "protected action" on the part of industrial organisations of employees under the Act. As a secondary issue, the appeals concern whether an agreement propounded by the respondent Unions170, presented to the Australian Industrial Relations Commission ("the Commission"), was certifiable under the Act, on the basis that it contained terms171 "about matters pertaining to the relationship between ... an employer ... and ... all persons who, at any time, are employed in a single business ... of the employer and whose employment is subject to the agreement." Because all three appeals involve a consideration of the same points, they were heard together in this Court. The facts giving rise to the dispute between the Unions and the appellant, Electrolux Home Products Pty Ltd ("Electrolux"), are set out in other reasons172. So are the applicable provisions of the Act173 and of earlier federal legislation on the relevant powers of the Commission and its predecessor174. Also set out there are the details of the history of the dispute between the parties and of their litigation175 and extracts from the respective reasons of the primary judge176 and 168 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 (Wilcox, Branson and 169 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600; [2001] FCA 1840. 170 The same short descriptions are adopted as in the reasons of Gummow, Hayne and 171 The Act, s 170LI(1). See joint reasons at [155]. 172 Reasons of McHugh J at [32]-[39]; joint reasons at [139]-[141]; reasons of 173 Reasons of Gleeson CJ at [12]; reasons of McHugh J at [40]-[52]; joint reasons at [130]-[138]; reasons of Callinan J at [236]-[239]. 174 Joint reasons at [152]-[156]. 175 Reasons of McHugh J at [34]-[39]; joint reasons at [142]-[148]; reasons of Kirby of the Full Court177. The reader of these reasons will not want these details repeated for a fourth time. It will be necessary to refer in a little more detail to the reasons of the Full Court in order to understand the considerations that led that Court to its conclusions, different from those of the primary judge. However, it is unnecessary to repeat any of the foregoing material. Incorporating it by reference in these reasons allows me to go directly to the essential points that need to be decided. In my view, the Full Court was correct in respect of each of them. The appeals to this Court should be dismissed. The Unions' industrial action was within s 170ML(2)(e) The context of this dispute: The first issue is whether the Unions' industrial action in September 2001 was "protected action" within s 170ML(2) of the Act. In April 2001 the Unions had commenced discussions with Electrolux concerning a new agreement which the Unions proposed should be certified by the Commission under the Act. Those discussions were not fruitful. This led, in September 2001, to the Unions' notifying Electrolux of their intention to commence industrial action in support of their claims. The Unions clearly intended, and contemplated, that such industrial action would be "protected action" within the meaning of s 170ML of the Act. Industrial action was thereafter taken by the Unions, purportedly in reliance upon their notice and their claim to protection in accordance with the terms of the Act. The primary judge and the Full Court accepted that the Unions' claims (and by inference the proposed agreement) were genuine in the relevant sense178. On the face of things, therefore, the Unions undertook the industrial action "for the purpose of supporting or advancing claims made in respect of the proposed agreement"179, namely the agreement propounded by the Unions to Electrolux. However, the latter contended that the industrial action was not "protected" because it argued that a term of the proposed agreement, presented by the Unions to Electrolux, for what was described as a "Bargaining Agent's 176 Joint reasons at [165]; reasons of Callinan J at [233]-[234]. 177 Joint reasons at [147]-[148] citing Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177. 178 cf R v Ludeke; Ex parte Queensland Electricity Commission (1985) 159 CLR 178 at 190-191; Attorney-General (Q) v Riordan (1997) 192 CLR 1 at 45, 60. 179 The Act, s 170ML(2). Kirby Fee"180 ("the Fee"), contaminated the "proposed agreement" and took it outside the Act. The Fee was intended to be applicable to each future employee of Electrolux who was not a member of an applicable union. According to Electrolux, the inclusion of the demand for the Fee took the "proposed agreement" outside the protection otherwise afforded to the Unions by s 170ML of the Act. It meant that the "proposed agreement" was not about a matter pertaining its employees. Accordingly, the inclusion of the term in the proposed agreement meant that the "proposed agreement" did not satisfy the requirements of s 170LI of the Act, was not capable of being certified and therefore was not a "proposed agreement" of the kind that attracted the protection to which s 170ML(2)(e) of the Act referred. relationship between Electrolux and the According to Electrolux, it followed that the industrial action taken by the Unions, purportedly in respect of the "proposed agreement", was not "protected" industrial action. In law, it was unprotected. On that footing the declaration to such effect made by the primary judge (or other appropriate remedies) were available to Electrolux to give effect to that conclusion. Electrolux could, as it purported to do, refuse to negotiate on the "proposed agreement". The industrial action of the Unions, being outside of the Act's protection, was unlawful. The Unions, by inference, were liable to Electrolux accordingly. The other members of this Court find these arguments persuasive. I do not. I will shortly say why. A purposive interpretation: First, as in the interpretation of any legislation, including federal legislation, it is important to give meaning to the contested provision so as to give effect to the implied purpose of the Parliament derived from the language in which it has expressed that purpose. The context states, or suggests, the first purpose. This was to restore the capacity of employees and employers, with or without the interposition of arbitrated awards, freely to negotiate employment conditions to govern employment relationships. They were to be able to do so largely on an enterprise basis, without all of the constraints of arbitrated industry-wide awards that had been such a feature of the regulation of Australian industrial conditions virtually from federation and until recent years181. 180 See the terms of this provision of the proposed agreement set out in the joint reasons at [140]. 181 Until the amendments to the Industrial Relations Act 1988 (Cth) inserted by the Industrial Relations Reform Act 1993 (Cth) incorporating Pt VIB ("Promoting Bargaining and Facilitating Agreements") in its original form. Further amendments (Footnote continues on next page) Kirby Much was made in argument of the use in the Full Court's reasons of the entitlement of organisations, employees and employers to engage in industrial warfare within strict and objectively definable limits. That expression is to be deprecated182. A better phrase might have been chosen, certainly one less provocative to the faint-hearted who recoil from the playing out of market forces in economic conflict at an enterprise level untamed, as in the recent past, by the interposition of representative bodies of employers and employees and the processes of dialogue, rational argument and formal decision-making by the Commission and its predecessors. However, the purposes of the new arrangements, inserted by Pt VIB of the Act, undoubtedly included a restoration of economic bargaining in which raw economic power at an enterprise level will, in some cases at least, replace the previous procedures of compulsory arbitration. This fact, and the apparent purposes of Pt VIB of the Act, make it correct, as the Full Court remarked, to say as North J did in Australian Paper Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia183: "The purpose of this statutory scheme is to allow negotiating parties, both employer and employee, maximum freedom consistent with a civilised community to take industrial action in aid of the negotiation of agreements without legal liability for that action." This is the starting point for the understanding of s 170ML(2) of the Act and the ascertainment of its meaning. The sub-section is to be construed in a context of a revival of robust enterprise bargaining, initiated by demands on employers, including by industrial organisations of employees on behalf of employees. Avoiding disproportionate interpretations: Secondly, the provisions of Pt VIB of the Act, in which s 170ML appears, are written to introduce a significantly new industrial relations regime. The Act, and even the words of the critical section184, pick up language with a long history and repeat its words in were inserted by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth). 182 Joint reasons at [148]. 183 (1998) 81 IR 15 at 18. See also the terms of s 3 of the Act and the objectives there set out, contained in the joint reasons at [132]. 184 cf joint reasons at [157]-[158] with reference to the definition of "industrial matters" in s 4(1) of the Conciliation and Arbitration Act 1904 (Cth). Kirby this new context. It should not, therefore, be entirely surprising that the Act would contemplate, in an Australian industrial relations setting, that a "proposed agreement" would, or might, include claims for terms that exceed the more sober expectations of the party making such claims. This has been a feature of proposals for industrial benefits since virtually the earliest days of federal legislative participation in industrial relations regulation. For constitutional reasons, it gave rise to the "log of claims" procedures and ambit claims185. But even placing that peculiar feature of the award system to one side in the new context of the Act, the very nature of industrial or employment bargaining, aiming to reach an "agreement" about employment conditions, contemplates (and virtually demands) that one side will make claims for industrial conditions that it may, or may not, expect to secure. Thus benefits may be sought by unions that may be watered down, modified or deleted as the negotiations proceed. This is part and parcel of the reality of employment bargaining, as of other forms of negotiation. It is unsurprising that it should exist in the contemporary Australian industrial relations context. Realism on the part of this Court requires it to face this reality. It suggests that it would be odd in the extreme that the mere inclusion in a "proposed agreement", propounded by a union to an employer, of a clause that was excessive to the more modest expectations (or that might even be outside the ambit of those that would, or could, later be certified by the Commission) would deprive the entire "proposed agreement" and the industrial organisation propounding it of protection from unlawfulness in the statutory scheme introduced by Pt VIB of the Act. That would be such a disproportionate and excessive consequence that it naturally sends the rational mind looking for another interpretation of s 170ML, if such be available in the language of the section186. The practical needs of industrial negotiations: Thirdly, the search for a rational and practical meaning to the language of the Act is made the more urgent by the dramatic consequences of denying protection to a union for industrial action taken following a "proposed agreement" as provided by the Act. The union might scrupulously go through all of the formalities contemplated by the Act: preparation and service within time of the "proposed agreement"; genuine negotiation; recognition of the failure of negotiations; notice to the employer of intended industrial actions and so forth. Yet all such precautions could be set at 185 Attorney-General (Q) v Riordan (1997) 192 CLR 1 at 37-46. 186 Rational decision-making is a characteristic normally to be attributed to the legal process: Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1619-1621 [116]- [126]; 200 ALR 447 at 477-479. Kirby nought by a subsequent judicial declaration, perhaps months or even years later in contested legal procedings (such as the present), to the effect that a particular clause (possibly minor) fell outside the permissible subjects of an entirely separate and later process committed to others – namely certification of the "proposed agreement" by the Commission. As the Full Court correctly said, "a high degree of certainty is essential"187 as to whether industrial action can be taken lawfully and is protected or not protected. Their Honours went on, in words that I would endorse188: "If parties are to make rational and confident decisions about their courses of conduct, they need to know where they stand. It would be inimical to the intended operation of Pt VIB to interpret s 170ML(2)(e) in such a way as to make the question whether particular industrial action is 'protected action', and therefore immune from legal liability, depend upon a conclusion concerning a technical matter of law: whether a particular claim, if conceded, would cause any resultant agreement to fall outside s 170LI(1). As this case demonstrates, that may be a matter about which well-informed people have different views." is finally determined with reference The present point has even more telling persuasiveness in this Court. In this case the industrial action was taken as long ago as September 2001. By the time this Court's decision is announced, three years will have expired before the issue this particular "proposed agreement". This Court should remember that industrial disputes often involve highly dramatic and urgent matters. The Parliament, at least, is to be taken to know that. The history of this country, going back to inter-colonial conflicts that first led to the inclusion in the Constitution of a relevant head of legislative power in respect of individual conciliation and arbitration, grew out of the recognition that, in this field, time is often of the essence. In construing Pt VIB of the Act, this Court should therefore prefer a construction that gives effect to that awareness; not one that inflicts delay, uncertainty and inordinate risk upon the industrial process. Realistic liability of industrial negotiations: Fourthly, the importance of securing protection against civil liability is not a minor matter. In the past, it might have been contemplated that institutional liability on the part of organisations of employees for unprotected industrial action might not be enforced. Such could not be assumed in current industrial circumstances. The 187 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 at 195 [93]. 188 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 at 195 [93]. Kirby provision of legal protection against liability for such industrial action is now a highly practical and important consideration for individual organisations, especially one might say for an organisation of employees that is party to negotiations under the Act189. The Parliament would also have known this fact. It can be assumed that the Act was drafted on the basis of this reality. To expose an industrial organisation of employees to grave, even crippling, civil liability for industrial action, determined years later to have been "unprotected", is to introduce a serious chilling effect into the negotiations that such organisations can undertake on behalf of their members. It would be a chilling effect inimical to the process of collective bargaining, including by such organisations on behalf of their members, as contemplated by the Act. These features of the industrial realities, against the background of which the scope of "protected action" is to be defined in accordance with the Act, lend support to the construction of the Act preferred by the Full Court. At least without very clear language – much clearer than appears in the Act – I would, like the Full Court, not be persuaded to interpret the Act so as to narrow the scope of legal protection for the bargaining actions of such organisations. At least, I would require very clear statutory language to drive me to such an artificial, inconvenient, unrealistic and potentially discriminatory result. The generality of words of the Act: Fifthly, the text of the Act itself must be analysed. I will set out the relevant provisions of s 170ML(2) with the appropriate emphasis to permit my point to be made more clearly: "During the bargaining period: (a) an organisation of employees that is a negotiating party; is entitled, for the purpose of: (e) supporting or advancing claims made in respect of the proposed agreement; to organise or engage in industrial action directly against the employer and, if the organisation … does so … that industrial action is protected action." 189 The Act, s 170ML(2). Kirby Most of the qualifying requirements necessary to render the Unions' industrial action in the present case a "protected action" are unquestionably established. The critical words that require attention concern whether the action is "for the purpose of … supporting or advancing claims made in respect of the proposed agreement." The very generality of the words of connection ("for the purpose of" and "in respect of") support an interpretation of s 170ML(2) that would read the sub- section in a broad way and not narrowly. The sub-section does not provide explicitly for a loss of protection if there is later found a disqualifying demand in the "proposed agreement". Still less does it restrict the protection provided to a case where the industrial action is taken in order to enforce each and every demand made in the "proposed agreement". On the contrary, the words of connection oblige the reader to characterise the general nature of the industrial action – its purpose and what it is done "in respect of". In accordance with the terms of s 170ML(2), this necessitates characterising the industrial action as a whole. The context reinforces such a reading. In my view, it is a serious mistake of interpretation to read the scope of the protection offered by the Act in the way favoured by the majority in this Court. Not only is that an impractical and narrow construction incompatible with the context and with the Parliament's language and purpose. It is one that has the effect of defeating a specific remedial protection against civil liability afforded by the Parliament to industrial organisations, such as the Unions. As the interpretation upholding that protection conforms to the statutory text and purpose, and sustains the effectiveness of the important right of collective bargaining about employment conditions, it is the one that this Court should prefer. Confirmation by later amendment: Sixthly, if the Parliament intended to adopt a narrower protection with respect to industrial action "for the purposes of" and "in respect of" the "proposed agreement", it would have said so. Indeed, the Parliament later did say so in terms of the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 (Cth)190. The terms of the last-mentioned Act do the work that the Act, as it stood at the time relevant to the present industrial action, did not. In former times, it might have been argued that the passage through the Parliament of reformatory and amending legislation amounted to an acceptance and endorsement of the interpretation of the Act adopted by the Full Court which this Court should not therefore change upon the assumption that the supervening 190 The terms are explained in the joint reasons at [138]. Kirby legislation was unnecessary or redundant191. We now live in more enlightened and realistic times. Such interpretative myths are not now endorsed. Their assumptions are not attributed to the legislature192. In advance of an appellate outcome, the Parliament is normally entitled to make its will perfectly plain. Subject to any constitutional limitations, it may later correct the outcome of a judicial decision of which it disapproves, leaving it to appellate courts to declare later whether that decision was, or was not, correct in the particular case. Nevertheless, the supervening legislation is at least available to a court reviewing the earlier decision to demonstrate how it was possible to remove doubt that was found to exist in the legislation as it previously stood. Such is the case here. Where the Parliament intended to cut back important protections, safeguarding valuable rights of protected collective bargaining, it should say so clearly – as it has now done and could have done earlier if that had been its earlier purpose. Confirmation of the specialist court: Seventhly, although this Court has its own constitutional and appellate functions to discharge in relation to the interpretation of the Act, it is sensible for it to give proper weight to the opinions and approaches of the bodies having the relevant expertise in the interpretation of such specialised legislation. In this case, this means the Federal Court, in whose Full Court disputes of this kind do, and should, normally finish193, and in the Commission. Although the Commission has expressed different views over time concerning the effects of the law canvassed in these appeals, its last word in respect of a contest, arising before the statutory amendment took effect, analysed past decisions of Full Benches of the Commissions. It confirmed the approach that the totality of the proposed agreement had to be considered in assigning a character to it as required by the Act194. This supports the general approach of the Full Court. Where experts in the field adopt an interpretation of the legislation, this Court will usually anchor a differing approach in very clear 191 cf the mode of reasoning in Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106- 107 cited by the joint reasons at [161]. 192 Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 328-329, 349-351 where R v Reynhoudt (1962) 107 CLR 381 at 388 per Dixon CJ is cited. 193 cf Federal Commissioner of Taxation v Westfield Ltd (1991) 22 ATR 400 at 402. See Hill, "What Do We Expect from Judges in Tax Cases?", (1995) 69 Australian Law Journal 992 at 999. 194 Automotive, Food, Metals, Printing, and Kindred Industries Union v Unilever Australia Ltd, Australian Industrial Relations Commission, Full Bench (Munro J, Drake SDP, Larkin C) at [142]-[148], [155]-[173]. Kirby statutory provisions. Yet such clear provisions are absent in this case. On the contrary, the statutory text supports the views adopted by the Full Court, as I have demonstrated. Those views take full account of industrial realities and the practical way in which the legislative protection of industrial organisations engaged in collective bargaining was to be taken as intended by the Parliament in the form in which the Act previously stood. Conclusion: the objection fails: For these reasons, the appeals to this Court from the substantive issue decided by the Full Court of the Federal Court fail. The orders of that Court, which rested upon its decision on this point, are sustained. The other matters argued are either premature and not the proper subject of relief by way of declaration or hypothetical in the state of the proceedings as they stood when the challenge was before the Federal Court. Especially because of the supervening amendment of the legislation, it is unnecessary to decide them. No costs orders turn on the resolution of the remaining points. It was common ground that no costs orders should be made by this Court. It follows that the appeals should be dismissed. The Unions' claim was within s 170LI(1) of the Act The context of the dispute: Because the majority of this Court reaches a different conclusion about the disposition of the argument concerning the operation of s 170LI(1), and because that question was fully debated before this Court and is the subject of the reasoned opinions of others195, I will deal with it briefly. The critical question is whether the proposed agreement, if it contained the "Bargaining Agents Fee" at the time it was propounded, would have been "an agreement … about matters pertaining to the relationship between … an employer … and ... all persons … employed in a … business … whose employment is subject to the agreement." It may be accepted that this question is to be determined according to the substance not simply the form of the "proposed agreement". It may be accepted that the mere demand by the Unions upon an employer concerning the terms of employment of future employees does not make the subject of the demand a "matter pertaining to" the employment relationship. It may also be accepted that a task of classification is involved which, once again, requires characterisation by the Court of the "matters" contained in the "proposed agreement" the subject of the application. 195 Reasons of Gleeson CJ at [13]-[17]; reasons of McHugh J at [78]-[79]; joint reasons at [153]-[163]; reasons of Callinan J at [238]-[253]. Kirby The argument of Electrolux, supported in this Court by the Minister for Employment and Workplace Relations who intervened in the interest of Electrolux, was that the applicable "matter" involved a "matter" solely between future employees of Electrolux and the Unions. In short, the Unions had sought to make Electrolux a "collecting agent" for a new fee between the Unions and non-members who happened to be employees of Electrolux. This was not therefore a "matter" pertaining to the "relationship" between such an employee and the employer. The relevant "relationship" was between the employee and the union. is arguable197. Differences of I accept, focussing solely on the text of the Act read narrowly, that this is an arguable construction. The fact that the primary judge accepted it196, and that others in this Court now have done so, shows that it is one way of looking at the statutory language. By the time contested questions of statutory construction reach this Court, it is rare indeed, if ever, that one can say that only one interpretation interpretation suggest, or demonstrate, differing starting points or values that influence the decision-maker, consciously or unconsciously. A reading of earlier decisions of this Court concerned with award provisions for deductions of union dues from employment salaries appears at first blush to lend support to the proposition advanced by Electrolux: R v Portus; Ex parte ANZ Banking Group Ltd198 and Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees199. However, this case is yet another illustration of the danger of reading judicial observations out of context. It demonstrates the need, in matters of statutory construction and characterisation, to focus on the language used by the Parliament, not the language used by judges in other contexts. Changing constitutional connection: First, the background to the problem concerning this Court in Portus and Re Alcan can be traced to the constitutional necessity of preventing the then Conciliation and Arbitration Commission from exceeding its constitutional mandate. At the time of those decisions, that mandate was relevantly confined to the provisions of s 51(xxxv) of the Constitution. The constitutional text continued therefore to take the Court back to the words "industrial dispute" in that paragraph of s 51(xxxv) as elaborated by 196 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 at [40]-[41]. See joint reasons at [165]. 197 News Ltd v South Sydney Football Club (2003) 77 ALJR 1515 at 1524 [42]; 200 ALR 157 at 168. 198 (1972) 127 CLR 353. 199 (1994) 181 CLR 96. Kirby the then provisions of the Conciliation and Arbitration Act 1904 (Cth)200 ("the 1904 Act") necessarily drawn with the provisions of the Constitution in mind. The Act in its present form operates in a considerably wider constitutional context. This is because of the utilization by the Federal Parliament of other relevant heads of constitutional power, including that derived from the corporations power201 and the external affairs power202 – the latter concerned with giving effect in federal law to certain Conventions of the International Labour Organisation to which Australia is a party. In these circumstances, to read down the provision of s 170LI(1) by reference to earlier judicial dicta, written in a significantly different constitutional and statutory context, invites error. It is an error which this Court should avoid by adhering closely to the statutory words, read now in a larger constitutional context, without the same implication that it is necessary to read down the supposed restriction on "matters pertaining to" the identified relationship in order to avoid exceeding the constitutional bounds understood to exist in s 51(xxxv) of the Constitution. Developing constitutional understanding: Secondly, even within that former context, it needs to be borne in mind that this Court's decisions were not always entirely consistent with each other over the course of the century during which the Court described the ambit of what could constitute an "industrial dispute" within the Constitution and the statute. Thus, originally, this Court took a comparatively broad view of what could constitute an "industry" and could be subject to an "industrial dispute"203. But then a majority restricted that notion by reference to supposed constitutional limitations that necessarily cut back the understanding of the statutory language204. The result, for many years, was a restricted view of the Constitution and of the statute205. This lasted until a wider 200 s 4(1) definition of "industrial dispute" and see joint reasons at [158] and the definition of "industrial matters". 201 Constitution, s 51(xx). 202 Constitution, s 51(xxix). See Kirby, "Human Rights and Industrial Relations", (2002) 44 Journal of Industrial Relations 562 at 566-568. 203 Jumbunna Coal Mine, NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 365, 370; Federated Municipal and Shire Council Employees' Union of Australia v Melbourne Corporation (1919) 26 CLR 508 at 575; cf at 584. 204 Federated State School Teachers' Association of Australia v State of Victoria (1929) 41 CLR 569 at 575; cf at 588 per Isaacs J dissenting. 205 See eg R v Commonwealth Court of Conciliation and Arbitration; Ex parte Victoria (1942) 66 CLR 488; Pitfield v Franki (1970) 123 CLR 448; R v Holmes; Ex parte Public Service Association (NSW) (1977) 140 CLR 63 and R v McMahon; Ex parte Darvall (1982) 151 CLR 57. Kirby view was adopted befitting the constitutional context and the larger statutory function envisaged206. A similar course of decisional history can be found in the cases concerned with the meaning of an "industrial dispute". In its earliest years, this Court was highly protective of what came to be described as the "management prerogatives" of employers. Despite union demands made on employers in the industrial and employment context, so-called "management prerogatives" were commonly deemed to fall outside the scope of the constitutional power and hence of the applicable legislation207. One of the strongest proponents of restriction upon interference in such "management prerogatives" was Barwick CJ. In R v Commonwealth Conciliation and Arbitration Commission; Ex parte Melbourne and Metropolitan Tramways Board (Tramways No 2) his Honour put it thus208: "Whilst it is a truism that both industrial disputes and awards made in their settlement may consequentially have an impact upon the management of an enterprise and upon otherwise unfettered managerial discretions, the management of the enterprise is not itself a subject matter of industrial dispute." With respect, there are reflections of similar views in some of the reasons now offered in disposing of these appeals. Yet gradually this Court reformulated its view of what constituted an "industrial dispute" for constitutional purposes so that implications of industrial demands upon "management prerogatives" came to be seen, in some cases, as legitimate subjects of "industrial disputes", lawfully giving rise to the facility of conciliation and arbitration under the Constitution and the statute209. It was inevitable that this process would occur because, in a sense, at the outset of Australia's industrial arbitration system, all decisions of the applicable tribunals constituted interferences to some degree in what had earlier been regarded as "management prerogatives". It was during this process of 206 See Professional Engineers' Case (1959) 107 CLR 208; Creighton, Ford and Mitchell, Labour Law: Text and Materials, 2nd ed (1993), ch 17 especially at 443; Williams, Labour Law and the Constitution (1998) at 68-78. 207 See eg Clancy v Butchers' Shop Employés Union (1904) 1 CLR 181 at 207; cf Australian Tramway Employés Association v Prahran and Malvern Tramway Trust (1913) 17 CLR 680 at 702; Federated Clothing Trades of the Commonwealth of Australia v Archer (1919) 27 CLR 207. 208 (1966) 115 CLR 443 at 451; cf R v Flight Crew Officers' Industrial Tribunal; Ex parte Australian Federation of Air Pilots (1971) 127 CLR 11 at 20. 209 See eg R v Gallagher; Ex parte Commonwealth Steamship Owners' Association (1968) 121 CLR 330 at 335. Kirby evolution in the perception by this Court of what "matters" did, and did not, sufficiently "pertain to the relationship between" employers and employees that a broader range of subjects came to be seen as within the ambit of industrial conflict and employment disputation. By the late 1970s, following a period of generally restrictive decisions210, this Court began to evince a broader and, I should say, more industrially realistic, approach to the permissible subject matters of "industrial disputes" within the Constitution and the statute. The turning point was probably R v Coldham; Ex parte Australian Social Welfare Union211. In that decision, this Court returned to the broad view of an "industrial dispute" originally contemplated by O'Connor J in Jumbunna212 and by Higgins J in Federated Municipal and Shire Council Employees' Union of Australia v Melbourne Corporation213. In a unanimous opinion in the Australian Social Welfare Union case, this Court said214: "The words ['industrial disputes'] are not a technical or legal expression. They have to be given their popular meaning – what they convey to the man in the street. And that is essentially a question of fact. It is, we think, beyond question that the popular meaning of 'industrial disputes' includes disputes between employees and employers about the terms of employment and the conditions of work." The rejection of the implied notion of a restriction on "interference" in so called "managerial prerogatives" began in this Court with Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of 210 Such as R v Kelly; Ex parte State of Victoria (1950) 81 CLR 64 (shop trading hours); R v Hamilton Knight; Ex parte The Commonwealth Steamship Owners Association (1952) 86 CLR 283 (leave); Australian Federation of Airline Pilots v Flight Crew Officers Industrial Tribunal (1968) 119 CLR 16 (manning levels); R v Commonwealth Industrial Court Judges; Ex parte Cocks (1968) 121 CLR 313 (use of outworkers); R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 (deduction of union dues). 211 (1983) 153 CLR 297. 212 (1908) 6 CLR 309 at 365-368. 213 (1919) 26 CLR 508 at 572. 214 (1983) 153 CLR 297 at 312. See also Re Lee; Ex parte Harper (1986) 160 CLR Kirby Manufactures215. It gathered force in Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd216. The decision in Re Alcan217, upon which Electrolux relied so heavily in these appeals, must be read in the context of this evolution in this Court's doctrine concerning the industrial tribunals and hence the matters that were to be taken, within those powers, as pertaining to the relationship between an employer and employee. The Court in Re Alcan there emphasised the words of the applicable legislation. It rejected the importation of artificial constitutional impediments concerning direct deduction of union dues as outside the scope of constitutional and statutory notions of an "industrial dispute". Given the language of the Constitution s 51(xxxv), the history of its development on this topic, the growth of compulsory arbitration and its dependence in practice upon registered organisations such as unions, this was a natural development in the Court's thinking. In the result, this Court applied the meaning it attributed to the parliamentary language unchanged since the Court's earlier decision in Portus but came to a different conclusion. It would be a great misfortune if this Court were now to reverse this beneficial and well established line of doctrine and returned to a narrow view of the ambit of an industrial dispute and employment relationship and what could be the subject of an award or agreement concerning this. There is no warrant in Re Alcan to do so. At least without a clear and valid statutory warrant to do so, this Court should resist the temptation to turn the clock back, effectively severing the history of decisional authority in this Court in recent years. Changing statutory connections: Thirdly, when the course adopted by the Court in Re Alcan is considered here, there are two very important changes to the applicable legislative language, since Re Alcan was decided, that affect the usefulness of that decision as an authority. They are critical for the outcome of this point in the present appeals. The first is the insertion of the word "about" in the statutory definition in s 170LI of the Act. It is enough that the "agreement" propounded to the Commission, under the Division, is "about" a matter "pertaining to the [specified] relationship". There are thus two words of connection. Each broadens and deepens the ambit of the linkage that would render the "agreement" one to which the Act applies. "Pertaining to" is already a very wide phrase of connection; but it also appeared in the 1904 Act. What was not in the 1904 Act was the preposition "about". 215 (1986) 160 CLR 341 at 353. 216 (1987) 163 CLR 117. 217 (1994) 181 CLR 96. Kirby At the time of the events relevant to the present case, it was enough that the agreement should be about matters pertaining to the relationship. It was not even necessary, as such, that the agreement should actually "pertain to" the relationship itself. Quite clearly, this parliamentary expansion of the ambit of the connection between the claim and the employment relationship was deliberate. It was designed to enhance the permissible scope of the agreement and the connection between its subject matter and the employment relationship. This, then, is the first textual reason for distinguishing the holding in Re Alcan and for declining in this case to follow the same approach on the basis that such a course was mandated there because the Parliament had persisted with the use of the same statutory language. Here, it has not. Even more important is the signal given in s 170LI(1) that the relationship in question is one between an employee and an "employer who is a constitutional corporation". This makes it clear that the Parliament had decided to cut the Act loose from the controversies arising in the past from implied limitations considered as inherent in the notions of an "industrial dispute", as that phrase is used in s 51 (xxxv) of the Constitution, and to substitute new and additional reliance on the relationships of an employee with a corporation qualifying as envisaged by s 51(xx) of the Constitution. In a stroke, a new constitutional foundation for federal regulation is created. It is no longer necessary to read into the resulting employment "relationship" limitations, broad or narrow, adopted for constitutional reasons in past cases such as Portus and Re Alcan. The Parliament has thus embraced a new constitutional paradigm. It behoves this Court to approach it without the blinkers apt to the old thinking reflected in Portus and continued in Re Alcan for narrow textual reasons of commonality of statutory language. We now have to apply different statutory language. We should re- focus our eyes on the present statutory words, freed from the earlier constitutional thinking. The correct interpretation of the Act: Fourthly, when this approach is taken, who could doubt that a claim for a "Bargaining Agent's Fee" is at least about matters pertaining to the relationship between Electrolux and its future employees, when those words are considered as words of ordinary language, presenting a question of fact to be decided? The future employees concerned are by definition parties to the employment relationship with Re Alcan. Those to whom the Fee would apply are those who have not joined a relevant union but have stood to gain from the collective bargaining by the union on behalf of employees of Electrolux. In the context of contemporary employment issues in Australia – where questions of enterprise bargaining, the role of unions in it and the terms of the Act continue to make such issues highly pertinent ones on the shop floor – the notion that the Unions' claim is one about matters pertaining to the employment relationship is irresistible. The only impediment, suggesting that the claim pertains only to the "relationship" between the employees and the unions, is one Kirby that derives from old thinking. It is based on the suggested restrictions traced ultimately to discarded constitutional notions of the permissible ambit of an "industrial dispute" as that expression then stood in the statute and was there understood in terms of s 51(xxxv) of the Constitution. The statute has been changed. The understanding of the Constitution has advanced. A new and different constitutional head of legislative power has been invoked. It is therefore a serious error for this Court, and especially at this stage, to inflict on the interpretation of s 170LI(1) of the Act notions drawn from discarded constitutional doctrines expressed in a significantly different legal context. The real work of s 170LI(1), as it stood at the relevant time, was to exclude from such proposed agreements wholly extraneous demands – such as those concerned with purely political issues, overseas conflicts or matters having no relevant connection to the particular Australian employment relationship. Unions have made such employment demands in the past, concerned with foreign policy, overseas wrongs and international solidarity. This demand was not of that kind. Section 170LI should be read as responding to demands of that extraneous kind. The present demand was on no view such an extraneous "non- employment" demand. It is completely unconvincing to me to say that the Unions' demand for the Fee pertained solely to the relationship between employees and the Unions. Least of all is it convincing to say that it was not about the matters pertaining to the employment relationship. Anyone who thinks otherwise, in my respectful opinion, must have paid no attention to employment controversies in Australia over the past two decades. Conclusion: claim valid and protected: Applying, therefore, the ordinary meaning of the English language to the words used in s 170LI(1), I have no doubt that the claim for the "Bargaining Agents Fee", made in the context, was about a matter pertaining to the relationship of Electrolux as a "constitutional corporation" and its future employees to whom the Fee was to apply. If there could have been any doubt about this under the former definition of "industrial dispute" in the 1904 Act, it is removed by the addition of the word "about", by the inclusion of a double formula for connection and by the substitution of a different foundation for the employment relationship in question (that with a "constitutional corporation"). It follows that, in the Act as it then stood, the claim made by the Unions was not one which would render the agreement propounded by them incompetent in an application to the Commission with the serious and disproportionate consequences that would follow under the Act. The agreement was therefore protected, as the Full Court found. The contrary view does not make practical sense in an Australian industrial context. The other issues argued in the appeals do not therefore arise for decision by me. The declarations made by the primary judge should not have been made. The Full Court was correct to set them aside. Kirby Order The appeals should be dismissed. Callinan CALLINAN J. It is necessary in order to resolve these appeals to construe the following statutory language "matters pertaining to the relationship between an employer [and an employee]" contained in s 170LI(1) of the Workplace Relations Act 1996 (Cth) ("the Act"). Facts The appellant is a manufacturer carrying on business and employing workers in New South Wales and South Australia. It is bound by the Metal Engineering and Associated Industries Award 1998 ("the Award") made by the Australian Industrial Relations Commission ("the Commission"), and the Email National Manufacturing Agreement 1999 ("the Agreement"), an agreement certified by the Commission pursuant to s 170LT of the Act. The Award and the Agreement apply to the appellant's employees. The Agreement was certified by the Commission on 8 October 1999 and was to expire on 30 June 2001. It continued in operation after that date pursuant to s 170LX of the Act. The first, second and third respondents ("the Unions") are organisations registered pursuant to the Act and each is a party to the Award and the Agreement. Members of the Unions are employed by the appellant. Others who are not members of the Unions are also employed by it. Between April and September 2001, the appellant and the Unions negotiated for a fresh certified agreement to replace the Agreement. In June and July 2001, each of the Unions issued and served "Notices of Initiation of Bargaining Period" under s 170MI(2) of the Act. Each notice stated that the Unions intended to try to reach an agreement with the appellant under Div 2 of Pt VIB of the Act and to have the agreement certified under Div 4 of Pt VIB of the Act. Further notices were issued and served in early September 2001 to the same effect. The second set of notices stated, in accordance with s 170MJ(c), various matters proposed to be covered by such an agreement including the currently contentious matter of payment of a bargaining agent's fee. The matter was one of contention in both of the States in which the appellant employed workers. During negotiations between April and September 2001, the claim for such a fee was made by the Unions in these terms: "[T]he Unions claim that the employer should advise new employees that an Agent's fee of $500 is payable to the Union by non Union members to the Unions to reflect the service obtained by those non members from the Unions in negotiating agreements, and that those employees should pay the amount and that the employer should provide a direct debit facility for the payments." The negotiations did not lead to a concluded agreement. One of the matters upon which the parties could not agree was the claim for the bargaining Callinan agent's fee. The fee was claimed on the asserted basis that the non-unionists were the beneficiaries of the services of the respondents in negotiating agreements under the Act. In September 2001, the Unions gave "Notices of Intention to take Industrial Action" to the appellant under s 170MO of the Act: that the Unions and their members intended to organise and engage in industrial action in accordance with the provisions applying to "protected action" set out in s 170ML of the Act. The industrial action was to consist of a series of rolling stoppages of work for two hours. Industrial action in accordance with the notices was taken on 14, 21 and 22 September 2001. The stoppages were for the purpose of supporting and advancing a number of claims including the bargaining agent's fee, which was held by Merkel J at first instance to be a substantive, discrete and significant claim218. Previous proceedings On 17 September 2001 the appellant applied to the Federal Court for various orders and declarations to establish that the industrial action, the stoppages, were not protected action attracting immunity on the basis, relevantly to these appeals, that the claim for the bargaining agent's fee did not pertain to the relationship of employer and employee as required by s 170LI of the Act. On 20 December 2001 Merkel J made declarations to the effect that the industrial action taken was not protected and that there had been breaches of s 170NC(1) of the Act. In discussing the bargaining agent's fee his Honour drew attention to the true nature of it219: "The claim, implicitly if not explicitly, is that [the appellant] is to act as the union's agent in entering into a contract with new employees which requires the employees, who are not union members, to employ the unions as their bargaining agent to reflect the unions' service in negotiating agreements with [the appellant] under the Act. 218 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 219 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 Callinan The relationship between the employer and the employee that would be created were the claim acceded to is, essentially, one of agency; [the appellant] is to contract with its employees on behalf of the relevant union, as its agent. The agency so created is for the benefit of the union, rather than for the benefit of the employee upon whom the contractual liability is to be involuntarily imposed. The resulting involuntary 'bargaining' agency is, as a matter of substance, if not form, a 'no free ride for non-unionists' claim, rather than one by which the union is undertaking its traditional role of representing the interests of union members in respect of the terms of employment of employees. Although the claim was argued as if it were a claim for future services, it may also be characterised as a claim for payment for the unions' services in securing the new employee's terms and conditions of employment in the proposed certified agreement, notwithstanding that the new employee will only have commenced employment after the date of the agreement. In that regard, it is relevant to note that the proposed draft agreement is to remain in force until 31 March 2003 (cl 7.0) and, in the meantime, no extra claims are to be pursued by the unions in relation to matters dealt with by the agreement except where consistent with the agreement or national wage case decisions (cl 47.0). Thus, payments claimed for bargaining 'services' prior to re-negotiation of a new agreement would appear to relate, primarily, to bargaining services rendered prior to the non-union member having commenced employment. The other aspect of the claim, the bargaining fee debit facility, is analogous to a demand by unions that an employer pay its employees' union dues by making deductions and payments from salary due and payable to employees in accordance with authorities provided by them. Such a claim has been held to not be within the requisite employment relationship. In Portus, Menzies J observed that such a claim220: '[involved] the same critical question, namely, whether the imposition upon an employer of an obligation to make deductions and payments from salary in accordance with the authority of the employee to whom the salary has become due and payable affects the industrial relationship of employers and employees. The identity of the payee does not seem to me to be significant in determining the character of such a dispute, unless, of course, the payment relates to an incident of the employment such as a deduction for and payment to a superannuation fund. In my opinion, the relationship that would be affected by such an obligation is a financial relationship of debtor and creditor arising 220 R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 at 360. Callinan from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association.' Walsh J observed221 that the benefit of offering an employee the payment facility was 'not a benefit or privilege of a kind which has any relevant connexion with the relationship of employer and employee'. His Honour also observed222 that recognising the importance of the functions of unions 'does not warrant a conclusion that anything which serves to benefit one of them and to give it additional strength, by increasing its financial stability or otherwise, is to be regarded as an industrial matter within the meaning of the Act'. Stephen J observed223: 'If, in the existing circumstances of employment, it was demanded of the employer that it accept back from employees a part of the remuneration paid, retain it for a period of time and then pay it over to a third party, the association, such a demand would be seeking to create a new, distinct relationship between the employer and its employees, having no connexion with the pre-existing employer- employee relationship. The fact that the present demand is made to operate at a slightly earlier stage, before salary is in fact paid over to employees, thereby obviating one step in the imaginary demand I have postulated, that of the acceptance of money back from employees, does not appear to me to convert a transaction foreign to the relationship of employer and employee into one which pertains to that relationship.' Portus was applied by the High Court in Alcan224. In Alcan the High Court confirmed that a demand in respect of payment of union dues did not pertain to the relationship between employers and employees as such. Although the payment of the bargaining agent's fee purports to relate to the unions' bargaining activities for employees, I do not see that as relating to an 'incident of the employment' any more than payment of 221 (1972) 127 CLR 353 at 365. 222 (1972) 127 CLR 353 at 369. 223 (1972) 127 CLR 353 at 372. 224 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96. Callinan union dues for a union representing its members at the workplace relates to an incident of employment (see Menzies J in Portus225). The involuntary aspect of the claim confirms that, in pursuing the claim, the unions are acting in their own interest and not that of their members or of non-union employees: cf Alcan226. Further, although a union claim that relates to services provided by a union to non-members might fall within the requisite employment relationship there are difficulties with such a claim: see Financial Sector Union227. Even if the unions' contention that the claim that payment of the fee by the employer providing a direct debit facility can form the subject matter of an industrial dispute were to be accepted, as was held in Alcan228, that does not assist in making it one that pertains to the requisite employment relationship. I would add that, although I have treated the claim as one relating to employees who are non-members I would have arrived at the same conclusion had the claim applied to all employees. For the reasons explained above neither claim would pertain to the requisite relationship." His Honour determined that the action was not protected for reasons which he expressed in this way229: "The claim by the unions for payment of a bargaining agent's fee is substantive, discrete and significant (ie, in the sense that it is substantial). The evidence of the parties shows that it was treated by them as such. The industrial action pursued by the unions in September 2001 was for the purpose of advancing claims that included that claim. It follows that that action was pursued for the purpose of supporting or advancing claims made in respect of an agreement about matters that did, and a substantive, discrete, and substantial matter that did not, pertain to the requisite relationship. Accordingly, the agreement proposed by the unions is not an agreement about matters pertaining the requisite employment relationship. 225 (1972) 127 CLR 353 at 360. 226 (1994) 181 CLR 96 at 104. 227 Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic) Pty Ltd (1993) 178 CLR 352 at 361-363 per Mason CJ, Deane, Toohey and Gaudron JJ. 228 (1994) 181 CLR 96 at 103-104. 229 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 Callinan My decision in the present case is on the basis that the claim in question relates to a substantive, discrete, and significant matter that does not pertain to the employment relationship. While I entertain some doubt as to whether a proper characterisation of an agreement for the purposes of s 170LI involves questions of degree, I leave for another case the question of whether a claim in respect of a matter that does not pertain to the employment relationship, but is not of significance, may be included in a certified agreement. Conclusion The industrial action taken in September 2001 by the unions, pursuant to the notices issued under s 170MO, was action for the purpose of supporting or advancing claims made in respect of a proposed agreement that was not an agreement about matters that pertained to the relationship between [the appellant] and its employees, as such. Consequently, the industrial action was not protected action under the Act." The Unions then successfully appealed to the Full Court of the Federal Court (Wilcox, Branson and Marshall JJ) which concluded that it did not matter whether a particular claim could or could not ultimately be included in an agreement complying with s 170LI: that it was sufficient for the Unions genuinely to want provision for the fee to be contained in an agreement it wished to have certified230. Their Honours went on to say that for the purposes of s 170LI of the Act, the presence of terms in the agreement not pertaining to a relevant relationship did not mean that the agreement itself did not so pertain: further, and in any event, the claim for the bargaining agent's fee might well give rise to a matter pertaining to the relationship between the appellant and its employees231. The appeals to this Court In order to obtain immunity from sanctions against industrial action under s 170MT of the Act, a negotiating party must satisfy a number of conditions. First, the party needs to be seeking an agreement under s 170LI. Secondly, it must have given a valid bargaining notice for the purpose of defining a bargaining period (ss 170MI and 170MJ). Thirdly, a valid notice of industrial action must have been given pursuant to s 170MO. Fourthly, there is a negative 230 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 at 195 [95]-[96]. 231 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Electrolux Home Products Pty Ltd (2002) 118 FCR 177 at 196-197 [99]-[102]. Callinan industrial action without prior negotiation (s 170MP). requirement, of absence of conduct in concert with other (unprotected) persons or organisations (s 170MN). Fifthly, the industrial action must have awaited the expiration of relevant awards and agreements (s 170MN). Sixthly, there may be Seventhly, authorization of the industrial action proposed must have been given (s 170MR). And last, there must be an application to the Commission for certification of an agreement within 21 days after the day when the agreement with respect to which the industrial action is taken is made (s 170MS). Section 170ML(2) should be set out: "Protected action (2) During the bargaining period: an organisation of employees that is a negotiating party; or a member of such an organisation who is employed by the employer; or an officer or employee of such an organisation acting in that capacity; or an employee who is a negotiating party; is entitled, for the purpose of: supporting or advancing claims made in respect of the proposed agreement; or responding to a lockout by the employer of employees whose employment will be subject to the agreement; to organise or engage in industrial action directly against the employer and, if the organisation, member, officer or employee does so, the organising of, or engaging in, that industrial action is protected action." Section 170LI is as follows: "Nature of agreement For an application to be made to the Commission under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between: Callinan an employer who is a constitutional corporation or the Commonwealth; and all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement. The agreement must be made in accordance with section 170LJ, 170LK or 170LL." In my opinion the approach and conclusion of the primary judge is to be preferred to that of the Full Court for these reasons. The reasoning of the Full Court involves the implication of the words "wholly or partly" before the word "about" in s 170LI. In general, statutory implications should only be made in cases of necessity of which this is not one. Furthermore, it can be seen that when some partial criterion is intended for the application of the Act, it generally says so in terms. Several examples of this may be given. In order to identify employees who may be excluded by regulation from the operation of Div 3 of Pt VIA of the Act, s 170CC(3)(a) refers to an employee whose remuneration was not wholly or partly determined on the basis of commission or piece rates. Section 170CM(6) makes like provision. Section 170CP makes provision for an application if the applicant has received a certificate with respect to an application made wholly or partly on the ground of the alleged contravention. And, pursuant to s 170MU, an employer must not dismiss an employee wholly or partly because the employee is proposing to engage in protected industrial action. A party's desire for the inclusion of a particular term of agreement, no matter how genuinely and dearly wished, cannot, absent express words so saying, be determinative of the true nature of the term. Nor can the fact that it may use words such as "employee" or "employer" or refer to the use and application of remuneration or any part of it receivable by the employee, be determinative of its true character. Whether the agreement pertains to the relationship between an employer and employee is to be objectively determined by the Court. The term providing for a bargaining fee may appropriately be described as one which seeks to impose upon an employer an obligation to act as collecting agent for the union to deduct from an employee's remuneration, an involuntary payment to the union for a "service" which the employee has not sought and which may have been of no benefit to him or her. Such a term pertains to, because it seeks to impose, an involuntary financial relationship between a union and a person who is not a member of it, rather than to a relationship between employer and employee. The only relevant relationship as far as the fee is concerned, between the employer and the non-unionist employee, is of an involuntary contract for the payment of an exaction sought to be made by a third party on the latter. Callinan Section 170MD of the earlier enactment, the Industrial Relations Act 1988 (Cth), provides no assistance in construing s 170LI of the Act. Section 170MD(1) of the former dealt with the Commission's powers to refuse to certify an agreement. The structure and wording of s 170MD(1) are quite different from s 170LI. Upon the termination of a bargaining period under s 170MW of the Act, if the Commission proceed to exercise its powers of arbitration under ss 170MX(3) and 170MY, it must make an award that deals with the matters that were in contention during the bargaining period. The power to arbitrate conferred on the Commission by s 170MY of the Act contemplates that the matters in contention during the bargaining period be matters which pertain to the relationship of employer and employee. It is right, as the Minister, who became a party to the appeals, submits, that there is no distinction between awards and certified agreements for the purposes of the enforcement of instruments under s 178 of the Act. An award can only be made in settlement of an industrial dispute with respect to matters which relate to both employers and employees as such232. The conclusion that I have reached is consistent with other cases in which the Court has held that the rejection of demands of an academic, political, social or managerial nature will not generate an industrial dispute capable of being settled by the making of an award233. In R v Coldham; Ex parte Fitzsimons234, Stephen J approved what was said by Menzies J in R v Portus; Ex parte ANZ Banking Group Ltd235, that the creation of a role of financial agent on the part of an employer did not constitute a relationship between employer and employee. 232 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 105-107; Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 353. 233 Australian Tramway Employes Association v Prahran and Malvern Tramway Trust (Union Badge Case) (1913) 17 CLR 680 at 705 per Higgins J and 718 per Powers J; R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 at 371 per Stephen J; R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153 at 164 234 (1976) 137 CLR 153 at 164. 235 (1972) 127 CLR 353 at 360. Callinan The latter of those cases heavily influenced, and correctly so, the reasoning of Merkel J236. It was not referred to at all in the reasons of the Full Court. The union there had demanded that an employer deduct and pay from its employees' wages sums of money in accordance with authorities provided by them. It was held that the demand did not give rise to an industrial matter. Barwick CJ, as well as agreeing with Menzies J, said this237: "In my opinion, the demand that the employer should pay out of earned wages some amounts to persons nominated by the employee is not a matter affecting the relations of employer and employee. It does not seem to me to advance the matter that the intended payee is the organization registered under the Act of which the employee is a member." Menzies J (with whom McTiernan J also agreed) said this238: the "Each contention, it seems to me, involves the same critical question, namely, whether the imposition upon an employer of an obligation to make deductions and payments from salary in accordance with the authority of the employee to whom the salary has become due industrial relationship of employers and and payable affects employees. The identity of the payee does not seem to me to be significant in determining the character of such a dispute, unless, of course, the payment relates to an incident of the employment such as a deduction for and payment to a superannuation fund. In my opinion, the relationship that would be affected by such an obligation is a financial relationship of debtor and creditor arising from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association." Walsh J made observations to a similar effect239: "The making of the deductions depends upon an authority given by an employee, who is free to withdraw the authority if he wishes to do so. The system should, therefore, be regarded, in my opinion, as pertaining 236 Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 237 R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 at 357. 238 (1972) 127 CLR 353 at 360. 239 (1972) 127 CLR 353 at 368. Callinan primarily to the relationship between an employee and his own union, from which relationship arises the obligation which is discharged by the payment made to the union by the employer. In so far as the practice also involves any relationship between an employee and his employer, this is not, in my opinion, a relationship between the employer as employer and the employee as employee, but is one in which the employer acts as agent for an employee in the making of a payment at his request and on his behalf from money to which he has become entitled." And Stephen J said this240: "[t]he demand does not seek to operate within the sphere of [the employment] relationship but instead would create a new relationship between the parties, in which the employer is agent or debtor and the employee is principal or creditor." The present case, as well as factually bearing much similarity to Portus, falls within the principle for which it stands and which is stated generally in unanimous terms in the passages that I have quoted. It is also a principle applied fairly recently by this Court in Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees241. It is unlikely that a legislature in enacting the Act would have intended to depart from a meaning settled by a series of cases in this Court the most recent of which was decided only two years earlier. The principle governs this case and provides sufficient and necessary reason to allow the appeals. Neither it nor the other reasons which I have given however exhaust the reasons why the appeals must succeed. The statutory conferral of an immunity from suit, specifically the sorts of suits which might otherwise be brought in respect of industrial action, for example, inducement of breach of contract and breach of contract, interferes with or takes away fundamental rights to sue. Another consequence would be that an employee's right to receive his or her remuneration in full from an employer would be seriously reduced. Either of those consequences provides reason to read the relevant sections of the Act as intending to interfere with such rights only to the extent and in respects clearly stated. It certainly provides no reason to import into the statutory language words not actually used and capable of embracing matters beyond the relationship of employer and employee. If s 170LI were to be read as capable of going beyond the relationship between a particular employee and its present and future employer so that an agreement might be certified which contains matters which pertain to the 240 (1972) 127 CLR 353 at 372. 241 (1994) 181 CLR 96. Callinan relationship between specified parties, but not in their respective capacities as employer and employee, there would be little effective limit upon the terms that could be included in an agreement brought for certification under Div 2 of Pt VIB of the Act. The appeals should be allowed. The declarations made by the primary judge on 20 December 2001 as follows should be restored: The industrial action of the First Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the First Respondent dated 5, 11, 13 and 14 September 2001: (a) was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and; breached s 170NC(1) of that Act. The industrial action of the Second Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the Second Respondent dated 5 and 14 September 2001: (a) was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and; breached s 170NC(1) of that Act. The industrial action of the Third Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the Third Respondent dated 6, 11, 13 and 14 September 2001: (a) was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and; breached s 170NC(1) of that Act." Because no party contended that orders for costs be made, there should be no such orders.

HIGH COURT OF AUSTRALIA Matter No S54/2015 ASTRAZENECA AB & ANOR APPELLANTS AND APOTEX PTY LTD Matter No S55/2015 RESPONDENT ASTRAZENECA AB & ANOR APPELLANTS AND WATSON PHARMA PTY LTD RESPONDENT Matter No S56/2015 ASTRAZENECA AB & ANOR APPELLANTS AND ASCENT PHARMA PTY LTD RESPONDENT AstraZeneca AB v Apotex Pty Ltd AstraZeneca AB v Watson Pharma Pty Ltd AstraZeneca AB v Ascent Pharma Pty Ltd [2015] HCA 30 2 September 2015 S54/2015, S55/2015 & S56/2015 ORDER In each matter, appeal dismissed with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with C Dimitriadis SC and C J Burgess for the appellants in each matter (instructed by Ashurst Australia) D K Catterns QC with N R Murray for the respondent in S54/2015 (instructed by Herbert Smith Freehills) A J Ryan SC with I P Horak for the respondents in S55/2015 and S56/2015 (instructed by Minter Ellison Lawyers) J T Gleeson SC, Solicitor-General of the Commonwealth with F T Roughley for the Commonwealth of Australia, intervening (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS AstraZeneca AB v Apotex Pty Ltd AstraZeneca AB v Watson Pharma Pty Ltd AstraZeneca AB v Ascent Pharma Pty Ltd Intellectual property – Patents – Patents Act 1990 (Cth) – Inventive step – Obviousness – Patent disclosing method of treatment for hypercholesterolemia – Administration of rosuvastatin and its pharmaceutically acceptable salts at low dosage range in claims – Whether invention obvious in light of common general knowledge together with two prior art documents considered separately where another prior art document disclosed alternative compound – Whether prior art documents were ascertained, understood and regarded by person skilled in relevant art as relevant – Whether permissible to use information from other documents to determine relevance of information in prior art document – Use of prior art not within common general knowledge. Words and phrases – "ascertained, understood and regarded as relevant", "considered separately", "inventive step", "obviousness", "person skilled in the relevant art". Patents Act 1990 (Cth), s 7(2), (3), s 18(1)(b). Introduction AstraZeneca AB, the first appellant, is the registered proprietor of Australian Patent Number AU200023051 ("Patent 051") entitled "Use of Cholesterol-Lowering Agent". AstraZeneca Pty Ltd, the second appellant, is the exclusive licensee of the Patent. The term "AstraZeneca" is used in these reasons to designate either or both appellants. The term "the Agent" used in the title of Patent 051 is defined in the specification as a compound called "rosuvastatin" and its pharmaceutically acceptable salts. Rosuvastatin is one of a class of compounds called statins which can reduce health threatening cholesterol levels in the human body by blocking the action of an enzyme called HMG-CoA reductase. The enzyme binds to a substrate HMG-CoA and mediates a reaction which transforms the substrate to mevalonic acid, a precursor of cholesterol. Statins interfere with that process by preferentially binding to the substrate, thus limiting the sites available for the enzyme and thereby reducing the production of cholesterol. Patent 051 is a method patent defining low dosage levels at which rosuvastatin is said to be efficacious in lowering cholesterol with less need for upward titration of doses over time and associated patient supervision and management than other statins existing at the priority date of the patent. The patent sets out three claims defining the invention: A method of treating a patient suffering from hypercholesterolemia which comprises administration as a starting dose of a single, once daily, oral dose of 5 to 10 mg of the compound [rosuvastatin]1 or a pharmaceutically acceptable salt thereof, in the form of a pharmaceutical composition. A method of treating a patient suffering from hypercholesterolemia which comprises administration of a single, once daily, oral dose of 5.2 to 10.4 mg of the calcium salt of the compound [rosuvastatin] in the form of a pharmaceutical composition. A method as claimed in claim 1 or 2 wherein the patient has an LDL-C level2 of 160 mg/dl or greater with no chronic heart disease or peripheral vascular disease and one or no risk factors for such a disease; an LDL-C level of greater than 130 mg/dl with no chronic heart disease or peripheral vascular disease and two or more risk factors for such a disease; or an 1 The generic designation rosuvastatin has been inserted in lieu of the full technical name of the chemical compound used in the claims. 2 LDL-C refers to low density lipoprotein cholesterol. LDL-C level of greater than 100 mg/dl with clinically evident chronic heart disease or peripheral vascular disease. The priority date of Patent 051 was 6 February 1999. The Full Court of the Federal Court, in a judgment delivered on 12 August 20143, dismissed appeals by AstraZeneca against a decision of Jagot J4 in which her Honour revoked the patent on a number of grounds. Her Honour held that AstraZeneca was not entitled to the patent because the claimed method of treatment had been invented by employees of Shionogi & Co Ltd ("Shionogi")5. She held that the invention as claimed lacked novelty6 and that it involved no inventive step having regard to the common general knowledge at the priority date whether considered by itself or in conjunction with either of two prior art publications extant at the priority date and not forming part of the common general knowledge7. The two prior art publications were a European patent, referred to as Patent 471, which claimed the invention of the compound rosuvastatin and methods of preparing it and a technical journal article referred to as the "Watanabe Article". The Full Court held that the primary judge had erred in finding want of novelty8. It also found, contrary to the primary judge, that the invention as claimed did not lack an inventive step having regard to the common general knowledge considered alone9. However, it agreed with the primary judge that the invention as claimed lacked inventive step by reference to common general 3 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324. 4 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285. (2013) 100 IPR 285 at 365 [291]–[292]. (2013) 100 IPR 285 at 373 [323]. (2013) 100 IPR 285 at 373–375 [324]–[334]. (2014) 226 FCR 324 at 402 [357] per Besanko, Foster, Nicholas and Yates JJ, Jessup J agreeing at 421 [447]. (2014) 226 FCR 324 at 371–372 [202]–[203], 373 [209] per Besanko, Foster, Nicholas and Yates JJ, 441 [503]–[504] per Jessup J. The Court essentially rejected the premise of her Honour's conclusion that it was possible to assume the existence and nature of rosuvastatin even though it did not form part of the common general knowledge: see (2013) 100 IPR 285 at 346 [220]–[221], 373 knowledge considered with either of the two prior art publications10. The decision of the Full Court on that question involved the application of ss 7(2) and 7(3) of the Patents Act 1990 (Cth) ("the 1990 Act") as that Act stood at the priority date and when the Patent was applied for. Sections 7(2) and 7(3) are central to these appeals against the decision of the Full Court. They defined the condition on satisfaction of which an invention would not be taken to involve an inventive step. Relevantly, that condition was satisfied if the invention would have been obvious to a person skilled in the relevant art in light of the common general knowledge considered separately or together with prior art information publicly available in a single document before the priority date of the patent. The single document had to contain prior art information which could reasonably be expected to have been ascertained, understood and regarded by the skilled person, before the priority date, as relevant to work in the relevant art in the patent area. In this Court, AstraZeneca's primary argument was for a construction of ss 7(2) and 7(3) which would preclude the use, in the imputed ascertainment of the relevant single document, of other prior art information not forming part of the common general knowledge. Its second argument was that the Court could not decide the question of want of inventive step on the basis of a single avenue of approach based on common general knowledge and the relevant single document. AstraZeneca also challenged the conclusion by the Full Court that the appeals against the primary judge's finding of want of entitlement failed. An interlocutory application, seeking to amend the notices of appeal to invoke an assignment by Shionogi to AstraZeneca which post-dated the primary judgment and to invoke relieving provisions of the 1990 Act in relation to entitlement which came into force after that judgment11, was dismissed12. The grounds of each appeal to this Court by special leave granted on 13 March 201513 were: "The Full Court erred in upholding the finding of the primary judge that Australian Patent 200023051 (the 051 Patent) was invalid on the ground 10 (2014) 226 FCR 324 at 452 [545] per Jessup J, Besanko, Foster, Nicholas and Yates JJ agreeing at 378 [228]–[229]. 11 Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), Sched 6, Item 31. Section 22A of the 1990 Act commenced on 15 April 2013. 12 (2014) 226 FCR 324 at 368–369 [188]–[191] per Besanko, Foster, Nicholas and Yates JJ, Jessup J agreeing at 421 [447]. 13 [2015] HCATrans 058 (French CJ and Hayne J). that the claimed invention was obvious in the light of the common general knowledge (the CGK) considered together with each of the documents referred to as Watanabe and the 471 Patent under the provisions of s 7(2) and (3) of the Patents Act 1990 (Cth) (the Act). The Full Court erred in upholding the finding of the primary judge that the 051 Patent was invalid on the ground that the first appellant was not entitled to the 051 Patent and in refusing to grant leave to the appellants to amend their notices of appeal and adduce further evidence directed to that issue." The first ground depended primarily upon constructions of ss 7(2) and 7(3) which their text will not bear. On their correct construction and application, the invention as claimed lacked an inventive step having regard to the common general knowledge and each of the Watanabe Article and Patent 471 considered separately with the common general knowledge. The failure of the first ground of appeal is sufficient to dispose of the appeals, which should be dismissed. Neither the second ground of appeal nor issues raised on the notices of contention filed by the respondents need to be determined. Before turning to the factual findings and evidence relating to the first ground, it is necessary to consider the construction and application of ss 7(2) and 7(3). The inventive step requirement Patent 051, being the subject of Letters Patent granted under s 61 of the 1990 Act, is a standard patent as defined in the Dictionary set out in Sched 1 to the Act. As a standard patent, it had to meet the requirement of s 18(1)(b)(ii) of the 1990 Act that "[the] invention ... so far as claimed in any claim ... when compared with the prior art base as it existed before the priority date of that claim ... involves an inventive step". The relevant part of the definition of "prior art base" set out in the Dictionary provided: in relation to deciding whether an invention does or does not involve an inventive step: information in a document, being a document publicly available anywhere in the patent area; and information made publicly available through doing an act anywhere in the patent area". Sections 7(2) and 7(3) of the 1990 Act set out the condition upon which an invention would not be taken to involve an inventive step when compared with the prior art base: "(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately. For the purposes of subsection (2), the kinds of information are: prior art information made publicly available in a single document or through doing a single act; and prior art information made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art in the patent area would treat them as a single source of that information; being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area." This case does not involve the use of two or more related documents. Section 7(3)(b) is therefore not material for present purposes. Sections 7(2) and 7(3), read with s 18(1)(b)(ii), take their place in the long history of the concept of the inventive step necessary to attract patent protection14 and are to be read in that context15. Section 6 of the Statute of Monopolies16, upon which British patent law was based after 1624, did not refer to an "invention". It excepted from the declaration that all monopolies were void "any Letters Patents and Grants of Privilege" for the "Making of any Manner of new Manufactures within this Realm, to the true and first Inventor and Inventors of such Manufactures, which others at the Time of Making such Letters Patents and Grants shall not use". Section 6 did not contain a requirement for an inventive 14 Beier, "The Inventive Step in Its Historical Development", (1986) 17 International Review of Industrial Property and Copyright Law 301. 15 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 280–281 [10]–[12] per McHugh ACJ, Gummow and Hayne JJ; [2004] HCA 14. 16 21 Jac I c 3 (1624). step. Before the enactment of the Patents, Designs, and Trade Marks Act 1883 (UK), scrutiny of patent applications in the United Kingdom was largely concerned with compliance with formalities unless the patent was challenged17. Want of novelty or utility or "lack of subject matter" could be raised in proceedings for the repeal of a patent taken by action of scire facias, brought in the name of the Crown pursuant to the fiat of the Attorney-General. The action was abolished by the 1883 Act but the grounds upon which it could be brought became grounds of revocation under that Act and were also available as defences to infringement proceedings18. They also became, under s 86(3) of the Patents Act 1903 (Cth), grounds for the revocation of a patent by petition to the High Court or the Supreme Court of a State19. The ground of want of inventive step, distinct from want of novelty and want of utility, as a basis for revoking a patent, was a product of case law under the rubric of "lack of subject matter"20. The term "obvious" emerged from the common law in relation to lack of subject matter in the late 19th century21. Lord Herschell, in an early use of the term in Vickers, Sons & Co Ltd v Siddell22, said: 17 Monotti, "Divergent Approaches the Appropriate Level of Inventiveness in Patent Law", in Ng, Bently and D'Agostino (eds), The Common Law of Intellectual Property: Essays in Honour of Professor David Vaver, (2010) in Defining 18 Edmunds and Stevens, The Law and Practice of Letters Patent for Inventions, 2nd ed (1897) at 484–486; Monotti, "Divergent Approaches in Defining the Appropriate Level of Inventiveness in Patent Law", in Ng, Bently and D'Agostino (eds), The Common Law of Intellectual Property: Essays in Honour of Professor David Vaver, (2010) 177 at 179–180. 19 Reflecting similar provisions in the pre-federation legislation of the Australian colonies: Patents, Designs, and Trade Marks Act 1884 (Q), s 29(3); Patents Act 1884 (Vic), s 15(3); Patents Act 1888 (WA), s 31(3); Patents, Designs, and Trade Marks Act 1893 (Tas), s 38(2); Patents Act 1899 (NSW), s 19(3). 20 Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 at 110–111 per Windeyer J; [1961] HCA 39. See, for example, Gadd v The Mayor of Manchester (1892) 9 RPC 516 at 525–526 per Lindley LJ. See also Terrell, The Law and Practice Relating to Letters Patent for Inventions, 7th ed (1927) at 57–58. 21 Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 272 per Aickin J, Gibbs ACJ, Stephen and Mason JJ agreeing at 268, Wilson J agreeing at 288; [1981] HCA 12 citing Fox, Monopolies and Patents, (1947) at 22 (1890) 15 App Cas 496 at 501–502. See also Longbottom v Shaw (1891) 8 RPC "the question remains, whether this ... was so obvious that it would at once occur the subject, and desirous of accomplishing the end, or whether it required some invention to devise it." to anyone acquainted with In Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2]23 this Court adverted to the historical development of want of inventive step at common law and the statutory ground, referring to obviousness, first created in the United Kingdom by the Patents and Designs Act 1932 (UK) ("the 1932 UK Act"), which the Court described as24: "a different formulation of the old ground of 'want of subject matter' with the test becoming an overtly qualitative test rather than a quantitative one." Australia followed the 1932 UK Act with the enactment of s 100(1)(e) of the Patents Act 1952 (Cth) ("the 1952 Act") providing as a ground of revocation that a claim "was obvious and did not involve an inventive step, having regard to what was known or used in Australia on or before the priority date of that claim". Section 100(1)(e) was "the first legislative recognition in Australia that obviousness, or lack of inventive step, constituted a ground of revocation which was independent of lack of novelty"25. Under the 1952 Act, a prior disclosure did not support a conclusion of obviousness unless there was evidence that the disclosure was part of the "common general knowledge" at the relevant time26. The term "common general knowledge" did not appear in s 100(1)(e). It was derived from the words "what was known or used in Australia". It had its origin in the common law of patents and was used in connection with want of novelty and want of subject matter. The relevant aspect of the latter objection was that the invention was "not proper subject-matter in view of the common knowledge of the time when it was patented"27. The content of common general knowledge, applied for the purposes 23 (2007) 235 CLR 173; [2007] HCA 21. 24 (2007) 235 CLR 173 at 192 [43]. 25 (2007) 235 CLR 173 at 193 [45]. 26 Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 295 per Aickin J, Barwick CJ agreeing at 259, Stephen and Mason JJ agreeing at 260, Wilson J agreeing at 298; [1980] HCA 9; Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816 at 822 [35]; 188 ALR 280 at 288; [2002] HCA 21. 27 Terrell, The Law and Practice Relating to Letters Patent for Inventions, 5th ed of the 1952 Act, was explained by Aickin J in Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd as28: "that which is known or used by those in the relevant trade. It forms the background knowledge and experience which is available to all in the trade in considering the making of new products, or the making of improvements in old, and it must be treated as being used by an individual as a general body of knowledge." Importantly, under Australian law, it was not to be constructed out of a mosaic of prior publications29. Publications existing before the priority date of a patent, in order to be relevant to want of inventive step under the 1952 Act, had to have become part of the common general knowledge. In Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd, Aickin J wrote the leading judgment, with which Gibbs ACJ, Stephen, Mason and Wilson JJ agreed, and said30: "the question of obviousness involves asking the question whether the invention would have been obvious to a non-inventive worker in the field, equipped with the common general knowledge in that particular field as at the priority date, without regard to documents in existence but not part of such common general knowledge." (emphasis added) The same requirement applicable to the 1952 Act was reflected in the discussion of Minnesota Mining in the joint judgment in Aktiebolaget Hässle v Alphapharm Pty Ltd ("AB Hässle")31. Relevant content was given to the term "obvious" by Aickin J in Wellcome Foundation Ltd, posing as the test32: "whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not." 28 (1980) 144 CLR 253 at 292. 29 (1980) 144 CLR 253 at 292–293. 30 (1981) 148 CLR 262 at 270. 31 (2002) 212 CLR 411 at 430–431 [43]–[45] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 59. 32 (1981) 148 CLR 262 at 286. The idea of steps taken "as a matter of routine" did not, as was pointed out in AB Hässle, include "a course of action which was complex and detailed, as well as laborious, with a good deal of trial and error, with dead ends and the retracing of steps"33. The question posed in AB Hässle was whether, in relation to a particular patent, putative experiments, leading from the relevant prior art base to the invention as claimed, are part of the inventive step claimed or are "of a routine character" to be tried "as a matter of course"34. That way of approaching the matter was said to have an affinity35 with the question posed by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd36. The question, stripped of references specific to the case before Graham J, can be framed as follows: "Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of [the existing compound], directly be led as a matter of course to try [the claimed inventive step] in the expectation that it might well produce a useful alternative to or better drug than [the existing compound]?" That question does not import, as a criterion of obviousness, that the inventive step claimed would be perceived by the hypothetical addressee as "worth a try" or "obvious to try"37. As was said in AB Hässle, the adoption of a criterion of validity expressed in those terms begs the question presented by the statute38. 33 (2002) 212 CLR 411 at 436 [58] per Gleeson CJ, Gaudron, Gummow and 34 (2002) 212 CLR 411 at 433 [52] per Gleeson CJ, Gaudron, Gummow and 35 (2002) 212 CLR 411 at 433 [53] per Gleeson CJ, Gaudron, Gummow and 36 [1970] RPC 157 at 187–188. The question posed was described in AB Hässle as a "reformulation of the 'Cripps question'" — a reference to the question set out in Sharp & Dohme Inc v Boots Pure Drug Company Ltd (1928) 45 RPC 153 at 173. 37 (2002) 212 CLR 411 at 441 [72] per Gleeson CJ, Gaudron, Gummow and 38 See the discussion of that observation, particularly with respect to the decisions of United States courts, in McRobert, "Inventive step: Obvious to try again?", (2009) 20 Australian Intellectual Property Journal 237. The enactment of ss 7(2) and 7(3) followed a report and recommendations by the Industrial Property Advisory Committee ("IPAC") which proposed that39: "For the purpose of determining inventiveness, any single prior disclosure or use should be capable of being considered against the background of all that is common general knowledge in the relevant field of art. On this basis the requirement of inventiveness will not be fulfilled if the knowledge imparted by the disclosure or use, combined with what is common general knowledge in the art, would render the claimed invention obvious to a person reasonably skilled in the art. However, it should not be possible for this purpose to combine two disclosures, two uses, or a disclosure and a use, where neither is within the common general knowledge of the art, except where one disclosure refers to another disclosure or use." IPAC recommended40: that novelty and obviousness for standard patents be determined against a prior art base consisting of— disclosures in recorded form publicly available anywhere in the world; disclosures openly made, by oral communication, Australia; and what has been openly done and used in Australia; that, for these purposes (except where there is cross-referencing) it not be permissible to combine any two disclosures, or a disclosure and a use, or any two uses, save that in determining obviousness any single disclosure or use should be capable of being viewed in the light of the common general knowledge in the relevant field of art, at the relevant time; and (iii) that the common general knowledge in the art be treated as including disclosures in recorded form publicly available anywhere in the world which a skilled person working in the art at the time 39 Commonwealth of Australia, Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984) at 45. 40 Commonwealth of Australia, Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984) at 46, Recommendation 13. should reasonably have been expected to find, understand, and regard as relevant." The latter recommendation was not accepted and was not reflected in ss 7(2) and 7(3). The qualification it contained, however, was found in the government's response to Recommendation 13(ii)41: "It is to be understood, however, for the purpose of determining whether an invention is obvious, that it be permissible only to consider, in the light of the common general knowledge, a single disclosure or use which a skilled person working in the art in Australia at the time should reasonably have been expected to find or uncover, understand, and regard as relevant." In the 1990 Act, as the Court said in Lockwood [No 2], the threshold of inventiveness was raised compared with that set by the 1952 Act. The new threshold reflected the two IPAC recommendations which were accepted with the qualifications mentioned in the previous paragraph42. The change effected by s 7(2) was that information publicly available at the priority date, but not part of common general knowledge, could be taken into account in addition to common general knowledge. The purpose of s 7(3) was broadly speaking43: "the specification of the additional publicly available information ... which must be added to common general knowledge for the purposes of deciding whether an alleged invention is obvious when compared with the prior art base." While the range of disclosures that could support a finding of obviousness was widened, the content of the "inventive step" requirement was not changed. The test was still that posed under the 1952 Act by Aickin J in Wellcome Foundation Ltd in terms of the hypothetical addressee taking, as a matter of routine, steps which might lead from the prior art to the invention44. That said, it was the text of ss 7(2) and 7(3) which governed the prior art information which could be invoked and how it could be invoked. 41 "Government Response to the Report of the Industrial Property Advisory Committee, 'Patents, Innovation and Competition in Australia'", Official Journal of Patents, Trade Marks and Designs, 18 December 1986, vol 56, No 47, 1462 at 42 (2007) 235 CLR 173 at 193 [45]. 43 (2007) 235 CLR 173 at 194 [49]. 44 (1981) 148 CLR 262 at 286, quoted at [15] above. The text of s 7(2) required, in unambiguous language, that "the onus to establish the absence of an inventive step rests upon the party challenging validity."45 It was, as Jessup J correctly observed in the Full Court, a deeming provision46. Section 7(2) would defeat a claim for want of inventive step unless one of the alternative conditions set out in s 7(2), read with s 7(3), was satisfied. Those conditions involved the following elements: An hypothetical person skilled in the relevant art. The person being, therefore, notionally possessed of the common general knowledge as it existed in the relevant area before the priority date of the impugned claim. The invention being obvious to that person in the light of the common general knowledge. Alternatively, that person being provided with prior art information made publicly available in a single document or through doing a single act, or made publicly available in two or more related documents or through doing two or more related acts if the relationship between them satisfied the requirement of s 7(3)(b). That prior art information, as defined by s 7(3), being information that the person could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area ("the relevance requirement"). "Ascertained", in this context, means "discovered or found out". "Understood" means that, having discovered the information, the person would have "comprehended it" or "appreciated its meaning or import"47. The invention being obvious to the person in the light of the common general knowledge considered together with either of the classes of prior art information defined in s 7(3). The judicial determination whether want of inventive step is established pursuant to s 7 is mediated through the legal construct of the hypothetical person skilled in the relevant art. The construct is of a kind well-known to the law and used for 45 Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816 at 821 [31]; 188 ALR 280 at 287. 46 (2014) 226 FCR 324 at 424 [458]. 47 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at 219 [132]. setting parameters for evaluative judgments48. It is a tool of analysis and is given statutory recognition, for that limited purpose, in s 7. AstraZeneca's constructional arguments Expert evidence at trial, as to the process by which prior art information is identified for the purposes of s 7(3), may assist the court in deciding whether that information meets the relevance requirement and whether it is thereby available for consideration under the alternative operation of s 7(2). Expert evidence may also inform the court's judgment as to obviousness, albeit mediated by the notional person skilled in the relevant art. In this case, the finding by the Full Court of want of inventive step was informed principally by the expert evidence of the respondents' witnesses, Professor Richard O'Brien and Dr Phillip Reece49, which is considered later in these reasons. They gave evidence of searches they carried out leading to identification of the prior art information invoked against the patent. In identifying that prior art information they had regard to other prior art publications disclosed by their searches. That approach, which was accepted by the primary judge and in the Full Court, was challenged in two constructional arguments about ss 7(2) and 7(3) which lay at the heart of AstraZeneca's case on its first ground of appeal. The first of the constructional arguments concerned satisfaction of the relevance requirement. AstraZeneca submitted in its outline of oral argument that: "A process of satisfying the 'regarded as relevant' requirement which involves considering by way of comparison non-cgk publications subverts the purpose of s 7(3) and is impermissible; a fortiori if the effect of the 48 See, for example, the hypothetical fair-minded person used in determination of a reasonable apprehension of bias discussed in British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; [2011] HCA 2 and Isbester v Knox City Council (2015) 89 ALJR 609; 320 ALR 432; [2015] HCA 20; the hypothetical referee in determining whether particular material is defamatory discussed in Radio 2UE Sydney Pty Ltd v Chesterton (2009) 238 CLR 460; [2009] HCA 16 and Harbour Radio Pty Ltd v Trad (2012) 247 CLR 31; [2012] HCA 44; the hypothetical reasonable person referred to in s 471.12 of the Criminal Code (Cth) considered in Monis v The Queen (2013) 249 CLR 92; [2013] HCA 4; the hypothetical reasonable person invoked to determine whether a representation to the public constitutes misleading or deceptive conduct discussed in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12. 49 Professor O'Brien was the expert witness of Watson Pharma Pty Ltd (now Actavis Pharma Pty Ltd) and Ascent Pharma Pty Ltd. Doctor Reece was the expert witness of Apotex Pty Ltd. comparison is to identify the publication as 'the' relevant course to pursue." In its written submissions it contended that: "The clear words of s 7(2) require that non-CGK sources must be 'considered separately'. This requires each non-CGK source to be considered separately at each stage of the obviousness inquiry, including (i) when assessing whether the invention is obvious in the light of the CGK and a single source of s 7(3) information and (ii) at the anterior step of assessing whether or not any given source of information satisfies the 'ascertained, understood and regarded as relevant' requirement in s 7(3)." (emphasis added) The reasons of the Full Court on that argument were given by Jessup J, with whom the other Judges agreed50. His Honour, directing his remarks to s 7(3), said51: "It is, in my view, wholly within the scheme of the subsection that [the skilled person] might well sort through all manner of information with a view to finding something that is 'regarded as relevant'. There is nothing in the provision which would place an embargo upon the skilled person using combinations of sources of information along the road to that destination." That approach was correct. The words "considered separately" in s 7(2) qualify the way in which prior art information complying with s 7(3) must be used, in conjunction with common general knowledge, in determining obviousness under the alternative operation of s 7(2). They preclude the use of a combination of unrelated documents, not forming part of the common general knowledge, for the purposes of that determination. Section 7(2) says nothing about how the relevance requirement in s 7(3) is to be satisfied. AstraZeneca argued that the construction adopted by the Full Court led to incongruity in that a comparative assessment of the prior art information against other located publications was permitted for the purpose of determining whether the relevance requirement was satisfied under s 7(3), but not permitted when applying the obviousness test under s 7(2). There is no incongruity. The relevance requirement is a threshold criterion for consideration, by the court, of a prior art publication in conjunction with common general knowledge for the 50 (2014) 226 FCR 324 at 447–448 [529]–[532], Besanko, Foster, Nicholas and Yates JJ agreeing at 378 [228]–[229]. 51 (2014) 226 FCR 324 at 448 [530]. purpose of determining obviousness. The process leading to its identification plays no role in that determination. There was a tendency in AstraZeneca's arguments to confer upon the "person skilled in the relevant art" more human characteristics of volitional and purposive action than are necessary for its function. The notional person is not an avatar for expert witnesses whose testimony is accepted by the court. It is a pale shadow of a real person — a tool of analysis which guides the court in determining, by reference to expert and other evidence, whether an invention as claimed does not involve an inventive step. AstraZeneca's second constructional argument was that, even if it were wrong on its first argument, s 7(2) did not allow the court to decide the question of want of inventive step on the basis that "the only course available to the skilled person [was] that identified in the s 7(3) document [a]dded to the prior art base." It submitted that the "single avenue approach" allowed by the Full Court created "a new revoker's starting point with the benefit of hindsight" and avoided false routes suggested by other documents which might have met the relevance requirement. One such document, referred to as the "Aoki Article" and located by both expert witnesses, had identified a promising compound other than rosuvastatin, known as NK-104. It suffices to say that the text of s 7(2) simply does not offer a constructional choice imposing the limitation for which AstraZeneca contends. The second argument must be rejected. AstraZeneca also argued that the "single avenue approach" led the Full Court to find obviousness despite the non-disclosure in the Watanabe Article or Patent 471 of animal safety data which was essential to any human dosage selection, including 5-10 mg, on the basis that the relevant range would be discovered by tests. This was effectively an attack on the merits of the obviousness finding considered later in these reasons. The rejection of the constructional arguments and consideration of the challenge to the merits of the obviousness finding should be placed in the concrete context of the terms of the patent, the relevant common general knowledge, the prior art information relied upon and the expert testimony in the case. Patent 051 The invention was described in Patent 051 as relating to the use of a cholesterol lowering agent and, more particularly, to the administration of a particular dose or dosage range of inhibitor rosuvastatin52 and its pharmaceutically acceptable salts. The specification acknowledged that rosuvastatin had been disclosed in the European Patent the HMG-CoA reductase 52 Described in the specification by its technical chemical name. Application, Publication No 0521471, which claimed it and methods for its preparation as inventions ("Patent 471"). That patent was one of the documents contained in prior art information which grounded the finding of a want of inventive step under the alternative operation of s 7(2). The specification also acknowledged disclosure of rosuvastatin in an article published in 199753. The article, whose lead author was Masamichi Watanabe, is the other prior art information, referred to in these reasons as "the Watanabe Article". In each of Patent 471 and the Watanabe Article, rosuvastatin was disclosed as an inhibitor of HMG-CoA reductase. However, the primary judge found, and it is not in dispute, that neither the chemical name nor structure of rosuvastatin was part of the common general knowledge of persons skilled in the relevant art before the priority date of Patent 05154. The specification referred to a number of HMG-CoA reductase inhibitors marketed under the collective designation of "statins". A "problem" was then identified: "Despite the benefits of statin therapy, less than optimal results may be achieved in patients, due to the level of efficacy and safety achieved at the recommended dosages of the currently marketed statins. Accordingly it is important to find dosages of alternative statins which beneficially alter lipid levels to a significantly greater extent than similar dosages of currently used statins and which have a similar or improved safety profile." A solution was set out: "Surprisingly it has now been found that when dosed orally to patients with hypercholesterolemia at particular dosages or in a particular dosage range the Agent lowers total cholesterol (TC) and low-density lipoprotein cholesterol (LDL-C) by an unexpected degree, and without any significant adverse side effects. When dosed at the same dosages or in the same dosage range, the Agent also modifies other lipoprotein levels (such as raising high density lipid cholesterol (HDL-C) levels, lowering triglyceride (TG) levels and lowering apolipoprotein B-100 (Apo-B) levels) to an unexpected and beneficial extent, without any significant adverse side effects. Elevations of alanine aminotransferase (ALT) liver enzyme levels are reported for other HMG-CoA reductase inhibitors. 53 Watanabe et al, "Synthesis and Biological Activity of Methanesulfonamide Pyrimidine- and N-Methanesulfonyl Pyrrole-Substituted 3,5-Dihydroxy-6- heptenoates, a Novel Series of HMG-CoA Reductase Inhibitors", (1997) 5 Bioorganic and Medicinal Chemistry 437. 54 (2013) 100 IPR 285 at 339 [195]. Surprisingly it has now been found that when the Agent is dosed at the dosages or in the dosage ranges discussed herein, clinically significant rises in these levels are less frequently observed." Various aspects of the invention were described essentially by reference to the objective of treatment and the dosage range. The claims defining the invention have been set out in the introduction to these reasons. Common general knowledge The primary judge defined the hypothetical skilled addressee of Patent 051 as a medical practitioner with specialised expertise treating hypercholesterolemia55. It was common general knowledge for such persons before the priority date that: statins were an effective and safe treatment for hypercholesterolemia but despite the existence of a number of statins there were patients who could not be treated with them56; simvastatin had been commonly used for lowering LDL-C. Atorvastatin, being more potent than simvastatin, had replaced it as the most commonly prescribed statin in Australia. Other statins available were fluvastatin and pravastatin57; statins on the market as at the priority date were available in the following doses, listed in the MIMS Annual 199858: fluvastatin — 20 mg and 40 mg tablets; pravastatin — 5 mg, 20 mg and 40 mg tablets; simvastatin — 5 mg, 10 mg, 20 mg and 40 mg tablets; and atorvastatin — 10 mg, 20 mg and 40 mg tablets59; 55 (2013) 100 IPR 285 at 314 [94]. 56 (2013) 100 IPR 285 at 323 [123]. 57 (2013) 100 IPR 285 at 318 [103]. 58 An acronym derived from a publication originally called Monthly Index of Medical Specialties. 59 (2013) 100 IPR 285 at 318 [103]. medical practitioners would typically prescribe patients the lowest dose of statin to begin with to minimise the risk of adverse events, such as muscle pain, liver dysfunction and more severe muscle toxicity, side effects potentially associated with statins. If the target cholesterol level was not reached and the dose had been well tolerated it would be increased by a process known as "dose titration" over a period of months. Dose titration aimed to increase the dose until the patient reached the target in as safe a manner as possible60; one issue with the prescription of statins was that many patients did not achieve their target cholesterol levels because dose titration required ongoing management and supervision by a medical practitioner61; consequently a statin which could bring more patients to their target level without dose titration than the existing statins would be highly desirable62. The existence, the name and the chemical structure of rosuvastatin and the fact that it had been subject to clinical trials were not part of the common general knowledge before the priority date of Patent 051. The primary judge found they were not part of the common general knowledge before 30 June 200063. Under the heading "Common general knowledge" the primary judge also considered evidence with respect to pre-clinical trials and clinical trials of promising new drugs. Her findings, which were summarised by the Full Court, involved the following propositions: A clinical trial is an experiment or a series of experiments investigating the use of a promising drug candidate and its use in humans. Clinical trials are time consuming and expensive with many new drug candidates failing in the trial process in terms of safety or efficacy, or both64. Pre-clinical in-vitro tests give an indication of whether the drug has the desired activity against the drug target and its selectivity to the target65. 60 (2013) 100 IPR 285 at 319 [109]. 61 (2013) 100 IPR 285 at 323 [123]. 62 (2013) 100 IPR 285 at 323 [123]. 63 (2013) 100 IPR 285 at 338–339 [190]–[197]. 64 (2014) 226 FCR 324 at 348 [68]. 65 (2014) 226 FCR 324 at 348 [69]. Pre-clinical animal studies establish the margin of safety of the drug which is the dosage or blood plasma concentration at which the first signs of toxicity are seen compared to the dose or plasma concentration required for efficacy. They provide information about safety and therapeutic efficacy, as well as pharmacokinetics — ie what the body does to the drug in terms of its absorption, distribution, metabolism and excretion. They also provide information about pharmacodynamics — ie what the drug does to the body in terms of biochemical and physiological effects66. Clinical trials establish the safety and efficacy of the drug in humans and are done in three sequential phases. Phase I trials use a small number of healthy subjects to ensure that the drug is safe in humans and to consider dosage ranges — the pharmacodynamics being a secondary purpose. Phase II trials involve studying the drug in a large number of patients, typically involving 50–300, suffering from the relevant condition, the primary objective being to ascertain the pharmacodynamic effects of the drug. Phase III trials involve studying the effectiveness of the drug in a large number of patients (up to 5,000) over a long period of time. Phase III trials are pivotal because generally it is in such trials that long term efficacy can be demonstrated for the first time and in a statistically significant number of participants. A fourth class of investigation involves long term post-marketing observation of the drug in a target population67. The primary judge's findings as to the common general knowledge at the priority date of Patent 051 were not challenged on the appeal to the Full Court68. Prior art information — Patent 471 The first in time of the two prior art publications relied upon by the respondents was Patent 471, which had a priority date of 1 July 1991. The compound the subject of the patent was rosuvastatin although that name was not used in the specification or claims. The applicant for the patent was Shionogi. One of the co-inventors was Masamichi Watanabe. The title of the patent was "Pyrimidine derivatives as HMG-CoA reductase inhibitors". A first generation of HMG-CoA reductase inhibitors, used for the treatment of atherosclerosis, was identified. They were the fungal metabolites, mevinolin, pravastatin sodium and 66 (2014) 226 FCR 324 at 348 [69]. 67 (2014) 226 FCR 324 at 349 [70]. 68 See especially (2014) 226 FCR 324 at 450 [538] per Jessup J. See generally (2014) 226 FCR 324 at 342–352 [47]–[86] per Besanko, Foster, Nicholas and Yates JJ. simvastatin and their chemical derivatives. A second generation, of synthetic inhibitors of HMG-CoA reductase, including fluvastatin, was also identified. reductase and The compound claimed in Patent 471 was said, in the specification, to inhibit HMG-CoA treatment of hypercholesterolemia and other conditions. The specification set out methods for its preparation and stated that it could be administered orally in the form of tablets, powders, capsules and granules or parenterally in the form of an aqueous or oily suspension. Dosages were mentioned: to be useful the "The dosages may vary with the administration route, age, weight, condition, and the kind of disease of the patients, but are usually 0.5-200 mg/day, preferably 1-100 mg/day for oral administration and 0.1-100 mg/day, preferably 0.5-50 mg/day for parenteral administration." There was no reference to clinical trials. The claims in the patent identified rosuvastatin (albeit not by that name), variants of it and processes for its preparation. Its biological activity was described by reference to its HMG-CoA reductase inhibitory effect on rat liver microsomes. The specification also stated: "The test data demonstrates that the compounds of the present invention exhibit HMG-CoA reductase inhibition activities superior to mevinolin." Prior art information — the Watanabe Article The Watanabe Article was published in 1997. It was co-authored by Masamichi Watanabe and others. Watanabe's affiliation was described as Shionogi Research Laboratories, Shionogi and Company Ltd. The title of the article referred to the synthesis and biological activity of a series of compounds identified as HMG-CoA reductase inhibitors. In the introductory section, mention was made of lovastatin, pravastatin and fluvastatin as potent hypocholesterolemic agents widely used clinically. Much effort was said to have been expended to obtain more potent reductase inhibitors. The article reported on the synthesis and biological activity of particular compounds, one of which was rosuvastatin, designated not by that name but as S-4522. The authors stated: "During this study, we found that [rosuvastatin] possesses greater enzyme inhibitory activity than lovastatin (1a) and pravastatin (1b)." S-4522 was tested for its ability to inhibit cholesterol biosynthesis in hepatocytes isolated from rat livers. It was approximately 100-fold more potent than pravastatin sodium salt. The results of testing on cultured human hepatoma cells suggested it could lead to a greater decrease in serum cholesterol than pravastatin. As a liver-selective HMG-CoA reductase inhibitor, it indicated a potent cholesterol lowering and reduced side effects in clinical use because the liver is a major site of cholesterol biosynthesis. It reduced the plasma cholesterol levels of beagle dogs by 26 per cent, compared with 18 per cent for pravastatin at a repeated dose for 14 days of 3 mg/kg per day. It also reduced the plasma cholesterol levels of the cynomologus monkey by 22 per cent at a dosage of 12.5 mg/kg whereas pravastatin reduced them by 19 per cent at a dosage of 50 mg/kg. It was said to be approximately four times more potent than lovastatin sodium salt in inhibiting HMG-CoA reductase in-vitro and was the most potent cholesterol biosynthesis inhibitor in isolated rat liver hepatocytes. The article noted that a clinical trial of S-4522 was in progress. Expert evidence — ascertainment of relevant prior art information The expert evidence relevant to inventive step, which was the focus of attention in this Court, was that of the respondents' witnesses, Dr Reece and Professor O'Brien. Their expertise was not in issue. Prior to trial Dr Reece had been instructed as follows in relation to the preparation of his opinion: and inhibitors are marketed, namely "You are given a new statin and are told that it is useful in the treatment of hypercholesterolemia, atherosclerosis. hyperlipoproteinemia HMG-CoA reductase inhibitors are the most widely used prescription medication for the treatment of hypercholesterolaemia. A number of HMG-CoA reductase lovastatin, pravastatin, simvastatin, fluvastatin, atorvastatin and cerivastatin, and are collectively referred to as 'statins'. Despite the benefits of statin therapy, less than optimal results may be achieved in patients, due to the level of efficacy and safety achieved at the recommended dosages of the currently marketed statins. Accordingly it is important to find dosages of alternative statins which beneficially alter lipid levels to a significantly greater extent than similar dosages of currently used statins and which have a similar or improved safety profile." The instructions given to Professor O'Brien in effect set out only so much of the preceding passage as commenced with the words "Despite the benefits"69. He was not told that there was "a new statin" that was not part of the common general knowledge. Jessup J took the view, however, that even in the case of Dr Reece the setting in which he prepared his opinion did no more than create an incentive to discover whether there was such a molecule. His Honour concluded that the utility of Dr Reece's evidence was not compromised because of the premise, in his instructions, that there was a new statin in existence70. 69 (2014) 226 FCR 324 at 445 [522] per Jessup J. 70 (2014) 226 FCR 324 at 445 [522]. In response to the problem set for him, Dr Reece searched for published articles which had the potential to provide information about a new statin with the characteristics referred to in his instructions. He acquired 19 abstracts of articles that appeared to fall within his terms of reference. He obtained the full texts of the articles concerned. He concluded that only three were relevant to his terms of reference. The lead authors were respectively Aoki, Watanabe and Thompson. The Aoki Article referred to an HMG-CoA reductase inhibitor called NK-104. The Watanabe Article, as already outlined, contained a report on a series of compounds including rosuvastatin which Dr Reece recognised as "a very potent inhibitor of cholesterol biosynthesis" and as "definitely a candidate for further development". The Thompson Article referred to a number of "the more promising looking compounds in the pipeline", including NK-104 and rosuvastatin71. Doctor Reece's assessment of the relevance of the Watanabe Article involved his assumption that the unknown compound with the characteristics for which he was searching was at the stage of phase II trials at least. As noted above, the Watanabe Article stated that rosuvastatin was in clinical trials. Doctor Reece took that to mean either phase I or phase II trials. The Thompson Article told him that rosuvastatin was in phase II trials72. Consistently with his approach to the construction of s 7(3), which has been accepted as correct earlier in these reasons, Jessup J, in effect, concluded that Dr Reece's use of the Thompson Article did not prevent his evidence from supporting a finding that the Watanabe Article met the relevance requirement73. Professor O'Brien's search and elimination process led him to the Watanabe and Aoki Articles and, via a footnote in Watanabe, to a Japanese patent equivalent to Patent 471. He was subsequently provided with a copy of the equivalent United States patent. He identified five abstracts of articles, two of which related to the statin cerivastatin. Those two abstracts suggested it was less efficacious than atorvastatin. Another article by Betteridge was a general reference which did not describe any new statin. Professor O'Brien preferred rosuvastatin, designated as S-4522 in the Watanabe Article, over NK-104, the subject of the Aoki Article. Rosuvastatin appeared to be more effective than pravastatin, fluvastatin and lovastatin and had progressed to clinical trials. The Watanabe Article also indicated that it had high potency with reduced side effects in clinical use. It appeared to be further along the line of development than NK-104. Professor O'Brien therefore regarded rosuvastatin as the most relevant compound in relation to the defined problem. 71 (2014) 226 FCR 324 at 447 [528]. 72 (2014) 226 FCR 324 at 447 [529]. 73 (2014) 226 FCR 324 at 447–448 [530]. As appears from his description of the search process, Professor O'Brien regarded the Watanabe Article as the most relevant one as a result of comparing it with other publications. His decision thus involved a choice between the publications. Again, consistently with the correct construction of s 7(3), Jessup J rejected the proposition that the Watanabe Article thus ascertained could not be said to have met the relevance requirement necessary for the purposes of s 7(2)74. Want of an inventive step In approaching the question of inventive step for the purposes of s 7(2), "whether the invention (in the 051 patent) would have been obvious to the skilled addressee in the light of the common general knowledge when considered together with the information brought in under s 7(3), namely, the information to be found in either the Watanabe article or the 471 patent (but not both)." His Honour adopted as the correct approach to "obviousness" that approved in AB Hässle76 and derived from the judgment of Graham J in Olin Mathieson, paraphrased earlier in these reasons. His Honour posed the question thus77: "whether the notional skilled person would have directly been led as a matter of course to try the invention as claimed in the expectation that it might well produce a better method of treating a patient suffering from hypercholesterolemia than existing statins and doses." The primary judge had answered that question in the affirmative. His Honour referred to the evidence of Professor O'Brien and Dr Reece. Both were aware of the existing statin known as atorvastatin which, it was common general knowledge, was the most efficacious of the existing statins on the market78. His Honour cited Professor O'Brien's evidence that he would have expected rosuvastatin "to have a similar or better efficacy than atorvastatin" but that would need to be confirmed by direct comparison. Rosuvastatin looked to 74 (2014) 226 FCR 324 at 448 [532]. 75 (2014) 226 FCR 324 at 448 [533]. 76 (2002) 212 CLR 411 at 433 [53]. 77 (2014) 226 FCR 324 at 448–449 [533]. 78 See (2014) 226 FCR 324 at 345 [54] per Besanko, Foster, Nicholas and Yates JJ. him to be "an exciting molecule". Its data were "impressive" and it "may well be better than atorvastatin"79. His Honour also referred to Dr Reece's evidence that the new statin which he was asked to identify would have to be neither less potent nor less safe than atorvastatin. Doctor Reece drew the conclusion from the Watanabe Article that rosuvastatin was "a very potent agent in reducing plasma cholesterol concentrations". The Full Court's attention was not drawn to any passage in his cross-examination in which he was tested on the extent to which he could have inferred that rosuvastatin would be likely to be at least as treatment efficacious Jessup J concluded that the primary judge had not erred in concluding that a person skilled in the art would have been led directly and as a matter of course to try rosuvastatin at a dosage of 5-10 mg/daily in the expectation that it might from well be hypercholesterolemia. The evidence of Professor O'Brien and of Dr Reece was sufficient to sustain the conclusion that the skilled person, having read the Watanabe Article in the light of the common general knowledge, would have entertained the expectation that rosuvastatin might well be at least as efficacious a treatment as atorvastatin. No error was involved in that reasoning. In the light of the evidence it would be a routine step to test rosuvastatin at the lowest efficacious dose. a patient suffering for Jessup J rejected a submission by AstraZeneca that the primary judge's conclusion that the skilled person would have proceeded to try rosuvastatin at any dose, let alone a 5 or 10 mg dose, with any reasonable expectation of success was not open on the evidence before her. That rejection was plainly correct. As "Whether an invention is obvious is a question to be answered by the Court." The question posed by this Court in Wellcome Foundation Ltd and AB Hässle does not require that, in order to sustain an obviousness case, a party has to lead evidence which echoes the terms of that question. A similar conclusion was open, as the primary judge found, on Patent 471. AstraZeneca submitted in this Court that the "claimed invention" is a treatment using a once daily, 5-10 mg dosage of rosuvastatin. The only dosage expert, Dr Reece, confirmed that neither the Watanabe Article nor Patent 471 79 (2014) 226 FCR 324 at 450–451 [540]. 80 (2014) 226 FCR 324 at 451 [541]. 81 (2014) 226 FCR 324 at 451 [543]. contained animal or human trial safety data. He had given evidence that such data were essential to determining what dosage should be tested in clinical trials. The person skilled in the art would never have chosen the dose to be tested simply by trying the doses that worked for other statins. That evidence was referred to by Jessup J, who said82: "But that evidence also made it quite clear that such trials would conventionally be carried out. They would fall within the concept of working towards the invention with an expectation of success referred to in AB Hassle." No error is disclosed in that reasoning. Finally, AstraZeneca submitted that the approach by Jessup J to s 7(3) led his Honour to disregard secondary evidence of inventiveness, namely, the failure of others to produce the invention and its substantial commercial success. AstraZeneca said that Jessup J held such evidence was irrelevant to a case based on s 7(3) information because the inquiry was a notional one "which need not correspond with reality"83. That approach was said to be contrary to the reasoning in Lockwood [No 2]. What the Court in Lockwood [No 2] said was that an Australian court should be slow to ignore secondary evidence or to rely on its own assumed technical expertise to reach conclusions contrary to such evidence84. Their Honours added, however, that Australian courts have long recognised that the importance of such evidence and its weight will vary from case to case and it will not necessarily be determinative. Jessup J's treatment of the secondary evidence arose in the context of the alternative operation of s 7(2). He said85: "the extended form of s 7(2) sets up a notional inquiry which need not correspond with reality. We know that, as a matter of common general knowledge, the notional non-inventive worker was not aware of the Watanabe article or the 471 patent. The fact that no-one proceeded to the point of making the invention claimed in claim 1 of the patent in suit is, therefore, beside the point. Once we equip the notional worker with the 82 (2014) 226 FCR 324 at 452 [547]. 83 (2014) 226 FCR 324 at 453 [551]. 84 (2007) 235 CLR 173 at 216 [116] citing Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816; 188 ALR 280; Bristol-Myers Squibb Company v FH Faulding & Co Ltd (2000) 97 FCR 524. 85 (2014) 226 FCR 324 at 453 [551]. Watanabe article or the 471 patent, the whole setting in which the Cripps question must be asked is altered. The conclusion that the invention under the 051 patent would then be obvious is, therefore, not foreclosed by the failure of any flesh and blood research worker to have reached that point in fact." (emphasis in original) In dealing with the substantial commercial success of the drug in which rosuvastatin was the active ingredient administered conformably with claim 1 in Patent 051, the primary judge had said86: "The problem with this approach in the present case is that the commercial success of AZ's rosuvastatin product, on the evidence, is due to its potency at lower doses than other statins. But as the generic parties pointed out, these are qualities of the compound rosuvastatin. AZ did not invent rosuvastatin. As Apotex put it, 'the commercial success of Crestor is due to the quality of the drug itself, not to the entirely conventional doses of 5 mg and 10 mg'." The treatment of the "secondary evidence" in this case was tied to the particular statutory context of the alternative operation of s 7(2) and the efficacy of the drug itself. No error is disclosed in the reasoning of Jessup J in this respect. Conclusion For the preceding reasons AstraZeneca's appeals fail on the first ground and must be dismissed. It is therefore not necessary to consider the questions raised on the notices of contention. In particular, it is not necessary to consider the question on which the Commonwealth was granted leave to intervene, namely, the correctness of the decision of the Full Court of the Federal Court in Apotex Pty Ltd v Sanofi-Aventis87. The appeals should be dismissed with costs. 86 (2013) 100 IPR 285 at 375 [332]. 87 (2009) 82 IPR 416. KIEFEL J. For some time, HMG-CoA reductase inhibitors, which are referred to as "statins", have been prescribed by medical practitioners for the treatment of conditions such as hypercholesterolemia and for the lowering of low density lipoprotein ("LDL") cholesterol. The statins are typically taken once a day as tablets. The primary judge in the Federal Court of Australia (Jagot J)88 noted that according to the MIMS Annual 1998, recommended starting doses of statins were typically 10, 20 or 40 milligrams. Medical practitioners usually prescribed the lowest dose of statins to begin with, to minimise the risk of adverse side- effects associated with statins89. If the target level of LDL cholesterol was not met and the dose had been well tolerated, it would be increased ("dose titration") over months. Dose titration aimed to increase the dose until the patient reached his or her target safely, but the practice was costly, because it necessitated a number of visits to the doctor and blood tests. It therefore risked patient non- compliance. As a result, titration often did not take place and the patient remained on the starting dose even though his or her target level was not reached. AstraZeneca AB and AstraZeneca Pty Limited (together "AstraZeneca") are respectively the registered proprietor and exclusive licensee of Australian Patent No 200023051 (which has been referred in the proceedings in the Federal Court as the "051 patent" and the "low dose patent", but is here referred to as "the Patent"). The specification for the Patent identifies the problem which the claimed invention seeks to overcome as finding dosages of alternative statins which have a similar or improved safety profile and are more efficacious in altering lipid levels than dosages of statins then being marketed. It discloses a method of treatment by the administration of what is called "the Agent" in a particular dose or dosage range. The Agent is rosuvastatin and pharmaceutically acceptable salts thereof. The method involved a starting dosage of rosuvastatin of 5-10 milligrams per day. The Patent's specification claimed that at these dosages LDL cholesterol is lowered "by an unexpected degree, and without any significant adverse side effects." The method of treatment described in the Patent, using rosuvastatin at the nominated dosages, has proved effective and commercially successful. The respondents to these appeals, Apotex Pty Ltd, Watson Pharma Pty Ltd (now Actavis Pharma Pty Ltd) and Ascent Pharma Pty Ltd ("the generic parties"), supplied generic compounds using rosuvastatin at like dosages. AstraZeneca claimed infringement of the Patent by that supply and obtained interlocutory injunctions. The generic parties sought revocation of the Patent. 88 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 318 [104]. 89 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 319 [109]. Her Honour the primary judge found the Patent to be invalid on three grounds: that AstraZeneca was not entitled to the Patent; that the invention disclosed in the Patent was not novel in light of two prior publications; and that the invention disclosed in the Patent did not involve an inventive step and was obvious within the meaning of s 7(2) of the Patents Act 1990 (Cth). A Full Court of the Federal Court (Besanko, Jessup, Foster, Nicholas and Yates JJ) overturned only the finding of lack of novelty and dismissed the appeals from her Honour's decision90. On its appeals to this Court, AstraZeneca sought to agitate all of the grounds of invalidity which had been upheld by the Full Court. The generic parties raised other issues by notice of contention. One issue which arises in connection with the test of obviousness under s 7(2) of the Patents Act 1990 concerns her Honour the primary judge's approach to the characterisation of the invention disclosed by the Patent specification. Her Honour considered91 that although rosuvastatin was not part of the common general knowledge at the priority date, the invention presupposed its existence. Rosuvastatin could therefore be taken as a given in applying the test of obviousness. The reasons of the Full Court on the question of obviousness were given by Jessup J, with whom the other members of the Court agreed. His Honour observed92 that the primary judge's approach to characterising the invention had regard to the specification rather than the claims of the Patent. That approach appeared to follow the decision of a Full Court of the Federal Court in Apotex Pty Ltd v Sanofi-Aventis93, although her Honour eschewed the use of the term "starting point", which had been used in that case, to describe the significance of rosuvastatin in testing the invention for obviousness. The decision in that case, his Honour observed, was at odds with a decision of another Full Court in Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd94, which his Honour considered to have been correctly decided. 90 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324. 91 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 345 [218], 346 92 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at 440-441 [497]-[500]. 93 (2009) 82 IPR 416. 94 (2008) 78 IPR 20. The Commonwealth was granted leave to intervene in this matter. It submitted that this Court need not, and should not, deal with this aspect of the primary judge's reasons. A determination of the correctness of her Honour's approach may have significant effects for the Commonwealth as a party in pending proceedings concerning undertakings made to it as to damages, and which were brought by the Commonwealth upon an acceptance of the correctness of the decision in Apotex Pty Ltd v Sanofi-Aventis. Were it necessary to the determination of the real issues in this matter for that issue to be addressed, the consequences for other litigation would not be a weighty, or even a relevant, consideration. However, it is not necessary to consider this issue in order to determine the question of obviousness. The evidence shows that a person skilled in the art would have discovered the existence of rosuvastatin in any event. In its reply submissions, AstraZeneca conceded as much. The conclusion of invalidity on the ground of obviousness which was reached by the primary judge and by the Full Court is correct, for the reasons which follow. It is unnecessary to consider the other issues raised. The appeals should be dismissed with costs. Obviousness – the Patents Act 1990 provisions Section 18(1)(b) of the Patents Act 1990 provides that an invention is patentable if, so far as claimed in any claim, it is novel and involves an inventive step when it is compared with the prior art base existing before the priority date of the claim. In relation to deciding whether an inventive step was involved, "prior art base" is defined in the Dictionary to the Act to mean information in a document that is publicly available and information made publicly available through doing an act. However, s 7(2) makes plain that, subject to the effect of the provisions of s 7(3), what is spoken of as the prior art base in the assessment of an inventive step is the common general knowledge, which is to say, the general body of knowledge and experience which is available to all those who might consider making a new product or improving existing products in order to meet an identified need95. At the priority date and the time the Patent was applied for, s 7(2) provided that: "an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general 95 Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 292 per Aickin J; [1980] HCA 9. knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately." Sub-section (3) relevantly provided: "For the purposes of subsection (2), the kinds of information are: prior art information made publicly available in a single document being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area." The prior art information referred to in s 7(3) is information which is not part of the common general knowledge. The effect of permitting the use of this additional information is to raise the threshold for inventiveness in s 7(2)96. The s 7(2) question The primary judge considered the hypothetical person skilled in the relevant art for the purposes of s 7(2) (hereafter "the skilled person") to be a medical practitioner with specialised expertise in treating hypercholesterolemia and particular expertise in lipidology. The Full Court saw no reason to interfere with this finding97. No party to these appeals challenged this aspect of her Honour's decision. The primary judge accepted the evidence of Professor Richard O'Brien and another witness as to the awareness of medical practitioners of the fact that a significant number of patients were not reaching their target levels of LDL cholesterol. Because of the ongoing management involved in dose titration, it was thought by practitioners to be desirable to have available new or improved statins which enable more people to achieve their target level at the first dose, which, according to ordinary prescribing practices, would be a dose at the lower end of the approved range. 96 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at 218 [127]; [2007] HCA 21. 97 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at 341 [45]. Aktiebolaget Hässle v Alphapharm Pty Ltd98 ("Alphapharm") stated the question to be answered to determine obviousness under the Patents Act 1952 (Cth). Section 100(1)(e) of that Act was in relevantly similar terms to s 7(2) of the 1990 Act except for the latter's addition to the matters to be considered, together with the common general knowledge, the prior art information referred to in s 7(3), which does not form part of the common general knowledge. Modifying the question stated in Alphapharm to allow for that further information and to be referable to the invention claimed in the Patent, the relevant enquiry is: specialises a medical practitioner who Would treating hypercholesterolemia and who has particular expertise in lipidology, alone or in a notional research group, at the relevant date in all the circumstances, which include the common general knowledge considered separately or together with prior art information publicly available in a document relevant to the problem that many patients are unable to achieve their target LDL cholesterol level using available statins at currently prescribed dosages, directly be led as a matter of course to try rosuvastatin with a starting dosage of 5-10 milligrams in the expectation that it might well produce a useful alternative to or better drug than the most effective statin then available? Before a document containing prior art information can be used along with the common general knowledge for the purposes of the s 7(2) enquiry, it is necessary that it meet the requirements of s 7(3). In Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2]99 it was explained that prior art information which is publicly available in a single document is "ascertained" if it is discovered or found out, and "understood" means that, having discovered the information, the skilled person would have comprehended it or appreciated its meaning or import. The Court also explained100 that the phrase "relevant to work in the relevant art" is directed to publicly available information, not part of the common general knowledge, which the skilled person could be expected to have regarded as relevant to solving a particular problem, or meeting a long-felt want or need, as the patentee claims to have done. 98 (2002) 212 CLR 411 at 433 [53]; [2002] HCA 59. 99 (2007) 235 CLR 173 at 219 [132]. 100 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at 222-223 [152]. Lockwood [No 2] also explains101 that, in answering the question of obviousness, the information referred to in s 7(3), like that part of the prior art base which is the common general knowledge, is considered for a particular purpose. That purpose is to look forward from the prior art base to see what the skilled person is likely to have done when faced with a problem similar to that which the patentee claims to have solved with the claimed invention. It is this aspect of the s 7(2) enquiry which assumes particular importance on these appeals. In addressing s 7(2), it is to be borne in mind that the skilled person is an artificial construct, intended as an aid to the courts in addressing the hypothetical question of whether a person, with the same knowledge in the field and aware of the problem to which the patent was directed, would be led directly to the claimed invention. The statute's creation of the skilled person construct for this purpose is not to be taken as an invitation to deal with the question posed by s 7(2) entirely in the abstract. Whilst the question remains one for the courts to determine, the courts do so by reference to the available evidence102 including that of persons who might be representative of the skilled person. The evidence in this case The Patent had a priority date of 6 February 1999. The primary judge accepted that the existence of rosuvastatin was not part of the common general knowledge of the skilled person at that date. However, it was disclosed in two documents, which were referred to by the primary judge as the "471 Patent" and the "Watanabe article". The 471 Patent was filed by Shionogi, from whom AstraZeneca later obtained a licence in an endeavour to overcome the finding that it was not entitled to the Patent because it was not the inventor of rosuvastatin. The 471 Patent is the European patent for the compound rosuvastatin, which has an equivalent US patent. The specification for the Patent itself states that "the Agent" to which it refers, but not by the name rosuvastatin, is disclosed in European Patent Application, Publication No 0521471. The primary judge found that the 471 Patent is a sufficient disclosure of the compound rosuvastatin. The Watanabe article contains a reference to a range of new compounds, but it is the compound there referred to as S-4522 that is rosuvastatin, which is identified on the first page of the article and referred to as "the selected 101 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at 218 [127]. 102 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at 223 [153]. compound". It is described as having greater potency than some other statins then marketed and as having been tested on animals. It was said to be a promising candidate for development. found The primary judge took Professor O'Brien to be representative of the skilled person who is the addressee with respect to the Watanabe article, which information. Professor O'Brien's expertise qualified him as representative of the skilled person according to the primary judge's description. It is evident that Professor O'Brien's evidence in particular was considered by her Honour to be of the most assistance on the question of obviousness. the course of his searches for prior art Professor O'Brien gave evidence that a person in his position faced with the problem of patients not reaching their target LDL cholesterol levels would engage in a four-stage process. In the first place, the person would undertake, or cause to be undertaken, routine and conventional literature searches to discover any alternative statins. Secondly, the person would compare the results of those searches. Thirdly, the person would select from that comparison the best candidate to solve the problem. Lastly, the person would undertake, or cause to be undertaken, trials using that candidate statin to test its suitability at relevant dosages. All drugs must be subjected to animal studies and then clinical trials involving humans before they can be marketed and these trials are very expensive. Professor O'Brien explained that, to address the problem, he would be looking for a statin that would lower LDL cholesterol more efficaciously across its safe dose range than the most effective statin being marketed, atorvastatin. To be more efficacious, the statin must have greater efficacy than existing statins at the maximum safe dose to assist in treating patients with very high LDL cholesterol levels. It would be advantageous to have greater efficacy with at least similar safety at the lowest recommended starting dose as this would benefit patients who were intolerant of higher doses. Professor O'Brien conducted what the primary judge described as "routine and conventional literature searches"103 and identified five abstracts of documents of potential relevance to the problem. He requested a full text copy of those documents, which he identified by reference to their authors. One of them, the "Aoki article", disclosed a statin referred to as NK-104, which he considered to be promising. But it was the Watanabe article and the compound S-4522 which seemed to him more interesting because it suggested that the statin S-4522 had high potency with reduced side-effects and it had progressed to clinical trials. He 103 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 374 [328]. regarded this as the most likely compound to solve the problem. As mentioned above, S-4522 was in fact rosuvastatin. Having selected this compound, Professor O'Brien gave evidence that the skilled person would have conducted further searches for other articles concerning it, including a patent search for the Japanese patent referred to in the Watanabe article. This was the Japanese Shionogi patent, which is to say the Japanese equivalent of the 471 Patent. He received an English language equivalent of the Japanese patent, which indicated that the author of that patent expected the compound to be effective across the typical dosage range of existing statins marketed in Australia. The information contained in the Watanabe article led Professor O'Brien to expect that this new statin would have a similar, or better, efficacy than atorvastatin. He expected it to be effective in lower dosages and considered that a starting dosage would be around 10 milligrams. The English language equivalent of the Japanese patent led him to expect that the starting dose would be 5-10 milligrams once daily, though he said that this would need to be confirmed by studies of human subjects. The Watanabe article indicated to him that the compound had been successful in both safety and efficacy on the pre- clinical animal trials, because it was not usual to commit to a clinical trial process, as the author reported, unless these trials were successful. The primary judge found104, by reference to the evidence of Professor O'Brien, and of Dr Reece, another expert witness, that the skilled person would have found each of the Watanabe article and the 471 Patent, would have understood them and would have regarded each as relevant. The information in each of them would have led that person, as a matter of course, to undertake clinical trials in the expectation that the compound might produce a better result than was currently achieved in the field. AstraZeneca's contentions as to obviousness AstraZeneca's contentions as to obviousness may be divided into two stages. The first concerns the application of the s 7(3) stipulations and in particular the determination of whether a document is relevant and therefore eligible to be considered as part of the s 7(2) process. The second concerns the s 7(2) process for determining the question of obviousness. Here AstraZeneca submits that there is an evidentiary gap, because the skilled person would be faced with a number of alternative routes to follow and there was no evidence as to what that person would do. There must be alternative routes available because 104 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 374-375 [329]- there is more than one document satisfying the test of relevance and each must be considered. Alternatively, if the Watanabe article can be relied upon alone, the skilled person could not be led by it to the dosage amounts that are part of the invention disclosed in the Patent. AstraZeneca submitted that in addressing the questions as to whether a document could reasonably be expected to be ascertained, understood and regarded by the skilled person as relevant to the problem, s 7(3) does not permit a process of comparison as between the documents in question and other documents not within the common general knowledge in order to select the document to be used in answering the question of obviousness under s 7(2). It submitted that, for the purposes of s 7(3), and in particular to determine its relevance, each document must be looked at independently. Although this point concerns the stipulations of s 7(3), AstraZeneca drew upon the concluding words of s 7(2) – "each of which must be considered separately" – in aid of the suggested prohibition on comparison in order to select a s 7(3) document. A consequence of its argument would appear to be that if a search for prior art information reveals more than one document, none of them could qualify as relevant to the problem if identifying a single document as relevant involved a process that required disregarding all other documents. The purpose of the requirements of separate consideration in s 7(2) is to prevent mosaicking, which is to say, selecting pieces of information from a number of prior publications or objects and assembling them such that the mosaic achieved reveals what is claimed in the patent in suit105. This is reinforced by the stipulation in s 7(3)(b) that two documents not within the common general knowledge may be used for the purposes of s 7(2) only if the skilled person would treat them as a single source of information. AstraZeneca's submissions are not directed to the mosaicking of information. AstraZeneca's submissions elide the stipulations of ss 7(2) and 7(3), when the purposes of those sub-sections are quite distinct. The purpose of s 7(3) is to identify documents which may be used for the s 7(2) question of obviousness. The sub-section does so by reference to attributes of a document and the information contained in it, as seen through the eyes of the skilled person. So long as the information in the document has those attributes stipulated by s 7(3) it may be used for the purposes of the enquiry under s 7(2). This is essentially a question of evidence, not statutory construction. 105 Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 292-293. The evidence of Professor O'Brien and Dr Reece clearly showed that the Watanabe article, and other documents, could be expected to be ascertained by the skilled person, by routine and conventional searches. In oral argument in this Court, AstraZeneca conceded that the Watanabe article, and the 471 Patent, could be regarded as capable of ascertainment so that the question became one as to the application of s 7(2). In that event the fact that the information contained in those documents could be appreciated as relevant to solving the problem at hand would also appear necessarily to be conceded. Regardless, there can be no doubt, having regard to Professor O'Brien's evidence, that the Watanabe article conveyed sufficient information about the compound it referred to in order for him to appreciate the compound's usefulness. In some cases there may be an issue about the extent to which the information in the document in question may be supplemented or explained by other information. This is not such a case. Professor O'Brien understood from the Watanabe article, as the skilled person would, that the compound there referred to, being rosuvastatin, would be useful for the treatment of hypercholesterolemia and might be more potent than statins then being marketed. The limited comparison Professor O'Brien undertook of the compound in the Watanabe article with that disclosed in the Aoki article was not done with a view to determining the Watanabe article's relevance. It was by way of selecting the best candidate for the solution to the problem. It was necessary for him to select the best candidate because the clinical trials which would follow are extremely expensive. The difficulty for AstraZeneca with respect to this aspect of his evidence is that selecting the Watanabe article leads inevitably to the complete invention. This is why AstraZeneca challenges the selection of the Watanabe article over others. AstraZeneca accepts that the Watanabe article discloses the route to the invention, but it submits that this is not the only route to be considered. It argues that not only must each document qualifying as relevant be considered separately, but that each must be considered under s 7(2). None may be discarded. The situation which would then be achieved would be that the skilled person would have a number of routes to choose from. It is at this point that AstraZeneca submits that the claim of obviousness must fail, because witnesses such as Professor O'Brien did not say what they would do in such a situation. There is a level of unreality about the situation AstraZeneca seeks to create. Professor O'Brien did not need to comment upon what he would do faced with alternative routes, because that hypothetical did not arise, given the selection he had made of rosuvastatin. This evidence of Professor O'Brien that he would select rosuvastatin is sufficient to conclude that the skilled person would have selected the route that led to the invention of rosuvastatin. AstraZeneca further submitted that even if the Watanabe article was selected or preferred, it was not obvious that the skilled person would actually pursue that route to reach the invention. However, this submission was premised upon the information in that article being regarded as relevant and no more. This ignores the effect of Professor O'Brien's evidence which went further than to identify the compound disclosed as relevant. There is no step towards the invention unaccounted for in the evidence of Professor O'Brien. His evidence not only identified rosuvastatin as relevant to solving the problem to which the Patent is addressed; both he and Dr Reece identified rosuvastatin as warranting clinical trials. This evidence also provides the answer to AstraZeneca's final submission. The final submission was that, armed with the Watanabe article and the common general knowledge, the skilled person would not have been led directly to the invention because the starting dosages are an essential element of the invention and were not revealed by that article or by any other prior art document. This may be accepted. The dosages were revealed to AstraZeneca by clinical trials on humans, as inevitably they would be if undertaken. The point is that the Watanabe article contained sufficient information, including as to the results of the pre-clinical trials on animals, for Professor O'Brien to consider that clinical trials were warranted. Dr Reece was of the same view. Professor O'Brien's evidence about what the right dosages might be, although accurate, was largely speculative and this was not his area of expertise. However, Dr Reece, who has a background in clinical pharmacology and research, gave evidence that dose sizes which would be trialled could be expected to start from 5 milligrams, 10 milligrams and 20 milligrams. I do not understand AstraZeneca to contend that the starting dosages disclosed in the Patent would not be identified by normal clinical trials, which utilise certain standards and procedures. The evidence therefore shows that the skilled person would be led to the invention. Orders I agree with the orders proposed by the Chief Justice. GAGELER AND KEANE JJ. We agree, for the reasons given by the Chief Justice and by Kiefel J, that the issue on which these appeals turn was correctly decided by the courts below. We wish only to make some brief comments upon the lack of merit in AstraZeneca's challenge to those decisions. In this case, special leave to appeal was granted principally to allow this Court to address difficulties said to attend the interpretation of s 7(2) and (3) of the Patents Act 1990 (Cth). The arguments advanced by AstraZeneca on these issues in this Court were without substance; they were also distinctly elusive in their presentation. The shifts which occurred in AstraZeneca's position during the course of argument should not be allowed to obscure the reality that these provisions give rise to no difficulties of interpretation material to the outcome of this case. The deference due to the plain and ordinary meaning of statutory language is not diminished because that language regulates intellectual property rights106. Both courts below were right to conclude that the putative invention did not involve an inventive step. Given that conclusion, the other arguments on which the parties lavished much time, resources and enthusiasm are unnecessary to resolve. The patent The priority date of the patent in suit ("the Patent") is 6 February 1999. Before this date it was part of the common general knowledge that statins were administered to patients to lower their low-density lipoprotein (LDL) cholesterol levels. The problem in the common general knowledge at the priority date was to develop a new statin treatment that could bring more patients to their target blood cholesterol level without the need to resort to dose titration. AstraZeneca claimed that it solved this problem by inventing the method of treatment claimed in the Patent. Claim 1 of the Patent defined the method of treatment as: "A method of treating a patient suffering from hypercholesterolemia which comprises administration as a starting dose of a single, once daily, oral dose of 5 to 10 mg of [rosuvastatin], or a pharmaceutically acceptable salt thereof, in the form of a pharmaceutical composition." 106 Alphapharm Pty Ltd v H Lundbeck A/S (2014) 89 ALJR 1 at 10 [42], 20 [104]; 314 ALR 182 at 193, 207; [2014] HCA 42. The decision of the primary judge range), were useful The primary judge held that the existence of the method of treatment was disclosed by two pieces of prior art. One was a European patent application ("the 471 patent"), which disclosed that various compounds, including rosuvastatin treatment of (within a certain dosage hypercholesterolemia. Her Honour found that the 471 patent would have enabled a person skilled in the art to proceed to the method of treatment claimed in the Patent. The other piece of prior art information was an academic article (referred to by the parties as "the Watanabe article") that described a compound, S-4522 (rosuvastatin), as a "promising candidate for development" in relation to the treatment of hypercholesterolemia. Her Honour found that the Watanabe article would also have enabled a person skilled in the art to proceed to the method of treatment claimed in the Patent. These findings were based on the expert evidence of Professor O'Brien and Dr Reece. the There was no challenge to Professor O'Brien's qualification to give evidence in relation to how a person skilled in the art would have gone about solving the problem in the common general knowledge. Professor O'Brien's evidence was that a person skilled in the art who encountered the problem would have engaged in a four-step process to solve it. That process would have involved, as the first two steps, routine and conventional literature searches to discover alternative statins, and a comparison of the results of those searches. That comparison would have led to a selection of the best candidate to solve the problem. There would then have been trials using that selected statin to determine its efficacy at relevant dosages. routine and conventional literature searches as the first step in this process. Those searches generated hundreds of abstracts of scientific papers. Professor O'Brien gave evidence that his comparison of these papers identified the Watanabe article and another paper, referred to as the Aoki article (which concerned an agent described as NK-104), as candidates to solve the problem. that he conducted The Watanabe article led Professor O'Brien to ascertain the Japanese equivalent of the 471 patent, the English language version of which led him to expect that an appropriate starting dose for treatment would be five to 10 milligrams once daily, although this expectation would need to be confirmed by studies of human subjects. In this regard, Dr Reece's evidence was to the same effect. Professor O'Brien said he would have chosen rosuvastatin for treatment, although he would not have been critical of someone who chose NK-104. This evidence led the primary judge to conclude that a person skilled in the art would have been led, as a matter of course, to try the method of treatment claimed in the Patent in the expectation of improved results for patients. Accordingly, the claimed method of treatment did not involve an inventive step. The appeals to the Full Court AstraZeneca appealed from the decision of the primary judge to the Full Court of the Federal Court of Australia (Besanko, Jessup, Foster, Nicholas and Yates JJ). In a separate concurring judgment, Jessup J dealt with the inventive step point. Jessup J upheld the primary judge's conclusion that the claimed invention was obvious in light of the common general knowledge together with either the Watanabe article or the 471 patent. His Honour's consideration107 of this issue involved two questions: "first, was there prior art information, of the kind referred to in [s 7(2)], which the skilled addressee 'could … be reasonably expected to have ascertained, understood [and] regarded as relevant' (within the meaning of [s 7(3)]); and secondly, if so, would the invention then have been obvious, in the light of the common general knowledge when considered together with that information, to the skilled addressee?" In relation to the first question, Jessup J held that it was permissible under s 7(3) to have regard to multiple pieces of prior art information "along the road to [the] destination" of assessing whether any single piece of prior art information could reasonably be expected to have been regarded as relevant to solving a problem in the common general knowledge. As his Honour rightly said108: "It is true that, under s 7(2) ... the skilled person notionally knows nothing beyond the common general knowledge. But it is then assumed [by s 7(3)] that he or she will undertake the task of finding some additional information which is not part of the common general knowledge. The question is whether he or she could be reasonably expected to have ascertained (etc) the information. Such an assumed course of inquiry must necessarily take the person into the realm of information which is not within the common general knowledge. It is, in my view, wholly within the scheme of the subsection that he or she might well sort through all manner of information with a view to finding something that is 'regarded 107 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at 444 [516]. 108 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at 447-448 [530]. as relevant'. There is nothing in the provision which would place an embargo upon the skilled person using combinations of sources of information along the road to that destination. … Ultimately, of course, there must be one document (or act) only which imparts the information which is to be added to the common general knowledge. But the sources which the skilled person would consult to decide what that document is, to come to an understanding of the information in it and to consider whether that information was relevant, are not confined to a single document." (original emphasis) This was sufficient to resolve the first question against AstraZeneca. As Jessup J appreciated, the plain and ordinary meaning of the language of s 7(3) imposes no limitation on the search for information outside the common general knowledge other than that the information must be "reasonably expected to have [been] ascertained, understood and regarded as relevant to work in the relevant art in the patent area." Nothing in s 7(3) suggests that the notional skilled addressee may not trawl through multiple documents, discarding the irrelevant and retaining the useful, as part of the ascertainment of relevant information. AstraZeneca initially argued that s 7(3) precluded such a sorting process in the search for relevant information; but the pressure of argument led inevitably to the abandonment of that position. Once relevant information has been ascertained in accordance with s 7(3), the second question posed by Jessup J may be addressed: would the invention be obvious if the information had been considered by a person skilled in the relevant art together with common general knowledge? The inquiry contemplated by s 7(2) is whether the invention would have been obvious to a person skilled in the art in the light of the common general knowledge alone, or "together with" a single piece of prior art information ascertained pursuant to s 7(3). What s 7(2) requires, by the plain and ordinary meaning of its language, is that where multiple pieces of prior art information are available and capable of being regarded as relevant, each must be considered, one at a time, together with the common general knowledge to answer the question whether the invention is obvious. If the invention is obvious in light of the common general knowledge plus any one of the ascertained pieces of prior art information, then the patent is invalid for want of an inventive step. AstraZeneca's contention seemed to be that a person skilled in the art, confronted by a choice between rosuvastatin and NK-104, would not be able to identify the pathway to a solution of the problem, and that this difficulty was not resolved by Professor O'Brien's evidence. It was said that the potential usefulness of both rosuvastatin and NK-104 meant that it would not have been obvious to a person skilled in the art at the priority date to choose rosuvastatin rather than NK-104 to treat hypercholesterolemia. On a fair view of Professor O'Brien's evidence, and indeed the view taken by the primary judge, Professor O'Brien's express preference for rosuvastatin means that this contention cannot be sustained. In any event, AstraZeneca's contention pursues a red herring. As the primary judge rightly said109: "The fact that there were other potential statin candidates ... for development at the time ... which the skilled addressee would also have located as a matter of course, does not detract from the fact that the information in each of the 471 patent and the Watanabe article would have led the skilled addressee as a matter of course to try the claimed invention in the expectation that it might well produce a useful alternative to or a better result than currently achieved in the field." The question is not whether it would have been obvious to the skilled addressee to choose rosuvastatin over NK-104; rather, it is whether a person skilled in the art would, in light of the common general knowledge plus either the Watanabe article or the 471 patent, have been directly led as a matter of course to try rosuvastatin in the expectation that it might well produce a solution to the problem which existed in the common general knowledge. Section 7(2) does not contemplate that a choice between apparently effective solutions must be attributed to the notional skilled addressee, much less that the notional skilled addressee might be so befuddled by an embarrassment of choices as to cease pursuit of the solution. It is also wrong to suggest, as AstraZeneca did, that the need for further testing of human subjects was an obstacle to a conclusion that rosuvastatin would have been tried as a matter of course in the expectation of a solution to the problem in the common general knowledge. Section 7(2) does not invite a consideration of the notional addressee's motivation to carry out any tests that would need to be done. In particular, it does not contemplate consideration of whether the skilled addressee would be sufficiently encouraged by the available information to undertake the expense and inconvenience of further tests necessary to bring the solution to the stage of implementation. AstraZeneca's appeals should be dismissed with costs. 109 Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285 at 374-375 [330]. Nettle 118 NETTLE J. With respect, I substantially agree with the reasons for judgment of French CJ and those of Kiefel J and wish to add only some brief observations on the meaning of ss 7(2) and 7(3) of the Patents Act 1990 (Cth). As French CJ and Kiefel J observe, the issue of central importance in these appeals was the construction of those provisions: more precisely, whether the person skilled in the art who is referred to in s 7(2) is permitted to have regard to more than one document when deciding whether there is a single document within the meaning of s 7(3)(a) which discloses prior art that in the light of common general knowledge renders an invention obvious. As French CJ and Kiefel J conclude, there is nothing in ss 7(2) or 7(3) which precludes the person skilled in the art from looking at more than one document (whether sequentially or comparatively or otherwise) for the purposes of determining the relevance of any single document. It is to be emphasised, however, that ss 7(2) and 7(3)(a) do not permit the person skilled in the art to combine information from other sources with the contents of the one document110. The plain and ordinary meaning of the words in s 7(2) – "each of which must be considered separately" – is that the single document referred to in s 7(3)(a) must be capable of standing alone without interpretative or corroborative assistance from another document or other source of information apart from common general knowledge. The rectitude of that meaning is supported by the legislative history of ss 7(2) and 7(3) which is essayed in French CJ's reasons. One of the arguments advanced for the appellants was that, but for information that Dr Reece derived from the Thompson article that the trials referred to in the Watanabe article were Phase II trials, Dr Reece would not have concluded that rosuvastatin was an obvious choice to satisfy the need for an effective statin that did not require dose titration. If that had been so, it would have been a valid point of objection. In contrast to the exercise involved in ascertaining the relevance of the Watanabe article – for which purpose it was permissible for a person skilled in the art to consider other documents – when the person skilled in the art came to deciding whether the Watanabe article rendered the invention obvious, it was necessary for that person to exclude from consideration any information derived otherwise 110 Section 7(3)(b) of the Patents Act permits two or more related documents, or two or more related acts, to be considered against the common general knowledge "if the relationship between the documents or acts is such that a person skilled in the relevant art in the patent area would treat them as a single source of that information", but that provision is not here engaged. Nettle than from common general knowledge and the prior art disclosed in the Watanabe article. In fact, however, there is no basis in the objection. Both the primary judge and the Full Court approached the matter in accordance with that requirement. As Jessup J said111, although Dr Reece's evidence was that the Watanabe article contained no safety data the result of either animal or human trials, the evidence also disclosed that trials of that kind would conventionally be carried out. Accordingly, carrying out the trials fell within the concept of working towards an invention with an expectation of success and that was consistent with the conclusion that the invention was obvious. I agree with the orders proposed by French CJ. 111 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at 452 [546]-[547].

HIGH COURT OF AUSTRALIA COPYRIGHT AGENCY LIMITED APPELLANT AND STATE OF NEW SOUTH WALES RESPONDENT Copyright Agency Limited v State of New South Wales [2008] HCA 35 6 August 2008 ORDER Appeal allowed. Orders of the Full Court of the Federal Court of Australia, made on 5 June 2007, in respect of questions 5 and 6, set aside. In place of those orders, questions 5 and 6 answered as follows: (6) Does not arise. Respondent to pay the appellant's costs of the appeal and of the proceedings before the Full Court of the Federal Court of Australia. On appeal from the Federal Court of Australia Representation D K Catterns QC with M R J Ellicott for the appellant (instructed by Banki D M Yates SC with J R Baird for the respondent (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Copyright Agency Ltd v New South Wales Intellectual property – Copyright – Crown use – Statutory licence scheme – Where survey plan lodged for registration at Lands and Property Information Division of Department of Lands (NSW) – Surveyor owned copyright in survey plan – Once registered, survey plan reproduced and communicated to the public for the services of the State of New South Wales – Whether statutory licence scheme in Copyright Act 1968 (Cth), Pt VII, Div 2 applied to authorise State to reproduce survey plan and communicate it to the public, and provided for terms upon which those acts could be done – Whether surveyor taken to have impliedly licensed reproduction and communication to the public of survey plan apart from statutory licence scheme – Comparison with provision for Crown use in foreign jurisdictions. Words and phrases – "Crown use", "equitable remuneration", "for the services of the State", "implied licence". Copyright Act 1968 (Cth), Pt VII, Div 2. GLEESON CJ, GUMMOW, HEYDON, CRENNAN AND KIEFEL JJ. The appellant, Copyright Agency Limited ("CAL"), is a "relevant collecting society" for the purposes of Pt VII, Div 2 of the Copyright Act 1968 (Cth) ("the Act")1. Members of CAL include members of the Australian Consulting Surveyors Association ("the Surveyors' Association") who produce survey plans of land and strata in the State of New South Wales ("the State"). Members of the Surveyors' Association, or their employees, are owners of the copyright in survey plans created by them. The survey plans are "artistic works" protected by the Act (s 10(1)). The copyright in these works includes the exclusive rights to reproduce the survey plans in a material form (s 31(1)(b)(i)) and to communicate2 them to the public (s 31(1)(b)(iii))3. The Copyright Tribunal of Australia ("the Tribunal") referred certain questions of law to a Full Court of the Federal Court of Australia (Lindgren, Emmett and Finkelstein JJ) ("the Full Court"). These questions arose between CAL and the State in an application to the Tribunal by CAL requesting determination of the terms upon which the State could copy the abovementioned survey plans and communicate them to the public4. The State registers surveyors to ensure that survey plans prepared by them meet the requirements of the State for the defining of boundaries of land parcels in the State. The State also registers survey plans through its Department of Lands. A division of that Department, called Lands and Property Information ("LPI") (formerly the Land Titles Office), provides land administration services to the State, including the registration of land titles and survey plans, both of 1 See s 182C and ss 153F and 182B of the Act. In relation to a work, "communicate" means "make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise)" (s 10(1) of the Act). 3 The exclusive right of "communication to the public" derives from the implementation by the Parliament of Art 8 of the World Intellectual Property Organization ("WIPO") Copyright Treaty of 1996 (effective from 6 March 2002) by enacting the Copyright Amendment (Digital Agenda) Act 2000 (Cth). 4 After 30 July 1998, the date on which the Copyright Amendment Act (No 1) 1998 (Cth) relevantly came into operation. Crennan which are integral to the Torrens System. Registers maintained by LPI record any alterations in land ownership and any changes to the boundaries of land. The legislation It is convenient to outline the relevant provisions of the Act before turning to the issue arising in this appeal. Part VII of the Act (ss 176-183F) provides for Crown copyright (Div 1) and the use of copyright material by the Crown (Div 2) where the expression "the Crown" includes a reference to the government of a State (s 10(1))5. The appeal concerns government use of copyright material. Consideration of government use of copyright material must start with the recognition that, subject to Pt VII, the Act "binds the Crown" (s 7). The Crown in Australia was not liable for infringement of copyright before the introduction of Pt VII, Div 2 of the Act6. This circumstance reflected the rule of statutory construction, that the Crown is not bound by a statute unless the statute says so expressly, or by necessary implication. That rule, reconsidered and restated by this Court in Bropho v Western Australia7, has now given way to the more flexible approach exemplified in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd8. Section 7, which predated those developments, was first introduced following the Crown legislative developments which commenced with Proceedings Act 1947 (UK) and resulted in the abrogation of Crown immunity in the United Kingdom in respect of copyright infringement. In its terms, s 7 highlights the fact that Pt VII, Div 2 provides for an exception (and defence) to infringement provisions which would otherwise apply to the Crown. 5 Section 10(1) relevantly provides: "the Crown includes the Crown in right of a State …". Provision also is made for the Territories of the Commonwealth. 6 This followed recommendations made by the Copyright Law Review Committee in 1959 ("the Spicer Committee"). The Act came into operation on 1 May 1969. (1990) 171 CLR 1; [1990] HCA 24. (2007) 81 ALJR 1622; 237 ALR 512; [2007] HCA 38. Crennan In the Second Reading Speech on the Bill for what became the Act, the Attorney-General (Mr N H Bowen QC) said9: "The Bill puts beyond doubt that the Crown is bound by the copyright law. Provision is made, however, [in Pt VII] for the use of copyright material for the services of the Commonwealth or the States upon payment of compensation to the owner of the copyright." Before turning to the relevant sections in Pt VII, it also needs to be noted that an act is "deemed to have been done with the licence of the owner of a copyright if the doing of the act was authorized by a licence binding the owner of the copyright" (s 15). This provision can encompass a consent or permission to use work subject to copyright, which is consonant with, or independent of, any contractual promise in respect of that work10. Pt VII, Div 2 (ss 182B-183F) is headed "Use of copyright material for the Crown". The phrase "copyright material" is defined (s 182B(1)) in terms which include not only literary, dramatic, musical and artistic works but copyright in published editions, sound recordings, cinematograph films, television and sound broadcasts and works included in them. The present litigation is concerned with the use of "copyright material", being survey plans, as "artistic works". References in these reasons to "works" should be read with this in mind and do not qualify the broader definition of "copyright material". The State did not suggest that any of the fair dealing provisions (ss 40-42) or other provisions in Pt III, Div 3 (ss 43-44F) which provide that certain acts do not constitute an infringement, had any application to the uses of the survey plans described below. In cases where these provisions do apply, Pt VII, Div 2 respecting Crown use and equitable remuneration is not engaged. The Act further provides that a State, doing any acts within the copyright, must inform the owner of the copyright unless it appears to the State that it would 9 Australia, House of Representatives, Parliamentary Debates (Hansard), 16 May 10 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 583 [10] per Gummow ACJ, 595-596 [59] per Kirby and Crennan JJ, 612 [121] per Hayne J, 632 [165] per Callinan J; [2006] HCA 55. Crennan be contrary to the public interest to do so (s 183(4))11. Terms for the doing of such acts by a State are to be fixed by agreement between the State and the copyright owner or, in default of agreement, by the Tribunal (s 183(5)). Putting aside for one moment the special position of governments, the idea that an exception to infringement of copyright might be made if a notice is given by a user of copyright material to an owner of the copyright and if the user pays certain specified royalties, is not new12. However, current statutory licence schemes, which will be discussed in more detail later, are comparatively complex and have been subject to continual legislative amendment as new technologies which simplify copying have emerged. Specific statutory exceptions to infringement are also well known. The long-established fair dealing exception first included in the Copyright Act 1911 (UK)13, is a familiar example. Current statutory exceptions to infringement are legion14. Some exceptions give rise to a right to use copyright material without payment of remuneration; these are often referred to as "free use" provisions. Other exceptions are the foundation for statutory licensing schemes which permit use on condition that remuneration is paid by users to owners. The licences are often described as "compulsory" and the schemes are often collectively referred to as "remunerated use" provisions. The 1998 amendments Amendments to the statutory licence scheme for government use were made in 199815. The amendments apply to "government copies"16 and provide 11 Provision for the form of that notice is made by reg 25 of the Copyright Regulations 1969 (Cth). 12 See the proviso to s 3 of the Copyright Act 1911 (UK) which was in force until 13 Section 2(1)(i). 14 Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 1: Exceptions to the Exclusive Rights of Copyright Owners, (1998). 15 Copyright Amendment Act (No 1) 1998 (Cth), Sched 4. 16 A "government copy" is defined in s 182B as a reproduction in a material form of copyright material made under the Crown use provision of s 183(1). Crennan for payment of equitable remuneration17 on the basis of sampling, rather than individual notices to copyright owners, where a declared collecting society The remuneration for (s 153F) is operating (ss 182B and 183A-183F). government copies is as agreed between government and the relevant collecting society or as determined by the Tribunal (ss 153K and 183A). The key provision is s 183A. The Explanatory Memorandum to the Copyright Amendment Bill 1997 (Cth) explained the introduction of s 183A as part of a package of amendments designed18: "to streamline the system for owners of copyright in works and other subject matter their materials are copied by Commonwealth, State and Territory governments. to be paid when The amendments will enable the governments to avail themselves of an administratively simple procedure for calculating and making payments of equitable remuneration to copyright owners for the use of their copyright materials by the governments. The amendments … will vary the operation of s 183(4) and 183(5) of the Act to permit payments for the reproduction of copyright materials by a government to be made [on] the basis of sampling, rather than the present method of full record-keeping under s 183, where there is a declared copyright collecting society. A relevant collecting society … in relation to all government copies or a class of government copies, will distribute the equitable remuneration to the owners of copyright in the material that has been copied and will hold in trust the remuneration for non-members who are entitled to receive it." The operation of s 183A may be summarised as follows. 17 The phrase "equitable remuneration" has its origins in the 1948 Brussels Revision of the Berne Convention for the Protection of Literary and Artistic Works 1886 (the "Brussels Act") Art 11bis(2). See generally Lahore, Copyright and Designs at 18 Explanatory Memorandum to the Copyright Amendment Bill 1997 (Cth) at Crennan If there is a "relevant collecting society" in operation in relation to a government copy, ss 183(4) and (5) are stated not to apply (s 183A(1)) and the interests of the copyright owner are instead afforded protection by s 183A(2). This provides that the government must pay the collecting society equitable remuneration for the making of government copies during a particular period using a method (s 183A(2)): agreed on by the collecting society and the government; or if there is no agreement – determined by the Tribunal under section These provisions alleviate the administrative burden of giving notice and fixing terms for each individual "government copy" under ss 183(4) and (5). Notification of the making of copies instead occurs by a process of "sampling". The method of working out equitable remuneration must take into account the estimated number of copies made for the services of the government during the period and specify the sampling system to be used for that purpose (s 183A(3)). This applies whether the method is agreed on by the collecting society and government or determined by the Tribunal (s 183A(5)). Equitable remuneration must be paid by the Commonwealth or State to the collecting society in the manner agreed by the parties or ordered by the Tribunal (s 183B(1)). Where not paid, the remuneration is recoverable by the collecting society as a debt due to the society in a court of competent jurisdiction (s 183B(2)). A company limited by guarantee may become a "relevant collecting society" for the purposes of s 183A by application under s 153F. If the Tribunal is satisfied of certain matters, including that the society's rules permit the relevant copyright owners to be members (ss 153F(6)(b) and (c)) and include provision for the distribution of remuneration (s 153F(6)(e)(iii)), it may declare the company to be a collecting society in relation to all or a class of government copies. Where such a declaration is in force, the company will be a "relevant collecting society" (s 182C). CAL meets this description as it has been declared to be a collecting society for the purposes of Pt VII, Div 2 of the Act for each owner of copyright in works, other than a work included in a sound recording or a cinematograph film. The operation of the 1998 amendments is dependent on a number of other provisions of the Act. Examples in Pt VII, Div 2 include the provision for the powers of collecting societies to carry out sampling (s 183C), annual reports and Crennan accounting (s 183D), the alteration of the rules of the collecting society (s 183E) and the making of applications to the Tribunal for the review of distribution arrangements (s 183F). Applications and references to the Tribunal are also dealt with by Subdiv E of Pt VI, Div 3 (ss 153E-153KA). Provision is made, for example, for applications for the review of a collecting society's distribution arrangement (s 153KA) and applications to the Tribunal to revoke a declaration of a collecting society (s 153G). Facts CAL applied to the Tribunal to determine a method of calculating equitable remuneration payable to it by the State for the making of digital copies of survey plans (s 183A(2)) and also to fix the terms upon which the State may communicate the survey plans to the public (s 183(5)). Because s 183(1) excepts those acts from infringement if done for the services of the State, CAL did not contend that the State was infringing the copyright in survey plans. Accordingly, in this appeal this Court is not considering s 183(1) as a statutory defence to infringement but as the foundation of a statutory licence scheme. Sub-sections 183(1) and (5) of the Act provide: "(1) The copyright in a literary, dramatic, musical or artistic work or a published edition of such a work, or in a sound recording, cinematograph film, television broadcast or sound broadcast, is not infringed by the Commonwealth or a State, or by a person authorized in writing by the Commonwealth or a State, doing any acts comprised in the copyright if the acts are done for the services of the Commonwealth or State. (5) Where an act comprised in a copyright has been done under subsection (1), the terms for the doing of the act are such terms as are, whether before or after the act is done, agreed between the Commonwealth or the State and the owner of the copyright or, in default of agreement, as are fixed by the Copyright Tribunal." The Tribunal heard the application, received evidence and submissions and made findings of fact. The Tribunal explained the importance of survey plans within the Torrens System: Crennan "A Survey Plan contains survey information that is essential to the creation of a new title or the redefinition of the land contained in an existing title. When a boundary is to be created by a surveyor in a Survey Plan, it must comply with the legislative requirements and the surrounding Survey Plans. The title and the Survey Plan are inextricably linked. Thus, registration of a Survey Plan is central to the grant of title under the Torrens System. [Survey plans] must be created and registered whenever land is subdivided and new land parcels are created, or when any dealings affecting the land are created (including encumbrances such as easements or leases)." The Tribunal acceded to the parties' request that a case be stated to the Full Court under s 161 of the Act for the determination of 11 questions of law. To enable proper consideration of the issues encompassed by the questions, a selection of registered survey plans (referred to by the Full Court as the "Relevant Plans") were put before the Full Court. On the basis that the State is not itself the copyright owner of any Relevant Plan under consideration, question 5 of the stated case asked: "… is the State, other than by operation of s 183 of the Act, entitled to a licence to: reproduce that [Relevant Plan]; and communicate that [Relevant Plan] to the public, within the meaning of the Act?" Question 6 asked: "If the answer to 5 is 'yes' in relation to any Relevant Plan, what are the terms of the licence?" In this Court the State did not challenge the Full Court's decisions adverse to it, that the Relevant Plans were neither first published by, or under the direction or control of, the State (s 177) nor made by, or under the direction or control of, the State (s 176). Accordingly, the appeal in this Court has proceeded on the basis that survey plans attract the protection of the Act as artistic works (within the meaning of the Act), surveyors are the owners of copyright in those Crennan artistic works, and only questions 5 and 6 are relevant to the issues sought to be agitated in this Court. Government uses of survey plans It has already been noted that the instrumentality of the State charged with the administration of the system of registration of land is LPI. Survey plans show how a parcel of land is positioned on the earth's surface and land in the State may not be subdivided so as to permit transfer of a legal estate in a parcel of land in the subdivision unless a plan is registered in accordance with Pt 23, Div 3 of the Conveyancing Act 1919 (NSW) ("the Conveyancing Act"). Such plans must conform to the requirements of Sched 5 to the Conveyancing (General) Regulation 2003 (NSW) made pursuant to s 202 of the Conveyancing Act. These requirements are conveniently set out by Emmett J in his reasons for decision in the Full Court19, which obviates the need to repeat them here. An obligation to make copies of plans available to the public once they are registered is imposed under ss 198 and 199 of the Conveyancing Act. Further, only a survey plan prepared by a registered surveyor is registrable under s 135F of the Real Property Act 1900 (NSW) ("the Real Property Act"). In order for a person to be registered as a surveyor, he or she must obtain a relevant four-year University degree and other professional qualifications. In addition to the preparation of registrable survey plans, surveyors' activities include subdivision and regional planning, surveying for strata titles, pipeline surveys, electricity transmission line surveys, engineering surveys and irrigation surveys. When a survey plan is lodged for registration with LPI, numerous checks are carried out. If the survey plan complies with all relevant legislative requirements it proceeds to registration. Upon registration, the survey plan is scanned into a database, and copies of it are sent to the relevant council and authorities and to LPI's office in Bathurst. The practical consequence of registration of a survey plan is that whilst copies are available over the counter, electronic copies of the plans are made available to LPI staff, government agencies, councils, relevant authorities, information brokers and members of the public. The Real Property Regulation 2003 (NSW) and the Conveyancing (General) Regulation 2003 (NSW) prescribe the fees payable to LPI for access and copying. Information brokers have 19 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 224-225 [46]. Crennan numerous clients and a sample contract between an information broker and LPI was in evidence. LPI acts "as a wholesaler [of the information] to the information brokers" and various fees per transaction were to be found in Sched C to the sample contract. The obligations of the information broker under the sample contract included the active marketing and promotion of its business. The decision of the Full Court In relation to question 5, CAL argued before the Full Court that the State's only authority to copy and make available the Relevant Plans derived from s 183(1) of the Act. Emmett J (with whom Lindgren and Finkelstein JJ agreed respecting questions 5 and 6 of the stated case) accepted that the copying and the making available of those plans was done "for the services of the … State"20 within the meaning of s 183. In 1863, the Torrens System of land ownership was established in New South Wales under the Real Property Act 1862 (NSW) which commenced operation on 1 July 1863. The current legislation governing the Torrens System in New South Wales is the Real Property Act. In that context Emmett J recognised that the Torrens System of land is based on statutory ownership and proper survey21. His Honour dealt with relevant statutory requirements to be found in the Real Property Act, which include a requirement that the Registrar-General cause a Register to be maintained (ss 31B and 32(1)) as a public record which must be available for inspection on payment of a prescribed fee (s 96B(1)), and from which certified copies of registered instruments must be furnished to the public, also upon payment of a prescribed fee (s 115(1))22. His Honour also considered the statutory requirements in the Strata Schemes (Freehold Development) Act 1973 (NSW) ("the Strata Freehold Act"), the Strata Schemes (Leasehold Development) Act 1986 (NSW) ("the Strata Leasehold Act"), the Community Land Development Act 1989 (NSW) and the Conveyancing Act, all of which legislation contains requirements in respect of 20 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 243 [153]. 21 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 218-219 [13]. 22 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 219 [14]-[16]. Crennan the registration of plans23. For example, under s 198(1) of the Conveyancing Act the Registrar-General is required to keep an index of the registers kept under that Act. On payment of a prescribed fee the Registrar-General may provide a copy or permit inspection of the whole or part of the index (s 198(2) of the Conveyancing Act). His Honour noted that survey plans fall into two categories: Deposited Plans (DPs), which represent a subdivision or consolidation of land and include community plans, and Strata Plans (SPs), which represent a subdivision of land under the Strata Freehold Act or the Strata Leasehold Act24. It appears that the system for the lodgement and registration of survey plans in connection with the Torrens System has, since its inception, involved lodgements with LPI (and formerly with the Land Titles Office). Originally this was done across a counter but since about 2002 survey plans can be lodged electronically25. After dealing extensively with the State's use of survey plans after lodgement and prior to registration, Emmett J next identified the detail of the State's various uses of survey plans on and subsequent to registration26: "(a) The original Survey Plan is dated and sealed and the new title is issued; The plan examiner registers the Survey Plan, by affixing the Registrar-General's seal, and issues the title; The electronic plan records held on the Document and Integrated Imaging Management System (DIIMS) are updated to reflect registration and the survey plan is "charted", meaning that it is added to the LPI's charting maps, along with the relevant information such as the DP or SP number and an indication of the new subdivisional lines; 23 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 220-225 [22]- 24 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 227 [57]. 25 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 228-229 [66]. 26 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 230-231 [76]. Crennan The registered original Survey Plan is scanned into DIIMS, from where it may be accessed by the public and government authorities; Copies of the Survey Plan are sent to the relevant council and authorities (that is, water and telephone) as required by relevant statutory instruments; and An electronic copy of the Survey Plan is sent to LPI Bathurst." It should be mentioned that a working copy of the original survey plan is made prior to formal registration and a back-up copy is made after registration. Despite finding that the uses of the plans by the State, as identified by his Honour, were "for the services of" the State within the meaning of s 183(1), the Full Court found for the State and answered "yes" to question 5 on the basis that27: "Whether or not s 183 has the effect that the doing of the acts, because they are done for the services of the State, are deemed not to be an infringement of copyright, a surveyor must be taken to have licensed and authorised the doing of the very acts that the surveyor was intending should be done as a consequence of the lodgment of the Relevant Plan for registration." The Full Court ordered that question 6 be answered28: "The licence is for the State to do everything that, under the statutory and regulatory framework that governs registered plans, the State is obliged to do with, or in relation to, registered plans." In this Court it is common ground between the parties that the words "or authorised" should be inserted after the word "obliged" in the answer to question 6. Appeal to this Court The issue in this appeal is whether the Full Court erred in finding that the State had a licence to reproduce the Relevant Plans and to communicate them to 27 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 244 [156]. 28 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 244 [158]. Crennan the public, independently of s 183 of the Act. It is important to recognise that the issue is limited to the copying of registered survey plans and the terms upon which they may be communicated to the public. Uses made of the survey plans which are antecedent to the two uses in question were not the subject of any claim for remuneration or for the fixing of terms. The antecedent dealings were described as the dating and sealing of the plans and their registration. CAL contended that s 183 is a statutory licence scheme leaving no room for the implication of a licence to copy the plans, or communicate them to the public. That argument was supported by reference to the whole of Pt VII, Div 2 and by pointing to the lack of necessity for an implied licence when there was an express statutory licence available. The State submitted that, in the circumstances described above, it is not dependent on s 183 to except it from infringement because it has an implied licence, binding on the owners of copyright in the plans, to do everything that it is required to do under the statutory and regulatory framework which governs such plans. Implicit in the argument was the proposition that the State has free use of the plans under that implied licence. The circumstances said by the State to support the implication of the licence were that it is an important State function to provide and maintain public records of landholdings, which includes legal obligations to provide copies of registered plans on request to the public. Furthermore, surveyors typically charge their clients for survey plans which they prepare in accordance with statutory and regulatory requirements knowing the use to which survey plans will be put by the State. The State sought to maintain the decision of the Full Court29 that assent by a surveyor to the submission of a survey plan prepared by him or her, for registration, authorised the State to do all and any of the acts described above which might otherwise constitute an infringement30. The points of difference between the parties cannot be resolved without noting relevant distinctions between the various uses of the survey plans made by the State. On the one hand, the State uses the plans in direct response to lodgement of the survey plans by an applicant to effect, if appropriate, registration, and to issue title. This includes making a working copy of the plans. 29 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 243 [155]. 30 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 243 [157]. Crennan These uses are directly connected with private contracts for reward between surveyors and their clients for the preparation of plans for the specific purposes of lodgement, registration and the issue of title. On the other hand, there are uses of survey plans by the State which flow from registration and which involve copying the plans for public purposes or communicating them to the public via a digital system. Whilst CAL is seeking remuneration and terms only in respect of those latter uses, the submissions did not always distinguish between the two types of uses. As will be explained in these reasons, the statutory licence scheme applies in the circumstances of this case to authorise the State to make copies of the survey plans after registration, for public purposes and for communication to the public, and provides for terms upon which that can be done. The scheme is compulsory in the sense that an owner cannot complain of the permitted use, but the use is allowed on condition that it be remunerated. Legislative history The emergence and refinement of statutory licence schemes has been a distinct part of the modern development of copyright law reflecting the competing economic interests of copyright owners and others with a legitimate interest in "being able to use copyright material on reasonable terms"31. The quest to maintain the balance between a public policy encouraging creativity and a public policy of permitting certain uses on some reasonable basis32 continues to 31 Second Reading Speech of the then Attorney-General, Mr N H Bowen QC, on the Copyright Bill 1968, Australia, House of Representatives, Parliamentary Debates (Hansard), 16 May 1968 at 1527. 32 Identified in Copyright Law Review Committee, Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider what Alterations are Desirable in The Copyright Law of the Commonwealth, (1959) (the "Report of the Spicer Committee") at 8-9 [13]. Crennan preoccupy the legislature33, particularly as modern techniques for copying, especially digital electronics, are "both immensely efficient and easy to use"34. There are now several licence schemes35 in the Act which have developed in tandem with improved techniques for copying works. These include the scheme in Pt VA (copying and communication of broadcasts by educational institutions assisting people with disabilities), Pt VB institutions and (reproducing and communicating works by educational institutions and institutions assisting people with disabilities)36 and Pt VC (retransmission of free-to-air broadcasts). It has been remarked, in relation to the common features of the statutory licence scheme for government use in Pt VII and other statutory licence schemes, that37: "In most, but not all, cases the users are readily identifiable, because they are significant entities such as radio broadcasters, recording companies and educational institutions. Copyright owners, on the other hand, are often more disparate, and it is only when they are organised collectively that they are really able to participate successfully in these schemes. Collective management of rights through collecting societies has become more prevalent in recent years. … Indeed, the educational copying schemes under Pts VA and VB of the Copyright Act 1968 (Cth), the retransmission scheme under Pt VC, and the government reproduction scheme under Pt VII, Div 2 recognise the role of such societies explicitly and are predicated on the assumption that users will be represented by such bodies." 33 Copyright Law Review Committee, Copyright and Contract, (2002). See also Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 1: Exceptions to the Exclusive Rights of Copyright Owners, (1998). 34 Cornish and Llewelyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 6th ed (2007) at 540 [14-10]. 35 See generally, Ricketson and Creswell, The Law of Intellectual Property: Copyright, Designs & Confidential Information, vol 2, ch 12; Lahore, Copyright and Designs, vol 1 at [28,005]. 36 See Copyright Agency Ltd v University of Adelaide (1999) 96 FCR 62. 37 Ricketson and Creswell, The Law of Intellectual Property: Copyright, Designs & Confidential Information, vol 2 at [12.5]. Crennan Before the modern rise of increasingly complex statutory licence schemes, provisions in respect of exceptions to infringement and statutory licences were comparatively simple. Section 8 of the Copyright Act 1912 (Cth) ("the 1912 Act"), simply provided that the Copyright Act 1911 (UK)38 ("the 1911 Act") should, subject to any modifications in the 1912 Act, be in force in the Commonwealth. As noted, the 1911 Act provided exceptions to infringement which included "[a]ny fair dealing with any work for the purposes of private study, research, criticism, review, or newspaper summary"39. As also noted, the 1911 Act contained a simple proviso that after the expiration of a period of years from the death of the author of a published work in which copyright subsisted there would be deemed to be no infringement by reproduction of the work provided that the reproducer gave a notice in writing (and paid certain prescribed royalties) to the owner40. It was also provided that (after the death of an author) a compulsory licence could be obtained on an application to the Privy Council41, although that latter provision was used rarely.42 Two related developments in the middle of the 20th century, one general, one more specific, constitute the setting in which the Spicer Committee was appointed to reconsider inevitable tensions between the rights of copyright owners and the public need for reasonable access to copyright works. 38 Contained in a schedule to the 1912 Act. 39 Section 2(1)(i). 40 The proviso to s 3 read: "after the expiration of twenty-five years, or in the case of a work in which copyright subsists at the passing of this Act thirty years, from the death of the author of a published work, copyright in the work shall not be deemed to be infringed by the reproduction of the work for sale if the person reproducing the work proves that he has given the prescribed notice in writing of his intention to reproduce the work, and that he has paid in the prescribed manner to, or for the benefit of, the owner of the copyright royalties in respect of all copies …". 41 Section 4. 42 Report of the Spicer Committee at 15 [44]. Crennan First, Art 7 of the Brussels Act43, provided that the term of copyright protection shall be for the life of the author and 50 years after the date of the author's death. That raised the prospect that compulsory licensing under s 3 of the 1911 Act could continue long after any real economic interests in preventing copying had dissipated44. For that reason, and following the Report of the Copyright Committee45 in the United Kingdom (the "Gregory Committee") before it, the Spicer Committee favoured removing general compulsory licensing provisions as they stood in the 1911 Act and as they applied in Australia, as a precondition for ratifying the Brussels Act46. Secondly, the specific abolition of Crown immunity for copyright infringement in the United Kingdom inevitably raised the question in Australia of following suit and simultaneously establishing a possible basis upon which some or all Crown use of copyright material might occur without the risk of infringement. That was the background to the Spicer Committee's consideration of the position of the Crown and the question of whether, and to what extent, it should be liable for copyright infringement. The Spicer Committee When it came to the topic of government use under its general remit to advise47, the Spicer Committee had before it the recommendation of the Gregory Committee that the Crown should be empowered to reproduce copyright material 43 As defined at fn 17. 44 Report of the Spicer Committee at 13 [38(b)]. 45 (1952) Cmd 8662. 46 Report of the Spicer Committee at 13 [38(b)]. 47 Report of the Spicer Committee at 7 [1] states that the Spicer Committee was appointed to advise: "which of the amendments recently made in the law of copyright in the United Kingdom should be incorporated into [Australian] copyright law and what other alterations or additions, if any, should be made to the copyright law of Australia". Crennan "for the services of the Crown" but only for the purposes of defence and essential communications48. The Gregory Committee's recommendations were not implemented in the Copyright Act 1956 (UK) nor were they adopted by the Spicer Committee. The meaning of the formula "for the services of the Crown", as it occurred in s 46(1) of the Patents Act 1949 (UK), was considered in Pfizer Corporation v Ministry of Health49. A majority in the House of Lords held that the formula, of some antiquity, was not limited to the internal activities of government departments but included use by government departments in the fulfilment of duties imposed on them by legislation, and that the expression was broad enough to cover provision of products to the public50. In any event, with an echo of s 51(xxxi) of the Constitution, the Spicer Committee made its recommendation for government use of copyright material in the following terms:51 "The Solicitor-General of the Commonwealth has expressed the view that the Commonwealth and the States should be empowered to use copyright material for any purposes of the Crown, subject to the payment of just terms to be fixed, in the absence of agreement, by the Court. A majority of us agree with that view. The occasions on which the Crown may need to use copyright material are varied and many. Most of us think that it is not possible to list those matters which might be said to be more vital to the public interest than others. At the same time, the rights of the author should be protected by provisions for the payment of just compensation to be fixed in the last resort by the Court." (emphasis added) Four relevant observations can be made about the Spicer Committee's recommendation. First, no overt consideration was given to distinguishing Crown use which might be subject to equitable remuneration and Crown use which might be subject to fair dealing provisions or a free use exception. 48 Report of the Copyright Committee, (1952) Cmd 8662 at 30 [75]. 50 [1965] AC 512 at 535 per Lord Reid, 543-544 per Lord Evershed, 551-552 per Lord Upjohn. 51 Report of the Spicer Committee at 77 [404]. Crennan Secondly, the public policy concept of "user pays" which is now familiar was not in contemplation. Thirdly, the Spicer Committee knew of the Crown use provisions recommended by the Gregory Committee but the majority of its members eschewed following these somewhat narrow recommendations. Fourthly, the Spicer Committee was conscious of, and considered, the role of collecting societies52 under subsisting statutory licence schemes. The Spicer Committee also recommended the institution of the Copyright Tribunal with jurisdiction to determine disputes between persons or organisations requiring licences and owners of copyright material53. Div 2 of Pt VII: the statutory licence scheme for government use When enacted almost a decade later, s 183(1) of the Act followed a form of provisions governing the rights of the Commonwealth and the States to use inventions subject to the payment of compensation54; this course had been expressly suggested by the Spicer Committee55. What is important in respect of the submissions made in this case is that no distinctions are made in s 183(1) between government uses obliged by statute and/or government uses which may be "vital to the public interest" on the one hand, and government uses which reflect considerations more closely resembling commercial uses, on the other. Whilst it is not difficult to understand a preference for a policy framed with an eye to such distinctions, no such policy is evinced in the clear and express terms of s 183(1). Section 183(3) provides that an authority may be given by the State to a person to do any acts comprised in the copyright before or after the acts have been done and notwithstanding that the person has a licence binding on the copyright owner to do the acts. This suggests that an authority, consent or 52 Report of the Spicer Committee at 65 [340], 68 [357]. 53 Report of the Spicer Committee at 68-72 [356]-[378]. 54 Patents Act 1952 (Cth) Pt XIV; now see Patents Act 1990 (Cth) Ch 17, Pt 2. 55 Report of the Spicer Committee at 77 [405]. Crennan permission given by a government instrumentality to another person, to do acts within the copyright, may co-exist with a licence covered by s 15 of the Act. An agreement or licence fixing terms upon which a person other than the Commonwealth or a State may do acts comprised in the copyright will not be operative under s 183(1), unless the agreement or licence has been approved by the relevant Attorney-General (s 183(6)). Under s 183(8), an act done under s 183(1) does not constitute publication of a work. This preserves for copyright owners the running of time in respect of the first publication. It also operates to preserve the ownership of copyright in works or other subject matter which otherwise would vest in the Commonwealth or a State. Finally, in recognition of separate statutory licence arrangements for educational uses, s 183(11) provides that copying or communication of a work for the educational purposes of an educational institution of, or under the control of, a State is "deemed not to be an act done for the services of … [the] State". Pt VB, Div 5 (ss 135ZU-135ZZA) establishes its own equitable remuneration system with respect to use by educational and other institutions. Section 183(11) emphasises the similarity of purpose in the different statutory licence provisions. A consideration of ss 183 and 183A supports the submission by CAL that Pt VII, Div 2 of the Act lays out a comprehensive licence scheme for government use of copyright material. The statutory provisions are detailed and discussed earlier in these reasons under the headings "The legislation" and "The 1998 amendments". The purpose of the scheme is to enable governments to use material subject to copyright "for the services of the Crown" without infringement. Certain exclusive rights of the owner of "copyright material" are qualified by Parliament in order to achieve that purpose. It is the statutory qualification of exclusive rights which gives rise to a statutory quid pro quo, namely a statutory right in the copyright owner (here a surveyor) to seek "terms" upon which the State (excepted from infringement by the legislature) may do any act within the copyright (s 183(5)) and to receive equitable remuneration for any "government copies" (s 183A). With reference to the use by the Spicer Committee of the constitutional expression "just terms", it may be added that CAL conducted its case in this Court on the footing that the statutory scheme afforded "just terms" to copyright owners. Crennan There is nothing in ss 183(1), 183(5) or 183A, or other provisions relating to the statutory licence scheme, which suggests that governments may make, or take the benefit of, arrangements which would have the effect of circumventing those provisions as they apply to the copying, and the communication to the public, of registered survey plans. The position elsewhere The competing policy considerations arising from copyright ownership and the needs of governments to access copyright material have been resolved elsewhere in different ways. United Kingdom There are a number of statutory exceptions to infringement permitting certain similar public uses of copyright material (ss 47-50 of the Copyright, Designs and Patents Act 1988 (UK) (the "1988 UK Act")). First, any copyright in material, which is open to public inspection pursuant to a statutory requirement or in a statutory register, will not be infringed by copying so much of the material as contains factual information provided that any copying is done by or with the authority of the person making the material open to public inspection or maintaining the register, and provided that the copying is "for a purpose which does not involve the issuing of copies to the public"56. Secondly, copyright in material which is open to public inspection will not be infringed by the copying or the issuing of copies to the public if this is by or with the authority of the person making the material open to the public and is for the purpose of enabling the material to be inspected at a more convenient time or place57. In the White Paper titled "Intellectual Property and Innovation"58 it had been said that the proposed legislation would "overcome the present obstacle to the copying of planning application documents by affected parties". Thirdly, copyright in material, which is open for public inspection pursuant to a statutory requirement or which is placed on a statutory register which contains information about matters of general scientific, technical, commercial or economic interest, will not be infringed by copying or issuing of copies to the public, by or with the 56 Section 47(1), 1988 UK Act. 57 Section 47(2), 1988 UK Act. 58 Cmnd 9712 at 48 [8.15]. Crennan authority of the person making the material open to public inspection or maintaining the register, for the purposes of disseminating that information59. There is a further exception for material communicated to the Crown in the course of public business by or with a licence of the owner, where the Crown owns or controls a document or other material embodying the work. Such material may be copied by the Crown or the Crown may issue copies to the public for the purposes for which the work was communicated to it, without infringement, subject to any agreement to the contrary60. Such provisions appear to cover the Crown when copying or issuing copies to the public which involve a profit at the copyright owner's expense61. There are also exceptions relating to the copying of public records62 and other acts specifically authorised by Acts of Parliament63. New Zealand The Copyright Act 1994 (NZ) binds the Crown (s 13) and provides for the use of copyright material for the services of the Crown upon payment of equitable remuneration to the copyright owner as agreed or determined (s 63). However, the definition of use for the services of the Crown is more confined than Div 2 of Pt VII of the Australian statute. The scheme is engaged only where acts are done for the purposes of national security or during a period of emergency (s 63(1)(a)) or in the interests of public safety or health (s 63(1)(b)). Consistently with its confined scope, no provision is made for sampling or collecting societies. There are further exceptions. These exceptions are generally similar in form to the provisions of the 1988 UK Act described above. For example, provision is made for the copying of material on a statutory register (s 61) and for 59 Section 47(3), 1988 UK Act. 60 Sub-sections 48(1), (2) and (5), 1988 UK Act. 61 Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed 62 Section 49, 1988 UK Act. 63 Section 50, 1988 UK Act. Crennan the copying of material communicated to the Crown in the course of public business (s 62) in terms that closely follow ss 47 and 48 of the 1988 UK Act. There is no requirement for payment of remuneration to the copyright owner in respect of these exceptions to the New Zealand scheme. United States of America Before intervention by the Congress in 196064, the United States government (but not its employees and agents) maintained as an aspect of sovereignty an immunity from suit for copyright infringement65. The Indian Tribes appear still to maintain an immunity from suit as an aspect of their sovereignty66. The position of the States depends upon the fluid condition of the jurisprudence respecting the measure of immunity from suit in federal courts given by the Eleventh Amendment to the United States Constitution67. In Patry on Copyright68, it is stated: is … no exemption their "There instrumentalities aside from sovereign immunity. In light of this potential liability, fair use is occasionally asserted as a defense for unauthorized government copying." (footnote omitted). from limitations for states or resulting liability from Canada In Canada the position respecting the continued existence of Crown immunity appears unsettled69 but there are statutory royalty systems with respect to copyright use by educational institutions and use of photocopying machines 64 By a law now found in 28 USC §1498(b). 65 Turton v United States 212 F 2d 354 at 355 (1954); Towle v Ross 32 F Supp 125 at 66 Bassett v Mashantucket Pequot Tribe 204 F 3d 343 at 356-358 (2000). 67 Nimmer on Copyright, vol 3 §12.01 [E][2][b] at 12-42. 68 vol 4 § 10:73 at 10-218. 69 McKeown, Fox on Canadian Law of Copyright and Industrial Designs, 4th ed Crennan installed in educational institutions, libraries, archives and museums70. There are also some limited exceptions to infringement in respect of a disclosure, or the making of a copy of material, which is authorised by a specific Act of Parliament71. These comparative considerations emphasise the general reach of s 183(1) of the Act and the deliberate choice of the Parliament to combine the exception to infringement, for government use, with a remuneration scheme, rather than to frame the exception as a fair dealing, or otherwise as a free use. Implied licence The State contended that there was no need for it to be excepted from infringement under s 183(1), because an antecedent question posed by s 36(1) is whether any of its acts of reproducing survey plans or communicating them to the public is done "without the licence of the owner". Essentially, the licence relied upon by the State was said to be implied by the conduct of a surveyor permitting survey plans to be registered in the knowledge of the uses to which they would be put. There is no doubt a licence can be implied in different ways as recognised by this Court in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd72: "A non-exclusive licence to use architectural plans and drawings may be oral or implied by conduct, or may be implied, by law, to a particular class of contracts, reflecting a concern that otherwise rights conferred under such contracts may be undermined, or may be implied, more narrowly, as necessary to give business efficacy to a specific agreement between the parties. A term which might ordinarily be implied, by law, to a particular class of contracts may be excluded by express provision or if it is 70 McKeown, Fox on Canadian Law of Copyright and Industrial Designs, 4th ed 71 See eg s 32.1 of the Copyright Act RSC 1985 c 42. 72 (2006) 229 CLR 577 at 595-596 [59] per Kirby and Crennan JJ; see also Gummow ACJ at 584 [16]. Crennan inconsistent with the terms of the contract. In some instances more than one of the bases for implication may apply." (footnotes omitted) The rationale for implying a licence in a contractual setting, explained by Jacobs J in Beck v Montana Constructions Pty Ltd73 bears repeating: "[T]he engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright implies a permission, or consent, or licence in the person giving the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement." Such considerations influenced the Full Court's finding that the circumstances here gave rise to an implied licence74. There are a number of facts which distinguish the position here from the position of the architect considered in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd75. It can be noted that the uses made by the State of survey plans, for the purposes of an individual applicant seeking registration of those plans and issue of title, are not dissimilar to the uses under consideration in the implied licence cases. These are not the dealings in respect of which CAL seeks determination of terms under s 183(5) of the Act, or the payment of equitable remuneration pursuant to s 183A. In relation to uses of the State which are not related to the private interests of an applicant, for registration and issue of title, but which can be conveniently described as public uses, a number of different considerations apply. First, whilst a surveyor's client pays the surveyor for the preparation of survey plans, a surveyor is not permitted by LPI to affix a copyright notice. However, there is nothing in the conduct of a surveyor in preparing plans for registration which involves abandoning exclusive rights bestowed by the Act, particularly since the statutory licence scheme qualifies those exclusive rights on condition that remuneration be paid for permitted uses. 73 [1964-5] NSWR 229 at 235. 74 Copyright Agency Ltd v New South Wales (2007) 159 FCR 213 at 243-244 [152]- 75 (2006) 229 CLR 577. Crennan Secondly, a surveyor cannot practise his or her profession, insofar as it touches land boundaries, without consenting to the provision of survey plans for registration knowing the uses, subsequent to registration, to which the plans will be put. Thirdly, an application on behalf of a surveyor for equitable remuneration in relation to government uses of survey plans which involve copying and communication of the plans for, and to, the public, subsequent to registration, does not undermine or impede the use by the surveyor's client of the survey plans for the purposes for which they were prepared, namely lodgement for registration and issue of title. Fourthly, neither a surveyor nor a surveyor's client could be expected to factor into remuneration under any contract of engagement between them, such copying for public uses as may be engaged in by the State. Fifthly, the State imposes charges for copies issued to the public. Sixthly, there is nothing in the express terms of s 183(1) (or its history) which could justify reading down the expression "for the services of the … State" so as to exclude reproduction and communication to the public pursuant to express statutory obligations. These considerations all militate against implying a licence, as a matter of law, into all contracts between surveyors and their clients, in favour of the State, which is a stranger to such contracts. They also militate against the founding of any licence in an authority or consent given by the surveyors to the State, independently of the contracts between the surveyors and their clients. Finally, and importantly, a licence will only be implied when there is a necessity to do so76. As stated by McHugh and Gummow JJ in Byrne v Australian Airlines Ltd77: 76 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 584 [13]-[14] per Gummow ACJ, 606 [96] per Kirby and Crennan JJ. 77 (1995) 185 CLR 410 at 450 per McHugh and Gummow JJ; [1995] HCA 24; see also Breen v Williams (1996) 186 CLR 71 at 91 per Dawson and Toohey JJ, 102- 103 per Gaudron and McHugh JJ, 124 per Gummow J; [1996] HCA 57. Crennan "This notion of 'necessity' has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law." Such necessity does not arise in the circumstances that the statutory licence scheme excepts the State from infringement, but does so on condition that terms for use are agreed or determined by the Tribunal (ss 183(1) and (5)). The Tribunal is experienced in determining what is fair as between a copyright owner and a user. It is possible, as ventured in the submissions by CAL, that some uses, such as the making of a "back-up" copy of the survey plans after registration, will not attract any remuneration. Conclusion and orders The appeal should be allowed. The orders of the Full Court made in respect of questions 5 and 6 should be set aside. Question 5 should be answered "No". Question 6 does not arise. The State should pay CAL's costs of the appeal and of the proceedings before the Full Court of the Federal Court of Australia.

HIGH COURT OF AUSTRALIA EMILY JADE ROSE TAPP APPELLANT AND AUSTRALIAN BUSHMEN'S CAMPDRAFT & RODEO ASSOCIATION LIMITED RESPONDENT Tapp v Australian Bushmen's Campdraft & Rodeo Association Limited [2022] HCA 11 Date of Hearing: 10 November 2021 Date of Judgment: 6 April 2022 ORDER Appeal allowed with costs. Set aside the orders made by the Court of Appeal of the Supreme Court of New South Wales on 23 October 2020 and, in their place, order that: the appeal be allowed with costs; and the orders made by the Supreme Court of New South Wales on 4 November 2019 be set aside and, in their place, it be ordered that: there be verdict and judgment for the plaintiff in the agreed amount of $6,750,000; and the defendant pay the plaintiff's costs. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with D F Villa SC and J Hillier for the appellant (instructed by Commins Hendriks Solicitors) J T Gleeson SC with D A Lloyd SC and K I H Lindeman for the respondent (instructed by RGSLAW) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tapp v Australian Bushmen's Campdraft & Rodeo Association Limited Tort – Negligence – Breach of duty of care – Causation – Obvious risk of dangerous recreational activity – Where appellant competing in campdraft competition – Where campdrafting a dangerous recreational activity – Where appellant's horse slipped and fell causing serious injury to appellant – Where four other contestants had falls prior to appellant's fall – Where experienced contestant warned organisers about condition of arena surface – Where organisers twice refused to stop competition – Whether respondent breached duty of care – Whether breach of duty of care caused appellant's injuries – Whether harm suffered by appellant result of materialisation of obvious risk of dangerous recreational activity. Words and phrases – "breach of duty", "causation", "dangerous recreational activity", "liability for harm", "obvious risk", "precautions against a risk of harm", "reasonable person", "significant risk of physical harm". Civil Liability Act 2002 (NSW), ss 5B, 5C, 5D, 5F, 5L. KIEFEL CJ AND KEANE J. On 8 January 2011, the appellant ("Ms Tapp") was injured while competing in a campdrafting event organised by the respondent, the Australian Bushmen's Campdraft & Rodeo Association Ltd ("the Association"). Ms Tapp's horse slipped, causing Ms Tapp to fall and suffer a serious spinal injury1. Ms Tapp brought an action in negligence for damages against the Association. Ms Tapp's claim was dismissed by the primary judge (Lonergan J). That decision was upheld by a majority of the New South Wales Court of Appeal (Basten and Payne JJA, McCallum JA dissenting). The appeal to this Court raises two issues: first, whether Ms Tapp had established that the Association failed to take reasonable precautions against the risk of injury (and whether such a breach was a cause of her injuries); and secondly, if liability were otherwise established, whether her injuries resulted from the materialisation of an "obvious risk" such that s 5L of the Civil Liability Act 2002 (NSW) ("the Act") operated to deny liability on the part of the Association. For the reasons that follow, the first issue must be resolved against Ms Tapp, and, on that basis, the appeal should be dismissed. It is unnecessary to consider the second issue. It is convenient to begin with some uncontroversial factual background, drawn from the concurrent findings of fact by both the primary judge and the Court of Appeal. Background Campdrafting is a sport that involves a horse and rider working cattle. In a campdrafting competition, a rider on horseback rides into a "camp" containing between six and eight head of cattle and attempts to separate, or "cut out", one animal from the herd. The rider must first manoeuvre the animal two or three times back and forth across the camp to demonstrate the rider's control of the animal. The rider then calls for the gate to the "arena" to be opened. After entering the arena, the rider must "draft" the animal around two pegs in a figure eight course before finally guiding it through another gate marked by two pegs, thus completing the campdraft2. A campdrafting competition is judged on horsemanship and Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA control over the animal, and must be completed within set time limits (usually between 45 and 47 seconds)3. The Association is a not-for-profit incorporated association with overall control of the sport of campdrafting in Australia4. The Association organised and managed the campdrafting event at which Ms Tapp was injured5 at Ellerston in New South Wales. Mr Shorten was the director of the Hunter Zone of the Association and was a directing mind of the Association whose acts and knowledge were properly to be attributed to the Association. He was the only member of the Association to give oral evidence6. His description of campdrafting, which was unchallenged in this respect, was as follows7: "Campdrafting is competitive and involves riding a horse at high speed, often in a full gallop, around a course which has pegs. It involves the rider steering the horse around the course. There are a number of risks. The horse could fall by losing its footing or contacting the hooves of the animal being chased. The rider could lose balance and fall off. Horses can be unpredictable animals and so can the livestock which the riders chase in the events." (emphasis added) Ms Tapp began riding horses at the age of five and became involved in campdrafting events when she was aged six. She won a number of junior campdrafting competitions. From age 12, Ms Tapp and her family would travel Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [38]; Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [90]. Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA around New South Wales to participate in campdrafting events organised by the Association, usually attending four to six events each year8. Ms Tapp, with her sister and her father, nominated to compete in the Ellerston campdraft event that was to take place between Friday, 7 January 2011 and Sunday, 9 January 2011. The entry form indicated that Ms Tapp was to compete on two horses, Xena Lena and Chiquita9. Ms Tapp's fall occurred on Saturday, 8 January 2011, the second day of the event. Over 700 rides had taken place on the arena surface over the first two days of the event leading up to the incident10. On the day of the incident, Ms Tapp had completed two rides herself in the ladies' division, her father had competed three or four times and her sister three times11. At around 5 pm, soon after the open draft commenced, Ms Tapp's father offered her his place in the open draft, riding on his horse, Xena Lena. Ms Tapp had ridden Xena Lena on many occasions, recreationally and at campdrafts, including at a campdrafting competition the previous weekend12. Ms Tapp warmed the horse up, and returned to the arena to find that the event had been delayed. Unaware of the reason for the delay, Ms Tapp waited for about five minutes before the event recommenced13. Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [13], [17]; Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [10]. Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 10 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [87]; Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [40], [79], [176]. 11 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 12 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 13 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Ms Tapp's fall Ms Tapp's fall occurred at around 7 pm while she was competing in the open draft14. Ms Tapp described the incident in a statement dated 18 December 2013 in the following terms15: "I waited for the judge to announce that I could start my run. My horse and I entered the camp and we were able to cut out a beast and turn it two or three times in the camp. I then called for the cut out gates to be opened to enter the arena. There was a peg on my right and one on my left. I had moved forward and was turning to the left on the other side of the left peg. My horse went from a short trot to a canter once outside of the camp gates. I was seated in the centre of the saddle. When I rode on my horse in the camp, I felt that there was good traction but as I came to do the figure 8 area the ground felt heavy and my horse struggled to get a proper stride. My horse could not get her next stride and she went down on her front that is, she fell straight in a direct line and then we both slid onto the ground. She got up after about 15 seconds and I tried to get up and could not. I was in excruciating pain in my chest but realised that I could not move my legs." Ms Tapp's description of her fall in a second statement, dated 25 May 2017, was in slightly different terms16: "I was about half way around the first peg on an arch when I felt my horse's front legs slide from beneath me and slide toward the right. My horse went down onto her front and both my horse and myself landed on the ground. My horse got up after about 15 seconds. I tried to get up but could not ..." The primary judge found that nothing turned on the slightly different wording of Ms Tapp's two statements17. Ms Tapp's descriptions of the incident 14 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 15 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 16 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 17 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC were consistent with the statements of her sister ("the horse looked like its front legs slid from under it and the horse and [Ms Tapp] fell") and her father ("the horse and [Ms Tapp] fell because the front legs of the horse slid from beneath it")18. As to the crucial issue19 – what the evidence demonstrated as to the reason Ms Tapp's horse fell – it was Ms Tapp's case that her horse fell because of deterioration in the surface of the arena leading up to her ride. Ms Tapp alleged that the Association, by allowing the event to continue in these circumstances, breached its duty to Ms Tapp to take reasonable care for her safety. The Association admitted that it owed Ms Tapp a duty of care to organise, manage and provide the campdrafting event with reasonable care and skill, but it denied that it had breached that duty20. Ms Tapp's amended statement of claim set out the standard of care that she alleged the Association had breached21: "92. A reasonable person in the position of the Defendant would have: 92.1. Ploughed the ground at the site of the campdrafting event prior to commencement of competition on 8 January 2011; 92.2. Stopped the competition when the ground became unsafe; 92.3. Warned competitors, including the Plaintiff, that the ground at the site of the campdrafting event had become unsafe." In relation to the contention that the surface of the arena should have been ploughed, it is relevant to note that the Association's Rule Book contains a 18 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 19 See Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [33]. 20 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 21 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC reference to the surface being ploughed, in the context of a general requirement that the arena surface be safe. Rule 15.5 provided22: "The Arena surface MUST be safe, being either ploughed or soft surface (sand or loam) arena. ATTENTION MUST BE GIVEN TO ARENA SURFACES." Ms Tapp did not conduct her case on the basis of a breach of the Association's Rules23. It can be seen, however, from Ms Tapp's contended breaches on the part of the Association that a significant issue was the evidence adduced at trial concerning the state of the surface of the arena. It is convenient now to turn to consider that evidence. Evidence concerning the surface of the arena A hazard and risk assessment form had been completed "in the days prior to the event"24 by Ms Shorten, who was the Secretary of the Ellerston District Sports Club25. That form identified a list of parameters and corresponding risks and was to be completed by indicating the "risk level" relating to each one. The "risk level" for every risk on the form was indicated to be "L", presumably intended to mean "Low". That included, relevantly, the risk of "Injury to spectators and competitors" in respect of the parameter "Ground surface". The form identified the "control" that had been implemented in respect of that risk to be: "ground maintenance carried out prior to event"26. An incident report prepared by the Ellerston District Sports Club and dated 12 January 2011 ("the Incident Report") noted that the surface had been 22 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 23 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 24 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 25 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 26 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC "renovated" at 7 am and 6 pm on Friday, 7 January 201127. Mr Shorten, in his evidence, stated that on the Friday evening, although he had not received any complaints and was not aware of any problems with the surface of the arena, he and several other organising members had decided to renovate the arena "just to keep it nice and soft and competitive"28. The references to "renovation" of the surface were to the soil being "aerated", not "ploughed"29. There was evidence that it had rained at Ellerston on Friday, 7 January 2011, but on Saturday, 8 January 2011, the sun was out30. Ms Tapp led evidence of a soil expert, although the primary judge found that his evidence was of little weight because assumptions as to rain measurements had not been established on the evidence31. Otherwise, the only evidence as to the condition of the surface of the arena was that of Mr Shorten. Mr Shorten competed in the campdraft on Friday, 7 January 2011, and gave the following evidence as to the state of the surface at the time32: "I did not think there was anything wrong with the surface. In fact I thought it was better than previous years, as it had a better ground covering and did not appear to be as dusty. There was moisture in the topsoil, but it was not wet." Mr Shorten competed again on Saturday, 8 January 2011, as did his wife and his two sons. He stated that he would not have competed, or allowed his family 27 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 28 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 29 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 30 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 31 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 32 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC members to compete, if he thought the ground was unsafe33. Mr Shorten fell after completing his first ride early in the open draft. He said that he fell because he had slackened off the reins after completing the course. In his opinion, his fall had nothing to do with the surface of the arena34. Mr Shorten gave evidence that the arena at Ellerston had never been ploughed until it was ploughed for the first time on Sunday, 9 January 2011, the day after Ms Tapp's injury35. Mr Shorten said the surface was ploughed because "we didn't want another accident"36. Evidence of other falls There was evidence that, besides Mr Shorten, several other riders fell off their horses on Saturday, 8 January 2011. The evidence was unclear as to the precise number of falls preceding Ms Tapp's incident. The Association, in its amended defence, admitted that there were falls at 6.14 pm (Mr Clydsdale), 6.36 pm (Mr Gillis) and 6.58 pm (Mr Piggot)37. The Incident Report referred to there having been seven falls over the course of the Saturday38. A document in the evidence described as the "Open Draft Draw" recorded four falls, all occurring in the hour leading up to Ms Tapp's incident, at 6.14 pm, 6.22 pm, 6.36 pm and 33 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 34 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 35 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 36 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 37 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 38 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 6.58 pm. All four falls were annotated on the draw as being "bad falls", which Mr Shorten explained as meaning that the rider was lucky not to be injured39. The primary judge made no finding as to the number of falls that occurred before Ms Tapp's incident. Her Honour noted that the only fall with respect to which there was admissible evidence as to the reason for the fall was Mr Shorten's, and he, as already noted, did not attribute the fall to a problem with the surface of the arena40. The primary judge accepted Ms Tapp's evidence that she had been unaware that there had been any falls before her ride in the open event41. There were no falls on Sunday, 9 January 201142. Evidence of complaints about the surface Prior to Ms Tapp's incident, two complaints were made by Mr Stanton, a competitor, about the surface of the arena. Mr Shorten recounted the circumstances of those complaints in his evidence in the following terms43: "Around mid-way through the open draft I was approached by John Stanton (John), a competitor. He said 'I think the open draft should be stopped. The ground is getting a bit slippery'. I said 'I don't think that's fair because people have already competed and they have their scores and if the ground is better in the morning the people who have already ridden on the ground might not make the final and that's not fair'. I had my arm in a sling at the time and he said 'look at you' and I said 'that's not fair it had nothing to do with the ground, it was my own stupid fault'. John then rode away. I approached Jack Gallagher the judge, and said 'hold the event up, wait a minute'. I then saw Allan Young, who is the Chairman 39 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [72], [88]-[89]; Trial transcript, T198/21. 40 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 41 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 42 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 43 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA of the Members Representative Council, and is also a board director of the [Association]. I said '[John Stanton] doesn't think the ground is that good. I don't think it is too bad. What do you think?' Allan said 'the surface is okay. Competitors need to ride to the condition of the ground'. I said to Jack 'what do you think'. He said 'yes, keep it going'. I then told Jack Gallagher to resume the event. I did not think that the condition of the surface was such that the event should be cancelled. I then returned to my truck. Before speaking to John Stanton again ... I spoke to John, and two friends who were competing, Pat Gillis and Adam Sadler. I knew that they had fallen off their horses that day. Pat Gillis said 'I left the camp and heard the judge say 22 so I tried to ride to get a good score and I rode too hard. I thought I had a chance of making the final'. Pat Gillis did not blame the arena surface. Adam Sadler said 'I am annoyed because I fell just before the gate which meant I didn't get a score'. He didn't blame the surface for his fall. I can't say how long after the first time John Stanton approached me, but he approached me a second time. This was after Jack Callinan had come to see me to see if I was alright. John approached me and said 'I think you should do something about this event. I think the ground is unsafe'. Jack Callinan and I walked around and told Jack Gallagher to pull the draft up for the moment. We then went over and spoke with Allan Young again and Wayne Smith, also a MRC board member. One or both of them said 'the riders should ride to the conditions'. Allan said 'I think the arena surface is still alright'. I considered the condition of the ground. I had noticed that the surface was not wet, it was moist in parts. Dust was still flowing up." Clearly enough, Mr Shorten viewed the surface in order to assess its condition. It is reasonably to be inferred that the other persons with whom he spoke on that topic likewise did so. It can be seen that, on two occasions, competition was suspended while the members of the Association responsible for the conduct of the competition considered Mr Stanton's suggestion that the event be cancelled. It can also be seen that, while Mr Stanton urged that course because the "ground [was] unsafe", that view was not shared by other participants who were in a position to make a responsible judgment. To the contrary, the prevailing view was that competitors should "ride to the conditions". In this regard, each of Mr Shorten, Mr Young and Mr Smith had competed on the arena surface that day44. Mr Gallagher was a judge of the campdrafting event45 and Mr Callinan was the President of the Ellerston District Sports Club46. Neither Mr Gillis nor Mr Sadler suggested that the state of the surface of the arena had anything to do with their falls. It may also be noted that there was evidence that Mr Young himself competed again on the arena surface after these discussions and immediately before Ms Tapp's injury47. It is also necessary to say something about the evidence of what Mr Stanton said to Mr Shorten. Mr Shorten's evidence about this stands as evidence of the fact of Mr Stanton's complaints and no more. Mr Stanton was not called by Ms Tapp to give evidence of his opinion and the basis for it. In these circumstances, the evidence of his complaints is not due any weight as evidence of the dangerous state of the surface of the arena, nor is there any basis to prefer him as an expert over Mr Shorten and the other four persons whose contrary views were expressed. Mr Stanton did not advise Mr Shorten what was wrong with the surface. If Mr Stanton had expressed an opinion about that subject, no doubt it would have been necessary for Ms Tapp to call him to support that opinion if the primary judge were to be asked to act upon it. Absent that key aspect of the evidence in her case, it was not possible to put to Mr Shorten what form the deterioration in the surface took, for comment. Mr Stanton did not say to Mr Shorten that the surface should be ploughed. The highest Mr Shorten's evidence in this regard can be put is that Mr Stanton suggested that the competition be called off for the night, presumably to recommence the following day. Mr Shorten, Mr Young and Mr Smith agreed that an announcement would be made over the loudspeaker that any competitors who wished to withdraw from the event could do so and receive a full refund48. The primary judge accepted the 44 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 45 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 46 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 47 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 48 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [56]. See also [57], [60], [64]-[65]. evidence of Ms Tapp and her father that neither heard the announcement at that time; in particular, the primary judge accepted that Ms Tapp was busy focussing on preparing for her ride49. It should be emphasised here that it was no part of Ms Tapp's case of negligence in this Court that the Association should have done more to bring the announcement to her attention. The reasons of the primary judge Before the primary judge, only liability was in issue, the parties having agreed the quantum of damages for Ms Tapp's injuries in the sum of $6,750,00050. The primary judge began by considering the application of s 5L of the Act, adopting51 the approach adverted to by Leeming JA in Goode v Angland52 that, since s 5L is a "liability-defeating rule", it may be appropriate to consider the defence at the outset. The primary judge concluded that the Association was not liable for Ms Tapp's injuries on the basis that her injuries were the materialisation of an obvious risk of a dangerous recreational activity within the meaning of that section53. Additionally and alternatively, her Honour held that even if the defence in s 5L were not made out, Ms Tapp had not shown that the Association had breached its duty of care to Ms Tapp54. Relevantly for present purposes, the primary judge rejected Ms Tapp's submission that the taking of reasonable care required the Association to stop the event after receiving the complaints from Mr Stanton; rather, what was required was the making of an informed decision about whether it was safe to continue with 49 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 50 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 51 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC (2017) 96 NSWLR 503 at 540-541 [185]. 53 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 54 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC the competition55. Her Honour found that Ms Tapp failed to demonstrate that the Association breached this standard of care56. In this regard, the primary judge emphasised that campdrafting was a sport that was "known to entail a risk of falling", the activity being one that involved a competitor "riding at speed on a horse and corralling a beast, in a particular required configuration, in a relatively confined space"57. The reasons of the Court of Appeal In the Court of Appeal, Payne JA (with whom Basten JA agreed) found no error in the primary judge's conclusion that Ms Tapp had failed to demonstrate that the Association breached its duty to Ms Tapp, or that any such breach was a cause of her fall58. Importantly, Payne JA held that Ms Tapp had failed to prove the cause of her horse's legs sliding out from under it59. In particular, his Honour concluded that Ms Tapp could not demonstrate that her horse fell because of deterioration in the surface of the arena, as distinct from some other cause60: "There were on the evidence a number of reasons why campdrafting carries a risk of a horse slipping and falling. Those reasons include the speed the horse is travelling, the complexity of the manoeuvre being made and the qualities of the horse. Mr Shorten's evidence that the risks of campdrafting include a risk that the 'horse could fall by losing its footing' was not 55 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 56 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 57 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [145]. See also [212]. 58 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 59 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 60 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [38]. See also [33], [37]. challenged. [Ms Tapp] did not prove that [her] horse slipped because of any deterioration in the surface of the arena." Payne JA observed that, insofar as the case for Ms Tapp assumed that it had been established that "a cause of [Ms Tapp's] horse falling was the deterioration in the condition of the surface of the arena which made the arena 'slippery'"61: "The primary judge made no such finding. It bears emphasis ... that at the trial, and on the appeal, [Ms Tapp] never clearly identified the way in which it was alleged the surface had deteriorated: (i) that it was hard and compacted when it should have been soft, (ii) that it was rough and broken up when it should have been smooth, or (iii) that it was slippery in some other way (for example by reason of rainfall during the day)." It was also noted that Ms Tapp's case relied heavily on the number of falls that had occurred that day, without evidence as to the particular circumstances of any of those falls or as to any causal connection between those falls and the supposed deterioration in the surface of the arena62. The other matters relied upon by Ms Tapp as evidence of deterioration in the surface of the arena – including the circumstance that Ms Tapp's fall occurred after the complaints made by Mr Stanton, and the fact that the ground was ploughed for three hours the day after the incident – were dismissed as the product of hindsight reasoning63. Payne JA saw no basis to differ from the conclusion of the primary judge that it had not been shown that the surface had deteriorated to such an extent that reasonable care for competitors required the event to be stopped, the surface to be ploughed and/or the competitors to be warned. Payne JA agreed with the primary judge that what was required in taking reasonable care was for the Association to make an informed decision as to whether it was safe to continue with the competition64. 61 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 62 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [56]-[58]. See also [39]. 63 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 64 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Basten JA dismissed the appeal for the same reasons as Payne JA65. Basten JA observed that Ms Tapp's claim in negligence failed for the fundamental reason that she had failed to establish why her horse fell, and whether this was due to deterioration in the surface or some other cause66. On the other hand, McCallum JA thought Ms Tapp's case was "strong" and had no difficulty drawing the inference that Ms Tapp's horse fell because of deterioration in the surface of the arena67. Her Honour provided four reasons for reaching that conclusion. First, her Honour emphasised that the Association's Rules required that the arena surface be safe – either ploughed or soft surface (sand or loam) – and that the Ellerston surface was neither68. Secondly, her Honour thought it significant that two complaints had been made about the state of the surface, in response to which the representatives of the Association did not conclude that the surface complied with r 15.5, or was safe, but rather that it was "[not] too bad", "okay" and "still alright"69. In this regard, her Honour considered that the primary motivation for the decision to continue the competition did not appear to be a positive satisfaction that the surface was safe, but rather that the competition should be continued in the interests of fairness to competitors who had already ridden70. 65 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 66 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 67 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 68 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 69 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 70 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Thirdly, McCallum JA said that the offer that competitors could withdraw from the event for a refund was "the clearest recognition" that there was some force in the concerns as to the state of the surface71. Finally, McCallum JA relied upon the following answer given by Mr Shorten in cross-examination72: "Q. Do you agree with me that the fact that a disc plough was used demonstrates how bad the condition was of the ground at 6.45 pm on Saturday, 8 January 2011? A. Yes, I would." McCallum JA considered that, by this answer, "Mr Shorten as good as conceded that the competition should have been stopped before Ms Tapp competed because the surface was unsafe"73. McCallum JA held that the primary judge ought to have found that the Association breached its duty by failing to suspend the competition at the very latest when the announcement was made, but probably earlier74. The cause of the fall It is convenient to begin by addressing the principal flaw in Ms Tapp's case before the Court of Appeal and in this Court: that Ms Tapp failed to prove the reason why her horse fell. As Payne JA observed75: 71 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 72 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 73 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 74 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 75 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA "There is no doubt that it was established that immediately prior to [Ms Tapp's] horse falling its legs slid. What was left unproven was the reason for that slide." It bears repeating that Ms Tapp bore the onus of proving any fact relevant to the issue of causation76. In this Court, Ms Tapp's submissions proceeded by way of a broad appeal to what might be said to be "common sense"77. Those submissions emphasised: Ms Tapp's unchallenged evidence that her horse had "slipped"; that Ms Tapp's fall had been preceded by several "bad falls" after two days of competition in which there had been some 700 rides over the surface of the arena; cross-examination that the surface of the arena was "dangerous"; and that when competition resumed on the Sunday, after the surface of the arena had been ploughed, no further falls occurred. In coming to grips with these contentions, it is necessary to make five preliminary observations. that Mr Shorten on behalf of the Association conceded First, this Court has recognised that the Act does not apply a test of Secondly, the argument for Ms Tapp that, as a matter of common sense, this Court should find – as neither Court below had found – that Ms Tapp's horse slipped because of deterioration in the surface of the arena over the course of the event is an attempt to make a virtue of necessity. At trial, Ms Tapp's case included evidence from two expert witnesses by which it was sought to prove that the surface of the arena was unsafe for campdrafting because of the presence of "standing water" on the surface of the arena as a result of earlier rainfall. The evidence of both these experts was rejected by the primary judge, and no member of the Court of Appeal took a different view79. It is not necessary to describe that expert evidence in any detail here because no reliance was placed on it in this 76 See s 5E of the Act. 77 As to the reasons why this notion should not be used in connection with causation, see Stapleton, "Law, Causation and Common Sense" (1988) 8 Oxford Journal of Legal Studies 111 at 123-124; Mason, "Fault, Causation and Responsibility: Is Tort Law Just an Instrument of Corrective Justice?" (2000) 19 Australian Bar Review 201 at 210; Stapleton, "Factual Causation" (2010) 38 Federal Law Review 467 at 78 Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420 at 440 [43]. 79 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [74]-[98]; Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [27], [44]-[46]. Court. The point is that, at trial, Ms Tapp had sought to establish specific reasons for inferring that the surface of the arena had deteriorated to the point where it was unsafe, and this attempt failed. The failure of an attempt to establish by expert evidence specific identified defects in the surface of the arena does not negative, as a matter of strict logic, the possibility that there was some other, unidentified defect in the surface of the arena that contributed to Ms Tapp's fall. Nevertheless, the failure of the expert evidence to identify the cause of Ms Tapp's fall is, at the very least, good reason for a sceptical response to an invitation to judges – persons with no relevant expertise or experience – to infer, as a matter of common sense, that her fall was caused by an unidentified defect in the surface of the arena for which the Association was responsible, rather than by one or more of the manifold risks involved in competitive campdrafting. Thirdly, in considering a "common sense" submission as to the cause of a horse slipping in the course of a campdrafting event, one must not lose sight of the intrinsic risks associated with that kind of competitive recreational activity. The risk of a horse slipping as a result of losing its footing during a manoeuvre performed at speed is part and parcel of competitive campdrafting on even the most benign of surfaces. This risk may be elevated by a deterioration in the surface, just as it may be elevated by the rider pressing hard to secure a competitive advantage, or by the unpredictability of the reactions of horse, cattle and rider as they interact with each other. That being so, in approaching the question whether any particular fall occurred because of deterioration in the quality of the surface of the arena to the point where the surface became unsafe, one cannot speculate that deterioration in the surface is a more likely explanation than the materialisation of one or more of the other risks that are intrinsic to this form of recreation. In Betts v Whittingslowe80, Dixon J found that the defendant's breach of duty, coupled with the occurrence of an accident of the kind that might thereby be caused, was enough to justify an inference that the breach caused the accident. His Honour was careful to explain, however, that that inference could be drawn because "the facts warrant no other inference inconsistent with liability on the part of the defendant". Fourthly, the suggestion that the occurrence of a number of falls shortly before Ms Tapp's fall should have indicated to the Association that there was plainly a problem with the surface of the arena sits uneasily with the circumstance that none of the information on which the Association's decision-makers acted suggested that deterioration in the surface was the cause of those falls. To the contrary, the information available to the Association at the time the competition (1945) 71 CLR 637 at 649. was suspended included statements from Mr Shorten and Mr Gillis, each of whom blamed his own management of his horse for his fall. Fifthly, the decision of the Association, after Ms Tapp's fall, to suspend competition and to plough the surface of the arena before competition resumed on the Sunday cannot be relied upon to inform either the Association's appreciation at the time of her fall of the extent of any deterioration in the surface, or the reasonableness of the precautions Ms Tapp contends should have been taken. Nor can the circumstance that no falls occurred on the day following Ms Tapp's fall, after the surface had been ploughed, be relied upon to overcome the primary judge's findings as to the factual deficit in the case advanced for Ms Tapp. The dangerous lure of hindsight reasoning was recognised and addressed in s 5C(c) of the Act: "In proceedings relating to liability for negligence: the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk." Quite apart from the operation of s 5C(c) of the Act to prohibit the use of hindsight to establish negligence on the part of the Association, it is readily understandable that riders competing on the Sunday would have been especially circumspect in their riding in reaction to Ms Tapp's injury on the Saturday evening. The question whether the case for Ms Tapp as to the cause of her fall was made out cannot now be approached in this Court as if it were a matter of first impression for this Court as a tribunal of fact unconstrained by the concurrent findings of fact in the Courts below. Contrary to the view of McCallum JA, the Court of Appeal had no sufficient basis for setting aside the findings of the primary judge81. The Association's concession as to causation In this Court, in addition to her appeals to a common sense view of the circumstances, Ms Tapp submitted that she was not required to prove the specific mechanism by which the surface had deteriorated, causing it to become unsafe; 81 Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686-687 [43]; 331 ALR 550 at 558-559. instead, all she was required to prove was that the surface had deteriorated to such a degree that the Association, acting reasonably, ought to have suspended the competition. This position was said to follow from the Association's concession at trial82 that causation would be established if the relevant breach was the Association's failure to stop the competition, because if the competition had been stopped, the incident would not have happened. The concession of the Association at trial does not support Ms Tapp's case as it was presented in this Court. Ms Tapp's case at trial – in response to which the Association made that concession – involved the contention that the Association breached its duty of care by failing, inter alia, to stop the competition83. However, Ms Tapp's case before the Court of Appeal, and in this Court, was one of a failure to suspend the competition to allow the surface of the arena to be ploughed. That "slide" in the formulation of Ms Tapp's case is significant. If the breach of duty were held to consist of a failure to permanently stop the competition, then it might be said that a causal connection between a failure to stop the competition and Ms Tapp's injury could be established simply on the basis that, absent the breach, Ms Tapp would not have been riding at all. But if the breach of duty were held to consist of a failure to suspend competition to allow the surface to be remediated by ploughing prior the establishment of a causal connection between breach of duty and Ms Tapp's injury would be more complicated. In the counterfactual where the competition had been suspended, Ms Tapp would still have competed, albeit at a different time. Even assuming that reasonable precautions would have entailed remediation of the surface before the competition resumed, it cannot be assumed that a different outcome would have ensued. Because the cause of Ms Tapp's fall was not identified, it cannot be assumed that this exigency would have been obviated by ploughing or other remediation of the surface. the competition recommencing, Reasonable precautions Quite apart from the evidentiary difficulties in Ms Tapp's case as regards causation, Ms Tapp was unable to demonstrate that the Association ought reasonably to have taken the precaution of suspending the competition and ploughing the surface before allowing the event to continue. 82 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 83 See [13] above. The question whether the Association breached its duty to Ms Tapp because it failed to suspend competition in order to plough the surface of the arena is a question that cannot be approached on the basis that the only relevant consideration was to ensure the safety of competitors. If that were the only consideration, no campdrafting events would be permitted, because the risk of serious injury is intrinsic to the sport. The notion of reasonable precautions necessarily contemplates the balancing of countervailing considerations84. In that vein, the decision of the Association fell to be made in a context in which competitors wanted to compete and were known to want to compete in their chosen form of recreation. In Agar v Hyde85, Gleeson CJ said: "People who pursue recreational activities regarded as sports often do so in hazardous circumstances; the element of danger may add to the enjoyment of the activity. Accepting risk, sometimes to a high degree, is part of many sports. ... Sport commonly involves competition ... A sporting contest might involve body contact where physical injury is an obvious risk, or the undertaking by individual competitors of efforts which test the limits of their capabilities in circumstances where failure is likely to result in physical harm. Rules are of the essence of sporting competition. Individuals, or teams, wishing to compete must agree, personally or through membership of some form of association, upon the rules which will govern their competition. ... Making and changing the rules may require giving weight to many considerations, some conflicting. ... [T]hey may include considerations relating to the safety of participants in the sport." In the context of the organisation and management of a campdrafting competition, a decision to allow the event to continue is not shown to be "wrong", much less negligently so, by pointing to the occurrence of a catastrophic injury without taking into account the willingness, indeed the eagerness, of competitors to engage in what is, on any view, a form of recreation fraught with risks of physical injury. In this context, and contrary to the approach of McCallum JA, one may recognise that competitors have varying appetites for risk, without concluding that an event is unsafe for all its participants. This notion may be seen in the circumstance that competitors were offered the opportunity to withdraw from the event for a full refund based on their own assessment of the risk level. It must be acknowledged that, in the present case, it is difficult, given the tragic injury suffered by Ms Tapp, not to focus upon the circumstances of that 84 See s 5B(2) of the Act. (2000) 201 CLR 552 at 561-562 [15]. tragedy. But one must not judge the wisdom of the Association's decision to continue the competition with the benefit of hindsight. Hindsight has the power to make an accidental injury appear both foreseeable and avoidable by the taking of precautions that now seem obvious. Hindsight may also cause one to focus on the particular risk of injury that ultimately materialised, thus losing sight of the potentially manifold risks intrinsic to the activity engaged in. As Gleeson CJ observed in Rosenberg v Percival86, in litigation the conduct of the parties is seen through the prism of hindsight. A foreseeable risk has eventuated and harm has resulted. The particular risk becomes the focus of attention. This focus on how the particular injury happened may be misleading in attempting to determine issues of duty and its breach87. In Rosenberg v Percival, Gleeson CJ went on to refer to the danger, identified in judgments of this Court88, which is posed by hindsight reasoning – the failure to take account of the context in which a risk was to be evaluated at the time the evaluation was made. Whether or not reasonable care was exercised in striking the balance between taking care for the safety of participants and allowing the competition to continue must be determined by reference to the knowledge of the circumstances available to those who made the decision for the Association when it was made. Moreover, and as relevant to this case, ascertaining the risk which in fact eventuated requires determination of the cause of the injury. Here, as the majority of the Court of Appeal correctly held, it could not be determined as a fact that some kind of deterioration to the surface was the risk which eventuated. It could not be a correct approach, as the case for Ms Tapp proceeded, to assume what needed to be determined as a fact, and then to proceed to determine whether a duty was owed with respect to it and what could have been done to avoid it. That hindsight is apt powerfully to distort one's appreciation of the extent and acceptability of a risk is poignantly illustrated in this case. Ms Tapp's father, himself an experienced campdrafter, offered Ms Tapp his place, and the use of his horse, in the open draft during which she was ultimately injured. Both he and Ms Tapp's sister had ridden the arena earlier that day, and there is no suggestion that either held any concerns that the arena was unsafe. Hindsight is apt also to distort one's perception of what precautions are reasonable. While, in hindsight, it seems obvious that the prudent course may have (2001) 205 CLR 434 at 441-442 [16]. 87 New South Wales v Fahy (2007) 232 CLR 486 at 505 [57]. 88 Jones v Bartlett (2000) 205 CLR 166 at 176 [19]; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 263 [17], 291-292 [109]. been to suspend competition for the Saturday evening, the Association's decision- makers did not have the benefit of hindsight, and they were making their decision in a context in which their expectation was that competitors wished to continue with the competition and their concern was to ensure fairness to all competitors. Moreover, and importantly, the circumstance that the Association chose to plough the surface after Ms Tapp's catastrophic injury says nothing about whether the Association, even if its decision-makers had decided to suspend competition on the Saturday evening before Ms Tapp's run, would have ploughed the arena before resuming competition on the Sunday. Certainly, Mr Stanton had not suggested that course, nor was the possibility of ploughing the arena raised in the discussion that took place thereafter. If one has regard only to what was known to the Association's decision-makers before Ms Tapp's injury, no sufficient reason appears to set aside the concurrent findings of the primary judge and the Court of Appeal. It may be accepted that there were reasons to consider whether continuing the competition might expose riders to an unacceptably increased risk of a fall by reason of some deterioration in the state of the surface of the arena; but there were also reasons to think that any increase in risk from deterioration in the surface of the arena was no more than could be dealt with by competitors "riding to the conditions". A decision reflecting reasonable care for competitors required an assessment whether the level of risk posed by the state of the surface required the competition to be suspended. The decision made by the Association to continue the competition, viewed in the context in which it was made, does not appear to be unreasonable. It was also far from apparent to the Association's decision-makers that it was the quality of the surface of the arena that was to blame for the falls which preceded Ms Tapp's fall, rather than any of the other manifold possibilities intrinsic to the dangerous activity in which Ms Tapp, her father, her sister, members of Mr Shorten's family and Mr Young were all willing to engage. The absence of evidence at trial from any of the other riders who fell as to their experience that the deteriorated surface caused their falls is emphatic confirmation that Ms Tapp's case was bound to fail for want of proof that deterioration in the surface caused her fall. The role of an appellate court As Payne JA noted in the Court of Appeal89, the primary judge did not find that "a cause of [Ms Tapp's] horse falling was the deterioration in the condition of the surface of the arena which made the arena 'slippery'". That being so, the case of negligence advanced by Ms Tapp could not succeed. It was no part of the 89 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA function of the Court of Appeal, as it is emphatically no part of the function of this Court, to reformulate the case a party seeks to make. The majority of the Court of Appeal, rightly, proceeded in conformity with the limits of their role in the administration of justice, both in refraining from reformulating the case sought to be made for Ms Tapp, and in recognising that there was no proper basis upon which the appellate court might make a finding as to the cause of Ms Tapp's fall which the primary judge was not able to make on the evidence. In the Court of Appeal, McCallum JA emphasised, as a significant indication that the Association had failed to take reasonable precautions, that the Association had not complied with the terms of r 15.5 concerning the composition of the surface of the arena. But Ms Tapp's case was not put on the footing that the Association was negligent because the surface of the arena had not been treated as required by r 15.5. There was little admissible evidence at trial as to the composition of the surface of the arena and no specific findings as to whether the terms of r 15.5 had been breached90. Nor was there any complaint about the absence of such findings. To seek to build a case on the footing that the surface of the arena should have been ploughed before competition began in accordance with r 15.5, and that the failure on the part of the Association to do so created an unreasonably elevated risk of a fall that came to pass as a cause of Ms Tapp's fall, would confront the difficulty that some 700 rides took place without incident until shortly before Ms Tapp's injury. In this Court, Ms Tapp argued that Payne JA erred in discounting as hindsight evidence certain concessions made by Mr Shorten in cross-examination. Had these concessions been given appropriate weight, Ms Tapp submitted, breach would have been established as held by McCallum JA. The concessions relied upon by Ms Tapp in this regard included Mr Shorten's statements that: it was "practically unprecedented" to have seven falls occur over the course of one event, let alone on a single day91; 90 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 91 Trial transcript, T168/11-14. a "bad fall" was "a signal that the surface needs attention to prevent another fall"92; at the time of Ms Tapp's fall, the arena surface had been "identified by [himself] and others by that stage as being dangerous"93; the surface was ploughed after Ms Tapp's fall "because we thought at the time that would be the reason for no more falls"94; the circumstance that the surface was ploughed after Ms Tapp's fall "demonstrates how bad the condition was of the ground" at the time of the incident95; and the event was allowed to continue following the complaints because "the event had to go on" and this "took precedence over safety"96. A consideration of each of these concessions in turn reveals that the primary judge, and the majority of the Court of Appeal, made no error in their treatment of this evidence. It can be seen that concession (a) rested on the unproven assumption that seven falls had occurred. In addition, concession (b) cannot be considered in isolation from the context that Mr Shorten and others did consider the safety of the surface before deciding to proceed. Concession (c) must be understood fairly as reflecting Mr Shorten's acknowledgement of what he had been told by Mr Stanton rather than a statement of his own considered opinion, bearing in mind that the question to which Mr Shorten responded referred to the identification of the state of the surface by himself "and others", a reference apt to encompass Mr Stanton. Concessions (c) to (f), and in particular (d) and (e), reflected a degree of hindsight. As to the ploughing of the surface the day after the incident, the cautious approach taken in light of Ms Tapp's fall demonstrated nothing as to whether, prior to the incident, a reasonable person with the knowledge of the Association's decision-makers would have concluded that the competition ought to be suspended and the ground ploughed. 92 Trial transcript, T165/9-12. 93 Trial transcript, T190/8-10. 94 Trial transcript, T172/16-21. 95 Trial transcript, T172/23-26. It is important to appreciate that the primary judge had the advantages noted by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy97: "On the one hand, the appellate court is obliged to 'give the judgment which in its opinion ought to have been given in the first instance'98. On the other, it must, of necessity, observe the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record99. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court, reading the transcript, cannot always fully share100." The primary judge was best placed to assess the significance of Mr Shorten's concessions, and in particular to gauge the extent to which his evidence is fairly to be understood as his response, in hindsight, to the tragic injury suffered by Ms Tapp. In this regard, her Honour was in the best position to assess the concessions, so-called, given by Mr Shorten by reference to the way that they were put to him in cross-examination, including as to the choices given to him by way of answer, and in light of his earlier evidence as to what had in fact occurred on the evening in question and what he had thought and done then. The concessions were to a large extent inconsistent with that evidence. That being so, it was properly a matter for the primary judge, who saw and heard Mr Shorten give evidence, to determine which aspects of his evidence to accept or reject, not an appellate court. The majority of the Court of Appeal, recognising the peculiar advantages of the primary judge in this regard, but having conducted their own review of the evidence, arrived at the same conclusion as the primary judge that the Association's decision to allow the event to proceed was not an unreasonable failure to take care for the safety of those who wished to take part in the event. In addition, there is little to be gained from a consideration of selective extracts of Mr Shorten's evidence divorced from other aspects of the evidence (2003) 214 CLR 118 at 125-126 [23]. 98 Dearman v Dearman (1908) 7 CLR 549 at 561. ... 99 Dearman v Dearman (1908) 7 CLR 549 at 561. See also Scott v Pauly (1917) 24 CLR 274 at 278-281. 100 Maynard v West Midlands Regional Health Authority [1984] 1 WLR 634 at 637; [1985] 1 All ER 635 at 637 ... See also Chambers v Jobling (1986) 7 NSWLR 1 before the primary judge. The evidence as to Mr Shorten's supposed concessions must be understood in light of the evidence weighing against such a conclusion. That included the following: (a) Ms Tapp, her father and her sister had each competed earlier on the day of the incident, and none raised any concern about the surface; (b) Ms Tapp's father offered Ms Tapp his spot in the open draft, which he would not have done if he had had concerns as to the safety of the surface; (c) Mr Shorten's wife and sons competed earlier on the day of the incident, and the primary judge accepted Mr Shorten's evidence that he would not have let them compete if he had perceived any danger; the decision that the surface was sufficiently safe for the competition to continue was made by a group of people who were experienced in organising and conducting campdrafting events, most of whom had either competed themselves earlier on the day of the incident (Mr Shorten, Mr Young and Mr Smith) or judged the competition, thereby being in a position to observe other riders (Mr Gallagher); and no competitor other than Mr Stanton raised any concern as to the safety of the surface, notwithstanding that there had been over 700 rides prior to Ms Tapp's fall. The majority of the Court of Appeal rightly recognised that there was no sufficient basis shown for them to overturn the decision of the primary judge. Orders The appeal must be dismissed. Ms Tapp must pay the Association's costs of the appeal to this Court. GORDON, EDELMAN AND GLEESON JJ. Introduction The sport of campdrafting involves a rider on horseback working cattle. The rider rides into a "camp" or "cut out yard" where there are six to eight head of cattle. The camp is separated by a gate from an arena. The rider must "cut out" or separate one beast from the rest of the herd and, after demonstrating control of the beast, must call for the gate into the arena to be opened. The rider must then work the beast around two pegs in the arena in a figure of eight. Then, the rider must guide the beast through two further pegs to complete the course. Points are awarded for equestrianism and control of the beast within set time limits. Most campdrafting events start and end without any rider falling from their horse. That was not the case at a multi-day campdrafting event organised by the respondent, the Australian Bushmen's Campdraft & Rodeo Association Ltd ("the Association"), with the involvement of the Ellerston District Sports Club Inc ("the Sports Club") on 7-9 January 2011. During the first two days of the event, 700 rides took place in the arena. As the trial judge concluded, it was "unsurprising" that the ground would have deteriorated over that period101. Towards the end of the second day, and in the period of less than an hour before the appellant, Ms Tapp, competed in the open campdraft event, there were four falls. After the first three of those falls, a contestant, Mr Stanton, who was a "very, very experienced horseman and campdrafter", told Mr Shorten, a director of the Hunter Zone of the Association and a member of the organising committee of the competition ("the Committee"), that the event should be stopped. The event was not stopped. Mr Shorten considered that if the event were stopped then riders who had not yet ridden would have an advantage if the ground were better in the morning. Very shortly after the three falls, yet another rider fell. Mr Stanton again told Mr Shorten that the event should be stopped because the ground was "unsafe". In cross-examination, Mr Shorten accepted that at that time the condition of the arena had been identified by him and others "as being dangerous". But, again, members of the Committee or the Members Representative Council of the organising body ("the MRC"), including Mr Shorten, chose not to stop the event. One or more of those members said that riders needed to ride to the conditions. Mr Shorten agreed in cross-examination that the justification in his mind for 101 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 1506 at [87]. See also Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 263 at [176]. continuing the event was that "the event had to go on" and that this took precedence over safety. Very shortly after the fourth fall there was a fifth fall. This time the fall had catastrophic consequences. The rider who fell from her horse was Ms Tapp. Ms Tapp was unaware of the preceding four falls. She was not aware of Mr Stanton's warnings. She had not been told anything about the condition of the ground of the arena by any member of the Association or any other person. As a contestant, she was not entitled to ride her horse in the arena prior to competing. Ms Tapp fell when her horse slipped on the ground of the arena. She suffered a serious spinal injury. There was no dispute at any stage of this proceeding that the Association owed a duty to take reasonable care to avoid foreseeable risks of personal injury to participants in the campdrafting event, including Ms Tapp. The Association admitted that it owed Ms Tapp a duty of care to organise, manage, and provide the campdrafting event with reasonable care and skill. The Association did not contest the trial judge's finding that "[w]hat was required in taking reasonable care was for an informed decision to be made as to whether it was safe to continue with the competition". But the Association claimed that it had not breached its duty, that any breach had not caused Ms Tapp's injuries, and that Ms Tapp's injuries were the result of the materialisation of an obvious risk. The trial judge and a majority of the Court of Appeal of the Supreme Court of New South Wales accepted those submissions. This appeal concerns: (i) whether the Association breached its duty of care to Ms Tapp within s 5B of the Civil Liability Act 2002 (NSW); (ii) whether that breach of duty caused Ms Tapp's injuries within s 5D of the Civil Liability Act; and (iii) whether the Association was not liable in negligence to Ms Tapp by reason of s 5L of the Civil Liability Act because her injuries were the "result of the materialisation of an obvious risk of a dangerous recreational activity". For the reasons below, (i) the Association breached its duty of care by failing to stop the event in order to inspect the ground of the arena and to consider its safety when the Association knew of substantially elevated risks of physical injury to the contestants; (ii) that breach of duty caused Ms Tapp's injuries; and (iii) the injuries were not the result of materialisation of an obvious risk. The appeal should be allowed. Background to the appeal Although only 19 years old at the time of her spinal injury, Ms Tapp was an experienced and very able horse rider and campdraft contestant. She had participated in campdrafting events from the age of six and had excelled at campdraft competitions. From the age of 12, Ms Tapp had participated in about six campdrafting events per year102. On the morning of 8 January 2011, Ms Tapp watched her father compete on the arena in different events. She competed twice in the Ladies' Campdraft at about 11 am. Later in the day, her father offered her his place in the Open Campdraft, riding his horse, Xena Lena. The Open Campdraft commenced at about 5 pm and Ms Tapp competed at around 7 pm as contestant 101. The Association's principal witness at trial was Mr Shorten. The trial judge found Mr Shorten to be "a genuine person who was flustered by the processes of cross-examination, but was doing his best to be truthful and to assist the Court"103. Mr Shorten's evidence established that a contestant might fall for reasons other than their horse slipping because of the poor condition of the surface. Mr Shorten described the risks of campdrafting as including the horse falling by losing its footing or contacting the hooves of the animal being chased, or the rider losing balance and falling off. Mr Shorten, himself, fell off his horse during the campdraft for reasons unrelated to the surface of the arena. Mr Shorten was contestant 17 in the Open Campdraft. The trial judge recorded Mr Shorten's account that "he had no problems with the ground[,] returned a good score of 88 but after completing the course '... he slackened off the reins, he relaxed the horse relaxed' and he fell onto his shoulder ... and that in his opinion, his fall had nothing to do with the surface"104. It appears that the Open Campdraft proceeded without incident from the time of Mr Shorten's ride as contestant 17 until the time of contestant 65. At 6.14 pm, contestant 65, Mr Clydsdale, fell from his horse105. At 6.22 pm and respectively two more contestants, Mr Sadler and Mr Gillis, 102 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 103 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 104 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 105 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC contestants 70A and 82, fell from their horses106. A document entitled "Open Draft Draw" contained the order in which contestants had been drawn to compete in the Open Campdraft, and recorded the number of points they had scored. The document also recorded which contestants had had falls. The falls of Mr Clydsdale, Mr Sadler, and Mr Gillis were described in the Open Draft Draw as "bad falls". It was conceded by Mr Shorten that a bad fall is accepted "in campdrafting circles as a signal that the surface needs attention to prevent another fall", although Mr Shorten's evidence was that, other than Ms Tapp's fall, he only saw the falls of Mr Gillis and Mr Sadler, and that Mr Gillis' fall was a "bad fall", but Mr Sadler's was not. After the falls of Mr Clydsdale, Mr Sadler, and Mr Gillis, the Open Campdraft was delayed. The delay arose because Mr Shorten was approached by an experienced campdrafter, Mr Stanton, who was listed as contestant 116 in the draw. The trial judge recorded Mr Shorten's evidence of Mr Stanton's first approach to Mr Shorten107. On that first approach, Mr Stanton said that the Open Campdraft should be stopped because "the ground [was] getting a bit slippery". Mr Shorten's reply was that this was not fair because "people have already competed and they have their scores and if the ground is better in the morning the people who have already ridden on the ground might not make the final and that's not fair". Mr Shorten then spoke with Mr Young, the Chair of the MRC and a director of the Association, and Mr Gallagher, who was the competition judge. Mr Young said that "the surface is okay. Competitors need to ride to the condition of the ground". And Mr Gallagher said that he thought that the competition should keep going. Mr Shorten also spoke with two contestants who had fallen from their horses, Mr Gillis and Mr Sadler. Mr Gillis said that he rode too hard and Mr Sadler said that he fell just before the gate. There was no evidence that either contestant was asked about the condition of the ground. And neither contestant said anything about whether the surface of the arena had caused their fall. At about 6.58 pm, another contestant fell from his horse. That contestant was number 98, Mr Piggot108. Mr Piggot's fall was also described in the Open Draft 106 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 107 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 108 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC Draw as a "bad fall". Very shortly after Mr Piggot's fall, Mr Shorten was again approached by Mr Stanton. Mr Stanton said, yet again, that something should be done about the event because he thought that the ground was "unsafe". The event was delayed while Mr Shorten and Mr Callinan (the President of the Sports Club, which coordinated and conducted carnivals and rodeos affiliated with the Association) walked around and spoke with Mr Young and another MRC board member, Mr Smith. One or both of Mr Young and Mr Smith said that "the riders should ride to the conditions". And Mr Young said again that he thought that "the arena surface is still alright". Mr Shorten said that he had considered the condition of the ground and noticed that the surface was not wet but was moist in parts and dust was still flowing up. Mr Shorten gave evidence that he told Mr Gallagher that "we will continue but we will make an announcement that any competitor who wishes to withdraw can do so and they will get their money back". An announcement was then made over the loudspeaker. Mr Shorten's evidence was that he had said to Mr Young and Mr Smith "we will announce that if competitors wanted to scratch they would get their full entry fee back or they could compete at their own risk" (emphasis added), but the trial judge found that the content of the announcement was only an offer of a refund if riders chose not to compete109. The direct evidence of how Ms Tapp fell was given by Ms Tapp, her sister, and her father. Each gave accounts which the trial judge appears to have accepted110. Importantly, a common factor in each account was that Ms Tapp's horse's front legs had slid from underneath it on the surface of the arena. In her first statement, Ms Tapp said that, immediately before the fall, "the ground felt heavy and my horse struggled to get a proper stride. My horse could not get her next stride and she went down on her front that is, she fell straight in a direct line and then we both slid onto the ground"111. In her second statement, 109 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 110 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 111 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC Ms Tapp said112: "I felt my horse's front legs slide from beneath me and slide toward the right. My horse went down onto her front and both my horse and myself landed on the ground". The evidence from Ms Tapp's sister included a statement that113: "I remember the horse looked like its front legs slid from under it and the horse and [Ms Tapp] fell." And Ms Tapp's father gave evidence that, as best he could tell114, "the horse and [Ms Tapp] fell because the front legs of the horse slid from beneath it". After Ms Tapp's fall, the competition stopped for the day. The Sports Club's Incident Report records that, the following day, the arena was ploughed for three hours before the competition recommenced. The Civil Liability Act This appeal concerns issues of breach of duty, causation, and the s 5L defence under Pt 1A of the Civil Liability Act115. The central issue in relation to both breach of duty in s 5B as well as "obvious risk" in s 5L is the level of generality at which the risk is characterised. In other words, what is the degree of specificity required in the statement of the risk? Sections 5B and 5C For the purpose of assessing breach of duty, s 5B(1) of the Civil Liability Act provides that "[a] person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions". Section 5B(2) provides that "[i]n determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the 112 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 113 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 114 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 115 Part 1A was inserted into the Civil Liability Act by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), largely implementing recommendations of the Ipp Report: Commonwealth of Australia, Review of the Law of Negligence: Final Report (2002). See also New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 2002 at 5765. following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm". Section 5C(a) is important. It provides that "the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible". Section 5D Sub-sections (1) to (3) of s 5D of the Civil Liability Act provide as follows: "(1) A determination that negligence caused particular harm comprises the following elements: that the negligence was a necessary condition of the occurrence of the harm (factual causation), and that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent: the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest." A negligent action will be a "necessary condition" of the occurrence of harm if, "but for" the negligence, the harm would not have occurred. As French CJ, Gummow, Crennan and Bell JJ said in Strong v Woolworths Ltd116, "[t]he determination of factual causation under s 5D(1)(a) is a statutory statement of the 'but for' test of causation: the plaintiff would not have suffered the particular harm but for the defendant's negligence". In this assessment, notions of "common sense" have no place117. Not only do those notions have no foothold in the text of s 5D, but it has been repeatedly said in this Court that "it is doubtful whether there is any 'common sense' notion of causation which can provide a useful, still less universal, legal norm"118. The task of adjudication requires transparent reasoning, not consideration of whether a judge's "sense" of a result might be common with that of others. No issue was raised at any stage of this litigation concerning the scope of the liability of the Association, nor was any issue raised concerning any exceptional case of causation pursuant to s 5D(2). Section 5L Division 5 of Pt 1A of the Civil Liability Act is concerned with "Recreational activities". Within Div 5, s 5L expresses a defence, the onus of which lies on the defendant119. Section 5L provides: "No liability for harm suffered from obvious risks of dangerous recreational activities (1) A person (the defendant) is not liable in negligence for harm suffered by another person (the plaintiff) as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the plaintiff. 116 (2012) 246 CLR 182 at 190 [18] (footnote omitted). 117 Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420 at 440 [43]. 118 Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 642 [45]. See also March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 532-533; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568 at 596-597 [96]-[98]; Comcare v Martin (2016) 258 CLR 467 at 479 [42]. 119 Fallas v Mourlas (2006) 65 NSWLR 418 at 423 [24], 438-439 [122]-[123]; Lormine Pty Ltd v Xuereb [2006] NSWCA 200 at [31]; Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103 at 113 [41]. This section applies whether or not the plaintiff was aware of the risk." The defence in s 5L requires a defendant to prove that: (i) the plaintiff was engaged in a "recreational activity"120; (ii) the recreational activity was dangerous in the sense that it involved "a significant risk of physical harm"121; (iii) there was a risk of that activity that was obvious122; and (iv) the harm was suffered by the plaintiff as a result of the materialisation of that obvious risk. Once these four elements are proved, the defence in s 5L will apply to the extent that the harm suffered by the plaintiff was a result of the materialisation of that obvious risk. There was no dispute in the Court of Appeal or in this Court that Ms Tapp was engaged in a dangerous recreational activity, namely campdrafting. The issue was whether there was a risk of that activity that was obvious and that materialised. An "obvious risk" is defined by ss 5F and 5K as "a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person", including "risks that are patent or a matter of common knowledge", and can include risks that have "a low probability of occurring" or which are "not prominent, conspicuous or physically observable". Characterising "risk" at the appropriate level of generality The proper assessment of the alleged breach of duty depends on "the correct identification of the relevant risk of injury"123, because it is only then that an assessment can take place of what a reasonable response to that risk would be124. The enquiry is concerned with determining what person, thing or set of circumstances gave rise to the potential for the harm for which the plaintiff seeks 120 See Civil Liability Act, s 5K. 121 Civil Liability Act, s 5K. 122 Civil Liability Act, ss 5F, 5K. 123 Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 338 [18]. 124 Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 351 [59]. damages125. The characterisation of the relevant risk should not obscure the true source of the potential injury126. The correct approach to characterisation of the risk for the purposes of breach of duty under s 5B of the Civil Liability Act was adopted in Port Macquarie Hastings Council v Mooney127. In that case, a pedestrian slipped and fell into a stormwater drain on an unlit, temporary gravel footpath. The characterisation of the risk ignored the manner in which the pedestrian fell, and the particular hazard which precipitated the fall (the stormwater drain). Sackville A-JA said128: "The relevant risk of harm created by the construction or completion of the footpath was that in complete darkness a pedestrian might fall and sustain injury by reason of an unexpected hazard on the path itself (such as an unsafe surface or variation in height) or by unwittingly deviating from the path and encountering an unseen hazard (such as loose gravel, a sloping surface or a sudden drop in ground level)." Section 5C(a) of the Civil Liability Act reflects, and is consistent with, the common law. The effect of this provision is that a defendant cannot avoid liability by characterising a risk at an artificially low level of generality, that is, with too much specificity. As this Court said in Chapman v Hearse129, "one thing is certain" and that is that in identifying a risk to which a defendant was required to respond, "it is not necessary for the plaintiff to show that the precise manner in which [their] injuries were sustained was reasonably foreseeable". The Court continued: "it would be quite artificial to make responsibility depend upon, or to deny liability by reference to, the capacity of a reasonable [person] to foresee damage of a precise and particular character or upon [their] capacity to foresee the precise events leading to the damage complained of". 125 Perisher Blue Pty Ltd v Nair-Smith (2015) 90 NSWLR 1 at 22 [98]. 126 Perisher Blue Pty Ltd v Nair-Smith (2015) 90 NSWLR 1 at 22 [99], quoting Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 351 [60]. 127 (2014) 201 LGERA 314. 128 (2014) 201 LGERA 314 at 329 [67]. 129 (1961) 106 CLR 112 at 120-121. Similarly, in Rosenberg v Percival130, Gummow J said: "A risk is real and foreseeable if it is not far-fetched or fanciful, even if it is extremely unlikely to occur. The precise and particular character of the injury or the precise sequence of events leading to the injury need not be foreseeable. It is sufficient if the kind or type of injury was foreseeable, even if the extent of the injury was greater than expected. Thus, in Hughes v Lord Advocate [[1963] AC 837], there was liability because injury by fire was foreseeable, even though the explosion that actually occurred was not." In the context of s 5L, as Bryson JA observed in C G Maloney Pty Ltd v Hutton-Potts131, "[m]uch depends, in the application of provisions dealing with obvious risk, upon the degree of generality or precision with which the risk is stated". Although the identification of the appropriate level of generality will not always be straightforward, there are four significant matters that must guide the reasoning process concerning the selection of the correct level of generality. First, and contrary to some views that have been expressed in the New South Wales Court of Appeal132, the "risk" with which s 5L is concerned will usually need to be assessed after a determination that there is prima facie liability for negligence. Secondly, the s 5L risk should be characterised at the same level of generality as the risk is characterised in the course of assessing whether the defendant has breached a duty of care. Thirdly, the generality at which the risk in s 5L is stated should include the same facts as established the risk for the purposes of the breach of duty which caused the harm to the plaintiff, but no more. Fourthly, and consequently, the characterisation of the risk does not need to descend to the precise detail of the mechanism by which an injury was suffered if that detail is unnecessary to establish a breach of duty. Each of these four matters is explained in turn below. First, as to the usual need for s 5L to be assessed after a determination of the existence of prima facie liability in negligence, this can be seen from the structured approach taken by the Civil Liability Act and from the terms of s 5L itself. Division 2 of Pt 1A, entitled "Duty of care", is concerned with when a person will be negligent for "failing to take precautions against a risk of harm". Division 3 of Pt 1A, entitled "Causation", is concerned with whether negligence "caused 130 (2001) 205 CLR 434 at 455 [64] (footnotes omitted). 131 [2006] NSWCA 136 at [173]. 132 See Goode v Angland (2017) 96 NSWLR 503 at 506 [5], 539 [177], 541 [185]; Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103 at 113 [38]-[39]. particular harm". And Divs 4 and 5 of Pt 1A are concerned with matters including the exclusion of liability for "obvious risks". In particular, Div 5 applies only in respect of "liability in negligence for harm to [the plaintiff] resulting from a recreational activity engaged in by the plaintiff"133. In other words, Div 5 presupposes that there would otherwise be liability for negligence arising from a failure to take precautions against a risk of harm where that negligent failure caused the harm. This conclusion is reinforced by the terms of s 5L, as a defence that excludes liability in negligence that would otherwise arise. In other words, s 5L is a "liability-defeating rule"134, of the same nature as those defences that were formerly described as "confession and avoidance"135. Secondly, the risk to which s 5L refers should be characterised at the same level of generality as it is characterised when assessing whether the defendant has breached a duty of care under s 5B136 as well as for the purposes of assessing causation under s 5D. Since s 5L operates upon established liability based on duty, breach, and causation of harm, the risk to which s 5L refers must be the same risk that has "materialised" as a result of the "harm" for which "liability in negligence" would arise. That is the risk to which s 5B refers in the context of the requirement to establish a breach of a duty of care, upon which, in turn, the requirement of causation depends137. Although the risk should be characterised in the same way for the purpose of s 5B in Div 2 (Duty of care) and s 5L in Div 5 (obvious risks), the assessment of the obviousness of the risk in s 5L proceeds from the perspective, not of a 133 Civil Liability Act, s 5J(1). 134 Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103 at 113 [38], citing Goudkamp, Tort Law Defences (2013) at 2. 135 Ibbetson, "Pleading Defences in Tort: The Historical Perspective", in Dyson, Goudkamp and Wilmot-Smith (eds), Defences in Tort (2015) 25 at 28-30. See also Astley v Austrust Ltd (1999) 197 CLR 1 at 33 [77]; Fairfax Media Publications Pty Ltd v Voller (2021) 95 ALJR 767 at 782 [74], 790 [118]; 392 ALR 540 at 556, 567. 136 cf Cox v Mid-Coast Council [2021] NSWCA 190 at [47]-[48]; see also at [1], [85]. 137 See Stapleton, Three Essays on Torts (2021) at 76-77. reasonable person in the defendant's position138, but of a reasonable person in the position of the plaintiff139. Thirdly, consequent upon the risk to which Divs 2, 4 and 5 refer being assessed at the same level of generality, the characterisation of the risk for the purpose of s 5L should be at the same level of generality as the risk considered for the purposes of the breach of duty which caused the harm to the plaintiff. Another way of putting this point, as expressed by the Court of Appeal of the Supreme Court of New South Wales in a passage to which Payne JA referred in this case140, is that the characterisation of the risk must include the "general causal mechanism of the injury sustained" which "gave rise to the potential for the harm for which the plaintiff seeks damages"141. Fourthly, just as it is unnecessary in the characterisation of risk for the purposes of assessing a breach of the duty of care for the plaintiff to show the reasonable foreseeability of the "precise manner in which [the] injuries were sustained"142, so too for the purposes of s 5L it is unnecessary for the defendant to show the precise manner in which the injuries were sustained for the purpose of characterising the risk143. For these reasons, it has correctly been observed that "an examination of the case law suggests that courts have consistently included the conduct alleged to be negligent as part of the risk description where that negligence involves commission rather than omission"144. To the extent to which any distinction can sensibly be drawn between negligence in the commission of an act and negligence by an omission, in neither case have courts characterised the risk by reference to 138 Civil Liability Act, s 5B(1). 139 Civil Liability Act, ss 5F(1), 5K. 140 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 141 Perisher Blue Pty Ltd v Nair-Smith (2015) 90 NSWLR 1 at 22 [98]. 142 Chapman v Hearse (1961) 106 CLR 112 at 120-121. 143 Perisher Blue Pty Ltd v Nair-Smith (2015) 90 NSWLR 1 at 22-23 [100]-[101]. 144 Perry, "Obvious risks of dangerous recreational activities: How is risk defined for Civil Liability Act purposes?" (2016) 23 Torts Law Journal 56 at 68. something that the defendant could or should hypothetically have done145. The focus should be upon the same essential circumstances which established the necessity for a reasonable person in the position of the defendant to take reasonable precautions in performance of a duty of care. The risk with which s 5L is concerned is thus the same risk as that with which s 5B is concerned. The first example of the correct application of the four factors discussed above in the characterisation of risk under s 5L is the decision in C G Maloney146. In that case, the plaintiff overlooked a warning sign, slipped on floor polish which had been spilt by a cleaner, and fell on a hotel floor, striking her knee. The risk, within s 5L, for which the defendant would be "liable in negligence for harm suffered" by the plaintiff was not "a risk that a recently polished floor will be slippery", because no liability would arise from a statement of the risk at that level of generality. "A higher degree of intensity [was] required in stating the risk."147 The risk, stated with the correct level of generality, and consistently with the essential circumstances in respect of which a person in the position of the defendant should reasonably have taken precautions, was the risk of falling from slipping on "polishing material on the floor which was not visible, and had not been removed in the buffing process"148. The proper characterisation of the risk did not, however, require any more precision or detail concerning the manner of the plaintiff's fall. The second example is the decision of the Court of Appeal of the Supreme Court of New South Wales in Menz v Wagga Wagga Show Society Inc149. In that case, the appellant had been injured after falling from her horse while warming up before a competition at a show managed by the respondent. The fall occurred when the horse was "spooked" by very loud noises made by children, described as a "loud bang" like a gunshot. In the course of dismissing a ground of appeal concerned with the trial judge's rejection of any breach of duty, Leeming JA 145 Perry, "Obvious risks of dangerous recreational activities: How is risk defined for Civil Liability Act purposes?" (2016) 23 Torts Law Journal 56 at 69. 146 [2006] NSWCA 136. See Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103 at 117-118 [61]-[63]. 147 [2006] NSWCA 136 at [173]-[174]. 148 [2006] NSWCA 136 at [174]. 149 (2020) 103 NSWLR 103. observed that "a horse could be spooked by a dog barking or a car backfiring"150 and the presence of additional stewards and marshals, even to prevent harm by risks that they could control, was not a precaution that a reasonable person should have taken151. When the Court of Appeal in Menz went on to consider an exclusion of potential liability under s 5L, the risk was characterised at the same level of generality, involving the essential facts that would have established any breach of duty that caused the harm to the plaintiff. Leeming JA, with whom Payne and White JJA agreed, concluded that the risk, which was obvious, was falling from a horse after it was "spooked by some stimulus"152. The proper characterisation of the risk did not require any further detail as to the manner in which the fall occurred. The Court of Appeal thus rejected the submission by the appellant that the risk should be characterised as including additional matters concerning the precise mechanism by which the injury was suffered, namely falling from a horse after it was "spooked" by children making very loud noises153. The proper characterisation of risk in this case There is no dispute that the horse on which Ms Tapp was riding slipped on the surface of the arena and that both horse and rider fell. Ms Tapp's case was that, by the time she competed in the Open Campdraft, the surface of the arena was not safe in that the surface had deteriorated beyond what could reasonably be expected so as to present a substantially increased risk of personal injury arising from falls of contestants. The trial judge dealt with the s 5L defence before considering breach of duty and, in doing so, characterised the risk for the purposes of s 5L as "the risk of falling and being injured" or, alternatively, as the risk "that the horse would fall and as a consequence of that, [Ms Tapp] would fall and be injured"154. At another point in the trial judge's reasons, her Honour characterised the risk, in a third way, 150 (2020) 103 NSWLR 103 at 127 [112]. See also at 112 [33]. 151 (2020) 103 NSWLR 103 at 127-128 [112]-[120]. 152 (2020) 103 NSWLR 103 at 121 [79]. 153 (2020) 103 NSWLR 103 at 118 [65]. 154 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC with more particularity, as "the risk of falling from the horse and suffering an injury whilst competing in a campdraft competition, given the complexities and risks inherent in and associated with that activity"155. The trial judge found that the relevant risk was "obvious" for the purposes of s 5L and, in any event, that Ms Tapp had not established that the Association breached the duty of care that it owed to Ms Tapp. In the first two characterisations, as Payne JA correctly said, the trial judge's approach was "far too broad"156. Put differently, the trial judge's characterisation was at too high a level of generality. The trial judge's characterisation did not include the essential facts that constituted the alleged breach of duty. As explained above, the characterisation of the risk for s 5L should be the same as the characterisation of the risk for s 5B. On appeal, a majority of the Court of Appeal (Basten and Payne JJA, McCallum JA dissenting) concluded that the trial judge did not err in finding that no breach of the Association's duty of care had been established157. Basten JA agreed with Payne JA in relation to the question of breach, adding that, without clear evidence as to the nature of the risk posed by the surface of the arena where Ms Tapp's horse fell, it was not possible to identify the risk of harm against which the Association should reasonably have taken precautions158. Payne JA concluded that Ms Tapp failed to establish, other than by reference to hindsight, that the surface of the arena had become unsafe for campdrafting159. The difficulty with the approach to characterisation of risk taken by Basten and Payne JJA is that it required Ms Tapp to identify the risk by reference to the 155 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 156 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 157 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 158 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 159 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA precise manner in which her injuries were sustained. That is inconsistent with the requirement deriving from s 5C(a) of the Civil Liability Act. A more accurate characterisation of the risk was that expressed by McCallum JA160, in her Honour's description of the risk as "the risk of injury as a result of falling from a horse that slipped by reason of the deterioration of the surface of the arena". To adapt that description, consistently with the essential facts that established the risk for the purposes of the breach of duty, the risk should be characterised as the substantially elevated risk of physical injury by falling from a horse that slipped by reason of the deterioration of the surface of the arena. Just as the characterisation of the risk in C G Maloney did not include the way in which a person might slip on a polished floor and the characterisation of the risk in Menz did not include the way in which a horse might be "spooked" by stimulus, no more precision than this was necessary in characterising the relevant risk in this case. Contrary to the reasoning of Payne JA, it was unnecessary to identify "the way in which ... the surface had deteriorated"161. Whether breach of the Association's duty of care was established: s 5B Once the risk is identified at the correct level of generality, it can be seen, with respect, that McCallum JA was correct to "assess Ms Tapp's case on that issue [of breach of duty] to be strong"162. The factors which the court must consider under s 5B(2) of the Civil Liability Act all point to the conclusion that a reasonable person in the position of the Association would have taken the immediate precaution of stopping the event in response to the substantially elevated risk of contestants being injured from falling from a horse that slipped on the deteriorated surface of the arena. In short: (i) the relevant risk was substantially elevated, so that a reasonable person in the position of the Association could have foreseen a probability that harm would occur if the competition were not stopped until members of the Committee or MRC had taken precautions beginning with inspecting the arena to be satisfied that the ground of the arena was reasonably safe; (ii) the likely seriousness of the harm was at the level of physical injury that could be 160 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 161 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 162 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA catastrophic; (iii) the burden of taking precautions to avoid the risk of harm was the simple act of stopping the event to inspect the arena and consider the safety of the ground of the arena; and (iv) these matters could not be outweighed by the social utility of continuing the event so that contestants who had already competed on worse ground were not at a competitive disadvantage. The probability of harm: s 5B(2)(a) The probability of harm falls to be assessed at the time at which a reasonable person in the position of the Association should have taken precautions. That time was shortly before 7 pm on 8 January 2011, being the time before Ms Tapp competed in the Open Campdraft. It is irrelevant that the condition of the ground might have been entirely safe the previous day, or in the morning of 8 January In assessing a substantially elevated risk or probability of harm shortly before Ms Tapp competed, it is necessary to identify the knowledge about the nature of the ground of the arena that would be held by a reasonable person in the position of the Association, ascertained by the matters that were known or ought to have been known by the relevant members of the Committee or MRC on behalf of the Association who were responsible for ensuring that the surface of the arena was reasonably safe for the event. There had been four falls in a very short time before Ms Tapp rode, all of which were described in the Open Draft Draw as "bad falls". As already noted, the falls occurred at 6.14 pm (Mr Clydsdale, contestant 65), 6.22 pm (Mr Sadler, contestant 70A), 6.36 pm (Mr Gillis, contestant 82), and 6.58 pm (Mr Piggot, contestant 98). Mr Shorten accepted that in Mr Gillis' fall, the horse "slipped from under" the rider. Mr Shorten's evidence was that "by far the majority of campdrafting events start and end without there being a fall". He also conceded that a bad fall is accepted "in campdrafting circles as a signal that the surface needs attention to prevent another fall", although, as explained, his evidence was that Mr Gillis' fall was a "bad fall", but that Mr Sadler's fall was not. He did not see the falls of Mr Clydsdale or Mr Piggot. The trial judge and the majority of the Court of Appeal made limited reference to this evidence concerning the four falls. After observing that the evidence as to the total number of falls for the whole of the day of 8 January 2011 was unclear, the trial judge referred to Mr Shorten's evidence that he had seen two falls (those of Mr Gillis and Mr Sadler) and that "they were both in the arena when they fell"163. The trial judge also stated that she was "conscious of the evidence and submission that falls at campdrafting events were rare"164. But her Honour did not advert to Mr Shorten's acceptance that a "bad fall" is an accepted "signal" that the surface of the arena needs attention. Nor did the majority of the Court of Appeal. The four falls were accompanied by two warnings given to Mr Shorten by the very experienced contestant, Mr Stanton: the first warning was given after the first three falls and the warning was that the competition should be stopped because "the ground [was] getting a bit slippery". The second warning was given after the fourth fall and was that something should be done about the event because he thought "the ground [was] unsafe". Nonetheless, the Committee and MRC chose not to stop the event in order to inspect the ground of the arena and to consider its safety. One or more of the Committee or MRC members said that riders needed to ride to the conditions, and Mr Shorten agreed in cross-examination that the justification in his mind for continuing the event was that "the event had to go on". In cross-examination, Mr Shorten accepted that, immediately before Ms Tapp entered the arena, the condition of the arena had been identified by him and others "as being dangerous". Contrary to the views of the majority of the Court of Appeal, none of that evidence is infected by hindsight reasoning. The questions put to Mr Shorten made clear that they were directed to Mr Shorten's state of mind prior to Ms Tapp's fall. Ms Tapp relied on the evidence contained in the Incident Report that it took three hours for the arena to be disc-ploughed and harrowed on the morning after Ms Tapp's fall and, when the competition commenced thereafter at 8.30 am, there were no further falls. The evidence that the arena was ploughed for three hours and that no further accidents occurred cannot be used to assess with the benefit of hindsight the response of a reasonable person in the position of the Association shortly before Ms Tapp competed in the Open Campdraft. But that evidence is a relevant matter from which an inference can be drawn about the extent to which it must have been apparent that there was a significant deterioration of the ground of the arena and the consequential substantially elevated risk of a rider falling. Mr Shorten agreed that the use of a disc plough demonstrated "how bad the condition was of the ground at 6.45 pm on Saturday, 8 January 2011". 163 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 164 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC There was a submission that the surface did not comply with the Association's Rule Book, specifically Rule 5 under the heading "Committee Rules", which required the following: "Com.15. Campdrafting. The Arena surface MUST be safe, being either ploughed or soft surface (sand or loam) arena. ATTENTION MUST BE GIVEN TO ARENA SURFACES. Hard surfaces, grass surfaces, uncovered trotting tracks and the like do not constitute 'safe arena surfaces', unless a special concession is granted by the Board." This should be put aside in any consideration of breach of duty. There may have been great force in a case that was based on Rule 5 of the Committee Rules, particularly in light of the 11 photographs of the grassy surface of the arena, described by McCallum JA in her dissenting reasons as showing "beyond dispute from every one of them that the surface of the arena was not as prescribed by the rules"165. But, as Payne JA observed, Ms Tapp's case was never "based on" the breach of such a rule166. And, although Ms Tapp pleaded a breach of Rule 5 as one factor relevant to an assessment of breach of duty, the trial judge did not find a breach of Rule 5167. In this Court, Ms Tapp did not dispute that the "essence" of her case in the Court of Appeal was correctly identified by Payne JA as being that, "following a number of falls on the Saturday afternoon, in particular after the fall by Mr Piggot[], there should have been steps taken by the [Association] which would have prevented [Ms Tapp's] fall"168. Rule 5 merely confirms what was not in issue, namely, that the Association was required to take reasonable steps to ensure the safety of the surface of the arena. 165 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 166 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 167 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC 168 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA The Court of Appeal should have accepted that, by the time Ms Tapp competed in the Open Campdraft, as contestant 101, there was a substantially increased risk or probability of physical injury to her by reason of deterioration of the condition of the surface of the arena. Seriousness of the harm, burden of taking precautions, and social utility of the activity: s 5B(2)(b)-(d) The substantially increased probability of harm is, however, only one factor in the assessment of breach of duty. The other factors contained in s 5B(2) – the likely seriousness of the harm (physical injury that could be catastrophic), the simplicity and ease of the response of stopping the event to consider and respond to the safety issues, and the almost trivial social disutility of contestants who had already competed that day being at a competitive disadvantage – were the subject of limited submissions. That is unsurprising. They all support a finding of breach of duty. Precautions that a reasonable person in the position of the Association should have taken Given the probability of harm, the potential magnitude of injury, the ease with which the event could have been stopped, and the minimal social disutility of disadvantage to contestants who participated in the Open Campdraft on 8 January 2011, the only available conclusion is that the event should have been stopped until members of the Committee or MRC on behalf of the Association inspected the arena and were satisfied that the ground of the arena was reasonably safe in that the risk of injury from falling from a horse that slipped on the ground of the arena was not substantially elevated. The Association submitted that, although it did not stop the event for the day after Mr Piggot's fall, it did respond by temporarily suspending the event while the ground of the arena was inspected and therefore it did not breach its duty of care. That submission cannot be accepted. The Association's submission was based upon the reasoning of Payne JA that the campdraft was delayed prior to Ms Tapp's fall "because various people, on behalf of the Association, were inspecting the arena and deciding whether it was safe to continue the event"169. That conclusion was not open on the evidence. While it is not in doubt that Mr Shorten delayed the Open Campdraft on each of the two occasions when Mr Stanton had questioned the safety of the arena surface, neither 169 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA the trial judge's findings nor the evidence supported the finding that the arena was inspected at that time or at any time during the Open Campdraft on 8 January 2011. Apart from Ms Tapp's evidence of a delay, the only relevant evidence comprised evidence from Mr Shorten and the Incident Report. That evidence does not support a finding that "various people ... were inspecting the arena". The highest the evidence could be put is that Mr Shorten "considered the condition of the ground" and "noticed that the surface was not wet, it was moist in parts" and "[d]ust was still flowing up". In cross-examination, Mr Shorten did not give evidence that he had inspected the arena. The relevant evidence was as follows: "Q: When you agreed with me a minute ago that Mr Stanton was right in identifying the dangerous condition of the ground, you'd actually inspected it? I walked across it, I didn't – I asked for them other fellows opinions. Q: When Mr Stanton came back and said point blank 'Somebody's going to get hurt out there', did you inspect it again? A: We went to the judge and asked him to halt the event, we walked across and seen Alan Young and Wayne Smith and spoke to them." In this Court, the Association also submitted that the duty of care owed by the Association was satisfied by an informed decision that it was safe to continue with the competition. The Association submitted that the organisers made an informed decision that it was safe to continue the competition, on two occasions stopping it, considering Mr Stanton's warnings, inspecting the ground, and consulting with experienced campdrafters including the judge and participants (some of whom had themselves fallen) before unanimously deciding to proceed. On the available evidence, there was no such informed decision. Not only was there no inspection of the ground but, as McCallum JA correctly found, in the conversations that ensued, no one concluded that the surface was safe170. Accordingly, the Association breached its duty of care by failing to stop the competition in order to inspect the ground and to make "an informed decision ... as to whether it was safe to continue with the competition". The Court of Appeal erred in failing to find that the Association had breached its duty of care in this respect. 170 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA Whether causation between the negligence and the harm was established: s 5D At trial, the Association conceded that, if the Court found that "the breach involved a failure to stop the event before [Ms Tapp's] ride, then it is self-evident that the failure to stop the event was a necessary condition of the harm and the requirements of s 5D are met", because "the accident wouldn't have happened". The extent of this concession was in issue in this Court. In particular, the Association submitted that its concession did not apply to the manner in which Ms Tapp ran her case in the Court of Appeal because, it was said, her case had shifted in the Court of Appeal from a case that the reasonable response of a person in the position of the Association would have been to "stop" the event, to a case that the reasonable response would have been to "suspend" the event. Putting to one side the philosophical question of how an event can be suspended without stopping it, no member of the Court of Appeal saw any distinction between Ms Tapp's pleaded case at trial, that the Association should have stopped the event, and her ground of appeal, that the Association should have "suspended" the event. There had been no suggestion at trial that "stopping" the event (which was the language used by Mr Stanton in his warnings to Mr Shorten) required the event to be terminated permanently. Indeed, Payne JA171 described Ms Tapp's case on appeal as one that the competition should have been stopped to "plough the arena and/or warn competitors that the site of the campdrafting event had become unsafe", and McCallum JA172 used "stopped" and "suspended" interchangeably. The concession should equally apply whether the counterfactual is described as "stopping" the event or "suspending" the event, and the Association should not, in this Court, be permitted to resile from its concession. In any event, the concession was properly made. In this Court, the Association submitted that: (i) there was insufficient basis to find that shortly before 7 pm after the fourth fall there had been "a deterioration of the ground of the kind for which [Ms Tapp] contends"; and (ii) Ms Tapp's fall might have occurred in any event if she competed when the competition resumed the next day. Those submissions should not be accepted. As to the first matter – the alleged insufficiency of evidence of deterioration of the ground – that has been explained and rejected in relation to breach of duty. 171 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 172 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA The evidence comprised: (i) the four falls in a period of less than an hour in circumstances where falls at campdrafting events are rare, and the relevance of a single "bad fall" as a "signal" that the ground needed attention to prevent another fall; (ii) the two warnings about the state of the ground by the very experienced contestant, Mr Stanton; (iii) Mr Shorten's concessions, including that immediately before Ms Tapp entered the arena he and others had identified the ground "as being dangerous"; and (iv) that it had taken a disc plough three hours to remediate the ground the next morning, which demonstrated how apparent it would have been that the condition of the ground was poor. The inference to be drawn from this evidence about the condition of the ground of the arena, together with the unchallenged evidence of Ms Tapp, her sister, and her father that her fall occurred as a result of her horse slipping on the surface of the arena, is that the condition of the ground was the cause of the fall. As to whether Ms Tapp's fall would have occurred in any event if the competition had been stopped before she competed, and resumed so that she had competed the next day, the Association relied upon the conclusion by the trial judge that there was no evidence that ploughing the arena would have led to a different outcome. But that conclusion had been reached as a consequence of the trial judge's incorrect premise that the ground had not substantially deteriorated and that no breach of duty had been established. A consideration of the counterfactual of what would have occurred if the Association had stopped the event must proceed on the basis that the Association would have acted lawfully173. The counterfactual must be assessed on the basis that the Association would have stopped the event in order to inspect the ground of the arena and to consider whether it was safe. In any event, to adapt what was said by Gummow J in Chappel v Hart174, it would be "unjust to absolve" the Association "from legal responsibility for [the] injuries by allowing decisive weight to hypothetical and problematic considerations of what could have happened ... in conditions of great variability". 173 Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485 at 498-499, citing Baker v Willoughby [1970] AC 467. See also Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm) at [938]-[941]. 174 (1998) 195 CLR 232 at 262 [81]. Whether the risk would have been obvious to a reasonable person in the position of Ms Tapp: s 5L Difficult issues can sometimes arise concerning which characteristics of a plaintiff or of a defendant are to be attributed to a reasonable person in their position175. None of those issues was raised in this case. The only issue was whether, from the perspective of a reasonable person in the position of Ms Tapp, the risk would have been obvious. There are three reasons which, in combination, preclude any conclusion that the risk of injury as a result of falling from a horse that slipped by reason of substantial deterioration of the surface of the arena beyond the normal deterioration that might be expected would have been obvious to a reasonable person in Ms Tapp's position. First, unlike the organisers of the competition on the Committee or MRC, Ms Tapp did not have the opportunity to examine the condition of the ground at all during the Open Campdraft, and particularly not in the hour before she competed, during which the other falls occurred. In cross-examination, Mr Shorten was asked about the opportunity of contestants to "walk the arena, or walk the field in which they're going to be competing". He said that the opportunity was offered to contestants "before the [O]pen [Camp]draft started" and that "[n]o competitor gets a chance before [they] ride[] in a camp to go around the course first". Secondly, a reasonable person in Ms Tapp's position would not have had any concerns about the condition of the ground from observations of other contestants or information about other contestants. On the day that Ms Tapp had her accident, she had already competed twice that morning, her sister had competed three times, and her father had competed four times (including one occasion shortly before Ms Tapp), all without incident. The trial judge held that Ms Tapp "did not observe any falls and was unaware that there had been any falls during the [O]pen [Campdraft] event"176. Indeed, from around 5 pm, when Ms Tapp accepted her father's offer to take his place in the Open Campdraft, until she competed at around 7 pm, Ms Tapp had warmed up her horse, Xena Lena, twice in an area about 200 metres from the arena. When asked in cross-examination about her awareness that a man had fallen 175 Compare Imbree v McNeilly (2008) 236 CLR 510 with Cook v Cook (1986) 162 CLR 376. 176 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC shortly before she competed, Ms Tapp explained that she had been away from the arena and had been unaware of that fall. Thirdly, as Mr Shorten said, and consistently with Rule 5, decisions concerning the quality of the surface and how the surface is maintained were made by the Committee or MRC. A reasonable person in the position of Ms Tapp, who was preparing herself and her horse to compete in the hour before being called, would have relied upon the Committee or MRC for that assessment. Further, although Ms Tapp was experienced in campdrafting, as a 19-year-old she was still a teenager and, as McCallum JA correctly observed, "teenagers are likely to be less attuned to risks that would be obvious to more experienced, settled members of the community"177. Ms Tapp's age thus reinforces the point that a reasonable person in her position would be unlikely to pause, while waiting for her run in a high-turnover event, to reflect upon the appearance of the surface of the arena. A reasonable person in her position would, if they turned their mind to the issue at all, likely assume the Committee or MRC had made an appropriate decision about the surface. During the time before Ms Tapp's event, she became aware that the event was delayed but no announcement was made about the reason for the delay and no one told Ms Tapp about the reason. The trial judge found that "no specific oral warning was given to [Ms Tapp] and no suggestion was made, by announcement or otherwise, that competitors 'rode at their own risk'"178. All that had been announced was that there was an offer of a refund of the entry fee if riders chose not to compete, but Ms Tapp did not hear the announcement and there was no suggestion that the announcement was loud enough that a reasonable person in her position, while warming up her horse in the separate arena, would have heard it. In any event, a reasonable person in Ms Tapp's position would have known, as she knew, that events were held up for other reasons such as "an injured beast ... coming out of the yard". Conclusion The appeal should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of New South Wales made on 23 October 2020 should be set aside and, in their place, it should be ordered that: 177 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2020] NSWCA 178 Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd [2019] NSWSC the appeal be allowed with costs; and the orders made by the Supreme Court of New South Wales on 4 November 2019 be set aside and, in their place, it be ordered that: there be verdict and judgment for the plaintiff in the agreed amount of $6,750,000; and the defendant pay the plaintiff's costs.

HIGH COURT OF AUSTRALIA LEONARDUS GERARDUS SMITS & ANOR APPELLANTS AND WALTER EDWARD ROACH & ORS RESPONDENTS Smits v Roach [2006] HCA 36 20 July 2006 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation J McC Ireland QC with H Altan for the appellants (instructed by Moloney Lawyers) T G R Parker SC with N J Owens for the respondents (instructed by Henderson Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Smits v Roach Courts and judges – Apprehended bias – Disqualification of judge – Right to trial by independent and impartial tribunal – Familial association – Brother of judge alleged to have an indirect pecuniary interest in outcome of proceedings – Associated party given access to judge's draft reasons in advance of delivery –Non- disclosure of association until conclusion of trial – Whether apprehension of bias reasonable – Whether connection between familial association and feared deviation from impartial decision articulated. Courts and judges – Apprehended bias – Disqualification of judge – Familial association – Brother of judge alleged to have an indirect pecuniary interest in outcome of proceedings – Failure to object promptly to judge's participation in the trial – Waiver of right to object. Legal practitioners – Barrister and client – Relationship of agency – Imputation to litigant of knowledge possessed by counsel. Words and phrases – "apprehended bias". GLEESON CJ, HEYDON AND CRENNAN JJ. The appellants, who are solicitors, were retained to act for the respondents in an action for damages for professional negligence against another firm of solicitors. The appellants and the respondents fell into dispute. The appellants ceased to act for the respondents, who were subsequently represented in the professional negligence proceedings by other solicitors. The appellants sued the respondents in the Supreme Court of New South Wales, seeking to recover professional costs to which they claimed to be entitled. They failed at first instance before McClellan J1. An appeal to the Court of Appeal of the Supreme Court of New South Wales (Sheller, Ipp and Bryson JJA) was partly successful2. The issue in the further appeal of the appellants to this Court is narrower than the issues considered by the Court of Appeal. It concerns only the ninth ground of appeal to the Court of Appeal, which was that McClellan J "erred in failing to disqualify himself on 26 June 2002 from determination of the proceedings". The Court of Appeal rejected that ground on the basis that the appellants "waived their right to seek to have the judge disqualify himself". In order to explain how the questions of disqualification and waiver arose, it is necessary to describe, in broad outline, the professional negligence proceedings, and the disputes that arose between the appellants and the respondents in relation to the conduct of those proceedings. The professional negligence proceedings The first respondent, Mr Roach, is an engineer. The second and third respondents are companies formerly controlled by the first respondent. They are now in voluntary liquidation. In the late 1980s, the first respondent became interested in a peat deposit in Victoria. The respondents engaged Freehill Hollingdale & Page ("Freehills") to act on their behalf in the legal steps to be taken to permit the exploitation of the peat deposit. The second respondent took a lease of the land. The respondents allege that, as a result of negligent advice from Freehills, the Roach interests failed to apply for a mining licence and, in consequence, another person obtained the right to exploit the deposit. For many years the first respondent had been a personal friend of the second appellant, Mr Leslie. The first respondent sought the professional assistance of Mr Leslie in connection with a claim for damages against Freehills. 1 Smits v Roach (2002) 55 NSWLR 166. 2 Smits v Roach (2004) 60 NSWLR 711. Crennan The respondents were not in a financial position to meet the costs of the proposed litigation in the ordinary way. A special agreement about costs was made. On 1 July 1995, before any proceedings against Freehills were commenced, the second appellant went into partnership with the first appellant. On 15 November 1995, the firm of Smits Leslie commenced proceedings on behalf of the respondents against Freehills. On 7 April 1999, the retainer of Smits Leslie was formally terminated. The circumstances in which the termination occurred are part of the subject matter of the litigation between the appellants and the respondents. The parties had been in dispute for several months before the termination. The damages claimed by the respondents against Freehills were for the loss of the profits that would have been made from the exploitation of the peat deposit. They were claimed to be in the order of $1 billion. There is no material before this Court that permits any conclusion about the credibility of that assessment of loss. In the Supreme Court of New South Wales, there was in evidence a report that a "spokeswoman for Freehills ... said the peat farm central to the proceedings is quite small and its only use is for fertiliser for mushrooms". There was also evidence that, at one stage, Freehills offered to settle the claim for $57,600 plus costs, but the offer was rejected. The offer was later increased to $125,000 plus costs, but was again rejected. Those offers may reflect no more than an assessment of what it was worth to Freehills, in terms of their own costs and time, to resolve the litigation. However, on the evidence in the present proceedings it is not possible to form a view about the merits of the claim against Freehills, or about the amount of damages likely to be awarded if the action were ultimately to succeed. Neither McClellan J nor the Court of Appeal made findings about those matters. Another topic about which the evidence is unclear, and about which there are no findings, is the state of preparation of the litigation between the respondents and Freehills when, in late 1998 and early 1999, the appellants effectively ceased to act for the respondents. The absence of the financial resources necessary for the preparation and prosecution of the case against Freehills was a principal cause of the breakdown in the personal and professional relations between the appellants and the first respondent. No findings have been made as to the extent to which the respondents have had benefit from the professional services of the appellants, or as to the value of that benefit assessed by reference to ordinary professional fees. To what extent it may have been necessary for the solicitors who took over the case from the appellants to duplicate work for which the appellants claim to be paid does not appear. On the approach taken by the Court of Appeal to the issues with which this Court is concerned, that was not material. It is clear, however, that the litigation was not in an advanced state of preparation at the time the appellants ceased to act. Crennan The disputes between the appellants and the respondents The disputes that were the subject of the litigation before McClellan J arose out of the problem of funding the action against Freehills. They culminated in mutual distrust, animosity and recriminations. There was conflicting evidence before McClellan J as to the events leading up to the termination of the appellants' retainer in April 1999. McClellan J preferred the evidence of the first respondent to that of the appellants. When, in 1995, the first respondent asked the second appellant to act for him and his companies, he proposed that the basis of the retainer would be that the second appellant would be entitled to be paid costs only in the event of success in the litigation, and that, in such event, the second appellant would be entitled to receive, in addition to normal professional fees, 10 per cent of any damages recovered by way of court order or settlement. The magnitude of the proposed litigation, and of the potential commitments to third parties, such as barristers and expert witnesses, was of concern to the first appellant when, in mid-1995, he went into partnership with the second appellant. Two written retainer agreements were signed. It is a measure of the rate of progress of the litigation, and the problems of litigation funding, that, although the action against Freehills was commenced in November 1995, the first retainer agreement was signed in April 1997, and the second on 23 June 1998. The first retainer agreement is of historical significance only. The retainer agreement of 23 June 1998 became of central importance. It pre-dated by only a few months the complete breakdown of the solicitor-client relationship. What was happening to the Freehills litigation while all this was going on appears only by inference from findings about the disagreements and recriminations between the appellants and the first respondent. McClellan J and the Court of Appeal found that both retainer agreements were champertous. The second retainer agreement, of 23 June 1998, was supplemented by a letter dated 24 June 1998. The agreement specified hourly rates for the legal work undertaken by the appellants. It provided that "[t]he Clients' obligation to pay all of the Solicitors' and the barrister's costs otherwise payable under this Agreement is contingent on the successful outcome of the matters in which the Solicitors and barrister provide the legal services to the Clients". The supplementary letter provided that, if the amount recovered in the action was less than $10 million, the appellants would be entitled to share in the proceeds to the extent of 10 per cent of the amount recovered, and for values over $10 million "an extra maximum of 5% recovered". The share in the proceeds was to be in addition to "any costs and disbursements which might be recoverable from the defendants". Crennan In September 1998, when it had become apparent that the prospect of settling the Freehills proceedings was remote, and that the preparation of the case for trial would involve significant financial commitments and risk, the appellants approached a litigation funder. The first respondent became personally involved in the discussions with the litigation funder. The appellants proposed an arrangement which involved "an up-front fee of $500,000 [to] be paid to Smits Leslie on account of legal costs and disbursements [already] incurred". This represented a fundamental departure from the retainer agreements. The terms of the proposed litigation funding, and, in particular, the proposed up-front fee of $500,000, became a source of dispute. By mid-December 1998, the solicitor- client relationship was under threat. In March 1999, the appellants issued a notice of rescission of the second retainer agreement. This was served on 7 April 1999 and, on the same day, the appellants filed in court a notice of ceasing to act for the respondents. Another firm of solicitors took over the conduct of the action against Freehills. For several months thereafter there were disputes, and legal proceedings, relating to the handing over of documents and other matters. These are presently irrelevant. Following the termination of the appellants' retainer, in May 1999 the second and third respondents were placed in voluntary liquidation. This was part of a scheme to facilitate litigation funding. There are no findings about the financial position of those two companies. In particular, there are no findings about the amount creditors are likely to receive. The present proceedings were commenced in July 1999. In the course of efforts to effect a settlement of at least some of the disputes, in September 1999 a "Ten Point Plan" was entered into between the appellants and the liquidators of the second and third respondents. The first respondent was not a party to that agreement. Under the Plan the liquidators agreed to admit the appellants as ordinary unsecured creditors in the liquidations in respect of an amount of $500,000 for acting in the professional negligence proceedings up to December 1998. The value to the appellants of that agreement is unclear, for the reasons given in the preceding paragraph. By an amended summons filed on 3 March 2000, it was claimed that the respondents had repudiated the second retainer agreement and that the appellants had a present entitlement to damages. In the alternative, the appellants sued on an alleged agreement of 11 December 1998 claiming $500,000 and 10 per cent of the proceeds of the Freehills litigation. Between March 2000 and February 2002 there were further amendments to the summons, cross-claims were made, the parties were amended, and some aspects of some of the disputes were settled. The details are not presently material. Crennan The hearing before McClellan J The proceedings were listed for hearing, on issues of liability only, before The appellants were represented by McClellan J on 11 March 2002. Mr Lindsay SC and Mr Haffenden of counsel. On or about 7 March 2002, McClellan J, on learning that he had been assigned to hear the case, invited the parties, through their respective counsel, to indicate whether they objected to his sitting. The reason for this appears to have been that the second appellant and the judge had played golf together on a number of occasions. It should be added that the second appellant is a former Registrar of the Supreme Court and would have been known personally to many of the judges. Issues of credit were involved in the case, and presumably that is what prompted McClellan J's enquiry. No objection was made to his sitting. The hearing took place on 11-14 March, 18 March, and 20-21 March 2002. McClellan J reserved his decision, and delivered judgment on 19 June 2002. A brief account of his formulation of the issues, and his reasons for judgment, will suffice for present purposes. It is unnecessary to repeat, or attempt to summarise, his lengthy recital of the evidence, and his detailed findings of fact. The case for the appellants, as opened by Mr Lindsay, included a claim, based on the Ten Point Plan of September 1999, to be admitted as creditors in the windings-up of the second and third respondents in the sum of $500,000. It also included a claim for a payment of $500,000 pursuant to an alleged agreement of December 1998. There was also a claim expressed by McClellan J as follows: interests, which entitles Smits Leslie "[I]t is said that the retainer agreements were wrongfully repudiated by the to damages, being Roach professional costs pursuant to the agreement, and future profit costs lost by reason of the termination of the agreement. In the alternative, Smits Leslie claim that they were entitled to terminate the agreement pursuant to cl 14 and plead an implied term (it not being expressly provided) that in the event the retainer was terminated, the defendants would pay professional costs, counsel's fees and disbursements. If those claims fail, Smits Leslie say they are entitled to reasonable remuneration for the work which they undertook." The respondents argued that the retainer agreements were champertous, illegal and unenforceable. They also argued that the appellants had repudiated the second retainer agreement and that the respondents had terminated the agreement. Further, it was said that any entitlement to fees was contingent on the successful outcome of the Freehills proceedings which had not occurred. The Crennan respondents denied the alleged agreements of December 1998 and September 1999. There was a cross-claim for damages. It is necessary to make brief reference to certain legislation bearing on the issues at trial. The Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) ("the Abolition Act") abolished the offence of maintenance (including champerty). Section 6 of the Abolition Act provided that the Act did not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal. At the same time, the Legal Profession Act 1987 (NSW) ("the Legal Profession Act") was amended. By the amendments, new provisions about costs agreements were included. Those provisions enabled a solicitor to make a costs agreement under which payment was contingent on a successful outcome. It also enabled such an agreement to provide for a premium (sometimes called an uplift) not exceeding 25 per cent of the costs payable. McClellan J recorded that, in final argument, the appellants accepted that they could not sustain all the terms of the second retainer agreement. He went "However, they seek to sustain a claim for the following payments: Smits Leslie's professional costs and counsel's contingent on a successful outcome proceedings; fees the Freehills payment of other disbursements incurred by Smits Leslie other than counsel's fees within thirty days of the issue of any account, and a premium of 25 per cent on costs and disbursements contingent on a successful outcome." McClellan J decided that the second retainer agreement (like the first retainer agreement) was champertous and that the appellants were "not entitled to recover any monies". He found that "the cause of many of the problems [between the parties] was the fact that Smits Leslie had failed to discharge their obligation to devise an effective litigation strategy and prepare [the case against Freehills] in a timely fashion". The Freehills litigation, he held, was beyond the skill and capacity of the appellants' firm, as well as their financial resources. By April 1999, the relationship between the appellants and their clients had deteriorated to the point where it was impossible for it effectively to continue. The appellants had no right to be paid for their work up until April 1999. The retainer agreement contained no such right, and in any event, even if enforceable, the agreement was conditional on a successful outcome in the Freehills litigation. As to the alleged agreement of December 1998, concerning a payment of Crennan $500,000 on account of costs, McClellan J found that there was no such agreement. As to the September 1999 agreement, McClellan J accepted that the Ten Point Plan was reflected in a concluded agreement between the appellants and the second and third respondents under which the appellants could lodge proofs of debt in the liquidation of those respondents. However, he held that the commencement of the proceedings was a repudiation of that agreement, which the respondents had accepted. The appellants' claims failed. He also dismissed the respondents' cross-claims. The disqualification issue This issue arose, at the end of the proceedings before McClellan J, in unusual circumstances. In the course of the hearing, evidence that might have been the subject of legal professional privilege, or that might otherwise have been the subject of a claim for confidentiality, was tendered. McClellan J was concerned that the form in which he published his reasons for judgment might inadvertently and unnecessarily disclose information the subject of such a claim. Accordingly, he handed a draft of his reasons to the parties and invited them, and Freehills, to make comments on the form of the reasons to be published. On 17 June 2002, at a hearing attended by junior counsel for the respective parties, and a representative of Freehills, McClellan J said that the matter he was raising (the form of his reasons for judgment and issues of confidentiality) affected the interests of Freehills as well as the interests of the parties. He said that his brother, Mr Geoff McClellan, was the Chairman of Partners of Freehills, that normally he would not sit on a matter which involved Freehills' interests, but that he did not appear to have any choice. He invited suggestions as to possible alternative courses, but none were made. Over the succeeding days, a number of issues of confidentiality were resolved by agreement between the parties and Freehills. On 26 June 2002, the matter was again listed before McClellan J for the purpose of finalising issues as to confidentiality. On that occasion, again, the parties were represented by junior counsel. Counsel for the appellants, with the leave of McClellan J, filed a notice of motion for McClellan J to disqualify himself and to refrain from making orders in the matter. The motion was supported by an affidavit of the second appellant, who said that he had not been aware, before June 2002, that the judge's brother was the Chairman of Freehills. The affidavit said that Mr Geoff McClellan was the seventy-second defendant in the Freehills action (other evidence indicated that there were at least 80 partners in the Sydney firm of Freehills), and that the deponent would have requested the judge to disqualify himself "if his relationship with a defendant in the Freehills Proceedings had been disclosed to us or our Counsel". The affidavit also Crennan asserted that the deponent had been told by both his counsel that they had not known that Mr Geoff McClellan, the judge's brother, was the Chairman of Freehills. The affidavit said, without elaboration: "The net commercial impact of the Judgment handed down in these proceedings on 19 June 2002 will be that Freehills will be relieved of a claim from the Defendants herein of not less than $675,000 on account of costs claimed by us as the Plaintiffs in these proceedings." When the affidavit was read, the judge's immediate response was to ask whether Mr Lindsay was aware of the application, and of the contents of the affidavit. There was the following exchange with junior counsel for the appellants: "HIS HONOUR: Mr Lindsay would have known that my brother was at Freehills without the slightest question. I find this an extraordinary proposition. Are you telling me that Mr Lindsay did not know that my brother was a partner at Freehills? HAFFENDEN: No, I'm not saying that. I can't speak for Mr Lindsay. HIS HONOUR: I don't know about [Mr Leslie], but I would imagine that probably counsel on both sides knew that my brother was at Freehills. HAFFENDEN: I didn't know, your Honour. HIS HONOUR: I would be certain Mr Lindsay knew." In his reasons for refusing to disqualify himself, McClellan J referred to the relevant part of the affidavit of the second appellant asserting lack of knowledge of the relationship and said: "Although I accept that this may be the case in relation to Messrs Leslie, Smits and Haffenden, I thought it unlikely to be the case in relation to Mr Lindsay. I asked Mr Leslie to tell me from the bar table whether he sought to sustain the allegation that Mr Lindsay was not aware that my brother was a partner of Freehills. He indicated that he did not and that that part of his affidavit was wrong." What would have happened if the judge had not questioned the assertion about what Mr Lindsay had told Mr Leslie is not clear. It appears that, when the affidavit was handed up in court, Mr Leslie knew it contained an error. The judge noticed the error, not because it was drawn to his attention, but because of his knowledge of Mr Lindsay's professional background. When the judge asked Mr Leslie to come forward, and questioned him about what was said in the Crennan affidavit, Mr Leslie responded that, after he had sworn the affidavit, Mr Lindsay had told him that "that is incorrect, as far as Mr Lindsay is concerned". When the matter later came before the Court of Appeal, an affidavit of Mr Lindsay was read. He said that, at the time of the commencement of the hearing before McClellan J, and at the time of discussion about whether to object to McClellan J sitting (for other reasons), he knew that Mr Geoff McClellan of Freehills was a brother of the judge (although he did not know that Freehills had a "Chairman of Partners"). He also testified that he believed, although he may have been mistaken, that he had referred to that fact in discussions with Mr Leslie. It should be added that there was no suggestion that Mr Geoff McClellan had taken any personal role in the advice given to the Roach interests about the peat deposit, or the conduct of the professional negligence proceedings. There is no evidence as to the role in Freehills of a Chairman of Partners, but presumably it involves some administrative responsibilities. On the motion for disqualification, junior counsel for the appellants said that the argument was that the judge was in "a position of potential conflict". The judge asked what was the conflict. Counsel said: "Now the issue of what costs there may have been [owing by Mr Roach and his companies] may very well impact upon those Freehills proceedings or any claim against Freehills or any settlement with Freehills. That is the argument." McClellan J dismissed the motion. He said: "The questions involved in the present dispute did not require the resolution of any issue relating to Freehills or any of its partners. Although the fact that Freehills have been sued has given rise to the current proceedings, the proceedings are otherwise so remote, that I am satisfied, having regard to the appropriate test, I should not disqualify myself. In any event as the plaintiff's senior counsel was apparently aware that my brother was a partner at Freehills but the matter was never raised, any right to object has been waived." The Court of Appeal's disposition of the issues other than disqualification The Court of Appeal allowed the appellants' appeal against the second and third respondents to the extent to which it was based on the Ten Point Plan contained in the agreement of 16 September 1999. The Court of Appeal agreed that the attempt by the appellants to base a claim on the second retainer Crennan agreement could have amounted to a repudiation of the Ten Point Plan agreement, but found that this had not been accepted. On the contrary, the second and third respondents had based a defence on the Ten Point Plan. The Court of Appeal made the following declaration to give effect to this part of its judgment. The terms of the declaration explain, sufficiently for present purposes, the relevant aspects of the Ten Point Plan: "4AA DECLARE that a valid and binding agreement was made on or about 16 September 1999 between the first and second appellants of the one part and [the second and third] respondents of the other part whereby: the first and second appellants were to be admitted as ordinary unsecured creditors in the liquidations of each of the [second and third] respondents in a sum of $500,000 in respect of their time charges in acting as solicitors for those parties in the period up to 1 December 1998; the first and second appellants were to be at liberty to submit proofs of debt to the liquidators of the [second and third] respondents respectively in respect of out of pocket expenses incurred by them in acting as solicitors for the [second and third] respondents in the period up to 19 April 1999 to a maximum of $75,000; and that the first and second appellants were to be at liberty to submit proofs of debt to the liquidators of the [second and third] respondents in accordance with their retainer agreement up to a limit of $100,000." The total of the three amounts referred to in those orders corresponds with the figure mentioned in the affidavit of Mr Leslie. The claim based on the second retainer agreement failed. The Court of Appeal disagreed with McClellan J's view that, being champertous, it was wholly void. The effect of the amendments to the Legal Profession Act was held to be that the second retainer agreement was unenforceable only to the extent to which it went beyond the boundaries marked out by that Act. However, the agreement legitimately made recovery of costs contingent upon a successful outcome of the Freehills proceedings and the parties deliberately made no provision for the appellants to be paid anything if the solicitors decided to cease to act for their clients before that outcome was achieved. The terms of the agreement made it Crennan plain that the appellants were not entitled to recover anything from their clients in contract or on a quantum meruit. The appeal to this Court The grounds of appeal to this Court relate solely to the Court of Appeal's decision on the issue of disqualification. If the appellants had succeeded on that issue, they would have been entitled to, and they would have sought, a new trial. This Court is asked to set aside the orders of the Court of Appeal (including those favourable to the second and third respondents) and order a new trial. It is not entirely clear what benefit would thus be gained by the appellants. The claim on the second retainer agreement failed in the Court of Appeal on legal grounds, and, at least as a practical matter, it seems very unlikely that a judge at a new trial would take a view different from that of the Court of Appeal. Nevertheless, the appellants argue that they have a right to a new trial. Presumably they see some possible advantage in persuading a trial judge to take a view of the primary facts different from that taken by McClellan J. They have already had an opportunity to pursue, in an appeal by way of rehearing, all the challenges they wished to make to the findings of McClellan J. If a view were taken that the grounds of appeal to this Court should be upheld, it might be necessary to give further consideration to the procedural position that thus would arise. In any event, the argument for the appellants serves to underscore the nature of the issue that arises in this appeal. If the appellants are right, and McClellan J should have disqualified himself in response to the motion of June 2002, then the consequences are visited upon the respondents. The motion for disqualification was brought after the appellants knew they were going to lose their case, in circumstances where at least their senior counsel had known from the outset the allegedly disqualifying fact. The appellants then pursued an appeal by way of re- hearing to the Court of Appeal, in which they argued all issues of fact or law that they wished to agitate. They were partly successful, and partly unsuccessful. Now, they contend, the entire case should be re-heard by another primary judge. The Court of Appeal's disposition of the disqualification issue McClellan J gave two reasons for rejecting the motion filed on 26 June 2002. The Court of Appeal rejected the ninth ground of appeal on the basis of the second of those reasons, that is to say, waiver. Sheller JA, with whom Ipp and Bryson JJA agreed, said: "The following matters are established and not in dispute. His Honour's brother was on the date of judgment a partner and the chairman of Freehills. It is assumed that he had been both from the time the proceedings began before McClellan J. Neither of the plaintiff solicitors Crennan nor junior counsel, Mr Haffenden, was aware of this before the trial judge's announcement on 17 June 2002. The application was made at the end of a trial which had occupied five hearing days and after the trial judge's judgment had been published. The judgment was apparently published on 19 June 2002, two days after the first disclosure on 17 June 2002, though it had been distributed in draft form to the parties before 17 June 2002. The degree to which the plaintiffs in the proceedings before McClellan J were entitled to recover their costs from the Roach interests would translate into an increase in the costs that the Roach interests could recover in the proceedings against Freehills, if they were successful. In that way, success by the plaintiffs in the proceedings before McClellan J could add to the amount for which Freehills would be liable to indemnify the Roach interests by an amount in the order of $500,000." The statement that neither of the appellants nor junior counsel was aware before June 2002 of the relationship between the judge and Mr Geoff McClellan is inconsistent with something that was said later in his Honour's reasons. The statement that this matter was not in dispute is not accepted by the respondents. It may be observed that, consistently with the argument that was put for the appellants before McClellan J, and in the Court of Appeal, and in this Court, Sheller JA approached the matter on the basis that it was the possible financial impact on Mr Geoff McClellan of success of the appellants that was the critical consideration. It was, of course, never suggested that McClellan J had any financial interest, direct or indirect, in the outcome of the proceedings. It was the suggested financial interest of his brother that was the problem. Yet the facts recorded by Sheller JA leave the nature and extent of that possible interest unclear and speculative. Freehills is one of Australia's largest law firms. The position of Mr Geoff McClellan as seventy-second defendant in the Freehills action reflects its size. It is reasonable to infer that it has professional indemnity insurance, although there is no information about the extent of such insurance. If there were judgment against Freehills in the professional negligence proceedings, then, in the ordinary course, Freehills would be liable to pay the reasonable legal costs and expenses incurred by the Roach interests in prosecuting their claim against Freehills. Whatever speculative or other special arrangements about litigation funding, or legal costs, were made between the Roach interests and their lawyers would ordinarily have no bearing on the extent of Freehills' liability. At first sight, a dispute as to fees between the Roach interests and their former lawyers would appear to be a matter of indifference to Freehills. This is a subject to which it will be necessary to return in dealing with the respondents' notice of contention. For the present, it suffices to say that the statement that success by the appellants in the proceedings before McClellan J could add to Freehills' liability by an amount in the order of $500,000 is disputed by the respondents, and the process of reasoning involved in that statement is not clear. Crennan The respondents argue that it is at least consistent with the facts established in evidence that the financial impact on Mr Geoff McClellan of success or failure by the appellants in their action against the Roach interests would be negligible, or non-existent. Sheller JA went on to say: "The Court referred to a statement made by Latham CJ in the course of argument in the Bank Nationalisation case ... It was pointed out, and must be remembered, when considering some of the older cases, that the applicable test is now accepted to be that stated in Ebner ... It is not whether there was a 'real likelihood of bias' but whether a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question in hand. Against that test has to be weighed the nature of the interest of the judge's brother in the outcome of the litigation and the relationship between the judge and his brother which, in the absence of any other information, might reasonably be regarded as close. If the trial judge had had a pecuniary interest such as shares in a private company which stood in the same litigation relationship to the respondents as Freehills did, even if automatic disqualification did not follow, the appellants could rightly have claimed that a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the case. The question was whether the fact that the trial judge had no pecuniary interest whatever in Freehills but his brother did, might give rise to a reasonable apprehension of bias. In the circumstance that so far as was known the relationship was close, a fair minded lay observer might reasonably have apprehended that the judge might not bring an impartial mind to the resolution of the case. The trial judge should have disclosed to the parties that his brother was a partner or chairman of Freehills when the proceedings began. His failure to do so is explained by the fact that, when considering whether they might object to McClellan J sitting, the parties were directing their minds to social relationships apparently enjoyed by the plaintiffs with various judges. Those matters were canvassed and dealt with. Clearly, the judge gave no consideration to the position of his brother. Mr Lindsay did. In the course of conversations with his junior and with Mr Leslie in early March he mentioned to each of them separately that it would be necessary for the solicitors to make a decision about whether or not to object to McClellan J. Mr Lindsay believes, though he may have been mistaken, that in the course of those conversations he referred to the fact that the judge's brother was a partner in Freehills as a factor to be taken into account. However, he was unable to devote any substantial time to consideration of whether or not the plaintiffs should object to McClellan J. Crennan On 11 March 2002, Mr Lindsay was instructed by the plaintiffs that they took no objection to McClellan J presiding at the hearing. Paragraph 14 in Mr Lindsay's affidavit is important. Amongst other things, he says that given the range and frequency of contact between the plaintiffs and all of the judges of the Equity Division and the fact (as he believed) that Mr Geoff McClellan was only one of a very large number of members of Freehills, he did not consider a decision by the plaintiffs not to object to In par 15 Mr Lindsay said he was unconcerned that the trial judge did not refer to the fact that his brother was a partner of Freehills 'because I believed that fact to have been known to all parties'." In the first of the two paragraphs just quoted, Sheller JA referred to a "pecuniary interest ... in Freehills" and, earlier, to an "interest ... in the outcome of the litigation". For the reasons explained in Ebner v Official Trustee in Bankruptcy3, when questions of pecuniary interest are considered in this context, there is a danger of confusing pecuniary interest in the outcome of litigation with pecuniary interest in a party to litigation. Without doubt, Mr Geoff McClellan had a pecuniary interest in Freehills. What is important, however, is whether he had a pecuniary interest in the outcome of the litigation between Smits Leslie and the Roach interests. Noting that waiver was available as an answer to an appeal grounded on an allegation of apprehended bias, Sheller JA, after referring to authority on the point, concluded: "As counsel, Mr Lindsay was bound to disclose to his clients that McClellan J's brother was a partner at Freehills. Indeed, according to his evidence, Mr Lindsay may well have done so. If the appellants did not act on that information at that time, or if Mr Lindsay did not inform them, they waived their right to seek to have the judge disqualify himself on the ground of his relationship with a partner in Freehills who was also the chairman. Ground 9 of the appeal accordingly fails." Sheller JA did not make a finding about whether Mr Lindsay had mentioned to the appellants, or at least the second appellant, at the outset, that the judge was Mr Geoff McClellan's brother. On the approach he took, he did not have to. He left the matter open. Senior counsel for the respondents in this Court pointed out that, if this Court were to hold that Mr Lindsay's knowledge was not of itself sufficient to bind the appellants, the matter would have to go (2000) 205 CLR 337 at 349 [25], 357 [55]. Crennan back to the Court of Appeal for a finding as to whether the appellants themselves knew. That is correct. As was noted earlier, Sheller JA's statement that, according to Mr Lindsay's evidence, he may well have told his clients that the judge's brother was a partner at Freehills is inconsistent with an earlier statement that it was not disputed that his clients did not know of the relationship before June 2002. On the approach taken by Sheller JA, it did not matter whether Mr Lindsay had told the clients earlier. However, if the appellants' submission in this appeal were to succeed, it would be important. The question could not simply be left unresolved. Waiver It has been held in this Court, on a number of occasions, that an objection to the constitution of a court or tribunal on the ground of apprehended bias may be waived, and that, if a litigant who is aware of the circumstances constituting a ground for such objection fails to object, then waiver will result. The general principle is not in contest in this appeal. The authorities on the point were examined by Dawson J in Vakauta v Kelly4. It is unnecessary to repeat what was said by Dawson J. It is as well, however, to repeat what was said in the joint judgment of Brennan, Deane and Gaudron JJ in the same case concerning the justice of the matter, because it is directly in point. In Vakauta v Kelly, the ground of apprehended bias was related to certain comments made by a trial judge in the course of proceedings. Brennan, Deane and Gaudron JJ, in a passage quoted by Sheller JA in the present case, said5: "Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object. The reason why that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair (1989) 167 CLR 568 at 577-579. (1989) 167 CLR 568 at 572. Crennan and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her." Let it be assumed, for the purpose of argument, that the trial judge's family relationship with a member of Freehills meant that an objection by either party to the judge sitting would have been well-founded on the basis of apprehended bias. If one party knew of the relationship and the other did not, in the absence of any principle of waiver the party who knew of the relationship could wait for the trial judge's decision, accept the decision if favourable, and have the decision set aside if unfavourable. In this case, the appellants first raised the question of disqualification after they knew what the decision of McClellan J was going to Let it be assumed, putting aside the unresolved question of fact noted earlier, that it was only senior counsel for the appellants, and not the appellants personally, who knew of the disqualifying relationship. From the point of view of the respondents, that makes no difference. Indeed, in most cases litigants in the position of the respondents, or trial judges, or an appellate court, would have no reliable basis for discriminating between knowledge of counsel and knowledge of counsel's clients. They are not privy to communications between counsel and their clients. Ordinarily, those are confidential and privileged. When a litigant is legally represented, judges communicate with counsel, not with the litigant. When, as sometimes occurs, a judge makes a disclosure of some matter for the purpose of enquiring whether a party desires to make submissions about possible disqualification, the response will come from counsel, not from the party. The judge may have no way of knowing what, if any, communications have taken place between counsel and client. The appellants were represented at trial by Mr Lindsay. If they had objected to McClellan J sitting, it would have been Mr Lindsay who would have made the objection. If the judge had disclosed his relationship with Mr Geoff McClellan, it would have been to Mr Lindsay that the disclosure would have been made, and it would have been for Mr Lindsay to respond. What, if anything, he might say to, or hear from, his clients before making that response, in the ordinary case, would be something of which neither the judge nor the respondents would know. If Mr Lindsay said that there was no objection to McClellan J sitting then it would not be for McClellan J, or the respondents, to investigate whether this was done upon instructions from his clients. Bearing always in mind that the ultimate question concerns the legal consequences for the respondents, does it make a difference that, in the present case, legal professional privilege having been waived, it is now known that Mr Lindsay, aware of the judge's relationship with Crennan Mr Geoff McClellan, raised no objection, but did so (let it be assumed) without having taken instructions from the clients? The answer to that question turns upon the principle according to which Mr Lindsay was representing his clients. It is a principle that involves, but is not limited to, general concepts of agency6. The adversarial system of litigation operates upon the basis that a party is generally bound by the conduct of counsel, and that counsel has a wide discretion as to the manner in which proceedings are conducted. The width of that discretion is reinforced by the role of the barrister as an officer of the court, by the barrister's paramount duty to the court, and by the public interest in the efficiency and finality of the judicial processes7. This was civil litigation. If Mr Lindsay had failed to object to inadmissible evidence in the course of the trial, the appellants would have been bound by the consequences, and there would have been no enquiry by an appellate court as to whether that had occurred for a good reason, or with the approval of the clients. Indeed, such an enquiry would normally be impossible. Similarly, if Mr Lindsay had decided not to pursue a certain line of argument, or press a possible point of law, the appellants could not have complained to an appellate court that he had failed to consult them about the matter. The respondents were not at risk of having a favourable decision set aside on the ground that, in some aspect (perhaps some very important aspect) of the conduct of the case, Mr Lindsay was acting without express instructions from his clients. That was because, in conducting the case on behalf of his clients, Mr Lindsay was exercising wide and independent discretion. If it were otherwise, any judgment in a civil case would be at risk of being set aside on the ground that counsel had acted in excess of authority, and the appellate process would be one of endless re-litigation of contested issues. The considerations according to which a principal is affected by an agent's knowledge, and the relevance of the circumstances in which the agent acquired the knowledge, depend upon the context in which the problem arises8. Having regard to counsel's role in the conduct of litigation, when a characterisation of the legal nature and quality of counsel's acts and omissions depends upon knowledge 6 See Matthews v Munster (1887) 20 QBD 141 at 142, 144-145. 7 D'Orta-Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 at 761-762 [34]-[36], 776 [111]-[113], 780 [139]-[140]; 214 ALR 92 at 100, 120-121, 126; R v Birks (1990) 19 NSWLR 677 at 683; Halsbury's Laws of England, 4th ed (2005 reissue), vol 3(1), par 664. 8 Bowstead & Reynolds on Agency, 17th ed, (2001), Art 97; El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 701-704 per Hoffmann LJ. Crennan of some fact or circumstance, then counsel's clients are affected by that knowledge. In this context, there is no reason in principle to distinguish between the knowledge of Mr Lindsay and that of his clients, or between knowledge that Mr Lindsay acquired as counsel for the appellants and knowledge that he acquired in some other capacity. To adopt language used by Handley JA9, and quoted with approval by Gummow and Hayne JJ10, in a somewhat different context, there is no basis for ignoring any part of Mr Lindsay's knowledge, present to his mind, when conducting the litigation. If McClellan J had raised the matter of his relationship with Mr Geoff McClellan in the course of the original discussion as to whether any party objected to his sitting, and Mr Lindsay had said there was no objection, neither the judge nor the respondents would have (or, for that matter, could have) investigated the question whether Mr Lindsay had instructions from his clients to say what he did. It cannot make a difference, as far as the legal consequences for the respondents are concerned, that the case is one of omission by Mr Lindsay. In the course of the litigation, Mr Lindsay's conduct included what he did not do as much as what he did. Failure to object to evidence or to pursue a particular line of argument, may, from one point of view, be an omission, but it is part of the conduct of the case. Nor is it possible to distinguish between the failure to object considered in Vakauta v Kelly, where the potentially disqualifying conduct occurred in court, and the failure to object in the present case, where there was a potentially disqualifying circumstance known to counsel. Indeed, the case illustrates the futility of endeavouring to assign an omission by counsel to either a particular time or a particular place11. The decision of the Court of Appeal on the issue of waiver was correct. The notice of contention Against the possibility that this Court might disagree with the Court of Appeal's conclusion on waiver, the respondents filed a notice of contention challenging the finding that a fair minded lay observer might reasonably have 9 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 at 697 [87]. 10 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) (2003) 214 CLR 514 at 548 [87]. 11 cf D'Orta-Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 at 770 [89]; 214 ALR 92 at 113. Crennan apprehended that McClellan J might not bring an impartial mind to the resolution of the case. While, strictly speaking, it is unnecessary to express a conclusion on the point, it should be observed that there are serious difficulties with the reasoning of the Court of Appeal. There is no suggestion that McClellan J had any personal interest, direct or indirect, in the case which he decided, or that he was in the position of being, either personally or through an alter ego12, a party to the cause. The argument is based on association: a close family relationship with a person who, as a partner in Freehills, is said to have had a financial interest in the outcome of the litigation between Smits Leslie and the Roach interests. It was pointed out in Ebner13 that the concept of interest (like the concept of association) is protean, and that one of the difficulties with the bright line of automatic disqualification drawn by Dimes v Proprietors of the Grand Junction Canal14 is that, upon examination, it is not nearly as bright as is sometimes supposed. Many of the cases it covers would in any event obviously be covered by a more general principle. In many other cases, the certainty which is thought to be part of its attraction is illusory. The proposition that Freehills, as a firm, had a financial interest in the outcome of the dispute between the Roach interests and their former solicitors is at least doubtful. The proposition that Mr Geoff McClellan, as one of at least 80 partners, was in such a position that the outcome of the dispute could have more than a negligible effect on his personal finances is even more doubtful15. If Freehills are ultimately successful in the Roach proceedings, then there is no reason to believe they will be affected in any way by the dispute with which McClellan J was concerned. If Freehills are ultimately unsuccessful, then they will almost certainly be ordered to pay the reasonable legal costs of the Roach interests. If the case is settled, the parties presumably will have negotiated on the basis of the assumptions just mentioned, so consideration of that possibility does not advance the argument. The Roach interests and Smits Leslie parted company at a time when, so far as appears from the evidence, the case against Freehills was still substantially unprepared. The disputes between Smits Leslie and the Roach interests were related to a special arrangement about fees, which would not concern Freehills. There was not 12 cf R v Bow Street Magistrate; Ex parte Pinochet (No 2) [2000] 1 AC 119 at 134. 13 (2000) 205 CLR 337 at 349 [25], 356-358 [54]-[56]. 14 (1852) 3 HLC 759 [10 ER 301]. 15 Compare the extra-judicial remarks of Lord Bingham of Cornhill MR quoted in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 358 [56]. Crennan shown, or found, to be any demonstrable relationship between the amounts of $500,000 or $675,000 and any amount that Freehills ultimately might be called upon to bear in respect of the legal costs attributable to the preparation of the Freehills litigation up until the time the Roach interests retained new solicitors. Furthermore, whatever that amount might be, (and nothing in the reasons of the Court of Appeal reflects any attempt to assess it), it would probably need to be divided by at least 80 to gauge its impact on Mr Geoff McClellan, leaving aside altogether considerations of insurance. In Ebner, the joint reasons of four members of the Court stated16: "The apprehension of bias principle ... [in its] application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an 'interest' in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed." The same observations apply where the basis of the assertion is association with somebody who is said to have an interest in the litigation. The reasons of the Court of Appeal do not articulate a logical connection between the matter complained of and the feared deviation from impartial decision making, or explain why it would have been reasonable to apprehend that McClellan J might decide the case other than on its legal and factual merits. The general principle to be applied is not in contest. In its application of the principle to the particular, and unusual, facts of the present case, the reasoning of the Court of Appeal is not compelling. If it were necessary to decide the notice of contention the argument for the respondents should succeed. 16 (2000) 205 CLR 337 at 345 [8]. Crennan Conclusion The appeal should be dismissed with costs. GUMMOW AND HAYNE JJ. The first matter which calls for attention is the treatment by the New South Wales Court of Appeal of the issue of apprehended bias. That required attention to and application of what was decided by this Court in Ebner v Official Trustee in Bankruptcy17. In their joint judgment, Gleeson CJ, McHugh, Gummow and Hayne JJ said that the applicable principle requires two steps and continued18: "First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an 'interest' in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed." Sheller JA, with whom Ipp JA and Bryson JA agreed set out that passage. However, after referring to authorities pre-dating Ebner, his Honour then concluded19: "The question was whether the fact that the trial judge had no pecuniary interest whatever in Freehills but his brother did, might give rise to a reasonable apprehension of bias. In the circumstance that so far as was known the relationship was close, a fair minded lay observer might reasonably have apprehended that the judge might not bring an impartial mind to the resolution of the case." That treatment of the issue failed to articulate a logical connection between the matter complained of and the feared deviation by McClellan J from the course of deciding on its merits the proceeding before him. That is to say, the Court of Appeal fixed its attention upon the first of the two necessary steps required by Ebner at the expense of the second. Given the abbreviated evidence on the disqualification application made to McClellan J, the Court of Appeal was required to approach with particular caution any attempt to circumvent the cumulative requirements of Ebner, lest the 17 (2000) 205 CLR 337. 18 (2000) 205 CLR 337 at 345 [8]. 19 Smits v Roach (2004) 60 NSWLR 711 at 736. shortcomings in the case presented on that application be visited upon other parties to the litigation. It is on that ground, advanced by the respondents' notice of contention, that the actual outcome in the Court of Appeal is to be supported and the appeal to this Court consequently dismissed with costs. We should add that, had it been necessary to do so, we also would dismiss the appeal for the reasons given by Gleeson CJ, Heydon and Crennan JJ on the issue of waiver. Kirby KIRBY J. This appeal comes by special leave from a judgment of the New South Wales Court of Appeal20. Logically, the first issue in the appeal concerns the lawfulness of the orders made in a proceeding where the judge of trial is alleged to have been disqualified for apprehended bias21. The disqualification is said to have arisen in this case by reason of an undisclosed association of the judge with a party to interconnected proceedings or because of an impermissible, although indirect, interest which the judge is said to have had in its outcome. If such a disqualification is established, the second issue concerns the law of waiver and whether, in the circumstances of this case, the parties complaining about the disqualification effectively waived that complaint. That depends, in turn, on the resolution of contested questions of law and fact. The relevant question of law is whether the complaining parties are to be taken, as a matter of law, to be constructively aware of the suggested ground of disqualification because that ground was at all times known to senior counsel retained for those parties in the trial. The relevant question of fact arises if such constructive knowledge cannot be attributed to the complaining parties as a matter of law. It is whether, as a matter of fact, the ground of disqualification was communicated to those parties by their senior counsel (as he thought he had done) or was not communicated or known to them (as junior counsel and the complaining parties In my opinion, given the present state of the law of disqualification and waiver, the general approach of the Court of Appeal on both of the foregoing issues was correct. The appeal should be dismissed. The facts Complex interrelated litigation: The issues in this appeal arise out of complex circumstances. The general background is described in the reasons of Gleeson CJ, Heydon and Crennan JJ22. From that description it is clear that the historical starting point of the dispute that occasions the proceedings, was the retainer of the legal firm Freehill Hollingdale and Page ("Freehills") by Mr Walter Roach, his wife and the companies that they then controlled. 20 (2004) 60 NSWLR 711 (Sheller JA; Ipp and Bryson JJA concurring) ("Smits"). 21 Sometimes called "suspected", "imputed" or "apprehended" bias: Australian National Industries Ltd v Spedley Securities Ltd (in Liq) (1992) 26 NSWLR 411 at 22 Reasons of Gleeson CJ, Heydon and Crennan JJ at [1]-[30]. Kirby Freehills, one of the largest legal firms in Australia, was retained by Mr and Mrs Roach and their companies ("the respondents") to protect their interests in the commercial exploitation of peat. The respondents claimed that Freehills was negligent in failing to advise them that an application should be made for a mining licence. That failure was said to have permitted a competitor to pre-empt the respondents and thereby to secure the legal right to exploit the deposit. That failure and its consequences are alleged to sound in damages for loss of profits worth many millions of dollars which the respondents would otherwise allegedly have recovered. Upon the discovery of the loss of their venture, the respondents terminated their retainer of Freehills. They retained Mr Leslie, a sole practitioner who later entered into partnership with Mr Smits to form Smits Leslie ("the appellants"). The appellants were instructed to bring proceedings on behalf of the respondents against Freehills, claiming damages for negligence and breach of the contract of retainer ("the Freehills litigation"). To mount such an action, potentially sounding in substantial damages, it was essential for the appellants to develop a sound strategy for the litigation. Such litigation would be expensive, involving the procurement of expert evidence, the retainer of barristers, the conduct of extensive discovery and the gathering of substantial witness testimonies. The litigation between the parties and Freehills proceeded very slowly. Much time was consumed in negotiations between the respondents and their new lawyers about costs. The three stages through which that negotiation passed from two retainer agreements, through an arrangement with a litigation funder, to a so-called "ten point plan" with the respondent companies (by this stage in liquidation) are also described in the reasons of Gleeson CJ, Heydon and Crennan JJ23. Ultimately, the respondents terminated the appellants' retainer. This step gave rise, in turn, to proceedings which the appellants brought against the respondents for legal costs which they claimed as their due. It was those proceedings that were assigned in the Commercial List of the Equity Division of the Supreme Court of New South Wales, to the primary judge, McClellan J. Potential disqualification is raised: The proceedings were returned for trial before the primary judge beginning on 11 March 2002. At the close of business in the preceding week, the primary judge had caused the parties to be asked if they had an objection to his hearing (and thus deciding) the case. Mr John Leslie (the second appellant) had earlier been Registrar of the Equity Division of the Supreme Court. He had played golf on a number of occasions with the primary judge and his father. In his then capacity as Registrar, he also had professional dealings with the judge. 23 Reasons of Gleeson CJ, Heydon and Crennan JJ at [8]-[14]. Kirby The nature of this pre-trial communication was disclosed in the announcement at the very beginning of the trial by Mr G Lindsay SC, senior counsel for the appellants. He said24: "A question having arisen as to whether or not an objection would be taken to your Honour dealing with the case because of past contact with one of the plaintiffs, I am instructed to inform the court that on our side of the record, and I understand on the defendants' side of the record as well, there is no objection to your Honour dealing with the matter." This statement appears to confirm what the appellants asserted was the content of the communication from the primary judge's chambers, as disclosed to them. It was addressed to social and professional contact between the appellants and the primary judge. It was not understood, or expressed to be, addressed to any association between the primary judge and the judge's brother, who, during the trial before the primary judge, was a partner and chairman of the partners of Freehills. Nor did it concern any indirect interest, familial, emotional, empathetic or otherwise, of the primary judge in his brother's contingent financial stake in the outcome of the proceedings between the appellants and the respondents, as to costs as part of the damages that might be recovered by the respondents against Freehills, were the respondents to succeed in the Freehills litigation. Evidence before the Court of Appeal, which was not tested by cross- examination or challenged, indicated that Mr Lindsay was busy preparing for the trial when the foregoing communication came from the primary judge's chambers. Mr Lindsay substantially left to the appellants' junior counsel, Mr W Haffenden, the issue of whether the appellants should raise any objection to the conduct of the trial before the primary judge. Therein lay the seeds of the present dispute. At all material times, the primary judge's brother was a partner of Freehills. During the trial before the primary judge, he was also the chairman of the partners of that firm. In the proceedings between the respondents and Freehills, the brother was named as the seventy-second defendant. The fact that the judge's brother was a partner (although not that he was chairman of partners) was known to Mr Lindsay. Before he was admitted to the Bar, Mr Lindsay had served his articles of clerkship at Freehills with the brother. In the preparation of the case, Mr Lindsay did not give this relationship much attention. He was later to say that he thought that he had mentioned the judge's relationship with his brother to the appellants. However, he acknowledged that he might not have 24 Transcript of the trial in Smits v Roach, Supreme Court (NSW), McClellan J in Equity Division, No 50099/99, 11 March 2002 at 1. Kirby done so. Neither in the communication from the primary judge's chambers nor at the time the trial began and the nominated issues of disqualification were addressed in open court, did the primary judge disclose, or otherwise place on the record of the trial, his association, as a brother, with one of the defendants in the Freehills litigation, or any indirect interest in, or association he might have with, those proceedings because of the familial connection. The trial proceeded. Important issues arose as to the credit of the appellants on the one hand and Mr and Mrs Roach (the first and second respondents) on the other. That dispute concerned the terms of the successive dealings between the appellants and the respondents. To resolve the contest about such dealings, it was necessary for the primary judge to resolve disputes that arose concerning the credit respectively of the appellants (particularly Mr Leslie) and of Mr and Mrs Roach. The primary judge preferred the testimony of the Roaches. In his reasons he said25: "There are many instances where the evidence of the Roaches is in conflict with that of Leslie or Smits … However, I have carefully observed the parties giving their evidence and for the reasons I have related, I have little difficulty in accepting Roach as against Leslie or Smits on any critical issue. Leslie admitted, and it was plain from his demeanour, that he hated Roach. He had come to believe, in my view entirely without justification, that Roach conspired with Justice Corporation to defraud him and Smits … The intensity of these feelings [on Mr Leslie's part] was manifest when he gave his evidence and I have formed the view that these feelings have influenced the account he gave. Smits evidence was equally unsatisfactory. When questioned, he failed to make concessions which should plainly have been made. He suggested that there was no conflict between the interests of Smits Leslie and Roach when dealing with Justice Corporation. This is hardly credible. In my judgment, the evidence which he gave was carefully crafted to suit the version of the events which he wished the court to accept and did not always accord with the true position. On the other hand, both Mr and Mrs Roach were impressive witnesses. Their evidence was clear, although their concern at the betrayal of their interests by Smits and Leslie was apparent. 25 Smits v Roach [2002] NSWSC 241 at [147]-[153]. Kirby I accept the evidence of the Roaches where it conflicts with either Smits or Leslie." Belated disclosure of the association: After the hearing was complete and the submissions concluded, the primary judge disclosed on the record his association with his brother and that the brother was the chairman of partners of Freehills. Such disclosure came about in an unusual way. In advance of the formal delivery and publication of his reasons for judgment, the primary judge arranged for the case to be listed for directions. His purpose was to provide the appellants and the respondents with a confidential pre-publication draft of his reasons. But it was also to provide those reasons to Freehills. The object of this exceptional course was to allow the appellants, the respondents, and Freehills to consider, and make submissions on, the form of the reasons having regard to the possible relevance of their contents for the pending, but separate, Freehills litigation. On 17 June 2002 the proceedings were returned before the primary judge. Mr Haffenden, Mr Finnane, junior counsel for the respondents and Mr Drinnan, for Freehills, appeared26. The specific concern, explained by the primary judge, was that his reasons in the dispute between the appellants and the respondents might needlessly disclose confidential matters potentially detrimental to Freehills in its litigation. That litigation with the respondents lay in the future. The primary judge sought submissions in order to protect against unnecessary disclosure of confidential dealings between those parties or any of them. His Honour stated that "a judgment would be prepared in which two pages were replaced with other pages and that the matter would be listed at 9.30 the following morning". His Honour then said27: "I said this on Friday to the parties who were here then. My brother is the chairman of Freehills. I would normally not sit in relation to a matter which would involve Freehills' interests but I do not think I have any choice in this case. If anyone has any problem and can see a way in which another judge could deal with the matter, I would gladly do so. I do not think there is a way." On 26 June 2002 the present proceedings were again listed for directions before the primary judge. Mr Haffenden asked the primary judge to receive a notice of motion, returned on a later date, in which the appellants asked him to disqualify himself from further participation in the hearing "by reason of the announcement in the court about your Honour being related to the chairman of 26 (2004) 60 NSWLR 711 at 725 [19]. 27 (2004) 60 NSWLR 711 at 725 [19]. Kirby Freehills". "That was something", declared Mr Haffenden, "that we weren't aware of. It was not appropriate."28 There followed a lengthy exchange between the primary judge and Mr Haffenden concerning the basis of a proposed notice of motion. The exchange is set out in full in the reasons of Sheller JA in the Court of Appeal29. In the course of the exchange with Mr Haffenden the following appears30: "HIS HONOUR: Mr Lindsay would have known that my brother was at Freehills without the slightest question. I find this an extraordinary proposition. Are you telling me that Mr Lindsay did not know that my brother was a partner at Freehills? MR HAFFENDEN: No, I'm not saying that. I can't speak for Mr Lindsay. HIS HONOUR: I don't know about Mr Leslie, but I would imagine that probably counsel on both sides knew that my brother was at Freehills. MR HAFFENDEN: I didn't know, your Honour. HIS HONOUR: I would be certain Mr Lindsay knew." Rejection of disqualification: The primary judge proceeded to dismiss the motion instanter. Amongst other things, he said31: "The motion is brought in the following circumstances. During the course of the making of submissions in relation to the publication of my reasons and the maintenance of the confidentiality of some of the material tendered in these proceedings, it was appropriate that [Freehills] have the opportunity of addressing me in relation to aspects of that matter which directly affected that firm's interests. To that end I asked that a representative of Freehills be present in court before I published my reasons for judgment in the matter in the event that there may be material in that judgment which Freehills sought to keep confidential. 28 (2004) 60 NSWLR 711 at 725-728 [21]. 29 (2004) 60 NSWLR 711 at 725-728 [21]. 30 (2004) 60 NSWLR 711 at 726 [21]. 31 Reasons of the primary judge set out in (2004) 60 NSWLR 711 at 728-729 [22]. Kirby On Monday, 17 June 2002, and later occasions, Freehills appeared before me and at that time, I disclosed to the parties the fact that my brother … is a partner and presently the chairman of Freehills. I did this because at that point of the proceedings it was obviously necessary for me to have regard to the interests of Freehills as well as the interests of the [respondents] in relation to any claim that evidence remain confidential, the privilege being that of either the [respondents] or Freehills. Smits Leslie were not affected by these matters. At that point no party suggested that I should disqualify myself from dealing with the issue of confidentiality and, as it happened, the issues relating to Freehills were resolved by consent. Since that occasion, the matter has been before me on further occasions when progress has been made towards identifying the documents in respect of which an order for confidentiality is to be made. In his affidavit, Mr Leslie deposes to the fact, which is true, that before the proceedings commenced I did not disclose that my brother is the chairman of Freehills. He says this fact was not known to him and swears that he was informed by his partner, Mr Smits, Mr Geoffrey Lindsay of senior Counsel, and Mr William Haffenden of junior Counsel, that none of those persons were aware of that fact. Although I accept that this may be the case in relation to Messrs Leslie, Smits and Haffenden, I thought it unlikely to be the case in relation The proceedings which I have determined relate to a dispute between the solicitors, Smits & Leslie, and the [respondents], Mr and Mrs Roach, and relevant companies. Although those proceedings involve a claim for professional fees in relation to proceedings brought by the Roaches against [Freehills], I did not believe that fact caused me any embarrassment in determining the dispute between the present parties. For that reason, I did not believe it necessary for me to disclose that my brother is the chairman of Freehills, although I always believed, as it happens correctly, that at least Mr Lindsay would have been aware of that fact." After recounting the appellants' submission that the primary judge's decision in these proceedings might impact "upon the costs which Freehills may have to pay in the, as yet undetermined, proceedings between the [respondents] Kirby and Freehills", and after referring to authority of this Court32, the primary judge refused to disqualify himself. He stated that he felt "no difficulty in determining the proceedings before me"33. He therefore dismissed the motion. In the appeal to the Court of Appeal numerous challenges were made concerning issues that were resolved at trial in the proceedings between the appellants and respondents. However, the only ground of appeal continued in this Court is that by which the appellants complained that the primary judge had erred in failing to disqualify himself on 26 June 2002, or earlier, from The decision of the Court of Appeal The outcome of the appeal to the Court of Appeal is described in the reasons of Gleeson CJ, Heydon and Crennan JJ35. As there explained, the appellants enjoyed a partial success. In place of the primary judge's conclusion that their claim for costs wholly failed36, on all of the grounds propounded, the Court of Appeal allowed the appellants' appeal against the primary judge's orders in favour of Mr and Mrs Roach and their companies. Whilst dismissing Mr and Mrs Roach from the proceedings and ordering the appellants to pay their costs, the Court of Appeal made the declaration of the liability of the Roach companies set out in the reasons of Gleeson CJ, Heydon and Crennan JJ37. This outcome meant that the appellants were admitted as ordinary unsecured creditors of the Roach companies in a sum of $500,000 in respect of their time charges in acting as solicitors for the Roach companies in the period up to 1 December 1998. They were permitted to submit a proof of debt to the liquidators of those companies in the sums, and on the contingency, specified. The orders for the costs of the proceedings in the Supreme Court were adjusted accordingly. 32 R v Watson; Ex parte Armstrong (1976) 136 CLR 248; Livesey v NSW Bar Association (1983) 151 CLR 288 at 294. 33 Reasons of the primary judge on the motion at [16], set out in (2004) 60 NSWLR 34 Notice of Appeal, Ground 9. 35 Reasons of Gleeson CJ, Heydon and Crennan JJ at [31]-[33]; cf reasons of Gummow and Hayne JJ at [56]-[57]. 36 (2002) 55 NSWLR 166 at 198 [328]. 37 Reasons of Gleeson CJ, Heydon and Crennan JJ at [35]-[36]. Kirby The decision of the Court of Appeal therefore constituted a significant victory for the appellants. However, the orders and declaration finally entered fell far short of what the appellants had hoped they would secure if they could obtain a rehearing of their claim by a judge who might be persuaded to reach conclusions that were not so clearly unfavourable to the appellants as those expressed in his reasons by the primary judge. On the critical question that is still alive in this Court, the Court of Appeal accepted the appellants' claim of apprehended bias on the part of the primary judge. That apprehended bias was held to have arisen because the primary judge had failed to reveal, earlier than he did, his familial association with his brother, the senior partner of Freehills and a defendant in the Freehills litigation. The Court of Appeal found that the claim of disqualification on that ground was "not a claim without substance"38. Sheller JA (for the Court of Appeal) concluded39: "… The question was whether the fact that the trial judge had no pecuniary interest whatever in Freehills but his brother did, might give rise to a reasonable apprehension of bias. In the circumstances that so far as was known the relationship [with the brother] was close, a fair minded lay observer might reasonably have apprehended that the judge might not bring an impartial mind to the resolution of the case. The trial judge should have disclosed to the parties that his brother was a partner or chairman of Freehills when the proceedings began." The Court of Appeal acknowledged that there were explanations why the primary judge had failed to make such disclosure, on his own initiative and in open court. Their Honours took into account Mr Lindsay's distraction and the matters disclosed by him in his affidavit to the Court of Appeal40. In particular the Court of Appeal noted Mr Lindsay's expressed belief that the primary judge did not refer to the fact that his brother was a partner of Freehills "because I believed that fact to have been known to all parties"41. However, after reference to authority in this Court, including Webb v The Queen42 and Ebner v Official 38 (2004) 60 NSWLR 711 at 734 [29]. 39 (2004) 60 NSWLR 711 at 736 [35]-[36]. 40 The substance of this affidavit is set out at (2004) 60 NSWLR 711 at 730-733 [25]. 41 (2004) 60 NSWLR 711 at 737 [36]. 42 (2004) 60 NSWLR 711 at 735 [30], citing Webb (1994) 181 CLR 41 at 74 per Kirby Trustee in Bankruptcy43, the Court of Appeal upheld the appellants' contention that the claim of apprehended bias had been made out. Without more, that conclusion, if sustained, would ordinarily have entitled the appellants to have the orders of the primary judge set aside and a retrial ordered. Ultimately, the Court of Appeal concluded against that course on the ground that the appellants had waived their objection to the participation of the primary judge in the proceedings at first instance44. In this Court, naturally enough, the appellants accepted the Court of Appeal's finding of disqualification of the primary judge for apprehended bias. But they appealed against the finding of waiver. The respondents upheld the conclusion of waiver and added further reasons to support that conclusion. However, by notice of contention, they submitted that the Court of Appeal had erred in concluding that the primary judge was disqualified because of apprehended bias arising from his failure to disclose, at the outset of the proceedings, the familial relationship with his brother, a party to the connected Freehills litigation with a contingent interest in the outcome of that litigation, in turn potentially affected by any conclusion which the primary judge reached as to the appellants' entitlement to recover costs for their part in the early phase of the Freehills litigation. The issues The issues arising: Three principal issues arise in this appeal: The disqualification issue: Was the Court of Appeal in error in concluding that the primary judge was disqualified for apprehended bias by reason of his failure to disclose, at the commencement of the trial, his relationship with his brother and the brother's status as a partner of Freehills and a defendant in the Freehills litigation? Although arising on the notice of contention, logically this issue comes first. This is so because, if it is decided that error has occurred in the Court of Appeal's conclusion in this regard, the orders of the primary judge would ordinarily be restored. No issue of waiver would then arise. In concluding as it did on the disqualification issue, did the Court of Appeal, whilst correctly referring to the case, fail accurately to apply the principles expressed by four judges of this Court in Ebner? Were the circumstances of Ebner, in this respect, analogous to those of the present case, thereby rendering the ratio decidendi of Ebner binding in these proceedings? Was it open to the Court of Appeal, in the light of factual differences between Ebner and the 43 (2004) 60 NSWLR 711 at 733 [28], 736 [34], citing Ebner (2000) 205 CLR 337 at 344-345 [6]-[8] per Gleeson CJ, McHugh, Gummow and Hayne JJ. 44 (2004) 60 NSWLR 711 at 739 [43]. Kirby present proceedings, to approach the issue of disqualification in the way that it did? If the approach expressed in Ebner is correctly applied, are the conclusions reached by the Court of Appeal confirmed, so that the conclusion of disqualification is upheld? for the very the primary The waiver issue: Did the Court of Appeal err in concluding that the appellants had waived their right to object to the participation of the primary judge in the orders disposing of the proceedings before him? In particular, was judge's late motion disqualification, after the appellants had exceptionally been given access to the primary judge's draft reasons, unavailing on that ground? Was it open to the Court of Appeal to conclude that the undoubted knowledge of Mr Lindsay concerning the position of the primary judge's brother as a senior partner of Freehills to be attributed, in law, as constructive knowledge of the appellants? Was this so even if the appellants (and their junior counsel, Mr Haffenden) were personally unaware of that relationship and contingent interest? In the circumstances, was that relationship, in any case, sufficient to oblige the disqualification of the primary judge or did its unexplored, unelaborated and indirect quality amount to such a tenuous ground for disqualification as to render it readily susceptible to waiver by the appellants' treatment of it (until after they had discovered the unfavourable conclusion of the primary judge by the provision of pre-judgment access to his reasons, which contained strong criticisms of their evidence)? The relief issue: In the event that the conclusion of the Court of Appeal on the disqualification issue is upheld and its conclusion on the waiver issue is set aside for error, are the respondents entitled (as they have requested) to have the proceedings returned to the Court of Appeal so that that Court might decide affirmatively whether Mr Lindsay had (as he originally believed) informed the appellants of the primary judge's association with Freehills, by reason of his relationship with his brother, a partner of that firm? The respondents submitted that the unresolved determination of whether that relationship had in fact been disclosed to the appellants by Mr Lindsay would afford them a further chance to establish actual waiver by the course taken by the appellants after such disclosure. If it were proved in the proceedings, when returned to the Court of Appeal, that the appellants had received actual notice of the relationship between the primary judge and a partner of Freehills (but raised no objection or argument of disqualification until they received the advance draft of the primary judge's adverse conclusions and reasons) this could, of itself, amount to the kind of waiver that has been accepted by this Court as applicable to cases of apprehended bias45. 45 Vakauta v Kelly (1989) 167 CLR 568 at 587-588 per Toohey J. Kirby Immaterial issues: Many other issues were raised in the written submissions of the parties and in their oral submissions to this Court. They included arguments addressed to: . Whether the disqualifying element applicable here was one of association or interest (even if that interest was the potential indirect financial interest of the brother in the ultimate outcome of the litigation between Freehills and the respondents or a non-financial, emotional interest or inclination to protect the brother from a contingent financial burden in proceedings brought against Freehills whilst the brother was a senior partner of that firm and indeed chairman of partners); . Whether, as they seemed content to do, the appellants might accept (as they eventually did) certain conclusions in their favour, reached by the Court of Appeal whilst rejecting the adverse conclusion on waiver or disqualification? Or whether, if they were to succeed on the issues of disqualification and waiver, the result was inevitably a complete retrial of all issues without the possibility of the appellants' picking and choosing amongst the determinations made by the Court of Appeal of those decisions that the appellants accepted, and those which they did not. Ordinarily, disqualification for apprehended bias betokens a fundamental error going to the heart of the proceedings, signifying a failure of the trial and requiring a complete rehearing; and . Whether the rehearing which the appellants had in the Court of Appeal, under the powers enjoyed by that Court46 to receive fresh evidence (as it did in the form of Mr Lindsay's affidavit), allowed that Court to review all of the evidence and to draw its own conclusions from the entirety of the evidence in the record, thereby curing any defects of the trial47. In the conclusions that I have reached, none of these immaterial issues needs to be addressed. It is enough to decide the three issues that I have first identified. The decision on those issues will, without more, determine the outcome of the appeal. 46 Supreme Court Act 1970 (NSW), s 75A(7). 47 See Fox v Percy (2003) 214 CLR 118. Kirby The finding of disqualification is sustained The fair-minded observer: At the outset it must be said as clearly as possible that the appellants made no suggestion that the primary judge was actually biased against them. The most that appears to have happened at trial is that the judge began by perceiving the proceeding before him as one wholly limited to the claim between the appellants and the respondents. For him, it was not connected to the separate Freehills litigation between the respondents and that firm of lawyers. It appears that, almost to the end, the primary judge kept the two proceedings separate in his mind. Apparently for this reason, it did not occur to him, at first, to disclose his brother's status in Freehills and his association with his brother. This fact is made apparent because when the primary judge sent his message to the parties prior to the beginning of the trial, he specifically addressed an issue of possible disqualification. This was limited to his past professional and social contact with Mr Leslie. He did not then raise the further possibility of disqualification because of his relationship with his brother, his brother's position as a defendant in the Freehills litigation or the potential of his decision on the costs issue to affect the quantum of the respondents' ultimate recovery against Freehills, when the Freehills litigation was concluded. The first issue in this appeal is whether the law governing the disqualification of judges (and like decision-makers) extends to a case of indirect and contingent interest and association, such as this. To decide whether it does, only limited assistance is provided by reference to the principles stated in the case law. Repeatedly, such law, in this country, the United Kingdom and other common law jurisdictions, invokes a fiction when reaching conclusions on the issue of disqualification. It is a fiction that I have myself applied many times48. It involves the invocation of the reaction of the reasonable, intelligent, fair-minded lay observer. That hypothetical construct will be familiar with the general nature and course of the proceedings, its outcome and the suggested disqualifying elements. That person will express his or her opinion as to whether the judge might not bring an impartial mind to bear upon the resolution of the proceedings because of a disqualifying consideration, relevantly an interest or association. 48 See eg, S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 368, 374 applying R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 264; Australian National Industries Ltd v Spedley Securities Ltd (in Liq) (1992) 26 NSWLR 411 at 419-420. Kirby The fictitious postulate has been stretched virtually to snapping point. Courts throughout the common law world have built up a profile of the hypothetical observer, identifying features which this paragon will manifest and features that will be absent. I collected some of these myself in Johnson v Of course, the elaboration of such features is provided by judges to remind themselves, the parties and the community reading their reasons that the standard that is applied is not simply the reaction of the judges, at trial or on appeal, to a particular complaint. It is, as far as it can be, an objective standard: one aimed at emphasising the undesirability of idiosyncratic and personal assessments of such matters. As the cases show, in such decisions different judges can reflect different assessments and reach different conclusions. The fact that this is so should make contemporary judges aware that, ultimately, they themselves have to shoulder the responsibility of reaching conclusions on the point and giving effect to them. They cannot ultimately hide behind a fiction and pretend that it provides an entirely objective standard by which to measure the individual case. The use of the fictitious bystander, in resolving disputes over disqualification for apprehended bias, is similar to the analogous approach to the response of the "ordinary reasonable reader" for the law of defamation, to which reference was recently made in this Court50. Doubtless there are other instances where the standard of the "reasonable man" or, more recently, the "reasonable person" is invoked to help explain a court's decision and to give it the allure of objectivity beyond the opinions of the actual judges who make the decision. Categories of disqualification: In order to provide guidance on the circumstances that oblige judicial disqualification, attempts have been made to categorise the circumstances where this may be required. In Webb51, in reasons that dissented in the result, Deane J explained, in an oft-quoted passage52: "The area covered by the doctrine of disqualification by reason of the appearance of bias encompasses at least four distinct, though sometimes overlapping, main categories of case. disqualification by interest, that is to say, cases where some direct or indirect interest in the proceedings, whether pecuniary or otherwise, gives rise to a reasonable apprehension of prejudice, partiality or prejudgment. The first 49 (2000) 201 CLR 488 at 507-509 [52]-[54]. 50 Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 at 1719-1720 [10]- [12], 1722-1723 [23]-[25]; 221 ALR 186 at 190, 193-194. 51 (1994) 181 CLR 41 at 74, referred to in Smits (2004) 60 NSWLR 711 at 735 [30]. 52 (1994) 181 CLR 41 at 74, citations omitted. Kirby The second is disqualification by conduct, including published statements. … The third category is disqualification by association. It will often overlap the first and consist of cases where the apprehension of prejudgment or other bias results from some direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings. The fourth is disqualification by extraneous information. It will commonly overlap the third …" In a footnote, as an example of disqualification by association, Deane J instanced in Webb, "a case where a dependent spouse or child has a direct pecuniary interest in the proceedings". As a matter of principle, the categories of association could not be limited to the identified connections. They would also extend to a brother, depending on the closeness of the relationship and the nature of the suggested link to the matter in issue53. In these proceedings, the Court of Appeal, correctly in my view, inferred that the relationship between the primary judge and his brother was close. There was nothing to suggest the contrary. Their common family and professional lives sustain the inference. As the Court of Appeal observed54, if the facts were known to be that the brother (or other close relative) had lost touch with the judge over many years before the case was heard, disqualification by association would not arise55. But that was not this case. Categories can be useful in judging new cases against previous applications of the law of judicial disqualification. However, obviously, common features are evident in the four categories identified by Deane J. What, then, are the common purposes of this body of law? Various attempts have been made to express those purposes. In Gillies v Secretary of State for Work and Pensions56, the House of Lords recently suggested that the underlying objective was to preserve the administration of justice from anything that might distract the decision-maker from the maintenance of its integrity. In Ebner57, I said much the same thing. Obviously, the underlying purpose of the law is to uphold the reality 53 cf Webb (1994) 181 CLR 41 at 74, fn 28. 54 (2004) 60 NSWLR 711 at 734 [29], 736 [35]. 55 cf S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 369. 56 [2006] 1 WLR 781 at 788 [20]; [2006] 1 All ER 731 at 739; cf Metropolitan Properties Co (FGC) Ltd v Lannon [1969] 1 QB 577 at 599 per Lord Denning MR. 57 Ebner (2000) 205 CLR 337 at 381 [139]. Kirby and the appearance of impartiality58. This body of law thereby helps to maintain the confidence of litigants, of the legal profession and the community in the independent and impartial administration of justice in our society59. The adoption of relatively strict rules and practices in respect of the disclosure by judges of a potentially disqualifying interest or association has many advantages. It promotes transparency in the judicial process. It relieves the parties of enquiring into, or otherwise investigating, judicial interests and associations. It invites a timely and informed decision on the part of the judge, litigants and legal practitioners as to whether any disclosed interest should be waived60. It removes a cause of judicial resentment or irritation when the question of disqualification is raised belatedly, as it was in this case61. The practice of prior disclosure of any possible interests, statements, associations, relationships and extrinsic knowledge thus operates prophylactically62. It helps to maintain respect for the integrity of judicial performance in the nation, as a model for the region and the building of the rule of law globally63. This is not just a question of prudence. It is part of the governing law. The right to an impartial tribunal: There is a final purpose, namely to ensure that Australia's municipal law and practice, in this respect, conforms to its obligations under international law64. Where there is any ambiguity or uncertainty in the expression of the common law and perhaps in wider circumstances65, it is permissible to give it a meaning and application bearing in mind Australia's treaty obligations66. Especially so in this case, since Australia has ratified both the International Covenant on Civil and Political Rights 58 Ebner (2000) 205 CLR 337 at 381 [139]. 59 Ebner (2000) 205 CLR 337 at 381 [139]. 60 Ebner (2000) 205 CLR 337 at 395 [177]. 61 Ebner (2000) 205 CLR 337 at 385 [153], citing South African authority. 62 Ebner (2000) 205 CLR 337 at 387 [159]. 63 Ebner (2000) 205 CLR 337 at 389 [161.5]. 64 Australian National Industries Ltd v Spedley Securities Ltd (in Liq) (1992) 26 NSWLR 411 at 418. 65 cf Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42; Chow Hung Ching v The King (1948) 77 CLR 449 at 477. 66 Ebner (2000) 205 CLR 337 at 389 [161.5]. Kirby ("ICCPR")67 and its supplementary Optional Protocol, affording those affected a right to complain to the United Nations Human Rights Committee about the content and operation of Australian law, measured against such standards68. The relevant ambiguity in this case is whether the judge's failure to disclose the association or interest amounted to apprehended bias as explained by Webb, Ebner and other cases. By Art 14.1 of the ICCPR it is provided that "everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law"69. The juxtaposition of "independent" and "impartial" makes it plain that two different, but related, concepts are intended. Independence connotes separation from other branches of government but also independence from the litigants, their interests and their representatives. Impartiality is concerned with the judge's approach to the hearing and the determination of matters in dispute70. The central importance of ensuring the reality and appearance of independence and impartiality in courts and tribunals is repeatedly emphasised in international and regional courts and bodies considering such questions71. The statement in the ICCPR of the essential features of the due administration of justice in courts and tribunals occasions no surprise to those operating in a common law system. Those features are also part of municipal law. Specifically, it is the duty of judicial officers to be vigilant for any disqualifying interests, statements, associations, relationships and knowledge. 67 International Covenant on Civil and Political Rights, opened for signature 19 December 1966, 999 UNTS 171; 1980 ATS 23 (entered into force 23 March 68 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. 69 See also Universal Declaration of Human Rights, General Assembly Res 217A(III), (183rd plen Mtg) UN Doc A/Res/217A (1948), Art 10; European Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November 1950, 213 UNTS 222 (entered into force 3 September 1953), Art 6(1); American Convention on Human Rights, opened for signature 22 November 1969, 1144 UNTS 123 (entered into force 18 July 1978), Art 8(1); African Charter on Human and Peoples' Rights, opened for signature 27 June 1981, 21 ILM 58 (entered into force 21 October 1986), Art 7(1)(b). 70 Ebner (2000) 205 CLR 337 at 383 [145]. 71 See eg Gonzalez del Rio v Peru, United Nations Human Rights Committee Communication No 263/1987 (1992); Karttunen v Finland, United Nations Human Rights Committee Communication No 387/1989 (1992) at [7.2]. Kirby This is so wherever and whenever such disqualifications, or possible disqualifications, arise. So long as they are not excluded by the de minimis exception72; or because the propounded disqualification is too indirect, remote and speculative73 or overcome by the requirement of necessity74, it is my view that they must be brought to the notice of the parties so that they can properly consider waiver. Otherwise the judge must refuse participation in the case, absent any countervailing principle that requires, or permits, continued participation. One such countervailing principle was expressed in Re JRL; Ex parte CJL75: that litigants should not be able to select their preferred judge76. So far as disqualifying associations are concerned, particularly in cases having any connection with close family members or bodies with which such family members are known to be involved, it is not difficult for a judicial officer or tribunal member in Australia to institute arrangements with a court or tribunal registry to ensure that the decision-maker is rostered off hearings in which the close family member might be involved, directly or indirectly as a lawyer, as a party, or as a witness in the proceedings or as a person whose interests are contingently affected by its outcome77. Where a case slips through such arrangements and is discovered at a late stage, even after proceedings have commenced and are well advanced, the principle of disqualification for an incompatible association or interest requires notification to the parties as soon as the association or interest is discovered or appreciated. The parties should then be afforded the opportunity to consider the issue, to decide whether to waive the disclosed feature or to request the opportunity to make submissions about a rehearing before a differently constituted court or tribunal. In retrospect, this is the course which the primary judge should have taken in these proceedings once he appreciated the facts and significance of the interrelationship of this case with the Freehills litigation. He 72 Ebner (2000) 205 CLR 337 at 391 [166]. 73 Ebner (2000) 205 CLR 337 at 392 [168]-[169]. 74 Ebner (2000) 205 CLR 337 at 393 [172]. 75 (1986) 161 CLR 342 at 352; cf Antoun v The Queen (2006) 80 ALJR 497 at 505 [34]; 224 ALR 51 at 60. 76 cf Fingleton v The Queen (2005) 79 ALJR 1250 at 1282 [160]; 216 ALR 474 at 77 S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR Kirby should have done so before publishing the advance draft of his reasons. Had he done that, the problem that soon arose might have disappeared. Taking this course will sometimes cause inconvenience and even loss to innocent parties. It will sometimes seem wasteful where the association appears minor and the disruption significant. However, the essential reason for relatively strict rules in this regard is that the reputational value of very high standards for the appearance of integrity is extremely precious. That cost and inconvenience must therefore be borne as the price of maintaining the reputation of courts and tribunals for the independent and impartial administration of justice. Such integrity in the performance and discharge of the decision-making function is hard won and all too easily lost78. That is why decisions on such questions should normally, in my view, err on the side of disclosure, if there is any real possibility that a reasonable observer might consider that the judge might be influenced or appear to be influenced by a disqualifying feature of the case. The Ebner holding: During the hearing of this appeal, I was reminded more than once79 that the stricter view of disqualification for interest that I had expressed in Ebner80 was not adopted by the joint reasons in that decision. The Court's orders in Ebner were unanimous, although I accept that the approach that I favoured was stricter than that expressed in the joint reasons. To the extent that the holding in Ebner (and in the associated appeal in Clenae Pty Ltd v Australia and New Zealand Banking Group81) applies to the present case, there being no constitutional element in the earlier decisions82, I am bound to give effect to the majority opinion. Strictly, the ratio decidendi of Ebner (and Clenae) concerned an issue that is not present in this appeal. It concerned disqualification of judges for pecuniary interests of their own in a bank which had its own pecuniary interest in the 78 Australian National Industries Ltd v Spedley Securities Ltd (in Liq) (1992) 26 NSWLR 411 at 419: "A thousand decisions faithfully and impartially made … could be undermined … by a reasonable, even though misguided, belief of partiality … or the conclusion that in that case 'things don't look right'." 79 [2006] HCATrans 74 at 1520, 3319. 80 Ebner (2000) 205 CLR 337 at 386-390 [157]-[163]. 81 Ebner (2000) 205 CLR 337. 82 But cf Ebner (2000) 205 CLR 337 at 362-363 [79]-[82] per Gaudron J, 372-373 [115]-[117] of my own reasons. Kirby outcome of the litigation (in Ebner) or was actually a party to proceedings before the judge (in Clenae). In the present case, the primary judge had no personal pecuniary interest whatever in the outcome of the proceedings. His brother had a pecuniary interest that was indirect and contingent. In so far as the primary judge had an interest, or apparent interest, its nature was potentially familial, emotional or empathetic. It was not pecuniary. This was, therefore, a case of disqualification by familial association with the brother who, in turn, had an indirect, contingent pecuniary interest in the dispute which the judge, his brother, was deciding. Notwithstanding the differences between the issues raised in Ebner and Clenae, and in this case, I accept that, by analogy, what the Court held in Ebner, if extended, would apply to this appeal. Certainly, it could be expected that the approach adopted in Ebner83 and Clenae would be adapted to the circumstances of this case. This was also the conclusion of the Court of Appeal when the matter was before it. In its reasons, the Court of Appeal began its analysis by citing Ebner84. The citation included the "two steps" test appearing in the joint reasons in Ebner85, quoted in the reasons of Gleeson CJ, Heydon and Crennan JJ in this appeal86. In adapting what is said in that passage, it is, I believe, necessary to make some adjustments, given that the disqualifying element in this appeal is not, ultimately, an "interest" but an "association" which the primary judge had that was ostensibly incompatible with a manifestly impartial determination of the case. Application of the Ebner test: Applying the Ebner test to such a case of association, the answer to the first step is that the consideration that might lead a judge to decide a case other than on its legal and factual merits might be the judge's sense of loyalty to, or concern for, a brother. Particularly a brother with responsibilities as senior partner and chairman of partners of Freehills, with duties by inference extending to public relations for that firm, in litigation involving a huge claim that had already attracted unwelcome publicity. It is true, as the respondents pointed out, that their litigation with the legally separate litigation with Freehills involved their appellants and 83 Ebner (2000) 205 CLR 337 at 349-350 [26]-[32]. 84 (2004) 60 NSWLR 711 at 733 [28]. 85 Ebner (2000) 205 CLR 337 at 345 [8]. 86 Reasons of Gleeson CJ, Heydon and Crennan JJ at [53]; cf reasons of Gummow and Hayne JJ at [56]. Kirby proceedings and issues. No one contests that. The Freehills litigation itself involved a claim potentially, at the very most, of the order of $1 billion87. The proceedings between the appellants and the respondents involved a claim no greater than $700,000. However, the latter sum (or even the maximum that the Court of Appeal ordered in favour of the appellants [$500,000]) and the brother's potential share after any insurance entitlement, could not be described as trivial. It would not fall within the de minimis exception to the obligation of disclosure88. Common experience indicates a measure of scepticism today (even on the part of intelligent and reasonable observers) concerning public institutions89. Such scepticism might affect attitudes toward a judge deciding a case that might contingently (in whatever degree) affect the interests of the judge's brother. Perhaps it should not be so. Perhaps ordinary observers should accept that no such contaminating influence would influence a judge or influence the judge's decision on the merits of the case. But in the present age, there is more suspicion of authority than hitherto. Those who do not accept this must not be reading newspapers. The second step in the Ebner formula requires an articulation of the logical connection between the disqualifying association or interest and the feared deviation from the course of deciding the case on its merits. Where the disqualifying factor is "interest" it is easier to give weight to relatively small and contingent pecuniary consequences for the judge or a close member of his or her family. In a sense, this makes it simpler to accept or reject the potential impact of the interest. But where, as here, what is complained of is a disqualifying "association", particularly a close family association, the disconnection of the postulated cause and the consequence is harder to accept. Put another way, a connection is easier to infer from familial associations. In this case this is particularly so because of at least four considerations: The failure of the primary judge to raise the fraternal association when other potentially disqualifying associations were specifically identified by the judge for comment and possible waiver; The fact that the interconnection between these proceedings and the Freehills litigation was obvious; would have been noticed on any 87 Reasons of Gleeson CJ, Heydon and Crennan JJ at [6]. 88 On what would and would not fall within the de minimus exception, see Ebner (2000) 205 CLR 337 at 367 [98], 385-386 [155], 391 [166]. 89 Australian National Industries Ltd v Spedley Securities Ltd (in Liq) (1992) 26 NSWLR 411 at 414. Kirby examination of the papers; and was observed by the primary judge himself, at the latest, about the time of preparing his reasons when it caused him, exceptionally, to provide a copy of his reasons in advance of their delivery to a representative of Freehills, a stranger to the present litigation, for comment and for their self-protection; The strong language, critical of the appellants' credibility, contained in the primary judge's reasons; and The denial of any recovery to the appellants (reversed by the Court of Appeal) which might seem intuitively surprising given the work they performed over a lengthy period and the disbursements they incurred, when acting for the respondents against Freehills. The respondents submitted that the connection between a judgment in favour of the appellants for their costs and any pecuniary burden on the primary judge's brother was too indirect, remote, speculative and individually trivial to amount to a perceived disqualification for familial association. However, such matters are not to be judged by fine legal analysis alone. That is not how the reasonable lay observer thinks or how a judge giving effect to that standard should reason. Given the purposes of the law of disqualification and the interests those purposes protect, the question is ultimately one not of a lawyer's professional evaluation but of public perception. By that standard, I consider that a sufficient link existed to sustain the conclusion of disqualification expressed by the Court of Appeal. I do not agree that, on this issue, the reasoning of that Court "is not compelling"90. On the contrary, in my view it is appropriately explained and adequately justified. It reveals no error. I reach this conclusion with natural reluctance because one measure of the care and accuracy of the primary judge's reasoning may be found in the fact that, after such hard fought proceedings, involving many factual disputes, numerous contested issues and difficult legal points, the primary judge's reasons have been sustained on most questions. In this Court, only the issue of disqualification (and the associated issue of waiver) were argued. The disqualification issue itself only arose at the last minute because the primary judge took steps to provide procedural fairness to Freehills, a party to separate, but connected, proceedings. To re-litigate the appellants' entitlement to costs after such an extensive trial would be very frustrating, not to say costly to the parties and the community. However, (subject to what follows) disqualification was required of the primary judge, who had to make a decision that contingently might have affected his brother's interests and those of the brother's legal firm. 90 Reasons of Gleeson CJ, Heydon and Crennan JJ at [54]. Kirby The constitutional dimension: I have not, in these reasons, addressed the possible application of the Constitution to reinforce the foregoing conclusion, as it concerns the provision of due process in a State Supreme Court. Such a court is expressly referred to in the Constitution91. It is part of the integrated Judicature of the Commonwealth92. The constitutional dimension of the requirements of impartiality, and the appearance of impartiality, were explained by Gaudron J in Ebner93. Her Honour said94: "[I]n my view, Ch III of the Constitution operates to guarantee impartiality and the appearance of impartiality throughout the Australian court system." In my reasons in Ebner, I agreed with this statement95. In this appeal, the parties did not advance constitutional arguments. The usual practice of this Court is to decide cases, if we can, without unnecessarily invoking the Constitution96. That course is possible, and appropriate, here. Nevertheless, it is important not to lose sight of arguments arising from the constitutional underpinnings of the integrated Judicature of the Commonwealth. They indicate the fundamental character of independence and impartiality in the judiciary which it is the duty of the courts to observe, maintain and protect. Conclusion – disqualification shown: It follows from this analysis that the decision of the Court of Appeal on the disqualification issue is sustained. The contrary view is insufficiently attentive to the right to trial before a manifestly impartial and independent tribunal. It departs from the proper tendency of our law to resolve questions of uncertainty in such matters in favour of recusal and especially where issues of credibility may be presented for decision97. But was 91 Constitution, s 73(ii). 92 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 95, 102, 114, 136 and 143. 93 Ebner (2000) 205 CLR 337 at 362-363 [79]-[81]. 94 Ebner (2000) 205 CLR 337 at 363 [82]. 95 Ebner (2000) 205 CLR 337 at 372 [115]. 96 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186; Hutchison 3G Australia Pty Ltd v City of Mitcham (2006) 80 ALJR 711 at 730-731 [110]; 225 ALR 615 at 640. 97 Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 at 480 [25]; applied Morrison v AWG Group Ltd [2006] EWCA 6 at [8], [18] per Mummery LJ. Kirby the consequence of this conclusion avoided by waiver of the disqualification by or for the appellants? The disqualification was waived the requirement for Waiver and judicial disqualification: The notion that a party may waive impartiality and non-compliance with independence of a judge is, in some ways, curious. I say that because the entitlement to a manifestly impartial and independent judicial or like decision is not one that belongs only to the parties to the proceeding98. It also belongs to citizens, for whom the judiciary is the third branch of their government, by analogy to other persons having a proceeding in an Australian court, and to observers generally. On previous occasions, I have referred to this curiosity99. It is one that has also been noted in the United States of America100. the manifest for objection on However, it is now settled law in this Court101 that where a litigant, aware the basis of of circumstances providing a ground disqualification, fails to object promptly, that litigant will be taken to have waived the objection and cannot later rely on it. Obviously, this conclusion represents a practical approach, even if at the cost of some doctrinal purity. Neither party to this appeal challenged the established holding of this Court in this regard. The issue, therefore, is whether, in the circumstances of this case, the appellants waived their objection to the disqualification of the primary judge on the basis of his association with his brother, a party to interconnected proceedings whose interests were contingently affected by the judge's decision. It is clear that any objection to a judge's participation in a trial on the ground of disqualification for association must be made promptly, once the affected party becomes aware of the suggested cause of the disqualification102. Although the trial before the primary judge was a long time in preparation and the appellants had their attention directed expressly to any objections they might have had to the participation of the primary judge, they did not raise an objection 98 Bias may be a jurisdictional error to which a litigant technically cannot consent; cf Toy-Cronin, "Waiver of the Rule Against Bias", (2000) 9 Auckland University Law Review 850 at 864. 99 S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 373; cf Najjar v Haines (1991) 25 NSWLR 224 at 229. 100 See eg United States v Lustman 258 F 2d 475 at 478 (1958). 101 Vakauta (1989) 167 CLR 568 at 577-579 per Dawson J, 587-588 per Toohey J. 102 Vakauta (1989) 167 CLR 568 at 572. Kirby on the basis of his association with his brother until just before the formal publication of reasons and pronouncement of orders. Indeed, the objection arose only after the appellants, the respondents and a representative of Freehills were exceptionally given a pre-publication copy of the judge's reasons disposing of the trial, and the primary judge disclosed his association with his brother in order to explain that unusual course of action. Then, the appellants moved for disqualification with appropriate speed. Yet, their application was not made until immediately before judgment and after a trial that had lasted for five days. If before, or at any time during the trial, the appellants had been informed by anyone, including their senior counsel, of the primary judge's familial association with his brother, and that his brother was a partner of Freehills, it is obvious that they would be taken to have waived any later objection based on that association. that in his conversation with his In his affidavit, read before the Court of Appeal, Mr Lindsay stated that he believed that each of the appellants "knew that his Honour was the brother of … a partner of Freehills"103. Mr Lindsay affirmed his belief (but agreed that he might have been mistaken) junior, Mr Haffenden, he had "... referred to the fact that McClellan J's brother … was a partner of Freehills as one of the factors to be taken into account" in deciding any objection to the primary judge's participation in the hearing104. Mr Lindsay stated that, at the final conference before the trial commenced, the appellants "were enthusiastic about the prospect of McClellan J presiding at the trial"105. Thereafter, there was no further discussion with the clients or Mr Haffenden about the primary judge's position regarding Freehills until the draft reasons were provided to the parties. Mr Lindsay stated106: "Had McClellan J announced, at the time of commencement of the hearing on 11 March 2002, that his brother was 'the Chairman of Partners' of Freehills – that fact being unknown to me – I would have taken specific instructions in relation to it. I was unconcerned that he did not refer to the fact that his brother was a partner of Freehills because I believed that fact to have been known to all parties." In his reasons for rejecting the motion to have him disqualify himself, the primary judge was willing to accept that the appellants and Mr Haffenden might 103 The affidavit is reproduced in Smits (2004) 60 NSWLR 711 at 730-732 [25.10]. 104 (2004) 60 NSWLR 711 at 732 [25.11]. 105 (2004) 60 NSWLR 711 at 732 [25.11]. 106 (2004) 40 NSWLR 711 at 733 [25.15]. Kirby have been unaware that his brother was a partner of Freehills107. However, for reasons already explained, he did not accept this in the case of Mr Lindsay. The primary judge concluded that108: "… [T]he plaintiff's senior counsel was apparently aware that my brother was a partner at Freehills but the matter was never raised … [so] any right to object has been waived". The Court of Appeal was also prepared to accept that "[n]either of the plaintiff solicitors nor junior counsel ... was aware of this before the trial judge's announcement on 17 June 2002"109. By this the Court of Appeal meant the position of the brother as a senior partner of Freehills, his contingent exposure to financial consequences as a result of the judge's decision and his fraternal association with the judge. There is a tension between this conclusion and the later statement in the Court of Appeal's reasons to the effect that Mr Lindsay may have informed the appellants (as he thought he had) concerning the primary judge's brother. In the end, the Court of Appeal did not resolve this possible conflict of fact, given that it was their Honours' opinion that, in such a matter, the knowledge of Mr Lindsay was knowledge in the appellants. Was this a correct conclusion? Did the Court of Appeal err in imputing Mr Lindsay's knowledge to the appellants although they, and significantly Mr Haffenden, stated in Court that, prior to the announcement, they had been unaware of that association. If knowledge of the association cannot, as a matter of law, be imputed to the appellants, is it necessary to return the issue to the Court of Appeal so that the appellants' actual knowledge can be the subject of a conclusive finding in that Court which, unlike this Court, can receive new evidence and make findings about it. Conclusion on imputed knowledge: Attributing to the appellants all relevant knowledge in the possession of their senior counsel, although possibly not expressly shared with them or brought to their attention, presents several difficulties. First, it relies on a legal fiction, because it postulates the attribution of knowledge that the client may never personally have received. Secondly, it attributes such knowledge in circumstances where the question to be answered is 107 Smits v Roach, unreported, Supreme Court of New South Wales, Equity Division, Commercial List, 26 June 2002 at 10. 108 Smits v Roach, unreported, Supreme Court of New South Wales, Equity Division, Commercial List, 26 June 2002 at 15, citing Vakauta (1988) 13 NSWLR 502. 109 (2004) 60 NSWLR 711 at 730 [23]. Kirby whether a litigant has waived a disqualifying association110. How, it might be asked, can there be waiver if the person authorised in law to make such waiver is not conscious of ever having done so and was not actually provided with the information necessary to making the requisite choice111? Thirdly, given that waiver also affects the public's right to the conduct of manifestly fair trials before independent and impartial tribunals, should such waiver by the party at least be a free, informed and positive decision, not one forced on that party by a fiction or rule of law? Fourthly, because of this Court's majority reaffirmation of the immunity of advocates from suit for mistakes made in the conduct of litigation112, does any notion of imputed knowledge or any fiction imposing knowledge contrary to the actual facts (without the chance of a legal remedy for faulty conduct or omission) work such an injustice as to cause this Court, in such circumstances, to draw back from a legal rule having such a consequence? As against these considerations the applicable principle must be expressed on the footing of the practical circumstances of a trial according to our legal system; the necessity, where legal advocates are retained, to rely on them to raise with their clients any relevant knowledge that they have; the general undesirability of opening to outside scrutiny the privileged communications that occur between the client and advocate; and the acute difficulty of litigating the content of such communications when normally it can be assumed that all relevant issues have been explored and appropriate advice tendered on issues that, objectively, the lawyers regard as important. Considerations such as these led the Court of Appeal, in the present case, to say113, adapting the language of Lord MacNaghten in Blackburn, Low & Co v Vigors114: "There is nothing unreasonable in imputing to a litigant all the information with regard to proceedings which the barrister to whom the management of those proceedings is committed, possessed at the time and should in the ordinary course of things have communicated to the litigant." 110 (2004) 60 NSWLR 711 at 739 [43]. 111 Ebner (2000) 205 CLR 337 at 393 [170] ("Disclosure of a relevant pecuniary interest is a precondition for effective waiver on the part of the parties.") 112 D'Orta-Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755; 214 ALR 92. 113 Smits (2004) 60 NSWLR 711 at 739 [40]. 114 (1887) 12 AC 531 at 542. Kirby Because there is no settled authority of this Court, or of any equivalent court, that resolves the precise issue raised by this appeal, it is necessary to resolve the waiver issue by reference to considerations of authority, principle and policy115. Approaching the issue in that way, not without some hesitation, I will not dissent from the conclusion stated by Gleeson CJ, Heydon and Crennan JJ in their reasons116. I do not accept that, as the appellants submitted, such an acknowledgment of imputed knowledge will discourage judges in proper cases from disclosing disqualifying interests and associations where, without the judge's disclosure in open court, it will be difficult or impossible for the litigant to know the disqualifying element. The circumstances of this case were "unusual"117. The conclusion of the Court of Appeal, undisturbed by this Court, that the primary judge was disqualified for an undisclosed association with his brother, will reaffirm the strictness of the rule of disclosure. However, the failure to disclose the association in this case is not ultimately determinative118. The Court of Appeal was also correct to conclude that that failure was waived by the appellants, having regard to the conduct of the case by their counsel. If Mr Lindsay (as he thought) notified the appellants of the primary judge's association with his brother, and the brother's position in Freehills (and contingent interest in the matter), express waiver would incontestably have occurred, and the judge would have been obliged to decide as such. However, if, as claimed and apparently accepted, he did not do so, the judge's association with his brother and Freehills was a consideration of which Mr Lindsay was undoubtedly aware. The brother's rank amongst the partners is of minor, if any, significance. If, then, Mr Lindsay did not raise the point before or during the trial, this was presumably because he did not judge it sufficiently significant, given all the other features of the case, including the appellants' apparent enthusiasm to have McClellan J presiding in the trial. It was because of those other features that Mr Lindsay "did not consider a decision by the [appellants] not to object to McClellan J as remarkable". In the multitude of decisions that have to be made in a large trial, especially just before the commencement of the hearing, there is no escaping reliance on the judgments made by the legal 115 Oceanic Sun Line Special Shipping Company v Fay (1988) 165 CLR 197 at 252. 116 Reasons of Gleeson CJ, Heydon and Crennan JJ at [55]; cf reasons of Gummow and Hayne JJ at [60]-[61]. 117 Reasons of Gleeson CJ, Heydon and Crennan JJ at [22]. 118 (2004) 60 NSWLR 711 at 732-733 [25.14]. Kirby representatives. Such judgments will ordinarily be upheld by the courts119. It is hard to see how the system of adversarial trial could operate otherwise. Viewed objectively, the opinion formed by Mr Lindsay was, on balance, a reasonable and justifiable one. The Court of Appeal was entitled to so hold. No error is shown requiring the Court's correction. It follows that the decision of the Court of Appeal that the appellants had waived the disqualification of the primary judge was legally correct. That decision should also be affirmed. Remitter to the Court of Appeal is unnecessary In the light of these conclusions, it is unnecessary to return the proceedings to the Court of Appeal for a finding on whether, in fact, Mr Lindsay informed the appellants of the fact that the primary judge's brother was a partner of Freehills and so liable to disqualification on that ground. Any such finding could only strengthen the conclusion of waiver that may be reached without it. For the conclusion of waiver to be accepted, proof of actual communication of the association between the judge and his brother and the brother's position in Freehills, known to Mr Lindsay, is not necessary. Order It follows that the appeal should be dismissed with costs. 119 See, for example, Birks v The Queen (1990) 19 NSWLR 677 at 680; TKWJ v The Queen (2002) 212 CLR 124; Ali v The Queen (2005) 79 ALJR 662; 214 ALR 1; and Nudd v The Queen (2006) 80 ALJR 614; 225 ALR 161.

HIGH COURT OF AUSTRALIA BVD17 AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS BVD17 v Minister for Immigration and Border Protection [2019] HCA 34 9 October 2019 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation A Aleksov for the appellant (instructed by Australian Presence Legal) G T Johnson SC with N D J Swan for the first respondent (instructed by Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS BVD17 v Minister for Immigration and Border Protection Immigration – Refugees – Application for protection visa – Immigration Assessment Authority ("Authority") – Review by Authority under Pt 7AA of Migration Act 1958 (Cth) – Where decision by delegate of Minister for Immigration and Border Protection to refuse protection visa referred to Authority for review – Where Secretary of Department of Immigration and Border Protection gave Authority documents and information – Where Secretary notified Authority that s 473GB applied to documents and information – Where s 473GB(3) conferred discretions on Authority, upon notification, to have regard to matter in document or to information and to disclose matter in document or information to referred applicant – Where documents and information not disclosed to referred applicant during review – Where fact of notification not disclosed to referred applicant during review – Whether procedural fairness required Authority to disclose fact of notification to referred applicant. Administrative law – Judicial review – Jurisdictional error – Procedural fairness – Where Div 3 of Pt 7AA, s 473GA and s 473GB provided exhaustive statement of natural justice hearing rule in relation to reviews by Authority – Whether implied obligation of procedural fairness precluded. Words and phrases – "disclosure", "document or information", "exclusion of procedural fairness", "exhaustive statement", "fact of notification", "natural justice hearing rule", "notification". Migration Act 1958 (Cth), Pt 7AA. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. This Court accepted in Minister for Immigration and Border Protection v SZMTA1 that the giving of a notification under s 438(2)(a) of the Migration Act 1958 (Cth) ("the Act") triggers an obligation of procedural fairness on the part of the Administrative Appeals Tribunal ("the Tribunal") to disclose the fact of notification to an applicant for review under Pt 7. The question of general importance in the present appeal is whether the giving of a notification under s 473GB(2)(a) triggers an equivalent obligation of procedural fairness on the part of the Immigration Assessment Authority ("the Authority") to disclose the fact of notification to a referred applicant in a review under Pt 7AA. The short answer is that procedural fairness does not oblige the Authority to disclose the fact of notification under s 473GB(2)(a) to a referred applicant in a review under Pt 7AA. The short reason is that s 473DA precludes such an obligation from arising. Relevant provisions of Pt 7AA The scheme of Pt 7AA of the Act, under which the Authority must review a "fast track reviewable decision"2 made by the Minister for Immigration and Border Protection ("the Minister") refusing under s 65 to grant a protection visa to a "fast track applicant"3, was considered in detail in Plaintiff M174/2016 v Minister for Immigration and Border Protection4. For the purposes of the present appeal, it is sufficient to mention only some features of the scheme. Section 473CA mandates referral of a fast track reviewable decision to the Authority by the Minister. Upon that referral occurring, s 473CB requires the Secretary of the Department of Immigration and Border Protection ("the Department") to give to the Authority specified categories of "review material". The specified categories of review material include any material in the (2019) 93 ALJR 252 at 257 [2], 269 [78]; 363 ALR 599 at 602, 618; [2019] HCA 2 Section 473BB of the Act (definition of "fast track reviewable decision"). 3 Section 5(1) of the Act (definition of "fast track applicant"). (2018) 92 ALJR 481; 353 ALR 600; [2018] HCA 16. Bell Nettle Gordon Secretary's possession or control considered by the Secretary to be relevant to the review5. Two provisions located in Div 6 of Pt 7AA qualify the obligation of the Secretary under s 473CB. One is s 473GA, which takes precedence over s 473CB to prevent the Secretary from giving the Authority a document or information if the Minister certifies under s 473GA(2) that disclosure would be contrary to the public interest because it would prejudice Australia's security, defence or international relations or because it would involve disclosure of Cabinet deliberations. The other is s 473GB, which operates to impose cumulative obligations and to confer supplementary powers on the Secretary and on the Authority where the Secretary gives to the Authority a document or information to which that section applies. By force of s 473GB(1), s 473GB applies to a document or information in either of two circumstances. One is where the Minister certifies that disclosure would be contrary to the public interest for a specified reason (other than a reason justifying certification under s 473GA) that could form the basis for a claim by the Commonwealth for non-disclosure in a court6. The other is where the document (or matter contained in the document) or information was given to the Minister or an officer of the Department in confidence7. Where s 473GB applies to a document or information which the Secretary gives to the Authority, s 473GB(2)(a) obliges the Secretary to notify the Authority in writing that the section applies in relation to the document or information. Complementing that obligation is a power, conferred on the Secretary by s 473GB(2)(b), to give the Authority any written advice that the Secretary thinks relevant about the significance of the notified document or information. The consequence for the Authority of the Secretary giving a notice under s 473GB(2)(a) is addressed in s 473GB(3), which provides: 5 Section 473CB(1)(c) of the Act. 6 Section 473GB(1)(a) and (5) of the Act. 7 Section 473GB(1)(b) of the Act. Bell Nettle Gordon "If the Immigration Assessment Authority is given a document or information and is notified that this section applies in relation to it, the Authority: (a) may, for the purpose of the exercise of its powers in relation to a fast track reviewable decision in respect of a referred applicant, have regard to any matter contained in the document, or to the information; and (b) may, if the Authority thinks it appropriate to do so having regard to any advice given by the Secretary under subsection (2), disclose any matter contained in the document, or the information, to the referred applicant." In relation to any matter or information which the Authority discloses to a referred applicant under s 473GB(3)(b), s 473GB(4) obliges the Authority to give a direction under s 473GD restricting its publication. Conformably with the analysis in SZMTA of the operation of s 438(3), three aspects of the operation of s 473GB(3) are not in dispute in the appeal. First, the Authority has no power to have regard to notified information or matter for the purpose of exercising any of its powers in relation to a fast track reviewable decision in respect of a referred applicant unless the Authority affirmatively exercises the discretion conferred on it by s 473GB(3)(a)8. Second, the Authority has no power to disclose the notified information or matter to the referred applicant unless the Authority affirmatively exercises the discretion conferred on it by s 473GB(3)(b)9. Third, the discretion conferred by s 473GB(3)(b) is conditioned by the requirement that it must be exercised within the bounds of reasonableness10. Also not in dispute in the appeal is that the discretions conferred by s 473GB(3)(a) and (b) are so bound together that an affirmative exercise of the discretion conferred by s 473GB(3)(a) gives rise to a (2019) 93 ALJR 252 at 260 [23]; 363 ALR 599 at 607. (2019) 93 ALJR 252 at 260 [24]; 363 ALR 599 at 607. 10 (2019) 93 ALJR 252 at 260 [24]; 363 ALR 599 at 607. Bell Nettle Gordon duty on the part of the Authority to consider exercise of the discretion conferred by s 473GB(3)(b)11. The overriding duty of the Authority to review a fast track reviewable decision referred to it under s 473CA is imposed by s 473CC(1). The outcome of the review is the making of a decision by the Authority under s 473CC(2) either to affirm the fast track reviewable decision referred to it or to remit the decision referred to it for reconsideration in accordance with such directions or recommendations as are permitted by regulation. How the Authority is ordinarily to go about conducting a review in the performance of the overriding duty imposed on it by s 473CC is the topic addressed in Div 3 of Pt 7AA. The powers of the Authority "in relation to a fast track reviewable decision in respect of a referred applicant" to which s 473GB(3)(a) refers encompass the powers conferred on the Authority by that Division. Division 3 commences with s 473DA, the construction and operation of which are central to answering the main question in the appeal. Section 473DA is headed "Exhaustive statement of natural justice hearing rule". Sub-section (1) provides: "This Division, together with sections 473GA and 473GB, is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to reviews conducted by the Immigration Assessment Authority." Sub-section (2) adds: "To avoid doubt, nothing in this Part requires the Immigration Assessment Authority to give to a referred applicant any material that was before the Minister when the Minister made the decision under section 65." Within Div 3, s 473DB(1) goes on to spell out that the primary obligation of the Authority is to review a fast track reviewable decision referred to it under s 473CA by considering the review material given under s 473CB "without accepting or requesting new information" and "without interviewing the referred 11 cf Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 499, 505; [1947] HCA 21. Bell Nettle Gordon applicant". The primary obligation is nevertheless imposed "[s]ubject to this Part", an expression indicating that the generality of the primary obligation can be qualified in the conduct of a particular review by the operation of other provisions located within Pt 7AA. The provisions which can operate to qualify the primary obligation spelt out in s 473DB(1) include s 473GB. They also include other provisions within Div 3. Amongst those other provisions is s 473DC(1), which confers a discretion on the Authority, itself to be exercised within the bounds of reasonableness12, to get "new information", being documents or information that were not before the Minister when making the decision under s 65 and that the Authority considers may be relevant. Amongst them also is s 473DC(3), which confers a discretion on the Authority, again to be exercised within the bounds of reasonableness13, to invite any person to provide new information in writing or in an interview. Consideration and disclosure by the Authority of such new information as the Authority might get under s 473DC(1) or s 473DC(3) are then governed by ss 473DD and 473DE. Two further provisions of Pt 7AA are also appropriate to be mentioned. Section 473EA, which is located within Div 4, requires a decision of the Authority on a review under Pt 7AA to be accompanied by a written statement setting out both "the decision of the Authority on the review" and "the reasons for the decision"14. The analysis in Minister for Immigration and Citizenship v SZGUR15 of the materially identical requirement in s 430 for the Refugee Review Tribunal to give a statement of the reasons for its decision in a review under Pt 7 supports two conclusions about which there is no dispute in the appeal. One is that the decision of the Authority on the review to which s 473EA refers is the ultimate decision of the Authority under s 473CC(2) either to affirm the fast track reviewable decision referred to it or to remit the decision referred to it for 12 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 487-488 [21], 497 [86], 498 [90]; 353 ALR 600 at 607, 620-621. 13 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 487-488 [21], 492 [49], 496 [71], 497 [86], 499-500 [97]; 353 ALR 14 See also s 25D of the Acts Interpretation Act 1901 (Cth). 15 (2011) 241 CLR 594 at 606 [32], 616-617 [69], 623 [91]-[92]; [2011] HCA 1. Bell Nettle Gordon reconsideration in accordance with such directions or recommendations as are permitted by regulation. The other is that the Authority, in giving reasons for that ultimate decision to affirm or remit, is not required to give reasons for the exercise or non-exercise of a procedural power such as those conferred on it by s 473DC(1) or s 473GB(3). Finally, s 473FB, which is located within Div 5, permits the President of the Tribunal to issue directions as to the conduct of reviews16 and requires the Authority so far as practicable to comply with those directions whilst making plain that non-compliance does not have the result that a decision of the Authority is invalid17. Directions that have in fact been issued by the President make provision for a referred applicant to provide written submissions to the Authority on topics identified as "why you disagree with the decision of the Department" and "any claim or matter that you presented to the Department that Facts The appellant is a citizen of Sri Lanka who arrived in Australia as an unauthorised maritime arrival on 13 October 2012. He applied for a protection visa, which a delegate of the Minister refused. The Minister referred the decision of the delegate to the Authority for review. The Authority affirmed the decision of the delegate. The Authority's written statement of its reasons for decision records that the Authority found that the appellant had fabricated his claims to have been of interest to authorities in Sri Lanka. The statement indicates that, in so finding, the Authority placed weight on the absence of corroboration of one of the appellant's claims in information contained in documents in a file of the Department which related to an application for a protection visa which had been made by another member of the appellant's family. 16 Section 473FB(1)(b) of the Act, read with s 473BB (definition of "President"). 17 Section 473FB(3) of the Act. 18 Practice Direction for Applicants, Representatives and Authorised Recipients, Practice Direction 1 (2018) at 3 [23]. Bell Nettle Gordon The departmental file had been before the delegate at the time of making the decision to refuse the appellant a protection visa but the delegate had not relied adversely on the contents of the file in making that decision. The file had been included in the review material given to the Authority by the Secretary to the Department under s 473CB of the Act and had been accompanied by a notification given to the Authority under s 473GB(2)(a) by a delegate of the Secretary. The notification stated that s 473GB applied to the documents and information in the file and expressed the view of the delegate that the documents and information in the file should not be disclosed to the appellant because they had been given to the Minister or to an officer of the Department in confidence. In the course of the review, the Authority did not disclose any of the documents or information in the file to the appellant and did not disclose the fact of having been given the notification under s 473GB(2) of the Act to the appellant. The Authority's written statement of its reasons for decision records that the Authority had regard to the review material and to particular country information, which it specifically identified as "new information", and that no further submissions or new information were provided to it. The statement makes no reference to the notification under s 473GB(2)(a) of the Act and makes no reference to the exercise of any discretion by the Authority under s 473GB(3) of the Act. Procedural history The appellant applied to the Federal Circuit Court for judicial review of the decision of the Authority under s 476 of the Act on grounds that the Authority's failure to disclose the documents and information in the file to him was both procedurally unfair and legally unreasonable. The Federal Circuit The appellant then appealed from the decision of the Federal Circuit Court to the Federal Court. The appeal was on a single ground, albeit the ground had two limbs. The ground was that the Federal Circuit Court erred in failing to find either: that the Authority failed to consider the exercise of the discretion conferred by s 473GB(3)(b) at all; or that, if the Authority did consider 19 BVD17 v Minister for Immigration and Border Protection [2017] FCCA 3046. Bell Nettle Gordon exercising that discretion, the Authority's failure to exercise the discretion to disclose the documents and information was legally unreasonable. The appeal was heard and determined by the Full Court of the Federal Court, constituted by Flick, Markovic and Banks-Smith JJ. The Full Court unanimously dismissed the appeal20, concluding that there was insufficient evidence from which to infer that the Authority failed to consider exercising the discretion conferred by s 473GB(3)(b)21, and that the appellant had not met the onus of establishing that an exercise of discretion to deny disclosure was legally unreasonable22. Appeal to this Court The decision of the Full Court of the Federal Court having been delivered before that of this Court in SZMTA, special leave to appeal was granted to permit the appellant to rely on a ground not raised in the Federal Circuit Court or the Full Court. The new ground is to the effect that, by failing to disclose to the appellant the fact of having been given the notification under s 473GB(2)(a), the Authority breached an obligation of procedural fairness. Resolution of the new ground turns entirely on the statutory question whether the Authority has an implied obligation of procedural fairness to disclose the fact of notification under s 473GB(2)(a) to a referred applicant in a review under Pt 7AA. Special leave to appeal was also granted to allow the appellant to reagitate the ground on which he was unsuccessful in the Full Court. At the hearing of the appeal, however, the appellant confined his argument on that ground to the contention that the Full Court was wrong to conclude that there was insufficient evidence from which to infer that the Authority failed to consider exercising the discretion conferred by s 473GB(3)(b). The appellant conceded that the Authority would have been entitled to give weight to the confidential quality of the documents and information which were the subject of the notification under s 473GB(2)(a). Further conceding that the weight reasonably able to be given to 20 BVD17 v Minister for Immigration and Border Protection (2018) 261 FCR 35. 21 BVD17 v Minister for Immigration and Border Protection (2018) 261 FCR 35 at 47 22 BVD17 v Minister for Immigration and Border Protection (2018) 261 FCR 35 at 48 Bell Nettle Gordon their confidential quality could not be assessed because the documents and information had not been put in evidence, the appellant did not renew his contention that, if the Authority did consider exercising that discretion, its failure to exercise the discretion to disclose the documents and information was legally unreasonable. Procedural fairness The thrust of the appellant's argument at the hearing of the appeal was that the reasoning in SZMTA concerning the operation of s 438(2)(a) to give rise to an obligation of procedural fairness within the scheme of Pt 7 is transferable to the operation of s 473GB(2)(a) within the scheme of Pt 7AA. The Minister, as first respondent to the appeal, relied on the differences between the two schemes emphasised in earlier reasoning of the Full Court of the Federal Court in Minister for Immigration and Border Protection v BBS1623. Identification of the incidents of the Authority's obligation to afford procedural fairness in the conduct of a review under Pt 7AA necessarily begins with the prescription in s 473DA(1) that Div 3, together with ss 473GA and 473GB, "is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to reviews conducted by the [Authority]". For reasons which will become apparent, that prescription is alone sufficient to preclude an obligation of procedural fairness on the part of the Authority to disclose the fact of notification under s 473GB(2)(a) to a referred applicant. Whether such an obligation would arise as an incident of the Authority's obligation to afford procedural fairness within the scheme of Pt 7AA were it not for the prescription in s 473DA(1) need not be explored. The prescription in s 473DA(1) has some parallels with the prescriptions in s 422B(1) and (2), the scope and operation of which were considered in SZMTA24. Like them, the prescription in s 473DA(1) is framed in a way that is consistent with to afford procedural fairness which arises as an implied condition of performance of the duty to conduct a review through operation of a common law principle of legislative acknowledgement of an obligation 23 (2017) 257 FCR 111. 24 (2019) 93 ALJR 252 at 262 [34]-[37]; 363 ALR 599 at 609-610. Bell Nettle Gordon statutory interpretation25. And like them, the prescription in s 473DA(1) "recognises that the precise content of that obligation to afford procedural fairness depends on 'the particular statutory framework'"26. Unlike the prescriptions in s 422B(1) and (2) as interpreted in SZMTA27, however, the prescription in s 473DA(1) is not framed to confine the exhaustiveness of its operation, in defining the content of the obligation to afford procedural fairness which it acknowledges, to the discrete subject matters of the provisions to which it refers. Instead, it extends the exhaustiveness of its operation, in defining the content of the Authority's obligation to afford procedural fairness, to the entirety of the performance of the overriding duty imposed on the Authority by s 473CC(1) to review a fast track reviewable decision referred to it under s 473CA. The reasoning in SZMTA28, that an incident of the obligation of procedural fairness which conditions performance of the overriding duty of the Tribunal to conduct a review under Pt 7 can arise outside the scope of the discrete subject matters of the provisions to which s 422B(1) and (2) refer, can therefore have no application to the Authority. Recognising that the prescription in s 473DA(1) is broad in its scope, the appellant argued that the effect of its operation on the identification of the incidents of the Authority's obligation to afford procedural fairness is minimal. The appellant argued that the "exhaustive statement of the requirements of the natural justice hearing rule" to which s 473DA(1) refers encompasses all that is expressed in and implied by the totality of the provisions which s 473DA(1) mentions. If a particular obligation of disclosure arises by implication from 25 (2019) 93 ALJR 252 at 262 [34]; 363 ALR 599 at 609. See also Minister for Immigration and Border Protection v SZSSJ (2016) 259 CLR 180 at 205 [75]; [2016] HCA 29. 26 (2019) 93 ALJR 252 at 262 [34]; 363 ALR 599 at 609, quoting Kioa v West (1985) 159 CLR 550 at 584; [1985] HCA 81 and Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 at 504; [1963] HCA 41. 27 (2019) 93 ALJR 252 at 262 [35]-[37]; 363 ALR 599 at 609-610. See also WAJR v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 624 at 637 [57]; Minister for Immigration and Citizenship v SZMOK (2009) 247 FCR 404 at 407 [9]. 28 (2019) 93 ALJR 252 at 261-262 [27]-[37]; 363 ALR 599 at 608-610. Bell Nettle Gordon construing Div 3 in combination with s 473GA or s 473GB against the background of the common law then, according to the appellant, that implied obligation is itself part of the "exhaustive statement of the requirements of the natural justice hearing rule" to which s 473DA(1) refers. All that the prescription in s 473DA(1) achieves, according to the appellant, is to prevent recourse to provisions in Pt 7AA other than Div 3 and ss 473GA and 473GB in determining the express or implied incidents of the Authority's obligation of procedural fairness. For example, it precludes an implication arising from the requirement of s 473FB for the Authority, so far as practicable, to comply with a direction by the President as to the conduct of reviews. The argument would deprive s 473DA(1) of any meaningful operation. It cannot be accepted. The evident purpose of s 473DA(1) in prescribing that the provisions to which it refers are to be taken to be an "exhaustive statement of the requirements of the natural justice hearing rule" is to require that those provisions be construed as a codification of the incidents of the Authority's acknowledged obligation of procedural fairness. The prescription does not preclude all implications. Importantly, it does not preclude an implication that a statutory power within the provisions to which s 473DA(1) refers must be exercised only within the bounds of legal reasonableness. What the prescription does preclude is an incident of the Authority's obligation of procedural fairness arising as a matter of implication through the application of the common law principle of statutory interpretation according to which, where the exercise of a power or the performance of a duty is conditioned by a requirement to afford procedural fairness, "regard must be had to the circumstances of the particular case to ascertain what is needed to satisfy the condition" with the result that "[i]t is not possible precisely and exhaustively to state what the repository of a statutory power must always do to satisfy [the] condition"29. The consequence of the codifying effect of s 473DA(1) was correctly stated by the Full Court of the Federal Court constituted by Robertson, Murphy and Kerr JJ in Minister for Immigration and Border Protection v CRY1630 and in Minister for Immigration and Border Protection v DZU1631. The consequence is that, except to the extent that procedural unfairness overlaps with legal 29 Kioa v West (1985) 159 CLR 550 at 611. See also at 585. 30 (2017) 253 FCR 475 at 491 [67]. 31 (2018) 253 FCR 526 at 552-553 [99]. Bell Nettle Gordon unreasonableness, procedural fairness analysis is not the "lens" through which the content of the procedural obligations imposed on the Authority in the conduct of a review under Pt 7AA is to be determined. Consistent with the earlier conclusion of the Full Court in BBS1632, the entirety of the content of the Authority's obligation of procedural fairness in the context of a notification under s 473GB(2)(a) is to be found in the outworking of the discretions conferred on the Authority by s 473GB(3). Section 473DA(1) leaves no room for an additional obligation of disclosure to arise in the manner recognised in SZMTA. For completeness, the overlapping operation of s 473DA(2) in the circumstances giving rise to the present appeal is also to be noted. The prescription in s 473DA(2), it will be recalled, is to the effect that nothing in Pt 7AA requires the Authority to give to a referred applicant any material that was before the Minister when making the decision under s 65. There might be circumstances in which the prescription would not prevent the Authority being required to provide material that was before the Minister to a referred applicant as an incident of a legally reasonable exercise of the discretion conferred on it by s 473DC(3)33. Similarly, there might be circumstances in which the prescription would not prevent the Authority being required to provide such material to a referred applicant as a consequence of a legally reasonable exercise of the discretion conferred on it by s 473GB(3)(b). However, the prescription does operate to preclude an obligation on the part of the Authority to give such material to a referred applicant from otherwise arising as a matter of implication. Exercise of discretion The appellant's argument that the Full Court was wrong to conclude that there was insufficient evidence from which to infer that the Authority failed to consider exercising the discretion conferred by s 473GB(3)(b) can be dealt with quite readily. 32 (2017) 257 FCR 111 at 144 [100]. 33 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 492 [49], 499-500 [97]; 353 ALR 600 at 613, 623-624. Bell Nettle Gordon As the recent decision in Plaintiff M47/2018 v Minister for Home Affairs34 well enough illustrates, leaving constitutional and legislative facts aside, it is the plaintiff in an application for judicial review of administrative action who has the onus of establishing on the balance of probabilities the facts on which a claim to relief is founded. To the extent that the factual basis for a claim to relief is sought to be founded on an inference to be drawn from a decision-maker's statement of reasons, the appropriateness of drawing the inference falls to be evaluated having regard to two settled principles. One is that such a statement of reasons must be read fairly and not in an unduly critical manner35. The other is that it must be read in light of the content of the statutory obligation pursuant to which it was prepared36. The appellant's contention before the Full Court that the Authority failed to consider the exercise of the discretion conferred by s 473GB(3)(b) was based solely on an inference sought to be drawn from the fact that the Authority's statement of its reasons for decision contains no reference to the discretion. The Full Court did not err in rejecting that contention. Given that the Authority was under no obligation to give reasons for its exercise or non-exercise of any procedural power, the mere failure of the Authority to mention the discretion conferred by s 473GB(3)(b) cannot support the drawing of an inference that the exercise of the discretion was not considered. The Authority's specific reference to taking particular country information into account as "new information", thereby indicating an exercise of discretion under s 473DC(1), lends no added support to the drawing of the inference. Having been before the delegate at the time of the decision under review, the information contained in the documents in the departmental file did not meet the description of "new information". The Authority's reference to one statutory power having been exercised in respect of one category of information cannot be taken to 34 (2019) 93 ALJR 732; 367 ALR 711; [2019] HCA 17. See also Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 616 [67], 623 [91]- 35 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; [1996] HCA 6. 36 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 606 Bell Nettle Gordon indicate that the Authority failed to consider the exercise of another statutory power in respect of another category of information. Orders The appeal must be dismissed with costs. Edelman Introduction Even with the benefit of omniscience, God still afforded Adam the benefit of the natural justice hearing rule37. That rule has long been understood to be a foundational principle of justice. When statute creates a decision-making process, the usual implication that would be drawn by any reasonable reader from the language is that the hearing will follow a procedure that is fair in light of the relevant provisions. It would require words of extreme clarity before a court could conclude that Parliament intended to create a process that permitted a statutory hearing process to proceed unfairly. At the heart of this appeal is whether s 473DA(1) of the Migration Act 1958 (Cth) excludes the ordinary manner in which implications are drawn or whether it provides, as it says, that the relevant ("exhaustive") provisions to consider for an implication of "the natural justice hearing rule in relation to reviews conducted by the Immigration Assessment Authority" are those contained in the same Division as well as ss 473GA and 473GB. The implication would then be assessed in the ordinary manner but without recourse to other provisions. The facts and background to this appeal are set out in the joint reasons for decision of the other members of this Court. I agree with those reasons for dismissing the second ground of appeal, concerning the alleged inference that the Immigration Assessment Authority ("the Authority") failed to consider exercising the discretion conferred by s 473GB(3)(b) of the Migration Act. I also agree with the conclusion reached in relation to the first ground of appeal, but for different reasons. In my view, s 473DA(1) of the Migration Act does not impliedly alter the underlying principles of statutory interpretation so as to preclude any implication of procedural fairness based on the natural justice hearing rule. Instead, I would dismiss the first ground of appeal because there was no practical unfairness to the appellant. When statutory words exclude procedural fairness When a decision-maker exercises a statutory power that would affect the rights or liabilities of another person, questions arise as to how that power should be exercised. The "hearing rule" is an expression, or more commonly an implication, in a statute of a requirement of procedural fairness in the exercise of 37 Genesis 3:11. See R v Chancellor of Cambridge University (1723) 1 Str 557 at 567 [93 ER 698 at 704]. Edelman that statutory power38. The implication will always depend upon the legislative intention; although where a power is conferred without express qualification, it will usually involve an implication39 that the power be exercised by respecting those requirements of justice that natural reason would require having regard to all of the circumstances. At a high level of generality, one of the requirements that will inform the terms of any implication, subject to the terms and context of the statutory power, will often be the principle based upon conventional assumptions to which the common law gives effect that a person should have a "reasonable opportunity of presenting [their] case"40. The threshold question on this appeal is whether s 473DA(1) of the Migration Act excludes any implication that would otherwise arise from the words of the statute in their context giving effect to a reasonable opportunity for an applicant to present their case, when any of the powers in Div 3 of Pt 7AA, s 473GA, or s 473GB are exercised by the Authority. Section 473DA(1) of the Migration Act provides: "This Division, together with sections 473GA and 473GB, is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to reviews conducted by the Immigration Assessment Authority." There is an immediate difficulty in interpreting s 473DA(1) as drawing a conceptual distinction within Div 3 and ss 473GA and 473GB between (i) express terms that impose duties that fall within the classification of the natural justice hearing rule, and (ii) implied terms that fall within that classification. That difficulty, which has been identified in the context of contractual instruments, is that it "flies in the face of our experience of the way language is used" to create a "conceptual difference between construing the 38 See Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 256 [2]; [2010] HCA 23. 39 Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 491; [1977] HCA 39; FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 407-408; [1982] HCA 26; Kioa v West (1985) 159 CLR 550 at 609; [1985] HCA 81; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 258- 259 [11]-[13]; Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 666 [97]; [2012] HCA 31. 40 Russell v Duke of Norfolk [1949] 1 All ER 109 at 118, quoted in Kioa v West (1985) 159 CLR 550 at 613 and Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at 511. See also Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 341 [52]; [2015] HCA 40. Edelman meaning of the words used ... and implying a term"41. As O'Connor J put it, "[e]very implication which the law makes is embodied in the contract just as effectively as if it were written therein in express language"42. Since the legislative intention from which a statutory implication is made also depends on context, including the common law background to the statutory words, "a debate whether procedural fairness is to be identified as a common law duty or as an implication from statute proceeds upon a false dichotomy and is unproductive"43. Hence, in Kioa v West44, Brennan J did not separate expression and implication when his Honour described the "procedural requirements ... expressly or impliedly prescribed by statute" as a question of interpretation that "demands a universal answer", albeit an answer which would be applied in a manner that would vary according to the circumstances of the case. In the context of Div 3 of Pt 7AA, there could be serious difficulties in drawing lines between express requirements of procedural fairness such as those in s 473DE(1) and implied requirements. For instance, when the Authority exercises its powers in relation to s 473DE(1), are matters such as (i) limits to the way the Authority thinks it appropriate to "give" the particulars of the new information, (ii) the extent of the particulars, or (iii) the manner of giving an invitation to comment on the new information, matters that are implied against the background of common law principles in light of which they were enacted, or matters that are an application of the express terms, or both? Ultimately, this issue can be put to one side because neither the semantic meaning nor the context of s 473DA(1) has the effect of excluding any implication that would be drawn from Div 3, s 473GA, or s 473GB to give effect to procedural fairness. The semantic meaning of the words of s 473DA(1) does not exclude an implication to give effect to the natural justice hearing rule when powers in Div 3 of Pt 7AA or ss 473GA and 473GB are exercised. Rather, the plain meaning of the words of s 473DA(1) is that the relevant provisions are the only provisions from which any obligations that could be characterised as part of the natural justice hearing rule could be expressed or implied for reviews conducted by the Authority. 41 Hoffmann, "Language and Lawyers" (2018) 134 Law Quarterly Review 553 at 563. Compare Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742 at 756 [26]-[27]. 42 Hart v MacDonald (1910) 10 CLR 417 at 427; [1910] HCA 13. 43 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 44 (1985) 159 CLR 550 at 611. Edelman Nor does the context in which this provision was enacted suggest the exclusion of procedural fairness implications in the exercise of powers by the Authority within Div 3 of Pt 7AA, s 473GA, or s 473GB. The words of s 473DA(1) are very similar to those of ss 51A, 97A, 118A, 127A, 357A, and 422B, which were inserted by items 1-6 of Sch 1 to the Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth) and commenced on 4 July 2002 ("the 2002 Provisions"). Each of the 2002 Provisions provides that various other provisions, Divisions, or Subdivisions are "taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with" or "the matters it deals with". These words have been held to be "consistent with the implication of an obligation to afford procedural fairness"45. They do not exclude an implication that would otherwise be drawn from the provisions to which they refer. There is one linguistic difference between the 2002 Provisions and s 473DA(1). The 2002 Provisions are expressed to apply "in relation to the matters they deal with" rather than, as s 473DA(1) was expressed in 2014, "in relation to reviews conducted by the Immigration Assessment Authority". But this difference concerns the range of matters that are the subject of the procedural fairness obligation. It is not concerned with any distinction between express and implied terms. Part 7AA limits the sources from which any hearing rule procedural fairness implication can be drawn in a hearing by the Authority to the provisions mentioned. Similarly, the reference in s 473DA(1) to "reviews conducted by the Immigration Assessment Authority" means "in relation to all subject matters dealt with by the Immigration Assessment Authority" in reviews under Pt 7AA. In contrast, the 2002 Provisions do not limit the entirety of the hearing rule procedural fairness obligations before the Administrative Appeals Tribunal ("the Tribunal"). Each of the 2002 Provisions constrains the Tribunal to confine its assessment of any express or implied obligations of procedural fairness to the subject matter of those provisions. This meaning of s 473DA(1) is confirmed by the use of the same words as the 2002 Provisions in the Explanatory Memorandum to the Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Act 2014 (Cth), which by item 21 of Sch 4 inserted Pt 7AA, including s 473DA, into the Migration Act46: 45 Minister for Immigration and Border Protection v SZMTA (2019) 93 ALJR 252 at 262 [34]; 363 ALR 599 at 609; [2019] HCA 3. 46 Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 130 [886]. Edelman "The purpose of this amendment is to make clear that sections 473GA, 473GB and Division 3 of Part 7AA of the Migration Act are an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with. Division 3 sets out how the IAA should conduct its review and outlines how the IAA is to review decisions on the papers and provides limits on the consideration of new information for the purposes of making a decision in relation to a fast track reviewable decision. Section[s] 473GA and 473GB deal with the disclosure of confidential information to and by the IAA." (emphasis added) This meaning is also supported by s 473DA(2) and the interpretation that has been given to that sub-section. That sub-section, "[t]o avoid doubt", relevantly provides that "nothing in this Part requires the Immigration Assessment Authority to give to a referred applicant any material that was before the Minister when the decision under section 65". Section 473DA(2) has been confined to implications requiring the giving of such material that would be drawn only from the natural justice hearing rule47. But it does not exclude all implications, including implications that would require the Authority to give the referred applicant other material. the Minister made The legislative intention underlying s 473DA(2) is to confirm beyond doubt that a particular, pertinent implication should not be drawn from the provisions in Pt 7AA. The premise of s 473DA(2) is that since implications might be drawn from the principles of the natural justice hearing rule it was necessary to remove any doubt about whether this particular implication could be drawn. Hence, when the Explanatory Memorandum explained the purpose of s 473DA(2), it did not say that the sub-section existed to confirm the exclusion of only one of the many possible implications that were also excluded. Rather, it explained that s 473DA(2) was there to remove doubts that might otherwise have permitted the particular implication of a liberty to comment to be drawn from the relevant provisions. The preferred position, which sought to remove doubt, was that the implication should not be drawn because, as the Explanatory Memorandum said, the applicant had already been given an opportunity to comment48: 47 See Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 488 [26], 499-500 [97]; 353 ALR 600 at 608, 623-624; [2018] HCA 16. 48 Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 130 [888]. Edelman "The purpose of [s 473DA(2)] is to put beyond doubt that the IAA is not required to give a referred applicant any material that was before the Minister for comment. This is because under subsection 57(2) of the Migration Act and in relation to their fast track decision, an applicant would have already been provided an opportunity to comment on relevant information that the Minister considered was the reason, or part of the reason for refusing to grant a visa." The principle of legality is a further reason why the words of s 473DA(1) should not be strained to reach a conclusion that any implication of procedural fairness is excluded. That principle usually represents the natural process of reasoning that the more important or fundamental a person's right, and the greater the alleged adverse effect on the right, the less likely it is that Parliament would have intended that effect, and the clearer the words that are required to achieve it. It is, perhaps unsurprisingly, a principle that is pertinent when considerations of the legality of executive action are concerned. Implications that are based upon principles of natural justice are important liberties that have been held only to be excluded by "plain words of necessary intendment", and not by "indirect references, uncertain inferences or equivocal considerations"49. The Minister submitted, however, that the exclusion could be drawn from the statement appearing in s 422B, but not in s 473DA, that "[i]n applying this Division, the Tribunal must act in a way that is fair and just"50. In effect, the Minister's submission was that the absence of an express reference to acting fairly and justly in s 473DA implied that the Authority was empowered to act in a way that was unfair or unjust in the exercise of its powers even if the natural implication to draw from the relevant provision was the contrary. That submission cannot be accepted. There is a convention of language that omission of a matter that is expressly mentioned elsewhere can imply its absence. But the force of this convention depends entirely on context. Here, a person's right to a reasonable opportunity to present a case, if naturally implied as part of a decision-maker's powers, is not an aspect of procedural fairness that can usually be abolished by Parliament by a nudge and a wink. In summary, s 473DA(1) does not say that "in the process of interpreting the meaning of Div 3 of Pt 7AA and ss 473GA and 473GB, a court cannot draw 49 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 259 [14]- [15], quoting respectively Annetts v McCann (1990) 170 CLR 596 at 598; [1990] HCA 57 and The Commissioner of Police v Tanos (1958) 98 CLR 383 at 396; [1958] HCA 6. 50 Migration Act, s 422B(3). See also Minister for Immigration and Border Protection v SZMTA (2019) 93 ALJR 252 at 262 [36]; 363 ALR 599 at 609. Edelman any implication that would require conduct to give a person a reasonable opportunity to present a case". What s 473DA(1) does, however, is exclude from consideration, for any implication, those terms and provisions outside Div 3 of Pt 7AA or ss 473GA and 473GB. It precludes from the consideration of what procedural fairness requires the Immigration Assessment Authority" any other legislative provisions, such as s 473FB in Div 5, which concerns practice directions issued by the President. in "reviews conducted by The limited implications of procedural fairness and unreasonableness in s 473GB The only provision from which the appellant sought to draw an implication of procedural fairness, requiring disclosure to him that the Authority had received material that was the subject of a certificate, was s 473GB(3). Section 473GB(3) provides: "If the Immigration Assessment Authority is given a document or information and is notified that this section applies in relation to it, the Authority: (a) may, for the purpose of the exercise of its powers in relation to a fast track reviewable decision in respect of a referred applicant, have regard to any matter contained in the document, or to the information; and (b) may, if the Authority thinks it appropriate to do so having regard to any advice given by the Secretary under subsection (2), disclose any matter contained in the document, or the information, to the referred applicant." The "document or information" to which s 473GB(3) refers is not the written certificate. The certificate is issued under s 473GB(5) to certify that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for reasons, broadly, of public interest immunity or confidentiality51. Section 473GB(3) does not expressly require the Authority to disclose any matter contained in the document, or the information, to the referred applicant. However, the appellant submitted that s 473GB(3) contained an implied power to disclose to him that a certificate had been issued and a duty to do so where procedural fairness required. 51 Migration Act, s 473GB(1). Edelman Although the Minister had submitted that any such implication of procedural fairness had been excluded by s 473DA(1), the Minister accepted that s 473DA(1) had not excluded a requirement that the Authority must act according to an implied requirement of legal reasonableness in exercising its powers under s 473GB(3). In other words, even if any implication of procedural fairness were excluded by s 473DA(1), an implication with almost precisely the same content could be implied as a requirement of legal reasonableness. It is hard to imagine any circumstance in which the exercise of a power in a manner contrary to the requirements of procedural fairness that would be implied but for the purported exclusion by s 473DA(1) would not be legally unreasonable52. However, in light of the conclusion I have reached about the proper interpretation of s 473DA(1), it is not necessary to consider the extent to which the acceptance of possible implications of legal reasonableness which might encompass the entirety of any duty of procedural fairness casts doubt upon whether Parliament would have intended to exclude an implication of the latter. It can be assumed for the purposes of this appeal that the Authority has a power to disclose that a certificate had been issued in addition to the power to disclose information or documents that are the subject of the certificate. It might be expected that a duty to exercise that power in order to give procedural fairness to an applicant would arise only in exceptional circumstances. However, one circumstance where the effective functioning of s 473GB(3) might arguably require the exercise of the power to disclose that a certificate had been issued is if it is necessary to obtain submissions from an applicant concerning whether there should be disclosure of information that is the subject of the certificate53. It suffices for the purposes of this appeal to assume both the existence of that power and a duty to exercise it where necessary to give applicants a reasonable opportunity to present a case. Even on this assumption there was no duty for the Authority to disclose the existence of the certificate in this case. Unfairness, unreasonableness and materiality In written submissions, a focus of the Minister was upon whether any procedural unfairness or unreasonableness arising from a failure to disclose the 52 See, eg, Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 373 [99]; [2013] HCA 18; Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 492 [49], 499-500 [97]; 353 ALR 600 at 53 See Migration Act, s 473DC(3) and Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 488 [26], 492 [49], 499-500 [97]; 353 ALR 600 at 608, 613, 623-624. Edelman existence of the certificate was material. However, he accepted in oral submissions that there is an anterior issue to materiality. This is whether the failure to disclose was unfair or unreasonable. Both "unfair" and "unreasonable" are relative terms. For an exercise of power to be procedurally unfair there must be sufficient "practical injustice" in the departure from the procedure impliedly required by the statute54. For an exercise of power to be legally unreasonable it must be unreasonable to the degree required by the statutory implication55. It is only where an irregularity reaches the threshold of practical unfairness or the required statutory standard of unreasonableness that the question of materiality arises. Then, for a finding of jurisdictional error, materiality requires consideration of (i) whether the conduct involved a fundamental irregularity56, or, if not, (ii) whether, despite the unfairness or unreasonableness, the result would not inevitably have been the same or, put another way, there was a possibility of a successful outcome57. There may, however, be circumstances where a discretion might nevertheless be exercised to refuse a new hearing, including practical reasons that have subsequently arisen that would make a new hearing futile58. Subject to issues concerning the substantive or evidentiary onus of proof59 the same basic reasoning has long applied in relation to the proviso in criminal 54 See, eg, Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]-[38]; [2003] HCA 6. 55 See, eg, Minister for Immigration and Border Protection v SZVFW (2018) 92 ALJR 713 at 728 [53], 739-740 [133]-[135]; 357 ALR 408 at 421-422, 437-438; [2018] HCA 30. 56 Hossain v Minister for Immigration and Border Protection (2018) 92 ALJR 780 at 789 [40], 795-796 [72]; 359 ALR 1 at 11, 19; [2018] HCA 34. 57 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 341 [56]; Hossain v Minister for Immigration and Border Protection (2018) 92 ALJR 780 at 788 [31], 790 [42], 795 [72]; 359 ALR 1 at 9, 11, 19. See also Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147; [1986] HCA 54. 58 Nobarani v Mariconte (2018) 92 ALJR 806 at 813 [39]; 359 ALR 31 at 39; [2018] HCA 36. 59 Minister for Immigration and Border Protection v SZMTA (2019) 93 ALJR 252 at 263 [46], but cf 272 [93]-[95]; 363 ALR 599 at 611, but cf 622-623. And compare Mraz v The Queen (1955) 93 CLR 493 at 514; [1955] HCA 59; TKWJ v The Queen (2002) 212 CLR 124 at 143 [63]; [2002] HCA 46; Lindsay v (Footnote continues on next page) Edelman appeals, where the adjective "substantial" is often used in place of "material". In most formulations of the common appeal provisions, an appeal will not be allowed unless there is a miscarriage of justice and it is not established that the miscarriage is not substantial60. The miscarriage is not substantial if the error was not fundamental and the result of the appeal would inevitably have been the same61. Again, there can be reasons why discretion might nevertheless be exercised not to grant a new trial. The important point for this appeal is that in this process the anterior question to whether an error is jurisdictional, or whether a miscarriage of justice is substantial, is whether the action or error qualifies as legally unjust or legally unreasonable or, in the language of the criminal law, a miscarriage of justice. It was not asserted in this Court that the failure of the Authority to disclose to the appellant that it had received material that was the subject of a certificate was a jurisdictional error due to legal unreasonableness. The failure did not reach the sufficient threshold of unreasonableness. Nor did it reach the required threshold of legal unfairness. The failure to inform the appellant of the existence of the certificate did not affect the manner in which the review was conducted. The fact of the existence of the certificate would not have revealed to the appellant anything new about the subject matter to which the certificate related. It would not have revealed to the appellant anything about his brother's evidence or omissions from that evidence, and would not have revealed any significance that the Authority might have placed on that evidence or those omissions. Conclusion For these reasons the first ground of appeal must be dismissed. I agree with the reasons of the joint judgment for dismissing the second ground of appeal, and with the orders proposed in the joint judgment. The Queen (2015) 255 CLR 272 at 294 [64]; [2015] HCA 16; Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147. 60 Criminal Appeal Act 1912 (NSW), s 6(1); Criminal Procedure Act 1921 (SA), s 158(1)(c), (2); Criminal Code (Qld), s 668E(1), (1A); Criminal Appeals Act 2004 (WA), s 30(3)(c), (4); Criminal Code (Tas), s 402(1), (2); Criminal Code (NT), s 411(1), (2); Supreme Court Act 1933 (ACT), s 37O(2)(a)(iii), (3)(b). Compare Criminal Procedure Act 2009 (Vic), s 276. 61 OKS v Western Australia (2019) 93 ALJR 438 at 446-447 [35]-[38]; 364 ALR 573 at 581-583; [2019] HCA 10.

HIGH COURT OF AUSTRALIA PLAINTIFF AND COLONEL PETER JOHN MORRISON, A MILITARY JUDGE OF THE AUSTRALIAN MILITARY COURT & ANOR DEFENDANTS Lane v Morrison [2009] HCA 29 26 August 2009 ORDER Declare that the provisions of Division 3 of Part VII of the Defence Force Discipline Act 1982 (Cth) are invalid. Order that a writ of prohibition issue directed to the first defendant, Colonel Peter John Morrison, a Military Judge of the Australian Military Court, prohibiting him from proceeding further with the charges relating to the plaintiff identified in the charge sheet dated 8 August 2007 and referred to the Australian Military Court for trial. Second defendant to pay the costs of the plaintiff. Representation A W Street SC with K S Cochrane and M J Duncan for the plaintiff (instructed by Provest Law) S J Gageler SC, Solicitor-General of the Commonwealth with S B Lloyd SC and J G Renwick for the second defendant (instructed by Australian Government Solicitor) Submitting appearance for the first defendant Intervener G T W Tannin SC with J C Pritchard intervening on behalf of the Attorney- General for the State of Western Australia (instructed by State Solicitor for Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Constitutional law (Cth) – Judicial power of the Commonwealth – Military courts – Member of Australian Defence Force charged under Defence Force Discipline Act 1982 (Cth) ("Act") – Where hearing before Australian Military Court ("AMC"), established by s 114 of Act – Where AMC a court of record and decision subject to appeal to tribunal – Relevance of fact that AMC has criminal jurisdiction – Whether AMC exercising judicial power of the Commonwealth – Whether AMC created in accordance with Ch III of Constitution. Constitutional law (Cth) – Defence power – Military courts – AMC independent from command structure – Whether creation of AMC beyond the scope of s 51(vi) of Constitution – Whether creation of AMC inconsistent with power vested in Governor-General by s 68 of Constitution. Words and phrases – "command structure", "court", "court of record", "courts- martial", "judicial power", "judicial power of the Commonwealth", "service tribunal". Constitution, Ch III, ss 51(vi), 68, 71, 72, 73(ii), 75(v), 77, 122. Defence Act 1903 (Cth). Defence Force Discipline Act 1982 (Cth), ss 3(1), 53, 61, 63, 114-121, 140, 188AP, 188AZ, 191. Defence Force Discipline Appeals Act 1955 (Cth), s 20. FRENCH CJ AND GUMMOW J. The first defendant, Colonel Morrison, is a Military Judge holding office as a member of the Australian Military Court ("the AMC"). He is an officer of the Commonwealth within the meaning of s 75(v) of the Constitution1. The AMC is created by s 114 of the Defence Force Discipline Act 1982 (Cth) ("the 1982 Act" or "the Act"). Section 114 is found in Div 3 (ss 114-121) of Pt VII. That Division was inserted by the Defence Legislation Amendment Act 2006 (Cth) ("the 2006 Act")2 and was amended by the Defence Legislation Amendment Act 2008 (Cth) ("the 2008 Act"). The relevant provisions of the 2006 Act commenced on 1 October 2007. The agreed statement of facts discloses that the plaintiff enlisted in the Royal Australian Navy ("the RAN") on 30 March 1998. On 14 March 2007 the plaintiff was discharged from the RAN and transferred for a five year period of service to the Naval Reserve (Active Reserve) ("the Reserve"). On 8 August 2007 the plaintiff was charged with the offence of "an act of indecency without consent" contrary to s 61(3) of the 1982 Act as applying s 60(2) of the Crimes Act 1900 (ACT), and with the offence of assaulting a superior officer, contrary to s 25 of the 1982 Act. The alleged offences occurred earlier, in August 2005, while he was a member of the RAN. The plaintiff was discharged from the Reserve with effect on 3 September 2007. On 21 September 2007 the Director of Military Prosecutions ("the DMP") sought the convening of a court-martial to try the charges against the plaintiff. By force of the transitional provisions in the 2006 Act3 the DMP was taken, on 1 October 2007, to have withdrawn that request and requested referral of the charges to the AMC for trial. On 26 November 2007, the Chief Military Judge nominated the first defendant to try the charges against the plaintiff. Section 114 of the Act states: "(1) A court, to be known as the Australian Military Court, is created by this Act. Note 1: The Australian Military Court is not a court for the purposes of Chapter III of the Constitution. 1 The original jurisdiction of this Court also is attracted by s 76(i) of the Constitution and s 30(a) of the Judiciary Act 1903 (Cth), and by s 75(iii) of the Constitution. 2 Sched 1, Pt 1. 3 Sched 1, Pt 3, item 257. Note 2: The Australian Military Court is a service tribunal for the purposes of this Act: see the definition of service tribunal in subsection 3(1). (1A) The Australian Military Court is a court of record. The Australian Military Court consists of: the Chief Military Judge; and such other Military Judges as from time to time hold office in accordance with this Act." The significance of the classification of the AMC as a "service tribunal" is discussed later in these reasons4. The AMC has jurisdiction conferred by s 115 to try certain charges of offences against the Act or the regulations made under it and, by virtue of the 2008 Act, to hear and determine certain "appeals" from decisions of "summary authorities", including commanding officers. The AMC is to have a seal (s 119). It may sit at any place in or outside Australia (s 117) and is constituted by a single Military Judge (s 116). Provision is made outside Div 3 of Pt VII for the hearing in public of the proceedings of the AMC, subject to restrictions respecting the interests of the security and defence of Australia and "the proper administration of justice or public morals" (s 140). The office of Registrar of the AMC is established by s 188F. Military Judges are appointed by the Governor-General by written instrument, for a term of 10 years (s 188AP). Appointments may be terminated by the Governor-General for cause (s 188AZ(1)). The appointment of a Military Judge comes to an end if the appointee ceases to be a member of the Defence Force (s 188AZ(2)). The plaintiff seeks prohibition to restrain the first defendant from trying the charges laid against him and declaratory relief, including a declaration that the central provisions made by the 2006 Act and included as Div 3 of Pt VII of the Act are invalid. The first defendant entered a submitting appearance. The Commonwealth is the second defendant. The Attorney-General for Western Australia intervened in support of the plaintiff. The Commonwealth has accepted that the relevant date for the determination of the question of validity is 1 October 2007 and submissions by both sides were directed to the legislation as it stood on that date. If the plaintiff's case be made out, it will be unnecessary to consider the amendments respecting the AMC made by the 2008 Act. The plaintiff should have prohibition and a declaration of the invalidity of Div 3 of Pt VII. Outline In outline, the reasons for that conclusion are as follows. The judicial power identified in Ch III is that of a body politic, namely the Commonwealth, which is distinct from that of the States and, given the presence of s 74, that of the United Kingdom. The powers of the Parliament to create courts are found only in ss 71, 72 and 122 of the Constitution5. The creation of the AMC is not supported by s 122 as a law with respect to the government of any territory. Nor is the AMC comprised of Justices who are appointed by the Governor-General in Council and with the tenure provided by s 72 of the Constitution. Further, however, the jurisdiction conferred upon the AMC by s 115 of the Act, to try charges of service offences, involves the exercise of the judicial power of the Commonwealth otherwise than in accordance with Ch III of the Constitution. Legislation conferring that jurisdiction is consistent with the Constitution only if the changes introduced by the 2006 Act, including the establishment of the AMC, are supported by s 51(vi) of the Constitution. But the special position of military justice, which is given by the defence power, is confined to that which, as a matter of history, answers the description given by Dixon J in R v Cox; Ex parte Smith6. There, after noting the treatment of the administration of military justice by courts-martial as an apparent exception to the principles of Ch III of the Constitution, his Honour stated that the exception was "not real" and continued: "To ensure that discipline is just, tribunals acting judicially are essential to the organization of an army or navy or air force. But they do not form part of the judicial system administering the law of the land." The validity of the system of military justice established by the Act, as it stood before the introduction of the AMC by the 2006 Act, was upheld in White v Director of Military Prosecutions7. The 2006 Act, as the explanatory materials emphasise in considerable detail, was designed to supersede, and improve upon, that system with one more nearly approaching, but stopping short of, the Ch III 5 Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 346 [57]; [1999] HCA 44. (1945) 71 CLR 1 at 23; [1945] HCA 18. (2007) 231 CLR 570; [2007] HCA 29. the paradigm. There was an attempt by the Parliament to borrow for the AMC the impartiality and judicial branch of government for reputation of non-partisanship, upon which its legitimacy has been said, in this Court, ultimately to depend8, and to thereby apply "the neutral colours of judicial action"9 to the work of the AMC. However, it was recognised in the travaux preparatoires that this would be a risky endeavour by the Parliament. And, in the event, the 2006 Act took the AMC beyond what is authorised by s 51(vi) of the Constitution. The description of the military justice system given by Dixon J in Cox was adopted in White v Director of Military Prosecutions10 by Gleeson CJ11 and underpinned the emphasis by Gummow, Hayne and Crennan JJ upon an understanding of that system in 190012. That system was, their Honours observed13: "directed to the maintenance of the defining characteristic of armed forces as disciplined forces organised hierarchically". Within that command structure, and in contrast to the operation of the civilian justice system, the sentences of courts-martial required confirmation by a superior officer and that confirmation in turn might be quashed upon petition to higher levels of the chain of command. In 1997 this characteristic of the British military justice system was held in Findlay v United Kingdom14 to contribute to a contravention of Art 6(1) of the European Convention on Human Rights by denying an entitlement to trial by "an independent and impartial tribunal established by law". In Australia, the 2006 Act established the AMC outside the previous command structure and evinced a legislative design to meet the concerns which had underpinned the decision in 8 Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 9, 21-22; [1996] HCA 18. 9 Mistretta v United States 488 US 361 at 407 (1989). 10 (2007) 231 CLR 570. 11 (2007) 231 CLR 570 at 585 [12]-[13]. 12 (2007) 231 CLR 570 at 598 [58]. 13 (2007) 231 CLR 570 at 596 [52]. 14 (1997) 24 EHRR 221 at 243-246. Findlay. But in doing so, the Parliament exceeded the exercise of power conferred by s 51(vi). We turn to develop the above outline of reasons. The explanatory materials In June 2005 the Foreign Affairs, Defence and Trade References Committee of the Senate delivered its Report titled The effectiveness of Australia's military justice system ("the 2005 Senate Report"). The Committee stated (par 5.79): "It is becoming increasingly apparent that Australia's disciplinary system is not striking the right balance between the requirements of a functional Defence Force and the rights of Service personnel, to the detriment of both. Twenty years since the introduction of the [1982 Act], the time has come to address seriously the overall viability of the system. Australian judicial decisions and the evidence before this committee suggest the discipline system is becoming unworkable and potentially open to challenge on constitutional grounds. Overseas jurisprudence and developments suggest that alternative approaches may be more effective." Findlay had concerned the court-martial procedures under the Army Act 1955 (UK) ("the 1955 UK Act") and in Grieves v United Kingdom15 a similar result had obtained with respect to naval courts-martial under the Naval Discipline Act 1957 (UK) ("the 1957 UK Act"). In Canada, the Supreme Court held in R v Généreux16 that a general court-martial under the National Defence Act (Can)17 was not an independent and impartial tribunal for the purposes of s 11(d) of the Canadian Charter of Rights and Freedoms. Remedial legislation had followed in both the United Kingdom and Canada. Article 14(1) of the International Covenant on Civil and Political Rights ("the ICCPR") is in similar terms to the provisions applied in Findlay, Grieves and Généreux, and the 2005 Senate Report emphasised that Australia is a signatory to the ICCPR. Recommendations 18 and 19 in the 2005 Senate Report were that a permanent military court be created in accordance with Ch III of the Constitution "to ensure its independence and impartiality" and that it be capable of trying 15 (2004) 39 EHRR 2. 16 [1992] 1 SCR 259. 17 RSC 1985, c N-5. offences currently tried under the 1982 Act by a court-martial or a Defence Force magistrate. The Government Response issued in October 2005 rejected the creation of a permanent military court under Ch III of the Constitution on grounds that Ch III imposed "real constraints" upon an effective military justice system. The Response continued: "The limitations resulting from those constraints means that having a separate military court outside Chapter III is preferable to bringing the military justice system into line with Chapter III requirements. The Government will instead establish a permanent military court, to be known as the Australian military court, to replace the current system of individually convened trials by Courts Martial and Defence Force Magistrates. The Australian military court would be established under appropriate Defence legislation and would satisfy the principles of impartiality and judicial independence through the statutory appointment of military judge advocates by the Minister for Defence, with security of tenure (fixed five-year terms with possible renewal of five years) and remuneration set by the Remuneration Tribunal (Cth). To enhance the independence of military judge advocates outside the chain of command, they would not be eligible for promotion during the period of their appointment. Advice to the Government indicates that a military court outside Chapter III would be valid provided jurisdiction is only exercised under the military system where proceedings can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline." Clause 114 of the Bill for the 2006 Act as introduced into the House of Representatives did not include sub-cl (1A), which classifies the AMC as "a court of record". The sub-clause was included as an amendment moved by the Government after a Report on the Bill to the Senate by the Standing Committee on Foreign Affairs, Defence and Trade ("the 2006 Report"). The Committee determined "that the proposed AMC would not achieve the level of independence and impartiality needed to ensure a fair and effective military justice system" (par 1.27). The Supplementary Explanatory Memorandum on the revised Bill stated that the new sub-cl (1A) "further enhances the status of the AMC" (par 13); it also said (par 12): "Courts martial and trials by Defence Force magistrates were not designated as 'courts of record' under the [1982 Act]. Consistent with this, the AMC was not specifically made a court of record because there was no legal or practical reason for doing so. Additionally, it avoided conferring the characteristics of a civilian court (with greater jurisdiction) on the AMC. Notwithstanding this, the functional attributes of a court of record are provided for in the Bill, including the capacity to deal with contempt of the court, conduct of proceedings in public, and a requirement to record proceedings. The AMC has now been accorded the status of a court of record, noting that there will be a provision to limit publication of proceedings in the interests of the security and defence of Australia or for particularly sensitive matters." As explained later in these reasons, the presence of s 114(1A) emphasises, but is not the sole indication of, a legislative intention to create a body with the character of a Ch III court, save for the manner of appointment and tenure of the Military Judges. It would be a denial of that legislative intention to read down s 114 by excising sub-s (1A) pursuant to s 15A of the Acts Interpretation Act 1901 (Cth)18, and, even if this were done, the legislation would not be saved. Courts and the Constitution The noun "court" is used in varied contexts and in many senses. The Oxford English Dictionary19 gives the following meanings, among others: "a princely residence, household, retinue", and "an assembly held by the sovereign", a use which gave rise to the terms "the 'high court of parliament'" and "'the king's courts' of justice". Of its use in the sense last mentioned, Barton J said20: "'Court' as the name of a place is merely a secondary meaning. 'The Court' is the deciding and enforcing authority, even if it sits under a tree, as sometimes it does in parts of the British Empire." Hence the statement by McHugh JA in Australian Postal Commission v Dao (No 2)21: "In ordinary usage the word 'court' has many meanings: they range from the group who form the retinue of a sovereign to an area used to play 18 Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416 at 502; [1996] HCA 56. 19 2nd ed (1989), vol 3 at 1057-1059. 20 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434 at 452; [1918] HCA 56. 21 (1986) 6 NSWLR 497 at 515. certain ball games. Legal usage also gives the word several meanings. Thus a 'court' may refer to a body exercising judicial power as in the Constitution, Ch III, or to a body exercising non-judicial power such as the Coroners Court or to a court of petty sessions hearing committal proceedings. It may even refer to a body exercising judicial and arbitral powers such as the former Commonwealth Court of Conciliation and Arbitration or the Queensland Industrial Court." In Dao, as a matter of statutory construction, it was held that the Equal Opportunity Tribunal, established by the Anti-Discrimination Act 1977 (NSW), was a "court" within the meaning of the Suitors' Fund Act 1951 (NSW). In Trevor Boiler Engineering Co Pty Ltd v Morley22 the Supreme Court of Victoria held that the Workers Compensation Board was "a court of law" within the meaning of the Administrative Law Act 1978 (Vic), with the consequence that its decisions were not amenable to review under that statute. On the other hand, the Tasmanian Anti-Discrimination Tribunal is not a "court of a State" within the meaning of s 77(iii) of the Constitution23, nor is the New South Wales Administrative Decisions Tribunal24. The "creation" or "erection" of a "court" provides for the formation and constitution of a body which answers that description25. There is a distinction between the creation of a federal court by the Parliament and the conferral of its jurisdiction under s 77 of the Constitution. The judicial power of the Commonwealth spoken of in s 71 of the Constitution identifies the function of a court rather than the body of law to be applied in exercise of that function26. Section 71 speaks of "such other federal courts as the Parliament creates". The Justices of those federal courts are appointed in accordance with, and have the tenure and remuneration provided in, s 72. Whilst in office they cannot be removed otherwise than as provided by s 72(ii). It would appear to follow that 23 Commonwealth v Anti-Discrimination Tribunal (Tasmania) (2008) 169 FCR 85. 24 Trust Company of Australia Ltd v Skiwing Pty Ltd (2006) 66 NSWLR 77. 25 Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 345-346 [56]. 26 Leeth v The Commonwealth (1992) 174 CLR 455 at 469; [1992] HCA 29; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 407 [233]; [2005] HCA 44. once created by the Parliament, and at least while its Justices are in office, a federal court may not be abolished by the Parliament. The provisions formerly made in Pt IX of the Navigation Act 1912 (Cth)27 for Courts of Marine Inquiry were an example of the Parliament creating a body with use of the term "court" without seeking to endow it with the character of a court as understood in Ch III of the Constitution. When considering Pt IX in R v Turner; Ex parte Marine Board of Hobart28 at least a majority of the Court (Knox CJ, Gavan Duffy, Rich and Starke JJ and Powers J) were able to dispose of the case without ruling on the question whether s 51(i) empowered the Parliament to erect a court with exclusive power to deal with marine collisions in inter-state trade. In Turner Higgins J29 was attracted to United States decisions which upheld the validity of what became known as "legislative courts". These courts are not limited to military tribunals and territorial courts, and decide cases and controversies between the United States and citizens which arise under the laws of the United States, yet they are sufficiently supported by Art I of the Constitution and do not exercise the judicial power of the United States provided for in Art III30. These courts currently include the Tax Court, the validity of which was upheld in Simanonok v Commissioner of Internal Revenue31, and the body known as the Foreign Intelligence Surveillance Court, which comprises a panel of serving federal judges designated by the Chief Justice of the United States for a maximum of seven years32. 27 Part IX was repealed by s 45 of the Transport and Communications Legislation Amendment Act (No 2) 1989 (Cth). 28 (1927) 39 CLR 411 at 424, 454; [1927] HCA 15. 29 (1927) 39 CLR 411 at 449-450. 30 See Northern Pipeline Construction Co v Marathon Pipe Line Co 458 US 50 at 67-70, 91 (1982); Chemerinsky, Federal Jurisdiction, 5th ed (2007) at 221-225, 236-263; Wright and Kane, Law of Federal Courts, 6th ed (2002) at 48-61. 31 731 F 2d 743 (1984). Nevertheless, the Tax Court is a "Court of Law" within the meaning of the Appointments Clause in Art II, so that the Congress may authorise it to appoint its "inferior Officers": Freytag v Commissioner of Internal Revenue 32 50 USCA §1803. The validity of this legislation was upheld in United States v Cavanagh 807 F 2d 787 at 791-792 (1987) and United States v Nicholson 955 F Supp 588 at 592-593 (1997). Cf Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1. However, in Australia, matters stand differently. In the Boilermakers' Case33 Dixon CJ, McTiernan, Fullagar and Kitto JJ remarked: "Had there been no Chap III in the Constitution it may be supposed that some at least of the legislative powers would have been construed as extending to the creation of courts with jurisdictions appropriate to the subject matter of the power. This could hardly have been otherwise with the powers in respect of bankruptcy and insolvency (s 51(xvii)) and with respect to divorce and matrimonial causes (s 51(xxii)). The legislature would then have been under no limitations as to the tribunals to be set up or the tenure of the judicial officers by whom they might be constituted. But the existence in the Constitution of Chap III and the nature of the provisions it contains make it clear that no resort can be made to judicial power except under or in conformity with ss 71-80." In its written submissions the Commonwealth contended in general terms that the replacement of the court-martial system by the AMC was but a "modernization" of terminology and was not a matter of substance. The Parliament, it was said, in reliance upon legislative powers outside ss 71 and 72 of the Constitution might create a body styled as a "court" and displaying some features commonly associated with courts, provided only that the body "does not exercise the judicial power of the Commonwealth". This submission appeared to lay the ground in Australia for a system of "legislative courts" resembling the United States model. Any such submission should be rejected. It cannot stand with the statement of general principle in the passage from the Boilermakers' Case set out above. In his oral submissions the Solicitor-General correctly disclaimed the existence of any general power in the Parliament to create legislative courts. Rather, he stressed the special position occupied by the defence power as the basis for the creation of the AMC. The provisions of the 2006 Act indicate a legislative intention to create a body with the character of a court created by the Parliament under Ch III of the Constitution, save for the manner of appointment and tenure of its members. That intention is emphasised by the statement in s 114(1A) of the Act that the AMC is "a court of record". Such a court has two relevant attributes. First, a court of record which is not created as a superior court nevertheless has the 33 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 269; [1956] HCA 10. to punish for contempt committed the court34. power Section 53(4)(d)(i) creates an offence of engagement in conduct which constitutes a contempt of the AMC; this appears to supplement the contempt power of the AMC itself. However, of that contempt power, the following statement in R v Taylor; Ex parte Roach35 is in point. Dixon, Webb, Fullagar and the face of "By definition contempt is confined as an offence to courses of conduct prejudicial to the judicial power and does not extend to impairments of other forms of authority. Obstructions to the exercise of executive power, administrative power, legislative power or other governmental power are not within the conception of the offence of contempt of court." Secondly, the proceedings of a court of record preserved in its archives are called records, and are conclusive evidence of that which is recorded therein36. More generally, as Barton J put it in Waterside Workers' Federation of Australia v J W Alexander Ltd37, in its usual acceptation the term "court of record" identifies "a body which has power both to make its determinations and to enforce them". The conclusive evidentiary character of the records of the AMC, otherwise flowing from its creation as a court of record, must be understood in the light of s 191 of the Act. This treats certain certificates setting out facts respecting AMC proceedings as prima facie evidence in any civil court. The result is that s 191 assists the operation of s 114(1A). The record is conclusive but the presence of a certificate relieves the need to prove by other means the content of the record. However, the Act must be read with changes made by the 2006 Act to the Defence Force Discipline Appeals Act 1955 (Cth) ("the Appeals Act"). The result is the subjection of the AMC by s 20 of the Appeals Act to "appeals" brought to the Defence Force Discipline Appeal Tribunal ("the Appeal Tribunal"), but only by leave where the ground is not a question of law. The 34 The Master Undertakers' Association of NSW v Crockett (1907) 5 CLR 389 at 392-393; [1907] HCA 65; K-Generation Pty Ltd v Liquor Licensing Court (2009) 83 ALJR 327 at 349 [129]; 252 ALR 471 at 496; [2009] HCA 4. 35 (1951) 82 CLR 587 at 598; [1951] HCA 22. 36 Halsbury's Laws of England, 1st ed, vol 9 at 10. 37 (1918) 25 CLR 434 at 455; cf at 467 per Isaacs and Rich JJ. Appeal Tribunal is not created as a court38. The creation of an "appeal" from a federal court, were the AMC to have that character, to an administrative body such as the Appeal Tribunal, would be repugnant to Ch III of the Constitution39, in particular to s 73(ii) which provides for the appellate jurisdiction of this Court. The upshot is that while the Parliament has given to the AMC some of the attributes of a court which may be created by the Parliament for the exercise of the judicial power of the Commonwealth, it has not created such a body. Indeed, Note 1 to s 114 and the legislative history indicate that the 2006 Act was not designed to achieve that outcome. The issues The issues which then arise may be stated as follows. First, does the 2006 Act, in providing for the creation of the AMC, answer the description of a law with respect to military justice which may be supported under the special provision made by the defence power in s 51(vi) of the Constitution? The plaintiff and Western Australia submit that the 2006 Act goes beyond what as a matter of history was encompassed by the administration of military justice by a hierarchical command structure. The second issue is related to the first and asks whether the power conferred on the Parliament by s 51(vi) of the Constitution extends to the identification of the AMC as a "Court", albeit not a court answering, as a matter of its formation and constitution, the character of a court created by the Parliament under ss 71 and 72 of the Constitution. Command structure The Defence Act 1903 (Cth) ("the 1903 Act") provided in Pt VIII (ss 86-100) for courts-martial. The 1903 Act applied to the naval and military forces of the Commonwealth (s 5). The effect of s 88 was that except so far as inconsistent with the 1903 Act, there applied to the composition, procedures and powers of courts-martial the provisions of the current Imperial law. In 1903 this 38 From decisions of the Appeal Tribunal there lies an "appeal" to the Federal Court on a question of law. See Hembury v Chief of the General Staff (1998) 193 CLR 641; [1998] HCA 47. 39 See APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 409 was found principally in the Naval Discipline Act 1866 (Imp)40 ("the 1866 Act") and the Army Act 1881 (Imp)41 ("the 1881 Act"). The 1866 Act stipulated that, save in the case of the death sentence (which could be remitted only by the sovereign), the Admiralty might suspend, annul or modify sentences passed at a court-martial (s 53(1)). The death sentence, save in the case of mutiny, was not to be carried out until it was confirmed by the Admiralty or by the Commander in Chief on a foreign station (s 53(3)). Section 46 of the 1881 Act dealt with the power of the commanding officer with respect to charges against a person under his command; the officer might dismiss the charge if he was of the opinion that it should not proceed, or take steps to bring the offender to a court-martial or, in the case of a soldier, deal himself with the case summarily. There were regimental, general, district and field general courts-martial (s 54(1)). Findings of acquittal apart (s 54(3)), the finding and sentence of a court-martial was valid only if confirmed by the relevant authority specified in s 54(1) (s 54(6)). The confirming authority might send back a finding or sentence for revision (s 54(2)) or mitigate or remit the punishment (s 57(1)). A sentence of death or penal servitude awarded by a field general court-martial was not to be carried into effect unless and until confirmed by the general or field officer commanding the force (s 54(1)(d)). If a sentence passed by a court-martial was confirmed and the sentence was undergone in a colony, the officer commanding the forces in that colony was empowered by s 57(2)(c) of the 1881 Act to remit, mitigate or commute the punishment. Where there was no superior authority in a colony to confirm the findings or sentences of a court-martial, the Governor had power to do so (s 54(4)). The Governor, if in command of the regular forces of the colony, was a qualified officer to confirm findings or sentences (s 54(7))42. That these systems of naval and military justice did not administer the ordinary law of the land was made apparent by s 101 of the 1866 Act (which 40 29 & 30 Vict c 109. The Naval Discipline (Dominion Naval Forces) Act 1911 (Imp) made provision for the application of the 1866 Act to naval forces raised by the self-governing Dominions. The 1866 Act was repealed by s 137 of the 1957 UK Act. 41 44 & 45 Vict c 58. The 1881 Act ceased to have effect in the United Kingdom on 31 December 1956 (Revision of the Army and Air Force Acts (Transitional Provisions) Act 1955 (UK), s 1) when it was replaced by the 1955 UK Act. 42 See Tarring, Chapters on the Law Relating to the Colonies, 4th ed (1913) at 31. stated that nothing in that statute was to supersede the authority of the ordinary civil and criminal courts) and s 41(5)(b) of the 1881 Act (which confirmed that a person subject to military law might be tried by any competent civil court for an offence for which he could be triable if not subject to military law). In Australia, s 86 of the 1903 Act, which was located in Pt VIII, empowered the Governor-General to convene, and appoint the officers to, courts-martial, and to approve, confirm, mitigate or remit any sentence. Section 87 conferred a power of delegation upon the Governor-General. No death sentence was the Governor-General (s 98). into effect until confirmed by to be carried Section 86 was amended43 to provide in s 86(2) to the effect that nothing in s 86 affected the powers of convening courts-martial and confirming findings and sentences, as provided in the 1866 Act, the 1881 Act and the Air Force Act 1917 (Imp). Section 5 of the Naval Defence Act 1910 (Cth) continued the application of Pt VIII of the 1903 Act to the Naval Forces of the Commonwealth and s 36 confirmed the operation of the 1866 Act44. Part VIII of the 1903 Act was repealed by the Defence Force (Miscellaneous Provisions) Act 1982 (Cth). Provision for review of proceedings of "service tribunals", being a court-martial, a Defence Force magistrate or a summary authority, was made by Pt IX of the 1982 Act (ss 150-169). Section 150 provided for the appointment by a chief of staff of officers to be a "reviewing authority". In the case of convictions by a subordinate summary authority there was a preliminary automatic review by the commanding officer (s 151); in the case of convictions by another service tribunal, there was automatic review by a reviewing authority (s 152). Provision was made for further review by a chief of staff, upon sufficient grounds appearing to him for that review (s 155). The system of "appeals" under the Appeals Act to the Appeal Tribunal was accommodated by s 156 to those review processes of Pt IX of the 1982 Act; the general effect of the lodgement of an appeal or application to the Appeal Tribunal for leave to appeal was to bar the exercise of the powers of the reviewing authority pending dismissal of the appeal or refusal of leave. 43 By the Defence Act 1917 (Cth), s 23, and the Air Force Act 1939 (Cth), s 3. 44 See R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 461-462, 463, 470-471, 476-477, 482-486; [1942] HCA 12. Judicial power In Grant v Gould45, when giving the judgment of the Court of Common Pleas, Lord Loughborough said: "Naval Courts Martial, Military Courts Martial, Courts of Admiralty, Courts of Prize, are all liable to the controlling authority, which the Courts of Westminster Hall have from time to time exercised, for the purpose of preventing them from exceeding the jurisdiction given to them: the general ground of prohibition being an excess of jurisdiction, when they assume a power to act in matters not within their cognizance." That reasoning was applicable to the jurisdiction of this Court established by s 75(v) of the Constitution. However, in England the reasons of Atkin LJ in R v Electricity Commissioners; Ex parte London Electricity Joint Committee Co (1920) Ltd46 supported the proposition that prohibition and certiorari may be issued to bodies "having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially". The effect of these influential observations, as Mason J put it in Kioa v West47: "was to focus attention on those elements in the making of administrative decisions which are analogous to judicial determination as a means of determining whether the rules of natural justice apply in a particular case. The emphasis given in subsequent decisions to the presence and absence of these characteristics diverted attention from the need to insist on the adoption in the administrative process of fair and flexible procedures for decision-making, procedures which do not necessarily take curial procedures as their model." Thereafter, in Australian Broadcasting Tribunal v Bond48 Deane J explained: "There was a time when it was customary to refer to the duty of a non-curial statutory decision-maker to observe common law requirements of fairness and detachment in certain circumstances as a 'duty to act 45 (1792) 2 H Bl 69 at 100 [126 ER 434 at 450]. 46 [1924] 1 KB 171 at 205. 47 (1985) 159 CLR 550 at 583-584; [1985] HCA 81. 48 (1990) 170 CLR 321 at 365-366; [1990] HCA 33. judicially' (see, eg, Testro Bros Pty Ltd v Tait49; Board of Education v Rice50; R v Electricity Commissioners51; Local Government Board v Arlidge52). There were, however, disadvantages in that phraseology. For one thing, as Lord Diplock pointed out in O'Reilly v Mackman53, it tended to give rise to, and preserve, subtle and often confusing distinctions between decisions that were 'quasi-judicial' and those that were 'merely' administrative. For another, particularly in this country where there is a constitutional barrier against the conferral of any part of the judicial power of the Commonwealth upon an administrative decision-maker, it involved the potential for confusion between an obligation to act judicially and the well-settled notion of exercising judicial power." The treatment of the jurisdiction conferred by s 75(v) of the Constitution with respect to prohibition directed to officers of the Commonwealth constituting military tribunals appears to have been influenced in the way described by Mason J and by Deane J. It may explain the frame of mind in which statements have been made, notably by Starke J in R v Bevan; Ex parte Elias and Gordon54, that although military tribunals did not exercise "the judicial power of the Commonwealth" identified in s 71, they did exercise "judicial power". But the only judicial power which the Constitution recognises is that exercised by the branch of government identified in Ch III. The 2006 Act The 1982 Act had continued the long-established system of automatic review within the command structure of the defence forces. From this system the 2006 Act departed with the creation and interposition of the AMC. The heading of Pt IX was changed from "Review of proceedings of service tribunals" to "Review of proceedings of summary authorities". The AMC is a "service tribunal" but is not a summary authority and the review provisions of Pt IX do not apply to it. Part VII of the 1982 Act now distinguishes between summary authorities (Div 2, ss 104-113) and the AMC (Div 3, ss 114-121). Summary 49 (1963) 109 CLR 353 at 365, 369, 370; [1963] HCA 29. 50 [1911] AC 179 at 182. 51 [1924] 1 KB 171 at 205. 52 [1915] AC 120 at 132. 53 [1983] 2 AC 237 at 279. 54 (1942) 66 CLR 452 at 466. authorities are officers appointed by the Chief of the Defence Force as a "superior summary authority" or by a commanding officer as a "subordinate summary authority", and, in the case of certain charges, a commanding officer is the summary authority (ss 105, 107). A charge may be referred by a commanding officer, or a superior officer, to the DMP (s 105A(2)). The DMP may request the Registrar of the AMC to refer the charge to the AMC for trial (s 118(1)). (This is the procedure which was followed with respect to the plaintiff, as explained, with reference to the transitional provisions, earlier in these reasons.) A punishment imposed or order made by the AMC takes effect forthwith (s 171), save that the AMC may order that the execution of the punishment be stayed in whole or part pending the determination of an "appeal" or application for leave to appeal to the Appeal Tribunal (s 176(2)). On the other hand, a range of punishments imposed, and orders made, by a summary authority do not take effect unless approved by a reviewing authority (s 172). The decision of the AMC upon the trial of a charge is conclusive, subject to the success of an "appeal" to the Appeal Tribunal and of any further "appeal" to the Federal Court. The result is that, as indicated by authorities including Brandy v Human Rights and Equal Opportunity Commission55, the 2006 Act purports to entrust to the AMC the exercise of the judicial power of the Commonwealth unless it can be said, despite the placement of the AMC outside the chain of command, that the 2006 Act is supported by s 51(vi) of the Constitution. The plaintiff's submissions The primary submission by the plaintiff emphasised the importance of the hierarchical command structure to the system of military justice derived from that in the United Kingdom at the time of federation in Australia. But this supplied the starting point for an argument based upon alleged incompatibility between the 2006 Act and s 68 of the Constitution. Section 68 states: "The command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen's representative." 55 (1995) 183 CLR 245 at 258-259, 269-271; [1995] HCA 10. See also Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350 at 358-360 [16]-[24], 363 [34]-[35]; [2007] HCA 23. The reference to the naval and military forces "of the Commonwealth" had, in 1900 and for some time thereafter, a particular significance in the scheme of Imperial naval defence56. The Constitution, by special provision in covering cl 5, was not in force on those British ships which were the Queen's ships of war even if their first port of clearance or port of destination was in Australia. The plaintiff seeks to make good a different point. He refers to other provisions in the Constitution, particularly the appointment and delegation provisions in ss 64, 67 and 72 and the temporary expenditure provision in s 83. These refer to the Governor-General in Council, an expression which bespeaks action upon advice of the Federal Executive Council. Section 63 makes this plain. Section 68 refers to the Governor-General, without more. The plaintiff submits (a) that s 68 vests in the Governor-General the prerogative power of the Crown as understood in the United Kingdom to maintain disciplined military forces and (b) that the power of command is beyond impairment by the legislation establishing the AMC, with the result that s 51(vi) does not support the 2006 Act. The first proposition is an incomplete statement of the effect of the Constitution. At the third session of the Federal Convention at Melbourne in 1898, Mr Deakin unsuccessfully sought to add to the draft s 68 a requirement that the Governor-General act under the advice of the Federal Executive Council57. Mr Barton considered the amendment unnecessary because "in these modern days" the exercise of a prerogative of the Crown required the advice of a responsible Minister58; that advice might be tendered to the Governor-General without the formality of an Executive Council meeting. It is true that another delegate, Mr Lewis MHA of Tasmania, said that nothing could be more subversive of discipline than for the power to review the 56 See White v Director of Military Prosecutions (2007) 231 CLR 570 at 596-597 [53] and, with respect to the British naval station in Sydney Harbour, New South Wales v The Commonwealth (1926) 38 CLR 74; [1926] HCA 23. 57 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2251-2264. 58 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2254. decisions of courts-martial to be exercised upon ministerial advice59. But that ignored the point made by Todd60 and repeated by Quick and Garran as follows61: "The command-in-chief of the naval and military forces of the Commonwealth is, in accordance with constitutional usage, vested in the Governor-General as the Queen's Representative. This is one of the oldest and most honoured prerogatives of the Crown, but it is now exercised in a constitutional manner. The Governor-General could not wield more authority in the naval and military business of the country than he could in the routine work of any other local department. Of what use would be the command without the grant of the supplies necessary for its execution? All matters, therefore, relating to the disposition and management of the federal forces will be regulated by the Governor-General with the advice of his Ministry having the confidence of Parliament." Hence the statement by Mr O'Connor62 in the debate upon the Deakin motion that the appointment of which s 68 speaks is nominal in the sense that it is placed within the system of responsible government, as well understood at the time of the debate in the Convention. Once that is understood there is no ground remaining for the second proposition by the plaintiff. The exercise of that command may be the subject of legislation supported by s 51(vi) of the Constitution. Indeed, the legislative structures for review in disciplinary matters created in the United Kingdom by the 1866 Act and the 1881 Act and then in Australia by the 1903 Act and the 1982 Act diminished the scope for the political interference, the fear of which appears to have moved Mr Lewis in the Convention debate. There remains the secondary, but more substantial, submission that the 2006 Act in creating the AMC apart from the command structure described earlier in these reasons, and in thereby purporting to provide for its exercise of the judicial power of the Commonwealth, cannot be sustained by s 51(vi). It is upon this ground that the case falls for decision. 59 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2263. 60 Todd, Parliamentary Government in the British Colonies, 2nd ed (1894) at 377. 61 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 62 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2258. Conclusions In oral submissions the Commonwealth Solicitor-General agreed that it was fundamental to the case for validity of the legislation under challenge that it did not place the AMC beyond the "historical stream" of the previous systems of military justice. The difficulty with the case for validity is that the AMC was designed to make a break with that past and the analysis of the 2006 Act earlier in these reasons shows that the Parliament achieved its objective. It was the presence of some characteristics of that "historical stream" which exposed the legislation in the United Kingdom and Canada to the successful attacks made in Findlay, Grieves and Généreux. Once it was decided to deal with the 1982 Act not by the creation of a Ch III court but by the creation of the AMC, the 2006 Act became vulnerable to the attack now successfully made upon the validity of the AMC. The power conferred by s 51(vi) does not extend to the creation of a "legislative court", in the sense discussed in these reasons, which operates outside the previous system of military justice. It therefore is unnecessary to deal, save in one respect, with the further arguments presented by the plaintiff. It was submitted that the power conferred by s 51(vi) was limited to the punishment of crimes such as those charged here which were committed on active service (not this case) or in the circumstances and places where the jurisdiction of the ordinary courts could not conveniently be exercised63. That submission is inconsistent with decisions, the most recent of which is White v Director of Military Prosecutions64, which should not be re-opened. Orders Upon the further amended application for an order to show cause, referred by the Chief Justice to the Full Court by order made 16 January 2009, there should be, pursuant to r 25.03.4 of the High Court Rules 2004, an order for a writ of prohibition directed to the first defendant. This should prohibit him from trying the charges against the plaintiff identified in par 17 of the agreed statement of facts dated 16 January 2009. There should also be a declaration that Div 3 of 63 cf Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 563 per Brennan and Toohey JJ; [1989] HCA 12. 64 (2007) 231 CLR 570. Pt VII of the Defence Force Discipline Act 1982 (Cth) is invalid. The plaintiff should have against the second defendant his costs in the cause. Hayne HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. Section 114 of the Defence Force Discipline Act 1982 (Cth) ("the DFDA") creates a court: the Australian Military Court ("the AMC"). It is a court of record65. It is created by the Parliament but the Commonwealth submits that the AMC is not one of those "other federal courts" created by the Parliament under s 71 of the Constitution in which the judicial power of the Commonwealth is vested. The AMC is not a court whose judges are appointed in the manner, or have the tenure and the security of remuneration, required by s 72 of the Constitution. The determinative issue in this matter is whether the DFDA provides for the AMC, a court not created in accordance with Ch III of the Constitution, to exercise the judicial power of the Commonwealth. The proceedings The plaintiff has been charged with offences allegedly committed when he was a member of the Permanent Navy, and thus a "defence member"66. It is intended that the charges will be tried by the AMC. The first defendant, Colonel Morrison, is a Military Judge of the AMC and has been nominated to try the case. The plaintiff has brought proceedings in this Court against Colonel Morrison and the Commonwealth seeking relief that includes prohibition directed to the first defendant and a declaration that the provisions of Div 3 of Pt VII of the DFDA (ss 114-121) are invalid. The first defendant filed a submitting appearance. The plaintiff and the Commonwealth having agreed in a statement of agreed facts, the proceedings were referred for hearing by the Full Court. The Attorney-General for Western Australia intervened in support of the plaintiff. The plaintiff put his claim that the legislation creating the AMC is invalid on several different bases. It is convenient to deal first with the argument that Div 3 of Pt VII of the DFDA is invalid because it provides for the exercise of the judicial power of the Commonwealth by a body not created in accordance with Ch III of the Constitution. In connection with that argument, the plaintiff relied on amendments made to the DFDA by the Defence Legislation Amendment Act 2008 (Cth) ("the 2008 Amendment Act") providing for the AMC to hear "appeals" from the decisions of summary authorities made under the DFDA. The amendments made 65 Defence Force Discipline Act 1982 (Cth) ("the DFDA"), s 114(1A). Hayne by the 2008 Amendment Act do not apply to the proceedings against the plaintiff. Not only would the provisions to which the plaintiff points not be engaged, the transitional provisions of the 2008 Amendment Act provide67 that the DFDA, as in force before the commencement of the 2008 Amendment Act, is to apply in relation to proceedings which had been commenced under the earlier form of the legislation. The proceedings brought against the plaintiff had been commenced under the earlier form of the legislation. It is not necessary to decide when they were commenced but that had happened by November 2007 when they were referred for trial by the AMC. It is, therefore, neither necessary nor appropriate to have regard in this matter to the amendments made by the 2008 Amendment Act. These reasons are directed to the validity of the relevant provisions of the DFDA (Div 3 of Pt VII) as those provisions stood before the commencement of the 2008 Amendment Act. Section 114 provides: "(1) A court, to be known as the Australian Military Court, is created by this Act. Note 1: The Australian Military Court is not a court for the purposes of Chapter III of the Constitution. Note 2: The Australian Military Court is a service tribunal for the purposes of this Act: see the definition of service tribunal in subsection 3(1). (1A) The Australian Military Court is a court of record. The Australian Military Court consists of: the Chief Military Judge; and such other Military Judges as from time to time hold office in accordance with this Act." It is sufficient for present purposes to note that the provisions of Div 3 of Pt VII, apart from s 114, are s 115 (dealing with the jurisdiction of the AMC), s 116 (providing for the exercise of the jurisdiction of the AMC), s 117 (providing that 67 Sched 8, item 4. Hayne the AMC may sit in or outside Australia), s 118 (concerning the referral of charges to the AMC and nomination of a Military Judge to try a charge), s 119 (providing for the seal of the AMC), s 120 (providing for an AMC stamp) and s 121 (providing for staff necessary to assist the AMC). The history of the legislation The provisions of Div 3 of Pt VII were introduced into the DFDA by the Defence Legislation Amendment Act 2006 (Cth) ("the 2006 Amendment Act"). The 2006 Amendment Act was enacted after a lengthy inquiry by the Senate Foreign Affairs, Defence and Trade References Committee into the effectiveness of the Australian military justice system in providing "impartial, rigorous and fair transparency and public improve outcomes, and mechanisms accountability of military justice procedures"68. the In its report, the Committee noted69 that the United States70, Canada71, the United Kingdom72 and other European nations73, as well as Australia74, had seen numerous court challenges in the preceding 20 years to the legal validity of their respective military justice systems. In Europe and Canada the challenges had centred upon whether service tribunals were independent and impartial. In the European Court of Human Rights had concluded75 that particular, 68 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system, June 2005 at v ("the 2005 Senate Committee Report"). 69 2005 Senate Committee Report at xxv. 70 Weiss v United States 510 US 163 (1994). 71 R v Généreux [1992] 1 SCR 259. 72 Grieves v United Kingdom (2004) 39 EHRR 2. 73 See Cooper v United Kingdom (2004) 39 EHRR 8. 74 The Committee referred to Re Tracey; Ex parte Ryan (1989) 166 CLR 518; [1989] HCA 12; Re Nolan; Ex parte Young (1991) 172 CLR 460; [1991] HCA 29; Re Tyler; Ex parte Foley (1994) 181 CLR 18; [1994] HCA 25. 75 Findlay v United Kingdom (1997) 24 EHRR 221. See also Grieves v United Kingdom (2004) 39 EHRR 2. Hayne courts-martial of United Kingdom service personnel (conducted under statutory provisions generally similar to those for which the DFDA then provided) violated the requirements of Art 6(1) of the European Convention on Human Rights that the determination of any criminal charge be by "an independent and impartial tribunal established by law". And the Supreme Court of Canada had held76 that the system of General Courts Martial then in force in Canada infringed the right to trial by an independent and impartial tribunal guaranteed by s 11(d) of the Canadian Charter of Rights and Freedoms. The 2005 Senate Committee Report recommended changes in the military justice system. In particular, it recommended77 that a permanent military court be created in accordance with Ch III of the Constitution to ensure its independence and impartiality. The Government published a written response to the 2005 Senate Committee Report. In that response the Government agreed78 to create a permanent military court, but did not support79 the creation of such a court under Ch III. The purpose of the Bill for the 2006 Amendment Act was to give effect to the Government Response80. Both the Government Response81 to the 2005 Senate Committee Report and the Explanatory Memorandum for the Defence Legislation Amendment Bill 2006 (Cth)82 made plain that the AMC was intended to satisfy the principles of 76 R v Généreux [1992] 1 SCR 259. 77 2005 Senate Committee Report at liv, Recommendation 19. 78 Australia, Department of Defence, Government Response to the Senate Foreign Affairs, Defence and Trade References Committee, "Report on the Effectiveness of Australia's Military Justice System", October 2005 at 4 ("the Government Response"). 79 Government Response at 14-15. 80 Australia, House of Representatives, Defence Legislation Amendment Bill 2006, Explanatory Memorandum, "Outline". Hayne impartiality and judicial independence, and independence from the chain of command in matters of military discipline. As will later be demonstrated, it is the independence of the AMC from the chain of command which is the chief feature distinguishing it from earlier forms of service tribunal which have been held not to exercise the judicial power of the Commonwealth. Accepted doctrine It is as well to begin consideration of the issues that arise in this matter by restating an undisputed constitutional principle. In R v Kirby; Ex parte Boilermakers' Society of Australia ("the Boilermakers' Case") it was held83 that: "Had there been no Chap III in the Constitution it may be supposed that some at least of the legislative powers would have been construed as extending to the creation of courts with jurisdictions appropriate to the subject matter of the power. This could hardly have been otherwise with the powers in respect of bankruptcy and insolvency (s 51(xvii)) and with respect to divorce and matrimonial causes (s 51(xxii)). The legislature would then have been under no limitations as to the tribunals to be set up or the tenure of the judicial officers by whom they might be constituted. But the existence in the Constitution of Chap III and the nature of the provisions it contains make it clear that no resort can be made to judicial power except under or in conformity with ss 71-80. An exercise of a legislative power may be such that 'matters' fit for the judicial process may arise under the law that is made. In virtue of that character, that is to say because they are matters arising under a law of the Commonwealth, they belong to federal judicial power. But they can be dealt with in federal jurisdiction only as the result of a law made in the exercise of the power conferred on the Parliament by s 76(ii) or that provision considered with s 71 and s 77." (emphasis added) The Commonwealth submissions The Commonwealth submitted that s 114, and the other provisions of Div 3 of Pt VII of the DFDA, are made under s 51(vi) as a law with respect to "the naval and military defence of the Commonwealth and of the several States". The Commonwealth submitted that the AMC is not a court encompassed by the phrase, in s 71 of the Constitution, "such other federal courts as the Parliament 83 (1956) 94 CLR 254 at 269; [1956] HCA 10. Hayne creates". The Commonwealth noted, correctly, that since long before Federation, tribunals acting judicially have been seen as essential to the organisation of an army, navy or air force84. Courts-martial have been held85 not to exercise the judicial power of the Commonwealth. The Commonwealth submitted that what the AMC is to do is not relevantly different from what was done by courts-martial or other forms of service tribunal. The Commonwealth sought to develop its argument by describing the functions performed by courts-martial as an exercise of "judicial power" which was not the exercise of the "judicial power of the Commonwealth". In this connection the Commonwealth referred to dicta86 in earlier decisions of this Court which were said to support such an analysis. But as will later appear, reference to the exercise of a species of judicial power that is not the judicial power of the Commonwealth does not assist the resolution of the issue in this case. Rather, it is necessary to focus upon the central plank of the Commonwealth's argument: that the AMC does not differ in any material respect tribunal, particularly naval and military from earlier forms of service courts-martial, which have been held not to exercise the judicial power of the Commonwealth. As noted earlier, the AMC was intended to differ from earlier forms of service tribunal. It is independent from the chain of command. That independence is critical to the decision whether the AMC is to exercise the judicial power of the Commonwealth. To explain the nature and extent of the changes made by the 2006 Amendment Act it is necessary to say something about courts-martial, and then compare the AMC with those earlier institutions and associated arrangements for service discipline. 84 R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23 per Dixon J; [1945] HCA 18. 85 R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452; [1942] HCA 12; R v Cox; Ex parte Smith (1945) 71 CLR 1; Re Tracey; Ex parte Ryan (1989) 166 CLR 518. 86 For example, Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 539-540. Hayne Courts-martial Part VIII (ss 86-100) of the Defence Act 1903 (Cth), as originally enacted, provided that the Governor-General may convene87 courts-martial, appoint88 officers to constitute courts-martial, and "[a]pprove, confirm, mitigate, or remit the sentence of any court-martial"89. Those powers could be delegated90. Section 88 of the Defence Act provided that, except so far as inconsistent with the Act, "the laws and regulations for the time being in force in relation to the composition, mode of procedure, and powers of courts-martial" in the Imperial forces ("the King's Regular Naval Forces" and "the King's Regular Forces") were to apply to the naval and military forces of the Commonwealth. At the time of enactment of the Defence Act, courts-martial in the Imperial forces were regulated by the Naval Discipline Act 1866 (Imp) (29 & 30 Vict c 109) and the Army Act91. Consistent with the provisions of s 86 of the Defence Act (and its reference to the Governor-General's power to "confirm, mitigate, or remit the sentence of any court-martial") neither a finding of guilt nor a sentence passed by a military court-martial held under the Army Act was valid or effective until confirmed by an army officer designated as a confirming authority92. And the sentence passed by a naval court-martial could (except in the case of a sentence of death, which could be remitted only by the sovereign) be suspended, annulled, modified, substituted by an inferior punishment or remitted by the Admiralty93. Except in the case of mutiny, the punishment of death could not be inflicted until the sentence had been confirmed by the Admiralty or by the Commander-in-Chief on a foreign station94. 87 s 86(a). 88 s 86(b). 89 s 86(c). 91 Army Act 1881 (Imp) (44 & 45 Vict c 58) as renewed in operation from year to year by the Army (Annual) Act. 92 Army Act, ss 54 and 57. 93 Naval Discipline Act 1866 (Imp), s 53(1). Hayne In 1910, the Naval Defence Act 1910 (Cth) was enacted. That Act made particular provisions for the Naval Forces of the Commonwealth. Section 5 provided that a number of provisions of the Defence Act (including the provisions of Pt VIII concerning courts-martial) continued to apply in relation to the Naval Forces of the Commonwealth. Section 36 provided that, subject to the Naval Defence Act, the Naval Discipline Act95 "and the King's Regulations and Admiralty Instructions for the time being in force in relation to the King's Naval Forces" applied to the Naval Forces of the Commonwealth. In 1917, s 86 of the Defence Act was amended96 to provide that the powers given to the Governor-General by that section did not affect the powers conferred by the Naval Discipline Act or the Army Act "of convening courts-martial and confirming the findings and sentences of those courts". This amendment emphasised a point already apparent from the conferral of authority on the Governor-General to convene courts-martial, and to approve, confirm, mitigate or remit the sentence of any court-martial. The decisions, not only whether to hold a court-martial, but also whether and how effect should be given to a finding by a court-martial of guilt, were matters for confirmation or review by higher authority within the chain of command of the forces. They were matters for the Governor-General as Commander in Chief of the naval and military forces of the Commonwealth97, or an officer designated by or on behalf of the Commander in Chief as a convening or confirming authority under the applicable Imperial legislation. Although written in a different time and context, the central point to be made about these arrangements was accurately captured by Platt J of the Supreme Court of New York when he said that98: "The proceedings of the Court-Martial were not definitive, but merely in the nature of an inquest, to inform the conscience of the commanding officer. He, alone, could not condemn 95 Defined in s 3 as "the Imperial Act called The Naval Discipline Act as amended from time to time ... [including] any Act for the time being in force in substitution for that Act". 96 Defence Act 1917 (Cth), s 23. 97 Constitution, s 68. 98 Mills v Martin 19 Johns 7 at 30 (1821). Hayne or punish, without the judgment of a Court-Martial; and, it is equally clear, that the Court could not punish without his order of confirmation." These features of the provisions for courts-martial set them apart from the exercise of the judicial power of the Commonwealth. The decisions of courts-martial were not "definitive" of guilt; the punishments awarded by courts-martial were subject to confirmation or review. Dispositive decisions about guilt and punishment were made on confirmation or review within the chain of command. It was, therefore, right to describe courts-martial as directed to the maintenance of discipline of the forces. They were tribunals established to ensure that the discipline administered within the forces was just. But as Dixon J pointed out in R v Cox; Ex parte Smith99, courts-martial did "not form part of the judicial system administering the law of the land". Until the enactment of the DFDA in 1982, the Defence Act continued to provide100 for courts-martial, and to identify the laws applicable to military courts-martial (as distinct from naval courts-martial) by reference to "the Imperial Act called the Army Act" as in force at identified times. The Naval Defence Act continued to make special provision for the Naval Forces of the Commonwealth but continued to provide101 that Pt VIII of the Defence Act (dealing with courts-martial) applied to and in relation to the Naval Forces and the members of those Forces. And like provision was made in respect of the Air Force by the Air Force Act 1923 (Cth). Until the enactment of the DFDA in 1982, the Defence Act continued to provide power to the Governor-General to convene courts-martial, to appoint officers to constitute courts-martial, to "confirm the finding, or finding and sentence of any court-martial, or in the case of a military or air-force court-martial send back the finding and sentence or either of them for revision"102, to mitigate or remit the punishment awarded by any sentence, or commute the punishment for some less punishment103, and to suspend the 99 (1945) 71 CLR 1 at 23. 100 See, for example, Defence Act 1903-1973, s 88. 102 s 86(1)(c). 103 s 86(1)(d). Hayne execution or currency of any sentence104. And the powers conferred by Imperial Acts with respect to convening courts-martial, and confirming the findings and sentences of those courts, as picked up and applied by s 86(2) of the Defence Act, remained unaffected. Although the DFDA recast the law relating to service discipline, some particular features of the former law remained substantially unaltered. In particular, under the DFDA as originally enacted, courts-martial in all arms of the Australian Defence Force were convened by an officer appointed as a convening authority by the Chief of Defence Force Staff, Chief of Naval Staff, Chief of the General Staff or Chief of the Air Staff105. The President and other members of a court-martial were appointed by a convening authority106. If a person was convicted by a court-martial, the proceedings were automatically to be reviewed107 by an officer appointed108 by a chief of staff as a reviewing authority. In addition, a person convicted by a court-martial could petition109 for review of the proceedings by a reviewing authority. A review by a reviewing authority did not prevent a further review of the proceedings by a chief of staff "if it appears to him that there are sufficient grounds for a further review"110. On review, whether by a reviewing authority or a chief of staff, the conviction could be quashed111, a 104 s 86(1)(e). Hayne new trial could be ordered112, conviction for an alternative offence could be substituted113, or in some cases the punishment imposed could be quashed114. The grounds upon which a reviewing authority could exercise these powers were limited. The limits were expressed in terms very like those found in common form criminal appeal statutes. So, for example, s 158(1) of the DFDA obliged a reviewing authority to quash a court-martial conviction if it appeared (among other things) that "the conviction is unreasonable, or cannot be supported, having regard to the evidence", or that, "as a result of a wrong decision on a question of law, or of mixed law and fact, the conviction was wrong in law and that a substantial miscarriage of justice has occurred". And reviewing authorities were bound115 to obtain a report on the proceedings from a legal officer, and bound116 by any opinion on a question of law set out in the report. But the point of present importance to be observed is that the final decision about guilt or punishment was not made by the court-martial; the final decision about those matters was made within the chain of command of the forces. In 2005 the DFDA was amended, by the Defence Legislation Amendment Act (No 2) 2005 (Cth), to provide for the offices of Director of Military Prosecutions ("the Director") and Registrar of Military Justice ("the Registrar"). The general effect of the amendments was to give the Registrar some of the powers of a convening authority and the Director the power to decide117 whether a charge should proceed and, if it should, whether it was to be dealt with summarily, by trial before a Defence Force magistrate or by trial by court-martial. Other features of the scheme for trial by court-martial remained substantially unaltered. Hayne In addition to the "review" system for which provision was made by the DFDA, a person convicted by court-martial could appeal against the conviction. In 1955, the Parliament had provided for appeals from courts-martial to a Courts-Martial Appeal Tribunal118. That body, renamed the Defence Force Discipline Appeal Tribunal by the Defence Force (Miscellaneous Provisions) Act 1982 (Cth) ("the Appeal Tribunal"), was given power to hear and determine certain appeals against conviction by court-martial and, more recently119, appeals against sentence. Since 1982, the Appeal Tribunal has been constituted by persons holding State or federal judicial office. It was not submitted, however, and it is not the case, that the Appeal Tribunal is a federal court, or that it exercises the judicial power of the Commonwealth120. The references made in legislation to "appeals" to the Appeal Tribunal are to be understood accordingly. Following the amendments made to the DFDA by the 2006 Amendment Act, the Appeal Tribunal may hear appeals from the AMC. The AMC The Bill for the 2006 Amendment Act, which among other things was to create the AMC, was intended to give effect to the Government Response to the 2005 Senate Committee Report. The provisions of the Bill for the 2006 Amendment Act were considered by the Senate Standing Committee on Foreign Affairs, Defence and Trade. The report121 of that Committee (the 2006 Senate Committee) was tabled in October 2006. Although the 2006 Senate Committee considered122 that the proposed AMC would not achieve the level of independence and impartiality needed to 118 Courts-Martial Appeals Act 1955 (Cth). 119 Defence Legislation Amendment Act 2006 (Cth), Sched 1, item 25, inserting s 20(3) and (4) in the Defence Force Discipline Appeals Act 1955 (Cth). 120 Hembury v Chief of General Staff (1998) 193 CLR 641 at 648 [13], 654 [32]; [1998] HCA 47. 121 Australia, Senate, Standing Committee on Foreign Affairs, Defence and Trade, Defence Legislation Amendment Bill 2006 [Provisions], October 2006 ("the 2006 Senate Committee Report"). 122 2006 Senate Committee Report at 6 [1.27]. Hayne ensure a fair and effective military justice system, it is evident that a central principle informing the relevant provisions of the 2006 Amendment Act was that the AMC was to be independent of the chain of command in the Australian Defence Force. Whereas the decisions of a court-martial to convict and sentence a member of the forces were subject to automatic review and confirmation by reviewing and confirming officers designated by a chief of staff, the decisions of the AMC were not to be subject to any review or confirmation within the chain of command. To adopt and adapt the dictum of Platt J123, no longer were there to be proceedings "in the nature of an inquest, to inform the conscience of the commanding officer"; the new court was to be able to condemn and punish without review or confirmation by a commanding officer. At least since the enactment of the Imperial Naval Discipline Act and Army Act, courts-martial of members of the forces subject to naval or military discipline were conducted according to procedures generally analogous to those followed by the civil courts. Courts-martial pronounced verdicts of guilt or innocence of offences, some of which were or were analogous to offences against the general criminal law. The punishments awarded by courts-martial included forms of punishment provided by the general criminal law. It is, then, not surprising that it has been said that courts-martial exercised a form of judicial power. Such an observation, however, is not helpful in the resolution of the issue that arises in this case. First, on analysis the observation may go no further than asserting that courts-martial act judicially124. That observation may be made of many tribunals. Secondly, and more importantly, the question which is presented by Ch III of the Constitution is whether the body under consideration exercises the judicial power of the Commonwealth. To speak of a court-martial exercising a species of judicial power is unhelpful if it distracts attention from the relevant constitutional question. That constitutional question was resolved in respect of courts-martial, as it was in R v Bevan, R v Cox and later Re Tracey, at a time when courts-martial were not independent of the chain of command of the forces. Courts-martial were convened only by order from within the chain of command; conclusions of guilt and determinations of punishment were subject to review or confirmation within that chain of command. A court-martial did not make a binding and 123 Mills v Martin 19 Johns 7 at 30 (1821). 124 cf R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23. Hayne authoritative decision of guilt or determination of punishment125. A court-martial did not enforce its decisions126. Enforcement of any decision, other than acquittal of the accused, depended upon the outcome of review of the decision within the chain of command. But a central purpose of the creation of the AMC was to have the new body make binding and authoritative decisions of guilt and determinations about punishment which, without further intervention from within the chain of command, would be enforced. That the AMC is to make binding and authoritative decisions on the issues identified without further intervention from within the chain of command is reason enough to conclude that it is to exercise the judicial power of the Commonwealth. It is, however, desirable to notice two further aspects of the amendments made by the 2006 Amendment Act, both of which relate to s 114(1A), providing that the AMC is a court of record. A court of record The plaintiff submitted, and the Commonwealth disputed, that because the AMC is created as a court and as a court of record, it exercises the judicial power of the Commonwealth. Particular attention was given in this connection to what power the AMC has to deal with that species of contempt referred to as contempt in the face of the court. The plaintiff submitted that the AMC has that power because it is a court of record, and that having that power demonstrates that the AMC exercises the judicial power of the Commonwealth. The Commonwealth submitted that courts-martial had always had power not substantially different from a court of record's power to deal with contempt in the face of the court, at least in respect of persons subject to naval or military law127, and that the inclusion of s 114(1A) did no more than ascribe a particular status to the new body; it did not give the new body powers different from those of courts-martial. It is not necessary to resolve this aspect of the debate between the parties. Designation of a body created by a law of the Parliament as a "court of record" 125 cf Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357 per Griffith CJ; [1909] HCA 36. 126 cf Rola Co (Australia) Pty Ltd v The Commonwealth (1944) 69 CLR 185 at 198-199 per Latham CJ; [1944] HCA 17. 127 Defence Act 1903 (Cth), ss 89, 90, 91. See now DFDA, s 53(5). Hayne may not, without more, show that it exercises the judicial power of the Commonwealth128. It is necessary to have regard to what the body does. And in this case the validity of the provisions which create the AMC turns on more fundamental considerations than what power it has to punish for contempt in the face of the court and whether that power is given by express provision or by designating the AMC as a court of record. It is, nonetheless, desirable to say something further about the provisions that create the AMC as a court and, in particular, s 114(1A), which provides that it is a court of record. It is convenient to do that by reference to some features of the legislative history that lies behind the inclusion of s 114(1A) in the DFDA by the 2006 Amendment Act. The legislative history of s 114(1A) As originally introduced, the Bill for the 2006 Amendment Act did not include the provision that would become s 114(1A). The 2006 Senate Committee recommended129 that the Bill be amended or redrafted because, among other things, the Committee considered130 that "the proposed AMC would not achieve the level of independence and impartiality needed to ensure a fair and effective military justice system" even though, as noted earlier, the Explanatory Memorandum for the Bill for the 2006 Amendment Act had said131 that the creation of the AMC was intended to "satisfy the principles of impartiality and judicial independence, and independence from the chain of command". The 2006 Senate Committee Report recorded132 a number of criticisms of the Bill, including "the failure to stipulate that the AMC was to be a court of record". As the Committee's written questions on notice to the Department of Defence showed133, the Judge Advocate General of the Australian Defence Force 128 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434 at 446, 454-456, 467; [1918] HCA 56; R v Turner; Ex parte Marine Board of Hobart (1927) 39 CLR 411 at 441-442; [1927] HCA 15. 129 2006 Senate Committee Report at 7 [1.31]. 130 2006 Senate Committee Report at 6 [1.27]. 131 at [3(b)]. 132 2006 Senate Committee Report at 4-5 [1.22]. 133 The questions were published as Appx 3 to the 2006 Senate Committee Report. Hayne had understood that the original intention was that the AMC would be a court of record, and he had expressed134 the view that: "there is no sensible reason why the AMC should not expressly be made a court of record and making it so would put beyond doubt its status as a court and its judicial authority". (emphasis added) The Department of Defence's response to the Committee's question about this aspect of the Bill was135 that advice to the department "was that it would be inappropriate to provide that the AMC is a court of record". The departmental response continued136: "The concept [of court of record] has meaning in connection with the civilian court system. The AMC is not part of that system and should not be conferred with a status that might be taken to suggest that it is (or that it has a similar jurisdiction). There is no reason to expand the use of the concept in relation to the AMC, which is a unique statutory creature. Its powers should generally be set out in its enabling legislation and not determined by reference to powers exercised by courts in the civilian system. The statutory status of the proposed AMC and its judicial authority is clear. The status of 'court of record' is also not required to establish the independence or impartiality of the proposed AMC." Nonetheless, the Bill for the 2006 Amendment Act was amended to provide, by the insertion of what was to become s 114(1A), that the AMC was to be a court of record. The Supplementary Explanatory Memorandum and Corrigendum to the Original Explanatory Memorandum circulated in respect of the Bill for the 2006 Amendment Act said of this provision: "11. A court of record is a court that is declared by an Act to be so or a court that has the power to impose a fine or imprisonment for contempt includes it or for another substantive offence (contempt against 134 2006 Senate Committee Report at 26 [20]. 135 2006 Senate Committee Report, Appx 5, Department of Defence, "Responses to Questions" at 6 [34]. 136 2006 Senate Committee Report, Appx 5, Department of Defence, "Responses to Questions" at 6-7 [34]. Hayne disturbance of proceedings, interference with the authority of the court or publication of material which may prejudice its proceedings). 12. Courts martial and trials by Defence Force magistrates were not designated as 'courts of record' under the DFDA. Consistent with this, the AMC was not specifically made a court of record because there was no legal or practical reason for doing so. Additionally, it avoided conferring the characteristics of a civilian court (with greater jurisdiction) on the AMC. Notwithstanding this, the functional attributes of a court of record are provided for in the Bill, including the capacity to deal with contempt of the court, conduct of proceedings in public, and a requirement to record proceedings. The AMC has now been accorded the status of a court of record, noting that there will be a provision to limit publication of proceedings in the interests of the security and defence of Australia or for particularly sensitive matters. reinforce Paragraph (8) will the provisions discussed paragraphs 11 to 12 by inserting new subclause 114(1A), to provide that the AMC is a 'court of record'. It will reinforce existing provisions in the DFDA which will require the public publication of AMC records except where it would be inappropriate to do so (for example, if it would be contrary to the interests of the security or defence of Australia, the proper administration of justice or public morals). These examples currently apply to the conduct of public hearings. This amendment further enhances the status of the AMC." (emphasis added) That is, the inclusion in the Bill of what was to become s 114(1A), providing that the AMC is a court of record, was seen as reinforcing what was already provided in the Bill. Without this provision the Bill was understood to provide for the AMC to have "the functional attributes of a court of record": it was to have capacity to deal with contempt of court, was to conduct its proceedings in public, and was to be required to record its proceedings. The amendment inserting what was to become s 114(1A) in the Bill was treated in the Supplementary Explanatory Memorandum as directed to "enhanc[ing] the status of the AMC", but appeared not to be intended to effect any substantive change in the nature of the body that was to be created. There is, however, a consequence of creating the AMC as a court of record which goes beyond the questions of status and contempt powers. That consequence depends upon the AMC both having power to make binding and authoritative determinations of guilt and being designated a court of record. It is necessary to examine further the kinds of issues which the DFDA, as amended Hayne by the 2006 Amendment Act, provides for the AMC to decide, and the final and binding nature of those decisions. The decisions which the AMC is to make include decisions about guilt of offences against the general criminal law. Section 115(1) of the DFDA, as amended by the 2006 Amendment Act, provides that: "Subject to section 63, the Australian Military Court has jurisdiction to try any charge against any person." Section 115(2) qualifies the generality of s 115(1) by excluding from the jurisdiction of the AMC the trial of charges of certain offences committed by service personnel undergoing detention, but this qualification may be put aside from further consideration. Section 3(1) of the DFDA defines "charge" as "a charge of a service offence". Section 61 of the DFDA makes it an offence against the DFDA, and thus a "service offence", to engage in conduct that would be an offence against a law of the Commonwealth in force in the Jervis Bay Territory, or any other law (including any unwritten law) in force in that Territory which creates offences or imposes criminal liability for offences137. Offences of these several kinds are identified138 in the DFDA as Territory offences. Because s 115(1) gives the AMC jurisdiction (subject to s 63) to try any charge against any person, the charges that may be tried by the AMC extend to charges of service offences that are constituted by engaging in conduct contrary to the general criminal law. The qualification to the jurisdiction of the AMC provided by the reference to s 63 is not unimportant but is of limited effect. Section 63 provides, in substance, that except with the consent of the Director of Public Prosecutions of the Commonwealth, proceedings under the DFDA are not to be instituted for certain identified offences including treason, murder, manslaughter, bigamy and certain sexual offences. There remains a wide range of Territory offences that are subject to the jurisdiction of the AMC. The offences with which the plaintiff is charged include a Territory offence that is not an offence of a kind described in 137 cf Re Aird; Ex parte Alpert (2004) 220 CLR 308; [2004] HCA 44. Hayne Before the amendments made by the 2006 Amendment Act, s 190 of the DFDA provided for the jurisdiction of the civil courts in relation to service offences. In particular, s 190(1) provided that "[s]ubject to the Constitution, a civil court does not have jurisdiction to try a charge of a service offence" and s 190(2) provided that, subject to some qualifications, "the jurisdiction of a civil court to try a charge of a civil court offence is not affected by this Act". As orginally enacted, sub-s (5) of s 190 provided that "[w]here a person has been acquitted or convicted of a service offence, the person is not liable to be tried by a civil court for a civil court offence that is substantially the same offence". And sub-s (3) provided that if a court-martial (or a Defence Force magistrate) was asked to, and did, take some other service offence into consideration when dealing with a person convicted of a service offence, the person was not liable to be tried for a civil court offence that was substantially the same offence as that taken into consideration. Both sub-s (3) and sub-s (5) were held invalid in Re Tracey139 because they interfered with the exercise by State courts of their general criminal jurisdiction. The consequence of the decision in Re Tracey was not substantially different from that which had obtained, before Federation, under the Imperial Army Act. Section 162 of that Act had provided for what the sidenote to the section described as the "[a]djustment of military and civil law" by providing: If a person sentenced by a court-martial in pursuance of this Act to punishment for an offence is afterwards tried by a civil court for the same offence, that court shall, in awarding punishment, have regard to the military punishment he may have already undergone. Save as aforesaid, nothing in this Act shall exempt an officer or soldier from being proceeded against by the ordinary course of law, when accused or convicted of any offence, except such an offence as is declared not to be a crime for the purpose of the provisions of this Act relating to taking a soldier out of Her Majesty's service." If the impugned provisions of the DFDA are valid the "adjustment of military and civil law" is very different. If the provisions are valid, the decision of the AMC would preclude subsequent prosecution in the civil courts for an offence substantially the same as the offence tried by the AMC. So much would 139 (1989) 166 CLR 518. Hayne follow from the status of the AMC as a court of record. As was said in Island Maritime Ltd v Filipowski140: "Just as judgment of a court of record in a civil action changes the cause of action to a matter of record141, conviction in a court of record in respect of a criminal offence brings about 'the substitution of a new liability'142." If the impugned provisions are valid, the AMC is given power to make a binding and authoritative determination of the issues of fact and law which are tendered on the trial of an offence the elements of which are identified by the generally applicable criminal law. If the impugned provisions are valid, the AMC is given power to punish a person found guilty of that offence. And, if the impugned provisions are valid, it follows from its being a court of record that the decision of the AMC would preclude further prosecution for the same offence under the generally applicable criminal law. For the AMC to make a binding and authoritative determination of such issues pursuant to the DFDA is to exercise the judicial power of the Commonwealth. There is no dispute that the AMC is not constituted in accordance with Ch III. It is unprofitable to examine whether, or in what sense, it is right to describe the AMC as a "court". To ask whether the legislature's use of the word is apposite invites debate about the definition of a word that has been used in diverse circumstances not always associated with the exercise of judicial power. What is determinative of the issue in the present case is what the AMC is to do under the DFDA, as amended by the 2006 Amendment Act. And what the AMC is to do is to exercise the judicial power of the Commonwealth otherwise than in accordance with Ch III. The AMC cannot validly exercise the judicial power of the Commonwealth. 140 (2006) 226 CLR 328 at 343 [42]; [2006] HCA 30. 141 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 606; [1996] HCA 38. 142 R v Wilkes (1948) 77 CLR 511 at 519; [1948] HCA 22. Hayne Severance? The Commonwealth submitted that, if s 114(1A) making the AMC a court of record was the reason provisions creating the AMC were beyond power, s 114(1A) could readily be severed. But as already indicated in these reasons, the provisions creating the AMC are invalid not just because the AMC is created a court of record, but because it is established to make binding and authoritative decisions of guilt or innocence independently from the chain of command of the defence forces. It is to exercise the judicial power of the Commonwealth. None of the provisions of Div 3 of Pt VII of the DFDA can be severed or read down in a way that would give the provisions valid operation. The whole of Div 3 of Pt VII should be declared to be invalid. Some additional arguments The plaintiff submitted that the provisions creating the AMC were invalid because s 68 of the Constitution143 precludes the creation of the AMC "by reason of [it] being separate from and unlawfully fettering 'command', to which the law making power in s 51(vi) is subject". The plaintiff sought, in this branch of the argument, to emphasise the extent to which the AMC stood apart from the chain of command of the forces and to contrast that with what was identified as a constitutional imperative that command of the forces be vested in the Governor-General. As already explained, the separation of the AMC from command and the conferral on it of authority to decide issues of guilt or innocence finally is of determinative significance in considering whether the AMC exercises the judicial power of the Commonwealth. It is therefore not necessary to decide the issue raised by the plaintiff's arguments regarding s 68, or to explore what is entailed by vesting the command in chief of the forces in the Governor-General. The parties also made submissions about the limits upon the exercise of the legislative power conferred by s 51(vi) to proscribe and provide for the punishment of conduct outside the engagement of Ch III. The Attorney-General for Western Australia intervened in the proceedings to make submissions on this issue. There was therefore debate in argument about "service status" as distinct 143 Section 68 provides: "The command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen's representative." Hayne from "service connection"144 and the notion of "disciplinary offences"145 as providing a criterion or criteria that mark the limit of that power. Given the footing on which the present litigation is to be decided, it is neither necessary nor desirable to go beyond what was said in White v Director of Military Prosecutions on these issues or to consider reopening that decision. Conclusion and order There should be a declaration that the provisions of Div 3 of Pt VII of the Defence Force Discipline Act 1982 (Cth) are invalid. A writ of prohibition should issue directed to the first defendant, Colonel Peter John Morrison, a Military Judge of the Australian Military Court, prohibiting him from proceeding further with the charges relating to the plaintiff identified in the charge sheet dated 8 August 2007 and referred to the Australian Military Court for trial. The Commonwealth should pay the plaintiff's costs of the proceedings. 144 Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 321-322 [36]-[37]; White v Director of Military Prosecutions (2007) 231 CLR 570 at 580-581 [3]; [2007] HCA 29. 145 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 591; White v Director of Military Prosecutions (2007) 231 CLR 570 at 599-602 [65]-[75].

HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT PETER MAXWELL EDWARDS AND ANOR RESPONDENTS The Queen v Edwards [2009] HCA 20 21 May 2009 ORDER Appeal allowed. Set aside paragraph 1 of the orders of the Supreme Court of Tasmania entered on 16 May 2008 and, in its place, order that the application for a permanent stay of proceedings on the indictment be dismissed. On appeal from the Supreme Court of Tasmania Representation W J Abraham QC with I M Arendt for the appellant (instructed by Director of Public Prosecutions (Cth)) B W Walker SC with J M Morris and B A P Kelleher for the respondents (instructed by Deacons Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Edwards Criminal law – Practice and procedure – Permanent stay of proceedings on indictment – Threshold for grant of permanent stay – Respondents charged with reckless operation of aircraft – Electronic records of event giving rise to charge overwritten – Delay in prosecuting offences – Whether combination of delay and lost evidence justified grant of permanent stay. HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The Supreme Court of Tasmania (Slicer J) ordered that proceedings on an indictment which charged the respondents with the reckless operation of an aircraft be stayed. The Court's reasons were delivered on 28 April 2008, the primary judge holding that a "stay of proceedings ought to be granted".1 The order which was entered on 16 May 2008 is recorded as "grants stay of proceedings". It is not in issue that the order had the effect of permanently staying proceedings on the indictment. The indictment charges the respondents jointly with operating an aircraft being reckless as to whether the manner of operation could endanger the life of another person, contrary to ss 20A(1) and 29 of the Civil Aviation Act 1988 (Cth)2. No appeal lies to the Court of Criminal Appeal of Tasmania from the decision of a trial judge ordering a stay of proceedings on indictment3. The Crown appeals by special leave to this Court against the order on the ground that the primary judge's discretion miscarried in that he acted upon a wrong principle and that he took into account irrelevant considerations relating to the suggested complexity of the trial. These submissions should be accepted. For the reasons that follow the order staying the proceeding should be set aside. The Crown case The respondents are airline pilots who were the pilot and first officer of a Qantas Boeing 737-400 aircraft on a flight to and from Launceston, which took place during night hours on 23 October 2001. Each of the respondents was responsible for the operation of the aircraft. The Crown alleges that the aircraft took off from Launceston Airport ("the airport") in darkness, without the necessary lighting being turned on. Qantas did not provide scheduled services to Launceston. This was a relief flight that was arranged in order to collect 70 passengers who had been stranded as the result of a mishap. The control tower at the airport was unmanned between the hours of 10.00pm and 6.00am. The apron and terminal lights at the airport operated 24 hours a day. The taxiway, runway edge lights and the illuminated wind direction indicator ("IWDI"), or windsock lighting, (collectively, "the runway 1 R v Edwards and Sarunic [2008] TASSC 17 at [60]. In the alternative, the respondents are charged with operating an aircraft being reckless as to whether the manner of operation could endanger the person or property of another person, contrary to ss 20A(2) and 29 of the Civil Aviation Act 1988 (Cth). 3 Chapter XLVI of the Criminal Code (Tas). Hayne lighting") were not illuminated when the control tower was unmanned. During these hours it was the responsibility of pilots arriving at, or departing from, the airport to turn on the runway lighting. This was done with the Pilot Activated Lighting system ("the PAL"). The PAL was activated by a signal that was transmitted from the aircraft's radio to a receiving device at the control tower. Once activated, the runway lighting remained illuminated for a period of 32 minutes. The aircraft touched down at the airport at 10.32pm. Before this a signal had been transmitted from the aircraft to the control tower, which had activated the PAL. Thus the runway lighting was on. The aircraft arrived outside the terminal building at 10.34pm. The interval between activation of the PAL and the aircraft's arrival is not known. Accordingly, the end of the cycle of runway lighting commenced by the initial activation of the PAL cannot be determined with precision. The aircraft moved from the terminal building at 11.01pm. It travelled along taxiway A, instead of taxiway C. Taxiway A was usually reserved for smaller aircraft. It taxied past the Royal Flying Doctor Service ("RFDS") hangar and prepared for take-off at 11.03pm. Its wheels left the runway at 11.05pm. The take-off was observed by Mr Griffiths and Mr Withers, two RFDS pilots, a paramedic and two nearby residents, Mr Walker, an aircraft enthusiast, and Mr Griffiths telephoned the duty operations officer at the airport shortly after the aircraft's departure to enquire whether there was a problem with the operation of the runway lights. The following day he reported the matter to the Civil Aviation Safety Authority ("CASA"). Mr Withers reported the matter to the Air Transport Safety Bureau ("ATSB") on 29 October 2001. The investigation Qantas was first notified of the incident on 9 November 2001. On 14 December 2001 CASA appointed an investigator to enquire into the incident. Mr Griffiths, Mr Withers and the paramedic made statements in the course of the investigation in which they said that the runway lighting was not illuminated when they observed the aircraft moving along the taxiway and when it took-off. Mr Walker made a statement saying that he had watched the aircraft as it moved along the taxiway and he had noted that the runway lighting was not on at that time nor during the aircraft's take-off. Mr Dergacz made a statement saying that he had heard the sound of a jet aircraft rotating from the runway and Hayne he had looked out of his window and observed that the runway lights were not illuminated. Statements were taken in the course of the investigation from Mr Gomez, the duty fire officer at the airport, and from Mr Axon, the maintenance engineer on board the aircraft. Mr Gomez watched the take-off with the use of binoculars. He paid attention to the aircraft's engines. When he was interviewed a few days after the incident he was unable to say whether the runway lighting was on or off at the relevant time. Mr Axon was present in the cockpit at the time of the take- off and had no memory of any unusual occurrence. Each of the respondents was contacted the investigation and each declined to be interviewed. On 2 January 2002, Qantas wrote to CASA advising that each of the respondents had reported that the runway lights were activated and operating during the take-off. On 15 January 2002, the first respondent made a statutory declaration stating that the runway lights were illuminated for the departure of the aircraft. in connection with The delays in prosecuting the offences In April 2002 CASA referred the matter to the Commonwealth Director of Public Prosecutions. For reasons that are not explained, complaints were not sworn against the respondents until 30 March 2004. The proceedings came before the Court of Petty Sessions on 8 June 2004. The respondents entered pleas of not guilty on 14 September 2004. The proceedings were listed for a committal hearing between 28 and 30 June 2005. These dates were vacated on the application of the defence. The committal hearing was held between 2 and 4 November 2005. The respondents were committed for trial. Delays associated with the provision of the transcript followed thereafter. The proceedings were listed for trial at the sittings of the Supreme Court commencing 21 November 2006. The trial did not proceed at this time apparently as the result of further difficulties associated with the provision of a complete transcript. On 13 March 2007 the proceedings were adjourned on the application of the defence to allow for the submission of a "no bill" application. The application for a stay came before Slicer J on 26 November 2007. The application was based on the loss of "primary technological evidence" ("the lost evidence") and on the delay which, it was said, strengthened the "prejudice" flowing from the lost evidence4. 4 R v Edwards and Sarunic [2008] TASSC 17 at [7]. Hayne The lost evidence and the operation of the PAL The lost evidence comprises the electronic record of the activation of the PAL made by a Monitor at the airport ("the Monitor List") and the information recorded on the aircraft's flight data recorder ("FDR"). The Monitor List contained a record of the last 13 activations of the PAL. A print-out of the Monitor List was obtained two days after the incident. This only contained records of activations on 24 and 25 October 2001. The FDR recorded the keying of the VHF radio system, the time of transmission and its duration. It did not identify the specific frequency or the purpose of the transmission. Given the time of night at which the incident occurred and the absence of staff in the control tower, an inference could be drawn from the FDR data that a radio transmission was made in order to activate the PAL. Data recorded on the FDR was overwritten after a time. The evidence established that the information recorded on the FDR during the aircraft's flight on 23 October 2001 could have been retrieved within 13 to 15 days of that day. The PAL was activated by the transmission of three pulses on a frequency specified by the manufacturer. Each pulse was required to be between one and five seconds in duration and it was necessary for all three to be transmitted within a 25 second span. Once activated, the PAL operated for an interval of between 30 and 60 minutes depending on the timer setting. The timer setting at the airport provided for a period of 32 minutes illumination. The system was designed to warn of the impending extinguishment of the lights; during the final 10 minutes of the cycle the IWDI flashed continuously. There were two distinctive features of the operation of the PAL at the airport. First, if the final pulse was transmitted during or after the 25th second, the lighting cycle defaulted to the concluding 10 minute phase, which was accompanied by the flashing of the primary IWDI ("the straddle effect"). Secondly, Civil Aviation Order 92 required the primary IWDI to be located on the left side of the runway, unless this was impractical. The primary IWDI at the airport was positioned on the right side of the runway. There were two IWDIs at the airport. Only the southern IWDI was configured to flash during the concluding phase of the PAL cycle. The northern IWDI, which was closer to the terminal, remained constantly alight throughout the PAL cycle. The respondents did not give evidence at the hearing of their application. Hayne The primary judge's reasons The primary judge concluded that factors of overall delay and the lost evidence made it appropriate to grant the stay5. In arriving at this conclusion his Honour stated the test in this way:6 "[W]hether the combination of loss of primary data or evidence and delay constitute, not abuse of power or inappropriate prosecution or abuse of process, but whether on the material before this Court continuation of the indictment to trial by jury could constitute an unacceptable injustice or unfairness (Walton v Gardiner)." (Emphasis added) His Honour purported to state the test by reference to the decision of this Court in Walton v Gardiner7. A majority of the Court approved each of the formulations of the test applied by members of the Court of Appeal; "whether, in all the circumstances, the continuation of the proceedings would involve unacceptable injustice or unfairness", or whether the "continuation of the proceedings would be 'so unfairly and unjustifiably oppressive' as to constitute an abuse of process".8 Their Honours observed that it had been made plain by the Court of Appeal that the court would only be satisfied that continuation of the proceedings constituted an abuse in an exceptional or extreme case9. The respondents acknowledge that the primary judge misstated the test in asking whether the loss of primary data and the delay could constitute an unacceptable injustice or unfairness. However, they submit that a fair reading of the whole of his Honour's reasons discloses that the error was one of expression and not of principle. This submission must be rejected. Throughout the reasons 5 R v Edwards and Sarunic [2008] TASSC 17 at [60]. 6 R v Edwards and Sarunic [2008] TASSC 17 at [59]. (1993) 177 CLR 378; [1993] HCA 77. 8 Walton v Gardiner (1993) 177 CLR 378 at 392 per Mason CJ, Deane and 9 Walton v Gardiner (1993) 177 CLR 378 at 392 per Mason CJ, Deane and Hayne it is apparent that his Honour is directing attention to the risk that the lost evidence may be productive of unfairness to the respondents10. His Honour's consideration of the evidence of the "straddle effect" and its significance to the issues in the trial is demonstrative of an approach which addressed the possibility that the trial may be unfair to the respondents because they had lost the opportunity of establishing by objective evidence an hypothesis that was consistent with their innocence. His Honour said this:11 "Accepting that the aircraft spent some four minutes in taxiing and the PAL transmission sent during pre-flight procedures some six minutes previous, the differing accounts of the RFDS pilots that there was no runway lighting with the claims of activation by the pilots, could be reconciled. The lighting sequence ended during take-off and the observation of the RFDS members made during that take-off, following their hearing the aircraft's acceleration. That might be conjecture but could be a matter advanced at trial. That conjecture is relevant to the initial question of whether or not the runway lighting was on at the relevant time. Less problematic is its relevance to the issue of recklessness. The sequence, especially the 'straddle' possibility, is whether the pilots were reasonably entitled to assume that the lighting was in operation. The above matters are made more complex and significant if, at trial, the jury accepted the prosecution evidence that the aircraft had moved along runway A, whereas it ought to have exited the terminal apron upon taxiway C before executing a 180 degree turn at the southern end of the main runway. This course would have impinged on the capacity of the pilots for observation of the IWDI. Thus even if the jury were to be satisfied, on the evidence, that the runway lights were 'off' at the time of take-off, the issues of timing, straddle, activation by transmission, and the like, remain cogent matters on 'recklessness'. The jury would be well able to consider whether the differing views of the pilots and the RFDS pilots, the position of the windsocks, the use of runways A or C for taxiing, the effects of other illumination from the 10 R v Edwards and Sarunic [2008] TASSC 17 at [20], [38], [39], [40], [43], [44], [56] and [57]. 11 R v Edwards and Sarunic [2008] TASSC 17 at [36]-[37] (emphasis added). Hayne terminal or apron lighting, and various inconsistencies between the evidence of observers, both inside and outside of the aircraft in their general consideration of a verdict. But the PAL related matters require a journey the [respondents] to the risk of an unfair conviction." into conjecture and/or complex evaluation exposing His Honour went on:12 "Retrieval of the electronic data from either the FDR and/or the Monitor List would have resolved the issue of whether the runway lights were active at the relevant time. Each might have provided certainty as to whether there had been activation or its attempt. Comparison of times recorded might have shown equipment failure or the likelihood of a 'straddle' effect, resulting in truncated operation. Given the limited time the aircraft was on the ground (33 minutes), the length of the lighting operation (32 minutes), and the time spent in taxiing (4 minutes), the impact of timing sequences and the need for the 'warning' lighting, the matters relied on by the [respondents] are neither far-fetched nor artificial forensic constructs. If a 'straddle' was sent while the pilots were preparing for take-off whilst the passengers were embarking, the lights might have ended the 10 minute sequence later in the taxiing manoeuvre or as the aircraft accelerated. The observations of the RFDS pilots could be reconciled with the pilot having activated the system." His Honour had earlier noted that it was a mandatory requirement that the PAL be activated before the aircraft commenced taxiing. This, it may be observed, is against acceptance of the proposition that retrieval of the data from the FDR would have resolved the issue of whether the runway lights were on at the relevant time since the FDR only records information when the aircraft's engines are running. Activation of the PAL at the airport before the aircraft's engines were turned on while the passengers were embarking, as his Honour posits in the above extract, would not have been captured by the FDR. His Honour's conclusion was expressed as follows:13 "The stay of proceedings ought be granted. Two accused who, on the allegation, are jointly liable, had differing tasks in the operation of the 12 R v Edwards and Sarunic [2008] TASSC 17 at [56]. 13 R v Edwards and Sarunic [2008] TASSC 17 at [60] (emphasis added). Hayne aircraft at the relevant times of taxiing and take-off. Severance provides no purpose. The nature of crime with its doctrine of strict liability and the statutory provisions governing 'mistake of fact', make any trial more complex. The time elapsed from the event until trial is some seven years, increasing the understandable, but greater, need for witnesses to rely on their first statements, and the effects of the passage of time on memory, might, absent primary evidence, reduce the case to 'word on word'. The complexity of the IWDI and 'straddle' matters is real and resolution requires more than assumption or conjecture for a fair and just determination. The peripheral matters raised by the [respondents] might have some prejudicial effect going to discretion, but it is the factors of overall delay and loss of significant primary evidence which persuades me to grant the applications." An essential element that the Crown must prove in support of the principal and alternative counts is that the runway lighting was not on at the time the aircraft moved along the runway and took-off. The lost evidence goes to this issue as does the testimony of witnesses whose accuracy and reliability may be affected by delay. The appellant correctly submits that his Honour's consideration of the complexity of the joint trial involving possible "defences" of mistake of fact under the Criminal Code (Cth) was not relevant to any issue raised by the application. His Honour had earlier concluded that the delay alone would not warrant a stay of proceedings14. He distinguished between the delay to the date the complaints were laid and the subsequent delays associated with the court proceedings. However, his ultimate conclusion was based upon the loss of the primary evidence and "overall" delay. It was not explained how the overall delay operated in combination with the lost evidence to create irremediable prejudice to the respondents, nor did his Honour address the circumstance that at least some of the delay was attributable to the conduct of the defence15. On the appeal the respondents do not rely on the overall delay but maintain that the unexplained delay of two years and three months before the complaints were laid occasioned prejudice in that they had lost the opportunity to obtain the early recollection of 14 R v Edwards and Sarunic [2008] TASSC 17 at [20]. 15 See Jago v District Court of New South Wales (1989) 168 CLR 23 at 33 per Mason CJ; [1989] HCA 46 as to the significance of the reasons for delay as a factor in the exercise of the balancing process in determining whether to grant a stay. Hayne witnesses. It is to be noted that the respondents were on notice of the allegation not later than 2 January 2002. The respondents do not contend that the loss of objective evidence, such as electronically recorded data or the like, would ordinarily justify a stay of proceedings on indictment. In the course of argument the respondents conceded that the loss of film recorded by a closed-circuit television camera at the scene of an alleged offence would not afford a basis for a stay16. They seek to distinguish their case on the basis that the loss here is of the independent record of the event giving rise to the charge. This is said to be productive of unfairness of the kind that informs the power to stay since the trial will necessarily involve an incomplete reconstruction of the event. The distinction between an independent record forming a constituent part of an event and an independent record of an event is without substance. Trials involve the reconstruction of events and it happens on occasions that relevant material is not available; documents, recordings and other things may be lost or destroyed. Witnesses may die. The fact that the tribunal of fact is called upon to determine issues of fact upon less than all of the material which could relevantly bear upon the matter does not make the trial unfair17. The respondents submit that in the event error is established their application should be remitted to the Supreme Court of Tasmania given what is described as "the complexity of the factual matters". This submission should be rejected. The exercise of the primary judge's discretion has been shown to have miscarried. It is open to this Court to reach its own decision in substitution for that of the primary judge in circumstances where, as here, the materials are before it18. 16 See Police v Sherlock [2009] SASC 64. 17 Jago v District Court of New South Wales (1989) 168 CLR 23 at 34 per Mason CJ, 47 per Brennan J; Williams v Spautz (1992) 174 CLR 509 at 519 per Mason CJ, Dawson, Toohey and McHugh JJ; [1992] HCA 34. 18 R v Carroll (2002) 213 CLR 635 at 657 [73]; [2002] HCA 55. Hayne It is well established that the circumstances in which proceedings may be found to be an abuse of process are not susceptible of exhaustive definition19. It is not necessary to consider whether there may be circumstances in which the loss of admissible evidence occasions injustice of a character that would make the continuation of proceedings on indictment an abuse of the process of the court. This is not such a case. The content of the Monitor List and the recording made by the FDR is unknown. In these circumstances it is not correct to characterise their loss as occasioning prejudice to the respondents. The lost evidence serves neither to undermine nor to support the Crown case. It is to be observed that if the Crown is unable to exclude the hypothesis, that the runway lighting was illuminated as the aircraft moved along it and that it ceased operating coincidentally at the time of take-off, it would fail to establish an element of the principal and the alternative offence. There is no feature of the delay that justifies taking the extreme step of permanently staying proceedings on the indictment. It has not been established that any prejudice arising by reason of the delay cannot be addressed by direction20. For these reasons the appeal should be allowed, the order of the Supreme Court of Tasmania entered on 16 May 2008 should be set aside and in its place the application for a permanent stay of proceedings on the indictment should be dismissed. 19 Ridgeway v The Queen (1995) 184 CLR 19 at 74-75 per Gaudron J; [1995] HCA 66; R v Carroll (2002) 213 CLR 635 at 657 [73] per Gaudron and Gummow JJ; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at 265-267 [9]-[15] per Gleeson CJ, Gummow, Hayne and Crennan JJ; [2006] HCA 27. 20 Jago v The District Court of New South Wales (1989) 168 CLR 23 at 34 per Mason CJ, 60 per Deane J, 77-78 per Gaudron J; R v Glennon (1992) 173 CLR 592 at 605 per Mason CJ and Toohey J; [1992] HCA 16; see also Longman v The Queen (1989) 168 CLR 79; [1989] HCA 60.

HIGH COURT OF AUSTRALIA Matter No S228/2014 LIMITED APPELLANT AND WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) AND OCTAVIAR ADMINISTRATION PTY LIMITED (IN LIQUIDATION) & ORS Matter No S229/2014 RESPONDENTS JPMORGAN CHASE BANK, NATIONAL ASSOCIATION & ANOR APPELLANTS AND WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) AND OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) & ORS RESPONDENTS Grant Samuel Corporate Finance Pty Limited v Fletcher JPMorgan Chase Bank, National Association v Fletcher [2015] HCA 8 11 March 2015 S228/2014 & S229/2014 ORDER Matter No S228/2014 Appeal allowed with costs. Set aside paragraph 2 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 28 February 2014 and, in its place, order that: the appeal is allowed with costs; and paragraphs 1 and 3 of the order of Black J made on 8 February 2013 are set aside and, in their place, it is ordered that: paragraph 2 of the order of Ward J made on 19 September 2011 is set aside and, in its place, it is ordered that the liquidators' application is dismissed; and the liquidators pay the costs of the proceedings. Matter No S229/2014 Appeal allowed with costs. Set aside paragraph 2 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 28 February 2014 and, in its place, order that: the appeal is allowed with costs; and paragraphs 1 and 3 of the order of Black J made on 8 February 2013 are set aside and, in their place, it is ordered that: paragraph 2 of the order of Ward J made on 19 September 2011 is set aside and, in its place, it is ordered that the liquidators' application is dismissed; and the liquidators pay the costs of the proceedings. On appeal from the Supreme Court of New South Wales Representation A J L Bannon SC with P M Knowles for the appellant in S228/2014 (instructed by Watson Mangioni Lawyers Pty Limited) C R C Newlinds SC with N M Bender for the appellants in S229/2014 (instructed by Corrs Chambers Westgarth Lawyers) B A J Coles QC with P J Dowdy and A K Flecknoe-Brown for the respondents in both matters (instructed by Henry Davis York) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Grant Samuel Corporate Finance Pty Limited v Fletcher JPMorgan Chase Bank, National Association v Fletcher Corporations – Winding up – Voidable transactions – Section 588FF(3) of Corporations Act 2001 (Cth) provided that application with respect to voidable transactions under s 588FF(1) "may only be made" during period set out in s 588FF(3)(a) or "within such longer period as the Court orders" on an application made by liquidator during par (a) period – On application made by liquidators after par (a) period had expired, Supreme Court made order under r 36.16(2)(b) of Uniform Civil Procedure Rules 2005 (NSW) varying date by which liquidators could make application under s 588FF(1) – Whether UCPR could be utilised to extend time within which proceedings under s 588FF(1) could be brought – Whether s 588FF(3) "otherwise provided" within meaning of s 79(1) of Judiciary Act 1903 (Cth). Words and phrases – "otherwise provided", "picked up". Corporations Act 2001 (Cth), s 588FF. Judiciary Act 1903 (Cth), s 79(1). Uniform Civil Procedure Rules 2005 (NSW), r 36.16(2)(b). FRENCH CJ, HAYNE, KIEFEL, BELL, GAGELER AND KEANE JJ. Section 588FF(1) of the Corporations Act 2001 (Cth) provides that a court, on the application of a company's liquidator, may make certain orders where it is satisfied that a transaction of the company is voidable because of s 588FE. transaction may be voidable. Section 588FE states Section 588FF(3) provides: reasons why a "An application under subsection (1) may only be made: during the period beginning on the relation-back day and ending: 3 years after the relation-back day; or 12 months after the first appointment of a liquidator in relation to the winding up of the company; whichever is the later; or (b) within such longer period as the Court orders on an application the this paragraph made by liquidator during the under paragraph (a) period." Where an order has been made that a company be wound up and the winding up is taken to have begun on the day the order was made, the "relation- back day" is the day on which the application for the order was filed1. In the liquidation of the second respondent in these appeals ("Octaviar Limited"), the relation-back day was 4 June 2008. The effect of the period of limitation stated in s 588FF(3)(a) ("the par (a) period") in this case was to require an application under s 588FF(1) to be made by the liquidators of Octaviar Limited by 4 June 2011, unless the Court2 ordered, under s 588FF(3)(b), that an application could be made within a longer period. On 10 May 2011, the first respondent in these appeals ("the liquidators") applied to the Supreme Court of New South Wales for an order extending the period within which they might bring proceedings under s 588FF(1). On 30 May 1 Corporations Act 2001 (Cth), s 9. 2 Corporations Act 2001, s 58AA. Hayne Bell 2011, Hammerschlag J extended that period to 3 October 2011 ("the extension order"). A further application was made to the Supreme Court within the period of that extension, but after the par (a) period had expired. On 19 September 2011, Ward J made an order on that application, under r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"), varying the extension order by changing the date set by Hammerschlag J by which the liquidators could make an application under s 588FF(1), to 3 April 2012 ("the variation order"). Each of the above-mentioned orders was made on the ex parte application of the liquidators. Application was subsequently made by the appellants in these two appeals to set aside the variation order. Black J dismissed those applications. A majority of the Court of Appeal dismissed the appeals from Black J's decision. These appeals raise the question, generally stated, whether a court, on an application made outside the par (a) period, but within an extended period ordered under s 588FF(3)(b) on an application made in the par (a) period, may exercise power under the general rules of procedure in the UCPR to further extend time for the making of an application under s 588FF(1). Attention is therefore directed to the relationship between the provisions of the Corporations Act and the general procedural rules of the UCPR. Section 79(1) of the Judiciary Act 1903 (Cth) provides that the laws of each State or Territory, including the laws relating to procedure, shall, "except as otherwise provided by the Constitution or the laws of the Commonwealth", be binding on all courts exercising federal jurisdiction in that State or Territory. It has been observed3 that the Corporations Act does not directly impose a universal, federal procedural regime, but rather leaves s 79 of the Judiciary Act to operate according to its terms in the State or Territory concerned. The particular question on these appeals arises from those terms. It is whether s 588FF(3) "otherwise provides", so that the UCPR are not picked up by s 79. Section 588FF(3) may be said to "otherwise provide" if it is inconsistent with so much of the general rules of procedure in the UCPR as would permit variation of the time fixed by the extension order. Inconsistency in this sense may be taken to include that s 588FF(3) leaves no room for the operation of the 3 Gordon v Tolcher (2006) 231 CLR 334 at 348 [40]; [2006] HCA 62. Hayne Bell UCPR4, which would be the case if s 588FF(3)(b) is clearly intended to be the exclusive source of power to extend time for the purposes of s 588FF(1). A majority of the Court of Appeal (Macfarlan and Gleeson JJA) held5 that the only restriction placed by s 588FF(3)(b) on the court's power to extend time for bringing proceedings under s 588FF(1) is that the court's order be made on an application made by the liquidator during the par (a) period. On this view, s 588FF(3)(b) does not require that the order, as distinct from the application, be made in that period. Their Honours considered that, in this case, it would be sufficient that the application for extension made within the par (a) period remained on foot when Ward J made the variation order. There may be a question whether the application on which Hammerschlag J made the extension order was extant at the time Ward J made the variation order, or whether the extension order finally disposed of the matter before Hammerschlag J. This may be put to one side. The real issue on these appeals is whether s 588FF(3) "otherwise provides" so that the relevant rule of the UCPR permitting variation of the extension order cannot apply. This was not a question which the majority in the Court of Appeal addressed6. It may be inferred that their Honours accepted that Ward J could not, and did not, exercise the power given by s 588FF(3)(b) to grant the further extension by making the variation order. Their Honours assumed that r 36.16(2)(b) of the UCPR could apply even though an order under s 588FF(3)(b) had been made and the par (a) period had expired. Beazley P, who was in dissent in the Court of Appeal, considered7 that, to the extent that it permits a new or further application to be made for an extension 4 Cf Northern Territory v GPAO (1999) 196 CLR 553 at 589 [84]; [1999] HCA 8. JPMorgan Chase Bank, National Association v Fletcher; Grant Samuel Corporate Finance Pty Ltd v Fletcher (2014) 85 NSWLR 644 at 672-673 [152], 674 [160], 6 Cf JPMorgan Chase Bank, National Association v Fletcher; Grant Samuel Corporate Finance Pty Ltd v Fletcher (2014) 85 NSWLR 644 at 676 [171]. JPMorgan Chase Bank, National Association v Fletcher; Grant Samuel Corporate Finance Pty Ltd v Fletcher (2014) 85 NSWLR 644 at 662 [89]. Hayne Bell of time, r 36.16(2)(b) is inconsistent with s 588FF(3)(b) and could not therefore be picked up by s 79 of the Judiciary Act. The majority considered8 there to be an analogy with the circumstances in Gordon v Tolcher, where the District Court Rules 1973 (NSW) were applied. Gordon v Tolcher was regarded as establishing that, once an application for extension of time is made in conformity with s 588FF(3)(b), the conduct of the litigation is left for the operation of the procedures of the court in which the application is made. In Gordon v Tolcher, a liquidator instituted proceedings in the District Court of New South Wales seeking orders pursuant to s 588FF(1) with respect to what were alleged to be voidable transactions. Those proceedings were instituted shortly before the end of the three year period fixed by s 588FF(3)(a) as it then stood9. There was no need for an extension of time under s 588FF(3)(b) as the application under s 588FF(1) was brought within time. A further relevant aspect of Gordon v Tolcher which sets it apart from this case is that the rules of the District Court were employed for a different purpose, namely to overcome the effect of their automatic operation on the proceedings which had been instituted. The circumstances in Gordon v Tolcher were that the statement of liquidated claim had not been served on the defendant and therefore no defence had been filed. The effect of Pt 18, r 9 of the District Court Rules, where a defence had not been filed within a certain time from the date of the commencement of the action, was that the action was treated as dormant and taken to be dismissed. A judge of the District Court declined to make an order having the effect of rescinding the dismissal of the liquidator's action. On appeal, the Court of Appeal made an order under Pt 3, r 2(2) of the District Court Rules extending the time for serving the statement of liquidated claim, thus overcoming the effect of the District Court Rule deeming the action to be dismissed. JPMorgan Chase Bank, National Association v Fletcher; Grant Samuel Corporate Finance Pty Ltd v Fletcher (2014) 85 NSWLR 644 at 673 [154]-[155]. 9 See Gordon v Tolcher (2006) 231 CLR 334 at 343 [17]. At the relevant time, s 588FF(3)(a) only provided that an application must be brought "within 3 years after the relation-back day". As discussed later in these reasons, the additional period now appearing in s 588FF(3)(a)(ii) was subsequently added. Hayne Bell As this Court said in Gordon v Tolcher10, that appeal could be disposed of simply upon the basis that the procedural regulation of a matter, after the institution of an application, is left to the State or Territory procedural law. The application in question was that filed under s 588FF(1). In the circumstances of that case, s 588FF clearly did not "otherwise provide" so as to deny the operation of s 79 "to pick up so much of the Rules as supported the orders made by the Court of Appeal."11 It is evident from the conclusion reached in Gordon v Tolcher that the Court rejected the appellant's submission12 that the liquidator's request to apply the provisions of Pt 3, r 2 was in effect an application for extension made outside the three year period and therefore not authorised by s 588FF(3). It is no doubt because of that submission that the Court felt obliged to say something more about the provision for time in s 588FF(3). The Court in Gordon v Tolcher said13 that s 588FF deals with the period within which an application under s 588FF(1) is to be made, as an essential aspect of the regime s 588FF creates. The provision in s 588FF(3), as to the time for the making of the application, is not to be characterised merely as a procedural stipulation as to time14. It would follow that the bringing of an application within the time required by s 588FF(3)(a) or (b) is a precondition to the court's jurisdiction under s 588FF(1). The Court in Gordon v Tolcher referred to the explanation which had been given by Spigelman CJ in BP Australia Ltd v Brown15 as to the significance of s 588FF(3) in the statutory scheme. In the Harmer Report16, which was 10 (2006) 231 CLR 334 at 346 [32]-[33]. 11 Gordon v Tolcher (2006) 231 CLR 334 at 348-349 [41]. 12 Gordon v Tolcher (2006) 231 CLR 334 at 336-337. 13 Gordon v Tolcher (2006) 231 CLR 334 at 348 [40]. 14 Gordon v Tolcher (2006) 231 CLR 334 at 347 [37]. 15 (2003) 58 NSWLR 322. 16 Australia, The Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 282-283 [688]. Hayne Bell published in 1988, it had been observed that the Australian Law Reform Commission ("the ALRC") had earlier proposed that a liquidator should have only three years within which to commence proceedings to recover the proceeds of voidable transactions, instead of the six years which were then allowed under legislation such as the Bankruptcy Act 1966 (Cth), although the ALRC had also proposed that the court should have power to extend the period of three years. The ALRC had received many submissions complaining of inordinate delay in the commencement of proceedings of this kind and there had been judicial observations critical of delays in winding up insolvent companies. The Harmer Report recommended that liquidators be placed under a more rigorous, though reasonable, time limit. In a passage from BP Australia Ltd v Brown17, which was cited in Gordon v Tolcher18, Spigelman CJ said that the legal policy which underlies s 588FF(3) is one which favours certainty. Whilst that provision does not have the effect of requiring all applications under s 588FF(1) to be brought within a short period of time, it does have the effect "of requiring those who wish to keep open the option to do so, to determine that they do wish to do so within the three year period and to seek a determinate extension of the period." His Honour said that "Parliament has identified a reasonable time for such matters to occur, subject to a single determinate extension of time." At the time BP Australia Ltd v Brown was decided, s 588FF(3)(a) contained only the requirement now appearing in sub-par (i), that proceedings be brought within three years of the relation-back day. Subsequently, in 200719, an alternative time limitation, that appearing now in sub-par (ii), was added whereby an application under s 588FF(1) may be brought 12 months after the first appointment of a liquidator in a winding up. The provision in s 588FF(3)(b), whereby the court may fix a further period, has remained throughout. The addition of the alternative time limitation in s 588FF(3)(a)(ii) does not detract from the force of what was said in BP Australia Ltd v Brown concerning the statutory aim of certainty which is evident in s 588FF(3). If anything, it tends to reinforce the decision of the legislature, in balancing in a liquidation the 17 (2003) 58 NSWLR 322 at 345 [115], 346 [118]. 18 (2006) 231 CLR 334 at 348 [39]. 19 Corporations Amendment (Insolvency) Act 2007 (Cth). Hayne Bell competing interests of creditors and those who have dealt with the company and might be the subject of s 588FF(1) proceedings, to limit the times within which such proceedings may be brought. Section 588FF(3) does so in language which may be described as "clear and emphatic"20. Section 588FF(3) provides that an application under s 588FF(1) "may only be made" within the periods set out in pars (a) and (b) of s 588FF(3). The phrase "may only be made" should be read with both paragraphs. So understood, the term "may only" has the effect of defining the jurisdiction of the court by imposing a requirement as to time as an essential condition of the right conferred by s 588FF(1) to bring proceedings for orders with respect to voidable transactions. An element of that right is that it must be exercised within the time specified21. This is what is conveyed by Gordon v Tolcher. The only power given to a court to vary the par (a) period is that given by s 588FF(3)(b). That power may not be supplemented22, nor varied, by rules of procedure of the court to which an application for extension of time is made. The rules of courts of the States and Territories cannot apply so as to vary the time dictated by s 588FF(3) for the bringing of a proceeding under s 588FF(1), because s 588FF(3) otherwise provides. It provides otherwise in the sense that it is inconsistent with so much of those rules as would permit variation of the time fixed by the extension order. The extension order made on 30 May 2011 was within power. As a result of that order, proceedings under s 588FF(1) could be brought by 3 October 2011, but no further extension could be granted once the par (a) period had elapsed. The UCPR could not be utilised to further extend the time within which proceedings under s 588FF(1) could be brought. 20 Texel Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 298 at 300, referring to Corporations Law, s 459G(2) and (3). 21 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277; [1995] HCA 43. 22 BP Australia Ltd v Brown (2003) 58 NSWLR 322 at 337 [65], quoting Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 281 [22]; [2000] HCA 30. Hayne Bell The appeals should be allowed with costs. The orders of the Court of Appeal should be set aside and in lieu thereof it should be ordered that leave to appeal be granted, the appeals be allowed with costs, the orders of Black J dismissing the appellants' applications with costs be set aside and the respondents pay the costs of those proceedings. The variation order made on 19 September 2011 should be set aside.

HIGH COURT OF AUSTRALIA Matter No S272/2016 SZTAL AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS Matter No S273/2016 SZTGM AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS SZTAL v Minister for Immigration and Border Protection SZTGM v Minister for Immigration and Border Protection [2017] HCA 34 6 September 2017 S272/2016 & S273/2016 ORDER Matter No S272/2016 Appeal dismissed. The appellant pay the first respondent's costs. Matter No S273/2016 Appeal dismissed. The appellant pay the first respondent's costs. On appeal from the Federal Court of Australia Representation S B Lloyd SC with B Mostafa for the appellant in each matter (instructed by Fragomen) S P Donaghue QC, Solicitor-General of the Commonwealth with M J Smith for in each matter (instructed by Australian Government Solicitor) the first respondent Submitting appearance for the second respondent in each matter Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS SZTAL v Minister for Immigration and Border Protection SZTGM v Minister for Immigration and Border Protection Migration – Protection visa – Complementary protection – Cruel or inhuman treatment or punishment – Meaning of "intentionally inflicted" – Degrading treatment or punishment – Meaning of "intended to cause" – Where Refugee Review Tribunal found appellants would likely be imprisoned for short period if returned to Sri Lanka – Where prison conditions in Sri Lanka may not meet international standards – Where definition of "cruel or inhuman treatment or punishment" in s 5(1) of Migration Act 1958 (Cth) requires intentional infliction of pain or suffering – Where definition of "degrading treatment or punishment" in s 5(1) of Migration Act requires intention to cause extreme humiliation – Whether Sri Lankan officials intend to inflict pain or suffering or cause extreme humiliation – Whether intention established by knowledge or foresight of pain or suffering or extreme humiliation. Words and phrases – "complementary protection regime", "cruel or inhuman treatment or punishment", "degrading treatment or punishment", "foresight of result", "intended to cause", "intention", "intentionally inflicted", "oblique intention". Migration Act 1958 (Cth), ss 5(1), 36. Criminal Code (Cth), s 5.2(3). KIEFEL CJ, NETTLE AND GORDON JJ. The relevant provisions of the "complementary protection regime" of the Migration Act 1958 (Cth) ("the Act") and the background to their inclusion in the Act in 2012 are set out in the reasons of Edelman J. The regime gives effect to Australia's non-refoulement obligations under the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984) ("the CAT") and the International Covenant on Civil and Political Rights (1966) ("the ICCPR"). At the same time, it addresses what was a lengthy and time consuming process relating to the grant of a protection visa to a non-citizen who was not a refugee1. A criterion for the grant of a protection visa under s 36(2)(aa) of the Act is that the applicant is a non-citizen in Australia in respect of whom "the Minister has substantial grounds for believing that, as a necessary and foreseeable consequence of the non-citizen being removed from Australia to a receiving country, there is a real risk that the non-citizen will suffer significant harm". The relevant circumstances stated in s 36(2A) as constituting "significant harm" are that the non-citizen would be subjected to "torture", "cruel or inhuman treatment or punishment" or "degrading treatment or punishment"2. "[C]ruel or inhuman treatment or punishment" is relevantly defined in s 5(1) of the Act as an act or omission by which "severe pain or suffering, whether physical or mental, is intentionally inflicted on a person" (emphasis added). As Edelman J explains3, this definition is not taken from the ICCPR. The ICCPR did not provide a definition. It did not expressly require that pain or suffering of the requisite degree be intentionally inflicted; nor has it subsequently been interpreted as importing such a requirement. The definition of "cruel or inhuman treatment or punishment" in s 5(1) is a partial adaptation of the definition of "torture" in s 5(1), which is clearly enough derived from the definition of "torture" in Art 1 of the CAT, which, in turn, speaks of "any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person" for certain purposes such as obtaining information or a confession, or intimidating or coercing the person or a third person. 1 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 February 2011 at 1356. 2 Migration Act 1958 (Cth), s 36(2A)(c), (d) and (e). Nettle Gordon Section 5(1) also defines "degrading treatment or punishment" for the purposes of the Act. It means an act or omission that causes and is intended to cause extreme humiliation which is unreasonable. That definition, like the definition of cruel or inhuman treatment or punishment in s 5(1), is not taken from the ICCPR. The ICCPR does not expressly require that humiliation of the requisite degree be intentionally caused; nor has it subsequently been interpreted as importing such a requirement. The Tribunal's findings The Refugee Review Tribunal ("the Tribunal") found that, if the appellants were returned to Sri Lanka, their country of origin, and if they were arrested and charged under the laws of that country because they had left it illegally, they would likely be held in remand for a short period, which may be one day, several days or possibly two weeks. The Tribunal accepted that prison conditions in Sri Lanka are poor and may not meet international standards by reason of matters such as overcrowding, poor sanitary facilities and limited access to food. The issue before the Tribunal, relevant to these appeals, was whether, in sending the appellants to prison, Sri Lankan officials could be said to intend to inflict severe pain or suffering or to intend to cause extreme humiliation. The Tribunal concluded that the element of intention was not satisfied. The country information before it indicated that the conditions in prisons in Sri Lanka are the result of a lack of resources, which the Sri Lankan government acknowledged and is taking steps to improve, rather than an intention to inflict cruel or inhuman treatment or punishment or to cause extreme humiliation. The Federal Circuit Court (Judge Driver) considered4, correctly in our view, that the Tribunal is to be understood to have concluded that "intentionally inflicted" in the definition of "cruel or inhuman treatment or punishment" connotes the existence of an actual, subjective, intention on the part of a person to bring about suffering by his or her conduct. His Honour considered the same to be true with respect to the words "intended to cause" in the definition of "degrading treatment or punishment". His Honour found no error in that 4 SZTAL v Minister for Immigration and Border Protection [2015] FCCA 64 at [49]; SZTGM v Minister for Immigration and Border Protection [2015] FCCA 87 at Nettle Gordon reasoning, and a majority of a Full Court of the Federal Court (Kenny and Nicholas JJ)5 agreed. Buchanan J dismissed the appeals on other grounds. Amongst the cases concerning the meaning of "intention" to which Kenny and Nicholas JJ in the Full Court referred was R v Willmot (No 2)6, where Connolly J said7 that "[t]he ordinary and natural meaning of the word 'intends' is to mean, to have in mind". In Zaburoni v The Queen8 a majority of this Court adopted that statement as to the ordinary meaning of "intends" as correct and rejected an argument that the word requires an assessment of a person's foresight of the consequences of his or her action. Intentionally inflicted or caused The appellants contend that the conditions of "intentional infliction of pain or suffering" or "intentionally causing extreme humiliation" are satisfied if a person does an act knowing that the act will, in the ordinary course of events, inflict pain or suffering, or cause extreme humiliation. On this argument, clearly enough, intention involves an assessment of the foresight of the consequences of an act. No detailed submissions were made by the parties in these appeals about the debate, in England, regarding the concept of "oblique intention"9. It is therefore unnecessary to enter into that debate for the purposes of these reasons. Applying the appellants' construction to the present cases, it is said that, if officials in Sri Lanka were to cause the appellants to be detained, those officials would intend to inflict pain or suffering or cause extreme humiliation because they must be taken to be aware of the conditions giving rise to such harm in the prisons to which the appellants would be sent. The meaning of "intention" for which the appellants contend is the second, alternative, meaning of "intention" with respect to a result in s 5.2(3) of the 5 SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR 556 at [1985] 2 Qd R 413. 7 R v Willmot (No 2) [1985] 2 Qd R 413 at 418. (2016) 256 CLR 482; [2016] HCA 12. 9 R v Hyam [1975] AC 55; R v Matthews [2003] 2 Cr App R 30. Nettle Gordon Criminal Code (Cth)10. This meaning also appears in the definition of "intention" given in the Rome Statute of the International Criminal Court (1998)11. The first meaning given in s 5.2(3) accords with the ordinary meaning adopted in The appellants also rely upon certain international law sources, including a decision of the Appeals Chamber of the International Criminal Tribunal for the former Yugoslavia12 and cases which follow it, as supporting the meaning for which they contend. The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose13. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense14. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. In Zaburoni, the plurality held that a person is ordinarily understood to intend a result by his or her action if the person means to produce that result. What is involved is the directing of the mind, having a purpose or design. So 10 Section 5.2(3) provides: "[a] person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events" (emphasis added). 11 2187 UNTS 90, Art 30(2)(b) (entered into force on 1 July 2002). 12 Prosecutor v Kunarac (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Appeals Chamber, Case No IT-96-23 and IT-96-23/1-A, 12 June 13 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]; [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41. 14 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2. Nettle Gordon understood, intention refers to a person's actual, subjective, intention15, as the Tribunal and Kenny and Nicholas JJ in the Full Court concluded. In Zaburoni, Nettle J reasoned in a way different from the plurality. In his Honour's view16, it logically followed that an accused could be said to intend to bring about a result where he or she foresaw that his or her actions would have an inevitable or certain consequence. The plurality in Zaburoni acknowledged17 that evidence that a person understood that a particular result was an inevitable consequence may go a long way towards proving intent, but held that it was not to be equated with it. Given that conclusion, the manner in which Nettle J reasoned in Zaburoni now stands rejected. The context of the Act does not tell against the ordinary meaning of "intention" accepted in Zaburoni. To the contrary, the fact that the element of intention is contained in the definition of "torture", from which the definitions in question are derived, tends to confirm it. A perpetrator of torture, clearly enough, means to inflict suffering because it is part of his or her ultimate purpose or design to subject the victim to pain and suffering in order, for example, to obtain a confession. It is, of course, possible that words taken from an international treaty may have another, different, meaning in international law. In such a case their importation into an Australian statute may suggest that that meaning was also intended to be imported18. But as Edelman J explains19, there is no settled meaning of "intentionally" to be derived from any international law sources. In particular, the decisions of the International Criminal Tribunal for the former Yugoslavia, to which this Court was referred, do not provide any settled meaning. 15 Zaburoni v The Queen (2016) 256 CLR 482 at 489 [11] per Kiefel, Bell and Keane JJ (citing R v Reid [2007] 1 Qd R 64 at 93 [93]), see also at 501 [55] per 16 Zaburoni v The Queen (2016) 256 CLR 482 at 504 [66]. 17 Zaburoni v The Queen (2016) 256 CLR 482 at 490 [15]. 18 Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 265; [1982] HCA 27. Nettle Gordon Similarly, the decision of the European Court of Human Rights ("the ECHR") in Kalashnikov v Russia20, which was referred to in argument before this Court, does not assist with respect to the meaning of "intention" in s 5(1) of the Act. At issue in that case was whether the applicant being subjected to appalling prison conditions in Russia for almost five years amounted to a violation of Art 3 of the European Convention on Human Rights ("the European Convention"), which provides that "[n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment". The concepts of "torture", "inhuman treatment or punishment" and "degrading treatment or punishment" are not further defined in the text of the European Convention. The factual dissimilarities of Kalashnikov may be put to one side. The argument put by Russia appears to have been similar to that put forward by the first respondent with respect to the intention of Sri Lankan officials, namely, that the Russian authorities had no intention of causing physical suffering to the applicant or harming his health, but rather the unsatisfactory conditions of detention, which the government was doing its best to improve, were owing to economic reasons and were experienced by most detainees21. The ECHR rejected that argument, holding that a lack of intention to humiliate or debase the applicant could not rule out a violation of Art 3 so far as concerns degrading treatment. Treatment has been deemed by the ECHR to be "degrading" when it is such as to arouse in victims feelings of fear, anguish and inferiority capable of humiliating and debasing them. The existence or otherwise of a purpose to do as such was treated only as "a factor to be taken into account"22. Since Art 3 was violated by degrading treatment, which does not require a positive intention under ECHR case law, the ECHR's reasoning in Kalashnikov does not shed light on the meaning of intention as used in the definitions in s 5(1) of the Act. Turning to the Criminal Code, the alternative definition of "intention" in s 5.2(3) does not form part of the context in which the complementary protection regime of the Act and the definitions contained in it are to be considered. The Criminal Code definition of "intention" was enacted in 1995 to apply to all Commonwealth offences. An offence of torture was inserted into the Criminal Code in 201023 and that existing definition of intention applied 20 (2003) 36 EHRR 34. 21 Kalashnikov v Russia (2003) 36 EHRR 34 at 607 [93]-[94]. 22 Kalashnikov v Russia (2003) 36 EHRR 34 at 611 [101]. 23 Crimes Legislation Amendment (Torture Prohibition and Death Penalty Abolition) Act 2010 (Cth). Nettle Gordon automatically to it. No inference can be drawn about the definition being considered particularly appropriate to acts of torture and therefore to the other conduct which constitutes "significant harm". The alternative definition of "intention" in s 5.2(3) of the Criminal Code reflects a policy choice concerning criminal responsibility. It appears from the Explanatory Memorandum to the Criminal Code Bill 199424 that those proposing it were well aware that it went against the view that awareness of, or foresight of, result is, at best, evidence of intention. The Explanatory Memorandum in that regard referred to R v Moloney25. In that case, Lord Bridge of Harwich firmly expressed the view that, as an element of any offence involving specific intent, foresight of consequences "belongs, not to the substantive law, but to the law of evidence"26. This accords with the reasoning of the plurality in Zaburoni. When the complementary protection regime was inserted in the Act in 2012 it would have been a simple enough matter to have adopted the Criminal Code definition of "intention" if it had been thought appropriate to its purposes, but there is no reference to that definition and nothing to suggest that it was considered to be appropriate. Applying the alternative meaning of "intention" would have the consequence that the ambit of the protection afforded by the complementary protection regime of the Act would be wider than the ordinary meaning of that word would allow. It is not immediately obvious that it was thought necessary or desirable to meet Australia's obligations under the CAT or the ICCPR in this way. Statutes in pari materia, in the sense that they deal with the same subject matter along the same lines, may form part of the context for the process of construction. Acts of this kind are said to form a kind of code or scheme, which arises from the degree of similarity involved27. Without this feature there is no warrant to transpose the meaning of a word from one statute to another or to 24 Australia, Senate, Criminal Code Bill 1994, Explanatory Memorandum at 14. 26 R v Moloney [1985] AC 905 at 928. 27 Jones, Bennion on Statutory Interpretation: A Code, 6th ed (2013) at 553. Nettle Gordon assume, where the same words are used in a subsequent statute, that the legislature intended to attach the same meaning to the same words28. The Criminal Code and the Act are not statutes in pari materia. The Criminal Code and the Act in its complementary protection provisions have in common that they give effect to Australia's obligations under the CAT, but they do so in different ways and for different purposes. The Criminal Code makes persons criminally responsible for acts of torture in the same way as they may be responsible for other offences involving intent. The provisions of the complementary protection regime in the Act offer protection against the return of a non-citizen to a country where the Minister has substantial grounds for believing that the person will be at risk of significant harm, by the grant of a visa enabling the person to stay in Australia. The Act is not concerned with whether country officials should be held criminally responsible but with the reality of the risk of harm from them. That risk is assessed by reference to what those officials might be understood to intend with respect to a non-citizen if the non-citizen is returned to that country. The reference in the Act to "intentionally inflicting" and "intentionally causing" is to the natural and ordinary meaning of the word "intends" and therefore to actual, subjective, intent. As Zaburoni confirms, a person intends a result when they have the result in question as their purpose. An intention of a person as to a result concerns that person's actual, subjective, state of mind. For that reason, as the plurality in Zaburoni were at pains to point out29, knowledge or foresight of a result is not to be equated with intent. Evidence that a person is aware that his or her conduct will certainly produce a particular result may permit an inference of intent to be drawn, but foresight of a result is of evidential significance only. It is not a substitute for the test of whether a person intended the result, which requires that the person meant to produce that particular result and that that was the person's purpose in doing the act. Intention applied In the present cases the question for the Tribunal was whether a Sri Lankan official, to whom knowledge of prison conditions can be imputed, 28 Lennon v Gibson Howes Ltd (1919) 26 CLR 285 at 287; [1919] AC 709 at 711- 712; Coverdale v West Coast Council (2016) 90 ALJR 562 at 570 [43]; 330 ALR 424 at 434; [2016] HCA 15. 29 Zaburoni v The Queen (2016) 256 CLR 482 at 490 [14]-[15]. Nettle Gordon could be said to intend to inflict severe pain or suffering on the appellants or to intend to cause them extreme humiliation by sending them to prison. That question was to be answered by the application of the ordinary meaning of "intends", as the Tribunal concluded. As has been explained, evidence of foresight of the risk of pain or suffering or humiliation may support an inference of intention. In some cases, the degree of foresight may render the inference compelling30. But in the present matters, having regard to the evidence before the Tribunal (including evidence about what the Sri Lankan authorities might know), the Tribunal was entitled to conclude that it was not to be inferred that the Sri Lankan officials intended to inflict the requisite degree of pain or suffering or humiliation. Orders In each matter the appeal should be dismissed and the appellant should pay the costs of the first respondent. 30 Zaburoni v The Queen (2016) 256 CLR 482 at 490 [15]. GAGELER J. A policeman arrests a person at an airport on suspicion of the person having committed a crime. The policeman does so because that is his job. That is where his job ends. The policeman knows that the person will be remanded in custody in a gaol and he knows that the conditions in the gaol will be appalling. There is nothing the policeman can do about that. Does the policeman "intend" to subject the person to the appalling gaol conditions? Not obviously; not obviously not; and no amount of contemplating the abstract meaning of "intend" will supply the answer. The answer depends on why the question is asked. The question is asked here in the implementation of the regime for "complementary protection" introduced into the Migration Act 1958 (Cth) by the Migration Amendment (Complementary Protection) Act 2011 (Cth). The question is asked for the particular purpose of applying the term "intend" – or more particularly its cognate terms "intended" and "intentionally" – as occurring in the statutory definitions of "cruel or inhuman treatment or punishment", "degrading treatment or punishment", and "torture"31, subjection to any of which is defined to constitute a form of "significant harm"32. The expression "significant harm" as so defined is the critical expression within the statutory formulation of the criterion for a protection visa, as an alternative to the criterion that the applicant for the visa is a non-citizen in Australia "in respect of whom the Minister is satisfied Australia has protection obligations" because the person is a refugee33, that the applicant for the visa is a non-citizen in Australia "in respect of whom the Minister is satisfied Australia has protection obligations because the Minister has substantial grounds for believing that, as a necessary and foreseeable consequence of the non-citizen being removed from Australia to a receiving country, there is a real risk that the non-citizen will suffer significant harm"34. The "protection obligations" to which that alternative criterion refers are relevantly those which Australia has under Art 7 of the International Covenant on Civil and Political Rights ("the ICCPR") in respect of cruel or inhuman treatment or punishment and degrading treatment or punishment and under Art 7 of the ICCPR and Art 3 of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment ("the CAT") in respect of torture. 31 Section 5(1) of the Migration Act. 32 Section 36(2A). 33 Section 36(2)(a). 34 Section 36(2)(aa). Part of the difficulty encountered in answering the question in the present cases has been that competing answers have been presented at each level of the judicial hierarchy as a choice between what has been argued on the one hand to be a fixed "ordinary meaning" of the word "intentionally" as appearing in a domestic statute and what has been argued on the other hand to be a settled meaning in international law of the same word appearing as part of the definition of "torture" in Art 1 of the CAT. Much effort has been expended exploring whether the word has or has not acquired a settled meaning in international law. The word has not been shown to have a settled meaning in international law. But that does not exhaust the relevance of international law to the choice of statutory meaning, and it does not lead to the result that the statutory meaning of the word is left to be determined as an exercise in abstract linguistic analysis. Ltd35: Mason J said in K & S Lake City Freighters Pty Ltd v Gordon & Gotch "Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise." Drawing on that statement, and its antecedents, Brennan CJ, Dawson, Toohey and Gummow JJ said in CIC Insurance Ltd v Bankstown Football Club Ltd36: "[T]he modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy." Both of those passages have been "cited too often to be doubted"37. Their import has been reinforced, not superseded or contradicted, by more recent statements emphasising that statutory construction involves attribution of meaning to statutory text. The task of construction begins, as it ends, with the 35 (1985) 157 CLR 309 at 315; [1985] HCA 48. 36 (1997) 187 CLR 384 at 408; [1997] HCA 2 (footnote omitted). 37 See Federal Commissioner of Taxation v Jayasinghe (2016) 247 FCR 40 at 43 [5] and [7]. statutory text. But the statutory text from beginning to end is construed in context, and an understanding of context has utility "if, and in so far as, it assists in fixing the meaning of the statutory text"38. The constructional choice presented by a statutory text read in context is sometimes between one meaning which can be characterised as the ordinary or grammatical meaning and another meaning which cannot be so characterised. More commonly, the choice is from "a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural", in which case the choice "turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies"39. Integral to making such a choice is discernment of statutory purpose. The unqualified statutory interpreting a provision of a Commonwealth Act, "the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation"40 "is in that respect a particular statutory reflection of a general systemic principle"41. instruction that, Exactly the same process of contextual construction is involved when the question is one of what content is to be given to a statutorily invoked concept which is expressed in words the ordinary or grammatical meaning of which is well-enough understood but insufficiently precise to provide definitive guidance as to how the concept is to be understood and applied in the particular statutory setting. An example is the varying senses in which the concept of causation might be invoked in statutory provisions which attribute responsibility for loss caused "by" or "because of" or "as a result of" contravention of different statutory norms. Because "one cannot give a common sense answer to a question of causation for the purpose of attributing responsibility under some rule without knowing the purpose and scope of the rule"42, "[t]he application of a causal term 38 Thiess v Collector of Customs (2014) 250 CLR 664 at 671 [22]; [2014] HCA 12, quoting Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; [2012] HCA 55. 39 Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 557 [66]; [2014] HCA 9. 40 Section 15AA of the Acts Interpretation Act 1901 (Cth). 41 Thiess v Collector of Customs (2014) 250 CLR 664 at 672 [23]. 42 Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 31, cited in Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 642 [45]; [2005] HCA 69. in a statutory provision is always to be determined by reference to the statutory text construed and applied in its statutory context in a manner which best effects its statutory purpose"43. The concept of intention is similarly insufficiently precise to allow its content in a particular statutory context always to be determined by reference merely to ordinary or grammatical meaning. That is particularly so where the question is whether a person "intends" a result which the person is aware will occur but which the person does not want to occur, either as an end in itself or as a means of achieving some other end. Does the dentist "intend" to cause pain to the patient? Does the judge who finds for the plaintiff knowing that the damages will bankrupt the defendant "intend" to bankrupt the defendant? Does the "strategic bomber" who drops the bomb on the enemy munitions factory "intend" to kill the children in the adjacent school? The answer will not be found in a dictionary, and neither common sense nor conceptual analysis can be expected to yield a single answer satisfying across a range of circumstances irrespective of why the question is asked44. Whether the concept of intention invoked in a particular statutory context is objective or subjective and, if subjective, whose and what state of mind will suffice to constitute the requisite intention will vary from statute to statute45. Where the question is one of subjective intention as to the result of conduct, "introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous"46. But whether a man or woman is to be taken subjectively to intend the known or expected consequences of his or her act is less susceptible of generalisation. Intention as to a result will sometimes require the purpose or design of bringing about the result47. At other times, intention as to result will sufficiently be found 43 Comcare v Martin (2016) 258 CLR 467 at 479 [42]; [2016] HCA 43. 44 See generally Simester, "Moral Certainty and the Boundaries of Intention", (1996) 16 Oxford Journal of Legal Studies 445; Sir Anthony Mason, "Intention in the Law of Murder", in Naffine, Owens and Williams (eds), Intention in Law and Philosophy, (2001) 107. 45 Cf News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 579-580 [39]-[41]; [2003] HCA 45. 46 Stapleton v The Queen (1952) 86 CLR 358 at 365; [1952] HCA 56. See also Smyth v The Queen (1957) 98 CLR 163 at 166-167; [1957] HCA 24; Parker v The Queen (1963) 111 CLR 610 at 631-632; [1963] HCA 14. 47 Eg Zaburoni v The Queen (2016) 256 CLR 482 at 488 [7]-[9], 501 [55]; [2016] HCA 12. in willingness to act with awareness of the likelihood of the result48. Absent express legislative indication as to which of those, or perhaps other, alternatives is applicable in a given context, the choice between them becomes a matter of construction. Neither alternative can be dismissed simply on the basis that it lies beyond the ordinary meaning of intention. Critical to making the constructional choice presented by the statutory text in the present context is the purpose for which the complementary protection regime was introduced. That purpose was identified at the time of introduction as being "to allow all claims by visa applicants that may engage Australia's non- refoulement obligations under the [identified] human rights instruments to be considered under a single protection visa application process, with access to the same robust decision-making framework … available to applicants who make claims that may engage Australia's obligations under the Refugees Convention"49. The interpretation which would best achieve that identified purpose, and which is for that reason to be preferred to any other interpretation, is the interpretation which would more closely align the statutory criterion for the grant of a protection visa to Australia's obligations under Art 7 of the ICCPR and Art 3 of the CAT. reviewable and procedurally transparent, To prefer the interpretation of "intended" and "intentionally" in the relevant statutory definitions which would more closely align the statutory criterion for the grant of a protection visa to Australia's obligations under Art 7 of the ICCPR and Art 3 of the CAT is not to invert the process of interpretation in the manner criticised in NBGM v Minister for Immigration and Multicultural Affairs50. Rather, it is to endeavour to adopt from a range of potentially available constructions that which best allows the domestic statutory language to fulfil its statutory purpose. There is no question that "it is the words of the Act which govern"51; the question is, and remains throughout the requisite analysis, as to the meaning of those words. The word "intentionally", as has already been mentioned, appears in the definition of "torture" in Art 1 of the CAT. The definition is framed relevantly to encompass "any act by which severe pain or suffering, whether physical or 48 Eg Vallance v The Queen (1961) 108 CLR 56 at 61; [1961] HCA 42; Chandler v Director of Public Prosecutions [1964] AC 763 at 804-805. 49 Australia, House of Representatives, Migration Amendment (Complementary Protection) Bill 2011, Explanatory Memorandum at 1. 50 (2006) 231 CLR 52 at 71-72 [61]; [2006] HCA 54. 51 Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 (2006) 231 CLR 1 at 16 [34]; [2006] HCA 53. mental, is intentionally inflicted on a person" for specified kinds of purposes. The word does not appear in Art 7 of the ICCPR, which states relevantly that "[n]o one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment". Turning first to the context for the word as appearing in the statutory definition of torture within the complementary protection regime that is provided by the definition in Art 1 of the CAT, it is important to recognise that Australia's obligations under the CAT go beyond the obligation imposed by Art 3 not to "expel, return ('refouler') or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture". They include as well the obligation imposed by Art 4 to "ensure that all acts of torture are offences under its criminal law", irrespective of where those acts might be committed, to which effect is given by the creation of an offence of torture under the Criminal Code (Cth)52. Whereas the definition of torture within the complementary protection regime effectively adopts the language of the definition in Art 1 of the CAT, in referring to any act "by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person", the Criminal Code operates to translate that language into a physical element and a fault element. The physical element of the offence of torture spelt out in the Criminal Code is relevantly that a perpetrator "engages in conduct that inflicts severe physical or mental pain or suffering" on a victim53. The corresponding fault element spelt out in the Criminal Code is that of "intention"54. The requisite intention will exist in either of two scenarios. One is where the perpetrator means to engage in the conduct and means to bring about infliction of severe physical or mental pain or suffering on the victim. The other is where the perpetrator means to engage in the conduct and is aware that infliction of severe physical or mental pain or suffering on the victim "will occur in the ordinary course of events"55. Admittedly, the two scenarios in which the requisite fault element of intention will exist are the product of application to the particular crime of torture of general principles of criminal liability set out in the Criminal Code. But application of those general principles of criminal liability to that crime can hardly be characterised as unthinking. Before insertion of the offence of torture into the Criminal Code by the Crimes Legislation Amendment (Torture 52 Division 274. 53 Section 274.2(2)(a). 54 Section 5.6(1). 55 Section 5.2(1) and (3). Prohibition and Death Penalty Abolition) Act 2010 (Cth), the same general principles of criminal liability had applied56 to the crime of torture as then created by the Crimes (Torture) Act 1988 (Cth). Those general principles of criminal liability could easily have been modified. They were not. The effect of applying them was and remains to make the mental element of the crime of torture as defined in Australia correspond with the mental element of the crime of torture as defined in the Rome Statute of the International Criminal Court57. Australia is a party to the Rome Statute and Parliament has facilitated compliance with Australia's obligations through the enactment of the International Criminal Court Act 2002 (Cth). Whilst it might be open to Parliament to adopt one approach to the definition of torture in Art 1 of the CAT in the legislative implementation of Australia's obligation under Art 3 of the CAT and another approach to the same definition in the legislative implementation of Australia's obligation under Art 4 of the CAT, for Parliament actually to do so would be strangely inconsistent. No reason appears for thinking that Parliament would have done so. In particular, no reason appears for attributing to Parliament a legislative intention to take a narrower view of torture for the purpose of protecting the victim than the view of torture it has expressly spelt out for the purpose of punishing the perpetrator. Turning from the definition of torture within the complementary protection regime to the definitions of cruel or inhuman treatment or punishment and of degrading treatment or punishment respectively, there is no reason to think that Parliament adopted the same word or a cognate word in definitions introduced at the same time as part of the complementary protection regime yet intended that word to have a different meaning. The underlying notion of intention in each of the three definitions must be the same. There is another and somewhat broader contextual reason to think that the wider notion of intention is appropriate. It lies in the scope of Art 7 of the ICCPR, to which the definitions of cruel or inhuman treatment or punishment and of degrading treatment or punishment are directed. The proscription in Art 7 of the ICCPR that "[n]o one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment" is mirrored in the proscription in Art 3 of the European Convention on Human Rights that "[n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment". In Kalashnikov v Russia58, the European Court of Human Rights 56 See s 2.2 of the Criminal Code. 57 2187 UNTS 90, Art 30. 58 (2003) 36 EHRR 34. concluded that Art 3 had been violated by the gaoling of a prisoner for a long period in overcrowded and unsanitary conditions resulting in an adverse effect on his physical health. In reasoning to that conclusion, the European Court accepted that there had been "no indication that there was a positive intention of humiliating or debasing" the prisoner, saying that "although the question whether the purpose of the treatment was to humiliate or debase [the prisoner] is a factor to be taken into account, the absence of any such purpose cannot exclude a finding of violation of Art 3"59. Treating the reasoning in Kalashnikov v Russia as transferable to Art 7 of the ICCPR, that reasoning indicates that a positive intention on the part of the perpetrator to bring about cruel, inhuman or degrading treatment or punishment is not essential to the occurrence of a violation. The reasoning indicates in turn that the introduction of the concept of intention into the statutory definitions of cruel or inhuman treatment or punishment and of degrading treatment or punishment might in some cases produce a result in which a victim of cruel, inhuman or degrading treatment or punishment would be denied complementary protection in circumstances in which Australia's protection obligation under Art 7 of the ICCPR would be engaged. That the introduction of the concept of intention narrows the scope of complementary protection provides no reason for treating the particular notion of intention that is incorporated into the definitions as a narrow one. To the contrary, it confirms the appropriateness of understanding the sense in which intention has been invoked to be a wide one. The circumstances of the prisoner who was the victim in Kalashnikov v Russia can be treated as illustrative of the circumstances of a person who would come within the scope of Australia's protection obligation under Art 7 of the ICCPR. What the illustration shows is that to understand the underlying notion of intention in each of the three statutory definitions as met where a perpetrator acts with awareness that the consequence to the victim will occur in the ordinary course of events is to adopt a construction which allows the statutory criterion for the grant of a protection visa better to meet Australia's obligation under Art 7 of the ICCPR, and which for that reason best achieves the purpose for which the complementary protection regime was introduced. The reasons for decision of the Refugee Review Tribunal in the present cases are capable of being read as containing findings to the effect that the conditions to which the applicants for protection visas would be subjected when held on remand on being returned to Sri Lanka would not be so extreme as to amount to cruel or inhuman treatment or punishment or to degrading treatment or punishment irrespective of any question of intention. That is how Buchanan J 59 (2003) 36 EHRR 34 at 589 [H11], 611 [101]. read them in the Full Court of the Federal Court. His Honour would have dismissed the applicants' appeals to that Court on that basis60. The Federal Circuit Court and the plurality in the Full Court of the Federal Court proceeded on a different view. They interpreted the decisions of the Tribunal as turning on findings to the effect that the conditions to which the applicants would be subjected when held on remand would be the result of a lack of resources "rather than an intention by the Sri Lankan government to inflict cruel or inhuman treatment or punishment or cause extreme humiliation". They therefore treated the decisions of the Tribunal as turning on the view that the notion of intention incorporated into the definitions of cruel or inhuman treatment or punishment and of degrading treatment or punishment within the complementary protection regime is limited to a subjective intention to bring about the relevant outcome. That view, they held, was correct in law61. The only question raised in the applicants' appeals to this Court is whether the plurality in the Full Court was itself correct in law in endorsing that limited view of intention. Recognising the question to be one of principle appropriate for resolution by this Court, the Minister has filed no notice of contention seeking to have the appeals dismissed on the basis identified by Buchanan J. For the reasons given, I consider that the view of intention endorsed by the plurality in the Full Court and now endorsed by the majority in this Court is too narrow. On the construction of the definitions I think to be preferable, the requisite intention will exist in either of two scenarios: where the perpetrator means to engage in conduct meaning to bring about the result adverse to the victim; and where the perpetrator means to engage in conduct aware that the result adverse to the victim will occur in the ordinary course of events. I would allow each appeal and make the consequential orders sought by the appellants. 60 SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR 556 at 61 SZTAL v Minister for Immigration and Border Protection [2015] FCCA 64 at [46]; SZTGM v Minister for Immigration and Border Protection [2015] FCCA 87 at [29]; SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR Edelman Introduction The central question in these two appeals is the meaning of "intentionally" in s 5(1) of the Migration Act 1958 (Cth), as amended in 201262. There is no dispute that, as the Full Court of the Federal Court held in each appeal, a person intends a result if the person "means" to achieve it in the sense of having it as the person's desire, aim, or purpose. But the appellants submitted that the concept of intent does not have to bear a narrow meaning which is limited to this sense of desire, aim, or purpose. They submitted that it had a broader meaning in s 5(1). The essential submission of the appellants was that the broader meaning of intention extends beyond desire, aim, or purpose and also "sees intent established once knowledge of the likelihood of the consequences [ie results] of an act reaches a sufficient degree of certainty". The appellants submitted that it was a sufficient degree of certainty if the actor knew that the result would occur in the ordinary course of events. This broader meaning of intention is precisely the concept that philosophers since Bentham have described, and debated, as "oblique intention". Bentham described oblique intention as arising where a result "was in contemplation, and appeared likely to ensue in case of the act's being performed"63. In submissions of identical effect, the appellants argued that intention could arise in such a case because "you have knowledge that the act you want to do is likely to have a result". Although the appellants used the synonym "indirect intention" in place of "oblique intention", they relied upon a famous article by Professor Glanville Williams64 in which Williams popularised, and supported, Bentham's label of oblique intention. For convenience, in these reasons I will describe the appellants' submissions by that well-known, and shorthand, label of "oblique intention", accepting that it is identical to the synonym used by the appellants of "indirect intention". There have been a number of judgments in this Court, relied upon by the appellants, that have described intention in terms which include within it this notion of oblique intention. Different formulations of oblique intention have insisted upon different degrees of foresight. Sometimes it has been said that the result must be foreseen as "inevitable" or "virtually certain". Sometimes it has 62 Migration Amendment (Complementary Protection) Act 2011 (Cth). The amending provisions commenced by proclamation on 24 March 2012. 63 Bentham, An Introduction to the Principles of Morals and Legislation, (1823), vol 1 at 141. 64 Williams, "Oblique Intention", (1987) 46 Cambridge Law Journal 417. Edelman been said that the result need only be foreseen as "probable". And the Criminal Code (Cth) has defined intention with respect to a result as existing where that result is expected to "occur in the ordinary course of events"65. The fundamental point of oblique intention is that foresight of a result is not used as a means to infer intention in the sense of an aim or purpose. The point is that voluntary conduct with a foreseen result means that the foreseen result is also intended. The context in which the question is raised in these two appeals concerns whether a Sri Lankan official who intends to detain briefly in custody a returned asylum seeker, and knows of the shocking conditions in custody, therefore intends that the detainee be subjected to those shocking conditions. The two appellants applied for protection visas, alleging that they would suffer (i) torture, (ii) cruel or inhuman treatment or punishment, or (iii) degrading treatment or punishment upon return to Sri Lanka if their applications were denied. Since they had not departed Sri Lanka lawfully they would be exposed to a brief period of detention on remand. They alleged that the infliction of pain and suffering (within the definitions of these three matters in the Migration Act) would arise as a result of prison conditions if they were returned. They submitted that "severe pain or suffering, whether physical or mental" would be "intentionally inflicted" upon them, within the meaning of s 5(1) of the Migration Act. As the appellants correctly submitted, the Full Court of the Federal Court effectively concluded that "actual, subjective, intention" cannot be proved in an oblique way merely by proving that the Sri Lankan official who would order the detention of the appellants would do so with knowledge of the consequences of his or her intended act. The appellants submitted that this was an error for two alternative reasons. First, the appellants alleged that the Migration Act should be construed consistently with an alleged international meaning of intention which was said to include oblique intention. The appellants submitted that this international meaning was applied in the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984) ("the Convention against Torture"). The appellants' submission on an international meaning of intention which includes oblique intention placed particular emphasis upon the definition of intention in the Criminal Code, which incorporated oblique intention. The appellants' first submission should not be accepted. No established, consistent definition of intention emerges from the international jurisprudence which the relevant provisions of the Migration Act could be thought to have adopted when they were inserted. The approach in the Criminal Code, which 65 Criminal Code (Cth), s 5.2(3). Edelman includes oblique intention, is not a uniform international model. In any event, the Criminal Code's adoption of oblique intention was made in circumstances of controversy where a choice was taken to depart from the ordinary meaning of intention, which does not include oblique intention. The Migration Act did not include the extended, and controversial, Criminal Code definition. The second reason given by the appellants was that the ordinary meaning of intention includes the concept of oblique intention. The first respondent relied upon the joint judgment of Kiefel, Bell and Keane JJ in Zaburoni v The Queen66, where their Honours rejected the concept of oblique intention. The decision in Zaburoni cannot resolve these appeals. There was no issue in that case as to whether "intent" in s 317(b) of the Criminal Code (Q) could include oblique intention. Indeed, it was conceded in argument that intention did not include oblique intention, so no reference was made to any of the earlier High Court judgments which had recognised or applied oblique intention67. Perhaps more fundamentally, even if the obiter dicta in Zaburoni could be treated as having impliedly rejected the earlier authorities, there would be a large question about the extent to which a later decision about the ordinary meaning of intention can be used to construe the meaning of that concept in an earlier statute. Nevertheless, the conclusions of the joint judgment about the ordinary meaning of intention should be endorsed. Despite earlier authority in this Court which suggested the contrary, the ordinary meaning applied in Zaburoni is not new. The earlier decisions of this Court which treated the ordinary meaning of intention as including oblique intention were never uncontroversial. Properly understood, oblique intention is not intention at all. Those cases must now be understood as using the word "intention" as a proxy for another concept, such as recklessness or a mental state other than intention. The best construction of the Migration Act is that it uses "intention" in its natural and ordinary sense rather than the unnatural or fictitious sense in which it is used in some earlier authorities. The Full Court in each case was correct to so conclude. The appeals must be dismissed. The 2012 Migration Act amendments relevant to these appeals Background to the 2012 amendments In the Second Reading Speech to the 2012 amendments, the Minister explained that prior to the amendments there existed "a significant administrative hole in [Australia's] protection visa application process". The "hole" gave rise to 66 (2016) 256 CLR 482 at 488-489 [8], [10]; [2016] HCA 12. 67 Zaburoni v The Queen (2016) 256 CLR 482 at 483, 485. Edelman a need to "align" Australia's protection visa process with Australia's international obligations of non-refoulement68. The administrative "hole" arose in the following way. Prior to the 2012 amendments, an applicant to whom Australia owed complementary protection obligations, such as protection from torture or cruel or inhuman treatment, fell outside the five categories outlined in the Convention Relating to the Status of Refugees (1951) and was therefore ineligible to receive a protection visa. The only way that an applicant could obtain a protection visa was to make an application to the Minister. Since the criteria for the application would not be satisfied, a delegate of the Minister would refuse the application (see s 65(1)(a)(ii) and (b) of the Migration Act). The applicant would then apply for review to the Refugee Review Tribunal, which application would necessarily be dismissed. However, the dismissal of the application for review would enliven the discretion of the Minister, under s 351 or s 417 of the Migration Act, to substitute a decision that was "more favourable" to the applicant if the Minister thought it was in the public interest to do so. The effect of this scheme, in the words used by the Minister in the Second Reading Speech, was that applicants would have to go through a process of "applying, failing, seeking review and failing again, just so they are then able to apply to the minister for personal intervention"69. The Minister described this as a "lengthy process" which was "very time consuming and extremely stressful"70. The Migration Act was therefore amended "to establish an efficient, transparent and accountable system for considering complementary protection claims, which will both enhance the integrity of Australia's arrangements for meeting its non- refoulement obligations and better reflect Australia's longstanding commitment to protecting those at risk of the most serious forms of human rights abuses"71. The Migration Act was amended by the Migration Amendment (Complementary Protection) Act 2011 (Cth), the relevant provisions of which took effect on 24 March 2012. 68 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 February 2011 at 1356-1357. 69 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 February 2011 at 1357. 70 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 February 2011 at 1357. 71 Australia, House of Representatives, Migration Amendment (Complementary Protection) Bill 2011, Explanatory Memorandum at 1. Edelman The operation of the 2012 amendments The 2012 amendments introduced s 36(2)(aa) of the Migration Act, which provided an additional basis for a grant of a protection visa. That additional basis is complementary protection in circumstances where the applicant does not fall within s 36(2)(a) because he or she is not a person about whom the Minister is satisfied that Australia has protection obligations because the person is a refugee. As Lander and Gordon JJ said in Minister for Immigration and Citizenship v SZQRB72, s 36(2)(aa) recognises that a non-citizen may be entitled to a protection visa because of Australia's other protection obligations under the Convention against Torture or the International Covenant on Civil and Political Rights (1966) ("the ICCPR"). In broad terms, the criterion is that the Minister must be satisfied that Australia has protection obligations in relation to the visa applicant. Those protection obligations arise if the Minister has substantial grounds for believing that, "as a necessary and foreseeable consequence of the non-citizen being removed from Australia to a receiving country, there is a real risk that the non- citizen will suffer significant harm"73. Paragraphs (c), (d), and (e) of s 36(2A) then respectively provide that a non-citizen will suffer significant harm if, among other things, the non-citizen will be "subjected to torture" or "subjected to cruel or inhuman treatment or punishment" or "subjected to degrading treatment or punishment". Torture Article 3(1) of the Convention against Torture, to which Australia is a party, provides that "[n]o State Party shall expel, return ('refouler') or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture". The definition of "torture" in Art 1(1) of the Convention against Torture was substantially reproduced in s 5(1) of the Migration Act. Torture is defined in s 5(1) of the Migration Act as follows: "torture means an act or omission by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person: for the purpose of obtaining from the person or from a third person information or a confession; or for the purpose of punishing the person for an act which that person or a third person has committed or is suspected of having committed; or 72 (2013) 210 FCR 505 at 526 [99]. 73 Migration Act 1958 (Cth), s 36(2)(aa). Edelman for the purpose of intimidating or coercing the person or a third person; or for a purpose related to a purpose mentioned in paragraph (a), (b) or (c); or for any reason based on discrimination that is inconsistent with the Articles of the Covenant; but does not include an act or omission arising only from, inherent in or incidental to, lawful sanctions that are not inconsistent with the Articles of the Covenant." Under s 5(1), "Covenant" is defined to mean the ICCPR. One departure in s 5(1) of the Migration Act from the definition of torture in the Convention against Torture is that s 5(1) does not restrict the torture, as Art 1(1) does, to pain or suffering "inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity". The Explanatory Memorandum accompanying the 2012 amendments, including the definition of torture, explained that in extending the definition in this respect, "Australia is mindful that Article 1(2) of the [Convention against Torture] enables States Parties to adopt national legislation that contains provisions of wider application the [Convention against Torture] than definition"74. Cruel or inhuman treatment or punishment Australia's non-refoulement obligation in relation to cruel or inhuman treatment or punishment arises under Arts 2 and 7 of the ICCPR. Article 7 of that Covenant provides: "No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment. In particular, no one shall be subjected without his scientific experimentation." to medical or free consent Unlike the definition of torture in s 5(1) of the Migration Act, which was derived closely from the Convention against Torture, the definition of "cruel or inhuman treatment or punishment" in s 5(1) departed significantly from the ICCPR. The ICCPR did not define "cruel, inhuman or degrading treatment or punishment". But s 5(1) of the Migration Act did define "cruel or inhuman 74 Australia, House of Representatives, Migration Amendment (Complementary Protection) Bill 2011, Explanatory Memorandum at 9 [52]. Edelman treatment or punishment". It included a requirement of intention which was not present in the ICCPR. The s 5(1) definition of "cruel or inhuman treatment or punishment" is essentially an extension of the definition of torture where the pain or suffering was not inflicted for one of the purposes or reasons stipulated under the definition of torture75. The s 5(1) definition is as follows: "cruel or inhuman treatment or punishment means an act or omission by which: severe pain or suffering, whether physical or mental, intentionally inflicted on a person; or pain or suffering, whether physical or mental, is intentionally inflicted on a person so long as, in all the circumstances, the act or omission could reasonably be regarded as cruel or inhuman in nature; but does not include an act or omission: that is not inconsistent with Article 7 of the Covenant; or arising only from, inherent in or incidental to, lawful sanctions that are not inconsistent with the Articles of the Covenant." The consequence of this approach to "cruel or inhuman treatment or punishment" in the Migration Act is that the concept operates as an extension of the provisions in relation to torture rather than to implement any particular international obligation. At least in the requirement for intention in the definition of "cruel or inhuman treatment or punishment" in s 5(1), it was, therefore, common ground that the definition still left a "hole" in the Migration Act scheme. In circumstances in which an applicant for a protection visa would be returned to a country where the person would be subject to unintended cruel or inhuman treatment or punishment, the applicant would need to make a necessarily unsuccessful application for a protection visa, with a necessarily unsuccessful review by the Tribunal, before the application could be considered by the Minister. Did the Migration Act incorporate an international law meaning of "intention" from the Convention against Torture? The appellants' submission concerning an alleged international meaning of "intention", which included oblique intention, essentially involved three steps. 75 Australia, House of Representatives, Migration Amendment (Complementary Protection) Bill 2011, Explanatory Memorandum at 5 [16]. Edelman First, the definition of cruel or inhuman treatment or punishment is essentially an extended application of the definition of torture. Therefore, "intention" in relation to cruel or inhuman treatment or punishment should have the same meaning as its use in relation to torture. Secondly, "intention" is a word that is capable of bearing more than one meaning. Thirdly, the 2012 amendments to the Migration Act adopted the international law meaning of intention, as that meaning is applied in the definition of torture in the Convention against Torture. The appellants submitted that according to the international law meaning, intention is "established once knowledge of the likelihood of the consequences of an act reaches a sufficient degree of certainty". As I have explained, this extension of intention to include foresight is oblique intention. The first step of the appellants' submission should be accepted. The same reference to intention, in definitions of closely related concepts, should have the same meaning. Ultimately, the first respondent did not contend that the word "intention" should have a different meaning in relation to the definition of "torture" from its meaning in relation to "cruel or inhuman treatment or punishment". As to the second step in the appellants' submission, it can be accepted immediately that "intention" is capable of being used by statutes with different meanings. Statutory words must always be read in their context. Indeed, it was common ground between the parties that the definition of intention in the Criminal Code (Cth) departed from some common law definitions of intention. But that does not mean that the word has more than one ordinary or natural meaning. The appellants' submission falters at the third step. However, several of the appellants' propositions in the third step should be accepted. The appellants correctly submitted that when Parliament implements a treaty into domestic law by using the same words as the treaty, "it is reasonable to assume that Parliament intended to import into municipal law a provision having the same effect as the corresponding provision in the treaty"76. In other words, where particular words are consciously imported from an international instrument into municipal law then it will generally be the case that the words in municipal law are used in the same way as an established international law meaning of those words. This approach is applicable to the definition of "torture" in s 5(1) of the Migration Act. Contrary to the submissions of the first respondent, the definitions in s 5(1) should not automatically be treated as a "code" to be interpreted without reference to any international materials. The Explanatory Memorandum to the 76 Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 265; [1982] HCA 27. See also Greentree v Minister for Environment and Heritage (2005) 144 FCR 388 at 397 Edelman Bill which introduced the 2012 amendments containing the definition of torture said that the purpose of stating expressly what torture does not include was "to confine the meaning of torture to the meaning expressed in international expert commentary (for example, commentary by relevant international human rights treaty bodies) on the meaning of that term as defined"77. The reason why the appellants' submission fails at the third step is that there is no established international law meaning of intention against which the use of that word in the Migration Act should be construed. The international law sources relied upon by the appellants are limited, are conflicting, and do not demonstrate any established or consistent meaning of intention. They can be divided into three categories. The first category involves decisions of the International Criminal Tribunal for the former Yugoslavia. The second concerns the Rome Statute of the International Criminal Court (1998) ("the Rome Statute") and the Criminal Code. The third category concerns a publication by the Immigration and Refugee Board of Canada78. The third category can be put to one side because the publication contained different meanings of intention in the text and the footnotes and, in any event, it was only a domestic publication provided by the Executive of one country for the use of a Tribunal in that country. Each of the first two categories can be examined in turn. As to the decisions of the International Criminal Tribunal for the former Yugoslavia, the appellants relied upon the decision of the Appeals Chamber in Prosecutor v Kunarac79 and subsequent Trial Chamber decisions which followed the Appeals Chamber80. The accused persons in Prosecutor v Kunarac argued that rapes that they had committed did not fall within the definition of torture because their intention was "of a sexual nature". The Appeals Chamber rejected this submission. 77 Australia, House of Representatives, Migration Amendment (Complementary Protection) Bill 2011, Explanatory Memorandum at 9 [52]. 78 Immigration and Refugee Board of Canada, Consolidated Grounds in the Immigration and Refugee Protection Act: Persons in Need of Protection – Risk to Life or Risk of Cruel and Unusual Treatment or Punishment, (2002). 79 (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Appeals Chamber, Case No IT-96-23 and IT-96-23/1-A, 12 June 2002). 80 Prosecutor v Limaj (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Trial Chamber II, Case No IT-03-66-T, 30 November 2005) at [238]; Prosecutor v Martić (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Trial Chamber I, Case No IT-95-11-T, 12 June 2007) at [77]. Edelman The Appeals Chamber said that the Trial Chamber had adopted a definition of torture with reference to the Convention against Torture and the case law of the International Criminal Tribunal for the former Yugoslavia and the International Criminal Tribunal for Rwanda. The definition was described as having the following three elements: (i) the infliction, by an act or omission, of severe pain or suffering, whether physical or mental; (ii) the act or omission must be intentional; and (iii) the act or omission must be aimed at one of the matters provided in the Convention against Torture81. The text of Art 1 of the Convention against Torture, which the Appeals Chamber was explicating in the threefold definition, refers to "any act by which severe pain or suffering ... is intentionally inflicted". The threefold definition does not involve any element of oblique intention. It requires, as the third element, that the act be "aimed at" causing severe pain or suffering. This is a natural sense of intention. In a later passage in the Appeals Chamber's judgment it was said that, irrespective of the motive of the accused, their acts involved "In view of the definition, it is important to establish whether a perpetrator intended to act in a way which, in the normal course of events, would cause severe pain or suffering, whether physical or mental, to his victims." This reference to the "normal course of events" does not appear to refer to the issue of intention in the third element of the definition. Instead, it appears directed to the first requirement, that the act inflicts pain or suffering. As Kiefel CJ pointed out during oral argument, this is a requirement of causation, not intention. The second category of international sources relied upon by the appellants includes the Rome Statute and the Criminal Code, which were said to be evidence of opinio iuris for an international definition of intention for the purposes of torture. The text of the Rome Statute was drafted and circulated in 1998. It entered into force on 1 July 2002. Article 7(1)(f) of the Rome Statute provides that torture may constitute a crime against humanity. Article 7(2)(e) defines torture consistently with the Convention against Torture. However, Art 30(2)(b) defines intention for the purpose of the whole of the Rome Statute. That definition of intention includes oblique intention. It applies in relation to a 81 Prosecutor v Kunarac (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Appeals Chamber, Case No IT-96-23 and IT-96-23/1-A, 12 June 82 Prosecutor v Kunarac (Judgement) (International Criminal Tribunal for the Former Yugoslavia, Appeals Chamber, Case No IT-96-23 and IT-96-23/1-A, 12 June Edelman consequence where the "person means to cause that consequence or is aware that it will occur in the ordinary course of events". The same definition of oblique intention is given in the definition of intention with respect to a result in s 5.2 of the Criminal Code. That section of the Criminal Code defines intention "with respect to a result" as arising "if he or she means to bring it about or is aware that it will occur in the ordinary course of events". The definitions of intention in the Rome Statute and the Criminal Code do not establish an international law meaning of intention for the purposes of the Convention against Torture, which could then be transplanted to s 5(1) of the Migration Act. There is no evidence that the definitions in the Rome Statute and the Criminal Code were enacted to pick up the definition in the Convention against Torture. The definition in each is different from the approach taken by the Appeals Chamber in Prosecutor v Kunarac. In both cases, the definition applies to a wide range of offences. As for the Criminal Code, there is also the obvious difficulty in establishing international opinio iuris by reference to the practice of a single State actor. Independently of the lack of any particular international law definition of intention, there is a further, insurmountable problem with transplanting the definition of intention in the Criminal Code to the Migration Act. This problem is the conscious choice about a definition of intention that was made in the Criminal Code but not made in the Migration Act. The insertion of the offence of torture in the Criminal Code occurred by amendments to the Criminal Code which entered into force on 14 April 201083. Prior to that time, the Crimes (Torture) Act 1988 (Cth) defined torture in s 3(1) as "any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person". Section 3(2) provided that, except so far as a contrary intention appeared, expressions used in the Act had the same meaning as in the Convention against Torture. Whatever the meaning of intention in the Convention against Torture, it is arguable that the meaning was altered by the operation of the particular Criminal Code definition of intention to offences generally84 from 15 December 2001. Certainly, when the offence of torture was substantially amended and relocated in the Criminal Code in 2010, the plain consequence was to provide for the inclusion of oblique intention as contained in the Criminal Code definition. In contrast, the enactment of the 2012 amendments to the Migration Act did not purport to apply the Criminal Code definition. 83 Crimes Legislation Amendment (Torture Prohibition and Death Penalty Abolition) Act 2010 (Cth). 84 Criminal Code (Cth), ss 2.2(2) and 5.2. Edelman The different choice made concerning the definition of intention in the Migration Act cannot be said to have been due to a consensus, less than two years after application of the Criminal Code definition to torture, that the definition was so well established that it need not be set out in full. Indeed, when the definition of intention was inserted into the Criminal Code in 1995, it was recognised in the Explanatory Memorandum that the inclusion of awareness that an event will occur in the ordinary course of events was controversial85. Two reasons given in the Explanatory Memorandum illustrate this controversy. One reason was that it was contrary to the approach taken by the House of Lords in three cases86. In one of those cases87, Lord Bridge of Harwich, with whom the other Law Lords agreed, said that the maxim that a person "is presumed to intend the natural and probable consequences" of his or her acts did not belong as part of the meaning of intention but was merely evidence from which an inference of intention might be drawn88. The other reason for controversy was that the distinction between circumstances and consequences (ie results) is problematic at the margins. The words chosen in s 5.2 of the Criminal Code were adopted with reference to this controversy. The ordinary meaning of intention in language and in law It was common ground that, in the absence of any established meaning of intention in relation to torture in international law jurisprudence, the meaning of intention in s 5(1) of the Migration Act, read in context, must be its natural and ordinary meaning. Some judgments of this Court have recognised or supported a concept of oblique intention. For instance, the appellants relied upon a passage in Vallance v The Queen89 where Dixon CJ approved the remarks of Professor Kenny that "in law it is clear that the word 'intention' ... covers all consequences whatever which the doer of an act foresees as likely to result from it". A similar observation was made by Menzies J90. Later, in a joint judgment in R v Crabbe91, which was also 85 Australia, Senate, Criminal Code Bill 1994, Explanatory Memorandum at 13-14. 86 R v Moloney [1985] AC 905; R v Hancock [1986] AC 455; R v Nedrick [1986] 1 WLR 1025; [1986] 3 All ER 1. 87 R v Moloney [1985] AC 905. 88 R v Moloney [1985] AC 905 at 928-929. 89 (1961) 108 CLR 56 at 59; [1961] HCA 42. 90 Vallance v The Queen (1961) 108 CLR 56 at 73. 91 (1985) 156 CLR 464 at 469; [1985] HCA 22. Edelman referred to by the appellants, this Court cited English academic writing92 and English judicial authority93 for the proposition that "on one view, a person who does an act knowing its probable consequences may be regarded as having intended those consequences to occur", although it was ultimately "unnecessary to enter upon that controversy". Perhaps the most famous English academic support for this view was given by Glanville Williams. In an article relied upon by the appellants, advocating for the adoption of oblique intention, Williams suggested an example94 of a villain who blows up an aircraft in flight with a time-bomb, merely for the purpose of collecting on insurance. The villain's aim was not to kill the people on board although he knew that their deaths would be an inevitable side-effect95. Williams postulated that while it was not the villain's aim or purpose to kill the people on board, it was possible for the law to say that he intended their deaths. However, even Williams recognised that oblique intention, as reflected in this example, is not the ordinary meaning of intention. Williams' argument was that the recognition of oblique intention was "a small departure" from the ordinary meaning of intention and "permissible on grounds of policy"96. Neither point should be accepted. First, as I explain below, the departure from ordinary language is not small. Indeed, Williams acknowledged that the extended meaning "does not always work satisfactorily" in some cases including, pertinently for these appeals, in relation to instances of mental stress97. Secondly, even if there were some warrant to extend intention to a different concept by reference to some preferred policy, a transparent approach should be taken which recognises that the concept being employed is not intention at all. 92 Mitchell (ed), Archbold: Pleading, Evidence and Practice in Criminal Cases, 41st ed (1982) at 995-1001; Kenny, Outlines of Criminal Law, (1902) at 148. 93 R v Hyam [1975] AC 55 at 82, 86, 96. Cf at 74-75 and, now, R v Jogee [2017] AC 94 Williams, "Oblique Intention", (1987) 46 Cambridge Law Journal 417 at 423, acknowledging the immediate source of the example as Lord Hailsham of St Marylebone in R v Hyam [1975] AC 55 at 74, who, in turn, borrowed from The Law Commission, Imputed Criminal Intent (Director of Public Prosecutions v Smith), Report No 10, (1967) at 14-15 [18], which, in turn, may have borrowed it from Williams, The Mental Element in Crime, (1965) at 34-35. 95 Williams, "Oblique Intention", (1987) 46 Cambridge Law Journal 417 at 423. 96 Williams, "Oblique Intention", (1987) 46 Cambridge Law Journal 417 at 426. 97 Williams, "Oblique Intention", (1987) 46 Cambridge Law Journal 417 at 435. Edelman However, where a statute employs a term in its ordinary sense, there can be no warrant for the extension of the meaning beyond its ordinary sense. Other instances of support for oblique intention in this Court can arguably be seen in Bahri Kural v The Queen98, and can be seen in Peters v The Queen99. In Bahri Kural, Mason CJ, Deane and Dawson JJ said that intention to import a drug "is established" if (i) an accused intended to bring an article into Australia, and (ii) the accused knew that the article contained narcotic drugs. It is possible to treat (ii) as just a circumstance from which intention is inferred rather than recognition of oblique intention100. However, the decision of McHugh J (with whom Gummow J agreed) in Peters is an unequivocal recognition of oblique intention. The appellants relied upon a passage where his Honour said that101: "If a person does something that is virtually certain to result in another event occurring and knows that that event is certain or virtually certain to occur, for legal purposes at least he or she intends it to occur." Despite the support for oblique intention that was identified by the appellants in academic writing and various judgments in this Court the concept should not be accepted as the ordinary meaning of "intention". For three reasons, the better approach is to recognise that where intention is used in its ordinary sense it bears its ordinary meaning. If another concept is relevant then the word "intention" would be better avoided. It will often only engender confusion for the same word to be used to embrace that which Bentham described by the misnomer "oblique intention", and which the appellants described as "indirect intention". The first reason why oblique intention should be regarded as invoking a concept different from intention is that the recognition of oblique intention as a form of intention has often proceeded from the false assumption that a person can intend an undesired consequence. For instance, in Peters, McHugh J reached the conclusion that intention includes oblique intention because he considered that "a person may intend to do something even though it is the last thing that he or she wishes to bring about"102. In oral submissions, the appellants therefore asserted 98 (1987) 162 CLR 502 at 504; [1987] HCA 16. Cf at 507. 99 (1998) 192 CLR 493 at 521-522 [68]-[69] per McHugh J, 533 [93] per Gummow J; [1998] HCA 7. 100 Smith v The Queen (2017) 91 ALJR 621 at 642 [78]; 343 ALR 561 at 586; [2017] HCA 19. 101 Peters v The Queen (1998) 192 CLR 493 at 522 [68]. 102 Peters v The Queen (1998) 192 CLR 493 at 522 [68]. Edelman that intention could arise at two levels, either in respect of a result that is desired or in respect of one that is undesired, but is likely to occur. The argument that oblique intention is just an example of an intention about something undesired initially appears attractive. But it suffers from the flaw of conflating two different, although overlapping, senses of desire103. A person can desire a consequence in the sense of volitionally choosing it. Or a person can desire a consequence in the sense of emotionally wanting it. Hence, a person who boards a plane from London to Manchester can still have a desire, in the sense of volitional choice, to travel to Manchester even if "Manchester is the last place he wants to be and his motive for boarding the plane is simply to escape pursuit"104. Another example is an accused who "sets fire to his enemy's house so as to spite the enemy even though he regrets the destruction of the house because it is a masterpiece of period architecture"105. The accused desired to destroy the house in the sense of volitionally choosing that outcome, even though he did not desire it in the sense of emotionally wanting it. The second reason why "oblique intention" should not be treated as intention is that it can lead to an absurd and unnatural use of the word "intention". For instance, a person who buys a lottery ticket will be aware that success is highly unlikely, or that in the ordinary course of events the person's ticket will not be successful. But no-one would speak of the person intending to be unsuccessful. Professor Finnis gives an example of a woman who decides to give testimony at her brother's trial although "acutely conscious of her uncontrollable stutter"106. She intends to give evidence but no-one would say that she intends to stutter. She does not choose, or desire, to do so. The third reason for eschewing oblique intention as a type of intention is that despite the authority in this Court which has recognised it, there is also substantial authority which has cast doubt upon whether oblique intention is really intention at all. For instance, in Vallance v The Queen107, Taylor J contrasted a "result foreseen as a not unlikely consequence" with "actual intent". In Giorgianni v The Queen108, Wilson, Deane and Dawson JJ suggested that 103 Finnis, Intention and Identity, (2011) at 177. 104 R v Moloney [1985] AC 905 at 926, also conflating the two senses of desire. 105 Zaburoni v The Queen (2016) 256 CLR 482 at 491 [18], citing Gillies, Criminal Law, 4th ed (1997) at 50. 106 Finnis, Intention and Identity, (2011) at 237. 107 (1961) 108 CLR 56 at 68. 108 (1985) 156 CLR 473 at 506; [1985] HCA 29. Edelman where it is sufficient that an act is done with foresight of its probable consequences, then it may be that such "intent may more properly be described as a form of recklessness". And in perhaps the most illuminating passage, Windeyer J said in Vallance v The Queen109: "The probability that harm will result from a man's acts may be so great, and so apparent, that it compels an inference that he actually intended to do that harm. Nevertheless, intention is a state of mind. The circumstances and probable consequences of a man's act are no more than evidence of his intention. For this reason this Court has often said that it is misleading to speak of a man being presumed always to intend the natural and probable consequences of his acts. And this, I do not doubt, is so. Because intent is a state of mind, it becomes necessary to ask what is that state of mind; what for the purposes of the criminal law is comprehended in the idea of an intentional act. Under the law apart from the Code, an accused would be guilty of unlawfully wounding if his actual purpose was to inflict a wound: he would also be guilty if, without any actual purpose to wound anyone, but foreseeing that what he was about to do was likely to cause a wound to someone, he yet went on to do it. The common law treats what was done recklessly, in that way, as if it had been done with actual intent. It says that a man, who actually realizes what must be, or very probably will be, the consequence of what he does, does it intending that consequence. The word 'intentional' in the Code carries, I think, these concepts of the common law. I therefore do not read s 13 as altering these principles. It is, I may add, in my view undesirable to insist upon desire of consequence as an element in intention. There is a risk of introducing an emotional ingredient into an intellectual concept. A man may seek to produce a result while regretting the need to do so." In this passage Windeyer J made several points which should be reiterated and affirmed as a summary of the discussion so far. First, the foresight of consequences which is the basis for "oblique intention" is not intention at all. It is only evidence from which an inference can be drawn of intention, in the sense of meaning for some result to occur or having that result as an aim or purpose. Secondly, there are instances where the common law treats recklessness as if it were intention. The law does itself no credit by deeming one concept to be another. Thirdly, there is a danger which can be caused by a focus on desire. This danger is that desire is a concept which can be understood in either an emotional sense or a volitional sense. When desire is used as a synonym for intention then it ought to be used in the sense of volitional desire or, in other words, the person's aim or purpose. 109 (1961) 108 CLR 56 at 82-83. Edelman The ordinary meaning of intention was considered in Zaburoni. In that case, Kiefel, Bell and Keane JJ quoted, with approval110, the approach of Connolly J in R v Willmot (No 2)111 that the ordinary and natural meaning of the word "intends" is "to mean, to have in mind", and that dictionary definitions show that "what is involved is the directing of the mind, having a purpose or design". As their Honours explained, this meaning of intention is different from the knowledge that conduct "will probably produce a particular harm"112. They explained that when asking whether a person had unlawfully transmitted a serious disease with intent to do so, the meaning of intention made irrelevant concepts of foreseeability, likelihood and probability113. To prove an intention to produce a particular result, by the ordinary meaning of intention, it is necessary to establish that the accused meant to produce that result by his or her conduct114. Although considerable weight was placed on Zaburoni by the first respondent in argument that decision is only relevant to these appeals as an illustration of what the ordinary and natural meaning of intention has always been. The decision, which concerned the meaning of intent in s 317(b) of the Criminal Code (Q), cannot be an authority which affects the construction of different legislation enacted years earlier. Further, the legitimacy of "oblique intention" as part of the concept of intention was not in issue in Zaburoni. The Crown did not argue on that appeal that Mr Zaburoni had an intention to transmit the human immunodeficiency virus ("HIV") because Mr Zaburoni had oblique intention arising from a choice to have unprotected sexual intercourse with the foresight that the act of unprotected sexual intercourse would cause HIV. Apart from the lack of any evidence about Mr Zaburoni's foresight of the possibility of HIV, the statistical evidence was that there was a 14 per cent risk of transmission, not that it was a certain result which had been foreseen. The appellants' submission that the ordinary or natural sense of intention includes "oblique intention" should not be accepted. In ordinary or natural language, oblique intention is not intention at all. Nor should it attract that label in law. The same ordinary meaning applies in s 5(1) of the Migration Act. The application of the ordinary meaning of intention to these appeals, therefore, would ask whether a person (the relevant Sri Lankan official) will mean to 110 (2016) 256 CLR 482 at 488 [8]. 111 [1985] 2 Qd R 413 at 418. 112 Zaburoni v The Queen (2016) 256 CLR 482 at 489 [10]. See also at 504 [66] per 113 Zaburoni v The Queen (2016) 256 CLR 482 at 489 [13]. 114 Zaburoni v The Queen (2016) 256 CLR 482 at 490 [14]. Edelman produce a particular result such as the severe pain or suffering which is an element of the definition of cruel or inhuman treatment or punishment. The decisions below Both appeals concerned decisions by the Tribunal to affirm the decisions of delegates of the Minister to refuse protection visas to each appellant under s 65 of the Migration Act. In each case, the appellant submitted to the Tribunal that a protection visa should be granted because there was a real risk that he would suffer significant harm if removed to Sri Lanka. The risk of significant harm was said to arise because of the treatment in Sri Lanka of citizens who departed contrary to Sri Lankan laws. The appellants submitted that this treatment would amount to torture or to "cruel or inhuman treatment or punishment" as those terms are defined in s 5(1) of the Migration Act. In SZTAL's case, the Tribunal accepted that since November 2012 all returnees who left Sri Lanka illegally had been arrested after their return. They were held on remand and then charged with an offence under the Immigrants and Emigrants Act 1945 prior to being bailed. The Tribunal found that SZTAL would be remanded for a short period of time of between one night and several nights, and possibly up to two weeks. As to the treatment during remand, the Tribunal referred to country information which indicated that prison conditions in Sri Lanka did not meet international standards, with concerns of "overcrowding, poor sanitary facilities, limited access to food, the absence of basic assistance mechanisms, a lack of reform initiatives and instances of torture, maltreatment and violence". The Tribunal quoted from a former United Nations Special Rapporteur on Torture, cited by the United States Department of State, who reported that "the combination of severe overcrowding and antiquated infrastructure of certain prison facilities places unbearable strains on services and resources". The Tribunal also referred to a press report which quoted returnees who said that they "slept on the floor in line" with their "bodies pressed up against each other", that they "could not roll over", and that some nights they had to take turns sleeping due to lack of space. The Tribunal described how Sri Lankan authorities have acknowledged the poor prison conditions but said that a lack of space and resources has inhibited reform. The Tribunal cited a call by the President of Sri Lanka for "an overhaul of the penal code and for the lower courts to reduce prison congestion and expedite the hearing of cases", as well as plans to construct and expand several prisons in partnership with the International Committee of the Red Cross. The Tribunal determined that a "relatively short period of remand" did not amount to an act or omission by which severe physical or mental pain or suffering is intentionally inflicted, nor did it amount to an act which could reasonably be regarded as cruel or inhuman. The Tribunal reiterated the Edelman requirement for intentional infliction of cruel or inhuman treatment or punishment or degrading treatment or punishment and said that "[m]ere negligence or lack of resources does not suffice". The Tribunal continued: "The country information above indicates that the poor prison conditions in Sri Lanka are due to a lack of resources which the government appears to have acknowledged and is taking steps to improve, rather than an intention by the Sri Lankan government to inflict cruel or inhuman treatment or punishment or cause extreme humiliation." The reasons, and decision, of the Tribunal in SZTGM's case, including the information referred to by the Tribunal and the reasoning of the Tribunal, were relevantly identical. Both SZTAL and SZTGM sought review of the Tribunal's decisions in the Federal Circuit Court. One submission for the appellants was that the Tribunal had misconstrued the meaning of "intention" in s 5(1) of the Migration Act. Both applications were dismissed. The primary judge in the Federal Circuit Court in SZTAL v Minister for Immigration and Border Protection115 held that the phrase "intentionally inflicted" required the existence of an actual, subjective intention on the part of a person to bring about the suffering by his or her conduct. Therefore, the Tribunal did not err by failing "to consider whether the Sri Lankan authorities had the necessary intent because they foresaw the consequences of their actions"116. This reasoning was incorporated by the same primary judge in his reasons in SZTGM v Minister for Immigration and Border Protection117. Both appellants appealed to the Federal Court. The appeals were heard together, with a third appeal, by the Full Court (Kenny, Buchanan and Nicholas JJ). The Full Court dismissed the appeals. In a joint judgment, Kenny and Nicholas JJ held that "intention" in s 5(1) of the Migration Act bore its natural and ordinary meaning of "actual subjective intention by the actor to bring about the victims' pain and suffering by the actor's conduct"118. Their Honours observed that the primary judge was correct to dismiss the applications for review because the Tribunal had treated "intentionally inflicted" as requiring an "actual subjective intention to cause the relevant harm" irrespective of whether 115 [2015] FCCA 64 at [49]. 116 SZTAL v Minister for Immigration and Border Protection [2015] FCCA 64 at [45]. 117 [2015] FCCA 87 at [29]. 118 SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR 556 at Edelman the authorities foresaw the consequences of their actions119. The third member of the Full Court, Buchanan J, dismissed the appeals on the basis that the Tribunal had found that the level of harm did not meet the physical or mental elements of the definitions120. The first respondent did not bring any notice of contention seeking to dismiss each appeal from the decision of the Full Court of the Federal Court on the basis that the Tribunal had found that the physical element of the definition was not satisfied. The approach to intention applied by the Tribunal The primary submission of the appellants in the Full Court of the Federal Court had been that the approach the Tribunal should have taken was to ask whether the actor knows or is aware that pain or suffering will be inflicted by the act or omission "in the ordinary course of events". For the reasons explained above, the Full Court correctly rejected that submission. Although the appellants maintained that submission in this Court, their submission in this Court was more nuanced. The appellants' ground of appeal in this Court was that the Full Court erred by requiring the "actual, subjective, intention" to be one which cannot be proved merely by the actor's knowledge of the consequences of his or her intended acts or omissions, no matter how certain that knowledge may be. The appellants' submission was effectively that intention could include circumstances where knowledge of (ie belief in) the future consequences of a voluntary act reaches a sufficient degree of certainty. Hence, they submitted that the Full Court and primary judge both erred by failing to apply the correct test. This submission of the appellants requires the recognition of "oblique intention" as a legitimate and ordinary use of intention. For the reasons I have explained, that submission cannot be accepted. The appeals must therefore be dismissed. The Full Court was correct that the Tribunal was required only to consider intention as meaning an "actual, subjective, intention". It was not sufficient for that intention to be proved by oblique intention. Foresight of consequences, especially with a high degree of perceived likelihood, is a matter from which intention can be inferred. But it is not part of the definition of intention. The appellants could only have established "intention" within par (a) of the definition of "cruel or inhuman treatment or punishment" in s 5(1) of the Migration Act if the Tribunal accepted that a relevant Sri Lankan official acted in a way meaning, in the sense of having as an 119 SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR 556 at 120 SZTAL v Minister for Immigration and Border Protection (2016) 243 FCR 556 at Edelman aim or purpose, that "severe pain or suffering, whether physical or mental" would be inflicted. This conclusion was rejected by the Tribunal. Orders The appeals should be dismissed. In each matter the appellant should pay the costs of the first respondent.

HIGH COURT OF AUSTRALIA FORTESCUE METALS GROUP LIMITED & ORS PLAINTIFFS AND THE COMMONWEALTH OF AUSTRALIA DEFENDANT Fortescue Metals Group Limited v The Commonwealth [2013] HCA 34 7 August 2013 ORDER The questions reserved for the consideration of the Full Court on 5 November 2012 be answered as follows: Question 1 Are any or all of s 3 of the Minerals Resource Rent Tax (Imposition— Customs) Act 2012 (Cth), s 3 of the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and s 3 of the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) invalid in their application to the plaintiffs on one or more of the following grounds: they discriminate between the States of the Commonwealth of Australia contrary to s 51(ii) of the Constitution; they give preference to one State of the Commonwealth of Australia over another State contrary to s 99 of the Constitution; they so discriminate against the States of the Commonwealth or so place a particular disability or burden upon the operations or activities of the States, as to be beyond the legislative power of the Commonwealth? Answer Question 2 Are any or all of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) and the Minerals Resource Rent Tax Act 2012 (Cth) invalid in their application to the plaintiffs on the ground that they are contrary to s 91 of the Constitution? Answer Question 3 Who should pay the costs of the reserved questions? Answer The plaintiffs. Representation D F Jackson QC with B Dharmananda SC and W A D Edwards for the plaintiffs (instructed by Corrs Chambers Westgarth Lawyers) J T Gleeson SC, Solicitor-General of the Commonwealth and N J Williams SC with G J D del Villar and D F C Thomas for the defendant (instructed by Australian Government Solicitor) Interveners W Sofronoff QC, Solicitor-General of the State of Queensland with A D Scott for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) G R Donaldson SC, Solicitor-General for the State of Western Australia with A J Sefton and J D Berson for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fortescue Metals Group Limited v The Commonwealth Constitutional law – Powers of Commonwealth Parliament – Constitution, s 51(ii) – "[T]axation; but so as not to discriminate between States or parts of States" – Minerals Resource Rent Tax Act 2012 (Cth), Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), Minerals Resource Rent Tax (Imposition— General) Act 2012 (Cth) ("Acts") established and imposed minerals resource rent tax ("MRRT") – Amounts paid as State royalties allowed under Acts as royalty credits – Available royalty credits which do not exceed mining profit deductible from MRRT as royalty allowance – Effect of Acts alleged to be that liability to pay MRRT varies between States and that reduction in State royalty increases liability to pay MRRT by the amount of the reduction – Whether Acts discriminate between States contrary to s 51(ii) of Constitution. Constitutional law – Constitution, s 99 – Prohibition on Commonwealth, by any law of revenue, giving preference to one State over another – Whether Acts give preference to one State over another. Constitutional law – Melbourne Corporation doctrine – Whether Acts discriminate against or place particular burden upon operations or activities of States, beyond legislative power of Commonwealth Parliament. Constitutional law – Constitution, s 91 – "Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals" – Whether Acts contravene s 91. Words and phrases – "discrimination", "Melbourne Corporation doctrine", "minerals resource rent tax", "preference in trade, commerce or revenue", "State royalties", "States or parts of States". Constitution, ss 51(ii), 91, 99. Introduction Fortescue Metals Group Ltd and four subsidiaries of that company commenced proceedings against the Commonwealth by way of writ issued out of this Court on 22 June 2012. They assert that provisions of the Minerals Resource Rent Tax Act 2012 (Cth) ("the MRRT Act") and three related Acts imposing Minerals Resource Rent Tax ("MRRT") in relation to iron ore are not valid laws of the Commonwealth. The three related Acts are the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth) and the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) (together referred to as "the Imposition Acts"). The stated object of the MRRT Act is to ensure that the Australian community receives an adequate return for its "taxable resources" having regard to their inherent value, their non-renewable nature and the extent to which they are subject to Commonwealth, State and Territory royalties1. The Act makes allowance, in fixing the MRRT liability of a miner, for mining royalties payable under State laws. Because the MRRT Act makes those allowances, the liabilities it imposes can vary according to State mineral royalty regimes. That potential for a differential operation from State to State underpins the plaintiffs' argument that the Act discriminates between States contrary to s 51(ii) of the Constitution and gives preference to one State over another contrary to s 99 of the Constitution. The plaintiffs also assert that, contrary to s 91 of the Constitution, the MRRT Act detracts from, impairs or curtails the grant by States of aid to mining for iron ore by the reduction of royalty rates applicable to the mining of iron ore. The Act is also said to detract from, impair or curtail the capacity of the States to function as governments contrary to the principles enunciated in Melbourne Corporation v The Commonwealth2. The Imposition Acts are challenged, along with the MRRT Act, because s 3 of each of them imposes the MRRT. A reference to the MRRT Act in these reasons is a reference to that Act read with the Imposition Acts. The limitations on Commonwealth legislative power imposed by ss 51(ii) and 99 of the Constitution protect the formal equality in the Federation of the States inter se and their people, and the economic union which came into 1 MRRT Act, s 1–10. (1947) 74 CLR 31; [1947] HCA 26. existence upon the creation of the Commonwealth3. They must be read in their context with s 51(iii), which limits legislative power with respect to bounties on the production or export of goods by requiring that they shall be "uniform throughout the Commonwealth", and s 88, which requires that customs duties be "uniform". The scheme of economic unity which they support is reinforced by s 102, which empowers the Parliament, by laws with respect to trade or commerce, to forbid as to railways any preference or discrimination by any State. The relationship between those provisions, the exclusivity provided by s 90 for Commonwealth legislative power with respect to customs, excise and bounties, and the guarantee of freedom of trade, commerce and intercourse among the States made by s 92, was encapsulated in the joint majority judgment in Capital Duplicators Pty Ltd v Australian Capital Territory [No 2]4: "ss 90 and 92, taken together with the safeguards against Commonwealth discrimination in s 51(ii) and (iii) and s 88, created a Commonwealth economic union, not an association of States each with its own separate economy." (footnote omitted) Importantly, the proscription of differential taxes avoided distortion of "local markets within the Commonwealth."5 At a more detailed level, the interactions between ss 51(ii), 51(iii), 88 and 99 are as summarised by Latham CJ in Elliott v The Commonwealth6: "The sections mentioned operate independently, but they overlap to some extent. Laws of taxation, including laws with respect to customs duties, fall under sec 51(ii) and as laws of revenue they fall under sec 99. Laws with respect to bounties on the export of goods fall under sec 51(iii) and also, as laws of trade or commerce, under sec 99. A preference in 3 A formal equality which belied persistent economic and geographical inequalities: Anderson, "The States and Relations with the Commonwealth", in Else-Mitchell (ed), Essays on the Australian Constitution, (1961) 93 at 108. (1993) 178 CLR 561 at 585; [1993] HCA 67. See also Clark King & Co Pty Ltd v Australian Wheat Board (1978) 140 CLR 120 at 153 per Barwick CJ; [1978] HCA 34; Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 660 per Deane J; [1983] HCA 23; Australian Coarse Grains Pool Pty Ltd v Barley Marketing Board (1985) 157 CLR 605 at 647–648 per Brennan J; [1985] HCA 38; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 426 per Mason CJ and Deane J; [1989] HCA 38. (1993) 178 CLR 561 at 585. (1936) 54 CLR 657 at 668; [1936] HCA 7. relation to any of these subjects which infringed sec 99 would also be a prohibited discrimination or a prohibited lack of uniformity under one of the other sections. Preference necessarily involves discrimination or lack of uniformity, but discrimination or lack of uniformity does not necessarily involve preference." The limitations imposed by ss 51(ii) and 99, which are in issue in this case, operate at a level of generality appropriate to their federal purposes. They do not prevent the Parliament of the Commonwealth from enacting uniform laws which have different effects in different States because of differences in the circumstances to which they apply, including different State legislative regimes. Nor do they apply to a law with respect to taxation merely because it provides for adjustments to the liabilities it imposes according to liabilities which might from time to time be imposed by differing State laws. The generality of the non-discrimination and no-preference limitations permits differences between States in the application of the law, for which the law makes provision, if such provision is based upon a distinction which is appropriate and adapted to the attainment of a proper objective7. Such a provision neither discriminates nor gives a preference within the meaning of those terms in ss 51(ii) and 99. For the reasons that follow, the MRRT Act neither discriminates between States or parts of States nor gives preference to one State over another. For the reasons given in the joint judgment of Hayne, Bell and Keane JJ, s 91 of the Constitution has no effect on the validity of the Act. Nor, for the reasons given by their Honours, does the Act impair the capacity of the States to function as governments contrary to the principles explained in Melbourne Corporation v The Commonwealth8 and more recently in Austin v The Commonwealth9 and Clarke v Federal Commissioner of Taxation10. The plaintiffs' challenges to the MRRT Act fail. The questions reserved On 5 November 2012, the Court ordered that the following questions be reserved for determination by the Full Court (on the basis of the pleadings and documents referred to in the pleadings): 7 Austin v The Commonwealth (2003) 215 CLR 185 at 247 [118]; [2003] HCA 3; Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 424 [89]; [2004] HCA 53. (1947) 74 CLR 31. (2003) 215 CLR 185. 10 (2009) 240 CLR 272; [2009] HCA 33. "(i) Are any or all of s 3 of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), s 3 of the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and s 3 of the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) invalid in their application to the plaintiffs on one or more of the following grounds: they discriminate between the States of the Commonwealth of Australia contrary to s 51(ii) of the Constitution; they give preference to one State of the Commonwealth of Australia over another State contrary to s 99 of the Constitution; so discriminate they the against Commonwealth or so place a particular disability or burden upon the operations or activities of the States, as to be beyond the legislative power of the Commonwealth? the States of (ii) Are any or all of the Minerals Resource Rent Tax (Imposition— Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) and the Minerals Resource Rent Tax Act 2012 (Cth) invalid in their application to the plaintiffs on the ground that they are contrary to s 91 of the Constitution? (iii) Who should pay the cost of the reserved questions?" An outline of the scheme of the legislation follows. The structure of the tax A miner is liable to pay MRRT for an MRRT year equal to the sum of its MRRT liabilities for each of its mining project interests for that year11. MRRT liability for a mining project interest for an MRRT year is calculated by the "MRRT liability = MRRT rate x (Mining profit – MRRT allowances)". 11 MRRT Act, s 10–1. 12 MRRT Act, s 10–5. The MRRT rate is 22.5%13. MRRT allowances are listed in Ch 3 of the MRRT Act. The "mining profit" for a mining project interest is the difference between "mining revenue" and "mining expenditure"14. The "mining revenue" for a mining project interest for an MRRT year is "the sum of all the amounts that, under this Act, are included in the miner's mining revenue for that interest for that year."15 It includes revenue from taxable resources extracted from the project area for the mining project interest, to the extent that the revenue is reasonably attributable to the taxable resources in the form and place they were in when they were at their valuation point16. It is not necessary for present purposes to explore the full complexity of the definition of mining revenue. The "mining expenditure" for a mining project interest for an MRRT year is "the sum of all the amounts that, under this Act, are included in the miner's mining expenditure for that interest for that year."17 It does not include amounts designated as "excluded expenditure"18. Payment of a "mining royalty" is "excluded expenditure"19. The term "mining royalty" is defined and, relevantly for present purposes, is an expenditure which20: is made in relation to a taxable resource extracted under authority of a production right; and is made under a Commonwealth law, a State law or a Territory law; and 13 The rate is specified in s 4 of each of the Imposition Acts as "30% x (1 – Extraction factor)" where the extraction factor is 25%. 14 MRRT Act, s 25–5. 15 MRRT Act, s 30–5. 16 MRRT Act, s 30–1(a). Section 40–5(1) provides that the valuation point for a "taxable resource" is the point just before the resource is removed from the run-of- mine stock pile on which it is stored. 17 MRRT Act, s 35–5(1). 18 MRRT Act, s 35–5(2). 19 MRRT Act, s 35–40. 20 MRRT Act, s 35–45(1). either: is a royalty; or (ii) would be a royalty, if the taxable resource were owned by the Commonwealth, State or Territory (as the case requires) just before the recovery of the resource."21 Although mining royalties payable to a State are excluded expenditure, they are to be deducted from mining profit in calculating MRRT liability. That is because they fall into the category of "MRRT allowances"22. That category is dealt with in Ch 3 of the MRRT Act. It consists of a number of classes of allowances which are defined by the Act23. The class immediately relevant to these proceedings is the "royalty allowance"24. Royalty allowances are dealt with in Pt 3–1 of Ch 3. That Part consists of Div 60, also entitled "Royalty allowances". The overview of the Division states25: "Mining royalties paid to the Commonwealth, States and Territories reduce a miner's MRRT liabilities for a mining project interest. To work out the royalty allowance, the amount of the royalty is grossed-up using the MRRT rate, in effect reducing the MRRT liability by the amount of the royalty." The mechanism that is adopted for bringing royalties into account is that of "royalty credits"26. Royalty credits not applied in one MRRT year can be applied 21 Section 35–45(1)(c)(ii) covers the case where an amount is payable under an Australian law in relation to minerals owned by private landowners. 22 MRRT Act, s 10–10, item 1 and see Pt 3–1. 23 The MRRT allowances are listed in s 10–10 with cross-references to the numbered Parts of Ch 3 which apply to them. They are: royalty allowance (Pt 3–1), transferred royalty allowance (Pt 3–2), pre-mining loss allowance (Pt 3–3), mining loss allowance (Pt 3–4), starting base allowance (Pt 3–5), transferred pre-mining loss allowance (Pt 3–6), transferred mining loss allowance (Pt 3–7). 24 MRRT Act, Pt 3–1. 25 MRRT Act, s 60–1. 26 MRRT Act, s 60–10. in later years27. They are reduced if a miner recoups an amount giving rise to a royalty credit28. A royalty credit includes a liability to pay a mining royalty in relation to a taxable resource extracted under the authority of the production right to which the relevant mining project interest relates29. The royalty credit arises at the time the miner incurs the liability and relates to the MRRT year in which it arises30. The amount of the royalty credit in the MRRT year in which the royalty credit arises in relation to a liability of a miner is calculated by determining how much of the liability gives rise to a royalty credit and dividing the result by the MRRT rate31. A "royalty allowance" is so much of the "royalty credits" as do not exceed the mining profit32. The mining project interests to which the MRRT Act applies are interests in relation to iron ore and coal and some related substances. They are called "taxable resources"33. If royalty credits in one year are not needed to offset the mining profit in that year, they can be carried over for use in subsequent years34. In that event, the amount of the royalty credits is uplifted to take account of the time value of money35. The MRRT does not become payable until the miner's group mining profit for an MRRT year exceeds $75 million36. The full amount of MRRT does not become payable until the group mining profit reaches $125 million37. 27 MRRT Act, s 60–25(2). 28 MRRT Act, s 60–30. 29 MRRT Act, s 60–20(1)(a). There is an extended aspect of the definition which is not material for present purposes. 30 MRRT Act, s 60–20(2). 31 MRRT Act, s 60–25(1). 32 MRRT Act, s 60–15(1). 33 MRRT Act, ss 15–5(4) and 20–5. 34 MRRT Act, s 60–25(2). 35 MRRT Act, s 60–25(2). 36 MRRT Act, ss 10–15 and 45–5. 37 MRRT Act, ss 10–15 and 45–10. The plaintiffs submitted that the effect of the MRRT Act is that a miner's MRRT liability, when payable, is either inversely proportional to the miner's liability for State mining royalties or is directly related to the extent of the miner's liability for such royalties. That is to say, the MRRT Act is expressly designed so that if more State royalties are payable, less MRRT is payable, and vice versa. The plaintiffs submitted that, in the result, where MRRT is payable, a miner's liability will vary from State to State, depending upon the royalty rate applicable in that State. The Commonwealth took issue with the plaintiffs about the relationship between MRRT liabilities and State royalties. It did so by reference to the different times at which, and conditions under which, MRRT liabilities and State royalties could become payable. There are undoubtedly a number of variables which can affect the liability of a miner for MRRT in a given year or over a number of years. One of those variables is the royalty payable from time to time under State law. It is not necessary for present purposes to explore hypothetical cases that might arise and differences in the liabilities which might attach or be attributed to mining projects in one State or another. The issues raised in the questions reserved can be decided on the basis that, all other things being equal, the MRRT Act can have the effect that a miner's liability for MRRT is greater in a State with a lower applicable royalty than in a State with a higher applicable royalty. It can therefore also have the effect that when a State reduces the applicable royalty, a miner's liability for MRRT, all other things being equal, will increase. The arithmetical gymnastics that, according to the plaintiffs, would enable the outcomes to be characterised as the application of different "effective" MRRT rates between States can be disregarded. In the forefront of consideration in this case is the interpretation and application of ss 51(ii) and 99 of the Constitution. Their interpretation depends upon their text. It is informed by their drafting history and the decisions of this Court interpreting and applying them. Those decisions do not yield single, simply expressed and exhaustive explanations and definitions of the limitations on legislative power imposed by those provisions. The Court responds to the cases it is called upon, by the accidents of history, to decide. Judicial interpretation in particular cases must be seen in the context of the Court's function. As Windeyer J said in the Payroll Tax Case38: "Exegesis must not be substituted for the text." 38 Victoria v The Commonwealth (1971) 122 CLR 353 at 403; [1971] HCA 16. That observation should be read in light of his Honour's approach to constitutional interpretation in the Australian context39: "In any country where the spirit of the common law holds sway the enunciation by courts of constitutional principles based on the interpretation of a written constitution may vary and develop in response to changing circumstances. This does not mean that courts have transgressed lawful boundaries: or that they may do so." first the What Windeyer J said echoed Attorney-General of the Commonwealth, in his Second Reading Speech for the Judiciary Bill 1902 (Cth) in March 190240: remarks of Alfred Deakin, "It is as one of the organs of Government which enables the Constitution to grow and to be adapted to the changeful necessities and circumstances of generation after generation that the High Court operates." It is in that spirit that ss 51(ii) and 99 in their application to this case should be interpreted. That is a conservative spirit which nevertheless recognises that a written constitution should be able, consistently with textual limitations, to accommodate changing circumstances. That approach, in this case, requires consideration of the text and the drafting histories of ss 51(ii) and 99, their judicial exegesis and the particular questions to be decided about their application. Constitution, s 51(ii) — drafting history Section 51(ii) confers power on the Parliament of the Commonwealth, subject to the Constitution, to make laws for the peace, order and good government of the Commonwealth with respect to: "taxation; but so as not to discriminate between States or parts of States". The ambit of the power is expressly confined by the "positive prohibition or restriction" against discrimination between States or parts of States41. It stands adjacent to s 51(iii), which authorises the Parliament to make laws with respect 39 (1971) 122 CLR 353 at 396–397. 40 Australia, House of Representatives, Parliamentary Debates (Hansard), 18 March 1902 at 10967, cited in New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 73–74 [54] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2006] HCA 52. 41 Work Choices Case (2006) 229 CLR 1 at 127 [219]–[221]. to "bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth". Their drafting histories are closely connected. In the drafts proposed at the National Australasian Convention in Sydney in 189142 and the drafts reviewed at the Adelaide43 and Sydney44 sessions of the Convention in 1897, the powers in relation to both taxation and bounties were subject to a uniformity requirement. The provisions relating to customs and excise and bounties were separated into two clauses in 1898 and the former was overtaken by the general taxation power45, a separation maintained in the final draft adopted by the Convention46. From the first drafts of the Constitution considered at the National Australasian Convention in Sydney in 189147 up to those considered at the 1898 Convention session held in Melbourne48, it was proposed that the Commonwealth 42 Inglis Clark Draft, 1891, cll 45(I), 55, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 85, 87; Kingston Draft, 1891, Pt XII, cl IV, reproduced in Williams, The Australian Constitution: Documentary History, (2005) at 129; First Official Draft, Sydney, 1891, cl 30(2), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 143; Final Draft, Sydney, 1891, cl 52(2), (3), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 446. 43 Adelaide Draft, 1897, cl 50(II), (III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 509. 44 Sydney Draft, 1897, cl 52(II), (III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 777. 45 Melbourne Draft, 1898, cl 52(II), (III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 873. 46 Final Draft, 1898, cl 51(II), (III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 1127. 47 Inglis Clark Draft, 1891, cll 45(I), 55, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 85, 87; Kingston Draft, 1891, Pt XII, cl IV, reproduced Documentary History, (2005) at 129; First Official Draft, Sydney, 1891, cl 30(2), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 143; Final Draft, Sydney, 1891, cl 52(3), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 446. in Williams, The Australian Constitution: 48 Adelaide Draft, 1897, cl 50(III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 509; Sydney Draft, 1897, cl 52(III), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 777; Melbourne Draft, 1898, cl 52(II), reproduced in Williams, (Footnote continues on next page) Parliament's power to impose taxation should be "uniform" throughout the Commonwealth. That constraint appeared in cl 55 of Inglis Clark's draft49, which informed much of the draft adopted by the 1891 Convention. It also appeared in Charles Kingston's draft50. It was inspired by Art I, s 8(1) of the United States Constitution, which required that "all Duties, Imposts and Excises shall be uniform throughout the United States". At the time of the 1891 Convention, the uniformity requirement in Art I, s 8(1), which applied only to indirect taxes, had been considered by the Supreme Court of the United States in the Head Money Cases51. Miller J, delivering the opinion of the Court, said52: "The tax is uniform when it operates with the same force and effect in every place where the subject of it is found." The criterion of uniformity under Art I was understood to be geographical. However, that understanding was called into question shortly before the 1897 and 1898 Convention sessions by a separate concurring opinion of Field J in Pollock v Farmers' Loan and Trust Co53. Field J construed the uniformity requirement as forbidding a tax-free threshold and the imposition of different rates of the same tax on property income according to whether the income was derived by natural persons or various classes of corporation54. That opinion raised a concern at the National Australasian Convention which led to a change in the text of what became s 51(ii). The Australian Constitution: A Documentary History, (2005) at 922; cf Final Draft, 1898, cl 51(II), reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 1127. 49 Inglis Clark Draft, 1891, cl 55, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 87. 50 Kingston Draft, 1891, Pt XII, cl IV, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 129. 51 Edye v Robertson 112 US 580 (1884). 52 112 US 580 at 594 (1884). 54 157 US 429 at 595 (1895). The observations were not part of the ratio of the Court as the challenged law was held by the majority to be invalid on the basis that the tax was a direct tax, which did not attract the uniformity requirement: 157 US 429 at 583 (1895); see also at 607 per Field J. The change from a requirement of uniformity to a prohibition against discrimination appeared in the draft Constitution produced at the Melbourne session of the Convention on 12 March 189855. It was explained by Edmund Barton as a cautious response to the "expressions" in the opinion of Field J in Pollock. In moving his amendment, Barton said56: "I think that although the word 'uniform' has the meaning it was intended to have—'one in form' throughout the Commonwealth—still there might be a difficulty, and litigation might arise about it, and prolonged trouble might be occasioned with regard to the provision in case, for instance, an income tax or a land tax was imposed. What is really wanted is to prevent a discrimination between citizens of the Commonwealth in the same circumstances." He described the amendment as preventing discrimination "or any form of tax which would make a difference between the citizen of one state and the citizen of another state, and to prevent anything which would place a tax upon a person going from one state to another."57 Professor Harrison Moore, writing in 1910, summed up the concerns enlivened by the opinion of Field J. The uniformity requirement, he said, "was more than the federal spirit required; it prevented not merely discrimination among the States, but discrimination in the case of individuals", so the Convention "adopted terms of geographical limitation."58 Quick and Garran characterised the constraint in s 51(ii) as a "limitation ... provided for federal reasons"59 being directed against "a system of taxation 55 Clause 52(II), reproduced Documentary History, (2005) at 954 read with the statements at 802 regarding Document 31.7B. in Williams, The Australian Constitution: 56 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 11 March 1898 at 2397. 57 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 11 March 1898 at 2397. 58 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed 59 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, designed to press more heavily on people or property in some States than on people or property in other States."60 Thus61: "to impose a high tax on commodities or persons in one State and a low tax on the same class of commodities or persons in another State, would be to discriminate. Such discriminations are forbidden, and uniformity of taxation throughout the Commonwealth is an essential condition of the validity of every taxing scheme." Quick and Garran characterised the constraint in s 51(ii) as "practically the same in substance as the requirement of Art 1, s 8, sub-s 1, of the United States Constitution"62. That conclusion rested upon the unstated but correct assumption that what Field J had said did not state the law in the United States before or after Pollock. The connection between Art I, s 8(1) and s 51(ii), reflected in the drafting history of s 51(ii), led to submissions in this case about decisions of the Supreme Court of the United States on the uniformity requirement. Some of them should be mentioned. The Head Money Cases and Pollock have been referred to. The geographical character of the uniformity requirement, rejected by Field J in Pollock, was reaffirmed in Knowlton v Moore63. White J, delivering the opinion of the Court, quoted one of the delegates to the Constitutional Convention of 1787, Luther Martin, who observed that some duties might be laid on articles little used in some States and much used in others64: "in which case, the first would pay little or no part of the revenue arising therefrom, while the whole or nearly the whole of it would be paid by the last, to wit, the States which use and consume the articles on which imposts and excises are laid." Much, of course, depends upon the level of generality of the requirement for uniformity or non-discrimination. The requirement for geographical uniformity 60 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 61 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 62 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 63 178 US 41 (1900): a case concerning death duties. 64 178 US 41 at 106 (1900). in the United States was pitched by the decisions of the Supreme Court at a level of generality permitting differences across State boundaries in specific applications of the law. At a level of generality appropriate to its federal purpose, the non-discrimination requirement in s 51(ii) excludes, from legislative power with respect to taxation, laws which make distinctions between States or parts of States which are inconsistent with the economic unity of the Commonwealth and the status of the States and their people as equals inter se in the Federation. That level of generality does not require the exclusion from the scope of the taxation power of a uniform rule incorporating adjustments of liabilities that take account of liabilities imposed by State laws. Reflecting that concept of uniformity informed by federal considerations, the Supreme Court of the United States in Florida v Mellon65 rejected as "without merit" a contention that a federal inheritance tax was not uniform because it allowed for deductions of State inheritance taxes when not all States imposed such taxes. All that the Constitution required was that66: "the law shall be uniform in the sense that by its provisions the rule of liability shall be the same in all parts of the United States." An analogous issue arose in Phillips v Commissioner of Internal Revenue67, which concerned a federal law for recovery of corporate taxes from stockholders who had received the assets of a dissolved corporation. The Court did not accept an argument that the law offended Art I, s 8(1) on the basis that the liabilities might differ from State to State because of differences in State laws. Brandeis J, delivering the opinion of the Court, said that68: "The extent and incidence of federal taxes not infrequently are affected by differences in state laws; but such variations do not infringe the constitutional prohibitions against delegation of the taxing power or the requirement of geographical uniformity." The "settled doctrine" of the Court that "the uniformity exacted is geographical, not intrinsic" was reaffirmed in Steward Machine Co v Davis69. 66 273 US 12 at 17 (1927). 68 283 US 589 at 602 (1931). 69 301 US 548 at 583 (1937) per Cardozo J, delivering the opinion of the Court. What might be thought to be a limiting decision was reached in 1983 in United States v Ptasynski70. The Supreme Court held that the Crude Oil Windfall Profit Tax Act of 1980, which exempted from the tax which it imposed domestic crude oil produced from wells within a defined geographical area in Alaska, was valid. The exemption was found not to have been drawn on State political lines, but to reflect a legislative judgment that unique climatic and geographic conditions required that oil produced from the exempt area be treated as a separate class of oil71. The general principle was that72: "The Uniformity Clause gives Congress wide latitude in deciding what to tax and does not prohibit it from considering geographically isolated problems." They quoted an observation of Dixon CJ The plaintiffs submitted that the United States decisions were "not on point". in Deputy Federal Commissioner of Taxation v Brown73 that s 51(ii) "may not be the same as art 1, s 8 of the Constitution of the United States"74. In its context, which concerned the application of s 79 of the Judiciary Act 1903 (Cth) in taxation recovery proceedings, the observation was not apposite to the plaintiffs' proposition. The plaintiffs went further and characterised the Supreme Court's decisions on Art I, s 8(1) as "illogical" and "appear[ing] to neuter the requirement for uniformity."75 The plaintiffs' submissions on the utility of the decisions of the Supreme Court 71 462 US 74 at 78 (1983) per Powell J, delivering the opinion of the Court. 72 462 US 74 at 84 (1983). 73 (1958) 100 CLR 32; [1958] HCA 2. 74 (1958) 100 CLR 32 at 39; the balance of the sentence being "but what the Supreme Court has said about State law in the collection of federal taxes seems to me to be true of our system." 75 The plaintiffs cited, in support of their criticism of the United States decisions, a trenchant academic article: Claus, "'Uniform Throughout the United States': Limits on Taxing as Limits on Spending", (2001) 18 Constitutional Commentary 517 at 522-529. Not surprisingly, a variety of academic perspectives have been expressed in relation to decisions of the United States Supreme Court on Art I, s 8(1): eg Lund, "The Uniformity Clause", (1984) 51 University of Chicago Law Review 1193 especially at 1200; Norton, "The Limitless Federal Taxing Power", (1985) 8 Harvard Journal of Law and Public Policy 591 at 604–605; Eggleston, "United States v Ptasynski: A Windfall for Congress", (1984) 61 Denver Law Journal 395 at 402. on Art I, s 8(1) should not be accepted. They reduce to a complaint about the level of generality at which the uniformity requirement in Art I, s 8(1) has been interpreted. The drafting history of s 51(ii) does not support an argument that the non- discrimination limitation differs fundamentally from the uniformity requirement in Art I, s 8(1) as it was understood before and after the "expressions" of Field J in Pollock. Quick and Garran's treatment of the two provisions as equivalent is supportive of that proposition, as are the observations of Harrison Moore. While decisions of the Supreme Court of the United States on uniformity cannot automatically be treated as applicable to the non-discrimination constraint in s 51(ii), they are appropriate sources of comparative constitutional law in its construction. In each case the principle underlying the limitation is a federal principle. In this country it allows the Commonwealth Parliament to make laws with respect to taxation which, by reason of differing circumstances, including State legal regimes, may have different effects in different States. As appears below, the principle does not preclude the Commonwealth Parliament from incorporating in its taxation laws uniform provisions of general application providing adjustments to the liabilities which they impose by reference to liabilities imposed under State law. It has done so for very many years. Drafting history — s 99 Section 99 of the Constitution provides: "The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof." Section 99 was inspired by Art I, s 9(6) of the United States Constitution, which provides that: "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another". Clause 54 of Inglis Clark's draft in 1891, like the United States provision, prohibited preference to the "ports of one Province over those of another" and added "nor shall vessels bound to or from one Province be obliged to enter or clear or pay duties in another."76 Kingston's draft contained a similar provision77. In the final draft, which emerged from the 1891 Sydney session of the 76 Inglis Clark Draft, 1891, cl 54, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 87. 77 Kingston Draft, 1891, Pt XII, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 130. Convention, the equivalent provision, under the heading "Equality of Trade", was cl 11 of Ch IV, entitled "Finance and Trade" and provided78: "Preference shall not be given by any law or regulation of commerce or revenue to the ports of one part of the Commonwealth over those of another part of the Commonwealth." The no-preference provision, which emerged from the 1897 sessions of the Convention as cl 95, prohibited preference to the ports of one State over the ports of another with the addition that any law or regulation derogating from freedom of trade and commerce between different parts of the Commonwealth should be null and void79. A number of amendments were debated at the Melbourne session of the Convention in 1898. There was substantive discussion at that session which, among other things, canvassed the necessity for the provision and whether it should apply to State laws. The final text of s 99 reflected in substance wording proposed by Edmund Barton80. Quick and Garran viewed s 99 in its application to taxation laws as adding little, if anything, to s 51(ii). They said81: "This section, therefore, extends to all laws and regulations of trade, commerce, and revenue, the condition which is elsewhere imposed with regard to laws dealing with taxation—viz, that they shall not discriminate between States or parts of States." Its object was "to prevent federal favoritism and partiality in commercial and other kindred regulations."82 A similar view of the relationship between the uniformity and no-preference rules in Art I, s 8(1) and Art I, s 9(6) of the United States Constitution had been expressed in Knowlton v Moore83, in which the 78 Final Draft, Sydney, 1891, Ch IV, cl 11, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 454. 79 Final Draft, Adelaide, 1897, cl 95, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 606. 80 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 22 February 1898 at 1329. 81 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 82 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, Supreme Court held that, although couched in different language, they had "absolutely the same significance."84 This Court's treatment of the relationship between the non-discrimination and no-preference limitations recognises that "while preference necessarily involves discrimination or lack of uniformity, the latter does not necessarily involve the former."85 In this case that has the consequence that if the MRRT Act cannot be said to discriminate within the meaning of s 51(ii) it cannot be said to give a preference within the meaning of s 99. The difficulty of identifying a prohibited preference given to one State over another where there were dissimilar circumstances was recognised by Quick and Garran. They foreshadowed the application of a criterion of reasonableness to the characterisation of preferences86: "If a difference of treatment is arbitrary, or if its purpose is to advantage or prejudice a locality, it is undue and unreasonable, and is accordingly a preference. If on the other hand the difference of treatment is the reasonable result of the dissimilarity of circumstances—or if it is based on recognized and reasonable principles of administration—it is no preference." That approach to characterisation was reflected in the general observation about the concept of discrimination made by Gaudron, Gummow and Hayne JJ in Austin v The Commonwealth87, and quoted by the majority in Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) in its discussion of the application of s 9988: "The essence of the notion of discrimination is said to lie in the unequal treatment of equals or the equal treatment of those who are not equals, where the differential treatment and unequal outcome is not the product of 84 178 US 41 at 104 (1900). 85 Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 423 [88] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ, citing Elliott v The Commonwealth (1936) 54 CLR 657 at 668 per Latham CJ, see also at 683 per Dixon J. 86 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 87 (2003) 215 CLR 185 at 247 [118]. 88 (2004) 220 CLR 388 at 424 [89]. a distinction which is appropriate and adapted to the attainment of a proper objective." (footnotes omitted) Their Honours' observation did not amount to a qualification justifying a law which would otherwise exceed the constitutional limitations. It set out a criterion for characterisation of a law as discriminatory for the purposes of s 51(ii). It was invoked by the Commonwealth in its submissions. The plaintiffs submitted that the reasoning of the majority in Permanent Trustee in this respect should not be followed. That submission should not be accepted. Before considering it further, however, it is desirable to consider the concepts of discrimination and preference in ss 51(ii) and 99 as they have emerged from the decisions of this Court. Sections 51(ii) and 99 — discrimination, preference and differential operation The uniformity requirement in the draft Constitution, as it stood after the Convention session held in Adelaide in 1897, attracted a "friendly suggestion"89 from the Colonial Office in the form of a question: "does 'uniform' mean uniform in law, or uniform in effect?"90 When Edmund Barton moved his amendment to replace uniformity with non-discrimination he made clear that the answer was "uniform in law". Laws with respect to taxation were to be "one in form" throughout the Commonwealth91. That approach was reflected in the first reported judicial consideration of s 51(ii), which was undertaken by the Full Court of the Supreme Court of Queensland, in The Colonial Sugar Refining Co Ltd v Irving92. Sir Samuel Griffith, then Chief Justice of Queensland and one month short of his appointment as the first Chief Justice of this Court, observed, consistently with the drafting history of s 51(ii), that93: "the discrimination must depend upon the geographical position, and not upon the accident of whether things happen to be found in one State or in another." 89 So described by Colonial Secretary Joseph Chamberlain in a covering letter to George Reid in July 1897, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 714. 90 Memorandum C, "Australian Federal Constitution. Criticisms on the Bill", reproduced in Williams, The Australian Constitution: A Documentary History, 91 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 11 March 1898 at 2397. 92 [1903] St R Qd 261. 93 [1903] St R Qd 261 at 276–277, Cooper J agreeing at 277, Real J agreeing at 281. The Full Court held that a Commonwealth law, imposing liability to excise duty on goods and providing an exemption for goods which had been subject to excise duties under State laws, did not discriminate within the meaning of s 51(ii). The "The rule laid down by the Act is a general one, applicable to all the States alike, and the fact that it operates unequally in the several States arises not from anything done by the Parliament, but from the inequality of the duties imposed by the States themselves." The plaintiffs submitted that a Commonwealth tax cannot impose different tax rates on different taxpayers in different States even when the result is that the total tax burden, both Commonwealth and State, upon all taxpayers is the same. They argued that CSR did not apply to such a case because in CSR the impugned duty was made payable on all sugar on which customs or excise duty had not been paid pursuant to State laws before 8 October 1901. That criterion of liability was said to identify a class of goods in respect of which excise duty was payable and to which it applied uniformly. That may be one way of characterising the tax in CSR. But, as appears from the judgments of the Full Court and the Privy Council, the basis upon which the tax was upheld was not so narrowly framed95. It is not controversial that a law which is uniform across the Commonwealth and does not in terms discriminate between States or parts of States can nevertheless have different effects between and within the States because of the circumstances upon which it operates, including the different State legal regimes with which it interacts. An example in the latter category from the United States is a law of the kind considered in Phillips v Commissioner of Internal Revenue96, referred to earlier in these reasons. It may be accepted that a Commonwealth law with respect to taxation which expressly provides, in a uniform rule, for the adjustment of the liabilities it imposes by reference to liabilities imposed by State laws is not logically completely congruent with a law which has differential effects across State boundaries or between parts of States because of its interaction with particular State laws. That does not mean, however, that such a law discriminates between States or parts of States. The term "discriminate" may vary in its precise meaning according to its context and can be difficult to define and apply. However that may be, as interpreted by the decisions of this Court on s 51(ii), it 94 Colonial Sugar Refining Co Ltd v Irving [1906] AC 360 at 367. 95 [1903] St R Qd 261 at 276–277; [1906] AC 360 at 367. does not place the MRRT Act beyond power. As the plurality said of the concept of discrimination generally in Bayside City Council v Telstra Corporation Ltd97: "It involves a comparison, and, where a certain kind of differential treatment is put forward as the basis of a claim of discrimination, it may require an examination of the relevance, appropriateness, or permissibility of some distinction by reference to which such treatment occurs, or by reference to which it is sought to be explained or justified." (footnote omitted) Their Honours went on to emphasise that judgments about relevance, appropriateness or permissibility of a distinction may be influenced strongly by context98. The Commonwealth submitted that a correct formulation of the concept of discrimination in s 51(ii) was to be found in the judgment of Isaacs J in his dissent in R v Barger99, the first reported decision of this Court on s 51(ii). "Discrimination between localities in the widest sense means that, because one man or his property is in one locality, then, regardless of any other circumstance, he or it is to be treated differently from the man or similar property in another locality." Higgins J reasoned along similar lines and observed that it would not be discrimination between States or parts of States if a graduated income tax were introduced when incomes were higher in one State than in another101. Controversy later attended another observation made by Isaacs J, in the same judgment, that discrimination under s 51(ii) was "preference of locality merely because it is locality, and because it is a particular part of a particular State."102 Although quoted and approved by the Privy Council in W R Moran Pty 97 (2004) 216 CLR 595 at 629–630 [40]; [2004] HCA 19. 98 (2004) 216 CLR 595 at 630 [40]. 99 (1908) 6 CLR 41; [1908] HCA 43. 100 (1908) 6 CLR 41 at 110. 101 (1908) 6 CLR 41 at 133. 102 (1908) 6 CLR 41 at 108. Ltd v Deputy Federal Commissioner of Taxation (NSW)103, it was a proposition which many years later in Commissioner of Taxation v Clyne104 Dixon CJ had the "greatest difficulty in grasping"105 and which Professor Geoffrey Sawer critically characterised as establishing a special criterion of "Stateishness"106. The majority in Barger107 took a stronger view of the prohibition against discrimination in s 51(ii) in its application than did Isaacs and Higgins JJ but did not in terms disagree with the "widest sense" of discrimination formulated by Isaacs J. Moreover, the primary finding of the majority was that the impugned legislation, which provided for the exemption from excise of certain articles according to labour conditions in the area in which the articles were manufactured, was not a law with respect to taxation. Their secondary finding, that it discriminated between States or parts of States, was necessarily made on the hypothesis that the primary finding was wrong. Their conclusion as to discrimination was reached in the shadow of the reserved powers doctrine, which the majority described as a rule which was "different, but ... founded upon the same principles."108 In that setting a strong view of the prohibition was not surprising. In a passage relied upon by the plaintiffs, the majority also distinguished CSR, observing that109: "if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity." Despite their dissent in Barger, the differential operation of laws permitted under the approach taken by Isaacs and Higgins JJ did not differ markedly from that permitted in later cases and in decisions on Art I, s 8(1) by the United States Supreme Court. The formulation by Isaacs J of discrimination in the "widest sense" was expressly adopted and applied in Cameron v Deputy 103 (1940) 63 CLR 338; [1940] AC 838. 104 (1958) 100 CLR 246; [1958] HCA 10. 105 (1958) 100 CLR 246 at 266. 106 "Commonwealth Taxation Laws—Uniformity and Preference", 32 Australian Law Journal 132. 107 Griffith CJ, Barton and O'Connor JJ. 108 (1908) 6 CLR 41 at 72. 109 (1908) 6 CLR 41 at 70–71. Federal Commissioner of Taxation110. Starke J drew the necessary distinction between a discriminatory tax law and a non-discriminatory tax law which has a differential operation or effect111: "A law with respect to taxation applicable to all States and parts of States alike does not infringe the Constitution merely because it operates unequally in the different States—not from anything done by the law-making authority, but on account of the inequality of conditions obtaining in the respective States." Knox CJ and Powers J, in James v The Commonwealth112, also expressly adopted the formulation by Isaacs J in Barger and his equation of the non-discrimination limitation in s 51(ii) with the no-preference rule in s 99113. Higgins J, "[a]fter twenty years", adhered to what he had said in Barger and asserted its relevance to s 99 "as one cannot conceive of any preference without discrimination"114. Starke J adhered to what he had said in Cameron115: "if a law is not applicable to all States alike, then it operates unequally between the States, and discriminates as a law between them." As Dennis Rose wrote in 1977, what Isaacs J said in his often quoted definition of discrimination in the "widest sense" had nothing to do with the proposition in the same judgment that discrimination for the purposes of s 51(ii) is limited to discrimination between localities as States or as parts of States116. 110 (1923) 32 CLR 68 at 72 per Knox CJ, 76 per Isaacs J, 78–79 per Higgins J, 79 per Rich J; see also at 79 per Starke J; [1923] HCA 4 (in which the Court held invalid a regulation under the Income Tax Assessment Act 1915 (Cth) fixing the value of various classes of livestock by State for the purpose of calculating profits and assessable income). 111 (1923) 32 CLR 68 at 79. 112 (1928) 41 CLR 442; [1928] HCA 45. 113 (1928) 41 CLR 442 at 455–456. 114 (1928) 41 CLR 442 at 460. 115 (1928) 41 CLR 442 at 464. 116 Rose, "Discrimination, Uniformity and Preference—Some Aspects of the Express Constitutional Provisions", in Zines (ed), Commentaries on the Australian Constitution, (1977) 191 at 194. Rose correctly observed that much of the subsequent support for what Isaacs J had said referred to the "widest sense" formulation. In Elliott v The Commonwealth117, which involved the trade and commerce aspect of s 99, the Court, by majority118, held valid regulations for the licensing of seamen applicable only to ports specified by the Minister. Latham CJ followed the approach taken by Isaacs and Higgins JJ in Barger, by the majority in Cameron, and by Knox CJ and Powers J in James. The Commonwealth, he held, was empowered to adjust its legislation to the varying circumstances of particular ports119. Rich J reasoned similarly, but more briefly120. Starke J held that legislation which discriminated between localities and made special rules for various occupations was "often desirable, but ... by no means preferences prohibited by sec 99."121 Dixon J, in dissent, also took the view that discrimination between States did not necessarily involve a preference of one over the other122. Evatt J acknowledged that Barger remained the leading authority on s 99, but preferred the view of the majority of the Court in that case, that s 99 "forbids all preferences which arise solely as a legal consequence of association with or reference to any locality in 'Australia,' ie, 'one or more of the States of Australia.'"123 In Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd124, little was said by the High Court about discrimination. The legislative scheme in issue comprised a Commonwealth law which imposed a uniform tax coupled with a law appropriating money for grants to Tasmania. The grants were made to enable the State to pay rebates to Tasmanian flour and wheat producers on the tax which they had paid to the Commonwealth. Once it was accepted that the relevant taxation laws, applying as they did a common rule, did not 117 (1936) 54 CLR 657. 118 Latham CJ, Rich, Starke and McTiernan JJ, Dixon and Evatt JJ dissenting. 119 (1936) 54 CLR 657 at 676 — on the basis that discrimination forbidden by s 99 was "not merely locality as such, but localities which for the purpose of applying the discrimen are taken as States or parts of States": at 675. 120 (1936) 54 CLR 657 at 678. 121 (1936) 54 CLR 657 at 680. 122 (1936) 54 CLR 657 at 683. 123 (1936) 54 CLR 657 at 690. 124 (1939) 61 CLR 735; [1939] HCA 27. discriminate, the conclusion that the scheme as a whole did not contravene s 51(ii) did not require exegesis of the concept of discrimination. To that extent, the approval by the Privy Council of what Isaacs J said in Barger was not directly apposite to its reasoning, which rejected the attack on the scheme as one "really based on the exercise by the Commonwealth Parliament of its powers under sec 96."125 Commissioner of Taxation v Clyne126 involved, inter alia, a question whether s 79A of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth), which prescribed allowable deductions in different amounts for residents of different geographical zones, offended against the restrictions in ss 51(ii) and 99. That question was not answered for reasons to do with the way the issues fell out in the case. However, Dixon CJ, with whom McTiernan, Williams, Kitto and Taylor JJ agreed, rejected the proposition, derived from the judgment of Isaacs J in Barger, that taxing legislation would not discriminate unless in some way the parts of the State in respect of which it discriminates were selected by virtue of their character as parts of a State127. Dixon CJ said128: "I find myself unable to appreciate the distinction between the selection by an enactment of an area in fact forming part of a State for the bestowal of a preference upon the area and the selection of the same area for the same purpose 'as part of the State'." That observation did not involve any rejection of the formulation by Isaacs J of "discrimination" in its "widest sense" as used in s 51(ii). Under the general principle that a non-discriminatory law may have different effects according to its interaction with different State laws, Taylor J in Conroy v Carter129, with the concurrence of Kitto and Windeyer JJ, characterised as non-discriminatory the deductibility under Commonwealth income tax laws of sums paid by taxpayers for land tax imposed under any law of a State. He said130: 125 (1940) 63 CLR 338 at 349; [1940] AC 838 at 857. 126 (1958) 100 CLR 246. 127 (1958) 100 CLR 246 at 266. 128 (1958) 100 CLR 246 at 266. 129 (1968) 118 CLR 90; [1968] HCA 39. 130 (1968) 118 CLR 90 at 101, Kitto J agreeing at 96, Windeyer J agreeing at 104. is a provision which operates generally "This the Commonwealth and the fact that in some States there may be no legislation imposing land tax does not mean that it discriminates between the States." throughout The asserted discrimination in Conroy was related to liability for certain Commonwealth levies, which depended upon the existence or otherwise of arrangements between the Commonwealth and particular States. The Court divided evenly and, by a statutory majority, held the impugned provision invalid. However, nothing in the reasons of Menzies J, who wrote the principal judgment for that majority, conflicted with the observation of Taylor J concerning the deductibility of sums paid under State law from income assessable for the purposes of the Commonwealth law. The Commonwealth relied upon the statement by Menzies J, with which Barwick CJ and McTiernan J agreed131: "in determining whether a law imposes such a discriminatory burden, it is to the law itself that attention must be paid, not to the laws of any State or States." The passage from the judgment of Taylor J, including what his Honour said about the deductibility of State land tax from assessable income, was footnoted by Gleeson CJ, Gummow and Hayne JJ in support of their Honours' observation in Austin v The Commonwealth132: "A law with respect to taxation, in general, does not discriminate in the sense spoken of in s 51(ii) if its operation is general throughout the Commonwealth even though, by reason of circumstances existing in one or more of the States, it may not operate uniformly." The inclusion, under the rubric of differential but non-discriminatory operation, of a taxation law providing for the deductibility of expenditures incurred under State laws may unite categories of differential operation which are not precisely logically congruent. It nevertheless reflects an interpretation of the non- discrimination constraint at a level of generality which is consistent with its federal purpose. 131 (1968) 118 CLR 90 at 103. 132 (2003) 215 CLR 185 at 247 [117]. Their Honours also cited Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd (1939) 61 CLR 735 at 764 and W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) (1940) 63 CLR 338 at 349; [1940] AC 838 at 857. The Commonwealth invoked the longstanding deductibility, for income tax purposes, of State payroll tax, State land tax, State royalties and "indeed any State impost that is an expense or outgoing incurred by a taxpayer in the circumstances identified in s 8–1(a) or (b) of the Income Tax Assessment Act 1997 (Cth)" ("the ITAA 1997"). The plaintiffs argued that there is a critical difference between the way in which royalty credits affect the imposition of the MRRT and the way in which deductions for State imposts are permitted by the ITAA 1997. That distinction was, with respect, an irrelevant matter of form rather than of substance. It may be accepted that the longstanding provision in taxation laws for deductions for expenses which may include liabilities under State laws does not itself provide the determinative answer to the constitutional question in any given case: does a law of taxation which makes such allowances impermissibly discriminate between States? Nevertheless, the subsistence of such laws over a long period of time, reflecting a practical and legitimate interaction in Commonwealth and State financial relationships, may constitute "circumstances" of the kind to which Windeyer J referred in the Payroll Tax Case which in turn inform the contemporary interpretation and application of the Constitution. They may, on that basis, be relevant to the application of a criterion of the kind foreshadowed by Quick and Garran in determining whether an impugned law discriminates or gives a preference within the meaning of the limitations imposed by ss 51(ii) and 99. That question is considered in the next section of these reasons. Reasonable differences The Commonwealth submitted that even if the MRRT Act gave rise to differential treatment or unequal outcomes as between States, it did not follow that it was a law made "so as to discriminate between States or parts of States". Relying upon the passage from Austin quoted in Permanent Trustee and set out earlier in these reasons133, the Commonwealth submitted that: the MRRT being a tax on profits, not on revenue, Parliament was entitled to conclude that profits could not accurately be identified without regard to costs and outgoings incurred in the course of deriving revenue — one such class of costs and outgoings being royalty payments made to the relevant State Government; the MRRT being a tax on above normal profits or economic rents, the Act proceeds on the basis that royalties may indirectly and at least in part constitute charges on the economic rents which the Act makes subject to taxation. To ignore State royalties in the calculation of the MRRT liability would be to risk imposing a tax on economic rents at a higher rate 133 See above at [31]. than intended or on profits that were merely necessary to preserve the economic viability of a mining project. On that basis, the Commonwealth submitted that any differential treatment or unequal outcome under the MRRT Act was the product of a distinction which was appropriate and adapted to the attainment of the objectives identified, each of which was a proper objective of the Parliament. The plaintiffs submitted, in effect, that such reasoning had no place in the characterisation of the MRRT Act as discriminatory or otherwise. If the law were unequally imposed it was prohibited by s 51(ii) regardless of the objectives. It should be noted that although the Commonwealth put its argument on the hypothesis, which it denied, that the MRRT Act had a differential treatment or unequal outcome as between States the constitutional question is one of discrimination or preference. What the Commonwealth seemed to argue as a matter of confession and avoidance was in truth an aspect of characterisation of the MRRT Act for the purposes of ss 51(ii) and 99. As explained earlier in these reasons, the constraints imposed by ss 51(ii) and 99 of the Constitution serve a federal purpose — the economic unity of the Commonwealth and the formal equality in the Federation of the States inter se and their people. Those high purposes are not defeated by uniform Commonwealth laws with respect to taxation or laws of trade, commerce or revenue which have different effects between one State and another because of their application to different circumstances or their interactions with different State legal regimes. Nor are those purposes defeated merely because a Commonwealth law includes provisions of general application allowing for different outcomes according to the existence or operation of a particular class of State law. A criterion for determining whether that category of Commonwealth law discriminates or gives a preference in the sense used in ss 51(ii) and 99 is whether the distinctions it makes are appropriate and adapted to a proper objective. The Commonwealth Places (Mirror Taxes) Act 1998 (Cth) ("the Mirror Taxes Act") fell into the category just described, applying as it did the different tax laws of each State to Commonwealth places within that State. As this Court held in Permanent Trustee, s 51(ii) did not apply at all to the Act because it was a law made under s 52(i)134. As a law of revenue, however, the Act did attract the no-preference limitation in s 99. On reasoning applicable to s 51(ii), the Court 134 (2004) 220 CLR 388 at 421 [79], applying Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630 at 662, 678–680; [1996] HCA 58. held that the Mirror Taxes Act did not give a preference to one State or any part thereof over another State or any part thereof. The majority said135: "The scheme of the Mirror Taxes Act may produce differences in revenue outcomes between States, but that mirrors the differences that exist between the different taxation regimes from State to State. The differential treatment and unequal outcome that is involved here is the product of distinctions that are appropriate and adapted to a proper objective." The objective of the impugned provision in that case was non-discriminatory. So too are the objectives of the impugned provisions of the MRRT Act. In general terms, they are those set out in the stated objectives of the Act referred to at the commencement of these reasons. The differences in the operation of the MRRT Act which arise out of its interaction with different royalty regimes serve those objectives. They are proper objectives, to which the impugned provisions are appropriate and adapted. The text, history, purpose and judicial exegesis of s 51(ii) require that the question whether the MRRT Act discriminates impermissibly be answered in the negative. It follows for reasons given earlier that the question whether the MRRT Act gives a preference contrary to s 99 is also to be answered in the negative. Conclusion The questions reserved should be answered: (ii) No. (iii) The plaintiffs. 135 (2004) 220 CLR 388 at 425 [91] per Gleeson CJ, Gummow, Hayne, Callinan and Hayne Bell HAYNE, BELL AND KEANE JJ. The minerals resource rent tax ("MRRT") is imposed by the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) (together "the Imposition Acts"). The assessment of the MRRT is provided for by the Minerals Resource Rent Tax Act 2012 (Cth) ("the MRRT Act"). In conformity with the intention declared in s 1-10 of the MRRT Act to tax "above normal profits" from certain mining operations, MRRT is not exigible until a miner's group mining profit exceeds a prescribed threshold. Under the MRRT Act, a liability to pay MRRT arises only when a miner derives an annual profit of a given amount after taking into account all deductions for expenditure (including of capital), all allowances (including those carried forward at uplifted rates) and any applicable tax offsets. Once MRRT is payable, however, the formula by which its amount is calculated operates so that a reduction in the mining royalty payable to a State government would, other things being equal, result in an equivalent increase in the amount of the MRRT liability, and an increase in the royalty would, other things being equal, result in an equivalent decrease in the miner's MRRT liability. As it happens, State mining royalties differ between the States within the federation. The plaintiffs, who are members of a group of companies which mine iron ore in Western Australia, brought proceedings in the original jurisdiction of this Court challenging the validity of the MRRT Act and of those provisions of the Imposition Acts which impose the tax. Pursuant to s 18 of the Judiciary Act 1903 (Cth), questions were reserved for determination by the Full Court on the basis of the parties' pleadings and documents referred to in the pleadings. The issues The plaintiffs founded their challenge to the validity of the MRRT Act and s 3 of each of the Imposition Acts (together "the MRRT Legislation") principally on the ground that s 51(ii) of the Constitution expressly precludes the imposition by the Commonwealth of a tax which would exact a greater amount of tax from a taxpayer whose mining operations are conducted in a State with a lower mining royalty rate than would be exacted from the same miner if the same mining operations were conducted by it in a State with a higher State royalty rate. The plaintiffs also contended for the same result by invoking the constitutional implication associated with this Court's decision in Melbourne Corporation v The Commonwealth136 and by reference to s 99 of the Constitution and its prohibition 136 (1947) 74 CLR 31; [1947] HCA 26. Hayne Bell against the Commonwealth, by any law or regulation of trade, commerce or revenue, giving "preference to one State or any part thereof over another State or any part thereof". Finally, the plaintiffs argued that the MRRT Legislation is invalid because it is inconsistent with s 91 of the Constitution. The Attorneys-General for the States of Queensland and Western Australia intervened to support the plaintiffs' challenge. These reasons will demonstrate that the plaintiffs' challenge fails and the questions reserved should be answered accordingly. The reasons will first provide a summary of the relevant legislative provisions and then deal, in turn, with s 51(ii), s 99, the Melbourne Corporation principle and s 91. The MRRT Legislation Each of the Imposition Acts provided in s 3(1) that MRRT payable under the MRRT Act "is imposed". Section 4 of each of the Imposition Acts provided for an "MRRT rate" of 22.5 per cent. The Imposition Acts operated in the alternative to each other: see s 3(2). It was not disputed that the Minerals Resource Rent Tax (Imposition—General) Act 2012 was the relevant Imposition Act for present purposes. The Revised Explanatory Memorandum to the Bills for the MRRT Legislation explained137 that the MRRT is a tax on "economic rents", which constitute "the return in excess of what is needed [by miners engaged in extracting iron ore, coal and some gases from the ground] to attract and retain factors of production in the production process". It went on to explain138 that "[a]s the MRRT taxes profits from minerals that are commonly subject to State and Territory royalties, it provides a credit for royalties". 137 Australia, Senate, Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Imposition—Excise) Bill 2011, Minerals Resource Rent Tax (Imposition— General) Bill 2011, Revised Explanatory Memorandum at 3. 138 Australia, Senate, Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Imposition—Excise) Bill 2011, Minerals Resource Rent Tax (Imposition— General) Bill 2011, Revised Explanatory Memorandum at 8 [1.25]. Hayne Bell The MRRT Legislation is complex; and it is unnecessary to grapple with all of its complexities. It is sufficient for the purposes of this case to refer only to the central provisions that bear upon the calculation of the MRRT. Calculating MRRT Section 1-10 of the MRRT Act provides that: "The object of this Act is to ensure that the Australian community receives an adequate return for its taxable resources, having regard to: the inherent value of the resources; and the non-renewable nature of the resources; and the extent to which the resources are subject to Commonwealth, State and Territory royalties. This Act does this by taxing above normal profits made by miners (also known as economic rents) that are reasonably attributable to the resources in the form and place they were in when extracted." MRRT is payable for an "MRRT year"139 by a miner in an amount equal to the sum of its MRRT liabilities for each of its "mining project interests"140 for that year. Section 10-1 of the MRRT Act provides that: "A miner is liable to pay MRRT, for an MRRT year, equal to the sum of its MRRT liabilities for each of its mining project interests for that year." Mining project interests are associated with "production rights" and, for present purposes, it is enough to notice that "production rights" include141 extraction rights conferred by a State government in respect of a particular geographical 139 Each MRRT year is a financial year and commences on 1 July: s 10-25. 140 This and other terms used in the MRRT Act are defined in the Dictionary set out in s 300-1. For the most part, it is sufficient to indicate, by the use of quotation marks, that a term is defined in s 300-1 without setting out the content of its definition. 141 See ss 15-5(2) and 15-15 together with the definition of "Australian law" in s 300-1 of the MRRT Act, which refers to the definition of that term in s 995-1(1) of the Income Tax Assessment Act 1997 (Cth). Hayne Bell part of the State. The mining project interests to which the MRRT Act applies are interests in relation to iron ore and coal (and some related substances), located in areas covered by a production right, which together are called "taxable resources"142. Section 10-5 of the MRRT Act provides that a miner's MRRT liability for a mining project interest for an MRRT year is to be worked out as follows: "MRRT liability = MRRT rate x (Mining profit – MRRT allowances)". Thus the amount of the MRRT liability for each mining project interest is calculated by subtracting from the "mining profit" certain "MRRT allowances". The sum so arrived at is then multiplied by the MRRT rate to establish the MRRT liability for each mining project interest. A miner's "mining profit" is calculated143 by deducting the miner's "mining expenditure" from its "mining revenue". The "mining revenue" for each mining project interest is determined in accordance with the provisions of Div 30 of the MRRT Act. The "mining expenditure" for each mining project interest is determined in accordance with Div 35 of the MRRT Act. The amounts to be deducted from mining revenue as mining expenditure do not include144 "excluded expenditure". Mining royalties payable to a State are one form of "excluded expenditure"145. If a miner's "group mining profit" for an MRRT year is less than $125 million, the miner is entitled146 to an "offset" for that year. If the group mining profit is less than or equal to $75 million, the amount of the offset is the sum of the miner's MRRT liabilities for each mining project interest, with the consequence that no MRRT is payable147. If a miner's group mining profit is greater than $75 million, but less than $125 million, the amount of the offset is to be calculated in accordance with s 45-10 and the miner will be liable to pay less than the amount that would be payable if MRRT at the rate of 22.5 per cent were to be applied to the full amount of the profit. 142 ss 15-5(4) and 20-5. 144 s 35-5(2). See also subdiv 35-B. 145 s 35-40(1)(a). 146 ss 10-15 and 45-10. 147 ss 10-15 and 45-5. Hayne Bell Taking account of royalties For the purposes of the MRRT Act, royalties payable under a State law by a miner in relation to a taxable resource extracted under authority of a production right are one form of "mining royalty"148. As already noted, amounts paid as a mining royalty are "excluded expenditure"149 and thus are not deductible from mining revenue as mining expenditure. Instead, amounts paid as a mining royalty are used to calculate150 the amount of a "royalty credit", and the amount of "available royalty credits" which does not exceed the mining profit is a "royalty allowance"151. is one form of "MRRT allowance"152 which is taken into account as part of the calculation153 of the MRRT liability for each mining project interest. A royalty allowance The "royalty credit" attributable to payment of a mining royalty is arrived at by dividing154 the liability for the mining royalty by the MRRT rate. If available royalty credits are not needed to offset the mining profit in any one year, they can be used155 in subsequent years. When available in subsequent years, the amount of the royalty credits is uplifted (to take account of the time value of money) as provided by s 60-25(2). The plaintiffs emphasised that the MRRT Act "is expressly designed so that, if more State royalties are payable, less MRRT is payable" and vice versa. As is later explained more fully, the plaintiffs submitted that two results followed. First, "a miner's actual liability to [pay] MRRT will vary from State to State, depending on the royalty rate applicable in that State". Second, "a State cannot reduce the royalty payable in respect of mining for iron ore, nor can it give a concession in respect of its royalty rate, nor can it change, favourably to 149 s 35-40(1)(a). 150 ss 60-20 and 60-25. 151 ss 60-10 and 60-15. Hayne Bell the miner, the basis of calculating royalty without the miner becoming liable to pay to the Commonwealth, as MRRT liability, the amount by which its liability to pay royalty to the State has been reduced". It followed, so the argument continued, that the MRRT Legislation in effect imposed a uniform cumulative rate of mineral rent throughout the Commonwealth, which discriminates between the States, by equating the "sacrifice" of miners in low royalty States with that of those in high royalty States and "imposing MRRT at a different effective rate in different States" (emphasis added). Section 51(ii) Section 51(ii) provides that, "subject to this Constitution", the Parliament may make laws with respect to "taxation; but so as not to discriminate between States or parts of States". In construing and applying s 51(ii), it is necessary to begin by identifying its place in the constitutional structure. It is a legislative power. The power is expressed very broadly, at least in the sense that "taxation" may take many forms. Apart from those forms of taxation dealt with in s 90 (duties of customs and of excise), the legislative power given by s 51(ii) is not exclusive to the federal Parliament. But the power is subject to some important limitations in addition to the express limiting clause contained within it: "but so as not to discriminate between States or parts of States". First, there is the prohibition in s 114 against the Commonwealth imposing "any tax on property of any kind belonging to a State". Second, s 99 provides that "[t]he Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof". Third, s 92 prohibits taxing interstate trade, commerce and intercourse. And fourth, there is in Melbourne the legislative power implied Corporation156 and later considered and applied Commonwealth157 and Clarke v Federal Commissioner of Taxation158. limitation on recognised Three textual points may then be made about the concluding words of s 51(ii). First, the reference to discriminating between "parts of States" suggests that the concluding words of s 51(ii) are to be read as directed against laws which discriminate between States, or parts of States, on the basis of geography or locality. "[P]arts of States" must be defined geographically. There is no textual 156 (1947) 74 CLR 31. 157 (2003) 215 CLR 185; [2003] HCA 3. 158 (2009) 240 CLR 272; [2009] HCA 33. Hayne Bell foundation for reading the reference to "States", as distinct from "parts of States", in any different way. Second, the concluding words of s 51(ii) do not speak of a law that discriminates against States or parts of States. The expression used is "so as not to discriminate between States or parts of States" (emphasis added). Third, it is necessary to recognise that the words "but so as not to discriminate" qualify a power to make laws with respect to taxation. And as already explained, the Commonwealth's power to make laws with respect to taxation is also limited by the provisions of ss 92, 99 and 114, and by the principle in Melbourne Corporation. The concluding words of s 51(ii) are a "positive prohibition or restriction"159 on the legislative power. Quick and Garran said160 of the limitation in s 51(ii) that: "This is a limitation which has been provided for federal reasons, viz, for the protection of States which might not possess sufficient strength in the Federal Parliament to resist the imposition of a system of taxation designed to press more heavily on people or property in some States than on people or property in other States." How then should the prohibition or limitation, "so as not to discriminate between States or parts of States", be understood? The plaintiffs accepted that a federal income tax imposed at the rate of 45 per cent on iron ore companies throughout Australia would not discriminate within the meaning of s 51(ii) of the Constitution, even though it might operate differently in different States. They accepted that such a law would not discriminate between States by reason only of the circumstance that, because Western Australia has the largest deposits of iron ore, Western Australian iron ore companies would contribute the largest amount of tax. And it was common ground that a federal income tax imposed at different rates in different States (say 40 per cent in New South Wales, 45 per cent in Queensland and 50 per cent in Western Australia) would discriminate between States, no matter what may be the reason for seeking to apply different rates of tax in the different States. There was no dispute that a law of this latter kind would contravene the constitutional limitation on power in s 51(ii) because it would impose different rates of tax based on the location of the subject of taxation in one State or another. 159 New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 127 [219]; [2006] HCA 52. 160 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, Hayne Bell The competing arguments about discrimination The plaintiffs argued that the MRRT Legislation contravened the limitation on the legislative power conferred by s 51(ii) because "in terms" the MRRT Legislation imposed a tax calculated and payable at a different rate for each State by reference to the different royalty rates of the various States. The MRRT Legislation was structured, the plaintiffs argued, "so as to impose MRRT on miners in different States at different effective rates". The MRRT Legislation was said to discriminate against the low royalty States by imposing an equalising burden of tax on mining operations in those States. There is considerable irony in the circumstance that the plaintiffs' argument, that the allowance made for State royalties invalidates the MRRT Legislation, would be obviated if the Parliament had made no allowance for those outlays, when that is a course that might fairly be said to be unfair to taxpayers. The plaintiffs argued that it is not correct to say that, because s 4 of each Imposition Act provided for an "MRRT rate" of 22.5 per cent, MRRT was imposed at a uniform rate throughout the Commonwealth. The plaintiffs submitted that the MRRT Legislation was enacted in the face of existing and different State royalty regimes. The MRRT liability is the product of the formula in s 10-5 of the MRRT Act, in which one element, the royalty allowance, varies from State to State. The consequence, the plaintiffs submitted, was that, as a matter of substance, the MRRT was imposed at different rates in different States and thus discriminated between States. The plaintiffs and Queensland emphasised that it was the royalty credits comprising the royalty allowance, and not the actual amount of royalty paid by a miner to a State, which ss 10-5 and 60-25 of the MRRT Act required to be deducted from mining profit before applying the MRRT rate to determine the MRRT liability. Section 60-25 required that royalty payments made by a miner be "grossed-up" by dividing them by the MRRT rate to determine the amount of the royalty credit. Thus, a miner which paid to a State royalties of $22.5 million was entitled to a royalty credit of $100 million (being the royalty payment divided by the MRRT rate of 22.5 per cent). Queensland submitted that the economic effect of ss 10-5 and 60-25 was the same as if the amounts paid for State royalty were deducted directly from the MRRT liability. Accordingly, so it was submitted, the effect of the MRRT Legislation was to impose on miners a uniform cumulative rate of what was described as "mineral rent". By contrast, the plaintiffs relied upon the same provisions to submit that mining profit was not taxed at a uniform MRRT rate. The plaintiffs sought to demonstrate this mathematically. If the only MRRT allowance a miner had was Hayne Bell a royalty allowance, the equation stated in s 10-5 ("MRRT liability = MRRT rate x (Mining profit – MRRT allowances)") could be rendered as "MRRT liability = (22.5 per cent x mining profit) – (22.5 per cent x royalty credit divided by 22.5 per cent)". That is, the plaintiffs submitted, "MRRT liability = (22.5 per cent x mining profit) – royalty credit". It followed, so the plaintiffs submitted, that in substance the MRRT liability was imposed on miners at different rates. The plaintiffs further submitted that the equations described also revealed that the "effective rate" of MRRT liability varied from State to State depending upon the amount paid for State royalty. That "effective rate" was to be calculated, the plaintiffs argued, by expressing the amount of MRRT liability as a percentage of the mining profit. The Commonwealth submitted that the MRRT Legislation did not prescribe or make any assumption about the amount or rate of royalty paid by a miner to a State and that any difference in State mining royalties is a consequence, not of the MRRT Legislation, but of the laws of the several States. Accordingly, so the Commonwealth submitted, the MRRT Legislation did not discriminate between States because it applied the same rules "throughout the Commonwealth even though, by reason of circumstances existing in one or other States, it may not operate uniformly"161 (emphasis added). The Commonwealth submitted, in effect, that to speak, as Queensland had in its submissions, of a single equalised "mineral rent" throughout the Commonwealth was to introduce irrelevant considerations into the debate about the validity of the MRRT Legislation. While economists might be disposed to speak of the taxes and royalties imposed by different polities as all being species of a genus identified as "economic rent", it is critical to the debate about validity to observe not only that the charges are imposed by different polities but also that there are important differences between the two imposts. Royalties can be seen as162 payments for the exercise of the right to exploit the property of another. Royalties are payable regardless of whether the exercise of those rights generates profit. But MRRT is payable only when a given level of profit is achieved after taking account of allowances and offsets. 161 Conroy v Carter (1968) 118 CLR 90 at 101 per Taylor J; [1968] HCA 39. See also at 103 per Menzies J; Austin v The Commonwealth (2003) 215 CLR 185 at 247 162 Stanton v Federal Commissioner of Taxation (1955) 92 CLR 630 at 639-642; [1955] HCA 56. Hayne Bell As to the plaintiffs' argument that the effective rate of the MRRT is not a uniform 22.5 per cent but is dependent upon the amount of royalty payments, the Commonwealth submitted that the assumption that royalty allowance would be the only MRRT allowance to be subtracted from mining profit is unrealistic. It is not necessary to explore that issue. More importantly, the Commonwealth submitted that the MRRT Act itself created no difference based on State locality. Earlier decisions about s 51(ii) There are relatively few decisions about the meaning and application of the limiting words of s 51(ii). The effect of those decisions may be described generally as being that discrimination has been found only when the relevant Act provided for the application of different rules according to locality and has not been established by showing only that application of the Act's provisions yields an assessment which would have been different if, by operating elsewhere, the taxpayer would have incurred different outgoings. It is, however, necessary to say something about the principal decisions. It is convenient to deal with them chronologically. Colonial Sugar Refining Co Ltd v Irving Section 4 of the Excise Tariff 1902 (Cth) provided that the time of the imposition of uniform duties of excise was 8 October 1901 at 4.00 pm "reckoned according to the standard time in force in the State of Victoria", and that "this Act shall be deemed to have come into operation at that time". The Act imposed a uniform excise duty on, among other products, manufactured sugar. Section 5 imposed duty on all dutiable goods which were manufactured or produced after the time when the duties were deemed to have been imposed, and also imposed duty on certain dutiable goods manufactured or produced before that time. The effect of the Excise Tariff 1902 was to exempt from duty goods on which excise duties had been paid under State legislation. The scale of State duties differed between the States. In Queensland, no excise duty was imposed on sugar. The Colonial Sugar Refining Company Limited argued that the Excise Tariff 1902 was a law with respect to taxation which discriminated between States. The argument was rejected by the Full Court of the Supreme Court of Queensland163 and, on appeal, by the Privy Council164. The proposition, central to the argument for invalidity, that discrimination was established by showing that the incidence of taxation varied from State to State was rejected in terms 163 The Colonial Sugar Refining Co Ltd v Irving [1903] St R Qd 261. 164 Colonial Sugar Refining Co Ltd v Irving [1906] AC 360. Hayne Bell directly applicable to the present matter. The Privy Council said165 that "[t]he rule laid down by the Act is a general one, applicable to all the States alike, and the fact that it operates unequally in the several States arises not from anything done by the Parliament, but from the inequality of the duties imposed by the States themselves" (emphasis added). Likewise, in the Full Court, Griffith CJ had concluded166 that the difference in the incidence of taxation was an inequality between individuals but not a discrimination between States. Griffith CJ said167 that "I do not think that we can have regard to the fact that, owing to the operation of the laws of the States, the incidence of taxation may be unequal in different States". It is important to recognise that Griffith CJ rested168 this conclusion on the proposition that, were this not so, "the power of the Federal Parliament would be limited by the laws of the States, and by the mode in which the States had exercised their powers of legislation". R v Barger In R v Barger169, this Court was required to consider the validity of an excise duty, imposed by the Excise Tariff 1906 (Cth), under which goods manufactured by persons who observed federally prescribed award conditions were exempt. The award conditions differed from State to State according to local circumstances. Whether goods were dutiable therefore depended upon the person's compliance with the prescribed conditions of employment. The Act was held to be invalid. Barger was decided in accordance with the then accepted doctrine of reserved State powers170. The reasons given by the Court must be considered in that light. None the less, the principles relied on by Griffith CJ, Barton and O'Connor JJ in concluding that the impugned law did discriminate between States may be understood as consistent with the views expressed by Griffith CJ in Colonial Sugar Refining and not affected by reserved powers reasoning. 165 [1906] AC 360 at 367. 166 [1903] St R Qd 261 at 276. 167 [1903] St R Qd 261 at 277. 168 [1903] St R Qd 261 at 277. 169 (1908) 6 CLR 41; [1908] HCA 43. 170 (1908) 6 CLR 41 at 67. Hayne Bell Whether the application of those principles required the conclusion that the impugned legislation was invalid divided the Court in Barger. And in Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd171, Evatt J expressed the view that the conclusion reached by the majority in Barger was wrong and inconsistent with the reasoning of the Court in Cameron v Deputy Federal Commissioner of Taxation172. It is, however, not necessary to decide in this matter whether the actual conclusion reached in Barger was right. Much emphasis was given in argument in this matter to a passage taken from the reasons of the majority in Barger which dealt with the advice of the Privy Council in Colonial Sugar Refining. Their Honours said173 that the Privy Council had held in Colonial Sugar Refining that "the discrimination, if any, was not effected by the Act imposing the Excise duty, but by the operation of the State laws previously existing". Their Honours went on to say174: "E converso, if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity." The plaintiffs and Queensland argued that the MRRT Legislation presents this converse case. They submitted that the amount payable as MRRT varied in inverse proportion to the royalties in the several States "so as to make the actual incidence of the burden [of Commonwealth and State taxation on miners] practically equal". The converse case postulated in Barger must be understood in light of all that was said in the reasons of Griffith CJ, Barton and O'Connor JJ. Their Honours recognised the great differences that can be seen between different parts of Australia. They said175 that: "The fact that taxation may produce indirect consequences was fully recognized by the framers of the Constitution. They recognized, 171 (1939) 61 CLR 735 at 781; [1939] HCA 27. 172 (1923) 32 CLR 68; [1923] HCA 4. 173 (1908) 6 CLR 41 at 70. 174 (1908) 6 CLR 41 at 70-71. 175 (1908) 6 CLR 41 at 69-70. Hayne Bell moreover, that those consequences would not, in the nature of things, be uniform throughout the vast area of the Commonwealth, extending over 32 parallels of latitude and 40 degrees of longitude. The varying conditions of climate – tropical, sub-tropical and temperate – and of locality – near or at great distances from the seaboard – make an effectual discrimination for many purposes between the several portions of the Commonwealth." Yet, despite these differences, the Constitution provides legislative power with respect to taxation "but so as not to discriminate between States or parts of States". As the majority said176, those words "recognize the fact that nature has already discriminated, and prescribe that no attempt shall be made to alter the effect of that natural discrimination". In particular, as their Honours recognised177, those words prohibit the Parliament from seeking to "bring about equality in the incidence of the burden of taxation, or what has been called an equality of sacrifice", by discriminating between the several portions of the Commonwealth. The converse case which the majority postulated in Barger was a case of the kind just described. That is, their Honours were referring to a hypothetical case in which the Parliament, instead of enacting the Excise Tariff 1902 considered in Colonial Sugar Refining, had enacted a tariff which provided that the amount of duty payable to the Commonwealth should be so much as, when added to the State tax paid on that sugar, would make equal throughout the Commonwealth the actual amount of tax paid on sugar by every manufacturer of that commodity. But, as is explained later in these reasons, the converse case postulated by the majority in Barger is not this case. Any discrimination between miners is not effected by the MRRT Legislation but by the operation of State laws. Cameron v Deputy Federal Commissioner of Taxation The Income Tax Regulations 1917 (Cth) provided that the "fair average value" of certain livestock to be taken into account in assessing the amount of a taxpayer's assessable income should be the values set out in a table. The table provided different values for the same kind of livestock in different States and, in Western Australia, for the same kind of livestock in different parts of the State. In Cameron178, the Court held the provisions invalid as discriminating between 176 (1908) 6 CLR 41 at 70. 177 (1908) 6 CLR 41 at 70. 178 (1923) 32 CLR 68. Hayne Bell States and parts of States. The provisions applied different legal standards "simply because the subject of taxation finds itself in one State or the other"179. Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd and W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) Commonwealth Acts imposed taxes on flour and wheat and provided for grants to States to be used to assist wheat growers. Because very little wheat was grown in Tasmania, and Tasmanians would bear the excise duty on flour by paying higher prices for bread and similar products, special provision was made for Tasmania. Section 14 of the Wheat Industry Assistance Act 1938 (Cth) provided that the Minister might make an additional grant to Tasmania not greater than the amount by which the tax raised in Tasmania under the Flour Tax (Wheat Industry Assistance) Assessment Act 1938 (Cth) exceeded the total amount paid to the State under the Wheat Industry Assistance Act. It was alleged that the Act imposing the tax discriminated between States. While a majority of this Court180 rejected the challenge, Evatt J would have held the Act imposing the tax invalid as discriminating in favour of Tasmania. Argument in the present matter directed attention to the dissenting reasons of Evatt J. His Honour concluded181 that the discrimination established was "not constituted by mere unequal operation in the States through casual or accidental features of the laws of those States". Rather, Evatt J held182 that the case was one where discrimination was "aimed at and achieved by the Commonwealth Act, with the favoured State playing the subordinate role of executant of the Commonwealth's scheme for refunding the tax". An appeal to the Privy Council failed183. Viscount Maugham, delivering the advice of the Privy Council, said184 that "it would be a mistake" to regard the 179 (1923) 32 CLR 68 at 77 per Isaacs J. 180 Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd (1939) 61 CLR 735. 181 (1939) 61 CLR 735 at 805. 182 (1939) 61 CLR 735 at 805. 183 W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) (1940) 63 CLR 338; [1940] AC 838. 184 (1940) 63 CLR 338 at 348; [1940] AC 838 at 856. Hayne Bell restriction contained in s 51(ii) (or the requirement in s 51(iii) that bounties "be uniform throughout the Commonwealth") as "providing for equality of burden as regards taxation or equality of benefit as regards bounties". Approving reference was made185 to the statement by Isaacs J in Barger186 that "the pervading idea is the preference of locality merely because it is locality, and because it is a particular part of a particular State" (emphasis added). "It does not include a differentiation based on other considerations, which are dependent on natural or business circumstances, and may operate with more or less force in different localities"187. Conroy v Carter Section 5 of the Poultry Industry Levy Collection Act 1965 (Cth) provided for the Commonwealth to make an arrangement with a State for the State Egg Board to collect the levy imposed by that Act on behalf of the Commonwealth. Section 6(1)(a) of the Act provided that, while an arrangement made under s 5 remained in force, payments of the levy were to be made to the State Egg Board. Section 6(1)(b) permitted the State Egg Board to retain, out of any moneys payable by the Board to any person, an amount not exceeding the amount of any levy that the person was liable to pay. In Conroy v Carter188, this Court considered whether s 6(1)(a) and s 6(1)(b) discriminated between States or parts of States. All members of this Court held that s 6(1)(a) did not so discriminate; the Court divided equally on whether s 6(1)(b) did so. Barwick CJ, McTiernan and Menzies JJ were of the opinion that s 6(1)(b) discriminated between States. Menzies J described189 the provision as subjecting a person liable to pay the levy "to a particular disadvantage at law to which a person in respect of hens kept in a State which has made no arrangement with the Commonwealth under s 5, is not". By contrast, Taylor J, with whom Kitto and s 6(1)(b) s 6(1)(a) nor that neither 185 (1940) 63 CLR 338 at 348; [1940] AC 838 at 856-857. 186 (1908) 6 CLR 41 at 108. 187 (1908) 6 CLR 41 at 108. 188 (1968) 118 CLR 90. 189 (1968) 118 CLR 90 at 103-104. 190 (1968) 118 CLR 90 at 102. Hayne Bell discriminated between States. Having referred to the earlier decisions of this Court and to several decisions191 of the United States Supreme Court about the application of Art I, s 8 of the United States Constitution192, Taylor J concluded193 that neither of the impugned provisions discriminated between States or parts of States because there was no discrimination in the manner in which the impost was imposed or in the method of its collection. The impugned provisions were, in his Honour's opinion, not relevantly different from a law providing that, in calculating assessable income for income tax, sums paid as State land tax should be allowable as deductions. A provision of the kind just described was one "which operates generally throughout the Commonwealth and the fact that in some States there may be no legislation imposing land tax does not mean that it discriminates between States"194. Different "effective" MRRT rates? It is not right to say, as the plaintiffs did, that "in terms" the MRRT Legislation imposes a tax calculated at a rate that differs from State to State. The amounts on which MRRT is levied will differ between different miners. If one of those miners had conducted identical operations in a different State, the amount on which MRRT would be levied would be different. The miner would have different outgoings, including a different outgoing for State royalties. But the rate at which the tax would be levied would remain 22.5 per cent, regardless of the State in which the miner operated. The plaintiffs submitted calculations directed to showing that the "effective" rate of MRRT imposed on a miner depended upon the amount of State royalty paid by that miner. The plaintiffs argued that, because the "effective" rate of MRRT depended upon the amount of State royalty paid, the MRRT Legislation discriminated between States by imposing different rates of tax according to locality. 191 United States v Snyder 149 US 210 (1893); Knowlton v Moore 178 US 41 (1900); Florida v Mellon 273 US 12 (1927). 192 "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises ... but all Duties, Imposts and Excises shall be uniform throughout the United States" (emphasis added). 193 (1968) 118 CLR 90 at 101. 194 (1968) 118 CLR 90 at 101. Hayne Bell The utility and relevance of the calculations and comparisons advanced by the plaintiffs depended upon the manner of their calculating the "effective" rate of MRRT. The central fallacy in the calculations was that each took as the base for the calculation of an effective rate of MRRT the amount of a miner's "mining profit". It will be recalled that s 10-5 of the MRRT Act required calculation of a miner's mining profit as the first step along the way to determining the miner's MRRT liability. But from the miner's mining profit there must be deducted the miner's MRRT allowances (including royalty allowances) before arriving at the sum on which MRRT is payable. It is neither useful nor relevant to consider any comparison made between the proportion of two different miners' mining profit which is payable as MRRT. That comparison is neither useful nor relevant because it does not take the amount on which MRRT is levied as the basis for comparison. Discrimination is not revealed by making the comparison advanced by the plaintiffs based on only one of the several integers used to calculate the amount on which MRRT is levied. Discrimination As five members of this Court pointed out in Bayside City Council v Telstra Corporation Ltd195, "[d]iscrimination is a concept that arises for consideration in a variety of constitutional and legislative contexts". Thus, s 102 of the Constitution provides power for the Parliament "by any law with respect to trade or commerce [to] forbid, as to railways, any preference or discrimination by any State, or by any authority constituted under a State, if such preference or discrimination is undue and unreasonable, or unjust to any State" (emphasis added). Section 117 provides that "[a] subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State" (emphasis added). Section 99 does not use the word "discrimination" but does provide that "[t]he Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof" (emphasis added). As the plurality also pointed out in Bayside City Council196, discrimination "involves a comparison". Usually that comparison will be informed by notions of difference and equality. In at least some cases, the notions of difference and equality which underpin the comparison will be supplemented by consideration 195 (2004) 216 CLR 595 at 629 [40]; [2004] HCA 19. 196 (2004) 216 CLR 595 at 629 [40], citing Street v Queensland Bar Association (1989) 168 CLR 461 at 506 per Brennan J; [1989] HCA 53. Hayne Bell of why some distinction is discerned in the relevant treatment of, or outcome for, the subject of the alleged discrimination. Whether, or to what extent, these notions may apply in connection with constitutional provisions other than s 51(ii) need not be, and is not, examined here. But it is necessary to exercise some care in determining whether, or to what extent, these are notions that can have a direct or immediate application in connection with s 51(ii). In that regard, it is relevant to notice that s 51(ii) "with its prohibition of discrimination may not be the same as art 1, s 8 of the Constitution of the United States requiring uniformity"197 of taxation. Different outcomes may be sufficient to demonstrate lack of uniformity but may not suffice to show discrimination. Quick and Garran said198 of the limiting clause in s 51(ii) that "[t]o discriminate obviously means to make differences in the nature, burden, incidence and enforcement of taxing law; to impose a high tax on commodities or persons in one State and a low tax on the same class of commodities or persons in another State, would be to discriminate". This understanding of "discriminate" accords with its basic dictionary meaning: "[t]o make a distinction; to perceive or note the difference (between things)"199 (original emphasis). Thus, when s 51(ii) speaks of a law with respect to "taxation; but so as not to discriminate between States or parts of States", it is speaking of a law with respect to taxation which does not, in its terms, draw any distinction between States or parts of States. Regardless of what differences can be perceived between States or parts of States, a law with respect to taxation may itself make no distinction between them, whether by reference to differences that have been or could be perceived, or otherwise. That is, adopting the words quoted earlier from Quick and Garran, the limiting clause of s 51(ii) prevents the enactment of laws which "make differences in the nature, burden, incidence and enforcement of taxing law" (emphasis added). 197 Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 39 per Dixon CJ; [1958] HCA 2; cf Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 550. 198 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 199 The Oxford English Dictionary, 2nd ed (1989), vol IV at 758, "discriminate", meaning 3a. Hayne Bell Discrimination in effect? Many of the submissions made by the plaintiffs and Queensland took as their premise that the MRRT Legislation sought to make the tax burden on miners equal throughout the federation. That is, it was submitted that the MRRT Legislation imposed a uniform cumulative rate of "mineral rent" throughout the Commonwealth which discriminated between the States by equating the "sacrifice" of miners in low royalty States with that of miners in high royalty States. The plaintiffs and Queensland thus submitted that, in effect if not in form, the MRRT Act was the converse case postulated by the majority in Barger because the royalty provisions of the MRRT Act sought to equalise the total tax "take" from miners by the federal and State governments. But unlike the converse case considered in Barger, the MRRT Act does not provide for any difference in MRRT liability according to where the miner operates. To the extent that the amount of MRRT paid varies from State to State because different rates of State royalty are charged, those variations are due to the different conditions that exist in the different States and, in particular, the different legislative regimes provided by the States. Other submissions of the plaintiffs and Queensland took as their premise that the MRRT Legislation treated equals unequally and, on that account, was discriminatory. More particularly, those submissions proceeded from the premise that s 51(ii) should be read as preventing the enactment of a law with respect to taxation which has different economic or other consequences in different States. And the plaintiffs argued that the MRRT Legislation discriminates against those States which wished to consider lowering their State royalty rates. None of these propositions is consistent with any of the cases that have been decided about s 51(ii), and that is reason enough to reject each of them. All of Colonial Sugar Refining, Barger, Cameron, Moran and Conroy require their rejection. It is, however, desirable to say more about why bare demonstration of different consequences in different States does not show that a law with respect to taxation discriminates between States or parts of States. Different consequences in different States As already noted, the limiting words of s 51(ii) do not speak of a law that discriminates against States or parts of States and should be read as referring to geographic differentiation, not to the effect of the relevant law on a State as a polity. Hayne Bell To discriminate against someone or something is "to make an adverse distinction with regard to; to distinguish unfavourably from others"200. And, of course, there has evolved a developed body of thinking about how the notions of "adverse" or "unfavourable" discrimination are to be understood and applied. Discrimination connotes comparison201. It directs attention to whether like cases are treated alike and different cases differently. But there may be two distinct questions that must be answered. First, are the cases that are being compared alike or different? Second, are the two cases treated alike or differently? It is particularly in the context of questions of "adverse" or "unfavourable" discrimination (or their converse cases of "preference" or "advantage") that comparison is central to identifying discrimination. In undertaking the task of comparison, it is often necessary to exercise great care when identifying the relevant comparator202; for it is necessary to identify a comparator that will enable identification of some relevant difference in treatment of cases that are alike, or some relevant identity of treatment of cases that are different. And it is in that same kind of context that it may be necessary to examine "the relevance, appropriateness, or permissibility of some distinction by reference to which such treatment occurs, or by reference to which it is sought to be explained or justified"203. In applying the limitation contained in s 51(ii), there is no question about selecting an appropriate comparator. Section 51(ii) expressly provides for the comparison that must be made. Does the impugned law discriminate between States or parts of States? Section 51(ii) thus provides that, whatever differences may be observed between States or parts of States, a law of the Parliament with respect to taxation may itself neither create nor draw any distinction between States or parts of States. In that sense, at least, the prohibition which the qualifying words of s 51(ii) provide is cast in absolute terms. The power to make a law with respect to taxation may not be exercised so as to discriminate. By contrast, as noted earlier, s 102 gives power to the Parliament, by any law with respect to trade or commerce, to forbid, as to railways, "any preference or discrimination by any 200 The Oxford English Dictionary, 2nd ed (1989), vol IV at 758, "discriminate", meaning 3b. 201 Street (1989) 168 CLR 461 at 506 per Brennan J. 202 See, for example, Purvis v New South Wales (2003) 217 CLR 92; [2003] HCA 62. 203 Bayside City Council (2004) 216 CLR 595 at 629-630 [40]. Hayne Bell State, or by any authority constituted under a State, if such preference or discrimination is undue and unreasonable, or unjust to any State" (emphasis added), when "due regard" is had to certain matters. Section 51(ii) uses no qualifying words like "undue", "unreasonable" or "unjust". It erects a rule expressed simply as "so as not to discriminate" (emphasis added). In its terms, then, s 51(ii) may be read as assuming that there are no differences between States (or parts of States) which could warrant a law with respect to taxation distinguishing between them. An assumption of that kind would fit comfortably with the limiting words of s 51(ii) fulfilling a fundamental federal purpose: that laws with respect to taxation enacted by the federal Parliament treat all States and parts of States alike. If this is the assumption that underpins s 51(ii), it would follow that, if a law with respect to taxation does discriminate between States (or parts of States), no further question could arise about whether the distinction that the law created or drew might none the less be explained or justified in a way that would take the challenged law outside the qualifying words of the provision. And if no further question of that kind need be answered, there would be no occasion to identify or consider the relationship that the law may have with some object or end which is identified as "proper" or "legitimate", because there could be no object or end that could constitute or reflect some difference between States (or parts of States) which would justify distinguishing between them. It is not necessary, however, to decide in this matter whether s 51(ii) should be understood as embodying or proceeding from an assumption of the kind described. The Commonwealth submitted that if, contrary to its principal submission, the MRRT Legislation "somehow had a relevant differential treatment or unequal outcome, it does not follow that the legislation is discriminatory between States". In support of that submission, the Commonwealth referred to the plurality's reasons in Austin, which noted204 that "[t]he essence of the notion of discrimination is said to lie in the unequal treatment of equals or the equal treatment of those who are not equals205, where the differential treatment and unequal outcome is not the product of a distinction which is appropriate and 204 (2003) 215 CLR 185 at 247 [118]. 205 Queensland Electricity Commission v The Commonwealth (1985) 159 CLR 192 at 240; [1985] HCA 56; Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 480; [1990] HCA 1; Cameron v The Queen (2002) 209 CLR 339 at 343-344 [15]; [2002] HCA 6. Hayne Bell adapted to the attainment of a proper objective206" (emphasis added). Whether, or how, this proposition was to be applied to a law with respect to taxation did not have to be, and was not, explored in Austin. And although the proposition was repeated in Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict)207, it was again unnecessary to explore its application to a law with respect to taxation. Nor is it necessary to undertake that task in this matter. The MRRT Legislation does not discriminate between States or parts of States. It has no different application between States. Observing that a miner would pay a different amount of MRRT if that miner conducted identical operations in a different State does not demonstrate discrimination. It may be accepted that consideration of whether a law discriminates between States or parts of States is not to be resolved by consideration only of the form of the law. The legal and practical operation of the law will bear upon the question. It by no means follows, however, that the law is shown to discriminate by demonstrating only that the law will have different effects on different taxpayers according to the State in which the taxpayer conducts the relevant activity or receives the relevant income or profit. In particular, a law is not shown to discriminate between States by demonstrating only that it will have a different practical operation in different States because those States have created different circumstances to which the federal Act will apply by enacting different State legislation. To the extent to which the plaintiffs' arguments depended upon the proposition that the federal legislative power to enact the MRRT Legislation was restricted because State Parliaments had made legislative provision for mining royalties which differed from State to State, the arguments must be rejected. Those arguments run counter to fundamental constitutional considerations. Central to the Australian federal system is "[t]he conception of independent governments existing in the one area and exercising powers in different fields of action carefully defined by law"208. "The position of the federal government is necessarily stronger than that of the States. The Commonwealth is a government to which enumerated powers have been 206 Street (1989) 168 CLR 461 at 510-511, 548, 571-573, 582; Cameron v The Queen (2002) 209 CLR 339 at 343-344 [15]. 207 (2004) 220 CLR 388 at 424 [89]; [2004] HCA 53. 208 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 267-268; [1956] HCA 10. Hayne Bell affirmatively granted."209 And s 109 gives supremacy to the valid exercise of the federal Parliament's legislative powers. The plaintiffs' arguments sought to invert that structure by asserting that the ambit of the Parliament's power under s 51(ii) to make a law with respect to taxation depends upon whether and how States have legislated for the different, if closely related, subject of mineral royalties. The inversion was effected by asserting that the practical effect of the MRRT Legislation is to discriminate between States. But the practical effect of the plaintiffs' point was no more than that taxpayers pay different amounts of MRRT according to what outgoings each actually incurs and those outgoings differ in amount according to where the taxpayer has its mining operations. Since Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers' Case")210, it has been securely established that the legitimate extent of the law-making power of the Commonwealth is not to be limited by first assuming the existence of State laws or law-making power, or by according precedence to State laws made in the exercise of State law-making power on those occasions when a State is the first to enter upon the legislative regulation of a particular activity. The plaintiffs' arguments for invalidity cut directly across these basal principles. The MRRT Legislation does not discriminate between States. If the States had enacted no provision for royalties or if all States had chosen to exact royalties at identical rates, the plaintiffs' argument of discrimination would evidently be without foundation. The possibility that a law of the federal Parliament might become invalid upon, and by reason of, one State changing its royalty rate would not be consistent with the observations of Griffith CJ in Colonial Sugar Refining211, much less the decision in the Engineers' Case212. The plaintiffs and Queensland rightly accepted that a federal taxing Act permitting deduction from the amount on which the tax was to be levied of expenses actually and necessarily incurred in conducting a business was not shown to be discriminatory by showing only that one of those expenses was a compulsory State exaction, the amount of which varied between the States. The MRRT Act's provisions about State royalties are different in their form, and thus their application, from provisions for deduction from taxable income commonly 209 Melbourne Corporation (1947) 74 CLR 31 at 82-83. 210 (1920) 28 CLR 129; [1920] HCA 54. 211 [1903] St R Qd 261 at 276-277. 212 (1920) 28 CLR 129 at 144-145, 154. Hayne Bell found for many years in Commonwealth income tax Acts. Those differences in form and application are not constitutionally relevant. Neither income tax Act provisions permitting deduction of State taxes from taxable income nor the royalty provisions of the MRRT Act discriminate between States. Section 99 The plaintiffs accepted that, if the MRRT Legislation did not discriminate between States, it was not a "law ... of trade, commerce, or revenue" which gave "preference to one State or any part thereof over another State or any part thereof". In Permanent Trustee213, the plurality said that it was not the occasion in that case "to seek to disentangle the reasoning in all the disparate authorities in the first fifty years of the Court which concern s 99 in its operation upon 'any law or regulation of trade, commerce ...'". Nor, given the conclusions reached about s 51(ii) and the plaintiffs' concession that s 99 is not then engaged, is this a case in which it is necessary or desirable to attempt that task. It is enough to repeat some points made214 by the plurality in Permanent Trustee by reference to Elliott v The Commonwealth215. As Dixon J said216 in Elliott, the critical phrase in s 99, "give preference ... over", expresses "a conception necessarily indefinite". Much therefore depends upon the level of abstraction at which debate enters upon the issue. Second, and of most immediate relevance in this case, "[t]o give preference to one State over another State discrimination or differentiation is necessary"217. But not every discrimination between States may amount to preference of one over another218. Because the MRRT Legislation does not discriminate between States, there is no preference of one State over another. 213 (2004) 220 CLR 388 at 423 [86]. 214 (2004) 220 CLR 388 at 423 [87]-[88]. 215 (1936) 54 CLR 657; [1936] HCA 7. 216 (1936) 54 CLR 657 at 682. 217 (1936) 54 CLR 657 at 683 per Dixon J; see also at 668 per Latham CJ. 218 (1936) 54 CLR 657 at 683 per Dixon J. Hayne Bell The Melbourne Corporation principle The plaintiffs submitted that the States own the minerals in their lands and have the ability to regulate extraction of those minerals on terms that the persons granted the right to take minerals pay in return royalties fixed by the States at whatever level the States choose. The plaintiffs submitted that the MRRT Legislation interfered with the States' management of the mineral resources under their control. The colony's control over minerals was recognised in the pre-federation constitutions of Queensland and Western Australia219. And upon federation, the States came to derive their existence from the Constitution itself, which, by s 106, continued the State constitutions in force (but subject to the Constitution)220. The plaintiffs and Western Australia argued that the MRRT Legislation was apt to neutralise the positive effect upon the level of mining activity in a State that might be expected to flow from the exercise of the State's ability to effect a reduction in the State's royalty rate. The plaintiffs' argument began with a passage from the judgment of Starke J in Melbourne Corporation221: "[I]n the end the question must be whether the legislation or the executive action curtails or interferes in a substantial manner with the exercise of constitutional power by the other. The management and control by the States and by local governing authorities of their revenues and funds is a constitutional power of vital importance to them. Their operations depend upon the control of those revenues and funds. And to curtail or interfere with the management of them interferes with their constitutional power." The plaintiffs submitted that the infirmity of the MRRT Legislation was revealed by substituting "natural resources" for "revenues and funds" in the passage just set out. 219 Constitution Act 1867 (Q), ss 30, 34 and 40; Western Australia Constitution Act 1890 (Imp), s 3; The Constitution Act 1889 (WA), s 64. See also New South Wales Constitution Act 1855 (Imp) (18 & 19 Vict c 54), Preamble, s 2, Sched 1, ss 43, 47 and 50; Victoria Constitution Act 1855 (Imp) (18 & 19 Vict c 55), Preamble, Sched 1, ss 44 and 54. 220 Victoria v The Commonwealth ("the Pay-roll Tax Case") (1971) 122 CLR 353 at 371 per Barwick CJ; [1971] HCA 16; New South Wales v The Commonwealth ("the Seas and Submerged Lands Case") (1975) 135 CLR 337 at 372 per Barwick CJ; [1975] HCA 58. 221 (1947) 74 CLR 31 at 75. Hayne Bell The plaintiffs further submitted that a State is necessarily both a territorial entity and a polity with responsibility for the management and control of the waste lands of the Crown and is expressly given the right to appropriate the proceeds of sale and revenues from such land, including royalties, mines and minerals in such lands222. The Commonwealth did not dispute that each State's ownership, management and control of its territory (including, particularly, the waste lands of the Crown within that territory) is a necessary attribute of statehood and that a State's ability by legislation to make laws to promote the development of its territory in the interests of, or to promote the welfare of the community of, the State is important. And the Commonwealth did not dispute that it is for the States to determine the level of royalty to be paid as the price for extracting minerals from their territories. But the Commonwealth submitted that the MRRT Legislation does not subject that ability to Commonwealth control and proceeded on the assumption that the States were free to fix royalties as they chose. In Melbourne Corporation, Dixon J said223 that: "The foundation of the Constitution is the conception of a central government and a number of State governments separately organized. The Constitution predicates their continued existence as independent entities." And as was said in the Work Choices Case224, the separate polities whose continued existence is predicated "are to continue as separate bodies politic each having legislative, executive and judicial functions". Hence, as the decisions in Austin225 and Clarke226 each demonstrate, the Melbourne Corporation principle requires consideration of whether impugned legislation is directed at States, imposing some special disability or burden on the exercise of powers and 222 See, for example, New South Wales Constitution Act 1855 (Imp); Williams v Attorney-General for New South Wales (1913) 16 CLR 404 at 425-426; [1913] HCA 33. 223 (1947) 74 CLR 31 at 82; See also Austin (2003) 215 CLR 185 at 245-246 [111]-[115]; Work Choices Case (2006) 229 CLR 1 at 119-120 [194]. 224 (2006) 229 CLR 1 at 120 [194]. 225 (2003) 215 CLR 185. 226 (2009) 240 CLR 272. Hayne Bell fulfilment of functions of the States which curtails their capacity to function as governments. The extent and importance of the States' function of managing their lands and mineral resources must be acknowledged. But the plaintiffs' submissions contended for a view of the Melbourne Corporation principle which, if accepted, would subvert not only the position established by the decision in the Engineers' Case but also s 109 of the Constitution. Western Australia submitted that it is "central to the capacity of [the] State to function as a government under the Constitution that it have the power to determine the most appropriate means of financing the development of communities in Western Australia". This submission bore a striking resemblance to arguments advanced by that State, and rejected, in Western Australia v The Commonwealth (Native Title Act Case)227. Western Australia alleged228, in the Native Title Act Case, that, because the "capacity and power to grant, regulate and otherwise deal with land and other resources in Western Australia ... is a fundamental sovereign function of the Government of Western Australia as a State", provisions of the Native Title Act 1993 (Cth) were invalid. But as the plurality held229 in that case: "The [Native Title Act] does not purport to affect the machinery of the government of the State. The constitution of the three branches of government is unimpaired; the capacity of the State to engage the servants it needs is unaffected; the acquisition of goods and services is not impeded; nor is any impediment placed in the way of acquiring the land needed for the discharge of the essential functions of the State save in one respect, namely, the payment of compensation. The Act does not impair what Dawson J described [in Queensland Electricity Commission v The Commonwealth230] as 'the capacity to exercise' constitutional functions though it may affect the ease with which those functions are exercised." If the MRRT Legislation does affect the States' control over land and resources, the effect is less direct and more speculative than the effect of the Native Title Act. If, then, the MRRT Legislation does diminish the choices 227 (1995) 183 CLR 373; [1995] HCA 47. 228 (1995) 183 CLR 373 at 478-479. 229 (1995) 183 CLR 373 at 481. 230 (1985) 159 CLR 192 at 260. Hayne Bell available to the executive governments of the States, that diminution does not engage the Melbourne Corporation principle. In Austin, the plurality noted231 that the fundamental constitutional conception which underpins the Melbourne Corporation principle "has proved insusceptible of precise formulation". Accordingly, the plurality warned232 against the risk of propositions stated in particular cases taking on, "by further judicial exegesis, a life of their own which is removed from the constitutional fundamentals which must sustain them". It remains important, however, to recognise how that fundamental constitutional conception has been applied in earlier decisions of this Court. In Austin and Clarke, the perceived vice of the Commonwealth law in question lay in its impact upon the capacity of a State to fix the terms of its relationships with its judiciary and legislature as branches of the government of that State. As had previously been pointed out, in Re Australian Education Union; Ex parte Victoria233, "critical to a State's capacity to function as a government is its ability, not only to determine the number and identity of those whom it wishes to engage at the higher levels of government, but also to determine the terms and conditions on which those persons shall be engaged". The legislation held invalid in Queensland Electricity Commission234 was directed only at a State. It provided a special set of rules concerning the resolution of an industrial dispute between certain Queensland State electricity authorities and the Electrical Trades Union, which represented employees of those authorities. That is, the law sought to burden the State by providing special rules to govern decisions about the relationship between agencies of the State and their employees. By contrast, in the Pay-roll Tax Case235, legislation imposing pay-roll tax on all employers (including the States) was held to be valid even though, of course, it placed a burden on the States. The MRRT Legislation is not aimed at the States or their entities as was the legislation considered in each of Melbourne Corporation, Queensland 231 (2003) 215 CLR 185 at 258 [145]. 232 (2003) 215 CLR 185 at 258-259 [145]. 233 (1995) 184 CLR 188 at 233; [1995] HCA 71. 234 (1985) 159 CLR 192. 235 (1971) 122 CLR 353. Hayne Bell Electricity Commission, Austin and Clarke. The MRRT Legislation does not impose any special burden or disability on the exercise of powers and fulfilment of functions of the States which curtails their capacity to function as governments. The MRRT Legislation does not deny the capacity of any State to fix the rate of royalty for minerals extracted by miners, and no burden upon a State attaches to any decision by the State to raise or lower that rate. If, as the plaintiffs asserted, the MRRT Legislation affects the States' ability to use a reduction in royalty rate as an incentive to attract mining investment in the State, the MRRT Legislation does not impose any limit or burden on any State in the exercise of its constitutional functions. Section 91 Section 91 of the Constitution provides that: "Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, any aid to or bounty on the production or export of goods." It was common ground that the plaintiffs engaged in mining for iron ore and that iron ore is an "other metal" within s 91. The plaintiffs argued that s 91 not only preserves the powers of a State to grant any aid or bounty on mining for gold, silver or other metals, but also limits the legislative power of the federal Parliament. In particular, the plaintiffs submitted that s 91 prevents the enactment of a federal law which impedes States granting an "aid ... on mining" for iron ore by reducing the rate of State royalty charged or exempting a miner from paying royalty. They submitted that, because the grant of any such reduction or exemption would have the effect that the MRRT otherwise payable by the miner would be increased by an amount equivalent to such reduction or exemption, the grant of the aid would be illusory. This result, the plaintiffs submitted, was precluded by the phrase "[n]othing in this Constitution prohibits". Insofar as the provisions of the Constitution might otherwise have authorised the making of the law, the introductory words of s 91 limited the ambit (or perhaps the exercise) of the relevant power. The first step in the plaintiffs' argument is undermined by observations in Seamen's Union of Australia v Utah Development Co236 which suggest that "aid" 236 (1978) 144 CLR 120 at 126 per Barwick CJ, 135 per Gibbs J, 140 per Stephen J, 148 per Mason J; [1978] HCA 46. Hayne Bell in s 91 should be read as limited to "financial assistance". And as the argument of Mr B H McPherson QC in Seamen's Union noted237, parliamentary usage of the term "aid" would support that view. It is, however, not necessary to reach any concluded view about this aspect of the matter. The plaintiffs' arguments fail for other reasons. Section 91 is not framed in terms of prohibition. As Mason J said238 in Seamen's Union, in respect of the second part of the section, "[i]t is inconceivable that a section, not cast in the form of a prohibition, should be widely interpreted so as to prevent a State, without the consent of both Houses of the Commonwealth Parliament, from granting ... benefits of any kind ... that might operate as an aid to production or export". Likewise, there is no reason to read the introductory words as limiting the legislative powers of the Commonwealth. Indeed, to read those words in the manner proposed by the plaintiffs would be to read them as providing for the legislative supremacy of State laws "granting any aid to or bounty on mining for gold, silver, or other metals". How that result would be consistent with s 109 was not explained. Section 91 denies any constitutional prohibition on granting any aid or bounty of the kind described. The expression "[n]othing in this Constitution prohibits" directs the reader to what might otherwise be read as working a prohibition. In particular, the introductory words of s 91 invite attention to s 90. When ss 90 and 91 are read together, there is evident reason for reading s 91 as qualifying s 90. Section 90 provides for the power of the Parliament to impose duties of customs and of excise and to grant bounties to become exclusive. Section 91 provides that nothing in the Constitution prohibits States granting any aid to or bounty on certain mining. Including reference in s 91 to "any aid" foreclosed any debate about whether a grant of financial aid to mining is a bounty on the production of goods. A grant or loan of money to encourage mining for particular metals would be an aid to mining. No great imagination is needed to see that the terms on which a grant or loan was made might provide some basis for arguing that it was a bounty on the production of the metal concerned. Section 91 was cast in terms that avoided that debate. But the words of s 91 do not admit of the construction which the plaintiffs urged. Section 91 preserves the States' legislative powers with respect to granting certain kinds of aid or bounty. It does not limit the legislative powers of the federal Parliament. In particular, there is no warrant for reading s 91 as if it 237 (1978) 144 CLR 120 at 125. 238 (1978) 144 CLR 120 at 149. Hayne Bell said "[n]o law of the Commonwealth may impair the effect of the provision of assistance by a State to mining for gold, silver, or other metals". Yet it is only by reading s 91 as having this effect that the plaintiffs' submissions about s 91 would be made good. Conclusion and orders For these reasons, the plaintiffs' challenges to validity are not made out. The plaintiffs should pay the costs of the reserved questions. The questions reserved for the opinion of the Full Court should be answered as follows: Are any or all of s 3 of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), s 3 of the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and s 3 of the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) invalid in their application to the plaintiffs on one or more of the following grounds: they discriminate between the States of the Commonwealth of Australia contrary to s 51(ii) of the Constitution; they give preference to one State of the Commonwealth of Australia over another State contrary to s 99 of the Constitution; so discriminate they the against Commonwealth or so place a particular disability or burden upon the operations or activities of the States, as to be beyond the legislative power of the Commonwealth? the States of Answer: (ii) Are any or all of the Minerals Resource Rent Tax (Imposition— Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) and the Minerals Resource Rent Tax Act 2012 (Cth) invalid in their application to the plaintiffs on the ground that they are contrary to s 91 of the Constitution? Answer: (iii) Who should pay the costs of the reserved questions? Answer: The plaintiffs. Further proceedings in the matter will be for determination by a single Justice. Hayne Bell Crennan CRENNAN J. I agree that the plaintiffs' constitutional challenge to the mining tax cannot be accepted and that the questions reserved for the opinion of the Full Court should be answered as proposed by Hayne, Bell and Keane JJ. The issues and the MRRT legislation (collectively, legislation imposing a minerals resource rent tax ("MRRT")239 and providing for the calculation of a taxpayer's MRRT liability240) have been set out in their Honours' joint reasons. What follows are my own reasons for not accepting the plaintiffs' submissions that the MRRT legislation contravenes the limitation on the federal legislative power to tax imposed by the proviso in s 51(ii) of the Constitution. These reasons also cover the plaintiffs' related submissions that the MRRT legislation contravenes s 99 of the Constitution. Subject to that, I agree with the joint reasons. The object of the MRRT legislation is to ensure that the Australian community receives "an adequate return"241 in respect of mined "taxable resources"242, namely iron ore and coal (and some related substances), from which miners make profits. The MRRT is a tax on mining projects and that object is sought to be achieved "by taxing above normal profits made by miners (also known as economic rents)"243 in respect of "mining project interests"244. It is explained in the Revised Explanatory Memorandum to the Bills which became the MRRT legislation ("the Revised Explanatory Memorandum") that it is "the characteristic of non-renewability that allows exploitation of [the taxable resources] to generate economic rent or above normal profit"245. 239 Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) ("the Imposition Acts"). 240 Minerals Resource Rent Tax Act 2012 (Cth). 241 Minerals Resource Rent Tax Act 2012, s 1-10. 242 Minerals Resource Rent Tax Act 2012, s 20-5. 243 Minerals Resource Rent Tax Act 2012, s 1-10. The full description of the subject of the tax is "above normal profits made by miners (also known as economic rents) that are reasonably attributable to the resources in the form and place they were in when extracted". The expression "economic rents" is used in these reasons in the same way as it is used in the MRRT legislation. 244 Minerals Resource Rent Tax Act 2012, s 15-5. 245 Australia, Senate, Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Footnote continues on next page) Crennan The concept that profits which exceed normal or ordinary rates of return on capital ventured are a natural subject of taxation is not novel246. A rational investor (and any lender to that investor) venturing capital in a large project can be expected to assess financial risks and returns in respect of the capital, skills and labour to be invested. Stated simply, necessary expenditures and outlays (including taxes) can be expected to be taken into account as costs or expenditures against profits or revenues, to establish a minimum rate of return on investment sufficient to encourage, justify and maintain that investment for some finite period. The critical feature of the MRRT legislation is that the MRRT is levied on a taxpayer's economic rent or above normal profit in respect of a relevant project, which immediately raises the need for a mechanism, or method of calculation, designed to isolate the limited portion of profit constituting the tax base. Determining a taxpayer's MRRT liability involves an MRRT formula permitting the subtraction of specified "MRRT allowances"247 from a taxpayer's "mining profit", thereby reducing that profit, in order to arrive at the above normal profit on which the MRRT is levied, and to which is applied the uniform rate of taxation of 22.5 per cent248. The MRRT formula is stated as: MRRT liability = MRRT rate x (Mining profit – MRRT allowances)249. Whilst it is unnecessary for present purposes to describe all the details of the MRRT legislation, it is important to understand that the item "mining profit", a component of the MRRT formula, is a net profit figure, being "the excess of mining revenue[250] over mining expenditure[251]" in respect of a relevant mining project in any MRRT year252. Capital and operating costs (of a kind which might (Imposition—Excise) Bill 2011, Minerals Resource Rent Tax (Imposition— General) Bill 2011, Revised Explanatory Memorandum at 5 [1.5]. 246 See, for example, LaBelle Iron Works v United States 256 US 377 (1921); United States v Ptasynski 462 US 74 (1983). 247 Minerals Resource Rent Tax Act 2012, Ch 3. 248 Imposition Acts, s 4. 249 Minerals Resource Rent Tax Act 2012, s 10-5. 250 Minerals Resource Rent Tax Act 2012, Pt 2-3, Div 30. 251 Minerals Resource Rent Tax Act 2012, Pt 2-3, Div 35. 252 Minerals Resource Rent Tax Act 2012, s 25-1. Crennan be taken into account ordinarily when assessing a rate of return on investment) "necessarily incurred … in the carrying on … of upstream mining operations"253 (which includes State taxes or charges, other than those excluded) are deducted immediately from the taxpayer's "mining revenue". An explanation of the purpose of the MRRT is contained in the Revised Explanatory Memorandum254: "The key purpose of the MRRT is to tax the economic rents from non-renewable resources after they have been extracted from the ground but before they have undergone any significant processing or value-add. Generally, the profit attributed to the resource at this point represents the value of the resource to the Australian community. Where the taxable resource is improved through beneficiation processes, such as crushing, washing, sorting, separating and refining, the value added is attributable to the miner." Certain expenditures, one of which is State mining royalties255, are "excluded expenditures" for the purposes of ascertaining a taxpayer's "mining profit". The MRRT formula then provides for the calculation of MRRT profit, a net profit figure. The above normal profit upon which the MRRT is levied is arrived at after applying, in a certain order against the taxpayer's "mining profit", seven "MRRT allowances"256. The critical MRRT allowance for present purposes is the "royalty allowance"257, giving a taxpayer credit for the amount of any mining royalties paid to the Commonwealth, a State or a Territory for the mining of taxable resources258. the Revised Explanatory Memorandum – in Australia, State and Territory governments typically tax the taxable resources covered by the MRRT legislation, by applying a royalty to The context was explained 253 Minerals Resource Rent Tax Act 2012, ss 35-10, 35-15 and 35-20. 254 Australia, Senate, Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Imposition—Excise) Bill 2011, Minerals Resource Rent Tax (Imposition— General) Bill 2011, Revised Explanatory Memorandum at 12 [2.8]. 255 Minerals Resource Rent Tax Act 2012, ss 35-40 and 35-45. 256 Minerals Resource Rent Tax Act 2012, s 10-10. 257 Minerals Resource Rent Tax Act 2012, s 10-10 and Pt 3-1, Div 60. 258 Minerals Resource Rent Tax Act 2012, ss 20-5 and 60-5. Crennan production on the basis of volume or value259. The "royalty allowance" is the amount of State mining royalty, grossed up by using the MRRT rate of taxation, thereby reducing a taxpayer's MRRT liability by the amount of the royalty paid. The royalty allowance is the only MRRT allowance which is grossed up; however, the plaintiffs stated that the grossing up of royalty payments was not critical to their constitutional challenge to the MRRT legislation, although they said that grossing up showed that the royalty allowance was a significant allowance. The plaintiffs do not complain about the calculation of a taxpayer's net mining profit. The plaintiffs only complain about the calculation of the MRRT profit, the above normal profit, and then only by reference to the allowance for State mining royalties. There is no challenge in respect of other MRRT allowances for items such as losses carried forward, starting base allowances or losses transferred from other projects. Everything else being equal, a reduction in a State mining royalty will result in an equivalent increase in a taxpayer's MRRT liability and vice versa. Mining royalty regimes and royalty rates vary from State to State. Further details of the calculation of a taxpayer's MRRT liability, by bringing royalties into account fully both by grossing up and through "royalty credits", are set out in the reasons of others and are not repeated here. The critical factor for the plaintiffs' challenge to the MRRT legislation based on s 51(ii) is that a taxpayer's MRRT liability varies according to the State mining royalties paid by the taxpayer, which depend on different State mining royalty regimes and rates. As a tax on above normal profit, no MRRT is payable if a taxpayer's group mining profit for the relevant financial year is less than or equal to $75 million260, inferentially a baseline in respect of the limited portion of profit upon which the MRRT is levied. If a taxpayer's group mining profit exceeds $75 million but is less than $125 million, a taxpayer will be liable to pay MRRT, but less than the full amount, which applies once the group mining profit reaches $125 million261. 259 Australia, Senate, Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Imposition—Excise) Bill 2011, Minerals Resource Rent Tax (Imposition— General) Bill 2011, Revised Explanatory Memorandum at 5 [1.7]. 260 Minerals Resource Rent Tax Act 2012, ss 10-15 and 45-5. 261 Minerals Resource Rent Tax Act 2012, ss 10-15 and 45-10. Crennan Section 51(ii) of the Constitution Section 51(ii) confers a legislative power on the federal Parliament with respect to "taxation", subject to the proviso "but so as not to discriminate between States or parts of States". As observed by Gaudron, Gummow and Hayne JJ in Austin v The Commonwealth262, following Taylor J in Conroy v Carter263, a law with respect to taxation does not discriminate in the sense spoken of in s 51(ii) if it operates generally throughout Australia "even though, by reason of circumstances existing in one or more of the States, it may not operate uniformly". It was not in contest that this general principle is specifically exemplified in federal legislation with respect to income tax, providing for the calculation of taxable income by reference to deductions for State taxes or charges for the purpose of determining the amount of income tax for which a taxpayer may be liable. Equally, it was accepted in argument that a federal law with respect to taxation imposing different rates or measures of taxation between States would contravene the limitation on legislative power in s 51(ii). And it was accepted that in order to determine whether a tax discriminated between States in terms of s 51(ii) it is necessary to consider the "real substance and effect"264, not just the form, of the tax. When a constitutional limitation on legislative power is relied on to invalidate a law, it is the law's "practical operation" which needs to be examined265. Whilst the plaintiffs' challenge to the MRRT legislation was expressed in various ways, which have been set out in the joint reasons, it was made clear in oral submissions that the plaintiffs' complaint was not that the imposition of the MRRT resulted in different amounts of tax being paid between States. Rather, the plaintiffs' complaint was that State mining royalties were picked up and applied by the federal Parliament as an essential integer in the MRRT formula, which it was contended resulted in different effective rates of taxation depending upon what State mining royalties were paid by a taxpayer. 262 ("Austin") (2003) 215 CLR 185 at 247 [117]; [2003] HCA 3. 263 (1968) 118 CLR 90 at 101; [1968] HCA 39. 264 W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) (1940) 63 CLR 338 at 346; [1940] AC 838 at 854. 265 Ha v New South Wales (1997) 189 CLR 465 at 498 per Brennan CJ, McHugh, Gummow and Kirby JJ; [1997] HCA 34. Crennan The plaintiffs produced calculations, tables and examples designed to show that, everything else being equal, different taxpayers in different States would incur differing MRRT liabilities as a result of the structure of the MRRT legislation. The method of calculation, the MRRT formula, set by the federal Parliament was fastened upon as discriminatory in the sense spoken of in s 51(ii). In terms of distinctions, developed in the relevant authorities and discussed below, the plaintiffs submitted that the MRRT legislation does not operate uniformly throughout Australia because the MRRT legislation itself effectively imposes different rates of MRRT liability on taxpayers (based on State mining royalties), and not because of different circumstances existing in one or more of the States which affect the practical operation of the MRRT. The State of Queensland, intervening, echoed that approach by contending that the MRRT is defined by reference to a variable (State mining royalties), therefore the MRRT itself "is determined by applying a State levy". The Commonwealth gave two discrete answers to the plaintiffs' challenge to the MRRT legislation based on s 51(ii). Primarily, the Commonwealth submitted that although the MRRT legislation does not operate uniformly throughout Australia, the MRRT legislation does not discriminate in the sense spoken of in s 51(ii). This was said to be so because a taxpayer's MRRT liability is calculated by reference to allowances (or outlays) prefatory to determining the amount of MRRT profit, the above normal profit on which the MRRT is levied, and to which is applied the uniform rate of taxation of 22.5 per cent, irrespective of where relevant mining projects are conducted. The Commonwealth submitted that unequal MRRT liabilities result from the different business conditions in each State (unequal State mining royalties) under which taxpayers operate, not from the method of calculation of any MRRT liability. In the alternative, and somewhat more faintly, the Commonwealth submitted that if the MRRT legislation results in differential treatment or an unequal outcome (which was denied), such a result was justified as the product of a distinction which was appropriate and adapted to the attainment of the objectives of the MRRT legislation. The principle restated in Austin266, set out above, is determinative of the questions arising from the plaintiffs' submissions, for which reason the Commonwealth's primary answer to those submissions must be accepted. The development of that general principle can be traced through a number of authorities concerned with a variety of factual circumstances, which demonstrate that a differential or unequal operation of a law with respect to taxation is not a necessary indication of discrimination in the sense spoken of in s 51(ii). 266 (2003) 215 CLR 185 at 247 [117]. Crennan The drafting history of s 51(ii), dealt with in the reasons of the Chief Justice, reveals the subject to which the language of s 51(ii) is directed267, and shows why the wide, non-exclusive power of the federal Parliament to raise money by any mode of taxation is nevertheless subject to limits. Those limits reflect the federal rationale of protecting taxpayers in the same circumstances in the various States of the Federation from discrimination by a federal law with respect to taxation, imposed differentially or unequally between States. The American authorities considering Art I of the Constitution of the United States, referred to in the reasons of the Chief Justice, also shed some light on the questions raised by the plaintiffs' submissions. Those cases illustrate the limitation on Congress's power to tax, imposed by the requirement in Art I, s 8(1) that "all Duties, Imposts and Excises shall be uniform throughout the United States". The requirement of uniformity is one of geographic uniformity, which is not contravened by the differential or unequal operation of a law with respect to taxation, where the "tax structure does not discriminate among the states"268, but the differential or unequal operation results from different conditions in different States, that being a neutral (ie a non-discriminatory) factor269. In Colonial Sugar Refining Co Ltd v Irving270, the Privy Council upheld as constitutionally valid the first federal excise duty imposed on all sugar in respect of which customs duties imposed by the States had not been paid. The unequal burden which resulted was found not to contravene s 51(ii) because the inequality of burden resulted from "the inequality of the duties imposed by the States themselves"271. In seeking to distinguish Irving, the plaintiffs emphasised that the method of calculation of any MRRT liability took into account State mining royalties, which led to submissions by the plaintiffs and the State of Queensland that the MRRT legislation fell squarely within what was said by the majority in R v Barger272, postulating a change in the facts of Irving which would have contravened s 51(ii): 267 Cole v Whitfield (1988) 165 CLR 360 at 385; [1988] HCA 18. 268 Tribe, American Constitutional Law, 3rd ed (2000), vol 1 at 842. 269 Knowlton v Moore 178 US 41 (1900), Florida v Mellon 273 US 12 (1927) and Gottlieb v White 69 F 2d 792 (1934), cited by Taylor J in Conroy v Carter (1968) 118 CLR 90 at 100-101; see also United States v Ptasynski 462 US 74 (1983). 270 ("Irving") [1906] AC 360. 271 Irving [1906] AC 360 at 367. 272 ("Barger") (1908) 6 CLR 41 at 70-71; [1908] HCA 43. Crennan "if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity." By reference to that passage, the plaintiffs, and the State of Queensland, described the MRRT as structured to be inversely proportional, or directly related, to the rate at which a State mining royalty is levied. However, read in context, that passage in Barger illustrates the difference between the inoffensive tax in Irving, which operated unequally because of different business conditions (unequal customs duties) in the States, and a differential or unequal imposition of a federal tax by Parliament, such as imposing different rates of taxation according only to locality. Also in Barger, in a passage affirmed subsequently by the Privy Council in W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW)273, Isaacs J (in dissent in the result, but not on this point) explained that the limitation in s 51(ii) does not encompass a differential or unequal operation of a law with respect to taxation which is dependent upon "natural or business circumstances [which] may operate with more or less force in different localities"274. In Cameron v Deputy Federal Commissioner of Taxation275, regulations made under the Income Tax Assessment Act 1915 (Cth)276 fixed differential or unequal values as "the fair average value" of stock to be taken into account (absent actual cost prices per head) for the purposes of determining the business profits included in a taxpayer's income. That imposition of different legal standards (unequal deductions) upon taxpayers, fixed solely upon the basis of the State in which the taxpayer's stock was located, contravened s 51(ii). As Isaacs J observed, those legal standards fixed by the federal Parliament were not based on "real commercial considerations" differing between States277. Further, Starke J observed that an inequality imposed on taxpayers in different States by a law with respect to taxation is distinct from an unequal incidence or burden of taxation "on account of the inequality of conditions obtaining in the respective States"278. 273 (1940) 63 CLR 338 at 348; [1940] AC 838 at 857. 274 (1908) 6 CLR 41 at 108. 275 ("Cameron") (1923) 32 CLR 68; [1923] HCA 4. 276 Income Tax Regulations 1917 (Cth), as amended by Statutory Rules 1918, No 315. 277 (1923) 32 CLR 68 at 75. 278 (1923) 32 CLR 68 at 79. Crennan The plaintiffs relied on Cameron as directly on point because the above normal profit on which the MRRT is levied is derived by subtracting different amounts of royalty credits referable to different State mining royalties charged, which depend on different State mining royalty regimes and rates. The critical difference between the regulations in Cameron and the MRRT formula is that the different values for stock in different States in Cameron were unequal standards fixed by the federal Parliament. Royalty credits, for which allowance is given in the MRRT formula, prefatory to calculating the tax base for the MRRT, are based on actual State exactions fixed (subject to change) by State legislatures. Of the seven MRRT allowances, only State mining royalties explicitly bring in State laws, but the MRRT allowances differ somewhat from the capital and operating costs already taken into account before the MRRT formula is applied. The allowances are available as "credits" (State mining royalties) and "losses" (for example, transferred losses, pre-mining losses and a start-up allowance) which can be carried forward, as necessarily incurred (or suffered) before a relevant project generates above normal profit. The method of calculation of the MRRT does not impose a tax dependent on variable values; rather, it is merely a formula for calculating the tax base, in circumstances where the tax base is affected by varying State laws imposing royalty charges to which a taxpayer's profit is subject. The calculations, tables and examples produced by the plaintiffs to illustrate different effective rates of taxation appeared to owe something to Cameron. Calculations took into account a taxpayer's MRRT and a taxpayer's mining profit, which led to irrelevant results, because the MRRT, being an economic rents tax (unlike an income tax on all sources of income), is not a tax on all profit. It is a tax only on the above normal portion of profit, and it is imposed only in the MRRT years in which a relevant project generates above normal profit. The differential or unequal operation of a law with respect to taxation was also considered in Conroy v Carter279. In dealing with an aspect of the legislation under consideration, about which the whole Court agreed280, Taylor J stated the principle, affirmed in Austin, which his Honour then illustrated by specific example281: "[A] law with respect to taxation cannot, in general, be said so to discriminate if its operation is general throughout the Commonwealth 279 (1968) 118 CLR 90. 280 Poultry Industry Levy Collection Act 1965 (Cth), s 6(1)(a). 281 (1968) 118 CLR 90 at 101. Crennan even though, by reason of circumstances existing in one or other States, it may not operate uniformly. Such a law is s 72(1) of the Income Tax Assessment Act 1936-1966 (Cth) which provides, inter alia, that sums for which the taxpayer is personally liable and which are paid in Australia by him in the year of income for land tax imposed under any law of the State shall be allowable deductions. This is a provision which operates generally throughout the Commonwealth and the fact that in some States there may be no legislation imposing land tax does not mean that it discriminates between States." The plaintiffs accepted the correctness of the general principle but, as already explained, the plaintiffs distinguished the MRRT legislation as structurally different from income tax legislation. The distinction does not support the plaintiffs' characterisation of the MRRT legislation or the structure of the MRRT as discriminatory. Structural differences can be acknowledged, since the MRRT, unlike income tax, is levied on a narrow portion of profit. However, in their relationship to the tax base, State mining royalties imposed under the laws of the States are not dissimilar to the example of State land tax referred to by Taylor J in Conroy v Carter. Differential or unequal State mining royalties, required to be paid to State governments, are part of the business conditions under which taxpaying miners operate. The method of calculation of any MRRT liability, coupled with the threshold of profit (less than or equal to $75 million) after which a taxpayer becomes liable to pay MRRT, establishes the taxable net profit upon which the uniform rate of taxation is imposed. The submissions that the inclusion of an allowance for State royalties in the method of calculation of any MRRT liability is an impermissible attempt by the federal Parliament to impose the MRRT on taxpayers on a differential or unequal basis, specifically at different effective rates, cannot be sustained. The MRRT legislation operates generally, notwithstanding a method of calculation of a taxpayer's liability set by the federal Parliament which includes an allowance for State mining royalties. The rate of taxation applied to the tax base, above normal profit, is imposed equally throughout Australia. Any differential or unequal operation of the MRRT legislation does not arise from the MRRT legislation, the structure of the MRRT, or a discriminatory method of calculating a taxpayer's MRRT liability, but is due to different business conditions between States (unequal mining royalties). Conclusions For these reasons, the MRRT legislation does not contravene the proviso in s 51(ii). That conclusion renders it unnecessary to deal with the Commonwealth's alternative answer to the plaintiffs' challenge based on s 51(ii), which the Commonwealth supported by reference to an approach considered in Crennan Austin282 and subsequently referred to in Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict)283. The plaintiffs agreed that the conclusions drawn in relation to s 51(ii) and the MRRT would also dispose of their constitutional challenge to the MRRT based on s 99. For the reasons given above, the MRRT legislation does not contravene s 99 by creating a preference for one State over another. 282 (2003) 215 CLR 185 at 247 [118]. 283 (2004) 220 CLR 388 at 424-425 [91] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 53. 177 KIEFEL J. The second to fifth plaintiffs are subsidiaries of the first plaintiff and the holders of registered mining leases for iron ore granted under s 71 of the Mining Act 1978 (WA). They are obliged to pay royalties to the Crown in right of the State of Western Australia at the rate prescribed by reg 86 of the Mining Regulations 1981 (WA) made pursuant to ss 109 and 162(1) of the Mining Act. Section 3(1) in each of the Minerals Resource Rent Tax (Imposition— Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) (collectively "the Imposition Acts") imposes a minerals resource rent tax ("MRRT"), the liability for which is calculated under the Minerals Resource Rent Tax Act 2012 (Cth) ("the MRRT Act"). In these reasons, "the MRRT legislation" refers to the Imposition Acts and the MRRT Act together. The calculation of MRRT is based upon "above normal profits" made on a miner's mining project interests284. The term "above normal profits" is not defined in the MRRT Act, but it may be inferred from the "low profit offsets", for which the Act provides285, that profits are above normal when the sum of profits of each mining project interest of the miner and its related entities is more than $75 million. The calculation of MRRT liability286 involves the deduction of "MRRT allowances"287 from a miner's mining profits before the MRRT rate is applied. The MRRT allowances include a royalty allowance288. The effect of the royalty allowance is that full credit is given to a miner for the amount of any mining royalties paid to the Commonwealth, a State or a Territory289 for the mining of certain resources290. The central feature of the MRRT legislation, so far as concerns the plaintiffs' claims, is the allowance made for mining royalties incurred by a miner. 284 Minerals Resource Rent Tax Act 2012 (Cth), ss 1-10, 10-1. 285 Minerals Resource Rent Tax Act 2012, ss 45-5, 45-10. 286 Minerals Resource Rent Tax Act 2012, s 10-5. 287 Minerals Resource Rent Tax Act 2012, Ch 3. 288 Minerals Resource Rent Tax Act 2012, s 10-10. 289 See the note to s 60-25(1) of the Minerals Resource Rent Tax Act 2012. 290 Minerals Resource Rent Tax Act 2012, s 20-5. The mining royalties payable by a miner in respect of the mining of iron ore vary from State to State. The combined effect of full credit being given for the amount paid by a miner for mining royalties and the variation in the rate of royalties as between States, all other things being equal, is that miners in some States will pay more by way of MRRT. A miner in a State which imposes a lower rate of mining royalties pays more to the Commonwealth by way of MRRT than a miner in a State which imposes a higher rate of mining royalties. If a State increases mining royalties, miners there will pay less MRRT. The States have the capacity to alter the applicable rate of mining royalties. Although there is little evidence of it having occurred, it is at least possible that a State may reduce its rate of royalty or make other concessions to the amount of mining royalties payable in order to encourage mining and the construction of infrastructure associated with it. If a State reduces mining royalties, miners there will pay more MRRT. The plaintiffs' claims The plaintiffs' principal claim is that MRRT, as calculated under the MRRT Act and imposed by the Imposition Acts, offends s 51(ii) of the Constitution291, the words of which contain a positive prohibition that a law with respect to taxation not discriminate between the States292. There is no dispute that s 3(1) of each of the Imposition Acts is a law with respect to taxation. The plaintiffs also contend that the MRRT legislation gives preference to one State over another, in contravention of s 99 of the Constitution293. This question is essentially the same as that arising under s 51(ii)294. 291 Section 51(ii) provides: "The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to … taxation; but so as not to discriminate between States or parts of States". 292 New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 127 [219]-[220]; [2006] HCA 52. 293 Section 99 provides: "The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof." 294 See R v Barger (1908) 6 CLR 41 at 107 per Isaacs J; [1908] HCA 43. The plaintiffs seek to apply the Melbourne Corporation doctrine295. The plaintiffs allege that the MRRT legislation has the effect of detracting from, impairing or curtailing the ability of a State to differentiate itself from other States by determining an applicable rate of mining royalties. Any reduction a State makes simply results in an increase in MRRT payable by a miner. This is alleged to affect the capacity of a State to function as a government with sovereign control over its territory and the economic development of its natural resources. The abovementioned effect, of an increase in the amount of MRRT payable by a miner, which results where a State reduces its rate of mining royalties or exempts a miner from paying them, is also said to detract from, impair or curtail a State in granting aid to mining contrary to the terms of s 91 of the Constitution296. The s 51(ii) issue The conclusion for which the plaintiffs contend is that the MRRT legislation discriminates between the States contrary to s 51(ii). It discriminates because the amount of MRRT paid by a miner varies according to the State in which the miner has its mining interests and according to the State to which it pays mining royalties. It may be noted at the outset that the amount of MRRT payable will vary according to a number of factors provided for in the MRRT Act, in the nature of items of expenditure and other allowances. The plaintiffs' argument is said to rely upon the "structural" aspects of the MRRT Act. Those aspects of the MRRT Act which the plaintiffs identify as relevant and significant are that: mining royalties are expressly excluded as items of expenditure; full credit is given for mining royalties by way of allowance; and the amount paid by way of mining royalties is a critical element of the calculation of a miner's ultimate MRRT liability. An understanding of the workings of the MRRT Act is therefore necessary to a consideration of the plaintiffs' argument. 295 After Melbourne Corporation v The Commonwealth (1947) 74 CLR 31; [1947] HCA 26. 296 Section 91 provides: "Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, any aid to or bounty on the production or export of goods." The calculation of MRRT By s 10-1 of the MRRT Act, a miner is liable to pay MRRT, for an MRRT year297, equal to the sum of its MRRT liabilities for each of its mining project interests298 for that year. The formula provided by s 10-5 for calculating a miner's MRRT liability for a mining project interest in an MRRT year is: MRRT liability = MRRT rate × (Mining profit − MRRT allowances). The MRRT rate is the rate of taxation at which a miner will be assessed with respect to its mining profits. The effective rate, given by the formula set out in s 4 in each of the Imposition Acts, is 22.5 per cent. Mining profits are dealt with in Pt 2-3 of the MRRT Act. In general terms, a miner's mining profit is the excess of its mining revenue over mining expenditure for the year299. Certain expenses are excluded from mining expenditure300 in the calculation of mining profit. Mining royalties are an item of "excluded expenditure"301. Other excluded expenditure includes items such as financing costs302, payments under hire purchase agreements303 and the cost of acquiring rights and interests in projects304. Mining royalties are then included amongst the MRRT allowances which are to be deducted from the figure for mining profit. Royalty allowances appear as item 1 in the order of the allowances which are to be applied in the calculation of MRRT liability305. Other allowances include pre-mining and mining loss allowances, a starting base allowance, and transferred pre-mining and mining loss allowances. 297 Defined as each financial year starting on or after 1 July 2012: Minerals Resource Rent Tax Act 2012, ss 10-25, 300-1. 298 Minerals Resource Rent Tax Act 2012, ss 15-5, 300-1. 299 Minerals Resource Rent Tax Act 2012, s 25-1. 300 Minerals Resource Rent Tax Act 2012, Pt 2-3, Div 35, subdiv 35-B. 301 Minerals Resource Rent Tax Act 2012, s 35-40. 302 Minerals Resource Rent Tax Act 2012, s 35-50. 303 Minerals Resource Rent Tax Act 2012, s 35-55. 304 Minerals Resource Rent Tax Act 2012, s 35-35. 305 Minerals Resource Rent Tax Act 2012, s 10-10. Chapter 3 deals with MRRT allowances and Pt 3-1, Div 60 with royalty allowances. As a guide to Div 60, it is said that "[m]ining royalties paid to the Commonwealth, States and Territories reduce a miner's MRRT liabilities for a mining project interest"306. The stated objects of the Division, by s 60-5, include reducing "a miner's MRRT liability relating to profits relating to taxable resources, to the extent those taxable resources are subject to Commonwealth, State and Territory royalties". A "mining royalty" is defined307 as expenditure made under a Commonwealth, State or Territory law in relation to a taxable resource extracted under authority of a production right. A miner has a royalty allowance for a mining project interest if the miner has a mining profit for that interest for the year and one or more "royalty credits" relating to the interest308. A royalty credit arises when a miner incurs a liability, inter alia, by way of a mining royalty309. A royalty credit may be transferred to the miner's other mining project interests and may be used in subsequent years310. Section 60-25 explains how a royalty credit is calculated. The amount is determined first by reference to the liability incurred for mining royalties. That liability is then divided by the MRRT rate. In the example given in the section, where a miner pays to a State mining royalties of $22.5 million in an MRRT year, the royalty credit is: $22.5 million MRRT rate [22.5 per cent] = $100 million. In summary, for every $22.5 million paid by a miner by way of mining royalties, a credit of $100 million is given. The royalty credit will thus be 4.4 recurring times each dollar paid, or otherwise incurred, by way of State mining royalties. As the note to s 60-25(1) says, the calculation "grosses-up the royalty payment to an amount that will reduce the ultimate MRRT liability by the amount of the royalty payment". The plaintiffs' argument does not depend upon the provisions which have the effect of grossing up mining royalties. Their 306 Minerals Resource Rent Tax Act 2012, s 60-1. 307 Minerals Resource Rent Tax Act 2012, ss 35-45(1), 300-1. 308 Minerals Resource Rent Tax Act 2012, ss 60-10, 300-1. 309 Minerals Resource Rent Tax Act 2012, s 60-20(1)(a). 310 Minerals Resource Rent Tax Act 2012, s 60-25(2). argument is the same regardless of those provisions. It centres upon full credit being given for mining royalties actually paid or incurred. A miner's royalty allowance is so much of the royalty credits as does not exceed the mining profit311. The royalty allowance, together with all other allowances, is deducted from the figure for mining profit in accordance with the formula in s 10-5, which is set out above312. A miner's liability for MRRT is then determined by multiplying that figure by the MRRT rate. By way of example, if the mining profit is $500 million and the MRRT allowances are $200 million, a miner's liability will be: $300 million × 22.5 per cent = $67.5 million. Because the calculation of a royalty credit, and therefore the royalty allowance, gives full credit for mining royalties in fact incurred by a miner, it follows that where the rate of royalty charged by one State varies from other States there will be differences in miners' liability for MRRT. The plaintiffs provided a series of equations transforming the formula in s 10-10 that they say demonstrate the impact of royalty allowances on the ultimate liability for MRRT. Those equations, which refer to a so-called "effective rate" of MRRT, are not of particular assistance to the issues before the Court and may be put to one side. There will be other differences in liability for MRRT, as between miners generally and as between miners in different States, resulting from the other allowances provided for in the MRRT Act. Further, MRRT liability will differ as between miners because their mining expenditure, which is deducted from revenue to ascertain mining profit, will be different. Such expenditure may include State taxes and levies other than mining royalties, such as payroll tax, workers' compensation premiums and the like. These taxes and levies may also differ as between States. Consideration of the s 51(ii) issue Discrimination Discrimination is a concept that arises for consideration in a variety of constitutional contexts313. Section 51(ii) prohibits a Commonwealth taxation law discriminating "between States or parts of States". The discrimination of which 311 Minerals Resource Rent Tax Act 2012, s 60-15(1). 312 See [188] above. 313 Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595 at 629 [40]; [2004] HCA 19. it speaks is discrimination on account of locality. Section 51(ii) requires that the States be treated alike and that a Commonwealth law relating to taxation not differentiate in its effect between the States. In R v Barger314, Isaacs J said that "[d]iscrimination between localities in the widest sense means that, because one man or his property is in one locality, then, regardless of any other circumstance, he or it is to be treated differently from the man or similar property in another locality"315. Although his Honour was in dissent in Barger, with Higgins J, this view of s 51(ii) was subsequently cited with approval in Cameron v Deputy Federal Commissioner of Taxation316, a case where a different standard was to be applied to the value of livestock solely by reference to "their State situation"317. Another statement by Isaacs J in Barger as to s 51(ii) is worthy of mention. It was referred to with approval by Evatt J in Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd318 and on appeal by the Privy Council in that case319. Isaacs J said320 that the "pervading idea" of the discrimination to which s 51(ii) refers is "the preference of locality merely because it is locality … It does not include a differentiation based on other considerations, which are dependent on natural or business circumstances". Although his Honour was speaking of the reference in s 51(ii) to "parts of States", what he said applies generally to the notion of discrimination with which s 51(ii) is concerned. Although discrimination can be an abstract concept, working out whether the effect of legislation is discriminatory is largely a practical question involving the consideration of unequal treatment321. It involves a comparison322. If a 314 (1908) 6 CLR 41. 315 R v Barger (1908) 6 CLR 41 at 110. 316 (1923) 32 CLR 68 at 72 per Knox CJ, 79 per Rich J; [1923] HCA 4. 317 Cameron v Deputy Federal Commissioner of Taxation (1923) 32 CLR 68 at 76 per 318 (1939) 61 CLR 735 at 781; [1939] HCA 27. 319 W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) (1940) 63 CLR 338 at 348; [1940] AC 838 at 856-857. 320 R v Barger (1908) 6 CLR 41 at 108. 321 Street v Queensland Bar Association (1989) 168 CLR 461 at 510; [1989] HCA 53. Commonwealth taxation law provides that the same measure is to apply to all persons or things subject to the tax, it would not generally be regarded as likely to discriminate in fact. Where a difference results from the operation of a taxation law, the question arises whether that difference is accounted for by the geographical situation of the subject of the tax. Importantly, for there to be the discrimination of which s 51(ii) speaks, the difference must be produced by the Commonwealth law itself and by reference to that geographical situation. There may not be discrimination where the difference results from the provisions of a State law. Section 51(ii) does not prohibit a taxation law from operating differentially in all respects. It does not require that a taxation law control the effect of other, external, factors which may be productive of a difference. A general deduction? The reference in Barger to "business circumstances"323 brings to mind the possibility that the MRRT Act, in giving full credit for State mining royalties, does little more than permit a miner something in the nature of a deduction of a business expense from mining profits before those profits are subjected to taxation. As the Commonwealth points out, miners are able to deduct State imposts when calculating their liability for income tax. It is not suggested that Commonwealth income tax legislation, in the provision for general deductions which it allows for business expenses from income, operates so as to discriminate in any relevant respect. The allowance for mining royalties in the MRRT Act does not appear to be so different from deductions of this kind. In common with them, the allowance for mining royalties operates generally and does not discriminate between miners in different States. The allowance is provided whenever mining royalties are incurred by a miner, regardless of the miner's locality. As the plaintiffs concede, their argument could not succeed had mining royalties been treated as mining expenditure under the MRRT Act. But they point out that the MRRT Act treats mining royalties differently from other mining expenditure. It expressly excludes them as items of mining expenditure. It further differentiates mining royalties from expenditure by allowing for them in full. The State of Queensland, intervening in support of the plaintiffs, submits that the royalty allowance is to be distinguished from other, more general deductions because what the MRRT Act deducts is not the royalty paid, but a product of the operation of "grossing up" upon an operand. What is extracted by the division by the MRRT rate, in the formula in s 60-25, is not the amount of 322 Street v Queensland Bar Association (1989) 168 CLR 461 at 506. 323 See [201] above. royalties paid, but the product of the calculation. This would seem to suggest that the royalty payment has, in the process, lost its quality as an item of business expenditure. It must be accepted that the MRRT Act treats the payment of mining royalties separately, even from other mining allowances, in order that they may be "grossed up" and allowed for. Nevertheless, it is the payment of mining royalties upon which that calculation is based. Putting aside the inflated figure for royalty allowance, upon which the plaintiffs' argument does not rely, it is the payment of mining royalties for which full credit is given. The fact that it is allowed for in full is a distinction without a point. The MRRT Act plainly acknowledges mining royalties as a sum which is likely to have been paid by miners to a State in the course of mining operations. The relevant effect of the royalty allowance is to give credit for what has been paid. It applies whenever such an expense is incurred and regardless of where it is incurred. The credit of royalty payment as a standard On its face, the calculation provided for by ss 10-5 and 25-5 would appear to operate uniformly. MRRT liability is determined by first identifying mining revenue, and then deducting certain mining expenditure and mining allowances. A uniform MRRT rate is applied to the figure arrived at. But the plaintiffs submit that it would be wrong to think that, because the Imposition Acts provide for a rate of 22.5 per cent, MRRT is levied uniformly. The plaintiffs contend that the legislation in Cameron is analogous in effect to the MRRT Act. The Income Tax Regulations 1917 (Cth) there considered provided that, so far as concerned profits made on the sale of livestock, different values were to be placed on stock of the same kind in different States. For example, a horse in New South Wales was to be valued at £8, but a horse in Victoria at £15 and in Queensland £4. The Deputy Federal Commissioner of Taxation proffered the explanation that the standard adopted was not arbitrary, but the actual average value of livestock in each State, which was merely recognised and enforced by the Regulations as a convenient and just method of valuing stock324. That explanation was rejected. The reasons of Isaacs J325 disclose that the value attributed to stock according to the Regulations was not in fact a "fair average value". Previously, the value of stock was to be that as determined by the Commissioner, but an amendment to the Regulations specified set values in a 324 Cameron v Deputy Federal Commissioner of Taxation (1923) 32 CLR 68 at 73-74. 325 Cameron v Deputy Federal Commissioner of Taxation (1923) 32 CLR 68 at 74-77. Had the Commissioner retained discretion schedule326. the determination, the Commissioner would have had to take account of values on either side of the relevant State borders. What the Regulations produced was a value rigidly fixed for the State in which the stock was located. Thus a horse in Albury was worth £8, whereas the same horse, located across the river at Wodonga, was to be valued at £15. to make Different standards were applied to different States by the Regulations in Cameron327. This was the source of the discrimination. What was produced by the Regulations was a standard which was identified not by reference to value in fact, but by reference to locality. Unsurprisingly, the Regulations were held to offend s 51(ii). As was pointed out by Isaacs J328, the only discrimen provided by the Regulations was "which State?" Cameron provides an unusually clear example of s 51(ii) discrimination. The royalty allowance provided for in the MRRT calculation does not operate in this way. The standard it applies is the actual amount of mining royalties which a miner has incurred. In contrast to the facts in Cameron, any variation in MRRT payable from miner to miner results from that fact and not from any State-based standard applied by the MRRT Act. The only causal connection between the royalty allowance and a State is that mining royalties are only incurred by a miner because of a State law. The MRRT Act says nothing about the quantum of mining royalties except that they are to be allowed in full when incurred. This tells against notions of discrimination. The cause of the difference? In Colonial Sugar Refining Co Ltd v Irving329 ("Irving") and in Barger, it was acknowledged that duties and levies in different parts of the Commonwealth would produce a differential effect for a Commonwealth law. It had been accepted by the framers of the Constitution that taxation may produce an indirect effect which was not uniform330. 326 Statutory Rules 1918, No 315. 327 (1923) 32 CLR 68 at 77. 328 Cameron v Deputy Federal Commissioner of Taxation (1923) 32 CLR 68 at 73; see also at 72 per Knox CJ. 330 R v Barger (1908) 6 CLR 41 at 69-70. The Excise Tariff 1902 (Cth), considered in Irving, exempted from the duties thereby imposed, goods upon which State customs duties had already been paid. However, the scale of duties differed as between the States so that the exemption operated unequally. An analogy with the provisions of the MRRT Act in this case is evident. Lord Davey, speaking for the Judicial Committee of the Privy Council, said331: "The rule laid down … is a general one, applicable to all the States alike, and the fact that it operates unequally in the several States arises not from anything done by the Parliament, but from the inequality of the duties imposed by the States themselves." A different view was taken of a similar exemption by the majority in Barger and this drew strong dissents from Isaacs and Higgins JJ. Barger is also authority for a view concerning powers reserved to the States which has long since been discredited332. This aspect of the case may be put to one side. Barger was concerned with the Excise Tariff 1906 (Cth), which imposed duties of excise upon specified goods at specified rates. However, the tariff did not apply to goods manufactured by any person in any part of the Commonwealth under conditions of remuneration of labour which satisfied any one of four prescribed matters. The majority held there to be discrimination in the taxing scheme by reference to the criterion of locality because of the possibility that goods of the same class would be excisable in some parts of the Commonwealth, but not others333. Isaacs J saw the exemption as a general rule operating unequally only because of the inequality of industrial circumstances334. There may be something to be said for the view335 that the approach of Isaacs J in Barger is more consonant with the decisions in Cameron and in Irving. It is not necessary to resolve the differences of opinion in Barger for the purposes of this matter. 331 Colonial Sugar Refining Co Ltd v Irving [1906] AC 360 at 367, cited with approval in Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 434 [127]-[128]; [2004] HCA 53. 332 See Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 434 [129]. 333 R v Barger (1908) 6 CLR 41 at 80. 334 R v Barger (1908) 6 CLR 41 at 110-111. 335 Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd (1939) 61 CLR 735 at 780-781 per Evatt J (in dissent). In Conroy v Carter336, Taylor J, with whom Barwick CJ, McTiernan, Kitto, Menzies and Windeyer JJ relevantly agreed, after referring to decisions concerning the United States Constitution and its command of geographical uniformity, said that it was not necessary, for a tax to be lawful by reference to s 51(ii), that it select objects which exist uniformly in all States. A law cannot, in general, be said to discriminate if its operation is general throughout the Commonwealth even if, by reason of circumstances existing in one or more States, it may not operate uniformly. This reflects the view expressed in Irving. Taylor J gave the example of a State land tax, which Commonwealth income tax legislation allows as a deduction from income in the relevant year. That provision for deduction, his Honour observed, operates generally throughout the Commonwealth. The fact that in some States there may be no legislation imposing land tax does not mean that the Commonwealth income tax legislation discriminates between the States. In the decision of the Full Court of the Supreme Court of Queensland in The Colonial Sugar Refining Co Ltd v Irving337, Griffith CJ concluded that "[i]f the imposition of these duties leads to an inequality, it is not a defect in the Federal law; it arises from the fact that the laws of the States were different, which is quite another thing". His Honour also observed that, were inequality to be viewed by reference to the operation of State law, the power of the federal Parliament would be limited by the laws of the States and by the mode in which the States had exercised their legislative powers. These observations point up the difficulties inherent in the plaintiffs' argument, which identifies differences in State laws as relevant to Commonwealth laws, particularly given the supremacy of the latter by reason of s 109 of the Constitution. The plaintiffs argue that the MRRT Act cannot be viewed in the same way as the legislation in the abovementioned cases because the MRRT Act itself provides for differential rates. It makes State mining royalties incurred an essential integer in the calculation of a miner's ultimate liability for MRRT. The calculation of royalty allowance is critical to that liability. The importance of this aspect of the plaintiffs' argument may be seen from their statements that: the discrimination resides in the calculation; the MRRT Act is discriminatory because the royalty allowance is the basis of the Act's structure; and "the tax is one calculated directly by reference to the amount of the royalty". In substance, payment of mining royalties to a State is treated no differently from any other allowance or deduction by the MRRT Act, save in the respects previously mentioned. Those differences do not detract from the fact 336 (1968) 118 CLR 90 at 100-101; [1968] HCA 39. 337 [1903] St R Qd 261 at 277. that mining royalties incurred are an amount for which credit is given and which reduces the amount of mining profits to be subjected to the MRRT rate. Mining royalties are essential to the calculation of a miner's ultimate MRRT liability in the same way as are other items of mining expenditure and mining allowances. An equalised tax burden? The State of Queensland contends that the MRRT Act seeks to bring about equality between miners in different States. It was the object of the MRRT Act to equalise a miner's overall tax burden. This can be seen by it operating so as to increase the MRRT liability in States with lower royalty rates, and vice versa. In support of that argument, reliance is placed upon a statement made by Griffith CJ for the majority in Barger. After referring to what had been said in Irving, that it was the effect of the State, not the Commonwealth, laws that created the unequal burden, his Honour said338: "E converso, if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity." The MRRT Act does not operate as does the hypothetical law referred to in Barger. The law to which Griffith CJ referred is a law which itself adjusts according to the amount of State duties paid, so that the overall amount of Commonwealth and State taxes is equalised. By way of example, if mining royalties of $2 were paid by a miner in one State and $4 by a miner in another, a Commonwealth law would operate in the way contemplated by Griffith CJ if it provided that the firstmentioned miner pay Commonwealth tax of $4 and the second $2. The MRRT Act does not operate in this way. It is not structured to ameliorate the effect of the State mining royalties for miners, but rather makes provision for miners' business circumstances, which may be affected by various State laws. It does not breach the constitutional prohibition in s 51(ii). Conclusion on the MRRT Act and s 51(ii) In Conroy v Carter, Menzies J339, with whom Barwick CJ and McTiernan J agreed, spoke of the discrimination to which s 51(ii) refers in the context of a taxation law which imposes a taxation burden. It may be accepted that s 51(ii) also prohibits a benefit which applies differentially as between the States. Expressing what his Honour said more generally, s 51(ii) forbids a 338 R v Barger (1908) 6 CLR 41 at 70-71. 339 Conroy v Carter (1968) 118 CLR 90 at 103. taxation law which operates to benefit or burden a person because of some connection with a State, but which would not be granted to or imposed on other persons not having that connection. In determining whether a law operates in that way, it is to the Commonwealth law itself that attention is directed. The MRRT Act provides generally for a royalty allowance, the calculation of which includes a credit for the whole amount incurred by a miner by way of mining royalties paid to a State. There is no standard of locality, of connection to a State, in the allowance made and in the deduction for which it provides. The standard is the fact and amount of payment. Any difference in the amount of the deduction for mining royalties results not from the MRRT Act but from the State legislation. Those who drafted the MRRT Act may be taken to have been aware that rates of mining royalties differ as between the States. The point, however, is not that there is some underlying assumption of difference on which the MRRT Act operates, as the plaintiffs and the State of Queensland suggest, but rather that the MRRT Act allows for whatever mining royalties are required to be paid under State legislation. It is not the Commonwealth Act that creates any inequality or difference, but State legislation. The Commonwealth is entitled to do what the States do and base its taxation measures on considerations of fairness, so long as it adheres to the constitutional injunction not to prefer States340. A State royalty is treated by the MRRT legislation as an amount which is likely to have been incurred by a miner in connection with its mining activities. A miner's MRRT liability will be affected by the expenses which it incurs, the other allowances for which the MRRT Act provides and whether, in a given MRRT year, a royalty credit has been transferred or carried over. This brings to mind what was said by Griffith CJ in the Supreme Court of Queensland in The Colonial Sugar Refining Co Ltd v Irving341, that the difference effected by the Excise Tariff 1902 was not discrimination created by Commonwealth law, but "a difference in the individual incidence of taxation". The MRRT legislation does not discriminate between States and does not create a preference for one over another. 340 R v Barger (1908) 6 CLR 41 at 108; Deputy Federal Commissioner of Taxation (NSW) v W R Moran Pty Ltd (1939) 61 CLR 735 at 781-782; W R Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) (1940) 63 CLR 338 at 348; [1940] AC 838 at 856-857. 341 [1903] St R Qd 261 at 276. The Melbourne Corporation doctrine The plaintiffs' claim that the MRRT legislation affects a State's capacity to control its sovereign territory and to deal with its natural resources, and Western Australia's submissions to similar effect, appear to reflect arguments which were put by Western Australia, and which were rejected, in Western Australia v The Commonwealth (Native Title Act Case)342, as Hayne, Bell and Keane JJ observe in their reasons. The MRRT legislation is not directed to the States and does not affect the government of a State. It does not deny the ability of a State to fix a rate of mining royalty. Any effect upon a State's ability to offer incentives, by reducing that rate or providing an exemption, is not a burden or limit respecting a State's constitutional functions. I agree with the reasons of Hayne, Bell and Keane JJ on this issue. Section 91 Section 91343, the plaintiffs submit, takes effect as a prohibition directed to any law made under a head of power in the Constitution which may hinder a State from providing the abovementioned incentives to a miner, as an encouragement to mining activity. In this regard, the plaintiffs rely upon the express provision, made in s 91, that "[n]othing in this Constitution prohibits a State from granting any aid". Section 91 must be read with s 90344. In Seamen's Union of Australia v Utah Development Co345, the only decision of this Court which has been 342 (1995) 183 CLR 373 at 478-479, 481; [1995] HCA 47. 343 See [185], fn 296 above. 344 Section 90 of the Constitution provides: "On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive. On the imposition of uniform duties of customs all laws of the several States imposing duties of customs or of excise, or offering bounties on the production or export of goods, shall cease to have effect, but any grant of or agreement for any such bounty lawfully made by or under the authority of the Government of any State shall be taken to be good if made before the thirtieth day of June, one thousand eight hundred and ninety-eight, and not otherwise." concerned with s 91, this Court discussed the relationship between ss 90 and 91. Mason J, with whom Jacobs and Aickin JJ agreed, observed346 that s 90 contains a prohibition which arises from the exclusive conferral on the Commonwealth Parliament of a power to impose duties of customs and excise and to grant bounties on the production and export of goods. The function of s 91 was said to relax that prohibition. The words "[n]othing in this Constitution" were held to refer back primarily, if not exclusively, to s 90 because there was no other provision in the Constitution which contained a relevant prohibition. What was said in Seamen's Union provides the answer to the plaintiffs' argument. Contrary to the plaintiffs' contention, that case did decide that the purpose of s 91 is to qualify the prohibition in s 90. Section 91 does not itself operate as a prohibition on Commonwealth laws. Section 91 confirms that a State may grant aid, which is to say a State Parliament may authorise expenditure by this means; it does not speak of how Commonwealth laws might interact with that grant. It is therefore not strictly necessary to point out that the plaintiffs do not refer to "aid" in the nature of a parliamentary grant of money, which is the sense in which it appears to have been understood in Seamen's Union347. Stephen J, in particular, appears to have taken up the argument put by the State of Queensland there, that aid refers to a pecuniary payment authorised by Parliament. His Honour said that history supports a narrower view of aid than as general assistance348. On that view, the incentives to which the plaintiffs refer would not amount to aid within the meaning of s 91. Conclusion and orders I agree with the orders proposed by Hayne, Bell and Keane JJ. 345 (1978) 144 CLR 120; [1978] HCA 46. 346 Seamen's Union of Australia v Utah Development Co (1978) 144 CLR 120 at 147. 347 See (1978) 144 CLR 120 at 126 per Barwick CJ, 135 per Gibbs J, 140 per Stephen J, 148 per Mason J. 348 Seamen's Union of Australia v Utah Development Co (1978) 144 CLR 120 at 140.

HIGH COURT OF AUSTRALIA SELF CARE IP HOLDINGS PTY LTD & ANOR APPELLANTS AND ALLERGAN AUSTRALIA PTY LTD & ANOR RESPONDENTS Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8 Dates of Hearing: 13 October & 14 December 2022 Date of Judgment: 15 March 2023 S79/2022 & S80/2022 ORDER In Matter No S79 of 2022: The appeal be allowed with costs. Orders 2 to 6 of the orders made by the Full Court of the Federal Court of Australia on 7 September 2021 and the declarations and orders made by the Full Court of the Federal Court of Australia on 13 October 2021 in proceeding NSD 35 of 2021 be set aside and, in their place, order that the appeal be dismissed with costs. In Matter No S80 of 2022: The appeal be allowed with costs. The orders made by the Full Court of the Federal Court of Australia on 7 September 2021 in proceeding NSD 249 of 2021 be set aside and, in their place, order that the appeal be dismissed with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with A R Lang SC for the appellants in each matter (instructed by Gilbert + Tobin) J T Gleeson SC with H P T Bevan SC and K I H Lindeman for the respondents in each matter (instructed by Griffith Hack Lawyers) J M Beaumont SC with G R Rubagotti, appearing as amicus curiae (at the hearing on 14 December 2022) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd Intellectual property – Trade marks – Trade Marks Act 1995 (Cth) ("Act") – Trade mark infringement under s 120(1) of Act – Where BOTOX registered as defensive trade mark – Whether "instant Botox® alternative" used as trade mark – Whether "instant Botox® alternative" and PROTOX deceptively similar to defensive trade mark – Whether reputation relevant to deceptive similarity. Consumer law – Misleading or deceptive conduct – False or misleading representations – Where alleged representation that wrinkle reducing effects of Inhibox would last, after treatment, for period equivalent to that achieved with treatment by Botox injection – Whether alleged representation conveyed. Words and phrases – "badge of origin", "deceptive similarity", "defensive trade mark", "imperfect recollection", "notional buyer", "reasonable consumer", "reputation", "use as a trade mark". Trade Marks Act 1995 (Cth), ss 10, 120, 185. Competition and Consumer Act 2010 (Cth), Sch 2, ss 4, 18, 29. KIEFEL CJ, GAGELER, GORDON, EDELMAN AND GLEESON JJ. Botox is an injectable pharmaceutical product containing botulinum toxin, type A. Allergan Inc, the second respondent, manufactures Botox and is registered under the Trade Marks Act 1995 (Cth) ("the TM Act") as the owner of various trade marks, including "[p]harmaceutical preparations for the treatment of ... wrinkles" and in class 3 for goods including "anti-ageing creams" and "anti-wrinkle cream". The class 3 mark is referred to in this judgment as the "BOTOX mark". Allergan1 does not use the BOTOX mark on any class 3 goods – that mark is a "defensive trade mark" under s 185 of the TM Act. in class 5 for goods the BOTOX mark including including anti-wrinkle skincare products, under The appellants (collectively, "Self Care") supply cosmetic products in trade mark class 3, FREEZEFRAME. Self Care's products are topical creams, serums and lotions that are typically self-applied. The issues in this Court were confined to just two of Self Care's products – Inhibox and Protox. the Under the TM Act, in relation to alleged infringement of the BOTOX mark contrary to s 120(1), there were relevantly two issues. First, did Self Care use the phrase "instant Botox® alternative" on Packaging A, Packaging B and its website2 in relation to Inhibox as a mark and, if so, was it deceptively similar to the BOTOX mark? Second, when Self Care used PROTOX as a mark3 (about which there was no dispute) was it deceptively similar to the BOTOX mark? Addressing both those issues required this Court to squarely confront the question of the relevance, if any, of reputation in assessing deceptive similarity in infringement proceedings under s 120(1) of the TM Act. As these reasons will show, reputation is not relevant to that inquiry. And, contrary to the findings of the Full Court of the Federal Court of Australia, Self Care did not infringe Allergan's BOTOX mark under s 120(1) of the TM Act by its use of either "instant Botox® alternative" or PROTOX. 1 The first respondent, Allergan Australia Pty Ltd, is a subsidiary of the second respondent, Allergan Inc (collectively, "Allergan"). Photographs of Packaging A and Packaging B of Inhibox are in Sch 1 to these reasons for judgment. Relevant extracts from Self Care's website are set out in the reasons. Photographs of the packaging of Protox are in Sch 2 to these reasons for judgment. Gordon Edelman Gleeson The third issue in this Court concerned whether Self Care contravened ss 18(1) and 29(1)(a) and (g) of the Australian Consumer Law4 ("the ACL"). The Full Court found that Self Care's use of the phrase "instant Botox® alternative" on Packaging A, Packaging B and the website in relation to Inhibox conveyed a representation that the wrinkle reducing effects of Inhibox would last, after treatment, for a period equivalent to that which would be achieved with treatment by Botox injection ("the long term efficacy representation"). Self Care appealed that finding in this Court. There was no dispute that, if conveyed, the long term efficacy representation was misleading contrary to ss 18 and 29 of the ACL. The only issue was whether Self Care made the long term efficacy representation. As these reasons will explain, contrary to the findings of the Full Court, the long term efficacy representation was not made. Self Care's appeals should be allowed. These relevant aspects of reasons will address the TM Act, focusing particularly on the scheme for registration of a trade mark (including the grounds for opposition and refusal of registration) and the provisions relating to defensive trade marks. The reasons will then address the principles applicable to assessing whether a sign is used as a trade mark and, if so, whether the mark is deceptively similar to a registered trade mark contrary to s 120(1) of the TM Act. In that context, the reasons will consider Self Care's use of the signs "instant Botox® alternative" and PROTOX. The reasons will then turn to the third issue on appeal – the correct approach when determining the meaning conveyed by conduct alleged to contravene the ACL and whether Self Care made the long term efficacy representation. Relevant aspects of the TM Act The TM Act provides for the registration of trade marks and sets out and protects the rights deriving from registration. The structure and policy of the Act may be relevantly summarised as follows: (1) the Register of Trade Marks will protect distinctive trade marks5; (2) a trade mark is registered in respect of particular goods or services in one or more of the classes of goods or services recognised in the internationally agreed Nice Classification and adopted by the TM 4 Competition and Consumer Act 2010 (Cth), Sch 2. 5 TM Act, s 17; see also ss 24 and 41. See also Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337 at 345 [17], citing E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at 162-163 [41]-[42]. Gordon Edelman Gleeson Act and the Trade Marks Regulations 1995 (Cth) ("the TM Regs")6; (3) the registered trade mark is treated as property itself7 and the registered owner of a trade mark has rights including the exclusive right to use the trade mark in relation to the goods or services in respect of which it is registered ("the monopoly")8; (4) the monopoly following registration is a sufficient basis upon which to seek relief from infringement9; and (5) the likelihood of deception and confusion between trade marks should be avoided10. trader's goods or services A "trade mark" is defined in s 17 as "a sign used, or intended to be used, those of another to distinguish" one (emphasis added). A "sign" includes a word and a combination of words11. The concept of "use" of and as a trade mark is central to the operation of the TM Act. A registered owner of a trade mark, from the date of registration12, has exclusive rights to use and authorise the use of the trade mark13. A trade mark can be removed from the Register for non-use14. And, as will be seen, use of a sign as a trade mark is an essential element of the infringement of registered marks15. from In light of the issues raised in these appeals, in particular the question of whether the reputation of a trade mark is relevant in infringement proceedings 6 TM Act, s 19; TM Regs, Sch 1. See also Davison and Horak, Shanahan's Australian Law of Trade Marks & Passing Off, 7th ed (2022) at 103 [15.1015]. 7 TM Act, s 21. cf Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17]-[18]. 8 TM Act, s 20(1). 9 TM Act, ss 20(2) and 120(1). 10 Cantarella Bros (2014) 254 CLR 337 at 345 [17]. 11 TM Act, s 6(1) definition of "sign". 12 TM Act, s 20(3). 13 TM Act, s 20(1). 14 TM Act, ss 92, 97, 101. 15 TM Act, s 120. Gordon Edelman Gleeson under s 120(1), it is necessary at the outset to address two aspects of the TM Act in some detail – registration of a trade mark, and defensive trade marks. Registration of a trade mark A person may apply for registration of a trade mark in respect of specific goods in one or more of the classes of goods specified in Sch 1 to the TM Regs if the person claims to be the owner of the trade mark, and the person is using or intends to use the trade mark in relation to those goods16. The particular goods in respect of which it is sought to register the trade mark must be specified in the application17. Particulars of the application, including the class numbers of the goods in respect of which registration is sought, are published by the Registrar of Trade Marks18. The Registrar must examine, and report on, whether the application is made in accordance with the Act and whether there are grounds for rejecting it19. There is a presumption of registrability: the Registrar must, after examination, accept the application unless satisfied that the application is not made in accordance with the Act or that there are grounds for rejecting it20, and then must, unless the registration is successfully opposed, register the trade mark within a set period21. Division 2 of Pt 4 of the TM Act (ss 39-44) sets out the grounds upon which an application to register a trade mark must be rejected by the Registrar. An application must be rejected if, among other things, (1) the trade mark is not capable of distinguishing the applicant's goods in respect of which the trade mark 16 TM Act, s 27(1), (5). The making of an application for registration is prima facie evidence of intention to use the mark: Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 401. 17 TM Act, s 27(3)(b); TM Regs, reg 4.4. See also Bauer Consumer Media Ltd v Evergreen Television Pty Ltd (2019) 367 ALR 393 at 400 [30]. 18 TM Act, s 30; TM Regs, reg 4.7. 19 TM Act, s 31. 20 TM Act, s 33. See also Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 21 TM Act, ss 68 and 69; TM Regs, reg 7.1. Gordon Edelman Gleeson is sought to be registered from the goods of other persons22; (2) the use of the trade mark in relation to the particular goods would be likely to deceive or cause confusion, because of some connotation that the trade mark or a sign contained in the trade mark has23; or (3) the applicant's trade mark in respect of the applicant's goods is substantially identical with, or deceptively similar to, a trade mark registered by another person in respect of similar goods and the priority date for the registration of the applicant's trade mark is not earlier than the priority date for the registration of the other trade mark24. If the application is accepted by the Registrar, a notice of acceptance is sent to the applicant and the decision is advertised in the Official Journal25. Registration of the trade mark may then be opposed by another person under Pt 5 of the TM Act26. Division 2 of Pt 5 of the TM Act (ss 57-62A) sets out the grounds for opposing registration. Those grounds include, among others, any of the grounds for the Registrar to reject an application27. Relevantly, registration of a trade mark in respect of particular goods ("the applicant's trade mark") may be opposed under s 60 on the ground that another trade mark had, before the priority date for the registration of the applicant's trade mark in respect of those goods, acquired a reputation in Australia and that, because of that reputation, the use of the applicant's trade mark would be likely to deceive or cause confusion28. Aspects of s 60 are important. 22 TM Act, s 41. 23 TM Act, s 43. 24 TM Act, s 44. Rights are taken to have accrued to the registered owner as from the date of registration of the mark: TM Act, s 20(3). 25 TM Act, s 34. If the application is accepted subject to conditions or limitations or is rejected, the applicant has appeal rights: s 35. 26 TM Act, s 52. Notice of intention to oppose must be filed within two months from the date on which acceptance is advertised in the Official Journal and a statement of grounds and particulars must be filed within one month from the day on which the notice of intention to oppose is filed: TM Regs, regs 5.6-5.7. 27 TM Act, s 57. Except for the ground that the trade mark cannot be represented graphically: s 40. 28 TM Act, s 60. Gordon Edelman Gleeson Opposition must be based on a trade mark having a reputation in Australia, not on reputation alone. And, if the requisite reputation has been established, the likelihood of deception or confusion must also be demonstrated. Put in different terms, proof of reputation alone in a trade mark in Australia in respect of the same goods is not sufficient; s 60(b) requires the person opposing registration to show that use of the applicant's trade mark would be likely to deceive or cause confusion. In sum, the Registrar must register a trade mark that has been accepted for registration if, relevantly, there is no opposition or, in a case where there has been opposition, the Registrar's decision is that the trade mark should be registered29. The trade mark is registered in respect of the particular goods specified in the application, not simply for a class of goods30. As has been explained, registration affords the trade mark owner a monopoly of the use of the trade mark in relation to the particular goods in respect of which the trade mark is registered31. Defensive trade marks There are four types of trade marks under the TM Act: standard marks, collective marks, certification marks and defensive marks32. Allergan's BOTOX mark in class 3 is a defensive mark. Part 17 of the TM Act (ss 184-189) defines what is a defensive trade mark and provides for the registration of a defensive mark and the extent to which the TM Act applies to such marks. In general terms, an owner of a trade mark can register a defensive mark in relation to particular goods if the owner has used a registered mark ("the first mark") in relation to the goods in respect of which it is registered to such an extent that it is likely that its use in relation to other goods will be taken to indicate that there is a connection between those other goods and the registered owner of the first mark33. A defensive trade mark may be registered even if the registered owner does not use or intend to use the trade mark in relation 29 TM Act, s 68. 30 TM Act, s 69(1)(b). 31 TM Act, s 20(1); see also s 19(2). 32 TM Act, ss 17, 162, 169, 185. 33 TM Act, s 185(1). Gordon Edelman Gleeson to those goods34. As the primary judge stated, "[r]egistration as a defensive mark is intended to give better protection to marks that have been used to such an extent for certain goods or services that their unauthorised use for quite different goods or services would be likely to mislead the public"35. An applicant for registration of a defensive mark must establish, by evidence, the reputation of the first mark in Australia36. It is the use, reputation and association of the first mark in relation to particular goods – here, BOTOX in class 5 for "[p]harmaceutical preparations for the treatment of ... wrinkles" – that provides the grounds for the registration of the same mark as a defensive mark in relation to other goods – here, in class 3 for goods including "anti-ageing creams" and "anti-wrinkle cream". Allergan obtained its defensive registration of the BOTOX mark in class 3 because of its use of the mark in class 5 even though the Act assumes that Allergan may never use the mark in class 337. Once a defensive mark is registered, s 186 provides that the Act (other than specified sections38) applies to such a mark. The provisions that do not apply, except for Pt 16 (certification trade marks), are concerned with the use of the registered trade mark or the requirements to use or have the intention to use the mark. In sum, an owner of a defensive mark in relation to particular goods in a specified class can get relief for infringement but does not have the exclusive right to use the mark (or to authorise others to use that mark) in relation to those particular goods39. Put in different terms, the monopoly for the owner of a defensive mark is found in the right of that owner to exclude use of the mark by others in relation to particular goods in a specified class. 34 TM Act, s 185(2). 35 Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (2020) 156 IPR 413 at 467 [296], citing Davison and Horak, Shanahan's Australian Law of Trade Marks & Passing Off, 6th ed (2016) at 483 [60.05]. 36 TM Regs, reg 17.1. See also IP Australia, Trade Marks Manual of Practice and Procedure (2022), Pt 34.7. 37 TM Act, ss 185(2) and 186. 38 TM Act, ss 20(1), 27(1)(b), 41, 59, Pt 9 (dealing with removal of trade marks for non-use), ss 121, 127, Pt 16 (dealing with certification trade marks). 39 TM Act, ss 186 and 20(1); cf s 20(2). Gordon Edelman Gleeson Section 187 provides for additional grounds for rejecting an application for registration or opposing registration (and consequently, for seeking cancellation40) of a defensive mark. The primary judge dismissed an application by Self Care seeking cancellation of Allergan's registration of the defensive BOTOX mark because Self Care did not establish under s 187(d) that it was not likely that the use of the mark BOTOX in relation to the goods in respect of which it was registered in class 3 would be taken to indicate a connection between those goods and Allergan. In reaching that conclusion, the primary judge received and considered, among other facts and matters, what was described as the "overwhelming" uncontested evidence of "the ubiquitous reputation of BOTOX", which was relevant to registration in the manner described above. Self Care did not appeal that aspect of the primary judge's decision. Trade mark infringement under s 120(1) Section 120 of the TM Act relevantly prescribes three kinds of trade mark infringement: (1) use of a substantially identical or deceptively similar mark on the goods of registration41; (2) use of a substantially identical or deceptively similar mark on goods of the same description as, or services that are closely related to, the goods of registration but subject to a defence if the alleged infringer can demonstrate that using the mark as they did was not likely to deceive or cause confusion42; and (3) use of a mark which is substantially identical or deceptively similar to a well known trade mark on unrelated goods, if the owner of the well known mark demonstrates that such use would be likely to suggest a connection between those goods and that owner, and for that reason the interests of the owner of the well known mark would be adversely affected43. These appeals are concerned with alleged infringement under s 120(1) – use of a deceptively similar mark on the goods of registration. The inquiry for trade 40 TM Act, s 88(2)(a). Pursuant to s 88(1) of the TM Act, a court may, on application of an aggrieved person, order that the Register be rectified by cancelling the registration of a trade mark. Such an application may be made, among other things, on any of the grounds on which registration of the trade mark could have been opposed: s 88(2)(a). 41 TM Act, s 120(1). 42 TM Act, s 120(2). 43 TM Act, s 120(3). Gordon Edelman Gleeson mark infringement under s 120(1) is limited and is a "separate and distinct exercise" from assessing whether a trade mark is registrable44. The test of deceptive similarity "must be applied whether the mark of which infringement is alleged is newly registered and almost unknown or has been prominently displayed on well-known merchandise for many years"45. That uniformity of the application of the test is important and is an issue to which we will need to return. There are two separate and essential elements to establish infringement under s 120(1): (1) that the person has "use[d] as a trade mark" a sign in relation to goods or services; and (2) that the trade mark was "substantially identical" or (as alleged in this case) "deceptively similar" to a trade mark registered in relation to those goods or services. Sign used as a trade mark Use of a trade mark in relation to goods means use of a trade mark upon, or in physical or other relation to, those goods46, and so can include use of the mark on product packaging or marketing such as on a website. There is a distinction, although not always easy to apply, between the use of a sign in relation to goods and the use of a sign as a trade mark47. A trade mark is a sign used, or intended to be used, to distinguish goods dealt with by one trader from goods dealt with by other traders48; that is, as a badge of origin49 to indicate a connection between the goods and the user of the mark. 44 Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (2022) 168 IPR 42 at 55 [67], 45 CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 at 62 [43], quoted in Swancom (2022) 168 IPR 42 at 55 [68]. 46 TM Act, s 7(4). 47 See Burrell and Handler, Australian Trade Mark Law, 2nd ed (2016) at 372. 48 TM Act, s 17. 49 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 65 [42]; E & J Gallo Winery (2010) 241 CLR 144 at 160 [33]. See also van Caenegem et al, Intellectual Property in Australia, 7th ed (2022) at 688 [19.25]. Gordon Edelman Gleeson Whether a sign has been "use[d] as a trade mark" is assessed objectively without reference to the subjective trading intentions of the user50. As the meaning of a sign, such as a word, varies with the context in which the sign is used, the objective purpose and nature of use are assessed by reference to context. That context includes the relevant trade51, the way in which the words have been displayed, and how the words would present themselves to persons who read them and form a view about what they connote52. A well known example where the use was not "as a trade mark" was in Irving's Yeast-Vite Ltd v Horsenail53, where the phrase "Yeast tablets a substitute for 'Yeast-Vite'" was held to be merely descriptive and not a use of "Yeast-Vite" as a trade mark. Therefore, it did not contravene the YEAST-VITE mark. The existence of a descriptive element or purpose does not necessarily preclude the sign being used as a trade mark54. Where there are several purposes for the use of the sign, if one purpose is to distinguish the goods provided in the course of trade that will be sufficient to establish use as a trade mark55. Where there are several words or signs used in combination, the existence of a clear dominant "brand" is relevant to the assessment of what would be taken to be the effect of the balance of the label, but does not mean another part of the label cannot also act to distinguish the goods56. 50 E & J Gallo Winery (2010) 241 CLR 144 at 160 [33], citing The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 and Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330. 51 Woolworths Ltd v BP Plc [No 2] (2006) 154 FCR 97 at 117 [77]. 52 Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192 at 211-212, 218; Anheuser-Busch Inc v Budejovický Budvar Národní Podnik (2002) 56 IPR 182 (1934) 51 RPC 110. 54 Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347. 55 Woolworths [No 2] (2006) 154 FCR 97 at 117 [77]. 56 Anheuser-Busch (2002) 56 IPR 182 at 228 [191]. Gordon Edelman Gleeson Deceptive similarity to the registered mark Nature of the inquiry Section 10 of the TM Act, headed "Definition of deceptively similar", provides that a trade mark is taken to be deceptively similar to another trade mark if it "so nearly resembles that other trade mark that it is likely to deceive or cause confusion". The essential task is one of trade mark comparison; the resemblance between the two marks must be the cause of the likely deception or confusion57. In evaluating the likelihood of confusion, the marks must be judged as a whole, taking into account both their look and their sound58. The principles for assessing whether a mark is deceptively similar to a registered trade mark under s 120(1) are well established. In Australian Woollen Mills Ltd v F S Walton & Co Ltd59, Dixon and McTiernan JJ explained the task in these terms: "But, in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained. In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part." 57 Swancom (2022) 168 IPR 42 at 55 [69]. 58 Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538. See also Re Application by Pianotist Co Ltd (1906) 23 RPC 774 at 777. (1937) 58 CLR 641 at 658; see also 659. See also Optical 88 Ltd v Optical 88 Pty Ltd [No 2] (2010) 275 ALR 526 at 548 [111]. Gordon Edelman Gleeson The question to be asked under s 120(1) is artificial – it is an objective question based on a construct. The focus is upon the effect or impression produced on the mind of potential customers60. The buyer posited by the test is notional (or hypothetical), although having characteristics of an actual group of people61. The notional buyer is understood by reference to the nature and kind of customer who would be likely to buy the goods covered by the registration62. However, the notional buyer is a person with no knowledge about any actual use of the registered mark, the actual business of the owner of the registered mark, the goods the owner produces, any acquired distinctiveness arising from the use of the mark prior to filing or, as will be seen, any reputation associated with the registered mark63. The issue is not abstract similarity, but deceptive similarity64. The marks are not to be looked at side by side65. Instead, the notional buyer's imperfect recollection of the registered mark lies at the centre of the test for deceptive similarity66. The test assumes that the notional buyer has an imperfect recollection of the mark as registered. The notional buyer is assumed to have seen the registered mark used in relation to the full range of goods to which the registration extends67. The correct approach is to compare the impression (allowing for imperfect recollection) that the notional buyer would have of the registered mark (as notionally used on all of the goods covered by the registration), with the impression that the notional buyer would have of the alleged infringer's mark 60 Australian Woollen Mills (1937) 58 CLR 641 at 658. 61 Henschke (2000) 52 IPR 42 at 62 [43]. 62 Pianotist (1906) 23 RPC 774 at 777; Cooper Engineering (1952) 86 CLR 536 at 63 See Swancom (2022) 168 IPR 42 at 55 [69]-[70], 57 [77]-[80]. 64 Australian Woollen Mills (1937) 58 CLR 641 at 658; Shell (1961) 109 CLR 407 at 65 Australian Woollen Mills (1937) 58 CLR 641 at 658. 66 Swancom (2022) 168 IPR 42 at 55 [70]. 67 MID Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236 at 245; Swancom (2022) 168 IPR 42 at 57 [78]. Gordon Edelman Gleeson (as actually used)68. As has been explained by the Full Federal Court, "[t]hat degree of artificiality can be justified on the ground that it is necessary in order to provide protection to the proprietor's statutory monopoly to its full extent"69. Threshold of deception or confusion that "likely A trade mark is deceptively similar if it "so nearly resembles" the other trade confusion"70. mark deceive" "[D]eceive[d]" implies the creation of an incorrect belief or mental impression; "caus[ing] confusion" may merely involve "perplexing or mixing up the minds" of potential customers71. Intention to deceive or cause confusion is not required, although if present may be a relevant consideration72. Similarly, evidence of actual cases of deception or confusion is of great weight, but not essential73. "cause The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected74, having regard to the character of the customers who would be likely to buy the goods75. As explained by Dixon and McTiernan JJ in Australian Woollen Mills, potential buyers of goods are not to be 68 Shell (1961) 109 CLR 407 at 415. See also Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 at 128; MID Sydney (1998) 90 FCR 236 at 245. 69 MID Sydney (1998) 90 FCR 236 at 245. 70 TM Act, s 10. 71 Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107 at 122 [39], quoting Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 at 72 Hashtag Burgers Pty Ltd v In-N-Out Burgers Inc (2020) 385 ALR 514 at 533 [67], citing Australian Woollen Mills (1937) 58 CLR 641 at 657. 73 Australian Woollen Mills (1937) 58 CLR 641 at 658. 74 Australian Woollen Mills (1937) 58 CLR 641 at 658. 75 Campomar (2000) 202 CLR 45 at 79 [83]. Gordon Edelman Gleeson credited however, "exceptional carelessness or stupidity may be disregarded"76. perception habitual "any high with caution"; It is not necessary to establish actual probability of deception or confusion77. But a mere possibility of confusion is not enough; there must be a real, tangible danger of deception or confusion occurring78. It is enough if the notional buyer would entertain a reasonable doubt as to whether, due to the resemblance between the marks, the two products come from the same source79. Put another way, there must be "a real likelihood that some people will wonder or be left in doubt about whether the two sets of products ... come from the same source"80. In considering the likelihood of confusion or deception, "the court is not looking to the totality of the conduct of the defendant in the same way as in a passing off suit"81. In addition to the degree of similarity between the marks, the assessment takes account of the effect of that similarity considered in relation to the alleged infringer's actual use of the mark82, as well as the circumstances of the goods, the character of the likely customers, and the market covered by the (1937) 58 CLR 641 at 658. 77 Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953) 91 CLR 78 Southern Cross (1953) 91 CLR 592 at 595, approved by Full Court (1954) 91 CLR 79 Southern Cross (1953) 91 CLR 592 at 595. See also Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 382 [50]; Campomar (2000) 202 CLR 45 at 80 Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 382 [50], restating principles from Southern Cross (1953) 91 CLR 592 at 594-595. 81 New South Wales Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549 at 589 (emphasis added), approved in Henschke (2000) 52 IPR 42 at 62 [44], Hashtag Burgers (2020) 385 ALR 514 at 532 [64], Combe International Ltd v Dr August Wolff GmbH & Co KG Arzneimittel (2021) 157 IPR 230 at 238 [27], PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd (2021) 285 FCR 598 at 622 [97] (see also 626 [111]) and Swancom (2022) 168 IPR 82 See [29] above. Gordon Edelman Gleeson monopoly attached to the registered trade mark83. Consideration of the context of those surrounding circumstances does not "open the door" for examination of the actual use of the registered mark, or, as will be explained, any consideration of the reputation associated with the mark84. Reputation The relevance of the reputation of a registered mark in an action for infringement under s 120(1) has been contentious for some years85, as a Full Court of the Federal Court most recently recognised in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd86. Despite both the primary judge and the Full Court referring to the reputation of BOTOX in assessing deceptive similarity, Allergan and Self Care both submitted that any reputation of a registered mark should not be taken into account in assessing deceptive similarity between it and an allegedly infringing mark for the purpose of s 120(1) of the TM Act. Given the significance of the issue to the TM Act and the lack of a contradictor, the hearing of the appeal was adjourned and, at the request of the Court, Ms Beaumont SC and Ms Rubagotti were appointed as amicae curiae to contradict the parties' contention. The Court is grateful for their assistance. The amicae submitted that, in the assessment of deceptive similarity, it was permissible to consider a mark's reputation, at least in the sense of what the mark means to the relevant class of potential customers by reason of the registered owner's use of the mark. The amicae contended that taking into account reputation in assessing deceptive similarity under s 120(1) was the practical reality of considering the "idea" of a mark and how potential customers will remember it, particularly in assessing a mark such as BOTOX which has no meaning except for what it has come to mean to potential customers by virtue of Allergan's use of the mark generally. Reputation in that sense was said to involve only the reputation in 83 New South Wales Dairy (1989) 86 ALR 549 at 589. 84 Swancom (2022) 168 IPR 42 at 59 [89]. See also Henschke (2000) 52 IPR 42 at 62 85 See Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 385-386 [61]; Henschke (2000) 52 IPR 42 at 62-67 [45]-[53]; Optical 88 (2010) 275 ALR 526 at 545 [96]; Australian Meat Group Pty Ltd v JBS Australia Pty Ltd (2018) 268 FCR 623 at 633 [41]-[42]. (2022) 168 IPR 42 at 57-59 [80]-[89]. Gordon Edelman Gleeson the mark in the form registered; it did not include any other elements (such as get-up or the use of a combination of marks) that might go to establishing a trade mark owner's reputation generally or goodwill in order to found an action in passing off or contravention of s 18 of the ACL. That is, although the way in which reputation may be relevant would depend on the facts of each case, the amicae submitted that there was no reason in principle to limit the treatment of reputation, particularly a strong or notorious reputation of a mark, in a way that only lessens the risk of "imperfect recollection" of the mark and consequentially lessens the risk of confusion. that In support of those contentions, the amicae principally relied on three authorities that considered the issue of reputation – Registrar of Trade Marks v Woolworths Ltd87, CA Henschke & Co v Rosemount Estates Pty Ltd88 and Australian Meat Group Pty Ltd v JBS Australia Pty Ltd89 – and from which a "principle" risk of "imperfect recollection" in the assessment of deceptive similarity under s 120(1) of the TM Act was said to be drawn. It will be necessary to consider each of these authorities below because, as will be explained, all forms of any so-called principle should be rejected. Reputation should not be taken into account when assessing deceptive similarity under s 120(1). That conclusion is compelled by the structure and purpose of, and the fundamental principles underpinning, the TM Act. relevant where reputation lessens the The starting point is the TM Act. As has been explained, the TM Act provides for the registration of trade marks and sets out and protects the rights deriving from registration. A registered trade mark is personal property and it is the Act that defines the rights that constitute that property, when the rights will come into existence (the date of registration)90, and what conduct will infringe those property rights91. Of particular significance is that the rights that constitute the property – a monopoly – are limited to use of a mark on the particular goods (1999) 93 FCR 365. (2000) 52 IPR 42. (2018) 268 FCR 623. 90 See [6]-[7] above. 91 See [20]-[33] above. See also Davison, "Reputation in Trade Mark Infringement: Why Some Courts Think it Matters and Why it Should Not" (2010) 38 Federal Law Review 231 at 235. Gordon Edelman Gleeson in a particular class, being the goods for which registration was sought and then obtained92. It is that registered mark, and that mark alone, which constitutes the is assessed. property and against which allegedly Registration of the trade mark alone confers the right of its exclusive use on the registered owner or, in the case of a defensive trade mark, the right to exclude use. If reputation was considered after registration other than where expressly provided for in the Act, the level of protection afforded to that right would vary and be infringing conduct That conclusion is reinforced by the structure and policy of the TM Act94, including that a Register of Trade Marks, which is publicly available, must be kept by the Registrar95; all particulars of registered trade marks must be entered on that Register (including the identified limits on the monopoly in the form of the mark, the class and the particular goods)96; and the Register is prima facie evidence of any particular entered in it97. Neither the reputation of the mark nor the trade mark owner's reputation is a particular on the Register. It is inspection of the Register that enables a person to identify what marks are registered, the extent of the monopoly of each mark and what actions the person might take under the Act – whether to seek registration of another mark, challenge the registration of an existing mark or modify their behaviour so as to avoid action under s 120 for infringement of a mark. As has been noted98: 92 Davison and Horak, Shanahan's Australian Law of Trade Marks & Passing Off, 7th ed (2022) at 104 [15.1020]. See also Calidad Pty Ltd v Seiko Epson Corporation [No 2] (2019) 147 IPR 386 at 395-396 [45]. 93 Davison, "Reputation in Trade Mark Infringement: Why Some Courts Think it Matters and Why it Should Not" (2010) 38 Federal Law Review 231 at 253. 94 See [6]-[7] above. 95 TM Act, s 207. 96 TM Act, ss 69(1) and 207(2). 97 TM Act, s 210. 98 Nikken Wellness Pty Ltd v van Voorst (2003) AIPC ¶91-904 at 35,907 [44], quoted in Bauer Consumer Media (2019) 367 ALR 393 at 454 [242]. See also Gordon Edelman Gleeson "Parliament must have intended the Register to speak for itself. People who peruse the Register, or an extract from it, must be able to act on the basis of what it says, without being obliged to make inquiries about the business history or previous conduct of the registered owner of the trade mark." The system of registration under the TM Act and the rights it creates establish "both an incentive to register and a corresponding incentive to contribute to a system which is more transparent than the protection of common law trade marks"99. Introduction of considerations of reputation into determining trade mark infringement under s 120(1) is contrary to an objective of the registered trade mark system, which is to provide "a bright line that delineates the property rights" of a registered owner, for the benefit of the owner and the public100, and runs the risk of collapsing the long standing distinction between infringement and passing off101. As explained, the concept of "use" in use of a trade mark, and use as a trade mark, is central to the operation of the TM Act102. Without use or intended use of a sign as a mark, there is no registrable trade mark and without use as a trade mark, s 120 does not apply. In relation to the use of a sign as a mark, reputation is expressly addressed by the Act at four separate stages and in specific and distinct ways. The manner in which the TM Act deals with reputation is important. It reflects that the TM Act strikes a balance between various commercial and public interests103. Re McGregor Trade Mark [1979] RPC 36 at 52-53, quoted in Lodestar Anstalt v Campari America LLC (2016) 244 FCR 557 at 574 [71] and PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd (2020) 154 IPR 68 at 147 [305]. 99 Davison, "Reputation in Trade Mark Infringement: Why Some Courts Think it Matters and Why it Should Not" (2010) 38 Federal Law Review 231 at 253. 100 Davison, "Reputation in Trade Mark Infringement: Why Some Courts Think it Matters and Why it Should Not" (2010) 38 Federal Law Review 231 at 231. 101 For the inquiry in s 120 being not as far-reaching as that for passing off, see Swancom (2022) 168 IPR 42 at 59 [89], citing Optical 88 (2010) 275 ALR 526 at 545 [95]. See also PDP Capital (2021) 285 FCR 598 at 626 [111], citing Australian Meat Group (2018) 268 FCR 623 at 636-637 [68]. 102 See [7] and [23]-[25] above. 103 cf Campomar (2000) 202 CLR 45 at 65 [42]. Gordon Edelman Gleeson First, registration of a mark in respect of particular goods may be opposed under s 60 on the ground that a trade mark has acquired a reputation in Australia and that, because of that reputation, the use of the applicant's trade mark would be likely to deceive or cause confusion104. Second, in the registration of a defensive mark under s 185. That section provides better protection to marks that have been used to such an extent for certain goods or services that their unauthorised use for quite different goods or services would be likely to mislead the public105. Third, in assessing infringement under s 120(3) when the allegedly infringed trade mark being well known in Australia is an element of the cause of action106. Section 120(4) provides that, for the purposes of deciding whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason. As was explained by this Court in Campomar Sociedad Limitada v Nike International Ltd107, s 120(3) and (4) reflect an extension of the infringement action "to restrain activities which are likely adversely to affect the interests of the owner of a 'famous' or 'well-known' trade mark by the 'dilution' of its distinctive qualities or of its value to the owner"108. Such provisions "represent legislative responses to the claims of trade mark owners to protection where ... the fame of a mark carries its function beyond the traditional role as an identifier of origin"109. 104 See [13] above. Before the primary judge, Allergan opposed the registration of the FREEZEFRAME PROTOX mark on the ground that its BOTOX mark had, before the priority date, acquired a reputation in Australia and that, because of that reputation, the use of the FREEZEFRAME PROTOX mark would be likely to deceive or cause confusion. That ground of opposition was unsuccessful and was not the subject of an appeal. 105 See [16] above. 106 See [20] above. 107 (2000) 202 CLR 45. 108 (2000) 202 CLR 45 at 66 [42]. 109 Campomar (2000) 202 CLR 45 at 66 [43]. Gordon Edelman Gleeson Fourth, the reputation of a registered trade mark is considered under s 24, where a registered trade mark consists of, or contains, a sign that, after the date of registration of the trade mark, becomes generally accepted within the relevant trade as the sign that describes or is the name of an article, substance or service. In other words, s 24 applies where the reputation of a trade mark is such that it becomes the generic description of the good or service. If that occurs, the registered owner ceases to have any exclusive rights to use the trade mark in relation to the article, substance or service, or other goods or services of the same description110. If s 24 applies, a person may apply to a court under s 87 to have the Register rectified by cancelling the registration of the trade mark. Whether BOTOX had become a generic sign under s 24 was not in issue at any stage in this proceeding – Self Care did not plead or run a case under s 24 or s 87 of the TM Act. Consideration of reputation in those prescribed and limited circumstances reflects not only that the TM Act strikes a balance between various interests, manifesting "from time to time a varying accommodation of commercial and the consuming public's interests"111, but also that in all other circumstances under the TM Act, the registration of a trade mark alone determines the rights of the owner of a registered trade mark112. In addition to the structure and policy of the TM Act and the nature and extent of the property rights granted by the TM Act requiring that to be so, reference to or reliance upon reputation in determining whether there has been the Act should be rejected for other, infringement under s 120(1) of practical reasons. Reputation, or the extent of reputation, can be difficult to ascertain and, in the absence of evidence, unless judicial notice could be taken of reputation, a court would be unable to evaluate the reputation of a mark. In the context of s 60, "reputation" has been considered to refer to recognition of a trade mark by the public generally113. It has been held to be "commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other 110 TM Act, s 24(2). cf s 24(3), which applies where the trade mark contains, rather than consists of, the sign. 111 Campomar (2000) 202 CLR 45 at 65 [42]. 112 cf John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 434-435. 113 McCormick & Co Inc v McCormick (2000) 51 IPR 102 at 127 [81]. Gordon Edelman Gleeson promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product"114. Identifying which aspects of reputation and what forms of evidence would be permissible to consider in an action for infringement would be a complex exercise. Not only that, but leading such evidence would distract from, if not defeat, the well understood and straightforward test which has been the hallmark of infringement actions115. In the application of that test, it is impermissible to attribute to the notional buyer any familiarity with the actual use of a registered trade mark, including any use in relation to goods which are not the subject of the trade mark asserted to be infringed under s 120(1). Put differently, the test cannot be a broad analysis of a potential buyer's familiarity with all goods related to the trade mark or a broad familiarity with the reputation of the trade mark owner. The inquiry under s 120(1) is directed to avoiding deception and confusion between trade marks, and protecting the registered owner's trade mark rights in relation to the particular goods covered by the registration. It is not concerned with and does not seek to protect "the commercial value or 'selling power' of a mark"116. The three decisions that were principally relied on by the amicae curiae117, and other decisions118, demonstrate the difficulty of reconciling the use of reputation with the text and operation of s 120(1). Determining now that an infringement proceeding under s 120(1) of the TM Act is to be resolved without reference to the reputation of the owner of the registered mark departs from what was said in those cases. However, the significance of that departure must be 114 McCormick (2000) 51 IPR 102 at 129 [86], approved in Austin Nichols & Co Inc v Lodestar Anstalt [No 1] (2012) 202 FCR 490 at 500 [45]. 115 See [22]-[33] above. See also Phone Directories Co Australia Pty Ltd v Telstra Corp Ltd (2014) 106 IPR 281 at 341 [321]. 116 See Campomar (2000) 202 CLR 45 at 66 [43], quoting American Law Institute, Restatement (Third) of the Law of Unfair Competition (1995), §25, Comment (a). 117 Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365; Henschke (2000) 52 IPR 42; Australian Meat Group (2018) 268 FCR 623. 118 Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 at 21-22 [89]-[90]; Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 at 376 [96]-[97]; Swancom (2022) 168 IPR 42 at 57-60 Gordon Edelman Gleeson considered having regard, first, to the fact that Registrar of Trade Marks v Woolworths Ltd was not an infringement proceeding but concerned deceptive similarity in the context of registration of a mark119; second, that what was said in Henschke about reputation was obiter and, in any event, the Full Court of the Federal Court, after identifying the limited range of the inquiry in an infringement proceeding and the nature of the test of deceptive similarity, doubted the relevance of reputation in a particular mark (including the "icon status" of a mark) in an action for infringement under s 120(1) of the TM Act120; and, finally, that in Australian Meat Group, the Full Court of the Federal Court sought to reconcile what was said in Registrar of Trade Marks v Woolworths Ltd with what was later said in Henschke in a way which accepted that reputation was not relevant generally to deceptive similarity but might be used to counter a proposition that there was deceptive similarity arising from imperfect recollection121. The so-called reputation principle in the context of an infringement proceeding under s 120(1), in all its forms, is rejected. None of this detracts from what Dixon and McTiernan JJ said more than 85 years ago in Australian Woollen Mills, that if a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part122. That inquiry does not concern reputation in the mark or in the owner of the mark. The inquiry is concerned with the effect and meaning of the spoken description of the mark. Self Care's use of "instant Botox® alternative" The primary judge's finding that Self Care did not use BOTOX simpliciter as a mark was not challenged on appeal to the Full Court. And Allergan conceded before the primary judge that Self Care did not use "Botox® alternative" simpliciter as a trade mark. The question on appeal to the Full Court, and then to this Court, was whether the phrase "instant Botox® alternative" was used by Self Care as a trade mark. The answer is no. The primary judge was correct to find that 119 (1999) 93 FCR 365 at 367 [2]. 120 (2000) 52 IPR 42 at 62-63 [44]-[45], 66-67 [52]-[53]. 121 Australian Meat Group (2018) 268 FCR 623 at 633 [41], 641-642 [88]. cf Swancom (2022) 168 IPR 42 at 57 [80]-[81]. 122 (1937) 58 CLR 641 at 658. Gordon Edelman Gleeson the phrase "instant Botox® alternative" was not used by Self Care as a trade mark. The Full Court was wrong to overturn that finding. As has been explained, a trade mark is a "badge of origin"123 indicating a connection in the course of trade between goods and the person who applies the mark to the goods124. The relevant principles in determining whether a word or a sign is used as a "trade mark" are not in dispute and have been set out above125. The use of the phrase "instant Botox® alternative" on Packaging A, Packaging B and the website may be addressed together, identifying relevant similarities and differences in use. The presentation of "instant Botox® alternative" was inconsistent in size, font and presentation on each of Packaging A, Packaging B and the website, indicating "instant Botox® alternative" was not being used as a badge of origin to distinguish Self Care's goods from those dealt with by another trader126. On Packaging A the phrase was presented vertically, marked out by four vertical lines separating each of the words. On Packaging B and on the website the phrase was presented horizontally without any the words. The arrangement of the words differed. On the packaging, each word in the phrase occupied its own line. On two website pages the phrase occupied a single line. On two other website pages the words "Instant" and "Botox®" shared a line and the word "ALTERNATIVE" appeared on the next line. The font was inconsistent. The packaging used a different font to the website pages, and one website page used a different font to the other website pages. The capitalisation was inconsistent. Three different forms were adopted: "instant Botox® alternative" on the packaging, "INSTANT BOTOX® ALTERNATIVE" on one website page and "Instant Botox® ALTERNATIVE" on three other website pages. lines separating 123 Campomar (2000) 202 CLR 45 at 65 [42]; E & J Gallo Winery (2010) 241 CLR 144 124 E & J Gallo Winery (2010) 241 CLR 144 at 163 [43], 175 [87], citing Coca-Cola Company (1999) 96 FCR 107 at 115 [19]. 125 See [23]-[25] above. 126 See E & J Gallo Winery (2010) 241 CLR 144 at 163 [43], 175 [87], citing Coca-Cola Company (1999) 96 FCR 107 at 115 [19]. Gordon Edelman Gleeson the the name of relevant product, Of particular significance was that the phrase "instant Botox® alternative" appeared alongside two clear badges of origin, namely the umbrella brand INHIBOX. FREEZEFRAME and This diminishes the likelihood that the phrase "instant Botox® alternative" could be objectively understood to indicate origin in itself127. This is because its use was not as dominant as the use of the other signs, FREEZEFRAME and INHIBOX. This is most evident on the packaging. On both Packaging A and Packaging B, "instant Botox® alternative" appeared only once, on the front of the box, INHIBOX. FREEZEFRAME and INHIBOX were also featured prominently on the left and right sides of each box. Further, unlike FREEZEFRAME and INHIBOX, "instant Botox® alternative" did not feature on the product visible through the clear plastic window on Packaging A (a syringe-like applicator containing the cream) itself. The phrase "instant Botox® alternative" was more prominent on the website, but that also evidences the inconsistency with which the phrase was used. than FREEZEFRAME and in much smaller font The FREEZEFRAME and INHIBOX script style and presentation is also significant. FREEZEFRAME and INHIBOX were both distinctive and stylised signs that were apt to be perceived as brands. In contrast, "instant Botox® alternative" was a descriptive phrase that had an ordinary meaning and included within it the trade mark BOTOX (identified as such with a ® symbol). It was descriptive of the product to which it was attached as an alternative product. While a sign can both be descriptive and serve as a badge of origin, the better view is that the use of the phrase, consistent with its ordinary meaning, had only a descriptive purpose and nature128. As the primary judge found, the phrase amounted to "ad-speak". The Full Court, in overturning the primary judge and reaching the contrary conclusion, misidentified, and consequently failed to engage with, the reasons of the primary judge with respect to why "instant Botox® alternative" did not constitute use as a trade mark. The Full Court identified four reasons given by the primary judge as to why "instant Botox® alternative" was not used as a trade mark. However, in the identified paragraphs, the primary judge was dealing with whether BOTOX alone was used by Self Care as a trade mark. The primary judge dealt with whether "instant Botox® alternative" was used as a trade mark at a different point in the judgment. 127 See Anheuser-Busch (2002) 56 IPR 182 at 228 [191]. 128 cf Shell (1963) 109 CLR 407 at 426; Johnson (1991) 30 FCR 326 at 347. Gordon Edelman Gleeson Next, the Full Court asked the wrong question. It asked whether there was an implied association in trade source between the different products. The Full Court said that the sign "instant Botox® alternative" "implie[d] an association in the trade source of the different products" and "was being used to denote some trade source connection with [Allergan's products]". At other points, the Full Court remarked on the existence of an "implied association with Allergan" and that a consumer might "reasonably consider there was an association" with Allergan. This reasoning by the Full Court shows that it impermissibly conflated the two elements of s 120(1) of the TM Act: (1) whether the sign was "use[d] as a trade mark" and (2) whether that trade mark was "deceptively similar" to the registered trade mark. Conflation of those elements is not uncommon. As Shanahan's Australian Law of Trade Marks & Passing Off observes, "[t]here is a common misconception that an infringer uses a sign as a trade mark if the use indicates or is likely to indicate a connection between the infringer's goods and the owner of the registered mark"129. However, "factors relevant to whether there is a misrepresentation or likelihood of deception have no role to play in deciding the question of what constitutes 'use as a trade mark'"130. As was stated in Coca-Cola Company v All-Fect Distributors Ltd, the inquiry is not "whether the sign indicates a connection between the alleged infringer's goods and those of the registered owner"131. The correct approach is to ask whether the sign used indicates origin of goods in the user of the sign132. For the reasons stated above, the phrase "instant Botox® alternative" was not used as a sign to indicate the origin of the goods in Self Care or to indicate that there was a connection in the course of trade between the goods and Self Care. As Self Care did not use "instant Botox® alternative" as a mark, Self Care's appeal against the Full Court's finding that it had infringed the BOTOX mark by 129 Davison and Horak, Shanahan's Australian Law of Trade Marks & Passing Off, 7th ed (2022) at 668 [85.560], citing several cases including Coca-Cola Company (1999) 96 FCR 107 at 115 [19]-[20], Global Brand Marketing Inc v YD Pty Ltd (2008) 76 IPR 161 at 171 [45]-[48] and Alcon Inc v Bausch & Lomb (Australia) Pty Ltd (2009) 83 IPR 210 at 238-239 [155]. 130 Davison and Horak, Shanahan's Australian Law of Trade Marks & Passing Off, 7th ed (2022) at 668-669 [85.560] (emphasis added). 131 (1999) 96 FCR 107 at 115 [20]. 132 Coca-Cola Company (1999) 96 FCR 107 at 115-116 [20]. Gordon Edelman Gleeson using "instant Botox® alternative" should be allowed. The question of deceptive similarity does not arise and it is also unnecessary to address the defence of use in good faith in s 122(1)(b) and the comparative advertising defence in s 122(1)(d) of the TM Act. Self Care's use of PROTOX The sole question in Allergan's appeal before the Full Court in respect of Self Care's use of PROTOX, and then in these appeals, was whether PROTOX was deceptively similar to the BOTOX mark. Self Care's application to cancel the registration of BOTOX as a defensive mark was rejected by the primary judge and was not appealed. The finding that PROTOX was used as a trade mark was also not appealed by Self Care, and there was no dispute that the goods in relation to which PROTOX is used by Self Care are goods in respect of which the BOTOX mark is registered in class 3. The primary judge found that PROTOX was not deceptively similar to BOTOX on the basis that the two marks were sufficiently distinctive such that persons of ordinary intelligence and memory were not likely to confuse them. The primary judge held that "although the words are very similar in look and in sound, they are less so in any idea or meaning conveyed by them". The primary judge, relying on the authority of Henschke and Australian Meat Group, found that the "ubiquitous reputation" of BOTOX meant there was not likely to be an imperfect recollection of the BOTOX mark, but held that a person with even an imperfect recollection was not likely to be deceived. The primary judge's conclusion was reinforced by the fact that the PROTOX mark was "almost always used in proximity to the FREEZEFRAME mark" and that there was "no evidence of actual confusion". The Full Court held that the primary judge failed to ask whether, by reason of the similarity between PROTOX and BOTOX (even assuming people would not confuse the marks or the products themselves), it might be the case that consumers would be caused to wonder whether the products came from the same source. Having identified error, the Full Court carried out its own assessment and reached a different conclusion. The Full Court held that, although consumers "would not have confused PROTOX for BOTOX" because the "words are sufficiently different for consumers to appreciate that the words are different and that the products to which the words relate are different", PROTOX was in fact deceptively similar to BOTOX because there was a real risk of confusion as to whether the two products might come from the same source. The Full Court said that: Gordon Edelman Gleeson "Some consumers are likely ... to have wondered whether PROTOX was an alternative product being offered by those behind BOTOX, perhaps targeted to those who did not like injections or who wanted the convenience of a home treatment. Some consumers are likely to have wondered whether PROTOX was developed by those behind BOTOX as a topical treatment to be used in conjunction with Botox treatment, perhaps to improve or prolong results." As is clear, the Full Court relied on the reputation of BOTOX as an injectable treatment to conclude that what otherwise was not a deceptively similar mark might be associated with Allergan because some potential customers "would wonder whether those behind BOTOX had decided to expand into topical cosmetic anti-wrinkle products". That was an error133. And, related to that error was the Full Court's failure to apply the correct test of comparison, which is based on the notional use of BOTOX on the goods covered by the registration – anti-wrinkle creams – and not its actual use134. PROTOX not deceptively similar to BOTOX The statutory inquiry under s 120(1) (read with s 10) is whether PROTOX so nearly resembles BOTOX for anti-wrinkle creams in class 3 that it is likely to deceive or cause confusion as to the source of those products. The applicable principles have been addressed135. Class 3 goods are, as described by the primary judge, "essentially cosmetics that are sold as retail products directly to the public". As explained, the focus is the effect or impression produced on the mind of potential customers who would be likely to buy anti-wrinkle creams in class 3. The correct approach is to compare the notional buyer's imperfect recollection of the BOTOX mark (on the assumption that the buyer has seen such a mark used on anti-wrinkle creams, even though no such mark is in fact used by Allergan in class 3) with PROTOX as actually used by Self Care on its product. In undertaking the correct comparison for deceptive similarity between the two marks, it was necessary to consider the marks visually and aurally and in the 133 See [34]-[51] above. 134 See [28]-[29] and [33] above. 135 See [26]-[33] above. Gordon Edelman Gleeson context of the relevant surrounding circumstances. Considering both the packaging and the website for Protox accords with assessing the "actual use" of the PROTOX mark as required by the test for deceptive similarity. As will be explained, the notional buyer would not be caused to wonder whether, or entertain a reasonable doubt as to whether, due to the resemblance between the marks, anti-wrinkle creams in class 3 bearing PROTOX and BOTOX would have the same trade source. Allergan was correct to submit that, as the Full Court accepted, there are visual and aural similarities between the two marks. The word PROTOX uses two short consonants, "p" and "r", to make the syllable "pro", which is visually and aurally similar to "bo"; both "pro" and "bo" are "sounded through the lips together"; and the word "otox" is "distinctive and identical" between PROTOX and BOTOX and is an "identical rhyme". But, as the Full Court correctly said, "[c]onsumers would not have confused PROTOX for BOTOX". The words are sufficiently different that the notional buyer, allowing for an imperfect recollection of BOTOX, would not confuse the marks or the products they denote. The visual and aural similarities were just one part of the inquiry. The question, then, was whether these similarities "imply an association" so that the notional buyer would be caused to wonder whether it might not be the case that the products come from the same source. The alleged deceptiveness was said to flow not only from the degree of similarity itself, but also from its effect considered in relation to the circumstances of the goods and the prospective purchaser and the market covered by the monopoly – anti-wrinkle creams in class 3. It is to be assumed that the products would be sold in similar trade outlets, including pharmacies, as well as through websites. The notional buyer has a recollection of the BOTOX mark being used on anti-wrinkle creams in class 3 in that context. The notional buyer sees the PROTOX mark used on a similar product – a serum which is advertised on its packaging and website to "prolong the look of Botox®". While the reputation of BOTOX cannot be considered, the relevant context includes the circumstances of the actual use of PROTOX by Self Care. "[P]rolong the look of Botox®" may suggest that Protox is a complementary product. However, as was observed by the primary judge, "it will be the common experience of consumers that one trader's product can be used to enhance another trader's product without there being any suggestion of affiliation"136. In this case, the back of the packaging stated in small font that 136 The primary judge rejected the submission that Self Care's use of the phrase "prolong the look of Botox®" suggested affiliation between Protox and Allergan by Gordon Edelman Gleeson "Botox is a registered trademark of Allergan Inc" and, although the assumption is that Botox is an anti-wrinkle cream, the website stated that "PROTOX has no association with any anti-wrinkle injection brand". Applying the applicable principles137, there is no real risk of confusion or deception such that the notional buyer will be caused to wonder whether it might be that the products come from the same source. What is required is a "real, tangible danger" of confusion or deception occurring138. As explained, the marks are sufficiently distinctive such that there is no real danger that the notional buyer would confuse the marks or products. The similarities between the marks, considered in the circumstances, are not such that the notional buyer nevertheless is likely to wonder whether the products come from the same trade source. That conclusion is reinforced by the fact that the PROTOX mark was "almost always used in proximity to the FREEZEFRAME mark" and that there was "no evidence of actual confusion". In submissions, Allergan relied on the finding of deceptive similarity of NO-TOX to BOTOX in Allergan Inc v Di Giacomo139, which concerned the unsuccessful registration of NO-TOX. That decision does not assist. It was an ex parte application concerned with opposition to registration of a trade mark under s 60 of the TM Act. Self Care's appeal against the Full Court's finding that it had infringed the BOTOX mark by using PROTOX should be allowed. Allergan filed a Notice of Contention that contended that the Full Court, having found that Self Care adopted the trade mark PROTOX (and the mark "instant Botox® alternative") with the intention to leverage off the fame or reputation of BOTOX, should also have held that each mark was fitted for that representing that Protox is an accessory for Botox. This formed part of the primary judge's dismissal of Allergan's claims at trial that Self Care made affiliation representations contrary to the ACL and engaged in passing off. Allergan did not appeal those aspects of the primary judge's decision. 137 See [26]-[33] above. 138 Southern Cross (1953) 91 CLR 592 at 595. 139 (2011) 199 FCR 126. Gordon Edelman Gleeson purpose and likely to deceive or cause confusion under s 120(1) of the TM Act140. During the hearing, Allergan informed the Court that it no longer pressed that contention. Contraventions of the ACL Section 18 of the ACL, headed "Misleading or deceptive conduct", provides in sub-s (1) that "[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". Section 29 is headed "False or misleading representations about goods or services". Sub-section (1) relevantly provides: "A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; ..." If a person makes a representation with respect to any future matter and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading141. The Full Court found that Self Care engaged in misleading or deceptive conduct contrary to s 18(1) of the ACL, and made a false or misleading representation contrary to s 29(1)(a) and (g), by the sale or promotion of Inhibox by reference to the phrase "instant Botox® alternative" on Packaging A, Packaging B and the website. Self Care appealed to this Court against that finding. 140 Seeking to rely on Australian Woollen Mills (1937) 58 CLR 641 at 657. 141 ACL, s 4(1). Gordon Edelman Gleeson The Full Court held that, in context, the phrase "instant Botox® alternative" would convey to reasonable consumers in the target market that: "(a) use of Inhibox would result in a similar reduction of the appearance of wrinkles to that which would be achieved with treatment by Botox; and (b) the effect would last, after treatment, for a period equivalent to that which would be achieved with treatment by Botox injection". Self Care was held to have had reasonable grounds to make the former representation. However, the Full Court held that it did not have reasonable grounds for making the latter representation – the long term efficacy representation – and had therefore contravened ss 18(1) and 29(1)(a) and (g) of the ACL. Self Care did not challenge the finding of the Full Court that the long term efficacy representation was misleading. The evidence did not establish that Inhibox had long term effects after treatment equivalent to those of Botox or that there were reasonable grounds for representing that it did. The unchallenged findings were that Inhibox reduced the appearance of wrinkles quickly enough to describe the effect as "instant" and the effects of treatment with Inhibox were noticeable for up to between five and eight hours after application. The primary judge found there was a reasonable foundation to claim that Inhibox produced a significant reduction in the appearance of wrinkles over a 28-day period of application, but this evidence said nothing about the effect after application ceased. On the other hand, the wrinkle reducing effects of a single Botox treatment last for up to four months. Self Care did, however, challenge the Full Court's finding that Self Care made the long term efficacy representation. In these appeals, we are concerned with whether the long term efficacy representation was made by use of the phrase "instant Botox® alternative" on Packaging A, Packaging B and the website. Principles The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the "conduct" said to contravene s 18; second, considering whether the identified conduct was conduct "in trade or commerce"; third, considering what meaning that Gordon Edelman Gleeson conduct conveyed; and fourth, determining whether that conduct in light of that meaning was "misleading or deceptive or ... likely to mislead or deceive"142. The first step requires asking: "what is the alleged conduct?" and "does the evidence establish that the person engaged in the conduct?"143. The third step considers what meaning that conduct conveyed to its intended audience144. As in this case, where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence145. The fourth step is to ask whether the conduct in light of that meaning meets the statutory description of "misleading or deceptive or ... likely to mislead or deceive"; that is, whether it has the tendency to lead into error146. Each of those steps involves "quintessential question[s] of fact"147. The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference 142 See Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 464-465 [89]. See also Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470 at 474 [14]-[15]; Reckitt Benckiser (Australia) Pty Ltd v Procter & Gamble Australia Pty Ltd [2015] FCA 753 at [35]. 143 cf Google (2013) 249 CLR 435 at 465 [89]. 144 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 145 Telstra (2007) 244 ALR 470 at 474 [14], citing Campomar (2000) 202 CLR 45 at 86-87 [105], National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) ATPR ¶42-000 at 48,714 [18] and Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at 44,891 [37]. 146 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 651 [39]. 147 Australian Competition and Consumer Commission v Telstra Corporation Ltd (2004) 208 ALR 459 at 475 [49]. See also Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 625 [109]. Gordon Edelman Gleeson to its context, on the state of mind of the relevant person or class of persons148. That context includes the immediate context – relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation – and the broader context of the relevant surrounding facts and circumstances149. It has been said that "[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character"150. That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive. Where the conduct was directed to the public or part of the public, the third and fourth steps must be undertaken by reference to the effect or likely effect of the conduct on the ordinary and reasonable members of the relevant class of persons. The relevant class of persons may be defined according to the nature of the conduct, by geographical distribution, age or some other common attribute, habit or interest151. It is necessary to isolate an ordinary and reasonable "representative member" (or members) of that class, to objectively attribute characteristics and knowledge to that hypothetical person (or persons), and to consider the effect or likely effect of the conduct on their state of mind152. This hypothetical construct "avoids using the very ignorant or the very knowledgeable to assess effect or likely effect; it also avoids using those credited 148 See Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 318-319 [24]-[25]. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199; Campomar (2000) 202 CLR 45 at 85 [102]-[103]. 149 Parkdale Custom Built Furniture (1982) 149 CLR 191 at 199; Butcher (2004) 218 CLR 592 at 605 [39], 625 [109]; Campbell (2009) 238 CLR 304 at 319 [25]-[26], 341-342 [102]; TPG Internet (2013) 250 CLR 640 at 655-656 [51]-[52]. 150 Google (2013) 249 CLR 435 at 465 [92]. 151 Campbell (2009) 238 CLR 304 at 319 [25]; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73 at 81 [41]. 152 Campomar (2000) 202 CLR 45 at 85 [103]. See also Crescent Funds Management (Aust) Ltd v Crescent Capital Partners Management Pty Ltd (2017) 118 ACSR 458 at 483 [105], 489 [138]; Australian Competition and Consumer Commission v Google LLC [No 2] (2021) 391 ALR 346 at 363-365 [90]-[98]. Gordon Edelman Gleeson with habitual caution or exceptional carelessness; it also avoids considering the assumptions of persons which are extreme or fanciful"153. The construct allows for a range of reasonable reactions to the conduct by the ordinary and reasonable member (or members) of the class154. Although s 18 takes a different form to s 29, the prohibitions are similar in nature155. In these appeals, there is no relevant meaningful difference between the words "misleading or deceptive" in s 18 and "false or misleading" in s 29156. Under s 29 it is necessary to identify a representation made in connection with the supply or possible supply of goods or services, or in connection with the promotion of the supply or use of goods or services, that is false or misleading and meets one of the descriptions in sub-s (1)(a) to (n). Approach of the courts below The claim before the primary judge alleged that Self Care had contravened the ACL by making numerous statements comparing four of Self Care's products with Botox, including seven statements in relation to Inhibox. Allergan alleged these statements conveyed misleading representations of affiliation with Allergan and its products, and misleading representations about the efficacy of Self Care's products. The primary judge rejected each of these allegations, except for one157. On appeal to the Full Court, Allergan only challenged the primary judge's conclusion in relation to one of the statements made about Inhibox – namely, the conclusion that the phrase "instant Botox® alternative" did convey a representation that Inhibox would achieve results of at least the same standard or 153 Comité Interprofessionnel Du Vin De Champagne v Powell (2015) 330 ALR 67 at 154 See Google LLC [No 2] (2021) 391 ALR 346 at 363-364 [92]-[94], quoting Campomar (2000) 202 CLR 45 at 86-87 [105], National Exchange (2004) ATPR ¶42-000 at 48,715-48,716 [24] and Comité Interprofessionnel (2015) 330 ALR 67 at 104 [171]. 155 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450 at 458 [21]. 156 Coles Supermarkets (2014) 317 ALR 73 at 81 [40]; TPG Internet (2020) 278 FCR 157 The primary judge found that the statement that the Night (tube) product "delivers the results of a Botox injection in 4 weeks" was misleading. Gordon Edelman Gleeson quality as Botox in terms of reduction in appearance of wrinkles but not about the length of time the results would last. The following summary addresses the aspects of the primary judge's reasoning relevant to that conclusion. The primary judge held that the class of consumers for Self Care's products was people who are interested in treatments for the reduction of the appearance of wrinkles. The class would likely be aware of Botox and include people who had used Botox, or who might have considered using Botox, or who would not be interested in using Botox. For the most part, they would likely be people who knew something about anti-ageing and anti-wrinkle treatments. The ordinary and reasonable consumer in that class would likely know that Botox is an injectable anti-wrinkle treatment that is available to be administered by healthcare professionals while Self Care's products are topically self-applied creams, serums and lotions and that Botox is likely to be more expensive than Self Care's products because it is required to be professionally administered. The consumer would not have seen or experienced Self Care's products and Botox being available in the same place. The primary judge also found that the ordinary and reasonable consumer would appreciate "that there are many variables to take into account in choosing one product over another" including "the trouble, pain and expense of purchase and administration or application, how long the effects of the product last, and how significant the effects are". The primary judge held that the phrase "instant Botox® alternative" was likely to be understood by ordinary and reasonable members of the class of consumers as representing that Inhibox would reduce the appearance of wrinkles to a similar extent as Botox does. On the evidence, Self Care had reasonable grounds to make that representation. The primary judge held that the phrase did not convey that Inhibox would have the same effect, mechanism or mode of action as Botox, or that the effect would last for the same amount of time. In coming to this conclusion, the primary judge identified the correct questions – what meaning the phrase "instant Botox® alternative" assessed in context conveyed, and whether it was misleading or deceptive. But, as the Full Court found, although the primary judge recognised the need to consider the phrase in context, the primary judge reached this conclusion by focusing solely on the phrase and its broader context – the surrounding circumstances – and did not consider the immediate context – the surrounding words and the design of Packaging A, Packaging B and the website. On appeal, the Full Court identified that error and went on to consider both the immediate and broader context. However, the Full Court itself made a number of errors. As explained below, it misdescribed the ordinary and reasonable Gordon Edelman Gleeson consumer. The Full Court proceeded to describe and assess the target market from a premise which was false and which infected the subsequent reasoning. The false premise was that consumers in the target market included consumers who considered that Inhibox and Botox had a common trade origin because Packaging A and Packaging B bore, prominently on the front of the packaging, a reference to "Botox®" and because the primary judge accepted that BOTOX was a powerful brand with a widespread reputation. The Full Court stated that the primary judge had found that, if the BOTOX brand was applied to a topical cosmetic product, ordinary reasonable consumers would draw a connection between the product and the owner of the trade mark BOTOX. Although the primary judge did find that there would be an association conveyed if the word BOTOX was used on its own on a topical cosmetic product, the primary judge made a finding that the phrase "instant Botox® alternative" would not convey an association between Inhibox and Botox to the reasonable consumer. There was no appeal against that finding. On appeal to the Full Court, Allergan argued that the primary judge should have found that the ordinary reasonable consumer was likely to know that the effects of a Botox treatment last for up to four months. The Full Court held that "[f]or reasons given below, the target market would have included reasonable consumers who had the understanding that Botox continued to have effect for a period of 4 months after treatment", but then it did not provide any reasons for that conclusion. Later, the Full Court stated that consumers in the target market would include consumers who would appreciate that Botox requires a short period after injection for its full effect to show and then has a reasonably long lasting effect. The Full Court then said that Botox usually has "an effect for about 4 months" but that conclusion was itself misstated. The finding of the primary judge was that Botox usually has an effect which lasts up to four months. The Full Court should not have overturned the factual findings of the primary judge as to the knowledge of the reasonable consumer without identifying and explaining the error made. Further, the Full Court's statement that the target market "would have included" reasonable consumers who had that knowledge demonstrated a misunderstanding of the relevant test. The ordinary and reasonable consumer is a hypothetical construct to whom the court attributes characteristics and knowledge in order to characterise the impugned conduct. The class in fact will always have reasonable consumers with varying levels of knowledge; the question was whether the knowledge should be attributed to the hypothetical reasonable consumer in this case. Proceeding from these false premises, there was then the finding by the Full Court that the long term efficacy representation had been made, namely that the target market it had identified would have included reasonable consumers who Gordon Edelman Gleeson understood from the phrase "instant Botox® alternative", when read in context, that Inhibox would provide a long term effect, after treatment ceased, that that provided by Botox. The Full Court comparable to "[s]ome reasonable consumers, at least before further inquiry or sober later consideration, may have thought from the phrase 'instant Botox® alternative', read in context, that the long term effect of Inhibox would be achieved after a single use in common with a single Botox treatment" (emphasis added) and that more consumers "would reasonably have assumed that a long term post-treatment effect, equivalent to Botox, could be achieved through use of the Inhibox product over some undefined but reasonable time" (emphasis added). found As will be explained, the reasonable consumer would not have understood that the phrase "instant Botox® alternative" on Packaging A, Packaging B or the website conveyed the long term efficacy representation. Market and the relevant class of consumer The court must put itself in the position of the ordinary and reasonable consumer in the relevant class158. The primary judge correctly identified the relevant class of consumers and attributed characteristics to the reasonable consumers in that class159. Impugned conduct The issue is whether the use of the phrase "instant Botox® alternative" in respect of Inhibox conveyed the long term efficacy representation – that the effects of Inhibox would last, after treatment, for a period equivalent to that which would be achieved with treatment by Botox injection. As the primary judge held, the statement that Inhibox is an "alternative" to Botox would likely be understood as distinguishing Inhibox as not having the qualities of Botox that the consumer might regard to be disadvantageous (such as it being an injectable that can only be administered by healthcare professionals and that it is relatively expensive), and as saying that the product would achieve a similar outcome to Botox in terms of reducing the appearance of wrinkles. The phrase "instant Botox® alternative" does not say anything expressly about the 158 Google LLC [No 2] (2021) 391 ALR 346 at 362 [86]; Australian Competition and Consumer Commission v Employsure Pty Ltd (2021) 392 ALR 205 at 225 [98]. 159 See [86] above. Gordon Edelman Gleeson extent of the effectiveness of Inhibox, particularly with regard to how long the reduction in the appearance of wrinkles will last. However, as the Full Court held, the question whether the phrase conveyed the long term efficacy representation must be assessed in context, which includes the packaging and marketing material. Packaging A – Inhibox old packaging160 Until about February 2017, Inhibox was packaged in a box with a clear plastic window through which could be seen a syringe-like applicator. On the front of Packaging A was the phrase "instant Botox® alternative" with the words "freezeframe" and "with INHIBOX". The words "Clinically proven to erase wrinkle appearance in 5 minutes" appeared on the side of the packaging. On the back of the packaging, Inhibox was described as "The world's first Instant and Long Term Botox® Alternative"161 in large font running vertically along the packaging. Beneath a heading "Freeze wrinkles instantly", the packaging stated: "Why wait for weeks to look dramatically younger when you can wipe away the years this very minute! freezeframe's exclusive INHIBOX complex is clinically proven to wipe away visible expression wrinkles around the eyes and on the forehead within 5 minutes, so you get an immediate wrinkle freeze and eye lift that lasts for hours." (emphasis added) Relevantly, this description explained that Inhibox has an effect which "lasts for hours". This directly contradicted the alleged long term efficacy representation and reduced the likelihood that the reasonable consumer would be misled into believing that the effects of Inhibox last as long as those of treatment by Botox injection. The back of the packaging made three further references to the effects of Inhibox being "long term". Under a heading "And long term!", it stated that "freezeframe technology is scientifically proven to reduce the appearance of wrinkles by up to 63.23% in just 28 days" and "freezeframe's Dual Effect technology gives you proven instant wrinkle reduction, plus the world's best long term wrinkle relaxing" and under a further heading – "Two of the world's most 160 See Sch 1 to these reasons for judgment. 161 At trial, Allergan unsuccessfully alleged that this statement contravened the ACL. Allergan did not appeal the primary judge's finding (see [85] above). Gordon Edelman Gleeson potent wrinkle erasers* read "[i]magine... the power of an instant wrinkle freeze, combined with the long term benefits of the most potent, cumulative facial relaxing technology on the planet. All in one simple formula." formula"162 – a statement in one that While these statements represent that the effects of Inhibox are "long term", in this context the reasonable consumer would be unlikely to believe that "long term" means an effect which has the same duration as after treatment by Botox injection. This is because the words "long term" must be understood in the context of the statement that the effect of Inhibox "lasts for hours" and the consistent use of the word "instant" on the packaging. The word "instant" appeared on the front of the box in the phrase "instant Botox® alternative". It also appeared in the large vertical heading on the back of the box "The world's first Instant and Long Term Botox® Alternative" and in the smaller horizontal heading "Freeze wrinkles instantly". It then appeared three more times in the text of the paragraphs on the back of the packaging alongside references to the effect occurring "this very minute!", "within 5 minutes" and being "immediate". There was an additional reference to Inhibox being "[c]linically proven to erase wrinkle appearance in 5 minutes" on the left-hand side of the packaging. The fact that the effect of Inhibox was said to be instant makes it less likely that the reasonable consumer would believe that those effects would last for as long as those of Botox. Put differently, the reasonable consumer would likely believe it too good to be true that the effects of Inhibox are both instant and as long lasting as those of Botox. That the reasonable consumer would likely have understood the references to "long term" as meaning that the consumer could continue to apply the cream to have a "long term" effect is reinforced by the broader context. That context includes that Inhibox is a different product to Botox – Inhibox is a topical cream, Botox is a pharmaceutical injection. Inhibox is administered differently to Botox – Inhibox is self-administered at home, Botox is injected by healthcare professionals. Inhibox is cheaper than Botox – the primary judge found that the reasonable consumer would know that Botox is likely to be more expensive than Inhibox because it is required to be professionally administered. Inhibox and Botox are not sold in the same locations – the reasonable consumer would not have seen them available in the same place because Inhibox is available in various retail outlets 162 The asterisk in the phrase refers to a definition on the back of the packaging which read "*Wrinkle erasers refers to the ability to reduce the visible appearance of wrinkles". Gordon Edelman Gleeson and pharmacies, whereas Botox is not supplied directly to retail customers and is available to be administered only by healthcare professionals. Taking into account that broader context, it is difficult to conceive why the reasonable consumer in the target market would think that a topically self-applied cream obtained from the pharmacy at a relatively low cost and worn in the course of the usual activities of life (including bathing and exercise) would have the same period of efficacy after treatment as an injectable anti-wrinkle treatment that is only available to be administered by healthcare professionals at a higher cost. As the primary judge identified, the reasonable consumer would appreciate "that there are many variables to take into account in choosing one product over another", including "the trouble, pain and expense of purchase and administration or application, how long the effects of the product last, and how significant the effects are". And, contrary to the approach of the Full Court, as the primary judge held, the reasonable consumer would not assume that, given the reference to "Botox®" on the packaging, there was a common trade origin between Inhibox and Botox. For those reasons, the phrase "instant Botox® alternative" on Packaging A would not convey to the reasonable consumer in the target market that the wrinkle reducing effects of Inhibox – after a single treatment or after use of the product over a reasonable time – would last, after treatment, for a period equivalent to that which would be achieved with treatment by Botox injection. Packaging B – Inhibox new packaging163 Since about September 2016, Inhibox has been packaged in a different box without a window. The front of the box prominently displayed the words "freezeframe" and "INHIBOX" as well as the phrase "instant Botox® alternative". On the back, in large font running vertically along the box, was the phrase "The original instant and long term Botox® alternative". On the back of the packaging, under the heading "INHIBOX" and a subheading "Freeze wrinkles instantly", there were two sentences, in relevantly the same terms as on the back of Packaging A164, which included the words (identical to Packaging A) "so you get an immediate wrinkle freeze and eye lift that lasts for hours". This again directly contradicted the alleged long term efficacy 163 See Sch 1 to these reasons for judgment. 164 See [97] above. Gordon Edelman Gleeson representation and reduced the likelihood that the reasonable consumer would be misled into believing that the effects of Inhibox last as long as those of treatment by Botox injection. Two further statements were also on the back of the packaging: "Here's the real breakthrough. freezeframe doesn't simply make you look younger instantly, it actually reduces the appearance of wrinkles for the long haul as well. Imagine... the power of an Instant [sic] wrinkle freeze, combined with the long term benefits of the most potent, cumulative facial relaxing technology on the planet. All in one simple formula. Looking younger has never been easier – or more satisfying for those of us who want instant gratification." The side of the package, along with "freezeframe" and "INHIBOX", contained the phrase "clinically proven to erase eye wrinkles & puffiness in 5 minutes". The broader context remains unaltered165. The reasoning and conclusion reached in relation to Packaging A applies equally, if not with greater force, to Packaging B. The phrase "instant Botox® alternative" on Packaging B did not convey the long term efficacy representation. The reasonable consumer would not have thought that Inhibox would reduce the appearance of wrinkles instantly and that the post-treatment effect – either after a single treatment or after use of the product over a reasonable time – would be for a term equivalent to that obtained through treatment by Botox injection. Website Five separate screenshots of pages of Self Care's website were in issue. The screenshots were taken at different times but the content of them is similar and it is appropriate to deal only with the first screenshot. The relevant extracts from the website are set out below. 165 See [100]-[101] above. Gordon Edelman Gleeson Under the phrase "INSTANT AND LONG TERM RESULTS", it stated: "CLINICALLY PROVEN INSTANT BOTOX® ALTERNATIVE FREEZES WRINKLES INSTANTLY REDUCES WRINKLES LONG TERM For expression wrinkles around eyes and forehead freezeframe with INHIBOX is the original Instant Botox® Alternative, clinically proven to erase wrinkle appearance under the eyes and on the forehead in just 5 minutes, whilst delivering up to 63.23% reduction invisible [sic] wrinkles in just 28 days. PRICE: $89.00" Four tabs appeared underneath: "DESCRIPTION", "INGREDIENTS", "REVIEWS" and "HOW TO USE". Only the first tab was in evidence. Under that tab, to the right of and slightly lower than the bottom of the image of the Inhibox product, it read: "The original Instant Botox® Alternative, freezeframe with INHIBOX has been a number 1 seller all over the world In an unprecedented breakthrough, cosmetic chemists have discovered a complex that literally freeze [sic] wrinkles upon application, and results have shown [sic] to last for hours. This discovery has sent shockwaves through the cosmetic industry as a topical alternative to Botox® injections becomes realised. Put the freeze on eye and forehead wrinkles for up to 8 hours The exclusive INHIBOX complex in freezeframe works in just minutes to magically erase the appearance of wrinkles and puffiness around the eyes and on the forehead. In fact, in one clinical trial, 100% of participants saw wrinkles diminished [sic] in just 5 minutes. Gordon Edelman Gleeson Dual effect technology gives clinically proven long term wrinkle reduction freezeframe is more than just an instant lift, this Dual Effect technology also contains the most significant breakthrough in topical wrinkle relaxing to date – so it works to relax your facial expressions and reduce the appearance of your wrinkles for the long term. freezeframe with INHIBOX is clinically proven to reduce visible wrinkles by as much as 63.23% in just 28 days so you will look years younger even when you're not wearing it! Two of the most potent wrinkle erasers in one formulation! The combination of this super strength peptide and the instant effect of INHIBOX work synergistically to create what we believe to be the most powerful wrinkle smoothing complex ever seen. Imagine... the power of an instant wrinkle freeze, combined with the long term benefits of the most potent, progressive facial relaxing technology ever discovered. All in one simple formula. Looking younger has never been easier – or more satisfying for those of us who want instant gratification! Price: $89.00" (italicised emphasis added) To the left of that text was a box headed "We also recommend", which contained two products – "Night" to "[r]elax wrinkles while you sleep" and "Boost", a "[c]oncentrated wrinkle relaxing eye roller". As with the analysis of Packaging A and Packaging B, the question is whether the reasonable consumer would believe that the long term efficacy representation was in fact made by the use of the phrase "instant Botox® alternative" on the website. The website contained two statements which directly contradicted the alleged long term efficacy representation. In the first paragraph under the "DESCRIPTION" tab it was stated in the body of the text that "upon application ... results have [sic] shown to last for hours". The second heading under the "DESCRIPTION" tab said "Put the freeze on eye and forehead wrinkles for up to 8 hours". That said, there were a number of references on the website to Inhibox having "long term" effects – in the top banner there was the phrase "INSTANT AND LONG TERM RESULTS"; to the right of the image of the Inhibox product were the words "CLINICALLY PROVEN – INSTANT INSTANTLY – BOTOX® ALTERNATIVE – FREEZES WRINKLES REDUCES WRINKLES LONG TERM"; towards the bottom of the page, Gordon Edelman Gleeson under the "DESCRIPTION" tab and the heading "Dual Effect technology gives clinically proven long term wrinkle reduction", Inhibox was said to "relax your facial expressions and reduce the appearance of your wrinkles for the long term"; and in the final paragraph under that tab Inhibox was said to have "long term benefits". There were also references to Inhibox having a "Dual Effect" and a reference to it providing "more than just an instant lift", being "clinically proven to reduce visible wrinkles by as much as 63.23% in just 28 days so you will look years younger even when you're not wearing it!" (emphasis added). The latter statement suggested that Inhibox would have some post-treatment effect after 28 days of use. The question is what the reasonable consumer would have thought the phrase "instant Botox® alternative" conveyed, in context. Did it convey that Inhibox had post-treatment effects that would be equivalent to those of Botox? Critically, although there were statements suggesting some post-treatment effect, those statements did not say how long such an effect might last. Other statements suggested that the results after application would last for hours. The broader context is the same as for Packaging A and Packaging B166. The reasonable consumer would have understood that, despite Inhibox being described as an "alternative", there would be differences between a Botox injection administered by a healthcare professional and a topically self-applied cream described as a "safe tissue tightening agent". In that context, "instant Botox® alternative" meant a product that would have an effect that could be fairly described as "instant" and be similarly effective to Botox at reducing the appearance of wrinkles – not a product that would have an equivalent post-treatment period of effect. The description of Inhibox as an "instant Botox® alternative" would not in that context convey to the reasonable consumer that the period of post-treatment efficacy would be equivalent to a Botox treatment. For those reasons, Self Care's appeal against the finding that its use of the phrase "instant Botox® alternative" contravened ss 18 and 29 of the ACL should be allowed. 166 See [100]-[101] and [106] above. Gordon Edelman Gleeson Conclusion and orders For those reasons, the orders are: Matter No S79/2022 The appeal be allowed with costs. Orders 2 to 6 of the orders made by the Full Court of the Federal Court of Australia on 7 September 2021 and the declarations and orders made by the Full Court of the Federal Court of Australia on 13 October 2021 in proceeding NSD 35 of 2021 be set aside and, in their place, order that the appeal be dismissed with costs. Matter No S80/2022 The appeal be allowed with costs. The orders made by the Full Court of the Federal Court of Australia on 7 September 2021 in proceeding NSD 249 of 2021 be set aside and, in their place, order that the appeal be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Macleod v The Queen [2003] HCA 24 7 May 2003 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation: P L G Brereton SC with J C Papayanni for the appellant (instructed by Jeffreys & Associates) T A Game SC with D Jordan for the respondent (instructed by Commonwealth Director of Public Prosecutions) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Macleod v The Queen Criminal law – Property offence – Fraudulent application of company property by director or officer – Accused also sole beneficial shareholder of company – Whether consent of accused, as sole shareholder, cures what would otherwise be a breach by accused, as director or officer, of s 173, Crimes Act 1900 (NSW). Criminal law – Property offence – Fraudulent application of company property by director or officer – Directions – Whether trial judge misdirected jury in failing to identify the use of dishonest means as an essential element of s 173, Crimes Act 1900 (NSW) – Whether trial judge erred in failing to direct that it was necessary for accused to have realised that his impugned conduct was dishonest by the current standards of ordinary, decent people. Words and phrases – "fraudulently", "claim of right". Crimes Act 1900 (NSW), ss 4(1), 173. GLEESON CJ, GUMMOW AND HAYNE JJ. This appeal from the New South Wales Court of Criminal Appeal1 concerns an offence created by State law which comprises the fraudulent taking or application, by a company director, officer or member, of property of the company, for the use or benefit of that person, or for any use or purpose other than the use or purpose of the company. Here, the sole beneficial shareholder of the company was the appellant. At a trial in the District Court of New South Wales (Rummery DCJ, sitting with a jury), the appellant was convicted on 10 March 1999 of 18 counts on an indictment containing 25 counts. Five of the counts upon which the appellant was convicted charged contravention of s 173 of the Crimes Act 1900 (NSW) ("the Crimes Act"). They are the only charges which are the subject of the present appeal. At the relevant time2, s 173 of the Crimes Act provided: "Whosoever, being a director, officer, or member, of any body corporate, or public company, fraudulently takes, or applies, for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate, or company, or fraudulently destroys any of the property of such body corporate, or company, shall be liable to penal servitude for 10 years." The term "property" was defined in s 4(1) as including: "every description of real and personal property; money, valuable securities, debts, and legacies; and all deeds and instruments relating to, or evidencing the title or right to any property, or giving a right to recover or receive any money or goods; and includes not only property originally in the possession or under the control of any person, but also any property into or for which the same may have been converted or exchanged, and 1 R v Macleod (2001) 52 NSWLR 389. 2 Section 173 was subsequently amended to replace "penal servitude" with "imprisonment": Crimes Legislation Amendment (Sentencing) Act 1999 (NSW), s 5, Sched 3, Item 70. everything acquired by such conversion or exchange, whether immediately or otherwise". The Court of Criminal Appeal (Mason P, Simpson J and Newman AJ) dismissed the appellant's appeal against conviction on each of the five counts charging contravention of s 173. By special leave, the appellant appeals against that decision. The indictment Each of the 25 counts related to an enterprise carried on by the appellant between 1989 and 1994 with an apparent view to obtaining taxation concessions under Div 10BA of Pt III of the Income Tax Assessment Act 1936 (Cth). The indictment impugned certain conduct of the appellant between 5 May 1990 and 25 February 1994; the counts which are the subject of this appeal related to events said to have occurred between 18 February 1991 and 20 December 1991. The prosecution alleged that the appellant, as director of three companies, had offered investment opportunities in a film production scheme. This had been promoted as involving the acquisition of copyright in primary works, the production and marketing of cinematograph films and the sharing amongst investors of profits derived from the joint ownership of the copyright therein. The three companies were Trainex Pty Ltd ("Trainex"), Starlight Film Studios Ltd ("Starlight") and Communications Entertainment Network Ltd ("CEN"). The appellant was at the relevant times a director of Trainex, save for the period to which counts 20 and 22 related, when he was secretary of the company. The appellant testified that he was the only shareholder in Trainex and there was no evidence that anyone else was beneficially interested in the company. If there were any other directors, they played no part in the company's affairs. Trainex had been incorporated (under a former name) as a proprietary company on 18 August 1977. The Companies Act 1961 (NSW) was then in force and s 114(1) thereof required proprietary companies to have at least two directors. At the time of the conduct the subject of the charges, Trainex, by force of ss 126 and 150 of the Corporations Law3 ("the Law"), was taken to be a company duly 3 As set out in s 82 of the Corporations Act 1989 (Cth) and applied as a law of New South Wales by s 7 of the Corporations (New South Wales) Act 1990 (NSW). incorporated under that Law. Section 221(1) of the Law required a proprietary company to have at least two directors4. Several thousand investors contributed to the scheme promoted by Trainex. The Investor's Deed required Trainex to hold the invested funds on trust for the purpose of film production. The Deed obliged Trainex to deposit the invested funds into a trust account and permitted the company to invest the funds in any interest bearing or discounted securities authorised by the Trustee Act 1925 (NSW). Upon satisfaction of the specified "Subscription Conditions" (essentially the raising of sufficient funds to meet the budgeted film production costs), Trainex was obliged to proceed with the production of the relevant film. The money raised by Trainex was held in several accounts with Chase AMP Bank. These were described to investors as "Trust Accounts" in the Investor's Deed and related correspondence. Of the funds raised, approximately $718,000 was applied to film production, but more than $2 million was applied to the appellant's own use. The appellant applied some of this money to the purchase of a home unit in Queensland; other amounts were paid to the credit of a loan account in Starlight in the appellant's name on which he subsequently drew. This application by the appellant of the funds required to be held on trust by Trainex placed Trainex in breach of the trusts created by the Investor's Deed. Counts 1 to 4 on the indictment charged that the appellant had been knowingly concerned in the commission by Trainex of the offence of offering a prescribed interest to the public for subscription or purchase in contravention of ss 169 and 570(1) of the Companies (New South Wales) Code (NSW). Counts 5 to 8 charged similar offences in contravention of ss 1064(1) and 1311(1) of the Law. Counts 9 and 10 charged that, in contravention of ss 1018(1) and 1311(1) of the Law, the appellant had been knowingly concerned in the commission by Starlight of the offence of offering prescribed interests for subscription or purchase without having registered a prospectus with the Australian Securities Commission. Counts 11 to 13 charged that the appellant had been knowingly concerned in the commission of offences by Trainex or Starlight against s 43 of the Securities Industry (New South Wales) Code (NSW) or s 780 of the Law in carrying on a securities business without a relevant licence, authorisation or exemption. 4 This was amended, with effect from 9 December 1995, to provide for a minimum of one director: First Corporate Law Simplification Act 1995 (Cth), s 4(2), Sched 4, Item 25. The appellant was convicted on each of these counts and his appeal against each conviction was dismissed except in respect of the convictions on counts 12 and 13. These were quashed by the Court of Criminal Appeal. No appeal has been taken against the decision of the Court of Criminal Appeal in respect of any of these counts. Six counts on the indictment (counts 14, 16, 18, 20, 22, 24) alleged contravention of s 173 of the Crimes Act. These charged that, as a director (counts 14, 16, 18, 24) or officer (counts 20, 22) of a body corporate, the appellant fraudulently applied for his own use (counts 14, 16, 18), or for purposes other than those of Trainex (counts 20, 22), property owned by Trainex or, in the case of count 24, property owned by CEN. The appellant was convicted on each of these counts, with the exception of count 24, on which he was acquitted. Six other counts (counts 15, 17, 19, 21, 23, 25) were charged as alternatives to these counts; no verdict was taken in respect of the first five. The jury acquitted the appellant on count 25. In the result, this appeal concerns only counts 14, 16, 18, 20 and 22; the conduct of the appellant in respect of Trainex alone here is in issue. Counts 14, 16 and 18 related to the application by the appellant of three cheques drawn upon the account of Trainex with Chase AMP Bank as payment for the Gold Coast property. Counts 20 and 22 related to two further cheques drawn on the Trainex account with Chase AMP Bank; these were applied at the appellant's direction in payment of the loan account held by him with Starlight. The Court of Criminal Appeal In total, the appellant was sentenced to a minimum term of imprisonment of five and a half years, commencing on 30 January 1997, with an additional term of 18 months. The Court of Criminal Appeal granted leave to appeal against the severity of the sentences, but dismissed the appeal against sentence (except in respect of counts 12 and 13). There is no appeal against sentence in this Court. In the Court of Criminal Appeal, Simpson J, with whom Mason P and Newman AJ agreed, rejected a submission for the appellant that the evidence in respect of counts 14, 16, 18, 20 and 22 could not constitute the offences charged5. Her Honour held that the fraudulent intent which s 173 required was equivalent to "dishonesty" and that there was ample evidence on which the jury could (2001) 52 NSWLR 389 at 391, 413, 419. conclude that the appellant, at the relevant times, had acted dishonestly6. Mason P, with the concurrence of Simpson J and Newman AJ, rejected a further submission that, as the "de facto controller" or "directing mind" of Trainex, the appellant (and therefore Trainex) had "consented" to the relevant applications of company property and that the "consensual" nature of these transactions precluded conviction under s 1737. The Court of Criminal Appeal also rejected various challenges by the appellant to the adequacy of the trial judge's directions in respect of the counts charging contravention of s 1738. Some of these challenges were renewed in this Court. The appellant's submissions In written submissions, the appellant contended that s 173 requires the prosecution to prove an absence of consent by the "victim" of the fraud, the use of dishonest means by the accused, and the absence of a bona fide claim of right in the accused. As ultimately put in oral submissions, "consent" on the part of the company was said to be inconsistent with dishonesty, rather than operating as a separate element of the offence. The appellant submitted that (i) because the use of funds by the appellant was "contemplated" by Trainex, and the absence of consent had to be proved by the prosecution, its case had to fail; (ii) the jury had been inadequately directed as to the need for the application to be dishonest towards the company; and (iii) no adequate directions were given with respect to the claim of right made by the appellant. Acceptance of (i) was said to necessitate the quashing of the convictions on the five counts in question, whilst the other grounds were directed to a new trial. The submissions for the appellant sought to isolate a series of discrete elements of the offence created by s 173. The construction propounded lacks a secure foundation in the statutory text and would be discordant with its legislative purpose. Moreover, the appellant's submissions on "absence of consent" paid insufficient regard to basic principles respecting the distinct legal personality of corporations. (2001) 52 NSWLR 389 at 410. (2001) 52 NSWLR 389 at 392-394, 410, 419. (2001) 52 NSWLR 389 at 391, 411-413, 419. Section 173 of the Crimes Act and common law larceny At all relevant times, Pt 4 (ss 93J-203) of the Crimes Act was headed "OFFENCES RELATING TO PROPERTY". It made provision in respect of, among other things, "LARCENY" (ss 116-154C), "EMBEZZLEMENT OR LARCENY" (ss 155-163), "FRAUDULENT MISAPPROPRIATION" (s 178A), "OBTAINING MONEY ETC BY DECEPTION" (s 178BA), "OBTAINING MONEY ETC BY FALSE OR MISLEADING STATEMENTS" (s 178BB) and "FALSE PRETENCES" (ss 179-185A). Section 173 appeared under the heading "FRAUDS BY FACTORS AND OTHER AGENTS" (ss 164-178). Other provisions under that heading proscribed misappropriation or fraudulent dealing by agents with respect to property entrusted to them (ss 165, 166, 168, 169, 170), the fraudulent disposal of property by trustees (s 172), misconduct of company directors or officers in respect of company accounts (ss 174, 175) and the publication of fraudulent statements (s 176), or cheating or defrauding (s 176A) by company directors or officers. These provisions created new offences which are substantially broader in scope than the common law crime of larceny. In R v Ward, Jordan CJ identified the "essentials" of the crime of larceny as consisting of a "composite thing" made up of9: "the taking away of a chattel belonging to another person, coupled with a purpose on the part of the taker permanently to deprive the owner of the property in the thing taken. If such a taking for such a purpose occurs without the consent of the owner, and not under a genuine claim of right, the crime of larceny is committed." His Honour observed that, at the time the law of larceny received its definition, the criminal law10: "protected a man from being deprived of his goods against his will; but from mere cheating he was expected to protect himself. Hence cheating, as such, was not a crime at common law. It followed that, if a man were induced to consent to part with his property in goods to a cheat by a deception, however fundamental, a consent of this kind made the taking not merely not larcenous but not criminal." (1938) 38 SR (NSW) 308 at 311. See also Croton v The Queen (1967) 117 CLR 10 (1938) 38 SR (NSW) 308 at 312-313. Perceived deficiencies in the common law attracted statutory intervention in England and in the Australian colonies throughout the course of the nineteenth century. The elaborate provisions of the Larceny Act 1827 (UK)11 and the Larceny Act 1861 (UK)12 are significant examples. In Australia, as in England, modern statutes, including what now is s 173, have created offences freed from many of the complex distinctions and restrictions of the common law. The statutory offence of obtaining property dishonestly by deception, which was considered in Parsons v The Queen13, illustrates the point. The definition of "property" in the statute there under consideration14 was so drawn as to include instruments creating or evidencing choses in action, which were said not to have been capable of being the subject of a charge of larceny at common law. Again, in R v Glenister15, the Court of Criminal Appeal held that s 173 of the Crimes Act displaced the requirement, which had existed under the common law, to prove an intention permanently to deprive the owner of the property taken. In Slattery v The King16, Griffith CJ observed that one result of the "many peculiar rules" of the English law of larceny was "that a person entrusted with property to hold for another, who converted that property to his own use, could not be charged with larceny, because he did not wrongfully take it away, having had it lawfully in his possession". Thus, at common law, the fraudulent breach of trust by a trustee was not a crime; being possessed of the whole legal estate in the trust property, the trustee committed no offence in misapplying that property to his own use17. Writing in 1883, Sir James Stephen observed that, as a general proposition, for centuries a borrower who made away with something lent to him was guilty of no crime at common law18. 11 7 & 8 Geo IV, c 29. 12 24 & 25 Vict, c 96. 13 (1999) 195 CLR 619 at 624 [10]. 14 Crimes Act 1958 (Vic), s 71(1). 15 [1980] 2 NSWLR 597. 16 (1905) 2 CLR 546 at 554-555. 17 See Stephen, A History of the Criminal Law of England, (1883), vol 3 at 147. 18 Stephen, A History of the Criminal Law of England, (1883), vol 3 at 128. In the United Kingdom from 1799, various statutes created offences comprising the misappropriation of property by persons (including clerks, servants, brokers and other agents, bailees and trustees, and, in time, company directors) who had been entrusted to deal with the property in specific ways and thus could not have been convicted of larceny at common law19. These offences were expanded and consolidated by ss 67-87 of the Larceny Act 1861 (UK)20. Section 81 thereof was in similar terms to what now is s 173 of the Crimes Act. Analogous provision had been made in New South Wales by s 5 of the Trustees and Directors Frauds Protection Act 1858 (NSW)21. This in turn was repealed and re-enacted in 188322, in language substantially similar to s 173 of the Crimes Act. The latter provision was, at the time of the offences the subject of this appeal, in the same terms as at its enactment in 1900. Consent The notion of "consent" was central to the appellant's submissions. The reference to "fraudulently tak[ing], or appl[ying]" in s 173 was said to import a requirement that the accused took or applied the property with the intention of dealing with it in a manner not intended, contemplated or understood by the victim. The "victim" here was Trainex; it was submitted that the company, in which the appellant alone had a beneficial interest, had "consented" to the taking or application, and that that "consent" had not been obtained by deceit or dishonesty. A contravention of s 173, it was said, was impossible where the taking or application occurred with the unanimous consent of the shareholders. 19 Stephen, A History of the Criminal Law of England, (1883), vol 3 at 150-159. Important enactments included: 39 Geo III, c 85; 52 Geo III, c 63; 7 & 8 Geo IV, c 29; 20 & 21 Vict, c 54. 20 24 & 25 Vict, c 96. 21 22 Vict No 16. This provided: "If any director public officer manager or member of any body corporate or public company shall in any manner with intent to defraud misappropriate or destroy any of the property of such body corporate or company (whether he be a member thereof or not) he shall be guilty of a misdemeanor." 22 Criminal Law Amendment Act 1883 (NSW), 46 Vict No 17, s 134, Sched 1. This was repealed in 1900 by the Crimes Act, s 2, Sched 1. The reforms in England and New South Wales implemented a legislative intention that criminal liability should extend to fraudulent dealings by agents, trustees, directors and others in property which had been entrusted to them for a particular purpose. That expansion of criminal liability left no room for the proposition, which appeared to inform the common law, that a limited expression of consent on the part of the owner, or the possessory interest of the trustee or bailee, provided an answer to a charge of a fraudulent dealing which travelled beyond that consent or interest. The new statutory offences invariably were expressed in terms of a fraudulent dealing carried out in furtherance of some personal use or benefit, or for any purpose other than the purpose authorised by the owner. Thus, to a significant degree, liability under the provisions depended upon the pursuit, to the prejudice of the owner, of benefits personal to the accused and in derogation of the purposes of the owner, rather than upon the identification of expressions of "consent" by the owner or the possessory interests of the accused. These reforms predated the emergence from the era of the joint stock company of a more fully developed understanding of the distinct legal identity of the corporation, as reflected in Salomon v Salomon & Co23. The scope and operation of the provisions necessarily move with those developments; their construction is informed by the proposition that a company has rights, interests and duties which differ from those of its directors, officers and members. The conduct or state of mind of the latter is not always to be attributed to the former; this is particularly evident upon an insolvent winding up. Indeed, the text of s 173 itself distinguishes between the director, officer or member's "own use or benefit" and the "use or purpose" of the "body corporate, or company". The Full Court of the Supreme Court of South Australia referred to like considerations in holding that a person in dominant control of a company is capable of contravening the South Australian analogue of s 173 by fraudulently applying company property for purposes other than the purposes of the company24. In R v Gomez, Lord Browne-Wilkinson said25: "Where a company is accused of a crime the acts and intentions of those who are the directing minds and will of the company are to be attributed to the company. That is not the law where the charge is that those who are 24 Attorney-General's Reference No 1 of 1985 (1985) 41 SASR 147 at 152-154. 25 [1993] AC 442 at 496. the directing minds and will have themselves committed a crime against the company26." His Lordship referred to Attorney-General's Reference (No 2 of 1982)27. The Court of Appeal there answered in the affirmative a point of law, referred to it by the Attorney-General, whether a person in total control of a limited liability company (by reason of shareholding and directorship) is capable of stealing the property of the company within the terms of the statutory offence of theft28. The submission that the "consent" of a single shareholder company cures what otherwise would be a breach of s 173 should not be accepted. The self-interested "consent" of the shareholder, given in furtherance of a crime committed against the company, cannot be said to represent the consent of the company. The proper construction of s 173 The text of s 173 indicates that the offence which it creates relevantly comprises three elements: (i) the taking or application of company property by a company director, officer or member; (ii) for his own use or benefit, or any use or purpose other than the use or purpose of the company; and (iii) that the taking or application was fraudulently made. The second element, though little emphasised in the submissions for the appellant, is significant. It confirms that, as indicated by the history of the provision, s 173 identifies criminal liability by reference to the application of company property by the accused for his or her personal benefit, and in a manner inconsistent with the purposes of the company. Hence the composite expression "fraudulently takes, or applies, for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate, or company". To dissect the word "fraudulently" and, through it, to import additional unexpressed elements of the offence would be insufficiently to attend to the wrongdoing which the provision itself identifies in the application of property for personal use unrelated to any use or purpose of the company. 26 See Attorney-General's Reference (No 2 of 1982) [1984] QB 624, applying Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250. 28 Theft Act 1968 (c 60) (UK), ss 1-6. In Glenister29, the New South Wales Court of Criminal Appeal correctly observed of the language of s 173 that: "'[f]raudulently' as a constituent of these offences bears a meaning which differs, not only from its meaning in civil contexts, but also from the significance assigned to it in certain other criminal contexts by express statutory definition." Section 173 is to be construed by reference to its terms, scope and purpose. To apply statements in authorities respecting other statutory or common law offences30 is to invite error. At times, the submissions for the appellant appeared to adopt such a course. The Court of Criminal Appeal in Glenister reviewed the authorities term construing s 173 and cognate provisions and concluded "fraudulently" in this context has a meaning interchangeable with "dishonestly"31. That construction has been adopted in relation to analogous provisions in other Australian jurisdictions32. It is consistent with the conclusion of four members of this Court in Spies v The Queen33 concerning the offence created by s 176A of the Crimes Act. It was there held that, to establish that a director had "defraud[ed]" any person in his or her dealings with the company in contravention of s 176A, it was necessary to prove that the accused had used "dishonest means" to prejudice the rights or interests of that person. that the 29 [1980] 2 NSWLR 597 at 605-606. 30 Including authorities construing statutory definitions of theft: see R v Roffel [1985] VR 511. The correctness of the decision in Roffel, which turned upon the application of s 72 of the Crimes Act 1958 (Vic), is not a matter that falls for determination in this case. 31 [1980] 2 NSWLR 597 at 604. See also Re Hyams and the Public Accountants Registration Act [1979] 2 NSWLR 854 at 863-864. 32 R v Smart [1983] 1 VR 265 at 293-295; Attorney-General's Reference No 1 of 1985 (1985) 41 SASR 147 at 152, 154. 33 (2000) 201 CLR 603 at 630-631 [78]-[81]. In Peters v The Queen, which concerned charges of conspiracy to defraud the Commonwealth under ss 86(1)(e) and 86A of the Crimes Act 1914 (Cth), Toohey and Gaudron JJ said that, ordinarily, fraud involves34: "the intentional creation of a situation in which one person deprives another of money or property or puts the money or property of that other person at risk or prejudicially affects that person in relation to 'some lawful right, interest, opportunity or advantage'35, knowing that he or she has no right to deprive that person of that money or property or to prejudice his or her interests". (emphasis added) Their Honours explained that the term "dishonestly" in a statutory offence may be employed in its ordinary meaning or in some special sense36. The line of authorities37 concerning the statutory offence of dishonestly obtaining property by deception provides an illustration of the latter38. In a passage that has significance for the present appeal, Toohey and "In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. … If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people." 34 (1998) 192 CLR 493 at 508 [30]. See also Spies v The Queen (2000) 201 CLR 603 35 R v Kastratovic (1985) 42 SASR 59 at 62. 36 (1998) 192 CLR 493 at 510 [34]. 37 See, eg, R v Salvo [1980] VR 401; R v Brow [1981] VR 783; R v Bonollo [1981] VR 633; R v Love (1989) 17 NSWLR 608. 38 Peters v The Queen (1998) 192 CLR 493 at 502 [11]-[13], 504 [18]-[19]; see also at 531 [86] per McHugh J. 39 (1998) 192 CLR 493 at 504 [18]; cf R v Feely [1973] QB 530; R v Ghosh [1982] QB 1053 at 1064; Twinsectra Ltd v Yardley [2002] 2 AC 164 at 171-175, 196-202. Their Honours rejected any further requirement, derived from R v Ghosh40, that the accused must have realised that the act was dishonest by those standards41. A question presented by s 173 of the Crimes Act is whether the taking or application was "fraudulent" or "dishonest" according to ordinary notions. The passage cited above from the joint judgment in Peters indicates the preferred approach to the meaning of the term "fraudulently" in s 173. Claim of right In Peters, the equation of "dishonesty" with absence of a belief of legal right was rejected, save where "dishonest" was used in a special statutory sense42. Section 173 is not such a special statutory provision. Rather, in this case, the notion of "claim of right" is a manifestation of the general principle identified by Dawson J in Walden v Hensler43, namely that it is: "always necessary for the prosecution to prove the intent which forms an ingredient of a particular crime and any honestly held belief, whether reasonable or not, which is inconsistent with the existence of that intent will afford a defence". Hence the statement by Glanville Williams44: "The evidential burden of a claim of right is on the accused, but the persuasive burden is on the prosecution to rebut it." The submissions for the appellant in this case stopped short of relying upon a distinct and wider principle identified by Dawson J in Walden45 as being that: 41 (1998) 192 CLR 493 at 503-504 [15]-[19]. 42 (1998) 192 CLR 493 at 502 [11], 504 [19], 531 [86]. 43 (1987) 163 CLR 561 at 591. 44 Williams, Criminal Law: The General Part, 2nd ed (1961), §117. 45 (1987) 163 CLR 561 at 591-592. "the existence of any state of mind, however limited, which is an element of a crime, may be negated by an honest and reasonable belief in the existence of circumstances which, if true, would make the impugned act innocent: R v Tolson46. The generality of that proposition may best be seen at common law in its application to statutory offences of strict liability which, although containing no requirement of intent, or mens rea as it is ordinarily understood, are nevertheless presumed to contain the requirement of a lesser mental element which may be expressed negatively as the absence of an honest and reasonable belief in a state of facts which if true would take the case outside the ambit of the offence. The existence of a defence based upon honest and reasonable mistake in the context of statutory offences has recently been discussed in He Kaw Teh v The Queen47". Against that background, several points should be made. The first concerns what is meant when it is said that the accused raises a claim of right. As to that, Dawson J said in Walden48: "It is not ignorance of the criminal law which founds a claim of right, but ignorance of the civil law, because a claim of right is not a claim to freedom to act in a particular manner – to the absence of prohibition. It is a claim to an entitlement in or with respect to property which goes to establish the absence of mens rea. A claim of that sort is necessarily a claim to a private right arising under civil law: see Cooper v Phibbs49." Secondly, the claim must be made honestly, leading to the proposition expressed by Callaway JA in R v Lawrence50 that, although an honest claim "may be both unreasonable and unfounded", if it is of that quality then the claim "is less likely to be believed or, more correctly, to engender a reasonable doubt". Thirdly, particular considerations arise where, fraud being inconsistent with a claim of right made in good faith to do the act complained of51, that act 46 (1889) 23 QBD 168. 47 (1985) 157 CLR 523. 48 (1987) 163 CLR 561 at 592-593. 49 (1867) LR 2 HL 149 at 170 per Lord Westbury. 50 [1997] 1 VR 459 at 467. 51 Stephen, A History of the Criminal Law of England, (1883), vol 3 at 124. has, as a necessary element of criminal liability, the quality of dishonesty according to ordinary notions. Section 173 of the Crimes Act is such a provision. Hence the observation by Simpson J to the effect that a finding that the appellant acted dishonestly and thus had the necessary mens rea foreclosed a finding that the appellant lacked the necessary mens rea for dishonesty because he had acted under a bona fide belief that he was entitled to do as he did52. Her Honour referred to the evidence of the "that he regarded the funds as being funds belonging to Trainex, and himself as being the owner of Trainex, and therefore the owner of the money. He said that he had not, in the early years, drawn a salary but, that, when the company's financial position was more secure, he was entitled to do so. He said that he believed that the company owed him more than the amount that he borrowed from it." The function of the claim of right put forward by the appellant was to seek to engender a reasonable doubt with respect to the overall persuasive burden on the prosecution of proving that there had been the fraudulent taking or application alleged. The trial judge reminded the jury of his directions with respect to the meaning of "fraudulently" in s 173 and continued: "[I]n assessing the accused['s] case that he was entitled to use the company money as he did you should apply the same principles, that is whether by ordinary notions the accused was acting honestly by the standards of ordinary decent people. Finally I remind you that again the onus remains on the Crown to establish the elements of the charges beyond reasonable doubt." The appellant complains that there was no specific reference to the "subjective" criterion attending a claim of right. But the directions to be given about a claim of right must reflect the elements of the offence charged and the nature of the mens rea required. Adopting the reasoning in Peters, as we do, and applying it to the offences now under consideration, there is no requirement that the appellant must have 52 R v Macleod (2001) 52 NSWLR 389 at 412-413. 53 R v Macleod (2001) 52 NSWLR 389 at 412-413. realised that the acts in question were dishonest by current standards of ordinary, decent people. To require reference to a "subjective" criterion of that nature when dealing with a claim of right would have deleterious consequences. It would distract jurors from applying the Peters direction about dishonesty, and it would limit the flexibility inherent in that direction. A direction about the "subjective" element of a claim of right was neither necessary nor appropriate in this case. It was open to the jury, looking at the matter by reference to the standards of ordinary, decent people, to conclude that at the time of the various takings or applications of sums by the appellant he knew of his lack of entitlement to take or apply the funds of Trainex for his own use or benefit and that, on that account, his acts were dishonest. Some of the evidence supporting that conclusion was summarised by Simpson J as follows54: "This evidence included evidence of the disposal of the investors' funds: of more than $6 million invested, approximately $2.2 million was used for the appellant's own purposes. He in fact made formal admissions, pursuant to s 184 of the Evidence Act 1995 [(NSW)], to that effect. A very small proportion of the funds ($718,000) was used in producing films. The income statement sent to investors falsely represented that income had been derived. The 'income' they showed was in fact funds derived from subsequent investors, and not from the marketing of completed film[s]. The so-called subsidy of 70 percent offered to investors was similarly a misrepresentation of the true position. The instruction given by the appellant to [Trainex's account and office manager] to conceal records from the [Australian Securities Commission] was evidence the jury were entitled to use as evidence of dishonesty." Much of the evidence went both to dishonesty in the initial raising of the funds from investors and the application of the property of Trainex; contrary to what appears to have been an assumption in the appellant's submissions, there was no necessary dichotomy between the two. The prosecution case had been that the entire film production enterprise was "a sham". Evidence tending to indicate a deliberate and sustained course of deception by the appellant is probative of a lack of genuine belief in an entitlement to apply the property of Trainex to his own use or benefit. Further, the documentation prepared by Trainex suggested that the appellant knew that Trainex owed obligations to others in respect of the 54 R v Macleod (2001) 52 NSWLR 389 at 410-411. disposition of the funds which he applied to his own use. A conclusion clearly was open that the appellant had known that the funds of investors were being held, pursuant to the Investor's Deed, for the particular purpose of film production and that he was obliged to see that those funds be kept by Trainex on trust for application for that purpose and not otherwise. The taking of those funds by the appellant for his own benefit, thereby placing Trainex in breach of trust, in the face of the documentary evidence that those funds had been raised for the purpose of film production, was indicative of the lack of any honest belief in his asserted entitlement to act as he did. Adequacy of the trial judge's directions The appellant submitted that the trial judge's directions were inadequate because they failed (i) to identify the need for dishonest means in the application of the funds, including the absence of informed consent of the "victim" of the fraud; (ii) to specify the facts from which dishonesty was to be inferred; (iii) to identify the need for prejudice to the company; (iv) to advert to the requirement for the prosecution to exclude a bona fide claim of right which involved a genuine, as opposed to reasonable, belief in the claimed right; and (v) to state that the appellant was entitled to be acquitted unless the jury were satisfied that the transactions were not loans. It will be apparent from what has been said earlier in these reasons that these submissions were misconceived. Section 173 does not impose a requirement for an absence of informed consent on the part of the "victim" of the fraud and specific directions respecting a "claim of right" are not required. The trial judge adequately identified the facts from which dishonesty was to be inferred, by specifying the particular applications which were the subject of each count and by contrasting the prosecution case with what the appellant had claimed was his genuine belief in his entitlement to act as he did. The prejudice to Trainex, being the significant loss of property, did not need specifically to be identified. In his written directions to the jury, the judge said: "Fraudulent means dishonest. To act fraudulently is to act dishonestly. In deciding whether the acts of the accused in applying the property of Trainex in the manner you find he did was or was not dishonest, you should apply the current standards of ordinary decent people." This was repeated in the trial judge's oral directions. The written directions on counts 20 and 22, under the heading "Other than for the purposes of Trainex", stated: "If you find that the money was applied to the Loan account of the accused in Starlight, the question for you is whether a purpose or use of Trainex has been served or promoted by such an application. Did such application advance or not advance the purposes of Trainex? The ultimate motives and intentions of the accused are irrelevant to a determination of the purpose of the application. But of course, they will be relevant to the question whether he acted fraudulently." The substance of this direction was repeated orally to the jury. In his oral directions with respect to counts 14, 16 and 18, the trial judge told the jury: "You know from the documentation that you have that the money came from persons, the various investors and you know from the documentation that you have what, according to both documents you may think the expectation on the Crown case of each of the investors was." The judge's directions, when read as a whole, (i) identified the knowledge, belief or intent which was said to render the conduct of the appellant dishonest, and (ii) instructed the jury to decide whether the appellant had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest, by reference to the standards of ordinary, decent people. The submission that the Court of Criminal Appeal erred in holding that these directions were adequate in the circumstances should be rejected. Conclusion The appeal should be dismissed. McHugh 57 McHUGH J. Section 173 of the Crimes Act 1900 (NSW) made it an offence for a director or officer of any body corporate to fraudulently take or apply any of its property "for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate". The principal question in this appeal is whether a person can be guilty of fraudulently applying property contrary to s 173 if that person is the controlling mind of and the only person beneficially interested in the company. If such a person can fraudulently apply property of the corporation, further questions arise in the appeal as to whether the trial judge misdirected the jury in respect of the term "fraudulently" and the appellant's "claim of right" to the property. In my opinion, a person may be convicted of fraudulently applying a company's property although that person is the controlling mind of and the sole beneficial shareholder in the company. Further, the directions of the trial judge were adequate in relation to the term "fraudulently" and the appellant's "claim of right". Statement of the case In the District Court of New South Wales, a jury convicted Robert James Macleod of 18 offences arising out of his conduct as an officer of a corporation55. Five of the 18 offences (counts 14, 16, 18, 20 and 22) were breaches of s 173 of the Crimes Act. Counts 14, 16 and 18 charged that Macleod, being a director of Trainex Pty Ltd ("Trainex"), "fraudulently applied for his own use property owned by Trainex", being three substantial sums of money owed to Trainex by Chase AMP Bank. Macleod used the funds to purchase a home unit on the Gold Coast. Counts 20 and 22 charged that Macleod, being an officer of the company, "fraudulently applied for a purpose other than for the purposes of" Trainex property owned by Trainex by applying the property to pay off his loan account with another company, Starlight Film Studios Ltd ("Starlight"). He appealed to the New South Wales Court of Criminal Appeal (Mason P, Simpson J and Newman AJ) against his conviction. That Court dismissed the appeal. It rejected Macleod's submission that the evidence did not constitute the offences charged because there was a consensual transaction that precluded conviction under s 173. It also rejected his submissions that the prosecution evidence did not establish that he had acted "fraudulently" and that the trial judge had misdirected the jury in relation to the fraud and to the "defence" of a "claim of right". In accordance with a grant of special leave to appeal, Macleod now appeals to this Court against his convictions on counts 14, 16, 18, 20 and 22 ("the fraud counts"). 55 Macleod was charged with 25 counts, six of which (counts 15, 17, 19, 21, 23 and 25) were alternatives to six primary charges (counts 14, 16, 18, 20, 22 and 24). McHugh The material facts The charges arose out of an enterprise conducted by Macleod over the period from 1989 to 199456. The enterprise purported to take advantage of taxation concessions offered by Div 10BA of Pt III of the Income Tax Assessment Act 1936 (Cth). Macleod was a director of three companies, Trainex, Starlight and Communications Entertainment Network Ltd ("CEN"). Trainex was entirely under the control of Macleod. There was no evidence that any other person had any beneficial interest in Trainex. Through these companies, Macleod purported to make films and videos in which he invited others to invest. Trainex was to receive the funds on the basis of standard documentation that emphasised the secure retention of the investors' funds in trust, pending expenditure on film production. Several thousand investors accepted this invitation, contributing more than $6,000,000. The money raised by Trainex was held in what the Investor's Deed referred to as "Trust Accounts" with Chase AMP Bank. Macleod's investment scheme offered substantial tax advantages. An investment of $3,000 received a "subsidy" of $7,000. For an outlay of $3,000, an investor received a tax-deductible expense of $10,000. Macleod claimed that this subsidy was funded by overseas finance. There was no evidence of this finance in the company's records. Investors were furnished with "income statements". They created the illusion that films were being made and were returning profits. Macleod determined the amount of income that was to be paid to investors. There was, however, no income derived from film production. The amounts remitted to investors as income came directly from investor funds. Of the $6,000,000 invested, only $718,249.27 was used to make films. More than $2,000,000 was applied for Macleod's benefit, including purchasing a home unit on the Gold Coast in his own name and making payments to the credit of his loan account with Starlight. The Australian Securities Commission investigated the enterprise in late 1991 or early 1992. Significantly, Macleod directed David Staume, Trainex's office and account manager, to store company records in a storage facility in the Sydney suburb of Ultimo to ensure that they would be hidden from the Commission. This was evidence of Macleod's consciousness of guilt. 56 Because of limitation provisions, the only matters charged were those committed from 1991. McHugh The Crown contended that the entire enterprise was a "sham" which Macleod practised upon investors to mislead them into believing that their funds were being used in accordance with the terms of the documents which Macleod had provided to them. Macleod's case Macleod contends that the evidence did not sustain the fraud counts because the use of the funds was "contemplated" by Trainex. He argues that "[i]t is essential to a fraudulent taking or application of property that the property be taken or applied with the intention of dealing with it in a manner not intended contemplated or understood by the victim". Macleod contends that, if the victim consents to the taking or application, no fraudulent taking or application occurs. Second, Macleod contends that the trial judge misdirected or failed to direct the jury as to the element of "fraudulently" in the fraud counts. He argues that the judge did not adequately direct the jury as to the need for the application to be dishonest towards the company. Macleod contends that the trial judge did not direct the jury that the use of dishonest means is an essential element in a "defrauding offence", and that this must have taken place in relation to obtaining the property. Third, Macleod contends that the trial judge erred in his directions to the jury concerning Macleod's "claim of right". According to Macleod, "[e]xclusion of a bona fide claim of right is an additional element of the offence, over and above the requirement to establish dishonest means", and the trial judge's directions did not reflect this requirement. Macleod contends that, if the Court upholds his first submission, it should enter an acquittal on the fraud counts. If the Court rejects that submission but upholds any of the other submissions, it should order a new trial. Issue 1: Whether a sole shareholder's consent to the taking of company property negates a charge of fraudulently applying that property The first issue in the appeal is whether a charge of "fraudulent application" under s 173 of the Crimes Act can be made out where the accused is the controlling mind of and the sole person beneficially interested in the company. It raises the question whether an officer of the company can be guilty of a fraudulent application of the company's property where, being the controller of the company, the officer consents to the transfer of corporate property to himself or herself. Central to Macleod's argument is the submission that the property must be taken or applied with the intention of dealing with it in a manner not intended or McHugh contemplated by the "victim". That is, Macleod maintains that the essential element of the fraud is the absence of consent. He argues that in the present case "the victim" of the "fraud" is the company and the consent of its sole shareholder is an answer to any claim of fraud. Accordingly, he says that he committed no offence because Trainex consented to his use of the funds. In the words of his counsel, Macleod, as "the sole beneficial shareholder[,] cannot defraud himself". Neither authority nor the proper construction of s 173 supports the contention Authority does not support Macleod's argument. Nor is its major premise the consequence of the proper construction of s 173. The consent of a sole shareholder cannot cure what would otherwise be a fraudulent taking or application of the company's property. A corporation is an entity separate from other persons who are its shareholders or associated with it. In Salomon v Salomon & Co57, the House of Lords unequivocally ruled that, even if a company is in essence a one-person business, no question of agency or trusteeship arises between the company and its controller. The company has the legal and beneficial title to its property. While legislative restriction on fraudulent dealing by agents, trustees, and directors in property entrusted to them for a particular purpose pre-dates the emergence of the separate legal entity concept58, the current provision must be read in the light of the dichotomy between the company and those who are its shareholders. Even where the shares of a company are closely held, the purposes (or interests) of the body corporate are not synonymous with the intentions of the person or persons in control. Even if all the shareholders are officers of the company and consent to the taking of the company's property, one or all of them can be guilty of an offence or offences against s 173 of the Act. In the Court of Criminal Appeal, Mason P said, correctly in my opinion59: 58 The earliest forms of the current s 173 were enacted in England in 1857 (20 & 21 Vict c 54), and adopted in the same form by the Trustees and Directors Frauds Protection Act 1858 (NSW). From there they have passed through consolidating Acts into the Crimes Act where they have remained relevantly unchanged since the Act's enactment. 59 (2001) 52 NSWLR 389 at 394. McHugh "In the context of provisions like s 173 there is clear authority that being in dominant control of a company provides no defence to a director proven to have fraudulently 'applied' company cheques for his or her own purposes." In Attorney-General's Reference No 1 of 198560, the Supreme Court of South Australia sitting in banc was asked to determine: "2. Whether a man in dominant control of a limited liability family company ... is capable of fraudulently applying the property of the company on a proper construction of s 189 of the Criminal Law Consolidation Act 1935-1984; and whether two men in dominant control of a limited liability company ... are (while acting in concert), capable of fraudulently applying the property of the company on a proper construction of s 189". Section 189 of the Criminal Law Consolidation Act 1935-1984 (SA) was not materially different from s 173 of the Crimes Act. King CJ, Bollen and Prior JJ unanimously answered the question in the affirmative. Prior J who gave the judgment of the Court said61: "The company was not charged with stealing from itself, or anyone else. Nor was it charged with applying property of its own for a purpose other than its own. The accused was not, and is not, the company. The fact that he is in dominant control of it, does not make the company property his property." Later, his Honour said "a man in dominant control of a company can fraudulently apply the company's property"62. Not only is authority and principle against the contention submitted by Macleod but the terms of s 173 give no support to his submissions. The elements of s 173 are: the taking or application of company property; by a company director, officer or member; 60 (1985) 41 SASR 147 at 150. 61 (1985) 41 SASR 147 at 153. 62 (1985) 41 SASR 147 at 154. McHugh for his own use or benefit, or any use or purpose other than the use or purpose of the company; that was fraudulently made. Section 173 itself suggests a dichotomy between the personal use or benefit of the director or officer and the use or purpose of the company. The section proscribes use by an officer of property for any use or purpose other than the use or purpose of the body corporate. This is an objective test. Under the Crimes Act, whether the taking or application was for the purposes of a corporation is determined objectively by reference to all the circumstances revealed in the evidence63. The use and benefit of the company is separate from (although not necessarily inconsistent with) the use or benefit of the accused. In s 173, "fraudulently" is an adverb that characterises the taking of property for the officer's own benefit or for purposes other than that of the company. The focus of the provision must be on whether the use of the company's property was for the use or purpose of the company. If it was not, it may – is very likely to – be fraudulent or dishonest. In the present case, Macleod applied the relevant property solely for his benefit – it could not be characterised otherwise. And it was open to the jury, as I later indicate, to find that the use was fraudulent. Section 173 does not require an absence of the "victim's" consent. However, Macleod claims that R v Roffel64 is authority for the proposition that the consent of all the shareholders is a defence to a charge of fraudulent taking or application of a company's property. In Roffel, a husband and wife were sole shareholders of a company whose stock and machinery were destroyed in a fire. Despite assuring creditors that they would be paid, the Roffels used most of the insurance payment for their own benefit. Mr Roffel was charged with theft of the company's funds. He defended his actions by asserting his belief that he was entitled to the monies as a company creditor on the basis that the company had originally received the entire business assets of the Roffels' partnership in exchange for shares issued. The jury convicted him. On appeal, he contended that there was no "appropriation" because the company had consented to the taking, the consent being evidenced by the acquiescence of both shareholders. 63 R v McEwan unreported, Supreme Court of New South Wales, 17 March 1978; R v Glenister [1980] 2 NSWLR 597 at 602-603. McHugh By majority, the Full Court of the Supreme Court of Victoria held that, when Roffel had taken the money, the company intended him to have it. Accordingly, there was no appropriation. The majority, applying the House of Lords decision in R v Morris65, held that there is no adverse interference with or usurpation of an owner's property where the owner consents to the taking of the "There was no evidence to suggest that the company did not intend the applicant to have the money and to use it for his own purposes. If the company decided to give the money to the applicant in order to defeat its creditors, that would be quite irrelevant. The motive of the company in making the gift could not convert the applicant's act in receiving the money into a usurpation of the company's rights." The majority found that, if a taking of possession of property is "consensual in the true sense" (that is to say that consent had not been obtained by duress or deception), it could not be described as an appropriation67. The decision in Roffel was met with "disbelief" from some commentators68. To some extent, the Victorian courts have sought to distance themselves from the decision69. In my opinion, the case was wrongly decided for the reasons given by Brooking J who dissented. His Honour held that an appropriation of property takes place where a person takes possession of another's property. His Honour thought that the consent of the owner was immaterial to whether an appropriation had taken place. He said70: "I see no sufficient warrant for holding that there is no assumption of the rights of an owner within the meaning of s 73(4) [of the Crimes Act 1958 66 [1985] VR 511 at 514. 67 R v Roffel [1985] VR 511 at 518 per Crockett J. 68 Baxt, "Commercial Law", (1993) 67 Australian Law Journal 696. See also von Nessen, "Company Controllers, Company Cheques and Theft – An Australian Perspective", (1986) Criminal Law Review 154; von Nessen, "My Body, Myself: Problems of Identity in Corporate Crime", (1985) 3 Company and Securities Law Journal 235. 69 See Feil v Commissioner of Corporate Affairs (1991) 9 ACLC 811. 70 R v Roffel [1985] VR 511 at 530. McHugh (Vic)] if the act in question is authorized by the person to whom the property belongs. The clear words of s 73(4) are not to be cut down by reference to some notion said to be contained in the ordinary meaning of 'appropriates'. The suggestion that the word 'assumption' in s 73(4) connotes something like want of authority I find unpersuasive." This Court rejected the Crown's application for special leave to appeal against the judgment of the Full Court. But that was because the prosecution had failed to establish the appropriate lack of company consent at trial71. Unsurprisingly, the House of Lords disapproved Roffel in R v Gomez72 where the issue was whether a charge of theft could be sustained against the respondent in circumstances where the owner of the relevant goods could be deemed to have consented to the goods being transferred73. The House also disapproved the reasoning in its earlier decision of Morris74. Lord Browne-Wilkinson said of that and similar cases75: "If the accused, by reason of being the controlling shareholder or otherwise, is 'the directing mind and will of the company' he is to be treated as having validly consented on behalf of the company to his own appropriation of the company's property. This is apparently so whether or not there has been compliance with the formal requirements of company law applicable to dealings with the property of a company … In my judgment this approach was wrong in law … Where a company is accused of a crime the acts and intentions of those who are the directing minds and will of the company are to be attributed to the company. That is not the law where the charge is that those who are the directing minds and will have themselves committed a crime against the company … 71 Unreported, High Court of Australia, 17 May 1985. 73 Section 1(1) of the Theft Act 1968 (UK) provided: "A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it". 75 R v Gomez [1993] AC 442 at 496-497. See also at 464-465 per Lord Keith of Kinkel, 491-492 per Lord Lowry. McHugh In my judgment the decision in R v Roffel [and statements in other cases] are not correct in law and should not be followed." (emphasis added) While Lord Keith of Kinkel said that the actual decision in Morris was correct, he considered that it was "erroneous, in addition to being unnecessary for the decision, to indicate that an act, expressly or impliedly authorised by the owner could never amount to an appropriation"76. His Lordship said77: "[A] person who ... procures the company's consent dishonestly and with the intention of permanently depriving the company of the money is guilty of theft contrary to [the Theft Act]". In any event, Roffel does not assist Macleod. Section 72(1) of the Crimes Act 1958 (Vic), on which Roffel turned, is significantly different from s 17378. It penalised dishonest appropriation "with the intention of permanently depriving" another of his or her property. In Attorney-General's Reference No 1 of 198579, the Supreme Court of South Australia, without considering whether Roffel was correctly decided, held that it had no relevance under the South Australian equivalent of s 173 of the Crimes Act. I reject the submission that an officer of a company cannot be guilty of the fraudulent taking of a company's property if, as its sole shareholder, that person consents to the taking. Issue 2: Whether the judge misdirected the jury as to the meaning of "fraudulently" Macleod contends that the trial judge's directions were inadequate because they failed to identify the use of dishonest means as an essential element of s 173. He submits: "In a fraudulent taking or application, there must be a taking or application by dishonest means, and it is the taking or application which must be fraudulent, and this focuses attention on the taking or application – and not the accused's ultimate purpose." 76 R v Gomez [1993] AC 442 at 464. 77 R v Gomez [1993] AC 442 at 465. 78 Section 72(1) of the Crimes Act 1958 (Vic) provided: "A person steals if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it." 79 (1985) 41 SASR 147 at 153-154. McHugh Macleod contends that "[t]he evidence was insufficient to establish dishonesty towards the company in the application of the funds", and that the jury were inadequately directed in this regard. These submissions cannot be sustained. In s 173, "fraudulently" means acting dishonestly, and it was open to the jury to find that Macleod dishonestly applied the funds of Trainex for his own benefit. The trial judge's directions contained no error. In R v Scott80, the House of Lords held that "fraudulently" means "dishonestly". Since that decision, courts have accepted that in a criminal prosecution "fraudulently" simply means acting dishonestly and that it is not necessary, for example, to prove any "deceitful deprivation" by the person alleged to have acted fraudulently. In Scott, the means proposed to perpetrate the agreement to defraud were dishonest, but not deceitful. Because there was no deceit, the accused contended that his conduct was not fraudulent. But the House of Lords held that deceit was not a necessary element of "fraud" and that dishonest means were sufficient. Viscount Dilhorne, with whose speech the other Law Lords agreed, said81: "As I have said, words take colour from the context in which they are used, but the words 'fraudulently' and 'defraud' must ordinarily have a very similar meaning. If, as I think, … 'fraudulently' means 'dishonestly', then 'to defraud' ordinarily means … to deprive a person dishonestly of something which is his or of something to which he is or would or might but for the perpetration of the fraud be entitled." In R v Glenister82, the New South Wales Court of Criminal Appeal held – correctly in my opinion – that in s 173 "fraudulently" has "a meaning interchangeable with 'dishonestly'". Where the dishonesty of the accused is an issue in a prosecution, the appropriate directions for the jury are those identified by Toohey and Gaudron JJ in Peters v The Queen83. Their Honours said84: 81 [1975] AC 819 at 839. 82 [1980] 2 NSWLR 597 at 604. 83 (1998) 192 CLR 493. 84 (1998) 192 CLR 493 at 504 [18]. McHugh "[T]he proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. However, if 'dishonest' is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word. Certainly, it will be necessary for the jury to be instructed as to that special meaning if there is an issue whether the act in question is properly characterised as dishonest." Thus, in accordance with Peters, the trial judge in a case like the present must: identify the knowledge, belief or intent which is said to render the relevant conduct dishonest; and instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest; and direct the jury that, in determining whether the conduct of the accused was dishonest, the standard is that of ordinary, decent people. The directions on "fraudulently" were not inadequate The directions of the trial judge in this case accorded with the requirements set out by Toohey and Gaudron JJ in Peters. They identified the knowledge, belief or intent that was said to render the conduct dishonest. They also instructed the jury to decide whether the accused had that knowledge, belief or intent, according to the standards of ordinary, decent people. In charging the jury, the learned trial judge gave written directions that contained the following paragraph: "(30) Fraudulent means dishonest. To act fraudulently is to act dishonestly. In deciding whether the acts of the accused in applying the property of Trainex in the manner you find he did was or was not dishonest, you should apply the current standards of ordinary decent people." McHugh On the first day of the summing-up, his Honour directed the jury: "In paragraph 30 you are told that fraudulent means dishonest. To act fraudulently is to act dishonestly. In deciding whether the acts of the accused, such acts as you find he did on the evidence that you have, in applying the property of Trainex in the manner you find he did, and there does not seem to be any dispute about where the money went to and for what purpose it went in relation to this unit in the Gold Coast, but in deciding whether such acts of the accused as you find he did in applying the property of Trainex in the manner you find he did was or was not dishonest you as the jury apply the current standards of ordinary decent people." The following day the judge returned to this topic. He said: "I should have said this to you yesterday that the accused's state of mind may also be relevant to the question of whether or not he acted improperly. For example if he reasonably believed that what he did was genuinely for the benefit of the company that belief may be relevant in determining whether he can be held to be criminally responsible for using his position in the way that he did. I might not have made clear to you yesterday that in the accused's case after counts one to thirteen is that he was legally entitled to use the company funds in the way that he did. Specifically he said that one, he is owed money for his services such as script writing, acting as a producer and an executive producer. Acting as the director of a company and generally managing the company and acquiring copyright. Two, that he directed Mr [Staume] to record all money advanced to him as loans and three, that Trainex owed him more money than he owed Trainex. Of course you also recall the Crown address to you and his submissions as to why you should find the accused acted dishonestly. I remind you of my directions to you especially in relation to the meaning of fraudulently which is in paragraph thirty of my aide memoire that you have that and in assessing the accused case that he was entitled to use the company money as he did you should apply the same principles, that is whether by ordinary notions the accused was acting honestly by the standards of ordinary decent people. Finally I remind you that again the onus remains on the Crown to establish the elements of the charges beyond reasonable doubt." (emphasis added) It was open to the jury, in considering the matter through the lens of the standards of ordinary, decent people, to conclude that at the relevant time Macleod knew that he was not entitled to apply the property for his own benefit and in that regard, his actions were dishonest. McHugh There was abundant evidence that Macleod acted fraudulently. Although investors invested over $6,000,000 for the purpose of the scheme, only $718,000 was used to produce films. In contrast, Macleod used over $2,000,000 of those funds for his own private purposes. The "income" statements that he sent to investors falsely represented that income had been derived from the making of films. The "income" returned to investors was taken from funds invested by later investors. His statement that investors would receive a subsidy funded by overseas finance was another lie. His instruction to Mr Staume to hide company records from the Australian Securities Commission evidenced a consciousness of guilt. If the jury had acquitted him of these charges, the acquittals would have been perverse. And, as I have pointed out, the trial judge's directions were not inadequate. The directions on "claim of right" were not necessary or appropriate For the reasons expressed in the joint judgment of Gleeson CJ, Gummow and Hayne JJ85, I agree that it was neither necessary nor appropriate for the trial judge to direct the jury about a "subjective" test for a claim of right. Conclusion The appellant was lawfully and properly convicted on an overpowering prosecution case. The appeal must be dismissed. 85 Reasons of Gleeson CJ, Gummow and Hayne JJ at [39]-[49]. Callinan CALLINAN J. This appeal raises questions as to the capacity of a director of a company to give a valid consent on its behalf to an unlawful use of its funds for his own benefit. The facts The appellant was a director of Trainex Pty Ltd ("Trainex" or "the company") and its sole shareholder. He alone controlled and managed it. Trainex solicited money from the public for investment in film making. Money invested for that purpose could attract an income tax concession for an investor pursuant to Pt III, Div 10BA of the Income Tax Assessment Act 1936 (Cth) ("the Income Tax Act"). The receipt and application of money so invested were governed by deeds executed by Trainex and each investor. The money was to be used to acquire a proprietary interest in films. An example is the deed entered into in relation to a film or series of films called "Toddler Taming", which was to be completed by 30 December 1990. Copyright in the film was to be owned, as to 50 percent by Trainex, and as to the remaining 50 percent by investors in proportion to their investments. By cl 2.2 of the deed Trainex was to deposit the invested funds into a trust account; by cl 2.3 Trainex was permitted to invest the funds in any interest bearing, or discounted securities authorised by the Trustee Act 1925 (NSW). On fulfilment of several conditions, including in particular the raising of sufficient money to meet the budgeted cost of making the film, Trainex was, by cl 5, to proceed to make it. By cl 6.1(a) of the deed each investor was to be one of the first owners of the copyright in the film: otherwise the taxation benefits available under Pt III, Div 10BA of the Income Tax Act would not be available. There was an acknowledgment in the deed (cl 8.1) that from the completion date (as defined), the copyright in the film would be owned by the investors and Trainex in the proportions already mentioned. It was a term of the deed, subject to some presently irrelevant exceptions, that Trainex or its agent would hold on behalf of the investors all rights necessary to make and market the film (cl 6.1(b)). The disbursement of the nett proceeds of the film was governed by cl 10 of the deed. Investors were entitled to a return of the amount invested, and, after repayment of any money provided by others in respect of the completion of the film, a proportionate share in any additional proceeds. Each investor was sent a letter by Trainex. The letter in respect of another proposed film, "The Paradise Kids", was as follows: Callinan "Dear Investor, This letter is to confirm the basis on which we will hold in our Trust Account certain moneys, (the 'Moneys'), received by [sic] you. The Moneys constitute an investment by you in the acquisition of the copyright of a film ... The Moneys are to be invested in acquiring the copyright of the film substantially on the basis outlined in the attached pages. The Moneys are to be paid to Motion Picture Management Limited, (who is the offeror named on the Prospectus for the film), when the prospectus for the film is registered, EXCEPT THAT if, for any reason whatsoever, you are not satisfied with the details of the said prospectus or if the said prospectus is not registered by 31st July 1991, you can request that the Moneys, (less FID and Bank charges), can be returned and such Moneys, (less the said FID and Bank charges), will be returned to you immediately upon your written instructions." From time to time investors were sent other letters containing "investment details", also referred to as "income statements". One such letter sent in 1989, before "Toddler Taming" was made, contained this assertion: "There is a requirement that a concession claimed in relation to a film under 10B of Tax Act should be income producing in the year in which the concession (or deduction) is claimed. The above film has met that requirement." (emphasis added) The recipient was advised to declare, for taxation purposes that: "The film has become income producing and the amount credited to my account is $195.65." (emphasis added) Other income statements, in a similar form, referring to income from "video sales – initial order" or "video sales – second order" and later orders were sent to investors from time to time. Investors were invited to elect whether to receive the relatively small amounts of income (falsely said to be generated by exploitation of films) or to have them reinvested. As Simpson J in the Court of Criminal Appeal said86: 86 R v Macleod (2001) 52 NSWLR 389 at 409 [81]. Callinan "These statements created the illusion that a film had been made, that marketing had begun, and that income was being generated. The truth was that ten videos constituting the Toddler Taming series were taped between August and December 1990, after considerable agitation by Dr Green. There was, in fact, no income from film production. The appearance of such income was created by allocating fresh investment funds to that purpose." I adopt the following summary of further relevant facts made by her Honour87: "In November 1989, a cheque in the amount of $300,000 was drawn on Trainex's business account. It was paid into the trust account of a firm of solicitors representing the vendor of a property purchased in the appellant's name. Over a period substantial sums were paid from Trainex's accounts and credited to the appellant's loan accounts, from which the appellant drew from time to time. In 1991, cheques totalling $955,000 were drawn on Trainex's accounts and applied to the purchase of a home unit on the Gold Coast in the appellant's name. In late 1991 or early 1992, the Australian Securities Commission ('the ASC') was investigating the enterprise. The appellant directed David Staume, Trainex's account manager and office manager, to remove company records to a storage centre in Ultimo. His stated purpose was to ensure that they would not be found by the ASC." The appellant was charged with 25 counts, six of which (counts 15, 17, 19, 21, 23 and 25) were alternatives to six primary charges (counts 14, 16, 18, 20, 22 and 24). Counts 1 to 4 were of offences under ss 16988 and 570(1)89 of the 87 R v Macleod (2001) 52 NSWLR 389 at 409 [82]-[84]. 88 Section 169 of the Companies (New South Wales) Code provided as follows: "A person, other than a company or an agent of a company authorized for that purpose under the common or official seal of the company, shall not issue to the public, offer to the public for subscription or purchase, or invite the public to subscribe for or purchase, any prescribed interest." 89 Section 570(1) of the Companies (New South Wales) Code provided as follows: "(1) A person who – (Footnote continues on next page) Callinan Companies (New South Wales) Code and the next nine counts were of offences under various sections of the Corporations Law and the Securities Industry (New South Wales) Code. This appeal is not concerned with those counts. The appellant was convicted the District Court of New South Wales (Rummery DCJ) on five of the primary counts (14, 16, 18, 20 and 22) and it is with these that the appeal to this Court is concerned. These were laid under s 173 of the Crimes Act 1900 (NSW) ("the Act"). Counts 14, 16 and 18 were of fraudulently applying for his own use property owned by Trainex (being a sum standing to the credit of Trainex at the Chase AMP Bank), respectively, of (in count 14) $270,000, (in count 16) $160,000, and, (in count 18) $524,872.05. The offences charged in counts 20 and 22 were of fraudulently applying for a purpose other than that of Trainex, property (being a sum standing to the credit of Trainex at the Chase AMP Bank) by causing the Chase AMP Bank to pay to Starlight Film Studios Ltd ("Starlight") to be credited to the appellant's loan account with Starlight respectively of (in count 20) $356,646.68 and (in count 22) $5,103. The appeal to the Court of Criminal Appeal The appellant appealed against his convictions to the Court of Criminal Appeal of New South Wales. There, Mason P (with whom Simpson J and Newman AJ agreed) rejected a submission by the appellant that in the absence of evidence establishing that his use of the funds was not intended by Trainex, he could not be guilty of a contravention of s 173 of the Act. Their Honours held that fraudulently meant dishonestly, and that, for the purposes of s 173 the fact of control of a company provided no defence to a director or officer proved to have fraudulently "applied" company cheques for his or her own purposes. His Honour was of the view that if R v Roffel90 were to be regarded as good law, it should be confined strictly to its particular statutory context of the use (and meaning) of the word "appropriation" in the statutory definition in Victoria does an act or thing that he is forbidden to do by or under a provision of this Code; does not do an act or thing that he is required or directed to do by or under a provision of this Code; or otherwise contravenes or fails to comply with a provision of this Code, is, unless that provision or another provision of this Code provides that he is guilty of an offence, guilty of an offence by virtue of this sub- section." Callinan of theft: for the purpose of a provision such as s 173 of the Act the fact of dominant control of a company by a person provided no defence to a director or officer who has fraudulently applied company cheques for his or her own purposes. The appeal was therefore dismissed. The appeal to this Court Section 173 of the Act provided as follows: "173 Directors etc fraudulently appropriating etc property Whosoever, being a director, officer, or member, of any body corporate, or public company, fraudulently takes, or applies, for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate, or company, or fraudulently destroys any of the property of such body corporate, or company, shall be liable to penal servitude for 10 years." The section is one of a number of sections which deal with the obligations of officers of companies and persons owing fiduciary duties in respect of property or money. Circumstances may exist in which a charge might be brought under, for example either s 173 or s 176A of the Act, the latter of which I set out. "176A Directors etc cheating or defrauding Whosoever, being a director, officer, or member, of any body corporate or public company, cheats or defrauds, or does or omits to do any act with intent to cheat or defraud, the body corporate or company or any person in his or her dealings with the body corporate or company shall be liable to imprisonment for 10 years." The appellant's submissions The principal submission that the appellant advances is that as the sole shareholder and a director of Trainex he could and did consent on its behalf to the use of the invested money for his own purposes: including for example, the purchase in his name of a home unit at the Gold Coast in Queensland for almost a million dollars. He does not shrink from that submission in the light of the further relevant facts that the money that was so used was not even beneficially owned by Trainex, but was for investment in accordance with a very explicit deed. He does not shrink from the submission even though he was bound to concede that if Trainex had any other shareholders at all, and no matter how Callinan small their shareholdings might be, the position would be different. He went so far as to say, as he had to, if his principal submission were correct, that the sole shareholder of a company can never be guilty of an offence under s 173 of the Act in using the funds of a company, effectively how he likes. R v Roffel overruled The submission must be rejected. It must be rejected notwithstanding the decision of the Full Court of Victoria in R v Roffel91 (Young CJ and Crockett J, Brooking J dissenting) or any of the decisions92 upon which that decision purports to rest. The dissent of Brooking J in Roffel is, in my opinion to be preferred. It is unnecessary to add to his Honour's detailed review of the relevant texts and authorities. The force of Brooking J's reasoning is in no way diminished by his Honour's conclusion that the case could be decided on the meaning of the word "appropriation" as used in the enactment under consideration93. The decision in Roffel has attracted a deal of criticism. It was described as technically correct in a note in the Australian Law Journal94. In R v Maher95 in the Court of Criminal Appeal of Queensland it was argued by the respondent that Roffel had been wrongly decided. The Court (Kelly ACJ, Derrington and Moynihan JJ) was content to distinguish it96. Its reasoning has been disapproved by the House of Lords in R v Gomez97. Roffel could not in any event be successfully relied on by the appellant here. Quite apart from the points made by Brooking J which are persuasive, and in my opinion correct, Roffel suffers from the defect that it makes no reference to 92 eg R v Morris [1984] AC 320. 93 [1985] VR 511 at 526-527. 94 Baxt, "Commercial Law", (1993) 67 Australian Law Journal 696. 95 [1987] 1 Qd R 171. 96 [1987] 1 Qd R 171 at 195-196. 97 [1993] AC 442 at 496-497 per Lord Browne-Wilkinson, Lords Keith of Kinkel, Jauncey of Tullichettle and Slynn of Hadley agreeing, and was not followed in Attorney-General's Reference No 1 of 1985 (1985) 41 SASR 147 at 153-155. Callinan provisions or analogues98 of them that have appeared in legislation for many years with respect to directors and officers of companies which not only create offences, but also impose affirmative duties of honesty, care and diligence on directors and officers, as well as prescribe the conditions for the making of loans by companies to them, matters of inescapable relevance to the propriety and possible criminality of any transactions between a company and a director or officer even when charges under those provisions are not directly under consideration. The appellant was guilty of fraudulent taking or application of property of Trainex The appellant submits that he could not be guilty of any fraud upon the company because it, or he, on its behalf consented to the use of, and the application of the money on his behalf. The use of the money was however in no fewer than three respects "unlawful". It was done in breach of the appellant's duties as a director. This was so whether or not the appellant was convicted on a charge under s 229 of the Companies (New South Wales) Code or its subsequent analogue in the Corporations Law because on any view the way in which the funds were applied by the appellant could not be regarded as an honest or reasonably careful and diligent discharge of the appellant's duties. The use of the money constituted a breach of trust, and although the memorandum and articles of association of Trainex were not before the Court, it is plain that the money used by the appellant was not used in pursuance of the objects of the company. Whether unlawfulness is or is not necessarily to be equated with fraud or dishonesty, it is relevant to the question whether fraud or dishonesty is present. Taken to their logical conclusion the appellant's submissions would, if correct, mean that no matter how the appellant chose to use Trainex's money, the company (by him) could always validate that use by consenting to it. I cannot accept this submission. It ignores the vital distinction which the law draws between separate legal personalities. It is a distinction which s 173 itself makes. The funds or property of a company can only be used or applied as the result of some act or conduct on the part of a natural person. The fact that the natural person so acting is in effective control of the company does not mean that he is the company, or that no distinction may be drawn between what he does and what the company may and should lawfully do. A director or officer acting in breach of his obligations under statute law relating to companies, or in breach of its memorandum and articles of association, by using the money of the company for his own purpose is no more the voice or the amanuensis of the company, as between himself and the 98 Companies (New South Wales) Code, s 229; Corporations Act 1989 (Cth), s 232; Corporations Law, s 232 and Corporations Act 2001 (Cth), ss 180-185. Callinan company, than a thief who gains access to its treasury and steals money from it, or a forger who forges a company cheque in his own favour. Nor can it be overlooked that s 173 in terms also renders criminal a fraudulent taking or application of property for other than a use or purpose of the company. In acting as he did in applying the money to which Trainex had legal title, but in respect of which it owed express fiduciary duties, he was not acting for or on behalf of the company, or indeed as the company, but in his own interests. The appellant submitted that "fraudulently" as used in the Act meant more than merely "dishonestly", that it required an added ingredient of trickery or deceptiveness of conduct as well as of intent. No matter how the word "fraudulently" in s 173 of the Act is to be understood the appellant was shown to have acted fraudulently here. An explanation of what dishonesty involves will rarely require elaboration to a jury by a trial judge. In this respect what was said by Toohey and Gaudron JJ in Peters v The Queen is apposite99: "In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. However, if 'dishonest' is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word. Certainly, it will be necessary for the jury to be instructed as to that special meaning if there is an issue whether the act in question is properly characterised as dishonest100." That the appellant was not charged under s 172 of the Act101 does not mean that the fact that he caused the company to act in breach of its obligations as a trustee 99 (1998) 192 CLR 493 at 504 [18]. 100 As in R v Salvo [1980] VR 401. 101 Section 172 provided as follows: (Footnote continues on next page) Callinan does not make his conduct in that regard irrelevant. "Fraudulently" taken at its lowest as requiring merely "dishonesty"102 was abundantly made out here. The appellant well knew of the obligations that the deed imposed upon Trainex. He also well knew that the money in its possession had not been used for the only purposes for which it could be used, to make the films, acquire the copyright, and otherwise to hold it for the investors, and he knew that his representation with respect to the generation of income by the films was false. Singly or together these matters were well capable of establishing beyond doubt that he was dishonest. They could also establish, in my opinion, fraud if there be required for it some additional ingredient to dishonesty. The appellant's conduct in several respects involved trickery or deception. The false "income statements" alone provided ample evidence of these. The trial judge's directions as to "fraudulently" were sufficient for the circumstances of this case. The appellant sought to emphasize in his submissions that there was no absence of consent by Trainex to the use of the funds by the appellant. The submissions ignore the realities that, first: any "consent" by Trainex for a use of the monies contrary to its lawful objects could not be a real and effective consent; secondly, that a consent to an illegality could not be a valid and effective consent; thirdly, that Trainex had no beneficial interest in the funds at any material time; fourthly, that they were to be held strictly upon the trusts contained in the deed; and fifthly, that in those circumstances the "consent" could not be the consent of Trainex: at most it could only be a purported consent by a different legal personality on its behalf, the appellant. Each of these is a reason why the appellant's attempt to characterize, as the appellant appears to have accepted he had to do, the consent of Trainex as a "true consent" failed. "Whosoever, being a trustee of property for the use or benefit, wholly or partially, of some other person or for any public or charitable purpose, converts, or appropriates, the same, or any part thereof, for the use or benefit of himself, or some other person, or for any other than such public or charitable purpose, or, otherwise disposes of, or destroys such property, or any part thereof, in violation in any such case of good faith, and with intent to defraud, shall be liable to penal servitude for ten years: Provided that no prosecution shall be instituted under this section without the leave of the Supreme Court or of the Attorney-General." 102 Peters v The Queen (1998) 192 CLR 493 at 542 [114] per Kirby J. Callinan The appellant repeatedly protested in cross-examination that the promises made by the deed did not reflect his real intentions. He sought to justify his use of the investors' money for his own benefit by contending that Trainex owed him money, and that the payments were to purchase, or to reimburse the appellant for the purchase of the copyright of a script or scripts. The jury was entitled, indeed almost bound, to reject these claims having regard to the limited and particular uses to which the investors' funds were to be put, how they were to be held until they could lawfully be put to those uses, and further, to the use of the funds well before there was even a film in existence in respect of which the copyright could be acquired. The appellant's claim of right and of misdirections in respect of it fails The appellant complains that the trial judge failed to direct the jury adequately with respect to the appellant's defence of claim of right. The claim of right was made on several bases. I have already referred to the ones upon which the appellant placed weight, the alleged loans, purchases and reimbursements. The appellant's submissions as to misdirection by the trial judge On the second day of his Honour's summing-up, the trial judge gave some additional directions to the effect that the accused's state of mind could be relevant to whether or not he acted improperly (language analogous to the terminology used in the Corporations Law, s 232(6)103): that if he reasonably believed that what he did was for the benefit of the company that might be relevant in determining whether he could be held criminally responsible for using his position as he did. His Honour then said that "the accused case after counts one to thirteen" is that he was entitled to use the company funds in the way in which he did. His Honour did not give any further directions as to the claim of right except to remind the members of the jury of what appeared in the written directions that they had already been given, that "in assessing the accused's case that he was entitled to use the company money as he did you should apply the ... standards of ordinary decent people." The appellant submitted that these directions could not have brought home to the jury that, in respect of the fraud charges, the Crown had to show that the claim of right was not only not reasonably held, but also not genuinely held. It 103 Section 232(6) provided as follows: "An officer or employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation." Callinan was submitted that such an omission was particularly damaging to the appellant because none of the evidence showed, or tended to show fraud on the company, or any intention to deprive it of the means of discharging its obligations to the shareholders and creditors. The submission can immediately be seen to be wrong because it ignores that the investors were not only beneficially entitled under the deed, but also were creditors of the company. the relevant time, acted dishonestly, and overlooked The appellant submitted that the Court of Criminal Appeal erred in holding that there was ample evidence on which the jury could conclude that the the appellant, at misdirections and omissions of the trial judge in his summing-up to which the appellant referred and which I have summarized. The appellant added that none of the matters listed by Simpson J104 pertained to the relevant applications of the company funds: that none showed, or tended to show, that the application of the company's funds – as distinct from their solicitation from the investors – was fraudulent. It might be that there were various misrepresentations to investors, but the appellant was not charged with defrauding them. Her Honour's conclusion involved a failure to focus on the need to establish that the relevant application of funds was dishonest – not that their original procuration from investors was. This was an error which the summing-up left open to the jury. These submissions should be rejected. The emphasis that the trial judge placed in his summing-up, on the need by the respondent to prove the appellant's dishonesty made it abundantly clear that the genesis of his belief was in issue. Just as absence of proof of dishonesty would mean that the prosecution had not made out its case, absence of proof that an accused's claim of right was not an honest one, would entitle the accused to an acquittal. Both as to the proof of the offences, and any other defence offered in respect of them, the accused's honesty or dishonesty of mind and purpose was crucial. As Gibbs J said in R v Pollard105: "An accused person acts in the exercise of an honest claim of right, if he honestly believes himself to be entitled to do what he is doing. A belief that he may acquire a right in the future is not in itself enough." 104 The evidence to which her Honour referred as conclusive of the appellant's dishonesty included: ample evidence of the appellant's use of investors' funds for his own purposes; formal admissions to that effect; only a small proportion of the funds were actually used in producing the films; the misrepresentations contained in the income statements; the misrepresentation as to the subsidy available to investors; and the instructions given to conceal records from the ASC. 105 [1962] QWN 13 at 29. Callinan Although the appellant was not charged with defrauding the investors, the way in which the money was raised from, and was to be held and applied for their benefit by the company, necessarily meant that the effect of the appellant's dealings with Trainex could not be divorced from an assessment of the appellant's state of mind, and the nature of his conduct in dealing as he did with the money to which Trainex had legal title but which it held for the benefit of the investors. In this matter, as will often be the case, a dishonest state of mind in respect of one aspect of an offence, for example an accused's use of the property of a corporation for other than a purpose of the corporation, will inevitably colour another element, the taking by the accused of the property. It does happen from time to time that the conduct of an accused might constitute more than one offence, or that it might render him criminally liable for a different offence from, or in addition to the one with which he has been charged. In these circumstances the prosecution may in general choose which charge or charges should be laid. The possibility of the formulation of a charge different from the one with which the accused is charged, does not mean that facts and circumstances of greater, or more direct relevance to the uncharged offence, are irrelevant to the charged offence. A case for the application of the proviso The cases against the appellant were very strong ones. Factors such as the way in which the funds were applied, their magnitude, the appellant's misrepresentations as to the earnings from the film, the shortage of funds otherwise, the absence of book entries for the alleged loans, the numerous breaches of the deed, and the other matters to which Simpson J referred in the Court of Criminal Appeal would in my opinion warrant the application of the proviso in s 6(1) of the Criminal Appeal Act 1912 (NSW) if otherwise there had been error on the part of the trial judge or the Court of Criminal Appeal. I would dismiss the appeal.

HIGH COURT OF AUSTRALIA AUS17 AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS AUS17 v Minister for Immigration and Border Protection [2020] HCA 37 Date of Hearing: 4 September 2020 Date of Judgment: 14 October 2020 ORDER Appeal allowed. Set aside orders 2, 3, 4 and 5 of the Federal Court of Australia made on 16 October 2019 and, in their place, order that the appeal to that Court be dismissed with costs. The first respondent pay the appellant's costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation S B Lloyd SC and J B King for the appellant (instructed by Varess) G R Kennett SC with B D Kaplan for the first respondent (instructed by Sparke Helmore Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS AUS17 v Minister for Immigration and Border Protection Immigration – Refugees – Application for protection visa – Immigration Assessment Authority ("Authority") – Review by Authority under Pt 7AA of Migration Act 1958 (Cth) – Where delegate of Minister for Immigration and Border Protection refused to grant appellant protection visa – Where decision referred to Authority for review – Where appellant's representative supplied Authority with further materials including letter of support from third party which post-dated delegate's decision – Where Authority considered the letter was "new information" but concluded it was not able to be considered under s 473DD – Where Authority assessed new information against criteria in ss 473DD(b)(i) and 473DD(a) but not s 473DD(b)(ii) – Whether s 473DD requires Authority to consider criteria in ss 473DD(b)(i) and 473DD(b)(ii) before considering criterion in s 473DD(a). "exceptional "credible personal Words and phrases – circumstances", "fast track reviewable decision", "Immigration Assessment Authority", "mandatory relevant consideration", "new information", "referred applicant". information", Migration Act 1958 (Cth), Pt 7AA. KIEFEL CJ, GAGELER, KEANE AND GORDON JJ. This appeal from a judgment of the Federal Court of Australia1, on appeal from a judgment of the Federal Circuit Court of Australia2 in an application for judicial review of a decision of the Immigration Assessment Authority, turns on the construction and operation of s 473DD within Pt 7AA of the Migration Act 1958 (Cth). Section 473DD in context Part 7AA has now been surveyed on numerous occasions3. Section 473CC imposes a duty on the Authority to review a "fast track reviewable decision" referred to it by the Minister for Immigration and Border Protection by which a delegate of the Minister has refused under s 65 to grant a protection visa to the "referred applicant". The Authority is required by s 473DB to perform that duty by "considering" the "review material" provided to it by the Secretary of the Department of Immigration and Border Protection at the time of referral4 "without accepting or requesting new information"5 save to the extent that the Authority "gets" new information from the referred applicant or some other person under s 473DC and goes on to "consider" that new information under s 473DD. "Information" − a communication of "knowledge of facts or circumstances ... of an evidentiary nature"6 − amounts to "new information" if the information meets two conditions7. The first is that the information was not before the Minister 1 Minister for Immigration and Border Protection v AUS17 (2019) 167 ALD 313. 2 AUS17 v Minister for Immigration and Border Protection [2017] FCCA 1986. See ABT17 v Minister for Immigration and Border Protection [2020] HCA 34 at [1] and the cases there cited. Sections 473BB (definition of "review material") and 473CB of the Migration Act. Section 473DB(1)(a) of the Migration Act. 6 Minister for Immigration and Border Protection v CED16 (2020) 94 ALJR 706 at 710-711 [21]; 380 ALR 216 at 222, quoting Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 440 [28]. Sections 473BB (definition of "new information") and 473DC(1) of the Migration Act. See Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 228 [24]. Gordon at the time of making the referred decision8. The second is that the Authority considers that the information might be "relevant" to the review9, meaning that the Authority thinks that the information might be capable of rationally affecting its assessment of the probability of the existence of some fact about which it might be required to make a finding in its decision on the review10. The Authority "gets" new information within the meaning of s 473DC when and if the Authority physically obtains new information11. The Authority goes on to "consider" new information within the meaning of s 473DD when and if the Authority takes new information it has got into account in making its decision on the review, assigning the new information such probative weight as it thinks the new information deserves in its assessment of the probability of the existence of some fact about which it actually makes a finding12. Section 473DD is in the following terms: "For the purposes of making a decision in relation to a fast track reviewable decision, the Immigration Assessment Authority must not consider any new information unless: the Authority is satisfied that there are exceptional circumstances to justify considering the new information; and the referred applicant satisfies the Authority that, in relation to any new information given, or proposed to be given, to the Authority by the referred applicant, the new information: was not, and could not have been, provided to the Minister before the Minister made the decision under section 65; or Section 473DC(1)(a) of the Migration Act. Section 473DC(1)(b) of the Migration Act. 10 Minister for Immigration and Border Protection v CED16 (2020) 94 ALJR 706 at 711 [23]; 380 ALR 216 at 222. 11 cf Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 228 [23]. 12 cf CNY17 v Minister for Immigration and Border Protection (2019) 94 ALJR 140 at 145 [7]; 375 ALR 47 at 50. Gordon is credible personal information which was not previously known and, had it been known, may have affected the consideration of the referred applicant's claims." Though expressed to prohibit the Authority from considering new information if the criteria it specifies are not met, s 473DD necessarily operates against the background of s 473DB also to empower the Authority to consider new information if the criteria it specifies are met. For that binary outcome of the application of s 473DD to be workable, s 473DD must be construed to impose a duty on the Authority to assess new information that it has got against the specified criteria. Having performed that duty to assess the new information against the specified criteria, the Authority must take that new information into account in making its decision on the review if those criteria are met and must not take that new information into account in making its decision on the review if those criteria are not met. The criteria that must be met if the Authority is to take new information that it has got into account in making its decision on the review vary according to the provenance of the new information that has been obtained by the Authority. All new information is required to meet the criterion specified in s 473DD(a) that the Authority is satisfied of the existence of "exceptional circumstances" justifying its consideration of that new information13. New information obtained from the referred applicant is required to meet at least one of the additional criteria specified in s 473DD(b). The additional criterion specified in s 473DD(b)(i) is met if the referred applicant satisfies the Authority that the new information meets the bipartite description of information that was not before the Minister at the time of making the referred decision and that could not have been before the Minister at the time of making the referred decision. The additional criterion specified in s 473DD(b)(ii) is met if the referred applicant satisfies the Authority that the new information meets the tripartite description of "credible personal information", that was not previously known, and that may have 13 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 229 [29]-[30]. Gordon affected consideration of the referred applicant's claims to be a person in respect of whom Australia has protection obligations if it had been previously known14. Section 473DD(b)(ii) was inserted during the parliamentary process which resulted in the enactment of Pt 7AA for the express purpose of expanding the circumstances in which new information obtained from a referred applicant might be considered by the Authority beyond those which would have prevailed had s 473DD(a) been left to operate only in combination with s 473DD(b)(i)15. Section 473DD(b)(ii) to that extent modifies the policy manifest in s 5AAA, s 473DB and s 473DD(b)(i) of casting responsibility on the applicant for a protection visa to provide evidence to establish his or her claims to be a person in respect of whom Australia has protection obligations at the time of making the application. Section 473DD(b)(ii) allows for a very limited second opportunity to provide evidence that might previously have been provided. Section 473DD would be at war with itself, and the purpose of s 473DD(b)(ii) would be thwarted, if the circumstance that there was new information from a referred applicant meeting the description in either s 473DD(b)(i) or s 473DD(b)(ii) were able to be ignored by the Authority in assessing the existence of exceptional circumstances justifying consideration of that new information in order to meet the criterion specified in s 473DD(a). Logic and policy therefore demand that the Authority assess such new information as it might obtain from the referred applicant first against the criteria specified in both s 473DD(b)(i) and s 473DD(b)(ii) and only then against the criterion specified in s 473DD(a). If neither of the criteria specified in s 473DD(b)(i) and s 473DD(b)(ii) is met, the Authority is prohibited from taking the new information into account in making its decision on the review. Further assessment of the new information against the criterion specified in s 473DD(a) is redundant. If either the criterion specified in s 473DD(b)(i) or the criterion specified in s 473DD(b)(ii) is met, that is a circumstance which must be factored into the subsequent assessment of whether the new information meets the 14 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 230-231 [33]-[34]. 15 Australia, Senate, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Supplementary Explanatory Memorandum (Sheet GH118) at 6 [29], quoted in Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 230 [33]. Gordon criterion specified in s 473DD(a). If both the criterion specified in s 473DD(b)(i) and the criterion specified in s 473DD(b)(ii) are met, that too is a circumstance which must be factored into the subsequent assessment of whether the new information meets the criterion specified in s 473DD(a) and which must heighten the prospect of that criterion being met. The result, as has been recognised by the Federal Court in numerous other cases16, is that the Authority does not perform the procedural duty imposed on it by s 473DD in its conduct of a review if it determines in the purported application of the criterion in s 473DD(a) that exceptional circumstances justifying consideration of new information obtained from the referred applicant do not exist without first assessing that information against the criteria specified in both s 473DD(b)(i) and s 473DD(b)(ii) and then taking the outcome of that assessment into account in its assessment against the criterion specified in s 473DD(a). The nature of the non-performance of the procedural duty in such a case is not inaccurately characterised as a failure to take account of a mandatory relevant consideration in the purported application of the criterion in s 473DD(a)17. As will be seen, that result was recognised and correctly applied by the Federal Circuit Court in the present case, but regrettably not by the Federal Court. The present case The appellant is a Sri Lankan citizen of Tamil ethnicity from the Jaffna District of Sri Lanka whose application for a protection visa was refused by a delegate of the Minister in a fast track reviewable decision which the Minister referred to the Authority. Central to the appellant's claims to be a person in respect of whom Australia has protection obligations were his claims to fear mistreatment at the hands of the Eelam People's Democratic Party ("the EPDP") as well as at the hands of the Sri Lankan Army. Whilst the delegate accepted the evidence provided by the 16 BVZ16 v Minister for Immigration and Border Protection (2017) 254 FCR 221 at 224-225 [9], 230 [35]-[37]; Minister for Immigration and Border Protection v BBS16 (2017) 257 FCR 111 at 144-146 [102]-[112]; CHF16 v Minister for Immigration and Border Protection (2017) 257 FCR 148 at 158-159 [44]-[45]; Minister for Immigration and Border Protection v CQW17 (2018) 264 FCR 249 at 17 Pace Minister for Immigration and Border Protection v CQW17 (2018) 264 FCR Gordon appellant in support of those claims to be generally credible, the delegate found that the appellant did not face a real risk of the mistreatment he feared. That was in part because the delegate found that the appellant was no longer a person of interest to the EPDP and in part because the delegate found that the individuals within the Sri Lankan Army who might want to harm the appellant did not extend to the "army establishment" but were confined to soldiers located at a particular army camp who were colleagues of a soldier killed in a car accident in which the appellant had been involved. Under cover of a submission from his migration agent, the appellant proffered to the Authority for the purpose of its review of the delegate's decision several documents which he had not provided to the Minister in support of his application. One was a letter which post-dated the decision of the delegate. The letter was from Mr Appathuray Vinayagamoorthy, a lawyer and former member of the Sri Lankan Parliament for the Jaffna District. The letter stated that the appellant and his family were known to Mr Vinayagamoorthy and went on to recount historical events corroborative of the appellant's claims. The letter added, "[e]ven still the EPDP and the Army visit his house to make inquiries about his whereabouts". The Authority affirmed the decision of the delegate, finding amongst other things that the appellant had fabricated his claim to fear mistreatment at the hands of the EPDP and had embellished his claim to fear mistreatment at the hands of the Sri Lankan Army. The Authority recorded in the statement of reasons for its decision on the review that the letter was "new information" which it had not considered in making its decision on the review. That was for reasons which the Reviewer who constituted the Authority for the purpose of the review explained in the following terms: "I accept the letter of support from Appathuray Vinayagamoorthy could not have been provided to the delegate as it was written after the delegate's decision. However, the information it provides recounts the claims already provided by the applicant and in that regard there is no reason to believe that the applicant could not have obtained a letter outlining this information earlier and provided it to the Minister. I am not satisfied that any exceptional circumstances exist that justify considering the new information." Plainly enough, the Authority assessed the letter against the criterion specified in s 473DD(b)(i), finding that criterion not to be met. It went on to assess the letter against the criterion specified in s 473DD(a), finding that criterion not to be met. There being nothing to suggest that the letter was incapable of being assessed by the Authority to meet the criterion specified in s 473DD(b)(ii), what the Authority should have done, but evidently did not do, was assess the letter Gordon against the criterion specified in s 473DD(b)(ii) and then take that assessment into account in going on to assess the letter against the criterion specified in s 473DD(a). In the Federal Circuit Court, Judge Driver correctly so found18. His Honour ordered the issue of writs of certiorari and mandamus directed to the Authority. Exercising alone the appellate jurisdiction of the Federal Court, Logan J took the view that the Authority was not obliged to have regard to the criterion specified in s 473DD(b)(ii) in assessing the letter against the criterion specified in s 473DD(a)19 and also took the view that the Authority's conclusion that the letter did not meet the criterion specified in s 473DD(b)(i) was a sufficient basis for its conclusion that the letter did not meet the criterion specified in s 473DD(a)20. In both respects, his Honour was wrong. There being no challenge to his Honour's further finding that any misapplication of s 473DD in relation to the letter was material to the Authority's decision on the review21, it follows that his Honour was wrong to allow the Minister's appeal from the orders of Judge Driver. Those orders are now to be restored. Orders The appeal is to be allowed with costs. The substantive orders made by Logan J are to be set aside. In their place, it is to be ordered that the appeal from the orders of Judge Driver is to be dismissed with costs. 18 AUS17 v Minister for Immigration and Border Protection [2017] FCCA 1986 at 19 Minister for Immigration and Border Protection v AUS17 (2019) 167 ALD 313 at 20 Minister for Immigration and Border Protection v AUS17 (2019) 167 ALD 313 at 21 Minister for Immigration and Border Protection v AUS17 (2019) 167 ALD 313 at Edelman EDELMAN J. The facts and legislative provisions are set out in the joint reasons of the other members of this Court. I agree with the orders proposed by their Honours. With respect, I also agree that, as a matter of policy, a prudent approach for the Immigration Assessment Authority to take is that described in the joint reasons at [11]. When considering s 473DD, in relation to new information given or proposed to be given by a referred applicant, it would be efficient and prudent for the Authority first to consider the two conditions in s 473DD(b)(i) and s 473DD(b)(ii), and only subsequently to consider s 473DD(a) if one or both of the two conditions is met. My only departure from the joint reasons is that I do not consider that such a reasoning procedure is demanded by the logic of s 473DD. In my view, an alternative approach that is equally open to the Authority as a matter of law is to consider s 473DD(a) first. If the "exceptional circumstances" criterion were not met, then there would not be a further requirement for the Authority to consider either limb of s 473DD(b) individually. This alternative approach by the Authority would align with the same manner of consideration of s 473DD(a) by the Authority where the new information is not given or proposed to be given to the Authority by the referred applicant, such as where new information is given by the Secretary. In the scenario where new information is given by the Secretary, the Authority would never turn to consider s 473DD(b) independently, although the issues raised by the two limbs of s 473DD(b) might often be considered as material circumstances in the assessment of whether there are "exceptional circumstances". This alternative approach also recognises that there will be some cases where the criteria in s 473DD(b) might not be relevant to s 473DD(a). One of those cases might be where new country information is provided to the Authority either by the Secretary or by the referred applicant. In considering whether exceptional circumstances exist, the Authority is not required to ask itself whether the country information is "credible personal information" within s 473DD(b)(ii). Plainly, country information is not personal information, which in broad terms is "information or an opinion about an identified individual, or an individual who is reasonably identifiable"22. The reason, nevertheless, that I consider the approach proposed by the joint reasons to be both efficient and prudent in the particular circumstance of new information given, or proposed to be given, by a referred applicant is that it reduces duplication of consideration and helps to ensure that material circumstances are not overlooked. Since s 473DD(a) will often require consideration of the two criteria in s 473DD(b) as part of all the material circumstances, a sensible and efficient approach is for s 473DD(b) to be considered first when it is engaged so that those considerations are in the forefront of the Authority's mind when considering exceptional circumstances. In this case, both criteria should have been 22 Migration Act 1958 (Cth), s 5(1) picking up the definition of "personal information" in Privacy Act 1988 (Cth), s 6(1). Edelman the Authority considered by its assessment of whether exceptional circumstances existed to justify consideration of the letter but one of them was not considered. I agree with the joint reasons that Logan J erred on this point in his otherwise comprehensive and careful judgment.

HIGH COURT OF AUSTRALIA ALEXANDER PURVIS on behalf of DANIEL HOGGAN APPELLANT AND STATE OF NEW SOUTH WALES (DEPARTMENT OF EDUCATION AND TRAINING) & ANOR RESPONDENTS Purvis v New South Wales (Department of Education and Training) [2003] HCA 62 11 November 2003 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation: S J Gageler SC with K L Eastman for the appellant (instructed by Legal Aid Commission of New South Wales, Coffs Harbour Regional Office) M G Sexton SC, Solicitor-General for the State of New South Wales with C A Ronalds for the first respondent (instructed by Crown Solicitor for the State of New South Wales) J Basten QC for the second respondent (instructed by Human Rights and Equal Opportunity Commission) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth of Australia with M A Perry intervening on behalf of the Attorney-General of the Commonwealth of Australia (instructed by Australian Government Solicitor) G J Williams intervening on behalf of People with Disabilities (NSW) Inc (instructed by New South Wales Disability Discrimination Legal Centre Inc) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Purvis v New South Wales (Department of Education and Training) Discrimination law – Disability discrimination – Suspension and subsequent exclusion from school of pupil who repeatedly assaulted teachers and other pupils – Where pupil's behaviour a consequence of brain damage – Whether pupil discriminated against on the ground of disability – Meaning of "disability" – Whether obligation to provide reasonable accommodation or make reasonable adjustments for persons with a disability – Whether treatment of pupil was less favourable than treatment that would be given to a person without the disability in "circumstances that are the same or are not materially different" – Whether comparator is a person who does not engage in violent behaviour – Whether pupil received less favourable treatment "because of" his disability – Disability Discrimination Act 1992 (Cth), s 5(1). Words and phrases – "disability", "circumstances that are the same or are not materially different", "because of". Disability Discrimination Act 1992 (Cth), ss 3, 4, 5, 10, 12, 22. GLEESON CJ. The issue in this appeal is whether the suspension, and subsequent exclusion, from a State high school, of a pupil who repeatedly assaulted other pupils and teachers, and whose behaviour was a consequence of brain damage suffered in infancy, contravened the Disability Discrimination Act 1992 (Cth) ("the Act"). The Human Rights and Equal Opportunity Commission ("the Commission") found that there had been a contravention. That decision was set aside by Emmett J in the Federal Court of Australia1. The Full Court of the Federal Court dismissed an appeal from Emmett J2. The appellant contends that the decision of the Commission was correct, and that the judges of the Federal Court were in error. The facts, and the relevant legislative provisions, are set out in the reasons for judgment of Gummow, Hayne and Heydon JJ. The chronology appended to the reasons of Callinan J sets out the history of the pupil's conduct, and of attempts by the school authorities to deal with the problems it created. In the end, the principal of the school, referring to the pupil's "very violent behaviour", and to his own responsibility for the health and safety of other pupils and members of the school staff, decided upon exclusion of the pupil. That, it is said, amounted to unlawful discrimination contrary to s 22 of the Act, because the educational authority excluded the pupil on the ground of his disability. The case was not argued as one of "indirect disability discrimination" of a kind covered by s 6 of the Act. If it had been, then s 6(b) would have created a difficulty for the appellant. Rather, the case was said to fall within s 5, read in the light of the definition of "disability", in s 4, as including: a disorder, illness or disease that affects a person's thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour". The definition of "disability" lists a series of physical conditions. The problem in the case arises partly because par (g) begins by reference to physical conditions and then adds a reference to a consequence ("disturbed behaviour") of a condition. It is necessary to relate par (g), with its added reference to resulting behaviour, to the provisions of s 5 as to what amounts to discrimination. The reference to "disturbed behaviour" in par (g) is plainly apt to cover the conduct of the pupil in this case. In considering the wider issue of the 1 New South Wales (Department of Education) v Human Rights and Equal Opportunity Commission (2001) 186 ALR 69. 2 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237. relationship of par (g) and s 5, it is necessary to bear in mind the width of that expression. It could include behaviour that is grossly anti-social, dangerous, and criminal. A person who suffers from a disorder that results in disturbed behaviour does not necessarily lack the mental capacity to be guilty of a crime. In some Australian jurisdictions, for example, homicide may be reduced from murder to manslaughter by reason of diminished responsibility, but it is still a serious crime. A person ordinarily cannot escape a conviction for arson by demonstrating that he or she is pyromaniac. Disturbed behaviour may take many forms, and may involve varying degrees of threat to the safety, or the property, of others. From the point of view of other pupils and staff, the conduct of the pupil in the present case was serious. Counsel for the appellant acknowledged that, in principle, his argument would have to be the same even if the conduct had been life threatening. Section 12 of the Act, which addresses the sources of Commonwealth power to enact the legislation, refers, in connection with the external affairs power, to particular treaties, and generally to "matters of international concern". Those matters include the rights of disabled people in general, and disabled children in particular. In the context of the present case, they also include the rights of the other children in the school. Article 3 of the Convention on the Rights of the Child requires State Parties to undertake to ensure the child such protection and care as is necessary for his or her well-being. Article 19 obliges State Parties to take all appropriate legislative, administrative, social and educational measures to protect the child from all forms of physical violence. The present case illustrates that rights, recognised by international norms, or by domestic law, may conflict. In construing the Act, there is no warrant for an assumption that, in seeking to protect the rights of disabled pupils, Parliament intended to disregard Australia's obligations to protect the rights of other pupils. Furthermore, a contention that the legislative power of the Commonwealth Parliament extends to obliging State educational authorities to accept, or continue to accommodate, pupils whose conduct is a serious threat to the safety of other pupils, or staff, or school property, would require careful scrutiny. The Act deals with discrimination in a normative, not a value-free, context. Section 22, with which this case is concerned, proscribes discrimination "against" a person on the ground of the person's disability. In some contexts, discrimination may be regarded, in terms of values, as neutral, or even positive; but not in this context. The Act is concerned with discrimination of a kind that the legislature regards as unjust, and makes unlawful. The question is whether the Act treats certain action taken in respect of conduct that affects, not only the person said to be the victim of the discrimination, but other persons whom the alleged discriminator is obliged by law to protect, as unjust and unlawful discrimination. The first respondent owed a duty of care towards its pupils and its staff3. That is part of the legal background to the operation of the provisions of the Act dealing with education. In its application to educational authorities, the Act enters an area of relationships governed by legal obligations designed to protect the young and vulnerable. In the development of common law principle, it is appropriate, and sometimes necessary, for a court to take account of the need for coherence in the law. For example, in Sullivan v Moody4, the Court asked how a duty of care of the kind there under consideration could be related rationally to the functions, powers and responsibilities of the persons and authorities said to owe that duty. In construing legislation, it may be appropriate to ask a similar question. The obligations which arise from the Act have to be related to the functions, powers and responsibilities of the first respondent. Furthermore, the conduct of the first respondent can only be evaluated fairly in the light of an understanding of those functions, powers and responsibilities. The Act, in its application to educational authorities, and in its prohibition of discrimination against persons on the ground of a disability, requires a judgment both as to alleged differential treatment and as to the ground upon which action was taken. In both respects, it is impossible to ignore the context in which the first respondent, by its officers, was acting. It was charged with the care and protection of all the pupils in the school in question. The first respondent showed concern and sensitivity in its dealings with the pupil. It also recognised its legal responsibilities to the other pupils and to the school staff. If there is a reasonable construction of the Act which avoids a conflict between those responsibilities and the obligations imposed by the Act, then that construction should be preferred. And in the practical application of the Act in an evaluation of the conduct of the first respondent, those responsibilities should be kept in mind. Section 5 of the Act relevantly provides that a person, the discriminator, discriminates against an aggrieved person on the ground of a disability if, because of the aggrieved person's disability, the discriminator treats the aggrieved person less favourably than the discriminator would treat a person without the disability in the same circumstances. Two related questions arise. First, in comparing the treatment of the aggrieved person (here, the pupil) with the treatment that would be given to a person (another pupil) without the disability in the same circumstances, what, if anything, is the other pupil to be assumed to have done? On the appellant's argument, the answer is – nothing. Secondly, was the supposedly less favourable treatment of the pupil because of (on the ground of) the disability? The relationship between those two questions, on the facts of this case, and the dispute to which they have given rise, exists because the pupil's disability is not merely a physical condition, but a physical condition that results in disturbed behaviour. 3 New South Wales v Lepore (2003) 77 ALJR 558; 195 ALR 412. (2001) 207 CLR 562 at 581 [55], [56]. The appellant contends that, since the pupil's disability is a disorder that results in disturbed behaviour, and since the disturbed behaviour took the form of violent conduct, then a person without the disability in the same circumstances must be taken to be a person who does not engage in violent conduct. On that approach, the comparison required by the Act is between the treatment received by the pupil (suspension and expulsion) and the treatment that would be received by a pupil who did not assault other pupils. The disturbed behaviour being an aspect of the disability, the treatment that would be received in the same circumstances by a person without the disability is the treatment that would be received by a pupil who did not misbehave. The corollary in relation to the ground of the first respondent's action against the pupil is said to be clear. The appellant points out that an aspect of the pupil's disability was his disturbed behaviour. Since he was suspended and expelled because of his disturbed behaviour, it is said that he was suspended and expelled because of his disability. The same would apply if the disturbed behaviour resulting from a pupil's disorder had taken the form of attempting to burn a school down, or attempting to kill somebody. On the appellant's argument, to suspend or expel such a pupil because of his or her behaviour would be to treat the pupil in that way because of his or her disability. It may be accepted, as following from pars (f) and (g) of the definition of disability, that the term "disability" includes functional disorders, such as an incapacity, or a diminished capacity, to control behaviour. And it may also be accepted, as the appellant insists, that the disturbed behaviour of the pupil that resulted from his disorder was an aspect of his disability. However, it is necessary to be more concrete in relating par (g) of the definition of disability to s 5. The circumstance that gave rise to the first respondent's treatment, by way of suspension and expulsion, of the pupil, was his propensity to engage in serious acts of violence towards other pupils and members of the staff. In his case, that propensity resulted from a disorder; but such a propensity could also exist in pupils without any disorder. What, for him, was disturbed behaviour, might be, for another pupil, bad behaviour. Another pupil "without the disability" would be another pupil without disturbed behaviour resulting from a disorder; not another pupil who did not misbehave. The circumstances to which s 5 directs attention as the same circumstances would involve violent conduct on the part of another pupil who is not manifesting disturbed behaviour resulting from a disorder. It is one thing to say, in the case of the pupil, that his violence, being disturbed behaviour resulting from a disorder, is an aspect of his disability. It is another thing to say that the required comparison is with a non-violent pupil. The required comparison is with a pupil without the disability; not a pupil without the violence. The circumstances are relevantly the same, in terms of treatment, when that pupil engages in violent behaviour. The law does not regard all bad behaviour as disturbed behaviour; and it does not regard all violent people as disabled. The fallacy in the appellant's argument lies in the contention that, because the pupil's violent behaviour was disturbed, and resulted from a disorder, s 5 always requires, and only permits, a comparison between his treatment and the treatment that would be given to a pupil who is not violent. Rather it requires a comparison with the treatment that would be given, in the same circumstances, to a pupil whose behaviour was not disturbed behaviour resulting from a disorder. Such a comparison requires no feat of imagination. There are pupils who have no disorder, and are not disturbed, who behave in a violent manner towards others. They would probably be suspended, and, if the conduct persisted, expelled, in less time than the pupil in this case. If the appellant's argument is correct, the comparison required by the Act is purely formal. If the person without the disability is simply a pupil who is never violent, then it is difficult to know what context is given to the requirement that the circumstances be the same. Furthermore, if the appellant's argument is correct, the Act places a school authority in a position of conflict between its responsibilities towards a child who manifests disturbed behaviour and its responsibilities towards the other children who are in its care, and who may become victims of that behaviour. The language of the Act does not require such a result. In characterising the actions of the first respondent, for the purpose of applying a law against unjust discrimination by making the comparison required by s 5 of the Act, and in considering all the circumstances in which the school principal acted, to compare the treatment of the pupil with the treatment of some other pupil who, without any disability, behaved violently permits due account to be taken of the first respondent's legal responsibilities towards the general body of pupils. Similar considerations arise in respect of the related issue of identifying the ground of the first respondent's action, which is to be considered in the light of both s 5 and s 10 of the Act. The fact that the pupil suffered from a disorder resulting in disturbed behaviour was, from the point of view of the school principal, neither the reason, nor a reason, why he was suspended and expelled. It is the school authority that is the alleged discriminator, and it is the reason or reasons for action of the responsible officers of the school authority that is or are in question. It is their conduct that is to be measured against the requirements of the Act. If one were to ask the pupil to explain, from his point of view, why he was expelled, it may be reasonable for him to say that his disability resulted in his expulsion. However, ss 5, 10 and 22 are concerned with the lawfulness of the conduct of the school authority, and with the true basis of the decision of the principal to suspend and later expel the pupil5. In the light of the school 5 Australian Iron & Steel Pty Ltd v Banovic (1989) 168 CLR 165 at 176-177 per Deane and Gaudron JJ, 184 per Dawson J, 208 per McHugh J; Waters v Public Transport Corporation (1991) 173 CLR 349 at 359 per Mason CJ and Gaudron J, authority's responsibilities to the other pupils, the basis of the decision cannot fairly be stated by observing that, but for the pupil's disability, he would not have engaged in the conduct that resulted in his suspension and expulsion. The expressed and genuine basis of the principal's decision was the danger to other pupils and staff constituted by the pupil's violent conduct, and the principal's responsibilities towards those people. In identifying and considering the basis of, and/or the legitimacy of, a decision, for the purpose of measuring the conduct of an alleged discriminator against the requirements of the Act, it is proper, and may be necessary, to have regard to the objects of the Act as defined in s 3, and to the scope and purpose of the legislation. Even though functional disorders may constitute a disability, and disturbed behaviour may be an aspect of a disability, it is not contrary to the scheme and objects of the Act to permit a decision-maker to identify a threat to the safety of other persons for whose welfare the decision-maker is responsible, resulting from the conduct of a person suffering from a disorder, as the basis of a decision. Just as questions of causation may be affected by normative considerations arising out of the legal context in which they are to be answered6, a statutory question as to the basis of a person's decision may be affected by similar considerations. There is no reason for rejecting the principal's statement of the basis of his decision as being the violent conduct of the pupil, and his concern for the safety of other pupils and staff members. It is not incompatible with the legislative scheme to identify the basis of the principal's decision as that which he expressed. On the contrary, to identify the pupil's disability as the basis of the decision would be unfair to the principal and to the first respondent. In particular, it would leave out of account obligations and responsibilities which the principal was legally required to take into account. Conclusion The appeal should be dismissed. I agree with the orders proposed by Gummow, Hayne and Heydon JJ. 6 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 269 16 McHUGH AND KIRBY JJ. This case is about discrimination on the ground of disability. It concerns the suspensions and later exclusion from school of a disabled student whose disability occasionally led him to violent and abusive behaviour. It concerns the failure of an educational authority to treat him equally with other students by taking steps that would have eliminated or substantially reduced his disruptive behaviour and allowed him to enjoy the same quality education as his fellow students enjoyed. The Disability Discrimination Act 1992 (Cth) ("the Act"), reflecting international developments7, has introduced important protections for disabled people. In certain cases, the Act requires that disabled persons be given equal treatment and it makes it clear that the equal treatment must be real and not notional. To avoid a finding of discrimination against a disabled person, a person may have to take steps that cause expense and inconvenience to that person. But that is what the Act requires unless the expense and inconvenience amounts to unjustifiable hardship. The international developments reflected in the Act have the high object of correcting centuries of neglect of, and discrimination and prejudice against, the disabled. It would be wrong and contrary to the purpose of the Act to construe its ameliorative provisions narrowly. Yet this is the result of the decision in the court below. The learned judges of the Full Court of the Federal Court who heard the case felt driven to adopt the construction they placed on the Act because of what they expressed as an intuitive feeling that reading the Act in the way contended for by the appellant would impose "draconian consequences" on the first respondent. As Dixon CJ once pointed out8, "once the subject matter is fairly within the province of the Federal legislature the justice and wisdom of the provisions ... are matters entirely for the Legislature and not for the Judiciary." The correct path of judicial interpretation – as always – requires that the Act be applied according to its terms and purposes. If its application in a particular case operates or may seem to operate harshly, it is a matter for the Parliament to correct. And it should not be forgotten that construing the Act narrowly because of the consequences in a particular case may lead to injustices in other cases perceived by In matters of judicial mind as more deserving. anti-discrimination law generally, and disability law in particular, judicial intuition as to what is "draconian" must be kept in firm check, for sometimes it the 7 Dubler, "Direct Discrimination and a Defence of Reasonable Justification", (2003) 77 Australian Law Journal 514 at 515-516. 8 Burton v Honan (1952) 86 CLR 169 at 179. McHugh Kirby will be based unconsciously on the very attitudes that the law is designed to It is essential, therefore, that Australian courts give full effect to the language and purpose of the ameliorative provisions of the Act whatever opinion individual judges may have of the justice or wisdom of particular provisions. This is particularly so where, as here, the Act contains novel concepts and beneficial objects and applies to many cases involving circumstances quite different from the present. Moreover, on the findings of the Commissioner who initially heard the complaint and determined it in favour of the appellant, the first respondent probably would not have been forced to choose between educating or expelling the disruptive and disabled student if it had taken steps that were open to it. Although it is not a relevant issue, taking those steps was not so inconvenient or expensive a course that it imposed unjustifiable hardship on the first respondent. In our opinion this appeal must be allowed. Statement of the case Mr Alexander Purvis and his wife had the foster care of Mr Daniel Hoggan who was born on 8 December 1984. Mr Hoggan sustained severe brain injury when he was 6 or 7 months old. As a result, he suffers from behavioural problems and other disabilities. In 1998, Mr Purvis complained to the Human Rights and Equal Opportunity Commission ("HREOC") that the State of New South Wales (Department of Education and Training) had discriminated against Mr Hoggan on the ground of his disability. He complained that the State had done so by subjecting Mr Hoggan to a "detriment" in his education and by suspending and eventually excluding him from a State school because of his misbehaviour. The Commissioner appointed by HREOC to determine the complaint found that the State through its agents had treated Mr Hoggan less favourably than it would have treated another student in circumstances that were the same or not materially different and had thereby contravened the Act. The Commissioner found that the State had treated him less favourably by failing to: 9 Where statutory provisions, or the common law, are not designed to alter common attitudes and stereotypes, intuition can sometimes afford a useful check for judicial reasoning: cf Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 642 [164]; Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 77 ALJR 1396 at 1421 [137]; 199 ALR 497 at 531. adjust its policies to suit his needs; provide him with teachers with the skills to deal with his behavioural problems; and obtain expert assistance to formulate proposals to overcome those problems. The Commissioner also declared that the State should pay compensation of $49,000 to Mr Purvis for the discriminatory treatment of Mr Hoggan. The Federal Court (Emmett J) set aside the declarations made by the Commissioner and remitted the complaint to HREOC "to make findings and recommendations according to law." His Honour held that, because Mr Hoggan had been suspended and excluded from the school by reason of his misbehaviour, the State had not discriminated against him on the ground of disability. His Honour also held that the State had no legal obligation to accommodate the needs of Mr Hoggan and that, in determining whether he had been less favourably treated than other students, the comparator was a student without a disability who had misbehaved in the same way. The Full Court of the Federal Court dismissed an appeal against the orders made by Emmett J in the Federal Court. Subsequently, this Court granted Mr Purvis special leave to appeal against the orders of the Full Court. HREOC and the State are respondents to the appeal. The Attorney-General of the Commonwealth, acting under s 78A of the Judiciary Act 1903 (Cth), intervened in the appeal and made submissions to the Court concerning the construction of the Act. The Court granted People with Disabilities (NSW) Inc, the peak cross-disability rights and advocacy organisation in New South Wales, leave to intervene as amicus curiae to provide written submissions on the meaning of the term "disability" in the Act. The issues in the appeal are: Does "disability" as defined in s 4(1) of the Act include the behavioural manifestation of a disorder? Does the Act contain an obligation to provide reasonable accommodation for persons with a disability? Does the comparator for determining whether there has been "less that person's favourable" characteristics? the disabled person have treatment of 4. What is the correct test of causation in determining whether a person has been discriminated against "on the ground of" his or her disability? McHugh Kirby the Act. the purpose of In our opinion, the behavioural manifestation of an underlying disorder or condition is itself a disability for the purposes of the Act. The Federal Court erred therefore in holding that the Act distinguished between the underlying condition and its manifestations. However, the Federal Court correctly held that the Act does not contain an obligation to provide accommodation for persons with disabilities although, in our opinion, it took too narrow a view of what constitutes "accommodation" for Providing accommodation to meet a person's disabilities goes to the issue under s 5 of the Act as to whether the circumstances of the disabled person are materially different from the circumstances of a person who is not disabled. It goes to an issue of evaluation, not obligation. The Federal Court also erred in holding that the comparator for determining whether there has been "less favourable" treatment of the disabled person has that person's characteristics. The circumstances of the person alleged to have suffered discriminatory treatment are excluded from the circumstances of the comparator in so far as those circumstances are related to the prohibited ground. The contrary view would seriously undermine the remedial objects of the Act. The Commissioner did not err, therefore, in holding that the characteristics of the disabled person cannot be imputed to the appropriate comparator. On the factual findings that he made, the Commissioner did not err in holding that the State through its agents had treated Mr Hoggan less favourably than other students. Finally, the Commissioner applied the correct test for determining whether a person has been discriminated against on the ground of that person's disability. The Commissioner applied the test: was the disability a reason for the treatment suffered? That is the correct test, although the Commissioner wrongly described it as a "but for" test. It follows that this appeal must be allowed. However, because the decision of the Commissioner contains legal errors, the award of damages cannot stand. The appropriate order is to allow the appeal to this Court and the Full Court of the Federal Court and to direct that the complaint be remitted to HREOC in accordance with the Human Rights Legislation Amendment Act (No 1) 1999 (Cth) and the Human Rights Legislation (Transitional) Regulations The material facts Mr Hoggan was a ward of the State. He had been in the full time foster care of Mr Purvis and his wife since 1989. Mr Hoggan sustained severe brain injury when he was about 6 or 7 months old as the consequence of an encephalopathic illness. The injury resulted in damage to the parieto-occipital lobes and bilateral damage to the frontal lobes of his brain. As a result of his brain injury, Mr Hoggan suffers from an intellectual disability, visual difficulties, epilepsy and behavioural problems. Dr Graham Wise, a child neurologist, testified at the hearing before the Commissioner that: "The major part of [Mr Hoggan's] difficult behaviour would be disinhibited and uninhibited behaviour. That is, your frontal lobes are very important for you to smooth out emotional ups and downs, to cope with emotional crises in a relatively even way. So he would be likely to have flares of temper which he wouldn't be able to control as well as a child of his age and with this degree of intellectual handicap who did not have those particular frontal lesions." Mr Norman Lord, a registered psychologist employed by the New South Wales Department of Community Services, testified that: "He acts without a view of consequences or an intent on the behaviour, so he is more prone to strike out ... Initially he may withdraw. As he becomes frustrated he may start talking to himself, he may start sort of using offensive words, to isolate himself or – he may isolate himself and use offensive words – become aggressive and push somebody away, strike out at somebody who is not involved, all as a sense of not being able to articulate what the problem is that he's having with his feelings." In the second half of 1996, Mr and Mrs Purvis enquired about enrolling Mr Hoggan at the South Grafton High School ("the High School") for the 1997 school year. At that time, Mr Hoggan was attending another school. Mr and Mrs Purvis felt that his behaviour had regressed as a result of the segregated environment at that school. They met with the then principal of the High School who rejected their application to enrol Mr Hoggan at that school. In December 1996, the Department of Education and Training appointed a new principal, Mr Barry Bartley, to the High School. Following discussions with Mr and Mrs Purvis and the Department, Mr Bartley decided to enrol Mr Hoggan at the school. Before Mr Hoggan attended the High School, a Draft Welfare and Discipline Policy ("DWD Policy") relating to him was formulated by modifying the Department's existing Student Welfare Policy. One session of a staff development day was used to allow Mr Hoggan's teachers to discuss his enrolment, education and participation at the school. The use of a "progress sheet" to monitor his behaviour was also discussed at this meeting. This form required teachers to grade Mr Hoggan on his participation, co-operation, understanding and behaviour at 20-minute intervals during the class. He was also to be provided with a teacher's aide to assist him in class. Mr Hoggan first attended the High School in April 1997. He attended with sporadic interruptions until December 1997 when he was permanently excluded because of his antisocial and violent behaviour. His problems at the school began in April 1997 when he hit one of his aides because he did not want McHugh Kirby to attend school. Despite his previous good behaviour, he was given a one-day suspension instead of the warning prescribed by the DWD Policy. Mr Bartley testified at the HREOC hearing that there was "zero tolerance" for such behaviour in the school. At a case management meeting held on 30 April 1997, Mr Purvis suggested that the DWD Policy might have to be adjusted for Mr Hoggan because he might interpret suspension as a reward, rather than a punishment. No adjustment was made. On 7 May 1997, Mr Bartley suspended Mr Hoggan for two days for verbally abusing a teacher's aide and for kicking a fellow student. Mr and Mrs Purvis asserted that this behaviour related to the inexperience of the aide (who had been working with Mr Hoggan for only three days) and her attempt to force him to go to a physical education class. The Commissioner rejected the aide's view that Mr Hoggan's actions were premeditated because that view did not accord with the medical and psychological evidence. On 8 May 1997, Mr and Mrs Purvis spoke to Mr Bartley about the appropriateness of suspension as a behaviour management strategy. They all agreed that Mr Lord should be contacted and that a meeting should be arranged to discuss behaviour management strategies for Mr Hoggan. On 30 May 1997, Mr Hoggan was placed in "time out" because he kicked a desk over, swore and kicked other children and their bags. The communication book noted that Mr Hoggan "is very stressed about Science test (Monday) (that's what upset him)." In mid-June 1997, Mr Lord attended a case management meeting where he offered to observe Mr Hoggan at school and devise a behaviour management plan for him in consultation with Mr Hoggan's teachers at no cost to the school. The school did not accept this offer. Mr Hoggan again misbehaved on 19, 23 and 24 June and 25 July 1997 but was not suspended. On 30 July 1997, however, Mr Hoggan kicked a teacher's aide and was suspended for two days. The Commissioner accepted Mr Bartley's evidence that at this stage any other student would have been expelled from the school. On 8 August 1997, Mr Peter Garrard and Mr Ken Callan, special education consultants with the Department of Education and Training, attended a case management meeting at the school. Later, they prepared a report recommending a number of strategies for the management of Mr Hoggan's behaviour. They provided the report to Mr Ronald Phillips, the District Superintendent, but he withheld it from Mr Bartley and the case management team because he was not satisfied that its content and recommendations would improve the situation at the school. Mr Phillips thought, despite the wide consultation referred to in the report, that the authors "had failed to widely consult". He also "felt that people with expertise on the ground were needed rather than a set of recommendations." On 2 September 1997, Mr Hoggan was suspended for a further 13 days (subsequently reduced to 8 days) for kicking another student. This incident occurred after a stressful weekend for Mr Hoggan. He returned to school on 15 September 1997. But on 18 September 1997, he was again suspended for 12 days after punching an aide in the back. This incident occurred after he had continually refused, despite encouragement from the aide and others, to go to class. All decisions to suspend Mr Hoggan were made in accordance with the DWD Policy and the general School Discipline Policy. Violent or inappropriate behaviour was the reason recorded for all of his suspensions. During 1997, a number of people unsuccessfully attempted to overcome the causes of Mr Hoggan's behaviour. In September, following a meeting with the teacher's aides, Mr Robert Field, a special education consultant, made a number of recommendations regarding his behaviour. About this time, Mr Bartley prepared his own plan for Mr Hoggan's ongoing attendance at the school. Ms Carrie Brooks, a program officer with the Department of Community Services, also produced guidelines designed to address Mr Hoggan's behaviour by making environmental changes, increasing alternative communication skills and providing opportunities for stress relief. None of those suggestions was adopted by the educational authority. In October 1997, the school counsellor recommended that Mr Hoggan be moved and enrolled in the Support Unit at Grafton High School. At a meeting held in November 1997, Mr Bartley and others decided that it was in Mr Hoggan's best interests to have him enrol at the Support Unit rather than at the High School. On 3 December 1997, Mr Bartley met with Mr and Mrs Purvis and indicated that he would exclude Mr Hoggan from the High School. On the same day, Mr Bartley wrote to the Department of Community Services, Mr Hoggan's legal guardian, informing the Department that he was excluding Mr Hoggan from the High School. Mr Bartley said that "the situation that caused his last suspension for very violent behaviour has not been resolved". In his letter, Mr Bartley expressed concern for the health and safety of the 80 staff and 1,000 students at the school because of Mr Hoggan's violent behaviour. The legislation The Act is the product of an international consensus that people with disabilities have long been subjected to discrimination in employment, education, access to premises, providing goods and services and many other areas of social and economic life. In 1982, the United Nations General Assembly adopted a World Programme of Action Concerning Disabled Persons outlining measures to McHugh Kirby equalise opportunities for people with disabilities. To encourage implementation of this Programme, the General Assembly proclaimed the period from 1983 to 1992 as the United Nations Decade of Disabled Persons10. The Act was passed in 1992, the final year of that Decade11. The structure of the Act, and to a large extent its detail, are drawn from the Sex Discrimination Act 1984 (Cth) and Racial Discrimination Act 1975 (Cth)12. The drafting of the Act also owes a heavy debt to Australian State anti- discrimination laws13. The relevant provisions of the Act are: "Objects The objects of this Act are: to eliminate, as far as possible, discrimination against persons on the ground of disability in the areas of: (i) ... education ... to ensure, as far as practicable, that persons with disabilities have the same rights to equality before the law as the rest of the community; and recognition and acceptance within the to promote community of the principle that persons with disabilities have the same fundamental rights as the rest of the community. 10 Human Rights and Equal Opportunity Commission, Draft Position Paper, Disability and Human Rights: Needs and Options for Further Protection, July 1991 at 35 [3.4]. 11 Australia, House of Representatives, Parliamentary Debates (Hansard), 26 May 12 Australia, House of Representatives, Parliamentary Debates (Hansard), 26 May 13 Hastings, "FounDDAtions: Reflections on the First Five Years of the Disability Discrimination Australia", http://www.hreoc.gov.au/disability_rights/hr_disab/found.html. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 26 May 1992 at published Act Interpretation In this Act, unless the contrary intention appears: 'disability', in relation to a person, means: total or partial loss of the person's bodily or mental functions; or total or partial loss of a part of the body; or the presence in the body of organisms causing disease or illness; or the presence in the body of organisms capable of causing disease or illness; or the malfunction, malformation or disfigurement of a part of the person's body; or a disorder or malfunction that results in the person learning differently the disorder or malfunction; or from a person without a disorder, illness or disease that affects a person's thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour; and includes a disability that: presently exists; or previously existed but no longer exists; or may exist in the future; or is imputed to a person. Disability Discrimination For a person the purposes of ('discriminator') discriminates against another person ('aggrieved person') on the ground of a disability of the aggrieved person if, because of the aggrieved person's disability, the discriminator treats or proposes to this Act, McHugh Kirby treat the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person without the disability. For the purposes of subsection (1), circumstances in which a person treats or would treat another person with a disability are not materially different because of the fact that different accommodation or services may be required by the person with a disability. Education discriminate against a person on the ground of the person's disability or a disability of any of the other person's associates: is unlawful for an educational authority by refusing or failing to accept the person's application for admission as a student; or in the terms or conditions on which it is prepared to admit the person as a student. it is unlawful for an educational authority to discriminate against a student on the ground of the student's disability or a disability of any of the student's associates: by denying the student access, or limiting the student's access, to any benefit provided by the educational authority; by expelling the student; or by subjecting the student to any other detriment. This section does not render it unlawful to refuse or fail to accept a person's application for admission as a student at an educational institution where the person, if admitted as a student by the educational authority, would require services or facilities that are not required by students who do not have a disability and the provision of which would impose unjustifiable hardship on the educational authority." The remedial nature of the Act requires that it be given a broad and beneficial construction14. In IW v City of Perth15, Kirby J said: "[P]rotective and remedial legislation should not be construed narrowly lest courts become the undoers and destroyers of the benefits and remedies provided by such legislation." So far as the language of the Act permits, courts should construe the Act in a manner that furthers the goal of truly equal treatment for disabled persons. The Human Rights and Equal Opportunity Commission hearing On 22 March 1998, Mr Purvis (acting on behalf of Mr Hoggan) complained to HREOC that Mr Hoggan had been discriminated against by the State in contravention of the Act. Mr Purvis claimed that, as a result of Mr Hoggan's disability, he was excluded and suspended from the High School and subjected to a detriment in his education by the failure to make reasonable accommodation for him. An attempt to conciliate the complaint was unsuccessful. Subsequently, HREOC referred the complaint to Commissioner Innes for hearing. The Commissioner found16 that the State, through its agents, had discriminated against Mr Hoggan by failing to accommodate his disability and that this failure led to the suspensions and Mr Hoggan's ultimate exclusion from the school. The Commissioner held that Mr Hoggan's behaviour was so closely connected to his disability that less favourable treatment on the ground of his behaviour was discrimination on the ground of his disability. The Commissioner also held that, to determine the discrimination issue, Mr Hoggan's treatment by the State had to be compared to that of a student without his disability and therefore without his disturbed behaviour. The Commissioner made a declaration that the State pay $49,000 in compensation. Relevant findings by the Commissioner The Commissioner found that the State had failed to accommodate Mr Hoggan's disability in three ways. He also made findings on the cause of Mr Hoggan's suspensions and exclusion. 14 IW v City of Perth (1997) 191 CLR 1 at 12, 22-23, 27, 39, 58. 15 (1997) 191 CLR 1 at 58. 16 Purvis obo Hoggan v The State of New South Wales (Department of Education) McHugh Kirby Failure to adjust the Draft Welfare and Discipline Policy The Commissioner found that the State should have consulted more broadly in the development of the DWD Policy. People who were very well placed to participate in the formulation process, such as Mr and Mrs Purvis, the teacher's aides, Mr Lord and Mr Field were not consulted. Instead, the policy was largely based on how the school counsellor thought Mr Hoggan might behave; many of the other people involved in its formulation had not even met The Commissioner found that during 1997 the school did not modify its policy despite its experiences with Mr Hoggan. The failure to do so continued even after Mr Purvis proposed modifications and Mr Lord offered to work in this area. The Commissioner was satisfied that the inflexibility of the DWD Policy and the impact that it had in the decisions to suspend and exclude Mr Hoggan, constituted a detriment in terms of s 22(2)(c) of the Act. Failure to provide teachers with training or an awareness program The Commissioner found that Mr Hoggan was largely taught by teacher's aides, rather than by teachers. He also found that overall Mr Hoggan's teachers had a very poor knowledge of the nature of Mr Hoggan's disabilities and how they affected his learning and behaviour. Teachers' views about Mr Hoggan's disabilities ranged, for example, from one teacher who "thought it was visual" to another who "did not appreciate that he had a vision disability." The Commissioner found Mr Hoggan's disabilities were on his file at the school and the principal was aware of his disabilities, Mr Hoggan's teachers were either unaware of the file or did not read it. that, although various medical reports relating In particular, the Commissioner found it "quite concerning" that the special teacher for learning difficulties "did not have an understanding of the relationship between [Mr Hoggan's] disability and his behaviour." He also noted that this teacher was given relief time to assist Mr Hoggan, but appeared to have spent little time with him. In addition, the Commissioner found that the strategy of using the "progress sheets" was not successful. First, Mr Hoggan was the only child monitored in this way. Second, most teachers only completed them to report poor conduct. Because of these inconsistencies, the forms were of little use in formulating behaviour management strategies. The Commissioner found that the limited attempts to make training available to Mr Hoggan's teachers constituted a detriment in terms of s 22(2)(c) of the Act. This failure did "not flow to suspensions and exclusion" and was a ground for separate relief. Failure to obtain the assistance of experts The Commissioner found that the State (through its responsible officers) did not obtain the assistance of experts in special education or behaviour until late in Mr Hoggan's placement and that even then most of their recommendations were not acted upon. This "failure, in part, led to the eventual ending of the placement." The Commissioner said that the implementation of some or all of the proposals in the report provided by Mr Garrard and Mr Callan could have averted the deteriorating situation that developed as the year progressed. He also found that the State had ignored all but one of Mr Field's recommendations and had not acted upon the recommendations in Mr Bartley's plan for Mr Hoggan's ongoing attendance at the school or the strategies proposed by Ms Brooks. Cause of suspensions and exclusion The Commissioner said that the failure to adjust the DWD Policy and the failure to engage experts led to the decisions to suspend and ultimately exclude Mr Hoggan. In relation to the suspensions the Commissioner said: "As already indicated, I am satisfied that Mr Bartley imposed the suspensions in compliance with the policies and as a result of [Mr Hoggan's] behaviour. Whilst I understand Mr Bartley's approach on this point (zero tolerance to what he described as violence) it was the outcome that may have been different if ... more flexibility had occurred. I accept the evidence of Mr Purvis and Mr Lord that [Mr Hoggan] could not make the association between his behaviour and the suspensions. This does not, in my view, indicate an incapacity to cope with the stresses of high school life. It indicates that other management strategies should have been tried before the placement was brought to an end. Mr Purvis requested this, Mr Lord offered to assist, and Messrs Garrard and Callan made recommendations. None of these options were taken up." In commenting on the decision to exclude Mr Hoggan, the Commissioner said: "The complainant's view is that some of the strategies used to manage [Mr Hoggan's] behaviour sent him wrong messages, and actually caused the behaviour to worsen. As an example, it was argued that being suspended (and thus sent home) for hitting or kicking could be perceived by [Mr Hoggan] as a reward rather than a punishment. Also, such punishments isolated [Mr Hoggan] further and increased the chances of him 'acting out'. This view is supported by the evidence of John Lord ... and by the recommendations in the Garrard [and] Callan report ... McHugh Kirby On balance, I am inclined to accept the complainant's view on this issue. I am satisfied that ... had [Mr Hoggan] received some different messages his 'acting out' would not have increased. It is unfortunate that the advice of Messrs Lord, Callan and Garrard were not acted upon, as it is my view that had this occurred [Mr Hoggan's] 'acting out' would have diminished. Had this been the case Mr Bartley and the Department may not have formed the views that they did with regard to [Mr Hoggan's] exclusion." The Commissioner found that the suspensions and exclusion constituted a breach of the Act. Because the inflexibility and failure to consult with experts had other effects besides the suspensions and exclusion, they were ground for separate relief. The Federal Court proceedings The State applied under the Administrative Decisions (Judicial Review) Act 1977 (Cth) to the Federal Court for an order of review of the decision of the Commissioner. The State alleged errors of law concerning: the meaning of discrimination "on the ground of" a disability; the application of s 5(2) of the Act; the relevant comparator; and the meaning of the words "benefit" and "detriment" in s 22(2) of the Act. The Federal Court (Emmett J) held17 that the Commissioner had erred in relation to each of these matters. His Honour set aside the decision of the Commissioner and remitted the matter to HREOC "to make findings and recommendations according to law." Mr Purvis appealed to the Full Court of the Federal Court (Spender, Gyles and Conti JJ), which dismissed the appeal18. Both Emmett J and the Full Court held that, for the purposes of the Act, a distinction must be drawn between a "disability" and the "conduct which it causes." They also held that the proper 17 New South Wales (Department of Education) v Human Rights and Equal Opportunity Commission (2001) 186 ALR 69. 18 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237. comparison for determining whether there had been discrimination within the meaning of the Act was between Mr Hoggan and another student manifesting the same behaviour. Their Honours rejected the Commissioner's finding that to treat Mr Hoggan less favourably because of his behaviour was to discriminate against him because of his disability. Issue 1: the meaning of "disability" The Commissioner accepted that, in terms of s 4(1) of the Act, Mr Hoggan's disabilities consist of: an intellectual disability that manifests in unusual individual mannerisms and disturbed behaviour such as rocking, humming, swearing and at times aggressive behaviour such as hitting or kicking; intellectual disability thought processes, perception of reality and emotions, and results in disturbed behaviour; an intellectual disability that results in Mr Hoggan learning differently from a person without the intellectual disability; a visual disability; epilepsy; and a past disability, namely severe encephalopathic illness. The Commissioner found that Mr Bartley made his decisions to suspend and exclude Mr Hoggan because of Mr Hoggan's behaviour and not because of his disability19. Accordingly, the Commissioner did not equate Mr Hoggan's behaviour with his disability. But the Commissioner found that Mr Hoggan's behaviour was so closely connected with his disability that less favourable treatment on the ground of behaviour would amount to less favourable treatment on the ground of the disability that caused that behaviour. It appears that this finding is relevant to the issue of causation rather than the definition of "disability". 19 The fact that the Commissioner also found that Mr Hoggan was excluded for broader reasons than just behavioural, including the view that he "could not operate in a regular high school environment as a result of his disability", is discussed at McHugh Kirby In the Federal Court, Emmett J took a different view. His Honour said: "[T]here is a distinction to be drawn between a disability within the meaning of the Act, on the one hand, and behaviour that might result from or be caused by that disability on the other hand. Less favourable treatment on the ground of the behaviour is not necessarily less favourable treatment by reason of the disability." (original emphasis) Emmett J said that pars (f) and (g) of s 4(1) are to be read as meaning that only a "disorder or malfunction" or a "disorder, illness or disease" that is manifested in certain symptoms will constitute a disability. Thus, it is the "disorder or malfunction" or the "disorder, illness or disease" that is the disability, not the symptom of that condition. The Full Court held that Emmett J was correct in holding that the Commissioner had misdirected himself as to the proper construction of s 4(1) by regarding Mr Hoggan's conduct as inseparable from his disability. Their Honours said: "In our opinion, that conduct was a consequence of the disability rather than any part of the disability within the meaning of s 4 of the Act. This is made quite explicit in subs (g), which most appropriately describes the disability in question here and which distinguishes between the disability and the conduct which it causes. The same may be said of subs (f). The other subsections do not involve conduct." Mr Purvis contends that Mr Hoggan's behaviour is not the mere consequence of his disability; he submits that the behaviour forms part of the disability. He contends that the term "disability" is concerned fundamentally with functional limitations – the inability of a person to act within what might be thought of as a normal range – not simply the underlying physical or pathological condition. But the State submits that Parliament has expressly drawn a distinction in the Act between the disability and the consequences of the disability. HREOC submits that Parliament has not adopted terminology that allows for precise distinctions to be drawn between physical causes and outward manifestations. It submits that it is not correct to say that the disability is the condition that causes the loss of function. The Attorney-General submits that, although the Full Court correctly construed s 4(1) as excluding the disturbed behaviour resulting from the disorder, its interpretation of "disability" as being merely the underlying condition is too narrow. The Attorney-General submits that disability is intended to include functional disorders, such as an incapacity to control behaviour. People with Disabilities (NSW) Inc also submits that the definition of "disability" includes the functional limitations arising as a result of impairment. It submits that the definition in the Act includes both "impairment" and "disability" as they were defined internationally at the time the Act was passed. In our view, the Federal Court's characterisation of disability as merely referring to the underlying condition does not accord with the proper construction of s 4(1) of the Act. Disability is defined broadly in s 4(1), the legislative intent being to capture the full range and nature of disabilities. As defined, it includes the functional limitations that result from the underlying condition. This interpretation gives the definition an operation consistent with the ordinary meaning of disability, viz, a "lack of ... physical or mental ability"20. The Act's definition draws upon existing definitions in Commonwealth and State legislation, as well as the meaning of disability in the international community21. The paragraphs of the definition that arguably apply to Mr Hoggan's behavioural problems are (a), (e) and (g). Paragraph (a) Paragraph (a) states that disability means the "total or partial loss of the person's bodily or mental functions". The focus of this paragraph is on loss of functions rather than the cause of any such loss. The ordinary meaning of the phrase "mental functions" would include the manner in which the mind functions through processes of thought and capacities to learn and control behaviour. Dictionaries define the term "mental" to include "performed by or existing in the mind" or "relating to the intellect"22 and "done by the mind"23. They define "function" to mean "to perform a function; act; serve; operate ... to carry out normal work, activity, or processes."24 Thus, the definition of disability contained in par (a) applies to Mr Hoggan because he suffers from a partial loss of his adaptive behaviour ability. 20 The Macquarie Dictionary, 3rd ed (1997) at 610. 21 Jones and Basser Marks, "The Limitations on the Use of Law to Promote Rights: An Assessment of the Disability Discrimination Act 1992 (Cth)", in Hauritz et al (eds), Justice for People with Disabilities: Legal and Institutional Issues, (1998) 22 The Macquarie Dictionary, 3rd ed (1997) at 1345-1346. 23 The Australian Oxford Dictionary, (1999) at 846. 24 The Macquarie Dictionary, 3rd ed (1997) at 859. McHugh Kirby Paragraph (e) Paragraph (e) states that disability means "the malfunction ... of a part of the person's body". This paragraph also focuses on functional ability, rather than underlying cause. "Malfunction" is defined in dictionaries to mean "a failure to function in a normal or satisfactory manner"25 (emphasis added) or "failure to function properly"26 (emphasis added). Mr Hoggan's brain malfunctions. His condition therefore falls within the definition of disability in par (e). Paragraph (g) Paragraph (g) declares that disability means "a disorder, illness or disease that affects a person's thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour". Mr Purvis contends that the words "that affects" and "that results in" are conjunctive and that the disability includes the "disturbed behaviour". The disabilities referred to in par (g) are confined by the adjectival phrases introduced by the word "that". The words that follow describe the type of disorder, illness or disease encompassed by the Act. The adjectival clauses cannot be definitive of the "disorder, illness or disease"; otherwise the Act would not protect persons who had a condition that did not manifest itself in disturbed behaviour because of the stage of the condition or because it was being effectively treated. The interpretation given to the words "disorder, illness or disease" by the Full Court, however, is too narrow. The Macquarie Dictionary defines "disorder" to mean "a derangement of physical or mental health or functions"27 (emphasis added). Thus, Mr Hoggan's behaviour is part of his disability because it includes his incapacity to adapt his behaviour to a standard consistent with the safety of other pupils, teachers and aides. His disability is not confined to his brain damage. International organisations also recognise that the term "disability" includes functional difficulties. When the Act was drafted, the most widely 25 The Australian Oxford Dictionary, (1999) at 816. 26 The Macquarie Dictionary, 3rd ed (1997) at 1304. 27 The Macquarie Dictionary, 3rd ed (1997) at 617. accepted classification scheme covering all disability types, both internationally28 and domestically, was that of the World Health Organisation's International Classification of Impairments, Disabilities, and Handicaps: A Manual of Classification Relating to the Consequences of Disease ("the ICIDH"). It recognised that a disability may include functional difficulties. The Act's definition of "disability" incorporates the key terminology of the ICIDH29. The ICIDH provides a conceptual framework for "disability" that describes three dimensions – impairment, disability and handicap. Impairment is defined as "any loss or abnormality of psychological, physiological, or anatomical structure or function"30. It includes the existence or occurrence of an anomaly, defect or loss in a limb, organ, tissue or other structure of the body, or a defect in a functional system or mechanism of the body, including the systems of mental function. Disability is defined as "any restriction or lack (resulting from an impairment) of ability to perform an activity in the manner or within the range considered normal for a human being"31. It is concerned with compound or integrated activities expected of the person or of the body as a whole, such as those represented by tasks, skills and behaviour. Handicap is defined as "a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the fulfilment of a role that is normal (depending on age, sex, and social and cultural factors) for that individual"32. Handicap focuses, therefore, on the person as a social being and reflects the interaction with, and adaptation to, the person's surroundings. 28 See United Nations World Programme of Action concerning Disabled Persons, 29 Madden and Hogan, The Definition of Disability in Australia, (1997) at 30. 30 World Health Organisation, Impairments, Disabilities, and Handicaps: A Manual of Classification Relating to the Consequences of Disease, (1980) at 27. International Classification of 31 World Health Organisation, Impairments, Disabilities, and Handicaps: A Manual of Classification Relating to the Consequences of Disease, (1980) at 28. International Classification of 32 World Health Organisation, Impairments, Disabilities, and Handicaps: A Manual of Classification Relating to the Consequences of Disease, (1980) at 29. International Classification of McHugh Kirby The definition of disability in the Act encompasses both the concept of "impairment" and "disability"33. The Draft Position Paper in relation to the Act refers to the ICIDH and states34: "This approach to definition has been valuable in focussing attention on the fact that for many people with disabilities, restrictions on their ability to participate equally in different aspects of life are not the inevitable, medical consequence of a particular impairment. Rather, in many cases restrictions on equality for people with disabilities result from features of the social or physical environment – features which can be altered, and which in some cases the law can help to change." This statement and the overall structure of the Act show that the Act was aimed at removing the handicaps faced by persons with disabilities that arise from their interaction with their social environment. To construe "disability" as including functional difficulties gives effect to the purposes of the Act. Such a construction accords with the Act's beneficial and remedial nature. In this case, the damage to Mr Hoggan's brain is a "hidden" impairment – it is not externally apparent unless and until it results in a disability. It is his inability to control his behaviour, rather than the underlying disorder, that inhibits his ability to function in the same way as a non-disabled person in areas covered by the Act, and gives rise to the potential for adverse treatment. To interpret the definition of "disability" as referring only to the underlying disorder undermines the utility of the discrimination prohibition in the case of hidden impairment35. Issue 2: the obligation to provide reasonable accommodation The Commissioner found that the State had an obligation to make a reasonably proportionate response to Mr Hoggan's disability. He held that the State through its agents could have done a number of things that would have been reasonably proportionate to Mr Hoggan's disabilities. He concluded that, if 33 Jones and Basser Marks, "Disability, Rights and Law in Australia", in Jones and Basser Marks (eds), Disability, Divers-Ability and Legal Change, (1999) 189 at 34 Human Rights and Equal Opportunity Commission, Disability and Human Rights: Needs and Options for Further Protection, July 1991 at 8 [1.2]. 35 See the Disability Advisory Council of Australia's Report of the National Consultations with People with a Disability, (1991) at 10 which reflects a concern to prevent people with hidden disabilities "falling through the gaps". the State had acted differently in these areas, the suspensions and exclusion might not have occurred. If the State had done so, and if the same events had occurred, discrimination would not have taken place. The Commissioner also held that once the school recognised that Mr Hoggan's disability required special services and facilities in order for him to function at the school, and it agreed to provide them, they were benefits for the purposes of s 22(2)(a) of the Act. In the Federal Court, Emmett J rejected these conclusions. His Honour said: "This case does not appear to me to have anything to do with 'accommodation' or 'services' in the sense defined. In any event, the Commission does not appear to have relied on s 5(2) in the reasoning process that led to its determination and declarations. Further, I do not read the Commission's reasons as containing a conclusion that s 5(2) imposes a positive obligation on the 'discriminator' ... Thus, s 5(2) does not appear to have any relevant application in the present case." His Honour held that failing to give special treatment to a student is not necessarily subjecting that student to a detriment. He said: "If those services and facilities are provided only to a person with a disability, the denial of them does not involve treating the person with a disability less favourably than the educational authority treats or would treat a person without the disability. The denial of a benefit that is not afforded to a person without a disability is not, of itself, discrimination within the meaning of s 5(1)." On appeal, the Full Court agreed with Emmett J on this point. The Full Court said: "The findings of discrimination which were made by HREOC in relation to acts or omissions other than expulsion go further and impose positive duties on the school to manage the conduct of the student, presumably regardless of cost or impact upon other school activities, without explaining why such special measures would not involve a breach of s 22(2)(a) or (c)." Mr Purvis, HREOC and the Attorney-General submit that the Act contains an obligation of reasonable accommodation. However, unlike HREOC and the Attorney-General, Mr Purvis does not assert that s 5(2) is the source of that obligation. He submits that the existence of the exemption for unjustifiable hardship in a non-discriminatory way may impose a burden on a person or institution. In contrast, the State submits that this case does not involve s 5(2) of the Act. It that dealing with a person with a disability indicates McHugh Kirby contends that s 5(2) does not impose any further or different obligation on a school to provide access to a benefit or not to subject a student to a detriment. Accommodation Disability discrimination is different from other types of discrimination, such as sex or race discrimination, in that its elimination is more likely to require affirmative action than is the case with sex and race discrimination. Disability discrimination is also different from sex and race discrimination in that the forms of disability are various and personal to the individual while sex and race are attributes that do not vary. The elimination of discrimination against people with disabilities is not furthered by "equal" treatment that ignores their individual disabilities. The Act imposes a prima facie requirement on persons falling within its terms to accommodate the disabilities of each disabled person in order to achieve real – not notional – equality. In this context, "accommodation" means the making of suitable provision for the disabled person. It includes, but is not limited to, the provision of residential or business accommodation. It is used in the sense that a banker uses the term when accommodating a customer's application for a loan36. In the Federal Court, however, Emmett J said the case does not appear to have anything to do with "accommodation" or "services". He referred to the definition of these terms in s 4(1) of the Act. Section 4(1) declares that "accommodation" includes "residential or business accommodation". But this is an inclusive definition. The objects of the Act would be seriously undermined if "accommodation" was confined to residential or business accommodation. It is hardly to be supposed that material circumstances for the purpose of s 5 of the Act do not include the accommodation of the disabled by providing ramps in appropriate cases. The definition of "accommodation" in s 4(1) was probably directed to discrimination in the offering of physical accommodation, an area which s 25 of the Act regulates. "Accommodation" is commonly understood to mean "an adjustment or adaptation to suit a special or different purpose."37 Once that is accepted, there is no reason, given the objects of the Act, for not extending the notion of "accommodation" to all those things and matters that are necessary to achieve true equality for the disabled. In Commonwealth v Humphries38, Kiefel J 36 cf Bills of Exchange Act 1909 (Cth), s 33. 37 The Australian Oxford Dictionary, (1999) at 8. 38 (1998) 86 FCR 324 at 333-334. rejected a correctly irrelevant because that "accommodation" and "services", as defined, do not refer to equipment. Her Honour said that these terms should be given a broad interpretation, which could include equipment. s 5(2) was submission Moreover, it is a serious mistake to construe the term "accommodation" as equivalent to "reasonable accommodation"39, a term not used in the Act. Where the Act applies, the alleged discriminator must accommodate the disabilities of the disabled person unless it "would impose unjustifiable hardship", as defined in s 11 of the Act, on the alleged discriminator. This is clear from the Second Reading Speech delivered by Mr Brian Howe, the then Minister for Health, Housing and Community Services. He said that under the Act "employers, providers of accommodation, education, goods and services, clubs and sporting groups would be able to argue that action necessary to accommodate the needs of people with disabilities would impose unjustifiable hardship."40 Adding the qualification "reasonable" to the requirement of accommodation imposes an unwarranted gloss on the Act – which reconciles the competing interests of the disabled and those with whom they interact by the more stringent standard of "unjustifiable hardship". the notion of reasonableness for "unjustifiable hardship" is an error. Substituting It is true that the Act covers situations where the "defence" of unjustifiable hardship is not available. Thus, s 22(4) of the Act – which enables an educational authority to refuse to accept a student's application for admission on the ground of unjustifiable hardship – does not apply once the student is accepted. But this is no reason for adding the "reasonableness" gloss to s 5 given that the Parliament has specifically defined the circumstances in which the Act's obligations must give way to the hardship imposed on the alleged discriminator. It is also true that the outline to the Explanatory Memorandum to the Disability Discrimination Bill 1992 stated: "The Bill also provides that only reasonable accommodation needs to be made for people with disabilities, and persons against whom 39 As suggested by Bourke, "Mental Illness, Discrimination in Employment and the Disability Discrimination Act 1992 (Cth)", (1996) 3 Journal of Law and Medicine 318 at 327; McDonagh, "Disability Discrimination Law in Australia", in Quinn et al, Disability Discrimination Law in the United States, Australia and Canada, 40 Australia, House of Representatives, Parliamentary Debates (Hansard), 26 May McHugh Kirby complaints are made will be able to argue that the accommodation necessary to be made will involve unjustifiable hardship on that person." (emphasis added) But a statement in an Explanatory Memorandum can no more change the meaning of a legislative enactment than can the Second Reading Speech of the Minister presenting the Bill41. The law is expressed in the legislation, not in the Explanatory Memoranda, although of course in cases of ambiguity interpreters may have regard to statements in such memoranda. In any event, in discussing s 5(2), the Memorandum stated: "[C]ircumstances will not be regarded as being materially different because the discriminator has to provide different accommodation or services to the aggrieved person. Whether, in fact, the discriminator will be required to provide the different accommodation will be determined when the issue of unjustifiable hardship is dealt with." Unjustifiable hardship In most42, but not all43, areas in which the Act operates there is an exception that allows for discrimination to occur if it would impose "unjustifiable hardship" on the discriminator to provide the services or facilities required by the person with the disability. Section 4(1) declares that "unjustifiable hardship" has the meaning given by s 11. Section 11 states that in determining what constitutes unjustifiable hardship, all relevant circumstances are to be taken into account. They include, relevantly, the nature of the benefit or detriment likely to accrue to, or be suffered by, the persons concerned, the effect of the disability, and "the financial circumstances and the estimated amount of expenditure required to be made by the person claiming unjustifiable hardship". The nature of the detriment likely to be suffered by any persons concerned, if the student was admitted, would comprehend consideration of 41 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518, 547. 42 The exception is provided in relation to employment (s 15), commission agents (s 16), contract workers (s 17), partnerships (s 18), education (s 22), access to the provision of goods, services and premises accommodation (s 25) and clubs and incorporated associations (s 27). facilities 43 The exception is not provided in relation to qualifying bodies (s 19), registered organisations under the Workplace Relations Act 1996 (Cth) (s 20), employment agencies (s 21), land (s 26), sport (s 28) and the administration of Commonwealth laws and programs (s 29). threats to the safety and welfare of other pupils, teachers and aides. Any negative impact that may be caused by the presence of a student with a disability in a mainstream class is a proper matter to be considered when making a decision on whether that individual student can be admitted44. Thus, the Act provides for a balance to be struck between the rights of the disabled child and those of other pupils and, for that matter, teaching staff. This provision also allows consideration of the duty of care owed by the educational authority to the other pupils45. The reference to the effect of the disability would also permit consideration of the possibility that behaviour of the proposed student would violate the criminal law. The Commissioner did not assume that the educational authority had infinite resources available to cater for Mr Hoggan's needs. It was the use of the available resources that the Commissioner criticised. He said: "[W]hilst substantial amounts of financial and staff resources had been committed to [Mr Hoggan's] inclusion at [the High School], advice of those with special education skills was not sought until later in the process, and then not always taken, and much of the information available ... did not percolate down to the teachers in the classroom." As we have already indicated, the unjustifiable hardship provisions in relation to education operate only in relation to a refusal or failure to accept a student's enrolment and not the way in which that person, once admitted, must be treated46. The appropriate course, however, is to accept that the limited operation of s 22(4) is anomalous47 and requires correction by Parliament, rather than to impose on the definitional provisions an artificial construction in an attempt to resolve the anomaly. As Kirby P pointed out in North Sydney Brick & Tile Co Ltd v Darvall48: 44 Ronalds, Discrimination Law and Practice, (1998) at 93. 45 Hills Grammar School v Human Rights and Equal Opportunity Commission (2000) 100 FCR 306 at 320 [54]. 46 Section 22(4). See also A School v Human Rights and Equal Opportunity Commission (No 2) (1998) 55 ALD 93. 47 However, it can be noted that a similar gap exists in the employment area. See s 15(4) and Bourke, "Mental Illness, Discrimination in Employment and the Disability Discrimination Act 1992 (Cth)", (1996) 3 Journal of Law and Medicine 48 (1986) 5 NSWLR 681 at 683. McHugh Kirby "If in the end, a strained construction strikes the judicial eye as unacceptable, no amount of commonsense or apparent legislative policy will authorise the judge to adopt that construction. To do so would involve a departure from the judge's limited constitutional function." The Supreme Court of Canada has explained why a requirement of accommodation is necessary to achieve true equality for the disabled. In Eaton v Brant County Board of Education49, Sopinka J said: "Whether it is the impossibility of success at a written test for a blind person, or the need for ramp access to a library, the discrimination does not lie in the attribution of untrue characteristics to the disabled individual ... Rather, it is the failure to make reasonable accommodation, to fine- tune society so that its structures and assumptions do not result in the relegation and banishment of disabled persons from participation, which results in discrimination against them. The discrimination inquiry which uses 'the attribution of stereotypical characteristics' reasoning as commonly understood is simply inappropriate here. It may be seen rather as a case of reverse stereotyping which, by not allowing for the condition of a disabled individual, ignores his or her disability and forces the individual to sink or swim within the mainstream environment." With the exception of the qualification "reasonable" – a necessary qualification in Canada which has no statutory qualification of "unjustifiable hardship" – this statement correctly states the rationale for the accommodation requirement in the Act. It is true that the notion of discrimination referred to by the Supreme Court of Canada is wider than that contained in the Act. It is also true, as Brennan CJ and McHugh J pointed out in IW v City of Perth50, that Australian the use of general definitions of discrimination such as that given by Gaudron and McHugh JJ in Castlemaine Tooheys Ltd v South Australia51. Instead, they have confined anti-discrimination legislation to particular fields and particular activities within those fields, making it necessary to analyse the structure and words of the Act to determine whether discrimination has occurred. But this legislative approach only reinforces the legislatures have avoided 49 [1997] 1 SCR 241 at 272-273 [67]. See also Holland v Boeing Co 583 P 2d 621 (1978) (US); Southeastern Community College v Davis 442 US 397 at 412-413 (1979); Eldridge v British Columbia (Attorney General) [1997] 3 SCR 624 at 50 (1997) 191 CLR 1 at 14-15. 51 (1990) 169 CLR 436 at 478. view that the Act must be applied according to its terms. Parliament has chosen to qualify the accommodation requirement by using a standard of unjustifiable hardship. It is not for the courts to change this standard by treating it as equivalent to reasonableness. The Attorney-General has now formulated Draft Disability Standards for Education 2003, pursuant to s 31 of the Act. The aim of such standards is to clarify and elaborate the legal obligations in relation to education. The Draft Standards provide that reasonable adjustments must be made to allow a student with a disability to apply for admission or enrolment, participate in the course and use the facilities or services on the same basis as a student without a disability, unless such adjustments would impose an unjustifiable hardship on the education provider. If, and in so far as, the Draft Standards indicate that the Act contains an obligation of reasonable accommodation, they misstate the law. Recognition not obligation of accommodation A number of cases have perceived an implied obligation to provide accommodation, although views as to the source of the obligation vary. In Mrs J v A School52, Sir Ronald Wilson, President of HREOC – although wrongly qualifying the obligation by the notion of reasonableness – said that s 5(2): "ensures that it is not just a question of treating the person with a disability in the same way as other people are treated; it is to be expected that the existence of the disability may require the person to be treated differently from the norm; in other words that some reasonable adjustment be made to accommodate the disability." On appeal, Mansfield J rejected the submission that Sir Ronald had erred in holding that s 5 imposed a positive obligation on the educational authority. His Honour said53: "I do not wish to be taken as accepting that the obligation not to discriminate against a person with a disability under [the Act] does not involve some obligation to take positive action with respect to a disabled person. Sections 7, 8 and 9 recognise circumstances will exist that involve a person with a disability needing to be treated differently. They provide that the treating of a person with a disability less favourably because of 52 (1998) EOC ¶92-948 at 78,313. 53 A School v Human Rights and Equal Opportunity Commission (No 2) (1998) 55 ALD 93 at 103. McHugh Kirby such a need will itself constitute discrimination. The accommodation of that need may well require some positive action to be taken." And later in his reasons, his Honour said54: "The determination of what is less favourable treatment for the purposes of s 5(1) must be measured in circumstances that are not 'materially different', and s 5(2) provides that the fact that a person with a disability may require different accommodation or services does not provide a basis for making out that material difference. Thus, it is not necessarily the case that, where [the Act] applies to a particular relationship or circumstance, there is no positive obligation to provide for the need of a person with a disability for different or additional accommodation or services. To the extent that to do so would produce hardship, the particular provisions seek to make allowance for that, including s 22(4)." On remittal to HREOC, Commissioner McEvoy said55: "[S]ection 5(2) does not provide just a description of what amounts to material differences: rather, it assists in determining how to make circumstances of disability not materially different. That is, in some circumstances there may be some positive obligation on a respondent to take steps in order to ensure there is no material difference between the treatment accorded to a person with a disability and the treatment accorded to a person in similar circumstances but without a disability ... It is my view that without this interpretation of section 5(2), it would be difficult to establish direct discrimination under the Act, except in the most blatant circumstances, and a person subjected to discriminatory treatment within the intention of the Act would most often have to rely on section 6 and establish indirect discrimination." Similarly, in Garity v Commonwealth Bank of Australia56 Commissioner Nettlefold said: 54 A School v Human Rights and Equal Opportunity Commission (No 2) (1998) 55 ALD 93 at 104. 55 Cowell v A School unreported, Human Rights and Equal Opportunity Commission, 10 October 2000 at [5.2.2]. See also Murphy v State of New South Wales (NSW Department of Education) (2000) EOC ¶93-095. 56 [1999] HREOCA 2 at [6.4]. "The proper construction of the Act shows that the principle of reasonable accommodation is contained in it. There is recognition of it in section 5(2), section 11, section 15(4) and section 55 of the Act ... The use of the word 'favourably' adverts to the notion of giving aid or help. A mere mechanical measure of the aid or help given, which ignores disparate capacities, needs, and circumstances is not sufficient." It is not accurate, however, to say that s 5(2) of the Act imposes an obligation to provide accommodation. No matter how important a particular accommodation may be for a disabled person or disabled persons generally, failure to provide it is not a breach of the Act per se. Rather, s 5(2) has the effect that a discriminator does not necessarily escape a finding of discrimination by asserting that the actual circumstances involved applied equally to those with and without disabilities. No doubt as a practical matter the discriminator may have to take steps to provide the accommodation to escape a finding of discrimination. But that is different from asserting that the Act imposes an obligation to provide accommodation for the disabled. As indicated by the Explanatory Memorandum, s 5(2) recognises rather than imposes the obligation of accommodation. It makes it clear that circumstances will not be materially different for the purpose of s 5(1) because, for example, a student in a wheelchair may require a ramp to gain access to a classroom while other students do not need the ramp. This example also illustrates the unique difficulty that arises in discerning the division between s 5 and s 6 of the Act because s 5(2) brings the requirement for a ramp, normally associated with indirect discrimination, into the realm of direct discrimination. Thus, the failure by The Commissioner found that a breach of s 5 occurred because of the failure of the High School to obtain expert advice and the failure to apply its policies more flexibly. Given the terms of s 5(2), it was no answer for the educational authority to contend that other students were not provided with this to provide such "accommodation". accommodation to enable Mr Hoggan to participate in regular school life, so far as possible, on an equal footing led, correctly on the facts of this case, to the finding of less favourable treatment for the purposes of the Act. But in so far as the Commissioner found that the failures to provide the accommodation themselves amounted to the denial of benefits or the subjection to detriments, he erred. There was no duty to provide the accommodation. Even if the Department had agreed to provide the accommodation to Mr Hoggan, the failure to provide it would not have been a per se breach of the Act. The failure to provide the required accommodation goes to the issue of materially different circumstances, not obligation. the school McHugh Kirby The Commissioner also found that the failure to provide the required accommodation led to the decisions to suspend and exclude Mr Hoggan. Because the suspensions and exclusion were themselves detriments within the meaning of the Act, the Commissioner did not err in finding that the failure to provide the accommodation subsequently led to the denial of benefits and the subjection to detriments. That is to say, if the accommodation had been provided, more probably than not the misbehaviour would not have occurred. A comparable situation arose in McNeill v Commonwealth of Australia57, where an employee who was legally blind was provided with specialised equipment. However, problems with the equipment frequently led to her seeking help from her supervisors and co-workers. She was also subjected to increased monitoring by her supervisor. The employee was ultimately dismissed on the basis of her poor communication and interpersonal skills. Commissioner Jones said: "[T]here was a connection between the lack of equipment and intense monitoring and the conduct and communications difficulties displayed by the complainant. The evidence adduced by the complainant satisfied me that much of the complainant's behaviour reflected her frustration at her disability not being reasonably accommodated by the respondent ... It follows that in dismissing the complainant, the respondent was doing so for reasons brought about by, and hence on the ground of, her disability – namely that her inefficiency and her frustration was caused by her disability not being adequately accommodated and also, in part, for displaying behaviour that was a manifestation of her disability." Exemptions In addition to the safeguard of "unjustifiable hardship", s 55 of the Act provides that HREOC may grant an exemption from the operation of the Act for a maximum of five years, although renewals may be granted. An exemption may be granted subject to terms and conditions and may be expressed to apply only in specific circumstances, or in relation to specific activities. Such an exemption was not sought in this case. Mr Purvis submits that, if a school could not manage a student, once enrolled, because of the student's violent and antisocial behaviour, the proper and only course open is for the school to make an application under s 55 for an exemption from the operation of the Act. The Commissioner was also of the 57 (1995) EOC ¶92-714 at 78,367. view that this was the solution provided by the legislation in a situation such as this58. In this regard, the Full Court stated: "Such a counter-intuitive, indeed extraordinary, result would require a very clear statutory basis. We do not regard s 55 as providing an escape from the otherwise draconian consequences of the construction of s 22 urged upon us on behalf of [Mr Purvis]. The problems inherent in such a discretionary application for exemption are illustrated by this case ... Apart from the time, expense and staff disruption involved, the school would ultimately be subject to a discretionary judgment by a body which does not have the responsibility for managing the student. Even if s 55 can be read as authorising an exemption in the case of an individual student, it is ill-designed to deal with such an issue in a case like the present. Most importantly, what is the position of the school and those at the school whilst the availability of an exemption is being decided? The staff and other students will live with the threat of injury or abuse, may suffer actual injury or abuse, and classes and other educational endeavours will be disrupted. In addition, those affected may be without remedy, as the school authorities are hamstrung by the law in adopting normal measures of control." The State argues that the exemption provision does not provide a practical solution to the problem of an individual student because it only operates in relation to broad categories of persons, rather than individuals. It also submits that the time required to obtain an exemption makes its utility problematic. But the terms of s 55 do not support this submission. The terms of the section indicate that it is flexible enough to apply to situations such as those that arose following the enrolment of Mr Hoggan. Indeed, the section seems wide enough to permit the grant of an exemption from the Act's provisions generally in all cases where the violent behaviour of students with a disability may pose a threat to other pupils or staff. And there is nothing to stop the making of an urgent application in respect of a particular student, if necessary. The Act provides a number of other exemptions. For example, s 47(1)(b) exempts acts done in direct compliance with an order of a court. It may be wide enough to cover cases where, for example, a teacher had obtained an apprehended violence order against a disabled child made under State law. Section 47(2) also provides that anything done by a person in direct compliance 58 See also A School v Human Rights and Equal Opportunity Commission (No 2) (1998) 55 ALD 93 at 104. McHugh Kirby with "a prescribed law" is not unlawful. The Education Act 1972 (SA) is a prescribed law for this purpose59. It allows the Director-General of the Education Department of South Australia to direct that a disabled child be enrolled at a special school if it is in the best interests of that child. Issue 3: the characteristics of the appropriate comparator Section 5(1) of the Act states that a person discriminates against another person if, because of that person's disability, the discriminator treats the person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats a person without the disability. Section 5(2) provides that the circumstances are not materially different because the person with the disability may require different accommodation. In this case, as in most cases, s 5 requires the construction of a "notional person" whose treatment can be compared to that of Mr Hoggan. The need for such a comparator is open to the criticism that it limits the Act's capacity to deal with cases of direct discrimination. In the United Kingdom, commentators have attempted to reformulate the notion of direct discrimination so as to free it of the shackles of the comparator60. One critic has said that a model predicated on comparability is particularly unsuited to the ground of impairment because the complainant simply cannot be said to be similarly situated to an able-bodied person61. The relevant comparator in this case is a person without Mr Hoggan's disability. But, for the purpose of s 5, what are the circumstances that are the same or are not materially different? The Commissioner identified the relevant circumstances as those of a year 7 student at the High School in 1997 without Mr Hoggan's disability and without his disturbed behaviour. The Commissioner pointed out that this does not mean that the student without the disability has been, or would be, treated more favourably than Mr Hoggan. He accepted Mr Purvis' submission that Mr Hoggan was treated less favourably if "when compared to the student without a disability [Mr Hoggan] has been deprived of a choice he values." The Commissioner said that to allow the disability itself to 59 See Disability Discrimination Regulations 1996 (Cth), reg 2A. 60 Fredman, Discrimination Law, (2002) at 96. See also Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] 2 All ER 26 which indicates that the comparator issue falls away once the causation issue is decided. 61 Thornton, The Liberal Promise: Anti-Discrimination Legislation in Australia, become the basis for determining that there are no same or similar circumstances would circumvent the clear legislative intent to make unlawful discrimination against a person because of a disorder, illness or disease that results in disturbed behaviour. Emmett J held that the Commissioner erred in so far as he did not consider the treatment that would have been accorded to a student who had engaged in behaviour similar to that of Mr Hoggan. His Honour said: "The requirement that the comparison [must be] between treatment of an aggrieved person and treatment of a person without the disability in circumstances that are the same or are not materially different requires an examination of the treatment that would be accorded to a student without [Mr Hoggan's] disability on the hypothesis that such a student had behaved in the same way as [Mr Hoggan]." On appeal, the Full Court also held it was necessary to assume that the comparator had engaged in like conduct. Their Honours said: "The failure to make this comparison led to the capricious result arrived at by HREOC. Each alleged act of discrimination is to be judged in the light of the conduct of [Mr Hoggan] which had taken place up to that time. The question to be answered at each point (including expulsion) is whether the consequence would have been the same (or worse) if the conduct had been that of a pupil not affected by brain damage ... This essential comparison was not carried out by HREOC, which accordingly fell into error of law in the application of s 5 of the Act." The Full Court held that, if a person who did not engage in the same behaviour as the complainant was taken as a comparator, "a false positive reading of discrimination would result." Mr Purvis submits that the appropriate statutory comparator is that identified by the Commissioner. The State and the Attorney-General submit that the comparator is a person without Mr Hoggan's disability but with the external manifestation of the disability in the form of disturbed behaviour. The characteristics of the comparator Discrimination jurisprudence establishes that the circumstances of the person alleged to have suffered discriminatory treatment and which are related to McHugh Kirby the prohibited ground are to be excluded from the circumstances of the comparator. In Sullivan v Department of Defence62, Sir Ronald Wilson said: "It would fatally frustrate the purposes of the Act if the matters which it expressly identifies as constituting unacceptable bases for differential treatment ... could be seized upon as rendering the overall circumstances materially different, with the result that the treatment could never be discriminatory within the meaning of the Act." Similarly, in Proudfoot v Australian Capital Territory Board of Health63, Sir Ronald Wilson said that the equivalent exemption provisions of the Sex Discrimination Act: through "would be rendered superfluous by such a construction, as presumably all of the circumstances contemplated by those sections would constitute material differences, with the consequence that the actions identified did not even pass threshold requirement of constituting discrimination. In my opinion, this construction could not have been intended. I therefore conclude that a difference to be material cannot be referable to the prohibited basis for less favourable treatment, namely sex. The purpose of s 5(1) is to identify less favourable treatment of one sex than the other in essentially the same circumstances, which circumstances are external to the question of sex." the In Commonwealth v Human Rights and Equal Opportunity Commission64, Wilcox J, after referring with approval to a statement of Sir Ronald Wilson in the decision under review (which was the same as that given in Sullivan), said: "To the extent that the Commonwealth argues in this case that there is a material difference between single people and married people in that the former tend not to have 'family' whereas the latter do, the difference is the proscribed discrimination itself." In Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd65, Lockhart J (with whom Black CJ agreed on this point) approved the 62 (1992) EOC ¶92-421 at 79,005. 63 (1992) EOC ¶92-417 at 78,980. 64 (1993) 46 FCR 191 at 209. 65 (1993) 46 FCR 301 at 307, 327. See also Commonwealth v Human Rights and Equal Opportunity Commission (1997) 77 FCR 371 at 395-396. statements in Sullivan and Proudfoot. His Honour rejected the view that the matters specified as constituting unacceptable bases for differential treatment can be relied upon to support the conclusion that the circumstances are not "the same" or are "materially different". Lockhart J said66: "The words ... 'in circumstances that are the same or are not materially different' are not in my opinion directed to the differences between men and women. If differences between men and women are capable of being material ... then the effect of those words would remove from the ambit of discrimination many cases of less favourable treatment occurring by reason of sex." In The City of Perth v DL (Representing the Members of People Living with AIDS (WA) Inc)67, however, Ipp and Scott JJ expressed a contrary view. the same impairment as "[T]he alleged 'discriminator' is not required to ignore characteristics which an aggrieved person in fact has merely because they are characteristics that appertain generally to, or are generally imputed to, the aggrieved person. persons having Accordingly, the comparison to be undertaken by the section is between the treatment of the aggrieved person (who has an impairment as defined by s 4(1)) and a notional person who does not have such an impairment as defined, but who has one or more of the characteristics or the requirement set out in ss 66A(1)(b) to (d). This argument rests on the proposition that the word 'impairment' ... means an impairment in terms of s 4(1), and not any extended meaning brought about by attributing the characteristics or the requirement referred to ... to the meaning of impairment." On appeal to this Court68, Toohey J rejected the respondents' argument that, although the comparator must be free of the impairment, the comparator nevertheless "retains the characteristics imputed to or which characterise the impaired person." His Honour accepted the appellant's argument that such a construction would frustrate the purpose of the Act. After referring to Commonwealth v Human Rights and Equal Opportunity Commission and Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd, his Honour held that, in making the comparison, the characteristics of the person with the disability are to be ignored. 66 (1993) 46 FCR 301 at 327. 67 (1996) EOC ¶92-796 at 78,869 68 IW v City of Perth (1997) 191 CLR 1 at 33-34. McHugh Kirby Kirby J specifically rejected69 the views of Ipp and Scott JJ that: "the respondents did not discriminate against people with an impairment if the reason for the differential treatment was a characteristic not unique to people with such an impairment and the respondents would have treated all persons with such a characteristic uniformly. All that was forbidden by the Act was discrimination by reference to the impairment." Although Toohey J and Kirby J were in dissent as to the result in IW v City of Perth, their dissent does not affect the validity of the views stated by their Honours. In the present case, the Full Court rejected the reasoning of Toohey and Kirby JJ because the Act in question in that case contained an extended definition of discrimination70. However, the principles expounded by Toohey and Kirby JJ were applied to the present Act in Commonwealth v Humphries71 and Garity v Commonwealth Bank of Australia72. Similarly, in School Board of Nassau County v Arline73, despite the absence of an extended definition of discrimination, the United States Supreme Court said that it would be unlawful to discriminate against a person on the basis of contagiousness where it was a characteristic of the person's impairment. Moreover, the presence of the exemption in s 48 of the Act in respect of infectious diseases indicates that, absent the exemption, discrimination on the basis of this characteristic would be unlawful. In this case, as a result of the brain injury he suffered, Mr Hoggan is unable to control his behaviour as well as a "normal" person of his age. The Commissioner accepted the evidence of Mr Lord that the nature of Mr Hoggan's disability means that he has no sense of the cause of his behaviour such that it 69 IW v City of Perth (1997) 191 CLR 1 at 66-67. 70 See also Dubler, "Direct Discrimination and a Defence of Reasonable Justification", (2003) 77 Australian Law Journal 514 at 515-516. 71 (1998) 86 FCR 324 at 333. 72 [1999] HREOCA 2 at [6.5]. 73 480 US 273 at 282 (1987); cf Chief Constable of the West Yorkshire Police v Khan [2001] 1 WLR 1947; [2001] 4 All ER 834 and Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] 2 All ER 26 at 61 [108]. can be described as planned or motivated by an evil intent. This makes Mr Hoggan's circumstances materially different from those of a person who is able to control his or her behaviour, but who is unwilling to do so for whatever reason. In Mr Hoggan's circumstances, the behaviour is a manifestation of his disability – for the "normal" person it is an act of free will. The learned judges of the Federal Court erred in holding that the proper comparator was one who exhibited the behaviour that Mr Hoggan did. Indeed, as will later appear, the proper comparator was a student who did not misbehave. The comparator adopted by the Federal Court would be appropriate if the case was one concerned with discrimination on the ground of sex or race. In such a case, the behaviour of the person alleged to have been discriminated against is not related to the prohibited ground. Thus, it would be appropriate to compare the treatment of a man who behaves badly with that of a woman who behaves badly to determine whether the man or woman, as the case may be, had received less favourable treatment on the ground of sex. Provisions that extend the definition of discrimination to cover the characteristics of a person have the purpose of ensuring that anti-discrimination legislation is not evaded by using such characteristics as "proxies" for discriminating on the basic grounds covered by the legislation74. But the purpose of a disability discrimination Act would be defeated if the comparator issue was determined in a way that enabled the characteristics of the disabled person to be attributed to the comparator. If the functional limitations and consequences of being blind or an amputee were to be attributed to the comparator as part of the relevant circumstances, for example, persons suffering from those disabilities would lose the protection of the Act in many situations. They would certainly lose it in any case where a characteristic of the disability, rather than the underlying condition, was the ground of unequal treatment. And loss of the Act's protection would not be limited to such dramatic cases as the blind and amputees. Suppose a person suffering from dyslexia is refused employment on the ground of difficulties with spelling but the difficulties could be largely overcome by using a computer with a spell checker. The proper comparator is not a person without the disability who cannot spell. Section 5(2) of the Act requires the comparison to be between a comparator without the disability who can spell and the dyslexic person who can spell with the aid of a computer that has a spell checker. When that comparison is made the employer will be shown to have breached the Act unless it can make out a case of unjustifiable hardship as defined by s 11 of the Act. 74 Human Rights and Equal Opportunity Commission, Draft Position Paper, Disability and Human Rights: Needs and Options for Further Protection, July 1991 at 96 [10.2.8]. McHugh Kirby In so far as the arguments of the State and the Attorney-General and the reasons of the Federal Court judges suggest that the behavioural characteristics of Mr Hoggan must be attributed to the comparator, they are erroneous and must be rejected. The Commissioner also said that, if the school had accommodated Mr Hoggan's disabilities and the same events had occurred, "their actions would have been reasonably proportionate in the circumstances, and discrimination would not have taken place." This proposition is based on the statement by Commissioner McEvoy in Cowell v A School75 that: "[T]he substantial effect of section 5(2) is to impose a duty on a respondent to make a reasonably proportionate response to the disability of the person with which it is dealing in the provision of appropriate accommodation or other support as may be required as a consequence of the disability, so that in truth the person with the disability is not subjected to less favourable treatment than would a person without a disability in similar circumstances." With respect, nothing in s 5(2) supports this proposition. The issue under that sub-section is not one of reasonable proportionality or reasonableness. It is whether the person with the disability requires "different accommodation or services". If so, the question of whether a failure to provide such accommodation or services has resulted in a breach of s 5 depends on whether the "discriminator" has made out a case of "unjustifiable hardship". The effect of s 5(2) is not to reasonably excuse discriminatory proportionate accommodation has been provided. The different accommodation or services required only make the circumstances "not materially different" if they overcome the effects of the disability with the result that the treatment is no longer "on the ground of a disability of the aggrieved person". reasonable or treatment so long as The proper comparison Once it is recognised that the appropriate comparator is not a student with behavioural problems, the case becomes a simple one. In his complaint to HREOC, Mr Purvis complained that the High School discriminated against Mr Hoggan "on the ground of a disability" by treating him less favourably than another student in circumstances that were "the same or ... not materially different". That less favourable treatment consisted of the school denying him 75 Unreported, Human Rights and Equal Opportunity Commission, 10 October 2000 benefits available to other students and subjecting him to detriments not suffered by other students. That the High School denied Mr Hoggan those benefits and subjected him to those detriments is not open to doubt. The educational authority denied, and continues to deny, him access to the benefits of an education at the High School, suspended him from the school on several occasions and ultimately expelled him (or excluded him, if you like) from the school and its facilities. The question then, is whether the educational authority would have denied those benefits to another student or subjected that student to those detriments in the same or similar circumstances. That is necessarily a hypothetical question, but its answer seems plain. The educational authority would not have denied those benefits to, or imposed those detriments on, another student because the educational authority would not have denied the benefits to, or imposed the detriments on, a student who behaved. If the educational authority had made accommodation the Commissioner, it is probable that he also would not have misbehaved – at all events to the same extent. On that hypothesis, the circumstances of the notional student and Mr Hoggan would not have been materially different. for Mr Hoggan's disabilities, on findings of the To obtain access to the benefits of an education at the High School and to overcome his behavioural problems, Mr Hoggan required accommodation. His disabilities required the educational authority to adjust the DWD Policy to suit his needs, to provide teachers with the skills to deal with his special problems and to obtain the assistance of experts to formulate proposals for overcoming those problems. On the findings of the Commissioner, if that accommodation had been made, it is likely that the educational authority would not have denied the benefits to Mr Hoggan or subjected him to the detriments that it did because it is likely that he would have behaved. Once these factual findings were made, the operation of s 5(2) became decisive. It declares that circumstances "are not materially different because of the fact that different accommodation or services may be required by the person with a disability." Section 5(2) recognises, if it does not imply, that the comparison of "material circumstances" may require the injection into the equation of all those matters and things that the disabled person requires to compete on equal terms with the able-bodied comparator. So in this case, s 5(2) required the issue of less favourable treatment to be determined by reference to Mr Hoggan's circumstances upon being given the required accommodation or services. On the Commissioner's findings it is probable that he would not have misbehaved. So, contrary to the approach of the judges in the Federal Court, the correct comparator was a student who did not misbehave, not a student who misbehaved. When that comparison is made, it is plain that the student comparator would not have been treated as unfavourably in respect of benefits and detriments as Mr Hoggan was actually treated. McHugh Kirby The Commissioner correctly held that the State through its agents had treated Mr Hoggan less favourably, in circumstances that were the same or not materially different, than the State treats or would treat a student without his disability. However, he erred in respect of some of his findings, and those errors affect the proper orders to be made in disposing of the appeal. Issue 4: discrimination "on the ground of" disability The State filed a notice of contention in this Court arguing that the decision of the Full Court should be affirmed on the following grounds: That the State did not, within the meaning of s 5(1) of the Act, treat Mr Hoggan "because of [his] disability" less favourably than it would have treated a person without such a disability. That the State did not, within the meaning of s 5(1) of the Act, discriminate against Mr Hoggan "on the ground of" his disability. Section 22(2) of the Act states that it is unlawful for an educational authority to discriminate against a student "on the ground of" the student's disability. Section 5(1) states that a person discriminates against another person on the ground of that person's disability if, "because of" the person's disability, the discriminator treats him or her less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person without the disability. The parties accept that Mr Hoggan was treated "less favourably" by being suspended and ultimately excluded from the school. It is sufficient in this case that Mr Hoggan has been denied a valuable choice, that is, to be enrolled in a mainstream school76. The Commissioner said that a connection or causal nexus must exist between the treatment suffered by the aggrieved person and the disability of that person. The Commissioner said that the accepted test was, what he incorrectly described as, the "but for test" as stated by Kirby J in IW v City of Perth77 as follows: 76 R v Birmingham City Council; Ex parte Equal Opportunities Commission [1989] AC 1155 at 1193; Commonwealth v Human Rights and Equal Opportunity Commission (1993) 46 FCR 191 at 210. 77 (1997) 191 CLR 1 at 63. "The object of the Act is to exclude the unlawful and discriminatory reasons from the relevant conduct. This is because such reasons can infect that conduct with prejudice and irrelevant or irrational considerations which the Act is designed to prevent. Because persons, faced with allegations of discrimination, genuinely or otherwise, assert multiple and complex reasons – and because affirmative proof of an unlawful reason is often difficult – the Act has simplified the task for the decision-maker. It is enough that it be shown that the doing of the act was 'by reason' or 'on the ground' of the particular matter in the sense that the unlawful consideration was included in the alleged discriminator's reason or grounds. It must be a real 'reason' or 'ground'. It is not enough to show that it was a trivial or insubstantial one. But once it is shown that the unlawful consideration truly played a causative part in the decision of the alleged discriminator, that is sufficient to attract a remedy under the Act." The Commissioner said that, because Mr Hoggan's behaviour is so closely connected to his disability, less favourable treatment on the ground of that behaviour constituted discrimination on the ground of the disability. Further, the Commissioner said that, while he was sure that the principal made his decisions for what he saw as Mr Hoggan's best interests, nonetheless they were in breach of the Act. In the Federal Court, Emmett J said that less favourable treatment on the ground of Mr Hoggan's behaviour is not necessarily less favourable treatment by reason of his disability. His Honour said that, while the position might be different where the disability necessarily resulted in the relevant behaviour, that was not the present case. On appeal the Full Court rejected the argument that to give less favourable treatment to a person suffering a mental disorder because of the behaviour resulting from that disorder discriminates against that person because of the mental disorder. The Full Court said: "The consequence of the argument for the appellant ... is that, once enrolled, any treatment of the student by the school authorities as a result of conduct caused by his disorder which restricted or disadvantaged him compared with the ordinary student would be discrimination in breach of the Act, no matter how necessary to preserve the discipline of the school and safety of staff and students. On this argument, any exclusion from ordinary classes, or special physical or other restraints imposed as the price of attendance at ordinary classes, would be a breach of s 22(2)(a) or (c), as the antisocial behaviour caused by the brain damage would be the cause of the special and detrimental treatment." McHugh Kirby Mr Purvis submits that the question of causation is not determined by a rigid or strict application of either the "but for" test or the "but why" test. He submits that such an approach may mask the proper factual inquiry to be undertaken. He contends that in this case the principal by adopting the protected condition as a criterion of action, even for the best of motives, seized upon something that Parliament has said may not be used as a criterion for adverse treatment. HREOC submits that it defies commonsense to say that less favourable treatment on the ground of disturbed behaviour, which flows from a known disability, is not less favourable treatment on the ground of disability because it is the behaviour, rather than the disability, that triggers the response. The State submits that the Commissioner erred in law in applying the "but for" test referred to by Kirby J in IW v City of Perth. It submits that the tribunal of fact must determine the "true reason" or "true basis" for the less favourable treatment. In this case, so the State submits, the true reasons for the principal's decisions were the safety and welfare of the other students and staff at the school and Mr Hoggan himself. The State also submits that the statement that the intention or motive of the alleged discriminator is not relevant is not consistent with the principles expounded in the cases. The Attorney-General, on the other hand, submits that a "but why" test is the appropriate test. Even if an alleged discriminator's intentions are benign, the criteria employed for a decision may be inherently discriminatory and thereby reveal that an unlawful consideration formed the true basis of the decision. The words "because of" in s 5(1) of the Act indicate that it is the reason why the discriminator acted that is relevant. This interpretation is also consistent with s 10 of the Act, which refers to an act done for two or more "reasons". In dealing with s 10 the Explanatory Memorandum to the Disability Discrimination Bill also stated that "[i]n relation to direct discrimination the reason that someone has done a particular discriminatory act is very important." However, the cases the alleged show differences of opinion concerning discriminator's motive or intention. the relevance of A "but for" test was applied by Lord Goff of Chieveley in R v Birmingham City Council; Ex parte Equal Opportunities Commission78 where his Lordship said: "There is discrimination under the statute if there is less favourable treatment on the ground of sex, in other words if the relevant girl or girls would have received the same treatment as the boys but for their sex. The intention or motive of the defendant to discriminate ... is not a necessary 78 [1989] AC 1155 at 1194. condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex. [Otherwise] it would be a good defence for an employer to show that he discriminated against women not because he intended to do so but ... because of customer preference, or to save money, or even to avoid controversy." By placing the words "intention" and "motive" together and denying that either is necessary for a finding of direct discrimination, his Lordship opened the way for the submission that direct discrimination does not contain an intention element. However, intention and motive are not the same thing79. In James v Eastleigh Borough Council80, Sir Nicolas Browne-Wilkinson VC rejected the "but for" test. His Lordship said81: "[O]ne is looking, not to the causative link between the defendant's behaviour and the detriment to the plaintiff, but to the reason why the defendant treated the plaintiff less favourably. The relevant question is 'did the defendant act on the ground of sex?' not 'did the less favourable treatment result from the defendant's actions?'" His Lordship said "the legally determinant matter is the true reason for the defendant's behaviour, not his intention or motive in so behaving."82 But on appeal the House of Lords reversed the decision. Lord Goff, together with Lord Bridge of Harwich and Lord Ackner, reaffirmed the objective "but for" test as the relevant test83. However, the dissentients, Lord Griffiths and Lord Lowry, criticised the "causative" approach as dispensing with essential statutory criteria84. Lord Lowry said85: 79 Gelowitz, "The Mental State for Direct Discrimination", (1989) 18 Industrial Law Journal 247 at 249. 81 [1990] 1 QB 61 at 74. 82 [1990] 1 QB 61 at 75. 83 James v Eastleigh Borough Council [1990] 2 AC 751 at 765 per Lord Bridge, 770 per Lord Ackner, 774 per Lord Goff. 84 [1990] 2 AC 751 at 768 per Lord Griffiths, 779-780 per Lord Lowry. 85 [1990] 2 AC 751 at 779-780. McHugh Kirby "It can thus be seen that the causative construction not only gets rid of unessential and often irrelevant mental ingredients, such as malice, prejudice, desire and motive, but also dispenses with an essential ingredient, namely, the ground on which the discriminator acts. The appellant's construction relieves the complainant of the need to prove anything except that A has done an act which results in less favourable treatment for B by reason of B's sex, which reduces to insignificance the words 'on the ground of.' Thus the causative test is too wide and is grammatically unsound, because it necessarily disregards the fact that the less favourable treatment is meted out to the victim on the ground of the victim's sex." (original emphasis) Since James, however, the United Kingdom courts have moved away from the "but for" test. In Nagarajan v London Regional Transport86, Lord Nicholls of Birkenhead held that it is necessary to consider the reason of the alleged discriminator but that his or her motive is irrelevant. His Lordship said: "[I]n every case it is necessary to inquire why the complainant received less favourable treatment. This is the crucial question. Was it on grounds of race? Or was it for some other reason, for instance, because the complainant was not so well qualified for the job? Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator ... The crucial question just mentioned is to be distinguished sharply from a second and different question: if the discriminator treated the complainant less favourably on racial grounds, why did he do so? The latter question is strictly beside the point when deciding whether an act of racial discrimination occurred ... Racial discrimination is not negatived by the discriminator's motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. In particular, if the reason why the alleged discriminator rejected the complainant's job application was racial, it matters not that his intention may have been benign." In Chief Constable of the West Yorkshire Police v Khan87 Lord Nicholls again rejected the "but for" test. He said: 86 [2000] 1 AC 501 at 510-511. See also at 521-522 per Lord Steyn, 523 per Lord Hutton, 524 per Lord Hobhouse of Woodborough. 87 [2001] 1 WLR 1947 at 1954 [29]; see also at 1958 [43]-[46] per Lord Mackay of Clashfern, 1960-1961 [54]-[60] per Lord Hoffmann, 1964 [77]-[78] per Lord Scott of Foscote; [2001] 4 All ER 834 at 841, 845, 847-848, 850-851. "For the reasons I sought to explain in Nagarajan v London Regional Transport ... a causation exercise of this type is not required ... The phrases 'on racial grounds' and 'by reason that' denote a different exercise: why did the alleged discriminator act as he did? What, consciously or unconsciously, was his reason? Unlike causation, this is a subjective test. Causation is a legal conclusion. The reason why a person acted as he did is a question of fact." The House of Lords recently affirmed these principles in Shamoon v Chief Constable of the Royal Ulster Constabulary88. Lord Hope of Craighead said that in most cases "the reason why" will call for some consideration of the mental processes of the alleged discriminator. These more recent English authorities are consistent with the approach taken by the Australian courts. In Australian Iron & Steel Pty Ltd v Banovic89, Deane and Gaudron JJ said that it is necessary to determine the "true basis" for the act or decision. This indicates that it is the reason for the decision that must be considered. Their Honours referred with approval to Lord Goff's statement in Birmingham regarding motive and intent to discriminate. They accepted that genuinely assigned reasons may in fact mask the true basis for the decision. Dawson J also said90 that the test is not subjective – the mere assertion of a ground that is not sex will not prevent the act from being discriminatory if the "true basis" for the act in question is in fact sex. In Waters v Public Transport Corporation91, Mason CJ and Gaudron J (Deane J agreeing) approved the view of Deane and Gaudron JJ in Banovic that motive or intention to discriminate is not required. Their Honours said that it is enough if the difference in treatment is based on the prohibited ground, notwithstanding an absence of motive or intention. In Waters, McHugh J rejected92 the statement of Lord Goff in Birmingham and the statements of Deane and Gaudron JJ in Banovic concerning motive or intention, in so far as they might suggest that it is not a necessary condition of 88 [2003] 2 All ER 26 at 45 [55]. 89 (1989) 168 CLR 165 at 176. 90 (1989) 168 CLR 165 at 184. 91 (1991) 173 CLR 349 at 359. 92 (1991) 173 CLR 349 at 401. McHugh Kirby liability that the conduct of the alleged discriminator was actuated by the prohibited ground. His Honour said: "The words 'on the ground of' and 'by reason of' require a causal connexion between the act of the discriminator which treats a person less favourably and the status or private life of the person the subject of that act ('the victim'). The status or private life of the victim must be at least one of the factors which moved the discriminator to act as he or she did." However, McHugh J's misgivings were more the result of the ambiguous use of the words "intention" and "motive" in Birmingham and Banovic than any real difference of approach with that of Deane and Gaudron JJ. The reasoning in discrimination cases in this Court is consistent with the view that, while it is necessary to consider the reason why the discriminator acted as he or she did, it is not necessary for the discriminator to have acted with a discriminatory motive. Motive is ordinarily the reason for achieving an object. But one can have a reason for doing something without necessarily having any particular object in mind. Subsequent decisions have applied this approach to the question of causation. In Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd93 Lockhart J said: "The plain words of the legislation ... necessarily render relevant the defendant's reason for doing an act, that is the reason why the defendant treated the complainant less favourably." His Honour also said94 that the presence of intention, motive or purpose relating to health does not necessarily detract from the conclusion that there is discrimination on the prohibited ground – in that case, sex. In University of Ballarat v Bridges95, having considered the decisions in Banovic and Waters, as well as dictionary definitions, Ormiston J concluded that both "ground" and "reason" connote a basis that actuates or moves a person to decide a matter or to act in a particular way. His Honour said96: 93 (1993) 46 FCR 301 at 322. 94 (1993) 46 FCR 301 at 327, Black CJ agreeing at 307. 95 [1995] 2 VR 418 at 438. 96 [1995] 2 VR 418 at 428. "[N]otwithstanding that it has been said on many occasions that the Act should be given a broad interpretation, the object of the legislature was to look at the reasoning process behind the decision, conscious and unconscious, at least so far as direct discrimination is concerned." His Honour said that motive and purpose should be treated as largely irrelevant so long as it can be shown that the person charged intended to do an act that in fact amounts to unlawful discrimination97. It is true that statements of Toohey J and Gummow J in IW v City of Perth98 might appear to support a "but for" test in discrimination cases. Kirby J, after referring to the "reasons for the conduct of the alleged discriminator"99, said that the "but for" test applied by the House of Lords in James and by this Court in Banovic and Waters was "the correct test"100. In IW v City of Perth, however, the references to the "but for" test were expressed in relation to a decision of a corporate body that was made by its Councillors casting votes. the mental state of the alleged discriminator101. The weight and course of authority no longer accepts that the "but for" test is the accepted test of causation in the context of anti-discrimination legislation. That is because that test focuses on the consequences for the complainant and not upon the Commissioner said that he was applying the "but for" test, the extract referred to from the reasons of Kirby J in IW v City of Perth is not expressed as a "but for" test. Correctly, it focuses on the "real reason" for the alleged discriminator's act. The Commissioner appears to have wrongly characterised the principle that he applied – which was the correct principle. He correctly held that the benevolent motive of the principal did not excuse the discriminatory treatment of Although The Commissioner also correctly found that, because Mr Hoggan was treated less favourably because of his behaviour, he was discriminated against on the ground of his disability. Mr Hoggan's behaviour is a manifestation of his 97 [1995] 2 VR 418 at 433. 98 (1997) 191 CLR 1 at 32, 47. 99 (1997) 191 CLR 1 at 63. 100 (1997) 191 CLR 1 at 64. 101 Gelowitz, "The Mental State for Direct Discrimination", (1989) 18 Industrial Law Journal 247 at 250. McHugh Kirby disability. In X v McHugh (Auditor-General for the State of Tasmania)102, Sir Ronald Wilson said that it is enough if an employer is shown to have discriminated because of a manifestation of a disability. The decision in X v McHugh was followed in Y v Australia Post103 where the Commission said: "[T]o discriminate against a person suffering a mental disorder because of the behaviour of that person which directly results from that mental disorder, is to discriminate against that person because of the mental disorder." The validity of this principle can be seen by considering situations where the disability manifests itself in ways that society perhaps finds more acceptable than in cases where the disability manifests itself in dangerous conduct. In Randell v Consolidated Bearing Co (SA) Pty Ltd104, for example, an employer was held to have discriminated against an employee on the ground of his disability by dismissing him because of his difficulties with the stock numbering system used These difficulties were a manifestation of the employee's dyslexia. the employer's warehouse. The Commissioner also found that the reason for Mr Hoggan's exclusion from the school, unlike the reason for his suspensions, included issues other than his behaviour. The Commissioner found that, although Mr Hoggan's behaviour was a factor in his exclusion, it was not the only factor. He found that the principal had also acted because Mr Hoggan was unable to cope with the stresses of high school life as a result of his disability. Section 10 of the Act states that, if an act is done for two or more reasons and one of the reasons is the disability of a person (whether or not it is the dominant or a substantial reason for doing the act), the act is taken to be done for that reason. Because the Commissioner found that the decision to exclude Mr Hoggan was made on this basis, the Commissioner's decision can be supported without having to consider issues relating to behaviour. In our view, when the Act is applied according to its true construction, the Commissioner was correct in finding that the State through its agents had discriminated against Mr Hoggan. However, his decision cannot be supported in so far as he found that the failure to provide accommodation constituted breaches of the Act that required awards of damages. 102 (1994) 56 IR 248 at 257. See also McNeill v Commonwealth of Australia (1995) EOC ¶92-714 at 78,367. 103 (1997) EOC ¶92-865 at 77,068. See also W v P Pty Ltd [1997] HREOCA 24. Although the Commissioner correctly found the State had discriminated against Mr Hoggan on the ground of his disability, it is impossible to restore the award of damages made in favour of Mr Purvis105. The award of $49,000 was the product of three breaches of the Act found by the Commissioner to have occurred. As we have indicated, the Commissioner erred in finding two of these breaches. that It is well established that, when an appellate court finds that a general award of damages was made on two or more grounds and one of those grounds is legally insupportable, the award must be set aside. In Cutts v Buckley106, where the evidence did not support each count of a general verdict, this Court held that the general verdict could not stand. The Court ordered a new trial on the count supported by evidence and entered judgment for the defendant on the other count. Dixon J107 said: "A verdict with entire damages upon several counts, which cannot be sustained upon one, cannot be sustained upon any count, because the entire sum is applicable to all the counts". In the same case, however, Evatt J108 pointed out: "There will, upon occasion, arise exceptional cases where the rule need not be applied. For instance, it may appear that the damages awarded by a general verdict for a plaintiff must be the same under each count, or can be reasonably attributed to one count only. In such cases the insufficiency or absence of evidence in support of one or more counts may not prevent the Full Court from exercising its wide powers by setting aside the general verdict, entering a verdict for the plaintiff for the same damages upon the count or counts which are supported by evidence, and for the defendant upon the count or counts which are not." 105 Although Mr Purvis was the complainant, the complaint was brought on behalf of Mr Hoggan and, in so far as damages were awarded, they should have been awarded to Mr Purvis to hold in trust for Mr Hoggan. 106 (1933) 49 CLR 189. See also O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 255, Williams v Moore [1963] SR (NSW) 765, Morgan v John Fairfax & Sons Ltd [No 2] (1991) 23 NSWLR 374 at 378-379 and TCN Channel 9 Pty Ltd v Antoniadis (1998) 44 NSWLR 682. 107 (1933) 49 CLR 189 at 198-199. 108 (1933) 49 CLR 189 at 200. McHugh Kirby However, this is not a case of an entire sum being awarded for the totality of breaches. The Commissioner's reasons show that he awarded individual amounts for each act of discrimination. The amounts wrongly awarded for breaches total $6,000. Accordingly, the justice of the case can be met by reducing the damages awarded by the Commissioner by $6,000, which was awarded for the failures to accommodate. Ordinarily, the proper order would be to allow the appeal to this Court and direct the Full Court to allow the appeal from Emmett J but remit the matter to HREOC to deal with the matter according to law. That would be a formality because the only step required by HREOC would be to reduce the damages by $6,000. The matter is complicated, however, by the enactment of the Human Rights Legislation Amendment Act (No 1) and the Human Rights Legislation (Transitional) Regulations made under that Act. Their effect was to deem the original complaint to have been terminated. In accordance with the Regulations, the complaint became subject to a new regime upon the Federal Court remitting the complaint to HREOC. It appears that it is now before the Federal Magistrates Court. However, the effect of the orders that we propose is that a new set of orders under the Administrative Decisions (Judicial Review) Act will be made by the Federal Court. In accordance with s 6 of the Human Rights Legislation Amendment Act (No 1), the complaint would be deemed to be lodged under s 46P of the "new" Human Rights and Equal Opportunity Commission Act 1986 (Cth) as amended by the Schedule in the Human Rights Legislation Amendment Act (No 1) and would have to be dealt with afresh by HREOC in accordance with that legislation. However, when HREOC sent the matter to the Federal Magistrates Court, as it would undoubtedly do, there would be no reason why that Court would not simply affirm the findings of the Commissioner not affected by legal error. In that event, the damages awarded would have to be reduced to Order The appeal should be allowed. The orders of the Full Court of the Federal Court of Australia should be set aside. In their place should be substituted an order that the appeal to that Court from the decision of Emmett J be allowed and that the complaint be remitted to HREOC. The State should pay the costs of Mr Purvis in this Court and in the Federal Court. 177 GUMMOW, HAYNE AND HEYDON JJ. In 1998, the appellant, Mr Purvis, complained the Human Rights and Equal Opportunity Commission ("the Commission") that, contrary to the Disability Discrimination Act 1992 (Cth) ("the Act"), his foster son, Daniel Hoggan, had been discriminated against by the State of New South Wales. Mr Purvis alleged that Daniel had been suspended, and later excluded, from South Grafton High School, a State high school, and had been subjected to various detriments in his education, in each case on the ground of his disability. Section 14 of the Act states that the statute binds the Crown in the right of each of the States, but does not render the States liable to prosecution for an offence. Pursuant to s 71 of the Act, in the form in which it stood at the time, before the amendments109 made in consequence of this Court's decision in Brandy v Human Rights and Equal Opportunity Commission110, the Commission endeavoured, by conciliation, to effect a settlement of the complaint but no settlement was reached. Accordingly, a Commissioner, Mr Graeme Innes ("the Commissioner"), was appointed to inquire into111, and determine112, the complaint. On 13 November 2000, the Commissioner determined the complaint and published reasons for his decision. He found that the State had discriminated against Daniel on the grounds of his disability and declared that, pursuant to s 103(1)(b)(iv) of the Act, the State should pay "the complainant" $49,000 as "compensation". (Presumably reference to "the complainant" was intended as a reference to Mr Purvis, but if that were so, it may be thought that there should have been express provision for Mr Purvis to hold the sum awarded for the benefit of Daniel. In this, and in several other respects, the declarations made by the Commissioner might be open to criticism but since nothing turns on those aspects of the matter, they may be put aside.) Pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth), the State sought, in the Federal Court of Australia, an order of review of the decision. The primary judge, Emmett J, held that the decision should be set aside and made other consequential orders113. The Full Court of the Federal 109 Human Rights Legislation Amendment Act (No 1) 1999 (Cth). 110 (1995) 183 CLR 245. 111 Disability Discrimination Act 1992 (Cth), s 79. 113 New South Wales (Department of Education) v Human Rights and Equal Opportunity Commission (2001) 186 ALR 69. Court (Spender, Gyles and Conti JJ) dismissed Mr Purvis' appeal from these orders114. By special leave, Mr Purvis now appeals to this Court. The ultimate question in issue in the litigation between the parties, and thus in the appeal to this Court, was whether the Commissioner had made an error of law in concluding, as he did, that the State had discriminated against Daniel on the ground of his disability (i) by denying or limiting Daniel's access to benefits provided by the State as an educational authority (s 22(2)(a)); (ii) by expelling him (s 22(2)(b)); and (iii) by subjecting him to other detriments (s 22(2)(c)). The particular questions which arose in the appeal to this Court included the following. Did the Commissioner make an error of law in identifying Daniel's disability? Did the Commissioner make an error of law in identifying what must be shown to demonstrate discrimination on the ground of that disability? Did the State treat Daniel "less favourably than, in circumstances that are the same or are not materially different, [the State] treats or would treat a person without the disability" (s 5(1))? Each of these particular questions can be answered only by giving consideration to the relevant provisions of the Act, understood, as they must be, in the context of the Act as a whole. Before turning to that task, however, it is necessary to say something more about the facts found by the Commissioner, and about how the particular questions arose. The facts Daniel was born on 8 December 1984. At about six or seven months of age he suffered severe encephalopathic illness. As a result, he suffered brain damage. He has intellectual disabilities and a visual disability, and he suffers from epilepsy. His intellectual disabilities affect his thought processes, his perception of reality and his emotions, and as a result he learns differently from a person without the disabilities. His disabilities are manifested by unusual individual mannerisms and by behaviour such as rocking, humming and swearing. A neurologist called to give evidence in the inquiry, and whose evidence the Commissioner accepted, said that "[t]he major part of his difficult behaviour would be disinhibited and uninhibited behaviour". At times, so the Commissioner found, Daniel's disability manifested in aggressive behaviour such as hitting or kicking. The Commissioner found that this behaviour was not planned or motivated by an ill intent. itself 114 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237. In 1996, Mr and Mrs Purvis sought to have Daniel enrolled as a pupil at South Grafton High School for the 1997 school year. At first, the application was refused, but in late February 1997 the Principal of the school told his staff that he would accept Daniel's application for enrolment. Daniel began school on 8 April 1997. Between 24 April 1997 and 18 September 1997 he was suspended five times. Each suspension was for an act of violence. The first suspension was recorded as being for "violence against staff", the second for kicking a fellow student and swearing, the third for kicking his teacher's aide, the fourth for kicking a fellow student, and the fifth for punching a teacher's aide. Daniel did not return to the school after his suspension on 18 September 1997. On 3 December 1997, after meeting Mr and Mrs Purvis and Daniel, the Principal of the school wrote to Daniel's legal guardian, the Department of Community Services, telling the Department that Daniel would be excluded from the school. The Principal said in his letter that: "Following the three meetings that have been held in relation to ... Daniel ... the situation that caused his last suspension for very violent behaviour has not been resolved ... As well as Daniel's education, I am also responsible for over 1000 other students and 80 teaching or SASS staff. The health and safety of all these people are also of great concern ..." The Disability Discrimination Act The Act was evidently drafted using the Sex Discrimination Act 1984 (Cth) ("the Sex Discrimination Act") as its model. The Act makes separate and distinct provision for indirect disability discrimination (dealt with in s 6 of the Act) from the provision made for disability discrimination (s 5). The Act defines "disability" (in s 4) and, in Pt 2 of the Act (ss 15-58), deals with the subject of "prohibition of disability discrimination". Division 1 of Pt 2 (ss 15-21) deals with discrimination in work; Div 2 (ss 22-34) deals with discrimination in other areas; and Div 3 (ss 35-40) deals with discrimination involving harassment. In its provisions dealing with the prohibition of disability discrimination the Act employs the formula that "it is unlawful for a person to discriminate against another person on the ground of the other person's disability" (or a disability of any of that other person's associates) by, or in the course of engaging in, certain identified kinds of conduct. Content is given to the clause "to discriminate against a person on the ground of another person's disability" by the provisions of ss 5 and 6 of the Act. Sections 5 and 6 provide: "Disability discrimination For a person the purposes of ('discriminator') discriminates against another person ('aggrieved person') on the ground of a disability of the aggrieved person if, because of the aggrieved person's disability, the discriminator treats or proposes to treat the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person without the disability. this Act, For the purposes of subsection (1), circumstances in which a person treats or would treat another person with a disability are not materially different because of the fact that different accommodation or services may be required by the person with a disability. Indirect disability discrimination For the purposes of this Act, a person ('discriminator') discriminates against another person ('aggrieved person') on the ground of a disability of the aggrieved person if the discriminator requires the aggrieved person to comply with a requirement or condition: (a) with which a substantially higher proportion of persons without the disability comply or are able to comply; and (b) which is not reasonable having regard to the circumstances of the case; and (c) with which the aggrieved person does not or is not able to comply." In the present case, it is the provisions of the Act prohibiting disability discrimination in education which are of immediate relevance. Section 22 of the Act provides: It is unlawful for an educational authority to discriminate against a person on the ground of the person's disability or a disability of any of the other person's associates: by refusing or failing to accept the person's application for admission as a student; or in the terms or conditions on which it is prepared to admit the person as a student. It is unlawful for an educational authority to discriminate against a student on the ground of the student's disability or a disability of any of the student's associates: by denying the student access, or limiting the student's access, to any benefit provided by the educational authority; by expelling the student; or by subjecting the student to any other detriment. This section does not render it unlawful to discriminate against a person on the ground of the person's disability in respect of admission to an educational institution established wholly or primarily for students who have a particular disability where the person does not have that particular disability. This section does not render it unlawful to refuse or fail to accept a person's application for admission as a student at an educational institution where the person, if admitted as a student by the educational authority, would require services or facilities that are not required by students who do not have a disability and the provision of which would impose unjustifiable hardship on the educational authority." As noted earlier, it was alleged in this case that s 22(2) had been contravened in each of the three respects identified in pars (a), (b) and (c) of that sub-section. Because the complaints concerned conduct and events that had occurred after Daniel's admission to South Grafton High School it was common ground between the parties that neither s 22(1) nor s 22(4) was engaged. In particular, it was common ground that the questions about unjustifiable hardship for an educational authority, which might arise under s 22(4) in connection with a refusal to admit someone as a student at an institution, did not arise. It was alleged that Daniel had been discriminated against on the ground of his disability because the State had acted contrary to s 22(2) as the operation of that provision was amplified by the direct discrimination provisions of s 5 of the Act, not the indirect discrimination provisions of s 6. No case of indirect disability discrimination was sought to be made at any stage of the proceedings before the Commissioner. Indeed, the Commissioner recorded that the appellant had submitted "the indirect discrimination model [was] inapplicable". The appellant's central contention has always been that the State, as educational authority, discriminated against Daniel on the ground of his disability because (to adopt and adapt the words of s 5(1)): (i) the State had treated him less favourably than, in circumstances that were the same or were not materially different, the State had treated or would have treated a person without the disability, and (ii) the State did this "because of" Daniel's disability. In order to apply the provisions mentioned, it is, of course, necessary to take account of the definition of "disability". That definition provides: total or partial loss of the person's bodily or mental functions; or total or partial loss of a part of the body; or the presence in the body of organisms causing disease or illness; or the presence in the body of organisms capable of causing disease or illness; or the malfunction, malformation or disfigurement of a part of the person's body; or a disorder or malfunction that results in the person learning differently the disorder or malfunction; or from a person without a disorder, illness or disease that affects a person's thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour; and includes a disability that: presently exists; or previously existed but no longer exists; or may exist in the future; or is imputed to a person". The issues in this Court Three issues were argued in the appeal to this Court. First, there was an issue about how the definition of disability applied. The trial judge115 and the 115 (2001) 186 ALR 69 at 77 [36]-[38], 79 [45]. Full Court116 held that the Commissioner had misdirected himself by failing to distinguish between the disability which Daniel suffered from and the conduct or behaviour that resulted from, or was caused by, that disability. In the terms used in par (g) of the definition of "disability", was Daniel's disability to be identified as the disorder from which he suffered, as the disturbed behaviour that resulted, or as some combination of both elements? Was it to be identified as the "partial loss of [his] ... mental functions" (par (a)), or as "the malfunction ... of a part of [his] body" (his brain) (par (e))? Secondly, the Commissioner concluded that Daniel's behaviour occurred as a result of his disability and that "in this case, Daniel's behaviour is so closely connected to his disability that if ... less favourable treatment has occurred on the ground of Daniel's behaviour then this will amount to discrimination on the ground of his disability". The trial judge117 and the Full Court118 held that the Commissioner erred by failing to compare the treatment accorded to Daniel with the treatment that would have been accorded by the State to a student who was not disabled but who had acted as Daniel had acted. Thirdly, what is meant by saying that there was less favourable treatment "because of" a disability? What is the relationship that must be shown to have existed between the disability and the conduct about which complaint is made? Argument in this Court was directed principally to the validity of the conclusions reached, both at trial and on appeal in the Full Court, about these three issues – the "disability" question, the "comparator" question, and the "causation" question. As has been noted above, each is fundamentally a question of statutory construction. It is, therefore, necessary to begin and end the argument by reference to the particular language of the Act. These reasons will seek to demonstrate that the second of the issues, concerning the comparison that must be made, between how Daniel was treated and how the State would have treated a person without the disability, in circumstances that were the same or were not materially different, is determinative. 116 (2002) 117 FCR 237 at 248 [28]. 117 (2001) 186 ALR 69 at 80 [51]-[52]. 118 (2002) 117 FCR 237 at 248 [29]. The approach to construction of the Act No doubt the statute must be construed as a whole. No doubt, also, it must be construed having regard to its evident objectives, stated, as they are, in s 3 of the Act as being: to eliminate, as far as possible, discrimination against persons on the ground of disability in the areas of: work, accommodation, education, access to premises, clubs and sport; and the provision of goods, facilities, services and land; and (iii) existing laws; and the administration of Commonwealth laws and programs; and to ensure, as far as practicable, that persons with disabilities have the same rights to equality before the law as the rest of the community; and to promote recognition and acceptance within the community of the principle that persons with disabilities have the same fundamental rights as the rest of the community." Moreover, account must also be taken of the limits which s 12 of the Act prescribes for the Act's application. For present purposes, the relevant limitation on the operation of s 22 of the Act is that contained in s 12(8) which provides that the "limited application provisions"119 (of which s 22 is one) have effect in relation to discrimination against a person with a disability to the extent that the provisions have one or more of five characteristics. Those characteristics are described as being that the provisions: 119 Defined in s 12(1). give effect to the Convention[120]; or give effect to the Covenant on Civil and Political Rights[121]; or give effect to the International Covenant on Economic, Social and Cultural Rights; or relate to matters external to Australia; or relate to matters of international concern." It was no doubt with these limitations in mind that we were taken in argument not only to the particular international instruments mentioned in s 12(8) of the Act, but also to a number of other international instruments dealing with disability discrimination. It was accepted that most, if not all, of these other international instruments were statements of aspiration, rather than international obligation, many of which were made in connection with the United Nations Decade of Disabled Persons. Where, as here, no challenge was made to the valid application of s 22 to the activities of the State which were the subject of the Commissioner's inquiry, it is unnecessary to examine whether, or to what extent, those instruments might reflect matters of international concern122. In so far as those instruments were said to bear upon the proper construction of the Act, however, it is necessary to notice an important respect in which the subject of disability discrimination differs from some other forms of discrimination. Central to the operation of the Sex Discrimination Act and the Racial Discrimination Act 1975 (Cth) ("the Racial Discrimination Act") is the requirement for equality of treatment. A central purpose of each of those Acts is to require that people not be treated differently on the ground of sex or race. Difference in sex or race is identified as a generally irrelevant consideration123. 120 The Discrimination (Employment and Occupation) Convention, (1958) adopted by the General Conference of the International Labour Organisation on 25 June 1958, a copy of the English text of which was set out in Sched 1 of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). 121 The International Covenant on Civil and Political Rights, a copy of the English text of which was set out in Sched 2 of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). 122 cf Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 123 Western Australia v Ward (2002) 76 ALJR 1098 at 1132 [121]; 191 ALR 1 at 48. By contrast, disability discrimination legislation necessarily focuses upon a criterion of admitted difference. The abilities of a disabled person differ in one or more respects from that range of abilities which is identified as falling within the band described as "normal". It follows that disability legislation must be understood from the premise that the criterion for its operation is difference. That has important consequences, not only for the lessons that may be learned from the way in which other legislatures or deliberative bodies have identified the problems that should be considered, but also for the proper understanding of the solutions that have been devised by those other bodies to answer the problems identified. Since the Act was enacted in Australia, legislation enacted in other jurisdictions has sought to give effect not just to a principle requiring equality of treatment but to what is sometimes called a "substantive conception of equality"124, is "to prevent or compensate for disadvantages"125. (Many of the international instruments to which we were taken must also be understood in that way.) the purpose in which Concepts of "difference", "disability" and "disadvantage" all depend upon comparisons. They assume that there is a person, or a group of persons, with whom it is useful and relevant to draw the comparison which is implicit in describing one person as "different", or "disabled", or "disadvantaged"126. Obviously, the utility and relevance of the comparison depends upon why it is being made. Different comparisons may have to be drawn according to whether the purpose is limited to ensuring that persons situated similarly are treated alike, or the purpose is wider than that. In particular, if the purpose of legislation is to ensure equality of treatment, the focus of inquiry will differ from the inquiry that must be made if the relevant purposes include ensuring equality in some other sense, for example, economic, social or cultural equality. 124 Collins, "Discrimination, Equality and Social Inclusion", (2003) 66 Modern Law Review 16 at 17. 125 Directive 2000/78/EC of 27 November 2000 ("the EC Directive"), (2000) Official Journal of the European Communities L 303/17, Recital (26). 126 Hendriks, "The significance of equality and non-discrimination for the protection of the rights and dignity of disabled persons", in Degener and Koster-Dreese (eds), Human Rights and Disabled Persons, (1995) 40 at 43. "Substantive equality" directs attention to equality of outcome or to the reduction or elimination of barriers to participation in certain activities. It begins from the premise that "in order to treat some persons equally, we must treat them differently"127. Obviously there are many ways in which "substantive equality" can be defined and there are many different ways in which legislatures may seek to achieve it. The principal focus of the Act, however, is on ensuring equality of treatment. In this respect it differs significantly from other, more recent, forms of disability discrimination legislation. In particular, for present purposes, it is important to notice that, unlike the Disability Discrimination Act 1995 (UK) ("the 1995 UK Act"), the Americans with Disabilities Act of 1990 ("the ADA")128 or the European Community Directive for "establishing a general framework for equal treatment in employment and occupation"129, the Act does not explicitly oblige persons to treat disabled persons differently from others in the community. The Act does not, for example, contain provisions equivalent to ss 5 and 6 and ss 28B to 28G of the 1995 UK Act which expressly oblige employers and educational authorities to make "reasonable adjustments" to accommodate disabled persons130. The provisions of the Ontario education legislation131 considered by the Supreme Court of Canada in Eaton v Brant County Board of Education132 provide a further example. The Minister of Education was required to ensure that there be available special education programmes and services for children with behavioural, intellectual and other "exceptionalities". The decision to place a 12 year old child with cerebral palsy in a special education class, contrary to her parents' wishes that she remain in a regular classroom, did not contravene the right given by s 15(1) of the Canadian Charter of Rights and Freedoms of equality before and under the law and to the equal protection and benefit of the 127 Regents of University of California v Bakke 438 US 265 at 407 (1978) per 128 §§1-514, 42 USC §§12101-12213. 129 The EC Directive, (2000) Official Journal of the European Communities L 303/16. 130 cf the Americans with Disabilities Act of 1990 §102(b)(5)(A), 42 USC §12112(b)(5)(A); the EC Directive, Art 5, (2000) Official Journal of the European Communities L 303/19. 131 s 8 of the Education Act, RSO 1990, c E2. 132 [1997] 1 SCR 241. law "without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability" (emphasis added). Sopinka J, who gave the leading judgment, emphasised that with disabled persons the avoidance of discrimination frequently will require distinctions to be made, taking into account the personal characteristics of such persons so as to ameliorate their situation133. What Sopinka J described as that form of discrimination inquiry which uses "the attribution of stereotypical characteristics" criterion was inappropriate in considering laws such as the Ontario education legislation134. Considerable care must be taken, therefore, before applying what has been said about either the aims or the effect of other forms of disability discrimination legislation from other jurisdictions to the construction of the Act. Even more care must be taken before adopting the necessarily general forms of aspirational, as distinct from normative, statements found in international instruments as an aid to resolving the particular questions of construction which now arise. Aspirational statements are commonly concerned to state goals, not to identify the particular methods by which the stated goals will be achieved. Those international instruments to which we were referred took this aspirational form. None of the considerations just mentioned denies the importance of giving full effect to the indirect disability discrimination provisions of the Act. Well before the Parliament's enactment of the Act, the Sex Discrimination Act or the Racial Discrimination Act, it had been recognised in the United States135 that, in some cases, nominally equal treatment can disguise discrimination. As Gaudron and McHugh JJ were later to point out in Castlemaine Tooheys Ltd v South Australia136, to proceed as if there is no difference, even though there is a relevant difference, may be discriminatory. But as later developments in connection with affirmative action and reverse discrimination legislation in the United States reveal, there is considerable room for debate about when 133 [1997] 1 SCR 241 at 272. 134 [1997] 1 SCR 241 at 272-273. 135 Gaston County v United States 395 US 285 (1969); Griggs v Duke Power Co 401 136 (1990) 169 CLR 436 at 478. apparently "equal" treatment is to be understood as being discriminatory and apparently unequal treatment is not137. With these considerations in mind, how should the issues of statutory construction which arise in this matter be resolved? "Disability" It is appropriate to consider first the definition of "disability" in s 4 of the Act. Paragraph (g) of that definition can be divided into two grammatical sections – a group of three nouns ("a disorder, illness or disease") and two adjectival phrases which qualify those nouns. The first adjectival phrase looks to the effects of the disorder, illness or disease on the person – the disorder, illness or disease is one that "affects a person's thought processes, perception of reality, emotions or judgment". The second looks to another kind of effect on the person – the disorder, illness or disease is one that "results in disturbed behaviour". In each case, the disability is defined by reference to cause (disorder, illness or disease) and effect. As has been noted earlier, both the trial judge and the Full Court drew a sharp distinction between cause and effect in applying the definition of disability. The grammatical structure of the definition provides an evident basis for drawing that distinction. There are, however, several reasons why distinguishing between the nouns that are used in par (g) of the definition and the adjectival phrases that qualify them may not be useful or appropriate. First, pars (a) to (g) of the definition of "disability" are not to be read as providing seven mutually exclusive categories of disability. So much is evident from the overlapping operation of the separate paragraphs of the definition. This conclusion is reinforced when regard is had to the temporal amplifications of the definition contained in pars (h), (i) and (j). Daniel's "disability" could fall within any of pars (a), (e) or (g) as being (i) a partial loss of his mental functions (par (a)), (ii) the malfunction of a part of his body being that part of the brain responsible for inhibitions (par (e)), or (iii) a disorder resulting in disturbed behaviour (par (g)). Because the paragraphs have an overlapping operation it may be doubted that the particular grammatical structure used in one of them can be given decisive effect. 137 See, for example, the consideration by the Supreme Court of the United States of university admission policies in Regents of University of California v Bakke 438 US 265 (1978), Gratz v Bollinger 156 L Ed 2d 257 (2003) and Grutter v Bollinger 156 L Ed 2d 304 (2003). Secondly, it is trite to say that effect must be given to the whole of the definition. It cannot be read as if the adjectival clauses are an unnecessary or ineffective addition to the three nouns that introduce this paragraph of the definition. To identify Daniel's disability by reference only to the physiological changes which his illness brought about in his brain would describe his disability incompletely. His disability is a particular type of disorder, a particular kind of malfunction of his brain, a loss of a particular aspect of his mental functions. Thirdly, and most importantly of all, to debate the meaning and effect of the definition divorced from the provisions in which it is to operate is to invite serious error. In particular, to focus on the cause of behaviour, to the exclusion of the resulting behaviour, would confine the operation of the Act by excluding from consideration that attribute of the disabled person (here, disturbed behaviour) which makes that person "different" in the eyes of others. Such a construction of the Act should be adopted only if its language requires it. Construction must proceed not only from a consideration of the grammatical structure of par (g) of the definition of disability, but also from a consideration of how the definition of disability is engaged in the other, operative, provisions of the Act. It is as well to turn to that latter task at once and to do so by reference to s 5(1), the provision which was said to be engaged here. Direct disability discrimination – the comparison to be made Section 5(1) of the Act requires comparison between the treatment which the discriminator gives, or proposes to give, to the aggrieved person and the treatment that the discriminator would give, or would propose to give, to a person without the aggrieved person's disability "in circumstances that are the same or are not materially different". If that comparison reveals that the disabled person was treated less favourably, the further question which must be asked is whether that was because of the disabled person's disability. Section 5(1), therefore, requires equality of treatment between the disabled and those who are not. Attention is invited to how the discriminator "treats or would treat a person without the disability" (emphasis added). The "comparator" identified by s 5(1) is "a person without the disability". The comparison that is to be made is of the treatment given or proposed to be given to the disabled person and the treatment of a person without the disability "in circumstances that are the same or are not materially different". Recognising that s 5(1) requires comparison with the treatment that would be given to a person without the disability is critical to the proper application of the Act. It is a comparison which is very different from the comparisons required by other forms of disability discrimination legislation. In the 1995 UK Act, for example, the focus is not upon the cases of different persons (one disabled, one not) in the same or not materially different circumstances. As was pointed out in Clark v TDG Ltd138, the focus of the 1995 UK Act is much narrower. It looks only to the reason for the treatment of the disabled person and then requires comparison with the treatment of "others to whom that reason does not or would not apply"139 (emphasis added). That is, it requires identification of why the disabled person was treated as he or she was, and then asks would another, to whom that reason did not apply, have been treated in the same way? In Clark, Mummery LJ said of the construction of the 1995 UK Act140: "Contrary to what might be reasonably assumed, the exercise of interpretation is not facilitated by familiarity with the pre-existing legislation prohibiting discrimination in the field of employment (and elsewhere) on the grounds of sex (Sex Discrimination Act 1975) and race (Race Relations Act 1976). Indeed, it may be positively misleading to approach the 1995 Act with assumptions and concepts familiar from experience of the workings of the 1975 and 1976 Acts." His Lordship added141: "The definition of discrimination in the [1995 UK Act] does not contain an express provision requiring a comparison of the cases of different persons in the same, or not materially different, circumstances. The statutory focus is narrower: it is on the 'reason' for the treatment of the disabled employee and the comparison to be made is with the treatment of 'others to whom that reason does not or would not apply'. The 'others' with whom comparison is to be made are not specifically required to be in the same, or not materially different, circumstances: they only have to be persons 'to whom that reason does not or would not apply'." What is meant by the reference, in s 5(1) of the Act, to "circumstances that are the same or are not materially different"? Section 5(2) provides some amplification of the operation of that expression. It identifies one circumstance 138 [1999] 2 All ER 977 at 987 per Mummery LJ. 139 Disability Discrimination Act 1995 (UK), s 5(1)(a). 140 [1999] 2 All ER 977 at 983. 141 [1999] 2 All ER 977 at 987. which does not amount to a material difference: "the fact that different accommodation or services may be required by the person with a disability". But s 5(2) does not explicitly oblige the provision of that different accommodation or those different services. Rather, s 5(2) says only that the disabled person's need for different accommodation or services does not constitute a material difference in judging whether the discriminator has treated the disabled person less favourably than a person without the disability. The Commission submitted that s 5(2) had greater significance than providing only that a need for different accommodation or services is not a material difference. It submitted that, if a school did not provide the services which a disabled person needed and later expelled that person, the circumstances in which it expelled the person would be materially different from those in which it would have expelled other students. In so far as that submission depended upon construing s 5, or s 5(2) in particular, as requiring the provision of different accommodation or services, it should be rejected. As the Commonwealth rightly submitted, there is no textual or other basis in s 5 for saying that a failure to provide such accommodation or services would constitute less favourable treatment of the disabled person for the purposes of s 5. The appellant's argument was not said to depend upon the operation of s 5(2). Rather, it depended upon contentions about the relationship between the application of the definition of disability and the identification of circumstances that are the same or not materially different. The appellant submitted that the decisions to suspend and ultimately exclude Daniel were brought about by his behaviour. It followed, so the argument proceeded, that if it was right to characterise Daniel's disturbed behaviour as part of his disability, Daniel was treated as he was "because of" his disability. And because Daniel's behaviour was brought about by the disorder from which he suffered, it followed, so it was said, that he was treated less favourably than a person without the disability. The appellant's argument thus proceeded from the application of the definition of disability (as a definition requiring reference both to Daniel's disorder and his behaviour) to a comparison with a person (a person without the disability) in circumstances where what differentiated Daniel from others (his disorder and his behaviour) were absent. That is, the relevant comparator was said to be Daniel without the disability of his disturbed behaviour. (There are obvious similarities between these propositions advanced by the appellant and the Commissioner's statement, mentioned earlier, that "Daniel's behaviour is so closely connected to his disability that if ... less favourable treatment has occurred on the ground of Daniel's behaviour then this will amount to discrimination on the ground of his disability".) The last step in the appellant's argument was said to follow from the need to exclude, from the identification of the circumstances that are the same or not materially different, all circumstances that constitute the disability in question. Only then, so it was said, would the comparator be in the same position as the person with the disability. Only then would the Act be given an operation that did not "fatally frustrate [its] purposes"142. It may readily be accepted that the necessary comparison to make is with the treatment of a person without the relevant disability. Section 5(1) makes that plain. It does not follow, however, that the "circumstances" to be considered are to be identified in the way the appellant contended. Indeed, to strip out of those circumstances any and every feature which presents difficulty to a disabled person would truly frustrate the purposes of the Act. Section 5(2) provides that the relevant circumstances are not shown to be materially different by showing that the disabled person has special needs. The appellant's contention, however, went further than that. It sought to refer to a set of circumstances that were wholly hypothetical – circumstances in which no aspect of the disability intrudes. That is not what the Act requires. In requiring a comparison between the treatment offered to a disabled person and the treatment that would be given to a person without the disability, s 5(1) requires that the circumstances attending the treatment given (or to be given) to the disabled person must be identified. What must then be examined is what would have been done in those circumstances if the person concerned was not disabled. The appellant's argument depended upon an inversion of that order of examination. Instead of directing attention first to the actual circumstances in which a disabled person was, or would be, treated disadvantageously, it sought to direct attention to a wholly hypothetical set of circumstances defined by excluding all features of the disability. The circumstances referred to in s 5(1) are all of the objective features which surround the actual or intended treatment of the disabled person by the person referred to in the provision as the "discriminator". It would be artificial to exclude (and there is no basis in the text of the provision for excluding) from consideration some of these circumstances because they are identified as being connected with that person's disability. There may be cases in which identifying the circumstances of intended treatment is not easy. But where it is alleged that a disabled person has been treated disadvantageously, those difficulties do not intrude. All of the circumstances of the impugned conduct can be identified and that is what s 5(1) requires. Once the circumstances of the treatment or intended 142 Sullivan v Department of Defence [1992] EOC ¶92-421 at 79,005. treatment have been identified, a comparison must be made with the treatment that would have been given to a person without the disability in circumstances that were the same or were not materially different. In the present case, the circumstances in which Daniel was treated as he was, included, but were not limited to, the fact that he had acted as he had. His violent actions towards teachers and others formed part of the circumstances in which it was said that he was treated less favourably than other pupils. Section 5(1) then presented two questions: How, in those circumstances, would the educational authority have treated a person without Daniel's disability? If Daniel's treatment was less favourable than the treatment that would be given to a person without the disability, was that because of Daniel's disability? Section 5(1) could be engaged in the application of s 22 only if it were found that Daniel was treated less favourably than a person without his disability would have been treated in circumstances that were the same as or were not materially different from the circumstances of Daniel's treatment. To construe the operation of s 5(1) in the way described does not frustrate the proper operation of the Act. First, and very importantly, it is necessary to recall that s 6 will be engaged if a discriminator requires compliance with a requirement or condition which is not reasonable having regard to the circumstances of the case. Secondly, in a case like the present, the construction we have described allows for a proper intersection between the operation of the Act and the operation of State and federal criminal law. Daniel's actions constituted assaults. It is neither necessary nor appropriate to decide whether he could or would have been held criminally responsible for them. It is enough to recognise that there will be cases where criminal conduct for which the perpetrator would be held criminally responsible could be seen to have occurred as a result of some disorder, illness or disease. It follows that there can be cases in which the perpetrator could be said to suffer a disability within the meaning of the Act. It would be a startling result if the Act, on its proper construction, did not permit an employer, educational authority, or other person subject to the Act to require, as a universal rule, that employees and pupils comply with the criminal law. Yet if the appellant's submission is right, the "circumstances" to which s 5(1) refers can include no reference to disturbed behaviour (even disturbed criminal behaviour) if that behaviour is a characteristic of, or consequence of, the actor's disability. Understanding the operation of the Act in this way would leave employers, educational authorities, and others subject to the Act, unable to insist upon compliance with the criminal law without in some cases contravening the Act. The third point to make about the construction of s 5(1) which we have proffered is that, on that construction, the provision still has very important work to do by preventing the different treatment of persons with disability. As pointed out earlier, other legislatures have sought to go further than provide for equality of treatment. But s 5(1) does not take that further step. Rather, it requires comparison with a person without the disability, in the same position in all material respects as the aggrieved person143. Fourthly, it is a construction of the section which does not depend upon distinguishing between the cause of a person's disability and the effects or consequences of it. Indeed, it is a construction which embraces the importance of identifying (as part of the relevant circumstances) all the effects and consequences of disability that are manifested to the alleged discriminator. What then is asked is: how would that person treat another in those same circumstances? Finally, it is a construction which gives separate and important work to all of the elements of s 5(1). The answer to the question presented by treatment "because of" disability does not determine the separate, comparative, question which must be asked: how would the discriminator treat or have treated a person without the disability in the relevant circumstances? The Commissioner did not apply s 5(1) in the way we have described. Rather, the two separate questions we have identified as being presented by s 5(1) were elided and treated as one. The Commissioner's conclusion about the reason for Daniel's suspensions and exclusion (his disturbed behaviour) was seen as being determinative of the question of less favourable treatment. The circumstances which surrounded Daniel's treatment were not identified. There was no determination of how a person without the disability would have been treated in circumstances that were the same as, or not materially different from, the circumstances surrounding Daniel's treatment. It follows that the appeal must be dismissed. 143 cf Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] 2 All ER 26 at 61 [108], 62 [110] per Lord Scott of Foscote. It is, however, desirable to say something shortly about the third issue argued in the appeal: was there less favourable treatment "because of" disability? The arguments about this aspect of s 5(1) sought to draw distinctions between the motive of the discriminator, the purpose of the conduct and the effect of the conduct, and between objective and subjective criteria of operation. Attention was directed to the drafter's use of the expression "by reason of" in the equivalent provisions of the Sex Discrimination Act144 rather than the expression "because of" used in s 5(1) and other provisions of the Act145. Reference was made to s 10 of the Act and its provision that if an act is done for two or more reasons and one of those is the disability of a person "whether or not it is the dominant or a substantial reason for doing the act" then for the purposes of the Act "the act is taken to be done for that reason". referred Counsel to statements this Court construing other anti-discrimination statutes where the view was taken that the phrase "on the ground of" did not require an examination of intention or motive146. On the other hand, in James v Eastleigh Borough Council147, the House of Lords treated as decisive the aim of the Council in acting as it did. For present purposes, it is enough to say that we doubt that distinctions between motive, purpose or effect will greatly assist the resolution of any problem about whether treatment occurred or was proposed "because of" disability. Rather, the central question will always be – why was the aggrieved person treated as he or she was? If the aggrieved person was treated less favourably was it "because of", "by reason of", that person's disability? Motive, purpose, effect may all bear on that question. But it would be a mistake to treat those words as substitutes for the statutory expression "because of". The appeal should be dismissed with costs. The consequence of that order would ordinarily be that the order of the primary judge, setting aside the Commissioner's decision and remitting it for further hearing, would stand unaffected. It was common ground, however, that by operation of the Human Rights Legislation Amendment Act (No 1) 1999 (Cth) and the Human Rights Legislation (Transitional) Regulations 2000 made under that Act, the original 145 For example, ss 7, 8. 146 Australian Iron & Steel Pty Ltd v Banovic (1989) 168 CLR 165 at 176, 184; Waters v Public Transport Corporation (1991) 173 CLR 349 at 359-360. complaint made by the appellant is taken to have been terminated by the President of the Human Rights and Equal Opportunity Commission and the appellant was thereupon entitled, as he did, to commence a new proceeding in the Federal Magistrates Court. It is neither necessary nor appropriate to make any reference to those matters in this Court's order. Callinan CALLINAN J. The events which gave rise to these proceedings occurred in a State school in the provincial city of Grafton in northern New South Wales. The outcome of the proceedings depends upon the proper construction of the Disability Discrimination Act 1992 (Cth) ("the Act"), the constitutional validity of which was not put in issue by any party. Accordingly, the case was conducted at all levels on the basis that the Act was validly enacted under the external affairs power, and on the assumption that it could operate in relation to the events in which the parties were concerned. I would also observe that no attempt was made to reconcile some competing provisions148 in the international instruments referred to in s 12(8)149 of the Act. Facts After a very great investment of time, resources, energy, expertise, money and compassion, on 3 December 1997, the first respondent determined that it could no longer provide a place for Daniel Hoggan within its mainstream classes at the South Grafton High School which it funded and conducted. Some idea of the magnitude of that investment can be obtained from the uncontroversial chronology provided by the appellant and appended to this judgment. The call upon the first respondent's resources did not cease on Daniel's exclusion from the school. As also appears from the chronology, much time and money have been expended on proceedings before the Human Rights and Equal Opportunity Commission ("the Commission"), in the Federal Court, the Full Court of the Federal Court and this Court. 148 Article 13 of the International Covenant on Economic, Social and Cultural Rights recognizes the right of everyone to education. That right could be adversely affected by an insistence that the education to which a disabled person is equally entitled should be provided in circumstances which cause disruption to the education of others. 149 "The limited application provisions have effect in relation to discrimination against a person with a disability to the extent that the provisions: give effect to the Convention; or give effect to the Covenant on Civil and Political Rights; or give effect to the International Covenant on Economic, Social and Cultural Rights; or relate to matters external to Australia; or relate to matters of international concern." Callinan Daniel Hoggan is now 18 years old. A severe encephalopathic illness at 6 or 7 months of age damaged his brain and rendered him disabled in several respects. In consequence, he exhibits disinhibited and uninhibited behaviour. He finds it difficult to communicate. This in turn leads to frustration and further behavioural problems. These have included offensive language, lack of self- control and violence. The relevant details are set out in the judgment of Gummow, Hayne and Heydon JJ. Eventually a Commissioner (appointed under the Act) Mr Innes, entertained a complaint about Daniel's exclusion from the school. The complaint was made by his foster father pursuant to s 69(1)(c) of the Act on behalf of Daniel as an aggrieved person. The complaint was of direct discrimination contrary to s 5 of the Act. The only sensible way to read the Act, and in particular s 103 of it which speaks in terms of the relief available to a complainant, is as referring in that respect to the aggrieved person, and not Mr Purvis the person who has initiated the proceedings on his behalf. The Commissioner's conclusion was that Daniel had been subjected to a detriment or detriments within the meaning of s 22(2)(c) of the Act. On 13 November 2000, the Commissioner made a declaration that, in breach of ss 5 and 22(2) of the Act, the first respondent had discriminated against Daniel Hoggan on the grounds of his disability. He also declared that the first respondent should pay the sum of $49,000 to Mr Purvis as compensation. The Commissioner's remarks on compensation were as follows: "I am satisfied that damages should be awarded under the following heads: the suspensions and exclusion fall under the head of the loss of the environment of attending school with consequent benefits such as access to library, classroom, recreational and other school facilities; access to normal peer interaction which is analogous to loss of enjoyment of normal working environment; loss of the opportunity to complete secondary education at school and the affect [sic] of exclusion on life chances including future employment chances and earning opportunities; loss of the expectation of receiving a secondary education in a regular and local school environment; and-or loss of the right to obtain the benefit of such an education. Callinan I have made the following awards of damages for the various incidents of discrimination based on my appreciation both of the facts and of the appropriate awards of damages in this area. For the first two suspensions, which were short suspensions, I have awarded $2000 each. For the next three suspensions, which were long suspensions, I have awarded $5000 each. For the exclusion, and the consequential loss of opportunity and enjoyment of school environment described above I have awarded For the inflexibility regarding the amendment of Daniel's discipline and welfare policy I award $2000. For the diminished opportunity provided to Daniel by the [first] respondent's failure to provide teachers with training or awareness programs I award $4000. For the diminished opportunity provided to Daniel by the [first] respondent's failure to consult with experts in special education I award $4000. This is a total damages award of $49000 to be paid within 28 days of the date of this decision." Quantum is not in issue but I cannot help observing in passing that the assessment of damages which were, by virtue of s 103(1)(b)(iv)150 of the Act, required to be compensatory, and not punitive in character, appears to be utterly arbitrary. The Commissioner failed to explain how failure to have access to the library, or other unidentified school facilities, could actually adversely affect Daniel. No attempt was made by him to show how $2000 for a suspension of a couple of days only could bear any relationship to any loss or damage actually sustained by Daniel. The assessment could hardly have been in respect of aggravated damages because, as the evidence showed, Daniel did not regard enforced absence from school as a penalty, or as hurtful to him. Indeed the 150 Section 103(1)(b) of the Act provides that the Commission may make a determination which includes: a declaration that the respondent should pay to the complainant damages by way of compensation for any loss or damage suffered because of the conduct of the respondent". Callinan evidence suggests that to him it was more in the nature of a benefit or a reward than a punishment. Nor was it any part of the Commissioner's function to award damages to his foster parents in respect of any hurt they may have suffered. The yardsticks that the Commissioner used were assessments of the Commission in two other instances151, made in respect of entirely different situations. The task that the Act dictated that the Commissioner undertake was of assessing this aggrieved person's, Daniel's, actual loss and damage. It may be that he allowed himself to be distracted by considerations imported from other jurisdictions instead of giving effect to the language of the Act. But whether that is so or not this apparently erroneous approach to the assessment of damages tends to reflect adversely on the Commissioner's approach to the case generally. Following the Commissioner's declarations the first respondent sought an order of review of them under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). Section 5(1) of the ADJR Act provides that a person who is aggrieved by a decision to which that Act applies may apply to a court for an order of review in respect of the decision on any one or more of the grounds set out in s 5(1). The first respondent relied on the ground stated in s 5(1) of the ADJR Act, that the decision involved errors of law. The first respondent's application for review was heard by Emmett J. The core of his Honour's reasoning in allowing the application is to be found in this passage152: "[T]here is a distinction to be drawn between a disability within the meaning of the Act, on the one hand, and behaviour that might result from or be caused by that disability on the other hand. Less favourable treatment on the ground of the behaviour is not necessarily less favourable treatment by reason of the disability. The position might be different in a case where the disability necessarily resulted in the relevant behaviour. That is not the present case. The behaviour of [Daniel] is not ipso facto a manifestation of a disability within the meaning of the Act nor of any disability of [Daniel] within the meaning of the Act." (original emphasis) It was clear, in his Honour's opinion, from the following finding made by the Commissioner that the Commissioner's reasons were based on a conclusion 151 Finnery v The Hills Grammar School unreported, Human Rights and Equal Opportunity Commission, 13 June 2000; Murphy v State of New South Wales (NSW Department of Education) (2000) EOC ¶93-095. 152 New South Wales (Department of Education) v Human Rights and Equal Opportunity Commission (2001) 186 ALR 69 at 77 [36]. Callinan that the principal's decision was made by reason of Daniel's behaviour rather than his disability153: "[The principal's] decision was taken as a result of Daniel's behaviour, which [the principal] believed impacted on the safety and welfare of Daniel, other students and staff. It was also taken, in [the principal's] view, as a result of Daniel's inability to cope with the stresses of high school life as a result of his disability. Whilst I am sure that [the principal] took this decision for what he saw as Daniel's best interests, nonetheless it was in breach of ss 5 and 22(2) of the Act." (emphasis His Honour, after the Commissioner's reasoning, set aside his decision and remitted the matter for determination according to law. identifying some other errors of law An appeal by the appellant to the Full Court of the Federal Court (Spender, Gyles and Conti JJ) was unanimously dismissed. Their Honours discussed Daniel's behaviour in this way154: "It must steadily be borne in mind that the expulsion ... followed repetitive anti-social and violent conduct towards other students and staff which was plainly unacceptable in a primary school. It was disturbing to the function of education and threatened the safety of other students and staff. Those responsible for administration of the school owed a duty of care to the other students in the school, the teachers and the teacher's aides, with potential liability for any breach of that duty (Commonwealth v Introvigne155). The disorder as such was ultimately not relied upon by the school in order to prevent enrolment (cf s 22(1)), notwithstanding the potential for anti-social conduct which it involved. If it had been, then it may be that there would have been discrimination, subject to the operation of s 22(4). We do not need to decide that question. The problem was that, once enrolled, the school was not able to cope with the conduct ... which in fact ensued, despite considerable time and effort." 153 New South Wales (Department of Education) v Human Rights and Equal Opportunity Commission (2001) 186 ALR 69 at 78 [43]. 154 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237 at 247 [25]. 155 (1982) 150 CLR 258. Callinan The Full Court expressly approved the reasoning of Emmett J156. Their Honours thought the decision of the Commissioner capricious157. They also considered that the Commissioner failed to make a proper comparison between the treatment accorded to Daniel and the treatment ordinarily accorded to a child without his disabilities158. The appeal to this Court The appellant has appealed to this Court on two grounds: The Full Court erred in construing 'disability' as defined in section 4 of the Disability Discrimination Act 1992 (Cth) ... to exclude the behavioural manifestation of a disability. The Full Court erred in identifying the 'comparator' for the purpose of applying the definition of 'direct discrimination' in section 5 of the Act as a person behaving in the same way as a person whose disability has a behavioural manifestation." It is important to keep in mind that the legislature appreciated that equality in all circumstances was impossible. Accordingly, s 3 of the Act does not state its objects in absolute terms. Two of them are, the elimination, "as far as possible" of discrimination against persons on the ground of disability in "education", and the ensuring, "as far as practicable" that disabled persons have the same rights to equality before the law as the rest of the community. Section 4 defines "disability" in this way: "'disability', in relation to a person, means: total or partial loss of the person's bodily or mental functions; or total or partial loss of a part of the body; or 156 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237 at 248 [28]. 157 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237 at 248 [29]. 158 Purvis v New South Wales (Department of Education and Training) (2002) 117 FCR 237 at 248 [29]. Callinan the presence in the body of organisms causing disease or illness; or the presence in the body of organisms capable of causing disease or illness; or the malfunction, malformation or disfigurement of a part of the person's body; or a disorder or malfunction that results in the person learning the disorder or differently malfunction; or from a person without a disorder, illness or disease that affects a person's thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour; and includes a disability that: presently exists; or previously existed but no longer exists; or may exist in the future; or is imputed to a person". Section 5 defines "discrimination": "Disability discrimination For a person the purposes of ('discriminator') discriminates against another person ('aggrieved person') on the ground of a disability of the aggrieved person if, because of the aggrieved person's disability, the discriminator treats or proposes to treat the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person without the disability. this Act, For the purposes of subsection (1), circumstances in which a person treats or would treat another person with a disability are not materially different because of the fact that different accommodation or services may be required by the person with a disability." Section 6 has contextual relevance to the case. It provides: Callinan "Indirect disability discrimination For the purposes of this Act, a person ('discriminator') discriminates against another person ('aggrieved person') on the ground of a disability of the aggrieved person if the discriminator requires the aggrieved person to comply with a requirement or condition: (a) with which a substantially higher proportion of persons without the disability comply or are able to comply; and (b) which is not reasonable having regard to the circumstances of the case; and (c) with which the aggrieved person does not or is not able to comply." Section 10 should also be noted: "Act done because of disability and for other reason an act is done for 2 or more reasons; and one of the reasons is the disability of a person (whether or not it is the dominant or a substantial reason for doing the act); then, for the purposes of this Act, the act is taken to be done for that reason." Sections 15 to 21 make unlawful, discrimination on the ground of disability, in employment, engagement or appointment of agents, of contract workers, in the formation of partnerships, in the granting of qualifications to tradespeople or professionals, and the membership of trade unions and employment agencies159. Section 22 is expressly concerned with education. It provides as follows: 159 At the time s 103 of the Act set out the non-binding determinations which the Commission could make in relation to a complaint. From 13 April 2000, the jurisdiction to hear and determine complaints of discrimination was conferred on the Federal Court and then later the Federal Magistrates Court by s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). Section 46PO(4) sets out the remedial orders which the Federal Court or Federal Magistrates Court may make if the complaint of discrimination is substantiated. Callinan "Education discriminate against a person on the ground of the person's disability or a disability of any of the other person's associates: is unlawful for an educational authority by refusing or failing to accept the person's application for admission as a student; or in the terms or conditions on which it is prepared to admit the person as a student. It is unlawful for an educational authority to discriminate against a student on the ground of the student's disability or a disability of any of the student's associates: by denying the student access, or limiting the student's access, to any benefit provided by the educational authority; by expelling the student; or by subjecting the student to any other detriment. This section does not render it unlawful to discriminate against a person on the ground of the person's disability in respect of admission to an educational institution established wholly or primarily for students who have a particular disability where the person does not have that particular disability. This section does not render it unlawful to refuse or fail to accept a person's application for admission as a student at an educational institution where the person, if admitted as a student by the educational authority, would require services or facilities that are not required by students who do not have a disability and the provision of which would impose unjustifiable hardship on the educational authority." For completeness I also set out s 55(1): "Commission may grant exemptions The Commission may, on application by: a person: on that person's own behalf; or Callinan on behalf of that person and another person or other persons; or (iii) on behalf of another person or other persons; or 2 or more persons: on their own behalf; or on behalf of themselves and another person or other persons; or (iii) on behalf of another person or other persons; by instrument grant to the person or persons to whom the application relates, as the case may be, an exemption from the operation of a provision of Division 1 or 2 (other than section 31 or 32), as specified in the instrument." The appellant's argument The appellant's argument can be shortly stated. The appellant initially submitted that on its proper construction the meaning of "disability" in pars (f) and (g) of s 4(1) of the Act is not confined to the underlying disorder, malfunction, illness or disease. The "disability" encompasses as well, the effects or results of that underlying disorder, malfunction, illness or disease to the extent specified in those paragraphs. As the argument progressed the appellant also came to rely on par (e) of the definition. The appellant argued that the expressions "that results in" and "that affects" are conjunctive. "Disability" encompasses the whole of the thing described in each paragraph: both cause and effects. As to par (e) the submission was that the behaviour was the, or an aspect of a malfunction of part of Daniel's body, his brain. The argument continued, that to construe the definition as submitted, would be to give it an operation which is consistent with the ordinary meaning of the defined term: a lack of physical or mental ability. The concept of disability generally indicates a physiological state that is involuntary, has some degree of permanence, and impairs the person's ability, in some measure, to carry out the normal functions of life. Such a construction is consistent with the way in which the cognate term "incapacity" has been interpreted in workers' compensation legislation: that a symptom, or behavioural manifestation of an injury or disease is not only Callinan inseparable from the injury or disease itself, but is also an aspect of the condition for which compensation for incapacity is payable160. The appellant then turned to the issue of causation. He submitted that it is unnecessary for the purposes of this case to determine whether the test of causation is a "but for" test, requiring only that the person's disability have a real causative effect in the sense that, but for its presence, the act complained of would not have occurred; or a "but why" test requiring an investigation of the reasons which led the alleged discriminator to accord the less favourable treatment to the person with the disability. On either approach, the appellant contended, attention must be paid to the particular characteristic of the complainant which in fact led to the decision or action of which complaint is made; and it is sufficient if the particular characteristic be the fact of, or an aspect of, the aggrieved person's disability. On either approach, the motive or intention of the discriminator in taking the aggrieved person's disability into account is irrelevant, however benign that motive or intention might be. The disposition of the appeal Education is not a head of Commonwealth power under s 51 of the Constitution. Nor are the definition, deterrence and punishment of criminal conduct except for crime the subject of legislation which the Commonwealth has power to enact and has enacted. These are essential functions of the States. As early as 1848 the Legislative Council of New South Wales allocated money for the establishment of schools in the Colony and appointed a Board of Commissioners for National Education161. Other legislation162 followed from time to time. Within five years of federation legislation163 was enacted to make education in public schools free and in 1916 to make it compulsory until age 160 Federal Broom Co Pty Ltd v Semlitch (1964) 110 CLR 626 at 637 per Windeyer J; Commonwealth Banking Corporation v Percival (1988) 20 FCR 176 at 180 per Davies, Sheppard and Ryan JJ; Tippett v Australian Postal Corporation (1998) 27 AAR 40; Re Chami and Secretary, Department of Social Security (1993) 31 ALD 161 See 11 Vict No 48, An Act to incorporate the Board of Commissioners for National Education. 162 For example, 18 Vict 1854, An Act to incorporate and partially endow the Sydney Grammar School; and the Public Schools Act 1866 (NSW). 163 Free Education Act 1906 (NSW). Callinan 14164. Disruption of a class, violence towards other students and teachers, and departures from the standards which the staff of a school seek to maintain clearly have a capacity to interfere with the provision of education by the State. It is arguable that federal legislation imposing upon a State educational authority the adoption of measures which would appear to require it to tolerate behaviour which is otherwise proscribed as criminal, or is detrimental to the education of the general body of students, or which requires the State to alter the manner in which it ordinarily provides educational services165, may have a capacity to burden or affect a State government in the performance of its functions166, or unduly interfere with them. The effect of such legislation could be, as Gaudron, Gummow and Hayne JJ put it in Austin v Commonwealth167, that in substance and operation it may cause in a significant manner "curtailment or interference with the exercise of State constitutional power[s]", here, over the provision of education and the criminal law. Such legislation, even if of general application, may be beyond the legislative power of the Commonwealth. The first respondent offered no arguments against the constitutional validity of the Act. That does not mean however that the matters that I have mentioned are irrelevant to its proper construction. It is right, in my opinion to approach that question on the basis that the Commonwealth was unlikely to have intended that the Act unduly interfere with the operation of the criminal law at least of New South Wales. Before dealing with the specifics of the appellant's argument it is important to identify the stated reason for the principal's decision to exclude Daniel. It is to be found in a letter that he wrote on 3 December 1997: "Following the three meetings that have been held in relation to your ward, Daniel Hoggan, the situation that caused his last suspension for very violent behaviour has not been resolved ... As well as Daniel's education, I am also responsible for over 1000 other students and 80 teaching or SASS staff. The health and safety of all these people are also of great concern ... Based on the above procedures and meetings which have been unresolved, I am moving an exclusion of Daniel from South Grafton High 164 Public Instruction (Amendment) Act 1916 (NSW). 165 See ss 5(2) and 22(2) of the Act. 166 See Austin v Commonwealth (2003) 77 ALJR 491 at 497-498 [19]-[20], 500-501 [26] per Gleeson CJ, 527 [166] per Gaudron, Gummow and Hayne JJ; 195 ALR 167 (2003) 77 ALJR 491 at 527 [168]; 195 ALR 321 at 370. Callinan School. Action will be taken to find an alternative placement within ten days." At this point I should also set out what seems to have been the basis of the Commissioner's finding as to the reason for Daniel's exclusion: "I find, based on the correspondence and evidence of [the principal], that the reason for Daniel's exclusion was more broadly based than just the last suspension. It related to Daniel's behaviour leading to the five suspensions, and throughout the period of his enrolment at SGHS. It also related to [the principal's] judgement that Daniel could not operate in a regular high school environment as a result of his disability. [The principal's] underlying reasoning – unlike that for his decision on the suspensions – included issues broader than just behavioural. Certainly Daniel's behaviour (and its impact on himself and other students and staff) was a factor, but it was not the only factor. The decision also related to socially and [the principal's] perceptions of Daniel's educationally." success It is not entirely easy to reconcile the passage that I have just quoted with a later finding as to the principal's decision: "[The principal's] decision was taken as a result of Daniel's behaviour, which [the principal] believed impacted on the safety and welfare of Daniel, other students and staff. It was also taken, in [the principal's] view, as a result of Daniel's inability to cope with the stresses of high school life as a result of his disability. Whilst I am sure that [the principal] took this decision for what he saw as Daniel's best interests, nonetheless it was in breach of ss 5 and 22(2) of the Act." This latter finding is consistent with the principal's stated reason for Daniel's exclusion. To say, as the Commissioner did, that the principal's decision "related to [his] perceptions of Daniel's success socially and educationally" really adds nothing to, or, is to say nothing different from, what the principal said was the reason for his decision. In my opinion the appellant's appeal must fail. Let me assume for present purposes that the appellant's argument that a person's behaviour in consequence of that person's disorder falls within the definition of disability, or, more specifically, that the behaviour is itself a malfunctioning of part of the body, the brain, within the meaning of par (e) of the definition of disability. Even on that assumption, the Act cannot be sensibly read, in my opinion, as extending to behaviour which constitutes criminal or quasi-criminal conduct. If it were intended to include, as a disability behaviour which was criminal, itself a startling proposition, then the legislation would surely have said so in clear terms, if of course constitutionally it could operate to impose toleration of Callinan criminal conduct on a State educational authority. The conduct in question here was of a criminal or quasi-criminal kind, including as it did, offensive language and assaults. The definition of disability is not to be read as covering criminal or quasi-criminal behaviour. And by criminal behaviour I do not mean only behaviour not excusable by reason of an absence of mens rea. Whether there may or may not be such a defence available is a different matter from the nature of the physical acts which, on their face, involve unlawful behaviour. If it were otherwise, behaviour with a capacity to injure, indeed even kill someone, or to damage property (by, for example, burning a school down) could be excused, and the first respondent bound to tolerate it, or seek to abate it, no matter how difficult, disruptive, expensive, or ineffectual measures for abatement might be. It is impossible to believe that the legislature intended such a result, particularly as it has acknowledged in s 3 of the Act that its objectives are to achieve what is practicable and possible, and as it may properly be assumed that it would not wish to burden the State significantly in carrying out its educational objectives, or interfere with the due administration of the criminal law of the State. The correctness of the first respondent's argument that "disability", as defined, is different from the behaviour which it produces or of which it is a manifestation, is not a matter upon which therefore I need reach any concluded opinion. A "total or partial loss of the person's bodily or mental functions" (par (a) of the definition) may not be the same as the behaviour which that loss produces. Paragraph (g) internally does appear to distinguish between the disorder, illness or disease and the behavioural results of any of them, perhaps indicating thereby that the condition and the behaviour are different and separate, and that the reference to behaviour is adjectival only. The best of the appellant's argument, in reliance on par (e) of the definition, is that the brain, mouth and limbs are all parts of the body, that behaviour in the form of swearing is a malfunction of the mouth itself, and that behaviour in the form of punching is a malfunction of the limbs. A difficulty to which the argument may give rise, is that par (e) may then have application to people who swear or kick or punch non-compulsively and controllably, and who in consequence therefore would have also to be regarded as "disabled". These questions which it is unnecessary for me to answer do not require any further consideration. The appeal should be dismissed not only for the reasons that I have given but also for the reasons given by Gummow, Hayne and Heydon JJ with respect to the "comparator" issue and the bearing that their Honours' construction of s 5(1) of the Act has on it. I would not wish to be taken however as deciding that the absence of an express statement in the Act requiring the provision of a service, or the expenditure of money by the State, necessarily eliminates the possibility that the Act as a whole, or by reference to sections of it, may impose an unacceptable burden upon, or effect a curtailment of a legitimate constitutional function of a State. The appeal should be dismissed with costs. Callinan CHRONOLOGY DATE EVENT 8 December 1984 Steps taken to enrol Daniel at South Grafton High School 6 August 1996 Mr and Mrs Purvis attend an interview with principal of South Grafton High School (SGHS) re Daniel's enrolment in 1997. 14 August 1996 Mr Purvis completes an application for Daniel's enrolment. 10 September 1996 SGHS teachers observe Daniel in class at Gillwinga Primary. 7 November 1996 Meeting between Mr and Mrs Purvis and principal SGHS to discuss potential obstacles to Daniel's attending SGHS. 11 November 1996 SGHS refuses enrolment of Daniel. Mr Purvis lodges an appeal. 23 December 1996 Mr Purvis lodges a complaint with the Human Rights and Equal Opportunity Commission (HREOC). 24 December 1996 The District Superintendent advised that the relevant policy has not been fully complied with in Daniel's case. 24 January 1997 February 1997 4 February 1997 5 February 1997 Conciliation conference convened by HREOC in relation to the complaint. Integration Committee established at the school to determine the amount and type of resources and support required for Daniel. Teacher's Federation Meeting held at SGHS to discuss Daniel's enrolment. Integration Committee meeting to discuss Daniel's application for enrolment. Callinan 6 February 1997 7 February 1997 Integration Committee meet with Daniel's primary school teachers. Meeting between principal of SGHS and Mr and Mrs Purvis to discuss action taken in relation to Daniel's enrolment. 11 February 1997 Teacher's Federation meeting with Daniel's primary school teachers. 12-13 February 1997 Discussions about Daniel participating in a trial day at SGHS. February 1997 The principal prepares a document entitled "Daniel 20 February 1997 Teacher's Federation meeting to discuss Daniel's enrolment. A motion to approve Daniel's enrolment was deferred. 21 February 1997 The principal applied for integration programme funding for Daniel. 26 February 1997 Teacher's Federation meeting to discuss Daniel's integration. The principal explained the proposed programme. A motion was passed to reject Daniel's enrolment. 27 February 1997 Extraordinary Staff Meeting SGHS to discuss the motion rejecting the enrolment. 28 February 1997 The principal informs the staff that he will accept Daniel's application for enrolment. Preparation for Daniel's attendance at SGHS 3 March 1997 7 March 1997 7 March 1997 Meeting between the principal and Mr and Mrs Purvis to discuss Daniel's enrolment and the establishment of a case management committee. Teacher's Federation Meeting to discuss Daniel's enrolment. Special Education Directorate approves funding of an amount equivalent to a Teacher's Aide (Special) for Callinan 12 March 1997 19 March 1997 24 March 1997 77 days (6 1/4 hours per day) and a Casual Teacher for 20 days (6 hours per day), until the end of Term 2. Principal and staff met with Mr Purvis. The issues of a welfare and discipline policy with appropriate sanctions for inappropriate behaviour were also discussed. Case management meeting to formulate welfare and discipline policy for Daniel. Principal prepared a document entitled "Enrolment of Daniel Hoggan to South Grafton High School (Student with special needs)". 25 March 1997 Case management meeting held with principal, staff and Mr Purvis. Daniel's attendance at SGHS 8 April 1997 Daniel commences at SGHS in Year 7. 24 April 1997 30 April 1997 6 May 1997 7 May 1997 7 May 1997 29 May 1997 First Suspension: Daniel suspended for 1 day. The reasons for the suspension are not clear but recorded in the Suspension Register as "violence against staff". Case management meeting held to discuss Daniel's progress, the effect of his presence in the class and modifications to the Draft Welfare and Discipline Policy which had been prepared for Daniel. Mr and Mrs Purvis meet with a psychologist to discuss strategies for getting Daniel to school. Second Suspension: Daniel suspended for 2 days for kicking a fellow student and swearing. Psychologist prepares a report on possible supports for Daniel. Principal meets with psychologist and Department of behaviour Community management strategy. Services discuss 30 May 1997 Daniel kicked a desk over, kicked other students, kicked bags and swore. Callinan 18 June 1997 Case management meeting attended by psychologist, behaviour management strategies discussed. 19, 23, 24 June 1997 Reports of Daniel kicking and swearing. 26 June 1997 30 July 1997 8 August 1997 August/ September 1997 Distance Education report – Daniel has settled down and "things going well". Third Suspension: Daniel suspended (2 days) for kicking his teacher's aide. Case management meeting attended by special education consultants. prepare education consultants the Special "programme review" which is an assessment of Daniel's placement at SGHS. Among a number of recommendations, current placement at SGHS should continue with appropriate ongoing support. said Daniel's they 2 September 1997 Fourth Suspension: Daniel suspended for 13 days for kicking a Year 10 student in the leg. The suspension was later reduced to 7 days. 18 September 1997 Fifth Suspension: Daniel suspended for 12 days for punching the teacher's aide in the back. 18 September 1997 future that his education. to Daniel's teachers' aides The principal prepared a draft recommendation in relation recommended through Distance Education deliver Daniel's academic education at home, and that his aides have access to the full support and resources of the school. The principal recommended join sports lessons and school excursions, and that a social group or circle of friends be established to meet with Daniel on a regular basis. that Daniel 26 September 1997 The principal writes to Mr and Mrs Purvis outlining his concerns and strongly suggesting that they explore the option of enrolling Daniel in the Special Unit at Grafton High School. Callinan 15 October 1997 25 October 1997 Case management meeting during which various options were discussed about Daniel's return to SGHS. School Counsellor prepared a report recommending that Daniel be enrolled at the Special Unit at Grafton High School. 28 October 1997 Principal prepared an application for integration funding for Daniel in Year 8, 1998. 4 November 1997 Teacher's Federation pass a resolution rejecting Daniel's inclusion at SGHS. 5 November 1997 Case management meeting. 6 November 1997 Meeting to develop revised educational plan attended by teacher's aide, Department of Community Services and parents. 7 November 1997 Submission regarding proposed new programme faxed to principal. 8 November 1997 Meeting held at SGHS to establish Daniel's needs. 20 November 1997 Mr Purvis visits GHS Support Unit. 2 December 1997 Mr Purvis advises SGHS of Daniel's intention to return. 3 December 1997 7 December 1997 Appeal against exclusion. 8 December 1997 School Counsellor's report on Daniel. 15 December 1997 State Integration Funding approved for Daniel for the school year 1998. 22 March 1998 Complaint lodged with HREOC. 15 October 1998 Acting Disability Discrimination Commissioner refers the Commissioner. for hearing before the complaint Callinan 24 May 1999 to 10 November 1999 Hearing of the complaint in Grafton (over 23 days) before Commissioner Graeme Innes. 13 April 2000 Amendments to the Act take effect. 13 November 2000 Commissioner delivers decision. 25 July 2001 29 August 2001 First Respondent files amended application for judicial review in the Federal Court. Justice Emmett upholds the application for review and remits the matter to the Commission. 19 September 2001 Appellant files an appeal in the Federal Court. 12 October 2001 Application commenced in the Federal Magistrates Court. 24 April 2002 Full Court dismisses the appeal. 5 November 2002 Special leave to appeal granted.

HIGH COURT OF AUSTRALIA AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER APPELLANT AND RESPONDENTS Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 Date of Hearing: 7 December 2021 Date of Judgment: 13 April 2022 ORDER Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia made on 16 October 2020 and, in their place, order that the appeal to that Court be dismissed. On appeal from the Federal Court of Australia Representation S P Donaghue QC, Solicitor-General of the Commonwealth, and T M Begbie QC with J D Watson for the appellant (instructed by R M Doyle SC with P A Boncardo and B Bromberg for the respondents (instructed by Construction, Forestry, Maritime, Mining and Energy Union) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Building and Construction Commissioner v Pattinson Industrial law (Cth) – Pecuniary penalties – Determination of appropriate penalty – Where s 349(1) of Fair Work Act 2009 (Cth) ("Act") relevantly provided that person must not knowingly or recklessly make false or misleading representation about another person's obligation to engage in industrial activity – Where s 546 of Act empowered Federal Court of Australia to order person to pay pecuniary penalty that court considered "appropriate" in respect of contravention of civil remedy provision – Where first respondent union officer and second respondent union each contravened s 349(1) of Act twice – Where second respondent had longstanding history of contraventions of Act – Whether discretion under s 546 of Act constrained by notion of proportionality drawn from criminal law – Whether statutory maximum penalty for civil remedy provision may be imposed only for worst category of contravening conduct. Words and phrases – "appropriate penalty", "civil penalty regime", "civil remedy provision", "deterrence", "discretion", "maximum penalty", "pecuniary penalty", "proportionality", "retribution". Fair Work Act 2009 (Cth), ss 349, 546. KIEFEL CJ, GAGELER, KEANE, GORDON, STEWARD AND GLEESON JJ. This appeal concerns the scope of the power conferred on the Federal Court of Australia by s 546 of the Fair Work Act 2009 (Cth) ("the Act") to impose civil pecuniary penalties in respect of contraventions of the civil remedy provisions of the Act. The contraventions in question occurred in September 2018 at a building site in Frankston, Victoria. The site was occupied by Multiplex Constructions Pty Ltd, the principal contractor. The first respondent ("Mr Pattinson") was an employee of Multiplex. He was also an officer of the second respondent union ("the CFMMEU") and was the union delegate on site1. A subcontractor was engaged to install solar panels at the site. Two employees of the subcontractor arrived at the site to carry out that work and attended an induction conducted by Mr Pattinson. During the induction, Mr Pattinson enquired whether the two employees were "union" and whether they had a "ticket". This enquiry alluded to the CFMMEU's longstanding "no ticket, no start" policy, pursuant to which all workers are required to hold union membership in order to work on construction sites where the CFMMEU has a presence. Since at least the advent of the Workplace Relations Act 1996 (Cth), the implementation of such a policy has been unlawful2. Neither employee was a member of the CFMMEU and they told Mr Pattinson as much. In response, Mr Pattinson represented to the two employees that, in order to perform the work they had attended the site to perform, they were required ("the misrepresentations"). As a result of the misrepresentations, the two employees were prevented from performing any work on the site that day3. to become a member of an industrial association 1 Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580 at 587 [9]-[10] ("Pattinson v ABCC"). 2 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 at 291-292 [3]-[9] ("ABCC v Pattinson"); Pattinson v ABCC (2020) 282 FCR 580 3 ABCC v Pattinson (2019) 291 IR 286 at 292-293 [15]-[16], [18]. In civil penalty proceedings brought by the Australian Building and Construction Commissioner ("the Commissioner") in the Federal Court of Australia, these matters of fact were admitted by Mr Pattinson and the CFMMEU. It was accepted that, by the misrepresentations, Mr Pattinson twice contravened s 349(1) of the Act, in that he knowingly or recklessly made a false or misleading representation about the supposed obligation of the two employees to become members of an industrial association. It was also accepted that Mr Pattinson, in making the misrepresentations, acted in his capacity as a delegate of the CFMMEU, and therefore his action was attributable to the CFMMEU pursuant to s 363 of the Act. It followed that the CFMMEU itself also contravened s 349(1)4. The primary judge (Snaden J) imposed civil pecuniary penalties in the amounts of $6,000 in respect of Mr Pattinson ($3,000 for each contravention) and $63,000 in respect of the CFMMEU ($31,500 for each contravention). His Honour was minded to fix the penalty for the CFMMEU at the statutory maximum of $63,000 for each contravention, having regard to the CFMMEU's longstanding history of contraventions of the Act in furtherance of its "no ticket, no start" policy. However, because both contraventions occurred in the course of a single episode, the primary judge reduced each penalty by half, so that their total reflected a single maximum penalty5. On appeal, the Full Court of the Federal Court of Australia (Allsop CJ, Besanko, White, Wigney and Bromwich JJ) held that the history of the CFMMEU's prior contraventions and the deterrent purpose of s 546 did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the circumstances of the instant contraventions6. The Full Court considered that the primary judge had erred in imposing on the CFMMEU what was, in effect, the maximum penalty, which the Full Court considered ought to be reserved for the most serious examples of conduct in contravention of s 349(1) of 4 ABCC v Pattinson (2019) 291 IR 286 at 293 [17], [19]-[20]; Pattinson v ABCC (2020) 282 FCR 580 at 588 [13]-[14]. 5 ABCC v Pattinson (2019) 291 IR 286 at 316-317 [115]-[118], 319 [128]. 6 Pattinson v ABCC (2020) 282 FCR 580 the Act7. The Full Court set aside the penalties imposed by the primary judge and, exercising afresh the discretion conferred by s 546, proceeded to impose penalties in the lesser amounts of $4,500 in respect of Mr Pattinson ($4,000 and $500) and $40,000 in respect of the CFMMEU ($38,000 and $2,000)8. The Commissioner appealed to this Court, contending that the Full Court made two related errors: first, in regarding the discretion under s 546 of the Act as constrained by a "notion of proportionality"; and secondly, in regarding the statutory maximum civil penalty as providing a "yardstick" according to which the maximum may be imposed only in a case involving the worst category of contravening conduct. The Commissioner's contentions should be accepted and the appeal allowed. Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU's non-compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain. The Full Court's critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a "notion of proportionality", in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty v ABCC (2020) 282 FCR 580 8 Pattinson v ABCC (2020) 282 FCR 580 at 652 [211], 653-654 [219], 654-655 [222]. even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be "some reasonable relationship between the theoretical maximum and the final penalty imposed"9. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others10. Before turning to discuss the reasons of the primary judge and the Full Court in more detail, it is desirable first to set out the civil penalty provisions of the Act, and to refer to the authoritative and uncontroversial judicial exegesis of those provisions and analogous civil penalty provisions in other Commonwealth legislation. Civil penalties pursuant to s 546 of the Act Section 546(1) of the Act empowers the Federal Court to order a person to pay a pecuniary penalty that the court considers is "appropriate" in respect of a contravention of a civil remedy provision. Section 349(1) is one such civil remedy provision. It provides: "A person must not knowingly or recklessly make a false or misleading representation about either of the following: another person's obligation to engage in industrial activity; another person's obligation to disclose whether he or she, or a third person: 9 Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at 63 [156]. 10 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293. is or is not, or was or was not, an officer or member of an industrial association; or is or is not engaging, or has or has not engaged, in industrial activity." By reason of s 546(2), a pecuniary penalty must not exceed the relevant "maximum penalty" specified by s 539(2). The maximum penalties for a contravention of s 349(1) are 60 penalty units for an individual and 300 penalty units for a body corporate11. At the time of the contraventions, a penalty unit was $21012. Accordingly, the maximum penalties that could have been imposed in the present case were $25,200 in respect of Mr Pattinson ($12,600 for each contravention) and $126,000 in respect of the CFMMEU ($63,000 for each contravention). In The Commonwealth v Director, Fair Work Building Industry Inspectorate ("the Agreed Penalties Case")13, French CJ, Kiefel, Bell, Nettle and Gordon JJ said that civil penalty provisions of the kind enacted in s 546 have a "statutory function of securing compliance with provisions of the [statutory] regime". Although it is accepted in the authorities that the courts may adapt principles which govern criminal sentencing to civil penalty regimes, "basic differences"14 between criminal prosecutions and civil penalty proceedings mean there are limits to the transplantation of principles from the former context to the latter. Indeed, the Act is emphatic in drawing a distinction between its civil penalty regime and criminal proceedings. For example: a contravention of a civil remedy provision is not an offence15; the rules of evidence and procedure for civil matters are applicable to proceedings relating to a contravention of a civil remedy 11 See s 546(2) of the Act. 12 s 4AA(1) of the Crimes Act 1914 (Cth). (2015) 258 CLR 482 at 495 [24]. 14 Agreed Penalties Case (2015) 258 CLR 482 at 505 [51]. See 505-507 [52]-[57]. 15 s 549 of the Act. provision16; and a court must not make a pecuniary penalty order for a contravention of a civil remedy provision against a person who has already been convicted of an offence for substantially the same conduct17. Most importantly, it has long been recognised that, unlike criminal sentences, civil penalties are imposed primarily, if not solely, for the purpose of deterrence. The plurality in the Agreed Penalties Case said18: import notions of retribution19 and "[W]hereas criminal penalties rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance20: 'Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.'" 16 s 551 of the Act. 17 s 552 of the Act. (2015) 258 CLR 482 at 506 [55]. 19 Gapes v Commercial Bank of Australia Ltd (1979) 27 ALR 87 at 90; cf Australian Securities and Investments Commission v Ingleby (2013) 39 VR 554 at 565 [44]. [1991] ATPR ¶41-076 at 52,152; cf Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR In a similar vein, in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner21, the Full Court of the Federal Court cited the decision of French J in Trade Practices Commission v CSR Ltd22 and the reasons of the plurality in the Agreed Penalties Case as establishing that deterrence is the "principal and indeed only object" of the imposition of a civil penalty: "[r]etribution, denunciation and rehabilitation have no part to play". In explaining the deterrent object of civil penalty regimes such as that found in the Act, the majority of this Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd23 approved the statement by the Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission24 that a civil penalty: "must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business". In CSR25, French J listed several factors which informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value: "The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following: The nature and extent of the contravening conduct. The amount of loss or damage caused. (2018) 264 FCR 155 at 167 [19]. [1991] ATPR ¶41-076. (2013) 250 CLR 640 at 659 [66]. (2012) 287 ALR 249 at 265 [62]. [1991] ATPR ¶41-076 at 52,152-52,153. The circumstances in which the conduct took place. The size of the contravening company. The degree of power it has, as evidenced by its market share and ease of entry into the market. The deliberateness of the contravention and the period over which it extended. 7. Whether the contravention arose out of the conduct of senior management or at a lower level. 8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. 9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention." It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations26 as a "rigid catalogue of matters for attention"27 as if it were a legal checklist. The court's task remains to determine what is an "appropriate" penalty in the circumstances of the particular case. 26 See also Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at 114-116 [126]; Kelly v Fitzpatrick (2007) 166 IR 14 at 27 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at The reasons of the primary judge The material put before the primary judge by the Commissioner included information as to the revenue and assets of the CFMMEU. This material showed that the CFMMEU was well-resourced, having more than sufficient means to pay any penalty that the court might have been disposed to impose. The material also showed that it had a troubling history of contraventions of the Act, including In this latter regard, the primary judge noted that the CFMMEU, since around the year 2000, had contravened civil remedy provisions of the Act or its predecessor on approximately 150 occasions, and s 349(1) on at least seven occasions28. The primary judge observed that the CFMMEU was, notoriously, a "serial offender" in that it had historically acted in disregard of the law and appeared to treat the imposition of pecuniary penalties in respect of those contraventions as "little more than the cost of its preferred business model"29. The primary judge found that the CFMMEU "favours a policy of 'no ticket, no start' and holds that philosophy ... as preferable to the law of the land" and that "the misconduct in this case is but the latest example of the Union's strategy '... to engage in whatever action, and make whatever threats, it wishes, without regard to the law ...'"30. On appeal to the Full Court, the CFMMEU did not dispute, and the Full Court did not disturb, these findings31. In this Court, the CFMMEU did seek to cavil with these findings, but identified no basis on which this Court might properly ignore them. It was also argued for the CFMMEU that the gravamen of the contraventions of s 349(1) of concern here was not the furtherance of the CFMMEU's "no ticket, no start" policy but rather misrepresentations about the existence and effect of such a policy. But the point is that the misrepresentations 28 ABCC v Pattinson (2019) 291 IR 286 at 298 [35]. 29 ABCC v Pattinson (2019) 291 IR 286 at 297 [33]. 30 ABCC v Pattinson (2019) 291 IR 286 at 310-311 [84], citing Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [No 2] [2016] FCA 436 at [142]. 31 Pattinson v ABCC (2020) 282 FCR 580 at 590 [20]. were made with the evident intention of ensuring the de facto implementation of the CFMMEU's "no ticket, no start" policy on site. It is distinctly jejune to suggest that the contraventions were not in furtherance of the CFMMEU's policy. As to the law, the primary judge noted a tension in recent decisions of the Full Court of the Federal Court32. On the one hand, there was the reasoning of the majority of the Full Court (Tracey and Logan JJ) in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner ("Broadway on Ann")33. In that case, Tracey and Logan JJ held that, although the contraventions in question were not of themselves at the most serious end of the spectrum, the imposition of the maximum penalty for each contravention was justified when viewed in the context of the CFMMEU's long history of prior contraventions34. On the other hand, the reasoning of Bromwich J in dissent in Broadway on Ann, and the reasoning of the Full Court in Parker v Australian Building and Construction Commissioner35, emphasised the central importance of the seriousness of the offending conduct as a constraint upon an appropriate penalty. In those judgments, it was said that a history of prior contraventions, while relevant, could not lead to the imposition of a penalty that was disproportionate to the gravity of the instant contraventions36. The primary judge preferred the reasoning of Tracey and Logan JJ in Broadway on Ann over that of Bromwich J and of the Full Court in Parker. His Honour observed that Parker – which was delivered after Broadway on Ann – did not explain how the reasoning of the majority in Broadway on Ann was plainly wrong37. 32 ABCC v Pattinson (2019) 291 IR 286 at 302-303 [53]. (2018) 265 FCR 208. (2018) 265 FCR 208 at 211 [1], 226 [69], 228 [77], 230 [87]. (2019) 270 FCR 39. 36 Broadway on Ann (2018) 265 FCR 208 at 231 [93], 233 [105]; Parker v Australian Building and Construction Commissioner (2019) 270 FCR 39 at 146 [339]. 37 ABCC v Pattinson (2019) 291 IR 286 at 306 [65], 307 [69]. The primary judge explained his preference for the approach of the majority in Broadway on Ann38: "Civil penalties have only one objective: deterrence. The court is charged, simply enough, with fashioning a penalty that serves to deter, both generally and specifically, the conduct in respect of which it is levelled. If the only way to deter even the most objectively inoffensive conduct (so assessed without reference to historical context) is to impose a penalty at or approaching the maximum amount available, then the imposition of anything less would necessarily result in a failure to achieve the only object to which the imposition of civil penalties is directed. That acknowledged, it is not apparent to me how a civil penalty that is fashioned at (and not beyond) a level that is necessary in order to deter the repetition of particular conduct might ever be impugned as disproportionate to its nature or gravity (or seriousness or character). To phrase that proposition as a question: how can a penalty be disproportionate to the nature or gravity of the conduct in respect of which it is imposed if it is no more than what is necessary to achieve the only objective that its imposition is meant to achieve?" The primary judge adopted39 the approach of Tracey J in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union [No 2] ("the Bendigo Theatre Case [No 2]")40. In that case, Tracey J said that if "the maximum penalty prescribed for an offence is intended for cases falling within the worst category of cases for which that penalty 38 ABCC v Pattinson (2019) 291 IR 286 at 307 [71]-[72]. 39 ABCC v Pattinson (2019) 291 IR 286 at 308 [77]. [2018] FCA 1211. is [prescribed]"41, then in the context of a civil penalty regime, with its strong focus on deterrence42: "the maximum penalty may be appropriate for a person who has repeatedly contravened the same or similar legislative provisions despite having been penalised regularly over a period of time for such misconduct. The gravity of the offending, in such cases, is to be assessed by reference to the nature and the quality of the recidivism rather than by comparison of individual instances of offending43. Relevant matters will include the number of contraventions which have occurred over a period, whether the ongoing misconduct is the result of conscious decisions, whether the repeated contravenor has treated the payment of penalties as a cost of doing business and whether any attempt has been made to comply with the law as declared by the Court." (emphasis added) The primary judge considered that to take into account a history of similar contraventions in order to assess the gravity, seriousness, nature or character of an instant contravention would not be to impose a fresh penalty for past offences or to impose a penalty that was disproportionate. Rather, it would "merely inform[] what is proportionate; that is to say, how serious or grave the instant contravention is"44. Applying this approach, the primary judge considered that, when viewed against the backdrop of the CFMMEU's "sorry record of statutory contravention", the contraventions in the present case were "very much of the gravest, most serious kind"45. On that basis, the primary judge held that it was appropriate to impose on the CFMMEU penalties set at the maximum amount, $63,000, although reduced 41 Bendigo Theatre Case [No 2] [2018] FCA 1211 at [18], citing Veen v The Queen [No 2] (1988) 164 CLR 465 at 478. 42 Bendigo Theatre Case [No 2] [2018] FCA 1211 at [20]. 43 Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [No 2] [2015] FCA 1462 at [8]. 44 ABCC v Pattinson (2019) 291 IR 286 at 310 [82] (emphasis in original). 45 ABCC v Pattinson (2019) 291 IR 286 at 310 [84]. by half to reflect that the two contraventions arose from the same course of conduct. In the result, the primary judge imposed on the CFMMEU a penalty of $31,500 for each of the two contraventions46. His Honour was satisfied that a total penalty of $63,000 in respect of the CFMMEU was "a proportionate response to the Union's wrongdoing and represent[ed] the best prospect that the court ha[d] of deterring its repetition"47. In relation to Mr Pattinson, the primary judge considered that although Mr Pattinson did not have a prior history of contraventions, it reflected poorly on him that he enforced the CFMMEU's "no ticket, no start" policy at the site. The primary judge considered that it was important that the penalty imposed on Mr Pattinson be sufficient to deter repetition of the conduct not only by Mr Pattinson himself, but also by other delegates and officers of the CFMMEU48. The primary judge imposed on Mr Pattinson a penalty of $3,000 for each of the two contraventions49. The reasons of the Full Court The Full Court allowed the appeal by Mr Pattinson and the CFMMEU. Allsop CJ, White and Wigney JJ delivered the leading judgment, with which Besanko and Bromwich JJ agreed. The Full Court recognised that the object of civil penalties is entirely protective, in that they are aimed at promoting compliance through general and specific deterrence, and concepts of punishment, retribution and rehabilitation from the criminal law have no role to play50. Having said that, however, their Honours went on explicitly to confine the exercise of the discretion conferred 46 ABCC v Pattinson (2019) 291 IR 286 at 316-317 [115]. 47 ABCC v Pattinson (2019) 291 IR 286 at 317 [117]. 48 ABCC v Pattinson (2019) 291 IR 286 at 311 [85]-[86]. 49 ABCC v Pattinson (2019) 291 IR 286 at 317 [116], [118]. 50 Pattinson v ABCC (2020) 282 FCR 580 at 595 [35], 596 [39]. by s 546 of the Act by reference to considerations relating to the importance of retribution in sentencing for breaches of the criminal law. The constraint that the Full Court applied took the form of a "notion of proportionality". Their Honours derived51 this "notion" of proportionality from the "principle" of proportionality discussed in Veen v The Queen [No 2]52. Their Honours proceeded on the principle of proportionality discussed in Veen [No 2] was itself rooted in the central significance of the purpose of retribution in criminal sentencing and the need for the punishment to fit the crime, that did not mean that a "notion" of proportionality had no place in civil penalty regimes that had deterrence as their sole purpose53. Rather, their Honours anchored their "notion" of proportionality in the civil penalty context by regarding that notion as inhering in the task, in s 546, of setting a penalty at a level that is "appropriate"54. that, although the basis An important aspect of this "notion" of proportionality that was said to have "survive[d]" the rejection of retributive considerations in the imposition of civil penalties was the Full Court's understanding of the role of the statutory maximum penalty in "shap[ing]" the appropriate punishment for offending of the relevant kind55. In this regard, the Full Court considered that a statutory maximum penalty was intended to be reserved for cases in which the "circumstances, including the nature and gravity of the contravention, ... warrant or call for the highest possible level of deterrence as reasonably appropriate"56. 51 Pattinson v ABCC (2020) 282 FCR 580 at 601 [61]. (1988) 164 CLR 465. 53 Pattinson v ABCC (2020) 282 FCR 580 at 598 [45], 616-617 [107]. 54 Pattinson v ABCC (2020) 282 FCR 580 at 614 [104], 616-617 [107], 618-619 [111], 55 Pattinson v ABCC (2020) 282 FCR 580 at 609 [92]. 56 Pattinson v ABCC (2020) 282 FCR 580 at 616 [106]. See also 601 [62], 613 [98], In the Full Court's view, a case could not be in the worst category merely by reason of the contravenor having a history of prior contraventions: to impose the maximum penalty in such a case would be to impose a penalty disproportionate to the nature, gravity and seriousness of the instant contravention57. Because the setting of statutory maxima is a matter for Parliament, any perceived inadequacy of those maxima to deter contraventions could not be a reason for imposing a maximum penalty in circumstances where it would not otherwise be warranted58. The Full Court considered that courts may have regard to wilful recidivism and intentional disobedience of the law59. The Full Court emphasised, however, that any demonstrated attitude of non-compliance of a contravenor was relevant only to the extent that it coloured the nature, gravity and seriousness of the contravention60, the focus remaining always on "the nature and the character of the human conduct that constituted the contravention in question"61. Allsop CJ, White "What is not permitted in the name of deterrence is to untether the penal response from the nature and character of the instant contravention such that the penalty imposed can be seen to be undifferentiated between grades of conduct assessed and characterised on a principled basis. ... to remove proportionality from the assessment of an appropriate penal response to a contravention or to make it a subsidiary consideration, would lead to an interpretation of a statutory power to inflict a penal consequence untethered to the nature and seriousness of the contravention. In such circumstances one is no longer penalising for an instant 57 Pattinson v ABCC (2020) 282 FCR 580 at 636 [160]-[161], 642-643 [180]-[181]. 58 Pattinson v ABCC (2020) 282 FCR 580 at 631 [139]. 59 Pattinson v ABCC (2020) 282 FCR 580 at 615 [106], 617-618 [108]-[110]. 60 Pattinson v ABCC (2020) 282 FCR 580 at 637 [162], 642 [180], 645 [186], 61 Pattinson v ABCC (2020) 282 FCR 580 at 647 [195]. 62 Pattinson v ABCC (2020) 282 FCR 580 at 642 [180]-[181]. contravention, rather one is imposing penalties to bring about compliance generally by, in effect, saying the maximum penalty is always available against the recidivist for any contravention since the penalty will always conform with the object of deterrence." (emphasis added) To similar effect, Besanko and Bromwich JJ said that it was important to recognise63: "the subtle but fundamental difference between characterising what has happened, which is conventional and permissible, and changing the character of what has happened, which is impermissible because it has the effect of at least in part imposing a penalty for what has been sanctioned previously. It is the injustice of the latter approach that is precluded by the principle of proportionality identified in Veen No 2." The Full Court concluded that the primary judge had committed such an error. While it was permissible for the primary judge to take into account the demonstrated unwillingness of the CFMMEU to obey the law as a factor bearing upon the seriousness of the instant contraventions, the Full Court considered that the CFMMEU's history of contraventions overwhelmed the primary judge's analysis such that his Honour did not make any real evaluation of the features of the instant contraventions. In effect, the primary judge was said to have determined that, because the CFMMEU's recidivism had reached some threshold level, future contraventions could be treated as being of the worst category and deserving of the maximum penalty, irrespective of the circumstances of the conduct that comprised the contraventions. Such a conclusion was said to be erroneous, since it would "jettison" the "notion of proportionality" their Honours regarded as inherent in the task required by s 546 to determine an appropriate penalty for a contravention64. Section 546 and the "notion of proportionality" The "notion of proportionality" derived by the Full Court from Veen [No 2] is so closely connected to the central role of retribution in criminal sentencing that it cannot be translated coherently into the civil penalty context of the Act. 63 Pattinson v ABCC (2020) 282 FCR 580 at 656-657 [231]. 64 Pattinson v ABCC (2020) 282 FCR 580 at 647-648 [194]-[195]. The proposition for which Veen [No 2] stands in the criminal law is that a sentence that is imposed with a view to protecting the community from a criminal offender must not be disproportionate to the seriousness of the offending for which the offender is being sentenced65. That is because, in the criminal law, the purpose of retribution – that is, imposing a punishment that fits the crime and is proper because it is what the offender deserves – constrains the sentencing discretion66. As noted above, it is well-settled that, in the civil penalty regime of the Act, retribution has no part to play. Nothing in the text, context or purpose of s 546 of the Act suggests that the Full Court's "notion of proportionality" inheres in the court's task, pursuant to s 546, to fix a penalty which it considers to be an "appropriate" penalty. The discretion conferred by s 546 is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably67 having regard to the subject matter, scope and purpose of the legislation68. In a civil penalty context, Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission69 said: "[I]nsistence upon the deterrent quality of a penalty should be balanced by insistence that it 'not be so high as to be oppressive'. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression." It may therefore be accepted that s 546 requires the court to ensure that the penalty it imposes is "proportionate", where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity. It is in this sense that the Full Court in Australian Competition and (1988) 164 CLR 465 at 472-473. (1988) 164 CLR 465 at 473-474. 67 Comcare v Banerji (2019) 267 CLR 373 at 403 [40]. 68 Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22], 96 [65], 120-121 [134]; Northern Territory v Sangare (2019) 265 CLR 164 at 172-173 [24]. (1996) 71 FCR 285 at 293. Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd70 used the term "proportionality", when their Honours said: "If it costs more to obey the law than to breach it, a failure to sanction contraventions adequately de facto punishes all who do the right thing. It is therefore important that those who do comply see that those who do not are dealt with appropriately. This is, in a sense, the other side of deterrence, being a dimension of the general deterrence equation. This is not to give licence to impose a disproportionate or oppressive penalty, which cannot be done, but rather to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance." (emphasis added) However, the Full Court's "notion of proportionality" derived from Veen [No 2] is something quite different. That notion cannot be reconciled with the decisive statements in the Agreed Penalties Case that civil penalties are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions71. To introduce considerations drawn from theories of retributive justice into the application of s 546 of the Act undermines the primary significance of deterrence. That the Full Court's approach in this case is apt to undermine the primacy of deterrence as the objective of the civil penalty regime in the Act is amply demonstrated once regard is had to the failure of previous penalties to have any deterrent effect on the CFMMEU's repeated contraventions of s 349(1) of the Act. The circumstance that the CFMMEU has continued to breach s 349(1), steadfastly resistant to previous attempts to enforce compliance by civil penalties fixed at less than the permitted maximum, is a compelling indication that the penalties previously imposed have not been taken seriously because they were insufficient to outweigh the benefits flowing unlawfully to the contravenor from adherence to the "no ticket, no start" policy. To the contrary, the CFMMEU's continuing (2016) 340 ALR 25 at 62 [152]. (2015) 258 CLR 482 at 495 [24], 506 [55], 507-508 [59], 523-524 [110]. defiance of s 349(1) indicates that it regards the penalties previously imposed as an "acceptable cost of doing business"72. Adoption of factors from criminal sentencing The CFMMEU submitted that although this Court's reasons in the Agreed Penalties Case73 and Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union74 were decisive in emphasising the primacy of deterrence as the objective of civil penalty regimes, this Court did not decide that factors which were traditionally seen to be grounded in retributive analysis – including proportionality – could never be relevant to the fixing of an appropriate civil penalty. The answer to this submission is that the reasoning in those decisions of this Court proceeds, unmistakably, on the basis that considerations of retribution are indeed immaterial to the application of s 546, save insofar as they are also material to deterrence, specific and general. And, to the extent that some of the factors listed by French J in CSR might be said to echo retributive theories, his Honour also made clear that those factors were relevant only to the extent they related to deterrence. It is therefore idle to observe, as the CFMMEU does, that nothing in the discussion in this Court's decisions expressly denies the possibility that the Full Court's "notion of proportionality" could "survive the rejection of retribution" as a relevant consideration – that notion is denied by the fundamental premise of this Court's decisions. It may be recognised that some concepts familiar from criminal sentencing may usefully be deployed in the enforcement of the civil penalty regime. In this regard, concepts such as totality, parity and course of conduct may assist in the assessment of what may be considered reasonably necessary to deter further contraventions of the Act. On behalf of the CFMMEU, the rhetorical question was asked, on several occasions, how it was that proportionality as a principle of sentencing did not translate to the civil penalty regime when other concepts 72 Agreed Penalties Case (2015) 258 CLR 482 at 524 [110], citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66] and Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 at 265 [62]-[63]. (2015) 258 CLR 482 at 506 [55]. (2018) 262 CLR 157 at 173 [43]-[44], 185 [87], 195-196 [116]. familiar in criminal sentencing such as totality, parity and course of conduct have been accepted as relevant. A compelling answer to that rhetorical question was provided by the Commissioner's counsel. Proportionality in this context has a normative character foreign to the purpose of the power, whereas concepts such as totality, parity and course of conduct are analytical tools75 which assist in the determination of a reasonable application of the law. Although these analytical concepts have been developed in the context of the punishment of crime, unlike proportionality, they are not so closely tied to retribution as to be incompatible with a civil penalty regime focussed on deterrence. The end of discretion? It does not follow, as the Full Court suggested76 and as the CFMMEU argued in this Court, from the rejection of the Full Court's "notion of proportionality" that s 546 must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender. It is important to recall that an "appropriate" penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a "one-off" result of inadvertence by the contravenor rather than the latest instance of the contravenor's pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions. The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors of the kind adverted to by French J in CSR. For example, where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the 75 See Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312 at 447-448 [421]-[424]; Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at 294 [226]. 76 Pattinson v ABCC (2020) 282 FCR 580 at 647-648 [195]. court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions. It is not necessary to multiply examples further. It is sufficient to say that a court empowered by s 546 to impose an "appropriate" penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act. Not the "worst case" The Full Court erred in treating the statutory maximum as implicitly requiring that contraventions be graded on a scale of increasing seriousness, with the maximum to be reserved exclusively for the worst category of contravening conduct. Nothing in the text of s 546, or its broader context, requires that the maximum constrain the statutory discretion in this way. This Court's reasoning in the Agreed Penalties Case is distinctly inconsistent with the notion that the maximum penalty may only be imposed in respect of contravening conduct of the most serious kind. Considerations of deterrence, and the protection of the public interest, justify the imposition of the maximum penalty where it is apparent that no lesser penalty will be an effective deterrent against further contraventions of a like kind. Where a contravention is an example of adherence to a strategy of choosing to pay a penalty in preference to obeying the law, the court may reasonably fix a penalty at the maximum set by statute with a view to making continued adherence to that strategy in the ongoing conduct of the contravenor's affairs as unattractive as it is open to the court reasonably to do. In regarding the statutory maximum penalty as having a role in a civil penalty context as some kind of graduated scale by which contraventions are to be categorised in order of seriousness and corresponding penalty, the Full Court attempted to transplant a concept of retributive justice, the origins of which are to be found in the criminal law, into a civil penalty regime in which retribution has no role to play. This "yardstick" understanding of the maximum penalty, with its focus on the objective seriousness or gravity of a contravention, is reminiscent of retributive notions of "just deserts"77 and the adage that the punishment should fit the crime. It is also instructive to note that, even in the criminal law, the role of the maximum penalty as a yardstick is not controlling, and must instead be balanced with all other relevant factors. In Markarian v The Queen78, Gleeson CJ, Gummow, Hayne and Callinan JJ said: "[C]areful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick." (emphasis added) In a civil penalty context, the relevance of a prescribed maximum penalty as a yardstick was explained by the Full Court of the Federal Court in Reckitt Benckiser79, where their Honours, citing Markarian, said: "The reasoning in Markarian about the need to have regard to the maximum penalty when considering the quantum of a penalty has been accepted to apply to civil penalties in numerous decisions of this Court both at first instance and on appeal. As Markarian makes clear, the maximum penalty, while important, is but one yardstick that ordinarily must be applied. Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of 77 Pearce v The Queen (1998) 194 CLR 610 at 623 [40]. (2005) 228 CLR 357 at 372 [31]. (2016) 340 ALR 25 at 63 [155]-[156]. the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed." (citations omitted) Two aspects of the Full Court's reasoning in this passage from Reckitt Benckiser deserve particular emphasis here. The first is their Honours' recognition that the maximum penalty is "but one yardstick that ordinarily must be applied" and must be treated "as one of a number of relevant factors". As has already been seen, other factors relevant for the purposes of the civil penalty regime include those identified by French J in CSR. The second point is that the maximum penalty does not constrain the exercise of the discretion under s 546 (or its analogues in other Commonwealth legislation), beyond requiring "some reasonable relationship between the theoretical maximum and the final penalty imposed". This relationship of "reasonableness" may be established by reference to the circumstances of the contravenor as well as by the circumstances of the conduct involved in the contravention. That is so because either set of circumstances may have a bearing upon the extent of the need for deterrence in the penalty to be imposed. And these categories of circumstances may overlap. Contravention vs contravenor One way of characterising the error of the Full Court was that, in reasoning to the conclusion that the CFMMEU's contraventions were not deserving of the maximum penalty, it sought to draw a sharp distinction between the circumstances of the contraventions and the circumstances of the contravenor. In focussing upon this distinction, the Full Court concluded that, having regard to the circumstances of the contraventions, which were not examples of the worst sort of conduct comprehended by s 349(1), the primary judge erred in imposing the maximum penalty80. But on the approach in CSR and affirmed in the decisions of this Court referred to above, both the circumstances of the contravenor and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for. Indeed, as long ago as Trade Practices 80 Pattinson v ABCC (2020) 282 FCR 580 at 647-648 [195]. Commission v Stihl Chain Saws (Aust) Pty Ltd81, in a passage referred to with evident approval by French J in CSR82, Smithers J said that a civil penalty "should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act". The distinction upon which the Full Court sought to insist cannot control the balancing exercise required by s 546. Indeed, it is difficult to see how this distinction serves any useful purpose in this context. Once it is accepted, as it must be, that the maximum penalty is intended by the Act to be imposed in respect of a contravention warranting the strongest deterrence within the prescribed cap, there is no warrant for the court to ascertain the extent of the necessity for deterrence by reference exclusively to the circumstances of the contravention. The categories of circumstances may overlap, in that matters may bear upon both the seriousness of the contravention and the intransigence of the contravenor. Further, circumstances which can be said to relate exclusively to the contravenor may bear strongly on what level of deterrence will be "appropriate". The majority in Broadway on Ann and the primary judge in this case were correct in concluding that the need for deterrence in each case, demonstrated by a persistent adherence to a strategy of non-compliance, warranted the imposition of the maximum penalty. They were also correct to reject the proposition that the court's assessment of what was reasonably necessary for deterrence was subject to the constraint that the maximum penalty could not be imposed in any case where the contravening conduct was not the worst example of contravening conduct. But to the extent that the majority in Broadway on Ann and the primary judge reached these conclusions by reasoning that the contravenor's history of contraventions was relevant only because it was a factor that made the circumstances of the contraventions of the most serious kind, their Honours might be said to have adopted an unnecessarily strict focus on the seriousness of the contravening conduct as distinct from the circumstances of the contravenor. It is not necessary that the task of setting a penalty that is "appropriate" to deter further contraventions should proceed by considering characteristics of the contravenor only to the extent that they can be said to bear upon the seriousness of the contravening conduct. [1978] ATPR ¶40-091 at 17,896. [1991] ATPR ¶41-076 at 52,153. The circumstances of the contravenor Indeed, in some cases, the circumstances of the contravenor may be more significant in terms of the extent of the necessity for deterrence than the circumstances of the contravention. In this regard, it is simply undeniable that, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravenor to abide by the law rather than to adhere to its preferred policy than will be necessary to persuade a poorly resourced contravenor that its unlawful policy preference is not sustainable. It is equally obvious that, the more determined a contravenor is to have its way in the workplace and the more deliberate its contravention is, the greater will be the financial incentive necessary to make the contravenor accept that the price of having its way is not sustainable83. In the present case, the CFMMEU's determination and financial ability to adhere to its "no ticket, no start" policy in defiance of the law are indisputably the most significant considerations in the assessment pursuant to s 546 of what is reasonably necessary to deter further contraventions of a like kind. The circumstances of the contraventions As to the circumstances of the contraventions of concern here, too much should not be made of the fact that the contraventions were not attended by violent or intimidatory behaviour that might have made the contraventions appear more serious. The public interest directly protected by s 349(1) of the Act lies in ensuring the maintenance of rights of association in the workplace. It is the interference with those rights by the making of false or misleading representations that is the gravamen of a contravention of s 349(1). To the extent that circumstances of aggravation such as violent or intimidatory behaviour might attend contraventions of s 349(1), those aggravating circumstances might well engage other laws concerned to protect peace and good order. It was argued on behalf of Mr Pattinson that, even if the Commissioner's appeal were otherwise successful, this Court should not set aside the penalty fixed by the Full Court in respect of Mr Pattinson and restore the penalty fixed by the primary judge. It was said that since the determination of the primary judge, 83 See Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR Mr Pattinson has retired. It was also said that he was merely a site delegate, not a senior official of the CFMMEU responsible for its policy and strategies. On that footing, it was said that considerations of specific deterrence did not support the penalty fixed by the primary judge. This argument should be rejected. The circumstance that Mr Pattinson has retired since the judgment of the primary judge says nothing against the appropriateness, as a matter of specific deterrence, of the penalty fixed by the primary judge. In addition, as is apparent from the primary judge's reasons, that penalty reflected considerations of general deterrence relevant to other delegates and officers of the CFMMEU. The reasons of the Full Court identify no reason for reducing the penalty fixed by the primary judge in relation to Mr Pattinson. It is noteworthy that the primary judge did not impose on Mr Pattinson anything like the maximum penalty that might have been imposed upon him. If the Full Court's interference with the primary judge's exercise of discretion in relation to Mr Pattinson is explicable on the same basis as that which led to the Full Court's interference with the penalty imposed on the CFMMEU, then, for the reasons set out above, there was no basis for that course. The penalty imposed by the primary judge in relation to Mr Pattinson should be restored. Conclusion The theory of s 546 of the Act is that the financial disincentive involved in the imposition of a pecuniary penalty will encourage compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice. Whether or not experience vindicates the theory of the Act is a matter for Parliament. The court's function is to give effect to the intention of the Act. In this regard, the court must do what it can to deter non-compliance with the Act. Where it is evident that a contravention has occurred as a matter of industrial strategy pursued without regard for the law, it is open to a court acting under s 546 reasonably to conclude that no penalty short of the maximum would be appropriate. The circumstance that the imposition of the maximum penalty might not prove in fact to be effective to deter further contraventions is not a reason to impose a lesser penalty or no penalty at all. The judicial task of setting an "appropriate" penalty under s 546 of the Act is informed by well-settled principles that have been applied without difficulty, and which require no supplementation by proportionality", drawn from the criminal law context of Veen [No 2]. the Full Court's "notion of The Full Court expressly acknowledged that "we are not in the domain of crime" and that "[t]he imposition of civil penalties is free from notions of retribution and denunciation, its object is deterrence"84. But it is impossible to square these acknowledgements with their Honours' conclusions, from which it is apparent that their Honours were distracted by their "notion of proportionality" from coming to grips with the central question: whether, in light of the CFMMEU's strategy of non-compliance with the law, the penalties imposed by the primary judge were reasonably necessary to deter further contraventions. To say, as the Full Court did, that on the approach taken by the primary judge "[t]he penalty becomes imposed not for the instant contravention but, to some degree, for the past, again"85 is to fail to appreciate that the significance of the CFMMEU's past offending is that it demonstrates a fixed "intention of promoting a no-ticket no-start policy"86. It is to fail to appreciate that the CFMMEU's tenacity in adhering to that policy reflects a calculation on its part that the industrial benefits from that adherence are such that the lesser penalties previously imposed are a price worth paying so that it can continue to have its way. The Full Court's unwarranted complication of the court's task pursuant to s 546, by introducing a "notion of proportionality" as a control on that discretion and by reserving the statutory maximum for an imagined "worst case", is apt to divert a court from its real task under s 546 of fixing the penalty which it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act. In the circumstances of this case, it was open to the primary judge reasonably to conclude that the maximum penalty was necessary to deter the CFMMEU from further contravening conduct of the kind in which it had engaged. The Full Court erred in holding otherwise. 84 Pattinson v ABCC (2020) 282 FCR 580 at 646 [191]. 85 Pattinson v ABCC (2020) 282 FCR 580 at 647 [195]. See also 657 [231]. 86 Pattinson v ABCC (2020) 282 FCR 580 at 647 [195]. Orders The appeal must be allowed. The orders of the Full Court should be set aside and, in their place, the appeal to the Full Court should be dismissed. Edelman The problem with deterrence It is "sometimes just to hang an innocent" person87. That is where the logic of general deterrence leads. The logic of specific deterrence can also lead to gross injustice. It can create a legal position where, as Professor Zedner has observed, the "utterly repentant offender, unlikely to repeat their crime, would not need to be punished however serious the offence for which they stand convicted, whereas the unrepentant offender who appears unlikely to change might attract a penalty greatly disproportionate to the present offence"88. Consider two hypothetical examples. First, a billion-dollar corporation commits multiple related contraventions of a civil remedy provision over a lengthy period. The contraventions are extremely serious. Although the contraventions are unknown, unintended, and undesired by any person in the company, they result in many millions of dollars of losses to the general public and they threaten public health and safety. The extreme disapprobation from the general public leads the corporation, and others like it, to put systems in place to ensure that there is almost no likelihood that the corporation, or any others like it, will commit any contravention of that general nature again. The maximum penalty for a single infringement by the civil penalty provision for a corporation is $63,000 but the effect of the multiple contraventions is that the maximum penalty is in the region of many millions of dollars. The court concludes that very little, if any, penalty is needed to ensure that the corporation or others in a similar position do not commit a contravention of this nature again. Secondly, an individual of modest means commits a single contravention of the same civil remedy provision. The contravention is extremely minor and results in no losses to anyone and no threat to anyone's health or safety. The maximum penalty for a single infringement by the civil penalty provision for an individual is $12,600. There is evidence that many other individuals exhibit an attitude of extreme defiance of the civil remedy provision and the court concludes that, unless the penalty imposed upon the individual is set at a level close to the maximum of $12,600, many others will contravene the provision. The contraventions by the corporation deserve a substantial penalty. The contravention by the individual does not. But, if the principal purpose of imposing civil penalties for a breach of this provision were deterrence then, as the 87 Moore, Placing Blame: A General Theory of the Criminal Law (1997) at 96, quoting Dennett and Lambert, The Philosophical Lexicon, 7th ed (1978) at 8. See also Voltaire, Candide (1759) at 211-212. 88 Zedner, Criminal Justice (2004) at 95. Edelman Solicitor-General of the Commonwealth submitted in oral argument on this appeal, only a token penalty should be imposed on the hypothetical corporation. It would be hard to justify even a penalty of $1,000 if no specific or general deterrence were thought to be required. But a focus principally upon the purpose of deterrence might be thought to justify a penalty of around $10,000 upon the individual for the purpose of general deterrence. Something is wrong with the law if, solely due to the future propensity of action by others, the law could tolerate a penalty of ten times more for (i) an individual who commits a single, minor contravention of a civil remedy provision than (ii) a billion-dollar corporation which commits far more serious contraventions on multiple occasions. The force of the reasons of the Full Court of the Federal Court of Australia in this case lies in that Court's valiant attempt to reconcile (i) the difficult requirement that the principal focus of a court be upon deterrence with (ii) ordering a penalty which a contravener, in justice, deserves for their past conduct. The latter has a powerful claim to be the principal focus required of a court exercising its power under s 546(1) of the Fair Work Act 2009 (Cth), upon finding a contravention of that Act, to "order a person to pay a pecuniary penalty that the court considers is appropriate". It is hard to imagine that Parliament intended, by that reference to "appropriate", to set the foundations of punishment by civil penalties in utilitarian notions of deterrence, rather than in the principle of just desert that has for so long formed the foundations of the approach to punishment in the criminal law. Nevertheless, the present doctrine of this Court is that the principal object of civil penalties is not desert but deterrence, the latter being an economic approach to punishment that uses the offender as an instrument of social policy and has been described even by its defenders as one that has not been favoured for the last hundred years89. The conduct of the second respondent union ("the CFMMEU") does not expose the problems with a principal focus upon deterrence in the way that the above hypothetical examples do. The conduct of the CFMMEU would have required a very substantial penalty on a view of the law based on either desert or deterrence. The circumstances of the CFMMEU's breaches were serious (for the reason that they were committed in wilful defiance of the law and preceded by 150 previous findings of contravention). The CFMMEU is also very likely to continue to commit these or similar contraventions of the Fair Work Act. As the CFMMEU has significant resources, a small penalty would have little or no effect. The primary judge imposed a substantial penalty: for the two contraventions 89 Compare Becker, "Crime and Punishment: An Economic Approach", in Becker and Landes (eds), Essays in the Economics of Crime and Punishment (1974) 1 at 45. Edelman together, the CFMMEU was ordered to pay the maximum penalty for a single contravention, $63,000. By contrast, the circumstances of the first respondent in this case, Mr Pattinson, point to anomalies with the application of a primary criterion of deterrence. Mr Pattinson is a 70-year-old, now retired, builder with more than two decades' experience as a site delegate whose reckless misrepresentation to two people, depriving each of them of a single day of work, was his first contravention of the Fair Work Act. On any view of the law, he did not deserve a substantial penalty. And yet, with the application of a principal purpose of deterrence, and without any evidence of his assets or income, Mr Pattinson was ordered by the primary judge to pay a substantial penalty of $6,000, around half of the maximum amount for a single contravention by an individual. The Full Court of the Federal Court followed the longstanding and basic principle of justice that focuses upon just desert – that penalty which, in justice, is no more than is deserved – and reduced the penalties imposed on both the CFMMEU and Mr Pattinson. Despite the injustice and anomalies in the application of deterrence rather than desert as a principal object of punishment, and despite the inconsistencies in the present state of the law, the Full Court should have applied deterrence as the principal object at the expense of desert. If deterrence, rather than desert, had been applied as a primary principle, the penalty imposed upon the CFMMEU by the primary judge should not have been reduced. Nevertheless, on any view, the Full Court was correct to reduce the penalty imposed upon The circumstances of this case The facts and background to this case are fully set out in the joint judgment. In short, the two contraventions by each of the respondents, Mr Pattinson and the CFMMEU, involved a brief incident in September 2018. Mr Pattinson was an officer of the CFMMEU, in the sense that he was a worker who was an elected representative of the workers on the site at which his employer was contracted to perform work. The contraventions of the Fair Work Act were committed by Mr Pattinson and attributed to the CFMMEU90. The contraventions involved a misrepresentation made by Mr Pattinson to two employees of a subcontractor engaged by Mr Pattinson's employer. Mr Pattinson represented to the two employees that, in order to perform their contracted work under the subcontract, they were required to be members of an industrial organisation. It was admitted by the respondents that this misrepresentation was made knowingly or recklessly and was a contravention of s 349(1) of the Fair Work Act. Since the misrepresentation was 90 Fair Work Act 2009 (Cth), s 363. Edelman made to two employees, Mr Pattinson and the CFMMEU committed two contraventions each. During more than 20 years of work as a site delegate, Mr Pattinson had never previously contravened the Fair Work Act or its predecessor. There was no evidence of Mr Pattinson's income or assets but there was no suggestion that he was a man of any considerable wealth. Nor was there any evidence of his ability to pay any penalty. By contrast, since 2000 the CFMMEU had contravened civil remedy provisions of the Fair Work Act or its predecessor on at least 150 occasions and had contravened s 349(1) on at least seven occasions91. For reasons explained below, the primary judge correctly reasoned that, "in assessing the nature, character and seriousness (and/or gravity) of the Union's Agreed Contraventions, regard may properly be had to its history of contravening conduct"92. That history, as his Honour held, established the contraventions as "very much of the gravest, most serious kind"93. The primary judge also observed that the CFMMEU is Desert and deterrence: primary and secondary criteria of justice Primary and secondary criteria of justice There is a fundamental difference between (i) a penalty that focuses upon "just desert", that is, the penalty that, in justice, is no more than the law treats as deserved by a defendant for their past conduct, and (ii) a penalty that focuses upon deterrence, that is, the penalty that is necessary to prevent a defendant or others in a similar position from contravening in the future. The former is concerned with the seriousness of what the defendant has done. The latter is concerned with what the defendant or others in a similar position might do. For so long as penalising and punishing are seen as a necessary response to breaches of legal rules, basic notions of justice, which recognise the dignity and moral worth of individuals, 91 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 92 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 93 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 94 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 Edelman usually require that the range of available penalties should be primarily set by reference to what a person has done rather than what the person or others might do in the future. As H L A Hart observed, "[l]ong sentences of imprisonment might effectually stamp out car parking offences, yet we think it wrong to employ them"95. Nevertheless, as a secondary criterion, an assessment of what the person, or others like them, might do in the future might assist in setting the appropriate penalty within the range of what the person justly deserves for their past conduct96. The primary criterion of justice in penalising should therefore be desert. In other words, in penalising a person, the primary focus should be upon ensuring that they are not punished any more than what the law requires that they deserve based on the seriousness of their past conduct, considered in light of all of the circumstances. In criminal law, this fundamental principle is sometimes expressed as a principle of "reasonableness", "appropriateness", or "proportionality". As Mason CJ, Deane, Dawson, Toohey and McHugh JJ said in Hoare v The Queen97, "a basic principle of sentencing law is that a sentence of imprisonment imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances". Or, as expressed by the Australian Law Reform Commission, "[t]he principle of proportionality requires courts to impose sentences that bear a reasonable, or proportionate, relationship to the criminal conduct in question ... considered in light of its objective circumstances"98. The label "proportionality", which is described as "one of the fundamental principles of sentencing law", is nothing more than the basic principle that a court must, by focusing upon what the law requires that a person deserves, "make a judgment concerning the relationship of the penalty to the facts ... after taking into account all the facts and circumstances of the case"99. Stripped of a requirement of proportionality, a court would be free to order a penalty which is outside the range of what a person deserves for what they have done. Even without language 95 Hart, Punishment and Responsibility: Essays in the Philosophy of Law, 2nd ed 96 Morris, Madness and the Criminal Law (1982), ch 5. Compare von Hirsch, "Proportionality in the Philosophy of Punishment" (1992) 16 Crime and Justice: A Review of Research 55 at 89-90. (1989) 167 CLR 348 at 354 (emphasis in original). 98 Australian Law Reform Commission, Same Crime, Same Time: Sentencing of Federal Offenders, Report No 103 (2006) at 150 [5.3]. 99 Markarian v The Queen (2005) 228 CLR 357 at 385 [69]. Edelman requiring a "reasonable", "appropriate", or "proportionate" punishment, the principle is so basic that it is ordinarily implied in the grant of a judicial discretion to punish100. Desert in criminal law and civil law Civil punishment usually requires an application of the same notions of proportionality as in the criminal law. For instance, an award of punitive damages to punish for civil wrongdoing must not be "disproportionate" to the seriousness of the wrong101. As Stevens J, for the Supreme Court of the United States, said in BMW of North America Inc v Gore102, "[p]erhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct". The award must not be "wholly disproportioned to the offense"103. In Comcare v Banerji104, in discussing the operation of s 15 of the Public Service Act 1999 (Cth), which permits the imposition by an employer of penalties including fines on an Australian Public Service employee, Kiefel CJ, Bell, Keane and Nettle JJ said that s 15 requires a "lawful, proportionate response to the nature and gravity of [the] misconduct" governed by a principle that a "[b]reach of the impugned provisions renders an employee of the APS liable to no greater penalty than is proportionate to the nature and gravity of the employee's misconduct". It is difficult to see why a civil penalty provision imposing only monetary penalties should be treated any differently. As Gleeson CJ, McHugh, Gummow and Hayne JJ said in Gray v Motor Accident Commission105, after referring to matters including "[t]he increasing frequency with which civil penalty provisions are enacted", such matters "deny the existence of any 'sharp cleavage' between the criminal and the civil law". 100 See also Veen v The Queen [No 2] (1988) 164 CLR 465 at 491. 101 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471. See also Gray v Motor Accident Commission (1998) 196 CLR 1 at 10-12 102 (1996) 517 US 559 at 575. 103 (1996) 517 US 559 at 575, citing St Louis, Iron Mountain & Southern Railway Co v Williams (1919) 251 US 63 at 66-67. 104 (2019) 267 CLR 373 at 398 [27], 403-404 [40]. 105 (1998) 196 CLR 1 at 7-8 [16] (footnotes omitted). Edelman In lucid and cogent submissions, senior counsel for the CFMMEU and Mr Pattinson pointed to three instances where the law concerning civil penalties replicates the approach of the criminal law in ensuring that a penalty does not exceed what the law requires that an offender deserves. Each of these instances ensures that the penalty imposed is what the law requires that a contravener deserves, whether proportionality. appropriateness, reasonableness, described The first instance is the totality principle. In criminal law, an aspect of that principle is to prevent an outcome where "the imposition of a cumulative sentence [is] incommensurate with the gravity of the whole of [the offender's] proven criminal conduct or ... due deserts"106. A second aspect of the totality principle in criminal law is that the penalty should not be "crushing" in light of the offender's record and prospects107. Both aspects of this principle have been repeatedly applied in relation to civil penalties to ensure that the penalty is "proportionate to the gravity of the [contraventions]"108 or, put differently, to ensure that the penalty is not "out of proportion to the overall misconduct"109 and is "just and appropriate"110. The second instance is the principle of consistency of punishment. In criminal law, the principle of consistency exists because an assessment of the penalty that an offender deserves includes systemic considerations: the administration of criminal justice "should be systematically fair, and that involves, amongst other things, reasonable consistency"111. One aspect of the principle of 106 Mill v The Queen (1988) 166 CLR 59 at 63, quoting R v Knight (1981) 26 SASR 107 Postiglione v The Queen (1997) 189 CLR 295 at 304, 308, 340-341. 108 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 572 [54]. See also at 567 [23], 583 [102]; QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142 at 166-167 [62]. See further Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 413 at [61]-[62]; Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 265 FCR 208 109 QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142 at 166 [62]. 110 McIver v Healey [2008] FCA 425 at [30]-[31]. 111 Wong v The Queen (2001) 207 CLR 584 at 591 [6]. Edelman consistency is that "careful attention to maximum penalties will almost always be required"112. This involves consideration of whether a person's past conduct, when viewed in light of all the circumstances, including the person's past contraventions, can be regarded as in the most serious category. Broadly the same approach has been taken to civil penalties, with the principle applied so that the imposition of "a maximum penalty offends the principle only if the case is recognisably outside the worst category"113. The third instance is the course of conduct principle, which applies in two circumstances: first, where multiple offences are founded on the same facts "it is necessary to ensure that the appropriate penalty for the same act or omission is not imposed twice"; and, secondly, where the offences are part of a series it is necessary to ensure that the punishment is for "the entirety of the criminal conduct of the same or similar character, rather than the several acts or omissions constituting the separate offences"114. To punish an offender twice for what is properly characterised as the same conduct is to punish other than "according to their just deserts"115. This principle has been repeatedly applied in civil penalty cases as an aspect of proportionality116 on the premise that, if the contraventions arose from a course of conduct, "the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions"117. 112 Markarian v The Queen (2005) 228 CLR 357 at 372 [31]. 113 Fox v St Barbara Mines Ltd [1998] FCA 621 at 18. See also QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142 at 166 [58]; Parker v Australian Building and Construction Commissioner (2019) 270 FCR 39 at 146-147 114 Ryan v The Queen (1982) 149 CLR 1 at 22. 115 Pearce v The Queen (1998) 194 CLR 610 at 623 [40]. 116 See eg Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at 294 [226], 296 [236]. 117 Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at 99-100 [148]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Registered Organisations Commissioner (2020) 283 FCR 404 Edelman Each of these instances – totality, consistency, and course of conduct – is concerned to ensure that an offender or contravener is not punished more than the law requires that they deserve in all of the circumstances of their past conduct. Each instance aims "to ensure that the penalties imposed overall are proportionate to the conduct"118. In other words, each is concerned with the reasonableness, appropriateness, or proportionality of the penalty in relation to the seriousness of the contravention in light of all of the circumstances. Each is independent of deterrence. The role of prior contraventions in assessing desert and deterrence There is an important difference between, on the one hand, taking repeated contraventions into account for the purpose of assessing the seriousness of the instant contravention and, on the other hand, taking repeated contraventions into account for the purpose of assessing the need for general and specific deterrence. The former uses the past contraventions as evidence of the attitude with which the contravention was committed. It is part of the circumstances in which the contravener committed the offence: "repeat violations will lead to an escalation in penalty levels, so as to express moral outrage at the offender's apparent wilful disregard of the law"119. The latter uses the past contraventions only as part of a calculus to predict future behaviour by the contravener or others in a similar position. The difference can be illustrated by an example. Suppose that a person has committed, and been penalised for, contraventions on 150 separate occasions. A 151st contravention will generally be much more serious than the first contravention because on the 151st occasion the court will readily, and far more confidently, draw the inference that the contravener acted in conscious and complete defiance of the law. The seriousness of the contravention is unaffected by predictions of whether the contravener is likely to contravene again or whether others are likely to contravene. Hence, without reducing the seriousness of the 151st contravention, it is possible that the court might also conclude that, on this 151st occasion, there is little need for specific deterrence because following this contravention the contravener has finally changed their course and specific procedures have been put in place to ensure that the contravention does not happen at 428 [81]. See also Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312 at 447 [421]. 118 Parker v Australian Building and Construction Commissioner (2019) 270 FCR 39 119 Yeung, "Quantifying Regulatory Penalties: Australian Competition Law Penalties in Perspective" (1999) 23 Melbourne University Law Review 440 at 455. Edelman again. Although the contravention remains just as serious, the need for specific deterrence is greatly reduced. An example of past contraventions being used to establish both the seriousness of instant contraventions and the need for deterrence is the case of Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner ("Broadway on Ann")120. In the Full Court of the Federal Court121, Tracey J in the majority referred to the history of contraventions by the CFMEU and said that the repeated contraventions "emphasise the objective seriousness of the CFMEU's conduct, acting through its officials. They bespeak deliberate abuse of the CFMEU's privileged position as a registered organisation in the Federal industrial relations system." Also in the majority, Logan J, after referring to the "disgraceful and shameful"122 history of the CFMEU's contraventions of the Fair Work Act, said that "[o]nce the contraventions on the day, deplorable in themselves, are viewed in context, they are, in my view, of the worst possible kind"123. Their Honours imposed the maximum available penalty for each of the six contraventions. With notions of deterrence reinforcing the need for the maximum penalties, the decision of the majority in Broadway on Ann was one that was open. The error in the dissenting decision was to divorce the past contraventions from the circumstances of the instant contraventions, leading to the erroneous conclusion that the instant contraventions could not be treated as being in the most serious category of offending124. The abandonment of desert as the primary criterion in the law of civil penalties In The Commonwealth v Director, Fair Work Building Industry Inspectorate ("the Agreed Penalties Case")125, French CJ, Kiefel, Bell, Nettle and Gordon JJ applied to civil penalties the remarks of French J, made in the context 120 (2018) 265 FCR 208. 121 (2018) 265 FCR 208 at 216 [27]. 122 (2018) 265 FCR 208 at 225 [65]. 123 (2018) 265 FCR 208 at 228 [77]. 124 (2018) 265 FCR 208 at 249 [163]-[164]. 125 (2015) 258 CLR 482 at 506 [55]. Edelman of trade practices legislation126, that "[n]either retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]". In a later decision, Keane, Nettle and Gordon JJ reiterated this point in relation to s 546 of the Fair Work Act127. The effect of these remarks by their Honours – rejecting notions of retribution or desert, together with rehabilitation – was radical. The effect was that deterrence, not desert, became the "principal and indeed only object"128 or the "principal, ... probably the only, object"129 of the imposition of civil penalties. However, although this secondary principle of justice (deterrence) replaced the primary principle of justice (desert), other manifestations of the primary principle of justice – totality, consistency, and course of conduct – have never been abolished. The continued recognition of these manifestations of the concept of desert means that although deterrence might be the principal purpose it cannot be the only purpose for the imposition of civil penalties. The state of the Australian law of civil penalties is therefore that, with the exception of various manifestations of the primary principle of justice in punishment, the seriousness of a contravention is to be assessed primarily for the purpose of deterrence, general and specific. Deterrence is focused upon the future. So any focus upon the events of the past can only be primarily relevant to illuminate the likelihood of contraventions in the future by the contravener or others in a similar position. Unless, and until, either (i) a direct challenge is brought in this Court to the notion that deterrence, rather than desert, is the principal object of civil penalties, or (ii) Parliament enacts new language, such as "proportionality", to replace the concept of "appropriateness" that has been treated as requiring the principal object to be deterrence, Australian law will remain that deterrence, rather than desert, is the principal object of civil penalties. Subject to statutory provision to the contrary, 126 Trade Practices Commission v CSR Ltd [1991] ATPR ¶41-076 at 52,152. 127 Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at 195 [116]. 128 Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155 at 167 [19], citing Trade Practices Commission v CSR Ltd [1991] ATPR ¶41-076 at 52,152. 129 Agreed Penalties Case (2015) 258 CLR 482 at 506 [55], quoting Trade Practices Commission v CSR Ltd [1991] ATPR ¶41-076 at 52,152. Edelman or a judicial re-interpretation of the meaning of an "appropriate" penalty, it is only within the ranges of available penalties based upon deterrence that some manifestations of the principle of desert – such as totality, consistency, and course of conduct – can have a role to play. An example of legislative strengthening of a principle of desert is the provision in s 557(1) of the Fair Work Act, in relation to some contraventions that do not include s 349, which converts the course of conduct principle into a rule that deems the course of conduct to be a single contravention. The approach to penalties based on deterrence On the questionable assumption that monetary penalties do operate in many cases to deter generally or specifically130, any general deterrence provided by those penalties is not binary. It is the experience of every judicial officer who has sentenced offenders or imposed civil penalties that even the largest and most extreme penalties will not deter everyone in a similar position. It is also an unfortunate truth that many potential contraveners, or their officers or advisers, do not spend many hours each week carefully reading the wisdom collected on AustLII, Jade, and other databases containing legal decisions on penalties. At best, general deterrence can only be used to identify a range of penalties in which, in pure utilitarian theory, at the lower end of the range, fewer potential contraveners will be deterred and, at the higher end of the range, more potential contraveners will be deterred. The maximum penalty provides the maximum deterrence that is permitted by law. It provides the maximum psychological impact for the decision calculus of a contravener even if that penalty might not ultimately deter the contravener or other potential contraveners in similar circumstances. In the realm of pure, abstract utilitarian theory, the penalty required by specific deterrence would be more precise than the broad range of possibilities that arise from general deterrence. In the abstract realm, where the premises of utilitarianism hold true, it is theoretically possible for a precise point to be identified below which other potential contraveners will not be deterred but at which specific deterrence will be achieved. But we do not live in that realm. Even upon the very large assumption that the relevant premises of utilitarianism hold true for a contravener – so that their actions are based upon a mechanical calculation of costs and benefits with an identifiable tipping point at which costs will exceed benefits – the information before a court is almost always woefully inadequate to identify that point with any degree of precision. In the real world, a regression analysis which attempted to identify that point would be the legal equivalent of searching in a haystack for a needle that probably does not exist. It is possible, however, that courts might rely upon specific deterrence to attempt to estimate a range of possible penalties, again on the assumptions of 130 Compare Zedner, Criminal Justice (2004) at 94. Edelman utilitarian theory, with an increasing likelihood that, as the penalty increases, the contravener will be deterred in the future. It may be that this exercise is a fool's errand in the absence of expert evidence of (i) behavioural psychology concerning the motivations and systems of the contravener or its officers and (ii) behavioural economics concerning the relevant marketplace. The exercise is nearly certain to be a fool's errand without evidence of the income and assets of the contravener. But, whilst deterrence is regarded as the principal object of civil remedy provisions that give rise to penalties, a court must do the best it can to identify a speculative range of penalties that might reflect increasing degrees of specific deterrence. The practical operation of a penalty regime based principally upon the object of deterrence, therefore, is that a court's assessment of both general and specific deterrence cannot be precise. The assessment can only identify potentially overlapping ranges of penalties, based on general and specific deterrence, that may achieve a reasonable deterrent effect in any decision calculus. Within those ranges, it must be assumed that the increasing penalties will increase the deterrent effect upon the contravener, and others like them, in the future. By definition, and on the assumptions of utilitarianism, the penalty with the greatest deterrent effect will be the maximum penalty available. Within the ranges of reasonable deterrent effect provided by each of general and specific deterrence, there are other factors that assist a court in imposing a particular penalty. In this way, proportionality or desert plays a role as a secondary criterion of justice. In the imposition of an appropriate penalty within the overlapping ranges provided by specific and general deterrence, a court can have regard to considerations including totality, consistency, and course of conduct. For instance, within the range of penalties that must be assumed to exist, from more than a minimal deterrent effect up to the maximum available deterrence, secondary considerations of desert can apply so that the penalty is not crushing or oppressive131. In this secondary sense, the "proportionality of penalty is measured in the wider context of the demands of effective deterrence"132. The need for deterrence in the present case As the primary judge explained, quoting from earlier decisions, (i) the prior and instant conduct of the CFMMEU revealed that "it favours a policy of 'no ticket, no start' and holds that philosophy ... as preferable to the law of the land" and (ii) its 131 See NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293. 132 Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at 62 [152]. Edelman it wishes, without regard misconduct is part of a strategy "to engage in whatever action, and make whatever threats, this anthropomorphising of the CFMMEU reflects the systemic culture of positive defiance of the law which exists within the organisation, requiring a high penalty for the purposes of specific and general deterrence. law"133. The result of the A further, and central, matter relevant to deterrence is the vast resources of the CFMMEU. The Construction and General Division Victoria/Tasmania Divisional Branch of the CFMMEU alone had a revenue of more than $30 million over the year before the contraventions and more than $68 million in net assets. The Solicitor-General correctly submitted that, analytically, the need for specific deterrence of the CFMMEU did not require the primary judge to impose only half of the maximum available penalty, with the reduction due to "course of conduct" considerations. The appellant's case was presented before the primary judge on the basis that a need for reasonable deterrence required a penalty in a range close to the maximum penalty. On such a case it is difficult to find fault in the submission of the Solicitor-General in this Court that, despite the course of conduct principle, it was at least open for the primary judge to order that the CFMMEU pay the combined maximum penalty for the two contraventions of $126,000 for the purpose of achieving specific deterrence. Indeed, if a penalty in that region were necessary to achieve more than a minimal deterrent effect in any decision calculus, it would not be relevant that this penalty might be more than double the amount that the CFMMEU deserved for the conduct attributed to it. But no ground of appeal on this basis was raised before the Full Court of the Federal Court or before this Court. Mr Pattinson's circumstances stand in stark contrast with those of the CFMMEU. There was no suggestion at any stage of this proceeding that Mr Pattinson had wilfully adopted the culture of defiance of the law that permeated the CFMMEU. As observed earlier in these reasons, in over two decades as a site delegate, Mr Pattinson had never previously contravened the Fair Work Act or its predecessor. There was no evidence before the primary judge or before the Full Court of Mr Pattinson's assets or his ability to pay any penalty. Senior counsel for Mr Pattinson submitted, without demur, that Mr Pattinson was a 70-year-old man who was now retired. An estimate of the minimum penalty necessary to achieve a reasonable effect of specific deterrence, at least on the material before this Court, would be a nominal amount. The only deterrent justification for imposition of more 133 Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 at 310-311 [84], citing Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union ("the Werribee Shopping Centre Case") [2017] FCA 1235 at [23], [28] and Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [No 2] [2016] FCA 436 at [142]. Edelman than a nominal amount upon Mr Pattinson would be the need to punish him as an instrument to deter others in his position, that is, for the purpose of general deterrence. The decision of the Full Court and the orders that should be made The Full Court of the Federal Court allowed the appeal of the CFMMEU and Mr Pattinson on two separate grounds. The first ground, which raised the issues discussed above, was that the primary judge erred by failing to approach the imposition of civil penalties on the CFMMEU by characterising the nature and gravity of the contraventions by reference only to the objective characteristics of the contraventions and without regard to the CFMMEU's history of contraventions of the statute. In the Full Court, Allsop CJ, White and Wigney JJ, with whom Besanko and Bromwich JJ relevantly agreed, overturned the decision of the primary judge on the basis that the penalties imposed by the primary judge were disproportionate to the nature and gravity of the conduct, which was not in the most serious category of contraventions134. The reasoning of Allsop CJ, White and Wigney JJ relied upon criminal law decisions of this Court such as Veen v The Queen [No 2]135, which treated proportionality as a primary consideration of justice. The approach of their Honours was also fortified by the decision of Kiefel CJ, Bell, Keane and Nettle JJ in Comcare v Banerji136, to which reference was made earlier in these reasons. It may be that, in light of the lengthy history of contraventions by the CFMMEU and its "systematic pattern of conduct"137, the primary judge was not in error to conclude that the instant contraventions by the CFMMEU were in the most serious category of contravention. As explained above, a history of contraventions is relevant to the assessment of the seriousness of an instant contravention. But the only ground of appeal before this Court is, relevantly, whether the Full Court erred by reasoning that "the maximum penalty cannot be imposed for contravening conduct that is not of the most serious and grave kind, even if that penalty is 134 Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580 at 636-637 [160]-[162], 642-643 [180]-[181]. See also at 655 [227], 656-657 135 (1988) 164 CLR 465. See Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580 at 596 [40]. See also at 598-609 [46]-[93], 636 136 (2019) 267 CLR 373 at 398 [27], 403-404 [40]. See Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580 at 616 [106]. 137 See Fair Work Act, s 557A. Edelman necessary in order to deter contravening conduct of the kind that has in fact occurred". More precisely, the issue is whether the upper limit of the range of penalties necessary to achieve deterrence must be below the maximum penalty if the conduct, in all the circumstances, is not within the most serious category. It is an unfortunate state of affairs where this Court is required to conclude that the Full Court was in error by treating the longstanding principle of basic justice – that an offender or contravener should be punished according to what the law requires that they deserve for their conduct – as a principal or primary criterion. But, for the reasons above, the conclusion that the Full Court was in error is required by the present state of the law in Australia. The second ground upon which the Full Court allowed the appeal included, among other things, that the primary judge erred in so far as his Honour determined that the respondents in this Court "should not receive any material discount on penalty by reason of their admissions and co-operation rendering a trial unnecessary". The Full Court held that the second ground of appeal was made out. This Court granted special leave to appeal from the decision of the Full Court limited to the first ground138. The effect of refusing special leave to appeal on the second ground is that there is no dispute that the primary judge erred by imposing penalties without giving due account for the material discount for co-operation to which the respondents were entitled. Therefore, by allowing an appeal in relation to the decision of the Full Court on the first ground, this Court cannot mechanically affirm a decision of the primary judge that has been held, without further appeal, to be erroneous. On this appeal, this Court must either re-exercise the penalty discretion or remit the matter to the Full Court for the discretion to be re-exercised. If this Court were to re-exercise the discretion to impose penalties on the basis that, contrary to what the Full Court found, the primary judge did not err in relation to the first ground, it would be surprising if this Court were to impose the very same penalty as the primary judge in circumstances where the primary judge did not allow a discount for co-operation and there was no dispute that the range of penalties should be constrained by the course of conduct principle. But how much less should the penalty be? No submissions were made by the parties in this Court as to such an exercise. Indeed, if deterrence were truly to be treated as the primary criterion of justice, then it would surely be highly relevant in the re-exercise of the discretion to know whether the CFMMEU had committed any similar contraventions in the three years since the contraventions in this case. The appropriate order is to remit the matter to the Full Court for consideration of the 138 See Australian Building and Construction Commissioner v Pattinson [2021] HCATrans 90. Edelman appropriate penalty to be imposed upon the CFMMEU in light of the reasons of this Court. There are further and more significant problems with this Court re-exercising the discretion to impose a different penalty upon Mr Pattinson. In relation to Mr Pattinson, the Full Court re-exercised its discretion only upon the basis that Mr Pattinson had made out the second ground of appeal, that is, the ground that was not before this Court. In the re-exercise of that discretion the Full Court said139: "[W]e consider that an appropriate penalty for the object to deter contraventions of this kind would be penalties for the two contraventions of $4,000 and $500 in a total of $4,500. We would consider these penalties as appropriate to deter Mr Pattinson and others in his position from repetition of such contravening conduct." Very few submissions were made in this Court about the exercise by the Full Court of its discretion to impose penalties upon Mr Pattinson. Senior counsel for Mr Pattinson submitted, without demur, that there was no need for any specific deterrence of Mr Pattinson because he was a 70-year-old man who had since retired from the building industry. If there were evidence to that effect, it would have provided a powerful justification for the re-exercise of discretion to impose a penalty at a level far below that which was imposed by the primary judge. In any event, it effectively became common ground that, even if the Full Court had erred in its reasoning concerning the re-exercise of discretion to impose a penalty on Mr Pattinson, it had not erred in the result. Senior counsel for Mr Pattinson submitted that, since Mr Pattinson had only prosecuted the second ground of appeal, a ground which was not the subject of the grant of special leave to appeal to this Court, the penalty imposed by the Full Court should not be disturbed. And when the Chief Justice of this Court asked senior counsel for the appellant what the appellant's position was in relation to the penalties imposed on Mr Pattinson, the reply was that, since the submissions of the appellant had been focused upon the position of the CFMMEU, "[i]f the Court felt that it was not appropriate to disturb the Full Court’s orders with respect to Mr Pattinson, we do not wish to be heard against that". It is unsurprising that no submission was made by the appellant that there should be an increase in the penalties imposed by the Full Court of $4,000 and $500 in order to deter Mr Pattinson and others like him, including other septuagenarian retirees of likely modest means who have never previously contravened the Fair Work Act or its predecessor over decades of work. 139 Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR Edelman The concession by the appellant, and the common ground between the parties, should be accepted with the conclusion that, whether or not the Full Court erred in its reasoning concerning the re-exercise of the discretion in relation to Mr Pattinson, it did not err in the result. The appeal should be dismissed in relation to Mr Pattinson. The following orders should be made: The appeal be allowed in part. (2) Orders 1 (in so far as it relates to the second respondent) and 2(b) of the Full Court made on 16 October 2020 be set aside and the matter be remitted to the Full Court for determination in accordance with the reasons of this Court. The appeal otherwise be dismissed.

HIGH COURT OF AUSTRALIA APPELLANTS AND ACN 004 410 833 LIMITED (FORMERLY ARRIUM LIMITED) (IN LIQUIDATION) & ORS RESPONDENTS Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) [2022] HCA 3 Dates of Hearing: 6 & 7 October 2021 Date of Judgment: 16 February 2022 ORDER Appeal allowed. Set aside orders 3, 4 and 5 made by the Court of Appeal of the Supreme Court of New South Wales on 30 July 2020 and, in their place, order that the appeal be dismissed with costs. The first and second respondents pay the appellants' costs of and incidental to the appeal, including the application for special leave to appeal. On appeal from the Supreme Court of New South Wales Representation N C Hutley SC and J Shepard for the appellants (instructed by Banton Group) M A Izzo SC with T E O'Brien for the first respondent (instructed by Arnold J K Kirk SC with A B Emmerson for the second respondent (instructed by Ashurst) Submitting appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) Companies – Winding up – Mandatory examination of persons about examinable affairs of corporation – Application to set aside summons for examination – Purposes for which an officer or provisional liquidator may be summoned for examination about corporation's examinable affairs pursuant to s 596A of Corporations Act 2001 (Cth) – Where appellants were shareholders of corporation in liquidation – Where appellants authorised by Australian Securities and Investments Commission to make application pursuant to s 596A of Corporations Act 2001 (Cth) – Where appellants applied for summons for purpose of investigating potential personal claims in capacity as shareholders against former directors and auditors of corporation – Where Registrar issued summons to former director to attend court for examination – Whether appellants' purpose foreign to purpose of s 596A of Corporations Act 2001 (Cth) – Whether examination an abuse of process. Words and phrases – "abuse of process", "benefit of the company, its creditors, or its contributories", "corporation in external administration", "eligible applicant", "enforcement of the law", "examinable affairs", "predominant purpose", "public administration and compliance", "public interest", "purpose of the examination", "scope and purpose of a statutory process", "summons for examination", "winding Corporations Act 2001 (Cth), s 596A. KIEFEL CJ AND KEANE J. The first respondent ("Arrium") was a producer of iron ore and steel and was listed on the Australian Stock Exchange. Between September and October 2014 it raised $754 million in capital. It provided an Information Memorandum in connection with the capital raising and shortly prior to that action it published its financial results for the year ended 30 June 2014. In its half-yearly results published in February 2015 the company acknowledged a reduction in the value of its mining operations of $1,335 million. Earlier, in January 2015, it had announced that it would be suspending or closing one of its principal mining operations. The announcement followed a decline in the export price of iron ore. The company was placed into administration in April 2016 and in June 2019 liquidators were appointed. In April 2018 the solicitors of the appellants, who were shareholders of Arrium, wrote to the Australian Securities and Investments Commission ("ASIC") requesting that the appellants be given the status of an "eligible applicant", a term defined by the Corporations Act 2001 (Cth)1 to include a person authorised in writing by ASIC to make an application under Pt 5.9, Div 1. Section 596A, in Pt 5.9, Div 1, relevantly provides that such a person may apply to the Court for a summons to be directed to a person who is an officer of a corporation or was an officer of a corporation in a specified period relating to the administration or winding up of the corporation, to be examined about the corporation's "examinable affairs"2. ASIC provided that authorisation. The appellants applied to the Supreme Court of New South Wales for orders that the third respondent, a former director of Arrium, appear for examination and produce documents. Orders were also sought for the second respondent (the auditor) and the bank who advised on the capital raising to produce certain documents. A Registrar in Equity made the orders. Arrium sought to have the orders stayed or set aside. The second respondent and the third respondent took part in those proceedings and sought similar orders. Black J ordered that the examination summons be stayed on condition that Arrium file an application for leave to appeal within a specific period3. Arrium did so. The Court of Appeal (Bathurst CJ, Bell P and Leeming JA) granted leave to appeal, allowed the appeal, See Corporations Act 2001 (Cth), s 9. In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1708. discharged the orders for examination made by the Registrar and made other In the letter to ASIC, the appellants' solicitors gave as the reason their clients should be given the status of eligible applicants their clients' concern that the results for the financial year ended 30 June 2014 and the information given in respect of the capital raising did "not adequately or fairly" portray the "true state of Arrium's business". They advised that they would seek an order for examination in order to determine whether any claims might be brought against the company, its directors or its auditor. The letter implied that a derivative action on behalf of the company was possible. In subsequent communications they said that the examinations would be made for the benefit of shareholders and creditors of the company. At the hearing before Black J, the appellants abandoned any suggestion that their purpose was to investigate the possibility of a derivative action. They accepted that they were not claiming against the company as creditors, and that any recovery by them against third parties would not improve the position of the company's other creditors. What was proposed was a class action for loss and damage suffered by investors who bought securities in the company after its 2014 financial year results and the 2014 capital raising, based on allegations of misrepresentations about its financial position at the relevant times. Black J considered that the information provided by the appellants to ASIC "does tend to indicate that their predominant purpose in seeking the issue of the examination summons was to investigate, and pursue, a personal claim in their capacity as shareholders against directors of Arrium or against its auditors"5. But his Honour was not satisfied that the application amounted to an abuse of process6. The Court of Appeal identified the critical question to be whether the purpose of the examination is foreign to the purpose for which the statutory power is conferred7 and concluded that it was. The examination was sought for a private 4 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298. In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [49]. In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [50]. 7 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 purpose for the benefit of a limited group of persons who bought shares in Arrium at a particular time irrespective of whether they held their shares when administrators were appointed, not for a purpose which conferred a demonstrable benefit on the company or its creditors or all of its contributories8. On this appeal the appellants argue that the system of discovery provided by s 596A does not require a benefit to accrue to Arrium, its contributories or its creditors. They contend that the statutory purpose is broader. It is to enable evidence and information to be obtained to support the bringing of proceedings against officers of the company and others in relation to the examinable affairs of the company. Statutory provisions Section 596A appears in Pt 5.9 of Ch 5 of the Corporations Act. Chapter 5 is headed "External administration". The Parts which precede Pt 5.9 deal with different types of external administration of a company and certain aspects of it. For example, Pt 5.1 deals with "Arrangements and reconstructions"; Pt 5.2 with "Receivers, and other controllers, of property of corporations"; Pt 5.3A with "Administration of a company's affairs with a view to executing a deed of company arrangement"; Pt 5.4 with "Winding up in insolvency"; Pt 5.5 with "Voluntary winding up"; Pt 5.6 with "Winding up generally"; Pt 5.7B with "Recovering property or compensation for the benefit of creditors of [an] insolvent company"; and Pt 5.8 with "Offences". Part 5.9 is headed "Miscellaneous". Division 1, in which s 596A and other provisions referred to below are located, is headed "Examining a person about a corporation". Section 596A provides: "Mandatory examination The Court is to summon a person for examination about a corporation's examinable affairs if: an eligible applicant applies for the summons; and 8 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [140], [141], referring to Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 and Evans v Wainter Pty Ltd (2005) 145 FCR 176. the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending: if the corporation is under administration – on the section 513C day[9] in relation to the administration; or if the corporation has executed a deed of company arrangement that has not yet terminated – on the section 513C day in relation to the administration that ended when the deed was executed; (iii) if the corporation is being, or has been, wound up – when the winding up began; or (iv) otherwise – when the application is made." An "eligible applicant", in relation to a corporation, is defined by s 9 to mean: "(a) ASIC; or a liquidator or provisional liquidator of the corporation; or an administrator of the corporation; or an administrator of a deed of company arrangement executed by the corporation; or a person authorised in writing by ASIC to make: applications under the Division of Part 5.9 in which the expression occurs; or such an application in relation to the corporation." Section 9 defines "examinable affairs", in relation to a corporation, to mean: the promotion, formation, management, administration or winding up of the corporation; or If a winding up was in progress when the administration began, the day on which the winding up is taken to have begun, or otherwise the day on which the administration began: see Corporations Act 2001 (Cth), ss 9 and 513C. any other affairs of the corporation (including anything that is included in the corporation's affairs because of section 53); or the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs because of paragraph (a) or (b)." Attention is directed on this appeal to para (b) and to s 53, which provides that for the purposes of the definition of "examinable affairs" in s 9, the affairs of a body corporate relevantly include: the promotion, formation, membership, control, business, trading, transactions and dealings (whether alone or jointly with any other person or persons and including transactions and dealings as agent, bailee or trustee), property (whether held alone or jointly with any other person or persons and including property held as agent, bailee or trustee), liabilities (including liabilities owed jointly with any other person or persons and liabilities as trustee), profits and other income, receipts, losses, outgoings and expenditure of the body; and in the case of a body corporate (not being a licensed trustee company or the Public Trustee of a State or Territory) that is a trustee (but without limiting the generality of paragraph (a)) – matters concerned with the ascertainment of the identity of the persons who are beneficiaries under the trust, their rights under the trust and any payments that they have received, or are entitled to receive, under the terms of the trust; and the internal management and proceedings of the body; and any act or thing done (including any contract made and any transaction entered into) by or on behalf of the body, or to or in relation to the body or its business or property, at a time when: a receiver, or a receiver and manager, is in possession of, or has control over, property of the body; or the body is under administration; or (iia) a deed of company arrangement executed by the body has not yet terminated; or (iii) a compromise or arrangement made between the body and any other person or persons is being administered; or the body is being wound up; and, without limiting the generality of the foregoing, any conduct of such a receiver or such a receiver and manager, of an administrator of the body, of an administrator of such a deed of company arrangement, of a person administering such a compromise or arrangement or of a liquidator or provisional liquidator of the body". Section 596B provides: "Discretionary examination The Court may summon a person for examination about a corporation's examinable affairs if: an eligible applicant applies for the summons; and the Court is satisfied that the person: (i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or (ii) may be able to give information about examinable affairs of the corporation. This section has effect subject to section 596A." Section 596C requires an affidavit to be filed in support of an application under s 596B. Sections 596D and 596E, respectively, provide for the content of a summons under s 596A or s 596B and require the applicant to give written notice of the examination to certain persons if the Court issues a summons. The Court may give directions about the examination (s 596F), which is to be held in public (s 597(4)). ASIC and any other eligible applicant in relation to the corporation may participate in the examination (s 597(5A)). A person who is examined is obliged to answer questions which the Court directs the person to answer, unless they have a reasonable excuse (s 597(7)(b)). The Court may also direct the person to produce books in their possession that are relevant to the examination (s 597(9)). A person is not excused from answering a question on the ground that it might tend to incriminate the person or make the person liable to a penalty (s 597(12)). Where a person claims that the answer might have either of those effects, s 597(12A) provides that the answer is not admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty other than a proceeding under the section or a proceeding respecting the falsity of the answer. A person may be required by the Court to sign a written record of their examination, which may, subject to s 597(12A), be used in evidence in any legal proceedings against the person (s 597(14)). The Court may order a person to file an affidavit about the examinable affairs of a corporation even if they have been summoned under s 596A or s 596B for examination about those affairs (s 597A). Abuse of process There can be no doubt that if the predominant purpose of the examination for which an application is made under s 596A, or s 596B, is collateral or foreign to the statutory purpose of such an examination, the application will amount to an abuse of process10. The appellants' submissions do not deny this. Two purposes must therefore be considered: first, the statutory purpose, and then the applicant's purpose in light of the statute's purpose. The central question on this appeal is: what is the statutory purpose or purposes of the examination for which s 596A provides? There is no difficulty in concluding what purpose the examination is to serve for the appellants. It is to enable them to investigate and pursue a proceeding in which they and a class of shareholders will claim, against certain directors and auditors of Arrium, damages for alleged misrepresentations made concerning the financial position of the company. It is to enable them to interrogate some or all of those and other persons prior to bringing said proceeding. The appellants' claim is one made in their personal capacity. It is a claim having no connection to the winding up of the company. The appellants do not pretend that it will be of benefit to those engaged in that external administration, to the company or to its creditors as a whole. Abuses of process in connection with an application for an examination summons may take many forms. An application brought by a liquidator for an examination for the purpose of rehearsing the cross-examination of a potentially hostile witness in pending litigation would likely be an abuse of process11. Other 10 See, for example, Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 518-519 per Gleeson CJ, Mahoney and Priestley JJA agreeing; Williams v Spautz (1992) 174 CLR 509 at 525 per Mason CJ, Dawson, Toohey and McHugh JJ; Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 91. 11 Re Auto Import Co (Australia) Ltd (1924) 25 SR (NSW) 52 at 55-56. examples may include the cross-examination of a person to destroy their credit12 and to obtain de facto discovery when an order for discovery has been refused13. In these examples, the applicant is seeking a forensic advantage not otherwise available by ordinary pre-trial processes where the legislative purpose is not advanced14. They have in common that they are purposes foreign to the statutory purpose, and do not permit the exercise of the statutory power. To do so would be an abuse of that power. In those circumstances it would be an abuse of the processes of the court to seek the exercise of the power. In Hong Kong Bank of Australia Ltd v Murphy15, Gleeson CJ (with whom Mahoney and Priestley JJA agreed) gave as an example of an abuse of process the application made in In re Imperial Continental Water Corporation16. A shareholder, who held a mortgage on calls that might be made of other shareholders of a particular company, brought proceedings to enforce the mortgage, to have any deficiency made good by the directors and to have an agreement, by which his shares were to be cancelled and his name removed from the register and the list of contributories, enforced. He obtained an order under s 115 of the Companies Act 1862 (UK)17 ("the 1862 Act") for the examination of the directors. Section 115 provided that after a court had made an order for winding up a company, it could summon before it any officers of the company or persons, including those suspected of having in their possession property of the company or whom the court thought capable of giving information concerning the trade dealings and property of the company, and require them to produce documents. 12 See Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 91, referring to Re Hugh J Roberts Pty Ltd (In liq) [1970] 2 NSWR 582. 13 See Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 91. See, relevantly, In re North Australian Territory Company (1890) 45 Ch D 87. 14 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519. (1992) 28 NSWLR 512 at 519. (1886) 33 Ch D 314. 17 25 & 26 Vict c 89. The examinee could be required to subscribe their name to the record of the examination18. Chitty J at first instance ordered, on a motion brought by the examinees, that the examination be postponed until after the trial of the action. The Court of Appeal of England and Wales held that decision to be correct. Each member of the Court of Appeal held that it did not accord with the proper purpose of the section to have the examination taken for the purpose of the proposed action19. The powers of examination are to be exercised for the purpose of the winding up, to enable the liquidator to ascertain what has been done with the assets of the company, with a view to benefiting those interested in the winding up – the creditors and contributories. Here the object of the action was solely for the benefit of the shareholder to enforce his own individual rights20. Cotton LJ said it would be wrong to give the shareholder the benefit of the statutory power for the purposes of this action21. Lindley LJ described such a course as an abuse of the power of the section, not a use of it22. It is correct to observe that decisions such as In re Imperial Continental Water Corporation23 reflect the statutory context in which the power to summon a person for examination is given and the purpose for which the powers were conferred24 and that these may change over time. The appellants contend that there has been a widening of the purpose of s 596A at or prior to the introduction of Pt 5.9. They point to s 541 of the Companies (New South Wales) Code of 1981 as having expanded the relevant power and to the mandatory nature of s 596A as marking a departure from the examination provisions which preceded it. Making 18 Companies Act 1862 (UK), s 117. In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 320-321 per Cotton LJ, 321 per Lindley LJ, 322 per Lopes LJ. In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 321 per Cotton LJ. In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 320. In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 321-322. (1886) 33 Ch D 314. See also In re North Australian Territory Company (1890) 45 Ch D 87. 24 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 613 per the provision mandatory evinces a clear statutory intention to compel a company's officers to account publicly concerning that company's examinable affairs. These submissions render it necessary, they contend, to consider legislative provisions for examinations from those considered in In re Imperial Continental Water Corporation25 and leading to s 596A. Text and statutory context The text of s 596A does not provide much assistance in determining the statutory purpose of the examination and the question which follows from it, namely whether that purpose places limits upon when a summons may properly issue. It may be accepted that, subject to the purpose of the examination being consistent with the statutory purpose, it is intended that a summons will issue under s 596A where the two stated conditions are met: the applicant is an eligible applicant and the person to be examined is an officer or provisional liquidator to whom that section applies. That much may be drawn from the mandatory terms of the provision. But this says nothing about the purpose of s 596A. Its context is not discovery and investigation for the purposes of litigation generally. During argument attention was directed to the requirements of s 596B. By comparison with s 596A, s 596B requires the Court to be satisfied, at a minimum, that the person to be summoned may be able to give information about the examinable affairs of the corporation. To that end an affidavit in support of the application must be filed (s 596C). The difference is explicable. The persons to whom s 596B refers may not have been officers of the corporation or otherwise persons examinable for the purposes of s 596A. Section 596A concerns officers, who may be considered to have a duty to co-operate in an external administration26. It is for that reason that it is intended that they be summoned without further inquiry, subject to the purpose of the examination being one contemplated by the statute. The subject with which Pt 5.9 is concerned is the external administration of corporations. Section 596A (and s 596B) applies to a corporation in some form of external administration. The reference in s 596A itself to a provisional liquidator and the forms of external administration there mentioned bear this out. The circumstance of external administration is clearly why the power is made available. (1886) 33 Ch D 314. 26 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 It is principally for the purposes of the external administration and what is sought to be achieved by it. In Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd27, French J drew attention to the place of Pt 5.9 in Ch 5. His Honour observed that the context in which the Part appears, as a set of miscellaneous provisions in Ch 5, strongly suggests that the examination power is intended to be ancillary to the functions of the Court and the functions of external receivers, controllers or liquidators of corporations for which Ch 5 makes provision. Clearly the purpose of Pt 5.9 is to assist persons who have the responsibility for the external administration of a corporation, as Gageler J observed in Palmer v Ayres28. The statutory context of s 596A points strongly to a purpose of aiding the external administration of a corporation in the tasks necessary to be carried out, such as locating and realising assets and investigating the affairs of the corporation. The latter might involve proceedings by which monies are made available to the corporation. It would follow that the examination power is intended to be used for the benefit of the administration and those who have an interest in it, namely creditors and contributories. An examination may be directed to misconduct on the part of the officer in relation to the corporation, conduct which s 596B identifies as relevant. True it is, as the appellants submit, that not all the forms of external administration in Pt 5.9 will be of commercial benefit to a corporation or its general body of creditors. They give as examples a receivership and a members' voluntary winding up. It may be arguable that the actions of a receiver could have a benefit wider than to the creditor who appoints the receiver. An examination is unlikely to be relevant in a voluntary winding up. But examples such as these do not detract from what may generally be understood to be the purposes of s 596A. The appellants also point to ASIC, who, as an eligible applicant, may itself seek an examination summons, although its concern will more likely be with respect to penalties rather than procuring benefits for the company, its creditors or its contributories. There may be a question whether ASIC would ever need to resort (2007) 156 FCR 501 at 527 [87]. (2017) 259 CLR 478 at 515 [98], referring to Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 216 [245], New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 613 and Meteyard v Love (2005) 65 NSWLR 36 at 40 [7]. to s 596A, given its other statutory powers29. In any event its position as an eligible applicant does not affect the question of what are the purposes of s 596A. Historical context and purpose A survey of the legislative history of examination powers from those of the 1862 Act to the enactment of Pt 5.9 reveals that amendments have been made so as to align them with examination provisions in earlier statutes dealing with personal bankruptcy; that they have always been directed to persons who had been concerned in or might be able to provide information about the affairs of the company, or persons who might have been involved in misconduct with respect to the company; that the context for the powers' use has extended beyond a winding up to other forms of external administration; and that the class of persons who could apply for them has likewise broadened. What the history does not show is that the provisions were altered in such a way as to be said to effect a change in the statutory purposes of the examination. Nothing in the cases dealing with the various iterations of these provisions suggests to the contrary. Early statutes In England, a statute of 154230, regarded as the first bankruptcy statute31, provided for the examination of third persons about a debtor's estate. The earliest similar provision in the companies law of the United Kingdom was s 15 of the Joint Stock Companies Winding Up Act 1844 (UK)32. It gave the court the power to summon and examine persons who were thought to be able to give information about the property and past transactions of the company. The provision's primary purpose was to assist the liquidator in the location of assets33. Like powers for the court to summon and examine persons were conferred by s 115 of the 1862 Act, the provision discussed in In re Imperial Continental 29 Australian Securities and Investments Commission Act 2001 (Cth), Pt 3. 30 Statute 34 & 35 Hen VIII c 4. 31 See Keay, "'Gone Fishing!' Is it legitimate in an examination under Section 597 of the Corporations Law (Companies Code, Section 541)?" (1991) 9 Company and Securities Law Journal 70 at 71 fn 5. 32 7 & 8 Vict c 111. 33 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at 515 [46], referring to McPherson's Law of Company Liquidation, 5th ed (2006) at [15.500]. Water Corporation34, in connection with the winding up of a company. Section 115 was analogous to s 120 of the Bankrupt Law Consolidation Act 1849 (UK)35, which was in force when the 1862 Act was passed. Another purpose of s 115 was thus to bring the practice in a company's winding up in line with that in bankruptcy, which was established to enable trustees in bankruptcy to find out facts before they brought an action in order to avoid the expense of an unsuccessful action36. In Hong Kong Bank37, Gleeson CJ summarised the Court of Appeal's conclusion in In re Imperial Continental Water Corporation about the purpose of the section as follows: "[t]he object of the section was to enable information to be obtained for the general benefit of a company's contributories and creditors". Section 115 was not the only provision of the 1862 Act concerned with examinations. In In re Imperial Continental Water Corporation38, Lindley LJ said "[t]his section is one of a group with which we are all familiar, sects 100, 115, 165, and 168, which authorize proceedings against directors. The object of them all is to enable the company, through its liquidator, with a view to the benefit of the creditors or contributories, or both of them, to ascertain what has been going on, and what has been done with the assets of the company." Section 165 of the 1862 Act permitted a liquidator, creditor or contributory of the company to apply for an examination as to the conduct of, among others, an officer of the company where it appeared that the officer had misapplied or retained company monies, become liable or accountable for any monies of the company, or been guilty of any misfeasance or breach of trust (in the balance of these reasons such provisions will be referred to as an "examination for misfeasance provision"). Provisions of this kind have been regarded as providing an alternative summary procedure to ordinary legal proceedings designed to facilitate the recovery of (1886) 33 Ch D 314. 35 12 & 13 Vict c 106. In re Gold Company (1879) 12 Ch D 77 at 85 per Jessel MR. (1992) 28 NSWLR 512 at 519. (1886) 33 Ch D 314 at 321. assets improperly dealt with and enable a liquidator to obtain compensation for misconduct which has caused loss to the company39. In court-ordered windings up, creditors and contributories could apply under s 115 as well as the liquidator, but it was the better and the usual course to entrust the examination to the liquidator. The circumstances in which creditors and contributories might be granted an order were accordingly more limited40. Likewise an applicant under s 165 was usually required to show some benefit, in the form of an improvement to the pool of assets to be distributed to the applicant, which would be gained from the making of the order41. Section 8 of the Companies (Winding up) Act 1890 (UK)42 provided for an examination of promoters, officers and other persons who had a past connection with the company, following a report to the court by the official receiver. Unlike s 115 of the 1862 Act, which remained in force, these examinations could be held in public. The introduction of s 8 has been described as being part of the general policy in England to assimilate liquidations with bankruptcy43. The position historically in Australia was much the same. The process of examining persons in a winding up of companies was borrowed from the law of bankruptcy. The purposes of the inquisitorial power conferred by bankruptcy and company legislation were regarded as much the same44. Prior to Federation, the Australian colonies enacted companies statutes based on the 1862 Act. General examination provisions to the same effect as s 115 of the 1862 Act were introduced into New South Wales by the Companies Act 39 McPherson, The Law of Company Liquidation (1968) at 322 (speaking of s 305 of the Uniform Companies Acts). See also Coventry and Dixon's Case (1880) 14 Ch D 40 Halsbury's Laws of England, 1st ed (1910), vol 5 (Companies) at 474 [807], citing Whitworth's Case (1881) 19 Ch D 118. 41 Cavendish Bentinck v Fenn (1887) 12 App Cas 652 at 664-665 per Lord Herschell, 666-667 per Lord Watson, 671-672 per Lord Macnaghten. 42 53 & 54 Vict c 63. 43 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at 516 [48], referring to McPherson's Law of Company Liquidation, 5th ed (2006) at [15.500]. 44 Re Csidei; Ex parte Andrew (1979) 39 FLR 387 at 390 per Lockhart J. 1874 (NSW)45. The Act also contained an examination for misfeasance provision46, similar to s 165 of the 1862 Act. Likewise, these applications could be brought by a liquidator, a creditor or a contributory. The general examination power of the Companies Act 1899 (NSW) was located in s 12347. The section was considered by Street J in In re John Pringle & Company Ltd48. On the application of the liquidator under that provision, an examination of, among others, three directors of the company took place. Two of the directors sought copies of the evidence given in the examination to use against the third director in potential proceedings for misfeasance. Street J49 noted that the proceedings would in no way benefit the company, or any of the creditors or contributories of the company. Any amount recovered would be for the sole benefit of the two directors in their individual capacities. His Honour applied the principles stated in In re Imperial Continental Water Corporation and held that the directors would not have been entitled to an order for examination and therefore could not be said to have a right to inspect the records of the examination which had occurred50. The Companies Act 1936 (NSW) provided that the court may summon an officer or other person for examination at any time after the appointment of a provisional liquidator51 and also contained an examination for misfeasance provision52. 47 The relevant examination for misfeasance provision in the Companies Act 1899 (NSW) was s 162. (1934) 34 SR (NSW) 508. In re John Pringle & Company Ltd (1934) 34 SR (NSW) 508 at 512-513. In re John Pringle & Company Ltd (1934) 34 SR (NSW) 508 at 513-514. The Uniform Companies Acts and ss 249, 250 and 367A In the first half of the 20th century the United Kingdom laws relating to company examinations were reviewed at intervals, resulting in consolidations of those laws53. The Companies Acts of the Australian States continued to be based on the United Kingdom models, but differences developed over time54. By agreement between the States and the Commonwealth a Uniform Companies Bill was developed. The Bill was offered as a proposal for adoption throughout the States and Territories, and implemented in 1961 and 1962, with each State enacting a Companies Act broadly based on the terms of that Bill55. The general powers of examination of persons in connection with court-ordered windings up of companies were provided by ss 249 and 250 of those Acts. They were based on ss 268 and 270 of the Companies Act 1948 (UK). The purpose of s 268 of the 1948 Act was said to be to assist the liquidator "to discover the truth of the circumstances connected with the affairs of the company, information of trading, dealings, and so forth" and to enable the liquidator with as little expense as possible and with much expedition to put the affairs of the company in order and to carry out the liquidation56. Section 249 conferred power on the court to summon any officer of the company or, relevantly, person the court considered capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company. In re Imperial Continental Water Corporation continued to be regarded by a leading text as stating the permissible limits of an examination for the purposes of s 24957. The various Companies Rules in force in each State at the time recognised that liquidators, creditors and contributories could apply for an order for a summons. Under the rules, a liquidator could apply ex parte but creditors or 53 Concluding with the Companies Act 1948 (UK), see ss 268, 270 and 333. 54 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at 516 [49]. 55 The Commonwealth made Companies Ordinances in like terms for, relevantly, the Australian Capital Territory and the Northern Territory. In New South Wales, the Companies Act 1961 (NSW) was enacted. See also New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 16 November 1961 at 2608. 56 Re Rolls Razor Ltd [1968] 3 All ER 698 at 700 per Buckley J. 57 Wallace and Young, Australian Company Law and Practice (1965) at 714. contributories were required to serve a summons on the liquidator and provide a supporting affidavit which, it has been said, needed to show a strong case for participation in the examination58. Section 250 enabled the court to make directions for the public examination of a wide ambit of persons after consideration of a report made by the liquidator to the court alleging the commission of a fraud or concealment of any material fact by a person involved in the promotion or formation of the company or any officer of the company since formation. In Rees v Kratzmann59, speaking of s 250 of the Companies Act 1961 (Qld), Windeyer J said that the boundaries of the court's discretion to order a public examination were not defined, but "the purpose of the inquiry is to gain information that may be relevant for the proper conduct of the winding-up of the affairs of a company in relation to which there are prima facie grounds for thinking that some fraud has been committed or some material fact concealed". At a later point in his reasons, Windeyer J compared the common law's traditional objection to compulsory interrogation with the practice which had developed in bankruptcy jurisdiction, where the debtor in their public examination cannot refuse to answer questions. In a passage to which the appellants referred in their submissions, his Honour described the purpose of the bankruptcy statute as being "to secure a full and complete examination and disclosure of the facts relating to the bankruptcy in the interests of the public"60. In his view the Companies Act 1961 (Qld) reflected the same idea. "The honest conduct of the affairs of companies is a matter of great public concern to-day"61, his Honour said. Windeyer J was speaking of the conduct of the public examination, which is inquisitorial in nature. His Honour recognised the higher public interest which is served by requiring full disclosure by a person, which may be understood to prevail over personal freedoms. In these remarks, his Honour was not suggesting that, because an examination might expose wrongful conduct, that was sufficient 58 McPherson, The Law of Company Liquidation (1968) at 315-316, citing Companies Rules 1968 (NSW), r 123, Supreme Court (Companies) Rules 1962 (Vic), r 61, Rules of Court (Companies Act) 1965 (SA), r 73, Companies Rules 1963 (Qld), r 61, Supreme Court (Companies) Rules 1963 (WA), r 61 and Supreme Court (Companies) Rules 1963 (Tas), r 51. (1965) 114 CLR 63 at 79. 60 Rees v Kratzmann (1965) 114 CLR 63 at 80. 61 Rees v Kratzmann (1965) 114 CLR 63 at 80. to warrant a summons for an examination, as the appellants contend. His Honour identified the relevant purpose of a public examination as being to gain information for the proper conduct of the winding up in circumstances where there was reason to think fraud or concealment of facts had taken place. The examination for misfeasance provision in the Companies Act 1961 (NSW) was s 305. In 1971, that provision was repealed and in effect re-enacted as s 367B. A broader power of examination of a similar nature was also introduced at the same time by s 367A62. This new provision provided that an application could be made to the court for an examination of a current or former officer of a company who appeared to the Corporate Affairs Commission ("the CAC")63 to have conducted himself in such a way that he has rendered himself liable to action by the company in relation to the performance of his duties as an officer. The companies to which ss 367A and 367B applied were extended and relevantly included those: in the course of being wound up; under official management; to which a receiver or manager had been appointed; or, which had ceased business or were unable to pay their debts64. An application under s 367A or s 367B could be brought by the CAC or a person authorised by it. An amendment in 197365 provided that a "prescribed person" could bring an application under s 367B. Under the new s 367B(1A), a "prescribed person" was defined to include the liquidator or provisional liquidator of the company, a contributory, the official manager and a person authorised by the CAC to make an application. Additionally, the words "negligence, default, breach of duty" replaced the reference to "misfeasance" in s 367B(1)66. The Companies Codes and s 541 In 1981, the Uniform Companies Acts were replaced by the Cooperative Scheme. Each State passed a Companies Code reflecting the statute enacted by the Commonwealth Parliament for the Australian Capital Territory67. The scheme was Introduced by the Companies (Amendment) Act 1971 (NSW). 63 Established by the Securities Industry Act 1970 (NSW). 64 Companies Act 1961 (NSW), s 367C. 65 Companies (Amendment) Act 1973 (NSW), s 7(b). 66 Companies (Amendment) Act 1973 (NSW), s 7(b)(ii) and (v). 67 Companies Act 1981 (Cth). overseen by the National Companies and Securities Commission ("the NCSC"), which was established in 198068 and worked in conjunction with State regulatory authorities, such as the CAC69. In New South Wales, the provisions of the Companies Act 1981 (Cth) were given force by the Companies (Application of Laws) Act 1981 (NSW) and published as the Companies (New South Wales) Code. An important change effected by s 541 of the Companies Act 1981 (Cth) was to amalgamate the more general examination provisions with the examination for misfeasance provisions70. Section 541 was now in Pt XIV ("Miscellaneous") in Div 1 ("General"). located Section 541, "Examination of persons concerned with corporations", relevantly provided that: "(2) Where it appears to the [NCSC] or to a prescribed person that – a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation, the [NCSC] or prescribed person may apply to the Court for an order under this section in relation to the person. (3) Where an application is made under sub-section (2) in relation to a person, the Court may, if it thinks fit, order that the person attend before the Court on a day and at a time to be fixed by the Court to be examined on oath or affirmation on any matters relating to the promotion, formation, 68 National Companies and Securities Commission Act 1979 (Cth). 69 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at 517 [54]. 70 See Australia, House of Representatives, Companies Bill 1981, Explanatory Memorandum at 506 [1174]. management, administration or winding up of, or otherwise relating to affairs of, the corporation concerned." In terms similar to the 1973 amendment to s 367B of the Companies Act 1961 (NSW)71, a "prescribed person" was defined to include an official manager, liquidator or provisional liquidator of the corporation or "any other person authorized by the [NCSC]" to make applications under the section72. In Hamilton v Oades73, Mason CJ identified two important public purposes that the examination provided by s 541 was designed to serve: "One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connexion with the company's affairs". The examination, his Honour said74: "is designed to elicit, among other things, evidence and information relating to the question whether the witness 'has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to' the corporation." These observations are consistent with what had been said by Windeyer J in Rees v Kratzmann75. Mason CJ went on to describe76 s 541 as creating "a system of discovery", but his Honour was not speaking of the interrogation provided by the examination as an adjunct to, or in aid of, ordinary litigation unconnected with the winding up or the interests of the company and others in its outcome, as the appellants' submissions imply. His Honour went on to describe77 the system of 71 And other State analogues. 72 Companies Act 1981 (Cth), s 541(1). (1989) 166 CLR 486 at 496. 74 Hamilton v Oades (1989) 166 CLR 486 at 496-497. (1965) 114 CLR 63. 76 Hamilton v Oades (1989) 166 CLR 486 at 497. 77 Hamilton v Oades (1989) 166 CLR 486 at 497. discovery as being for the purpose of bringing charges and observed that the section gave to the liquidator "rights not possessed by an ordinary litigant". The Corporations Act and s 597 The unsuccessful attempt by the Commonwealth to impose a national scheme of corporate regulation in 198978 led to the introduction of the 1991 Cooperative Scheme. Section 597 of the Corporations Law79 reflected s 541 of the Companies Codes. It has been described as, in many respects, a conflation of the powers of ss 249, 250 and 367A of the Uniform Companies Acts80. It retained the provisions of s 541 relating to prescribed persons who might apply to the Court for an examination order. By this time, the Australian Securities Commission ("the ASC") had been established to replace the NCSC81. In Hong Kong Bank, Gleeson CJ82 said of s 597 that: "The statutory context of 'external administration', in which s 597 has its place, throws light on the purposes for which the power to order examinations (or to authorise persons to apply for examination orders) is conferred. Those purposes include the protection of shareholders and creditors and of interested members of the public. They are not, however, confined to the need for such protection in the case of winding up. Winding up is only one form of external administration. The scope of s 597 is wider." In that case the ASC had authorised the new trustees of certain unit trusts to make an application under s 597 in relation to the former trustee, which was 78 See New South Wales v The Commonwealth (1990) 169 CLR 482. 79 Corporations Act 1989 (Cth), s 82 and given force by each of the States in their respective legislation. See Corporations (New South Wales) Act 1990 (NSW); Corporations (Victoria) Act 1990 (Vic); Corporations (South Australia) Act 1990 (SA); Corporations (Queensland) Act 1990 (Qld); Corporations (Western Australia) Act 1990 (WA); Corporations (Tasmania) Act 1990 (Tas). 80 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at 519 [59], quoting Keay, "'Gone Fishing!' Is it legitimate in an examination under Section 597 of the Corporations Law (Companies Code, Section 541)?" (1991) 9 Company and Securities Law Journal 70 at 70. 81 Australian Securities Commission Act 1989 (Cth). (1992) 28 NSWLR 512 at 521. undergoing a court-ordered winding up. The new trustees intended bringing proceedings in connection with breaches of trust and other misconduct by the former trustee. The "interested members of the public", to whom Gleeson CJ had referred, were no doubt the 52,000 members of the public who had invested in the unit trusts83. The purpose of the new trustees with regard to the examinations was held not to be improper. Their purpose was to obtain information for litigation brought where a large number of investors were owed money as a consequence of the financial failure of the trusts and they were unlikely to be fully informed about the affairs of the trusts84. The fact that a forensic advantage was gained did not mean that the order for examination would not advance a purpose intended to be secured by the legislation, his Honour held85. His Honour did not seek to explore the outer limits of the purposes of s 597, considering it sufficient that the proposed examinations were to be held in circumstances "closely analogous to those for which examinations have traditionally been conducted by liquidators"86. Section 597 was also considered by a Full Court of the Federal Court (Gummow, Hill and Cooper JJ) in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England87. A question for the Court was whether an application under s 597 made by the receiver and manager of a company, who had been appointed by the trustee of debenture holders and was authorised by the ASC to make the application, was an abuse of process. The Court held that that question turned on the purpose of the application and the circumstances of the case88. Where the purpose is foreign to the purpose of the statutory power it would be an abuse of the power89. In Re Excel, the Court identified the applicant's purpose to be to obtain an advantage in proceedings brought by the trustee and debenture holders against 83 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 515. 84 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 520. 85 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519. 86 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519-520. (1994) 52 FCR 69. 88 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 89. 89 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 91. third parties, the advantage being to obtain pre-trial depositions which would not otherwise be available in the proceedings90. There was no benefit to the corporation, its contributories or its creditors, except in the most indirect way. The relevant purpose of an examination, the Court held91, is to gather information in relation to the management and administration and affairs of the corporation, to determine the assets which may be available for distribution to creditors and the location of the assets, and to determine whether assets may be recovered by the corporation for the benefit of creditors92. This may arise out of transactions which may have involved misconduct in relation to the corporation. The power of examination is ultimately in aid of the corporation itself, not the person seeking 1992 Amendments and Pt 5.9 Sections 596A to 596F were introduced by the Corporate Law Reform Act 1992 (Cth) ("the 1992 Act"), which introduced Div 1 of Pt 5.9 under its present title, "Examining a person about a corporation". Section 597 was reduced to its present form, to deal with how examinations under ss 596A and 596B are to be conducted. The 1992 amendments implemented the General Insolvency Inquiry of the Australian Law Reform Commission ("the Harmer Report"). The chief purposes of an examination in bankruptcy and in company insolvency were said to be "to facilitate the recovery of property, to discover whether conduct of the insolvent led to the insolvency and to investigate possible causes of action against third parties"94. The principal purpose of the examination was acknowledged to be "the discovery of information which will assist in the administration of the estate". The 90 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 93. 91 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 86. 92 cf Flanders v Beatty (1995) 16 ACSR 324 at 331. 93 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 91. 94 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 interests of "'public policy' in prosecuting criminal offences", although recognised as important, were said to be secondary95. The most significant difference between the bankruptcy and company examination procedures, which was noted in the Harmer Report96, was that in bankruptcy a trustee was entitled to examine a bankrupt without first obtaining a court order. It expressed concern that the formalities and expense involved in company administrations might operate as a deterrent and observed that it would be consistent with the duty of directors of an insolvent company to assist in a winding up if they were examined. It recommended that there be provision made for examination without court order of persons who have acted in certain capacities within two years before the commencement of the winding up of the company97. It recommended that where a person does not fall within the category of an "officer" of the company, but may nonetheless be able to provide information as to the company's affairs, the requirement for an order for examination be retained98. Sections 596A and 596B clearly have their genesis in the Harmer Report, but the Bill for the 1992 Act did not adopt the recommendation that there be no court order with respect to officers of the company. Rather, the procedure outlined in the Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth), in respect of s 596A, was that the Court was to issue a summons to an examinable officer about a company's examinable affairs on the application of an eligible applicant. The Court would do so where satisfied that a person is an examinable officer, without the need to inquire further into matters such as whether the person has taken part or been concerned in the examinable affairs of the corporation, has been guilty of misconduct, or is able to give relevant information. The Explanatory Memorandum envisaged that the issue of a summons in these circumstances would be a formality which might be undertaken by a Registrar or equivalent official99. 95 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 96 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 97 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 98 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 99 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1155]. It further said that the Court would have a discretion, under s 596B, to issue a summons to a person who was not an examinable officer, and that an application for such a summons should continue to be supported by an affidavit100. The Explanatory Memorandum advised that the proposed definition of a company's "examinable affairs" was based upon the definition of that term in the Bankruptcy Act 1966 (Cth)101. This accorded with the Harmer Report's recommendation102. The proposed definition of an "examinable officer" would include all persons who may have had a significant role in the management of the company103. In relation to the proposed definition of "eligible applicant", it said "[t]he list of persons is similar to the list in existing subsection 597(1), except that an administrator of a corporation and an administrator of a deed of company arrangement … have been added" and official managers had been omitted104. At the time the provisions of Pt 5.9 were introduced in 1992, the ASC was the body which could authorise a person to be an eligible applicant. In 1998 it was renamed ASIC105. ASIC's roles and functions were later set out in their present form in the Australian Securities and Investments Commission Act 2001 (Cth). Evans v Wainter Pty Ltd106 is a decision of a Full Court of the Federal Court (Ryan, Lander and Crennan JJ) concerning ss 596A and 596B. There, Wainter Pty Ltd, having been authorised by ASIC to be an "eligible applicant", applied for orders under both sections for the issue of examination summonses against persons who had been directors of a company, New Tel Ltd, which was now in liquidation, 100 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1156]-[1159]. 101 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [347]. 102 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 103 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [350]. 104 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [344]. 105 Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 (Cth). 106 (2005) 145 FCR 176. and the company's legal representatives. The purpose of the examinations was to assist in proceedings against the firm of solicitors that had advised New Tel Ltd in respect of a transaction between New Tel Ltd and Wainter Pty Ltd. Wainter Pty Ltd claimed damages for misleading and deceptive conduct, which it alleged caused it to agree to forgo a debt and a substantial shareholding in another company that New Tel Ltd was proposing to take over, in exchange for shares and options in New Tel Ltd. Lander J applied the principle in Re Excel, which his Honour took to be "that it is an abuse of process to use the Pt 5.9 procedure if the predominant purpose of the applicant seeking the order is not for the purpose of benefiting the corporation, its contributories or its creditors"107. His Honour rejected an argument that because s 596A is expressed in mandatory terms its purposes have changed. In his Honour's view, s 596A was enacted to simplify the procedures and make it easier for an eligible applicant to examine examinable officers and recognised that those officers should be available for examination. There is nothing in the 1992 Act which derogates from the reasons in Re Excel that the purpose in seeking the examination summons must be in the interests of the corporation, its creditors or its contributories108. But his Honour held that that purpose would be served by the proceedings against the solicitors' firm because New Tel Ltd would be released from any liability owed to Wainter Pty Ltd, to the benefit of New Tel Ltd and its creditors109. At the conclusion of his reasons, his Honour distilled a series of propositions, including that relied upon by the appellants, as to what is a legitimate purpose. His Honour listed five such "purposes", although they combine some activities such as gathering information and the identification of assets with more general purposes such as the protection of the interests of creditors. The fourth was: "it serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation"110. 107 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 200 [143], Ryan and Crennan JJ agreeing. 108 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 208 [192]-[194], Ryan and 109 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 218 [259]. 110 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 217 [252 (3.4)]. The appellants' reliance on this statement as one of the general purposes of s 596A is misplaced. In context, it is intended only as an example of what may legitimately be done where a statutory purpose is being pursued. His Honour makes it plain111 that if a person applies for an order unconnected with the purposes authorised by the legislation, where there is no benefit to the corporation, its creditors or its contributories, there will be an abuse of process. A wider purpose? In re Imperial Continental Water Corporation recognised that there were limits to the purposes for which an examination under s 115 of the 1862 Act could be put. The statutory purpose was confined to investigations by the liquidator as to the assets of the company in order to benefit those interested in the winding up. To this may be added the purpose contemplated by s 165, to investigate possible misconduct by an officer of the company. In light of these purposes, and the refusal of the Court of Appeal in that case to hold that the purpose of an individual to pursue litigation for their own benefit was a proper one, the appellants need to point to some evidencing of change in statutory purposes over time. They are unable to do so. Statutory context is important to the ascertainment of the purpose of an examination. Resort to statutory context will not avail the appellants. It has been and remains corporate insolvency and the resulting external administration of a company. Amendments which have been made to the examination power up to and including Pt 5.9 of the Corporations Act continue to pursue a policy of more closely aligning examinations in corporate insolvency with those in personal insolvency. The types of external administration to which the examination power is relevant have expanded over time. But the general powers have always been framed largely by reference to that administration and never by reference to litigation by individuals for their benefit. That must be in part because the examination powers are extraordinary, as Chitty J described them in In re Imperial Continental Water Corporation112. In Hamilton v Oades113, Mason CJ made a similar observation. As his Honour said, they are a form of discovery not available to an ordinary litigant. They are special powers which are intended for wider, public purposes. It needs also to be borne in mind that they involve the denial of certain privileges, including that against self- incrimination, in order that their public purpose can be achieved. The fact that the 111 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 217 [252 (4) and (8)]. 112 (1886) 33 Ch D 314 at 318. 113 (1989) 166 CLR 486 at 497. examination proposed by the appellants might possibly reveal wrongful conduct which may be the subject of charges or other regulatory action does not convert their purpose in seeking the examination to the second purpose stated in Hamilton v Oades. In re Imperial Continental Water Corporation cannot be distinguished on the basis that there the application was brought by a liquidator and now the class of persons who may apply for an examination summons is wider. Creditors and contributories have always been able to apply for both a general examination summons and an examination for misfeasance summons, although they might be required to show good reason for the making of such an order, such as that some benefit will accrue to the company or its creditors or contributories. That position maintains today. Creditors and contributories would no doubt come within the class of eligible applicants who may be authorised by ASIC to bring an application under s 596A or s 596B, just as the new trustees were authorised in Hong Kong Bank, where the litigation was held to be productive of benefit. The conferral of standing upon a person to bring an application for an examination summons, by way of authorisation by a regulatory authority, was not first provided by s 541 of the Companies Codes. It had been available since the Uniform Companies Acts114. Contrary to the appellants' contention, s 541 did not expand the examination power. It consolidated what had been treated separately as a power to examine to obtain information for the general benefit of the external administration and one to investigate misconduct. At points in their argument the appellants suggested that the authorisation given by ASIC is in some way linked to the statutory purpose. That cannot be so. ASIC's authorisation merely provides standing to a person to bring proceedings115. It occurs prior to the bringing of the application for an examination summons, which is when questions of abuse of process may arise. It cannot inform the question of statutory purpose. It may be accepted that Pt 5.9 introduced some changes to the process respecting an examination summons and the conduct of the examination. Most obviously in the former respect it provided separately for examinations of persons who are provisional liquidators or officers of the company or who had been in a period prior to the commencement of the external administration. It recognised that 114 As relevantly amended by Companies (Amendment) Act 1973 (NSW), s 7(b) and other State analogues. 115 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 86. officers are to be expected to co-operate in the external administration about the affairs of the company. It mandated the making of an order for examination in their case. But such an order would always be subject to the purpose of the examination being one of the statute's purposes. It is also noteworthy in this regard that the list of eligible applicants in s 9 of the Corporations Act, consistently with the legislative history set out above, does not include a person who claims to have suffered loss by reason of misconduct in or relating to the affairs of the company. So far as concerns the conduct of the examination, Pt 5.9 provides that its subject is the "examinable affairs" of the company, as defined. Both the Harmer Report116 and the Explanatory Memorandum117 explain that it was considered desirable to adopt the wider definition of "examinable affairs" in s 5(1) of the Bankruptcy Act 1966 (Cth). No wider purpose such as that for which the appellants contend can be discerned by that adoption. The decided cases have consistently identified the purposes of the examination power. In no way do they depart from those identified in In re Imperial Continental Water Corporation. The decision in Hong Kong Bank confirms that decision's currency in recent times. Whilst the Harmer Report acknowledged that they may include the investigation of possible causes of action, this was as part of the general recovery of property, which, in the context of insolvency, is for the benefit of the company's creditors or contributories. The decided cases referred to above, and in particular Hong Kong Bank and Re Excel, have consistently held an order for an examination summons for some other, foreign purpose to be an abuse of the power and of the process of the court. The decision in In re Imperial Continental Water Corporation has never been doubted, consistently with an acceptance that the law on this subject has been settled. An exception to these cases is Flanders v Beatty, where it was held that the purpose of an examination under s 596A is no longer required to provide the benefits spoken of118. The Full Court of the Supreme Court of Victoria did not state what any new purposes of Pt 5.9 are, but held it would be for the court to rule on any oppressive or foreign purposes in any particular application119. This begs the question of how it is to be discerned whether a purpose is foreign to the 116 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 117 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1172]-[1173]. 118 (1995) 16 ACSR 324 at 331 per Ormiston J, Tadgell and Harper JJ agreeing. 119 Flanders v Beatty (1995) 16 ACSR 324 at 335. statute. This decision was not relied on by the appellants and does not accord with the approach historically taken to the purpose of examinations, which Hong Kong Bank and Re Excel clearly consider to be settled. It should not be followed. One result of the broader purpose for which the appellants contend would be that the special power of examination would be available in all manner of proceedings, wholly unconnected with the external administration of a company or the interests of persons in its outcome. By way of example, there would seem to be nothing to prevent a person seeking an examination in aid of an industrial dispute or an action for personal injuries arising in the workplace. If such a significant change had been introduced it might have been expected that some mention might have been made of it in the Harmer Report or the Explanatory Memorandum to the 1992 Act. Conclusion For these reasons the Court of Appeal was right to adhere to the settled understanding that the purposes which inform s 596A confine its application so that it does not authorise an examination to facilitate the investigation or prosecution of a claim that has nothing to do with the external administration of the company and which is being pursued exclusively for the benefit of persons other than the company, or its creditors or contributories considered as a whole. The appeal should be dismissed with costs. Part 5.9 of the Corporations Act 2001 (Cth) makes provision for the compulsory examination of a person before "the Court"120 about the "examinable affairs"121 of a corporation that is in "external administration" within the meaning of Ch 5 of the Corporations Act. The Part was examined in detail in Palmer v Ayres122. The process for which it provides includes creation of a record of the examination which is to be open for public inspection and able to be used in evidence in legal proceedings against the person123. The gateway to the process of compulsory examination for which the Part provides is the making of an order summoning a person for examination about a corporation's examinable affairs. The Court is empowered to make such an order, on the application of an "eligible applicant"124, under either s 596A or s 596B. There is an important difference between s 596A and s 596B. Section 596A imposes a duty on the Court to make an order summoning a person for examination. The duty arises if the Court is satisfied that the person is, or was during a specified period, an "officer"125 or "provisional liquidator"126 of the corporation127. Section 596B, by contrast, confers a discretion on the Court to make an order summoning a person for examination. The discretion arises if the Court is satisfied that the person "has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation"128 or if the Court is satisfied that the person simply "may be able to give information about examinable affairs of the corporation"129. 120 Section 58AA. 121 Section 9 (definition of "examinable affairs"). 122 (2017) 259 CLR 478 at 486-489 [9]-[19], 513-515 [94]-[99]. 123 Section 597(13)-(14A). 124 Section 9 (definition of "eligible applicant"). 125 Section 9 (definition of "officer"). 126 Section 9 (definition of "provisional liquidator"). 127 Section 596A(b). 128 Section 596B(1)(b)(i). 129 Section 596B(1)(b)(ii). There is also an important commonality between s 596A and s 596B. The commonality is that the s 596A duty is imposed and the s 596B discretion is conferred conformably with the ordinary incidents of the exercise of jurisdiction by the Court130. Indispensable to the ordinary incidents of the jurisdiction of the Court is the capacity of the Court to prevent abuse of its process131. The Court can accordingly refuse to make an order under either section if it is satisfied in advance that summoning a person on the application of an eligible applicant would amount to an abuse of the process of compulsory examination for which the Part provides. The Court can also stay an order it has made under either section if it is later satisfied that subjecting or continuing to subject the person to the process of compulsory examination amounts to an abuse of that process. "The possible varieties of abuse of process are only limited by human ingenuity and the categories are not closed."132 That said, abuses of process "usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute"133. Those categories can overlap in practice. A pertinent example is where one party invokes a procedure of the court for a purpose unjustifiably oppressive to another. The illegitimacy of the purpose then lies in the unjustifiable oppression. But an invocation of a procedure can be unjustifiably oppressive even if invoked for a legitimate purpose. This appeal is concerned only with whether the appellants' application to the Supreme Court of New South Wales for an order under s 596A summoning the third respondent for examination about the eligible affairs of the first respondent was an abuse of process within the first of those categories. That is to say, it is concerned only with whether the application was an invocation of the process of compulsory examination for an illegitimate purpose unrelated to oppression. 130 Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 559-560. 131 Williams v Spautz (1992) 174 CLR 509 at 518; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 60-61 [41], 107-108 [187]. 132 Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279. See Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 265-267 [9]-[15]. 133 Rogers v The Queen (1994) 181 CLR 251 at 286. See PNJ v The Queen (2009) 83 ALJR 384 at 386 [3]; 252 ALR 612 at 613; Victoria International Container Terminal Ltd v Lunt (2021) 95 ALJR 363 at 368 [14]; 388 ALR 376 at 380. There is no dispute that the appellants had the immediate purpose of examining the third respondent about the examinable affairs of the first respondent. There is also no dispute that the appellants' ultimate purpose in examining the third respondent about the examinable affairs of the first respondent was to investigate and pursue a potential class action on behalf of some former shareholders of the first respondent against former officers and advisers of the first respondent. In that potential class action, the appellants would seek to recover losses sustained as a result of events that occurred during the course of the examinable affairs of the first respondent. The question in the appeal is whether the New South Wales Court of Appeal was correct to conclude that the appellants' application for the order was an invocation of the process of compulsory examination for an illegitimate purpose because their ultimate purpose, if fulfilled, would not confer a demonstrable benefit on the company or its creditors134. Invocation of a process of a court as a step in the pursuit of an ultimate purpose amounts of itself to an abuse of process only if pursuit of the ultimate purpose is "foreign to the nature of the process in question"135. The question in the appeal therefore reduces to whether, and if so how, the ultimate purpose of the appellants can be said to have been foreign to the process of compulsory examination for which provision is made in Pt 5.9 of the Corporations Act. Treating Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England136, as referred to in Evans v Wainter Pty Ltd137, as authority for the proposition that "an application for the predominant purpose of advancing the cause of the applicant in litigation against third parties and not for the benefit of the corporation, its contributories or its creditors is a use of the provision for a purpose foreign to the power"138, the Court of Appeal concluded 134 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 135 Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 at 599, citing Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 521- 523. See Williams v Spautz (1992) 174 CLR 509 at 526-527, 535; Victoria International Container Terminal Ltd v Lunt (2021) 95 ALJR 363 at 369-370 [23]- [24]; 388 ALR 376 at 382-383. 136 (1994) 52 FCR 69 at 91, 93. 137 (2005) 145 FCR 176 at 200 [143], 216 [247]. 138 (2020) 383 ALR 298 at 331 [137]. See also at 332 [140]. that the appellants' ultimate purpose in seeking the examination summons was foreign to the process of compulsory examination for which provision is made in Pt 5.9 on the basis that fulfilment of their purpose would not confer a demonstrable benefit on the first respondent or its creditors139. Relying predominantly on observations in Hamilton v Oades140, the first respondent sought to defend the conclusion of the Court of Appeal on the basis that the ultimate purpose of the appellants was neither to aid those responsible for the external administration of the first respondent in the performance of their duties nor to bring criminal or regulatory proceedings in connection with the affairs of the first respondent. An obvious point to be made at the outset is that neither Hamilton v Oades nor Re Excel arose under Pt 5.9 of the Corporations Act. What was said in those cases reflected the precise form of the legislation in issue. The same is true of In re Imperial Continental Water Corporation141 and Rees v Kratzmann142, to which attention was drawn in the course of argument. In re Imperial Continental Water Corporation concerned the discretionary power of a court under the Companies Act 1862 (UK)143, on the application of a liquidator or contributory144, to summon for examination a person thought capable of giving information concerning the trade, dealings, estate or effects of a company in winding up. For the discretion to be exercised, it had earlier been held that the court needed to be satisfied that the making of the order was "just and beneficial for the purposes of the winding-up"145. The outcome in In re Imperial Continental Water Corporation, staying an order made on the application of a contributory who sought it for the purpose of obtaining information to be used by him in an action against the company and its directors, reflected that basic limitation146. Substantially the same discretionary power was reproduced in legislation in 139 (2020) 383 ALR 298 at 332 [141]. 140 (1989) 166 CLR 486. 141 (1886) 33 Ch D 314. 142 (1965) 114 CLR 63. 143 Section 115. 144 Section 138. 145 In re Metropolitan Bank (1880) 15 Ch D 139 at 142. 146 (1886) 33 Ch D 314 at 316, 320-322. Australia up to and including the uniform Companies Acts of 1961147, where it was interpreted and applied subject to the same limitation148. Rees v Kratzmann concerned the distinct discretionary power of a court under the uniform Companies Acts149 to order the public examination of a person about the promotion or formation or conduct of the business of a company in liquidation after receiving and considering a report of the liquidator stating the opinion of the liquidator that a fraud had been committed in the promotion or formation of the business of a company. The progenitor of that distinct discretionary power was a provision of the Companies (Winding-up) Act 1890 (UK) which had been interpreted by the House of Lords to limit the scope of the discretion to ordering examination of a person about that person's part in the fraud stated in the liquidator's report150. In Rees v Kratzmann, no justification was found for importing a similar limitation into the more liberally expressed discretionary power conferred by the uniform Companies Acts151. Noting that "[t]he honest conduct of the affairs of companies is a matter of great public concern to-day" and that "[i]f the legislature thinks that in this field the public interest overcomes some of the common law's traditional consideration for the individual, then effect must be given to the statute which embodies this policy", Windeyer J expressed the opinion that "[t]he only general conclusion that, as it seems to me, can be drawn from the statute is that the legislature thought it in the public interest to widen the scope of public examinations but to entrust a considerable measure of control to courts concerned"152. Hamilton v Oades concerned the discretionary power of a court under s 541 of the Companies Code, in the form in which it commenced in 1982153, to order the compulsory examination of a person in relation to "the promotion, formation, 147 eg ss 249 and 305 of the Companies Act 1961 (NSW). 148 Re Hugh J Roberts Pty Ltd (In liq) [1970] 2 NSWR 582 at 583. 149 Section 250 of the Companies Act 1961 (Qld). 150 Section 8(3), as considered in Ex parte Barnes [1896] AC 146. 151 (1965) 114 CLR 63 at 78-79. 152 (1965) 114 CLR 63 at 80-81. 153 Companies Act 1981 (Cth). See, relevantly, Companies (Application of Laws) Act 1981 (NSW). management, administration or winding up of, or otherwise relating to affairs of" a corporation in liquidation or under official management154. The power was capable of being exercised on the application of the National Companies and Securities Commission or a State or Territory delegate, or an official manager, liquidator or provisional liquidator of the corporation, or any other person authorised by the Commission to make the application155 if it appeared to the applicant that the person either: had "taken part or been concerned in the promotion, formation, management, administration or winding up of, or [had] otherwise taken part or been concerned in affairs of, a corporation [and had] been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation"156 ("sub-section (2)(a)"); or "may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation"157 ("sub-section (2)(b)"). The court had a further discretion on making the order for an examination or at any later time, on the application of any person concerned, to give such directions as to the matters to be inquired into as it thought fit158. In respect of that further discretion, Mason CJ said in Hamilton v Oades159: "In exercising this discretion the judge is confronted with a difficult task. He has to take account of the competing public and private interests. There are the two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connexion with the company's affairs ... Sub-section (2)(a) and (b) emphasizes the high public importance of these purposes." Two things are apparent about that statement. The first is that, in identifying those "two important public purposes", Mason CJ was adhering closely to the text 154 Section 541(3). 155 Section 541(1)-(2). 156 Section 541(2)(a). 157 Section 541(2)(b). 158 Section 541(5). 159 (1989) 166 CLR 486 at 496. and structure of the limitations that sub-section (2)(a) and sub-section (2)(b) placed on the making of an application for an order for compulsory examination. The second is that, in describing those purposes, his Honour was plainly not purporting to be exhaustive. The text and structure of the discretionary power conferred on a court by s 541 of the Companies Code as considered in Hamilton v Oades was carried over into the discretionary power conferred on a court by s 597 within Pt 5.9 of the Corporations Law, in the form in which it commenced in 1991160. The power was to order the compulsory examination of a person in relation to "the promotion, formation, management, administration or winding up of, or otherwise relating to affairs of" a corporation in external administration under Ch 5 of the Corporations Law161. In Hong Kong Bank of Australia Ltd v Murphy162, the New South Wales Court of Appeal held that s 597 of the Corporations Law permitted the ordering, on the application of new trustees of publicly traded unit trusts who were authorised by the Australian Securities Commission ("the ASC") to make the application, of the compulsory examination of persons connected with the previous administration of the trusts by a company in liquidation. That was despite the examination having been found to be for the purpose of allowing the new trustees to obtain information that may assist them in proceedings against the company and others brought for the ultimate benefit of the investors in the trusts. The Court of Appeal in Hong Kong Bank refuted the notion that the need which had existed under the uniform Companies Acts for a compulsory examination to be shown to be for the purposes of the winding up of the company in liquidation had been carried over into s 597 of the Corporations Law. Gleeson CJ, with whom Mahoney and Priestley JJA agreed, said163: "As appears from its place in the legislative scheme, and from its terms, whilst s 597 has an important role to play in relation to companies that are being wound up, and liquidators or provisional liquidators will be amongst those who most commonly take advantage of its provisions, the 160 Corporations Act 1989 (Cth) as amended by the Corporations Legislation Amendment Act 1990 (Cth) and applied relevantly by the Corporations (New South Wales) Act 1990 (NSW). 161 Section 597(3). 162 (1992) 28 NSWLR 512. 163 (1992) 28 NSWLR 512 at 521. operation of the section is by no means confined to liquidators. The statutory context of 'external administration', in which s 597 has its place, throws light on the purposes for which the power to order examinations (or to authorise persons to apply for examination orders) is conferred. Those purposes include the protection of shareholders and creditors and of interested members of the public. They are not, however, confined to the need for such protection in the case of winding up. Winding up is only one form of external administration. The scope of s 597 is wider." Re Excel, which was decided by the Full Court of the Federal Court two years later, likewise concerned s 597 of the Corporations Law in the form in which it commenced in 1991164. There an appointee of the trustee of debenture holders who was authorised by the ASC to make an application for examinations was found to have abused the process of the Federal Court by making an application for an order to conduct an examination of a former auditor of a company in liquidation in circumstances where the trustee and the debenture holders had already commenced proceedings against the former auditor for damages for loss arising from his conduct in that capacity. In joint reasons for judgment, Gummow, Hill and Cooper JJ stated their conclusion as follows165: "[W]e are of the view that the use of the power to obtain an examination summons for the principal purpose of furthering the cause of the applicant for the summons or, as in this case, appointor of the applicant in litigation against third parties, not for the benefit of the corporation, its contributories or creditors (other than in the most indirect way) is a use of the power for a purpose foreign to that power and thus an abuse of the power. Such a purpose would provide to the examiner the opportunity for pre-trial depositions which would not be available in the litigation." The first sentence of that statement of conclusion in Re Excel was expressed in terms suggestive of a reversion to the notion rejected in Hong Kong Bank of the need for a compulsory examination to be for the purposes of the winding up. The second sentence, however, anchored the abuse found to the illegitimacy of the forensic advantage which the compulsory examination would confer on the examiner over the examinee as parties to existing litigation. An abuse of that nature is a form of oppression. The joint reasons in Re Excel166 had earlier drawn attention 164 As relevantly applied by the Corporations (South Australia) Act 1990 (SA). 165 (1994) 52 FCR 69 at 93. 166 (1994) 52 FCR 69 at 89-91, referring to Re Hugh J Roberts Pty Ltd (In liq) [1970] 2 NSWR 582 at 585. See also Hamilton v Oades (1989) 166 CLR 486 at 498; Re Auto Import Company (Australia) Ltd (1924) 25 SR (NSW) 52 at 56. to the fact that an abuse of that nature had long been understood to be capable of being committed even by a liquidator who had commenced proceedings against the examinee for the purposes of the winding up. Nothing was said in Re Excel to cast doubt on the reasoning or conclusion in Hong Kong Bank. Indeed, the conclusion reached in Re Excel had been foreshadowed by the observation of Gleeson CJ in Hong Kong Bank that "the court will not permit a liquidator, or other eligible person, to abuse its process by using an examination solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures, such as discovery or inspection"167. Much was sought to be made in the present appeal of the hypothetical example given in Re Excel of it being "an abuse of process for a creditor approved by the [ASC] ... to obtain an examination summons to conduct an examination for the purpose of obtaining evidence in proceedings which the creditor proposed to bring against the examinee for defamation"168. The rhetorical force of hypothetical examples often lies in tacit assumptions. If the assumption made is that the connection between the putative defamation and the examinable affairs of the corporation in administration was one of mere happenstance, the abuse of process is apparent enough. The abuse would lie in the oppression to the examinee of being subjected to a form of preliminary discovery which would not be available to the examiner but for that happenstance. The putative defamation, for example, might have arisen in the context of a personal quarrel but have been contained in a statement made during a meeting of shareholders or officers of the corporation. The rhetorical force of the example changes dramatically if the assumption made is that the putative defamation was intimately connected with the examinable affairs of the corporation in external administration. The putative defamation, for example, might have been the publication by the corporation of a press release or other communication falsely attributing its impending financial failure to unconscionable conduct on the part of a creditor, and the examination might be sought by the creditor to investigate and pursue potential claims in defamation against the officers and advisers of the corporation who might have participated in its publication169. Part 5.9 of the Corporations Act, which commenced in 2001, reproduces the form of Pt 5.9 of the Corporations Law. The form of Pt 5.9 of the Corporations Law had been the result of extensive amendments introduced by the Corporate Law Reform Act 1992 (Cth). The first and second respondents are correct to point 167 (1992) 28 NSWLR 512 at 519. 168 (1994) 52 FCR 69 at 91. 169 cf Webb v Bloch (1928) 41 CLR 331. out that nothing in the background to the Corporate Law Reform Act was suggestive of a legislative intention fundamentally to alter the circumstances in which a compulsory examination into the examinable affairs of a corporation in external administration would be permitted to occur. The Corporate Law Reform Act nevertheless continued the trend of expanding those circumstances which had already been evident in Pt 5.9 of the Corporations Law in the form in which it commenced in 1991. Soon after these amendments, Hayne J observed in New Zealand Steel (Australia) Pty Ltd v Burton170 that "the evident intention of the legislature revealed in many of the recent changes to companies legislation is that directors and those engaged in the management of companies should be accountable and, in at least some cases, publicly accountable for their conduct". In Flanders v Beatty171, the Full Court of the Supreme Court of Victoria highlighted three main changes to Pt 5.9 in the form it took after the extensive amendments effected by the Corporate Law Reform Act. The first was an expansion in the range of eligible applicants, corresponding to an expansion in the forms of external administration within the meaning of Ch 5. The second was the inclusion of the new and expansive definition of "examinable affairs". The third was the elimination of the need for an eligible applicant to apply for any exercise of discretion on the part of a court to obtain an order summoning for examination a person who is, or was during the period specified in s 596A, an officer or provisional liquidator of the corporation in external administration. The observations made, and the decisions rendered, in both New Zealand Steel and Flanders were flatly inconsistent with the discretion conferred by s 596B, and by parity of reasoning with the duty imposed by s 596A, being limited by any implicit requirement for the examination sought by an eligible applicant to be shown to be for the purpose of benefiting the corporation or the general body of creditors or contributories. The eligible applicant for the order under s 596B made in New Zealand Steel was a person authorised by the ASC who sought information to be used against the examinee in litigation the subject matter of which arose out of the examinable affairs of the corporation. The eligible applicant for the s 596B order upheld in Flanders was the administrator of deeds of company arrangement who sought information to be used in the enforcement only of the rights of participating creditors. Notwithstanding New Zealand Steel and Flanders, the Full Court of the Federal Court in Evans v Wainter, undertaking a survey of the prior case law after the enactment of the Corporations Act, treated Re Excel as standing for "the 170 (1994) 13 ACSR 610 at 619. 171 (1995) 16 ACSR 324 at 332. proposition that it is an abuse of process to use the Pt 5.9 procedure if the predominant purpose of the applicant seeking the order is not for the purpose of benefiting the corporation, its contributories or its creditors"172. Then, soon after Evans v Wainter, its statement of the proposition was quoted without disapproval in the New South Wales Court of Appeal in Meteyard v Love173 in circumstances where it was not determinative of the outcome. The statement of the proposition in Evans v Wainter accords with some of the language in the statement of the conclusion in Re Excel. The statement in Evans v Wainter nevertheless draws too much from Re Excel. For reasons already given, the better explanation of the abuse found in Re Excel was that it lay not in an absence of benefit to the corporation, its contributories or its creditors, but rather in the unfair forensic advantage which the examination would have given to the examiner over the examinee in existing litigation. To the extent that courts have adopted the proposition drawn from Re Excel in Evans v Wainter, they have been led into error. Consistently with Hong Kong Bank before Re Excel, and consistently with New Zealand Steel and Flanders after Re Excel, there was not under Pt 5.9 of the Corporations Law any requirement for an examination sought by an eligible applicant to be for the purpose of benefiting the corporation or the general body of creditors or contributories. Nor can that, or any other, purposive requirement be discerned in the text or structure of Pt 5.9 of the Corporations Act. The circumstances in which a corporation can be in external administration within the meaning of Ch 5 of the Corporations Act extend beyond circumstances of winding up of a corporation. They include, for example, circumstances in which some but not all of the property of the corporation is in receivership under Pt 5.2174 as well as circumstances in which a corporation is operating under a deed of company arrangement under Pt 5.3A. Not every circumstance of external administration necessarily operates for the benefit of the corporation or for the benefit of the general body of creditors or contributories. Yet in every circumstance of external administration, the compulsory examination procedure under Pt 5.9 of the Corporations Act is available. And in every circumstance of external administration, the Australian Securities and Investments Commission ("ASIC") and any person authorised by ASIC (either 172 (2005) 145 FCR 176 at 200 [143]. See also at 216 [247]. 173 (2005) 65 NSWLR 36 at 40 [7]. 174 eg Saraceni v Jones (2012) 246 CLR 251. generally or in relation to the corporation) is an eligible applicant for an order under both s 596A and s 596B175. In conformity with reasoning in Re Excel adopted in Saraceni v Australian Securities and Investments Commission176, it may be accepted that "in determining whether to authorise a particular person to make applications in relation to a particular corporation, [ASIC] will be required only to consider the relationship which that person has to the external administration and in a particular case the appropriateness of that person being given standing to apply to the Court"177. In considering the appropriateness of the person being given standing to apply for an order under s 596A or s 596B, however, ASIC can be expected to heed the exhortation of the Australian Securities and Investments Commission Act 2001 (Cth) that, in performing its functions and exercising its powers under the Corporations Act, ASIC "must strive" to "maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy" and to "promote the confident and informed participation of investors and consumers in the financial system"178. Under Pt 9.4B of the Corporations Act, ASIC is empowered to pursue corporate misfeasance by itself bringing proceedings for orders which include declarations of contravention, pecuniary penalty orders and compensation orders. But ASIC is not obliged to limit its vision of what can be done to maintain, facilitate and improve the performance of the financial system to what it might achieve in proceedings that it might bring. Having regard to the range of functions and powers with which it is invested, ASIC can take the view that the confident and informed participation of investors and consumers in the financial system would be promoted by authorising investors or consumers who might have suffered loss through corporate misfeasance to investigate that misfeasance through the public process for which Pt 5.9 provides with a view to them pursuing recovery of their losses by bringing civil proceedings of their own either under the ordinary processes of a court or under class action regimes like that in Pt IVA of the Federal Court of Australia Act 1976 (Cth), inserted shortly before the enactment of the Corporate Law Reform Act179. The Australian Law Reform 175 Section 9 (definition of "eligible applicant"). 176 (2013) 211 FCR 298 at 313-314 [106]-[109]. 177 (1994) 52 FCR 69 at 86. 178 Section 1(2)(a) and (b). 179 Federal Court of Australia Amendment Act 1991 (Cth). Commission noted in 2018 that class actions "frequently perform a public function by being employed to vindicate broader statutory policies"180. The attempt by the first respondent to limit the ultimate purpose for which a compulsory examination might be conducted as being either to aid those responsible for the external administration of a corporation in the performance of their duties or to bring criminal or regulatory proceedings in connection with the affairs of the corporation must therefore be rejected. Not only does such a limitation as to purpose find no anchor in the text or structure of s 596A or s 596B or of Pt 5.9 as a whole, but to impose such a limitation would unduly constrain the outworking of the regulatory choices available to ASIC in the exercise of its authorisation function. In accepting the proposition drawn from Re Excel in Evans v Wainter, the Court of Appeal properly applied the interpretative approach first laid down in Australian Securities Commission v Marlborough Gold Mines Ltd181 in the context of the Corporations Law that "an intermediate appellate court – and all the more so a single judge – should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong". A consequence of the approach is that it occasionally falls to this Court on appeal from an intermediate appellate court to rechart a course of decision-making incorrectly set by another intermediate appellate court. That is what needs to happen here. The legitimacy of any purpose to which the process of compulsory examination under Pt 5.9 of the Corporations Act might ultimately be put may well lie in the nature and quality of the connection between the purpose and the examinable affairs of the corporation that is in external administration. That said, I do not think it necessary or prudent to attempt to map out the metes and bounds of the legitimate purposes to which the process might ultimately be put in order to resolve the present appeal. Indeed, borrowing from another field of discourse, I doubt whether any court considering whether an application is or was an invocation of the process of compulsory examination for an illegitimate purpose can be expected to do more than to pronounce in a particular case that a specifically 180 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, Report No 134 (2018) at 32 [1.47]. See also Kirby v Centro Properties Ltd (2008) 253 ALR 181 (1993) 177 CLR 485 at 492. identified purpose is "definitely extraneous to any objects the legislature could have had in view"182. Suffice it for the purpose of the present case to conclude that the appellants did not seek to examine the third respondent for a purpose foreign to the nature of the process of compulsory examination for which Pt 5.9 of the Corporations Act provides by reason only that the result which the appellants intended to achieve would bring no commercial or demonstrable benefit to the first respondent or its creditors. The appellants' ultimate purpose of enabling evidence and information to be obtained to support the bringing of proceedings against officers and other persons in connection with the examinable affairs of the first respondent was not illegitimate. The appeal should be allowed with costs. The substantive orders made by the Court of Appeal should be set aside. In their place, the appeal to that Court should be dismissed with costs. 182 cf Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505. EdelmanJ EDELMAN AND STEWARD JJ. The appellants were shareholders in the company formerly known as Arrium Limited ("Arrium"). Arrium was a publicly listed company on the Australian Stock Exchange that formerly produced steel and iron ore. It is now in liquidation. The appellants, in their capacity as "eligible applicants" under the Corporations Act 2001 (Cth), sought an order from the Supreme Court of New South Wales that a summons be issued for the public examination of a former director of Arrium. The order was sought pursuant to s 596A of the Corporations Act and was duly made by a Registrar in Equity. Arrium sought to have the order stayed or set aside183. The primary judge declined to do so. The Court of Appeal of the Supreme Court of New South Wales disagreed. The Court of Appeal decided that the predominant purpose of the examination sought was not to confer a benefit on Arrium, its creditors, or its contributories; rather, the purpose of that examination was to pursue a "private" benefit for only a "limited group" of shareholders184. As such, the Court of Appeal decided that the examination would have served a purpose foreign to s 596A and was therefore an abuse of process. For the reasons which follow, and with great respect, the Court of Appeal erred in limiting the purposes for which an examination may be sought pursuant to s 596A. If the appellants' purpose for the examination were truly foreign to the purpose of s 596A then it would be an abuse of process. But the purpose of the appellants was not so foreign. Abuse of process Although the categories are not closed, the doctrine of abuse of process has conveniently, but loosely, been divided into three overlapping categories185. These 183 Certain orders for the production of documents under s 68 of the Civil Procedure Act 2005 (NSW) and s 597(9) of the Corporations Act 2001 (Cth) were also made in relation to KPMG, being Arrium's former auditors and the second respondent to this appeal, and UBS AG, being a former adviser to the company. It was agreed that, if the examination order were to be set aside, the orders for production should also be set aside. 184 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [141] per Bathurst CJ, Bell P and Leeming JA. 185 Rogers v The Queen (1994) 181 CLR 251 at 286 per McHugh J. See also Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 267 [15] per Gleeson CJ, Gummow, Hayne and Crennan JJ; PNJ v The Queen (2009) 83 ALJR 384 at 386 [3] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ; 252 ALR 612 at 613; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 452 EdelmanJ are: (i) the use of the court's processes for an illegitimate purpose; (ii) the use of the court's processes in a manner that is unjustifiably oppressive to one of the parties; and (iii) a category which might better be described as concerned with the integrity of the court and not merely its processes186, and which is sometimes described as concerned with bringing the administration of justice into disrepute. This appeal is concerned with the first category. The category arises where the predominant purpose of a litigant invoking the processes of the court is illegitimate in the sense that the purpose is outside the scope of a court process authorised by statute. Once the scope of the statute has been identified, the focus is upon whether the purpose of the litigant was outside that scope. That purpose is conceptually separate from the effect or result of the litigant's conduct in invoking the court's process187. Within the category of abuse of process by use of the court's process for an illegitimate purpose, a distinction has been drawn between (i) a litigant's immediate purpose in the sense of the end to be achieved and the means of doing so and (ii) the litigant's ultimate purpose in the sense of their motive. The doctrine of abuse of process has been said to be concerned with the immediate purpose, not the ultimate purpose188: "If the [immediate] object sought to be effected by the process is within the lawful scope of the process, it is a use of the process within the meaning of the law, though it may be [for an ultimate purpose that is] malicious, or even fraudulent"189. Hence, in Williams v Spautz190, Mason CJ, [89] per Gummow A-CJ, Hayne, Crennan and Bell JJ; Moti v The Queen (2011) 245 CLR 456 at 464 [10] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. 186 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 325 at 412 [259] per Edelman J. 187 See, eg, Zaburoni v The Queen (2016) 256 CLR 482 at 489 [10] per Kiefel, Bell and Keane JJ; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 395-397 [98]-[102] per Edelman J. 188 Williams v Spautz (1992) 174 CLR 509 at 526-527 per Mason CJ, Dawson, Toohey and McHugh JJ; Victoria International Container Terminal Ltd v Lunt (2021) 95 ALJR 363 at 369-370 [23]-[24] per Kiefel CJ, Gageler, Keane and Gordon JJ, 372 [38] per Edelman J; 388 ALR 376 at 382-383, 385-386. 189 Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 521 per Isaacs J (emphasis in original). 190 (1992) 174 CLR 509 at 526-527. See also at 535 per Brennan J. EdelmanJ Dawson, Toohey and McHugh JJ gave the example of a councillor who prosecutes another councillor with the "immediate purpose" of securing a conviction and the "ultimate purpose" of having their opponent disqualified from office. Such a prosecution was said not to be an abuse of process because the scope of the legal process was characterised broadly as concerned with securing convictions of offenders and the immediate purpose was within that scope. In Victoria International Container Terminal Ltd v Lunt191, Mr Lunt's proceeding was not an abuse of process because his immediate purpose (means and ends), which was to set aside an Enterprise Agreement, was not outside the scope of the statute. It did not matter that his ultimate purpose (or motive), which was to obtain a benefit for the union of which he was a member, was outside the scope of the statute. By contrast, in Williams v Spautz, it was held to be an abuse of process for the plaintiff to bring criminal proceedings for the immediate purpose of causing the defendant to reinstate his employment or to agree to a favourable settlement of civil proceedings rather than to obtain a conviction. That was to use the proceedings to obtain "some advantage for which they are not designed"192. The distinction between an immediate purpose and an ultimate purpose can be confusing because "ultimate purpose", in the sense of motive, can be what underlies "immediate purpose", in the sense of the means and ends to be achieved. The distinction can also distract from the central question, which is whether the litigant's predominant purpose, in the sense of the end to be achieved and the means by which that end will be achieved, is inconsistent with the express or implied scope of the court's process. The terminology of a litigant's purpose should therefore be understood to mean both the end which the litigant seeks to achieve and the means by which they will do so. A better way of expressing the first category of abuse of process is therefore simply to ask whether the predominant means adopted and ends to be achieved by a litigant (in other words, the litigant's purpose) are inconsistent with the express or implied scope of the legal process. Where the legal process is statutory, if the purpose of the litigant is consistent with the scope of the legislation then it will not usually matter whether the litigant has some ulterior motive. After the identification of the litigant's predominant means and ends, the question that is 191 (2021) 95 ALJR 363; 388 ALR 376. 192 (1992) 174 CLR 509 at 526 per Mason CJ, Dawson, Toohey and McHugh JJ. EdelmanJ "implicit in, indeed at the very heart of, that process" is to ask whether the "scope and purpose of the statute" will be contradicted or stultified193. In cases of statutory processes, once the purpose of the litigant has been identified, the existence of the first category of abuse of process may often depend upon the degree of generality at which the legislative scope and purpose is identified. At the lowest level of generality, the scope and purpose of a statutory process might, in rare cases, be identified simply by the meaning of its terms so that there "is no purpose to the [provision], other than its achievement"194. There, a litigant whose means require satisfying the statutory terms will not have an illegitimate purpose within the first category of abuse of process, whatever motive they might have. But the scope and purpose of a statutory process will generally be characterised at a higher level of generality, by reference to the goal or mischief to which it is directed195. Although the scope and purpose of a statute can be identified in a manner that is generally applicable, the existence of the first category of abuse of process might depend greatly upon the particular facts and circumstances of an individual case. It would be a fool's errand to attempt to chart the legitimacy of an almost infinite variety of purposes – means and ends – for which a litigant might seek to invoke the statutory process. Each case should be assessed on its own facts and circumstances in light of the statutory scope and purpose. The purpose of the examination sought by the appellants In August 2014, Arrium published its results for the financial year ended 30 June 2014. On 15 September 2014, it announced that it would undertake a capital raising. For that purpose, shareholders were provided with an Information Memorandum. The capital raising was successfully completed in October 2014. In January 2015, Arrium announced that its Southern Iron mining operation would be suspended or closed. A month later, it recognised an impairment in the value of its mining operations in excess of $1 billion. In April 2016, Arrium was placed 193 Compare Miller v Miller (2011) 242 CLR 446 at 459 [27] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. 194 Unions NSW v New South Wales (2013) 252 CLR 530 at 557-558 [51]-[52] per French CJ, Hayne, Crennan, Kiefel and Bell JJ. See also Monis v The Queen (2013) 249 CLR 92 at 133 [73] per French CJ. 195 Brown v Tasmania (2017) 261 CLR 328 at 392 [209] per Gageler J; Unions NSW v New South Wales (2019) 264 CLR 595 at 657 [171] per Edelman J. EdelmanJ into administration and, in June 2019, the administrators were appointed as liquidators. The appellants believe they may have potential claims arising out of the capital raising against the former directors of Arrium and its auditors (KPMG) in relation to the accuracy of the contents of Arrium's 2014 financial results and the Information Memorandum. The appellants may ultimately commence some form of class action. They accept that they have no claim against Arrium itself, and that there are no claims that might be made by Arrium or its creditors against any former officer of the company in circumstances where it was accepted that Arrium had benefited from the capital raising. They also concede that any future proceedings would be confined to a potential class of shareholders of Arrium, namely those who purchased shares on or after 19 August 2014; that class would necessarily include those who participated in the capital raising. It might also include members who had ceased to be shareholders before Arrium went into administration. The appellants' end or goal in seeking to examine the former director is to investigate and to pursue personal claims in their capacity as shareholders against the former directors and auditors of Arrium196. The means by which that goal would be achieved necessarily involved the appellants satisfying the criteria in s 596A of the Corporations Act by securing authorisation from the Australian Securities and Investments Commission ("ASIC") to examine the former director about the corporation's "examinable affairs" in circumstances where the corporation is in liquidation. At first instance, after noting the "heavy onus" on Arrium of establishing that an examination of the former director would be an abuse of process, the primary judge decided that, because such an examination might have validly been pursued by the liquidators of Arrium, it necessarily followed that an examination could validly be sought by the appellants as contributories who "have likely suffered loss"197. In addition, the primary judge found that the information to be produced from the examination "would also likely advance the interests of Arrium and its creditors, so far as it either produces additional relevant information that supports further causes of action by Arrium, or does not do so and therefore 196 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 305 [36], 324-325 [93], 330 [129] per Bathurst CJ, Bell P and Leeming JA. 197 In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [50] per Black J; the liquidators earlier had informally interviewed this director. EdelmanJ supports the liquidators' present assessment that their insolvent trading claims are more likely to benefit Arrium and its creditors than the claims which the [appellants] seek to investigate"198. By contrast, the Court of Appeal decided that an examination sought predominantly for the purpose of pursuing private litigation against a third party or third parties, and not for the purposes of conferring a "demonstrable"199 or "commercial"200 benefit on "the company or its creditors (and possibly on all of its contributories)"201, was an abuse of process. It was concluded that this was the position here – the appellants' purpose was an abuse of process202. Although there was little dispute in this Court about the purpose of the appellants, the first and second respondents (Arrium and KPMG respectively) sought to deny or dilute the finding below that any future claims would be brought by the appellants in their "capacity [as] shareholders". That aspect of the appellants' purpose, namely the means by which they would achieve their desired end, is important. So is the aspect of the appellants' purpose that their potential claim against the former directors of Arrium and its auditors would be part of a class action. It cannot be doubted that the appellants' class action, if brought, would include claims arising from the participation of the appellants in the capital raising, and thus as shareholders of Arrium, as the appellants were only able to participate in the capital raising by virtue of already being shareholders. These matters demonstrate that the appellants' purpose in seeking the examination included the administration or enforcement of the law concerning the public dealings of the corporation in external administration and its officers. 198 In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [50] per Black J. 199 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [140] per Bathurst CJ, Bell P and Leeming JA. 200 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 329 [123] per Bathurst CJ, Bell P and Leeming JA. 201 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [140] per Bathurst CJ, Bell P and Leeming JA. 202 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [141] per Bathurst CJ, Bell P and Leeming JA. EdelmanJ The scope and purpose of s 596A Statutory history Courts have long possessed a statutory power to summon for examination officers of a company that is being wound up to compel the giving of information concerning the trade, dealings, estate, or effects of the company. Section 115 of the Companies Act 1862203 is an example of this type of power. That provision empowered the court, "after it has made an Order for winding up the Company", to "summon before it" for examination various classes of person, including those whom the court considered capable of giving information concerning the trade, dealings, estate, or effects of the company. The provision was later described in Parliament as "a means by which directors, managers, and auditors can be examined and brought to book, and anyone acquainted with winding-up proceedings in the Chancery Courts knows that this was proved a most powerful and successful provision"204. The powers of compulsory examination in Australia evolved from similar provisions205. The predecessors of the modern provisions can be seen in the 1981 Companies Codes206. Notably, s 541 permitted any person so authorised by the then National Companies and Securities Commission (a "prescribed person")207 to apply for an order for a compulsory examination. Section 541(2) provided as follows: "Where it appears to the Commission or to a prescribed person that – a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or 203 25 & 26 Vict c 89. 204 House of Commons Debates, 27 February 1890, vol 341, col 1405. 205 See, eg, Companies Act 1874 (NSW), s 173. 206 eg, Companies Act 1981 (Cth); Companies (Application of Laws) Act 1981 (NSW); Companies (Application of Laws) Act 1981 (Vic). 207 See, eg, Companies (New South Wales) Code, s 541. EdelmanJ a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation, the Commission or prescribed person may apply to the Court for an order under this section in relation to the person." When the national co-operative scheme led by the Corporations Act 1989 (Cth) ("the 1989 Corporations Law") was enacted, the power to compel the public examination of an officer of a company was conferred by s 597 of that Act. Relevantly, the lawful capacity to make an application for a compulsory examination was expressed in s 597(2) as follows: "Where it appears to the Commission or to a prescribed person that: a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation; the Commission or prescribed person may apply to the Court for an order under this section in relation to the person." In general terms, para (a) of s 597(2) was concerned with the examination of an "insider" in the company who might have committed some form of misconduct. In contrast, and again in general terms, para (b) of s 597(2) was concerned with any "person" who might have had knowledge about the affairs of the company. Section 597(1) provided that the reference to a "prescribed person" in s 597(2) was to an official manager, liquidator, or provisional liquidator of the corporation or to any other person authorised by the then Australian Securities Commission ("the ASC") to apply for an examination. The power of the court to order a compulsory examination was conferred by s 597(3) of the 1989 Corporations Law, which was in the following terms: "Where an application is made under subsection (2) in relation to a person, the Court may order that the person attend before the Court on a day and at a time to be fixed by the Court to be examined on oath on any matters relating to the promotion, formation, management, administration or winding up of, or otherwise relating to affairs of, the corporation concerned." EdelmanJ As with s 541 of the Companies Codes, the court had a discretion as to whether to make an order for a compulsory examination. The existence of such a discretion was confirmed by the use of the phrase "may order" in s 597 and the phrase "may, if it thinks fit, order" in s 541. In 1992, a series of related provisions, including ss 596A and 596B, were inserted into the 1989 Corporations Law by the Corporate Law Reform Act 1992 (Cth). Section 596B, for the reasons expressed below, replaced s 597. Section 596A, however, conferred an entirely new power of examination. In general terms, it permitted the examination of an insider of the company by limited classes of examiners. Both provisions were re-enacted in 2001 with the passing of the Corporations Act. Section 596A provides208: "Mandatory examination The Court is to summon a person for examination about a corporation's examinable affairs if: an eligible applicant applies for the summons; and the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending: the corporation section 513C day in relation to the administration; or is under administration – on the if the corporation has executed a deed of company arrangement that has not yet terminated – on the section 513C day in relation to the administration that ended when the deed was executed; or 208 Sub-paragraphs (iia) and (iib) were enacted on 1 January 2021 by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) in connection with the introduction of Pt 5.3B. In broad terms, that Part sets out a new formal debt restructuring process for eligible small companies, supervised by "small business restructuring practitioners". As is another form of external that process administration that is subject to an overarching supervisory power of the court to "make such order as it thinks appropriate" (see s 458A), the introduction of sub-paras (iia) and (iib) has no real bearing on the proper purposes for issuing a summons for examination under s 596A. EdelmanJ (iia) if the corporation is under restructuring – on the section 513CA day in relation to the restructuring; or (iib) if the corporation has made a restructuring plan that has not yet terminated – on the section 513CA day in relation to the restructuring that ended when the plan was made; or (iii) if the corporation is being, or has been, wound up – when the winding up began; or otherwise – when the application is made." The word "officer" is broadly defined in s 9 of the Corporations Act to include a director, receiver, administrator, or liquidator of a company. The term "examinable affairs" of a company is also broadly defined in s 9 as, amongst other matters, the promotion, formation, management, administration, or winding up of a company or any other affairs of a company. And the "affairs of a body corporate", by s 53, are themselves extremely broad, including "the promotion, formation, membership, control, business, trading, transactions and dealings" of the company. Section 596B provides: "Discretionary examination The Court may summon a person for examination about a corporation's examinable affairs if: an eligible applicant applies for the summons; and the Court is satisfied that the person: has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or (ii) may be able to give information about examinable affairs of the corporation. This section has effect subject to section 596A." By s 596B, the court retains the same discretion it had under s 597 of the 1989 Corporations Law not to issue a summons. By contrast, the issue of a summons pursuant to s 596A is mandatory once the criteria contained therein are satisfied. The phrase used in s 596A is "[t]he Court is to summon", whereas the phrase deployed in s 596B is "[t]he Court may summon" (emphasis added). If the terms of s 596A are satisfied, the court "is to summon a person for examination". EdelmanJ The court has "no discretion to decline to issue a summons if an application is made under s 596A and the criteria identified in paras (a) and (b) of the section are satisfied"209. In such circumstances, subject to the doctrine of abuse of process, an applicant may obtain a summons "as of right"210. As Hayne J said in New Zealand Steel (Australia) Pty Ltd v Burton, in the case of s 596A, "the court is bound to order an examination"211. Another striking change in the terms of s 596A from the predecessor legislation is that no affidavit evidence is required in support of a summons for examination under s 596A. Although s 596C requires an applicant for a s 596B summons to file an affidavit "that supports the application and complies with the rules", no such affidavit is mandated for the purposes of making an application to issue a s 596A summons212. The statutory scheme thus contemplates that a court could make an order for an examination pursuant to s 596A without the need for any supporting affidavit213. The court might not need to look beyond the face of an application to determine whether to issue a summons in accordance with the five criteria set out below. Alternatively, the court might only need a supporting affidavit that confirms the satisfaction of those criteria214. 209 Carter v Gartner (2003) 130 FCR 99 at 107 [25] per Branson J, citing Simionato v Macks (1996) 19 ACSR 34 at 56 per Lander J and Hill v Smithfield Service Centre Pty Ltd (In liq) (2002) 196 ALR 246 at 249-250 [21]-[22], 254-255 [47] per 210 Flanders v Beatty (1995) 16 ACSR 324 at 332 per Ormiston J (Tadgell and 211 (1994) 13 ACSR 610 at 618. 212 Rule 11.3 of the Supreme Court (Corporations) Rules 1999 (NSW) nonetheless requires the filing of an affidavit in support of an application for a summons pursuant to both ss 596A and 596B. As the application here was supported by an affidavit, it is not necessary to decide whether r 11.3 should be read down to be in accordance with ss 596A and 596C. 213 Carter v Gartner (2003) 130 FCR 99 at 107 [25] per Branson J, citing Simionato v Macks (1996) 19 ACSR 34 at 56 per Lander J and Hill v Smithfield Service Centre Pty Ltd (In liq) (2002) 196 ALR 246 at 249-250 [21]-[22], 254-255 [47] per 214 cf Kimberley Diamonds Ltd v Arnautovic (2017) 252 FCR 244 at 249 [21]-[22] per Foster, Wigney and Markovic JJ. EdelmanJ In the absence of any affidavit material, as Santow JA observed in Meteyard v Love215, the breadth of the definition of "examinable affairs" in the criterion that the examination be "about a corporation's examinable affairs" means that a court might only be able to determine whether a summons had been issued for a foreign or abusive purpose once the resulting examination is under way. This breadth, his Honour continued, reflected a change by the 1992 legislative amendments to the 1989 Corporations Law with216: to permitting examinations under the "an expansionist approach Corporations Act. They further underpin the wisdom of generally permitting the examinations to go ahead, given that there remains the protective safeguard of an intervention more precisely focussed at the examination stage. That said, if a clear-cut case of abuse emerges earlier, courts have to intervene if examinees are not to be put to potentially huge expense and inconvenience." The capacity of a court to prevent questioning that would constitute an abuse of process is not denied by s 596A. But, the prevailing means of preventing such abuse are different because the issue of a summons is mandatory. Once again, statutory context is important. The identification of that statutory context commences with the obvious proposition, already mentioned, that s 596C mandates that an application for a summons for examination pursuant to s 596B be supported by an affidavit; and that there is no equivalent statutory requirement in the case of s 596A. Where an application is made for a summons pursuant to s 596A without any supporting affidavit, it may well be difficult, if not impossible, for a court to know the purpose for which the examination is sought. Sections 596F and 597 are also important for the identification of the scope and purpose of s 596A. Formerly, s 597(5) empowered a court to give directions as to the matters to be enquired into and, subject to s 597(4), as to the procedure to be followed at an examination. Moreover, as the legislative history reveals, the court has always had the power to supervise the conduct of such examinations217. The Corporate Law Reform Act, however, more explicitly gave a court control over how examinations may take place pursuant to s 596A. Pursuant to s 596F, a court may give directions about: the matters to be enquired into; the procedure to be followed; who may be present when an examination is held in private; who may be excluded when an examination is held in public; access to the records of the 215 (2005) 65 NSWLR 36 at 40-41 [9], [12]. 216 Meteyard v Love (2005) 65 NSWLR 36 at 41 [12]. 217 See Hamilton v Oades (1989) 166 CLR 486 at 498 per Mason CJ. EdelmanJ examination; prohibiting publication or communication of information about the examination; and destroying a document that relates to an examination which was created at the examination. In addition, there is now an express power whereby a court may also control, as appropriate, the questions that may be asked at an examination to ensure that they are directed at the examinable affairs of a company218. The lowest level of generality of statutory scope and purpose: criteria for the issue of a s 596A summons At the lowest level of generality, the purpose of s 596A could be confined to its criteria. As to those criteria, given the objectives expressed in the "Harmer Report" and the Explanatory Memorandum (discussed below219), it is unsurprising that the language found in s 596A is very different from the language in former s 597(2)(a) of the 1989 Corporations Law. Whilst it has been said that s 596A contains only two criteria to be satisfied220, a more complete statement is that it has five criteria. First, the application for a summons must be made by an "eligible applicant" as defined221. Secondly, the person to be examined must be an existing officer or provisional liquidator of the company, or must have been such an officer or provisional liquidator during or after the two years ending on certain specified days set out in s 596A(b). Thirdly, the summons must be "about a corporation's examinable affairs". Fourthly, the form of a summons must comply with s 596D. Fifthly, the company in question must be subject to some form of external administration for the purposes of Ch 5 of the Corporations Act. That fifth criterion is supported by the context of s 596A as contained within Ch 5 of the Corporations Act, a chapter that addresses the various ways in which a company may be externally administered. It is also supported by the legislative history discussed above. As French J said in Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd222: "the historical roots of the power lie deep in corporate insolvency law nourished by the development of the examination powers in respect of 218 Corporations Act 2001 (Cth), s 597(5B). 219 See below at [165]-[167]. 220 Palmer v Ayres (2017) 259 CLR 478 at 487 [12] per Kiefel, Keane, Nettle and 221 Corporations Act 2001 (Cth), s 9. 222 (2007) 156 FCR 501 at 527 [88]. See also Palmer v Ayres (2017) 259 CLR 478 at 513 [94] per EdelmanJ bankrupt individuals. The proposition that s 541 of the Companies Codes introduced, by a sidewind, unrecognised in the Explanatory Memorandum, a general power in the courts to examine persons about the affairs of corporations is, with respect, improbable. It is remarkable that the Harmer Report would have failed to recognise the statutory divergence from that closer alignment with bankruptcy law which it proposed. The Explanatory Memorandum for the 1992 amendments which introduced ss 596A and 596B into the Corporations Law was focused on insolvency and forms of if a general power of judicial external administration. Moreover examination of persons about the affairs of corporations were intended, the question arises whether there was any point in retaining specific references to the various categories of external administration mentioned in s 596A." No party disputed that the summons applied for here satisfied these five criteria. It follows that, unless the appellants' purpose was an abuse of process by reference to the purpose of s 596A at a higher level of generality, the Supreme Court of New South Wales was obliged to issue the summons to the former director of Arrium. The scope and purpose of s 596A at a higher level of generality: the approaches of the parties The valid exercise of the power conferred by s 596A is not conditioned upon an examination being for the benefit of the company, its creditors, or its contributories. But, as mentioned above, the purpose of a statutory provision is usually expressed at a higher level of generality than its terms and by reference to the broader mischief to which it is directed. As explained at the outset of these reasons, the centrepiece of the reasoning of the Court of Appeal set the purpose of s 596A at a higher level of generality. That purpose was said to be the conferral of a benefit on the company, its creditors, or its contributories. In this Court, there was a disconnect between the submissions of the appellants and the first respondent, on the one hand, and the reasoning of the Court of Appeal, on the other. The Court of Appeal was not asked to address the correctness of the submissions now put to this Court by both the appellants and the first respondent. The appellants contended that the application for a summons pursuant to s 596A serves the following two purposes. First, s 596A aids the process of external administration, which is not limited to assisting liquidators to protect the interests of creditors. Secondly, the provision assists in the bringing of proceedings against the examinable officers of a company and others in connection with the company's examinable affairs. Inferentially, an application for a summons not made in conformity with either purpose would be an abuse of process. Here, it was submitted by the appellants that the summons was sought in aid of the second, and not the first, purpose. EdelmanJ The first respondent agreed with the appellants' expression of the permissible purposes for seeking a summons, save that, importantly, in the case of the second purpose, the proceedings must be confined to those of a regulatory nature. The first respondent also submitted that the expression by the Court of Appeal of the test that an examination must be for the benefit of the company, its creditors, or its contributories was confined to the first purpose. Here, the first respondent contended that, because the proposed class action was not a regulatory proceeding, it followed that the summons sought by the appellants was an abuse of process. No serious attempt was made to defend the Court of Appeal's suggestion that, in the case of an examination made to benefit contributories, it must be for the benefit of "all" contributories223. The source of the approach of the parties to the asserted purposes of s 596A being twofold was the following observation of Mason CJ in Hamilton v Oades224: "There are the two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist [them] in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connexion with the company's affairs." That observation was made with respect to s 541 of the Companies (New South Wales) Code, which, as set out above, referred to the compulsory examination of a person who is, or may be, guilty of fraud, negligence, default, breach of trust or duty, or other misconduct. The observation was also made in the context of a case concerned with the availability of the privilege against self-incrimination. In that respect, in support of its contention that the second purpose was to be confined to regulatory proceedings, the first respondent relied upon the reference to misconduct in s 596B(1)(b)(i). The absence of that word in s 596A was of no moment, it was said, because one needed to read that provision and s 596B together. With respect, neither the approach of the appellants nor that of the first respondent as to the purpose of s 596A should be accepted. Hamilton, as already mentioned, concerned a different provision which expressed a different test for the making of an order for compulsory examination, a test which is not found in s 596A. Section 541 was the predecessor provision to s 596B, not s 596A. This can 223 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [140] per Bathurst CJ, Bell P and Leeming JA. 224 (1989) 166 CLR 486 at 496, citing Mortimer v Brown (1970) 122 CLR 493 at 496 per Kitto J, 499 per Walsh J. EdelmanJ be seen in the fact that both ss 541 and 596B confer a discretion on the court for the purpose of making an order for examination, and both describe those liable to be examined in the same essential way. The similarity with the expression of who is eligible to be examined pursuant to s 596B(1)(b) (and s 597(2) of the 1989 Corporations Law) is obvious. By contrast, s 596A is new and finds no direct analogy with any former provision in any earlier companies legislation. The break from legislative history in the enactment of s 596A is confirmed in the Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth). It states that, prior to 1992, a noteworthy difference between the procedures for corporate insolvency and for personal bankruptcy was that a trustee in bankruptcy was entitled to examine a bankrupt without the need to obtain a court order225. According to the Explanatory Memorandum, this difference led the Harmer Report to recommend the creation of a similar power for the examination of company officers without the need for any court order where the person to be examined was, or had been within two years before the commencement of the winding up, a director or other officer of the company226. But, where the person to be examined was an outsider, the Harmer Report recommended the retention of the need to obtain an order of the court to permit an examination to take place227. The Explanatory Memorandum indicates that Parliament did not accept the recommendation contained in the Harmer Report to create an examination power exercisable without any court order228. But the Parliament did accept the need to create a new power to make it easier for an eligible applicant to obtain a summons from the court to examine a company's officers. Indeed, to use the language of the 225 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1152]. 226 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 (1988) at 250 [585]-[586]. See Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1153]-[1155]. 227 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1156]-[1158]; Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 (1988) at 250 [585]-[586]. 228 cf Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1153]-[1155]. EdelmanJ Explanatory Memorandum, the obtaining of a s 596A summons was intended to be only a "formality"229. The Explanatory Memorandum thus states230: "The intention is that the Court will issue the summons where it is satisfied that the person's connection with the company is such that the person is an examinable officer, without the need to inquire further into such matters as whether that person has taken part or been concerned in the examinable affairs of the corporation, been guilty of misconduct in relation to the corporation or is able to give information about examinable affairs of the corporation. It is envisaged that the issue of a summons in such circumstances will be a formality, and that the respective Court rules may provide for execution of the function by a Registrar or equivalent official, where appropriate." The Explanatory Memorandum also records that Parliament accepted the Harmer Report recommendation for the examination of outsiders231; this partly explains the nature of the power conferred by s 596B. The Explanatory Memorandum states that the purpose of this express power is to "cast a very broad net in defining the matters on which a person may be examined"232. The breadth of that net is measured by the term "examinable affairs". As noted earlier, that term is broadly defined, and extends to "the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs"233. That term replaced the phrase "matters relating to the promotion, formation, management, administration or winding up of, or otherwise relating to affairs of, the corporation concerned", which had previously appeared in s 597(3) of the 1989 Corporations Law. 229 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1155]. 230 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1155] (emphasis added). 231 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1156]-[1158]. 232 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [1173]. 233 Corporations Act 2001 (Cth), s 9; see also s 53. EdelmanJ Although s 596A of the Corporations Act preserved some of the criteria in its legislative forebears, it broke away from the general model by: (i) expanding the range of eligible applicants; (ii) expanding the scope of examinations by the broad definitions of "examinable affairs" and "affairs of a body corporate"; and (iii) removing the discretion of the court to grant the order summoning a person for examination. The wider purpose, or statutory scope, of s 596A The statutory history, context, and terms of s 596A, set out above, demonstrate that a characterisation of the purpose of s 596A at a higher level of generality than its terms should not be curtailed by "muffled echoes of old arguments" concerning its predecessors234. In particular, the purpose of s 596A cannot be confined by reference to benefit to the company, its creditors, or its contributories. As the scope of application of s 596A expanded, so did its underlying purpose and concern. That expanded concern is with the administration or enforcement of the law concerning the public dealings of the corporation in external administration and its officers. The only vestige that remains of the old approaches to purpose that might have confined the predecessors to s 596A is the public aspect of the purpose of the power. The purpose of s 596A, at a higher level of generality than its terms, and reflecting the underlying mischief to which the provision is directed, is therefore to address, by examinations of present or former corporate officers or provisional liquidators, the administration or enforcement of the law concerning the corporation and its officers in public dealings. A summons for examination will not be an abuse of process unless the predominant purpose of the examination would contradict or stultify – in some way – this public interest in the external administration of a company. The underlying public administration and compliance purpose of s 596A is reflected in the persons eligible to apply for a summons, generally being those serving in offices which serve a public function or who are subject more generally to the supervision of the court, such as a liquidator or an administrator. The persons who can apply for a summons under s 596A also include ASIC or persons authorised by ASIC. ASIC is under a statutory duty to strive to: maintain, facilitate, and improve the performance of the financial system, and the entities within that system, in the interests of commercial certainty, reducing business costs, and the 234 See Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 414 per Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ, quoting Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 276 per Windeyer J. See also Rees v Kratzmann (1965) 114 CLR 63 at 78 per Menzies J (Barwick CJ and Taylor J agreeing), 80 per Windeyer J. EdelmanJ efficiency and development of the economy; promote the confident and informed participation of investors and consumers in the financial system; administer the laws that confer functions and powers on ASIC effectively and with a minimum of procedural requirements; receive, process, and store, efficiently and quickly, the information given to ASIC under the laws that confer functions and powers on it; ensure that information is available as soon as practicable for access by the public; and take whatever action it can take, and which is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers upon ASIC235. There is no reason to suppose that ASIC cannot apply for a summons pursuant to s 596A in the pursuit of any of the foregoing objectives. And, as the appellants have observed, the result of any subsequent examination may ultimately confer no benefit on a company, its creditors, or its contributories. Yet that examination will not be an abuse of process. Enforcement of the law serves the public interest and is a legitimate purpose for the issue of a summons pursuant to s 596A. An eligible applicant also includes a person authorised by ASIC in writing to make an application for a summons pursuant to s 596A. It is not to be assumed or expected that ASIC might authorise a person to make an illegitimate, vexatious or oppressive examination of a company officer. Rather, the power of authorisation exists to enable a person to undertake enforcement functions similar to those conferred on ASIC. It also exists to enable a creditor or contributory to advance claims they may or may not have against a company in external administration or its current or former officers. For the reasons set out below, both purposes serve the public interest. The underlying public administration and compliance purpose of s 596A is also reflected in the fact that the provision invokes the jurisdiction of a court. As the plurality held in Palmer v Ayres236, the s 596A power is an instance of judicial power for the purposes of Ch III of the Constitution and involves a matter. In separate reasons in the same case, Gageler J held that the matter to which the exercise of the judicial power of supervision under s 596A is directed was the 235 Australian Securities and Investments Commission Act 2001 (Cth), s 1(2). 236 (2017) 259 CLR 478 at 492 [31] per Kiefel, Keane, Nettle and Gordon JJ, citing Abebe v The Commonwealth (1999) 197 CLR 510 at 524-525 [25] per Gleeson CJ and McHugh J and Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 16 [57] per Wilcox, EdelmanJ external administration of a company arising under a law made by the Parliament237. Legitimate purposes under s 596A therefore include the enforcement of the Corporations Act, the promotion of compliance with that Act, and the protection of shareholders or creditors from corporate misconduct. An examination conducted for a purpose that included investigating the possible existence of misconduct on the part of a company's officers might be expected to serve the public interest in ways such as these. Hence, regardless of whatever ultimate purpose a litigant might have, a summons that is sought for a substantial purpose that includes the public purpose of enforcement of the Corporations Act, whether by ASIC or another eligible applicant, is not a summons sought for a purpose foreign to s 596A in the sense that it is inconsistent with the purposes of s 596A. And the purpose of enforcement of the Corporations Act includes examination for the purpose of determining whether relief might be obtained in respect of potential corporate misconduct. The authorities concerning the purpose of s 596A and its predecessors For the reasons above, the authorities concerning the predecessor provisions to s 596A are of limited assistance in identifying the purpose of s 596A. For instance, since s 115 of the Companies Act 1862 was bound up with the process of winding up, it was decided that the power existed for the purpose of winding up and for the benefit of those interested in it238. Section 115 thus could not be used in the pursuit of a purely private cause of action against the company or its officers239. Nor could the provision be used in the pursuit of other foreign purposes, such as a vexatious or oppressive purpose240 or to obtain some unfair forensic advantage in pending litigation241. 237 Palmer v Ayres (2017) 259 CLR 478 at 516 [103]. 238 In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 320-321 per Cotton LJ. 239 In re Imperial Continental Water Corporation (1886) 33 Ch D 314 at 320-321 per Cotton LJ. 240 Re Hugh J Roberts Pty Ltd (In liq) [1970] 2 NSWR 582 at 583 per Street J. 241 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519 per Gleeson CJ (Mahoney and Priestley JJA agreeing). EdelmanJ As Hayne J explained in New Zealand Steel242, the early English decisions concerning the power conferred by s 115 of the Companies Act 1862 and its predecessors reflected the statutory context in which they were made243. As noted above, those provisions conferred power on a court to "summon before it" an officer of the company or a person capable of giving information about the trade, dealings or estate of the company. A section such as s 115 was cast in terms that permitted the court to act of its own motion, but it was held that such a course would be most unusual244. The early jurisprudence concerning s 115 emphasised that it conferred an "extraordinary power" that was "of an inquisitorial kind"245. Accordingly, there was a concern that the power only be exercised when it was "just and beneficial"246 to do so. No matter who applied, an order for examination would properly be made only "if the examination was for the purposes of the winding up and for the benefit of those interested in it"247. Since applications under s 115 were made by liquidators (in the usual case), as well as by creditors or contributories, it followed that an application for the purpose of the winding up needed to be for the benefit of the company or its creditors or contributories. But s 596A expanded both the range of eligible applicants and the scope of examinations. In Re Excel Finance Corporation Ltd248, the Full Court of the Federal Court of Australia considered the scope of operation of s 597 of the 1989 Corporations Law. It decided that the use of the power for the principal purpose of furthering the "personal advantage"249 of an applicant for the summons, and "not [a purpose] for 242 (1994) 13 ACSR 610. 243 (1994) 13 ACSR 610 at 613. 244 See Re Land Securities Company (1894) 42 WR 624 at 624 per Vaughan Williams J. 245 In re North Australian Territory Company (1890) 45 Ch D 87 at 93 per Bowen LJ. 246 In re Metropolitan Bank (Heiron's Case) (1880) 15 Ch D 139 at 142 per Baggallay LJ and Bramwell LJ. 247 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 615 per 248 (1994) 52 FCR 69. 249 Re Excel Finance Corporation Ltd (1994) 52 FCR 69 at 91 per Gummow, Hill and EdelmanJ the benefit of the corporation, its contributories or creditors (other than in the most indirect way)", was an abuse of the power250. The phrase "for the benefit of the corporation, its contributories or creditors" was a modern expression of the requirement deriving from s 115 of the Companies Act 1862 that the power be exercised for the purpose of a winding up of a company, on the application of a liquidator, a contributory, or a creditor. The distinction drawn between a private purpose for examination, and a purpose of investigation that benefits the corporation, its creditors, or its contributories, is not stable. When a company is being wound up, it can be presumed that all of its shareholders and all of its creditors want a monetary or other return on their investment. The same is true whether shareholders and creditors are considered as individual entities or collectively. Thus, in the Court of Appeal of the Supreme Court of New South Wales decision in Hong Kong Bank of Australia Ltd v Murphy, Gleeson CJ recognised that there was no "strict dichotomy" between the advantage to be gained by an applicant for examination and a benefit that might flow to the creditors or contributories or members of the public251. Perhaps for that reason, the Full Court observed in Excel that there could be no objection to the use of an examination by a creditor for the purpose of ensuring that their debt would be paid252. If the creditor were unsecured, it was observed, the creditor's interest would be no different from that of all the other unsecured creditors of the company, who would share equally in the distributable assets of the company253. If the creditor were a secured creditor, the Full Court said254: "the fact that the purpose of the examination was to aid the ultimate recovery of the secured debt, by, for example, the ascertaining of the existence of assets, would operate to the benefit of the company by ensuring 250 Re Excel Finance Corporation Ltd (1994) 52 FCR 69 at 93 per Gummow, Hill and 251 (1992) 28 NSWLR 512 at 519 (Mahoney and Priestley JJA agreeing). 252 Re Excel Finance Corporation Ltd (1994) 52 FCR 69 at 93 per Gummow, Hill and 253 Re Excel Finance Corporation Ltd (1994) 52 FCR 69 at 93 per Gummow, Hill and 254 Re Excel Finance Corporation Ltd (1994) 52 FCR 69 at 93 per Gummow, Hill and EdelmanJ that it paid out the secured creditors and that there was then revealed what other assets (if any) were available for distribution to unsecured creditors." It may be that a better characterisation of purpose in the authorities on the older legislative provisions concerning winding up, such as s 115 of the Companies Act 1862, would have avoided any focus upon benefit to the corporation and instead expressed the purpose, as McLelland J did in Re BPTC Ltd255, in relation to s 387 of the Companies (New South Wales) Code, as one of "[f]acilitation of the accountability to individual creditors or contributories, as well as to the company itself, of those who participated in the conduct of its affairs prior to the winding up". In any event, the broader purposes of the power conferred by the wider s 596A, as distinct from its predecessors, were recognised by the Full Court of the Supreme Court of Victoria in Flanders v Beatty, where Ormiston J said256: "Now the powers given under s 596A to 597B are clearly so wide and so easily exercised by 'eligible applicants' (cf s 596A) that the purposes to be served by examinations ought not be limited by reference to the benefit of the company or its creditors or contributories. The objects to be served by the issue of an examination summons and the making of orders for examination should be discerned only by reference to the statutory provisions which invest those powers. If those powers are being used for oppressive purposes or to serve ends entirely outside the scope of the sections, such as to gather evidence for libel proceedings, then the court will intervene to prevent the examination. As to the precise ambit of the power of the commission to authorise applications under the new sections, it is unnecessary to express any further opinion." Ormiston J was also of the view that, given the variety of external company arrangements permitted then by the 1989 Corporations Law, "an examination intended to assist the enforcement of the rights or claims of relatively few persons affected by an arrangement may nevertheless be proper and appropriate"257. In other words, it appears that Ormiston J would have considered the summons in issue in this case to be entirely valid. 255 (1992) 7 ACSR 291 at 292-293. 256 (1995) 16 ACSR 324 at 335 (Tadgell and Harper JJ agreeing). 257 Flanders v Beatty (1995) 16 ACSR 324 at 333 (Tadgell and Harper JJ agreeing). EdelmanJ In Evans v Wainter Pty Ltd258, the Full Court of the Federal Court appeared to express a contrary view. Lander J, with whom Ryan and Crennan JJ relevantly agreed, concluded that the mandatory nature of s 596A did not justify a conclusion that the purpose of the examination power had changed259. Lander J decided that an applicant was only entitled to a summons under s 596A if the purpose of the resulting examination was, concordantly with Excel, in the interests of the corporation, its creditors, or its contributories260. But his Honour did not explain why that limited purpose, which had been derived from the more limited identity of applicants in a winding up under s 115 of the Companies Act 1862, should continue to apply to the new and expanded s 596A. Despite his reference to the need for the purpose of the examination to conform to the interests of the corporation, its creditors, or its contributories, when Lander J came to characterise the statutory purpose, his Honour did so in broader terms. In amplification of what he considered were legitimate purposes for the issue of a s 596A summons, Lander J referred, without suggesting that these purposes were exhaustive, to the following261: "First, an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation. Second, it assists the corporation's administrators to identify the corporation's assets, both tangible and intangible. It also allows the corporation's liabilities to be identified. Third, the purpose is to protect the interests of the corporation's creditors. Fourth, it serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation. 258 (2005) 145 FCR 176. 259 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 208 [193]. 260 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 216 [247] (Ryan and Crennan JJ agreeing). 261 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 216-217 [252(3)] (Ryan and EdelmanJ Fifth, it assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations." Each of those examples given by Lander J is an instance of administration or enforcement of the law concerning the public dealings of the corporation in external administration and its officers. More fundamentally, however, the result in Evans v Wainter, like that in Flanders v Beatty, is inconsistent with any requirement that an applicant have a purpose of conferring a benefit on the company, its creditors, or its contributories. The Full Court in Evans v Wainter concluded that it was not an abuse of process for an applicant, authorised by ASIC, to apply for an examination summons for the purpose of obtaining information in order to bring proceedings for misleading or deceptive conduct, including against a firm of solicitors who had advised the company (now in liquidation) about a transaction between the company and the applicant. In bringing that proceeding, the applicant in Evans v Wainter had no purpose of benefiting the company, its creditors, or its contributories. However, the applicant's purpose involved enforcement of the law concerning the corporation and its officers in public dealings. The Full Court in Evans v Wainter considered that there would be a benefit to the company in the effect of successful proceedings by the applicant against the solicitors because any recovery would release the company from liability262. But it cannot be a requirement for a summons for examination that the effect of the summons would be a "benefit" to the company. As the Full Court of the Federal Court correctly observed in Kimberley Diamonds Ltd v Arnautovic263, an applicant does not need to demonstrate practical utility; they need not show that the examination would achieve any specific result or outcome. Indeed, it is unnecessary for an applicant to demonstrate that the examination "would be in any sense desirable or efficacious"264. The approach which does not confine the statutory purpose to the interests of the corporation, its creditors, or its contributories has also been taken in relation to s 596B. That reasoning must apply a fortiori to s 596A with its potentially wider purpose. In New Zealand Steel265, a creditor (New Zealand Steel Pty Ltd) had sued 262 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 218 [259] per Lander J (Ryan and 263 (2017) 252 FCR 244 at 249 [21] per Foster, Wigney and Markovic JJ. 264 Kimberley Diamonds Ltd v Arnautovic (2017) 252 FCR 244 at 249 [21] per Foster, 265 (1994) 13 ACSR 610. EdelmanJ officers of an insolvent company, to which a receiver and manager had been appointed, for trading whilst insolvent. An application for discovery had already been dismissed when that creditor obtained an adjournment of the trial to enable it to undertake an examination, pursuant to s 596B, of a person who had taken part in the management of the insolvent company. The creditor had been authorised to apply for a s 596B examination by the ASC. The person set to be examined made an application to set aside the summons for examination. Hayne J dismissed that application to set aside the summons. The proposed examination was not an abuse of process because the creditor's purpose necessarily involved enforcement of the law concerning the corporation in its public dealings. The creditor's purpose was consistent with "the evident intention of the legislature ... that directors and those engaged in the management of companies should be accountable"266. The examination would have "[been] of matters of concern to others"267. The examination would have concerned a period of trading that would have affected other creditors, and the ASC, "in its role as regulator", could have chosen to participate268. The record of the examination would have been open to any such creditor and to the ASC269. Finally, Hayne J observed270: "If any question arose of the examination being conducted in a particular way that amounted to an abuse or was vexatious, then application might be made to stop that abuse." It follows that examining an officer of a company for the purpose of pursuing a claim against the company or one of its officers or advisers for the enforcement of the law can be an entirely legitimate use of the power conferred by s 596A. It should not matter whether the claim relates to all creditors or all contributories, or only a smaller group. Generally speaking, where a company is subject to external administration, each creditor and each shareholder wishes to recover their loss; the recompense they seek is money or an in specie distribution. 266 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. 267 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. 268 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. For example, ASIC may seek declarations or compensation or other orders following a compulsory examination pursuant to s 1317J of the Corporations Act 2001 (Cth). 269 Under the Corporations Act 2001 (Cth), the examination is also normally held in public: s 597(4). 270 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. EdelmanJ No doubt some are more altruistic than others and may pursue a remedy directed at, or which includes, other creditors or shareholders being compensated. But the existence of such fine feelings is of no consequence to the court's application of s 596A. As conceded by the first respondent, the pursuit of a claim for the benefit of some shareholders can be as legitimate as a claim made for the benefit of all shareholders. In both cases, the recovery of money in respect of corporate misadventure serves the public interest by necessarily including a purpose to enforce the law. The making of such claims is a means of protecting shareholders and creditors and of ensuring compliance with the law. An examination made pursuant to s 596A for such a purpose is no abuse of process. It should also be emphasised that setting aside a summons for an improper purpose would be, in the usual case, inapt where the threat of abuse is capable of being addressed by the court in other ways271. In the case of a summons issued pursuant to s 596A, the integrity of any examination should be capable of protection by the court through the making of appropriate directions and by the controlling of what questions might be asked272. It would only be when these alternatives were unable adequately to address the threat of an abuse of process that a more "draconian"273 remedy might be appropriate, such as the setting aside of the summons. Even then, the setting aside of a summons on the grounds that it is an abuse of process should be a measure of "last resort"274; such a remedy must be reserved for only the most exceptional or extreme cases275. Contrary to the first and second respondents' contentions, to permit a creditor or contributory to examine an officer of a company in external administration in order to pursue an individual claim or claims arising out of the company's "examinable affairs" will not expose that officer to the risk of 271 Victoria International Container Terminal Ltd v Lunt (2021) 95 ALJR 363 at 369 [20] per Kiefel CJ, Gageler, Keane and Gordon JJ, 372 [38] per Edelman J; 388 ALR 376 at 381, 385. See also Jago v District Court (NSW) (1989) 168 CLR 23 at 272 Corporations Act 2001 (Cth), ss 596F, 597(5B). 273 Victoria International Container Terminal Ltd v Lunt (2021) 95 ALJR 363 at 369 [20] per Kiefel CJ, Gageler, Keane and Gordon JJ; 388 ALR 376 at 381. 274 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 325 at 409 [248] per Edelman J. 275 Kimberley Diamonds Ltd v Arnautovic (2017) 252 FCR 244 at 251 [33] per Foster, EdelmanJ examination "to the possible detriment of the corporation"276. Only limited classes of individuals or entities are eligible to apply for the issue of a summons pursuant to s 596A. It should not be assumed that ASIC, a liquidator, or an administrator would, in the discharge of their respective offices, use the power conferred by s 596A oppressively or vexatiously. Nor, as already mentioned, should it be assumed that there is a realistic risk that ASIC would authorise a person to be an eligible applicant who might seek an examination without good reason. In any event, the court retains a capacity at all times to prevent an examination which is oppressive, vexatious, or otherwise an abuse of process. Moreover, the very cost of carrying out an examination should defer frivolous applications. In that regard, s 597B permits a court to order an applicant to pay the costs of an examinee where it is satisfied that the relevant summons has been "obtained without reasonable cause". The purpose of the summons to the former director was within the scope of s 596A The appellants are aggrieved because they suspect that Arrium misled them during the 2014 capital raising. Potentially all shareholders who participated in that raising may be members of a future class action. The appellants believe that they may be able to recover their losses from the former directors of Arrium or its former auditors or both. The appellants are eligible applicants for the purposes of s 596A(a). The former director they seek to examine was an "officer" at the relevant time for the purposes of s 596A(b). And the proposed examination would be "about" the examinable affairs of Arrium for the purposes of s 596A. It follows that, unless it was an abuse of process, the Registrar was obliged to issue the summons sought, as she did. In New Zealand Steel, Hayne J said that, if a liquidator had been appointed to the company and had applied for an examination to determine if the company had traded whilst insolvent, with a view to recommending criminal proceedings to the ASC, "it is clear that such an examination would [have been] for the purposes of the statute"277. No different result, it was said, would have been justified if, instead, a creditor, pursuing "ends which [were] private to and concern only it"278, had put such a liquidator "in funds in order that the examination might be 276 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 216 [249] per Lander J (Ryan and 277 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. 278 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. EdelmanJ prosecuted"279. Adopting the same reasoning here, if the liquidators had instead obtained a summons to examine a former Arrium director about the existence of possible misleading or deceptive conduct arising out of the capital raising, the legitimacy of pursuing such a course under s 596A could not have been questioned. As it happens, the director in question was "informally interviewed" by the liquidators. Some shareholders now want the matter more thoroughly examined. To do so is not to pursue any purpose foreign to s 596A. A similar conclusion was reached applying similar reasoning by the primary judge280. His Honour was, with respect, correct. The furtherance of the appellants' purpose, in the sense of the means by which the appellants will achieve their end, will involve conducting the examination, which will probably take place in public281 and as to which ASIC may choose to take part282, in which there will be consideration of issues concerning whether Arrium's officers engaged in misleading or deceptive conduct in the 2014 capital raising. Whilst the proposed class action, if successful, undoubtedly would not benefit all of Arrium's shareholders, it is a legitimate use of the power conferred by s 596A for those shareholders who stand to benefit to seek to test the merits of that class action with a compulsory examination by means that include the administration or enforcement of the law concerning the public dealings of the corporation in external administration and its officers. The exposure of any wrongdoing may well encourage greater compliance with the law. In that respect, the record of the examination will also be open for inspection283, as well as for use in subsequent legal proceedings284. Finally, the foregoing conclusion is strengthened in light of the effective abandonment at the hearing of any defence of the proposition, suggested by the Court of Appeal below285, that in the case of an examination sought for the benefit 279 New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 619. 280 In the matter of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [50] per Black J. 281 Corporations Act 2001 (Cth), s 597(4). 282 Corporations Act 2001 (Cth), s 597(5A)(a). 283 Corporations Act 2001 (Cth), s 597(14A). 284 Corporations Act 2001 (Cth), s 597(14), subject the privilege against self-incrimination specified in sub-s (12A). 285 ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) v Walton (2020) 383 ALR 298 at 332 [140] per Bathurst CJ, Bell P and Leeming JA. EdelmanJ of contributories, it must be for the benefit of "all" contributories. As noted earlier, the potential class of Arrium shareholders for which any class action would be brought would include those who purchased shares on or after 19 August 2014. As Arrium was not placed into administration until April 2016, it can safely be assumed that the potential class could include a substantial number of shareholders. The notice of contention By notice of contention, KPMG, being the second respondent and Arrium's former auditors, contended that it was an abuse of process for an eligible applicant to conduct an examination for the predominant subjective purpose of investigating a potential claim by that applicant against a third party, even if the success of that claim would benefit the company, its creditors, or its contributories. An incidental or coincidental benefit, it was said, could not save the use of a power for an improper purpose. With respect, that submission assumes that a summons issued for the purpose of investigating a potential claim against a third party is necessarily an abuse of process. For the reasons already given, that would not necessarily be Conclusion The appeal should be allowed. Orders 3-5 of the orders made by the Court of Appeal on 30 July 2020 should be set aside and in their place it should be ordered that the appeal be dismissed with costs. The first and second respondents should pay the appellants' costs of the application for special leave to appeal and of this appeal.

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND SHARPCAN PTY LTD RESPONDENT Commissioner of Taxation v Sharpcan Pty Ltd [2019] HCA 36 Date of Hearing: 9 August 2019 Date of Judgment: 16 October 2019 ORDER Appeal allowed. Set aside order 1 of the Full Court of the Federal Court of Australia made on 27 September 2018 and in lieu thereof order that: the appeal to that Court be allowed; the decision of 14 December 2017 be set aside; and the Administrative Appeals Tribunal dated the appellant's objection decision be affirmed. On appeal from the Federal Court of Australia Representation G J Davies QC with J E Jaques and L J S Molesworth for the appellant (instructed by Australian Government Solicitor) D H Bloom QC and T P Murphy QC with D J McInerney and C M Horan for the respondent (instructed by Rigby Cooke Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Sharpcan Pty Ltd Income tax (Cth) – Allowable deductions – Where taxpayer had received percentage of income derived from 18 gaming machines operated by authorised gaming operator under Gambling Regulation Act 2003 (Vic) at its hotel premises – Where Gambling Regulation Act amended to provide for gaming machine entitlements ("GMEs") to be allocated directly to gaming venue operators – Where taxpayer bid for and was allocated 18 GMEs permitting it to operate gaming machines at its premises for ten years – Where taxpayer paid purchase price by instalments – Whether purchase price was outgoing on revenue account deductible under s 8-1 of Income Tax Assessment Act 1997 (Cth) ("1997 Act") – Whether purchase price was expenditure incurred to preserve (but not enhance) value of goodwill in relation to legal or equitable right with value to taxpayer solely attributable to effect on goodwill deductible under s 40-880 of 1997 Act. Words and phrases – "asset of enduring value", "barrier to entry", "blackhole expenditure", "capital account", "capital asset", "CGT asset", "CGT cost base", "CGT event", "gaming machine entitlements", "goodwill", "motive", "objective purpose", "once-and-for-all outgoing", "practical and business point of view", "purchase price funded out of revenue", "revenue account", "statutory rights", "structural solution". Gambling Regulation Act 2003 (Vic), Ch 3, Pt 4A. Income Tax Assessment Act 1997 (Cth), ss 8-1, 40-880. KIEFEL CJ, BELL, GAGELER, NETTLE AND GORDON JJ. This is an appeal from a decision of the Full Court of the Federal Court of Australia (Greenwood A-CJ, McKerracher J agreeing; Thawley J dissenting) that a sum of $600,300 paid by Spazor Pty Ltd ("the Trustee") to the State of Victoria for the allocation to the Trustee of 18 gaming machine entitlements ("GMEs") under the Gambling Regulation Act 2003 (Vic) was an outgoing on revenue account and, as such, deductible under s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act")1. The majority further held (Thawley J dissenting) that, if the outgoing were not so deductible, it would be deductible under s 40-880 of the 1997 Act as expenditure incurred to preserve but not enhance the value of goodwill in relation to a legal or equitable right of which the value to the Trustee was solely attributable to the effect that it had on goodwill2. For the reasons which follow, the appeal should be allowed. The amount of $600,300 which the Trustee paid for the acquisition of the GMEs was an outgoing on capital account, and thus not deductible under s 8-1 of the 1997 Act. Nor was it deductible under s 40-880 of the 1997 Act, because it was not incurred to preserve but not enhance the value of goodwill and the value of the GMEs to the Trustee was not solely attributable to the effect which they had on goodwill. The facts At all relevant times, the Trustee was the trustee of the Daylesford Royal Hotel Trust ("the Trust"), of which the respondent ("Sharpcan") was the sole beneficiary. On 8 August 2005, the Trustee, in its capacity as trustee of the Trust, purchased from Tattersall's Ltd ("Tattersall's") the business of the Royal Hotel in Daylesford at a price of $1,025,000. At the time of purchase, the hotel premises were a venue approved for gaming under the Gambling Regulation Act3, and Tattersall's was the authorised gaming operator of 18 gaming machines that 1 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 165 2 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at See Gambling Regulation Act (as at 18 June 2009), ss 1.3(1) (definition of "approved venue"), 3.2.1, 3.4.1. Bell Nettle Gordon Tattersall's owned and operated at the premises4. The Trustee did not purchase the gaming machines, but, in accordance with the terms of agreement under which it purchased the hotel business, between 8 August 2005 and 15 August 2012 Tattersall's continued to operate the 18 gaming machines at the premises and paid to the Trustee, as the new venue operator, a percentage of the income derived from the machines. On 10 April 2008, the Victorian government announced that gaming operator licences issued to Tattersall's would not be renewed following their expiration in 2012 and that a new regulatory regime would be introduced in their place5. Thereafter, by the Gambling Regulation Amendment (Licensing) Act 2009 (Vic), new gaming machine licensing provisions were enacted that provided for GMEs to be allocated directly to gaming venue operators – thus, in effect, cutting out Tattersall's6. Pursuant to that legislation, the Victorian government put up new GMEs for auction, and the Trustee bid for and was allocated 18 new GMEs for the sum of $600,300. Each of the new GMEs was of ten years' duration and permitted the Trustee to operate one gaming machine (a total of 18 gaming machines) at the premises for that period7. Subject to necessary approvals, the GMEs were capable of being sold and transferred to other venue operators for the operation of gaming machines at other premises8. See Gambling Regulation Act (as at 18 June 2009), ss 1.3(1) (definition of "gaming operator"), 3.4.2, 3.4.9; Victoria v Tatts Group Ltd (2016) 90 ALJR 392 at 398 [31]-[32] per French CJ, Kiefel, Bell, Keane and Gordon JJ; 328 ALR 564 See Victoria v Tatts (2016) 90 ALJR 392 at 399 [38] per French CJ, Kiefel, Bell, Keane and Gordon JJ; 328 ALR 564 at 572. See Gambling Regulation Act (as at 1 January 2010), Ch 3, Pt 4A; Victoria v Tatts (2016) 90 ALJR 392 at 399-400 [39]-[41] per French CJ, Kiefel, Bell, Keane and Gordon JJ; 328 ALR 564 at 573. See Gambling Regulation Act (as at 1 January 2010), ss 3.4A.1(1), 3.4A.2(1), 3.4A.5(4), 3.4A.7(1)(b). See Gambling Regulation Act (as at 1 January 2010), s 3.4A.3, Ch 3, Pt 4A, Div 5. Bell Nettle Gordon In order to fund the purchase price of the GMEs, the Trustee entered into a related agreement with the Minister for Gaming9, which provided for deferred payment of the remainder of the purchase price (after the $10,000 bond to participate in the auction was credited) by instalments between May 2010 and August 2016. The related agreement also provided that, if the Trustee defaulted in payment of an instalment, the number of GMEs proportionate to the total purchase price then outstanding could be forfeit10. The Trustee paid $50,030 in May 2010, $60,030 in August 2012, and $30,015 quarterly thereafter until August 2016. Under the applicable provisions of the Gambling Regulation Act11, the Trustee was required to ensure that the 18 machines were "approved gaming machines". To that end, the Trustee entered into a contract with PVS Australia Pty Ltd ("PVS"), which was authorised to provide approved gaming machines, and, by arrangement between PVS and Tattersall's, PVS approved the 18 machines already installed at the premises. The Trustee was also required to ensure that the gaming machines were monitored in accordance with the Gambling Regulation Act12, and the Trustee engaged Intralot Gaming Services Pty Ltd to monitor the machines. The Trustee thereby operated the 18 machines on site and derived income therefrom until it sold the hotel business on 9 November 2015. In its income tax return for the year of income ended 30 June 2012, the Trustee claimed the purchase price of the GMEs as a deduction under s 8-1 of the 1997 Act or, alternatively, one-fifth of the purchase price as a deduction under s 40-880 of the 1997 Act. The Commissioner of Taxation disallowed both claims ("the objection decision"). See Gambling Regulation Act (as at 1 January 2010), s 3.4A.6. 10 See Gambling Regulation Act (as at 1 January 2010), Ch 3, Pt 4A, Div 7. 11 See Gambling Regulation Act (as at 1 January 2010), ss 1.3(1) (definition of "approved gaming machine"), 3.4A.2, 3.5.1, 3.5.4. 12 See Gambling Regulation Act (as at 1 January 2010), ss 1.3(1) (definition of "electronic monitoring system"), 3.4.4, 3.5.13, 3.5.17A. Bell Nettle Gordon Relevant statutory provisions So far as is relevant for present purposes, s 8-1 of the 1997 Act provides as follows: "(1) You can deduct from your assessable income any loss or outgoing to the extent that: it is incurred in gaining or producing your assessable income; or it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: it is a loss or outgoing of capital, or of a capital nature ..." So far as is relevant for present purposes, s 40-880 of the 1997 Act provided at the relevant time that: "(1) The object of this section is to make certain *business capital expenditure deductible over 5 years if: the expenditure is not otherwise taken into account; and a deduction is not denied by some other provision; and the business is, was or is proposed to be *carried on for a *taxable purpose. (2) You can deduct, in equal proportions over a period of 5 income years starting in the year in which you incur it, capital expenditure you incur: in relation to your *business ... Bell Nettle Gordon (5) You cannot deduct anything under this section for an amount of expenditure you incur to the extent that: it is in relation to a lease or other legal or equitable right; or it could, apart from this section, be taken into account in working out the amount of a *capital gain or *capital loss from a *CGT event ... The exceptions in paragraphs (5)(d) and (f) do not apply to expenditure you incur to preserve (but not enhance) the value of goodwill if the expenditure you incur is in relation to a legal or equitable right and the value to you of the right is solely attributable to the effect that the right has on goodwill." Proceedings before the AAT Sharpcan applied to the Administrative Appeals Tribunal ("the AAT") for review of the objection decision. The AAT, constituted by Pagone J sitting as Deputy President of the AAT, set aside the objection decision on the basis that the amount paid for the GMEs was allowable as a deduction in respect of the 2010 year of income under s 8-1 of the 1997 Act. Pagone J reasoned13 that, although "[s]ome features of [the GMEs] may be thought to be of capital or of a capital nature", "[t]he character of the outgoing ... must be answered by considering what the expenditure was effected to calculate for the business of the trustee from a practical and business point of view" and that "[t]he outgoing for the [GMEs] in the trustee's business is more like a fee paid for the regular conduct of a business than the acquisition of a permanent or enduring asset". In his Honour's view14: 13 Re Sharpcan Pty Ltd and Federal Commissioner of Taxation (2017) 107 ATR 176 14 Re Sharpcan Pty Ltd and Federal Commissioner of Taxation (2017) 107 ATR 176 Bell Nettle Gordon "The outgoings were for the statutory entitlement to conduct gaming at its premises on gaming machines over time, and the amount of the bid reflected the expected income stream from the use of those other assets which the [GMEs] permitted. An incident of acquiring the [GMEs] by the outgoing may have been to have preserved the trustee's income earning structure, but the purpose of the outgoing was to obtain the right to conduct gaming to enable the trustee to derive the future income which was expected from the gaming." Proceedings before the Full Court The Commissioner appealed to the Full Court, which, by majority, dismissed the appeal. The majority accepted15 that there were factors which suggested that the outgoing was in the nature of a capital outgoing. The factors identified in the Commissioner's submission16 were: that the GMEs were intangible assets created pursuant to statute; that the GMEs could be bought and sold; that the GMEs conferred on the Trustee a statutory authority necessary lawfully to conduct gaming on gaming machines; that the GMEs were of ten years' duration (subject to a liability to forfeiture for breach of the operating conditions); that the price which the Trustee paid for the GMEs was set at auction and, despite the deferred payment agreement, was properly characterised as a lump sum; that the price was payable irrespective of the fortunes of the business; 15 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 188 16 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 178 Bell Nettle Gordon that the fundamental change in the arrangements involved the Trustee conducting gaming and becoming entitled to the whole of the income generated from the gaming activities for the entire period of ten years; and that the Trustee became responsible for outgoings for the supply, maintenance and monitoring of gaming machines and the payment of taxes in respect of gaming. The majority stated17, however, that there were in effect four factors which, taken together, led to the conclusion that the outgoing was on revenue account. They were: that the outgoing had "to be recouped out of, in effect, every day's trading across all facets of the integrated business and especially out of gaming revenues"; that the outgoing reflected "the economic value of the income stream expected from putting other assets to use to derive income" from gaming; that the outgoing was "incurred in relation to a business properly understood as an integrated hotel business characterised by the various trading activities [being the sale of drinks, meals and accommodation], including gaming, conducted by the Trustee", which "the Commissioner ha[d], quite artificially, looked through and beyond" to "excise[] ... that part of it which relate[d] to gaming"; and that "[t]he Trustee was confronted with the changed circumstances brought about by government intervention and had to respond to the possible loss of the right to derive revenue from gaming activities", and "[i]f the Trustee [had] not bid for, and [won] the bidding for, 18 GMEs ... it would not have any income from gaming from 16 August 2012" and "the business of the integrated hotel undertaking would have been significantly at risk". 17 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 191 [154], 195 [176], 196 [185]-[186], 197 [190], 216 [290] (emphasis in original). Bell Nettle Gordon Although expressing18 some reservation as to the value of analogies to decided cases, the majority equated19 the purchase price of the GMEs to amounts paid by BP Australia Ltd to service station proprietors to secure solo-site tying arrangements. In BP Australia Ltd v Federal Commissioner of Taxation, the Privy Council held20 that those payments were deductible under s 51(1) of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth) as amounts payable out of "circulating capital" which "had to come back penny by penny with every order during the period in order to reimburse and justify the particular outlay". In the alternative, the majority reasoned21 that, if the purchase price were an outgoing on capital account, it would be deductible under s 40-880 of the 1997 Act because, they said, the purpose of the expenditure from a practical and business point of view was to preserve the goodwill of the hotel business and the value to the Trustee of the GMEs was solely attributable to the effect that they had on the goodwill of the business, which would have been significantly diminished without them. Thawley J, in dissent, would have allowed the appeal22. His Honour concluded23 that the GMEs were a capital asset of enduring value acquired as a 18 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 179 [92], citing Federal Commissioner of Taxation v Citylink Melbourne Ltd (2006) 228 CLR 1 at 43 [151] per Crennan J and Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at 661 [64] per Gaudron, Gummow, Kirby and 19 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at (1965) 112 CLR 386 at 398 per Lord Pearce for the Board; [1966] AC 224 at 21 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 206 22 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 227 23 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 214 Bell Nettle Gordon "means of production", being "capital assets necessary for it to conduct gaming activities". His Honour observed24 that it was "not to the point that changes in the law were the reason why the Trustee formed a desire to acquire those assets, or formed the view that it was commercially necessary for those assets to be acquired". Thawley J did not accept that the outgoing reflected "the economic value of the income stream expected from putting other assets to use to derive income from gaming", and said25 that, "even if it had, that would not have been a basis for concluding that the expenditure was on revenue account". Nor did his Honour accept that the purchase price was analogous to the amounts paid by BP Australia to secure tying arrangements. As he explained26: "The practical commercial requirement to acquire the GMEs was a one- off expenditure which would secure for the Trustee the ability to conduct gaming for a period of 10 years. This was a significant, one-off, structural change to the way the business operated. It was not expenditure which would need to be repeated over and again as a necessity of trade comparable to the need on the part of BP [Australia] to secure trade ties with numerous petrol retailers." Thawley J also rejected the claim to deduct part of the purchase price of the GMEs under s 40-880 of the 1997 Act. His Honour denied27 that the GMEs were acquired "to preserve (but not enhance) the value of goodwill". In his Honour's view28, the evidence demonstrated "that the purpose of the expenditure was to acquire GMEs at the lowest possible price ... to enable the Trustee lawfully to commence conducting gaming activities and derive income (greater 24 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 215 25 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 216 26 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 218 27 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 227 28 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 224 Bell Nettle Gordon over the full term than had previously been derived) through the exercise of the rights ... for 10 years absent a sale of the rights to an incoming purchaser", rather than "to preserve (but not enhance) the value of goodwill". His Honour also denied29 that the value of the GMEs to the Trustee was "solely attributable" to the effect that they had on "goodwill". He held30 that they "had a value distinct from any effect [they] had on goodwill", which inhered in the fact that they were "a valuable asset capable of transfer" which "resulted in a taxable income stream" different from, and likely to be significantly more profitable than, that which had previously been earned. The purchase price was an outgoing of capital Thawley J was correct that the GMEs were a capital asset of enduring value acquired by the Trustee as the means of production necessary for the Trustee to conduct gaming activities in the period following expiration of the Trustee's arrangements with Tattersall's. It was not to the point that the Trustee intended to recoup the purchase price of the GMEs over time out of every day's trading. It was not to the point that the purchase price of the GMEs may have reflected the economic value of the income stream expected to be derived from gaming. It was not to the point that the Trustee's hotel business was an integrated business which would have been significantly prejudiced and possibly failed if the Trustee had not purchased the GMEs. And it was not to the point that the reason the Trustee determined to acquire the GMEs was the change in the law that made it necessary for a venue operator to own GMEs rather than dealing through Tattersall's. The Trustee's purpose in paying the purchase price of the GMEs was to acquire, hold and deploy the GMEs as enduring assets of the hotel business for the purpose of generating income from gaming. There can be no question that the purchase price was incurred on capital account. Authority is clear that the test of whether an outgoing is incurred on revenue account or capital account primarily depends on what the outgoing is 29 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 227 30 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 227 Bell Nettle Gordon calculated to effect from a practical and business point of view31. Identification of the advantage sought to be obtained ordinarily involves consideration of the manner in which it is to be used and whether the means of acquisition is a once- and-for-all outgoing for the acquisition of something of enduring advantage or a periodical outlay to cover the use and enjoyment of something for periods commensurate with those payments32. Once identified, the advantage is to be 31 Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 at 648 per Dixon J (McTiernan J agreeing at 652). See BP Australia (1965) 112 CLR 386 at 397 per Lord Pearce for the Board; [1966] AC 224 at 264; Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645 at 659 per Gibbs A-CJ, 661-662 per Stephen and Aickin JJ, 667-668 per Jacobs J, 672 per Murphy J; Cliffs International Inc v Federal Commissioner of Taxation (1979) 142 CLR 140 at 152 per Gibbs J, 158 per Stephen J, 171-172 per Jacobs J, 176 per Murphy J; Citylink (2006) 228 CLR 1 at 14 [25] per Kirby J, 43 [148] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 27 [76]-[77]); AusNet Transmission Group Pty Ltd v Federal Commissioner of Taxation (2015) 255 CLR 439 at 455 [22] per French CJ, Kiefel and Bell JJ, 474 [73]-[74] per Gageler J, 496 [140] per Nettle J. See also Strick (Inspector of Taxes) v Regent Oil Co Ltd [1966] AC 295 at 348 per Lord Wilberforce. 32 Sun Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR 337 at 363 per Dixon J (McTiernan J agreeing at 365). See Broken Hill Theatres Pty Ltd v Federal Commissioner of Taxation (1952) 85 CLR 423 at 433-434 per Dixon CJ, McTiernan, Fullagar and Kitto JJ; BP Australia (1965) 112 CLR 386 at 394 per Lord Pearce for the Board; [1966] AC 224 at 261; South Australian Battery Makers (1978) 140 CLR 645 at 654-655 per Gibbs A-CJ (Stephen and Aickin JJ agreeing at 661); Cliffs International (1979) 142 CLR 140 at 153-154 per Gibbs J, 164 per Stephen J, 173 per Jacobs J; Avco Financial Services Ltd v Federal Commissioner of Taxation (1982) 150 CLR 510 at 518 per Gibbs CJ; GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 124 at 137 per Brennan, Dawson, Toohey, Gaudron and McHugh JJ; Mount Isa Mines Ltd v Federal Commissioner of Taxation (1992) 176 CLR 141 at 147-148 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Citylink (2006) 228 CLR 1 at 14 [24] per Kirby J, 43 [147] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 27 [76]-[77]); AusNet Transmission (2015) 255 CLR 439 at 454-455 [22] per French CJ, Kiefel and Bell JJ. Bell Nettle Gordon characterised by reference to the distinction between the acquisition of the means of production and the use of them; between establishing or extending a business organisation and carrying on the business; between the implements employed in work and the regular performance of the work in which they are employed; and between an enterprise itself and the sustained effort of those engaged in it33. Thus, an indicator that an outgoing is incurred on capital account is that what it secures is necessary for the structure of the business34. The GMEs were assets of enduring value authorising the holder to conduct gaming activities35. When the Trustee's arrangements with Tattersall's expired, the Trustee purchased the GMEs as assets of enduring value to replace the extinguished arrangements and thereby provide itself with the means of continuing to operate the gaming aspect of the hotel business for the next ten years. The GMEs were necessary for the structure of the business because the conduct of gaming in an approved venue is only lawful if the venue operator holds a GME. The GMEs were a barrier to entry36. The purchase price was paid in several instalments, but it was in the nature of a once-and-for-all outgoing for the acquisition of an enduring asset. This was not a case of regular and recurrent payments for the use of an asset. 33 Hallstroms (1946) 72 CLR 634 at 647 per Dixon J (McTiernan J agreeing at 652). See Sun Newspapers (1938) 61 CLR 337 at 359 per Dixon J (McTiernan J agreeing at 365); BP Australia (1965) 112 CLR 386 at 404 per Lord Pearce for the Board; [1966] AC 224 at 271; South Australian Battery Makers (1978) 140 CLR 645 at 661 per Stephen and Aickin JJ; Mount Isa Mines (1992) 176 CLR 141 at 147 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; AusNet Transmission (2015) 255 CLR 439 at 474 [73] per See also Strick (Inspector of Taxes) v Regent Oil Co Ltd [1966] AC 295 at 329 per Lord Morris of Borth-y-Gest. 34 AusNet Transmission (2015) 255 CLR 439 at 472 [66] per French CJ, Kiefel and 35 See British Insulated and Helsby Cables Ltd v Atherton [1926] AC 205 at 213-214 per Viscount Cave LC. 36 Gambling Regulation Act (as at 1 January 2010), s 3.4A.1(1)(a). Bell Nettle Gordon Assets of enduring advantage Counsel for Sharpcan submitted that, although the GMEs were of nominally ten years' duration, the purchase price was incurred on revenue account because the acquisition of the GMEs did not amount to the acquisition of "permanent rights" or, alternatively, because the rights conferred by the GMEs were in the nature of statutory licences subject to forfeiture in the event of failure to comply with their conditions and the possibility of statutory amendment. Counsel invoked the decisions of this Court in Federal Commissioner of Taxation v Citylink Melbourne Ltd37 and ICM Agriculture Pty Ltd v The Commonwealth38 in support of those submissions. Those submissions should be rejected. Citylink provides no support for the idea that the acquisition of the GMEs was not the acquisition of an asset of enduring advantage. As the majority in Citylink noted39, the concession agreement there in issue was essentially a licence agreement "to use capital assets for the limited period of the concession". It followed, as the majority held40, that concession fees under the agreement, which were payable semi-annually and calculated in part on the basis of revenue generated41, were "periodic licence fees" for such use. They were not the purchase price for the acquisition of any enduring advantage, because the agreement did not confer any "permanent ownership rights" over the roads and lands which were the subject of the concession42. Although the concession agreement was of 30 years' duration, that (2006) 228 CLR 1. (2009) 240 CLR 140. (2006) 228 CLR 1 at 42 [143] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 27 [76]-[77]) (emphasis added). 40 Citylink (2006) 228 CLR 1 at 44 [154] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 27 [76]-[77]). 41 See Citylink (2006) 228 CLR 1 at 32-33 [102]-[103], [106], 41-42 [141]-[142] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 42 Citylink (2006) 228 CLR 1 at 44 [154] per Crennan J (Gleeson CJ, Gummow, Callinan and Heydon JJ agreeing at 8 [1]-[2], 27 [76]-[77]). Bell Nettle Gordon fact did not alter the character of the advantage sought by the fees payable under By contrast, as Thawley J observed43, the payments in respect of the GMEs were not in any sense in the nature of periodic licence fees. They were merely instalments of the purchase price "for" the GMEs, which was payable once and for all upon the acquisition of the GMEs regardless of the amount of revenue which the GMEs might or might not generate. ICM provides no support for Sharpcan's argument either. In that case, it was held that statutory ground and surface water licences issued under the Water Act 1912 (NSW) were a species of property but that their cancellation by statute and replacement with new statutory licences which did not permit the licence holders to take as much water as was previously allowed was not an "acquisition of property" within the meaning of s 51(xxxi) of the Constitution: either because the water was a natural resource over which the State had always had power to limit use44; or because the State acquired no identifiable or measurable advantage by cancellation of the original licences45. Hayne, Kiefel and Bell JJ observed46 that one reason among others for the latter conclusion was that, because the original licences were statutory licences, they were inherently susceptible to change or termination. Counsel for Sharpcan argued that, since the GMEs were statutory rights, they were likewise inherently susceptible to change or termination and so could not be regarded as assets of enduring advantage. That is not so. The fact that the defeasance of one form of inherently defeasible statutory right does not amount to the "acquisition of property" within the meaning of s 51(xxxi) of the Constitution provides little, if any, guidance as to whether the acquisition by a taxpayer of another form of inherently defeasible statutory right amounts to the acquisition by the taxpayer of an asset of sufficient permanence or enduring 43 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at ICM (2009) 240 CLR 140 at 180 [84] per French CJ, Gummow and Crennan JJ. ICM (2009) 240 CLR 140 at 201-202 [147] per Hayne, Kiefel and Bell JJ. ICM (2009) 240 CLR 140 at 200 [144]. Bell Nettle Gordon advantage to be regarded as having been acquired on capital account. As Latham CJ stated in Sun Newspapers Ltd v Federal Commissioner of Taxation47: "When the words 'permanent' or 'enduring' are used in this connection it is not meant that the advantage which will be obtained will last forever. The distinction which is drawn is that between more or less recurrent expenses involved in running a business and an expenditure for the benefit of the business as a whole". Here, the purchase price of the GMEs was not recurrent expenditure but expenditure made once and for all with a view to bringing into existence an advantage of enduring benefit to the Trustee's mixed hotel business: the ability, albeit subject to some risk of earlier termination, lawfully to operate 18 gaming machines on the premises for up to ten years following cessation of the arrangements with Tattersall's. Purchase price funded out of revenue The majority in the Full Court attributed48 significance to the fact, as they found it to be, that the Trustee purchased the GMEs with the intention that the purchase price should be funded out of receipts of gaming income derived from the operation of the GMEs. As Thawley J observed49, however, the evidence did not go so far; and, even if it had, the existence of such an intention would only serve to confirm that the Trustee expected the GMEs to generate income over a substantial period of time and thus be of enduring advantage to the business. The nature of a once-and-for-all outgoing for the acquisition of an asset is determined by the character of the advantage sought to be achieved by its acquisition, not by the source of funds with which it is purchased50. The relevant distinction is (1938) 61 CLR 337 at 355, citing Anglo-Persian Oil Co Ltd v Dale (1932) 145 LT 529 at 532 per Rowlatt J. 48 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 49 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 217 50 See Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation (1953) 89 CLR 428 at 454 per Fullagar J (Kitto and Taylor JJ agreeing at Footnote continues Bell Nettle Gordon between a once-and-for-all outgoing for the acquisition of something of enduring advantage and a periodical outlay to cover the use and enjoyment of something for periods commensurate with those payments. The intended source of funding did not imply that the purchase price of the GMEs was not a once-and-for-all outgoing for the acquisition of something of enduring advantage. Economic value of income stream The majority in the Full Court considered51 it to be significant that the Trustee calculated the maximum amount which it was prepared to bid for the GMEs on the basis of a projection of what the GMEs were likely to return over the course of their ten-year term. Once again, however, as Thawley J observed52, the evidence did not go so far; and, even if it had, it would not have been significant. Proper analysis of what the acquisition of the GMEs was calculated to effect from a practical and business point of view required taking account of the legal rights and obligations thereby created and their expected consequences for the Trustee's business53. Regardless of the considerations informing the amount that the Trustee was willing to pay for the GMEs, the purchase price for the GMEs was a lump sum paid for the acquisition of the GMEs which was payable regardless of the amount of income that might be earned from them54. 460); GP International (1990) 170 CLR 124 at 137 per Brennan, Dawson, Toohey, 51 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 52 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 216 53 See South Australian Battery Makers (1978) 140 CLR 645 at 662 per Stephen and Aickin JJ; GP International (1990) 170 CLR 124 at 137 per Brennan, Dawson, Toohey, Gaudron and McHugh JJ; AusNet Transmission (2015) 255 CLR 439 at 455 [22] per French CJ, Kiefel and Bell JJ, 474 [74] per 54 See Inland Revenue Commissioners v Adam 1928 SC 738 at 743 per Lord Clyde. Bell Nettle Gordon The majority in the Full Court were of the view55 that, because the maximum amount that the Trustee was prepared to pay for the GMEs was calculated by reference to the income which the Trustee estimated the GMEs would return over their ten-year lifetime, the lump sum purchase price of the GMEs was in effect equivalent to a stream of regular and recurrent payments over the lifetime of the GMEs for the use of them throughout that period, and, therefore, was incurred on revenue account. That reasoning was misplaced. Presumably, most rational business operators would not contemplate the acquisition of a capital asset unless the present discounted value of the stream of income which it is expected to generate over its lifetime is at least as much as its purchase price56. But there is nothing in principle or authority which supports the idea that that is a basis to treat the acquisition of a capital asset as if it were acquired on revenue account. Admittedly, in BP Australia, in a passage of the judgment which the majority in the Full Court emphasised57, Lord Pearce stated58 that: "The test of whether these sums were payable out of fixed or circulating capital, referred to for example in John Smith & Son v Moore59 tends in the present case in favour of regarding these payments as revenue expenditure. ... The sums in question were sums which had to come back penny by penny with every order during the period in order to reimburse and justify the particular outlay." If taken at face value, however, those propositions are problematic. 55 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 190 56 For early recognition of this fact, see Wellington, The Economic Theory of the Location of Railways: An Analysis of the Conditions Controlling the Laying out of Railways to Effect the Most Judicious Expenditure of Capital, rev ed (1887), ch 4. 57 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 191 (1965) 112 CLR 386 at 398; [1966] AC 224 at 265-266. [1921] 2 AC 13 at 19 per Viscount Haldane. Bell Nettle Gordon In John Smith, Viscount Haldane referred60 to the distinction between fixed capital and circulating capital as corresponding to the distinction which Adam Smith first drew between what the owner of a business turns to profit by keeping in his own possession and what he makes profit of by parting with and letting change masters61. Thus, his Lordship held that long-term contracts for the purchase of coal at favourable discounted prices were fixed capital – not part of circulating capital – on the basis that the taxpayer did not profit by selling the contracts but rather by retaining the contracts and employing his circulating capital in buying coal under them for sale at a profit62. If anything, John Smith tends to imply that the amounts outlaid by BP Australia were outgoings incurred in the acquisition of capital assets, not that they were revenue outgoings. Lord Pearce's dictum may be understood as emphasising that the amounts paid by BP Australia were revenue outgoings (for reasons discussed below), and thus to be accounted against incoming revenue. But it should not be understood as asserting that those amounts were on revenue account merely because BP Australia could, did or even had to amortise them over the cost of each gallon of petrol sold. A taxpayer's acknowledgment that a capital outlay can be expressed in terms of an economically equivalent projected stream of income payments does not convert the capital outlay into a revenue outgoing. Obstacle to integrated business The majority in the Full Court considered63 it to be significant that the purchase price of the GMEs was "incurred in relation to a business properly understood as an integrated hotel business" and referred to the Commissioner as having artificially looked "through and beyond the integrated undertaking of the hotel business and excised from it that part of it which relate[d] to gaming". Likewise, in submissions before this Court, counsel for Sharpcan emphasised that the Trustee's purchase of the GMEs was not the purchase of a new business, [1921] 2 AC 13 at 19-20. 61 See Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th ed (1789), vol 1, bk 2, ch 1. 62 John Smith [1921] 2 AC 13 at 20 per Viscount Haldane. 63 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 196 Bell Nettle Gordon or the addition of a new and distinct aspect of business, but rather a means of dealing with an obstacle to continued trade the result of the change in legislation. Counsel submitted that the outgoing was for that reason incurred on revenue account, and invoked the decisions of this Court in Hallstroms Pty Ltd v Federal Commissioner of Taxation64 and Federal Commissioner of Taxation v Snowden & Willson Pty Ltd65, the decision of the Federal Court in Magna Alloys and Research Pty Ltd v Federal Commissioner of Taxation66, and the decision of the Privy Council in BP Australia in support of those submissions. Those submissions must be rejected. As has been observed67, the determination of whether an outgoing is incurred on capital account or revenue account depends on the nature and purpose of the outgoing: specifically, whether the outgoing is calculated to effect the acquisition of an enduring advantage to the business. And the identification of what (if anything) is to be acquired by an outgoing ultimately requires a counterfactual, not an historical, analysis: specifically, a comparison of the expected structure of the business after the outgoing with the expected structure but for the outgoing, not with the structure before the outgoing. Other things being equal, it makes no difference whether the outlay has the effect of expanding the business or simply maintaining it at its present level68. If a once-and-for-all payment is made for the acquisition of an asset of enduring advantage which, once acquired, forms part of the profit- earning structure of the business, the payment is incurred on capital account. To illustrate the point with an example suggested by counsel for the Commissioner, if a tradesperson's delivery van reaches the end of its working life, it may be necessary for the tradesperson to purchase a new delivery van in order to continue to carry on business as he or she has done up to that point. But the purchase price of the new van is not a revenue outgoing. It is the acquisition (1946) 72 CLR 634. (1958) 99 CLR 431. (1980) 33 ALR 213. 67 See [18] above. 68 See John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation (1959) 101 CLR 30 at 40-42 per Fullagar J. Contra Southern v Borax Consolidated Ltd [1941] 1 KB 111 at 116-117 per Lawrence J. Bell Nettle Gordon of an asset of enduring advantage which is incurred on capital account. And the same applies to the Trustee's purchase of the GMEs. It was necessary for the Trustee to purchase the GMEs in order to continue to carry on its business as it had done up to that point. But the purchase price was a once-and-for-all payment for the acquisition of an asset of enduring advantage – the 18 GMEs – which once acquired formed part of the profit-earning structure of the Trustee's business. It was incurred on capital account. Nor do any of the decisions on which counsel relied suggest otherwise. In Hallstroms69, a majority of this Court held that legal costs and expenses incurred in opposing the extension of a competitor's patent were deductible because they did not result in the taxpayer's acquisition of an asset of enduring advantage. The majority reasoned70 that the expenditure merely avoided a diminution in the taxpayer's business, not the extinguishment of that business or any substantial alteration to its structure71. In dissent, Dixon J reasoned72 that, although the cost of acquisition of an asset of enduring advantage as part of the profit-earning structure of a business is a capital outlay, it is not the case that an outlay which does not result in an alteration in fixed capital assets may not be a capital outlay, and that, as the outlay in resisting the patent extension had been incurred to enable the taxpayer "to place its business on a fresh foundation" by turning over to production of refrigerators according to the patented invention, it concerned "the reform of or the more effective establishment of the organization" by which income would be produced and was, therefore, an outgoing of a capital nature. In effect, however, all members of the Court acknowledged that an outgoing to avoid substantial alteration to the structure of a business may be incurred on capital account. In Snowden & Willson, money expended by a speculative builder on advertising and in appearing before a Royal Commission into complaints against the builder's business practices was held to be deductible as incurred on revenue account because the expenditure was not to prevent the winding up of the builder (1946) 72 CLR 634. 70 Hallstroms (1946) 72 CLR 634 at 642 per Latham CJ, 645 per Starke J, 654 per 71 cf Ward & Co Ltd v Commissioner of Taxes [1923] AC 145. 72 Hallstroms (1946) 72 CLR 634 at 649-651 (McTiernan J agreeing at 652). Bell Nettle Gordon or a stoppage of its business but simply to counter the effect of the allegations and thereby prevent those persons who had made the allegations escaping obligations to pay the builder under existing contracts73. There is no suggestion in Snowden & Willson that the costs of acquisition of an asset of enduring advantage as an accretion to the profit-earning structure of the business are incurred otherwise than on capital account. Magna Alloys was to similar effect. In that matter, legal costs incurred to defend directors of the corporate taxpayer in criminal proceedings associated with marketing methods employed to sell the taxpayer's products were held to be deductible because the interests of the taxpayer were inextricably involved with those of its directors and it was plainly in the taxpayer's own interests that the directors were properly represented. Brennan J reasoned74 that the expenditure was properly to be regarded as a cost on revenue account because it was incurred in attempting to vindicate the day-to-day business methods of the taxpayer and thus in overcoming the obstacle to its trading which had been raised by the proceedings. Deane and Fisher JJ reasoned75 that the proceedings in respect of which the expenditure was incurred did not imperil the company except in the most indirect way and that it did not involve the acquisition of any enduring or tangible asset. BP Australia is more complex. As has been seen, in that case the Privy Council held that the payments made by BP Australia to petrol retailers to secure each retailer's agreement to stock only BP Australia products and to make reasonable endeavours to promote retail sales of BP Australia products were incurred on revenue account. And as has been observed, some of their Lordships' observations are problematic. In substance, however, the main thrust of their reasoning relied on the following considerations: (1958) 99 CLR 431 at 437 per Dixon CJ, 445-446 per Fullagar J (Williams J agreeing at 437), 451-452 per Taylor J. 74 Magna Alloys (1980) 33 ALR 213 at 228-229. 75 Magna Alloys (1980) 33 ALR 213 at 239. Bell Nettle Gordon that the tying arrangements were not of such duration as to indicate that the ties were a structural solution76; that the payments were made to particular customers to secure their that the benefit of each payment to BP Australia was to be used in the continuous and recurrent struggle to get orders and sell petrol78; that, although not strictly "bundles of orders", the agreements were the basis of orders and made orders inevitable79; and that, for a durable company operating in the wholesale petroleum market after the rapid change from multi-brand franchises to solo-brand sites, the payments were essentially recurrent80. In the result, BP Australia is perhaps best understood as a decision that, where an oil company paid particular customers on a recurrent basis to induce those customers to buy quantities of a product which the oil company sought to sell to those customers on a recurrent basis, the payments were an expense incurred on revenue account in gaining or producing sales and, therefore, deductible. 76 BP Australia (1965) 112 CLR 386 at 399-400 per Lord Pearce for the Board; [1966] AC 224 at 267; cf Strick (Inspector of Taxes) v Regent Oil Co Ltd [1966] AC 295, decided on the same day by the House of Lords constituted by the same Law Lords. 77 BP Australia (1965) 112 CLR 386 at 402-403 per Lord Pearce for the Board; [1966] AC 224 at 270. See and compare Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting (1985) at 438-439 [7.36]. 78 BP Australia (1965) 112 CLR 386 at 405 per Lord Pearce for the Board; [1966] AC 224 at 273. 79 BP Australia (1965) 112 CLR 386 at 405 per Lord Pearce for the Board; [1966] AC 224 at 273. 80 BP Australia (1965) 112 CLR 386 at 405-406 per Lord Pearce for the Board; [1966] AC 224 at 273-274. Bell Nettle Gordon By contrast, here, the GMEs were a structural solution. The purchase price was not paid to particular customers to secure their particular custom: it was paid to a third party – the State of Victoria – for the acquisition of entitlements of ten years' duration lawfully to operate gaming machines on the Trustee's hotel premises. The benefit to the Trustee of purchasing the GMEs was not in any sense analogous to "bundles of orders" from customers seeking to play the gaming machines. The benefit to the Trustee of purchasing the GMEs was the acquisition of an enduring asset as part of the profit-earning structure of the Trustee's business from which to derive gaming income. In relevant respects, the acquisition of the GMEs was not dissimilar to the acquisition of the hotel licence in Henriksen v Grafton Hotel Ltd81, which was held to be an acquisition on capital account. No commercial choice Finally on this aspect of the matter, the majority in the Full Court emphasised82 that the impending statutory regime presented a major threat to the revenues, profitability and goodwill of the hotel unless the GMEs were acquired and thereby deprived the Trustee of any commercial choice other than to bid successfully for the GMEs. As it appears, the majority equated that to the circumstance in BP Australia that BP Australia's entry into the solo-site agreements under which it made payments to petrol retailers was in effect foisted on it by the actions of its competitors entering into similar agreements with other retailers and thus leaving it with no choice but to do likewise83. The majority in the Full Court appear to have reasoned that the fact the purchase of the GMEs was foisted on the Trustee (just as the need to enter into tying arrangements was foisted on BP Australia) meant or contributed to the conclusion that the purchase price of the GMEs was incurred on revenue account. If so, that reasoning was misplaced. The determination of whether a taxpayer acquires an asset on capital account or revenue account is not affected by whether the taxpayer's assessment of the need to acquire the asset is foisted on the taxpayer. Nor is it the case that the determination of whether expenditure is 82 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 83 See BP Australia (1965) 112 CLR 386 at 387-388; [1966] AC 224 at 228-229. Bell Nettle Gordon incurred on capital account or revenue account depends on whether, but for acquisition of the asset, the taxpayer might have suffered a substantial reduction in income or be unable to continue in business. As has been explained84, it depends on whether the asset is acquired as part of fixed capital – as part of the profit-earning structure of the business – or as part of working capital to be used up in the course of the regular and recurrent operation of the profit-earning structure of the business. As Thawley J concluded, the GMEs were a capital asset of enduring value acquired as "means of production" to put the Trustee in a position where it owned the capital assets necessary for it to conduct gaming activities. Section 40-880(2) did not apply As is apparent from the text and context of s 40-880(6), its purpose is to allow a deduction for capital expenditure which is incurred to preserve goodwill by acquiring a legal or equitable right that has no value to the taxpayer independent of its effect on goodwill, and which could not otherwise be brought to account under the Act. That is confirmed by the history of the provision and the Explanatory Memorandum to the Bill85 enacted as the Tax Laws Amendment (2006 Measures No 1) Act 2006 (Cth) ("the amending Act"), by which the provision was introduced into the 1997 Act. Goodwill is a CGT asset86, and therefore expenditure incurred in the acquisition of goodwill may be brought to account in the first element of the CGT cost base of that asset at the time of a CGT event87. Before the enactment of the amending Act, expenditure in relation to goodwill other than the purchase of goodwill could be brought to account in the fourth element of the CGT cost base88: 84 See [33] above. 85 Australia, House of Representatives, Tax Laws Amendment (2006 Measures No 1) Bill 2006, Explanatory Memorandum at 55 [2.70]-[2.71]. 86 1997 Act (as at 9 June 2010), s 108-5(2)(b). 87 See 1997 Act (as at 9 June 2010), s 110-25(1), (2). 88 1997 Act (as at 5 April 2006), s 110-25(5). Bell Nettle Gordon "The fourth element is capital expenditure you incurred to increase the [CGT] asset's value. However, the expenditure must be reflected in the state or nature of the asset at the time of the *CGT event." As enacted in 2001, s 40-880(1) permitted a taxpayer to deduct certain identified capital expenditure that could not be taken into account in working out the amount of a capital gain or capital loss from a CGT event. Since expenditure to increase the value of goodwill could be taken into account in the fourth element of the CGT cost base, s 40-880(1) did not apply to such expenditure. The amending Act abolished the ability to include expenditure in relation to goodwill in the fourth element of the CGT cost base89 and created a new deduction under s 40-880(2) in effect to preserve the deductibility of such expenditure. In order to achieve that result, s 40-880(6) was included to prevent the exclusions in s 40-880(5)(d) and (f) applying to such expenditure. Further, s 40-880 is a provision of last resort90. It targets "blackhole expenditure", namely business expenses incurred by taxpayers that fall outside the scope of deduction provisions of income tax law91. Thus, as s 40-880(1) provides, a deduction under s 40-880 is "only allowed to the extent that the expenditure is not taken into account in some way elsewhere in the income tax law"92. Viewed in that context, it can be seen that the purpose of s 40-880(6) was to confine deductibility under s 40-880(2) for expenditure in relation to goodwill to expenditure in relation to goodwill that could not otherwise be brought to account under the 1997 Act. Notably, because the GMEs were a kind of property and thus CGT assets, the purchase price of the GMEs could be brought to account under the Act in the first element of the CGT cost base of the GMEs. 89 See 1997 Act (as at 9 June 2010), s 110-25(5A). 90 Australia, House of Representatives, Tax Laws Amendment (2006 Measures No 1) Bill 2006, Explanatory Memorandum at 40 [2.7], 43 [2.15], 49 [2.43], 52 [2.61]. 91 See Augustinos, "Blackhole Expenditures and the Operation of Section 40-880" (2009) 38 Australian Tax Review 100. 92 Australia, House of Representatives, Tax Laws Amendment (2006 Measures No 1) Bill 2006, Explanatory Memorandum at 52 [2.61]. Bell Nettle Gordon Both parties submitted before this Court, as they did before the Full Court, that the determination of whether expenditure for the acquisition of a legal or equitable right is incurred "to preserve (but not enhance) the value of goodwill" within the meaning of s 40-880(6) of the 1997 Act necessitates an assessment of the taxpayer's subjective purpose for incurring the expenditure. It is not immediately apparent that is so. Although the word "purpose" has been interpreted in the context of several other statutory provisions as denoting subjective purpose93, it may be that different considerations apply here. Section 40-880(6) is directed to what the expenditure is for, and, on one view, for in that collocation implies an objective connection between expenditure and the object of the expenditure94. It is also possibly not without significance that "purpose" in s 8-1 of the 1997 Act means objective purpose95, and it is yet to be authoritatively determined whether the purpose of subject expenditure must be the sole or dominant purpose of the expenditure96. For present purposes, however, it is unnecessary to reach a concluded view about those issues. It is sufficient to observe, as Thawley J found, that the evidence did not establish that the Trustee's subjective purpose in purchasing the GMEs was to preserve but not enhance the goodwill of the hotel business; and it is plain that that was not the objective purpose. Before the AAT, the evidence on which Sharpcan relied to establish subjective purpose was limited to the evidence of David Canny, the directing mind of the Trustee, that he determined that the Trustee should bid for the GMEs up to the maximum price recommended in a financial advice report as to the 93 See, eg, News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 573 [18] per Gleeson CJ, 580 [41] per McHugh J, 585 [60] per Gummow J, 636-637 [212] per Callinan J; Federal Commissioner of Taxation v Starr (2007) 164 FCR 436 at 442-443 [25]-[31] per Spender, Siopis and 94 See and compare Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 at 8 per Lord Denning for the Board; [1958] AC 450 at 465. 95 See Magna Alloys (1980) 33 ALR 213 at 215-216 per Brennan J, 233-235 per 96 See and compare, in relation to s 80B(5)(c) of the Income Tax Assessment Act 1936 (Cth), Federal Commissioner of Taxation v Students World (Australia) Pty Ltd (1978) 138 CLR 251 at 265 per Mason J. Bell Nettle Gordon likely earnings from the GMEs, and that the Trustee bid for "exactly 18 GMEs to continue to enable [the Trustee] to operate its existing business as it had under the then existing regime"97. As Thawley J observed98, that evidence demonstrated that the Trustee was motivated to purchase the GMEs by the realisation that it could not continue to carry on its gaming business unless it did so. Motive, however, is different from purpose. As Gleeson CJ noted in News Ltd v South Sydney District Rugby League Football Club Ltd99, the motive for a person's conduct is the person's reason for engaging in it. By contrast, the purpose of a person's conduct is the end that is sought to be accomplished by it. Here, although it may be accepted that the Trustee's motive for purchasing the GMEs was that the Trustee wished to continue to carry on its gaming business as it had done up to that point, the end that the Trustee subjectively sought to accomplish in outlaying the purchase price of the 18 GMEs, and thus the subjective purpose of the expenditure, was to acquire the 18 GMEs necessary to continue to trade. That was also the objective purpose of the outlay. Looked at objectively from a practical and business point of view, the purpose of paying the purchase price of the GMEs was to acquire the GMEs as an asset of the Trustee to be used in the course of the Trustee's hotel business. Contrary also to the majority's conclusion, the value to the Trustee of the GMEs was not solely attributable to the effect that the GMEs had on goodwill. As the majority in this Court cautioned in Federal Commissioner of Taxation v Murry100, care must be taken to distinguish between the sources of goodwill and goodwill itself: "Goodwill is an item of property and an asset in its own right. For legal and accounting purposes, it must be separated from those assets and revenue expenditures of a business that can be individually identified and quantified in the accounts of a business." 97 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 224 98 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 226 (2003) 215 CLR 563 at 573 [18]. 100 (1998) 193 CLR 605 at 617-618 [30] per Gaudron, McHugh, Gummow and Bell Nettle Gordon The majority in the Full Court found that the "Trustee incurred the outgoing to preserve the hotel business as a going concern"101. The majority also found that the value to the Trustee of the right to conduct gaming "was solely attributable to the effect the right had on the custom, patronage, revenue and profits of the hotel business, that is, the effect on the goodwill of the integrated hotel business undertaking"102. The majority erred in considering the effect on the goodwill of the integrated hotel business and, as appears from Commissioner of State Revenue (WA) v Placer Dome Inc103, in conflating goodwill with the going concern value of the business. Here the GMEs were assets which could be individually identified and quantified in the accounts of the Trustee's business, which had a value quite apart from any contribution that they may have made to goodwill. That value resided in their capacity to generate gaming income and the fact that they could be sold and transferred to other venue operators, albeit subject to some restrictions and qualifications104. Conclusion It follows that the appeal should be allowed. Order 1 of the Full Court should be set aside. In its place, it should be ordered that the appeal to the Full Court be allowed and that the decision of the AAT be set aside. In its place, it should be ordered that the objection decision be affirmed. 101 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 197 102 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2018) 262 FCR 151 at 205 103 (2018) 93 ALJR 65 at 84 [97]-[98] per Kiefel CJ, Bell, Nettle and Gordon JJ; 362 ALR 190 at 211. 104 See and compare Murry (1998) 193 CLR 605 at 626-627 [57], 629 [65] per Gaudron, McHugh, Gummow and Hayne JJ.

HIGH COURT OF AUSTRALIA DAVID STUART & ANOR APPELLANTS AND TANIA KIRKLAND-VEENSTRA & ANOR RESPONDENTS Stuart v Kirkland-Veenstra [2009] HCA 15 22 April 2009 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 29 February 2008, except insofar as they deal in paragraph 4 with the costs of the appeal to that Court, and in their place order that: each party bear its own costs of the proceedings at first instance; and the appeal to the Court of Appeal be otherwise dismissed. Appellants to pay first respondent's costs of the appeal to this Court. On appeal from the Supreme Court of Victoria Representation J Ruskin QC with R J Orr for the appellants (instructed by Victorian Government Solicitor) J H Kennan SC with P T Vout and P Halley for the first respondent (instructed by Slater & Gordon) M F Wheelahan SC with M D Rush for the second respondent (instructed by Deacons Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Stuart v Kirkland-Veenstra Torts – Negligence – Duty of care – Where Mental Health Act 1986 (Vic), s 10 empowered police to apprehend person who "appears to be mentally ill" if reasonable grounds for believing that person had recently attempted suicide or likely to do so – Where police came upon man who appeared to have been contemplating suicide but showed no sign of mental illness – Interaction of common law and relationship established by s 10 – Whether duty of care to prevent foreseeable harm to man at own hand – Relevance of conditions engaging exercise of statutory power – Relevance of fact that duty alleged is duty to protect person from self-harm – Relevance of general rule against duty to rescue – Relevance of vulnerability of particular class of persons – Relevance of control over source of risk to persons. Torts – Negligence – Duty of care – Where duty alleged to arise in context of power conferred by Mental Health Act 1986, s 10 – Whether preconditions to existence of power established on facts – Whether common law duty could exist in absence of relevant power. Torts – Breach of statutory duty – Relevance as alternative to action alleging breach of common law duty of care – Principles relevant to determining legislative intention that cause of action be available – Relevance of legislative provision for special measures to protect identifiable class of persons or property – Whether existence of discretion to exercise power inconsistent with existence of statutory duty. Statutes – Interpretation – Whether person who has attempted suicide to be equated with person "mentally ill" – Relationship between attempted suicide and mental illness – Understanding at common law of relationship between suicide and mental illness. Words and phrases – "mentally ill". Crimes Act 1958 (Vic), ss 457, 463B. Mental Health Act 1986 (Vic), ss 3, 8, 10. Wrongs Act 1958 (Vic), Pt III. Introduction Between mid-morning and 2.30 pm on 22 August 1999, Ronald Hendrik Veenstra committed suicide at his home in Somerville, Victoria by sitting in his car with the engine running. A hose connected the exhaust pipe to the interior of the vehicle. Earlier that day, at about 5.40 am, two police officers had observed Mr Veenstra in his vehicle in a car park on the Mornington Peninsula with a hose leading from the exhaust pipe to the interior of his vehicle. The engine was not running. Upon being questioned, Mr Veenstra persuaded the officers that although he had been about to do something stupid he had changed his mind and was going home to talk to his wife. He sounded rational and was responsive to their questions. He declined their various offers of assistance. He removed the hose from the exhaust. The officers let him proceed from the car park. Mr Veenstra's widow, Mrs Kirkland-Veenstra, sued the officers and the State of Victoria before a judge and jury in the County Court alleging that the officers had breached their duty of care towards her husband and herself by failing, inter alia, to apprehend him under s 10 of the Mental Health Act 1986 (Vic) ("the 1986 Act"). At the close of the evidence the trial judge ruled that there was no duty of care and gave judgment for the defendants. Mrs Kirkland- Veenstra appealed to the Court of Appeal which, by majority, allowed the appeal, set aside the trial judge's decision and remitted the matter for retrial1. The officers were granted special leave to appeal to this Court. This is not a case about moral or ethical obligations or what commonsense might or might not have dictated as an appropriate course of action for the officers. Those questions may be open to debate and there may be different views about what more the officers could have done in the situation in which they found themselves. Their power to apprehend Mr Veenstra was limited and conditional. The case is about whether they owed a legal duty to Mr Veenstra and his wife, breach of which could expose them and the State of Victoria to liability for damages for negligence. Mr Veenstra's death was a tragedy for him and his wife. That sad fact does not answer the legal question for decision. In my opinion the trial judge was correct, there was no legal duty of care and the appeal should be allowed. The existence of a power to apprehend Mr Veenstra under s 10 of the 1986 Act was critical to the reasoning of the Court of Appeal and to the case as presented in this Court. However, it was a power 1 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936. which was never enlivened. The officers said, and the trial judge held, that they did not think Mr Veenstra was mentally ill. Although findings by the trial judge that Mr Veenstra showed no signs of mental illness were under challenge in the Court of Appeal, the finding as to the officers' opinions about him was not the subject of any ground of appeal. There was no suggestion that the officers' opinions were not held in good faith. While attempted suicide may be indicative of mental illness, it is not necessarily so. Moreover, it seems clear that while Mr Veenstra had taken preliminary steps in contemplation of suicide, he had not "attempted" suicide within the meaning of s 10. The officers, after talking with him, did not believe that he was going to take his own life. In the circumstances they could not have apprehended him unless they believed him to be mentally ill and likely to attempt suicide. The case for a duty of care depended upon the existence of the power to apprehend. That power did not exist in this case. Factual history as found by the trial judge At about 5.40 am on 22 August 1999, Ronald Hendrik Veenstra was observed by two members of Victoria Police to be sitting in a car at the Sunnyside Beach public car park on the Mornington Peninsula. The two officers were Acting Senior Sergeant Stuart and Detective Senior Constable Woolcock. Both were experienced officers, both held the rank of Detective Senior Constable. DSC Stuart had been a police officer for 17 years and DSC Woolcock for 12 years. DSC Stuart saw Mr Veenstra in the driver's seat. He also saw a light- coloured corrugated tube running from the rear of the vehicle to its left side. He inferred that the driver was contemplating suicide. He told DSC Woolcock what he had noticed and what he thought. Both officers approached the driver's side of the vehicle. The window was fully open. The engine was not running. As they approached the car they saw Mr Veenstra put a notepad into a briefcase inside the car. Mr Veenstra gave the officers his name and address. He told them that he had been in the car park for about two hours before they had arrived. The officers asked him about the tube secured to the exhaust of his car. He said he had been contemplating doing something stupid but had changed his mind. He said he was in a loveless marriage. He had been writing down some thoughts for his mother and was about to leave the scene when they arrived. He was going to go home and discuss things with his wife. He said that he was an intelligent person and that there were other options open to him. He did not use the word "suicide", nor expressly state that he had been thinking about killing himself. The officers felt the bonnet and radiator of the vehicle, both of which were cold. They asked Mr Veenstra about his employment and asked whether he had prior dealings with the police. They asked whether he wanted them to contact his wife or to take him to see a doctor or to drive him home. He declined their offers of assistance. He said he would see his own doctor later on. Mr Veenstra told DSC Stuart that he wanted to go home and speak to his wife about his marital problems. The two officers had observed a vacuum cleaner in the rear of the car. There were no exhaust fumes in the car. They checked, through police radio, on the vehicle, the licence and Mr Veenstra's personal history. Neither the vehicle nor the driver had been recorded as missing. It was the fact that arrangements had been made with Mr Veenstra through his solicitor for police to serve him, on the afternoon of that day, with papers relating to fraud charges arising out of his former employment as financial manager of a car dealership. There is no suggestion that either of the two officers was aware of those arrangements or of the fact that there were charges pending against Mr Veenstra. Both officers were of the opinion that Mr Veenstra showed no signs of mental illness. He appeared to them to be rational, cooperative and very responsible the entire time. During their conversation he removed the hose from the exhaust and placed it in the vehicle. He did this of his own initiative and not as a result of any suggestion made to him by the officers. The two officers were aware that they had a power under s 10 of the 1986 Act to apprehend a person who appeared to have a mental illness and to have attempted or to be likely to attempt suicide. They did not exercise that power. They allowed Mr Veenstra to leave the car park. In a patrol log which they wrote up at the end of the shift they recorded that Mr Veenstra was depressed and had contemplated suicide but would seek help and return home. They recorded also that he did not want police intervention and did not want his family informed. The trial judge found: "When interrupted, the objective evidence was consistent with voluntary withdrawal by Mr Veenstra from his plan." All told, the officers were at Sunnyside Beach car park for about 15 minutes. It was 6 am when Mr Veenstra left to return to his home. The officers left shortly after him and returned to the police station. Mrs Kirkland-Veenstra saw her husband at about 9 am that morning when she awoke. She said he was "a little bit quiet". She was planning to go out to a dog show. Mr Veenstra said he would not come with her as he didn't feel well. She offered to stay home. He told her that she had to give a message to a colleague about a forthcoming meeting of dog breeders. She went off by herself. At some time between mid-morning and 2.30 pm Mr Veenstra committed suicide by asphyxiation outside his home by connecting a hose to the exhaust of his vehicle, putting the other end into his car and starting the engine. He had left a suicide note. His father-in-law found him at about 2.30 pm and tried unsuccessfully to revive him. His wife returned home very shortly afterwards. She also tried to revive Mr Veenstra but was unsuccessful. The proceedings in the County Court of Victoria On 2 May 2003, Mrs Kirkland-Veenstra issued a writ out of the County Court of Victoria naming the two officers and the State of Victoria as defendants. She claimed to have suffered injury, loss and damage including nervous shock arising from learning of her husband's suicide. She alleged that the two officers had owed her and her late husband a duty of care, which they had breached. In her amended statement of claim Mrs Kirkland-Veenstra alleged that: At the time of speaking to her husband at Sunnyside Beach the two officers knew or ought to have known that he was: (a) mentally ill; in the process of committing suicide; and likely to attempt suicide or to cause serious bodily harm to himself. At all material times they owed him and her a duty to take reasonable care to protect his and her health and safety. This duty was said to arise pursuant to: common law; the effect and operation of s 10 of the 1986 Act; and the operation of the Victoria Police Manual. She also alleged that the two officers owed her a duty to prevent foreseeable psychiatric injuries to her resulting from breach of the duty of care they owed to the deceased. The pleaded breaches of the duty of care, which were various, included the failure by the two officers to arrest the deceased and arrange for him to be examined by a medical practitioner pursuant to s 10 of the 1986 Act. Mrs Kirkland-Veenstra also pleaded the existence of a "statutory duty" by the two officers and that they breached that duty. There was, however, no relevant statutory duty and that contention was not pressed on the appeal to this Court. Mrs Kirkland-Veenstra alleged that as a consequence of the breaches of duty by the two officers she had suffered injury, loss and damage, particularised as depression, post-traumatic stress disorder, nervous shock, and pain, shock and suffering. Section 23 of the Crown Proceedings Act 1958 (Vic) was relied upon to establish the liability of the State of Victoria for the alleged breaches of duty by the two officers. The proceedings were brought by Mrs Kirkland-Veenstra for her own benefit, at common law and pursuant to the provisions of Pt III of the Wrongs Act 1958 (Vic). The trial judge's decision The trial of the action was heard in the Victorian County Court before a judge and a six person jury. After the close of the evidence and following submissions by counsel, the trial judge held that: "the plaintiff is not owed a duty of care either under the Wrongs Act by the defendants or for her personal injuries in the form of nervous shock and post-traumatic stress disorder which she alleges she suffered by reason of the negligence of the defendants". In his reasons for judgment, the trial judge proceeded on findings of fact which he himself made. They form the basis of the factual outline set out earlier in these reasons. The trial judge held that s 10 of the 1986 Act confers a statutory power but imposes no duty. There was no relevant statutory duty imposed upon the officers which would assist in formulating a common law duty of care. He said: "In the knowledge of the provision of s 10 of the [1986 Act] and the Victoria Police manual, [the officers] made a considered judgment; that is, that Mr Veenstra did not manifest signs that he had a mental illness such as to justify his detention and conveyance to a doctor for examination. The temptation to reason that Mr Veenstra subsequently suicided by the same method that he set in train at Sunnyside [Beach] carpark at his home about six hours later and that, applying the but for test of causation, had the officers detained him he may not or would not have suicided later is an argument based not on foreseeability of harm, but on hindsight. Equally, it may be said Mr Veenstra did as he said he would do. He went home and spoke with his wife. He tricked her and committed suicide in her absence." His Honour said: "For these reasons I am of the opinion that neither a common law duty of care nor a statutory duty of care in favour of Mr Veenstra was owed by the [officers]. Consequently, no liability can attach to the [State of Victoria] in such circumstances." His Honour also found that there was no duty of care owed by the officers to Mrs Kirkland-Veenstra. On 21 July 2006, the trial judge made an order giving judgment for the defendants and consequential costs orders. His Honour's decision was appealed to the Court of Appeal of Victoria. On 29 February 2008, the Court ordered that the appeal be allowed, the decision of the trial judge be set aside and that the proceeding be remitted to the County Court constituted by a different judge for retrial. Orders were made that the two officers and the State pay Mrs Kirkland- Veenstra's costs of the appeal and that the costs of the first trial should abide the result of the retrial. Reasons for judgment in the Court of Appeal Warren CJ and Maxwell P were both of the opinion that the appeal should be allowed. Chernov JA dissented. Key elements of the Chief Justice's reasoning were: The case concerned "a specific power vested in a special category of persons to prevent self-harm of the gravest kind". These persons have the authority and the capacity to intervene2. (ii) Whether a duty of care exists in a novel case is to be decided according to a multi-factorial or "salient features" approach3. (iii) The officers were aware of the danger faced by Mr Veenstra. They had the power, under s 10 of the 1986 Act, to apprehend him and take him to hospital or to call for medical assistance4. (iv) The officers owed a duty of care at common law to Mr Veenstra. It arose independently of statute. There were no supervening policy reasons to deny it on the facts5. It was enlivened at the time that the officers realised that Mr Veenstra was contemplating suicide6. (2008) Aust Torts Reports ¶81-936 at 61,304 [39]. (2008) Aust Torts Reports ¶81-936 at 61,307 [56]. (2008) Aust Torts Reports ¶81-936 at 61,305 [44]. (2008) Aust Torts Reports ¶81-936 at 61,307 [56] and 61,309 [69]. (2008) Aust Torts Reports ¶81-936 at 61,309-61,310 [72]. The duty of care required the officers to exercise their statutory power reasonably to protect those whom the Act sought to protect7. (vi) The class of persons to whom the duty was owed consisted of those in clear and obvious contemplation of suicide. The scope of the duty extended to assessment of the situation and possibly the provision of assistance as provided for in the Act8. (vii) It was reasonably foreseeable that a failure to apprehend Mr Veenstra and take him to hospital or arrange for medical assistance might result in his suicide. The officers had noticed that he was depressed and had observed all facets of his preparations to commit suicide, including the hose, its connection to the car exhaust and the making of a note9. (viii) It was also reasonably foreseeable that if the officers failed to exercise reasonable care in their dealings with Mr Veenstra, Mrs Kirkland- Veenstra would suffer the kind of injury which she did. It was reasonable to expect the officers to have had Mrs Kirkland-Veenstra in contemplation as a person "closely and directly affected" by their acts and omissions in relation to her husband10. Maxwell P agreed with the Chief Justice and also made the following key points: Emphasis was to be placed on the degree of danger to which Mr Veenstra was exposed, the limited opportunity he had to protect himself given his mental state and the absence of any cost or inconvenience to the officers The officers had legal authority to exercise direct, immediate and complete control over the risk that Mr Veenstra might commit suicide. They were able, under s 10, to do what no other person could do without risking civil liability for assault or false imprisonment, namely apprehend Mr Veenstra and use "such force as may be reasonably necessary"12. (2008) Aust Torts Reports ¶81-936 at 61,307 [54]. (2008) Aust Torts Reports ¶81-936 at 61,310 [76]. (2008) Aust Torts Reports ¶81-936 at 61,308 [61]. 10 (2008) Aust Torts Reports ¶81-936 at 61,313 [90]. 11 (2008) Aust Torts Reports ¶81-936 at 61,314 [100]. 12 (2008) Aust Torts Reports ¶81-936 at 61,315 [103]. (iii) The imposition of a duty of care would not "significantly and impermissibly" constrain the discharge by police officers of their duty to consider whether or not the power under s 10 was exercisable and should be exercised13. (iv) The policy of the Act was that there should be intervention to prevent suicide when there was an identified risk that it might occur. A precautionary approach responsive to, rather than dismissive of, indicia of risk must be seen as conducive to the achievement of the statutory purpose14. Both the Chief Justice and Maxwell P were of the view that the case was not about the exercise of policing powers. It was more closely analogous to cases about the exercise of powers vested in statutory authorities generally15. Both of their Honours proceeded on the basis that the two officers had the power to apprehend Mr Veenstra in the car park. That was, with respect, a conclusion which could not be supported having regard to the necessary pre-conditions for the exercise of the power that Mr Veenstra should appear to the officers to be mentally ill and that they should have reasonable grounds for believing that he was likely to attempt suicide. The non-satisfaction of those conditions is addressed later in these reasons. Chernov JA dissented. His Honour held that there was no duty of care of the kind propounded by the majority. The essential reason for his conclusion was that the imposition of the claimed duty of care was incompatible with the framework of the 1986 Act16. In reaching that conclusion his Honour held: In deciding whether to exercise the discretion under the Act, the relevant officer was subject to a number of constraints. They required a "fine line" decision not only determining whether the requirements of s 10(1) were made out, but also taking into account competing policy considerations expressed in the Act. The officer was to exercise the discretion in the context of a duty to maintain public order, a duty owed to the public generally and not to individual members17. 13 (2008) Aust Torts Reports ¶81-936 at 61,316 [110]. 14 (2008) Aust Torts Reports ¶81-936 at 61,317 [116]. 15 (2008) Aust Torts Reports ¶81-936 at 61,302 [29] per Warren CJ, 61,316 [112] and 61,317 [115] per Maxwell P. 16 (2008) Aust Torts Reports ¶81-936 at 61,318 [120]. 17 (2008) Aust Torts Reports ¶81-936 at 61,319 [126]. The imposition of a common law duty on such an officer would amount to a "distorting" influence on the discretionary power and be inconsistent with the legislative scheme18. (iii) The control and vulnerability which might give rise to a duty of care did not exist in the present case. The control able to be exercised by the officers was of a limited nature. It was not apparent that the exercise of the power could have removed the risk to the deceased. There was no relevant vulnerability or dependence by the deceased on the officers19. A number of the trial judge's findings of fact were challenged in the amended notice of appeal in the Court of Appeal, including the finding that Mr Veenstra did not manifest signs that he had a mental illness such as to justify his detention and conveyance to a doctor for examination. There was no challenge to the finding as to the officers' opinions about Mr Veenstra's mental condition. The grounds challenging the trial judge's findings of fact were not dealt with by the Court of Appeal. Her Honour, the Chief Justice, said20: "Mostly, the matters were properly matters to be determined by the jury in any event, as was acknowledged by counsel for the [officers]. Doubtless his Honour proceeded to determine these matters as part of his decision on the duty point." Grounds of appeal The grounds of appeal in this Court involved one proposition variously justified, namely that the majority in the Court of Appeal erred in holding that the officers owed a duty of care to Mr Veenstra. Statutory history and framework From the 19th century until 1943, a series of statutes known as Lunacy Acts made provision for the apprehension, examination, commitment and treatment of mentally ill persons in Victoria21. In 1943 the Lunacy Acts still in 18 (2008) Aust Torts Reports ¶81-936 at 61,319 [127]. 19 (2008) Aust Torts Reports ¶81-936 at 61,321 [131]. 20 (2008) Aust Torts Reports ¶81-936 at 61,313 [94]. 21 Lunacy Act 1890 (Vic), Lunacy Act 1903 (Vic), Lunacy Act 1915 (Vic), Lunacy Act 1928 (Vic), Lunacy Act 1941 (Vic) and Lunacy Act 1943 (Vic). force were renamed Mental Hygiene Acts22. The Mental Hygiene Acts and an unproclaimed Mental Deficiency Act 1939 (Vic) were consolidated into the Mental Health Act 1959 (Vic) ("the 1959 Act"). It provided for the involuntary admission to institutions of "mentally ill or intellectually defective"23 persons. The process of commitment involved bringing such persons before justices, their examination by medical practitioners and their commitment where various conditions were met24. That process, in one form or another, had been in place for many years. Section 45 of the 1959 Act empowered a justice to make orders requiring police officers to apprehend, and bring before two justices, persons who appeared to be mentally ill or intellectually defective, without sufficient means of support or wandering at large, or thought to be contemplating the commission of an offence. Section 45(2) was the closest equivalent to the present s 10. It provided: "Any member of the police force finding any such person so wandering or under such circumstances as aforesaid may without any such order apprehend him and take him before two justices." The Mental Health Bill, introduced into the Parliament in May 1985, was based upon recommendations contained in the report, published in December 1981, of a Consultative Council established by the Minister for Health to review mental health legislation in Victoria ("the Myers Report")25. The Consultative Council proposed a new statute to replace the 1959 Act26. The recommended aim of the new legislation was to minimise27: 22 Mental Hygiene (Mode of Citation) Act 1943 (Vic), ss 1(2) and 2(1)(a)-(c). 23 1959 Act, s 45(1). 24 1959 Act, ss 45-51. 25 Victoria, Consultative Council on Review of Mental Health Legislation, Report of the Consultative Council on Review of Mental Health Legislation, December 1981, known as the Myers Report after the Chairman, Dr D M Myers. See Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at 71. 26 Victoria, Consultative Council on Review of Mental Health Legislation, Report of the Consultative Council on Review of Mental Health Legislation, December 1981 at 13 (Recommendation 26) and 147 [13.3(i)]. 27 Victoria, Consultative Council on Review of Mental Health Legislation, Report of the Consultative Council on Review of Mental Health Legislation, December 1981 at 147-148 [13.3(vi)]. restrictions upon the liberty of any person with mental illness, and interference with his civil rights, privacy, dignity, self-respect, and cultural, moral or religious beliefs, so far as is consistent with his proper protection and care and, in the case of his mental illness constituting a threat to the public safety, with the protection of the public". The recommendation was reflected in the Second Reading Speech in May 1985, in which the Bill was said to be based on the "fundamental principle" of the "least restrictive alternative"28. The recommended aim of the new Act and the fundamental principle referred to in the Second Reading Speech were embodied in cl 4(2)(b) of the Bill in relation to the care and treatment of persons who are mentally ill. The Bill was described in the Second Reading Speech as concentrating on involuntary patients29. In the Explanatory Memorandum it was said that the Bill recognised that the classification of a person as an involuntary patient involved a curtailment of civil liberties30. It took the approach that such action should only be contemplated if absolutely necessary for the safety and wellbeing of the person, or for the protection of the community. Under the heading "APPREHENSION BY POLICE", the Minister acknowledged the school of thought that police should not have a role to play in the admission of apparently ill persons. He said31: "Nevertheless, it is a fact of life that the police are usually the first to be summoned to some antisocial incident, and no one else is better trained or equipped to provide the assistance which may be required to deal with a difficult situation." 28 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at 29 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at 30 Victoria, Legislative Assembly, Mental Health Bill 1985, Explanatory Memorandum at 1; see also Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at 74. 31 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at After referring to the existing "archaic" provisions requiring an inquiry by two "In an emergency situation where, for example, an apparently mentally ill person has gone berserk, or is about to commit suicide, the police will have the power to enter any premises without the need for a warrant, and to use such force as may be reasonably necessary to apprehend the person for the purpose of immediately bringing him or her before a medical practitioner." Clause 10, as it appeared in the Bill at that time, conferred a power upon police to apprehend persons apparently mentally ill in a wider range of circumstances than those set out in the section as enacted. These included circumstances in which the police had reasonable grounds to believe that the person was "likely to commit an offence against the law"33. The Bill was withdrawn and public comment invited. It was re-presented with amendments as the Mental Health Bill (No 2) in November 1985. The Minister, in his Second Reading Speech for the revised Bill, said its objectives and fundamental principles were the same as those embodied in the earlier version34. The Minister made specific comment about cl 1035: "Some concern was expressed by several organizations at the powers to be vested in the police in clause 10 of the earlier Bill. The aim of this clause is to give the police a capacity to take an apparently mentally ill person into custody in an emergency situation. The Government accepts that the earlier clause may have been too broadly worded, especially to the extent that it would give police more powers to apprehend apparently mentally ill persons than they currently have under the criminal law. The revised clause 10 will limit police powers of entry without warrant to those situations where an apparently mentally ill person is in danger of suiciding, or doing serious harm to himself." 32 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 1985 at 33 Mental Health Bill 1985, cl 10(1)(d). 34 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 28 November 35 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 28 November The Mental Health (Amendment) Act 1995 (Vic) ("the 1995 Amending Act") amended the 1986 Act. As appears from the Second Reading Speech, the 1995 amendments to the Act followed upon recommendations incorporated into a Discussion Paper prepared by the Psychiatric Services Division of the Victorian Department of Health and Community Services in February 199536. The amendments were also informed by the report of a consultancy commissioned by the Australian Health Ministers Advisory Council (AHMAC) Working Group on Mental Health Policy in 1994 to draft model clauses for the use of States and Territories in the development of nationally consistent mental health legislation37. Section 11 of the 1995 Amending Act introduced a new sub-s (1A) into s 8 of the 1986 Act. That sub-section provided a definition of "mental illness". Section 8 sets out the criteria for admission and detention of persons as involuntary patients. The definition in s 8(1A) was also incorporated by reference in the list of definitions of general application to the Act which are set out in s 3. The definition is in the following terms: "Subject to sub-section (2), a person is mentally ill if he or she has a mental illness, being a medical condition that is characterised by a significant disturbance of thought, mood, perception or memory." Section 8(2) excludes a number of classes of behaviour as reasons for considering a person to be mentally ill. None of these is, or was, said to be material for present purposes. According to the Second Reading Speech for the Mental Health (Amendment) Bill in 1995, the definition of "mental illness" would "provide guidance to consumers, practitioners and the broader community about the grounds for detention"38. Section 10, itself, was the subject of amendments in 1990 and 1994, as well as in the 1995 Amending Act. The 1990 amendment inserted sub-s (4) in its relevant form save for the word "registered" before "medical practitioner" which 36 Victoria, Department of Health and Community Services, Psychiatric Services Division, Victoria's Mental Health Services: Proposed Amendments to the Mental Health Act 1986, Discussion Paper, (1995). 37 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 5 October 1995 38 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 5 October 1995 was introduced in 199439. The 1995 amendments introduced sub-s (1A) into s 10. It made clear that a police officer forming an opinion about whether a person was mentally ill was not required to exercise a clinical judgment. This amendment coincided with the introduction of the definition of "mental illness" by the enactment of s 8(1A). In 1999, at the time of Mr Veenstra's death, s 10 provided: "Apprehension of mentally ill persons in certain circumstances (1) A member of the police force may apprehend a person who appears to be mentally ill if the member of the police force has reasonable grounds for believing that – the person has recently attempted suicide or attempted to cause serious bodily harm to herself or himself or to some other person; or the person is likely by act or neglect to attempt suicide or to cause serious bodily harm to herself or himself or to some other person. (1A) A member of the police force is not required for the purposes of sub-section (1) to exercise any clinical judgment as to whether a person is mentally ill but may exercise the powers conferred by this section if, having regard to the behaviour and appearance of the person, the person appears to the member of the police force to be mentally ill. For the purpose of apprehending a person under sub-section (1) a member of the police force may with such assistance as is required – enter any premises; and use such force as may be reasonably necessary. (3) A member of the police force exercising the powers conferred by this section may be accompanied by a registered medical practitioner. 39 Mental Health (General Amendment) Act 1990 (Vic), s 5; Medical Practice Act 1994 (Vic), Sched 1, Item 38.4. (4) A member of the police force must as soon as practicable after (1) arrange an apprehending a person under sub-section examination of the person by a registered medical practitioner. The registered medical practitioner may examine the person for the purposes of this Act." Section 10 appears in Div 2 of Pt 3 of the 1986 Act. The other provisions of that Division form the statutory scheme of which s 10 is part. As they stood at the time of Mr Veenstra's death those other provisions included: Section 8 setting out the criteria for admission and detention as an involuntary patient. Section 9 providing for involuntary admission of persons upon a recommendation the prescribed form by a registered medical practitioner. Section 11 providing for the issue by a magistrate of a special warrant authorising and directing a member of the police with a registered medical practitioner to visit and examine a person appearing to be mentally ill and incapable of caring for herself or himself. Section 12 providing for the admission and detention of involuntary patients upon a request and recommendation by a medical practitioner pursuant to s 9. Other provisions of Div 2 are not material for present purposes. The apprehension of a person under s 10 does not necessarily lead to that person's admission or detention as an involuntary patient. The 1986 Act, as it stood in 1999, required a person apprehended by police officers under s 10 to be brought to a registered medical practitioner for examination40. A person so examined could only be admitted and detained as an involuntary patient according to the criteria and procedures set down in the other provisions of Div 2 of Pt 3 of the 1986 Act. Unless the person met the criteria set out in s 8, including that of mental illness, there was no basis for further coercive action following upon examination by the practitioner. These provisions of the Act give nobody the legal power to prevent a person from taking his or her own life. That is not to say that timely interventions and counselling will not avert suicide or serious self-harm. There was evidence about the effects of intervention on short term and long term survival given at trial by Mr Jeffrey Cummins, a clinical and 40 1986 Act, s 10(4). forensic psychologist called as an expert witness on behalf of Mrs Kirkland- Veenstra. But those questions are not before this Court which is concerned, in this appeal, only with the existence of a legal duty of care, breach of which gives rise to liability for damages. Section 122 of the 1986 Act provides immunity from suit in the following terms: "No civil or criminal proceedings lies [sic] against any person for anything done in good faith and with reasonable care in reliance on any authority or document apparently given or made in accordance with the requirements of this Act." This immunity has no application to action taken by police officers under s 10. The authority to act under s 10 is given by that provision. The trial judge noted that although s 122 was initially relied upon, it was not pressed at trial and was eventually formally abandoned. It should also be noted that any person may use reasonable force to prevent a person from committing suicide. Section 463B of the Crimes Act 1958 (Vic) states: "Every person is justified in using such force as may reasonably be necessary to prevent the commission of suicide or of any act which he believes on reasonable grounds would, if permitted, amount to suicide." This provision confers legal immunity on a person committing what might otherwise be an assault, in order to prevent somebody from committing suicide. Its full scope was not debated on the appeal. It was not suggested that it had any part to play in determining whether officers Stuart and Woolcock owed a legal duty of care to the deceased and his wife. Mental illness and suicide Section 10 does not assume a necessary linkage between mental illness and attempted suicide. This accords with the long-standing resistance of the common law to the proposition that such a connection necessarily exists41. That resistance no doubt has its origins in the historical treatment of suicide as a crime designated "felo de se". The requirements of criminal responsibility for the commission of such an offence assumed a mind capable of choosing to do or not to do the prohibited act. Blackstone, writing in the 18th century, described suicide as "self-murder" and said "[t]he party must be of years of discretion, and 41 Ray, A Treatise on the Medical Jurisprudence of Insanity, (1838) at 383 [286]. in his senses, else it is no crime"42. But he criticised the merciful tendency of coronial juries to find that suicide was itself evidence of insanity. Such findings avoided the harsh legal consequences that followed for the family of the deceased of forfeiture of his property to the Crown43. Suicide and attempted suicide are no longer criminal offences. This has been the case since 1961 in England and 1967 in Victoria44. Suicide and attempted suicide are seen as reflective of psychological or psychiatric issues which may or may not involve "mental illness" according to established diagnostic conventions. State intervention to prevent suicide may now be seen, at least in part, as the exercise of a parens patriae role and the interest of the State in protecting the life of its own citizens45. The common law does not even support the general proposition that attempted suicide or suicide gives rise to a presumption of mental illness, at least not to the extent that would amount to testamentary incapacity. A testator's suicide, following shortly upon the making of a will, does not raise a presumption of testamentary incapacity46. The Supreme Court of New South Wales came to that conclusion in 1988 in a case involving the suicide of a young testator who shot himself apparently within hours of making a form of will47. Not having been referred to, and unable to discover, any English or Australian authority on the point, Powell J accepted a number of propositions based on case law from the United States. Those propositions were that post-testamentary 42 Blackstone, Commentaries on the Laws of England, (1769), bk 4 at 189, and see generally Bloch, "The Role of Law in Suicide Prevention: Beyond Civil Commitment – A Bystander Duty to Report Suicide Threats", (1987) 39 Stanford Law Review 929 at 930-931. 43 Bloch, "The Role of Law in Suicide Prevention: Beyond Civil Commitment – A Bystander Duty to Report Suicide Threats", (1987) 39 Stanford Law Review 929 at 931-932. See also the discussion and references in the plurality judgment of Gummow, Hayne and Heydon JJ at [94]-[97]. 44 Suicide Act 1961 (UK), ss 1-2; Crimes Act 1967 (Vic), s 2. 45 Bloch, "The Role of Law in Suicide Prevention: Beyond Civil Commitment – A Bystander Duty to Report Suicide Threats", (1987) 39 Stanford Law Review 929 at 46 Burrows v Burrows (1827) 1 Hagg Ecc 109 at 113 [162 ER 524 at 525-526]; Brooks v Barrett 24 Mass 94 at 97 (1828). 47 Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR suicide "does not give rise to a presumption of testamentary incapacity", is not "at all conclusive on the issue" and "is not judicially regarded as proof per se of insanity"48. As noted earlier, there was in fact at least one old English authority on the point49. The test of testamentary incapacity which his Honour applied was drawn from the 19th century judgment of Cockburn CJ in Banks v Goodfellow50. It was considerably narrower than the definition of mental illness in s 8(1A). Nevertheless, the construction of s 10, which would not treat attempted suicide as necessarily reflecting mental illness, is consistent with the long-standing caution of the common law about that proposition. Given the complexity and variety of factors which may lead to suicidal behaviour, it would be a bold legislative step indeed to sweep it all under the rubric of mental illness, however widely defined51. That step has not been taken in the 1986 Act. The statute and the common law This case is about alleged actionable negligence on the part of officers Stuart and Woolcock. It therefore requires consideration of whether they owed a duty of care to Mr Veenstra and his wife in circumstances in which there was a reasonably foreseeable risk of harm to them in the event of a breach of that duty. If such a duty existed, it would then require consideration of whether the officers breached that duty and whether harm resulted. The claim that the officers were repositories of a statutory power and that the scope of the asserted duty of care related to the discretion whether or not to exercise that power does not place the case into a distinct field of actionable tort. It is a claim for damages for injury caused by negligence. That is so, and remains so, notwithstanding the considerable body of jurisprudence on the tortious liability arising out of the exercise or non-exercise of statutory powers. The Court at all times is concerned with the application of "private law notions of duty", albeit they are applied in the field of the exercise of powers under public 48 (1988) 14 NSWLR 698 at 707. 49 Burrows v Burrows (1827) 1 Hagg Ecc 109 [162 ER 524]. 50 (1870) LR 5 QB 549 at 565; see (1988) 14 NSWLR 698 at 705. 51 There was evidence at trial from Professor Diego De Leo characterising suicide as "a behaviour" and not "a mental disease". statutes52. As Gaudron J said in Crimmins v Stevedoring Industry Finance Committee53: "In the case of discretionary powers vested in a statutory body, it is not strictly accurate to speak, as is sometimes done, of a common law duty superimposed upon statutory powers. Rather, the statute pursuant to which the body is created and its powers conferred operates 'in the milieu of the common law'." (footnotes omitted) A claim for damages for breach of a duty of care may be made against the repository of a statutory power in circumstances in which: a decision has been made not to exercise the power; or a decision has been made to exercise the power and the claim relates to the manner of its exercise. Bennion puts it thus at s 14 of his Code of statutory interpretation54: "(16) It constitutes the tort of negligence if a person purporting to perform a statutory requirement, or exercise a statutory authority, contravenes a duty of care which arises at common law, and is not intended to be overridden by the statute, and damage results. The case is similar with other torts such as nuisance. The reason is that the statutory power, duty or authority is then taken not to excuse malfeasance or misfeasance in its purported exercise. (17) Liability under the tort of negligence (as opposed to the breach tort) may arise where a statutory power is conferred on a person and that person carelessly fails to exercise the power, or exercises it in a careless manner, and damage results." 52 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 35 [82] per McHugh J (Gleeson CJ agreeing), 78-79 [218] per Kirby J, 96 [270] per Hayne J (Gummow J relevantly agreeing at 56 [149], see also at 59 [159] and following); [1999] HCA 59. 53 (1999) 200 CLR 1 at 18 [26], citing Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 487; [1995] HCA 47. 54 Bennion on Statutory Interpretation, 5th ed (2008) at 82 and 84. There are classes of case in which the statute conferring a power also imposes, expressly or by necessary implication, a duty to exercise the power. In that case the duty is statutory and a failure to exercise it may give rise to an action in tort for breach of statutory duty. That is not this case. It is not now suggested that s 10 or any other part of the 1986 Act conferred a statutory duty on the officers to exercise the power of apprehension in any circumstances, however pressing. Nor, therefore, can it be suggested that it gives rise to a cause of action for breach of statutory duty. But to say of a statute that it does not "create" a cause of action for breach of duty does not necessarily mean "that there is no room for the operation of the principles of negligence"55. The duty asserted in this case was a common law duty of care. It was said, in the Court of Appeal, to be supported by a number of connected circumstances, including the foreseeable risk of suicide, the officers' awareness of circumstances indicating that risk, the existence of the statutory power and the claimed capacity of the officers, by using that power, to do something to prevent Mr Veenstra's suicide. The existence of the statutory power was central to the argument put on behalf of Mrs Kirkland-Veenstra. Gummow J pointed, in Pyrenees Shire Council v Day56, to criteria by which the courts in Australia and England were said to have applied principles of negligence to local authorities with respect to the discharge of their statutory functions. They involved distinctions between decisions taken at a policy level and decisions of an operational character, between misfeasance and non-feasance and between statutory powers and statutory duties. But as his Honour said57: "Some of these distinctions and doctrines are entrenched in the common law of Australia, others are not. All of them … tend to distract attention from the primary requirement of analysis of any legislation which is in point and of the positions occupied by the parties on the facts as found at trial. This analysis is of particular importance where … the facts do not fall into one of the classes … already recognised by the authorities as attracting a duty of care, the scope of which is settled." It is the statutory provision in question, s 10 of the 1986 Act, that requires first consideration. 55 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 541 [58] per Gaudron, McHugh and Gummow JJ; [2001] HCA 29. 56 (1998) 192 CLR 330 at 376-377 [125]; [1998] HCA 3, see also his Honour's observations on the significance of the relevant statutory scheme in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 59 [159]. 57 (1998) 192 CLR 330 at 377 [126]. The operation of s 10 In considering whether, having regard to s 10, the officers, Stuart and Woolcock, owed the propounded duty of care to Mrs Kirkland-Veenstra and her late husband, it is necessary to examine the operation of the section and the statutory scheme of which it is a part. The power which the section confers on police officers is subject to two necessary conditions. The first requires that a person "appears to be mentally ill". This is the language which was used in s 45(1) of the 1959 Act and might be taken as requiring that the person to be apprehended exhibit objectively ascertainable illness. However, in the context in which the term is used in s 10, before a person can be apprehended it is clear that he or she must appear to the apprehending officer to be mentally ill. That is to say, the officer must form the opinion that the person is mentally ill. This requires a subjective opinion by the officer58. indicia of mental The preceding construction is reinforced by the language of s 10(1A) and the definition of "mentally ill" in s 8(1A). The requisite opinion is an opinion formed, having regard to the behaviour and appearance of the person, that the person has a mental condition characterised by a significant disturbance of thought, mood, perception or memory. This does not require "clinical judgment" by the officers. A layman's opinion conforming with the broad definition of "mentally ill" in s 8(1A) would suffice. As is apparent from the structure of s 10, and consistently with the common law history discussed earlier, the fact that a person has attempted suicide or prepared to attempt suicide is not of itself sufficient to support an inference that the person is mentally ill. Given its proper construction and the emergency situations with which s 10 is concerned, there is no scope for argument, in deciding whether the power to apprehend was enlivened, that, contrary to the opinion formed by the officer, there were indicia of mental illness which should have been apparent to him or her. The power is not enlivened by objective circumstances but by the opinion of the officer. The second condition relevant to the present case that must be satisfied, before the power to apprehend a person under s 10 is enlivened, is that the officer has reasonable grounds for believing that the person is likely, by act or neglect, 58 Robinson v Sunderland Corporation [1899] 1 QB 751 at 757 per Channell J; St James's Hall Company v London County Council [1901] 2 KB 250 at 255 per Channell J and see Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 at 120-123 and authorities there cited; George v Rockett (1990) 170 CLR 104 at 111-113; [1990] HCA 26 considering the term "if it appears to a justice" in s 679 of the Criminal Code (Q). to attempt suicide. The term "has reasonable grounds for believing", when conditioning the exercise of a statutory power by reference to the person upon whom the power is conferred, is generally construed as meaning that the person must form the requisite belief and the belief must be based on reasonable grounds59. The term may sometimes be used in a statutory setting which does not require the requisite belief to be held so long as reasonable grounds for such a belief exist. This Court so held in George v Rockett60 in relation to the power of justices to issue a search warrant under s 679 of the Criminal Code (Q). But that construction appears to have turned upon the particular structure of that section and the place in it of the words "reasonable grounds for believing" not linked directly to the state of mind of the justices. They were there used as part of an attribute of things which might be seized under the warrant. In my opinion, the power of apprehension conferred by s 10, in the circumstances of this case, required the officers, before exercising that power, to form a subjective belief, albeit it had to be based upon reasonable grounds, that Mr Veenstra was likely to attempt suicide. What had occurred prior to the intervention of the officers, while indicative of preparations to commit suicide, did not indicate that an attempt had been undertaken. That is to say, the alternative necessary condition under s 10(1)(a) for the exercise of the power had not been satisfied. The section does not state the time interval over which the likelihood of an attempt is to be assessed. It is apparent from the Second Reading Speech of May 1985, however, that the section was intended to enable a response to what the Minister described as "an emergency situation". This suggests that the relevant likelihood is that the person is about to or will shortly attempt suicide unless apprehended. In the present case it is clear from the findings of fact by the primary judge, accepting the testimony of the officers, that they did not think Mr Veenstra was mentally ill. That was an opinion they were entitled to form. The fact that a person has decided to commit suicide may indicate deep unhappiness or despair. It does not mean that the person is mentally ill within the meaning of s 8(1A). Mr Veenstra's rational and cooperative responses observed by the officers supported their opinion. The facts as found exclude the possibility that the 59 Lloyd v Wallach (1915) 20 CLR 299 at 304 per Griffith CJ (Powers J agreeing at 314), 308-309 per Isaacs J, 312-313 per Higgins J; [1915] HCA 60; Moreau v Federal Commissioner of Taxation (1926) 39 CLR 65 at 68 per Isaacs J; [1926] HCA 28; Boucaut Bay Co Ltd (In liq) v The Commonwealth (1927) 40 CLR 98 at 106 per Isaacs ACJ (Gavan Duffy, Powers and Rich JJ agreeing at 108); [1927] HCA 59; W A Pines Pty Ltd v Bannerman (1980) 30 ALR 559 at 566-567 per Brennan J, 569-572 per Lockhart J (Bowen CJ agreeing at 562). 60 (1990) 170 CLR 104 at 112. officers had formed a belief, after their conversation with Mr Veenstra, that he was likely, shortly, to attempt suicide. On this basis neither of the conditions necessary for the exercise of the power of apprehension was satisfied. The duty of care The primary duty said to be owed to Mr Veenstra and Mrs Kirkland- Veenstra by the two officers was pleaded in the widest terms as "a duty to take reasonable care to protect his and her health and safety". The duty of care identified by the Chief Justice in the Court of Appeal was a duty "to exercise reasonably the statutory power for the purpose of protecting those whom the Act seeks to protect"61. The scope of that duty was said to be "comparatively narrow"62. Her Honour went on to support her finding that the duty of care existed by saying that63: "By the conferral of powers by the [1986 Act], the purpose of which was to protect the mentally ill from situations such as this, they had control over the situation." The scope of the duty as her Honour found it "extended to the assessment of the situation and possibly the provision of assistance as provided for in the Act"64. Maxwell P diverged from the Chief Justice in his formulation of the duty of care. His Honour formulated it in the terms pleaded in the amended statement of claim as a duty to take reasonable care to protect Mr Veenstra and Mrs Kirkland-Veenstra against reasonably foreseeable risks of harm65. Whether the discharge of the duty required the exercise of the power under s 10 was said to be a matter for the jury. His Honour placed emphasis on the "issues of control and knowledge", which he regarded as "particularly significant in this case"66. Like the Chief Justice, however, he proceeded on the basis that the power under 61 (2008) Aust Torts Reports ¶81-936 at 61,305 [39] and 61,307 [54]. 62 (2008) Aust Torts Reports ¶81-936 at 61,307 [54]. 63 (2008) Aust Torts Reports ¶81-936 at 61,310 [76]. 64 (2008) Aust Torts Reports ¶81-936 at 61,310 [76]. 65 (2008) Aust Torts Reports ¶81-936 at 61,314 [99]. 66 (2008) Aust Torts Reports ¶81-936 at 61,314 [102]. 67 (2008) Aust Torts Reports ¶81-936 at 61,315 [103], referring to s 10(2)(b). "In the present case, the [officers] had the legal authority to exercise direct, immediate and complete control over the risk that Mr Veenstra might, in his current frame of mind, commit suicide. Clothed with the authority of s 10, they were in a position to do what no other person could do without risking civil liability for assault or false imprisonment, namely, to apprehend Mr Veenstra and, for that purpose, to 'use such force as may be reasonably necessary'." (footnotes omitted) The judgments of both the Chief Justice and the President turned upon the availability to the officers of the power to apprehend persons under s 10. On the unchallenged fact as found by the trial judge, that they believed that Mr Veenstra was not mentally ill, the power to apprehend him was never enlivened. And on the facts they did not believe, when they decided to let him drive home, that he would be likely, shortly afterwards, to attempt to take his own life. Absent that belief, the power could not be enlivened. The duty of care which the majority in the Court of Appeal found to exist could not have existed because the critical statutory power conferred by s 10, which was in the end the foundation of the duty of care in the circumstances of the case, did not exist. Conclusion For the preceding reasons, in my opinion, this appeal should be allowed. I agree with the orders proposed in the plurality judgment of Gummow, Hayne and GUMMOW, HAYNE AND HEYDON JJ. At about 5.40 on the morning of 22 August 1999 two police officers saw a motor car parked in a beachside car park on the Mornington Peninsula. One of the officers saw a tube leading from the exhaust into a rear window of the car and concluded that someone in the car was "contemplating suicide". The officers spoke to the occupant of the car, Ronald Hendrik Veenstra. Mr Veenstra told the officers that he had been sitting in the car park for two hours and when the officers asked Mr Veenstra about the tube into the car, he said that he had contemplated doing "something stupid". The officers checked the car and its contents. No medication, alcohol or drugs were in the car; the engine was not running and was cold. The officers spoke to Mr Veenstra for about 15 minutes. He told them he had put his thoughts on paper but he would not show them what he had written. One of the officers later said that Mr Veenstra "had a mindset that he wanted to go home and speak to his wife about his marital problems". The officers offered to contact a doctor, to contact Mr Veenstra's family, or to contact the psychiatric Crisis Assessment and Treatment service ("the CAT service"), but Mr Veenstra refused all these offers, saying that he would see his own doctor. The officers concluded that Mr Veenstra showed no sign of mental illness; that he was rational, co-operative and responsible. The officers allowed Mr Veenstra to leave. Later that same day Mr Veenstra took his own life by securing a hose from the exhaust of his car and starting the engine. Mr Veenstra's widow (the plaintiff) brought proceedings in the County Court of Victoria against the two officers and against the State of Victoria (which it is alleged would be responsible for any damages awarded against the officers68). She claimed damages under Pt III of the Wrongs Act 1958 (Vic) for the wrongful death of her husband, and damages for personal injuries in the form of nervous shock and post-traumatic stress disorder that she alleged she had sustained by reason of the alleged negligence of the officers. In her amended statement of claim, the plaintiff alleged that the officers owed her late husband and her a duty to take reasonable care to protect his and her health and safety. The duties were alleged to have arisen pursuant to "common law ... the effect and operation of section 10 of the Mental Health Act [1986 (Vic)] ... [and] the operation of the Victoria Police Manual". The plaintiff alleged her late husband's suicide was caused or contributed to by the officers' 68 This was said to follow from the application of either s 23 of the Crown Proceedings Act 1958 (Vic) or s 123 of the Police Regulation Act 1958 (Vic). It is not necessary, however, to examine this question further. breach of those duties. Many particulars were given of the alleged breach. At trial, however, chief weight was put upon two allegations. First, it was alleged that the officers breached their duty of care by failing to apprehend Mr Veenstra and arrange for him to be examined by a medical practitioner pursuant to s 10 of the Mental Health Act. Secondly, it was alleged that, contrary to procedures laid down in the Victoria Police Manual, the officers did not contact the nearest CAT service and stay with Mr Veenstra until he was assessed by that service. (This second way of putting the case was not pressed in this Court. It may be put aside from further consideration.) In her amended statement of claim, the plaintiff also made an alternative claim for breach of statutory duty. It was alleged that the police officers were under a statutory duty to "arrest [Mr Veenstra] and arrange for him to be examined by a medical practitioner pursuant to section 10 of the Mental Health Act" or to follow procedures laid down in the Victoria Police Manual about contacting the CAT service. This alternative claim for breach of statutory duty was not pressed at trial. The action was tried in the County Court before a judge and a jury of six. At the conclusion of the evidence, the trial judge (Judge Wood) entered judgment for the defendants, holding that the officers did not owe either the plaintiff or her late husband a duty of care. On appeal to the Court of Appeal of the Supreme Court of Victoria that Court (Warren CJ and Maxwell P; Chernov JA dissenting) held69 that the police officers owed both Mr Veenstra and his wife a duty of care. The Court set aside the judgment entered for the defendants and remitted the proceeding for retrial. By special leave, the police officers now appeal to this Court. The State of Victoria was joined as the second respondent to the appeal but made submissions in support of the officers' appeal. The appeal should be allowed and the judgment entered at trial in favour of the defendants restored. The statutory framework All parties to the appeal in this Court recognised the need to begin examination of the issues by reference to the relevant statutory framework. Although closest attention must be given to the relevant provisions of the Mental 69 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,297. Health Act (and s 10 in particular) it is necessary to notice not only some other statutory provisions, but also some matters of history that lie behind them. The proposition that, at common law, suicide was a "felony equivalent to murder"70 has been seen71 as requiring some amplification or qualification. But the proposition was generally accepted in Australia for many years and it is not necessary to consider whether it is complete or accurate. By the time of the events giving rise to this proceeding, suicide was no longer a crime in any State or Territory but it was a crime72 to incite, aid, abet, counsel or procure commission of suicide. Suicide was not a crime under the Criminal Codes of Queensland, Western Australia or Tasmania. In 1967, the Victorian Parliament enacted that "[t]he rule of law whereby it is a crime for a person to commit or to attempt to commit suicide is hereby abrogated"73. Inciting or counselling suicide, or aiding or abetting suicide or attempted suicide, were made74 offences and special provision was made75 in respect of suicide pacts. And in the same Act76, a new section, s 463B, was inserted in the Crimes Act 1958 (Vic) ("the Victorian Crimes Act") providing that: "Every person is justified in using such force as may reasonably be necessary to prevent the commission of suicide or of any act which he believes on reasonable grounds would, if committed, amount to suicide." 70 Howard, Australian Criminal Law, 2nd ed (1970) at 123. 71 Barry, "Suicide and the Law", (1965) 5 Melbourne University Law Review 1; Mikell, "Is Suicide Murder?", (1903) 3 Columbia Law Review 379. 72 Crimes Act 1900 (NSW), s 31C; Crimes Act 1958 (Vic), s 6B(2); Criminal Law Consolidation Act 1935 (SA), ss 13A(5), 13A(7); Criminal Code (Q), s 311; The Criminal Code (WA), s 288; Criminal Code (Tas), s 163; Criminal Code (NT), s 168; Crimes Act 1900 (ACT), s 17. 73 Crimes Act 1967 (Vic), s 2, inserting s 6A in the Crimes Act 1958 (Vic). 74 Crimes Act 1958, s 6B(2) as inserted by the Crimes Act 1967, s 2. 75 Crimes Act 1958, s 6B. 76 Crimes Act 1967, s 3. In 1983 legislation was enacted in New South Wales77 and South Australia78 abolishing the rule of law that it is a crime to commit or attempt to commit suicide. And by the same legislation, provision was made in both New South Wales and South Australia justifying the use of force to prevent suicide. Like provisions were made in the Australian Capital Territory in 199079 and in the Northern Territory in 199680. It is to be noted that provisions like s 463B of the Victorian Crimes Act did not permit apprehension or arrest of a person who had threatened or was threatening suicide. The provisions authorised the application of force to prevent suicide. That s 463B of the Victorian Crimes Act did not authorise apprehension or arrest was apparent from its text. If reinforcement for this construction was necessary (and it most likely was not) it was provided, in Victoria, by s 457 of the Victorian Crimes Act81 which since 1972 has provided (in effect) that no person may be arrested without warrant except pursuant to the provisions of that Act or some other Act expressly giving power to arrest without warrant. It is against this background that, in 1986, provision was made in Victoria, by s 10 of the Mental Health Act, for a police officer to have power if certain conditions are met to apprehend a person who appears to be mentally ill. Section 10 of the Mental Health Act (as in force in August 1999) provided: "10. Apprehension of mentally ill persons in certain circumstances (1) A member of the police force may apprehend a person who appears to be mentally ill if the member of the police force has reasonable grounds for believing that— the person has recently attempted suicide or attempted to cause serious bodily harm to herself or himself or to some other person; or 77 Crimes (Mental Disorder) Amendment Act 1983 (NSW). 78 Criminal Law Consolidation Act Amendment Act 1983 (SA). 79 Crimes (Amendment) Ordinance (No 2) 1990 (ACT). 80 Criminal Code Amendment Act 1996 (NT). 81 As amended by the Crimes (Powers of Arrest) Act 1972 (Vic). the person is likely by act or neglect to attempt suicide or to cause serious bodily harm to herself or himself or to some other person. (1A) A member of the police force is not required for the purposes of sub-section (1) to exercise any clinical judgment as to whether a person is mentally ill but may exercise the powers conferred by this section if, having regard to the behaviour and appearance of the person, the person appears to the member of the police force to be mentally ill. the purpose of apprehending a person under For sub-section (1) a member of the police force may with such assistance as is required— enter any premises; and use such force as may be reasonably necessary. (3) A member of the police force exercising the powers conferred by this section may be accompanied by a registered medical practitioner. (4) A member of the police force must as soon as practicable after apprehending a person under sub-section (1) arrange an examination of the person by a registered medical practitioner. The registered medical practitioner may examine the person for the purposes of this Act." Some aspects of s 10 should be noticed. First, s 10(1) gives a member of the police force the power to apprehend a person "who appears to be mentally ill" if the member has reasonable grounds for believing one or more matters. What is meant by "appears to be mentally ill" is explained in s 10(1A), a sub-section that directs attention to the behaviour and appearance of the person, and the definition of mental illness in s 8(1A). Section 8(1A) provides that, subject to s 8(2) (which gives a long list of what is not sufficient to demonstrate mental illness), mental illness is "a medical condition that is characterised by a significant disturbance of thought, mood, perception or memory". For present purposes, however, the critical observation that must be made about s 10(1) is that it gives power to police officers: "[a] member of the police force may apprehend ..." (emphasis added). The sub-section does not in terms impose on police officers an obligation to exercise that power of apprehension if a person appears mentally ill and there are reasonable grounds for the officer to believe that the person has recently attempted or is likely to attempt suicide or to cause serious bodily harm to that person or to some other person. And there may very well be circumstances in which a police officer acting reasonably would not exercise the power even if the conditions for its exercise were met. Framing the duty of care As noted earlier, the case which the plaintiff pleaded and sought to make at trial was that the officers owed both her late husband and her a duty which was identified as a duty to take reasonable care to protect his and her health and safety. Argument in this Court focused upon whether the officers owed Mr Veenstra a duty of care. It was accepted in this Court (as it had been in the Court of Appeal) that if no duty was owed to Mr Veenstra, the officers owed no duty to the plaintiff. And it was further accepted in this Court that if a duty was owed to Mr Veenstra, and if it was breached and that breach was a cause of psychiatric injury to the plaintiff, the plaintiff would also have an action for damages for that injury82. The duty which was allegedly owed to Mr Veenstra was defined in oral argument in this Court in slightly different terms from those found in the pleading. Nothing turns on those differences. In this Court, the duty was said to be to take reasonable steps to prevent foreseeable harm to Mr Veenstra at his own hand. The scope of the duty was described as including apprehension and taking him to a medical practitioner for assessment. But it was accepted that the duty was not absolute. That is, it was accepted that there may be cases in which it would be reasonable to do nothing, or to take some step short of apprehension. The framing of the case in this way tended to obscure the distinction between the existence of a duty of care and the considerations which arise in a determination of what a reasonable man would do by way of response to the risk of injury to the plaintiff83. In part, this reflects the special nature of the posited duty as a duty to prevent harm to the deceased at his own hand, not at the hand of another. 82 Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269; [2003] HCA 83 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48; [1980] HCA 12. The duty thus posited is novel. It has two particular features which require more detailed examination. First, although framed as a duty to take reasonable steps to prevent foreseeable harm, the particular kind of harm to be prevented is harm at the hand of the person to whom the duty is owed. Secondly, although the duty is framed in general terms (to take reasonable steps to prevent foreseeable harm) it is evident that central to the concept of "reasonable steps" is exercise of an identified statutory power. A duty to prevent self-harm? The duty which the plaintiff alleged the police officers owed her late husband was a duty to control his actions, not in this case to prevent harm to a stranger, but to prevent him harming himself. On its face, the proposed duty would mark a significant departure from an underlying value of the common law which gives primacy to personal autonomy, for its performance would have the officers control conduct of Mr Veenstra deliberately directed at himself. Personal autonomy is a value that informs much of the common law. It is a value that is reflected in the law of negligence. The co-existence of a knowledge of a risk of harm and power to avert or minimise that harm does not, without more, give rise to a duty of care at common law84. As Dixon J said in Smith v Leurs85, "[t]he general rule is that one man is under no duty of controlling another man to prevent his doing damage to a third"86. It is, therefore, "exceptional to find in the law a duty to control another's actions to prevent harm to strangers"87. And there is no general duty to rescue. In this respect, the common law differs sharply from civil law. The common law has been described as "individualistic", the civil law as "more socially impregnated"88. It may be said that the notion of personal autonomy is imprecise, if only because it will often imply some notion of voluntary action or freedom of choice. 84 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 596 [145]; [2002] HCA 54. 85 (1945) 70 CLR 256 at 262; [1945] HCA 27. 86 See also Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; [2000] HCA 61. 87 Smith v Leurs (1945) 70 CLR 256 at 262. 88 Markesinis and Unberath, The German Law of Torts: A Comparative Treatise, 4th ed (2002) at 90. And, as Windeyer J pointed out in Ryan v The Queen89, albeit in a different context, words like "voluntary" are ambiguous. But expressed in the most general way, the value described as personal autonomy leaves it to the individual to decide whether to engage in conduct that may cause that individual harm90. As Lord Hope of Craighead put it in Reeves v Commissioner of Police of the Metropolis91, "[o]n the whole people are entitled to act as they please, even if this will inevitably lead to their own death or injury"92. When a duty to control the actions of another is found it will usually be because the person to be controlled is not autonomous. Thus, the duty of care which a gaoler owes a prisoner93 is owed because the prisoner is deprived of personal liberty and the gaoler has assumed control of the prisoner's person. The prisoner does not have autonomy. Is the duty postulated in this case to be justified on the basis that the person to whom the duty is owed is not capable of exercising personal autonomy? The majority in the Court of Appeal concluded94 that it was to be inferred from s 10 of the Mental Health Act that it was the legislative view "that to attempt suicide is to be mentally ill". If that were right, it may be said that finding the alleged duty of care would not encroach upon the autonomy of the individual because autonomy presupposes full capacity to make choices. But the inference which the Court of Appeal drew is not open. Section 10 does not reveal any legislative view that to attempt suicide is to be mentally ill. Nor, as explained below, has that been the unqualified position of the common law. 89 (1967) 121 CLR 205 at 244; [1967] HCA 2. See also Tofilau v The Queen (2007) 231 CLR 396 at 404-405 [6], 417-418 [49]-[52]; [2007] HCA 39. 90 Agar v Hyde (2000) 201 CLR 552 at 583-584 [88]-[90]; [2000] HCA 41. 91 [2000] 1 AC 360 at 379-380. 92 See also Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 477 [14]; [2004] HCA 29; Tomlinson v Congleton Borough Council [2004] 1 AC 46; R (L) v Home Secretary [2008] 3 WLR 1325 at 1338 [39], 1342 93 Howard v Jarvis (1958) 98 CLR 177 at 183; [1958] HCA 19; New South Wales v Bujdoso (2005) 227 CLR 1; [2005] HCA 76. 94 (2008) Aust Torts Reports ¶81-936 at 61,308 [64]. That s 10 does not reveal that legislative view is demonstrated by the requirement of s 10 that two conditions be met in order to enliven the power of apprehension: first, that the person appear to be mentally ill and second, that the person has recently attempted or is likely to attempt suicide, or has recently caused or is likely to attempt to cause serious bodily harm, whether to that person or to another. Perhaps an inference of the kind drawn by the majority might have been available if there were no separate requirement that the person concerned appear to be mentally ill, but even then it would be a bold inference to draw that the Victorian legislature assumed that threatening serious harm to oneself or another will in every case suggest mental illness. It is nonetheless important to acknowledge that suicide is often associated with disturbance of "the balance of the mind" or with being of "unsound mind". This was not always so. Bracton, writing in the 13th century, recognised the complexity of suicide. Bracton contrasted95 the case of "a man [who] slays himself in weariness of life or because he is unwilling to endure further bodily pain" from one who "lays violent hands upon himself without justification, through anger and ill-will, as where wishing to injure another but unable to accomplish his intention he kills himself". The former might have "a successor, but his movable goods are confiscated. He does not lose his inheritance, only his movable goods". On the other hand, the latter "is to be punished and shall have no successor"96. But by the 16th century distinctions of this kind were lost in the general condemnation97 of suicide as "an offence against nature, against God, and against the King. Against nature, because it is contrary to the rules of self-preservation ... Against God, in that it is a breach of His commandment, thou shalt not kill ... Against the King in that hereby he has lost a subject, and ... he being the head [of the body politic] has lost one of his mystical members."98 And of these three causes for condemnation, it was the religious that may be seen as having had chief influence on the later development of the law. 95 Bracton, De Legibus et Consuetudinibus Angliae (Woodbine ed, Thorne trans, 1968) ("Bracton"), vol 2, f 150 at 424. 96 Bracton, vol 2, f 150 at 424. 97 Hales v Petit (1562) 1 Plowden 253 at 261 [75 ER 387 at 400]. 98 This reflected the notion of the "body politic" current at the time Hales v Petit was decided: Thomas v Mowbray (2007) 233 CLR 307 at 362 [142]; [2007] HCA 33. A suicide was buried at night, at a crossroads, and the corpse was defiled. The last recorded instance of this being done in England was in 182399. In Victoria, the Coroners Act 1896, in a provision drawing upon English statutory sources100, provided that upon a coroner's finding of a verdict of suicide (felo de se) it was not necessary that the interment of the body "take place between the hours of nine and twelve at night" and that the coroner could not forbid the performance of any of the rites of Christian burial. The performance of the rites of Christian burial was not authorised on the interment of the remains of a person who had committed suicide, unless, significantly, the deceased was shown to have been non compos mentis at the time101. During the 20th century, perhaps even earlier, coroners or juries would often add to a verdict that the deceased had killed himself or herself, words to the effect "whilst of unsound mind" or "whilst the balance of [his or her] mind was disturbed". Riders to this effect were added even where there was no medical evidence to support the conclusion102. In these circumstances, the association that may have developed in the past between suicide and mental illness provides no certain foundation for a conclusion that a person threatening suicide will in every case lack the capacity to decide what to do. That is, the historical association between suicide and mental illness provides no sufficient basis upon which to impose a duty of care which denies the personal autonomy of the person to whom it is owed. And the provisions of the Mental Health Act not only do not provide such a basis, they reinforce the need to give effect to personal autonomy. Contrary to the inference drawn by the majority in the Court of Appeal in this case, the premise for the provisions that now appear in s 10 of the Mental Health Act is that a person threatening suicide may or may not be suffering mental illness. Moreover, the central premises for the Mental Health Act are that its provisions are directed to "the care, treatment and protection of mentally ill people who do not or cannot consent to that care, treatment or protection"103 and that "every function, power, authority, discretion, jurisdiction and duty conferred 99 Barry, "Suicide and the Law", (1965) 5 Melbourne University Law Review 1 at 6. 100 4 Geo IV c 52; Interments (felo de se) Act 1882 (UK). 101 Halsbury's Laws of England, 1st ed, vol 9 at 592-593, par 1198. 102 Jervis on The Office and Duties of Coroners, 9th ed (1957) at 180, 484. 103 s 4(1)(a). or imposed by [that] Act is to be exercised or performed" so that those suffering a mental disorder are given the best possible care and treatment in the "least possible intrusive manner" and so that restrictions on liberty and interference with rights, privacy, dignity and self-respect are kept "to the minimum necessary in the circumstances"104. That is, the Mental Health Act reinforces the importance of that value of personal autonomy which must inform the development of the common law. The duty which is postulated in the present case is expressed in terms which, on their face, would require every person who knows (perhaps every person who ought to know) that another is threatening self-harm to take reasonable steps to prevent that harm. Presumably, performance of a duty described in those terms would require the person, in an appropriate case, to exercise the power given by s 463B of the Victorian Crimes Act (or equivalent provisions) and use reasonable force to prevent the commission of suicide or "of any act which he believes on reasonable grounds would, if committed, amount to suicide". Presumably it is a duty which would require the person to call for police so that they could exercise powers under s 10. And all this regardless of whether the person threatening self-harm is in fact mentally ill, or appears to be so. So expressed the duty would be a particular species of a general duty to rescue. The common law of Australia has not recognised, and should not now recognise, such a general duty of care. No doubt it was with that in mind that, despite the general terms in which the postulated duty was described, the plaintiff submitted that the duty was one which should be understood as arising from the "peculiar relationship" created by s 10 of the Mental Health Act. That is, although the plaintiff submitted that the relevant scope of the duty in this case included but was not limited to exercising the powers given by s 10 of the Mental Health Act, the duty of care which the plaintiff alleged the police officers owed her late husband was a duty that they were alleged to owe because they were members of the police force. Thus, although expressed in general terms (as a duty owed to Mr Veenstra to take reasonable steps to prevent foreseeable harm to him at his own hand) it was not submitted that the duty was owed by anyone and everyone who came upon the scene in the car park and observed a tube leading into the car. Rather, the premise for the plaintiff's argument was that the officers owed the asserted duty because they, as members of the police force, had a particular power to intervene. Understood in this way, the duty alleged is revealed as being a duty to exercise a statutory power. This aspect of the matter merits separate consideration. A duty to exercise a statutory power? The duty which it is said should be found is a duty to be expressed as part of the single and unified common law of Australia105. Yet it is a duty that is said to be owed only by those who have a specific statutory power, and it is a duty that is said to arise out of the "relationship" created by the existence of that power. Whether the asserted duty exists is not determined by whether the conditions for exercise of the statutory power are shown to have existed in a particular case. The existence of facts satisfying those conditions would be a central part of the inquiry about breach. Rather, in deciding whether the officers owed the asserted duty it is necessary to consider what is the duty which it is said is owed by those who have a specific statutory power, and how is that duty said to arise out of the "relationship" created by the existence of that power. Both the specificity of the duty and the nature of the alleged "relationship" require further examination. Argument of the present matter proceeded with little reference to the statute law of other Australian jurisdictions. Yet if the plaintiff is right to say that the police officers owed Mr Veenstra a common law duty of care, it is presumably a duty that finds at least some reflection and operation outside Victoria106. State and Territory legislation concerning mental health is not uniform. At the times relevant to this matter, however, all jurisdictions made some provision107 permitting police officers to apprehend persons who appeared to be mentally ill and who appeared to present danger to themselves or others. Those 105 Lipohar v The Queen (1999) 200 CLR 485; [1999] HCA 65. 106 See Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [23]-[25], 83 [91]; [1999] HCA 67. 107 See Mental Health Act 1990 (NSW), s 24; Mental Health Act 1993 (SA), s 23; Mental Health Act 1974 (Q), s 26; Mental Health Act 1996 (WA), s 195; Mental Health Act 1963 (Tas), s 100; Mental Health Act (NT), s 9; Mental Health (Treatment and Care) Act 1994 (ACT), s 37. provisions can be said to be generally similar to s 10 of the Mental Health Act but they were not identical to s 10. Although the duty asserted was, for the reasons given earlier, a duty to take reasonable care to protect from harm by exercising a statutory power, it was a duty to take care by exercising an available statutory power. So understood, it is apparent that the duty could not be confined to the particular power given by s 10 of the Mental Health Act. First, the duty must be one that would require exercise of the powers given by equivalent provisions in other jurisdictions. Secondly, and more importantly, the duty of care alleged by the plaintiff could not be confined to a duty to take reasonable care to protect a person from self-harm by exercising statutory powers under applicable mental health legislation. The duty alleged could not be confined to cases of self-harm and could not be confined to cases in which powers under mental health legislation may be engaged. Rather, the duty alleged in this case would necessarily be a particular example of a more general duty of care owed by those who have statutory power to take action in exercise of that power, whenever two conditions are satisfied: it is reasonable to do so and acting will be likely to protect another from physical harm. And although the duty alleged in this case is said to have been owed to Mr Veenstra to take reasonable care to protect him from harm at his own hand, there is no basis upon which the relevant duty of care could be confined to cases of self-harm. If owed, the duty must extend to preventing harm to at least some others. For the reasons given earlier, no such general duty should be found to have been owed by the police officers. Even if the duty could be confined to a more particular class of cases, of which this is an example, no such duty should be held to exist. The duty alleged in this case was said to arise out of the relationship created by the existence of the power given to police officers by s 10 of the Mental Health Act. Though not explored in any detail in either written or oral argument the "relationship" said to be created by the existence of the power must be understood as a reference to a relationship between Mr Veenstra and the police officers that followed from, or was created by, the existence of facts and circumstances which enlivened consideration of whether the statutory power was to be exercised. That is, the statutory power is said to be coupled with a common law duty of care that would require not only consideration of the exercise of the power but also its exercise whenever reasonable to do so. The immediate answer to this proposition may be thought to be that this is not what s 10 of the Mental Health Act provides, and no other statutory source of such obligations was identified. But it is necessary to explain why s 10 itself does not found the plaintiff's action and to examine further why the common law does not impose a duty of care. As noted earlier, the plaintiff had pleaded a claim for breach of statutory duty but that claim was not pressed at trial. Because s 10 of the Mental Health Act confers power but does not impose a duty to exercise the power, the abandonment of the claim for breach of statutory duty derived from that Act was inevitable and right108. That is, the existence of such a cause of action is not to be inferred from "a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed [or in this case authorised], the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation"109. Why, then, does the common law not impose a duty of care? There can be no duty to act in a particular way unless there is authority to do so. Power is therefore a necessary condition of liability but it is not a sufficient condition. Statutory power to act in a particular way, coupled with the fact that, if action is not taken, it is reasonably foreseeable that harm will ensue, is not sufficient to establish a duty to take that action. Rather, as was pointed out in Graham Barclay Oysters Pty Ltd v Ryan110, the existence or otherwise of a common law duty of care owed by a statutory authority (or in this case the holder of statutory power) "turns on a close examination of the terms, scope and purpose of the relevant statutory regime". Does that regime erect or facilitate "a relationship between the authority [here the holder of statutory power] and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence"111? Evaluation of the relationship between the holder of the power and the person or persons to whom it is said that a duty of care is owed will require examination of the degree and nature of control exercised over the risk of harm 108 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 404-405; [1967] HCA 31; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 457-461; [1995] HCA 24; Slivak v Lurgi (Australia) Pty Ltd (2001) 205 CLR 304 at 315-316 [27]-[29]; [2001] HCA 6. 109 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405. 110 (2002) 211 CLR 540 at 596-597 [146]. 111 (2002) 211 CLR 540 at 596-597 [146]. that has eventuated112, the degree of vulnerability of those who depend on the proper exercise of the relevant power113, and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute114. Other considerations may be relevant115. In the present matter, as in a number of cases about the exercise of statutory power116, it is the factor of control that is of critical significance. It was not the officers who controlled the source of the risk of harm to Mr Veenstra; it was Mr Veenstra alone who was the source of that risk. For the reasons that have been expressed in connection with consideration of the value of personal autonomy, this factor is of predominant importance. The present case stands in sharp contrast to Crimmins v Stevedoring Industry Finance Committee117. In that case the Court held that the Australian Stevedoring Industry Authority owed a waterside worker a common law duty to take reasonable care to protect him from reasonably foreseeable risks of injury arising from his employment by registered stevedores. The conclusion reached by the majority of the Court was founded on considerations that were identified as finding close analogy with those which lead to an employer being responsible 112 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 597 [149]. See also Howard v Jarvis (1958) 98 CLR 177 at 183; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550-552, 556-557; [1994] HCA 13. 113 Graham Barclay Oysters (2002) 211 CLR 540 at 597 [149]. See also Burnie Port Authority (1994) 179 CLR 520 at 551; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 24-25 [44]-[46], 38-39 [91]-[93], 40-41 [100]; [1999] HCA 59. 114 Graham Barclay Oysters (2002) 211 CLR 540 at 597-598 [149]; Sullivan v Moody (2001) 207 CLR 562 at 581-582 [55]-[62]; [2001] HCA 59. 115 Graham Barclay Oysters (2002) 211 CLR 540 at 598 [149]; Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 16-17 [47], 23-24 [76]; [2001] HCA 19. 116 Crimmins (1999) 200 CLR 1 at 24-25 [43]-[46], 42-43 [104], 61 [166], 82 [227], 104 [304], 116 [357]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 558-559 [102]; [2001] HCA 29; Graham Barclay Oysters (2002) 211 CLR 540 at 598-599 [150]-[152]. See also Burnie Port Authority (1994) 179 CLR 520 at 551-552; Agar v Hyde (2000) 201 CLR 552 at 562 [16], 564 [21], 581-582 117 (1999) 200 CLR 1. for providing a safe system of work and a safe place of work. The Authority had or should have had knowledge of the special risks to which the workers were subject and could control (or at least minimise) those risks by the exercise of its statutory powers. And it was the Authority that put the workers at risk of harm because it was the Authority that assigned the workers to particular stevedores. The Authority was held to control the source of the risk of harm to the workers. No similar analogy with existing relationships giving rise to a duty of care can be drawn in the present case. More particularly, the police officers did not control the source of the risk to Mr Veenstra as would have been the case if he had been a prisoner in custody118. No doubt it can be said that the police officers knew of the particular risk to Mr Veenstra. They had, after all, observed the preparations Mr Veenstra had made at the car park. No doubt it can also be said that they were in a position to control or minimise the occurrence of the observed risk (in this case because they had the power given by s 10 of the Mental Health Act). But considerations of the same kind will almost always be present when a passer-by observes a person in danger. The passer-by can see there is danger; the passer-by can almost always do something that would reduce the risk of harm. Yet there is no general duty to rescue. And unlike the case in Crimmins, it was not the officers who put Mr Veenstra in harm's way. They came upon the scene which Mr Veenstra had created. Were they to intervene to prevent his conduct? That question is not answered by pointing to what was decided in Crimmins. Contrary to the plaintiff's submissions, this was not a case in which principles of the kind examined in Pyrenees Shire Council v Day119 are engaged. In that case, a public authority had entered upon120 the exercise of its statutory 118 cf Reeves v Commissioner of Police of the Metropolis [2000] 1 AC 360; Savage v South Essex Partnership NHS Foundation Trust [2009] 2 WLR 115; [2009] 1 All ER 1053. As Lord Rodger of Earlsferry pointed out in Savage [2009] 2 WLR 115 at 125 [25]; [2009] 1 All ER 1053 at 1064, "under the domestic law of the United Kingdom there is no general legal duty on the state to prevent everyone within its jurisdiction from committing suicide". And the obligation of the State, under Art 2 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, incorporated into United Kingdom domestic law by the Human Rights Act 1998 (UK), to protect everyone's right to life, requires steps to prevent suicide by prisoners, military conscripts, and hospital patients, not the population at large: [2009] 2 WLR 115 at 123-133 [18]-[50]; [2009] 1 All ER 119 (1998) 192 CLR 330; [1998] HCA 3. 120 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 391 [177]. powers with respect to a particular subject-matter (fire prevention). The authority was held to have owed a duty to take reasonable care in exercising those powers. But the case was a particular example of the general proposition121 that "when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely to be occasioned, by their exercise, damages for negligence may be recovered". In the present matter, the complaint is not about the care with which a statutory power was exercised; it is a complaint that the power was not exercised. That is, the submission in the present case is that the existence of the statutory power, coupled with proof of the existence of facts that would have warranted its exercise, should be held to give the plaintiff a cause of action for the damage occasioned as a result of the power not being exercised. For the reasons that have been given, the characteristics of the relationship between the police officers (as holders of the power given by s 10 of the Mental Health Act) and Mr Veenstra (as the person against whom the power would be exercised) do not answer the criteria for intervention by the tort of negligence122. Whether the police officers acted reasonably in allowing Mr Veenstra to go home has never been decided in this litigation. The decisions in the courts below, and in this Court, turn only on the question of duty of care. We are therefore not to be taken as expressing a view about any question of breach, or whether the facts found at first instance demonstrated that s 10 of the Mental Health Act could have been engaged. It is not necessary to consider the more general questions addressed in argument about the tortious liability of police123 in other circumstances. 121 Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202 at 220; [1957] HCA 14. 122 Graham Barclay Oysters (2002) 211 CLR 540 at 596-597 [146], 597-598 [149]. 123 cf Hill v Chief Constable of West Yorkshire [1989] AC 53; Brooks v Commissioner of Police of the Metropolis [2005] 1 WLR 1495; [2005] 2 All ER 489; Smith v Chief Constable of Sussex Police [2008] 3 WLR 593; [2008] 3 All ER 977; Hill v Hamilton-Wentworth Regional Police Services Board [2007] 3 SCR 129; Zalewski v Turcarolo [1995] 2 VR 562. Conclusions and orders For these reasons, the trial judge was right to hold that the police officers did not owe Mr Veenstra the duty of care upon which the plaintiff's claim under the Wrongs Act depended. It was not disputed that it follows that the officers did not owe the plaintiff the duty of care upon which her action for damages for psychiatric injury depended. The appeal should be allowed. The orders of the Court of Appeal (except in so far as they deal in par 4 with the costs of the appeal to that Court) should be set aside and in their place there should be orders that each party should bear its own costs of the proceedings at first instance, but that otherwise the appeal to the Court of Appeal is dismissed. Consistent with the terms on which special leave to appeal to this Court was granted, the appellants should pay the first respondent's costs of the appeal to this Court. The second respondent should bear its own costs. CRENNAN AND KIEFEL JJ. The facts relevant to this appeal are set out in the reasons of French CJ and in the reasons of Gummow, Hayne and Heydon JJ. We agree that the appeal should be allowed. We have taken a different view from others of the essential reasoning of the majority in the Court of Appeal to the conclusion that the police officers came under a duty to exercise a common law duty of care consonant with the statutory power in question. It is evident from that reasoning, which the plaintiff sought to uphold, that the obligation to exercise the power derives entirely from the statute and is therefore apposite to an action for breach of statutory duty, which the plaintiff disclaimed. Such a cause of action has some features in common with the action upon which the plaintiff relied, which depended upon the existence of a duty of care at common law. Regardless of the true nature of the plaintiff's cause of action, we consider that the conditions necessary to engage the statutory power in question were not present. The action brought by Mrs Kirkland-Veenstra ("the plaintiff") was based upon the existence of a common law duty of care which required the two police officers, who spoke to her husband on the morning of 22 August 1999, to take steps which would prevent him from taking his own life. The common law does not recognise a duty to rescue another person. The plaintiff's case therefore relied upon the power of apprehension contained in s 10(1) of the Mental Health Act 1986 (Vic) ("the Act"). It was alleged that the common law would consider the police officers to have been obliged to utilise that power. Section 10(1) of the Act provides that a member of the police force "may apprehend a person who appears to be mentally ill" if they have reasonable grounds for believing that the person has recently attempted suicide or to cause serious bodily harm to herself or himself or some other person, or is likely to do so. The police officer is not required to exercise any clinical judgment as to whether a person is mentally ill, but "may exercise the powers conferred by this section if, having regard to the behaviour and appearance of the person, the person appears to the member of the police force to be mentally ill."124 "Mental illness" is defined125 as a "medical condition that is characterised by a significant disturbance of thought, mood, perception or memory." The majority in the Court of Appeal discussed cases concerned with whether public authorities might come under a duty of care and the factors which have been identified as relevant to that inquiry. The control of the risk to the plaintiff's husband, provided by the power in s 10(1), together with the police 124 Mental Health Act 1986 (Vic), s 10(1A). 125 Mental Health Act 1986, s 8(1A). officers' knowledge of that risk was regarded as being of particular importance126. The duty was found to exist because of the police officers' awareness that the plaintiff's husband had taken steps preparatory to suicide and because they were considered to have a power which had as its purpose the protection of a class of persons of which the plaintiff's husband was a member127. That class was identified as persons who a police officer believes, on reasonable grounds, have recently attempted or are likely to attempt suicide128. In their Honours' view, "the necessary facts were present for the exercise of the power."129 The common law generally does not impose a duty upon a person to take affirmative action to protect another from harm130. Such an approach is regarded as fundamental to the common law and has as its foundation concepts of causation. The law draws a distinction between the creation of, or the material increase of, a risk of harm to another person and the failure to prevent something one has not brought about. The distinction may be seen as reflected in notions of misfeasance and non-feasance131. So far as concerns situations brought about by the action of the person at risk, it is the general view of the common law that such persons should take responsibility for their own actions132. In this, English 126 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,310 [76] per Warren CJ, 61,314-61,315 [101]-[103] per Maxwell P. 127 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,308 [63], 61,309-61,310 [72], 61,310 [75] and 61,310 [76] per Warren CJ, Maxwell P agreeing. 128 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,308 [63] per Warren CJ, Maxwell P agreeing. 129 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,305 [39] per Warren CJ, Maxwell P agreeing. 130 Smith v Leurs (1945) 70 CLR 256 at 262 per Dixon J; [1945] HCA 27; Hargrave v Goldman (1963) 110 CLR 40 at 66 per Windeyer J; [1963] HCA 56; Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 444 per Gibbs CJ; [1985] HCA 41; Stovin v Wise [1996] AC 923 at 943 per Lord Hoffmann. 131 The significance of which in this sphere was questioned in Brodie v Singleton Shire Council (2001) 206 CLR 512; [2001] HCA 29; cf Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 479 per Brennan J. 132 Reeves v Commissioner of Police of the Metropolis [2000] 1 AC 360 at 368 per Lord Hoffmann; Weinrib, "The Case for a Duty to Rescue", (1980) 90 Yale Law Journal 247 at 268. law has been seen to have an affinity with Roman law, in its reluctance to interfere or to encourage interference with the freedom of the individual133. The common law does recognise that some special relationships may require affirmative action to be taken by one party134 and are therefore to be excepted from the general rule. Examples of such relationships are employer and employee, teacher and pupil, carrier and passenger, shipmaster and crew. The refusal of the English common law to impose a general duty to act has been criticised135. Civil law countries impose criminal sanctions where a person fails to assist136. German law imposes such an obligation in circumstances where there is imminent peril and a person can act without danger to themselves. Even so, that obligation does not arise in the case of a person attempting suicide because the peril is viewed as an act of will, at least in cases where the person is not insane137. In principle a public authority exercising statutory powers should not be regarded by the common law any differently from a citizen. It should not be considered to have an obligation to act138. But the position of a public authority is not the same as that of a citizen and the rule of equality is not regarded as wholly applicable139. It has public functions and it has statutory powers which the citizen does not. Some powers might be effective to avert or minimise a risk 133 Zimmermann, The Law of Obligations, (1996) at 1044. 134 As Gummow J observed in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 61 [165]; [1999] HCA 59. 135 See Weinrib, "The Case for a Duty to Rescue", (1980) 90 Yale Law Journal 247 at 136 See Feldbrugge, "Good and Bad Samaritans: A Comparative Survey of Criminal Law Provisions Concerning Failure to Rescue", (1966) 14 American Journal of Comparative Law 630. 137 Gordley and von Mehren, An Introduction to the Comparative Study of Private Law, (2006) at 369-370. 138 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 459-460 per Mason J; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 580 [91] per McHugh J; [2002] HCA 54. 139 See Allars, "Tort and Equity Claims Against the State", in Finn (ed), Essays on Law and Government: Volume 2, The Citizen and the State in the Courts, (1996) of harm to particular persons or their property, but the statute might not oblige their use. The relevant concern of the common law is whether a public authority might nevertheless be considered to be under a duty of care which obliges it to exercise its powers in a particular way140. The common law duty in question is to be distinguished from one arising under the statute which provides the public authority's powers. The action for breach of statutory duty, although itself a tort, is regarded as distinct from the tort of negligence. It will be necessary to return to the elements of this action in more detail later in these reasons. In a case where a general duty of care is alleged, it is said that the statute cannot itself be regarded as the source of the duty; rather it is the foundation or setting for it141. The duty of care is said to arise independently of the statute142. The existence of statutory powers is necessary, but not sufficient, to give rise to a duty of care143. No guiding principle, by which an authority might be considered to be obliged to exercise its powers at common law, has been identified; the search continues144. There is agreement that the statutory powers in question must be directed towards some identifiable class or individual, or their property, as distinct from the public at large145. 140 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 60 141 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 434 per Gibbs CJ, 459-460 per Mason J; and see Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 60 [163] per Gummow J. 142 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 575 [80] per 143 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 434 per Gibbs CJ; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 622 [289] per Hayne J; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 575-576 [80]-[81] 144 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 630 [316] per Hayne J. 145 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 40 [99] per McHugh J; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 633 [326] per Hayne J; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 562 [32] per Gleeson CJ, 575 [79] per McHugh J. Different factors have been identified, from time to time, as relevant to the existence of a duty of care. Not all have continued to be regarded as useful. Notions of proximity and general reliance are no longer considered to provide the answer to the question of whether an authority should be considered to have been obliged to exercise its powers. In this case the majority in the Court of Appeal identified as of particular relevance the vulnerability of the plaintiff's husband and the control that the officers had over the risk of harm which eventuated, because of the powers given by s 10. The majority emphasised that the Act intended those powers to be used to protect a person such as him. The vulnerability of a plaintiff was referred to in Pyrenees Shire Council v Day146 as an aspect of the plaintiff's supposed reliance upon an authority to use its powers147. A focus on vulnerability may in part explain the decision in Crimmins v Stevedoring Industry Finance Committee148. It has not been universally accepted as a useful analytical tool149. In Graham Barclay Oysters Pty Ltd v Ryan, Gummow and Hayne JJ treated the degree of a plaintiff's vulnerability as part only of an evaluation as to whether a relationship may be seen to exist between a statutory authority and the class of persons in question150. Establishing the existence of a relationship between a plaintiff and a public authority has the advantage of coherence with the exceptions, already recognised by the common law, to the general rule that there is no duty of affirmative action. 146 (1998) 192 CLR 330; [1998] HCA 3. 147 See Pyrenees Shire Council v Day (1998) 192 CLR 330 at 361 [77] per Toohey J, 372-373 [116] per McHugh J. And see also Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 24 [43] per Gaudron J and the cases therein cited, in particular Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; [1994] HCA 13; Hill v Van Erp (1997) 188 CLR 159 at 186 per Dawson J, 216 per McHugh J; [1997] HCA 9; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 194 [11] and 195 [13] per Gleeson CJ, 202 [41]-[42] per Gaudron J, 236 [149]-[151] per McHugh J, 259 [216] per Gummow J, 289 [296] per Kirby J and 328 [416] per Callinan J; [1999] HCA 36. See also Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 577 [84] per McHugh J, 631-632 [254] per Kirby J and 664 148 (1999) 200 CLR 1 at 24-25 [43]-[44] per Gaudron J, 40-41 [100] per McHugh J, 85 149 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 627 [308] per Hayne J. 150 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 597-598 [149]. Reference was made in the judgment of Warren CJ in the Court of Appeal to a class of persons, which included the plaintiff's husband, who might be described as "especially vulnerable"151. But her Honour did not connect that vulnerability to a concept such as reliance or to the existence of a relationship. The point made by her Honour was that the Act had a specific class in contemplation as the object of the power provided for in s 10, which is an exercise in statutory interpretation. A relationship might be seen to arise when an authority has commenced exercising its powers towards a class of individuals. In Pyrenees Shire Council v Day152 McHugh J referred to the Council's "entry into the field of inspection" as connected with the reliance of persons upon the Council to protect them from danger153. Warren CJ referred to the police officers in this case as having "entered the field"154. This overlooks the fact that the allegation and the evidence in this case were that the power in question was not used at all. The measure of control which may be provided by a statute, with respect to the safety of persons or property, has been considered to be indicative of a duty of care155. It was influential to the reasoning of both Warren CJ and Maxwell P in the Court of Appeal. Maxwell P in particular emphasised that the police officers had legal authority to exercise control over the risk that the plaintiff's husband might commit suicide and could do that which no other person could, without exposure to civil liability, namely apprehend a person, using such force as was necessary156. In Pyrenees Shire Council v Day157 Gummow J considered that the measure of control which the Council had with respect to the prevention of fire, and which included its knowledge of the risk to the plaintiff's property, was the 151 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,309 [64]. 152 (1998) 192 CLR 330. 153 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 372 [115]. 154 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,305 [44]. 155 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 389 [168] per Gummow J; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 61 156 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,315 [103]. 157 (1998) 192 CLR 330. touchstone of its liability158. In Brodie v Singleton Shire Council159 it was said that, whatever be the significance now of the distinction between misfeasance and non-feasance, powers may give a public authority such a significant and special measure of control regarding the safety of persons as to impose a duty on the authority to exercise them160. The importance of control as a basis for the existence of a duty of care was adverted to by Gleeson CJ in Graham Barclay Oysters Pty Ltd v Ryan161 and was referred to by Gummow and Hayne JJ as a factor of fundamental importance in discerning a duty of care on the part of a public authority162. Questions about the degree of a public authority's control over the risks to which a plaintiff was exposed will usually be answered by reference to the statute providing for those measures. Where a statute provides significant and special measures, which may be seen to be directed towards the risk of harm to a class of persons or property, attention is directed to the purpose for which the measures have been provided. If part of the rationale for excepting a public authority from the general rule of the common law, that no affirmative action is required, is the availability of statutory powers, their purpose must necessarily be considered. In the present case the majority in the Court of Appeal clearly considered it to be a matter of importance. The issue, as stated by Warren CJ, was whether a duty of care exists to exercise the statutory power for the purpose of protecting those whom the Act seeks to protect163. Maxwell P described the Act as one which contained health and safety powers to safeguard mentally ill people against the gravest of risks164. The evident purpose of statutory provisions, which might be utilised to prevent or minimise harm, has been identified as relevant to the existence of a duty of care in cases in this Court. The powers given to the Council in Pyrenees Shire Council v Day were considered by Gummow J to have been provided to 158 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 389 [168]. 159 (2001) 206 CLR 512. 160 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 559 [102] per Gaudron, 161 (2002) 211 CLR 540 at 558 [20]. 162 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 598 [150]. 163 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,305 [39]. 164 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,317 [115]. further the legislative purpose of fire prevention165. In Crimmins v Stevedoring Industry Finance Committee and again in Graham Barclay Oysters Pty Ltd v Ryan, McHugh J observed that some powers are clearly enough conferred because the legislature intends that the power will be exercised, in appropriate circumstances, to protect the specific class of persons or property166. His Honour considered that the judgment of Lord Hoffmann in Stovin v Wise167 should be understood in this way168. The duty alleged to arise in this case can be seen as referable entirely to the Act. In such a case factors such as control are neither independent of, nor external to, the statute. They are features of the statutory scheme itself. Putting to one side, for the moment, any distinction between power and duty, as the subjects of the two different causes of action, it may be observed that this case is analogous to one for breach of statutory duty. In particular, on the view taken by the Court of Appeal, the act to be performed is directed by the statute towards an identifiable class of persons which the Act intends to protect. The action for breach of statutory duty was described in Byrne v Australian Airlines Ltd169 in these terms: "A cause of action for damages for breach of statutory duty arises where a statute which imposes an obligation for the protection or benefit of a particular class of persons is, upon its proper construction, intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of a kind against which the statute was designed to afford protection." A comparison may be drawn between this action and that arising under German law. There a duty to take affirmative action, on the part of a public official or body, may arise from the protective purpose of a legislative rule which was created to prevent the mischief that occurred170. The focus of the German 165 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 391 [175]. 166 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 40 [99]; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 576 [82]. 168 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 576 [82]. 169 (1995) 185 CLR 410 at 424 per Brennan CJ, Dawson and Toohey JJ; [1995] HCA 170 Markesinis, Always on the Same Path: Essays on Foreign Law and Comparative Methodology, (2001), vol 2 at 262. courts is accordingly on the relevance and meaning of the official duty and the purpose it is to serve171. The principal control of actionability lies in the requirement that the duty be owed to an individual, as a member of a protected group. It is explained that this requirement is viewed much more strictly than in English law172. The requirement of legislative intention concerning the availability of a cause of action has been regarded as the defining feature of the action for breach of statutory duty. The difficulty, in most cases, of discerning an intention on the part of the legislature, that a remedy be provided to the persons to whom the statute might be seen as directed, was referred to by Dixon J in O'Connor v S P Bray Ltd173. His Honour observed that the legislature will rarely express such an intention. Resort has therefore often been had to presumptions or policy to supply the intention174. In cases where a statute provides significant and special measures for the protection of classes of persons or of property, the difficulty with ascertaining legislative intention may not be so acute, at least where it may be discerned that the legislature would have expected the powers to have been exercised in the circumstances which prevailed. Cases such as R v Deputy Governor of Parkhurst Prison; Ex parte Hague175 which state that an intention to protect individuals is not of itself sufficient to support an action for breach of statutory duty might be distinguished on this basis. The provisions in Pyrenees Shire Council v Day provide an example of a case where a legislative intent may have been inferred, although it was not necessary to resort to it in that case. There the plaintiffs did not rely upon breach of statutory duty to uphold the finding of liability, on the part of the Council, on the appeal to this Court, although they had pleaded that cause of action, in the alternative176. 171 Markesinis and Unberath, The German Law of Torts, 4th ed (2002) at 895; and see case note 132 at 953-956. 172 Markesinis, Always on the Same Path: Essays on Foreign Law and Comparative Methodology, (2001), vol 2 at 234, 235. 173 (1937) 56 CLR 464 at 477-478; [1937] HCA 18; and see Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405 per Kitto J; [1967] HCA 31. 174 O'Connor v S P Bray Ltd (1937) 56 CLR 464 at 478; and see Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405 per Kitto J. 175 [1992] 1 AC 58 at 170-171 per Lord Jauncey of Tullichettle. 176 See Pyrenees Shire Council v Day (1998) 192 CLR 330 at 350 [40] per Toohey J. The existence of a power coupled with a discretion may not suffice for an action for breach of statutory duty. The statute must oblige the exercise of those powers in the circumstances which prevail. In Sutherland Shire Council v Heyman177 Gibbs CJ observed that the relevant statutory provisions conferred powers on the Council but did not place it under a statutory duty which was required to be performed. The power given by s 10(1) of the Act is not expressed to oblige a police officer to apprehend a person who fulfils the description there provided – a mentally ill person who has recently attempted to suicide or to harm themselves or some other person or is likely to do so. There may be circumstances where those indicia are present but an officer is nevertheless justified in not apprehending a person178. This may account for the choice implied by the word "may" in the sub-section. The common law may not interfere with the exercise of a discretion179. No factors relevant to the exercise of such a discretion were said to be present in this case, if the power was enlivened. In Pyrenees Shire Council v Day180 Brennan CJ said that the existence of a discretion to exercise a power is not necessarily inconsistent with a duty to exercise it181. The case to which his Honour referred, Julius v Lord Bishop of Oxford182, whilst concerned with a matter of public law, the issue of a writ of mandamus, also involved the construction of a statutory provision which included the words "it shall be lawful" in connection with the exercise of power. The nature and object of a power, and the persons for whose benefit it is intended to be exercised, were matters which Earl Cairns LC considered might "couple the power with a duty" so as to oblige its exercise183. 177 (1985) 157 CLR 424 at 447. 178 As the reasons of Gummow, Hayne and Heydon JJ observe at [82]. 179 See Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 575 [80] per 180 (1998) 192 CLR 330. 181 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 346 [23]. 182 (1880) 5 App Cas 214. 183 Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 at 222-223 and see also at 225 and 227, 229-230 per Lord Penzance and 235 per Lord Selborne. The discussion to this point may not suggest as inappropriate the cause of action for breach of statutory duty where a statute contains special measures directed towards a class of persons, where its evident purpose is their protection and when it may be inferred that the legislature expects that the powers will be used in particular circumstances, although exercise of a discretion may impact upon the lastmentioned feature. The reasoning of the majority in the Court of Appeal may be seen as directed to the majority of these considerations. It is not necessary to determine whether all such features were present in this case, but not for the reason that the plaintiff eschewed reliance upon such an action. Regardless of which cause of action was appropriate to this case both required the power in s 10(1) to have been available for the police officers' use. A consideration of that sub-section, which was not undertaken by the majority, reveals that the power of apprehension was not enlivened. The power of apprehension in s 10(1) required, critically, that there be an opinion, held by a police officer, that the plaintiff's husband was mentally ill when he was observed. Depending on the circumstances, a person who has attempted, or is likely to attempt, suicide may or may not satisfy the criteria of mental illness in s 8. The majority were not correct to hold that s 10 is to be read as equating a person who has attempted or may attempt suicide with a person who is mentally ill184. The terms of s 10 and the definition of mental illness suggest to the contrary. It is not a sufficient condition that an officer be aware that the plaintiff's husband had recently contemplated suicide. The purpose of s 10(1) is to allow officers lawfully to apprehend a person who appears to be mentally ill and is also at risk of harm. Its purpose is not to prevent suicide. In this regard the Act does not deviate from the common law view of autonomy. The plaintiff's case was that the police officers should have formed the view that her husband was mentally ill, because it was apparent to them that he had taken steps towards suicide. An inquiry as to what the officers should have done may be relevant to whether there was a breach of a common law duty of care which has been found to exist. We are concerned with the anterior inquiry, whether a duty arose. From that point consideration may be given as to its content and to its breach. The latter issue, logically, does not answer those before it. The question of whether there was a duty at common law in this case requires, as a minimum, a power given by the statute. This is because it is the existence of a power, to avert the risk of harm, which would set the police officers apart from persons generally and the common law rule that no action is 184 Kirkland-Veenstra v Stuart (2008) Aust Torts Reports ¶81-936 at 61,308 [64] per Warren CJ, Maxwell P agreeing. required to protect others. It is the availability of such a power which may inform considerations as to the existence of a relationship and the ability to control the risk of harm which may be relevant to the existence of a duty. However, it is not the common law which determines whether the power is enlivened. It is the Mental Health Act which is the sole source of the power. That Act, by s 10, requires that a police officer hold an opinion that a person is mentally ill before the power of apprehension is available to the officer. In the present case neither officer held such an opinion. There was no issue raised as to the fact that such opinions were held185. It is difficult to see what such an issue might be, on the facts of this case. The opinions held by the police officers were considered and reasoned. The statute requires no more. Absent the holding of an opinion that the plaintiff's husband was mentally ill, the power to apprehend was not available. A condition necessary to the power did not exist in law186. It follows that, in the circumstances of this case, the statutory provisions supplied no relevant statutory power to which a common law duty could attach187. We agree with the orders proposed in the reasons of Gummow, Hayne and 185 As French CJ observes at [5]. 186 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1179 [73] per McHugh and Gummow JJ; 198 ALR 59 at 76; [2003] HCA 30. 187 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 609 [183] per

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND MBI PROPERTIES PTY LTD RESPONDENT Commissioner of Taxation v MBI Properties Pty Ltd [2014] HCA 49 3 December 2014 ORDER Appeal allowed. Set aside orders 1 to 4 of the orders made by the Full Court of the Federal Court of Australia on 18 October 2013 and, in their place, order that the appeal to that Court be dismissed. The appellant pay the respondent's costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation A H Slater QC with B C Kasep for the appellant (instructed by Australian Government Solicitor) J O Hmelnitsky SC with D P Hume for the respondent (instructed by Balazs Lazanas & Welch LLP) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v MBI Properties Pty Ltd Taxation – GST – A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("GST Act") – Supply of a going concern – Where respondent purchased premises subject to existing lease – Whether continuing observance of lessor's obligations constituted the making of supplies through an enterprise which were neither taxable supplies nor GST-free supplies – Whether respondent liable to an increasing adjustment under s 135-5 of GST Act – Whether respondent's intended supply of residential premises by way of lease was for a "price" within the meaning of s 9-75 of GST Act. Words and phrases – "GST", "increasing adjustment", "price", "supply of a going concern". A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 38-325, 40-35, FRENCH CJ, HAYNE, KIEFEL, GAGELER AND KEANE JJ. Introduction This appeal, from a decision of the Full Court of the Federal Court, concerns the characterisation, for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act"), of observance of obligations of lessor and lessee continued by operation of law following the sale and purchase of premises subject to an existing lease. MBI Properties Pty Ltd ("MBI") acquired three apartments in a hotel complex, each of which was subject to a lease entered into between the vendor, South Steyne Hotel Pty Ltd ("South Steyne"), and the operator of the hotel, Mirvac Management Ltd ("MML"). MBI, on acquiring the rights of the lessor, became the recipient of a "supply of a going concern" within the meaning of the GST Act. The primary question on the appeal to the Full Court concerned the construction and application of s 135-5(1)(b) of the GST Act and whether, by reason of MBI's assumption of the lessor's rights and obligations with respect to MML, it was thereafter making supplies through an enterprise to which the supplies related. Contrary to the conclusion reached by the Full Court, MBI was making such supplies, which were neither taxable supplies nor GST-free supplies. MBI was thereby subject to assessment for GST under the increasing adjustment provision in s 135-5 of the GST Act. Moreover, it could not be said that the rental payments under the lease were to be treated exclusively as consideration for the supply made at the time of the grant of the lease. As explained in these reasons, the appeal by the Commissioner of Taxation ("the Commissioner") against the decision of the Full Court must therefore be allowed. The reasons begin with a consideration of the relevant provisions of the GST Act. Legislative context Under the GST Act, an entity is liable to pay GST on any "taxable supply", and is entitled to an input tax credit on any "creditable acquisition". For each tax period applicable to the entity, amounts of GST are set off against amounts of input tax credits to produce a net amount, which may then be subject to adjustments. The net amount, as adjusted, is the amount which the entity must pay to the Commonwealth, or which the Commonwealth must pay to the entity, in respect of the period. Hayne Section 135-5 of the GST Act provides for an adjustment which can increase the net amount an entity must pay to the Commonwealth in respect of a tax period. The section provides that "[y]ou have an increasing adjustment if ... you are the recipient of a supply of a going concern ... and ... you intend that some or all of the supplies made through the enterprise to which the supply relates will be supplies that are neither taxable supplies nor GST-free supplies"1. The amount of the increasing adjustment is calculated by taking one tenth of the price of the supply in relation to which the increasing adjustment arises and multiplying it by "the proportion of all the supplies made through the enterprise that you intend will be supplies that are neither taxable supplies nor GST-free supplies, expressed as a percentage worked out on the basis of the prices of those supplies"2. MBI's liability to an increasing adjustment under s 135-5 is in contest in this appeal. To set the context for that contest it is necessary to refer to three important statutory terms and the general rule of liability under the GST Act. Section 9-10(1) defines the term "supply", which lies at the heart of this appeal, as "any form of supply whatsoever". Section 9-10(2), without limiting s 9-10(1), sets out particular examples of "supply". They include "a grant, assignment or surrender of real property"3, the "creation, grant, transfer, assignment or surrender of any right"4 and an entry into, or release from, an obligation to do anything or to refrain from an act or to tolerate an act or situation5. The other two important terms are "consideration" and "enterprise". "Consideration" includes "any payment, or any act or forbearance, in connection with a supply of anything"6. "Enterprise" means "an activity, or series of 1 Section 135-5(1). 2 Section 135-5(2). 3 Section 9-10(2)(d) — the expression "real property" being defined in s 195-1 to include any interest in or right over land. 4 Section 9-10(2)(e). 5 Section 9-10(2)(g). 6 Section 9-15(1)(a). Hayne activities, done" in any of a number of specified ways7. One of those ways is "on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property"8. The general rule of liability depends upon the concept of "taxable supply" in s 9-5, which uses each of the three preceding terms. That section provides in the relevant part that "[y]ou make a taxable supply if ... you make the supply for consideration ... and ... the supply is made in the course or furtherance of an enterprise that you carry on". The section adds the important qualification that "the supply is not a taxable supply to the extent that it is GST-free or input taxed". The general rule of liability is to be found in s 9-40: "[y]ou must pay the GST payable on any taxable supply that you make". The amount of GST so payable is set, by s 9-70, at "10% of the value of the taxable supply". The value of a taxable supply is set, by s 9-75, at ten elevenths of the "price", which the same section goes on to define. The relevant effect of that definition is that, where "the consideration for the supply" is confined to consideration expressed as an amount of money, the price is that amount. According to the general "attribution rule" in s 29-5, save where accounting occurs on a cash basis, "GST payable by you on a taxable supply" is attributable to the tax period in which any invoice is issued in relation to the supply or, in the absence of an invoice, in which any of the consideration is received for the supply. There are three special rules in the GST Act which are relevant to this appeal. The first is s 156-5, which provides that the "GST payable by you on a taxable supply that is made ... for a period or on a progressive basis ... and ... for consideration that is to be provided on a progressive or periodic basis ... is attributable, in accordance with section 29-5, as if each progressive or periodic component of the supply were a separate supply". For the purpose of that special rule, s 156-22 requires a supply "by way of lease" to be treated as a supply that is made on a progressive or periodic basis. The second relevant special rule is in s 40-35, which provides that one of the forms of supply that is ordinarily input taxed is a supply of "residential premises" that is a supply "by way of lease, hire or licence". The expression "residential premises" is defined in s 195-1 to mean land or a building which is 7 Section 9-20(1). 8 Section 9-20(1)(c). Hayne occupied, or intended to be and capable of being occupied, as a residence or for residential accommodation. As an input taxed supply, no GST is payable on a supply of residential premises by way of lease, and there is no entitlement to an input tax credit for anything acquired to make that supply. There is no dispute that the apartments leased to MML were "residential premises". The third relevant special rule is in s 38-325. It provides that one of the forms of supply that is ordinarily GST-free is "[t]he supply of a going concern". The expression "supply of a going concern" is defined in that section to mean a supply under an arrangement under which the supplier supplies to the recipient "all of the things that are necessary for the continued operation of an enterprise" which the supplier carries on or will carry on until the day of the supply. As a GST-free supply, no GST is payable on the supply of a going concern, and an entitlement for an input tax credit on anything acquired to make the supply is not affected. The acquisition by MBI of the lessor's rights under the leases over the three residential apartments which it acquired was the supply to it of a going concern. Section 135-5 sets out the circumstances in which the recipient of the supply of a going concern is subject to liability for GST under the "increasing adjustment" for which that section provides. The purpose of s 135-5 was explained in the Explanatory Memorandum to the Bill for the GST Act as being "to ensure that you account for GST in proportion to the ... input taxed use of a going concern that you acquire" by being subjected to an adjustment which "increases your net amount by an amount equal to the GST you would bear on the acquisition if it had been a taxable supply to you", with the result that "you only get a going concern GST-free to the extent that you intend to make taxable supplies with it"9. Section 135-5 applies if the recipient of a supply of a going concern intends that "some or all of the supplies made through the enterprise" will be supplies that are input taxed supplies, and that are therefore neither taxable supplies nor GST-free supplies. Where those conditions are met, and where all of the supplies that the recipient intends will be made through the enterprise will be input taxed supplies (that is, where the proportion of input taxed supplies expressed as a percentage worked out on the basis of the "prices" of those 9 Australia, House of Representatives, A New Tax System (Goods and Services Tax) Bill 1998, Explanatory Memorandum at [6.256]-[6.257]. Hayne supplies is 100%), the increasing adjustment to which the recipient will be subjected will be one tenth of the price of the supply of the going concern10. Factual context In 2000, South Steyne purchased a hotel complex in Manly, New South Wales, known as the Sebel Manly Beach Hotel. In 2006, a plan of strata subdivision was registered which divided part of the hotel complex into 83 strata lots, each comprising an apartment in the hotel complex. Later in 2006, South Steyne as "owner" and MML as "operator" entered into apartment leases in respect of each of the 83 strata lots. Under each apartment lease, the owner granted to the operator a lease of a lot comprising a specified apartment in the hotel complex for a term of ten years in consideration for the operator paying a monthly rent to the owner. Each apartment lease obliged the operator to use the apartment as part of a serviced apartment business (defined to mean the business of operating all of the lots in the strata plan in respect of which there were current leases as serviced apartments) and expressly provided that the operator was entitled to "occupy and use" the apartment for that permitted use "without interruption or interference by the [o]wner or any person claiming through the [o]wner". Each apartment lease also obliged the owner not to transfer title to the lot comprising the apartment unless the transfer was subject to the operator's rights under the apartment lease, and unless the transferee entered into an agreement with the operator in a specified form acknowledging that the apartment had been leased to the operator for use in the serviced apartment business and that ownership was subject to that lease. In October 2007, South Steyne sold three apartment lots to MBI. Each contract of sale contained provision for MBI to elect to participate in what was described as a management rights scheme (defined to mean the scheme of operating or promoting the relationship between the operator and the owner of a lot in relation to the operator managing and letting out the lot). Each contract of sale stipulated that, if MBI so elected, the lot was sold subject to the apartment lease and MBI as purchaser intended that the lot would be used by the operator pursuant to that scheme. MBI elected to participate in the management rights scheme referred to in the contract of sale. 10 Section 135-5(2). Hayne Litigious history In 2008, South Steyne and MBI were applicants in proceedings against the Commissioner in the Federal Court in which they sought declarations as to the characterisation for the purposes of the GST Act of what they identified as a number of categories of supply11. Amongst the categories of supply they identified were the sale of each apartment lot by South Steyne to MBI and what they described as "[t]he continuation of the leases of [the apartment lots] by MBI which, as purchaser of [the lots], took title subject to the ongoing lease of those [lots] to MML"12. The application was dismissed at first instance13. South Steyne and MBI were then appellants in an appeal to the Full Court. In South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation14, the Full Court allowed that appeal in part. The Full Court held that the apartment lots were residential premises within the meaning of the GST Act15. The Full Court also held that the sale of each apartment lot by South Steyne to MBI subject to an existing apartment lease was the supply of a going concern, constituted by South Steyne thereby supplying to MBI all of the things necessary for the continued operation of the enterprise comprising the serviced apartment business which South Steyne was to carry on until the completion of the contract 11 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 71 ATR 12 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 71 ATR 13 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 71 ATR 14 (2009) 180 FCR 409. 15 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 180 FCR Hayne of sale16. The Full Court, by majority, declared that the sale of each apartment lot was GST-free under s 38-325 of the GST Act17. As recorded by the primary judge and as noted in the Full Court in South Steyne, there was "no dispute between the parties that the purchase of the reversionary interest in the apartments by MBI effected a 'supply' by MBI in favour of MML"18. The dispute between the parties was as to the characterisation of that supply. Notwithstanding the common position of the parties, the Full Court in South Steyne held that MBI's purchase resulted in no supply at all by MBI to MML. The Full Court accepted that entering into each apartment lease constituted a supply by way of lease from South Steyne to MML. The Full Court also accepted that, by operation of law, each apartment lease continued after the sale of the corresponding apartment lot by South Steyne to MBI with MBI succeeding to the rights and obligations of the owner under the lease. That continuation of each apartment lease by operation of law, each member of the Full Court held, was insufficient to result in a supply by MBI to MML19. The Full Court having held in South Steyne that the sale of each apartment lot by South Steyne to MBI subject to an apartment lease was a GST-free supply of a going concern, and that the lots were residential premises, the Commissioner assessed MBI to GST on the basis of MBI having an increasing adjustment under s 135-5. On disallowance of MBI's objection to that assessment, MBI appealed to the Federal Court. MBI's appeal was dismissed at first instance20, but allowed 16 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 180 FCR 17 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 180 FCR 18 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 180 FCR 19 South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation (2009) 180 FCR 20 MBI Properties Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶20-372. Hayne on further appeal to the Full Court21. The Full Court set aside the objection decision and allowed MBI's objection to the assessment. At neither stage of the proceedings on MBI's appeal to the Federal Court from the disallowance of its objection to the assessment did the Commissioner challenge the earlier holding of the Full Court in South Steyne that the continuation of each apartment lease after the sale of the corresponding apartment lot by South Steyne to MBI did not result in a supply by MBI to MML. The Commissioner at each stage argued instead that continuation of the apartment lease resulted in a continuation of an input taxed supply of residential premises by way of lease from South Steyne to MML22. The Commissioner's argument was accepted by Griffiths J at first instance23, but was rejected by the Full Court. Edmonds J, with whom Farrell and Davies JJ agreed, said24: "The lease is the subject of the supply, not the 'supply'; the 'supply' is the grant of the lease: see s 9-10(2)(d) of the GST Act. The act of grant does not continue for the term of the lease; the 'supply' is complete on the lease coming into existence. The 'supply' constituted by the grant of the lease did not continue beyond the grant; the fact that the lease continued was solely a function of the terms of the grant, not a continuing supply by the grantor." "If the 'supply' constituted by the grant of the lease did not survive the grant", Edmonds J continued, "it certainly did not survive the sale of the reversion from 21 MBI Properties Pty Ltd v Federal Commissioner of Taxation (2013) 215 FCR 65. 22 MBI Properties Pty Ltd v Federal Commissioner of Taxation (2013) 215 FCR 65 at 23 MBI Properties Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶20-372 at 24 MBI Properties Pty Ltd v Federal Commissioner of Taxation (2013) 215 FCR 65 at Hayne South Steyne to MBI"25. That result, Edmonds J said, was "totally consistent" with South Steyne26. The Full Court's conclusion that there was no supply at all in respect of each lease following the sale of each apartment lot by South Steyne to MBI meant that there was no input taxed supply which MBI could have intended would be made through any enterprise it acquired from South Steyne as a going concern. That meant in turn that the conditions for the operation of s 135-5 were not met, and that there was accordingly no increasing adjustment. This appeal This appeal, by special leave, is from the decision of the Full Court which allowed MBI's appeal, set aside the objection decision and allowed MBI's objection to the Commissioner's assessment of MBI to GST on the basis of MBI having an increasing adjustment under s 135-5. In it, the Commissioner abandons the argument he put at each stage of the proceedings on MBI's appeal in the Federal Court. The Commissioner now challenges the conclusion of the Full Court in South Steyne that the continuation of each apartment lease after the sale of the apartment lot subject to the apartment lease by South Steyne to MBI did not result in MBI making any supply to MML. The continuation of each apartment lease, the Commissioner now argues, resulted in an input taxed supply of residential premises by way of lease by MBI to MML. The litigious history does not preclude the Commissioner from putting that new argument. The Commissioner's new argument commences by pointing out that, from the time of grant by South Steyne to MML, each apartment lease had the dual character of an executed demise and an executory contract27: as an executory contract, the apartment lease obliged the owner to continue to give the operator use and occupation of the apartment lot throughout the term of the lease in consideration of the periodic payment of rent. The Commissioner next points out 25 MBI Properties Pty Ltd v Federal Commissioner of Taxation (2013) 215 FCR 65 at 26 MBI Properties Pty Ltd v Federal Commissioner of Taxation (2013) 215 FCR 65 at 27 Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers Appointed) (In liq) (2013) 88 ALJR 132 at 140-141 [39]-[40], 144-145 [62]-[67]; 304 ALR 80 at 88, 93-94; [2013] HCA 51. Hayne that MBI became subject to that continuing obligation by operation of law on the sale of the apartment lots subject to the apartment leases by South Steyne to MBI28. The Commissioner argues that MBI's intended observance of that continuing obligation to give MML use and occupation of the apartment lot is properly characterised as an intended supply by MBI to MML of use and occupation of the apartment lot. The apartment lots being residential premises, and the supply occurring through the medium of the lease, the intended supply by MBI to MML was an input taxed supply by operation of s 40-35. MBI does not dispute that each apartment lease had the character of both an executed demise and an executory contract. Nor does MBI dispute that, on the sale of each apartment lot, MBI succeeded by operation of law to the obligation to continue to give MML use and occupation of the apartment lot under the lease. What MBI disputes is the characterisation for the purposes of the GST Act of its observance of that continuing obligation. MBI points out that observance of its continuing obligation to give MML use and occupation of each apartment lot involved no action on its part. MBI argues that mere passive observance of an existing obligation is insufficient to give rise to a supply within the meaning of s 9-10; for there to be a supply something must be done by the supplier. Even if observing its obligation to give use and occupation of the apartment lot were sufficient to constitute a supply, MBI goes on to argue, it would not be a supply made through an enterprise and it would not be a supply of residential premises within the meaning of s 40-35: the supply to which that section refers is not the supply of premises or of the use of premises but the supply of a right to use premises; here MML already had that right. MBI does not dispute that the conditions for the operation of s 135-5 were met if its observance of the obligation to give use and occupation of each apartment lot was sufficient to give rise to a supply of residential premises by way of lease to MML. That is to say, MBI does not dispute that the supply was one which MBI intended would be made through the enterprise it acquired from South Steyne as a going concern. But MBI has a fall-back argument reflected in its notice of contention. The argument is that no increasing adjustment can be calculated using the 28 Section 40(3) of the Real Property Act 1900 (NSW) and s 118 of the Conveyancing Act 1919 (NSW). Hayne formula set out in s 135-5. That is because the formula requires the existence of a price for the intended supply. MBI argues that the rent to be paid to MBI by MML remains exclusively the price for the earlier supply constituted by the grant of the apartment lease by South Steyne to MML and cannot also be the price for any supply by MBI to MML. That must be so, according to MBI, because the general operation of the GST Act is to avoid double taxation by implicitly requiring that any one amount of consideration only ever be the price of one supply. A single payment in connection with two or more sequential supplies can only ever be treated as the price of the earliest of those supplies and cannot also be treated as the price of the later supplies. Issues The issues in the appeal can therefore be crystallised as follows: Whether MBI, as purchaser of the reversionary estate in the leased apartments, made a "supply" (as defined in the GST Act) to MML as tenant during the currency of each lease after completion of the purchase. Whether, if MBI did make a relevant supply to MML, there was any "price" for the supply for the purpose of calculating an increasing adjustment under s 135-5(2). Did MBI intend to make a supply of residential premises to MML? Federal Commissioner of Taxation v Qantas Airways Ltd29 shows that it is wrong to consider that one transaction must always involve the making of just one supply. It is similarly wrong to consider that the making of a supply must always involve the taking of some action on the part of the supplier. The concept of supply as employed in the GST Act is of wide import. Absent modification of the general operation of the GST Act through application of a special rule, there is a supply whenever one entity (the supplier) provides something of value to another entity (the recipient). Section 9-10(1), the amplitude of which is highlighted by ss 9-10(2) and 9-10(3), serves to emphasise that the something can be anything and can be provided by any means. The expansive language of ss 9-10(2)(g) and 9-10(3) serves in addition to emphasise that the thing provided can be provided by means of the supplier refraining from 29 (2012) 247 CLR 286; [2012] HCA 41. Hayne acting, or by means of the supplier tolerating some act or situation, just as it can be provided by means of the supplier doing some act. A transaction which involves a supplier entering into and performing an executory contract will in general involve the supplier making at least two supplies: a supply which occurs at the time of entering into the contract, in the form of both the creation of a contractual right to performance and the corresponding entering into of a contractual obligation to perform; and a supply which occurs at the time of contractual performance, even if contractual performance involves nothing more than the supplier observing a contractual obligation to refrain from taking some action or to tolerate some situation during a contractually defined period. That general observation applies as much to a lease as to another executory contract. There will in general be a supply which occurs at the time of entering into the lease. That supply will involve a grant within the scope of s 9-10(2)(d) combined (as contemplated by s 9-10(2)(h)) with the creation of contractual rights within the scope of s 9-10(2)(e) and with the entry into contractual obligations within the scope of s 9-10(2)(g). There will then be at least one further supply which occurs progressively throughout the term of the lease. That supply will occur by means of the lessor observing and continuing to observe the express or implied covenant of quiet enjoyment under the lease. The thing of value which the lessee thereby receives is continuing use and occupation of the leased premises. The special attribution rule in s 156-5, made applicable to a supply by way of lease by s 156-22, does not alter those aspects of the general operation of the GST Act. In observing and continuing to observe the express or implied covenant of quiet enjoyment under the lease, the lessor is appropriately characterised, for the purposes of the GST Act, as engaging in an "activity" done "on a regular or continuous basis, in the form of a lease". The result is that, whether or not the lessor might also be engaged in some other form of enterprise, the lessor makes the supply of use and occupation of the leased premises in the course of the lessor carrying on an enterprise as defined in s 9-20(1)(c). Once the general operation of the GST Act is understood in that way, it is apparent that there is no warrant in the text or policy of the GST Act for reading the reference in the special rule in s 40-35 to a supply of "residential premises" that is a supply "by way of lease" as referring to the supply which occurs at the time of entering into the lease but not as referring to the further supply which occurs by means of the lessor observing and continuing to observe the express or Hayne implied covenant of quiet enjoyment under the lease. The reference encompasses both, and both are therefore input taxed. lease as the grant of The text of s 40-35 supports the view that the Full Court was wrong to focus exclusively on the relevant supply. the Section 40-35(1) describes the circumstances in which "[a] supply of premises that is by way of lease, hire or licence" is input taxed. A lease (which operates as a grant of an estate) and a hiring and a licence (which do not) are all treated by s 40-35 as species of supply. That treatment suggests that the circumstance that a lease characteristically operates as a grant of an estate (as well as an executory contract) is no reason to deny that observation of obligations to provide the use of premises over time is a supply of the premises. In the circumstances which gave rise to the present appeal, there was an input taxed supply of residential premises by way of lease which occurred at the time of the grant of each apartment lease by South Steyne to MML. There was then a further input taxed supply of residential premises by way of lease which occurred by means of South Steyne observing its express obligation under the lease to provide MML with use and occupation of the leased premises. MBI's assumption of that express obligation by operation of law on its purchase of the premises from South Steyne resulted in MBI becoming obliged to continue to make the same further input taxed supply of residential premises by way of lease to MML throughout the remaining term of the lease. MBI intended at the time of purchase to observe that ongoing obligation. MBI intended to do so through an enterprise which was the same enterprise as that in which South Steyne had previously engaged and which MBI, by purchasing the premises subject to the lease, had acquired from South Steyne as a going concern. The Full Court in the present case was wrong to reason that the only relevant supply was on the grant of the lease by South Steyne to MML, and the Full Court in South Steyne was wrong to conclude that MBI made no supply to MML. Was MBI's intended supply for a price? The definition of price in s 9-75 (referring to the consideration for a taxable supply) and the definition of consideration in s 9-15(1)(a) (extending to any payment in connection with a supply of anything) contain nothing to suggest a need to establish an exclusive connection between a particular payment and a particular supply for the amount of that payment to be the price for that supply within the general operation of the GST Act. Hayne Establishment of such an exclusive connection is not required in order to avoid double taxation. The general operation of the GST Act avoids double taxation not by establishing an exclusive connection between a particular amount of consideration and a particular supply but rather by establishing an exclusive connection between a particular amount of consideration and a particular tax period. The scheme of the GST Act is that, subject to the operation of any applicable special rule, it is s 29-5 which makes GST payable only once, in the tax period of the first payment or invoice. That explanation of the role of s 29-5 was adopted in Qantas Airways30. Earlier observations in Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd31 were directed to the operation of special rules applicable to a deposit held as security for the performance of an obligation32, not to the general operation of the GST Act. MBI's intended supply of residential premises by way of lease to MML was for a price: the rent to be paid to MBI by MML in observance of MML's continuing obligation under the apartment lease. That is so whether or not that rent can be said also to have been payable in connection with South Steyne's grant of the apartment lease to MML. Conclusion The conditions for the operation of s 135-5 were met, and the Commissioner was correct to assess MBI to an increasing adjustment under that section. MBI's appeal from the disallowance of its objection to that assessment should have been dismissed. The Commissioner having undertaken not to seek to disturb the orders for costs made by the Full Court and to pay the costs of MBI irrespective of the outcome of the appeal, the appropriate orders are: (1) Appeal allowed. 30 (2012) 247 CLR 286 at 290 [5], 293-294 [19]. 31 (2008) 236 CLR 342 at 346 [4]-[5], 347 [12], 356 [41]-[42]; [2008] HCA 22. 32 Division 99. Hayne Set aside orders 1 to 4 of the orders made by the Full Court of the Federal Court of Australia on 18 October 2013 and, in their place, order that the appeal to that Court be dismissed. The appellant pay the respondent's costs of the appeal to this Court.

HIGH COURT OF AUSTRALIA APPELLANT AND CHIEF COMMISSIONER OF STATE REVENUE RESPONDENT Maurici v Chief Commissioner of State Revenue [2003] HCA 8 13 February 2003 ORDER Appeal allowed. Orders 2 to 5 of the orders of the Court of Appeal of New South Wales made on 20 June 2001 be set aside, and in their place, order that the appeal from the orders of Cowdroy J of the Land and Environment Court made on 23 December 1999 be dismissed with costs. Respondent to pay the costs of the appeal to this Court and the Court of Appeal of New South Wales. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with I McN Jackman SC for the appellant (instructed by Speed & Stracey) B J Preston SC with J B Maston for the respondent (instructed by the Crown Solicitor for the State of New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Maurici v Chief Commissioner of State Revenue Land tax – Valuation of land – Improved residential property in Sydney – Assessment of unimproved value of land – Whether s 6A(1) Valuation of Land Act 1916 (NSW) includes use of improved land sales – Relevance of "scarcity" – Valuation by reference substantially or exclusively to sales of unimproved land invalid. Practice and procedure – Appeals – s 56A Land and Environment Court Act 1979 (NSW) – Question of law – Principles of assessment of land value – Relevance of scarcity. Land and Environment Court Act 1979 (NSW), s 56A. Land Tax Management Act 1956 (NSW), s 56. Valuation of Land Act 1916 (NSW), ss 4(1), 5, 6A(1). McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ. The question in this appeal is whether, in fixing the unimproved value of an improved parcel of land under the Land Tax Management Act 1956 (NSW) in accordance with s 6A of the Valuation of Land Act 1916 (NSW) as the former requires, it is right to have regard exclusively or virtually exclusively to sales of scarce unimproved parcels of land in the same locality as the relevant land. Facts and previous proceedings The appellant is the owner of a parcel of waterfront land at Hunters Hill, a long settled residential suburb of Sydney in which there are very few, vacant, residential sites. An assessment of land tax was made on 8 September 1998 on the basis of the unimproved value of the appellant's land of $2,440,000 as at 1 July 1997. The appellant objected to the valuation. The Chief Commissioner of State Revenue disallowed the objection. In doing so he said this: "The Court has held that the best method of determining land value is by direct comparison with sales of vacant land. Sales evidence does not need to be perfectly comparable to be valuable to the analysis of the market. It is the task of the professional land valuer to examine the available evidence, interpret the vacant land market as at 1 July each year and establish value levels for each type of property liable for land tax. The valuers are well aware that substantial increases to previous levels will be questioned and all values must be well supported by sales evidence." (emphasis added) On 26 August 1999 the Valuer General informed the appellant that the valuation would be reduced to $2,000,000. The appellant appealed to the Land and Environment Court against the Chief Commissioner's decision pursuant to s 38 of the Valuation of Land Act. The appeal, which was heard by Commissioner Nott, was on several grounds of which only one remains live in this appeal. The appellant contended that the valuation should be reduced to $1,250,000. He argued that the appropriate method of valuation required that an estimation be made of the value of the improvements, consisting mainly of a substantial house, and that that estimate be deducted from the notional selling price of the property in its fully improved state to derive the unimproved value. The respondent relied on the evidence of a valuer, Mr Croker. His opinion as to the appropriate method of valuation echoed what the Chief Commissioner had said in his rejection of the appellant's objection. He compared McHugh Kirby Hayne Callinan the appellant's notionally unimproved site with two other vacant sites which had recently been sold, and another vacant site which had been sold and resold after a relatively brief period. He said that he relied on the sale and the resale as evidence of value to a much lesser extent than the two other sales. That he was effectively disregarding sales of improved lands, and that he considered he was obliged to do so by the Act, was made clear from a passage in his evidence during cross-examination: "Q Yes, well that's what I'm saying to you, you're saying that what the Valuer-General does is that in considering each block, if, for example, one's dealing with a largely built-up suburb, he notionally imagines that has the only or one of the very few vacant blocks available in the area, and he attributes the scarcity value that it would have if it were actually vacant on the market to its value for the purposes of s 6A? That's right, we must by the way the Act's worded. And he goes on and he does that for each block, one after the other? That's correct. So every single block has got a notional component for scarcity value? That's right. Even though in fact they're all built on, and even though, if they were all vacant at the same time, they obviously wouldn't possess that premium? That's correct. And so therefore one either had to do one of two things, one had to go to sales of vacant land further from the range, or one had to use improved properties and engage in some form of deduction of notional-- A Well I disagree with that. In evidence I've already given to the Court I've made the statement that in my view, and the Court's McHugh Kirby Hayne Callinan upheld that too, it's not just my isolated opinion, it is far better to analyse sales remote in time and even in place of vacant land than it is to attempt to analyse improved sales." (emphasis added) Commissioner Nott accepted, subject to some minor adjustments, Mr Croker's method of valuation as the correct one by reducing the unimproved value of the land by $50,000 only, to $1,950,000. In doing so he rejected a submission by the appellant made on the basis of the exchanges in cross-examination that we have quoted1: "A novel submission was made by Mr Birch of counsel for the applicant: if a vacant land sale, such as of 30B Viret Street (having no house on it) was used to derive the land value, then an (unspecified) deduction should be made from the land value, because of the general scarcity of vacant land in the Hunters Hill Municipality. It was further submitted that such a deduction would not have to be made if sales of improved properties were used, as the improved sales (of which there were many) would not include a premium for scarcity." An appeal lay, and was taken from that decision to a judge of the Land and Environment Court on a question of law pursuant to s 56A of the Land and Environment Court Act 1979 (NSW). We do not doubt that the question argued there, and again here, as to the relevance of scarcity, was a question of at least mixed law and fact. The making of a valuation will frequently involve an application of legal principle or principles. Questions of law, fact and opinion do not always readily and neatly divide themselves into discrete matters in valuation cases and practice2. The Privy Council took this view, with which we respectfully agree, of what may constitute a point, or question of law in relation to a valuation of land, in Melwood Units Pty Ltd v Commissioner of Main Roads3: 1 Maurici v Chief Commissioner of State Revenue unreported, Land and Environment Court of New South Wales, 6 October 1999 at [72]. 2 Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 266 [276]; 167 ALR 575 at 651. [1979] AC 426 at 432 per Lord Russell of Killowen. See also The Commonwealth of Australia v Arklay (1952) 87 CLR 159 at 174-175 per Dixon CJ, Williams and Kitto JJ citing Commissioner of Succession Duties (SA) v Executor Trustee and (Footnote continues on next page) McHugh Kirby Hayne Callinan "If it should appear that the Land Appeal Court ignored a principle of assessment of compensation for compulsory acquisition (resumption), such as for example that commonly known as the Point Gourde principle, that in their Lordships' opinion would be an error in law. So also if the Land Appeal Court rejected as wholly irrelevant to assessment of compensation a transaction which prima facie afforded some evidence of value and rejected it for reasons which were not rational, that in their Lordships' opinion would be an error in law. And as will be seen, it is on those lines that the developer contends that the Land Appeal Court erred in this case." Cowdroy J accepted the appellant's argument as to the relevance of the scarcity of vacant allotments and allowed the appeal. His Honour said this4: "The appellant submits that the sales of the vacant parcels of land were unduly inflated and therefore unreliable as comparable sales due to a 'scarcity factor'. Such argument is based upon an answer in cross- examination of the respondent's valuer in which he acknowledged that a scarcity factor was a known component of vacant land sales in the Sydney metropolitan area and that such factor might be incorporated in the valuations of the Valuer General made pursuant to s 6A of the [Valuation of Land Act]. Commissioner Nott declined to make any deduction in the comparable sales of vacant land because of the scarcity factor. With the exception of one property which had erected upon it a derelict but substantial house, all of the comparable sales relied upon were of vacant lots. To this challenge the respondent submits that the selection of the is not unreasonable within properties by Wednesbury sense and that no error of law is demonstrated. the Commissioner Whilst there is nothing to suggest that such sales do not represent a comparable sale for use in assessing the value of the appellant's land, it is Agency Co of South Australia Ltd (1947) 74 CLR 358 at 367 per Latham CJ, Rich 4 Maurici v Chief Commissioner of State Revenue (1999) 105 LGERA 318 at 322- McHugh Kirby Hayne Callinan not clear from the judgment whether the Commissioner paid any regard to the remaining valuations and if he did, the extent of such consideration. The learned Commissioner said that he reached his conclusion 'principally' upon the first six valuations. Had it not been for the acknowledgment by the respondent of the existence of the scarcity factor, this ground would be rejected. However as it is acknowledged to exist and as it is not clear whether such factor has caused the sales of vacant parcels of land to be inflated, this issue must be addressed. I uphold this ground of appeal." The Court of Appeal of the Supreme Court of New South Wales to which the respondent then appealed took a different view from Cowdroy J. There, Handley JA with whom Beazley JA and Giles JA agreed, said this5: "There can be no doubt that the result contended for by the Chief Commissioner is artificial and leads to higher land values. He contends that the statutory assumption in s 6A(1) ('assuming that the improvements … had not been made') must be applied property by property. By doing this each developed parcel in Hunter's Hill municipality attracts the scarcity premium commanded by the few vacant parcels which would not exist if every parcel was undeveloped. This method of valuation is also said to be unfair because the taxpayer could not realise this scarcity premium on a sale of his developed block. The taxpayer's argument for excluding the effect of the scarcity factor when determining the land value is contrary to the text of s 6A(1). The land value is the price that the land would realise on sale 'assuming that the improvements … other than land improvements … had not been made'. The hypothetical sale is of vacant land, and if vacant land commands a premium in the market, the hypothetical sale would realise that premium. No such assumption is required to be made about any other land. The result therefore is that the subject land is to be valued as vacant, but located in the neighbourhood as it exists in the real world. 5 Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 at 681 McHugh Kirby Hayne Callinan The question is actually covered by the decision in Tetzner v Colonial Sugar Refining Co Ltd6 where Lord Keith of Avonholm, speaking for the Judicial Committee said, in relation to similar legislation: '… What … is required … is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer's computation. The land will then be valued as land void of buildings but situated in the community with the amenities and facilities which have grown up around it. Their Lordships see no objection in the process of valuation to regarding the land as land situated in a sugar town. The valuer need not shut his eyes to the fact that there is a sugar manufacturing industry in existence.' Equally it may be said in the present case that the valuer need not shut his eyes to the fact that Hunter's Hill exists as a developed residential suburb. The taxpayer's third challenge to the valuation adopted by Commissioner Nott must also be rejected. Leave to appeal from the decision of Cowdroy J in this respect should be granted and the appeal should be allowed." The appellant repeated the arguments in this Court that he raised in the Land and Environment Court and the Court of Appeal. The applicable legislation Section 567 of the Land Tax Management Act relevantly provided that s 6A of the Valuation of Land Act applied to the determination of land value for the purposes of the former. That does not mean however that other sections of the latter not expressly so applied are irrelevant: they may, for example, assist in construing s 6A itself. The definition of "land improvements" in s 4(1) of the Valuation of Land Act should first be noticed: "Land improvements means: the clearing of land by the removal or thinning out of timber, scrub or other vegetable growths, [1958] AC 50 at 57. 7 Repealed by the Valuation of Land Amendment Act 2000 (NSW), Sched 3. McHugh Kirby Hayne Callinan the picking up and removal of stone, the improvement of soil fertility or the structure of soil, the restoration or improvement of land surface by excavation, filling, grading or levelling, not being works of irrigation or conservation, (d1) without limiting paragraph (d), any excavation, filling, grading or levelling of land for the purpose of the erection of a building, structure or work, not being for the purpose of irrigation or conservation, the reclamation of land by draining or filling together with any retaining walls or other works appurtenant to the reclamation, and underground drains." It is plain that the definition is of improvements effected on and to an actual parcel of land itself, and not improvements external to the land. This appears from, among other things, the reference to "excavation, filling, grading or levelling of land for the purpose of the erection of a building" and the absence of any reference to any externalities to the land, such as roads and other services. Section 5 of the Valuation of Land Act defines improved value of land. "(1) The improved value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require. In determining the improved value of any land being premises occupied for trade, business, or manufacturing purposes, such value shall not include the value of any plant, machines, tools, or other appliances which are not fixed to the premises or which are only so fixed that they may be removed from the premises without structural damage thereto." Section 6A of the Act provides as follows: "(1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would McHugh Kirby Hayne Callinan require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made. (2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that: the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used, but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made. (3) Notwithstanding anything in subsection (1), in determining the land value of any land, being land in relation to which, at the date to which the valuation relates, there was a water right: the land value shall include the value of the right, and it shall be assumed that the right shall continue to apply in relation to the land." The first step to be taken under s 6A is to identify what is capable of being regarded as improvements, "other than land improvements". The second step is notionally to remove the improvements from the land. It is at the third point that difficulties arise. How is the land in its notionally unimproved state to be valued? The traditional, and usually unexceptionable method is to seek out relatively contemporaneous sales of comparable properties between parties at arm's length, unaffected by special circumstances, such as, for example, a strong desire by a purchaser to buy an adjoining property, and to use those sales as a yardstick for the valuation of the relevant land. The method adopted by the respondent suffered, in our opinion, from these defects. It was unduly selective. It looked, on a fair reading of Mr Croker's McHugh Kirby Hayne Callinan evidence, effectively exclusively to four sales (including a resale) only. Those were sales of vacant or substantially vacant land. They were not representative of sales in Hunters Hill. That must be so, because, as both sides accept, vacant land in Hunters Hill is scarce, if not to say, very scarce. The approach of the respondent, taken to its ultimate conclusion would mean that if there were one only (reasonably comparable, in location, outlook and other relevant features) vacant parcel of land left in a district, the likely or actual recent sale price of that parcel would effectively set the value for each and every improved parcel of land in that district. The respondent accepted that the valuer called on his side, not only valued the subject land as if its improvements had been shorn from it, but also as if it, now, a notionally unimproved, and therefore vacant site, was as scarce as the vacant sites the subject of the sales to which he said he had primary, but to which he effectively had exclusive regard. No attempt, it may be observed, was made by the respondent, to resolve the inherent paradox that as every improved parcel of land would be required to be treated in an equivalent way, the consequence would be that all parcels were notionally vacant and that there would no longer be any scarcity of vacant land. The respondent further submits that the exercise he undertook is the one that s 6A(1) requires be undertaken. And it was that exercise and the result which it produced which were approved by Commissioner Nott and the Court of Appeal. Section 6A certainly does not dictate that that exercise be undertaken. In valuing the land, the respondent's valuer, to use the language of the Privy Council in Melwood, "ignored a principle of assessment of [value]", the principle being, that sales to be treated as comparable sales need to be truly comparable; or, to put it another way, in valuing the land the respondent's valuer did not proceed rationally, in that he was unreasonably selective in ultimately confining himself to two sales of scarce vacant land for the purposes of the comparison. The respondent could not, and did not suggest that he would be performing his statutory duty if he made other than a fair estimate of the value of the subject land. A fair estimate could only be made here on the basis of a fair, that is to say, a reasonably representative group of comparable sales. A group of comparable sales cannot be representative if it does not go beyond sales of scarce vacant land. That is not to say that sales of comparable vacant land may not provide useful evidence of value. But as J F N Murray observes in Principles and Practice of Valuation8 in discussing valuations under federal land tax legislation of land in its notionally unimproved state, "sale evidence [must be] relevant and sufficient in volume" (emphasis added). So too, sales relied on, such as of scarce 8 4th ed (1969) at 120. McHugh Kirby Hayne Callinan vacant land, are likely to be to a special and different class of buyer from buyers of improved land. As Waddell J said in Sher v The Commissioner for Main Roads9, sales of properties of a different character are likely to attract a different class of buyer and are unlikely to provide a reliable indication of value. Conclusion and disposition of the appeal Improved sales are used daily for the purposes of statutory valuations under provisions similar to s 6A(1) of the Valuation of Land Act, by subtracting the added value of the improvements to them from their sale prices to derive unimproved values. It may be that in such a desirable area as Hunters Hill where there are apparently many mansions, their presence and the presence of lesser houses may add little, or much less than replacement value to the sale prices of the land on which they stand. But that does not mean that the respondent is entitled to ignore reasonably contemporaneous sales of comparable improved land. Such sales, particularly in the case of a scarcity of vacant land cannot be disregarded. The contrary approach is required by the Act. The Court of Appeal was of the opinion that the question raised in this appeal was governed (adversely to the appellant) by the decision of the Privy Council in Tetzner v Colonial Sugar Refining Co Ltd10, particularly by the observations of Lord Keith of Avonholm11 to which Handley JA referred. Nothing that was said by his Lordship in Tetzner bears upon the way in which a valuer should go about the task of selecting and applying comparable sales under the applicable legislation. The appellant does not suggest, to borrow his Lordship's words, that the valuer should close his eyes to any relevant fact. Indeed the contrary is the case. It is, the appellant submits, the respondent's valuer who closed his eyes to relevant matters. He should have had regard to all of the relevant facts including the scarcity of vacant land, the possibility of a particular and limited class of persons in the market for it, the scarcity or otherwise of improved land, the added value of the improvements to comparable lands, and in particular, truly comparable sales, which ideally would include like land similarly improved to the subject land. And whilst it is true that s 6A is (1975) 24 The Valuer 150 at 151. 11 [1958] AC 50 at 57. McHugh Kirby Hayne Callinan intended to apply to each valuation made under it, its statutory operation in relation to all valuations, that is, all pieces of land to be valued, is another factor which cannot be ignored, and requires that a scarcity of vacant sites not be the determinant factor in valuations made under the Act. The Court of Appeal erred in upholding the respondent's appeal to it by approving the respondent's flawed method of valuation. However, a question arises as to how in view of the state of the evidence adduced before Commissioner Nott this matter should now be disposed of. The respondent wishes the valuation to be determined according to the reasoning and decision of this Court notwithstanding any deficiencies in the evidence adduced so far, that includes evidence on behalf of the appellant which in part at least may assume, and wrongly so, that replacement cost necessarily equals added value. He also accepts that if Mr Croker's approach to scarcity value is, as it has been, rejected, the matter should be remitted to the Commissioner for determination in accordance with the judgment of this Court. We would accordingly so order. It will be a matter for the Commissioner to determine whether, in the light of the clarification of the legislation and the proper approach to its application, he may, and should receive further evidence. These conclusions should be implemented by orders that (1) the appeal to this Court be allowed with costs; and (2) orders 2-5 of the orders of the Court of Appeal be set aside and in place thereof it be ordered that the appeal from the orders of Cowdroy J of 23 December 1999 be dismissed with costs. Costs orders in favour of the appellant should be made in respect of the appeals at both levels because the appellant has substantially succeeded and the case is of importance to, and is in the nature of a test case for, the respondent. Orders The restoration of the orders of Cowdroy J will give the appellant his costs in the Land and Environment Court, and provide for the remitter to Commissioner Nott for rehearing. As indicated above, it will be for Commissioner Nott to determine whether he may and should receive further evidence. Having regard to the provisions of s 6912 of the Land and Environment In this section, costs includes: costs of or incidental to proceedings in the Court, (Footnote continues on next page) McHugh Kirby Hayne Callinan Court Act, it will be for the Land and Environment Court (if it thinks fit) to make any order for costs of the proceedings before the Commissioner. in the case of an appeal to the Court, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal, and in the case of proceedings transferred or remitted to the Court, the costs of or incidental to the whole proceedings, both before and after the transfer or remittal. Subject to the rules and subject to any other Act: costs are in the discretion of the Court, the Court may determine by whom and to what extent costs are to be paid, and the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis. A Commissioner or Commissioners may not make an order under this section except with the concurrence of the Chief Judge.

HIGH COURT OF AUSTRALIA PLAINTIFF M76/2013 PLAINTIFF AND MINISTER FOR IMMIGRATION, MULTICULTURAL AFFAIRS AND CITIZENSHIP & ORS DEFENDANTS Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship [2013] HCA 53 12 December 2013 ORDER The questions asked by the parties in the amended Special Case dated 13 August 2013 and referred for consideration by the Full Court be answered as follows: Question 1 Do ss 189, 196 and 198 of the Migration Act 1958 (Cth) authorise the detention of the Plaintiff? Answer The plaintiff's present detention is authorised by ss 189 and 196 of the Act. Question 2 If the answer to question 1 is "yes", are these provisions beyond the legislative power of the Commonwealth insofar as they apply to the Plaintiff? Answer Save that the plaintiff's present detention is validly authorised by ss 189 and 196 of the Act, it is not necessary to answer this question. Question 3 Does the fact that the Plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) reveal an error of law? Answer Yes. Question 4 What relief, if any, should issue? Answer It should be declared that the exercise of the Minister's power was affected by an error of law in that, in deciding whether to refer the plaintiff's application to the Minister, an officer of the Commonwealth acted upon PIC 4002 as a consideration relevant to the decision. Question 5 Who should pay the costs of and incidental to this Special Case? Answer The defendants. Representation R M Niall SC with K L Walker, C L Lenehan and A Rao for the plaintiff (instructed by Allens) J T Gleeson SC, Solicitor-General of the Commonwealth and S P Donaghue SC with N M Wood for the defendants (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship Migration – Refugees – Protection visas – Offshore entry persons – Power of Minister to permit valid application for protection visa – Plaintiff assessed to be refugee – Plaintiff subject of adverse security assessment by Australian Security Intelligence Organisation – Minister's department did not refer plaintiff's case for Minister's consideration – Minister's department acted upon invalid regulation – Whether Minister's exercise of power attended by error of law. Migration – Unlawful non-citizens – Immigration detention pending removal from Australia – Minister's consideration of whether to permit plaintiff to make valid application for visa not completed – Not established that no realistic prospect of removal from Australia in reasonably foreseeable future – Whether appropriate to re-open Al-Kateb v Godwin (2004) 219 CLR 562; [2004] HCA 37 – Whether plaintiff's detention authorised. Administrative law – Non-compellable power – Remedies – Declaration – Plaintiff has real interest in raising question of error – Whether declaration appropriate remedy. Words and phrases – "adverse security assessment", "declaration", "error of law", "executive detention", "harmless error", "lift the bar", "real interest". Migration Act 1958 (Cth), ss 46A(2), 189, 196, 198. Migration Regulations 1994 (Cth), Sched 2, cl 866.225(a), Sched 4, cl 4002. Introduction In 2008, the Minister for Immigration and Citizenship established a Refugee Status Assessment ("RSA") process for the assessment of claims for protection under the Refugees Convention as amended by the Refugees Protocol1 ("the Refugees Convention") by persons known as "offshore entry persons" who had arrived by boat in Australia without a visa. As this Court held in Plaintiff M61/2010E v The Commonwealth (Offshore Processing Case)2, the detention of such persons while their claims were being assessed was lawful because the assessment in legal effect informed a statutory process under which the Minister considered whether or not to decide to allow such persons to make applications for protection visas. Applications for such visas by offshore entry persons were otherwise barred by s 46A(1) of the Migration Act 1958 (Cth) ("the Act"). This Special Case concerns a plaintiff who was found to be a refugee under the RSA process, but was the subject of an adverse security assessment by the Australian Security Intelligence Organisation ("ASIO"). That assessment was made on the assumption that, if the plaintiff were permitted to apply for a protection visa, it would be a necessary condition of the grant of such a visa, pursuant to public interest criterion 4002 ("PIC 4002"), set out in the Migration Regulations 1994, that she not be the subject of an adverse security assessment. That public interest criterion was subsequently found by this Court in Plaintiff M47/2012 v Director-General of Security3 to be invalid. Officers of the Department of Immigration and Citizenship, acting on ministerial guidelines, and having regard to the adverse security assessment, did not refer the plaintiff's case to the Minister for a decision on whether to allow her to apply for a protection visa. Acknowledging that the plaintiff could not be returned to her country of origin — where, as had been found, she would face persecution on Convention grounds — the Department approached a number of other countries to accept her for resettlement. Those approaches were unsuccessful. The plaintiff asserts error in the Department's reliance upon the adverse security assessment and challenges the lawfulness of her continuing detention. 1 The "Refugees Convention" means the Convention Relating to the Status of Refugees (1951); the "Refugees Protocol" means the Protocol Relating to the Status of Refugees (1967). (2010) 243 CLR 319; [2010] HCA 41. (2012) 86 ALJR 1372; 292 ALR 243; [2012] HCA 46. For the reasons that follow, the decision by the Department not to refer to the Minister the plaintiff's request to be allowed to apply for a protection visa was informed by error. Nevertheless, her continuing detention is lawful. The Minister has not yet made a determination whether or not to allow the plaintiff to apply for a visa. If a decision is made not to allow her to apply, the question whether she can be detained indefinitely thereafter, where there is no other country to which she can be sent, may arise. It has not arisen yet. The occasion is not one which warrants consideration of the correctness of the decision of this Court in Al-Kateb v Godwin4. The questions raised in the Special Case should be answered accordingly and a declaration made as proposed in the joint reasons of Crennan, Bell and Gageler JJ5. Factual and procedural background On 8 May 2010, the plaintiff, a national of Sri Lanka, entered Australia without a visa at Christmas Island, which was designated under the Act as an "excised offshore place"6. Having entered without a visa she was an "unlawful non-citizen" within the meaning of the Act7. Being an unlawful non-citizen who had entered Australia at an excised offshore place, she was also an "offshore entry person"8. Because she was an unlawful non-citizen, the plaintiff was taken into immigration detention pursuant to s 189 of the Act. The plaintiff claimed at all times to have had a well-founded fear of persecution in Sri Lanka by reason of her race or political opinion. However, because she was an offshore entry person who was in Australia and was an unlawful non-citizen, s 46A(1) of the Act had the effect that an application by her for a visa would not be a valid application. On 27 July 2010, the plaintiff claimed protection as a refugee. She was interviewed by an officer of the Department on 30 July 2010. That interview commenced the RSA process conducted under ministerial guidelines. The nature of the RSA process was described in the Offshore Processing Case. Its purpose was to enable the Minister to consider whether to determine, pursuant to s 46A(2) of the Act, if he thought it in the public interest to do so, that the barring provision in s 46A(1) would not apply to an application by the plaintiff for a visa. Section 46A(7) provided that the Minister was not under a duty to consider whether to exercise (2004) 219 CLR 562; [2004] HCA 37. 5 Reasons of Crennan, Bell and Gageler JJ at [150]. 6 Act, s 5(1), definition of "excised offshore place". 7 Act, s 14. 8 Act, s 5(1), definition of "offshore entry person". his power under s 46A(2)9. However, as this Court held in the Offshore Processing Case, the establishment and conduct of the RSA process reflected a ministerial decision to consider exercising the power under s 46A(2) in every case in which an offshore entry person claimed to be a person to whom Australia owed protection obligations10. On or about 12 September 2011, the plaintiff was found by a delegate of the Minister to be a person to whom Australia owed protection obligations under the Refugees Convention within the meaning of s 36(2)(a) of the Act. In a response dated 10 March 2009 to a departmental submission concerning the application of s 46A(2) to a group of offshore entry persons, the Minister had directed that health, identity and security checks of an offshore entry person should "be completed prior to release from detention." The Minister added: "Unless there are extenuating or special circumstances those requirements should be applied before seek bar to be lifted under Sect 46A(2)." The term "release from detention" was not apposite. "Release from detention" was not a legal consequence of a referral to the Minister of a request that he exercise his power under s 46A(2). It may be that its use was an elliptical reference to the stage at which a person lodged a valid application for a protection visa following a decision by the Minister to allow such an application to be made. Once a visa was issued, release from immigration detention would ordinarily follow. On 12 September 2011, the Department completed its inquiries as to whether the plaintiff was a refugee and concluded that she was a person to whom Australia owed protection obligations under the Refugees Convention. The plaintiff was interviewed by ASIO on 8 December 2011 for the purpose of conducting a security assessment. On 24 March 2012, the Minister issued further guidelines on ministerial interventions under s 46A(2). In s 10 of the guidelines under the heading "CASES NOT TO BE REFERRED FOR MY CONSIDERATION", the Minister, referring to offshore entry persons as "OEPs", stated: 9 Section 46A(7) was in a form found in a number of provisions of the Act providing for non-compellable dispensing powers and considered in Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636; [2012] HCA 31. 10 (2010) 243 CLR 319 at 350–351 [70]–[71]. "For OEPs who have undertaken a Refugee Status Assessment (RSA) or POE interview prior to the transition to a single PV process on 24 March 2012 ... and in relation to whom the following circumstances apply, their case should not be referred for my consideration: where my department has conducted an assessment or has accepted an assessment made by an independent merits reviewer, which has found that an OEP engages Australia's protection as provided for under s36(2) of the Act and the OEP does not appear to satisfy or is awaiting to satisfy the relevant Public Interest Criteria for the grant of a PV. For all OEPs (regardless of their date of arrival) to whom the following circumstances apply, their case should not be referred for my consideration: where an OEP has been found to engage Australia's protection as provided for in s36(2) of the Act but has received an adverse security assessment". PIC 4002, which was among the public interest criteria referred to in the ministerial guidelines, was specified in the Migration Regulations as a primary criterion which must be satisfied for the grant of a protection visa11. It required that: "The applicant is not assessed by the Australian Security Intelligence Organisation to be directly or indirectly a risk to security, within the meaning of section 4 of the Australian Security Intelligence Organisation Act 1979." That criterion was subsequently held by this Court in Plaintiff M47 to be an invalid exercise of the regulation-making power. Judgment in Plaintiff M47 was delivered on 5 October 2012. In April 2012, the plaintiff was advised by the Department that ASIO had assessed her to be directly or indirectly a risk to security within the meaning of s 4 of the Australian Security Intelligence Organisation Act 1979 (Cth). On that basis it was said that she did not satisfy PIC 4002. For that reason her case was not referred to the Minister for consideration of a determination under s 46A(2) 11 Migration Regulations, Sched 2, cl 866.225. on whether she should be permitted to make a valid application for a protection visa. As a result of the adverse security assessment, no consideration is presently being given to the making of a determination under s 46A(2) or otherwise granting a visa to the plaintiff. The plaintiff had been taken into immigration detention upon her arrival on Christmas Island in May 2010. She had her then two young sons with her. In March 2011, the Minister made a residence determination pursuant to s 197AB of the Act permitting her and her sons to reside in so-called "community detention". Under that determination they could move freely in the community. However, the plaintiff was required to report to the Department regularly and to accept visits at her residence, scheduled and unscheduled, from departmental staff. She moved into the specified residence on or about 8 April 2011. On 23 March 2012, she and her then two sons were transferred to the address of her then de facto spouse, who is now her husband, in Melbourne. He is a national of Sri Lanka who was granted a protection visa on 3 July 2012 and became an Australian permanent resident. The plaintiff and her husband married under Australian law on 18 October 2012. Their son, who is now the plaintiff's youngest child, was born on 15 January 2013 and is an Australian citizen. In May 2012, the Minister revoked the plaintiff's residence determination and she and her then two sons were transferred to Sydney Immigration Residential Housing at Villawood, where she is presently detained. Her placement in that residential housing facility is a species of "immigration detention" as placement in "another place approved by the Minister in writing" for the purposes of par (b)(v) of the definition of "immigration detention" in s 5(1) of the Act. Subsequently, the Minister exercised his power under s 46A(2) so that the plaintiff's two eldest children could lodge valid applications for protection visas, which they were granted on 20 June 2013. The plaintiff's three children live as "visitors" at the residential facility. There is no dispute that the plaintiff is in continuing immigration detention. Following the decision of this Court in Plaintiff M47, the Commonwealth appointed a retired Federal Court judge as an "Independent Reviewer" to review adverse security assessments made by ASIO in relation to persons who had been found by the Department to be owed protection obligations and who remained in immigration detention. Her terms of reference required the Independent Reviewer to provide an opinion to the Director-General of Security on whether the challenged adverse security assessment was an appropriate outcome based on the material relied upon by ASIO, including any new material which had been referred to ASIO, and to make recommendations for the Director-General's consideration. The Director-General was not obliged by law to consider or otherwise take any steps in response to any such recommendation. The plaintiff applied on 14 December 2012 for a review of the adverse security assessment against her. Having received detailed written submissions from the plaintiff, followed by an interview and the receipt of supplementary submissions, the Independent Reviewer wrote to the plaintiff on or about 11 June 2013 informing her that, in the Independent Reviewer's opinion, the adverse security assessment was an appropriate outcome. The Independent Reviewer recommended that the assessment be reviewed again in 12 months' time. The Independent Reviewer's decision was not linked to any statutory process. It had no legal consequence or effect. The plaintiff's request to be allowed to apply for a protection visa was not referred to the Minister, so the security assessment was not relied upon for any ministerial decision. The plaintiff has no right to enter and remain in any country other than Sri Lanka. Approaches have been made by the Department, without success, to a number of other countries seeking their assistance to resettle persons from the adverse security assessment cohort, of which the plaintiff is one. The Department considers that in the absence of a change in circumstances, further approaches to the countries already approached or other countries are unlikely to result in them accepting the plaintiff for resettlement. The Department intends to keep the plaintiff's case under review with a view to approaching resettlement countries should there be a change in circumstances that would make such an approach appropriate. In July 2013, a departmental officer sent a letter to the plaintiff's legal advisers requesting that she provide details of relatives which she had said were living in India and another country so the Department could explore the option of third country resettlement with them. Her legal representatives informed the Department on 25 July 2013 that her mother and two brothers are living as refugees in India, do not have permanent residency and have no right to sponsor a family member to join them. Her father had moved back to Sri Lanka. Moreover, the legal advisers informed the Department that India will not accept a refugee who has received an adverse security assessment. The plaintiff commenced proceedings in this Court on 5 July 2013 with an application, which was amended and further amended. In the further amended application, which was filed on 14 August 2013, the plaintiff sought a writ of habeas corpus requiring her release on such conditions as the Court sees fit. She also sought declarations, including a declaration that her detention at Sydney Immigration Residential Housing is unlawful and further declaratory relief. The plaintiff filed a Special Case on 1 August 2013. Hayne J made an order on 2 August 2013 referring the Special Case to a Full Court12. The Special Case was subsequently amended to reflect the further amended application. It refers five questions for determination by the Court. 12 [2013] HCATrans 162. The questions for determination The questions in the Special Case are: (1) Do ss 189, 196 and 198 of the Migration Act 1958 (Cth) authorise the detention of the Plaintiff? If the answer to question 1 is "yes", are these provisions beyond the legislative power of the Commonwealth insofar as they apply to the Plaintiff? (3) Does the fact that the Plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) reveal an error of law? (4) What relief, if any, should issue? (5) Who should pay the costs of and incidental to this Special Case? Question 3 — the s 46A question It is convenient to consider question 3 first as, for the reasons that follow, the answer to that question effectively determines this Special Case. The legal nature and effect of the RSA process and the ASIO assessment must be identified in determining whether the non-referral of the plaintiff's request to the Minister to consider exercising his power under s 46A(2) was infected by legal error. The first is shortly stated. The RSA process involved a decision by the Minister to consider the exercise of his power under s 46A(2). That process in its application to the plaintiff provided a lawful basis for her continuing detention13. The legal nature and effect of the ASIO assessment requires close consideration of the RSA process and the ministerial guidelines. The plaintiff had, in effect, requested the opportunity to apply for a protection visa under s 36 of the Act. The relevant ministerial guidelines were directed to requests for ministerial consideration of the exercise of his power under s 46A(2) of the Act. The question to which the RSA process was directed was whether the criterion stated in s 36(2)(a) as a criterion for the grant of a protection visa was met14. That was the question whether the plaintiff was: 13 Offshore Processing Case (2010) 243 CLR 319 at 348–351 [62]–[71]. 14 (2010) 243 CLR 319 at 356 [89]. "a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol". The RSA process involved a proleptic application of that criterion to the plaintiff's request as though she had made an application for a protection visa. There were other criteria referred to in the Minister's direction of 10 March 2009, under the general description of health and security checks, which the Minister wanted dealt with before having the matter referred to him for consideration. The defendants, in submissions to this Court, characterised the power conferred on the Minister by s 46A(2) of the Act as involving two distinct steps. The first was a decision whether to consider making a determination. The second was the decision to make or not make a determination. That much is not controversial15. The defendants submitted that by reason of s 46A(7) the Minister could terminate the process of consideration at any time. That proposition should not be accepted. Once the Minister has decided to consider whether or not to exercise his power under s 46A(2), he must decide to exercise it or not to exercise it. The defendants also argued that, except for a bad faith limitation, a decision to lift the bar imposed by s 46A(1) was conditioned only upon the Minister's view that it was in the public interest to do so. They submitted that it was open to the Minister to direct the Department to refer a case to him for a possible decision under s 46A(2) only if the person met certain criteria, which need not match the criteria for a visa. That can be done. It was not done in this case. The defendants also submitted that the Department's non-referral of the plaintiff's case accorded with the guidelines issued in 2012. So much may be accepted, but the directions were informed by legal error. That result flows from the decision of this Court in Plaintiff M47 that PIC 4002 was invalid. The application of the RSA process and the ministerial guidelines, designed as they were to provide a proleptic assessment of the plaintiff's satisfaction of PIC 4002, among other criteria, wrongly assumed its validity. It is not the case that, in considering whether to exercise his power under s 46A(2) in relation to a possible application for a protection visa, the Minister is always required to apply processes of assessment which precisely foreshadow those that would be followed in an application for a protection visa. The determination which the Minister makes under s 46A(2) is made "[i]f the Minister thinks that it is in the public interest to do so". The public interest may allow the Minister to have regard to a range of considerations, consistent with the 15 Offshore Processing Case (2010) 243 CLR 319 at 350 [70] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ. subject matter, scope and purpose of the Act16. Those considerations are not limited to the criteria for the grant of the type of visa being sought. However, the Minister has committed himself to a process which foreshadows the process to be followed and the criteria to be applied in determining an application for a protection visa. The plaintiff's continued detention was based upon the need to make relevant inquiries in aid of that process. The Solicitor-General submitted, on behalf of the defendants, that the reference in the March 2012 guidelines to an adverse security assessment indicated both a proleptic application of PIC 4002 and reliance upon an adverse security assessment as a matter informing the public interest, which the Minister would have to consider under s 46A(2). That construction of the guidelines had the character of a reconstruction undertaken in the light of the decision of this Court in Plaintiff M47. The Solicitor-General conceded that if the correct construction of the guidelines was that the fact of an adverse security assessment of itself was not a barrier to referral, then there had been an error and what the Department should have done was to refer the matter to the Minister. Nevertheless, it was submitted that the Minister would remain free under s 46A(2) to determine that the existence of the adverse security assessment was a reason against making a determination to allow the plaintiff to apply for a protection visa. The legal consequences for the Minister and for the plaintiff arising out of the application to her of the RSA process, as governed by the ministerial directions and guidelines and the statutory context, may be summarised as follows: Upon the plaintiff's arrival in Australia as an offshore entry person and an unlawful non-citizen, officers of the Department were required, by s 189 of the Act, to take her into immigration detention. Section 198(2) of the Act required officers to remove the plaintiff from Australia as soon as reasonably practicable if she had not made a valid application for a substantive visa or had made a valid application that had finally been adversely determined. (iii) By virtue of s 46A(1), the plaintiff was unable to make a valid application for a substantive visa. Absent any claim to engage protection obligations under the Refugees Convention, the plaintiff would have been liable to removal back to Sri Lanka as soon as reasonably practicable after her initial detention. 16 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 496 per Latham CJ, 505 per Dixon J; [1947] HCA 21. (iv) The plaintiff having made a claim to have a well-founded fear of persecution on Convention grounds if returned to Sri Lanka, she was not removed to that country but continued to be detained so that her claim could be assessed under the RSA process. Section 198(2) of the Act, as construed by this Court in the Offshore Processing Case, accommodates "the taking of steps for the purpose of informing the Minister of matters relevant to the possible exercise of power under either s 46A or s 195A."17 Assuming that such inquiries they were were undertaken reasonably promptly, detention while undertaken would be lawful18. (vi) By operation of s 46A(7), the Minister does not have a duty to consider exercising his power under s 46A(2). (vii) The establishment and implementation of the RSA process constituted a decision by the Minister to do that which he was under no duty to do — namely, to consider whether to exercise his power under s 46A(2) in respect of offshore entry persons, including the plaintiff19. (viii) The assessment of the plaintiff's claims under the RSA process as a means of informing the Minister's decision whether or not to exercise his power under s 46A(2) provided the legal underpinning for the plaintiff's continuing detention20. (ix) The Minister's decision, effected by the establishment and implementation of the RSA process, to consider exercising his power under s 46A(2) was not made pursuant to s 46A(7). That subsection confers no power. It merely declares that there is no duty to consider exercising the power under s 46A(2)21. 17 (2010) 243 CLR 319 at 341–342 [35]. 18 (2010) 243 CLR 319 at 341–342 [35]. 19 (2010) 243 CLR 319 at 349 [66]. 20 (2010) 243 CLR 319 at 351 [71]. 21 (2010) 243 CLR 319 at 347 [59]. The RSA process and subsequent checks constituted, in respect of the plaintiff, the steps taken to inform the exercise of the Minister's power under s 46A(2)22. (xi) The steps taken under the RSA process and subsequently to inform ministerial consideration of whether to exercise his power under s 46A(2) must be in accordance with law, including compliance with the requirements of procedural fairness and by reference to correct legal principles correctly applied23. In this case the post-RSA process was informed by error of law in relation to PIC 4002. On the basis of that error, the plaintiff's case was not referred to the Minister. There was no separate consideration, and none was provided for in the guidelines, of whether some public interest criterion derived from the "public interest" condition referred to in s 46A(2) would be unable to be met. As a consequence, the third question in the Special Case should be answered "Yes". Declaratory relief to give effect to that answer should be granted in the terms proposed in the joint reasons of Crennan, Bell and Gageler JJ24. The continuing detention of the plaintiff Absent her claim on Australia for protection under the Refugees Convention and the process of assessment that followed it, the plaintiff's continuing detention would only have been lawful while steps were being taken to arrange for her removal as soon as reasonably practicable from Australia to Sri Lanka. The process of assessment provided a distinct legal underpinning for her detention pending its completion and the ministerial decision. The legal proceedings which the plaintiff has instigated in this Court to test that process for legal error must, like the process itself, be accommodated by the provisions of s 198(2). In short, subject to reasonable promptness on the part of the Minister and his officers in responding to the declaration of this Court, the plaintiff's continuing detention is authorised. In the event that the Minister makes a decision under s 46A(2) adverse to the plaintiff, the question may arise whether her detention thereafter is authorised if she is unable to be removed to another country. On the construction of ss 189, 196 and 198 of the Act adopted by the majority in Al-Kateb, it appears that her continuing detention would be authorised until she was able to be removed from Australia. However, question 1 in the Special Case speaks to the present, rather 22 (2010) 243 CLR 319 at 349–350 [67], 353–354 [78]. 23 (2010) 243 CLR 319 at 354 [78]. 24 Reasons of Crennan, Bell and Gageler JJ at [150]. than to the position which may arise after the Minister has made a decision under s 46A(2). In my opinion, question 1 can only be answered by reference to the present circumstances. In the circumstances, this is not a case in which this Court should consider reopening the decision in Al-Kateb, either as to the construction of ss 189, 196 and 198 of the Act or as to the constitutional validity of those provisions. Nor is it necessary to confirm its correctness. The reopening and re-examination of a decision of this Court should only be considered in a case the outcome of which depends upon its application. And in such a case well-established criteria governing the circumstances in which a previous decision of this Court will be reopened would apply25. Conclusion I would answer the questions in the Special Case as proposed in the joint judgment of Crennan, Bell and Gageler JJ26. 25 See John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438–439; [1989] HCA 5; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352 [70] per French CJ; [2009] HCA 2. 26 Reasons of Crennan, Bell and Gageler JJ at [150]. Hayne HAYNE J. The Migration Act 1958 (Cth) ("the Act") provides27 that a non-citizen in the "migration zone"28 is either a "lawful non-citizen" or an "unlawful non-citizen" according to whether he or she holds a visa that is in effect. An officer who knows or reasonably suspects that a person in the migration zone is an unlawful non-citizen must detain that person under s 189(1) or (3). An unlawful non-citizen detained under s 189 must be kept29 in immigration detention until the occurrence of one of four terminating events: removal30 from Australia, deportation31, grant32 of a visa, or an officer beginning to deal33 with the non-citizen for the purpose of taking that person to a regional processing country34. An officer must remove from Australia an unlawful non-citizen detained under s 189(3) "as soon as reasonably practicable"35. Once again, this Court must decide whether these provisions of the Act mean what they say and, if they do, whether they are valid. This Court decided both the construction and the constitutional question in Al-Kateb v Godwin36, deciding that ss 189, 196 and 198 had to be construed as meaning what they say, and that those provisions were not beyond the legislative 27 ss 13(1) and 14(1). 28 Defined in s 5(1). 30 Under s 198. 31 Under s 200. 32 Under s 65 or s 195A. 33 Under s 198AD(3). 34 This last terminating event was added to the Act in 2012, after the plaintiff's initial detention, by the Migration Legislation Amendment (Regional Processing and Other Measures) Act 2012 (Cth), s 3, Sched 1, item 18. Nothing turns on this amendment. 36 (2004) 219 CLR 562; [2004] HCA 37. Hayne powers of the Parliament. As I said37 in Al-Kateb, by reference to the words of "Think what one may of a statute ... when passed by a society which professes to put its faith in [freedom], a court has no warrant for refusing to enforce it. If that society chooses to flinch when its principles are put to the test, courts are not set up to give it derring-do." No good reason was proffered for revisiting the conclusions reached in Al-Kateb about the construction of the relevant provisions and their validity. Despite making numerous amendments to the Act in the intervening years, the Parliament has taken no step to amend these provisions in any relevant way. The provisions are valid laws of the Parliament. No matter what one may think of the provisions, this Court has no warrant for refusing to enforce them. Behind the issues of construction and validity that have been mentioned, there lies a third issue in this case: whether the Minister must decide whether to make a determination under s 46A(2) which would permit the plaintiff to make a valid application for a visa. These reasons will show that, having decided to consider whether to exercise this power, the Minister must decide whether to make a determination under s 46A(2). And the Minister must decide whether to make the determination only by reference to the one consideration which the Minister decided was relevant to the exercise of the power, namely whether Australia owes the Refugees the plaintiff protection obligations under Convention39 as amended by the Refugees Protocol40 ("the Convention"). Consideration of this third issue requires brief reference to the facts. The facts The plaintiff is a Sri Lankan national. She arrived by boat in Australia in May 2010. She then held, and now holds, no visa permitting her to travel to and enter Australia or permitting her to remain in Australia. She is, therefore, an unlawful non-citizen41. Having first arrived in Australia in the Territory of 37 (2004) 219 CLR 562 at 652 [269]. 38 United States v Shaughnessy 195 F 2d 964 at 971 (1952). 39 The Convention relating to the Status of Refugees done at Geneva on 28 July 1951. 40 The Protocol relating to the Status of Refugees done at New York on 31 January 41 ss 5(1) and 14(1). Hayne Christmas Island (an "excised offshore place") she is an "offshore entry person"42. It is not now disputed that the plaintiff has a well-founded fear of persecution for reasons of race and political opinion if she returns to Sri Lanka. She is a "refugee" within the meaning of the Convention, but the Act provides43 that, because she is an offshore entry person, she cannot make a valid application for any visa. She has been in immigration detention since her arrival in 2010. In April 2012, the Australian Security Intelligence Organisation ("ASIO") gave the Department of Immigration and Citizenship an "adverse security assessment" with respect to the plaintiff. That assessment recorded that ASIO assessed the plaintiff to be directly or indirectly a risk to "security" within the meaning of s 4 of the Australian Security Intelligence Organisation Act 1979 (Cth) ("the ASIO Act"). The ASIO Act definition of "security" required44 reference to "the carrying out of Australia's responsibilities to any foreign country" in relation to certain matters. ASIO later summarised its reasons for making the adverse security assessment in four points. ASIO had concluded that the plaintiff (a) had been a voluntary member of the Liberation Tigers of Tamil Eelam ("LTTE") who had engaged in armed combat, training and administrative support; (b) remained "strongly ideologically supportive of the LTTE and its aim to achieve Tamil Eelam through the use of violence"; (c) was likely to continue to support the LTTE in Australia; and (d) was "likely to engage in acts prejudicial to Australia's security" if she were to be granted a visa. On their face, the first three points relate only to the past conduct and present beliefs of the plaintiff. The real sting of the assessment appears to lie in the last point made but neither its content nor its basis has been revealed, whether in the course of these proceedings or otherwise. It is not a point which necessarily follows from any one or more of the first three points. 42 s 5(1). Following the enactment of the Migration Amendment (Unauthorised Maritime Arrivals and Other Measures) Act 2013 (Cth), the Act no longer uses the term "offshore entry person". Instead, the Act now uses the term "unauthorised maritime arrival", and defines that term in a way which differs in some respects from the definition of "offshore entry person". Nothing turns on this change. It is convenient to use the term "offshore entry person" in these reasons and to refer to the relevant provisions of the Act in the form they took when the Act used that expression. 43 s 46A(1). 44 s 4, definition of "security", par (b). Hayne In April 2012, when ASIO gave its adverse security assessment, regulations made under the Act provided45 that a criterion46 for the grant of a protection visa ("PIC 4002") was, in effect, that ASIO not have provided an adverse security assessment in respect of the visa applicant. In October 2012, this Court held47, in Plaintiff M47/2012 v Director-General of Security, that PIC 4002 was invalid because its making was inconsistent with the Act. Sections 500(1) and 501(6) prescribed character requirements for the grant of a protection visa and made special provision for the review of decisions refusing to grant a protection visa relying on Art 1F, 32 or 33(2) of the Convention or on the ground (among others) that there is a significant risk that a person would represent a danger to the Australian community or to a segment of that community. None of those grounds permitted consideration of foreign country security obligations of the kind referred to in par (b) of the ASIO Act definition of "security". Hence, PIC 4002 prescribed a criterion which went beyond those expressly provided by the Act, was inconsistent with the Act and was invalid. The plaintiff has no right to enter and remain in any country other than Sri Lanka. The Minister does not propose to remove the plaintiff to Sri Lanka against her will. Despite efforts to resettle the plaintiff in another country, no country has agreed to take the plaintiff and it is agreed that no country appears likely to do so. The defendants ("the Commonwealth parties") accepted that, in the circumstances, it would be open to conclude that there is no real likelihood or prospect that the plaintiff will be removed from Australia in the reasonably foreseeable future. The plaintiff commenced proceedings in the original jurisdiction of this Court alleging that her continued detention was unlawful. The parties agreed in stating questions of law in the form of a special case for the consideration of the Full Court. It is convenient to deal first with whether the Minister decided to consider whether to make a s 46A(2) determination (permitting the plaintiff to make a valid application for a visa). 45 Migration Regulations 1994 (Cth), Sched 2, cl 866.225(a). 46 Migration Regulations 1994, Sched 4, cl 4002. 47 (2012) 86 ALJR 1372 at 1396-1397 [71] per French CJ, 1418-1419 [206] per Hayne J, 1455 [399] per Crennan J, 1465 [455], [458]-[459] per Kiefel J; 292 ALR 243 at 267, 297-298, 348, 361-362; [2012] HCA 46. Hayne Did the Minister decide to consider whether to make a s 46A(2) determination? At all times relevant to this matter, s 46A(1) of the Act has provided that an application for a visa is not a valid application if it is made by an offshore entry person who is in Australia and is an unlawful non-citizen. Section 46A(2) provided: "If the Minister thinks that it is in the public interest to do so, the Minister may, by written notice given to an offshore entry person, determine that subsection (1) does not apply to an application by the person for a visa of a class specified in the determination." This power (often referred to as the power to "lift the bar") may only be exercised by the Minister personally48. Section 46A(7) provided that: "The Minister does not have a duty to consider whether to exercise the power under subsection (2) in respect of any offshore entry person whether the Minister is requested to do so by the offshore entry person or by any other person, or in any other circumstances." The effect of s 46A(7) "non-compellable". is often referred to as making the power Before the plaintiff arrived and was detained at Christmas Island, the Minister had established administrative processes for determining whether, as a matter of international law, Australia's obligations under the Convention were engaged in respect of particular offshore entry persons. These administrative processes were described in a "Refugee Status Assessment Procedures Manual" ("the RSA Manual"). This Court considered some aspects of the nature and effect of those administrative processes ("the RSA process") in Plaintiff M61/2010E v The Commonwealth ("the Offshore Processing Case")49. In particular, this Court held50 that assessments made under the RSA process had to be made according to law and in a manner that afforded procedural fairness to the person whose claim was being assessed. 48 s 46A(3). 49 (2010) 243 CLR 319; [2010] HCA 41. 50 (2010) 243 CLR 319 at 355-357 [87]-[91]. Hayne The central premise51 for the decision in the Offshore Processing Case was that offshore entry persons who were detained while the RSA process was conducted were detained under and for the purposes of the Act. More particularly, those persons were detained for the purpose of the Minister considering whether to exercise power under the Act. And argument of the present matter proceeded on the undisputed footing that the RSA process was engaged in the plaintiff's case for that purpose. Having regard, however, to the course taken in argument of the present matter, it is necessary to identify more precisely why the plaintiff's detention for the purpose of considering whether to lift the bar was detention under and for the purposes of the Act. It will be recalled that one of the terminating events prescribed by s 196(1) as fixing the duration of immigration detention is that the unlawful non-citizen detained under s 189 "is granted a visa"52. When the obligation under s 198(2) to remove an unlawful non-citizen "as soon as reasonably practicable" is read with both the inability of an offshore entry person to make a valid application for a visa53 and the Minister's power under s 46A(2) to lift the bar, it is evident that the Act authorises detention of an unlawful non-citizen for so long as is reasonably necessary for the Minister first, to decide whether to consider exercising the power to lift the bar and second, to decide whether to lift the bar54. In the case of this plaintiff, like other offshore entry persons to whom the RSA process was applied, the Minister had determined55 (by establishing the RSA process and detaining the plaintiff and others while that process was conducted) to consider whether to lift the bar. The Minister could not have been compelled to embark upon that consideration. But the following observations require the conclusion that the Minister did embark upon that consideration. The Minister decided that the RSA process would be followed for every offshore entry person who claimed that Australia owed protection obligations to him or her. The plaintiff made such a claim. The RSA process began and she was not removed from Australia as soon as reasonably practicable as would otherwise have been required by s 198(2). But the plaintiff was still detained and her continued detention was justifiable only if it was under and for the purposes of the Act. The only possible statutory purpose for detaining an offshore entry 51 (2010) 243 CLR 319 at 351 [70]. 52 s 196(1)(c). 53 s 46A(1). 54 cf Offshore Processing Case (2010) 243 CLR 319 at 350 [70]. 55 Offshore Processing Case (2010) 243 CLR 319 at 350-351 [70]-[71]. Hayne person, other than for removal, was for consideration of whether to permit that person (under s 46A(2)) to make a valid application for a visa. And if detention was for that purpose, consideration of whether to exercise the power given by s 46A(2) must have begun. That is, by detaining an offshore entry person to follow the RSA process, the Minister necessarily decided to consider exercising the power given by s 46A(2) in respect of that person. To put the same point another way, the operation of s 46A(7) was exhausted once the RSA process was engaged in respect of an offshore entry person who was detained. Relevant contextual considerations The steps that were taken in respect of the plaintiff for the purposes of the Minister's consideration of whether to lift the bar must be understood having regard to the policy which was then being pursued. That, in turn, requires reference to some matters of history. Those matters are described56 in some detail in the Offshore Processing Case. It is sufficient for present purposes to notice only the following features. In 2001, the Parliament enacted six Acts57, one after the other, which affected the entry into and remaining in Australia by non-citizens. The changes made by those Acts included provision for excising certain Australian territory, including the Territory of Christmas Island, from the migration zone58 and the insertion into the Act of various sections, including ss 46A59 and 198A60. 56 (2010) 243 CLR 319 at 339-342 [29]-[40]. 57 Border Protection (Validation and Enforcement Powers) Act 2001 (Cth); Migration Amendment (Excision from Migration Zone) Act 2001 (Cth); Migration Amendment (Excision from Migration Zone) (Consequential Provisions) Act 2001 (Cth); Migration Legislation Amendment Act (No 1) 2001 (Cth); Migration Legislation Amendment Act (No 5) 2001 (Cth); Migration Legislation Amendment Act (No 6) 2001 (Cth). 58 Migration Amendment (Excision from Migration Zone) Act 2001, s 3, Sched 1, item 1. 59 Migration Amendment (Excision from Migration Zone) Act 2001, s 3, Sched 1, item 4. 60 Migration Amendment (Excision from Migration Zone) (Consequential Provisions) Act 2001, s 3(1), Sched 1, item 6. Hayne Section 198A(1) provided that offshore entry persons might be taken from Australia to a country declared under that section. The Republic of Nauru and the Independent State of Papua New Guinea were declared countries and persons were removed from Australia to those places in exercise of the power given by s 198A(1). This procedure came to be called the "Pacific Strategy". As noted61 in the Offshore Processing Case, the changes to the Act "that were worked by inserting s 46A and, in consequence, inserting s 198A, are to be seen as reflecting a legislative intention to adhere to that understanding of Australia's obligations under the [Convention] that informed other provisions made by the Act". Following a change of government in 2007, offshore entry persons were no longer taken to Nauru or Papua New Guinea. The Government decided that all offshore entry persons would be "processed" on Christmas Island and that the RSA process would be followed in respect of offshore entry persons who claimed to be refugees. As was said62 in the Offshore Processing Case, the adoption of the RSA process and its application to offshore entry persons could only be understood as implementing the decision no longer to follow the Pacific Strategy but instead to undertake the RSA process as the means of meeting Australia's obligations under the Convention. The purpose and content of the RSA process The RSA Manual recorded, under the heading "Background", that offshore entry persons "who raise claims or information which prima facie may engage Australia's protection obligations [will] have such claims examined under a separate RSA process so that the Minister can be advised whether Australia's protection obligations under the Refugees Convention are engaged" (emphasis added). Not only did the RSA Manual show that the RSA process was directed to determining whether Australia owed protection obligations to any offshore entry person who made a claim to protection, offshore entry persons were told that this was what the process was deciding. Offshore entry persons to whom the RSA process was applied were told, at the start of the process, that what was being done was to "assess and process" their claims to be refugees. The RSA Manual required that an offshore entry person who raised "claims or information that may engage Australia's protection obligations" was to be provided with an information sheet outlining the RSA process. That 61 (2010) 243 CLR 319 at 341 [34]. 62 (2010) 243 CLR 319 at 342 [40]. Hayne information sheet (available in a number of languages) told the offshore entry person that: "If a finding is made that you are a refugee, the department will write to the Minister for Immigration and Citizenship (the minister) asking him to allow you to make a visa application to stay in Australia. If the minister allows you to lodge a visa application, you will be asked to complete and sign a form asking for a visa to stay in Australia. Your agent can help you with this. If you are successful with your application for a visa, you will be given a permanent visa to live in mainland Australia. You will be moved to mainland Australia and will receive help with settlement into the Australian community." The information sheet also described what would happen if a finding was made that the person concerned was not a refugee and what would happen if that person sought review of the decision by an independent reviewer. It is not necessary, in this case, to refer to the review processes. Although the special case does not state expressly that the plaintiff was given such an information sheet, it should be inferred that she was. The RSA Manual provided that the assessment of claims made by an offshore entry person would be made by an "RSA officer": "a departmental employee tasked by the Minister ... to identify refugees according to the definition of a refugee as set out in the Refugees Convention". The RSA Manual required the RSA officer to consider eight issues: (a) what the claimant's country of nationality or former habitual residence was; (b) whether the claimant had the right to enter and reside in a safe third country; (c) whether Art 1C of the Convention (providing for the cessation of protection obligations) applied; (d) whether any of the exclusion clauses of Art 1D, 1E or 1F of the Convention applied; (e) whether Art 33(2) of the Convention (providing, among other things, that the benefit of the obligation not to expel or return a refugee to the borders of a country where he or she fears persecution for a Convention reason "may not ... be claimed by a refugee whom there are reasonable grounds Hayne for regarding as a danger to the security of the country in which he [or she] is") applied; whether the claimant feared harm for a Convention reason; (g) whether the harm feared amounted to persecution; and (h) whether the claimant's fear was well-founded. The RSA Manual required the RSA officer, for each issue, to "set out, evaluate and weigh evidence", "set out, discuss and consider the relevant articles of the Refugees Convention", "state and explain the overall conclusion reached in relation to each issue" and "record a finding" for each of the issues considered. Once an RSA officer completed the assessment of the claims made by an offshore entry person, the officer was "to record [his or her] finding on the claimant's claims and determine whether the claimant is or is not a refugee under Article 1 of the Convention". As would be expected, the information set out in the information sheet provided to offshore entry persons was consistent with the RSA Manual's description of the way in which cases should be finalised by RSA officers. A "[p]ositive RSA outcome" was described in the following terms: "When an [offshore entry person] is found to be owed protection through the RSA process, and is not subject to exclusion clauses under Articles 1F and 33(2) of the Refugees Convention, Australia's protection obligations under the Convention are enlivened. A submission will be provided to the Minister for [his or her] consideration of whether to exercise [his or her] power under section 46A(2) of the Migration Act and lift the section 46A(1) bar to allow a protection (or other) visa application to be made. If the Minister decides to lift the bar, the [offshore entry person] will be invited to lodge a Protection visa application using Form 866. This application will be assessed with reference to the claims made during the RSA process. Subject to health and character requirements being met, a Protection visa will then be granted to the [offshore entry person]. Following grant, the [offshore entry person] will be resettled in Australia." (emphasis added) The RSA Manual shows that the RSA process was directed to advising the Minister whether Australia's international obligations under the Convention were engaged. The RSA process had no wider purpose. In particular, the RSA process was not directed to determining whether a protection visa would be granted if a valid application could be made. The RSA Manual acknowledged, more than once, that if the Minister lifted the bar, the person concerned had to Hayne make an application for a protection visa and meet necessary health and character requirements as part of the process of consideration of the visa application. The assessment of the plaintiff's claims The RSA officer who assessed the plaintiff's claims under the RSA process determined that she was a refugee as defined by the Convention. The RSA officer found that Art 1F of the Convention was not engaged, there being "no serious reasons for considering that the [plaintiff] was complicit in any war crime or crimes against humanity". The RSA officer further found that the plaintiff did not come within the express exception provided by Art 33(2) of the Convention to the obligation not to expel or return a refugee to the borders of a country in which that person had a well-founded fear of persecution for a Convention reason. That is, the RSA officer found that there were not "reasonable grounds for regarding [the plaintiff] as a danger to the security" of Australia. The decision made under the RSA process was communicated by the Department to the plaintiff. The plaintiff was told that she was "still subject to health, identity, security and character checking processes", as were family members who had made protection claims dependent on hers. Steps following the adverse security assessment As has already been noted, ASIO gave the Department an adverse security assessment in respect of the plaintiff in April 2012. The Department treated the adverse security assessment as requiring that it not refer the plaintiff's case to the Minister and it did not. The Department's decision not to refer the plaintiff's case to the Minister was based upon two different ministerial communications, one in 2009 and the other in 2012. It is necessary to say something about each. The 2009 ministerial comments In 2009, well before the plaintiff had arrived at Christmas Island, the Department had made a submission to the Minister seeking what was described as "your decision on whether you wish to exercise your section 46A(2) power in the case of thirty two people" who had arrived on a particular boat. Twenty-nine of the persons concerned had had health, character and security clearances finalised; three had outstanding security clearances. The Department's submission said that protection visa applications by those three persons would "remain undecided until all clearances have been finalised". It went on to point out that: Hayne "once the three clients are in the [protection visa] stream, and if they happen to receive a negative finding, they will have access to both merits and judicial review. Alternatively you may decide to defer your decision to exercise your section 46A(2) power for the three individuals until all mandatory checks have been completed." The Minister declined to determine that any of the three persons awaiting a security clearance should be entitled to make a valid application for a visa. The Minister said that government policy was for health, identity and security checks to be completed prior to release from detention and that, unless there were extenuating or special circumstances, those requirements should be applied before seeking to lift the bar under s 46A(2). The Minister's reference to completing health and security checks before release from detention assumed, wrongly, that deciding to permit the making of a valid application for a visa would release the plaintiff from detention. Permitting the making of a valid application for a visa would not have had that effect. The Act required continuing detention of every unlawful non-citizen until a visa was granted or one of the other terminating events specified in s 196(1) occurred. The plaintiff did not submit that anything turned upon this error and it may be put aside from further consideration. The comments made by the Minister were treated by the Department as a general direction to be followed in later cases in which there was a question about seeking the Minister's exercise of power under s 46A(2). That is, they were treated as identifying when the Minister wished not to embark upon the task of deciding whether to lift the bar. But as has been demonstrated, the Minister had already taken that step. Whatever may have been the effect of the Minister's comments in the particular cases then under consideration, they were not comments which bore at all on whether the Minister should decide to lift the bar in the plaintiff's case. The comments which the Minister made in his 2009 decision were irrelevant to the plaintiff's case and the Department was wrong to treat them as applicable. The 2012 direction In 2012, one month before ASIO gave the adverse security assessment in respect of the plaintiff, the Minister gave directions about the circumstances in which he may wish to consider exercising his power under s 46A(2), and in which the Department should draw particular cases to his attention. One kind of case which the directions said should not be referred for the Minister's consideration was where an offshore entry person was found to engage Australia's protection obligations as provided by s 36(2) of the Act but had received an adverse security assessment. Hayne Like the 2009 ministerial comments, the directions given in 2012 were, and are, irrelevant to the plaintiff's case. They were, and are, irrelevant because the Minister had already decided to consider exercising power under s 46A(2) in respect of the plaintiff. The directions given in 2012 dealt only with whether the Minister would consider exercising the power. Contrary to the premise for some of the submissions advanced by the Commonwealth parties, once the RSA process had begun, there was no further occasion upon which s 46A(7) could be applied in the plaintiff's case. The s 46A(2) power remains unperformed Having decided to consider exercising power under s 46A(2), the Minister has never done so. The Minister has never made a decision whether to permit the plaintiff to make a valid application for a visa. The power under s 46A(2) remains unperformed. What consequences follow must be determined by first identifying the relationship between the RSA process and the power given by s 46A(2). The RSA process and the power given by s 46A(2) It is unsurprising that, in considering whether to permit making an application for a protection visa, the only question considered in the RSA process was whether Australia's international obligations were engaged, leaving for later determination, in accordance with the requirements of the Act, whether a visa should be granted. It is unsurprising, in other words, that the process which the Minister directed should be followed when an offshore entry person claimed to be owed protection obligations was not a process directed to informing the Minister whether he would be obliged to grant or refuse a visa if a valid application were to be made. It is unsurprising because whether to permit the making of a valid application for a protection visa was to be understood as a threshold question governed only by the need to avoid breaching Australia's international obligations. The Act would be left to do its work in respect of domestic requirements (including security requirements) after the making of an application. It is to be recalled that the power given by s 46A(2), if exercised, would only permit an offshore entry person to make a valid application for a visa. If a valid application were made, it would have to be dealt with in accordance with the Act. After considering the application, the Minister would be bound63 to grant the visa if satisfied that the health and other criteria for the visa had been met and if satisfied that the grant of the visa was not prevented by (among other 63 s 65(1)(a). Hayne provisions) s 501. If not satisfied of these matters, the Minister would be bound64 to refuse to grant the visa sought. Section 46A(2) did not provide for, or permit, the establishment of a system for the grant of visas to offshore entry persons. The power under s 46A(2) concerned only the making of a valid application for a visa. Section 195A(2) of the Act gave the Minister discretionary power to grant a visa to any person in detention under s 189, including an offshore entry person. The fields of operation of ss 46A and 195A were distinct. There is no basis for reading them as overlapping in any way. It may be that consideration of whether a visa would have to be granted could be said to be always irrelevant to the exercise of the power to determine whether a valid application could be made. It is not necessary to decide whether that is so. If consideration of whether a visa would have to be granted could be relevant to the exercise of the power given by s 46A(2), only lawfully made criteria for the grant of a visa could properly be taken into account. And this Court held in Plaintiff M47/2012 that PIC 4002 was not a valid criterion for the grant of a protection visa. But there are more fundamental reasons for concluding that the particular steps which the Minister has taken in administering the Act have limited the considerations which can now be taken into account in exercising the power given by s 46A(2) in respect of the plaintiff. It is necessary to explain why that is so. A power exercisable in "the public interest" The power given by s 46A(2) (to permit the making of a valid application for a visa) might be exercised by the Minister "[i]f the Minister thinks that it is in the public interest to do so". The discretion thus given to the Minister is very wide65. Like the provision considered in Water Conservation and Irrigation Commission (NSW) v Browning66, s 46A(2) granted a discretion that, "though ... neither arbitrary nor completely unlimited ... is certainly undefined". That is, "there is no positive indication of the considerations upon which it is intended 64 s 65(1)(b). 65 See, for example, The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379 at 400-401 [42]; [2012] HCA 36. 66 (1947) 74 CLR 492 at 505 per Dixon J; [1947] HCA 21. Hayne that the grant or refusal of [the determination] shall depend"67. Accordingly, as Dixon J pointed out in Swan Hill Corporation v Bradbury68: "only a negative definition of the grounds governing the discretion may be given. It may be possible to say that this or that consideration is extraneous to the power, but it must always be impracticable in such cases to make more than the most general positive statement of the permissible limits within which the discretion is exercisable and is beyond legal control." The resolution of this case, however, does not depend upon attempting some a priori statement of the grounds which might fall outside the public interest. The questions to be considered are more particular. The Minister identified only one issue which bore upon the decision whether to lift the bar: is the plaintiff a refugee within the meaning of the Convention? Having decided that the plaintiff should be detained for consideration of whether to lift the bar by reference to the outcome of the RSA process, can the Minister now make no decision at all? If the Minister does make a decision, can any other consideration be taken into account? The plaintiff's detention was under and for the purposes of the Act because (and only because) it was for the purpose of the Minister considering whether to make a determination that it is in the public interest to permit the plaintiff to make a valid application for a visa. The RSA officer who assessed the plaintiff's claims resolved the only issue which the Minister had identified as relevant to the exercise of the power in the plaintiff's favour. The Commonwealth parties submitted, in this Court, that the Minister could refuse at any time to make a decision under s 46A(2). The Commonwealth parties further submitted that, if the Minister were to make a decision about whether he would permit the plaintiff to make a valid application for a visa, he could lawfully take any consideration relevant to the public interest into account and treat any public interest consideration as determinative, no matter what inquiries may have been made while the plaintiff was detained. Both of these submissions should be rejected. Having decided to consider whether to make a determination under s 46A(2), the Minister had to conclude that consideration. Having identified only one issue as relevant to the decision to lift the bar, the Minister could not make that decision by reference to any other consideration. 67 (1947) 74 CLR 492 at 505. 68 (1937) 56 CLR 746 at 758; [1937] HCA 15. Hayne The Minister must decide Having decided that he would consider whether to make a determination under s 46A(2), the Minister must decide whether or not to lift the bar for the plaintiff. As was said69 in the Offshore Processing Case, "[i]t is not readily to be supposed that a statutory power to detain a person permits continuation of that detention at the unconstrained discretion of the Executive." But there would be detention at the unconstrained discretion of the Executive if the Commonwealth parties were right to submit that the Minister could decide, at any time, to refuse to conclude, or to stop, consideration of whether to lift the bar. If the Minister, having decided to consider whether to exercise the power to lift the bar, had no duty to conclude that consideration, the Act would authorise detention at the will of the Minister. That construction of the Act should not be adopted. Rather, having decided to determine whether or not to lift the bar, the Minister should be held to be bound to make that decision and to do so within a reasonable time70. Section 46A(7) makes plain that the Minister has no duty, and may not be compelled, to consider whether to exercise the power given by s 46A(2). But once the Minister has decided to consider whether to exercise the power, neither s 46A(7) nor any other provision of the Act permits or requires the conclusion that the Minister may, at will, decline to make any decision under s 46A(2) even though the subject of consideration has been detained for the purposes of the Minister having inquiries made which are relevant to the exercise of the power given by that provision. What may be considered? Can the Minister now act on any matter which he considers relevant to the public interest? Again, this question must be answered recognising the legal foundation for the plaintiff's detention. The Executive detained the plaintiff under and for the purposes of the Act. The detention was under and for the purposes of the Act, and lawful, only because the Minister had decided two things: first, to consider whether to make a determination under s 46A(2) to lift the bar and second, to have his Department inquire into and advise him, for the purposes of his making that decision, whether the plaintiff was a refugee to whom Australia owed protection obligations under the Convention. 69 (2010) 243 CLR 319 at 348 [64]. 70 cf Koon Wing Lau v Calwell (1949) 80 CLR 533 at 581 per Dixon J; [1949] HCA 65. Hayne The Minister could have left the Act to operate according to its terms in respect of the plaintiff, or in respect of offshore entry persons generally. He did not. That is, the Minister could have left the plaintiff (or other offshore entry persons detained in accordance with s 189 of the Act) to be removed from Australia in accordance with s 198(2) as soon after their arrival at an excised offshore place as was reasonably practicable. Carrying out the RSA process thus directly affected the liberty of those to whom it was applied. Those persons were detained for longer than whatever may have been the time to effect their removal from Australia as soon as reasonably practicable. The power to detain unlawful non-citizens given by the Act should not be construed as unbounded. Nor are the applicable provisions of the Act to be construed as authorising detention for whatever period of time the Minister may choose. The primary temporal limitation on the power to detain is provided by the imposition of the statutory duty to remove as soon as reasonably practicable. Further detention is authorised only if the detention is under and for the purposes of the Act. The bounds of that further detention must be ascertainable, and enforceable, at all times during its continuance. The lawfulness of the detention (as to both its purpose and its duration) must be capable of being fixed, and be fixed, by a criterion or criteria determined at the start of the detention. Fixing the lawful boundaries for the detention at its outset is essential because only if that is done can the lawfulness of the detention be adjudged and enforced by a court, including this Court in exercise of its jurisdiction under s 75(v) of the Constitution, at any time during its continuance. The plaintiff was detained for the purpose of the Minister considering whether to make a determination under s 46A(2) to lift the bar. That purpose was being fulfilled, and the plaintiff's detention was lawful, only because the RSA process was engaged in respect of the plaintiff. But the purpose (the Minister considering whether to make a determination) could not be fulfilled by a means other than the means in virtue of which the purpose was first satisfied. That is, the means of pursuing the purpose were set according to the sole issue which was considered in the RSA process. By setting those means, the duration of the detention was set as the time reasonably necessary to carry out those means in order to decide whether to lift the bar. The administrative choice which the Minister made by detaining the plaintiff on the basis described, rather than allowing performance of the duty to remove her from Australia "as soon as reasonably practicable", once made, could not be undone. It could not be undone because of the effect it had on the plaintiff's liberty. The administrative choice which the Minister made was a choice which prolonged the plaintiff's detention. Hayne The administrative decision to detain the plaintiff for the purpose of deciding whether to lift the bar, once made, limited the purpose of detention by identifying at its outset only one consideration which the Minister would take into account in exercising power under s 46A(2). And by taking these steps the Minister fixed not only the means of pursuing the purpose of the detention but also the duration of the detention. The Act does not authorise detention of an offshore entry person for whatever number of successive periods of detention would be necessary for the Minister to obtain information and advice about a series of disconnected inquiries said to relate to questions of public interest governing the exercise of the power under s 46A(2). To read the Act as permitting that to occur would be to read the Act as permitting detention at the will of the Executive. That construction should be rejected. As it happens, nothing the Minister or the Department said or did in the course of the detention of the plaintiff departed from the operation of the Act that has been described. The Minister decided that those offshore entry persons who made claims to protection should have their claims investigated, assessed and, if need be, reviewed. The Minister established the RSA process for these purposes. One step in that process was to tell offshore entry persons, in the information sheet issued at the start of the process, what issue would be investigated. Neither the RSA Manual nor the information sheet suggested that security criteria wider than those presented by the Convention, or any health criteria, would be investigated before a decision was made whether or not to lift the bar. The RSA Manual expressly stated, more than once, that these were issues that would be considered in the course of determining an application for a protection visa. The Minister was not bound to limit the inquiry in the way he did. The Minister could have established less confined inquiries about any matters which could be thought to bear upon the relevant public interest criterion. But the Minister did not do that. And in light of the contextual considerations set out earlier in these reasons, it is unsurprising that the Minister did not. The policy then being pursued (by establishing and implementing the RSA process) was directed to ensuring that, using the then structures of the Act, Australia adhered the Commonwealth parties in the Offshore Processing Case showed, the intention was that this should be done by a "non-statutory" administrative process. But compliance with Australia's international obligations was the driving force for all of the procedures that were established. the arguments advanced by international obligations. its The Act having been administered as it was, and the plaintiff having been detained as she was, the Minister may not now make the decision whether to Hayne make a determination under s 46A(2) by reference to any consideration except the outcome of the RSA process. It is important, however, to emphasise two points. First, as already explained, the Minister could lawfully have administered the Act in other ways. He did not. Second, the conclusion that the Minister may not now take account of the adverse security assessment which ASIO has provided in respect of the plaintiff, when deciding whether to make a determination under s 46A(2) to lift the bar, leaves the relevant security issues to be determined in the course of deciding whether a visa must be granted. Section 501(1) provides that the Minister may refuse to grant a visa to a person if the person does not satisfy the Minister that he or she passes the character test. A person fails71 that test if, among other things, there is a significant risk that the person, if allowed to enter or to remain in Australia, would "represent a danger to the Australian community or to a segment of that community". The consequences of the s 46A(2) power being unperformed What follows from the Minister's failure to decide whether to exercise the power given by s 46A(2)? The plaintiff has made no claim for mandamus. She claims a declaration that the Minister's power remains unperformed and a declaration to that effect should be made. Before turning to consider the construction and constitutional issues, however, it is convenient to consider the argument advanced by the Commonwealth parties that mandamus could not be granted in this matter. The Commonwealth parties submitted that the Offshore Processing Case decided that mandamus will not go to compel consideration of the exercise of power under s 46A. In that case, the Court said72: "Because ss 46A and 195A both state, in terms, that the Minister does not have a duty to consider whether to exercise the power given by the section, mandamus will not issue to compel the Minister to consider or reconsider exercising either power. That the Minister decided to consider exercising the powers and, for that purpose, directed the making of Refugee Status Assessments and Independent Merits Reviews does not entail that, if the process of inquiry miscarried, the Minister can be compelled again to consider exercising the power." It is important to notice, however, that the complaints made in the Offshore Processing Case were about steps taken in the course of conducting the 71 s 501(6)(d)(v). 72 (2010) 243 CLR 319 at 358 [99]. Hayne inquiries which the Minister had directed be undertaken. The complaints that were made and considered in that case were not complaints about the Minister failing to exercise power under s 46A(2) or s 195A(2). Rather, the issue was whether the Minister could be required, by mandamus, to make fresh inquiries about matters which had been examined imperfectly. Neither the argument in that case, nor the reasons for judgment, focused directly upon whether mandamus could issue to compel the Minister, having already embarked upon consideration of whether to exercise the power given by s 46A(2), to decide whether to exercise that power. And, as was made plain in the Court's reasons73, it was not necessary for the Court to examine whether submissions then made by the Commonwealth parties "might permit or require modification to accommodate cases ... where the right that is affected by conducting the impugned process of decision making is a right to liberty". In this matter, the special case prepared by the parties recorded that, if the Court declared "that the Minister erred in failing to decide whether to exercise his power under s 46A(2) ... or that an officer of the Department erred in failing to refer the Plaintiff's case to the Minister for him to exercise his power under s 46A(2), consideration would be given by the Department" to whether the plaintiff's case should be referred to the Minister. Although this was expressed in the terms of Solicitor-General of the Commonwealth accepted that, as would be expected, the Department and the Minister would give effect to any declaration the Court made. the Department giving consideration taking action, If some controversy were later to emerge about what the Minister had or had not done in response to this Court's decision, that controversy would fall for consideration on the facts and in the circumstances as they then existed. Whether, or to what extent, that controversy would require examination of the availability of mandamus as a remedy which will go "[w]here there is no specific remedy and by reason of the want of that specific remedy justice cannot be done unless a mandamus is to go"74 need not be decided. 73 (2010) 243 CLR 319 at 359 [100]. 74 In re Nathan (1884) 12 QBD 461 at 473 per Brett MR. See also R v Bank of England (1780) 2 Dougl 524 at 526 per Lord Mansfield [99 ER 334 at 335]; R v Lambourn Valley Railway Co (1888) 22 QBD 463 at 466 per Pollock B; Blackstone, Commentaries on the Laws of England, (1768), bk 3, c 7 at 110; Halsbury's Laws of England, 1st ed, vol 10, par 160. Hayne The construction and constitutional issues It is nonetheless desirable to deal with the construction and constitutional issues which were argued. The construction issue must be determined in light of the scheme which is revealed by the relevant provisions of the Act. The scheme of the Act Sections 189, 196 and 198 of the Act are the central provisions regulating detention of unlawful non-citizens. The relevant text of those sections is set out in the reasons of other members of the Court and need not be repeated here. The questions which arise in this matter about the construction and application of those provisions cannot be answered without first identifying the place of those provisions in the overall scheme of the Act. As I have previously pointed out75, the Act has a binary structure. Its central provisions posit a choice between two outcomes for non-citizens within Australia's migration zone. The Act divides76 non-citizens into "lawful non-citizens" and "unlawful non-citizens" according to whether the non-citizen in question holds a visa that is in effect. If a non-citizen can make a valid application for a visa, the Minister must decide either to grant77 or refuse to grant78 that application according to whether the Minister is satisfied that the requirements stated within the Act or regulations are met. Subject to some presently irrelevant exceptions, an officer is bound79 to detain a person whom the officer knows or reasonably suspects to be an unlawful non-citizen. An unlawful non-citizen who has been detained under s 189 must be kept in immigration detention until the occurrence of one of the terminating events prescribed by s 196(1). Section 198(2) obliges an officer to remove an unlawful non-citizen from Australia "as soon as reasonably practicable". These provisions of the Act are directed to the regulation of persons entering and remaining in Australia. Those whom the Act classifies as "unlawful non-citizens" are persons who have no permission to travel to and enter Australia or to remain in Australia. Sections 189, 196 and 198 provide powers of detention 75 Plaintiff M47/2012 (2012) 86 ALJR 1372 at 1413 [176]; 292 ALR 243 at 291. 76 ss 13(1) and 14(1). 77 s 65(1)(a). 78 s 65(1)(b). Hayne and removal in aid of effecting a fundamental purpose of the Act, namely, providing that those who are not citizens of Australia may travel to and enter Australia and may remain in Australia only if they have permission to do so. No provision of the Act countenances any middle ground between being a lawful non-citizen (who is entitled to remain in Australia in accordance with any applicable visa requirements) and being an unlawful non-citizen (who may, and who usually must, be detained and who, assuming no other relevant provision or procedure under the Act remains unperformed, must be removed from Australia as soon as reasonably practicable). An unlawful non-citizen cannot be removed from Australia unless he or she will be received at the place to which he or she is taken. Removal means removal to a place. Ordinarily, the country of which the person concerned is a national is bound80 to receive that person and there may be other countries that are willing to do so. But the Act is silent on these matters. And it says nothing about the case of the unlawful non-citizen who is stateless and thus without a country of nationality that is bound to receive that person. Likewise, the Act does not deal expressly with the case of an unlawful non-citizen who has a well-founded fear of persecution for a Convention reason in his or her country of nationality but who is not entitled to a protection visa. But, as the decision in Plaintiff M47/2012 demonstrates, the Act does recognise expressly that persons with a well-founded fear of persecution for a Convention reason may validly be refused a protection visa under the Act. The Act recognises expressly that a person who is a refugee may be and remain an unlawful non-citizen whom an officer is bound to remove from Australia as soon as reasonably practicable. The plaintiff and the Commonwealth parties submitted that s 198(2) should be construed as not permitting removal from Australia of a person found to have a well-founded fear of persecution for a Convention reason in his or her country of origin to that country. It is not necessary to examine whether that is right. The plaintiff has not asked to be returned to Sri Lanka and the Minister does not propose to remove her there. The plaintiff's detention is authorised The parties in this case agreed that the plaintiff has no present right to enter and remain in any country other than Sri Lanka. They agreed that "[a]t present" there is no other country to which the plaintiff can be sent and that efforts made by the Department to resettle persons to whom Australia owes 80 See Plaintiff M70/2011 v Minister for Immigration and Citizenship (Malaysian Declaration Case) (2011) 244 CLR 144 at 190 [92]; [2011] HCA 32. Hayne protection obligations but who are the subject of adverse security assessments have been unavailing. The Court must decide the questions reserved on the footing that the plaintiff cannot and will not be removed from Australia unless or until circumstances change. There is no basis for saying whether or when that might occur. The plaintiff submitted that, in these circumstances, the Act does not authorise her detention even though she has no permission to enter Australia or remain in Australia. That is, the effect of the plaintiff's submissions was that, the plaintiff having come within the international boundaries of Australia, the Act does not, or at least does not validly, prevent her entering and remaining in Australia free from any form of detention. That submission must be rejected. Construing the Act In Al-Kateb, this Court decided, by majority81, that ss 189, 196 and 198 authorised and required the detention of an unlawful non-citizen, even if his or her removal from Australia was not reasonably practicable in the foreseeable future. In Plaintiff M47/2012, two members of the Court concluded82 that the dissenting opinion about the construction of those provisions expressed83 by Gleeson CJ in Al-Kateb was to be preferred. But Al-Kateb has not been overruled. Fundamental principle requires84 that this Court not now depart from the construction of the relevant provisions which was adopted by the majority in Al-Kateb. All that has changed since Al-Kateb was decided is the composition of the Bench. That is not reason enough to revisit the decision85. And when the Parliament has had repeated opportunities to amend the effect of the decision in 81 (2004) 219 CLR 562 at 581 [33]-[35] per McHugh J, 640 [231]-[232], 643 [241] per Hayne J, 659-662 [292], [295], [298] per Callinan J, 662-663 [303] per 82 (2012) 86 ALJR 1372 at 1403-1404 [117]-[120], 1408 [145] per Gummow J, 1477-1479 [527]-[534] per Bell J; 292 ALR 243 at 276-277, 282, 378-381. 83 (2004) 219 CLR 562 at 576-578 [17]-[22]. 84 See, for example, Queensland v The Commonwealth (1977) 139 CLR 585 at 599 per Gibbs J; [1977] HCA 60; Lee v New South Wales Crime Commission (2013) 87 ALJR 1082 at 1106-1107 [62]-[66]; 302 ALR 363 at 390-391; [2013] HCA 39. 85 The Tramways Case [No 1] (1914) 18 CLR 54 at 69; [1914] HCA 15; Queensland v The Commonwealth (1977) 139 CLR 585 at 600. Hayne that case, but has not done so, this Court should not depart from what was then held to be the proper construction of the relevant provisions. The Act fixes the end of immigration detention by reference to the occurrence of one of the four terminating events prescribed by s 196(1) and referred to at the start of these reasons: removal from Australia, deportation, grant of a visa, or an officer beginning to deal with the non-citizen for the purpose of taking that person to a regional processing country. The requirement of s 196(1) that an unlawful non-citizen detained under s 189 must be kept in immigration detention "until" the happening of one of those events cannot be construed as using the word "until" in some purposive sense. One of the terminating events is the grant of a visa and it is not to be supposed that detention could be for the purpose of granting the person detained a visa. It thus follows that the word "until" must be read in s 196(1) as fixing the end of detention, not as fixing the purpose or purposes for which detention is or may be effected. Understood in that way, s 196 (when read with ss 189 and 198) takes its place as a provision which is central to effecting the overall purpose of the whole of Pt 2 (ss 213-274) of the Act. That purpose is to control the arrival and presence of non-citizens in Australia. Mandatory detention under and for the purposes of the Act is the means which the Parliament has adopted to assert control over the arrival and presence of such persons. Sections 189, 196 and 198 do that by preventing those who have no permission to travel to and enter Australia and no permission to remain in Australia from doing so. Detention under and for the purposes of the Act in accordance with those provisions serves the purpose of controlling the arrival and presence of non-citizens in Australia. Validity of the provisions The Court decided86, in Al-Kateb, that ss 189, 196 and 198 of the Act, construed in the manner that has been described, are valid. Again, this conclusion should not now be revisited. It may be accepted87 that this Court may more readily reconsider constitutional issues than it should reconsider questions of statutory construction. Nonetheless, the conclusion reached by the majority in 86 (2004) 219 CLR 562 at 585-586 [48] per McHugh J, 650-651 [266]-[268] per Hayne J, 661 [298] per Callinan J, 662-663 [303] per Heydon J. 87 See, for example, Australian Agricultural Co v Federated Engine-Drivers and Firemen's Association of Australasia (1913) 17 CLR 261 at 278 per Isaacs J; [1913] HCA 41; Queensland v The Commonwealth (1977) 139 CLR 585 at 599 per Hayne For the reasons which I gave in Al-Kateb, I consider that the provisions of ss 189, 196 and 198, when construed in the manner I have described, are valid laws of the Commonwealth. Nothing is to be gained by my rehearsing what I said there. Chapter III of the Constitution does not limit the powers given by s 51(xix) and (xxvii) in a way which precludes the enactment of those provisions or, in the events that have happened, their continued valid application to the plaintiff. A law which requires the detention of a person who has no permission to travel to and enter Australia and no permission to remain in Australia until that person is removed from Australia does not constitute any exercise of the judicial power of the Commonwealth, regardless of whether removal can be seen to be reasonably practicable in the foreseeable future. It is a law within the legislative powers of the Parliament and is valid. Whether it is thought to be a good law or a bad law, a fair law or an unfair law, or a law that is consistent with basic tenets of common humanity is a matter for the Parliament and "the people of the Commonwealth"88, not for the courts. Conclusion and orders For these reasons, the plaintiff fails in her challenge to the construction of ss 189, 196 and 198 of the Act. She fails in her challenge to the validity of those provisions in their application to her. She succeeds in her arguments that the Minister's power under s 46A(2) remains unperformed and a declaration to that effect should be made. She should have one half of her costs of the special case. I would answer the questions stated for the opinion of the Full Court as follows: Do ss 189, 196 and 198 of the Migration Act 1958 (Cth) authorise the detention of the Plaintiff? Answer: Yes. If the answer to question 1 is "yes", are these provisions beyond the legislative power of the Commonwealth insofar as they apply to the Plaintiff? Answer: Does the fact that the Plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) reveal an error of law? 88 Constitution, s 24. Hayne Answer: Yes. 4. What relief, if any, should issue? Answer: There should be a declaration that the Minister was and is bound to determine whether s 46A(1) of the Act does not apply to an application by the plaintiff for a protection visa. 5. Who should pay the costs of and incidental to this Special Case? Answer: The defendants should pay one half of the plaintiff's costs. Crennan Bell CRENNAN, BELL AND GAGELER JJ. By application in the original jurisdiction of the High Court, for declaratory relief and habeas corpus, the plaintiff claims her present detention is not authorised by ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act"). It was not disputed in this Court that the plaintiff, a Sri Lankan national, has a well-founded fear of persecution for the reasons of race and political opinion if she returns to Sri Lanka. The parties have agreed in stating questions of law in the form of a special case for the opinion of the Full Court. Those questions, the background facts and the relevant statutory provisions are all set out in the reasons for judgment of Kiefel and Keane JJ. As their Honours note, the defendants have not sought to argue that Plaintiff M47/2012 v Director-General of Security89 was not correctly decided. Their Honours go on to conclude that as at 24 April 2012 an error of law led the Department to conclude that PIC 4002 was a basis on which a visa could have been lawfully refused to the plaintiff90. We agree with the answers given by Kiefel and Keane JJ to Questions 3 and 4 for the reasons given by their Honours. It follows from those answers to Questions 3 and 4 that the Minister has yet to complete his consideration under s 46A of the Act as to whether or not to lift the bar so as to allow the plaintiff to apply for a visa. Accordingly, the plaintiff's present detention can and should be held to be validly authorised by ss 189 and 196 of the Act. Her present detention is for the purpose of completing statutory processes, which will result in a determination of whether she is or is not to be granted permission to remain in Australia, and for the purpose of removing her if that permission is not granted. On that basis, we would answer "Yes" to Question 1 without reaching the constitutional issue determined in Al-Kateb v Godwin91, which is the subject- matter of Question 2. Any reconsideration of that constitutional issue can and should await another day. To explain why the constitutional issue determined in Al-Kateb need not be reached, it is necessary to start with the prior constitutional holding in 89 (2012) 86 ALJR 1372; 292 ALR 243; [2012] HCA 46. 90 Reasons of Kiefel and Keane JJ at [222]. 91 (2004) 219 CLR 562; [2004] HCA 37. Crennan Bell Chu Kheng Lim v Minister for Immigration92. The plaintiff seeks not to challenge that prior holding but rather to rely on it. The constitutional holding in Lim was that of Brennan, Deane and Dawson JJ, with whom Mason CJ agreed. They constituted a majority of the Court and their views "reflect the principles for which the case stands as authority"93. Their holding was that laws authorising or requiring the detention in custody by the executive of non-citizens, being laws with respect to aliens within s 51(xix) of the Constitution, will not contravene Ch III of the Constitution, and will therefore be valid, only if94: "the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered." The necessity referred to in that holding in Lim is not that detention itself be necessary for the purposes of the identified administrative processes but that the period of detention be limited to the time necessarily taken in administrative processes directed to the limited purposes identified95. The temporal limits and the limited purposes are connected such that the power to detain is not unconstrained. So much is clear from their Honours' separate observations that Ch III is not contravened by laws which require or authorise the executive to detain non-citizens in custody "in the context and for the purposes of", and in that sense as an "incident of", processes allowing for application for, and consideration of, the grant of permission to remain in Australia, and providing for deportation or removal if permission is not granted96. The common law does not recognise any executive warrant authorising arbitrary detention. A non-citizen can therefore invoke the original jurisdiction of the Court under s 75(iii) and (v) of the Constitution in respect of any detention if and when that 92 (1992) 176 CLR 1; [1992] HCA 64. 93 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 11 [14]; [2004] HCA 49. 94 (1992) 176 CLR 1 at 33. 95 See Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 14 [26]. 96 (1992) 176 CLR 1 at 10, 32. Crennan Bell detention becomes unlawful97. What begins as lawful custody under a valid statutory provision can cease to be so. The constitutional holding in Lim was therefore that conferring limited legal authority to detain a non-citizen in custody as an incident of the statutory conferral on the executive of powers to consider and grant permission to remain in Australia, and to deport or remove if permission is not granted, is consistent with Ch III if, but only if, the detention in custody is limited to such period of time as is reasonably capable of being seen as necessary for the completion of administrative processes directed to those purposes. Subject to Al-Kateb, and its companion case, Minister for Immigration and Multicultural and Indigenous Affairs v Al Khafaji98, that is the constitutional principle for which Lim remains authority. The majority in those cases did not overrule Lim. The minority neither advanced nor supported a proposition, contrary to Lim, that it is unlawful to detain in custody a non-citizen while administrative processes capable of resulting in admission to Australia have not been exhausted. The constitutional issue raised for determination in Al-Kateb and Al Khafaji was whether detention in custody by the executive of a non-citizen can continue consistently with Ch III once the point is reached when (1) the administrative processes allowing for application for, and consideration of, the grant of permission to remain in Australia have been exhausted and (2) there is no real prospect that removal of the non-citizen from Australia will be practicable in the reasonably foreseeable future. Mr Al-Kateb was a stateless Palestinian born in Kuwait. He requested in writing to be removed from Australia either to Kuwait or to Gaza. Nine months later, all attempts to obtain the international co-operation necessary for that removal to occur had been unsuccessful. At first instance in the Federal Court, von Doussa J rejected a submission that he should find "that removal from Australia [would] be achievable, but may take time" or that "there remain[ed] a number of options which [were] yet to be exhausted"99 and found instead "that removal from Australia [was] not reasonably practicable at the [then] present time as there [was] no real likelihood or prospect of removal in the reasonably 97 (1992) 176 CLR 1 at 19-20. 98 (2004) 219 CLR 664; [2004] HCA 38. 99 SHFB v Goodwin [2003] FCA 294 at [19]. Crennan Bell foreseeable future"100. In this Court, Gleeson CJ treated that finding as equivalent to a finding that the purpose of removal had become "incapable of fulfilment"101. Mr Al Khafaji was an Iraqi citizen. He was denied a protection visa, despite being found to have a well-founded fear of persecution should he be returned to Iraq, because he had not taken all available steps to avail himself of a right to reside in Syria. He then asked in writing to be removed to Syria or to any third country but the international co-operation necessary for that to occur was not forthcoming after nearly two years. At first instance in the Federal Court, Mansfield J found "nothing to indicate that there [was] any real prospect of [Mr Al Khafaji] being returned to Syria in the reasonably foreseeable future, and nothing to indicate that he [could] successfully be removed to another country in any measurable timeframe"102. The point reached in Al-Kateb and in Al Khafaji has not been reached in the present case. First, because the answers to Questions 3 and 4 have the effect that the steps to be taken in relation to the plaintiff under and for the purposes of the RSA process have not been completed, the administrative processes capable of resulting in the plaintiff being granted permission to remain in Australia have not yet been exhausted. The agreement of the parties is that the Department will in such event consider "whether the [p]laintiff's case should be referred to the Minister for the possible exercise of his power under s 46A(2)". There is no dispute that steps taken under and for the purposes of the RSA process are "steps taken under and for the purposes of the [Act]"103. The present case is in this respect indistinguishable from Plaintiff M47/2012 v Director-General of Security104, in which the majority held it to be unnecessary and inappropriate to revisit Al-Kateb and Al Khafaji. 100 [2003] FCA 294 at [21]. 101 (2004) 219 CLR 562 at 572 [3]. 102 Al Khafaji v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 1369 at [21]. 103 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 334 [9]; [2010] HCA 41. 104 (2012) 86 ALJR 1372 at 1397 [72], 1421-1422 [226], 1457 [404]-[405], 1465 [460]; 292 ALR 243 at 267, 302, 350-351, 362. Crennan Bell Secondly, notwithstanding the qualified concession of the Minister that it "would be open" to the Court to do so, we are not prepared to draw from the material contained in the special case an inference of fact that there is currently no realistic prospect that the plaintiff will be able to be removed from Australia in the reasonably foreseeable future. The special case contains no agreement between the parties to that effect. The material contained in the special case discloses that the plaintiff has close relatives living both in India and in another country which has an established practice of offering substantial resettlement places on an annual and ongoing basis, and that the plaintiff has quite recently been invited to approach India and that other country directly to seek resettlement and has not suggested through her legal representatives either that she has done so or cannot do so. The special case also discloses that the Department intends to keep her case under review with a view to approaching resettlement countries should there be a change in circumstances that would make such an approach appropriate, the possible changes in circumstances including "a change in the [p]laintiff's personal circumstances, or further information being obtained regarding Unlike Mr Al-Kateb and Mr Al Khafaji, the plaintiff has not asked the Minister in writing to be removed to any country. The options for her removal have not yet been exhausted. in resettlement countries". the [p]laintiff's relatives As has been said and referred to many times105: "It is not the practice of the Court to investigate and decide constitutional questions unless there exists a state of facts which makes it necessary to decide such a question in order to do justice in the given case and to determine the rights of the parties." Adherence to that practice is especially important in a case, such as the present, where consideration of the constitutional question sought to be raised would involve the reconsideration of an earlier decision, a course the contemplation of which independently attracts a "strongly conservative cautionary principle"106. The plaintiff seeks to argue, contrary to the holding of the majority in Al-Kateb and Al Khafaji and in reliance on the holding in Lim, that once the grant 105 Lambert v Weichelt (1954) 28 ALJ 282 at 283. See also Cheng v The Queen (2000) 203 CLR 248 at 270 [58]; [2000] HCA 53; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 473-474 [248]-[252]; [2001] HCA 51; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 437 [355]; [2009] HCA 2. 106 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352 [70]. See also Queensland v The Commonwealth (1977) 139 CLR 585 at 599; [1977] HCA 60. Crennan Bell of permission to remain in Australia is no longer an available option for a non-citizen, the continuation of detention can only be for the purpose of deportation, which purpose is "necessarily limited by the capacity to achieve it". In circumstances where consideration of granting the plaintiff permission to remain in Australia has not been completed and where incapacity to achieve removal of the plaintiff has not been shown, a state of facts which would make it necessary to investigate and decide the argument does not exist. Acceptance of the argument would not deny the validity of the plaintiff's current detention under ss 189 and 196 of the Act. For the reasons given we would answer the questions stated for the opinion of the Full Court as follows: Question 1 Do ss 189, 196 and 198 of the Migration Act 1958 (Cth) authorise the detention of the Plaintiff? Answer The plaintiff's present detention is authorised by ss 189 and 196 of the Act. Question 2 If the answer to question 1 is "yes", are these provisions beyond the legislative power of the Commonwealth insofar as they apply to the Plaintiff? Answer Save that the plaintiff's present detention is validly authorised by ss 189 and 196 of the Act, it is not necessary to answer this question. Question 3 Does the fact that the Plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) reveal an error of law? Answer Yes. Question 4 What relief, if any, should issue? Crennan Bell Answer It should be declared that the exercise of the Minister's power was affected by an error of law in that, in deciding whether to refer the plaintiff's application to the Minister, an officer of the Commonwealth acted upon PIC 4002 as a consideration relevant to the decision. Question 5 Who should pay the costs of and incidental to this Special Case? Answer The defendants. 151 KIEFEL AND KEANE JJ. On 8 May 2010 the plaintiff, a Sri Lankan national of Tamil ethnic origin, and her two eldest sons arrived in Australia by boat from India. The plaintiff had been a member of the Liberation Tigers of Tamil Eelam. On arrival the plaintiff and her sons were detained under s 189(3) of the Migration Act 1958 (Cth) ("the Act") and were transported to Christmas Island. On 7 June 2010 the plaintiff and her sons were moved to Leonora Alternative Place of Detention in Western Australia. From that point they were held in immigration detention under s 189(1) of the Act. On 27 July 2010 the plaintiff submitted to the Department of Immigration and Citizenship ("the Department") a request for protection as a refugee. The request was made under the Refugee Status Assessment process ("the RSA process"), which was directed to whether the Minister should exercise his discretion under s 46A(2) of the Act. That assessment was undertaken. On 28 March 2011 the Minister made a "residence determination" pursuant to s 197AB of the Act permitting the plaintiff and her sons to reside in "community detention". On 19 September 2011 the plaintiff was advised by the Department that she had been found to be a person in respect of whom Australia owes protection obligations under the Refugees Convention107. On 8 December 2011 the Australian Security Intelligence Organisation ("ASIO") interviewed the plaintiff for the purpose of conducting a security assessment of her. On 24 April 2012, ASIO furnished the Department with an "adverse security assessment" with respect to the plaintiff. On 24 April 2012 the plaintiff was advised by the Department that, as a result of that security assessment, she would not satisfy Public Interest Criterion 4002 ("PIC 4002") and was therefore not eligible under the Act for the grant of a permanent visa. On 10 May 2012, following the adverse security assessment from ASIO, the Minister revoked the residence determination under s 197AD; and the plaintiff and her sons have been in immigration detention ever since. 107 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). It was common ground between the parties that the plaintiff has a well-founded fear of persecution in Sri Lanka for reasons of race and political opinion. The defendants accepted that it is open to this Court to proceed on the footing that, because other countries are unwilling to receive the plaintiff, removing her from Australia to another country is not reasonably practicable at the present, and there is no real likelihood or prospect of removal in the reasonably foreseeable future. On the other hand, the defendants did not accept that there is no reasonable future prospect of resettling the plaintiff in another country. The defendants asserted that the plaintiff's detention is authorised pursuant to s 189(1) and s 196(1) of the Act for the purpose of removing her from Australia as soon as it is reasonably practicable to do so and segregating her from the community pending her removal. The parties agreed that the plaintiff has no present right to enter and remain in any country other than Sri Lanka. The Minister does not propose to remove the plaintiff to Sri Lanka against her will; and the plaintiff has not asked the Minister in writing to be removed to Sri Lanka or any other country. Approaches to other countries with a view to resettling the plaintiff have met with negative responses. While the plaintiff remains in detention, the Department intends to keep her case under review with a view to approaching other countries to accept the plaintiff for resettlement should there be a change in circumstances that would make such an approach appropriate. Special Case questions In proceedings commenced in the original jurisdiction of the Court in which the plaintiff claimed that her detention is unlawful, the following questions have been stated for determination: Do ss 189, 196 and 198 of the Act authorise the detention of the plaintiff? If the answer to question 1 is "yes", are these provisions beyond the legislative power of the Commonwealth insofar as they apply to the plaintiff? Does the fact that the plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) reveal an error of law? 4. What relief, if any, should issue? 5. Who should pay the costs of and incidental to this Special Case? These questions will be addressed in turn. The first four questions involve the further agitation of arguments concerning the operation of the Act which have been the subject of extensive discussion in recent decisions of this Court108. In the light of this discussion, and in the interests of coherence and clarity, the discussion of these questions may be relatively brief. In order to deal with these questions it is neither necessary nor desirable to traverse yet again the detailed examinations of the Act undertaken in recent cases, or to review the reasons which led to the resolution of each of those cases. The one exception in this regard is the decision in Al-Kateb v Godwin109, which was said by the plaintiff to have been incorrectly decided. It will be necessary to review the basis of that decision in the course of addressing the first question. Question 1: the detention of the plaintiff under the Act The plaintiff contended that her detention is not authorised by ss 189, 196 and 198 of the Act. It is necessary to set out these provisions at some length. Section 189 concerns the detention of unlawful non-citizens. It provides relevantly: If an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person. If an officer knows or reasonably suspects that a person ... in an excised offshore place is an unlawful non-citizen, the officer must detain the person." 108 Minister for Immigration and Multicultural Affairs v Khawar (2002) 210 CLR 1; [2002] HCA 14; Al-Kateb v Godwin (2004) 219 CLR 562; [2004] HCA 37; Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1; [2004] HCA 49; NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 CLR 161; [2005] HCA 6; Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 (2006) 231 CLR 1; [2006] HCA 53; Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319; [2010] HCA 41; Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144; [2011] HCA 32; Plaintiff M47/2012 v Director-General of Security (2012) 86 ALJR 1372; 292 ALR 243; [2012] HCA 46. 109 (2004) 219 CLR 562. It was common ground that, by virtue of ss 5(1) and 14 of the Act, the plaintiff became an "unlawful non-citizen" upon her arrival in Australia. Once an unlawful non-citizen has been detained under s 189, s 196 comes into operation. So far as is relevant, it provides: "(1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until: he or she is removed from Australia under section 198 or an officer begins to deal with the non-citizen under subsection 198AD(3); or he or she is deported under section 200; or he or she is granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than as referred to in paragraph (1)(a), (aa) or (b)) unless the non-citizen has been granted a visa." Section 198 of the Act provides, relevantly to question 1: "(1) An officer must remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be so removed. (2) An officer must remove as soon as reasonably practicable an unlawful non-citizen: (c) who either: has not made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; or has made a valid application for a substantive visa, that can be granted when the applicant is in the migration zone, that has been finally determined." In Al-Kateb, this Court held that these provisions, properly construed, authorised the continued detention of an unlawful non-citizen whose prospects of removal from Australia were substantially the same as those of the plaintiff. The plaintiff submitted that Al-Kateb should be re-opened and overruled. In that case, the appellant was a "stateless person", as that term is defined in Art 1 of the Convention relating to the Status of Stateless Persons. He arrived in Australia by boat without a passport or Australian visa110. He was taken into immigration detention and unsuccessfully applied for a protection visa111. The appellant wrote to the Minister and requested that he be removed from the country, thus enlivening s 198(1) of the Act. Because of difficulties in securing the co-operation of other countries in relation to the appellant's resettlement, removal to another country was not possible. It was common ground that removing the appellant from Australia was not reasonably practicable and there was no real likelihood or prospect of removal in the reasonably foreseeable future112. The majority of the Court, consisting of McHugh, Hayne, Callinan and Heydon JJ, held that ss 189, 196 and 198 authorised the continued detention of an unlawful non-citizen even in circumstances where the removal of the unlawful non-citizen from Australia was not reasonably practicable in the foreseeable future. In their Honours' view, the authority to detain an unlawful non-citizen was not limited to a reasonable period within which the removal of that person might be arranged. In the leading judgment of the majority, Hayne J noted113 that "[t]he provisions requiring detention of unlawful non-citizens do not expressly refer to the purpose of detention." Instead, "s 189 requires officers to detain unlawful non-citizens and s 196 identifies the period of detention." The imposition of the 110 (2004) 219 CLR 562 at 596 [79]. 111 (2004) 219 CLR 562 at 630 [195]. 112 (2004) 219 CLR 562 at 631 [197]. 113 (2004) 219 CLR 562 at 638 [224]. duty on an officer under s 198 to remove an unlawful non-citizen recognised that114: "the co-operation of persons, other than the non-citizen and the officer, will often (indeed usually) be necessary before the removal can occur. The duty to remove must be performed within that time. And so long as the time for performance of that duty has not expired, s 196 in terms provides that the non-citizen must be detained." (emphasis in original) "[i]t cannot be said that the purpose of detention (the purpose of removal) is shown to be spent by showing that efforts made to achieve removal have not so far been successful. And even if, as in this case, it is found that 'there is no real likelihood or prospect of [the non-citizen's] removal in the reasonably foreseeable future', that does not mean that continued detention is not for the purpose of subsequent removal. The legislature having authorised detention until the first point at which removal is reasonably practicable, it is not possible to construe the words used as being subject to some narrower limitation ... The time for removal is fixed by this legislation by reference to reasonable practicability." (emphasis in original) Hayne J expressly adverted116 to the principle of construction that "legislation is not to be construed as interfering with fundamental rights and freedoms unless the intention to do so is unmistakably clear." His Honour said that117: "Reading the three sections together ... what is clear is that detention is mandatory and must continue until removal, or deportation, or the grant of a visa. The relevant time limitation introduced to that otherwise temporally unbounded detention is the time limit fixed by s 198 – removal as soon as reasonably practicable after certain events. No other, more stringent, time limit can be implied into the legislation. ... [T]he time limit imposed by the Act cannot be transformed by resort to the general principle identified. The words are, as I have said, intractable." 114 (2004) 219 CLR 562 at 638-639 [226]. 115 (2004) 219 CLR 562 at 640 [231]. 116 (2004) 219 CLR 562 at 643 [241]. 117 (2004) 219 CLR 562 at 643 [241]. In relation to the construction of ss 189, 196 and 198, McHugh and Heydon JJ agreed with Hayne J118. The reasoning of Callinan J did not expressly discuss the principle of legality addressed by Hayne J; but it is apparent from his reasons that Callinan J regarded the effect of the statutory language as sufficiently clear to leave no room for doubt as to the meaning of the Act119. The plaintiff submitted that Al-Kateb was wrongly decided and that it should not be followed. The minority in Al-Kateb reached their conclusions by somewhat different paths of reasoning120. In their separate reasons in Plaintiff M47/2012 v Director-General of Security121, Gummow and Bell JJ expressed their preference for the approach of Gleeson CJ in Al-Kateb. We will, therefore, focus upon the reasoning of Gleeson CJ. In Al-Kateb, the nub of the reasoning of Gleeson CJ122 was that the Act makes no express provision for indefinite detention. In resolving questions raised by legislative silence, regard should be had to a fundamental principle of interpretation, that of legality. It presumes that the legislature does not intend to abrogate or curtail human rights or freedoms (of which personal liberty is the most basic) unless such an intention is manifested by unambiguous language. This reasoning invites attention to two questions: first, whether the Act is indeed "silent" on the question of detention where "the assumption underlying s 198 (the reasonable practicability of removal) is false", and secondly, whether the plaintiff has a fundamental right to be at liberty within the Australian community so as to engage the principle of interpretation referred to by As to the first of these questions, there is much to be said in favour of the view that the Act is not relevantly "silent". The scheme of the Act contemplates that only those aliens who hold a visa are entitled to be at large in the Australian community. In this context, the absence of an express limitation upon continued detention where removal is not practicable within a reasonable time is not 118 (2004) 219 CLR 562 at 581 [33] per McHugh J, 662-663 [303] per Heydon J. 119 (2004) 219 CLR 562 at 661-662 [297]-[298]. 120 (2004) 219 CLR 562 at 576-578 [17]-[22] per Gleeson CJ, 607-609 [118]-[125] per Gummow J, 630 [193] per Kirby J. 121 (2012) 86 ALJR 1372 at 1402-1404 [110]-[121] per Gummow J, 1479 [532]-[534] per Bell J; 292 ALR 243 at 275-278, 380-381. 122 (2004) 219 CLR 562 at 576-577 [18]-[19]. "silence" on the part of the legislature. The circumstance that the language of ss 189, 196 and 198 is not qualified by any indication that the mandate requiring detention depends upon the reasonable practicability of removal within any time frame is eloquent of an intention that an unlawful non-citizen should not be at large in the Australian community: the mandate in s 189 is unqualified in its terms, and the operation of the mandate in s 196(1) is, in terms (subject only to the possibility of the Minister making a "residence determination" under s 197AB of the Act), until the unlawful non-citizen is removed from Australia under s 198 or the unlawful non-citizen is granted a visa. It has been said123 that the authority to detain conferred by s 196(1) is constrained under s 198(2) by the purpose of removal within a reasonable time, and that where this purpose is presently incapable of fulfilment, the authority to detain expires. But to say that is to fail to recognise that ss 196 and 198 are parts of a legislative scheme which includes s 189. Even if it were to be accepted that s 196(1) ceased to authorise the continuing detention of an unlawful non-citizen, and the detainee were released, s 189 would then be engaged to require immediate detention in order to serve the evident purpose of preventing unauthorised entry into the Australian community. As to the second of these points, an alien's right to be at liberty in Australia is to be approached as a matter of statutory entitlement under the Act rather than as a "fundamental right". The view of the minority in Al-Kateb, viz, that the Act leaves room for the possibility that an alien who is an unlawful non-citizen may lawfully be at liberty within the Australian community without a visa issued pursuant to the provisions of the Act, derives no support from the language of the Act. Nor does it derive support from any principle of the common law that an alien who is unlawfully in Australia is entitled to be at liberty in the Australian community as if he or she were an Australian citizen or a non-citizen lawfully present in Australia. In Chu Kheng Lim v Minister for Immigration, Brennan, Deane and "While an alien who is actually within this country enjoys the protection of our law, his or her status, rights and immunities under that law differ from the status, rights and immunities of an Australian citizen in a variety of important respects. For present purposes, the most important difference … lies in the vulnerability of the alien to exclusion or 123 Al-Kateb v Godwin (2004) 219 CLR 562 at 608 [121]-[122] per Gummow J. 124 (1992) 176 CLR 1 at 29; [1992] HCA 64. See also at 57 per Gaudron J. deportation. That vulnerability flows from both the common law and the provisions of the Constitution." (emphasis added; footnote omitted) While it may not be practicable to deport the plaintiff now or within the reasonably foreseeable future, the provisions of the Act serve to exclude the plaintiff from the Australian community, she having no right under the Act to enter, and be at large in, that community. As a matter of ordinary language, these provisions do not have the meaning and effect that an unlawful non-citizen who has not obtained a visa, but whose removal from Australia is not reasonably practicable because no other country is willing to accept him or her for resettlement, is to be allowed to go at large in the Australian community. Notwithstanding the high value accorded to individual liberty in the tradition of the common law, and even though a less stringent regime might have been adopted, it is hardly surprising that the Act operates to prevent entry into the Australian community save pursuant to authority granted by the Act. Thus, in the Supreme Court of the United Kingdom, it was said that it was unlikely that any State party to the Refugees Convention would have agreed to grant to refugees the freedom to move freely within its territory before the State had decided according to its own domestic laws whether or not to admit them to the territory in the first place125. In summary to this point, there is much force in the view of the majority in Al-Kateb that the Act does not leave room for the possibility that an unlawful non-citizen who does not hold a visa, but who cannot practicably be removed to another country because he or she is not yet welcome in Australia, is entitled to be at liberty within the Australian community, either generally or until removal might become practicable. Indeed, with great respect to those who thought otherwise, it is difficult to accept that it is not the better view of the relevant provisions of the Act. But even if it could not be said that the interpretation of the Act for which the decision in Al-Kateb stands is definitely correct, there are powerful reasons not to permit the decision in Al-Kateb now to be called into question. It is not disputed that this Court may reconsider and depart from its previous decisions. Although there is "no very definite rule" as to the 125 R (ST) v Secretary of State for the Home Department [2012] 2 AC 135 at 153 [37]. circumstances in which this Court will do so126, a number of factors have been recognised to be relevant. Those factors were considered by Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ in John v Federal Commissioner of Taxation127: "The first was that the earlier decisions did not rest upon a principle carefully worked out in a significant succession of cases. The second was a difference between the reasons of the justices constituting the majority in one of the earlier decisions. The third was that the earlier decisions had achieved no useful result but on the contrary had led to considerable inconvenience. The fourth was that the earlier decisions had not been in a manner which militated against independently acted on in Queensland v The reconsideration, as had been Commonwealth128." the case In Wurridjal v The Commonwealth, French CJ said129 that, when considering whether to overrule previous decisions, this Court should be "informed by a strongly conservative cautionary principle, adopted in the interests of continuity and consistency in the law". While this Court's ultimate obligation is to give effect to the statute, departure from a previous interpretation by this Court is "a course [that] should not lightly be taken." In terms of the second factor referred to in John, there was no serious divergence between the reasoning adopted by the Justices who constituted the majority in Al-Kateb. Given that the principle of legality, on which the minority view in Al-Kateb depends, operates "to give effect to the will of Parliament by declaring the meaning of what Parliament has enacted"130, and given that the decision in Al-Kateb has stood for nine years without legislative correction, the suggestion that the majority view did not give effect to the will of Parliament has little practical attraction. It may be accepted that there may be many reasons why the legislature does not move to correct a judicial misinterpretation of its will; but 126 Attorney-General (NSW) v The Perpetual Trustee Co Ltd (1952) 85 CLR 237 at 243-244; [1952] HCA 2. 127 (1989) 166 CLR 417 at 438-439; [1989] HCA 5. 128 (1977) 139 CLR 585; [1977] HCA 60. 129 (2009) 237 CLR 309 at 352 [70]; [2009] HCA 2. 130 (2004) 219 CLR 562 at 577 [19]. that consideration has little force in relation to legislation where the legislature has been active in making amendments to the legislation in question but has refrained from altering the text the subject of earlier interpretation. Importantly in this regard, and with particular reference to the fourth factor referred to in John, the Parliament has acted on the basis of the majority view, introducing s 195A into the Act by the Migration Amendment (Detention Arrangements) Act 2005 (Cth) ("the Amendment Act"). Section 195A relevantly provides that: "(1) This section applies to a person who is in detention under section 189. If the Minister thinks that it is in the public interest to do so, the Minister may grant a person to whom this section applies a visa of a particular class (whether or not the person has applied for the visa)." The Explanatory Memorandum to the Amendment Act sheds further light on the Parliament's intention. It explains that131: "The Bill inserts a new section 195A, which provides the Minister with a non-compellable power to grant a visa to a person who is being held in immigration detention where the Minister is satisfied that it is in the public interest to do so. In the exercise of this power the Minister will not be bound by the provisions of the [Act] or regulations governing application and grant requirements. The Minister will have the flexibility to grant any visa that is appropriate to that individual's circumstances, including a Removal Pending Bridging Visa where the detainee has no right to remain in Australia but removal is not practicable in the foreseeable future." The introduction of this section may readily be understood as an attempt by the Parliament to ameliorate individual hardship that might follow from the decision in Al-Kateb. The assumption on which it proceeds is that the decision in Al-Kateb stands as an accurate interpretation of the legislative will. 131 Australia, House of Representatives, Migration Amendment (Detention Arrangements) Bill 2005, Explanatory Memorandum at 3 [10]. Regularity and consistency are important attributes of the rule of law132. As Kirby J said in K-Generation Pty Ltd v Liquor Licensing Court133, "care should be taken to avoid (especially within a very short interval) the re-opening and re-examination of issues that have substantially been decided by earlier decisions in closely analogous circumstances." While it is true that the obligation of this Court is to construe legislation faithfully rather than to perpetuate an erroneous interpretation134, there comes a point when a view of statutory construction which may reasonably have been contestable on the first occasion on which it was agitated must be acknowledged to have been settled. Whatever the original balance of strengths and weaknesses in the majority and minority views in Al-Kateb might have been, the decision should now be regarded as having decisively quelled the controversy as to the interpretation of the Act which arose in that case and in this. It should not be re-opened. For the sake of completeness, it may be noted that in the plaintiff's written submissions it was also argued that the present case is distinguishable from Al- Kateb because, unlike Mr Al-Kateb, the plaintiff is a person to whom s 198(2) rather than s 198(1) of the Act applies. The difference between the two provisions is immaterial for present purposes135. This argument was not pressed in oral argument. It should be rejected. For these reasons, the first question should be answered "Yes". Question 2: the validity of ss 189, 196 and 198 of the Act Section 51(xix) of the Constitution empowers the Parliament to make laws with respect to aliens. That this power includes the making of measures to prevent entry into the Australian community by those who have not been given 132 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 569 [67]; [2002] HCA 49; Central Bayside General Practice Association Ltd v Commissioner of State Revenue (Vic) (2006) 228 CLR 168 at 201 [92]; [2006] HCA 43; PGA v The Queen (2012) 245 CLR 355 at 401 [124]; [2012] HCA 21. 133 (2009) 237 CLR 501 at 569 [246]; [2009] HCA 4. 134 Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 13; [1987] HCA 19; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 439-440. 135 Plaintiff M47/2012 v Director-General of Security (2012) 86 ALJR 1372 at 1442 [331]; 292 ALR 243 at 330-331. permission to do so under Australian law is not at all remarkable. In Ruddock v Vadarlis, French J, as his Honour then was, said136: "The power to determine who may come into Australia is so central to its sovereignty that it is not to be supposed that the Government of the nation would lack under the power conferred upon it directly by the Constitution, the ability to prevent people not part of the Australian community, from entering." The plaintiff submitted that, exceptional cases aside, the involuntary detention of a person in the exercise of the Parliament's power to make laws with respect to aliens, and, in that regard, to authorise detention by the executive "to prevent people not part of the Australian community, from entering", is permissible only as a consequence of the judicial adjudication of the criminal guilt of that person for past acts. This submission was said to be derived from Ch III of the Constitution, and to be applicable to citizen and non-citizen alike. The plaintiff contended that, if ss 196 and 198 are construed to authorise continued detention where removal is not reasonably practicable within a reasonable time, then such detention is inconsistent with Ch III of the Constitution. That contention was rejected by the majority in Al-Kateb. In that regard, "A law requiring the detention of the alien takes its character from the purpose of the detention. As long as the purpose of the detention is to make the alien available for deportation or to prevent the alien from entering Australia or the Australian community, the detention is non- punitive. The Parliament of the Commonwealth is entitled, in accordance with the power conferred by s 51(xix) and without infringing Ch III of the Constitution, to take such steps as are likely to ensure that unlawful non- citizens do not enter Australia or become part of the Australian community and that they are available for deportation when that becomes practicable." It may readily be accepted that the common law right of every Australian citizen to be at liberty means that, generally speaking, any involuntary detention of a citizen would be characterised as penal and punitive. Such a state of affairs 136 (2001) 110 FCR 491 at 543 [193]. 137 (2004) 219 CLR 562 at 584 [45]. may only be consequential upon a judicial finding of criminal guilt138. But the character of a law which affects the right of a citizen under the common law to be at liberty is radically different from that of a law which affects an alien who seeks to enter the Australian community without its permission. Thus, in Lim, "Aliens, not being members of the community that constitutes the body politic of Australia, have no right to enter or remain in Australia unless such right is expressly granted. Laws regulating their entry to and providing for their departure from Australia (including deportation, if necessary) are directly connected with their alien status." That being so, immigration detention is readily characterised, not as a mode of punishment for an offence, but as a means evidently capable of serving the purpose of ensuring that an alien who presents uninvited and unheralded at the border with no right to enter Australia does not do so while consideration is given by the Australian government to whether permission to enter should be given. It is also an obvious means to ensure that an alien is available for deportation if permission to enter is not forthcoming. Thus, in Re Woolley; Ex parte Applicants M276/2003, Hayne J, with whom Heydon J agreed140, said141: "Once it is accepted, as I do, that the aliens and immigration powers support a law directed to excluding a non-citizen from the Australian community (by segregating that person from the community) the effluxion of time, whether judged alone or in the light of the vulnerability of those who are detained, will not itself demonstrate that the purpose of detention has passed from exclusion by segregation to punishment." That a less stringent regime might have been adopted by the Parliament does not deny the competence of the Parliament to establish the regime for which the Act provides. It may be noted, however, that the Act now makes provision in s 195A to ameliorate the hardship that might arise in circumstances where removal is impracticable. 138 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 29. 139 (1992) 176 CLR 1 at 57. 140 (2004) 225 CLR 1 at 87 [270]. See also to similar effect at 85 [261]-[262] per 141 (2004) 225 CLR 1 at 77 [227]. Question 2 should be answered "No". Question 3: s 46A(2) and error of law At all relevant times s 46A(1) of the Act precluded "unlawful non- citizens" who were "offshore entry persons" (now "unauthorised maritime arrivals") from making a valid visa application. Section 46A(2) contemplated that this preclusion might be relaxed. Section 46A of the Act relevantly provided: "(1) An application for a visa is not a valid application if it is made by an offshore entry person who: is in Australia; and is an unlawful non-citizen. If the Minister thinks that it is in the public interest to do so, the Minister may, by written notice given to an offshore entry person, determine that subsection (1) does not apply to an application by the person for a visa of a class specified in the determination. (3) The power under subsection (2) may only be exercised by the Minister personally. (7) The Minister does not have a duty to consider whether to exercise the power under subsection (2) in respect of any offshore entry person whether the Minister is requested to do so by the offshore entry person or by any other person, or in any other circumstances." It was common ground that, under the terms of the Act at the time, the plaintiff was an "offshore entry person" as that term was defined by s 5(1) of the Act for the purposes of s 46A of the Act. In Plaintiff M61/2010E v The Commonwealth142 ("the Offshore Processing Case"), the Court explained the operation of s 46A: "The power given by s 46A is, in effect, to determine that an offshore entry person may make a valid application for a visa of a class specified. 142 (2010) 243 CLR 319 at 336 [13]. It is commonly referred to as a decision to 'lift the bar' (scil on making a valid application for a visa)." The Court also explained143 that the exercise of power under s 46A is constituted by two distinct steps, the first of which is to consider exercising the power to lift the bar. The second is whether to lift the bar. In the Offshore Processing Case, the Minister had decided that consideration was to be given to the exercise of the statutory powers under s 46A with respect to offshore entry persons. That decision was consistent with, and was to be understood by reference to, Australia's obligations under the Refugees Convention144. Having decided that he would consider the exercise of power, the Minister required his Department to undertake the necessary enquiries to make an assessment. The importance of those steps for the Offshore Processing Case was that, while those enquiries were made, detention was lawful145. The establishment and implementation of the RSA process evidenced the Minister's decision to consider whether to exercise the powers under s 46A with respect to an offshore entry person who claimed protection146. The fact remains that the Minister has begun the task of considering whether to exercise the powers under s 46A even if no submission is put before the Minister or even if there has been an unfavourable outcome of the RSA process147. The Court in the Offshore Processing Case148 explained what follows from this: "[O]nce it is decided that the assessment and review processes were undertaken for the purpose of the Minister considering whether to exercise power under either s 46A or s 195A, it follows from the consequence upon the claimant's liberty that the assessment and review must be procedurally fair and must address the relevant legal question or questions. The right of a claimant to liberty from restraint at the behest of the Australian 143 (2010) 243 CLR 319 at 350 [70]. 144 (2010) 243 CLR 319 at 350 [70]. 145 (2010) 243 CLR 319 at 341-342 [35]. 146 (2010) 243 CLR 319 at 349 [66]. 147 (2010) 243 CLR 319 at 349-350 [67]. 148 (2010) 243 CLR 319 at 353-354 [77]-[78]. Executive is directly affected. The claimant is detained for the purposes of permitting the Minister to be informed of matters that the Minister has required to be examined as bearing upon whether the power will be exercised. The Minister having decided to consider the exercise of power under either or both of ss 46A and 195A, the steps that are taken to inform that consideration are steps towards the exercise of those statutory powers. That the steps taken to inform the consideration of exercise of power may lead at some point to the result that further consideration of exercise of the power is stopped does not deny that the steps that were taken were taken towards the possible exercise of those powers. Nor does it deny that taking the steps that were taken directly affected the claimant's liberty. … [T]he consideration must proceed by reference to correct legal principles, correctly applied." The letter of 19 September 2011 by the Department to the plaintiff advised, in effect, that she had been assessed to be a refugee. Government policy at that time was that requirements relating to health, identity and security checks should be applied before considering whether to lift the bar under s 46A(2). On 24 April 2012 ASIO furnished to the Minister an adverse security assessment in respect of the plaintiff. ASIO assessed that the plaintiff was directly or indirectly a risk to security within the meaning of s 4 of the Australian Security Intelligence Organisation Act 1979 (Cth) ("the ASIO Act"). By letter dated the same day, the Department informed the plaintiff that she was not eligible for the grant of a visa to remain in Australia because the ASIO assessment meant that she could not satisfy the requirements of PIC 4002 as a criterion for the grant of a protection visa149. The letter also informed the plaintiff that ASIO's assessment was not amenable to merits review. PIC 4002 was in the following terms: "The applicant is not assessed by the Australian Security Intelligence Organisation to be directly or indirectly a risk to security, within the meaning of section 4 of the [ASIO Act]." It was agreed between the parties that, as a consequence of the adverse security assessment, no consideration is currently being given to the making of a determination under s 46A(2) or of otherwise granting a visa to the plaintiff. That would not appear to us to be relevant to any question in the case. 149 Migration Act 1958 (Cth), s 65(1)(a)(ii). In Plaintiff M47/2012, which was delivered subsequent to the decision communicated to the plaintiff, the majority, consisting of French CJ, Hayne, Crennan and Kiefel JJ, held that cl 866.225 of Sched 2 to the Migration Regulations 1994 (Cth) was invalid to the extent that it prescribed PIC 4002 as a criterion for the grant of a protection visa. The regulation operating by reference to that criterion was inconsistent with the Act150. The defendants did not seek to argue that Plaintiff M47/2012 had not been correctly decided. We therefore conclude that, as at 24 April 2012, an error of law led the Department to conclude that PIC 4002 was a basis on which a visa could lawfully have been refused to the plaintiff. The failure to satisfy PIC 4002 was the only reason given by the Department for the decision communicated to the plaintiff by its letter of 24 April 2012. The plaintiff's contention in relation to question 3 was that the Minister embarked upon a process of consideration of whether to exercise his power under s 46A(2) of the Act having regard to Australia's protection obligations under the Refugees Convention, and that process was terminated as a result of an error of law in that PIC 4002 was not a basis on which a visa could lawfully have been refused. On 24 March 2012 the Minister issued guidelines ("the guidelines") in relation to the circumstances in which he wished to consider the possible exercise of his power under s 46A(2) of the Act. The guidelines stated that a person who was a person to whom Australia owed protection obligations as provided for in s 36(2) of the Act, but who had received an adverse security assessment, should not be referred to him for the purposes of s 46A(2). It is common ground that the guidelines applied, and continue to apply, to the plaintiff. The defendants sought to rely upon the circumstance that the guidelines indicated that the Minister did not wish to consider exercising his power under s 46A(2) of the Act to lift the bar with respect to persons who, like the plaintiff, have received adverse security assessments from ASIO quite apart from specific reliance upon PIC 4002. In this regard, it was agreed between the parties that the plaintiff's case was not referred to the Minister for him to consider whether to exercise his power under s 46A(2) because the plaintiff did not satisfy PIC 4002 and the plaintiff had an adverse security assessment from ASIO. The defendants argued that the existence of an additional and independent disqualifying criterion – the fact that the plaintiff had received an adverse security assessment – rendered the Department's reliance on PIC 4002 a harmless error. The 150 (2012) 86 ALJR 1372 at 1396-1397 [71], 1421 [221], 1455 [399], 1465 [458]; 292 ALR 243 at 267, 301, 348, 361-362. non-referral of the plaintiff's case to the Minister for consideration of the possible exercise of the power under s 46A(2) was not caused, in the defendants' submission, by an error of law on the part of an officer of the Department. The plaintiff argued that this circumstance does not cure the flaw in the process which has occurred in relation to the lifting of the bar under s 46A(2) of the Act. It was submitted that, given Australia's protection obligations under the Refugees Convention, the prospect of the grant of a protection visa under s 65(1)(a) of the Act was not foreclosed by reason of other provisions of the Act including ss 500 and 501, provisions which ought to be considered by the Minister in exercising his discretion under s 46A(2) of the Act151. In that regard, as was observed in Plaintiff M47/2012, the notion of security for the purpose of an assessment under the ASIO Act may be wider than that contemplated by Arts 32 and 33(2) of the Refugees Convention, which are relevant to decisions under ss 500(1)(c) and 501(1) of the Act152. The further consideration given to the plaintiff's case at the time the error concerning PIC 4002 occurred was for the purpose of the Minister's decision under s 46A(2), whether to lift the bar and allow the plaintiff to make a valid application for a protection visa. It follows from the Offshore Processing Case that such consideration was undertaken for the purposes of the Act. Her continued detention at that point was justified by reference to that further consideration for those purposes. It was required to be undertaken in accordance with a correct view of the law. It was not. The Minister's decision whether to lift the bar was foreclosed by the error concerning PIC 4002. It was wrongly considered that the failure to meet that criterion meant that the plaintiff was not eligible for the grant of a protection visa. That is what the letter of 24 April 2012 advised. On that view, there would be no point in referring the matter to the Minister for his decision. 151 Plaintiff M47/2012 v Director-General of Security (2012) 86 ALJR 1372 at 1391 [43], 1416 [193], 1453-1454 [389], 1464 [451]; 292 ALR 243 at 259-260, 294-295, 152 (2012) 86 ALJR 1372 at 1418 [204], 1460-1461 [432]-[433]; 292 ALR 243 at 297, The defendants submitted, by reference to s 46A(7), that the Minister was under no duty to decide to lift the bar. So much may be accepted. But the point is that a decision had been made to consider whether to exercise that power. That is what the security assessment and consideration of PIC 4002 were directed to. Section 46A(7) is beside the point. The defendants' reliance upon an alternative basis for non-referral of the plaintiff's matter to the Minister, namely the existence of the adverse ASIO assessment, is misplaced. The question whether the Minister can halt the process of decision-making on the basis of such an assessment, given the provisions of the Act relating to relevant aspects of security, may be put to one side. The defendants' submission denies the basis in fact upon which the process was halted. The fact that a non-referral might, in the terms of the guidelines, be justified on another basis is irrelevant. The question whether ASIO's adverse security assessment could and would have led, justifiably, to the plaintiff's application not being referred to the Minister for his consideration under s 46A(2) is hypothetical given that it does not arise in respect of a process of decision-making which has actually occurred. It is neither necessary nor appropriate for this Court to seek to resolve the defendants' argument that the Department's reliance on PIC 4002 was a harmless error. The Court cannot speculate as to whether the plaintiff has no prospects of a favourable decision, because of the existence of the ASIO assessment, and whether any referral to the Minister is therefore futile. On this view, the third question posed for determination should be answered "Yes". The nature and extent of the relief appropriate to that conclusion is the subject of the next question. Question 4: relief There are reasons for making a declaration to the effect of the answer to question 3, even if it cannot be shown that it will have practical consequences for the future. First, there is support in the authorities for taking such a course. In Ainsworth v Criminal Justice Commission153 the Criminal Justice Commission had prepared a report on the gaming machine industry, which, inter alia, ascribed certain conduct to the appellants (who were manufacturers and suppliers of poker machines) and was critical of that conduct. The report recommended that the appellants' corporate group should "not be permitted to participate in the gaming 153 (1992) 175 CLR 564; [1992] HCA 10. machine industry in Queensland."154 Under the relevant legislation, the report was granted all the immunities and privileges that it would have been provided with if it had been tabled and printed in Parliament. However, the appellants were not afforded procedural fairness during the report's preparation in that they were not informed of the Commission's investigation, nor were they given the chance to respond to the allegations before the report was published155. The appellants sought relief by way of certiorari and mandamus. The Court refused to grant either writ. Certiorari could not be granted because the Commission's report had, by itself, no legal effect or consequence156. Similarly, mandamus was not available because the Commission was not under a duty to investigate and report the appellants' dealings in the Queensland gaming machine industry157. The Court proceeded to make a declaration that the appellants had been denied procedural fairness in the publication of the report. The plurality stated158: "It does not follow that, because mandamus and certiorari are inapplicable, the appellants must leave this Court without remedy. The law with respect to procedural fairness has developed in spite of the technical aspects of the prerogative writs. Moreover, had the appellants had advance notice of the Commission's intention to report adversely, its failure to observe the requirements of procedural fairness would have entitled them to relief by way of prohibition preventing it from reporting adversely without first giving them an opportunity to answer the matters findings or put against recommendations that might be made. ... [A]lthough it [the report] had no legal effect or consequence, it had the practical effect of blackening the appellants' reputations. Prima facie, at least, these matters suggest that the appellants are entitled to declaratory relief". (footnotes omitted) to put submissions as them and In the Offshore Processing Case, the Court made a declaration in circumstances where a writ of mandamus could not compel the Minister to 154 (1992) 175 CLR 564 at 571. 155 (1992) 175 CLR 564 at 571. 156 (1992) 175 CLR 564 at 580. 157 (1992) 175 CLR 564 at 579. 158 (1992) 175 CLR 564 at 581. consider or reconsider the exercise of the power reposed in him so that there was no utility in granting mandamus. For the same reason, certiorari would also have been inutile159. Nevertheless, the Court said160: "Although the plaintiffs' claims for certiorari and mandamus should be rejected, a declaration should be made in each case that the processes undertaken to arrive at the reviewer's recommendation were flawed in the respects that have been identified. In many cases, the conclusion that certiorari and mandamus do not lie would require the further conclusion that no declaration of right should be made." It was held that a declaration was appropriate because the plaintiffs had a "real interest" in raising the question with which the declaration was concerned161. In this case, the plaintiff has a real interest in raising the question as to the error in the decision-making process. Secondly, it was common ground in the Special Case stated for determination by the Court that: "[i]n the event that the Court declares in this proceeding that … an officer of the Department erred in failing to refer the [p]laintiff's case to the Minister for him to exercise his power under s 46A(2), consideration would be given by the Department … to whether the [p]laintiff's case should be referred to the Minister for the possible exercise of his power under s 46A(2)." Accordingly, it should be declared that the exercise of the Minister's power under s 46A(2) was affected by an error of law in that, in deciding whether to refer the Commonwealth acted upon PIC 4002 as a consideration relevant to the decision. the Minister, an officer of the plaintiff's application Question 5: costs The disposition of the costs of the litigation is in the discretion of the Court162. Usually, in the exercise of this discretion, it is ordered that the costs 159 (2010) 243 CLR 319 at 358-359 [99]-[100]. 160 (2010) 243 CLR 319 at 359 [101]. 161 (2010) 243 CLR 319 at 359 [103]. 162 Rule 50.01 of the High Court Rules 2004 provides that "[s]ubject to the provisions of any law of the Commonwealth and to these Rules, the costs of and incidental to all proceedings in the Court are in the discretion of the Court or a Justice." should follow the event163. In some cases the "event" may be contestable, especially where separate issues have fallen in different ways. This is such a case. The plaintiff has been unsuccessful in her challenges to Al-Kateb, and to the validity of ss 189, 196 and 198 of the Act. On the other hand, the plaintiff has succeeded in obtaining declaratory relief. Whether that success will enure to her substantial benefit is not a matter upon which the Court can speculate. It is correct to say, however, that while the plaintiff has enjoyed some success, it has largely been a Pyrrhic victory, given the rejection of substantial aspects of her case. It may be said that, although the order which the Court should make in her favour reflects only a modest level of success on her part, the determination of the questions by the Court was necessary to enable her to achieve even that level of relief. That would not be a sound basis on which to make an award of costs in the plaintiff's favour. It appears from the Special Case that the plaintiff's parents and brothers reside in India and that she has sisters who live in another country. On 23 July 2013 the Department wrote to the plaintiff's legal advisers suggesting, among other things, that the plaintiff contact her family members in order to enlist their support regarding her possible resettlement. This letter elicited the following response from the plaintiff's legal advisers: "We are instructed that our client does not feel comfortable asking her family directly whether or not they would support or sponsor her to resettle in another country, as they do not share a close relationship and they have not been disposed to help her previously. She has requested that we instead speak to her family directly. If that is not agreed, we request that you make it clear in communications with our client's family that it is not at her instigation that these enquiries are being made." The attitude manifest in that response detracts from the force of the suggestion that the plaintiff's predicament is such that the only means of relief available to her was the pursuit of her claim in this Court. In these circumstances, each side should bear its own costs. There should be no order as to costs. 163 See, for example, Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67] per McHugh J; [1998] HCA 11. Conclusion The questions stated for determination should be answered as follows: Yes. Yes. It should be declared that the exercise of the Minister's power was affected by an error of law in that, in deciding whether to refer the plaintiff's application to the Minister, an officer of the Commonwealth acted upon PIC 4002 as a consideration relevant to the decision. There should be no order as to costs.

HIGH COURT OF AUSTRALIA SKA AND THE QUEEN APPLICANT RESPONDENT SKA v The Queen [2011] HCA 13 4 May 2011 ORDER Special leave to appeal granted in respect of grounds 2, 3 and 4 of the amended draft notice of appeal dated 13 August 2010, but refused on grounds 1 and 5. Appeal treated as instituted and heard instanter and allowed. Set aside the order of the Court of Criminal Appeal of New South Wales dismissing the applicant's appeal against conviction to that Court made on 14 July 2009. Remit the matter to the Court of Criminal Appeal for rehearing. On appeal from the Supreme Court of New South Wales Representation H K Dhanji SC with C E Alexander for the applicant (instructed by Crawford & D M L Woodburne SC with J A Girdham for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal – Appeal on ground jury verdict unreasonable, or cannot be supported, having regard to the evidence – Application of test in M v The Queen (1994) 181 CLR 487 – Whether Court of Criminal Appeal made independent assessment of evidence. Criminal law – Appeal – Video evidence – Where Court of Criminal Appeal relied on transcript of evidence – Whether sufficient to rely on transcript of evidence. Criminal law – Appeal – Trial judge's opinion – Where trial judge considered a jury acting reasonably could not have been satisfied beyond reasonable doubt of accused's guilt – Whether regard should be had to trial judge's opinion. Words and phrases – "unreasonable, or cannot be supported", "unsafe or unsatisfactory". Criminal Appeal Act 1912 (NSW), s 6(1). FRENCH CJ, GUMMOW AND KIEFEL JJ. The applicant seeks special leave to appeal from the judgment of the New South Wales Court of Criminal Appeal1 which dismissed his appeals against both conviction and sentence for sexual assault, aggravated sexual assault and aggravated indecent assault against a child. The facts and circumstances relating to those charges and the history of the proceedings are contained in the reasons of Crennan J. The applicant's ground of appeal in the Court of Criminal Appeal relevant to the proceedings in this Court is that the verdicts of the jury were perverse and not supported by the evidence. Section 6(1) of the Criminal Appeal Act 1912 (NSW) ("the Criminal Appeal Act") states that the Court of Criminal Appeal "shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported, having regard to the evidence". The evidence The five charges brought against the applicant concerned offences which were alleged to have been committed in two periods in time. The first three charges were alleged to have occurred between 1 June 2004 and 31 July 2004, when the complainant was under 10 years of age. The fourth and fifth charges were alleged to have occurred between 1 December 2006 and 25 December 2006, when the complainant was 10 years of age. It is the latter charges, and in particular when they were said to have occurred, which assumed importance on the hearing of this application. The applicant's wife is the sister of the complainant's father. The applicant was therefore referred to as the complainant's uncle. One of the applicant's daughters, Sh, was good friends with the complainant. The complainant said, when interviewed by a police officer, that the offences occurred whilst she was sharing a bedroom with her sister and Sh, during visits or "sleepovers" at the applicant's family home. On each occasion she alleged that the applicant came to the room and either fondled her breasts with his hands inside her pyjama top (counts 2, 3 and 5) or digitally penetrated her vagina (counts 1 and 4). In the interview the complainant confirmed that she was at her uncle's house having a "sleepover" with her cousin on the last occasion when he had touched her – the occasion of counts 4 and 5. She said it was "[a]bout, just before Christmas, around then." She later said that she went to the house around 1 SKA v The Queen [2009] NSWCCA 186. 3.00 or 4.00 pm. Asked to recall whether it was a weekday or on the weekend, she replied: It was, I think it was a Friday. No, wait, it was, it was the day before Christmas Eve. Q58. The day before Christmas Eve? Yes, I think so. I think that was when. 'Cause we were having that kind of, like since our families are really close, we just go over to their house and we'd have that little family get together." The complainant's evidence-in-chief took the form of the videotape recording of her interview, which was played to the jury2. She also gave some oral evidence. In the cross-examination of the complainant which followed, she was asked if her uncle's house remained the same throughout the periods in question, up until 23 December 2006. The question was directed to the complainant's recollection of some renovations having been undertaken, which is not presently relevant. Her answer, however, assumes relevance with respect to the time of the last two alleged offences. She answered: "A. Yes but it may have – may have not been 23 December but … [L]ike I guessed that it may have been the day before New Year's Eve because I do remember some celebrations around then but it could have been maybe even a week before that." She was then asked: I see so why are you changing that? A. Well because I've thought of it. I thought maybe – and I've watched the video I've thought, oh well then I think I thought that it may have been the day before New Year's Eve, but it may have not been. I thought it was around that time – 2 This was permitted under the Evidence (Children) Act 1997 (NSW). That statute was repealed by s 5 of the Criminal Procedure Amendment (Vulnerable Persons) Act 2007 (NSW), but s 3 and Sched 1 of the 2007 Act inserted in the Criminal Procedure Act 1986 (NSW) a provision saving the application of the 1997 Act to proceedings thereunder which were pending immediately before its repeal. The present provisions provide a particular exception to the hearsay rule: Gately v The Queen (2007) 232 CLR 208 at 240 [104]-[105]; [2007] HCA 55. The day before Christmas Eve? Yeah it's Christmas Eve, sorry." In re-examination she was taken back to her answers to the questions by the police officer in her interview, and asked to explain why she had said "Yes, I think so" when asked to confirm that the last offences occurred on the day before Christmas Eve, and why she had used the term "around". She said that she was not exactly sure of the date and then went on: "I do know it was before Christmas because I remember the last time I saw them which was the night of Christmas Eve and they were just leaving just before 12.00 and I was complaining because I wanted them to stay till the thing go to – the clock go to Christmas, so I do remember the last time was before Christmas, some time within December." Before the jury were addressed, the trial judge (Finnane DCJ) discussed the date of the 2006 offences with prosecution and defence counsel in the absence of the jury. At the end of that discussion the trial judge stated: "I'm not going to let the jury have the view or decide this case on the basis that any time in December is good enough. In my view the evidence on which the Crown case is based is it's the 22nd or the 23rd, that's the evidence. Maybe the 24th but no other time. There's no possibility on the evidence of any earlier weekend raised in December or any other day so I wouldn't allow [the prosecution] to address on that." During the closing address to the jury, the prosecutor stated that the incidents were "sometime just before Christmas". In summing up his Honour told the jury that, in relation to the events of 2006, the complainant's evidence was that these assaults occurred perhaps on the Friday night, which would have been 22 December, the Saturday night, being 23 December, or possibly Sunday 24 December. She had related the offences to the period around Christmas. The date of the incidents the subject of counts 4 and 5 is critical because the applicant led evidence at trial which provided an alibi for the period from the evening of 22 December up to and including Christmas Eve. The applicant gave evidence that he was at a concert, in which one of his daughters was performing, on 22 December 2006, a fact confirmed by his wife. There was evidence that, on the evening of 23 December 2006, the applicant and his family visited a person recently arrived from overseas at his home and remained there until about 11.00 pm. Other evidence confirmed a large gathering, on the evening of 24 December, for dinner at the home of the complainant's family. The evidence of the firstmentioned witness was unchallenged and the other witnesses were not seriously challenged about their accounts. The effect of this evidence, as the trial judge observed for the benefit of the jury, was that if the jury came to the view that the incidents could only have occurred in the period immediately before Christmas of 2006 and the evidence providing an alibi was not disproved, it was unlikely that the jury could conclude beyond reasonable doubt that the applicant was guilty of the 2006 offences. The task of the Court of Criminal Appeal It is agreed between the parties that the relevant function to be performed by the Court of Criminal Appeal in determining an appeal, such as that of the applicant, is as stated in M v The Queen3 by Mason CJ, Deane, Dawson and Toohey JJ: "Where, notwithstanding that as a matter of law there is evidence to sustain a verdict, a court of criminal appeal is asked to conclude that the verdict is unsafe or unsatisfactory, the question which the court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty". This test has been restated to reflect the terms of s 6(1) of the Criminal Appeal Act. In MFA v The Queen4 McHugh, Gummow and Kirby JJ stated that the reference to "unsafe or unsatisfactory" in M is to be taken as "equivalent to the statutory formula referring to the impugned verdict as 'unreasonable' or such as 'cannot be supported, having regard to the evidence'." The starting point in the application of s 6(1) is that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, and the jury has had the benefit of having seen and heard the witnesses5. However, the joint judgment in M went on to say6: "In most cases a doubt experienced by an appellate court will be a doubt which a jury ought also to have experienced. It is only where a jury's (1994) 181 CLR 487 at 493; [1994] HCA 63. (2002) 213 CLR 606 at 623-624 [58]; [2002] HCA 53. 5 M v The Queen (1994) 181 CLR 487 at 493 per Mason CJ, Deane, Dawson and 6 M v The Queen (1994) 181 CLR 487 at 494. advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred." Save as to the issue whether the Court of Criminal Appeal erred in not viewing a videotape of the complainant's police interview, to which reference will be made later in these reasons, this qualification is not relevant to the present matter. In determining an appeal pursuant to s 6(1) of the Criminal Appeal Act, by applying the test set down in M and restated in MFA, the Court is to make "an independent assessment of the evidence, both as to its sufficiency and its quality"7. In M, Mason CJ, Deane, Dawson and Toohey JJ stated8: "In reaching such a conclusion, the court does not consider as a question of law whether there is evidence to support the verdict. Questions of law are separately dealt with by s 6(1). The question is one of fact which the court must decide by making its own independent assessment of the evidence and determining whether, notwithstanding that there is evidence upon which a jury might convict, 'none the less it would be dangerous in all the circumstances to allow the verdict of guilty to stand'." The decision of the Court of Criminal Appeal The other members of the Court of Criminal Appeal (McClellan CJ at CL and James J) agreed with the reasons of Simpson J for dismissing the appeal. Her Honour detailed the evidence of the complainant and, in that process, noted her evidence as to when the alleged incidents occurred. She noted that the complainant had initially said that the incident the subject of the 2006 allegations occurred "just before Christmas, around then" and that, more specifically, the complainant had said that it was the day before Christmas Eve9. She observed that the complainant was giving this account in April 200710. Her Honour noted the complainant's responses to questions in cross-examination about when the 2006 events had occurred11: 7 Morris v The Queen (1987) 163 CLR 454 at 473 per Deane, Toohey and Gaudron JJ; [1987] HCA 50. 8 M v The Queen (1994) 181 CLR 487 at 492-493 (footnotes omitted). 9 SKA v The Queen [2009] NSWCCA 186 at [36]. 10 SKA v The Queen [2009] NSWCCA 186 at [36]. 11 SKA v The Queen [2009] NSWCCA 186 at [53]. "She said that initially she had thought that was the day before New Year's Eve, because she could remember some celebrations, but that she then thought it could have been a week earlier than that. She concluded that it may have been the day before Christmas Eve." Simpson J outlined the evidence which had been led for the defence, including the alibi evidence. In this regard her Honour focussed upon the evidence of witnesses as to what took place on 23 December12: "The [applicant] then gave evidence about his activities on 23 December 2006. He said that the daughter of neighbours, who was close to Sh, spent some time with Sh at his home in the morning. The complainant was not present. At 6.00pm, the family went to Mass, as was their practice. He did not recall seeing the complainant at Mass, although it was also her family's usual practice to attend. The [applicant] and his family then returned home, and remained at home until about 8.45pm, when they took food to the home of his uncle, [Mr J], who was returning from India that evening. His brother-in-law (brother of his wife and of the complainant's father) was also present with his family. They remained at Mr [J's] home until 10.30 or 11.00pm, then returned home." Her Honour then added13: "The following day, 24 December, they spent some time in the morning shopping, and had dinner at the complainant's home with her family and others." Her Honour did not refer to the applicant's activities on 22 December 2006. The focus of her Honour upon the applicant's whereabouts on 23 December is explicable. The notice of alibi given by the applicant was directed to the morning and evening of 23 December, in the belief that the complainant had committed herself to that date in the early interview. It was in connection with the alibi notice that her Honour observed that it was directed to 12 SKA v The Queen [2009] NSWCCA 186 at [83]-[84]. 13 SKA v The Queen [2009] NSWCCA 186 at [85]. the complainant's assertion that events occurred "'the day before Christmas Eve' (although, it will be recalled, the complainant was not dogmatic as to the date)."14 In submissions to the Court of Criminal Appeal, the applicant sought to establish that the verdicts were unreasonable by reference to a number of points, 13 in all, concerning the reliability of the complainant's evidence. Her Honour described them as "essentially jury points"15. Amongst them was the point that the complainant had committed herself to the date of 23 December for the 2006 offences and the evidence had established an alibi for that date. Because they were of the nature of points to be made to the jury and therefore, inferentially, not of themselves decisive of the appeal, her Honour did not deal with them in any detail. Rather, her Honour made some observations "that might help to shed some light on the approach that may have been taken by the jury."16 In that process, her Honour said that in relation to the 2006 allegations the complainant's account was sufficient to enable the jury to conclude, if they accepted her evidence, that the specific incidents the subject of the charges had occurred17. Her Honour discounted other points sought to be made by the applicant, in his attempt to undermine the possible acceptance of the complainant's evidence. Her Honour observed that what was important was the complainant's description of the event and that "[t]he jury was plainly prepared to accept her account."18 Her Honour then concluded19: "I am satisfied, on the evidence, that it was open to the jury to reach the verdicts it did. To the extent that it is relevant, I would also be satisfied beyond reasonable doubt, on the evidence, that the [applicant] committed each of the offences charged. I would dismiss the appeal against conviction." 14 SKA v The Queen [2009] NSWCCA 186 at [70]. 15 SKA v The Queen [2009] NSWCCA 186 at [113]. 16 SKA v The Queen [2009] NSWCCA 186 at [113]. 17 SKA v The Queen [2009] NSWCCA 186 at [117]. 18 SKA v The Queen [2009] NSWCCA 186 at [122]. 19 SKA v The Queen [2009] NSWCCA 186 at [124]. This appeal The reasoning of the Court of Criminal Appeal exposes a fundamental problem with its approach to its task. The Court concerned itself with whether, as a question of law, there was evidence to support the verdicts, rather than making its own independent assessment of the evidence. The applicant submitted in this Court that this reasoning demonstrated an "inverting of the process" required to be undertaken by the Court of Criminal Appeal. The reasons of Simpson J indicate that her Honour considered what should have been the central question – whether on the evidence the Court was satisfied that the applicant was guilty of the offences – as rather an ancillary question to the question whether there was a sufficiency of evidence to sustain the conviction. As Deane, Toohey and Gaudron JJ made clear in Morris v The Queen20, such an inquiry is not what is required by s 6(1) of the Criminal Appeal Act. To determine satisfactorily the applicant's appeal, the Court of Criminal Appeal was required to determine whether the evidence was such that it was open to a jury to conclude beyond reasonable doubt that the applicant was guilty of the offences with which he was charged. The applicant correctly submits that two errors are evident in the reasoning of the Court of Criminal Appeal in reaching this conclusion. First, the Court of Criminal Appeal did not satisfactorily determine the date at which it was alleged that the applicant committed the offences the subject of counts 4 and 5. Whilst it is true that an appellate court is not always bound to deal with all arguments put to it, this was a critical matter. Secondly, this led the Court into error when considering the sufficiency of evidence on which it was open to a jury to have concluded beyond reasonable doubt that the applicant was guilty of committing the 2006 offences. On appeal, the task of the Court of Criminal Appeal was to make an independent assessment of the whole of the evidence, to determine whether the verdicts of guilty could be supported. There is no doubt that the Court of Criminal Appeal was not bound by the ruling of the trial judge concerning the date of the 2006 offences. However, the Court of Criminal Appeal was required to form an opinion as to the date of the 2006 offences in order to weigh the whole of the evidence. The reasons for judgment by Simpson J do not disclose that the Court of Criminal Appeal made an independent assessment of the evidence concerning the 2006 offences, and therefore the Court could not weigh the competing evidence to determine whether the verdicts of guilty could be supported. 20 (1987) 163 CLR 454 at 473. It was not sufficient to say that the complainant's account of the incidents was sufficiently particular to enable a jury to accept it. The complainant's evidence as to when they occurred was also part of her account and, potentially at least, a matter by which her other evidence fell to be considered. It may be that the argument of the applicant on the appeal, which focussed upon the complainant's nomination of the evening of 23 December as the date of the last two offences and then as one of many "jury points", served to distract the attention of the Court of Criminal Appeal. Observing that the complainant had not been dogmatic about 23 December may not have sufficiently overcome her identification of the days before Christmas as essential to her recollection. These were matters to be considered by the Court of Criminal Appeal. To the extent that Simpson J considered whether she was satisfied that it was open to the jury to be satisfied beyond reasonable doubt as to the guilt of the applicant, it appears that this consideration was undertaken without any weighing of the competing evidence; an exercise which the Court of Criminal Appeal was required to undertake to determine whether the verdicts of guilty were unreasonable or could not be supported. Simpson J's reasons do not demonstrate that her Honour weighed the conflicting evidence respecting the 2006 offences and therefore it appears that the Court of Criminal Appeal failed to perform the duty required of it by the Criminal Appeal Act. Special leave should therefore be granted, the appeal allowed and the matter remitted to the Court of Criminal Appeal for rehearing of the appeal from all convictions. The rehearing must necessarily extend to the 2004 offences. A conclusion as to whether one episode of offences occurred is plainly relevant to the other. Other matters The applicant's submissions, that the Court of Criminal Appeal was obliged to have regard to the trial judge's opinion that a jury acting reasonably could not have been satisfied beyond reasonable doubt, and to have regard to the video recording of the complainant's evidence-in-chief, should be rejected for the reasons given by Crennan J. Since the matter should, in our view, be remitted it is necessary to say something further concerning the latter contention. The first ground of the applicant's proposed amended notice of appeal was that the Court of Criminal Appeal "erred in failing to view for itself that part of the evidence of the complainant which was presented by way of a pre-recorded video recording of an interview between the complainant and the police." Neither in the notice of appeal, nor in the argument which followed, was it explained why the Court of Criminal Appeal could be said to have fallen into error in this regard, particularly since it had not been raised before that Court and there was no argument put by the applicant about it21. Simpson J herself raised the question whether the Court ought to view the video recording or rely only upon the transcript of the evidence22. Her Honour said23: "At the outset of the hearing of the appeal Senior Counsel for the [applicant] was invited to comment on this question. He declined to submit that the Court ought to view the video, but added: 'Unless, of course, your Honours feel that you need to view the video to see the demeanour of the young girl during the course of the interview.'" Her Honour, however, concluded, in the absence of any argument, that the question should be resolved in favour of the Court proceeding on the basis of the transcript of evidence alone24. Influential to her Honour's conclusion was that viewing the recording might create an imbalance, given that the Court would not be viewing the evidence of other witnesses25. No other witness's evidence had been the subject of video recording. The correctness of her Honour's observation, as to the potential for an undue focus upon the complainant as a witness, which might result from viewing the video recording, cannot be doubted. It should also be recalled that it was a recording of part only of the complainant's evidence, her evidence-in-chief, and thus may not have been a fair representation of her evidence as a whole. It may be observed that the imbalance of which her Honour spoke may have favoured the complainant as a witness. The trial judge, on the applicant's application for bail following conviction, expressed the view that she was a "very compelling" witness. He also described the applicant as "perfectly honest". This points up the risk to the applicant in having the Court of Criminal Appeal view 21 SKA v The Queen [2009] NSWCCA 186 at [102]. 22 SKA v The Queen [2009] NSWCCA 186 at [102]. 23 SKA v The Queen [2009] NSWCCA 186 at [103]. 24 SKA v The Queen [2009] NSWCCA 186 at [104]. 25 SKA v The Queen [2009] NSWCCA 186 at [108]. the evidence, which may explain why the applicant's counsel did not ask the Court to do so or take up the suggestion that it might. At the least it may be said there was no obvious benefit to the applicant in that course. More importantly, no reason is now advanced as to why it was necessary that the Court of Criminal Appeal do so. The account given and the language used by witnesses, which are available by way of transcript, are usually sufficient for a review of evidence. It is to be expected that if there is something which may affect a court's view of the evidence, which can only be discerned visually or by sound, it can and will be identified. Absent this purpose it is not possible to conclude that a court is obliged to go further and view a recording of evidence. There must be something in the circumstances of the case which necessitates such an approach. In the Court of Criminal Appeal the applicant relied upon certain speech patterns of the complainant as indicative of uncertainty on her part. However, they were evident from the transcript and were dealt with by Simpson J on that basis26. No purpose which would have been served by the Court of Criminal Appeal in viewing the recording, as necessary to the applicant's appeal or in the interests of justice, was identified by the applicant in submissions to this Court. The approach taken by the applicant in submissions was to suggest that it is "commonplace for an appeal court to view such a video". The judgments relied upon provide no support for this proposition. In CSR Ltd v Della Maddalena27 Callinan and Heydon JJ explained that they had viewed a video recording because it had "loomed so large" in the judgment of the court appealed from28. Kirby J did not ascribe a reason29, but his Honour is likely to have had the same reason for viewing the video. Other cases to which the applicant referred offer no further assistance. In each of them a purpose for the viewing may be clearly discerned. In Clark v HM Advocate30 the issue before the Lord Justice General, Lord Cowie and Lord Caplan in the High Court of Justiciary was whether the intonation of the 26 SKA v The Queen [2009] NSWCCA 186 at [111]. 27 (2006) 80 ALJR 458; 224 ALR 1; [2006] HCA 1. 28 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 494 [192]; 224 ALR 1 at 47. 29 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 472 [56]; 224 ALR 1 at 16. presiding judge at a trial in the Sheriff Court at Falkirk, in parts of his charge to the jury where he posed various questions, suggested answers unfavourable to the accused. In R v El Moustafa31 the Victorian Court of Appeal viewed video recordings of the evidence of two witnesses, in applying the proviso in s 568(1) of the Crimes Act 1958 (Vic)32, in the case of one (the accused) because there was a question about whether he had given his evidence in a persuasive manner and, in the case of the other, because the parties were agreed that his evidence should be viewed33. In the course of the Court's reasoning, issues about the use of such evidence by an appellate court, to assess the strength or weakness of a prosecution case, were said to involve a number of considerations. They were said to call for "circumspection in utilising video recordings of evidence of the trial."34 And, their Honours observed, whether a video recording of any part of the evidence should be viewed must depend upon the particular circumstances of the case35. The applicant has not pointed to any circumstance in this case which would have necessitated the viewing of part of the complainant's evidence by the Court of Criminal Appeal. The purpose of the proposed ground, it may be inferred, was to bolster the application for special leave. Conclusion and orders Special leave for the applicant to appeal to this Court should be granted, but only with respect to grounds 2 to 4 inclusive. The appeal should be treated as having been heard instanter and allowed. The order of the Court of Criminal Appeal dismissing the applicant's appeal against conviction to that Court should be set aside and the matter remitted to the Court of Criminal Appeal for rehearing. 31 [2010] VSCA 40. 32 Repealed by s 422(4) of the Criminal Procedure Act 2009 (Vic). 33 R v El Moustafa [2010] VSCA 40 at [46]. 34 R v El Moustafa [2010] VSCA 40 at [44] per Redlich and Harper JJA and Habersberger AJA. 35 R v El Moustafa [2010] VSCA 40 at [45]. HEYDON J. I agree with the orders proposed by and the reasoning of Crennan J. In relation to grounds 3 and 4 of the amended draft notice of appeal, I would add only the following. The applicant submitted that the Court of Criminal Appeal had failed to understand and to carry out the task required of an appellate court in determining whether the verdicts were unreasonable, which was to make its own independent evaluation of the evidence. The premises relied on by the applicant to support the conclusion that the Court of Criminal Appeal had failed in that task were various. They do not support it. The first premise rested on the applicant's criticism of the Court of Criminal Appeal's treatment of the law. That criticism turned on comparing three passages in M v The Queen36. The first passage was summarised by the Court of Criminal Appeal as the test for which M v The Queen is authority. The first passage is: "the question which the court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty."37 The second passage was quoted by the Court of Criminal Appeal38: "In most cases a doubt experienced by an appellate court will be a doubt which a jury ought also to have experienced. It is only where a jury's advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred. That is to say, where the evidence lacks credibility for reasons which are not explained by the manner in which it was given, a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced." But the applicant criticised the Court of Criminal Appeal for not referring to a third passage in the majority judgment in M v The Queen39 appearing a little earlier than the two passages just quoted: 36 (1994) 181 CLR 487; [1994] HCA 63. 37 (1994) 181 CLR 487 at 493 per Mason CJ, Deane, Dawson and Toohey JJ. 38 (1994) 181 CLR 487 at 494. 39 (1994) 181 CLR 487 at 492. "the court does not consider as a question of law whether there is evidence to support the verdict. Questions of law are separately dealt with by s 6(1)[40]. The question is one of fact which the court must decide by making its own independent assessment of the evidence". The applicant submitted, both in chief and in reply, that the failure of the Court of Criminal Appeal to quote or refer to this third passage showed that it had failed to undertake an independent assessment of the evidence. But why should the Court of Criminal Appeal have set out the third passage? It was not submitted that the Court of Criminal Appeal was specifically referred to that passage as crucial. The first two passages made, by implication, the same point as the point made more explicitly in the third passage. The members of the Court of Criminal Appeal who heard the applicant's appeal between them, at the bar and on the bench, have participated in hundreds, if not thousands, of cases involving appeals on the ground that the verdict was unreasonable. Of course it is possible that even so experienced a court may have overlooked the relevant test, but it cannot be readily assumed that it did so. There is no basis for ascribing to the Court a fundamental misapprehension of its task. The failure of the Court of Criminal Appeal to quote the third passage is not a ground for doing so. It understood that the appeal was based on the "unreasonable" ground in s 6(1) of the Act. It referred to the relevant test several times. If the failure of the Court of Criminal Appeal to refer to a particular passage in a judgment, in which other passages were referred to and quoted, is to be criticised, a precedent would be set for appeals to be allowed on the ground that the judgments under appeal failed ritually to incant key propositions or quote them from leading judgments, even though it was manifestly clear that the relevant court had kept the key propositions fully in mind. There has been a growing tendency for modern judgments to become too long, too stuffed with bookish references to authority, and too prone to excessive quotation from authority. Acceptance of the applicant's submission would accelerate that tendency sharply and damagingly. The conclusion that the Court of Criminal Appeal understood its task is supported by the fact that, read as a whole, its reasons reveal that it approached the evidence by attempting to judge its reliability and cogency for itself. One indication of that is the Court of Criminal Appeal's references to itself seeing "little force", or not seeing "any great moment", or seeing "little moment" in particular matters of fact or criticisms. These expressions were used in relation to points (iii)-(v) of the points into which the Court of Criminal Appeal refined the applicant's submissions. The applicant made no complaint about the manner in which the Court of Criminal Appeal dealt with points (i)-(v), nor about its 40 ie, s 6(1) of the Criminal Appeal Act 1912 (NSW) ("the Act"). failure in terms to deal with points (ix) and (x). It may be inferred that the applicant accepts that in those respects the Court of Criminal Appeal did engage in an independent examination of the evidence for itself, rather than finding it merely sufficient or reposing on jury acceptance of it. As Crennan J has demonstrated, the Court of Criminal Appeal engaged in an independent examination of the evidence going to the other criticisms, even though it did not classify it under points (vi)-(viii) and (xi)-(xiii). The very fact that the Court of Criminal Appeal had been able to reduce some rather diffuse submissions advanced to it into 13 quite differently organised categories is something which not only deserves praise, but also establishes performance of its duty to make an independent assessment of the evidence. It must have equipped the Court for a critical scrutiny of that evidence, and the process of classification in itself assisted the Court to become apprised of the detailed evidence and the alleged imperfections in it as viewed through the critical spectacles of the applicant. The applicant criticised the Court of Criminal Appeal for saying that it was "satisfied, on the evidence, that it was open to the jury to reach the verdicts it did", and then going on to preface a statement that it was satisfied of guilt beyond reasonable doubt with the words "[t]o the extent that it is relevant". The applicant submitted that "that qualification … would suggest … a misapprehension because it was not a question to be qualified. It was the central question and the qualification to the extent that it is relevant would suggest the very absence of centrality of that primary question." The applicant submitted that the Court of Criminal Appeal had "inverted" the order in which the test in M v The Queen should be applied. Yet it is plain from M v The Queen that the appellate court's personal satisfaction beyond reasonable doubt is not the sole or central question, at least in the sense that it is subject to a qualification. It is a qualification explained by this Court in a passage appearing immediately after the first of the three passages quoted above41 setting out the question which the "But in answering that question the court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses. On the contrary, the court must pay full regard to those considerations." And the same theme was sounded in the second passage from M v The Queen, which was quoted by the Court of Criminal Appeal43. The expression "[t]o the 41 See [40]. 42 M v The Queen (1994) 181 CLR 487 at 493. 43 See above at [41]. extent that it is relevant" encompasses that qualification. The words with which the Court of Criminal Appeal prefaced its statement that it was satisfied of guilt beyond reasonable doubt, far from revealing an erroneous approach, thus confirmed the consistency of its method with the law stated by this Court in M v The Queen. When the Court of Criminal Appeal's analysis of the evidence is read, there is no reason to suppose that it wrongly inverted any aspect of the test called for by M v The Queen. The applicant also submitted that the Court of Criminal Appeal had expressed no reasons for its statement that it was satisfied beyond reasonable doubt. That is a baseless submission: the statement was a statement of conclusion, appearing after many pages of evidentiary analysis. At one stage the applicant made an audacious submission that the respondent had failed to submit in this Court that the Court of Criminal Appeal had considered all the evidence, or took into account the evidence given in the defence case, or made its own independent assessment of the whole of the evidence. It was suggested that the respondent's failures in these respects indicated that the Court of Criminal Appeal had not done these things. The respondent was not guilty of these failures. The respondent posed as an issue whether the Court of Criminal Appeal had made an independent assessment of the evidence. And the respondent repeatedly submitted that the Court of Criminal Appeal had made an independent assessment of the relevant parts of the evidence. A further premise invoked by the applicant in support of his contention that the Court of Criminal Appeal had failed to make its own independent assessment of the evidence centred on that Court's occasional references to whether the complainant's evidence was "sufficient" to warrant conviction, and whether it was "open" to the jury to convict. However, the applicant's reliance on these references came to lack significance after the applicant conceded in reply that he was not complaining that the Court of Criminal Appeal had applied a "sufficiency of evidence" test. Another premise for the alleged conclusion that the Court of Criminal Appeal had failed to make its own independent assessment of the evidence turned on references by the Court of Criminal Appeal to the jury accepting the complainant's evidence, and the Court of Criminal Appeal's characterisation of the applicant's factual criticisms of the verdicts as being "legitimate points to put to the jury", as having been, "very effectively", put to the jury, and as being "essentially jury points". These criticisms depend on removing particular phrases used by the Court of Criminal Appeal from their context and over-stressing their significance, instead of concentrating on the substance of what the Court of Criminal Appeal did. There is no reason to doubt that the members of the Court of Criminal Appeal were, as they said, "satisfied beyond reasonable doubt, on the evidence, that the [applicant] committed each of the offences charged." By using the words "jury points", the Court of Criminal Appeal was not treating them as unworthy of its own independent consideration, nor was it indicating that it proposed not to examine any of them: for it examined them all. The Court of Criminal Appeal was taking into account what this Court said in M v The Queen in relation to the need for the appellate court not to disregard or discount, but to pay full regard to, the consideration that the jury has the primary responsibility for determining guilt or the consideration that the jury has seen and heard the witnesses44. In these and other respects, the application for special leave to appeal wore the appearance of an attempt to set up an "armchair" appeal, in which those responsible for its inception moved hypercritically through the Court of Criminal Appeal's reasoning, assembling a mass of complaints by concentrating on particular parts of the reasons for judgment rather than the whole. Criticisms of the verbal and formalist kind made by the applicant could not have been made if the Court of Criminal Appeal had expressed its reasons in formulaic terms. But the reasons would not have been improved by being expressed in that way. Finally, the applicant endeavoured to make something of the fact that in this Court the respondent referred to evidence to which the Court of Criminal Appeal had not referred but which supported its analysis. The applicant submitted that this showed the respondent seeking to support the verdicts by engaging in the task which the Court of Criminal Appeal allegedly failed to perform, and thus, in effect, revealing a consciousness of the Court of Criminal Appeal's alleged failure. This is not a valid argument. The respondent's demonstration that there was additional evidence supporting the Court of Criminal Appeal's conclusions does not establish that the Court of Criminal Appeal failed in its duty. If it did, then any appeal based on the unreasonableness of a verdict would succeed if it could be shown that the intermediate appellate court had failed to mention a piece of evidence even though the evidence which it had mentioned was adequate to support its conclusions. That cannot be correct. 44 (1994) 181 CLR 487 at 493: quoted above at [45]. Crennan CRENNAN J. This application for special leave to appeal concerns whether the Court of Criminal Appeal of New South Wales erred in dismissing an appeal against conviction brought on the ground that the jury's verdicts are unreasonable and cannot be supported having regard to the evidence45. On 12 August 2008, the applicant was arraigned on an indictment containing five counts relating to sexual offences against a child. Counts 1 to 3 involved one charge of sexual intercourse with the complainant46, and two counts of aggravated indecent assault47, between 1 June 2004 and 31 July 2004 when the complainant, the applicant's niece by marriage, was aged eight. Counts 4 and 5 involved a charge of aggravated sexual intercourse with the complainant48, and one count of aggravated indecent assault49, between 1 December 2006 and 25 December 2006 when the complainant was aged 10. The aggravating circumstance identified in count 4 was that, at the time of the offence, the complainant was under the authority of the applicant. The applicant pleaded not guilty to all charges. On 21 August 2008, after a trial before Judge Finnane of the District Court of New South Wales, a jury found the applicant guilty of all five counts. On 6 February 2009, Judge Finnane sentenced the applicant in relation to the offences so that they were partially concurrent and partially cumulative, with the result that the applicant was to serve an effective overall sentence of eight years, nine months and 15 days with a non-parole period of four years, nine months and 15 days. The applicant appealed to the Court of Criminal Appeal under the Criminal Appeal Act 1912 (NSW) on two grounds (the latter with leave): that the verdicts of the jury are perverse and are not supported by the evidence, and that the sentences are manifestly excessive. The Crown cross-appealed against the sentences on the ground that they are manifestly inadequate. The appeal against conviction, brought under s 5(1)(b) of the Criminal Appeal Act, fell to be determined under s 6(1) of that Act, which relevantly provides that the Court of Criminal Appeal shall allow an appeal against conviction if the Court is: 45 SKA v The Queen [2009] NSWCCA 186. 46 Crimes Act 1900 (NSW), s 66A. 47 Crimes Act, s 61M(2). 48 Crimes Act, s 66C(2). 49 Crimes Act, s 61M(1). Crennan "of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported, having regard to the evidence". This provision, like similar provisions in Australia, derives from the Criminal Appeal Act 1907 (UK). On 14 July 2009, the Court of Criminal Appeal (McClellan CJ at CL, James and Simpson JJ) dismissed the applicant's appeal against conviction and sentence, but allowed the Crown's cross-appeal and re-sentenced the applicant, resulting in a non-parole period of eight years. The applicant applied for special leave to appeal against the decision of the Court of Criminal Appeal dismissing his appeal against conviction and, on 30 July 2010, Gummow and Heydon JJ referred the application for special leave to an enlarged bench. In an amended draft notice of appeal, the applicant identified five grounds of appeal as follows: The Court of Criminal Appeal erred in failing to view for itself that part of the evidence of the complainant which was presented by way of a pre-recorded video recording of an interview between the complainant and the police. The Court of Criminal Appeal erred in failing to have regard to the trial judge's expressed view that 'the jury acting reasonably could not have convicted' the applicant. The Court of Criminal Appeal erred in failing to properly apply the test in M v The Queen (1994) 181 CLR 487[50]. The Court of Criminal Appeal erred in failing to find that the verdicts of the jury are unreasonable or cannot be supported having regard to the evidence. The Court of Criminal Appeal erred in having regard to material that was not before the jury, namely the unedited account of the complainant's evidence." In order to explain these grounds of appeal it is necessary to refer both to the evidence and to the course of the trial. 50 [1994] HCA 63. Crennan The trial The complainant's evidence in chief at the trial was given in the first instance by way of a video recording of an interview of the complainant by a police officer, Detective Senior Constable Bagnall ("the Bagnall interview")51. The Bagnall interview was recorded on 10 April 2007 when the complainant was nearly 11 years old. An edited copy of the video recording was played to the jury, the complainant gave oral evidence and was cross-examined. following which The complainant gave evidence of the incidents, the subject of the charges, concerning 2004 and 2006. She also gave evidence of an incident of alleged sexual interference by the applicant in 2001, which was not the subject of any charge. The complainant's father is the brother of the applicant's wife. Both families migrated to Australia from India. The complainant has two older sisters, one of whom, L, is three years older than she is. The applicant has two daughters, one of whom, Sh, was younger than, and good friends with, the complainant. The complainant said that sexual encounters with the applicant occurred in both 2004 and 2006, when she was staying at the house of the applicant and his family and sharing a bed with her sister L and her cousin Sh. During the trial, the occasions when the complainant stayed at the applicant's house were referred to as "sleepovers". The applicant gave evidence that the bed used during the sleepovers was a standard, queen-sized bed. In relation to the 2004 incident, the complainant gave evidence that the applicant got into the bed she was occupying with L and Sh when L and Sh were asleep, and that the applicant digitally penetrated her vagina (Count 1). She said she awakened Sh and asked Sh to play a game, at which point the applicant left the room. She said that the applicant returned subsequently and fondled her around the breast area with his hand inside her pyjamas (Count 2) and she got up and went to the toilet with L, who was by then awake. The complainant said that the applicant followed her and L to the toilet and asked, during that time, whether 51 The Criminal Procedure Act 1986 (NSW) was amended by the Criminal Procedure Amendment (Vulnerable Persons) Act 2007 (NSW) to permit such a course under that Act. It became effective from 12 October 2007 and contained a transitional provision (cl 56 of Sched 2) in respect of analogous provisions in the Evidence (Children) Act 1997 (NSW). The Bagnall interview was conducted when the latter Act applied. Crennan she was okay. She said when she got back into bed the applicant came back and fondled her breasts again (Count 3). As to the 2006 incident, the complainant gave evidence that the applicant came into the bedroom when L and Sh were asleep in the bed with her, and that the applicant digitally penetrated her vagina (Count 4). She said she pushed him away. She said she told the applicant she needed a drink of water and was away from the bed for 10 to 15 minutes, during which time the applicant came and asked whether she was alright. She said the applicant then fondled her breasts inside her pyjama top (Count 5). She said nothing was said by the applicant, or her, when the incidents occurred. In the Bagnall interview the complainant gave evidence as to the time when the 2006 incident occurred; she said that it was "[a]bout, just before Christmas, around then". On the same issue, later in the Bagnall interview, she gave the following evidence: "Q56: And do you remember what day that was? No, I don't remember what day, I'm sorry. Q57: Do you remember, that's OK. Do you remember, was it a, a weekday or a weekend, or something else? It was, I think it was a Friday. No, wait, it was, it was the day before Christmas Eve. Q58: The day before Christmas Eve? Yes, I think so. I think that was when." In her oral evidence at the trial the complainant said of the time at which the 2006 incident occurred: "I guessed that it may have been the day before New Year's Eve because I do remember some celebrations around then but it could have been maybe even a week before that." When her interlocutor queried this by saying "[t]he day before Christmas Eve?", she corrected the evidence set out immediately above by saying: "Yeah it's Christmas Eve, sorry." The prosecution called the complainant's older sister L to give evidence. L had also been interviewed by Detective Senior Constable Bagnall and an edited transcript of that interview was in evidence. The complainant's sister did not say anything in her interview which corroborated the specific allegations made by the Crennan complainant, but gave evidence of an occasion when the applicant put his arm around her and she "was just really uncomfortable". The complainant's sister also gave oral evidence and was cross-examined. She could not recall any occasion when the applicant was in the bed during a sleepover. The complainant's mother and father were also called to give evidence; their evidence was partly directed to issues such as the frequency and warmth of interaction between the two families. The Crown tendered an undated alibi notice in respect of the applicant, under s 150 of the Criminal Procedure Act 1986 (NSW), directed to the day before Christmas Eve. In that alibi notice, it was asserted that on 23 December 2006, from between 1.30 to 1.40pm until 4.45pm the applicant and his wife visited friends, and that from between 8.30 to 8.45pm until 10.30 to 11pm they visited the applicant's uncle, who had just returned from India. At trial, the alibi notice was not relied upon and that which the alibi asserted as to the earlier part of the day was proven to be incorrect. The applicant gave evidence and denied ever having sexually interfered with the complainant or ever having been in bed with her. He gave evidence about the frequency and warmth of interaction between the two families relevant to the uncharged acts alleged against him in 2001 and gave evidence of the family circumstances in 2004. He also gave evidence of his movements and those of his family on 22, 23, 24 and 25 December 2006. The applicant gave evidence that on 22 December 2006 one of his daughters had a concert in Blacktown which was attended by his family between 6.30 to 9.30pm and that no-one other than his family was at his place that night. He said that on 23 December 2006 he and his family went to Mass at 6pm and at about 8.30 to 8.45pm until 10.30 to 11pm he and his family visited his uncle, who had just returned from India. He said the complainant was not with him that night. He said that on the morning of 24 December 2006 he was shopping and in the evening he attended dinner at the house of the complainant's parents. He also gave evidence that on the evening of 25 December 2006 he attended a family party. The applicant's wife gave evidence, and corroborated the applicant's evidence concerning the concert in Blacktown on 22 December, the visit to the applicant's uncle on 23 December and the visit on 24 December to the complainant's parents. The applicant's uncle gave evidence corroborating the applicant's visit to him on 23 December 2006. The applicant's brother-in-law corroborated the applicant's visit to the applicant's uncle on 23 December 2006 and the visit to the complainant's parents' house on 24 December 2006. The witnesses, who corroborated the applicant's visit to his uncle on 23 December 2006, were not challenged on that evidence by the prosecution. Crennan As to the allegations concerning 2006, during the course of discussion about proposed directions, which took place in the absence of the jury, the trial judge said to the prosecutor: "You are to refer only to this, that the evidence in the case was that these events occurred on 22 or 23 or perhaps 24 December … You are not to raise the possibility that these events might have occurred at some other time in December." The prosecutor said he wished to say to the jury that when first asked about the date the complainant said "just before Christmas, around then". The trial judge responded: "the 'around then' has to be qualified. You have to point out to [the jury] that her case is these events occurred on 22, 23 or 24 December. That's the case that was put and I'm not going to allow some other case to be put." In his final address, the prosecutor referred the jury to a copy of the indictment, which referred to "[b]etween 1 December 2006 and 25 December 2006" in relation to counts 4 and 5. He then addressed the jury to the effect that the complainant could not, and could not be expected to, remember the exact or precise dates upon which the alleged offences occurred. No issue or complaint was raised in respect of that address in relation to the 2006 incident. In defence counsel's final address, he stated that the complainant's evidence was that the occurrence alleged in 2006 happened on 23 December After conviction, applications were made to the trial judge, on behalf of the applicant, for a certificate under the Criminal Appeal Act52, which his Honour declined to grant, and for bail, which his Honour indicated he proposed to uphold before he proceeded to sentence the applicant. During the course of the judgment in respect of bail, his Honour recorded that the applicant appeared to be "a perfectly honest witness" and also that he "found the complainant a very compelling witness". His Honour then continued: "I find it impossible to see how any jury acting reasonably could be satisfied beyond reasonable doubt … In my opinion the jury acting reasonably could not have convicted the accused." In the Court of Criminal Appeal, the sole ground of appeal against conviction was treated as a complaint that the verdict of the jury with respect to each of the five counts, of which the applicant was convicted, was unreasonable 52 Section 5(1)(b). Crennan or could not be supported having regard to the evidence53. It was recognised correctly that, in undertaking its function under the relevant part of s 6(1) of the Criminal Appeal Act, the Court was bound to apply the test stated by four members of this Court (Mason CJ, Deane, Dawson and Toohey JJ) in M54: "Where, notwithstanding that as a matter of law there is evidence to sustain a verdict, a court of criminal appeal is asked to conclude that the verdict is unsafe or unsatisfactory, the question which the court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty55." Their Honours proceeded to give guidance to appellate courts in respect of their task: "But in answering that question the court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses. On the contrary, the court must pay full regard to those considerations56." It was noted in the joint judgment that the expression "unsafe or unsatisfactory" does not appear in the legislation57. The once common use of that expression, in the context of the legislation, and a subsequent return to a preference for the precise statutory language are both noted and explained in MFA v The Queen58. M has been affirmed and applied in this Court in Jones 53 SKA v The Queen [2009] NSWCCA 186 at [94]. 54 (1994) 181 CLR 487 at 493. 55 See Whitehorn v The Queen (1983) 152 CLR 657 at 686; [1983] HCA 42; Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 532; [1984] HCA 7; Knight v The Queen (1992) 175 CLR 495 at 504-505, 511; [1992] HCA 56. 56 Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 621. 57 (1994) 181 CLR 487 at 492. 58 (2002) 213 CLR 606 at 614 [25] per Gleeson CJ, Hayne and Callinan JJ, 620 [45]-[46] per McHugh, Gummow and Kirby JJ; [2002] HCA 53; see also R v Hillier (2007) 228 CLR 618 at 629-630 [20]; [2007] HCA 13. Crennan v The Queen59, MFA60, R v Hillier61 and R v Nguyen62; further, in Weiss v The Queen63 this Court reiterated that criminal appeal provisions, such as s 6(1), require an appellate court to "make its own independent assessment of the evidence". It is the assessment of the whole of the evidence which provides the basis for any opinion or conclusion under s 6(1). In Dinsdale v The Queen64, Gaudron and Gummow JJ had occasion to consider a different provision, under the Criminal Code (WA)65, which empowered the Court of Criminal Appeal of Western Australia to quash the sentence imposed at trial and pass another sentence "if they [thought] that a different sentence should have been passed". Their Honours said: "this opinion of the Court of Criminal Appeal must be expressed as well as formed, so that, to adapt a statement by McHugh JA in Soulemezis v Dudley (Holdings) Pty Ltd66, the essential ground or grounds for the formation of the opinion are articulated." The reasons of the Court of Criminal Appeal The Court of Criminal Appeal did not view the video recording of the Bagnall interview. Instead, their Honours relied solely on an unedited transcript of that interview, whereas the jury had seen an edited video recording, the redacted transcript of which was incorporated into the ordinary, daily transcript of the trial. The question of whether the video recording should be viewed at the Her Honour Simpson J (with whom appellate McClellan CJ at CL and James J agreed) noted the following67: level was considered. 59 (1997) 191 CLR 439 at 452; [1997] HCA 56. 60 (2002) 213 CLR 606 at 614 [25], 624 [59]. 61 (2007) 228 CLR 618 at 629-630 [20]. 62 (2010) 85 ALJR 8 at 14 [33]; 271 ALR 493 at 500-501; [2010] HCA 38. 63 (2005) 224 CLR 300 at 316 [41]; [2005] HCA 81. 64 (2000) 202 CLR 321 at 329 [21]; [2000] HCA 54. 65 Section 689(3). 66 (1987) 10 NSWLR 247 at 280. 67 SKA v The Queen [2009] NSWCCA 186 at [103]. Crennan "At the outset of the hearing of the appeal Senior Counsel for the [applicant] was invited to comment on this question. He declined to submit that the Court ought to view the video, but added: 'Unless, of course, your Honours feel that you need to view the video to see the demeanour of the [complainant] during the course of the [Bagnall] interview.'" In the absence of submissions to the contrary, Simpson J formed what her Honour described as the "tentative view" that the video evidence should not be put before the appellate court68. Over some 80 paragraphs Simpson J dealt with the evidence including the evidence given by, and on behalf of, the applicant69. When coming to the question of whether the verdicts were unreasonable, Simpson J noted that "[t]he approach taken on behalf of the [applicant] was, essentially, to attack the reliability of the complainant."70 Her Honour then distilled the applicant's arguments constituting criticisms of the complainant's evidence into thirteen points. This covered the issues defined at trial and in the Court of Criminal Appeal and referred to evidence which her Honour had already considered. All thirteen points raised for consideration specific evidence in the trial upon which the applicant wished to rely in order to support the appeal ground that the verdicts are unreasonable and could not be supported having regard to the evidence, and most of the thirteen points encapsulated the applicant's arguments in respect of that specific evidence. Her Honour then said71: "These were, of course, all legitimate points to put to the jury. And they were, very effectively, put to the jury. It was within the jury's province and function to evaluate them, individually and in conjunction with one another, in order to determine whether they cast doubt on the evidence given by the complainant. Plainly, after due deliberation – in excess of three hours, following a trial the evidence in which occupied only 407 pages of transcript (plus the transcript of the two interviews) – the jury was satisfied that, notwithstanding the arguments of senior counsel, the essential evidence of the complainant was sufficient to 68 SKA v The Queen [2009] NSWCCA 186 at [104]. 69 SKA v The Queen [2009] NSWCCA 186 at [13]-[93]. 70 SKA v The Queen [2009] NSWCCA 186 at [111]. 71 SKA v The Queen [2009] NSWCCA 186 at [112]-[113]. Crennan warrant conviction. The question for this Court is whether it was open to the jury to reach that conclusion. These were essentially jury points. I do not propose, therefore, to comment on each point made. It is appropriate, however, to make some observations that might help to shed some light on the approach that may have been taken by the jury. In doing so, I will retain the point numbering system above." Her Honour proceeded to consider the applicant's criticisms of the evidence at the trial in respect of some six of the thirteen points, then said72: "As I have mentioned, it is not necessary to dissect every argument put on behalf of the [applicant]. All were put to the jury. Obviously, all were rejected. I am satisfied, on the evidence, that it was open to the jury to reach the verdicts it did. To the extent that it is relevant, I would also be satisfied beyond reasonable doubt, on the evidence, that the [applicant] committed each of the offences charged. I would dismiss the appeal against conviction." Application of the test in M The primary complaint made on behalf of the applicant was that the Court of Criminal Appeal failed to discharge its function under s 6(1) of the Criminal Appeal Act in accordance with the test in M. It was said that the test in M was misapplied because the whole of the evidence was not independently assessed on the appeal. First, it was submitted that, contrary to the authority of Morris v The Queen73, approved in M74, Simpson J concentrated on the sufficiency of the evidence, not its quality or weight, especially by asking whether it was open to the jury to conclude that the essential evidence of the complainant was sufficient to warrant conviction. There is a difference between the function of an appellate court in assessing the evidence at a trial in order to determine whether a verdict of guilty 72 SKA v The Queen [2009] NSWCCA 186 at [123]-[124]. 73 (1987) 163 CLR 454 at 473; [1987] HCA 50. 74 (1994) 181 CLR 487 at 492 per Mason CJ, Deane, Dawson and Toohey JJ, 525 per Crennan was unreasonable, and the function of a trial judge in considering whether as a matter of law there is evidence on which an accused could be convicted. With the former, regard must be had to the whole of the evidence75. Paraphrasing part of the test in M, as Simpson J did, was not an error. The next and related criticism made of the reasoning in the Court of Criminal Appeal was that not all of the arguments advanced by the applicant in respect of the evidence were dealt with, including particularly the applicant's criticisms of the complainant's evidence in the light of the alibi evidence relied on by the applicant in relation to 23 December 2006. That led to the contention that conclusions reached in relation to the appeal against conviction were expressed without the Court making its own independent assessment of the whole of the evidence. It was said that the respondent did not submit that the Court of Criminal Appeal took into account the whole of the evidence in the defence case; rather, the respondent sought to support the verdicts by analysing all of the evidence. The six points referred to by Simpson J in her judgment, which the applicant contended showed that her Honour had not dealt with the whole of the evidence, were (using the numbers and text in the Court of Criminal Appeal, as corrected by the applicant)76: "(vi) in cross-examination the complainant said that she was 'just not clear' about the first time the [applicant] molested her; (vii) in relation to the 2006 [sic, 2004] allegations, the complainant claimed that when she went to the toilet L accompanied her but that she did not tell L what had happened and that this was because she was afraid about what other people might think and that she was not comfortable talking about it. It was submitted that this evidence was 'fanciful', given her assertions that the two girls had gone to the toilet after the [applicant] got into bed with them (and with Sh); (viii) notwithstanding the complainant's claims that L was present on this occasion (and other occasions), L's evidence did not in any way support that of the complainant; 75 MFA v The Queen (2002) 213 CLR 606 at 615 [26]; R v R (1989) 18 NSWLR 74 76 SKA v The Queen [2009] NSWCCA 186 at [111]. Crennan (xi) the complainant's evidence concerning the presence or otherwise of L during the commission of the 2004 [sic, 2006] offences was conflicting. In her interview the complainant said that L and Sh were both present. Later in the interview she said that she thought L had gone home with the family and did not stay that night. In oral evidence (in chief) she reverted to saying that she thought L was present because she recalled her being present while they watched the movie ('Charlie and the Chocolate Factory'); (xii) [the applicant's uncle's] evidence established an alibi for the [applicant] between 9.00pm and 11.00pm on the evening of 23 December 2006, and made it highly unlikely that the complainant had been present at his house at any other time on that evening. The complainant had committed herself to the 23 December date, and [the applicant's uncle's] evidence, like the evidence of the DVD release date, undermined the complainant's account of this event, also to the point of irretrievability; (xiii) the evidence concerning the frequency of overnight stays and contact between the two families up to 2004 was conflicting. The complainant, L, and both of her parents gave evidence that the children stayed at the [applicant's] house from time to time from 2001; the [applicant] and his wife both gave evidence that this did not begin to occur until 2004, when Sh started school. Circumstantial evidence pointing to the unlikelihood of that having occurred before 2004 was given – for example, the disruption caused by the renovations, the cooling of relationships between the families during and following the visit of the [applicant's] mother, and difficulties following the birth of the [applicant's] younger daughter, SA." By reference to the matters set out in the six points, the applicant submitted that "[a]spects of the evidence were not dealt with by Simpson J". That submission underpinned a submission that there was no foundation for her Honour's ultimate conclusion that she was satisfied, on the evidence, that it was open to the jury to reach the verdicts it did. There is no complaint about what both parties called the "summary" of evidence in the Court of Criminal Appeal, which covered the issues defined in the trial as they were pursued on appeal and extended, as I have already observed, over some 80 paragraphs. However, it was contended that apart from their coverage in the summary of evidence, points (vi), (vii), (viii), (xi), (xii) and (xiii) were all dealt with cursorily as matters which were put to the jury77. The submission, and its incorrectness, is well illustrated by reference to point (xii) concerning the alibi evidence. 77 SKA v The Queen [2009] NSWCCA 186 at [123]. Crennan The alibi issue – point (xii) In relation to point (xii), the applicant asserted that, in respect of the 2006 incident, the complainant had committed herself to the date of 23 December 2006 and the alibi evidence showed this was wrong. It was submitted that there was no response to the applicant's contention that the the alibi evidence of the applicant complainant's evidence of the 2006 incident. Further, complaint was made that the evidence given by the applicant in relation to his movements on 22 December 2006 was not mentioned in the reasons. irretrievably undermined In answer to these submissions the respondent submitted that Simpson J had dealt with the evidence concerning the date of the incident in a manner which indicated that the complainant had not committed herself to the date of 23 December 2006, with the result that any error about the date did not irretrievably undermine the complainant's evidence. The first point to be made about this issue is that the Court of Criminal Appeal was not bound by the ruling of the trial judge concerning the date of the 2006 incident, as it is for that Court to undertake its own assessment of the evidence. The second point to be made is that, contrary to the applicant's submission that her Honour did not deal with the evidence of the applicant and his uncle concerning the 23 December 2006 date, the whole of the evidence as to whether 23 December was the date on which the 2006 incident occurred, including that of the applicant, the applicant's wife and his uncle, was dealt with by Simpson J78. In relation to the evidence of the applicant's uncle, her Honour referred to the fact that he produced documentary evidence of his travel arrangements involving 23 December 2006 and further noted that he was not cross-examined79. Also, her Honour considered the evidence of the applicant's wife and stated that her evidence of family activities on 23 December 2006 corroborated that given by the applicant80. Her Honour also noted the applicant's evidence of his movements on 24 December 200681. 78 SKA v The Queen [2009] NSWCCA 186 at [53], [70], [83], [84], [91] and [92]. 79 SKA v The Queen [2009] NSWCCA 186 at [92]. 80 SKA v The Queen [2009] NSWCCA 186 at [91]. 81 SKA v The Queen [2009] NSWCCA 186 at [85]. Crennan In the main body of her judgment, Simpson J dealt with the complainant's evidence in respect of the incident in December 2006. After doing so her Honour said: "[the complainant] concluded that [the incident] may have been the day before Christmas Eve" (emphasis added)82. When her Honour considered every aspect of the alibi notice directed to the date 23 December 2006, her Honour repeated her evaluation that "the complainant was not dogmatic as to the date"83. That evaluation inevitably dealt with the applicant's argument noted in point (xii). Having regard to the fact that her Honour dealt with all of the evidence as to the date of 23 December 2006, including that of the complainant, the applicant, the applicant's uncle and the applicant's wife, it is unremarkable that Simpson J referred to the applicant's argument, noted in point (xii), as a legitimate point to be put to the jury. Her Honour's assessment that the complainant was not dogmatic about the date of the 2006 incident bore on all of the applicant's evidence of his movements on 22, 23 and 24 December 2006. More generally, the respondent's response to the applicant's contention that points (vi), (vii), (viii), (xi), (xii) and (xiii) were only dealt with as matters which were legitimate points to put to the jury was that the whole of Simpson J's judgment showed that no detail of the complainant's account was left unexamined. Further, it was submitted that in that part of the judgment which both parties referred to as the summary of the evidence, Simpson J noted the significant issues to which the evidence related, including the applicant's criticisms of the complainant's case. Those submissions must be accepted, as their correctness can be demonstrated in respect of each aspect of the evidence which the applicant claims was not dealt with for the purposes of the test in M. That exercise in respect of point (xii) has already been done. Point (vi) concerned the complainant's evidence that she was not clear about the dates of the uncharged 2001 incident. This point overlapped with point (ii) which also dealt with the complainant's uncertainty about the time of the 2001 incident. The applicant's submission that Simpson J did not deal with this aspect of the evidence is incorrect. The complainant's evidence was that she was not sure about the details because she was "very young" at the time (she was 4). Her Honour dealt with the relevant evidence84 and evaluated the complainant's uncertainty about the date85. Her Honour also reviewed the relevant cross-examination86. This issue of the complainant's equivocation about the date 82 SKA v The Queen [2009] NSWCCA 186 at [53]. 83 SKA v The Queen [2009] NSWCCA 186 at [70]. 84 SKA v The Queen [2009] NSWCCA 186 at [13], [34] and [35]. 85 SKA v The Queen [2009] NSWCCA 186 at [35] and [41]-[44]. 86 SKA v The Queen [2009] NSWCCA 186 at [49]-[52]. Crennan was also expressly dealt with by Simpson J in a manner which showed regard to the applicant's criticism that the complainant's evidence was deficient87. To the extent that the applicant suggested that Simpson J did not deal with L's evidence, the evidence relevant to point (vii) (which overlaps with point (viii)) was dealt with by Simpson J88. Her Honour accepted the applicant's argument that the evidence of L did not corroborate the complainant's evidence89. Her Honour also dealt with the complainant's evidence as to why she was "afraid about telling people" about the 2004 events. Of the 2004 incident, on the topic of the complainant not talking to others about it, Simpson J records that the complainant said90: "I think I was on the verge of sort of understanding what was going on but I think for the same reason I was still a bit afraid about telling people and what they might think and what might happen between us two families." Point (xiii) concerned conflicting evidence about the frequency of overnight stays and contact between the two families. The relevant evidence of six witnesses was dealt with comprehensively by Simpson J91. The jury ultimately had the evidence of the complainant, L (who was not challenged on the issue), and the complainant's mother and father to the effect that the overnight stays and contact were frequent. As against that there was conflicting evidence of the applicant and his wife. It is unremarkable that Simpson J noted that the applicant's arguments in relation to the issue were legitimate points to put to the jury. The description of six points as legitimate points to put to the jury has been misunderstood by the applicant. The remark was made in the context that the contested issues in the trial turned on the complainant's word against the applicant's word and there were factual conflicts which were ultimately for the resolution of the jury. 87 SKA v The Queen [2009] NSWCCA 186 at [118]. 88 SKA v The Queen [2009] NSWCCA 186 at [15], [58]-[62] and [64]-[66]. 89 SKA v The Queen [2009] NSWCCA 186 at [65]. 90 SKA v The Queen [2009] NSWCCA 186 at [46]. 91 SKA v The Queen [2009] NSWCCA 186 at [56]-[57] (the complainant), [65] (L), [67] (the complainant's mother), [68] (the complainant's father), [75]-[81] (the applicant), and [87] and [89] (the applicant's wife). Crennan The remark was not an indication that some of the evidence would not be assessed by her Honour. The misunderstanding which has arisen is that the applicant has incorrectly treated her Honour's isolation of thirteen points as confining her Honour's assessment of the evidence. Her Honour's isolation of the thirteen points was merely a method of distilling the applicant's criticisms of the complainant's evidence, being evidence with which she had already dealt. The applicant has treated that part of the judgment where her Honour describes six points as legitimate points to put to the jury as though her Honour thereby dispensed with considering the whole of the evidence. As demonstrated in these reasons, that is incorrect. An appellate court is not required to dissect every argument raised by an appellant. Simpson J's description of certain points as legitimate points to put to the jury is not inconsistent with her Honour having assessed the whole of the evidence in support of the counts, in terms of asking and answering the question framed in M. On one view, the applicant's complaint on this aspect of the case may be, in truth, a complaint about the reasons. It might have been desirable to deal with all thirteen points in precisely the same way so as to avoid misunderstanding. However, a consideration of the whole of the judgment shows a comprehensive and independent assessment of the whole of the evidence and a clear appreciation of the applicant's criticisms of the complainant's evidence. That assessment was the foundation for her Honour's conclusions in respect of the counts that upon the evidence it was open to the jury to reach the verdicts it did. Furthermore, in the light of the whole of her Honour's judgment, when her Honour described the six points as legitimate points to put to the jury, it is clear that her Honour was doing no more than following the guidance to appellate courts in M to pay full regard to the considerations that the jury is entrusted with the primary responsibility of determining guilt or innocence and has had the benefit of having seen and heard the witnesses. As these reasons show, the Court of Criminal Appeal discharged its functions under s 6(1) of the Criminal Appeal Act in accordance with the test in M. Although the application for special leave focussed on the submissions about the evidence by video recording, on the referral to a Full Bench the submissions concerning the proper application of M became dominant. In the circumstances and having regard to the reasons set out above, special leave to appeal in respect of grounds 2, 3 and 4 of the amended draft notice of appeal should be granted, and the appeal should be treated as instituted, heard instanter and dismissed. Other matters For the sake of completeness, it is necessary to deal with other criticisms made of the decision of the Court of Criminal Appeal, all of which must be rejected. It was submitted for the applicant that the Court of Criminal Appeal erred in failing to reduce, to the extent that it was able, the disadvantage of not Crennan having been present at the trial. This was said to arise because Simpson J did not have regard to the trial judge's opinion expressed in the judgment granting bail to the applicant pending the appeal, and also because the Court of Criminal Appeal did not view the video recording described above. A related complaint was that the Court of Criminal Appeal erred in having the unedited transcript of the complainant's evidence given by video recording in circumstances where the jury had an edited version. Opinion of the trial judge Submissions on the alleged failure to take into account the trial judge's opinion were framed by reference to the value of a trial judge's report which must undoubtedly have been of "great use"92 before the routine provision of transcripts as part of a written record of a trial. In this case, the trial judge was not asked to provide a report93 and he declined to provide a certificate that the case was fit to appeal. Relevant authorities establish a number of propositions about trial judges' reports which are applicable to the present circumstances where the transcribed evidence is part of the written record. First, whilst a trial judge's report may be a factor to be taken into account it would be wrong to substitute the opinion of the judge for that of the jury94. Secondly, the weight to be given by an appellate court to a trial judge's report will vary with the circumstances95. Such a report will be of greatest assistance when expressing views about matters not readily apparent from the written 92 R v Dent (1912) 12 SR (NSW) 544 at 551. 93 Section 11 of the Criminal Appeal Act relevantly provides: "The judge of the court of trial may, and, if requested to do so by the Chief Justice, shall, in case of any appeal or application for leave to appeal, furnish to the registrar the judge's notes of the trial, and also a report, giving the judge's opinion upon the case, or upon any point arising in the case". It can be noted that s 316 of the Criminal Procedure Act 2009 (Vic) is a similar provision, as was s 573 of the Crimes Act 1958 (Vic). 94 R v Appellant W unreported, Court of Criminal Appeal of New South Wales, 9 March 1990 at 11 per Gleeson CJ; see also JMV (2001) 124 A Crim R 432 95 R v Marziale unreported, Court of Appeal of Victoria, 18 April 1996 at 34 per Winneke P, Brooking JA and Southwell AJA. Crennan record of a trial96. Less weight will be given to a trial judge's report in circumstances where the judge's opinion appears to be based almost wholly upon the assessment of the evidence which an appellate court is obliged to undertake for itself97, or is an opinion which is not fully reasoned. The functions of such a report, when there is in existence an adequate system for reporting of court proceedings98, have been summarised helpfully in Sloane99: "An important function of a report under s 11 of the Criminal Appeal Act is to inform the Court of Criminal Appeal of any problems which might have emerged during the trial, which either do not appear on the face of the record, or which are imperfectly or ambiguously recorded. Another permissible and relevant function of such a report is its use, by a trial judge, to raise any matters of irregularity or otherwise, which may give cause for significant doubt in relation to a guilty verdict, and which again are not apparent upon a bare reading of the record. A third permissible reason for such a report is its provision, in response to a specific request from the Court of Criminal Appeal, in relation to any matter which may be of concern to it. Otherwise, in times where there is in existence an adequate system for court reporting, occasion for the provision of a s 11 report should only arise in exceptional circumstances. Its use in order to justify, or to explain a decision for which reasons should have been provided, is not such a circumstance." In dismissing the appeal against conviction, no reference was made in the reasons of Simpson J to the opinion expressed by the trial judge. However, it was noted in that part of the reasons dealing with the appeal and cross-appeal in relation to sentence that the trial judge "held a strong view" that a jury, acting reasonably, ought not to have been satisfied beyond reasonable doubt of the 96 Ahmet (1996) 86 A Crim R 316 at 323; R v Garofalo [1999] 2 VR 625 at 628-629 [44]; JMV (2001) 124 A Crim R 432 at 434 [6]; Sloane (2001) 126 A Crim R 188 at 189-190 [10]-[13]; SI v The Queen [2007] NSWCCA 181. 97 R v Marziale unreported, Court of Appeal of Victoria, 18 April 1996 at 34. 98 Section 39 of the Criminal Procedure Act provides for the recording of the evidence of witnesses in criminal proceedings. 99 (2001) 126 A Crim R 188 at 189-190 [10]-[13] per Wood CJ at CL. Crennan applicant's guilt, and that an appeal against conviction had strong prospects of success100. It was also noted that, in his Honour's remarks on sentence, the trial judge had illustrated why the jury should have doubted the veracity of the complainant. First, the trial judge found that the complainant's evidence that the applicant never spoke during the assaults (which were said to have occurred when others were asleep in the room) departed from his past experience in relation to analogous sexual offences. Secondly, the trial judge considered that the applicant's account of his activities on 23 December 2006 contradicted the complainant's account. Thirdly, the trial judge referred to the lack of corroboration of the complainant. Finally, the trial judge doubted the complainant's account of the uncharged incident in 2001 when she was only four years of age. Simpson J observed that the trial judge's remarks reflected his view of the complainant's veracity, which differed from the view taken by the jury101. Her Honour also rightly deprecated the trial judge's expression of the view that the jury verdicts were unsafe, for the reason that this raised false hope and complicated the task of the Court of Criminal Appeal in relation to re-sentencing102. The concerns, underpinning the trial judge's opinion, expressed in his judgment granting bail, did not depend on any advantage from seeing and hearing the witnesses because, as already mentioned, the trial judge found the applicant to be an honest witness and found the complainant to be a compelling witness. The trial judge's opinion was based on his assessment of the evidence, the very task which it was for the Court of Criminal Appeal to undertake independently for itself. In these circumstances there was no error in relation to the way in which Simpson J dealt with the trial judge's opinion. Evidence by video recording Finally, the failure of the Court of Criminal Appeal to view the video recording was said to be an error, more particularly as an appellate court can and often will view such a video recording when it is tendered as an exhibit at a trial103. Simpson J expressed the tentative view that viewing the video recording would have meant assessing a portion of the evidence on a different basis from 100 SKA v The Queen [2009] NSWCCA 186 at [141] and [210]. 101 SKA v The Queen [2009] NSWCCA 186 at [152]. 102 SKA v The Queen [2009] NSWCCA 186 at [210]-[211]. 103 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 472 [56], 494 [192]; 224 ALR 1 at 16, 47; [2006] HCA 1. Crennan the rest of the evidence: "It would create an imbalance for the appellate court to be exposed to the visual image and oral recording of one witness and not others."104 However, it is unnecessary to deal in any detail with submissions made on this branch of the applicant's argument. This is because there was no identification by the applicant's counsel of any forensic purpose to be served by having the Court of Criminal Appeal view the video recording, a course which defence counsel had not urged upon the Court. As to the related complaint – that the Court of Criminal Appeal took into account evidence not before the jury by having an unedited transcript of the Bagnall interview – it is sufficient to observe that the only use made of the unedited transcript of the video recording was to illustrate a speech pattern of the complainant's which was palpable, in any event, in other evidence given by her. Special leave should be refused in respect of grounds 1 and 5 of the amended draft notice of appeal. Orders The following orders should be made. Special leave to appeal be refused in respect of grounds 1 and 5, and be granted in respect of grounds 2, 3 and 4, of the amended draft notice of appeal dated 13 August 2010. The appeal be treated as instituted, heard instanter and dismissed. 104 SKA v The Queen [2009] NSWCCA 186 at [108]. Crennan

HIGH COURT OF AUSTRALIA THE QUEEN AND AKON GUODE APPELLANT RESPONDENT The Queen v Guode [2020] HCA 8 Date of Hearing: 14 November 2019 Date of Judgment: 18 March 2020 ORDER Appeal allowed. Set aside the orders made by the Court of Appeal of the Supreme Court of Victoria on 16 August 2018. Quash the sentences imposed by the Court of Appeal of the Supreme Court of Victoria on 16 August 2018. Remit the matter to the Court of Appeal of the Supreme Court of Victoria for further determination according to law. On appeal from the Supreme Court of Victoria Representation K E Judd QC with A S Ellis for the appellant (instructed by Solicitor for Public Prosecutions (Vic)) O P Holdenson QC with C A Boston and L V Drago for the respondent (instructed by Stary Norton Halphen) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Guode Criminal law – Sentence – Irrelevant consideration – Where respondent pleaded guilty to murder contrary to common law and to infanticide and attempted murder contrary to ss 6(1) and 321M of Crimes Act 1958 (Vic) respectively – Where primary judge sentenced respondent to 26 years and six months' imprisonment with non-parole period of 20 years – Where Court of Appeal allowed appeal against sentence and re-sentenced respondent to 18 years' imprisonment with non-parole period of 14 years – Where respondent's mental condition at time of offending called for application of principles stated in R v Verdins (2007) 16 VR 269 – Where element of offence of infanticide included disturbance of balance of mind – Where infanticide carried significantly shorter maximum penalty than offences of murder and attempted murder – Whether Court of Appeal erred by evaluating appropriateness of sentences imposed for murder and attempted murder in light of lesser maximum penalty for offence of infanticide. Words and phrases – "acceptance of a plea", "attempted murder", "disturbance of mind", "impaired mental functioning", "infanticide", "irrelevant consideration", "manifestly excessive", "mental condition", "mitigating factors", "moral culpability", "murder", "sentencing", "sentencing considerations", "specific error", "Verdins considerations". Crimes Act 1958 (Vic), ss 3, 6(1), 321P(1)-(1A). KIEFEL CJ, GAGELER AND NETTLE JJ. The sole question of principle which arises for determination in this appeal is whether, where a woman with impaired mental functioning is charged with and pleads guilty to an offence of infanticide and also offences of murder and attempted murder committed by the same act, the Crown's acceptance of the plea to the charge of infanticide is relevant to the sentences to be imposed on the charges of murder and attempted murder. For the reasons which follow, it is not. The dispositive question of fact is whether the Court of Appeal of the Supreme Court of Victoria, in determining the respondent's appeal to that Court against her sentence on the basis that it was manifestly excessive, took that irrelevant consideration into account. For the reasons which follow, they did and the appeal should be allowed. Relevant statutory provisions Section 3 of the Crimes Act 1958 (Vic) provides so far as is relevant, in substance, that the maximum penalty for an offence of murder is life imprisonment. Section 321P of the Crimes Act provides so far as is relevant, in substance, that the maximum penalty for the offence of attempted murder is 25 years' imprisonment. Section 6(1) of the Crimes Act provides for the offence of infanticide. The current form of s 6(1) was substituted1 for its predecessor to give effect to recommendations made by the Victorian Law Reform Commission ("the Commission") in its Final Report into Defences to Homicide delivered in October 2004 ("the Commission's Report"). Relevantly, the Commission made three recommendations with respect to infanticide, as follows: "Infanticide should be retained as an offence and as a statutory alternative to murder."2 "Infanticide should apply where a woman has suffered from a disturbance of mind as the result of not having recovered from the effect of giving birth or any disorder consequent on childbirth."3 1 By the Crimes (Homicide) Act 2005 (Vic). 2 Victorian Law Reform Commission, Defences to Homicide: Final Report (2004) at lv [47]. Nettle "The offence of infanticide should be modified by: extending the offence to cover the killing of an infant aged up to two years; and [(ii)] applying the offence to the killing of older children as the result of the accused not having recovered from the effect of giving birth or any disorder consequent on childbirth."4 In support of recommendation 3(ii), the Commission stated5: "The Commission [considers] that it is unjust that a woman who, due to a disturbance of mind, killed more than one child, can rely on infanticide for one child but not the other. The Commission recommends the law should be changed to rectify this anomaly." Parliament accepted recommendations 1, 2 and 3(i), but did not adopt recommendation 3(ii). In the result, s 6(1) of the Crimes Act now appears as follows: "If a woman carries out conduct that causes the death of her child in circumstances that would constitute murder and, at the time of carrying out the conduct, the balance of her mind was disturbed because of – her not having fully recovered from the effect of giving birth to that child within the preceding 2 years; or a disorder consequent on her giving birth to that child within the preceding 2 years – she is guilty of infanticide, and not of murder, and liable to level 6 imprisonment (5 years maximum)." 3 Victorian Law Reform Commission, Defences to Homicide: Final Report (2004) at lv [48]. 4 Victorian Law Reform Commission, Defences to Homicide: Final Report (2004) at lv [49]. 5 Victorian Law Reform Commission, Defences to Homicide: Final Report (2004) Nettle Verdins considerations Apart from s 6(1) of the Crimes Act, the ways in which a mental disorder or abnormality or an impairment of mental function, whether temporary or permanent ("the condition"), may be relevant to sentencing were compendiously summarised6 by the Court of Appeal of the Supreme Court of Victoria in R v The condition may reduce the moral culpability of the offending conduct, as distinct from the offender's legal responsibility. Where that is so, the condition affects the punishment that is just in all the circumstances; and denunciation is less likely to be a relevant sentencing objective. The condition may have a bearing on the kind of sentence that is imposed and the conditions in which it should be served. 3. Whether general deterrence should be moderated or eliminated as a sentencing consideration depends upon the nature and severity of the symptoms exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of sentence or both. 4. Whether specific deterrence should be moderated or eliminated as a sentencing consideration likewise depends upon the nature and severity of the symptoms of the condition as exhibited by the (2007) 16 VR 269 at 276 [32] per Maxwell P, Buchanan and Vincent JJA, reformulating the principles enunciated in R v Tsiaras [1996] 1 VR 398. That summary has consistently been adopted by intermediate appellate courts elsewhere in Australia: Du Randt v The Queen [2008] NSWCCA 121 at [24] per Barr J (Basten JA and Buddin J agreeing); Carlton v The Queen (2008) 189 A Crim R 332 at 351 [101] per Basten JA; Western Australia v SJH (2009) 200 A Crim R 228 at 246 [81]-[82] per Wheeler JA (Owen JA agreeing); R v Yost [2010] SASCFC 4 at [21]-[22] per Kelly J (Doyle CJ and Duggan J agreeing); Startup v Tasmania [2010] TASCCA 5 at [6] per Evans, Tennent and Wood JJ; R v Yarwood (2011) 220 A Crim R 497 at 506-507 [23]-[26] per White JA (Fraser JA and North J agreeing); Millard v The Queen [2016] ACTCA 14 at [31] per Refshauge, Penfold and North JJ. See also Muldrock v The Queen (2011) 244 CLR 120 at 137-139 [50]-[55] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Nettle offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of the sentence or both. The existence of the condition at the date of sentencing (or its foreseeable recurrence) may mean that a given sentence will weigh more heavily on the offender than it would on a person in normal health. 6. Where there is a serious risk of imprisonment having a significant adverse effect on the offender's mental health, this will be a factor tending to mitigate punishment." (footnote omitted) Proceedings at first instance In this matter, the respondent was arraigned before the Supreme Court of Victoria on 16 January 2017 on an indictment alleging one charge of infanticide (Charge 1), two charges of murder (Charges 2 and 3) and one charge of attempted murder (Charge 4). The respondent pleaded guilty to each charge. As the Summary of Prosecution Opening7 disclosed, the respondent committed the offences on 8 April 2015 by driving a car, carrying four of her children, into Lake Gladman in Wyndham Vale, Victoria with the intention of killing each child. In support of her plea in mitigation of penalty, the respondent adduced uncontested expert psychiatric evidence from Dr Danny Sullivan, a Consultant Forensic Psychiatrist and Assistant Clinical Director at the Victorian Institute of Forensic Mental Health, to the effect that, at the time of the offending, the respondent was suffering from a "major depressive disorder, mild-moderate in severity, with somatic syndrome", the consequence of having given birth to the youngest of the deceased children. Dr Sullivan added, in the language of s 6(1)(b) of the Crimes Act, that the balance of the respondent's mind was thus disturbed by a depressive illness which arose as a consequence of the respondent having given birth to her youngest child within the preceding two years. In a Second Supplementary Psychiatric Report, Dr Sullivan further opined that, "[o]n balance, there is evidence of post-traumatic stress disorder, which is mild in severity", but stated that he did "not consider that this diagnosis materially 7 Which was read onto the transcript by the Crown, and accepted by the respondent as accurate. Nettle alter[ed] [his] previous consideration of impairment of mental functioning at the time of the alleged events". The sentencing judge (Lasry J) found that the respondent's mental state affected all four charges and "it also follows that several of the principles decided in R v Verdins apply ... so as to reduce but not eliminate the moral culpability of [the respondent's offending]" and "to significantly moderate the role of specific deterrence in the sentence to be imposed on [the respondent] as well as general deterrence". On that basis, on 30 May 2017, his Honour sentenced the respondent on Charge 1 to 12 months' imprisonment, on each of Charges 2 and 3 to 22 years' imprisonment and on Charge 4 to six years' imprisonment, and ordered that six months of the sentence imposed on Charge 1, three years of the sentence imposed on Charge 3 and one year of the sentence imposed on Charge 4 be served cumulatively on the sentence imposed on Charge 2, making a total effective sentence of 26 years and six months' imprisonment. Lasry J fixed a non-parole period of 20 years. Proceedings before the Court of Appeal The respondent applied for leave to appeal against sentence to the Court of Appeal. That Court, constituted by a single judge of appeal (Weinberg JA), dismissed8 the application on the papers under s 315 of the Criminal Procedure Act 2009 (Vic). His Honour held9 that it could not "reasonably be contended that the individual sentences, the total effective sentence, or the non-parole period, were wholly outside the range reasonably available for offences of this gravity". Pursuant to s 315(2) of the Criminal Procedure Act, the respondent elected to have her application for leave to appeal redetermined by the Court of Appeal constituted by two or more judges of appeal (Ferguson CJ, Priest and Beach JJA). Their Honours held10 that Lasry J had erred by giving insufficient weight to the respondent's mental condition and other mitigating factors, with the result that the sentences that Lasry J imposed on Charges 2, 3 and 4 were manifestly excessive, and that, "in light of the sentences imposed by the judge on charges 2 and 3, the orders for cumulation on the other charges were also 8 Guode v The Queen [2017] VSCA 311 at [39]. 9 Guode v The Queen [2017] VSCA 311 at [39]. 10 Guode v The Queen [2018] VSCA 205 at [72]-[73]. Nettle manifestly excessive". The Court of Appeal quashed the sentences imposed on Charges 2, 3 and 4; resentenced the respondent on each of Charges 2 and 3 to 16 years' imprisonment and on Charge 4 to four years' imprisonment; ordered that 12 months of the sentence imposed on Charge 3 and six months of each of the sentences imposed on Charges 1 and 4 be served cumulatively on the sentence imposed on Charge 2, making a total effective sentence of 18 years' imprisonment; and fixed a non-parole period of 14 years. In reasoning to those results, the Court of Appeal noted11 that: "Much of the discussion in this case concerned the ramifications of joining charges of infanticide and murder (and attempted murder) on the indictment; and more particularly, whether the charges of murder needed to be viewed through the 'prism' of infanticide. In our view, the real relevance of the charge of infanticide lies not so much in its presence on the indictment vis-à-vis the charges of murder (and attempted murder), but in the prosecution's acceptance – in laying that charge and accepting a plea to it – that the balance of the applicant's mind was disturbed due to a depressive disorder consequent on her giving birth to the child Bol [the youngest child]. That acceptance must, we consider, influence any assessment of the applicant's moral blameworthiness on all of the charges that she faced." The Court of Appeal further noted12 that Parliament had not accepted the Commission's recommendation that, where a woman who, due to a disturbance of mind the result of not having recovered from the effect of giving birth or any disorder consequent on childbirth, kills a child of less than two years of age and also another child or other children of a greater age, the offence of infanticide should apply to each child and not just to the child under two years of age. But their Honours then went on as follows13: "As we have indicated, however, the prosecution's acceptance of a plea to infanticide is not irrelevant to a consideration of the applicant's other offending. Indeed, the opposite is true. At the risk of repetition, the prosecution conceded that the second limb of s 6(1) was engaged. It was thereby conceded that at the time that the applicant drove into the lake 11 Guode v The Queen [2018] VSCA 205 at [61]. 12 Guode v The Queen [2018] VSCA 205 at [64]. 13 Guode v The Queen [2018] VSCA 205 at [65]-[67], [72] (emphasis added). Nettle intending to kill the child Bol [the youngest child], 'the balance of her mind was disturbed because of ... a disorder consequent on her giving birth to that child'. In QPX14, Bongiorno JA was required to sentence a woman who had pleaded guilty to the infanticide with respect to one twin, 'M', and to recklessly causing serious injury to the other twin, 'N'. In the course of his reasons for sentence, his Honour said: 'This case of infanticide and, in this particular instance, the charge of recklessly causing serious injury must both be viewed in light of the statutory definition of infanticide set out in the Crimes Act 1958. By the Crown's acceptance of QPX's plea of guilty to infanticide in respect of M it has acknowledged that both offences in circumstances arising from or causally were committed connected to her recently having given birth to her twin daughters. The prosecutor in this Court correctly acknowledged this analysis. In alike vein, we consider that the charges of murder and attempted murder must be viewed in light of the statutory definition of infanticide in s 6(1) of the Crimes Act 1958, and by the prosecution's acceptance of a plea to infanticide with respect to [the youngest child], by which it acknowledged that all four offences were committed in circumstances arising from, or causally connected to, a disorder consequent upon the applicant recently having given birth to [that child]. In our view, there is substance in the submissions of the applicant's counsel that sentences of 22 years' imprisonment on each of the two charges of murder are of the order of sentences generally reserved for cases unattended by the powerful mitigating features of this case. Had adequate weight been given to the applicant's mental condition and other factors in mitigation, we consider that significantly more lenient sentences would have been imposed on each of those charges. Indeed, in our view, the individual sentences on those charges are beyond the range of those open in the sound exercise of the sentencing discretion, and are manifestly excessive (as is the sentence on the charge of attempted murder)." 14 Director of Public Prosecutions v QPX [2014] VSC 189. Nettle The appeal to this Court By grant of special leave, the Crown appeals to this Court on the sole ground that the Court of Appeal erred by taking into account as a relevant consideration, in the determination of whether the sentences imposed on the charges of murder and attempted murder were manifestly excessive, that the Crown had accepted the respondent's plea of guilty to the charge of infanticide. The Director of Public Prosecutions submitted that it is clear from the Parliament's rejection of recommendation 3(ii) of the Commission's Report that the Crown's acceptance of the respondent's plea to the charge of infanticide was irrelevant to the sentences to be imposed on the other charges. In the Director's submission, it is also clear from the passages of the Court of Appeal's reasons for judgment set out above that, despite the irrelevance of the Crown's acceptance of the respondent's plea to the charge of infanticide, the Court of Appeal treated it as relevant. Moreover, in the Director's submission, if the Court of Appeal had not treated the Crown's acceptance of the respondent's plea to the charge of infanticide as informing the sentences properly to be imposed on the charges of murder and attempted murder, it would not have been open to the Court of Appeal to conclude, as their Honours did, that the sentences imposed in respect of those charges and the total effective sentence, in view of the orders for cumulation, were manifestly excessive, the result of giving inadequate weight to mitigatory considerations. Counsel for the respondent submitted, to the contrary, that, although the Court of Appeal referred to the fact of the Crown's acceptance of the respondent's plea to the charge of infanticide; and that the offences of murder and attempted murder "must be viewed in light of the statutory definition of infanticide in s 6(1) of the Crimes Act"; and that by accepting the respondent's plea to the charge of infanticide, the Crown had "acknowledged that [all of the] offences were committed in circumstances arising from or causally connected to [the respondent] recently having given birth", the Court of Appeal were properly to be understood as using those expressions as no more than a compendious means of reiterating Dr Sullivan's uncontested expert psychiatric evidence (to which their Honours had earlier referred) that, at the time of the offences, the respondent was suffering from a major depressive illness, mild-moderate in severity, which impaired her capacity to exercise appropriate judgment, think clearly, make calm and rational choices, and appreciate the wrongfulness of her conduct, which was very likely causally associated with her behaviour in driving her children into the lake. On that basis, in counsel's submission, it was well open to the Court of Appeal to conclude that the sentences imposed in respect of the charges of murder and attempted murder and the total effective sentence, in view of the orders for cumulation, were manifestly excessive. Nettle The irrelevance of the plea to the charge of infanticide The Crown's acceptance of the respondent's plea to the charge of infanticide was irrelevant to the sentences to be imposed on the other charges. By its rejection of recommendation 3(ii) of the Commission's Report, Parliament signified that it is impermissible in a matter of this kind to view offences other than infanticide "in light of the statutory definition of infanticide in s 6(1) of the Crimes Act". Consequently, where a woman, like the respondent, who, due to a disturbance of mind the result of childbirth, kills one of her children of less than two years of age and, at the same time, kills or attempts to kill another or others of a greater age, she stands to be sentenced on the charge of infanticide in accordance with s 6(1) but to be sentenced for the other offences without reference or regard to s 6(1), or to the mental condition that it describes. The mental condition relevant to the offence of infanticide is that the balance of the woman's mind was disturbed because of a disorder consequent on her giving birth to the deceased child within the preceding two years. Once that is established, the woman comes within the unique sentencing regime of s 6(1) of the Crimes Act and the sentence to be imposed on her for the offence of infanticide is to be imposed by reference to the maximum penalty for infanticide of five years' imprisonment having regard, inter alia, to the nature and gravity of the woman's disturbance of mind. By contrast, in the case of other offences committed at the same time as the offence of infanticide, the sentences to be imposed on the woman are to be imposed by reference to the maximum penalties for those offences, in accordance, inter alia, with relevant Verdins considerations having regard to the evidence of the woman's mental condition at the time of the offending, or sentence, or both: in this case, Dr Sullivan's evidence that the respondent suffered from a "major depressive disorder, mild-moderate in severity, with somatic syndrome", which impaired her capacity to exercise appropriate judgment, think clearly, make calm and rational choices, and appreciate the wrongfulness of her conduct, which was very likely causally associated with her behaviour in driving her children into the lake. No doubt, the assessment of the nature and gravity of the woman's state of mind for the purposes of sentencing her for the offence of infanticide is likely to entail consideration of the same evidence as is relevant to the assessment of the woman's mental condition for the purpose of applying the Verdins considerations to the sentences to be imposed for the other offences. It is not to the point, however, and it says nothing sufficiently specific about the nature and gravity of a woman's mental condition for the purpose of applying the Verdins considerations to the other offences, to observe that the woman's mental condition is capable of description as a disturbance of mind because of a disorder Nettle consequent on the woman giving birth to another child within the meaning of s 6(1) of the Crimes Act. So to describe the woman's mental condition creates the risk that the other offences will be "viewed in light of the statutory definition of infanticide in s 6(1) of the Crimes Act", and thus as attracting sentences at least to some degree informed by the unique sentencing regime of s 6(1) that Parliament has determined should apply only to the offence of infanticide. It is a practice that should be avoided. Error in taking an irrelevant consideration into account As is apparent from the Court of Appeal's reasons, their Honours followed15 Bongiorno JA's process of reasoning in Director of Public Prosecutions v QPX16: that, where a woman was charged with infanticide of one child and, simultaneously, with recklessly causing serious injury to another, both offences had to be viewed in light of the definition of infanticide in s 6(1) of the Crimes Act, and the Crown's acceptance of the woman's plea of guilty to infanticide in respect of the first child was to be treated as acknowledging that both offences were committed in circumstances arising from or causally connected to the woman having recently given birth to both children. On that basis, the Court of Appeal concluded17 that the respondent's offences of murder and attempted murder needed to be "viewed in light of the statutory definition of infanticide in s 6(1) of the Crimes Act", and the Crown's acceptance of the respondent's plea to infanticide in respect of her youngest child was to be taken as an acknowledgment that all four of the respondent's offences were committed in circumstances arising from, or causally connected to, a disorder consequent upon the respondent having recently given birth to the respondent's youngest child. Of course, if, as counsel for the respondent submitted, that meant no more than that the Court of Appeal considered the charges of murder and attempted murder were to be viewed in light of the uncontested expert evidence that the respondent was suffering from a clinically significant mood disorder which impaired her capacity to exercise appropriate judgment, think clearly, make calm and rational choices, and appreciate the wrongfulness of her conduct, there would be no error in it. But if, as the Director contended, the Court of Appeal intended thereby to convey that the sentences imposed on the charges of murder and 15 Guode v The Queen [2018] VSCA 205 at [66]. [2014] VSC 189. 17 Guode v The Queen [2018] VSCA 205 at [67]. Nettle attempted murder needed to be reduced to reflect the fact that the balance of the respondent's mind was disturbed because of a disorder consequent on her giving birth to a child within the preceding two years within the meaning of s 6(1) of the Crimes Act, the Court of Appeal were in error. So to approach the sentencing task was tantamount to doing the very thing that Parliament, by rejecting recommendation 3(ii) of the Commission's Report, determined should not be done. Given that the Court of Appeal expressly referred to Parliament's rejection of recommendation 3(ii) of the Commission's Report, it presents in one sense as unlikely that the Court of Appeal would have made that error. As the Director submitted, however, three features of the Court of Appeal's reasons provide "an evidentiary basis for the conclusion"18 that their Honours did mean to convey that the sentences imposed on the charges of murder and attempted murder needed to be reduced, from levels that would otherwise have been appropriate, to reflect the fact that the balance of the respondent's mind fell within the description of a disorder consequent on her giving birth to a child within the preceding two years within the meaning of s 6(1) of the Crimes Act. First, the Court of Appeal's reasons accord closely to what senior counsel who appeared for the respondent before that Court there described as his "primary argument", that the charges of murder and attempted murder were to be seen in light of the Crown's acceptance of the respondent's plea to the charge of infanticide, and, in particular, meant that the sentences to be imposed on the charges of murder and attempted murder should be "very much significantly lower"; that the charges of murder and attempted murder were to be "look[ed] at ... through the lens of infanticide"; that "the cases show that moral culpability is reduced enormously in infanticide cases and that's what we have here"; and, ultimately, that "[o]nce you accept what the public conscience is about the tragedy and horror of the killing or murder of a child which is captured by infanticide, that has to very much more seriously inform how you assess what the public conscience is with regard to sentence on the murders". Secondly, the Court of Appeal's repeated observations that the Crown was to be taken as having conceded that the respondent's state of mind was as prescribed by s 6(1)(b) of the Crimes Act and that the offences of murder and attempted murder were to be seen in the light of the statutory definition of infanticide in s 6(1) of the Crimes Act cannot sensibly be regarded as a 18 Matthews v The Queen (2014) 44 VR 280 at 288 [17] per Warren CJ, Nettle and Redlich JJA. Nettle compendious reference back to Dr Sullivan's more detailed and nuanced explanation of the respondent's psychological condition at the time of offending. The question for the Court of Appeal was whether and to what extent Dr Sullivan's uncontested psychiatric evidence (which their Honours had earlier set out in extenso) demonstrated that the respondent's psychological condition was so grave that the sentencing judge must have given insufficient weight to Verdins considerations. As has been observed, the statutory prescription "a disorder consequent on her giving birth to that child within the preceding 2 years", as such, says next to nothing as to the nature and gravity of the respondent's psychological condition. Thirdly, of the 14 paragraphs of the Court of Appeal's reasons comprising their Honours' analysis of the relevant principles and the application of them to the determination of whether the sentences imposed in respect of the charges of murder and attempted murder were manifestly excessive, seven are concerned with the offence of infanticide and the significance of the Crown's acceptance of the respondent's plea of guilty to the charge of infanticide as a concession that at the time the respondent drove her children into the lake intending to kill them, the balance of her mind was affected in the manner prescribed in s 6(1)(b) of the Crimes Act. In view of the Court of Appeal's concentration on the point, it is unrealistic to suppose that their Honours did not regard it as one of importance in the determination of the sentences properly to be imposed for the offences of murder and attempted murder. Whether it would have been open to the Court of Appeal to conclude, without taking into account the Crown's acceptance of the plea to the charge of infanticide, that the sentences imposed by the sentencing judge on the charges of murder and attempted murder were manifestly excessive is not a question which needs to be determined in the appeal. It is a question of a nature which, as a general rule, this Court does not entertain19. Conclusion and orders The Court of Appeal erred by taking into account as a relevant consideration in the determination of whether the sentences imposed on the charges of murder and attempted murder were manifestly excessive that the Crown had accepted the respondent's plea of guilty to the charge of infanticide, 19 Neal v The Queen (1982) 149 CLR 305 at 322-323 per Brennan J; Munda v Western Australia (2013) 249 CLR 600 at 621-622 [60] per French CJ, Hayne, Crennan, Kiefel, Gageler and Keane JJ. Nettle and thus that the charges of murder and attempted murder were to be viewed "in light of the statutory definition of infanticide in s 6(1) of the Crimes Act 1958". The orders of the Court of Appeal should be set aside, the sentences imposed by the Court of Appeal should be quashed and the matter should be remitted to the Court of Appeal for further determination according to law. Introduction On 8 April 2015, Ms Guode deliberately drove her car into Lake Gladman in Wyndham Vale, Victoria. Four of her children were in the car. The oldest of those children (Aluel) was five years old. Her twins (Madit and Hangar) were four years old. And her youngest child (Bol) was aged 16 months. Shortly prior to this shocking event, one of her children had been observed to be hysterical in the car while another child was observed hanging off or grabbing the front seat, and Ms Guode had been seen huddled over the steering wheel with her face in her hands. Ms Guode survived, together with Aluel. The other three children drowned. Ms Guode was charged on indictment with (i) infanticide of Bol (charge 1), (ii) murder of Madit and Hangar (charges 2 and 3), and (iii) attempted murder of Aluel (charge 4). Ms Guode pleaded guilty to all counts in the Supreme Court of Victoria on 16 January 2017. Ms Guode had arrived in Australia in 2005 as a refugee on a Global Special Humanitarian visa after having been raised in South Sudan during the civil war. She had witnessed her husband's murder. She had been raped to the point of unconsciousness and had been wounded with a knife. She had escaped by walking for 18 days to Uganda with her three young children. After arriving in Australia, she had four further children as a result of a relationship which saw her ostracised from her community. At the time of her offending, Ms Guode was a single parent with a traumatic past. She had seven children, spoke little English, had severe financial problems, and was socially isolated. The uncontested evidence at the sentencing hearing was that Ms Guode had been suffering from a major depressive disorder linked with the birth of Bol in 2013 and a mild post-traumatic stress disorder. The primary judge (Lasry J) sentenced her to imprisonment for 22 years for each charge of murder and six years for the charge of attempted murder. After concurrency of some of those sentences, her total effective sentence was 26 years and six months' imprisonment with a non-parole period of 20 years. After an application for leave to appeal against sentence was refused by a single judge, Ms Guode renewed her application for leave to appeal against her sentence. Her sole proposed ground of appeal was that the sentence was manifestly excessive. The Court of Appeal of the Supreme Court of Victoria allowed the appeal and resentenced Ms Guode. But for her pleas of guilty, the Court of Appeal said that it would have imposed a total effective sentence of 33 years' imprisonment with a non-parole period of 27 years20. After taking into account the pleas of guilty, the sentence for each charge of murder was reduced from 22 years to 16 years' imprisonment and the sentence for the charge of attempted murder was reduced from six years to four years' imprisonment. total effective sentence of 18 years' The Court of Appeal imprisonment with a non-parole period of 14 years. imposed a Perhaps due to an awareness that this Court rarely grants special leave to provide a second appellate consideration of whether or not a primary sentence was manifestly excessive, the sole ground of appeal upon which special leave to appeal was sought from, and granted by, this Court was that the Court of Appeal erred by taking into account as a relevant consideration in its determination of manifest excess the fact that the prosecution had accepted a plea of guilty to infanticide in respect of charge 1 on the indictment. The Crown's submissions before this Court had two strands. One strand of the Crown's submissions was that the large difference in sentence between the Court of Appeal and the primary judge bespeaks error, especially since a single judge of the Court of Appeal had refused leave to appeal. That submission should not be accepted. A conclusion that the decision of the primary judge was manifestly excessive will often necessitate a substantial reduction when resentencing. A further obstacle, particularly in the absence of any ground of appeal by the Crown alleging error in relation to the mitigating factor of Ms Guode's plea of guilty, is the term of 33 years' imprisonment that the Court of Appeal would have imposed but for her pleas of guilty. This is, to say the least, a large obstacle to concluding that the Court of Appeal had resentenced Ms Guode for murder and attempted murder by reference to infanticide with its maximum sentence of five years21. Finally, and most fundamentally, the Crown's submission amounts to little more than an attempt impermissibly to introduce, by the back door, a ground of appeal that the Court of Appeal erred in concluding that the primary judge's sentence was manifestly excessive. The only remaining issue on this appeal is the second strand to the Crown's submissions. That strand involves the submission that nine paragraphs of the Court of Appeal's reasons22 should be interpreted as revealing a basic error. That basic error was said to be that the Court of Appeal allowed the lesser 20 Sentencing Act 1991 (Vic), s 6AAA. 21 Crimes Act 1958 (Vic), s 6(1). 22 Guode v The Queen [2018] VSCA 205 at [61]-[69]. maximum penalty of five years' imprisonment for infanticide to "permeate or percolate" into the assessment of the sentences for the murder charges (which carried a maximum penalty of life imprisonment23) or attempted murder charge (which carried a maximum penalty of 25 years' imprisonment24). The Crown submitted that this error was exemplified by a process of reasoning that the sentences for murder and attempted murder should be viewed through the "prism" of the lower maximum of five years' imprisonment as the Victorian Law report25. Reform Commission Perhaps unsurprisingly, the Court of Appeal did not make any such elementary error expressly. The Crown's submission is effectively that this error should be inferred from those nine paragraphs. recommended had Nothing in the nine paragraphs upon which the Crown relies provides any basis for concluding that the Court of Appeal made that basic error. No such submission had been made to the Court of Appeal. Preceding the nine paragraphs was an accurate summary of the submissions of the parties, containing no legal error. Following the nine paragraphs was a description of the essential reasoning of the Court of Appeal, containing no legal error. And within the nine paragraphs was the following: (i) a recitation of the history of infanticide that had been a matter of submission; (ii) the unimpeachably correct statement by the Court of Appeal that Ms Guode was to be sentenced according to what the law is, not what the Victorian Law Reform Commission thought desirable; (iii) a statement that the relevance of infanticide was that "all four offences were committed in circumstances arising from, or causally connected to, a disorder consequent upon [Ms Guode] recently having given birth to Bol"26; and (iv) a correct statement and application of the principles concerning mental impairment as a mitigating factor in instances of murder and attempted murder. One of the basic principles to be applied in an appeal from the exercise of a sentencing discretion is that "[i]t must appear that some error has been made in exercising the discretion"27. Either specific error must be identified in the reasons given or error inferred from the result being, on the facts, "unreasonable or 23 Crimes Act 1958 (Vic), s 3. 24 Crimes Act 1958 (Vic), ss 321P(1), 321P(1A). 25 Victorian Law Reform Commission, Defences to Homicide: Final Report (2004) 26 Guode v The Queen [2018] VSCA 205 at [65], [67]. 27 House v The King (1936) 55 CLR 499 at 505. plainly unjust"28. The reasons a sentencing court gives must speak for themselves. Those reasons for sentence must be read, and read fairly, for what they say. Either the reasons, when read fairly, reveal that a wrong principle has been applied, or they do not. On this appeal, a specific error was alleged, and that error does not appear in the reasons of the Court of Appeal. This Court should not intervene, on the application of the Crown, to increase a sentence passed or not disturbed by the intermediate court except to correct some identified error of principle. Here, there is no such error. The appeal should be dismissed. The sentencing hearing and the role of infanticide The offence of infanticide The offence of infanticide is contained in s 6(1) of the Crimes Act 1958 (Vic), which provides that the offence is committed in circumstances as follows: "If a woman carries out conduct that causes the death of her child in circumstances that would constitute murder and, at the time of carrying out the conduct, the balance of her mind was disturbed because of – her not having fully recovered from the effect of giving birth to that child within the preceding 2 years; or a disorder consequent on her giving birth to that child within the preceding 2 years – she is guilty of infanticide, and not of murder, and liable to level 6 imprisonment (5 years maximum)." Although infanticide is a separate and wholly distinct offence from murder and attempted murder, there can be overlap in the underlying factual substratum relevant to those offences. The relevant overlap in this case concerned expert evidence from Dr Sullivan, a consultant forensic psychiatrist, that satisfied the requirement in s 6(1)(b) that the balance of Ms Guode's mind was disturbed because of a disorder consequent on her giving birth to a child in the previous two years. 28 House v The King (1936) 55 CLR 499 at 505. The evidence from Dr Sullivan was also relevant to the charges of murder and attempted murder. In R v Verdins29, the Court of Appeal of the Supreme Court of Victoria reformulated the principles concerning the relevance of impaired mental functioning to sentencing. The Court of Appeal stated that there are at least six ways in which impaired mental functioning could be relevant. Relevantly to this appeal, these ways included: The condition may reduce the moral culpability of the offending conduct, as distinct from the offender's legal responsibility. Where that is so, the condition affects the punishment that is just in all the circumstances; and denunciation is less likely to be a relevant sentencing objective. 3. Whether general deterrence should be moderated or eliminated as a sentencing consideration depends upon the nature and severity of the symptoms exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of sentence or both. 4. Whether specific deterrence should be moderated or eliminated as a sentencing consideration likewise depends upon the nature and severity of the symptoms of the condition as exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of the sentence or both." For these reasons, when the Crown accepted Ms Guode's plea of guilty to infanticide, it must have been taken to accept Dr Sullivan's conclusion that the elements of s 6(1)(b) of the Crimes Act were satisfied by evidence that was also relevant to the Verdins factors. At Ms Guode's sentencing hearing, Dr Sullivan's evidence was that Ms Guode had a major depressive disorder linked with the birth of Bol in 2013. In his first report, of 13 January 2017, Dr Sullivan described how the birth of Ms Guode's youngest child, Bol, had been complicated by post-partum haemorrhage which required a blood transfusion. Following Bol's birth, (2007) 16 VR 269 at 276 [32] (footnote omitted). Ms Guode had "declined in functioning", including withdrawal from social events and a range of symptoms of depression including "disturbed sleep and appetite, weight loss, reduced energy and concentration, subjective confusion and reduced interest in usual activities, tearfulness, hopelessness and helplessness about her situation". Dr Sullivan described the clear sustaining factors for Ms Guode's depression: "the burden of looking after a large family with limited assistance; financial stressors; relational problems with the father of the younger children; stigma and persecution within her community; and ill-defined health problems". He said that the "onset and persistence of her depressive symptoms are consistent with a diagnosis of major depressive disorder, mild-moderate in severity, with somatic syndrome". Dr Sullivan concluded that at the time of the incident with which Ms Guode was charged she "was suffering from a depressive illness which was a consequence of having given birth to Bol within the preceding two years". He said that "the balance of her mind was disturbed by depression". Dr Sullivan prepared a second report, dated 11 February 2017. In this second report, he repeated the conclusions from his first report and concluded that Ms Guode's "mental functioning at the time of the offences was impaired by clinically significant mood disorder, and that this was likely causally associated with her behaviour in driving into the lake. ... [D]epression impaired her capacity to exercise appropriate judgment, and her capacity to think clearly and make calm and rational choices. ... Ms Guode's capacity to appreciate the wrongfulness of her conduct at the time was impaired. The intent of the behaviour was obscured." Dr Sullivan prepared a third report, dated 28 March 2017. In this third report, he described evidence from Ms Guode including that she had seen her husband shot dead in South Sudan and his body burned, that she had been raped until she was unconscious, and that upon escaping to northern Uganda (by walking for 18 days with her three young children) she had been treated in hospital including for knife wounds in her back and on her hand. Dr Sullivan referred to her evidence of flashbacks of these events and he concluded that there was evidence that, in addition to his other diagnoses, Ms Guode was also suffering from post-traumatic stress disorder, which was mild in severity, and that this diagnosis did not materially alter his previous consideration of the impairment of Ms Guode's mental functioning at the time of the events. Dr Sullivan was cross-examined by the Crown. The cross-examination included questions about the history of infanticide and the recommendations made by the Victorian Law Reform Commission. Dr Sullivan testified: "[W]e have lots of hypotheses about why depression occurs and they involved biological, psychological, social explanations; none of those are satisfactory explanations for all of these conditions. I think that the Law Reform Commission in my opinion rightly pointed out that this is not just a single condition which is based upon immeasurable, biological or physiological variables and it's far more complex than that and most of us from our personal experience have known people who are depressed or perceive them all as different human beings. They've experienced depression as individually and differently as they are themselves individually different." Dr Sullivan gave evidence that Ms Guode's conduct fell within the offence of infanticide in s 6(1)(b) of the Crimes Act 1958 (Vic) because "the balance of her mind was disturbed because of ... a disorder consequent on her giving birth to that child within the preceding 2 years". The sentencing by the primary judge In sentencing Ms Guode, the primary judge described a submission by Ms Guode's counsel that it was through the "prism" of the charge of infanticide that the charges of murder and attempted murder should be viewed. The use of the word "prism" by counsel was unfortunate. However, in written submissions, Ms Guode's counsel explained the meaning of this reference: "This offending, though, must be seen contextually, through the prism of [Ms Guode's] poor mental health that is an essential part of the (accepted) plea to infanticide." The primary judge referred to this submission about the "prism" of infanticide, and then said30: "As far as I know there has not been an occasion where a woman has been sentenced for infanticide and for other offences concerning the killing of children who do not fall within the legal definition. Clearly, your mental state as I conclude it to be, affects all four charges. Therefore, your plea to infanticide having been accepted and there being evidence to support a conclusion from Dr Sullivan, it also follows that several of the principles decided in R v Verdins apply in your case. There was a realistic connection between your mental state as Dr Sullivan 30 R v Guode [2017] VSC 285 at [55]-[57] (footnote omitted). described it and your offending. There was no contention about that between your counsel and the prosecutor on the hearing of your plea." It was common ground on the appeal to this Court that there was no error in these remarks by the primary judge. On appeal to this Court, the Crown submitted that the primary judge erred by saying the symptoms of Ms Guode's mental impairment were "severe and had been for some time" in a description that was quoted by the Court of Appeal. It may not have been inapt to describe the consequences of a depression disorder that is "mild-moderate in severity" combined with post-traumatic stress disorder that is "mild in severity" as, in total, being "severe". In any event, in circumstances in which the quote had been relied upon by Ms Guode before the Court of Appeal without demur, and in which the Court of Appeal placed little reliance upon this description, this point was, at best, as the Crown accepted on this appeal, "not [a] big point[]". The Court of Appeal hearing and decision The essence of the submissions before the Court of Appeal on Ms Guode's behalf was as follows: "The law rightly allows ... for an understanding that the state of mind and motives of the killer are highly relevant. In circumstances where the child is under the age of two this can be reflected in the charge of infanticide. In circumstances where the children are over the age of two the law should not, and does not ignore the state of mind and motives of the offender. The disturbed mind necessarily is relevant to an assessment of the seriousness of the offending and other sentencing principles. The commission of the offences of murder with a disturbed mind, where [Ms Guode] could not cope with the extreme difficulties she encountered in trying to care for her children, provides a stark contrast to the motivations behind most crimes of murder." There was, and could be, no suggestion on the appeal to this Court that this submission involved any error. Counsel for Ms Guode's argument was plain. The acceptance of a plea of guilty to infanticide necessarily involved an acceptance that, as s 6(1)(b) of the Crimes Act requires, "the balance of [Ms Guode's] mind was disturbed". After summarising the submission from Ms Guode's counsel31, and the submissions from the Crown32, the Court of Appeal's reasoning, which spans 14 paragraphs, was entitled "Analysis"33. As mentioned above, the analysis of the Court of Appeal was preceded by an accurate summary of the submissions made on behalf of Ms Guode, which contained no error. There was also no suggestion of any error in the concluding paragraphs of the analysis of the Court of Appeal, which contained the Court's essential reasoning about why the primary judge's sentence had involved manifest error. Within those paragraphs the Court of Appeal said34: "[T]here is substance in the submissions of [Ms Guode's] counsel that sentences of 22 years' imprisonment on each of the two charges of murder are of the order of sentences generally reserved for cases unattended by the powerful mitigating features of this case. Had adequate weight been given to [Ms Guode's] mental condition and other factors in mitigation, we consider that significantly more lenient sentences would have been imposed on each of those charges. Indeed, in our view, the individual sentences on those charges are beyond the range of those open in the sound exercise of the sentencing discretion, and are manifestly excessive (as is the sentence on the charge of attempted murder)." The Crown's submission on this appeal accepts that (i) the Court of Appeal preceded its analysis with an accurate summary of Ms Guode's submission, which summary contained no legal error, and (ii) the Court of Appeal concluded its analysis, containing its essential reasoning concerning manifest excess, without legal error. This is not a promising start for the Crown's submission that in between the legally correct commencement, conclusion and summary, the Court of Appeal made the fundamental error of viewing the offences of murder and attempted murder through the prism of infanticide. Some of the analysis in the nine paragraphs that the Crown sought to impugn on this appeal was not strictly necessary for the resolution of the appeal to the Court of Appeal. But appellate legal reasoning is not always confined to those matters that are essential to the disposition of an appeal. Indeed, in some instances it is necessary for appellate judges to address submissions that are not 31 Guode v The Queen [2018] VSCA 205 at [53]-[55]. 32 Guode v The Queen [2018] VSCA 205 at [56]-[60]. 33 Guode v The Queen [2018] VSCA 205 at [61]-[74]. 34 Guode v The Queen [2018] VSCA 205 at [72]. dispositive of an appeal35. In many others it will be appropriate for appellate judges, in the exercise of judgment, to do so. In this case, involving the unique circumstance of overlapping charges of infanticide and murder, it was not inappropriate for the Court of Appeal to engage in nine paragraphs of discussion concerning this overlap. This is particularly so given that, as the Court of Appeal said at the commencement of those paragraphs, "[m]uch of the discussion in this case concerned the ramifications of joining charges of infanticide and murder (and attempted murder) on the indictment; and more particularly, whether the charges of murder needed to be viewed through the 'prism' of infanticide"36. Nothing in the nine paragraphs which the Crown sought to impugn on this appeal supports the Crown's submission that the Court of Appeal's analysis of the "discussion in this case" involved the acceptance of a proposition involving the basic error that the process of sentencing for murder or attempted murder in the case should be viewed through the "prism" of infanticide so that the maximum sentence for murder or attempted murder needed somehow to be understood or modified by reference to the lower maximum sentence for infanticide. This is for four reasons. First, in the first of the nine paragraphs, after explaining that it was responding to the "discussion in this case", the Court of Appeal said37: "[T]he real relevance of the charge of infanticide lies not so much in its presence on the indictment vis-à-vis the charges of murder (and attempted murder), but in the prosecution's acceptance – in laying that charge and accepting a plea to it – that the balance of [Ms Guode's] mind was disturbed due to a depressive disorder consequent on her giving birth to the child Bol. That acceptance must, we consider, influence any assessment of [Ms Guode's] moral blameworthiness on all of the charges that she faced." In the context discussed above, this statement must mean that by accepting Ms Guode's plea of guilty to infanticide the Crown must have been taken to have accepted the presence of Ms Guode's depressive disorder at the time of the events, a disorder which was relevant by the application of the Verdins factors to sentencing for the charges of murder and attempted murder. 35 Kuru v New South Wales (2008) 236 CLR 1 at 6 [12]. 36 Guode v The Queen [2018] VSCA 205 at [61]. 37 Guode v The Queen [2018] VSCA 205 at [61]. Secondly, after three paragraphs of discussion about the history of infanticide and the Victorian Law Reform Commission report into defences to homicide, which reflected submissions made by the Crown on the appeal to it, the Court of Appeal rejected the very point, and the very error, that the Crown alleged in this Court that the Court of Appeal had made. The Court of Appeal said: "Of course, [Ms Guode] fell to be dealt with according to what the law is, not according to what the VLRC thought desirable"38. The reference to the Victorian Law Reform Commission report, which had been the subject of expert evidence and submissions, was understandable. Importantly, the Court of Appeal then reiterated the relevance of the Crown's acceptance of a plea of guilty to infanticide, namely a concession that the Verdins factors, to which the Court had referred earlier, would apply39: "It was thereby conceded that at the time that [Ms Guode] drove into the lake intending to kill the child Bol, 'the balance of her mind was disturbed because of … a disorder consequent on her giving birth to that child'." Thirdly, in case there were any doubt, the Court of Appeal reiterated this point yet again40 by reference to a decision of Bongiorno JA41, who said of the relationship between the charge of infanticide and the charge of recklessly causing serious injury that, by the Crown's acceptance of the plea of guilty to infanticide, "it has acknowledged that both offences were committed in circumstances arising from or causally connected to her recently having given birth". The Court of Appeal said that the relevance of the charges of murder and attempted murder, "in light of the statutory definition of infanticide", applied in "alike vein" since the Crown's acceptance of the plea "acknowledged that all four offences were committed in circumstances arising from, or causally connected to, a disorder consequent upon [Ms Guode] recently having given birth to Bol"42. Fourthly, the last two of the nine paragraphs that the Crown sought to impugn involved a direct application of the relevant Verdins factors. The Court of Appeal explained that there was a causal link between the impairment of Ms Guode's mental functioning and her behaviour in driving her car with her 38 Guode v The Queen [2018] VSCA 205 at [65]. 39 Guode v The Queen [2018] VSCA 205 at [65]. 40 Guode v The Queen [2018] VSCA 205 at [66]. 41 Director of Public Prosecutions v QPX [2014] VSC 189 at [26]. 42 Guode v The Queen [2018] VSCA 205 at [67]. children into the lake. The Court of Appeal considered the manner in which that impairment affected Ms Guode's capacity to make decisions. The Court of Appeal concluded, applying the Verdins factors, that Ms Guode's "moral culpability [was] significantly reduced", and "that both general deterrence and specific deterrence sentencing considerations"43. Indeed, this explanation by the Court of Appeal is a complete answer to the submission that the Court had made the basic error which was attributed to it44: significantly moderated as should be "Given the state of the evidence, it cannot be denied that [Ms Guode's] mental functioning at the relevant time was impaired by a clinically significant mood disorder, which very likely was causally associated with [Ms Guode's] behaviour in driving her children into the lake. Major depression impaired [Ms Guode's] capacity to exercise appropriate judgment, and her capacity to think clearly and make calm and rational choices. Indeed, the uncontradicted psychiatric opinion is that [Ms Guode's] capacity to appreciate the wrongfulness of her conduct at the time was impaired, and the intent of her behaviour was obscured." (emphasis added) These four reasons are confined to an analysis of the Court of Appeal's reasons, including the Court of Appeal's description of the oral arguments to which it responded. There are difficulties in interpreting reasons for decision in light of oral statements to which the court does not refer. However, even if significance were to be given to such oral statements of counsel, it is notable that after senior counsel for Ms Guode submitted that murder should be viewed through the lens of infanticide, Priest JA responded that "a better way" of looking at the issue was that "the diminution of [Ms Guode's] moral culpability is something that should apply across the board" and that "there's been an acceptance of a diminution of her moral culpability by the Crown in accepting and laying a charge of infanticide". Senior counsel for Ms Guode accepted this reformulation. Then, in an exchange with the Director of Public Prosecutions, Priest JA observed, and the Director accepted, that Parliament had not acted upon the recommendation of the Victorian Law Reform Commission. His Honour then said, in terms that summarise the point that we consider was made by the Court of Appeal in the nine relevant paragraphs: 43 Guode v The Queen [2018] VSCA 205 at [68]-[69]. 44 Guode v The Queen [2018] VSCA 205 at [68]. "By accepting the plea to infanticide the Crown accepted, did it not, that the balance of [Ms Guode's] mind was disturbed and that, as you've pointed out, paragraph 89 of the prosecution opening, that she was suffering from a disorder, you can't then compartmentalise that, can you, and say I will only plead infanticide." Conclusion Before the primary judge it was common ground that there were no cases that involved fact patterns that were comparable to this case. The tragic and shocking events involved Ms Guode's gross breach of the trust reposed in her by her children, leading to the loss of life of three of her young and vulnerable children and nearly leading to the loss of life of another. On any view, the primary judge was required to sentence her to a lengthy term of imprisonment, particularly for the two charges of murder and the charge of attempted murder. However, there were also numerous factors raised on behalf of Ms Guode in mitigation including her background, the burden of her imprisonment, including protective custody and possible deportation at the conclusion of her term of imprisonment, the effect of prison on her mental health, and her rehabilitation prospects. Most significantly, however, the nature and effect of Ms Guode's mental impairment as contributing factors to her actions were the central reasons for the conclusion by the Court of Appeal that the primary judge's sentence had been manifestly excessive. The essence of the reasoning of the Court of Appeal was no more than to say that Ms Guode's mental impairment, necessarily accepted by the Crown in its acceptance of a plea of guilty to infanticide, was relevant to the sentencing exercise for all four of the offences of which Ms Guode was convicted, and not merely to infanticide. That reasoning was not in error. The appeal must be dismissed.

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND CITIZENSHIP APPELLANT AND SZIAI AND ANOR RESPONDENTS Minister for Immigration and Citizenship v SZIAI [2009] HCA 39 23 September 2009 ORDER Appeal allowed. Set aside orders 1 to 5 of the orders made by the Federal Court of Australia on 8 September 2008, and in lieu thereof order that: order 2 of the orders made by the Federal Magistrates Court of Australia on 18 June 2008 be set aside; and the appeal be otherwise dismissed. Appellant to pay the costs of the first respondent's appeal to this Court. On appeal from the Federal Court of Australia Representation S J Gageler SC, Solicitor-General of the Commonwealth with G T Johnson and the the Attorney-General of G R Kennett for Commonwealth intervening (instructed by Australian Government Solicitor) the appellant and for N J Williams SC with A M Mitchelmore for the first respondent (instructed by Dobbie and Devine Immigration Lawyers Pty Ltd) Submitting appearance for the second respondent. Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Citizenship v SZIAI Immigration – Refugees – Review by Refugee Review Tribunal ("RRT") – Whether failure to make certain inquiries was unreasonable or constituted failure to conduct review within meaning of Migration Act 1958 (Cth), s 414 – Whether failure to inquire constituted jurisdictional error. Immigration – Refugees – Review by RRT – Where RRT received allegation that documents provided by visa applicant were "fake & forged", invited applicant to comment in writing, but failed to invite him to further hearing – Whether such failure amounted to denial of procedural fairness, breach of Migration Act 1958, s 425, or failure to conduct review within meaning of Migration Act 1958, s 414 – Whether allegation of forgery raised new "issue" within meaning of Migration Act 1958, s 425. Words and phrases – "failure to inquire", "inquisitorial", "issues", "procedural fairness", "review". Migration Act 1958 (Cth), ss 414, 424, 424A, 425. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Introduction The functions, powers and duties of the Refugee Review Tribunal ("the Tribunal") are set out in Pt 7 of the Migration Act 1958 (Cth) ("the Migration Act"). When the Tribunal receives a valid application for the review of an "RRT-reviewable decision" under the Migration Act, it must review that decision1. The class of "RRT-reviewable decisions" includes decisions by delegates of the Minister for Immigration and Citizenship ("the Minister") refusing the grant of protection visas2. In the exercise of its review function, the Tribunal may obtain such information as it considers relevant3. In this sense it has an inquisitorial function. That does not, however, impose upon it a general duty to undertake its own inquiries in addition to information provided to it by the applicant and otherwise under the Act4. In this case the Federal Court, on appeal from the Federal Magistrates Court, quashed a decision of the Tribunal on the erroneous basis that it had committed jurisdictional error by unreasonably failing to undertake its own inquiries into certain matters. Those matters related to the authenticity of documents, provided by the applicant for review, which had been impugned by third party information of which the applicant had been given notice, and to which he had replied in writing5. The Minister's appeal against the decision of the Federal Court must be allowed. A contention that the Tribunal had a duty to invite the applicant for review to an additional hearing to deal with the third party information is rejected. 1 Migration Act, s 414. 2 Migration Act, s 411(1)(c). 3 Migration Act, s 424. 4 Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 78 ALJR 992 at 999 [43] per Gummow and Hayne JJ, Gleeson CJ agreeing at 992 [1]; 207 ALR 12 at 21-22, 13; [2004] HCA 32. 5 SZIAI v Minister for Immigration and Citizenship (2008) 104 ALD 22. Crennan Bell Factual and procedural history On 11 February 2008, the Tribunal affirmed a decision of a delegate of the Minister to refuse a protection visa to SZIAI, a citizen of Bangladesh. SZIAI claimed to have converted from the Sunni Muslim faith to become an Ahmadiyya Muslim. He said he had been an active Ahmadi and had been the subject of threats, including threats to his life, from Sunni Muslims. He claimed to have a well-founded fear of persecution if he were to return to Bangladesh. In coming to its decision, the Tribunal had regard to a letter from the Ahmadiyya Muslim Association Australia Inc ("the Association") responding to an inquiry from the Tribunal about whether SZIAI was known to the Ahmadiyya Muslim Jamaat in Bangladesh ("AMJ Bangladesh")6. The Tribunal had sent to the Association copies and translations of certificates produced to it by SZIAI and signed by persons purportedly associated with the Ahmadiyya Muslim Jamaat at Khulna. One of the certificates said that SZIAI had joined the Jamaat there on 1 January 2000. Both certificates said that he had taken a responsible role in the Jamaat and was always engaged in its activities. Both certificates bore mobile telephone numbers, apparently those of their authors. The Association responded to the Tribunal by letter dated 10 January 2008 advising that it had received information from the AMJ Bangladesh. It enclosed a letter signed by Mobasherur Rahman, the National Ameer of the AMJ Bangladesh. That letter said, inter alia: "Please refer to your letter No 386 dt 25.11.07 regarding [SZIAI]. For your kind information on enquiry our Khulna Jamaat informed me that they could not find out any such name in their record. Both the certificates submit by him are fake & forged. Moreover as you know local Ameer/Presidents can only issue certificates for transfer of a member from one local Jamaat to other Jamaats within the country. Only National Ameer can issue a certificate for international travel/transfer of a member." On 14 January 2008 the Tribunal, acting under s 424A of the Migration Act, sent a lengthy letter to SZIAI's solicitors inviting him to "comment on information that the Tribunal considers would, subject to any comments you 6 The term "Jamaat" is an Arabic word which means "Assembly". Crennan Bell make, be the reason, or a part of the reason, for affirming the decision under review." A number of matters were identified. One of those matters was the letter from the National Ameer. A copy was enclosed. The Tribunal said in its letter that the advice from the National Ameer might lead it to conclude that there was no truth to SZIAI's claims of fear of persecution by reason of his religion if he were to return to Bangladesh. SZIAI's solicitors wrote back to the Tribunal on 29 January 2008 saying: "We refer to the RRT's recent correspondence, inviting comment in relation to information received that suggests that the applicant is not an Ahmadi. We are instructed to inform the RRT that the applicant disagrees with the information forwarded and states that he is an Ahmadi. He cannot, however, otherwise prove that to be so. If you have any enquiries please contact me." In its reasons for decision the Tribunal referred to the correspondence from the Association and the letter from the National Ameer. It set out what it had said to SZIAI in its letter of 14 January 2008 and noted the response. Having regard to the information referred to in its letter of 14 January 2008, the Tribunal concluded that SZIAI was not a witness of the truth and that there was no truth to the claims he had made in support of his application for a protection visa. An application for judicial review was dismissed by the Federal Magistrates Court on 18 June 20087. SZIAI appealed to the Federal Court. On 8 September 2008, Flick J ordered that the appeal be allowed, the orders made in the Federal Magistrates Court be set aside, the decision of the Tribunal be quashed and the matter be remitted to the Tribunal to be determined according to law8. Special leave to appeal against his decision was granted by this Court on 13 February 2009. It was granted upon the undertaking by the Minister that he would not seek to displace the costs orders in favour of SZIAI in the Federal Court and that he would bear the reasonable costs of SZIAI of this appeal, including the costs of the special leave application. [2008] FMCA 788. (2008) 104 ALD 22. Crennan Bell The reasoning in the Federal Court Flick J correctly eschewed any suggestion that the power of the Tribunal to make inquiries imposed upon it any duty or obligation to do so9. However he also said that "jurisdictional error may be exposed by a failure to inquire and that such a failure may render a decision manifestly unreasonable"10. The circumstances in which a Tribunal decision would be set aside on such grounds might be "a confined category of case"11. His Honour was evidently satisfied that the case before him fell within such a category. The authenticity of the certificates had been placed in issue by the information which the Tribunal had obtained from the Association. The issue to which they were directed was "centrally relevant to the decision reached". He held with "considerable reservation" that the Tribunal should have made an inquiry of the authors of the certificates12. He concluded that the Federal Magistrates Court had erred in not holding that the Tribunal's decision was vitiated by reason of its failure to make inquiries. The issues The questions raised by the grounds of appeal and by a notice of contention filed on behalf of SZIAI were: 1. Whether the Tribunal had committed jurisdictional error by not making its own inquiries in relation to the allegation that the certificates provided by SZIAI were forgeries. 2. Whether the Tribunal denied procedural fairness, failed to comply with s 425 of the Migration Act, or failed to conduct the review required by s 414 in failing to invite SZIAI to a further hearing following receipt of (2008) 104 ALD 22 at 25 [18], referring to Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 78 ALJR 992; 207 ALR 12. 10 (2008) 104 ALD 22 at 25 [19]. 11 (2008) 104 ALD 22 at 27 [25]. 12 (2008) 104 ALD 22 at 28 [27]. Crennan Bell the allegation that the two documents provided by him to the Tribunal were "fake & forged". The jurisdiction of the Federal Magistrates Court The statutory jurisdiction of the Federal Magistrates Court is "the same original jurisdiction in relation to migration decisions as the High Court has under paragraph 75(v) of the Constitution"13. The Tribunal's decision was a "migration decision"14. The Federal Magistrates Court could therefore grant relief by way of prohibition or mandamus and, ancillary to such relief, could issue certiorari to quash the decision. However it could only do those things if the Tribunal was shown to have committed jurisdictional error15. The scope of judicial review in respect of the decision of the Tribunal thus differed from that provided by s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") where the grounds of review are laid out without confinement to "jurisdictional error". Some of the decisions relied upon in the Federal Court turned upon the application of s 5. It has, however, been said in this Court16 with reference to s 75(v) and jurisdictional error, that where a statutory power is conferred the legislature is taken to intend that the discretion be exercised reasonably. The argument in the 13 Migration Act, s 476(1). 14 Migration Act, s 5 ("migration decision") read with s 474(2). 15 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 508 [82]; [2003] HCA 2; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57. 16 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 100-101 [40] per Gaudron and Gummow JJ; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme (2003) 216 CLR 212 at 221 [30] per Gleeson CJ, Gummow and Heydon JJ; [2003] HCA 56; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1177-1178 [67]-[69] per McHugh and Gummow JJ, 1194 [174] per Callinan J; 198 ALR 59 at 75-76, 98-99; [2003] HCA 30. Crennan Bell present appeal proceeded on the footing that "Wednesbury unreasonableness"17 could give rise to jurisdictional error. Tribunal inquiry and jurisdictional error SZIAI complained that failure by the Tribunal to inquire rendered its decision "manifestly unreasonable". That complaint involves several steps and assumptions. Was there an obligation or duty imposed by the Migration Act to make the inquiries in question? If so, was there deficiency in process which was so linked to the decision reached as to make it manifestly unreasonable? It was not contended at any stage of this litigation that the Tribunal was obliged to exercise the power conferred by s 424 of the Migration Act to "get any information that it considers relevant" and no other specific source of such an obligation was identified. Rather, reliance was placed upon what was said to be the "inquisitorial" nature of proceedings in the Tribunal. It has been said in this Court on more than one occasion that proceedings before the Tribunal are inquisitorial, rather than adversarial in their general character18. There is no joinder of issues as understood between parties to adversarial litigation. The word "inquisitorial" has been used to indicate that the Tribunal, which can exercise all the powers and discretions of the primary decision-maker,19 is not itself a contradictor to the cause of the applicant for review. Nor does the primary decision-maker appear before the Tribunal as a contradictor. The relevant ordinary meaning of "inquisitorial" is "having or exercising the function of an inquisitor", that is to say "one whose official duty it is to inquire, examine or investigate"20. As applied to the Tribunal "inquisitorial" 17 After Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 18 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 164 [40]; [2006] HCA 63; Minister for Immigration and Citizenship v SZKTI [2009] HCA 30 at [27], n 19. 19 Migration Act, s 415(1). 20 Shorter Oxford English Dictionary, 3rd ed (1973), vol 1 at 1079. See also "inquisitorial system" in Black's Law Dictionary, 8th ed (2004) at 809, defined as the civil law system of proof-taking "whereby the judge conducts the trial, (Footnote continues on next page) Crennan Bell does not carry that full ordinary meaning. It merely delimits the nature of the Tribunal's functions. They are to be found in the provisions of the Migration Act. The core function, in the words of s 414 of the Act, is to "review the decision" which is the subject of a valid application made to the Tribunal under s 412 of the Act. The observation in Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs21 that the Tribunal was "bound to make its own inquiries and form its own views upon the claim which the appellant made"22 was informed by the context, which concerned the requirements, in the circumstances, of procedural fairness. The Court held that procedural fairness had required the Tribunal to tell the applicant the substance of certain allegations made against him by a third party and to ask him to respond to them23. The failure of an administrative decision-maker to make inquiry into factual matters which can readily be determined and are of critical significance to a decision made under statutory authority, has sometimes been said to support characterisation of the decision as an exercise of power so unreasonable that no reasonable person would have so exercised it. Observations by Wilcox J in Prasad v Minister for Immigration and Ethnic Affairs24, which were said by his Honour to be tentative and unnecessary for the decision in the case, may support such a proposition. However, Wilcox J was dealing with the grounds of review provided by s 5 of the ADJR Act; in particular s 5(1)(e) and s 5(2)(g), which he described as concerned with the manner of exercise of the power in question. Nevertheless, the inquiry under these provisions, as he framed it, was ultimately directed to the unreasonable exercise of a power within the meaning of par (g) of s 5(2). determines what questions to ask, and defines the scope and the extent of the inquiry". 21 (2005) 225 CLR 88; [2005] HCA 72. 22 (2005) 225 CLR 88 at 99 [26]. 23 (2005) 225 CLR 88 at 100 [29]. 24 (1985) 6 FCR 155 at 167-170. Crennan Bell The discussion by Wilcox J in Prasad has been adopted or cited in a number of later cases in the Federal Court. The decisions, not all of which were founded upon the ADJR Act, were collected by Kenny J in Minister for Immigration and Citizenship v Le25. In the course of deciding to grant prohibition and certiorari in Ex parte Helena Valley/Boya Association (Inc)26, the Full Court of the Supreme Court of Western Australia cited Prasad as authority for the necessity for a decision-maker to make inquiries in order to discover appropriate material if it be readily available. The proposition which may emerge from Prasad has not been the subject of full consideration in this Court, whether in litigation under the ADJR Act, or any other statutory regime or under s 75(v) of the Constitution. Some observations by Mason CJ in Chan v Minister for Immigration and Ethnic Affairs27 have been taken as an indication of a need for decision-makers to make inquiries in relation to claimed changes in the political circumstances in the home country of a person seeking protection as a refugee. However, the legal consequences of a failure to inquire were not discussed in that judgment. In Minister for Immigration and Ethnic Affairs v Teoh28, Mason CJ and Deane J accepted the correctness of the approach in Prasad in "an appropriate case"29. Teoh was not such a case as reliance was not placed on the ground of review under the ADJR Act which was considered in Prasad. McHugh J also made reference to Prasad and other Federal Court decisions to similar effect. But, like Mason CJ and Deane J, he found them inapplicable in Teoh30. In Abebe v The Commonwealth31, Gummow and Hayne JJ rejected a submission that the Tribunal in that case should have made further inquiries. They did so on the 25 (2007) 164 FCR 151 at 174-176 [65]-[67]. 26 (1989) 2 WAR 422 at 445. Cf Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd [2008] 2 Qd R 495 at 511 [53]-[54]; Love v State of Victoria [2009] VSC 27 (1989) 169 CLR 379 at 391; [1989] HCA 62. 28 (1995) 183 CLR 273; [1995] HCA 20. 29 (1995) 183 CLR 273 at 290. 30 (1995) 183 CLR 273 at 321. 31 (1999) 197 CLR 510; [1999] HCA 14. Crennan Bell basis that "[n]o plausible and possible line of inquiry was suggested"32. They did not think it necessary to consider the premise of the submission, namely that the Tribunal was under an obligation to make further inquiries. Nor was it necessary to consider the limits of so-called Wednesbury unreasonableness33. Mason CJ and Deane J in Teoh also rejected the proposition that failure by a decision-maker to initiate inquiries could constitute a departure from common law standards of natural justice or procedural fairness34. It is difficult to see any basis upon which a failure to inquire could constitute a breach of the requirements of procedural fairness at common law. The facts of this case, in any event, even considered without reference to s 422B of the Migration Act, do not show a basis for a complaint of want of procedural fairness. Although decisions in the Federal Court concerned with a failure to make obvious inquiries have led to references to a "duty to inquire", that term is apt to direct consideration away from the question whether the decision which is under review is vitiated by jurisdictional error. The duty imposed upon the Tribunal by the Migration Act is a duty to review. It may be that a failure to make an obvious inquiry about a critical fact, the existence of which is easily ascertained, could, in some circumstances, supply a sufficient link to the outcome to constitute a failure to review. If so, such a failure could give rise to jurisdictional error by constructive failure to exercise jurisdiction35. It may be that failure to make such an inquiry results in a decision being affected in some other way that manifests itself as jurisdictional error. It is not necessary to explore these questions of principle in this case. There are two reasons for that. The first reason is that there was nothing on the record to indicate that any further inquiry by the Tribunal, directed to the authenticity of the certificates, could have yielded a useful result. There was nothing before the Federal Magistrates Court or the Federal Court to indicate what information might be 32 (1999) 197 CLR 510 at 578 [194]. 33 Their Honours were in dissent, but their observations were not relevant to the point of their dissent. 34 (1995) 183 CLR 273 at 290. 35 See authorities collected in Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 453 [189], n 214; [2001] HCA 51. Crennan Bell elicited if the Tribunal were to undertake the inquiry which was said to be critical to the validity of its decision. The inquiry suggested was telephone contact with the persons whose mobile telephone numbers were shown on the certificates. But the question whether the certificates contained false statements as to authorship or otherwise would not be able to be determined by calls placed to those telephone numbers. If the respondents to the calls admitted to the Tribunal or its officers that the certificates contained false statements, then the grounds for a decision adverse to SZIAI would have been strengthened. If the respondents said that the contents were true, it would have added nothing to the statements effectively conveyed by the certificates themselves. The second reason is that the response made by SZIAI's solicitors to the Tribunal's letter of 14 January 2008 itself indicated the futility of further inquiry. There was nothing that SZIAI or his solicitors were able to add, beyond a bare denial of what appeared in the National Ameer's letter. For these reasons there is no factual basis for the conclusion that the failure to inquire constituted a failure to undertake the statutory duty of review or that it was otherwise so unreasonable as to support a finding that the Tribunal's decision was infected by jurisdictional error. No issue of procedural fairness otherwise arises. SZIAI was given an opportunity to comment upon the National Ameer's letter and did so in the limited terms indicated. To invite SZIAI to a further hearing pursuant to s 425 of the Migration Act would have been an empty exercise. There was no such obligation in any event. The National Ameer's letter was by way of information that the Tribunal considered would be a reason, or part of a reason, for affirming the decision under review. It discharged its obligation, pursuant to s 424A of the Migration Act, by giving SZIAI the opportunity to comment on that information. The letter did not raise a new issue in the sense that that term is used in s 425. Conclusion For the preceding reasons this appeal should be allowed and the decision of the Federal Court set aside. A constitutional point raised about the validity of s 422B of the Migration Act does not need to be considered, having regard to the conclusions reached above on the procedural fairness arguments. HEYDON J. The crucial controversies between the parties in this Court turned on two arguments advanced by the first respondent ("the respondent"). The respondent's first argument: failure to make inquiries The first argument related to a failure of the Refugee Review Tribunal ("the Tribunal") to make certain inquiries of Mr Nuruzzaman, Mr Hossain and the Ahmadiyya Muslim Association Australia Inc36. Mr Hossain signed a so-called "certification" dated 7 August 2006 produced to the Tribunal by the respondent as evidence of his involvement in the activities of an Ahmadiyya Muslim Jamaat in Bangladesh. Mr Nuruzzaman signed another so-called certification of the same date produced by the respondent for the same purpose. These certifications were frequently called "certificates" in argument, and that description will be employed below. On 10 January 2008 the Ahmadiyya Muslim Association Australia Inc informed the Tribunal that it had received certain information about the respondent. The information was contained in a letter of 8 January 2008 from the National Ameer of the Ahmadiyya Muslim Jamaat, Bangladesh. The letter said: "our Khulna Jamaat informed me that they could not find out [the respondent's] name in their record." The letter also said: "Both the certificates submit by him are fake & forged." The respondent submitted that the failure of the Tribunal to make the inquiries was an error going to jurisdiction. The respondent's second argument: new "issues" The second argument of the respondent was that an alternative jurisdictional error had been committed by the Tribunal. The argument pointed to the Tribunal's duty under s 425(1) of the Migration Act 1958 (Cth) ("the Act"). It provides: "The Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review." In isolating the point of the respondent's second argument, it is necessary to bear in mind the procedural background. 36 Some documents give the relevant body that title. Others call it the Ahmadiyya Muslim Association of Australia Inc. For consistency, the title in the text will be employed below. The background The original decision of the appellant's delegate refusing the respondent the protection visa he sought was made as long ago as 18 August 2005. This appeal is the culmination of the respondent's third attempt to have that decision reviewed in his favour. The first attempt was an application to the Tribunal followed by an oral hearing on 16 November 2005. It resulted in the Tribunal affirming the delegate's decision on 8 December 2005. However, that decision of the Tribunal was quashed by consent orders made by the Federal Magistrates Court. A second hearing then took place on 13 September 2006 before a differently constituted Tribunal. On 26 October 2006 that Tribunal affirmed the delegate's decision. However, the respondent again enjoyed success in the Federal Magistrates Court: the second Tribunal's decision was quashed. A third took place before a differently constituted Tribunal on hearing 9 November 2007. On 19 February 2008 that Tribunal upheld the delegate's decision. In essence it rejected all the respondent's claims on credibility grounds. Although an application for judicial review to the Federal Magistrates Court failed, the respondent succeeded in obtaining an order from the Federal Court of Australia allowing an appeal. From that order this appeal is brought. then On what basis, then, did the respondent contend that the Tribunal should have given him a hearing additional to the third hearing he received on 9 November 2007? The basis is that a new "issue" arose after that hearing. At that hearing the Tribunal had before it Mr Nuruzzaman's certificate (sent on 25 August 2006) and Mr Hossain's certificate (handed over at the hearing). The Tribunal questioned the authenticity of the certificates. It questioned the failure of the respondent to produce a letter from the Ahmadiyya Muslim Association Australia Inc confirming his faith and practice as an Ahmadi. It requested the respondent's consent to its contacting that Association. Five days later, on 14 November 2007, the respondent's representatives conveyed that consent (although they also submitted that the Tribunal was biased – an allegation not now persisted in). Accordingly, on 15 November 2007 the Tribunal sent a letter to the Ahmadiyya Muslim Association Australia Inc enclosing the certificates and asking various questions. On 10 January 2008 that Association responded, enclosing the letter of 8 January 2008 from the National Ameer of the Ahmadiyya Muslim Jamaat, Bangladesh, alleging that Mr Nuruzzaman's certificate and Mr Hossain's certificate were "fake & forged". The new "issue", creating a duty on the Tribunal to invite the respondent to a further hearing, was said in written submissions to be whether the certificates were in truth "fake & forged". In oral argument it was submitted that another new "issue" had arisen from the 8 January 2008 letter – whether or not the respondent's name was in the Failure to make further inquiries of Mr Nuruzzaman, Mr Hossain or the Ahmadiyya Muslim Association Australia Inc Whatever the general duty of the Tribunal to make inquiries, and whatever the impact of that duty might be on the conduct of the Tribunal in other circumstances, in the circumstances of this case there is no doubt that the Tribunal was not obliged to make any more inquiries than it did. Hence it is not necessary to seek to formulate that duty in terms capable of application in other circumstances. The third Tribunal decision. The Tribunal was not obliged to make any more inquiries than it did for the following reasons. The third Tribunal decision occupied 28 closely typed pages. The operative part of it began by analysing in detail the way in which the respondent had put his case before the appellant's delegate. That case was that though he had been brought up as a Sunni Muslim, he had converted to the Ahmadi faith on 1 January 2000. He said he was a member of the Ahmadiyya Muslim Jamaat (Qadiani) and had "regularly followed all rituals performances with utmost respect". He was disowned by his family and close relatives. He and his family had been threatened with death. He had been badly injured by Sunni extremists. He had been subjected to false charges. An essential precondition to acceptance of the case so presented turned on the extent to which the respondent had practised his new faith. The Tribunal then analysed in detail the respondent's evidence at the first and second hearings. It recorded one event before the second hearing which later assumed significance. The respondent produced an undated certificate from Mr Nuruzzaman "of the Ahmadiyya Muslim Jamaat in Khulna stating that he knew the [respondent], that the [respondent] had taken the bai'at (oath) at the Ahmadiyya Muslim Jamaat on 1 January 2000 'by my assistance' and that from that time he had 'engaged with all activities of our Jamaat'." The third Tribunal decision then recorded that after the second hearing the Tribunal requested that the respondent provide the following: "A letter, preferably in the form of a Statutory Declaration, from the Imam or other senior person at the Ahmadiyya mosque which you attend. This letter should state that you are known to the writer of the letter as a practising member of the Ahmadiyya faith, and should also state how long you have been attending the mosque and/or other activities in connection with the Ahmadiyya religion." On 12 October 2006 the respondent's solicitors replied in the following terms: "Our client has been unable to obtain the information requested in the RRT's letter dated 13 September 2006. We note our client's claim that the mosque is not in the practice of issuing such letters for persons who enter Australia however, merely because the mosque will not issue a letter does not mean that our client is not of the Ahmadiyya faith. The applicant has provided evidence that he was practising his Ahmadiyya faith in Bangladesh. Furthermore, a friend has confirmed that the applicant attends a mosque." The Tribunal's reasons for decision then described in detail what had happened at the third hearing. In that hearing the Tribunal revealed considerable doubt about many aspects of the respondent's claims. It was sceptical about his failure to mention Mr Nuruzzaman in his original application to the delegate or in the first hearing. It inquired how his wife could have been ignorant of his faith if he had attended the Ahmadi mosque every Friday and other Ahmadi meetings. It told the respondent that he had told his story a number of times, and each time it was different. It commented on his failure to get a letter from the Ahmadi mosque he claimed to attend in Australia supporting his case even though it had verified that other applicants for refugee status were Ahmadis. In connection with Mr Nuruzzaman's certificate, it contended that forged or fraudulently obtained documents were readily available in Bangladesh. The respondent's criticisms of the letters of 8 and 10 January 2008. In this Court, counsel for the respondent, in his customary careful way, contended that the Tribunal's conclusion that the respondent was not a genuine Ahmadi was based on its acceptance of what the National Ameer of the Ahmadiyya Muslim Jamaat, Bangladesh, said in his letter of 8 January 2008 enclosed with the Ahmadiyya Muslim Association Australia Inc's letter of 10 January 2008. It is certainly true that the Tribunal said in its reasons for decision more than once that it relied on "the information referred to in the Tribunal's letter dated 14 January 2008", and that letter referred to the National Ameer's letter of 8 January 2008. Counsel criticised the letters of 8 and 10 January 2008, and the Tribunal's reasoning, in several ways. First, he said that the Tribunal's letter of 15 November 2007 to the Ahmadiyya Muslim Association Australia Inc had asked two questions. One was whether the respondent was "known to the Ahmadiyya Muslim Jamaat Bangladesh." The other was whether the respondent was known to the congregation of the Ahmadi mosque at Marsden Park, which the respondent claimed to attend every Friday. Counsel submitted to this Court that the Association's reply of 10 January 2008 did not answer either question. Secondly, counsel said that the inability of the Khulna Jamaat in Bangladesh to find the respondent's name in its records had to be analysed in the light of such questions as whether records of attendance at prayers were kept, and whether they were kept well. Thirdly, counsel contended that the 8 January 2008 letter revealed a misunderstanding about whether the certificates of Mr Nuruzzaman and Mr Hossain were in para materia with the certificates mentioned in the letter which could be issued in order to effectuate a transfer of a member of a Bangladeshi Jamaat to a Jamaat outside Bangladesh. Then counsel said that while a reference to the name of the respondent in the records of the Khulna Jamaat might establish that he was an Ahmadi, an absence of reference to his name did not establish that he was not. Counsel said that the Tribunal failed to understand this. Finally, counsel submitted that "the material before the Tribunal standing alone did not provide a rational foundation for acceptance" of what it said were "two bare assertions", namely that the certificates were "fake & forged", and that since the respondent was not listed in the records of the Khulna Jamaat, he had not attended it. The criticisms considered. It is convenient to start with the last criticism. The Tribunal's conclusions were not arrived at by reference to "the material before the Tribunal standing alone". They were arrived at by examination of what was said in the respondent's original application, as well as what happened at each of the three hearings. They were also arrived at in the light of the response given by the solicitors for the respondent to the Tribunal's letter of 14 January 2008. That letter was long and detailed: it filled seven closely typed pages and contained numerous material enclosures. It set out many alleged inconsistencies and difficulties in the respondent's position. It called for written comments on the problems identified. In particular, it drew attention to the letter of 8 January 2008, which was one of the enclosures. In the plainest terms it identified the damaging impact which that letter had on the respondent's overall credibility as well as his particular claim to have been converted. It set 29 January 2008 as the time by which the respondent's comments should be received, but it indicated that an extension could be requested. The respondent's solicitors were experienced in the particular field. They did not complain of any shortage of time within which to reply. On 29 January 2008 they duly sent a response. But it was brief. The response merely conveyed the respondent's disagreement with the information forwarded. The response did not deal at all with the many points made which were distinct from the questions arising from the 8 January 2008 letter. Nor did it deal with that letter. In particular, although the arguments advanced by counsel for the respondent in this Court varied in their power, none of them were drawn to the Tribunal's attention. Counsel accepted that "some inference" was available from this circumstance. In truth, a very strong inference is available, when the circumstances of the three hearings and the many difficulties being experienced by the Tribunal are borne in mind. The inference is that the Tribunal's points were not answered because the respondent's representatives had been unable to obtain from the respondent any instructions enabling them to be answered, and because they were incapable of answer. Further, the course which the respondent now says the Tribunal should have taken was not a course which his representatives asked the Tribunal to take in the letter of 29 January 2008. Although the respondent had noted at the 9 November 2007 hearing that Mr Nuruzzaman's certificate bore a telephone number which could be used to contact him, it did not seem that he urged that Mr Nuruzzaman actually be contacted. The correctness of the course which the respondent now advocates is diminished by the hindsight attached to it. The respondent's contention that the Tribunal should have made a further inquiry of the Ahmadiyya Muslim Association Australia Inc is without merit. It is plain that the Association viewed itself as having nothing to add to what it said on 10 January 2008. Its letter of that date needs to be read in the light of what it said in an earlier letter to the Tribunal dated 12 December 2004. It said: "When any person approaches the National Ahmadiyya Association, for being attested as an Ahmadi, he is asked to provide his antecedents such as his name with parentage, his previous address, the name of 'Jamaat' (branch of the Association) to which he belonged, date of joining the Association – if not an Ahmadi by birth, and other information which he may like to supply to help verify his religious status. The information supplied by him is passed on to the National Amir of his country, who then obtains verification from the Amir/President of the local 'Jamaat' to which he claims to have belonged. A letter of verification of being an Ahmadi is issued by us, on the basis of information thus obtained. This procedure is followed in all cases unless I happen to know an applicant personally." It then said: "There is no other way to have the claim of a person of being an Ahmadi verified." The letters of 8 and 10 January 2008 revealed that a process of that kind had come to a dead end. Perhaps someone could have asked the Ahmadiyya Muslim Jamaat in Bangladesh why it thought that the certificates were "fake & forged". But the respondent did not submit that the Tribunal should ask this, and in any event the respondent was in at least as good a position as the Tribunal to put the question. On his case, he was a victim of religious persecution, and he would have been seeking the assistance of senior office holders in the religious denomination being persecuted to avoid that persecution. If the respondent thought that the Association's answer in its letter of 10 January 2008 was incomplete or rested on a misunderstanding of the Tribunal's letter of 15 November 2007, those thoughts were not conveyed to the Tribunal with a view to further action on its part. And the respondent's contention that the issue of whether Mr Nuruzzaman and Mr Hossain had forged their certificates could be resolved by asking them whether they had in fact done so must be rejected. Those questions would not have been likely to receive illuminating answers. The only useful way forward was for the respondent to procure better material, from Bangladesh and Australia, demonstrating that his claims about his faith and practice were well-based. His representatives informed the Tribunal in their letter of 29 January 2008 that this was beyond his capacity. The question of whether the Tribunal should have made further inquiries must be assessed bearing in mind that it was for the respondent to demonstrate that his claims were genuine; it was not for the Tribunal to try to achieve a demonstration that he had failed to achieve. The respondent had procured the certificates in the first place. Those certificates purported to be from gentlemen who knew the respondent. The respondent, it could be assumed, would know whether Mr Nuruzzaman or Mr Hossain could provide any useful information in relation to the letter of 8 January 2008. The respondent was in at least as good a position as the Tribunal to contact those gentlemen. He was represented by solicitors. Despite the letter of 8 January 2008, the respondent did not ask the Tribunal to contact either gentleman. It was not unreasonable for the Tribunal to proceed on the basis that if any further evidence was to be provided in support of the certificates, it would come from the respondent. The failure of the Tribunal to make the inquiries of which the respondent complains was not a jurisdictional error. Section 425 In relation to pleadings filed in conventional litigation, lawyers are familiar with the difficulties that arise in practice in distinguishing between allegations of material fact (which must be pleaded), some kinds of particulars of those allegations (which must be pleaded), other kinds of particulars (which need not be pleaded, but must be supplied in correspondence if requested), and evidence of the material facts so pleaded and particularised. It can be difficult to distinguish between the relevant allegations throw up. Now a proceeding in the Tribunal seeking review of a decision by a delegate of the Minister refusing an application for a visa is not conventional litigation and is not subject to any rules of pleading. But similar distinguishing difficulties sub-controversies within an issue and controversies about separate issues. In particular cases much debate could take place about how broadly or narrowly issues should have been, or were, perceived. issues which disagreements about sub-questions between arise can the The first "new" issue: forgery. This appeal is not a suitable occasion on which to explore these problems in general or exhaustive terms. The question whether the certificates were "fake & forged" was not a new issue which arose in a distinct way after the third hearing. In one sense it was arguably only a sub-issue of the general question: was the respondent converted to the Ahmadi faith as he claimed? It was clear from at least the third hearing that the Tribunal had the utmost scepticism about the respondent's position on that question. But it is not necessary to examine the proposition that forgery was only a sub-issue of the issue as to whether the respondent had been converted. That is because if it is assumed in the respondent's favour that a wholly unforeseen claim that the certificates were forged which emerged after the third hearing might raise a new issue triggering s 425 – a proposition open to debate – the claim that the certificates were forged in this case was not wholly unforeseen at that third hearing. At the third hearing the Tribunal drew attention to what it regarded as the belated emergence of Mr Nuruzzaman's asseverations – first in an undated certificate, then in the certificate dated 7 August 2006. The Tribunal also referred, while Mr Nuruzzaman's certificate and the fabrication of the respondent's claim to be Ahmadi were under debate, to the supposed ready availability of forged or fraudulently obtained documents in Bangladesh. The respondent in this Court appealed to a distinction between "a general proposition that in a particular country forged documents might be obtained and a specific proposition that these documents were fake and forged." But the context in which the Tribunal asserted the general proposition indicated that it had in mind the application of it to the particular certificates. It was to meet the supposed ready availability of forged or fraudulently obtained documents in Bangladesh that the Tribunal requested the respondent's consent to contacting the Ahmadiyya Muslim Association Australia Inc. That was because, as the Tribunal told the respondent, that Association "had told the Tribunal that they would verify a person's claims with the Ahmadiyya Jamaat to which he claimed to have belonged in Bangladesh so they were able to confirm whether someone was a genuine Ahmadi or not". That was a reference to the letter of 12 December 2004 quoted above37. Far from the forgery of the certificates being a fresh issue which arose after the third hearing, it was a live issue at that hearing. Indeed the material which eventually stated in terms that the certificates were forged came to light because of the Tribunal's concern to bypass the possibility of further forgeries being perpetrated to support the genuineness of the certificates which the Tribunal suspected had been forged. The second "new" issue: the presence of the respondent's name in the Khulna Jamaat records. The second "new" issue which the respondent contended arose from the 8 January 2008 letter – whether or not the respondent's name was in the Khulna Jamaat records – was not a new issue. The Tribunal's reference during the third hearing to the letter of 12 December 2004 from the Ahmadiyya Muslim Association Australia Inc to the Tribunal makes it clear that the question of the status of the respondent with his Jamaat in Bangladesh, to which the Jamaat's records were relevant, was a live one at the third hearing. It was not a new issue raised after it. 37 See above at [50]. The Tribunal was right to give the respondent particulars of the 8 January 2008 letter (pursuant to s 424A(1)(a) of the Act), right to ensure by its very detailed and frank letter of 14 January 2008 that the respondent understood why it was relevant (pursuant to s 424A(1)(b)), and right to invite the respondent to comment on the 8 January 2008 letter (pursuant to s 424A(1)(c)). But the Tribunal was never asked by the respondent to give a fourth oral hearing. Of course, if s 425 imposed a duty, the failure to demand compliance with it would not negate its existence. But that failure does suggest that the application of s 425 to the circumstances of this case was not obvious. And, in truth, no obligation to give a fourth oral hearing, as distinct from an invitation to supply a written response, arose under s 425. Conclusion The appeal should be allowed.

HIGH COURT OF AUSTRALIA JOHN ANDREWS & ORS APPLICANTS AND AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED RESPONDENT Andrews v Australia and New Zealand Banking Group Limited [2012] HCA 30 6 September 2012 ORDER Leave to appeal granted in respect of grounds 1-4 of the amended draft notice of appeal. The amended draft notice of appeal treated as filed and the appeal treated as instituted and heard instanter and allowed with costs. Save as to sub-paragraphs (f)(i), (g), (h), (i), (k), (o)(i), and (p)(i) of order 1, set aside orders 1 and 2 of the orders made by the Federal Court of Australia on 13 December 2011, and in their place declare that the circumstances: that the honour, dishonour, non-payment and over limit fees were not charged by the respondent upon breach of contract by its customers, and that the customers had no responsibility or obligation to avoid the occurrence of events upon which these fees were charged, do not render these fees incapable of characterisation as penalties. Set aside the orders with respect to the costs of the Separate Questions made by the Federal Court of Australia on 7 February 2012, and in their place order that the question of costs be reserved for consideration by a judge of that Court. Representation J T Gleeson SC with J A Watson for the applicants (instructed by Maurice Blackburn) A C Archibald QC with M H O'Bryan SC for the respondent (instructed by Ashurst Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Andrews v Australia and New Zealand Banking Group Limited Banker and customer – Penalty doctrine – Consumer and commercial credit card accounts – Honour fee – Dishonour fee – Late payment fee – Non-payment fee – Over limit fee – Whether those fees penalties – Whether penalty doctrine limited to circumstances where there is breach of contract – Significance of law respecting penal bonds – Grounds for equitable intervention – Whether penalty doctrine now wholly a rule of common law. Equity – Doctrines and remedies – Relief against penalties – Significance of law respecting penal bonds – Whether relief available only in cases of breach of contract – Whether penalty doctrine now wholly a rule of common law. Words and phrases – "bond", "condition", "dishonour fee", "exception fees", "honour fee", "penalty". Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 5, 21, 24(1A). Judiciary Act 1903 (Cth), s 80. Judicature Act 1873 (UK), s 24(11). FRENCH CJ, GUMMOW, CRENNAN, KIEFEL AND BELL JJ. In this litigation the applicants challenge the legal efficacy of various bank fees charged to customers. These reasons are organised as follows: Introduction The penalty doctrine The course of the Federal Court litigation The Interstar decision Bonds, contracts and the meanings of "condition" Limited scope of the penalty doctrine? The common law action of assumpsit AMEV-UDC in the High Court The Dunlop Case Conclusion Order Introduction There is pending in the Federal Court of Australia a representative action pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") against There are approximately 38,000 group members. In addition there also are pending in the Federal Court six proceedings against other banks which raise the same or similar issues. the respondent ("the ANZ"). The prolix pleading filed by the applicants puts their case on various grounds. These include engagement by the ANZ in "unconscionable conduct" in contravention of the Australian Securities and Investments Commission Act 2001 (Cth) and the Fair Trading Act 1999 (Vic) ("the FTA"), the application of s 32W and s 32Y of the FTA to avoid "unfair terms", and the operation of provisions of Crennan Bell the Consumer Credit (Victoria) Code and the National Credit Code with respect to "unjust transactions". These aspects of the litigation are not before the Court. But it may be observed that this pattern of remedial legislation suggests the need for caution in dealing with the unwritten law as if laissez faire notions of an untrammelled "freedom of contract" provide a universal legal value1. What is immediately material is the claim for declaratory relief under s 21 of the Federal Court Act that certain provisions in contracts between the ANZ and the applicants are void or unenforceable as penalties, and that the applicants and group members are entitled to repayment of fees charged to them under those provisions, as moneys had and received by the ANZ to their use. In this Court the applicants rely upon the doctrine identified with relief against penalty obligations and, on its part, the ANZ refers to matters of legal history to demonstrate the inapplicability of that doctrine to the present case. It is convenient to begin with some reference to settled aspects of the penalty doctrine. The penalty doctrine Mason and Deane JJ observed in Legione v Hateley2 that, as the term suggests, a penalty is in the nature of a punishment for non-observance of a contractual stipulation and consists, upon breach, of the imposition of an additional or different liability. In general terms, a stipulation prima facie imposes a penalty on a party ("the first party") if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an 1 See Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 60 [20], 62-63 [24]-[25]; [1999] HCA 67; Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 549 [22]; [2010] HCA 42. (1983) 152 CLR 406 at 445; [1983] HCA 11. Crennan Bell additional detriment, the penalty, to the benefit of the second party3. In that sense, the collateral or accessory stipulation is described as being in the nature of a security for and in terrorem of the satisfaction of the primary stipulation4. If compensation can be made to the second party for the prejudice suffered by failure of the primary stipulation, the collateral stipulation and the penalty are enforced only to the extent of that compensation. The first party is relieved to that degree from liability to satisfy the collateral stipulation. It has been established at least since the decision of Lord Macclesfield in Peachy v Duke of Somerset5 that the penalty doctrine is not engaged if the prejudice or damage to the interests of the second party by the failure of the primary stipulation is insusceptible of evaluation and assessment in money terms. It is the availability of compensation which generates the "equity" upon which the court intervenes; without it, the parties are left to their legal rights and obligations. The point is illustrated by Waterside Workers' Federation of Australia v Stewart6. A bond was given by the appellant in the sum of £500 on condition that it pay £50 if and so often as its members in combination should go on strike. Isaacs and Rich JJ7 emphasised that, whilst refusal to work almost inevitably would cause loss to employers, "no one can ever tell how much loss is sustained by not doing business" and on the principle stated by Lord Macclesfield no relief was to be given against payment of the £50. 3 Waterside Workers' Federation of Australia v Stewart (1919) 27 CLR 119 at 128-129, 131; [1919] HCA 63; Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 at 520; [1985] HCA 63. 4 Rolfe v Peterson (1772) 2 Bro PC 436 at 442 [1 ER 1048 at 1052]; Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 at 86; cf, as to irrevocable letters of credit and "performance bonds", the proceeds of which are in substitution for performance by a contractor, Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812; Mason, "'I'll have my bond; speak not against my bond': Constructive trusts and surplus proceeds from performance bonds", (2012) 6 Journal of Equity 74 at 81-83. (1720) 1 Strange 447 [93 ER 626]. (1919) 27 CLR 119. (1919) 27 CLR 119 at 131-132. Crennan Bell It should be noted that the primary stipulation may be the occurrence or non-occurrence of an event which need not be the payment of money8. Further, the penalty imposed upon the first party upon failure of the primary stipulation need not be a requirement to pay to the second party a sum of money. In Jobson v Johnson9 Dillon LJ and Nicholls LJ explained that there is no distinction in principle here between a stipulation upon default for the transfer (or the use10) of property and a payment of money; such a distinction would elevate form over substance. In that case, cl 6(b) of a share sale contract provided that upon default in payment of an instalment of the purchase price the purchaser was obliged to retransfer the shares to the vendors upon payment of a stipulated sum to the purchaser. The Court of Appeal held that cl 6(b) had the characteristics of a penalty clause. It ordered that either the shares be sold by the purchaser and the amount of the unpaid instalments be paid to the assignee of the vendors; or the current value of the shares, the aggregate of the unpaid instalments and amounts charged on the shares be ascertained and, if this was less than the sum presently due from the vendors under cl 6(b), effect be given to cl 6(b). It will already be apparent that an understanding of the penalty doctrine requires more than a brief backward glance. In his reasons in Austin v United Dominions Corporation Ltd11, after referring to the common law and statutory developments which had occurred by the first half of the 18th century, and noting that the equitable origin of the penalty doctrine was accepted throughout the 18th century, Priestley JA continued: "In the latter part of the eighteenth century and through much of the nineteenth century the courts showed restlessness with their longstanding duty to relieve against penalties. This has been attributed to the fact that 8 Story, Commentaries on Equity Jurisprudence as Administered in England and America, 13th ed (1886), vol 2 at [1314]. [1989] 1 WLR 1026 at 1034-1035, 1039 respectively; [1989] 1 All ER 621 at 628, 10 See Forestry Commission (New South Wales) v Stefanetto (1976) 133 CLR 507 at 519-521 per Mason J; [1976] HCA 3. 11 [1984] 2 NSWLR 612 at 626; affd sub nom AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; [1986] HCA 63 (Gibbs CJ, Mason and Wilson JJ; Deane and Crennan Bell during this period the principle of freedom of contract reached its zenith: see Atiyah, The Rise and Fall of Freedom of Contract12. Whatever the reason, during the nineteenth century the way in which the law concerning penalties originated and the way in which that law became incorporated in the common law were to some extent lost sight of. At the same time the operation of that law was clarified by the recognition of the distinction between a penalty and a genuine pre-estimate of liquidated damages." The formulation of that distinction between a penalty and a pre-estimate of liquidated damages which was made by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd13 has been described as a product of centuries of equity jurisprudence14. It was recently applied by this Court in Ringrow Pty Ltd v BP Australia Pty Ltd15. But the present dispute requires attention at an anterior stage of analysis, namely identification of those criteria by which the penalty doctrine is engaged. The course of the Federal Court litigation The litigation was instituted and has been conducted in the Victorian District Registry of the Federal Court. Section 5 of the Federal Court Act creates the Federal Court as a court of law and equity. The governing law for the litigation is the common law of Australia as modified by applicable federal and Victorian statute law16. Before this Court there is that part of a pending application for leave to appeal to the Full Court of the Federal Court removed into this Court by order made 11 May 2012. That order removed grounds 1-4 of the proposed appeal by the applicants from the answers to certain separate questions given by the primary judge (Gordon J)17 on 13 December 2011. The interlocutory nature of 13 [1915] AC 79 at 86-87. 14 Rossiter, Penalties and Forfeiture, (1992) at 33. 15 (2005) 224 CLR 656 at 662-663 [11]-[12]; [2005] HCA 71. See also the opinion of Douglas J in Priebe & Sons Inc v United States 332 US 407 at 411-412 (1947). 16 Judiciary Act 1903 (Cth), s 80. 17 Andrews v Australia and New Zealand Banking Group Ltd (2011) 288 ALR 611. Crennan Bell the proceeding before her Honour necessitates the grant of leave for an appeal to the Full Court18 and delineates the process which has been removed into this Court. Shortly put, grounds 1-4 of the proposed Full Court appeal concern the nature and scope of the jurisdiction to relieve against penalties and the question whether relief is available only after the penalty is imposed upon a breach of contract. The Federal Court litigation concerns fees identified as honour, dishonour, and non-payment fees charged by the ANZ in respect of various retail deposit accounts and business deposit accounts, and fees identified as over limit and late payment fees charged by the ANZ in respect of consumer credit card accounts and commercial credit card accounts; these fees were identified in the reasons of the primary judge as "exception fees". The substance of the relevant, but awkwardly expressed, separate questions before the primary judge was to ask whether the exception fees were payable upon breach by the applicants of contractual obligations to the ANZ, and, in the alternative, to ask whether it had been the responsibility of the applicants to see that the circumstances occasioning the imposition of the exception fees did not arise. If there was an affirmative answer to either of the alternative questions, it then was asked whether the fees were "capable of being characterised as a penalty by reason of that fact". The primary judge found that the late payment fee was payable upon breach of contract and therefore was capable of characterisation as a penalty. The ANZ has not sought to appeal against that finding. However, in respect of the honour, dishonour, non-payment and over limit fees the primary judge held that these were not charged by the ANZ upon breach of contract by the customer, nor was the occurrence of the event upon which the fees were charged (overdrawing the account or credit limit or attempting to do so) an event which the customer had an obligation or responsibility to avoid19. Having thus answered in the negative each of the alternative questions, the primary judge held it was unnecessary to answer the question whether these fees were capable of characterisation as a penalty. 18 Federal Court Act, s 24(1A). 19 (2011) 288 ALR 611 at 667-668 [205]-[208]. Crennan Bell However, her Honour did find that under the pre-existing terms agreed between them, these fees were charged by the ANZ as a consequence of the decision of the ANZ to afford or to decline the provision of further accommodation to the customer. The ANZ did so respectively by approving or authorising payment on an "instruction" issued to it by the customer, or by refusing to do so, where the honouring of the "instruction" would have the effect of overdrawing the customer's account or exceeding the account credit limit. But the separate questions were not so framed as to ask whether, by reason of these conclusions just mentioned, the fees were incapable of characterisation as penalties. Hence, the proposed grounds of appeal which are presently before this Court (grounds 1-4) do not include an express challenge to those significant findings. Nevertheless, it will be necessary in these reasons to make further reference to them20. Ground 6, which is not before this Court, asserts error by her Honour in failing to characterise the fees as payable on breach. The primary judge conducted a detailed analysis by reference to the document identified as "PDS March 2005". This was the "ANZ Saving & Transaction Products – Product Disclosure Statement" issued in compliance with Pt 7.9, Div 2 (ss 1011A-1016F) of the Corporations Act 2001 (Cth). What was identified as "Exception Fee No 3" was a Retail Deposit Account (Saving Account, Honour Fee). Clause 2.12 of PDS March 2005 relevantly stated21: "ANZ does not agree to provide any credit in respect of your account without prior written agreement, which (depending on your account type) can be through an ANZ Equity Manager Facility, an Overdraft Facility or an ANZ Assured Facility. It is a condition of all ANZ accounts that you must not overdraw your account without prior arrangements being made and agreed with ANZ. If you request a withdrawal or payment from your account which would overdraw your account, ANZ may, in its discretion, allow the withdrawal or payment to be made on the following terms: interest will be charged on the overdrawn amount at the ANZ Retail Index Rate plus a margin (refer to 'ANZ Personal Banking Account Fees and Charges' booklet for details); 21 (2011) 288 ALR 611 at 654 [153]. Crennan Bell an Honour Fee may be charged for ANZ agreeing to honour the transaction which resulted in the overdrawn amount (refer to 'ANZ Personal Banking Account Fees and Charges' booklet for details); the overdrawn amount, any interest on that amount and the Honour Fee will be debited to your account; and you must repay the overdrawn amount and pay any accrued interest on that amount and the Honour Fee within seven days of the overdrawn amount being debited to your account." (emphasis added) Clause 2.7 of PDS March 2005 provided that a dishonour fee and a non-payment fee would be charged, respectively, if the customer authorised a third party to direct debit an account and payment was not made, or if the customer authorised a periodical payment and payment was not made, in either case because there were insufficient cleared funds in the customer's account22. These provisions were modified in December 2009. An "Honour Fee" was charged for considering a deemed (and successful) request for an "Informal Overdraft". An "Outward Dishonour Fee" was charged for considering a deemed (and rejected) request where the customer did not satisfy the ANZ's credit criteria for an Informal Overdraft. The request was deemed to be made where a debit was initiated which, if processed by the ANZ, would result in an account being overdrawn or an approved limit on the account being exceeded. The principal findings of the primary judge made irrelevant the concession by the ANZ that it did not determine the quantum of these fees by reference to a sum which would have constituted a genuine pre-estimate of the damage the ANZ might suffer as a consequence of permitting the overdrawing of an account. The applicants plead that the fees in question were imposed upon or in default of the occurrence of stipulated events but were "out of all proportion" to the loss or damage which might have been sustained by the ANZ by reason of the occurrence of those events. The applicants also submit to this Court that these fees were charged "for a service with no content". Further, the applicants contend that despite the form 22 (2011) 288 ALR 611 at 655 [156]. Crennan Bell of the honour fee, with the provision of further accommodation by the ANZ to the customer, in substance it is a disguised penalty. The Interstar decision In reaching her conclusion respecting the scope of the penalty doctrine, the primary judge, with respect quite properly, followed what had been decided by the New South Wales Court of Appeal in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd23. In that case the Court of Appeal held24 that the primary judge (Brereton J)25 had erred in denying that the doctrine had ceased to be one of equity and now was wholly legal in nature and in concluding that the doctrine was not limited to the failure of stipulations which were breaches of contract. The appellants in Interstar were finance companies and the respondents conducted the business of "mortgage originators". Upon the happening of any one of a range of events, the appellants were empowered to terminate agreements, under which they made to the respondents payments described as commissions. Not all of these events were breaches of those agreements by the respondents and not all were acts or omissions over which the respondents had control26. The respondents successfully contended at first instance that the event 23 (2008) 257 ALR 292. 24 (2008) 257 ALR 292 at 321-330. 25 Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd (2007) Aust Contract Reports ¶90-261 at 90,037; Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd (No 2) [2007] NSWSC 592. 26 The relevant provisions read: Termination Interstar may terminate this Agreement immediately upon the happening of any of the following events: upon the occurrence of an Insolvency Event in relation to the Originator; upon the Originator breaching any of the terms and conditions of this Agreement and/or the Manual and (Footnote continues on next page) Crennan Bell giving rise to the penalty, as the act or event upon which liability was conditioned, could be the termination of the agreements even if the ground for termination was not breach thereof. Brereton J held that the termination clause was a penalty provision and wholly void27, and that the respondents were entitled to continued receipt of the commissions. The Court of Appeal held that the agreements conferred no accrued rights upon the respondents, so that upon termination there was no forfeiture of accrued property for the collateral purpose of encouraging compliance with the contract and no engagement of the penalty the breach not being rectified to the absolute satisfaction of Interstar within fourteen days after the date upon which written notice of such breach is given by Interstar to the Originator; where the Originator or Originator's Representative has engaged in any proven deceptive or fraudulent activity in relation to an Application or a Settled Loan or Interstar considers, its reasonable the Originator or Originator's opinion, Representative has engaged in deceptive or fraudulent activity in relation to an Application or a Settled Loan; that where, in the sole bona fide opinion of Interstar, there is a change in the management or effective control of the Originator which change is not acceptable to Interstar. In the event that this Agreement is terminated by Interstar: pursuant to clause 20.1(a) or (c), then the Originator shall, with effect from the date of termination, have no further entitlement to receive any Originator's Fee." 27 [2007] NSWSC 592 at [7], [49]. Crennan Bell doctrine; further, the character of the provisions was to define entitlement to the commissions28. These holdings would have been sufficient for the Court of Appeal to dispose of the case. However, the Court went on, with reference to observations of Mason and Wilson JJ in AMEV-UDC Finance Ltd v Austin ("AMEV-UDC")29, to state that "[t]he modern rule against penalties is a rule of law, not equity"30. The Court of Appeal also, with particular reference to the speech of Lord Roskill in Exports Credits Guarantee Dept v Universal Oil Products Co ("ECGD")31, said that the limits of the doctrine of penalties arise "from the consequences of breach of contract" and so reflect "the public policy of keeping commercial parties to their bargains"32. The applicants seek in this Court to challenge these statements in Interstar. For the reasons which follow that challenge should succeed. Bonds, contracts and the meanings of "condition" Before proceeding further with the challenge which the applicants seek to make to Interstar, something first should be said about the nature of the bond because it was here that equity first intervened. This, in turn, involves consideration of the use of the term "condition" in the relevant legal discourse. Like the term "rescission"33, the term "condition" has several distinct meanings and applications. This must clearly be kept in mind to avoid engendering confusion of legal principle. 28 (2008) 257 ALR 292 at 319. 29 (1986) 162 CLR 170 at 191. 30 (2008) 257 ALR 292 at 320. 31 [1983] 1 WLR 399 at 402-404; [1983] 2 All ER 205 at 223-224. 32 (2008) 257 ALR 292 at 324. 33 See Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379-380; [1936] HCA 6; Johnson v Agnew [1980] AC 367 at Crennan Bell Unlike a simple contract containing an exchange of promises, which are classified as conditions or warranties, a bond is an instrument under seal, usually a deed poll, whereby the obligor is bound to the obligee. The ordinary form of bond in use in modern times is not merely for a certain money payment, but is accompanied by a condition in the nature of a defeasance, the performance or occurrence of which discharges the bond. One meaning of "condition" is an important, vital, or material promise, the breach of which will repudiate a contract; the term "breach of contract" is used in contrast to "breach of warranty". But as Professor Stoljar pointed out in his article "The Contractual Concept of Condition"34, while the obligation under a bond may be said to be conditioned upon the occurrence of a particular event, it is important to note that the term "condition" is not used here in the sense just described with respect to breaches of contract. The distinction is drawn as follows in Williston, A Treatise on the Law of Contracts35: "The common early form of contractual obligation was a bond upon condition, so that in the early books the word 'obligation' without more is used to designate such a bond. The purpose of the bond obviously was, and still is, to secure performance of the condition, but instead of attempting to secure this result by exacting a promise from the obligor to perform the condition, there is an acknowledgment of indebtedness – in effect a promise to pay a sum of money if the condition is not performed." In these reasons the term "stipulation" has been used when describing the penalty doctrine36. This reflects the origin of the penal obligation or condition, as known today, in the stipulations (stipulatio) in Roman law at a period where stipulations for the payment of money were alone valid. The practical method at that period of stipulating for the performance of a collateral act was to make the payment of a money sum conditional on the non-performance of the desired act; 34 (1953) 69 Law Quarterly Review 485 at 486-487. 35 Fourth ed (2000), §42:15; see also Halsbury, The Laws of England, 1st ed (1908), vol 3 at 80. Crennan Bell that sum might be recovered in full even if it exceeded the value of the stipulated act or forbearance37. Williston wrote that it came to be recognised in Roman law that the amount stated in a stipulation and named as a penalty might be reduced if found to be excessive38. But in the early common law the bond, regarded as a penal sum, secured strict performance of the principal obligation. In modern civil law systems the subject is not dealt with on uniform principles39. It is said, for example, that the Louisiana courts have confused the principles of the governing Civil Code and their French derivation40 with the common law concept of liquidated damages41. Section 343 of the German Civil Code, which came into force in 1900, provides that upon the motion of the obligor a "disproportionately high" penalty may be reduced, by a judgment, to an appropriate amount, after taking into account "every legitimate interest" of the obligee, not merely the The condition in a bond must not be unlawful, for example, in general or unreasonable restraint of trade43. However, the condition may be an occurrence or event which need not be some act or omission of the obligor, analogous to a contractual promise by the obligor. Moreover, the condition is not invalid merely because it provides for the performance of an act or the happening of an event which is improbable, albeit, at the outset44, not impossible. Thus, in 37 Loyd, "Penalties and Forfeitures", (1915) 29 Harvard Law Review 117. 38 Williston, A Treatise on the Law of Contracts, rev ed (1957), vol 3, §792. See also Loyd, "Penalties and Forfeitures", (1915) 29 Harvard Law Review 117 at 117-118. 39 Williston, A Treatise on the Law of Contracts, rev ed (1957), vol 3, §792. 40 Cox, "Penal Clauses and Liquidated Damages, a Comparative Survey", (1958) 33 Tulane Law Review 180 at 186-187. 41 Cox, "Penal Clauses and Liquidated Damages, a Comparative Survey", (1958) 33 Tulane Law Review 180 at 192. 42 Zimmermann, The Law of Obligations, (1996) at 107-108. 43 Mitchel v Reynolds (1711) P Wms 181 [24 ER 347]. 44 With respect to supervening impossibility, see Williston, A Treatise on the Law of Contracts, 4th ed (2000), §42:17. Crennan Bell Campbell v French45, Lord Kenyon, in delivering the opinion of the Court of King's Bench, said: "The general law respecting conditions is extremely well settled in a vast variety of books and cases; and, without detailing them, it is sufficient to say that they will be found in Rolle's Abridgment, and in Coke upon Littleton; and the uncontrolled result from them all is, that if the condition be an impossible condition, the bond becomes single, but if the condition be only improbable, as in the instance put, if the Pope of Rome should come here to-morrow, yet that condition is a good condition however improbable it may be." It also should be noted that from the time of Lord Nottingham, the "conditions" which attracted relief in equity extended beyond those described as such in bonds and simple contracts, and to provisions which were secured by a determinable estate in land and to conditions for the vesting of an estate46. While an action in debt for the sum of the bond was the remedy for enforcement of the bond at law, equity looked to what was involved in satisfaction of the condition for which the bond was security. However, as noted above47, unless the failure of the condition was compensible there was no "handle" for equity to intervene48. A further example of this requirement for equitable intervention is presented by the decision of the United States Supreme Court in Clark v Barnard49. A bond was given to the government by the holder of a statutory franchise for the completion of an item of public infrastructure by a given date; the prejudice to the body politic by failure to complete did not sound in damages. 45 (1795) 6 TR 200 at 211 [101 ER 510 at 516]. 46 Pitcarne v Bruce (1676) Lord Nottingham's Chancery Cases, Volume II, Selden Society vol 79 (1961), Case 587; Yale, "Introduction" at 20. 48 Lord Macclesfield, in Peachy v Duke of Somerset (1721) 1 Strange 447 at 453 [93 ER 626 at 630], said that "it is the recompence that gives this Court a handle to grant relief". 49 108 US 436 at 455-459 (1883). Crennan Bell Williston describes the position as follows50: the regarding literal enforcement of "The court of equity early assumed jurisdiction to limit the recovery in an action on a bond to the damages actually suffered by the obligee, the obligation as Although some eminent authorities expressed unconscientious. disapproval of the doctrine of equitable relief against penalties and forfeitures as 'a principle long acknowledged in this court but utterly without foundation,' others of equal note have urged that '[t]here is no more intrinsic sanctity in stipulations by contract than in other solemn acts of the parties which are constantly interfered with by courts of equity upon the broad grounds of public policy on the pure principles of natural justice.' A distinction was taken at an early day between bonds 'where the party might be put in as good a plight as where the condition itself was literally performed,' and cases 'where the condition was collateral and no recompense or value could be put on the breach of it.' In the former case, equity would give relief; in the latter case, it would not; and this distinction has developed into the modern distinction between penalties and liquidated damages." (footnotes omitted) If the condition of the bond was the conveyance or settlement of an estate or interest in land, or the non-performance of certain acts, for example, by way of competition with a former business partner, a court of equity might treat the condition as evidence of an agreement to convey51, or of a non-competition covenant52. In such cases, specific performance then might be decreed or an injunction granted to enforce the negative covenant; damages would be an inadequate remedy and so it would be no answer by the defendant to offer to pay the sum fixed by the bond. But, contrary to what the ANZ submitted, these cases 50 Fourth ed (2000), §42:15. 51 Parks v Wilson (1724) 10 Mod 515 at 518 [88 ER 832 at 833]; Prebble v Boghurst (1818) 1 Swans 309 at 318-319 [36 ER 402 at 407-408]; Evans, Appendix to Pothier, A Treatise on the Law of Obligations, or Contracts, (1806), vol 2, Appendix XII at 81-85. 52 Hardy v Martin (1783) 1 Cox 26 [29 ER 1046]; National Provincial Bank of England v Marshall (1888) 40 Ch D 112. Crennan Bell do not establish any general proposition as to the contractual character of the condition in a bond. Some analogy to the issues which presently arise is presented by those concerning the nature of a deposit which were considered in Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd53. The law respecting bonds, like that respecting deposits, was received from Roman law and developed before the rise of what might be called the modern law of contract. The courts of equity did not treat their jurisdiction to relieve against penalties and forfeitures as extending to forfeiture of a deposit, being an amount paid as an earnest of performance54. Those courts did, however, relieve against stipulations which were penal conditions in bonds. The courts of equity went on to extend their jurisdiction to deal with stipulations which were penal provisions in simple contracts. But it does not follow that that extension was a change to the nature of the jurisdiction. In particular, the requirement that equity intervene to ensure the recovery of no more than compensation, accommodated the "fundamental principle" of modern contract law to redress breach by adequate compensation 55. Enough has been said to show that (a) the first field for the operation of the equitable doctrine concerned the enforcement of bonds, (b) with respect to bonds, the expressions "obligation" and "condition" are not employed in the same or corresponding sense as appears in dealing with the breach of contractual promises, and (c) it does not follow, as the ANZ would have it, that in a simple contract the only stipulations which engage the penalty doctrine must be those which are contractual promises broken by the promisor. Limited scope of the penalty doctrine? Thus, while the ANZ maintains that the penalty doctrine has the limited scope, respecting breaches of contract, which in Interstar the Court of Appeal identified with ECGD, this limitation should not be accepted. 53 (2008) 236 CLR 342 at 349-352 [22]-[27]; [2008] HCA 22. 54 NLS Pty Ltd v Hughes (1966) 120 CLR 583 at 589; [1966] HCA 63. 55 Farnsworth, Contracts, 4th ed (2004), §12.18; cf Attorney General v Blake [2001] 1 AC 268 at 284-285. Crennan Bell What was in issue in ECGD was a defence to an action upon an indemnity given to a guarantor which was a government body to hold the guarantor harmless by reimbursement of moneys it paid to answer calls on the guarantee. The circumstance, as was the case in ECGD, that this might turn out to have been a commercially improvident arrangement for the indemnifier would not attract the intervention of equity when the indemnity was called upon by the guarantor. The liability of the indemnifier would mirror the loss incurred by the guarantor. It was in that particular situation that Lord Roskill said in ECGD56: "[P]erhaps the main purpose, of the law relating to penalty clauses is to prevent a plaintiff recovering a sum of money in respect of a breach of contract committed by a defendant which bears little or no relationship to the loss actually suffered by the plaintiff as a result of the breach by the defendant." In AMEV-UDC Gibbs CJ57 emphasised that this Court was not required to consider the proposition, said to be derived from ECGD, that no clause which provided for the payment of money on the happening of a specified event other than a breach of a contractual duty owed by the contemplated payor to the contemplated payee could ever be a penalty. Brereton J in Interstar58 rejected the submission that liability to pay, forfeit or suffer the retention of money or property which engages the penalty doctrine may never be triggered by the failure in occurrence of an event which is stipulated in a prior agreement between the parties but is not itself the subject of a contractual promise between them. Brereton J pointed to the regard paid by equity to substance rather than merely to form and referred to the grant of relief in the case of penal bonds for non-performance of a condition which was not the subject of any contractual promise59. These are significant considerations. They are not displaced by fixing solely upon a breach of contract by the party seeking relief from an alleged penalty. 56 [1983] 1 WLR 399 at 403; [1983] 2 All ER 205 at 224. 57 (1986) 162 CLR 170 at 174. 58 (2007) Aust Contract Reports ¶90-261 at 90,044. 59 (2007) Aust Contract Reports ¶90-261 at 90,044. Crennan Bell In Interstar the Court of Appeal misunderstood the scope of the penalty doctrine. The question whether in a given case the operation of a stipulation which is not a contractual promise may attract the penalty doctrine is not foreclosed by the rejection in the Court of Appeal of what had been said by Brereton J at first instance. The common law action of assumpsit There remains for consideration the further proposition in Interstar which, rather than acknowledging the concurrent administration in New South Wales (as elsewhere) of law and equity, appears to treat the penalty doctrine as having disappeared from equity by absorption into the common law action of assumpsit. This proposition should be rejected. It will be recalled that the common law courts developed assumpsit as a general remedy for breach of agreements not under seal, simple contracts, for which an action for breach of covenant would not lie. Moreover, assumpsit was extended to certain cases where there was no more than an implied undertaking to pay, thus giving the occasion for the unhappy expression "quasi-contract"60. With respect to money bonds, by the time of Lord Nottingham, who was Lord Chancellor 1673-1682, and thus well before the statutes dealing with the procedure in actions upon bonds61, the common law courts significantly revised their procedures with respect to trials of actions pleaded in assumpsit. They did so in the fashion described by Lord Nottingham in his handbook (first published only in 1965) "Prolegomena of Chancery and Equity" and repeated by Priestley JA in Austin62: "The settling of the chancery practice of relieving penalties brought a prompt response from the common law courts. Lord Nottingham 60 Anson wrote that where "for purposes of pleading" obligations acquired "the form of agreement", the term "quasi-contract" was used "for want of a better name": Anson, Principles of the English Law of Contract, 10th ed (1903) at 382. 61 8 & 9 Will III, c 11 (1696); 4 & 5 Anne, c 16 (1705). The relevant statutory texts are set out in Newland, "Equitable Relief Against Penalties", (2011) 85 Australian Law Journal 434 at 442. 62 [1984] 2 NSWLR 612 at 625-626. See also Simpson, "The Penal Bond with Conditional Defeasance", (1966) 82 Law Quarterly Review 392 at 419. Crennan Bell recorded it in his Prolegomena, in Ch V headed 'Equitas Sequitur Legem', as follows: In the midst of those cases which refer to this head, it may be worth the while a little to invert the rule, and to consider how far lex sequitur equitatem, that is, to observe how courts of law have changed their rules and, when they saw that equity would relieve, have chosen rather to relieve the parties themselves than send them hither. Thus in all suits on bonds it's now become the course of the Court, that, if the defendant will pay the principal and interest and charges, the plaintiff shall be obliged to accept it till plea pleaded, else the defendant shall have a perpetual imparlance[63], and all this to prevent a suit in Chancery, which otherwise would give the same relief' (at 203). The position thus reached was regulated at common law by statute in 1696 in regard to plaintiffs suing for penalties for non-performance of covenants or agreements64 and in 1705 in regard to money bonds65. Practice in England based on the Statutes of William and Anne had the effect of making the law concerning penalties as familiar to the common law courts as in chancery." The effect of the statute of 1705 upon the enforcement of a money bond was that the debtor was discharged on paying principal, interest and costs; with respect to other bonds and covenants with a penalty the statute of 1696 enabled damages to be assessed for such breaches as were proved, execution being stayed 63 An imparlance denoted the time given to the defendant to plead either of course or in the discretion of the court (Mellor v Walker (1671) 2 Wms Saund 1 at 1 note (2) [85 ER 524 at 530]), and a perpetual imparlance would have had the effect of a permanent stay. 64 8 & 9 Will III, c 11, s 8. 65 4 & 5 Anne, c 3, s 12. Crennan Bell on payment of the amount assessed and costs, but with the judgment remaining to answer any further breach66. Writing in 1769, Blackstone had identified as one of the advances made since the revolution of 1688, "the liberality of sentiment, which (though late) has now taken possession of our courts of common law, and induced them to adopt (where facts can be clearly ascertained) the same principles of redress as have prevailed in our courts of equity, from the time Lord Nottingham presided there"67. This adoption of equitable doctrine by the common law courts, in the period before the introduction of the Judicature system, was not limited to the principles concerning penalties. The trend was the subject of comment in 1845 by the standard text Law Studies written by Samuel Warren68. For example, Parke B spoke in Smith v Winter69 of the equitable doctrine with respect to the discharge of sureties having "crept into the law"; the result was that a parol agreement by the creditor to give time to the principal debtor might be pleaded to an action at law on a guarantee not given under seal70. The position established in the common law courts with respect to penalties was exemplified by the remarks of Lord Mansfield in Lowe v Peers71, Lord Ellenborough in Wilbeam v Ashton72, Tindal CJ in Kemble v Farren73, and 66 White and Tudor's Leading Cases in Equity, 9th ed (1928), vol 2 at 224. See also AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 202 per Deane J; Instruments Act 1958 (Vic), s 30. 67 Blackstone, Commentaries on the Laws of England, (1769), bk 4 at 435. 68 Second ed (1845) at 300-302. A recent observation of this "fusion by convergence" is made by Professor Polden in The Oxford History of the Laws of England, vol XI (2010) at 757. 69 (1838) 4 M & W 454 at 464 [150 ER 1507 at 1512]. 70 Rowlatt, The Law of Principal and Surety, 3rd ed (1936) at 252-254. However, as de Colyar noted (A Treatise on the Law of Guarantees, 3rd ed (1897) at 424-425), "of course the surety was still at liberty to resort to a court of equity for relief". 71 (1768) 4 Burr 2225 at 2228-2229 [98 ER 160 at 162]. 72 (1807) 1 Camp 78 [170 ER 883]. 73 (1829) 6 Bing 141 at 148 [130 ER 1234 at 1237]. Crennan Bell Parke B in Horner v Flintoff74, Galsworthy v Strutt75 and Atkyns v Kinnier76. In Kemble v Farren77, an action in assumpsit by the manager of the Covent Garden Theatre against an actor who had failed to meet an engagement at that theatre, "But that a very large sum should become immediately payable, in consequence of the nonpayment of a very small sum, and that the former should not be considered as a penalty, appears to be a contradiction in terms; the case being precisely that in which courts of equity have always relieved, and against which courts of law have, in modern times, endeavoured to relieve, by directing juries to assess the real damages sustained by the breach of the agreement." In Reynolds v Bridge78, a decision of the Court of Queen's Bench, Coleridge J referred to Astley v Weldon, Kemble v Farren and Atkyns v Kinnier and concluded that: "the principle seems to be, that, if you find a covenant the breach of which will occasion a damage, not uncertain, but such as is capable of being ascertained, as where there is a particular sum to be paid which is much less than the sum named as payable upon the breach, there it is held that the last named sum is specified by way of penalty, because a Court of equity would limit the amount to be actually paid". To the above English authorities it may be added that by the mid-19th century, common law courts in the United States "almost universally" adopted a practice whereby, although judgment for the full amount of the bond was entered, the courts then proceeded to "chancery the bond"; execution issued only for the just amount found to be due on a reference to a master, assessor, or jury79. 74 (1842) 9 M & W 678 at 680-681 [152 ER 287 at 287-288]. 75 (1848) 1 Ex 659 at 662-666 [154 ER 280 at 282-283]. 76 (1850) 4 Ex 776 at 783-784 [154 ER 1429 at 1432-1433]. 77 (1829) 6 Bing 141 at 148 [130 ER 1234 at 1237]. 78 (1856) 6 El & Bl 528 at 541 [119 ER 961 at 966]. 79 Merwin, The Principles of Equity and Equity Pleading, (1895) at 220. Crennan Bell It also should be noted that where in Chancery it appeared that the sum in question was a penalty, the court would direct an issue of quantum damnificatus However, the common law courts were constrained by the limitations of their remedies and procedures. Thus, they lacked the procedures to take complex accounts and the remedy of injunction to restrain, for example, attempts by the defendant to recover the amount of a bond by an action at law81. The Common Law Procedure Act 1854 (UK)82 was directed to enlarging the jurisdiction of the common law courts, having regard to the inconvenience of concurrent proceedings necessary in certain cases to establish a right in a common law court and to obtain a remedy in Chancery. However, the power of the common law courts to grant injunctions under that Act was limited to restraining the repetition or continuation of breaches of contract in respect of which the plaintiff was entitled to bring an action for damages83. Where the collateral stipulation relieved against was one not for the payment of money but for the transfer or use of property, there was no scope in an assumpsit action for what Nicholls LJ called "the scaling down exercise" by which a court of equity would tailor specific relief to ensure adequate compensation, but no more84. This had to await the arrival of the united court administration under the Judicature system. Further, as Lord Eldon pointed out in Seton v Slade85, where the condition of the bond was a temporal stipulation, it remained the position that in equity time was not of the essence. 80 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 187; Astley v Weldon (1801) 2 Bos & Pul 346 at 350-351 [126 ER 1318 at 1321] per Lord Eldon; Hardy v Martin (1783) 1 Cox 26 [29 ER 1046]; Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 1 at 1008-1010. 81 Edwards-Wood v Baldwin (1863) 4 Giff 613 [66 ER 851]. 82 17 & 18 Vict, c 125. 83 Sections 79 and 82. 84 Jobson v Johnson [1989] 1 WLR 1026 at 1042, 1045-1046; [1989] 1 All ER 621 85 (1802) 7 Ves Jun 265 at 273-274 [32 ER 108 at 111]. Crennan Bell The developments in the practice of the common law courts in assumpsit actions before the introduction of the Judicature system did not somehow Moreover, the applicants correctly submit that the ANZ can point to no reason in principle why the scope of the equitable doctrine should be restricted to those cases today where, hypothetically, an assumpsit action would have lain at common law in the 19th century. Indeed, considerations of principle point in the other direction. It is undoubtedly the case that in fields of private and public law the principles of equity continue to develop by principled advances of traditional doctrine87. Sir Anthony Mason has noted that while the common law comprised rules which traditionally existed as a body of customary law, equity "made no secret of its evolutionary development"88. Why, with respect to the penalty doctrine, that evolutionary process should be restricted by hypothetical assumpsit actions is not apparent. A further point is that, to the extent that the common law courts had so developed their procedures and the action in assumpsit by the second half of the 19th century as in some situations to speak with courts of equity with the same voice, there was at that time, and within the terms of the Judicature legislation, no "conflict or variance ... with reference to the same matter"; and so there was no occasion under the statute for the doctrine of equity to "prevail"89. It should be emphasised that, in any event, under the Judicature legislation it is equity not the law that is to prevail. In Interstar the Court of Appeal thus had no basis for the proposition that the penalty doctrine is a rule of law not of equity. 86 cf AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 201; Metro-Goldwyn-Mayer Pty Ltd v Greenham [1966] 2 NSWR 717 at 727. 87 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 241 [90]; [2001] HCA 63. 88 Mason, "The Impact of Equitable Doctrine on the Law of Contract", (1998) 27 Anglo-American Law Review 1 at 3. See also PGA v The Queen (2012) 86 ALJR 641 at 649-650 [20]-[21]; 287 ALR 599 at 605; [2012] HCA 21; Watt, Equity Stirring, (2009) at 231-232. 89 Judicature Act 1873 (UK), s 24(11). See Supreme Court Act 1986 (Vic), s 29. Crennan Bell AMEV-UDC in the High Court That counsel for the successful respondent in AMEV-UDC was well aware of the pre-Judicature developments in the common law courts is apparent from the citation90 of Lord Eldon's judgment in Astley v Weldon91, which was delivered when he was Chief Justice of the Court of Common Pleas. There is, with respect, no ground upon which to cavil with four of the five propositions distilled from the history of the penalty doctrine and stated in AMEV-UDC by Mason and Wilson JJ as follows92: "(1) equity would only relieve where compensation could be made for the actual damage suffered by the party seeking to recover the penalty; (2) the actual damage suffered by the party was assessed in an action at common law, such as an action of covenant, or upon a special issue quantum damnificatus which could be joined in an action on the case ... (3) the expression 'actual damage' seems to have been used in contradistinction to 'agreed sum' or 'liquidated' or 'stipulated' damages, not by way of opposition to damage which was recoverable at law; (4) there seems to have been no instance of equity awarding compensation over and above the amount awarded as common law damages, other than cases in which equity would not relieve against the penalty; and (5) relief was granted, in the case of penal bonds, where there was no express contractual promise to perform the condition (see Hardy v Martin[93]), though it seems such a promise could in many cases readily be implied." However, as noted earlier in these reasons under the heading "Bonds, contracts and the meanings of 'condition'", a reference such as that in proposition (5) to the implication into a bond of an "express contractual promise to perform the condition" tends to obscure the path taken by the common law courts in developing the action in assumpsit. 90 (1986) 162 CLR 170 at 172-173. 91 (1801) 2 Bos & Pul 346 [126 ER 1318]. 92 (1986) 162 CLR 170 at 190. 93 (1783) 1 Cox 26 [29 ER 1046]. Crennan Bell The upshot is that at first instance in Interstar94, Brereton J properly understood the significance of what had been said by Mason and Wilson JJ, when he concluded: "[T]heir Honours' judgment does not decide that relief against a penalty is available only when it is conditioned upon a breach of contract; to the contrary, it suggests that relief may be granted in cases of penalties for non-performance of a condition, although there is no express contractual promise to perform the condition – apparently on the basis that despite the absence of such an express promise, a penalty conditioned on failure of a condition is for these purposes in substance equivalent to a promise that the condition will be satisfied." A further statement by Mason and Wilson JJ in AMEV-UDC95, that it was the effect of the Judicature system which led: "to the conclusion that the equitable jurisdiction to relieve against penalties withered on the vine for the simple reason that, except perhaps in very unusual circumstances, it offered no prospect of relief which was not ordinarily available in proceedings to recover a stipulated sum or, alternatively, damages", overlooks the proposition that the only relevant effect of the Judicature system, as explained above, was upon the procedures in the unified court system not upon substantive doctrine. Thereafter, in whatever court the action was brought in respect of a penalty, a money remedy, declaratory and injunctive relief and the taking of an account were available in that one action. The Dunlop Case Extensive reference was made by the primary judge to the decision of the House of Lords in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd96. The conduct of that litigation illustrates the operation just mentioned of the Judicature system. Something more should be said on that matter. 94 (2007) Aust Contract Reports ¶90-261 at 90,037. 95 (1986) 162 CLR 170 at 191. Crennan Bell The appellant in Dunlop was a manufacturer of motor tyres and related products which it sold under the registered trade mark "Dunlop". It allowed trade purchasers discounts from the list prices, but in order to prevent under-selling insisted that the trade purchasers agree not to sell to private buyers at less than list prices or to trade buyers at less than list prices after deducting certain discounts. The trade purchasers also agreed, as agents for the appellant, to obtain from their trade customers similar undertakings to observe list prices of the appellant. It appeared to follow from the then recent decision of Kekewich J in Elliman, Sons & Co Ltd v Carrington & Son Ltd97 that resale price maintenance stipulations of this nature were not contracts in restraint of trade98. No challenge to that decision was made in Dunlop. A company curiously styled A. Pellant Limited had a contract with the appellant under which it received considerable quantities of the appellant's products. Before supplying these goods to the respondent as sub-purchaser, A. Pellant Limited, as required by its contract with the appellant, required the respondent to enter into a contract with it, as agent for the appellant99. The contract obliged the respondent on its part to observe the restrictions described above. This contract contained the clause: "We agree to pay to [the appellant] the sum of £5 for each and every tyre, cover or tube sold or offered in breach of this agreement, as and by way of liquidated damages and not as a penalty, but without prejudice to any other rights or remedies [A. Pellant Limited] or [the appellant] may have hereunder." The contract appears to have been in a standard form, and was headed "Price Maintenance Agreement to be entered into by trade purchasers of Dunlop Motor Tyres"100. 98 See Heydon, The Restraint of Trade Doctrine, 3rd ed (2008) at 248-249. 99 cf Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847. 100 See [1915] AC 79 at 80-81, where the full text is set out. Crennan Bell The appellant commenced an action in the King's Bench Division, seeking an equitable remedy, namely an injunction to restrain further breaches of this contract by the respondent, in particular, by making further sales of a tyre cover for £3.12.11 per item instead of the list price of £4.1.0. The appellant also sought damages. One of the defences pleaded was that the sum of £5 stipulated in the contract was a penalty. The primary judge (Phillimore J) granted the injunction and also directed an inquiry as to damages. The Court of Appeal (Vaughan Williams and Swinfen Eady LJJ; Kennedy LJ dissenting) held that the stipulation as to £5 was a penalty and, moreover, the appellant was entitled only to nominal damages in the sum of £2. On the other hand, at the earlier inquiry before the Master, evidence had been accepted that price cutting by a particular firm soon became generally known and the local agents of the appellant suffered a loss of business and resorted for supplies to other firms, thereby upsetting the selling organisation of the appellant. The Master had assessed the damages at £250. In the House of Lords, Lord Atkinson summarised the evidence directed to showing that even if the sum agreed appeared imprecise as a pre-estimate of damage, it protected the appellant's interest in preventing undercutting, which would disorganise its trading system101. Thus the critical issue, determined in favour of the appellant, was whether the sum agreed was commensurate with the interest protected by the bargain. The effect of the decision of the House of Lords was to restore the outcome at first instance and the award made by the Master upon the inquiry. The litigation in Dunlop, where in the one court, and in the same proceeding, legal and equitable remedies were sought by the plaintiff and the defendant raised the penalty doctrine in its defence, illustrates the place of the penalty doctrine in a court where there is a unified administration of law and equity but equitable doctrines retain their identity. Conclusion The upshot is that the restrictions upon the penalty doctrine urged by the Court of Appeal in Interstar should not be accepted. The primary judge erred in concluding, in effect, that in the absence of contractual breach or an obligation or 101 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 Crennan Bell responsibility on the customer to avoid the occurrence of an event upon which the relevant fees were charged, no question arose as to whether the fees were capable of characterisation as penalties. Indeed, a further issue appears to have been presented by her Honour's findings set out above102. This may be stated as being whether the requirement to pay the fees in question was not enjoyed by the ANZ as security for performance by the customer of its other obligations to the ANZ, or whether the fees were charged by the ANZ, as specified in pre-existing arrangements with the customer, and ANZ, respectively, for the further accommodation provided to the customer by its authorising payments upon instructions by the customer upon which the ANZ otherwise was not obliged to act, or upon refusal of that accommodation. The operative distinction would be that upon which the majority of the New South Wales Court of Appeal (Jacobs JA and Holmes JA) decided Metro-Goldwyn-Mayer Pty Ltd v Greenham103. Their Honours contrasted a stipulation attracting the penalty doctrine and one giving rise consensually to an additional obligation. This distinction had been identified long before, by Lord St Leonards in French v Macale104, as follows: "[I]t appears, that the question for the Court to ascertain is, whether the party is restricted by covenant from doing the particular act, although if he do it a payment is reserved; or whether according to the true construction of the contract, its meaning is, that the one party shall have a right to do the act, on payment of what is agreed upon as an equivalent. If a man let meadow land for two guineas an acre, and the contract is, that if the tenant choose to employ it in tillage, he may do so, paying an additional rent of two guineas an acre, no doubt this is a perfectly good and unobjectionable contract; the breaking up the land is not inconsistent with the contract, 103 [1966] 2 NSWR 717 at 723-724, 727. 104 (1842) 2 Drury and Warren 269 at 275-276. The case was decided when, as Sir Edward Sugden, Lord St Leonards was Lord Chancellor of Ireland. Crennan Bell which provides, that in case the act is done the landlord is to receive an increased rent."105 (emphasis added) The English and United States authorities in which the distinction thereafter was applied are collected and discussed in the treatise by Pomeroy106, under the heading "Stipulations not Penalties – Alternative Stipulations". In Metro-Goldwyn-Mayer, the contract for the hiring of films to exhibitors for public showing conferred the right to one screening only. The exhibitor was obliged to pay for each additional screening a sum equivalent to four times the original fee. The questions of construction of the contract were resolved by Jacobs JA and Holmes JA in such a fashion that the penalty doctrine had no "There is no right in the exhibitor to use the film otherwise than on an authorized occasion. If he does so then he must be taken to have exercised an option so to do under the agreement, if the agreement so provides. The agreement provides that he may exercise such an option in one event only, namely, that he pay a hiring fee of four times the usual hiring fee." But it should be emphasised that the determination, with respect to the relevant exception fees, of live issues of this nature is entirely a matter upon further trial, along with the grounds upon which the applicants submit the penalty doctrine does apply to those fees. Order The applicants should have leave to appeal upon grounds 1-4 of the amended draft notice of appeal, and, to that extent, the appeal should be allowed with costs. The answers to so much of paragraphs 1 and 2 of the orders of the primary judge against which the applicant appeals should be set aside. In place of those answers, the answer should be substituted that the circumstances that the honour, dishonour, non-payment and over limit fees were not charged by the 105 To the same effect were remarks of Lord Loughborough in Hardy v Martin (1783) 1 Cox 26 at 27 [29 ER 1046 at 1046-1047]. 106 Pomeroy, A Treatise on Equity Jurisprudence, 5th ed (1941), vol 2, §437. 107 [1966] 2 NSWR 717 at 723. Crennan Bell respondent upon breach of contract by its customers and that the customers had no responsibility or obligation to avoid the occurrence of events upon which these fees were charged, do not render the fees incapable of characterisation as penalties. That will leave for determination by the Full Court the grant of leave with respect to ground 6, by which the applicants challenge the finding of the absence of breach. Ground 5, which also remains, may add nothing to the other grounds. It will be for the applicants to decide whether to press those grounds. If those grounds remain in play and the Full Court has disposed of them and of any consequent appeal and remaining costs issues in that Court, it will be for the applicants to seek the hearing at trial of the live issues respecting penalties and of the statutory claims. The primary judge made a costs order and gave comprehensive reasons for doing so. So much of those orders as require the applicants to pay fifty percent of the costs of the ANZ of and incidental to the hearing of the separate questions should be set aside. The making of a substituted costs order should be for the primary judge upon the further conduct of the trial.

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS AND APPELLANT RESPONDENT Minister for Immigration and Multicultural Affairs v Wang [2003] HCA 11 12 March 2003 1. Appeal allowed. ORDER 2. Set aside the orders of the Full Court of the Federal Court made on 3 April 2001 and, in their place, order that the application to that Court pursuant to the liberty reserved by the order of 10 November 2000 be dismissed. On appeal from the Federal Court of Australia Representation: J Basten QC with N J Williams SC for the appellant (instructed by Australian Government Solicitor) J T Gleeson SC with M R Speakman for the respondent (instructed by Stuart & Mills) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Multicultural Affairs v Wang Immigration – Review – Refugee Review Tribunal – Orders made by Federal Court on application for review – Where Tribunal erred in law in making earlier decision – Power of Court to refer matter to Tribunal constituted by member who made earlier decision – Power of Court to give direction as to constitution of Tribunal – Proper considerations in exercise of such discretion – Whether direction in the interests of justice – Whether necessary to do justice to preserve Tribunal's findings of fact on first review. Immigration – Review – Refugee Review Tribunal – Nature of proceedings before – How Tribunal in second hearing should regard findings of fact made in first hearing. Words and phrases – "necessary to do justice". Migration Act 1958 (Cth), s 481(1)(b), s 481(1)(d). GLEESON CJ. The Full Court of the Federal Court, after allowing an appeal from a single judge of that Court, who had dismissed an application for review of a decision of the Refugee Review Tribunal ("the Tribunal"), set aside the decision of the Tribunal and then ordered that the matter be remitted to the Tribunal as previously constituted. The appellant challenges the order as to the constitution of the Tribunal on the grounds of lack of power or, alternatively, error in the exercise of discretion. The facts are set out in the reasons of Gummow and Hayne JJ. I will refer to them only to the extent necessary to explain my conclusion. The power of deciding the constitution of the Tribunal for the purpose of a particular review proceeding was vested in the Principal Member of the Tribunal by the Migration Act 1958 (Cth) ("the Act"), (ss 420, 420A, 421, 422, 422A). It was the Principal Member who had the primary responsibility of deciding what was in the interests of the efficient conduct of the review. In the ordinary case, it would be the Principal Member who would be in possession of the information necessary for a proper discharge of that responsibility. The Principal Member allocates work among Tribunal members, is aware of their commitments and availability, and makes administrative arrangements within the Tribunal. At the relevant time, s 481 of the Act empowered the Federal Court, on an application for a review of a decision of the Tribunal, to make various orders, including an order setting aside the decision in whole or in part, and referring the matter to which the decision related to the person who made the decision for further consideration, "subject to such directions as the Court thinks fit". The "person who made the decision" was the Tribunal. The power to give directions included, in a proper case, a power to direct that, on a further hearing, the Tribunal should be differently constituted from the original Tribunal whose decision was under review. So much was conceded by the appellant1. To that extent, at least, the powers of the Principal Member were subject to those of the Federal Court. Once it is accepted that it was within the power of the Federal Court, under s 481, in some circumstances to give a direction as to the constitution of the Tribunal on a further hearing, it is difficult to see a basis, as a matter of statutory construction, for limiting the power to any particular circumstances, or any particular kind of direction. Accordingly, I am prepared to accept that there was a power in the Federal Court to direct that a matter be remitted to the member who constituted the original Tribunal. However, the propriety of the exercise of such a power, as a matter of judicial discretion, and comity, is another matter. To take the most obvious considerations that might arise, the Federal Court would ordinarily be unaware of the availability of the member who conducted the original hearing, or of other facts or circumstances cf Smith v NSW Bar Association (1992) 176 CLR 256. that might bear upon matters relevant to the internal administration of the Tribunal. However, the principal reason for the exercise by the Full Court of the power in the present case was clear; and it had nothing to do with administrative convenience or efficiency. On 10 November 2000, the Full Court of the Federal Court2 (Wilcox, Gray and Merkel JJ) allowed an appeal from Lindgren J3, set aside the decision of the Tribunal (constituted by Ms Boland) on the ground of error of law, and ordered that the matter be remitted to the Tribunal. One of the powers of the Federal Court, under s 481(1)(c) of the Act, was to make an order declaring the rights of the parties in respect of any matter to which the Tribunal's decision related. The Tribunal's decision related to an application by Ji Dong Wang ("the respondent") for a protection visa. It was reviewing an unfavourable decision by a delegate of the Minister for Immigration and Multicultural Affairs. The basis of the application was a claim that the respondent, being outside the country of his nationality, the People's Republic of China, was unwilling to return to it because of a well-founded fear of being persecuted for reasons of religion. The Tribunal's reasons for decision set out in some detail its view of the facts. The findings of fact were not in all respects clear, but to a substantial extent they accepted the respondent's assertions in support of his claim for refugee status. The Full Court found that the Tribunal made an error of law. However it did not hold that a correction of the error of law necessarily entitled the respondent to a protection visa. Indeed, the Full Court expressed some reservations as to the correctness of the Tribunal's approach to some issues of fact. Gray J questioned the manner in which the Tribunal tested the respondent's claim to religious belief by reference to the adequacy of his knowledge of religious doctrine. Merkel J criticised the Tribunal for giving "only scant attention" to the available information as to the penalties in the respondent's country of nationality for practising his religion. His Honour also considered that the Tribunal's findings as to his intentions about religious observance if he returned to his country of nationality were unclear. In brief, although the Full Court observed that the Tribunal's findings of fact were generally favourable to the respondent, there were said to be some respects in which they were deficient. The Full Court ordered that the decision of the Tribunal be set aside, and the matter be remitted to the Tribunal to be determined in accordance with law. The consequence of that order was that the Tribunal, in dealing with the remitted matter, would be obliged to determine, in the light of the circumstances 2 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548. 3 Wang v Minister for Immigration and Multicultural Affairs [2000] FCA 511. existing at the date of such new determination, and of the information before the Tribunal at that time, all questions of fact and law relevant to the respondent's claim to refugee status. However, the members of the Full Court expressed concern about the possibility that the Tribunal, on the further hearing, might make findings less favourable to the respondent than had been made by Ms Boland. The existence of such a possibility resulted from the provisions of the Act, and from the terms of the order made by the Full Court. Two members of the Full Court, Wilcox and Merkel JJ, were content, at that stage, to leave the question of the constitution of the Tribunal on remittal unresolved, subject to liberty to apply. However, they made clear what they thought should happen, subject to unforeseen difficulties. Merkel J, with whom Wilcox J agreed, said: "Although the Court has power to direct that the matter be heard by a differently constituted RRT, that direction may not be appropriate in the present case as to do so might deprive the appellant of findings that were favourable to the outcome of his application. However, I would also desist from directing that the matter be referred back to the RRT constituted by the member who made the decision the subject of the review as there may be circumstances, including a view by the appellant that that was not appropriate, that ought to be considered before that course is ordered. In the circumstances it is appropriate to reserve liberty to apply on the issue of the constitution of the RRT that is to determine the outcome of the appellant's application for a protection visa." The references to "the appellant" are to the present respondent. Presumably, the reference to the possibility that he might have a "view" that it was "not appropriate" for Ms Boland further to hear his matter was intended to mean that he might wish to make submissions on that question. Gray J would have gone further. He thought that justice required, at that stage, an order referring the matter back to Ms Boland. He said: "If the RRT were to be reconstituted, there is a danger that the appellant might lose the benefit of the favourable findings of fact to which I have referred. There is a risk that a differently constituted RRT might take a different view as to the appellant's credit, or as to the weight of the evidence, and arrive at findings of fact that would be unfavourable to him. If that were to occur, the appellant would be deprived of the fruits of his successful appeal and the result would be unjust to him." The concerns of all three members of the Full Court were plain. They were not suggesting that considerations of cost or efficiency dictated that the further hearing be by Ms Boland. (We were told that the original hearing lasted one day.) They thought that the present respondent should not be subject to the risk that a freshly constituted Tribunal might take a view of the facts less favourable to him than the view that had been taken by Ms Boland. Whether that was a proper discretionary basis for the order that was ultimately made is a question that must be faced squarely. In the light of the clear statements of the members of the Full Court, it would be disingenuous to suggest that the order was made to save expense, or for other reasons related to administrative efficiency. At that stage, the views of Wilcox and Merkel JJ prevailed. Because they recognised that there may be reasons, unknown to them, why the matter could not go back to Ms Boland, the order included the following: In the event there is a dispute over the constitution of the Refugee Review Tribunal that is to determine the matter the parties have liberty to apply on that issue." The legal nature of the "dispute over the constitution of the … Tribunal" envisaged is unclear. Who would be the parties to the dispute? Would they include the Principal Member of the Tribunal? In ordinary adversarial litigation, the parties do not choose their judge. Where it is the function of a Chief Justice to assign members of a court to hear particular cases, the capacity to exercise that function, free from interference by, and scrutiny of, the other branches of government is an essential aspect of judicial independence. The limits on the power to enquire into the reasons for a decision to assign a judge to a case were examined by the Supreme Court of Canada in MacKeigan v Hickman4. If one party takes objection to a judge hearing a case, then that objection will be determined in accordance with ordinary procedures and, if unsuccessful, may ultimately constitute a ground of appeal5. However, it is one thing for a party to litigation to object to a judge hearing a case. It is a different matter for a party to claim a right to have, or an interest in having, a particular judge hear a case. The proceedings in the Tribunal were not adversarial litigation, and the Tribunal is not part of the judicial branch of government. Whether a decision of the Principal Member as to the constitution of the Tribunal to hear a particular matter might itself be the subject of judicial review is not a question that was argued in the present case; the Principal Member was not a party to the proceedings before the Full Court, and there was no suggestion that any decision of the Principal Member was under review. Rather, the Full Court, on 10 November 2000, contemplated that either party, pursuant to the liberty to apply, might restore the matter to its list, so that the Full Court, if necessary and appropriate, could make an order concerning the constitution of the Tribunal on the future hearing of the remitted matter. [1989] 2 SCR 796. See also Rajski v Wood (1989) 18 NSWLR 512 at 526 per Hope AJA. 5 See Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 348 [19]-[22]. When the matter was remitted to the Tribunal, the respondent applied to have the matter relisted before Ms Boland. He was told by the Deputy Registrar that, because Ms Boland was based in Melbourne, and because the matter was being handled by the Sydney Registry, a member based in Sydney would be assigned to the case. The respondent then exercised his liberty to apply. The matter came back before the Full Court, which, on 3 April 2001, ordered that the matter be remitted to the Tribunal as originally constituted6. It is that order that is the subject of the present appeal. The Full Court inferred that the decision that the matter be assigned to a Sydney-based member had been made by the Principal Member. Merkel J commented that the decision appeared to reflect a "Kafkaesque" preference for efficiency over justice. However, he went on immediately to point out that the Full Court was not reviewing any decision of the Principal Member. It might be added that the Principal Member, and the Tribunal, were not parties to the proceedings in the Full Court, and were not represented by counsel, and that the Full Court had no evidence before it as to the reasons for the assignment of a member of the Tribunal other than Ms Boland to hear the matter other than the statement that had been made by the Deputy Registrar. Wilcox J inferred that there was no difficulty about Ms Boland being available to hear the remitted matter, and said that, this being so, and for the additional reasons expressed in the original reasons of the members of the Full Court, the matter should be remitted with an order that it be heard by Ms Boland. Gray J concurred, for the reasons given in his earlier judgment. Merkel J said that, in their earlier reasons, all members of the Court expressed the view "that the appellant was entitled to have the matter remitted to the originally constituted RRT", although he and Wilcox J had reserved consideration of any reason that might later emerge as to why that was not an appropriate course. He concluded, after referring to the interests of justice: "It is to be recalled that the decision of the original RRT was set aside by reason of errors of law and not by reason of any challenge to any of the factual findings made by it. Further, for the reasons set out in the reasons for judgment of each of the members of the Court, it seemed desirable that the same member re-hear the matter on the remittal. No valid reason has been put forward on behalf of the Minister as to why that should not occur." It is clear that the reason for the order finally made by the Full Court was a view that the interests of justice required that the respondent should be protected 6 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR as far as possible from the contingency that, on the hearing of the remitted matter, the Tribunal might take a view of the facts less favourable to the respondent than had been taken by Ms Boland. The content of the interests of justice, in the events that occurred, is to be determined in the light of the provisions of the Act, pursuant to which the respondent made his application for a protection visa, and pursuant to which the delegate of the Minister, the Tribunal, and the Federal Court were acting. Under the statutory scheme, and in consequence of the other orders made by the Full Court, the Tribunal is now obliged to undertake a further review of the delegate's decision. The Tribunal's decision upon that review is to be made on the basis of the facts as they appear in the course of that review. To what extent the information before the Tribunal will differ from the information that was originally before Ms Boland is not known. The findings made by Ms Boland will have no legal status in that further review. Neither Ms Boland, if she undertakes the further review, nor any other member of the Tribunal, if the Tribunal is differently constituted, will be bound by them. The most that can be said is that, as a practical matter, if Ms Boland undertakes the review, then, unless there is a significant change in the information before the Tribunal, she is unlikely to alter the view of the facts she took previously, whereas a fresh decision-maker might see the matter differently even if the information remains substantially the same. If that be regarded properly as a risk, does justice require that the respondent be protected from it? It is tempting, but dangerous, to seek analogies in the field of adversarial litigation. An appeal court, pursuant to statutory power, may order a re-trial limited to particular issues. But where the issues on a re-trial are at large, it would come as a surprise to see a court of appeal order a re-trial before a particular judge for the reason that the judge is thought to be more, or less, likely than others to resolve the issues in a particular fashion. The Full Court, having set aside the Tribunal's decision, appears to have contemplated that the further hearing would in some way be limited, but it made no order to that effect; it attempted to achieve the same practical result by indirect means. Whether it could have achieved the intended result by making different orders, or giving different directions, is not a matter that arises for decision. Proceedings before the Tribunal are not adversarial. No issues are joined. There is an ultimate question to be answered, and a statutory consequence attaching to the answer to that question. The question is whether the Tribunal is, or is not, satisfied of the matters set out in s 65 of the Act which, in the case of the respondent, concern his claim that he has a well-founded fear of being persecuted for reasons of religion. That state of satisfaction must exist at the time of the decision following the hearing of the remitted matter, and must be formed on the basis of all the information before the Tribunal at that time. Justice requires that the respondent's claim be considered fairly, and on its substantial merits. It does not require that the hearing be conducted on the basis that any favourable findings of fact, made in the course of the decision that was set aside by the Full Court, be somehow preserved for his benefit. Nor does it require the selection, if possible, of a decision-maker who has already shown herself to be willing to accept parts of the respondent's case. Fairness to a person seeking a visa may require that, in a given case, he or she be protected against the possibility, or the appearance, of adverse pre-judgment. It does not require protection against the risk that open-minded judgment will result in a view of certain facts less favourable than that of an earlier decision-maker whose decision has been set aside completely. In making its order as to the constitution of the Tribunal for the purpose of securing for the respondent the benefit of such favourable views as had previously been formed by Ms Boland, the Full Court erred. The appeal should be allowed. I agree with the orders proposed by McHugh 21 McHUGH J. At the relevant time, s 481(1)(b) of the Migration Act 1958 (Cth) enacted that the Federal Court of Australia may make "an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit". After allowing an appeal against a decision by a single judge to affirm a decision of the Refugee Review Tribunal, the Full Court of the Federal Court, purporting to exercise the power conferred by s 481(1)(b), ordered that "[t]he matter be remitted to the ... Tribunal as previously constituted for the ... application for review". The order appears to have been made to achieve the object of preserving findings of fact that the Tribunal had made in favour of the respondent who was the appellant in the Full Court. The issue in this appeal is whether the Full Court had power to make the order and, if so, whether, having regard to the facts of the case, it erred in the exercise of its discretion in making the order. In my opinion, the Full Court had the power to make an order of the kind that it did, but it erred in making the order. It erred because s 481(1)(d) of the Act was the provision that authorised orders concerning the composition of the Tribunal, not s 481(1)(b) as the Full Court thought. It also erred because it did not properly address the issue posed by s 481(1)(d) – whether it was "necessary to do justice" that the matter should be heard by the person who presided at the original hearing. Instead the Full Court appears to have thought that the matter should go back to that person because she was more likely than not to make the same findings, favourable to the respondent, Mr Wang, as she had made at the original hearing. Statement of the case Mr Ji Dong Wang claims that he is a refugee because he has a well- founded fear that he would be persecuted for his religious beliefs if he returned to China. He claims that the fear of persecution had forced him to flee from China. The Tribunal rejected his claim for refugee status. It was not satisfied that the respondent was a non-citizen to whom Australia owed protection obligations under the Convention Relating to the Status of Refugees 1951 as amended by the 1967 Protocol Relating to the Status of Refugees. The Tribunal found that, although the religious practices and beliefs of the respondent would be subject to state controls, if he returned to China, those controls were "insufficient to deprive him of his right to religious freedom". Mr Wang applied to the Federal Court under s 476(1) of the Migration Act for a review of the Tribunal's decision. The primary judge held that the Tribunal had not erred in law in holding that Mr Wang was not a refugee. Mr Wang then appealed to the Full Court of the Federal Court. It unanimously held that the Tribunal had erred in law7. 7 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548. McHugh Merkel J held that the Tribunal had failed to determine whether the difficulties that the respondent had encountered with the Chinese authorities concerning worshipping in an unregistered church constituted persecution. His Honour said that the Tribunal had determined a different question – whether the laws regulating religious practice were persecutory. Although his Honour remitted the matter to the Tribunal for further hearing, he made no order directing the Tribunal as to how it should be constituted for the rehearing. His Honour expressed the view, however, that, if the matter were heard by a differently constituted Tribunal, it "might deprive the [respondent] of findings that were favourable to the outcome of his application"8. He said that "[i]n the circumstances it is appropriate to reserve liberty to apply on the issue of the constitution of the [Refugee Review Tribunal]"9. Wilcox J substantially agreed with the reasons of Merkel J. Wilcox J also agreed with the orders made by Merkel J. The third member of the Full Court, Gray J, also held that the Tribunal had erred in law. His Honour said that justice could only be done if the matter were referred to the Tribunal constituted by the member whose decision had been set aside. Gray J also said that he expected the Tribunal to "make an express finding that accord[ed] with its implicit finding and hold that, in consequence, the [respondent] is entitled to a protection visa"10. After the Full Court made its order, the respondent's solicitor wrote to the Tribunal asking for the matter to be heard by the member who had previously decided the application. This request does not appear to have been answered. Instead, the Tribunal informed Mr Wang that his case would be "handled by the Sydney Registry of the Tribunal". Mr Wang brought the matter back before the Full Court under the "liberty to apply" order. The Full Court then referred the matter to the Tribunal, as previously constituted. The reasons of the Full Court show that it thought that it was in the interests of justice that the matter should be remitted to the Tribunal, 8 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548 at 9 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548 at 10 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548 at McHugh as originally constituted, to preserve those findings, favourable to Mr Wang, that the Tribunal made at the first hearing11. The power of the Federal Court to direct that the Tribunal be constituted by a particular person Section 481(1) of the Act relevantly provided: "On an application for review of a judicially-reviewable decision, the Federal Court may, in its discretion, make all or any of the following orders: an order affirming, quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or such earlier date as the Court specifies; an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit; an order directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the Federal Court considers necessary to do justice between the parties." In the present case, it was the Tribunal, and not the member constituting it, who was "the person who made the decision" within the meaning of s 481(1)(b). That is because the power conferred by that paragraph is exercisable in reviewing a "judicially-reviewable decision". And s 475 of the Act defined such a decision as a decision of the Immigration Review Tribunal, the Refugee Review Tribunal or other decision made under the Act, or the regulations, relating to visas. No doubt decisions made under the Act or regulations include decisions by individuals. Such a decision would be a "judicially-reviewable decision" for the purpose of s 475. But it does not follow that the person who constituted the Tribunal is a decision-maker for the purpose of s 481(1)(b). The terms of s 475 indicate that there are three classes of decision-makers: the Immigration Review Tribunal, the Refugee Review Tribunal and individuals who are persona designata. 11 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR McHugh At common law, when a decision, made by a tribunal, attracts the operation of the prerogative writs, the writ is directed to the tribunal and not to the person constituting the tribunal, and that is so whether or not the tribunal is a legal entity12. The drafter of Pt 8 of the Act which contains ss 475 and 481 has self-evidently taken the same approach and regarded the Immigration Review Tribunal and the Refugee Review Tribunal as entities that can be made the subject of orders under s 481. Because that is so, it was the Tribunal that made the decision, not the individual who constituted it. In this case, therefore, the "judicially-reviewable decision" was made by the Tribunal. Thus, s 481(1)(b) only authorised the Federal Court to refer the matter back to the Tribunal. But the power to remit includes the power to give "such directions as the Court thinks fit". Does this include a direction that the Tribunal be constituted by a particular member? All members of the Full Federal Court thought that it did13. But in my opinion, they erred in thinking that the power to give directions under s 481(1)(b) extended to giving a direction as to how the Tribunal should be constituted. This Court has said more than once in recent years that powers conferred on superior courts should not be read down or confined14. But that is a general rule. In a particular statutory setting, it may be overridden by the terms of the legislation. The power to give directions under s 481(1)(b) is wide. It should be read literally and widely, so far as it is possible to do so. But wide as the power is, it is not possible to read it as conferring a power to give a direction that is inconsistent with an express provision of the Act. It is an elementary rule of statutory construction that powers conferred by general words are not intended to 12 Brown v Rezitis (1970) 127 CLR 157 at 169; Kerr v Commissioner of Police [1977] 2 NSWLR 721 at 723-725. 13 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR 14 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284, 290; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, 202-203, 205; Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; PMT Partners Pty Ltd (in Liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313; Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279 [17]. McHugh overrule or supersede powers conferred in specific terms15. This is particularly so, where the specific power is conferred subject to limitations or qualifications16. This Act contains a specific power concerning directions about the constitution of the Tribunal, and it is a power that contains qualifications or limitations in the sense that it must be exercised by a particular person and in writing. Section 421(2) of the Act authorises the Principal Member of the Tribunal to "give a written direction about who is to constitute the Tribunal for the purpose of a particular review". In accordance with the rule of construction to which I have referred, the power to give directions in s 481(1)(b) cannot be read as conferring power on the Federal Court to order the Tribunal to be constituted by a particular person. That power is to be exercised "as the Court thinks fit". It is a general power that is not directed to any specific end. Its general language cannot be construed as authorising a direction that would conflict with the specific power that s 421(2) confers on the Principal Member. That it is the Tribunal to whom the directions may be given reinforces this conclusion. The direction is given to the entity known as the Tribunal. In a particular case, the power to direct may extend to directing the Tribunal to treat certain facts as established. But even then, it may need to be qualified by an "unless" clause. And in determining whether the Tribunal can or should be given a direction, the Federal Court must take into account that the Tribunal is not a court; nor does it exercise judicial power. Care must be taken not to confuse the role of the Tribunal with that of a court which must necessarily find or rely on facts that are relevant to defined issues between the parties, issues that concern facts that have occurred in the past. The proceedings before the Tribunal are not adversarial in nature. There is no contradictor, and there are no issues between parties. Whatever findings the Tribunal makes, they are no more than the findings that the Tribunal considers are necessary to explain its decision17. Under s 430(1), the Tribunal is bound to prepare a written statement that sets out the reasons for its decision and its 15 Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1 at 29; Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 29 ALR 333 16 Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672. 17 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at McHugh findings on material questions of fact and the evidence or other material on which those findings are based. The statement of reasons reflects the decision that the Tribunal makes. It shows the findings of fact and the reasoning for the Tribunal's decision as at the date of that decision. Those facts may or may not be the facts that existed at the time of the Tribunal's earlier decision. But the Tribunal is not required to make any particular findings of fact although its failure to do so in a particular case may indicate jurisdictional error on the part of the Tribunal18. There may be cases where the Federal Court can find that no material change has occurred in the conditions in the country that give rise to the applicant's fear of persecution. In such a case, it may be open to the Federal Court to direct the Tribunal only to decide the point in respect of which the Court has found legal error. It may also be open to the Federal Court to direct the Tribunal to make a finding as a matter of law. But ordinarily a direction by the Federal Court that the Tribunal must act on facts found at a previous hearing imposes a duty that the Act itself does not impose upon the Tribunal when hearing the matter. Such a direction is also likely to conflict with the Tribunal's duty to decide the applicant's claim for protection at the time that the Tribunal makes its decision. In many cases, such a direction is likely to embarrass the Tribunal by hampering its ability to determine the case as at the date of its decision. It is unnecessary in this case to decide how far the Federal Court has power to direct the Tribunal to treat certain matters as established. It made no attempt to do so in this case. Perhaps it thought that it had no power to do so. In any event, directing the Tribunal as to how it treats facts is not the same as directing it as to how it is to be constituted when it rehears the matter. That is a matter of no concern of the Federal Court unless the matter comes within s 481(1)(d). When a question arises as to whether a particular person should or should not constitute the Tribunal, it is s 481(1)(d) and not s 481(1)(b) that is the potential source of the Federal Court's power to make an order concerning the constitution of the Tribunal. Section 481(1)(d) is a more specific power than s 481(1)(b). It authorises an order that is "necessary to do justice between the parties". The order must be directed to a party. The Tribunal is ordinarily, and in all cases ought to be, a party to the proceedings in the Federal Court. In a bias case, for example, s 481(1)(d) enables the Federal Court to direct the Tribunal that a particular person shall not constitute the Tribunal. To the extent that a direction under s 481(1)(d) would conflict with a direction under the specific power conferred by 18 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at McHugh s 421(2), the meanings of the two provisions must be adjusted "to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions"19. The purpose of s 421(2) is to give the power of assignment to the Principal Member. The express purpose of s 481(1)(d) is to enable the Federal Court to do justice between the parties. The power to ensure that justice is done must trump the power to assign who shall constitute the Tribunal on a particular occasion. Where the two provisions conflict, s 481(1)(d) is the leading provision to which s 421(2) as the subordinate provision must give way20. In the present case, the issue was not whether a particular person should not hear the case but whether a particular person should constitute the Tribunal for the rehearing. The words of s 481(1)(d) are wide enough to authorise the Federal Court to direct that a particular member should hear the matter being remitted – if it is "necessary to do justice between the parties". Where the need for a decision is urgent, and the original hearing was lengthy, for example, s 481(1)(d) may authorise the Federal Court to direct that the Tribunal be constituted by the person who presided at the original hearing. But in determining what is necessary to do justice, it must be kept in mind that in most cases it is for the Principal Member, not the Federal Court, to determine who shall hear the case. Moreover, the Federal Court must bear in mind that, if the Tribunal is reconstituted, the new member "may ... have regard to any record of the proceedings of the review made by the member who previously constituted the Tribunal"21. The cases where it is necessary in the interests of justice that a particular person should constitute the Tribunal are likely to be small in number compared with those where it is necessary in the interests of justice that a particular person should not hear the case. In the present case, the Full Court had power to make an order of the kind that it did. But it could only do so if it was "necessary to do justice between the parties". The exercise of the power Unfortunately, the Full Court's reasons do not address the issue whether justice made it necessary for the Tribunal to be constituted by the member who 19 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 20 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 21 Section 422A(3). McHugh decided the case at the original hearing. Instead, the Full Court became diverted by the question whether its power to give directions under s 481(1)(b) overrode the "general powers reserved to the Principal Member under ss 421 and 422A of the Act"22. It is true that, at one stage of its reasons, Merkel J (with whom Wilcox and Gray JJ agreed) said that if it "determines that it is appropriate in the exercise of its discretion to remit the matter to the RRT that heard the matter originally, because it is in the interests of justice to do so, then (putting aside issues of unavailability etc) there is no power in the Principal Member to exercise a discretion to determine that a different course is to be followed"23. But the Full Court made no decision that it was necessary to do justice to have the matter heard by the Tribunal member who made the earlier decision. The power conferred by s 481(1)(d) is not triggered because it is "desirable" or "in the interests of justice" to have the matter heard by the original decision- maker. It must be necessary to do justice to make the order. Many procedures are desirable or in the interests of justice. But not all of them are necessary for justice to be done. Although the Full Court appears to have made the order that it did to ensure that Mr Wang got the benefit of the previous factual findings, it did not direct the Tribunal, in rehearing the application, to apply or accept the findings that it had made in the original hearing. It seems to have assumed that, because the matter would go back to the same person, Mr Wang would receive the same favourable findings on certain issues. That may or may not have been a safe assumption. But whether it was or was not, the Tribunal was not bound to make the same findings as it did on the first occasion. To send the matter back to the Tribunal on the basis that it was desirable that the same Tribunal member should hear the matter because she could be expected to make findings favourable to Mr Wang is not an order that was "necessary to do justice". It did not even give Mr Wang the benefit of the previous findings assuming that it was open to the Federal Court to make an order under s 481(1)(b) that had that effect. With great respect to the members of the Full Court, the order that the Court made achieved nothing for Mr Wang but the chance that the Tribunal would again make findings in his favour. In all the circumstances, I have reluctantly concluded that the Federal Court erred when it exercised its power. It has not considered the matter according to law. Its order must be set aside. As I can see no basis upon which 22 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR 23 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR McHugh the Full Court could make the order that it did, it would be pointless remitting the matter to the Full Court to re-exercise its discretionary power. Order The appeal should be allowed. The orders of the Full Court of the Federal Court made on 3 April 2001 should be set aside. In lieu of the Full Court's orders, there should be substituted an order that the application to the Full Court under the liberty to apply order of 10 November 2000 be dismissed. In accordance with the Minister's Notice of Appeal in this Court, there should be no order as to costs in this Court or in the proceedings in the Full Court. GUMMOW AND HAYNE JJ. The respondent, a national of the People's Republic of China, came to Australia in 1997. He applied for a protection visa. In 1998, a delegate of the Minister refused to grant the respondent the visa he sought and the respondent applied to the Refugee Review Tribunal ("the Tribunal") for review of that decision. The Tribunal affirmed the decision not to grant a protection visa. Pursuant to the then applicable provisions of Pt 8 of the Migration Act 1958 (Cth) ("the Act"), in particular s 476, the respondent applied to the Federal Court of Australia for review by that Court of the Tribunal's decision. By his amended application the respondent sought orders that the Tribunal's decision be set aside and that "[t]he matter be referred back to the … Tribunal in order for the Tribunal to determine the matter in accordance with the law". The primary judge (Lindgren J) dismissed the application for review24. The respondent appealed to the Full Court of the Federal Court. That Court (Wilcox, Gray and Merkel JJ) allowed the appeal25. The issues which arise in this Court concern a consequential order which the Full Court made after it had published its reasons for decision in the appeal and made an order allowing the appeal26: an order that "[t]he matter be remitted to the … Tribunal as previously constituted for the … application for review" (emphasis added). Was there power to make that order? If there was, did the Court err in making it? These reasons will seek to demonstrate that, although the Court may well have had power to make the order, it erred in doing so in this case. It is necessary to say something more about the course of proceedings both in the Tribunal and in the courts below. The Tribunal The respondent claimed that he fled from his home town, and then from China, out of fear of persecution for reasons of his religious belief. The Tribunal said that it found "his knowledge of Christianity to be somewhat basic" and that he had "provided sufficient information on his beliefs and activities for it to be feasible that he has a rudimentary knowledge of the Christian faith" (emphasis added). It accepted that the respondent may have been detained as many as five 24 Wang v Minister for Immigration and Multicultural Affairs [2000] FCA 511. 25 Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548. 26 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR times between December 1995 and October 1996 on account of his attending unregistered religious meetings. The Tribunal concluded, however, that the respondent could practise as a Protestant Christian in China and that, although resumption in China of his religious practices and beliefs would be "subject to some state controls", that would be "insufficient to deprive him of his right to religious freedom". The Tribunal was, therefore, not satisfied that he was27 a non-citizen to whom Australia owed protection obligations under the Refugees Convention28 as amended by the Refugees Protocol29. The Federal Court at first instance and on appeal On the application to the Federal Court for review, the primary judge concluded30 that the Tribunal was to be understood as having made four findings: that the respondent could practise as a Protestant Christian in China in both official and unofficial churches; that the respondent did not hold any significant religious belief that would prevent him from doing so; that his level of understanding of his Protestant faith was not such that he would encounter religious difficulty in worshipping in an official church; and that were the respondent to resume worshipping in an unregistered church, difficulties that he might again encounter with the authorities would be due to the enforcement of a regime of government control over the organisation of religious institutions, not the inhibition of the respondent's religious beliefs and practices. Understanding the Tribunal's decision in this way, the primary judge rejected the submission that the Tribunal had addressed a wrong question, thereby erring in law. 27 Migration Act 1958 (Cth), s 36(2). 28 The Convention relating to the Status of Refugees done at Geneva on 28 July 1951. 29 The Protocol relating to the Status of Refugees done at New York on 31 January 30 [2000] FCA 511 at [34]. In the Full Court, Merkel J, with whom Wilcox J substantially agreed, concluded31 that, although the Tribunal had posed the right question (whether the treatment the respondent had faced, and could expect to face if he returned, was persecutory), it had not answered that question. Rather, so Merkel J concluded, the Tribunal had answered a separate question – whether the laws regulating religious practice were persecutory. Accordingly, Merkel J and Wilcox J held that the appeal should be allowed, the Tribunal's decision set aside, and consequential orders made. Their Honours did not then favour the making of any direction about the way in which the Tribunal should be constituted for the rehearing. Merkel J said that to direct rehearing by a differently constituted Tribunal "might deprive the [respondent] of findings that were favourable to the outcome of his application"32 but that he might wish to contend that reference back to the Tribunal constituted by the same member would be inappropriate33. That being so, with the concurrence of Wilcox J, consequential orders were made remitting the matter to the Tribunal to be determined in accordance with law and reserving liberty to the parties to apply "[i]n the event there is a dispute over the constitution of the … Tribunal that is to determine the matter". The third member of the Court, Gray J, took a different path to the conclusion that the appeal should be allowed, and would then have made a different consequential order. His Honour considered that the Tribunal had implicitly found that there was a real chance that the respondent would be subjected to persecution if he were returned to China and carried out his intention of practising his religion in the way in which he wished to practise it34. In his Honour's view35, justice to the respondent could be done only by setting aside the Tribunal's decision and making an order referring the matter to the Tribunal, constituted by the member whose decision was set aside, for further consideration according to law. Gray J went on to say36 that he would expect the Tribunal to "make an express finding that accord[ed] with its implicit finding and hold that, in consequence, the [respondent] is entitled to a protection visa". 31 (2000) 105 FCR 548 at 549 [1] per Wilcox J, 568 [96] per Merkel J. 32 (2000) 105 FCR 548 at 571 [112]. 33 (2000) 105 FCR 548 at 572 [112]. 34 (2000) 105 FCR 548 at 553 [24]. 35 (2000) 105 FCR 548 at 554 [27]. 36 (2000) 105 FCR 548 at 554 [27]. Reference back to the Tribunal and exercise of liberty to apply The order for reference back having been made, the respondent's solicitor wrote to the Tribunal asking for the matter to be heard by the member whose decision had been set aside. So far as the evidence reveals, there was no reply to this request. Rather, the Deputy Registrar of the Tribunal wrote to the respondent a letter, which it might be thought was in common form, saying that, because the respondent's address was in New South Wales, "your case is now being handled by the Sydney Registry of the Tribunal" and that the case had been "constituted" to a member other than the member who made the decision that had been set aside. Pursuant to the liberty to apply which the Full Court had reserved, the respondent in this Court (the appellant in that proceeding) brought the question of the constitution of the Tribunal before the Full Court for further hearing. The reservation of liberty to parties to apply to the court making orders is a provision "directed essentially to questions of machinery which may arise from the implementation of [those] orders"37. In that connection it is as well to notice that the condition for the exercise of that liberty to apply was expressed by the Full Court's order in terms that are at best awkward and, on one view of that order, would be inappropriate. To speak of a "dispute over the constitution of the ... Tribunal" suggests either that there could be a dispute between the Tribunal (not a party in the Federal Court proceedings) and one of the parties to that litigation, or that there could be some agreement (or, therefore, a dispute) between the parties to the litigation about the composition of the Tribunal. Subject to whatever may be the powers of the Federal Court to direct a particular composition of the Tribunal, it was the responsibility of the Principal Member of the Tribunal to allocate the work of the Tribunal among its members38 and to give a written direction about who was to constitute the Tribunal for the purpose of a particular review39. It was not a matter for agreement between the parties to the litigation in the Federal Court and there was no proceeding in that Court seeking to challenge a decision by the Principal Member to constitute the Tribunal in any particular way. All this being so, no reference should have been made in the order to a "dispute over the constitution of the … Tribunal". Rather, as subsequent proceedings revealed, the intention of the order was to reserve liberty to apply if 37 Abigroup Ltd v Abignano (1992) 39 FCR 74 at 88. 38 s 460(2)(b). the parties to the litigation could not agree upon what consequential orders the Full Court should make. Only in that sense could there be any dispute over the constitution of the Tribunal with which the Federal Court could deal. Power to direct the constitution of the Tribunal Section 481(1) of the Act, as it stood at the relevant time, provided that the Federal Court might, in its discretion, make all or any of a number of orders. One (specified by par (b) of s 481(1)) was "an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit". That power was given to the Federal Court in relation to an application for review of a "judicially-reviewable decision", an expression defined in s 475 of the Act as decisions of the Immigration Review Tribunal, the Refugee Review Tribunal and40 other decisions made under the Act, or regulations made under the Act, relating to visas. This last category of judicially-reviewable decisions included decisions made by individual decision-makers (for example, the Minister or a delegate of the Minister). to each of Even without reference to s 22(1)(a) of the Acts Interpretation Act 1901 (Cth), and its provision that a number of expressions, including "person", "include a body politic or corporate as well as an individual", the definition of "judicially-reviewable decision", read with the powers given to the Federal Court by s 481, requires that the word "person" in s 481(1)(b) is read distributively to apply the definition of judicially-reviewable decision – the two identified Tribunals and persons making other decisions of the kinds identified in that definition. In this case, the relevant decision-maker was the Tribunal, not the individual who constituted it for the particular review. It was a decision of the Tribunal which was the relevant form of "judicially-reviewable decision". It follows that the Court's power to refer the matter for further consideration was a power to refer it to the Tribunal. the decision-makers identified That does not conclude the question of power. Account must be taken of, and meaning given to, the further provision of s 481(1)(b) that an order referring the matter for further consideration, in this case by the Tribunal, may be made "subject to such directions as the Court thinks fit". The amplitude of that power should not be unnecessarily confined41. It is a power that includes directing that 40 s 475(1)(c). 41 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; PMT Partners Pty Ltd (in Liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313 per Brennan CJ, Gaudron and McHugh JJ; (Footnote continues on next page) the matter be heard by the Tribunal constituted differently from its constitution for a decision that was set aside. On its face there seems, therefore, no reason to think that it would not extend to confer power on the Court to direct the converse – that the Tribunal be constituted in a particular way rather than not be constituted in a particular way. It is, however, not necessary to reach a final conclusion about that question. For the reasons that follow, if the Court had the power to direct that the Tribunal be constituted by the member who constituted it in making the decision that was set aside, it should not have exercised it in this case. Should a direction have been made? On the second hearing of the matter by the Full Court, pursuant to the liberty to apply that was reserved, each of the members of the Full Court gave reasons42 for joining in an order that the matter be referred back to the Tribunal as previously constituted. Wilcox J said43 that the Court had not made such an order when the matter was first before the Court because "it was not known whether that member was available to deal with the matter within a reasonable time" and expressed general agreement with the reasons of other members of the Court. As we have noted earlier, Gray J had dealt with the matter in the reasons first published44 where he said, among other things, that45 were the Tribunal to be reconstituted "there is a danger that the [respondent] might lose the benefit of the favourable findings of fact" to which his Honour had referred in his reasons and that46 there was "a risk that a differently constituted [Tribunal] might take a different view as to the [respondent's] credit, or as to the weight of the evidence, and arrive at findings of fact that would be unfavourable to him". Merkel J proceeded from the premise that in the earlier reasons all members of the Court had "clearly expressed [the view] that the [respondent] was Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279 [17] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ. 42 (2001) 108 FCR 167. 43 (2001) 108 FCR 167 at 168 [2]. 44 (2000) 105 FCR 548 at 553-554 [25]-[27]. 45 (2000) 105 FCR 548 at 553 [25]. 46 (2000) 105 FCR 548 at 553 [25]. entitled to have the matter remitted to the originally constituted [Tribunal]"47 (emphasis added). For our own part, we do not read the reasons first published as expressing that view. Putting that aside, neither in those reasons, nor in the reasons published when the second order was made, is any basis for such an entitlement spelled out. None was proffered in argument in this Court. Rather, in his second set of reasons, Merkel J appears to have put the matter rather differently, basing the order not on any entitlement to it but upon the dictates of the interests of justice48, and thus discretionary considerations. Be that as it may, all three members of the Court appear to have based the decision to direct that the Tribunal be constituted by the member whose decision had been set aside on the conclusion that it was desirable, perhaps even necessary, to preserve some findings that had been made at the first, failed, review by the Tribunal. Not only was the conclusion wrong, the Court's order did not give effect to it. The Court's direction that the Tribunal be constituted in a particular way said nothing about how the Tribunal, so constituted, should regard findings made in the course of the first review. The Court's orders, taken as a whole, provided for the Tribunal to begin again its statutory task of reviewing the decision to refuse the respondent a protection visa. The direction therefore cannot be justified by reference to the requirements of s 420, that the Tribunal pursue the objective of providing a mechanism of review that is, among other things, economical, informal and quick. Whether any findings from the first review would be preserved would entirely depend upon the view formed by the Tribunal in conducting the second review. On that second review the respondent, as applicant for a visa, could be expected to appear to give evidence and present arguments49, and, so far as the Court's orders were concerned, it was a review to be conducted in the ordinary way. At best, then, any preservation of findings was speculative and depended upon an assumption that the member constituting the Tribunal would be unlikely to depart from views formed earlier despite considering any further evidence or argument. This may be reason enough to conclude that the Full Court's discretion miscarried. There are, however, more fundamental reasons why the conclusion that it was desirable to preserve findings made at the first review was wrong. To explain why that is so, it is necessary to examine both the task that 47 (2001) 108 FCR 167 at 170 [17]. 48 (2001) 108 FCR 167 at 171 [22]. the Tribunal had performed in preparing its first reasons for decision and the task that it was required to perform on the matter being remitted to it. For the purposes of conducting the review of the decision to refuse the respondent a protection visa, the Tribunal could exercise all the powers and discretions that were conferred by the Act on the person who made the decision50. It was empowered (among other things) to affirm the decision, vary it or set it aside and substitute a new decision51. When the Tribunal made its decision (in this case to affirm the decision not to grant a protection visa) it was bound to prepare a written statement that, among other things, set out the reasons for its decision, set out the findings on any material questions of fact, and referred to the evidence or other material on which the findings of fact were based52. For present purposes, then, it may be assumed that the written statement prepared by the Tribunal in this matter complied with those requirements and it may, therefore, be assumed that it would be possible to identify the findings which the Tribunal made on any material question of fact. As it happens, that assumption may not be right, and identification of the findings made by the Tribunal in this case may not be free from controversy. To give only one example, mentioned earlier, the Tribunal spoke of it as "feasible" that the respondent had a rudimentary knowledge of the Christian faith and that he spent some time as a member of an unregistered congregation. Exactly what that finding amounts to is not perspicuously clear. However, whether or not the identification of the Tribunal's findings would be controversial, there is a more deep-seated problem that is presented by seeking to identify findings made by the Tribunal and have the Tribunal then rely on them in a later review. In adversarial litigation, findings of fact that are made will reflect the joinder of issue between the parties. The issues of fact and law joined between the parties will be defined by interlocutory processes or by the course of the hearing. They are, therefore, issues which the parties have identified. A review by the Tribunal is a very different kind of process53. It is not adversarial; there are no opposing parties; there are no issues joined. The person who has sought the review seeks a particular administrative decision – in this case the grant of a 53 Mahon v Air New Zealand Ltd [1984] AC 808 at 814; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 282. protection visa – and puts to the Tribunal whatever material or submission that person considers will assist that claim. The findings of fact that the Tribunal makes are those that it, rather than the claimant, let alone adversarial parties, considers to be necessary for it to make its decision. Those findings, therefore, cannot be treated as a determination of some question identified in any way that is distinct from the particular process of reasoning which the Tribunal adopts in reaching its decision. The Tribunal's written statement of its reasons and, in particular, its statement of the findings on any material questions of fact, must be understood in this way. Indeed, so much follows from Minister for Immigration and Multicultural Affairs v Yusuf54, where six members of the Court held that the Act's requirement for the Tribunal to set out findings of fact was a requirement that focussed upon the subjective thought processes of the Tribunal, not some objectively determined set of "material" facts. That is, it was held that the Act required the Tribunal to set out the findings it did make rather than findings it ought to have made. Necessarily, the findings that are recorded in the Tribunal's written statement of its decision and reasons will reflect the matters that the applicant for review will have sought to agitate. No less importantly, the findings that are recorded will reflect what the Tribunal considered to be material to the decision which it made on the review. And what was material to that decision will depend upon the view that the Tribunal formed about the relevant legal questions that the review presented. It follows, therefore, that to attempt to divorce the Tribunal's statement of its findings on what it considered to be a material question of fact, from the decision it made and, in particular, from its reasons, may be dangerous in cases like the present where it is accepted that the Tribunal made an error of law. There are several reasons why it may be a dangerous process. First, there is the notorious difficulty of disentangling findings of fact from conclusions about applicable legal principle. Secondly, assuming that those difficulties can be surmounted, the findings of fact which the Tribunal makes after hearing and assessing the body of material and submissions will necessarily reflect the Tribunal's conclusions about applicable legal principle and will be directed to the questions that those principles present. If, in that review, the Tribunal makes an error of law and a subsequent review is ordered, what is the Tribunal then to do if further findings are to be made about subjects with which the first Tribunal dealt? For it to take, as its starting point, findings that were made on that earlier review 54 (2001) 206 CLR 323 at 329 [1] per Gleeson CJ, 337-338 [33]-[34] per Gaudron J, 346 [68] per McHugh, Gummow and Hayne JJ, 392 [217] per Callinan J. under a misapprehension of applicable legal principles may, indeed often would, skew the second factual inquiry by the Tribunal. By contrast, if no more findings need be made on the second review, because only one conclusion was lawfully open to the Tribunal on the findings made at the first, the difficulties to which we have referred would be much reduced, if not eliminated. In the present case, however, only Gray J considered that what he identified as an implicit finding of fact by the Tribunal required a particular outcome on the matter returning to the Tribunal. The other members of the Full Court did not form that view. Even if a majority of the Court had formed that view, it may well have been unnecessary, even inappropriate, to direct reference back to the Tribunal as originally constituted. The considerations we have mentioned so far all relate to the task that the Tribunal was required to perform in its first review of the decision to refuse the respondent a protection visa. There is a further important consideration which bears upon the correctness of the direction which the Full Court gave about the constitution of the Tribunal. It relates to the task that the Tribunal will have to perform on a reference back. When the Tribunal reviews a decision to refuse a protection visa it must decide whether the applicant is, at the time of the Tribunal's decision, a person to whom Australia owes protection obligations55. So much follows from the fact that the Tribunal exercises afresh the powers of the original decision-maker. Seeking to "preserve" some findings of fact made at an earlier review assumes that no circumstance relevant to those facts has changed in the intervening time. It assumes, for example, that conditions in the country of origin have not changed and, in a case like the present, that the beliefs and intentions of the person who has sought protection have not changed in any material way. There was no evidence before the Full Court which would enable it to conclude that there had been no material change in circumstances. Indeed, given that the proceeding before the Federal Court was in the nature of judicial review, it would not be expected that the Court would have had such material before it. For these reasons, the conclusion that it was desirable to preserve some findings of fact made in the course of the first review was wrong. If the Full Court had power to give the direction it did about the constitution of the Tribunal, its discretion miscarried. There being no other basis advanced, whether in the courts below or in this Court, for making such a decision, it follows that 55 Minister for Immigration and Multicultural Affairs v Thiyagarajah (2000) 199 CLR 343 at 354-355 [28]. the appeal to this Court should be allowed. The orders of the Full Court of the Federal Court made on 3 April 2001 should be set aside and in their place there should be an order that the application to that Court pursuant to the liberty reserved by the order of 10 November 2000 be dismissed. By its Notice of Appeal the appellant sought no order as to the costs of the appeal in this Court, or the costs of the proceedings before the Full Court which led to the order of 3 April 2001 and there should, therefore, be no order for those costs. Kirby KIRBY J. In Park Oh Ho v Minister for Immigration and Ethnic Affairs56, this Court examined the template57 from which the provision in question in this appeal was copied58. In a unanimous opinion59, the Court made it clear that the purpose of the provision was "to allow flexibility in the framing of orders so that the issues properly raised in the review proceedings can be disposed of" in a way that "avoid[s] unnecessary re-litigation between the parties of those issues". Those words guide my approach to the problem presented by this appeal. The Minister for Immigration and Multicultural Affairs ("the Minister") appeals from a judgment of the Full Court of the Federal Court of Australia60. It upheld that Court's power under s 481 of the Migration Act 1958 (Cth) ("the Act") to order, or direct, that, following a successful challenge to a decision of the Refugee Review Tribunal ("the Tribunal"), the matter should be remitted for review to the Tribunal as previously constituted61. The Minister submits that the Federal Court had no power to so order. Alternatively, he contends that, if there was power, the order made represented an erroneous exercise of the discretion of the Federal Court. The facts Mr Ji Dong Wang ("the respondent") is a national of the People's Republic of China. He arrived in Australia in 1997. He promptly applied for a protection visa as a refugee62. He asserted that he was unwilling to return to his country of 56 (1989) 167 CLR 637 ("Park Oh Ho") at 644. See also Minister for Immigration and Multicultural Affairs v Thiyagarajah (2000) 199 CLR 343 ("Thiyagarajah") at 57 Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"), 58 Migration Act 1958 (Cth), s 481. The section has since been repealed. It continues to operate in respect of the decision of the Tribunal affecting the respondent: Migration Legislation Amendment (Judicial Review) Act 2001 (Cth), Sched 1. 59 Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. 60 Wang v Minister for Immigration and Multicultural Affairs (No 2) (2001) 108 FCR 167 ("Wang (No 2)"). See also Wang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 548 ("Wang (No 1)"). 61 Order of the Full Court, 3 April 2001. 62 The Act, s 36. In particular, s 36(2) provided: "A criterion for a protection visa is that the applicant for the visa is a non-citizen in Australia to whom Australia has (Footnote continues on next page) Kirby nationality because of a well-founded fear of being persecuted for reasons of his religion63. A delegate of the Minister refused to grant such a visa. The respondent then sought review of that decision by the Tribunal. For the purpose of the review, the Tribunal was constituted by Ms Kerry Boland. In conducting the review, in accordance with s 430 of the Act, the Tribunal was required to prepare a written statement setting out its decision, the reasons for the decision and the findings of any material questions of fact as well as providing references to the evidence or other material on which the findings were based. On 10 December 1999, Ms Boland's decision was handed down64. In accordance with the foregoing requirements, the written statement set out the respondent's claims and the evidence adduced before the Tribunal. It concluded with what were described as "findings and reasons". Some of the findings, either expressly or implicitly, accepted a number of assertions that had been made by the respondent during the hearing. He had been closely questioned about his knowledge concerning Christianity and his claimed adherence to the Protestant faith65. Ms Boland concluded that the respondent's knowledge of the Bible and of the basic doctrines of Christianity was "rudimentary". Nonetheless, she accepted that, in following his religious practices in China, the respondent had been subject to a "stiff penalty", including detention on five occasions between December 1995 and October 1996 "because the authorities wanted him to stop attending unregistered religious meetings". Arguably, Ms Boland implicitly found that there was a real chance that the respondent would be persecuted if he continued to practise his religion in China otherwise than at registered churches approved, and monitored, by the Chinese government. Having reviewed the evidence and expressed her opinions about the resulting inferences, Ms Boland posed what everyone agreed was the correct question for the Tribunal to answer. This was whether the treatment to which the respondent had been subject in China was persecutory and, if it was, whether he could expect to face similar persecution were he to return and continue practising his religion66. Instead of answering those questions, the respondent complained protection obligations under the Refugees Convention as amended by the Refugees Protocol." 63 Art 1A(2) of the Refugees Convention. 64 The Act, ss 430A, 430B. 65 Re Ji Dong Wang, decision of the Refugee Review Tribunal, 10 December 1999. 66 Wang (No 1) (2000) 105 FCR 548 at 568 [94]-[95]. Kirby that Ms Boland had "answered the separate question of whether the laws regulating religious practice [in China] were persecutory"67. From the decision of the Tribunal answering the latter question in the negative (and affirming the delegate's decision) the respondent applied to the Federal Court for an order of review. That application was heard by Lindgren J who dismissed it68. The respondent then appealed to the Full Court. That Court, in its first decision69, upheld the respondent's appeal. It set aside the orders of the primary judge and the decision of the Tribunal. It ordered that "the matter be remitted to the [Tribunal] to be determined in accordance with law". However, the Full Court further ordered that "[i]n the event there is a dispute over the constitution of the [Tribunal] that is to determine the matter the parties have liberty to apply on that issue". The Minister brought no application to this Court seeking to appeal from the further order (order 4). Soon after the judgment of the Full Court had been entered, the respondent's solicitor wrote to the Principal Member of the Tribunal ("the Principal Member") requesting that the respondent's application for review be listed before Ms Boland "in order for her to determine this matter in accordance with the decision of the Federal Court". However, in January 2001, a letter from the Deputy Registrar of the Sydney Registry of the Tribunal informed the respondent that: "The Tribunal is now ready to consider your case, which was remitted to the Tribunal by the Federal Court on 10th November 2000. Because your address is in NSW, your case is now being handled by the Sydney Registry of the Tribunal. Your case has been constituted to member Blount." The foregoing letter did not expressly indicate that the Principal Member had exercised any powers belonging to him under the Act to direct "who is to constitute the Tribunal for the purpose of a particular review"70. Furthermore, the letter did not state that the Principal Member had determined that any previous direction given by him, that Ms Boland should constitute the Tribunal for the purposes of the review, should be revoked or had made a direction that the Tribunal should be reconstituted71. However, the matter subsequently proceeded 67 Wang (No 1) (2000) 105 FCR 548 at 568 [96] (emphasis added). 68 Wang v Minister for Immigration and Multicultural Affairs [2000] FCA 511. 69 Wang (No 1) (2000) 105 FCR 548. 70 The Act, s 421(2). 71 The Act, ss 422 and 422A. Kirby before the Full Court on the assumption that the Principal Member had determined that the Tribunal should be reconstituted for a fresh hearing of the respondent's application for review of the delegate's decision72. A number of further letters to the Tribunal on the respondent's behalf requested that the matter be relisted before Ms Boland. Those letters were not answered. There was no suggestion that the Minister had urged a different view on the Tribunal. Subsequently, an application was made to the Full Court on 3 April 2001 pursuant to the liberty reserved by order 4 of the Full Court's orders. In the result, the Full Court added to its previous orders an order that "[t]he matter be remitted to the [Tribunal] as previously constituted for the [respondent's] application for review". It is from that supplementary order that, by special leave, the Minister has appealed to this Court. The two Full Court decisions The first Full Court decision: Because this appeal concerns the Full Court's power, and if there be power, the occasion of its exercise, it is unnecessary to examine much more of the Full Court's reasons about the substance of the respondent's challenge to the Tribunal's decision. In the second Full Court decision the judges, in response to arguments addressed to the points now in issue, stated their reasons for reserving their power and for their conclusion that it should be exercised in this case. In the first Full Court decision, each of the judges considered that an available (and in this instance the proper) course to be followed was for the application, when remitted to the Tribunal, to be determined by Ms Boland. Wilcox J agreed with Merkel J that "in the particular circumstances of this case" such a course was "not inappropriate" and indeed "desirable"73. Merkel J only desisted initially "from directing that the matter be referred back to the [Tribunal] constituted by the member who made the decision the subject of the review as there may be circumstances, including a view by the [respondent] that that was not appropriate, that ought to be considered before that course is ordered"74. Wilcox J was of the same view, saying that "there may be some reason, not known to us, why the previous member cannot, or should not, deal with the matter"75. 72 Wang (No 2) (2001) 108 FCR 167 at 171 [20]-[21]. 73 Wang (No 1) (2000) 105 FCR 548 at 551 [11]. 74 Wang (No 1) (2000) 105 FCR 548 at 571-572 [112]. 75 Wang (No 1) (2000) 105 FCR 548 at 551 [12]. Kirby In an earlier case, Gray J had expressed a view that an order pursuant to s 481(1)(b) remitting the matter for further consideration had to be directed to the Tribunal member who made the original decision76. Within the Federal Court that opinion has not prevailed. The contrary opinion, expressed by Merkel J in Nguyen v Minister for Immigration and Multicultural Affairs77, has been preferred. This was that s 481(1) of the Act was "intended to confer broad power on the [Federal] Court to make orders that are appropriate, in all the circumstances of the case, on an application for judicial review"78. In this case, in the first Full Court, Gray J accepted that s 481 empowered the Federal Court to make an order that a matter be remitted to the Tribunal, as distinct from the particular member who had made the original decision79. However, in his Honour's view in the particular case, "justice to the [respondent could] only be done" by "making an order referring the matter to which the decision relates to the [Tribunal] constituted by the member who made the decision set aside"80. In the first Full Court decision, the approach of Wilcox and Merkel JJ prevailed. Orders were made simply remitting the matter to the Tribunal. However, the judges sufficiently indicated that, given the limited ground that was held to warrant disturbance of Ms Boland's decision, the application to the Tribunal would be returned to her for further consideration. Had that happened, the Full Court and this Court would not have been troubled. It was the reconstitution of the Tribunal, notwithstanding these indications, that reawakened the involvement of the Full Court, pursuant to the liberty that it had reserved. The second Full Court decision: When the Full Court relisted the matter, it unanimously concluded that it should add to its orders what Wilcox J described as a "direction"81. It did so pursuant to the power reserved in the original orders. 76 Kathiresan v Minister for Immigration and Multicultural Affairs unreported, Federal Court of Australia, 4 March 1998 at 13-14, 19. This view was later adopted by Ryan J in Rajalingam v Minister for Immigration and Multicultural Affairs unreported, Federal Court of Australia, 14 September 1998 at 20. In his approach, Gray J accepted that directions could be given that, in a particular case, the Tribunal be constituted by a different member. 77 (1998) 88 FCR 206 ("Nguyen") at 215-217. See also Minister for Immigration and Multicultural Affairs v Yusuf (1999) 95 FCR 506 at 515-516 [40]. 78 (1998) 88 FCR 206 at 216. 79 Wang (No 1) (2000) 105 FCR 548 at 553 [23]. See also Wang (No 2) (2001) 108 FCR 167 at 168 [4]. 80 Wang (No 1) (2000) 105 FCR 548 at 554 [27]. 81 Wang (No 2) (2001) 108 FCR 167 at 168 [2]. Kirby Wilcox J was of the opinion that there was "no difficulty about the original member hearing the remitted matter"82. His Honour favoured the making of an order to that effect83. So did Gray J84. It was Merkel J who gave the principal reasons for the second Full Court decision. By reference to the language of s 481(1) of the Act, Merkel J had no doubt that there was power, under par (b) of the sub-section, to order that the matter "should be heard by the same, or a differently constituted, [Tribunal]"85. He rejected the contention that doing so represented an illegitimate review of a decision of the Principal Member to make directions for the constitution of the Tribunal86. He held that the Principal Member's powers were subject to the particular powers to make appropriate orders on review, reserved by the Act to the Federal Court. In considering whether such power should be exercised in the present case, Merkel J went on to ask "whether there is any reason why the Court should not order that the matter be heard by the originally constituted [Tribunal]"87. His Honour considered that, in the decision of the first Full Court, the reasons of each of the judges had "clearly expressed" the view that "the [respondent] was entitled to have the matter remitted" to Ms Boland. He said88: "It is to be recalled that the decision of the original [Tribunal] was set aside by reason of errors of law and not by reason of any challenge to any of the factual findings made by it. Further, for the reasons set out in the reasons for judgment of each of the members of the Court, it seemed desirable that the same member re-hear the matter on the remittal. No valid reason has been put forward on behalf of the Minister as to why that should not occur." A consideration informing Merkel J's reasons was the instruction in s 420(1) of the Act that the Tribunal is "to pursue the objective of providing a 82 Wang (No 2) (2001) 108 FCR 167 at 168 [3]. 83 Wang (No 2) (2001) 108 FCR 167 at 168 [1]. 84 Wang (No 2) (2001) 108 FCR 167 at 168-169 [5]-[6]. 85 Wang (No 2) (2001) 108 FCR 167 at 170 [16]. 86 Wang (No 2) (2001) 108 FCR 167 at 171 [21]. 87 Wang (No 2) (2001) 108 FCR 167 at 170 [17]. 88 Wang (No 2) (2001) 108 FCR 167 at 172 [23]. Kirby mechanism of review that is fair, just, economical, informal and quick". His Honour recalled that in the first decision all members of the Full Court had expressed views "to the general effect that it appeared to be fair and just that the [Tribunal] not be reconstituted"89. All that had been offered as an explanation for reconstituting the Tribunal was the fact that the respondent lived in New South Wales and Ms Boland was attached to the Melbourne Registry90. But that had always been so. Although the Federal Court was not, as such, reviewing the decision of the Tribunal or the Principal Member on the reassignment of the matter to another member, the fact that the location of the respondent and Ms Boland had not changed since the original hearing gave the reassignment what Merkel J described as "a Kafkaesque quality"91. Against such a background, his Honour was of the view that it was proper for the Federal Court to exercise the powers reserved in the first decision. Hence the supplementary order now before this Court. The applicable legislation The exercise by the Federal Court of its jurisdiction to receive an application for review of a judicially reviewable decision92, including a decision of the Tribunal93, enlivened the powers in s 481 of the Act to make appropriate orders. Section 481(1), which is relevant, is set out in the reasons of McHugh J94. Sub-section (3) of that section further provided: "(3) The Federal Court may, at any time, of its own motion or on the application of any party, revoke, vary, or suspend the operation of, any order made by it under this section." The Federal Court also enjoys general powers conferred on it when exercising its "appellate jurisdiction"95. The Full Court was exercising that jurisdiction in the appeal from the primary judge. However, the respondent did not rely on such general powers. He submitted that the source of the power of 89 Wang (No 2) (2001) 108 FCR 167 at 171 [20]. 90 Wang (No 2) (2001) 108 FCR 167 at 169 [11]. 91 Wang (No 2) (2001) 108 FCR 167 at 171 [20] (original emphasis). 92 The Act, s 476(1). 93 The Act, s 475(1)(b). 94 Reasons of McHugh J at [29]. 95 See Federal Court of Australia Act 1976 (Cth), s 28. Kirby the Full Court in the present case was s 481(1) of the Act. I will proceed on that basis. It is useful to notice the powers of the Principal Member under the Act. That office holder is empowered to give directions in writing, not inconsistent with the Act or the regulations, as to the operations of the Tribunal and the conduct of reviews96. He can "give a written direction about who is to constitute the Tribunal for the purpose of a particular review"97. He is obliged to direct another member to constitute the Tribunal "for the purpose of finishing the review" where the member who constituted the Tribunal for the purposes of the particular review "stops being a member" or "for any reason, is not available for the purpose of the review at the place where the review is being conducted"98. If the Principal Member thinks that reconstitution "is in the interests of achieving the efficient conduct of the review", in accordance with the objectives set out in s 420(1) of the Act, he may direct that "the member constituting the Tribunal for a particular review be removed" and that "another member constitute the Tribunal for the purposes of that review"99. However, such power of reconstitution is not available unless "the Tribunal's decision on the review has not been recorded in writing or given orally"100 and certain other conditions are fulfilled101. In the event of reconstitution of the Tribunal, it is provided that "the member constituting the Tribunal in accordance with the direction is to continue and finish the review and may, for that purpose, have regard to any record of the proceedings of the review made by the member who previously constituted the Tribunal"102. Power: the Minister's arguments The Minister submitted that the supplementary order made by the Full Court was beyond the power of the Federal Court. He advanced five principal arguments. 96 The Act, s 420A. 97 The Act, s 421(2). 98 The Act, s 422(1). 99 The Act, s 422A(1). 100 The Act, s 422A(2)(a). 101 See the Act, s 422A(2)(b) and (c). 102 The Act, s 422A(3). Kirby First, it was urged that s 481(1)(b) of the Act did not authorise the Full Court to make the supplementary order. According to the Minister, this was so for two reasons. The "person who made the decision" to whom the order may be directed was a reference to the Tribunal where, as here, the impugned decision was one of the Tribunal. Further, the additional reference to the giving of directions as the Court thinks fit did not empower the Court to direct that the Tribunal be constituted by the original member. the Federal Court. Secondly, the Minister argued that the order setting aside the decision pursuant to par (a) – which had been the principal relief given by the Full Court in its first decision – left nothing in the matter to be subject to a further order or direction of left for "further consideration". The matter was returned to the Tribunal, in effect, to start again. This being so, it was open to, in fact necessary for, the Principal Member to constitute the Tribunal for the remitted proceedings. He might, in some circumstances, do so by appointing the same member as had conducted the earlier review. But he was not obliged to do so. Often such an assignment would be inappropriate or impossible. There was nothing Thirdly, where, as here, the Federal Court inferred that the Principal Member had decided to reconstitute the Tribunal for the hearing of the proceedings remitted to it, that exercise of power drew its authority from powers conferred on the Principal Member by the Act. In the face of such powers, and the exercise of them by the Principal Member, the Minister argued that the Federal Court's general powers under s 481 of the Act did not extend to an interference or the making of orders to the contrary. Under the Act, the internal operations of the Tribunal belonged to the Tribunal itself, not to the Federal Court. The powers of the Federal Court were limited to the performance of the circumscribed functions of review conferred on it by the Parliament. Save for these, the prerogatives of the other branches of government were to be respected by that Court, relevantly the prerogatives to make decisions about the constitution of the Tribunal for the conduct of a second review within the Executive branch103. Fourthly, the very limits imposed on the jurisdiction and powers of the Federal Court, in its conduct of judicial review under the Act, were said to confirm the conclusion that the orders that the Federal Court might make in discharge of those powers were strictly limited. They were confined to the carrying into effect of the functions of judicial review104. Only to that extent could that Court interfere in the performance by the Tribunal of the functions that 103 cf Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 38 per Brennan J. 104 cf Thiyagarajah (2000) 199 CLR 343 at 357 [34]. Kirby the Parliament had assigned to it. The Federal Court did not have a roving power to do justice "in the particular case as it saw fit". The doing of "justice" envisaged by the conferral of powers on the Federal Court was not at large. It was limited to justice according to law, including as expressed in the Act105. Specifically, this left the determination of the facts exclusively to the Tribunal itself. It was no function of the Federal Court, by fashioning orders limiting the constitution of the Tribunal, to dictate or try to influence the fact-finding processes of the Tribunal. Fifthly, in so far as the Full Court had derived encouragement for the view of the power that it adopted from the statutory injunction that the mechanism of review was to be "fair, just, economical, informal and quick", the Minister pointed out that these were matters of administrative judgment addressed to the Tribunal, not to the Federal Court for the performance of its limited role. Power: the Full Court's order was valid Finding the preferable construction: As is common when a contested issue of statutory construction reaches this Court, our function is to identify the preferable construction and to state the considerations that lead us to that conclusion. Ordinarily, where an appellate court sets aside a decision of another court or tribunal and remits proceedings to that court or tribunal for redetermination, freed from any error identified on appeal or judicial review, the reconstitution of the court or tribunal concerned is left to it106. This is so because the court of appeal or review usually conserves its orders to the discharge of its own functions. Considerations of comity and mutual respect between institutions are involved. So is an acknowledgment of the range of considerations that may need to be taken into account in constituting, or reconstituting, the relevant court or tribunal having regard to the availability of personnel, considerations of the death or retirement of members, leave and workload requirements, circuit duties, economies of listing and the like. The respondent did not contest the relevance of these considerations. His primary contention was limited to the Minister's attack on the Full Court's power to order as it did in its second decision. He argued that there was power and that the discretionary considerations particular to his case were for the Federal Court and in any case sustained, or justified, the order made. So far as the power is concerned, the respondent's submission should be preferred. It is necessary to 105 Johns v Australian Securities Commission (1993) 178 CLR 408 at 433-434. 106 Steedman v Baulkham Hills Shire Council [No 2] (1993) 31 NSWLR 562 at 576- 577 with reference to Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal (1990) 26 FCR 39 at 42. Kirby clarify the source and scope of the power before considering the attack on the exercise of the power. Unless its perimeters are identified, the suggestion that they have been exceeded cannot be accurately decided. An order under s 481(1)(b): I have already made reference to the division of opinion in the Federal Court in relation to the nature of an order under s 481(1)(b) where the decision under review is one of a tribunal. The issue is whether the reference to the "person who made the decision" is a reference to the original individual decision-maker or to the tribunal as a body. In Nguyen107, Merkel J expressed his preference for a broader interpretation of the term "person" to include a tribunal. The language of the provision is clearly broad enough to make either course permissible. An order under s 481(1)(b) could be directed either to a tribunal or to the individual who originally constituted it. In the opening words of s 481(1), reference is made to "a judicially- reviewable decision". This expressly includes decisions of the Tribunal108. However, the "person who made the decision" includes, where the "decision" has been made by the Tribunal, the person who constituted the Tribunal for that purpose. True, the phrase is broad enough to include other individuals, who are not members of a tribunal and who make judicially reviewable decisions under the Act or the regulations109. Such a "person" would include a delegate of the Minister. But this simply explains why the drafter used a generic term, broad enough to include tribunals and individual decision-makers alike. Where a decision of a tribunal or board is set aside on judicial review, the usual course is indeed to refer the matter back to that body for a decision to be made free of error and according to law. In that context, the supervisory writs at common law were ordinarily directed to the body that made the decision, rather than to the individual member110. However, that has been described as the ordinary course to follow where there was no reason for the "tribunal [to be] constituted by a particular person or by particular persons"111. 107 (1998) 88 FCR 206 at 217. 108 The Act, s 475(1)(b). 109 The Act, s 475(1)(c). 110 Brown v Rezitis (1970) 127 CLR 157 at 169 per Barwick CJ; Kerr v Commissioner of Police and Crown Employees Appeal Board [1977] 2 NSWLR 721 ("Kerr") at 724 per Moffitt P. 111 Kerr [1977] 2 NSWLR 721 at 725 per Moffitt P. See also R v Commissioners of the Court of Requests in the City of London (1806) 7 East 292 at 295 [103 ER 112 at 114] per Lord Ellenborough CJ. Kirby This Court warned in Park Oh Ho112 that the equivalent provision in the ADJR Act should not be interpreted with "undue technicality". This is particularly so in light of its purposes. Such purposes represent an important reason for rejecting a narrow reading of the term "person" in par (b) of s 481(1) of the Act. The ordinary course of remitting the matter to the Tribunal following review is consistent with s 481(1)(b). However, within the statutory scheme par (b) may also have other work to do. Specifically, it would be consistent with its language that a decision be returned to the member who originally constituted the Tribunal. This would be particularly appropriate where, due to the nature of the identified error in the original decision, the matter is sent back for "further consideration" as part of the continuing review. A case such as the present, where the identified error occurred in performing the very last step of the decision-making process, is an instance where the latter course might be appropriate and preferable. Power to give a direction: Further, as Merkel J113 pointed out, the reference in s 481(1)(b) to "such directions as the Court thinks fit" includes, in particular circumstances, a power to direct that the Tribunal be constituted by the member who made the original decision114. There are a number of reasons for my conclusion that the Full Court's interpretation was correct. First, s 481(1) is designed to confer specified powers on the Federal Court. That Court is a superior court created under the Constitution. It has been repeatedly held that legislative conferral of such powers on a court is not to be narrowly construed115. This is so because the receptacle of the power can be trusted to exercise it only where such exercise is warranted. A superior court must normally be afforded a large field of discretionary power with which to respond to the myriad circumstances coming before it. It would be contrary to 112 (1989) 167 CLR 637 at 644. 113 Wang (No 2) (2001) 108 FCR 167 at 170 [16]. See also at 168 [1] per Wilcox J agreeing. 114 Gray J agreed with this analysis, while at the same time maintaining his view that an order under par (b) could be directed to the actual person who made the decision: Wang (No 2) (2001) 108 FCR 167 at 168-169 [5]. 115 Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, 202-203, 205; Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 420-421; CDJ v VAJ (1998) 197 CLR 172 at 201 [110]; Abebe v The Commonwealth (1999) 197 CLR 510 at 586-587 [221]; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 423-424 [110]; Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 479 [134]. Kirby legal authority and principle to read the scope of the power conferred by s 481(1)(b) narrowly. Secondly, the suggestion that the power in s 481(1)(b) can have no work to do after an order setting aside the whole of a decision previously made by the Tribunal cannot stand with the clear statement in the opening words of s 481(1). By those words, the Parliament has conferred on the Federal Court power to "make all or any of the [specified] orders". This phrase makes it plain that an order under par (b) may coexist with an order quashing or setting aside an earlier decision of the Tribunal. Thirdly, this reading of the power in s 481(1)(b) is also consistent with the observations of this Court in Park Oh Ho116 with which I began these reasons. Although that case was addressed to a different paragraph in the equivalent sub- section of the ADJR Act, the desirability of avoiding unnecessary re-examination of the issues for decision is an equally relevant consideration in fashioning an order under s 481(1)(b). The whole spirit of s 481(1) is one that embraces flexibility and the adjustment of the orders in a way that is appropriate to the circumstances of the particular case, specifically the correction of the identified error in the decision-making process. Such an approach is compatible with the closing words of par (d), by which the Federal Court is empowered to make an order of the specified kind that it "considers necessary to do justice between the parties". No doubt the powers conferred by s 481(1) must be exercised judicially and for the purpose of completing the judicial review for which they are afforded. But within those broad strictures, there is no reason to read down the powers as stated. Approached in this way, s 481(1)(b) envisages an order directed to the original decision-maker within the Tribunal that limits the interference of the Federal Court to the correction of some particular aspect of the original decision. It permits an order to be made that that decision should receive "further consideration" in the light of such correction and subject to a direction requiring reconsideration by the original decision-maker. It may be possible for the Court, on review, to achieve a similar result through fashioning an order under another paragraph of the sub-section, say par (d). In the present proceedings the Tribunal had not been joined as a party. Yet the avenue provided by par (b) was available and was utilised. Fourthly, an order of such a kind under s 481(1)(b) was not incompatible with the general powers of the Principal Member to constitute or reconstitute the Tribunal in accordance with the Act. The Principal Member retains his general powers. But where, in special circumstances, a decision of the Tribunal has been 116 (1989) 167 CLR 637 at 644. Kirby subject to review in the Federal Court and has been quashed or set aside by that Court (which, in its discretion, makes, additionally, an order under s 481(1)(b)) the specificity of the Federal Court's consequential powers overrides the generality of the Principal Member's powers. The successive provisions of the Act must be read so as to work together harmoniously117. The exercise by the Federal Court of its powers is not an interference with the exercise by the Principal Member of his. In the case where the Court's order includes a direction with respect to the constitution of the Tribunal, any exercise of the power by the Principal Member must conform to that order. Fifthly, it may be accepted that the Federal Court's functions are limited to those of judicial review and, under the Act, at the relevant time, were significantly circumscribed so as to narrow them even further118. However, these limitations are irrelevant to the present problem. The decision was reviewed. No application has been made to this Court to challenge the substance of that decision. Normally the determination of questions of fact is a matter exclusively for the Tribunal. But nothing in the Full Court's supplementary order purports to deny this. The question is not whether the Tribunal should, or should not, make The question is whether, in the particular relevant decisions of fact. circumstances, the Federal Court was empowered to direct that, for the purposes of finishing the review according to law, the Tribunal be constituted by the original decision-maker, in effect for further consideration of the facts in the light of the limited error of law which the Full Court found. This does not amount to an impermissible dictation to the Tribunal of how it will find facts. On the contrary, it accepts fully that it is for the Tribunal to make the relevant factual findings based on the evidence before it. Sixthly, it is true that the statutory prescription to pursue the objective of providing a mechanism of review that is "fair, just, economical, informal and quick" is addressed to the Tribunal itself. Ordinarily, it would be for it to decide how those objectives should be attained. Presumably, the Principal Member will have those objectives in mind in making directions for constitution or reconstitution of the Tribunal for a particular review. However, once these are stated as the statutory objectives for the review procedures of the Tribunal, I see no inconsistency in the Federal Court's adapting its orders, in the exercise of its own powers, in a way that is most compatible with the attainment of such objectives. 117 Ross v The Queen (1979) 141 CLR 432 at 440 per Gibbs J. 118 The Act, ss 475(2), 476(2), (3) and (4). Kirby In the present case, there might have been some additional cost following a return of the matter for reconsideration by Ms Boland, such as the provision of a videolink119. But every other element of the Parliament's instruction about the way the Tribunal was to operate was advanced by the Federal Court's supplementary order. At least, it was open to the Federal Court to so conclude. The Act is to be read as a whole. To suggest that, in its review of a decision of the Tribunal and consequent orders, the Federal Court is to ignore the parliamentary injunctions about the way the Tribunal is to operate, is to slip into the error of reading s 481 in isolation from its place in the legislative scheme. Seventhly, it was conceded by the Minister (correctly in my view) that it was competent for the Federal Court, in making an order under s 481(1)(b), upon returning a judicially reviewable decision to the Tribunal, to give directions to the effect that the application should be reheard before a differently constituted Tribunal. Such a direction is not uncommon in the exercise of appellate or judicial review jurisdiction where a conclusion is reached that a rehearing by the same decision-maker would be unlawful (where a decision is set aside for reasons of actual or apparent bias) or otherwise undesirable (in the interests of justice)120. In the exercise of its appellate and review jurisdiction under the Constitution, this Court does not hesitate to so provide121. Once it is conceded that it is open to the Federal Court, reviewing a decision of the Tribunal, to give a negative direction concerning the composition of the Tribunal on return of the matter to it, it is impossible as a matter of statutory language and legal principle to justify restricting the power to give directions of an affirmative character. The directions that may be given are stated to be such "as the Court thinks fit"122. There is no basis in the conferral of power to adopt such a disjointed construction. The power is not, of course, entirely at large. It remains an incident to the judicial review powers of the Court. Its exercise is both guided and circumscribed by the nature of the error identified in the decision of the Tribunal. 119 That was how the original Tribunal hearing was conducted. 120 Smith v NSW Bar Association (1992) 176 CLR 256 at 269; cf Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal (1990) 26 FCR 39 at 42-43; Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 80 FCR 78 at 122; Vaitaiki v Minister for Immigration and Ethnic Affairs (1998) 150 ALR 608 at 615. 121 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 266; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 300. 122 The Act, s 481(1)(b). Kirby Conclusion: there was power: It follows that the conferral by the Parliament on the Federal Court of a discretionary power under s 481(1)(b) sustained the supplementary order made by the Full Court in its second decision. The making of such an order had been expressly reserved by that Court's first decision. I do not doubt that the Full Court's preference was known to the Tribunal at the time a decision was made to reassign the matter to another member. However that may be, the power to make the supplementary order was reserved by the Federal Court. The power was exercised within a reasonable time and in a way that accorded procedural fairness to both parties. The purported reassignment, if there was such an action on the part of the Principal Member, was a nullity. It was inconsistent with a judicial order that formed part of the completion by the Federal Court of its determination of the appeal in the matter before it. Discretion: the Minister's arguments In the event that the arguments on the existence of power failed, the Minister submitted that the Full Court's exercise of the discretion envisaged by the power had miscarried. Before this Court his arguments to this effect were not developed orally. Presumably this was so because the Minister recognised how exceptional it would be to succeed in a challenge to a discretionary decision, made within a determined power. A number of arguments were mentioned in his written submissions. First, it was said that the exercise of any such power was limited to the attainment of the purpose for which the power existed. Relevantly, this could only be to complete the judicial review of a decision of the Tribunal123. Because the Tribunal, however constituted, would be obliged to reach its conclusion on the application on the basis of the materials before it at the time of its decision (and because such materials might in a given case necessitate reconsideration of an earlier conclusion) no issue estoppel could arise to prevent the Tribunal deciding facts relevant to the respondent's entitlements124. On this basis, the return of the matter to the same decision-maker, in the hope of preventing a reopening of, or preserving, earlier factual findings and inferences, would be futile. In so far as the Full Court has sought to achieve such an objective, it had exercised its discretion by reference to an irrelevant consideration. 123 Thiyagarajah (2000) 199 CLR 343 at 356-358 [34]-[36]; cf Johns v Australian Securities Commission (1993) 178 CLR 408 at 433-434; Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209 at 220. 124 cf Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293 at 306-307 [41]-[42]. Kirby Secondly, in its criticisms of the purported reassignment of the application to a new member of the Tribunal, the Full Court had taken into account what it considered to be unconvincing reasons contained in the Deputy Registrar's letter to the respondent. The Minister submitted that this too was an irrelevant consideration. There was no obligation for the Tribunal, or the Principal Member, to justify publicly the considerations that lay behind such decisions. They were internal to the Tribunal and immune from judicial examination125. The Tribunal was not a party to the proceedings in the Federal Court. It was therefore said that the Full Court had no business reviewing the reassignment decision in the course of disposing of the review proceedings. Thirdly, attention was drawn to the statement in the second Full Court's reasons to the effect that the question was "whether there is any reason why the Court should not order that the matter be heard by the originally constituted [Tribunal]"126. This appeared to reverse the onus from the normal rule of disposition that would ordinarily leave the constitution of a court or tribunal to its own proper processes. The Minister complained that the Full Court's approach evidenced an impermissible pursuit by the Full Court of a collateral purpose which was calculated to deprive the Tribunal of its statutory function of determining, on the material available and at the date of its decision, whether it was satisfied that the respondent had a Convention-based fear of persecution127. This Court was told that, since the Full Court's order in the present matter, similar orders had been made in Federal Court proceedings, intruding (as it was put) into the fact-finding functions of the Tribunal in a way that was incompatible with the statutory presumption that such functions would be performed with even-handedness by the Tribunal itself128. 125 The Act, s 435. See Herijanto v Refugee Review Tribunal (2000) 74 ALJR 698 at 700-701 [13], [16] per Gaudron J; 170 ALR 379 at 382, 383; Muin v Refugee Review Tribunal (2002) 76 ALJR 966; 190 ALR 601. 126 Wang (No 2) (2001) 108 FCR 167 at 170 [17] (emphasis added). 127 Minister for Immigration and Multicultural Affairs v Khawar (2002) 76 ALJR 667 at 681 [88]; 187 ALR 574 at 594. 128 Minister for Immigration and Multicultural Affairs v Applicant C (2001) 116 FCR 154 at 178-179 [92]-[95]; Aala v Minister for Immigration and Multicultural Affairs [2002] FCAFC 204 at [61]. See also Minister for Immigration and Multicultural Affairs v Villa (2001) 115 FCR 16 at 19-20 [15]-[17] per Kirby The exercise of discretion was unassailable The arguments about the exercise of the Federal Court's powers are unconvincing. Doubtless this explains why the main attack by the Minister was on the issue of power. This Court has now held129 (or assumed130) that such attack fails. If power is established, a challenge in this Court to its discretionary exercise would ordinarily be an unpromising endeavour and unlikely on its own to attract a grant of special leave. Where the Parliament has conferred discretionary powers in broad terms on a court to allow their flexible deployment in a great number of cases and in a variety of circumstances, a court such as this should hesitate long before intervening. Secondly, once it is accepted that the power to make an order existed, it is irrelevant to complain that its exercise involved an intrusion into the powers of the Principal Member. The very purpose of providing such a power was to allow the Tribunal, in appropriate circumstances, to pick up its consideration of the matter, at the point at which the earlier decision was reached. The decision- maker is then obliged to give "further consideration" to the earlier decision, freed from the error of law identified by the Federal Court. The inquisitorial character of the Tribunal is completely untouched. How it goes about its decision-making on remitter is a matter entirely for it in light of the evidence and material placed before it. It is precisely because the Tribunal is obliged to make findings of fact, and to state them in its reasons for decision, that such findings may afford the foundation for the "further consideration" by the decision-maker. Because of delays in litigation, it may be expected that in some cases the "further consideration" of the case would require the making of supplementary determinations of fact. One example in refugee cases may be determinations in relation to country information. The conditions in the country of the applicant's nationality may have altered significantly in the intervening period. Yet, in some cases, the "further consideration" contemplated by s 481(1)(b) of the Act may, as a practical matter, involve little more than a re-examination of the factual determinations, freed from the legal error identified by the supervisory court. Such an approach promotes the statutory objectives for the review procedures of the Tribunal. 129 Reasons of Gleeson CJ at [4], reasons of McHugh J at [22] and my own reasons at 130 Reasons of Gummow and Hayne JJ at [62]. Kirby This is not the occasion to explore the question of issue estoppel in administrative proceedings131. The respondent did not assert that he was entitled to such an estoppel. I do not read the Full Court's second decision as suggesting otherwise. The most that was assumed, correctly in my view, was that, upon return of the matter to "the person who made the decision", absent any new evidence, or material the "further consideration" could be economically and quickly concluded. Such a course was arguably warranted. The Full Court had decided that Ms Boland had asked herself the correct question but then had proceeded to answer another, different and irrelevant, one. The purport of the supplementary order and direction was to require "further consideration" which might be limited to Ms Boland's simply addressing, and answering, the correct question, as the Federal Court had found the law to require. that obliged different conclusions, Thirdly, the complaint that the discretion miscarried because the Federal Court, in effect, conducted a review of what it inferred to have been the Principal Member's decision to reconstitute the Tribunal is also unconvincing. The Full Court made it clear that it was not doing this132. In any case, it is far from clear that any such decision existed, although the Full Court proceeded on that assumption. Fourthly, it is incorrect to say that, by making an order under s 481(1)(b), the Full Court exceeded the proper boundaries of judicial review, pursued a collateral purpose and unfairly promoted the interest of one side in the fact- finding of the Tribunal. Once it is accepted that power existed to make a supplementary order under s 481(1)(b), it must also be accepted that such orders were contemplated by the Parliament. It is unsurprising that they should be. They fit comfortably into the identified statutory objectives that the Tribunal's processes of review should be "fair, just, economical, informal and quick"133. 131 cf Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 453-456, 460. See Hall, "Res Judicata and the Administrative Appeals Tribunal", (1994) 2 Australian Journal of Administrative Law 22 and McEvoy, "Res Judicata, Issue Estoppel and the Commonwealth Administrative Appeals Tribunal: A Square Peg into a Round Hole?", (1996) 4 Australian Journal of Administrative Law 37. 132 Wang (No 2) (2001) 108 FCR 167 at 171 [21]. 133 cf Comcare v Grimes (1994) 50 FCR 60 at 66-67; Re Quinn and Australian Postal Corporation (1992) 15 AAR 519 at 525-526. Kirby Fifthly, the suggestion that the Full Court reversed the onus is only superficially attractive. In stating the issue as he did134, Merkel J should be understood as continuing the consideration of the issues relevant to the proper exercise of the Court's discretion. For reasons that they severally stated, all of the judges had earlier expressed the opinion that, in order to do justice to the respondent, the matter should be referred back to Ms Boland, especially given the nature of the fact-finding process and the limited error identified in her decision. In that context, the reference to "[t]he remaining question" must be understood as an examination, no doubt proper, of the existence of considerations against making the direction. Merkel J went on to conclude that no such convincing considerations had been proffered135. The Parliament has stated that the proceedings before the Tribunal must be "fair" and "just". That would, in any case, normally be a presumption imputed to its operations. In furthering the objectives of fair and efficient review it may, in certain circumstances, be appropriate for the Federal Court to make an order or direction (affirmative or negative) in relation to the constitution of the Tribunal for the purposes of reconsidering the matter. Here, there had been a significant factual contest about whether the respondent was indeed a Protestant Christian, whether he had been incarcerated and whether he had effectively been limited to worship in government-regulated churches in which the congregants were allegedly subject to official propaganda. The respondent had been tested on his knowledge of Christian doctrine and about the books of the Old Testament. He appears to have been asked questions about his religion that many Australian Christians might not be able to answer. The findings of the Tribunal, constituted by Ms Boland, arguably amounted to acceptance of the respondent's assertions on these points. The error identified was purely an error of law – and a limited one. In fashioning its orders in the present appeal, the Full Court sought to provide the necessary flexibility to the Tribunal to perform its decision-making function as envisaged by the Act. This was one of the reasons why Wilcox and Merkel JJ refrained from making the direction in the Full Court's first decision. One of the objects of the Full Court's supplementary order was to save the respondent the ordeal of having to go through the same fact-finding process again before a differently constituted Tribunal if this were unnecessary. Members of this Court, faced with the same question, might not have made such an order. But once power is established, and it is remembered that the power is broadly stated so as to be used flexibly, it is legally erroneous to give effect to a different view on the use of that power. The Full Court's exercise of its 134 Wang (No 2) (2001) 108 FCR 167 at 170 [17]. 135 Wang (No 2) (2001) 108 FCR 167 at 171-172 [18]-[22]. Kirby discretion should be respected. No error of principle has been shown. The reasons for hesitation in the disturbance of discretionary decisions are too well known to require elaboration136. A mere "difference of opinion"137 as to the way to exercise the discretion is not a sufficient justification for disturbance. We should respect this Court's repeated authority on this point just as we constantly insist that other courts do so138. Conclusion and orders If, contrary to my view, any of the challenges by the Minister disclose an error in the exercise of the power and discretion conferred on the Federal Court, it would remain for this Court to exercise the discretion afresh or to return the matter to the Full Court for redetermination. If, on this footing, it was necessary and appropriate to exercise the discretion afresh, for the reasons that I have given I would come to the same conclusion as the Full Court did. Apart from everything else, the power provided was intended to contribute to the expedition of the process of decision-making and the reduction of the costs and other burdens on the respondent and on the Australian community that are only too well illustrated by these proceedings. In the end, this appeal represents an extraordinary challenge by the Executive Government to a procedural direction made by a superior court within its powers and discretion. This Court should not respond to that challenge by undermining the breadth of the power or the width of the discretion reposed in the Federal Court by law enacted by the Parliament. This Court should be the upholder of the independent decisions of the courts. Not least should it be so in an area of jurisdiction where the weak and the vulnerable come before the courts in conflict with the resourceful and determined. The appeal should be dismissed with costs. 136 House v The King (1936) 55 CLR 499 at 504-505; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 176-178; Norbis v Norbis (1986) 161 CLR 513 at 517-519. 137 Norbis v Norbis (1986) 161 CLR 513 at 518. 138 U v U (2002) 76 ALJR 1416 at 1431 [93]-[94]; 191 ALR 289 at 309.

HIGH COURT OF AUSTRALIA APPELLANT AND FOR THE STATE OF QUEENSLAND RESPONDENT Fardon v Attorney-General for the State of Queensland [2004] HCA 46 1 October 2004 B104/2003 and B105/2003 In matter B104 of 2003 ORDER Appeal from the decision of the Court of Appeal of the Supreme Court of Queensland dated 23 September 2003 dismissed. In matter B105 of 2003 1. Declare that section 13 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) is not beyond the legislative power of the State of Queensland. 2. Remit the cause to the Court of Appeal for hearing and determination of the remaining issues on the appeal to that Court. On appeal from Supreme Court of Queensland Representation: S R Southwood QC with P D Keyzer for the appellant (instructed by Prisoners' Legal Service) P A Keane QC, Solicitor-General of the State of Queensland, with R V Hanson QC and R W Campbell for the respondent (instructed by Crown Solicitor for the State of Queensland) Interveners: H C Burmester QC with N L Sharp the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) intervening on behalf of R J Meadows QC, Solicitor-General for the State of Western Australia, with K H Glancy intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor's Office of Western Australia) R J Meadows QC, Solicitor-General for the State of Western Australia, with S G E McLeish intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales, with J G Renwick intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia, with C D Bleby intervening on behalf of the Attorney-General for the State of South Australia (instructed by the Crown Solicitors Office of South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fardon v Attorney-General for the State of Queensland Constitutional law (Cth) – Judicial power of Commonwealth – Vesting of federal jurisdiction in State courts – Act empowering State court to order continuing detention of persons convicted of serious sexual offences after expiry of their sentence where there is an "unacceptable risk" of the prisoner committing a serious sexual offence in the future – Whether criterion for order of continuing detention devoid of content – Whether order for continuing detention to protect the community an exercise of judicial power – Whether powers conferred by Act on State court incompatible with State court being a suitable repository of judicial power of the Commonwealth – Whether powers conferred by Act on State court compromise the institutional integrity of State court. Constitutional law (Q) – Powers of State Parliament – Separation of powers – Act empowering State court to order continuing detention of persons convicted of serious sexual offences after expiry of their sentence where there is an "unacceptable risk" of the prisoner committing a serious sexual offence in the future – Whether a law – Whether incompatible with State court being suitable repository of federal judicial power – Whether public confidence in integrity or impartiality of judiciary compromised. Words and phrases – "unacceptable risk". Constitution, Ch III. Dangerous Prisoners (Sexual Offenders) Act 2003 (Q), s 8, Pt 2, Div 3. GLEESON CJ. The issue in this matter is whether the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act") is valid. The suggested ground of invalidity is that the Act, contrary to the requirements of Ch III of the Constitution, involves the Supreme Court of Queensland in the process of deciding whether prisoners who have been convicted of serious sexual offences should be the subject of continuing detention orders, on the ground that they are a serious danger to the community. The contrariety is said to lie in the attempt by the Queensland Parliament to confer on the Supreme Court a function which is incompatible with the Court's position, under the Constitution, as a potential repository of federal jurisdiction, the function being repugnant to the Court's institutional integrity. The repugnancy is claimed to be similar to that identified in Kable v Director of Public Prosecutions (NSW)1. That formulation of the issue reflects the constitutional context. An Act of the Queensland Parliament provides, in certain circumstances, and subject to certain procedures, for the continuing, preventive, detention of serious sexual offenders who have served their terms of imprisonment, and who are shown to constitute a serious danger to the community. No one would doubt the power of the Queensland Parliament to legislate for the detention of such persons if they were mentally ill2. The constitutional objection to the legislative scheme is not based, or at least is not directly based, upon a suggested infringement of the appellant's human rights. The objection is based upon the involvement of the Supreme Court of Queensland in the process. It is the effect of the legislation upon the institutional integrity of the Supreme Court, rather than its effect upon the personal liberty of the appellant, that is said to conflict with the requirements of the Constitution. There is a paradox in this. As Charles JA pointed out in R v Moffatt3 (a case in which there was an unsuccessful challenge, on similar grounds, to Victorian legislation providing for the imposition of indefinite sentences on dangerous persons convicted of certain serious offences), it might be thought surprising that there would be an objection to having detention decided upon by a court, whose proceedings are in public, and whose decisions are subject to appeal, rather than by executive decision. Furthermore, as Williams JA pointed out in this case, there is other Queensland legislation4 under which indefinite detention may be imposed at the time of sentencing violent sexual offenders who are regarded as a serious danger to the community. If it is lawful and appropriate for a judge to make an assessment of danger to the community at the time of sentencing, perhaps many years before an offender is (1996) 189 CLR 51. 2 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 28. [1998] 2 VR 229 at 260. 4 Penalties and Sentences Act 1992 (Qld), s 163. due to be released into the community, it may be thought curious that it is inappropriate for a judge to make such an assessment at or near the time of imminent release, when the danger might be assessed more accurately. There are important issues that could be raised about the legislative policy of continuing detention of offenders who have served terms of imprisonment, and who are regarded as a danger to the community when released. Substantial questions of civil liberty arise. This case, however, is not concerned with those wider issues. The outcome turns upon a relatively narrow point, concerning the nature of the function which the Act confers upon the Supreme Court. If it is concluded that the function is not repugnant to the institutional integrity of that Court, the argument for invalidity fails. That was the conclusion reached by a majority in the Court of Appeal of Queensland (de Jersey CJ and Williams JA; McMurdo P dissenting)5. their The appellant On 8 October 1980, the appellant was sentenced to imprisonment for 13 years for rape. After serving eight years of that sentence he was released on parole. Twenty days after his release he committed further offences of rape, sodomy and assault occasioning actual bodily harm. He was sentenced to 14 years imprisonment. That sentence expired on or about 30 June 2003. The Act came into force on 6 June 2003. On 17 June 2003, the Attorney-General of Queensland applied for an interim detention order. A series of short-term interim orders were made. It was the first of those orders that was the subject of the appeal to the Court of Appeal, and is the subject of this appeal. In the meantime, White J dealt with the matter on a final basis (subject to the Act's scheme for periodic review). Her Honour made the following findings: "What is of major concern is the failure by [the appellant] to participate in or to participate to completion in a course or courses of therapy ... For some ten years there have been efforts made to assist [the appellant] towards reintegration into the community ... He has, for the most part, chosen not to take some responsibility for his own rehabilitation and engage in appropriate treatment ... There is a great deal of guidance to be found in the most recent reports and evidence ... This could be further explored. The goal must be one of rehabilitation if [the appellant] is to remain detained and, with [the appellant's] co-operation, appropriate treatment together with staged reintegration as recommended by Dr Moyle may lead to a positive [2003] QCA 416. outcome when this order is reviewed. But until that occurs, [the appellant] must be detained so that the community may be adequately protected." The Act The objects of the Act are stated in s 3: "3 The objects of this Act are – to provide for the continued detention in custody or supervised release of a particular class of prisoner to ensure adequate protection of the community; and to provide continuing control, care or treatment of a particular class of prisoner to facilitate their rehabilitation." Under Pt 2, Div 3 of the Act, the Supreme Court may order, in respect of a prisoner serving imprisonment for a serious sexual offence, that the prisoner be detained in custody for an indefinite term, or that, upon release, the prisoner be subject to continuing supervision. Any continuing detention order is subject to periodic review. The Court may make such an order only if satisfied that the person would constitute a serious danger to the community, the danger taking the form of "an unacceptable risk that the prisoner [would] commit a serious sexual offence" (s 13(2)). The onus of establishing the serious danger to the community rests on the Attorney-General. It can only be discharged by acceptable, cogent evidence which satisfies the Court to a high degree of probability (s 13(3)). Detailed reasons must be given for any order (s 17). There is an appeal to the Court of Appeal. Provision for interim orders is made (s 8). The appellant challenges the validity of both s 8 and s 13. Protection of the community In 1975, Robert Charles Vincent Veen, who had stabbed and killed a man, and who had been charged with murder, was found guilty of manslaughter on the ground of diminished responsibility. Some four years earlier, he had been convicted of malicious wounding with a knife. The sentencing judge in the Supreme Court of New South Wales found that he suffered from brain damage which could cause uncontrolled aggression when he was affected by alcohol. The judge said he was likely to kill or injure someone if he was released, and imposed a sentence of life imprisonment for the protection of the community. This Court upheld an appeal, and reduced the sentence to imprisonment for twelve years: Veen v The Queen6. (1979) 143 CLR 458. Veen was released in January 1983. In October 1983, he stabbed and killed a man. The Crown accepted a plea of guilty to manslaughter on the ground of diminished responsibility. Once again, a judge of the Supreme Court of New South Wales sentenced him to life imprisonment, on the ground that he was a danger to society, and was likely to kill again when released. That sentence was upheld by this Court: Veen v The Queen [No 2]7. This is not the occasion to seek to reconcile those two decisions. The facts of the case reveal a common problem with which courts and legislatures have to deal. Although he dissented in the second case, Deane J said8: "[T]he protection of the community obviously warrants the introduction of some acceptable statutory system of preventive restraint to deal with the case of a person who has been convicted of violent crime and who, while not legally insane, might represent a grave threat to the safety of other people by reason of mental abnormality if he were to be released as a matter of course at the end of what represents a proper punitive sentence. Such a statutory system could, one would hope, avoid the disadvantages of indeterminate prison sentences by being based on periodic orders for continuing detention in an institution other than a gaol and provide a guarantee of regular and thorough review by psychiatric and other experts." The hope expressed in the final sentence relates to a matter of legislative policy rather than constitutional significance. That, no doubt, is why it was described as a hope about a statutory system. As was pointed out in Engert9, people suffering from mental disorders frequently come into collision with the criminal justice system, and discretionary sentencing decisions must take into account a number of sometimes competing considerations, including the protection of society. The law is a normative science, and many of its rules and principles are based upon assumptions about volition that would not necessarily be accepted as accurate by psychiatrists. In United States v Chandler10, Chief Judge Haynsworth said: "The criminal law exists for the protection of society. Without undue harm to the interests of the society it protects, it can exclude from (1988) 164 CLR 465. (1988) 164 CLR 465 at 495. (1995) 84 A Crim R 67 at 68. 10 393 F 2d 920 (1968) at 929. its moral judgments those whose powers of intellect or will are so far impaired that they have no substantial control of their conduct. It can afford, too, elimination of the last vestiges of the notion of punishment for punishment's sake and a further implementation of the principles of rehabilitation, deterrence and, wherever necessary, the ultimate isolation from society of those individuals who have no capacity for the adjustments necessary to conform their conduct as active members of a free society to the requirements of the law. The law may not serve its purpose, however, should it embrace the doctrines of determinism. Should the law extend its rule of immunity from its sanctions to all those persons for whose deviant conduct there may be some psychiatric explanation, the processes of the law would break down and society would be forced to find other substitutes for its protection. The law must proceed upon the assumption that man, generally, has a qualified freedom of will, and that any individual who has a substantial capacity for choice should be subject to its sanctions. At least, we must proceed upon that assumption until there have been devised more symmetrical solutions to the many faceted problems of society's treatment of persons charged with commission of crimes." The way in which the criminal justice system should respond to the case of the prisoner who represents a serious danger to the community upon release is an almost intractable problem. No doubt, predictions of future danger may be unreliable, but, as the case of Veen shows, they may also be right. Common law sentencing principles, and some legislative regimes, permit or require such predictions at the time of sentencing, which will often be many years before possible release. If, as a matter of policy, the unreliability of such predictions is a significant factor, it is not necessarily surprising to find a legislature attempting to postpone the time for prediction until closer to the point of release. Legislative schemes for preventive detention of offenders who are regarded as a danger to the community have a long history11. Inebriates have been the subject of special legislation of that kind12. So have recidivists, or "habitual criminals"13. Some Australian States have enacted legislation which provides for indefinite sentences where a sentencing judge is satisfied that a 11 See Dershowitz, "The Origins of Preventive Confinement in Anglo-American Law" (1974) 43 University of Cincinnati Law Review 1 (Pt 1) and 781 (Pt II). 12 eg Inebriates Act 1898 (UK), Convicted Inebriates Act 1913 (SA), Inebriates Act 1912 (NSW). 13 eg Habitual Criminals Act 1957 (NSW). serious offender is a danger to the community14. In the United Kingdom, the Powers of Criminal Courts (Sentencing) Act 2000 allows a judge to pass a custodial sentence longer than commensurate with the seriousness of an offence in order to protect the public from harm (s 80(2)(b)). In R (Giles) v Parole Board15, the House of Lords examined in some detail the law of various European countries on the subject, and the Strasbourg jurisprudence. In the United States, regimes of "civil commitment" of dangerous offenders have frequently been subjected to constitutional scrutiny16. Plainly, the lawfulness of systems of preventive detention is considered in the light of the particular constitutional context. In the United States, the right to substantive due process is significant. In Canada, the Charter of Rights and Freedoms must be considered17. In Australia, the Constitution does not contain any general statement of rights and freedoms. Subject to the Constitution, as a general rule it is for the federal Parliament, and the legislatures of the States and Territories, to consider the protection of the safety of citizens in the light of the rights and freedoms accepted as fundamental in our society. Principles of the common law, protective of such rights and freedoms, may come into play in the application and interpretation of valid legislation18. The constitutional objection to the legislative scheme presently under consideration has already been identified. It is convenient to consider it by reference to the decision of this Court in Kable. Kable The decision in Kable established the principle that, since the Constitution established an integrated Australian court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts, State legislation which purports to confer upon such a court a function which substantially impairs its institutional integrity, and which is therefore incompatible with its role as a repository of federal jurisdiction, is invalid. 14 eg Sentencing Act 1991 (Vic), Pt 3 Div 2 (1A), Criminal Law (Sentencing) Act 1988 (SA), Pt 2 Div 3, Criminal Code (WA), s 662(a) considered by this Court in Chester v The Queen (1988) 165 CLR 611, Sentencing Act 1995 (WA), s 98. 16 See Kansas v Crane 534 US 407 (2002). 17 R v Lyons [1987] 2 SCR 309. 18 cf Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30]. The New South Wales legislation in question in that case provided for the preventive detention of only one person, Mr Kable. As was pointed out by Dawson J, the final form of the legislation had a number of curious features, because of its parliamentary history19. It was originally framed as a law of general application, but an amendment confined its application to the appellant. The object of the statute in its final form was said to be to protect the community by providing for the preventive detention of Gregory Wayne Kable. Toohey J said that the extraordinary character of the legislation and of the functions it required the Supreme Court to perform was highlighted by the operation of the statute upon one named person only20. In that respect, he said, the statute was virtually unique. Senior counsel for the appellant in the case argued that the legislation was not a carefully calculated legislative response to a general social problem; it was legislation ad hominem21. That argument was accepted. The members of the Court in the majority considered that the appearance of institutional impartiality of the Supreme Court was seriously damaged by a statute which drew it into what was, in substance, a political exercise22. The minor premise of the successful argument in Kable was specific to the legislation there in question. It is the major premise – the general principle – that is to be applied in the present case. It is unnecessary in this case to decide whether, under the Constitution, the federal Parliament could enact a valid law imposing on a court a function comparable to that conferred by the Act on the Supreme Court of Queensland. The Act is State legislation, and the suggested ground of invalidity is that identified in the decision in Kable; a ground based upon the involvement of the Supreme Court in the decision-making process as to detention. Indeed, in the course of argument, senior counsel for the appellant acknowledged that his challenge to the validity of the Act would disappear if the power to make the relevant decision were to be vested in a panel of psychiatrists (or, presumably, retired judges). The Act is a general law authorising the preventive detention of a prisoner in the interests of community protection. It authorises and empowers the Supreme Court to act in a manner which is consistent with its judicial character. 19 (1996) 189 CLR 51 at 68-69. 20 (1996) 189 CLR 51 at 98. 21 (1996) 189 CLR 51 at 62. 22 See, eg, (1996) 189 CLR 51 at 133-134 per Gummow J. It does not confer functions which are incompatible with the proper discharge of judicial responsibilities or with the exercise of judicial power. It confers a substantial discretion as to whether an order should be made, and if so, the type of order. If an order is made, it might involve either detention or release under supervision. The onus of proof is on the Attorney-General. The rules of evidence apply. The discretion is to be exercised by reference to the criterion of serious danger to the community. The Court is obliged, by s 13(4) of the Act, to have regard to a list of matters that are all relevant to that criterion. There is a right of appeal. Hearings are conducted in public, and in accordance with the ordinary judicial process. There is nothing to suggest that the Supreme Court is to act as a mere instrument of government policy. The outcome of each case is to be determined on its merits. It might be thought that, by conferring the powers in question on the Supreme Court of Queensland, the Queensland Parliament was attempting to ensure that the powers would be exercised independently, impartially, and judicially. Unless it can be said that there is something inherent in the making of an order for preventive, as distinct from punitive, detention that compromises the institutional integrity of a court, then it is hard to see the foundation for the appellant's argument. As was noted above, there is legislation, in Queensland and elsewhere, providing for sentencing judges to impose indefinite sentences, or sentences longer than would be commensurate with the seriousness of a particular offence, by way of response to an apprehension of danger to the community. The validity of such legislation, when tested against the Kable principle, was upheld in Moffatt. We were not invited to hold that Moffatt was wrongly decided. The existence of legislation of that kind makes it difficult to maintain a strict division between punitive and preventive detention. Furthermore, as Veen [No 2] held, common law sentencing principles have long accepted protection of the community as a relevant sentencing consideration. The fate of the victim in that case had been foreseen, and foretold, by a sentencing judge years before. The devising of an appropriate community response to the problem referred to by Deane J in the passage from Veen [No 2] quoted above raises difficult questions involving the reconciliation of rights to liberty and concerns for the protection of the community. Such issues typically arise in the case of a small number of unfortunate individuals who suffer disorders which make them dangerous to others. It cannot be a serious objection to the validity of the Act that the law which the Supreme Court of Queensland is required to administer relates to a subject that is, or may be, politically divisive or sensitive. Many laws enacted by parliaments and administered by courts are the outcome of political controversy, and reflect controversial political opinions. The political process is the mechanism by which representative democracy functions. It does not compromise the integrity of courts to give effect to valid legislation. That is their duty. Courts do not operate in a politically sterile environment. They administer the law, and much law is the outcome of political action. It was argued that the test, posed by s 13(2), of "an unacceptable risk that the prisoner will commit a serious sexual offence" is devoid of practical content. On the contrary, the standard of "unacceptable risk" was referred to by this Court in M v M23 in the context of the magnitude of a risk that will justify a court in denying a parent access to a child. The Court warned against "striving for a greater degree of definition than the subject is capable of yielding". The phrase is used in the Bail Act 1980 (Q), which provides that courts may deny bail where there is an unacceptable risk that an offender will fail to appear (s 16). It is not devoid of content, and its use does not warrant a conclusion that the decision- making process is a meaningless charade. In some of the reasons in Kable, references were made to the capacity of the legislation there in question to diminish public confidence in the judiciary. Those references were in the context of a statute that was held to impair the institutional integrity of a court and involve it in an ad hominem exercise. Nothing that was said in Kable meant that a court's opinion of its own standing is a criterion of validity of law24. Furthermore, nothing would be more likely to damage public confidence in the integrity and impartiality of courts than judicial refusal to implement the provisions of a statute upon the ground of an objection to legislative policy. If courts were to set out to defeat the intention of Parliament because of disagreement with the wisdom of a law, then the judiciary's collective reputation for impartiality would quickly disappear. This case involves no question of the interpretation of an ambiguous statute, or of the application of the common law. It concerns a specific challenge to the validity of a State law on the ground that it involves an impermissible attempt to resolve a certain kind of problem through the State's judicial process. Conclusion The decision of the Court of Appeal was correct. The challenge to the validity of the Act fails. The appeal from the Court of Appeal in relation to the interim orders should be dismissed. In relation to the cause partly removed to this Court, it should be declared that s 13 of the Act is valid, and the matter should be remitted to the Court of Appeal for determination of the remaining issues. 23 (1988) 166 CLR 69 at 78. 24 cf Nicholas v The Queen (1998) 193 CLR 173 at 197 [36]. McHugh 25 McHUGH J. Queensland legislation authorises the Supreme Court of that State to order that a prisoner be detained in custody if it is satisfied that there are reasonable grounds for believing that the prisoner is a serious danger to the community. In June 1989, the appellant, Robert John Fardon was sentenced to 14 years imprisonment in respect of various sexual offences. His sentences expired on or about 30 June 2003. He was detained in prison after the expiration of his sentences under interim orders made under the legislation. In November 2003, the Supreme Court ordered that he be detained in custody for an indefinite term. The question in this case is whether the Queensland legislation is invalid because it vests in the Supreme Court functions that are incompatible with its role as a repository of the judicial power of the Commonwealth. In my opinion, the legislation is valid. The material facts In June 1989, Fardon pleaded guilty to offences of sodomy and unlawful assault of a female. He pleaded not guilty, but was subsequently convicted, of a charge of rape of the same person. All offences were committed on 3 October 1988. On 30 June 1989, Fardon was sentenced to 14 years imprisonment on two of the counts and three years imprisonment on the third count, all sentences to be served concurrently. His sentences expired on or about 30 June 2003. On 6 June 2003, the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act") came into force. On 17 June 2003, the Attorney-General of the State of Queensland filed an Originating Application under s 5 of the Act for an order that Fardon be detained for an indefinite period under s 13. By a series of interim detention orders, the first of which was made by Muir J in the Supreme Court on 27 June 2003 under s 8 of the Act, Fardon was detained until the Supreme Court heard the Attorney-General's Application. In determining the first interim detention order, Muir J also upheld the validity of s 8 of the Act25. In the meantime, Fardon appealed to the Queensland Court of Appeal against the interim detention order of Muir J and his Honour's subsequent judgment as to the validity of s 8 of the Act. On 23 September 2003, the Court of Appeal (de Jersey CJ and Williams JA, McMurdo P dissenting) dismissed the appeal against the interim detention order and judgment of Muir J and also upheld the validity of the Act26. 25 Attorney-General (Q) v Fardon [2003] QSC 200. 26 Attorney-General (Q) v Fardon [2003] QCA 416. McHugh In November 2003, on the Attorney-General's Application, White J in the Supreme Court ordered that Fardon be detained in custody for an indefinite term. The order was made under s 13 of the Act. White J found27 that it was established "to the requisite standard that [Fardon] is a serious danger to the community in that there is an unacceptable risk that he will commit a serious sexual offence if released from custody." Her Honour said that a major concern was28: "the failure by [Fardon] to participate in or to participate to completion in a course or courses of therapy which address his 'inner world' and give him risk minimisation strategies whether related to his violent sexual offending or alcohol and drug relapse prevention." Her Honour said29 that Fardon "has, for the most part, chosen not to take some responsibility for his own rehabilitation and engage in appropriate treatment." The appellant then appealed to the Court of Appeal against the order of White J. This Court granted special leave to appeal against the dismissal by the Queensland Court of Appeal of the appeal against the interim detention order made under s 8 by Muir J and his Honour's judgment upholding the validity of s 8 of the Act. Acting under s 40 of the Judiciary Act 1903 (Cth), this Court also ordered that so much of the appeal pending in the Court of Appeal against the order of White J as raised the question of the validity of s 13 of the Act be removed into this Court. Both the appeal and the cause removed were heard together. Kable v Director of Public Prosecutions (NSW) The appellant contends that the Act is invalid because it confers a jurisdiction and powers on the Supreme Court of Queensland that is and are incompatible with the exercise by that Court of federal jurisdiction. He contends that the decision of this Court in Kable v Director of Public Prosecutions (NSW)30 shows that this is so. In Kable, the Court held that the Community Protection Act 1994 (NSW) was incompatible with Ch III of the Constitution because it required the Supreme Court of New South Wales to order the continued imprisonment of a specified person on the expiration of his sentence 27 Attorney-General (Q) v Fardon [2003] QSC 379 at [98]. 28 Fardon [2003] QSC 379 at [100]. 29 Fardon [2003] QSC 379 at [100]. 30 (1996) 189 CLR 51. McHugh for manslaughter. The majority Justices in that case held that, because State courts can be invested with federal jurisdiction, State legislation cannot confer jurisdiction or powers on State courts that compromises their integrity as courts exercising federal jurisdiction31. The majority held that the terms of the Community Protection Act were such that that Act compromised the integrity of the New South Wales Supreme Court and undermined the power conferred on the Federal Parliament by the Constitution to invest State courts with federal jurisdiction32. However, the legislation that the Court declared invalid in Kable was extraordinary. Section 3(1) of that Act declared that the object of the Act was "to protect the community by providing for the preventive detention ... of Gregory Wayne Kable." Section 3(3) declared that it "authorises the making of a detention order against Gregory Wayne Kable and does not authorise the making of a detention order against any other person." It was thus ad hominem legislation that, although dressed up as a Supreme Court legal proceeding, had been enacted for the purpose of ensuring that Kable remained in prison when his sentence expired. Indeed, I thought that it made the Supreme Court33: instrument of a "the the executive government, to imprison the appellant by a process that is far removed from the judicial process that is ordinarily invoked when a court is asked to imprison a person." legislative plan, initiated by As Gaudron J pointed out34: "The proceedings which the Act contemplates are not proceedings otherwise known to the law. And except to the extent that the Act attempts to dress them up as legal proceedings (for example, by referring to the applicant as 'the defendant', by specifying that the proceedings are civil proceedings and by suggesting that the rules of evidence apply), they do not in any way partake of the nature of legal proceedings. They do not involve the resolution of a dispute between contesting parties as to their respective legal rights and obligations. And as already indicated, the applicant is not to be put on trial for any offence against the criminal law. 31 Kable (1996) 189 CLR 51 at 96 per Toohey J, 103 per Gaudron J, 116-119 per McHugh J, 127-128 per Gummow J. 32 Kable (1996) 189 CLR 51 at 98 per Toohey J, 106-108 per Gaudron J, 122, 124 per McHugh J, 134 per Gummow J. 33 Kable (1996) 189 CLR 51 at 122. 34 Kable (1996) 189 CLR 51 at 106. McHugh Instead, the proceedings are directed to the making of a guess – perhaps an educated guess, but a guess nonetheless – whether, on the balance of probabilities, the appellant will commit an offence of the kind specified in the definition of 'serious act of violence'. And, at least in some circumstances, the Act directs that that guess be made having regard to material which would not be admissible as evidence in legal proceedings." (footnotes omitted) The relevant provisions of the Act for the purpose of this case are set out in Gummow J's reasons. The differences between the legislation considered in Kable and the Act are substantial. First, the latter Act is not directed at a particular person but at all persons who are serving a period of imprisonment for "a serious sexual offence"35. Second, when determining an application under the Act, the Supreme Court is exercising judicial power. It has to determine whether, on application by the Attorney-General, the Court is satisfied that "there is an unacceptable risk that the prisoner will commit a serious sexual offence" if the prisoner is released from custody36. That issue must be determined in accordance with the rules of evidence37. It is true that in form the Act does not require the Court to determine "an actual or potential controversy as to existing rights or obligations."38 But that does not mean that the Court is not exercising judicial power. The exercise of judicial power often involves the making of orders upon determining that a particular fact or status exists. It does so, for example, in the cases of matrimonial causes, bankruptcy, probate and the winding up of companies. The powers exercised and orders made by the Court under this Act are of the same jurisprudential character as in those cases. The Court must first determine whether there is "an unacceptable risk that the prisoner will commit a serious sexual offence". That is a standard sufficiently precise to engage the exercise of State judicial power39. Indeed, it would seem sufficiently precise to constitute a "matter" that could be conferred on or invested in a court exercising federal jurisdiction40. Third, if the Court finds that the 35 Sections 2, 5, 13. 36 Section 13(2). 37 Section 13(3). 38 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 375 per Kitto J. 39 M v M (1988) 166 CLR 69 at 78. 40 As to the need for issues to be defined with sufficient precision to involve an exercise of federal judicial power, see R v Spicer; Ex parte Waterside Workers' Federation of Australia (1957) 100 CLR 312 at 319 per Dixon CJ, Williams, Kitto McHugh Attorney-General has satisfied that standard, the Court has a discretion as to whether it should make an order under the Act and, if so, what kind of order41. The Court is not required or expected to make an order for continued detention in custody. The Court has three discretionary choices open to it if it finds that the Attorney-General has satisfied the "unacceptable risk" standard. It may make a "continuing detention order"42, a "supervision order"43 or no order. Fourth, the Court must be satisfied of the "unacceptable risk" standard "to a high degree of probability"44. The Attorney-General bears the onus of proof. Fifth, the Act is not designed to punish the prisoner. It is designed to protect the community against certain classes of convicted sexual offenders who have not been rehabilitated during their period of imprisonment. The objects of the Act expressed in s 3 are: to provide for the continued detention in custody or supervised release of a particular class of prisoner to ensure adequate protection of the community; and to provide continuing control, care or treatment of a particular class of prisoner to facilitate their rehabilitation." Sixth, nothing in the Act or the surrounding circumstances45 suggests that the jurisdiction conferred is a disguised substitute for an ordinary legislative or executive function. Nor is there anything in the Act or those circumstances that might lead to the perception that the Supreme Court, in exercising its jurisdiction under the Act, is acting in conjunction with, and not independently of, the Queensland legislature or executive government. 41 Section 13(5). 42 Section 13(5)(a). 43 Section 13(5)(b). 44 Section 13(3)(b). 45 See, eg, Queensland, Dangerous Prisoners (Sexual Offenders) Bill 2003 (Q) Explanatory Notes, (2003); Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2003 at 2484-2486 per Welford; Queensland, Dangerous Prisoners (Sexual Offenders) Bill 2003 (Q), Amendments Committee, Explanatory Notes, (2003); Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 26 November 2003 at 5127 per Welford. McHugh Does the Act compromise the institutional integrity of the Supreme Court of Queensland? With great respect to those who hold the contrary view, nothing in the Act or the surrounding circumstances gives any ground for supposing that the jurisdiction conferred by the Act compromises the institutional integrity of the Supreme Court of Queensland. Nothing in the Act gives any ground for concluding that it impairs the institutional capacity of the Supreme Court to exercise federal jurisdiction that the Federal Parliament has invested or may invest in that Court. Nothing in the Act might lead a reasonable person to conclude that the Supreme Court of Queensland, when exercising federal jurisdiction, might not be an impartial tribunal free of governmental or legislative influence or might not be capable of administering invested federal jurisdiction according to law. It is a serious constitutional mistake to think that either Kable or the Constitution assimilates State courts or their judges and officers with federal courts and their judges and officers. The Constitution provides for an integrated court system. But that does not mean that what federal courts cannot do, State courts cannot do. Australia is governed by a federal, not a unitary, system of government. As Knox CJ, Rich and Dixon JJ pointed out in Le Mesurier v Connor46: "The Parliament may create Federal Courts, and over them and their organization it has ample power. But the Courts of a State are the judicial organs of another Government. They are created by State law; their existence depends upon State law; that law, primarily at least, determines the constitution of the Court itself, and the organization through which its powers and jurisdictions are exercised. When a Court has been erected, its jurisdiction, whether in respect of place, person or subject matter, may be enlarged or restricted. The extent of the jurisdiction of a State Court would naturally be determined by State Law". Application of Ch III to the States The doctrine of the separation of powers, derived from Chs I, II and III of the Constitution, does not apply as such in any of the States, including Queensland. Chapter III of the Constitution, which provides for the exercise of federal judicial power, invalidates State legislation that purports to invest jurisdiction and powers in State courts only in very limited circumstances. One circumstance is State legislation that attempts to alter or interfere with the 46 (1929) 42 CLR 481 at 495-496. McHugh working of the federal judicial system set up by Ch III47. Another is the circumstance dealt with in Kable: legislation that purports to confer jurisdiction on State courts but compromises the institutional integrity of State courts and affects their capacity to exercise federal jurisdiction invested under Ch III impartially and competently. Subject to that proviso, when the Federal Parliament invests State courts with federal jurisdiction, it must take them as it finds them. Cases in this Court have often demonstrated that, subject to the Kable principle, the Parliament of the Commonwealth must take State courts as it finds them48. Thus, the structure of a State court may provide for certain matters to be determined by a person other than a judge – such as a master or registrar – who is not a component part of the court. If the Parliament of the Commonwealth invests that court with federal jurisdiction in respect of those matters, the investiture does not contravene Ch III of the Constitution, and that person may exercise the judicial power of the Commonwealth. Thus, in The Commonwealth v Hospital Contribution Fund49, this Court held that, notwithstanding that a Master of the Supreme Court of New South Wales was not a component part of that Court, under the Supreme Court Act 1970 (NSW), orders made by the Master were orders of that Court in both State and federal jurisdiction. Gibbs CJ "He was the officer of the court by whom the jurisdiction and powers of the court in the matter in question were normally exercised, and an order made by him, if not set aside or varied by the court, would take effect as an order of the court. Although he was not a member of the court he was, in my respectful opinion, part of the organization through which the 47 The Commonwealth v Queensland (1975) 134 CLR 298 at 314-315 per Gibbs J, Barwick CJ, Stephen and Mason JJ agreeing. 48 See, eg, Federated Sawmill, Timberyard and General Woodworkers' Employes' Association (Adelaide Branch) v Alexander (1912) 15 CLR 308 at 313 per Griffith CJ; Le Mesurier (1929) 42 CLR 481 at 496-498 per Knox CJ, Rich and Dixon JJ; Adams v Chas S Watson Pty Ltd (1938) 60 CLR 545 at 554-555 per Latham CJ; Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25 at 37 per Latham CJ; Kotsis v Kotsis (1970) 122 CLR 69 at 109 per Gibbs J; Russell v Russell (1976) 134 CLR 495 at 516-517 per Gibbs J, 530 per Stephen J, 535 per Mason J, 554 per Jacobs J; The Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49 at 61 per 49 (1982) 150 CLR 49. 50 Hospital Contribution Fund (1982) 150 CLR 49 at 59. McHugh powers and jurisdiction of the court were exercised in matters of State jurisdiction, and through which they were to be exercised in matters of federal jurisdiction also, once the court was invested with federal jurisdiction." Furthermore, when investing a State court with federal jurisdiction, the Federal Parliament cannot alter the structure of the court by making an officer of the Commonwealth a functionary of the court and empowering the officer to administer part of its jurisdiction51. Nor can it invest State courts with federal jurisdiction and, contrary to the open justice rule, require those courts to conduct proceedings in closed court52. Nor can the Parliament require a State court invested with federal jurisdiction to have trial by jury when the court is so organised under State law that it does not use that form of trial when exercising State jurisdiction53. For example, Magistrates' Courts in this country do not provide for trial by jury. If the Parliament, acting under s 77(iii) of the Constitution, enacted a law purporting to invest a Magistrates' Court of a State with jurisdiction to hear indictable offences and the law, expressly or impliedly, sought to require trial by jury in the Magistrates' Court, the law would be invalid because a law that invests a State court with federal jurisdiction must take the court as it finds it. In any event, s 80 of the Constitution, which requires trial by jury for federal indictable offences, would operate to invalidate the law. Moreover, as Gaudron J pointed out in Kable54: "[T]here is nothing to prevent the Parliaments of the States from conferring powers on their courts which are wholly non-judicial, so long as they are not repugnant to or inconsistent with the exercise by those courts of the judicial power of the Commonwealth." Nor is there anything in the Constitution that would preclude the States from legislating so as to empower non-judicial tribunals to determine issues of criminal guilt or to sentence offenders for breaches of the law. The Queensland Parliament has power to make laws for "the peace welfare and good government" of that State55. That power is preserved by s 107 of the Commonwealth 51 Le Mesurier (1929) 42 CLR 481 at 496-497 per Knox CJ, Rich and Dixon JJ. 52 Russell (1976) 134 CLR 495 at 506 per Barwick CJ, 520 per Gibbs J, 532 per 53 Brown v The Queen (1986) 160 CLR 171 at 199 per Brennan J. 54 (1996) 189 CLR 51 at 106. 55 Constitution Act 1867 (Q), s 2. McHugh Constitution. Those words give the Queensland Parliament a power as plenary as that of the Imperial Parliament56. They would authorise the Queensland Parliament, if it wished, to abolish criminal juries and require breaches of the criminal law to be determined by non-judicial tribunals. The content of a State's legal system and the structure, organisation and jurisdiction of its courts are matters for each State. If a State legislates for a tribunal of accountants to hear and determine "white collar" crimes or for a tribunal of psychiatrists to hear and determine cases involving mental health issues, nothing in Ch III of the Constitution prevents the State from doing so. Likewise, nothing in Ch III prevents a State, if it wishes, from implementing an inquisitorial, rather than an adversarial, system of justice for State courts. The powers conferred on the Queensland Parliament by s 2 of the Constitution Act 1867 (Q) are, of course, preserved subject to the Commonwealth Constitution. However, no process of legal or logical reasoning leads to the conclusion that, because the Federal Parliament may invest State courts with federal jurisdiction, the States cannot legislate for the determination of issues of criminal guilt or sentencing by non- judicial tribunals. The bare fact that particular State legislation invests a State court with powers that are or jurisdiction that is repugnant to the traditional judicial process will seldom, if ever, compromise the institutional integrity of that court to the extent that it affects that court's capacity to exercise federal jurisdiction impartially and according to federal law. State legislation may alter the burden of proof and the rules of evidence and procedure in civil and criminal courts in ways that are repugnant to the traditional judicial process without compromising the institutional integrity of the courts that must administer that legislation. State legislation may require State courts to exercise powers and take away substantive rights on grounds that judges think are foolish, unwise or even patently unjust. Nevertheless, it does not follow that, because State legislation requires State courts to make orders that could not be countenanced in a society with a Bill of Rights, the institutional integrity of those courts is compromised. The pejorative phrase – "repugnant to the judicial process" – is not the constitutional criterion. In this area of constitutional discourse, it is best avoided, for it invites error. That which judges regard as repugnant to the judicial process may be no more than a reflection of their personal dislike of legislation that they think unjustifiably affects long recognised rights, freedoms and judicial procedures. State legislation that requires State courts to act in ways inconsistent with the traditional judicial process will be invalid only when it leads to the conclusion that reasonable persons might think that the legislation compromises the capacity of State courts to administer invested federal jurisdiction impartially according to federal law. That conclusion is likely to be reached only when other 56 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 10. McHugh provisions of the legislation or the surrounding circumstances as well as the departure from the traditional judicial process indicate that the State court might not be an impartial tribunal that is independent of the legislative and the executive arms of government. Conclusions In my opinion, Kable does not govern this case. Kable is a decision of very limited application. That is not surprising. One would not expect the States to legislate, whether by accident or design, in a manner that would compromise the institutional integrity of their courts. Kable was the result of legislation that was almost unique in the history of Australia. More importantly, however, the background to and provisions of the Community Protection Act pointed to a legislative scheme enacted solely for the purpose of ensuring that Mr Kable, alone of all people in New South Wales, would be kept in prison after his term of imprisonment had expired. The terms, background and parliamentary history of the legislation gave rise to the perception that the Supreme Court of that State might be acting in conjunction with the New South Wales Parliament and the executive government to keep Mr Kable in prison. The combination of circumstances which gave rise to the perception in Kable is unlikely to be repeated. The Kable principle, if required to be applied in future, is more likely to be applied in respect of the terms, conditions and manner of appointment of State judges or in circumstances where State judges are used to carry out non- judicial functions, rather than in the context of Kable-type legislation. In this case, it is impossible to conclude that the Queensland Parliament or the executive government of that State might be working in conjunction with the Supreme Court to continue the imprisonment of the appellant. Nor is it possible to conclude that the Act gives rise to a perception that the Supreme Court of Queensland might not render invested federal jurisdiction impartially in accordance with federal law. The Act is not directed to a particular person but to a class of persons that the Parliament might reasonably think is a danger to the community57. Far from the Act giving rise to a perception that the Supreme Court of Queensland is acting in conjunction with the Queensland Parliament or the executive government, it shows the opposite. It requires the Court to adjudicate on the claim by the Executive that a prisoner is "a serious danger to the community" in accordance with the rules of evidence and "to a high degree of probability". Even if the Court is satisfied that there is an unacceptable risk that 57 See, eg, Queensland, Dangerous Prisoners (Sexual Offenders) Bill 2003 (Q) Explanatory Notes, (2003) at 1; Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2003 at 2484 per Welford; Queensland, Dangerous Prisoners (Sexual Offenders) Bill 2003 (Q), Amendments in Committee, Explanatory Notes, (2003) at 1. McHugh the prisoner will commit a serious sexual offence if released from custody, the Court is not required to order the prisoner's continued detention or supervised release. Furthermore, the Court must give detailed reasons for its order58, reasons that are inevitably subject to public scrutiny. It is impossible to hold, therefore, that the Queensland Parliament and the executive government intend that the appellant's imprisonment should continue and that they have simply used the Act "to cloak their work in the neutral colors of judicial action."59 On the contrary, the irresistible conclusion is that the Queensland Parliament has invested the Supreme Court of Queensland with this jurisdiction because that Court, rather than the Parliament, the executive government or a tribunal such as a Parole Board or a panel of psychiatrists, is the institution best fitted to exercise the jurisdiction. Orders I agree with the orders proposed by Gummow J. 58 Section 17. 59 Mistretta v United States 488 US 361 at 407 (1989). GUMMOW J. On 30 June 1989, after a trial in the Supreme Court of Queensland at Townsville before Kneipp J and a jury, the appellant was convicted of rape, sodomy and assault. He was sentenced to 14 years imprisonment. Thereafter, the Penalties and Sentences Act 1992 (Q) ("the Sentences is headed "INDEFINITE Part 10 Act") was enacted. SENTENCES". Section 163(1) states: "A court may, instead of imposing a fixed term of imprisonment, impose an indefinite sentence on an offender convicted of a violent offence on – its own initiative; or an application made by counsel for the prosecution." A "violent offence" must be one attracting a penalty of imprisonment for life (s 162). An application may be made only with the consent of the Attorney- General (s 165). An order is subject to periodic review by a court (s 171), but continues until a court orders that the indefinite term of imprisonment is discharged (s 162). As s 163(1) indicates, this system applies only as part of the trial process and thus had no application to the pre-1992 conviction of the appellant. The sentence imposed upon the appellant in 1989 was due to expire on or about 30 June 2003. Shortly before that date, that is to say, on 6 June 2003, the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act") came into force. It is the validity of the central provision of the Act, s 13, which is now challenged in this Court. The structure of the Act In the Second Reading Speech on the Bill for the Act, the respondent, the "[T]he law has never regarded detention as legitimately authorised only for the purpose of punishment for proven criminal offending. Even the the factors of rehabilitation and sentencing process contemplates protection of the public be considered in deciding whether to impose a custodial sentence." 60 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2003 Both propositions may be accepted but they do not necessarily provide answers to the challenge to validity of the legislation. Section 3 of the Act states: "The objects of this Act are – to provide for the continued detention in custody or supervised release of a particular class of prisoner to ensure adequate protection of the community; and to provide continuing control, care or treatment of a particular class of prisoner their rehabilitation." facilitate The Act empowers the Trial Division of the Supreme Court, upon application pursuant to s 5 by the Attorney-General, to make certain orders in relation to a "prisoner". For this purpose, the term "prisoner" is defined in s 5(6) as follows: "'prisoner' means a prisoner detained in custody who is serving a period of imprisonment for a serious sexual offence, or serving a period of imprisonment that includes a term of imprisonment for a serious sexual offence, whether the person was sentenced to the term or period of imprisonment before or after the commencement of this section." (emphasis added) The phrase "serious sexual offence" is defined in the Schedule to the Act as meaning: "an offence of a sexual nature, whether committed in Queensland or outside Queensland – involving violence; or against children". The offences of which the appellant had been convicted on 30 June 1989 answered the description in par (a). Accordingly, at the time the Act commenced, the appellant was one who was then serving a period of imprisonment for a serious sexual offence within the meaning of the legislation. After what is identified in s 8 as a preliminary hearing, the Supreme Court may make an "interim detention order" (s 8(2)) pending the hearing of an application for an order under s 13. If the interim detention order requires the detention of the prisoner in custody after the end of the prisoner's period of imprisonment, that person "remains a prisoner, including for all purposes in relation to an application under this Act" (s 8(3)). The litigation Consecutive interim detention orders under s 8 were made in the Supreme Court in respect of the appellant by Muir J on 27 June 2003 (two days before he otherwise would have ceased to be a prisoner), by Philippides J on 31 July 2003, and by Atkinson J on 2 October 2003. In the meantime, on 23 September 2003, the Court of Appeal (de Jersey CJ and Williams JA; McMurdo P dissenting)61 had dismissed an appeal against the order made by Muir J on 27 June 2003 and the judgment of Muir J delivered on 9 July 2003 in which the validity of s 8 of the Act had been upheld. The suggested grounds of invalidity of s 8 resembled those upon which s 13 is now attacked. Section 13 of the Act provides for the making of two species of order: a "supervision order" involving release from custody subject to appropriate conditions; and a "continuing detention order" (s 13(5)). In each case, the "paramount consideration" for the Supreme Court is "the need to ensure adequate protection of the community" s 13(6)). The respondent's application under s 13 for a "continuing detention order" was heard by White J on 27-30 October 2003. On 6 November 2003, her Honour, after delivery of detailed reasons, made an order as follows62: "Robert John Fardon be detained in custody for an indefinite term for control, care and treatment." An appeal to the Court of Appeal against the order made by White J was instituted and, by order of this Court made on 18 December 2003 under s 40 of the Judiciary Act 1903 (Cth), there was removed into this Court so much of the cause pending in the Court of Appeal as raises the question of the validity of s 13 of the Act. This Court had earlier granted special leave to appeal against the dismissal by the Court of Appeal of the appeal against the interim order under s 8 made by Muir J on 27 June 2003 and his later judgment upholding the validity of s 8 of the Act. Both the removed cause and the appeal have been heard in this Court together, but submissions have concentrated upon the removed matter and the outcome of the challenge made there to the validity of s 13 will determine the outcome of the appeal respecting s 8. 61 A-G (Qld) v Fardon [2003] QCA 416. 62 Attorney-General (Qld) v Fardon [2003] QSC 379. Continuing detention orders Section 14 states the effect of a continuing detention order in these terms: "(1) A continuing detention order has effect in accordance with its terms – on the order being made or at the end of the prisoner's period of imprisonment, whichever is the later; and until rescinded by the court's order. (2) A person subject to a continuing detention order remains a prisoner." In this setting, "prisoner" is defined in the Schedule as meaning "a prisoner within the meaning of the Corrective Services Act 2000 [(Q)]" ("the Corrective Act"). Further, s 50 of the Act provides: "An order of the court or the Court of Appeal under this Act that a prisoner be detained in custody for the period stated in the order is taken to be a warrant committing the prisoner into custody for [the Corrective Act]." A continuing detention order may be made only if s 13 applies. That section applies only if, on the hearing of the Attorney-General's application, "the court is satisfied [that] the prisoner is a serious danger to the community" in the absence of an order thereunder (s 13(1)). For there to be such a danger, there must be (s 13(2)): "an unacceptable risk that the prisoner will commit a serious sexual offence – if the prisoner is released from custody; or the prisoner supervision order being made". is released from custody without a For guidance as to the content of the phrase "unacceptable risk", the Queensland Solicitor-General, who in this Court appeared for the Attorney- General, referred to the following passage in the joint judgment of the Court in the family law case of M v M63: 63 (1988) 166 CLR 69 at 78. "Efforts to define with greater precision the magnitude of the risk which will justify a court in denying a parent access to a child have resulted in a variety of formulations. The degree of risk has been described as a 'risk of serious harm'64, 'an element of risk' or 'an appreciable risk'65, 'a real possibility'66, a 'real risk'67, and an 'unacceptable risk'68. This imposing array indicates that the courts are striving for a greater degree of definition than the subject is capable of yielding. In devising these tests the courts have endeavoured, in their efforts to protect the child's paramount interests, to achieve a balance between the risk of detriment to the child from sexual abuse and the possibility of benefit to the child from parental access. To achieve a proper balance, the test is best expressed by saying that a court will not grant custody or access to a parent if that custody or access would expose the child to an unacceptable risk of sexual abuse." The appellant's case The appellant complains that (i) by the order of White J under s 13 of the Act, his detention has been extended beyond the limit of the period of the sentence imposed after his conviction, and (ii) this result has been obtained by reason not of his past conduct but by a finding under a law made after the commencement of his sentence that there is an unacceptable risk that he will offend again by committing a serious sexual offence were he released from custody. To some degree, the gravamen of this complaint reflects what was written by Professor Norval Morris more than 50 years ago. He wrote69: "The main point made by those resisting the introduction of the indeterminate sentence is that only by adhering to the conception of nulla 64 A v A [1976] VR 298 at 300. 65 Marriage of M (1986) 11 Fam LR 765 at 771. 66 B v B (Access) [1986] FLC ¶91-758 at 75,545. 67 Leveque v Leveque (1983) 54 BCLR 164 at 167. 68 In re G (A minor) [1987] 1 WLR 1461 at 1469. 69 In the Introduction to a number of the McGill Law Journal devoted exclusively to the question of habitual criminal and preventive detention, (1967) 13 McGill Law Journal 534 at 552, reprinted from his earlier work, The Habitual Criminal, (1951). poena sine lege[70] in its application to punishment can any defence against official abuse be guaranteed to the individual; and to support this they point to the development in criminology under totalitarian régimes where 'scientific criminology' was perverted to political ends. In the absence of legal control of punishments they fear administrative arbitrariness. Thus Jerome Hall contends that 'the insight of the common lawyer on these vital issues reflects the informed knowledge of Western civilization. In the choice of alternatives, he knows the value of legal control of official conduct, especially when the personal rights of weak individuals are at stake.'71" Professor Morris went on to refer to the statement made in 1945 by Sir Leon Radzinowicz72: "Unless indeterminate sentences are awarded with great care, there is a grave risk that this measure, designed to ensure the better protection of society, may become an instrument of social aggression and weaken the basic principle of individual liberty." Legislative schemes for preventative detention have emphasised the predictive, not merely the diagnostic, aspects of psychiatry. The distinction was drawn by Michel Foucault in lectures at the Collège de France given in 1974- 1975. Speaking of changes to French law made as long ago as 1838, he contrasted the identification of a condition which disqualified a person from the exercise of his fundamental rights and the binding administrative force given to conclusions concerning "the possibility of disturbance, disorder and danger"73. In those countries of Europe where a remedy in the nature of a writ of habeas corpus is not an essential element in the legal systems they inherit, the fear of "administrative arbitrariness" to which Professor Morris referred, is reflected in Art 5(4) of the Convention for the Protection of Human Rights and 70 In an earlier and fuller form, the maxim is "there can be no capital punishment destructive either to the individual or his property, which is not established by law before the fact" (Nulla poena capitis nulla quae hominem remve ejus destruat esse potest nisi legibus praefinita), Lofft, Reports of Cases adjudged in the Court of King's Bench, (1790) Appendix, 16, maxim 466. 71 General Principles of Criminal Law, (1947) at 53. 72 In his article, "The Persistent Offender", in Radzinowicz and Turner (eds), The Modern Approach to Criminal Law, (1945), 162 at 167. 73 Foucault, Abnormal, (2003) at 141. Fundamental Freedoms74 ("the Convention"). This is now found in a Schedule to the Human Rights Act 1998 (UK). Article 5(4) states: "Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful." The Strasbourg jurisprudence construing Art 5(4) was considered by the House of Lords in R (Giles) v Parole Board75. Their Lordships saw the drawing in it of a distinction between a deprivation of liberty for an indeterminate term by a court order and by administrative decision76. The House of Lords held that a sentence which was imposed by an English court for a longer period than would be commensurate with the seriousness of the offences for which there had been convictions, in order to protect the public from serious harm from the offender, and which was thereafter the subject of review by a judicial body – the Parole Board – did not attract the operation of Art 5(4). In particular, there was no conferral upon the executive of a power of determination of when the public interest permitted the release of the prisoner. The Queensland Solicitor-General correctly emphasised that the system established by the Act does not display that vice perceived by Art 5(4) of the Convention, namely the intrusion of administrative or executive power into what should be the role of the courts in determining the lawfulness of detention. The immediate issue for this Court that is presented by the appellant's grievance is of a different order. It concerns the recruitment by the Act of the Supreme Court of Queensland to exercise powers and functions which are said to be repugnant to a particular character of that State court given it by the Constitution. Precisely, the issue is whether s 13 of the Act confers a jurisdiction upon the Supreme Court which is repugnant to, or incompatible with, its character under the Constitution of a State court available for investment with federal jurisdiction by federal law made under s 77(iii). The appellant contends like characteristics to those of the Community Protection Act 1994 (NSW) ("the NSW Act") which was held invalid in Kable v Director of Public Prosecutions the Act displays the same or that 74 Agreed by the Council of Europe at Rome on 4 November 1950. 75 [2004] 1 AC 1 at 25-34 per Lord Hope of Craighead, 38-45 per Lord Hutton; Lord Bingham of Cornhill, Lord Steyn, Lord Scott of Foscote agreeing at 20, 21, 45. 76 [2004] 1 AC 1 at 25 per Lord Hope of Craighead; Lord Bingham of Cornhill, Lord Steyn and Lord Scott of Foscote agreeing at 20, 21, 45. (NSW)77. On the other hand, the Solicitor-General submitted that the Act was drawn with an eye to learning from the fate of the earlier New South Wales legislation and that the Act mandates procedures which do not involve the Supreme Court in the exercise of jurisdiction repugnant to, or incompatible with, its character of a State court invested with federal jurisdiction. Chapter III of the Constitution The submissions for the Attorney-General of the Commonwealth, who intervened in this Court, took a different tack and should be considered first. The contention here is that s 13 of the Act, the object of the primary challenge by the appellant, does not fall beyond the limit established by Kable because the Parliament of the Commonwealth itself could validly confer on a Ch III court the functions contained in s 13. This is said to be so even though the detention which the Act provides is preventative, not punitive, in nature. The Commonwealth's submissions are to be rejected. Several steps are involved in reaching that conclusion. The first is by way of disclaimer. It may be accepted that, consistently with Ch III and with what was said by this Court in Veen v The Queen [No 2]78, the objectives of the sentencing process include the various and overlapping purposes of "protection of society, deterrence of the offender and of others who might be tempted to offend, retribution and reform". It may be observed that in Queensland these matters are reflected in the terms of s 9(1) of the Sentences Act. This states: "The only purposes for which sentences may be imposed on an offender are – to punish the offender to an extent or in a way that is just in all the circumstances; or to provide conditions in the court's order that the court considers will help the offender to be rehabilitated; or to deter the offender or other persons from committing the same or a similar offence; or to make it clear that the community, acting through the court, denounces the sort of conduct in which the offender was involved; or 77 (1996) 189 CLR 51. 78 (1988) 164 CLR 465 at 476; cf Crimes Act 1914 (Cth), Pt IB. to protect the Queensland community from the offender; ...". Further, for the purposes of argument, it may be accepted that a propensity to commit serious offences in the future and the consequential need for protection of the public may, consistently with Ch III, support the imposition at trial of a sentence which fosters that protection by a measure of preventative detention of the offender. That appears, in the different constitutional setting in Canada, to be the outcome of the decision of the Supreme Court in R v Lyons79. The Supreme Court upheld the validity of Pt XXI of the Canadian Criminal Code (headed "PREVENTIVE DETENTION")80; this provided that where a person had been adjudged guilty of a "serious personal injury offence", the court, on application, might find the offender to be a dangerous offender and thereupon impose a sentence of indeterminate detention in place of any other sentence that might have been imposed. However, La Forest J emphasised81 that this punishment "flows from the actual commission of a specific crime, the requisite elements of which have been proved to exist beyond a reasonable doubt". Particular issues in Lyons turned upon the consideration that Pt XXI also applied where there had been acceptance of a guilty plea. An analogy is provided by the consideration in this Court of the legislation of Western Australia. In McGarry v The Queen, it was observed in the joint judgment of the Court82: "The Criminal Code (WA) makes separate provision for appeals to the Court of Criminal Appeal against an order for indefinite imprisonment (s 688(1a)(a)) and against any other sentence (s 688(1a)(b)). The former lies as of right; the latter lies only with the leave of the Court of Criminal Appeal. That might be thought to suggest that two appellate processes had been engaged in the present case – one concerning the order for indefinite imprisonment and the other concerning the nominal sentence. Even if that were so, it should not obscure the fact that the decision to make an order for indefinite imprisonment, and the decision fixing the nominal sentence, form part of a single sentencing decision." 79 [1987] 2 SCR 309. 80 RSC 1970, c C-34. 81 [1987] 2 SCR 309 at 328. 82 (2001) 207 CLR 121 at 126 [8]. "It follows that if an appellate court concludes that the sentencing judge's discretion miscarried in fixing the nominal term of imprisonment, the whole of the sentence imposed by the sentencing judge, including the order for indefinite imprisonment, should be set aside and the appellate court would then be obliged itself to re-sentence the offender." The continuing detention orders for which s 13 of the Act provides are not of the character identified in Lyons and McGarry. It is true that the prisoner must still be under sentence when the Attorney-General moves under s 5 for an order and that the effect of the continuing detention order made by White J is the same as if the appellant had been, by warrant, committed into custody in the sense spoken of in the Corrective Act (s 50). Nevertheless, that detention of the appellant does not draw its authority from what was done in the sentencing of the appellant by Kneipp J in 1989. The Solicitor-General, in oral submissions, correctly accepted that the Act took as the factum for its application the status or condition of the appellant as a "prisoner" within the meaning of s 5(6); but, the Solicitor-General emphasised, the legislature might have adopted some other relevant factum. It will be necessary to return to that latter submission. However, one point should be made now. It is accepted that the common law value expressed by the term "double jeopardy" applies not only to determination of guilt or innocence, but also to the quantification of punishment84. However, the making of a continuing detention order with effect after expiry of the term for which the appellant was sentenced in 1989 did not punish him twice, or increase his punishment for the offences of which he had been convicted. The Act operated by reference to the appellant's status deriving from that conviction, but then set up its own normative structure. It did not implicate the common law principle in the same way as, for example, the conferral by statute of a right in the prosecution to appeal against sentence. Upon the hypothesis propounded by the Commonwealth, the significant result of the foregoing is that a person may be held in detention in a corrective facility, to use the modern euphemism, by order of a court exercising federal jurisdiction and by reason of a finding of criminal propensity rather than an 83 (2001) 207 CLR 121 at 126 [9]. 84 Rohde v Director of Public Prosecutions (1986) 161 CLR 119 at 128-129; Pearce v The Queen (1998) 194 CLR 610 at 628 [64]; cf Pfaffenroth, "The Need for Coherence: States' Civil Commitment of Sex Offenders in the Wake of Kansas v Crane", (2003) 55 Stanford Law Review 2229 at 2254-2255. adjudication of criminal guilt85. propositions. That invites attention to two related The first is that expressed as follows by Gaudron J in Re Nolan; Ex parte Young86: "[I]t is beyond dispute that the power to determine whether a person has engaged in conduct which is forbidden by law and, if so, to make a binding and enforceable declaration as to the consequences which the law imposes by reason of that conduct lies at the heart of exclusive judicial power." The making by the Supreme Court of a continuing detention order under s 13 is conditioned upon a finding, not that the person has engaged in conduct which is forbidden by law, but that there is an unacceptable risk that the person will commit a serious sexual offence. That directs attention to the second proposition and to what was said by Brennan, Deane and Dawson JJ in Chu Kheng Lim v Minister for Immigration87. That litigation directly concerned the detention of aliens with no title to enter or remain in Australia, not the situation of citizens such as the appellant. However, their Honours earlier in their judgment had said that, putting aside the cases of detention on grounds of mental illness, infectious disease and the qualifications required by other "exceptional cases", there was a constitutional principle derived from Ch III that88: "the involuntary detention of a citizen in custody by the State is penal or punitive in character and, under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt". 85 cf R v Lyons [1987] 2 SCR 309 at 328. 86 (1991) 172 CLR 460 at 497. See also the remarks of Deane J in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580. 87 (1992) 176 CLR 1 at 27-28. 88 (1992) 176 CLR 1 at 27. That passage was applied as a step in the reasoning in Kable of Toohey J89 and Gummow J90, and is reflected in that of Gaudron J91 and McHugh J92. It must be said that the expression of a constitutional principle in this form has certain indeterminacies. The first is the identification of the beneficiary of the principle as "a citizen". That may readily be understood given the context in Lim of the detention of aliens with no title to enter or remain in Australia and their liability to deportation processes. But in other respects aliens are not outlaws93; many will have a statutory right or title to remain in Australia for a determinate or indeterminate period and at least for that period they have the protection afforded by the Constitution and the laws of Australia. There is no reason why the constitutional principle stated above should not apply to them outside the particular area of immigration detention with which Lim was concerned. Subsequent references in these reasons to "a citizen" should be read in this extended sense. Another indeterminacy concerns the phrase "criminal guilt". In Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd, Hayne J, after referring to the unstable nature of a dichotomy between civil and criminal proceedings, went on94: "It seeks to divide the litigious world into only two parts when, in truth, that world is more complex and varied than such a classification acknowledges. There are proceedings with both civil and criminal characteristics: for example, proceedings for a civil penalty under 89 (1996) 189 CLR 51 at 97-98. 90 (1996) 189 CLR 51 at 131-132. 91 (1996) 189 CLR 51 at 106-107. 92 (1996) 189 CLR 51 at 121-122. 93 R v Home Secretary, Ex parte Khawaja [1984] AC 74 at 111-112; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 298-299, 327-328, 335-336; Behrooz v Secretary, Department of Immigration and Multicultural and Indigenous Affairs (2004) 78 ALJR 1056 at 1066 [51]-[53]; 208 ALR 271 at 283-284. See also the Opinion of the Supreme Court of the United States in Rasul v Bush 72 USLW 4596 94 (2003) 77 ALJR 1629 at 1649 [114]; 201 ALR 1 at 28-29. See also at 1634 [29]; 7 of ALR; and see further Rich v Australian Securities and Investments Commission [2004] HCA 42. companies95 and trade practices96 legislation. The purposes of those proceedings include purposes of deterrence, and the consequences can be large and punishing." However, what is involved here is the loss of liberty of the individual by reason of adjudication of a breach of the law. In such a situation, as Kirby J remarked in Labrador97, that loss of liberty is "ordinarily one of the hallmarks reserved to criminal proceedings conducted in the courts, with the protections and assurances that criminal proceedings provide". I would prefer a formulation of the principle derived from Ch III in terms that, the "exceptional cases" aside, the involuntary detention of a citizen in custody by the State is permissible only as a consequential step in the adjudication of criminal guilt of that citizen for past acts. That central conception is consistent with the holding in Polyukhovich v The Commonwealth98 that the conduct may not have been forbidden by law when it was engaged in; the detention under federal legislation such as that upheld in Polyukhovich still follows from a trial for past, not anticipated, conduct. That formulation also eschews the phrase "is penal or punitive in character". In doing so, the formulation emphasises that the concern is with the deprivation of liberty without adjudication of guilt rather than with the further question whether the deprivation is for a punitive purpose99. Further, "punishment" and cognate terms have an indeterminate reference, and are "heavily charged with subjective emotional and intellectual overtones"100. The indeterminacy of the term "punishment" is illustrated by the division of opinion in the United States Supreme Court in Kansas v Hendricks101. The 95 Corporations Act 2001 (Cth), Pt 9.4B (ss 1317DA-1317S). 96 Trade Practices Act 1974 (Cth), s 77. 97 (2003) 77 ALJR 1629 at 1638 [56]; 201 ALR 1 at 13; cf Kansas v Hendricks 521 US 346 at 361-363, 379-381 (1997). 98 The War Crimes Act Case (1991) 172 CLR 501. 99 Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1125 [137]-[139]; 208 ALR 124 at 100 Morris, (1967) 13 McGill Law Journal 534 at 538. 101 521 US 346 (1997). See Pfaffenroth, "The Need for Coherence: States' Civil Commitment of Sex Offenders in the Wake of Kansas v Crane", (2003) 55 Stanford Law Review 2229. Kansas law under challenge in that case established procedures for the commitment of those who by reason of a "mental abnormality" or a "personality disorder" were likely to engage in "predatory acts of sexual violence". The issues (resolved in favour of validity) whether the law violated the United States Constitution's double jeopardy prohibition or its ban on ex post facto law-making were treated by the Supreme Court as turning on the classification of commitment under the law as "punishment". The majority contrasted detention for the purpose of protecting the community from harm and "the two primary objectives of criminal punishment: retribution and deterrence"102. This Court has looked at the objectives of the sentencing process rather more broadly, as noted above with the reference to Veen v The Queen [No 2]. Preventative detention regimes attached by legislation to the curial sentencing process upon conviction have a long history in common law countries. The Habitual Criminals Act 1905 (NSW) and Pt II of the Prevention of Crime Act 1908 (UK) are examples of such legislation. It may be accepted that the list of exceptions to which reference was made in Lim103 is not closed. But it is not suggested that regimes imposing upon the courts functions detached from the sentencing process form a new exceptional class, nor that the detention of the mentally ill for treatment is of the same character as the incarceration of those "likely to" commit certain classes of offence. Another of the well-understood exceptions to which the Court referred in Lim104, with a citation from Blackstone, was committal to custody, pursuant to executive warrant of accused persons to ensure availability to be dealt with by exercise of the judicial power. But detention by reason of apprehended conduct, even by judicial determination on a quia timet basis, is of a different character and is at odds with the central constitutional conception of detention as a consequence of judicial determination of engagement in past conduct. is not the present point, namely, consideration of the Commonwealth's submissions, that federal legislation, drawing its inspiration from the Act, may provide for detention without adjudication of criminal guilt but by a judicial process of some refinement. The vice for a Ch III court and for the federal laws postulated in submissions would be in the nature of the outcome, not the means by which it was obtained. 102 521 US 346 at 361-362 (1997). 103 (1992) 176 CLR 1 at 28. 104 (1992) 176 CLR 1 at 28. The repugnancy doctrine in Kable does not imply into the Constitutions of the States the separation of judicial power mandated for the Commonwealth by Ch III. That is fundamental for an understanding of Kable. No party or intervener submits otherwise. Hence, in the joint judgment in Silbert v Director of Public Prosecutions (WA)105, it was emphasised that the repugnancy doctrine in Kable operates upon the footing that the outcome provided for by the State law in question could not be obtained in the exercise of federal jurisdiction. If it could be so obtained then, as in Silbert106 and Baker v The Queen107, the necessary comparator for the repugnancy doctrine to operate has not been established and that is the end of the matter. It may logically be sustainable to proceed on the hypothesis that the outcome could not be obtained in the exercise of federal jurisdiction and to conclude that, even so, no case under the Kable doctrine of repugnancy is made out and the State legislation is valid. However, given particularly the detailed submissions by the Attorney-General of the Commonwealth, I have, as indicated above, dealt directly with the federal jurisdiction issue. No "legal fiction" has been involved in this consideration of the Commonwealth's submissions. A supposition known to be false or fictional but the disproving of which the law forbids is one thing; the assumption of a proposition or condition taken as a step in syllogistic reasoning to test a larger thesis is another. The first denies the exercise of logic, the second exemplifies it. The conclusion reached on the federal jurisdiction issue directly leads to the further issue, that on which the appellant and respondent are at odds, namely the application to the Act of the repugnancy doctrine. The Act and judicial process At this stage, the nature of the process for which the Act provides assumes particular importance. This process may ameliorate what otherwise would be the sapping of the institutional integrity of the Supreme Court. In Kable, the majority judgments in varying degrees, but with significant common ground, accepted the submission of Sir Maurice Byers QC108 that the NSW Act was "not a carefully calculated legislative response to a general social 105 (2004) 78 ALJR 464 at 466 [10]; 205 ALR 43 at 46. 106 (2004) 78 ALJR 464 at 466 [11]-[13]; 205 ALR 43 at 46. 107 [2004] HCA 45. 108 (1996) 189 CLR 51 at 62. problem". McHugh J stressed that the NSW Act required a decision as to the propensities of the defendant be made on material otherwise inadmissible in legal proceedings109. His Honour concluded110: "The Act seeks to ensure, so far as legislation can do it, that the appellant will be imprisoned by the Supreme Court when his sentence for manslaughter expires. It makes the Supreme Court the instrument of a legislative plan, initiated by the executive government, to imprison the appellant by a process that is far removed from the judicial process that is ordinarily invoked when a court is asked to imprison a person." Hence the relevance to the reasoning in Kable of the statement by the Supreme Court of the United States in Mistretta v United States111 that the reputation of the judicial branch of government may not be borrowed by the legislative and executive branches "to cloak their work in the neutral colors of judicial action". In Nolan, Gaudron J described the "general features" of the judicial process as including112: "open and public enquiry (subject to limited exceptions), the application of the rules of natural justice, the ascertainment of the facts as they are and as they bear on the right or liability in issue and the identification of the applicable law, followed by an application of that law to those facts113." There is nothing in the Act to exclude rules of natural justice from the process of the Supreme Court. However, as was emphasised in the joint judgment in Wilson v Minister for Aboriginal and Torres Strait Islander Affairs114, many persons at various levels in the executive branch of government are obliged to act without bias and by a procedure giving to persons with the necessary interest an opportunity to be heard and to deal with any case presented by those with opposing interests. 109 (1996) 189 CLR 51 at 120-121; see also at 105, 106 per Gaudron J, 131 per 110 (1996) 189 CLR 51 at 122. 111 488 US 361 at 407 (1989). 112 (1991) 172 CLR 460 at 496. 113 See also R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374 per Kitto J. 114 (1996) 189 CLR 1 at 17. Nevertheless, the Act goes further. Section 25(2) imposed upon the respondent a duty of disclosure of evidence or things in his possession which was the same duty of disclosure as the prosecution has in a criminal proceeding. The respondent was entitled to appear at the hearing of the application for the continuing detention order (s 49). The procedure at the hearing of the s 13 application was governed by s 45(2), (3), (4). This states: "(2) Subject to the admissibility of the evidence, before the court makes a decision or order on the hearing of an application it must – hear evidence called by the Attorney-General; and hear evidence given or called by the prisoner, if the prisoner elects to give or call evidence. Subject to subsection (4), ordinary rules of evidence apply to evidence given or called under subsection (2). In making its decision, the court may receive in evidence the following documents – the prisoner's antecedents and criminal history; anything relevant to the issue contained in the certified transcription of, or any medical, psychiatric, psychological or other report tendered in, any proceeding against the prisoner for a serious sexual offence." The respondent had the onus of proof that the appellant was a serious danger to the community in the sense required for the making of a continuing detention order (s 13(7)). The satisfaction of the Supreme Court that the appellant is a serious danger to the community could be attained (s 13(3)): "only if it is satisfied – by acceptable, cogent evidence; and to a high degree of probability; that the evidence is of sufficient weight to justify the decision." The requirements in s 13(3) respecting the cogency of acceptable evidence and the attainment by the Supreme Court of a high degree of probability are important in considering the validity of s 13, given the nature of the ultimate issue in a s 13 application for a continuing detention order. That is the existence of an unacceptable risk of commission of a "serious sexual offence" as defined, if the "prisoner" as defined is released from custody. In Kable115, McHugh J pointed to the requirement in the NSW Act that the Supreme Court of New South Wales "speculate whether, on the balance of probabilities, it is more likely than not the appellant will commit a serious act of violence". His Honour went on to refer to the prediction of dangerousness as a notoriously difficult matter116. However, under the present legislation, in considering the application for a continuing detention order against the appellant, the Court was required to have regard to the matters listed in pars (a)-(j) of s 13(4). These include psychiatric reports indicating, with reasons, an assessment of the level of risk that the prisoner will commit another serious sexual offence if released from custody or released without the making of a supervision order (s 13(4)(a), s 11(2)); the existence of any pattern of offending behaviour on the part of the prisoner (s 13(4)(d)); participation in rehabilitation programmes (s 13(4)(e), (f)); and "any other relevant matter" (s 13(4)(j)). The Court was obliged by s 17 to give "detailed reasons" for the making of the continuing detention order in respect of the appellant and to do so at the time that order was made. Provision is made in Pt 4 of the Act (ss 31-43) for appeals by the Attorney-General or the prisoner against whom a decision under the Act has been made. An appeal is to the Queensland Court of Appeal and is by way of a rehearing (s 43(1)). The Court of Appeal has all the powers and duties of the court that made the decision from which the appeal is brought and "on special grounds" may receive further evidence as to questions of fact (s 43). Kable In the written submissions, the Victorian Solicitor-General essays the principle for which Kable is authority in a fashion which in its essentials should be accepted. First, it was a particular combination of features of the NSW Act that led to its invalidity. These included the apparent legislative plan to conscript the Supreme Court of New South Wales to procure the imprisonment of the appellant by a process which departed in serious respects from the usual judicial process. Secondly, the essential notion is that of repugnancy to or incompatibility with that institutional integrity of the State courts which bespeaks their 115 (1996) 189 CLR 51 at 122-123. 116 (1996) 189 CLR 51 at 123. constitutionally mandated position in the Australian legal system. The point was made as follows by Gaudron J in Kable117: "Once the notion that the Constitution permits of different grades or qualities of justice is rejected, the consideration that State courts have a role and existence transcending their status as State courts directs the conclusion that Ch III requires that the Parliaments of the States not legislate to confer powers on State courts which are repugnant to or incompatible with the Commonwealth." judicial power of their exercise of the Thirdly, one important indication that a particular law has the character just stated is that the exercise of the power or function in question is calculated, in the sense of apt or likely, to undermine public confidence in the courts exercising that power or function. The relationship between institutional integrity and public confidence in the administration of justice was discussed, in strongly disapproving any judicial participation in "plea bargaining", by the Full Court of the Supreme Court of Victoria in R v Marshall118. However, although in some of the cases119 considering the application of Kable, institutional integrity and public confidence perhaps may have appeared as distinct and separately sufficient considerations, that is not so. Perception as to the undermining of public confidence is an indicator, but not the touchstone, of invalidity; the touchstone concerns institutional integrity. Fourthly, the notions of repugnancy and incompatibility appear elsewhere in constitutional doctrine. Examples are provided by the interaction between Imperial law and colonial and State law before the enactment of s 3 of the Australia Act 1986 (Cth)120, between federal and Territory laws121, and between statute and delegated legislation122. A closer, if inexact, analogy is provided by 117 (1996) 189 CLR 51 at 103. 118 [1981] VR 725 at 733-734. 119 See, for example, Northern Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 78 ALJR 977 at 990-991 [65]; 206 ALR 315 at 334. 120 See Yougarla v Western Australia (2001) 207 CLR 344 at 354-355 [17]. 121 Northern Territory v GPAO (1999) 196 CLR 553 at 579-580 [51], 636 [219]. 122 Northern Territory v GPAO (1999) 196 CLR 553 at 580 [52]. the constitutional restriction on the availability of Ch III judges to perform non-judicial functions as designated persons123. But, in that last category, as with Kable and the present case, the critical notions of repugnancy and incompatibility are insusceptible of further definition in terms which necessarily dictate future outcomes. For example, in the joint judgment in Northern Australian Aboriginal Legal Aid Service Inc v Bradley124, there was reserved for consideration elsewhere "the application of Kable to a series of acting rather than full [judicial] appointments which is so extensive as to distort the character of the court concerned". The notions of particular disability or burden upon State activity which are derived from Melbourne Corporation v The Commonwealth125 provide another instance of constitutional doctrine which is not framed in terms apt to dictate future outcomes. That a particular constitutional doctrine requires close attention to the detail of impugned legislation and that its invalidating effect may be demonstrated infrequently does not, as the history of the application of Melbourne Corporation over 50 years shows, warrant its description at any one time as a dead letter. Reflection upon the range of human affairs, the scope of executive and legislative activity, and the necessity for close analysis of complex and varied statutory schemes will indicate that this may be a strength rather than a weakness of constitutional doctrine. So also, for example, in private law with the protection extended by equity to the victims of fraud. Two and a half centuries ago, in a perspicacious passage in a letter to Lord Kames, Lord Hardwicke LC wrote126: "But as to relief against frauds, no invariable rules can be established. Fraud is infinite, and were a Court of Equity once to lay down rules, how far they would go, and no farther, in extending their relief against it, or to 123 Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1. 124 (2004) 78 ALJR 977 at 986 [32]; 206 ALR 315 at 327. 125 (1947) 74 CLR 31. The Melbourne Corporation doctrine has successfully been invoked in Queensland Electricity Commission v The Commonwealth (1985) 159 CLR 192 and Austin v Commonwealth (2003) 77 ALJR 491; 195 ALR 321. twice since 1947, 126 Written 30 June 1759 and reproduced in Parkes, A History of the Court of Chancery, (1828) at 508. See also Reddaway v Banham [1896] AC 199 at 221 per Lord Macnaghten; Nocton v Lord Ashburton [1914] AC 932 at 954 per Viscount Haldane LC; Story, Commentaries in Equity Jurisprudence as administered in England and America, 13th ed (1886), vol 1, §186. define strictly the species or evidence of it, the jurisdiction would be cramped, and perpetually eluded by new schemes, which the fertility of man's invention would contrive." Conclusions Emphasis already has been given in these reasons to the consideration that, while the outcome contemplated and authorised by the Act, the making of a continuing detention order under s 13, could not be attained in the exercise of federal jurisdiction by any court of a State, this circumstance itself cannot dictate a conclusion of repugnancy and incompatibility and therefore of invalidity of the Act. On the other hand, the particular preventative detention regime established by the Act cannot be said to bestow upon the Supreme Court a function which "is an integral part of, or is closely connected with, the functions of the Legislature or the Executive Government"127. Rather, the regime is sui generis in nature. That, other things being equal, supports the case by the respondent that no incompatibility in the necessary sense is to be found128. Mention also should be made of several matters of significance which, taken together with others, support the case in opposition to the appellant's attack on the validity of s 13 of the Act. First, the factum upon which the attraction of the Act turns is the status of the appellant to an application by the Attorney- General as a "prisoner" (s 5(6)) who is presently detained in custody upon conviction for an offence of the character of those offences of which there is said to be an unacceptable risk of commission if the appellant be released from custody. To this degree there remains a connection between the operation of the Act and anterior conviction by the usual judicial processes. A legislative choice of a factum of some other character may well have imperilled the validity of s 13. Secondly, s 13(5) states that if the Supreme Court attains the necessary satisfaction it "may order" what is a "continuing detention order" or the lesser option of conditional release under a "supervision order". It will be assumed that "may" is used here in a sense that requires one or the other outcome, without the possibility of declining to make either order129. What is of present significance is 127 Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 17. 128 cf Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 17. 129 See Samad v District Court of New South Wales (2002) 209 CLR 140 at 152-154 provisions of Pt 3 (ss 26-30) headed "ANNUAL REVIEWS". Despite the statement in s 13(5), exemplified in the order made here by White J130, that the prisoner be detained under a continuing detention order for "an indefinite term for control, care or treatment" (emphasis added), less than that outcome is mandated by the Act. Section 27 imposes upon the Attorney-General an obligation to cause a review to be carried out at the end of one year after the order first has effect and afterwards at intervals of not more than one year after the last review. The Supreme Court at any time after the first review under s 27 may give the prisoner leave to apply for review on the grounds that there are exceptional circumstances relating to the prisoner (s 28). On a review under Pt 3, the Supreme Court must rescind the continuing detention order unless it orders that the prisoner continue to be subject to that order (s 30(5)). The Supreme Court is empowered by s 30(2) to: "affirm the decision only if it is satisfied – by acceptable, cogent evidence; and to a high degree of probability; that the evidence is of sufficient weight to affirm the decision". The purpose of Pt 3 "is to ensure that a prisoner's continued detention under a continuing detention order is subject to regular review" (s 26). That statement of purpose guides the construction of the balance of Pt 3. That which is affirmed under s 30 is the primary decision "that the prisoner is a serious danger to the community in the absence of a division 3 order" (emphasis added) (s 30(1)). The phrase "is a serious danger" involves the use of the continuous present to require a decision that, by reason of the attainment of satisfaction by the means and to the degree specified in s 30(3), the prisoner presently is a serious danger to the community in the absence of a Div 3 order. Upon the reaching of that decision, the court may order further subjection to a continuing detention order or release subject to a supervision order (s 30(3)); in making a choice between those orders, the court is to have as "the paramount consideration ... the need to ensure adequate protection of the community" (s 30(4)). 130 Her Honour expressed the order as one for "control, care and treatment" (emphasis added); the Act speaks of "control, care or treatment" (emphasis added) (s 13(5)(a)). It is unnecessary here to determine whether par (a) of s 13(5) should be read, as was submitted for the respondent, "any one or more of, care control or treatment". Section 30(2) may permit refusal by the court of an order for further detention, by reason of failure by the appropriate authorities to implement the earlier order. An example would be an order for treatment of the prisoner to facilitate rehabilitation, an objective of the Act (s 3(b)). It is unnecessary to decide that question here. However, what is vital for Pt 3, and thus to the validity of the Act, is the requirement that the regular "review" does not, with the passage of time, become no more than a periodic formality; if the exercise in which the court was involved had been permitted by the legislation to lose its requirement for deeply serious consideration upon specified criteria and to a high degree of satisfaction, then invalidity of such legislation may well result. The nature of the factum selected for the attraction of the Act (the definition of "prisoner" in s 5(6)) and the subjection of continuing orders to annual "review" by the Supreme Court together support the maintenance of the institutional integrity of the Supreme Court. So also does the character of their judicial process provided by the Act with respect to applications under s 8 and s 13 and detailed earlier in these reasons. This process, together with that required for the annual "reviews" under Pt 3, answers the description of the general features of judicial process given by Gaudron J in the passage from Nolan131 which has been set out and makes special allowance by the standard of satisfaction required for the deprivation of liberty that is involved with a continuing detention order. It also should be emphasised that the Supreme Court performs its functions under the Act independently of any instruction, advice or wish of the legislative or executive branches of government. Further, the grounds upon which the Supreme Court exercises its powers conferred by the Act are confined to those prescribed by law; there is no scope for the exercise of what in Wilson v Minister for Aboriginal and Torres Strait Islander Affairs was classed as a "political discretion"132. In the light of the combination of considerations, the conclusion is that the appellant fails to establish the necessary impairment of the institutional integrity of the Supreme Court by reason of repugnancy or incompatibility of the Act, in particular s 13 of the statute. It should be added that the conclusions already expressed supply the answer to the appellant's argument that the Act imposes a Bill of Penalities. The argument appears to have been put on the basis that, if the Act did answer that 131 (1991) 172 CLR 460 at 497; see also at 496. 132 (1996) 189 CLR 1 at 17. description, repugnancy in the sense required for the application of Kable would be established. However, the Act does not impose punishment for guilt declared by the legislature133. Orders With respect to the removed cause (a) there should be a declaration that s 13 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) is not beyond the legislative power of the State of Queensland, and (b) the cause otherwise should be remitted to the Queensland Court of Appeal for hearing and determination of the remaining issues on the appeal to that Court. The appeal to this Court in the other matter should be dismissed. 133 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 534-535, 646, 721-722; Kariapper v Wijesinha [1968] AC 717 at 736 per Sir Douglas Menzies (delivering the judgment of the Board). Kirby 121 KIRBY J. This appeal, heard together with a cause removed into this Court134, involves a challenge to the constitutional validity of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act"). The Queensland Court of Appeal, by majority135, confirmed the decision of the primary judge136 that the Act was valid. However, in the Court of Appeal, McMurdo P (dissenting) observed137: "The scheme instituted under the Act is unique in Australia in that it makes a prisoner who has been convicted and sentenced for an offence liable for an order for further detention imposed by a Supreme Court judge, not because of any further unlawful actions but because of the potential that the prisoner may commit further unlawful actions." Mr Robert Fardon (the appellant) asserts that the Act is invalid because it seeks to impose on the Supreme Court of Queensland, a court constitutionally recognised within the integrated judicature of the Commonwealth138, functions inconsistent with ("repugnant to"139) the requirements of Ch III of the federal Constitution. Unreliable predictions of criminal dangerousness The appellant points out that the sentences of imprisonment imposed on him in 1989 have been served in their entirety140. Nevertheless, pursuant to orders made under the Act, the appellant has remained a prisoner, incarcerated in the Townsville Correctional Centre after the date of the expiry of his sentences. This has occurred without allegation, still less proof, of any further offence by 134 Under the Judiciary Act 1903 (Cth), s 40. See reasons of Gummow J at [56]. 135 de Jersey CJ and Williams JA; McMurdo P dissenting. See Attorney-General (Q) v 136 Attorney-General (Q) v Fardon [2003] QSC 200 (Muir J). 137 Fardon [2003] QCA 416 at [76]. 138 Constitution, s 73. See also ss 74, 106. 139 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 103-104 per Gaudron J, 132 per Gummow J. 140 The term of imprisonment was 14 years on each of two counts of the indictment charging offences of rape and sodomy and three years on a third count charging unlawful assault on a female. The sentences were ordered to be served concurrently. Kirby him, or breach of the law. He complains that, effectively, his judicial punishment has been extended by orders made under the Act, a supervening law141: "because opinions have been formed, probably on material which would not be admissible in a legal proceeding and on a standard other than beyond reasonable doubt, that [he] will commit a serious sexual offence as defined if released from custody, or at least unsupervised custody, after completing [his] sentenced terms of imprisonment." Experts in law, psychology and criminology have long recognised the unreliability of predictions of criminal dangerousness142. In a recent comment, Professor Kate Warner remarked143: "[A]n obstacle to preventive detention is the difficulty of prediction. Psychiatrists notoriously overpredict. Predictions of dangerousness have been shown to have only a one-third to 50% success rate144. While actuarial predictions have been shown to be better than clinical predictions – an interesting point as psychiatric or clinical predictions are central to continuing detention orders – neither are accurate." Judges of this Court have referred to such unreliability145. Even with the procedures and criteria adopted, the Act ultimately deprives people such as the appellant of personal liberty, a most fundamental human right, on a prediction of dangerousness, based largely on the opinions of psychiatrists which can only be, at best, an educated or informed "guess"146. The Act does so in circumstances, 141 [2003] QCA 416 at [91] per McMurdo P (diss). 142 eg Webster et al, "Introduction", in Webster et al (eds), Dangerousness: Probability and prediction, psychiatry and public policy, (1985) at 1, 4, 10; Gabor, The Prediction of Criminal Behaviour: Statistical Approaches, (1986) at 87, 89; Glaser, "Profiling the Rapist: The Prediction of Dangerousness", in Easteal (ed), Without Consent: Confronting Adult Sexual Violence, Australian Institute of Criminology Conference Proceedings No 20, (1993) at 287. 143 Warner, "Sentencing review 2002-2003", (2003) 27 Criminal Law Journal 325 at 338; Shea, Psychiatry in Court, 2nd ed, (1996) at 155. 144 Ashworth, Sentencing and Criminal Justice, 3rd ed (2000) at 180. 145 eg Kable (1996) 189 CLR 51 at 122-123 per McHugh J; Veen v The Queen (1979) 143 CLR 458 at 463-465 per Stephen J; McGarry v The Queen (2001) 207 CLR 121 at 141-142 [61] of my own reasons. 146 Fardon [2003] QCA 416 at [91], applying the language of Kable (1996) 189 CLR 51 at 106 per Gaudron J, 123 per McHugh J. Kirby and with consequences, that represent a departure from past and present notions of the judicial function in Australia. As the Act's provisions show, it targets people who "will almost inevitably be unpopular with the community and the media who can be expected to take considerable interest in orders of the type sought under the Act"147. As framed, the Act is invalid. It sets a very bad example, which, unless stopped in its tracks, will expand to endanger freedoms protected by the Constitution. In this country, judges do not impose punishment on people for their beliefs, however foolish or undesirable they may be regarded148, nor for future crimes that people fear but which those concerned have not committed. In strictly limited circumstances, the judiciary permits "executive interference with the liberty of the individual"149 where "the purpose of the imprisonment is to achieve some legitimate non-punitive object"150. Despite some attempts to give the Act that appearance, that is not the true meaning and effect of its terms. The appellant's continued imprisonment is unlawful. Having served his lawful sentences, he should be released forthwith. The facts and relevant legislation Facts and legislation: The facts, so far as they are relevant, are stated in the reasons of the other members of this Court151. Also set out there are the important provisions of the Act152 and of other Queensland statutes relevant to the operation of the Act or to understanding its purposes153. 147 Fardon [2003] QCA 416 at [91]. See also "Editorial: Law and Order State Elections", (2003) 27 Criminal Law Journal 5 at 7, quoting Brown and Hogg, Rethinking Law and Order, (1998). 148 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 ("the Communist Party Case"). 149 See Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 56 per 150 Lim (1992) 176 CLR 1 at 71 per McHugh J. 151 Reasons of Gummow J at [46]-[48], [53]-[56]; reasons of Callinan and Heydon JJ 152 Reasons of Gummow J at [49]-[52], [57]-[59], [95]-[96], [109]-[111]; reasons of Callinan and Heydon JJ at [211]. 153 eg the Penalties and Sentences Act 1992 (Q). See reasons of Gummow J at [47], Kirby I will not repeat any of this material. However, it is pertinent to add reference to two other Queensland statutes. By s 4 of the Act it is provided that the Bail Act 1980 (Q) does not apply to a person detained under the Act154. By s 14(2) of the Act, it is provided that a "person subject to a continuing detention order remains a prisoner". The word "prisoner" is defined in the "dictionary" referred to in s 2 of the Act (and contained in the Schedule) to mean "a prisoner within the meaning of the Corrective Services Act 2000 [(Q)]"155. By s 6(1) of the last-mentioned Act, it is provided that a "person sentenced to a period of imprisonment, or required by law to be detained for a period of imprisonment, must be detained for the period in a corrective services facility". By s 14(1) of the Act a "continuing detention order" under the Act has effect in accordance with its terms: "(a) on the order being made or at the end of the prisoner's period of imprisonment, whichever is the later; and (b) until rescinded by the court's order". A general facility exists under the Corrective Services Act for a corrective services officer to make an order transferring a prisoner from a corrective services facility to a place for medical or psychological examination or treatment156. This is not special to a "prisoner" subject to an order under the Act. Under the Corrective Services Act, the chief executive of corrective services must establish services or programmes "for the medical welfare of prisoners"157 and to "help prisoners to be integrated into the community after their release from custody"158, and to "take into account the special needs of offenders"159. These too are general provisions. There was no evidence, on the face of the Act or otherwise, that, under the orders made under the Act, the appellant was to be transferred into a different facility, separate from the ordinary prison environment. On the contrary, the only available inference from the record is that the appellant remains in the Townsville Correctional Centre. Inferentially, he stays in the very same cell in which he had served the sentences 154 A like consideration was relevant in Kable (1996) 189 CLR 51 at 129 per 155 In this respect the legislation is similar to that provided in Kable (1996) 189 CLR 51 at 98 per Toohey J. 156 Corrective Services Act, s 53(1). 157 Corrective Services Act, s 190(1)(a). 158 Corrective Services Act, s 190(1)(b). 159 Corrective Services Act, s 190(2). Kirby judicially imposed upon him as punishment upon his conviction for criminal offences. Common ground: Although the appellant suggested that the primary issue presented by the proceeding was whether the Act, specifically ss 8 and 13, infringed Ch III of the Constitution, he did not seek to propound an argument of constitutional incompatibility ("repugnance") based upon an implied right to due process or equality derived from implications to be discovered in Ch III160. I am content in this case, where other arguments are determinative, to put those issues to one side. But if they had been explored, they might well have sustained the conclusion that I will support on other grounds. Similarly, no party, and none of the governmental interveners, challenged the principle expressed by the majority of this Court in Kable v Director of Public Prosecutions (NSW)161. The issue for decision, as litigated, was therefore whether the Kable principle rendered invalid the impugned provisions of the Act under which the appellant's detention has continued; and indeed whether it invalidated the entire scheme of the Act having regard to those sections162. Kable: chimera or protection?: The reasons of the judges below, respectively upholding and rejecting the validity of the Act, are sufficiently described in the reasons of other members of this Court163. So is the subsequent litigation, pursuant to which a "continuing detention order" under the Act was made against the appellant164. I do not pretend that the ultimate issue raised by these proceedings is cut and dried. The validity of similar enactments has repeatedly divided the Supreme Court of the United States, giving effect to its own constitutional 160 See Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 606-614, 703-707; Leeth v The Commonwealth (1992) 174 CLR 455 at 483- 490, 501-503; Kruger v The Commonwealth (1997) 190 CLR 1 at 94-95, 112-113; Cameron v The Queen (2002) 209 CLR 339 at 352-353 [44]-[45], 368-369 [93]- [95]. See also Parker, "Protection of Judicial Process as an Implied Constitutional Principle", (1994) 16 Adelaide Law Review 341 at 350-354. 161 (1996) 189 CLR 51. 162 [2003] QCA 416 at [92] per McMurdo P. Her Honour held that ss 8 and 13 could not be severed and that the entire scheme of the Act was invalid. 163 Reasons of Gummow J at [53]; reasons of Callinan and Heydon JJ at [203]-[204]. 164 Attorney-General (Q) v Fardon [2003] QSC 379 per White J. See reasons of Gummow J at [55]-[56]; reasons of Callinan and Heydon JJ at [205]. Kirby obligations165. In this country, the Kable principle has so far proved a weak protection against State legislation said to have intruded impermissibly into the judicial function166. In only one case has the principle been upheld and applied by this Court, namely in Kable itself. What was seen at first to be an important assurance that the State judiciary in Australia (certainly the named Supreme Courts) enjoyed many of the constitutional protections of the federal judiciary167, has repeatedly been revealed as a chimera. I disagree with this approach. It is unnecessary to the principle stated in Kable and undesirable in terms of constitutional fundamentals. In my opinion, Kable is especially important when the rights of unpopular minorities are committed to the courts. That is when legislatures may be tempted to exceed their constitutional powers, involving the independent judiciary in incompatible activities so as to cloak serious injustices with the semblance of judicial propriety. Against such risks, Ch III of the Constitution stands guard. This Court should be vigilant to uphold such protection. That is what the principle in Kable requires. The Kable principle Avoiding repugnance to Ch III: Too much has been made of the differing ways in which the majority in Kable expressed their respective reasons for upholding the constitutional objection to the Community Protection Act 1994 (NSW), challenged in that case. The essential idea was relatively clear and simple. Because State courts (and unavoidably State Supreme Courts named in the Constitution) may be vested with federal jurisdiction which they are then bound to exercise168, they must exhibit certain basic qualities as "courts" fit for that function. 165 Kansas v Hendricks 521 US 346 (1997); Seling v Young 531 US 250 (2001); Kansas v Crane 534 US 407 (2002). 166 See eg H A Bachrach Pty Ltd v The State of Queensland (1998) 195 CLR 547; Silbert v Director of Public Prosecutions (WA) (2004) 78 ALJR 464 at 470 [32]-[33]; 205 ALR 43 at 51. 167 Campbell, "Constitutional Protection of State Courts and Judges", (1997) 23 Monash University Law Review 397 at 408; Walker, "Disputed Returns and Parliamentary Qualifications: Is the High Court's Jurisdiction Constitutional?", (1997) 20 University of NSW Law Journal 257 at 271; Bagaric and Lakic, "Victorian Sentencing Turns Retrospective: The Constitutional Validity of Retrospective Criminal Legislation after Kable", (1999) 23 Criminal Law Journal 168 Constitution, s 77(iii). Kirby In short, State courts must remain at all times curial receptacles proper to the exercise of federal jurisdiction. Although they are not, as such, federal courts, subject to the express strictures of Ch III, their inclusion in the integrated judicature of the Commonwealth, the provisions for appeals from them to federal courts169 and the facility for the vesting of federal jurisdiction all imply that they cannot be required by State law to perform functions inconsistent with ("repugnant to") Ch III. In particular instances of challenge, it falls to the courts themselves (ultimately this Court), to explain the contents of the Kable principle. The principle must be given meaning in a context that respects the different constitutional origins and histories of State courts; but which also upholds the implications necessary to their undoubted place within the judicature envisaged by the federal Constitution. Just as the States of Australia are not, constitutionally speaking, merely the colonies renamed, so State courts, after Federation (and specifically State Supreme Courts named in the Constitution) derive particular functions and characteristics from the federal Constitution itself. These requirements are not identical to those imposed explicitly on federal courts. However, they cannot be so different from such requirements as to undermine the integrated scheme for the national judicature which the Constitution creates. Self-evidently, a conclusion that legislation infringes the Constitution and is for that reason invalid is a serious one170. The only justification for such a conclusion can be the Constitution itself. It cannot depend on the whim of judges to set aside an unliked law that has been made by the vote of a majority of the representatives of the people, elected to Parliament171. However, just as the legislators have their functions under the Constitution, so do the courts. If any branch of government neglects, or exceeds, its functions, the harmony envisaged by the Constitution is disturbed. Within the Constitution, legislators sometimes respond to waves of community fear and the system of representative government created by 169 Constitution, s 73. See Minister for Works (WA) v Civil and Civic Pty Ltd (1967) 116 CLR 273 at 277, 281-282. 170 Universal Film Manufacturing Co (Australasia) Ltd v New South Wales (1927) 40 CLR 333 at 347, 356; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 171 Nicholas v The Queen (1998) 193 CLR 173 at 197 [37] per Brennan CJ. Kirby emotion, occasionally promoted by sections of the media172. As this Court demonstrated in Australian Communist Party v The Commonwealth ("the Communist Party Case")173, its function, derived from the Constitution, responds to a time frame that is much longer than that of the other branches of government. Inevitably, it affords a constitutional corrective to transient passions and, sometimes, to ill-considered laws repugnant to the timeless constitutional design. This is what I take Kable to require. It forbids attempts of State Parliaments to impose on courts, notably Supreme Courts, functions that would oblige them to act in relation to a person "in a manner which is inconsistent with traditional judicial process"174. It prevents attempts to impose on such courts "proceedings [not] otherwise known to the law", that is, those not partaking "of the nature of legal proceedings"175. It proscribes parliamentary endeavours to "compromise the institutional impartiality" of a State Supreme Court176. It forbids the conferral upon State courts of functions "repugnant to judicial process"177. Recent, and not so recent, experience teaches that governments and parliaments can, from time to time, endeavour to attract electoral support by attempting to spend the reputational currency of the independent courts in the pursuit of objectives which legislators deem to be popular. Normally, this will be constitutionally permissible and legally unchallengeable. However, as Kable demonstrates, a point will be reached when it is not, however popular the law in question may at first be. The criteria for the decision are stated in Kable in general terms. Yet such is often the case in constitutional adjudication. Evaluation and judgment are required of judicial decision-makers responding, as they must, to enduring values, not to immediate acclaim. 172 See Fardon [2003] QCA 416 at [91]. See also "Editorial: Law and Order State Elections", (2003) 27 Criminal Law Journal 5; Warner, "Sentencing review 2002-2003", (2003) 27 Criminal Law Journal 325 at 330. 173 (1951) 83 CLR 1. 174 Kable (1996) 189 CLR 51 at 98 per Toohey J. See also Grollo v Palmer (1995) 184 CLR 348 at 363-365; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 8-9, 13-14, 20-22. 175 Kable (1996) 189 CLR 51 at 106 per Gaudron J. 176 Kable (1996) 189 CLR 51 at 121 per McHugh J. 177 Kable (1996) 189 CLR 51 at 134 per Gummow J. Kirby Protection of the legal and constitutional rights of minorities in a representative democracy such as the Australian Commonwealth is sometimes unpopular. This is so whether it involves religious minorities178, communists179, illegal drug importers180, applicants for refugee status181, or persons accused of offences against anti-terrorist laws182. Least of all is it popular in the case of prisoners convicted of violent sexual offences or offences against children. Yet it is in cases of such a kind that the rule of law is tested. As Latham CJ pointed out long ago, in claims for legal protection, normally, "the majority of the people can look after itself": constitutional protections only really become important in the case of "minorities, and, in particular, of unpopular minorities"183. It is in such cases that the adherence of this Court to established constitutional principle is truly tested, as it is in this case. The implications of Kable: A number of propositions about the ambit of the Kable principle can be derived from the case itself and from subsequent decisions: The circumstances that will invoke the principle of repugnance must be "extraordinary"184. Despite occasional derogations, Australian legislatures are normally respectful of the separation of the judicial power and of the constitutional functions assigned to the courts. Yet this adjective ("extraordinary") gives little guidance in a particular case. Such appellations tend to depend on the eye of the beholder; The law considered in Kable was directed at one person only. Here, the Act is drafted as one of apparently general application. It has already been invoked in cases other than that of the appellant. Nevertheless, it is 178 Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116. 179 Communist Party Case (1951) 83 CLR 1. 180 Ridgeway v The Queen (1995) 184 CLR 19. 181 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476. 182 See M v Secretary of State for the Home Department [2004] EWCA Civ 324 per Lord Woolf CJ; [2004] 2 All ER 863. See also Rasul v Bush 72 USLW 4596 183 Jehovah's Witnesses Inc (1943) 67 CLR 116 at 124. See also Morris, "Introduction", (1967) 13 McGill Law Journal 534 at 552. 184 Kable (1996) 189 CLR 51 at 98. See also at 134. Kirby unthinkable that Kable was a stand-alone decision, concerned to state a constitutional principle limited to only one case and never to be repeated. It is sufficient to attract the Kable rule that the impugned law should apply to a small number of identifiable persons, singled out for special treatment185. It could not be denied that the Act in issue in this appeal is concerned with a small, limited and defined class, identified with relative ease. To that extent, it invites Kable scrutiny; (3) All judges in the majority in Kable referred to the importance of maintaining community confidence in the integrity of the courts186. However, as such, this is not a criterion for the application of the Kable principle187. It is what will be lost as a result of neglecting the considerations which the principle defends. Such a view of what was meant by the reasons of the majority in Kable is increasingly accepted188. It is singularly inappropriate to place undue emphasis on the fiction of public perceptions in this context. At the time of a constitutional challenge on this basis, it is quite possible that the public will share, at least in the short run, some of the passions that may have led to the legislation under consideration. So it may have been in Kable. So it may have been at first in the Communist Party Case. So it may be in the present proceedings. The cautionary voice of constitutional principle is not always popular, assuming that it is expressed at all189; (4) Occasionally, it is useful to test the suggested repugnancy to Ch III of the impugned State law by asking whether, if enacted by the Federal Parliament, its provisions would have passed muster in relation to a federal court. If they would, the "occasion for the application of Kable 185 See Nicholas (1998) 193 CLR 173 at 261 [204]. 186 Kable (1996) 189 CLR 51 at 108 per Gaudron J, 118-119 per McHugh J, 133 per Gummow J. See also Mann v O'Neill (1997) 191 CLR 204 at 245 per Gummow J. 187 Silbert (2004) 78 ALJR 464 at 468-469 [26]; 205 ALR 43 at 49-50. 188 See reasons of Gummow J at [102]. See also Handsley, "Public Confidence in the Judiciary: A Red Herring for the Separation of Judicial Power", (1998) 20 Sydney Law Review 183; Nicholas (1998) 193 CLR 173 at 197 [37]. See also at 275-276 189 See eg Dred Scott v Sandford 60 US 393 (1856) (slaves); Ex parte Quirin 317 US 1 (1942) (war prisoners); Korematsu v United States 323 US 214 (1944) (Japanese- American internees); Dennis v United States 341 US 494 (1951) (communists). See also Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1135-1136 [190]; 208 ALR Kirby does not arise"190. However, I agree with Callinan and Heydon JJ that this test is not "the exclusive test of validity"191 of a State law measured by the Kable standard. This is because, in their Honours' words, "[n]ot everything by way of decision-making denied to a federal judge is denied to a judge of a State"192; and If it is shown that the jurisdiction and powers conferred on a State court could not be conferred on a federal court, the party complaining that the State law imposes functions on the State judiciary, inconsistent with ("repugnant to") Ch III of the federal Constitution, is well advanced in making good the Kable argument. This is because of the integrated character of the Australian judiciary, both in terms of Ch III and in fact. If one part of the nation's judiciary could not lawfully perform a specified function, there is a heavy burden of persuasion that another could do so. There are differences between the federal and State judiciaries in Australia. Most of them are concerned with the capability of the State judiciary to perform non-judicial functions prohibited to federal courts under the present understanding of the separation of judicial powers mandated by the federal Constitution193. But where, outside this limited field of difference, a State Parliament has purportedly assigned to a State court the performance of functions that are unusual, beyond the traditional judicial process and repugnant to the ordinary judicial role, this Court will more readily come to the conclusion that the State law demonstrates Kable inconsistency. Preventive detention and federal courts As Gummow J has noted in his reasons194, the Federal Attorney-General intervened in these proceedings to support the validity of the Act. He did so on the footing that like legislation could have been enacted by the Federal Parliament. Accordingly, he argued, the Act occasioned no offence to Ch III and hence did not offend the principle in Kable. I agree with Gummow J, for the reasons that he gives, that this argument should be rejected195. 190 Bachrach (1998) 195 CLR 547 at 561-562 [14]. 191 Reasons of Callinan and Heydon JJ at [219]. See also Silbert (2004) 78 ALJR 464 at 470 [32]; 205 ALR 43 at 51. 192 Reasons of Callinan and Heydon JJ at [219]. 193 Mabo v Queensland (1988) 166 CLR 186 at 201-202. 194 Reasons of Gummow J at [68]. See also reasons of Hayne J at [196]. 195 Reasons of Gummow J at [69]. Kirby This conclusion clearly lifts the appellant's case into arguable application of the Kable principle. The question becomes whether the character of a State court, specifically a State Supreme Court, viewed together with the provisions incorporated into the Act in the attempt to avoid Kable invalidity, are sufficient to produce the conclusion that the Act is constitutionally valid and does not have the disqualifying characteristics identified in the legislation considered in Kable. The Act imposes functions repugnant to Ch III Five features of repugnance: Despite the attempts in the Act to dress up the jurisdiction and powers given to the Supreme Court of Queensland as a measure for the protection of the public, a close analysis of its features confirms the impression which is derived, at the threshold, from its short title. This is an Act to make provision for the continuous punishment of prisoners who have already served punishment previously imposed upon them by the judiciary for specified sexual offences and who, approaching their release, towards completion of that punishment, are ordered to be retained in prison, as prisoners, on an hypothesis of dangerousness. There are five features in the Act which, combined, indicate an attempted imposition upon the judges of the Supreme Court of Queensland functions repugnant to Ch III of the federal Constitution as explained in Kable. These features severally authorise the Supreme Court, contrary to traditional judicial process in Australia, to order: The civil commitment of a person to a prison established for the reception of prisoners, properly so-called; The detention of that person in prison, in the absence of a new crime, trial and conviction and on the basis of the assessment of future re-offending, not past offences; The imprisonment of the person in circumstances that do not conform to established principles relating to civil judicial commitment for the protection of the public, as on a ground of mental illness; The imposition of additional judicial punishment on a class of prisoners selected by the legislature in a manner inconsistent with the character of a court and with the judicial power exercised by it; and The infliction of double punishment on a prisoner who has completed a sentence judicially imposed by reference, amongst other things, to the criterion of that person's past criminal conduct which is already the subject of final judicial orders that are (or shortly will be) spent at the time the second punishment begins. Kirby I shall explain each of these disqualifying considerations in turn. It is their cumulative effect that brings the Act into conflict with the principle stated in Kable. Civil commitment unknown to law: Generally speaking, in Australia, the involuntary detention of a person in custody by any agency of the state is viewed as penal or punitive in character. In Australian law, personal liberty has always been regarded as the most fundamental of rights196. Self-evidently, liberty is not an absolute right197. However, to deprive a person of liberty, where that person is otherwise entitled to it, is a grave step. If it is to extend for more than a very short interval, such as may properly be entrusted to officials in the Executive Government, it requires the authority of a judicial order198. These rules explain a fundamental principle that lies deep in our law. Ordinarily, it requires officers of the Executive Government, who deprive a person of liberty, to bring that person promptly before the judicial branch, for orders that authorise, or terminate, the continued detention199. The social purpose behind these legal obligations is to divorce, as far as society can, the hand that would deprive the individual of liberty from the hand that authorises continued detention. The former, which normally lies in the Executive branch200, is taken to be committed to the deprivation of liberty for some purpose201. The latter is taken to be independent and committed only to the application in the particular case of valid laws. The operation of the writ of habeas corpus is another assurance, afforded to the judiciary, requiring the prompt legal justification of any contested deprivation of liberty202. So precious does our legal system regard 196 Whittaker v The King (1928) 41 CLR 230 at 248; Trobridge v Hardy (1955) 94 CLR 147 at 152; Watson v Marshall and Cade (1971) 124 CLR 621 at 632; Williams v The Queen (1986) 161 CLR 278 at 292. 197 Hendricks 521 US 346 at 356-357 (1997). 198 See Al-Kateb (2004) 78 ALJR 1099 at 1131 [167]; 208 ALR 124 at 167. 199 See eg Dallison v Caffery [1965] 1 QB 348 at 367; Drymalik v Feldman [1966] SASR 227; R v Banner [1970] VR 240. See also The Law Reform Commission, Criminal Investigation, Report No 2 – An Interim Report, (1975) at 38-39 [87]. 200 The arrest by order of a House of Parliament in R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157 is an anomalous and questionable exception. 201 See Kable (1996) 189 CLR 51 at 120-121 per McHugh J. Kirby every moment of personal freedom. The scrutiny of a justification of the deprivation of liberty must not be perfunctory. It is a real and solemn responsibility of the judiciary, rooted in our constitutional history. In R v Quinn; Ex parte Consolidated Food Corporation, Jacobs J observed203: "[W]e have inherited and were intended by our Constitution to live under a system of law and government which has traditionally protected the rights of persons by ensuring that those rights are determined by a judiciary independent of the parliament and the executive. But the rights referred to in such an enunciation are the basic rights which traditionally, and therefore historically, are judged by that independent judiciary which is the bulwark of freedom. The governance of a trial for the determination of criminal guilt is the classic example." The necessary involvement of the judiciary in adjudging and punishing criminal guilt is a fixed feature of the courts participating in the integrated judicature of the Commonwealth, provided for in the Constitution204. Precisely because liberty is regarded as so precious, legal provisions derogating from liberty (and especially those that would permit the Executive Government to deprive a person of liberty) are viewed by courts with heightened vigilance. Normally, a law providing for the deprivation of the liberty of an individual will be classified as punitive. As a safeguard against expansion of forms of administrative detention without court orders, our legal system has been at pains to insist that detention in custody must ordinarily be treated as penal or punitive, precisely because only the judiciary is authorised to adjudge and punish criminal guilt205. Were it otherwise, it would be a simple matter to provide by law for various forms of administrative detention, to call such detention something other than "punishment", and thereby to avoid the constitutional protection of independent judicial assessment before such deprivation is rendered lawful. 202 In re Yates; Ex parte Walsh and Johnson (1925) 37 CLR 36; R v Carter; Ex parte Kisch (1934) 52 CLR 221; R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452. See also Rumsfeld v Padilla 72 USLW 4584 (2004). 203 (1977) 138 CLR 1 at 11. 204 Lim (1992) 176 CLR 1 at 26-29; Kable (1996) 189 CLR 51 at 97, 131. 205 Lim (1992) 176 CLR 1 at 26-29; Kable (1996) 189 CLR 51 at 97, 131. See also Behrooz v Secretary, Department of Immigration and Multicultural and Indigenous Affairs (2004) 78 ALJR 1056 at 1078-1079 [117]-[124]; 208 ALR 271 at 299-301. Kirby It is true that a limited number of exceptions to this constitutional scheme have been acknowledged by this Court. They include immigration detention of "unlawful non-citizens" for the purposes of deportation or to enable an application for an entry permit to be made and determined206; quarantine detention for reasons of public health207; detention of the mentally ill and the legally insane for the protection of the community208; and analogous non- punitive, protective orders permitted by valid legislation209. This Court has assumed, or suggested, that the imposition by federal and State courts of sentences that involve indefinite periods of imprisonment is compatible with Ch III210. Such provisions have a long history. In intermediate courts, they have been held compatible with Kable211. This Court has also made it clear that the list of permissible burdens upon liberty, classified as "non-punitive," is not closed212. Nonetheless, where, as in the case of the Act, a new, different and so far special attempt is made by State legislation to press the judiciary into a function not previously performed by it, it is necessary to evaluate the new role by reference to fundamental principles. The categories of exception to deprivations of liberty treated as non-punitive may not be closed; but they remain exceptions. They are, and should continue to be, few, fully justifiable for reasons of history or reasons of principle developed by analogy with the historical derogations from the norm. Deprivation of liberty should continue to be seen for what it is. For the person so deprived, it will usually be the worst punishment that our legal system now inflicts. In Australia, punishment, as such, is reserved to the 206 Lim (1992) 176 CLR 1 at 25-26, 28, 33, 55; Behrooz (2004) 78 ALJR 1056 at 1078 [121]; 208 ALR 271 at 300-301. 207 Lim (1992) 176 CLR 1 at 28. 208 Lim (1992) 176 CLR 1 at 28. 209 Lim (1992) 176 CLR 1 at 27-29, 33, 55, 65, 71; Kable (1996) 189 CLR 51 at 121, 210 See Veen v The Queen [No 2] (1988) 164 CLR 465 at 495. 211 eg R v Moffatt [1998] 2 VR 229 at 249 per Hayne JA. 212 Lim (1992) 176 CLR 1 at 55; Kable (1996) 189 CLR 51 at 121; Kruger (1997) 190 CLR 1 at 162; Behrooz (2004) 78 ALJR 1056 at 1078 [121]; 208 ALR 271 at Kirby judiciary in a case following an established breach of the law. For that the offender "can be punished [but] for nothing else"213. In the case of the Act, the drafter has not even attempted a change of nomenclature to disguise the reality of the order assigned to the judiciary in a case such as that affecting the appellant. The person the subject of the order is a "prisoner", convicted of a previous crime. He or she is already detained in prison and must be so at the time of the application and order. If the order under the Act is made, he or she is nominally detained as a "serious danger to the community". However, such continued detention is served in a prison and the detainee, although having completed the service of imprisonment, remains a "prisoner". The detention continues under the "continuing detention order". From the point of view of the person so detained, the imprisonment "continues" exactly as it was. Where a court is concerned with the constitutional character of an Act, its attention is addressed to actuality, not appearances. Were it otherwise, by the mere choice of legislative language and the stroke of a pen, the requirements of the Constitution could be circumvented. In Ha v NSW214 the joint majority reasons explained215: "When a constitutional limitation or restriction on power is relied on to invalidate a law, the effect of the law in and upon the facts and circumstances to which it relates – its practical operation – must be examined as well as its terms in order to ensure that the limitation or restriction is not circumvented by mere drafting devices." The same point was made Immigration216: in Chu Kheng Lim v Minister for "In exclusively entrusting to the courts designated by Ch III the function of the adjudgment and punishment of criminal guilt under a law of the Commonwealth, the Constitution's concern is with substance and not mere form." 213 Lim (1992) 176 CLR 1 at 27-28, quoting Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 202. 214 (1997) 189 CLR 465. 215 (1997) 189 CLR 465 at 498. 216 (1992) 176 CLR 1 at 27. See also Re Wakim; Ex parte McNally (1999) 198 CLR Kirby The same rule must apply to the evaluation of a State law said to be incompatible with Ch III of the federal Constitution. Invalidity does not depend on verbal formulae or the proponent's intent217. It depends upon the character of the law218. Effectively, the Act does not provide for civil commitment of a person who has completed a criminal sentence. Had it done so, one would have expected commitment of that person to a different (non-prison) institution, with different incidents, different facilities, different availability of treatment and support designed to restore the person as quickly as possible to liberty, which is that person's ordinary right as a human being in Australia and under the protection of its Constitution and laws. Occasionally, for a very short interval and in exceptional circumstances, civil commitment to prison may occur219. But that is not the character of the Act. lengthy commitment, generally with assessment and It contemplates reassessments at annual intervals. In Australia, we formerly boasted that even an hour of liberty was precious to the common law. Have we debased liberty so far that deprivation of liberty, for yearly intervals, confined in a prison cell, is now regarded as immaterial or insignificant220? Under the Act, just as in the law invalidated in Kable, the prisoner could theoretically be detained for the rest of the prisoner's life. This could ensue not because of any past crime committed, but because of a prediction of future criminal conduct221. In the United States, where post-sentence detention legislation has been enacted, such continuing detention is ordinarily carried out in different facilities, controlled by a different governmental agency, with different features to mark the conclusion of the commencement of a new detention with a different quality and purpose222. The Queensland Act does not even pretend to make such distinctions. The realities are unashamedly displayed. The punitive character of the Act is indicated by the precondition for its orders (that the subject is a "prisoner" convicted of criminal the punitive element of judicial sentence and the 217 Al-Kateb (2004) 78 ALJR 1099 at 1131 [167]; 208 ALR 124 at 167. 218 Kable (1996) 189 CLR 51 at 116 per McHugh J. See also Bachrach (1998) 195 CLR 547 at 560-561 [9]-[12]. 219 eg in the case of aliens who are serving a sentence of imprisonment and are subject to immediate deportation or removal from Australia. See Migration Act 1958 (Cth), ss 200, 201, 202, 203, 204. 220 See the Act, Pt 3 ("Annual Reviews"), esp s 26. 221 See Kable (1996) 189 CLR 51 at 108 per McHugh J, 131-132 per Gummow J. 222 See Hendricks 521 US 346 at 368-369 (1997). Kirby offence(s)); by the requirement that the Court have regard to "the prisoner's antecedents and criminal history"223 for which inferentially the prisoner has previously been punished; and by the obligation imposed by the Act to retain the prisoner in a corrective services facility under an order accurately described as a "continuing detention order". A clearer indication could not be given that the past "detention" of punitive imprisonment, judicially imposed, is to "continue". And, by Australian constitutional On its face, the Act hardly makes any effort to pretend to a new form of "civil commitment". To the extent that it does, it fails to disguise its true law, character, namely punishment. punishment as such is reserved to the judiciary for breaches of the law. An order of imprisonment as punishment can therefore only be made by a court following proof of the commission of a criminal offence, established beyond reasonable doubt224 where the charge is contested225, in a fair trial at which the accused is found guilty by an independent court of the offence charged. Here there has been no offence; no charge; no trial. Effectively, the presumption of innocence has been removed226. Instead, because of a prisoner's antecedents and criminal history, provision is made for a new form of additional punishment utilising the courts and the corrective services system in a way that stands outside the judicial process hitherto observed in Australia. Civil commitment to prison of persons who have not been convicted of a crime is inconsistent with, and repugnant to, the exercise of the judicial power as envisaged by the Constitution227. Predictive superadded imprisonment: Although the features of the criminal process in the common law have taken a "meandering course" over many centuries228 it has been fundamental, until now, that (save for the remand of accused persons awaiting trial who are not granted bail) imprisonment has followed final proof of crime. It has not anticipated the crime. Even remanded 223 The Act, s 13(4)(g). See Kable (1996) 189 CLR 51 at 132 per Gummow J, where the fact of imprisonment without adjudgment by a court of criminal guilt was seen as the essential reason for treating the legislation as inconsistent with Ch III. See also at 121 per McHugh J. 224 Azzopardi v The Queen (2001) 205 CLR 50 at 64-65 [34]. See also RPS v The Queen (2000) 199 CLR 620 at 630 [22], 634 [33]. 225 Dietrich v The Queen (1992) 177 CLR 292. 226 See State v Coetzee [1997] 2 LRC 593 at 677-678 [220], cited in R v Lambert [2002] 2 AC 545 at 569-570 [34]. 227 See Kable (1996) 189 CLR 51 at 125 per Gummow J. 228 Azzopardi (2001) 205 CLR 50 at 65 [36]. Kirby prisoners are imprisoned for defined and generally limited periods and after a fresh crime is alleged to have occurred. In our system of criminal justice, prisons are therefore a place of punishment for past wrong-doing. By a sentence that includes imprisonment, a judge communicates the censure of society deserved by the prisoner for proved past crimes. Imprisonment is not used as punishment in advance for crimes feared, anticipated or predicted in the future. To introduce such a notion of punishment, and to require courts to impose a prison sentence in respect of perceived future risks, is a new development. It is one fraught with dangers and "inconsistent with traditional judicial process"229. The focus of the exercise of judicial power upon past events is not accidental. It is an aspect of the essential character of the judicial function. Of its nature, judicial power involves the application of the law to past events or conduct230. Although, in discharging their functions, judges are often called upon to predict future happenings231, an order imprisoning a person because of an estimate of some future offence is something new and different. Simply calling the imprisonment by a different name ("detention") does not alter its true character or punitive effect. Least of all does it do so in the case of an Act that fixes on the subject's status as a "prisoner" and "continues" the type of "detention" that previously existed, that is, punitive imprisonment. Such an order, superimposed at the end of judicial punishment for past crimes, must be distinguished from an order imposing imprisonment for an indeterminate period also for past crimes that is part of the judicial assessment of the punishment for such crimes, determined at the time of sentencing. There, at least, the exercise of judicial power is addressed to past facts proved in a judicial process. Such a sentence, whatever problems it raises for finality and proportionality, observes an historically conventional judicial practice. It involves the achievement of traditional retribution, deterrence and incapacitation applied prospectively232. It does not involve supplementing, at a future time, a previously final judicial sentence with new orders that, because they are given effect by the continuation of the fact of imprisonment, amount to new punishment beyond that already imposed in accordance with law233. sentencing objectives, including 229 Kable (1996) 189 CLR 51 at 98 per Toohey J. 230 Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188. See also Ha (1997) 189 CLR 465 at 503-504. 231 The granting of Quia Timet injunctions constitutes an example. 232 See Lowndes v The Queen (1999) 195 CLR 665 at 670 [11]; McGarry (2001) 207 CLR 121 at 123-124 [1], 149-150 [84]. 233 See McGarry (2001) 207 CLR 121. Kirby Properly informed, the public understands the role of judges in ordering the deprivation of liberty on the basis of proved breaches of the law in the past. The introduction of a power to deprive persons of liberty, and to commit them to prison potentially for very long, even indefinite, periods on the basis of someone's estimate of the risk that they will offend in the future, inevitably undermines public confidence in the courts as places exhibiting justice to all, including those accused and previously convicted of serious crimes234. A court in the position of this Court is always obliged to test a novel law by what would occur if the novelty became common or repeated or is taken to its logical extent. The Act, if valid, opens the way for future instances of preventative detention in prison, based on prediction. Such a departure from traditional judicial functions is constitutionally impermissible. Beyond mental illness orders: But can it be said that the orders permitted under the Act are, or are analogous to, civil commitment for mental illness235? Although the predicted dangerousness of sexual offenders, based on past conduct, might not involve proof of a mental illness in the usual sense of that term236, is it sufficiently analogous to allay constitutional concerns based on the novelty of the function committed by the Act to a State court? Certainly, before a "continuing detention order" is made under the Act, there is no requirement for a finding as to mental illness, abnormality or infirmity in the accepted sense. In his Second Reading Speech on the Bill that became the Act, the respondent Attorney-General made it clear that the Act was not founded on concepts of mental illness237. This is perhaps understandable given that considerations of mental illness may lead to reducing, not increasing, criminal punishment238. Section 8(2)(a) of the Act authorises the Supreme Court to make "an order that the prisoner undergo examinations by 2 psychiatrists named by the court who are to prepare independent reports". By s 11(2) of the Act, there is no requirement for a diagnosis of mental illness, abnormality or infirmity. Nothing in the Act requires such a diagnosis, or finding by the court, to justify the exercise of the court's powers under ss 8 or 13 of the Act. The inquiry required 234 See Kable (1996) 189 CLR 51 at 98, 107. 235 Lim (1992) 176 CLR 1 at 28, 55. 236 See Veen [No 2] (1988) 164 CLR 465 at 495 per Deane J. 237 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2003 at 2484-2486. See also the Act, ss 3(a), 13(6). 238 eg Scognamiglio (1991) 56 A Crim R 81 at 86; Engert (1995) 84 A Crim R 67 at Kirby of the court must simply focus on the risk of re-offending. It operates on a prediction as to future conduct based on estimates of propensity that would ordinarily be inadmissible in a judicial trial conducted to adjudge whether a person was liable to be sentenced to imprisonment239. It follows that the civil commitment envisaged by the Act is based on estimates of re-offending unaccompanied by any requirement on the part of the court to make a finding of the existence of a recognised mental illness, abnormality or infirmity. their departure from These and related features of the Act illustrate the novelty of its the mental health exception for civil provisions; commitment deemed to fall short of "punishment"; and the free hand given to the psychiatric witnesses upon whose evidence the Act requires the State court to perform its function. In effect, the psychiatrists are allowed to estimate to anchor such dangerousness without any accompanying estimations in an established mental illness, abnormality or infirmity240. Because such predictions involve guesswork and are notoriously unreliable at the best of times, such functions cannot be imposed on judges divorced from an appropriate footing based on an established mental illness, abnormality or infirmity. It is that established foundation that gives the assurance necessary to justify detention based on a prediction depending on more than the contestable and fallible predictive capacity, absent a recognised and well-established mental disease of settled and describable features. requirement It is true that bail decisions will often be made by reference to predictive considerations. Commonly, such decisions require a court to evaluate whether an accused will appear to answer the charge at a trial, will interfere with the safety or welfare of a victim or witness or will be harmed or commit self-harm241. In other countries, constitutional courts have rejected the use in bail decisions of considerations of the possibility that the accused will commit further offences242. For example, in the Irish Supreme Court, which was unanimous on the point, 239 The Act, ss 13(4), 13(6). 240 See above, these reasons at [123]-[126]. 241 eg Bail Act, s 16(1)(a). 242 The People (Attorney General) v O'Callaghan [1966] IR 501; see also Ryan v Director of Public Prosecutions [1989] IR 399 at 404-405. 243 O'Callaghan [1966] IR 501 at 516-517. Ó Dálaigh CJ and Budd J reached similar Kirby "In this country it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter upon which he has not been convicted or that in any circumstances he should be deprived of his liberty upon only the belief that he will commit offences if left at liberty, save in the most extraordinary circumstances carefully spelled out by the [Parliament] and then only to secure the preservation of public peace and order or the public safety and the preservation of the State in a time of national emergency or in some situation akin to that." The Bail Act expressly provides for consideration, in bail decisions, of whether there is an unacceptable risk that, whilst released, the accused will commit an offence, that is, a future offence244. It is unnecessary to decide here the constitutional validity of that provision. It is enough to point to the great difference between refusal of bail in respect of a pending charge of a past offence and refusal of liberty, potentially for very long intervals of time, in respect of estimations of future offending, based on predictions of propensity and submitted to proof otherwise than by reference to the criminal standard of proof. In addressing legislation bearing some similarities to the Act, the Supreme Court of the United States has concluded that dangerousness by itself is insufficient to sustain civil commitment of prisoners beyond the term of punishment imposed for criminal offences. Relevantly, it is necessary for the additional finding to be made, warranting continued deprivation of liberty, that the subject is suffering from a mental illness, abnormality or infirmity that justifies the very large step of depriving him or her of liberty245. The Supreme Court has held that post-sentence civil commitment must be undertaken in hospitals or equivalent institutions, segregated from prisons established for the punishment of those convicted of crime246. The Act under consideration includes amongst its objects "care" and "treatment" of a "particular class of prisoner to facilitate their rehabilitation"247. However, in the scheme of the Act, this object obviously takes a distant second place (if any place at all) to the true purpose of the legislation, which is to provide for "the continued detention in custody … of a particular class of 244 Bail Act, s 16(1)(a)(ii)(A). 245 Hendricks 521 US 346 at 358 (1997). 246 Hendricks 521 US 346 at 368-369 (1997); Seling v Young 531 US 250 at 261 247 The Act, s 3(b). Kirby prisoner"248. If the real objective of the Act were to facilitate rehabilitation of certain prisoners retained in prison under a "continuing detention order", significant, genuine and detailed provisions would have appeared in the Act for care, treatment and rehabilitation. There are none. Instead, the detainee remains effectively a prisoner. He or she is retained in a penal custodial institution, even as here the very prison in which the sentences of judicial punishment have been served. After the judicial sentence has concluded, the normal incidents of punishment continue. They are precisely the same. These features of the Act demonstrate that the orders for which it provides do not fall within the category of civil commitment for mental illness contemplated in Lim as an exception to the comprehensive control enjoyed by the judiciary over orders depriving persons of their liberty249. Here, the deprivation can only be viewed as punishment250. Although the constitutional setting in the United States is different from that operating in Australia, our legal tradition shares a common vigilance to the dangers of civil commitment that deprives persons of their liberty. In my view, the purposes of Ch III and the tests expounded by the majority in Kable251 require this Court to adopt a similar vigilance to this new mode of effective punishment provided for in the Act. The Act is not proportional (that is, appropriate and adapted) to a legitimate non-punitive objective252. It conscripts judges in the imposition of effective judicial punishment in proceedings not otherwise known to the law253. The misuse of psychiatry and psychology254 in recent memory in other countries 248 The Act, s 3(a). 249 Lim (1992) 176 CLR 1 at 28. See also Al-Kateb (2004) 78 ALJR 1099 at 1103 ALR 124 at 128, 152-153, 161-162, 163, 188-189. 250 For the characteristics of punishment, see Hart, Punishment and Responsibility, (1968) at 4-5, cited in Al-Kateb (2004) 78 ALJR 1099 at 1147-1148 [265] per Hayne J; 208 ALR 124 at 190. 251 Kable (1996) 189 CLR 51 at 98, 106, 121, 134. See Silbert (2004) 78 ALJR 464 at 472 [49]; 205 ALR 43 at 55. 252 Lim (1992) 176 CLR 1 at 58; Kruger (1997) 190 CLR 1 at 162. 253 Kable (1996) 189 CLR 51 at 134 per Gummow J. 254 Bloch and Reddaway, Psychiatric Terror: How Soviet Psychiatry Is Used to Suppress Dissent, (1977); Masserman and Masserman (eds), Social Psychiatry and World Accords, (1996). Kirby demands the imposition of rigorous standards before courts may be enlisted to deprive persons of liberty on psychological evidence, absent an established mental illness, abnormality or infirmity. This is why, in other countries, and hitherto in Australia, recognised and well documented mental illnesses, abnormalities or infirmities are the prerequisite for civil commitment on this ground. Psychiatric assessment of risk alone is insufficient. To involve the judiciary in assessments of the latter kind is to attempt to cloak such unreliable and potentially unjust guesswork with the authority of the judicial office. It is repugnant to the judicial process to do so. Highly selective punishment: Whilst it is true that the Act does not single out, or name, an individual prisoner for continued detention (as was the case in the legislation involving Mr Kable) it is still inconsistent with the traditional judicial process. It is directed to a readily identifiable and small group of individuals who have committed the specified categories of offence and are in Queensland prisons. It adds to the effective punishment of those individuals by exposing them to continued detention beyond the sentence judicially imposed by earlier final orders. It does not contain the procedural safeguards involved in the trial before an Australian court of a criminal offence carrying the risk of punishment by imprisonment. In effect, the appellant and the small class of persons in a like position, are identified by reference both in the short title to the Act and in its provisions255. Only the most formalistic approach to the continued detention of the appellant in prison, in the same conditions as those imposed as punishment for criminal convictions, could result in the pretence that his continued detention was not punishment. This Court has repeatedly insisted that, in matters of constitutional evaluation, substance, and not mere form, provides the touchstone256. Thus, in Witham v Holloway257 it became necessary for the Court to classify contempt proceedings. Traditionally, they had been treated by the common law as civil in character. However, they often resulted in orders of imprisonment or the imposition of fines. This Court concluded that such 255 The Act, ss 1, 3(a) and 5(6). 256 eg Lim (1992) 176 CLR 1 at 27; Ha (1997) 189 CLR 465 at 498; Re Wakim (1999) 198 CLR 511 at 572 [103]. 257 (1995) 183 CLR 525. See also John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 364. Kirby proceedings were more correctly classified as criminal in nature. The joint reasons explained258: "Punishment is punishment, whether it is imposed in vindication or for remedial or coercive purposes. And there can be no doubt that imprisonment and the imposition of fines … constitute punishment." Upon this basis, the continued imprisonment of the appellant likewise constitutes punishment. There are too many features of the Act to deny that classification to the order made against him. Such order is "taken to be a warrant committing the prisoner into custody for the Corrective Services Act"259. It designates the continuing detainee "a prisoner". The prisoner is even denied eligibility for the entitlements of other prisoners, such as post-prison community based release260. This is added punishment and the Act makes little or no effort to pretend to the contrary. In argument, it was suggested that, even if the Act created an effective trial and punishment of persons such as the appellant, it did no offence to the Constitution because the separation of the judicial power in the States is not as rigorous as with respect to federal courts named or contemplated in Ch III courts. I doubt the correctness of this oft-stated proposition expressed so broadly; but it is unnecessary to examine that question here. By involving a State court in the imposition of punishment, without the safeguards associated with a judicial trial, the Act offends the implications of Ch III in the precise way that Kable described. In this country imprisonment as punishment must follow the standard of traditional judicial process and be for a conventional purpose. The Act does not observe those standards. It pretends to a form of civil commitment; but that pretence does not survive even perfunctory scrutiny. Punishment is punishment and that is what the continued imprisonment ordered in the appellant's case is in law as well as effect. Double and retrospective punishment: The rule against double punishment for proved crimes may be traced to Biblical times261. In English law it is often traced to the Constitutions of Clarendon (1164) by which King 258 Holloway (1995) 183 CLR 525 at 534 per Brennan, Deane, Toohey and Gaudron JJ, 545 per McHugh J. See also Young v Registrar, Court of Appeal (1993) 32 NSWLR 262 at 276-279, 288, 292. 259 The Act, s 50. 260 Under the Corrective Services Act, Ch 5. See the Act, s 51. 261 In the Old Testament Book of Nahum 1:9 (King James Bible). See Thomas, Double Jeopardy: The History, the Law, (1998) at 72. Kirby Henry II asserted a right to subject clergy to trial in the civil as well as ecclesiastical courts. The resolution of that conflict, following the murder of Archbishop Thomas à Becket, witnessed the beginning of the acceptance by English law that a person should not be put in danger twice for the same crime262. This rule is reflected in the common law. It is expressed in the Fifth Amendment to the Constitution of the United States 1787, stating that no person shall be "subject for the same offence to be twice put in jeopardy of life or limb". By the Fourteenth Amendment, that provision has been held applicable to State as well as federal laws in the United States263. Although there is no similar express constitutional provision in Australia, our law has repeatedly upheld procedural and substantive rules that provide effective protection against double jeopardy264. The principle is also reflected in the International Covenant on Civil and Political Rights ("ICCPR")265. Australia is a party to the ICCPR and also to the First Optional Protocol to the ICCPR266. Because of this, the influence of the ICCPR upon Australian law is large, immediate and bound to increase, particularly in statutory construction267. But can it be said that, by enacting the Act, the Queensland Parliament has, within its legislative powers, adopted a law that deliberately involves a form of double punishment which is nevertheless valid and binding? Certainly, by force of the Act, a person such as the appellant is liable, as I would conclude, to further punishment268. That punishment is based, in part at least, upon the criterion of his former conviction(s). Accordingly, the punishment constitutes an increase to the punishment already judicially imposed by reference to the 262 Blackstone, Commentaries, (1769), bk 4, c 26 at 329. 263 Benton v Maryland 395 US 784 at 793-796 (1969). 264 See Rogers v The Queen (1994) 181 CLR 251 at 273; Pearce v The Queen (1998) 194 CLR 610 at 625 [52]-[54]; R v Carroll (2002) 213 CLR 635. See also Stafford v United Kingdom (2002) 35 EHRR 32 at 1121, 1143-1144 [79]-[80]. 265 Done at New York on 19 December 1966, [1980] Australian Treaty Series No 23, Art 14.7. 266 Done at New York on 19 December 1966, [1991] Australian Treaty Series No 39. 267 See Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42; Al-Kateb (2004) 78 ALJR 1099 at 1128 [150], 1133 [180]; 208 ALR 124 at 162-163, 170. See also Coleman v Power [2004] HCA 39 at [17]-[19], [22] per Gleeson CJ, [240]-[241], [243]-[247] of my own reasons. 268 The Act, ss 8, 13, 50. Kirby appellant's earlier conviction(s) and final sentence(s) for the same crime(s). It involves a later judge being required, in effect, to impose new punishment beyond that fixed by an earlier judge, without any intervening offence, trial or conviction. In R v Carroll269, Gaudron and Gummow JJ remarked that the interests at stake in that appeal "touch upon matters fundamental to the structure and operation of the legal system and to the nature of judicial power". Respectfully, I agree with that observation. In that case, the attempt was made, despite Mr Carroll's earlier acquittal, to expose him again to punishment by reference to the same past acts by charging him with a new and different offence. This Court unanimously held that the attempt failed. The reasoning of the Court did not rest upon constitutional grounds. It did not have to do so because the common law afforded the solution. In the present case, the common law would not prevail over clear State legislation, so long as that law was constitutionally valid. The reference in Carroll to "matters fundamental … to the nature of judicial power" is therefore pertinent. In my view, it is essential to the nature of the judicial power that, if a prisoner has served in full the sentence imposed by a court as final punishment it is not competent for the legislature to require another court, later, to impose additional punishment by reference to previous, still less the same, offences. Such a requirement could not be imposed upon Ch III courts. Equally, it is repugnant to the exercise by State courts of the federal judicial power that may be vested in those courts for such courts to be obliged to perform such functions. Effectively, what is attempted involves the second court in reviewing, and increasing, the punishment previously imposed by the first court for precisely the same past conduct. Alternatively, it involves the second court in superimposing additional punishment on the basis that the original maximum punishment provided by law, as imposed, has later proved inadequate and that a new foundation for additional punishment, in effect retrospective, may be discovered in order to increase it. Retrospective application of new criminal offences and of additional punishment is offensive to the fundamental tenets of our law. It is also contrary to the obligations assumed by Australia under the ICCPR270. It is contrary to truth and transparency in sentencing. It is destructive of the human capacity for redemption. It debases the judiciary that is required to play a part in 269 (2002) 213 CLR 635 at 661 [86]. 270 Art 15.1. See generally debates in the NSW Parliament on the Sentencing (Life NSW, Legislative Council, Sentences) Amendment Bill 1993 Parliamentary Debates (Hansard), 9 November 1993 at 4948, 4950, 4952. (NSW): Kirby On this footing, the imposition of such functions on a State court is offensive to the basic notions of the judicial power contained in Ch III of the Constitution of the Commonwealth. It follows that the provisions of the Act are invalid. The offending provisions cannot be severed. They lie at the very heart of the Act. In my opinion, the entire Act fails. The dangers of phenomenological punishment This Court should not resolve the arguments of the parties in the present proceedings unaware of what has gone before. History evidences many patterns of unacceptable intrusions by other sources of power into the independence of the judiciary. These should not be dismissed as irrelevant to Australia. They have occurred in "highly civilised" countries, with strong legal and judicial traditions. This Court should be vigilant to the patterns demonstrated by history wherever they arise in the Commonwealth. It is against their emergence that the doctrine expressed in Kable protects fundamental features of the judicial branch of government. One pattern of intrusion into judicial functions may be observed in what occurred in Germany in the early 1930s. It was provided for in the acts of an elected government. Laws with retroactive effect were duly promulgated. Such laws adopted a phenomenological approach. Punishment was addressed to the estimated character of the criminal instead of the proved facts of a crime. Rather than sanctioning specified criminal conduct, the phenomenological school of criminal liability procured the enactment of laws prescribing punishment for identified "criminal archetypes". These were the Volksschädlinge (those who harmed the nation). The attention of the courts was diverted from the corpus delicti of a crime to a preoccupation with the "pictorial impression" of the accused. Provision was made for punishment, or additional punishment, not for specific acts of proved conduct but for "an inclination towards criminality so deep-rooted that it precluded [the offender's] ever becoming a useful member of the ... community"271. This shift of focus in the criminal law led to a practice of not releasing prisoners at the expiry of their sentences. By 1936, in Germany, a police practice of intensive surveillance of discharged criminals was replaced by increased utilisation of laws permitting "protective custody". The German courts were not instructed, advised or otherwise influenced in individual cases272. They did not 271 Grunberger, A Social History of the Third Reich, (1971) at 123, quoting from Hamburger Fremdenblatt, 6 June 1943. 272 See reasons of Gummow J at [116]. Kirby need to be. The basis of the law had shifted from the orthodox to the new, just as here. Offenders for whom such punishments were prescribed were transferred from civil prisons to other institutions, such as lunatic asylums, following the termination of their criminal sentence. Political prisoners and "undesirables" became increasingly subject to indeterminate detention273. In the Communist Party Case, Dixon J taught the need for this Court to keep its eye on history, including recent history, so far as it illustrated the over-reach of governmental power274. He and his generation of Australian judges were aware of the challenge to the capacity of the judiciary to defend the rule of law275. This Court should not allow the passage of fifty years since this insight to dull its memory or its appreciation of the distortions of the judicial power that are now being attempted. The principle in Kable was a wise and prudent one, defensive of judicial independence in Australia and concerned with much more than Mr Kable's liberty. I dissent from the willingness of this Court, having stated the principle, now repeatedly to lend its authority to the confinement of the application of the principle. This has been done virtually to the point where the principle itself has disappeared at the very time when the need for it has greatly increased, as this case shows. Conclusions and orders In Veen v The Queen [No 2]276, Deane J pointed out that cases may exceptionally arise where a prisoner, who has completed the punishment, judicially imposed upon proof of a criminal offence, may continue to represent a danger to the community. Where such a danger arises from an established mental illness, abnormality or infirmity which requires and justifies civil commitment, the law already provides solutions. If it is desired to extend powers to deprive of their liberty persons who do not exhibit an established mental illness, abnormality or infirmity, it is possible that another form of detention might be created. It is also possible that judges might play a part in giving effect to it in ways compatible with the traditional judicial process and observing the conventional nature of legal proceedings. However, at a minimum, any such detention would have to be conducted in a medical or like institution, with full 273 Grunberger, A Social History of the Third Reich, (1971) at 123-124. 274 (1951) 83 CLR 1 at 187-188. See Winterton, "The Communist Party Case", in Lee and Winterton (eds), Australian Constitutional Landmarks, (2003) at 132. 275 Communist Party Case (1951) 83 CLR 1 at 193. 276 (1988) 164 CLR 465 at 495. The remarks of Deane J suggest a possibility of an "acceptable statutory system" of preventive restraint. They do not suggest that this "system" would simply involve continuation of imprisonment. Kirby facilities for rehabilitation and therapy, divorced from the punishment for which prisons and custodial services are designed. In the present case there was no attempt to observe this important constitutional distinction. On the contrary, the "continued detention" is wholly integrated with, and expressly continues, the imprisonment of the prisoner. The appellant remains a prisoner in the same custodial institution. The need to treat any continuing civil commitment differently is not purely symbolic, although in matters of liberty, symbols matter. Instead, it is essential to avoid a procedure repugnant to the solemn function performed by courts in the imposition of criminal punishment by sentences of imprisonment. In Australia, such punishment is reserved to courts in respect of the crimes that prisoners are proved to have committed. It is not available for crimes that are feared, anticipated or predicted to occur in the future on evidence that is notoriously unreliable and otherwise would be inadmissible and by people who do not have the gift of prophesy. The appeal should be allowed. The judgment of the Court of Appeal of the Supreme Court of Queensland should be set aside. In lieu thereof, it should be ordered that the judgment of the primary judge be set aside. In its place it should be declared that the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) is invalid. The appellant should be released from detention. In the cause removed to this Court pursuant to the Judiciary Act 1903 (Cth), it should be ordered that the cause be returned to the Court of Appeal of the Supreme Court of Queensland to be determined consistently with the declaration that the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) is invalid. Hayne 195 HAYNE J. I agree that in the cause, part of which has been removed into this Court, there should be a declaration that s 13 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act") is not beyond the legislative power of the State of Queensland and that the cause otherwise should be remitted to the Queensland Court of Appeal for hearing and determination of the remaining issues in the appeal to that Court. The appeal to this Court concerning the interim order made by Muir J on 27 June 2003 and his judgment upholding the validity of the Act should be dismissed. Subject to one exception, I agree in the reasons of Gummow J. The exception is that I would reserve my opinion about whether federal legislation along the lines of the Act would be invalid. As Gummow J points out, no sharp line can be drawn between criminal and civil proceedings or between detention that is punitive and detention that is not. And once it is accepted, as it has been in Australia, that protection of the community from the consequences of an offender's re-offending is a legitimate purpose of sentencing277, the line between preventative detention of those who have committed crimes in the past (for fear of what they may do in the future) and punishment of those persons for what they have done becomes increasingly difficult to discern. So too, when the propensity to commit crimes (past or future) is explained by reference to constructs like "anti-social personality disorder" and it is suggested that the disorder, or the offender's behaviour, can be treated, the line between commitment for psychiatric illness and preventative detention is difficult to discern. Indeed, the premise for the decisions of the Supreme Court of the United States upholding State civil commitment statutes278 is that the statutes do not differ in substance or effect from a legislative regime providing for the confinement of some who suffer psychiatric illness. I acknowledge the evident force in the proposition that to confine a person for what he or she might do, rather than what he or she has done, is at odds with identifying the central constitutional conception of detention as a consequence of judicial determination of engagement in past conduct. Nonetheless, I would reserve for further consideration, in a case where it necessarily falls for decision, whether legislation requiring a federal court to determine whether a person previously found guilty of an offence should be detained beyond the expiration of the sentence imposed, on the ground that the prisoner will or may offend again, would purport to confer a non-judicial function on that court. Because the distinctions referred to above are so uncertain much may turn on the particular terms and operation of the legislation in question. 277 Veen v The Queen [No 2] (1988) 164 CLR 465. 278 Addington v Texas 441 US 418 (1979); Jones v United States 463 US 354 (1983); Kansas v Hendricks 521 US 346 (1997); Kansas v Crane 534 US 407 (2002). Hayne Subject to that, I agree that, for the reasons given by Gummow J, first, that the principle for which Kable v Director of Public Prosecutions (NSW)279 stands requires for its application that the Act in question be repugnant to, or incompatible with, that institutional integrity which the exercise of federal jurisdiction conferred upon the Supreme Court of Queensland requires and, secondly, that the Act is not of that kind. 279 (1996) 189 CLR 51. The issue The question raised by this appeal is whether ss 8 and 13 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) ("the Act") infringe Ch III of the Commonwealth Constitution by vesting in the Supreme Court of Queensland functions that are incompatible with the exercise by that Court of the judicial power of the Commonwealth contrary to the principles expounded by this Court in Kable v Director of Public Prosecutions (NSW)280. Facts and previous proceedings On 30 June 1989 the appellant was convicted of rape, sodomy and assault occasioning bodily harm. He was sentenced to a term of imprisonment of 14 years expiring on or about 30 June 2003. The Act commenced operation on 6 June 2003. On 17 June 2003, the respondent filed an application in the Supreme Court of Queensland under s 5 of the Act for an order that the appellant be detained for an indefinite period pursuant to s 13 of the Act. On 27 June 2003, the Supreme Court (Muir J) made orders pursuant to s 8(2)(b) of the Act for the interim detention of the appellant, pending a psychiatric assessment. The appellant challenged the Act on the basis that its provisions were incompatible with Ch III of the Constitution. On 9 July 2003, Muir J rejected the constitutional challenge to s 8 of the Act281. The appellant had argued that s 8 of the Act, by conferring on the Supreme Court the power to make an interim preventative detention order, infringed Ch III of the Constitution by vesting in the Supreme Court functions incompatible with the Court's function as a repository of judicial power of the Commonwealth: that the Act was relevantly the same in substance and effect as the legislation which this Court struck down in Kable. His Honour was of the opinion however that Kable was distinguishable: contrary to the appellant's argument, there were "substantial differences" between the provisions of the Act and the legislation in Kable. His Honour said this282: 280 (1996) 189 CLR 51. 281 A-G (Q) v Fardon [2003] QSC 200. 282 A-G (Q) v Fardon [2003] QSC 200 at [78]. "In particular, the Act, unlike the Kable legislation, is not directed towards securing the continued detention of one person. The Act has general application, rules of evidence apply, the Attorney-General has the onus of proof 'to a high degree of probability' in respect of orders made under s 13 and the court has a discretion as to whether to make one of the orders specified in s 13(5) or no order at all. All continuing detention or supervision orders must be accompanied by detailed reasons and are subject to rights of appeal." On 23 September 2003, the Court of Appeal (de Jersey CJ and Williams JA, McMurdo P dissenting) affirmed the decision of Muir J. The majority found that the Act conferred genuine discretionary power on the Supreme Court and infringed no principle for which Kable stands283. Between 27 and 30 October 2003, the Court (White J) heard the respondent's application for an order that the appellant be detained in prison for an indefinite term pursuant to s 13 of the Act. Her Honour had before her not only the reports by two psychiatrists ordered by the Court, but also reports by two other such practitioners. Provision was also made for the appellant to be present by video link to the hearing. He availed himself of this opportunity by giving oral evidence by this means. The evidence before her Honour was that the appellant had spent almost 23 years in prison since October 1980. His most serious crimes were sexual offences. Two involved children. The offences were accompanied by marked violence. There was also evidence that the appellant had claimed that he had committed some offences in order that he would be sent to prison where "he was comfortable". On 6 November 2003, her Honour held that there was a serious risk that the appellant would commit a serious sexual offence if he were to be released from custody, and ordered that he be detained for an indefinite term, for control, care and treatment. Appeal to this Court The grounds of the appellant's appeal to this Court are: "The majority of the Supreme Court of Appeal of Queensland (the Court of Appeal) erred in holding that: Section 8 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld) fell within the legislative competence of the Queensland Parliament; and 283 A-G (Qld) v Fardon [2003] QCA 416. Section 13 of the Dangerous Prisoners (Sexual Offenders) Act the 2003 (Qld) fell within Queensland Parliament; and legislative competence of the The majority of the Court of Appeal erred in distinguishing Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 for the reasons they did." We should say at the outset that we are generally in agreement with the reasoning and conclusion of the majority in the Court of Appeal. Appellant's submissions The appellant in this Court repeated the argument that he had advanced in the Court of Appeal, that ss 8 and 13 of the Act have the same objectionable features as the legislation that this Court held invalid in Kable, in particular, that the purported conferral of a power upon a court to detain a person in custody upon the basis of a prediction that an offender will re-offend, rather than upon an adjudication of actual criminal guilt, is offensive to Ch III of the Constitution. The scheme of the Act The purpose of the Act is to enable "the Supreme Court to order the post- sentence preventative detention of sex offenders who pose a serious danger to the community."284 In outline, the Act applies to persons imprisoned for a "serious sexual offence" which is defined in the schedule to the Act as "an offence of a sexual nature, whether committed in Queensland or outside Queensland involving violence or against children". The Attorney-General may apply to the Court for orders requiring such a person to submit to psychiatric assessment285. Upon an application, the Court may order that the person undergo a risk assessment by two qualified psychiatrists, who must prepare an assessment of the risk of the person re-offending286. If the Court is satisfied that the person would, if released, pose a serious danger to the community, it is empowered to order the prisoner's detention (a "continuing detention order") or supervision subject to conditions 284 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2003 imposed by the Court (a "supervision order")287. In determining which order to make, the paramount consideration is to be the need to protect the community288. A continuing detention order is to remain in effect until revoked by order of the court. In the meantime, the person subject to the order is to remain a prisoner289. Supervision orders are to be made for a definite term290. Section 8 of the Act provides: Preliminary hearing If the court is satisfied there are reasonable grounds for believing the prisoner is a serious danger to the community in the absence of a division 3 order, the court must set a date for the hearing of the application for a division 3 order. If the court is satisfied as required under subsection (1), it may make either or both of the following orders – an order that the prisoner undergo examinations by 2 psychiatrists named by the court who are to prepare independent reports (a "risk assessment order"); if the court is satisfied that the prisoner may be released from custody before the application is finally decided, an order that the prisoner be detained in custody for the period stated in the order (an "interim detention order"). If the prisoner is ordered to be detained in custody after the prisoner's period of imprisonment ends, the person remains a prisoner, including for all purposes in relation to an application under this Act. If the court sets a date for the hearing of the application for a division 3 order but the prisoner is released from custody before the application is finally decided, for all purposes in relation to deciding the application this Act continues to apply to the person as if the person were a prisoner." Section 13 of the Act provides: "13 Division 3 orders This section applies if, on the hearing of an application for a division 3 order, the court is satisfied the prisoner is a serious danger to the community in the absence of a division 3 order (a "serious danger to the community"). (2) A prisoner is a serious danger to the community as mentioned in subsection (1) if there is an unacceptable risk that the prisoner will commit a serious sexual offence – if the prisoner is released from custody; or the prisoner supervision order being made. is released from custody without a (3) On hearing the application, the court may decide that it is satisfied as required under subsection (1) only if it is satisfied – by acceptable, cogent evidence; and to a high degree of probability; that the evidence is of sufficient weight to justify the decision. In deciding whether a prisoner is a serious danger to the community as mentioned in subsection (1), the court must have regard to the following – the reports prepared by the psychiatrists under section 11 and the extent to which the prisoner cooperated in the examinations by the psychiatrists; any other medical, psychiatric, psychological or other assessment relating to the prisoner; information indicating whether or not there is a propensity on the part of the prisoner to commit serious sexual offences in the future; (d) whether or not there is any pattern of offending behaviour on the part of the prisoner; efforts by the prisoner to address the cause or causes of the the prisoner's offending behaviour, prisoner participated in rehabilitation programs; including whether whether or not the prisoner's participation in rehabilitation programs has had a positive effect on the prisoner; the prisoner's antecedents and criminal history; the risk that the prisoner will commit another serious sexual offence if released into the community; the need to protect members of the community from that risk; any other relevant matter. If the court is satisfied as required under subsection (1), the court may order – that the prisoner be detained in custody for an indefinite term for control, care or treatment ("continuing detention order"); or that the prisoner be released from custody subject to the conditions it considers appropriate that are stated in the order ("supervision order"). In deciding whether to make an order under subsection (5)(a) or (b), the paramount consideration is to be the need to ensure adequate protection of the community. The Attorney-General has the onus of proving that a prisoner is a serious danger to the community as mentioned in subsection (1)." (footnote omitted) The decision in Kable In Kable, this Court found that the Community Protection Act 1994 (NSW) was incompatible with Ch III of the Commonwealth Constitution, and therefore invalid, because it effectively required a Judge of the Supreme Court of New South Wales to make an order depriving a named person of his liberty at the expiration of his term of imprisonment. The majority was of the opinion that the Community Protection Act compromised the integrity of the judicial system established by Ch III because it obliged the Supreme Court of New South Wales, a Court which exercised the judicial power of the Commonwealth from time to time, to act non-judicially when exercising State jurisdiction. In Kable, the Justices in the majority used differing formulations when stating the principles, but all of them referred to constitutional integrity, or public confidence, or both. With respect to the powers purportedly conferred by the Community Protection Act, Toohey J held that they were incompatible with the exercise of the judicial power of the Commonwealth because they were of such a nature that public confidence in the integrity of the judiciary as an institution was diminished291. Gaudron J said that they compromised the integrity of the judicial system brought into existence by Ch III of the Constitution, which depends on State courts acting in accordance with the judicial process and on the maintenance of public confidence in that process292. The opinion of McHugh J was that the impugned conferral of non-judicial power or other incidents of the Court should not be such as could lead an ordinary reasonable member of the public to conclude that the Court was not independent of the executive government of the State, or that the Court as an institution was not free of governmental influence in administering the judicial functions invested in the the Court293. Court, and compromised institutional Gummow J was of the view that the exercise of statutory powers jeopardized the integrity of the Court, and sapped the appearance of institutional impartiality, and the maintenance of public confidence in the judiciary294. impartiality of the Detention under the Act is for non-punitive purposes It is accepted that in some circumstances, it is valid to confer powers on both non-judicial and judicial bodies to authorize detention, for example, in cases of infectious disease or mental illness. These categories are not closed. In this respect, the second object of the Act is relevant295: "[T]o provide continuing control, care or treatment of a particular class of prisoner to facilitate their rehabilitation." To the extent that the Act in fact furthers this object, a court applying it would be undertaking, without compromise to its judicial integrity, a conventional adjudicative process. 291 (1996) 189 CLR 51 at 98. 292 (1996) 189 CLR 51 at 107. 293 (1996) 189 CLR 51 at 117, 119 and 121. 294 (1996) 189 CLR 51 at 133. 295 s 3(b). To determine whether detention is punitive, the question, whether the impugned law provides for detention as punishment or for some legitimate non-punitive purpose, has to be answered. As Gummow J said in Kruger v The Commonwealth296: "The question whether a power to detain persons or to take them into custody is to be characterised as punitive in nature, so as to attract the operation of Ch III, depends upon whether those activities are reasonably capable of being seen as necessary for a legitimate non-punitive objective. The categories of non-punitive, involuntary detention are not closed." (footnotes omitted) Several features of the Act indicate that the purpose of the detention in question is to protect the community and not to punish. Its objects are stated to be to ensure protection of the community and to facilitate rehabilitation297. The focus of the inquiry in determining whether to make an order under ss 8 or 13 is on whether the prisoner is a serious danger, or an unacceptable risk to the community. Annual reviews of continuing detention orders are obligatory298. In our opinion, the Act, as the respondent submits, is intended to protect the community from predatory sexual offenders. It is a protective law authorizing involuntary detention in the interests of public safety. Its proper characterization is as a protective rather than a punitive enactment. It is not unique in this respect. Other categories of non-punitive, involuntary detention include: by reason of mental infirmity; public safety concerning chemical, biological and radiological emergencies; migration; indefinite sentencing; contagious diseases and drug treatment299. This is not to say however that this Court should not be vigilant in ensuring that the occasions for non-punitive detention are not abused or extended for illegitimate purposes. 296 (1997) 190 CLR 1 at 162. 297 s 3(a). 299 See Crimes Act 1914 (Cth), ss 20B(4), 20B(5), 20BC(2)(b), 20BJ(1) and 20BM(5)(d); Migration Act 1958 (Cth), s 178; Crimes (Mental Impairment and Unfitness to be Tried) Act 1997 (Vic), ss 10(1)(c), 12(2)(c), 19(1)(c) and 26(2)(a)(ii); Criminal Law Consolidation Act 1935 (SA), ss 269O(1)(b)(i) and 269V(2)(b); Health Act 1937 (Q), ss 36, 37 and 130B; Mental Health Act 2000 (Q), ss 57, 59, 61-63, 68, 69, 101, 273 and 288; Penalties and Sentences Act 1992 (Q), ss 162 and 163; Public Safety Preservation Act 1986 (Q), ss 34, 35 and 36; Criminal Law (Mentally Impaired Defendants) Act 1996 (WA), s 24. One further submission of the appellant requires consideration. He contended that the Act was a Bill of Pains and Penalties, that is, a "legislative enactment which inflicts punishment without a judicial trial"300. In Chu Kheng Lim v Minister for Immigration, McHugh J discussed such a Bill and said this of it in a Constitutional context301: "At common law, special Acts of Parliament under which the legislature inflicted punishment upon persons alleged to be guilty of treason or felony 'without any conviction in the ordinary course of judicial proceedings' were known as Bills of Attainder and Bills of Pains and Penalties. The term 'Bill of Attainder' was used in respect of Acts imposing sentences of death, the term 'Bill of Pains and Penalties' in respect of Acts imposing lesser penalties. In the sixteenth and seventeenth centuries, the Parliament of the United Kingdom passed many such Bills, particularly 'in times of rebellion, or of gross subserviency to the crown, or of violent political excitements'. During the American Revolution, a number of such Bills were passed in the thirteen States. Subsequently, the Constitution of the United States prohibited the enactment of Bills of Attainder. The Supreme Court of the United States has construed the term 'Bill of Attainder' in that clause to include all 'legislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial'. Thus, a Bill of Attainder or a Bill of Pains and Penalties is a law (1) directed to an individual or a particular group of individuals (2) which punishes that individual or individuals (3) without the procedural safeguards involved in a judicial trial. No express prohibition against the enactment of Bills of Attainder or Bills of Pains and Penalties is to be found in the Constitution. However, it is a necessary implication of the adoption of the doctrine of separation of powers in the Constitution that the Parliament of the Commonwealth cannot enact such Bills. An Act of the Parliament which sought to punish individuals or a particular group of individuals for their past conduct without the benefit of a judicial trial or the procedural safeguards essential to such a trial would be an exercise of judicial power of the Commonwealth and impliedly prohibited by the doctrine of the separation of powers. Such an Act would infringe the separation of 300 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 535-536, 646, 685- 301 (1992) 176 CLR 1 at 69-70. judicial and legislative power by substituting a legislative judgment of guilt for the judgment of the courts exercising federal judicial power." (footnotes omitted) The Act here is not such a bill. Its purpose is not to punish people for their past conduct. It is a protective measure and provides, in any event, for many of the safeguards of a judicial trial. It is necessary to keep in mind the issues with which Kable was concerned and the true nature of the decision which the Court made there. Despite the differing formulations of the Justices in the majority, the primary issue remained whether the process which the legislation required the Supreme Court of New South Wales to undertake, was so far removed from a truly judicial process that the Court, by undertaking it, would be so tainted or polluted that it would no longer be a suitable receptacle for the exercise of Federal judicial power under Ch III of the Constitution. This Court did not in Kable hold however that in all respects, a Supreme Court of a State was the same, and subject to the same constraints, as a federal court established under Ch III of the Constitution. Federal judicial power is not identical with State judicial power. Although the test, whether, if the State enactment were a federal enactment, it would infringe Ch III of the Constitution, is a useful one, it is not the exclusive test of validity. It is possible that a State legislative conferral of power which, if it were federal legislation, would infringe Ch III of the Constitution, may nonetheless be valid. Not everything by way of decision- making denied to a federal judge is denied to a judge of a State. So long as the State court, in applying legislation, is not called upon to act and decide, effectively as the alter ego of the legislature or the executive, so long as it is to undertake a genuine adjudicative process and so long as its integrity and independence as a court are not compromised, then the legislation in question will not infringe Ch III of the Constitution. The forms and procedures prescribed by the Act bear the hallmarks of traditional judicial forms and procedure. Section 5(3) raises a formidable threshold for the Attorney-General as applicant to surmount: a need at a preliminary hearing to satisfy the Court that "there are reasonable grounds for believing the prisoner is a serious danger to the community in the absence of [an] … order." This is a considerably higher threshold than a prosecutor has to surmount at a committal, effectively the establishment of a prima facie case only. The Act requires that the prisoner will be provided with full disclosure and details of the allegations and all other relevant material filed by the Attorney- General against him302 and provides for the filing of material by him303. The 302 ss 5(5), 12 and 25. effect of s 7 is to apply the rules of evidence except with respect to a preliminary hearing where the rules may be relaxed to accord with those generally obtaining in urgent interlocutory applications. The prisoner has full rights to cross- examine and to adduce evidence304. The Court may decide some relatively less important matters only on the papers305. Should the Court reach the requisite degree of satisfaction at a preliminary hearing, the application is then to proceed to a final hearing306 and the Court has a discretion to order two independent psychiatric examinations and reports. These points should be made about the section which empowers the Court to make an order for the detention of a prisoner. First, the prisoner's release must be shown to present an unacceptable risk of the commission by him of a serious sexual offence. In so deciding, the Court may only act upon "acceptable, cogent evidence"307 and the degree of satisfaction that it must reach is one of "a high degree of probability"308. Section 13(4) provides another safeguard by requiring the Court to have regard to these relevant and important matters: the psychiatrists' reports; the co- operation or otherwise of the prisoner with the psychiatrists; other relevant reports; the prisoner's propensities; any pattern of offending by the prisoner; the prisoner's participation in rehabilitative programmes and the results of them; the prisoner's efforts to address the cause of his behaviour; the prisoner's antecedents and criminal history; "the risk that the prisoner will commit another serious sexual offence if released into the community"309; and the need to protect the community against that risk and any other relevant matter. The yardstick to which the Court is to have regard, of an unacceptable risk to the community, relevantly a risk established according to a high degree of probability, that the prisoner will commit another sexual offence if released, established on and by acceptable and cogent evidence, adduced according to the rules of evidence, is one which courts historically have had regard to in many 307 s 13(3)(a). 308 s 13(3)(b). 309 s 13(4)(h). areas of the law. The process of reaching a predictive conclusion about risk is not a novel one. The Family Court undertakes a similar process on a daily basis and this Court (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ) said this in M v M of the appropriate approach by the Family Court to the evaluation of a risk to a child310: "Efforts to define with greater precision the magnitude of the risk which will justify a court in denying a parent access to a child have resulted in a variety of formulations. The degree of risk has been described as a 'risk of serious harm'311, 'an element of risk' or 'an appreciable risk'312, a 'real risk'314, and an 'real possibility'313, a 'unacceptable risk'315. This imposing array indicates that the courts are striving for a greater degree of definition than the subject is capable of yielding. In devising these tests the courts have endeavoured, in their efforts to protect the child's paramount interests, to achieve a balance between the risk of detriment to the child from sexual abuse and the possibility of benefit to the child from parental access. To achieve a proper balance, the test is best expressed by saying that a court will not grant custody or access to a parent if that custody or access would expose the child to an unacceptable risk of sexual abuse." Sentencing itself in part at least may be a predictive exercise requiring a court on occasions to ask itself for how long an offender should be imprisoned to enable him to be rehabilitated, or to ensure that he will no longer pose a threat to the community. The predictive exercise of an assessment of damages for future losses is also a daily occurrence in the courts. Even if the Court concludes under s 13(1) of the Act that the prisoner is a serious danger to the community, it still has a discretion under s 13(5) as to the way in which the application should be disposed of. It may, for example, order that the prisoner be released from custody subject to conditions. Section 16 prescribes the contents of such an order. 310 (1988) 166 CLR 69 at 78. 311 A v A [1976] VR 298 at 300. 312 Marriage of M (1986) 11 Fam LR 765 at 771. 313 B v B (Access) [1986] FLC ¶91-758 at 75,545. 314 Leveque v Leveque (1983) 54 BCLR 164 at 167. 315 In re G (A minor) [1987] 1 WLR 1461 at 1469. Section 13(6) of the Act uses the expression "paramount consideration" which is similar to the expression "paramount interests" referred to in M v M316, and is one that is well familiar to, and regularly construed by family courts. It should be observed at this point that it is possible, although in practice almost unthinkable that, having regard to the discretion apparently conferred on the Court by s 8(2) of the Act whether to order psychiatric examinations and reports, the Court might make a continuing detention order in their absence. Whether however in doing so, a court would be acting on acceptable, cogent evidence establishing unacceptable risk to a high degree of probability is another matter. In any event, courts are on occasions required to decide matters on evidence of less than desirable quality and volume, and that they may have to do so, will not necessarily deprive their function of its judicial character. Another judicial hallmark of the process for which the Act provides is the requirement that the Court give reasons for its decision317. The purpose of Pt 3 of the Act is to ensure that a prisoner's continual detention be reviewed annually. Sections 26 and 27 require the Attorney-General to ensure that this purpose is effected. In exceptional circumstances, a prisoner may himself seek leave to apply for a review318. The balance of Pt 3 contains provisions of similar kind to those governing the applications for the original order and ensures fair process. And again, before the Court may affirm the order for detention it must be satisfied to a high degree of probability. Part 4 of the Act confers a right of appeal upon both the Attorney-General and the prisoner. The rights may be exercised without the necessity to obtain prior leave and are available in respect of any decision under the Act319. It can be seen therefore that careful attention has been paid in the drafting of the Act to a need for full and proper legal process in the making of decisions 316 (1988) 166 CLR 69. under it. It is an Act of general application, unlike the ad hominem nature of the legislation in Kable320. Conclusion The Act does not offend against the principle for which Kable stands. It is designed to achieve a legitimate, preventative, non-punitive purpose in the public interest, and to achieve it with due regard to a full and conventional judicial process, including unfettered appellate review. In undertaking that process, and in making a decision as part of it, the Supreme Court did not exercise power inconsistent with its function as a Court which exercises judicial power pursuant to Ch III of the Constitution. The appeal should be dismissed. 320 (1996) 189 CLR 51 at 121-134. See also Liyanage v The Queen [1967] 1 AC 259 at 289-290; Leeth v Commonwealth (1992) 174 CLR 455 at 469-470; Nicholas v The Queen (1998) 193 CLR 173 at 192.

HIGH COURT OF AUSTRALIA Matter No B21/2017 COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE APPELLANT AND STEVEN IRVINE HART & ORS RESPONDENTS Matter No B22/2017 COMMONWEALTH OF AUSTRALIA APPELLANT AND YAK 3 INVESTMENTS PTY LTD AS TRUSTEE FOR YAK 3 DISCRETIONARY TRUST & ORS RESPONDENTS Matter No B23/2017 COMMONWEALTH OF AUSTRALIA & ANOR APPELLANTS AND FLYING FIGHTERS PTY LTD & ORS RESPONDENTS Commissioner of the Australian Federal Police v Hart Commonwealth of Australia v Yak 3 Investments Pty Ltd Commonwealth of Australia v Flying Fighters Pty Ltd [2018] HCA 1 7 February 2018 B21/2017, B22/2017 & B23/2017 ORDER Matter No B21/2017 Appeal dismissed with costs. Matter No B22/2017 and Matter No B23/2017 Appeal in Matter No B22/2017 allowed in part. Appeal in Matter No B23/2017 allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Queensland made in Appeal No 4987/13 on 29 August 2016 and 8 November 2016, and orders 1, 4(a), (b), (e) and (f), 5, 7 to 9, and 11 to 18 of that Court made in Appeal No 3908/13 on 8 November 2016, and in their place make the following orders and declarations: each appeal be allowed in part; in Appeal No 3908/13, declare that: the mortgage Nemesis Australia Pty Ltd had legal ownership of Lot 56 on Registered Plan 188161, also known as 6 Merriwa Street, subject to the rights of the mortgagee under favour of Countrywide Co-operative Housing Society Ltd and the chargee under a mortgage debenture in favour of Merrell Associates Ltd, immediately prior to its forfeiture to the Commonwealth on 18 April 2006; and the mortgage upon satisfaction of favour of Countrywide Co-operative Housing Society Ltd and upon satisfaction of the amount of $1.6 million secured by the mortgage debenture in par (i), if any part of the proceeds of sale of 6 Merriwa Street has not been applied to meet that liability, the balance of proceeds then remaining (if any), together with interest on that balance, is payable by the Commonwealth to Nemesis Australia Pty Ltd; and in each of Appeal No 3908/13 and Appeal No 4987/13, each party bear its own costs. On appeal from the Supreme Court of Queensland Representation S P Donaghue QC, Solicitor-General of the Commonwealth and G J D del Villar with J Freidgeim for the appellants (instructed by Commissioner of the Australian Federal Police, Criminal Assets Litigation) B W Walker SC with A J Greinke and G C Dempsey for the respondents (instructed by James Conomos Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of the Australian Federal Police v Hart Commonwealth of Australia v Yak 3 Investments Pty Ltd Commonwealth of Australia v Flying Fighters Pty Ltd Criminal law – Forfeiture of property – Where restraining orders made in respect of certain property suspected of being under effective control of person suspected of certain offences – Where person convicted of offences – Where property automatically forfeited to Commonwealth under s 92 of Proceeds of Crime Act 2002 (Cth) – Where companies associated with convicted person applied for orders under s 102 of Proceeds of Crime Act for recovery of interests, or amounts equal to value of interests, in forfeited property – Whether forfeited property "not used in, or in connection with, any unlawful activity" within s 102(3)(a) of Proceeds of Crime Act – Whether "use" requires that property be necessary for or have made unique contribution to unlawful activity – Whether degree of use must be proportionate to forfeiture of property – Whether forfeited property "not derived or realised, directly or indirectly, by any person from any unlawful activity" within s 102(3)(a) of Proceeds of Crime Act – Whether property "derived" if wholly or partly derived from unlawful activity – Whether degree of derivation must be substantial – Whether forfeited property "acquired ... lawfully" within s 102(3)(b) of Proceeds of Crime Act – Whether applicant must prove each step in process of acquisition lawful – Whether applicant must prove all consideration paid for property lawfully acquired. Criminal law – Forfeiture of property – Application under s 141 of Proceeds of Crime Act 2002 (Cth) for order that forfeited property be available to satisfy pecuniary penalty order against convicted person – Where court must be satisfied property subject to effective control of convicted person – Whether effective control determined as at date of restraining order in respect of property or as at date of determination of application under s 141. Words and phrases – "acquired the property lawfully", "derived", "directly or indirectly", "effective control", "forfeiture", "interest", "lawfully acquired", "partly derived", "proceeds of an offence", "proceeds of crime", "realised", "unlawful activity", "used in, or in connection with", "wholly derived". Proceeds of Crime Act 2002 (Cth), ss 5, 6, 16, 17, 18, 24, 24A, 25, 26(4), 29, 42, KIEFEL CJ, BELL, GAGELER AND EDELMAN JJ. Three appeals are brought from a decision of the Court of Appeal of the Supreme Court of Queensland1 on appeal by way of rehearing from the decision of the District Court of Queensland2 in a matter arising under the Proceeds of Crime Act 2002 (Cth) ("the POCA"). Two of the appeals turn on the construction and application of s 102(3) of the POCA, in the form in which that section existed in 2006 before it was substantially amended in 20103. The third of the appeals turns on the construction and application of s 141 of the POCA, in the form in which it existed in 2006 and continues to exist. The procedural history of the appeals and the relevant provisions of the POCA are comprehensively set out in the reasons for judgment of Gordon J, with whose factual analysis and legal conclusions we agree. On the construction and application of s 141 of the POCA, we have nothing to add to what her Honour has written. It is necessary only to mention a few matters of fact by way of background to the issues which arise as to the construction of s 102(3) of the POCA. Mr Steven Hart was an accountant who operated tax minimisation schemes. He was convicted of nine offences of defrauding the Commonwealth in contravention of s 29D of the Crimes Act 1914 (Cth). Pursuant to s 92 of the POCA property, including that of companies with which he was associated ("the Companies") and which had previously been the subject of a restraining order, was automatically forfeited to the Commonwealth. The Companies filed an application under s 102 of the POCA seeking orders for recovery of their interests in certain of the forfeited property, or the payment by the Commonwealth of an amount equal to the value of their interests. The Commonwealth Director of Public Prosecutions applied under s 141 for a declaration that the property the subject of the s 102 application was available to satisfy any pecuniary penalty order made against Mr Hart. A pecuniary penalty order was subsequently made. It required Mr Hart to pay $14,757,287.35 to the Commonwealth. 1 Commissioner of the Australian Federal Police v Hart (2016) 336 ALR 492. 2 Commonwealth Director of Public Prosecutions v Hart [2013] QDC 60. 3 Crimes Legislation Amendment (Serious and Organised Crime) Act (No 2) 2010 (Cth). Bell Edelman Construction of s 102(3) of the POCA that where property Section 102(1) provides the Commonwealth under s 92, the court that made the restraining order may, on the application of a person who claims an interest in the property, make an order declaring the "nature, extent and value" of the applicant's interest in the property. The court may make further orders directing the Commonwealth to transfer the interest to the applicant or declaring that there is payable by the Commonwealth to the applicant an amount equal to that value. is forfeited An order under s 102(1) can only be made if the court is satisfied as to the grounds set out in s 102(2) and (3). The focus in these appeals is on the conditions stated in s 102(3). Those conditions, which the applicant by force of s 317 bears the onus of proving on the balance of probabilities, include that: "the property was not used in, or in connection with, any unlawful activity" ("the use condition"); "the property ... was not derived or realised, directly or indirectly, by any person from any unlawful activity" ("the derivation condition"); and "the applicant acquired the property lawfully" ("the acquisition condition"). Proof of those conditions is proof in a State or Territory court invested with jurisdiction under s 314 of the POCA in a matter arising under the POCA and in a proceeding which by force of s 315 is civil to which the Commonwealth is a necessary party. It is proof in an adversarial proceeding conducted in accordance with the civil procedure of that court4, including such procedure as exists in that court for the definition of issues between parties. The primary judge and the Court of Appeal were correct in taking the view that, where an application for orders under s 102 proceeds on pleadings, an applicant need not negative possibilities which the Commonwealth does not raise in its defence5. 4 Cf Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486 at 491 [7]; [2006] HCA 38, citing Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560; [1956] HCA 22. 5 Commissioner of the Australian Federal Police v Hart (2016) 336 ALR 492 at 678- 679 [935]. See also Director of Public Prosecutions (Cth) v Jeffery (1992) 58 A Crim R 310 at 313-314. Bell Edelman "[T]he property" referred to in the use condition and in the derivation condition is the property once the subject of the restraining order that has been forfeited to the Commonwealth under s 92. The property, ordinarily the "thing"6, is that which at the time of the application has vested absolutely in the Commonwealth under s 96 by reason of the forfeiture that has occurred, in which the applicant claims to have had an interest at the time of forfeiture that the applicant would have retained had forfeiture not occurred. Read with the definitions of "property" and of "interest" in s 338, the reference to "the property" in the use condition and in the derivation condition extends also to any legal or equitable estate or interest in the forfeited thing and any right, power or privilege in connection with that thing. "[U]nlawful activity", referred to in the use condition and in the derivation condition, is defined in s 338 to mean an act or omission that constitutes an offence against a law of the Commonwealth or against a law of a foreign country or an indictable offence against a law of a State or Territory. Satisfaction of the use condition requires proof by an applicant on the balance of probabilities that the thing forfeited was not used in, or in connection with, an act or omission that constituted a relevant offence, and that no legal or equitable estate or interest in that thing and no right, power or privilege in connection with that thing was used in, or in connection with, an act or omission that constituted a relevant offence. Consistently with the construction of equivalent language adopted by the Full Court of the Supreme Court of South Australia in Director of Public Prosecutions v George7, use in or in connection with an act or omission that constituted a relevant offence is a broad conception involving practical considerations which do not readily admit of detailed exposition in the abstract. The conception requires neither a causal link between the property and the offence nor that the property was necessary for the commission of the offence or made a unique contribution to the commission of the offence. Implicit in the expression of the condition is that the use can be by any person. Implicit also is that the degree of use need not be proportionate to the forfeiture that has occurred. Satisfaction of the derivation condition requires proof by an applicant on the balance of probabilities that the thing forfeited (and every legal or equitable 6 Cf Director of Public Prosecutions (Cth) v Hart (No 2) [2005] 2 Qd R 246 at 257 (2008) 102 SASR 246. Bell Edelman estate or interest in that thing, and every right, power or privilege in connection with that thing) was not "derived or realised", directly or indirectly, by any person from an act or omission that constituted a relevant offence. The term "realised" in this context adds nothing of significance to the term "derived". There is a definition of "derived" in s 336, but because that definition is limited to "[a] reference to a person having derived proceeds, a benefit or literary proceeds", that definition has no application to the derivation condition. The definition, in any event, is inclusive rather than explicatory. Section 329, defining when property is "proceeds of an offence", and s 330, defining when property becomes, remains and ceases to be "proceeds of an offence", are nevertheless instructive because they indicate the sense in which "derived" is used in the POCA. Absent any contrary indication in s 102, the sense in which the term is used in those sections can accordingly be taken to indicate the sense in which the term is used in the derivation condition. One of the principal issues on appeal to this Court concerns the approach of the Court of Appeal to the derivation condition. The majority considered that the condition would be satisfied where an asset was derived from a combination of sources of funds, some of which were not tainted as proceeds of the commission of an offence. In their Honours' view, the only circumstance in which the condition would not be satisfied was where the asset was "wholly derived" from the commission of an offence8. Contrary to the conclusion of the majority of the Court of Appeal, s 329(1) and (4) indicate that property can be derived from an act or omission that constitutes a relevant offence even if the property is not "wholly derived" from that act or omission. In that respect, the juxtaposition of s 329(1)(a) and s 329(1)(b) makes clear that property is sufficiently derived from the act or omission that constitutes the relevant offence if the property is either "wholly derived" or "partly derived" from the act or omission. In either case, the property is "derived". The difference between the two cases is one of degree. Property would not answer the description of being "partly derived" from an act or omission if the degree of derivation were no more than trivial9. Beyond that, however, there is no requirement that the degree of derivation must be substantial. And there is no requirement that the degree of derivation must be proportionate to the forfeiture that has occurred. (2016) 336 ALR 492 at 654-655 [832], 675 [921], 676 [923], 700 [1027]. 9 Cf Williams v The Queen (1978) 140 CLR 591 at 602; [1978] HCA 49. Bell Edelman Section 330(1) is also important in indicating that property can be derived from an act or omission that constitutes a relevant offence by reason of being wholly or partly derived from a disposal of, or other dealing with, other property that has been derived from that act or omission. Conformably with the question of whether property has been used in or in connection with a relevant offence, the question of whether property has been derived by a person from an act or omission that constitutes a relevant offence turns on considerations of substance and economic reality which can be expected to vary in different factual settings. Derivation might in one factual setting be constituted by a non-trivial causal connection between the relevant act or omission and the acquisition or continued holding by the person of the thing forfeited (or a legal or equitable estate or interest in that thing, or a right, power or privilege in connection with that thing). Derivation might in another factual setting be constituted by the act or omission resulting in money or some other property being disposed of or otherwise dealt with so as to make a non-trivial contribution to payment for the thing forfeited (or a legal or equitable estate or interest in that thing, or a right, power or privilege in connection with that thing). Those examples are not exhaustive. As with the use condition, the derivation condition does not lend itself to detailed exposition in the abstract. Contrasting with the same term in the use condition and in the derivation condition, "property" in the acquisition condition can only refer to the interest in the thing forfeited that is claimed by the applicant. The focus of the acquisition condition is on the process by which the applicant came to hold that interest. The applicant must prove that each step in that process was lawful. Where the applicant purchased the property, to prove that the applicant acquired the property lawfully the applicant must prove that all of the consideration for the acquisition was lawfully acquired. Application of s 102(3) of the POCA Against the background of the factual analysis undertaken by Gordon J, application of the three critical conditions imposed by s 102(3) for the making of an order under s 102(1) is perhaps best illustrated by reference to four items of forfeited property. Two of those items are the aircraft referred to as "the T-28" and "the North American Trojan" in each of which Flying Fighters Pty Ltd ("Fighters"), as registered owner at the time of forfeiture, claimed an interest. The other two are the items of real property respectively referred to as Doonan's Road, Grandchester ("Doonan's Road"), of which Bubbling Springs Pty Ltd ("Bubbling") was registered owner at the time of forfeiture and in which it Bell Edelman claimed an interest, and 6 Merriwa Street, Sunnybank Hills ("Merriwa Street"), of which Nemesis Australia Pty Ltd ("Nemesis") was registered owner at the time of forfeiture and in which it claimed an interest. The T-28 and the North American Trojan Fighters purchased a 50 per cent interest in the T-28 for $133,000 and later purchased the remaining 50 per cent interest in the T-28 for a further $149,100. There was no dispute between Fighters and the Commonwealth that $83,100 of that further $149,100, amounting to approximately 29 per cent of the total purchase price of the T-28, was paid from a trust account out of an amount of $100,000 paid into that trust account by Merrell Associates Ltd ("Merrell") from an amount of $300,000 paid to Merrell by United Overseas Credit Ltd ("UOCL"). No issue was joined between Fighters and the Commonwealth as to the use condition. The principal issues joined between Fighters and the Commonwealth were as to the derivation condition and the acquisition condition. One of the unchallenged findings of the primary judge was that he was not satisfied on the balance of probabilities that funds sourced by Fighters from Merrell or UOCL did not result from actions of Merrell and UOCL which constituted offences against s 29D of the Crimes Act 1914 (Cth) or s 135.1(5) of the Criminal Code (Cth). That conclusion alone was sufficient to mean that Fighters failed to prove on the balance of probabilities that the T-28 was not derived, partly and indirectly, from unlawful activity of Merrell and UOCL. Fighters for that reason failed to establish the derivation condition. Another of the unchallenged findings of the primary judge was that he was not satisfied on the balance of probabilities that receipt, possession and disposal by Fighters of money paid directly or indirectly by Merrell or UOCL to Fighters did not constitute offences against s 82(1) of the Proceeds of Crime Act 1987 (Cth) or s 400.9 of the Criminal Code (Cth) ("the money laundering offences"). That further finding was also sufficient to mean that Fighters failed to prove on the balance of probabilities that the T-28 was not derived, partly and indirectly, from unlawful activity of Fighters. Fighters for that additional reason failed to establish the derivation condition. The finding of the primary judge concerning the money laundering offences was also sufficient to mean that Fighters failed to prove on the balance of probabilities that each step in the process by which it came to acquire its interest in the T-28 was lawful. Fighters for that reason failed to establish the acquisition condition. Bell Edelman Fighters purchased the North American Trojan for $228,500. The Commonwealth did not put in issue the source of the funds used by Fighters to pay that purchase price and no issue was joined as to the acquisition condition. Issue was joined as to the use condition and as to the derivation condition by reference solely to an amount of $50,000 which Fighters later sourced from UOCL and spent on repairs. There is nothing to suggest that undertaking the repairs contributed to Fighters continuing to own the North American Trojan at the time of forfeiture. There is in the circumstances no other basis for considering that Fighters failed to establish the derivation condition. The primary judge's finding as to the money laundering offences makes the position in relation to the use condition different. Given that the amount of money which Fighters spent on the repairs was not trivial and that it was sourced from UOCL, Fighters failed to prove on the balance of probabilities that the North American Trojan was not used in, or in connection with, the unlawful activity of disposing by Fighters of that amount which Fighters received from UOCL. Doonan's Road and Merriwa Street The main issue concerning Doonan's Road is whether Bubbling succeeded in establishing the use condition given the finding of the primary judge that he was unable to be satisfied that Perpetual Nominees Ltd ("Perpetual") was not induced to lend to Bubbling and to Yak 3 Investments Pty Ltd ("Yak 3") by the making of a loan application which contained a fraudulent representation in contravention of s 408C(1)(f) of the Criminal Code (Q) ("the Perpetual offences") and by the proffering of Doonan's Road as security. The proffering of Doonan's Road as security for the Perpetual loans was a use of Doonan's Road. That use was not a use in the fraudulent act that constituted the Perpetual offences. But it was a use in connection with that fraudulent act: both formed material parts of a single proposal which was directed to and which resulted in Perpetual making the loans. Bubbling for that reason failed to establish the use condition. Unlike Doonan's Road, Merriwa Street was not proffered as security for the Perpetual loans. Merriwa Street was not otherwise referred to in the transaction documents for the Perpetual loans. Nemesis did not by reason of the Perpetual offences fail to establish the use condition. The main issue concerning Merriwa Street is whether Nemesis succeeded in establishing the derivation condition given the finding of the primary judge Bell Edelman that the moneys loaned by Perpetual to Bubbling and to Yak 3 were sought and were used to repay part of a loan to Nemesis from the National Australia Bank ("NAB") in respect of which NAB had a mortgage over Merriwa Street. As explained by Gordon J, the primary judge did not find, and the evidence did not justify a finding, that repayment to NAB of the amounts of the loans made by Perpetual to Bubbling and to Yak 3 prevented NAB from exercising its rights over Merriwa Street so as to have been a cause of Nemesis continuing to have its interest in Merriwa Street at the time of forfeiture; indeed, the bulk of the funding used to repay NAB came from loans to Nemesis by Equititrust Ltd ("Equititrust"). Absent a basis for inferring such a causal connection to have existed, Nemesis did not by reason of the Perpetual offences fail to establish the derivation condition. The final issue is whether Nemesis failed to establish the derivation condition in respect of Merriwa Street against the background of the finding of the primary judge that some of the moneys used to repay loans to Nemesis by Equititrust were sourced from UOCL. As Gordon J explains, the amounts sourced from UOCL on which the Commonwealth relies in raising this issue were found by the primary judge to have amounted to no more than five per cent of the total repayments to Equititrust. There is no basis for inferring those amounts may have been a cause of Nemesis continuing to have its interest in Merriwa Street at the time of forfeiture. Orders We agree with the orders proposed by Gordon J. GORDON J. The Proceeds of Crime Act 2002 (Cth)10 ("the POCA") is intended to, and does, prevent criminals from enjoying the fruits of their crimes, deprive them of the proceeds of and benefits derived from criminal conduct, prevent the reinvestment of those proceeds and benefits in further criminal activities, punish and deter breaches of laws, and enable law enforcement authorities to trace the fruits of offences11. It achieves these objects through a confiscation scheme12 which provides for orders restraining persons from disposing of or otherwise dealing with particular property13, forfeiture orders14, automatic forfeiture of property following conviction of a serious offence15 and pecuniary penalty orders16. These appeals raise issues about the construction and application of the provisions of the POCA allowing a court to make orders relating to the transfer of forfeited property. In particular, the appeals require consideration of s 102(3), which provides that the court that made a restraining order may make orders excluding particular property from automatic forfeiture to the Commonwealth if a number of grounds are established. Those grounds require the applicant to establish, in effect, that there is nothing unlawful about the property, in the sense that the property was not used in, or in connection with, any unlawful activity; that the property was not derived, directly or indirectly, from unlawful activity; and, finally, that the applicant acquired the property lawfully. 10 The applicable version of the POCA for the purposes of these appeals is the POCA as at 13 July 2006, taking into account amendments up to the Law Enforcement Integrity Commissioner (Consequential Amendments) Act 2006 (Cth). The POCA, including s 102, was amended in 2010: see generally Crimes Legislation Amendment (Serious and Organised Crime) Act (No 2) 2010 (Cth). Whether, and to what extent, the changes would lead to a different outcome in these appeals is, of course, not decided. 11 s 5 of the POCA; Australia, House of Representatives, Proceeds of Crime Bill 2002, Explanatory Memorandum at 1-2. 12 See s 6 of the POCA. 13 Pt 2-1 of the POCA. 14 Pt 2-2 of the POCA. 15 Pt 2-3 of the POCA. 16 Pt 2-4 of the POCA. Although the immediate focus of these appeals is the construction and application of s 102, the determination of those issues requires close examination of the overall scheme of the POCA and separate consideration of each of the various items of property in issue17. There is also an issue about the construction and application of another provision of the POCA (s 141), which deals with enforcement of a pecuniary penalty order. Hence, the balance of these reasons is organised as follows: Proceedings below These appeals The POCA Restraining orders under Pt 2-1 Conviction forfeiture (3) Application by convicted person for exclusion under s 94 (4) Application by third party for exclusion under (5) Order under s 102(1) Section 102(3) appeals Tax minimisation schemes and money laundering – UOCL and Merrell Structure of this part of the reasons Sea Fury (4) Mercedes (6) North American Trojan Samara Street 17 Hawker Sea Fury FB11 (registration VH-SHF) ("the Sea Fury"); 1983 Mercedes Benz 380SL ("the Mercedes"); North American Aviation T-28 Trojan (registration VH-SHT) ("the T-28"); North American Aviation T-28 Trojan (registration VH-AVC) ("the North American Trojan"); 27 Samara Street, Sunnybank ("Samara Street"); 6 Merriwa Street, Sunnybank Hills ("Merriwa Street"); Archerfield Airport lease 703146442 sublease 70447517 ("Hangar 400"); and Doonan's Road, The Perpetual Offences (a) Doonan's Road (b) Hangar 400 (c) Merriwa Street Section 102(1) – order declaring the nature, extent and value of an interest and the Merrell Charges Section 141 appeal Conclusion and orders Proceedings below In May 2003, the Commonwealth Director of Public Prosecutions ("the CDPP") suspected that Mr Steven Irvine Hart had committed indictable offences The CDPP sought, tax minimisation schemes. and subsequently obtained, restraining orders under the POCA prohibiting disposal of, or dealing with, specific property that was suspected of being under Mr Hart's effective control. in operating On 26 May 2005, Mr Hart was found guilty of nine offences of defrauding the Commonwealth in contravention of s 29D of the Crimes Act 1914 (Cth). He was sentenced to seven years' imprisonment for each offence, with the sentences to be served concurrently. On 18 April 2006, the property that was the restraining orders was automatically subject Commonwealth under s 92 of the POCA. forfeited the Following the automatic forfeiture of the restrained property to the Commonwealth, two applications were filed in the District Court of Queensland. First, an application was made by a number of companies with which Mr Hart was affiliated: relevantly, Flying Fighters Pty Ltd as trustee for Flying Fighters Discretionary Trust ("Fighters"), Bubbling Springs Pty Ltd as trustee for Bubbling Springs Discretionary Trust ("Bubbling"), Nemesis Australia Pty Ltd ("Nemesis") and Yak 3 Investments Pty Ltd as trustee for Yak 3 Discretionary Trust ("Yak 3") (together, "the Companies"). That application was made for orders under s 102 of the POCA to recover their respective interests, or an amount equal to the value of their interests, in some of the forfeited property ("the s 102 application"). In respect of each item of property, the Companies contended that the property was not used in, or in connection with, any unlawful activity18; the property was not derived or realised, directly or indirectly, by any 18 s 102(3)(a) of the POCA. person from any unlawful activity19; and the relevant Company had acquired the property lawfully20. Second, the CDPP applied under s 141 of the POCA for a declaration that any property recovered by the Companies pursuant to the s 102 application was available to satisfy any pecuniary penalty order made against Mr Hart ("the s 141 application"). The CDPP alleged that although the property was not owned by Mr Hart, it was subject to his effective control. On 19 November 2010, pursuant to s 116 of the POCA, a pecuniary penalty order was made against Mr Hart ordering him to pay $14,757,287.35 to the Commonwealth. In determining the amount of that penalty, the value of the property automatically forfeited in 2006, following Mr Hart's convictions, was taken into account to reduce the amount of the pecuniary penalty order21. The primary judge initially refused to make the orders sought in the s 102 application because he found that the Companies had failed to prove the value of their interest in specific assets at the time of the forfeiture22. However, his Honour indicated that he would grant the Companies relief in respect of those assets, on condition that the Companies paid the Commonwealth $1.6 million23. Orders were made in those terms on 6 May 2013. The $1.6 million represented an amount owed under a number of fixed and floating charges which had been granted by each of the Companies over their assets to Merrell Associates Ltd ("Merrell")24. The charges to Merrell had been forfeited to the Commonwealth. The primary judge dismissed the s 141 application on discretionary grounds25. 19 s 102(3)(a) of the POCA. 20 s 102(3)(b) of the POCA. 21 Commonwealth Director of Public Prosecutions v Hart (2010) 81 ATR 471 at 477-478 [5], 598 [558]. See also Commonwealth Director of Public Prosecutions v Hart [2013] QDC 60 at [877]-[879]. 22 Hart [2013] QDC 60 at [852]-[853]. See also Commissioner of the Australian Federal Police v Hart (2016) 336 ALR 492 at 654 [828]-[830], 741 [1247], 23 Hart [2013] QDC 60 at [852]-[855]. 24 See Hart [2013] QDC 60 at [472]. 25 Hart [2013] QDC 60 at [867]-[885]. The Commonwealth26 appealed to the Court of Appeal of the Supreme Court of Queensland against the dismissal of the s 141 application and, separately, against the 6 May 2013 orders in relation to the s 102 application. The Companies appealed against the primary judge's refusal to make the orders they had sought under s 102 and against the 6 May 2013 orders (including the requirement that they pay $1.6 million). the Companies' appeal and the Companies' appeal27. The Court of Appeal, by majority (Peter Lyons J, Douglas J agreeing; Morrison JA dissenting), dismissed the two appeals by the Commonwealth and the allowed Commonwealth's s 102 appeal, the majority held that none of the assets in the proceedings was used in, or in connection with, any unlawful activity or was derived or realised, directly or indirectly, by any person from any unlawful activity28. An important step in the majority's reasoning was its approach to the phrase "derived or realised" in s 102(3)(a), which it construed as meaning "wholly derived" or "wholly realised"29. In the Commonwealth's s 141 appeal, the majority held that effective control was to be assessed at the date of the determination of an application under s 14130 and that, in this case, the 26 In the Court of Appeal, the appellant in the s 141 appeal was the Commissioner of the Australian Federal Police. The appellant in the s 102 appeal was the Commonwealth. In the Companies' appeal, both the Commonwealth and the Commissioner of the Australian Federal Police were named as respondents. The appeals to this Court were brought respectively by each of the Commissioner of the Australian Federal Police, the Commonwealth, and the Commonwealth and the Commissioner of the Australian Federal Police. It is not necessary for the purposes of these reasons to distinguish between the Commonwealth and the Commissioner of the Australian Federal Police as parties. It will be convenient to refer to both as "the Commonwealth". 27 Hart (2016) 336 ALR 492 at 654 [828]-[830], 741 [1247], 746 [1272]-[1273]. 28 Hart (2016) 336 ALR 492 at 697-698 [1017] (the T-28), 700 [1027] (the Sea Fury), 717 [1115] (the North American Trojan), 723 [1144] (Hangar 400), 724 [1158] (Merriwa Street), 727 [1172] (Samara Street), 731 [1194] (Doonan's Road), 732 [1199] (the Mercedes). 29 Hart (2016) 336 ALR 492 at 675-676 [918]-[923] per Peter Lyons J, 654-655 [831]-[833] per Douglas J; cf at 521 [123], 523-524 [138] per 30 Hart (2016) 336 ALR 492 at 745-746 [1268]. Commonwealth could not establish that Mr Hart had effective control of the assets at that date31. The Court of Appeal made orders declaring the value of the Companies' interests in certain assets immediately before forfeiture and requiring the Commonwealth to pay the Companies that value, with interest. It also ordered the transfer of certain assets and interests in property to the Companies with the result that those assets and interests would not be available to be applied towards the pecuniary penalty order. These appeals These appeals concern the following assets automatically forfeited to the Commonwealth on 18 April 2006: three aircraft (the Sea Fury, the T-28 and the North American Trojan) and a motor vehicle (the Mercedes), all owned by Fighters; and four pieces of real property (Samara Street and Doonan's Road, owned by Bubbling; Merriwa Street, owned by Nemesis; and Hangar 400, a sublease over Commonwealth land, registered in the name of Yak 3). Fixed and floating charges, described as mortgage debentures, were granted by each of Fighters, Bubbling, Nemesis and Yak 3 over their respective assets to Merrell ("the Merrell Charges"). As has already been mentioned, these were also automatically forfeited to the Commonwealth. As will be seen, Merrell was a central participant in the unlawful activity undertaken as part of Mr Hart's tax minimisation schemes. It was common ground before the Court of Appeal, and before this Court, that at the date of forfeiture the value of the debt owed to Merrell under each charge was $1.6 million and remained unsatisfied. As noted at the outset, questions about the construction of s 102(3) of the POCA and its application to the assets in issue in these appeals require consideration of each limb of s 102(3) and an understanding of the framework erected by the POCA, being the statutory context in which the provision sits. It is against that framework that an applicant for an order under s 102(3), in relation to specific "property"32 that has been forfeited to the Commonwealth, must establish on the balance of probabilities33 that: 31 Hart (2016) 336 ALR 492 at 743 [1256]. 32 "[P]roperty" is defined in s 338 of the POCA and, by reference to the definition of "interest" in s 338, includes any present, future, vested or contingent legal or equitable estate or interest in the property or thing as well as any right, power or privilege in connection with the property or thing. 33 s 317 of the POCA. the property was not used in, or in connection with, any *unlawful activity and was not derived or realised, directly or indirectly, by any person from any unlawful activity; and the applicant acquired the property lawfully; and the applicant is not the person convicted of the offence to which the forfeiture relates." Paragraphs (a) and (b) provide, in effect, for three criteria or "limbs" that the applicant must address. The first is that the property was not used in, or in connection with, any unlawful activity (the "use limb"). The second is that the property was not derived or realised, directly or indirectly, by any person from any unlawful activity (the "source limb"). The third is that the applicant acquired the property lawfully (the "lawfully acquired limb"). The use limb and the source limb are negative – the applicant must establish that the property was not used in, or in connection with, any unlawful activity and the property was not derived or realised, directly or indirectly, by any person from any unlawful activity. The lawfully acquired limb is positive – the applicant must establish that they acquired the property (or their interest in the property) lawfully. Each limb presents a fact-specific and often fact-intensive inquiry. In each case, whether the criteria of the relevant limb are established will be a matter of fact and degree. As these reasons will explain: the use limb seeks to identify a connection between the use of the property and unlawful activity. It may, and commonly will, require consideration of one or more of the following questions: how the property was used in or in connection with unlawful activity; the extent to which the property was so used; and how much or what part of the property was used in that unlawful activity; the source limb seeks to identify a connection between the derivation of the property and unlawful activity. The inquiry may differ depending on the relevant derivation; but it may be appropriate to ask whether the extent and nature of the connection is not between insubstantial; and the unlawful activity and the derivation the lawfully acquired limb asks whether there was unlawful activity in the process of acquisition of the applicant's interest in the property or whether the funds used to acquire that interest in the property were unlawfully acquired. The question, simply, is whether the applicant acquired the property (or the applicant's interest in the property) lawfully, other than in respects which would be considered de minimis. On the proper construction of s 102(3), the Commonwealth's appeal in relation to the s 102 application should be allowed in part, on the basis that: in relation to the Sea Fury, the Mercedes, the T-28 and Samara Street, the relevant Company failed to establish the source limb; in relation to the Sea Fury and the T-28, the relevant Company also failed to establish the lawfully acquired limb; and in relation to the North American Trojan, Hangar 400 and Doonan's Road, the relevant Company failed to establish the use limb. In relation to Merriwa Street, although Nemesis satisfied each limb of s 102(3), the orders and declarations made by the Court of Appeal failed to properly address the nature, extent and value of Nemesis' interest in Merriwa Street and, in particular, failed to address the fact that the assets of Nemesis, and therefore Merriwa Street, were subject to one of the Merrell Charges at the date of forfeiture. Accordingly, the orders made by the Court of Appeal should be set aside and, in their place, orders should be made which address the existence of the Merrell Charge granted by Nemesis, the owner of Merriwa Street. Finally, for the reasons explained in Part E below, the Commonwealth's appeal in relation to the dismissal of the s 141 application should be dismissed. The POCA Chapter 2 of the POCA contains a scheme comprising interlocking parts: Pt 2-1 deals with restraining orders, Pt 2-2 deals with forfeiture orders, Pt 2-3 deals with automatic forfeiture following conviction of a serious offence and Pt 2-4 deals with pecuniary penalty orders34. Three elements of that statutory framework – (1) restraining orders; (2) forfeiture; and (3) exclusion from forfeiture – are considered in turn in this part of the reasons. Aspects of the POCA that relate to pecuniary penalty orders and enforcement will be considered in Part E of these reasons, which addresses the s 141 appeal. 34 Part 2-5 of the POCA, dealing with literary proceeds, is not relevant to these appeals and may be put to one side. Restraining orders under Pt 2-1 A restraining order is a critical part of the scheme: it restrains the disposal of, or other dealing with, particular property that is, or might be, the subject of future forfeiture in relation to certain offences35. It is the mechanism that ensures property is not dissipated before it is able to be confiscated. The CDPP, as the applicant36, must establish certain pre-conditions, on the balance of probabilities37. The application can be made ex parte38. The pre-conditions to the court making a restraining order vary according to the seriousness of the offence. For present purposes, it is sufficient to refer to s 18 (dealing with restraining orders for persons suspected of committing serious offences) and then, by way of contrast, s 17 (dealing with restraining orders for persons convicted of, or charged with, other indictable offences). The offences to which these appeals relate were serious offences. Section 18 enables a court to make a restraining order where there are reasonable grounds to suspect that a person has committed a serious offence39, within the six years preceding the application for the restraining order or since the application was made. It is not necessary for the reasonable grounds to be based on a finding as to the commission of a particular serious offence40. The restraining order may prohibit specific property from being disposed of, or otherwise dealt with, by any person, or prescribe that property is only to be disposed of or dealt with in a specified manner or in specified circumstances41. 35 s 16 of the POCA. 36 s 25 of the POCA. 37 s 317 of the POCA. 38 See s 26(4) of the POCA. 39 A "serious offence" is relevantly defined to mean an indictable offence punishable by imprisonment for three or more years involving, among other things, unlawful conduct constituted by or relating to a breach of s 81 of the Proceeds of Crime Act 1987 (Cth) or Pt 10.2 of the Criminal Code (Cth) (money laundering) and unlawful conduct by a person that causes, or is intended to cause, a loss to the Commonwealth or another person of at least $10,000: par (a)(ii) and (iv) of the definition of "serious offence" in s 338 of the POCA. 40 s 18(4) of the POCA. 41 s 18(1)(a) and (b) of the POCA. A restraining order may cover property where the court is satisfied that there are reasonable grounds to suspect that the property is: all or specified property of the suspect42, including bankruptcy property of the suspect43; or specified property of another person (regardless of whether that other person's identity is known) that is subject to the effective control of the suspect or is proceeds of the offence or offences which form the basis of the restraining order44. "[E]ffective control" is defined broadly under the POCA45. The definition seeks to capture aspects of control that might not otherwise be caught. For example, property may be subject to the effective control of a person whether or not the person has a legal or equitable estate or interest in the property or a right, power or privilege in connection with the property46; and property held on trust for the ultimate benefit of a person is taken to be under the effective control of the person47. The broad definition of effective control provides that a court may consider property without the CDPP needing to show that it is in fact under the effective control of the suspect. So, property disposed of to another person without sufficient consideration, within six years before or after an application for a restraining order, a forfeiture order or a pecuniary penalty order, is deemed to be under the effective control of the person who disposed of the property48. The intended reach of s 18 of the POCA is made clear from the outset: if there are reasonable grounds to suspect that a person has committed a serious offence, a court is able to prohibit the disposal of, and other dealing with, all of that suspect's property (together with property subject to their effective control) irrespective of its connection with the alleged serious offence. The court must make the restraining order even if there is no risk of the property being disposed 42 s 18(2)(a) and (b) of the POCA. 43 s 18(2)(aa) and (ba) of the POCA. 44 s 18(2)(c) and (d)(i) of the POCA. 45 s 337 of the POCA. 46 s 337(1) of the POCA. 47 s 337(2) of the POCA. 48 s 337(4) of the POCA. of or otherwise dealt with49 and the court may specify that the restraining order covers property that is acquired by the suspect after the court makes the order50. After the order is made, it is up to the suspect to establish that the specified property should not be subject to restraint51. By way of contrast, s 17 applies where a person has been convicted of, has been charged with, or is proposed to be charged with, an indictable offence52, which need not be a serious offence within the meaning of the POCA. If the person has not been convicted, the court must be satisfied that there are reasonable grounds to suspect that the person committed an indictable offence53. If the application is to restrain property of a person other than the suspect, the court must be satisfied that there are reasonable grounds to suspect that the property is subject to the effective control of the suspect or is proceeds or an instrument of the offence54. If these pre-conditions are met, the court must make an order that identified property must not be disposed of or otherwise dealt with by any person, or dealt with by any person except in the manner and circumstances specified in the order. Section 17 thereby sets a higher bar for the CDPP: there is no equivalent of s 18(4) (that the reasonable grounds need not be based on a finding as to the commission of a particular offence) and it provides that a court may refuse to make a restraining order in relation to an indictable offence that is not a serious offence if the court is satisfied that it is not in the public interest to make the order55. The POCA contains procedures for property to be excluded from a restraining order and for a restraining order to be revoked56. Consistent with the 49 s 18(5) of the POCA. See also s 17(5) of the POCA. 50 s 18(6) of the POCA. See also s 17(6) of the POCA. 51 Div 3 of Pt 2-1 of the POCA. 52 s 17(1)(d) of the POCA. An "indictable offence" includes an offence against a law of the Commonwealth that may be dealt with as an indictable offence even if it may also be dealt with as a summary offence in some circumstances: s 338 of the POCA. 53 s 17(1)(e)-(f) and (3)(a) of the POCA. 54 s 17(1)(e)-(f) and (3)(b) of the POCA. 55 s 17(4) of the POCA. 56 See, eg, in Pt 2-1 of the POCA, s 24 (allowance for expenses), s 24A (excluding property when expenses are not allowed), s 29 (excluding specified property for (Footnote continues on next page) intended reach of the POCA, the circumstances are limited and the conditions strict57. These exclusion and revocation procedures are not directly in issue in these proceedings. Conviction forfeiture The making of a restraining order against property in relation to certain offences is a step to possible forfeiture of that property. Under the POCA, property may be forfeited to the Commonwealth where there is a conviction for an indictable offence ("conviction forfeiture") but also where there is no conviction ("civil forfeiture"). A distinction is also drawn by reference to the seriousness of the offence. Following the conviction of a person of a serious offence, any property the subject of a restraining order that relates to that offence is automatically forfeited to the Commonwealth58. The automatic forfeiture occurs six months after the date of the conviction (or at the end of an extended period specified in an extension order). The restraining order does not in fact have to relate to the specific offence of which the person was convicted: it is deemed sufficient if the restraining order was in relation to a related offence59 of which the person had been, or was proposed to be, charged at the time of the making of the restraining order. Central to the POCA scheme is the way it defines "unlawful activity" and the way that definition feeds into, and affects, the construction and operation of a number of other definitions60. "[U]nlawful activity" is defined to mean an act or omission that constitutes an offence against a law of the Commonwealth, an offence against a certain reasons), s 42 (application to revoke a restraining order) and s 44 (security to revoke a restraining order). 57 For example, a court must not exclude property from a restraining order under s 29 of the POCA unless the court is satisfied that a pecuniary penalty order could not be made against the person who owns the property or, if the property is not owned by the suspect but is under the suspect's effective control, against the suspect: s 29(4) of the POCA. 58 Div 1 of Pt 2-3 of the POCA and, in particular, s 92. 59 An offence is a "related offence" of another offence if the physical elements of the two offences are substantially the same acts or omissions: s 338 of the POCA. 60 See ss 329 and 330 of the POCA. law of a State or Territory that may be dealt with on indictment, or an offence against a law of a foreign country61. Unsurprisingly, "proceeds of an unlawful activity" means proceeds of the offence constituted by the act or omission that constitutes the unlawful activity62. Next, property is "proceeds of an offence" if it is wholly or partly derived or realised, whether directly or indirectly, from the commission of the offence63. And property can be proceeds of an offence even if no person has been convicted of the offence64 and whether the property is situated within or outside Australia65. Moreover, the scope of "proceeds of an offence" is extended by s 330, which provides that property becomes proceeds of an offence if it is wholly or partly derived or realised from a disposal of or other dealing with proceeds of the offence or wholly or partly acquired using proceeds of the offence, including because of a previous application of s 33066. And property remains proceeds of an offence even if it is credited to an account or it is disposed of or otherwise dealt with67. There is no need to adopt or meet equitable tracing principles. Indeed, s 330(5) provides that if a person once owned property that was proceeds of an offence but the person ceased to be the owner of the property and (at that time or a later time) the property stopped being proceeds of an offence or an instrument of the offence68 and the person subsequently acquires the property again, then the property becomes proceeds of an offence again. This broad definition of "proceeds" is central to the confiscation scheme in the POCA. 61 s 338 of the POCA. 62 s 329(4) of the POCA. 63 s 329(1) of the POCA. 64 s 329(3) of the POCA. 65 s 329(1) of the POCA. 66 s 330(1) of the POCA. 67 s 330(3) of the POCA. 68 For example, because it was acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence: see s 330(4)(a) of the POCA. Application by convicted person for exclusion under s 94 If a person convicted of a serious offence wishes to have property excluded from automatic forfeiture, that person must apply after conviction of the serious offence to which the restraining order relates but before the restrained property is automatically forfeited69 – that is, usually within six months after conviction. The person convicted of the serious offence must own the property and the court must be satisfied that (1) the property is neither proceeds of unlawful activity nor an instrument of unlawful activity and (2) the person's interest in the property was lawfully acquired70. As is apparent, the person convicted of the serious offence must satisfy the court that the property was not the proceeds of any unlawful activity, not just of the serious offence of which the person was convicted. Application by third party for exclusion under s 102 In the proceedings giving rise to these appeals, Mr Hart did not apply for an exclusion order. Instead, as noted earlier, when Mr Hart was convicted and the restrained property was automatically forfeited to the Commonwealth, the Companies applied for an order under s 102 declaring the nature, extent and value of their interests in some of the forfeited property and a further order that their interests in that specific property be transferred to them or that an amount equal to the value of their interests in that property was payable by the Commonwealth to them71. Before a court may make such an order, it must be satisfied that the grounds set out in s 102(2) or (3) exist. Those sub-sections provide: "(2) An order under this section may be made if: the applicant was not, in any way, involved in the commission of the offence to which the forfeiture relates; and the applicant's *interest in the property is not subject to the *effective control of the person whose conviction caused the forfeiture; and 69 s 94 of the POCA. 70 s 94(1)(c), (e) and (f) of the POCA. 71 s 102(1) of the POCA. the applicant's interest in the property is not *proceeds of the offence or an *instrument of the offence. (3) An order under this section may also be made if: the property was not used in, or in connection with, any *unlawful activity and was not derived or realised, directly or indirectly, by any person from any unlawful activity; and the applicant acquired the property lawfully; and the applicant is not the person convicted of the offence to which the forfeiture relates." (emphasis added) Sections 102(2) and 102(3) deal with different categories of applicant. Section 102(2) only avails an applicant who was not, in any way, involved in the commission of the offence to which the forfeiture relates. Section 102(3), unlike s 102(2), may also avail an applicant who was involved in, but not convicted of, the offence to which the forfeiture relates. Innocent third party – s 102(2) Although these appeals are directly concerned with s 102(3), it is necessary to start with s 102(2). Under s 102(2), if an applicant is not, in any way, involved in the commission of the offence to which the forfeiture relates, they are entitled to an order excluding the property from forfeiture if they can satisfy the court of two matters: first, that their interest in the forfeited property is not subject to the effective control of the person whose conviction caused the forfeiture; and second, that their interest in the forfeited property is, relevantly, not "proceeds of the offence". For the purposes of s 102(2)(c), it is for the innocent third party applicant to establish, on the balance of probabilities72, that the applicant's interest in the forfeited property was not "proceeds of the offence" (emphasis added). That is, notwithstanding that the applicant was not in any way involved in the commission of the offence to which the forfeiture relates, the applicant must establish that their interest in the property was not wholly or partly derived or realised from the commission of the offence or from a disposal or other dealing with proceeds of the offence and was not wholly or partly acquired using proceeds of the offence, in the broad sense discussed earlier73. And of course, if the applicant once owned but ceased to own property that was proceeds of the 72 s 317 of the POCA. 73 See Part C(2) above. offence and the property stopped being proceeds of the offence, the property again becomes proceeds of the offence if the applicant reacquires it. Section 102(2) sets a high bar. (b) Other situations – s 102(3) Section 102(3), unlike s 102(2), permits an application by a person who is involved in, but is not the person convicted of, the offence to which the forfeiture relates. The provision focuses on the "property" that was automatically forfeited. The pre-conditions for making the order under s 102(3) are cumulative and, unsurprisingly, more stringent than s 102(2). An applicant may be entitled to an order under s 102(3) only if they can satisfy the court of three limbs – the use limb, the source limb and the lawfully acquired limb. Use limb – par (a) First, in relation to the use limb, the applicant must establish, on the balance of probabilities74, that the property was not used in, or in connection with, any unlawful activity. The inquiry that must be made is necessarily broad. Under this limb, "the property" is not expressed to be limited to the applicant's interest in the forfeited property. It refers to the property itself, including any interest in the property75. Moreover, not only does the use limb extend to any unlawful activity – not just the unlawful activity giving rise to the restraining order and the forfeiture – but the addition of the words "in connection with" reinforces the breadth of the inquiry. It is an inquiry which seeks to identify a connection between the use of the property and unlawful activity. Identifying that relationship or connection may, and commonly will, direct attention to, and require consideration of, one or more of the following questions: how the property was used in or in connection with unlawful activity; the extent to which the property was so used; and how much or what part of the property was used in that unlawful activity76. Further, because the use limb is cast in negative and broad terms, it is not necessarily decisive for an applicant to show that: 74 s 317 of the POCA. 75 See the definitions of "property" and "interest" in s 338 of the POCA. 76 cf Director of Public Prosecutions v George (2008) 102 SASR 246 at 261 [60]. there is no causal link between the property and unlawful activity – something less than a causal link may result in the use limb not being established; the property was not essential or necessary for the commission of an offence; the property did not make a unique contribution to the commission of an offence; or the use in the unlawful activity was not the sole or dominant use of the property. Some facts and circumstances will be more straightforward. If a house is used as the place to manufacture drugs, or a car is used to distribute drugs, the asset will be caught by s 102(3)(a) and the applicant will not be entitled to an order under s 102(3). Other facts and circumstances will be more complicated. If, for example, the unlawful activity is money laundering proceeds of crime through the sale or purchase of assets (or both), a question may arise whether a particular asset in that series of transactions was used in, or in connection with, the unlawful activity of money laundering. That conduct may, in certain circumstances, support a finding that a court cannot be satisfied that the property was not used in, or in connection with, any unlawful activity. Each inquiry will be fact-specific and often fact-intensive. It is a question of fact and degree. But the onus is on, and remains on, an applicant for an order under s 102(3) to establish on the balance of probabilities that the property was not used in, or in connection with, any unlawful activity. How an applicant discharges that onus will vary between applications. However, an applicant is not required to consider or negative all possibilities irrespective of whether they are raised by the CDPP77. If the CDPP intends to rely upon facts and circumstances which it contends establish that a trial judge should not be satisfied that the use limb is established (or, for that matter, the source limb or the lawfully acquired limb), the CDPP should identify those facts and matters as early as possible in its defence or other pleading in response to any s 102(3) application. Source limb – par (a) Under the source limb the applicant must establish, on the balance of probabilities78, that the property was not derived or realised, directly or 77 Hart (2016) 336 ALR 492 at 678-679 [935]. See also Director of Public Prosecutions (Cth) v Jeffery (1992) 58 A Crim R 310 at 313-314. 78 s 317 of the POCA. indirectly, by any person from any unlawful activity. As with the use limb, "the property" to which the source limb refers is not limited to the applicant's interest in the forfeited property. The focus is on how the property, including any interest in the property, was derived or realised. Further, the inclusion of the phrases "directly or indirectly", "by any person" (not limited to the applicant or the person convicted of the offence to which the forfeiture relates) and "from any unlawful activity" (not limited to the offence to which the forfeiture relates) is intended to, and does, broaden the circumstances which are excluded from Put in different terms, the source limb significantly narrows the scope of the property that can be the subject of an exclusion order under s 102(3). Together with the other limbs, it sets a high bar for recovery of forfeited property: a higher bar than that in s 102(2). In this Court, a central issue about the source limb was whether, as the majority of the Court of Appeal held, the source limb would be satisfied if an applicant showed that the property was not wholly derived (or realised) from unlawful activity79. It was not suggested that "realised" relevantly added to the concept of derivation for the purposes of the present appeals. The majority of the Court of Appeal relied by way of comparison on how "proceeds of an offence" is defined in s 329, which relevantly provides that property is proceeds of an offence if it is "wholly" or "partly" derived or realised from the commission of the offence. First, the inclusion of "partly" in s 329 (and s 330) was said to reflect a recognition by the drafters that the ordinary meaning of "derived" was "wholly derived". Second, the majority concluded that this ordinary meaning should be applied to "derived" in s 102(3)(a), given that the phrase was not preceded by "wholly or partly". The Companies' submission in this Court was, in short, that this approach was correct: if the Parliament had intended that an applicant should have to satisfy the court that property was not partly derived from unlawful activity, s 102(3)(a) would have either used the defined term "proceeds" or included the phrase "wholly or partly" before "derived". As will become apparent, that submission should be rejected. Section 102(3)(a) speaks expressly of "property … derived … directly or indirectly". Whether property has been derived directly or indirectly by any 79 Hart (2016) 336 ALR 492 at 654-655 [832], 675-676 [920]-[923]. person from any unlawful activity is not further defined80. The statutory question may be one of fact and degree. It will be fact-specific and often fact-intensive. It may involve practical considerations. The word "derived" directs attention to whether there is a relevant connection between the property, its derivation and a relevant activity. Obviously, the nature of the connection may differ according to what is said to be the relevant form of derivation. Where the deriving is the original acquisition of the property, the relationship sought is a connection between unlawful activity and acquisition. In turn, that directs attention to how the unlawful activity caused or contributed to the occurrence of the derivation. The extent and nature of the connection is not unimportant: if the overall assessment is that the extent and nature of the connection is de minimis, then there is no relevant connection that could lead to a finding of derivation. Putting the matter in different terms, it may be appropriate to ask whether the extent and nature of the connection between the unlawful activity and the derivation is not insubstantial. Where the unlawful activity in issue is a cause (not the cause) of the derivation – as it will be when a not insignificant part of the funds for acquisition directly or indirectly comes from unlawful activity – the property will be derived directly or indirectly from the unlawful activity. Hence, it is too broad to say that "derived" in its ordinary sense means "wholly" derived and that this is how the source limb should be understood. The word, like any word in a statute, must be read in context. The context includes the surrounding words in s 102(3)(a), the purpose of s 102(3), the place of s 102(3) within s 102 and the overall statutory scheme. Section 102(3) provides a mechanism for persons, including a person involved in the commission of a serious offence (but not convicted of that offence), to seek to recover property already automatically forfeited to the Commonwealth. But that mechanism is limited. And the focus of s 102(3) is not limited to proceeds of crime. Thus, the source limb is directed to ensuring that property that was derived by any person from any unlawful activity is not able to 80 Section 336 is directed to deriving "proceeds", not deriving property. It provides: "A reference to a person having derived *proceeds [or] a *benefit … includes a reference to: the person; or another person at the request or direction of the first person; having derived the proceeds [or] benefit … directly or indirectly." be transferred to a person who, potentially, was involved in the commission of the offence to which the forfeiture relates. It is stringent in its scope and intended reach. And consistent with that objective, the balance of s 102(3)(a) uses words of generality – the use limb requires the applicant to establish that "the property was not used in, or in connection with, any unlawful activity". To read "derived" in s 102(3)(a) as "wholly derived" would be directly contrary to the purpose of Further, s 102(3) is clearly intended to impose a higher bar for recovery than that provided under s 102(2) to a third party who was not involved in the commission of the offence to which the forfeiture relates. To read "derived" as "wholly derived" in s 102(3)(a) would place an applicant who may have been involved in the commission of the offence in a more advantageous position than an innocent third party under s 102(2). That cannot be the intended result. Next, the Companies' contention that the separate use of "wholly" and "partly" in the definition of "proceeds" in s 329 of the POCA means that Parliament was assuming or accepting that "derived" ordinarily means "wholly derived", and that it therefore bears that meaning in s 102(3)(a), is misplaced. First, it is not necessarily the case that "derived" is ordinarily understood as meaning "wholly derived". As just explained, the word takes its meaning from its context, and the context includes the fact that s 102(3) does not allow property to be recovered just because it is not proceeds of crime: it is more stringent. Second, sub-ss (1) and (4) of s 329, in their terms, indicate that derivation can include partial derivation. They provide that property can be proceeds of an offence even if the property is only partly derived from the commission of that offence. It is not necessary that the property be wholly derived from the commission of that offence. Section 330(1) also provides that property can be proceeds of a relevant offence if the property is partly derived from a disposal of, or other dealing with, other property that is derived from the commission of that offence. Again, it is not necessary that the property be wholly derived from the commission of that offence. These sections are entirely consistent with the conclusion that, in the context of the POCA, "derived" includes both "wholly" and "partly" derived. They confirm that, unless the derivation is de minimis, it is sufficient for the purposes of s 102(3)(a) if the property is partly derived from any unlawful activity. During the course of oral submissions about the proper construction of the source limb, possible tests for determining whether property was "derived" from unlawful activity, including proportional tests – for example, whether most or a substantial proportion of the funds used have come from unlawful activity – or a "but for" test – whether the property would not have been obtained or retained but for the use of tainted funds – were discussed. As the preceding analysis demonstrates, the statutory question is one of fact and degree, and will be fact-specific and often fact-intensive. In considering the application of the source limb to the facts and circumstances of a specific asset, including, in particular, the extent and nature of the connection between the unlawful activity and the derivation, a proportional test, or a "but for" test, may be of assistance. However, the answer provided by either test will not be decisive because, consistent with the broad construction of the source limb explained earlier, the statutory question is better approached by asking whether the extent and nature of the connection between the unlawful activity and the derivation is not insubstantial. Finally, contrary to the view expressed by the majority of the Court of Appeal, the decision of the Supreme Court of Victoria in Director of Public Prosecutions v Allen81 does not assist in the application of the source limb. Although Allen correctly recognised that property may be acquired using funds from a number of sources, some of which may be lawful and others of which might be unlawful, it did not purport to lay down a general test for when property would be derived or realised from the commission of an offence82. And that is unsurprising. Not only was the legislative framework in Allen different, but it was simply not necessary for the judge in Allen to consider the outer reaches of "derived" given his finding that virtually all the property to be forfeited in that case was derived from the commission of offences. (iii) Lawfully acquired limb – par (b) Finally, the lawfully acquired limb requires the applicant to establish, on the balance of probabilities83, that they acquired the property lawfully84. Unlike the other limbs, it is framed in positive terms. Moreover, given that the focus is on acquisition by the applicant, the reference to "the property" in this limb must be read as a reference to the applicant's interest in the property85. But, as with the other limbs of s 102(3), the inquiry involves a question of fact and degree. It too will be fact-specific and often fact-intensive. Under this limb, the initial focus shifts from the property to the applicant. Property will not be lawfully acquired if an offence is committed in the process of acquisition or if the funds used to acquire the property were not lawfully acquired86. In other cases, consideration will need to be given to the source of 81 Unreported, Supreme Court of Victoria, 12 December 1988. 82 See also Director of Public Prosecutions (Cth) v Corby [2007] 2 Qd R 318 at 321. 83 s 317 of the POCA. 84 s 102(3)(b) of the POCA. 85 See the definitions of "property" and "interest" in s 338 of the POCA. 86 See Markovski v Director of Public Prosecutions (2014) 41 VR 548 at 563 [76], the funds used in the acquisition and its effect upon the lawfulness of the transaction. So, for example, property is unlikely to be lawfully acquired if: the applicant acquired the property with the proceeds of crime or as a result of some other form of illegality (which it is presently unnecessary and inappropriate to define); the funds the applicant used to purchase the property were not themselves lawfully acquired; or the funds the applicant used to purchase the property were provided by a third party who had acquired them unlawfully. Under this limb, proportional tests – for example, whether most or a substantial proportion of the asset was acquired lawfully – and a "but for" test – whether the property would not have been acquired but for the unlawful activity or tainted funds – are also unlikely to be determinative. For example, if an offence has been committed in the process of acquisition, the extent to which that unlawful activity contributed to the acquisition of the asset will usually be irrelevant because the limb will not be satisfied. For those reasons, the statutory question under this limb is better approached by asking whether the asset was acquired lawfully, other than in respects which would be considered de minimis. (5) Order under s 102(1) As the application of s 102(3) to the assets in issue in these appeals will demonstrate, assessing an application for an order from a court under s 102 is a process which requires the exercise of judgment. That is why the court "may" make the order. As has been recognised, in a statutory provision which confers a power, the word "may" can be used in more than one sense87. It may be used to indicate that a court or other decision-maker has a discretion. Alternatively, it may be used to indicate that a decision-maker has authority to exercise a power, which they are obliged to exercise if statutory criteria are met. In the present case, "may" in s 102(3) falls in the latter category. The criteria specified in s 102(3) are stringent; but their stringency also demonstrates that they are intended to be exhaustive. If the court is satisfied that the applicant has established that those criteria are met, an order must be made. 87 See Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 128, 133-135, 138-139; [1971] HCA 12. Section 102(1) provides that the court may make an order: declaring the nature, extent and value of the applicant's interest in the property; and either: if the interest is still vested in the Commonwealth— directing the Commonwealth to transfer the interest to the applicant; or declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c)." The form of the order made is important. In the context of these appeals, it will be considered in Part D(9) below. Section 102(3) appeals Tax minimisation schemes and money laundering – UOCL and Merrell Mr Hart used various companies to operate the tax minimisation schemes that led to his convictions. His clients, participants in the schemes, paid fees to some of these companies, including Merrell and United Overseas Credit Ltd ("UOCL"). For example, in relation to UOCL, after the CDPP applied for the pecuniary penalty order against Mr Hart, the District Court found that Mr Hart had defrauded the Commonwealth contrary to s 29D of the Crimes Act 1914 (Cth)88 and had dishonestly caused a loss or a risk of loss to the Commonwealth contrary to s 135.1(5) of the Criminal Code (Cth)89. In making those findings, the District Court held that Mr Hart's means were dishonest according to the standards of ordinary people and that he knew that those means were dishonest90. Each offence was an indictable offence. The courts below in the current proceedings referred to these as the "UOCL Offences". It is appropriate to adopt the same terminology. 88 These offences were in addition to the nine offences of defrauding the Commonwealth contrary to s 29D of the Crimes Act 1914 (Cth) of which Mr Hart had been convicted in 2005. 89 Hart (2010) 81 ATR 471. 90 Hart (2010) 81 ATR 471 at 558-559 [373], [376], 581 [462], 587 [499]. With respect to the UOCL Offences, there is now no dispute that the primary judge was satisfied that any funds UOCL provided to Merrell91 (which were then provided to the Companies) "may reasonably be suspected of being proceeds of crime" within the meaning of s 82(1) of the Proceeds of Crime Act 1987 (Cth) ("the POCA 1987") or fell within the equivalent terms of its successor provision, s 400.9 of the Criminal Code (Cth)92. The primary judge stated that: (1) Mr Hart exercised a "high degree of control" over UOCL and Merrell at all material times93 including over their day to day operations94; the Companies had not satisfied his Honour that Mr Hart was not in effective control of the Companies when the UOCL Offences were committed95; practically all of Merrell's funds were derived or realised, directly or indirectly, from UOCL96; (4) money paid by UOCL to Merrell and to the Companies was money "derived from the commission of" the UOCL Offences and constituted "proceeds of crime"97; (5) where UOCL funds or Merrell funds were received by companies of which Mr Hart was in effective control or an agent, his Honour was "suspicious" that an offence against s 82(1) of the POCA 1987 91 Hart [2013] QDC 60 at [72]. 92 Hart [2013] QDC 60 at [81]; see also at [284]. Section 82(1) of the POCA 1987 was superseded by s 400.9 of the Criminal Code (Cth) from 1 January 2003: see s 2 of the Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002 (Cth). The provisions were framed in different terms but are not relevantly different for present purposes. 93 Hart [2013] QDC 60 at [290]. 94 Hart [2013] QDC 60 at [77], [265]. 95 Hart [2013] QDC 60 at [77]. 96 Hart [2013] QDC 60 at [72]-[76]. 97 Hart [2013] QDC 60 at [287]. or s 400.9 of the Criminal Code (Cth) was committed by the recipient and was satisfied that the recipient had Mr Hart's state of mind98; any funds Merrell or UOCL provided in relation to the assets in issue in the proceedings before his Honour "may reasonably be suspected of being proceeds of crime" within the meaning of those words in s 82(1) of the POCA 1987 or fell within the equivalent terms of s 400.9 of the Criminal Code (Cth)99; and (7) where money was paid by UOCL or Merrell to one of the Companies and was used to derive or realise a relevant asset, the primary judge was not satisfied that such an asset was not also directly derived from an offence against s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth), in addition to being indirectly derived from the unlawful activity constituting the UOCL Offences100. These unchallenged findings of the primary judge are important because funds sourced from one or both of UOCL and Merrell were provided in relation to some of the assets in issue in these appeals – the Sea Fury, the T-28 and the North American Trojan. Structure of this part of the reasons Each asset requires separate consideration and application of the three limbs of s 102(3). That task is complex. It is necessary to analyse the facts and contentions in relation to each asset in some detail. Each asset is considered by reference to the relevant findings of the primary judge, the approach of the Court of Appeal and then the issues in this Court, framed by the Commonwealth's appeal grounds and any relevant grounds in the notices of contention filed by the Companies. 98 Hart [2013] QDC 60 at [296]. 99 See Hart [2013] QDC 60 at [81]. 100 See Hart [2013] QDC 60 at [81]. Sea Fury Fighters was the registered owner of the Sea Fury. It purchased the plane using five separate cash flows101: Cash flow Date Payer (as loan to Fighters) Nemesis Merrell Merrell Unlimited Aero Maintenance Pty Ltd ("UAM") UAM There was no dispute that cash flow 1 ($58,600.45) was not tainted102. Cash flows 2 and 4 ($185,566) were paid by Merrell to Fighters; they had been immediately preceded by payments, in similar amounts, from UOCL to Merrell. For the reasons set out in Part D(1) above, the primary judge was not satisfied that those cash flows were untainted103. That finding was not challenged in the Court of Appeal104. The primary judge was also not satisfied that $300,000 of the UAM payments (cash flows 5 and 6) had not been derived indirectly from the UOCL Offences105. Accordingly, the primary judge was not satisfied that $485,566 (or 73 per cent) of the purchase price of the Sea Fury had not been derived indirectly from unlawful activity – namely, the UOCL Offences. The Court of Appeal did not disturb the findings of the primary judge106. The Court of Appeal found no error in the primary judge's conclusion that he was not satisfied that 73 per cent of the funds used to purchase the Sea Fury was not derived from unlawful activity. Nor did the Court of Appeal disturb the finding 101 The cash flows are numbered in accordance with an affidavit sworn by Mr Vincent, a forensic accountant engaged by the Commonwealth to identify the sources of funds. 102 Hart [2013] QDC 60 at [613]; Hart (2016) 336 ALR 492 at 617 [610]. 103 Hart [2013] QDC 60 at [614]. 104 Hart (2016) 336 ALR 492 at 698 [1019]. 105 Hart [2013] QDC 60 at [615]-[616]. 106 Hart (2016) 336 ALR 492 at 619 [624], 699 [1026]. of the primary judge that it was reasonably certain that bringing into Australia, receiving, possessing or disposing of the $300,000 would have contravened s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth)107. However, the majority of the Court of Appeal held that the Sea Fury was not derived, directly or indirectly, from unlawful activity because it construed s 102(3)(a) so that the source limb would be satisfied unless the property was wholly derived or realised, directly or indirectly, from unlawful activity108. That is, the majority considered that the property would not be considered to be "derived" or "realised" from the commission of an offence if it was "derived" or "realised" from a combination of the commission of that offence and some other, untainted source. The Court of Appeal made the following declaration and order ("the Sea Fury declaration and order"): a declaration that Fighters had legal ownership of the Sea Fury, subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and an order directing the Commonwealth, within 21 days, to transfer its interest in the Sea Fury to Fighters and to deliver possession of the Sea Fury and its operational documents to Fighters. On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to the Sea Fury because Fighters had failed to establish each limb of s 102(3). By a notice of contention, the Companies sought to challenge the finding of the primary judge, not disturbed by the Court of Appeal, that he was not satisfied that $300,000 of cash flows 5 and 6 was from untainted sources. It is first necessary to address the notice of contention. To understand the Companies' contention, the following findings of the primary judge in relation to the $300,000 are relevant: part of cash flow 5 was met by a $361,000 payment from Nemesis on 6 November 2000, which was, in turn, sourced from a payment to Nemesis of $1.3 million from Blackshort Pty Ltd ("Blackshort") on 3 November 2000109; 107 Hart (2016) 336 ALR 492 at 699 [1024]-[1026]; Hart [2013] QDC 60 at [81], 108 Hart (2016) 336 ALR 492 at 700 [1027]; see also at 675 [920]. 109 Hart [2013] QDC 60 at [615]. Blackshort had made the $1.3 million payment to Nemesis on behalf of Watson Benefit Services Pty Ltd ("WBS")110; in the month prior to the payment of $1.3 million to Nemesis, WBS had received two payments from UOCL totalling $2 million111; and the possibility existed that UOCL had transferred funds to Nemesis via WBS112. Given the findings of the primary judge about the UOCL Offences113, his Honour was not satisfied that $300,000 of the $361,000 paid by Nemesis was untainted114. In this Court, by their notice of contention, the Companies contended that the Court of Appeal ought to have excluded the $300,000 from Blackshort as not having been derived from unlawful activity or pleaded as a source of tainted funds. In particular, the Companies challenged the finding of the primary judge that the possibility existed that UOCL had transferred funds via WBS to Nemesis. The Companies contended that the primary judge should not have permitted the CDPP to rely on these allegations at trial because they were not the subject of affidavit evidence adduced by the CDPP, and were raised for the first time in cross-examination, at which time it was too late for the Companies to obtain evidence from the relevant bank's records. The Companies further contended that, in any event, the evidence was inconsistent with the transfer of UOCL monies to Nemesis through Blackshort because the primary evidence of the Blackshort bank account did not show that any monies were paid by UOCL. In relation to the alleged lack of notice, the evidence was to the contrary. The conduct of the litigation reveals that Mr Vincent, the Commonwealth's forensic accountant, referred to the payment of $1.3 million from Blackshort in a report he prepared dated 2 September 2009, in which he concluded that there was 110 See Hart (2016) 336 ALR 492 at 698-699 [1022]. 111 Hart [2013] QDC 60 at [615]; Hart (2016) 336 ALR 492 at 698-699 [1022]. WBS also received $1 million from Nemesis on 6 October 2000: Hart (2016) 336 ALR 492 at 698 [1021]. 112 Hart [2013] QDC 60 at [615]. 113 See Part D(1) above. 114 Hart [2013] QDC 60 at [615]-[616]. insufficient evidence to draw a conclusion about the original source of the funds used to acquire the Sea Fury because the documentation was "[i]nsufficient to ascertain how Fighters[,] and the companies allegedly making payments on their behalf, derived the funds in order to make the payments used to acquire [the Sea Fury]". Mrs Laura Hart, one of the Companies' witnesses, responded to the Vincent report in an affidavit dated 21 September 2010. She asserted that the $1.3 million deposit had arisen because Nemesis had invested $1 million with WBS and the investment had returned $300,000 in one month. She further asserted that the investment was the subject of a written agreement but did not produce it. In a supplementary report dated 21 October 2010, Mr Vincent restated his earlier views about the $1.3 million payment. As that history reveals, the ultimate derivation of the $1.3 million was in issue, the Companies were aware of it being in issue and they sought to address it through Mrs Hart's evidence. There was no lack of notice. The problem for the Companies was not lack of notice but the fact that Mrs Hart's evidence on this issue was rightly rejected. The Companies' explanation for the $1.3 million was supplied by Mrs Hart and yet she did not provide primary evidence of the alleged written agreement with WBS115. As the primary judge found, Mrs Hart gave no evidence of whether she had read the written agreement or how she knew its terms116 and the Companies did not adduce any evidence of the agreement (including by way of subpoena) or evidence from anyone who might have been able to shed light on the transactions, and that absence of evidence was not explained117. And the banking documents that were in evidence did not assist the Companies. WBS's bank statement showed that UOCL had deposited funds into WBS's account in October 2000 but did not demonstrate that only a small amount subsequently went to Blackshort and Blackshort's bank statement did not demonstrate the source of funds used to restore the credit balance to that account after the payment to Nemesis on 3 November 2000. The Court of Appeal's analysis118 was not shown to be in error on this point. 115 Hart [2013] QDC 60 at [615]. 116 Hart [2013] QDC 60 at [615]. 117 Hart (2016) 336 ALR 492 at 619 [622]. 118 Hart (2016) 336 ALR 492 at 618 [617], 699 [1024]. Source limb The question is whether Fighters has discharged its onus of establishing that the Sea Fury was not derived, directly or indirectly, by any person from any unlawful activity119. On the findings summarised above, the answer is "no". The primary judge and the Court of Appeal were not satisfied that $485,566 (or 73 per cent) of the purchase price of the Sea Fury had not been derived indirectly from unlawful activity – the UOCL Offences120. The connection between the unlawful activity and the derivation of the Sea Fury was direct. The unlawful activity contributed to the derivation, namely the acquisition, of the Sea Fury and it did so in a not insubstantial way. The Court of Appeal was in error in making the Sea Fury declaration and order. Lawfully acquired limb Given the conclusion reached in relation to the source limb, it is strictly unnecessary to reach a concluded view about the lawfully acquired limb. However, the facts as described above are sufficient to show that Fighters also did not establish this limb. $485,566 of the purchase price was from the UOCL Offences. And, as explained earlier, Mr Hart controlled UOCL and was aware of the transfer of funds from UOCL. Fighters bore the onus of establishing that it lawfully acquired the Sea Fury. But, on the facts as described, the Sea Fury was not lawfully acquired. It was acquired, in part, using proceeds of crime and that is unlawful: receiving, possessing and then disposing of the proceeds of crime is money laundering contrary to s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth). Fighters has not discharged the onus it bore of establishing that it lawfully acquired the Sea Fury. (c) Use limb Given the conclusions reached in relation to the other limbs in s 102(3), it is unnecessary to reach a concluded view about the use limb. That is not to be read, however, as precluding the possibility that there may be circumstances in which property will be used in, or in connection with, unlawful activity where the unlawful activity is money laundering of proceeds of crime. That is, the particular facts and circumstances may indicate that proceeds 119 See Part C(4)(b)(ii) above. 120 See Part D(1) above. of crime have been "washed" by the sale and purchase of a particular asset or assets. (4) Mercedes Fighters was the registered owner of the Mercedes prior to forfeiture. As will be seen, an important feature of the factual context is that the loan which funded Fighters' purchase of the Mercedes was secured by a charge over the Sea Fury. That charge was the only security for the loan, and recourse was limited to that security. The issue on appeal to this Court is whether the source limb was satisfied. Primary judge Before Fighters acquired the Mercedes in 2001, it was owned by Nemesis121. There was no evidence that Nemesis acquired the car using tainted funds or funds derived from unlawful activity122. In September 2001, when Nemesis went into receivership, the car was sold to Fighters using funds borrowed from a Dr Fleming123. Dr Fleming's loan was in the amount of $400,000. A charge in favour of Dr Fleming was placed over some of Fighters' assets, including the Sea Fury124. The primary judge was not satisfied that Dr Fleming's loan would have been made without the security of the charge over the Sea Fury125. Accordingly, because the primary judge was not satisfied that the Sea Fury was not derived from unlawful activity, he was also not satisfied that the Mercedes was not derived from unlawful activity126. The primary judge was unable to determine whether the interest of Fighters in the Mercedes had a value at the date of forfeiture because the Merrell Charge over it secured repayment of $1.6 million and his Honour could not be 121 Hart [2013] QDC 60 at [834]. 122 Hart [2013] QDC 60 at [834]. 123 Hart [2013] QDC 60 at [835]. 124 Hart [2013] QDC 60 at [835]. 125 Hart [2013] QDC 60 at [845]. 126 Hart [2013] QDC 60 at [845]. satisfied of the total value of all of the assets which were charged127. As previously explained, the Merrell Charges covered assets of each of the Companies. The $1.6 million figure represents the total indebtedness of the Companies at the date of forfeiture. His Honour did not determine the amount individually owing by each of the Companies, but observed that the parties had treated the Companies as though they were "cross-guarantors for one another's debts to Merrell"128. Court of Appeal In the Court of Appeal, Morrison JA did not disturb the primary judge's findings129 and made additional findings130 that: (1) Dr Fleming's loan to Fighters for the purchase of the Mercedes was provided by a deed of loan and was made on security that included the Sea Fury; (2) Dr Fleming described the charge over the Sea Fury as the "primary security" after he had satisfied himself that it was sufficient to cover the loan; the charge in favour of Dr Fleming was the first registered charge and, so that it would have first priority over the Merrell Charge, a deed of priority was entered into with Merrell; and cl 1 of the deed of loan specified that the loan was subject to the execution of the "Collateral Security", which was defined as the first registered company charge over the Sea Fury, and cl 6 limited recourse by Dr Fleming against Fighters to the extent of any monies recovered upon enforcement of the "Collateral Security". Hence, Morrison JA concluded that where the loan was expressed to be on the basis of the provision of security over the Sea Fury, the charge over the Sea Fury was the only security and recourse was limited to that security, it was "easy to infer" that the loan would not have been made without the charge over 127 Hart [2013] QDC 60 at [846]. 128 See Hart [2013] QDC 60 at [468]. 129 Hart (2016) 336 ALR 492 at 620 [632]. 130 Hart (2016) 336 ALR 492 at 622 [641]. the Sea Fury131. As Morrison JA stated, this was not a case where a general security placed over an asset coincidentally covered the forfeited asset132. The majority of the Court of Appeal did not disturb the findings of the primary judge. The majority did find that Dr Fleming later received $500,000 "to release the fixed charge over [the Sea Fury]"133. Given the majority's conclusion that Fighters had shown that its interest in the Sea Fury was not wholly derived or realised, directly or indirectly, from unlawful activity, it also concluded that Fighters' interest in the Mercedes was not so derived or realised. The majority found it unnecessary to deal with other matters134. As explained above, the majority of the Court of Appeal was wrong to conclude that the source limb was satisfied unless the asset was wholly derived from unlawful activity135. The Court of Appeal made the following declaration and order ("the Mercedes declaration and order"): a declaration that Fighters had legal ownership of the Mercedes, subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and an order directing the Commonwealth, within 21 days, to transfer its interest in the Mercedes to Fighters and to deliver possession of the Mercedes and its operational documents to Fighters. (c) High Court On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to the Mercedes because Fighters had failed to establish the source limb. Specifically, the Commonwealth contended that the majority was mistaken in its finding about the Sea Fury's derivation and, as a consequence, was also mistaken in its finding about the Mercedes. 131 Hart (2016) 336 ALR 492 at 623 [642]. 132 Hart (2016) 336 ALR 492 at 623 [643]. 133 Hart (2016) 336 ALR 492 at 731 [1196]. 134 Hart (2016) 336 ALR 492 at 732 [1199]. 135 See Part C(4)(b)(ii) above. By a notice of contention, the Companies contended that the Court of Appeal ought to have found that the Mercedes was not derived from unlawful activity because it was not acquired using tainted funds. It is appropriate to first address the notice of contention. The ground raised in the notice of contention should be rejected. The notice of contention proceeded on an incorrect construction of the source limb. It assumed that the majority of the Court of Appeal was correct to conclude that the source limb was satisfied unless the asset was wholly derived from unlawful activity. As has been seen, that construction was wrong. Hence, the Companies' contention that, because the majority found that the Sea Fury was not derived from unlawful activity, the issue about the use of the Sea Fury as security for the loan from Dr Fleming fell away should be rejected. The Companies further contended that, even if the majority's construction of the source limb was not correct, "[t]he reasoning of the primary judge was wrong in principle". The Companies submitted that "[a]n asset that was not 'derived … from any unlawful activity' does not lose that status because a general security (such as a fixed and floating charge, or 'all monies' mortgage) is temporarily granted over that asset, together with another asset or fund which happens to be tainted", particularly where, as happened here, "the loan to refinance the vehicle had been discharged entirely from lawful sources". That contention is contrary to the facts and proceeds on a misconstruction of the source limb. The findings of the primary judge (not disturbed by Morrison JA and not addressed by the majority) establish that this was not a case where a general security placed over an asset coincidentally covered a tainted asset. This was a case where the loan was expressed to be on the basis of the provision of security over the Sea Fury, the charge over the Sea Fury was the only security and recourse was limited to that security, with the result that – as Morrison JA observed – it was "easy to infer" that the loan would not have been made without the charge over the Sea Fury. Finally, the Companies' contention that the loan from Dr Fleming was discharged entirely from lawful sources does not and cannot provide a complete answer to the source limb. The question is whether, on the approach earlier explained136, Fighters has discharged its onus of establishing that the Mercedes was not derived, directly or indirectly, by any person from any unlawful activity. On the findings which are summarised above, the answer is "no". 136 See Part C(4)(b)(ii) above. The connection between the unlawful activity and the derivation of the Mercedes was not direct. However, without the provision of the Sea Fury, an asset derived from unlawful activity, the Mercedes would not have been financed and acquired. The unlawful activity contributed to the derivation, namely the acquisition, of the Mercedes and it did so in a not insubstantial way. The fact that the loan from Dr Fleming was allegedly discharged entirely from lawful sources is not determinative. The intended reach of the POCA is broader. The Court of Appeal was in error in making the Mercedes declaration and order. The T-28 was purchased by Fighters in two transactions – the first half share for $133,000 in 1996, the second half share for $149,100 in 1998. The second half share was funded using three cash flows: Cash flow Date Payer Merrell Fighters Fighters Payee Account AGC & MP Account) In the Court of Appeal, the Companies did not challenge the primary judge's findings about cash flow 5: namely, that the Merrell funds originally came from UOCL and were not shown to be lawfully derived137. In relation to cash flow 6, the majority found that the primary judge's finding138 that the $64,000 was derived from unlawful activity was an error139. In relation to the source limb, the majority concluded that the T-28 was not derived from unlawful activity because it was not wholly derived from unlawful activity140. The majority did not consider the use limb or the lawfully acquired limb. 137 Hart [2013] QDC 60 at [487]; see also at [56]-[68]; Hart (2016) 336 ALR 492 at 138 Hart [2013] QDC 60 at [488]. 139 Hart (2016) 336 ALR 492 at 697 [1016]. 140 Hart (2016) 336 ALR 492 at 697-698 [1017]. The Court made the following declaration and order ("the T-28 declaration and order"): a declaration that Fighters had legal ownership of the T-28, subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and an order directing the Commonwealth, within 21 days, to transfer its interest in the T-28 to Fighters and to deliver possession of the T-28 and its operational documents to Fighters. In this Court, there was no challenge to the majority's conclusion about cash flow 6. The only issue was what consequences should follow from the unchallenged findings about cash flow 5, being that $83,100 (or 29 per cent) of the purchase price of the T-28 came from tainted funds. The Commonwealth submitted that no s 102(3) order should be or could be made in relation to the T-28 because Fighters could not satisfy any of the three limbs in s 102(3). It is convenient to begin with the source limb. Source limb The question is whether Fighters has discharged its onus of establishing that the T-28 was not derived, directly or indirectly, by any person from any unlawful activity141. On the findings of the primary judge, the answer is "no". There was no dispute that $83,100 of the purchase price was derived from unlawful activity and that the payment made by Merrell was derived from the UOCL Offences142. The Companies submitted that while the funds were ultimately sourced from UOCL, they only indirectly contributed to the purchase of the T-28 since the monies were not applied directly but were sourced from the trust account of Geoff Klooger & Associates, solicitors for the Companies and Merrell. That is, while they did not dispute that the ultimate source of the funds was UOCL, they contended that the "indirect contribution to the acquisition of the T-28 mean[t] that there was no money laundering offence involved in the acquisition of the T-28". Those contentions should be rejected. 141 See Part C(4)(b)(ii) above. 142 Hart (2016) 336 ALR 492 at 623 [646]-[647], 694 [1001], 697-698 [1017]. The UOCL Offences have been explained earlier in these reasons: see Part D(1) above. First, the contentions are contrary to the evidence the Companies adduced before the primary judge. The evidence was that, on 23 October 1998, Merrell lent Fighters $100,000 which was advanced by telegraphic transfer to the trust account of Geoff Klooger & Associates and that, on 2 November 1998, Fighters used $83,100 of that $100,000 to pay the vendor for the T-28. In light of the primary judge's findings about Mr Hart's control of the Companies (and Merrell) during the UOCL Offences and his knowledge about the source of Merrell's funds, Fighters had failed to discharge the onus it bore of establishing that the T-28 was not derived, directly or indirectly, from unlawful activity. Put in different terms, $83,100, or 29 per cent, of the purchase price was from unlawful activity. The connection between the unlawful activity and the derivation of the T-28 was direct. The unlawful activity contributed to the derivation, namely the acquisition, of the T-28 and it did so in a not insubstantial way. The Court of Appeal was in error in making the T-28 declaration and order. Lawfully acquired limb Given the conclusion reached in relation to the source limb, it is strictly unnecessary to reach a concluded view about the lawfully acquired limb. However, the facts as described above are sufficient to show that Fighters also did not establish this limb. The $83,100 of the purchase price sourced from Merrell was from the UOCL Offences. And, as explained earlier, Mr Hart controlled UOCL and was aware of the transfer of funds from UOCL. Fighters bore the onus of establishing that it lawfully acquired the T-28. But, on the facts as described, the T-28 was not lawfully acquired. It was acquired using proceeds of crime and that is unlawful – receiving, possessing and disposing of the $83,100 would have contravened s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth)143. Fighters had failed to discharge the onus it bore of establishing that it lawfully acquired the T-28. (c) Use limb The primary judge did not make a finding about whether the T-28 was used in, or in connection with, any unlawful activity; nor did the Commonwealth raise that issue by notice of contention in the Court of Appeal. In this Court, the Commonwealth contended that the majority of the Court of Appeal erred in failing to consider the use limb and that the majority should have found that the use limb was not established. Given the conclusions already reached in relation 143 cf Hart [2013] QDC 60 at [81], [405], [615]-[616]; Hart (2016) 336 ALR 492 at to the other limbs in s 102(3), it is unnecessary either to address those contentions or to reach a concluded view about the use limb. North American Trojan The North American Trojan was purchased in 2001 by Fighters for $228,500. The primary judge recorded that the Commonwealth "[did] not impugn" the original purchase price144; accordingly, it can be inferred from his Honour's reasons that he found that the funds used to purchase the North American Trojan were untainted. Prior to forfeiture, the North American Trojan was registered in the name of Fighters and subject to one of the Merrell Charges. There was no evidence of the market value of the aircraft at the time of forfeiture or at the trial of the s 102 application. In this Court, the focus was on $50,000 spent on restoration works. The source limb and the use limb were in issue. Primary judge From 2003 to 2005, Fighters allegedly spent $75,800 towards part restoration of the aircraft. $50,000 of the work was done in the 2003 financial year and recorded as a debt due by Fighters to Flying Fighters Maintenance and Restoration Pty Ltd ("FFMR"). Despite the restoration works, the value of the plane did not increase by the $50,000 recorded in Fighters' books of account145. Fighters failed to produce any documentary evidence to support the additional $25,800 claimed as a restoration cost (over and above the $50,000) and therefore the primary judge declined to find that that cost had been incurred146. Between 30 January 2003 and 3 February 2003, Fighters transferred $159,500 to FFMR by three payments. There was no dispute that the ultimate source of these three payments was UOCL and that the repairs to the aircraft were funded by UOCL147. As has been seen, the primary judge found that any funds UOCL provided "may reasonably be suspected of being proceeds of crime" within the meaning of s 82(1) of the POCA 1987 or fell within the terms of s 400.9 of the Criminal 144 Hart [2013] QDC 60 at [723]. 145 Hart [2013] QDC 60 at [722]-[723]. 146 Hart [2013] QDC 60 at [724], [726]. 147 Hart [2013] QDC 60 at [725]. Code (Cth)148. Accordingly, his Honour found that the money used to fund the restoration works in 2003 ($50,000) was "substantially tainted funds"149. However, for the purposes of the source limb, the primary judge concluded that the North American Trojan was not substantially derived from tainted funds and that it was therefore lawfully derived150. The primary judge was satisfied that the value of Fighters' interest in the plane at the time of forfeiture was diminished by the charge to Merrell and concluded that the value of Fighters' interest in the North American Trojan was not proved151. His Honour initially refused to make an order under s 102 but subsequently ordered that the North American Trojan be transferred to Fighters on condition that the Companies pay the Commonwealth $1.6 million. Court of Appeal The Court of Appeal did not disturb the primary judge's factual findings152. In particular, all members of the Court of Appeal accepted the primary judge's finding that the funds expended on restoration ($50,000) were tainted funds153. Morrison JA would have allowed the Commonwealth's appeal in relation to the North American Trojan154. In reaching that conclusion, his Honour stated that, in his view, the assessment of whether property or an interest in property has been derived from unlawful activity under the source limb required an examination of the contributions to the property or interest as part of the tracing back exercise, including expenditure after acquisition155. His Honour considered that the precise form of expenditure did not make a difference in this assessment – it was a question of fact in each case156. 148 Hart [2013] QDC 60 at [81]. 149 Hart [2013] QDC 60 at [726]. 150 Hart [2013] QDC 60 at [726]. 151 Hart [2013] QDC 60 at [727]. 152 Hart (2016) 336 ALR 492 at 626 [659]-[661], 713-714 [1094]-[1096]. 153 Hart (2016) 336 ALR 492 at 626 [661], 629 [677], 713-714 [1096]. 154 Hart (2016) 336 ALR 492 at 629 [679]. 155 Hart (2016) 336 ALR 492 at 627 [669]-[670]. 156 Hart (2016) 336 ALR 492 at 628 [671]-[673]. However, under the source limb, the majority considered that the expenditure on restoration and repairs did not affect their conclusion that the aircraft was not derived from unlawful activity157. It considered that the relevant question was how the interest in a given asset was acquired. As Douglas J put it, "[t]he more natural meaning is that [the asset] had been derived lawfully when it was bought"158 (emphasis added). The majority further found that even if restoration and repair funds could be taken into account, the "relatively small amount" spent on repairs and restoration, relative to the purchase price, was not sufficient to affect the the aircraft was not derived from unlawful activity159. conclusion Accordingly, the majority found that Fighters' interest in the aircraft was not derived from the proceeds of crime and therefore from the commission of an offence under s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth)160. that The Court made the following declaration and order ("the Trojan declaration and order"): a declaration that Fighters had legal ownership of the North American Trojan, subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and an order directing the Commonwealth, within 21 days, to transfer its interest in the North American Trojan to Fighters and to deliver possession of the North American Trojan and its operational documents to Fighters. (c) High Court On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to the North American Trojan because Fighters had failed to establish the source limb or the use limb, or both, because the $50,000 spent on repairs and restoration was paid for using proceeds of crime. 157 Hart (2016) 336 ALR 492 at 655 [833], 716 [1108]. 158 Hart (2016) 336 ALR 492 at 655 [833]. 159 Hart (2016) 336 ALR 492 at 716 [1109]. 160 Hart (2016) 336 ALR 492 at 717 [1115]-[1117]. In relation to the source limb, the unlawful activity (money laundering of the proceeds of crime) had no direct or indirect role in the initial derivation of the North American Trojan. Although, in some circumstances, it might be possible to contend that the proceeds of crime had a direct or indirect role in the derivation of the property by reason of expenditure after acquisition (for example, because the funds were used to substantially increase the value of the asset, as in a home renovation), that is not this case. The finding made by the primary judge was that, despite the restoration works of $50,000, the value of the North American Trojan did not increase. That is not to be read as precluding the possibility that there may be circumstances in which property will be derived from unlawful activity, such as money laundering of the proceeds of crime to carry out restoration works, where the works altered the shape, form or use of the asset in a not insubstantial manner, even though the value of the asset was not affected or the money was spent after the asset was acquired. However, there was no evidence in these proceedings that the works altered the shape, form or use of the North American In relation to the use limb, the question is whether the North American Trojan was used in, or in connection with, an unlawful activity where the unlawful activity was money laundering $50,000 of proceeds of crime. As explained in relation to the Sea Fury161, there may be circumstances where property will be used in, or in connection with, unlawful activity where the unlawful activity is money laundering of proceeds of crime. In the circumstances of the North American Trojan, it is not possible to rule out that hypothesis. Having regard to the source of the funds said to have been spent on repairs and restoration, there were reasonable grounds to suspect that the aircraft was used in connection with the unlawful activity of money laundering. It must be recalled that receiving, possessing and disposing of the $50,000 may have contravened s 82(1) of the POCA 1987 or s 400.9 of the Criminal Code (Cth)162 and $50,000 is a not insubstantial sum. The Trojan declaration and order must be set aside. Samara Street Samara Street was registered in the name of Bubbling immediately prior to forfeiture. There are two issues in this Court: whether the source of the funds used to purchase Samara Street was in fact unlawful activity (raised by the 161 See Part D(3)(c) above. 162 Hart [2013] QDC 60 at [81], [405], [615]-[616]; Hart (2016) 336 ALR 492 at Companies' notices of contention) and, if so, whether Bubbling had discharged its onus under the source limb (raised by the Commonwealth's appeal). Primary judge Samara Street was purchased by Bubbling on 3 March 1998 for $150,571.12 with funding of $45,000 from Astion Pty Ltd ("Astion"), $100,000 from the ANZ Bank and the balance ($5,571.12) from other sources163. The primary judge was not satisfied that the $45,000 was not derived from unlawful activity because Astion was an entity involved in "the Hendon Arrangement"164. His Honour was also "doubtful" that the ANZ Bank or any other commercial lender would have lent 100 per cent of the purchase price and that Samara Street would have been purchased without the contribution from Astion165. The Hendon Arrangement166 concerned the Westside Commerce Centre, a real estate development in South Australia that was owned by Westside Commerce Centre Pty Ltd ("WCC") as trustee of the Hendon Unit Trust. At 30 June 1993, WCC had substantial accrued losses ($5,472,742), was in default with its financier, had external creditors and was unable to borrow the funds required to complete the development167. Mr Hart and a Mr Adcock (who was aware of the Westside development and the position of WCC prior to taking up employment with Mr Hart) developed a tax minimisation proposal which involved a joint venture between WCC and the Hendon Unit Trust. Mr Hart established Astion to take over as trustee from WCC and to acquire the real estate development168. The participants in the Hendon Arrangement were clients of Harts Accountants and Auditors ("Harts Accountants")169. 163 Hart [2013] QDC 60 at [799]-[800]. 164 Hart [2013] QDC 60 at [801], [807]. 165 Hart [2013] QDC 60 at [807]. 166 See generally Hart [2013] QDC 60 at [318]-[346]. 167 Hart [2013] QDC 60 at [319]. 168 Hart [2013] QDC 60 at [319]. 169 Hart [2013] QDC 60 at [320]-[322]. The proposal was that trustee clients would appoint WCC as a beneficiary of their trusts and appoint income to it but that the income would be isolated from the creditors of WCC170. Out of the appointed income, 10 per cent was to be paid to Astion and 2 per cent to Tinkadale Pty Ltd171. On 30 June 1995, Astion was appointed trustee of the Hendon Unit Trust172. Of the $12,031,072 in income that was purportedly appointed to WCC, Astion received approximately $1.2 million, which it then provided to entities associated with Mr Hart, including Bubbling173. But there were problems. The primary judge found that there were reasonable grounds to suspect offences of recklessly making false or misleading statements, in breach of s 8N of the Taxation Administration Act 1953 (Cth) ("the TAA"), in relation to the Hendon Arrangement174. As the primary judge said175: "Harts [Accountants] had legal advice that the effectiveness of the clients' resolutions appointing WCC would depend on the terms of the clients' trust deeds and whether the terms authorised the appointments. Harts [Accountants] knew that if the terms did not authorise such an appointment, Harts [Accountants] could advise the client how to take steps provided for in proforma documents and execute them so as to make subsequent appointments of income to WCC valid. If the accountants had ensured that the process had been followed, the distributions of income would have been valid. The accountants' fault was inaction when they were forewarned by lawyers that action by the accountants was required. With respect, the finding of recklessness was based on a strong footing." Accordingly, his Honour was not satisfied that the payments Astion received as purported distributions were not substantially derived or realised from unlawful activity176. Two other findings of the primary judge are important 170 Hart [2013] QDC 60 at [322]. 171 Hart [2013] QDC 60 at [323]. 172 Hart [2013] QDC 60 at [319]. 173 Hart [2013] QDC 60 at [326]-[331]. 174 Hart [2013] QDC 60 at [336]. 175 Hart [2013] QDC 60 at [335]. 176 Hart [2013] QDC 60 at [343]. to the issues in these appeals: first, that Bubbling had not been able to show that, but for the distributions derived from that unlawful activity, Astion would have been able to save rent it had earned lawfully to provide the $45,000177; and second, that it seemed likely that the ANZ Bank would not have lent the whole of the purchase price and the property would not have been purchased without the $45,000 provided by Astion178. Samara Street was subject to a fixed and floating charge over the assets of Bubbling in favour of Merrell to secure $1.6 million; that charge was forfeited to the Commonwealth179. It was sold by the Official Trustee on 20 April 2007 (with the consent of Bubbling) and the net proceeds of sale, after a mortgage was paid180, were still held by the Official Trustee at the time of the decision of the primary judge181. Court of Appeal On appeal to the Court of Appeal, the Companies submitted that the fees paid to Astion from the Hendon Arrangement were not derived or realised from unlawful activity and that the primary judge erred in finding that Bubbling had not been able to show that, but for the distributions derived from unlawful activity, Astion would not have been able to save the $45,000 from rent it had earned lawfully182. The majority rejected those contentions. The majority concluded that the primary judge was correct to find that the Companies had failed to establish that the fees derived from the Hendon Arrangement were not derived or realised from unlawful activity183 and that Bubbling had failed to establish that the $45,000 provided by Astion for the acquisition of Samara Street did not come from the 177 Hart [2013] QDC 60 at [343]-[345]. 178 Hart [2013] QDC 60 at [807]. 179 Hart [2013] QDC 60 at [797]. 180 Immediately prior to forfeiture, the interest of Sunshine Co-operative Housing Society Ltd, as the registered mortgagee for Samara Street, was excluded from forfeiture by order of the District Court made on 18 April 2006. 181 Hart [2013] QDC 60 at [798]. 182 Hart (2016) 336 ALR 492 at 634 [710]-[711]. 183 Hart (2016) 336 ALR 492 at 686 [968]. Hendon Arrangement184. Significantly, the majority stated that it was a reasonable inference that Astion provided the $45,000 to Bubbling because of the association of both companies with Mr Hart and that, as the primary judge had found, it seemed likely that the ANZ Bank would not have lent the whole of the purchase price and the property would not have been purchased without the $45,000 provided by Astion185. Although the majority concluded that the provision of $45,000 was a "relatively significant feature" of the acquisition of Samara Street186, because of its construction of s 102(3)(a) it found that the source limb was established on the basis that Bubbling had shown that the property was not wholly derived from unlawful activity, notwithstanding the role which the Astion money had played in the acquisition of the property187. The Court made the following declarations ("the Samara Street declarations"): a declaration that Bubbling had legal ownership of Samara Street, subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; a declaration that the value of Bubbling's interest in Samara Street immediately prior to forfeiture was $174,500; and a declaration that there was payable by the Commonwealth to Bubbling the sum of $174,500, together with interest in the amount of $142,638.61 to 27 September 2016 and thereafter at a prescribed rate. (c) High Court In this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to the proceeds of Samara Street because Bubbling had failed to establish the source limb. 184 Hart (2016) 336 ALR 492 at 726 [1169]. 185 Hart (2016) 336 ALR 492 at 726 [1168]. 186 Hart (2016) 336 ALR 492 at 726 [1168]. 187 Hart (2016) 336 ALR 492 at 726-727 [1171]-[1172]. The Companies, by notices of contention, challenged the finding that the funds provided through the Hendon Arrangement were funds from an unlawful activity. They submitted that: the funds were lawfully obtained by Astion from the Astion Unit Trust and that the Court of Appeal ought to have found that Mr Hart and others did not "recklessly" cause statements to be made to a taxation officer within the meaning of s 8N of the TAA; there was no admissible evidence before the primary judge from which an inference could reasonably be drawn that Harts Australasia Ltd's ("Harts Australasia") clients or their accountants made dishonestly false statements the Commissioner of Taxation; and the evidence disclosed that Harts Accountants were operating on a false assumption as to the efficacy of the scheme in respect of some clients and they further submitted that even if the trust deeds had not been checked, that was at most negligence rather than dishonesty. Alternatively, the Companies contended that even if the notices of contention failed, the contribution of unlawful funds was no more than 30 per cent of the purchase price and therefore the majority's conclusion that Samara Street was not derived directly or indirectly from unlawful activity was correct. Notices of contention As was explained earlier, it is first necessary to deal with the grounds in the notices of contention. Those grounds should be rejected. Before the primary judge, the CDPP adduced affidavit evidence from Mr Stevens, who had worked in what he described as the Harts Australia Limited Group188, and from Mr Young of the Australian Taxation Office, both of whom outlined the nature of the Hendon Arrangement. Mr Young gave evidence that the Commissioner of Taxation had assessed primary tax as payable by the participants in the Hendon Arrangement and had imposed penalty tax on them based on the recklessness of their tax agent, Harts Australasia. 188 It was not clear the primary judge precisely which companies the "Harts Australia Limited Group" covered. The Companies did not object to those two affidavits being read189. And the Companies did not call any of the following people to give evidence: Mr Hart, Mr Adcock or anyone else who had worked under them; anyone from Cleary & Hoare Solicitors, who provided the pro forma documents used by the participants and who gave the Harts Australia Limited Group legal advice on how to implement the arrangement (advice which was ignored); or any of the 52 participant trustees. In those circumstances, it was therefore not an "obvious inference" that persons involved with the Hendon Arrangement had simply been negligent190. The primary the Hendon Arrangement in relation (not disturbed by the majority of the Court of Appeal) were open. The relevant grounds in the notices of contention should be rejected. judge's findings (ii) No s 102 order The remaining question is whether Bubbling has discharged its onus of establishing that Samara Street was not derived, directly or indirectly, by any person from any unlawful activity191. On the findings of the primary judge, which are summarised above, the answer is "no". The unlawful activity (the offences committed as part of the tax minimisation scheme) generated the funds used to provide part of the purchase price. That contribution of funds from an unlawful activity ($45,000) was 30 per cent of the purchase price. The connection between the unlawful activity and the derivation of Samara Street was direct. The unlawful activity contributed to the derivation, namely the acquisition, of Samara Street and it did so in a not insubstantial way. Further, the contribution was in circumstances where the ANZ Bank would not have lent the whole of the purchase price and the property would not have been purchased without the $45,000 provided by Astion. The Court of Appeal was in error in making the Samara Street declarations. The Perpetual Offences Merriwa Street, Hangar 400 and Doonan's Road are interrelated and involve what were described in the courts below as the "Perpetual Offences". The Perpetual Offences relate to a finding by the primary judge that he was not satisfied that two of the Companies – Yak 3 and Bubbling – did not fraudulently 189 Hart (2016) 336 ALR 492 at 684 [958]. 190 cf Hart (2016) 336 ALR 492 at 683 [955]. 191 See Part C(4)(b)(ii) above. induce Perpetual Nominees Ltd ("Perpetual") to approve two loans in contravention of s 408C(1)(f) of the Criminal Code (Q)192. In this Court, the Companies contended by notice of contention that the Court of Appeal ought to have found that neither Yak 3 nor Bubbling fraudulently induced Perpetual to approve the loans in contravention of s 408C(1)(f) of the Criminal Code (Q). It is necessary to address the notice of contention before considering the application of s 102(3) to each of the properties. The history may be stated shortly. In May 2001, the National Australia Bank ("NAB") issued to Nemesis a notice of termination and demanded immediate repayment of $2.3 million and $1.05 million, followed by a default notice and a demand to Nemesis, and subsequently a notice of exercise of power of sale over all assets of Nemesis193. It was not good timing. Harts Australasia had a consolidated net loss after tax of $92.8 million for the year ended 30 June 2001194. And before 25 September 2001, Nemesis and Sea Fury Investments Pty Ltd had applied to McLaughlin Financial Services ("MFS") for funding and been advised by MFS that it would not proceed with those loans because of "further searches, media coverage and information further revealed"195. By 1 October 2001, Bubbling and Yak 3 knew that MFS would not be likely to approve loans to companies associated with Mr Hart196. On that day, Mr Hart resigned as a director of Bubbling and as a director and secretary of Nemesis197. In about October 2001, Mr and Mrs Hart informed Dr Ambler (a wealthy client) that NAB wanted all their loans paid out198. Mr Hart informed Dr Ambler 192 Hart [2013] QDC 60 at [275]-[276]; see generally at [198]-[276]. 193 Hart [2013] QDC 60 at [204]-[205]. See also Hart (2016) 336 ALR 492 at 194 Hart [2013] QDC 60 at [206]. 195 Hart [2013] QDC 60 at [207]. 196 Hart [2013] QDC 60 at [210]. 197 Hart [2013] QDC 60 at [210]. 198 Hart [2013] QDC 60 at [211]-[212]. that he (Mr Hart) was unable to refinance the mortgage because of his adverse circumstances but that Perpetual would agree to refinance the mortgage if a personal guarantee was provided. Mr Hart asked Dr Ambler to give that personal guarantee so Yak 3 could secure a loan199. Dr Ambler agreed to offer his guarantee so long as he was adequately protected against the risk of being called upon under the guarantee200. Dr Fleming was asked to give a similar guarantee, on similar terms, for Bubbling's loan201. On 23 October 2001, Dr Ambler was appointed as a director of Yak 3 and Dr Fleming was appointed as a director of Bubbling202. In return for the guarantees, Dr Ambler and Dr Fleming were offered, and later granted, an option to purchase Hangar 400 and Doonan's Road respectively203. On 1 November 2001, NAB appointed a controller of Nemesis204. for $650,000 Sometime before 3 December 2001, Bubbling applied to MFS for a loan facility for $1 million from Perpetual and Yak 3 applied to MFS for a loan facilities")205. facility On 3 December 2001, MFS advised them that their loan facility applications were conditionally approved206. The condition was that each borrower and the guarantors (Dr Ambler and Dr Fleming) provide a written representation that "they are entering into a loan agreement on their own behalf and are not doing so on behalf of [Mr Hart] or any of his associated companies"207. from Perpetual ("the Perpetual Each borrower, each director and each relevant guarantor signed a document entitled Loan Facility Terms and Conditions which included a representation ("the cl 16 representation") that208: 199 Hart [2013] QDC 60 at [215]; see also at [212]. 200 Hart [2013] QDC 60 at [211]. 201 Hart [2013] QDC 60 at [217]. 202 Hart [2013] QDC 60 at [220]. 203 Hart [2013] QDC 60 at [215], [217], [229], [232]. 204 Hart [2013] QDC 60 at [221]. 205 Hart [2013] QDC 60 at [222]. 206 Hart [2013] QDC 60 at [224]. 207 Hart [2013] QDC 60 at [223]. 208 Hart [2013] QDC 60 at [225]. "The borrower and guarantor represent and acknowledge that they are entering into this agreement of their own volition and are not doing so on behalf of [Mr Hart] nor any associated company with which he is associated. indemnifying us as to the repayment of the loan. We make this representation acknowledging that the lender is relying upon this representation in approving the loan facility." Neither [Mr Hart] nor any associated company The primary judge found that the documents were signed to induce MFS and Perpetual to approve the loans and to lend209. The primary judge was "not satisfied that MFS and [Perpetual] did not require and rely on the representations they requested and received"210. On 19 December 2001, Perpetual lent Bubbling $650,000, on the security of Doonan's Road, and lent Yak 3 $650,000, on the security of Hangar 400211. The borrowed funds were then used by Nemesis to partly repay monies it owed to NAB212. The primary judge found that there was evidence tending to prove that213: (1) Mrs Hart, a Ms Petersen, Dr Ambler, Dr Fleming and Mr Hart knew and believed that Dr Ambler and Dr Fleming were being given an indemnity by Yak 3 or Bubbling; (2) Mrs Hart had read the loan documentation; (3) Ms Petersen, Dr Ambler and Dr Fleming signed the Loan Facility Terms and Conditions, and should have read that documentation; the loan documentation included the cl 16 representation; and (5) Mr Hart was in effective control of the Companies – including Yak 3 and Bubbling – and in effective control of their assets, in December 2001, in January 2002, and in May and December 2003. 209 Hart [2013] QDC 60 at [227]. 210 Hart [2013] QDC 60 at [271]. 211 Hart [2013] QDC 60 at [230]. 212 Hart [2013] QDC 60 at [409]. 213 Hart [2013] QDC 60 at [252]. The primary judge was not satisfied that Yak 3 and Bubbling did not commit the crime of fraud by dishonestly inducing Perpetual to approve the loans in contravention of s 408C(1)(f) of the Criminal Code (Q)214. Further, his Honour was not satisfied215 that Bubbling and Yak 3 did not dishonestly represent that they were not entering into the agreement on behalf of Mr Hart or any associated company with which he was associated, and was also not satisfied that Bubbling and Yak 3 – by Mrs Hart and Ms Petersen, and by Dr Ambler or Dr Fleming – did not dishonestly represent that no "associated company" was indemnifying Dr Ambler and Dr Fleming as to the repayment of the respective loans. The balance of the NAB debt was met by a loan from Equititrust Ltd ("Equititrust") to Nemesis secured by a mortgage over Merriwa Street ("the Equititrust facility")216. The primary judge found that while Nemesis had the Equititrust facility, Nemesis received funds primarily from Unlimited Business Consultants (Qld) Pty Ltd ("UBC") (which received funds from UOCL and other sources) and from Spider Tracks Pty Ltd ("Spider") (which received funds from UBC)217. The funds UBC received from sources other than UOCL were substantially derived from lawful sources and the amount of funds UBC received from UOCL was about 49 per cent of the amount UBC paid to Nemesis and Spider218. From 21 January 2002 to 19 June 2003, Nemesis made repayments of interest to Equititrust of at least $304,111219. The primary judge found that the UOCL funds represented substantially less than 5 per cent of the funds used by Nemesis to repay Equititrust220. 214 Hart [2013] QDC 60 at [275]-[276]; see also at [237], [239]-[240]. 215 Hart [2013] QDC 60 at [275]. 216 Hart [2013] QDC 60 at [412], [787]. 217 Hart [2013] QDC 60 at [413]-[414], [419]. 218 Hart [2013] QDC 60 at [419]. 219 Hart [2013] QDC 60 at [420], [787]. 220 Hart [2013] QDC 60 at [791]. The Court of Appeal did not disturb these findings221. In particular, the finding of the primary judge that he was not satisfied that no offences were committed in obtaining the Perpetual facilities was held not to be erroneous222. As stated earlier, in this Court the Companies filed a notice of contention contending that the Court of Appeal ought to have found that neither Yak 3 nor Bubbling fraudulently induced Perpetual to approve the loans in contravention of s 408C(1)(f) of the Criminal Code (Q). That contention should be rejected. The factual findings set out above were open and were based on the credit of witnesses. Although Dr Ambler and Dr Fleming gave evidence, the Companies failed to lead any evidence from them about their understanding of the arrangements. Indeed, the primary judge accepted Dr Ambler's and Dr Fleming's evidence, which indicated that they believed they were given an indemnity – in the sense of protection or security – by Yak 3 and Bubbling respectively223. The primary judge's acceptance of that evidence recognised that the cl 16 representation was both objectively false and known to be so224. The sole evidence adduced by the Companies was from Ms Petersen and Mrs Hart. The primary judge, who had seen them cross-examined, did not accept that their evidence was credible – a finding upheld by the Court of Appeal225. The Companies failed to call evidence from Mr Hart, the lawyers who Mrs Hart alleged had prepared the option agreements in favour of Dr Ambler and Dr Fleming, or anyone from MFS or Perpetual who had been involved in approving the loans. And it must be recalled that the primary judge found that Mr Hart was in effective control of Yak 3 and Bubbling at all relevant times226 and that finding was not challenged on appeal to the Court of Appeal. The primary judge's conclusion (not disturbed by the Court of Appeal) that he was not satisfied that Yak 3 and Bubbling had not committed the Perpetual Offences disclosed no error. It is against that background that the three properties – Doonan's Road, Hangar 400 and Merriwa Street – are considered. 221 Hart (2016) 336 ALR 492 at 579-589 [431]-[480], 688-694 [978]-[999]. 222 Hart (2016) 336 ALR 492 at 688-694 [978]-[999]. 223 Hart [2013] QDC 60 at [215], [217]. 224 Hart (2016) 336 ALR 492 at 692-693 [996]. 225 Hart (2016) 336 ALR 492 at 585-586 [463]-[466], 692-693 [996]. 226 Hart [2013] QDC 60 at [261]-[266]. (a) Doonan's Road Immediately prior to forfeiture, Doonan's Road was registered in the name of Bubbling. Merrell had a charge over the assets of Bubbling to secure an obligation to pay $1.6 million. That charge was also forfeited to the Commonwealth. Equititrust's interest as registered mortgagee was excluded from forfeiture by order of the District Court made on 18 April 2006227. On 18 August 2006, Doonan's Road was sold by Equititrust as mortgagee in possession and, after the amount owing under the mortgage and tax were paid, net proceeds of $501,580.53 were banked by the Official Trustee228. In relation to the use limb, the primary judge construed the words "used in, or in connection with, … unlawful activity" as requiring there to be a "substantial connection between the activity in question and the use of the property"229. Adopting that construction, his Honour concluded that there was no sufficient connection with unlawful activity arising from the provision of Doonan's Road as security for the Perpetual loan to Bubbling, which had been arguably induced by fraudulent misrepresentations230. The primary judge concluded that Doonan's Road was not used in, or in connection with, the alleged fraudulent misrepresentations by being used as security for the repayment of the loan induced by the misrepresentations231. The primary judge also found that the value of Bubbling's interest in Doonan's Road at the time of forfeiture was $501,580.53 before considering the effect of the Merrell Charge on that value232. In the Court of Appeal, the Commonwealth challenged the finding of the primary judge that the use of the property as security for the Perpetual loan to Bubbling was too tenuous a connection for the purposes of the use limb233. Morrison JA did not disturb the factual findings of the primary judge. However, his Honour disagreed with the primary judge's conclusion and held that, on the facts, it was difficult to reach any conclusion other than that 227 Hart [2013] QDC 60 at [812]. 228 Hart [2013] QDC 60 at [813]. 229 Hart [2013] QDC 60 at [119], [282]. 230 Hart [2013] QDC 60 at [827]. 231 Hart [2013] QDC 60 at [282]. 232 Hart [2013] QDC 60 at [829]. 233 Hart (2016) 336 ALR 492 at 630 [687]. Doonan's Road was "used in, or in connection with, … unlawful activity"234. His Honour came to that conclusion having regard to the following facts and matters. First, the central misrepresentation was in cl 16, and without it Perpetual would not have advanced the Perpetual facilities235. Second, there was no reason to conclude that Perpetual was indifferent to Doonan's Road being offered as security for the loan to Bubbling: Perpetual in fact stipulated that Doonan's Road be offered as security and there was no basis to think that the funds would have been lent without it236. And, third, when the cl 16 representation was made to Perpetual, it was made by Bubbling, apart from the individuals who conducted the negotiations, and Bubbling used Doonan's Road as part of a process to convince Perpetual to lend to it, by offering Doonan's Road as security. The whole purpose of obtaining the Perpetual facilities was so that the funds could be on-lent to Nemesis, so that Nemesis could pay out NAB, which was threatening to move against Nemesis. Had NAB not been satisfied, it would almost certainly have resulted in property being lost to Nemesis. There was no evidence that Nemesis had any other way of meeting NAB's demand but that which involved the Perpetual facilities and the Perpetual Offences237. By contrast, the majority found that Bubbling had established both the source limb and the use limb238. In the majority's view, although Doonan's Road was used in connection with the Perpetual loan to Bubbling, it was not used in connection with the fraudulent inducement used to obtain that facility239. The Court made the following declarations: a declaration that Bubbling had legal ownership of Doonan's Road, subject to Equititrust's mortgage and the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; a declaration that the value of Bubbling's interest in Doonan's Road immediately prior to forfeiture was $388,500; and 234 See Hart (2016) 336 ALR 492 at 631 [695]. 235 Hart (2016) 336 ALR 492 at 631 [692]. 236 Hart (2016) 336 ALR 492 at 631 [693]. 237 Hart (2016) 336 ALR 492 at 631 [694]. 238 Hart (2016) 336 ALR 492 at 731 [1194]. 239 Hart (2016) 336 ALR 492 at 731 [1193]. a declaration that there was payable by the Commonwealth to Bubbling the sum of $388,500, together with interest in the amount of $337,899.83 to 27 September 2016 and thereafter at a prescribed rate. On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to Doonan's Road because, by reason of the NAB loan and the Perpetual facilities, Bubbling had failed to establish one or both of the use limb and the source limb. Use limb For the reasons identified by Morrison JA240, Doonan's Road was used in, or in connection with, the Perpetual Offences. When the cl 16 representation was made to Perpetual it was made by Bubbling, apart from the individuals who conducted the negotiations, and Bubbling used Doonan's Road to convince Perpetual to lend to it, by offering Doonan's Road as security. The security offered to Perpetual was a package and Perpetual sought Doonan's Road as security, as well as the cl 16 representation. Without security over Doonan's Road, it is reasonable to infer that the cl 16 representation would not have been given or accepted. Source limb Given the conclusion reached in relation to the use limb, it is unnecessary to reach a concluded view about the source limb. (b) Hangar 400 Hangar 400 is in a not dissimilar position to Doonan's Road. Immediately prior to forfeiture, Hangar 400 – more particularly, a sublease over certain land at Archerfield Airport – was registered in the name of Yak 3241. The Merrell Charge over Hangar 400 was also forfeited to the Commonwealth on 18 April 2006242. Equititrust's interest as registered 240 Hart (2016) 336 ALR 492 at 631 [692]-[695]. See [220] above. 241 See Hart (2016) 336 ALR 492 at 720 [1132]; cf Hart [2013] QDC 60 at 242 Hart [2013] QDC 60 at [760]. mortgagee was excluded from forfeiture by order of the District Court made on 18 April 2006243. Despite the findings of the primary judge in relation to the Perpetual Offences244, the primary judge rejected the contention that because the funds borrowed from Perpetual, lent on the security of Hangar 400, were used to pay out a loan from NAB, it had not been established that the interest in Hangar 400 was not derived from unlawful activity245. Similar to his Honour's findings in relation to Doonan's Road, the primary judge found that, on the facts, the connection between Hangar 400 and the Perpetual Offences was too tenuous because the cl 16 representation was not the sole cause of the Perpetual facilities being advanced246. His Honour found that Yak 3 had established both the source limb and the use limb. However, the primary judge found that Yak 3 had not proved the value of the interest in Hangar 400 at the time of forfeiture, having regard to the Merrell Charge247. On appeal to the Court of Appeal, the Commonwealth challenged the primary judge's finding that the use of the property as security for the Perpetual loan to Yak 3 was too tenuous a connection to lead to the conclusion that the property was used in, or in connection with, unlawful activity248. Morrison JA held that the primary judge's finding that, on the facts, the cl 16 representation was not the sole cause of the Perpetual facilities could not be sustained, and that Hangar 400 was "used in, or in connection with, … unlawful activity" for the reasons set out above249. As with Doonan's Road, the 243 Hart [2013] QDC 60 at [759]. 244 Hart [2013] QDC 60 at [275]-[276]. 245 Hart [2013] QDC 60 at [761]-[782]. The primary judge proceeded on the basis that Hangar 400 was registered in the name of Nemesis. On appeal, the Court of Appeal identified Yak 3 as the entity holding the sublease, with Peter Lyons J concluding that the primary judge's identification of Nemesis was mistaken: see Hart (2016) 336 ALR 492 at 720 [1132]; see also at 630 [685]. In this Court, no party suggested that anything turned on how the primary judge identified the lessee. 246 Hart [2013] QDC 60 at [781]. 247 Hart [2013] QDC 60 at [761], [782]. 248 Hart (2016) 336 ALR 492 at 630 [687]. 249 See [220] above. majority found that Yak 3 had established both the source limb and the use limb. In the majority's view, although the property was used in connection with the Perpetual loan to Yak 3, it was not used in connection with the fraudulent inducement used to obtain the loan250. The Court made a declaration and order in the following terms: a declaration that Yak 3 was lessee of Hangar 400, subject to Equititrust's mortgage and the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and an order directing the Commonwealth, within 21 days, and subject to any agreement reached with Yak 3 in respect of any licence or sublease of Hangar 400, to transfer its interest in Hangar 400 to Yak 3 and deliver up vacant possession of Hangar 400 to Yak 3. On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to Hangar 400 because, by reason of the NAB loan and the Perpetual facilities, Yak 3 had failed to establish one or both of the use limb and the source limb. Use limb For the reasons identified by Morrison JA251, Hangar 400 was also used in, or in connection with, the Perpetual Offences. When the cl 16 representation was made to Perpetual it was made by Yak 3, apart from the individuals who conducted the negotiations, and Yak 3 used Hangar 400 to convince Perpetual to lend to it, by offering Hangar 400 as security. The security offered to Perpetual was a package and Perpetual sought Hangar 400 as security as well as the cl 16 representation. Without Hangar 400 being offered as security, it is reasonable to infer that the cl 16 representation would not have been given or accepted. Source limb Given the conclusion reached in relation to the use limb, it is unnecessary to reach a concluded view about the source limb. 250 Hart (2016) 336 ALR 492 at 722-723 [1143]-[1144]. 251 Hart (2016) 336 ALR 492 at 631 [692]-[695]. See [220] above. (c) Merriwa Street to pay $1.6 million and Immediately prior to forfeiture, Merriwa Street was registered in the name of Nemesis252. Merrell had a charge over the assets of Nemesis to secure an obligation the Commonwealth253. Merriwa Street was sold by the Official Trustee on 8 January 2007 with the consent of Nemesis and after a mortgage to Countrywide Co-operative Housing Society Ltd ("Countrywide") was paid out; the net proceeds of sale ($40,252.07) were banked and, at the time of the primary judge's decision, were still held by the Official Trustee254. that charge was forfeited Merriwa Street was purchased by Nemesis in 1986 for $69,470.72. It was not at that time derived from unlawful activity255. Merriwa Street was not sought by, offered to or taken by Perpetual as security; a mortgage was provided to Equititrust on 20 December 2001, when Nemesis borrowed $1.825 million from Equititrust to assist to repay the NAB loan256. As the primary judge found, while Nemesis had the Equititrust facility, Nemesis received funds primarily from UBC, which received funds from UOCL and other sources257. From 21 January 2002 to 19 June 2003, Nemesis made repayments of interest to Equititrust of at least $304,111258. The primary judge found that the UOCL funds represented substantially less than 5 per cent of the funds used by Nemesis to repay Equititrust259. The primary judge was satisfied that Merriwa Street was not derived from unlawful activity and was not acquired unlawfully260. 252 Hart [2013] QDC 60 at [783]. 253 Hart [2013] QDC 60 at [783]. 254 Hart [2013] QDC 60 at [784]. 255 Hart [2013] QDC 60 at [785]. 256 Hart [2013] QDC 60 at [412], [786]-[787]. 257 Hart [2013] QDC 60 at [413]-[414], [419]. 258 Hart [2013] QDC 60 at [420]. 259 Hart [2013] QDC 60 at [791]. 260 Hart [2013] QDC 60 at [792]. Before the Court of Appeal, the Commonwealth submitted that the primary judge erred in a number of respects261. In particular, the Commonwealth contended that Nemesis had failed to demonstrate that its interest in Merriwa Street (after the discharge of the NAB mortgage) was not derived from an offence against the Criminal Code (Q), that Merriwa Street was used in connection with the Perpetual Offences and that some of the monies used to repay Equititrust came from UOCL, which meant that Nemesis' interest was derived from unlawful activity. Morrison JA considered that the Commonwealth should succeed in relation to the source limb, although he rejected its submissions in relation to the use limb. In relation to the source limb, his Honour found that: (1) when the circumstances surrounding the Merriwa Street mortgage (being that Merriwa Street had been mortgaged to NAB and repayments to NAB had been sourced, at least in part, from funds from UOCL) were added to the Perpetual Offences which enabled the NAB loan to be paid out, as well as the repayments by Nemesis to Equititrust from UOCL funds, the effect was that Merriwa Street was derived from unlawful activity262; the use of tainted funds to make loan repayments, on a property mortgaged as security for those repayments, was capable of leading to the conclusion that the property had been derived from unlawful activity263; it was reasonable to infer that the repayments to NAB served to keep NAB from moving against the property; the Perpetual facilities were obtained to prevent NAB from exercising its rights under its loan agreement, including against Merriwa Street; and the repayments to Equititrust were necessary to ensure that Equititrust did not exercise its rights as mortgagee against Merriwa Street264; and each of the repayments (to NAB and Equititrust) involved the use of UOCL funds, which were tainted funds. Even if the tainted funds were "substantially less than five per cent of the funds used 261 Hart (2016) 336 ALR 492 at 723-724 [1152]. 262 Hart (2016) 336 ALR 492 at 632-633 [700]-[704]. 263 Hart (2016) 336 ALR 492 at 632 [701]. 264 Hart (2016) 336 ALR 492 at 632 [702]. to repay the amount owed to Equititrust"265, that contribution, combined with the fact that the NAB repayments were also sourced in part from UOCL funds, should have led the primary judge to find that he could not be satisfied that Merriwa Street was not derived from unlawful activity266. As to the use limb, Morrison JA was satisfied that Merriwa Street was not used in, or in connection with, unlawful activity, because Merriwa Street was not part of the security offered to Perpetual and because Nemesis did not make the representations relied on for the Perpetual Offences267. By contrast, the majority found that: by 1993, Nemesis held Merriwa Street unencumbered and had paid for it using funds not derived from unlawful activity, meaning that Nemesis had demonstrated that its interest in Merriwa Street was not derived from unlawful activity268; given the history of the NAB demands, it was "rather unlikely" that NAB would not have released its mortgage over the property on the basis that it would receive the monies from Equititrust. Further, if that was correct, there was no basis for thinking that the NAB mortgage over Merriwa Street was released by reference to the Perpetual facilities. In addition, given that Merriwa Street was mortgaged to secure the repayment of the advance by Equititrust, but not the Perpetual facilities, it was difficult to ascribe any role to the Perpetual facilities in relation to the release of the NAB mortgage over Merriwa Street269; assuming that it was relevant to consider the source of funds used to repay the loan from Equititrust, the "quite small role" played by the UOCL funds did not affect the finding that Nemesis' interest in 265 Hart (2016) 336 ALR 492 at 723 [1151]. 266 Hart (2016) 336 ALR 492 at 633 [703]-[704]. 267 Hart (2016) 336 ALR 492 at 633 [707]-[708]. 268 Hart (2016) 336 ALR 492 at 724 [1153]. 269 Hart (2016) 336 ALR 492 at 724 [1154]. Merriwa Street was not derived or realised from unlawful activity270; and the Commonwealth's submission that Merriwa Street was used in connection with the Perpetual Offences was wrong because Merriwa Street was not mortgaged to support the Perpetual facilities, and there was no other basis on which it might be said to have been so used271. The Court made the following declarations ("the Merriwa Street declarations"): a declaration that Nemesis had legal ownership of Merriwa Street, subject to the Countrywide mortgage and the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; a declaration that the value of Nemesis' interest in Merriwa Street immediately prior to forfeiture was $34,000; and a declaration that the sum of $34,000 (together with interest in the amount of $28,765.99 to 18 April 2013 and thereafter at a prescribed rate) was payable to Nemesis by the Commonwealth. On appeal to this Court, the Commonwealth contended that no s 102(3) order should be or could be made in relation to the proceeds of Merriwa Street because Nemesis had failed to establish the source limb. The Commonwealth's contention was that funds from the Perpetual Offences (which the Court of Appeal was not satisfied had not been committed), together with funds from Equititrust, were used to repay the NAB loan and that therefore the Perpetual facilities played an important role in Nemesis retaining its interest in Merriwa Street, affecting the lawfulness of Nemesis' derivation of its interest in the property. That contention should be rejected. By 1993, Nemesis held Merriwa Street unencumbered and its interest in Merriwa Street was not derived from unlawful activity272. In May 1993, Merriwa Street was mortgaged to NAB to support a loan facility which, when paid out in December 2001, was in excess of $2.993 million. From August 1998 to May 270 Hart (2016) 336 ALR 492 at 724 [1156]. 271 Hart (2016) 336 ALR 492 at 724 [1157]. 272 Hart [2013] QDC 60 at [785]. 2001, Nemesis paid NAB $105,441 in interest. At least $93,000 of those interest payments was derived from lawful sources273. If the balance came from tainted funds, it was, in the circumstances, de minimis. In December 2001, when the NAB facility was paid out, Merriwa Street was mortgaged to secure the Equititrust facility (of $1.825 million). Merriwa Street was not offered as security for, and did not secure, the Perpetual facilities. Nemesis did not make the cl 16 representation to Perpetual. And, contrary to the finding of Morrison JA, there was no basis to infer that the funds used to pay out the NAB facility in December 2001 kept NAB from moving against Merriwa Street. Indeed, as the majority of the Court of Appeal concluded, given the history of the NAB demands274, it was "rather unlikely" that NAB would not have released its mortgage over Merriwa Street, on the basis that it would receive the $1.825 million from Equititrust275. Finally, from December 2001 to June 2003, of the $3.398 million in principal and interest repayments made by Nemesis to Equititrust, substantially less than $152,055 in interest payments (or substantially less than 5 per cent of the total repayments) came from UOCL276. In those circumstances, it is not open to conclude that Merriwa Street was derived, directly or indirectly, by or as a result of the Perpetual Offences. The majority of the Court of Appeal was right to conclude that there was no relevant connection between the derivation of the property and the unlawful activity relied upon. The Commonwealth also contended that the majority erred in declaring the value of Nemesis' interest immediately prior to forfeiture to be $34,000, on the basis that it had ignored the effect of the Merrell Charge on the value of that interest. That contention should be accepted. The Merriwa Street declarations were not correct because they failed to address the value of the Merrell Charge and therefore properly address the value of Nemesis' interest immediately prior to forfeiture. Accordingly, those declarations should be set aside and, in their place, declarations and orders should be made which address the nature, extent and value of the Merrell Charge. The Merrell Charges are considered next. 273 Hart [2013] QDC 60 at [409], [411]. 274 Hart [2013] QDC 60 at [204]-[205]; Hart (2016) 336 ALR 492 at 580 [437], 275 Hart (2016) 336 ALR 492 at 724 [1154]. 276 Hart [2013] QDC 60 at [420]. Section 102(1) – order declaring the nature, extent and value of an interest and the Merrell Charges If the court is satisfied of the criteria specified by s 102(3) of the POCA, an order under s 102(1) should be made277. As has been seen, s 102(1) provides: "If property is forfeited to the Commonwealth under section 92, the court that made the *restraining order referred to in paragraph 92(1)(b) may, if: a person who claims an *interest in the property applies under section 104 for an order under this section; and the court is satisfied that the grounds set out in subsection (2) or (3) exist; make an order: declaring the nature, extent and value of the applicant's interest in the property; and either: if the interest is still vested in the Commonwealth— directing the Commonwealth to transfer the interest to the applicant; or declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c)." In drafting an order under s 102(1), s 102(1)(c) and (d) must be addressed. In these appeals, one issue is how a court is to address the nature, extent and value of an applicant's interest in property where the property is subject to a security interest, and where both the property and the security interest have been automatically forfeited to the Commonwealth. In these appeals, the Merrell Charges were a form of security interest comprising a fixed and floating charge, described as a mortgage debenture, granted by each of Fighters, Bubbling, Nemesis and Yak 3 over their respective assets to Merrell. The Merrell Charges were subject to a restraining order and, on Mr Hart's conviction, were automatically forfeited to the Commonwealth. 277 See Part C(5) above. Primary judge The proceedings were conducted on the basis that the assets forfeited on 18 April 2006 were (until forfeiture) subject to the Merrell Charges and that each charge provided security for the total amount of the debt owed to Merrell278. Indeed, Merrell had applied to exclude the Merrell Charges from automatic forfeiture but discontinued that application279. The primary judge concluded that Merrell's rights as creditor and its rights as chargee were separate rights; and that its loss of a charge over an asset owned by one of the Companies did not result in the loss of its right to sue the relevant Company for payment of the debt secured by that charge280. His Honour also concluded, in respect of the charge granted by Fighters to Merrell, that its forfeiture did not invest the Commonwealth with Merrell's rights against Fighters for the payment of money281. Further, his Honour did not accept that the Commonwealth had "received Merrell's right to sue for the amounts owed by the Companies to Merrell"282. The primary judge concluded that the nature and extent of the collective interests of Fighters, Yak 3, Nemesis and Bubbling in the relevant assets and proceeds (relevantly Hangar 400, the Sea Fury, the North American Trojan and the T-28, and the proceeds of sale of Doonan's Road, Merriwa Street and Samara Street retained by the Official Trustee) was that they were interests in the whole of those assets and those proceeds then retained, less $1.6 million being the equivalent of the amount the repayment of which was secured by the Merrell Charges at the date of forfeiture against all relevant assets283. Hence, on 6 May 2013, the primary judge relevantly ordered that: "1. Within 60 days of this order, [the Companies] pay to the Commonwealth … the sum of $1,600,000.00 less those funds held by the Insolvency and Trustee Service of Australia ('ITSA') in respect of: 278 Hart [2013] QDC 60 at [436], [468]. 279 Hart [2013] QDC 60 at [433]. 280 Hart [2013] QDC 60 at [444]. 281 Hart [2013] QDC 60 at [444]. 282 Hart [2013] QDC 60 at [462]. 283 Hart [2013] QDC 60 at [849], [853]. the sale proceeds of [Merriwa Street] and [Doonan's Road]. Upon the payment by [the Companies] of the funds specified in paragraph 1 of this Order and notification to the Commonwealth by its banker that the funds have been cleared: ITSA has 60 days in which to vacate Hangar 400; The Commonwealth is to remove the caveats lodged with respect to [the sublease of Hangar 400] and to provide notice to the parties of that removal; and The aircraft, namely … [the North American Trojan] be transferred to [Fighters]. The order for payment of $1.6 million reflected the primary judge's finding that, on 18 April 2006, the Companies were indebted to Merrell in an amount of "no more than $1,600,000"284. Court of Appeal None of the findings concerning the Merrell Charges was challenged on appeal to the Court of Appeal285. However, neither the Commonwealth nor the Companies sought to uphold the orders dealing with the Merrell Charges. The Commonwealth contended that the primary judge should not have made the orders because he was unable to declare the monetary value of the Companies' interest in the assets in accordance with s 102(1)286. The Companies contended that the primary judge was wrong to treat the value of the assets the subject of his Honour's 6 May 2013 orders as reduced by the Merrell Charges because when the charges were forfeited they "became empty"287 and ceased to have any effect on the Companies. In their 284 Hart [2013] QDC 60 at [472]. 285 Hart (2016) 336 ALR 492 at 738 [1230], [1232]. 286 Hart (2016) 336 ALR 492 at 739 [1237]. 287 Hart (2016) 336 ALR 492 at 739 [1238]. submission, the Merrell Charges did not diminish the value of the assets which were forfeited. The majority of the Court of Appeal found that while each asset was subject to a charge, that did not affect the nature of the Companies' interests in the assets; and, further, that until the secured creditor exercised its rights of sale, the rights of the owner of the asset were generally "not affected"288. Peter "since Merrell no longer held the charges, and the Commonwealth did not have any assignment of the debts which would entitle it to enforce them, the charges had no practical effect [and it] would follow that the determination of the nature and extent of the interest of [the Companies] as being diminished by $1.6 million … was erroneous; and so were orders made to give effect to such a determination". The Court of Appeal set aside pars 1 and 3 of the orders made by the primary judge and then adopted a formula along the following lines, as has been seen in the discussion of each of the relevant assets in the earlier parts of these reasons: a declaration that [X] had legal ownership of the [named asset], subject to the charge in favour of Merrell, immediately prior to the forfeiture to the Commonwealth on 18 April 2006; and in the case of Samara Street, Doonan's Road and Merriwa Street, declarations as to the value of [X]'s interest immediately prior to forfeiture and that a corresponding sum was payable to [X] by the Commonwealth; and in each other case, an order directing the Commonwealth, within 21 days, to transfer its interest in the [named asset] to [X] and to deliver possession of the [named asset] to [X]. Section 102(1) order The primary judge290 and the Court of Appeal291 considered par 1 of the primary judge's orders to be a "conditional" order. The Court of Appeal 288 Hart (2016) 336 ALR 492 at 740 [1242]-[1243]. 289 Hart (2016) 336 ALR 492 at 740 [1243]. 290 Hart [2013] QDC 60 at [465], [854]. 291 See Hart (2016) 336 ALR 492 at 530 [170]-[171], 534 [196]-[197], 538-540 concluded that the power to make orders under s 102(1) included a power to make orders which are subject to conditions292. That conclusion is misplaced and may be put to one side. First, in drafting an order under s 102(1), s 102(1)(c) and (d) must be addressed. An applicant must establish, on the balance of probabilities, the nature, extent and value of their interest in the property. That inquiry must consider whether the property is subject to a security interest and, if so, the nature, extent and value of that security interest. Here, each security interest, one of the Merrell Charges, was described as a mortgage debenture which secured an agreed amount of $1.6 million and was duly registered under the Corporations Act 2001 (Cth). Each was a fixed charge over certain assets (including all of the assets, or proceeds of assets, in issue in these proceedings) and a floating charge over all other assets. The essence of a fixed charge is that property is "appropriated" or "made available as security" for the payment of a debt. Once property is appropriated in this manner, the charge is said to "fix". Where, as here, the subject property is appropriated immediately to the chargee upon the chargor acquiring an interest, the charge is thereupon "fixed"293. Further, under the terms of each charge, the monies owing under the charge became immediately payable, and the security enforceable by the chargee, if, amongst other things, any part of the relevant Company's assets, interests or property was confiscated or forfeited. There was no lacuna294. Accordingly, from the time of execution of each of the Merrell Charges, Merrell at least had an equitable interest in part of the assets of the chargor (including all of the assets, or proceeds of the assets, in issue in these proceedings) and, on forfeiture, an equitable interest in all of the assets of the 292 Hart (2016) 336 ALR 492 at 538 [228], 676 [925]. 293 Illingworth v Houldsworth [1904] AC 355 at 358; Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 133 CLR 164 at 173; [1975] HCA 50; United Builders Pty Ltd v Mutual Acceptance Ltd (1980) 144 CLR 673 at 686; [1980] HCA 43. See also National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at 449-450; Gough, Company Charges, 2nd ed (1996) at 17, 20. 294 See generally Barba v Gas & Fuel Corporation (Vict) (1976) 136 CLR 120 at 137; [1976] HCA 60. chargor295. Put in other terms, at all times Merrell had a right in equity to restrain the legal owner of the asset from dealing with the asset contrary to the terms of the mortgage debenture. Accordingly, the nature, extent and value of the relevant Company's interest in any asset were to be determined subject to the relevant Merrell Charge, a first ranking fixed charge over that asset securing repayment of $1.6 million. That liability had to be satisfied before the asset was entitled to be transferred to the relevant Company. And there were other complications. The obligation to pay $1.6 million was secured by each of the Merrell Charges and the Merrell Charges were forfeited to the Commonwealth. Therefore, the declarations and orders made had to take account of (1) the existence of the directly applicable Merrell Charge as well as the interrelationship between the liability for the indebtedness under all of the Merrell Charges and (2) the fact that each of the Merrell Charges vested in the Commonwealth on forfeiture, either absolutely or subject to any registration requirements296. Consistent with the wording of s 102(1), the order that the Court of Appeal might have made was in the following terms: "(1) Declare that [X] has legal ownership of the [named asset], subject to the rights of the mortgagee under the [named] mortgage; (2) Direct that upon satisfaction of the amount of $[Y] secured by that mortgage, if any part of the proceeds of sale of the [named asset] have not been applied to meet that liability, the balance of proceeds then remaining, if any, together with interest on that balance, is payable to [X]." In these appeals, that form of order should be made in relation to the proceeds of Merriwa Street. Section 141 appeal Finally, it is necessary to consider Div 4 of Pt 2-4 of the POCA, which deals with enforcement of a pecuniary penalty order. 295 See, eg, Barba (1976) 136 CLR 120 at 137; Gough, Company Charges, 2nd ed (1996) at 17, 20, 69. The parties did not address the implications, if any, of the Personal Property Securities Act 2009 (Cth). 296 ss 66 and 67 of the POCA. Relevantly, s 141(1) provides that: a person is subject to a *pecuniary penalty order; and the *DPP applies to the court for an order under this section; and the court is satisfied that particular property is subject to the *effective control of the person; the court may make an order declaring that the whole, or a specified part, of that property is available to satisfy the pecuniary penalty order." (emphasis added) This appeal is concerned with two questions of construction in relation to s 141(1)(c): first, at what date must the court be satisfied that the particular property is not subject to the effective control of the person subject to the pecuniary penalty order; and second, the court's discretion to make such an order. As will become apparent, the second issue is not reached. Before turning to the construction of s 141, it is necessary to explain in greater detail the background to the s 141 application and the reasoning of the courts below. (1) Date for determining effective control The Companies and the CDPP made separate applications for orders under s 102 and s 141 respectively. The applications were determined on 2 April 2013. Further orders in the s 102 application were made on 6 May 2013. The s 141 application was brought in response to, and was evidently designed to anticipate the outcome of, the s 102 application. The CDPP sought a declaration that any property which had been forfeited to the Commonwealth but was "recovered" as a result of the s 102 application was property that was available to satisfy any pecuniary penalty order made against Mr Hart. Thus, to the extent the Companies established that property was recoverable under s 102, attention turned to whether, for the purposes of the s 141 application, Mr Hart was in effective control of the Companies and (therefore) their assets. The CDPP bore the onus of proof297. At the hearing of the s 102 and s 141 applications before the primary judge, the CDPP submitted that, on the proper construction of s 141, the relevant 297 s 317 of the POCA. time for determining effective control for the purposes of s 141 was the date of the restraining orders298. Mr Hart, who appeared on his own behalf and on behalf of the Companies, conceded that effective control for the purposes of s 141 had to be determined at the date of the restraining orders299 and that the District Court had previously found that Mr Hart remained in effective control of the Companies, as well as in effective control of their property, at the date of the restraining orders300 notwithstanding that he had formally resigned as director of three of those companies301. Consistent with those submissions and the concession by the Companies and Mr Hart, the primary judge found that Mr Hart had effective control of the Companies and their assets on 8 May 2003 and 19 December 2003302. The primary judge also made findings as to dates before 2003, including that Mr Hart had effective control of the Companies' assets in December 2001303 and January 2002304, and that there were "reasonable grounds to suspect that he was in effective control" of the Companies at all material times, before, in and from December 2001305. In the Court of Appeal, Mr Hart and the Companies adopted a different stance and submitted that effective control was to be assessed at the date of the determination of the s 141 application rather than the date of any restraining 298 Hart [2013] QDC 60 at [859]. 299 Hart [2013] QDC 60 at [864]-[865]; see also at [148], [255]. 300 First made on 8 May 2003 and then varied on 19 December 2003. 301 Commonwealth Director of Public Prosecutions v Hart [2004] QDC 121 at [166]. That finding was upheld by the Court of Appeal: Director of Public Prosecutions (Cth) v Hart (No 2) [2005] 2 Qd R 246 at 261 [32]. 302 Hart [2013] QDC 60 at [252], [865]. 303 Hart [2013] QDC 60 at [252], [266]. 304 Hart [2013] QDC 60 at [266]. 305 Hart [2013] QDC 60 at [293]. order306. That submission was accepted by the majority of the Court of Appeal307. In this Court, the Commonwealth submitted that the majority of the Court of Appeal erred in holding that effective control was to be assessed at the date of the determination of the s 141 application. That submission should be rejected. Consistent with the statutory language of "is" in s 141(1)(c), the court must be satisfied that the particular property is not subject to the effective control of the person subject to a pecuniary penalty order at the date of the s 141 order. Contrary to the submissions of the Commonwealth, it cannot be the date of the restraining order. There is nothing to suggest that an application under s 141 could not and would not be made by the CDPP in respect of property that is not presently forfeited and perhaps never was forfeited to the Commonwealth or subject to a restraining order. The time at which the court assesses effective control does not and cannot change depending on the property in question. It cannot be the date of the application in some cases, the date of the initial restraining order in others, and the date of the s 141 order in other cases still308. Indeed, if "is" in s 141 referred to the time of the s 141 application – as appeared to be suggested at one point in oral argument – then the Commonwealth could not have obtained the order in issue in these appeals because the property was forfeited. The Commonwealth identified other provisions in the POCA which fix on whether property "is" under or subject to the effective control of some person – namely, ss 29(4), 102(2)(b) and 116(3) – and submitted that "is" in those provisions could not be read literally. It was contended that the same logic could and should apply to s 141(1)(c). That contention should be rejected. As the Commonwealth recognised, those other provisions, unlike s 141(1)(c), apply only to property which is presently forfeited or is subject to a restraining order. Thus, the word "is" in s 102(2)(b) must be read as referring to something other than the date of the determination of the application, because s 102 only applies to presently forfeited property. If s 102(2)(b) were read as referring to the time of the application, it would always be satisfied and the provision would be redundant. That is not the case for s 141(1)(c), which is not confined to presently restrained or forfeited property. For the same reason, the decision in Logan Park Investments Pty Ltd v Director of Public Prosecutions (Cth)309, which concerned 306 Hart (2016) 336 ALR 492 at 742 [1252]. 307 Hart (2016) 336 ALR 492 at 745-746 [1268]. 308 cf Hart (2016) 336 ALR 492 at 544-545 [268]-[275]. 309 (1994) 122 FLR 1. a provision of the POCA 1987 that applied only to presently restrained property, takes the matter no further. No effective control at date of determination of s 141 application Once it is accepted that effective control for the purposes of s 141(1)(c) is to be assessed as at the date of the determination of the application, it follows that, in this case, the condition in s 141(1)(c) could not be satisfied on the evidence at trial. As the primary judge recorded, "[t]here was no issue litigated in these proceedings about whether Mr Hart would have or would be given effective control of property if the Commonwealth is directed to transfer property to the Companies or to pay the value of property to them"310. Later in his reasons, the primary judge concluded that311: no issue had been raised in the pleadings about whether Mr Hart continued to be in effective control of the Companies at the time of the trial; it was "possible" that Mr Hart "remain[ed] in effective control of the Companies" but the issue had "not been adequately explored in evidence"; and his Honour was "not persuaded that Mr Hart is currently more than the trusted adviser to the directors" of the Companies. Some matters mentioned in the primary judge's reasons may be considered relevant to effective control as at 2 April 2013 (the date on which the s 141 application was determined) but, as noted above, the evidence is scant and there were no direct findings. Those matters include, for example, that Mr Hart acted as a McKenzie friend for the Companies in the proceedings before the primary judge312 and that there was evidence before the primary judge that Mr Hart remained a beneficiary of at least two discretionary trusts for which one of the Companies was trustee, although the CDPP did not submit that Mr Hart was 310 Hart [2013] QDC 60 at [168]. 311 Hart [2013] QDC 60 at [880]. 312 Hart [2013] QDC 60 at [29]. thereby (or for any other reason) the "beneficial owner" of the Companies' assets or any particular asset313. Further, in the Court of Appeal, the majority – having concluded, as the Companies contended, that effective control was to be assessed at the date of the determination of the s 141 application rather than the date of any restraining order – stated that "[t]here has been no suggestion that the Commonwealth parties might have led evidence" to address effective control at the date of determination314. That last observation by the majority is important because, by reason of s 317 of the POCA, the CDPP bore the onus of proving the matters necessary to establish the grounds for making the s 141 order for which it applied. The CDPP did not address those matters, and therefore did not discharge that onus. For those reasons, the Commonwealth's appeal in relation to s 141 should be dismissed. Conclusion and orders For those reasons, the following orders should be made: Matter No B21/2017 Appeal dismissed with costs. Matter No B22/2017 and Matter No B23/2017 (1) Appeal in Matter No B22/2017 allowed in part. (2) Appeal in Matter No B23/2017 allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Queensland made in Appeal No 4987/13 on 29 August 2016 and 8 November 2016, and orders 1, 4(a), (b), (e) and (f), 5, 7 to 9, and 11 to 18 of that Court made in Appeal No 3908/13 on 8 November 2016, and the following orders and declarations: their place make each appeal be allowed in part; 313 Hart [2013] QDC 60 at [883]. 314 Hart (2016) 336 ALR 492 at 743 [1256]. in Appeal No 3908/13, declare that: Nemesis Australia Pty Ltd had legal ownership of Lot 56 on Registered Plan 188161, also known as the 6 Merriwa Street, subject mortgagee under favour of Countrywide Co-operative Housing Society Ltd and the chargee under a mortgage debenture in favour of Merrell Associates Ltd, immediately prior to its forfeiture to the Commonwealth on 18 April 2006; and the rights of the mortgage upon satisfaction of the mortgage in favour of Countrywide Co-operative Housing Society Ltd and upon satisfaction of the amount of $1.6 million secured by the mortgage debenture in par (i), if any part of the proceeds of sale of 6 Merriwa Street has not been applied to meet that liability, the balance of proceeds then remaining (if any), together with interest on the Commonwealth to Nemesis Australia Pty Ltd; and is payable by that balance, in each of Appeal No 3908/13 and Appeal No 4987/13, each party bear its own costs.

HIGH COURT OF AUSTRALIA NICK DEGUISA & ANOR APPELLANTS AND ANN LYNN & ORS RESPONDENTS [2020] HCA 39 Date of Hearing: 2 September 2020 Date of Judgment: 4 November 2020 ORDER Appeal allowed. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 5 September 2019 and 3 March 2020 and, in their place, order that: the appeal to that Court be allowed; paragraphs 1, 3, 4, 7 and 8 of the orders of the District Court of South Australia made on 29 August 2018 in matters DCCIV 1750 of 2016 and DCCIV 597 of 2018 be set aside and, in their place, it be ordered that: the balance of the plaintiffs' actions be dismissed; and the plaintiffs pay the defendants' costs in both matters; and the respondents pay the appellants' costs in that Court. The respondents pay the appellants' costs in this Court. On appeal from the Supreme Court of South Australia Representation A L Tokley QC and H M Heuzenroeder for the appellants (instructed by W J N Wells QC with R Ross-Smith for the respondents (instructed by Lindbloms Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Real property – Torrens system – Where appellants registered proprietors of land – Where appellants obtained planning approval to subdivide land and build two townhouses – Where present certificate of title for land referred to memorandum of encumbrance which prohibited erection of any buildings other than "a dwellinghouse" and prohibited "multiple dwellings" – Where back-cover sheet of memorandum of encumbrance had typed statement indicating that encumbrance formed part of common building scheme – Where neither memorandum of encumbrance nor present certificate of title identified other lots benefited by restrictive covenants in memorandum of encumbrance – Where s 69 of Real Property Act 1886 (SA) provided title to land indefeasible subject to encumbrances and interests "notified" on original certificate of title of such land – Whether appellants were notified of restrictive covenants in memorandum of encumbrance in accordance with s 69. Words and phrases – "cancelled certificate of title", "certificate of title", "common building scheme", "encumbrance", "memorandum of encumbrance", "notice", "notified", "notified on the certificate of title", "prudent conveyancer", "purpose of the Torrens system", "Register Book", "restrictive covenants", "search and inspection", "searches of the Register", "sufficiently notified", "title", "title by registration", "title of the registered proprietor", "Torrens system". Real Property Act 1886 (SA), ss 51B, 69. KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ. Robert Richard Torrens, a native of Cork in Ireland1, by his vision, energy and tenacity, secured for his adoptive home, South Australia, the manifold benefits of the system of land title by registration which bears his name. The Torrens reform group was multidisciplinary, drew on international comparative law analysis including of other land systems and presaged the great modern law reform projects2. As Professor Whalan has explained, the Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land3. With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry4. The benefits of the Torrens system in bringing order out of the chaos of the state of colonial land titles in South Australia were so significant that the system came to be adopted by the other Australian colonies prior to Federation, and by the Territories thereafter. But for some time after the adoption of the Torrens system by legislatures in Australia, the courts did not fully embrace the radical reform wrought by the adoption of Torrens' great innovation. That was due, in no small measure, to the influence of the Privy Council's decision in Gibbs v Messer5, the effect of which was to defer the indefeasibility of the title of a registered proprietor 1 Croucher, "'Delenda Est Carthago!' – Sir Robert Richard Torrens and His Attack on the Evils of Conveyancing and Dependent Land Titles: A Reflection on the Sesquicentenary of the Introduction of His Great Law Reforming Initiative" (2009) 11 Flinders Journal of Law Reform 197 at 202. 2 Raff, "Torrens, Hübbe, Stewardship and the Globalisation of Property Law Systems" (2009) 30 Adelaide Law Review 245. 3 Whalan, The Torrens System in Australia (1982) at 20. 4 Whalan, The Torrens System in Australia (1982) at 13-20; Breskvar v Wall (1971) 126 CLR 376 at 385. [1891] AC 248. See Clements v Ellis (1934) 51 CLR 217 at 243-245. so that the title of a person dealing with the registered proprietor might be defeated by the effect of transactions that were not notified on the certificate of title. It was only in the landmark decisions of the Privy Council in Frazer v Walker6 and the High Court in Breskvar v Wall7 that it was fully accepted that the Torrens system established a system of title by registration rather than one of registration of title. That understanding of the scheme of the Torrens system informed this Court's decision in Westfield Management Ltd v Perpetual Trustee Co Ltd8. In that case, the Court unanimously affirmed that the dealings recorded on the certificate of title, together with the information appearing on that folio of the Register Book, provide a purchaser taking his or her title to land from the registered proprietor "with the information necessary to comprehend the extent or state of the registered title to the land in question" so that information extraneous to the certificate of title was immaterial to the indefeasibility of the purchaser's title9. As will be seen, the path to the resolution of the principal issue in the present case is significantly illuminated by the approach in Westfield. The issue The appellants are the registered proprietors of land situated at 538 Henley Beach Road, Fulham ("Lot 3"), as comprised in certificate of title volume 5804 folio 557 ("the present certificate of title")10. The appellants have planning approval to subdivide their lot and build two townhouses11. The first and second respondents are daughters of Betty Fielder, who was the owner of a large parcel of land which included 52 smaller parcels of land, including Lot 3, sold in the mid-1960s as part of what is claimed to be a common building scheme. The third respondent is the registered proprietor of Lots 5 and 35, [1967] 1 AC 569 at 581, 584-585. (1971) 126 CLR 376 at 385-387, 391, 397, 399-400, 406, 413. (2007) 233 CLR 528 at 531-532 [5]. See also at 539 [39]. 9 Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at 10 Deguisa v Lynn [2019] SASCFC 107 at [137]. 11 Deguisa v Lynn [2019] SASCFC 107 at [107]. one or the other of which is said also to be derived from the common building scheme. The respondents contend that covenants in the common building scheme restrict the nature and extent of construction permitted on Lot 3. The appellants' principal contention is that they are not bound by the restrictive covenants, because they were not "notified" of them in accordance with s 69 of the Real Property Act 1886 (SA) ("the Act"). This contention was rejected by the courts below. The appellants also argue that none of the respondents have standing to enforce the common building scheme, and further, that the covenants do not on their terms prevent the construction they seek to undertake. Once again, the appellants were unsuccessful in relation to these arguments in the courts below. The appellants' principal contention should be accepted. The text of s 69 of the Act, the statutory context in which it is to be construed, and the authoritative judicial exposition of the purpose of the Act, combine to support the conclusion that a person dealing with a registered proprietor of land is not to be regarded as having been notified of an encumbrance or qualification upon the title of the registered proprietor that cannot be ascertained from a search of the certificate of title or from a registered instrument referred to in a memorial entered in the Register Book by the Registrar-General. On the footing that the appellants' principal contention must be accepted, their appeal must be allowed. That being so, it is unnecessary to consider the other contentions advanced by them. Common building schemes and the Torrens system A common building scheme is constituted under the general law. It is sufficient for the purposes of this case to say that where a plaintiff and defendant each derive title to a lot from a common vendor of land laid out for sale in separate lots as part of a general scheme of development, the lots are sold subject to a covenant containing restrictions imposed upon all the lots for the benefit of all the lots, and the plaintiff and defendant (or their predecessors in title) have purchased their lots on the footing that the restrictions were for the benefit of the other lots in the general scheme, the plaintiff will in equity be entitled to enforce the covenant Under the Act, restrictive covenants in common building schemes cannot be registered. Indeed, it has been observed that "there is no evidence that the notification or registration of restrictive covenants was within Torrens' field of vision"13. In New South Wales14, Victoria15, Western Australia16, Tasmania17 and the Northern Territory18, legislation has made specific provision for the creation and notification of restrictive covenants; but South Australia, Queensland and the Australian Capital Territory have not made any such provision. The present case is not concerned with whether a covenantor is bound by his or her promise to the covenantee, but with whether the title to land in ownership of a successor in title to the covenantor is affected by the interest of the owner of another parcel of land in the enforcement of the covenant, the benefit of which attaches to that other person's land. While the provisions of the Act speak of encumbrances, liens, estates or interests as possible qualifications of, or burdens upon, the title of a registered proprietor of land, there is no express reference in the Act to restrictive covenants, or to the interest of the covenantee as a species of interest that may burden or qualify the title of the registered proprietor. The cases do not suggest, and the appellants did not argue, that restrictive covenants enforceable under the general law as part of a common building scheme are in 12 Elliston v Reacher [1908] 2 Ch 374 at 384; Brunner v Greenslade [1971] Ch 993 at 1003-1004. See generally Bradbrook and MacCallum, Bradbrook and Neave's Easements and Restrictive Covenants, 3rd ed (2011) at 348-350. 13 Christensen and Duncan, "Is it time for a national review of the Torrens' system? – The eccentric position of private restrictive covenants" (2005) 12 Australian Property Law Journal 104 at 104. 14 Conveyancing Act 1919 (NSW), ss 89A, 89B, 89C. 15 Transfer of Land Act 1958 (Vic), s 88. 16 Transfer of Land Act 1893 (WA), ss 129A, 129B. 17 Land Titles Act 1980 (Tas), ss 102-104. 18 Law of Property Act 2000 (NT), s 169. some way so alien to the scheme of the Act that the equitable rights and obligations so created cannot be accommodated to the provisions of the Act. But if the benefit and burden of mutual restrictive covenants are to affect the registered title of a purchaser of a parcel of land subsequent to the original covenantors, steps must be taken to ensure the notification on the certificate of title of each parcel of land burdened by a restrictive covenant and the other lots intended to be benefited by that covenant as part of the common building scheme. In South Australia, advantage has been taken of s 128 of the Act, which provides for the execution in the appropriate form of an encumbrance where "land is intended to be charged with, or made security for, the payment of ... [a] sum of money, in favour of any person". The courts have upheld the practice of annexing the restrictive covenant of a common building scheme to an encumbrance which secures the payment of a sum of money. This practice facilitates the registration of an instrument which gives notice on the certificate of title of the burden of the restrictive covenant and of the other lots in the scheme which benefit from it19. It must be understood that the rent charge in an encumbrance creates an interest in land, but a restrictive covenant of itself does not. It was common ground between the parties that a covenant can operate against an owner of land who is not himself or herself a covenantor only if the owner is relevantly fixed with notice of the other parcel or parcels to which the benefit of the covenant is attached. In this regard, the provision of the Act of central concern in the present case is s 69. It provides, subject to immaterial exceptions: "The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible". Not surprisingly, the appellants' argument emphasised the text of s 69, making the compelling point that the section speaks of encumbrances and interests "notified on" the original certificate of title rather than of some looser or less immediate connection between what is to be found on the certificate of title and the encumbrance or interest, such as "relating to" or "reasonably ascertainable from" the certificate of title. The appellants contend that s 69 could hardly have been clearer that encumbrances or interests that can be discovered only by a search for material extraneous to the Register Book are beyond its contemplation. As a 19 Blacks Ltd v Rix [1962] SASR 161 at 163-164; Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382 at 389-390; Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9 at 21-22 [71]-[72]. matter of the ordinary and natural meaning of the text of s 69 of the Act, there is force in the appellants' contention. The other provisions of the Act which provide the context in which s 69 operates do not suggest any reason to disagree with this view of the operation of s 69. On the contrary, reference to the statutory context in which s 69 appears shows that the scheme of the Act is that the certificate of title should be kept by the Registrar-General so as to enable a person searching the Register Book to find a statement of the state of the registered proprietor's title that is both accurate and comprehensive. It is convenient to refer to these provisions now, before turning to a summary of the facts of the case and an examination of the judgments in the courts below. Statutory context Section 10 of the Act states that the objects of the Act are "to simplify the title to land and to facilitate dealing therewith, and to secure indefeasibility of title to all registered proprietors, except in certain cases specified in this Act". Section 11 of the Act goes on to state that the Act "shall always be construed in such manner as shall best give effect to the objects" of the Act. Section 49 provides that "[e]ach original certificate shall constitute a separate folium of the Register Book, and the Registrar-General shall record thereon distinctly and separately all memorials affecting the land included in each certificate". to which instrument Section 51 provides that "[e]very memorial entered in the Register Book shall be sealed with the seal of the Registrar-General, and shall state the nature of the the Registrar-General directs, and shall refer by number or symbol to such instrument". In this regard, the term "instrument" is defined by s 3(1) as "every document capable of registration under the provisions of any of the Real Property Acts, or in respect of which any entry is by any of the Real Property Acts directed, required, or permitted to be made in the Register Book". it relates and such other particulars as Section 57 provides relevantly that "[e]very instrument shall, when registered, be deemed part of the Register Book". It is evident that ss 49, 51 and 57 contemplate that the Registrar-General is duty-bound to ensure that the certificate of title is a comprehensive statement of all memorials "affecting" the land included in the certificate. That comprehensive statement leaves no room for the possibility that information extraneous to the certificate of title may affect the title of the registered proprietor. That understanding is confirmed by s 77, which requires the Registrar-General to "record on every certificate issued by him, and in such manner as to preserve their respective priorities, memorials of all subsisting ... encumbrances ... to which the land may be subject". Section 65 provides relevantly that "[a]ny person shall have access to the Register Book, and to all instruments filed and deposited in the Lands Titles Office for the purpose of inspection during the hours ... appointed for search". Section 128 provides relevantly that whenever any land is intended to be charged with the payment of a rent charge in favour of any person, "the registered proprietor shall execute an encumbrance in the appropriate form". Section 129(1) provides relevantly that every such encumbrance "shall contain an accurate statement of the estate or interest intended to be ... encumbered, and shall also contain or have endorsed thereon a memorandum of all leases, mortgages, and encumbrances (if any) affecting such land". Section 129(2) relevantly provides that where an encumbrancer is required to "do or refrain from doing any ... act ... by reference to some other document", the Registrar-General may require a copy of the document concerned to be attached to the encumbrance or deposited in the General Registry Office or in any other public registry in the State where, in the opinion of the Registrar-General, the requirement is not adequately set forth in the instrument lodged for registration. In 1990, s 51B was added to the Act. That section provides that where the Registrar-General is required by the Act or any other Act to register title to land, or to record any other information relating to land, the Registrar-General may do so by an electronic or other process. In such a case, the provisions of the Act are to be construed so as to apply to the registration of title, and the term "Register Book" will be taken to include the records so maintained by the Registrar-General. In particular, s 51B(e) provides that a requirement of the Act that a record relating to land be made by entry or endorsement of a memorial or memorandum in the Register Book or by any other entry or endorsement or by notation in the Register Book or on the certificate or other instrument of title for the land will be satisfied if the Registrar-General makes the record by an electronic process. Lot 3 Lot 3 is one of 54 allotments which once were part of a larger parcel of land contained in the now cancelled certificate of title volume 2442 folio 85 ("the grandparent certificate of title")20. The registered proprietor of that large parcel of land was Oliver Ayton, the third respondent's maternal grandfather. That parcel of land was bequeathed by Oliver Ayton to Keith Ayton and Betty Fielder in 196121. In the mid-1960s, that land was the subject of a substantial subdivision which, among other things, produced Lot 3. The first sale of Lot 3 occurred in 1965 to Giulio and Franca Boin. At that time, Lot 3 was contained in certificate of title volume 3310 folio 186 ("the parent certificate of title")22. A memorandum of encumbrance ("the Memorandum of Encumbrance"), numbered dealing 2675722, dated 4 November 1965, was lodged for registration and recorded on the parent certificate of title. Lot 3, so encumbered, was transferred from Keith Ayton and Betty Fielder to Giulio and Franca Boin. The terms of the Memorandum of Encumbrance relevantly provided23: That the Encumbrancer will not at any time erect or permit or suffer to be erected upon the said land or any part thereof any building or buildings other than a dwellinghouse for private residential purposes, and outbuilding or outbuildings suitable for use in conjunction with a dwellinghouse used for private residential purposes That the Encumbrancer will not at any time erect or permit or suffer to be erected upon the said land or any part thereof any block or blocks of flats home units or other multiple dwellings." 20 Deguisa v Lynn [2019] SASCFC 107 at [72]. 21 Deguisa v Lynn [2019] SASCFC 107 at [126]. 22 Deguisa v Lynn [2019] SASCFC 107 at [131], [133]. 23 Deguisa v Lynn [2019] SASCFC 107 at [135]. In relation to the Memorandum of Encumbrance, the present certificate of title to Lot 3 states24: "Schedule of Dealings Dealing Number Description ENCUMBRANCE TO KEITH OLIVER AYTON AND BETTY JOAN FIELDER AS JOINT TENANTS" On the back-cover sheet of the Memorandum of Encumbrance there appears a handwritten requisition by the Lands Titles Office. It is in these terms25: "Is this encumbrance part of a common building scheme? If not to what land is it appurtenant." The handwritten requisition gave rise to the Memorandum of Encumbrance land broker, typed statement by a being relodged and filed, with a A & HF Gaetjens Pty Ltd, which stated26: "This encumbrance forms portion of a common Building Scheme." The land broker's reference to the existence of a common building scheme was not replicated or expanded upon on any of the memorialised documents or certificates of title for land said to be affected by the common building scheme27. In 1967, Giulio and Franca Boin transferred Lot 3 to William and Muriel McKenzie as joint tenants. The appellants purchased Lot 3, being then contained in the present certificate of title, from the estate of Muriel McKenzie. The transfer took effect on 23 January 2008. As has been noted, the present certificate of title had endorsed upon it the encumbrance in favour of Keith Ayton 24 Lynn v Deguisa [2017] SADC 78 at [48]. 25 Deguisa v Lynn [2019] SASCFC 107 at [131]. 26 Deguisa v Lynn [2019] SASCFC 107 at [132]. 27 Deguisa v Lynn [2019] SASCFC 107 at [134]. and Betty Fielder in its schedule of dealings28; but there was no mention in the present certificate of title or the Memorandum of Encumbrance of other lots intended to be benefited by cll 2 and 3 of the Memorandum of Encumbrance. The other land said to be subject to the common building scheme It was established in the course of these proceedings that each of the 54 lots which resulted from the subdivisions of the grandparent certificate of title, with the exception of Lots 5 and 21, was sold with a registered memorandum of encumbrance that included the same restrictive covenants as appear in the Memorandum of Encumbrance29. As noted, the present certificate of title to Lot 3 does not contain any description of the certificates of title to the other lots derived from the grandparent certificate of title. All 54 lots are depicted on a document described as the "Gaetjens Plan", a one-page document which, it may be inferred, was created by the land broker A & HF Gaetjens, who acted for the vendors in marketing the subdivided lots to the public30. The Gaetjens Plan was located by the third respondent during a search of Betty Fielder's personal items after her death31. It was not available upon a search of the Lands Titles Office32. The subdivision of the land covered by the grandparent certificate of title was effected in stages: Ten certificates of title were issued on 7 September 1964, for allotments subject to Deposited Plan 819933. 28 Deguisa v Lynn [2019] SASCFC 107 at [136]-[137]. 29 Deguisa v Lynn [2019] SASCFC 107 at [130]. 30 Deguisa v Lynn [2019] SASCFC 107 at [121]. 31 Deguisa v Lynn [2019] SASCFC 107 at [122]-[123]. 32 Deguisa v Lynn [2019] SASCFC 107 at [123]. 33 Deguisa v Lynn [2019] SASCFC 107 at [78], [127]. Thirty-eight certificates of title were issued on 10 December 1964, for allotments subject to Deposited Plan 759334. Six certificates of title were issued on 13 April 1965 for five allotments on Henley Beach Road and an allotment on Carolyn Avenue. These allotments included Lot 3 on the Gaetjens Plan. These allotments were not subject to a deposited plan but are depicted in the plan in Lands Titles Office Docket 669 of 196435. That information is recorded in memorials on the back sheet of the grandparent certificate of title36. The relevant deposited plans and docket were not mentioned on the folio of the Register Book containing the present certificate of title for Lot 3; rather they are records of the Lands Titles Office and working documents in conformity with which the certificates of title for the new subdivided lots were issued37. The primary judge On 16 December 2015, the appellants applied for development approval to build two attached residences on Lot 3. On 12 April 2016, that application was granted38. The respondents, contending that the building of two dwelling houses on Lot 3 would infringe the restrictive covenants in the Memorandum of Encumbrance, lodged a caveat over Lot 3 to protect their interest in enforcing the covenants. The respondents commenced proceedings in the District Court of South Australia to extend the caveat until their substantive application to prevent the construction of the townhouses on Lot 3 was determined39. 34 Deguisa v Lynn [2019] SASCFC 107 at [86], [127]. 35 Deguisa v Lynn [2019] SASCFC 107 at [89], [90], [95], [127]. 36 Deguisa v Lynn [2019] SASCFC 107 at [127]. 37 Deguisa v Lynn [2019] SASCFC 107 at [66]. 38 Deguisa v Lynn [2019] SASCFC 107 at [107]. 39 Lynn v Deguisa [2017] SADC 78. The primary judge (Judge Tilmouth) held that the restrictive covenants were binding on the appellants as part of a common building scheme with respect to 52 allotments (which did not include Lots 5 and 21), established in 1964 when the subdivision was laid out in accordance with the Gaetjens Plan40. The primary judge reasoned that the appellants had sufficient notice of the covenants and ought to have made further searches to ascertain the nature and extent of the common building scheme. The primary judge said that the "were in a position to 'identify the land which is entitled to the benefit of the covenant either from the encumbrance or from other related documents which can be discovered on a search of the Land Titles Office'". The primary judge held further that the respondents had standing to bring the proceedings in their capacity as caveators, and that they had the statutory right to bring and enforce caveats in relation to their equitable interest in the land42. In addition, his Honour held that the third respondent had standing on the basis of his ownership of an allotment in the common building scheme which was subject to identical restrictive covenants to the appellants' land43. In a subsequent judgment in separate proceedings44, the primary judge held that the terms of the Memorandum of Encumbrance prohibited the erection of more than one dwelling house. On that footing, the appellants were prohibited from doing so despite having obtained planning approval for that purpose45. 40 Lynn v Deguisa [2017] SADC 78 at [42]-[43]. 41 Lynn v Deguisa [2017] SADC 78 at [64], citing Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382 at 391. 42 Lynn v Deguisa [2017] SADC 78 at [68]-[69]. 43 Lynn v Deguisa [2017] SADC 78 at [69]. 44 Lynn v Deguisa [No 2] [2018] SADC 84. 45 Lynn v Deguisa [No 2] [2018] SADC 84 at [28], [30]. The Full Court of the Supreme Court of South Australia The appellants appealed to the Full Court of the Supreme Court of South Australia from both of the primary judge's judgments. The majority of that Court (Peek J, with whom Hughes J agreed) upheld the conclusions of the primary judge. Peek J held that the 52 lots sold out of the subdivision that were encumbered with identical restrictive covenants, which did not include Lots 5 and 21, were therefore part of a common building scheme46. His Honour held further that the appellants were sufficiently notified of the restrictive covenants. In this regard, Peek J proceeded upon the "governing principle", stated by Windeyer J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd47: "What is 'notified' to a prospective purchaser by the vendor's certificate of title is everything that would have come to his or her knowledge if a prudent conveyancer had made such searches as ought reasonably to have been made by him [or her] as a result of what appears on that certificate of title." Peek J went on to say48: "And if one inquires, 'What searches of the Register ought reasonably be made by a prospective purchaser?' the applicable principle becomes: A prospective purchaser is required to make such searches of the Register as ought reasonably be made by a prudent conveyancer having regard to both what appears on the vendor's certificate of title and what comes to his or her knowledge during the course of such reasonable searches." Importantly, Peek J understood that the searches contemplated by Windeyer J included searches that were not directed by entries in the Register Book to particular registered instruments. Peek J considered that the appellants, having inspected the Memorandum of Encumbrance referred to on the certificate 46 Deguisa v Lynn [2019] SASCFC 107 at [141], [145], [154]-[155]. (1971) 124 CLR 73 at 93, cited in Deguisa v Lynn [2019] SASCFC 107 at [194], 48 Deguisa v Lynn [2019] SASCFC 107 at [253]. of title, would have been put on notice of the possible existence of a "common building scheme", and thus of the likelihood of a number of identifiable lots with mutually enforceable covenants49. The appellants ought then to have undertaken the further searches of the Register that would have been undertaken by a prudent conveyancer; these searches would have confirmed that all the lots in the building scheme were sold by the same common vendors, had the same encumbrances and restrictive covenants attached to them, and originated from the same subdivision which had produced Lot 3, and that therefore Lot 3 was part of a common building scheme50. Further, as to the searches that would have been conducted by a prudent conveyancer, Peek J accepted expert evidence adduced by the respondents to the effect that a search for the "distinctive surname 'Ayton'" in the 1965 or 1966 alphabetical listings of the vendors attainable from the Lands Titles Office would have yielded all of "the encumbrance names"51. It is noteworthy that the expert evidence in relation to these searches was that "Ayton" rather than "Fielder" would be chosen for the purpose of the searches because "Ayton" was an unusual name, whereas "Fielder" would be "lost in numerous other Fielders"52. In dissent, Kourakis CJ, having referred to the reasons of Barwick CJ and Windeyer J in Bursill53, held that the appellants were not bound by the restrictive covenants because s 69 of the Act does not contemplate either a search for other certificates of title that were not referred to in a memorial on the present certificate of title, or other general searches to ascertain the other lots that might have been benefited by the covenants in the Memorandum of Encumbrance54. Because neither the memorial of the Memorandum of Encumbrance nor the Memorandum of Encumbrance identified the lots said to be entitled to the benefit of the covenants said to burden Lot 3, Kourakis CJ concluded that the interests of such covenantees 49 Deguisa v Lynn [2019] SASCFC 107 at [256]-[257]. 50 Deguisa v Lynn [2019] SASCFC 107 at [275]. 51 Deguisa v Lynn [2019] SASCFC 107 at [264]. 52 Deguisa v Lynn [2019] SASCFC 107 at [264]. 53 Deguisa v Lynn [2019] SASCFC 107 at [30]-[32]. 54 Deguisa v Lynn [2019] SASCFC 107 at [36], [53]. in the appellants' land were not notified on the present certificate of title, and so the appellants were not bound by the restrictive covenants55. "[T]he question in this case is whether the memorial of the registered encumbrance containing the restrictive covenant, or the registered encumbrance itself, gives notice of the properties which hold the benefit of the covenant which burdens Lot 3. There is no statutory basis on which to frame the question more widely to include memorials and registered instruments in the entirety of the Register Book. It is one thing to be able to identify the benefited land by an internal reference, in the registered encumbrance itself, to the Certificates of Title of the benefited land, or by a reference to land which can be ascertained with certainty from public documents, like a deposited plan in the Lands Titles Office. It is quite another thing to bind the registered proprietor on the basis of inferences he or she might draw from other Certificates of Title and the registered instruments noted on them, however probable those inferences might appear to be." Kourakis CJ went on to observe that, even if the appellants had been required to undertake further searches, those searches would not have put the appellants sufficiently on notice, because different inferences as to the extent of the building scheme were available57, the most natural inference being that the land benefited by the covenants by the owner of Lot 3 comprised only Lots 1-5, which were all part of the final re-subdivision of the grandparent certificate of title facing Henley Beach Road58. The resolution of the difference of views separating Kourakis CJ and Peek J depends in large part on the significance to be accorded to the reasons of the 55 Deguisa v Lynn [2019] SASCFC 107 at [3], [39], [61]. 56 Deguisa v Lynn [2019] SASCFC 107 at [39]. 57 Deguisa v Lynn [2019] SASCFC 107 at [56], [70]. 58 Deguisa v Lynn [2019] SASCFC 107 at [96]-[98]. members of the majority of this Court in Bursill in relation to the scheme of the Act59. It is convenient, therefore, to turn now to a consideration of that decision. Bursill In Bursill, the certificate of title referred to a "Right of way created by ... Transfer No 7922". Though the certificate of title referred only to creating a right of way, an examination of the transfer document itself revealed that there were further rights granted with respect to buildings and airspace. Section 37 of the relevant legislation, the Real Property Act 1900 (NSW) ("the NSW Act"), provided that "[e]very memorial entered in the register-book shall state the nature of the instrument to which it relates". Section 42 of the NSW Act at that time provided that the registered proprietor of land held the interest in land subject to interests "notified on the folium of the register-book constituted by the grant or certificate of title". The majority of the High Court (Barwick CJ and Windeyer J) held that the grant of rights to buildings and airspace effected by the transfer document itself was sufficiently notified to a prospective purchaser in accordance with s 42 of the NSW Act. It is important to appreciate that the matter at issue was whether the inadequate description of the nature of the instrument on the certificate of title meant that a purchaser had not been sufficiently notified of the effect of the instrument. That question was answered in the negative by both Barwick CJ and Windeyer J because the true effect of transfer no 7922 was apparent from a reading of that instrument, which was itself referred to on the certificate of title. In this "It is not without significance that registered dealings being part of the Register Book are bound up with it ... and thus available for search and inspection. The Register Book is available for public search." Barwick CJ went on to say61: "It seems to me that it was not intended that the certificate of title alone should provide a purchaser dealing with the registered proprietor with (1971) 124 CLR 73 esp at 79 and 93. (1971) 124 CLR 73 at 77. (1971) 124 CLR 73 at 77-79. all the information necessary to be known to comprehend the extent or state of that proprietor's title to the land. The dealings once registered became themselves part of the Register Book. It was therefore sufficient that their registration should be by statement of their nature recorded on the certificate of title ... Both in the endorsement in 1862 and in the endorsement on the present certificate of title a description of what the memorandum of transfer achieved appears. In practical terms this inadequate description cannot be of moment because even to ascertain the nature and extent of the right or rights of way which it is said to have created or extended the memorandum of transfer must be searched and examined ... To my mind, it is inescapable that a person dealing with the registered proprietor in this case would be bound to search the registered dealing of which particulars were endorsed on the relevant certificate of title. Further, s 42 says that the registered proprietor holds the described interest in land subject only, with the stated exception, to 'notified' encumbrances etc and s 43 does not protect a purchaser from the effect of notice of registered interests. In my opinion, no purchaser from the registered proprietor in this case could properly claim to hold the land free of the registered estate or interest created by the memorandum of transfer of 1872 [transfer no 7922]." It is tolerably clear from the context in which these observations were made that when Barwick CJ spoke of "search", he meant obtaining and reading such registered instruments as were notified on the certificate of title. He was certainly not suggesting the need for a search for documents that might have been found outside the Register Book or documents that might be found in the Registry Office but were not incorporated by an entry on the certificate of title. inadequate description, or misdescription, of the nature of the instrument of transfer did not prevent a sufficient notification of the interest of the transferee62: thus concluded that the "If, as I think, the memorandum of transfer was duly registered that registration was continued under the Act of 1900 ... The estate or interest in the airspace occupied by the building over the right of way therefore was not an unregistered interest: on the contrary, it was a registered interest. That registered estate or interest was, in my opinion, sufficiently (1971) 124 CLR 73 at 78-79. particularized on the present certificate of title ... The notification brought to the knowledge of the purchaser the existence in the Register Book of the memorandum of transfer and therefore of the registered interest in the land of the registered proprietor which the registered memorandum of transfer created." Contrary to the view of the majority of the Court below in the present case63, the reasons of Barwick CJ in Bursill do not support the proposition that what is "notified" within the meaning of s 69 of the Act extends beyond what is referred to on the certificate of title, to include what might be found outside the Register or in other documents somewhere in the Lands Titles Office if one knew how to find them. Indeed, it is apparent from the passages cited that Barwick CJ, in speaking of registered dealings being available for "search and inspection", was speaking of the search of registered instruments or of instruments referred to in such instruments which were themselves registered. As he said, if the memorandum of transfer was unregistered, then "no further matter with respect to it" would have arisen64. In other words, if the transfer document was not a document incorporated through reference on the certificate of title in the Register Book, the prospective purchaser would not be bound to search for it. Whether Windeyer J took a different view is perhaps debatable. Windeyer J said65: "The argument that the interest in the buildings is not notified on the certificate of title proceeded on the assumption that Bursill, when purchasing the land, could safely neglect to search transfer No 7922, which was expressly referred to on the certificate of title. It is contended that this reference to the memorandum of transfer did not amount to constructive notice of its full operation, because it was described as creating an 'Extension of the Right of Way' ... [W]hat is 'notified' to a prospective purchaser by his vendor's certificate of title is everything that would have 63 Deguisa v Lynn [2019] SASCFC 107 at [219]. 64 Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 65 Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 come to his knowledge if he had made such searches as ought reasonably to have been made by him as a result of what there appears ... It seems to me that ... a prudent conveyancer acting for a purchaser of the land ... would have ascertained what it was that transfer 7922 referred to on the vendor's certificate of title in law effected." It can be seen that in this passage, when Windeyer J spoke of what a "prudent conveyancer" would do in the light of the reference to transfer no 7922 on the certificate of title, his Honour was speaking of taking up and reading that instrument of transfer. The respondents submitted that the reasons of Windeyer J support the view that a prospective purchaser ought to be taken as having been notified of "everything that would have come to his knowledge if he had made such searches as ought reasonably to have been made by him as a result of what there [on the certificate of title] appears". This reasoning was said by the respondents to proceed on the basis of assessing what the entry on the certificate of title reasonably put the prospective purchaser on notice of, not only what the entry incorporated by reference. The respondents accepted that, on the facts of Bursill, the relevant search did not need to go further than the instrument directly referred to on the certificate of title, but maintained that that is not to say that the proposition for which Bursill stands is that a required search can never go beyond such an instrument. Given that the issue on which the decision of the case turned was whether the misdescription of the instrument was material, or whether the effect of the misdescription was dispelled by a reading of the instrument, there is something to be said for the view that Windeyer J should not be regarded as saying any more than that a "prudent conveyancer" would actually take up and read the instrument that is recorded in the Register Book, and would thus not be misled by the misdescription. It must be acknowledged, however, that the Court of Appeal of New South Wales in Registrar-General v Cihan66 did not interpret the reasons of Windeyer J (or those of Barwick CJ) in that way. Rather, the Court of Appeal accepted the interpretation contended for by the respondents in the present case. In Cihan, the Court of Appeal was relevantly concerned with whether an easement, which subsisted before the land in question was brought under the Torrens system, was recorded in the relevant folio of the Register pursuant to the modern analogue in New South Wales of s 69 of the Act. That analogue speaks of (2012) 16 BPR 30,845. encumbrances or interests "recorded in" the relevant folio of the Register rather than "notified on" the certificate of title, but nothing turns on that. The current folio of the Register recorded an encumbrance which provided "Easement affecting the land shown so burdened in Vol 6451 Fol 53". Volume 6451 folio 53 contained the endorsement "Last Certificate Vol 1022 Fol 161". The certificate of title comprised in volume 1022 folio 161 contained a description of the dominant tenement of an easement. Barrett JA (with whom Allsop P and Tobias A-JA agreed) held that the easement was sufficiently notified. Barrett JA, after referring to the judgments of Barwick CJ and Windeyer J in Bursill, said67: "The concept here is that 'notification' ... is sufficiently made if particulars explicitly stated are such as to engender in the mind of a reasonable reader generally familiar with property and land titles a need for further inquiry by resort to readily available records." Barrett JA, applying that understanding to the facts of the case before him, held that the "Last Certificate" referred to indicated a "source of additional information" about the content of the endorsement, and that a search of that certificate of title would have brought to light the dominant tenement68. With all respect, the Court of Appeal's expansive view of what is "recorded in a folio of the Register" is not supported by a close reading of the reasons of Barwick CJ in Bursill. In addition, it may be said that the reasons of Windeyer J in Bursill do not provide unequivocal support for the expansive view that a purchaser is bound to make an open-ended "inquiry by resort to readily available records". However that may be, there is little to be gained by further consideration of what Windeyer J meant to convey in Bursill. Even if it be accepted that Windeyer J did have in contemplation prudent searches, possibly extending to such as might have been required of a purchaser to avoid being fixed with constructive notice of a defect in title in relation to pre-Torrens title land, such an expansive view is inconsistent with the scheme of the Act as expounded in Westfield. 67 Registrar-General v Cihan (2012) 16 BPR 30,845 at 30,855 [64]. 68 Registrar-General v Cihan (2012) 16 BPR 30,845 at 30,852-30,854 [45]-[57], Westfield In Westfield, this Court held that it is contrary to the purpose of the Torrens system to seek to establish the intention or contemplation of the parties to an instrument registered under the NSW Act by reference to material extrinsic to the instrument. In a unanimous judgment, Gleeson CJ, Gummow, Kirby, Hayne and "Together with the information appearing on the relevant folio, the registration of dealings manifests the scheme of the Torrens system to provide third parties with the information necessary to comprehend the extent or state of the registered title to the land in question. This important element in the Torrens system is discussed by Barwick CJ in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd70. It will be necessary later in these reasons to refer further to the significance of this for the present appeal." The Court in Westfield71 referred with approval to the decision of Connolly J in Hutchinson v Lemon72. In that case, a memorial of a registered survey plan which showed the existence of an easement appeared on a certificate of title, but there was no memorial of a document creating the easement. The defendants argued that the memorial of the registered plan on the certificate of title was only a notification that a survey of such an easement had been lodged, rather than a notification of an easement over the land73. Connolly J rejected that 69 Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at (1971) 124 CLR 73 at 77-78. See also the remarks of Connolly J in Hutchinson v Lemon [1983] 1 Qd R 369 at 372-373. (2007) 233 CLR 528 at 531 [5] fn 31. [1983] 1 Qd R 369. 73 Hutchinson v Lemon [1983] 1 Qd R 369 at 372-373. 74 Hutchinson v Lemon [1983] 1 Qd R 369 at 373. "[Bursill] is authority for the proposition that to identify the interests which are notified ... by entry or memorial on the certificate of title involves a search of the instrument of which the memorial is so entered." In approving of the decision in Hutchinson v Lemon and the remarks of Connolly J in the cited passage in particular, the Court in Westfield accepted that only instruments notified by entry or memorial on the certificate of title are sufficiently notified on the certificate of title to defeat the otherwise unqualified title of the registered proprietor. Importantly, in Westfield the Court expressly approved of the reasons of Barwick CJ in Bursill, but did not mention the reasons of Windeyer J in that case75. When their Honours later returned to discuss the significance of this element of the Torrens system, their Honours said76: "Recent decisions, including Halloran v Minister Administering National Parks and Wildlife Act 197477, Farah Constructions Pty Ltd v Say-Dee Pty Ltd78, and Black v Garnock79, have stressed the importance in litigation respecting title to land under the Torrens system of the principle of indefeasibility expounded in particular by this Court in Breskvar v Wall80. The importance this has for the construction of the terms in which easements are granted has been remarked by Gillard J in Riley v Penttila81 75 Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at 76 Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at (2006) 229 CLR 545 at 559-560 [35]. (2007) 230 CLR 89 at 167-172 [190]-[198]. (2007) 230 CLR 438 at 443 [10]. (1971) 126 CLR 376. See also Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245 at 264 [26]-[27]. [1974] VR 547 at 573. and by Everett J in Pearce v City of Hobart82 ... The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee83." In Westfield, this Court indicated a distinct preference for the firm clarity of the approach of Barwick CJ in Bursill over the more equivocal statements of Windeyer J. The approach of Barwick CJ is a better fit with the understanding of the Torrens system as a system of title by registration, affirmed in Breskvar v Wall. Within that system, the State's guarantee of the state of the title of the registered proprietor shown by the certificate of title encompasses any qualification to that title by virtue of the interest in the land of a person other than a registered proprietor. The approach of Peek J in the present case is inconsistent with the reasons of this Court in Westfield. Those reasons support the proposition that unless reference to an interest is endorsed on the certificate of title or incorporated by reference in a registered instrument notified on the certificate of title, the interest has not been notified on the certificate of title. The simplification of land title and the assurance of transparency of land ownership that are the objects of the Act are not able to be accommodated in relation to a common building scheme unless all the lots benefited by a restrictive covenant can be identified by a potential purchaser from information on the certificate of title. Such identification ensures that a potential purchaser is able to make fully informed decisions in relation to the concerned land. It is not to be supposed that the only legitimate concern of a potential purchaser of land in seeking to ascertain the nature and extent of qualifications upon the potential vendor's title to land is to enable the potential purchaser to make a binary choice as to whether to proceed with the purchase or to decline to do so. Knowledge of the nature and extent of qualifications upon the potential vendor's title would also enable a potential purchaser to bargain for a reduction in price to reflect the burden of any qualification upon the potential vendor's ability to convey a clear title to the land. In a case such as the present, a potential purchaser who knows what other [1981] Tas R 334 at 349-350. 83 cf Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605 at 610-612. lots are benefited by the restrictive covenant burdening the potential vendor's lot may seek to negotiate for a release of that burden from the other lot owners. That can occur only if the potential purchaser is able to identify each and every such other lot. In functional terms, the notification of which s 69 speaks can be effective only if a person dealing with the registered proprietor of land is informed by memorials on the certificate of title of the identity of each of the other lots in the common building scheme. Anything less falls short of fulfilling the function that notification on the certificate of title serves within the scheme of the Act. The benefited parcels were not notified on the certificate of title to Lot 3 As a matter of the ordinary and natural meaning of the language of s 69 of the Act, and in conformity with the authoritative exposition of the purpose of the Torrens system in Westfield, any intending purchaser of Lot 3 was notified by entry on the present certificate of title only of the memorialised Memorandum of Encumbrance, and of the terms of that instrument. There was no notification on the present certificate of title of the other lots that were benefited by the restrictive covenants in the Memorandum of Encumbrance. Those lots were not identified in the Memorandum of Encumbrance. The land broker's reference to "a common building scheme" on the back of the Memorandum of Encumbrance did not identify a registrable dealing with land and was not a memorial of a subsisting encumbrance. More importantly, the land broker's notation did not identify the certificates of title to lots that have the benefit of the restrictive covenants that are said to burden Lot 3, so that those lots could be identified by a search of the Register. that to search for the assigns of The respondents argued the description of Keith Ayton and Betty Fielder in the Memorandum of Encumbrance should have prompted a prudent conveyancer transferors and encumbrancees, Keith Ayton and Betty Fielder. This is because s 3(2) of the Act84 provides that an encumbrancee includes the assigns of the person. The respondents argued that a prudent conveyancer would have known that Keith Ayton and Betty Fielder were the transferors of the land contained in the parent certificate of title, which referred to the grandparent certificate of title. The prudent conveyancer would then examine the grandparent certificate of title, which would reveal the issue of 52 parent certificates of title, the transferees of which were assigns of Keith Ayton and Betty Fielder. The respondents also contended that a prudent conveyancer would have searched for Deposited Plan 8199, Deposited Plan 7593 the 84 Real Property Act 1886 (SA), s 3 (as it stood in 1965). and Lands Titles Office Docket 669 of 1964 because they were expressly referred to on the grandparent certificate of title. A similar argument was advanced and rejected in Re Dennerstein85. That case concerned the Victorian analogue of the Act. The issue was whether a common building scheme affecting the applicant's land prevented the erection of certain buildings. It had been argued that a purchaser could have inspected the lodged plan of the subdivision of the estate in which the land was situated, and then searched the transfer of the other lots contained therein, from which the purchaser could ascertain that the transfers were made pursuant to a common building scheme and hence, possibly, which lands were affected. Hudson J, consistently with the view of the purpose of the legislation later endorsed by this Court in Westfield, rejected this argument, saying86: "[A] purchaser of land under the Transfer of Land Act is not bound to prosecute inquiries and searches and make deductions such as would be involved if [those] contentions were accepted. Even when all the materials and evidence in relation to the circumstances under which an estate has been subdivided and sold are available it is not by any means easy to determine whether the sale of allotments in the estate has been made under or pursuant to a common building scheme. To require a person interested in purchasing one of those allotments to make this determination after obtaining the necessary evidence perhaps years after the original sale if it is available would render conveyancing a hazardous and cumbersome operation, and, in the case of dealings in land under the operation of the Transfer of Land Act, would defeat the object of the Act and destroy in large measure the efficacy of the system sought to be established thereby." His Honour went on to say that a notification of an encumbrance that arises "will not be effective to bind transferees of the land unless not only the existence of the scheme and the nature of the restrictions imposed thereunder, but the lands affected by the scheme (both as to the benefit and 86 Re Dennerstein [1963] VR 688 at 696. 87 Re Dennerstein [1963] VR 688 at 696. the burden of the restriction) are indicated in the notification, either directly or by reference to some instrument or other document to which a person searching the register has access". To similar effect, in Clem Smith Nominees Pty Ltd v Farrelly88, Bray CJ said that on the facts of that case, there was: "absolutely nothing in the encumbrance from which any land entitled to the benefit of a covenant can be identified or defined, there is absolutely nothing to suggest that the covenants were imposed for the benefit of any land at all". Consistently with the decision of Hudson J in Re Dennerstein, and with the approach of this Court in Westfield, the appellants in the present case were not required to undertake further inquiries and searches to ascertain the extent of the common building scheme referred to in the land broker's notation in the Memorandum of Encumbrance. The appellants were not required to make searches in relation to cancelled certificates of title. A certificate of title, such as the grandparent certificate of title or the parent certificate of title, once it has been superseded and replaced by the current certificate of title is no longer the certificate of title for a lot; it is no longer part of the Register Book. That is so even though it, or a copy, may be kept in the office of the Lands Titles Office or on its computer systems. The grandparent certificate of title and the parent certificate of title ceased to be part of the Register Book upon their cancellations. There can only be one operative certificate of title at any given time89. Nor could the Gaetjens Plan be a source of information in ascertaining the extent of the common building scheme, given it was not part of the Register Book, and not even to be found in the Lands Titles Office or on its computer systems. The respondents referred to the decision of the Supreme Court of South Australia (Debelle J, with whom King CJ and Cox J agreed) in Burke v Yurilla SA Pty Ltd90, where Debelle J said: (1978) 20 SASR 227 at 236. 89 See Real Property Act 1886 (SA), ss 78, 80H and 103. See also s 51C. (1991) 56 SASR 382 at 391. "Provided that the person intending to deal with the registered proprietor is able to identify the land which is entitled to the benefit of the covenant either from the encumbrance or from other related documents which can be discovered on a search of the Lands Titles Office, the purchaser would have notice from the Register itself of the restrictive covenant and its terms". But the issue is not whether it is possible that an exhaustive search in the Lands Titles Office or elsewhere might unearth "other related documents", like the grandparent certificate of title in the present case, which no longer form part of the Register Book but which, as it happens, are still kept in the Lands Titles Office notwithstanding the absence of any legislative requirement in that regard. In Netherby Properties Pty Ltd v Tower Trust Ltd91 Perry J held that the restrictive covenants upon which the defendant in that case relied were not enforceable against the plaintiff because the registered memorandum of encumbrance did not identify the lots intended to benefit from the covenants. Referring to the reasons of Debelle J in Burke v Yurilla92, Perry J said93: "When Debelle J uses the expression 'provided the land entitled to the benefit of the covenant can be identified from the Register', ... what is envisaged is that the quasi dominant tenement can be readily identified from the register, without a complex inquiry of the kind referred to by ... [D]etails must appear in the encumbrance or on the certificate of title upon which the encumbrance is registered, from which the nature and extent of the scheme, and the identity of the land to be benefited, must clearly appear." (emphasis in the original) The reasoning of Perry J fully accords with the understanding of the scheme of the Act stated by this Court in Westfield. As Hudson J said in Re Dennerstein94, it would be inconsistent with the objects of the Act to fix a purchaser of registered land with notice of rights and interests that are not referred to by memorial on the certificate of title and ascertainable by a search of the Register Book. If a purchaser (1999) 76 SASR 9 at 21-22 [71]-[72]. (1991) 56 SASR 382 at 390. 93 Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9 at 24 [77]-[78]. [1963] VR 688 at 695-696. cannot thereby ascertain the lots benefited by the encumbrance, s 69 of the Act operates to free the purchaser, once registered, of any equitable interest that might otherwise have been asserted by an encumbrancee. In addition, it cannot be that, as seems to have been accepted by Peek J in acting upon the expert evidence to which he referred, the operation of s 69 of the Act depends upon whether the surname of the original vendor in a common building scheme is unusual. If generalised searches beyond that of the current certificate of title of a property were required, it would be difficult to draw a line as to when "prudent" searching might cease. This is the sort of complexity and uncertainty that the Act sought to eradicate. More importantly, the scheme of the Act would be reduced to incoherence if the operation of s 69 of the Act were to vary with the surname of the owner of land referred to in a certificate of title that is no longer a folio of the Register Book. The respondents argued further that the scope of what was notified to the appellants under s 69 of the Act was widened by operation of s 51B of the Act. As noted earlier, that provision allows the Registrar-General to record electronically information relating to land and provides that those records are then included in the "Register Book". Section 53 provides that the Registrar-General must retain all recorded information either in its original form "or in some other form". Section 65 provides for public access to the Register Book and "to all instruments filed and deposited in the Lands Titles Office", where an "instrument" is defined in s 3(1) as including "every document ... in respect of which any entry is by any of the Real Property Acts directed, required, or permitted to be made in the Register Book" (emphasis added). The respondents argued that the combined effect of these provisions is that the certified plans of subdivision and approved plans of re-subdivision deposited and lodged in 1964 and 1965 respectively were in 2008, and still are, accessible as part of the Register Book, such that they widen the scope of the notification contemplated by s 69 of the Act. These contentions should not be accepted. It is to be noted that s 51B applies only where the Registrar-General is required by legislation to record relevant information electronically. The Registrar-General was not required to record the cancelled grandparent certificate of title or associated plans and dockets electronically, no doubt for the good reason that they were no longer operative in relation to any land within the scope of the Act. Any equitable interest that might have been enforceable against subsequent purchasers of Lot 3 ceased to be enforceable upon the sale of Lot 3 in 1967 by Giulio and Franca Boin, before s 51B was introduced. Nothing in the provisions to which the respondents refer suggests any intention to revive interests that ceased to be enforceable against the land before their enactment. More importantly, nothing in s 51B suggests an intention on the part of the legislature to alter the operation of s 69 by the enactment of those provisions. In particular, nothing in any of those provisions gives any reason to think that s 69 has an operation in relation to the registration of title by entry upon the folio of the Register Book that is different from the registration of title by electronic means. Conclusion A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to the enforceability of the benefit of a restrictive covenant only if those rights are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments which contain that information. Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 and the purpose of the Act. The present certificate of title to Lot 3 did not contain a memorial that disclosed any registered instrument showing the other lots said to have the benefit of the restrictive covenants. On that basis the appellants' principal contention must be accepted. Orders The appeal should be allowed and the orders of the Full Court of the Supreme Court should be set aside, and the appeal to that Court allowed. Paragraphs 1, 3, 4, 7 and 8 of the orders of the District Court of South Australia made on 29 August 2018 should be set aside, and in their place it should be ordered that the respondents' actions in the District Court should be dismissed. The respondents should pay the appellants' costs in this Court and in the courts below.

HIGH COURT OF AUSTRALIA PLAINTIFF AND MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS & ANOR DEFENDANTS Tu'uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] HCA 28 Date of Hearing: 10 May 2022 Date of Judgment: 17 August 2022 ORDER Application dismissed with costs. Representation O R Jones with J G Wherrett for the plaintiff (instructed by Turner Coulson Immigration Lawyers) S B Lloyd SC with B D Kaplan for the first defendant (instructed by Australian Government Solicitor) Submitting appearance for the second defendant Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tu'uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs Immigration – Visas – Review of cancellation decision – Application for extension of time – Where then Minister for Home Affairs cancelled plaintiff's visa pursuant to s 501(3)(b) of Migration Act 1958 (Cth) – Where plaintiff applied pursuant to s 477A(2) for extension of time to file application for review of Minister's decision – Where primary judge heard application for extension of time concurrently with underlying substantive application – Where primary judge refused application for extension of time on basis that proposed ground of review had no merit – Whether primary judge misapprehended or misconceived nature of statutory power in s 477A(2) – Whether primary judge committed jurisdictional error – Whether exercise of discretion in s 477A(2) may involve more than impressionistic assessment of merits of proposed grounds of review. Words and phrases – "extension of time", "impressionistic assessment", "jurisdictional error", "misapprehended or misconceived", "necessary in the interests of the administration of justice", "reasonable prospects of success", "reasonably arguable". Migration Act 1958 (Cth), ss 476A, 477A. KIEFEL CJ, GAGELER, KEANE AND GLEESON JJ. This case concerns the correct approach to be taken by a judge of the Federal Court of Australia in the exercise of the power to extend time for making an application under s 477A(1) of the Migration Act 1958 (Cth) ("the Act"). Section 477A(1) provides that an application to the Federal Court for a remedy to be granted in the exercise of the Court's original jurisdiction under s 476A(1)(b) or (c) in relation to a "migration decision"1 must be made within 35 days of the date of the migration decision. However, by s 477A(2), the Federal Court may extend the 35 day period "as the Federal Court considers appropriate" if an application has been made in the required form, and the Federal Court "is satisfied that it is necessary in the interests of the administration of justice to make the order". The plaintiff sought an extension of time to file an application for judicial review of a decision to cancel his Class TY Subclass 444 Special Category (Temporary) visa. The visa had been cancelled by the then Minister for Home Affairs under s 501(3)(b) of the Act, on the basis of matters that included the Minister's suspicion that the plaintiff had been or was a member of the Comanchero Outlaw Motorcycle Gang ("the Comanchero OMG"). The primary judge (Nicholas J) dismissed the extension of time application, after failing to be persuaded that the single ground of review in the proposed substantive application had any merit2. The plaintiff contends that the primary judge's decision involved jurisdictional error because his Honour misapprehended or misconceived the nature and purpose of the statutory power in s 477A(2) to extend time. The plaintiff argues that this error is revealed by the primary judge's reasons, which are said to extend beyond an assessment of the merits of the application on an "impressionistic" basis for the limited purpose of assessing whether the application was reasonably arguable. The primary judge did not err in dismissing the extension of time application. His Honour was entitled to exercise the power in s 477A(2) by forming the view that the substantive application lacked merit in the manner recorded in his Honour's reasons. Accordingly, the plaintiff's application in this Court fails. 1 Migration Act 1958 (Cth), s 5(1). 2 Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 1000 at [9]. Primary judge's reasons In accordance with common practice in the Federal Court, the primary judge heard the extension of time application together with argument on the substantive application. This approach is efficient, but did require the primary judge to avoid the error of conflating the two applications by refusing to extend time on the basis of a final determination of the issues raised by the substantive application, instead of by reference to a consideration of what was necessary in the interests of the administration of justice3. The primary judge recorded the Minister's acceptance that the plaintiff's delay of about three weeks was "not inordinate" and that the Minister would not be prejudiced by the grant of an extension of time, but that the Minister opposed the extension of time sought on the basis that the proposed ground of review "lack[ed] sufficient merit"4. At the hearing before the primary judge, the single proposed ground of review concerned the Minister's reference to several criminal charges pending against the plaintiff at the time of the visa cancellation. The ground was stated in the following terms: "In relying on the charges laid against the [plaintiff] in support of a determination that the [plaintiff] posed a risk of reoffending and/or a risk to the Australian community, the Minister failed to act on the basis of probative material and/or took into account an irrelevant consideration and/or acted in a legally unreasonable and/or illogical and/or irrational way and/or acted contrary to the presumption of innocence and therefore committed jurisdictional error." The primary judge recorded that he was not persuaded that this proposed ground had any merit. After recording the plaintiff's submissions in support of that ground, the primary judge stated that he did not accept those submissions. His Honour's reasons may be summarised as follows: (1) it was permissible for the Minister to have regard to the existence of criminal charges, even if the allegations supporting the charges had not been proven or the visa holder had been acquitted; (2) the Minister's findings did not depend upon an acceptance that the plaintiff had in fact committed the criminal offences with which he had been charged; (3) there SZTES v Minister for Immigration and Border Protection [2015] FCA 719 at [82]- 4 Katoa [2021] FCA 1000 at [7]. was probative material before the Minister from which he could reasonably infer that the pending charges arose out of the plaintiff's involvement with the Comanchero OMG, and that, as late as 18 January 2019, the plaintiff was keeping company with other members of the Comanchero OMG and that their activities resulted in the plaintiff and other members being charged with serious criminal offences; (4) the Minister's process of reasoning was not unreasonable in the legal sense nor was it affected by any other error capable of amounting to jurisdictional error. The power to extend time in s 477A(2) Section 477A provides relevantly: "(1) An application to the Federal Court for a remedy to be granted in exercise of the court's original jurisdiction under paragraph 476A(1)(b) or (c) in relation to a migration decision must be made to the court within 35 days of the date of the migration decision. The Federal Court may, by order, extend that 35 day period as the Federal Court considers appropriate if: an application for that order has been made in writing to the Federal Court specifying why the applicant considers that it is necessary in the interests of the administration of justice to make the order; and the Federal Court is satisfied that it is necessary in the interests of the administration of justice to make the order." The "may" in the chapeau to s 477A(2) confers an authority to exercise the jurisdiction conferred under s 476A(1)(b) or s 476A(1)(c) of the Act, and is not merely facultative in nature5. The power is discretionary in the sense that it involves an evaluative judgment as to a state of satisfaction6. At a high level of generality, it may be accepted that the purpose of a power to extend time is "to eliminate the injustice a prospective [applicant] might suffer 5 Ex parte McGavin; Re Berne (1945) 46 SR (NSW) 58 at 60-61; Ward v Williams (1955) 92 CLR 496 at 507; Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 cf Norbis v Norbis (1986) 161 CLR 513 at 518. by reason of the imposition of a rigid time limit within which an action was to be commenced"7. However, what amounts to injustice in this context is not obvious. The text of s 477A reveals a legislative intention to restrict the Federal Court's exercise of its original jurisdiction under s 476A(1)(b) and (c) by a 35 day time limit on applications, and to ameliorate injustice that might result from that time limit by allowing that time to be extended only in cases where a judge has reached the state of satisfaction in s 477A(2)(b). On its face, the power conferred by s 477A(2) is unfettered except by the requirements of a written application in conformity with s 477A(2)(a) and the Court's satisfaction that an order extending time "is necessary in the interests of the administration of justice"8. Other than the "interests of the administration of justice", there are no mandatory relevant considerations, whether express or to be implied from the "subject-matter, scope and purpose" of the Act9. The focus of s 477A(2)(b) is not on the interests of the applicant, but the broader interests of the administration of justice10. So framed, the paragraph allows the Court to look at a myriad of facts and circumstances, including the length of the applicant's delay, reasons for the delay, prejudice to the respondent, prejudice to third parties and the merits of the underlying application. The level of satisfaction for the Court to reach is not low: the Court must be satisfied not just that an extension of time is desirable, but that it is needed in the interests of the administration of justice. In the absence of mandatory considerations for determining whether his Honour had the state of satisfaction required by s 477A(2)(b), the primary judge properly referred to the well established principles guiding decisions whether to extend time under s 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) that were stated by Wilcox J in Hunter Valley Developments Pty Ltd v 7 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553, quoting Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628 at 635. 8 CZA19 v Federal Circuit Court of Australia (2021) 285 FCR 447 at 452 [19]; WZASS v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2021) 282 FCR 516 at 522-523 [29]-[33]. SZUWX v Minister for Immigration and Border Protection (2016) 238 FCR 456 at 458 [11]-[12], 459 [18], [19]; Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40. 10 cf BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 421-422 [15]. Cohen11. Those principles, which are non-exhaustive of the factors that may be relevant to an extension of time under s 477A(2), include that "[t]he merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted"12. Guidelines for the proper exercise of the power in s 477(2) of the Act (which is in relevantly similar terms to s 477A(2)) were stated by the Full Court of the Federal Court in DHX17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs13. In particular, the Full Court stated that an evaluation of the merits of the proposed substantive application that goes further than an "impressionistic evaluation of the [applicant's] proposed ground of review, strongly suggests that it misconceived its function or power and acted in excess of its jurisdiction"14. The Court added that "the decisional process of exercising the discretion in s 477(2) neither requires nor warrants anything more than an impressionistic consideration of the proposed grounds of review" and, if "a court seeks to assess the merits of the proposed grounds of review against a standard of whether they would ultimately succeed on the hearing of the application, the conclusion will usually be drawn that it has misconceived its function and or power"15. The reasoning of the Full Court in DHX17 was informed by the earlier decision of Mortimer J in MZABP v Minister for Immigration and Border Protection concerning s 477(2)16, endorsed on appeal by a different Full Court17. In MZABP, Mortimer J noted that the subject matter of an application under (1984) 3 FCR 344 at 348-349, affirmed in Parker v The Queen [2002] FCAFC 133 at [6]; Mentink v Minister for Home Affairs [2013] FCAFC 113 at [2], [33]-[36]; BQQ15 v Minister for Home Affairs [2019] FCAFC 218 at [33]; Porter v Ghasemi (2021) 286 FCR 556 at 566 [40]. 12 Hunter Valley Developments (1984) 3 FCR 344 at 349. (2020) 278 FCR 475 at 492 [64]. 14 DHX17 (2020) 278 FCR 475 at 493 [68]. 15 DHX17 (2020) 278 FCR 475 at 493 [68], 495 [76]. 16 DHX17 (2020) 278 FCR 475 at 488-489 [47]-[53]; MZABP (2015) 242 FCR 585 at 17 MZABP v Minister for Immigration and Border Protection (2016) 152 ALD 478 at s 477(2) is not whether the applicant will ultimately be successful in challenging the decision under review18. Her Honour considered that the "correct approach" to the assessment of the merits of the proposed application, for the purpose of deciding whether to extend time, "may be expressed by the use of language such as whether a ground is 'arguable', 'reasonably arguable', 'sufficiently arguable' or has 'reasonable prospects of success'"19. Her Honour also expressed the view that "[i]f a judge travels beyond an examination of the grounds at what should be a reasonably impressionistic level ... into a fuller consideration of the arguments for and against each ground of review ... that is not a function appropriate to a discretion such as that contained in s 477(2)"20. Underlying Mortimer J's reasoning was an analysis of the nature of the power conferred by s 477(2). Her Honour considered the legislative history and extrinsic materials but concluded that they shed no particular light on the content of the phrase "in the interests of the administration of justice"21. Ultimately, her Honour characterised the judgment to be made under s 477(2)(b) as involving a conclusion that "it is appropriate, or fair and equitable, that a litigant should have the opportunity for which the legislative scheme provides: namely, a review of the lawfulness of the decision said to affect the litigant, conducted in accordance with judicial process and subject to considered judicial determination"22. Her Honour also expressed the view that it will seldom be appropriate to refuse to extend time where a ground of review is properly described as weak as opposed to hopeless, citing the observation of French J in Seiler v Minister for Immigration, Local Government and Ethnic Affairs, made in relation to s 11 of the Administrative Decisions (Judicial Review) Act, that "a strong case may be a positive factor in favour of the grant of extension, but an apparently weak case cannot be treated as a factor weighing against it"23. French J's observation in Seiler cannot be applied to the operation of s 477A(2) without regard to the important fact that the power considered by his Honour did not require the state of satisfaction set out in s 477A(2)(b). Even so, it 18 MZABP (2015) 242 FCR 585 at 598 [63]. 19 MZABP (2015) 242 FCR 585 at 598 [63]. 20 MZABP (2015) 242 FCR 585 at 598 [62]. 21 MZABP (2015) 242 FCR 585 at 594 [47]-[50]. 22 MZABP (2015) 242 FCR 585 at 596 [56]. 23 MZABP (2015) 242 FCR 585 at 599 [65], quoting Seiler (1994) 48 FCR 83 at 98. may be accepted that, in determining what is necessary in the interests of the administration of justice for the purposes of s 477A(2) (or s 477(2)), it will often be appropriate to assess the merits of the proposed grounds of review at a "reasonably impressionistic level"24. That is because the interests of justice are likely to be advanced by granting an extension of time to an application with some merit, depending, of course, on other relevant factors. In this regard, it may be relevant, as Mortimer J observed25, that an extension of time will confer upon the applicant not only the right to a determination of their substantive application on the merits but also a right of appeal from that judgment, if adverse to the applicant26. However, and as the plaintiff accepted, there will be circumstances in which it is appropriate for the Court to engage in more than an impressionistic assessment of the merits. For example, if the delay is lengthy and unexplained, the applicant may be required to show that their case is strong or even "exceptional"27. In such a case, a proper exercise of the power conferred by s 477A(2) will not require the judge to confine their consideration of the merits to an assessment of what is "reasonably arguable" or some similar standard. In other cases, the proposed ground of review may be hopeless but it may be necessary to examine the proposed application in some detail to reach that conclusion28. The broad power in s 477A(2) does not prevent a judge from undertaking such an examination and from relying upon that determination to refuse an extension of time. It follows that the Full Court in DHX17 was wrong to say that "the decisional process of exercising the discretion in s 477(2) [here, s 477A(2)] neither requires nor warrants anything more than an impressionistic consideration of the proposed grounds of review"29. As the merits of a proposed application are a 24 CZA19 v Federal Circuit Court of Australia (2021) 285 FCR 447 at 452 [19]. 25 MZABP (2015) 242 FCR 585 at 597 [58]. 26 Federal Court of Australia Act 1976 (Cth), s 24(1)(a). 27 cf, for example, Vella v Minister for Immigration and Border Protection (2015) 90 ALJR 89 at 90 [3]; 326 ALR 391 at 392, citing Re Commonwealth; Ex parte Marks (2000) 75 ALJR 470 at 474 [13]; 177 ALR 491 at 495 citing Gallo v Dawson (1990) 64 ALJR 458 at 459; 93 ALR 479 at 481. 28 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 29 DHX17 (2020) 278 FCR 475 at 493 [68]. permissible consideration, it is within the Federal Court's jurisdiction under s 477A(2) to have regard to that factor in such manner as it considers appropriate in the circumstances. Put another way, s 477A(2) entrusts to the Federal Court the function of identifying and formulating the interests of the administration of justice and how they should be weighed and assessed, including by reference to the merits of the proposed application30. The opinion expressed by the Full Court in DHX17, that a judge who undertakes more than an impressionistic evaluation of the underlying merits of the applicant's case is likely to commit jurisdictional error, was mistaken. In this case, there is no basis to conclude that the primary judge's consideration of the plaintiff's proposed ground of review involved error. His Honour considered the substance of the ground of review and concluded that it lacked merit. His Honour's reasons say nothing to suggest that this consideration involved the identification of any issue that might have had merit, and the plaintiff did not point to any such issue. Nor, contrary to the example posited by Mortimer J in MZABP31, do his Honour's reasons suggest that the primary judge would only have concluded that it would be necessary in the interests of the administration of justice to extend time if his Honour was persuaded that the proposed ground of review would succeed. It was permissible, and in this case appropriate, for the primary judge to assess whether the proposed ground of appeal had any merit in order to decide the extension of time application. Having failed to be satisfied that the proposed ground had any merit, it was open to his Honour to fail to be satisfied that it was necessary in the interests of the administration of justice to grant an extension of time. Conclusion The plaintiff's amended application should be dismissed with costs. 30 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 572 [67]. (2015) 242 FCR 585 at 599 [68]. Gordon EdelmanJ GORDON, EDELMAN AND STEWARD JJ. The plaintiff, a citizen of New Zealand, held a Class TY Subclass 444 Special Category (Temporary) visa. On 2 September 2019, the then Minister for Home Affairs32 ("the Minister") cancelled the plaintiff's visa pursuant to s 501(3)(b) of the Migration Act 1958 (Cth) on the basis that the Minister reasonably suspected that the plaintiff did not pass the character test and was satisfied that the cancellation of his visa was in the national interest ("the Minister's decision"). The plaintiff had 35 days from the date of the Minister's decision to file an application in the Federal Court of Australia to seek review of the Minister's decision pursuant to s 476A(1)(c) of the Migration Act33. Any application was, therefore, due to be filed by 7 October 2019. On 1 November 2019, some 25 days late, the plaintiff applied to the Federal Court pursuant to s 477A(2) of the Migration Act for an extension of time in which to file an application for review of the Minister's decision under s 476A. An affidavit affirmed by the plaintiff's solicitor and filed in support of the application for an extension of time explained the delay. An amended draft originating application for review of the Minister's decision was annexed to the affidavit. The Minister opposed the extension of time. On 8 October 2020, the primary judge heard the application for an extension of time34 and, in the event that an extension of time was granted, the substantive underlying application. The plaintiff's proposed ground of review was fully argued. On 24 August 2021, the primary judge refused the application for an extension of time on the basis that he was not persuaded that the proposed ground of review had any merit. On 17 September 2021, the plaintiff filed an application for a constitutional or other writ in this Court's original jurisdiction. The plaintiff sought a writ of certiorari to quash the orders of the primary judge made on 24 August 2021 and a writ of mandamus that the primary judge determine the plaintiff's application for an extension of time pursuant to s 477A(2) of the Migration Act according to law. 32 Now the Minister Multicultural Affairs. for Immigration, Citizenship, Migrant Services and 33 Migration Act, s 477A(1). 34 There was a separate application before the primary judge for an extension of time under s 477(2) of the Migration Act in a proceeding that was transferred to the Federal Court from the Federal Circuit Court of Australia. That application is not in issue in this case. Gordon EdelmanJ The plaintiff had no right to bring an appeal, or to seek leave or special leave to appeal, in either the Full Court of the Federal Court or this Court, from the decision of the primary judge to refuse to grant an extension of time under s 477A(2)35. On 9 December 2021, Gageler J granted leave to the plaintiff to file an amended application for a constitutional or other writ and referred the amended application for hearing by the Full Court. The sole ground raised in the amended application is that the primary judge erred in law in failing to assess whether, in respect of the plaintiff's proposed ground of review of the Minister's decision, "the [p]laintiff's claim had reasonable prospects of success so as to justify the grant of an extension of time pursuant to s 477A(2) of the [Migration Act]" (emphasis added). That is, the plaintiff submitted that, in the particular circumstances of this case, because the primary judge went further and undertook a more complete review of the merits of the proposed ground of review, the primary judge had misapprehended or misconceived the nature and purpose of the statutory power in s 477A(2) of the Migration Act and therefore committed jurisdictional error. The plaintiff did not contend in this Court that his underlying substantive review ground had any reasonable prospects of success or that it should have been accepted by the primary judge. The plaintiff's amended application for a constitutional or other writ should be dismissed. Statutory framework Section 476A(1)(c) of the Migration Act, under the heading "Limited jurisdiction of the Federal Court", relevantly provides that despite any other law, including s 39B of the Judiciary Act 1903 (Cth) and s 8 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), "the Federal Court has original jurisdiction in relation to a migration decision" if "the decision is a privative clause decision[36], or purported privative clause decision, 35 See Migration Act, s 476A(3)(b); see also s 476A(4); Federal Court of Australia Act 1976 (Cth), s 33(2). to be made, or required 36 "[P]rivative clause decision" means "a decision of an administrative character made, proposed the case may be, under [the Migration Act] or under a regulation or other instrument made under [the Migration Act] (whether in the exercise of a discretion or not), other than a decision referred to" in s 474(4) or (5): Migration Act, s 474(2); see also s 5(1) para (a) of the definition of "migration decision" and definition of "privative clause decision". to be made, as Gordon EdelmanJ made personally by the Minister under section 501, 501A, 501B, 501BA, 501C or 501CA" (emphasis added). The Minister's decision was such a decision. Section 476A(3)(b) provides that, despite s 24 of the Federal Court of Australia Act 1976 (Cth), "an appeal may not be brought to the Federal Court from ... a judgment of the Federal Court that makes an order or refuses to make an order under subsection 477A(2)". Section 477A, headed "Time limits on applications to the Federal Court", relevantly provides: "(1) An application to the Federal Court for a remedy to be granted in exercise of the court's original jurisdiction under paragraph 476A(1)(b) or (c) in relation to a migration decision must be made to the court within 35 days of the date of the migration decision[37]. The Federal Court may, by order, extend [the] 35 day period [prescribed in s 477A(1)] as the Federal Court considers appropriate an application for that order has been made in writing to the Federal Court specifying why the applicant considers that it is necessary in the interests of the administration of justice to make the order; and the Federal Court is satisfied that it is necessary in the interests of the administration of justice to make the order." (emphasis added) Jurisdictional error? The specific question raised in this proceeding is whether the primary judge fell into jurisdictional error by misconceiving the nature of the function he was performing in deciding whether or not to make an order for an extension of time under s 477A(2). The answer to that question depends on the proper construction of s 477A(2). The proper construction of s 477A(2) is to be resolved "by applying the fundamental principles of statutory interpretation, which require 37 "[D]ate of the migration decision" relevantly means "the date of the written notice of the decision or, if no such notice exists, the date that the Court considers appropriate": see Migration Act, ss 477(3)(d) and 477A(3). Gordon EdelmanJ reading the text of the relevant provisions in their context" and having regard to statutory purpose38. Broad discretion Section 477A(2) confers a broad discretion on the Federal Court to extend the 35-day time limit imposed by s 477A(1) for the filing of an application to the Federal Court for review of a migration decision. Section 477A(2) provides that the Federal Court "may", by order, extend "considers appropriate" if two conditions are met. The first condition is that "an application for that order has been made in writing to the Federal Court specifying why the applicant considers that it is necessary in the interests of the administration of justice to make the order"39. The second condition is that "the Federal Court is satisfied that it is necessary in the interests of the administration of justice to make the order"40. The second condition is of particular relevance in this proceeding. the 35-day period as Purpose of s 477A(2) Before considering the second condition further, it is convenient to say something about the purpose of s 477A(2), as statutory purpose occupied a significant place in the plaintiff's argument that the discretion conferred upon the Federal Court by s 477A(2) must be subject to limits in respect of the assessment of the merits of a proposed application. 38 Binsaris v Northern Territory (2020) 270 CLR 549 at 571 [54]. See also North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 581 [11], 605 [81]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14], citing CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408, Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[72] and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 39 Migration Act, s 477A(2)(a). A person must file an application for an extension of time, in accordance with a prescribed form, accompanied by an affidavit stating briefly but specifically the facts on which the application relies and why the application was not filed within time, as well as a draft originating application: Federal Court Rules 2011 (Cth), r 31.23. 40 Migration Act, s 477A(2)(b). Gordon EdelmanJ Section 477A(1) creates a time limit for seeking review of a migration decision. Insofar as that sub-section of s 477A is concerned, the Minister was correct to submit that the evident purpose is to control, in the sense of restrict, the exercise of the original jurisdiction of the Federal Court in relation to a migration decision where an applicant has not made their application within 35 days of the date of that decision. Much like limitation periods enacted in other statutory contexts, the time limit in s 477A(1) no doubt "represents the legislature's judgment that the welfare of society is best served" by judicial review applications being instituted within a particular period of time, notwithstanding that the enactment of that period may result in a good ground of review being defeated41. But while the time limit is "the general rule", a provision (like s 477A(2)) authorising a court to extend time is "the exception to it"42. The exception has a different statutory purpose or object than the general rule. Having regard to the text and context of s 477A(2)43, the purpose of the exception authorising the Federal Court to grant an extension of time is to ensure that the imposition of a time limit on seeking judicial review does not undermine the administration of justice. Put differently, the purpose is to ensure that the provision fixing the time limit within which to seek judicial review (s 477A(1)) does not become an "instrument[] of injustice"44. That purpose is reflected in the two conditions governing the exercise of the power to extend time: (1) that an applicant identify in writing why they consider it "necessary in the interests of the administration of justice" to extend time; and (2) that the Court be satisfied that it is "necessary in the interests of the administration of justice" to extend time. Those are the only express limits on what is otherwise a broadly conferred power to extend time. And that statutory purpose is consistent with the legislative history of the provision45. Since 2001, when provisions were enacted which expressly excluded 41 cf Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553. 42 cf Brisbane South Regional Health Authority (1996) 186 CLR 541 at 553. 43 See Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 389-390 44 cf Gallo v Dawson (1990) 64 ALJR 458 at 459; 93 ALR 479 at 480, citing Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. 45 See Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]. Gordon EdelmanJ the ability of the High Court and the Federal Court to extend the statutorily prescribed time limits for making applications for judicial review of migration decisions46, the capacity to extend time has twice been expanded: first, in 200547, to allow the High Court, the Federal Court and the then Federal Magistrates Court to extend the time limits by up to 56 days if an application for an extension of time was made within 84 days of the decision and the relevant court was satisfied that it was "in the interests of the administration of justice" to extend time; and second, in 200948, to confer a broad discretion on the High Court, the Federal Court and the then Federal Magistrates Court to extend the time limits if an application for an extension of time was made and the relevant court was satisfied that it was "necessary in the interests of the administration of justice" to extend time. The circumstances surrounding those amendments are important. invalid "to then stood was The 2005 amendments were made not long after Plaintiff S157/2002 v The Commonwealth49, in which Callinan J relevantly concluded that s 486A of the Migration Act as purport[ed] to impose a time limit of [35] days within which to bring proceedings under s 75(v) [of the Constitution] in [the High] Court"50. At this time, the Migration Act conferred no power on the High Court (or the Federal Court) to extend time. While Callinan J did not doubt that there was a power to prescribe time limits that were binding on the High Court in relation to the remedies for which s 75(v) provides, he considered limits must be "truly regulatory in nature and not such as to make any constitutional right of recourse virtually illusory"51, amounting in substance to a prohibition52. In respect of s 486A, his Honour emphasised that persons seeking remedies under the extent that such time that 46 See Migration Legislation Amendment Act (No 1) 2001 (Cth), Sch 1, item 4 (relevantly inserting s 486A into the Migration Act); Migration Legislation Amendment (Judicial Review) Act 2001 (Cth), Sch 1, item 7 (relevantly inserting s 477 into the Migration Act). 47 See Migration Litigation Reform Act 2005 (Cth), Sch 1, items 18 and 30-33. 48 See Migration Legislation Amendment Act (No 1) 2009 (Cth), Sch 2, items 1-6. (2003) 211 CLR 476. (2003) 211 CLR 476 at 537 [174]. The other members of the Court in Plaintiff S157 did not rule upon the validity of s 486A: see Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 at 661 [15]. 51 Plaintiff S157 (2003) 211 CLR 476 at 538 [176]. 52 Plaintiff S157 (2003) 211 CLR 476 at 537 [173]. Gordon EdelmanJ s 75(v) may be incapable of speaking English and would often be living or detained in places remote from lawyers and, in those circumstances, the 35-day time limit to constitutional remedies53. would effectively deny applicants recourse His Honour observed that a "substantially longer period might perhaps lawfully be prescribed, or perhaps even [35] days accompanied by a power to extend time"54. The 2005 amendments apparently took up the former suggestion of providing longer time periods55. The 2009 amendments were made after this Court's decision in Bodruddaza v Minister for Immigration and Multicultural Affairs56, which held that the non-extendable time limit on applications for judicial review in s 486A as it stood after the 2005 amendments was unconstitutional. The Court held that s 486A curtailed or limited the right or ability of applicants to seek relief under s 75(v) in a manner that was inconsistent with the place of that provision in the constitutional structure57; its constitutional vice was that it did not "allow for the range of vitiating administrative circumstances which may decision-making"58. The plurality, with whom Callinan J agreed59, observed that some individuals may be unaware of the circumstances giving rise to a possible challenge until after the time provided in s 486A had lapsed – for example, where the decision was procured by a corrupt inducement or affected by actual or apprehended bias; the relevant circumstances may have been unknown or unknowable while the s 486A timescale was in operation but later become known events" may "physically incapacitate the applicant or otherwise, without any shortcoming on the part of the applicant, lead to a failure to move within the stipulated time limit", including where a delay is caused by a failure on the part of a applicant60. The plurality "supervening added affect that the 53 Plaintiff S157 (2003) 211 CLR 476 at 537 [174]-[175]. 54 Plaintiff S157 (2003) 211 CLR 476 at 538 [176]. 55 See Bodruddaza (2007) 228 CLR 651 at 661 [16]. (2007) 228 CLR 651. 57 See Bodruddaza (2007) 228 CLR 651 at 671-672 [53], [55], [60]; see also 676 [79]. 58 Bodruddaza (2007) 228 CLR 651 at 671-672 [55]; see also 676 [79]. 59 Bodruddaza (2007) 228 CLR 651 at 676 [79]. 60 Bodruddaza (2007) 228 CLR 651 at 672 [56]. Gordon EdelmanJ migration adviser61. The plurality held that those examples, while not exhaustive, were "instances where the time limit subvert[ed] the constitutional purpose of the remedy provided by s 75(v)"62. The 2009 amendments sought to address the constitutional issues identified in Bodruddaza and to "enable[] the Courts to protect applicants from possible injustice caused by the time limits"63. Second condition – interests of administration of justice deliberately broad justice" Turning to the second condition, the phrase "necessary in the interests of is "deliberately broad"64. the administration of in s 477A(2)(b) The provision does not contain a list of considerations that must or may be taken into account by the Court in determining whether it is satisfied that it is "necessary in the interests of the administration of justice" to grant an extension of time. As the plaintiff's counsel accepted, there is nothing in the text, context or purpose of s 477A(2) to suggest that, in forming the relevant state of satisfaction referred to in para (b), the Court must have regard to any particular consideration. Other than consideration of whether the grant of the extension of time sought is "necessary in the interests of the administration of justice", which would require having regard to the application made under s 477A(2)(a), there are no mandatory relevant considerations that can be discerned from the "subject-matter, scope and purpose" of the provision65. The text of the provision – the broad terms in which the discretion is conferred – range of potentially there will be a "permissible" considerations, depending on the case. It is, in each case, for the judge hearing the extension of time application to determine which of a range of recognises that 61 Bodruddaza (2007) 228 CLR 651 at 672 [57]. 62 Bodruddaza (2007) 228 CLR 651 at 672 [58]. 63 See Australia, Senate, Parliamentary Debates (Hansard), 3 December 2008 at 7944. See also Australia, Senate, Migration Legislation Amendment Bill (No 2) 2008, Explanatory Memorandum at 2, 12 [68], 13-14 [76]-[77], 15-16 [87], [89]-[90], 64 SZSZW v Minister for Immigration and Border Protection [2018] FCAFC 82 at [27], quoting MZABP v Minister for Immigration and Border Protection (2015) 242 FCR 65 cf Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40. See also WZASS v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2021) 282 FCR 516 at 522-523 [29]-[33]; CZA19 v Federal Circuit Court of Australia (2021) 285 FCR 447 at 452 [19]. Gordon EdelmanJ potentially relevant factors are to be taken into account in evaluating whether the interests of the administration of justice make it necessary for an extension of time to be granted in that particular case66. Factors that are commonly regarded as relevant to the exercise of the Court's discretion to grant an extension of time include67: the length of the delay; the explanation for the delay; any prejudice to the administration of justice as a result of the delay; and the prospects of the applicant succeeding in the application or the "strength or weakness of the case ... sought to be advanced and the utility of advancing that case"68. Although there are no mandatory relevant considerations other than the second condition in s 477A(2) (namely, that it is necessary in the interests of the administration of justice to grant the extension of time), that is not to deny that there may well be circumstances where, by failing to consider a particular consideration in the context of a particular case (such as an explanation for delay), the Court may be found to have misconceived the nature of the power being exercised under s 477A(2)69 or acted outside the bounds of legal reasonableness or rationality70. Those issues do not arise in this case. Arguments about jurisdictional error misconceived The essence of the plaintiff's argument was that: (1) the discretion conferred upon the Federal Court by s 477A(2) "must be exercised within the limits indicated time"71, the subject matter and purpose of the power to extend 66 cf APP17 v Minister for Immigration and Border Protection [2019] FCA 794 at [12]-[13]; Huynh v Federal Circuit Court of Australia (2019) 166 ALD 228 at 237 [39]; DHX17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2020) 278 FCR 475 at 492 [62]. 67 See Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349. 68 See Plaintiff M90/2009 v Minister for Immigration and Citizenship [2009] HCATrans 279 at lines 1264-1265. 69 cf BVW17 v Minister for Immigration and Border Protection [2017] FCA 1508 at [64]; Huynh (2019) 166 ALD 228 at 237 [41]-[43]. 70 See Minister for Immigration and Citizenship v Li (2013) 249 CLR 332. 71 Relying on Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473, Brisbane South Regional Health Authority (1996) 186 CLR 541 at 554, Jackamarra v Krakouer (1998) 195 CLR 516 at 539 [66], Wu v The Queen (1999) 199 CLR 99 at 123-124 [70]-[71] and Rozenblit v Vainer (2018) 262 CLR 478 at 491 [40]. Gordon EdelmanJ otherwise the Court will misconceive the nature of the function it is exercising72; and (2) it would be contrary to the subject matter and purpose of the power to extend time for a judge hearing an extension of time application (at least where the delay is minor and has been explained and there is no prejudice to the respondent) to conduct an assessment of the substantive merits of the application, rather than a preliminary or threshold assessment of whether an applicant's proposed ground of review is reasonably arguable. In short, the plaintiff's argument was that "it can never be in the interests of the administration of justice to refuse an extension of time by determining the substantive merits [of a proposed application] if the other factors favour the grant of an extension of time". As was explained in Kirk v Industrial Court (NSW)73, the Court in Craig v South Australia74 gave the following three examples in amplifying what their Honours said about the ambit of jurisdictional error by an inferior court and, in particular, the circumstances when an inferior court acts beyond jurisdiction by entertaining a matter outside the limits of the inferior court's functions or powers75: "(a) the absence of a jurisdictional fact; (b) disregard of a matter that the relevant statute requires be taken to account as a condition of jurisdiction (or the converse case of taking account of a matter required to be ignored); and (c) misconstruction of the relevant statute thereby misconceiving the nature of the function which the inferior court is performing or the extent of its powers in the circumstances of the particular case." (emphasis added) Regarding the last example, the Court in Craig76 observed that "the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern". Although the Federal Court is designated as a "superior court of record"77, the errors described in Craig in the context of inferior courts also constitute jurisdictional error when made by a judge of the Federal Court. The amenability 72 Relying on Craig v South Australia (1995) 184 CLR 163 at 177-178. (2010) 239 CLR 531 at 573-574 [71]-[73]. (1995) 184 CLR 163 at 177-178. 75 Kirk (2010) 239 CLR 531 at 574 [72], citing Craig (1995) 184 CLR 163 at 177-178. (1995) 184 CLR 163 at 178, quoted with approval in Kirk (2010) 239 CLR 531 77 Federal Court of Australia Act, s 5(2). Gordon EdelmanJ of judicial review for such errors "does not depend upon the court of which the judge is a member being an 'inferior' court, but upon the jurisdiction of the court being limited"78. But not every error of law made by a court involves jurisdictional error79. As the Court explained in Craig80, "the ordinary jurisdiction of a court of law encompasses authority to decide questions of law, as well as questions of fact, involved in matters which it has jurisdiction to determine". The discharge of that ordinary jurisdiction – whether by a superior court such as the Federal Court or by an inferior court – routinely involves "[t]he identification of relevant issues [and] the formulation of relevant questions"81. Where a court is "entrusted with authority to identify, formulate and determine"82 the relevant issues and questions (as the Federal Court is under s 477A(2)83), demonstrable error in the identification of the issues or the formulation of the questions will not ordinarily constitute jurisdictional error, but will be an error "within jurisdiction"84. The plaintiff identified six reasons why an assessment of the substantive (rather than impressionistic) merits of a proposed application in the context of determining whether to exercise the discretion to extend time under s 477A(2) in the circumstances of a case such as the present involves jurisdictional error (namely, by the Court misconceiving the nature of the function it is performing and, therefore, acting in excess of jurisdiction). It is necessary to address each in turn. First, the plaintiff's argument started from the premise that s 477A(2) is in the nature of a "gateway provision", pursuant to which the Court must determine whether the application should proceed to a full and final determination 78 Kirk (2010) 239 CLR 531 at 583 [107]. 79 Craig (1995) 184 CLR 163 at 180; Kirk (2010) 239 CLR 531 at 577 [85]. (1995) 184 CLR 163 at 179, quoted with approval in Kirk (2010) 239 CLR 531 81 Craig (1995) 184 CLR 163 at 179. 82 Craig (1995) 184 CLR 163 at 180. 83 cf AUK15 v Minister for Immigration and Border Protection [2016] HCATrans 36 at lines 1597-1609. 84 Craig (1995) 184 CLR 163 at 180. See also R v Gray; Ex parte Marsh (1985) 157 CLR 351 at 390; Kirk (2010) 239 CLR 531 at 572-573 [67]-[68]. Gordon EdelmanJ of the merits; and undertaking such a full and final determination at the "gateway stage" is inconsistent with the statutory scheme. As the Minister submitted, even assuming that the time limit imposed by s 477A(1) operates as a limitation on the scope of the Federal Court's jurisdiction85, that would not mean that it is a jurisdictional error for the Court to go beyond a threshold assessment of the merits of the substantive application in circumstances where there is nothing in s 477A limitation. Describing s 477A(2) as a "gateway provision" does not assist in identifying the limits of the power. It does not tell you whether a Federal Court judge who identifies a wrong issue or asks a wrong question falls into jurisdictional error. imposes such a that Moreover, there are real difficulties in any attempt to draw a strict line between a "gateway" consideration and a full and final determination on the merits. As Barwick CJ observed in General Steel Industries Inc v Commissioner for Railways (NSW)86, sometimes argument, "perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed". Second, and the context of s 477A(2) being said to be a "gateway provision", the plaintiff submitted that there is nothing in the text or context of s 477A(2) to suggest that Parliament intended that the Court could or should use the power to extend time as an "alternative mechanism" for determining the substantive application itself. It may be accepted that, in imposing a time limit for seeking judicial review, Parliament did not intend that the Federal Court would undertake a full assessment of the substantive merits of every proposed application. But that says nothing about whether, in determining whether the Court is satisfied that it is "necessary in the interests of the administration of justice" to extend time under s 477A(2)(b), the Court would commit jurisdictional error by undertaking more than an impressionistic assessment of the merits of a proposed application. If a judge determining whether to grant an extension of time under s 477A(2) asked themselves, independently of other factors, "should the applicant lose on the merits of their proposed substantive application?" and resolved the application for an extension of time by reference only to the substantive merits of the application, it may be that they would have misconceived the nature of the function which they were performing in the sense explained in Craig87. 85 cf Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 377, 385, 388, 394; Wei v Minister for Immigration and Border Protection (2015) 257 CLR 22 (1964) 112 CLR 125 at 130. (1995) 184 CLR 163 at 177-178. Gordon EdelmanJ But that does not mean that, in circumstances where other factors favour the grant of an extension of time, consideration of the merits of a proposed application beyond an impressionistic analysis of whether the proposed application is "reasonably arguable" necessarily involves jurisdictional error. Third, having regard to the purpose of s 477A(2) being to ameliorate injustice arising from strict application of the time limit, the plaintiff contended that where the other discretionary factors – such as the reasons for the delay, the extent of the delay and the existence (or otherwise) of prejudice to the respondent – do not weigh against the grant of an extension of time, the applicant is entitled to be placed on an equal footing with those who brought their applications within time. In this regard, the plaintiff emphasised that applicants who commence proceedings within time are in a position to advance their case in the usual way to a final hearing and, thereafter, may access any available appellate process. The plaintiff submitted that, subject to other discretionary factors, an applicant with an arguable claim brought out of time should have the same opportunity88. That argument finds no support in the text or context of s 477A(2); it would involve reading in a gloss on the statutory text, which (as explained) deliberately confers a broad discretion on the Federal Court89. It is for the judge hearing the application to determine which considerations bear on the interests of the administration of justice in the particular case. The approach urged by the plaintiff would essentially involve establishing a default rule whereby if a short delay is adequately explained and there is no prejudice to the respondent, an extension of time would have to be granted if the application was reasonably arguable. It would involve drawing a distinction between the limits on the exercise of the power to extend time under s 477A(2) by dividing all applications for extensions of time into two categories. In cases of the kind just described, the Court would exceed jurisdiction by considering the merits of a proposed application beyond an impressionistic analysis of whether the proposed application is "reasonably arguable". But in cases outside that category, the Court would act within jurisdiction if it engaged in a more detailed assessment of the merits of a proposed application. There is no basis in the text, context or purpose of s 477A(2) for introducing such a default rule or for drawing a sharp distinction between the limits on the Federal Court's power by funnelling applications for an extension of time into two categories. 88 cf MZABP (2015) 242 FCR 585 at 596 [56]. 89 cf Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 Gordon EdelmanJ More generally, the plaintiff gave little recognition to the fact that, by imposing a statutory time limit, Parliament has evinced a clear intention to place an applicant who fails to comply with the time limit in a different position to applicants who have complied. As Wilcox J put it in Hunter Valley Developments Pty Ltd v Cohen90, "it is the prima facie rule that proceedings commenced outside [the relevant] period will not be entertained". Fourth, the plaintiff emphasised that it was unlikely that Parliament would have intended that a refusal to extend time under s 477A(2) could foreclose the statutory right of appeal to the Full Court of the Federal Court that would otherwise be available under s 24 of the Federal Court of Australia Act unless the claim was not reasonably arguable, or where other factors – such as the reason for and extent of the delay – weighed in favour of refusing the extension of time. Moreover, the plaintiff submitted that Parliament is unlikely to have intended a result whereby it was left to the Court, in its discretion, whether to engage in a more substantive assessment of the merits or not as part of the determination of an application for an extension of time, because such a construction would result in "arbitrary outcomes" whereby the availability of appellate review depended on whether the particular judge decided to descend into a more detailed examination of the merits or not. Such a contention is contrary to the text, context and purpose of s 477A(2). Parliament left it to the judge hearing a particular application for an extension of time, in their discretion, to make an assessment of the extent to which the merits of the application (along with the range of other potentially relevant considerations) are to be taken into account in determining whether they are satisfied that an extension of time is necessary in "the interests of the administration of justice" in the case. In assessing whether it is necessary in the interests of the administration of justice to grant the extension under s 477A(2), the merits of the underlying application may be, and often are, considered and given considerable weight. In some, maybe most, extension of time applications, the judge can and does consider the merits of the underlying application at what might be described as a threshold level – inquiring whether the proposed grounds of review enjoy reasonable prospects of success. In order to resolve the facts and issues raised in an application for an extension of time, however, the judge may sometimes consider that it is necessary to have regard to the merits of the proposed application in greater detail. Indeed, in assessing some extension of time applications, a failure to consider the merits of the proposed application in greater detail might give rise to error. (1984) 3 FCR 344 at 348. Gordon EdelmanJ The plaintiff's suggestion that there may be "arbitrary outcomes" where the availability of appellate review depends on the extent to which a judge considers it necessary to descend into the merits of the substantive application is misplaced. Parliament has evinced a clear intention to prevent appellate review of extension of time decisions in s 476A(3) and (4) of the Migration Act. It is simply a consequence of the legislative scheme that some applicants for an extension of time will be successful, so that their substantive application goes on to be determined with the consequence that they have an entitlement to appeal an unsuccessful outcome, while other applicants will be unsuccessful and not able to appeal the decision. That is not arbitrary. And, in any event, an applicant who does not obtain an extension of time can seek relief in the Federal Court pursuant to s 39B of the Judiciary Act or in the High Court's original jurisdiction (as the plaintiff did in this case). Redress for such an applicant is not completely unavailable91. The "injustice" identified by the plaintiff was essentially that if a judge considering whether it is necessary in the interests of the administration of justice to grant an extension of time in a particular case assesses the substantive merits of a proposed application at more than a reasonably impressionistic level, the applicant is limited to the narrower grounds available for judicial review of a judicial decision, whereas if the judge assesses the merits of the proposed application at a threshold level and grants the extension, then the substantive application is filed and heard on its merits and the losing party has a right of appeal under s 24 of the Federal Court of Australia Act. That is a consequence of the statutory regime; it is not a basis for concluding that the former approach involves jurisdictional error. Further, the usual and proper approach of judges determining applications for an extension of time will ensure that such injustice is unlikely. Where there is not much force in the factors other than the merits which weigh against an extension of time so that the judge hears the application for an extension of time together with the substantive application, then even if the substantive application is unsuccessful the proper course may often be to grant an extension of time if the underlying claim had reasonable prospects of success. Fifth, it was said that the application of a standard that a proposed ground of review be reasonably arguable, assessed on an impressionistic basis, is consistent with the common law's reluctance to deny aggrieved persons with an arguable complaint access to the courts – a concern which is particularly acute in 91 SZRIQ v Federal Magistrates Court of Australia (2013) 236 FCR 442 at 456 [69]. See also SZTES v Minister for Immigration and Border Protection [2015] FCA 719 Gordon EdelmanJ the migration context. The plaintiff relied, in particular, on observations made by the Full Court of the Federal Court in DHX17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs92. The plaintiff's reliance on the sensitivity of the common law to the premature curtailment of a person's ability to access the courts is misplaced; it does not bear on the issue raised by the application – whether the Federal Court will commit jurisdictional error by engaging in more than an impressionistic assessment of the merits of a proposed application – and it impermissibly seeks to elevate principles expressed in different decision-making contexts into a limitation on the exercise of the broad discretionary power conferred on the Federal Court under s 477A(2). In any event, the premise of this submission was misconceived. There is a clear difference between the denial of a person's access to the courts and the regulation of that access by reference to reasonable requirements of timeliness in the circumstances. Section 477A(2) concerns the latter, not the former. Sixth, and finally, the plaintiff drew attention to the fact that his approach to the merits of a proposed application in the context of an application for an extension of time was consistent with the manner in which provisions affording a discretion to extend time have been traditionally understood. He submitted that, given s 477A(2) was inserted into the Migration Act against this considerable body of case law concerning other powers to extend time, it is likely that Parliament intended the discretion conferred on the Federal Court by s 477A(2) to be exercised in the same way. The plaintiff relied on Mortimer J's observations in MZABP v Minister for Immigration and Border Protection93, where her Honour explained that the inappropriateness of requiring an applicant, in effect, to establish that their proposed grounds of review "will succeed" was made clear more than 20 years earlier by French J Immigration, Local Government and Ethnic Affairs94 in the context of the discretion to extend time conferred under s 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The plaintiff also referred to cases in other statutory contexts where the same approach to the assessment of the merits has been adopted95. None of the cases relied upon by the plaintiff from other statutory contexts in Seiler v Minister for (2020) 278 FCR 475 at 493-494 [68]-[70], 494-495 [75]. (2015) 242 FCR 585 at 598-599 [65]. (1994) 48 FCR 83 at 98. See also Barrett v Minister for Immigration, Local Government and Ethnic Affairs (1989) 18 ALD 129 at 130-131. 95 See Tomko v Palasty [No 2] (2007) 71 NSWLR 61 at 65 [14], 75 [58]; Renshaw v New South Wales Lotteries Corporation Pty Ltd [2021] NSWCA 41 Gordon EdelmanJ involved judicial review for jurisdictional error on the part of a court. Observations in those cases about the desirable or proper approach to assessing the merits of a proposed application do not bear upon whether the Federal Court will exceed its jurisdiction in not following that approach in the context of considering an application for an extension of time under s 477A(2). Further, and no less significantly, the unworkability of the approach propounded by the plaintiff is apparent both generally and by reference to the facts of this case. The plaintiff did not suggest that it will never be permissible to consider the merits of an application, beyond whether it is reasonably arguable, in determining whether to grant an extension of time. He accepted that, for example, "if the delay is a long one and there is no proper explanation for that delay, then the Court may be minded to refuse an extension of time unless an exceptional case is demonstrated", and "[t]he strength of the claim may, in these circumstances, tip the balance in favour of the grant of an extension of time". But he submitted that because the present case "involved a minor, and explained, delay" that issue does not arise. A bright line for the permissibility of considering the merits of a case at more than an impressionistic level was sought to be drawn by reliance upon concepts such as "proper explanation" and "minor" delay. As the Minister correctly submitted, the difficulty with the plaintiff's argument is that it imposes a bright line distinction in the construction of s 477A which distinction is dependent on the application of the facts of a particular case to these evaluative concepts. That is unprincipled and unworkable. for his contention The plaintiff drew particular support that, where the Federal Court goes beyond an assessment of the merits on an impressionistic basis when considering an application for an extension of time under s 477A(2), the more detailed consideration of the merits strongly suggests that the Court has misconceived its function or power and acted in excess of jurisdiction, from the decision of Mortimer J in MZABP96 (which was relevantly endorsed by the Full Court of the Federal Court on appeal97) and the Full Court of the Federal Court's decision in DHX1798. Although there are statements in those authorities to the effect that the assessment of the merits of a proposed application should be conducted at a reasonably impressionistic level, there is not a consistent line of authorities in the Federal Court to the effect that a failure to do so (by conducting a fuller assessment of the merits) necessarily will constitute (2015) 242 FCR 585 at 597-598 [62]-[63]. 97 MZABP v Minister for Immigration and Border Protection (2016) 152 ALD 478 at 486 [38]; see also 482-484 [21]-[23]. (2020) 278 FCR 475 at 493 [68], 496-497 [82]-[83]. Gordon EdelmanJ jurisdictional error99. As these reasons have shown, the latter proposition is not correct. It is inconsistent with the text, context and purpose of s 477A(2) of the Migration Act. In sum, it is within the ordinary jurisdiction of the Federal Court (in the sense discussed in Craig100) to identify the relevant issues and to formulate the relevant questions in determining whether the Court is satisfied that it is necessary in the interests of the administration of justice to extend time under s 477A(2) of the Migration Act. Where an application for an order under s 477A(2) has been made to the Federal Court "specifying why the applicant considers that it is necessary in the interests of the administration of justice to make the order"101, the question for the Federal Court – the statutory question – is whether the Court is satisfied that it is necessary in the interests of the administration of justice to grant the extension. There are no mandatory considerations. A number of factors may be relevant and it is for the judge hearing the application to decide what is both necessary and sufficient to resolve the issues raised in the application. In assessing whether it is necessary in the interests of the administration of justice to grant the extension under s 477A(2), the merits of the underlying application may be, and often are, considered and given considerable weight. In some, maybe most, extension of time applications, the judge can and does consider the merits of the underlying application at what might be described as a threshold level – inquiring whether the proposed grounds of review enjoy reasonable prospects of success. But in order to resolve the facts and issues raised in an application, the judge may sometimes consider that it is necessary to have regard to the merits of the underlying application in greater detail. In exercising the power conferred by s 477A(2) of the Migration Act to refuse to grant an extension of time in which a person may seek judicial review of a "migration decision", subject to according the parties procedural fairness and acting within the bounds of legal reasonableness and rationality, when answering the statutory question posed by s 477A(2) – whether the Federal Court is satisfied that it is necessary in the interests of the administration of justice to grant the extension – the Federal Court does not ordinarily fall into jurisdictional error by concluding that it is not necessary in the interests of the administration of justice to grant an extension of time after having undertaken something more than a 99 cf SZTES [2015] FCA 719 at [90]; DBA16 v Minister for Home Affairs [2018] FCA 1777 at [60]; Huynh (2019) 166 ALD 228 at 240 [58], 241-242 [64]-[69]; CZA19 (2021) 285 FCR 447 at 452 [19]. 100 (1995) 184 CLR 163 at 178-179. 101 Migration Act, s 477A(2)(a). Gordon EdelmanJ preliminary or threshold assessment of whether the proposed grounds of review enjoy reasonable prospects of success. Prudential approach That does not deny the utility of the prudential approach often adopted by the Federal Court, when the merits of the underlying claim might be reasonably arguable or require further and more detailed consideration before a concluded view can be formed on the application for an extension of time under s 477A(2), of listing and hearing both the s 477A(2) application and the underlying substantive application at the one time and, where appropriate, in the disposition of those applications, granting leave under s 477A(2) and determining the substantive application. Of course, whether and when a judge may conclude that it is more prudent to grant the extension of time but leave consideration of the full merits of grounds of judicial review for a subsequent hearing is a matter for the judge to decide in the circumstances of the case. That decision may be much affected by whether having a separate hearing about the merits of the substantive application is necessary to give the parties procedural fairness. Conclusion and order In light of the reasoning above, it is unnecessary to consider whether the primary judge's reasoning involved a threshold or impressionistic assessment of the merits of the proposed application. Even if the primary judge did assess the merits at more than a threshold or impressionistic level, in doing so his Honour did not commit jurisdictional error by misconceiving the nature of the function he was performing. For those reasons, the plaintiff's amended application for a constitutional or other writ should be dismissed with costs.

HIGH COURT OF AUSTRALIA CHARLES DELIUS SOMERVILLE ALEXANDER & ORS trading as MINTER ELLISON APPELLANTS AND PERPETUAL TRUSTEES WA LIMITED & ANOR RESPONDENTS Alexander v Perpetual Trustees WA Limited [2004] HCA 7 12 February 2004 Appeal dismissed with costs. ORDER On appeal from Supreme Court of New South Wales Representation: B J Shaw QC and T M Faulkner for the appellants (instructed by Mallesons D F Jackson QC with S D Robb QC for the respondents (instructed by Phillips Fox) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Alexander v Perpetual Trustees WA Limited Contribution – Statutory right of – Trusts – Money received by firm of solicitors from respondent trustees to be held for a specific purpose and in accordance with specific conditions – Misapplication of funds by firm – Breach of trust by firm – Respondent trustees sued by beneficiaries – Firm sued by respondent trustees – Cross-claim by firm against respondent trustees – Whether contribution available – Whether firm liable to beneficiaries for damage – Whether respondent trustees liable to beneficiaries for same damage – Nature of beneficiaries' rights against firm – Proper construction of Wrongs Act 1958 (Vic), Pt IV. Contribution – Statutory right of – Trade practices – Misleading and deceptive conduct – Money received by firm of solicitors from respondent trustees to be held for a specific purpose and in accordance with specific conditions – Misapplication of funds by firm – Misrepresentations by firm – Respondent trustees sued by beneficiaries – Firm sued by respondent trustees – Cross-claim by firm against respondent trustees – Whether contribution available – Whether firm liable to beneficiaries for damage – Whether respondent trustees liable to beneficiaries for same damage. Fair Trading Act 1985 (Vic), ss 11, 37. Wrongs Act 1958 (Vic), Pt IV. GLEESON CJ, GUMMOW AND HAYNE JJ. This appeal is brought from the New South Wales Court of Appeal (Stein JA, Davies AJA, Ipp AJA)1 which upheld the decision of the Supreme Court (Rolfe J)2. The proceedings at trial and in the Court of Appeal involved a range of issues but in this Court the appeal turns upon the construction of Pt IV of the Wrongs Act 1958 (Vic) ("the Act") and its application to a claim for contribution under the statute made by trustees. Part IV of the Act (ss 23A-24AD) is headed "CONTRIBUTION" and ss 23B and 24 operate to create both a new right and a remedy for the recovery of what s 23B identifies as contribution from any person "liable in respect of the same damage" as the claimant for contribution3. The Act has its provenance in British legislation, the Civil Liability (Contribution) Act 1978 (UK) ("the UK Act"), and reference will be made to decisions construing that statute. It is essential to recognise at the outset that both the Act and the UK Act provide for contribution where the claimant and the person from whom contribution is sought are each liable to a common plaintiff. Neither Act provides for contribution between those who may have had some role in an interconnected set of transactions but who are not both liable to a common plaintiff. Nothing in the text of either the Act or the UK Act, or any law reform or other material which preceded either Act, suggests that the aim of the legislation was to provide for contribution between those who were parties to the same transaction or a series of related transactions. It is, therefore, wrong to proceed, whether from general notions of "distributive justice" or otherwise, as if the legislative purpose or object were wider than providing for contribution between those liable to a common plaintiff. These reasons demonstrate that the parties to the appeal in this Court were not liable to a common plaintiff. The Act has no precise analogue in other Australian jurisdictions. The litigation giving rise to this appeal was conducted in the courts of New South Wales, not in those of Victoria. It is not now disputed that Pt IV of the Act was applicable in the New South Wales litigation if its terms otherwise were satisfied. Section 23B(6) states that references in the section to liability in respect of any damage are to liability which has been or could be established in an action 1 Alexander and Ors (t/as Minter Ellison) v Perpetual Trustees WA Ltd and Perpetual Trustee Co Ltd [2001] NSWCA 240; [2002] NSWCA 101. 2 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642. cf James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 64-65 brought in Victoria, and that it is immaterial that any issue in that litigation would be determined, in accordance with the rules of private international law, by reference to the law of a place outside Victoria. The various breaches of trust which were committed appear to have occurred in Victoria4 and, in any event, there are no relevant differences in the principles of trust law in Victoria and New South Wales. The facts The relevant facts are not disputed and may shortly be stated. However, for a proper appreciation of the issues of law which arise it is necessary to bear in mind that there were transactions involving what may be described as two different levels of trusts. There were trusts of which the respondents were trustees, and trusts of which the appellants were trustees. The first respondent, Perpetual Trustees WA Limited ("PTWA"), was a trustee company enjoying special status conferred by the Trustee Companies Act 1987 (WA)5 and the second respondent, Perpetual Trustee Company Limited ("PT"), had that status under the Trustee Companies Act 1964 (NSW)6. The companies were members of what was described in the evidence as the Perpetual Group. PTWA and PT were trustees of certain managed superannuation funds. These trusts may be identified as the first level trusts. Some of the beneficiaries thereunder may themselves have been acting as trustees, for example, of family trusts, but with that level of trusts (if any) we are not concerned. Between 1993 and 1995 a number of beneficiaries under the managed funds directed that moneys be invested by the trustees in EC Consolidated Capital Limited ("ECCCL"). The total amounts so invested were $2,377,400 (by PTWA) and $7,179,700 (by PT). Each investment by PTWA and PT was in the sum of $500,000 or a greater amount; the refusal by ECCCL of investments in a sum less than $500,000 removed the requirement of compliance by ECCCL with the prospectus provisions of the then Corporations Law7. However, the sums cf John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. s 4(1) and Sched 1. s 3(1) and the Third Schedule. 7 See Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 77 ALJR 895 at 897 [4]; 196 ALR 482 at 484. provided by the individual beneficiaries, before they were pooled by PTWA and PT for investment with ECCCL, in each case were less than $500,000. The terms on which the moneys were to be invested by PTWA and PT called for the provision of security by the issue of a bearer certificate of deposit. In breach of their duties as trustees, PTWA and PT failed to ensure that the manner in which the moneys were invested conformed with these terms and, in particular, PTWA and PT did not ensure that the investments were secured by bearer certificates of deposit. On 15 July 1997, ECCCL was placed in liquidation. As a result of the absence of the certificates, the investments were lost. The plaintiffs sue PTWA and PT Forty of the beneficiaries under the managed funds ("the plaintiffs") successfully sued PTWA and PT for breach of trust. The plaintiffs' case was that PTWA and PT had failed in their duties to exercise the same degree of skill and diligence as an ordinary prudent person would exercise in dealing with the property of another, and to ensure that their duties and powers were exercised in the best interests of the members of the managed funds. Rolfe J ordered the relevant respondent to pay to each plaintiff the amount of the plaintiff's investment. The amounts recovered by the plaintiffs in their action against the respondents were, against PTWA $1,744,683, and against PT $2,112,135. No challenge is made in this Court to these findings and orders respecting the liability of the respondents to the plaintiffs. The respondents had paid the investment moneys on each occasion to the appellants ("Minters"), a well-known national firm of solicitors. Minters acted as solicitor for ECCCL. At all relevant times, a partner in Minters' Melbourne office had the carriage of the matter. Minters was obliged to hold the moneys received from the respondents upon trust for, and to the account of, the relevant respondent, with the power (and duty) to disburse the moneys in accordance with the subscription agreements executed by the respondents. The agreements were governed by the law of Victoria. Minters later released the funds to ECCCL in breach of the terms on which it held them. The trust relationship, with respect to these funds, was between Minters as trustee and the respondents as beneficiaries and constituted the second level trusts. It should, however, be noted that the funds paid by the respondents were derived from the first level trusts, of which the respondents were trustees. The particular respects in which, in the action against them by the plaintiffs, the respondents were found to have acted in breach of their duties to the plaintiffs under the first level trusts were: their appointment of Minters as their agent, notwithstanding the potential conflict of interest; the failure of the respondents to make any inquiry from Minters as to whether settlement had been completed regularly and, in particular, whether a bearer certificate of deposit had been obtained as required by the subscription agreements; the failure to seek to inspect the required bearer certificates of deposit. PTWA and PT cross-claim against Minters The respondents each brought successful cross-claims against Minters, which acted in the investment transactions both as agent for the respondents (in which capacity it received the investment funds from the respondents, held them on trust for the respondents, and wrongly disbursed them to ECCCL) and as solicitor for ECCCL. The cross-claim by PTWA was the second cross-claim in the proceedings and that by PT was the third cross-claim. Several points should be noted here. First, no claim in the litigation was made by the plaintiffs against Minters; nor were the plaintiffs joined in either the second or the third cross-claim. Secondly, PTWA and PT sued Minters for breaches of the second level trusts, of which they were the beneficiaries; it was not relevantly to the point that, in turn, PTWA and PT were trustees of the managed funds whence the moneys invested with ECCCL originated. It will be necessary to return to this matter. Thirdly, as has been indicated above, the amounts which Minters received from the respondents included, but were not confined to, the amounts invested for the plaintiffs; the cross-claims were not limited to the amounts invested from the funds of the plaintiffs, but included all amounts invested in ECCCL by the respondents as trustees. Other conduct of Minters in relation to the ECCCL investments is described in the reasons for judgment of this Court in Youyang Pty Ltd v Minter Ellison Morris Fletcher8. There, as in the present case, Minters preferred the interests of its client ECCCL, disregarded its obligations as trustee and paid moneys over without obtaining the necessary bearer certificates of deposit. Rolfe J said in his judgment in the present case9: (2003) 77 ALJR 895; 196 ALR 482. (1998) 29 ACSR 642 at 727. "The continued failure of [Minters] to advise the investor that conforming deposit certificates were not being obtained was, in my opinion, inexcusable." On the cross-claims by PTWA and PT against Minters, Rolfe J made the following orders (which included a component of interest) in favour of the respondents against Minters: Judgment be entered for PTWA against [Minters] in the sum of $3,620,722.00 on terms that PTWA applies that money to replenish the relevant trust funds or to pay the Plaintiffs. Judgment be entered for PT against [Minters] in the sum of $8,818,802.00 on terms that PT applies that money to replenish the relevant trust funds or to pay the Plaintiffs." The form of these orders reflects the circumstance already remarked that the cross-claims extended beyond the funds claimed by the plaintiffs to include all amounts invested by PTWA and PT in ECCCL. The cross-claims against Minters were based on three causes of action: breach of trust, negligence, and misleading and deceptive conduct in breach of the Fair Trading Act 1985 (Vic) ("the Fair Trading Act"). Section 11 thereof forbade the engagement, in trade or commerce, in conduct that was misleading or deceptive or was likely to mislead or deceive and s 37 provided, subject to a time limitation, a remedy for the recovery of the loss or damage suffered by reason of such conduct. Rolfe J found that there were breaches of trust, negligence, and misleading and deceptive conduct. He made the orders set out above on the basis of equitable compensation for breach of trust. In particular, he treated the failure to obtain the required security as causative of the whole of the loss of the amounts invested in ECCCL by the respondents. The present appeal – Minters' cross-claim against PTWA and PT This appeal does not involve a challenge to any of the above aspects of the decision of Rolfe J, which was confirmed by the Court of Appeal. The appeal arises from another branch of the litigation, a cross-claim by Minters against PTWA and PT. Minters, by what was the seventh cross-claim in the action, claimed against PTWA and PT contribution under s 23B of the Act. That claim was rejected by Rolfe J and the Court of Appeal. That rejection is the subject of the present appeal. If its appeal succeeds, Minters seeks the remitter of the proceedings to the Supreme Court of New South Wales for the determination of the amount of contribution it may recover under the Act. As noted above, the plaintiffs did not sue Minters or otherwise seek to establish any liability to them on the part of Minters. However, Minters (for the purposes of its claim to contribution under the Act) asserts the existence of that liability to the plaintiffs (and other investor-beneficiaries) and says that it is entitled by the statute to share that liability with the respondents. The respondents emphasise that it was necessary for Minters to plead in its cross-claim and to prove a direct liability to these investors. In the Court of Appeal and in this Court, it is said that there has been a failure in this respect which is fatal to Minters' case. That submission should be accepted. It is now convenient to turn to the provisions of Pt IV of the Act. Part IV of the Act Part IV, in substantially its present form, was inserted by the Wrongs (Contribution) Act 1985 (Vic) ("the Contribution Act") and came into force on 12 February 1986. Prior to the enactment of that legislation, contribution under the Act was restricted to claims between tortfeasors. Section 24(1)(c) had provided that: "any tort-feasor liable in respect of [damage suffered by any person as a result of a tort (whether a crime or not)] may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage (whether as a joint tort-feasor or otherwise)". The amendments made in 1985 to the Act primarily were designed to remove this restriction and permit, for the first time in Victoria, contribution between persons liable in respect of the same damage where the legal basis of liability arose out of a breach of contract, a breach of trust or otherwise10. No doubt the amendments were also designed to resolve the conceptual and practical difficulties for which the earlier legislation had become notorious11. 10 Explanatory Memorandum, Wrongs (Contribution) Bill. 11 See Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200 at 211-212; James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 59-60 [7], 69-70 [46]. Such reforms were not without precedent. In 1978, the United Kingdom Parliament had enacted the UK Act. This statute, the relevant provisions of which do not extend to Scotland (s 10(3)), removed the restriction then operative on the availability of the statutory right to contribution in areas other than tort12. The UK Act was enacted as a result of a recommendation by the English Law Commission to the effect that13: "statutory rights of contribution should not be confined, as at present, to cases where damage is suffered as a result of a tort, but should cover cases where it is suffered as a result of tort, breach of contract, breach of trust or other breach of duty ... [T]he statutory right to recover contribution should be available to any person liable in respect of the damage, not just persons liable in tort". The recommendations of the Law Commission were adopted with approval by the Chief Justice of Victoria's Law Reform Committee in 1979 and the Contribution Act in large part mirrored the reforms contained within the UK to common The issue currently before the Court is not to be resolved primarily through reference law and equitable principles governing contribution, nor through a misplaced reliance on the circumstance that the areas of liability in respect of which the right to contribution potentially may apply have significantly been widened by the Act. Cautionary observations to like effect were made with respect to the UK Act by the House of Lords in Royal Brompton Hospital NHS Trust v Hammond15. 12 See Law Reform (Married Women and Tortfeasors) Act 1935 (UK), s 6, adopting a recommendation of the Law Revision Committee, Third Interim Report, (1934), Cmd 4637 at 8. 13 Report on Contribution, (1977), No 79 at 23. See also Hong Kong, Law Reform Commission, Report on the Law relating to Contribution between Wrongdoers, (1984) at 50; Ontario, Law Reform Commision, Report on Contribution among Wrongdoers and Contributory Negligence, (1988) at 268; New Zealand, Law Commission, Apportionment of Civil Liability, (1998), No 47 at 1; New South Wales, Law Reform Commission, Contribution between Persons liable for the Same Damage, (1999), No 89 at 51. 14 Victoria, Chief Justice's Law Reform Committee, Contribution, (1979) at 1-2. 15 [2002] 1 WLR 1397 at 1401, 1409-1410, 1417; [2002] 2 All ER 801 at 805-806, The evident remedial purpose of the legislation has been relied upon, in both the United Kingdom and this country16, to support what is said to be a wide or broad interpretation of the statutory right and remedy which it created. Such expressions mask the requirement that the legislation be given its proper construction having regard to its purpose and scope17. The new statutory right and remedy do not operate at large. Rather, they are available only to a party who meets the criteria specified in Pt IV. In Royal Brompton Hospital, Lord Bingham of Cornhill said of the UK Act18: "When any claim for contribution falls to be decided the following questions in my opinion arise. (1) What damage has A suffered? (2) Is B liable to A in respect of that damage? (3) Is C also liable to A in respect of that damage or some of it?" Translated to the present appeal, A represents the plaintiffs, B the respondents, Where a person has suffered damage in connection with some transactions or events involving the wrongful conduct of others, the statutory creation of rights of contribution between the wrongdoers seeks to address the injustice that may result in some cases if the victim, by his or her selection of defendants, could throw the burden of liability on to one or some of the wrongdoers, to the exclusion of the others. A policy of preventing or limiting such injustice will require a legislature to make choices between different methods of giving effect to that policy. Those choices will be reflected in the terms of the legislation. The Act directs attention to a common liability by using in s 23B the expression "in respect of the same damage". This is a narrower concept than that of liabilities arising out of, or by reason of, the same transactions or related transactions. In resolving questions of construction of the legislation, it is not to be assumed that the legislative purpose is always to provide the widest possible sharing of liabilities, actual or potential, real or hypothetical. 16 K v P (J, Third Party) [1993] Ch 140 at 148; Friends' Provident Life Office v Hillier Parker May & Rowden [1997] QB 85 at 102-103, 113; Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 11-12. 17 cf DP v Commonwealth Central Authority (2001) 206 CLR 401 at 417-418 [41]- 18 [2002] 1 WLR 1397 at 1401; [2002] 2 All ER 801 at 806. 19 James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 61 [12]. The construction of Pt IV Section 23B is headed "Entitlement to contribution". Sub-section (1) thereof provides that: "Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise)." (emphasis added) Section 24(2) provides that the amount of contribution recoverable under s 23B from a person is that found to be "just and equitable having regard to the extent of that person's responsibility for the damage". The first phrase emphasised in s 23B(1) as set out above identifies the position to be established respecting Minters as the "person liable". The phrase is given content by s 23A. Sub-sections (1) and (2) thereof provide: "(1) For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependants of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise. References in this Part to an action brought by or on behalf of the person who suffered any damage includes references to an action brought for the benefit of the estate or dependants of that person." (emphasis added) The terms of s 23A(1) which have been emphasised indicate that, consistently with the recommendations of the English Law Commission which have been set out earlier in these reasons, the legal basis of the alleged liability of Minters in the present case is not limited to tort, but includes contract and trust or other breach of duty. It appears not to be disputed that the phrase "or otherwise" extends to liability based in the Fair Trading Act. It should be added that a person is entitled to recover contribution pursuant to s 23B(1) notwithstanding that that person (ie, the claimant) has ceased to be liable in respect of the damage in question. This is so provided that the claimant was liable immediately before the claimant made or was ordered or agreed to make the payment in respect of which contribution is sought (s 23B(2)). Further, a person is liable to make contribution notwithstanding that that person has ceased to be liable in respect of the damage in question. This is so unless that person ceased to be liable by virtue of the expiry of a limitation period which extinguished the right on which the claim against that person in respect of the damage was made (s 23B(3)). Two relevant propositions are, therefore, central to the proper application of s 23B as it is to be understood in the light of s 23A. First, the party claiming contribution ("the claimant") must show that it is liable in respect of damage suffered by another person ("the injured plaintiff"). Secondly, the claimant may recover contribution from any other person ("the potential contributor") who is also liable to the injured plaintiff in respect of the same damage. The relevant inquiry is not confined to whether the damage for which each is liable can be said to be the same; both claimant and potential contributor must be liable to the injured plaintiff. It will be necessary to deal in detail with the arguments that were advanced in the present matter. It is convenient to say at once, however, that Minters' claim for contribution should be held to have failed. Minters was not liable to the plaintiffs (the investors) for the damage in respect of which it sought contribution. PTWA and PT were liable to the plaintiffs for breach of the first level trusts. Minters was held liable to PTWA and PT for breach of different trusts (the second level trusts) and for that breach it was not liable to the plaintiffs. PTWA and PT having sued Minters to judgment, the plaintiffs could not have sued Minters for that breach. Minters, therefore, did not show that it was liable to the plaintiffs in respect of the damage which the plaintiffs had suffered and for which PTWA and PT were also liable to the plaintiffs. The issues Two vital questions arise. The first is whether Minters may properly be characterised for s 23B(1) as a "person liable in respect of any damage suffered by another person". The answer necessarily depends upon an identification of the person, or persons, by whom the relevant damage was suffered, and requires consideration of s 23A(1). Minters' submissions on this point are somewhat equivocal. One reading of its written submissions suggests that the persons who suffered the relevant damage are the plaintiffs; another suggests that the relevant class is not so confined but includes all the investor-beneficiaries. The distinction would be of great significance in the quantification of the amount of contribution to be awarded under s 24, were that stage in the litigation to be reached. However, as will appear, whatever reading of the submissions be adopted, Minters' case fails at the threshold before questions of quantification arise. Given the terms of s 23A(1) of the Act, Minters' case depends upon acceptance of the proposition that the plaintiffs (or the investor-beneficiaries) are "entitled to recover compensation" from Minters in respect of "damage" suffered by them. Minters submits that such an entitlement arises in one of two ways. The primary submission is that the status of the plaintiffs as beneficiaries of the respective first level trusts of which the respondents were trustees rendered them under the general law "entitled" to recover compensation directly from Minters in respect of loss or damage suffered to the trust property. Secondly, the plaintiffs are said to enjoy a right pursuant to s 37 of the Fair Trading Act to recover compensation for loss or damage suffered by them as a result of Minters' misleading and deceptive conduct. Neither submission should be accepted. The second question which is of critical importance is presented by the requirement in s 23B(1) that the respondents, the parties against whom Minters asserts an entitlement to contribution, be liable "in respect of the same damage". In Royal Brompton Hospital it was held that this requirement in the UK Act was not satisfied. The hospital claimed damages against the architect it had engaged under a building contract in respect of, among other lapses, the negligent issue of extension certificates to the builder. The claim by the architect against the builder for contribution was struck out. This was because the claim by the hospital against the builder was for damages for delay in completion, whilst its claim against the architect was for the impairment of its ability to proceed against the builder. Thus, the Law Lords held that the statutory criterion that the claims be for "the same damage" was not met. Lord Steyn said that the "natural and ordinary meaning" of that phrase was controlling20. Lord Bingham of Cornhill described that phrase as emphasising the need, which was "a constant theme of the law of contribution", for the "one loss to be apportioned among those liable"21. But what is the "damage" which must have this identity? The legislation offers no definitions. In Royal Brompton Hospital22, the House of Lords held that "damage" does not mean the "damages" awarded as compensation by a court, usually as a single sum. That is consistent with decisions in this Court construing similar legislation23, but does not take the matter very far. 20 [2002] 1 WLR 1397 at 1410; [2002] 2 All ER 801 at 814. 21 [2002] 1 WLR 1397 at 1401; [2002] 2 All ER 801 at 805-806. 22 [2002] 1 WLR 1397 at 1401, 1410; [2002] 2 All ER 801 at 806, 813-814. 23 See Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527. The definition in s 23A(1), which has been set out, suggests that there may be the necessary sameness in the "damage" for which the two parties to the contribution claim are liable to a third, even without an identical legal basis for that liability. So it may be in a given case that the liability of one party is founded in contract and the other is in tort. But that does not resolve the present problem, which concerns liabilities founded in breaches of trusts at the two levels. The legal basis of liability may in each case be located in trust law, but what is meant by the requirement of "the same damage" where a plurality of trusts is involved? Minters' submission is to the effect that "any damage" identifies interference with any legal or equitable right or interest. The "interference" would include the infliction of injury to proprietary interests and the infliction of personal injury as an interference with the interest in bodily integrity24. Understood in this fairly broad sense, the submission by Minters may be accepted for present purposes, without finally ruling on the question25. That is because, even on the basis that the relevant interests damaged were those conferred by law upon the beneficiaries of trusts, the appeal must fail. Conclusions respecting breaches of trust Here, the claim under s 23B proceeds upon the basis that Minters is liable in respect of certain damage, and that, although it has never been sued, it is entitled to recover contribution from the respondents, who are said to be persons liable in respect of the same damage. The relevant damage is said to be damage suffered by the plaintiffs and other investors who were beneficiaries of the first level trusts, of which PTWA and PT were trustees. The liability in respect of that damage exists if the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of that damage. The proposition that the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of damage, and the proposition that the respondents were liable to the plaintiffs and others in respect of the same damage, are contested, and were rejected by Rolfe J and the Court of Appeal. Additionally, Davies AJA in the Court of Appeal, with whom Ipp AJA agreed, said that, in the circumstances of the case, it was not just and equitable, within the meaning of s 24(2), that an order for contribution be made 24 See Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527. 25 cf Tame v New South Wales (2002) 211 CLR 317 at 373-375 [168]-[172]. and that the respondents were entitled to be fully indemnified by Minters in respect of any damages which might otherwise fall within the provisions of s 23B. In dealing with the claim for contribution, Rolfe J said26: "If the case turned on the negligence of [Minters] then, in my opinion, it would be appropriate to consider whether PTWA and PT had been guilty of contributory negligence. If that was a matter I had to consider I would have come to the conclusion, essentially for the reasons I have given in articulating why they are liable to the plaintiffs, that they had been guilty of contributory negligence and, as between them and [Minters] I would have apportioned the damages as to 40% and 60% respectively. If I had come to the conclusion that the matter turned on the Fair Trading Act, I would have found that [Minters] engaged in misleading conduct and it would have been necessary for me to mould relief conformably with the decision of the Court of Appeal in Akron Securities Ltd v Iliffe27. My inclination, prima facie, would have been to grant relief reflecting the culpability between the parties in the terms to which I have referred in considering contributory negligence. It is not necessary to reach a final conclusion on this point. In my view, the highest duty owed by [Minters] to PTWA and PT was as trustee and, accordingly, I am of the view that PTWA and PT are entitled to judgment against [Minters] for the full amount required to replenish the trusts, together with compound interest on yearly rests on the trustee basis and for costs." It may be noted that the first two causes of action are fault-based and the third, restitutionary or restorative, in the sense used by Street J in Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd28, and recently exemplified in Youyang29. Hence the use by Rolfe J of the term "highest duty". Rolfe J said that, where a trustee is ordered to pay equitable compensation for 26 (1998) 29 ACSR 642 at 756-757. 27 (1997) 41 NSWLR 353. 28 (1966) 84 WN (Pt 1) (NSW) 399 at 406. 29 (2003) 77 ALJR 895 at 901-902 [35]; 196 ALR 482 at 490-491. breach of trust, the amount is not reduced by contributory negligence on the part of the beneficiary. That was correct30. Further, Rolfe J said the amount recoverable by the respondents by way of equitable compensation from Minters was not in respect of the same damage as that suffered by the plaintiffs; the "damage springs from different breaches and there is no co-ordinate liability"31. The same reasoning prevailed in the Court of Appeal but cannot be fully accepted. The question raised by s 23B is whether Minters and the respondents were liable to the plaintiffs (and, it would seem, to the other investor- beneficiaries) in respect of the same damage sustained by the plaintiffs. But that is not necessarily the same question as whether the liability of Minters to the respondents under the cross-claims by the respondents was in respect of the same damage as the liability of both Minters and the respondents to the plaintiffs and the other investor-beneficiaries. The respondents' cross-claims against Minters, in so far as they were based on a cause of action in negligence, were always exposed to the possibility of a reduction on account of contributory negligence32. It does not follow that any other cause of action available to the respondents was exposed to the same reduction33. As to the matter of the claim under the Fair Trading Act, it is convenient to leave that to one side for the moment. The rights or interests the infringement of which constituted the damage for which equitable compensation by Minters to the respondents was ordered by way of remedy on the respondents' cross-claims were different from, although related to, the rights or interests of the plaintiffs and others which were infringed by the acts and omissions of the respondents. Minters was liable to make restitution to the respondents of the moneys it received on the second level trusts for the respondents and paid away in breach of trust. Even so, it is said on behalf of Minters that the plaintiffs (and the other investor-beneficiaries) were privy to the respondents' cross-claims against Minters, in the sense that, if the cross-claims had failed, they would have been bound by that outcome and would have lost whatever prospect they might have 30 Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at 201-202 [86], 230-231 31 (1998) 29 ACSR 642 at 756. 32 Wrongs Act 1958 (Vic), s 26. 33 Astley v Austrust Ltd (1999) 197 CLR 1. had of proceeding directly against Minters for breach of trust34. That directs attention to the question raised by s 23A(1). Were the plaintiffs entitled to recover compensation from Minters? In answering that question it is necessary first to further consider the nature and form of the two cross-claims of the respondents against Minters for breach of trust. The cross-claims asserted that PTWA and PT "invested trust funds at the direction of trust members" including the plaintiffs, and that they now sought to recover those trust moneys. It also was alleged, as Rolfe J held to be the case, that the moneys paid to Minters in the course of making that investment were held on trust for PTWA and PT. The cross-claims did not make it plain that the beneficiaries of these second level trusts were PTWA and PT but that appears to be the assumption. This being so, the cross-claims were brought by the beneficiaries of the second level trusts against the trustee thereof. It was not to the point that, as was the case with the orders made by Rolfe J, the moneys so recovered would be funds for which PTWA and PT were bound to account as trustees of the first level trusts. If a beneficiary, who happens to be a trustee of another trust, sues its trustee for breach of trust, it is not readily apparent that the beneficiaries of the other trust are necessarily proper parties to that suit. However, the appeal was argued on the assumptions (more favourable to Minters' case) that what was being enforced by the cross-claims were the first level trusts, and that PTWA and PT were in a similar position to that of trustees to whom a third party owes an equitable debt created in the course of the exercise of the investment powers of PTWA and PT under the first level trusts. Those assumptions, which give the beneficiaries of the first level trusts a more direct interest, may be accepted for present purposes. On one of the cross-claims the claimant was PTWA and on the other PT; the plaintiffs and the other investor-beneficiaries were not joined. It was not necessary that they be joined. Order 8 r 15(1) of the Supreme Court Rules 1970 (NSW) provided that when any proceedings were brought by a trustee it was not necessary to join as a party any of the persons having a beneficial interest under the trust. That provision had its origins in the Chancery Procedure Act 1852 34 Young v Murphy [1996] 1 VR 279 at 286. (UK)35 and is found in other jurisdictions, for example in r 16.02 of the Supreme Court (General Civil Procedure) Rules 1996 (Vic)36. The present issue is rather different and may be expressed by asking whether those for whom PTWA and PT were trustees had been entitled themselves to institute the cross-claims brought against Minters. The orders made by Rolfe J on the cross-claims by PTWA and PT for equitable compensation plainly were an exercise of the equitable jurisdiction of the Supreme Court to remedy breaches of trust. Reference has been made earlier in these reasons to the provisions made in s 23B(2) and (3) with respect to the cessation of liability in respect of the damage in question. However, as the respondents submit, in the context of a claim for contribution under the statute, the entitlement which it postulates must be actual, not purely hypothetical and conditional. The statute should be applied by reference to the facts that exist, and the events that have occurred, in the particular case. If it were otherwise, Minters would have a claim for contribution with respect to a liability that may not exist. In Ramage v Waclaw37, Powell J reviewed many of the authorities, including the judgment of James LJ in Sharpe v San Paulo Railway Co38, which support the proposition that, where relief is sought in the equitable jurisdiction of the Supreme Court against a third party, a beneficiary may sue in his own name, joining as defendants the trustee and any other beneficiaries, but only where there are "special circumstances". One reason for this restriction, given by James LJ in Sharpe39, is the avoidance of the vexation of the third party by multiple suits. Powell J held that the "special circumstances" were not confined to collusion between the trustee and the third party, or the insolvency of the trustee40. But the general principle is that stated by Scott41: 35 15 & 16 Vict, c 86, s 42, r 9. 36 See also Young v Murphy [1996] 1 VR 279 at 283. In England, see RSC O 15 r 14; Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 1 at 196. 37 (1988) 12 NSWLR 84 at 91-93. 38 (1873) LR 8 Ch App 597 at 609-610. 39 (1873) LR 8 Ch App 597 at 609. 40 (1988) 12 NSWLR 84 at 91-92. 41 Scott on Trusts, 4th ed (1989), vol 4, §282. "The interests of the beneficiaries of a trust are protected against a third person acting adversely to the trustee through proceedings brought against him by the trustee and not by the beneficiaries. As long as the trustee is ready and willing to take the proper proceedings against the third person, the beneficiaries cannot maintain a suit against him." in Ramage, Minters referred to statements of principle by the Privy Council in Hayim v Citibank NA42. Their Lordships referred to some of the authorities discussed by that "special circumstances" included a failure by the trustees to perform their duty to the beneficiaries to protect the trust estate or the interests of the beneficiary therein43. Nothing there said assists the arguments by Minters that the plaintiffs had the necessary entitlement for Pt IV of the Act. In the present litigation, no question arises respecting the solvency of PTWA and PT, or of collusion between them and Minters. To the contrary, PTWA and PT were ready and willing to take and did take, by instituting and pursuing the second and third cross-claims to judgment, the proper steps against Minters to restore the first level trusts. The plaintiffs and the other investor- beneficiaries thus had no entitlement themselves to recover compensation from Minters. There is a further point, which involves discarding the assumption made above concerning the nature of the cross-claims made against Minters. In the circumstances of this litigation, the plaintiffs and the other investor-beneficiaries, by reason of the breach by the respondents of the first level trusts, were entitled to equitable compensation by the respondents, an entitlement which the plaintiffs enforced to judgment. But there was no entitlement in the plaintiffs or other beneficiaries of the first level trusts to institute or prosecute the second and third cross-claims in fact pursued by the respondents against Minters. These cross-claims were the enforcement of the entitlement of the respondents arising by reason of the breach by Minters of the second level trusts of which the respondents were the beneficiaries. That entitlement of the respondents was not gainsaid or diminished or supplemented by the circumstance that the respondents were trustees of the first level trusts in favour of the plaintiffs and the other investor-beneficiaries. Accordingly, for these further reasons, there was no 43 [1987] AC 730 at 748. liability in respect of which Minters could sue against the respondents the order for contribution brought on the seventh cross-claim. It was pointed out in the Court of Appeal that, even if the statutory conditions of an entitlement to contribution were otherwise satisfied, it would become necessary, given the terms of s 24(2) of the Act, to consider the amount of the contribution that would be just and equitable. Davies AJA, with whom Ipp AJA agreed, held that the amount would be nil. As trustee for the respondents, Minters was obliged to make full restitution in respect of the trust property which, in breach of trust, it paid away. It was obliged, and ordered, to replenish the trust funds. If that were the liability in respect of which it was seeking contribution from the respondents, then it is difficult to see that justice and equity would require any such contribution. But, according to Minters, that is not the relevant liability. The relevant liability, it is said, is the liability of Minters (and the respondents) to the plaintiffs and others. There may be some force in the argument that, if there were otherwise a liability in respect of the same damage, which could form the basis of a claim by Minters for contribution by the respondents, then the justice and equity spoken of in s 24(2) would require a fault-based approach to contribution. This would lead to the same practical result as that reached by Rolfe J in relation to contributory negligence. However, in view of the conclusion reached on the anterior question, it is unnecessary to express a final view on the argument. The Fair Trading Act There remains for consideration the Fair Trading Act. Rolfe J, on the cross-claims by the respondents, held that Minters had engaged in misleading or deceptive conduct. However, it is not the liability of Minters to the respondents for contravention of the statute which is the basis of the claim by Minters for contribution under the Act. That basis lies in what is said to be a liability of Minters to the plaintiffs and the other investor-beneficiaries. But, however that may be, the respondents have not been found to have engaged in misleading and deceptive conduct. There was no liability of Minters and the respondents to the plaintiffs and the other investor-beneficiaries for "the same damage" sustained by contravention by them of the Fair Trading Act. It is true that the respondents had been the causes of damage to the beneficial interests under the first level trusts. But that was not "the same damage" as that sustained by the respondents by reason of the misrepresentations made to them by Minters. Rolfe J found that Minters had engaged in misleading and deceptive conduct, specifically by writing letters to the respondents which failed to disclose that no bearer deposit certificates had been obtained. Those letters, he found, "amounted to misrepresentations by silence in so far as they conveyed the impression, on a fair reading of them, that settlement had taken place conformably with the subscription agreements whereas it had not"44. Because Rolfe J took the view that "the highest duty owed by [Minters] to PTWA and PT was as trustee", he did not go on to deal with the precise form of the relief to which the respondents would have been entitled under the Fair Trading Act, other than to say that his provisional view was that he would have had to mould relief which would reflect the comparative culpability of the parties, that is to say, the respondents as cross-claimants and Minters. Since he was prepared to make orders on the cross-claims to provide equitable compensation, there was no need to give further consideration to the causes of action in negligence or for contravention of the Fair Trading Act. The respondents were entitled to relief on their cross-claims on the basis most favourable to them. In Henderson v Merrett Syndicates Ltd45, Lord Goff of Chieveley, in a passage cited by this Court in Astley v Austrust Ltd46, said: "I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him". His Lordship was there speaking of concurrent liability in contract and tort. The same applies in principle in the present case. Rolfe J appears to have envisaged, without deciding the matter, that, without recourse to s 24(2) of the Act, he would have been able, by granting appropriate relief under the Fair Trading Act, to limit the entitlement of the respondents by reference to what he called their own "culpability". He never made any assessment, or award, of damages in respect of the contravention of the Fair Trading Act. Nor did he address the kinds of question that would have arisen under ss 23A and 23B of the Act. He did not examine the question of any entitlement of the plaintiffs to sue Minters under s 37 of the Fair Trading Act to recover the amount of the loss or damage they could show they had sustained by reason of Minters' misleading and deceptive conduct, an entitlement that may have been supported by the construction given to the Trade Practices Act 1974 (Cth) in Poignand v NZI Securities Australia Ltd47. He did not deal with the significance, if any, of the time limit upon proceedings for relief imposed by 44 (1998) 29 ACSR 642 at 751. 45 [1995] 2 AC 145 at 194. 46 (1999) 197 CLR 1 at 22 [46]. 47 (1992) 37 FCR 363. s 37(2) of the Fair Trading Act. He did not compare the nature of the relief to which the plaintiffs might have been entitled against Minters with that to which the respondents would have been entitled against Minters. In particular, Rolfe J did not consider whether, if the respondents had replenished the trust estates of which they were trustees, there would have been any loss or damage suffered by the plaintiffs by reason of Minters' contravention of the Fair Trading Act. The existence of any such liability remains purely theoretical. No loss by the plaintiffs and the other investor-beneficiaries has been established. So long as the respondents made good, out of the funds available to them (including their own assets, or the proceeds of the exercise of their entitlement against Minters for breach of the second level trusts), the loss to the first level trusts of which they were trustees, there would be no loss to the plaintiffs and others resulting from the contravention of the Fair Trading Act. Conclusion The appeal should be dismissed with costs. McHugh 67 McHUGH J. For the reasons given by Callinan J, the appellants breached s 11 of the Fair Trading Act 1985 (Vic) and their breach was a cause of the loss suffered by the plaintiffs in the action. The appellants were therefore liable to the plaintiffs to the extent that the appellants caused the loss of the funds invested in EC Consolidated Capital Limited ("EC Consolidated") on behalf of the plaintiffs. The respondents too have been held liable to the plaintiffs for losing the funds invested in EC Consolidated, such liability having been found to be established by the trial judge. Accordingly, within the meaning of s 23B(1) of the Wrongs Act 1958 (Vic) ("the Act"), both the appellants and the respondents were "liable in respect of the same damage" – the loss of the funds beneficially owned by the plaintiffs. Because that is so, s 23B of the Act entitles the appellants to contribution from the respondents in respect of the damage for which the appellants are responsible. For the reasons given by his Honour, I also agree that the respondents cannot rely on the various "defences" upon which they seek to rely. Accordingly, the appeal must be allowed. I agree with the orders Kirby KIRBY J. Where the acts or omissions of a number of parties contribute to the damage suffered by another, a rational system of law would provide a means by which those responsible for such damage were obliged to share the burden as between each other in a just and equitable way, having regard to the extent of their respective responsibilities for the damage. The apportionment might not be capable of being performed with scientific precision because of the diversity of the several responsibilities and the scope for different assessments of the requirements of justice and equity in the case. But the fundamental notion of contribution is a simple one. In an ideal world it would not be "defeated by too technical an approach"48. Decisions of the courts, including recent decisions of this Court49, demonstrate that, in the quest for distributive justice, in cases involving liability of several parties to a common plaintiff, impediments are often thought to arise that defeat the object of contribution50. So it has proved in giving effect to early contribution legislation designed to overcome legal impediments51. And so it has proved in claims for equitable contribution between co-obligors52. It is as if the legal mind, locked in its categories, is fundamentally resistant to the notion of distributive justice as between parties liable, in different legal ways, to a common plaintiff. The present appeal is the latest instance of resistance to the simple idea of contribution. "Gallons of ink" have been spilt over earlier versions of contribution legislation. Despite a new attempt by the Parliament of Victoria to make its reformatory will clear, it seems that the flow of ink will not be stemmed. 48 Mahoney v McManus (1981) 180 CLR 370 at 378 per Gibbs CJ. 49 James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; Burke v LFOT Pty Ltd (2002) 209 CLR 282. 50 Barnett, "The Uneasy Position of Unjust Enrichment After Roxborough v Rothmans", (2002) 23 Adelaide Law Review 277 at 289. 51 James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 69-70 [46] referring to Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200 at 211; Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 at 219-220; Bakker v Joppich (1980) 25 SASR 52 Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 321-324 [106]-[117]. Kirby The facts The background facts: The basic facts are described in the reasons of Gleeson CJ, Gummow and Hayne JJ ("the joint reasons")53 and in the reasons of Callinan J54. Although, in their detail, the facts are complicated, reduced to essentials, they are comparatively simple. The Perpetual Companies ("Perpetual") were trustees of superannuation funds. They were directed by members of the funds ("the beneficiaries") to invest large sums in preference shares offered to the market by a company ("ECCC"). Minter Ellison ("Minters"), a firm of lawyers, acted in that capacity for ECCC. As security for the deposits with that company, a deposit certificate was to be issued by a reputable bank, in the form of a bearer certificate of the deposit, a guarantee or letter of credit. The security documents were drafted by Minters. It also acted as agent for Perpetual. Perpetual paid the funds into the trust account of Minters. Minters was obliged not to release the funds to ECCC until the deposit certificates were issued. However, without provision of the certificates, Minters released the funds to ECCC. With each such payment, Minters incorrectly represented to Perpetual that it had received the deposit certificate. It transmitted purported "certificates" to Perpetual for safe custody. Neither Minters nor Perpetual checked the documents so forwarded in a careful and prudent way, conforming to their respective duties as trustees. Had they done so, each would have recognised that no deposit certificates had been issued and that the beneficiaries therefore had no recourse to a bank to safeguard their investments. In the result, when ECCC became insolvent, the beneficiaries' funds were lost. The beneficiaries sued Perpetual for breach of the terms of the trust upon which Perpetual had received the funds from them. Perpetual, in turn, sued Minters for breach of the terms of the trust upon which Minters had received the deposits from Perpetual. Each of these claims succeeded. A claim that Minters had contravened provisions of the Fair Trading Act 1985 (Vic) by making misrepresentations to Perpetual that constituted misleading and deceptive conduct, was also successful. These findings are not now in dispute. The substantial issue before this Court is whether Minters is entitled to contribution55 from Perpetual and whether it is "just and equitable having regard to the extent of [Perpetual's] responsibility for the damage"56 that Perpetual 53 Joint reasons at [5]-[17]. 54 Reasons of Callinan J at [122]-[137]. 55 Wrongs Act 1958 (Vic), s 23B(1). 56 Wrongs Act 1958 (Vic), s 24(2). Kirby should share the ultimate burden for the common damage for which the liability of each had been, or could be, established57. Common ground: Further background to this sorry chronicle may be found in an earlier decision of this Court58. For the purposes of this appeal numerous points were either common ground or excluded by the limited grant of special leave. Thus, it was not now disputed that the contribution rights and obligations of Minters and Perpetual, although determined in the Supreme Court of New South Wales, were to be decided by the application of the Wrongs Act 1958 (Vic). That Act was to be applied as it was amended by the insertion in Pt IV ("Contribution") of a series of provisions adopted by the Victorian Parliament in 198559. Likewise, in so far as the claim was based on statute for misleading and deceptive conduct on the part of Minters towards Perpetual, it was to be determined in accordance with the Fair Trading Act60. The operation of those two Victorian statutes in the circumstances and their application by the Supreme Court of New South Wales are not now contested. The test for liability to contribution, under the Wrongs Act, as between Perpetual and Minters was not limited to the liability that had been legally established between the beneficiaries and Perpetual. As with earlier versions of the contribution legislation61, the Wrongs Act does not confine the right to contribution to liability already proved as between the putative contributor and the original plaintiff. It would scarcely be just or sensible if that were so. It would, in effect, render a claimant for contribution hostage to the way in which another person defined its claim. The Wrongs Act recognises that the claimant for contribution is entitled to recover not only for "such liability which has been … established" but also "such liability which … could be established in an action brought against that person in Victoria by or on behalf of the person who suffered the damage"62. 57 Wrongs Act 1958 (Vic), s 23B(6). 58 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 77 ALJR 895; 196 ALR 59 Wrongs (Contribution) Act 1985 (Vic), s 4, with effect from 12 February 1986. 60 ss 11(1), 37(1). See reasons of Callinan J at [154]. 61 eg Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1)(c) considered Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 at 219, 222, 224. See also George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169 at 196; Harvey v R G O'Dell Ltd Galway (Third Party) [1958] 2 QB 78 at 62 Wrongs Act 1958 (Vic), s 23B(6). See also reasons of Callinan J at [148]. Kirby In this sense, as between a claimant for contribution and a putative contributor, the issue presented by the claim under the Wrongs Act is, in part, determined by any proceedings that have been brought and, in part, by an answer to the hypothetical question of what "could be established" if such proceedings had been brought. The legislation Original statutory reform: The Law Reform (Married Women and Tortfeasors) Act 1935 (UK) was the first statutory attempt to reform the law of contribution in England63. That Act was quickly copied throughout the British Empire, including in Australia. However, a defect of the statutory reform (apart from its ambiguous expression) was that it was limited to recovery of contribution as between tortfeasors, that is, "[w]here damage is suffered by any person as a result of a tort"64. Such was the earlier law in Victoria65. Such is still the law in the majority of Australian jurisdictions66. Those who suggest that judges should take a passive role, indifferent to the need to update remedies available at common law and in equity, do well to reflect upon the long saga of apparent parliamentary indifference and neglect disclosed by the general legislative inattention to the oft- demonstrated defects in the original contribution legislation. If ever there was an illustration of the need for appropriate judicial steps to facilitate just remedies as between parties, this is it. Further English reform: In England (whence, it seems, Australian lawmakers still derive their comparatively rare bursts of imagination in such matters), the Law Commission in 1975 proposed a series of reforms designed to repair some of the larger defects in contribution as between tortfeasors and to broaden the "statutory jurisdiction to make contribution orders [beyond] 63 See also James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 70 64 Law Reform (Married Women and Tortfeasors) Act 1935 (UK), s 6(1). 65 Wrongs Act 1958 (Vic), s 24(1) (since repealed). 66 Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1)(c); Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7(1)(c); Wrongs Act 1954 (Tas), s 3(1)(c); Law Reform Act 1995 (Q), s 6(c); Law Reform (Miscellaneous Provisions) Act (NT), s 12(4). Kirby situations in which the claims arise out of tort … to cover breaches of contract, breaches of trust and other breaches of duty as well"67. Unsurprisingly, the Law Commission's proposal was well received in the English legal profession and community. In consequence, in 1977, the Commission produced its Report on Contribution68. Although the report was delivered in the context of the Commission's then general review of the law of contract and quasi-contract, Most significantly, it endorsed the expansion of the applicability of statutory compensation to "wrongdoers other than tortfeasors"69. In support of the Commission's recommendation, it pointed to the "double advantage" of expanding the entitlement to contribution in such a way70: the proposals were much broader. "First, it closes the gap where there are no rights of contribution at common law. Second, it allows the courts greater flexibility where the existing rules would otherwise work unjustly. The proposal has won general support from those who commented on our working paper and we accordingly recommend that it should be given legislative effect." The Commission said that it could see "no policy reason" for leaving the previous gap in the entitlement to contribution "unfilled"71. Reform in Victoria: the In Victoria, recommendations of the English Law Commission should be adopted in the Wrongs Act was considered by a sub-committee of the Chief Justice's Law Reform Committee. that Committee recommended the adoption in Victoria of the Law Commission's proposals72. the question whether immaterial reservation, With an 67 England and Wales, The Law Commission, Contribution, Law Com Working Paper No 59, (1975) at 33 [56]. 68 England and Wales, The Law Commission, Report on Contribution, Law Com 69 England and Wales, The Law Commission, Report on Contribution, Law Com No 79, (1977) at 10 [33]. 70 England and Wales, The Law Commission, Report on Contribution, Law Com No 79, (1977) at 11 [33] (footnote omitted). 71 England and Wales, The Law Commission, Report on Contribution, Law Com No 79, (1977) at 10 [33]. 72 Victoria, Chief Justice's Law Reform Committee, Contribution, (1979), par 1. Kirby The Committee noted that, by the time of its report, the proposals had passed into law in England73. Whilst remarking on a possible divergence between the law of Victoria and that of England on the subject of the availability of contributory negligence as a defence to a claim of damages for breach of contract74 and offering some criticisms of the drafting of the English statute, the Committee recommended adoption of the substance of the Law Commission's reforms in Victoria. In the House of Lords in the United Kingdom Parliament, Lord Scarman and the Lord Chancellor made speeches supporting the passage of the English legislation. The latter pointed out that "[t]he present law on contribution has … led to injustice by failing to provide all the remedies that are required"75. The Bill was described as "a measure of law reform and … a step further to improve the quality of justice"76. The basic principle of contribution was explained in terms similar to those that I have set out at the head of these reasons. In due course, in terms of the amendments to the Wrongs Act, the Victorian Parliament enacted the amendments to the law of contribution adapted from the English model77. Significance of the reform: The initiative of the Victorian Parliament to carry into law the reform of statutory contribution and to expand the availability of such contribution beyond that between tortfeasors so as to embrace coordinate liability on "whatever … legal basis", including for "breach of trust"78, should not be whittled down by this Court. I have included the foregoing history of the enactment of the reforms to the law of contribution in Victoria for three 73 Civil Liability (Contribution) Act 1978 (UK). See United Kingdom, House of Lords, Parliamentary Debates (Hansard), 18 July 1978 at 245-255. 74 The Committee referred to Belous v Willetts [1970] VR 45; A S James Pty Ltd v C B Duncan [1970] VR 705; De Meza v Apple [1974] 1 Lloyd's Rep 508: Victoria, Chief Justice's Law Reform Committee, Contribution, (1979), pars 10.1-10.2. See now Astley v Austrust Ltd (1999) 197 CLR 1. 75 United Kingdom, House of Lords, Parliamentary Debates (Hansard), 18 July 1978 76 United Kingdom, House of Lords, Parliamentary Debates (Hansard), 18 July 1978 77 Only minor changes have been introduced in other jurisdictions. See Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 6(1) replacing Wrongs Act 1936 (SA), s 25(1)(c); Civil Law (Wrongs) Act 2002 (ACT), 78 Wrongs Act 1958 (Vic), s 23A(1). Kirby purposes. First, to demonstrate beyond doubt the remedial and reformatory character of the legislation so enacted. Secondly, to indicate the deliberate purpose that lay behind the adoption of the reforms in Victoria, so far the only jurisdiction to do so in Australia79. And thirdly, to highlight the error that arose in the Court of Appeal of New South Wales in these proceedings. There, in the original reasons published by that court for rejecting Minters' claim to contribution, two of the judges made no reference whatsoever to the Wrongs Act. Only Davies AJA cited the Act, and then only in describing the claims brought by Minters80. It was the omission of the Court of Appeal to make any substantive reference to Minters' reliance on the enlargement of the right to contribution provided by s 23B of the Wrongs Act that led to a notice of motion by Perpetual the point. seeking supplementary Supplementary reasons were later published81. The reconsideration did not cause the Court of Appeal to alter its opinion or (if it was still possible at that stage) its orders. judgment dealing with reasons for In busy courts, it is easy enough to overlook points, as I have myself done. However, this appeal is yet another instance of the phenomenon, all too common, for Australian lawyers and courts to attempt to resolve novel disputes by reference to judicial elaboration rather than the text of an applicable statute. This Court has drawn this tendency to notice more times than I care to remember82. The present is a classic illustration. 79 The South Australian contribution legislation extends to liability in contract and under statute but that liability must be established in an action for contribution: Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), ss 4(1) and 6(1) and (3). 80 Alexander (T/as Minter Ellison) v Perpetual Trustees WA Ltd [2001] NSWCA 240 at [137] per Davies AJA. 81 Alexander (T/as Minter Ellison) v Perpetual Trustees WA Ltd (No 2) [2002] NSWCA 101. 82 eg Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 89 [46]; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 545 [63]; Commonwealth v Yarmirr (2001) 208 CLR 1 at 111 [249]; Allan v Transurban City Link Ltd (2001) 208 CLR 167 at 184-185 [54]; Conway v The Queen (2002) 209 CLR 203 at 227 [65]; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 1893 at 1897 [24]-[25], 1906 [73]-[75]; 201 ALR 414 at 420, 432. Kirby Instead of analysing the meaning, application and purpose of the reformatory provisions of the Wrongs Act, the learned judges of the Court of Appeal (even, in my respectful opinion, in their supplementary reasons) focussed upon judicial exposition. It is important that this Court should not make the same mistake. The amendments to the Wrongs Act introduce deliberate and important reforms to the written law. They require of judges a fresh look at the availability of contribution, freed from restrictions earlier devised by judges which, in part, the remedial provisions were designed to overcome. Where there is written law, as here, our duty is to the text and purpose of the legislature83. Especially where new written law is adopted following a careful law reform process, it is essential that courts should not adopt a restrictive interpretation that undermines the attainment of the reform, to the full extent possible in the statutory language. Analysis of the amended Wrongs Act Adoption of broad language: The breadth of the intended operation of the 1985 reform of the Wrongs Act is made clear by the language in which the new provisions are expressed84. First, some observations need to be made about the interaction of the provisions. Take s 23A(1) of the Act with its definition of "a person [who] is liable", as referred to in s 23B(1). The ambit of the new provision takes its colour from the purpose, which is stated to be to provide for "contribution". That word appears, without relevant restriction, in the heading to Pt IV of the Wrongs Act. The legislative history evinces a clear object to enlarge the facility of orders for contribution. Then, the fact that, by s 24(2), that facility is committed to a court or, where applicable, a jury instructed by a judge, indicates that a large latitude is intended, subject to appeal, as may be contemplated by the now wide circumstances to which contribution is made applicable. Then, the criterion in s 24(2) of what is "just and equitable having regard to the extent of that person's responsibility for the damage" reinforces the breadth of the intended operation of the remedy. As previously stated, by s 23B(6), the remedy is to be available not only where liability has been established but also where it "could be established in an action brought … in Victoria". These general observations about Pt IV of the Wrongs Act are further reinforced when one turns to the actual language of the critical provisions. Thus, in s 23A, the words "any damage" suggest that it is not necessary to establish a strict coincidence between the damage caused by the claimant for contribution and that caused by the putative contributor if some part of the damage in question 83 Conway v The Queen (2002) 209 CLR 203 at 227 [66]. 84 The relevant provisions are set out in the reasons of Callinan J at [148]. Kirby Then, the claimant for contribution coincides. to recover "compensation" (as it is expressed) from the putative contributor not necessarily to the extent of the entire "damage". All that is required is that the claim should be "in respect of that damage". The breadth of the phrase "in respect of" is established by so much decisional authority that I am almost embarrassed to mention the point85. The words of connection chosen by the legislature deny any suggestion that there must be exact identity of the liability for the damage. is entitled The foregoing impressions are then reinforced by the wide ambit introduced by the 1985 reforms. Contribution is now available beyond "tort". It extends to "breach of contract, breach of trust or otherwise". The reference to "breach of trust" is itself remarkable. It takes the operation of statutory contribution far beyond tort and that other part of the law of obligations, contracts and quasi-contracts. It provides a statutory remedy in the case of "breach of trust" and "otherwise" where, formerly, only the remedy of equitable contribution would have been available, with its encrustations, recently demonstrated and reaffirmed, over my objection86. The fact that, in a particular case, the foundation of a claim for contribution might derive from two or more bases of liability, such as tort, breach of trust or breach of statutory duty, indicates that it is a serious mistake to attempt a return to the pre-1985 strictness of coordinate liability, which this Court has held to be necessary in a case of equitable contribution. Under the Wrongs Act, the amplitude and multiplicity of the possible bases of liability make it clear that no narrow view is to be adopted in defining a person liable in respect of the "damage". But this is not all. Section 23B(1) is similarly expressed in very wide terms. Again, it is sufficient that the person claiming contribution be "liable in respect of any damage suffered by another person". Again, it is unnecessary to establish an exact coincidence of the damage for which the claimant and the putative contributor are responsible. Likewise, the contemplation of contribution "from any other person" emphasises the breadth of the class of putative contributors. Then comes the phrase "liable in respect of the same damage". To the suggestion that these words cut back the ambit of the class of potential contributors, the answer appears in the breadth of the definition incorporated in 85 Powers v Maher (1959) 103 CLR 478 at 484-485; State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 at 416; McDowell v Baker (1979) 144 CLR 413 at 419; Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at 111; Trustees of the Will of Cunard v Inland Revenue Commissioners [1946] 1 All ER 159 at 164. 86 Burke v LFOT Pty Ltd (2002) 209 CLR 282. Kirby s 23B(1) by force of s 23A(1), as I have just explained. That ambit is still further reinforced by the words in parenthesis, referring to the alternative possibilities that the claimant for contribution and the putative contributor are jointly liable to the first person (in this case the beneficiaries) "or otherwise". The reference to "otherwise" clearly means that the claimant and the putative contributor may be severally liable; liable in respect of different parts of the "damage"; liable on different legal bases ("whether tort, breach of contract, breach of trust …"); liable by statute ("… or otherwise"); and liable whether such liability is established or is such as could be established if an action were brought. Same "damage" not "cause of action": It is very important to notice that neither s 23A(1) nor s 23B(1) states, or suggests, that the liability "in respect of the same damage" must arise out of identical causes of action, on the part of the "first-mentioned person". On the contrary, the language, purpose and history of the reformed provisions of the Wrongs Act make it abundantly clear that this need not be so. It would have been easy for the United Kingdom Parliament (and the Victorian Parliament copying it and the law reform bodies that recommended the reform) to impose in clear terms a requirement of exactly coincident liability and sources of liability. Instead, the reforms and the statutes giving them effect focussed, and focussed only, on the "damage". It is the liability "in respect of the same damage" that is critical. Thus, in the application of the provisions of the Wrongs Act, the starting point is to find the "damage" "in respect of" which the claim for contribution is made. So long as that "damage" coincides, sufficiently in the context of a reformatory provision contemplating multiple and distinct causes of action giving rise to liability for the damage, the precondition for statutory contribution exists. In this analysis, I therefore agree with the approach of Callinan J in this appeal87, with which McHugh J agrees88. Minters was found to have engaged in misleading and deceptive conduct in contravention of the Fair Trading Act. Perpetual was found to have breached duties owed as trustee to the beneficiaries. Each was responsible (albeit in differing ways) for the same damage, that is, the loss of the beneficiaries' funds invested in ECCC. I disagree with the approach stated in the joint reasons89. In my view, it is erroneous to import into the requirement of liability "in respect of the same damage" any notion that suggests that such liability must be a common liability to a common plaintiff, based on the same legal category or source of liability. Upon this view, the fact that there 87 Reasons of Callinan J at [149]-[166]. 88 Reasons of McHugh J at [67]. 89 Joint reasons at [27], [33]. Kirby were two (even in some cases three) "levels of trusts"90 is irrelevant. To introduce that notion, and to assign statutory significance to it, is to mistake the instruction of the reformed legislation, which addresses the identity of the "damage", not the identity of its legal or equitable foundation. Conclusion – contribution legislation applies: In the circumstances of this appeal, for the purposes of the claim for contribution, the "damage" was relevantly "the same". It was the loss suffered by the beneficiaries because neither Minters nor Perpetual performed carefully and faithfully the duties severally cast on each of them by law. Both of them were persons liable within s 23A(1). Both were therefore liable to contribute to the damage. By this analysis, within s 23B(1), Minters was a person liable "in respect of" any damage suffered by the beneficiaries, on the footing that the beneficiaries were entitled to recover compensation from Minters "in respect of" that damage, whatever the legal basis of liability. In such circumstances Minters, in accordance with s 23B(1), was entitled to recover compensation from Perpetual, being an "other person" liable "in respect of" the same damage, although severally not jointly, with Minters and on a basis, if necessary, different from the basis upon which Minters was itself liable. The foundations for the liability of Minters and Perpetual "in respect of" the same damage comprised their several liabilities, which included liability arising out of breach of the Fair Trading Act and breach of trust. I agree with what Callinan J has written in this respect91. His Honour's approach ensures the sensible operation of the Wrongs Act in circumstances of successive breaches of statutory duty and of trust by each of the claimant for contribution (Minters) and the putative contributor (Perpetual) respectively. The alternative and narrower view, preferred in the joint reasons, defeats the achievement of an obvious purpose of the reform to statutory contribution in a way that is unnecessary in the language by which the statute is expressed and contrary to its purpose. In summary, to the extent that there is any uncertainty or ambiguity in the provisions of the Wrongs Act, I would prefer the approach of Callinan J because it achieves the object of the reform. It prevents yet another remedial statute from misfiring because of the way a court reads it. It is time, wherever possible, to lift the dead hand of the past from the law of contribution. That, as I take it, was the purpose of the 1985 amendments to the Wrongs Act. This Court should give effect to that purpose. 90 Joint reasons at [5]; see also at [33]. 91 Reasons of Callinan J at [149]-[166]. Kirby A "just and equitable" apportionment of responsibility? Is contribution bound to fail? There are two remaining arguments of Perpetual that need to be addressed. The first arises out of a conclusion of Davies AJA, in his supplementary reasons in the Court of Appeal, providing a second, and alternative, basis for rejecting Minters' claim for contribution. This was his Honour's statement92 (with which Ipp AJA agreed without separate reasons93) that, in the circumstances of the case, "it was not just and equitable that an order for contribution be made against [Perpetual]". This conclusion was put forward on the basis that Perpetual was "entitled to be fully indemnified by [Minters] in respect of any damages which might otherwise fall within the application of the statutory provisions"94. It must be conceded that there is an important question to be determined concerning the extent of Minters' entitlement to contribution from Perpetual under the Wrongs Act, even within the open-ended formula of that Act, with its reference to what is "just and equitable having regard to the extent of [the putative contributor's] responsibility for the damage"95. At trial, Rolfe J observed that contribution was not available because "[t]he damage springs from different breaches and there is no co-ordinate liability"96. I have already endeavoured to show that this approach was in error. However, his Honour went on to state that, if the case "turned on the negligence of [Minters] then, in my opinion, it would be appropriate to consider whether [Perpetual] had been guilty of contributory negligence"97. By reference to what he had held in deciding the liability of Perpetual to the beneficiaries, Rolfe J concluded that, approached in such a way, he would have "apportioned the damages as to 40% and 60% respectively", that is, as to Perpetual and Minters98. 92 Alexander (T/as Minter Ellison) v Perpetual Trustees WA Ltd (No 2) [2002] NSWCA 101 at [27]. 93 Alexander (T/as Minter Ellison) v Perpetual Trustees WA Ltd (No 2) [2002] NSWCA 101 at [29]. 94 Alexander (T/as Minter Ellison) v Perpetual Trustees WA Ltd (No 2) [2002] NSWCA 101 at [27]. His Honour referred to the reasons of that court given in [2001] NSWCA 240. 95 Wrongs Act 1958 (Vic), s 24(2). 96 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 756. 97 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 756. 98 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 756. Kirby Perpetual suggested that there were fundamental flaws in accepting this approach, even if his Honour was wrong in treating contribution as unavailable under the Wrongs Act or otherwise. Thus, Perpetual invoked the recent observations of this Court concerning the inadmissibility of notions of contributory negligence when deciding the scope of a fiduciary's duty to a beneficiary99 and the basic principle that a fiduciary's liability to a beneficiary for breach of trust is one of restoration100. That the fiduciary's duty is to make good breaches arising from its default in discharging the fiduciary obligation is not in doubt101. As McLachlin J explained in Canson Enterprises Ltd v Boughton & Co102, this is because "[t]he fiduciary relationship has trust, not self-interest, at its core, and when breach occurs, the balance favours the person wronged. … In short, equity is concerned, not only to compensate the plaintiff, but to enforce the trust which is at its heart." Is it therefore self-evident (as Davies AJA appeared to consider) that a claim by Minters for contribution from Perpetual is bound to fail because to uphold it would work a fundamental offence to the liability of a trustee to restore the damage suffered by its beneficiary, that is, Perpetual to the beneficiary plaintiffs and Minters to Perpetual as its beneficiary? Futility is not established: In this Court, Perpetual relied upon the conclusion of the majority of the Court of Appeal that, if it came to the assessment of what was "just and equitable", Minters would still recover no contribution. I accept that this argument needs to be dealt with. However, ultimately, for a mixture of procedural and substantive reasons, I would not decide the appeal on this basis. First, when special leave was granted to Minters, it was made clear that this Court would not embark upon any question of apportionment and that the notice of appeal had to be amended to reflect this limitation, as indeed it was. The amended notice of appeal omits the ground of appeal challenging the conclusions of the courts below determining the amount of compensation 99 Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 201-202 [85]-[86] per McHugh, Gummow, Hayne and Callinan JJ, 230-232 [171]-[174] of my own reasons. 100 Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 224-225 [151]. 101 Breen v Williams (1996) 186 CLR 71 at 113; Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 201 [85], 224 [150]. 102 [1991] 3 SCR 534 at 543 cited Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR Kirby recoverable. Minters thus tendered to this Court only an issue of legal principle concerning the availability of recovery under the Wrongs Act. It asked that, if that principle were determined in its favour, the extent of any recovery should be remitted to the Supreme Court. In view of these developments, that is the course that should be taken. Secondly, and in any case, once it is decided (as I would conclude) that the Wrongs Act applies to the respective liabilities of Minters and Perpetual, it is arguable that no pre-existing doctrine of equity or of unwritten law concerning the liability of trustees ousts the statutory prescription. Although addressed to the kind of apportionment which he would have made in a case of coordinate liability in negligence, Rolfe J's assessment of the respective "responsibilities" for the damage of Minters and Perpetual, in the sense of the causes of the ultimate loss of the moneys deposited by the beneficiaries (namely 60% Minters and 40% Perpetual) suggests that there might yet be utility in considering the application of the Wrongs Act. The very broad criteria expressed in the Act, once it attaches, read against the background of Rolfe J's comment, suggest that a proper application of the Act might result in orders for contribution of a substantial kind. In so far as the earlier reasons of the Court of Appeal were addressed to the issue of equitable contribution, in circumstances requiring coordinate liability, they were not directed to the statutory question presented by s 24 of the Wrongs Act. This is what is "just and equitable having regard to the extent of … responsibility for the damage". It is arguable that the statute releases the decision-maker from the strictness of the old law. It is possible that it enlivens a large quasi-discretionary decision by reference to a more broadly stated criterion. None of these points has yet been decided by the Court of Appeal. Still less, having regard to the grounds of appeal, are they before this Court. I would therefore reject the first of Perpetual's "threshold" arguments for upholding the judgment of the Court of Appeal on the alternative conclusion stated by Davies AJA. It would be procedurally unfair, and premature, for this Court to decide the matter on such an argument. It is not obvious that the argument would prove fatal to Minters in the application of the Wrongs Act. The argument of "indemnity" fails Exclusion of other indemnities: More troubling is Perpetual's second "threshold" argument, advanced on the assumption that the provisions of the Wrongs Act were otherwise enlivened. This was that Perpetual was entitled, in the circumstances, to exclude the operation of the contribution provisions of the Wrongs Act on the basis of s 24AD(4) of that Act. There was no procedural impediment to considering this point. Indeed, it is involved in the issue of whether the Wrongs Act applies at all; and if so how. Kirby The sub-section in question reads, relevantly (with emphasis added): "(4) The right to recover contribution in accordance with section 23B supersedes any right, other than an express contractual right, to recover contribution (as distinct from indemnity) otherwise than under this Part in corresponding circumstances but nothing in this Part shall affect – any express or implied contractual or other right to indemnity … which would be enforceable apart from this Part …" Perpetual's argument invoked reflections of the point just dealt with. It drew upon the strict legal and equitable obligations that have hitherto governed trustees in relation to their beneficiaries in respect of breaches of trust; the restitutory principle governing the obligations of trustees; and the irrelevance, in that context, of notions of "contributory negligence" or "contributing fault" on the part of a beneficiary103. Because the general duty of the fiduciary has been expressed as one to "make good any losses arising from the breach"104, Perpetual argued that, as against Minters, it was entitled to a full replenishment of the trusts together with compound interest105. It submitted that this was, within s 24AD(4)(a) of the Wrongs Act, an "other right to indemnity" that "would be enforceable apart from [Pt IV of the Wrongs Act]". On that basis, Perpetual submitted that the Wrongs Act preserved the beneficiary's "right to indemnity" from its defaulting trustee. So preserved, the duty of Minters (as trustee) to Perpetual (as beneficiary) ousted any entitlement that might otherwise arise for contribution as between Minters and Perpetual pursuant to s 23B of the Wrongs Act. For its part, Minters argued that an "indemnity" comprised a promise. As such, s 24AD(4) was not concerned with the preservation of the rights of a beneficiary deriving from the law of trusts and not from any express or implied promise. It is true that indemnities commonly arise from promises of various 103 Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 201 [86], 228-232 [165]- [174]. See also Maguire v Makaronis (1997) 188 CLR 449 at 496. 104 Breen v Williams (1996) 186 CLR 71 at 113. 105 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 757. Kirby kinds106. There are some indications in the language of s 24AD(4) that the sub- section was concerned with contractual indemnities, these being expressly referred to in pars (a) and (b). However, the use of the words "or other" to signify that other (non-contractual) rights to indemnity were included, suggests that the sub-section is not limited to express or implied promises. Statutory indemnities give rise the construction urged by Perpetual in the context of s 24AD(4). On that footing, Perpetual submitted that its entitlement to "indemnity" excluded any entitlement of Minters to contribution pursuant to s 23B(1) of the Wrongs Act. to non-promissory obligations107. Such was Contribution is not bound to fail: I am not convinced that s 24AD(4) of the Wrongs Act has the effect claimed by Perpetual. It is not conventional to describe the rights of a trustee to follow trust money into the hands of another with notice of the trust as an "indemnity"108 any more than to describe the beneficiary's entitlement against a defaulting trustee as one of "indemnity". The rights of beneficiaries in relation to trustees are usually described, by reference to equitable principles, in terms of restoration or restitution. Because of the nature of equity and the purposes and flexibility of its remedies, the more mechanical legal notion of "indemnity" fits somewhat uncomfortably with the enforcement of a trustee's obligations to beneficiaries. The elliptical phrase "or other right to indemnity" is not, therefore, facially apt to import the obligations owed by a trustee (Minters) to a beneficiary (Perpetual). It would follow that s 24AD(4) is not enlivened by this case. An earlier suggestion by Minters of a contractual indemnity was rejected. It has not been reagitated in this appeal. Even if the foregoing conclusions were incorrect, it is important to note the limited operation of s 24AD(4), according to its terms. It does not "exclude" any entitlement to contribution. In that sense, the language of s 24AD(4) is to be contrasted with that of the former template109. All that s 24AD(4) provides is that nothing in Pt IV of the Wrongs Act affects any implied contractual or other right to indemnity. Upon this view, the suggested "indemnity" in the form of the trustee's obligation of restoration to the beneficiary remains. But arguably, it 106 Wren v Mahony (1972) 126 CLR 212 at 225-226; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 595; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 254. 107 McGrath v Fairfield Municipal Council (1985) 156 CLR 672 at 679-680. 108 Wynne v Tempest [1897] 1 Ch 110 at 114 per Chitty J. 109 eg Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1)(c): "[N]o person shall be entitled to recover contribution under this section from any person entitled to be indemnified". Kirby would still fall to be evaluated, in a case to which s 23B(1) of the Wrongs Act applies, by the very broad formula stated in s 24(2) of that Act110. The formula in s 24(2) of the Wrongs Act, being stated in legislation, is superimposed upon earlier equitable doctrine governing trustees' obligations to beneficiaries. That doctrine remains to be taken into account in identifying the damage shared between Minters and Perpetual and in coming to a conclusion of what is "just and equitable having regard to the extent of [Perpetual's] responsibility". Arguably, the "responsibility" in question is no longer simply that of a trustee to the beneficiary. It is the "responsibility" for the "damage" which has been suffered "by another person" (here, the plaintiff beneficiaries). In short, upon this view, the mind of the decision-maker is released from the former categories and rules of equity governing the duties of trustees to their beneficiaries. Instead, the decision-maker is invited, once the Wrongs Act is engaged, to stand back and make the broad judgment of "responsibility for the damage" which s 24(2) commands. Given the unsatisfactory history of contribution, that would not be an entirely surprising outcome. Conclusions and orders No one in this case has yet performed in a satisfactory fashion the function envisaged by the Wrongs Act, given the view that has been taken that contribution is unavailable both under that Act and by the rules governing equitable compensation. In this appeal Minters has, in my view, made good its complaint that the courts below failed to apply the provisions of the Wrongs Act, as the terms of that Act oblige. It is therefore necessary to return this aspect of the proceedings to the Supreme Court for the proper application of the widened language of the Wrongs Act to Minters' claim for contribution from Perpetual. Such application would permit a proper determination of Perpetual's two "preliminary" points that I have just mentioned. A consideration of those points at this stage does not suggest that Minters' claim under the Act is futile. I agree in the orders proposed by Callinan J. 110 cf Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 429-430 per McHugh J, concerning multiple causes in negligence claims. Callinan CALLINAN J. The question which this appeal raises is whether the appellant solicitors who were held to have acted in breach of trust and the Fair Trading Act 1985 (Vic), and negligently, in relation to funds of which the respondent trustee companies were trustees, and who had themselves acted in breach of trust, were entitled to recover contribution from the latter pursuant to s 23B of the Wrongs Act 1958 (Vic). The facts In late 1997, 40 plaintiffs sued five defendants in the Supreme Court of New South Wales. The plaintiffs were the beneficial owners of funds which were held on their behalf by the respondents. Some of the plaintiffs were themselves trustees for others. Each plaintiff claimed an amount of money that he or she had lost by its being invested, together with other sums of money held on behalf of others, between 1993 and 1995, in preference shares in EC Consolidated Capital Limited ("ECCC"), a company which went into liquidation on 15 July 1997. ECCC had invited members of the public to subscribe for redeemable "A" class preference shares in its capital. No smaller sum than $500,000 could be invested. The business of ECCC was the management of investments in the international money markets and in commodity contracts. ECCC stated in its offer documents that its obligations to redeem were supported by the provision of a "Deposit Certificate" issued by a "Prime Bank", in this case, Dresdner Bank AG, or a wholly owned subsidiary of it. The Deposit Certificate was to be a bearer certificate of deposit, guarantee, or a letter of credit drawn against the Prime Bank and lodged with a "Paying Agent". The Paying Agent was to be National Registries Pty Limited ("National Registries"). The purpose of these arrangements was to secure the investors' capital investment. The respondents ("the Perpetual Companies") were trustees of two managed superannuation funds that were directed by several of their beneficiaries to invest their funds in ECCC. The Perpetual Companies were the third and fourth defendants at first instance and are the respondents to the appeal in this Court. The appellants acted as solicitors for ECCC. They drafted the agreements that set out the basis on which the funds would be released to ECCC. One such agreement was the "Subscription Agreement" which prescribed the obligations to which I have referred, to obtain Deposit Certificates. The appellants also acted as agents for the Perpetual Companies on completion of each settlement. This dual relationship inevitably gave rise to the possibility of a conflict of interest. They held the subscriptions paid by investors in their trust account. The money was to be released to ECCC in accordance Callinan with the Subscription Agreement only, that is, relevantly, when Deposit Certificates of the kind proposed in the offer documents became available. The appellants neither received nor sighted Deposit Certificates, yet they released the funds to ECCC. ECCC's failure to provide a conforming Deposit Certificate was a breach by ECCC of the Subscription Agreement. The appellants did not notify the Perpetual Companies of this fact. To the contrary, they wrote to National Registries, the Paying Agent, after each settlement, enclosing a document that they misdescribed as a Deposit Certificate, for safe custody. The lack of conforming Deposit Certificates led to the loss of the investors' funds because, on ECCC's insolvency, the investors had no recourse to the Prime Bank or otherwise. Trial at first instance All except two of the plaintiffs sought and received financial advice from Feldworth Financial Services Pty Limited ("Feldworth"). The advice was provided by the managing director of Feldworth, Mr Hans Felden. Feldworth and Mr Felden were the first and second defendants in the proceedings at first instance. Feldworth and Mr Felden did not defend the case brought against them, and the trial judge, Rolfe J, gave judgment against them. Thereafter their involvement in these proceedings ceased. The plaintiffs succeeded against the Perpetual Companies also. Rolfe J concluded that they were guilty of gross dereliction of duty as trustees. In particular, his Honour held that the appointment of the appellants as their agent without regard to the latter's conflict of interest fell short of the standard of conduct to be expected of a reasonable and prudent trustee. His Honour found that the breach was compounded by the failure of the respondents to make any enquiries of the solicitors or National Registries whether the Deposit Certificates had been received. The fifth defendant was Flexiplan Australia Limited ("Flexiplan") which in 1993 replaced one of the Perpetual Companies as the trustee of one of the superannuation funds. The plaintiffs alleged that Flexiplan had acted in breach of its duty as a trustee by failing to obtain written confirmation that the Deposit Certificates had been obtained and were being held by National Registries. Rolfe J was of the view that Flexiplan's position on becoming trustee was different from that of the Perpetual Companies. It was not involved in any transaction in which money was to be expended. That had already happened. The only asset of the trust was the block of ECCC shares that had already been acquired. In the result, his Honour held that the plaintiffs had not established any relevant breach of duty by Flexiplan. No issue was taken in relation to that Callinan finding. Flexiplan was not a party to an appeal to the Court of Appeal, and is not a party to the appeal in this Court. The plaintiffs did not join the appellants as defendants at first instance. The respondents, the Perpetual Companies, cross-claimed against them. Rolfe J found that the appellants had acted negligently, and were derelict in their duty as agent for the respondents. His Honour also found that the appellants had acted in breach of s 11 of the Fair Trading Act on the basis that they had wrongly conveyed the impression, in letters to the respondents, that conforming Deposit Certificates had been obtained. At the trial the appellants had conceded liability for breach of trust and negligence, but had sought to escape liability by relying on an exemption clause contained in the Subscription Agreement. Rolfe J concluded that the exemption clause was intended to relieve the solicitors from liability in carrying out their obligations under the Subscription Agreement only: the liability asserted against the appellants in this case did not arise under it. Rather, it arose in the context of their relationship of agency with the respondents. His Honour therefore gave judgment in favour of the respondents against the appellants. The appellants had further submitted at the trial that even if they were guilty of any of the breaches alleged, no damage flowed from them because the chain of causation had been broken by the actions of the respondents in dealing with the Prime Bank. His Honour was nonetheless satisfied that it was the appellants' breaches that led to the failure to obtain conforming Deposit Certificates and that, but for the breaches, the loss would not have been sustained. Rolfe J also held that in the circumstances contribution was not available. The plaintiffs were entitled to recover from the respondents, and the respondents were entitled to recover from the appellants: their respective liabilities arose from different breaches and there was no co-ordinate liability. If it were otherwise, and he was bound to apportion responsibility, he would, his Honour said, have attributed liability of 60% to the appellants and 40% to the respondents. His Honour's disposition of the proceedings between the appellants and the respondents followed detailed argument by the parties which raised and developed the points which his Honour discussed. It should be kept in mind that the action was brought in the commercial division of the Court in which statements and arguments tend sometimes to take the place of detailed pleading, and in practice provide the basis for the joinder of issues. Although there were extensive pleadings here, it is plain that there were also departures from, and Callinan additions to them in argument. I am satisfied that in all relevant and practical senses, the issues argued in the appeals were sufficiently raised at the trial. Appeal to the New South Wales Court of Appeal The appellants appealed to the Court of Appeal of New South Wales (Stein JA, Davies AJA and Ipp AJA). They contended that the primary judge erred in his construction of the exclusion clauses and that their effect, on their ordinary and natural meaning, was to relieve the solicitors of all liability to the Perpetual Companies. They also argued that his Honour had erred in rejecting the appellants' claim for contribution from the respondents. The first argument failed and needs no further consideration. With respect to contribution, Stein JA reviewed a number of recent cases, including Cockburn v GIO Finance Ltd (No 2)111, in which it was held that a common obligation giving rise to co-ordinate liability can only arise in cases in which the parties are liable to perform substantially the same obligation, and the liabilities are of the same nature and to the same extent: "The liability of [the appellants] to [the respondents] arose out of the breach by the solicitors of the trust arising under the Subscription Agreement and by reason of the appointment of the solicitors as [the Perpetual Companies'] agent on settlement, as well as for negligence in the performance of their trust obligations. These were different trusts and different breaches. They were simply not 'of the same nature and the same extent'. There was no common obligation owed to the beneficiaries. Indeed, the obligation of the solicitors was to [the Perpetual Companies] ... The transactions were related, however this is not sufficient. Something more is needed to enliven the right to contribution. It cannot be said that the solicitors and [the Perpetual Companies] are liable to perform substantially the same obligation. Indeed, they are liable with respect to different obligations and the liability is not a common one. The solicitors had no liability which was capable of being co-ordinate with [the Perpetual Companies'] liability to [their] beneficiaries." Davies AJA agreed generally with Stein JA. On the issue of contribution, his Honour noted that the claim was pursued under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or s 23B of the Wrongs Act, each of 111 (2001) 51 NSWLR 624. Callinan which is relevantly to the same effect, and also, on the basis of an entitlement to contribution in equity. On any basis, his Honour held, although he did not deal in detail with those two Acts, the claim failed. "[The Perpetual Companies], on the one hand, and the solicitors, on the other, were not under co-ordinate liabilities in respect of the damages awarded. The damages which the solicitors were ordered to pay ... were awarded because they flowed from the solicitors' breach of their duty to those parties. One party who has been ordered to pay monies to another party, by way of compensation for breach of trust, may not rely upon principles of contribution to recover back some of the damages which it has been ordered to pay ... [The Perpetual Companies], on the one hand, and the solicitors, on the other, were not persons whose liability was 'of the same nature and the same extent'. These words were used by Lord Chelmsford in Caledonian Railway Co v Colt112 and by Lord Ross in BP Petroleum Development Ltd v Esso Petroleum Co Ltd113. They were adopted by Gummow J in Street v Retravision (NSW) Pty Ltd114 and by Mason P in Cockburn v GIO Finance Ltd115. Mason P said that this requirement 'emphasises the need for the two parties to be liable to perform substantially the same obligation'." The Perpetual Companies subsequently moved the Court for orders to lead to a full and proper consideration of the appellants' submission founded on s 23B of the Wrongs Act. The Court indicated that it would provide supplementary reasons in response to written submissions in respect of that section. Stein JA adhered to his opinion that the appellants were not entitled to an order for contribution, whether under the Wrongs Act or otherwise. His Honour concluded that on the proper construction of s 23B(1) and s 23A(1) of the Wrongs Act, the appellants could only recover contribution from any other person liable in respect of the same damage if the parties who suffered the damage (the plaintiff beneficiaries) were entitled to recover compensation from the appellants in respect of that damage. His Honour held that such a condition could not be satisfied in this case because the beneficiaries of a trust do not have a right of action for compensation against a third party who may have been in 112 (1860) 3 Macq 833 at 844. 113 1987 SLT 345 at 347. 114 (1995) 56 FCR 588. 115 (2001) 51 NSWLR 624 at 632 [28]. Callinan breach of an obligation owed to the beneficiaries' trustee: because the appellants' liability was solely to the respondents who alone had a liability to the beneficiaries, the appellants were not entitled to contribution. The authorities upon which his Honour relied appear from the following passages in his judgment: "Section 23B(1) has to be understood in the light of the definitional provision in s 23A(1). The latter provision says that 'a person is liable in respect of any damage' (the same words as in s 23B(1)) 'if the person who suffered that damage ... is entitled to recover compensation from the first mentioned person in respect of that damage ...'. Substituting the parties to this litigation into the provision means that the appellant solicitors may recover contribution from any other person liable in respect of the same damage if the beneficiaries (who suffered the damage) are entitled to recover compensation from the appellants with respect of that damage. For s 23B to apply it is therefore essential that the beneficiaries are entitled to recover compensation from the appellants. This requirement cannot be here satisfied because, as a general proposition, beneficiaries of a trust do not have a right of action for compensation against a third party who wrongly breached an obligation owed to the trustee of the beneficiaries. See, for example, Hayim v Citibank NA116. ... There are some circumstances where beneficiaries may be entitled to join their trustee in proceedings against a third party, but the rationale is to enforce the trustee's rights as against the third party. It is only in an exceptional case, such as BT Australia Ltd v Raine & Horne Pty Ltd117, where beneficiaries, on particular facts, have a direct right of action against a third party. Such a situation does not arise in the present case. In the instant case the appellants' liability was solely to the respondents and the respondents alone had a liability to the beneficiaries ..." (original emphasis) Davies AJA reiterated his view that the respondents were under no liability to contribute under the Wrongs Act because there was no co-ordinate liability in respect of the damages awarded. The appellants were ordered to pay 116 [1987] AC 730 at 748. 117 [1983] 3 NSWLR 221. Callinan damages because of the breach of their duty to the respondents. This was a separate and distinct source of liability from that of the respondents which arose from the breach of their duty to the beneficiaries. Davies AJA further held that in the circumstances it would not be just and equitable for an order for contribution to be made. His Honour referred to s 24(2) of the Act which provides that a court has the power to exempt any person from liability to make a contribution, and concluded that the Perpetual Companies were entitled in the circumstances to be fully indemnified by the solicitors. Ipp AJA agreed with the supplementary reasons of both Stein JA and Davies AJA. The appeal to this Court The solicitors have appealed to this Court on only one ground, namely that: "The Court [of Appeal of New South Wales] erred in holding that the Appellants are not entitled to contribution against the Respondents pursuant to section 23B of the Wrongs Act 1958 (Victoria)." It is necessary to set out the relevant parts of s 23A(1) and s 23B of the Wrongs Act: "23A Definitions For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependants of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise. 23B Entitlement to contribution Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise). (2) A person shall be entitled to recover contribution by virtue of sub-section (1) notwithstanding that that person has ceased to be Callinan liable in respect of the damage in question since the time when the damage occurred provided liable that immediately before that person made or was ordered or agreed to make the payment in respect of which the contribution is sought. that person was so (3) A person shall be liable to make contribution by virtue of sub-section (1) notwithstanding that that person has ceased to be liable in respect of the damage in question since the time when the damage occurred unless that person ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against that person in respect of the damage was based. Subject to section 24(2B), a person who in good faith has made or agreed to make any payment in settlement or compromise of a claim made against that person in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not the person who has made or agreed to make the payment is or ever was liable in respect of the damage provided that that person would have been liable assuming that the factual basis of the claim against that person could be established. Subject to section 24(2B), a judgment given in an action brought by or on behalf of the person who suffered the damage in question against any person from whom contribution is sought under this section shall be conclusive in the proceedings for contribution as to any issue determined by that judgment in favour of the person from whom the contribution is sought. References in this section to a person's liability in respect of any damage are references to any such liability which has been or could be established in an action brought against that person in Victoria by or on behalf of the person who suffered the damage and it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a place outside Victoria." The appellants contend that on three separate bases under the Act they are entitled to contribution from the respondents: first, that their conduct and that of the respondents, both being breaches of a fiduciary kind, caused the same damage to the same victims; secondly, that both are relevantly, that is co-ordinately, liable in respect of that damage; and, thirdly, that the appellants were in any event, in the unusual circumstances of this case, directly liable to the original plaintiffs, although they were only beneficially entitled to the relevant Callinan funds, and therefore both the appellants and the respondents are liable in respect of the same damage. Because of the view that I take of the third of the appellants' contentions it is unnecessary for me to deal with the other two of them. The appellants' third contention is that, because they were, in the circumstances, directly liable to the plaintiff beneficiaries under s 11 of the Fair Trading Act, they were liable in respect of the same damage as the respondents. The respondents argue that liability on this basis is entirely hypothetical: that, for example, it cannot be known whether the plaintiff beneficiaries would have obtained a judgment against the appellants for contravention of the Fair Trading Act. But that is precisely the decision which a court construing the Wrongs Act has to make, and, as here, sometimes in circumstances in which the plaintiffs have for their own good reasons been selective about whom they have sued, and upon which causes of action they have relied. The respondents' argument does not therefore answer the appellants' contention. Section 23B(6) of the Wrongs Act refers to "liability which has been or could be established" in respect of a person. It accordingly becomes necessary to determine whether on the facts an action under the Fair Trading Act could have been successfully maintained. Section 11(1) of the Fair Trading Act provided118: "A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 37(1) of that Act provided119: "A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part II may recover the amount of the loss or damage by proceeding against that other person or against any person involved in the contravention." Rolfe J found that the appellants had engaged in misleading conduct with respect to the statements that they made to the respondents and which gave the 118 The Fair Trading Act 1985 (Vic) was repealed on 1 September 1999. Section 11 of that Act has been re-enacted as s 9 of the Fair Trading Act 1999 (Vic). 119 The Fair Trading Act 1985 (Vic) was repealed on 1 September 1999. Section 37 has been substantially re-enacted as s 159 of the Fair Trading Act 1999 (Vic). Callinan impression that settlement of particular purchases of shares in ECCC had taken place conformably with the Subscription Agreement. The further question therefore becomes whether the conduct that misled the respondents could also be taken to have caused the beneficiaries to have suffered loss, injury or damage. As will appear, in my opinion it did. Reference should first be made to Poignand v NZI Securities Australia Ltd120 in which Gummow J considered the operation of s 87(1A) of the Trade Practices Act 1974 (Cth) which has features in common with s 37 of the Fair Trading Act and which provides as follows: "(1A) Without limiting the generality of section 80, the Court may: on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of [relevantly, s 52]; or make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will: compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person." In that case, beneficiaries who had suffered or were likely to suffer loss or damage because of the conduct of a third party in dealing with the trustee of the relevant trust were themselves able to seek remedies against the third party under the Trade Practices Act. This was so because of the operation of s 87(1A) which allowed action to be taken by the beneficiaries even though the conduct which contravened the Trade Practices Act was directed to the trustee. In affirming that construction of s 87(1A), Gummow J said121: 120 (1992) 37 FCR 363. 121 (1992) 37 FCR 363 at 372. Callinan "The result of the operation of the statute law is to confer standing upon the unit holders to act now against the respondents for contravention of the TP Act and to seek various remedies." there, What his Honour said in my opinion, apposite here. Section 37(1) of the Fair Trading Act in its terms operated to confer standing upon the plaintiff beneficiaries to sue the appellants had they so wished. Had the plaintiff beneficiaries chosen to commence an action against the appellants for breach of the Fair Trading Act, they would not, in my view, have had to show that they themselves relied on the misleading or deceptive representations made by the appellants122. Rather, they would have needed only to show that the misleading or deceptive conduct of the appellants was a genuine causal factor in their loss. In the present case it cannot be doubted that the plaintiff beneficiaries suffered loss. What was the loss? It was the money that they had provided to the respondents for investment on their behalf. That was what the plaintiffs sought to recover, and it was of no consequence to them who reimbursed them or how, legally, those involved might choose to characterize the plaintiffs' entitlement and those others' obligations. Was the loss of the plaintiffs' money caused by the appellants' misleading and deceptive conduct towards the respondents as well as the respondents' breaches of trust? In my view, the loss was similarly caused by the conduct that misled the respondents and induced them to act in the manner that they did. Had the appellants not misled the respondents as to whether the making of the investments was being done in conformity with the Subscription Agreement, it is likely that the respondents would not have continued to invest the beneficiaries' funds in ECCC and could and would have called for a return of money earlier invested, and at a time when ECCC would have been in a position to refund it. The fact that other money held on behalf of other persons may have also been invested and lost does not mean that other readily quantifiable losses and therefore damages could not be recovered by the plaintiff beneficiaries here, from the appellants. If it be the case that a cause of the beneficiaries' loss was the appellants' breach of the Fair Trading Act also, as I think it was, the situation is this. First, the respondents are liable to the beneficiaries to the extent of the funds invested on their behalf in ECCC. Secondly, the appellants were also liable to the beneficiaries to the extent of the money invested in ECCC on their behalf. It follows that the respondents and the appellants are "liable in respect of the same damage", the loss of the beneficiaries' money, for the purposes of s 23B(1) of the Wrongs Act. It is not relevant that the beneficiaries did not in fact pursue an 122 See Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Pacific Coal Pty Ltd v Idemitsu Queensland Pty Ltd (1992) ATPR (Digest) ¶46-094. Callinan action against the appellants. This follows from the language of s 23B(6) of the Act. For the first time, during oral argument in this Court, the respondents sought to rely upon the expiration of the period of limitation stated in s 37(2) of the Fair Trading Act which provided as follows: "A proceeding under sub-section (1) may be commenced at any time within three years after the date on which the cause of action accrued." Even if the respondents were allowed to set up a previously unheralded limitations defence at this late stage, it would fail for the reason that the Wrongs Act is concerned not with whom a plaintiff has chosen to sue or not to sue, but whom it might have sued, at or by the time when the contribution proceedings were actually commenced. The appellants are therefore entitled to contribution from the respondents under the Act. The general rule that beneficiaries may not sue on their own behalf in respect of damage caused by third parties to trustees unless the trustees refuse to sue, in which event they should also be joined as defendants in the beneficiaries' suit, has no relevant application in the circumstance that there is a separate statutory remedy which is not to be constrained, whether by a non-statutory rule, however well established, or otherwise. To that rule in any event there are exceptions and this, it seems to me, would be one of them. As Lord Templeman, in giving the advice of the Privy Council in Hayim v Citibank NA123 said: "[The] authorities demonstrate that a beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustee in the performance of the duty owned by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate." Such an exception is well justified. A beneficiary is entitled to be wary of the enthusiasm and performance in litigation of a trustee, even if the trustee has duly instigated it, in circumstances in which there is obviously much potential for a conflict of interest and the trustee's own conduct is seriously impugned. This provides good reason for an exception of the kind identified by the Privy Council. Hayim does not in my respectful opinion stand as an authority in support of the respondents' arguments. Indeed it assists the appellants. The other 123 [1987] AC 730 at 748. See also the summary of Powell J of other cases which demonstrates that there is no absolute rule of preclusion of action by beneficiaries in Ramage v Waclaw (1988) 12 NSWLR 84 at 91-92. Callinan case, BT Australia Ltd v Raine & Horne Pty Ltd124, which Stein JA in the Court of Appeal thought relevant also assists them. It was a case of negligent misstatement. If a negligent misstatement may in principle, and I see no reason why it should not, be equated with any other form of negligent conduct or breach, by misrepresentation or deceptive conduct contrary to the Fair Trading Act, then relief in favour of the appellants should be available here. If the unit holders in BT Australia could sue the misrepresentor there, then there is no reason in principle why the plaintiff beneficiaries might not sue the appellants here, as misrepresentors under the Fair Trading Act. It has been suggested that because some of the plaintiffs were themselves trustees, if the appellants were to succeed here, then by parity of reasoning the plaintiffs' beneficiaries also, and indeed any beneficiaries of beneficiaries, and so on, could also sue: that such a possible consequence provided reason to deny the appellants relief by way of contribution. This is, in a sense, a type of floodgates argument. I would reject it. The general principle stands, and any beneficiaries would, before they could sue, need to bring themselves within an exception to it, assuming that they could in all other respects show that they had a good cause of action. It has also been suggested that in some way the appellants would be placed in an unjustifiable position of advantage if they were entitled to recover contribution, because of a circumstance of a fortuitous kind, the presence of beneficiaries under a trust having a right personally to sue the appellants, rather than being confined to their rights against the respondent trustees. I do not agree with the suggestion. The right to contribution is the consequence at which the Wrongs Act aims and follows from a natural reading of it and the Fair Trading Act. Furthermore, and in any event, exposure to the possibility of multiple claims is hardly an advantage. The fact that the plaintiffs chose not to make them all is itself entirely fortuitous and has nothing to say about the meaning of the Wrongs Act. It is an Act intended to extinguish technical defences based on old equitable and common law rules which denied a fair and reasonable sharing of blame among those who have contributed to identifiable loss and damage, and it is to that intention, readily discernible from its language, that I will give effect. Contrary to what Rolfe J said, the whole purpose of the Act is to focus on the damage, and not the breaches. The nature of the breaches is irrelevant. Whether there is liability depends upon the identification of the damage and not on the causes of action available or chosen to pursue it. 124 [1983] 3 NSWLR 221. Callinan The respondents' claim for indemnity Kirby J in his judgment has dealt with the respondents' reliance on s 24AD(4) of the Wrongs Act. I agree with his Honour's reasoning and conclusions with respect to that reliance. I need add nothing about it. The appeal should be allowed. The orders of the Court of Appeal should be set aside to the extent that they dismissed the appellants' claim for contribution. In place of those orders the appeal to that Court should be allowed to such extent, with costs. The proceedings should be remitted to the Commercial List of the Equity Division of the Supreme Court of New South Wales for determination of the amount of contribution which the appellants should recover under the Wrongs Act. The respondents should pay the appellants' costs of the appeal to this Court. It will be for the Supreme Court of New South Wales to decide the issue of costs in that Court.

HIGH COURT OF AUSTRALIA AND APPELLANT KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT & ORS RESPONDENTS Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 6 October 2005 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 30 July 2003 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation: J V Nicholas SC with C Dimitriadis for the appellant (instructed by Gadens Lawyers) D K Catterns QC and R Cobden for the respondents (instructed by Blake J Basten QC with G C McGowan SC and L G de Ferrari appearing as amici curiae on behalf of the Australian Digital Alliance Limited and the Australian Libraries Copyright Committee (instructed by Sarah Waladan) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Stevens v Kabushiki Kaisha Sony Computer Entertainment Intellectual property – Copyright – Circumvention devices – Circumvention of a technological protection measure – Definition of "technological protection measure" in s 10(1) of the Copyright Act 1968 (Cth) ("the Act") – Respondents produced and sold computer games on CD-ROMs for use with PlayStation consoles – Access codes on the CD-ROMs could not be reproduced by conventional CD recording or copying devices – Games could only be played if access codes were read by the boot ROM device within a PlayStation console – Appellant sold and installed "mod chips" into PlayStation consoles which allowed unauthorised copies of games to be played – Whether appellant had knowingly sold or distributed a circumvention device which was capable of circumventing, or facilitating the circumvention of, a technological protection measure – Whether access codes and boot ROM were technological protection measures – Whether access codes and boot ROM prevented or inhibited the infringement of copyright by preventing access to unauthorised copies of games. Intellectual property – Copyright – Circumvention devices – Literary works – Computer programs – Reproduction in a material form – Definition of "material form" in s 10(1) of the Act – Parts of program code reproduced in the random access memory ("RAM") of a PlayStation console as game is being played – Whether access codes and boot ROM prevented or inhibited the infringement of copyright in a literary work by preventing a substantial part of a computer program from being reproduced in RAM – Whether RAM a "material form" for the purposes of the Act. Intellectual property – Copyright – Circumvention devices – Subject-matter – Cinematograph films – Part of the aggregate of visual images contained in program code copied in the RAM of a PlayStation console as game is being played – Whether access codes and boot ROM prevented or inhibited the infringement of copyright in a cinematograph film by preventing a copy of the film being made in RAM – Whether a substantial part of a cinematograph film is embodied in RAM as game is being played. Statutes – Statutory construction – Approach where provision is ambiguous – Approach where provision is the product of legislative debate over evolving technology and compromise – Use of extrinsic materials – Relevance of legislative history – Relevance of policy considerations – Preference for interpretation which upholds fundamental rights. Words and phrases – "circumvention device", "technological protection measure", "prevent or inhibit", "material form", "cinematograph film", "substantial part". Copyright Act 1968 (Cth), ss 10(1), 116A. Copyright Amendment (Digital Agenda) Act 2000 (Cth). GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. With effect from 4 March 2001, the Copyright Amendment (Digital Agenda) Act 2000 (Cth) ("the Amendment Act") made significant amendments to the Copyright Act 1968 (Cth) ("the Act"). This appeal concerns a dispute as to the construction of the "circumvention device" provisions introduced by the Amendment Act. The scope of copyright law Over a long period amendments to copyright law have comprised legislative solutions to problems created by competing economic and social pressures associated with the development of new technologies. The issues in the present appeal indicate that this is very much the case today. The well-established categories of original works of authorship have been supplemented by various types of "subject-matter other than works" (including, significantly for this case, cinematograph films), certain "moral rights" have been conferred on individuals, and computer programs have been protected as literary works. This last step has been taken notwithstanding any incongruity in treating computer programs as literary works given "their objective of making hardware function rather than of conveying anything immediately perceivable to humans"1. Copyright in both works and other subject-matter remains defined in the Act primarily in terms of the doing (or the authorising of the doing) of any of various acts listed as those comprised in the relevant copyright2. Other infringement provisions include those dealing with importation for sale and hire (ss 37, 102) and sale and other dealings (ss 38, 103). It follows from this specificity that not all activities involving the use of copyright material require a licence to escape infringement3. (Patent law has operated more broadly, with the traditional terms of the grant of monopoly being to "make, use, exercise and vend" the invention; however, no patent rights were claimed in this litigation.) Merely to read a copy of a book is not to infringe the literary work of which the book is a material reproduction. Further, the making available of means of 1 Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004) at 3 Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004) at reproduction which may or may not amount to infringement has been held not necessarily to amount to authorisation of infringement4. This litigation turns upon the Amendment Act which expand neither the existing categories of copyright works and other subject-matter protected by the Act nor the categories of infringement. Rather, the legislation in question deals with "anti-spoiler devices" which would allow the side-stepping of technical barriers to copying. the construction of provisions Anti-spoiler devices There is considerable controversy in Australia and elsewhere concerning the proper scope of such legislation5. However, the task of the Court on this appeal is to construe the particular compromises reflected in the terms of the Amendment Act. The development of technical barriers to copying and the escalation of a struggle between those who design such barriers and those who devise means of surmounting them is not new. Professor Cornish writes6: "Back in the 1970s and 1980s, the answer to analogue copying on photocopiers, cassette decks, and video recorders was pronounced to lie in the machines themselves: but the eternally springing hopes were often enough dashed. Every locked door seemed to produce a hacker with a jemmy. With the Internet, technical control remains the core objective, because it seems the only hope for preserving the copyright industries in something resembling their present form." (original emphasis) A legislative response to problems identified in the pre-Internet age had been made in the United Kingdom in s 296 of the Copyright, Designs and 4 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 497-498; Sony Corp of America v Universal City Studios, Inc 464 US 417 (1984); CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013. 5 Kell, Maurushat and Tacit, "Technical Protection Measures: Tilting at Copyright's Windmill", (2002-2003) 34 Ottawa Law Review 7. 6 Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004) at Patents Act 1988 (UK) ("the 1988 UK Act")7. Section 296(2) used the broadly stated expression "any device or means specifically designed or adapted to circumvent the form of copy-protection employed". Section 296(4) defined the phrase "copy-protection" as including "any device or means intended to prevent or restrict copying of a work or to impair the quality of copies made". The distinction between preventing or restricting copying of a work and the impairment of the quality of copies made remains important in considering the construction of the current Australian legislation. The Amendment Act Section 3 of the Amendment Act sets out what are stated to be the objects of that statute. These objects are expressed largely by reference to the Internet and online access to copyright material. According to the Revised Explanatory Memorandum to the Senate on the Bill for the Amendment Act ("the Explanatory Memorandum")8, "the keystone" to the reforms provided by the Bill was the introduction9 of a "new technology-neutral right to communicate literary, dramatic and musical works to the public". This would "provide copyright owners with greater protection for their material in the new digital environment". However, the substantive provisions of the Amendment Act with which this appeal is concerned deal with a different matter, technical control of "access". to circumvention devices and electronic The Amendment Act inserted Div 2A (ss 116A-116D) in Pt V of the Act. Part V is headed "Remedies and offences". Division 2A is headed "Actions in rights management relation information". The Amendment Act also introduced additions to the offence provisions contained in Div 5 (ss 132-133A) so as to create new offences for contravention of the new Div 2A. The Amendment Act further introduced new definitions into s 10 of the Act. The Act has been further amended on five occasions, the last set of changes being those made with effect from 1 January 2005 by the US Free Trade Ageement Implementation Act 2004 (Cth) ("the 2004 Act"). This litigation is concerned with the statute in what is to be taken as its form at the date of commencement of the Amendment Act, 4 March 2001. 7 Sections 296-296ZF were substituted in the United Kingdom legislation for s 296 by the Copyright and Related Rights Regulations SI 2003/2498, reg 24(1). 8 par 50. 9 By what in the Act became sub-par (iv) of s 31(1)(a) and sub-par (iii) of s 31(1)(b), these expressed the new right as one "to communicate the work to the public". In the Explanatory Memorandum10 it was said that the provisions of Div 2A were intended to provide "appropriate measures for the enforcement of copyright in the digital environment" and to provide "effective civil remedies against the abuse of technological copyright protection measures". In particular, Div 2A provided copyright owners "with new civil remedies against persons who make, commercially deal in, import, advertise, market or make available online devices, or provide services, used to circumvent technological copyright protection measures". The Explanatory Memorandum11 also stated that the changes made were intended to ensure that Australia provided adequate legal protection and effective legal remedies to comply with "the technological measures obligations" in two treaties negotiated in 1996 in the World Intellectual Property Organization ("WIPO"). One of these was the WIPO Copyright Treaty, which became effective on 6 March 2002. Article 11 of the WIPO Copyright Treaty stated: legal remedies against "Contracting Parties shall provide adequate legal protection and the circumvention of effective effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law." It will be apparent that the provision is expressed in broad terms, leaving considerable scope to individual States in deciding on the manner of implementation12. The Explanatory Memorandum further said of the new Div 2A13: 10 par 181. 11 par 183. 12 Article 18 of the second WIPO treaty, the WIPO Performances and Phonograms Treaty, provided similarly to Art 11 of the WIPO Copyright Treaty but in relation to performers and producers of sound recordings. 13 par 182. Article 12 of the WIPO Copyright Treaty dealt with "electronic rights management information", that is to say such things as the electronic identification of author, owner, terms and conditions of use, and code numbering, and obliged (Footnote continues on next page) "These provisions will operate to provide copyright owners and their licensees with an effective means of enforcing their rights in the online environment whilst simultaneously allowing for the operation of some exceptions to the exclusive rights of copyright owners. In this way, the provisions are intended to strike a fair balance between the rights of copyright owners and the rights of copyright users." The contrast between legislation such as Div 2A and the protection of copyright in works and other subject-matter was drawn by the Committee on Commerce of the House of Representatives of the United States Congress when considering legislation proposed to amend the copyright law and to implement in the United States Art 11 of the WIPO Copyright Treaty. The United States legislation that resulted, the Digital Millennium Copyright Act 1998, amended Title 17 of the United States Code, introducing inter alia 17 USC §1201, to which more detailed reference will be made below. With respect to the previous copyright provisions, that Committee said in Pt 2 of its report14: "In general, all of these provisions are technology neutral. They do not regulate commerce in information technology, ie, products and devices for transmitting, storing, and using information. Instead, they prohibit certain actions and create exceptions to permit certain conduct deemed to be in the greater public interest, all in a way that balances the interests of copyright owners and users of copyrighted works." The Committee went on to refer to the use of the term "paracopyright" to identify anti-circumvention provisions, liability under which could result from conduct independent of any act of infringement or of any intent to promote infringement15. Before turning to consider the submissions respecting the construction of the definition of "technological protection measure" in the Act, it should be observed that the broad terms of Art 11 of the WIPO Copyright Treaty have supported legislation of various countries which is in differing forms. For Contracting States to provide adequate and effective legal remedies against misuse. Article 12 is reflected in ss 116B and 116C in Div 2A. No question arises in this litigation concerning those provisions. 14 HR Rept No 105-551 Pt 2 at 24 (1998). 15 HR Rept No 105-551 Pt 2 at 24 (1998). example, in the United States, 17 USC §1201, which is headed "Circumvention of copyright protection systems", deals with the matter in different terms from those of Div 2A in the Australian legislation. Section 1201(a)(1)(A) states that "[n]o person shall circumvent a technological measure that effectively controls access to a work protected under this title". Then, §1201(a)(3) provides: "As used in this subsection– (A) to 'circumvent a technological measure' means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner; and (B) a technological measure 'effectively controls access to a work' if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work." The Australian legislative materials identified in the written submissions to the Court indicate that proposals were made by the International Intellectual Property Alliance to the House of Representatives Standing Committee on Legal and Constitutional Affairs in favour of the adoption of legislation in terms such as those of the United States, with emphasis upon protection for all devices controlling access to a work. However, as will be apparent, the legislation as enacted takes a different form, with an emphasis upon measures designed to prevent or inhibit infringement. The facts The present respondents (collectively described as "Sony") produced and sold computer games on CD-ROMs for use with PlayStation consoles. Sony as owner or exclusive licensee controls the copyright in the computer programs (as literary works under the Act) and in the cinematograph films (as subject-matter other than works) embodied in the CD-ROMs for the games. On two occasions after the commencement of the Amendment Act, the appellant, Mr Stevens, sold unauthorised copies of PlayStation games. The games were titled "Croc 2", "Medi Evil", "Motor Races World Tour" and "Porsche 2000". Mr Stevens was not sued for any acts on his part that might have constituted infringements of Sony copyright in any computer program or cinematograph film. Nor were the makers of the unauthorised copies, whether However, the PlayStation software contained access restrictions described as follows by Sackville J in his judgment at first instance16: "The PlayStation software incorporates an access code, or a number of encrypted sectors of data that cannot be reproduced by conventional CD recording or copying devices (usually referred to as 'burning' mechanisms). The access code is stored on an encrypted portion of the CD-ROM and essentially consists of a string of characters. This string must be read by the boot ROM located within the PlayStation console if the particular game is to be played. The boot ROM recognises whether there is an access code and specifically what kind of access code it is. The access code is inaccessible to standard CD-ROM 'burners' or standard CD replication manufacturing parts." Sony contended that, in this state of affairs, a "technological protection measure" could be said to exist in the boot ROM, or the access code in the PlayStation software, or the two in their combined operation. In addition to supplying the unauthorised copies, Mr Stevens on three occasions sold and installed "mod chips" into PlayStation consoles. The unauthorised copies could not be played upon an "unchipped" or unmodified PlayStation console because they did not have the requisite access code. However, these copies could be played upon the "chipped" PlayStation consoles which Mr Stevens had modified. By proceedings instituted in the Federal Court, Sony alleged that contrary to s 116A (inserted in the Act by the Amendment Act) Mr Stevens without permission had knowingly sold or distributed a "circumvention device" which the circumvention of a was capable of circumventing or facilitating "technological protection measure" which protected Sony's copyright in literary works (computer programs) and cinematograph films. The litigation By its application in the Federal Court, Sony sought against Mr Stevens a declaration, damages, an injunction and civil relief under the civil remedies provision in s 116D. Sackville J held that the claims by Sony under Div 2A 16 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2002) 200 ALR 55 at failed17. In the Full Court, Sony succeeded on the first of three issues, but not on the second or third18. However, Sony's success was sufficient to entitle it to substantial relief against Mr Stevens. The Full Court made a declaration as follows: "On 8 April 2001, 28 September 2001 and 16 November 2001 [Mr Stevens] sold circumvention devices, as defined in [the Act, s 10(1)], for use in association with 'PlayStation' computer consoles and the CD-ROMs for 'PlayStation' computer games, in contravention of s 116A of [the] Act." The Full Court enjoined Mr Stevens from selling circumvention devices for use in association with those computer consoles and CD-ROMs in contravention of s 116A of the Act. It remitted the matter to the primary judge for determination of the claims for damages pursuant to s 116D of the Act. Against those orders, Mr Stevens appeals by special leave to this Court. By Notice of Contention, Sony seeks to reagitate the issues on which it did not succeed in the Full Court. At first instance, Sackville J had permitted the Australian Competition and Consumer Commission ("the ACCC") to appear as amicus curiae and to press for a construction of the relevant provisions of the Act at odds with that favoured by Sony19. An application to this Court by the ACCC was withdrawn. However, the Court granted leave to appear as amici curiae to the Australian Digital Alliance Ltd and the Australian Libraries Copyright Committee. Section 116A Section 116A(1), so far as immediately material, states that the section applies if "a work or other subject-matter is protected by a technological protection measure" and a person without the permission of the owner or exclusive licensee thereof makes, sells or offers for sale or hire or otherwise promotes or advertises "a circumvention device" which is capable of circumventing, or facilitating the circumvention of, that "technological protection measure". Making and importing are also proscribed by s 116A(1), but the mere 17 (2002) 200 ALR 55. 18 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2003) 132 FCR 31. 19 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2001) 116 FCR 490. use of a circumvention device is not proscribed. Supplying, making and importing are excused if "for use" for a "permitted purpose". The terms "circumvention device" and "technological protection measure" are defined in s 10(1)20. Save as to what follows, it was not disputed that Mr Stevens had sold "circumvention devices". The definition is as follows: "circumvention device means a device (including a computer program) having only a limited commercially significant purpose or use, or no such purpose or use, other than the circumvention, or facilitating the circumvention, of an [sic] technological protection measure." What was in issue was the existence of the "technological protection measure" identified in the concluding words of the definition of "circumvention device". It is upon the following definition of "technological protection measure" that the appeal by Mr Stevens turns. The definition states: "technological protection measure means a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means: by ensuring that access to the work or other subject matter is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or exclusive licensee of the copyright; through a copy control mechanism." Statutory construction The critical task for the outcome of this appeal is one of statutory interpretation, particularly of the defined expression "technological protection measure" as it appears in the setting of Div 2A. No particular theory or "rule" of statutory interpretation, including that of "purposive" construction, can obviate the need for close attention to the text and structure of Div 2A. 20 The definitions shown in these reasons are in their form as amended with effect from 4 March 2001 by the Copyright Amendment (Parallel Importation) Act 2003 (Cth), s 2, Sched 3, Items 1, 3. Lord Renton QC21 writes of the position in the United Kingdom22: "I do not know to what extent judicial interpretation influences drafting but drafting greatly influences judicial interpretation of statutes. From earliest times judges have found it difficult to interpret them, and most of the time of appellate judges is now taken up in doing so. Parliament has never required the judges to do so in any particular way. The Interpretation Act [1978 (UK)] merely provides some definitions and minor assumptions. So the judges have made their own well-known rules of interpretation." Of these rules of interpretation Lord Renton continues23: "The first was the Mischief Rule in 1584: to find out the intention of Parliament it was necessary to discover the mischief for which the common law did not provide and what was the remedy Parliament chose to cure it. That rule still applies where relevant. Later came the Golden Rule, which said that, if the whole statute leads to inconsistency, absurdity or inconvenience, the court should give it another meaning that makes more sense. This caused problems and led to the Literal Rule: if the words of the statute which apply to the case being tried are clear, they must be followed, however unjust the result. Then came 'the Diplock principle', that the court must give effect to what the words would mean to those whose conduct the statute regulates." He then indicates that in England in the past 50 years the judges have gradually adopted the "purposive rule"; under this the judges try to discover what Parliament intended. In Australia, s 15AA of the Acts Interpretation Act 1901 (Cth) states: "In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or 21 Former Chairman of the Committee on the Preparation of Legislation and President of the Statute Law Society. 22 "The Evolution of Modern Statute Law and Its Future", in Freeman (ed), Legislation and the Courts, (1997) 7 at 13. 23 "The Evolution of Modern Statute Law and Its Future", in Freeman (ed), Legislation and the Courts, (1997) 7 at 14. object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object." Section 15AB provides for the use of a wide range of extrinsic materials in pursuing the construction indicated in s 15AA. In the case of the Amendment Act, there is a statement of objects in s 3. However, as indicated earlier in these reasons, that statement of objects, which fixes upon the "online" environment of the Internet, does not encompass the broader operation of Div 2A, as demonstrated by the facts in this litigation. Nor do the extrinsic materials give any clear indication of how it came to be that the Bill for the Amendment Act took the final form that it did. Indeed, the very range of the extrinsic materials, with shifting and contradictory positions taken by a range of interest holders in the legislative outcome, suggests that the legislative purpose was to express an inarticulate (or at least not publicly disclosed) compromise. There is force in the statement by one commentator24: "The definition of 'technological protection measure' is a compromise, which was neither as restrictive as some copyright users had hoped, nor as broad as copyright owners sought – and parts of the legislative history are opaque." The result is that in the present case to fix upon one "purpose" and then bend the terms of the definition to that end risks "picking a winner" where the legislature has stayed its hand from doing so. In the selection of a sole or dominant "purpose", there is a risk of unintended consequences, particularly where, as here, the substratum of the legislation is constantly changing technologies. "Technological protection measure" These considerations indicate the approach to construction evident in the reasoning of Sackville J, with its close attention to text and structure. Of the expression "technological protection measure", his Honour said25: 24 Weatherall, "On Technology Locks and the Proper Scope of Digital Copyright Laws – Sony in the High Court", (2004) 26 Sydney Law Review 613 at 637. 25 (2002) 200 ALR 55 at 80. "The definition has a number of elements, as follows: . a device or product, or a component incorporated into a process . that is designed . in the ordinary course of its operation . to prevent or inhibit the infringement of copyright in a work [or other subject-matter] . by either or both of two particular means. The two particular means of preventing or inhibiting the infringement of copyright are these: . ensuring that access to the work is available solely by use of an access code or process with the authority of the owner or licensee; or . a copy control mechanism." Sackville J did not accept the construction advanced by Sony which was to be accepted in the Full Court and which is urged again on this appeal. His Honour rejected the proposition that26: "the definition is concerned with devices or products that do not, by their operations, prevent or curtail specific acts infringing or facilitating the infringement of copyright in a work [or other subject-matter], but merely have a general deterrent or discouraging effect on those who might be contemplating infringing copyright in a class of works, for example by making unlawful copies of a CD-ROM". "It can be seen that the focus of the definition, as the expression 'technological protection measure' itself implies, is on a technological device or product that is designed to bring about a specified result (preventing or inhibiting the infringement of copyright in a work) by 26 (2002) 200 ALR 55 at 81. 27 (2002) 200 ALR 55 at 80. particular means. Each of the specified means involves a technological process or mechanism. The means identified in par (a) is an access code or process that must be used to gain access to the work. The means identified in par (b) is a 'copy control mechanism'." That latter expression is not defined in the legislation. However, the distinction between devices or means designed to prevent any copying at all and those designed to impair the quality of copies that are made has a provenance in s 296 of the 1988 UK Act, to which reference has been made at par [8] of these reasons. Consistently with this and with reference to the Australian legislative history, Sackville J concluded that the phrase "copy control mechanism" encompassed a mechanism restricting the extent (and, one might add, the effectiveness) of copying of a work that otherwise could be undertaken by someone with "access" to the copyright material28. "a 'technological protection measure', as defined, must be a device or product which utilises technological means to deny a person access to a copyright work [or other subject-matter], or which limits a person's capacity to make copies of a work [or other subject-matter] to which access has been gained, and thereby 'physically' prevents or inhibits the person from undertaking acts which, if carried out, would or might infringe copyright in the work [or other subject-matter]". That construction should be accepted. It is important to understand that the reference to the undertaking of acts which, if carried out, would or might infringe, is consistent with the fundamental notion that copyright comprises the exclusive right to do any one or more of "acts" primarily identified in ss 31 and 85-88 of the Act. The definition of "technological protection measure" proceeds on the footing that, but for the operation of the device or product or component incorporated into a process, there would be no technological or mechanical barrier to "access" the copyright material or to make copies of the work after "access" has been gained. The term "access" as used in the definition is not further explained in the legislation. It may be taken to identify placement of the addressee in a position where, but for 28 (2002) 200 ALR 55 at 80. 29 (2002) 200 ALR 55 at 81. the "technological protection measure", the addressee would be in a position to infringe. This construction of the definition is assisted by a consideration of the "permitted purpose" qualifications to the prohibitions imposed by s 116A(1). First, s 116A(3) provides that, in certain circumstances, the section does not apply in relation to the supply of a circumvention device "to a person for use for a permitted purpose". The term "supply" means selling the circumvention device, letting it for hire, distributing it or making it available online (s 116A(8)). Secondly, s 116A(4) states that the section in certain circumstances does not apply in relation to the making or importing of a circumvention device "for use only for a permitted purpose". The expression "permitted purpose" in sub-ss (3) and (4) has the content given it by sub-s (7). This states that for the purposes of s 116A, a circumvention device is taken to be used for a permitted purpose only if two criteria are met. The first criterion is that the device be "used for the purpose of doing an act comprised in the copyright in a work or other subject-matter" (emphasis added). The second criterion is that the doing of that act otherwise comprised in the copyright is rendered not an infringement by reason of the operation of one or more of the exculpatory provisions then set out30. (The listed provisions do not include the general fair-dealing exculpations in ss 40, 41 and 42 of the Act.) The first criterion in s 116A(7) for reliance upon the permitted purpose provisions which are an answer to what would otherwise be a claim under s 116A thus in terms links the use of a circumvention device to the doing of one or more of the acts enumerated in s 31 of the Act (where these are done in relation to a work) and in ss 85-88 (where these are done in relation to subject- matter other than a work). If the construction of the definition for which Sony contends were accepted despite the linkage specified in s 116A(7) between the use of a circumvention device and the central provisions of ss 31 and 85-88 of the Act, the permitted purpose provisions would risk stultification. The facts of the present case are in point. The use of Mr Stevens' mod chip in order to circumvent the protections provided by (a) the access code on a CD-ROM in which a PlayStation game is stored and (b) the boot ROM device contained within the PlayStation console cannot be said to be for the "purpose" of reproducing a computer game within the sense of s 31 of the Act. Any such 30 The sections are ss 47D, 47E, 47F, 48A, 49, 50, 51A and 183 and Pt VB. reproduction will already have been made through the ordinary process of "burning" the CD-ROM. The mod chip is utilised for a different purpose, namely to access the reproduced computer program and thereafter visually to apprehend the result of the exercise of the functions of the program. There are three other considerations which support Sackville J's construction of the definition. The first is that, in choosing between a relatively broad and a relatively narrow construction of legislation, it is desirable to take into account its penal character. The present litigation does not arise from the institution of criminal proceedings under the offence provisions now contained particularly in s 132 of the Act. However, a person who makes or sells a circumvention device (s 132(5B)) is liable to imprisonment for not more than five years (s 132(6A)). An appreciation of the heavy hand that may be brought down by the criminal law suggests the need for caution in accepting any loose, albeit "practical", construction of Div 2A itself. The second consideration is that the true construction of the definition of "technological protection measure" must be one which catches devices which prevent infringement. The Sony device does not prevent infringement. Nor do many of the devices falling within the definition advanced by Sony. The Sony device and devices like it prevent access only after any infringement has taken place. The third consideration is that in construing a definition which focuses on a device designed to prevent or inhibit the infringement of copyright, it is important to avoid an overbroad construction which would extend the copyright monopoly rather than match it. A defect in the construction rejected by Sackville J is that its effect is to extend the copyright monopoly by including within the definition not only technological protection measures which stop the infringement of copyright, but also devices which prevent the carrying out of conduct which does not infringe copyright and is not otherwise unlawful. One example of that conduct is playing in Australia a program lawfully acquired in the United States. It was common ground in the courts below and in argument in this Court that this act would not of itself have been an infringement31. 31 (2002) 200 ALR 55 at 75, 79-80. The Full Court's reasoning However, on appeal, the Full Court accepted the construction advanced by Sony. In doing so, the Full Court did not refer to the significance, for construction of the definition of "technological protection measure", of the permitted purpose provisions. The reasoning of the judges in the Full Court varied. Lindgren J, with whom Finkelstein J agreed on this issue32, found nothing in the statutory text to persuade him strongly to one construction or the other33. His Honour was persuaded by a detailed review of the extrinsic materials that a "broader approach" was intended by the Parliament so that the definition of "technological protection measure" embraced an "inhibition" which was indirect and operated before an attempted operation of the circumvention device34. However, if one thing appears from a consideration of the Australian and international materials it is that in Australia there was a reluctance to give to copyright owners a form of broad "access control". Indeed, this reluctance is manifest in the inclusion in the definition of "technological protection measure" of the concept of prevention or inhibition of infringement. This outcome dissatisfied copyright owners. Yet other "stakeholders" with their own interests did not achieve all they may have desired. To those, such as the ACCC, concerned with the operation of restrictive trade practices law, it was significant that the access code for Sony products differed in various markets, so that a PlayStation game purchased in the United States could not be played on an unmodified PlayStation console purchased in Australia35. Users of copyright material such as those represented in the amici curiae in this Court were dissatisfied by the exclusion from the permitted purpose provisions of the general provisions protecting fair dealing. Other users were dissatisfied by the failure to include in the permitted purpose provisions the specific protection given by s 47C for back-up copies of computer programs. All of these considerations suggest no particular support for the "broad" approach to the definition of "technological protection measure". 32 (2003) 132 FCR 31 at 80. 33 (2003) 132 FCR 31 at 54. 34 (2003) 132 FCR 31 at 69-70. 35 (2002) 200 ALR 55 at 65. French J, the other member of the Full Court, emphasised that s 116A operates with respect to the range of acts which may constitute infringement, a range going beyond reproduction. His Honour said of that range of acts36: "It extends to knowingly selling or offering for sale articles, the making of which constituted an infringement of copyright (s 38). ... If a device such as an access code on a CD-ROM in conjunction with a Boot ROM in the PlayStation console renders the infringing copies of computer games useless, then it would prevent infringement by rendering the sale of the copy 'impracticable or impossible by anticipatory action'." However, the provision in s 38 which, subject to the fair dealing and related provisions, renders it an infringement of copyright in a work to sell an article "if the person knew, or ought reasonably to have known, that the making of the article constituted an infringement" may be accommodated within the operation of s 116A without going so far as did French J in construing the definition of "technological protection measure". Taking the example discussed by French J, s 38 itself indicates that what might be called the act of secondary infringement by sale must necessarily follow in a temporal and practical sense from the primary infringement of making the article. The "technological protection measure", consistently with the construction accepted by Sackville J, prevents the act of primary infringement in an immediate sense. It also thereby "inhibits" the act of secondary infringement. One meaning of "inhibit" is to hinder, to check or to place an obstacle or impediment to a path of conduct37. French J went on to conclude38 that the construction proffered by Sony flowed from a consideration of the ordinary and grammatical meaning of the language of s 116A and the definition of "technological protection measure". To accept the contrary construction would be "to cage the ordinary meaning of the words which have been adopted"39. 36 (2003) 132 FCR 31 at 40. The quotation in the passage is a quotation from the definition of "prevent" in the Shorter Oxford English Dictionary: see (2003) 132 FCR 31 at 39. 37 The Oxford English Dictionary, 2nd ed (1989), vol 7, gives as one meaning "To restrain, check, hinder, prevent, stop." Webster's Third New International Dictionary, (1986) gives "to operate against the full development or activity of" and "to retard". 38 (2003) 132 FCR 31 at 41. 39 (2003) 132 FCR 31 at 41. Copyright legislation, both in Australia and elsewhere, gives rise to difficult questions of construction. Given the complexity of the characteristics of this form of intangible property, that, perhaps, is inevitable. It may be going too far to say of the definition of "technological protection measure" and of s 116A, as Benjamin Kaplan wrote of the American law even as it stood in 196740, that the provisions have a "maddeningly casual prolixity and imprecision". However, in this Court no party advanced the proposition that its task on this appeal was satisfied merely by a consideration of the ordinary meaning of the words in the definition of "technological protection measure". Rather, Sony contended that, unless the term "inhibit" had the meaning given by the Full Court, it was otiose, adding nothing to "prevent". One meaning of "inhibit" indeed is "prevent". However, it may be taken that "inhibit" is used in the definition of "technological protection measure" in one of its weaker senses, while still necessarily attached to an act of infringement. One such sense has been given above with respect to acts of secondary infringement by dealing in an article created by an act of primary infringement. Further, the operation of a copy control mechanism to impair the quality or limit the quantity of a reproduction may be said to hinder the act of infringement. In that regard, there is a legislative antecedent in s 296 of the 1988 UK Act. This, it will be recalled, spoke of devices or means intended "to impair" the quality of copies made. In the present case, the Sony device does not interfere with the making of a perfect copy of Sony's copyright in its computer program or cinematograph film. Conclusion on construction of definition of "technological protection measure" The conclusion reached by Sackville J was correct and should not have been disturbed by the Full Court. There remain for consideration the two grounds advanced by Sony in its Notice of Contention. To these we now turn. Sony's Notice of Contention By its Notice of Contention, Sony contends that the decision of the Full Court should be affirmed on grounds in addition to those upon which it succeeded there. Sony has submitted that its device (comprising either or both the boot ROM in the PlayStation console and the access code on PlayStation 40 An Unhurried View of Copyright, (1967) at 40. CD-ROMs) was a "technological protection measure" on three essentially distinct bases. The first which has been dealt with in these reasons was the construction argument concerning "inhibit" and "practical effect". The second ground was that the device fell within the terms of the definition of "technological protection measure" because it prevented PlayStation users from reproducing in the RAM of an unmodified PlayStation console a substantial part of the particular program embodied in an unauthorised copy of a PlayStation CD-ROM by playing the CD-ROM in that console. This may be called "the reproduction in RAM contention". The remaining contention was that the device answered the description of the definition because it prevented PlayStation users from making in the RAM of an unmodified PlayStation console a copy of a substantial part of a cinematograph film embodied in an unauthorised copy of a PlayStation CD-ROM by playing the CD-ROM in that console. This may be called "the cinematograph film contention". Sackville J had rejected all these submissions. In the Full Court, French J and Lindgren J accepted Sony's argument on the first point but rejected the other grounds. Finkelstein J accepted Sony's arguments on all three grounds. Hence the Notice of Contention respecting the reproduction in RAM contention and the cinematograph film contention. To these we now turn. The reproduction in RAM contention As Lindgren J noted in the Full Court41, Sony's contention here must be that the protection device prevents or inhibits reproduction of the literary work constituted by the computer program (being the set of statements or instructions embodied in the CD-ROM for a PlayStation game) in a material form in RAM, within the meaning of par (a)(i) of s 31(1) of the Act42. Section 21 provides that, for the purposes of the Act, reproduction is to be taken to have occurred in various circumstances. One of those is set out in s 21(1A). This states: "For the purposes of this Act, a work is taken to have been reproduced if it is converted into or from a digital or other electronic machine-readable 41 (2003) 132 FCR 31 at 75. 42 This identifies copyright in relation to a literary work as the exclusive right, among other things, "to reproduce the work in a material form". form, and any article embodying the work in such a form is taken to be a reproduction of the work." The PlayStation console is equipped with random access memory ("RAM") which it utilises in order to accelerate its own operation. This it does by copying into its RAM a portion of the computer program stored in the CD-ROM being played. Sackville J noted at least two key features of this process. First, "[t]he RAM's capacity is limited to 2 megabytes", and "[s]ince the game code may consist of up to 580 megabytes ... only a small section of the game code is downloaded and copied"43. Secondly, the "storage [of the copy] in RAM is temporary, in the sense that the data is only stored there until the PlayStation console is shut down"44. If any conversion of the program from a CD-ROM to RAM answers s 21(1A), there remains, as Lindgren J noted45, the question whether the reproduction in RAM is "in a material form" within the meaning of par (a)(i) of s 31(1) of the Act. Sackville J held that a substantial part of the computer program embodied in a PlayStation CD-ROM was temporarily stored in the RAM of a PlayStation console while the game is played: the storage is temporary because the contents of the RAM will be lost if power to the console is disconnected and are displaced as new instructions are downloaded to the RAM46. That conclusion was not challenged in this appeal. But his Honour held that temporary storage of a substantial part of the computer program did not entail reproduction of it in a "material form"47. 43 (2002) 200 ALR 55 at 66. 44 (2002) 200 ALR 55 at 66. 45 (2003) 132 FCR 31 at 75. 46 (2002) 200 ALR 55 at 83. 47 Sackville J rejected an argument that the data stored in the RAM were reproduced at a particular point known as the gateway to the graphics processing unit: (2002) 200 ALR 55 at 87-88. Sony did not press that argument in the Full Court of the Federal Court: (2003) 132 FCR 31 at 87. Nor was it pressed in this Court. A definition of "material form" was introduced by the Copyright Amendment Act 1984 (Cth) ("the 1984 Amendment Act")48. The definition states: "material form, in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage from which the work or adaptation, or a substantial part of the work or adaptation, can be reproduced." (emphasis added) The definition was the general understanding that in copyright law a material form was one which could be perceived by the senses49. to qualify what had been introduced Whilst the 1984 Amendment Act indicates that RAM may constitute a "material form" for the purposes of the Act, in certain circumstances, this is not determinative of this ground in the Notice of Contention. This is because if the "material form" upon which Sony relies is a form of invisible storage, then this storage must be one from which the work or a substantial part of it "can be reproduced". In effect, as Mr Stevens contends, the legislature amplified the rights of copyright owners with respect to reproduction in invisible forms of storage but did so subject to essential limitations. Sony submitted that the words of the definition of "material form" after "includes" were not crucial to its success, because as a matter of ordinary language the data stored in the RAM could be said to reproduce the computer program stored in a PlayStation game in a material form. The answer is that given by Sackville J50: the data were not in a material or corporeal form, but in a non-material, incorporeal form, comprising essentially electronic impulses. 48 The definition has since been amended by the 2004 Act. In its amended form, it states: "material form, in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage of the work or adaptation, or a substantial part of the work or adaptation, (whether or not the work or adapation, or a substantial part of the work or adaptation, can be reproduced)." 49 See the judgment of Brennan J in Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 at 202-203. 50 (2002) 200 ALR 55 at 89-90. Sony also relied on par 28 of the Explanatory Memorandum to the Bill for the 1984 Amendment Act introducing the definition of "material form": "The definition of 'material form' is new and makes it clear that material form includes such methods of fixation as storage or reproduction on magnetic tape, read only or random access computer memory, magnetic or laser disks, bubble memories and other forms of storage which will doubtless be developed." As Lindgren J pointed out, that assumes that in some circumstances the electronic impulses stored in RAM are in material form; it does not state a test for distinguishing between the circumstances in which they are and those in which they are not, and it does not say that they are in material form in all circumstances51. The closing words of the definition of "material form", namely "can be reproduced", were interpreted by Finkelstein J in his dissenting judgment in the Full Court52 as meaning "may be able to be reproduced". This takes the inquiry concerning materiality of form from the realm of present capability into that of abstract or conjectural possibility. Lindgren J said it was53: "an unrealistic and strained construction to treat the words 'can be reproduced' at the end of the definition of 'material form' so widely as to encompass 'could be reproduced if an additional device, not supplied with the console and not yet available, were to be manufactured and attached to it' or 'could be produced if the RAM under consideration formed part of a future modified console'". Earlier, in Australian Video Retailers Association v Warner Home Video Pty Ltd ("AVRA")54, Emmett J had appeared to interpret "can be reproduced" as "ordinarily is able to be reproduced". His Honour said55 that "ordinarily it will 51 (2003) 132 FCR 31 at 75. 52 (2003) 132 FCR 31 at 86. 53 (2003) 132 FCR 31 at 77. 54 (2001) 114 FCR 324 at 345. 55 (2001) 114 FCR 324 at 345. not be possible to reproduce the contents of RAM in a DVD player". He continued56: "If a DVD player has been modified, such that it is possible to study or use the RAM for the purpose of reproducing its contents, there could be a reproduction of the computer program in a material form within the meaning of s 31(1)(a)(i) of the Act. However, in the ordinary course, temporary storage of a substantial part of the computer program in the RAM of a DVD player will not involve a reproduction of the computer program in a material form. Where a DVD disc is being played by means of a personal computer, it will be possible, where an appropriate additional program is installed in the personal computer, to reproduce the contents of RAM. However, where a computer does not have such a program installed, the use of the computer for the purpose of playing a DVD disc will not involve the reproduction of the computer programs in question in a material form within the meaning of s 31(1)(a)(i) of the Act." (original emphasis) The references by Emmett J to what "ordinarily" will not be possible and to what happens "in the ordinary course" explain what is intended in the statutory phrase "can be reproduced". It is not sufficient to consider what might or would result from additional steps such as the use of additional hardware. With that in mind, it is apparent from the account of the evidence given by Sackville J that Sony's device cannot answer the requirement of the definition of "material form". Sackville J accepted the evidence of Mr Nabarro, Vice-President, Technical Services, of Sony Computer Entertainment Europe Limited, as is apparent from the following passage in his Honour's judgment57: "Once a portion of the game code has been copied into the RAM, it is stored there. The storage in RAM is temporary, in the sense that the data is only stored there until the PlayStation console is shut down. Moreover, as Mr Nabarro explained, the data stored in the RAM will be 'flushed' as new instructions are transferred from the PlayStation game's 56 (2001) 114 FCR 324 at 345-346. 57 (2002) 200 ALR 55 at 66. code. Mr Nabarro was also asked whether the portion of the game code stored in the RAM could be extracted and reproduced. His answer was that this could not be done without developing hardware which would enable the process to be reversed." (emphasis added) What is said in the last quoted sentence is sufficient answer to Sony's case. It is unnecessary to determine whether the temporary storage which is "flushed" is sufficient to answer the definition of "material form". However, it should be noted that in the formulation of Art 11 of the WIPO Copyright Treaty, to which reference has been made, a proposal was made but not accepted to give explicitly to copyright owners the exclusive right to authorise "direct and indirect reproduction of their works, whether permanent or temporary, in any manner or form"58. "On the face of things, it might seem surprising that the reproduction in electronic or digital form of a computer program is not necessarily an infringement of copyright in the computer program. The scheme of the legislation, however, seems to be that reproducing a work in electronic or digital form infringes copyright, pursuant to ss 31(1)(a)(i) and 36(1) of [the Act], only if the form in which the work is reproduced is itself capable of further reproduction." His Honour added that this approach is consistent with s 21(1A) of the Act and added60: "It is plausible that the legislation is structured in this way as a means of balancing the interests of copyright owners and users. If a work such as a computer program is reproduced in electronic or digital form, but is not amenable to further reproduction, it might well be thought too restrictive to regard the first reproduction in electronic or digital form as necessarily an infringement of copyright." 58 Samuelson, "The US Digital Agenda at WIPO", (1997) 37 Virginia Journal of International Law 369 at 382-392 (emphasis added). 59 (2002) 200 ALR 55 at 89. 60 (2002) 200 ALR 55 at 90. Finkelstein J referred to certain United States authorities holding that the downloading of computer software into the RAM is the making of a "copy" for the purposes of the Copyright Act 1976, as amended, 17 USC §101. That provision defines "copies" as: "material objects ... in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device". The word "fixed" was defined as follows: "A work is 'fixed' in a tangible medium of expression when its embodiment in a copy ... is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Finkelstein J acknowledged that the legislative scheme in the United States is different and the authorities have attracted a great deal of criticism61. In particular, the utility of the authorities is diluted by the words "with the aid of a machine or device" in the definition of "copies". Lindgren J made the point that the words permit use of a machine or device not already present in the PlayStation console and software of which the RAM is part62. The first ground of the Notice of Contention, the reproduction in RAM contention, should be rejected. The cinematograph film contention The term "cinematograph film" is defined in s 10(1) of the Act as follows: "cinematograph film means the aggregate of the visual images embodied in an article or thing so as to be capable by the use of that article or thing: of being shown as a moving picture; or of being embodied in another article or thing by the use of which it can be so shown; 61 (2003) 132 FCR 31 at 83-85. 62 (2003) 132 FCR 31 at 78. and includes the aggregate of the sounds embodied in a sound-track associated with such visual images." The set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result answers the definition of "computer program" which, in turn, is brought within the definition of "literary work" Cinematograph films are differently treated. within Pt III of the Act. Cinematograph films are one of those subject-matters other than works in which copyright is conferred by Pt IV of the Act. Section 86(a) provides that, for the purposes of the Act, copyright in relation to a cinematograph film includes the exclusive right "to make a copy of the film". Section 21(6) states: "For the purposes of this Act, a sound recording or cinematograph film is taken to have been copied if it is converted into or from a digital or other electronic machine-readable form, and any article embodying the recording or film in such a form is taken to be a copy of the recording or film." Further, s 24 deals with this concept of embodiment in an article as follows: "For the purposes of this Act, sounds or visual images shall be taken to have been embodied in an article or thing if the article or thing has been so treated in relation to those sounds or visual images that those sounds or visual images are capable, with or without the aid of some other device, of being reproduced from the article or thing." Finally, it follows from s 14(1) that it is sufficient for infringement that there has been the copying of "a substantial part" of a cinematograph film. Galaxy Electronics Pty Ltd v Sega Enterprises Ltd63 concerned two video games constituting a series of images such that the events represented on the screen varied according to the actions of the player of the game. The Federal Court held that the aggregate of the visual images generated by the playing of each of the games constituted a "cinematograph film". It did not matter that the images were embodied in the computer program or integrated circuits in a different form from that in which they might appear on the screen. Nor did it matter that the images seen by players were created by computer calculations 63 (1997) 75 FCR 8. only immediately before their appearance on the screen. The present litigation also concerns games with this general character. In his evidence at the trial in this case, Mr Nabarro referred to the importance of the interactive elements in the codes for computer games and to the "level" at which particular choices are made to play a game. Earlier, in Galaxy64, the Full Court adopted what had been said at trial by Burchett J65: "[E]xcept for the opening and closing sequences, the events represented on the screen will show differences from screening to screening, except where the player's responses are all correct. ... the apparatus is designed to screen the simple story only when the correct responses to a series of cues are fed into it by the player; and when incorrect responses are given, a number of variations will result." Neither side sought in this Court to challenge Galaxy, although the amici curiae rightly pointed to difficulties to which that case gives rise. However, what now follows in these reasons proceeds on the footing that the aggregate of the images and sounds stored on a PlayStation CD-ROM answers the statutory description of "cinematograph film". By its Notice of Contention, Sony would have this Court decide that the RAM of a PlayStation console is an article or thing in which at least a substantial part of a cinematograph film is embodied. It is then submitted that the Sony device was a "technological protection measure". It prevented the making of a copy of a film embodied in the RAM. This argument was raised at trial by an amendment of pleadings pursuant to leave granted on the first day. The preparation of the affidavit evidence thus had preceded the pleading. Sackville J's conclusion on this branch of the case was expressed as follows66: 64 (1997) 75 FCR 8 at 12. 65 Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 69 FCR 268 at 270. 66 (2002) 200 ALR 55 at 93. "In the absence of clearer and more detailed evidence as to the nature and quality of the images embodied in the instructions stored in the RAM, assessed in relation to the totality of 'the aggregate of visual images' constituting the cinematograph film, I cannot conclude (to adopt the language of Emmett J [in AVRA]) that 'the ephemeral embodiment' of a small proportion of images in the RAM constitutes the act of making a copy of the cinematograph film for the purposes of s 86(a) of [the Act]." In the result, his Honour decided that, on the evidence before him, the argument founded on s 86(a) of the Act had to be rejected. the copying of what amounted The question whether the evidence presented at trial was sufficient to establish to a "substantial part" of a cinematograph film which had been copied into the RAM was essentially a matter for Sackville J at trial. Mr Stevens correctly stresses in this Court that there was no attempt in the Full Court to assess the "substantiality" of any part of any particular cinematograph film by reference to the whole of it. The determination of questions of what amounts to the taking of a substantial part of a work or other subject-matter is notoriously difficult. This is nonetheless so in the present case where, on the evidence of Mr Nabarro, the purpose of the temporary storage of a small part of the instructions on the RAM of the PlayStation console is purely to enable the display of visual images and sounds by the console in real time. In his dissenting judgment in the Full Court, Finkelstein J said67: "[T]he question whether a substantial part of the copyright had been reproduced did not require detailed evidence. In particular, it did not require oral evidence from a witness to describe the relevant technology and, perhaps, express an opinion on the issue of substantiality. In many instances, of which this case is a good example, the judge can make an assessment whether a substantial part of the copyright has been taken by making a simple visual comparison between the copyright work and the allegedly infringing work. Second, I do not accept that the judge was confined in his consideration of the issue to what he observed during the demonstration. He had available to him the disks and a PlayStation console and, if necessary, he could have personally played the games in order to assess the nature and the quality of the images stored in the RAM when compared to the totality of the visual images comprising the film." 67 (2003) 132 FCR 31 at 90. However, this case did not involve the viewing of a motion picture in the ordinary understanding of that term. The visual images which, consistently with Galaxy, are to be taken to constitute a cinematograph film do not have a set course or sequence of motion. The whole copyright subject-matter cannot be determined merely by a visual appraisal as with a motion picture. The Sony cinematograph films did not comprise visual images and sounds conventionally arranged in a linear sequence. Rather, they were interactive in nature, so that the ability to appreciate directly their content was dependent upon particular activity varying between one player and another. In this setting, difficult questions for the assessment of substantiality are presented. It is not sufficient here to attempt to assimilate an artificial and contrived demonstration of the playing of the games to the viewing of a segment of a motion picture. Sony correctly emphasises that the case law concerned with Pt III "works" such as books, where the subject-matter may be appreciated directly, shows that the courts readily enter upon the question of substantiality and that the emphasis has been upon quality, not merely quantity. However, the judgment of Starke J in Blackie & Sons Ltd v Lothian Book Publishing Co Proprietary Ltd68 is an early illustration in this Court of the general proposition that substantiality is a question of degree which depends upon the circumstances of each particular case. Where the issue of substantiality arises with respect to a computer program, the importance of evidence is apparent from Data Access Corporation v Powerflex Services Pty Ltd69. In the present case, whether what remained in the RAM, as "accessible by the console", had "an appreciable, playable, coherent, viewable and enjoyable part" of what must be taken to be a cinematograph film was, Sony submits, sufficiently established by the demonstration of two games during the hearing of the Full Court appeal and the reaction thereto of It is unnecessary in this appeal to consider what may be the scope in dealing with computer games for evidence bearing upon the alleged "quality" of that which has been taken. Reference has been made above to the interactive nature of the computer games, and to the limited (and technical) purpose of the temporary storage on the RAM of the PlayStation console. Whatever the scope 68 (1921) 29 CLR 396 at 403. 69 (1999) 202 CLR 1 at 30-34 [77]-[92]. here for consideration of "quality", there was an unsatisfactory carriage by Sony of its evidential burden. There remains then the question of quantity. What here is critical is Sackville J's acceptance that the evidence suggested that only a very small proportion of the images and sounds comprising the cinematograph film were "embodied" in the PlayStation console's RAM at any given time70. In the circumstances as they arose at trial, Sony failed to lay the necessary evidentiary basis for a finding in its favour on substantiality. That being so, it is unnecessary to consider other submissions put in this Court in answer to Sony's case. The second ground in the Notice of Contention also fails. Disposition of the appeal The appeal should be allowed with costs. The orders of the Full Court of the Federal Court should be set aside. In place of those orders, the appeal to the Full Court should be dismissed with costs. 70 (2002) 200 ALR 55 at 93. McHugh 102 McHUGH J. The issue in this case is whether the protective device that is installed in Sony "PlayStation" consoles is a "technological protection measure" within the meaning of s 116A(1) of the Copyright Act 1968 Cth ("the Act"). If it is, then the "mod chips" that the appellant supplied and installed in the PlayStation consoles are "circumvention device[s]" as defined by s 10(1) of the Act. If he installed "circumvention devices", he contravened s 116A of the Act and is liable to Sony for damages or an account of profits and other remedies conferred on a copyright owner by s 116D of the Act. Statement of the case Three Sony companies ("Sony") sued Mr Eddy Stevens in the Federal Court of Australia, alleging that he had contravened s 116A of the Act by supplying and installing circumvention devices that were intended to facilitate the use of pirated copies of Sony's PlayStation computer games. In the proceedings, Sony asked the Federal Court for damages, for an injunction and for relief under the civil remedies provisions in s 116D as well as a declaration of contravention. The trial judge, Sackville J, rejected Sony's claim. His Honour held that Sony's protection device did not constitute a "technological protection measure" for three reasons: the device, which merely discourages users from copying games, but does not affect the ability of users to copy games, was not "designed ... to prevent or inhibit" copyright infringement; the device was not designed to prevent the reproduction of the computer game in a "material form", because the storage of the portion of the PlayStation game in the console's RAM during the playing of the game was not a form of storage from which the PlayStation game, or a substantial part of it, can be reproduced without modifying the console; and the device was not designed to prevent the copying of the computer game as a "cinematograph film", because the portion of the PlayStation game that was stored in the console's RAM during the playing of the game was not a "substantial part" of the "aggregate of the visual images" that constitute a cinematograph film. The Full Court of the Federal Court allowed Sony's appeal against the first holding of Sackville J. The Full Court found that the Sony companies' method of "ensuring that access to the program is not available except by use of the Boot ROM, or the access code embedded in the PlayStation games, or both in McHugh combination"71 fell within the definition of "technological protection measure". The Full Court held that the measure was designed to "prevent or inhibit" the copying or selling of infringing copies of authorised CD-ROMs. However, a majority of the Full Court upheld the other two holdings of Sackville J. Because the Full Court found that the Boot ROM and access code were a "technological protection measure", it declared: "On 8 April 2001, 28 September 2001 and 16 November 2001 [Mr Stevens] sold circumvention devices, as defined in [the Act], for use in association with 'PlayStation' computer consoles and the CD-ROMs for 'PlayStation' computer games, in contravention of s 116A of [the] Act." This Court granted Mr Stevens special leave to appeal against the decision and orders of the Full Court. In addition to supporting the decision of the Full Court of the Federal Court on the first holding, Sony has filed a Notice of Contention challenging the two holdings of Sackville J that were upheld by a majority of the Full Court. In my opinion, Mr Stevens' appeal must be allowed and Sony's Notice of Contention dismissed. That is because Sackville J was correct in holding that the Sony protection device was not a "technological protection measure" for the purposes of the Act. It was not "designed ... to prevent or inhibit" copyright infringement within the meaning of s 10(1) of the Act. It was not designed to prevent the reproduction of the computer game in a "material form". It was not designed to prevent the copying of the computer game as a "cinematograph film". The material facts The PlayStation console The Sony PlayStation is an appliance for playing computer games72. It consists of a console, two game controllers and software that enables the playing of CD-ROMs. The computer games are stored on CD-ROMs. The data on the CD-ROM is transmitted, interpreted and eventually displayed on a television or computer monitor through the operation of the console. The console is composed of the following parts: a read-only memory ("ROM") based internal operating system; 71 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2003) 132 FCR 31 at 70 [139] per Lindgren J. 72 The PlayStation also plays back the audio CD media. McHugh a CD drive, in which a CD-ROM is inserted, and from which the "game code" of the game's software is downloaded into the random access memory ("RAM"); RAM, which delivers data to the central processing unit ("CPU"). Unlike a CD-ROM, which can store up to 650 megabytes of data but has only one continuous track, the PlayStation RAM is limited to two megabytes, but it delivers data through 32 highways at one time. The storage of data in RAM is temporary, as it will be "flushed" when new instructions are transferred from the PlayStation game's code and when the power to the console is shut down. Sackville J accepted the evidence of Mr Nabarro, a witness who gave evidence for Sony, that the portion of the game code that is stored in the RAM could only be reproduced if hardware was developed to reverse the process; the CPU, which feeds data from RAM to the custom graphics processing unit ("GPU"); the GPU, which manipulates the data to create the images that appear on the television screen and then moves the data to the video RAM "so that the GPU is free to work on the next section", according to Mr Nabarro; and the video RAM, which transmits the data to a digital terminal video converter, which changes digital electronic signals into analogue signals that may be interpreted and displayed by a television. The components of the console communicate through a main "bus" and a "sub-bus" while the CPU of the console and the game controllers communicate through a serial communication protocol. Access codes The CD-ROMs that contain a computer game also contain an "access code", which is a string of encrypted sectors of data. Unlike the computer game, the access code cannot be accessed or reproduced by conventional CD-ROM copying devices (ie "CD burners"). After a CD-ROM is inserted in the console, and before the computer game may be played, a Boot ROM chip in the console must read the string of encrypted data. If an infringing copy of a computer game is inserted into the console, the access code is not found on the CD-ROM and so the game's software does not load. Instead, the user is prompted to insert an authorised CD-ROM. If an authorised copy of a computer game is inserted into the console, the CD sub-bus controller prevents a user from then replacing the authorised copy with an infringing copy and using the access code of the authorised copy to verify an infringing copy. McHugh While PlayStations are sold in many parts of the world, the format of the consoles and the CD-ROMs on which games are played varies. The format depends on the television system standard that is operative in the market in which the consoles are manufactured for distribution. PlayStation consoles and games that are manufactured for distribution in Japan, South East Asia and North America are formatted in accord with the National Television Systems Committee ("NTSC") standard of colour television systems. But the consoles and games distributed in Europe and Australia are formatted in accord with the Phase Alternating Line ("PAL") standard. The Sony companies may distribute the same computer game to different parts of the world, but the access codes of the game's CD-ROMs vary as between countries and regions. The result is that the PlayStation game software that is stored on a CD-ROM that is purchased in Japan or the United States will not be loaded by a PlayStation console that was purchased in Australia unless the reading of the access code is circumvented. Circumventing the Boot ROM's reading of the access code A console that was purchased in Australia may nonetheless load software that is contained on a CD-ROM that was either purchased in a country with NTSC formatting or illegally copied from an authorised game if the console's programming is overridden with a "mod chip". The trial judge accepted the evidence of Mr Nabarro as to the functionality of a mod chip. It is a programmed computer chip. It instructs the console that the territorial codes are acceptable and permits the software's loading. It does so even though the CD-ROM that had been inserted in the CD drive does not carry the access code – which the internal operating system of consoles distributed in Australia is programmed to read. The activities of Mr Stevens Justice Sackville found that Mr Stevens supplied and installed mod chips in PlayStation consoles on three occasions after the Copyright Amendment (Digital Agenda) Act 2000 (Cth) ("the Digital Agenda Act") came into force. On two occasions, he received $45 for his services and $70 on the third occasion. His Honour also made two findings concerning Mr Stevens' state of mind. First, Mr Stevens knew that the mod chips were installed for the purpose of enabling the console to play copies of the PlayStation games that lacked the access code that Australian consoles recognise. Second, he knew that many copies played "would be copies made without the authority or licence of [Sony]." The Copyright Act 1968 If the provisions of s 116A(1) apply to these acts of installation by Mr Stevens, he is liable to pay damages or an account of profits in accordance with s 116D(1). The relevant parts of s 116A declare: McHugh "(1) Subject to subsections (2), (3) and (4), this section applies if: a work or other subject-matter technological protection measure; and is protected by a a person does any of the following acts without the permission of the owner or exclusive licensee of the copyright in the work or other subject-matter: (iii) sells, lets for hire, or by way of trade offers or exposes for sale or hire or otherwise promotes, advertises or markets, such a circumvention device; distributes such a circumvention device for the purpose of trade, or for any other purpose that will affect prejudicially the owner of the copyright; (vii) provides, or by way of trade promotes, advertises or markets, a circumvention service capable of circumventing, or facilitating the circumvention of, the technological protection measure; and the person knew, or ought reasonably to have known, that the device or service would be used to circumvent, or facilitate the circumvention of, the technological protection measure. This section does not apply in relation to the supply of a circumvention device or a circumvention service to a person for use for a permitted purpose if: the person is a qualified person; and the person gives the supplier before, or at the time of, the supply a declaration signed by the person ... If this section applies, the owner or exclusive licensee of the copyright may bring an action against the person. McHugh For the purposes of this section, a circumvention device or a circumvention service is taken to be used for a permitted purpose only if: the device or service is used for the purpose of doing an act comprised in the copyright in a work or other subject- matter; and the doing of the act is not an infringement of the copyright in the work or other subject-matter under section 47D, 47E, 47F, 48A, 49, 50, 51A or 183 or Part VB. In this section: supply means: in relation to a circumvention device – sell the device, let it for hire, distribute it or make it available online; and in relation to a circumvention service – provide the service. The defendant bears the burden of establishing the matters referred to in subsections (3), (4) and (4A)." Section 10(1) of the Act defines the following terms: "circumvention device means a device (including a computer program) having only a limited commercially significant purpose or use, or no such purpose or use, other than the circumvention, or facilitating the circumvention, of an [sic] technological protection measure. technological protection measure means a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means: by ensuring that access to the work or other subject matter is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or exclusive licensee of the copyright; through a copy control mechanism." McHugh As a result of these provisions, Mr Stevens is liable for his supply and installation of mod chips if the Boot ROM chip, the access code or a combination of the two falls within the definition of "technological protection measure". The decision of Sackville J The construction argument Justice Sackville accepted the undisputed proposition of Sony that a PlayStation game which is stored on a CD-ROM falls within the definition of "computer program", and so, within the definition of "literary work", which are both defined in s 10(1) of the Act. Justice Sackville held, however, that the Boot ROM and/or the access code were not "designed ... to prevent or inhibit the infringement of copyright" in the computer game. His Honour held that they were intended, inter alia, only to "deter or otherwise discourage copyright infringement by the unlawful making, importation and distribution of copies of PlayStation games."73 Deterrence or discouragement was insufficient to "inhibit the infringement of copyright" because "[t]he definition ... contemplates that but for the operation of the device or product, there would be no technological or perhaps mechanical barrier to a person gaining access to the copyright work, or making copies of the work after access has been gained, thereby putting himself or herself in a position to infringe copyright in the work."74 His Honour said that the definition was not75: "concerned with devices or products that do not, by their operations, prevent or curtail specific acts infringing or facilitating the infringement of copyright in a work, but merely have a general deterrent or discouraging effect on those who might be contemplating infringing copyright in a class of works, for example by making unlawful copies of a CD-ROM." Reproduction in RAM Justice Sackville found that Sony's device was not "designed ... to prevent or inhibit" the reproduction of the computer game in material form by preventing a user from downloading a portion of the game's code into the RAM. This was because the game code cannot be reproduced from its temporary storage in RAM, and thus is not reproduced in a "material form". 73 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2002) 200 ALR 55 at 74 (2002) 200 ALR 55 at 80-81 [115] (emphasis in original). 75 (2002) 200 ALR 55 at 81 [115]. McHugh Copying of a cinematograph film Justice Sackville also rejected Sony's argument that the device was designed to prevent the copying of a "substantial part" of a "cinematograph film" embodied in the computer game, which is an infringement of copyright pursuant to ss 86(a) and 14(1) of the Act. His Honour held that "the evidence to support [this argument] was very sketchy"76, and he assumed "that the reasoning in Galaxy Electronics v Sega Enterprises applies to the PlayStation games"77. The argument was rejected on the ground that the data that is reproduced in the RAM upon the downloading of the game code is not a "substantial part" of the cinematograph film and so s 86(a) of the Act, when read with s 14(1) of the Act, was not infringed. The decision of the Full Court The construction argument The Full Court held that, for the purpose of the definition of "technological protection measure", it is of no relevance that "the inhibition is indirect and operates prior to the hypothetical attempt at access and the hypothetical operation of the circumvention device."78 Justice Lindgren, with whose judgment on this point Finkelstein J agreed, held that79: "the extrinsic materials ... show an intention that the opening words coupled with para (a) of the definition of 'technological protection measure' were intended to embrace that inhibition, in the sense of deterrence or discouragement of infringement, which results from a denial of access to, and therefore prevention of use of, a program copied in infringement of copyright." French J agreed with the conclusion of Lindgren and Finkelstein JJ on this point but French J thought that "the proper construction of s 116A and the definition of 'technological protection measure' flows from a consideration of the ordinary and grammatical meaning of its language."80 76 (2002) 200 ALR 55 at 91 [152]. 77 (2002) 200 ALR 55 at 92 [157]. 78 (2003) 132 FCR 31 at 70 [139] per Lindgren J. 79 (2003) 132 FCR 31 at 70 [138]. 80 (2003) 132 FCR 31 at 41 [25]. McHugh Reproduction in RAM A majority of the Full Court (Finkelstein J dissenting) affirmed the decision of Sackville J that the downloading of the game code into the RAM did not constitute a reproduction of the code in "material form". Justice Lindgren noted that the code could be reproduced from the RAM if hardware was engineered to reverse the process. But his Honour concluded that it was "an unrealistic and strained construction to treat the words 'can be reproduced' at the end of the definition of 'material form'" to cover the present case. He said that they cannot be construed "so widely as to encompass 'could be reproduced if an additional device, not supplied with the console and not yet available, were to be manufactured and attached to it'"81. Copying of a cinematograph film The Full Court majority, like Sackville J, noted the insufficiency of evidence to support this ground. Justice Lindgren said that "the evidence addressed only the question whether the images were embodied in a larger article or thing of which the RAM formed only one element."82 Accordingly, he could not conclude that the computer game's "images are capable, when the RAM ... is used in the console, of being reproduced from the RAM."83 Construing the legislation In determining issues of statutory construction, the text of the relevant statutory provision must be evaluated not only by reference to its literal meaning but also by reference to the purpose and context of the provision. And context is not limited to the text of the rest of the statute. For purposes of statutory construction, context includes the state of the law when the statute was enacted, its known or supposed defects at that time and the history of the relevant branch of the law, including the legislative history of the statute itself. It also includes in appropriate cases "extrinsic materials" such as reports of statutory bodies or commissions and parliamentary speeches – indeed any material that may throw light on the meaning that the enacting legislature intended to give to the provision. This is the process required by the modern approach of the common law to statutory construction84. In many jurisdictions, the common law principles have been incorporated, extended or modified by statute. Section 15AA of the 81 (2003) 132 FCR 31 at 77 [170]. 82 (2003) 132 FCR 31 at 80 [186]. 83 (2003) 132 FCR 31 at 80 [185]. 84 cf CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. McHugh Acts Interpretation Act 1901 (Cth) requires a court construing federal legislation to have regard to its purpose. Section 15AB of that Act authorises the use of various forms of extrinsic material to determine the meaning of that legislation. Section 15AB(3), however, has probably modified the common law position. It requires the court, when considering extrinsic material or its weight, to take into account "the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision" and "the need to avoid prolonging legal or other proceedings without compensating advantage." But sometimes – opponents of the purposive construction would say most of the time – the purpose of the statute in general, and the purpose of its individual sections in particular, are elusive. Similarly, sometimes context gives little – even no – guidance. In the present case, I think that it is impossible to discern the purpose of the relevant provisions, except by reference to the text. And I think that the historical background, the parliamentary history of the legislation and the extrinsic materials – the context – lead to no conclusion other than that the Federal Parliament resolved an important conflict between copyright owners and copyright users by an autochthonous solution. Much modern legislation regulating an industry reflects a compromise reached between, or forced upon, powerful and competing groups in the industry whose interests are likely to be enhanced or impaired by the legislation. In such cases, what emerges from the legislative process is frequently not a law motivated solely by the public interest. It reflects wholly or partly a compromise that is the product of intensive lobbying, directly or indirectly, of Ministers and parliamentarians by groups in the industry seeking to achieve the maximum protection or advancement of their respective interests. The only purpose of the legislation or its particular provisions is to give effect to the compromise. To attempt to construe the meaning of particular provisions of such legislation not solely by reference to its text but by reference to some supposed purpose of the legislation invites error. There is a good deal of evidence that supports the view that the legislative provisions with which this litigation is concerned are the product of a compromise agreed to, or forced upon, interest groups in the industry affected by the legislation. As the judgments of Sackville J and Lindgren J show, for many years Australian and overseas copyright owners and copyright users had been active in seeking to expand or limit the scope of legislation permitting copyright owners to use a "technological protection measure". A Parliamentary Committee set up to investigate that issue received about 100 submissions85. The Parliament did not adopt the Committee's recommendation concerning the form that the legislation might take. And the extrinsic materials to which we were referred did 85 (2003) 132 FCR 31 at 63 [114]. McHugh not disclose why the legislation took the precise form that it did. Moreover, the legislation that Parliament enacted did not give either the copyright owners or copyright users exactly what they wanted. As one writer has said86: "The definition of 'technological protection measure' is a compromise, which was neither as restrictive as some copyright users had hoped, nor as broad as copyright owners sought – and parts of the legislative history are opaque." Furthermore, there is nothing in the objects section of the Digital Agenda Act nor in the Explanatory Memoranda that shows a legislative purpose that assists in determining the meaning of the expression "technological protection measure". The legislative provisions that are the subject of this litigation were inserted into the Act by the Digital Agenda Act. Section 3 of that Act sets out its objects. But the objects, as so set out, concentrate on the Internet and online access to copyright material. They do not show what was the object of permitting and protecting the use of technological protection measures. Against this background, the best – and certainly the preferable – guide to the meaning of the relevant provisions is the text of those provisions. The first issue – the construction of "technological protection measure" The resolution of the first issue turns on the meaning of "inhibit" and, in particular, the way in which its meaning differs from the meaning of "prevent". It is not controversial that a device is "designed ... to prevent ... the infringement of copyright in a work" when the device utilises one of the two means identified by the s 10(1) definition in order to cause a user of the work to be unable to do an act of infringement. An example87 is the activation code on Microsoft's Windows XP program, which "ensur[es] that access to the work ... is available solely by use of an access code"88, and thereby causes (and is designed to cause) a user who does not have the access code to be unable to copy the program onto his or her hard drive. However, as the facts of the present case demonstrate, the unavailability to the user of an access code or the inability to copy the work does not always 86 Weatherall, "On Technology Locks and the Proper Scope of Digital Copyright Laws – Sony in the High Court", (2004) 26 Sydney Law Review 613 at 637. 87 Eggins, "A Victory for Copyright Owners: Kabushiki Kaisha Sony Computer Entertainment v Stevens", (2004) 23 University of Queensland Law Journal 234 at 88 Section 10(1) of the Act. McHugh prevent the doing of an act that infringes copyright. Sony's device ensures that the PlayStation console cannot load the game software unless the software is accompanied by an access code that is read by the Boot ROM. In this way, the device makes it impossible for a user to access, that is, to apprehend the contents of, the work89, by making it impossible to load the reproduced software onto the PlayStation console. But the device does not render the user unable to "reproduce the work in a material form", sell or import the reproduction. To the extent that protective devices like the PlayStation Boot ROM and access code are not designed to make it impossible for users to do acts that infringe rights comprised in the copyright, none of the devices are "designed ... to prevent ... the infringement of copyright". Instead, the extent to which these protective devices are protected by s 116A of the Act depends on the scope of the definition of "inhibit". "[D]esigned, in the ordinary course of its operation, to ... inhibit the infringement of copyright" Mr Stevens contends that Sackville J correctly defined the term "inhibit" in the definition of "technological protection measure". That interpretation classifies a device as "designed ... to prevent or inhibit" copyright infringement if "but for the operation of the device or product, there would be no technological or perhaps mechanical barrier to a person ... putting himself or herself in a position to infringe copyright in the work."90 In contrast, Sony contends that "inhibit" ought to be given the meaning ascribed to it by the Full Court of the Federal Court. On that meaning, a device is "designed ... to ... inhibit the infringement of copyright" if the device is designed to "deter" or "discourage" the infringement of copyright. On the Full Court's reading, a technological protection measure is a device that, in the ordinary course of its operation, is designed to make copyright infringement futile. That is, a device "inhibits" the infringement of copyright if the prospect of restricted access to the work or a controlled capacity to copy the work dissolves every reason to do an act that infringes copyright in the work. If the Boot ROM fails to locate an access code, the copy of the work (ie the game software) is unable to be loaded onto the console, and so the game is "unplayable". Sony points out that an "unplayable" copy of a PlayStation game has no market value. Consequently, the operation of the Boot ROM and access code causes PlayStation users to have no reason to do any act of copyright infringement – eg copying, selling or importing an infringing copy of a game – that a user might otherwise have reason to do. 89 See Ginsburg, "Essay: From Having Copies to Experiencing Works: The Development of an Access Right in US Copyright Law", (2003) 50 Journal of the Copyright Society of the USA 113 at 120. 90 (2002) 200 ALR 55 at 80-81 [115] (emphasis in original). McHugh The difference between the interpretations of "inhibit" in the judgments of Sackville J and the Full Court of the Federal Court inheres in the disparate descriptive tasks that each interpretation requires the term "designed" to perform. Sackville J used the term "designed" to describe the action that the device was intended to execute in the course of its operation. To identify this action, it was necessary to ask: "what is the device meant to do?" His Honour answered this question in terms of the device's construction of a "technological or perhaps mechanical barrier" that operated "physically" to prevent or inhibit acts of dealing with the work91. The Full Court of the Federal Court saw the content of the term "designed" differently. It thought that it refers to the effect that the device's action is intended to cause. This effect is discerned from the question: "why is the device meant to do that?" On this view, as Lindgren J noted, this "purpose" may be "indirect[ly]" achieved by the device's operation and, consequently, fall within the s10(1) definition92. However, the Full Court's interpretation of "inhibit" and description of the device's "design" gives rise to three problems. First, the interpretation is not consistent with the language of the s 10(1) definition of "technological protection measure". That the device must be "designed, in the ordinary course of its operation, to ... inhibit" indicates that the definition is concerned with the actions that the device is intended to execute in the course of its operation. The chain of causation, by which the device utilises one of the two processes specified in pars (a) and (b) of the definition to "inhibit" acts of copyright infringement, must be fixed by the completion of the device's operation. The effects that the device's action, in enacting one of the two processes, is intended to have on a user subsequent to the completion of the course of its operation are external to this chain of causation, and thus not attributable to the device. Second, the grammatical structure of the phrase "designed ... to prevent or inhibit" – where the term "designed" operates in the same way in respect of both "prevent" and "inhibit" – indicates that the term "designed" must perform the same descriptive task when attached to "inhibit" as it does when attached to "prevent". A device is "designed ... to prevent" copyright infringement when it is the operation of the device (which must incorporate one of the two processes specified in the definition) that makes it impossible to do an act of copyright infringement. In this context, the term "designed" is used to describe the device's function, and not the purpose that the execution of the function was intended to 91 (2002) 200 ALR 55 at 80-81 [115]. 92 (2003) 132 FCR 31 at 70 [139]. McHugh fulfil. Thus, for grammatical consistency, the phrase "designed ... to ... inhibit" must also refer to the device's intended operation. It cannot extend to the intended effect of the device's operation (ie the user's understanding and contemplation of the device's operation that causes there to be no reason to do an act of copyright infringement). Third, Sony's interpretation is not consistent with the language of the s 10(1) definition of "circumvention device". A "circumvention device" is defined by reference to the device's "purpose or use". If the legislature intended the s 10(1) definition of "technological protection measure" to extend to a device whose ultimate purpose, even if not its immediate effect, is to "inhibit" copyright infringement, then the plainer language of the "circumvention device" definition would have been used, so as to include devices having a "purpose or use to prevent or inhibit" copyright infringement. In my opinion, for the purpose of s 10(1), a device is a device that is "designed ... to ... inhibit" copyright if the device functions, "in the ordinary course of its operation", so as to make the doing of an act of copyright infringement – not impossible – but more difficult than it would be if the device did not operate. This interpretation does not render the term "inhibit" redundant because it applies to at least two categories of devices that do not have an absolute preventative effect on copyright infringement. Thus, there are protective devices that regulate a user's access, not to the work itself, but to the appliance through which works are accessed. For example, "device binding" is a measure through which the decryption key of a work is linked to the "unique identifier" of the computer of a person who is licensed to download and copy a work93. The work may only be downloaded and saved (and thus, copied) onto a computer with this identifier. The fact that access to the work is available solely by use of a decryption key that is linked to the computer's identifier does not make it impossible for another user of the same computer – who has not been licensed to reproduce the material – to download and save the work. Nonetheless, in disenabling the access of all other computers to the work, "device binding" mechanisms function to make it more difficult for users – who are not licensed to download the work – to have access to an appliance that will enable the copying and infringement of copyright in the work. In this way, "device binding" inhibits, but does not prevent, copyright infringement. Other devices are designed to make it impossible to do an act of copyright infringement by a particular method or methods, but are ineffective to prevent the 93 Kerr, Maurushat and Tacit, "Technical Protection Measures: Tilting at Copyright's Windmill", (2002-2003) 34 Ottawa Law Review 7 at 16. McHugh doing of the same infringing act by other, more complex, methods. Online access controls are an example. They are measures that decrypt a work that is delivered to the computer through the Internet – "streamed" – when it is delivered to the computer. The work is then immediately re-encrypted, so as to enable only a small portion of the work to be decrypted at any given time. The result is that the work cannot be digitally copied onto the computer to which it is being delivered94. However, the re-encryption of the work, after it has been delivered and played, does not restrain the user from reproducing the work on other recording devices while the work is being played. In making it impossible to do an act of copyright infringement (ie reproduction) using one method, but not making it impossible to do the same act of copyright infringement using a more tedious method, online access controls make it more difficult to reproduce the work. Acts of copyright infringement include not only acts that are comprised in the copyright but also acts of dealing with infringing copies of copyrighted works (eg by selling or importing). As French J observed95, it may be that the function of a protective device will rarely make it impossible, or even more difficult, to engage in the latter category of acts. But this is not an illogical result that ought to compel an alternate reading of the statutory definition. The Parliament did not contemplate that technological protection measures would "prevent or inhibit" acts of dealing with infringing copies. This is evident from the limited scope of s 116A(7) of the Act. Section 116A(7) defines "a permitted purpose", for which a circumvention device may be used in accordance with s 116A(3), as "the purpose of doing an act comprised in the copyright in a work". The "permitted purposes" for using a circumvention device do not extend to acts of dealing – however fairly – with copies of works. Thus, a circumvention device may be needed to circumvent a technological protection measure in order to sell, trade or import the protected work for one of the purposes listed in Pt III, Div 3 of the Act. On this hypothesis, the fair dealer who installs the device does not infringe copyright by selling, trading or importing the work, but nonetheless would contravene s 116A of the Act by making a circumvention device for a purpose that is not permitted. This would be an anomaly. It confirms the view that the s 10(1) definition of "technological protection measure" ought to be read according to its ordinary meaning and not artificially stretched to include within its scope acts of copyright infringement that are not comprised in the copyright. On the interpretation of the s 10(1) definition of "technological protection measure" that I favour, Sony's device of the Boot ROM chip and the access code 94 Kerr, Maurushat and Tacit, "Technical Protection Measures: Tilting at Copyright's Windmill", (2002-2003) 34 Ottawa Law Review 7 at 16. 95 (2003) 132 FCR 31 at 40 [20]. McHugh or either of them does not constitute a "technological protection measure" by virtue of the device's deterrent effect on the copying of computer games. That is because the console's inability to load the software from an infringing copy does not make it impossible or more physically difficult to make an infringing copy. The second issue – reproduction in RAM If the process of downloading the game code into the RAM of the PlayStation console involves a reproduction of the game code "in a material form", the downloading is an act of copyright infringement against which the protective device is designed to protect. Section 10(1) defines "material form" to include "any form (whether visible or not) of storage from which the work or adaptation, or a substantial part of the work or adaptation, can be reproduced." In cross-examination, Mr Nabarro conceded that the game code could not be reproduced "without developing particular hardware to extract [the code] back from RAM." Mr Stevens contends that the inability of the console to reproduce the game code that was stored in RAM without additional hardware means that the game code was not reproduced in a "material form". He relied on Emmett J's decision in Australian Video Retailers Association v Warner Home Video Pty Ltd where he ruled96, in relation to the RAM of a DVD player, that: "If a DVD player has been modified, such that it is possible to study or use the RAM for the purpose of reproducing its contents, there could be a reproduction of the computer program in a material form within the meaning of s 31(1)(a)(i) of the Act. However, in the ordinary course, temporary storage of a substantial part of the computer program in the RAM of a DVD player will not involve a reproduction of the computer program in a material form." In response, Sony contended that the dissenting judgment of Finkelstein J in the Full Court correctly applied the law. His Honour ruled that the storage of the game code in RAM was a form of storage from which that part of the computer game "can be reproduced" because, "with appropriate equipment", the code "may be able to be reproduced"97. On this view, it is not necessary that "the ability to reproduce the work from storage must exist at the time the work is placed into storage"98. 96 (2001) 114 FCR 324 at 345-346 [103] (emphasis in original). 97 (2003) 132 FCR 31 at 86 [209]. 98 (2003) 132 FCR 31 at 86 [209]. McHugh Justice Finkelstein interpreted the word "can" to express a possibility. The Oxford English Dictionary defines "can", when used to express a possibility or a capacity, as "[t]o be permitted or enabled by the conditions of the case". This definition shows that, while an action is possible even if the action has not yet been performed, an action is not possible unless, and until, the conditions on which the action depends have occurred. It is not enough to point to the possibility of establishing those conditions. As it is impossible to reproduce the storage of the game code from the RAM of the PlayStation console unless the console is modified with additional, reverse-engineered hardware, it is not possible for the code to be reproduced until that modification occurs. Thus, the definition of "material form" is not satisfied until the conditions that enable the reproduction of the work from storage in RAM prevail. When Mr Stevens supplied and installed the mod chips in Sony's PlayStation consoles, the PlayStations had not been modified with the requisite hardware. Thus, when Mr Stevens is alleged to have contravened s 116A of the Act, the device that the mod chips circumvented was not "designed ... to prevent" the act of reproduction of the work in "material form". Consequently, it was not a "technological protection measure" to which s 116A applied. The third issue – copying of a cinematograph film Sony's third submission was that the downloading of the game code into the console's RAM constituted an act of copyright infringement, an infringement against which the protective device was designed to protect. That was because the downloading involved a copying of a "substantial part" of the game's "cinematograph film" and was thus an infringement within the meaning of ss 86(a) and 14(1) of the Act. Section 10(1) defines "cinematograph film" as: "the aggregate of the visual images embodied in an article or thing so as to be capable by the use of that article or thing: of being shown as a moving picture; or of being embodied in another article or thing by the use of which it can be so shown; and includes the aggregate of the sounds embodied in a sound-track associated with such visual images." Section 10(1) also defines "copy" as meaning "in relation to a cinematograph film": McHugh "any article or thing in which the visual images or sounds comprising the film are embodied." Section 24 clarifies the meaning of "embodied" by declaring that: "sounds or visual images shall be taken to have been embodied in an article or thing if the article or thing has been so treated in relation to those sounds or visual images that those sounds or visual images are capable, with or without the aid of some other device, of being reproduced from the article or thing." Even assuming that a computer game's code constitutes "visual images", the evidence did not establish that the game code that is downloaded into the PlayStation console's RAM satisfies the definition of a "cinematograph film". It is true that Mr Nabarro's evidence established that the game code is "embodied", within the meaning of s 24, in the "article[s] or thing[s]" of the RAM, CPU, GPU, video RAM and digital terminal video converter. That is because the code is downloaded or transmitted to each of these entities in a way that makes the code capable, "with ... the aid of" all the other articles and things, of reproducing the code on the television screen. But his evidence does not establish that the "aggregate of the visual images", ie the aggregate of computer code, that is embodied in any of the console's "article[s] or thing[s]" at any point of time is, within the meaning of s 10(1), capable of: "being shown as a moving picture" or "being embodied in another article or thing by the use of which it can be so shown". "being shown as a moving picture" The code that is embodied in the RAM is a section of the game code that is needed to play a chosen section of any game. But not all game code that is loaded into the RAM is ultimately reproduced on the television screen. Mr Nabarro explained that "RAM basically acts like a reserve holding area and then as specific parts of that game code are required they're called off by the central processor, the CPU and fed into the graphics processing unit." The RAM stores an unsorted collection of game code. That code is not capable "of being shown as a moving picture" because it is not capable of arranging itself into an order in which the picture would move. It is only when the code is "called off by the central processor, the CPU and fed into the graphics processing unit" that the order of its reproduction is determined. Section 10(1), unlike s 24, does not permit an "article or thing" to harness "the aid of some other device" to assist the thing in the achievement of its McHugh purpose. Comparing the wording of ss 10(1) and 24 is instructive. It shows that the visual images that are embodied in an "article or thing" must be "capable, with or without the aid of some other device, of being reproduced". But it also shows that they must be "capable by the use of that article or thing ... of being shown as a moving picture" without the aid of any other device. Thus, it is irrelevant to par (a) of the s 10(1) definition of "cinematograph film" that, with the aid of the CPU, the game code that is embodied in the RAM could be selected for reproduction as a moving picture. "being embodied in another article or thing by the use of which it can be so shown" Nor is the game code that is embodied in the RAM capable "of being embodied in another article or thing by the use of which [the game code] can be shown". That is because there is insufficient evidence to establish that the code that is selected by the CPU for transmission to the GPU (and onwards to the video RAM and digital terminal video converter) constitutes an "aggregate of the visual images". Mr Nabarro's evidence merely shows that "specific parts of that game code" are transmitted to, and embodied in, the GPU. It does not show that the GPU stores the "specific parts" so as to embody an "aggregate" of "specific parts" of computer code. Instead, the GPU "moves" the code on "into the video RAM so that the GPU is free to work on the next section because of course this is a continuously changing environment." Thus, even though the GPU may reproduce a series of game code in the video RAM, and even though the net result of all reproductions is to show a moving picture, the GPU does not embody, at any given time, an "aggregate of the visual images". Accordingly, at no point in the process through which the game code is downloaded into the RAM and eventually transmitted to the television is a "cinematograph film" copied into any of the PlayStation console's articles or things. Order The appeal must be allowed. Kirby 163 KIRBY J. This appeal raises important questions of copyright law as that law operates in Australia in relation to digital technology. The appeal comes from a judgment of the Full Court of the Federal Court of Australia99. That judgment, although unanimous as to the outcome, reflects reasons of the participating judges100 that differ in important respects – both as to the approach that should be taken to the contested statutory language101 and as to the merits of two additional contentions urged by the Sony company interests ("Sony") in support of their case102. Despite these divergences there was unanimity in the Full Court about the meaning to be given, in s 116A of the Copyright Act 1968 (Cth) ("the Copyright Act")103, the expression "technological protection measure" ("TPM"). Specifically, the Full Court agreed that the measures taken by Sony in the present case fell within the phrase TPM as so defined104. This conclusion was sufficient, with other uncontested determinations made at trial105, to result in the reversal by the Full Court of the judgment entered by the primary judge (Sackville J). He had decided that the claim by Sony under s 116A of the Copyright Act against Mr Eddy Stevens (the appellant) had failed106. Instead, the Full Court concluded that, on the basis of its view as to the meaning of TPM (as well as the by then uncontested basis of breaches of the 99 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2003) 132 FCR 31. 100 French J, Lindgren J and Finkelstein J. 101 (2003) 132 FCR 31 at 54 [85] per Lindgren J, 80 [189] per Finkelstein J agreeing; cf at 41 [25] per French J. 102 (2003) 132 FCR 31 at 78 [173], 80 [187] per Lindgren J, 41 [26] per French J concurring; contra 80 [189] per Finkelstein J. 103 Inserted by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) ("the Digital Agenda Act") 104 (2003) 132 FCR 31 at 34 [2], 37 [12], 41 [25] per French J, 69-70 [138]-[139] per Lindgren J, 80 [189] per Finkelstein J. 105 Such as that, if the access code had been a TPM, the chips sold or promoted by the appellant were circumvention devices: see Kabushiki Kaisha Sony Computer Entertainment v Stevens (2002) 200 ALR 55 at 94 [165]-[167] per Sackville J. 106 (2002) 200 ALR 55 at 81-82 [117]-[118]. Kirby Trade Marks Act 1995 (Cth) ("the Trade Marks Act"), s 120(1)), Sony was entitled to succeed107. Against the disturbance by the Full Court of the orders of the primary judge, Mr Stevens appealed to this Court. He sought to restore the orders at trial concerning the Copyright Act and to resist the defensive reliance by Sony upon the two additional copyright arguments on which the majority of the Full Court preferred the view accepted by the primary judge. As to the major point of difference between the primary judge and the Full Court – the meaning of TPM as defined in s 10(1) of the Copyright Act – Lindgren J in the Full Court (correctly in my view) described the issue of construction involved as "finely balanced". According to Lindgren J, no textual argument offered strong support for one construction over the other108. The factual findings and conclusions of the primary judge were not challenged in this Court109. In this appeal, therefore, this Court has before it three points of statutory construction which, like so many others that reach it, involve disputed arguments yielding contestable outcomes. Conformably with authority110, this Court must identify, and explain, the interpretation that it prefers. It must do so by reference to established sources and tools: by close examination of the statutory text, its language, context and structure; by identification of the purposes suggested by that text111; and by the use of the statutory history, including available background materials that cast light on the meaning of the text112. Yet, in construing the Copyright Act there are peculiar difficulties that, in my view, may be traced, ultimately, to the constitutional head of power113 by which the Federal Parliament enjoys the legislative authority to make laws with respect to "copyrights, patents of 107 The primary judge had rejected a claim of misleading or deceptive conduct contrary to the Fair Trading Act 1987 (NSW), s 42. See (2002) 200 ALR 55 at 70 [73]. This finding was not challenged by Sony on appeal. 108 (2003) 132 FCR 31 at 54 [85]. 109 [2005] HCATrans 030 at 17. 110 Including the Acts Interpretation Act 1901 (Cth), ss 15A and 15AB. 111 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 517-518. 112 Palgo Holdings Pty Ltd v Gowans (2005) 79 ALJR 1121 at 1129 [35]-[40]; 215 ALR 253 at 262-264. 113 Constitution, s 51(xviii). Kirby inventions and designs, and trade marks". That power is granted in a constitutional and legal setting in which competing legal interests must also be upheld by the law, including, generally, free expression and the normal interest of property owners in the undisturbed enjoyment of their property114. "Copyright", it has been rightly declared, "is one of the great balancing acts of the law. Many balls are in play and many interests are in conflict."115 To the traditional problems of resolving such conflicts must be added, in the present age, the difficulties of applying the conventional model of copyright law to subject matters for which that model is not wholly appropriate; adjusting it to the "implications of the online environment"; and adapting it to international pressures that may reflect economic and legal interests that do not fit comfortably into the local constitutional and legal environment. "The dance proceeds", as Professor Ricketson has observed116; but the multiplicity of participants and interests now involved in its rhythms inevitably affect the contemporary judicial task of resolving contested questions of interpretation of the Copyright Act. Where, as both sides effectively conceded in this appeal, alternative views are available as to the meaning of the disputed provisions of the Copyright Act, the resolution of the task of interpretation is bound to lie (even more than in most cases) in considerations additional to those that can be extracted directly from the statutory text. Although I agree in the conclusion stated in the reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("the joint reasons") and of McHugh J as to the issues in, and outcome of, this appeal, it is to clarify and elaborate the range of considerations that affect my reasoning that I write separately. The facts and the legislation The facts: The essential facts are stated in brief terms in the joint reasons117. The course of the relevant pleadings118; a description of the way the 114 Constitution, s 51(xxxi). See Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation (1970) 121 CLR 154; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480. 115 Ricketson, "Copyright", in Blackshield, Coper and Williams (eds), The Oxford Companion to the High Court of Australia, (2001) 152 at 154. 116 Ricketson, "Copyright", in Blackshield, Coper and Williams (eds), The Oxford Companion to the High Court of Australia, (2001) 152 at 154. 117 Joint reasons at [19]-[23]. See also reasons of McHugh J at [108]-[113]. 118 (2002) 200 ALR 55 at 60-62 [17]-[24]. Kirby circumvention device claim developed119; and the facts concerning the Sony companies, their PlayStation system and Mr Stevens' activities120 are set out in the reasons of the primary judge, in terms that can be accessed by those who desire more detail. The appellant accepted that the PlayStation CD ROMs, manufactured and supplied by Sony, incorporated a number of encrypted data (referred to as the "access code") that could not be reproduced by conventional CD recording devices. The access code consisted essentially of a string of characters, stored in a portion of the CD ROM inaccessible to such recording devices. Before the game stored on the CD ROM could be played, this code had to be read by the Boot ROM, located within the Sony PlayStation console. In effect, the Boot ROM first determines whether there is a relevant access code on the CD ROM and, if there is, what the access code provides. If that code is found by the Boot ROM and can be read, the game can be played. If not, the CD ROM cannot be loaded and the game cannot then be played121. A copy of a PlayStation CD ROM, made without the licence of Sony (as when "burnt" using a conventional CD "burner"), would not ordinarily be capable of being played on an unmodified PlayStation console. The appellant did not challenge the finding of the primary judge that the Boot ROM was intended by Sony to deter, or discourage, the making, importation and distribution of unauthorised ("counterfeit") copies of the Sony PlayStation CD ROMs122. Nor did the appellant contest the related finding of the primary judge that he was aware that the modifications made by him to PlayStation consoles were intended to enable such copies to be played. Although Sony argued that it was legally irrelevant, the evidence at trial proved that the PlayStation consoles, as manufactured and supplied by Sony, were designed to allow the operation of PlayStation games only as distributed in particular regions of the world. Thus, the Boot ROM in a PlayStation console distributed and sold in the United States of America is designed to recognise only the access code on PlayStation CD ROMs sold and distributed in that region. Likewise PlayStation CD ROMs sold and distributed in Japan have a different access code, recognised only by the Boot ROM contained in a PlayStation console distributed and sold in that region. A third region, with an access code 119 (2002) 200 ALR 55 at 62-64 [25]-[36]. 120 (2002) 200 ALR 55 at 64-67 [37]-[54], 67-68 [58]-[63]. 121 (2002) 200 ALR 55 at 65 [46]. 122 (2002) 200 ALR 55 at 78-79 [107]. Kirby different again, is constituted by other areas of the world which include Australia, New Zealand and Europe. From the foregoing it follows that a PlayStation CD ROM sold and distributed in one global region cannot be played on an unmodified PlayStation console sold and distributed in another region. Thus, the purchaser and owner of a PlayStation CD ROM, lawfully acquired, say, in Japan or the United States and brought to Australia, could not play that CD ROM on an unmodified console lawfully acquired, say, in Australia or Europe123. By their line the Popes of old divided the world into two spheres of influence. Sony, it appears, has divided the world (for the moment) into at least three spheres or markets. By the combined operation of the CD ROM access code and the Boot ROM in the PlayStation consoles, Sony sought to impose restrictions on the ordinary rights of owners, respectively of the CD ROMS and consoles, beyond those relevant to any copyright infringement as such. In effect, and apparently intentionally, those restrictions reduce global market competition. They inhibit rights ordinarily acquired by Australian owners of chattels to use and adapt the same, once acquired, to their advantage and for their use as they see fit. Before this Court, Sony ultimately settled for a contention that it was the combination of the access code in the PlayStation CD ROMs and the technological capacity to recognise and respond to such codes in the Boot ROM chip in the PlayStation console that amounted to a TPM within s 10(1) of the Copyright Act. Earlier attempts to identify the "protective device" in each of these items separately were abandoned so as to embrace the combined view. On the face of things, the combined operation of the foregoing technology constitutes a "measure" within the Copyright Act that answers to a description of a "device or product, or a component incorporated into a process" which was designed (without some other intervening device, product or component) to prevent access to the use of the game digitally encoded in Sony's CD ROM and capable of being played on its PlayStation console. In my opinion, it is necessary to spell out these features of Sony's "device", "product" and "component" (together "the device") in order to appreciate fully the force of Sony's argument that the device fell within the statutory definition of TPM. It was in response to this added digital component that the appellant offered for sale, sold and installed where necessary, both CD ROMs, copied without Sony's authority using conventional CD recording or copying devices (such as a conventional CD "burner"), and "mod chips". The latter are programmed computer chips which, when installed in the PlayStation console, override its internal operating system so as to permit the console to load the computer program contained on the copy CD ROMs, although they do not 123 cf reasons of McHugh J at [111]. Kirby contain the relevant access code. A PlayStation console, modified by the addition in it of a "mod chip", is commonly referred to as a "chipped console"124. In a world in which owners of copyright in defined works and subject matter involving digital technology have sought to protect their copyright interest by an encoded technological barrier or impediment; where international treaties (to which Australia is a party) have agreed on the adoption of specified national protections for the effectiveness of such measures; where such measures have been thoroughly debated in Australia by experts, parliamentary bodies and eventually the Parliament itself resulting in the Digital Agenda Act, it seems, on the face of things, that a broad view of the legislation (including of the definition of TPM in s 10(1) of the Copyright Act) favours Sony in this appeal. A broad view could sustain the conclusion reached by the Full Court and negative the outcome reached by the primary judge. What more (Sony might ask itself rhetorically) could it have done using a technological "device" to protect its interests in the copyright in its works and to keep unauthorised intruders, such as the appellant and his customers, from the unlicensed use of Sony's PlayStation products? Was not this precisely what international treaties and national law were designed to uphold? Do these practical considerations not support Sony's contention that its device is a TPM? The first statutory issue in this appeal (and the other issues presented by Sony's notice of contention) are not, however, to be decided at the foregoing level of generality. Legal analysis is required. Such analysis must begin with the language, context and apparent purposes of the Copyright Act. The question is not whether Sony, or anyone else, considered that they had implemented a "device" to protect a popular work with valuable copyright features from the activities of "pirates" like the appellant. Self-evidently, that was Sony's aim. The primary question in this appeal is whether, in doing so, Sony is entitled to invoke the Copyright Act, according to its terms, to gain legal remedies against the appellant. That is a legal, not a technological, question. It must be answered using legal tools. The legislation: The provisions of the Copyright Act that determine the outcome of this appeal are contained, or described, in the joint reasons125. I will not repeat the language of the Act. 124 (2002) 200 ALR 55 at 66-67 [54]. 125 As to the (first) TPM issue, see joint reasons at [27]-[29]; as to the (second) RAM issue at [62], [66]; as to the (third) cinematograph film issue at [80]. See also reasons of McHugh J at [114]-[115]. Kirby Crucial to the point that differentiated the opinion of the primary judge from the Full Court was the definition of "technological protection measure" in s 10(1) of the Copyright Act. That phrase, which is central to, and incorporated in, the definition of "circumvention device" (and is essential to establishing breach of s 116A(1) of the Act), contains the requirement that the TPM must be "a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work" by specified means. The stated introductory words (the chapeau) to the statutory definition are the legal preconditions to establishing an unlawful measure. Unless they are proved by the evidence to have been fulfilled, all that remains is an intended "circumvention device" and an intended TPM. They may yet have some practical effectiveness to protect the given copyright interests but, unless the conditions are fulfilled, they do not attract the legal protections provided by the Copyright Act that Sony invoked against the appellant in this case. That the measures in this case did not attract such legal protections was the conclusion reached by the primary judge. However, it was the one point upon which all judges of the Full Court expressed agreement, in reversing the primary judge's orders and upholding Sony's claim. Sony sought to maintain this conclusion which became the focus of most of the argument in this appeal. The remaining issues, raised by Sony's notice of contention, were deployed defensively, in case the primary judge's conclusion on this point was restored and the Full Court reversed. The issues Three issues are therefore presented for resolution in the appeal – the first in terms of the appellant's grounds of appeal and the second and third by Sony's notice of contention: The technological protection measure issue: Whether, in accordance with s 10(1) of the Copyright Act, Sony's protection device constituted a TPM within the meaning of the definition of that expression in s 10(1) of the Copyright Act. The reproduction in material form issue: Whether the playing of a PlayStation game CD ROM on the Sony PlayStation console involved the reproduction in a material form, within s 10(1) of the Copyright Act, of the whole or a substantial part of a computer program, within the meaning of that Act. The cinematograph film issue: Whether the playing of such a game on such a PlayStation console involved the making of a copy of the whole, or of a substantial part, of a cinematograph film within the meaning of Kirby s 86(a) of the Copyright Act, having regard to the definition of "copy" in s 10(1) of the Act, as supplemented by s 24. Before the primary judge, Sony failed on all three issues. In the Full Court, Sony succeeded only on the first. Of the judges in the Full Court, Finkelstein J alone would have upheld Sony's arguments on the second and third issues126. In this Court, the joint reasons prefer the conclusions of the primary judge on the first issue and reject Sony's argument on the second and third issues, as the majority judges did below127. I agree. The result is that the orders of the primary judge should be restored. I agree with the reasoning of the joint reasons as they concern the second and third issues. However, I wish to express in my own words how I resolve the difficult problem of statutory construction presented by the first issue. I do this out of respect for the unanimous conclusion of the experienced judges of the Full Federal Court, conscious that I am differing from them in a matter where the legislation is susceptible to the meaning which they preferred, which meaning, on balance, I find less persuasive than the one adopted by the primary judge. TPM: meaning in the Copyright Act Two meanings: The question for this Court is whether the Full Court erred in the approach it took concerning the meaning of the expression TPM. In short, did the Full Court err in substituting its view of that meaning for the contrary view adopted by the primary judge? The resolution of this question depends on the definition of TPM in s 10(1) of the Copyright Act. In turn, that meaning is influenced by the approach adopted to the task of interpretation. The primary judge focussed his attention on the opening words of the definition. He held that Sony's "device", "product" or "component" was not, as such, in the ordinary course of its operation, designed "to prevent or inhibit the infringement of copyright". This was because, as a matter of application of the words of the Act to the uncontested evidence, the "device", "product" or "component" manifestly did not prevent or inhibit a person from undertaking acts which, if carried out, would or might infringe copyright in the work. The infringement had already occurred, at least when the copy of the CD ROM was made. Indeed, such an infringement was inevitable and even inherent in the 126 (2003) 132 FCR 31 at 41 [26] per French J, 76 [168], 80 [187] per Lindgren J; cf at 88 [211], 91-92 [224] per Finkelstein J. 127 As to the second issue, see joint reasons at [38]-[47]. As to the third issue, see at [62]-[79]. See also reasons of McHugh J at [144]-[149], [150]-[161]. Kirby circumvention offered by the appellant for the measures adopted by Sony both on the CD ROM and in the Boot ROM of the PlayStation console. The focus of the statutory definition is on the "device" and its consequences, as such. The focus is not on the impact or operation of the device. Nor is it on social facts or human psychology. This is how the primary judge explained his reasoning128: "The definition, so it seems to me, contemplates that but for the operation of the device or product, there would be no technological or perhaps mechanical barrier to a person gaining access to the copyright work, or making copies of the work after access has been gained, thereby putting himself or herself in a position to infringe copyright in the work. The definition is intended to be confined to devices or products that utilise technological processes or mechanisms to prevent or curtail specific actions in relation to a work, which actions would otherwise infringe or facilitate infringement of copyright in that work. … I do not think the definition is concerned with devices or products that do not, by their operations, prevent or curtail specific acts infringing or facilitating the infringement of copyright in a work, but merely have a general deterrent or discouraging effect on those who might be contemplating infringing copyright in a class of works, for example by making unlawful copies of a CD-ROM." In its reasoning the Full Court preferred a broader approach. One judge (French J) considered that such an approach was required by the plain language of the Copyright Act, read in its context129. The other judges (Lindgren J, with whom Finkelstein J concurred on this point)130 considered that there was ambiguity in the text and that reference to the background material sustained the broader approach urged by Sony. In particular, Lindgren and Finkelstein JJ considered that the legislative history, culminating in the Digital Agenda Act, was determinative on the point131. Support for the Full Court's approach: There is no point pretending that one interpretation is clearly correct and the other clearly wrong. As with so 128 (2002) 200 ALR 55 at 80-81 [115] (second emphasis added). 129 (2003) 132 FCR 31 at 41 [25]. But see also at 40-41 [22]. 130 (2003) 132 FCR 31 at 54 [85] per Lindgren J, 80 [189] per Finkelstein J. 131 (2003) 132 FCR 31 at 69-70 [138]-[139] per Lindgren J, 80 [189] per Finkelstein J. Kirby many similar disputes over statutory interpretation reaching this Court, each approach is arguable132. The primary judge drew the inference that the Digital Agenda Act contemplated a TPM that itself would prevent or inhibit the infringement of copyright in a work from happening at all. There were other ways of wording the legislation. The statutory texts adopted in other countries indicated as much133. Yet the Australian legislation adopted a distinct approach. It was one designed to prevent or inhibit infringement of copyright as such, and access to copyrighted works and subject matters as incidental to that purpose134. Sony defended the interpretation of TPM favoured by the Full Court by reference to a number of considerations. Thus, Lindgren J disagreed with the primary judge's view, describing it as involving an "unwarranted preconception that the 'access' to which para (a) of the definition of [TPM] refers is limited to access for the purpose of subsequent infringement"135. It was sufficient, upon the Full Court's view, that the "access" denied should be retrospective, as where (in default of the technological devices introduced by Sony or the use of a circumvention device contrary to s 116A of the Copyright Act) the attempted use of the CD ROMs in such consoles would fail to access the game, so denying their users the benefit of any earlier infringement of Sony's copyright. In support of this broader interpretation of the Copyright Act, Sony relied on textual indications, as well as the extrinsic materials mentioned by Lindgren J in his reasons in the Full Court136. As to the textual indications, Sony placed much emphasis (as did the judges in the Full Court) upon the use, in the definition of TPM, of the verb "inhibit" in addition to the word "prevent" in the context of copyright 132 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 580 [42]. 133 Digital Millennium Copyright Act of 1998 (17 USC §1201); Copyright, Designs and Patents Act 1988 (UK), s 296. See also Copyright Act 1994 (NZ), s 226; Copyright Ordinance (Cap 528) (HK), s 273; Copyright Act 2004 (Singapore), 134 cf reasons of McHugh J, referring to Acts Interpretation Act 1901 (Cth), s 15AA and 15AB, at [124]. 135 (2003) 132 FCR 31 at 69 [138]. 136 (2003) 132 FCR 31 at 69-70 [138]-[139]; see also at 80 [189] per Finkelstein J agreeing. Kirby infringement of the work in question. Even if, upon one view, a technological measure to prevent infringement of copyright might be treated as having failed where an unauthorised copy of a CD ROM had been made (without the access code) and inserted in a Sony PlayStation console, inhibition (so it was said) included the interaction between the technological device and social facts or human psychology. Thus, the effect of the device, in the "ordinary course of its operation", is that the unauthorised copy of the CD ROM (without the access code) would be rejected. Such rejection would deny the would-be player access on the PlayStation console to the game. The result would thus be frustration, disappointment and the conclusion that the "pirate" CD ROM was useless. The intended infringement of the copyright would thereby be defeated. By defeating it, Sony's device might not have prevented the infringement of copyright (if any), such as had occurred in the creation of the unreadable copy of the work or subject matter. However, it would certainly inhibit the infringement of copyright. It would do so by denying a reward to the copier, namely access to the copyrighted work or subject matter137. As an inhibition, Sony's device, so its argument ran, qualified as a TPM within s 10(1) of the Copyright Act. As to the extrinsic materials, Sony supported the analysis of the emergence of the Digital Agenda Act explained in the reasons of Lindgren J (with whom Finkelstein J agreed). Much emphasis was placed on the rejection in the definition of TPM of the recommendation of the Australian Parliamentary Committee to the effect that the definition should not have two limbs, one of which allowed copyright owners to control access to their work138. From this legislative history, Sony drew the conclusion that the definition of TPM in the Act was intended to include protective devices that controlled access alone. Each of these interpretations is open on the statutory language and differing views as to the legislative process leading to the enactment of the Digital Agenda Act. Both sides invoked extrinsic materials and specifically those relevant to the legislative history. The duty of a court is to give effect to the purpose of the Parliament as expressed in the language of its legislation. This 137 (2003) 132 FCR 31 at 39 [17] per French J, 69-70 [138]-[140] per Lindgren J, 80 138 (2003) 132 FCR 31 at 63-67 [114]-[128] per Lindgren J citing the report of the Australian Parliament, House of Representatives Standing Committee on Legal and Constitutional Affairs, Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999 (1999). See also (2002) 200 ALR 55 at 73-74 [84]-[86]. Kirby is a constitutional duty expressly imposed139 as well as a duty implied in the concept of the rule of law that is inherent in the Australian Constitution140. No court may frustrate the command of the Parliament, as for example because a judge disagrees with the legislative policy; considers that it is too protective of foreign intellectual property interests; or concludes that it needs reconsideration, or that it unduly extends the legal protections of copyright law in a way that disturbs balances of interests hitherto observed by such law. If, after analysis, the meaning of the legislation is established and is sufficiently clear, and if it is constitutionally valid, a court must uphold its meaning and give effect to its command. Policy and a broad approach: In addition to the arguments deployed in the Full Court, there are a number of general considerations that lend support to the conclusion expressed by the Full Court. In my view, these include that: The Court is giving meaning to innovative legislation designed to respond to new technological developments as they affect copyright law. To the extent that the Court concludes that the text misfires, so that it does not hit its apparent target, it encourages increasingly complex legislative language as the Parliament, frustrated by court decisions, attempts to make its purposes unmistakably plain by expressing them in more and more detail141; The definition of TPM in s 10(1) of the Copyright Act was one of a number of changes to the balances hitherto observed in Australian copyright law, influenced by international treaty obligations and by conclusions apparently accepted by the Executive Government and the Parliament142. In such circumstances, complaints about disturbance of those balances are less convincing than they might otherwise have been. 139 Covering cl 5. See Trust Co of Australia Ltd v Commissioner of State Revenue (2003) 77 ALJR 1019 at 1029 [68]; 197 ALR 297 at 310; Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 305-306 [87]; Palgo Holdings (2005) 79 ALJR 1121 at 1129 [39]; 215 ALR 253 at 263-264. 140 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513 [103]. 141 Australian Broadcasting Corporation v Redmore Pty Ltd (1987) 11 NSWLR 621 at 142 Such as the reversal of the onus of proof for alleged breaches: see Copyright Act, s 116A(9). See also s 132(5J); cf Weatherall, "On Technology Locks and the Proper Scope of Digital Copyright Laws – Sony in the High Court", (2004) 26 Sydney Law Review 613 at 630 ("Weatherall"). Kirby Especially is this so because still further changes to such balances have been made, or foreshadowed, by the Free Trade Agreement between Australia and the United States of America after the events occurred relevant to this appeal143; The conclusion reached by the Full Court is consonant with contemporary decisions overseas in cases bearing some similarities to the present, although concededly based on important legislation reflecting Copyright law aims to promote innovation and creativity by protecting new works, according temporary exclusive rights in respect of them, particularly against deliberate uncompensated invasions for the profit of strangers, who have made no arrangement for compensation to the copyright owner, but instead seek financial gain of their own from facilitating deliberate copying of the original works of others. These considerations remain relevant to the contemporary digital environment. They have recently been upheld by the Supreme Court of the United States145. Any suggestion that the digital environment is in some way to be rendered a copyright-free zone flies in the face of international agreements as well as Australian national legislation adopted after a painstaking process of consultation with relevant interests, parliamentary 143 See US Free Trade Agreement Implementation Act 2004 (Cth) which effected amendments to the Copyright Act by s 3 and items 186-190 of Sched 9 to that Act. That Act introduced new ss 43B and 111B into the Copyright Act with effect from 1 January 2005. See s 3 and items 187-188 of Sched 9 of the said Act. These amendments, whilst taking effect from 1 January 2005, apply only in respect of acts done after that date (see s 2, item 20 of the table). They thus foreshadow amendments to Australian copyright law without taking effect in respect of the subject proceedings. 144 Sony Computer Entertainment v Edmunds (2002) 55 IPR 429 (EWHC Ch). See also Kabushiki Kaisha Sony Computer Entertainment Inc v Ball [2004] EWHC 1738 (Ch) at [10]; Sony Computer Entertainment Inc v Lik Sang International Ltd (2003) 58 IPR 176 (HC HK); Sony Computer Entertainment America, Inc v Gamemasters 87 F Supp 2d 976 (ND Cal, 1999). Sony accepted that the decisions in the foregoing cases did not bear directly on the present question of statutory construction but suggested that they were illustrative of the approach of courts in common law countries to broadly equivalent provisions. It is the equivalence of the provisions that was contested. 145 Metro-Goldwyn-Mayer Studios Inc v Grokster, Ltd 73 USLW 4675 (2005). Kirby investigation and debate146. The outcome of these agreements and national legal changes may reflect compromises147. However, they also indicate a deliberate global and national resolve to afford effective copyright protection in the digital context. No court has authority to give effect to a contrary objective of its own, or to frustrate laws that have been enacted by the Parliament to afford such protection. TPM: the preferable construction Accepting an ambiguity: With respect to the contrary opinion of French J, I prefer the view adopted by the other judges in the Federal Court that the definition of TPM in s 10(1) of the Copyright Act is ambiguous. This conclusion requires this Court to choose between the available interpretations. That obligation does not confer an unfettered power. It necessitates an interpretative analysis justifying to the relevant interpretative community the conclusion that is reached. That community commonly includes the parties, interested members of the legal profession, the competing interests (including relevant groups and organisations such as the amici curiae) as well as interested members of the public. Because the legislative words do not, alone, yield a convincing resolution to the problem of interpretation, it is necessary to refer to contextual and extrinsic circumstances that bring the decision-maker to the ultimate resolution. Relevant textual indications: The task of statutory interpretation is, at least in part, one that involves individual impressions. As many cases demonstrate, different judicial readers, trained in the same tradition, examine the same language yet come to different conclusions. The object of legal analysis is to ensure, so far as possible, that each decision-maker takes into account the same considerations before reaching a conclusion, and that such legal analysis is as candid as exposition of judicial reasons permits, concerning the chief factors that have led to one conclusion rather than another. Take the present case. The main textual considerations that support the conclusion of the primary judge are as follows. The drafter of the Australian provision has, apparently deliberately, chosen a distinctive way of expressing the prohibition in s 116A of the Copyright Act. This is by using references to and ("technological technological protection measure" expressions 146 Such as the World Intellectual Property Organization Copyright Treaty (WCT) and the World Intellectual Property Organization Performances and Phonograms Treaty (WPPT) referred to by Lindgren J: see (2003) 132 FCR 31 at 58 [100]. See also Weatherall at 627. 147 For a description of the proposals of the House of Representatives Committee and the response of the Government, see Weatherall at 629-631. Kirby "circumvention device") that are defined in s 10(1) of the Copyright Act. Moreover, whilst a particular "device" might, in general terms, be regarded as a "circumvention device" – just as the primary judge was willing to accept the appellant's modifications were in the present case – they only have the relevant statutory significance in so far as they circumvent, or facilitate the circumvention of, a TPM. The drafting is thus tight. Apparently, it is deliberately expressed in terms of defined measures. Those measures, in turn, are not described in general terms as measures preventing or inhibiting access to a work or to subject matter entitled to copyright protection under the Act. Instead, two elements are stated as prerequisites to the existence of a TPM, as defined. These are that the TPM must be a "device or product, or a component incorporated into a process" – implying (as the word "technological" in the expression TPM itself suggests) a measure having an ordinary operation of the designated type. Moreover, what is to be prevented or inhibited is not, as such, "access" to a work or subject matter that is entitled to copyright. It is the infringement of copyright in that work that is to be prevented or inhibited; and inferentially, the infringement is to be prevented or inhibited by such technological means. The Parliament having chosen such an elaborate and specific definition for the key provision of the legislative scheme, a court should pause before stretching the highly specific language in order to overcome a supposed practical problem. To do so would not be to construe the text, but to substitute a new and broader text for the one chosen by the Parliament after extensive consultation, investigation and debate. Particularly in the context of the object stated in s 3 of the Digital Agenda Act – very much tied into the "new online technologies" and the perceived advantages of the Internet148 – the foregoing "technological" interpretation of the definition of TPM causes no surprise. It is one that is grounded in the language of s 10(1) of the Copyright Act. It is strengthened by the postulate of the Digital Agenda Act that technology itself could be invoked to provide protections against breaches of copyright. The difficulty with Sony's interpretation is that it challenges the very assumption upon which the definition of TPM in terms of "devices" would operate to have the designated effect, namely the prevention or inhibition of the infringement of copyright. The inclusion of the word "inhibit", in the context of a focus upon a self- operating device, does not alter this conclusion. A strict interpretation does not deprive the term "inhibit" in s 10(1) of meaningful content. That word still has work to do in a number of contexts that are not covered by the word "prevent". For example, it will apply to a protective device which regulates access to the mechanism that provides access to a work, rather than access to the work itself. 148 Digital Agenda Act, s 3(a) and (e). Kirby Such a device will not prevent infringement in all cases. This is because a device limiting access to a work does not prevent infringing copies being made once access is legitimately achieved. However, by restricting access to the work in the first place, such a device makes infringement more difficult. Significantly, such an inhibition operates prospectively; the infringement against which the device is designed to protect occurs subsequent to the operation of the protection device in its ordinary course. The description of "device binding" in the reasons of McHugh J149 provides a good example of this category of technological device, which is designed to inhibit, but not prevent, infringement within the meaning of Secondly, a device that prevents infringement by a particular method, but which is ineffective to protect against infringement by another more complex or involved method, is a device that will not be covered by the term "prevent" in s 10(1)150. This is because infringement will still be possible, through the more complex method, notwithstanding the operation of the device. However, by making infringement more difficult (say by preventing a common or easily available method of infringement), such a device can be seen to inhibit infringement in the technical sense required by the definition. This further demonstrates the utility of the inclusion of the term "inhibit" in s 10(1), consistent with the strict interpretation that I favour. Had it been the purpose of the Parliament, by the enactment of the Digital Agenda Act, to create a right to control access generally, it had the opportunity to say so. It even had overseas precedents upon which it could draw. The Australian Government was pressed to provide protection for all devices that "control access". This is evident in the definition of TPM suggested to the Australian Parliamentary Committee by the International Intellectual Property Alliance151. Such a definition would effectively have mirrored the provision adopted by the Congress of the United States in the Digital Millennium 149 See reasons of McHugh J at [140]. 150 Online access control mechanisms are an example of such a protective device: see reasons of McHugh J at [141]. 151 The definition proposed by the International Intellectual Property Alliance was: "'effective technological protection measure' means any technology, device or component that, in the normal course of its operation, controls access to a protected work, sound recording, or other subject matter, or protects any copyright as provided by this Act": see International Intellectual Property Alliance submission to House of Representatives Standing Committee on Legal and Constitutional Affairs, 7 October 1999 at 5. Kirby Copyright Act of 1998152. By the time the Australian definition of TPM was enacted, the United States Act had been in force for two years. Nevertheless, the propounded definition of wider ambit was not accepted. Instead, in Australia, the Parliament chose to focus its definition upon protection from infringement of copyright as such. The preference inherent in the Australian Act has been viewed as one which "favours the use of protected works"153, by limiting the operation of TPMs in terms of control over infringement of copyright rather than a potentially broader control over access. When the competing legislation of other jurisdictions, giving effect to the relevant international treaties, is contrasted, it appears clear that the distinctive statutory formula adopted in Australia was a deliberate one. It was less protective of copyright than the legal regimes adopted in the United States, the United Kingdom and elsewhere154. In the face of such a formula, accepted after a long inquiry and contrary submissions made by affected interest groups, the safer course for this Court, in giving meaning to the definition of TPM in s 10(1) of the Copyright Act, is to stick closely to the more restricted language of the Act. This approach has a textual foundation. It lies in the meaning to be attributed to the words "designed" and "inhibit" appearing in the definition of TPM in the Copyright Act155. If the definition of TPM were to be read expansively, so as to include devices designed to prevent access to material, with no inherent or necessary link to the prevention or inhibition of infringement of copyright, this would expand the ambit of the definition beyond that naturally indicated by the text of s 10(1) of the Copyright Act. It could interfere with the fair dealing provisions in Div 3 of Pt III of the Copyright Act and thereby alter the balance struck by the law in this country. As the amici submitted to this Court, Sony's interpretation of s 116A would enable rights holders effectively to opt out of the fair dealing scheme of the Act. This would have the potential consequence of restricting access to a 152 17 USC §1201. 153 Kerr, Maurushat and Tacit, "Technological Protection Measures: Tilting at Copyright's Windmill", (2002-2003) 34 Ottawa Law Review 7 at 58. See also Linsday, "A Comparative Analysis of the Law relating to Technological Protection Measures", (2002) 20 Copyright Reporter 118 at 124. 154 Digital Millennium Copyright Act of 1998 (17 USC §1201); Copyright and Related Rights Regulations 2003 (UK), reg 24 amending s 296 and inserting ss 296ZA, 296ZB, 296ZD and 296ZF. 155 cf reasons of McHugh J at [133]-[138]. Kirby broad range of material and of impeding lawful dealings as permitted by Div 3 of Pt III of the Copyright Act. The inevitable result would be the substitution of contractual obligations inter partes for the provisions contained in the Copyright Act – the relevant public law. Potentially, this could have serious consequences for the operation of the fair dealing provisions of that Act. This is not an interpretation that should be readily accepted. Especially so where the language of the definition of TPM presents the perfectly acceptable, apparently intentional, and more confined construction expounded by the primary judge156. Avoiding over-wide operation: There is an additional reason for preferring the more confined interpretation of the definition of TPM in the Copyright Act. This is because the wider view urged by Sony would have the result of affording Sony, and other rights holders in its position, a de facto control over access to copyrighted works or materials that would permit the achievement of economic ends additional to, but different from, those ordinarily protected by copyright law. If the present case is taken as an illustration, Sony's interpretation would permit the effective enforcement, through a technological measure, of the division of global markets designated by Sony. It would have the effect of imposing, at least potentially, differential price structures in those separate markets. In short, it would give Sony broader powers over pricing of its products in its self-designated markets than the Copyright Act in Australia would ordinarily allow157. It may be accepted, as the primary judge concluded, that "[t]he fact that a device can be said to be designed to achieve two or more objectives, only one of which is to prevent or inhibit the infringement of copyright, does not … of itself … take the device outside the definition of" a TPM158. It may also be accepted that Sony's device was not designed primarily to achieve a particular non- copyright purpose159. Nevertheless, where a choice of interpretation has to be 156 See generally Dellit and Kendall, "Technological Protection Measures and Fair Dealing: Maintaining the Balance Between Copyright Protection and the Right to Access Information", (2003) 4 Digital Technology Law Journal 1 at 51-53 [204]- [212]; Vinje, "Copyright Imperilled?", (1999) European Intellectual Property Review 192 at 198-200; Gasaway, "The New Access Right and its Impact on Libraries and Library Users", (2003) 10 Journal of Intellectual Property Law 269 157 Weatherall at 624-625. This consideration gave rise to arguments of inconsistency with the provisions of the Copyright Act concerning parallel importation. It is unnecessary to consider these. 158 (2002) 200 ALR 55 at 78 [104]; cf Weatherall at 625. 159 (2002) 200 ALR 55 at 78 [104], cf at 79 [108]. Kirby made, the existence of the additional non-copyright purpose of enforcing global market price differentiation does constitute a reason to prefer an outcome that is consistent with the balances ordinarily inherent in copyright legislation over a result that is not. Upholding fundamental rights: A further reason, not wholly unconnected with the last, is relevant to the choice to be made in selecting between the competing interpretations of the definition of TPM. The interpretation favoured by the primary judge confines that definition and hence the operation of s 116A of the Copyright Act and the civil remedies which that section provides. The Full Court's broader view gives an undifferentiated operation to the provisions of s 116A that clearly impinges on what would otherwise be the legal rights of the owner of a Sony CD ROM and PlayStation console to copy the same for limited purposes and to use and modify the same for legitimate reasons, as in the pursuit of that person's ordinary rights as the owner of chattels. Take, for example, the case earlier mentioned of a purchaser of a Sony CD ROM in Japan or the United States who found, on arrival in Australia, that he or she could not play the game on a Sony PlayStation console purchased in Australia. In the case postulated, there is no obvious copyright reason why the purchaser should not be entitled to copy the CD ROM and modify the console in such a way as to enjoy his or her lawfully acquired property without inhibition. Yet, on Sony's theory of the definition of TPM in s 10(1) of the Copyright Act, it is able to enforce its division of global markets by a device ostensibly limited to the protection of Sony against the infringement of its copyright. Ordinary principles of statutory construction, observed by this Court since its earliest days, have construed legislation, where there is doubt, to protect the fundamental rights of the individual160. The right of the individual to enjoy lawfully acquired private property (a CD ROM game or a PlayStation console purchased in another region of the world or possibly to make a backup copy of the CD ROM) would ordinarily be a right inherent in Australian law upon the acquisition of such a chattel. This is a further reason why s 116A of the Copyright Act and the definition of TPM in s 10(1) of that Act should be read strictly. Doing so avoids an interpretation that would deprive the property owner of an incident of that person's ordinary legal rights. 160 See Fitzgerald, "The Playstation Mod Chip: A Technological Guarantee of the Digital Consumer's Liberty or Copyright Menace/Circumvention Device?", (2005) 10 Media and Arts Law Review 85 at 95 citing such cases as Potter v Minahan (1908) 7 CLR 277 at 304; Plaintiff S157/2002 (2003) 211 CLR 476 at 492 [30]. See also Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1105 [19], 1136 [193], 1144 [241]; 208 ALR 124 at 130, 173-174, 184; Coleman v Power (2004) 78 ALJR 1166 at 1199 [185], 1212 [250]-[251]; 209 ALR 182 at 227, 245-246. Kirby The provisions of the Australian Constitution affording the power to make laws with respect to copyright161 operate in a constitutional and legal setting162 that normally upholds the rights of the individual to deal with his or her property as that individual thinks fit. In that setting, absent the provision of just terms, the individual is specifically entitled not to have such rights infringed by federal legislation in a way that amounts to an impermissible inhibition upon those rights constituting an acquisition. This is not the case in which to explore the limits that exist in the powers of the Australian Parliament, by legislation purporting to deal with the subject matter of copyright, to encumber the enjoyment of lawfully acquired chattel property in the supposed furtherance of the rights of copyright owners. However, limits there are163. In Wilson v Anderson164 I said, in words to which I adhere, that fundamental rights will persist in the face of legislation said to be inconsistent with them "'unless there be a clear and plain intention' to extinguish such rights". These remarks were made in the context of a suggested extinguishment of rights ordinary to the ownership and possession of property. I added165: "It is an old, wise and beneficial presumption, long obeyed, that to take away people's rights, Parliament must use clear language. The basic human right to own property and to be immune from arbitrary dispossession of property is one generally respected by Australian lawmakers. This fundamental rule attributes to the legislatures of Australia a respect for the rights of the people which those legislatures have normally observed, being themselves regularly accountable to the electors as envisaged by the Constitution. In some circumstances, at least in respect of federal legislation depriving people of established property rights, the presumption to which I have referred is reinforced by constitutional imperatives." 161 Constitution, s 51(xviii). cf MGM Studios 73 USLW 4675 at 4688 (2005) per 162 See eg Constitution, s 51(xxxi). 163 Lessig, Code and Other Laws of Cyberspace, (1999) at 131, 133-134; Fitzgerald, "The Playstation Mod Chip: A Technological Guarantee of the Digital Consumer's Liberty or Copyright Menace/Circumvention Device?", (2005) 10 Media and Arts Law Review 85 at 96; cf Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 529-530 [128]-[129], 531 [133] fn 266. 164 (2002) 213 CLR 401 at 457 [139] (footnote omitted). 165 (2002) 213 CLR 401 at 457-458 [140] (footnotes omitted). Kirby To the extent that attempts are made to push the provisions of Australian copyright legislation beyond the legitimate purposes traditional to copyright protection at law, the Parliament risks losing its nexus to the constitutional source of power. That source postulates a balance of interests such as have traditionally been observed by copyright statutes, including the Copyright Act. In the present case, it is legitimate to say that, had it been the purpose of the Parliament to push the provisions of the Copyright Act attaching offences and sanctions to circumvention of TPMs in a way that deprived chattel owners of ordinary rights of ownership, such a provision would have been spelt out in unmistakable terms. In the definition of TPM in s 10(1) of the Copyright Act, such unmistakable language does not appear. This fact affords a further reason for preferring the more restricted interpretation that is compatible with the ordinary incidents of ownership of lawfully acquired chattels. The fact that, in the present case, this approach affords protection, incidentally, to the proved activities of a person such as the appellant, is simply the most recent illustration of the way in which copyright law sometimes operates. Sony will itself be aware of this incidental operation of the law. In Sony Corp of America v Universal City Studios, Inc166, the Supreme Court of the United States held that Sony, as the distributor and seller of the Betamax video cassette recorder, was not liable if users of that recorder infringed the copyright of others in television broadcasts. In that case, it was claimed that Sony, as the manufacturer of the recorder, was liable for the infringement that occurred when purchasers taped copyright programmes. It was argued that Sony had supplied the means used to infringe the copyright of others and had constructive knowledge that such infringement would occur. Because a legitimate basis for the taping of television programmes for viewing at more convenient times ("time-shifting") was found by the Supreme Court to be fair and not an infringing use, the claim of infringement against Sony was rejected167. This interpretation of the United States law reflected the bias inherent in the legal systems of the common law in favour of protecting the rights of copyright owners in a context that also protects other legal interests belonging to other persons. As Breyer J has recently pointed out, in a concurring opinion168, the rule in the Sony Betamax decision was strongly protective of new technology. It foreshadowed the dramatic evolution of the product's market. It 167 cf MGM Studios 73 USLW 4675 at 4679-4680 (2005) per Souter J. 168 In which Stevens and O'Connor JJ joined: see MGM Studios 73 USLW 4675 at Kirby respected the limitations facing judges where matters of complex and novel technology are concerned. And it avoided the introduction of a "chill of technological development"169 in the name of responding to alleged copyright infringement. Many of these considerations apply in the present case to suggest a preference for a stricter, rather than a broader, meaning of the expression TPM in s 10(1) of the Copyright Act. The legislative option: An additional consideration for avoiding reversal of the Sony rule in the United States Supreme Court was mentioned by Breyer J in the recent opinion to which I have referred. This was, as the decision in Sony in that Court had earlier recognised, that "the legislative option remains available. Courts are less well suited than Congress to the task of 'accommodat[ing] fully the varied permutations of competing interests that are inevitably implicated by such new technology.'"170 In the Australian context, the inevitability of further legislation on the protection of technology with TPMs was made clear by reference to the provisions of, and some legislation already enacted for, the Australia-United States Free Trade Agreement171. Provisions in that Agreement, and likely future legislation, impinge upon the subject matters of this appeal. Almost certainly they will require the attention of the Australian Parliament in the foreseeable future172. 169 73 USLW 4675 at 4688 (2005). 170 MGM Studios 73 USLW 4675 at 4690 (2005), citing Sony 464 US 417 at 431 (1984). See Audio Home Recording Act of 1992 (adding 17 USC Ch 10). Following Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 the Copyright Act was quickly amended: McKeough, Stewart and Griffith, Intellectual Property in Australia, 3rd ed (2004) at 139 [5.10]. 171 Fitzgerald, "The Playstation Mod Chip: A Technological Guarantee of the Digital Consumer's Liberty or Copyright Menace/Circumvention Device?", (2005) 10 Media and Arts Law Review 85 at 89 fn 18. As the author notes, Art 17.4.1 of the Australia-US Free Trade Agreement obliges Australia to enact laws giving copyright owners the right to prohibit all copies, in any manner or form, permanent or temporary. This change will be implemented under the US Free Trade Agreement Implementation Act 2004 (Cth) which came into effect on 1 January 2005. That Act includes amendments to the definition of "material form" in s 10(1) of the Copyright Act and creates an exception to infringement where the reproduction is made as part of a technical process of using a non-infringing copy of the copyright material (see ss 43B and 111B). 172 The undertaking of a further review of the legislation was foreshadowed at the time the Digital Agenda Act was enacted: see Revised Explanatory Memorandum, (Footnote continues on next page) Kirby In these circumstances, it is preferable for this Court to say with some strictness what s 10(1) of the Copyright Act means in its definition of TPM, understood according to the words enacted by the Parliament. If it should transpire that this is different from the purpose that the Parliament was seeking to attain (or if it should appear that later events now make a different balance appropriate) it will be open to the Parliament, subject to the Constitution, to enact provisions clarifying its purpose for the future. Moreover, the submissions in the present case, as it progressed through the courts, called to attention a number of considerations that may need to be given weight in any clarification of the definition of TPM in the Copyright Act. Such considerations included the proper protection of fair dealing in works or other subject matters entitled to protection against infringement of copyright; proper protection of the rights of owners of chattels in the use and reasonable enjoyment of such chattels; the preservation of fair copying by purchasers for personal purposes; and the need to protect and uphold technological innovation which an over rigid definition of TPMs might discourage. These considerations are essential attributes of copyright law as it applies in Australia. They are integrated in the protection which that law offers to the copyright owner's interest in its intellectual property. A court, not fully aware of the compromises that have been struck nationally and internationally and of the large debates that have addressed so- called super or "übercopyright"173, is well advised, in the end, to confine itself to offering its best solution to the contested task of statutory interpretation. Whether that construction properly reflects the purpose that the Parliament had when it adopted its definition of TPM, or needs modification, is a decision that must be left to others in the Executive Government and the Parliament itself, assisted by the many contesting interests. Criminal offences: There is one final, although less important, consideration that can be mentioned that favours a somewhat stricter approach to the meaning of TPM in s 10(1) of the Copyright Act than was adopted by the Full Court. This is the consideration that the statutory wrong, and civil action Copyright Amendment (Digital Agenda) Bill 2000 (Cth) at 17. A report from this review process was released on 28 April 2004: Phillips Fox, Digital Agenda Review, Report and Recommendations, (2004). This is under consideration: see Weatherall at 615. 173 Vinje, "Copyright Imperilled?", (1999) European Intellectual Property Review 192; Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004), Ch 2; Ginsburg, "Essay: From Having Copies to Experiencing Works: The Development of an Access Right in US Copyright Law", (2003) 50 Journal of the Copyright Society of the USA 113. Kirby and remedies provided in s 116A of the Copyright Act, which depend upon the key role played in that section by the expression TPM, are reinforced by the provisions of s 132(5A) of the Copyright Act inserted by the Digital Agenda Act174. That sub-section, and associated provisions, make it a criminal offence to provide, promote or advertise a circumvention service or to make, sell, let for hire, distribute, import or make available online a circumvention service or to remove or alter electronic rights management information attached to a copy of a work and otherwise to act in relation to a circumvention device or service in a way prohibited by the Act's new provisions. Given the key part played in these criminal offences by the same phrase (TPM), the appellant urged this Court to give a strict meaning to the expression in conformity with the traditional approach to statutory interpretation of provisions imposing criminal sanctions. In recent years, in this Court, there has been a diminished inclination to adopt different rules for the construction of penal legislation, and indeed legislation imposing taxation and other special categories175. Instead, a uniform approach, aimed to give effect to the purpose of legislation as expressed in its language, has usually replaced the special rules. Such special rules were often relics of literalism in statutory interpretation176. On the other hand, legislation that radically simplifies the proof of criminal offences against the Copyright Act177, imposes a limited burden of proof on the defendant178 and provides for criminal penalties, interpretation that reflects the seriousness of the consequences attaching to a criminal conviction. The fact that the phrase TPM appears in the new criminal offences, as well as in the provision for civil remedies under s 116A, pursuant to which the appellant was sued for copyright infringement, lends some weight to a invites an approach imprisonment179, including 174 Digital Agenda Act, Sched 1, item 100. 175 Beckwith v The Queen (1976) 135 CLR 569 at 576; Palgo Holdings (2005) 79 ALJR 1121 at 1141 [112] fn 147 and cases there cited; 215 ALR 253 at 279. See also Chief Executive Officer of Customs v El Hajje (2005) 79 ALJR 1289 at 1304 [74]; 218 ALR 457 at 477; R v Lavender (2005) 79 ALJR 1337 at 1354-1355 [93]- [95]; 218 ALR 521 at 544-545. 176 As well, prosecutions under these penal provisions of the Copyright Act have been relatively rare: see McKeough, Stewart and Griffith, Intellectual Property in Australia, 3rd ed (2004) at 263 [8.59]; Kendall and McNamara, "Piracy and the Copyright Act: Criminal Deterrent or 'Slap on the Wrist'?", (2002) 13 Australian Intellectual Property Journal 121 at 131. 177 See eg Copyright Act, s 132(5GA), (5H). 178 Copyright Act, s 132(5J). 179 Copyright Act, s 132(6A). Kirby stricter meaning of the contested definition of TPM, in preference to the broader meaning adopted by the Full Court. Conclusion: strict meaning: For the foregoing reasons, I would resolve the differences about the interpretation of the definition of TPM in s 10(1) of the Copyright Act in favour of the approach adopted at trial by the primary judge. It affords a meaning consonant with the actual language of the Copyright Act. It is consistent with the context of the definition in the provisions introduced by the Digital Agenda Act, being designed to add serious civil and criminal outcomes to circumvention of measures constituted by "devices" which by their own operation prevent or inhibit infringements of copyright. The evidence in the present case showed that the technological devices relied on by Sony were not of that character. On the basis of the evidence accepted by the primary judge, it was open to him to so conclude. Although it may be accepted that a different construction of the Copyright Act was also reasonably available, the Full Court erred in giving effect to its opinion favourable to that alternative, broader, construction of the Act. The considerations that I have mentioned indicate why I believe it was an error for the Full Court to prefer the broader over the narrower view in this instance. The context and legal policy considerations to which I have referred ought to have caused the Full Court, in a question of statutory construction which it acknowledged to be finely balanced, to uphold the primary judge's analysis and to confirm it. Contention issues, conclusion and orders The second and third issues argued in this appeal should be decided in the manner proposed in the joint reasons180. The result is that the appellant is entitled to succeed in the appeal and to have restored to him the orders entered by the primary judge at trial. This conclusion leaves outstanding the determination of the remedies to which Sony is entitled against the appellant for the infringement of the Trade Marks Act, found against him at first instance and not challenged in the Full Court or in this Court. I agree in the orders proposed in the joint reasons. 180 See above fn 127.

HIGH COURT OF AUSTRALIA RE MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS RESPONDENT PROSECUTOR/APPLICANT Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56 2 October 2003 1. Order nisi, granted on 28 October 2002, discharged. ORDER 2. Application for declaration that the decision of the respondent made on 27 June 2002 is invalid and void, dismissed. 3. Prosecutor to pay the respondent's costs. Representation: P L G Brereton SC with D P M Ash for the prosecutor/applicant (instructed by J Basten QC with G R Kennett for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme Immigration – Refugees – Minister – Decision to cancel visa – Whether decision affected by jurisdictional error – Whether prosecutor denied procedural fairness – Whether constructive failure to exercise jurisdiction – Whether decision affected by "Wednesbury unreasonableness" – Whether alleged failure by Minister to notify prosecutor in writing of reasons for decision infected decision with jurisdictional error – Migration Act 1958 (Cth), s 501G. Constitution, s 75(v). Migration Act 1958 (Cth), ss 69, 501, 501G. GLEESON CJ, GUMMOW AND HEYDON JJ. On 28 October 2002, a Justice of this Court (Gaudron J) ordered that the respondent ("the Minister") show cause why certiorari should not issue removing into this Court to be quashed a decision of the Minister made on 27 June 2002 ("the Decision") and prohibition should not issue prohibiting the Minister from proceeding further with any action in respect of the Decision. An application also was made for a declaration that the Decision "is invalid and void". The Decision was to cancel the visa pursuant to which the prosecutor had been entitled to remain in Australia. That cancellation effected an immediate change of his status. He thereupon became an unlawful non-citizen within s 15 of the Migration Act 1958 (Cth) ("the Act"), who was to be detained forthwith (s 189) and removed from Australia as soon as practicable (s 198). The prosecutor presently is in immigration detention. Not all of the grounds in the order nisi were pressed before the Full Court. Grounds raising issues of validity of certain provisions of the Act were not argued. The grounds remaining assert jurisdictional error, in particular (a) by the denial to the prosecutor of the necessary measure of procedural fairness in the making of the Decision and (b) in the alleged failure to observe what are said to be the mandatory requirements in s 501G of the Act respecting the giving by the Minister of written notification of the decision to cancel the prosecutor's visa. It is common ground that if the Decision is not a privative clause decision within the meaning of s 474 of the Act there is no legislative impediment to the exercise by this Court of the jurisdiction conferred in this matter by s 75(v) of the Constitution, supplemented by the powers conferred by ss 32 and 33 of the Judiciary Act 1903 (Cth). in Plaintiff S157/2002 v The reasoning Commonwealth1 supports that stance. The facts The prosecutor was born in Germany on 28 January 1961 and is a German citizen. He has never acquired Australian citizenship. When an infant, he was removed by the relevant authorities in Germany from his biological parents and was brought up in Germany by a foster family. The prosecutor entered Australia on 6 March 1971 with his foster parents. Members of the prosecutor's biological family, including his biological mother and some half-siblings, live in Germany. However, the prosecutor has had no contact or involvement of substance with those persons. He has two children, born in 1985 and 1988, who are Australian (2003) 77 ALJR 454; 195 ALR 24. citizens. He is divorced and the children have been in the custody of their mother. On 9 December 1992, the prosecutor pleaded guilty before the Criminal Division of the Supreme Court of New South Wales to a charge of murdering one David Roberts on 2 April 1989. In her remarks on sentence, which later were before the Minister, the sentencing judge (Mathews J) said: "The prisoner is entitled to the leniency which flows from his expression of remorse and his plea of guilty. He also benefits from the fact of his prior unblemished record. I accept also in his favour that his dominant motive in killing Mr Roberts was to protect Mrs Roberts from her husband's continued violence and cruelty. This was nevertheless a terrible killing. Mr Roberts did not stand a chance when he was pushed into the boiling sea. The prisoner must now accept term of imprisonment." the consequences – which will involve a long Her Honour then sentenced the prosecutor to imprisonment for 16 years, made up of a minimum term of 10 years, to commence on 9 December 1992 and thus to expire on 8 December 2002, and an additional term of six years. The legislation the Act to cancel The Decision made by the Minister on 27 June 2002 was to exercise his discretion under s 501(2) of the prosecutor's visa. Section 501(2) empowers the Minister to cancel a visa granted to a person if the Minister reasonably suspects that the person does not pass "the character test" and that person does not satisfy the Minister that he or she passes "the character test". Section 501(6) indicates the circumstances in which a person does not pass "the character test". One such circumstance applies if the person has a "substantial criminal record", a term defined in s 501(7). A person has a substantial criminal record in the necessary sense if, among other things, that person has been sentenced to a term of imprisonment of 12 months or more (s 501(7)(c)). It followed that the prosecutor had a substantial criminal record within the meaning of par (c) of s 501(7). Accordingly, it was open for the Minister reasonably to suspect that the prosecutor did not pass "the character test" (s 501(2)(a)). Section 501G(1), so far as relevant, provides that if a decision, such as the present, is made under s 501(2) to cancel a visa: "the Minister must give the person a written notice that: sets out the decision; and specifies the provision under which the decision was made and sets out the effect of that provision; and sets out the reasons (other than non-disclosable information) for the decision". No attention was given in submissions to the extent to which the requirement of par (e) may be expanded by s 25D of the Acts Interpretation Act 1901 (Cth). This states: "Where an Act requires a tribunal, body or person making a decision to give written reasons for the decision, whether the expression 'reasons', 'grounds' or any other expression is used, the instrument giving the reasons shall also set out the findings on material questions of fact and refer to the evidence or other material on which those findings were based", but, given the course of argument, it may be put to one side for this case. However, s 501G(4) is an important provision for this case. It states: "A failure to comply with this section in relation to a decision does not affect the validity of the decision." Steps taken before the Decision Before turning further to consider the submissions made by the prosecutor, it is convenient to look more closely at some of the events leading up to the making of the Decision. On 27 February 2002, whilst the prosecutor was serving his sentence, two steps of present importance occurred. First, he acknowledged receipt of a "Notice of Intention to Consider Cancelling a Visa" ("the Notice") pursuant to s 501 of the Act, the text of s 501 and the Minister's Direction No 21 titled "Direction under Section 499 – Visa Refusal and Cancellation under Section 501 [of the Act]" ("the Direction"). Section 499 empowered the giving by the Minister of written directions, among other things, concerning the exercise of powers under s 501. The first document referred to was dated 27 February 2002. It stated that the prosecutor's visa might be liable for cancellation under s 501 and that the Minister himself would personally be making the decision whether to cancel the visa under s 501(2). It was pointed out that, if the decision was to cancel the visa, the prosecutor would not be entitled to have the decision reviewed by the Administrative Appeals Tribunal. The Notice went on to state that in reaching a decision the Minister was to have regard to the prosecutor's criminal record and the Direction. The Notice continued: "In preparing any comments please read fully and carefully the contents of the Minister's Direction. You should address each and every topic that you feel applies to you or is relevant to your circumstances. You may also wish to provide any further information that you feel the Minister ought to be aware of and take into account." The Notice concluded with an address in the Minister's Department to which the prosecutor should direct any questions or send any written response. Also on 27 February 2002, an officer of the Minister's Department interviewed the prosecutor at the prison where he was confined. A written set of notes of that interview later were signed by the prosecutor on 27 March 2002. On that latter date, the prosecutor took up the invitation in the Notice to respond in writing. He did so by letter with annexures comprising more than 40 pages. three officers of his Department and headed In making the Decision, the Minister had before him a document prepared "ISSUES FOR CONSIDERATION OF POSSIBLE CANCELLATION OF TRANSITIONAL (PERMANENT) VISA UNDER S 501(2) OF THE [ACT]". This document of 14 pages ("the Submission") had annexed to it Annexures A-J. Annexure G was the notes of the interview of 27 February 2002 with the prosecutor; Annexure H was the letter from the prosecutor dated 27 March 2002; Annexure I was the notes of the interview with the prosecutor's foster brother, Mr Zimmermann, conducted on 7 May 2002; and Annexure J was a copy of the transcript of 11 pages containing the remarks on sentencing by Mathews J on 26 February Procedural fairness In oral argument, counsel for the prosecutor eschewed the submission attributed to him by the Minister that the requirements of procedural fairness had obliged the Minister to afford him the opportunity to make submissions personally to the Minister rather than merely rely upon written communications. Rather, the complaint was that the prosecutor had been denied the opportunity to see, comment on and answer the Submission before the Minister had acted upon it. In particular, the prosecutor contended that he had not had the opportunity to see how the authors of the Submission had "distilled" the relevant material and commented on it. In that latter regard, it was said that the text of the Submission set out selective portions of the remarks on sentence by Mathews J and had omitted portions which indicated that, in the view of the judge, expressed in 1993, the chances of the prosecutor committing further offences of violence were "so low as to be virtually non-existent". Under the heading "[L]ikelihood that the conduct may be repeated (including any risk of recidivism)", the Submission dealt in detail with materials relevant to the assessment of that issue. In particular, it referred to detailed written submissions made by the prosecutor and the interview with his foster brother, Mr Zimmermann. The conclusion reached in the Submission was expressed as follows: "In consideration of the above factors, it is open for you to find that [the prosecutor] is at a low risk of recidivism." On the other hand, under the next heading "General deterrence", the conclusion was expressed: "The offence committed by [the prosecutor] was murder. It is open for you to find that cancellation of [the prosecutor's] visa would serve as a deterrence factor against others committing similar offences. The Government has a strong interest in deterring others from committing offences of this nature." (original emphasis) The Submission thus presented the Minister with a balanced picture on topics, including likely recidivism, which was based upon contemporary material. The conclusion reached was that it was open for the Minister that there was a low risk of recidivism. In that setting, the complaint of a failure to set out in the body of the Submission a particular portion of the sentencing comments made nine years before is fanciful. Further, it does not readily appear how the principles of procedural fairness could be engaged in the manner contended for by the prosecutor. It may be accepted, as the prosecutor submitted, that his entitlement extended to the rebuttal of, and comment by way of submission upon, adverse material received by the decision-maker from other sources. That stops short of supporting a complaint of the nature essentially involved here of the "pitch" or "balance" in the statement of relevant considerations in the Submission. Further, as indicated above, there is no substance in any complaint of unfair or prejudicial "lack of balance". Reference was made by the prosecutor to the decision of the Full Court of the Federal Court in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd2. Nothing there said supports any different conclusion to that just expressed. The Full Court's statement of principle was as follows3: "Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question." The prosecutor also pointed to the material in the Submission under the heading "The Expectations of the Australian Community". After referring to par 2.12 of the Direction, which included the statement that visa cancellation and removal of a non-citizen may be appropriate because the offences are such that the Australian community would expect the person to be removed from this country, the Submission continued: "The offence committed by [the prosecutor] is considered by the Government to be very serious. The Australian community expects non-citizens to obey Australian laws while in Australia and therefore it is open for you to find that the character concerns or offence are such that the Australian community may expect that [the prosecutor] should be removed from Australia." The reader was then referred to Annexures B and C, being copies of the prosecutor's certificate of conviction and his criminal history. It was submitted that the submission, as it was put, that the Australian community would expect the prosecutor to have his visa cancelled was "adverse material" within the meaning of the authorities. However, what was said in this portion of the Submission was expressly related to the terms of the Direction. (1994) 49 FCR 576. (1994) 49 FCR 576 at 591-592. The Direction had been supplied to the prosecutor with the letter of 27 February 2002 and detailed written submissions had followed by way of response. There was no fresh "adverse material" put forward to the Minister in the Submission. The prosecutor relied upon Re Refugee Review Tribunal; Ex parte Aala4. But, in that case, the decision-maker, the Tribunal, had so conducted the matter that the prosecutor was deprived of a fair opportunity to correct an erroneous and factual assumption relevant to his credibility and the majority of the Court held that it could not be predicted that, had the Tribunal been alerted to the situation, the result inevitably would have been unchanged. That is far from the facts of the present case. The submissions respecting a denial of procedural fairness have not been made out. Other grounds of complaint The prosecutor also contended that there had been a constructive failure to exercise jurisdiction because the Minister had been led by the terms of the Submission to misconstrue the nature of the power under s 501(2). A sentence in the Submission speaks of the exercise of a discretion "to decide whether [the prosecutor] should be permitted to remain in Australia". That may suggest, incorrectly, that, in the absence of an exercise of discrection favourable to the prosecutor, his visa would be cancelled. The discretion was one to cancel, not to relieve from cancellation. However, counsel for the Minister pointed to other passages in the Submission where the issue was posed in correct terms. The Submission is to be read as a whole. In particular, the decision which the Minister did make was to him in the terms "I have decided TO EXERCISE MY presented DISCRETION UNDER SUBSECTION 501(2) OF THE ACT TO CANCEL THE VISA, so I hereby cancel the visa". There was no constructive failure to exercise jurisdiction. In addition, but somewhat faintly, the prosecutor relied upon what was said to be an inadequate consideration in the Submission of the importance of the impact upon the children of the prosecutor of his removal from Australia. There is no substance in that point. (2000) 204 CLR 82. The prosecutor also relied upon what was identified as "Wednesbury unreasonableness"5 for an additional or alternative ground of jurisdictional error. For the proposition that "Wednesbury unreasonableness", if established, brought a case within jurisdictional error under s 75(v) of the Constitution, the prosecutor relied upon what was said in the joint judgment of Gaudron and Gummow JJ in Aala6. However, the Minister had before him the matters presented in a balanced fashion in the Submission. There is no weight in any complaint that, in acting upon the Submission, the Minister reached a decision so unreasonable "that it might almost be described as being done in bad faith" or "so absurd that no sensible person could ever dream that it lay within the powers of [the Minister]"7. Section 501G of the Act There remains for consideration the submissions that orders absolute should be made for prohibition and certiorari by reason of what is said to be a failure by the Minister to meet the requirements of s 501G of the Act to give the prosecutor a written notice setting out his decision, specifying the provision under which the decision was made, with the effect of that provision, and setting out reasons for the decision. Section 501G(3) states: "A notice under subsection (1) must be given in the prescribed manner." Regulation 2.16(3) of the Migration Regulations made under the Act provides for notification of decisions to grant or to refuse visas but does not deal with cancellations. The Court was not referred to any other regulation implementing s 501G(3). There is no legislative stipulation of any particular period of time within which notice is to be given. Two further matters should be noted immediately. The first is that the submission is that the alleged failure, although it goes to a step posterior to the making of the Decision, nevertheless, on the proper construction of the 5 After Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] (2000) 204 CLR 82 at 100-101 [40]. See now Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1169-1170 [20], 1177-1178 [67]-[69], 1194 [174]; 198 ALR 59 at 64, 75-76, [1948] 1 KB 223 at 229. legislation, involves jurisdictional error tainting the Decision. The second is that it appeared to be accepted, correctly, by both sides in argument that (a) s 501G imposed upon the Minister a duty or obligation which, in a properly constituted proceeding, was susceptible to enforcement by order for mandamus8, and (b) s 501G(4) did not operate as an attempted privative clause to achieve the impossible by ousting the jurisdiction with respect to mandamus conferred on this Court by s 75(v) of the Constitution. However, no application for mandamus is made by the prosecutor. The prosecutor relied upon the construction given to s 69(1) of the Act in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah9. However, what was said in Miah is of no immediate assistance in applying s 501G to the present case. The latter provision is one of a number in the Act concerned with the notification of decisions to cancel visas. They include s 127 and s 129. Section 500A(10) deals with notification of refusal or cancellation of temporary safe haven visas. In each case10, it is said that failure to give notification does not affect the validity of the decision which has not been notified as required. Section 69(1) deals with broader questions. It states: "(1) Non-compliance by the Minister with Subdivision AA or AB or section 494D in relation to a visa application does not mean that a decision to grant or refuse to grant the visa is not a valid decision but only means that the decision might have been the wrong one and might be set aside if reviewed. If the Minister deals with a visa application in a way that complies with Subdivision AA, AB and this Subdivision, the Minister is not required to take any other action in dealing with it." The subdivisions referred to are part of Pt 2, Div 3 which deals with the grant of visas for non-citizens. The prosecutor in Miah was, by virtue of s 65 of the Act, entitled to the grant of a visa if the Minister or his delegate was satisfied that the cf Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 77 ALJR 437 at 445 [48], 452-453 [98]-[100]; 195 ALR 1 at 12, 22-23. (2001) 206 CLR 57. 10 Sections 127(3), 129(3), 500A(10). prosecutor met the relevant criterion respecting his character as a refugee11. The Court rejected the Minister's submission that, within Div 3, there was prescribed a code of procedure which contained a comprehensive and exhaustive statement of the requirements of procedural fairness. One issue in Miah was whether s 69(1) was effective to bar from review in the Court under s 75(v) of the Constitution a decision to deny a protection visa which was impeached for jurisdictional error by reason of failure to observe the rules of natural justice. It was held that, on its proper construction, s 69(1) did not attempt to achieve that result. Gleeson CJ and Hayne J12, Gaudron J13, with whom McHugh J agreed in this respect14, and Kirby J15 construed s 69(1) as providing, not that the decision in question was valid, but that it might be set aside on review, so that it did not excuse, in this Court, the denial of procedural fairness which was established on the evidence. The point presently at issue in this case is rather different. Section 501G assumes the making of a decision (here, under s 501(2)) and imposes a duty with respect to notification of that decision. Section 501G(4) emphasises that the failure of the Minister to discharge that duty does not affect the validity of the decision. The first question that then arises is whether, as the prosecutor contends, the Minister failed to discharge the duty in question, in particular, by failing to give the prosecutor a written statement setting out the reasons for the decision (s 501G(1)(e)). The prosecutor, it appears, received the Submission with p 16 thereof completed by the Minister on 27 June 2002. Page 16 was headed: "MINISTERS [sic] DECISION ON CANCELLATION UNDER S 501(2) PART E: DECISION", and continued, above the Minister's statement that he reasonably suspected the prosecutor did not pass the character test and that the prosecutor had not satisfied 11 (2001) 206 CLR 57 at 60 [1]. 12 (2001) 206 CLR 57 at 74 [47]. 13 (2001) 206 CLR 57 at 86-88 [100]-[104]. 14 (2001) 206 CLR 57 at 98 [144]. 15 (2001) 206 CLR 57 at 120 [204]. him that he passed that test, and that he had decided to exercise his discretion under s 501(2) to cancel, and did cancel, the prosecutor's visa: "I have considered all relevant matters including (1) an assessment of the Character Test as defined by s 501(6) of [the Act], (2) [the Direction] and [the prosecutor's] comments, and have decided ...". It was decided by this Court in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd16, where an order for prohibition under s 75(v) of the Constitution was made, that the "inadequacy" of the material on which the decision-maker acted may support the inference that the decision-maker had applied the wrong test or was not "in reality" satisfied of the requisite matters. Given the detail supplied in the Submission (including the annexures) and the statement by the Minister set out above, and not challenged, that he had considered all relevant matters, the decision in Melbourne Stevedoring is of no assistance to the prosecutor. Nor, for the same reasons, is the statement by Gibbs CJ in Public Service Board of NSW v Osmond17, made with reference to Padfield v Minister of Agriculture, Fisheries and Food18, that "if the decision-maker does not give any reason for his decision, the court may be able to infer that he had no good reason". That inference is not open here. But that does not answer the allied but conceptually distinct point that what appears on p 16 of the Submission does not "set[] out the reasons ... for the decision". There are some issues for decision which are of such a nature that, as Kitto J put it19, with reference to the statements by Lord Herschell and Eve J: "[I]t is not to be expected that [the judge] will be able, at any rate satisfactorily to the litigants or to one of the litigants, to indicate in detail the grounds which have led him to the conclusion." The question for decision by the Minister here was not of that order. In any event, the Parliament obliged the Minister, having reached a conclusion, to set out his reasons and, in order to discharge that duty, it was at least necessary for him to express the essential ground or grounds for his conclusion that the 16 (1953) 88 CLR 100 at 120. 17 (1986) 159 CLR 656 at 663-664. 18 [1968] AC 997 at 1053. See also Wu v The Queen (1999) 199 CLR 99 at 124 [71]. 19 In re Wolanski's Registered Design (1953) 88 CLR 278 at 281. See also Dinsdale v The Queen (2000) 202 CLR 321 at 326 [9]-[10]. prosecutor had not satisfied him that he passed the character test and that the prosecutor's visa should be cancelled20. That was not done. What then are the consequences? The duty imposed upon the Minister was not, as was suggested in argument, a duty of imperfect obligation. That mandamus may lie to compel performance of the duty denies such a contention. Once that duty is performed, the reasons set out by the Minister may disclose error of a kind which attracts prohibition under s 75(v) of the Constitution21. Yet, as has been remarked earlier in these reasons, the prosecutor does not seek mandamus, perhaps from a prudent apprehension of what may be the product of the proper discharge of the statutory duty. Rather, the prosecutor fixes upon those cases concerned with breach of an essential preliminary to the exercise of a statutory power (here, that of visa cancellation under s 501(2)). Those cases, as it was put in Project Blue Sky Inc v Australian Broadcasting Authority22: "are regarded as going to the jurisdiction of the person or body exercising the power or authority". It was decided by Lee J in W157/00A v Minister for Immigration and Multicultural Affairs23 that the failure by the respondent to give a written notice setting out the reasons for the decision as required by s 501G(1)(e) attracted review by the Federal Court under what was then s 476 of the Act. This was because there had been a failure to observe "procedures that were required by [the] Act ... to be observed in connection with the making of the decision"24 (emphasis added). That may be conceded, but it does not address the submission that such a failure also taints that decision with jurisdictional error so as to attract s 75(v) of the Constitution. 20 cf Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280; Fleming v The Queen (1998) 197 CLR 250 at 252-253 [2], 260 [22]; Dinsdale v The Queen (2000) 202 CLR 321 at 329 [21]. 21 cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 22 (1998) 194 CLR 355 at 389 [92]. 23 (2001) 190 ALR 55 at 66-67. His Honour's treatment of the subject was not challenged on appeal: Minister for Immigration and Multicultural Affairs v W157/00A (2002) 72 ALD 49 at 56. 24 (2001) 190 ALR 55 at 67. Here, the question is whether the step under s 501G which logically and temporally succeeds the making of a decision in exercise of a power is a condition precedent to that exercise. The possibility that this is so may be conceded. But, as Project Blue Sky emphasised25, the answer depends upon the construction of the Act to determine whether it was a purpose of the Act that an act done or not done, in breach of the provision, should be invalid. This gives rise to several immediate difficulties for the prosecutor. First, "the act" upon which the prosecutor fixes for relief by way of certiorari and prohibition is not the failure to give the written notice required by s 501G, but the exercise of the power of visa cancellation conferred by s 501(2). Secondly, the Act deals expressly in s 501G(4) with the interrelation between cancellation and notification. The stipulation it makes is that a failure in notification does not of itself affect the validity of the cancellation. The cancellation decision may still be reviewed under s 75(v) of the Constitution for jurisdictional error otherwise arising. The prosecutor's attack, albeit unsuccessful, for denial of natural justice is an immediate example. But failure in the notification required by s 501G does not impeach the cancellation decision for jurisdictional error. The prosecutor urged the Court to have regard to the decision-making process as a whole and to the importance manifested in other (and earlier) federal law, notably the Administrative Decisions (Judicial Review) Act 1977 (Cth), of the giving of reasons by administrative decision-makers, including Ministers. However, when these points are conceded and regard is had to the overall scheme of the Act as it applies to this case, the result does not assist the prosecutor. The visa cancellation decision may be reviewed in this Court for jurisdictional error. Such error may be found from what is disclosed by reasons provided under s 501G(1)(e). Failure to provide reasons may also be reviewed in this Court and compliance by the Minister with the statutory duty may be ordered. The reasons then provided may furnish grounds for prohibition under s 75(v) in respect of the visa cancellation decision. But what is not provided for is for a prosecutor, as in this case, to bypass that earlier step utilising mandamus, and to impeach the visa cancellation decision itself for want of discharge of the duty to provide reasons. There is, as was pointed out in argument, a critical distinction between failure to comply with s 501G(1)(e) and using that failure to conclude that the visa cancellation decision is flawed by jurisdictional error. 25 (1998) 194 CLR 355 at 390-391 [93]. Conclusion The order nisi should be discharged and the application dismissed with costs. McHugh 50 McHUGH J. The prosecutor seeks writs of prohibition and certiorari in relation to a decision made by the Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister") on 27 June 2002 to cancel the prosecutor's residence visa. In October 2002, Gaudron J granted an order nisi requiring the Minister to show cause why certiorari should not issue to remove the decision into this Court for the purpose of quashing it. The prosecutor alleges that the Minister exceeded or, alternatively, failed to exercise his jurisdiction in making the decision. In the forefront of the prosecutor's claims are the submissions that the prosecutor was denied procedural fairness in the making of this decision and that the Minister failed to observe the requirements of s 501G of the Migration Act 1958 (Cth) ("the Act"). That section requires the Minister to give written notification of his decision to cancel the visa. The prosecutor is a German national who has never acquired Australian citizenship. He was born in Germany in 1961, and was brought to Australia in 1971 with his foster parents. In December 1992, the prosecutor pleaded guilty before the Supreme Court of New South Wales to a charge of murder. He was sentenced to imprisonment for 16 years, with a minimum term of 10 years. The minimum term expired on 8 December 2002. Section 501(2) of the Act confers on the Minister a discretionary power to cancel a visa granted to a person where the Minister reasonably suspects that the person does not pass "the character test" and the person does not satisfy the Minister that he or she passes this test. Section 501(6) outlines the circumstances in which a person does not pass "the character test". One of these circumstances is that the visa holder has a "substantial criminal record" which s 501(7)(c) defines to include the case of a person having been sentenced to a term of imprisonment of 12 months or more. Plainly, the prosecutor's sentence for murder authorised the Minister to cancel his visa. Failure to give reasons to the prosecutor Section 501G(1) of the Act relevantly provides that, if the Minister makes a decision to cancel a visa, the Minister must give the person written notice that sets out the decision, specifies the provision under which the decision was made, and sets out the reasons for the decision. The Minister failed to comply with this section. What he provided to the prosecutor did not constitute "reasons" for the purpose of s 501G(1)(e). What the Minister did was to provide the prosecutor with a copy of the Departmental brief to the Minister discussing the issues in the case neutrally. The brief did not argue for any particular conclusion. It also contained an attachment that listed the options open to the Minister. One option was to cancel the visa. The Minister took that option, which he indicated by crossing out the other options. The copy sent to the prosecutor showed that the Minister had exercised this option and cancelled the visa. But it is impossible to McHugh deduce from the selection of the option and the brief's discussion of the issues, what were the Minister's reasons for cancelling the visa. The prosecutor contends that the Minister's failure to give reasons constitutes jurisdictional error with the result that the Minister had no jurisdiction or power to cancel the visa. Jurisdiction is the authority to decide. It is not easy to accept the notion that a decision is made without authority because subsequently the decision-maker fails to give reasons for the decision. Nevertheless, it is always possible that a statutory scheme has made the giving of reasons a condition precedent to the validity of a decision. If it has, a decision that does not give reasons will be made without authority. Whether a scheme has that effect is determined by applying the principles stated by this Court in Project Blue Sky Inc v Australian Broadcasting Authority26. In Project Blue Sky, the majority Justices rejected27 the traditional distinction between "mandatory" and "directory" requirements, saying that "[a] better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid." In determining the purpose of the legislation, regard has to be had to "the language of the relevant provision and the scope and object of the whole statute". In this case, it is beyond argument that the Act did not intend that failure to comply with s 501G should invalidate the decision to cancel a visa. Section 501G(4) of the Act states that "[a] failure to comply with this section in relation to a decision does not affect the validity of the decision." Nothing in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah28 supports the claim that the failure to give reasons constituted jurisdictional error. Miah concerned the effect of s 69 of the Act. That section dealt with decisions to grant or refuse to grant visas. It declared that the failure of such a decision to comply with certain provisions of the Act did not mean that the decision was not a valid decision. Section 69 declared that it only meant that the decision might be set aside if reviewed. Members of the Court held29 in Miah that, properly construed, s 69 did not purport to validate the Minister's decision with the result that, if the prosecutor established a denial of natural justice, the prosecutor could obtain relief in this Court under s 75(v) of the Constitution. Miah does not assist in determining whether the Minister's decision in this case was made without authority. 26 (1998) 194 CLR 355. 27 (1998) 194 CLR 355 at 389-391 [92]-[93]. 28 (2001) 206 CLR 57. 29 (2001) 206 CLR 57 at 74 [47], 86-88 [100]-[104], 98 [144], 120 [204]. McHugh The Minister's failure to give reasons did not leave the prosecutor without remedy. It was open to the prosecutor to seek a writ of mandamus to compel the Minister to provide reasons for the decision. If reasons were provided as the result of the issue of the mandamus, they might demonstrate an error of a kind that would attract prohibition under s 75(v) of the Constitution. But the prosecutor has not sought to obtain a writ of mandamus. Nor is any assistance obtained from the decision in W157/00A v Minister for Immigration and Multicultural Affairs30, a case concerned with the kind of error that was necessary to attract review under what was then s 476 of the Act. The decision concerning the issue of judicial review in that case does not assist in determining whether there was error sufficient to attract review under s 75(v) of the Constitution. Procedural fairness The prosecutor also contended that he had been denied procedural fairness because he had not been given the opportunity to comment on the relevant material put before the Minister. For the reasons given in the joint judgment of Gleeson CJ and Gummow and Heydon JJ, there is no substance in this submission. Interests of the children Nor is there any substance in the contention that the Minister failed to have due regard to the interests of the prosecutor's children because they were not given an adequate opportunity to make submissions in relation to their separate interests. The brief that was submitted to the Minister made it clear that he had to take the interests of the prosecutor's children into account as a primary consideration in making his decision. It also described accurately the nature of the prosecutor's relationship with his children. At all events, the prosecutor did not suggest that the brief contained any false statements. The material question Nor is there any substance in the contention that the Minister misunderstood the nature of the decision that he had to make. The prosecutor contended that the brief led the Minister to address an irrelevant question instead of the question that he was required to decide. The prosecutor based this submission on a statement in the brief to the effect that the Minister had a discretion "to decide whether [the prosecutor] should be permitted to remain in Australia." It is true that the discretion was whether or not to cancel the visa and 30 (2001) 190 ALR 55. McHugh not a discretion to permit the prosecutor to remain in Australia. But the correct issue was formulated on four occasions in the brief. Quite apart from that consideration, however, the decision itself showed that the Minister asked the correct question. In making his decision, the Minister stated that he had decided to exercise his discretion under s 501(2) of the Act to cancel the visa and that he thereby cancelled the visa. Wednesbury unreasonableness Finally, there is no basis for the claim that the Minister's decision was so unreasonable that no Minister could properly have made it. The prosecutor's conviction and sentence for murder entitled the Minister to cancel the visa. Although the brief fairly mentioned matters that might have caused the Minister to refuse to cancel the visa, they were not so overpowering that the Minister's decision could even arguably be said to be unreasonable. Order The order nisi should be discharged with costs. Kirby KIRBY J. The issue in this appeal concerns the duty of a designated administrator to give reasons for his decision and the consequences of his failure to do so for the validity of the decision. In other common law countries, the law has moved in recent times, with general consistency, to insist on the importance of the giving of reasons for valid and just decisions, not only by judges but also by administrators31. The more serious the context, the clearer the obligation. As Lord Steyn said in R (Daly) v Secretary of State for the Home Department32: "[I]n law context is everything." The more significant the decision, the clearer the duty may be, the clearer the reasons should be and the clearer the consequences will be for the breach33. Some decisions cry out for a clear explanation34. Especially is this so where the legislature has recognised the need and imposed a duty to give reasons and where the decision is very important for the person affected and for others close to that person. In such a case, the duty to give reasons is one which this Court should uphold. The just, rational and lawful administration of the law is at stake. This Court has before it the return of an order nisi for writs of prohibition and certiorari, and associated relief35. Prohibition is sought pursuant to s 75(v) of the Constitution. At issue is whether the decision impugned discloses jurisdictional error on the part of the decision-maker in his failure to afford a fair hearing, to give reasons as required by law, to address correctly the matter to be decided and to have regard to the considerations relevant to the decision. The decision-maker was the Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister"). The decision was one to cancel the visa of Mr Thomas Palme ("the prosecutor"), a long-time permanent resident of Australia who is an alien. The record shows that no reasons as required by law were given. In the circumstances, that failure indicates that the decision was an arbitrary one made outside the decision-maker's jurisdiction. On that ground the application succeeds. No legislative exception precludes it. The order nisi should be made 31 See eg Baker v Canada (Minister of Citizenship and Immigration) [1999] 2 SCR 817; R v Sheppard [2002] 1 SCR 869. 32 [2001] 2 AC 532 at 548 [28]; cf R (Mahmood) v Secretary of State for the Home Department [2001] 1 WLR 840 at 847-848 [18]. 33 cf A, B & C (a family of Peru) v Chief Executive Department of Labour [2001] NZAR 981; Taggart, "Administrative Law: Reasons for Decision", (2003) New Zealand Law Review 118 at 119-120. 34 cf R v Director of Public Prosecutions; Ex parte Manning [2001] QB 330. 35 The order nisi was granted by Gaudron J on 28 October 2002. Kirby absolute. Where great power over human lives is given to a single person, even a Minister, it should cause no surprise that the exercise of that power is subjected by the courts to strict scrutiny36. The background facts Migration and early life: The prosecutor is a national of the Federal Republic of Germany. He is now aged 42 years. He came to Australia as a child aged ten years in the care of his foster family. He grew up with his foster family and was the youngest of their four children. He attended primary and secondary school in Australia, and had a stable education and employment record with no relevant criminal involvement before the crime that has resulted in the present proceedings. The prosecutor married and has two children now aged respectively 18 and 14 years. By inference, both children are Australian citizens. The prosecutor's principal language is English. Although he speaks some German his written German is poor. Whilst some members of the prosecutor's biological family still live in Germany, he has had no substantial contact with them since he was fostered to the couple who brought him to Australia. The prosecutor's marriage broke down and he separated from his wife with whom his children continue to reside. It was at about the time of the separation that the prosecutor became involved in the life of Mr David Roberts ("the deceased") and Mr Roberts' wife. The deceased disappeared on 1 April 1989 when on a fishing trip with the prosecutor. His body was never found. A coronial inquiry determined that he However, soon after the disappearance, the had drowned accidentally. prosecutor told two friends that he had smashed a rock over the deceased's head and thrown him into the water. In due course, one of the friends informed the police of this conversation. When detectives called on the prosecutor he admitted the crime, expressed remorse and cooperated with the police. Conviction of murder: The prosecutor was charged with murder. At his trial in the Supreme Court of New South Wales before Mathews J he pleaded guilty. Her Honour accepted the plea, convicted him, treated the case as involving "special circumstances"37 and sentenced him to a minimum term of imprisonment of ten years commencing in December 1992, together with an 36 Re Minister for Immigration and Multicultural Affairs; Ex parte S20/2002 (2003) 77 ALJR 1165 at 1194 [170]; 198 ALR 59 at 98. 37 Sentencing Act 1989 (NSW), s 5 (superseded by Crimes (Sentencing Procedure) Act 1999 (NSW)). Kirby additional term of six years. The prosecutor has served the minimum term sentence. He was an exemplary prisoner. Had he become an Australian citizen before these events, he would presumably by now have been released into the community. But the prosecutor never changed his nationality. Upon his conviction of murder the prosecutor would ordinarily have been liable to be sentenced to life imprisonment38. Given that the prosecutor admitted that the killing of the deceased was premeditated and deliberate, the explanation of the sentence imposed in the circumstances must be found in the reasons for sentence of Mathews J. Her Honour described the case as "quite extraordinary". The sentencing judge recorded various matters of extenuation concerned with the circumstances of the homicide and the life of the prosecutor. The prosecutor alleged that he had committed the killing to extricate the deceased's wife from a situation of intolerable abuse to which she and her children had been subjected by the deceased. The wife supported the prosecutor's evidence in this respect. At the time of the trial a de facto married relationship existed between the prosecutor and the deceased's wife. A question arose as to whether this intimate association had pre-existed the murder and explained the prosecutor's real motive for the killing. The sentencing judge did not so hold. However, she concluded that the prosecutor had become obsessed with the plight of the deceased's wife, in part because of his attraction to her. She rejected the contention that the homicide had been a "spur of the moment or unpremeditated killing". Against the background of these serious findings it is plain that the considerations personal to the prosecutor weighed heavily with Mathews J in reaching the sentence that she imposed on him. She concluded that the killing was uncharacteristic of the prosecutor's behaviour and that there was no chance of the recurrence of violence. The prosecutor's relationship with the wife of the deceased and her children did not survive his incarceration. Furthermore, his own wife divorced him. However, according to the record, the prosecutor maintained his links by telephone with his daughter although not with his son. The prosecutor's former wife maintained the contact between the children and the prosecutor's foster family. The prosecutor claimed that the daughter was very attached to him and that she would suffer greatly should they be separated. Links to children and Australia: In these circumstances, when the question of the prosecutor's migration status arose, it was his contention that he had effectively been absorbed into the Australian community. That contention 38 Crimes Act 1900 (NSW), s 19A(1). See also Crimes Act 1900 (NSW), s 441A (repealed); Sentencing Act 1989 (NSW), s 13A (repealed) discussed in R v Purdey (1993) 31 NSWLR 668. Kirby was not contested by the Minister. However, this was only because it was treated as legally irrelevant, the prosecutor being an alien under Australian law and liable, as such, to deportation in accordance with law39. No argument was advanced to the contrary of this last proposition40. However, the prosecutor asserted that, overwhelmingly, his personal links since early childhood had been with Australia where his children, family and friends all lived. The prosecutor claimed that to return him to Germany, where he had no real family or personal links and few employment skills, would have grave consequences. As a matter of practicality, it would be likely to sever his contact with his children. Although his crime was a most serious one, the prosecutor submitted that the assessment of it, and of his background, by the sentencing judge, as well as the sentence that she imposed, showed that his was not the worst type of case. He submitted that his good record in Australia, apart from the crime, was objectively relevant to the migration decision to be made in his case. In effect, the prosecutor said that he had paid the price fixed by Australian law for the crime, knew no other country than Australia and should have had such considerations taken fully into account in the decision made on whether to expel him. It was not for a court, exercising powers of judicial review, to reconsider the decision to remove the prosecutor from Australia on its merits41. However, the prosecutor submitted that the foregoing considerations were relevant to the evaluation of his claims that he had been denied a fair hearing and deprived of proper reasons, and otherwise suffered a decision with profound consequences for him and his children, made without due compliance with law. The ministerial decision Liability to visa cancellation: The subject of these proceedings is a decision made by the Minister on 27 June 2002. That decision purported to exercise the power granted to the Minister by the Migration Act 1958 (Cth) ("the Act"). By s 501(2) of the Act, the Minister was empowered to cancel the visa that afforded the prosecutor the right to remain in Australia as an alien. The precise status of the prosecutor when he arrived in Australia in 1971 is not disclosed. It is possible that he was allowed to enter on his foster father's 39 Re Patterson; Ex parte Taylor (2001) 207 CLR 391; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 77 ALJR 1; 193 ALR 37. 40 cf Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 77 ALJR 1 at 31 [195], 39 [229]; 193 ALR 37 at 79, 89. 41 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 42. Kirby passport42. However that may be, as a result of changes to the Act in 199443, the prosecutor's status became that of an alien granted a transitional (permanent) visa. At the time that the prosecutor committed the crime, and at the time of his sentence, he was not liable to visa cancellation under the Act on that ground. The relevant provision of the Act was then s 55. That section provided for deportation of non-citizens present in Australia for less than ten years who were convicted of specified crimes. Because by such times the prosecutor had been present in Australia as a permanent resident for considerably more than ten years, he was not then so liable44. However, his position was altered by amendments to the Act enacted whilst the prosecutor was serving his sentence. No separate argument was presented concerning the validity of such retrospective legislation or the procedures followed in giving it effect in the prosecutor's case. In 1998, pursuant to the supervening amendments, the Minister's department informed the prosecutor that he was liable to visa cancellation pursuant to s 501 of the Act (as it then stood). The prosecutor was invited to provide material to demonstrate why his visa should not be cancelled. From prison, the prosecutor responded and asked to be interviewed. No further steps were taken until 27 February 2002. At that time, the department informed the prosecutor again of his liability to visa cancellation pursuant to s 501 of the Act in the form in which, by further amending legislation45, s 501 had been altered to its present terms. The departmental letter to the prosecutor in February 2002 enclosed the full text of s 501 together with copy of the Minister's Direction The Direction46 is a 14 page, closely typed document setting out a large amount of general information concerning the operation of s 501. To a lawyer's eye much of the information could be seen to be irrelevant to the case of the 42 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 421-422 [92] per McHugh J referring to the Act, s 6(8) as in force at the relevant time. 43 Migration Legislation Amendment Act 1994 (Cth), s 7; Migration Reform (Transitional Provisions) Regulations (Cth), reg 4. See Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 421-422 [92]. 44 The Act, s 55(b)(ii) as it stood before 1994. 45 Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Act 1998 (Cth), Sched 1, item 23. 46 Pursuant to s 499 of the Act the Minister gave "Direction – Visa Refusal and Cancellation under section 501 – No 21". Kirby prosecutor (for example descriptions of "past and present general conduct", references to the risks that the alien might "harass, molest, intimidate or stalk another person in Australia", "vilify a segment of the community" or "incite discord", and the provision of lists of crimes other than murder, extending over two pages, given as "examples of offences which are considered by the Government to be very serious"). The Direction was obviously designed to cover every possible case. It was not particular to the prosecutor's case. For many of its recipients, it would be quite difficult to understand, even for those (like the prosecutor) with a proficiency in the English language which many recipients would not enjoy. This notwithstanding, the departmental letter of February 2002 instructed the prosecutor to "read fully and carefully the contents of the Minister's Direction". It told him that he "should address each and every topic that you feel applies to you or is relevant to your circumstances". Subsequently, the prosecutor was interviewed in person by an officer of the department. A typed transcript of that interview was later given to him. By letter in March 2002, the prosecutor sent the Minister personal references from people who knew him. These references included one from his foster brother who spoke highly of him as a family member and one from a former work colleague who expressed willingness to employ him when he became eligible for work release. The Minister's decision: As the date for release from prison approached, the Minister's department prepared a submission for the Minister in the form of a brief. This document, the substantive part of which comprised 16 pages, concluded with a section in the following terms: "MINISTERS [sic] DECISION ON CANCELLATION UNDER S 501(2) PART E: DECISION [63] I have considered all relevant matters including (1) an assessment of the Character Test as defined by s 501(6) of the Migration Act 1958, (2) my Direction under s 499 of that Act and Mr Palme's comments, and have decided that: Please delete whichever is NOT applicable: I am satisfied that Mr Palme passes the character test; I reasonably suspect that Mr Palme does not pass the character test and Mr Palme has not satisfied me that he passes the character test BUT I have decided NOT to exercise my discretion under subsection 501(2) of the Act to cancel the visa; Kirby I reasonably suspect Mr Palme does not pass the character test and Mr Palme has not satisfied me that he passes the character test BUT I have decided NOT to exercise my discretion under subsection 501(2) of the Act to cancel the visa BUT Mr Palme is to be WARNED that a fresh assessment will be made with a view to consider [sic] cancelling his visa if he is convicted of any further offences; I reasonably suspect that Mr Palme does not pass the character test and Mr Palme has not satisfied me that he passes the character test AND I have decided TO EXERCISE MY DISCRETION UNDER SUBSECTION 501(2) OF THE ACT TO CANCEL THE VISA, so I hereby cancel the visa." The departmental record placed before this Court included a photocopy of the original brief. From this it emerges that par (d) of the decision was initially deleted by the Minister who placed lines through the paragraph apparently signifying disagreement with its conclusion. Initially it seems that pars (a) and (b) were likewise crossed through, consistent with the adoption of a decision in terms of par (c). However, further deletions were marked on the document extending to par (c). Beside par (d) was placed the word "stet" above the Minister's signature. From this it is clear that the ultimate decision of the Minister was to cancel the prosecutor's visa in terms of par (d). However, the face of the document suggests either that the Minister changed his mind in the course of reaching his decision or that a mistake had been made when initially recording the decision. The record of the Minister's "decision" is certainly consistent with a conclusion that the case for the discretionary decision of the Minister was finely balanced as, in any event, the foregoing facts arguably show. In such a case, the provision of reasons that identified sufficiently and accurately the bases for the decision, where that was required by law, became all the more important. The purported reasons: No reasons, as such, were appended to the Minister's conclusion after the record of his decision to cancel the prosecutor's visa signified by his restoration of par (d). When the deleted paragraphs are put aside (in compliance with the departmental request to delete "whichever is NOT applicable") all that remains on that page to explain the reasons for the Minister's decision is an assertion that he has "considered all relevant matters"; that he reasonably suspects that the prosecutor does not pass the "character test" provided by the Act; and that "I have decided TO EXERCISE MY DISCRETION UNDER SUBSECTION 501(2)". Kirby The departmental brief preceding the statement of the Minister's decision purported to be a neutral presentation by the department to the Minister of the relevant considerations of fact and law necessary for the Minister to make his decision. The brief contained no recommendation one way or the other. It drew the Minister's attention to the provisions of s 501 of the Act applicable to the circumstances. It set out extracts from the Minister's Direction. These included the statement that "[i]t is the Government's view that the following are examples of offences which are considered by the Government to be very serious". Unsurprisingly, murder was amongst such offences. Correctly, the brief informed the Minister that it was open to him to find that the prosecutor's conduct against the community was serious. To provide more detail for the Minister's assessment, the brief contained extracts from the reasons on sentence of Mathews J. Those extracts set out her Honour's findings about the circumstances of the offence and the prosecutor's motive for the crime and conclusions about premeditation. The brief then itemised statements of the prosecutor and his foster brother and information concerning his past record, employment history and prison assessments. On the basis of this material, the brief concluded that it was open to the Minister to find that the prosecutor was "at a low risk of recidivism". The brief next turned to the issue of "[g]eneral deterrence". It concluded that it was open to the Minister to find that cancellation of the prosecutor's visa would serve as a "deterrence factor against others committing similar offences". It then addressed the issue of the suggested expectations of the Australian community set out in the Minister's Direction. It concluded in words that the prosecutor claimed were critical: "The offence committed by Mr Palme is considered by the Government to be very serious. The Australian community expects non-citizens to obey Australian laws while in Australia and therefore it is open for you to find that the character concerns or offence are such that the Australian community may expect that Mr Palme should be removed from Australia." Finally, the brief concluded with references to the consideration of the best interests of the prosecutor's children. It mentioned his relationship with his children and that it was open to the Minister to find that cancellation of his visa and removal from Australia "would have a detrimental effect on his children". Likewise, the brief included a summary of the prosecutor's good relationship with his foster family and the fact that it was open to the Minister to find that his removal from Australia "would impose significant hardship" on that family. At the conclusion of this statement of matters that it was open to the Minister to take into account in reaching his decision appeared a schedule of "evidence or other material on which facts/background information is based". Kirby That schedule opened with the statement: "In support of the above findings I had regard to the following material". After this statement is listed a series of annexures, being the original documents in the departmental file, including confirmation of the prosecutor's immigration status, his criminal conviction, correspondence, letters and references tendered by him and the judge's comments on sentence. The last page of the departmental brief, immediately following the signed statement of the Minister's decision, described above, contained the names and signatures of three departmental officers who had "prepared" or "cleared" the brief for the Minister. It is not entirely clear whether the statement "I had regard to the following material" is a certification by those officers of what they had regard to or is intended to amount to an assertion by the Minister that he had had such regard, without specifying to what degree. I will assume that the latter is the proper interpretation. The issues The prosecutor's arguments presented four issues to this Court: The procedural fairness issue: Whether the Minister had failed to accord the prosecutor procedural fairness by reason of the Minister's omission to provide the prosecutor with a fair hearing, and specifically a fair opportunity to respond to the matters set out in the departmental brief before the Minister made his decision in reliance upon it; The reasons issue: Whether the Minister had failed to give any, or adequate, reasons for his decision in accordance with the Act and, if he did fail, whether any such failure constituted jurisdictional error on the footing (a) that it indicated that the "decision" made was an arbitrary one and not a "decision" as contemplated by the Act; or (b) that it otherwise failed to accord the prosecutor procedural fairness; The material question issue: Whether the Minister had misunderstood the nature of the decision that he had to make, being led by the terms of the brief to address an immaterial question rather than the question required by the Act, and thereby committed jurisdictional error; and The interests of the children issue: Whether the Minister had failed to have proper regard to the interests of the prosecutor's children, whose separate interests would be affected by the decision whether or not to cancel their father's visa47. 47 cf Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286- 289, 290-292, 304-305; cf Re Minister for Immigration and Multicultural Affairs; (Footnote continues on next page) Kirby Two insubstantial grounds should be rejected The material question issue: The third and fourth issues may be quickly disposed of. Assuming, for these purposes, that the departmental brief is incorporated as evidence of the reasons for the Minister's decision, it is true that at one stage, early in that document, the question for the Minister's decision is stated loosely. The Minister is there invited to decide "whether [the prosecutor] should be permitted to remain in Australia". The prosecutor submitted that the correct question was whether the Minister should cancel the visa and not, as such, whether he should remain in this country. He argued that the correct formulation concentrated attention on the serious step of cancellation. This point is without legal merit. Repeatedly in the brief the question for decision was correctly stated to be that of cancellation of the visa. That is the form in which the question is posed in the text of the brief on at least four occasions. Most importantly, it is the form in which it appears in the final section labelled "Decision" where the Minister's actual exercise of discretion and decision are recorded. The claim based on the third issue is therefore rejected. The interests of the children issue: Nor is there a proper criticism of the brief in the presentation of references to the interests of the prosecutor's children. To the contrary, the brief, by reference to the Minister's own Direction expressed in terms of the conventional understanding of the decision of this Court in Minister for Immigration and Ethnic Affairs v Teoh48, made it clear that the Minister was to take the interests of the prosecutor's children into account as a "primary consideration". The brief made express reference to the Convention on the Rights of the Child to which Australia is a party49. The circumstances of the prosecutor's relationship with his children were then described. Neither in this nor in any other respect was it alleged by the prosecutor that the brief contained any misstatement of the facts. Whilst it is true that the brief did not expressly identify the children as Australian citizens, that status was left to inference which was overwhelming. Further, the terms of the brief concerning the interests of the children were sufficient in the circumstances to direct the mind of the Minister to those interests. There is no merit in the fourth point. The claim based on it is also rejected. Ex parte Lam (2003) 77 ALJR 699 at 716-717 [95]-[102], 720 [122], 724-726 [140]-[147]; 195 ALR 502 at 525-527, 531, 536-539. 48 (1995) 183 CLR 273. 49 Done at New York on 20 November 1989, 1991 Australia Treaty Series 4. Kirby Confining the issues: It was common ground that the Minister's decision, at the time it was made, was a "privative decision" in terms of the recent amendments to the Act50. The order nisi that was granted to the prosecutor included a ground permitting him to challenge the constitutional validity of the provisions of the Act so far as they purported to constrain the jurisdiction of this Court to issue the constitutional writ that the prosecutor sought. After the order nisi was granted, this Court decided that the "privative" provisions of the Act did not, in terms, purport to oust this Court's jurisdiction under s 75(v) of the Constitution51. Accordingly, the prosecutor submitted that this ground in the order nisi had become redundant. No submission was advanced for the Minister to challenge that proposition. It is therefore appropriate to proceed upon that basis. It follows from the foregoing that the issues in the proceedings are confined to the first two raised by the prosecutor. Although in terms of the temporal sequence of events, and perhaps logically, the challenge asserting that the decision was made without according the prosecutor procedural fairness might be thought to come first, it is convenient to give priority to the second issue challenging the Minister's alleged failure to provide reasons. The resolution of that issue may have a larger significance for the administration of the Act. As well, it is susceptible to easier resolution. I will therefore address it immediately. The relevant legislation Natural justice requirements: The following provisions of the Act need to be noticed: "501 Refusal or cancellation of visa on character grounds Decision of Minister or delegate – natural justice applies The Minister may cancel a visa that has been granted to a person if: the Minister reasonably suspects that the person does not pass the character test; and 50 The Act, s 474. 51 Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 464 [43], [45], 475 [106], 489 [177]; 195 ALR 24 at 37, 52, 72. Kirby the person does not satisfy the Minister that the person passes the character test. Decision of Minister – natural justice does not apply The Minister may: cancel a visa that has been granted to a person; the Minister reasonably suspects that the person does not pass the character test; and the Minister is satisfied that the … cancellation is in the national interest. The power under subsection (3) may only be exercised by the Minister personally. The rules of natural justice, and the code of procedure set out in Subdivision AB of Division 3 of Part 2, do not apply to a decision under subsection (3)." There follows in s 501 a definition of the "character test". By s 501(6)(a) a person does not pass the character test if the person has a "substantial criminal record", as defined. By s 501(7) a "substantial criminal record" is defined to include, in par (c), the case where a person "has been sentenced to a term of imprisonment of 12 months or more". By this definition, it was clearly open to the Minister to decide that the prosecutor did not pass the "character test" in accordance with s 501(2). So much was not contested before this Court. Because the Minister did not purport to treat the case as one involving cancellation of the prosecutor's visa "in the national interest" it is clear that, having decided to proceed with the decision of whether to cancel the prosecutor's visa personally (and not by delegation), the Minister was empowered to cancel the visa himself. However, the decision was discretionary. To its exercise, by the terms of s 501(5) of the Act, the rules of natural justice and the statutory code of procedure applied. Where, under the Act, a decision whether to cancel a visa is delegated by the Minister to his delegate52 and a cancellation decision is made by such 52 The Act, s 496. Kirby delegate, the person affected has the right to have such decision reviewed by the Administrative Appeals Tribunal53 ("the AAT"). In such a case, that person has a full opportunity in a public hearing to adduce evidence and argument to resist a decision cancelling the visa, including on the ground that although the person does not pass the "character test" as defined the discretion to cancel the visa should not be exercised in all the circumstances. Had the Minister decided to delegate the decision in that way, the prosecutor would have had that facility. Nevertheless, it was open to the Minister to proceed as he did by personal decision. Proceeding in that way, he became the repository of the statutory power of decision. He was then obliged to exercise his power as any other repository must do in like circumstances. He was required to observe the provisions of the Act and specifically the obligation to accord natural justice to the person affected by the decision, relevantly for this argument, the prosecutor. Requirement of reasons: A common feature of much federal legislation concerned with public administration in recent years has been the enactment of an obligation to provide reasons for administrative decisions54. In respect of a decision made by the Minister personally to cancel a visa under s 501(2), s 501G enacts duties that the Minister must observe. Relevantly, s 501G provides in such a case: the Minister must give the person a written notice that: sets out the decision; and specifies the provision under which the decision was made and sets out the effect of that provision; and sets out the reasons (other than non-disclosable information) for the decision … (3) A notice under subsection (1) must be given in the prescribed manner. (4) A failure to comply with this section in relation to a decision does not affect the validity of the decision." 53 The Act, s 500(1)(b). 54 eg Administrative Decisions (Judicial Review) Act 1977 (Cth), s 13. Kirby The omission to state reasons and its consequences The purported reasons: After the Minister made the decision in the manner described, by indicating that he deleted pars (a), (b) and (c) of the form provided to him on the penultimate page of the departmental brief and endorsed par (d), a copy of that decision was sent to the prosecutor on 4 July 2002. A copy of the brief was enclosed in the letter notifying the prosecutor of the Minister's action; informing him of the cancellation of his visa; telling him that he was excluded from appealing to the AAT; and warning him that he was liable to be maintained in immigration detention, following completion of the custodial portion of his sentence, prior to his removal from Australia55. Until that time, the prosecutor had no knowledge of the precise contents of the departmental brief. So much was not contested. All other avenues of judicial and administrative review of the Minister's decision being excluded by the Act, the prosecutor promptly applied to this Court and obtained the order nisi. Clearly enough, by the written notice given to the prosecutor in the departmental letter, the Minister gave him a notice that set out the decision and sufficiently specified the provision of the Act under which the decision was made and the effect of that provision. To that extent the requirements of s 501G(1) were complied with. The question in these proceedings is whether such notice set out the "reasons … for the decision" as s 501G(1)(e) requires. If not, the consequential question is, what follows? Even giving the departmental letter, the Minister's decision and the attached brief the most beneficial construction possible, I am unconvinced that the written notice to the prosecutor set out the reasons for the decision as the Parliament required. The starting point in giving meaning to the obligation in s 501G(1)(e) is an appreciation of the importance of reasons in administrative decisions generally and in the Minister's decision in this case in particular. Rationale for reasons: The rationale of the obligation to provide reasons for administrative decisions is that they amount to a "salutary discipline for those who have to decide anything that adversely affects others"56. They encourage "a careful examination of the relevant issues, the elimination of extraneous 55 According to the Minister, he was granted a bridging visa to allow him to remain in Australia to complete his custodial sentence. 56 de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed (1995) at 459 citing Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870 at 872. Kirby considerations, and consistency in decision-making"57. They provide guidance for future like decisions. In many cases they promote the acceptance of decisions once made58. They facilitate the work of the courts in performing their supervisory functions where they have jurisdiction to do so59. They encourage good administration generally by ensuring that a decision is properly considered by the repository of the power60. They promote real consideration of the issues and discourage the decision-maker from merely going through the motions61. Where the decision effects the redefinition of the status of a person by the agencies of the State, they guard against the arbitrariness that would be involved in such a redefinition without proper reasons62. By giving reasons, the repository of public power increases "public confidence in, and the legitimacy of, the administrative process"63. In the context of more general developments in Australian administrative law, facilitated by legislative provisions enacted by the Parliament requiring the giving of reasons, the foregoing explanations and justifications are reinforced 57 de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed 58 de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed (1995) at 459 citing R v Secretary of State for the Home Department; Ex parte Singh (The Times, 8 June 1987 per Woolf LJ). 59 Craig, "The Common Law, Reasons and Administrative Justice", (1994) Cambridge Law Journal 282 at 283. 60 de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed 61 de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed 62 Craig, "The Common Law, Reasons and Administrative Justice", (1994) Cambridge Law Journal 282 at 283 citing Rabin, "Job Security and Due Process: Monitoring Administrative Discretion Through a Reasons Requirement", (1976) 44 University of Chicago Law Review 60 at 77-78. 63 Craig, "The Common Law, Reasons and Administrative Justice", (1994) Cambridge Law Journal 282 at 283. Kirby both by Australian judicial authority64 and by expert administrative agencies65. Similar points have been made in academic writing both in Australia and overseas66. Reasons in migration cases: In the context of a decision by the Minister made under the Act, such as that affecting the prosecutor in this case, there are particular features that reinforce the significance of reasons and which help to explain why the Parliament enacted as it did in s 501G(1)(e) of the Act. Without exhausting the list the relevant considerations include: The immediate consequences of the decision for the liberty of the person affected by it, given that, if not otherwise in custody, the person must be taken into immigration detention and held there pending execution of the decision; The drastic consequences of such a decision for the person concerned, the person's family and commonly (as in this case) other Australian citizens having close relationships with the person; The fact that the making of the decision by the Minister personally deprives the person affected of a right to have the decision reviewed by the AAT, such as would otherwise apply if the decision were made by the delegate of the Minister; and The fact that the Minister is not obliged in such a case to report to the Parliament on the making of such a decision. In other cases where the Minister makes a decision personally under the Act having similarly drastic consequences, he is obliged to cause notice of his decision to be 64 eg Hatfield v Health Insurance Commission (1987) 15 FCR 487 at 489-490; Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at 482- 65 eg Administrative Review Council, Review of the Administrative Decisions (Judicial Review) Act: Statements of Reasons for Decisions, Report No 33 (1991). See also Administrative Review Council, Practical Guidelines for Preparing Statements of Reasons, (November 2002). 66 eg Macdonald and Lametti, "Reasons for Decision in Administrative Law", (1990) 3 Canadian Journal of Administrative Law and Practice 123; Wade and Forsyth, Administrative Law, 8th ed (2000) at 516-520; Mason, "Australian Administrative Law Compared with Overseas Models of Administrative Law", (2001) 31 AIAL Forum 45 at 60-62; Joseph, Constitutional and Administrative Law in New Zealand, 2nd ed (2001) at 871-873. Kirby laid before each House of Parliament within a given time67. No such obligation applies to a decision such as that made in the present case. In so far as the procedure of parliamentary tabling represents a form of political accountability for the Minister's decision68, it is an accountability missing from cases such as the present. The foregoing considerations reinforce an impression which the language of s 501G(1) would in any case occasion, namely that, when the Parliament enacted the obligation for the Minister to give a person such as the prosecutor a written notice setting out the reasons for the decision, it meant that instruction to be taken seriously and to be properly complied with. It was not a trifle. Failure to provide reasons: Can it therefore be said that the letter notifying the prosecutor of the Minister's decision, attaching the departmental brief, sufficiently conformed to the requirements stated in the Act? In my view, it cannot. First, the "reasons" required in the notice are "the reasons … for the decision". (There is no suggestion in the present case that there was any "non- disclosable information" that could be omitted from the reasons.) Because of the use of the definite article, the reference to "the reasons" suggests that the reasons provided have to be the true and sufficient reasons that caused the Minister to decide as he did in the circumstances. As the "decision" is in law one to be made by the Minister, the reasons must be those of the Minister personally not just the reasons, if any, held by others69. Only the Minister's reasons will be "the reasons … for the decision". There is no indication in the Minister's hand or otherwise, following the record of his decision (signified on the penultimate page of the brief), of the reasons that actually led the Minister to the decision that he made. The selection of the Minister's "reasons" is left to inference. They must be deduced from the terms of the brief. There are few clear indications of how that process is to be carried out. In fact, at least in this case, it is left to guesswork and speculation. Secondly, in so far as the opening sentence of the Minister's "decision" is said to constitute the "reasons" required, it is inadequate. To state "I have considered all relevant matters" is an all-embracing and self-serving statement of 67 See eg the Act, ss 500A(7), 501C(8), (9) and (10). 68 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 502-503 [331], 519 [381]. 69 Chief Constable of the North Wales Police v Evans [1982] 1 WLR 1155 at 1161, 1164-1165; [1982] 3 All ER 141 at 144, 147. See also Kioa v West (1985) 159 CLR 550 at 588, 602, 628, 634. Kirby conclusion not of the reasons for that conclusion. It does not identify the matters in the brief that the Minister ultimately considered to be relevant to the exercise of his discretion and those that he regarded as irrelevant or insubstantial. It does not reveal the reasons why the Minister opted for one rather than any of the three other possibilities offered to him at the conclusion of the brief. A greater specificity than simple reference to "all relevant matters" is envisaged by the language of s 501G(1). Otherwise, the general and particular objectives that lie behind the legislative requirement for the provision of the "reasons" will not be attained. Thirdly, the statement of the decision to cancel the visa, with its reference to the reason that the Minister "reasonably suspect[s] that [the prosecutor] does not pass the character test and [he] has not satisfied me that he passes the character test", is also a statement of conclusion. It is not a statement of "reasons" that address the various arguments elaborated in the brief as pertinent to the ultimate discretion afforded to the Minister by s 501(2) of the Act. Given that there was no real contest that the prosecutor did not pass the "character test", as defined by the Act, it remained for the Minister's "reasons" to explain why, in the circumstances, the discretion to cancel the visa was exercised rather than the discretion not to do so in light of the countervailing factual considerations relevant to the case, many of which were set out in the brief. In the statement of the conclusion in terms of par (d), which the Minister adopted, there is no hint of "the reasons" for preferring the option of cancellation to that of non-cancellation. Yet in accordance with the Act, a statement of the decision alone is not sufficient. For such a serious decision the Parliament has required that the notice should go further and set out the reasons. Fourthly, the format of the departmental brief could scarcely serve as an indication of "the reasons" for the Minister's decision. The departmental brief in this case studiously refrained from making a recommendation to the Minister as to the decision that he should reach. In so far as it offered various suggestions as to what was "open for the Minister to find", such suggestions were expressed in terms that pulled in opposite directions. Thus, whilst the brief stated that it was open to the Minister to find that the prosecutor's conduct against the community was "serious", as it obviously was, and such that "the Australian community may expect [him to] be removed from Australia", it was also stated that it was open to the Minister to conclude that the prosecutor was "at a low risk of recidivism" and that his removal from Australia would have a detrimental effect on his children and on his foster family many or all of whom, inferentially, were Australian citizens. Therefore, simply to treat the brief as incorporated by reference by way of the Minister's consideration of "all relevant matters" gives no clue as to the way the Minister resolved the tension critical to the decision in the prosecutor's case between those factors favouring cancellation and those factors favouring non-cancellation. Kirby The very fact that the design of the brief in its concluding section permitted the Minister to reach opposite decisions, indicates that provision of the brief without some elaboration and explanation by the Minister would not constitute notification of "the reasons" for the decision. The same briefing material could not logically constitute "the reasons" for cancellation and also non-cancellation without a ministerial indication of a preference for one view of the matters contained in the brief over another or an assignment of greater weight to one or more considerations than to others. Reasons from the decision-maker: It follows that, in so far as the Minister's stated "decision" left "the reasons" for the decision to guesswork and speculation, transmission of the departmental brief did not resolve the ambiguities. It did not set out "the reasons" as the Parliament enacted70. My conclusion in this regard is consistent with that reached by the Supreme Court of Canada in Suresh v Canada (Minister of Citizenship and Immigration)71. There, in reviewing under the Canadian Charter of Rights and Freedoms a ministerial decision to declare that an asylum seeker was a danger to the security of Canada, that Court said72: "The Minister must provide written reasons for her decision … The reasons must … articulate why, subject to privilege or valid legal reasons for not disclosing detailed information, the Minister believes the individual to be a danger to the security of Canada as required by the Act. In addition, the reasons must also emanate from the person making the decision, in this case the Minister, rather than take the form of advice or suggestion, such as the memorandum of [the departmental official]. [The official's] report, explaining to the Minister the position of [the department], is more like a prosecutor's brief than a statement of reasons for a decision." Although, in the present case, the departmental brief was more even- handed than was found to be the case in Suresh, and although the legal context is not the same, the documents in the two cases were equally inadequate as a statement of the Minister's reasons for decision. Here, the brief remained a statement of ministerial options. Without more, its very purpose prevented its 70 cf W157/00A v Minister for Immigration and Multicultural Affairs (2001) 190 ALR 55; Minister for Immigration and Multicultural Affairs v W157/00A (2002) 72 ALD 71 [2002] 1 SCR 3. 72 Suresh v Canada (Minister of Citizenship and Immigration) [2002] 1 SCR 3 at 66- Kirby fulfilling the requirement of providing "the reasons" for a decision that opted for one of three possible decisions on cancellation. Conclusion – factors but no reasons: In the Full Court of the Federal Court, in explaining a similar conclusion by reference to what appears to have been a similar document, Branson J correctly said73: "[T]he idea that the one document can be characterised as a notice that sets out the reasons for diametrically opposed decisions depending on whether the expression 'agreed' or 'not agreed' at the conclusion of the document is crossed out runs contrary to logic. In truth, as in the Canadian case of Suresh, the document here sought to be characterised as a notice which sets out the minister's reasons for decision is a document provided to the minister to assist him in reaching his decision. It does not tell the respondent why his visa was cancelled; at best it sets out facts and other material relevant to the exercise of the minister's discretion to cancel or not to cancel the respondent's visa. [The notice] may set out the findings of fact which gave rise to the decision but it does not set out the reasons for the decision." The omission to give reasons indicates a failure of the process The provisions of s 501G: To overcome this reasoning, the Minister invoked the provision in s 501G(4) to the effect that a failure to comply with the section "in relation to a decision" did not affect the validity of the decision74. In other proceedings, an enactment to such effect might raise a question about the constitutional validity of a legislative attempt in undiscriminating terms to uphold a decision made by a Minister in apparent non-compliance with requirements stated in some detail by the Parliament. No notices having been given as required by s 78B of the Judiciary Act 1903 (Cth) to attack the constitutional validity of s 501G(4), that question cannot be considered in these proceedings. Similarly, because no application was made on behalf of the prosecutor for the constitutional writ of mandamus to compel the Minister to give the prosecutor a written notice, setting out the reasons for his decision to cancel the visa, no question arises here as to whether such relief would be available75. 73 Minister for Immigration and Multicultural Affairs v W157/00A (2002) 72 ALD 49 74 cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 75 cf Ayan v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 196 ALR 332 at 333-334 [4]. Kirby Nevertheless, the requirements of s 501G(1) should be approached on the footing that the obligation expressed by the Parliament, including to provide written notice of the reasons for such decisions, was intended to be taken seriously and complied with76. The provisions of sub-s (4) of the section are to be read with that assumption in mind. It should not therefore be assumed that the obligations imposed on the Minister in sub-s (1) of s 501G are to be ignored or avoided simply because of the presence of sub-s (4). Reading the latter in the context of the former, it is necessary to give sub-s (4) a meaning that preserves the obligations imposed on the Minister by s 501G(1). Particularly by reference to this Court's powers under s 75(v) of the Constitution, recently given fresh emphasis77, it is proper to read s 501G(4) so that it does not purport to exempt a ministerial decision to which s 501G applies from compliance with s 501G(1) as if it did not exist. This Court would not readily infer that the detailed requirements of s 501G(1) were to be treated as mere legislative surplusage to be complied with or not at the whim of the Minister. The Minister accepted that, notwithstanding s 501G(4), within its powers under s 75(v) of the Constitution, this Court could consider his suggested non- compliance with s 501G(1) to ascertain whether, on some ground other than non- compliance with the requirements of s 501G(1), the prosecutor was entitled to relief in the form of prohibition. This was a correct concession. It is supported by a long line of judicial authority. Indications of no decision: In R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd78, this Court considered a privative provision in federal legislation79. It drew a distinction between a case where the decision-maker was said to have had inadequate materials before it to make the decision and a case where the inadequacy of the materials suggested that no decision as contemplated by the legislation had been made. Four members of the Court said80: 76 In the Explanatory Memorandum circulated with the 1998 Bill which introduced s 501G into the Act it is stated that under s 501G(1) the Minister "must give the person written notice that … sets out the reasons for the decision": Australia, Senate, Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Bill 1998 (Cth), Explanatory Memorandum at 19 [90]. 77 Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 464 [43], [45], 475 [106], 489 [177]; 195 ALR 24 at 37, 52, 72. 78 (1953) 88 CLR 100. 79 Stevedoring Industry Act 1949 (Cth), s 52. 80 (1953) 88 CLR 100 at 120 per Dixon CJ, Williams, Webb and Fullagar JJ. At 122 Taylor J expressed substantial agreement with the reasons in the joint judgment. (Footnote continues on next page) Kirby "The inadequacy of the material is not in itself a ground for prohibition. But it is a circumstance which may support the inference that the tribunal is applying the wrong test or is not in reality satisfied of the requisite matters. If there are other indications that this is so or that the purpose of the function committed to the tribunal is misconceived it is but a short step to the conclusion that in truth the power has not arisen because the conditions for its exercise do not exist in law and in fact." A similar point was made by Gibbs CJ (writing with the concurrence of Brennan J) in Public Service Board of NSW v Osmond81. In that case, unlike this, there was no express statutory obligation on the decision-maker to provide the person affected by its decision with a written notice setting out the reasons for the decision. This Court reversed a conclusion of the New South Wales Court of Appeal in which a majority had held that the common law would fill the gap left by the statutory omission to require reasons. Because of the express requirement in this case of s 501G(1)(e) of the Act to provide reasons, these proceedings do not afford an opportunity to reconsider the general principle stated in Osmond in the light of later legal developments. However, in Osmond, Gibbs CJ pointed out that, in some circumstances, the omission of a decision-maker to give reasons "[T]he fact that no reasons are given for a decision does not mean that it cannot be questioned; indeed, if the decision-maker does not give any reason for his decision, the court may be able to infer that he had no good reason." As his Honour explained, the approach of Australian authority in this respect runs in parallel with a line of authority in England83. Legislative relief from invalidity: More recently, addressing the operation of s 69 of the Act (which, like s 501G(4), was designed to exempt from invalidity a ministerial decision that did not comply with statutory requirements) See also Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 81 (1986) 159 CLR 656. 82 (1986) 159 CLR 656 at 663-664. 83 Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 at 1033, Kirby Gaudron J84 (writing with the concurrence of McHugh J85 on this point) emphasised the necessarily limited ambit of provisions such as s 69 in the face of this Court's jurisdiction under s 75(v) of the Constitution. Her Honour said86: "The purpose of s 69 of the Act is to ensure that an applicant's rights are to be ascertained by reference to the Minister's decision unless and until set aside. It says nothing as to an applicant's statutory or constitutional rights to have a decision reviewed. Still less does it purport to excuse non-compliance with the Act or the rules of natural justice." These comments are clearly correct. They apply equally to the operation of s 501G(4) of the Act. Once this point is reached, in proceedings such as the present it is necessary to examine the entirety of the Minister's decision-making process, including the omission to afford a written notice setting out the reasons for the decision. Such examination is carried out to determine whether a "decision", as contemplated by the Act, has been made at all. It is useful to remember, as Branson J recently did in similar circumstances87, the observation of McHugh JA in Soulemezis v Dudley (Holdings) Pty Ltd88: "[W]ithout the articulation of reasons, a judicial decision cannot be distinguished from an arbitrary decision. In my opinion the giving of reasons is correctly perceived as 'a necessary incident of the judicial process' because it enables the basis of the decision to be seen and understood both for the instant case and for the future direction of the law." 84 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 87-88 [103]. 85 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 98 [144]. 86 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 88 [104]. 87 Minister for Immigration and Multicultural Affairs v W157/00A (2002) 72 ALD 49 88 (1987) 10 NSWLR 247 at 279. Kirby At least in this respect, the same principle applies to administrative decisions of the Minister of the kind in question here89. Without the provision of reasons, as the Act required, it is but a small step to conclude that the Minister failed to take into account the considerations necessary for the making of a lawful decision90. An unreasoned decision-making process in a case of this kind is the antithesis of the process for which the Parliament provided when it enacted s 501G(1). The Minister's decision was arbitrary. Contrary to the paragraph preceding the selection of the decision, there were no "findings" in the departmental brief. The brief, by its language and purpose, could apply equally to any of the ultimate decisions which the Minister was invited to make. No relief from fundamental non-compliance: It follows from this conclusion that, as in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah91 and other cases, jurisdictional error in the form of a constructive failure to exercise jurisdiction has been demonstrated. This conclusion entitles the prosecutor to constitutional relief. In any exercise of the power to cancel the prosecutor's visa it may be expected that, in accordance with the Act, written reasons will accompany and give focus to the Minister's decision and be provided to the prosecutor in accordance with s 501G(1) of the Act. This was not done in the prosector's case. There is no discretionary ground to withhold the issue of the writ. The exemption in s 501G postulates an otherwise real but defective compliance with the requirements of s 501G(1). It cannot avail the Minister in this case. A fundamental failure to comply with s 501G(1) leaves nothing upon which s 501G(4) can operate to rescue a resulting "decision" made without observance of the rules as to reasons laid down by the Parliament92. Were it 89 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 330 [4], 338-339 [37]-[38], 348-349 [75]. See also Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 626 [40]; Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 532 90 Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 663-664; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 81-82 [80]-[81]. 91 (2001) 206 CLR 57 at 81-83 [80]-[86]. 92 R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 248; Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 632; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 614-615 [51], 646- (Footnote continues on next page) Kirby otherwise, by a simple statutory device such as s 501G(4), the Parliament could render every protective statutory procedure that has not been complied with by the decision-maker effectively immune from this Court's constitutional scrutiny under s 75(v)93. That is not the law. It would be a sorry day for the rule of law in this country if it were. Natural justice In the light of the foregoing conclusion, it is unnecessary to consider in detail the alternative way that the prosecutor sought to argue that the failure of the Minister to provide him with reasons in accordance with s 501G(1) of the Act demonstrated jurisdictional error94. It was his contention that such failure amounted to a breach of the rules of natural justice, governing the Minister in the making of his decision. Certainly, if such a breach were established it would amount to jurisdictional error95. The Minister sought to draw a distinction between the manner in which a decision affecting a person's rights or interests is made and the way in which such a decision is communicated. It is unnecessary, in light of the conclusion already expressed, to consider this additional argument. The prosecutor had further arguments to support the suggested departure from the requirements of procedural fairness, apart from the omission to provide reasons as required by the Act. He did not contend that, before making his decision, the Minister was obliged to afford him an oral hearing such as he could have secured if the decision had been made by a delegate of the Minister and thereafter reviewed by the AAT96. Nor did he dispute that the Minister would, of necessity, have to rely upon departmental officers to summarise and present 647 [152]; Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 470 [76]- [77], 474-475 [103]-[104]; 195 ALR 24 at 45-46, 51-52. 93 Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 474-475 [103]-[104]; 195 ALR 24 at 51-52. 94 cf Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 676. See R v Secretary of State for the Home Department; Ex parte Doody [1994] 1 AC 531; Baker v Canada (Minister of Citizenship and Immigration) [1999] 2 SCR 817. 95 Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 464 [45]; 195 ALR 96 Local Government Board v Arlidge [1915] AC 120; Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 214-215, 217, 221, 224-225, 226; Chief Constable of the North Wales Police v Evans [1982] 1 WLR 1155 at 1161; [1982] 3 All ER 141 at 144; Kioa v West (1985) 159 CLR 550 at 588, 602, 628, 634; South Australia v O'Shea (1987) 163 CLR 378 at 409. Kirby important factual considerations favourable relevant materials97. However, he did argue that, in two residual respects, the procedures adopted by the Minister fell short of meeting the requirements of natural justice. These were (a) that the departmental brief, in summarising the facts, had omitted to him, specifically sections of the sentencing remarks of Mathews J which emphasised his good qualities and explained the comparatively light sentence that her Honour had imposed; and (b) the failure of the Minister to provide a copy of the departmental brief until after the decision was made, thereby depriving him of the chance to comment effectively by focussing his submissions upon the issues for decision and targeting them in a way that the lengthy, generally expressed and substantially irrelevant Direction No 21 did not facilitate98. There are various difficulties with these arguments. Because I have already decided that the prosecutor is entitled to relief it is unnecessary for me to resolve them. I therefore refrain from doing so. Orders The order nisi should be made absolute. Writs of prohibition and certiorari should be issued. The Minister should pay the prosecutor's costs. 97 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 30-31, 98 cf Jeffs v New Zealand Dairy Production and Marketing Board [1967] 1 AC 551; Chief Constable of the North Wales Police v Evans [1982] 1 WLR 1155 at 1165; [1982] 3 All ER 141 at 147.

HIGH COURT OF AUSTRALIA Matter No S362/2008 APPELLANT AND COMMONWEALTH OF AUSTRALIA & ANOR RESPONDENTS Matter No S363/2008 ASHRAF THABIT SELIM AND APPELLANT VINAYAK (VINOO) LELE, PATRICK TAN AND DAVID RIVETT CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 309 & ORS RESPONDENTS Wong v Commonwealth of Australia Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 [2009] HCA 3 2 February 2009 S362/2008 & S363/2008 ORDER Matter No S362/2008 Appeal dismissed. Appellant to pay the costs of the first respondent. Matter No S363/2008 Appeal dismissed. Appellant to pay the costs of the first, third and fourth respondents. On appeal from the Federal Court of Australia Representation D F Jackson QC with M A Robinson and J Chambers for the appellant in both matters (instructed by TressCox Lawyers) S J Gageler SC, Solicitor-General of the Commonwealth with R M Henderson and K M Richardson for the first respondent in S362/2008 and intervening on behalf of the Attorney-General of the Commonwealth in S363/2008 (instructed by Australian Government Solicitor) Submitting appearances for the second respondent in both matters R M Henderson for the first, third and fourth respondents in S363/2008 (instructed by Sparke Helmore) P J Davis SC with G J D del Villar intervening on behalf of the Attorney-General of the State of Queensland in both matters (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Wong v Commonwealth of Australia Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 Constitutional law (Cth) – Legislative power – Constitution, s 51(xxiiiA) – Provision of medical and dental services (but not so as to authorize any form of civil conscription) – Meaning of "civil conscription". Constitutional law (Cth) – Legislative power – Constitution, s 51(xxiiiA) – Provision of medical and dental services (but not so as to authorize any form of civil conscription) – Health Insurance Act 1973 (Cth) – Whether ss 10, 20, 20A or Pt VAA or any provision thereof amount to "civil conscription" – Meaning of "inappropriate practice" as defined in s 82(1). Constitutional law (Cth) – Legislative power – Constitution, s 51(xxiiiA) – Provision of medical and dental services (but not so as to authorize any form of civil conscription) – Health Insurance Act 1973 (Cth) – Pt VAA – Professional Services Review Scheme – Whether Pt VAA invalid as imposing a form of "civil conscription" – Whether provisions imposing obligation on medical practitioners to avoid "inappropriate practice" to remain in Medicare scheme invalid. Constitutional law (Cth) – Legislative power – Constitution, s 51(xxiiiA) – Relevance of extrinsic materials and legislative history in construction of Constitution – Manner of construction where provision inserted by referendum under Constitution, s 128. Words and phrases – "civil conscription", "(but not so as to authorize any form of civil conscription)". Constitution, s 51(xxiiiA). Health Insurance Act 1973 (Cth), ss 10, 20, 20A, Pt VAA. FRENCH CJ AND GUMMOW J. The appeals These appeals were heard together. Both appellants carry on in New South Wales private practice as general medical practitioners. They are "vocationally registered general practitioners" within the meaning of s 3F of the Health Insurance Act 1973 (Cth) ("the Act"). Part VAA of the Act (ss 80-106ZR) is headed "The Professional Services Review Scheme" and was introduced in its original form in 1994 by the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth) ("the 1994 Act")1. The definition in s 82 of "inappropriate practice" is central to the operation of the scheme established by Pt VAA. A finding that a practitioner has engaged in "inappropriate practice" may lead, among other consequences, to the imposition of an obligation to repay to the Commonwealth Medicare benefits paid inappropriate practice (s 106U(1)(ca)) and to full disqualification from provision of services under the Act (s 106U(1)(h)) for a period of up to three years (s 106U(4)). in connection with for services rendered On 13 January 2004 (in the case of Dr Wong) and 10 October 2003 (in the case of Dr Selim) findings were made that the appellants had engaged in conduct constituting "inappropriate practice". The appeals are brought to this Court from the decisions of the Full Court of the Federal Court reported as Selim v Lele2. The Full Court (Black CJ, Finn and Lander JJ) dismissed an appeal by Dr Selim from the decision of Stone J3, and answered adversely to Dr Wong questions referred to the Full Court in a proceeding which had been instituted by him in this Court and remitted by order of Gleeson CJ to the Federal Court. The relief sought in this Court is in or to the effect of a declaration that: 1 Part VAA was amended by the Health Insurance Amendment (Professional Services Review) Act 1999 (Cth) and the Health Legislation Amendment Act (No 3) 1999 (Cth). Part VAA was further amended by the Health Insurance Amendment (Professional Services Review and Other Matters) Act 2002 (Cth) ("the 2002 Act"). This was after the institution of proceedings respecting the appellants and the Full Court applied Pt VAA as it stood before the 2002 Act: (2008) 167 FCR 61 at 63. (2008) 167 FCR 61. (2006) 150 FCR 83. "Sections 10, 20, 20A and [Pt] VAA (or any provision of [Pt] VAA) of [the Act] amount the meaning of [s] 51(xxiiiA) of the Constitution, and are outside the legislative powers of the Commonwealth and invalid." 'civil conscription' within Sections 10, 20 and 20A of the Act deal with entitlement to Medicare benefit, payment to the persons incurring the medical expenses in respect of professional service and assignment of Medicare benefit to the relevant practitioner. Section 51(xxiiiA) was added after a referendum conducted under s 128 of the Constitution on 28 September 1946 and reads: "the provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances". The Full Court decision Of the claims respecting the invalidity of ss 10, 20 and 20A of the Act, the Full Court concluded4 that these provisions do not compel a medical practitioner to render any professional service to any person. With respect to Pt VAA, the Full Court adopted the statement by Davies J "The Commonwealth's interest is to see that the services which are provided by a medical practitioner and for which a Commonwealth benefit is or may be claimed are services in respect of which the medical practitioner provides due care and skill, that a claim if made is brought under the correct item and that overservicing does not occur." The Full Court then concluded6: "To the extent that there is a practical compulsion for general practitioners to participate in the Medicare Scheme, what is compelled is not service of (2008) 167 FCR 61 at 80. (1997) 80 FCR 453 at 459. (2008) 167 FCR 61 at 80-81. the Commonwealth. Rather, it is that they conduct their practices with the care and skill that would be acceptable to the general body of practitioners. Such a condition is 'clearly necessary to the effective exercise of the power conferred by s 51(xxiiiA)'. The Act does not authorise civil conscription." The quotation in the third sentence is from the judgment of Gibbs J in General Practitioners Society v The Commonwealth7. As will become apparent later in these reasons, what was said by Gibbs J is not wholly satisfactory. With that caveat, and for the reasons that follow, the conclusions reached by the Full Court should be accepted and the appeals dismissed. Previous decisions In General Practitioners8 the Court rejected the submission by the plaintiffs9 that for "civil conscription" within the meaning of s 51(xxiiiA) of the Constitution: "[a]ll that is required is that an action which otherwise would not be done or might otherwise be done voluntarily is now required by federal law. No question of degree is involved. If there is any species or kind of conscription, the law is bad." On the other hand, the Court, whilst upholding the challenged provisions, did not wholly accept the submission for the Commonwealth10 that there is civil conscription only where the compulsion in the statute: "extends across the area of medical practice so as to render the service compelled a medical service of the Commonwealth". In the submissions by the Solicitor-General on the present appeals, the Commonwealth renewed and developed that submission. The Solicitor-General contended that, within the meaning of s 51(xxiiiA), "civil conscription" involves (a) some form of compulsion or coercion which is properly described as the rendering of service or the doing of work and (b) that work or service is for or at (1980) 145 CLR 532 at 557; [1980] HCA 30. (1980) 145 CLR 532. (1980) 145 CLR 532 at 535. 10 (1980) 145 CLR 532 at 536. the direction of the Commonwealth; the challenged legislation did not satisfy requirement (a) and there was no form of civil conscription. Upon a stated case, the Full Court in General Practitioners answered "No" to questions challenging the validity of ss 16A, 16B and 16C of the Act and of certain regulations. Various obligations were placed upon persons wishing to become and remain approved pathology practitioners; the payment of medical benefits was contingent upon the provision of services by approved pathology practitioners. A distinction was drawn in General Practitioners between regulation of the manner in which some of the incidents of the practices of medical practitioners were carried out and the compulsion, legal or practical, to carry on that practice and provide the services in question. The laws under challenge were held to be of the former character and thus were valid. The distinction was treated by Gibbs J11 as supported by what had been said by Dixon J in his dissenting judgment in British Medical Association v The Commonwealth12, respecting the permissible regulation of financial and administrative incidents of medical or dental practice. However, to fix upon a notion of reasonable regulation, with its resonances of judicial exegesis of s 92 of the Constitution13, manifests an inadequate appreciation of the reasoning of Dixon J in the BMA Case. His Honour said that inherent in the notion conveyed by the words "any form of civil conscription" was "compulsion to serve"14. The service so compelled might be "irregular or intermittent", so that a duty to give medical attention to hospital outpatients for two hours once a fortnight "would no doubt be a form of civil conscription"15. Nor, in Dixon J's view, was it necessary that the proscribed law involve the relationship of employer and employee; a law requiring a medical practitioner to perform medical services for patients at the practitioner's own rooms would involve a form of civil conscription16. 11 (1980) 145 CLR 532 at 558. Stephen J (at 563), Mason J (at 564), Murphy J (at 565) and Wilson J (at 571-572) agreed with Gibbs J in this respect. 12 (1949) 79 CLR 201 at 278; [1949] HCA 44. 13 Betfair Pty Ltd v Western Australia (2008) 82 ALJR 600 at 618-621 [85]-[105]; 244 ALR 32 at 56-60; [2008] HCA 11. 14 (1949) 79 CLR 201 at 278. 15 (1949) 79 CLR 201 at 278. 16 (1949) 79 CLR 201 at 278. But, to Dixon J, compulsion to serve medically or to render medical services was one thing, and a law stipulating the manner in which an incident of medical practice was carried out, was another. Those incidents included financial and administrative matters, and s 7A was a law of this character. It did not compel a form of civil conscription because17: "There is no compulsion to serve as a medical man, to attend patients, to render medical services to patients, or to act in any other medical capacity, whether regularly or occasionally, over a period of time, however short, or intermittently." A provision numbered s 7A was inserted in the Pharmaceutical Benefits Act 1947 (Cth) by the Pharmaceutical Benefits Act 1949 (Cth)18, then repealed by the Pharmaceutical Benefits Act (No 2) 1949 (Cth)19 which introduced s 7A in the form successfully challenged in the BMA Case. In that case, Williams J said of the statute as enacted in 1947 that it20: "did not seek to compel medical practitioners to write prescriptions on Commonwealth forms. They were supplied with copies of the formulary and with forms and requested to use the forms when a pharmaceutical benefit was prescribed." His Honour continued21: "We were told by the Attorney-General that the government believed that medical practitioners would co-operate voluntarily and that it would not be necessary to use compulsion. It may have been thought that patients would exercise a practical compulsion by urging practitioners to use the forms so that they might become entitled to receive the pharmaceutical benefits. But neither event happened and s 7A was inserted in the principal Act by Acts Nos 8 and 26 of 1949 to make the use of the Commonwealth forms compulsory." 17 (1949) 79 CLR 201 at 278. 18 Act 8 of 1949. 19 Act 26 of 1949. 20 (1949) 79 CLR 201 at 288. 21 (1949) 79 CLR 201 at 288-289. In the BMA Case, the majority decision (Latham CJ, Rich, Williams and Webb JJ; Dixon and McTiernan JJ dissenting) was that s 7A was invalid as authorising a form of civil conscription of medical services. The section, however, required use of a statutory form for the writing of any prescription, whether or not the medicines were to be obtained free by the patient under the Commonwealth scheme. Thus there was no necessary connection with the head legislative power in s 51(xxiiiA) of the Constitution. The result in the BMA Case was rationalised by Barwick CJ and by Gibbs J on that basis in their reasons in General Practitioners22. (The question whether, upon that understanding of the earlier case, s 7A was to be read down, and with what consequences, was not explored by their Honours in General Practitioners.) The argument of the plaintiffs in General Practitioners, described above, was derived from a wider reading of the BMA Case than that which was to be accepted in General Practitioners. Gibbs J expressed his conclusion in terms reflecting the reasoning of Dixon J in the BMA Case, saying23: "The provisions in question in these proceedings do compel medical practitioners to perform certain duties in the course of carrying out their medical practices, but they do not go beyond regulating the manner in which some of the incidents of those practices are carried out, and they do not compel any medical practitioner to perform any medical services. Most of the duties imposed relate only to things done incidentally in the course of practice, rather than to a medical service itself." There was some debate in General Practitioners as to whether "practical compulsion" as distinct from "legal compulsion" would satisfy the constitutional conception of "civil conscription". Mason J and Wilson J24 reserved their position. However, in argument on the present appeals, the Commonwealth accepted that "practical compulsion" would suffice. Constitutional interpretation As demonstrated by the arguments submitted on the present appeals to this Court, there remains some uncertainty respecting the phrase "(but not so as to authorize any form of civil conscription)". Each side sought to turn this to its 22 (1980) 145 CLR 532 at 537, 558-559 respectively. 23 (1980) 145 CLR 532 at 559-560. 24 (1980) 145 CLR 532 at 564, 571-572 respectively. advantage. However, both approached the issue of constitutional interpretation in a manner which differs from that in the two previous cases. These were decided in 1949 and 1980 respectively, at a time when the doctrine of the Court took a limited view of the use of extrinsic materials in the interpretation of the Constitution, including interpretation of provisions added to the Constitution under the alteration procedures of s 128. The present parties, encouraged by Cole v Whitfield25 and Betfair Pty Ltd v Western Australia26, relied upon matters of legislative history to assist the interpretation of s 51(xxiiiA). The issues which arise in the pursuit of that endeavour illustrate the the proposition that diverse and complex questions of construction of Constitution are not answered by adoption and application of any particular, all-embracing and revelatory theory or doctrine27. The character of s 51(xxiiiA) as a product of the machinery prescribed by s 128 for the alteration of the Constitution gives a particular character to matters of legislative history. Sir William Harrison Moore saw in s 128 a recognition of three principles: those of Parliamentary government, of democracy and of federalism28. The requirement that the genesis of change be a proposed law for the alteration of the Constitution and that this be placed before each legislative chamber directs attention to the considerations which animated the executive and legislative branches of government. Section 128 goes on to provide that the vote upon a proposed law submitted to the electors "shall be taken in such manner as the Parliament prescribes". The Parliament acted accordingly in 1906, enacting the Referendum (Constitution Alteration) Act 1906 (Cth) ("the Referendum Act"). Section 6A, first introduced in 191229, was designed to enable electors to be informed of "the 25 (1988) 165 CLR 360; [1988] HCA 18. 26 (2008) 82 ALJR 600; 244 ALR 32. 27 See SGH Ltd v Federal Commissioner of Taxation (2002) 210 CLR 51 "Theories of Constitutional [2002] HCA 18; Heydon, Interpretation: a Taxonomy", Bar News (Winter 2007) 12 at 26-27. 28 The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 599. 29 By s 2 of the Referendum (Constitution Alteration) Act [No 2] 1912 (Cth). plain facts of the case, as set forth by each side"30. Mr W M Hughes, the Attorney-General, went on31: "Quite a number of measures, admirable in themselves, have been rejected by the Swiss people; and to a large extent this has been due to the lack of precise information at the disposal of the elector. In America, the referendum and initiative have been grafted on to the Constitution in several States, and many of them have adopted this method of approaching the elector." The procedures mandated by the Constitution for the adoption of s 51(xxiiiA) in 1946 invite particular attention to the matters of history and usage to which reference was made in the submissions in these appeals. No doubt those matters cannot be and are not determinative of the construction and interpretation of the addition made to s 51. But their importance is supported by the lack of any clear meaning apparent on the face of the text of the expression "any form of civil conscription". In their reasons in the BMA Case, Rich J said of the phrase "civil conscription" that it was "somewhat of a novelty", Williams J said it had "no ordinary meaning in the English language", and Webb J said that he could not remember seeing or hearing it until he saw it in the proposed law for the 1946 referendum32. Later, in the course of his reasons in General Practitioners, Aickin J remarked33: "'Civil conscription' is not a technical expression with a settled historical meaning. It is no doubt used by way of analogy to military conscription but the use of the words 'any form of civil conscription' indicates to my mind an intention to give the term a wide rather than a narrow meaning, the precise extent of which cannot be determined in advance." Those remarks repay study and invite comment. 30 Australia, House of Representatives, Parliamentary Debates (Hansard), 16 December 1912 at 7153. 31 Australia, House of Representatives, Parliamentary Debates (Hansard), 16 December 1912 at 7154. 32 (1949) 79 CLR 201 at 255 per Rich J, 287 per Williams J, 292 per Webb J. 33 (1980) 145 CLR 532 at 571. Conscription – The Australian setting In this country, the subject of military conscription, especially for service beyond the limits of the Commonwealth, is associated with highly controversial political and social divisions during World War I. The Military Service Referendum Act 1916 (Cth) had authorised a plebiscite, conducted on 28 October 1916, posing the question "Are you in favour of the Government having, in this grave emergency, the same compulsory powers over citizens in regard to requiring their military service, for the term of this War, outside the Commonwealth, as it now has in regard to military service within the Commonwealth?". Compulsory military service within the Commonwealth was provided for in Pt IV (ss 59-61A) of the Defence Act 1903 (Cth). The distinction between the military service within and beyond Commonwealth, which was critical to the controversies during World War I, has a general significance. It shows that the place at which service is required may be an aspect of a form of conscription. the geographical limits of The conduct of the 1916 plebiscite, called a "referendum", was controlled by provisions of the Referendum Act which were applied (by s 7) as if the prescribed question were a proposed law to which s 128 of the Constitution applied. The Referendum Act included the compulsory voting provisions introduced by the Compulsory Voting Act 1915 (Cth)34. The War Precautions (Military Service Referendum) Regulations35 made under the War Precautions Act 1914 (Cth) provided for a second plebiscite, to be conducted on 20 December 1917, where the question was "Are you in favour of the proposal of the Commonwealth Government for reinforcing the Australian Imperial Force oversea?". Both plebiscites, which were popularly understood as turning upon "conscription", failed to carry36. Whilst it may be true to say that the phrase "civil conscription" lacked a settled meaning at the time of the amendment of the Constitution in 1946, the related expression "industrial conscription" had at that time played a considerable 34 Repealed by the Statute Law Revision Act 1934 (Cth). 35 Statutory Rules 1917, No 290. 36 Sawer, Australian Federal Politics and Law 1901-1929, (1956) at 135-136, part in political discourse. In the United Kingdom the Emergency Powers Act 1920 (UK), while providing for the proclamation of an emergency and the making of regulations, had stated (s 2(1)): "Provided that nothing in this Act shall be construed to authorise the making of any regulations imposing any form of compulsory military service or industrial conscription". Shortly thereafter in Australia the Public Safety Preservation Act 1923 (Vic) ("the 1923 Act") had included s 7 which stated: "Nothing in this Act shall be construed to authorize the making of any regulations imposing any form of industrial conscription." Also at the State level, the National Emergency Act 1941 (NSW), which received the Royal Assent on 20 March 194137, contained a provision following that in the 1923 Act. Section 3 authorised the making of raid precaution schemes for the protection of persons or property in the event of "any warlike attack". However, s 8(2) preserved the operation of industrial awards and agreements, and s 8(1) dealt with the avoidance of "industrial conscription" in the same terms as s 7 of the 1923 Act. Section 5 of the National Security Act 1939 (Cth) ("the 1939 Act") conferred in broad terms a power for the making of regulations. However, s 5(7) provided that nothing in the section authorised: the imposition of any form of compulsory naval, military or air-force service, or any form of industrial conscription, or the extension of any existing obligation to render compulsory naval, military or air-force service". (emphasis added) The National Security Act 1940 (Cth) ("the 1940 Act") amended the 1939 Act by inserting s 13A, as follows: anything contained "Notwithstanding the Governor-General may make such regulations making provision for requiring persons to place themselves, their services and their property at the disposal of the Commonwealth, as appear to him to be necessary or expedient the Commonwealth and the Territories of the Commonwealth, or the efficient prosecution of any war in which His Majesty is or may be engaged: the public safety, the defence of for securing this Act, 37 Repealed by the Statute Law Revision Act 1976 (NSW), Sched 1. Provided that nothing in this section shall authorize the imposition of any form of compulsory service beyond the limits of Australia." (emphasis added) (Thereafter provision was made by the Defence (Citizen Military Forces) Act 1943 (Cth) for compulsory military service in "the South-Western Pacific Zone" and in Polites v The Commonwealth38 this system was held validly to apply to conscripted aliens.) Regulation 15(1) of the National Security (Man Power) Regulations39 ("the Man Power Regulations") was made in 1943 in reliance upon s 13A and stated: "The Director-General [of Man Power] may direct any person resident in Australia to engage in employment under the direction and control of the employer specified in the direction, or to perform work or services (whether for a specified employer or not) specified in the direction." Section 13A was substantially in the form of s 1 of the Emergency Powers (Defence) Act 1940 (UK) and reg 15 was in substantially the same form as reg 58A of the Defence (General) Regulations made on 22 May 1940 under the United Kingdom legislation40. In the Second Reading Speech on the Bill for the 1940 Act, the Prime Minister (Mr R G Menzies) had said of the proposed s 13A41: "It takes power to control persons in relation to themselves so that they, for example, may be taken and trained to prepare for the defence of Australia. It takes power over their services so that they may be, notwithstanding any limitation contained in the original act, directed as to what services they are to perform and where they are to perform them. That applies all round." 38 (1945) 70 CLR 60; [1945] HCA 3. 39 Statutory Rules 1943, No 23. 40 See the argument of Fullagar KC in Reid v Sinderberry (1944) 68 CLR 504 at 505; [1944] HCA 15. 41 Australia, House of Representatives, Parliamentary Debates (Hansard), 20 June On 8 June 1944, in Reid v Sinderberry42, this Court allowed an appeal from the Full Court of the New South Wales Supreme Court43. On 25 May 1944 the Full Court had held that upon its construction s 13A of the 1939 Act did not authorise the making of reg 15 of the Man Power Regulations. Jordan CJ had said that "read according to [its] natural construction [reg 15] would, if valid, reduce the population of Australia to a state of serfdom more abject than any which obtained in the Middle Ages"44. That reasoning was rejected by this Court. In the course of upholding the validity of reg 15, Latham CJ and McTiernan J45 remarked that notwithstanding the provision in s 5(7) of the 1939 Act that nothing in the regulation making power was to authorise the imposition of "any form of industrial conscription", it was clear that reg 15 imposed a "very wide form of industrial conscription". However, the opening words of s 13A, introduced by the 1940 Act, made it clear that its operation was not limited by any reference to the terms of s 5(7) as it had been enacted in the 1939 Act. The present appellants emphasise that the treatment by this Court in Reid of reg 15 as imposing a form of industrial conscription, was in respect of a provision which required work to be performed not under the control of the Commonwealth, but at the direction of a specified employer. With effect 4 April 1944, reg 15AA was added46 to the Man Power Regulations. This empowered the Director-General, among other matters, to order that a particular person or those in a class of persons, without consent, neither cease to carry on or practise their "trade, profession or calling" at any particular place, nor commence to do so at some other place, whether on his own account or as an employee. This provision extended the system of conscription beyond the trades, to professions. It also directed the place at which these activities were to be conducted. On 19 August 1944 a proposed law47 to amend the Constitution by inserting after Ch I a chapter to be headed "Chapter IA – Temporary Provisions" 42 (1944) 68 CLR 504. 43 Ex parte Sinderberry; Re Reid (1944) 44 SR (NSW) 263. 44 (1944) 44 SR (NSW) 263 at 266. 45 (1944) 68 CLR 504 at 509. 46 Statutory Rules 1944, No 61. 47 Cited as Constitution Alteration (Post-war Reconstruction and Democratic Rights) 1944 (Cth). was placed before the electors. This new chapter was to comprise s 60A which would empower the Parliament, subject to the Constitution, to make laws for the peace, order and good government of the Commonwealth with respect to 14 subject matters listed as pars (i)-(xiv) of s 60A(1). Paragraph (ii) of s 60A(1) would read "employment and unemployment". The proposed s 60A(5) provided for s 60A to cease to have effect and for any laws then current to cease to have effect at the expiration of a period of five years from the cessation of hostilities in the then present war. The referendum was not approved by the majorities of electors required by s 128 of the Constitution. In both the "YES" and "NO" cases distributed pursuant to s 6A of the Referendum Act, there was discussion of the prospect that the proposed legislative power with respect to "employment and unemployment" would authorise laws providing for industrial conscription during the present war and in the five year period after the end of hostilities. The "NO" case said of what it called "the Government's 'Brains Trust'": "It is all very simple as they explain it. All you have to do is to give up your right to choose your own way of living and take orders to go to the job selected for you (that is, accept industrial conscription) and the industries which are to give you your livelihood will be re-organized by men who, for the most part, have never had to organize or control a successful pie-stall!" The 1946 referendum The Pharmaceutical Benefits Act 1944 (Cth) had provided for the supply by chemists without charge to the public of certain medicines prescribed by medical practitioners, had appropriated money to pay the chemists for those medicines and had imposed obligations upon medical practitioners and chemists in relation to the prescription and supply of the medicines. On 19 November 1945 this Court held in Attorney-General (Vict) v The Commonwealth48 that the legislation was not authorised under the power of appropriation found in s 81 of the Constitution or by the incidental power conferred by s 51(xxxix). It followed that the statute was invalid. Thereafter at a referendum conducted on 28 September 1946 the majorities of electors required by s 128 of the Constitution approved a proposed law to alter s 51 of the Constitution by inserting par (xxiiiA). 48 (1945) 71 CLR 237; [1945] HCA 30. The Attorney-General for Victoria sued at the relation of the president, vice-president and honorary secretary of the Medical Society of Victoria: (1945) 71 CLR 237 at 237-238. The "YES" case for the proposed law under the heading "No question of socializing medical and dental services" stated: "You will not be voting for any particular method of providing medical and dental services. Whether or not they are to be provided, and if so how, will both be matters for your representatives in Parliament from time to time to decide, in accordance with your wishes. At least once in every three years, you can change your representatives if you do not approve their actions. But there is one thing the Parliament will not be able to do. It will not be able to bring in any form of civil conscription. That, you will see if you refer to the heading in black type, is expressly safeguarded in the new power itself. This means that doctors and dentists cannot be forced to become professional officers of the Commonwealth under a scheme of medical and dental services." Under the heading "This referendum not a political matter", the "YES" case said: "There is no Party question at all. The idea that doctors and dentists might be conscripted was the only real objection of the Opposition parties in Parliament. The Government has set that doubt at rest by agreeing to the insertion of a clause in the power itself that there shall be no conscription. After that, only three out of all the members of the Federal Parliament voted against the Social Services Bill – Mr A Cameron (South Australia) in the House of Representatives and Senators Mattner and McLachlan (both of South Australia) in the Senate. These three are the only persons in Australia authorized to present a Case for 'No' in this pamphlet on this question." Under the heading "Three reasons for voting 'NO'", the "NO" case stated: "The following are three important reasons why you should vote 'NO' to No 1 proposal, against the powers to provide specified social services:- Because through them the Commonwealth can gain further far-reaching controls over your daily lives; Because they will enable the States to be ousted from their present role of providing additional social services; and Because they are one step further towards the centralization of all controls and powers in Canberra." The proposed law had taken the form in which it was submitted to the electors after detailed consideration in the Parliament. On 27 March 1946 the Attorney-General and Minister for External Affairs, Dr H V Evatt, moved the second reading of the Constitution Alteration (Social Services) Bill 1946. He said49: "The object of this bill is to alter the Constitution so that this Parliament can continue to provide directly for promoting social security in Australia. This is in no sense a party measure. Ever since federation, it has been assumed by successive governments and parliaments that the National Parliament could spend for any all-Australian purpose the money that it raises. In 1944, I warned the House and the country that, under the Constitution as it stands, the legal foundations for even the most urgent modern social service legislation were doubtful and insecure. The High Court's decision last year in the pharmaceutical benefits case has shown that these doubts were only too well founded. The object of this bill is to place Australian social service legislation on a sound legal footing." Mr Percy Spender, a member of the Opposition, asked whether50: "the power to legislate in respect of medical and dental services, if granted, enable the Parliament to nationalize those services". Dr Evatt responded: "We might discuss that in some detail at a later stage." Upon the resumption on 3 April 1946 of the debate on the second reading, the Leader of the Opposition (Mr R G Menzies) referred to Mr Spender's question and to what, he said, was the inadequate response of the Attorney-General51. Mr Menzies referred to the decision delivered on 14 December 1945 in Australian National Airways Pty Ltd v The Commonwealth52. This established that the Parliament was authorised by s 51(i) of the Constitution to create a body 49 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 50 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 51 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 April 52 (1945) 71 CLR 29; [1945] HCA 41. corporate with power to conduct inter-State services for the transport by air of passengers and goods for reward. Mr Menzies continued53: "In those circumstances, very little doubt exists that not only the words of the proposed amendment but also the decision of the High Court will mean that under those words, the medical and dental professions could be nationalized by making all doctors and dentists members of one government service which had a monopoly of medical and dental treatment. In that sense, this power includes a power to nationalize medicine and dentistry." In the course of the resumed debate on 9 April 1946, Mr Haylen blamed the failure of the 1944 referendum upon the effectiveness of the "lie" which had been circulated in the newspapers "that a 'Yes' vote would be a vote for industrial conscription"54. In further debate, on 10 April 1946, Mr Menzies moved that the proposed new par (xxiiiA) include after the word "services" the words "(but not so as to authorize any form of civil conscription)". Mr Menzies said that he had borrowed the form of words from that appearing in another measure then before the Parliament, the Constitution Alteration (Industrial Employment) Bill, in which the proposed additional head of legislative power was "Terms and conditions of employment in industry but not so as to authorize any form of industrial conscription"55. (That measure was to be submitted at a referendum also to be conducted on 28 September 1946; it failed to carry.) Mr Menzies remarked of the medical and dental professions56: "their members are entitled to be protected against conscription just as are industrial workers under the bill I have mentioned. This is a perfectly fair proposition: If industrial workers are to be put beyond the danger of industrial conscription, then what is good for them should be good for professional workers also." 53 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 April 54 Australia, House of Representatives, Parliamentary Debates (Hansard), 9 April 55 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April 56 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April Dr Evatt had been on notice of the amendment and forthwith accepted it. He had available to him a written advice dated 9 April 1946 from the Solicitor-General, Sir George Knowles57, and two officers of the Attorney-General's Department58. The advice was headed "Amendment to be moved by Mr Menzies". The document stated: "The meaning assigned by the Oxford Dictionary to the word 'conscription' is inter alia the compulsory enlistment of men for military service – more generally, enrolment or enlistment. In view of the meaning assigned to 'conscription' in the Oxford Dictionary it is of the essence of conscription that there must be some form of compulsory enlistment or enrolment of the conscript. The question arises whether, if the amendment is agreed to, the Commonwealth would be precluded from passing any legislation which would have the effect of preventing medical practitioners, registered under State law, from refusing to treat patients who are entitled to benefits provided under Commonwealth legislation." The authors concluded: "In our view the Commonwealth would, under the power proposed to be taken, as proposed to be amended by Mr Menzies, have ample authority to require practising doctors or dentists to treat patients entitled to medical or dental benefits under Commonwealth legislation passed in pursuance of the power. The only kind of legislation which the amendment would preclude would be such as compelled doctors or dentists in effect to become servants of the Commonwealth, or to have the whole of their professional activities controlled by Commonwealth direction." (emphasis added) The Constitution Alteration (Social Services) Bill 1946 came into effect on 19 December after the passage of the referendum and the giving of the Royal Assent. It may be noted that the 1939 Act was then still in force. That statute and all remaining regulations thereunder ceased to have effect only on 31 December 194659. The Man Power Regulations had been repealed with effect 57 Solicitor-General 1932-1946. 58 M Boniwell and C K Comans. 59 By operation of s 2 of the National Security Act 1946 (Cth). 1 May 194660, and so had remained in force during the Parliamentary debates in March and April 1946. The utility of the extrinsic materials These materials and the events described above assist in an understanding of what was conveyed by the phrase "any form of civil conscription" at the time of the introduction of s 51(xxiiiA) under the procedures of s 128 of the Constitution61. The phrase had been used, consistently with the submissions now made by the Solicitor-General, to identify the compulsory provision of service or doing of work for the Commonwealth, or for a third party as directed by the Commonwealth. The later legislation challenged in this Court has not sought to deny to medical practitioners the power to refuse to treat patients entitled to benefits under the legislation. The occasion thus far has not been presented to test the gravamen of the advice provided to the Attorney-General on 9 April 1946 and upon which he appears to have relied in accepting the amendment moved by Mr Menzies. What can be taken from the extrinsic materials is the notion of compulsion to serve. This may fix upon the place of provision of the service, the identity of the recipient of the service and the occasions for its provision, but need not compel the creation of a status of servant of the Commonwealth. This notion is reflected in the reasoning of Dixon J in the BMA Case. In their submissions to this Court the appellants rely upon the advice to the Attorney-General of 9 April 1946 as indicative of the scope of the reservation contained in s 51(xxiiiA). In particular, the appellants emphasise the phrase "to have the whole of their professional activities controlled by Commonwealth direction", and submit that Pt VAA deals so extensively with the conduct of practitioners as to cover "everything that the doctor might do". Part VAA In its application to the appellants, par (a) of s 82(1) provides: 60 National Security (Regulations Repeal) Regulations (No 7). Statutory Rules 1946, 61 See Cole v Whitfield (1988) 165 CLR 360 at 385. "(1) A practitioner engages in inappropriate practice if the practitioner's conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that: if the practitioner rendered or initiated the referred services the conduct would be as a general practitioner – unacceptable to the general body of general practitioners". The "Committee" is a Professional Services Review Committee set up under s 93; it must comprise a Deputy Director of Professional Services Review (appointed under s 85 after consultation between the Minister and the Australian Medical Association Limited) and at least two other Panel members who are general practitioners (s 95(5)). There are a number of such Committees. The first respondents in the Selim appeal constitute Professional Services Review Committee No 309. In determining the question posed by s 82(1) regard must be had, as well as to other relevant matters, to "whether or not the practitioner kept adequate and contemporaneous records of the rendering or initiation of the services" (s 82(3)). The term "service" relevantly means a service for which Medicare benefit was payable (s 81). Entitlement to payment of Medicare benefit, where medical expenses are incurred in respect of a professional service, is conferred by s 10 of the Act. The benefit in respect of a service is, in general, an amount equal to 75 percent of the Schedule fee (s 10(2)). Speaking of the introduction of Pt VAA by the 1994 Act, in Pradhan v "Previously the mechanism employed to protect public revenues was by policing 'excessive servicing' by a practitioner. The change to concern with 'inappropriate practice' was remarked on in the Second Reading Speech on the 1993 amending bill in the following terms63: 'A significant change in the bill is the replacement of the concept of excessive servicing with one of inappropriate practice. Whereas excessive servicing is currently defined as the rendering or initiation of services not reasonably necessary for the adequate care of the patient, the concept of inappropriate practice goes further. It covers a practitioner engaging in conduct in connection 62 (2001) 125 FCR 280 at 282. 63 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 September 1993 at 1551. Conclusions with the rendering or initiating of services that is unacceptable to his or her professional colleagues generally.'" The legislative history and the genesis of s 51(xxiiiA) supports a construction of the phrase "(but not so as to authorize any form of civil conscription)" which treats "civil conscription" as involving some form of compulsion or coercion, in a legal or practical sense, to carry out work or provide services; the work or services may be for the Commonwealth itself or a statutory body which is created by the Parliament for purposes of the Commonwealth64; it also may be for the benefit of third parties, if at the direction of the Commonwealth. An issue whether legislation otherwise supported by s 51(xxiiiA) authorises a form of civil conscription may only be decided with close attention to the legislative scheme in question, in particular, to those aspects which are under challenge. The appellants contest the validity of certain provisions of the Act. The Act, and delegated legislation supported by it, provides a regime with a wide and diverse operation and many norms of conduct. To refuse the relief sought by the appellants indicates no view as to the validity or invalidity of other aspects of the legislation which may be the subject of other challenges yet unformulated. The reservation in the advice of 9 April 1946 respecting the control by Commonwealth direction of the professional activities calls for further consideration. Contrary to what was said there, something less than control of "the whole" of those activities may, if the necessary legislative compulsion or coercion be present, amount to a "form of civil conscription". Does Pt VAA provide an example? The appellants complain of s 82(3) to which reference has been made above. The sub-section states: "A Committee must, in determining whether a practitioner's conduct in connection with rendering or initiating services was inappropriate practice, have regard to (as well as to other relevant matters) whether or not the practitioner kept adequate and contemporaneous records of the rendering or initiation of the services." 64 cf Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334; [1969] HCA 44. The keeping of adequate and contemporaneous records of the rendering or the initiation of services provided by the practitioner is, as the place of s 82(3) within the definition of "inappropriate practice" indicates, apt to assist the Committees in reaching their reasonable conclusions as to unacceptable conduct for s 82(1). The statutory criterion of conduct unacceptable to the general body of general practitioners, of which the appellants also complain, is an adaptation for the operation of the Act of principles of professional responsibility developed in the second half of the 19th century. The phrase "infamous conduct in any professional respect" found in s 29 of the Medical Act 1858 (UK)65 and memorably construed in Allinson v General Council of Medical Education and Registration66 with use of the phrase "disgraceful or dishonourable", has been seen since as not necessarily requiring an appeal to a moral standard67. The essential question in such cases is whether "the practitioner was in such breach of the written or unwritten rules of the profession as would reasonably incur the strong reprobation of professional brethren of good repute and competence"68. The rendering of services not reasonably necessary for the care of the patient may be dubbed "overservicing", but may also attract the reprobation just described. A legislative scheme for the provision of medical services supported by appropriation of the Consolidated Revenue Fund established under s 81 of the Constitution, by requiring the professional activities of medical practitioners to conform to the norms derived from Allinson, does not conscript them. Those norms are calculated to ensure that the activities be professional rather than unprofessional in character. The formation of an opinion in the course of the performance of functions or the exercise of power under Pt VAA that the conduct of the person under review has caused, is causing, or is likely to cause "a significant threat to the life or health of any other person" leads to a reference under s 106XA to the appropriate regulatory body in the State or Territory in which the practitioner 65 21 & 22 Vict c 90. 66 [1894] 1 QB 750 at 760-761. See also A Solicitor v Council of Law Society (NSW) (2004) 216 CLR 253 at 264-265 [13]; [2004] HCA 1. 67 Epstein v The Medical Board of Victoria [1945] VLR 309 at 310; Ex parte Meehan; Re Medical Practitioners Act [1965] NSWR 30 at 36. 68 Qidwai v Brown [1984] 1 NSWLR 100 at 105; Pillai v Messiter [No 2] (1989) 16 NSWLR 197 at 199-200, 208; cf Hoile v The Medical Board of South Australia (1960) 104 CLR 157 at 162-163; [1960] HCA 30. practises; provision is made under s 106XB for reference to the appropriate regulatory body where the opinion formed is that there has been a failure "to comply with professional standards". The presence of these further provisions in Pt VAA does not give it the character of a law which authorises a form of civil conscription. There remains the alleged invalidity of ss 10, 20 and 20A of the Act. There was said to be a form of practical compulsion applied by these provisions to practitioners such as the appellants. The practical compulsion was said to be to participate in the Medicare scheme. Three matters were emphasised by the appellants. First, the medical practitioner must be prepared to accept that at least part of the fee may not be paid by the patient and rely upon payment by the Health Insurance Commission of an amount equal to that of the Medicare benefit (s 20(3)). Secondly, the medical practitioner may, as a practical matter, be left to rely for payment upon an assignment under s 20A of the Medicare benefit in respect of a service rendered to an eligible person. Thirdly, s 19(6) denies payment of a Medicare benefit where there has been a failure to record prescribed details (including particulars of the item number) of the service provided. These provisions condition the enjoyment of membership of the scheme established by the Act. They do not amount to practical compulsion to perform a professional service. The Full Court was correct in the conclusion expressed as follows69: "Those sections assume that a medical practitioner has rendered a professional service to an eligible person and has rendered a fee for that service, and provides a scheme whereby either the eligible person, if he or she has paid that fee, becomes entitled to a Medicare benefit or, if the eligible person has not paid that fee, the medical practitioner becomes entitled to the Medicare benefit. Those sections provide for the payment of a medical practitioner's fee for a professional service when that professional service has been rendered in response to an eligible person's request." Orders Each appeal should be dismissed. In Wong, the appellant should pay the costs of the first respondent. In Selim, the appellant should pay the costs of the first, third and fourth respondents. 69 (2008) 167 FCR 61 at 80. Kirby KIRBY J. Dr Chee Kan Kenneth Wong and Dr Ashraf Thabit Selim ("the appellants") challenge orders of the Full Court of the Federal Court of Australia70. That Court by those orders (in consolidated proceedings) dismissed an appeal by Dr Selim from orders of a single judge (Stone J)71 and decided a reference to the Federal Court from this Court of like questions adversely to Dr Wong72. By the time special leave was granted, the constitutional questions which the appellants sought to agitate against the validity of the Professional Services Review ("PSR") scheme established by Pt VAA of the Health Insurance Act 1973 (Cth) ("the Act") were confined to the decision that the PSR scheme did not offend the prohibition on "civil conscription" contained in the grant of power to the Federal Parliament in s 51(xxiiiA) of the Constitution. Section 51(xxiiiA) allows the Parliament to make laws with respect to: "the provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances". The head of power itself was inserted by the Constitution Alteration (Social Services) 1946 (Cth) which was approved by the electors in a referendum conducted on 28 September 1946 in accordance with s 128 of the Constitution. Exceptionally, that referendum was carried nationally and in all six States73. Other issues agitated in the Federal Court were not maintained in this Court74. In deriving the meaning of the restriction on legislative power effected by the prohibition on measures amounting to "any form of civil conscription", the joint reasons in the Full Court of the Federal Court recognised that a preliminary question arose as to the approach to be taken to the interpretation of s 51(xxiiiA). 70 Selim v Lele (2008) 167 FCR 61. 71 Selim v Lele (2006) 150 FCR 83. 72 Dimian v The Commonwealth [2006] HCATrans 565. 73 The overall total vote in favour of the amendment was 51.59% of the electors, with 43.27% against and 5.14% informal. See Blackshield and Williams, Australian Constitutional Law and Theory, 4th ed (2006) at 1449. 74 Notably the challenge to the validity of s 106U of the Act on the ground that it purported to confer part of the judicial power of the Commonwealth on persons not appointed to office pursuant to s 72 of the Constitution. See (2008) 167 FCR 61 at Kirby They asked whether the paragraph should be "approached from the viewpoint of a committed originalist or from that of one who accepts that the Constitution is a 'living instrument', to be interpreted in light of the fact that its legitimacy stems from its 'original adoption (by referenda) and subsequent maintenance (by acquiescence) of its provisions by the people'"75. This was an important observation. It lies at the heart of the different approach that I take to the constitutional question presented by these appeals. In past authority this Court has accepted that, in resolving disputed questions concerning the meaning of the Constitution76 (and specifically in deriving the meaning of provisions adopted following amendments made under s 12877), it is legitimate for the decision-maker to consider, and give weight to, historical materials as they throw light on the resolution of such problems78. Nevertheless, such historical materials do not control the meaning of the constitutional language. Identifying that meaning is a task of legal analysis, not of historical research. In this case the reasons of other members of this Court (both in the language chosen79 and in their approach and emphasis80) might be read as suggesting otherwise. It is for this reason that I write separately. I could not agree to an interpretation of s 51(xxiiiA) that treated the history surrounding the adoption of that paragraph as determinative of the meaning of the provision as it operates today. Not only would this be contrary to the general view I hold as to the proper approach to deriving constitutional meaning (and the approach ordinarily taken by this Court). It would also risk accepting a view of the paragraph that would be unjust to the appellants and to other persons whose interests are protected by the constitutional prohibition against laws that "authorize any form of civil conscription". That notion is one that necessarily changes and adapts to different times and circumstances. 75 (2008) 167 FCR 61 at 66 [17] applying Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 171; [1994] HCA 46. 76 Cole v Whitfield (1988) 165 CLR 360 at 385; [1988] HCA 18. 77 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 361-362 [27]-[30] per Gaudron J, 382-383 [92]-[94] per Gummow and Hayne JJ, 407-408 [145]-[146] of my own reasons; [1998] HCA 22. 78 Reasons of Heydon J at [262]-[263]. 79 Reasons of French CJ and Gummow J at [52]; cf reasons of Hayne, Crennan and 80 Reasons of French CJ and Gummow J dealing with the history of the 1946 referendum at [43]-[55]; see also reasons of Hayne, Crennan and Kiefel JJ at [174]- Kirby When the proper approach to deriving the meaning of s 51(xxiiiA) is adopted (including by appropriate but limited use of the historical record explaining what was in the minds of the legislators and the electors when the paragraph was added to the Constitution), the same result is reached as is stated in other reasons. Substantially, I agree in the analysis of Hayne, Crennan and Kiefel JJ. The provisions of the Act, as challenged in this Court, do not offend the prohibition on enacting "any form of civil conscription". The Full Court was correct to so decide. The appeals to this Court should be dismissed. The proceedings The agreed facts: Many of the background facts necessary to decide the constitutional issue raised by the appeals are stated in the reasons of other members of this Court81. However, because the Constitution (like other written laws) operates in the real world, it is useful, in approaching its meaning, to have an idea of the actual circumstances that call forth the remaining issue for decision. Such circumstances were before the Full Court of the Federal Court and they are expressed in its reasons82. Although largely derived from the case of Dr Selim, they were contained in facts that were agreed for the purpose of both proceedings in that Court. It is therefore convenient, as other reasons do, to treat the facts in Dr Selim's case as indicative of the circumstances giving rise to the common constitutional objection of the appellants83. Adding a few facts to the bare bones of the disembodied constitutional submissions which they advance helps us to understand better the force of their argument that they have been subjected to at least a "form" of "civil conscription", contrary to the prohibition contained in s 51(xxiiiA). Dr Selim, a medical graduate from Cairo University, came to Australia in 1984. He obtained the necessary Australian qualifications to practise as a medical practitioner in 1985. He has been in private practice as a general practitioner since 1987. He is vocationally registered as such under s 3F of the Act. 81 Reasons of French CJ and Gummow J at [3]-[4]; reasons of Hayne, Crennan and 82 (2008) 167 FCR 61 at 73-75 [34]-[35]. 83 cf reasons of Hayne, Crennan and Kiefel JJ at [167]-[170]. Kirby In December 2001, Insurance Commission ("the the Health Commission"), acting pursuant to s 86(1) of the Act, referred Dr Selim's conduct to the Director of PSR. The referral related to professional services rendered by Dr Selim to or on behalf of patients during the calendar year 2000. The Commission concluded that Dr Selim may have engaged in "inappropriate practice", contrary to ss 81 and 82 of the Act, as amended by the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth)84. In particular, the Commission's consideration of "inappropriate practice" was based on the concern that Dr Selim had rendered a very high volume of services in the nominated time and may not have provided the appropriate quality of clinical input into those services. If these allegations were established, Dr Selim (and, in his case which was in material respects similar, Dr Wong) would be exposed to the imposition of statutory sanctions, including disqualification for up to three years from participating in the Medicare Scheme established by the Act or disqualified from providing designated services or services to specified classes of persons. If a non-"bulk billing" practitioner were fully disqualified it would be likely that he or she would lose a substantial number of patients from the practice unless the practitioner reduced the fees charged to approximately the difference between the fees previously charged and the Medicare benefit. How many of the lost patients might later return to the practice, after the period of disqualification, would depend on a number of factors, including the extent and duration of the disqualification, the availability of other practitioners in the area and other competitive and economic considerations. During disqualification, the medical practitioner might engage a locum tenens to continue ongoing care to his or her patients, provided such a person was available and qualified. Likewise, if the practitioner were a member of a group practice, other members could continue ongoing care of the patients, provided their skills were suitable and they had the capacity to take on other patients85. Whilst fully disqualified, a medical practitioner would not be prevented from rendering medical services for which no Medicare benefit was payable – such as statutory services to veterans, services to workers' compensation patients, overseas visitors, patients in public hospitals, in the defence services, cosmetic surgery, health screening and so on. As well, the medical practitioner could carry on non-fee services, such as in medical journalism and administration as well as services for those patients who are "prepared to pay the practitioner's fee without 84 Reasons of Hayne, Crennan and Kiefel JJ at [211]-[226]; reasons of Heydon J at 85 (2008) 167 FCR 61 at 73-74 [34]. Kirby claiming on Medicare". But the agreed facts accepted the unsurprising conclusion that "to provide services solely on this basis would rarely be economically practicable". The Full Court expressed some general factual conclusions of its own relevant to the practicalities of disqualification to be ordered against the appellants86: "[I]f patients cannot claim medical benefits in relation to the services that a doctor provides … a doctor will have few, if any, opportunities to practise as a general practitioner in private practice. The Act thus imposes a practical compulsion on those who wish to practise as general practitioners in private practice to participate in the Medicare Scheme and, as a result of Pt VAA, to conduct their practice in such a way as to avoid committing inappropriate practice. They therefore must not, in relation to the rendering or initiating of services for which medical benefits are payable, do anything that would be unacceptable to the general body of general practitioners [in accordance with s 82(1)(a) of the Act]. The other ways in which those with medical training could practise their profession were also available, to some extent, when the High Court heard the BMA Case87 and the General Practitioners Society Case88, and are not sufficient to avoid the practical compulsion upon all, or virtually all, of those wishing to practise as general practitioners in private practice." The foregoing conclusions on the facts were unchallenged in this Court. They are obviously sensible and realistic. It was the practical consequences of the operation of the Act and its administration, by reference to the very broad criterion of "inappropriate practice", that the appellants argued had crossed the constitutional line and entered the territory forbidden to federal legislation by the prohibition on laws "authoriz[ing] any form of civil conscription". The legislation: The history of the legislation, the subject of the constitutional challenge, is contained in other reasons89. So are the most important provisions of the Act. It is unnecessary for me to repeat this material. 86 (2008) 167 FCR 61 at 75 [35]. 87 British Medical Association v The Commonwealth (1949) 79 CLR 201; [1949] HCA 44. 88 General Practitioners Society v The Commonwealth (1980) 145 CLR 532; [1980] HCA 30. 89 Reasons of French CJ and Gummow J at [56]-[59]; reasons of Hayne, Crennan and Kirby On the basis of the record, it is important (particularly for the approach that I take to the meaning of the constitutional provision) to emphasise that the appellants' challenge to the constitutional validity of the Act was limited to the provisions of ss 10, 20 and 20A and "any provision of [Pt] VAA … of [the Act]"90. It is therefore unnecessary, and would be inappropriate, to consider whether any other provisions of the Act offend the constitutional prohibition or to speculate on broader questions that may present in the future. Such questions could concern particular aspects of a "managed care" system of healthcare91, including the concept of "case mix" and whether such features of the legislation, now or in the future, might offend the constitutional prohibition92. None of these issues is raised by the present appeals. The issues Non-issues: In addition to excluding the abandoned issue (raising a complaint that the scheme of Pt VAA and specifically s 106U of the Act were invalid on judicial power grounds) and any broader question as to the constitutional validity of "case mix" and "managed care" provisions93, in the way the appeals were argued three particular issues can be noted and set aside: The sickness and hospital benefits issue: Before the Full Court, the Commonwealth argued that the impugned sections of the Act were laws with respect to "sickness and hospital benefits" and, for that reason, that they did not attract the prohibition on "civil conscription" that was the 90 Reasons of French CJ and Gummow J at [5]. 91 See Health Legislation (Private Health Insurance Reform) Amendment Act 1995 (Cth) amending both the National Health Act 1953 (Cth), which provided for a form of contributory health insurance, and the Health Insurance Act 1973 (Cth). 92 The "case mix" reimbursement system is based on identification and classification of various patient diagnoses ("diagnostically related groups") requiring a specific rate of funding to all patients with similar diagnoses. See Mendelson, "Devaluation of a Constitutional Guarantee: The History of Section 51(xxiiiA) of the Commonwealth Constitution", (1999) 23 Melbourne University Law Review 308 ("Mendelson") at 331. The "case mix" system was developed in the 1970s at Yale University. See Curran, Hall and Kaye, Health Care Law, Forensic Science, and Public Policy, 4th ed (1990) at 719-720. See also National Health Act 1953 (Cth), s 73BD(4)(a)(i) which was inserted by Health Legislation (Private Health Insurance Reform) Amendment Act 1995 (Cth). 93 Mendelson (1999) 23 Melbourne University Law Review 308 at 331-340. Kirby focus of the appellants' arguments94. The Full Court noted that this submission was reserved for possible pursuit in this Court; but their Honours observed that it "seems to stretch the notion of a 'sickness benefit' to argue that it would apply to all medical services for which benefits are payable under the Act"95. That comment was a proper one. I did not understand that, ultimately, the Commonwealth pressed a contrary submission on this Court; the bracketed phrase The medical and dental services issue: Likewise, as noted by Hayne, Crennan and Kiefel JJ96, the foundation for the appellants' challenge to the constitutional validity of the identified provisions of the Act was only the prohibition upon "civil conscription" s 51(xxiiiA) of the Constitution. The appellants did not mount a separate challenge based upon the contention that all, or any, of the provisions impugned would, in their true character, take the Act outside the "central area" of the power provided by s 51(xxiiiA). Conventionally, a broad approach is adopted to the "central area" of such a grant of power, given the myriad circumstances for which the Parliament might decide to enact laws on that and related and incidental matters. Nevertheless, a point could arise as to the validity of a particular federal law where, for example, in its true character, an enacted provision was a law to achieve other and different purposes. The mere fact that a law was addressed to medical or dental practitioners, their actual or potential patients or healthcare issues generally, would not render it valid under s 51(xxiiiA) if, properly characterised, the law was not one with respect to the "provision" of "medical and dental services". Because this issue was not canvassed in these appeals, it can likewise be put aside; and issue: impact Although The employment and practical the Commonwealth, in response to challenges invoking s 51(xxiiiA) of the Constitution, has long argued that the prohibition on forms of "civil conscription" is confined to attempted laws to nationalise the medical and dental professions and the provision of their services (and thus to address "conscription" in the sense of actual or effective "employment" of such practitioners by or for the Commonwealth), in the way the arguments developed the submissions were not so limited. Correctly so, in my opinion. During argument, the Commonwealth accepted that it was appropriate for the Court to consider the extent to which the Act imposed 94 (2008) 167 FCR 61 at 70 [28]. 95 (2008) 167 FCR 61 at 70 [28]. 96 Reasons of Hayne, Crennan and Kiefel JJ at [225]. Kirby obligations of "practical compulsion" upon the appellants whilst insisting that compulsion in various forms was not of itself necessarily offensive to s 51(xxiiiA) read as a whole and would not be so unless rising to the level of a "form" of "civil conscription"97. The issues: The exclusion of the foregoing issues leaves four issues to be resolved in these appeals: Constitutional interpretation: Is the meaning of s 51(xxiiiA) of the Constitution controlled, or substantially determined, by the debates and circumstances that surrounded the introduction of that paragraph into s 51 and the then understandings of various forms of military, industrial or other "conscription", existing in Australian, United Kingdom and other laws prior to that time? Constitutional decisions: Did the decision of this Court in General Practitioners in 1980 effectively restore a meaning of s 51(xxiiiA) that had been adopted by Dixon J in dissent in the BMA case of 1949? Is this Court now bound by the view expressed in General Practitioners by Gibbs J98 that "[t]he words 'any form of' do not … extend the meaning of 'conscription', and that word connotes compulsion to serve rather than regulation of the manner in which a service is performed"? If the appellants wish to contest the narrower meaning of the prohibition in s 51(xxiiiA), adopted in General Practitioners, is it necessary for them to obtain the leave of the Court, or a majority of the Court, to contend that the earlier, broader meaning adopted and applied in the BMA case was correct and should be restored? (3) Meaning of "civil conscription": In the light of the resolution of the foregoing issues, is the phrase "any form of" civil conscription limited to "compulsion to serve" or does it extend to a wider range of coercive obligations so as to carry into effect its constitutional purpose? Application of the prohibition: Are all or any of the provisions of the Act impugned by the appellants invalid as offending the constitutional prohibition in the light of the resolution of the foregoing issues? 97 [2008] HCATrans 352 at 2215. 98 (1980) 145 CLR 532 at 557. Kirby The centrality of constitutional interpretation Recognising the threshold issue: French CJ and Gummow J are correct99 in recognising the threshold importance of resolving an uncertainty that arises as to the interpretation of the constitutional phrase "but not so as to authorize any form of civil conscription". It is that uncertainty that the parties severally sought to exploit. The Full Court was also correct in appreciating the significance, for the resolution of this issue, of identifying the approach to be taken to the understanding of the paragraph by reference either to the original materials available to the legislators and electors who agreed to the insertion of the paragraph in the Constitution, or by reference to the wider range of materials available today to those obliged to make decisions on the question100. These are not theoretical considerations. Unless this Court follows a consistent approach to resolving such questions it risks the criticism that it adopts, in some cases, a form of "originalist" approach to the most important task it fulfils (constitutional interpretation) and in other cases a broader approach that recognises the reification of the words appearing in the Constitution, either those surviving from its original adoption or those later inserted in accordance with Rejecting "originalist" approaches: In many of the recent decisions of this Court judges of the Court (or at least a clear majority of them) have rejected the notion that constitutional meaning is to be derived from nothing more than what was in the minds of those who framed the applicable constitutional language. Thus, the observations of the entire Court in Cheatle v The Queen101, to the effect that "in contemporary Australia, the exclusion of females and unpropertied persons [from a 'jury'] would itself be inconsistent with [s 80 of the Constitution]", is the clearest possible statement that the adoption of a 1900 meaning to the original language of the Constitution is not appropriate to fulfil the task of judicial interpretation assigned by the Constitution to this and other courts. 99 Reasons of French CJ and Gummow J at [18]. 100 (2008) 167 FCR 61 at 66 [17]. 101 (1993) 177 CLR 541 at 561; [1993] HCA 44. Kirby Similarly, the conclusion of the Court in Sue v Hill102 that the expression "subject … of a foreign power", appearing in s 44 of the Constitution103, extends to a "subject" of the Queen who was a citizen of the United Kingdom. Had an "originalist" approach been applied to the meaning of the words in s 44(i), there is no doubt that, in 1900, a subject of the Queen of the United Kingdom would not have been included within the disqualification. There could scarcely be a clearer instance of a rejection of the "originalist" approach in Sue v Hill given that its consequence would have been the opposite disposition. A special exception has sometimes been suggested for technical words in the Constitution, requiring an "originalist" approach in such cases104. However, even this proposition must now be doubted in the light of recent decisions105. The fundamental difficulty of adopting an "originalist" interpretation of constitutional language is that it is incompatible with the character and purpose of the text being interpreted. This is a law that speaks of high governmental matters applicable from generation to generation and from age to age. In Grain Pool of Western Australia v The Commonwealth106, by reference to a provision of the Constitution (s 51(xviii)), I said107: "[T]hose who were present at the conventions which framed the Constitution are long since dead. They did not intend, nor did they enjoy the power, to impose their wishes and understandings of the text upon contemporary Australians for whom the Constitution must, to the full the diverse needs of modern extent government108. Once the Constitution was made and brought into law, it text allows, meet that the 102 (1999) 199 CLR 462; [1999] HCA 30. 103 Constitution, s 44(i). 104 As for example in defining the character and incidents of the constitutional writs mentioned in s 75(v). 105 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57. In that case, contrary to an historical exegesis, the Court held that, of their nature, all of the constitutional writs mentioned in s 75(v) are discretionary in character, whatever may have been the historical availability of the preceding prerogative writs in the United Kingdom. 106 (2000) 202 CLR 479; [2000] HCA 14. 107 (2000) 202 CLR 479 at 522-523 [111]. See also Aala (2000) 204 CLR 82 at 133 108 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 600-601; [1999] HCA 27; cf Inglis Clark, Studies in Australian Constitutional Law, (1901) at 21. Kirby took upon itself the character proper to an instrument for the governance of a new federal nation. A constitution is always a special law. It is quite different in function and character from an ordinary statute. It must be construed accordingly. Its purpose requires that the heads of lawmaking power should be given an ample construction because their object is to afford indefinitely … authority to the Federal Parliament to make laws responding to different times and changing needs." I remain of these views. Assistance may sometimes be derived from the study of historical materials that accompanied the adoption of a constitutional provision. This is not so only in respect of the use of the Convention Debates and other materials concerning the original language of the Constitution109. It is also true of the use that may be made of materials concerning referenda to amend the Constitution, both where a referendum was successful110 and where it was rejected by the electors111. I do not question the admissibility and utility, in particular cases, of such materials as they tend to identify the subjects of debate112. However, I adhere to the opinion I expressed in Grain Pool113: "Although it is sometimes helpful, in exploring the meaning of the constitutional text, to have regard to the debates in the Constitutional Conventions that led to its adoption114 and other contemporary historical115 and legal116 understandings and presuppositions, these cannot impose 109 New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 199 [466], 219-220 [525]; [2006] HCA 52; cf Betfair Pty Ltd v Western Australia (2008) 234 CLR 418; [2008] HCA 11. 110 Kartinyeri (1998) 195 CLR 337 at 401 [132]; cf (2008) 167 FCR 61 at 66 [16]. 111 Work Choices Case (2006) 229 CLR 1 at 187 [437]; cf at 99-101 [125]-[135]. 112 (2006) 229 CLR 1 at 245-246 [614] referring to unsuccessful attempts by successive Australian governments to enlarge the power with respect to the resolution of industrial disputes in s 51(xxxv) of the Constitution. See also at 285- 301 [709]-[735] per Callinan J. 113 (2000) 202 CLR 479 at 523 [112] (emphasis added). 114 Cole v Whitfield (1988) 165 CLR 360; Ha v New South Wales (1997) 189 CLR 465 at 514; [1997] HCA 34. 115 Ha (1997) 189 CLR 465 at 494. 116 As was done by Isaacs J and Higgins J in Attorney-General of NSW v Brewery Employees Union of NSW ("the Union Label Case") (1908) 6 CLR 469; [1908] HCA 94. Kirby unchangeable meanings upon the words. They are set free from the framers' intentions. They are free from the understandings of their meaning in 1900 whose basic relevance is often propounded to throw light on the framers' intentions. The words gain their legitimacy and legal force from the fact that they appear in the Constitution; not from how they were conceived by the framers a century ago." The same is true of the intentions of the framers of constitutional amendments such as s 51(xxiiiA). The ultimate meaning is to be found in the text, interpreted in the usual way by reference to history, context and purpose. The Constitution is not a time capsule of history, to be uncovered and disclosed intermittently to later generations. It is a living charter of government of daily application for present and future Australians. This Court needs to say so. In the interpretation of the Constitution, the Court should act consistently. Limits of historical appreciation: These considerations make me unwilling to assign undue importance to the historical materials, deployed in other reasons, whether: To show the original intention of those who propounded (and amended) what is now s 51(xxiiiA) of the Constitution; To reveal the political concerns over the nationalisation of the medical profession existing at that time in light of then recent New Zealand and United Kingdom laws and proposals117; or To demonstrate the knowledge of parliamentarians in 1946 concerning the use of statutory expressions relating to forms of "military conscription", "industrial conscription" and other like coercive regimes118. Whilst these historical materials are helpful as affording a context for approaching the meaning of s 51(xxiiiA), it would be a serious mistake to think of them as resolving the problem of meaning now before this Court, or of controlling the interpretation which the Court gives to the constitutional provision as adopted. When the Constitution was amended by referendum to incorporate the added paragraph, the words had thereafter to respond to new circumstances, quite different from the controversial war-time conscription for Australians to perform overseas military service in the Great War; or strike- 117 Mendelson (1999) 23 Melbourne University Law Review 308 at 312-313. 118 cf reasons of French CJ and Gummow J at [27]-[42]; reasons of Hayne, Crennan and Kiefel JJ at [187]-[201]. Kirby breaking and man-power regulation in later years of the twentieth century, both in Australia and the United Kingdom. For example, the framers of s 51(xxiiiA) could not have envisaged the advances in "medical and dental services" that have occurred in the sixty years since the adoption of the amendment. These changes have arisen largely by reason of then unknowable technological developments. They could not have anticipated the complexity and potential costs of the resulting changes in healthcare; the appearance of new diseases; the advent of new and hugely expensive therapies; not to mention new means of affording the high standards of healthcare envisaged by the Universal Declaration of Human Rights119. That Declaration was being conceived and developed by the United Nations at the very time that the amendment, in terms of s 51(xxiiiA), was being adopted in Australia and given its initial effect. Nor could the law-makers of 1946 (or the electors who approved the insertion of par (xxiiiA) in s 51 of the Constitution) have foreseen the advances in the "regulatory state"120; the collapse of the command economies; the spread of governmental notions of "economic rationalism"121; and the development of new techniques, designed to maximise the efficient provision of healthcare within society and to contain the costs and means of doing so122. Once a constitutional provision is adopted, it must apply to events and developments that could not have been imagined at the time of its adoption. This is why it is wrong in legal principle to confine the ascertainment of the boundaries of a constitutional power to the discovery of the purposes of those who devised it or the circumstances and experiences that may have been in their minds when they did so. These considerations afford but one portion of the material upon which the constitutional analysis proceeds. It is helpful, in part, to 119 Adopted and proclaimed by the General Assembly of the United Nations, Resolution 217 A(III) of 10 December 1948; see esp Art 25.1; [1980] ATS 23. See also International Covenant on Economic, Social and Cultural Rights (1966), Art 12. 120 White v Director of Military Prosecutions (2007) 231 CLR 570 at 595 [48] per Gummow, Hayne and Crennan JJ; [2007] HCA 29. 121 Mendelson (1999) 23 Melbourne University Law Review 308 at 344; Waitzkin and Iriart, "How the United States Exports Managed Care to Third-World Countries", (2000) 52(1) Monthly Review 21. 122 Faunce, "Selim v Lele and the Civil (Industrial) Conscription Prohibition: Constitutional Protection Against Federal Legislation Controlling or Privatising Australian Public Hospitals", (2008) 16 Journal of Law and Medicine 36 at 43. Kirby understanding the purpose or "mischief" that lay behind the constitutional provision. However, once the words are chosen, it is fundamental to the task of constitutional interpretation that those words apply as understood from time to time. They cannot be limited to the circumstances, experiences, purposes or objectives of those who adopted them. Application of recent authority: Nothing in the foregoing observations is inconsistent with the general approach of this Court in recent years, once Cole v Whitfield123 lifted the earlier prohibition on reference to, and use of, historical materials (specifically Convention Debates) in assisting in the derivation of the meaning of constitutional words. Neither in Cole v Whitfield124 nor in later decisions, including the opinion of six members of the Court in Betfair Pty Ltd v Western Australia125, was it suggested that the use of historical materials imposed an interpretation of words confining their meaning to the original understandings, without regard to the changing circumstances to which those words must apply in times far removed from those in which the words were first written. It follows that history may afford an understanding of the general purpose of the words, viewed at the time of adoption126. But the constitutional function of the words, once chosen, requires that they should continue to apply in different and unenvisaged later circumstances according to the "broad and general" approach explained by O'Connor J in the early years of the Commonwealth127. That approach was specifically reaffirmed in Betfair128. Obviously, it applies to the problem presented by the present appeals. Distinguishing access to and use of history: In these appeals, French CJ and Gummow J are therefore correct, with respect, in pointing out that the issue of constitutional interpretation, affecting s 51(xxiiiA), presented when the BMA case (1949) and General Practitioners (1980) were decided, necessarily involved 123 (1988) 165 CLR 360 at 385. 124 See eg (1988) 165 CLR 360 at 385. 125 (2008) 234 CLR 418 at 453-454 [19]-[20]. 126 See eg in Betfair (2008) 234 CLR 418 at 453-454 [19]-[20]. The joint reasons there referred to the "present operation of s 92 in the 'new economy' in which Betfair operates in Australia". 127 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368; [1908] HCA 95; cf North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 615; [1975] HCA 45. 128 (2008) 234 CLR 418 at 453 [19]. Kirby a somewhat different approach because, at that time, this Court was limited in the use that it might make of extrinsic materials to understand the ambit of a constitutional provision129. However, it is one thing to permit access to such materials. It is quite another to allow the resulting discoveries to control the meaning of the text, as then understood. Nothing in Cole v Whitfield or Betfair warrants an originalist view of the use of the historical materials deployed in the present appeals. On the contrary, the joint reasons in Betfair laid emphasis on the importance of the constitutional text and on the need to construe constitutional language as it speaks to new and differing circumstances arising at a later time. The shift in constitutional decisions Narrowing of constitutional approach: An analysis of the decisions of this Court on s 51(xxiiiA) demonstrates that a very significant shift occurred in reasoning between the majority decision in the BMA case (from which Dixon J and McTiernan J dissented)130 and the decision in General Practitioners. Clearly, in BMA, the majority judges took a broader view of the prohibition on "civil conscription" appearing in s 51(xxiiiA). Thus, in his reasons in BMA, "There could in my opinion be no more effective means of compulsion than is to be found in a legal provision that unless a person acts in a particular way he shall not be allowed to earn his living in the way, and possibly in the only way, in which he is qualified to earn a living. … [I]n determining whether there is compulsion it is proper to consider not only the bare legal provision but also the effect of that provision in relation to the class of persons to whom it is applied in the actual economic and other circumstances of that class." To similar effect, Webb J observed132: "To require a person to do something which he may lawfully decline to do but only at the sacrifice of the whole or a substantial part of the means of his livelihood would, I think, be to subject him to practical compulsion amounting to conscription in the case of services required by Parliament 129 Reasons of French CJ and Gummow J at [18]. 130 (1949) 79 CLR 201 at 278 per Dixon J; cf at 283 per McTiernan J. 131 (1949) 79 CLR 201 at 253. 132 (1949) 79 CLR 201 at 292-293. See also at 290 per Williams J. Kirby to be rendered to the people. If Parliament cannot lawfully do this directly by legal means it cannot lawfully do it indirectly by creating a situation, as distinct from merely taking advantage of one, in which the individual is left no real choice but compliance." In General Practitioners there was a departure from this expansive view which had led to the outcome in BMA. That outcome had been unfavourable to the validity of the medical prescription writing obligation that was struck down in that case. While several of the judges in General Practitioners acknowledged that practical compulsion could, in particular circumstances, afford examples of "civil conscription"133, there is little doubt that the Court embraced an understanding of "civil conscription" that was closer to the dissenting reasons of Dixon J in the BMA case and less favourable to the broad ambit of the prohibition upheld there. The clearest illustration of the narrowing of the view of the prohibition on "civil conscription" may be found in the reasons of Gibbs J in General Practitioners, although his Honour considered that his opinion was consistent with what he took to be the ratio decidendi in the BMA case. Specifically, "[I]t could not properly be said that it would be a form of civil conscription to require a person who had voluntarily engaged in civilian employment to perform the duties of that employment in accordance with the instructions given to him by his employers … There is nothing in the Constitution that would indicate that the expression 'any form of civil conscription' where it appears in s 51(xxiiiA) should be given an enlarged meaning which its words do not naturally bear. The words 'any form of' do not, in my opinion, extend the meaning of 'conscription', and that word connotes compulsion to serve rather than regulation of the manner in which a service is performed." As a matter of textual interpretation of the language in which the prohibition is stated, I find it impossible to accept that the words "any form of" in s 51(xxiiiA) do not enlarge the concept of "civil conscription"135. They are part of the ambit of the prohibition, which is to be read as a whole. On their face, the words are clearly intended to signal that no narrow view should be taken of the 133 (1980) 145 CLR 532 at 549 per Gibbs J. See also at 537-538 per Barwick CJ, 563- 564 per Stephen J, 565 per Murphy J, 565-566 per Aickin J. Mason J at 564 and Wilson J at 571 reserved the question. 134 (1980) 145 CLR 532 at 557. 135 Reasons of Heydon J at [264]. Kirby form of "civil conscription" that is prohibited. It is unpersuasive to me to draw a distinction between "compulsion to serve" and "regulation of the manner in which a service is performed", if such a distinction is intended to deny the fact that particular forms of regulation can, at a certain point, amount, in practice, to a "form of civil conscription". Both as a matter of textual interpretation and as a matter of practical commonsense, there is much to be said for the more ample view of the prohibition on "civil conscription" stated in the majority reasons in the BMA case136. Supposed need for leave to reargue: A question then arises (and was raised by the submissions of the appellants) as to whether they required the leave of this Court to suggest (as they did in their arguments) that the approach adopted by the Court in General Practitioners was incorrect and that this Court should revert to the approach explained by the majority in BMA. In this connection, reference was made to the supposed requirement of leave and to the considerations that would then enliven provision of such leave137. I do not accept that any procedural requirement of leave (necessarily potentially limited to a majority of judges of this Court) could impede the right and duty of a judge of the Court to state his or her belief concerning the true meaning and application of the Constitution. The judge's obligation derives from the Constitution itself. No procedural rule, devised by judges, could impede its exercise138. The right and duty of a judge of this Court to state the law prevails, particularly in matters of constitutional interpretation139. If, contrary to my belief, leave is required, I would certainly grant it to the appellants. This would not be the first time that a significant (and potentially useful or convenient) federal legislative scheme would have fallen, where, for constitutional reasons, that scheme was held invalid140. Such decisions can arise most especially when a federal law, relying on earlier decisions of the Court, 136 Reasons of Heydon J at [259]. 137 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439; [1989] HCA 5. 138 Evda Nominees Pty Ltd v Victoria (1984) 154 CLR 311 at 316; [1984] HCA 18. 139 Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630 at 673; [1996] HCA 58; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 56 [77]; [2003] HCA 72. 140 See eg New South Wales v The Commonwealth (The Incorporation Case) (1990) 169 CLR 482; [1990] HCA 2; Re Wakim (1999) 198 CLR 511. Kirby seeks to erect too large an edifice of regulation, incapable of being supported by the constitutional text141. The appellants' complaints: The appellants argued that, when the edifice of Pt VAA of the Act was examined, it was excessive to the power, especially after the change from regulation of practitioner conduct by reference to a criterion of "excessive services"142 to one by reference to the broader notion of "inappropriate practice"143. According to the appellants, the result of this change was the imposition of an impermissible "form" of "civil conscription". A coercive intrusion had been introduced into the lives of the healthcare professionals who provided "medical and dental services"144. It took the legislation into conflict with the prohibition in s 51(xxiiiA). This required invalidation of the impugned provisions and their severance, if possible, from other provisions of the Act. The introduction of the criterion of practical coercion of health professionals, effectively to conform to perceptions of "appropriate practice", beyond those enforceable by the State and Territory disciplinary bodies applicable to registered medical practitioners and dental surgeons, subjected such professionals to severe restrictions and regulations. The subject provisions, which were introduced in 1994, were not in force at the time of the decision in General Practitioners. Moreover, at that time (amongst other things) the Court's restriction on access to historical and other materials would have prevented the presentation of many of the arguments advanced by both sides in these appeals. It follows that it is appropriate to recognise the uncertainty that exists in the meaning of the prohibition contained in s 51(xxiiiA) of the Constitution; to acknowledge the arguable shift in the approach between the BMA case and General Practitioners; and to accept that there are difficulties in adopting at face value some of the reasoning expressed in General Practitioners. What, then, does the prohibition in the paragraph entail, with particular relevance to the statutory provisions that the appellants impugn? 141 As in Ha (1997) 189 CLR 465 at 502-503. 142 The Act as formerly provided in s 79(1B). See reasons of Hayne, Crennan and 143 The Act, ss 82, 81. See reasons of Hayne, Crennan and Kiefel JJ at [212]. 144 By the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth). Kirby The meaning of civil conscription Starting with the constitutional text: The meaning of the prohibition in s 51(xxiiiA) is to be derived by an orthodox process of analysis addressed to the contested phrase of the Constitution. That mode of reasoning does not surrender the analysis either to the supposed enlightenment now afforded by available historical material or to an uncritical acceptance of the unadorned criterion expressed by Dixon J in the BMA case145 and reflected in the reasons of Gibbs J in General Practitioners146. The starting point for analysis is always the language of the provision itself. Several points need to be noticed. First, each of the social security benefits stated in the paragraph is governed by the opening phrase "the provision of". Thus, laws with respect to "medical and dental services" at large are not assigned to the Federal Parliament by the added head of power. What is authorised are laws with respect to "the provision of" both "medical and dental services". That is also the context in which the prohibition has to be understood. Moreover, the provision of the applicable services needs to be understood by reference to the accompanying services, all of which contemplate payments or facilities of various kinds: "maternity allowances", "widows' pensions", "child endowment", "unemployment, pharmaceutical, sickness and hospital benefits" and "benefits to students and family allowances". It is in this context that "medical and dental services" appear with their attached prohibition on "civil conscription". It is difficult to imagine that the mere payment of the various forms of allowances, pensions, endowment and benefits could turn into a form of "civil conscription". Hence, the bracketed words have generally been assumed to govern only the provision of "medical and dental services". With their reference to nominated professions those words are conceivably susceptible to a form of "civil conscription". Were it otherwise, it might have been expected that the words now appearing within brackets would have appeared either at the beginning or at the end of the paragraph, so as to govern expressly all of the nominated services. Dictionary meanings of conscription: Contrary to the suggestion of Gibbs J in General Practitioners, the inclusion within brackets of the reference to "any form of" civil conscription seems designed to expand the concept of "conscription" itself. Normally, in contemporary English, that word is used to refer to compulsory military enlistment in the defence forces. In fact, this is the 145 (1949) 79 CLR 201 at 278. 146 (1980) 145 CLR 532 at 559-560. Kirby sole definition provided in the Macquarie Dictionary147, namely "compulsory enrolment in the armed forces". In the Shorter Oxford English Dictionary, the primary relevant meaning given is "[e]nrolment or enlistment (of soldiers)"148. However, in Dr Samuel Johnson's original Dictionary of the English Language149, the author, by reference to the Latin source of the word (conscriptio), describes "conscription" as "[a]n enrolling or registering". He explains "conscript" by reference to a non- military example: "A term used in speaking of the Roman senators, who were called Patres conscripti, from their names being written in the register of the senate." The military use of "conscription" in England is ascribed by the Shorter Oxford English Dictionary to the 1650s. A wider application of the word "conscription" to non-military activities is also recognised in other modern dictionaries but still with primary reference to compulsory service in the armed forces150. Clearly, the usual denotation of the word in Australia, at least when expressed in the form of the noun "conscription", involves compulsory enrolment in the armed forces. This fact helps to explain the importance of the parenthetical prohibition on "civil conscription" and the inclusion of the indication that what was being prohibited was "any form" of such "conscription" which, in this instance, was expressly to be "civil", not military, in character. As a textual matter, the inclusion of the indication of the breadth of the concept ("any form of") suggests that the imperfection of the metaphorical phrase was recognised by the drafters151. It was not "military" (or even "industrial") conscription, as in the failed accompanying proposal envisaging enlarged legislative powers with respect to industrial employment. All of these considerations place emphasis on the width of the stated prohibition, considered by reference to the terms in which it is expressed. 147 Federation Edition (2001), vol 1 at 413. 148 3rd ed (1973), vol 1 at 403. 149 (1755). See also Chambers English Dictionary, (1988) at 302. 150 eg Encarta World English Dictionary, (1999) at 404; The Random House Dictionary of the English Language, (1983) at 312; Webster's Third New International Dictionary, (1976) at 482. 151 See, for example, Mendelson (1999) 23 Melbourne University Law Review 308 at Kirby A special and limited protection: A further feature, derived from the text, that lends support to the foregoing propositions is that the protection afforded by the words in brackets is special, limited and necessarily restricted to those involved in the provision of "medical and dental services". Such persons comprise the healthcare professionals who provide the designated services. They also include, of necessity, the patients who are the recipients of the provision of such services. Normally, in our society, the provision of "medical and dental services" occurs pursuant to a private contract entered into between the healthcare provider and the patient152. The purpose of incorporating a prohibition on "civil conscription" in the provision of such services is thus to preserve such a contractual relationship between the provider and the patient, at least to the extent that each might wish their relationship to be governed by such a contract. In this sense, the prohibition is expressed for purposes of protection, including a protection extending to the patient. It is designed to ensure the continuance in Australia of the individual provision of such services, as against their provision, say, entirely by a government-employed (or government- controlled) healthcare profession. This does not mean that there cannot be the provision of "medical and dental services" otherwise than by individual suppliers, including for example public hospitals and private insurers. However, the prohibition on "any form of civil conscription" is designed to protect patients from having the supply of "medical and dental services", otherwise than by private contract, forced upon them without their consent. A rare constitutional guarantee: Because of its character as a guarantee or protection, both for the healthcare professionals identified and for the patients affected by the provision of their services, the exclusion of any form of "civil conscription" must be seen as one of the rare instances of an individual guarantee and protection spelt out in the Australian Constitution. The fact that the Constitution has taken the trouble to afford such a guarantee is a strong reason for upholding a broad ambit for the prohibition, to the full extent that the words permit. It is a reason for rejecting an unduly narrow reading. Such an approach also conforms to the view taken about analogous questions arising in other paragraphs in s 51 of the Constitution, where a grant of power is made subject to a "safeguard, restriction or qualification"153. This was 152 Breen v Williams (1996) 186 CLR 71 at 123; [1996] HCA 57; cf Mendelson (1999) 23 Melbourne University Law Review 308 at 319. 153 See Work Choices Case (2006) 229 CLR 1 at 215 [515]. Kirby the expression employed by Dixon CJ in explaining the approach that is to be taken when deciding the meaning of a grant of power expressed as subject to a limitation. In Attorney-General (Cth) v Schmidt154, Dixon CJ explained the proper approach with the concurrence of the four other judges participating in that case155. The principle there stated has been applied by this Court on many occasions156. Although commonly considered in the context of the power to make laws with respect to the acquisition of property, subject to the "guarantee" of "just terms"157, the present is an even clearer occasion for the application of the stated rule. This is because of the way in which the limitation on the exercise of the power is expressed within the very grant of legislative power itself – emphatically and within parentheses. The broad approach to constitutional words: The established approach of this Court to the ascertainment of the meaning of constitutional words, affording a grant of legislative power to the Parliament, is to insist that such words should be given a broad application. This approach is adopted out of recognition of the purposes of the Constitution; the democratic accountability of the repository of the power; and the vast array of circumstances to which, over time, the power will have application158. Although this rule is normally stated in the context of a grant of power, the same principle applies to a limitation upon such a grant, at least where that limitation has been adopted, as here, to afford protection to an identified class. This is especially so where it is recognised that that class includes not merely the providers of "medical and dental services" but also the recipients, namely patients, and citizens generally, as potential recipients of such services. Express textual enlargement of exemption: In the present case, the foregoing rule receives specific endorsement from the use of the expression "any form of civil conscription". Correctly, in my view, the wide ambit of "any form 154 (1961) 105 CLR 361 at 372; [1961] HCA 21. 155 (1961) 105 CLR 361 at 373 per Fullagar, Kitto and Taylor JJ and at 377 per 156 See eg Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 160 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ; [1994] HCA 27; see also Work Choices Case (2006) 229 CLR 1 at 211-213 [502]-[507]. 157 Constitution, s 51(xxxi). See also s 51(xxxiii). 158 Jumbunna (1908) 6 CLR 309 at 367-368; cf Betfair (2008) 234 CLR 418 at 454 Kirby of" was recognised in the BMA case both by Latham CJ159 and by Williams J160. If the opinion of Gibbs J in General Practitioners were correct161, that phrase was basically redundant. This is not a view that I could accept. In a comparatively sparse constitutional text, containing comparatively few express, protective guarantees, it is an approach to the interpretation of the Constitution that is unsupported by any other instance of which I am aware162. Fundamental human rights: To the extent that it is permissible to construe a contested provision of the Constitution by reference to the contextual consideration of emerging norms of fundamental human rights as expressed in international law163, some reinforcement for a broad reading of the prohibition in s 51(xxiiiA) of the Constitution can also be found in relevant provisions of international law. These include the provisions of the Universal Declaration of Human Rights, including Art 23.1 which guarantees that "[e]veryone has the right to work [and] to free choice of employment" and of Art 25.1 which provides: "Everyone has the right to a standard of living adequate for the health and well- being of himself and of his family … and medical care and necessary social services, and the right to security in the event of … sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control."164 159 (1949) 79 CLR 201 at 250. 160 (1949) 79 CLR 201 at 287. 161 (1980) 145 CLR 532 at 557. 162 Unless it be the Work Choices Case (2006) 229 CLR 1, assuming (as I there held) that the provision for the resolution of industrial disputes stated in s 51(xxxv) of the requirement for the prevention and settlement to be by procedures of conciliation and arbitration was such a guarantee. See (2006) 229 CLR 1 at 214-216 [510]- 163 Upon which see Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 657; [1997] HCA 38; Al-Kateb v Godwin (2004) 219 CLR 562 at 617-630 [152]-[191] of my own reasons; cf at 583-595 [42]-[73] per McHugh J; [2004] HCA 37; Roach v Electoral Commissioner (2007) 233 CLR 162 at 177-180 [13]- [19] per Gleeson CJ, 203-204 [100] per Gummow, Kirby and Crennan JJ, 220-223 [163]-[173] per Hayne J, 224-225 [181] per Heydon J; [2007] HCA 43. 164 See also International Covenant on Economic, Social and Cultural Rights (1966), Art 7 (work rights), Art 9 (right to social security), Art 12 (right to the enjoyment of the highest available standard of physical and mental health). See esp Art 12.2(d) referring to conditions that will assure to all medical services and (Footnote continues on next page) Kirby To the extent that the interpretation of the prohibition on "civil conscription" urged by the appellants finds support in the international expression of fundamental rights, and in the international law that states those rights, the wider view of the phrase should be preferred to a view that would fail to uphold such fundamental rights in the Australian context. It is important to recognise that the fundamental human rights referred to in the instruments of international law preceded the inclusion of reference to them in such instruments. All that international law has done is to express the rights that inhere in human beings by virtue of their humanity. There is therefore no inconsistency in giving a meaning to the Australian Constitution by reference to declarations of fundamental rights that were adopted after the initial acceptance of the Constitution or, in this case, after the 1946 amendment of the Constitution by the addition of the provisions of s 51(xxiiiA). The necessity of detailed implementation: So far, the analysis of the content of the power in s 51(xxiiiA) has laid emphasis upon the wide ambit both of the grant to make laws with respect to the "provision" of "medical and dental" services and of the exclusion from that grant of a law that would authorise "any form of civil conscription". However, s 51(xxiiiA) must also be read in the context of the Constitution viewed as a whole. It is therefore necessary to refer to express and implied contextual considerations that throw light on the scope of the particular power and of the express exclusion from it. Specifically, both the express and implied constitutional provisions for the making of laws incidental to the execution of any power vested in the Parliament165 envisage the enactment of detailed laws to carry into force a head of power such as that in par (xxiiiA). In the nature of modern government, such provisions are bound to involve considerable detail, both of a substantive and procedural kind. Especially so in the context of a paragraph of the Constitution, such as s 51(xxiiiA), with its wide variety of provisions for differing kinds of allowances, pensions, endowment and sundry benefits. It would be impossible to bring such a head of power into effect, in the form of a comprehensive law on social security such as the Act, without enacting provisions of very considerable detail. This is especially so because the addition of par (xxiiiA) to s 51 supplements a power to make laws on "invalid and old-age pensions" included in the original list of powers afforded to the Federal medical attention in the event of sickness. See as well International Covenant on Civil and Political Rights (1966), Art 8.3(a) (prohibition on forced or compulsory labour). 165 See eg Constitution, s 51(xxxix). Kirby Parliament in 1901166. Thus par (xxiiiA) expanded greatly the powers of the Federal Parliament and its potential functions and duties with respect to social services for all Australians. The history of the introduction of the legislation based upon s 51(xxiiiA), and the complexity of the scheme as it grew and expanded, is explained in other reasons167. In the nature of such a substantial grant of legislative power; the wide variety of the services specifically nominated; the individuality of the beneficiaries affected; and the specificity of the transactions to be provided for, federal legislation of considerable detail was necessary, addressed both to the rights and obligations of the providers of "medical and dental services" and also to the rights and obligations of the recipients of those services. It follows that, in arriving at an understanding about the express prohibition on "any form of civil conscription", stated in s 51(xxiiiA), it is necessary to accept that detailed provisions for the implementation of the services, and for their regulation and proper deployment, would not, of themselves, amount to "any form of civil conscription"168. In so far as such regulation is necessary to, and inherent in, the provision of a wide range of "medical and dental services", and reasonably proportionate to the grant of power for that purpose, the stated constitutional prohibition would not, without more, be breached. Constitutional regulation of finances: There is a further contextual consideration which must be taken into account, for it lies deep in the language, history and principles of the Constitution, in relation to which s 51(xxiiiA) must find its place and be understood. I refer to the central constitutional doctrine that the imposition of taxation and the raising of moneys from people, constituting as they do a "burden on the people"169, have to be effected as the Constitution expressly provides. Thus, the expenditure of moneys must be approved by Appropriation Bills that conform to the constitutional design170 and that observe the requirements of the Constitution for the levying of moneys from the people; the payment of such 166 Constitution, s 51(xxiii). 167 See esp reasons of Hayne, Crennan and Kiefel JJ at [203]-[210]. 168 Reasons of Heydon J at [277]. 169 Constitution, s 53. 170 Constitution, ss 54, 55. See also Combet v The Commonwealth (2005) 224 CLR 494; [2005] HCA 61. Kirby moneys into the Consolidated Revenue Fund; and the expenditure of all such moneys in accordance with, or under, appropriations made by law171. The foregoing are fundamental postulates of the Constitution. They impose severe practical requirements. These are reflected in all federal measures involving the expenditure of moneys. The requirements ensure that such moneys are lawfully and properly expended, and not otherwise. In the context of the Constitution, no reading of the prohibition on "any form of civil conscription" could be adopted that in any material way limited or restricted the due observance of these other constitutional norms designed to ensure the lawfulness and integrity of the expenditures of the Commonwealth. Self-evidently, the provision of social services in the many forms described in s 51(xxiiiA) would necessarily involve both very large aggregate expenditures and very small individual expenditures made payable (relevantly) to the providers of "medical and dental services" or their agents, or to patients or other persons on their behalf. No view could be adopted of the prohibition in s 51(xxiiiA) on the enactment of "any form of civil conscription" which involves a departure from, or limitation upon, the proper regulation of the expenditures to ensure their lawfulness and financial integrity. The enactment of general and particular provisions of federal law to safeguard such considerations was expressed by, or implied in, the constitutional provisions governing taxation, appropriations, the Consolidated Revenue Fund and the expenditures to which I have referred. If any aspect of the federal law, enacted in a proportionate way to conform with such constitutional provisions, involved a burden (even a coercive burden) on the providers of "medical and dental services" (or their patients who received such services) this could not, of itself, constitute a form of "civil conscription". That is so because of the need to reconcile the prohibition expressed in s 51(xxiiiA) with the provisions elsewhere contained in the Constitution, or implied by necessity and constitutional convention, to uphold the lawfulness and integrity of each expenditure of federal funds raised ultimately as a "burden on the people". Also of necessity, because of the very great aggregate sums of federal moneys involved and the multitude of very small payments for the provision of individual services arising in the case of particular recipients, a high degree of particularity in monitoring, supervising and checking such payments is inescapable. The prohibition on "any form of civil conscription" must accommodate to that degree of particularity. An intrusion to some degree into the private contractual arrangements between the provider of "medical and dental 171 See Constitution, ss 81, 82, 83. Kirby services" and the recipient of such services is inescapable, so long as there is any payment of moneys out of the Consolidated Revenue Fund. Defining the permissible regulation: The question in these appeals thus becomes how to define the point where the necessary, proper and inescapable intrusion into the private arrangements between the provider of "medical and dental services" and a recipient of such services passes beyond legitimate scrutiny for reasons of upholding the lawfulness and integrity of such payments and is converted, by its sheer detail and intrusiveness, into a prohibited "form of civil conscription". No easy formula is available to identify that point. In recognition of the primary grant of power to the Parliament to enact laws for a wide range of social services, including the provision of "medical and dental services"; the adoption of the power to do so, exceptionally, by amendment of the Constitution; and the importance and necessity of detailed provisions (including machinery laws) to ensure the lawfulness and integrity of both aggregate and individual payments, the courts will generally respect and uphold the means adopted by the legislature. So long as the machinery provisions are proportionate to the grant of power and do not aggregate to a "form of civil conscription", this Court would not invalidate a measure, or combination of measures, properly characterised as laws enacted to give effect to constitutional requirements designed to uphold the lawfulness and integrity of federal financial expenditures. In particular, the Court would not ordinarily second-guess the legislature in such specific provisions, so long as they appeared reasonably appropriate and adapted ("proportionate") to the fulfilment of the power afforded by s 51(xxiiiA). There must, however, be exceptions to such deference. Thus, a law pretending to be one to uphold the lawfulness and integrity of financial expenditures but which, instead, was properly to be characterised as one intruding into the individual relationship between providers of "medical and dental services" and recipient patients, might attract constitutional invalidation. So might a law which was so detailed and intrusive as to impose coercive requirements and restrictions on the provider of such services, disproportionate to any legitimate federal interest, financial or otherwise. Similarly, to enact laws imposing blanket rules affecting the individual relationship between providers of "medical and dental services" and their recipients, whether for reasons of cost minimisation or for the achievement of particular administrative outcomes in terms of medical or dental practice, could risk invalidation. They might do so either as falling outside the primary grant of legislative power or as falling within a prohibited "form" of "civil conscription". Test for the prohibition: The test for attracting the prohibition contained in s 51(xxiiiA) is whether the impugned regulation, by its details and burdens, intrudes impermissibly into the private consensual arrangements between the Kirby providers of "medical and dental services" and the individual recipients of such services. It is this consensual feature of those arrangements which the head of power postulates will be undisturbed. Most obviously, any such disturbance would happen in the unlikely event of an attempt by the Parliament to revive the nationalisation of the healthcare professions or to force their members into full-time or part-time work for the federal government or its agencies. It would also occur where a conclusion was reached that the true purpose of the law was not the regulation of the legality and financial integrity of such benefits but an unjustifiable intrusion into the conduct of medical and dental practice, inconsistent with, or travelling significantly beyond, the ordinary standards generally observed by such professions in Australia. Obviously, cases could arise at the borderline. Views might sometimes differ as to whether particular provisions exceed the grant of power or attract the the prohibition upon "any form of civil broadly stated expression of conscription". In performing the judgment that is enlivened by the prohibition, the decision-maker will not only be affected by the several considerations that I have listed, giving emphasis to the wide ambit of the prohibition. The decision- maker will also give due attention to the need, inherent in the nature of the power, for implementing laws of high particularity that include necessary provisions to ensure the lawfulness and financial integrity of all payments made, conformably with the Constitution. Application of the principles to this case When the foregoing approach is taken to the central issue in these appeals, the appellants' challenges fail. But they fail for reasons of textual and legal analysis, not for reasons of the historical intentions that lay behind the amendment of the Constitution to insert par (xxiiiA) into s 51. The provisions of the Act which the appellants impugn do not compel the provider of "medical and dental services" to perform any service for or on behalf of a recipient, whether legally or practically, whether on behalf of the Commonwealth or (least of all) as its employee or agent. The scheme of the Act, and specifically the impugned provisions, carefully respect the individual and personal character of the relations between the healthcare professional, as the provider of services, and the individual patient, as recipient. True, many detailed obligations are cast on the provider. By the standards of earlier times, they potentially intrude, to some extent, into the professional relationship. However, the provisions that the appellants challenge in these appeals do not demonstrate disproportionality in the regulation nor do they constitute an intrusion that attracts the prohibition on "any form of civil conscription". Kirby Central to my opinion in this respect is a conclusion similar to that expressed by Hayne, Crennan and Kiefel JJ172. After the adoption of the defined criterion of "inappropriate practice", proper care has to be taken in the provisions of the Act, to limit the conduct that will attract that description. In part, the phrase is still defined by reference to the provision of excessive services, which is of proper and legitimate concern to the Commonwealth and its agencies as guardians of public moneys raised from the people. So far as wider considerations of "unprofessional conduct" are concerned, two provisions in s 82 (which the appellants challenge) save the legislation from invalidity. The first is the adoption of a criterion that the supervising committee's conclusion must be "reasonable". The second is the requirement that the committee must ask itself whether the conduct of the healthcare professional "would be unacceptable to the general body" of relevant practitioners involved in supplying the "medical and dental services" concerned173. These criteria, in combination, necessarily require that committee opinions are determined not by considerations attractive to federal officials, as such, or supposed overall health-management objectives. Instead, in every case, the committee must reach a reasonable conclusion by reference to the standards of the general body of the profession concerned, judged in a therapeutic context. That conclusion is, in turn, susceptible (as in the appellants' cases) to procedures for judicial review, further appeal to the courts and ultimately a constitutional appeal to this Court. I am unconvinced that any of the provisions of the Act impugned by the appellants constitute an illicit attempt, in either of their cases, to force them into forms of medical practice that are imposed for unstated bureaucratic reasons of cost saving, health policy or other purposes inconsistent with the proper conduct of the individual arrangements between the patient and the healthcare professional concerned. In so far as benefits are provided, the scheme of the legislation gives primacy to the individual arrangements between the healthcare professional and the patient but with appropriate protections to both which are consistent with that relationship. Even "bulk billing" is only possible by consent of both parties to that relationship. In these ways, the legislation avoids impermissible forms of "civil conscription" which the grant of power was thought otherwise possibly to entail. Specifically, I agree with what Hayne, Crennan and Kiefel JJ have written about the analogy between the statutory criteria expressed in the Act and the long-established law on professional standards stated in such decisions as 172 Reasons of Hayne, Crennan and Kiefel JJ at [211]. 173 Reasons of Hayne, Crennan and Kiefel JJ at [217]. Kirby Allinson v General Council of Medical Education and Registration174 with the elaboration now afforded by Lord Hoffmann in McCandless v General Medical Council175. The concept of "inappropriate practice" is not exactly the same as "unprofessional conduct" existing in the 1890s when Allinson was decided176. The statutory criterion today, in a modern regulatory state with a universal, national health scheme, contemplates detailed record-keeping to comply with basic constitutional and statutory principles. Poor book-keeping might not have been "unprofessional conduct" in the century before last177. However, in the contemporary Australian context, where what is involved is overcharging, overservicing or inadequate clinical care in the nominated time, it could well be so. In any case, the close similarity of the two concepts is plain. In consequence of the foregoing conclusions, the regulation imposed on the appellants by the Act, in the provisions impugned by them, are no more than measures proportionate to ensure the lawfulness and integrity of the provision of "medical and dental services" in a manner conforming to the Constitution. They do not constitute a "form of civil conscription". It follows that the impugned provisions of the Act are valid. Orders I agree in the orders proposed by Hayne, Crennan and Kiefel JJ. 174 [1894] 1 QB 750 at 760-761, 763, 766. See reasons of Hayne, Crennan and 175 [1996] 1 WLR 167 at 169 (PC). See reasons of Hayne, Crennan and Kiefel JJ at 176 cf reasons of Heydon J at [234]-[241]. 177 Reasons of Heydon J at [241]. 162 HAYNE, CRENNAN AND KIEFEL JJ. The appellant in each of these matters is a general medical practitioner. Each has been found by a Professional Services Review Committee set up under Pt VAA (ss 80-106ZR) of the Health Insurance Act 1973 (Cth) to have engaged in "inappropriate practice". Each appellant submits that certain provisions of the Health Insurance Act, namely ss 10, 20 and 20A and some or all of the provisions of Pt VAA178, amount to a "form of civil conscription" within the meaning of s 51(xxiiiA) of the Constitution and are therefore beyond the legislative powers of the Commonwealth and invalid. The impugned provisions do not amount to a form of civil conscription. Each appeal should be dismissed with costs. The proceedings In May 2006, Dr Wong and Dr Rifaat George Dimian commenced an action in this Court seeking declarations that certain provisions of the Health Insurance Act are not valid laws of the Commonwealth. They alleged that certain provisions of the Health Insurance Act "as a practical matter compel general practitioners to participate in the scheme provided for by [those provisions] in order to carry on practice as a general practitioner" and thus amount to "civil conscription". They further alleged that s 106U of the Health Insurance Act, a provision dealing with the form and content of determinations of "inappropriate practice", purported to confer part of the judicial power of the Commonwealth on persons who had not been appointed pursuant to s 72 of the Constitution and was on that account invalid. This latter contention is not maintained in the appeal to this Court. It may be put aside from further consideration. In October 2006, the action was remitted to the Federal Court of Australia. Before describing the subsequent proceedings in the Federal Court it is convenient to describe the proceedings that led to the second appeal in this Court: the appeal in which Dr Selim is appellant. In November 2003, Dr Selim applied to the Federal Court for an order of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and for relief under s 39B of the Judiciary Act 1903 (Cth) in respect of steps allegedly taken under Pt VAA of the Health Insurance Act. In October 2004, Dr Selim's application to the Federal Court was amended to add 178 Unless otherwise indicated, references to provisions of the Health Insurance Act 1973 (Cth) are to the legislation in the form it took at 14 October 2002, which the parties accepted was the relevant version of the Act. grounds alleging invalidity of some or all of the provisions of Pt VAA of the Health Insurance Act on the basis that the Part, or provisions in it, authorise or provide for a form or forms of civil conscription. Dr Selim's application was heard by a single judge of the Federal Court (Stone J) and in February 2006 the application was dismissed179. Dr Selim appealed to the Full Court of the Federal Court. The appeal in Dr Selim's matter was heard together with questions referred to the Full Court of the Federal Court in the proceedings in which Dr Wong and Dr Dimian were plaintiffs. Those questions were referred pursuant to s 25(6) of the Federal Court of Australia Act 1976 (Cth) and were referred on an agreed statement of facts. The Full Court (Black CJ, Finn and Lander JJ) dismissed180 Dr Selim's appeal, and answered the questions referred in the other matter in terms upholding the validity of the impugned provisions. By special leave, Dr Wong and Dr Selim appeal to this Court. Dr Dimian did not join in the appeal by Dr Wong. He was named as a respondent to the proceedings in this Court, and filed a submitting appearance. Section 51(xxiiiA) Section 51(xxiiiA) gives the Parliament power to make laws with respect "the provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances". In British Medical Association v The Commonwealth ("the BMA Case")181, Dixon J said that the expression "civil conscription" used in s 51(xxiiiA) was not "an expression which has gained general currency or has acquired a recognized application". Consideration of some aspects of the history of events leading to the amendment of the Constitution by insertion of s 51(xxiiiA), coupled with a 179 Selim v Lele (2006) 150 FCR 83. 180 Selim v Lele (2008) 167 FCR 61. 181 (1949) 79 CLR 201 at 262; [1949] HCA 44. consideration of some earlier usages of the cognate expression "industrial conscription", does assist, however, in construing the parenthetical expression: "but not so as to authorize any form of civil conscription". The assistance provided by these matters of history and usage lies chiefly in what they show about the issue (or issues) to which the reference to civil conscription was directed182. It is convenient to take up the account of that history in 1944. Health and social services benefits in the 1940s The Pharmaceutical Benefits Act 1944 (Cth) provided (s 8) that, subject to the Act, "every person ordinarily resident in the Commonwealth shall be entitled to receive pharmaceutical benefits", and those benefits were identified (s 7) as medicines, medicinal compounds, and materials and appliances identified in the Commonwealth Pharmaceutical Formulary or an addendum to the Formulary. In the following year, provision was made by the Hospital Benefits Act 1945 (Cth) for the Commonwealth to make payments to States, by way of financial assistance, in respect of beds occupied by qualified persons in public and non-public wards in public hospitals, and for regulations to be made in relation to payments by the Commonwealth of hospital benefits in respect of patients in private hospitals. In November 1945, this Court held in Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case")183 that the Pharmaceutical Benefits Act 1944 was beyond power. The Commonwealth's submissions, that the Act was authorised under s 81 of the Constitution as an appropriation from the Consolidated Revenue Fund "for the purposes of the Commonwealth", or was supported by the incidental power in s 51(xxxix), were rejected. Four months later, on 26 March 1946, the then Attorney-General, Dr Evatt, introduced the Constitution Alteration (Social Services) Bill 1946 with the object, as he put it184, of placing "Australian social service legislation on a 182 Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 494-496 [20]-[23]; [2000] HCA 14. 183 (1945) 71 CLR 237; [1945] HCA 30. 184 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March sound legal footing". As the Attorney-General went on to say185, "[w]hen the Constitution was adopted in 1900, the idea of even invalid and old-age pensions was new", but the Parliament was given power to make laws with respect to that subject matter by s 51(xxiii). And although Parliament had power in relation to insurance other than State insurance (s 51(xiv)) "[a]ny other social service payments made by the Commonwealth must, therefore, rest on some other foundation"186. And that was seen as extending to other social services such as child endowment, widows' pensions, and medical and hospital benefits. The Bill, as first introduced in the House of Representatives, expressed the relevant head of legislative power as "[t]he provision of maternity allowances, widows' pensions, child endowment, unemployment, sickness and hospital benefits, medical and dental services, benefits to students and family allowances". Two other Bills for constitutional alteration were introduced into the Parliament at the same time as the proposal about social services. The Constitution Alteration (Industrial Employment) Bill 1946 proposed the addition of par (xxxivA) to s 51 to give power to the Parliament to make laws with respect to "[t]erms and conditions of employment in industry, but not so as to authorize any form of industrial conscription". The third proposal was to provide legislative power with respect to the "[o]rganized marketing of primary products" but the detail of this proposal need not be further considered. During the Attorney-General's second reading speech in support of the Constitution Alteration (Social Services) Bill 1946 a member of the Opposition asked187 whether the power, if granted, would enable the Parliament to nationalise medical and dental services. The Attorney-General expressed188 the opinion that the proposed alteration would not enable the Commonwealth to say "[w]e shall make all practitioners in the medical and dental professions members of the service of the Commonwealth". But examination of the subsequent 185 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 186 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 187 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 188 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March the House of Representatives the possible debates "nationalisation" of the medical and dental professions remained a live issue, albeit without any precise definition of what would constitute "nationalisation". reveals that At the end of debate in the House of Representatives about the Constitution Alteration (Social Services) Bill, the then Leader of the Opposition, Mr Menzies, proposed189 that after the word "services" there be inserted "(but not so as to authorize any form of civil conscription)". The amendment was at once accepted190 by the Government and it was in this form that the proposal went to the Senate, and subsequently to electors in a referendum. The pamphlet setting out the case for and against the proposal, provided to electors in accordance with the Referendum (Constitution Alteration) Act 1906 (Cth), asserted, in the case for the amendment, that there was "[n]o question of socializing medical and dental services". It was said that the express safeguard against civil conscription "means that doctors and dentists cannot be forced to become professional officers of the Commonwealth under a scheme of medical and dental services". This view of the effect of the words precluding any form of civil conscription is not at odds with, and may even have been based upon, written the advice given on 9 April 1946 by Commonwealth and others to the Government, about the amendment which Mr Menzies had proposed to the Bill. It was said in that advice that: then Solicitor-General of the "The only kind of legislation which the amendment would preclude would be such as compelled doctors or dentists in effect to become servants of the Commonwealth, or to have the whole of their professional activities controlled by Commonwealth direction." It will be observed that the authors of the advice focused attention upon compulsion. In so far as they directed attention to compulsion to become servants of the Commonwealth, there would be little debate that such a law would very likely amount to a form of civil conscription. And it was this point that was made in the pamphlet setting out the case for the proposal to amend the Constitution. 189 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April 190 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April By contrast, there may well be some difficult questions raised by the reference in the written advice to doctors or dentists having "the whole of their professional activities controlled by Commonwealth direction". It is, however, not fruitful to explore those questions. The advice is of use only as one of a number of different sources which disclose the issue (or issues) to which the amendment proposed by Mr Menzies was directed, and which offer some indication of then current usages of the language that was ultimately incorporated in s 51(xxiiiA). For present purposes, what emerges from both the pamphlet given to electors, and the written advice given to government, is no more than that the issue being addressed by adding the qualification about civil conscription was seen as having at its centre compulsion to become, in effect, servants of the Commonwealth. Neither the pamphlet nor the advice goes any great distance towards resolving how far the idea of civil conscription travels beyond that core idea. Civil conscription As is sufficiently apparent from the text of s 51(xxiiiA) (but is confirmed by what was said191 in the House of Representatives in connection with the Bill for the constitutional amendment) the form of words "but not so as to authorize any form of civil conscription" was borrowed from the Constitution Alteration (Industrial Employment) Bill, and its reference to "[t]erms and conditions of employment in industry, but not so as to authorize any form of industrial conscription". The use of the expression "civil conscription" in the proposed s 51(xxiiiA), rather then current understandings of the need to distinguish between the professions and industry192. Today, the term "civil conscription" may therefore be seen as a genteelism, but at the time the expression was evidently adopted as cognate with, and not materially different in content from, the expression "industrial conscription". than "industrial conscription", reflected 191 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April 192 cf Wilde, "Serendipity, Doctors and the Australian Constitution", (2005) 7 Health and History 41 at 42 and the description of the course of events given by Sir Henry Newland, President of the British Medical Association's Australian Federal Council at the time, in "Two Men of Years and Honour", The Medical Journal of Australia, 31 October 1964, 715 at 717. The expression "any form of industrial conscription" was borrowed from s 5(7)(a) of the National Security Act 1939 (Cth), an Act to which assent was given on 9 September 1939, six days after the commencement of World War II. Section 5(7) of the National Security Act limited the power in s 5(1), to make regulations "for securing the public safety and the defence of the Commonwealth and the Territories of the Commonwealth", by providing that the power did not extend to authorise "the imposition of any form of compulsory naval, military or air-force service, or any form of industrial conscription" (emphasis added). But the use in the National Security Act of the expression "industrial conscription" was not novel. "Industrial conscription" was an expression found in other legislation, both in Australia and in England, between the two World Wars. In 1920, the Parliament at Westminster enacted the Emergency Powers Act 1920 to make what the long title of the Act described as "exceptional provision for the Protection of the Community in cases of Emergency". Wide regulation-making powers were conferred, but there were two provisos. First, it was said193 that nothing in the Act should be construed "to authorise the making of any regulations imposing any form of compulsory military service or industrial conscription" (emphasis added). Secondly, it was provided194 that no regulation should make it an offence "for any person or persons to take part in a strike, or peacefully to persuade any other person or persons to take part in a strike". In Victoria, in 1923, at the time of a police strike, legislative provision was made for that particular emergency and for later cases of emergency. The Public Safety Preservation Act 1923 (Vic) provided various powers on proclamation declaring that a state of emergency exists. But s 7 provided that nothing in the Act should be construed "to authorize the making of any regulations imposing any form of industrial conscription". The Act was subsequently consolidated in the course of the general Victorian statutory consolidations of 1929 and 1958, and has been amended in some respects, but remains in force in substantially the same terms195. The most notable form of industrial conscription in Australia occurred in World War II and was effected by regulations made under the National Security 195 See Public Safety Preservation Act 1958 (Vic), s 7. Act 1939. Although that Act, as originally enacted, had expressly provided that the regulation-making power it conferred did not authorise the imposition of any form of industrial conscription, the Act was amended, in 1940196, to provide power to make regulations: "making provision for requiring persons to place themselves, their services and their property at the disposal of the Commonwealth, as ... necessary or expedient for securing the public safety, the defence of the Commonwealth and the Territories of the Commonwealth, or the efficient prosecution of any war in which His Majesty is or may be engaged". (emphasis added) this power, regulations were made197 permitting And pursuant the Director-General of Man Power to "direct any person resident in Australia to engage in employment under the direction and control of the employer specified in the direction, or to perform work or services (whether for a specified employer or not) specified in the direction". That is, the regulation required all persons resident the Commonwealth". The validity of the regulation was upheld by this Court in Reid v Sinderberry198. in Australia "to place the disposal of themselves Against this background199, the meaning to be given to "civil conscription", when used in s 51(xxiiiA), begins to emerge more clearly. It is evident that it connotes compulsion. As Dixon J pointed out in the BMA Case200, the analogy with compulsory enlistment in the armed forces is readily drawn. Because the analogy with military conscription is so readily available it is apparent that the forms of compulsion which were referred to during World War II as manpower direction, or "requiring persons to place themselves ... at the disposal of the Commonwealth", lie at the centre of the notion conveyed by the the cognate expression "civil expression "industrial conscription" and conscription". But the example of civil or industrial conscription provided by 196 National Security Act 1940 (Cth). 197 National Security (Man Power) Regulations 1942 (Cth) as amended by National Security (Man Power) Regulations 1943 (Cth). 198 (1944) 68 CLR 504; [1944] HCA 15. 199 cf General Practitioners Society v The Commonwealth ("the General Practitioners Case") (1980) 145 CLR 532 at 571 per Aickin J; [1980] HCA 30. 200 (1949) 79 CLR 201 at 262. World War II manpower arrangements cannot be seen as marking the metes and bounds of either expression. We doubt that it is possible to provide any general definition of what is meant by "civil conscription". Rather, as Dixon J also pointed out in the BMA Case201, the meaning of an indefinite expression like "civil conscription" "cannot often be determined in the abstract [and it] is only by settling what application an expression like 'civil conscription' has to definite situations that its exact scope can be worked out". Of course, it is to be noticed that s 51(xxiiiA) speaks of "any form of civil conscription". The words "any form of" emphasise that the prohibition is not to be understood narrowly, but nothing in the present matters was said to turn upon giving those words a particular application or operation. This Court held in the BMA Case that s 7A of the Pharmaceutical Benefits Act 1947 (Cth), which required a medical practitioner not to write a prescription in respect of certain medicines or appliances otherwise than on a prescription form supplied by the Commonwealth, imposed a form of civil conscription. The more broadly expressed opinions stated by some members of the Court in the BMA Case, to the effect that "civil conscription" extends to "any compulsion of law requiring that men ... perform work in a particular way"202, have since been rejected203. Rather, the dissenting opinion of Dixon J in the BMA Case has come to be regarded204 as better expressing the construction and application of s 51(xxiiiA). In the BMA Case, the determinative question for Dixon J was205 "whether the isolation of an incident in medical practice and the imposition of a duty in reference to what is done can fall within the conception described by the words 'any form of civil conscription', or whether on the other hand compulsory service or the compulsory performance of a service or services is not connoted" (emphasis added). 201 (1949) 79 CLR 201 at 262. 202 (1949) 79 CLR 201 at 249 per Latham CJ. See also at 290 per Williams J, 294 per Webb J; cf at 255 per Rich J. 203 General Practitioners Case (1980) 145 CLR 532 at 556-557 per Gibbs J, 563 per Stephen J, 564 per Mason J, 571-572 per Wilson J; cf at 537 per Barwick CJ, 571 204 General Practitioners Case (1980) 145 CLR 532 at 558 per Gibbs J, 563 per Stephen J, 564 per Mason J, 571-572 per Wilson J. 205 (1949) 79 CLR 201 at 262. Dixon J concluded206 that s 7A (and an associated regulation) amounted to "no more than a regulation of the manner in which prescriptions shall be given" and that "[t]he end in view [was] not medical but financial and administrative". Noting207 that "[t]here is no compulsion to serve as a medical man, to attend patients, to render medical services to patients, or to act in any other medical capacity, whether regularly or occasionally, over a period of time, however short, or intermittently", Dixon J concluded that s 7A was valid. While the section made obligatory "an act in the course of medical practice"208 it did not amount to "a compulsory medical service"209. Subsequently, in General Practitioners Society v The Commonwealth ("the General Practitioners Case")210, the relevant question was expressed211 by Gibbs J, with whose reasons in this respect Stephen, Mason and Wilson JJ agreed, in terms that reflected the inquiries made by Dixon J in the BMA Case. That is, it was said to be necessary to distinguish between regulating the manner in which some of the incidents of medical practice are carried out and compelling any medical practitioner to perform any medical services. So expressed, the distinction may be thought to sound echoes of a distinction of the kind that had been made in connection with s 92 of the Constitution between "reasonable regulation" and prohibition212. The difficulties and incoherence of that distinction contributed213 to the Court's taking a new path 206 (1949) 79 CLR 201 at 278. 207 (1949) 79 CLR 201 at 278. 208 (1949) 79 CLR 201 at 278. 209 (1949) 79 CLR 201 at 277. 210 (1980) 145 CLR 532. 211 (1980) 145 CLR 532 at 559 per Gibbs J. 212 See, for example, Samuels v Readers' Digest Association Pty Ltd (1969) 120 CLR 1; [1969] HCA 6; North Eastern Dairy Co Ltd v Dairy Industry Authority of New South Wales (1975) 134 CLR 559; [1975] HCA 45. See also Zines, The High Court and the Constitution, 5th ed (2008) at 167-171. 213 See, for example, Finemores Transport Pty Ltd v New South Wales (1978) 139 CLR 338; [1978] HCA 16. in relation to s 92 in Cole v Whitfield214. But what Dixon J said in the BMA Case and what Gibbs J said in the General Practitioners Case does not direct attention to a distinction of the kind attempted in connection with the application of s 92, where the focus fell upon whether the regulation was reasonable, in the sense of necessary for the needs of "a free and civilized society"215. Rather, what was said by Dixon J in the BMA Case and by Gibbs J in the General Practitioners Case focuses attention upon what it is that the impugned law compels. Hence the question which Dixon J framed in the BMA Case216 was whether the isolation of an incident in medical practice, and the imposition of a duty in reference to what is done in that practice, comes within the ambit of either "compulsory service" or "the compulsory performance of a service or services", for if it fell within either of those descriptions, it would amount to a form of civil conscription. As "It is difficult indeed to say with confidence what is essential to the meaning of the expression 'any form of civil conscription', to ascribe to the expression any definite requirement as part of its connotation. But compulsion to serve seems to be inherent in the notion conveyed by the words. No doubt the service may be irregular or intermittent. A duty to give medical attention to outpatients at a hospital for two hours once a fortnight if imposed by law would no doubt be a form of civil conscription. It need not involve the relation of employer and employee. A law imposing an obligation to perform medical services for patients at a practitioner's own rooms would doubtless be bad as involving a form of civil conscription. But I cannot escape the conviction that a wide distinction exists between on the one hand a regulation of the manner in which an incident of medical practice is carried out, if and when it is done, and on the other hand the compulsion to serve medically or to render medical services. The former does not appear to me within the conception; the latter does." 214 (1988) 165 CLR 360; [1988] HCA 18. 215 Samuels v Readers' Digest Association Pty Ltd (1969) 120 CLR 1 at 15 per Barwick CJ; cf The Commonwealth v Bank of New South Wales (1949) 79 CLR 497; [1950] AC 235; Hughes and Vale Pty Ltd v The State of New South Wales [No 2] (1955) 93 CLR 127 at 218 per Kitto J; [1955] HCA 28. 216 (1949) 79 CLR 201 at 262. 217 (1949) 79 CLR 201 at 278. This view of civil conscription may well be understood as encompassing practical as well as legal compulsion218. If that is so, the view expressed by Dixon J was wider than that expressed by the other dissentient in the BMA Case, McTiernan J, who held219 that "[a]ny form of civil conscription does not mean any form of compulsion or control of conduct" and that the condition in par (xxiiiA) "with respect to civil conscription is aimed at the passing of a law which by any form conscribes a person into the service of the Commonwealth". McTiernan J denied220 that practical necessity or moral duty could amount to conscription. the General Practitioners Case, Mr M H Byers QC, then Solicitor-General of the Commonwealth, urged221 the adoption of the dissenting opinions of Dixon and McTiernan JJ in the BMA Case. The differences between the two opinions were not then said to be of significance. Rather, in the General Practitioners Case, the Commonwealth submitted that the laws then in question directed no statutory compulsion to the doctor, that there was no compulsion to do the service, that the doctor could treat or not treat the patient, and that civil conscription was to be understood as a compulsion to service analogous to military conscription. The Commonwealth repeated these submissions in the present matters. The Court divided in the General Practitioners Case about whether it was necessary to decide whether practical compulsion could amount to civil conscription. Five members of the Court concluded222 that in at least some circumstances practical compulsion could amount to a form of civil conscription; two members of the Court expressly reserved223 the question. All members of the Court held that provisions of the Health Insurance Act which provided that certain conditions be satisfied before medical benefits became payable to eligible persons to whom pathology services had been rendered and imposed obligations 218 cf Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J; [1948] HCA 7. 219 (1949) 79 CLR 201 at 283. 220 (1949) 79 CLR 201 at 283. 221 (1980) 145 CLR 532 at 536. 222 (1980) 145 CLR 532 at 537-538 per Barwick CJ, 550 per Gibbs J, 563 per Stephen J, 565 per Murphy J, 571 per Aickin J. 223 (1980) 145 CLR 532 at 564 per Mason J, 571 per Wilson J. on some providers of services (with the object of ensuring that unnecessary or excessive pathology services were not rendered) did not amount to a form of civil conscription. Although the sections then impugned compelled medical practitioners to perform certain duties in the course of practice, the provisions did not go beyond regulating the manner in which some of the incidents of practice were performed. The provisions did not compel a practitioner to perform any medical service. The appellants' case The appellants made two submissions in these matters. First, they submitted that "practical compulsion for a general practitioner to participate in the Medicare Scheme is sufficient for the provisions of the [Health Insurance Act] to offend the prohibition against civil conscription". Secondly, they submitted that the requirement of the Health Insurance Act "for medical practitioners not to engage in 'inappropriate practice' is an impermissible intervention in the professional delivery of clinical medical services and care and offends the prohibition against civil conscription". The Medicare scheme In support of their first submission, that practical compulsion to participate in the Medicare scheme sufficed to offend the prohibition against civil conscription, the appellants submitted that ss 10, 20 and 20A of the Health Insurance Act are invalid. These three provisions, together, were identified as providing the essential framework for "the Medicare scheme". Section 10 provides an entitlement to a Medicare benefit; s 20 identifies who is entitled to a Medicare benefit; and s 20A provides for assignment of Medicare benefits. So far as now relevant, s 10 provides: "(1) Where, on or after 1 February 1984, medical expenses are incurred in respect of a professional service rendered in Australia to an eligible person, medicare benefit calculated in accordance with subsection (2) is payable, subject to and in accordance with this Act, in respect of that professional service. (2) A benefit in respect of a service is: in the case of a service of the kind referred to in subparagraph (a)(ii) and paragraph (b) of the definition of applicable benefits arrangement in subsection 5A(1) of the National Health Act 1953 (not being a service, or a service in a class of services, that, under the regulations, is excluded from this paragraph)—an amount equal to 75% of the Schedule fee; or in any other case—an amount equal to 85% of the Schedule fee." The "Schedule fee" in relation to a service is defined in s 8(1A) of the Health Insurance Act as "the fee specified in the table in respect of the service". The "table" referred to in that definition is defined in s 3 as a table composed of three parts: the "general medical services table", the "diagnostic imaging services table" and the "pathology services table". Provision is made by ss 4, 4AA and 4A of the Health Insurance Act for the making of regulations prescribing each of those tables. Taken together, the tables cover most forms of medical consultation, examination, procedure and treatment. Sections 20 and 20A provide for payment of Medicare benefits. Section 20(1) provides that, subject to Pt II of the Health Insurance Act, "medicare benefit in respect of a professional service is payable by the Commission on behalf of the Commonwealth to the person who incurs the medical expenses in respect of that service". The entitlement for which s 20(1) provides is qualified by subsequent sub-sections of s 20. In particular, s 20(2) provides, in effect, that if a person to whom a Medicare benefit is payable under s 20(1) has not paid the medical expenses that he or she has incurred in respect of the particular service: "he or she shall not be paid the medicare benefit but, if he or she so requests, there shall, in lieu of that payment, be given to him or her personally, or sent to him or her by post at his or her last-known address, a cheque for the amount of the medicare benefit drawn in favour of the person by whom, or on whose behalf, the professional service was rendered". Section 20(3) and (4) deal with the case where a cheque is issued pursuant to s 20(2), in respect of a professional service rendered by or on behalf of a general practitioner, but the cheque is not presented for payment. In that event, the Commission may pay the amount of the relevant Medicare benefit to the general practitioner, and the person otherwise entitled to claim a Medicare benefit may no longer do so. Section 20A provides for assignment of Medicare benefits. It is the provisions of s 20A which underpin the practice known as "bulk-billing". Where a Medicare benefit is payable to an eligible person, that person and the practitioner providing the service may enter into an agreement in accordance with an approved form under which224: the first-mentioned eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first-mentioned eligible person". (emphasis added) An assignment of a Medicare benefit may not be made except in accordance with s 20A225 and it follows that a practitioner cannot take an assignment of a Medicare benefit except in full payment of the medical expenses incurred. Where an assignment takes effect or an agreement is made under s 20A, the Medicare benefit is payable in accordance with the assignment or the agreement226. It may be accepted that an inevitable consequence of these provisions for payment of Medicare benefits is that it is very unlikely that a medical practitioner could establish or maintain practice as a general practitioner in a way that did not give patients any access to those benefits. Whether a practitioner could establish or maintain a practice without agreeing to accept assignments of the Medicare benefits in full payment for some or all of the services the practitioner renders to patients would be determined by many considerations. But even if it is possible to practise as a general practitioner without bulk-billing at least some patients, it may be accepted that there is little if any practical alternative to practising in a way that gives most patients the right to claim whatever Medicare benefits are lawfully available. In that sense there is practical compulsion to participate in the Medicare scheme. It may also be accepted, as Aickin J said227 in the General Practitioners Case, that: "No doubt a legal obligation to perform particular medical or dental services, or to perform medical or dental services at a particular place, or 224 s 20A(1). 225 s 20A(5). 226 s 20A(3). 227 (1980) 145 CLR 532 at 565-566. to perform such services only as an employee of the Commonwealth would be clear examples of civil conscription. An equally clear example would be the prohibition of the performance of medical or dental services by particular qualified practitioners other than in some designated place, though no punishment was attached to failure to practise in that place. Other forms of 'practical compulsion' are easy enough to imagine, particularly those which impose economic pressure such that it would be unreasonable to suppose that it could be resisted." (emphasis added) Contrary to the appellants' submissions, however, to observe that there is a practical compulsion to participate in the Medicare scheme does not conclude whether the impugned provisions of the Health Insurance Act provide for a form of civil conscription. In answering that question, it is necessary to begin by noticing what the impugned provisions do not compel, either legally or practically. The impugned provisions do not compel, legally or practically, a medical practitioner to perform any service, whether on behalf of the Commonwealth or at all. They do not compel, legally or practically, a medical practitioner to treat or not treat any particular patient or group of patients. The impugned provisions do not, in the words of Dixon J in the BMA Case228, provide for "compulsory service" or "the compulsory performance of a service or services". The impugned provisions do not, in the terms used in the Commonwealth's argument in the General Practitioners Case229, direct any statutory compulsion to a doctor. There is no compulsion to do any service. A doctor can treat or not treat a patient. There is no compulsion to service analogous to military conscription. And there is neither a legal nor a practical compulsion, in the words of Aickin J in the General Practitioners Case, "to perform particular medical ... services, or to perform medical ... services at a particular place, or to perform such services only as an employee of the Commonwealth". The appellants did not submit to the contrary. Rather, the appellants drew attention to the consequence that follows from the need, as they put it, to "participate" in the Medicare scheme: the consequence that the medical practitioner is subject to the Professional Services Review Scheme provided for by Pt VAA of the Health Insurance Act. As s 80(1) of that Act records, Pt VAA "creates a scheme under which a person's conduct can be examined to ascertain whether inappropriate practice ... is involved. It also provides for action that can be taken in response to inappropriate practice." This the appellants characterised 228 (1949) 79 CLR 201 at 262. 229 (1980) 145 CLR 532 at 536. as requiring a practitioner to "conform to whatever it takes to remain in the scheme, even in matters going to the mode or manner of provision of medical services". Inappropriate practice The concept of "inappropriate practice" was introduced into the Health Insurance Act by the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth) ("the 1994 Amendment Act"). Before the amendments made by the 1994 Amendment Act, the Health Insurance Act provided230 for a Medical Services Committee of Inquiry to examine whether a practitioner had rendered or initiated "excessive services", defined231 as "services in respect of which medicare benefit has become or may become payable and which were not reasonably necessary for the adequate medical or dental care of the patient concerned". If satisfied that a practitioner had rendered or initiated excessive services, the Committee could recommend232 the imposition of any of a number of sanctions, ranging from reprimand to a requirement for repayment to the Commonwealth of amounts that had been paid as benefits. Section 82 of the Health Insurance Act as amended by the 1994 Amendment Act defines "inappropriate practice". Both s 81 and the heading to s 82 treat the provisions of s 82 as assigning a number of meanings to the expression, but for present purposes it is sufficient to notice three particular features of the provisions of s 82. First, and most importantly, "inappropriate practice" is confined to a practitioner's "conduct in connection with rendering or initiating services". For this purpose, "service" means233: a service for which, at the time it was rendered or initiated, medicare benefit was payable; or a service rendered by way of a prescribing or dispensing of a pharmaceutical benefit by a medical practitioner or a dental practitioner". 231 s 79(1B). That is, inappropriate practice is confined to conduct "in connection with rendering or initiating" services for which a Medicare benefit is payable under the Health Insurance Act or a pharmaceutical benefit is payable under Pt VII of the National Health Act 1953 (Cth). The Explanatory Memorandum for the Bill for what was to become the 1994 Amendment Act recorded234 that the concept of inappropriate practice would encompass "the existing concepts of excessive rendering and excessive initiating but also [introduce] the concept of excessive prescribing". It continued235: "In addition, it will allow a Committee to examine, where relevant, aspects of a practitioner's practice broader than purely the excessive servicing of patients. A Committee will have the capacity to consider the conduct of the person under review in his or her practice and determine whether that conduct is acceptable to the general body of his or her profession or specialty." (emphasis added) The breadth of what has since been asserted to be the reach of the provision is indicated by a report236, made in 1999, following a review of the operation of the provisions of Pt VAA. That report identified237 the categories of conduct which involved inappropriate practice. Those categories included such matters as "issues of professional concern in relation to clinical competence and performance", "aberrant professional behaviour or beliefs", "physical or mental impairment", "substance abuse" and "[o]rganisational issues which affect patient safety", as well as matters going more directly to the number and types of services said to have been performed by a practitioner. At least some of these categories of conduct assume a very large meaning of, and application for, the expression "conduct in connection with rendering or initiating services". There may be room for debate about whether issues like 234 Explanatory Memorandum for the Health Legislation (Professional Services Review) Amendment Bill 1993 (Cth) at 4. 235 Explanatory Memorandum for the Health Legislation (Professional Services Review) Amendment Bill 1993 (Cth) at 4. 236 Australia, Report of the Review Committee of the Professional Services Review Scheme, (1999). 237 Australia, Report of the Review Committee of the Professional Services Review Scheme, (1999) at 15-16. general questions about a practitioner's physical or mental competence or a practitioner's substance abuse will come within the expression "conduct in connection with rendering or initiating services". There may also be room for debate about whether all questions about clinical competence and performance, or all organisational issues affecting safety, will come within that expression. No doubt the expression "in connection with" is not to be given a narrow or confined construction. But the provision requires that a connection be demonstrated between identified conduct and rendering or initiating services for which benefits are payable. It is not necessary to examine further the nature of, or limits to, that connection. The Health Insurance Act recognises that examining a practitioner's conduct in connection with rendering or initiating services may reveal conduct that does not fall within the statutory concept of inappropriate practice but which may fall within some other definition of unprofessional practice. Provision is therefore made by s 106XA for referring to an appropriate regulatory body any significant threat to life or health that comes to light "in the course of the performance of functions or the exercise of powers" under Pt VAA of the Act. And s 106XB provides for reference to an appropriate regulatory body of any non-compliance by a practitioner with professional standards. These provisions show that it is neither necessary nor appropriate to attempt to stretch the concept of "inappropriate practice", or its definition as "conduct in connection with rendering or initiating services", to embrace all forms of conduct by a practitioner that would merit professional condemnation. Rather, the focus of Pt VAA must remain fixed upon conduct in connection with rendering or initiating services for which benefits are payable. And it was no doubt with just such a focus in mind that provision was made in 1999, by the Health Insurance Amendment (Professional Services Review) Act 1999 (Cth), for a Committee considering whether a practitioner has engaged in inappropriate practice to have regard to only samples of classes of services238 before finding that a practitioner has engaged in inappropriate practice in relation to services of the relevant class; for a Committee to make a finding of inappropriate practice239 if it is established that a practitioner's conduct in rendering or initiating services constitutes a "prescribed pattern of services"; and for a Committee to make a generic finding of inappropriate practice240 where it cannot make a finding by reference to samples of services provided or to 238 s 106K. 239 s 106KA. 240 s 106KB. prescribed patterns of services because clinical or practice records are insufficient. The second point to notice about s 82 is that it requires that the conduct be "such that a Committee could reasonably conclude that ... the conduct would be unacceptable to the general body" of relevant practitioners (emphasis added). The addition of the word "reasonably" reinforces the conclusion that might otherwise have been drawn in any event that the standard against which conduct is to be measured is an objectively determined standard. Moreover, the use of the word "reasonably" may take on particular significance in the application of the ADJR Act. In particular, it may bear upon whether a decision to which the ADJR Act applies was "authorized by the enactment in pursuance of which it was purported to be made"241, whether the decision "involved an error of law"242, as well as whether "the decision was otherwise contrary to law"243 or involved an "improper exercise of ... power"244. It is not necessary to explore in any further detail these questions about the application of the ADJR Act. Thirdly, the references in s 82(1) to a conclusion that "the conduct would be unacceptable to the general body" of relevant practitioners cannot be understood divorced from some aspects of the history of legislative regulation of the medical profession. For many years, both in England and in Australia, medical practitioners would be struck off the register if found "to have been guilty of infamous conduct in any professional respect"245. In Allinson v General Council of Medical Education and Registration246, the Court of Appeal of England and Wales identified one form of conduct amounting to "infamous conduct in a professional respect" as a medical practitioner, in the pursuit of that profession, doing "something with regard to it which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and 241 Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5(1)(d). 242 s 5(1)(f). 243 s 5(1)(j). 244 s 5(1)(e). 245 Medical Act 1858 (UK), s 29. 246 [1894] 1 QB 750 at 760-761 per Lord Esher MR, 763 per Lopes LJ, 766 per Davey LJ. competency". Proof of conduct of that kind resulted in striking the offender's name from the register of practitioners. No lesser punishment could be imposed. Not surprisingly, then, there was much litigation over the years about what was "infamous conduct in a professional respect". In particular, much attention was given to whether it was necessary to establish moral turpitude, fraud or dishonesty. For the most part these issues were put to rest in Australia by this Court's decision in Hoile v The Medical Board of South Australia247 holding that what amounts to "infamous conduct" is "best represented by the words 'shameful' or 'disgraceful'; and it is as conduct of a medical practitioner in relation to his profession that it must be considered shameful or disgraceful"248. More recent legislation regulating the conduct of professional practitioners such as medical and legal practitioners has moved away from the notion of "infamous conduct" and has provided for a much greater range of punishments for professional default than termination of the right to practise by striking off the appropriate register249. And as Lord Hoffmann, delivering the opinion of the Judicial Committee of the Privy Council in McCandless v General Medical Council250, pointed out, "the public has higher expectations of doctors and members of other self-governing professions [and] [t]heir governing bodies are under a corresponding duty to protect the public against the genially incompetent as well as the deliberate wrongdoers". But from Allinson's Case to today, a common thread can be identified running through most statutes regulating the conduct of what Lord Hoffmann referred to as the "self-governing professions". The standard of conduct expected 247 (1960) 104 CLR 157 at 162; [1960] HCA 30. 248 See also, R v The Medical Board of Victoria; Ex parte Epstein [1945] VLR 60; Epstein v The Medical Board of Victoria [1945] VLR 309; Re Appeals of Johnson and Anderson [1967] 2 NSWR 357; Mercer v Pharmacy Board of Victoria [1968] VR 72; Basser v Medical Board of Victoria [1981] VR 953. 249 See the provisions relating to "professional misconduct" or cognate expressions in, for example, Medical Practice Act 1992 (NSW), s 36; Health Professions Registration Act 2005 (Vic), s 3; Medical Practice Act 2004 (SA), s 3; Health Practitioners (Professional Standards) Act 1999 (Q), s 3; Medical Practitioners Registration Act 1996 (Tas), s 45; Health Practitioners Act (NT), s 56(2); Health Professionals Act 2004 (ACT), s 18; cf Medical Act 1894 (WA), s 13. 250 [1996] 1 WLR 167 at 169. of practitioners is an objective standard and is often identified, at least in part, by reference to the opinion of members of the profession, or members of the profession "of good repute and competency"251. Hence, the reference in s 82(1) to conduct that "would be unacceptable to the general body" of relevant practitioners can be seen as maintaining the thread common to many earlier forms of professional discipline and regulation, by which the standards of conduct are set by reference to prevailing professional opinion. And in particular, the conduct which may be identified as "inappropriate practice", as defined in s 82 of the Health Insurance Act, is conduct which has two features. First, the conduct must be "in connection with rendering or initiating services" for which a Medicare benefit or a pharmaceutical benefit is payable. Secondly, the conduct must be such as a Committee could reasonably conclude would be unacceptable to the general body of relevant practitioners. As noted earlier, it may be accepted that the Health Insurance Act has the practical effect of requiring those medical practitioners who wish to practise as general practitioners to participate in the Medicare scheme. The Act requires those practitioners not to engage in inappropriate practice. It therefore follows that the Health Insurance Act practically compels those practitioners to abide by a particular standard of professional behaviour in connection with rendering or initiating services. Even if the definition of inappropriate practice in s 82 is as broad in its application as has been asserted (and as noted earlier, it is not necessary to decide whether it is) the standard of conduct that is thus imposed is framed by reference to professional opinion. It is, therefore, not different in kind from the standard of professional conduct that, since Allinson's Case, has been expected of medical practitioners in the conduct of their profession. Whether such a broad view of s 82 could present any question about whether, in some of its applications, the law, so construed, was a law with respect to medical and dental services was not explored in argument. It is neither necessary nor appropriate to express any opinion about whether any such question would be presented, or about how such a question should be answered. The only attack mounted on the provisions of the Health Insurance Act which are impugned in these proceedings was that they provided for a form of civil conscription. 251 Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 at 761. See also, for example, In re A Solicitor; Ex parte Law Society [1912] 1 KB 302 at 312; R v The Medical Board of Victoria; Ex parte Epstein [1945] VLR 60; Epstein v The Medical Board of Victoria [1945] VLR 309; Re Appeals of Johnson and Anderson [1967] 2 NSWR 357. Assuming, without deciding, that s 82 does require medical practitioners to conform to the standard thus prescribed in relation to what the appellants called "matters going to the mode or manner of provision of medical services", the requirement to comply with that standard does not constitute a form of civil conscription. Section 82 and the other provisions which the appellants alleged to be invalid do not deny that a medical practitioner is free to choose whether to practise. A practitioner may choose whether to practise on his or her own account, or as an employee. The impugned provisions do not confine a practitioner's freedom252 to choose where to practise. If the practitioner practises on his or her own account, the practitioner may decide when to be available for consultation and who to accept as a patient. The practical compulsion to meet a prescribed standard of conduct when the practitioner does practise is not a form of civil conscription. To adopt and adapt what Dixon J said253 in the BMA Case, "[t]here is no compulsion to serve as a medical [practitioner], to attend patients, to render medical services to patients, or to act in any other medical capacity, whether regularly or occasionally, over a period of time, however short, or intermittently". Each appeal should be dismissed. In Dr Wong's appeal the appellant should pay the costs of the Commonwealth. In Dr Selim's appeal, the appellant should pay the costs of the first, third and fourth respondents. 252 Reference was made in passing during oral argument to arrangements made under s 19ABA of the Health Insurance Act with respect to agreements to work in rural or remote areas. Reference may also be made to s 19AB and arrangements made with respect to certain overseas trained doctors. Neither the operation of any of these arrangements nor their validity was examined in argument. 253 (1949) 79 CLR 201 at 278. 228 HEYDON J. The background circumstances and the principal constitutional and legislative provisions are set out in other judgments. The legislative scheme in outline Sections 9, 10, 20 and 20A. What the Full Court called the "Medicare Scheme" operates in relation to general practitioners in the following way. Subject to s 20A of the Act, medical practitioners who participate in the Medicare Scheme may charge their patients what they wish, but, in relation to the vast majority of professional services, the patient is entitled to a "Medicare benefit" in relation to each professional service: ss 9, 10(1) and (2) and 20254. Section 20A deals with the practice known as "bulk billing". It authorises the entry into an agreement between medical practitioner and patient under which the patient assigns to the medical practitioner that patient's right to payment of a Medicare benefit in full payment of the medical expenses incurred in respect of the professional service in question. But it is not all medical practitioners who may participate in the Medicare Scheme – only those not disqualified from doing so. Disqualification is regulated by Pt VAA. Part VAA. Part VAA was introduced in 1994. The responsible Ministers were Senator Graham Richardson as Minister for Health and Dr Andrew Theophanous as Parliamentary Secretary to the Minister for Health. Part VAA may thus be called the "Richardson-Theophanous scheme". About that scheme the Full Court made255 the following finding (partly challenged by the respondents, but not successfully)256: "[I]f patients cannot claim medical benefits in relation to the services that a doctor provides … a doctor will have few, if any, opportunities to practise as a general practitioner in private practice. The Act thus imposes a practical compulsion on those who wish to practise as general 254 The Medicare benefit is calculated by reference to a table of medical services prescribed in regulations made each year setting out items of medical services, the amount of fees applicable in respect of each item, and rules for interpreting the table. The table is published annually in a "Medicare Benefits Schedule Book". The table covers most services likely to be provided by a general medical practitioner. Sometimes the services are described specifically and sometimes they are described in general terms, for example, "brief", "standard", "long" or "prolonged" consultations. 255 Selim v Lele (2008) 167 FCR 61 at 75 [35]. 256 See below at [256]-[259]. practitioners in private practice to participate in the Medicare Scheme and, as a result of Pt VAA, to conduct their practice in such a way as to avoid committing inappropriate practice." The reference to "inappropriate practice" is a reference, relevantly, to s 82 of the Act. Section 82(1)(a) provides: "A practitioner engages in inappropriate practice if the practitioner's conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that: if the practitioner rendered or initiated the referred services as a general practitioner – the conduct would be unacceptable to the general body of general practitioners …" Section 81(1) provides that the reference in s 82(1)(a) to "Committee" is a reference to a Professional Services Review Committee set up under s 93 ("a Committee"). At the relevant time s 86(1)(a) empowered the Health Insurance Commission to refer to the Director of Professional Services Review ("the Director") the conduct of a person relating to the question whether that person had engaged in inappropriate practice in connection with the rendering of services for which Medicare benefit was payable. This was known as "investigative referral": s 81(1). Section 93(1) empowered the Director to set up a Committee of three relevantly qualified medical practitioners (s 95) and make an "adjudicative referral" to it to consider whether conduct by the person under review constituted engaging in inappropriate practice. The Committee was obliged to prepare "a written draft report of preliminary findings" (s 106KD) and a "final report" (s 106L). The final report was to be given to the "Determining Authority" (s 106L(4)). Where the Committee found that the person under review had engaged in inappropriate practice, the Determining Authority was to make draft determinations and final determinations (ss 106T, 106TA, 106U and 106V). Those determinations had to contain one or more of a series of directions which included reprimand, counselling, non-payment of Medicare benefits, repayment of Medicare benefits, and full or partial disqualification (pursuant to s 106U(1)(h)) for up to three years: s 106U(1). A Medicare benefit is not payable in respect of a professional service rendered by a practitioner in relation to whom a final determination contained a direction under s 106U(1)(h) that the practitioner be disqualified: s 19B(2). The consequence of the Full Court's finding quoted above257 about the Richardson- Theophanous scheme is that if a final determination directs disqualification, the doctor in question will have few, if any, opportunities to practise as a general practitioner in private practice. What is "inappropriate practice"? legislation Before examining whether is beyond Commonwealth legislative power, it is necessary to establish what it means. It is plain that the concept of "inappropriate practice" is central to the Richardson-Theophanous scheme. It confronts the parties with a dilemma. The more narrow s 82(1) is, the less likely it is that it will be invalid (although the more likely it is that a particular Committee may act beyond its powers). The wider it is, the more likely it is that it will be invalid (although if it is valid it is less likely that a particular Committee will act beyond its powers). Four possible meanings of "inappropriate practice". What, then, is "inappropriate practice"? There are at least four possibilities. The first is that the expression refers only to excessive servicing – the supply of medical services unnecessarily. The second is that it refers to unprofessional conduct of the kind discussed in the line of cases associated with Allinson v General Council of Medical Education and Registration258 and dealt with in legislation to a similar effect – that is, misconduct which includes not only some forms of excessive servicing but other kinds of professional misconduct. The third is that the expression refers to failures to attain proper standards of care and skill in the conduct of medical practices, both in relation to particular forms of advice and treatment and in relation to practice organisation. The fourth is that the expression extends beyond the first three meanings in such a way as to permit control of conduct even though it is honest, careful and skilful. Excessive servicing? Contrary to the submissions of the Commonwealth, the first view – that "inappropriate practice" refers only to excessive servicing – tends to be negated by the Second Reading Speech on the Health Legislation (Professional Services Review) Amendment Bill 1993, which, on enactment, amended the Act by inserting Pt VAA. Dr Theophanous said259: 258 [1894] 1 QB 750 at 760-761. See [64] and [220]-[222] above. 259 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 September 1993 at 1551. "Whereas excessive servicing is currently defined as the rendering or initiation of services not reasonably necessary for the adequate care of the patient, the concept of inappropriate practice goes further." the Explanatory Memorandum circulated by authority of Senator And "Section 82 defines a new concept, to be known as 'inappropriate practice'. It encompasses the existing concepts of excessive rendering and excessive initiating but also introduces the concept of excessive prescribing. In addition, it will allow a Committee to examine, where relevant, aspects of a practitioner's practice broader than purely the excessive servicing of patients." The proposition that Pt VAA extends beyond excessive servicing is also now supported by an amendment to Pt VAA made in 2003 to introduce s 79A. It provides: "The object of this Part is to protect the integrity of the Commonwealth medicare benefits and pharmaceutical benefits programs and, in doing so: protect patients and the community in general from the risks associated with inappropriate practice; and protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice." Paragraph (b) corresponds with a purpose directed against "inappropriate practice" viewed as excessive servicing. But par (a) reflects other and wider purposes. Allinson conduct? The second view – that "inappropriate practice" refers to unprofessional conduct – is negated by various provisions in Pt VAA. (a) One is s 82(3), which makes the keeping of adequate and contemporaneous records a relevant factor. Inefficiency in record keeping is not unprofessional conduct as traditionally and generally understood. The same applies to s 106KB(1)(a) which widens the Committee's powers if there are no, or no adequate, clinical or practice records. 260 Explanatory Memorandum to the Health Legislation (Professional Services Review) Amendment Bill 1993 (Cth) at 4. Sections 89A and 106N give respectively the Director and the Committee certain powers if fraud is suspected: this specific provision for a particular type of malpractice suggests that s 82(1) ranges much more widely. Section 106K permits the Committee to have regard to samples of the services supplied by the relevant medical practitioner within a class of services: this suggests that Pt VAA is not concerned only with particular serious incidents but routine repeated instances of unacceptable conduct. The same is true of s 106KA, which deals with services constituting a "prescribed pattern of services" over a particular period. There is a wide range of directions which may be contained in a draft or final determination: s 106U. There would be little point in having directions as painless as a reprimand or counselling or a non-payment of a single Medicare benefit otherwise payable or a repayment of whole or part of a single Medicare benefit if the conduct which resulted in that outcome was not capable of extending to very minor failings in the conduct of a practice. Want of due care and skill? Hence it is likely that "inappropriate practice" extends at least to the conduct encompassed within the third view. That was the view of the Full Court261 and of Davies J262, who thought that "unacceptable" conduct concerned departures from due care and skill. However, the Report of the Review Committee of the Professional Services Review Scheme to the Minister for Health and Aged Care263 went further. More detailed regulation? The Report. The Report concluded that the conduct identified by the Committees under the Richardson-Theophanous scheme as involving inappropriate practice fell into three categories. One, under the heading "General professional issues", related to "clinical competence and performance; aberrant professional behaviour or beliefs; lack of meaningful continuing medical education; physical or mental impairment; and substance abuse." Under that heading the Report also referred to organisational issues "which affect patient safety, such as equipment and staffing deficiencies" as also sometimes being evident. The second, under the heading "Particular identifiable unacceptable conduct", was described as "high number of services per patient; unusual incidence of specific types of services; inappropriate prescribing; 261 Selim v Lele (2008) 167 FCR 61 at 80-81 [50]. 262 Yung v Adams (1997) 80 FCR 453 at 459. 263 Australia, Report of the Review Committee of the Professional Services Review Scheme, (1999) at 15-16. inappropriate ordering of diagnostic imaging and pathology; and inappropriate use of Medicare item numbers when making claims." The third, under the heading "High volume services per day", referred to "high numbers of services per day with low rates of consultation services per patient."264 to "unusual incidence of specific types of services"; and If the Richardson-Theophanous scheme gives a Committee, given the task of adjudicating on "inappropriate practice", the power to identify as aberrant – years after the supply of the medical services being investigated – certain "professional behaviour" or "professional beliefs", it gives a very wide power of control. The same is true in relation to the mode of "performance" within a practice; "inappropriate prescribing". In each case there is a possibility of particular sanctions for the past and of preventing or hindering or dissuading the supply by doctors of particular types of services, medications or treatments – types which might not command majority support within the profession but may be thought bona fide and on reasonable grounds by a particular doctor to be suitable for a particular condition in a particular patient, and which, though unorthodox, may one day come to be regarded as wholly legitimate. For almost every one of the striking advances in medical treatment over the last 250 years was at the time when it was developed and introduced not favoured by the majority of the profession. The Report thus indicates a very wide view of what the expression "inappropriate practice" can include. So do the final reports of the Committees which investigated Dr Selim and Dr Wong. More detailed regulation? The Committees' findings against Dr Selim and Dr Wong. A Committee found in a final report made under s 106L that Dr Selim's conduct constituted "inappropriate practice" in relation to the quality of clinical input into his servicing, the failure to provide "professional services", the failure to maintain adequate records, and the failure to meet the requirements for providing item 23 and item 36 services265. 264 Australia, Report of the Review Committee of the Professional Services Review Scheme, (1999) at 15-16. 265 An item 23 service was: "Professional attendance involving taking a selective history, examination of the patient with implementation of a management plan in relation to 1 or more problems, OR a professional attendance of less than 20 minutes duration involving components of a service to which item 36, 37, 38, 40, 43, 44, 47, 48, 50 or 51 applies." An item 36 service was: "Professional attendance involving taking a detailed history, an examination investigations and of multiple (Footnote continues on next page) systems, arranging any necessary Another Committee found in a final report made under s 106L that Dr Wong's conduct constituted "inappropriate practice" in connection with item 23 services266: he had not provided an appropriate level of clinical input; he had managed patients episodically rather than pursuant to a clinical management plan; his use of therapeutic drugs demonstrated poor clinical acumen; and he had provided services that were not clinically necessary. Taking the findings against the two doctors together, many adverse findings did not concern unsatisfactory treatment as such. They concerned the failure to record, or record in detail or legibly, events which may have happened – histories given on particular visits, observations made during particular visits, explanations of the dosages in which and the frequencies with which medications were to be given, and the setting of time frames for follow-up treatment. Some adverse findings concerned the prescription of medications or tests which were not clinically indicated; episodic treatment rather than treatment regulated by a clinical management plan or strategy; incorrect usages of technical terms; incorrect prescriptions of drugs for viral as opposed to bacterial illnesses and vice versa; and incorrect prescriptions of drugs which might interact adversely with other medications being taken. The point is not that these conclusions of the Committees are necessarily unsound. Rather it is that the legislative expression "inappropriate practice" is seen as warranting extremely detailed examination of the contacts between the doctors and the patients in their most minute aspects. The extreme breadth of the expression suggests that that construction of it, which the Report assumed and on which the Committees appear to have been acting, is correct. Even though s 82(1) contains the words "reasonably conclude that … the conduct would be unacceptable to the general body of general practitioners", a very great deal is left to the opinion, judgment and discretion of three people. Is a disciplinary scheme, backed by many sanctions, some severe, involving so detailed a level of management and regulation, a form of "civil conscription"? implementing a management plan in relation to 1 or more problems, and lasting at least 20 minutes, OR a professional attendance of less than 40 minutes duration involving components of a service to which item 44, 47, 48, 50 or 51 applies." 266 The definition in the period relevant to Dr Wong was in substance the same as the definition relevant to Dr Selim: see n 265 above. The Commonwealth's submissions The Commonwealth submitted that the following test stated by Gibbs J in General Practitioners Society v The Commonwealth, which was concurred in by at least five other members of the Court, was correct267: "[The] expression ['any form of civil conscription'], used in its natural meaning, and applied, as the context of par (xxiiiA) requires, to medical and dental services, refers to any sort of compulsion to engage in practice as a doctor or a dentist or to perform particular medical or dental services. However, in its natural meaning it does not refer to compulsion to do, in a particular way, some act in the course of carrying on practice or performing a service, when there is no compulsion to carry on the practice or perform the service." (emphasis added by the Commonwealth) Hence even if it could be said that there was practical compulsion on medical practitioners to conduct their practices in such a way as to avoid committing inappropriate practice, there was no compulsion to perform particular medical services. All that Pt VAA did was to compel doctors to do, in a particular way, some act in the course of carrying on practice or performing a service where there was no compulsion to carry on the practice or perform the service. The Commonwealth further submitted that to overrule that test and include within "civil conscription" provisions compelling an act done in the course of performing a service to be done in a particular way even though there was no compulsion to perform the service would be to depart from the meaning of "civil conscription" as understood at the time when s 51(xxiiiA) was inserted into the Constitution in 1946. Three preliminary matters Three preliminary matters are to be remembered. Constitutional guarantee. the phrase "any form of civil First, conscription" operates to confer a type of constitutional guarantee. It creates a deliberate constitutional restraint on a head of Commonwealth legislative power. It relates to individual freedom. It should thus be treated as a matter of substance. It should be read purposively. It should not be construed narrowly. The Commonwealth accepted this, but submitted that it did not follow that it should "automatically … be read up": it should be read as operating within the field which its proper construction carves out. 267 (1980) 145 CLR 532 at 557 (cf at 565-566 and 571 per Aickin J); [1980] HCA 30. Relevance of practical operation. Secondly, in Ha v New South Wales268 Brennan CJ, McHugh, Gummow and Kirby JJ said: "When a constitutional limitation or restriction on power is relied on to invalidate a law, the effect of the law in and upon the facts and circumstances to which it relates – its practical operation – must be examined as well as its terms in order to ensure that the limitation or restriction is not circumvented by mere drafting devices. In recent cases, this Court has insisted on an examination of the practical operation (or substance) of a law impugned for contravention of a constitutional limitation or restriction on power." Sufficiency of practical compulsion. Thirdly, it is clear that the meaning of "compulsion" in the General Practitioners test includes legal compulsion, ie a command backed by a sanction or enforceable by mandatory injunction. Two members of this Court in the General Practitioners case (Mason J269 and Wilson J270) left open the question whether practical compulsion as distinct from legal compulsion is enough to satisfy the constitutional conception of "civil conscription", but the other five members considered that it was271, although Barwick CJ thought that "to make out such a case would need an extremely strong set of circumstances which, in real terms, left the individual with no choice but to submit to what the statute required, though it did not command it."272 In particular Gibbs J appears to have included "practical compulsion" within his references to "compulsion". That is because he said273: "The question whether a law imposes civil conscription cannot be answered in the negative simply because the law does not create any legal liability to perform any medical or dental service; the effect of the law in the economic and other circumstances must be considered, and practical compulsion is enough". 268 (1997) 189 CLR 465 at 498 (footnote omitted); [1997] HCA 34. 269 (1980) 145 CLR 532 at 564. 270 (1980) 145 CLR 532 at 571. 271 (1980) 145 CLR 532 at 537-538 per Barwick CJ, 550 per Gibbs J, 563 per Stephen J, 565 per Murphy J and 565-566 per Aickin J. 272 (1980) 145 CLR 532 at 538. 273 (1980) 145 CLR 532 at 550. There are also dicta from three Justices to the same effect in British Medical Association v The Commonwealth274. In these proceedings the Commonwealth accepted that practical compulsion would suffice. An example of practical compulsion would arise where benefits are given to medical practitioners who comply with a certain condition (eg to treat a particular patient or give a particular patient a particular service), but where benefits are not given to those who do not, in circumstances where failure to obtain those benefits will be economically fatal to the medical practitioner in question. The reasoning of the Full Court The Full Court concluded, first, that the Act imposed a practical compulsion not to do anything which would be unacceptable to the general body of practitioners275. But it also concluded, secondly, that the second sentence of the General Practitioners test applied: neither s 10, nor s 20, nor s 20A, nor Pt VAA created any compulsion on a medical practitioner to perform any professional service276. The Commonwealth denied that the Full Court was correct to reach its first conclusion. It said: "If I choose to be a general practitioner in private practice, then the economic incentives facing my clients [sic] are such that I am unlikely to be able to earn a living as a general practitioner in private practice unless I participate to some extent in the Medicare system and, to that extent, conduct my practice in a way that avoids committing inappropriate practice within the meaning of Part VAA." It then said: "[T]o characterise the indirect economic effect of the Act on the patient and through the patient on the practitioner as practical compulsion imposed by the Act is going too far". But it did not explain why it was going too far. It is practical compulsion not merely because of indirect economic effects, but because of the way the statutory structure operates on general practitioners considered as professionals. The following is a conventional path for a person educated in New South Wales who wishes to become a general practitioner. Normally a very high result must be achieved in the last year of secondary school. A university degree must 274 (1949) 79 CLR 201 at 252-253 per Latham CJ, 256 per Rich J and 292-293 per Webb J; McTiernan J was of the contrary opinion at 283-284; [1949] HCA 44. 275 Selim v Lele (2008) 167 FCR 61 at 75 [35], quoted above at [84]. 276 Selim v Lele (2008) 167 FCR 61 at 79-81 [45]-[50]. then be obtained, and usually is obtained in a medicine-related field, for example the degree of Bachelor of Medical Science. It is then necessary to gain admission to a university medical school. This entails the passing of quite difficult examinations: many are called to sit, not all that many are chosen. Four years of study for a medical degree then follow. Not all survive them. A year's training in a teaching hospital as an "intern" then takes place. Since 1996 it has been necessary to undertake a minimum of three years supervised clinical practice and to pass the examinations prescribed by the Royal Australian College of General Practitioners. By the time general practitioners have reached that stage they are aged about 30. There may be heavy financial pressures on them. They may well have funded their studies and their accommodation by borrowing. Most persons in that position have to take any medical work they can. They will not obtain any significant amount of medical work unless they are participants in the Medicare Scheme, for if they are not their patients will not be eligible for Medicare benefits. This creates a practical necessity to treat patients who come forward on the conditions of detailed regulation inherent in the Richardson- Theophanous scheme. The Commonwealth attempted to negate this conclusion by pointing to the capacity of general practitioners to pursue various forms of occupational activity open outside the Medicare Scheme and hence outside the controls of the These range from various forms of employment by the Commonwealth or the States or by trading corporations, to work on cruise ships, in gaols or for professional sports teams; conducting medical examinations for the purpose of insurance, drivers' licences and other licences; working in specialty clinics dealing with obesity or cosmetic problems or weight reduction; attending to overseas visitors not eligible for Medicare benefits; dealing with patients who qualify for benefits under the Veterans' Entitlements Act 1986 (Cth); treating patients whose treatment is covered by a workers' compensation scheme or other compensation scheme or by insurance; and working in pharmaceutical companies, tertiary institutions, journalism or medical administration. With the greatest respect to all medical practitioners who provide medical services, or engage in paramedical activities, of these doubtless worthwhile kinds, many general practitioners may not view them as forming a desirable or satisfactory career path. The Full Court's first conclusion was correct. Medical practitioners have the strongest pressures of self-interest to earn their living and they have a moral obligation to support those dependent on them by earning their living. The effect of ss 10, 20 and 20A and Pt VAA is that unless medical practitioners are prepared to act in the way Pt VAA requires, they will not readily be able to earn their living in the way, and possibly the only way, in which they are qualified to earn it. As Latham CJ said in the British Medical Association case277, there could be no more effective means of compulsion. The General Practitioners test A difficulty with the General Practitioners test is that Gibbs J said that in some circumstances it could be civil conscription for Parliament "to provide that a doctor … should carry on his practice at a particular place, or at a particular time, or only for a particular class of patients."278 But, on the General Practitioners test, why? For Gibbs J also said that if doctors are not compelled "to perform services generally as such, or to perform particular medical … services", there is no civil conscription279. There is no compulsion to attend to any particular patient at that place or time or among that class. Further, the General Practitioners test is the product of analysis resting on the "natural meaning" of words280. Thus Gibbs J said281: "The word 'conscription', in the sense that seems to be most apposite for present purposes, means the compulsory enlistment of men (or women) for military (including naval or air force) service. The expression 'civil conscription' appears to mean the calling up of persons for compulsory service other than military service." The type of analysis described in Cole v Whitfield282 was not then permitted, and was not engaged in. It is necessary to engage in it before considering whether the General Practitioners test is correct. It will be concluded that it is not. It is undesirable to seek to devise a better test which will answer all possible circumstances. It is better to confine attention to the circumstances of these particular proceedings283. 277 (1949) 79 CLR 201 at 253. See also Webb J to the same effect at 292-293. The passages are quoted at [106]-[107] above. 278 (1980) 145 CLR 532 at 558. 279 (1980) 145 CLR 532 at 558. 280 (1980) 145 CLR 532 at 557. 281 (1980) 145 CLR 532 at 555. See also at 557. 282 (1988) 165 CLR 360 at 384; [1988] HCA 18. See below at [262]. 283 See British Medical Association v The Commonwealth (1949) 79 CLR 201 at 262 per Dixon J, quoted above at [193]. Cole v Whitfield In the course of argument the Commonwealth, in particular, but not only the Commonwealth, referred to the legislative and historical background to s 51(xxiiiA). For example, the Commonwealth relied on the fact that the "Yes" case at the referendum approving s 51(xxiiiA) claimed that it would give the power to provide the benefits then being provided in New Zealand, and the Commonwealth relied on the terms of the New Zealand legislation. Leaving aside the rather important point that the "Yes" case did not say what the terms of the New Zealand legislation were, and that it would be extremely difficult for the voters to find out the terms for themselves, this reasoning must be questioned. The Commonwealth contended that this course was justified by Cole v Whitfield because it assisted in identifying "the subject to which [the] language was directed". Those words from the joint judgment in Cole v Whitfield appeared as part of the following passage284: "Reference to the history of s 92 may be made, not for the purpose of substituting for the meaning of the words used the scope and effect – if such could be established – which the founding fathers subjectively intended the section to have, but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged." Of these three purposes, the third does not arise: s 51(xxiiiA) did not emerge from the movement towards federation. The first purpose can be pursued, but only to a limited extent. The limit to the extent to which it can be pursued stems from the fact that it is not possible to adopt one standard approach: to take the constitutional words, locate usages of those words before or soon after they entered the Constitution, and ascertain their meaning at that time in that light. In the case of "civil conscription", that approach is not possible. According to Dixon J, writing three years after s 51(xxiiiA) was introduced, "any form of civil conscription" was a "vague and figurative expression [which] carries with it no clear conception."285 He said: "[I]t is not an expression which has gained general currency or has acquired a recognized application."286 Rich J called the expression "somewhat of a novelty."287 Williams J said that the "words 'civil 284 (1988) 165 CLR 360 at 385. 285 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 261. 286 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 262. 287 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 255. conscription' have no ordinary meaning in the English language."288 And Webb J said that he could not "remember hearing or seeing the term used" until he saw it "in the proposed law in the terms of par (xxiiiA) passed by Parliament and subsequently submitted to the electors under s 128 of the Commonwealth Constitution."289 However, the first purpose can be pursued to the extent to which "civil conscription" covers at least the same ground as "industrial conscription". That it does so is evident from the linguistic similarity between the two expressions and the contemporary materials290. It can be seen from the contemporary materials analysed above291, and from other contemporary materials, that among the things which in 1946 were seen as examples of "industrial conscription" were the following: a law compelling an individual to work292; a law compelling a worker to work in a particular industry293; a law compelling a worker to work for a particular employer, or compelling a particular employer to accept a particular worker294; a law compelling a worker to work in a particular place295; and 288 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 287. 289 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 292. 290 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 April 1946 at 1215 (last two sentences of Mr Menzies' speech and third sentence of 291 See above at [27]-[51]. 292 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 April 293 Australia, House of Representatives, Parliamentary Debates (Hansard), 9 March 294 Chief Electoral Officer for the Commonwealth, Referendums to be taken on the Proposed Laws, Constitution Alteration (Social Services) 1946, Constitution Alteration (Organized Marketing of Primary Products) 1946, Constitution Alteration (Industrial Employment) 1946: The Case For and Against, 20 July 1946 295 Australia, House of Representatives, Parliamentary Debates (Hansard), 9 March 1944 at 1159-1160; Australia, Senate, Parliamentary Debates (Hansard), 22 March (Footnote continues on next page) a law preventing a worker from leaving his employment (ie a law compelling a worker not to leave his current employment)296. This is unlikely to be an exhaustive list. There are indications that compulsory unionism was thought to be within the expression "industrial conscription"297. The range of these examples suggests that "industrial conscription" was not a narrow conception, although it is unnecessary for present purposes to seek to identify what it is which connects the examples298. The analogue for doctors of example (d) would arise if under a Commonwealth enactment a doctor was told: "Your patients will receive no Medicare benefits unless you are qualified to participate in the Medicare Scheme, and you cannot participate in the Medicare Scheme unless you live in Coonamble." If an employee were exposed to an enactment of that kind, it would be industrial conscription, because it has the practical effect of compelling the doctor not to practise medicine in any place the doctor would otherwise have chosen and of compelling the doctor to practise medicine in Coonamble. If "civil conscription" includes at least all forms of "industrial conscription" the 1944 at 1708-1709; Australia, Senate, Parliamentary Debates (Hansard), 23 March 1944 at 1838, 1860-1861 ("under [industrial conscription] a man must go where he is sent") and 1891-1892 ("to stipulate that a worker shall accept employment in one place and not in another"). 296 Chief Electoral Officer for the Commonwealth, Referendums to be taken on the Proposed Laws, Constitution Alteration (Social Services) 1946, Constitution Alteration (Organized Marketing of Primary Products) 1946, Constitution Alteration (Industrial Employment) 1946: The Case For and Against, 20 July 1946 at 17 ("He cannot be 'pegged' in his job"). 297 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 April 1946 at 906; Australia, Senate, Parliamentary Debates (Hansard), 19 June 1946 at 298 See, for example, Chief Electoral Officer for the Commonwealth, Referendum to be taken on the Proposed Law Constitution Alteration (Post-war Reconstruction and Democratic Rights) 1944, 20 April 1944 at 13 (industrial conscription involved removing "your right to choose your own way of living and [taking] orders to go to the job selected for you"); Australia, House of Representatives, Parliamentary Debates (Hansard), 3 April 1946 at 906 (industrial conscription was "industrial compulsion by the authority of law"); Australia, Senate, Parliamentary Debates (Hansard), 12 April 1946 at 1425 (protection against industrial conscription negativing the power to make laws "in regard to the relation between employer and employee – its commencement, its continuance and its termination"). enactment would amount to civil conscription. Gibbs J said that an enactment "having [the] result" that "a doctor … should carry on his practice at a particular place … might well be regarded as imposing a form of civil conscription." He said299: "It is necessary in every case to consider the true meaning and effect of the challenged provisions, in order to determine whether they do compel doctors … to perform services generally as such, or to perform particular medical … services; if so, they will be invalid." In the example under discussion, there is no compulsion to perform services "generally as such", for the doctor could practise without supplying his services "generally"; and there is no compulsion to perform particular medical services. Hence on the General Practitioners test the enactment would be valid even though it was analogous to industrial conscription. That suggests that the General Practitioners test is too narrow even if civil conscription does not extend beyond industrial conscription. Cole v Whitfield: subject to which "civil conscription" directed But the contemporary materials relating to "industrial conscription" leave open the question whether, in the medical field, "civil conscription" had a wider meaning. That inquiry can be pursued by examining the contemporary materials with a view to identifying the second of the three matters listed in Cole v Whitfield – the subject to which the constitutional language was directed. While in 1946 almost all industrial workers were employees, hardly any of those who supplied medical and dental services, namely medical and dental practitioners, were employees. And, in 1946, the relationships of medical and dental practitioners with their patients were quite different from the relationships between industrial workers and those for whom they worked. In short, it is necessary to bear in mind the character of the persons whose services are said to be conscripted in relation to the character of the persons who are to receive them. The Commonwealth submitted that "the s 51(xxiiiA) prohibition was intended to prevent the nationalisation of medical and dental services". Although no attempt was made to define "nationalisation", counsel for the Commonwealth, in oral argument, with reference to the referendum case sent to electors in 1946, submitted that the "essential concern" was ensuring that doctors and dentists were not "forced to become professional officers of the Commonwealth under a scheme of medical and dental services." 299 General Practitioners Society v The Commonwealth (1980) 145 CLR 532 at 558. the Commonwealth and That concern did not centre on the existence of a formal relationship of employer and employee between the medical practitioner, but on a matter of substance – the nature and degree of control exercisable by the Commonwealth. Medical practitioners employed by the Commonwealth would be subject to control over the occasion, time and place of work. And they could be subject also to control over their medical and professional activities – the time to be spent with the patient, the kind of tests to be performed, the drugs to be prescribed and the medical records to be kept. Bearing in mind the professional character of the work performed by medical practitioners, it is not apparent why, in 1946, a scheme containing the latter controls, even though they were not imposed as part of an employer- employee relationship, would be unobjectionable. For the reasons given below300, a Commonwealth legislative scheme that controlled a practitioner's medical and professional activities would have been inconsistent with the nature of the doctor-patient relationship as understood in 1946. And it would have been inconsistent with contemporary understandings of medical practice. These inconsistencies point to the conclusion that the language employed in s 51(xxiiiA) was not directed solely to the prevention of Commonwealth control over the occasion, time and place of work of medical practitioners. Rich J's view of the doctor-patient relationship. In the British Medical Association case, three years after s 51(xxiiiA) entered the Constitution, Rich J said301: "An extremely important consideration which cannot be disregarded is the confidential relationship of doctor and patient, a relationship akin to that of solicitor and client and priest and penitent. To disregard this relationship compels a doctor to abandon his normal duties and obligations to his patient." The cure which a doctor may offer, as Rich J said a little earlier302: "is the result of the practitioner's examination and overhaul of the patient, diagnosis of the complaint and the choice of the treatment, drugs, materials and appliances which his knowledge and skill dictate." 300 See [269]-[278]. 301 (1949) 79 CLR 201 at 256. 302 (1949) 79 CLR 201 at 256. Even National Service for Health: The Labour Party's Post-war Policy, (1943) at 17, discussed below at [274], recognised this: "The confidential relation between doctor and patient is an indispensable part of a satisfactory health service." Although the connotations of the expression "doctor-patient relationship" may be different now, at the time when s 51(xxiiiA) was introduced, the notion of the doctor-patient relationship was heavily infused with a perception of its confidential, even friendly, character; of individual practitioners – who then had high community status – having autonomy in their treatment of particular patients; and of the consequential need for doctors to give treatment not mandated by outside influences or commands in any absolute or universal way, but devised by reference to the particular needs of the particular patient in the light of the doctor's personal perception of the problem. That that was so can be seen from five other pieces of material. importance of the Sir Earle Page's view of the doctor-patient relationship. The first is that ideas of that kind received significant expression in a speech delivered only seven years after s 51(xxiiiA) entered the Constitution. It was the Second Reading Speech delivered by the Minister for Health, Sir Earle Page, a self- described "truant surgeon", in introducing the Bill which became the National Health Act 1953 (Cth). He said303: "Restoration of health and prolongation of life is the task of the physician, who must be dedicated to the practice of the healing art, just as the priest is dedicated to the saving of souls. The work of both those dedicated professions is essentially personal and individual. It is the person with his idiosyncrasies, allergies and family heredity and personal and financial problems who must be cured. It is the individual with his physical and mental disease and his own peculiar symptoms who must be treated. It is the personal, continuous contact of the doctor, with an interest in the patient and his family, that must be maintained. These results can best be obtained by maintaining the position, prestige and fullest usefulness of the general medical practitioner … In recent reports on the British service, the great complaint of that system relates to the deterioration of the general medical practitioner, due to inadequate hospital contacts and lack of time for proper examination owing to the panel system under which each doctor often has several thousands of patients … The most important point in medical treatment is complete and early examination and diagnosis, whether the treatment is later given by a general medical practitioner or a specialist. It is imperative to preserve this cardinal feature of complete and early examination and diagnosis … [I]t is absolutely necessary for the doctor to have time to be the friend and 303 Australia, House of Representatives, Parliamentary Debates (Hansard), 12 November 1953 at 154-155. confidant of the patient and his family, because illness is not only physical. It is frequently psychological." Dr Evatt on controlling doctors. Secondly, thinking similar to that of Sir Earle Page was evidently shared by Dr Evatt. On 27 March 1946 Dr Evatt informed the House of Representatives that the proposed s 51(xxiiiA) would not affect the State laws regulating the right to practise medicine or dentistry and would not affect "the right of a doctor or a dentist as an individual to practise his profession." Dr Evatt also said that under s 51(xxiiiA) "no authority will be vested in the Commonwealth to control health generally or the general practice of medicine or dentistry"304. Underlying these statements is an assumption that in the context of doctors and dentists the words of s 51(xxiiiA) did not mean regulation or control of their rights to practise as they saw fit: any regulation or control would be the province of State law only305. Dixon J's view on employment. Three years after s 51(xxiiiA) entered the Constitution, Dixon J said: "No one would doubt that an attempt to impose upon a medical practitioner or a dentist an obligation to serve in the employment of the Government would fall within the words."306 The reason why no contemporary would doubt that a compulsorily established relationship of employment fell within civil conscription was because of the types of control characteristic of an employment relationship, and the antithesis between them and contemporary perceptions of that contemporaries saw those types of control, compulsorily imposed, as equally falling within civil conscription even if the doctor was not placed in an employment relationship. the doctor-patient relationship. is also likely Nationalisation of medicine in the United Kingdom. A fourth item arises from contemporaneous events in relation to the development of the United 304 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 305 As is discussed above at [48]-[50], Mr Menzies moved his amendment to the proposed s 51(xxiiiA) to include a reference to civil conscription on 10 April 1946, but he had given prior notice of it to Dr Evatt: the Solicitor-General and two of his colleagues advised on it in writing on 9 April 1946. It is not clear, then, whether on 27 March 1946 Dr Evatt had in mind s 51(xxiiiA) without Mr Menzies' amendment or with it. If he had in mind s 51(xxiiiA) without the amendment, it may explain why he accepted the amendment readily: he saw the meaning of the language of both the unamended and the amended versions as not affecting individual rights of practice and as not giving power to enact legislation to control them. 306 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 261-262. Kingdom National Health Service by the National Health Service Act 1946 (UK). Those events were followed closely in Australia. In 1942 the Beveridge Report had recommended "the setting up of a comprehensive medical service for every citizen, covering all treatment and every form of disability under the supervision of the Health Departments"307. But in this respect the Beveridge Report did not descend to much detail, and said that it "is not necessary to express an opinion on the terms of service and remuneration of doctors of various kinds, of dentists and of nurses"308. In April 1943 the Labour Party published one of its "Reconstruction Pamphlets" entitled National Service for Health: The Labour Party's Post-war Policy. It stated: "In the Labour Party's opinion … it is necessary that the medical profession should be organised as a national, full-time, salaried, pensionable service."309 After its decisive victory in the 1945 General Election, the Labour government presided over by C R Attlee nationalised various industries310. From October 1945 the Minister of Health, Aneurin Bevan, began dealing with the British Medical Association, and in particular with a committee negotiating on behalf of the medical profession, about the form which a National Health Service might take. In December 1945 the committee published seven "professional fundamentals". The first four have been summarised as follows311: "1 In the public interest, the profession is opposed to any form of service leading directly or indirectly to the profession as a whole becoming whole-time salaried servants of the State or of local authorities. 2 The profession should be free to exercise its skills, the individual doctor being fully responsible for the care of his patient, with freedom of action, speech and publication, and no interference with his professional work. 3 The citizen should be free to choose his family doctor and (in consultation with that doctor) his hospital, and to choose whether to use the service or not. 307 Sir William Beveridge, Social Insurance and Allied Services, (1942) Cmd 6404 at 308 Sir William Beveridge, Social Insurance and Allied Services, (1942) Cmd 6404 at 309 Labour Party, National Service for Health: The Labour Party's Post-war Policy, 310 For example, Bank of England Act 1946 (UK); Coal Industry Nationalisation Act 1946 (UK); Cable and Wireless Act 1946 (UK). 311 Pater, The Making of the National Health Service, (1981) at 112-113. 4 Doctors should be free to choose their form and place of work without government or other direction." The most relevant of the "professional fundamentals" to questions of "civil conscription" short of rendering doctors, directly or indirectly, whole-time salaried servants of the State are the second and fourth. An historian of the process by which the National Health Service was created has said that "all except the first and the fourth were entirely in line with the government's own views."312 It is notorious that in the years 1945 and 1946 the British Medical Association was influential in Australian medical affairs: there was no Australian Medical Association and most Australian doctors were members of the Australian branches of the British Medical Association313. It may safely be inferred that the understandings on which the "professional fundamentals" asserted by the British Medical Association rested were shared in Australia. The first three "fundamentals" were repeated by Sir Earle Page in the House of Representatives on 17 March 1949314. Senator McKenna's Second Reading Speech in 1949. A fifth piece of evidence suggesting that the Richardson-Theophanous scheme would have been regarded as beyond s 51(xxiiiA) because of the words "civil conscription" may be found in the Second Reading Speech of the Minister for Health, Senator McKenna, introducing the Pharmaceutical Benefits Bill 1949. That Bill introduced the amendment to the Pharmaceutical Benefits Act 1947 (Cth) which was held partially invalid in the British Medical Association case. He said that under the 1947 Act "there was to be no regimentation of doctors, that … the doctor would have complete freedom of action."315 He also said that the amendment: "neither proposes nor initiates any interference with the practice of medicine … The doctor will still diagnose and assess his patient's needs in the light of his medical knowledge and experience and in accordance with his own unfettered judgment."316 312 Pater, The Making of the National Health Service, (1981) at 113. 313 Ross-Smith, "The Evolution of a National Medical Association in Australia", [1962] 1 Medical Journal of Australia 746 at 751 (80-90% of the whole profession). 314 Australia, House of Representatives, Parliamentary Debates (Hansard), 17 March 315 Australia, Senate, Parliamentary Debates (Hansard), 10 March 1949 at 1244. 316 Australia, Senate, Parliamentary Debates (Hansard), 10 March 1949 at 1247. It is thus plain that around the time s 51(xxiiiA) was introduced into the Constitution legislation in the form of the Richardson-Theophanous scheme was not in contemplation. Legislation of that kind would have been regarded by contemporaries as completely alien to conventional ideas of the time about governmental control of the relationship between medical practitioners and their patients. It seems likely that any system creating practical compulsion to supply medical services on the conditions inherent in the Richardson-Theophanous scheme would have been seen as a form of civil conscription – a means of vesting authority in the Commonwealth, in Dr Evatt's words, "to control health generally or the general practice of medicine or dentistry". That conclusion is supported by the advice given by Sir George Knowles, Mr Boniwell and Mr Comans on 9 April 1946 about Mr Menzies' amendment to the proposed s 51(xxiiiA)317. The question asked was whether the reference to civil conscription would prevent the Commonwealth from passing legislation to prevent medical practitioners from refusing to treat patients entitled to Commonwealth benefits. The answer given was in the negative. The correctness of that answer is highly questionable if the General Practitioners test is applied. The legislation postulated involves compulsion to treat a particular class of patient whether the doctor wants to or not. But putting aside the correctness of the answer to the precise question asked, the last 13 words of the advice reveal a contemporary understanding of the words "civil conscription" in the context of medical services as meaning control by the Commonwealth of the whole of a doctor's professional activities. The intensely detailed regime of control provided for in the Richardson-Theophanous scheme is control of that kind318. The General Practitioners test revisited Dixon J said that the expression civil conscription "is described by a metaphor and therefore must rest upon analogy."319 The most obvious analogy is 317 See [50] above. 318 A "moderate originalist" has thoughtfully argued that only evidence of "the founders' intentions which … was readily available to their intended audience" may be examined – which would exclude private communications like that of Sir George Knowles and his colleagues: see Goldsworthy, "Originalism in Constitutional Interpretation", (1997) 25 Federal Law Review 1 at 20. However, if the correct approach is to search, not for the actual intention of the framers, but for what their words meant at the time they were used – and it is this which Cole v Whitfield seems to favour – the objection is not open. Even quite secret contemporary material could cast light on contemporary meaning. 319 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 262. with military service. Analogies can mislead, and the misleading character of that analogy is to align "civil conscription" too closely with "military conscription". The expression "civil conscription" used in relation to medical services is not limited to ideas about compelling doctors to work for the Commonwealth. While the legislation does not make medical practitioners servants of the Commonwealth, medical practitioners are engaged in the the compulsory provision of services for Commonwealth. That is because the practical compulsion created by ss 10, 20 and 20A on medical practitioners to operate under the Medicare Scheme means that the Commonwealth is directing them, through its legislation, to comply with Pt VAA. The expression "civil conscription" extends to the very extensive intrusions effected by the Richardson-Theophanous scheme into the relationships between doctor and patient through which doctors supply their services in circumstances where it is not in a practical sense possible for doctors to decline to provide the services. third parties as directed by Conclusion The appeals should be allowed. Dr Selim desires a declaration that because ss 10, 20 and 20A and Pt VAA amount to "civil conscription" within the meaning of s 51(xxiiiA) of the Constitution, they are invalid. Dr Wong desires an answer to the same effect in relation to the question referred into the Full Court of the Federal Court of Australia in relation to which special leave to appeal to this Court was granted. These desires caused the Commonwealth to contend that if the conclusion that ss 10, 20 and 20A were invalid depended on overruling the General Practitioners case, there would be much to be said against that course because of the extent to which the Medicare Scheme had been relied on by medical practitioners and the public, and by the legislature in amending the Act320. However, ss 10, 20 and 20A by themselves do not amount to "civil conscription". They generate, with other factors, an element of practical compulsion to comply with the Richardson-Theophanous scheme enacted in Pt VAA, but independently of that scheme they do not have the intrusive quality which renders it civil conscription. However, some provisions in the Richardson-Theophanous scheme amount to civil conscription. It is not necessary to work out the full extent of the sections which are invalid in these dissenting reasons beyond saying that ss 82 and 106U are invalid. If so, the whole Richardson-Theophanous scheme becomes unworkable. The Commonwealth did not demonstrate that there had been so much legislation in reliance on the Richardson-Theophanous scheme as to render it wrong to overrule the General Practitioners test. 320 Citing John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439; [1989] HCA 5.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2022] HCA 14 Date of Hearing: 16 March 2022 Date of Judgment: 13 April 2022 S146/2021, S147/2021, S148/2021 & S149/2021 ORDER The appeal in each matter be allowed in part. Set aside the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 3 August 2018 and, in its place, order that: the appeal be allowed in part; the appellant's convictions on Counts 4 and 6 to 12 be set aside; and a new trial be had on Counts 4 and 6 to 12. In relation to Counts 1 and 5, remit the matter to the Court of Criminal Appeal of the Supreme Court of New South Wales to consider whether: to affirm or vary the appellant's sentence under s 7(1) of the Criminal Appeal Act 1912 (NSW); to remit the matter to the District Court of New South Wales under s 12(2) of the Criminal Appeal Act 1912 (NSW); or to await the outcome of any new trial on Counts 4 and 6 to 12. On appeal from the Supreme Court of New South Wales Representation G A Bashir SC with D L Carroll and G E L Huxley for the appellant (instructed by AA Criminal Lawyer) D T Kell SC with E S Jones for the respondent (instructed by Office of the Director of Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal practice – Jury trial – Where s 53A(1)(c) of Jury Act 1977 (NSW) provided for mandatory discharge of juror where juror engaged in misconduct in relation to trial – Where misconduct included conduct constituting offence against Jury Act – Where offence against s 68C(1) of Jury Act for juror to make inquiry for purpose of obtaining information about any matters relevant to trial – Where evidence led as to Working with Children Check – Where evidence subject of submissions and referred to in summing up – Where jury note disclosed juror had searched internet for requirements of Working with Children Check – Where trial judge took verdicts which jury indicated they had reached unanimous verdict on before discharging juror – Whether information subject of inquiry about matter relevant to trial – Whether inquiry made for purpose of obtaining information about that matter – Whether mandatory discharge of juror required. Words and phrases – "constitution and authority of the jury", "discharge of jurors", "jury deliberations", "making an inquiry", "mandatory discharge", "matters relevant to the trial", "misconduct in relation to the trial", "purpose of obtaining information", "true verdict according to the evidence". Jury Act 1977 (NSW), ss 53A, 53B, 55DA, 68C. KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ. In New South Wales, a juror in a jury trial takes an oath, or makes an affirmation, that they will give a true verdict according to the evidence1. From the time a juror is sworn in as a juror, and until they are discharged by the court2, they must not make an inquiry for the purpose of obtaining information about any matters relevant to the trial3. "[M]aking an inquiry" includes conducting any research, for example, by using the internet4. Section 53A of the Jury Act 1977 (NSW) relevantly provides that a court "must discharge a juror if, in the course of any trial ... the juror has engaged in misconduct in relation to the trial"5 (emphasis added). "[M]isconduct", in relation to a trial, relevantly means "conduct that constitutes an offence against [the Jury Act]"6. It is an offence against the Jury Act for a juror to make an inquiry for the purpose of obtaining information about a matter relevant to the trial7. The appellant, Mr Hoang, was tried in the District Court of New South Wales on an indictment charging him with 12 counts of sexual offences against children: five counts of aggravated indecent assault8 (counts 1, 6, 8, 9 and 10); two counts of aggravated acts of indecency9 (counts 2 and 3) and five counts of aggravated sexual intercourse10 (counts 4, 5, 7, 11 and 12). There were five Jury Act 1977 (NSW), s 72A. Jury Act, s 68C(2). Jury Act, s 68C(1). Jury Act, s 68C(5)(b). Jury Act, s 53A(1)(c). Jury Act, s 53A(2)(a). Jury Act, s 68C(1). 8 Crimes Act 1900 (NSW), s 61M(2). 9 Crimes Act, s 61O(1). 10 Crimes Act, s 66A(2). complainants. The offences were alleged to have been committed whilst the appellant was a mathematics tutor between 1 January 2007 and 31 July 2014. The appellant pleaded not guilty to all charges. The trial judge gave directions to the jury at the start of the trial, both orally and in writing, that jurors were not to search the internet for anything relevant to the trial. As part of its case, the Crown led evidence that the appellant did not hold a Working with Children Check11. Character evidence was adduced by the appellant to counter that evidence, and his counsel made submissions about that evidence, which the trial judge then referred to in her summing up. During the course of jury deliberations, the jury provided a note to the trial judge stating that they had reached agreement on eight of the 12 counts and had varying degrees of agreement about the other counts. The jury continued to deliberate until approximately 4pm that day, at which time they were sent home. The jury returned the following morning. At approximately 12.30pm, the jury foreperson sent the trial judge a note which stated12: "This morning a juror disclosed that yesterday evening they google/looked up on the internet the requirements for a working with children check. The juror had previously been a teacher and was curious as to why they themselves did not have a check. They discovered the legislation, which was only introduced in 2013. I myself have completed a working with children course and so already know this information but it had not been discussed in the jury room. 11 See Child Protection (Working with Children) Act 2012 (NSW), s 5(1) definition of "working with children check clearance", Pt 3. 12 See Jury Act, s 75C(1), which relevantly provides that a juror who "has reasonable grounds to suspect any irregularity" – defined in sub-s (4)(a) to include "the commission ... of an offence under [the] Act" – "in relation to the performance of [another] juror's functions as a juror ... may disclose the suspicion and the grounds on which it is held to the court". This information discovery of a juror making their own enquiry I do not feel has had an impact, however I understand my duty to notify you of this as per the written instructions at the commencement of this trial." Upon the trial judge being informed of the inquiry, her Honour proceeded to take the eight verdicts referred to in the jury note from the previous day as well as two further verdicts which, that afternoon, the jury indicated they had reached a unanimous verdict on. The jury returned verdicts of not guilty in respect of counts 2 and 3 and guilty verdicts in respect of counts 4 and 6 to 12. The trial judge then discharged the juror for misconduct under s 53A(1)(c) of the Jury Act. The remaining jurors then continued to deliberate in respect of the remaining two counts (counts 1 and 5). Unanimous guilty verdicts were later delivered with respect to those counts. Two weeks after the last verdict was delivered, the trial judge delivered reasons for discharging the juror. The appellant applied for leave to appeal against his convictions to the Court of Criminal Appeal of the Supreme Court of New South Wales. The three proposed appeal grounds relevantly related to the juror's conduct in conducting the search and whether that search constituted misconduct within the meaning of s 53A(1)(c) of the Jury Act and, if so, whether the juror should have been discharged prior to taking the first ten verdicts. In the Court of Criminal Appeal, the Crown accepted that if the juror's conduct in conducting the search constituted misconduct within the meaning of s 53A(1)(c) of the Jury Act, the juror should have been discharged prior to taking the ten verdicts. However, the Crown contended that the evidence did not establish that the juror's conduct constituted misconduct and contended that the trial judge was in error in finding to the contrary. In particular, the Crown submitted that the juror did not make the inquiry "for the purpose" of obtaining information about a matter relevant to the trial but did so for her own personal purpose. The appeal was dismissed (N Adams J, with whom Hoeben CJ at CL agreed; Campbell J dissenting). The majority held that the requirement in s 68C(1) that the inquiry be for a specified "purpose" requires a finding of the juror's intention in making the inquiry or the reason why the inquiry was made. The majority found that the juror made the inquiry for the purpose of "satisfying herself as to why she did not require a Working with Children Check" and, as that was not a matter that was relevant to the trial, the juror had not engaged in misconduct. The majority also held that, although the trial judge may have tentatively formed the view that there was misconduct prior to taking the verdicts, "the decision that later discharged the juror was made after the point in time at which it [was] alleged that the obligation to discharge was enlivened" (emphasis in original). As will be explained, the appeals must be allowed. On the proper construction of s 68C(1), read with s 53A(1)(c), the juror had engaged in misconduct by making an inquiry for the purpose of obtaining information about a matter relevant to the trial and the trial judge was in error in taking the ten verdicts before discharging that juror. Jury trial and the Jury Act The jury is "the fundamental institution in our traditional system of administering criminal justice"13. It is, in a criminal trial, the method by which laypeople selected by lot perform, under the guidance of a judge, the fact-finding function of ascertaining guilt or innocence14. The Jury Act regulates a wide range of matters concerned with jury trials. It, along with other legislation, sets the parameters of that method of trial and regulates the process15. The provisions governing "the constitution and authority of the jury as the tribunal of fact in a criminal trial are mandatory"16. A failure to comply with them "may render a trial a nullity, at least in the sense that the conviction produced cannot withstand an appeal"17. Part 9 of the Jury Act sets out a range of offences in relation to jurors18. These appeals are concerned with s 68C(1), which prohibits a juror in any criminal 13 Brown v The Queen (1986) 160 CLR 171 at 197; see also 178. 14 Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 375. See also Cheatle v The Queen (1993) 177 CLR 541 at 549. 15 Maher v The Queen (1987) 163 CLR 221 at 229. 16 Maher (1987) 163 CLR 221 at 233. 17 Maher (1987) 163 CLR 221 at 233, quoted in Katsuno v The Queen (1999) 199 CLR 40 at 59 [32]. See also R v Wood (2008) 186 A Crim R 454 at 463 [33]. Including potential jurors supplying false or misleading information (s 62) or failing to attend for jury service (s 63) and other offences such as personation of jurors proceedings making an inquiry for the purpose of obtaining information about any matters relevant to the trial except in the proper exercise of their functions as a juror. A judge may compulsorily examine a juror on oath "to determine whether a juror has engaged in any conduct that may constitute a contravention of section 68C"19. Part 7A, headed "Discharge of jurors", then provides powers to and imposes duties upon a court to discharge a juror, or a jury, in certain circumstances. Section 53A(1)(c) imposes a mandatory duty upon a court to discharge a juror if, in relation to a trial, they have engaged in misconduct, being, relevantly, conduct that constitutes an offence against the Jury Act – including an offence against s 68C. Section 53B operates in different circumstances. It provides the court with a discretion to discharge a juror in certain circumstances including: if in the judge's opinion the juror is likely to become unable to serve as a juror before the delivery of a verdict because of ill health or incapacity20; if it appears to the court that the juror cannot "give impartial consideration to the case"21; if the juror "refuses to take part in the jury's deliberations"22; or if it appears to the court that, "for any other reason affecting the juror's ability to perform the functions of a juror, the juror should not continue to act as a juror"23. It is not engaged in this case. (s 67), disclosing the identity or address of a juror (s 68) and soliciting information from or harassing a juror (s 68A). 19 Jury Act, s 55DA(1). "If there is reason ... to suspect that the verdict of a jury in a trial of any criminal proceedings may be, or may have been, affected because of improper conduct by a member or members of the jury, the sheriff may, with the consent of or at the request of the Supreme Court or District Court, investigate the matter and report to the court on the outcome of the investigation": Jury Act, s 73A(1). 20 Jury Act, s 53B(a). 21 Jury Act, s 53B(b). 22 Jury Act, s 53B(c). 23 Jury Act, s 53B(d). If a juror is discharged in criminal proceedings under Pt 7A, the court must discharge the jury if it is "of the opinion that to continue the trial ... with the remaining jurors would give rise to the risk of a substantial miscarriage of justice": Jury Act, s 53C(1)(a). The trial Specific aspects of what transpired during the appellant's trial need to be addressed in some detail – in particular, the Working with Children Check evidence and how it was dealt with during the trial, and then what steps were taken by the trial judge in response to the note from the foreperson. Evidence and addresses in relation to Working with Children Check Late in the trial, Detective Senior Constable Paul was called by the Crown and gave evidence that he had made an inquiry with the State Office of the Children's Guardian as to whether the appellant had a Working with Children Check. He said that he was familiar with the Working with Children Check system. He agreed with the Crown Prosecutor that "if you are a teacher or if you work on the grounds around a school or if you are a police officer and you are working with children, you have to get clearance pursuant to [the] Children and Young Persons Protection Act ... that you are cleared and licensed to work ... with children ... [a]nd the Department keeps a register of people with such a grant of permission". Detective Senior Constable Paul said he had received correspondence from the "Office of Public Guardian" stating that there was no record of the appellant on the register under his name and date of birth. As the Court of Criminal Appeal unanimously stated, the relevance of this evidence was at best obscure. Indeed, the legislation referred to in that evidence was the Child Protection (Working with Children) Act 2012 (NSW), which commenced on 15 June 201324 and applied to only part of the period identified in the indictment. In any event, for reasons which are not apparent, that evidence was led by the Crown Prosecutor without objection in the presence of the jury. Detective Senior Constable Paul was not cross-examined about that evidence. Defence counsel, however, sought to counter that evidence. Two days later, David Nguyen gave character evidence on behalf of the appellant. Mr Nguyen gave evidence that he was a family friend of the appellant, that he was a private English tutor and that the appellant referred work to him. He gave evidence that the appellant had taken out an advertisement in his name in relation to private tutoring, and that the appellant had suggested that students who called in response to that advertisement in relation to mathematics tutoring should be referred to the 24 Child Protection (Working with Children) Act, s 2 read with New South Wales, Commencement Proclamation, 2013 No 154, 24 April 2013. appellant. Mr Nguyen gave evidence that he did not have any formal qualifications in tutoring, and that he did not have a "Working With Children Certificate". He said that "at least 90% of undergraduate students have tutored at some point. A lot of my friends tutor and, yeah, none of us have that qualification". In his closing address to the jury, the Crown Prosecutor did not refer to the Working with Children Check evidence. However, the Crown Prosecutor said to the jury that the evidence disclosed that the appellant had "his own risk plan" to avoid detection. The Crown Prosecutor said that certain classified advertisements the appellant had placed – which were "not in his name", had "false" addresses, and in relation to which he sought to "have someone else take the phone call" – were part of a "sophisticated pretence", which was "bold and sexually driven", that he was "a respectable, well regarded, successful teacher of some fame in terms of his students", when in fact he was tutoring children as part of a "system" he built around himself "so he didn't even need to really think about anything that might be a barrier between him and his sexual gratification". The next day, defence counsel addressed this issue squarely in his closing address. Counsel referred to and disparaged the Crown's reliance on the classified advertisements, characterising the Crown's submission as being that there was "some dark mystery, some fraud or ruse played out to get the accused into houses where he submissions, defence counsel referred to the evidence of Mr Nguyen, describing him as an "intelligent young man" who would have "impressed you as an impartial witness". He made the following remarks in relation to the Working with Children Check evidence: Immediately following [could] tutor". those "You remember the evidence late in the trial again from Detective Paul in relation to the inquiries that were made with the State Office of the Children's Guardian as to whether the accused had a working with children certificate. He didn't. It sounded bad at the time. Then we found out from David Nguyen, a capable young man, he is studying to be a doctor and working as a private tutor, he tells us that 90 per cent of undergraduate students have tutored at some point and lots of his friends are tutors and none of them have that qualification." (emphasis added) It is significant, as Campbell J said in the Court of Criminal Appeal, that defence counsel ("who must be taken to have a better feel for the potential significance of the evidence lead at the trial" than an appellate court) "thought it pertinent to remind the jury of the evidence on this topic". In her summing up to the jury, the trial judge referred to the Crown's reliance on the classified advertisements. Her Honour noted that the Crown had referred to how the appellant was "purporting to be respectable and regarded as a successful teacher, that the [advertisements] were not in his name or addresses, they were false and by someone else" and that the Crown submitted the appellant "was risk averse and was trying to minimise his risk". The trial judge recorded the Crown's submission that it was "a pattern, a system". Her Honour shortly thereafter summarised defence counsel's response to that submission, which she said was to the effect of "look, there is not some dark mystery or fraud or ruse played out". That was followed by her Honour referring to Mr Nguyen's evidence and defence counsel's submission that the fact that the appellant did not have "a Working with Children's Certificate was not unusual, that most tutors in particular students do not". Both defence counsel and the trial judge not only addressed the Working with Children Check evidence but explained it. As Campbell J said in the Court of Criminal Appeal, the Working with Children Check evidence was obviously on the mind of the juror who decided to make the inquiry, first, when they made the inquiry which was recorded in the note from the foreperson, and second, when they decided "to share the results of that inquiry and the reasons for making it with the rest of the jury" the following morning. Steps taken by the trial judge On reading the note from the jury foreperson, the trial judge formed the view, without the need to conduct any inquiry or examination under s 55DA of the Jury Act, that she was satisfied that a juror had engaged in misconduct in relation to the trial. The majority in the Court of Criminal Appeal held that the trial judge was in error in determining that there was juror misconduct warranting mandatory discharge of that juror under s 53A(1)(c) of the Jury Act. That conclusion is the subject of ground 1 of these appeals. It turns on the proper construction of s 68C(1), read with s 53A(1)(c). That leads to the second issue in these appeals. There was no dispute before the trial judge or in the Court of Criminal Appeal that the combined effect of ss 68C(1) and 53A(1)(c) is that once the trial judge is satisfied that a juror has engaged in misconduct, "there is no course available other than to discharge [the] juror"25. In the trial judge's reasons for her approach in discharging the juror, her Honour said: "Prior to making specific inquiries in relation to the jury note, ... I heard submissions from both counsel. Both counsel submitted that an inquiry into the juror who had made inquiries on the Internet should take place before any steps were taken to take the eight verdicts. I declined to conduct the inquiry with the juror before taking the verdicts as I was of the opinion that I had sufficient information in [the] jury note ... that a breach had occurred. It was therefore mandatory that that juror had to be dismissed." (emphasis added) However, as we have seen, the trial judge did not dismiss the juror, and proceeded to take verdicts on ten counts and only then discharged the juror. The majority of the Court of Criminal Appeal held that mandatory discharge was not required prior to the trial judge taking the verdicts even though the trial judge was satisfied that misconduct under s 53A(1)(c) had occurred. As will be seen, that was contrary to the "mandatory" terms of the statute "which govern the constitution and authority of the jury as the tribunal of fact in a criminal trial"26. Construction of s 68C(1), read with s 53A As has been explained, s 53A(1)(c) imposes a duty upon the court to discharge a juror during the course of a trial if the juror has engaged in misconduct in relation to the trial27. Section 53A(2)(a) relevantly defines "misconduct" as an offence against the Jury Act. Section 53A(2)(a) does not itself create an offence. It refers to "conduct that constitutes an offence against" the Jury Act (emphasis added). None of the various offences listed in the Jury Act (including s 68C(1)) is constituted by the specified actus reus alone. To "constitute" each offence, the conduct includes both the actus reus and the applicable mens rea. Of course, proof beyond reasonable doubt that 25 Smith v The Queen (2010) 79 NSWLR 675 at 681 [26]. 26 Maher (1987) 163 CLR 221 at 233. 27 Jury Act, s 53A(1)(c). the identified conduct constitutes an offence against the Jury Act is not required for the purposes of s 53A(2)(a)28. in context, and The appellant contended that s 53A, read as a whole, applies to conduct alone, and does not include the mens rea of s 68C(1) – namely, the intention or purpose for making the inquiry. That contention is contrary to the text of s 53A(2)(a), read the "general principles of criminal responsibility"29. That a judge must consider both the actus reus and the mens rea of the specified offence in determining whether a juror has "engaged in any conduct that may constitute a contravention of" s 68C(1) is reinforced by s 55DA, which recognises the possibility that, during a trial judge's inquiry of the juror, evidence may be given which has the capacity to prove that that offence has been committed. The juror cannot refuse to give such evidence30, but may be given a certificate if they do give such evidence31, which prevents that evidence from being used against them in any subsequent proceedings instituted against them for a breach of s 68C(1)32. Further, s 53A does not, in its terms, displace any element of any of the criminal offences referred to in the section, including s 68C(1)33. In this Court, the appellant advanced three interconnected sub-grounds, each directed to establishing that the Court of Criminal Appeal erred in holding that there had been no juror misconduct. Each sub-ground depends on the proper construction of s 68C(1) of the Jury Act. Self-evidently, there must be a juror in a criminal proceeding and that juror must make an inquiry within the meaning of s 68C(1). In the present appeals, those matters were not in dispute. The next question raised by s 68C(1) is whether the juror's inquiry – here, the Google search – was "for the purpose of obtaining information about ... any matters relevant to the trial" (emphasis added). Was the 28 Smith (2010) 79 NSWLR 675 at 681 [28], cited in Zheng v The Queen (2021) 104 NSWLR 668 at 682 [66]. 29 CTM v The Queen (2008) 236 CLR 440 at 446 [5]; see also 483-484 [148]. 30 Jury Act, s 55DA(2). 31 Jury Act, s 55DA(3). 32 Jury Act, s 55DA(4). 33 cf He Kaw Teh v The Queen (1985) 157 CLR 523 at 528-530, 565-568, 582, Google search about a matter relevant to the trial? If so, was the inquiry made by the juror for the purpose of obtaining information about that matter? One issue which divided the parties on appeal was whether the juror's stated intention or motive for "making an inquiry" is relevant. What is a "matter relevant to the trial" will, of course, vary from trial to trial and it is therefore unnecessary and inappropriate to attempt to chart the metes and bounds of s 68C(1). The phrase "information about ... any matters relevant to the trial" is to be understood as including, at least, a juror acquiring information about matters of evidence given or addresses to the jury at the trial. Contrary to the Crown submissions, s 68C(1) is not limited to asking whether the juror had an intention to acquire information that bears upon a juror's deliberation about a fact in issue, the elements of the offence or the issues on which the guilt of the accused depends. Nor, as the Crown submitted, is s 68C(1) limited to asking whether the juror's purpose was to obtain information "that is understood and intended by the juror" to have relevance to contested issues in the trial. The words of s 68C(1) do not permit of either construction. And that is unsurprising. Asking such a question of the juror would very likely be inconsistent with central planks in the administration of criminal justice. Three of those planks should be identified. First, the trial judge must stay above the contest between the parties in a manner consistent with the judge's ultimate role of "ensuring the propriety and fairness of the trial and ... instructing the jury in the relevant law"34. Second, the jury process of deliberation is fluid, not static35. "A jury is usually required to consider not only the ultimate question of whether guilt has been established beyond reasonable doubt, but also particular questions that are steps along the way to the final conclusion reflected in a verdict, or the inability to reach a verdict"36. Third, the confidentiality of jury deliberations is a principle of the "highest significance in our justice system"37. Consistently with those principles, the question prescribed by s 68C(1) is whether the juror's inquiry 34 Ratten v The Queen (1974) 131 CLR 510 at 517. 35 Smith v The Queen (2015) 255 CLR 161 at 171 [33]. 36 Smith (2015) 255 CLR 161 at 171-172 [34]. 37 HM v The Queen (2013) 44 VR 717 at 719 [5], cited in Smith (2015) 255 CLR 161 was "for the purpose of obtaining information about ... any matters relevant to the trial", including information about matters of evidence given or addresses to the jury at trial38. Section 68C(1), read with s 68C(5)(b), does not extend to what might be called inadvertent searching. Section 68C(1) is directed to a juror making an inquiry for the purpose of obtaining information about a matter relevant to the trial. Any concern for the safety and propriety of a jury trial arising from an inadvertent search undertaken by a juror may be addressed by the trial judge under s 53A(1)(c) read with sub-s (2)(b) or, alternatively, s 53B. It is for the same reasons that the mental element – making the inquiry for the purpose of obtaining information about a matter relevant to the trial – is not concerned with the juror's motive for making the inquiry. It is the fact of the inquiry, and that the purpose of the inquiry was to obtain information about a particular matter relevant to the trial, which is the subject of the prohibition. That a juror might have undertaken such an inquiry for their own purposes does not mean that, consistently with the terms of s 68C(1), the inquiry was not also made for the purpose of obtaining information about a matter relevant to the trial39. During the course of argument, reference was made to s 68C(4), which provides that "[a]nything done by a juror in contravention of a direction given to the jury by the judge in the criminal proceedings is not a proper exercise by the juror of his or her functions as a juror". As the Crown submitted, when s 68C(4) is engaged, as it is here because the juror undertook the Google search in contravention of the trial judge's oral and written directions, the juror cannot seek to rely upon the exception in s 68C(1), namely that the inquiry was "in the proper exercise of his or her functions as a juror". Here, the inquiry was not. Inquiry was about a relevant matter and was for a prohibited purpose In this case, the matter about which the juror made the inquiry was the Working with Children Check. Evidence had been given about that at the trial, 38 See R v K (2003) 59 NSWLR 431 at 450 [88]; R v Skaf (2004) 60 NSWLR 86 at 104 [277]; New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 October 2004 at 12097. 39 cf Zaburoni v The Queen (2016) 256 CLR 482 at 491 [19]; Roy v O'Neill (2020) 95 ALJR 64 at 70 [20], 71 [29]; 385 ALR 187 at 193, 194. and defence counsel made submissions about that evidence, which the trial judge then referred to in her summing up. One purpose of the juror making the inquiry was to obtain information that was relevant to the trial. As the note from the foreperson records, the juror Googled "the requirements for a working with children check" and "discovered the legislation, which was only introduced in 2013". That is prohibited. That information obtained by the juror by making the inquiry was not in evidence before the Court, and consideration of it by the juror was contrary to the oath or affirmation that they took when they were sworn in as a juror – to "give a true verdict according to the evidence" (emphasis added)40. The fact that the juror had previously been a teacher and was curious as to why they themselves did not have a Working with Children Check was irrelevant. For those reasons, the trial judge was correct to find that the juror, in the course of the trial, had engaged in misconduct in relation to the trial, namely by making an inquiry for the purpose of obtaining information about a matter relevant to the trial within the meaning of s 68C(1). Mandatory discharge Section 53A(1)(c) relevantly provides that a court "must discharge a juror if, in the course of any trial ... the juror has engaged in misconduct in relation to the trial". As we have seen, prior to the juror engaging in the misconduct, the jury told the trial judge that they had reached a unanimous decision on the verdicts on eight counts (the following day confirmed to be counts 4 and 6 to 12). Those 11 jurors included the juror who subsequently engaged in the misconduct. However, the next day, despite being told of the juror's inquiry, the trial judge proceeded to take the eight verdicts, as well as two further verdicts which the jury that day indicated that they had reached a unanimous verdict on. The trial judge did so before discharging the juror, so that those verdicts included the verdicts of that juror. The question is whether the trial judge was correct to take those verdicts at the time she did. The answer is no. As has been explained, the trial judge, immediately after she had read the foreperson's note disclosing that the juror had made the inquiry on the internet, indicated that she intended to take the verdicts prior to dealing with the issue of the juror's inquiry. During a lengthy debate with counsel, throughout which she was urged by both the Crown and defence counsel not to adopt that course, her Honour agreed that s 68C had been "breach[ed]". In her written reasons for discharging the juror, the trial judge recorded that the juror "did make an inquiry for the purposes of obtaining information about a matter relevant to the trial", 40 Jury Act, s 72A(1). that that "enlivened" and that she "had no option but to discharge that juror". inquiry was "specifically prohibited", that therefore s 53A was The majority of the Court of Criminal Appeal held, and the Crown submitted before this Court, that the trial judge's views were "tentative", and that her Honour had not made a "decision at the earlier point in time that the juror was guilty of misconduct". That was an error. The only available conclusion that can be drawn from the record of the trial and, in particular, from what the trial judge said was that, before taking the ten verdicts, the trial judge was affirmatively satisfied that there had been misconduct by the juror. The trial judge was required to immediately discharge the juror before taking the ten verdicts. In the Court of Criminal Appeal, the Crown conceded that "a failure by a trial judge to immediately discharge a juror upon being satisfied of juror misconduct amounts to a failure to comply with a mandatory requirement under the Jury Act and is as such a fundament[al] defect leaving no room for the application of the proviso in s 6(1) of the Criminal Appeal Act". As Campbell J observed, that concession was properly made. In this Court, the Crown submitted that if the trial judge technically erred by failing to discharge the juror consequent upon any (erroneous) finding of misconduct, that was an error to which the proviso could, and should, apply. The premise for the submission – that the trial judge's finding that there was misconduct within the meaning of s 53A(1)(c) was erroneous – is incorrect. The point does not arise. If, however, the juror did engage in misconduct within the meaning of s 53A(1)(c), then the Crown accepted that the verdicts of guilty entered before the juror was discharged should be set aside. The appeals should be allowed in relation to those counts, namely counts 4 and 6 to 12. Conclusions and orders The parties did not agree what consequential orders should be made if the appeals were allowed. The appellant submitted that all convictions on all counts should be quashed and a new trial be had. Alternatively, the appellant submitted that the convictions on counts 4 and 6 to 12 should be quashed and a new trial had on those counts. The Crown contended that the alternative orders proposed by the appellant should be made. The appellant's submission that all convictions should be quashed was said to arise because there was a real possibility that the verdicts on counts 4 and 6 to 12, as to which the evidence was relied on for tendency and coincidence reasoning, were taken into consideration in determining the verdicts for counts 1 and 5. That submission is rejected. The risk that the verdicts on counts 4 and 6 to 12 were relied on for tendency or coincidence reasoning was addressed by the trial judge instructing the jury that, to rely on such reasoning, the jury had to be satisfied that the acts from which a tendency could be inferred in fact occurred or that similarities in the complainants' accounts in fact existed. The jury was not told that they could reason from "verdicts of guilt". The verdicts on counts 1 and 5 should not be set aside. The sentence imposed on the appellant was structured as it was by reference to his conviction on counts 1 and 4 to 12. In relation to the sentence imposed on counts 1 and 5, it is for the Court of Criminal Appeal to determine whether to affirm or vary the appellant's sentence under s 7(1) of the Criminal Appeal Act 1912 (NSW), remit the matter to the District Court under s 12(2) of that Act or await the outcome of any new trial on counts 4 and 6 to 12. For those reasons, the orders of the Court are: The appeal in each matter be allowed in part. Set aside the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 3 August 2018 and, in its place, order that: the appeal be allowed in part; the appellant's convictions on Counts 4 and 6 to 12 be set aside; and a new trial be had on Counts 4 and 6 to 12. In relation to Counts 1 and 5, remit the matter to the Court of Criminal Appeal of the Supreme Court of New South Wales to consider whether: to affirm or vary the appellant's sentence under s 7(1) of the Criminal Appeal Act 1912 (NSW); to remit the matter to the District Court of New South Wales under s 12(2) of the Criminal Appeal Act 1912 (NSW); or to await the outcome of any new trial on Counts 4 and 6 to

HIGH COURT OF AUSTRALIA COMMONWEALTH OF AUSTRALIA APPELLANT AND AJL20 RESPONDENT Commonwealth of Australia v AJL20 [2021] HCA 21 Date of Hearing: 13 April 2021 Date of Judgment: 23 June 2021 C16/2020 & C17/2020 ORDER Matter No C16/2020 Appeal allowed. Set aside the orders made by the Federal Court of Australia on 29 September 2020 and, in their place, it be ordered that the proceeding be dismissed with costs. The respondent must pay the appellant's costs of the appeal to this Court. Matter No C17/2020 Appeal allowed. Set aside the orders made by the Federal Court of Australia on 11 September 2020 and, in their place, it be ordered that the application filed in the Federal Circuit Court of Australia on 12 May 2020 and transferred to the Federal Court of Australia on 27 May 2020 be dismissed with costs. The respondent must pay the appellant's costs of the appeal to this Court. Representation S P Donaghue QC, Solicitor-General of the Commonwealth, with G R Kennett SC, C J Tran and N A Wootton for the appellant and for the Attorney-General of intervening (instructed by Australian Government Solicitor) the Commonwealth, J T Gleeson SC with N M Wood and J E Hartley for the respondent (instructed by Human Rights for All) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commonwealth of Australia v AJL20 Constitutional law (Cth) – Immigration – Tort – False imprisonment – Where respondent "unlawful non-citizen" detained by Executive under ss 189(1) and 196(1) of Migration Act 1958 (Cth) – Whether period of executive detention authorised and required by ss 189(1) and 196(1) ceases when removal of "unlawful non-citizen" from Australia should have occurred had Executive acted with all reasonable despatch in performance of s 198(6) duty to remove, or continues until actual event of removal or grant of visa – Whether Parliament's power to authorise and require detention until actual event of removal or grant of visa limited by implications of Ch III of Constitution – Whether non-performance by Executive of statutory duties erases legitimate non-punitive statutory purposes which those duties support. Words and phrases – "aliens", "deportation", "duty to remove", "exclusive vesting of the judicial power of the Commonwealth", "executive detention", "executive power", "executive purpose", "false imprisonment", "habeas corpus", "hedging duty", "judicial power", "lawful non-citizen", "legitimate non-punitive purposes", "Lim principle", "mandamus", "non-refoulement", "Parliamentary supremacy", "reading down", "removal", "remove as soon as reasonably practicable", "separation of powers", "statutory duty", "statutory purposes", "terminating events", "unlawful non-citizen", "visa". Constitution, s 51(xix), Ch III. Migration Act 1958 (Cth), ss 4, 13, 14, 189, 196, 197C, 198. KIEFEL CJ, GAGELER, KEANE AND STEWARD JJ. The respondent is a Syrian citizen, who arrived in Australia in May 2005 as the holder of a child visa. On 2 October 2014, the then Minister for Immigration and Border Protection ("the Minister") cancelled the respondent's child visa on character grounds under s 501(2) of the Migration Act 1958 (Cth) ("the Act"). Having become an "unlawful non-citizen" in consequence of the cancellation of his visa, the respondent was detained on 8 October 2014, as required by s 189(1) of the Act. The respondent remained in immigration detention until he was released from detention into the community pursuant to the order of the primary judge (Bromberg J) made on 11 September 2020 on the footing that the respondent's continuing detention was unlawful. His Honour held that, because the Executive had not removed the respondent from Australia "as soon as reasonably practicable" in accordance with s 198(6) of the Act, his detention was not for the purpose of removal from Australia and was therefore unlawful. The circumstance that the failure of duty on the part of the Executive was explicable by its desire to comply with Australia's non-refoulement obligations was, by virtue of s 197C, no justification for that failure1. In this Court, the Commonwealth contended that the respondent's detention under s 189(1) was lawful because it was authorised and, indeed, required by s 196(1) of the Act. The respondent argued to the contrary that s 196(1) does not authorise the Executive to detain an unlawful non-citizen where its officers have failed to remove the unlawful non-citizen from Australia as soon as reasonably practicable. The respondent contended that, as the primary judge held2, this construction of the Act was compelled by the need to observe the constitutional limitations on the Commonwealth's legislative power to authorise detention by the Executive. Almost two decades ago in NAES v Minister for Immigration and Multicultural and Indigenous Affairs3, Beaumont J rejected an application for habeas corpus in circumstances materially the same as the present case. Beaumont J, following the construction of ss 196(1) and 198 adopted by French J (as his Honour then was) in WAIS v Minister for Immigration and Multicultural 1 AJL20 v The Commonwealth [2020] FCA 1305 at [95]-[99], [123]; see also DMH16 v Minister for Immigration and Border Protection (2017) 253 FCR 576 at 581 [26]. 2 AJL20 v The Commonwealth [2020] FCA 1305 at [17], [34(d)], [44], [75]. [2003] FCA 2 at [11]-[15]. Steward and Indigenous Affairs4, held that the operation of ss 189(1) and 196(1) in authorising the applicant's detention was not conditioned on the actual achievement of removal of the unlawful non-citizen as soon as reasonably practicable by the Executive. On that footing, an order mandating compliance by the Executive with the duty imposed by s 198 was, as Beaumont J explained, the appropriate remedy for non-compliance with s 198 of the Act. Such an order would give effect to the statutory scheme, whereas an order for the release of an unlawful non-citizen into the community would undermine it. The approach taken by Beaumont J was correct 18 years ago and remains correct today. There is no room for any doubt that the interpretation of ss 196(1) and 198 that his Honour adopted, and that was applied again more recently by the Full Court of the Federal Court (Robertson, Griffiths and Bromwich JJ) in ASP15 v The Commonwealth5, faithfully reflects the intention of the Act. No constitutional imperative requires departure from it. The primary judge erred in thinking otherwise. The proceedings After the respondent was detained in October 2014, he made a number of applications for a protection visa. These applications were, however, refused on character grounds under s 501(1) of the Act. On 25 July 2019, following representations made on his behalf, the Minister refused to consider granting the respondent a visa under s 195A of the Act. On 4 November 2019, the respondent commenced proceedings in the Federal Court of Australia seeking damages in respect of his alleged false imprisonment by the Commonwealth since 26 July 2019 ("the compensation proceeding"). On 12 May 2020, the respondent commenced a further proceeding in the Federal Circuit Court of Australia seeking what was described as "an order in the nature of a writ of habeas corpus" ("the specific relief proceeding"). The specific relief proceeding was transferred to the Federal Court on 27 May 2020. In this Court, it was expressly conceded by the Commonwealth that, as the primary judge found, the respondent had not been removed from Australia "as soon as reasonably practicable" as required by s 198(6) of the Act. The primary judge's finding in this regard was, in part, based on the circumstance that officers of what [2002] FCA 1625 at [56]. (2016) 248 FCR 372 at 382-383 [40]-[42]. Steward is now the Department of Home Affairs had formed the view that to remove the respondent to Syria would place Australia in breach of its international non-refoulement obligations6. By reason of s 197C of the Act, that consideration was irrelevant to whether it was reasonably practicable that the respondent be removed from Australia. This circumstance aside, the primary judge's finding was also based on findings of fact that the Executive could and should have done more to expedite the respondent's removal from Australia 1 Following the making of an order in the specific relief proceeding on 11 September 2020 that the respondent be released forthwith, on 29 September 2020 the primary judge made a declaration in the compensation proceeding that the respondent's detention since 26 July 2019 was unlawful. The damages recoverable by the respondent were to be assessed separately8. In each proceeding, the Commonwealth appealed to the Full Court of the Federal Court, contending that the primary judge erred in concluding that ss 189(1) and 196(1) of the Act did not authorise the respondent's detention. Upon the application of the Attorney-General of the Commonwealth, each appeal to the Full Court was removed into this Court pursuant to s 40 of the Judiciary Act 1903 (Cth). It is convenient now to set out the relevant provisions of the Act, and to note this Court's settled view of the constitutional validity and proper construction of these provisions and their predecessors in order to lay the ground for a consideration of the reasons of the primary judge and the arguments advanced by the respondent in their support. The Act Section 4(1) states that the object of the Act is to "regulate, in the national interest, the coming into, and presence in, Australia of non-citizens". Section 4(2) states that, to "advance its object", the Act "provides for visas permitting non- citizens to enter or remain in Australia and the Parliament intends that this Act be the only source of the right of non-citizens to so enter or remain". Section 4(4) further states that, to "advance its object", the Act "provides for the removal ... 6 AJL20 v The Commonwealth [2020] FCA 1305 at [10]. 7 AJL20 v The Commonwealth [2020] FCA 1305 at [105]-[171]. 8 AJL20 v The Commonwealth [2020] FCA 1305 at [173]. Steward from Australia of non-citizens whose presence in Australia is not permitted by this Act". Section 14 provides that an "unlawful non-citizen" is a non-citizen who is in the "migration zone" (in broad terms, Australia9) and is not a "lawful non- citizen". Section 13 provides that a "lawful non-citizen" is a non-citizen who is in the "migration zone" and holds an effective "visa". A visa provides permission to enter or remain in Australia10. The dichotomy between lawful non-citizens and unlawful non-citizens is fundamental to the scheme of ss 189, 196 and 198 of the Act whereby an unlawful non-citizen is not at liberty to enter the Australian community. As Hayne J said in Plaintiff M47/2012 v Director-General of Security11: "The Act provides no middle ground between being a lawful non- citizen (entitled to remain in Australia in accordance with any applicable visa requirements) and being an unlawful non-citizen, who may, usually must, be detained and who (assuming there is no pending consideration of a valid visa application) must be removed from Australia as soon as reasonably practicable." To this end, s 189(1) of the Act authorises and requires the Executive to detain unlawful non-citizens. It provides: "If an officer knows or reasonably suspects that a person in the migration zone ... is an unlawful non-citizen, the officer must detain the person." Read with the definition of "detain" in s 5(1) of the Act, s 189(1) has two distinct and sequential operations. First, it authorises and requires a person in the migration zone to be taken into immigration detention by an officer who knows or reasonably suspects that the person is an unlawful non-citizen. Secondly, it authorises and requires the person, having been taken into immigration detention, to be kept in immigration detention by or at the direction of an officer who knows or reasonably suspects that the person is an unlawful non-citizen. Section 196 governs the period for which a person taken into immigration detention is to be kept in immigration detention under s 189(1) by or at the See the Act, s 5(1). 10 The Act, s 29. (2012) 251 CLR 1 at 78 [178]. Steward direction of an officer who knows or reasonably suspects that the person is an unlawful non-citizen. It provides relevantly: "(1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until: he or she is removed from Australia under section 198 or 199; an officer begins to deal with the non-citizen under subsection 198AD(3); or he or she is deported under section 200; or he or she is granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than as referred to in paragraph (1)(a), (aa) or (b)) unless the non-citizen has been granted a visa. This section has effect despite any other law. In this section: visa decision means a decision relating to a visa (including a decision not to grant the visa, to cancel the visa or not to reinstate the visa)." The authority and duty to detain an unlawful non-citizen pursuant to s 189(1) for the period specified in s 196(1) is attended by an obligation on the Executive to effect the removal of an unlawful non-citizen "as soon as reasonably practicable". This obligation is contained in s 198, which relevantly provides: "Removal on request (1) An officer must remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be so removed. Steward Removal of unlawful non-citizens in other circumstances (6) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and the non-citizen made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; and one of the following applies: the grant of the visa has been refused and the application has been finally determined; the visa cannot be granted; and the non-citizen has not made another valid application for a substantive visa that can be granted when the applicant is in the migration zone." Section 197C was inserted into the Act to overcome decisions which had interpreted s 198 to the effect that it did not require the removal of an unlawful non-citizen where the removal would place Australia in breach of its non- refoulement obligations12. At the material time, s 197C provided: "(1) For the purposes of section 198, it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non-citizen. (2) An officer's duty to remove as soon as reasonably practicable an unlawful non-citizen under section 198 arises irrespective of whether 12 Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144; Minister for Immigration and Citizenship v SZQRB (2013) 210 FCR 505. See Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 165-166 [1135]-[1140]. Steward there has been an assessment, according to law, of Australia's non- refoulement obligations in respect of the non-citizen." The course of authority The power of the Parliament Section 51(xix) of the Constitution empowers the Commonwealth Parliament to make laws with respect to aliens and immigration. It is uncontroversial that this power includes the making of laws restricting the entry into the Australian community of aliens who have not been given permission to enter under Australian law and providing for the removal of such persons. In Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs, "Aliens, not being members of the community that constitutes the body politic of Australia, have no right to enter or remain in Australia unless such right is expressly granted. Laws regulating their entry to and providing for their departure from Australia (including deportation, if necessary) are directly connected with their alien status." It has long been recognised that a law that provides for the executive detention of an alien, in order to prevent unauthorised entry into the Australian community or to facilitate removal from Australia, is also within the scope of s 51(xix). In Koon Wing Lau v Calwell14, Latham CJ, with whom McTiernan J agreed, discussing a challenge to the constitutional validity of a measure that provided for the detention of certain aliens pending deportation, said: "It is contended that [the measure] is invalid because it permits unlimited imprisonment. Any deprivation of liberty must be shown to be authorized by law before it can be justified. But deportation legislation is a necessary element in the control of immigration into a country. 'The power to deport', Barton J said in Robtelmes v Brenan15 ., 'is the complement of the power to exclude.' Deportation under legislation of this character, whether it is (1992) 176 CLR 1 at 57. (1949) 80 CLR 533 at 555; see also Falzon v Minister for Immigration and Border Protection (2018) 262 CLR 333 at 358 [92]. (1906) 4 CLR 395. Steward regarded as legislation relating to aliens or legislation relating to immigration, is not imposed as punishment for being an alien or for being an immigrant: Ex parte Walsh and Johnson; In re Yates16." The amplitude of the legislative power conferred by s 51(xix) is qualified by the implications of Ch III of the Constitution, involuntary detention being ordinarily within the exclusive province of the courts. In Lim17, Brennan, Deane and Dawson JJ (Gaudron J relevantly agreeing) held that, exceptional cases aside, "the involuntary detention of a citizen in custody by the State is penal or punitive in character and ... exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt". However, as their Honours explained18, one such exceptional case, in which "authority to detain ... can be conferred on the Executive [by the Parliament] without infringement of Ch III's exclusive vesting of the judicial power of the Commonwealth in the courts which it designates", is: "authority to detain (or to direct the detention of) an alien in custody for the purposes of expulsion or deportation ... [including] authority to detain an alien in custody, when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport". Their Honours went on to hold that the predecessors of ss 189, 196(1) and 198 fell within this exception to the Ch III limitation on the power of the Parliament to authorise executive detention because "the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered"19. The authority to detain conferred on the Executive by s 54L(1) and (2), the predecessor of ss 189(1) and 196(1), was (1925) 37 CLR 36: see at 60, 96. (1992) 176 CLR 1 at 27. 18 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 32. 19 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 33. Steward characterised as an incident of the power to exclude, admit and deport non-citizens20, and was unanimously upheld as valid by the Court. Similarly, in Re Woolley; Ex parte Applicants M276/200321, Gleeson CJ, in a passage cited with approval by Crennan, Bell and Gageler JJ Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship22, explained that until the completion of the steps that terminate the period of detention of a non-citizen required and authorised by the Act, "the non-citizen has no legal right to enter the community, and a law providing for detention during the process of decision-making is not punitive in nature". Whether a law authorising or requiring detention is reasonably capable of being seen as necessary for the purpose of segregation pending receipt, investigation and determination of any visa application or removal of an unlawful non-citizen depends on the connection between the detention and segregation or removal. In Al-Kateb v Godwin23, McHugh J explained: "A law requiring the detention of the alien takes its character from the purpose of the detention. As long as the purpose of the detention is to make the alien available for deportation or to prevent the alien from entering Australia or the Australian community, the detention is non-punitive. The Parliament of the Commonwealth is entitled, in accordance with the power conferred by s 51(xix) and without infringing Ch III of the Constitution, to take such steps as are likely to ensure that unlawful non-citizens do not enter Australia or become part of the Australian community and that they are available for deportation when that becomes practicable." The correctness of the constitutional holding in Al-Kateb, that ss 189, 196 and 198 are valid insofar as they authorise and require detention of an unlawful non-citizen even where removal is not reasonably practicable in the foreseeable future, does not arise for consideration in the present case. 20 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 33. (2004) 225 CLR 1 at 14 [26]. (2013) 251 CLR 322 at 369-370 [139]. (2004) 219 CLR 562 at 584 [45]. Steward In Plaintiff S4/2014 v Minister for Immigration and Border Protection24, French CJ, Hayne, Crennan, Kiefel and Keane JJ referred to Lim, and went on to say that: "[D]etention under and for the purposes of the Act is limited by the purposes for which the detention is being effected. And it further follows that, when describing and justifying detention as being under and for the purposes of the Act, it will always be necessary to identify the purpose for the detention. Lawfully, that purpose can only be one of three purposes: the purpose of removal from Australia; the purpose of receiving, investigating and determining an application for a visa permitting the alien to enter and remain in Australia; or, in a case such as the present, the purpose of determining whether to permit a valid application for a visa." It is because the detention mandated by s 189(1) of the Act is temporally constrained by s 196(1) that the detention is capable of being seen as necessary for execution of the legitimate non-punitive purposes of segregation pending receipt, investigation and determination of any visa application or removal. In Plaintiff S4, "Section 196(1) prescribes the duration of immigration detention. It provides that an unlawful non-citizen must be kept in immigration detention until the happening of one of four events: removal from Australia under s 198 or s 199; an officer beginning the process under s 198AD(3) for removal to a regional processing country; deportation under s 200; or the grant of a visa. Of those four events, it is the first – removal from Australia under s 198(2) – which fixed the outer limit to the plaintiff's detention. ... [I]f none of the [last] three events [mentioned in s 196(1)] occurred, removal under s 198(2) had to occur 'as soon as reasonably practicable' (emphasis added). The duration of the plaintiff's lawful detention under the Act was thus ultimately bounded by the Act's requirement to effect his removal as soon as reasonably practicable. It was bounded in this way because the (2014) 253 CLR 219 at 231 [26]; see also Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 370 (2014) 253 CLR 219 at 232-233 [30], [32]-[33]. Steward requirement to remove was the only event terminating immigration detention which, all else failing, must occur." Their Honours had earlier said that26: "The duration of any form of detention, and thus its lawfulness, must be capable of being determined at any time and from time to time. Otherwise, the lawfulness of the detention could not be determined and enforced27 by the courts, and, ultimately, by this Court." In Plaintiff M96A/2016 v The Commonwealth28, Kiefel CJ, Bell, Keane, Nettle, Gordon and Edelman JJ said that, by this last observation in Plaintiff S4, it had been meant that "there must be objectively determinable criteria for detention". Their Honours explained that this second limitation on the amplitude of the Parliament's power to authorise executive detention flows from the need to ensure that29: "Parliament cannot avoid judicial scrutiny of the legality of detention by [legislating] criteria which are too vague to be capable of objective determination. This would include an attempt to make the length of detention at any the unconstrained, and unascertainable, opinion of the Executive30." time dependent upon In Plaintiff M96A31, the plurality concluded that ss 189(1) and 196(1) did not exceed the Parliament's power on this basis because: "The duration of the detention of transitory persons who are detained under s 189 of the Act is able to be objectively determined at any time, and 26 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232 [29]. 27 Crowley's Case (1818) 2 Swans 1 at 61 [36 ER 514 at 531]. (2017) 261 CLR 582 at 597 [31]. 29 Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 597 [31]. 30 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 258. (2017) 261 CLR 582 at 597 [32]. Steward from time to time. At any time it can be concluded that detention in Australia will conclude if any of the various preconditions [in s 196(1)] are met." To similar effect, Gageler J said32: "[T]he duration of the detention is capable of objective determination by a court at any time and from time to time. From the moment of the commencement of the detention under s 189, duration of the detention is made by s 196(1)(a) and (aa) to depend on performance of the duty to remove imposed by s 198(1A) or by s 198AD(2)." The application of the Act The nature of the duty to detain imposed by s 189(1) of the Act was explained by Hayne J (McHugh and Heydon JJ relevantly agreeing) in Al-Kateb33: "[T]he provision is mandatory; the legislature requires that persons of the identified class be detained and kept in detention. No discretion must, or even can, be exercised. No judgment is called for. The only disputable question is whether the person is an unlawful non-citizen." The duration of the detention required and authorised by s 196(1) is, as Hayne J said in Al-Kateb34, "fixed by reference to the occurrence of any of [the four] specified events. Detention must continue 'until' one of those events occurs." The combined effect of ss 189(1) and 196(1) is that a non-citizen can be lawfully within the Australian community only if he or she has been granted a visa35. Otherwise, an unlawful non-citizen must be detained until such time as he or she departs Australia by one of the means referred to in s 196(1), relevantly in this case removal under s 198. That removal is to be effectuated by the 32 Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 600 [45]. (2004) 219 CLR 562 at 647 [254]. (2004) 219 CLR 562 at 638 [226]. See also Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 593 [19]; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232-233 [30]. 35 Subject to Love v The Commonwealth (2020) 94 ALJR 198; 375 ALR 597. Steward performance of the duty that s 198(6) places on officers of the Commonwealth to remove "as soon as reasonably practicable". This view of the relationship between s 196 and s 198 has consistently been accepted and applied in the Federal Court36. Similarly, with respect to the relationship between s 196 and the duty to grant or refuse a visa under s 65 in a reasonable time, in ASP1537 the Full Court held that: "It follows that once a valid visa application has been made, unless and until a decision is made either to grant or refuse a visa, detention is authorised and required by s 196(1). This conclusion is consistent with the binding authority of Al-Kateb as to the nature of lawful detention and the meaning of s 196(1). ... Such detention does not cease to be for the purpose of considering and determining an application for a visa because the necessary process has not been completed within the time required by the Migration Act, be that time period express or implied. If in fact a court determines that the process to make a visa decision has gone on for too long, it nonetheless remains detention for that purpose and is both validly authorised and required by s 196(1) of the Migration Act. The normal remedy is court action to compel a visa decision to be made, one way or the other." Bearing on each of the two steps in the reasoning of the primary judge now to be considered, the Full Court in ASP15 continued38: "Nor does any question of inconsistency with Ch III of the Constitution of the Commonwealth arise. Detention while a visa application is being considered does not deprive that detention of its statutory purpose 36 WAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 1625 at [46]-[49]; NAES v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 2 at [6]-[7]; SHFB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 29 at [10], [12]-[13]; SHFB v Goodwin [2003] FCA 294 at [8]-[12], [23]-[25]; NAGA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 224 at [10]-[11], [64]; Daniel v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 196 ALR 52 at 57 [15]-[16], 63 [36]; CMA19 v Minister for Home Affairs [2020] FCA (2016) 248 FCR 372 at 382-383 [40]. (2016) 248 FCR 372 at 383 [41]-[42]. Steward because a reasonable time to make a decision about a visa in furtherance of that purpose has been exceeded. ... The regime for immigration detention is valid for the purposes of making a visa decision precisely because it imposes an obligation on the Minister to make that decision within whatever time limit applies; detention only remains valid so long as such a purpose under the Migration Act continues to exist. In the case of detention pending a visa decision, failure to do so within the required time renders the Minister liable to the issue of a writ of mandamus to compel him or her to perform their statutory duty. However it does not render invalid the provision which authorises detention in the first place. So long as the Migration Act validly continues to authorise detention, there can be no claim for false imprisonment or habeas corpus." (emphasis in original) The reasons of the primary judge The primary judge found that the Commonwealth had failed to remove the respondent "as soon as reasonably practicable" as required by s 19839, and proceeded to hold that this failure by officers of the Executive involved a "departure from the requisite removal purpose for [the respondent's] detention"40. On that footing, the primary judge proceeded to the conclusion that the detention of the respondent was no longer for the purpose of removal and was therefore unlawful41. The primary judge's reasoning involved two steps that are in controversy. First, his Honour read down s 196(1) by treating the period of detention to which it refers as dependent not upon the existence of the duty to remove as soon as reasonably practicable in s 198(6), but upon the performance of that duty in fact by the Executive. His Honour considered this reading down of s 196(1) to be necessary to preserve its constitutional validity. Secondly, his Honour concluded that non-compliance by the Executive with s 198(6) gave rise to a "departure" from the purpose of the detention authorised and required by ss 189(1) and 196(1), so 39 AJL20 v The Commonwealth [2020] FCA 1305 at [123]-[125], [170]. 40 AJL20 v The Commonwealth [2020] FCA 1305 at [128], [171]. 41 AJL20 v The Commonwealth [2020] FCA 1305 at [75], [128], [171]. Steward that thereafter the detention of the respondent by the Executive was no longer for the purpose of his removal. The primary judge then proceeded to hold that "an order in the nature of a writ of habeas corpus" requiring the respondent's release was necessary to "remediate [his] unlawful detention" and maintain the rule of law42. His Honour considered that an order of this kind was not rendered inutile because s 189(1) of the Act would require the respondent to be immediately re-detained. His Honour took that view because, in the proceedings before him, the Commonwealth maintained its adherence to a policy of non-refoulement in relation to the respondent despite the terms of s 197C. That being so, his Honour considered that s 189(1) would not authorise the respondent's re-detention because, by reason of the Executive's erroneous adherence to this policy, any further detention would continue not to be for the purpose of his removal43. For the reasons that follow, the steps by which the learned primary judge reasoned to his conclusion are flawed. Step 1: Reading down s 196(1) The primary judge approached the construction of s 196 of the Act "in light of the constitutional constraints upon administrative detention which flow from Chapter III of the Constitution ... which provides for the separation of judicial power from the executive and legislative powers"44. In his Honour's view, endorsed by the respondent on appeal, the scheme of immigration detention could not, given the implications of Ch III, validly be enacted by the Parliament under s 51(xix) of the Constitution save where the Executive could be shown in any particular case to perform its obligations to remove the detainee as soon as reasonably practicable. This approach conflated questions of constitutional validity with questions of statutory interpretation, and questions concerning the purpose of the Act with questions concerning the purpose of the officers of the Executive bound by it. It was also contrary to the clear course of authority. 42 AJL20 v The Commonwealth [2020] FCA 1305 at [72]-[73], [174]-[175]. 43 AJL20 v The Commonwealth [2020] FCA 1305 at [175]. 44 AJL20 v The Commonwealth [2020] FCA 1305 at [17]. Steward The constitutional and statutory questions When the Executive executes a statute of the Commonwealth, as opposed to exercising its common law prerogatives and capacities45 or whatever authority is inherent in s 61 of the Constitution46, the constitutional question is whether the statutory authority conferred on the Executive is within the competence of the Parliament; the statutory question is whether the executive action in question is authorised by the statute. If the statute, properly construed, can be seen to conform to constitutional limitations upon legislative competence without any need to read it down to save its validity47, then it is valid in all its applications, and no further constitutional issue arises. The question then is whether the executive action in question was authorised by the statute, with that question to be resolved by reference to the statute as a matter of administrative law48. As French CJ, Gummow, Hayne, Crennan and Bell JJ said in Wotton v Queensland49: "[I]f, on its proper construction, the statute complies with the constitutional limitation, without any need to read it down to save its validity, any complaint respecting the exercise of power thereunder in a given case ... does not raise a constitutional question, as distinct from a question of the exercise of statutory power." As has been noted, it is well-settled that the Act does not permit detention of a non-citizen for purposes unconnected with entry into, or exclusion or removal from, the community. The detention authorised by ss 189(1) and 196(1) of the Act 45 See Davis v The Commonwealth (1988) 166 CLR 79 at 108; Williams v The Commonwealth [No 2] (2014) 252 CLR 416. 46 See Pape v Federal Commissioner of Taxation (2009) 238 CLR 1. 47 See Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 180; Acts Interpretation Act 1901 (Cth), s 15A and its State and Territory equivalents. 48 Wotton v Queensland (2012) 246 CLR 1 at 9-10 [10], 13-14 [21], [24], 29-30 [74]. See also Comcare v Banerji (2019) 267 CLR 373 at 405-406 [44], 421-422 [96]; Palmer v Western Australia (2021) 95 ALJR 229 at 245 [65], 254 [118]-[120], 270- 271 [200]-[202], 274 [224]; 388 ALR 180 at 196, 208, 229-230, 234. (2012) 246 CLR 1 at 14 [22]; see also Palmer v Western Australia (2021) 95 ALJR 388 ALR 180 at 196-197, 210, 229-230, 235, 236-237. Steward is reasonably capable of being seen as necessary for the legitimate non-punitive purposes of segregation pending investigation and determination of any visa application or removal50. This is because the authority and obligation of the Executive to detain unlawful non-citizens is hedged about by enforceable duties, such as that in s 198(6), that give effect to legitimate non-punitive purposes. Upon performance of these duties, the detention is brought to an end. As was explained in Plaintiff M96A, the existence of these hedging duties also means that the duration, and thus lawfulness, of the detention authorised by the Act is capable of determination from time to time51. It is because these duties are enforceable that "the length of detention [is not] at any time dependent upon the unconstrained, and unascertainable, opinion of the Executive"52. Accordingly, ss 189(1) and 196(1) are valid. There is no need to read them down to save their validity. They are valid in all their potential applications. As has been observed, it is because the duration of the detention of an unlawful non-citizen must end, either upon the grant of a visa or upon the removal of the non-citizen from Australia, that immigration detention under the Act is not punishment within the exclusive province of judicial power. That is so because the terms of the Act circumscribe the purposes of detention of an unlawful non-citizen so that they do not include punishment. The purposes of the Act, and the consequent validity of the Act, cannot be set at nought by the intents or purposes of the officers of the Executive whose duty it is to enforce the Act. Accordingly, there was no warrant for the primary judge to hold that, in order to preserve its constitutional validity, "it is not possible to read the directive in s 196(1)(a) as authorising detention 'until' the fact or the event of the removal of the detainee from Australia"53. There is likewise no constitutional need to read the words "until ... he or she is removed from Australia" as referring "not to the fact of 50 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 17, 29, 32-34, 36, 38; Al-Kateb v Godwin (2004) 219 CLR 562 at 584-586 [45]-[48], 650-651 [266]-[267], 658 [289], 660-661 [295]; Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 31-32 [72]-[73], (2017) 261 CLR 582 at 597 [32], 600 [45]. 52 Compare Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 53 AJL20 v The Commonwealth [2020] FCA 1305 at [44]-[45]. Steward removal but to the time and effort necessary, as a matter of reasonable practicability, to effectuate the purpose of detention"54 such that the period of detention authorised under s 196 ceases to be authorised when removal should have occurred had officers of the Executive acted with all reasonable despatch55. The primary judge noted56 that the plurality in Plaintiff M96A57 said, in relation to the event listed in s 196(1)(a), that "it is a condition that removal must occur as soon as reasonably practicable". His Honour took this statement to support the view that the detention of an unlawful non-citizen ceases to be authorised by the Act immediately, where there has been a delay in the Executive's performance of the duty imposed by s 198. The respondent sought to rely upon the reasoning of Brennan, Deane and Dawson JJ in Lim58 in support of much the same proposition. The respondent's contention was to the effect that only where the Executive properly performs the duties that establish the legitimate non-punitive purposes of the Act can the unlawful non-citizen's detention ordained by the Parliament be reasonably capable of being seen as necessary for legitimate non-punitive purposes. Neither Plaintiff M96A nor Lim suggests that the operation of s 189(1) is conditioned upon s 198(6) in this manner, either as a matter of ordinary construction or in order to preserve its constitutional validity. When read in the context of the observation that "detention in Australia will conclude if any of the various preconditions [in s 196(1)] are met"59, the statement of the plurality in Plaintiff M96A does not suggest that the authority and duty to detain imposed by s 189(1) disappears immediately upon delay in the performance of the hedging duty in s 198(6). Nor can one discern in, or attribute to, the plurality's statement in Plaintiff M96A or the reasoning in Lim (or the passages in Plaintiff S4 to which reference has been and will be made) any adherence to the heresy that, where a law is within the Parliament's competence because of the imposition of duties on 54 AJL20 v The Commonwealth [2020] FCA 1305 at [45]. 55 AJL20 v The Commonwealth [2020] FCA 1305 at [89]. 56 AJL20 v The Commonwealth [2020] FCA 1305 at [48]. (2017) 261 CLR 582 at 593 [20]. (1992) 176 CLR 1 at 33-36. 59 Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 597 [32]. Steward officers of the Executive, delay in performance of those duties by those officers can take the law outside Parliament's competence. A failure by the Executive diligently to perform the duties that give effect to the legitimate non-punitive purposes for which detention is authorised and required by the Act erases neither those duties nor the statutory purposes which those duties support. Were it otherwise, the supremacy of the Parliament over the Executive would be reversed and the rule of law subverted60. Detention until removal As has been seen, it is well-settled that the detention authorised by s 189(1) must continue until the first occurrence of a terminating event specified in s 196(1). The text of s 196(1) is clear: a person detained under s 189 "must be kept in immigration detention until", relevantly, "he or she is removed from Australia under section 198". The word "until", used in its ordinary sense of "up to the time"61 and in conjunction with the word "kept", refers to an ongoing or continuous state of affairs that is to be maintained up to the time that the event (relevantly, the grant of a visa or removal) actually occurs. As much is confirmed by s 196(3), to which the primary judge did not refer, in its provision that an unlawful non-citizen may be "release[d]" from detention only in the ways set out in s 196(1). In so providing, s 196 gives effect to the binary division drawn by the Act between lawful non-citizens, who may be at liberty in the community, and unlawful non-citizens, who must not be. Thus, as was explained by Hayne J in Plaintiff M7662: "The requirement of s 196(1) that an unlawful non-citizen detained under s 189 must be kept in immigration detention 'until' the happening of one of [the four terminating events prescribed by s 196(1)] cannot be construed as using the word 'until' in some purposive sense. One of the terminating events is the grant of a visa and it is not to be supposed that detention could be for the purpose of granting the person detained a visa. It thus follows that 60 See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 202-203; Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 61 Oxford English Dictionary, 2nd ed (1989), vol 19 at 234, Meaning 5(a): "Onward till (a time specified or indicated); up to the time of (an action, occurrence, etc)". (2013) 251 CLR 322 at 366 [126]. Steward the word 'until' must be read in s 196(1) as fixing the end of detention, not as fixing the purpose or purposes for which detention is or may be effected." As much had earlier been recognised in WAIS63, where French J concluded that: "The language of s 196 ... seems to me to be intractable. The detention there prescribed is ended only by one of the terminating events. The removal obligation for which s 198 provides does not seem to have been enacted for any purpose protective of the rights of detainees. Rather it facilitates the expeditious removal from Australia of unlawful non-citizens. The remedy for a failure in the discharge of that duty may be mandamus, possibly directed to the Minister." (emphasis added) The duty imposed upon officers of the Executive by ss 189(1) and 196(1) of the Act is to detain the unlawful non-citizen until the occurrence of one of the events referred to in s 196. The duty so imposed by the Act is neither conditional upon, nor co-extensive with, the intents or purposes of officers of the Executive towards the detainee. Where the Executive is dilatory in performing the hedging duties imposed upon it, as French J observed, the remedy of mandamus is available to compel the proper performance of those duties64. It is precisely because the hedging duties may be enforced so as to bring the detention of the unlawful non-citizen to an end that the executive detention authorised and required by ss 189 and 196 can be seen to be within the Parliament's power under s 51(xix) of the Constitution as limited by the implications of Ch III. These hedging duties are not things written in water. A failure on the part of the responsible officers of the Executive to comply with an order of the court mandating performance of their statutory duties may result in those officers being committed to prison for contempt of court65. By this means, [2002] FCA 1625 at [56]; see also Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri (2003) 126 FCR 54 at 88 [134]. 64 See Plaintiff S297/2013 v Minister for Immigration and Border Protection (2015) 255 CLR 231. 65 M v Home Office [1994] 1 AC 377; see also AFX17 v Minister for Home Affairs [No 4] [2020] FCA 926. Steward judicial power is exercised to give effect to the scheme of the Act, enforcing the supremacy of the Parliament over the Executive66. The duty imposed by s 198(6) was enforceable at all times during the 14 months when the responsible officers of the Executive were failing to perform that duty in the present case. At all times during this period, they were amenable to mandamus to require them to perform that duty. But at all times, their duty was to remove the respondent from Australia. Nothing happened that might, consistently with the Act, require or permit them to set the respondent at large in Australia. Not surprisingly, perhaps, given that Syria was the likely destination for removal, at no stage did the respondent demand that the duty under s 198(6) be performed. The decision of the primary judge is thus attended by the supreme irony that the failure of the Executive to perform a duty which the respondent did not at any time seek to have performed has led to the admission of the respondent into the Australian community contrary to the duty of the Executive and to the clear intention of the Act as to the circumstances in which an unlawful non-citizen might be admitted into the Australian community. Koon Wing Lau The respondent sought to support the primary judge's view that the word "until" in s 196(1) should be understood as being constrained by the ability and intent of officers of the Executive to give effect to the statutory purpose of detention by reference to Koon Wing Lau. That submission cannot be accepted. Koon Wing Lau67 was relevantly concerned with a challenge to the validity of s 7 of the War-time Refugees Removal Act 1949 (Cth) ("the WRR Act"), which provided for the detention of "deportees", who included aliens who had entered Australia during the period of the Second World War, or who entered Australia as a place of refuge and had not left Australia since so entering. Section 7 provided relevantly that: "A deportee may – pending his deportation and until he is placed on board a vessel for deportation from Australia; 66 M v Home Office [1994] 1 AC 377 at 395. (1949) 80 CLR 533 at 550. Steward be kept in such custody as the Minister or an officer directs." In rejecting the challenge to the validity of s 7 on the basis that it permitted "unlimited imprisonment", Latham CJ (with whom McTiernan J agreed) said68: "Section 7 does not create or purport to create a power to keep a deportee in custody for an unlimited period. The power to hold him in custody is only a power to do so pending deportation and until he is placed on board a vessel for deportation ... If it were shown that detention was not being used for these purposes the detention would be unauthorized and a writ of habeas corpus would provide an immediate remedy." Dixon J, having referred to the "imperative language" of s 5 of the WRR Act, which provided that a person in respect of whom a deportation order is made "shall be deported in accordance with [that] Act", said69: "In s 7(1)(a) I think that the words 'pending deportation' imply purpose. The two provisions together mean that a deportee may be held in custody for the purpose of fulfilling the obligation to deport him until he is placed on board the vessel. It appears to me to follow that unless within a reasonable time he is placed on board a vessel he would be entitled to his discharge on habeas. In these circumstances the provision is, I think, a law with respect to the removal of the alien or refugee and falls within the respective powers justifying that removal." "The Act does not provide that a deportee shall be deported from Australia within a specified period. It was submitted that under this provision a deportee could be kept in custody indefinitely and never deported, so that it is not a law with respect to the deportation of aliens at all but a law which in substance and effect authorizes the indefinite incarceration of the members of a certain class of persons. But a deportee may only be kept in custody pending his deportation and until he is placed on board a vessel for deportation from Australia, so that, if it appeared that a deportee was being 68 Koon Wing Lau v Calwell (1949) 80 CLR 533 at 556. 69 Koon Wing Lau v Calwell (1949) 80 CLR 533 at 581. 70 Koon Wing Lau v Calwell (1949) 80 CLR 533 at 586. Steward kept in custody not with a view to his deportation but simply with a view to his imprisonment for an indefinite period, the custody would be illegal. This fact might be difficult to prove but the omission to fix a period within which the deportee must be placed on board a vessel for deportation from Australia is not sufficient, in my opinion, to prevent s 7 ... being a law with respect to aliens. It would obviously be difficult to fix such a period." These statements do not support the primary judge's construction of "until" in s 196(1) of the Act. Section 7 of the WRR Act applied to aliens who may have been lawfully at liberty within the Australian community unless the WRR Act authorised their detention and deportation. At the time, there was no statutory equivalent of ss 189 and 196 of the Act; and nothing in the report of the case suggests that any of the persons liable to deportation had entered Australia unlawfully. As Callinan J noted in Al-Kateb71, Dixon J was not discussing the scope of the constitutional power with respect to aliens, but was construing the language of the WRR Act and the authority conferred thereby on the Executive. Latham CJ and Williams J were similarly concerned with the extent of the statutory authority conferred on the Executive. Detention of deportees under s 7 was at the discretion of the Executive. If officers of the Executive chose to detain a person for purposes other than to effect their deportation, as might be evidenced by a failure to deport the person within a reasonable time, s 7 did not authorise that person's detention. If a person's detention was unauthorised, it followed that the status quo ex ante, being at liberty in the community, ought to be restored by way of habeas. In contrast, ss 189 and 196 of the Act require the segregation of unlawful non-citizens, both before they are admitted pursuant to a visa and in order to facilitate their removal if a visa is not granted72. Given this statutory requirement, it matters not why an officer of the Executive might detain a person because, provided that person is in fact an unlawful non-citizen, the Parliament has required that he or she be detained73. Because the evident intention of the Act is that an unlawful non-citizen may not, in any circumstances, be at liberty in the Australian (2004) 219 CLR 562 at 657 [288]. 72 See Al-Kateb v Godwin (2004) 219 CLR 562 at 647 [254]. 73 See Al-Kateb v Godwin (2004) 219 CLR 562 at 647 [254]. Steward community, no question of release on habeas can arise. As Hayne J, with whom McHugh and Heydon JJ relevantly agreed, said in Al-Kateb74: "The questions which arise about mandatory detention do not arise as a choice between detention and freedom. The detention to be examined is not the detention of someone who, but for the fact of detention, would have been, and been entitled to be, free in the Australian community." It is also convenient to note here a statement of the Full Court of the Federal Court (Black CJ, Sundberg and Weinberg JJ) in Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri75, in the course of reasoning to a conclusion disapproved by this Court in Al-Kateb. After correctly stating that "[i]f the Minister were not fulfilling his duty under s 198(1) to remove as soon as reasonably practicable the detention would ... still be lawful and the appropriate remedy would be an order in the nature of mandamus to compel the Minister to take the steps required for the performance of his duty"76, the Full Court went on incorrectly to state77: "The Minister's purpose in detaining, however, must be the bona fide purpose of removal. Otherwise the detention would not be lawful. If the Minister were to hold a person in detention without such a purpose, then the detention would be unlawful and the person entitled to relief in the nature of habeas corpus. This conclusion is consistent with the decision of the High Court in Park Oh Ho v Minister for Immigration and Ethnic Affairs78". In this regard, the Full Court misunderstood Park Oh Ho. In that case, this Court held that a deportation order purportedly made in the exercise of a discretion (2004) 219 CLR 562 at 637 [219], see also at 662 [299]. To similar effect, see Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 379-380 [182]-[183]. (2003) 126 FCR 54. 76 Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri (2003) 126 FCR 54 at 88 [134]. 77 Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri (2003) 126 FCR 54 at 88 [135]. (1989) 167 CLR 637. Steward to order deportation then conferred by the Act was invalid because the deportation order had been made for the ulterior purpose of keeping the deportees available to be witnesses in a pending criminal prosecution. As a result of the invalidity of the deportation order, the detention of the appellants was unlawful because the authority to detain under the relevant provisions of the Act was confined to "deportees" and they were no longer "deportees"79. Nothing in the decision or reasons in Park Oh Ho sheds light on the operation of s 189, s 196 or s 198 of the Act. The validity of s 196(3) In an attempt to avoid the difficulty of reconciling the primary judge's construction of s 196(1) with s 196(3), the respondent argued that s 196(3) is invalid on the same basis its predecessor, s 54R, was held to be invalid in Lim. This submission cannot be accepted. Section 54R provided that "[a] court is not to order the release from custody of a designated person". Section 54Q had the effect that a designated person's detention would cease to be authorised upon the expiry of a specified time period. The expression "designated person" was defined in s 54K in such a way that "status ... as a 'designated person' does not automatically cease when detention in custody is no longer authorized by" the Act80. In Lim81, Brennan, Deane and Dawson JJ (Gaudron J agreeing) held that, given that circumstances could exist in which a designated person may be unlawfully held in custody in purported pursuance of the Act, "it necessarily follow[ed] that the provision of s 54R [was] invalid". Their Honours went on to say82: "In terms, s 54R is a direction by the Parliament to the courts as to the manner in which they are to exercise their jurisdiction. It is one thing for the Parliament, within the limits of the legislative power conferred upon it 79 Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 at 80 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 35. (1992) 176 CLR 1 at 36. 82 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 36-37. Steward by the Constitution, to grant or withhold jurisdiction. It is a quite different thing for the Parliament to purport to direct the courts as to the manner and outcome of the exercise of their jurisdiction. The former falls within the legislative power which the Constitution, including Ch III itself, entrusts to the Parliament. The latter constitutes an impermissible intrusion into the judicial power which Ch III vests exclusively in the courts which it designates." In NAMU of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs83, Black CJ, Sundberg and Weinberg JJ observed, correctly, that "[s] 196 lacks the two features that were fatal to s 54R" in that s 196 is confined in its operation to "unlawful non-citizens", that is, persons who are not lawfully present in Australia; and, further, unlike s 54R, which purported to preclude a court from ordering the release of persons whose detention had become unlawful, s 196 "precludes a court from ordering the release of persons who are lawfully detained". On that basis, s 196 "does no more than restate this axiomatic position"84 in order to put beyond doubt the incorrectness of interpretations of the kind adopted by the primary judge. Section 196(2) confirms that this is so. Step 2: Delay, departure and detention for an unauthorised purpose It must be accepted upon the unchallenged findings of fact made by the primary judge that officers of the Executive were distracted from their duty under s 198(6) of the Act by an irrelevant consideration, namely the breach by Australia of its non-refoulement obligations if the option of removing the respondent to Syria were to be pursued. It may also be accepted that on his Honour's findings of fact, more might have been done to remove the respondent from Australia. The primary judge made the leap, from a finding of a failure by the Executive to remove the respondent as soon as reasonably practicable as required by s 198(6), to the conclusion that the Executive was detaining the respondent for a purpose other than his removal from Australia85. This leap was not justified by any finding of (2002) 124 FCR 589 at 595 [10]. 84 NAMU of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 124 FCR 589 at 595 [10]. 85 AJL20 v The Commonwealth [2020] FCA 1305 at [25]-[34], [40]-[46], [69]. Steward fact, or indeed by any evidence, but was understood by his Honour to be required by the following passage from the reasons of this Court in Plaintiff S486: "The duration of the plaintiff's lawful detention under the Act was thus ultimately bounded by the Act's requirement to effect his removal as soon as reasonably practicable. It was bounded in this way because the requirement to remove was the only event terminating immigration detention which, all else failing, must occur. It follows that the Executive's consideration (while the plaintiff was in immigration detention) of whether he might seek and be granted a protection visa had to be undertaken within that framework. As already observed, the authority to detain the plaintiff is an incident of the power of the Executive to remove the plaintiff or to permit him to enter and remain in Australia, and the plaintiff's detention is limited to what is reasonably capable of being seen as necessary to effect those purposes. The purpose for his detention had to be carried into effect as soon as reasonably practicable. That is, consideration of whether a protection visa may be sought by or granted to the plaintiff had to be undertaken and completed as soon as reasonably practicable. Departure from that requirement would entail departure from the purpose for his detention and could be justified only if the Act were construed as permitting detention at the discretion of the Executive. The Act is not to be construed as permitting detention of that kind." In this respect, the primary judge was mistaken. Plaintiff S4 does not authorise reasoning from a finding of want of proper diligence in the performance of the duty to remove to a conclusion that some unauthorised punitive purpose is being pursued by the Executive. In Plaintiff S4, the circumstances of the unlawful non-citizen were such as to have engaged the requirement that he be removed from Australia as soon as reasonably practicable pursuant to s 198(2) of the Act. Notwithstanding that the duty to remove had been triggered, the Minister embarked upon a consideration of whether to exercise the power conferred by s 46A(2) of the Act to lift the bar imposed by s 46A(1), preventing the detainee from making a valid application for a visa87. As a result, the plaintiff's detention went beyond detention referable only (2014) 253 CLR 219 at 233 [33]-[34]. 87 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232-234 [28]-[35]. Steward to the performance of the duty pursuant to s 198(2) and became detention for the purpose of the Minister's consideration of whether to exercise the s 46A(2) power. The Court held that, because s 198(2) was the dominant provision and the obligation thereunder to remove "as soon as reasonably practicable" had already been triggered, the temporal limit applied also to the decision under s 46A(2). In the context where the plaintiff's detention had been prolonged to allow the Minister to consider whether to exercise the power conferred by s 46A(2), the Minister was not permitted then to exercise the separate power to grant a visa pursuant to s 195A(2). The grant of that visa foreclosed the exercise of the power under s 46A before a decision was made and thus deprived the prolongation of detention of its purpose88. When, in Plaintiff S489, the Court said that "[d]eparture from that requirement [to carry the purpose into effect as soon as reasonably practicable] would entail departure from the purpose for ... detention [of the unlawful non-citizen] and could be justified only if the Act were construed as permitting detention at the discretion of the Executive", their Honours were concerned to emphasise why administrative steps that prolonged detention must be taken within the framework of the Act and subject to its implicit temporal limits. Their Honours were not expressing a conclusion that failure to comply with a duty to bring about one of the terminating events in s 196(1) had the consequence that, ipso facto, detention became unlawful. The notion that pursuit by the Executive of a purpose that is unauthorised or even prohibited by the Act might render the detention mandated by s 189(1) during the period mandated by s 196(1)(a) invalid is in any event problematic for the reasons that have already been given. Further, as Selway J explained in Alsalih v Manager, Baxter Immigration Detention Facility90: "In contrast to the exercise of a discretionary power, there is no necessary requirement that a statutory duty be exercised bona fide and for the purpose for which the power was given. To give a simple example, if a Sheriff has a warrant to hold a prisoner in gaol the duty to do so exists no matter whether the Sheriff is bona fide and no matter what his or her 88 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 235 [41], 237 [46]-[47]. (2014) 253 CLR 219 at 233 [34]. (2004) 136 FCR 291 at 309 [56]. Steward purpose might be. Otherwise, an officer could avoid a statutory duty merely by disagreeing with it." It is enough for the duty to detain imposed by s 189(1) to be sustained in accordance with s 196(1)(a) until completion of the performance of the duty to remove imposed by s 198 that the officer keeping or causing the person to be kept in immigration detention knows or reasonably suspects that the person is an unlawful non-citizen. Provided the requisite knowledge or suspicion continues to exist throughout the period of detention91, an unauthorised or prohibited purpose on the part of the officer in prolonging the period of detention can affect neither the duty to detain nor the duty to remove nor the appropriate remedy for non- performance of the duty to remove. Conclusion The conclusion that officers of the Executive have not discharged their statutory duty to remove the respondent from Australia as soon as reasonably practicable affords a basis for orders requiring that they do their duty. Orders to that effect are appropriate to enforce the scheme of the Act. In contrast, to order that the respondent be released into the Australian community because officers of the Executive have not performed their statutory duty to remove him from Australia is to subvert that scheme. It is evident that the Executive found the prospect of the removal of the respondent to Syria in breach of Australia's non-refoulement obligations unpalatable. In that regard, it is equally evident that, if the Minister wished to avoid the realisation of that unpalatable prospect, a visa might be granted to the respondent – precisely as the Explanatory Memorandum to the Bill that introduced s 197C contemplated92: "Australia will continue to meet its non-refoulement obligations through other mechanisms and not through the removal powers in section 198 of the Migration Act. For example, Australia's non-refoulement obligations will be met through ... the Minister's personal powers in the 91 cf Guo v The Commonwealth (2017) 258 FCR 31 at 56 [83]. 92 Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 166 [1142]. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 25 September 2014 at 10548-10549. Steward Migration Act, including those under section ... 195A ... of the Migration Act." (emphasis added) Orders In the compensation proceeding, C16/2020: the appeal should be allowed, and the orders of the Federal Court of Australia made on 29 September 2020 be set aside, and in their place it be ordered that the proceeding be dismissed with costs; the respondent must pay the appellant's costs of the appeal to this Court. In the specific relief proceeding, C17/2020: the appeal should be allowed, and the orders of the Federal Court of Australia made on 11 September 2020 be set aside, and in their place it be ordered that the application filed in the Federal Circuit Court of Australia on 12 May 2020 and transferred to the Federal Court of Australia on 27 May 2020 be dismissed with costs; the respondent must pay the appellant's costs of the appeal to this Court. Gordon Gleeson GORDON AND GLEESON JJ. The Migration Act 1958 (Cth) authorises the Executive (relevantly referred to as "an officer"93) to detain an unlawful non-citizen94 and to keep that person in detention ("immigration detention")95. The authority the Migration Act gives the Executive to keep a person in immigration detention is not unlimited. The Migration Act provides for when detention must begin and when it must end. The plurality in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs96 held that there are limits on the Executive's authority to detain an alien in custody "when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport" and that those limits are necessary to ensure that Executive detention does not infringe Ch III of the Constitution. Continuing detention beyond the limits necessary for constitutional validity is unlawful97. As Crennan, Bell and Gageler JJ explained in Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship98: "laws authorising or requiring the detention in custody by the executive of non-citizens, being laws with respect to aliens within s 51(xix) of the Constitution, will not contravene Ch III of the Constitution, and will therefore be valid, only if: 'the detention which they require and authorise is limited to what is reasonably capable of being seen as necessary for the 93 Migration Act, s 5(1) definition of "officer". 94 Migration Act, ss 13 and 14. 95 Migration Act, ss 189, 196, 198. See Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 337 [19]-[20]; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232-233 [30]. (1992) 176 CLR 1 at 32. See also Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 257 CLR 42 at 161-162 [384]-[385]. 97 See Lim (1992) 176 CLR 1 at 33-36; see also 11-12, 51, 53. (2013) 251 CLR 322 at 369 [138], quoting Lim (1992) 176 CLR 1 at 33. See also Plaintiff S4 (2014) 253 CLR 219 at 231-232 [25]-[29]; CPCF v Minister for Immigration and Border Protection (2015) 255 CLR 514 at 625 [374]. Gordon Gleeson purposes of deportation or necessary to enable an application for an entry permit to be made and considered.'" (emphasis added; footnote omitted) The Executive has no "prerogative" or non-statutory power to detain a person99. The criteria against which the lawfulness of detention must be judged "are set at the start of the detention"100. As six members of this Court observed in Plaintiff M96A/2016 v The Commonwealth101, citing Australian Communist Party v The Commonwealth102, "Parliament cannot avoid judicial scrutiny of the legality of detention" by "mak[ing] the length of detention at any time dependent upon the unconstrained, and unascertainable, opinion of the Executive" (emphasis added). Indeed, it is "because immigration detention is not discretionary, but is an incident of the execution of particular powers of the Executive, [that] it must serve the purposes of the Act and its duration must be fixed by reference to what is both necessary and incidental to the execution of those powers and the fulfilment of those purposes"103 (emphasis added). The central dispute in these appeals is whether detention is lawful even though it continues beyond the time at which it should have come to an end. The detention of the respondent, AJL20, should have been, but was not, brought to an end by removing AJL20 from Australia sooner than he will now be removed. His detention was prolonged because, contrary to ss 196, 197C and 198 of the Migration Act, for approximately 14 months104, officers considered Australia's 99 Lim (1992) 176 CLR 1 at 19, 63; CPCF (2015) 255 CLR 514 at 567-568 [148]-[150], 599-600 [273]-[275]; Plaintiff M68 (2016) 257 CLR 42 at 105 [159], 158 [372]. As stated in Lim (1992) 176 CLR 1 at 28, it is unnecessary to consider the power of the Executive in times of war. 100 Plaintiff S4 (2014) 253 CLR 219 at 232 [29]. 101 (2017) 261 CLR 582 at 597 [31]. 102 (1951) 83 CLR 1 at 258. 103 Plaintiff S4 (2014) 253 CLR 219 at 232 [29]. 104 The period of detention challenged began on 26 July 2019, the day after AJL20's visa application was "finally determined" by reason of the Minister for Home Affairs declining to consider exercising his discretion under s 195A to grant AJL20 a visa, triggering his removal "as soon as reasonably practicable" under s 198(6), and ended on 11 September 2020, when AJL20 was released from detention by order of the Federal Court of Australia. Gordon Gleeson non-refoulement obligations in respect of AJL20105. Section 197C made clear, in unambiguous terms, that for the purposes of removal of an unlawful non-citizen under s 198, "it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non-citizen"106, and, further, that the duty to remove an unlawful non-citizen as soon as reasonably practicable arises "irrespective of whether there has been an assessment, according to law, of Australia's non-refoulement obligations in respect of the non-citizen"107. The Commonwealth submitted that immigration detention is lawful until an unlawful non-citizen is "actually removed". That is, the Commonwealth submitted that the authority to detain an unlawful non-citizen continues until the "actual occurrence" of a "terminating event" under s 196(1) – relevantly, removal from Australia – regardless of whether, as the Migration Act requires, the Commonwealth removes the person as soon as reasonably practicable. The Commonwealth submitted that even where, as here, the Executive prolonged AJL20's detention (by spending many months considering non-refoulement obligations that the Migration Act expressly provided were irrelevant to the Executive's obligation to remove AJL20 as soon as reasonably practicable), the detention was lawful. That would mean that Executive detention would remain lawful until such time as an unlawful non-citizen is removed under s 198, subject only to the requirement that, throughout the duration of the detention, an officer knows or reasonably suspects that the person is an unlawful non-citizen108. The logical, and inevitable, consequence of the Commonwealth's submission is that (perhaps absent express malice109) detention could lawfully continue for so long as the Executive chose, notwithstanding non-compliance with s 196. Put differently, the Commonwealth's contention would enable detention of unlawful non-citizens at the unconstrained discretion of the Executive; 105 See Al-Kateb v Godwin (2004) 219 CLR 562 at 636 [218], 639 [227]-[228]. 106 Migration Act, s 197C(1) (as it stood at the relevant time). 107 Migration Act, s 197C(2) (as it stood at the relevant time). See Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 108 Migration Act, s 189. 109 Which might constitute misfeasance in public office: Northern Territory v Mengel (1995) 185 CLR 307 at 345-348; Sanders v Snell (1998) 196 CLR 329 at 346-347 Gordon Gleeson the terminating event may never occur despite being reasonably practicable, yet detention would remain lawful110. That would render the Ch III limits on Executive detention meaningless. The Commonwealth's submissions have no foundation in the text of the Migration Act. If they did, there would be a question about the validity of the provisions111; but no such question is reached. On the proper construction of the Migration Act, the Commonwealth's submissions fail. Sections 189, 196, 197C and 198 must be read together112. That construction has to take place against the constitutional background113. Both the plain text of the provisions, and the constitutional framework within which they sit and must be read, show that the Executive's authority to keep an unlawful non-citizen in immigration detention stops when time for removal as soon as reasonably practicable has expired. As will be explained, it is not the event of removal, but a time by which removal must occur, that defines the lawfulness of detention. Section 189(1) provides for a mandatory114 duty to detain an unlawful non-citizen "[i]f an officer knows or reasonably suspects that a person in the migration zone ... is an unlawful non-citizen". The authority to keep an unlawful non-citizen in detention is conditioned by s 196. Section 196 identifies a number of "terminating events" the pursuit of which justifies keeping a person in detention115. One of those events is, relevantly, until "he or she is removed from 110 cf Plaintiff S4 (2014) 253 CLR 219 at 232 [29], 233 [33]-[34]; Plaintiff M96A (2017) 261 CLR 582 at 597 [31]. 111 Lim (1992) 176 CLR 1 at 33, 36, 58. See also Koon Wing Lau v Calwell (1949) 80 CLR 533 at 556. 112 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[70]; Al-Kateb (2004) 219 CLR 562 at 637-638 [223]; Plaintiff S4 (2014) 253 CLR 219 at 230 [23], 236 [42]. 113 Acts Interpretation Act 1901 (Cth), s 15A; Lim (1992) 176 CLR 1 at 14; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 504 [71]; Plaintiff M47/2012 v Director-General of Security (2012) 251 CLR 1 at 133 [339]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 604 [76]. 114 Al-Kateb (2004) 219 CLR 562 at 647 [254]. 115 See Lim (1992) 176 CLR 1 at 32-33, 36. Gordon Gleeson Australia under section 198"116. Section 198, in its various operations, requires that an officer must remove an unlawful non-citizen "as soon as reasonably practicable"117. That obligation is triggered by an objective event. It may be triggered by a written request for removal by the unlawful non-citizen under s 198(1) or, as in this case, it may be triggered by a final decision not to grant a visa under s 198(6). Once that event occurred for AJL20 (as it had on 25 July 2019, when the Minister for Home Affairs declined to consider exercising his discretion under s 195A to grant AJL20 a visa118), AJL20's detention under s 196 was authorised for the Executive to pursue his removal from Australia in accordance with s 198(6), as soon as reasonably practicable, and for no other reason. The Commonwealth's submission elides the distinction between taking into detention and the duration of detention. The Migration Act relevantly defines "detain" to mean119: take into immigration detention; or keep, or cause to be kept, in immigration detention; and includes taking such action and using such force as are reasonably necessary to do so." (emphasis added) The disjunctive "or" is important and is not to be ignored. It reinforces the distinction between taking into detention and the duration of – keeping a person in – detention that is reflected in the text of the provisions and in the way the provisions are intended to, and do, operate as a coherent whole. two reference The statutory power to detain an unlawful non-citizen must be understood interlocking dimensions – power and duration. The Commonwealth's argument elides the two by focusing only on the power and duty given by s 189 and ignoring the duration fixed by ss 196 and 198, detention until removal as soon as reasonably practicable. The Commonwealth, by eliding power and duration, sought to say that detention for longer than the time authorised by the Migration Act was lawful. And yet, the Commonwealth said mandamus 116 Migration Act, s 196(1)(a). 117 Migration Act, s 198(1), (1A), (1C)-(2B), (5), (6)-(9). 118 It was common ground that s 198(6) was engaged in respect of AJL20 by 26 July 2019. 119 Migration Act, s 5(1) definition of "detain". Gordon Gleeson would be available, there being a statutory duty that had not been performed. The statutory duty not performed was the duty to remove as soon as reasonably practicable. The tension in the Commonwealth's position can only be resolved by recognising that the prolongation of the detention was not authorised by the Migration Act and was therefore unlawful. At trial, the primary judge held that the Commonwealth failed to take steps to remove AJL20 from Australia to any country for the first period of his detention once s 198(6) was engaged, and failed to take steps to remove him to Syria, his country of nationality, for the whole of his detention, despite reasonably practicable steps being available to do so120. The primary judge also found that the onus was on the Commonwealth to establish that the earliest point in time for removal had not yet arrived121. His Honour found that the Commonwealth had not discharged that onus122. That AJL20's detention had been prolonged was not disputed in this Court. If the Migration Act operates according to its terms and an unlawful non-citizen is removed as soon as reasonably practicable, there is no occasion to reconsider or re-engage s 189. But where an unlawful non-citizen has been detained unlawfully and remains in detention, s 189 would require the unlawful non-citizen, if released, to be immediately re-detained123. Two points should then be made. First, the unlawful non-citizen could only be detained lawfully – that is, only until they could be removed as soon as reasonably practicable. Second, observing that s 189 would apply to require re-detention does not alter the conclusion that the past period of detention was not authorised by the Migration Act. And, not being authorised by the Migration Act, the past detention was unlawful124. This construction of the provisions is wholly consistent with what the plurality held in Lim in respect of legislation not materially different from the 120 AJL20 v The Commonwealth [2020] FCA 1305 at [126]-[128], [159], [170]-[171]. 121 AJL20 [2020] FCA 1305 at [88], [91]. 122 AJL20 [2020] FCA 1305 at [88]. 123 Plaintiff M76 (2013) 251 CLR 322 at 380 [183]. See also Wiest v Director of Public Prosecutions (1988) 81 ALR 129 at 135-136; Al-Kateb (2004) 219 CLR 562 at 641 124 Lim (1992) 176 CLR 1 at 35-36. Gordon Gleeson legislation now in issue125. The plurality in Lim recognised that continuing detention beyond the limits fixed by the legislative scheme (being limits necessary for constitutional validity126) was unlawful127. Here, the relevant limit is removal as soon as reasonably practicable, not the bare fact of removal. And, consistent with the view of the plurality in Lim, detention for a period beyond that in which removal is reasonably practicable is unlawful128. The contrary conclusion, urged by the Commonwealth, would subvert the existence and efficacy of the limits on Executive detention required by Ch III of the Constitution. Much reference was made in argument to Al-Kateb v Godwin, but that was a case where the Executive could not remove an unlawful non-citizen129. These appeals were concerned with a period of 14 months where the Executive would not remove. What was said in Al-Kateb must be read in the light of the issue in that case – an issue presented by the Executive's inability to remove, not, as here, detention prolonged by the Executive's consideration of non-refoulement obligations which were expressly stated to be irrelevant to whether and when an unlawful non-citizen should be removed. If it is alleged that there has been wrongful detention by the Executive, the nature of the issue – Executive interference with the liberty of the individual – compels the availability of habeas corpus130. It is for the Executive to justify detention131. Whether detention is lawful is a question which must be able to be 125 See Migration Amendment Act 1992 (Cth), s 3, inserting Div 4B of Pt 2, including what was then ss 54L, 54N, 54P, 54R; see also Al-Kateb (2004) 219 CLR 126 Lim (1992) 176 CLR 1 at 33-34. See [78]-[79] above. 127 Lim (1992) 176 CLR 1 at 35-36; see also 11-12, 51, 53. 128 Lim (1992) 176 CLR 1 at 35-36. 129 (2004) 219 CLR 562 at 631 [197]-[198]. 130 See Koon Wing Lau (1949) 80 CLR 533 at 556, 581; Lim (1992) 176 CLR 1 at 31-32; Al-Kateb (2004) 219 CLR 562 at 638 [224]; Plaintiff M47 (2012) 251 CLR 1 at 57-58 [108]; Plaintiff M68 (2016) 257 CLR 42 at 105 [159]. 131 Liversidge v Anderson [1942] AC 206 at 245; Trobridge v Hardy (1955) 94 CLR 147 at 152; Plaintiff M47/2018 v Minister for Home Affairs (2019) 265 CLR 285 at 299 [39]; McHugh v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2020) 385 ALR 405 at 407 [5]. Gordon Gleeson asked, and the detention justified, at any point of time on any day132. And it is a question that must be answered by reference to the criteria set at the commencement of the detention133. Here, the justification for the period of detention was set at the start and is found in s 198, not s 189. The requirement that an officer must maintain their knowledge or reasonable suspicion that a person is an unlawful non-citizen throughout the duration of the person's detention under s 189 of the Migration Act is not – and, for the reasons explained above134, could not validly be – the only limit on the duration of lawful detention135. The temporal limit expressly fixed by s 198 – the terminating bookend – is removal "as soon as reasonably practicable". That mandamus may have been available to compel the Executive to act in accordance with the Migration Act is not determinative. Mandamus and habeas are different remedies. The two remedies have different purposes and engage differences in onus of proof136. Those differences reflect the differences in the underlying complaint. The concern of habeas is liberty, or, more accurately, 132 Plaintiff S4 (2014) 253 CLR 219 at 232 [29], citing Crowley's Case (1818) 2 Swans 1 at 61 [36 ER 514 at 531]; Plaintiff M96A (2017) 261 CLR 582 at 597 [31]-[32]. 133 Plaintiff S4 (2014) 253 CLR 219 at 232 [29]; Plaintiff M96A (2017) 261 CLR 582 134 See [78]-[79], [82] above. 135 See Plaintiff M47 (2012) 251 CLR 1 at 143 [361]. See also Alsalih v Manager, Baxter Immigration Detention Facility (2004) 136 FCR 291 at 309 [57]-[58]. 136 For the onus in habeas applications, see Liversidge [1942] AC 206 at 245-246; Trobridge (1955) 94 CLR 147 at 152; Plaintiff M47 (2019) 265 CLR 285 at 299 [39]; McHugh (2020) 385 ALR 405 at 407 [5]. For the onus in judicial review applications where mandamus is sought, see Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 616 [67], 623 [91]-[92]; Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at 185 [24]. Gordon Gleeson remedying unlawful detention137. Mandamus remedies a failure to perform a statutory duty138. Habeas is not only part of Australian law but an essential form of relief for unlawful Executive detention139. As Brennan J said in Re Bolton; Ex parte Beane140: "Many of our fundamental freedoms are guaranteed by ancient principles of the common law or by ancient statutes which are so much part of the accepted constitutional framework that their terms, if not their very existence, may be overlooked until a case arises which evokes their contemporary and undiminished force. This is such a case and the common law of habeas corpus and the Habeas Corpus Act 1679 (31 Car II c 2) as extended by the Habeas Corpus Act 1816 (56 Geo III c 100) are such laws." That is why habeas corpus has been described as "the great and efficacious writ in the "high prerogative writ"142; all manner of illegal confinement"141; 137 Plaintiff S4 (2014) 253 CLR 219 at 232 [29], citing Crowley's Case (1818) 2 Swans 1 at 61 [36 ER 514 at 531]; Plaintiff M96A (2017) 261 CLR 582 at 597 [31]. 138 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35; Plaintiff S157 (2003) 211 CLR 476 at 492 [31], 513-514 [104]; Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 [39]. 139 Koon Wing Lau (1949) 80 CLR 533 at 556, 581, 586; Lim (1992) 176 CLR 1 at 31-32, 51; Al-Kateb (2004) 219 CLR 562 at 638 [224]; Plaintiff M47 (2012) 251 CLR 1 at 57-58 [108]; Plaintiff M68 (2016) 257 CLR 42 at 105 [159]. See also R v The Governor of the Metropolitan Gaol, Coburg; Ex parte Kimball [1937] VLR 279; Bedgood v Keeper of Her Majesty's Penitentiary at Malabar [1975] 2 NSWLR 144; MacDonald v Attorney-General (1980) 24 SASR 294; Puharka v Webb [1983] 2 NSWLR 31. 140 (1987) 162 CLR 514 at 520-521. 141 Blackstone, Commentaries on the Laws of England (1768), bk 3, ch 8 at 131. 142 Blackstone, Commentaries on the Laws of England (1768), bk 3, ch 8 at 131. Gordon Gleeson a "famous bulwark of our liberties"143; and "the most significant means of protecting individual liberty"144. It is a remedy "the more necessary, because the oppression does not always arise from the ill-nature, but sometimes from the mere inattention, of government"145. The writ is intended to provide a "swift and imperative remedy in all cases of illegal restraint or confinement"146. This Court should do nothing that undermines the availability of the writ147 to protect against unlawful detention by the Executive. The matter may be tested this way. If an unlawful non-citizen was detained and, consistent with ss 196 and 198, removal of that person as soon as reasonably practicable was anticipated to be 100 days but that person was still being detained after 200 days because the Executive had spent 150 days considering non-refoulement obligations, mandamus does not assist. From day 101, the detention was unlawful. There would be an action for damages for unlawful imprisonment and habeas would go to release the unlawful non-citizen from unlawful detention. However, as explained, because of their status as an unlawful non-citizen, s 189 would require the Executive to re-detain the person. Another example makes good the point in relation to the need for, and nature of, habeas: what if, instead of considering non-refoulement obligations, the Executive simply lost an unlawful non-citizen's file as a result of an administrative error and detained the person for 100 days more than the period necessary to remove that person as soon as reasonably practicable? On the Commonwealth's argument, that person would have no remedy for the 100 days that person had been unnecessarily detained (the past) but would only have a prospective remedy requiring the Executive to now remove the person as soon as reasonably practicable. Mandamus is directed at a different issue to habeas, at a different point in time, and would not be swift. 143 Jenks, "The Story of the Habeas Corpus", in Association of American Law Schools (ed), Select Essays in Anglo-American Legal History (1908), vol 2, 531 at 144 Farbey, Sharpe and Atrill, The Law of Habeas Corpus, 3rd ed (2011) at 1. 145 Blackstone, Commentaries on the Laws of England (1768), bk 3, ch 8 at 137-138. 146 Secretary of State for Home Affairs v O'Brien [1923] AC 603 at 609; Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 77. 147 See, eg, the jurisdiction of the High Court in relation to habeas corpus: Judiciary Act 1903 (Cth), s 33(1)(f); Plaintiff M47 (2012) 251 CLR 1 at 57-58 [108]. Gordon Gleeson All detention, including the period of detention, must be justified148. Prolonged detention at the unconstrained discretion of the Executive is not only harmful but unlawful149 and must be able to be remedied, without delay. Habeas is the only process which compels those who detain an individual to justify the lawfulness of detention. The contrary conclusion not only is abdication by the Court of performance of its obligations but would bring the law into disrepute by increasing the costs of detention for government and the debts of those detained, as well as increasing the improbability of an individual bringing action for mandamus in circumstances where there is even the remotest of chances that the Executive may permit them to stay. In any event, singularity of remedy has never been the way of the common law150. Once it is accepted, as it must be, that the power to detain has temporal bookends (a start and an end point), then detention beyond the terminating bookend is unlawful. The terminating bookend is fixed by removal as soon as reasonably practicable. That is, lawfulness of detention comes to an end at the time by which removal could have been reasonably practicable. The prolonging of detention can be sufficient to demonstrate that a detainee's removal will occur beyond the limit fixed by the legislative scheme – the terminating bookend – removal as soon as reasonably practicable. The Commonwealth's argument depends, implicitly but not explicitly, on reading the terminating bookend as if it was marked by the fact of removal, not, as the Commonwealth said it accepted, the time fixed by s 198, being the time at which removal would have been reasonably practicable. The Commonwealth's submission that its construction would not result in "unbounded, unconstrained or discretionary Executive detention", because failure to comply with the duty to remove an unlawful non-citizen as soon as reasonably practicable may attract mandamus, is glib and unhelpful151. The availability of 148 Plaintiff S4 (2014) 253 CLR 219 at 232 [29]; Plaintiff M96A (2017) 261 CLR 582 149 Plaintiff M61 (2010) 243 CLR 319 at 348 [64], 353 [77]; Plaintiff S4 (2014) 253 CLR 219 at 230 [22]. See also Lim (1992) 176 CLR 1 at 19; Plaintiff M76 (2013) 251 CLR 322 at 369-370 [139]. 150 See, eg, Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 355; Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560 at 600 [84]. 151 A statutory power to detain a person does not permit continuation of that detention at the unconstrained discretion of the Executive: Plaintiff M61 (2010) 243 CLR 319 Gordon Gleeson mandamus depends on there being a public duty unperformed, not a private duty breach of which sounds in damages152. The reference to mandamus is glib because there will be some, if not many, cases where an unlawful non-citizen in immigration detention will have no means of obtaining information necessary to mount a case for mandamus. The unlawful prolongation of detention that is brought about by the Executive's failure to remove as soon as reasonably practicable will go unremedied. The person in detention has no claim for damages; the Bivens action for damages153 is not recognised in Australia154. The Commonwealth sought to rely upon dicta in WAIS v Minister for Immigration and Multicultural and Indigenous Affairs155 and NAES v Minister for Immigration and Multicultural and Indigenous Affairs156 in support of its submission that mandamus is the only available or appropriate remedy. Those cases were concerned with whether release would be inconsistent with the statutory scheme, and not, as here, with the consequences of detention being prolonged beyond the time permitted by the Migration Act and the re-engagement of s 189. To the extent that those cases, or the dicta of the Full Court of the Federal Court in Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri157, assumed or concluded that detention prolonged beyond the time permitted by the Migration Act would be lawful, they are wrong. They are contrary to the express terms of the Migration Act and are inconsistent with Lim158. at 348 [64], 353 [77]; Plaintiff S4 (2014) 253 CLR 219 at 230 [22]. See also Lim (1992) 176 CLR 1 at 19; Plaintiff M76 (2013) 251 CLR 322 at 369 [139]. 152 See, eg, Cuming Campbell Investments Pty Ltd v Collector of Imposts (Vict) (1938) 60 CLR 741 at 749; Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 404-405. 153 After Bivens v Six Unknown Named Agents of Federal Bureau of Narcotics (1971) 154 British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 52 [40], citing Kruger v The Commonwealth (1997) 190 CLR 1 at 46-47, 93, 155 [2002] FCA 1625 at [56]. 156 [2003] FCA 2 at [11]-[13]. 157 (2003) 126 FCR 54 at 87-88 [134]-[135]. 158 See [90] above. Gordon Gleeson The Commonwealth's reliance on ASP15 v The Commonwealth159 is misplaced. That case concerned delay in the processing of a visa application, but, unlike Plaintiff S4/2014 v Minister for Immigration and Border Protection, it was not a case where the duty to remove as soon as reasonably practicable under s 198 had been engaged160. Thus, the Full Court of the Federal Court's finding that detention will remain "validly authorised" despite "the process to make a visa decision [going] on for too long"161 must be read in light of the Full Court's express acknowledgement that where the duty in s 198 has been engaged, as in this case, detention beyond the requirements of that section "could become unlawful"162. Indeed, the Full Court described the majority reasoning in Al-Kateb as meaning that "[i]f a person continued to be detained after [the relevant criterion in s 198 was satisfied and removal was reasonably practicable], it would inevitably follow that the detention was for some purpose other than removal as authorised and required by s 198(2)"163 (emphasis added). Here, there was no dispute that AJL20 is an unlawful non-citizen of Syrian nationality who was involuntarily detained in the custody of the Executive in 2014 and that, from 26 July 2019, the Executive prolonged his detention because, contrary to ss 196, 197C and 198 of the Migration Act, for approximately 14 months, officers considered non-refoulement obligations. His period of detention was prolonged longer than the Executive was lawfully entitled to detain him. The Commonwealth submitted, and the primary judge found, that during the latter part of the time the Executive, through its officers, was considering non-refoulement obligations, it also sought to determine whether AJL20 could be removed to Lebanon. To that extent, and for that time, the Executive detained AJL20 for the purpose of removing him from Australia. But observing that to be so is no answer to the more basic question of whether AJL20 was being detained for removal as soon as reasonably practicable. To establish that to be so, the Commonwealth would have had to show that removal to Lebanon would be 159 (2016) 248 FCR 372. 160 ASP15 (2016) 248 FCR 372 at 382 [38]-[39]. cf Plaintiff S4 (2014) 253 CLR 219 at 161 ASP15 (2016) 248 FCR 372 at 383 [40]. 162 ASP15 (2016) 248 FCR 372 at 382 [38]. 163 ASP15 (2016) 248 FCR 372 at 381 [31]. Gordon Gleeson the most expeditious method that was reasonably practicable to effect removal. The Commonwealth did not attempt to show that to be so164. The unlawful Executive inaction in this case may also be characterised, as it was by the primary judge, as a departure from the required purpose of AJL20's detention, being his removal from Australia as soon as reasonably practicable165. The purpose of immigration detention is assessed objectively by reference to all of the circumstances, including the conduct of officers responsible for AJL20's detention166. As was rightly said by the Federal Court in Alsalih v Manager, Baxter Immigration Detention Facility167, purpose is to be assessed objectively, "[i]t is not obvious ... that the subjective purpose of [those] officer[s] has much to do with" the duty to detain an unlawful non-citizen (emphasis added). The lawfulness of detention under s 196(1) depends upon the Executive continuing to act in accordance with one of the statutory purposes for the detention168. Indeed, as was held in Al-Kateb, detention for the purpose of removal under s 198 will cease to be detention for that purpose when the detention extends beyond the time when the removal of the non-citizen has become reasonably practicable169. In this case, the Executive taking steps contrary to s 197C is what disconnected the detention from removal as soon as reasonably practicable and thus from that point the detention was not under or for the purposes of the Migration Act170. The primary judge's unchallenged findings to the effect that no steps were taken during the relevant periods to pursue AJL20's removal to Syria, the country of his 164 cf AJL20 [2020] FCA 1305 at [168]. 165 Plaintiff S4 (2014) 253 CLR 219 at 233-234 [35]; Falzon v Minister for Immigration and Border Protection (2018) 262 CLR 333 at 360-361 [97]-[98]; Plaintiff M47 (2019) 265 CLR 285 at 289-290 [2]. 166 Al-Kateb (2004) 219 CLR 562 at 576 [17]; Plaintiff M96A (2017) 261 CLR 582 at 167 (2004) 136 FCR 291 at 309 [58]. 168 Plaintiff M61 (2010) 243 CLR 319 at 341-342 [35]; Plaintiff M76 (2013) 251 CLR 322 at 343-344 [30], 357 [89]; Plaintiff S4 (2014) 253 CLR 219 at 231 [26], 232 [28], 233-234 [34]-[35]. See also Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 at 643-644. 169 (2004) 219 CLR 562 at 581 [33], 638-639 [226]-[227], 640 [231], 659 [291], 662-663 [303]. See ASP15 (2016) 248 FCR 372 at 381 [31]. 170 Plaintiff S4 (2014) 253 CLR 219 at 231 [26]. Gordon Gleeson nationality, despite the availability of reasonably practicable steps towards that end, supported his Honour's conclusion that there had been a departure from the only purpose for which AJL20 could have been detained lawfully, namely, his removal from Australia as soon as reasonably practicable. Conclusion and orders Damages for false imprisonment for the period of prolonged unlawful detention were and remain available. A writ of habeas was available to be granted to release AJL20 from that unlawful detention. However, consistent with the statutory scheme, on his release, s 189 was re-engaged and "an officer" was under a duty to detain AJL20, an unlawful non-citizen. The orders made by the primary judge should not be disturbed. The Commonwealth chose to take what was said in the reasons of the primary judge as prohibiting it from re-detaining AJL20. But that was not what the orders of the primary judge said and an appeal to this Court is against orders, not reasons171. The appeals to this Court therefore should be dismissed with costs. 171 Constitution, s 73; Perara-Cathcart v The Queen (2017) 260 CLR 595 at 643-644 [142], citing Burrell v The Queen (2008) 238 CLR 218 at 235 [69]. Edelman Introduction In Al-Kateb v Godwin172, a bare majority of this Court held that s 189 of the Migration Act 1958 (Cth) authorised the potentially indefinite detention of a person who fell within the category of "unlawful non-citizen". One reason the majority held the detention to be lawful was that the scope and purposes of the Migration Act were not thought to preclude the indefinite detention of an unlawful non-citizen173. AJL20 did not challenge that decision on these appeals. But the effect of the Commonwealth's submission on these appeals is to take the decision in Al-Kateb v Godwin one large step further. The effect of the Commonwealth's submission, if accepted, is that it would be lawful for the Executive, through Commonwealth officers, to continue the detention of an unlawful non-citizen for an objective purpose that is contrary to an express provision concerning the scope of the Migration Act. The Commonwealth's submission should not be accepted. The express and implied boundaries of the Migration Act would be exploded if the Executive could act for purposes that are objectively inconsistent with the scope and purposes of the Act. It has long been recognised that instruments conferring authority will contain implied, if not express, boundaries upon the exercise of that authority – by exercise of powers or performance of duties – to ensure that the exercise of authority is not for purposes that are beyond the scope and purposes of the conferral of authority. For instance, a director of a public company is required to exercise powers and to perform duties for purposes properly within the express or implied scope of the director's authority. And statutory authority is generally conferred subject to the implication that it will be exercised within the scope and purposes of the statute, which might, themselves, be constitutionally constrained. It would be very strange if the Migration Act were an island of freedom from established legal concepts, permitting the Executive to act for any purpose in the exercise of its powers or the performance of its duties, no matter how far that purpose departs from the express or implied terms of statutory authority. In the circumstances of this case, where the Migration Act imposed a "duty" upon the Executive to keep AJL20 in immigration detention, albeit one that was subject to a power to release AJL20 by the grant of a visa, the question is whether the Executive could perform this "duty" for an objective purpose that is inconsistent with the scope and purposes of the Act. 172 (2004) 219 CLR 562. 173 See (2004) 219 CLR 562 at 609 [126]. Edelman These appeals therefore involve deep questions of Commonwealth Executive authority. Does the apparently open-textured provision, s 189 of the Migration Act, permit an unlawful non-citizen to be detained by an officer of the Executive for an objective purpose that is contrary to the terms of the Act? As a general proposition, courts confine open-textured statutory duties, functions, and powers by requiring that they be performed or exercised according to the purposes for which they were conferred. An exception should not be created just for the Migration Act. Indeed, in the specific context of the Migration Act, the question was resolved in the negative by this Court nearly 30 years ago in a decision which has since been woven into the fabric of the Migration Act174. Section 189 of the Migration Act requires an officer to take an unlawful non-citizen into immigration detention but does not require continued detention if the Minister exercises the power to grant a visa (whether or not on application and whether or not the relevant requirements in the Migration Regulations 1994 (Cth) are satisfied175) to "a person who is in detention under section 189"176. The Migration Act does not permit continued detention of that person for purposes beyond the scope and purposes of the Act. It is of fundamental importance to these appeals to separate two distinct categories of duty and power contained in Divs 7 and 8 of Pt 2 of the Migration Act. In broad terms, Div 7 imposes a "duty" upon the Executive to keep unlawful non-citizens in immigration detention for proper purposes, with a power to cease that detention by granting them a visa. Also in broad terms, Div 8 imposes a duty upon the Executive to remove unlawful non-citizens as soon as reasonably practicable. A breach of one duty does not mean that the other duty has been breached. And the legal response to a breach of each duty is different. The primary legal response to unlawful detention is habeas corpus, and release from detention. The primary legal response to the failure to perform the duty to remove as soon as reasonably practicable is mandamus to compel removal. Two hypothetical examples can illustrate the independence of the two duties. First, suppose that upon the proper cancellation of the visa of a non-citizen, the Executive determined that prior to their removal, the non-citizen should serve two years in immigration detention as a penalty for perceived adverse behaviour, following which the non-citizen would be immediately removed. Suppose also that, coincidentally, evidence before the court was that it would not be reasonably practicable to remove the person for two years. Notwithstanding that the person would be removed as soon as reasonably practicable, the continued detention 174 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1. 175 Migration Act 1958 (Cth), ss 195A(2), 195A(3). 176 Migration Act, ss 189, 195A, 196(1). Edelman would be a breach of the "duty" of continuing detention for proper purposes. From the moment after detention, the unlawful non-citizen would have been entitled to release, although the non-citizen could always be re-detained for a proper purpose, such as solely for removal within the scope and purposes of the Migration Act. In this example, however, there would never have been a breach of the duty to remove as soon as reasonably practicable. Secondly, suppose that an unlawful non-citizen was lawfully detained and that evidence before the court was that removal was possible within weeks of the commencement of detention. Suppose also that owing to dilatory conduct by the Executive, the non-citizen was not removed as soon as reasonably practicable and was still being held in immigration detention for the purpose of removal ten months after detention commenced. Unless the purpose of the Executive was positively not to remove as soon as reasonably practicable, then there would be no breach of the "duty" of continuing detention of the non-citizen for proper purposes. In other words, there would be no breach of the "duty" upon the Executive to continue detention only for Executive purposes that are objectively within the scope and purposes of the Migration Act. But there would be a breach of the duty to remove the non-citizen as soon as reasonably practicable. In this case, the findings of the primary judge establish a breach of both duties: (i) the "duty" under Div 7 to keep AJL20 in immigration detention only for proper purposes and (ii) the duty under Div 8 to remove as soon as reasonably practicable. It is common ground that from 26 July 2019 the Executive had failed to remove AJL20 as soon as reasonably practicable. The primary judge's findings also establish that the Executive's objective purpose was to remove AJL20 in a manner consistent with Australia's non-refoulement obligations177. As senior counsel for AJL20 submitted, that purpose could not be consistent with the Migration Act because s 197C of the Migration Act provides that, for the purposes of s 198 (removal from Australia of unlawful non-citizens), it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non-citizen. The purpose of the Executive cannot be characterised as removal generally, shorn of the condition that removal be consistent with Australia's non-refoulement obligations. To characterise the purpose so generally, as senior counsel for AJL20 submitted, would mean that the failure to take any steps for over 13 months toward removal of AJL20 to Syria was "purposeless" or "arbitrary". In effect, as senior counsel submitted, the "Commonwealth went to the hearing and then went to judgment saying [']the circumstances you should act upon are [that] we do not intend to observe [s] 197C[']". As the primary judge correctly held, "[a] policy of 177 AJL20 v The Commonwealth [2020] FCA 1305 at [10], [117], [120], [163], [169]. Edelman non-refoulement is morally justifiable ... [but] the Commonwealth cannot act as though s 197C does not exist"178. The conclusion that the purpose of the Executive was not consistent with the Migration Act does not mean that the Executive was required to remove AJL20 to Syria. Nor does s 197C have that effect. Rather than detaining AJL20 unlawfully, in order to remove him consistently with Australia's non-refoulement obligations the Minister could have exercised his power under s 195A of the Migration Act to grant AJL20 a Subclass 070 – Bridging (Removal Pending) visa179. The Minister would not then have been required to remove AJL20 without regard for Australia's non-refoulement obligations. Such an outcome was Parliament's intention when s 197C was introduced. As the primary judge observed180, the Explanatory Memorandum to the Bill which introduced s 197C into the Migration Act181 explained that Australia will continue to meet its non-refoulement obligations through mechanisms including the use of the Minister's personal powers under s 195A. The appeals should be dismissed with costs. The scheme of immigration detention as applied to AJL20 The Commonwealth is correct in its submission that the Migration Act sets up binary categories of lawful non-citizens and unlawful non-citizens182. But this division is not the same as a division of those who are entitled to be at liberty in the Australian community and those who are not entitled to be at such liberty183. For instance, s 195A(2) permits the Minister to grant a visa to an unlawful non-citizen in detention under s 189, including an unlawful non-citizen who remains subject to removal. And an unlawful non-citizen would have some liberty 178 AJL20 v The Commonwealth [2020] FCA 1305 at [123]. 179 See Migration Regulations 1994 (Cth), Sch 1, item 1307, Sch 2, cll 070.111- 070.411, read with regs 2.20(12), 2.20A. 180 AJL20 v The Commonwealth [2020] FCA 1305 at [121]. 181 Australia, House of Representatives, Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Bill 2014, Explanatory Memorandum at 166 [1142], 167 [1146]. 182 See Migration Act, ss 13, 14. 183 Compare Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 379 [182]. Edelman if the Minister exercised the power under s 197AB to make a residence determination, which would permit an unlawful non-citizen to reside at a specified place in the community rather than in immigration detention. Nevertheless, putting the various exceptions aside, the detention of unlawful non-citizens within the scope of, and for the purposes of, the Migration Act is generally required by s 189 of the Migration Act, which includes a general "duty" to continue the detention of a person if "an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen". In 2005, AJL20 arrived in Australia on a child visa. On 2 October 2014, AJL20 became an unlawful non-citizen following the Minister's cancellation of his visa on character grounds184. On 8 October 2014, AJL20 was validly detained by the Commonwealth in "immigration detention"185 for the purposes of the Migration Act as required by s 189 of the Migration Act. But the initial validity of his detention did not mean that his detention would remain valid for all time. By the definition of "detain" in s 5(1) of the Migration Act, the general "duty" in s 189 is relevantly one of continuing detention consistently with the scope and purposes of the Act. The "duty" is not limited to taking an unlawful non-citizen into immigration detention for the purposes of the Migration Act. It extends to "keep[ing]" the unlawful non-citizen, or "caus[ing] [the unlawful non-citizen] to be kept, in immigration detention"186. Section 196 provides for the duration of such immigration detention of an unlawful non-citizen "detained under section 189" and hence "kept in immigration detention" under s 189 read with s 5(1). The duration of AJL20's detention was therefore authorised under s 196 only so long as it was "under section 189". As explained below, detention under s 189 must be detention which is consistent with the scope and purposes of the Migration Act. Section 198(6) provides that an "officer must remove as soon as reasonably practicable an unlawful non-citizen" if various conditions are met. It was common ground at all stages of this proceeding that AJL20 met those conditions from 26 July 2019. From that date, the Executive was obliged by s 198(6) to remove AJL20 from Australia "as soon as reasonably practicable". Section 197C(1) provides, for the purposes of s 198, that "it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non-citizen". 184 See Migration Act, s 501(2). 185 See the definitions of "detain" and "immigration detention" in Migration Act, s 5(1). 186 See the definition of "detain" in Migration Act, s 5(1). Edelman On 1 March 2019, the Executive directed that AJL20's administrative status concerning barriers to "8.7 (non-refoulement obligations)" and an Inspector informed officers within the Department that "we will not be [pursuing] any removal arrangements" for AJL20187. to resolution be changed Two relevant periods of time were identified by the primary judge following the inactivity in relation to removal after 1 March 2019: (i) the first period was from 26 July 2019 until 27 November 2019, during which the Commonwealth took no active steps to effect the removal of AJL20 from Australia; and (ii) the second period was from 28 November 2019 until 11 September 2020 (the date of the primary judge's judgment), during which the Commonwealth pursued the possibility of Lebanon, but not Syria, as a receiving country to enable removal of AJL20. As the Commonwealth rightly conceded in this Court, the distinction between those periods is no longer material because the Commonwealth did not challenge the primary judge's findings that throughout both periods the Executive did not comply with the requirement in s 198(6) to remove AJL20 as soon as reasonably practicable. The primary judge also found, in another unchallenged conclusion, that throughout both periods the Executive maintained its purpose of removing AJL20 consistently with Australia's non-refoulement obligations. Through multiple case reviews in the second period, AJL20's administrative status continued to have a "barrier indicator" of "[8.7] Non-Refoulement" and the documentary evidence showed that non-refoulement obligations were consistently asserted as an obstacle to AJL20's removal. The evidence of the Status Resolution Officer for AJL20 during the second period was that he "was non-removable because he could not be returned to his country of origin because he was owed protection"188. Broad statutory duties are limited by legislative scope and purposes It has long been accepted that open-textured statutory powers, with no indication of the purposes or considerations upon which the powers must depend, are nevertheless confined by "the subject matter and the scope and purpose of the statutory enactments"189. Hence, "[a]n official who lawfully takes a person into 187 AJL20 v The Commonwealth [2020] FCA 1305 at [105], [120]. 188 AJL20 v The Commonwealth [2020] FCA 1305 at [157]. 189 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505. See also Victorian Railways Commissioners v McCartney and Nicholson (1935) 52 CLR 383 at 391; R v Trebilco; Ex parte F S Falkiner & Sons Ltd (1936) 56 CLR 20 at 32; Swan Hill Corporation v Bradbury (1937) 56 CLR 746 at 757-758; Edelman custody cannot continue to hold that person in custody other than for a purpose authorised by the statute conferring the power"190. The same is true of the authority to perform a statutory duty where the statute contains no express limits on the performance of the duty191. The duty is confined by the scope and purposes of the statutory enactment. Although it is common to speak of the power or duty being constrained by the requirement that the power or duty be exercised or performed "for proper purposes", it would be more precise to speak of the constraint as one to exercise the power or to perform the duty within the scope and purposes expressed or implied in the statute. The "duty" of continuing detention under s 189 of the Migration Act is no exception to this general rule. A person can only be "kept" in detention under s 189 if the detention is within the scope and purposes of the Migration Act. Like any statutory duty, function, or power, s 189 must be performed within the scope and purposes of the enactment. At a high level of generality, the purpose of the Migration Act is "to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens"192. The Act is intended to be "the only source of the right of non-citizens to so enter or remain"193 and it aims for the removal "from Australia of non-citizens whose presence in Australia is not permitted by this Act"194. But these statements of object do not, and cannot, conclusively define the scope and purposes of the Migration Act. Plainly, the Act does not permit the Executive to continue the detention of any unlawful non-citizen for any purpose so long as there is also an intention ultimately to remove the person from Australia. Indeed, if the Migration Act had purported to allow the Executive to do so then it would be R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49; FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 368; Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40; O'Sullivan v Farrer (1989) 168 CLR 210 at 216; Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22], 84 [31]. 190 North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 591 [34]. 191 See Walton v Gardiner (1993) 177 CLR 378 at 409. 192 Migration Act, s 4(1). 193 Migration Act, s 4(2). 194 Migration Act, s 4(4). Edelman unconstitutional to that extent. In Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs195, in the context of provisions including the predecessor provision to s 189, a joint judgment of Brennan, Deane and Dawson JJ held, in a passage which has been consistently reaffirmed in this Court196, that the valid purposes for detention were "limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered". The reason that Brennan, Deane and Dawson JJ held that the Executive was constitutionally constrained to a narrow range of legitimate purposes was that other purposes would be punitive, using that concept in a sense extending beyond the narrow conception of criminal punishment as moral desert197. Their Honours concluded that the Commonwealth Parliament cannot validly authorise the Executive to detain aliens involuntarily beyond the limited period discussed above because to do so would be "penal or punitive in character [which] under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt"198. As constitutionally constrained, the terms of the Migration Act establish the scope and purposes for legitimate Executive action. That Executive action, whether in performance of a duty or in the exercise of a power, cannot be for an illegitimate purpose, namely a purpose that does not conform to the scope and purposes of the Act. As this Court said in Plaintiff S4/2014 v Minister for Immigration and Border Protection199: "It follows that detention under and for the purposes of the Act is limited by the purposes for which the detention is being effected. And it further follows that, when describing and justifying detention as being under and for the purposes of the Act, it will always be necessary to identify the 195 (1992) 176 CLR 1 at 33. See also at 65. 196 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 11 [14], 13-14 [21]; Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369 [138]; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 231 [26]; Plaintiff M96A/2016 v The Commonwealth (2017) 261 CLR 582 at 593 [21]. 197 See Minister for Home Affairs v Benbrika (2021) 95 ALJR 166 at 215-216 [196]-[197], 219 [210]-[213]; 388 ALR 1 at 58-59, 63-64. 198 (1992) 176 CLR 1 at 27. 199 (2014) 253 CLR 219 at 231 [26]. Edelman purpose for the detention. Lawfully, that purpose can only be one of three purposes: the purpose of removal from Australia; the purpose of receiving, investigating and determining an application[200] for a visa permitting the alien to enter and remain in Australia; or, in a case such as the present, the purpose of determining whether to permit a valid application for a visa." Habeas corpus where detention is beyond the scope and purposes of the statute As a matter of statutory implication, any exercise of statutory power by the Executive will usually be authorised only on the basis that the exercise is within the scope of the legislation and for the purposes for which the power was conferred201. It is not necessary that an ulterior purpose be the sole purpose in order for the Executive action to be ultra vires. It suffices "if such a purpose is a substantial purpose"202. The primary remedy for an ultra vires, and therefore unlawful, detention is a writ of habeas corpus. Unlike damages for false imprisonment, which are only a secondary remedy to compensate for losses where the elements of the tort are satisfied, the remedy of habeas corpus, or an order of that nature203, is a primary remedy by which a person seeks to rectify the unlawful nature of the detention by release: "[w]hen it has been decided that the detention of any person is illegal he is entitled to be discharged"204. In Koon Wing Lau v Calwell205, this Court considered the operation of s 7(1)(a) of the War-time Refugees Removal Act 1949 (Cth), which empowered the Minister or an officer to detain a deportee in custody "pending his deportation and until he is placed on board a vessel for deportation from Australia". Latham CJ, 200 To which can be added the consideration of whether to grant a visa without application, such as under Migration Act, s 195A. 201 Brownells Ltd v Ironmongers' Wages Board (1950) 81 CLR 108 at 119-120. See also R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 186-187. 202 Thompson v Randwick Corporation (1950) 81 CLR 87 at 106. See also Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 149 [30]; Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 at 67 [93]. 203 Ruddock v Vadarlis (2001) 110 FCR 491 at 509 [66], 518 [106]-[107]. Compare at 204 Secretary of State for Home Affairs v O'Brien [1923] AC 603 at 619. 205 (1949) 80 CLR 533. Edelman with whom McTiernan J agreed, said that "[i]f it were shown that detention was not being used for these purposes the detention would be unauthorized and a writ of habeas corpus would provide an immediate remedy"206. The same reasoning was applied in Park Oh Ho v Minister for Immigration and Ethnic Affairs207, where this Court held that a power to detain a deportee in custody "pending deportation" did not authorise "the indefinite detention in custody of a person for some ulterior purpose, such as the purpose of being kept available as a witness in a pending criminal prosecution". This established reasoning in relation to statutory powers is equally true of the performance of a statutory duty. The usual statutory implication will be that the performance of a statutory duty will be invalid if it is not performed within the scope of the legislation and for the purposes for which it was imposed. In the Migration Act, detention by the Executive for a purpose that is not within the scope and purposes of the Migration Act is not detention under the Act. Hence, s 196 describes the requirement to keep an unlawful non-citizen in detention as applicable where the detention is "under section 189". As the Full Court of the Federal Court said in ASP15 v The Commonwealth208, referring to detention by the Executive for the purpose of making a visa decision, "detention only remains valid so long as such a purpose under the Migration Act continues to exist". The implied requirement that the Executive purpose for performance of a duty must fall within the scope and purposes of the Migration Act was also recognised in the consideration of the "duty" of detention in s 189 by both the majority and minority judgments in Al-Kateb v Godwin209: Gleeson CJ held that the detention was unlawful because the purpose of removal was not capable of being fulfilled210; Gummow J, and Kirby J in similar terms211, recognised that the purposes of the Migration Act "are not at large" and that "the purpose of deportation or expulsion cannot be treated by the legislature as a matter purely for the opinion of the executive government"212; Hayne J proceeded upon the basis 206 (1949) 80 CLR 533 at 556. 207 (1989) 167 CLR 637 at 643. 208 (2016) 248 FCR 372 at 383 [42]. 209 (2004) 219 CLR 562. 210 (2004) 219 CLR 562 at 578 [22]. 211 (2004) 219 CLR 562 at 630 [193]. 212 (2004) 219 CLR 562 at 613 [140]. Edelman that the Migration Act, like s 7(1)(a) of the War-time Refugees Removal Act in Koon Wing Lau, provides for detention so long as it is "for the purposes of processing any visa application and removal"213; and Callinan J considered that the detention was lawful because there was no basis to imply a limit to the period of detention of a "'reasonable' period" and because the Executive purpose of detention was within the statutory purpose214. Finally, one rationale for the decision of six members of this Court in Plaintiff M96A/2016 v The Commonwealth215 was that the Executive had to act for purposes within the scope and purposes of the Migration Act. In Plaintiff M96A/2016, the plaintiffs were brought to Australia from Nauru for medical treatment. They were detained by the Executive under s 189 of the Migration Act while they were in Australia. One question was whether the Executive had detained the plaintiffs for purposes that were beyond the scope and purposes of the Migration Act. The joint judgment quoted from Plaintiff S4/2014216 for the proposition that "detention under and for the purposes of the Act is limited by the purposes for which the detention is being effected". It was held that the relevant purposes of detaining the plaintiffs in Plaintiff M96A/2016 were within the scope of the Migration Act. Importantly, a legal purpose is distinct from its foreseeable consequences or effects217. A consequence or effect of bringing the plaintiffs to Australia for medical treatment was that they were detained in Australia. But the Executive purpose for which the plaintiffs were detained was not for medical treatment. The Executive purpose of the detention was for the plaintiffs' subsequent removal from Australia. Indeed, the detention would have come to an end upon commencement of the process of removal even if medical treatment had not been concluded218. Apart from these matters of authority, there are also strong reasons of principle why a statute will generally be interpreted to constrain the performance of duties according to the scope and purposes of the statute, just as the exercise of 213 (2004) 219 CLR 562 at 638 [225]. 214 (2004) 219 CLR 562 at 661 [298]. 215 (2017) 261 CLR 582 at 594 [22]. 216 (2014) 253 CLR 219 at 231 [26]. 217 See Unions NSW v New South Wales (2019) 264 CLR 595 at 656 [170]. See also Zaburoni v The Queen (2016) 256 CLR 482 at 489 [10], 504 [66]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 395-397 [98]-[102]. 218 (2017) 261 CLR 582 at 595 [26]. Edelman powers is so constrained. There can be a very fine line between whether a provision is characterised as imposing a duty or as conferring a power or as imposing a duty that is subject to a power. For instance, the so-called "duty" of continuing detention required by s 189 would not need to have been performed in respect of AJL20 if the Minister had exercised the power under s 195A to grant a Subclass 070 – Bridging (Removal Pending) visa to AJL20. In exercising the power under s 195A, the Minister is not bound by Subdiv AA (Applications for visas), AC (Grant of visas) or AF (Bridging visas) of Div 3 of Pt 2 of the Migration Act or by the relevant provisions of the Migration Regulations219. As the Explanatory Memorandum to the Bill that introduced s 195A stated220: "[New section 195A] provides the Minister with a non-compellable power to grant a visa to a person who is being held in immigration detention where the Minister is satisfied that it is in the public interest to do so. In the exercise of this power the Minister will not be bound by the provisions of the Migration Act or regulations governing application and grant requirements. The Minister will have the flexibility to grant any visa that is appropriate to that individual's circumstances, including a Removal Pending Bridging Visa where the detainee has no right to remain in Australia but removal is not practicable in the foreseeable future." It is, at best, misleading to describe any obligation deriving from s 189 as a "duty" upon the Executive to detain AJL20 when the Executive could have released AJL20 by exercise of a general power to grant him a visa under s 195A. As Hohfeld cautioned a century ago, the generalised use of "chameleon-hued words" such as "duties" can constitute a "peril both to clear thought and to lucid expression"221. But, whether or not it would debase the content of a "duty" to speak in terms shrouded in the mystical logic of an obligation of the Executive to do something that it is not obliged to do, it is most unlikely that Parliament intended that significant consequences would turn upon fine questions of abstract legal theory that depended upon a loose characterisation of s 189 as a "duty" rather than a power. Executive purpose is to be assessed objectively For the reasons above, authority and principle plainly establish that a natural implication from the Migration Act is that the Executive cannot exercise a power 219 Migration Act, s 195A(3). 220 Australia, House of Representatives, Migration Amendment Arrangements) Bill 2005, Explanatory Memorandum at 3 [10]. (Detention 221 Hohfeld, "Some Fundamental Legal Conceptions as Applied in Judicial Reasoning" (1913) 23 Yale Law Journal 16 at 29. Edelman or perform a duty or function for purposes that are beyond the express or implied scope and purposes of the Act. Without such an implication, the Migration Act would authorise the Executive to act for a purpose such as punishment which, if expressed in the Migration Act, would be an unconstitutional provision. But, with such an implication, the Executive would be acting ultra vires if it detained an unlawful non-citizen under s 189 for the purposes of punishment, in contravention of an implied constraint in the Migration Act. And just as the purposes for which the Executive can act are constrained by implied restrictions based on the scope and purposes of the Migration Act, so too the purposes for which the Executive can act are constrained by express restrictions on the scope and purposes of the Migration Act, including s 197C. The question that then arises is whether the s 197C constraint upon the purpose of the Executive in continuing to detain AJL20 until 11 September 2020 is one which is required to be ascertained subjectively or whether it is to be ascertained objectively by the acts and conduct of officers of the Executive. In relation to powers, the answer is generally that the purpose of the Executive is assessed objectively222. The same is true in relation to duties. As Gleeson CJ said in Al-Kateb v Godwin223, "[t]he purpose is objective. What is in question is the purpose of the detention, not the motives or intention of the Minister, or the officers". Consequently, improper purpose is not synonymous with a lack of good faith in a moral sense224 or with dishonesty225. Again, six members of this Court in Plaintiff M96A/2016226 said that "the purpose of immigration detention is assessed objectively by reference to all of the circumstances". This objective assessment of whether the purpose of the Executive's exercise of powers or performance of duties is one that is within the scope and purposes of the relevant legislation aligns with the same objective assessment of whether the powers and duties of directors are exercised or performed for proper purposes. In the context of directors' duties, it is established that the exercise of a power or the performance of a duty for an ulterior or impermissible purpose can be invalid notwithstanding that the exercise or performance occurs, as it did in this 222 See Thompson v Randwick Corporation (1950) 81 CLR 87 at 106. 223 (2004) 219 CLR 562 at 576 [17]. 224 See SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 at 195 [13], citing Wade and Forsyth, Administrative Law, 9th ed (2004) at 416. 225 Thompson v Randwick Corporation (1950) 81 CLR 87 at 106; Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 at 67 [93]. 226 (2017) 261 CLR 582 at 594 [22]. Edelman case, with "substantially altruistic" motives227. The court "is entitled to look at the situation objectively"228. The concern is not with "an almost infinite analysis of the fears and desires, proximate and remote, which, in truth, form the compound motives usually animating human conduct" but is instead with an objective analysis of "the substantial object the accomplishment of which formed the real ground of the board's action"229. One difference, however, between the duties of the Executive and the duties of directors is that the latter also contain elements of subjectivity in the requirement that duties must also be performed in good faith, or bona fide. In Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri230, the Full Court of the Federal Court referred to two purpose-based limitations upon the duty to detain under the Migration Act. The first appeared to be subjective: "[i]f the Minister were to hold a person in detention without [a bona fide purpose of removal], then the detention would be unlawful and the person entitled to relief in the nature of habeas corpus". The second, which was rejected in Al-Kateb v Godwin, appeared to be objective: there must be a "real likelihood or prospect of the removal of the person from Australia in the reasonably foreseeable future". The question of whether the "duty" to detain was subject to an objective or subjective purpose-based limitation was subsequently answered by Selway J in Alsalih v Manager, Baxter Immigration Detention Facility231. Though the case concerned the second limitation upon the "duty" to detain, which was rejected in Al-Kateb v Godwin, Selway J considered both limitations upon the power to detain. In the passages relevant to this case232, his Honour correctly explained that "the detention power in the Act is purposive" and expressed the view that the "requirement under the first limitation that the Minister exercise the power bona fide for the purpose of removal is a subjective test of purpose". But he later 227 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 293. 228 Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 at 832. 229 Mills v Mills (1938) 60 CLR 150 at 185-186. 230 (2003) 126 FCR 54 at 88 [135]-[136]. 231 (2004) 136 FCR 291. 232 (2004) 136 FCR 291 at 308-309 [54]-[58]. Edelman qualified that reasoning by doubting whether such a subjective approach to purpose should be taken233: "In contrast to the exercise of a discretionary power, there is no necessary requirement that a statutory duty be exercised bona fide and for the purpose for which the power was given. To give a simple example, if a Sheriff has a warrant to hold a prisoner in gaol the duty to do so exists no matter whether the Sheriff is bona fide and no matter what his or her purpose might be. Otherwise, an officer could avoid a statutory duty merely by disagreeing with it. In relation to a statutory duty the question of whether there is any objective or subjective purpose is a matter of statutory interpretation." It is plain beyond peradventure that Selway J was not suggesting that the rejection of a subjective purpose requirement meant that the "duty" of continuing detention was not purposive at all. His Honour concluded234: "In this case the combined effect of ss 189 and 198 of the [A]ct is to impose a duty upon someone (presumably an officer) to detain an unlawful non-citizen. It is not obvious to me that the subjective purpose of that officer has much to do with that duty. In my view any inquiry in relation to the purpose of the statutory provision is an inquiry as to objective purpose." The duty to detain lawfully and the duty to remove as soon as reasonably practicable It is necessary to separate (i) the "duty" of the Executive acting under s 189 to detain an unlawful non-citizen lawfully, including within the scope and purposes of the Migration Act, from (ii) the duty of the Executive to remove an unlawful non-citizen as soon as reasonably practicable under s 198(6), read with s 196. The primary remedy for a breach of either duty aims to ensure compliance with the law, but different writs have historically evolved (i) where compliance with the law requires release from detention, and (ii) where compliance requires performance of a public act or duty. The primary remedy for a breach of a duty to detain lawfully is to undo the continuing unlawfulness by an order for release by a writ of habeas corpus ad subjiciendum, "for removing the injury of unjust and illegal confinement [which] does not always arise from the ill-nature, but sometimes from the mere inattention, 233 (2004) 136 FCR 291 at 309 [56] (emphasis added). 234 (2004) 136 FCR 291 at 309 [58] (emphasis added). Edelman of government"235. On the other hand, the primary remedy for a breach of the duty to remove an unlawful non-citizen as soon as reasonably practicable is a writ of mandamus, which "issues in all cases where the party [has] a right to have any thing done, and [has] no other specific means of compelling [its] performance"236. It lies to command "the doing of what ought to be done, and not to undo what has been done"237. There are remarks in some of the authorities which might, on one view, be read as conflating the two duties. For instance, in Lim238, Mason CJ said that detention may cease to be lawful "by reason of the failure of the Executive to take steps to remove a designated person from Australia in conformity with Div 4B". His Honour gave examples including: (i) a failure to remove the designated person as soon as practicable after the person had asked the Minister in writing to be removed239; and (ii) a failure to remove the designated person as soon as practicable after the refusal of an entry application for the person and the finalisation of all appeals against, or reviews of, the refusal (if any)240. Another instance is the reasons of Dixon J in Koon Wing Lau241, where his Honour said of provisions that empowered the detention of a deportee "for the purpose of fulfilling the obligation to deport him until he is placed on board the vessel" that "unless within a reasonable time he is placed on board a vessel he would be entitled to his discharge on habeas". The remarks of Mason CJ and Dixon J should not be understood as conflating the two different duties. In Lim, Mason CJ only said that detention "may" cease to be lawful in those circumstances. Whether a detention would cease to be lawful would depend upon whether the purpose for the failure by the Executive to remove the designated person was inconsistent with the scope and purposes of the Migration Act. The mere unintentional failure to act as soon as reasonably practicable is not sufficient for an inference that the Executive's 235 Blackstone, Commentaries on the Laws of England (1768), bk 3, ch 8 at 137-138 (emphasis in original). 236 Blackstone, Commentaries on the Laws of England (1768), bk 3, ch 7 at 110. See also Tapping, The Law and Practice of the High Prerogative Writ of Mandamus, as it obtains both in England and in Ireland (1853) at 58-59. 237 Merrill, Law of Mandamus (1892) at 47. 238 (1992) 176 CLR 1 at 11-12. 239 Under the provision that was then Migration Act, s 54P(1). See now s 198(1). 240 Under the provision that was then Migration Act, s 54P(3). See now s 198(6). 241 (1949) 80 CLR 533 at 581. Edelman purpose for detention was inconsistent with the scope and purposes of the Migration Act. In Koon Wing Lau, the remarks of Dixon J were made in response to a submission that there would be nothing to prevent the Minister directing that a deportee be detained "for life or indefinitely". His Honour was thus contemplating a circumstance where the failure to act within a reasonable time was evidence of a purpose which was beyond the scope and purposes of the Migration Act. Ascertaining the Executive's purpose of detaining AJL20 The purpose of an act purportedly performed under a statute must be characterised at the correct level of generality. Suppose that the Executive detained a person under s 189 for the purpose of removing them from Australia specifically to a country to which the Migration Act prohibited removal. At a high level of generality, it might be said that the purpose was consistent with the statute: it was to remove the person from Australia. But to express the purpose at such a high level of generality ignores a substantial object of the Executive: to ensure that the person is removed only to the prohibited country. The same reasoning must also apply where the purpose of the Executive is to remove a person from Australia but to do so contrary to the terms of s 197C of the Migration Act by not removing a person to a particular country due to non-refoulement obligations. Hence, in this case it would be an incomplete statement of the purpose of the Executive to describe the purpose merely as removal of AJL20 from Australia. A statement of purpose at that level of generality does not merely fail to capture the substance of the purpose of the Executive. It also fails to explain why the Executive took no steps at all to remove AJL20 from Australia in the period from at least 26 July 2019 until 27 November 2019. The purpose of the Executive from, at the latest, 26 July 2019 until the date of the primary judge's judgment, 11 September 2020, was to remove AJL20 from Australia consistently with Australia's international non-refoulement obligations. In April 2019, the Minister was asked if he wished to consider exercising his powers under s 195A or s 197AB of the Migration Act. Until the Minister declined to consider the exercise of his discretions under either of those provisions on 25 July 2019, it may have been within the scope of the Migration Act for the Minister to detain AJL20 in order to consider whether to exercise his powers under s 195A or s 197AB and to remove AJL20 consistently with Australia's international non-refoulement obligations. From 26 July 2019, the purpose of the Executive in detaining AJL20 was solely for removal in a manner consistent with Australia's non-refoulement obligations. That purpose explains the lack of any steps being taken for removal for several months. That purpose also explains the lack of any steps being taken to investigate removal of AJL20 to Syria concurrently with investigations in relation to Lebanon in the second period, from 28 November 2019 until 11 September 2020. Edelman Section 189 of the Migration Act permits detention only where the purpose of the Executive is within the scope and purposes of the Act. The purpose of the Executive, to remove AJL20 from Australia consistently with Australia's international non-refoulement obligations, was contrary to the express terms of s 197C of the Migration Act. The Executive could have detained, and still can detain, AJL20 if it changed its purpose to one of removal that is not inconsistent with the scope and purposes of the Migration Act. Further, as explained in the introduction to these reasons, from 1 March 2019, the Executive could have fulfilled its purpose by granting to AJL20 a Subclass 070 – Bridging (Removal Pending) visa under s 195A of the Migration Act. Consistently with the requirements for that visa, AJL20 was initially detained lawfully under s 189. It was also open to the Minister to be satisfied that removal of AJL20 to Syria was not reasonably practicable at the point in time when considering the grant of the visa, which is a separate matter from when removal would become reasonably practicable. What the Executive could not do was to detain AJL20 with a purpose that was contrary to the terms of the Migration Act. Subject to s 196(3) of the Migration Act, the unlawful detention of AJL20 between 26 July 2019 and 11 September 2020 was the proper subject of a writ of, or an order in the nature of, habeas corpus. Section 196(3) cannot preclude release of persons unlawfully detained The Commonwealth relied upon s 196(3) as providing support for the proposition that a person can be released from detention only on the occurrence of one of the events set out in s 196(1), which, in broad terms, are removal, or the process of removal, from Australia, deportation from Australia, or the grant of a visa. Section 196(3) provides: "To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than as referred to in paragraph (1)(a), (aa) or (b)) unless the non-citizen has been granted a visa." The predecessor provision to s 196(3), in its original numbering, was s 54R of the Migration Act. That section provided that "[a] court is not to order the release from custody of a designated person". Despite its literal terms, the "plain intention of Parliament" was "that a designated person should be released from custody" in situations involving removal from Australia or the grant of an entry permit242. 242 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 11. Edelman In Lim, a majority of this Court held that s 54R of the Migration Act could not be read down to permit release of the person from detention where the person was being detained unlawfully. One example given in the joint reasons of Brennan, Deane and Dawson JJ (with which Gaudron J agreed) was where the person continued to be held in detention beyond the express 273-day limit for detention that was then provided by s 54Q of the Migration Act243. In other words, s 54R could not validly preclude a court from releasing from detention a person who was not lawfully detained. If s 196(3) could not be read down so that "detention" meant only "lawful detention"244 then s 196(3) would not permit the release by a court of persons who are unlawful non-citizens, apart from those who are excluded from that concept by necessary disapplication245. It is not possible to exclude from the definition of "unlawful non-citizen" all those persons who are lawfully detained due to that status but whose detention becomes unlawful due to an invalid purpose. And although s 196(4) contemplates the release by a court of various categories of person found to have been unlawfully detained, and whatever may be the effect of making that sub-section subject to paras (a), (b) and (c) of s 196(1), to the extent, if at all, that s 196(3) could prevent the release by a court of a person from detention where that person is found to be detained for a non-statutory purpose, and therefore unlawfully, s 196(3) would be invalid for reasons that are indistinguishable as a matter of principle from the reasons which invalidated s 54R in Lim. Conclusion For a court to uphold a purpose of detention that is beyond the scope and purposes of statutory authority would be to deny "the supremacy of Parliament over the Executive"246. As an unlawful non-citizen, AJL20 was initially detained, and could have continued to have been detained, by the Executive acting within the scope and purposes of the Migration Act. But at least from 26 July 2019, the purpose of the Executive was to remove AJL20 consistently with Australia's non-refoulement obligations. That purpose could have been fulfilled by granting AJL20 a Subclass 070 – Bridging (Removal Pending) visa247 under s 195A of the Migration Act. But to pursue this purpose whilst AJL20 was in detention, 243 (1992) 176 CLR 1 at 35-36. 244 Al-Kateb v Godwin (2004) 219 CLR 562 at 574 [10]. 245 Love v The Commonwealth (2020) 94 ALJR 198; 375 ALR 597. 246 R (Public Law Project) v Lord Chancellor [2016] AC 1531 at 1556 [23]. 247 See Migration Regulations, reg 2.20(12). Edelman purportedly under s 189, was contrary to the express terms of s 197C of the Migration Act and was therefore beyond the scope and purposes of the Migration Act. As the primary judge concluded, the Commonwealth consistently maintained its position, whilst detaining AJL20, that Australia's non-refoulement obligations should be treated as precluding his removal to Syria248. AJL20 was entitled to the remedy of habeas corpus for so long as the Executive persisted with its purpose of removing him in a manner contrary to the terms of s 197C. At no stage before the primary judge, or subsequently, did the Executive recant that purpose. Although a writ of habeas corpus may have attached to it conditions that must be observed by the person upon release249, the Commonwealth did not seek from the primary judge, nor did it seek in this Court, any conditions upon the release of AJL20 relating to his removal from Australia. The appeals must be dismissed with costs. 248 AJL20 v The Commonwealth [2020] FCA 1305 at [157]. 249 Al-Kateb v Godwin (2004) 219 CLR 562 at 579-580 [27]; Plaintiff M47/2012 v Director-General of Security (2012) 251 CLR 1 at 57-58 [108].

HIGH COURT OF AUSTRALIA ALLIANZ AUSTRALIA INSURANCE LIMITED APPELLANT AND DELOR VUE APARTMENTS CTS 39788 RESPONDENT Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 Date of Hearing: 10 & 11 August 2022 Date of Judgment: 14 December 2022 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 9 July 2021 and, in their place, order that: the appeal be allowed with costs; and the declarations and orders of the Federal Court of Australia made on 24 July 2020 be set aside and, in their place, it be ordered that proceeding NSD 2094 of 2018 be dismissed with costs. On appeal from the Federal Court of Australia Representation D A McLure SC and T O Prince for the appellant (instructed by Holman Webb Lawyers Brisbane) I M Jackman SC with M R Elliott SC and P Mann for the respondent (instructed by LMI Legal) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 Insurance – Contract of insurance – Where insured body corporate knew that apartment buildings had serious non-structural defects which it did not disclose to insurer – Where cyclone caused substantial damage to apartment buildings and exposed defects – Where insurer advised insured that it would provide indemnity despite non-disclosure – Where extent of indemnity ambiguous – Where dispute arose as to sequence of repair works and distribution of costs – Where insurer proposed settlement on particular terms and advised that, if insured did not accept, it would rely on s 28(3) of Insurance Contracts Act 1984 (Cth) and reduce liability based on non-disclosure – Whether insurer bound by representation of indemnity due to waiver, election or estoppel – Whether insurer failed to act with utmost good faith. Words and phrases – "completed exercise of a legal power", "detriment", "duty of faith", "election", "election by affirmation", "estoppel", utmost good "extinguishment of rights", "full satisfaction of alternative rights", "inconsistent sets of rights", "indemnity", "irrevocable waiver", "non-disclosure", "policy of insurance", "revocation", "waiver". Insurance Contracts Act 1984 (Cth), ss 13, 14, 28(3). KIEFEL CJ, EDELMAN, STEWARD AND GLEESON JJ. Introduction A body corporate brings a claim for indemnity under an insurance policy following damage to apartment buildings by a cyclone. The cyclone damage exposes the existence of pre-existing defects in the apartment buildings which the body corporate had not disclosed to the insurer. Some of those defects need to be repaired concurrently with the cyclone damage. The insurer sends the body corporate an email containing a gratuitous representation that the insurer will grant indemnity despite its power to reduce its liability arising from the body corporate's non-disclosure. But the email is ambiguous as to the extent of indemnity offered. In particular, the insurer denies liability for defective materials and construction, and requires the body corporate to pay for rectification repairs to the roof, with the scope and costs of those works yet to be determined. The insurer also states that the roof repairs will need to be carried out before internal damage repairs can proceed. Over the course of the next year, investigations by the insurer reveal further pre-existing defects. A dispute eventually arises between the insurer and the body corporate. After having incurred nearly $200,000 of costs, the insurer informs the body corporate with greater precision about the extent of its offer to grant indemnity for repairs and replacements, to an estimated cost of around $918,709.90, with other repairs to be undertaken by the body corporate. The insurer informs the body corporate that, unless the body corporate agrees to the proposed terms within 21 days (later extended to more than three months), the insurer will rely on its power not to pay anything due to the non-disclosure. The body corporate refuses the offer. The insurer denies indemnity. At trial, the body corporate argued that the insurer was bound by its gratuitous representation that it would grant indemnity because the insurer: (i) had irrevocably elected not to exercise its power to rely on the defence arising from non-disclosure; (ii) had waived its right to rely on the defence arising from non-disclosure; (iii) was estopped from resiling from its representation that it would grant indemnity; and (iv) had failed to act with the utmost good faith. In the Federal Court of Australia, the primary judge (Allsop CJ) upheld the body corporate's claims on (ii), (iii), and (iv). A majority of the Full Court of the Federal Court of Australia (McKerracher and Colvin JJ, Derrington J dissenting) dismissed an appeal, finding that all four claims by the body corporate were established. The appeal to this Court should be allowed. In the law of contract there are limited circumstances in which a gratuitous waiver of rights becomes irrevocable. In this case, where the body corporate did not establish that it had suffered any detriment in reliance upon the insurer's representation, none of those limited circumstances is present. And the insurer did not breach its duty of utmost good faith when, acting lawfully and honestly, it clarified the extent of its offer of indemnity, but required that offer to be accepted for it to waive the defence based on non-disclosure. Background The respondent, Delor Vue Apartments CTS 39788 ("Delor Vue"), is the body corporate for a complex of 11 apartment buildings, each containing approximately six residential lots. The apartment buildings are in Cannonvale in north Queensland. On 28 March 2017, Tropical Cyclone Debbie struck north Queensland. The cyclone caused substantial damage to the Cannonvale apartment buildings. Five days before the cyclone, Delor Vue had obtained a policy of insurance ("the Policy") for public liability and property damage with the appellant, Allianz Australia Insurance Ltd ("Allianz"). Allianz acted through its subsidiary underwriting agency, Strata Community Insurance ("SCI"). Other than where the communication referred to was specifically to or from SCI, these reasons generally refer to Allianz rather than its agent, SCI. Prior to its entry into the Policy, Delor Vue knew that the Cannonvale apartment buildings had serious non-structural defects. The soffits and eaves were badly constructed and badly affixed. A number of them had dislodged. They were a danger to people and to property, although some steps had been taken to ameliorate the danger and to plan for repairs. These defects were not disclosed to Allianz by Delor Vue prior to its entry into the Policy. Almost immediately after the cyclone, Delor Vue notified a claim under the Policy. On 27 April 2017, following Delor Vue's provision of all relevant documents to SCI, an officer of SCI sent an email to Delor Vue's insurance broker referring to this non-disclosure and advising that SCI would need to investigate it further before making a determination. On 9 May 2017, an officer of SCI sent a further email to Delor Vue's insurance broker referring to the non-disclosure and to a building inspection report prepared for Delor Vue dated 1 April 2015 which had referred to the defects in the soffit panels. The email also referred to a "more precise synopsis" of the issue in an engineer inspection report dated 1 December 2016. SCI then said: "Despite the non-disclosure issue which is present, [SCI] is pleased to confirm that we will honour the claim and provide indemnity to [Delor Vue], in line with all other relevant policy terms, conditions and exclusions." SCI described its decision as one to "grant indemnity" but said that there were two categories of damage: "1. Defective materials and construction of the roof, including but not limited to tie downs, rafters and timbers and soffit"; and "2. Resultant damage including but not limited to internal water damage, fascia, guttering and roof sheeting (for those buildings which lost roof sheeting only)". SCI advised that it would cover the repair costs associated with the second category, but not the first category. The language used by SCI was imprecise and the parties ultimately disagreed on the scope of application of the second category. In particular, there was a dispute about the meaning of the phrase "for those buildings which lost roof sheeting only". In the 9 May 2017 email, SCI also explained the further steps that were then contemplated. Lawyers had been engaged to assist with potential recovery from the original builder and developer, and an engineering report had been sought to assist in relation to this recovery. SCI asked that Delor Vue cooperate with it to ensure the best chance of recovery. SCI was also awaiting a scope of works for the roof repairs which it said would be broken down into two parts: (i) the defective repairs to be paid for by Delor Vue; and (ii) the resultant damage repairs to be paid for by SCI. SCI explained that roof repairs would need to be carried out before internal repairs for those buildings with roof damage or with water entering through the roof. The scope of the resultant damage for which Allianz, through SCI, had undertaken to arrange repairs in the 9 May 2017 email was, and is, unclear. It included damage to roof sheeting, but it was not clear whether it included damage to roof sheeting where the damage was also the result of defective materials and construction of the roof. It included internal water damage, fascia and guttering damage, but it was not clear whether those items were included for all of the buildings which suffered such damage or only those buildings which lost roof sheeting. On appeal to this Court, Allianz submitted that the 9 May 2017 email expressly stated that "the roof repairs will need to be carried out first [by Delor], before the internal resultant damage repairs can proceed". That submission is contrary to the reasoning of a majority of the Full Court1 and is unsupported by any ground of appeal. It also misrepresents the 9 May 2017 email. That email was not suggesting that the roof repairs needed to be carried out first by Delor Vue. It was making the much more mundane, and obvious, point that the roof repairs needed to be undertaken first to ensure the buildings were watertight before internal repairs could commence. The terms of the 9 May 2017 email left unclear whether Allianz contemplated that it would be necessary for Delor Vue and Allianz to reach agreement as to the roof repairs for which each would pay before those repairs were undertaken. During May 2017, the solicitors for Allianz, as the insurer of Delor Vue, wrote to the Australian Securities and Investments Commission ("ASIC") noting that there was a "strike off action in progress" for the corporation which was responsible for building the Cannonvale apartment buildings and requesting that ASIC defer the deregistration of the corporate builder. The solicitors for Allianz also wrote to a director of the corporate builder, contemplating litigation on behalf of Delor Vue against the corporate builder and advising the director that, if the corporation were deregistered before Delor Vue's subrogated claim was finalised, then Delor Vue would hold the director personally liable. In June and October 2017, the solicitors for Allianz, on behalf of Delor Vue, wrote further letters to the director of the corporate builder. The first letter expressed conditions upon which Delor Vue would be prepared to allow the corporate builder to deregister that were designed to preserve any claims Delor Vue had upon the insurance policy held by the corporate builder. The second letter complained of the corporate builder's deregistration and raised the prospect of an action by Delor Vue to reinstate the registration of the corporate builder. Both Allianz and Delor Vue retained engineers and builders to advise in relation to the nature and cost of the repairs. Allianz then discovered that there were more defects with the roof construction relating to the roof trusses, including defects in the trusses themselves and the manner in which they had been tied down to the building. The trusses were structurally inadequate and could not be salvaged. The vast majority, but not all, of the defective trusses were undamaged by the cyclone. Therefore, in addition to the two categories of repairs for damage to the Cannonvale apartment buildings contemplated in the 9 May 2017 email, there was a third category of repairs, outside the scope of that email. That category was 1 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 394-395 [15]. described by the majority in the Full Court as "remedial work to the roof in respect of defects that had not yet manifested in any damage"2. Since it was necessary for all the work to be commissioned at the same time, Allianz and Delor Vue needed to agree on the sequence of work and the costs they would each incur. But a dispute arose as to those matters. During 2017 and early 2018, no substantial contract for repair works was entered into, although engineering and building reports were obtained and "make safe" repairs were undertaken on the Cannonvale apartment buildings at Allianz's expense. Part of the dispute concerned the defects in the roof trusses that Allianz had discovered. Engineers retained by Delor Vue had produced a report that was not as critical of the state of the roof trusses as the reports prepared by Allianz's engineers. But, at that time, Delor Vue and its engineers had not been given the report produced by Allianz's engineers. In August 2017, Delor Vue asserted to Allianz that the roof trusses did not need to be replaced. But, after Delor Vue and its engineers were provided with the report produced by Allianz's engineers, Delor Vue obtained another report from its engineers. The conclusions of that second report included: the roof trusses required extensive repairs, including significant strengthening repairs in order to be certified; and the tie-down capacity of the roof trusses was not sufficient to withstand the wind loads for the region. On 18 January 2018, Delor Vue resolved to enter into and execute a loan agreement for the maximum amount of $750,000 "for the purposes of defect repairs to the building essential to permit the insurance repairs to be undertaken to the building following Cyclone Debbie". But Delor Vue had been advised by SCI as early as 22 June 2017 that "the costs involved in rectifying the defective related items will be in the millions". At that time, SCI told Delor Vue that Delor Vue would need to raise funds in order for the rectification works to proceed. In February 2018, the body corporate manager for Delor Vue suggested an option, said to be "considerably simpler and therefore less expensive", which would involve fitting new trusses alongside the existing trusses. That option was considered by Allianz's loss adjusters who concluded that "[t]here may be some savings, but there will be additional difficulties and costs as the works will take longer pushing the cost up". Ultimately, Allianz's loss adjusters concluded that it was not "cost effective". 2 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 395 [17]. In March 2018, Allianz invited Delor Vue to renew its insurance policy for 12 months. The premium offered was an increase of about 50 per cent, namely $128,830.05. And renewal was conditional upon works relating to the roof defects being completed within six months of the renewal date. After some frustration, Delor Vue ultimately renewed the policy for six months. On 3 May 2018, Delor Vue's solicitors wrote to Allianz in what the primary judge described as a "direct, and to a degree, combative (though not rude) tone"3. The letter set out a number of complaints: the failure to provide documents; a lack of transparency in the adjustment process; and delay. They said that the failure by Allianz to state its position on indemnity "with any clarity" had caused delays in the progression of the claim and in the repairs. Allegations were made that Allianz: had breached its duty of good faith; might be in breach of contract; and might be liable for damages. On 28 May 2018, Allianz (through SCI) responded in detail to the letter from Delor Vue's solicitors. Allianz set out the contents of its 9 May 2017 email in full and noted that Delor Vue had described Allianz's position on indemnity as "unclear". Amongst other things, Allianz reiterated the non-disclosure by Delor Vue, proposed what it described as a "settlement", and made the following points: All of the costs for rectifying defects were excluded by cl 1(d) of the Policy which provided that Allianz would not pay for loss or damage caused by non-rectification of a defect that Delor Vue was "aware of, or should reasonably have been aware of". Despite the non-disclosure by Delor Vue, Allianz would pay for the cost of repairing: (i) internal damage to the Cannonvale apartment buildings from the cyclone that had nothing to do with the pre-existing defects; (ii) resultant damage for the one building which lost roof sheeting only – being the second category of damage described in the 9 May 2017 email, which Delor Vue did not agree was limited to one building only – despite that damage arising from the defective materials and construction of the roof; and (iii) damage to the roofs of the other buildings, but only where the damage did not result from a pre-existing defect or the cost did not have to be incurred in any event to rectify faulty work or materials. Delor Vue must otherwise pay for and arrange the repair of pre-existing defects. But Allianz would only "work with [Delor Vue] to rebuild, replace 3 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 161 [182]. and/or repair the damage that is covered by the Policy" if Delor Vue rebuilds, replaces or repairs the pre-existing defects by 23 September 2018, under a building contract entered into by Delor Vue and approved by Allianz. Allianz's loss adjusters had quantified Allianz's costs of repair or replacement arising from cyclone damage at $918,709.90 and Delor Vue's costs of repair or replacement of pre-existing defects at $3,579,432.72. If Delor Vue does not agree to proceed on the terms outlined within 21 days, then Allianz's "offer in relation to indemnity will lapse" and Allianz will not pay anything "pursuant to section 28 of the Insurance Contracts Act 1984 on the basis of [Delor Vue's] non-disclosure". After requesting an extension of time for any acceptance of the offer, which Allianz granted to 31 August 2018, Delor Vue's solicitors later responded. Amongst other matters, Delor Vue denied that Allianz could reduce its liability by reference to s 28 of the Insurance Contracts Act 1984 (Cth) due to principles described as "election" or "waiver". The solicitors for Allianz replied, asserting that its liability had been reduced to nil. By this time, Allianz had paid to Delor Vue amounts totalling $192,471.74 for building repairs, compensation to unit holders for loss of rent, alternative accommodation expenses, and professional fees. The decisions of the primary judge and the Full Court In conclusions that were not challenged on appeal, the primary judge held that: (i) the failure by Delor Vue to disclose the known defects in the buildings to Allianz prior to entry into the Policy amounted to a breach of Delor Vue's duty of disclosure under s 21(1)(b) of the Insurance Contracts Act; (ii) Allianz (through its agent, SCI) would not have accepted the risk had the disclosure been made by Delor Vue; and (iii) subject to any waiver, estoppel, or failure to act with the utmost good faith, Allianz was entitled, under s 28(3) of the Insurance Contracts Act, to reduce its liability to nil for the claim made by Delor Vue for property damage consequent upon the cyclone. The primary judge rejected the submission by Delor Vue that Allianz was bound by an election not to rely upon the defence under s 28(3) of the Insurance Contracts Act, but found that Allianz was unable to rely upon s 28(3) for reasons of waiver, estoppel, and the duty of utmost good faith. The primary judge made declarations to that effect. An injunction to "hold the insurer to its stated position" arising from the breach of the duty of utmost good faith would have been ordered but for the making of the declarations4. A majority of the Full Court dismissed an appeal by Allianz. Although their Honours refused to make an additional declaration, McKerracher and Colvin JJ accepted Delor Vue's submissions on its notice of contention to the effect that Allianz was bound by an election not to rely on the defence under s 28(3) of the Insurance Contracts Act. The appeal was otherwise dismissed. In dissent in the Full Court, Derrington J would have allowed the appeal. His Honour considered that Allianz was not precluded from revoking its promise by any doctrine of election, waiver, or estoppel and that Allianz had not failed to act with the utmost good faith in revoking the waiver of its right to rely on the defence under s 28(3) of the Insurance Contracts Act. For the reasons below, The Insurance Contracts Act: ss 13, 14, 28 Sections 13, 14 and 28 of the Insurance Contracts Act relevantly provide as follows: "13 The duty of the utmost good faith (1) A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith. (2) A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection (1) is a breach of the requirements of this Act. 4 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 193 [349]. 14 Parties not to rely on provisions except in the utmost good faith If reliance by a party to a contract of insurance on a provision of the contract would be to fail to act with the utmost good faith, the party may not rely on the provision. Subsection (1) does not limit the operation of section 13. 28 General insurance This section applies where the person who became the insured under a contract of general insurance upon the contract being entered into: failed to comply with the duty of disclosure; or (b) made a misrepresentation to the insurer before the contract was entered into; but does not apply where the insurer would have entered into the contract, for the same premium and on the same terms and conditions, even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into. If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract. If the insurer is not entitled to avoid the contract or, being entitled to avoid the contract (whether under subsection (2) or otherwise) has not done so, the liability of the insurer in respect of a claim is reduced to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made." Allianz's waiver of the s 28(3) defence The nature of an irrevocable waiver It has been repeatedly said that "waiver" is a term that is used in many different senses5. Perhaps the most common usage of waiver is to describe an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power6. By itself, a waiver of a right is rarely irrevocable. For that reason, it has sometimes been said that the general rule concerning a waiver of a right, "in the sense of an intimation of an intention not to enforce it", is that the mere act of representing that a right has been waived is "of itself inoperative"7. Similarly, it has been said that "the mere statement of an intention not to insist on a right is not effectual unless made for consideration ... A mere waiver signifies nothing more than an expression of intention not to insist upon the right"8. Perhaps more accurately, the legal position is that although a waiver does have legal effect in that "the waiver is binding on the waiving party, unless the waiver is effectively retracted"9, the waiver can generally be revoked at any time with reasonable notice10. The Commonwealth v Verwayen (1990) 170 CLR 394 at 406, 422, 467; Mann v Carnell (1999) 201 CLR 1 at 13 [28]; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 587-588 [51]-[54]; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 882-883; Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12 at 28-29. See Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at 315 [30]; Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12 at 29. See also Stoljar, "The Modification of Contracts" (1957) 35 Canadian Bar Review 485 at 489-490. 7 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257. 8 Mulcahy v Hoyne (1925) 36 CLR 41 at 50, quoting Stackhouse v Barnston (1805) 10 Ves 453 at 466 [32 ER 921 at 925]. 9 Restatement of the Law of Liability Insurance §5, Comment h. 10 Stevens, "Not Waiving but Drowning", in Dyson, Goudkamp and Wilmot-Smith (eds), Defences in Contract (2017) 125 at 126. Nevertheless, exceptions or "special cases"11 exist where a unilateral waiver cannot be revoked. One exception is where the strength of the interest of finality in litigation can sometimes mean that a waiver of particular rights related to litigation is irrevocable. For instance, the waiver of legal professional privilege will be irrevocable "where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect"12. A similar approach, which also "depended upon considerations founded in the nature of the adversarial litigious process" that are "not relevant to the identification of the rights and obligations of parties to contracts"13, was taken in The Commonwealth v Verwayen14 by Toohey J and Gaudron J. Their Honours concluded that an undertaking not to plead a limitations defence had become irrevocable. But, even then, that view did not command the support of a majority of the Court. Brennan J, by contrast, considered that the "ordinary principles of estoppel"15 applied to the waiver in that case so that it could be revoked at any time before it had been relied upon to the detriment of the other party, or otherwise until judgment was entered so that no amendment to the pleading was possible16. Outside the context of litigation, and in the law of contract, the circumstances in which a waiver cannot be revoked have always been exceptional. If such circumstances were not both exceptional and justified they would undermine other contractual rules, including those generally requiring that variation of a contract be in the form of a deed or supported by consideration. Hence, aside from circumstances where a legal right can no longer be enforced due to entry into a deed, a fresh agreement for consideration, or expiry of a limitation period, the general rule is that, despite a "mere naked promise ... not founded upon 11 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257. 12 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at 315 [30]. 13 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 589-590 (1990) 170 CLR 394 at 472-473, 484-485. (1990) 170 CLR 394 at 428. (1990) 170 CLR 394 at 427-428. any consideration"17 not to enforce a legal right, the legal right may continue to be enforced until it is fully satisfied18. For the same reasons, the development of loose legal rules for an irrevocable waiver would undermine formalities where they are required for written contracts. Indeed, writing after the decision of Denning J in Central London Property Trust Ltd v High Trees House Ltd19, Cheshire and Fifoot observed that "in their efforts to circumvent this objection ... the courts have excelled themselves in ingenuity, if not in wisdom"20. Consistently with the stance of parties in previous litigation concerning waiver in this Court21, Delor Vue properly did not, at any stage in this litigation, submit that there was any independent doctrine precluding revocation of a waiver based on concepts such as "unfairness"22 or based on any assertion of notions of waiver peculiar to insurance contracts. Such submissions would require revision of our understanding of basic principles of contract, even if confined to insurance contracts. At the very least, such an approach should not be taken by a court without argument. Delor Vue's submissions were more modest but, if accepted, would nevertheless undermine the integrity of established contractual rules by expanding the principles of election by affirmation, or extinguishment of rights, in such a way as to make irrevocable a unilateral waiver of a defence to liability by a party to a contract, outside the context of litigation. 17 Barns v Queensland National Bank Ltd (1906) 3 CLR 925 at 937, referring to Williams v Stern (1879) 5 QBD 409. 18 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257. See also The Commonwealth v Verwayen (1990) 170 CLR 394 at 406; Seddon and Bigwood, Cheshire and Fifoot Law of Contract, 11th Aust ed (2017) at 93-94 [2.29]. 20 Cheshire and Fifoot, "Central London Property Trust Ltd v High Trees House Ltd" (1947) 63 Law Quarterly Review 283 at 291. 21 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 585 22 But compare Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 409-410 [96], [98]-[99], 413-414 [122]. The waiver and its revocation by Allianz As described above, the extent to which Allianz undertook to grant indemnity in the 9 May 2017 email was ambiguous. Allianz undertook in the email to cover the costs associated with "[r]esultant damage including but not limited to internal water damage, fascia, guttering and roof sheeting (for those buildings which lost roof sheeting only)" but not for the overlapping category of "[d]efective materials and construction of the roof". Nevertheless, Allianz made no submission in this Court that the ambiguities in its 9 May 2017 email, and the lack of any reference to s 28(3) of the Insurance Contracts Act, precluded an interpretation of that email as containing an unequivocal waiver of Allianz's defence under Putting aside its ambiguities, and on the assumption that the 9 May 2017 email contained a waiver of Allianz's defence under s 28(3), Allianz did not express the extent of the defence that would otherwise have applied. It did not express in the 9 May 2017 email, and could not have been certain of, the extent to which it would have been entitled under s 28(3) to reduce its liability in respect of Although the primary judge made a carefully worded declaration that Allianz was entitled to a remedy that would reduce its liability to nil "for the claim made consequent on damage caused to [Delor Vue's] property", this did not mean that Allianz was free from all liability to Delor Vue. Assuming that Allianz was entitled to reduce its liability under s 28(3) on the basis that it would not have issued any policy if the disclosure had been made24, it may be that the "amount which would place the insurer in the position it would have been in" but for the non-disclosure would have required Allianz to have refunded to Delor Vue all premiums paid by Delor Vue25. It is not entirely accurate to describe the waiver by Allianz as having been revoked by Allianz's letter to Delor Vue's solicitors on 28 May 2018. In that letter, 23 Compare Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 39. 24 Twenty-First Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919 at 927-928. Compare Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 at 621-622. 25 See Australian Law Reform Commission, Insurance Contracts, Report No 20 Allianz undertook to grant indemnity, subject to conditions, for estimated costs of $918,709.90. The only sense in which Allianz could be said to have "revoked" its waiver on 28 May 2018 was that the continued operation of the waiver was made conditional upon acceptance of terms, in order to resolve the dispute between the parties, within a reasonable time (21 days, later extended to more than three months). It is only in that sense that the waiver can be described as having been revoked. Election by affirmation In the law of contract, a party can act in a manner that affirms the existence of a contractual right or rights, by exercising what is commonly described as an election between inconsistent sets of rights26. The usual reference to the sets of rights includes all claim rights, privileges, powers, and immunities27. Although many of the older cases of election by affirmation (including in this Court28) described the principle as one of "waiver", and although it might be possible to express modern cases involving affirmation of a contract in terms of irrevocable waiver of a power to terminate the contract, the language of "waiver" can distract in this area. As three members of this Court observed in Agricultural and Rural Finance Pty Ltd v Gardiner29, the "[c]ircumstances in which there is an election between inconsistent rights are radically different from some others in which there is said to be a waiver of rights". In the law of contract, the better description of this doctrine is election by affirmation30. The majority of the Full Court in this case, and Delor Vue's submissions in this Court, sought to expand the application of this doctrine of election by 26 See, eg, Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 27 Handley, Estoppel by Conduct and Election, 2nd ed (2016) at 241 [13-035], 253 28 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326, relied on in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 658; Owendale Pty Ltd v Anthony (1967) 117 CLR 539 at 556-557. (2008) 238 CLR 570 at 589 [60]. See also at 588 [56]. 30 See Elder's Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 at 616-618; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 644, 647-649. affirmation in order to create a new principle that would make irrevocable the waiver by Allianz of the defence under s 28(3) of the Insurance Contracts Act. As the majority in the Full Court expressed the point, the doctrine of election would be applied to require an insurer "not to adopt inconsistent positions under the same policy of insurance in circumstances where one of those positions was consistent only with accepting liability under the policy and the other position was consistent only with denying liability"31. In short, an insurer can never revoke a waiver of a statutory defence that would permit the insurer to reduce its liability under a contract of insurance. The historical origins of election by affirmation Historically, an election by affirmation of a contractual term arose in circumstances in which the performance of an obligation by one party was seen as a condition precedent to the existence of an obligation of the other party32. As Denning MR explained, "[u]nder the old forms of pleading, a plaintiff had to aver and prove that [they] had performed all conditions precedent or that [they were] ready and willing to perform them"33. If the condition precedent failed, the counterparty could, nevertheless, affirm the corresponding obligation. One example was where a tenant breached a leasehold covenant that was a condition precedent to the landlord's obligation to afford quiet possession. The landlord could nevertheless affirm the obligation to ensure quiet possession by accepting rent with knowledge of the circumstances amounting to the breach of the condition precedent: it was "a contradiction in terms" to treat a person as a tenant and also as a trespasser34. Another example was where the price payable under a contract of sale was conditional upon an obligation to be fulfilled by the seller, such as the delivery of the promised goods, but the obligation was not fulfilled because the goods were seriously defective. The performance of the obligation substantially in the manner 31 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 412 [112]. 32 Hurst v Bryk [2002] 1 AC 185 at 193. See also Wilmot-Smith, "Termination after Breach" (2018) 134 Law Quarterly Review 307 at 307-308. 33 Cehave NV v Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] QB 44 at 57. See also Pordage v Cole (1669) 1 Wms Saund 319 at 320 [85 ER 449 at 452]. 34 Finch v Underwood (1876) 2 Ch D 310 at 316. promised by the seller was seen as "a condition precedent to [the seller's] right of action" for the price and hence a "condition precedent to the purchaser's liability"35. But if the buyer chose to keep the defective goods, the buyer's obligation would be affirmed, and it was said that the buyer had "waive[d] the condition" by accepting the goods36. The rationale was that the buyer could not act inconsistently by purporting to keep both the goods and the price: "you cannot have the egg and the The use of "waiver" in these older cases has the potential to mislead. In the example of acceptance of defective goods, the legal effect of any election was not to waive the seller's obligation to deliver the goods as promised. An action for damages could still be brought by the buyer for breach of that obligation by the seller. The language of "waiver" in these older cases did, however, direct attention to the revocability of the "waiving" party's position where an inconsistency had not arisen by the affirmation. In Panoutsos v Raymond Hadley Corporation of New York38, a seller continued to ship flour under a contract that was divided into separate shipments, despite the buyer's failure to comply with a condition precedent to delivery, namely obtaining a confirmed bankers' credit. The seller later sought to revoke that "waiver" of the condition precedent for future deliveries of flour. The seller was unable to revoke the "waiver", but only because reasonable notice had not been given. As Viscount Reading CJ said in the leading judgment in the Court of Appeal, when the sellers "intended to change [their] position it was incumbent on them to give reasonable notice of that intention to the buyer so as to enable him to comply with the condition which up to that time had been waived"39. By contrast, an approach of irrevocable election by affirmation following failure of a condition precedent was taken in relation to conditions in some contracts of insurance. Hence, in 1911 it was said that in "policies of insurance 35 Wallis, Son & Wells v Pratt & Haynes [1910] 2 KB 1003 at 1017-1018. See also Behn v Burness (1863) 3 B & S 751 at 759 [122 ER 281 at 284]; Bentsen v Taylor, Sons & Co [No 2] [1893] 2 QB 274 at 279, 280-281, 284. 36 Sale of Goods Act 1893 (56 & 57 Vict c 71), s 11. See English, "The Nature of 'Promissory Conditions'" (2021) 137 Law Quarterly Review 630 at 637-638. 37 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257. [1917] 2 KB 473 at 478. against fire it is commonly stipulated that the assured shall give notice and deliver particulars of the loss within a limited time, as a condition precedent to [the assured's] claim on the policy"40. There was "no reason why [the insurer] may not waive or extend the time"41. As will be seen below, the decision of this Court in Craine v Colonial Mutual Fire Insurance Co Ltd42, which was also expressed in the language of "waiver", might best be explained on the basis of this historical approach to the doctrine of election by affirmation, namely the circumstances in which an irrevocable election by affirmation will have occurred after the failure of a condition precedent. But there may be doubt as to whether that interpretation would cohere with the common law in its modern state, and there are large questions concerning whether this historical approach of liberal recognition of irrevocable affirmation following failure of any condition precedent should apply generally today, other than where it has been impliedly preserved by statute43. If a contractual term is today properly interpreted as a condition precedent to counter-performance, it is strongly arguable that upon the failure of such a condition precedent a party's decision its obligation of counter-performance will generally only be irrevocable after detrimental reliance by the other party44. Hence, in Gardiner45, Gummow, Hayne and Kiefel JJ, with whom Heydon J agreed, said that the older decision in Panoutsos "may be better identified as one of estoppel". This echoed the view expressed more than half a century ago by Cheshire and Fifoot who, after discussing Panoutsos, described to affirm 40 Randall, Leake's Law of Contracts, 6th ed (1911) at 466. See London Guarantie Co v Fearnley (1880) 5 App Cas 911 at 915-916; Hiddle v National Fire and Marine Insurance Co of New Zealand [1896] AC 372 at 373. 41 Porter, The Laws of Insurance, 5th ed (1908) at 218. (1920) 28 CLR 305. 43 See Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd [1992] 1 AC 233 at 262-263, discussing Marine Insurance Act 1906 (UK), ss 33 and 44 See Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] 2 All ER (Comm) 14 at 34-35 [65]-[66]. (2008) 238 CLR 570 at 597 [84]. estoppel in comparison with common law "waiver" as "a simpler and more satisfactory doctrine"46. The modern approach to election by affirmation The historical approach to election by affirmation treated the most important contractual obligations of one party as conditions precedent to the obligation of the other party to perform corresponding obligations. If the condition precedent failed, then the corresponding obligation would also fail unless the counterparty "waived" the condition precedent to performance by acting in a manner that affirmed their corresponding obligation. During the twentieth century, that analysis, sometimes strained in the treatment of terms as conditions precedent, generally gave way to an approach which treated a serious breach of contract – a breach that undermines the "root" or basis of the contractual undertakings – as giving rise to a legal power for the innocent party to terminate the entirety of the contract for the future47. With the modern approach to termination of contract, the doctrine of election by affirmation came to be applied consistently to instances in which the innocent party elected not to exercise a power to forfeit a lease or to terminate a contract. Hence, if a tenant breached a covenant in a lease entitling the landlord to forfeiture and re-entry, but the landlord, with knowledge of all the circumstances, elected to affirm the lease by a communicated act such as the acceptance of rent, this was an "unequivocal recognition of the continued existence of the lease" which would "amount to a waiver of that [power]" to forfeit the lease48. The landlord was treated as having a power, by conduct, to "elect to affirm the lease"49. 46 Cheshire and Fifoot, "Central London Property Trust Ltd v High Trees House Ltd" (1947) 63 Law Quarterly Review 283 at 300. 47 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469-470, 476-477; Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 454; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 31; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 427; Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 135-140 [43]-[56]. 48 Owendale Pty Ltd v Anthony (1967) 117 CLR 539 at 556-557. 49 Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 657. The same is true of election to affirm any contract. In Sargent v ASL Developments Ltd50, Stephen J (with whom McTiernan A-CJ agreed) applied the same principle to a party who had a power to terminate a contract but "cho[se] instead to keep the contract on foot and sue for damages rather than [terminate] for breach". The election to affirm the contract kept extant the set of contractual rights which were necessarily and immediately inconsistent with those that would arise upon termination of the contract. The inconsistent rights that would arise upon termination of the contract, such as loss of bargain damages, were lost. As Stephen J explained, the doctrine of election only applies where the nature of the sets of rights is such that "neither one may be enjoyed without the extinction of the other"51. Even then, however, an election to affirm will only be an irrevocable waiver of the power to terminate where the election was made with knowledge of the circumstances giving rise to the alternative, inconsistent set of rights52. This doctrine of election by affirmation of a contract has been recognised by decisions, including in this Court, for almost a century. The dominant rationale is that the "the mere fact of intimating [a] choice" in relation to these alternative rights makes it "inevitable, or necessary in the interests of justice, that the choice, when once made, should be irrevocable"53. In other words, the choice between maintaining one right or set of rights and extinguishing an alternative, immediately inconsistent right or set of rights54 is one that must be irrevocable "because [the sets of rights] are inconsistent [so that] neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of (1974) 131 CLR 634 at 642. (1974) 131 CLR 634 at 641. 52 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 259; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 645, 649, 658; Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 633-634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 42-43. 53 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257-258. See also Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 647; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 883. 54 See, eg, Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at enjoying the other"55. The very nature of the states of legal existence and non-existence of a contract is that both states cannot subsist, like Schrödinger's cat, at the same time. The dominant rationale is not without difficulty56. It fails to explain the necessity for knowledge of the circumstances giving rise to a power to terminate before an election by affirmation will be irrevocable. There may also be difficulty in identifying the alternative, inconsistent set of rights to the affirmed contractual rights because the absence of contractual rights is not itself a set of rights. There is an inconsistency in continuing the legal "positions" (namely the existence and non-existence of a contract) but there are not two separate sets of rights. This difficulty is not fully resolved even in the careful refinement by the Hon K R Handley KC, who said that the "election does not involve a choice between two sets of rights which presently co-exist but between an existing set of rights and a new set which does not yet exist"57. Apart from possible secondary rights such as loss of bargain damages, it is difficult to identify a new set of rights that would exist following termination of a contract. These difficulties in justification, combined with the difficulty in finding "a case where an irrevocable election to affirm was found in the absence of facts supporting a promissory estoppel", have led one author to suggest replacement of the doctrine of election with the doctrine of estoppel58. Such a step may be too large for the common law now to take, requiring a party to prove detriment to establish irrevocable election by affirmation of the other party59. But the common law certainly should not take the opposite step of vastly expanding the operation of election by affirmation in the manner submitted by Delor Vue. 55 Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 641. See also The Commonwealth v Verwayen (1990) 170 CLR 394 at 423; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 42. 56 Compare BP Exploration Co (Libya) Ltd v Hunt [No 2] [1979] 1 WLR 783 at 811: a "need for finality in commercial transactions". 57 Handley, Estoppel by Conduct and Election, 2nd ed (2016) at 255. 58 Liu, "Rethinking Election: A General Theory" (2013) 35 Sydney Law Review 599 at 59 Compare Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 646-647; The Commonwealth v Verwayen (1990) 170 CLR 394 at 423. Election by affirmation cannot be applied to Allianz's waiver By its proposed notice of contention in this Court, Delor Vue sought leave to support the conclusion of the majority of the Full Court on the basis that Allianz's representation that it would not rely on s 28(3) of the Insurance Contracts Act was a choice between alternative and inconsistent sets of rights. Delor Vue should be given leave to file its notice of contention but its submission that the doctrine of election by affirmation applied to make Allianz's waiver irrevocable is, nevertheless, unsustainable. As to the historical application of election by affirmation, s 28(3) does not operate to make disclosure by the insured a condition precedent to any obligation of the insurer. Different views about the operation of s 28(3) have been expressed60. On one view, s 28(3) operates on the basis of the existence of an insurance policy by reference to the additional premium that would have been charged if there had been full disclosure61. On another view, s 28(3) can operate on the basis that the insurer would not have accepted the policy at all, so that liability may be reduced as low as the amount of the premium paid62. On either view, however, s 28(3) operates only as a defence to reduce the amount of the insurer's liability by reference to a counterfactual assumption. It does not operate as a condition precedent, extinguishing a corresponding contractual obligation. It is therefore unnecessary to consider whether, in the modern law, a waiver of a condition precedent is irrevocable without detrimental reliance63. As to the modern approach to election by affirmation, s 28(3) does not give the insurer any power to elect to affirm the contract rather than to avoid or terminate its contractual obligations. There is no sense in which a decision by an insurer to waive the defence under s 28(3) involves an election between alternative 60 See Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603 61 Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 at 62 Twenty-First Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919 at 927-928. See Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) at 284. 63 See, eg, Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] 2 All ER (Comm) 14 at 36-37 [70]; Lexington Insurance Co v Multinacional de Seguros SA [2009] 1 All ER (Comm) 35 at 47-51 [50]-[68]. and inconsistent sets of rights (or even an immediate inconsistency between continuing legal positions). With or without waiver, the insurance contract remains on foot and reliance on the defence under s 28(3) is not immediately inconsistent with any of the contractual rights. In its operation in relation to rights, s 28(3) stands in stark contrast with s 28(2), which is a statutory recognition of the power of an insurer to avoid a contract from its inception64 for a fraudulent non-disclosure or a fraudulent misrepresentation. An insurer that elects to waive the power under s 28(2) elects to affirm the set of continuing rights under the relevant contract of insurance rather than to exercise the immediately inconsistent power to avoid the contract from inception. Indeed, the submissions of Delor Vue and the decision of the majority of the Full Court to the contrary are directly inconsistent with the reasoning and unanimous result in this Court in Gardiner65. Although numerous facts were disputed in that case, Gummow, Hayne and Kiefel JJ proceeded on the assumption that a lender and an indemnifier had represented to an indemnified party that the indemnity "remained effective and enforceable, despite past defaults"66. The defaults concerned failures to make punctual performance under separate agreements with the lender. Despite that representation, their Honours said that "there was no election between inconsistent rights" and that to hold the lender and indemnifier to the representation would "supplant accepted principles governing whether an estoppel is established and whether a contract has been varied"67. The submission of Delor Vue that Allianz had irrevocably elected not to rely on the defence under s 28(3) can be aptly expressed in the words of Rix LJ in Kosmar Villa Holidays plc v Trustees of Syndicate 124368 as a submission that "goes far wider than the doctrine of election has ever been previously explained or applied": "While a contract is in operation, it is important to know, in circumstances where it lies in the choice of a party, whether the contract lives or dies (or at least whether purported performance under it, such as a delivery of goods, is accepted or not); and, whether the option is for life or death, acceptance 64 See Insurance Contracts Act 1984 (Cth), s 11(1) definition of "avoid". (2008) 238 CLR 570. (2008) 238 CLR 570 at 601 [95]. (2008) 238 CLR 570 at 601 [95]-[96]. [2008] 2 All ER (Comm) 14 at 35 [66]. or rejection, the choice is unilateral and irrevocable. But when it is merely a defence to a claim that is in question, there would not seem to be the same necessity to choose timeously and irrevocably between reliance or not on the defence in question." Extinguishment of rights Completed exercise of a legal power or full satisfaction of all alternative rights The primary judge and the majority of the Full Court concluded that, in the alternative to "election", Allianz's waiver of the defence under s 28(3) was irrevocable due to the operation of the general rules of "waiver". In this Court, Delor Vue repeated a submission, which was accepted by the majority of the Full Court, that there are cases of irrevocable waiver not falling within the doctrines of "election" or estoppel. That submission should be accepted. In particular, there are two relevant categories in which a person's rights are extinguished as a result of their conduct, which have sometimes been referred to as "waiver"69 or as "election"70, but which involve different principles71. One category is where a person completes the exercise of a legal power to extinguish a right or set of rights, such as a power to terminate a contract for the future or to rescind a contract from the beginning. Lord Goff described this as the "abandonment of a right", contrasting it with "forbearance from exercising a right"72. The second category is where a person takes a course of action that is inconsistent with the continued existence of the right or set of rights and the person pursues that course of action until all alternative rights arising from the course of action are wholly satisfied. An accurate description of both of these categories is extinguishment of rights. 69 Price v Dyer (1810) 17 Ves 356 at 364 [34 ER 137 at 140]; Mulcahy v Hoyne (1925) 36 CLR 41 at 53; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 587 [52]. 70 See O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 260-261: "frequently referred to as an instance of the principle of election". 71 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 261; Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn [2021] 1 WLR 5741 at 72 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The "Kanchenjunga") [1990] 1 Lloyd's Rep 391 at 397-398. Where a party exercises a power to terminate a contract, and fulfils the requirements for termination, the effect is to extinguish all, or nearly all73, of the contractual rights and obligations for the future74. And where a party exercises a power to rescind a contract from the beginning for fraud or misrepresentation or any other vitiating factor, and the requirements for rescission are satisfied (including obtaining a court order where necessary75), the effect is to extinguish a right or set of rights for both the future and the past76. Alternatively, a party can extinguish rights by taking a course of action, with knowledge of all relevant circumstances, such that an alternative set of rights is fully satisfied. Full satisfaction of all of the alternative rights is essential. An example is the decision of the Supreme Court of New South Wales (Full Court) in O'Connor v S P Bray Ltd77. In that case it was held that by exercising all of his rights under the Workers' Compensation Act 1926 (NSW), including by litigation, such that all entitlements under that Act had been satisfied, the plaintiff no longer had a right to common law damages. The plaintiff had "obtained such satisfaction of one of his alternative rights as [to make] the other no longer available"78. Importantly, it was not sufficient to extinguish the alternative right to common law damages that the plaintiff had taken steps towards obtaining compensation, and indeed had obtained some compensation, under the Workers' Compensation Act79. It was necessary that the statutory rights were fully satisfied before the alternative common law rights were extinguished. 73 See, eg, Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1980) 144 CLR 300 at 306-307; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 365; Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 235. 74 Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642. 75 Alati v Kruger (1955) 94 CLR 216 at 223-224. Cf O'Sullivan, Elliott and Zakrzewski, The Law of Rescission, 2nd ed (2014) at 263 [11.109]. 76 Abram Steamship Co v Westville Shipping Co [1923] AC 773 at 781; O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 261. (1936) 36 SR (NSW) 248 at 265. (1936) 36 SR (NSW) 248 at 264. (1936) 36 SR (NSW) 248 at 264-265, referring to Harbon v Geddes (1935) 53 CLR The decision in O'Connor was overturned in this Court, but the requirement of full satisfaction was endorsed by Starke J and Dixon J80. Indeed, despite having obtained "complete discharge of all liability subsisting under the Act" which would otherwise have led to the exhaustion of "one of the two sets of rights", the alternative, inconsistent rights at common law were nevertheless not extinguished because the jury's verdict assumed that the plaintiff did not have knowledge of those alternative rights81. Another example of the requirement for complete satisfaction of alternative rights before a right will be extinguished is the set of rules concerning "election" between inconsistent remedies, such as compensatory damages and disgorgement of profits82 or compensatory damages and restitutionary damages83. A plaintiff can take numerous steps consistent only with the choice of one remedy and not the other, but the election will generally only be irrevocable after one remedy is fully satisfied by the entry of judgment84. In all these instances85, as Jordan CJ explained in O'Connor86: "one of the alternative rights must have been satisfied. Merely to take some step towards obtaining the benefit of one of them is not necessarily irrevocable if the step stops short of obtaining satisfaction. One may be permitted to change one's mind". 80 O'Connor v S P Bray Ltd (1937) 56 CLR 464 at 474, 476. 81 O'Connor v S P Bray Ltd (1937) 56 CLR 464 at 476-477. See also at 489-490. 82 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 588 83 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 18, 30, 34. See Wright, "United Australia Ltd v Barclays Bank Ltd" (1941) 57 Law Quarterly Review 184 84 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 569-570; Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 521-522. 85 See Fullers' Theatres Ltd v Musgrove (1923) 31 CLR 524 at 546-547; O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 258. (1936) 36 SR (NSW) 248 at 257. The vast expansion proposed by Delor Vue Putting to one side questions of knowledge, in the two categories above, a person's rights are extinguished as a consequence of either the completed exercise of a power to extinguish the rights, or the full satisfaction of alternative and inconsistent rights. Delor Vue sought to create a novel third category where a person's rights are extinguished by the person merely taking steps which clearly evidence a choice between two inconsistent courses of action. Delor Vue submitted that Allianz's unilateral waiver of the defence under s 28(3) became irrevocable, extinguishing the defence, by actions that not only fell far short of full satisfaction of alternative rights, but which involved no more than Allianz taking steps that were not necessarily inconsistent with, or alternative to, reliance on the defence. Delor Vue relied upon the following actions of Allianz, taken after Allianz's waiver of the s 28(3) defence in the 9 May 2017 email: (i) asserting contractual rights to take subrogated action against the builder; (ii) asserting contractual rights to access the property; and (iii) asserting contractual rights to control repair work. But without the waiver in Allianz's email on 9 May 2017, none of those actions was necessarily inconsistent with Allianz maintaining a defence under s 28(3). Those actions could have been consistent with Allianz maintaining a defence under s 28(3) that extended only to a partial reduction of its liability to grant an indemnity. Indeed, as the majority of the Full Court recognised, at the time of taking those actions Allianz could not have been certain of the extent of its entitlement to reduce its liability under s 28(3)87. The actions upon which Delor Vue relied are no more than actions consistent with, but not necessarily conclusive of, Allianz maintaining a continued intention to waive the defence under s 28(3). In any event, Delor Vue's submission, and the approach of the majority of the Full Court – that taking a course of action that is inconsistent with a right can extinguish the right – is in direct conflict with long-standing authority that requires the completed exercise of a power to extinguish rights or full satisfaction of alternative rights before a right or set of rights is extinguished. Delor Vue relied on the statement by Lord Blackburn in Scarf v Jardine88 that where a person "has an option to choose one or other of two inconsistent things", the choice between them "cannot be retracted, it is final and cannot be altered". But, as Jordan CJ 87 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 439 [242]. 88 (1882) 7 App Cas 345 at 360. explained in O'Connor89, that "sweeping dicta" of Lord Blackburn "cannot be supported as a general proposition". The only authority in the last century that Delor Vue could point to in support of an expanded principle of extinguishment of rights was the judgment of Isaacs J in Craine90. Due to the considerable attention and emphasis placed upon this decision by the parties, it is necessary to consider that case in some detail. Two points must be made. First, although the basis for the decision is not entirely clear, its force today derives from its consistency with the fabric of modern decisions. Unsurprisingly, it has been understood by this Court in light of the modern approach to termination of contracts. Secondly, on any interpretation of the decision, it does not assist Delor Vue. The decision in Craine In the primary appeal considered by the Court, Mr Craine held a policy of insurance with Colonial Mutual Fire Insurance Co Ltd that provided for fire insurance in respect of motor cars. Clause 11 of the policy required written notice forthwith upon the occurrence of loss or damage and written notification of a claim within 15 days of the loss or damage, and provided that "[n]o amount shall be payable under this policy unless the terms of this condition have been complied with". Clause 19 prohibited the waiver of this requirement other than by writing endorsed on the policy document. A fire occurred in Mr Craine's premises on 30 September 1917 in circumstances that fell within the policy. It was admitted that the time for providing written notification of the claim had been extended until noon on 26 October 1917. But, contrary to the strict terms of cl 11, Mr Craine only provided written notification of the claim at 3 pm on 26 October 1917. The insurer, by its agent, wrote to Mr Craine pointing out the non-compliance but requesting further information about the claim and indicating an intention to sell or dispose of all salvage stock that was the subject of the general claim, except the specifically insured motor cars. In the meantime, the insurer had already taken possession of Mr Craine's premises and all the property in the building. The trial judge found that the insurer subjected Mr Craine to "a great deal of inconvenience, delay, (1936) 36 SR (NSW) 248 at 258-259. (1920) 28 CLR 305. business trouble and loss"91. After four months, the insurer gave up possession, having completed its salvage operations. At trial, the insurer sought to rely on cl 11 to deny liability to pay the claim. Such a defence would today be met by the terms of s 54(3) of the Insurance Contracts Act. Without the benefit of that provision, Mr Craine relied upon "waiver" and estoppel. The jury was asked a question in the following terms: "Did the defendants represent to the plaintiff that they did not intend to rely upon the claims having been put in too late?" The jury answered: "Yes; they did waive their claim". In giving judgment, the trial judge disregarded all but "Yes" as not responsive to the question. The trial judge held that there was no evidence either of election or of estoppel and that, if there was, cl 19 was an answer. Accordingly, judgment was entered for the defendants. On appeal to this Court, Isaacs J (giving the judgment of the Court) observed that at trial the insurer had not contested the elements of an estoppel – being inducement and prejudice – and that the insurer could not contest those elements on appeal92. An issue was whether the evidence was sufficient in law to support the jury's finding that the representation was made. This Court upheld the defence of estoppel and dismissed the claim of "waiver". The claim of "waiver" was dismissed only on the basis that cl 19 precluded waiver without express written endorsement on the policy document. Apart from cl 19, "waiver" would have been established "since [the insurer], with full knowledge of the breach of condition, retained possession of the premises containing the goods for about three months after knowledge, and exerted rights which they could only exercise on the assumption that their obligation still existed"93. Although Isaacs J held that the "waiver" was precluded by cl 19, his Honour did not otherwise clearly separate "waiver" from estoppel in his reasoning. On this appeal, however, Delor Vue relied heavily on a passage of Isaacs J's reasoning that followed a statement that "the only contested element of estoppel having been found against the defendant, the question is whether the evidence was sufficient in (1920) 28 CLR 305 at 317. (1920) 28 CLR 305 at 318-319. (1920) 28 CLR 305 at 325. law to support the finding of the jury"94. In the passage relied upon by Delor Vue, "Now, so long as the [insurer] distinctly and unequivocally retained the attitude of total non-liability on its part, because such a breach of clause 11 by the plaintiff as occurred put an end to all obligation by the [insurer] to pay a penny—in other words, that the contract according to its own terms had, by reason of the breach of clause 11, terminated the contractual obligations of the parties—it was safe. If, maintaining that attitude consistently, it further intimated that it was prepared to consider an ad misericordiam appeal by the plaintiff, supported by whatever proofs and testimony he might voluntarily submit, whether as suggested by the [insurer] or not, we should think the position of the [insurer] would still be unassailable. But insurers are not at liberty to mislead. They are not at liberty, at least apart from special provision in their contract, to do what is forcibly termed in Scotch law 'approbate and reprobate.' They are not at liberty to deny to the insured rights given to him under the contract and at the same time insist on and exercise as against him in adversum correlative rights given to them by the contract, as a qualification or a safeguard, on the basis that the rights of the insured are in full operation." It may be arguable that, in this discussion, Isaacs J was concerned with election in its historical sense and was not using termination in the modern sense of a power to terminate a contract and bring all obligations to an end. His Honour considered that "the contract according to its own terms had ... terminated the contractual obligations of the parties"96. In this way, his Honour was describing the historical approach by which election by affirmation precluded contractual obligations being automatically extinguished by the failure of a condition precedent. That view might also be supported by Isaacs J's reliance upon the decision of Parker J in Matthews v Smallwood97, in which it was held, consistently with the older authorities on election discussed earlier in these reasons, that the landlord's receipt of rent, with knowledge of the tenant's breach that forfeited the lease, would waive their right of re-entry. (1920) 28 CLR 305 at 319. (1920) 28 CLR 305 at 319-320. (1920) 28 CLR 305 at 319. [1910] 1 Ch 777 at 786-787. On the other hand, later decisions of this Court provide strong support for Allianz's submission that Isaacs J should be treated as being concerned with election in the modern sense. For instance, in several later decisions concerning the modern approach to waiver by election, members of this Court have described a later discussion in Craine98, including references to "approbating" and "reprobating", as being concerned with election in the modern sense99. In two decisions, this Court also cited Craine as an example of the modern approach to election concerning a choice to affirm the contract as a whole rather than merely to affirm the particular obligations that would otherwise have been extinguished by the failure of a condition precedent. Thus, in Gardiner100 three members of this Court described Craine as supporting the proposition that "the exercise, despite knowledge of a breach entitling one party to be discharged from its future performance, of rights available only if the contract subsists, will constitute an election to maintain the contract on foot". And in Visscher v Giudice101 four members of this Court cited Craine in support of a proposition concerning "an election ... to treat the contract as discharged by ... breach". There is a third possible interpretation of the reasons of Isaacs J in Craine: namely, that his Honour was contemplating that any waiver of cl 11 by the insurer would require detrimental reliance by Mr Craine before it could be irrevocable. In Mulcahy v Hoyne102, Isaacs J explained that the expression "approbating and reprobating" was used to describe an estoppel, which requires detrimental reliance: "[A]ny notion of estoppel, ... though distinct from waiver (in any sense) as a principle (see Craine v Colonial Mutual Fire Insurance Co ... ), frequently runs parallel with waiver, and is sometimes used as an exchangeable term for waiver in relation to what is known as 'approbating and reprobating'." And, later in the reasons in Craine, Isaacs J explained that the acts "in adversum", to which he had previously referred, were those taken against the interests of (1920) 28 CLR 305 at 326. 99 See Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642, 647; Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 633; The Commonwealth v Verwayen (1990) 170 CLR 394 at 406-407, 424, 451, 472. 100 (2008) 238 CLR 570 at 589 [58]. 101 (2009) 239 CLR 361 at 377-378 [49]. 102 (1925) 36 CLR 41 at 56-57. See also Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 592-593 [70]-[71]. Mr Craine: for "practically four months... [the insurer], with full knowledge of the facts as to condition 11, had retained possession of the premises and cars, and all property in the premises, in adversum, and in right of clause 12 of the conditions of the contract"103. The decision of the Privy Council on the appeal from this Court's decision in Craine was concerned only with, and based only upon, the waiver being irrevocable due to estoppel104. Delivering the advice of the Privy Council, Lord Atkinson held that estoppel had been established by the conduct of the insurer in taking possession of the premises without authority of cl 12 of the contract, and to the conceded detriment of Mr Craine105. It is, ultimately, both unproductive and unnecessary to resolve which of these views is the best interpretation of Craine. It is unproductive because the precedential force of the reasoning of early common law authorities will depend in part upon the extent to which those authorities are consistent with the common law mosaic of the present. Here, this includes the modern approach to termination of a contract as described in Gardiner106 and Visscher v Giudice107. It is unnecessary because, on any view, the remarks of Isaacs J cannot assist Delor Vue. As explained above, s 28(3) is a defence to a claim for indemnity. It does not give rise to a power for an insurer to terminate a contract. Nor is it a condition precedent that must be satisfied before Allianz could be under any obligation to pay. And, for the reasons below, Delor Vue's submission that Allianz was estopped from revoking its waiver cannot be accepted. Irrevocable waiver by estoppel The third basis upon which the majority of the Full Court held that Allianz's waiver had become irrevocable was by operation of an estoppel. In this Court, there was no dispute concerning the nature of the estoppel, such as whether it was a promissory estoppel or an estoppel by convention. Nor was there any dispute that Delor Vue was required to establish that it had suffered detriment to succeed in its 103 (1920) 28 CLR 305 at 322. 104 Yorkshire Insurance Co v Craine [1922] 2 AC 541. 105 [1922] 2 AC 541 at 549-550, 552-553. 106 (2008) 238 CLR 570. 107 (2009) 239 CLR 361. claim that Allianz was estopped from revoking its waiver108. The only issue was whether Delor Vue had established any detriment. It can immediately be accepted that the detriment with which estoppel is concerned is not limited to loss that can be measured in monetary terms. It is concerned with "the consequences that would enure to the disadvantage of a person who has been induced to change his or her position if the state of affairs so brought about were to be altered by the reversal of the assumption on which the change of position occurred"109. In short, Delor Vue needed to establish that it would suffer adverse consequences, or "a source of prejudice"110, if Allianz were entitled to revoke its waiver, in the sense of placing conditions upon the waiver. It can also be accepted that Delor Vue could have established detriment by showing that it had lost an opportunity that was of real and substantial value, even if it could not prove that the opportunity would have realised a benefit111. But Delor Vue had to prove that the opportunity was lost and that it was something of value112. Delor Vue submitted in this Court, consistent with the conclusions of the primary judge and the majority of the Full Court113, that detriment had been established by two opportunities lost by Delor Vue during the year between the waiver (on 9 May 2017) and the "revocation" (on 28 May 2018): (i) an opportunity "to challenge [Allianz] for indemnity in May 2017 and potentially resolve the conflict within that challenge"; and (ii) an opportunity "to take steps to carry out repair works itself rather than being left with a damaged property for over a year, and all of the distress and inconvenience attending that situation". 108 See McFarlane, The Law of Proprietary Estoppel, 2nd ed (2020) at 226-229 109 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 598-599 [84]. 110 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675. 111 Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at 486 [5]. 112 See Talacko v Talacko (2021) 272 CLR 478 at 495-496 [42]. 113 See Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 187 [333]; Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 432 [204(8)]. The first alleged lost opportunity was, essentially, for Delor Vue to compromise litigation concerning the operation of s 28(3) on terms that were more favourable than Allianz's offer of 28 May 2018 to incur costs estimated at $918,709.90, in addition to costs already incurred of almost $200,000. But no case based on this type of detriment was ever run at trial. No such detriment was set out in Delor Vue's Amended Concise Statement, the case to which the primary judge properly held Delor Vue, despite attempts late in the trial to expand its case. There is also no basis to infer that there was any real or substantial prospect of Delor Vue obtaining, in a mediation, a more favourable settlement than that offered by Allianz in May 2018. Since no such case was ever run at trial, no evidence was called by Delor Vue as to whether it might have commenced litigation between May 2017 and May 2018. Delor Vue did not call any evidence concerning the relationship between the parties during that year that might have shown that there was a prospect of a more favourable settlement in a mediation if litigation had been commenced. Nor was there evidence before the Court concerning any informal offers to resolve the dispute made by either party during that period, or the attitude of either party to such offers. And, in the absence of any case concerning the loss of a prospect of a more favourable outcome by a mediation, Allianz did not waive privilege or seek to tender any legal correspondence in relation to offers to resolve the dispute between May 2017 and May 2018. In this Court, Delor Vue submitted that there was a "souring" of the relationship between the parties after 12 months. It can be accepted that relations had indeed soured by the time of the correspondence on 3 May 2018. But it is too late for Delor Vue to construct a case for the first time, in this Court, that a souring of relations at an unspecified time between May 2017 and May 2018 deprived it of the prospect of a more favourable outcome, by a mediation, than that offered by Allianz in May 2018. An example of one of the many issues that might have been explored had such a case been run at trial is whether, even without litigation or mediation, Allianz had made informal offers to Delor Vue to resolve the dispute which were at the limits of what it was ever prepared to offer. The second alleged lost opportunity was for Delor Vue to take steps to carry out the repair works itself. The majority of the Full Court concluded, after a careful and detailed analysis of the case before the primary judge, including Delor Vue's late attempts to expand its case, that Delor Vue's case was confined to "a claim that as a matter of fact, because of the May 2017 Email, [Delor Vue] did not take matters into its own hands, undertake the work and pursue Allianz"114. As the majority of the Full Court correctly concluded, this was not a claim that "Delor [Vue] pursued some other course ... such as by applying its available funds to something else such that they could not be used to repair the relevant damage"115. Nor was it a claim that "it was to be more difficult or more costly or more burdensome to undertake the repairs" in May 2018 than it was in May 2017116. Indeed, as the majority added, Delor Vue "identified no consequence beyond the fact that it had left things to Allianz and therefore had not done anything to pursue things for itself"117. Although Delor Vue did take some action between May 2017 and May 2018, including commissioning engineering and building reports, it is not sufficient proof of detriment for Delor Vue to assert that, as a consequence of the 9 May 2017 email, it refrained from taking unspecified additional action that it would otherwise have taken. The nature of any action that Delor Vue might have taken is important given that: (i) Delor Vue's available funds, including the proposed loan, fell vastly short of the cost of repairs; and (ii) Delor Vue never specified any of the work that it could have undertaken. Further, even if it is assumed that Delor Vue had refrained from taking some additional action, refraining from that action might not necessarily have been detrimental. If the cost of taking the additional action fell, then, all other things being equal, the decision to refrain would have been beneficial. Or, if the cost remained the same, the decision to refrain might still have been beneficial if the effect was to allow all repair works to be done concurrently, after the additional defects in the roof trusses had been discovered. In summary, Delor Vue did not prove any "acts, facts or circumstances"118 from which any detriment could be inferred due to the loss of an opportunity to engage in repair works itself between May 2017 and May 2018. Indeed, the facts 114 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 431 [202]. 115 (2021) 287 FCR 388 at 422 [162] (emphasis in original). 116 (2021) 287 FCR 388 at 423 [166]. 117 (2021) 287 FCR 388 at 423 [168]. 118 The Commonwealth v Clark [1994] 2 VR 333 at 380. established only a clear benefit to Delor Vue during this period from the money spent by Allianz, including on repairs. Perhaps in order to address this obstacle, Delor Vue submitted in this Court that, "subject to the question of financial limitations", Delor Vue could have attended to "simpler and cheaper defects rectification works" in tandem with cyclone damage repairs. But, as explained above, the majority of the Full Court correctly concluded that Delor Vue had not run a case at trial that it could have undertaken works more cheaply itself between May 2017 and May 2018. In any event, such a submission is not supported by the evidence. The reference to "simpler and cheaper defects rectification works" appears to be to the uncosted option of fitting new trusses alongside the existing trusses, as suggested by Delor Vue's body corporate manager. That option was considered by Allianz's loss adjusters who concluded that it was not cost effective. Allianz's duty of utmost good faith The nature of the duty of utmost good faith Section 13(1) of the Insurance Contracts Act, set out earlier in these reasons, is an instantiation of the centuries-old common law "duty of utmost good faith" in commercial contracts. Like the common law duty, the duty in s 13(1) is not a free-standing or "independent general duty to act in good faith"119. Rather, as s 13(1) provides, the duty has two aspects: (i) it is a principle upon which a contract of insurance is "based" and thus assists in the recognition of particular implied duties120; and (ii) it is an implied condition on existing rights, powers, and duties, governing the manner in which each contracting party must act towards the other party "in respect of any matter arising under or in relation to" the contract of insurance. Each of these two aspects of the duty of utmost good faith applies equally to the insurer and to the insured. Indeed, it has long been recognised that the duty of utmost good faith applies symmetrically to both parties to an insurance 119 Re Zurich Australian Insurance Ltd [1999] 2 Qd R 203 at 218 [82]. 120 Carter v Boehm (1766) 3 Burr 1905 at 1911 [97 ER 1162 at 1165]: to "vary the nature of the contract". contract121. This symmetrical operation was generally incorporated into s 13(1) of the Insurance Contracts Act122. The first aspect of the duty of utmost good faith, as the principle on which the contract of insurance is based, requires various implied duties to be recognised. The most widely recognised of these is the duty of full disclosure. As early as 1766, Lord Mansfield said in the insurance context in Carter v Boehm123, albeit in remarks intended to apply to all contracts, that "[g]ood faith forbids either party by concealing what [they] privately know[], to draw the other into a bargain" where the other is ignorant of the concealed fact. The duty of disclosure by an insured is now the subject of a detailed statutory regime in Divs 1 and 3 of Pt IV of the Insurance Contracts Act. The second aspect of the duty of utmost good faith, as an implied condition, requires each party "to have regard to more than its own interests when exercising its rights and powers under the contract of insurance"124. This condition upon the exercise of rights and powers and the performance of obligations is not fiduciary125. It does not require a party to an insurance contract to exercise rights or powers or to perform obligations only in the interests of the other party. But nor is the condition limited to honest performance. The duty to act honestly, or not deceitfully, has been said to be "a duty of universal obligation"126. Section 13(1) would add nothing to the conditions on the exercise of those contractual rights and 121 Wood, A Treatise on the Law of Fire Insurance (1886) at 464; Phillips, A Treatise on the Law of Insurance (1823) at 81. 122 See Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) at xxi-xxii. See also CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 at 41 [125]. 123 (1766) 3 Burr 1905 at 1910 [97 ER 1162 at 1164]. 124 Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 31. See also CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 at 12 [15]. 125 CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680 at 693 126 Nocton v Lord Ashburton [1914] AC 932 at 954; Magill v Magill (2006) 226 CLR powers, and the performance of obligations, if it merely required the exercise or performance to be honest. It has therefore been said that rights and powers must be exercised, and duties must be performed, "consistently with commercial standards of decency and fairness"127 as distinct from standards of decency and fairness more generally. Several examples can be given of how the duty of utmost good faith conditions the exercise of contractual rights and powers and the performance of obligations. The refusal to cooperate with another contractual party in the exercise of a power can involve a lack of utmost good faith128. The failure, "within a reasonable time of the receipt of the claim"129, to perform the obligation to accept or refuse a claim can involve a lack of utmost good faith. And, as s 14 of the Insurance Contracts Act provides, reliance upon a power specifically provided to one party in the contract will be precluded if the reliance would involve a lack of utmost good faith. The suggested content of Allianz's duty of utmost good faith The majority of the Full Court gave no particularised content to the duty of utmost good faith, treating it only as an open-textured contractual obligation, such as to act "consistently with commercial standards of decency and fairness", requiring "an evaluative decision to be made by reference to all of the circumstances of the case"130. That approach was in error for the reasons set out above. There is no free-standing general obligation upon an insurer, independent of its contractual rights, powers, and obligations, to act in a manner which is decent and fair. The obligation to act decently and with fairness is a condition on how existing rights, powers, and duties are to be exercised or performed in the commercial world. The primary judge, by contrast, relied upon the duty of utmost good faith in its first aspect, as a principle that gives rise to particular implied duties, concluding that the duty of utmost good faith precluded Allianz from "resiling from the clear 127 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 at 12 [15] (emphasis added). 128 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 at 79 129 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 401-402. 130 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 441 [252]-[253]. representation, in effect a promise, in the 9 May 2017 email" or "resiling from a considered position ... of a claim of significant financial dimension"131. The particular implied duty postulated by the primary judge could not have been intended, and was not expressed, as an absolute duty upon parties to an insurance contract never to resile from any representation. An insurer and an insured do not owe a duty never to depart from representations made to each other. For instance, even if a representation is made unequivocally, it might be reasonable to depart from that representation if it was insignificant, or if circumstances change and departure would occasion no prejudice to the other party. If such a novel duty were to be recognised, and if it were to add anything to the doctrine of estoppel, it could only be a duty not to depart, without a reasonable basis, from significant representations concerning a claim. In this Court, Delor Vue focused on the second aspect of the duty of utmost good faith. Delor Vue referred to the obligation of an insurer "to make a clear and timeous decision in respect of a claim" and submitted that the need for certainty that underpins this obligation applies equally to prevent an insurer from "revers[ing] its position on the claim" in circumstances in which the insurer had "acted on that certain state of affairs for over a year". This submission is a mischaracterisation of the facts. Allianz did not "reverse" its position on Delor Vue's claim in the 28 May 2018 letter. The highest the submission could be expressed is that Allianz reversed its position on one legal aspect of Delor Vue's claim in stating that Allianz would rely on s 28(3) if its offer was not accepted. Ultimately, however, Delor Vue's submission effectively requires recognition of the same novel duty identified by the primary judge, namely that Allianz was under a duty not to resile, without a reasonable basis, from any significant representation to Delor Vue concerning a claim made by Delor Vue. Allianz did not breach its duty of utmost good faith By whichever approach this novel duty of a party to an insurance contract is sought to be derived, it cannot be accepted. It is not fatal to the existence of this novel duty that Delor Vue was unable to point to a single case identifying a remotely similar duty over the period of more than 250 years since a duty of utmost good faith in insurance contracts was recognised. Nor is it fatal that the Australian Law Reform Commission did not contemplate anything like it in the report which 131 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 192-193 [346]-[347]. formed the basis of the Insurance Contracts Act132. But, in a context in which insurers have been operating for nearly 40 years on the basis of a particular understanding of the operation of the Insurance Contracts Act, these matters are not a promising start. What is fatal to the recognition of this novel duty is that it would not be coherent either with the operation of existing legal doctrines, whose existence was well established at the time of the Insurance Contracts Act, or with the Insurance Contracts Act itself. In relation to insurers, it would have the effect of subsuming much of the operation of the doctrines of election, waiver, and estoppel into a broader positive duty not to unreasonably depart from significant representations. No reliance or detriment would be required. The recognition of such a duty would also have radical consequences for an insured that would not be coherent with the generally symmetrical operation of the Insurance Contracts Act. Div 2 of Pt IV of the Insurance Contracts Act is concerned with misrepresentations by an insured. Suppose that, following the occurrence of an insured event, an insured party, carelessly assuming that the damage was minimal, made a representation to their insurer that no claim would be brought under the policy. The factual aspect of that representation – the "state of affairs" – being the present state of mind of the insured party133 would not be a misrepresentation by the insured within s 24 of the Insurance Contracts Act. But if it were a breach of the duty of utmost good faith for the insured to depart unreasonably from their representation concerning a claim, then the insurer could cancel the contract under s 60(1)(a) if a claim was subsequently brought by the insured. These matters are sufficient to conclude that there is no basis to find that Allianz breached its duty of utmost good faith by imposing conditions upon its representation that it would not rely on s 28(3) of the Insurance Contracts Act. In any event, however, even if there were a duty of the kind suggested by the primary judge or by Delor Vue, that duty would not have been breached by Allianz. Delor Vue's submission that Allianz's conduct amounted to a breach of a duty not to resile, without a reasonable basis, from its representation is based on the premise that it is possible to fillet the representation by Allianz that it would not rely on s 28(3) of the Insurance Contracts Act from the remainder of the 9 May 132 Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982). 133 Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483; Meehan v Jones (1982) 149 CLR 571 at 578-579; The Commonwealth v Verwayen (1990) 170 CLR 394 at 410. 2017 email. That premise is incorrect. Any assessment of whether the conduct of a party to an insurance contract has breached the duty of utmost good faith, in either of its aspects, requires consideration of the whole of the context of that party's conduct. When the representation in the 9 May 2017 email is read in its full context, it is clear that Allianz was not accepting liability for the whole of Delor Vue's claim. Allianz's representation that it would not rely on s 28(3) was inseparable from Allianz's limited offer of indemnity that excluded "[d]efective materials and construction of the roof, including but not limited to tie downs, rafters and timbers and soffit" and required Delor Vue to pay for roof repairs of a scope yet to be defined, but to be undertaken prior to internal repairs. And when the representation in the 28 May 2018 letter is read in its full context, which included almost a year of dispute about the terms of Allianz's limited offer of indemnity, it is clear that Allianz was endeavouring to give more detailed and precise content to the terms of its 9 May 2017 email (which were set out in full). That included greater precision about the repairs and replacements that Allianz would undertake, to an estimated cost of around $918,709.90, in addition to costs of nearly $200,000 that it had already incurred. When the 9 May 2017 email and the 28 May 2018 letter are both read in context, the appropriate characterisation of the 28 May 2018 letter, in the words of Derrington J in dissent in the Full Court, is that Allianz was giving content to its offer "to pay a large gratuitous amount in respect of a liability which did not exist"134, albeit with a limited time for acceptance (ultimately, around three months). Even if the novel duty proposed by Delor Vue were accepted, the 28 May 2018 letter could not be a breach of the duty of utmost good faith. For these reasons, Allianz did not breach its duty of utmost good faith. It is, therefore, unnecessary to consider any of Allianz's submissions concerning the utility or availability of a declaration if a breach had occurred, including submissions that Delor Vue: (i) did not seek any declaration of a breach of s 13; (ii) sought only damages for breach of s 13, in place of which a declaration was made; (iii) led no evidence of any consequential loss suffered from the alleged breach of the duty of utmost good faith and obtained no award of damages from the primary judge; and (iv) did not seek or obtain any injunction to enforce the duty alleged to have been breached. 134 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 512 [577]. Conclusion Allianz's waiver of the defence under s 28(3) of the Insurance Contracts Act was revocable and was revoked. Delor Vue did not establish that Allianz was precluded from revoking its waiver by reason of "election", "waiver", estoppel, or the duty of utmost good faith. Orders should be made as follows: The appeal be allowed with costs. The orders of the Full Court of the Federal Court of Australia made on 9 July 2021 be set aside and, in their place, it be ordered that: the appeal be allowed with costs; and the declarations and orders of the Federal Court of Australia made on 24 July 2020 be set aside and, in their place, it be ordered that proceeding NSD 2094 of 2018 be dismissed with costs. 112 Part IV of the Insurance Contracts Act 1984 (Cth) ("the Act") codifies the pre-contractual duty of disclosure of an insured135 and the consequences of an insured failing to comply with that duty136. The pre-contractual duty of the insured is to make known to the insurer every matter known to the insured that the insured knows, or that a reasonable person in the circumstances could be expected to know, to be relevant to the decision of the insurer whether to accept the risk insured and, if so, on what terms137. Failure to comply with that duty, unless fraudulent138, does not entitle the insurer to avoid the contract of insurance. Instead, "the liability of the insurer in respect of a claim is reduced to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred"139. The statutory reduction in the liability of an insurer consequent upon an insured's failure to comply with the pre-contractual duty of disclosure, although expressed in self-executing terms, takes effect as a statutory right conferred on and for the benefit of the insurer140. The insurer can choose to rely, or not to rely, on that statutory right in answer to a claim made by the insured under the contract of insurance. This appeal concerns the basis or bases on which an insurer can be bound to adhere to a unilateral choice communicated to the insured not to rely on that statutory right in answer to a claim. The appeal is from a judgment of the Full Court of the Federal Court141 which, by majority (McKerracher and Colvin JJ, Derrington J dissenting), 135 Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 at 136 Section 33 of the Act. 137 Section 21(1) and (2) of the Act. 138 Section 28(2) of the Act. 139 Section 28(3) of the Act. 140 See The Commonwealth v Verwayen (1990) 170 CLR 394 at 405-406; Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129 at 141 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388. dismissed an appeal from a first instance judgment of Allsop CJ142. None of the findings of fact made by Allsop CJ was disturbed in the Full Court. None is sought to be disturbed in this Court. The following is a sufficient summary. Delor Vue Apartments CTS 39788, the respondent insured, is the body corporate for an apartment complex built in 2008 and 2009 in Cannonvale near Airlie Beach in North Queensland. In March 2017, Delor Vue entered into a composite policy of insurance issued by Strata Community Insurance ("SCI") as agent for Allianz Australia Insurance Ltd, the appellant insurer. The risks covered by the policy included property damage and public liability. Before entering into the policy, Delor Vue was aware that the apartment complex had badly affixed and constructed soffits and eaves which were dangerous if they dislodged. Delor Vue failed to disclose that matter to SCI. The matter was not relevant to the risk of property damage covered by the policy but was relevant to the risk of public liability covered by the policy. SCI as agent for Allianz would not have accepted the risk of public liability and so would not have issued the composite policy had the matter been disclosed143. Delor Vue accordingly failed to comply with its pre-contractual duty of disclosure and Allianz accordingly had in consequence a statutory right to reduce its liability in respect of any claim Delor Vue might make under the policy to nothing144. Less than a week after the insurance cover commenced under the policy, Tropical Cyclone Debbie severely damaged the apartment complex. Delor Vue made a claim under the policy for property damage. During the investigation of that claim, Delor Vue's failure to comply with its pre-contractual duty of disclosure became apparent. Delor Vue promptly provided all relevant information in its possession to SCI and Allianz145. On 9 May 2017, SCI as agent for Allianz sent an email to Delor Vue stating that "[d]espite the non-disclosure issue which is present, [SCI] is pleased to confirm that we will honour the claim and provide indemnity to [Delor Vue], in line with all other relevant policy terms, conditions and exclusions". "The email 142 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117. 143 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 122 [22]-[23], 179 [288]. 144 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 175-176 [267]-[268]. 145 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 145 [122], 189 [338]. was the expression of a measured, informed and apparently final position" which "on its face was intended to be acted on by Delor Vue". The position of Allianz so expressed was that "[t]he factual and legal state of affairs between insurer and insured would proceed on the basis of the policy without any reliance by SCI on any rights it may have had arising from non-disclosure"146. It was "in effect a promise, to adjust the claim on policy terms"147. Just over a year later, on 28 May 2018, Allianz resiled from that position. Allianz wrote to Delor Vue making a take-it-or-leave-it offer to settle the claim. In default of acceptance by Delor Vue of the offer it then made, Allianz purported to reserve its statutory right to reduce payment of the claim to nothing because of In the meantime, although the parties were in dispute about the extent to which work needed to repair the apartment complex was covered by the policy, the parties had proceeded on the basis that SCI was adjusting Delor Vue's claim in accordance with the policy on behalf of Allianz. SCI had been given unfettered access to the apartment complex in accordance with the terms of the policy, had engaged engineers to investigate the scope of necessary repair works, had obtained quotations, and had threatened to commence subrogated proceedings against the builder149. Delor Vue for its part had facilitated SCI undertaking those activities, had refrained from itself rectifying the property to the extent it was financially able to do so, had refrained from commencing proceedings against Allianz to enforce the claim, and had sought and been granted a six-month renewal of the policy for a substantial premium150. Delor Vue rejected the take-it-or-leave-it offer to settle the claim and ultimately commenced a proceeding to enforce the claim against Allianz in the Federal Court. In that proceeding, Allianz sought to rely on its statutory right to 146 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 147 [127]. 147 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 123 [26]. 148 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 123 [26], 161-163 [183]-[185]. 149 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 120 [10]. 150 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 159 [175], 187 [333]. reduce to nothing its liability in respect of the claim under the policy by reason of Delor Vue's failure to comply with its pre-contractual duty of disclosure. The conclusion reached by Allsop CJ at first instance was that Allianz was precluded from relying on its statutory right to reduce its liability in respect of the claim under the policy for three distinct reasons. First, Allianz had waived that right by its email of 9 May 2017151. Second, as of 28 May 2018, Allianz was estopped from departing from the position stated in that email152. Third, Allianz's attempt then to depart from the position so stated breached the provision implied into the policy by the Act153 which required it to act with the "utmost good faith"154. In the Full Court, McKerracher and Colvin JJ discerned no error in any of those conclusions. Their Honours differed from Allsop CJ only in that they preferred to explain the preclusion which arose from the email of 9 May 2017 in terms of election rather than waiver. Derrington J disagreed with each conclusion. For the following reasons, I agree with McKerracher and Colvin JJ that each conclusion reached by Allsop CJ was correct. Differing from McKerracher and Colvin JJ only as to taxonomy and terminology, I share Allsop CJ's preference for explaining the preclusion which arose from the email of 9 May 2017 in terms of waiver rather than election. Waiver Delivering the judgment of this Court (constituted by Knox CJ, Isaacs and Starke JJ) in Craine v Colonial Mutual Fire Insurance Co Ltd155, Isaacs J explained waiver to be a distinct legal doctrine. The explanation was given in an insurance context. Under one provision of a contract of insurance, written notification of a claim by the insured to the insurer within a specified time of the occurrence of an insured loss was made a condition precedent to the liability of the insurer to pay the claim156. Under another, the insurer was not to be taken to 151 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 190-191 [341]. 152 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 189-190 [337]-[338]. 153 Section 13(1) of the Act. 154 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 192-193 [346]-[349]. 155 (1920) 28 CLR 305 at 326. 156 (1920) 28 CLR 305 at 306 (clause 11). "waive" a condition of the contract unless the insurer stated in writing that the condition was waived157. The insured failed to make timely written notification of a claim. The insurer nevertheless proceeded to adjust the claim, and for that purpose to exercise powers under the contract158. The insurer was found by a jury at trial to have thereby represented to the insured that the insurer did not rely on the condition precedent to deny liability to pay the claim159. Citing nineteenth century and earlier twentieth century English cases, Isaacs J explained "waiver" to have a "strict legal connotation"160: "'A waiver must be an intentional act with knowledge'. First, 'some distinct act ought to be done to constitute a waiver'; next, it must be 'intentional', that is, such as ... indicates intention to treat the matter as if the condition did not exist or as if the ... breach of condition had not occurred; and, lastly, it must be 'with knowledge'". Of the conceptual basis on which the doctrine of waiver operates, Isaacs J said161: "'Waiver' is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions. It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has 'approbated' so as to prevent him from 'reprobating' – in English terms, whether he has elected to get some advantage to which he would not otherwise have been entitled, so as to deny to him a later election to the contrary. His knowledge is necessary, or he cannot be said to have approbated or elected." Going on to explain the doctrine of estoppel consistently with the explanation which would later be given in Thompson v Palmer162, Newbon v City Mutual Life Assurance Society Ltd163 and Grundt v Great Boulder Pty Gold Mines 157 (1920) 28 CLR 305 at 307 (clause 19). 158 (1920) 28 CLR 305 at 306-307 (clause 12). 159 (1920) 28 CLR 305 at 311. 160 (1920) 28 CLR 305 at 326 (citations omitted and cleaned up). 161 (1920) 28 CLR 305 at 326 (citations omitted). 162 (1933) 49 CLR 507 at 520, 547. 163 (1935) 52 CLR 723 at 734-735. Ltd164 and taken up in subsequent cases, Isaacs J pointed out that estoppel differs from waiver in important respects165. First, estoppel looks chiefly to the situation of the person relying on the conduct which gives rise to the estoppel, making the knowledge and intention of the person sought to be estopped immaterial. Second, estoppel can arise from conduct of the person sought to be estopped which falls short of a positive act. What Isaacs J held in Craine was that the insurer would have waived its right to rely on the condition precedent to liability had the contract of insurance not required waiver to be only in writing166. However, in circumstances where the only element of estoppel contested at trial had been the making of the representation167, the insurer was estopped from relying on the condition168. The outcome that the insurer was estopped from relying on the condition precedent to liability was upheld on appeal to the Privy Council, where only estoppel was in issue169. In Mulcahy v Hoyne170, Isaacs J subsequently cited the decisions of this Court and the Privy Council in Craine as illustrating the proposition that estoppel is "distinct from waiver (in any sense) as a principle" though it "frequently runs parallel with waiver". Four points are to be noted about the doctrine of waiver as so explained by Isaacs J in Craine. First, waiver was said to be a conclusion of law which follows when the necessary facts are established171. Second, the legal conclusion of waiver was not said to follow from the mere fact of an intimation of an intention not to enforce a right172. The conclusion was 164 (1937) 59 CLR 641 at 657. 165 (1920) 28 CLR 305 at 327. 166 (1920) 28 CLR 305 at 325. 167 (1920) 28 CLR 305 at 318-319. 168 (1920) 28 CLR 305 at 328-329. 169 Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541. 170 (1925) 36 CLR 41 at 56-57. 171 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326. See also Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55. 172 cf O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257. said to follow from the communication of an informed and fully formed intention to relinquish or abandon a right – to treat the right as if it "did not exist"173. Third, the explanation in Craine was confined to waiver in the sense of unilateral relinquishment or abandonment of an accrued right inuring solely for the benefit of the party relinquishing or abandoning it. The accrued right relinquished or abandoned by the insurer in Craine was a right to rely on a past non-compliance by the insured with a condition precedent to the past accrual of a contractual liability on the part of the insurer to pay the claim which had been made by the insured174. The explanation was not concerned with "waiver" in the distinct sense of a unilateral abandonment of, or promise not to enforce, a right to performance of a condition of an executory contract. Waiver in that distinct sense, sometimes referred to as "forbearance"175, did not arise for consideration in Craine and does not arise for consideration in this appeal. Waiver in that distinct sense did arise subsequently to Craine in Mulcahy. There, Knox CJ176, Isaacs J177, and Starke J178 each adhered to the long-established principle179 that a promise not to enforce a contract is legally inoperative and cannot excuse a breach of contract unless it is supported by consideration or unless it gives rise to an estoppel. Finally, but not least importantly, whilst communication of an informed intention to abandon an accrued right was explained in Craine as the making of an "election", the election referred to was not a choice between inconsistent rights. It was a choice between the inconsistent "positions" of retaining the right and relinquishing the same right180. The doctrine of waiver as so explained by Isaacs J in Craine accords with the description of waiver as the unilateral abandonment of a right which has 173 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326. 174 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 322-323. 175 The "Kanchenjunga" [1990] 1 Lloyd's Rep 391 at 397-398; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 592-599 [68]-[87]. 176 (1925) 36 CLR 41 at 50. 177 (1925) 36 CLR 41 at 53-56. 178 (1925) 36 CLR 41 at 58-59. 179 See earlier Barns v Queensland National Bank Ltd (1906) 3 CLR 925 at 938, quoting Stackhouse v Barnston (1805) 10 Ves 453 at 466 [32 ER 921 at 925-926]. 180 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326. appeared in successive editions of Halsbury's Laws of England181. That description of waiver was adopted by Latham CJ in Grundt182, by members of the House of Lords in Banning v Wright183, by Brennan J in The Commonwealth v Verwayen184 and by Finn and Sundberg JJ in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd185. The explanation of the conceptual basis for the doctrine of waiver given by Isaacs J in Craine is also consistent with the explanation of how waiver operates given by Lord Hailsham in Banning186, as adopted and elaborated on by Brennan J in Verwayen187. The explanation is that waiver "is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted"188. Waiver, properly so understood, is not a doctrine by operation of which a right is extinguished. Like estoppel, it is a doctrine by operation of which assertion of a right is precluded. Craine was argued and decided after and without reference to the publication in 1917 of a treatise entitled Waiver Distributed by Canadian author, Mr John Ewart KC189. Unfortunately, the argument in Craine was presented without reference to the treatise and the reasoning of Isaacs J therefore had no occasion to engage with Mr Ewart's thesis. Mr Ewart's thesis, in short, was that waiver should not be understood as a distinct doctrine of law and that the numerous 181 Halsbury's Laws of England, 1st ed (1910), vol XIII (Equity) at 165 [197]; Halsbury's Laws of England, 2nd ed (1934), vol XIII (Equity) at 207 [197]; Halsbury's Laws of England, 3rd ed (1956), vol 14 (Equity) at 637 [1175]; Halsbury's Laws of England, 4th ed (1976), vol 16 (Equity) at 992 [1471]; Halsbury's Laws of England, 4th ed (1992 reissue), vol 16 (Equity) at 824 [922]; Halsbury's Laws of England, 4th ed (2003 reissue), vol 16(2) (Equity) at 390 [907]; Halsbury's Laws of England, 5th ed (2021), vol 47 at 228 [251]. 182 (1937) 59 CLR 641 at 658. 183 [1972] 1 WLR 972 at 979, 982, 990; [1972] 2 All ER 987 at 998, 1001, 1007-1008. 184 (1990) 170 CLR 394 at 423. 185 (2006) 149 FCR 395 at 421 [113]. 186 [1972] 1 WLR 972 at 978-979; [1972] 2 All ER 987 at 997-998. 187 (1990) 170 CLR 394 at 423. 188 The Commonwealth v Verwayen (1990) 170 CLR 394 at 423, quoting Banning v Wright [1972] 1 WLR 972 at 979; [1972] 2 All ER 987 at 998. 189 Ewart, Waiver Distributed (1917). cases (in England and in the United States) which had until the time of publication been explained in terms of waiver could all be "distributed" and explained more satisfactorily as instances of the operation of one or other of the distinct "departments" of estoppel, election, contract and release. "Waiver", according to Mr Ewart, was not itself a "department" but "an empty category"; the word was "used indefinitely as a cover for vague, uncertain thought"190. Mr Ewart's thesis became influential – so influential that it soon became customary for judicial references to waiver in Australia191, as in England192, to contain an acknowledgement of uncertainty as to the content of the term. By 1977, it was being said in the leading English text on the law of estoppel that "whereas a fairly successful attempt may be made to state with precision what is meant by 'estoppel' and by 'election', the term 'waiver' when used in a similar connotation is not capable of exact definition in the light of the authorities"193. Mr Ewart's distribution of waiver was reflected in the holding of the Court of Appeal of England and Wales in Kosmar Villa Holidays plc v Trustees of Syndicate 1243194 that a statutory reference to a contractual precondition to liability arising under an insurance contract being able to be "waived" by the insurer referred to "waiver by estoppel" as distinct from "waiver by election"195. The language of "waiver by election" was more recently picked up by the Privy Council in Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn196. Whether waiver should continue to be recognised as a distinct legal doctrine in Australia was touched on in Agricultural and Rural Finance Pty Ltd v 190 Ewart, Waiver Distributed (1917) at 4-5. 191 See, eg, Bysouth v Shire of Blackburn and Mitcham [No 2] [1928] VLR 562 at 579; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 658; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655. 192 See, eg, Ross T Smyth & Co Ltd v TD Bailey, Son & Co [1940] 3 All ER 60 at 70; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 193 Spencer Bower and Turner, The Law Relating to Estoppel by Representation, 3rd ed 194 [2008] 2 All ER (Comm) 14 at 24-26 [36]-[38]. 195 See to similar effect Carter, Contract Law in Australia, 7th ed (2018) at 171-173 [7- 196 [2021] 1 WLR 5741 at 5748 [21]. Gardiner197. Noting Mr Ewart's thesis and subsequent judicial expressions of uncertainty198, Gummow, Hayne and Kiefel JJ found it "unnecessary to determine whether such a residual category or general principle exists in the common law of Australia"199. Kirby J alone was prepared to acknowledge waiver as a distinct doctrine having an operation beyond instances of contractual variation, estoppel and election200. Professor Carter subsequently observed that "[i]t remains an open question whether the law recognises the unilateral disclaimer of a right as binding independently of agreement, election or estoppel"201. Under the common law of New York, in contrast, waiver has continued to be recognised and applied as a distinct legal doctrine. That has been so despite Cardozo J having been apparently attracted to Mr Ewart's thesis202. Under New York law, the doctrine has been repeatedly reaffirmed in much the same terms as Isaacs J explained it in Craine203. According to one frequently cited encapsulation of the doctrine204: "A waiver is an intentional abandonment or relinquishment of a known right or advantage which, but for such waiver, the party would have enjoyed. It is the voluntary act of the party, and does not require or depend upon a new contract, new consideration, or an estoppel. It cannot be recalled or expunged." The uncertainty engendered here and elsewhere by Waiver Distributed warrants close attention to Mr Ewart's thesis. The thesis seems to me to have a problem. The "department" of election, to which Mr Ewart sought to allocate many cases of waiver, was not subjected to the same degree of scrutiny as he applied to 197 (2008) 238 CLR 570 at 586-587 [50]-[51]. 198 (2008) 238 CLR 570 at 586-588 [50]-[54], 602 [100]. 199 (2008) 238 CLR 570 at 602 [98]. 200 (2008) 238 CLR 570 at 605 [110]-[111]. 201 Carter's Breach of Contract, 2nd ed (2019) at 461 [10-43] fn 355. 202 See Beatty v Guggenheim Exploration Co (1919) 225 NY 380 at 388-389. 203 See Nassau Trust Company v Montrose Concrete Products Corp (1982) 56 NY 2d 175 at 184 (and the cases there cited); State of New York v Amro Realty Corporation (1991) 936 F 2d 1420 at 1431-1432; Fundamental Portfolio Advisors Inc v Tocqueville Asset Management LP (2006) 7 NY 3d 96 at 104. 204 Alsens American Portland Cement Works v Degnon Contracting Co (1917) 222 NY deny waiver the status of a "department". Distinguishing election from waiver, he said that waiver "implies that you have something, and that you are throwing it away", whereas election "implies that you have a right to get one of two things, or to occupy one of two positions, by choosing between them"205. Accordingly, "[i]f you had a choice between a horse and a mule, and you chose the horse, you would not say that you 'waived' the mule"; "[f]or you did not"206. What Mr Ewart did not explore was why, having chosen the horse, you should not be permitted to change your mind and have the mule instead. Had Mr Ewart gone down that path, he would have seen that election can itself be "distributed"207. He might even have come to accept that, in some manifestations, the irrevocability of an election is best explained in terms of throwing away or relinquishing a right. Take by way of example the paradigm case of an innocent party to a contract, having knowledge of a breach by another party, being confronted at common law with what is routinely said to be an "election" either to "terminate" or "affirm" the contract. The election can be described, as it was by Deane, Toohey, Gaudron and McHugh JJ in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW)208 and by Gaudron, Gummow and Hayne JJ in Victoria v Sutton209, as a choice between two mutually exclusive courses of action – to terminate the contract or to keep the contract on foot. The election can be described, as it was by Stephen J in Sargent v ASL Developments Ltd210, as a choice between two mutually exclusive sets of rights – those rights which would come into existence if the contract is terminated and those rights which would continue to exist if the contract is kept on foot. Or the election can be described, with equal if not greater accuracy, as a choice as to whether or not to exercise an existing right (in the nature of a power) – the right to terminate the contract. Mr Handley KC has cogently made that point, emphasising that no action on the part of the innocent 205 Ewart, Waiver Distributed (1917) at 13. 206 Ewart, Waiver Distributed (1917) at 7. 207 cf Reynolds, "Election Distributed" (1970) 86 Law Quarterly Review 318 at 323; Liu, "Rethinking Election: A General Theory" (2013) 35 Sydney Law Review 599 at 208 (1993) 182 CLR 26 at 41, quoting Spencer Bower and Turner, The Law Relating to Estoppel by Representation, 3rd ed (1977) at 313. See also Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn [2021] 1 WLR 5741 at 209 (1998) 195 CLR 291 at 306 [40]. 210 (1974) 131 CLR 634 at 641-642. party is needed for the contract to be kept on foot because that is the default position211. The description of the election as a choice as to whether or not to exercise an existing right to terminate the contract is consistent with the description of election given by Lord Goff in The "Kanchenjunga"212 to which further reference will be made. If the innocent party makes and unequivocally communicates a choice to exercise that party's right to terminate the contract, the communicated choice itself operates in law to bring about that result. The contract is at an end. If the innocent party by positive conduct or prevarication induces the party in breach to rely to its detriment on the contract continuing, the innocent party can be estopped from later exercising the right so as to bring the contract to an end. Jordan CJ explained all that in O'Connor v S P Bray Ltd213, where he demonstrated that no principle of election is needed to produce the result for which the law provides in either of those scenarios. The explanation given by Jordan CJ was accepted by Stephen J in Sargent214 and by Brennan J in Immer215. If, on the other hand, the innocent party, having knowledge of facts which give rise to the right to terminate the contract, makes and unequivocally communicates a choice not to exercise that right but instead to affirm the contract, the innocent party will be precluded from later exercising the right to terminate the contract. That will be so even without any detrimental reliance by the party in breach. The legal consequence of a knowing and unequivocally communicated choice to affirm a contract being to preclude later exercise of the right to terminate was accepted in Wendt v Bruce216 and Tropical Traders Ltd v Goonan217 and was 211 Handley, Estoppel by Conduct and Election, 2nd ed (2016) at 253-254 [14-001]- 212 [1990] 1 Lloyd's Rep 391 at 398. 213 (1936) 36 SR (NSW) 248 at 258-262. See also Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226-227. 214 (1974) 131 CLR 634 at 642. 215 (1993) 182 CLR 26 at 31-32. See also Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn [2021] 1 WLR 5741 at 5748 [21]. 216 (1931) 45 CLR 245 at 253. 217 (1964) 111 CLR 41 at 55. confirmed by Stephen J218 and Mason J219 in Sargent, where the operative doctrine was said to be election. Sargent was followed in Immer220. Between Sargent and Immer was The "Kanchenjunga". There Lord Goff referred to waiver as a term capable of referring to "a forbearance from exercising a right or to an abandonment of a right" and described the House of Lords as in that case "concerned with waiver in the sense of abandonment of a right which arises by virtue of a party making an election"221. Lord Goff described "the principle of election" as applying "when a state of affairs comes into existence in which one party becomes entitled to exercise a right, and has to choose whether to exercise the right or not"222. He said that "perhaps because a party who elects not to exercise a right which has become available to [that party] is abandoning that right, [the party] will only be held to have done so if [the party] has ... communicated [their] election to the other party in clear and unequivocal terms"223. Deane, Toohey, Gaudron and McHugh JJ cited that exposition of principle in Immer for the proposition that "election involves the abandoning of a right that is available"224. By way of further example of how Mr Ewart's "department" of election can be "distributed", closer to the circumstances of the present case, take the analogous case of an insurer having at common law a right (now excluded by operation of Pt V of the Act) to avoid a contract of insurance for material non-disclosure by an insured. In Khoury v Government Insurance Office (NSW)225, which was decided after Sargent but before The "Kanchenjunga", Mason, Brennan, Deane and Dawson JJ cited Sargent for the proposition that "[a] person confronted by two truly alternative rights or sets of rights, such as the right to avoid or terminate a contract and the right to affirm it and insist on performance, may lose one of them by acting 'in a manner which is consistent only with [that person] having chosen to rely on [the other] of them'". Their Honours added with reference to Craine that 218 (1974) 131 CLR 634 at 641. 219 (1974) 131 CLR 634 at 655-656. 220 (1993) 182 CLR 26 at 31-32. 221 [1990] 1 Lloyd's Rep 391 at 397-398. 222 [1990] 1 Lloyd's Rep 391 at 399. 223 [1990] 1 Lloyd's Rep 391 at 398. 224 (1993) 182 CLR 26 at 39. 225 (1984) 165 CLR 622 at 633, quoting Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 883. "[w]here an insurer is confronted with such alternative rights and elects to affirm the contract of insurance, [the insurer] is commonly said to have 'waived' the right to avoid or terminate [the contract]". The terminology and structure of reasoning adopted in Immer with reference to The "Kanchenjunga", and the terminology and structure of reasoning adopted in Khoury with reference to Craine, support both: (1) characterisation of the choice that an innocent party has as to whether or not to exercise a right to terminate or avoid a contract as an "election"; and (2) characterisation of the legal effect of a knowing and unequivocally communicated election to affirm the contract as an abandonment or "waiver" of the right to terminate or avoid the contract. The reason why the right to terminate or avoid cannot be exercised after affirmation is because the affirmation operates in law to waive the right to terminate or avoid and therefore to preclude the later exercise of that right. The question yet to be answered is: why in principle should an informed and unequivocally communicated intention to affirm a contract, which has not been relied on by the party to whom it is made and which is not supported by consideration, operate in law to preclude an innocent contracting party from thereafter exercising the right to terminate or avoid the contract? The answer given by Mason J in Sargent226 was "because it has been thought to be fair as between the parties that the person affected is entitled to know where he stands and that the person electing should not have the opportunity of changing his election and subjecting his adversary to different obligations". The same answer was given in different words in an earlier American case227, cited by Stephen J in Sargent228, where it was said that "[t]he basic concept of the doctrine of election is that a party shall not be permitted to insist at different times upon the truth of two inconsistent and repugnant positions, according to the promptings of [that party's] own interest". Professor Farnsworth gave very much the same answer when he said that even an innocent party should not be permitted to engage in "opportunistic behavio[u]r"229. Each of those versions of the answer is an expression of the same basic notion of fairness as Isaacs J expressed in Craine230 when he said that a party who 226 (1974) 131 CLR 634 at 656. 227 Myers v Ross (1935) 10 F Supp 409 at 411 [6]. 228 (1974) 131 CLR 634 at 647. 229 Farnsworth, Changing Your Mind: The Law of Regretted Decisions (1998) at 185. See also Bigwood, "Fine-Tuning Affirmation of a Contract by Election: Part 1" [2010] New Zealand Law Review 37 at 80-82. 230 (1920) 28 CLR 305 at 326. has "approbated" should not afterwards be permitted to "reprobate", and as Gavan Duffy CJ and Starke J expressed in Wendt v Bruce231 when they said that a party "cannot blow hot and cold". Whatever the form in which it might be expressed, the core of the answer is that fairness to the other party makes it "in the interests of justice, that the choice, when once made, should be irrevocable"232. Having recognised the "distributability" of election in a contractual context, the appropriateness of characterising a knowing and unequivocally communicated choice of an innocent party to affirm a contract as a waiver of that party's right to terminate the contract, and the commonality of the underlying principle of preclusion, two taxonomical and definitional approaches to waiver and election can be seen to be open. One approach is to view election, much as did Mr Ewart, as a doctrine applicable whenever a party faces a choice between occupying one or other of two positions which cannot be occupied simultaneously (or between pursuing one or other of two courses of action which cannot be pursued simultaneously). On that broad view of the scope of the doctrine of election, waiver can be treated as a species of election applicable where the choice is simply between the position (or course of action) of retaining a right and the position (or course of action) of abandoning that same right. That, in essence, was the approach indicated by Handley JA in Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd233 and adopted in the present case by McKerracher and Colvin JJ234. Another approach is to adopt the schema mapped out by Brennan J in Verwayen235. The schema involves treating election as a doctrine which applies where the law confers on a person a choice between inconsistent rights or sets of rights and which "ensures that there is no inconsistency in the enforcement of [the] person's rights". The schema further involves treating waiver as a distinct doctrine which "recognizes the unilateral divestiture of certain rights"236. The schema necessarily admits of overlap between waiver and election in the case of an 231 (1931) 45 CLR 245 at 253. See also Lissenden v CAV Bosch Ltd [1940] AC 412 at 232 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 258. 233 (1995) 8 ANZ Insurance Cases ¶61-235 at 75,649-75,650. 234 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 415-416 [132]-[136]. 235 (1990) 170 CLR 394 at 421-424. 236 The Commonwealth v Verwayen (1990) 170 CLR 394 at 423. affirmation of a contract. That, in essence, was the approach adopted in the present case by Allsop CJ237. Of the two approaches, I prefer the second. It matches up better than the first with the language and structure of reasoning adopted in Craine (in relation to waiver) and Sargent (in relation to election) and Khoury (in relation to both waiver and election). It recognises waiver as the operative legal doctrine which precludes exercise of a right to terminate or avoid a contract after affirmation. And it recognises that the considerations of justice which inform the application of the doctrine to preclude the exercise of a right in such a case are capable of having a broader operation. Whichever of the two approaches is adopted, however, the trigger for a waiver to occur where a person is faced with a choice between keeping an accrued right and abandoning that same right is the same: knowledge of the facts giving rise to the right and unequivocal communication of a choice to abandon that right. And the legal operation of waiver where so triggered is the same: the right abandoned is not extinguished but assertion of the abandoned right is thereafter precluded. Brennan J was cautious in Verwayen in describing waiver as a doctrine applicable only to "the unilateral divestiture of certain rights". No doubt, there are accrued rights which inure solely for the benefit of the right-holder which, for reasons of legal principle or legal policy or legal history, are incapable of unilateral divestiture or abandonment. Longstanding authority indicates that a right to payment of a debt or a fixed sum of money is one of them238. The statutory right of an insurer to reduce its liability consequent upon an insured's failure to comply with the pre-contractual duty of disclosure is not. Substituting as it does for the common law right of an insurer to avoid a contract of insurance for material non-disclosure239, which an insurer could waive (or elect) to abandon, the statutory right is one which the insurer must similarly be able to waive (or elect) to abandon. 237 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 182-183 [308]-[310], 190 [339]. 238 Foakes v Beer (1884) 9 App Cas 605. See Heydon on Contract (2019) 178-183 [5.820]-[5.900]. But see Dixon, "Concerning Judicial Method", in Crennan and Gummow (eds), Jesting Pilate and Other Papers and Addresses, 3rd ed (2019) 112 239 See Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 at 615; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR That is what occurred here. With knowledge of the facts giving rise to its statutory right to reduce its liability by reason of Delor Vue's failure to comply with its pre-contractual duty of disclosure, SCI on behalf of Allianz made and, by its email of 9 May 2017, unequivocally communicated to Delor Vue a choice not to rely on that statutory right in answer to the claim which Delor Vue had by then made for property damage arising from Tropical Cyclone Debbie. Allianz thereby and thereupon waived that right, in consequence of which Allianz was thereafter precluded from attempting to reassert it. Estoppel Turning from waiver to estoppel, the critical question is whether Delor Vue so acted or abstained from acting on the faith of SCI's representation in its email of 9 May 2017 that Allianz would not rely on its statutory right in answer to Delor Vue's claim during the period from 9 May 2017 until 28 May 2018 as to have made it unjust or unconscionable240 for Allianz on 28 May 2018 to resile from the position stated in that representation. Allsop CJ at first instance241 and McKerracher and Colvin JJ in the Full Court242 concluded that it was unjust for Allianz then to resile from the position stated in the representation in the circumstances where Delor Vue during the prior year-long period had in reliance on the representation: (1) refrained from taking legal action to enforce the claim against Allianz; and (2) refrained from itself taking steps to repair the damage to the apartment complex. On its appeal to this Court, Allianz challenges that conclusion on two principal grounds. One is procedural. The other is substantive. 240 Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 at 734; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675; Giumelli v Giumelli (1999) 196 CLR 101 at 123-124; Sidhu v Van Dyke (2014) 251 CLR 505 at 530 [85], 531 [92]; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 598-600 [84]-[88], 623-624 [152]- [154]; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 241 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 189 [337]. 242 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 432-433 [206]-[212], 433-436 [213]-[225]. The procedural ground is that the reliance found was neither pleaded nor the subject of testimony by any witness. For the reasons given by Allsop CJ243 and reiterated by McKerracher and Colvin JJ244 in response to similar procedural complaints, I reject that ground. The want of pleading gave rise to no procedural unfairness. The reliance found was properly inferred from objective conduct. The substantive ground is that the detrimental reliance found did not justify the conclusion that Allianz's departure on 28 May 2018 from the position stated in the representation of 9 May 2017 was sufficiently detrimental or prejudicial to Delor Vue to be characterised as unjust. Allianz points out that, by refraining from taking legal action to enforce the claim against Allianz during the year-long period, Delor Vue lost neither the opportunity to take legal action to enforce the claim nor the opportunity to settle the claim. Delor Vue in fact later seized the opportunity to take legal action to enforce the claim – giving rise to the present case. Allianz further points to the absence of any finding that, had Delor Vue not refrained from taking steps to repair the damage to the apartment complex during the year-long period, the damage to the apartment complex would have been repaired faster, better, or cheaper. For much the same reasons as those given by Allsop CJ245 and reiterated by McKerracher and Colvin JJ246 when similar arguments were put to and rejected by them, I also reject that substantive ground of challenge. Allianz's approach to assessing the injustice arising from its change of position is too granular and takes insufficient account of the temporal dimension of Delor Vue's reliance on the position SCI had represented. In Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd247, Hayne, Crennan, Kiefel, Bell and Keane JJ emphasised that "[d]etriment has not been considered to be a narrow or technical concept in connection with estoppel", that "[s]o long as [detriment] is substantial, it need not consist of expenditure of money or other quantifiable financial detriment" and that detriment "must be approached as 'part of a broad inquiry as to whether repudiation of an 243 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 187 [334]. 244 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 431 [201]-[203]. 245 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [No 2] (2020) 379 ALR 117 at 187 [333]. 246 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388 at 432-433 [206]-[212], 433-436 [213]-[225]. 247 (2014) 253 CLR 560 at 600 [88], citing Gillett v Holt [2001] Ch 210 at 232-233. assurance is or is not unconscionable in all the circumstances'". Their Honours also cited with approval248 the important statement of principle by Allsop CJ, then Allsop P, in Delaforce v Simpson-Cook249, to the effect that the importance of keeping a party to a prior representation is especially strong in circumstances where reliance on the representation has led another party to refrain from taking action which might realistically have led to a better outcome for that party. As his Honour there put it: "That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position." Much the same point had been made by Isaacs J in Hawkins v Gaden250. In the context of determining whether proven detrimental reliance on a prior representation made departure from the representation unjust, his Honour had there "The pecuniary amount of the prejudice is not the test ... If it were the test, the remedy might often be worse than the disease. The Court might be compelled to try a series of intricate collateral issues." For an entire year, during which time the damage to the apartment complex from Tropical Cyclone Debbie remained substantially unrepaired, Delor Vue refrained from pursuing opportunities for self-help which were obviously available to it. Delor Vue refrained from pursuing opportunities during that year-long period on the faith of Allianz's representation. Delor Vue did not need to prove that it would in fact have been better off if it had pursued one or other of those opportunities during that period in order to justify the conclusion that Allianz's subsequent departure from the position represented was unjust. Utmost good faith The Act provides that "[a] contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or 248 (2014) 253 CLR 560 at 598-599 [84]. 249 (2010) 78 NSWLR 483 at 486 [5]. 250 (1925) 37 CLR 183. 251 (1925) 37 CLR 183 at 202. in relation to it, with the utmost good faith"252. Without limiting the operation of that provision, the Act goes on to provide that "[i]f reliance by a party to a contract of insurance on a provision of the contract would be to fail to act with the utmost good faith, the party may not rely on the provision"253. Those provisions together spell out that the duty of utmost good faith ("uberrima fides"), which had long been acknowledged to exist between an insured and an insurer at common law but the precise scope and status of which had remained uncertain, now and by force of statute: (1) is mutual; (2) is implied into the contract of insurance; (3) requires the insurer and the insured each to act towards the other with the utmost good faith "in respect of any matter arising under or in relation to" the contract of insurance; and (4) can be breached by reliance on a contractual right. Enactment of the provision implemented a recommendation of the Australian Law Reform Commission ("the ALRC") in its report titled Insurance Contracts. The ALRC explained the background to the recommendation as follows254: "The common law requirement that insurer and insured act in the utmost good faith towards each other forms the basis of their relationship. This requirement has usually been recognised in connection with the duty of disclosure. In principle, it should apply equally to other aspects of the insurance relationship. That view was adopted by Mr Justice Stephen in Distillers Bio-Chemicals (Australia) Pty Ltd v Ajax Insurance Co Ltd255. However, there is no reported decision in Australia applying the duty to the payment of claims. The position must, therefore, remain in some doubt. That doubt should be resolved. Legislation should make it clear that the duty of good faith applies to all aspects of the relationship between insurer and insured, including the settlement of claims. An insured should be entitled to recover damages for loss suffered by him as a result of the insurer's breach of the duty of good faith in relation to the settlement of a claim." 252 Section 13(1) of the Act, originally enacted as s 13 of the Act. 253 Section 14(1) of the Act. 254 Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) at 202 [328] (footnote omitted). 255 (1974) 130 CLR 1 at 31. The ALRC also explained256: "Both parties to an insurance contract are subject to the requirement of uberrima fides. This should be restated as a contractual duty between the parties. Neither party should be entitled to rely on a contractual provision when to do so would involve a breach of the duty of utmost good faith. That should provide sufficient inducement to insurers and their advisers to be careful in drafting their policies and to act fairly in relying on their strict terms." The explanations contained in those paragraphs of the ALRC's report, both as to the need for the statutory implication and as to the intended scope of the operation of the implied contractual requirement, were specifically taken up in the Explanatory Memorandum to the Bill for the Act. The "rationale" for the statutory implication there given was as follows257: "The extent and application of the duty of good faith should be clarified to ensure that parties are aware of their obligations. For example, it will be clear that the duty extends to the insurer in relation to the payment of a claim. The clause will ensure that insurers and their advisers are careful in drafting their policies and that they act fairly in relying on their strict terms." The content of the implied contractual requirement that an insurer act towards an insured with the utmost good faith has been expounded conformably with those indications of the legislative purpose underlying its statutory implication. In AMP Financial Planning Pty Ltd v CGU Insurance Ltd258, Emmett J (with whom Moore J agreed) said that acting with the utmost good faith requires more than merely acting in good faith and that the content of the implied contractual requirement is informed by "notions of fairness, reasonableness and community standards of decency and fair dealing". He said that the implied contractual requirement is breached by conduct on the part of an insurer towards an insured in relation to a claim made under a contract of insurance that is "capricious or unreasonable" when gauged by reference to those notions259. That 256 Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) at 257 Australia, House of Representatives, Insurance Contracts Bill 1984, Explanatory Memorandum at 23 [35], citing Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) at 32 [51], 202 [328]. 258 (2005) 146 FCR 447 at 475 [87]-[89]. 259 (2005) 146 FCR 447 at 475 [89]. exposition of the content of the implied contractual requirement was specifically endorsed on appeal to this Court260. Express statutory inclusion of relying on a contractual right within the scope of the acts governed by the implied contractual requirement to act with the utmost good faith is reason enough to consider that the contractual requirement is breached where an insurer relies on a contractual right to defeat a claim or to reduce its liability in respect of a claim in circumstances which make the insurer's reliance on the right capricious or unreasonable when gauged by reference to the informing notions of fairness, reasonableness, and community standards of decency and fair dealing. There is no reason to consider that the implied contractual requirement is not similarly breached where an insurer's reliance on its statutory right to reduce its liability in respect of a claim, by reason of an insured's failure to comply with the insured's pre-contractual duty of disclosure, is capricious or unreasonable when gauged by reference to the same informing notions. Breach of the implied contractual requirement by the insurer in either of those circumstances could be restrained at the suit of the insured by an injunction restraining the insurer's reliance on the right, issued in what is sometimes referred to as the "auxiliary jurisdiction" of equity to safeguard a legal right261. Damages at common law could hardly be an adequate remedy for the breach. The Federal Court being a court of law and equity with jurisdiction to grant all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward in a matter before it262, the availability of injunctive relief in equity has the consequence that the insurer's breach can be raised in that Court by the insured in direct answer to the insurer's assertion of a contractual or statutory right to defeat or reduce a claim263. That is what has occurred here, leading to the framing by Allsop CJ of appropriate declaratory relief. The notions of fairness and reasonableness which inform the assessment of the reasonableness or unreasonableness of an insurer's assertion of a contractual or statutory right inherently encompass considerations of the kind traditionally understood to underpin the general "preclusionary" doctrines of waiver and 260 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 at 12 [15], 45 [139]. See also at 77-78 [257]. 261 JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 292; Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 575 [129]. 262 Sections 5 and 22 of the Federal Court of Australia Act 1976 (Cth). 263 Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605 at 632-633; Price v Spoor (2021) 270 CLR 450 at 470-471 [51]. estoppel. That must be so whether or not waiver is to continue to be recognised as a distinct doctrine in Australia. The considerations accordingly include: that an insured is in principle entitled to know where the insured stands in respect of a claim made under the insurance contract; that an insurer, having made and unequivocally communicated a fully informed choice not to assert a right in answer to a claim should in principle be held to that choice; and that an insured having relied to its detriment on a communicated choice of an insurer not to assert a right should not in principle be subjected to prejudice by the insurer changing its position. The peculiar dependence of an insured on an insurer in circumstances of the insured having suffered loss means that those considerations, drawn from general principles of law, apply in an insurance context to a heightened degree. The continuing obligations of an insured to an insurer under the contract of insurance and the vulnerability of an insured to the exercise of contractual and other powers by an insurer in the course of adjusting a claim add a further dimension. Though uttered in the context of estoppel a century ago, remarks by Lord Atkinson in the Privy Council on appeal from the decision of this Court in Craine are on point and have contemporary resonance. Speaking about the propriety of the insurance company in that case relying on the unperformed condition precedent ("condition 11") to deny liability to pay the claim made by the insured after having exercised contractual powers ("condition 12") in the adjustment of the claim, Lord Atkinson said264: "The penalty inflicted upon the assured in case all the terms of condition 11 be not complied with is that no amount should be payable to the assured under the policy of insurance. The company are thus free to take an objection to the non-performance of any of these terms and refuse to pay anything to the insured. The important question remains, can the company do this after they have availed themselves and while they are availing themselves of the powers conferred upon them by condition 12? Those powers are vast, they are far-reaching, and might in their operation and results inflict serious pecuniary loss on the assured. It may well be that it would be just and fair and businesslike to empower each company to exercise all or any of those powers while the amount of the claim of the assured was not adjusted; but it would be most oppressive and unbusinesslike to enable them after they had exercised these or any of these powers to say to [the] assured, your claim did not comply with all the terms of condition 11, therefore, though we have taken possession of your premises and sold your property, we will pay you nothing under the policies." 264 Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541 at 545-546. See to similar effect Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 320. Allianz accepted in argument on the appeal that the requirement that it act towards Delor Vue with the utmost good faith necessitated that it make and communicate to Delor Vue in a timely manner a decision as to whether or not it would accept or reject Delor Vue's claim so as to accept or reject responsibility to adjust the claim under the contract of insurance. That is what SCI as agent for Allianz did by the email of 9 May 2017. With full knowledge of the facts giving rise to Allianz's statutory right to reduce its liability in respect of the claim, SCI as agent for Allianz unequivocally announced in that email that it would not be relying on that right. Whether or not that fully informed and unequivocally communicated choice constituted a legally operative waiver, in my opinion, the statutorily implied contractual requirement that Allianz act towards Delor Vue with the utmost good faith entailed that Allianz was from then on bound to adhere to the position it had announced. Allianz was not entitled to go back on its word. It was not entitled to blow hot and cold. Even if Allianz were not in that way bound by the implied contractual requirement of utmost good faith never to depart from the position announced in the email of 9 May 2017, the fact that a year then passed, during which Delor Vue relied on the announcement to its detriment and during which SCI as agent for Allianz went on to adjust the claim in accordance with the terms of the contract of insurance, is sufficient to render Allianz's reassertion of the statutory right on and from 28 May 2018 unreasonable, indeed capricious. In the words of Lord Atkinson, what it then did was "oppressive and unbusinesslike". Disposition The appeal should be dismissed.

HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT RESPONDENT The Queen v Kilic [2016] HCA 48 7 December 2016 ORDER Appeal allowed. Set aside orders 2 to 7 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 8 December 2015 and in their place order that the appeal to that Court be dismissed. On appeal from the Supreme Court of Victoria Representation G J C Silbert QC with B L Sonnet for the appellant (instructed by Solicitor for Public Prosecutions (Vic)) D A Dann QC with G F Connelly for the respondent (instructed by Doogue Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Kilic Criminal law – Sentencing – Intentionally causing serious injury – Where respondent and victim in domestic relationship – Where victim 12 weeks pregnant with respondent's child – Where respondent caused serious injury to victim by dousing her with petrol and setting her alight – Where instant offence at upper end of range of seriousness for offence of intentionally causing serious injury – Whether Court of Appeal erred in use of expression "worst category" of offence – Whether Court of Appeal erred in consideration of current sentencing practices – Whether sentence imposed by sentencing judge manifestly excessive. Words and phrases – "comparable case", "current sentencing practices", "maximum prescribed penalty", "spectrum of seriousness", "upper end of the range of seriousness", "worst category", "yardstick". Crimes Act 1958 (Vic), s 16. Sentencing Act 1991 (Vic), ss 1(a), 5(2)(b). BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. Upon pleading guilty before a judge of the County Court of Victoria to one charge of intentionally causing serious injury1 by dousing the victim with petrol and setting her alight, the respondent was sentenced for that offence ("the principal offence") to 14 years' imprisonment. The respondent also pleaded guilty to two uplifted2 charges, one of using a prohibited weapon3 and one of dealing with suspected proceeds of crime4 ("the summary offences"), and was sentenced to further terms of 12 months' imprisonment for each of those offences. The sentencing judge (Judge Montgomery) cumulated six months of each of the sentences imposed for the summary offences upon each other and upon the sentence imposed for the principal offence, making a total effective sentence of 15 years' imprisonment. His Honour set a non-parole period of 11 years5. On the respondent's appeal to the Court of Appeal of the Supreme Court of Victoria (Redlich and Whelan JJA), their Honours held that there was "such a disparity between the sentence imposed [for the principal offence] and current sentencing practice as illustrated by the authorities relied upon by the parties" that it was apparent that there had "been a breach of the underlying sentencing principle of equal justice"6. The Court of Appeal allowed the appeal7, quashed the sentences imposed by Judge Montgomery and resentenced the respondent for the principal offence to 10 years and six months' imprisonment, and for the summary offences to six months' and three months' imprisonment respectively 1 Crimes Act 1958 (Vic), s 16. 2 Section 145 of the Criminal Procedure Act 2009 (Vic) governs the circumstances in which, on the committal for trial of an accused charged with an indictable offence, the Magistrates' Court of Victoria must transfer related charges for summary offences against the accused to the court to which the accused has been committed for trial. 3 Control of Weapons Act 1990 (Vic), s 5AA. 4 Crimes Act, s 195. 5 DPP v Kilic [2015] VCC 392. 6 Kilic v The Queen [2015] VSCA 331 at [67]. It should be noted that the Court of Appeal refused the respondent leave to appeal on a "fresh evidence" ground that has not been pursued further. Bell NettleJ (of which three months of the first sentence and one month of the second were cumulated upon each other and upon the sentence imposed for the principal offence), making a total effective sentence of 10 years and 10 months' imprisonment. The Court of Appeal set a non-parole period of seven years and six months. By special leave granted by Kiefel and Gordon JJ, the Crown appeals to this Court on five different grounds which, in the course of argument, conduced to a primary question of principle of whether the Court of Appeal erred in their consideration of "current sentencing practices" by holding that the difference between the sentence imposed by Judge Montgomery and the sentences imposed in some other cases to which the Court of Appeal referred warranted the conclusion that the sentence imposed by Judge Montgomery was manifestly excessive. For the reasons which follow, that question should be answered in the affirmative and the appeal should be allowed. There is also a secondary complaint the Court of Appeal impermissibly substituted their own views for the findings of Judge Montgomery as to whether the principal offence is appropriately to be characterised as unpremeditated; as to the extent of the respondent's criminal antecedents; and as to the respondent's prospects of rehabilitation. As will be explained, that complaint should be rejected. that The facts At the time of commission of the principal offence on 27 July 2014, the respondent was 22 years of age and in a relationship with the victim which had begun in February 2014. The victim was 23 years of age and she was 12 weeks pregnant with the respondent's child. Their relationship was described by the victim as "dysfunctional and controlled by drug use". Both the respondent and the victim used the drug known as "ice" (crystal methamphetamine). Towards the end of March 2014, the victim began living with the respondent in a house where he resided with his father. On 26 July 2014, as a result of what the victim considered to be the constant paranoid, controlling behaviour of the respondent, she left the house and stayed overnight with a friend. During the following day, a mutual friend, Ms Ahu, attempted to counsel the couple. Early in the evening of that day, Ahu arranged to meet the victim to discuss the relationship issues and, on the way, Ahu stopped at the respondent's home to collect some belongings and to speak to the respondent. Ahu observed him to be in a highly agitated state and angry that the victim would not speak to him or meet him. He alleged that the victim had been cheating on him and he Bell NettleJ called the victim a "slut". Later, he calmed down and said that everything was "going to be ok". Ahu telephoned the victim from the respondent's home and the victim arranged to meet Ahu there. Hence, at about 10.40 pm, the victim's uncle and cousin commenced to drive the victim towards the respondent's home. On the way, the victim observed two of her and the respondent's friends, Mr Bond and Mr Scott, who were on the side of the road refuelling their car with petrol from a fuel can. The victim therefore got out of the car in which she had been travelling and, when Bond and Scott had finished refuelling the car, drove on with them to the respondent's home. At that stage, there was still approximately a litre of petrol remaining in the fuel can, which was on the back seat. When they arrived at the respondent's home, Bond parked in the street directly opposite the front entrance. As Bond was about to get out of the car, he observed the respondent running across the street towards him holding a samurai sword above his shoulders and pointing it at Bond. As the respondent reached the car, he thrust the sword through the open driver's window where Bond was sitting but, at the last moment, the sword veered towards the steering wheel. The respondent then walked away from the car, verbally abusing Bond, Scott and the victim as he went. He yelled at the victim: "you're just a fucking slut". Bond followed the respondent into the front yard of the house and attempted to calm him down. The respondent filled a plastic bottle with water, swung the sword at the bottle and said to Bond: "this would take some cunt's head off". The respondent and Bond went into the house and, when the respondent was in his bedroom, Bond hid the sword inside the exhaust fan in the bathroom ceiling. While Bond was in the bathroom, the respondent again went outside to the car, where the victim was sitting in the back seat on the driver's side. The victim observed the respondent to have a terrifying look on his face, and, fearing for her safety, she locked the back driver's side door. The respondent, however, went around to the other side of the car, opened the other rear door and sat on the back seat next to the victim. A struggle ensued as the victim attempted to fight the respondent off. At that point, he emptied the contents of the fuel can over her, dousing her with petrol. He then got out of the car leaving her on the back seat, crying, wet and cold. A few minutes later, the respondent returned to the car and again got into the back seat next to the victim. She attempted to climb out of the car backwards but the respondent grabbed her by her jumper and pulled her back into the car. He then said "you wanna make my heart burn, now you can burn bitch". As he did, he held a cigarette lighter to her chest, igniting the petrol. Immediately, the Bell NettleJ victim's hair, face and clothing were engulfed in flames. She stumbled from the car and attempted unsuccessfully to extinguish the flames. Bond and Ahu ran from the house and they, along with Scott, assisted her. The respondent dialled 000 and then threw the telephone at Bond and said "here you talk to them", which Bond did. The respondent returned to the house to obtain an ice pack to put on the burns to his hands that he appears to have sustained while attempting to extinguish the flames soon after lighting the fire. He then left the scene when Bond told him to "fuck off". The victim was taken to hospital in a critical condition. Her injuries were horrendous. She was admitted to the intensive care unit, intubated and placed in an induced coma for five days on a ventilator. She had sustained burns to 20 per cent of her total body surface area, including burns bordering on extensive burn wounds to areas essential for life such as airways; burns to sensitive areas such as the head, face, neck, breasts, hands and wrists; and burns to multiple other body parts, constituting a combination of injuries with accumulative effect. To a large extent, the burn injuries were deep  that is, partial and full thickness skin burns  and required complex surgery and skin grafting, with skin harvesting from other parts of the victim's body rendering it necessary to wound further areas not affected by the fire. In the result, only a small skin area was left unhurt. The multiple complex life-saving assessments, investigations and treatments involved in stabilising the victim's condition carried and continue to pose a high risk of complications and side-effects. In the course of treatment, she suffered complications, which required further interventions, and infections that would likely have caused her a high degree of pain and discomfort. She is now faced with a protracted risk of future thrombosis, infections and immobility, and a decreased immunological defence system. At the sentencing hearing, it was understood that she would remain scarred, possibly to large areas of her body including sensitive areas such as her face, breasts and hands, with protracted cosmetic and social implications, and that the functionality of her hands and limbs would remain diminished. It was also understood that her future quality of life would be reduced and that she would require ongoing care in different medical and mental health areas. There is no doubt that she would have died without the treatment which she received. Due to the nature and seriousness of her injuries, and her long-term prognosis, the victim's pregnancy was terminated at her request on 13 August 2014. Since her discharge from hospital, she has had numerous outpatient appointments for rehabilitation and physiotherapy. Bell NettleJ The sentencing judge's reasons In assessing the nature and gravity of the offence, Judge Montgomery remarked that he found it hard to recall a more serious example of intentionally causing serious injury in his 38 years of working in criminal law. He stated that he took into account that the respondent was only 22 years of age at the time of the offending but added that he considered that the circumstances of the offending tended to push the significance of the respondent's age into the background. He observed that it was necessary to impose a sentence adequate to express his denunciation of the offence and to send a message to the community that violence against women will not be tolerated. His Honour stated that he took into account that the offending was spontaneous, opportunistic and not planned, and also that the respondent had attempted to do something to stop the fire. He also accepted that the respondent was remorseful. But, as his Honour observed, the respondent had a number of previous convictions for minor offences not involving violence, and also a number of convictions in relation to the possession of weapons; and, despite those previous convictions, the respondent had offended again, even while on bail and serving a community correction order in respect of previous offending. Consequently, there was a need for specific deterrence. His Honour noted that he had not been provided with any psychiatric assessment of the respondent that might have served to explain the offending, and he remarked that it was difficult to assess the respondent's prospects of rehabilitation. His Honour observed, however, that it was necessary to consider protection of the community and that someone who had acted in the way the respondent had was a risk to the community. He added that he had taken note of the sentences imposed in a number of other cases which the Crown and defence counsel had drawn to his attention. On balancing each of those considerations, his Honour concluded that it was necessary to impose the sentence he did, and he declared that, but for the respondent's plea of guilty, he would have imposed a total effective sentence of 18 years' imprisonment with a non-parole period of 15 years. The Court of Appeal's reasons The Court of Appeal stated that they considered the offending in this case to be "truly horrific" and that the "intentional setting on fire of any person with ensuing and entirely predictable life-threatening burns to a large part of the body" placed this case within the "worst category of this offence"8. Their Honours also specifically observed that the aftermath of the victim's injuries had involved 8 Kilic v The Queen [2015] VSCA 331 at [31]. Bell NettleJ numerous surgical procedures, which entailed their own risks and complications, that the victim had required skin grafts taken from healthy parts of her body, and that, due to the physical and mental impact of her injuries, the victim had elected to terminate her pregnancy. The Court of Appeal took the view, however, that, although the use of fire intentionally to cause serious injury is a rarity in the criminal law, when one looked to the few cases involving the deliberate causing of serious injury by fire, and also to cases of intentionally causing serious injury by means other than fire that were in what was said to be the "worst category", it was apparent that the sentence imposed by Judge Montgomery was manifestly excessive. The Court of Appeal thus allowed the appeal, quashed the sentences imposed and resentenced the respondent. The cases of intentionally causing serious injury by fire to which the Court of Appeal referred were R v Alipek9, R v Huitt10, Emery v The Queen11 and R v Rossi12 (the latter two cases arising from the one event) and the cases of intentionally causing serious injury by means other than fire which were said also to be in the "worst category" were Director of Public Prosecutions v Terrick13, Arthars v The Queen14 and Ali v The Queen15. It will be necessary to consider those cases in greater detail later in these reasons. Before doing so, however, it is appropriate to say something about the Court of Appeal's use of the expression "the worst category of this offence". "Worst category" of this offence As was earlier observed, in the course of considering the "[c]ircumstances of offending" the Court of Appeal described the principal offence as being within [2006] VSCA 66. 10 [1998] VSCA 118. 11 [2011] VSCA 212. 12 [2010] VSC 602. 15 [2010] VSCA 182. Bell NettleJ "the worst category" of the offence of intentionally causing serious injury16. Later in their reasons17, they added that, in assessing whether the sentence imposed was manifestly excessive, it was important to recognise the limitations on the use that may be made of the "worst category offending authorities". What is meant by an offence falling within the "worst category" of the offence is that it is an instance of the offence which is so grave that it warrants the imposition of the maximum prescribed penalty for that offence18. Both the nature of the crime and the circumstances of the criminal are considered in determining whether the case is of the worst type19. Once it is recognised that an offence falls within the "worst category", it is beside the point that it may be possible to conceive of an even worse instance of the offence20. Thus, an offence may be assessed as so grave as to warrant the maximum prescribed penalty notwithstanding that it is possible to imagine an even worse instance of the offence. Where, however, an offence, although a grave instance of the offence, is not so grave as to warrant the imposition of the maximum prescribed penalty  as the offending was agreed to be here  a sentencing judge is bound to consider where the facts of the particular offence and offender lie on the "spectrum" that extends from the least serious instances of the offence to the worst category, 16 Kilic v The Queen [2015] VSCA 331 at [31]. 17 Kilic v The Queen [2015] VSCA 331 at [66]. 18 Ibbs v The Queen (1987) 163 CLR 447 at 451-452; [1987] HCA 46; Veen v The Queen [No 2] (1988) 164 CLR 465 at 478 per Mason CJ, Brennan, Dawson and Toohey JJ; [1988] HCA 14. See also Markarian v The Queen (2005) 228 CLR 357 at 372 [31] per Gleeson CJ, Gummow, Hayne and Callinan JJ; [2005] HCA 25. 19 R v Tait (1979) 24 ALR 473 at 485. Compare the narrower approach said to be required in a different statutory context: R v Twala unreported, Court of Criminal Appeal of the Supreme Court of New South Wales, 4 November 1994 at 2, 6 per Badgery-Parker J (Carruthers and Finlay JJ agreeing). 20 Veen [No 2] (1988) 164 CLR 465 at 478 per Mason CJ, Brennan, Dawson and Toohey JJ; Bensegger v The Queen [1979] WAR 65 at 68 per Burt CJ; R v Lawrence (1980) 32 ALR 72 at 110-111 per Moffitt P. Bell NettleJ properly so called21. It is potentially confusing, therefore, and likely to lead to error to describe an offence which does not warrant the maximum prescribed penalty as being "within the worst category". It is a practice which should be avoided. There is also another reason to avoid use of the expression "the worst category" of an offence. Not infrequently where an offence does not warrant the maximum prescribed penalty, a sentencing judge may observe in the course of his or her sentencing remarks that, although the offence is a serious, or perhaps particularly serious, instance of the offence, it is not within the "worst category". To do so is not inaccurate and it may be thought a convenient form of legal shorthand. But lay persons are unlikely to be familiar with the legal signification of the expression and, as a result, might wrongly take it to mean that the judge has underestimated the seriousness or effects of the offence. In order to avoid difficulties of that kind, sentencing judges should avoid using the expression "worst category" and instead, in those cases where it is relevant to do so, state in full whether the offence is or is not so grave as to warrant the maximum prescribed penalty. Current sentencing practices Section 5(2)(b) of the Sentencing Act 1991 (Vic) required Judge Montgomery, and the Court of Appeal, to have regard to "current sentencing practices". The evident purpose of that requirement is to promote consistency of approach in the sentencing of offenders22. Consideration of "current sentencing practices" will include, where appropriate, the proper use of information about sentencing patterns for an offence23. The requirement of currency recognises that sentencing practices for a particular offence or type of offence may change over time reflecting changes in community attitudes to some forms of offending. For 21 Ibbs (1987) 163 CLR 447 at 452; Elias v The Queen (2013) 248 CLR 483 at 494 [27]; [2013] HCA 31. 22 Sentencing Act 1991 (Vic), s 1(a). 23 See and compare Wong v The Queen (2001) 207 CLR 584 at 591-593 [6]-[12] per Gleeson CJ, 605-608 [57]-[66] per Gaudron, Gummow and Hayne JJ; [2001] HCA 64; Hili v The Queen (2010) 242 CLR 520 at 536-537 [53]-[54] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2010] HCA 45; R v Pham (2015) 256 CLR 550 at 559-560 [28]-[29] per French CJ, Keane and Nettle JJ; [2015] HCA 39. Bell NettleJ example, current sentencing practices with respect to sexual offences may be seen to depart from past practices by reason, inter alia, of changes in understanding of the long-term harm done to the victim. So, too, may current sentencing practices for offences involving domestic violence depart from past sentencing practices for this category of offence because of changes in societal attitudes to domestic relations. Their Honours in the Court of Appeal observed, correctly, that examination of cases of causing serious injury by fire may provide a relevant "yardstick"24 by which a sentencing court can attempt to achieve consistency in sentencing and in the application of relevant sentencing principles but that the requirement to have regard to the sentences imposed in those cases does not mean that the range of sentences imposed in the past fixes the boundaries within which future sentences must be passed25; rather the range of sentences imposed in the past may inform a "broad understanding of the range of sentences that would ensure consistency in sentencing and a uniform application of principle"26. It is apparent, however, that the Court of Appeal ran into error, in the significance they attributed to the sentences imposed in those cases, when their Honours went on to conclude that, despite what they considered to be the "latitude" that had to be extended to a sentencing judge when sentencing for an offence at the upper end of the spectrum of seriousness, there was27: "such a disparity between the sentence imposed and current sentencing practice as illustrated by the authorities relied upon by the parties, that we are satisfied that there has been a breach of the underlying sentencing 24 Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1 at 71 [304] per Simpson J, quoted with approval in Hili (2010) 242 CLR 520 at 537 [54] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. See also Pham (2015) 256 CLR 550 at 560 [29] per French CJ, Keane and Nettle JJ. Another "yardstick" is the statutory maximum: R v Hoar (1981) 148 CLR 32 at 39 per Gibbs CJ, Mason, Aickin and Brennan JJ; [1981] HCA 67. See also Sentencing Act, s 5(2)(a). 25 Director of Public Prosecutions (Vic) v OJA (2007) 172 A Crim R 181 at 196 [30]- [31] per Nettle JA (Ashley and Redlich JJA agreeing at 206 [71], [72]). 26 Kilic v The Queen [2015] VSCA 331 at [48]. 27 Kilic v The Queen [2015] VSCA 331 at [67]-[68]. Bell NettleJ principle of equal justice. The sentence imposed is unjustifiably disparate from other sentences imposed for worst category offending by offenders in comparable circumstances. Subtle distinctions between serious injuries should be eschewed but without minimising the horrific injuries suffered by the victim, there is a clear distinction to be made here from those cases where the victims have sustained lifelong major physical or mental disabilities. When this consideration the [respondent's] genuine remorse, youth and lack of relevant prior offending, and prospects for rehabilitation, the conclusion is, on our view, inescapable that the sentence imposed on the primary charge was well beyond a reasonable exercise of the sentencing discretion." (footnote omitted) lack of premeditation, is combined with the the Crown submitted, despite the Court of Appeal's correct observations of principle earlier referred to, the Court of Appeal's reasoning in effect impermissibly treated the sentences imposed in the few cases mentioned as defining the sentencing range and, on that basis, concluded that, because the sentence imposed in this case exceeded the sentences imposed in all but one of the cases referred to, the sentence imposed in this case was beyond the range of available sentences. Cases of intentionally causing serious injury by fire are not common. The few cases mentioned by the parties could not properly be regarded as providing a sentencing pattern. There were too few of them28, one dealt with a different offence, another was more than 12 years old and, in any event, as will be explained, the circumstances of the offending in each of those cases were too disparate. At best they were representative of particular aspects of the spectrum of seriousness29. Lack of comparability of cases referred to Although the circumstances of the offending in Alipek were not dissimilar to those here, and Alipek was convicted, following trial, of attempted murder, 28 Cf Johnson v The Queen [2011] VSCA 348 at [23]-[24] per Buchanan JA (T Forrest AJA agreeing at [43]). 29 Ibbs (1987) 163 CLR 447 at 452. Bell NettleJ Alipek's offending was mitigated by his psychiatric condition30. It is also to be observed that it is now more than 12 years since Alipek was sentenced and that sentencing practices in cases of intentionally causing serious injury have evolved considerably in that time31. The circumstances in Huitt were very different from those here and, in any event, Huitt was sentenced in 1998, when sentences for intentionally causing serious injury were very much lower than today. Until 1 September 1997, the maximum sentence for the offence of intentionally causing serious injury was 12 years and six months' imprisonment32 and thus, as was observed by the Court of Appeal in Director of Public Prosecutions v Zullo33, the "very top of the range" was considered to be between six and 10 years' imprisonment. Following the increase in maximum penalty to 20 years' imprisonment, it came to be recognised that the top of the range is "upwards of fifteen years"34. It is also to be remembered that in Huitt the Court of Appeal described the sentences as "merciful rather than excessive"35. Emery and Rossi involved intentionally causing serious injury by fire with the use of petrol, but the circumstances of the offending were otherwise significantly different from the present. They did not involve violence perpetrated in the course of a domestic relationship against the offender's female partner. They did not involve the abuse of a relationship of trust which such an offence necessarily entails and which, as Judge Montgomery observed, must 30 Alipek [2006] VSCA 66 at [31] per Warren CJ (Buchanan and Vincent JJA agreeing at [33], [34]). 31 See generally OJA (2007) 172 A Crim R 181 at 196 [31] per Nettle JA (Ashley and Redlich JJA agreeing at 206 [71], [72]). 32 Sentencing and Other Acts (Amendment) Act 1997 (Vic), s 60(1), Sched 1, item 10. 33 [2004] VSCA 153 at [10] per Nettle JA (Winneke P and Batt JA agreeing at [26], [27]), citing Fox and Freiberg, Sentencing: State and Federal Law in Victoria, 2nd ed (1999) at [12.303]. 34 Zullo [2004] VSCA 153 at [10] per Nettle JA (Winneke P and Batt JA agreeing at 35 Huitt [1998] VSCA 118 at [16] per Charles JA (Winneke P and Buchanan JA agreeing at [17], [18]). Bell NettleJ steadfastly be deterred. The offences were committed following a physical altercation between Rossi and the victim. Rossi's moral culpability was reduced by reason of his depressive disorder and psychological state and, whereas in this case Judge Montgomery found it difficult to assess the respondent's prospects of rehabilitation, Rossi was found to have good prospects of rehabilitation. Critically, by contrast to the victim in this case, who will continue to suffer from the very serious effects of her injuries for the rest of her life (with consequent diminished future quality of life and the need for ongoing care in different medical and mental health areas), in Emery and Rossi the injuries sustained by the victim were much less to begin with and had significantly resolved by the time of sentencing. Terrick is relevant to the extent that, like the present case, it involved some of the most catastrophic injuries that can be imagined in a case of intentionally causing serious injury. But, as in Emery and Rossi, the circumstances of the offending in Terrick were once again very different from those here. It was not a case of domestic violence perpetrated against a woman in abuse of a relationship of trust. It is also apparent that, in circumstances where the offenders were of Aboriginal descent, the sentences imposed at first instance, and thus it would seem on appeal, took into account the mitigatory considerations identified in R v Fuller-Cust36. Most significantly, the sentences passed on appeal were less than otherwise would have been expected because of the double jeopardy doctrine which then applied to Crown appeals against sentence37. Arthars involved very serious injuries but the circumstances of the offending were entirely different from those here, and, viewed in hindsight, the sentences imposed in Arthars present as remarkably merciful. Possibly, that is attributable to the fact that, in Arthars, the sentencing judge found that both offenders had good prospects of rehabilitation and that the mental condition of 36 (2002) 6 VR 496 at 520-524 [78]-[92] per Eames JA. Cf Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37; Munda v Western Australia (2013) 249 CLR 600; [2013] HCA 38. 37 See R v Clarke [1996] 2 VR 520 at 522-523 per Charles JA (Winneke P and Hayne JA agreeing at 524); Director of Public Prosecutions (Vic) v Bright (2006) 163 A Crim R 538 at 542-543 [10] per Redlich JA (Vincent JA agreeing at 541 [6]). See now Criminal Procedure Act, s 289(2); Director of Public Prosecutions v Karazisis (2010) 31 VR 634 at 637-640 [4]-[13] per Warren CJ and Maxwell P, 644-649 [35]-[56] per Ashley, Redlich and Weinberg JJA. Bell NettleJ one of them was a mitigatory consideration. In this case, there was no such mitigatory consideration rising to that level. Ali was not in any way comparable to this case, apart from the fact that it involved an offence considered to be towards the upper end of the range of seriousness for offences of intentionally causing serious injury. Indeed, one might wonder why the offending in Ali was not considered to be so grave as to warrant the maximum prescribed penalty of 20 years' imprisonment. But, however that may be, the only significance of Ali for present purposes is to demonstrate that an offence of intentionally causing serious injury which is towards the upper end of the range of seriousness is liable to attract a sentence upwards of 15 years' imprisonment. imposition of Comparison of injuries In argument before this Court, the Crown further criticised the Court of Appeal's reasoning as involving an unprincipled comparison of the significance of the victim's injuries in this case to the seriousness of the injuries in Terrick, Arthars and Ali, and, on the basis of that comparison, concluding that there is a clear distinction to be made between this case and cases in which "the victims have sustained lifelong major physical or mental disabilities"38. In the Crown's submission, that reasoning was a disconnect from the Court of Appeal's earlier stated recognition that the offending in this case was so horrific and productive of chronic, serious injury as to place it at the upper end of the range of seriousness, or a disconnect from what the Court of Appeal had recognised earlier in their reasons as the impropriety of attempting to draw subtle distinctions between the seriousness of injuries which, in each case, place the offences at the upper end of the range of seriousness. Those submissions should be accepted. Having noticed that the maximum prescribed penalty for the offence of intentionally causing serious injury is 20 years' imprisonment, and having observed, correctly, that the offence in this case was at the upper end of the range of seriousness, the question for the Court of Appeal was why a sentence of 14 years' imprisonment for an offence at the upper end of the range of seriousness should be regarded as manifestly excessive. Ultimately, their Honours resolved39 that question on the basis that there was such a disparity between the extent of the injuries inflicted on the victims in 38 Kilic v The Queen [2015] VSCA 331 at [68]. 39 Kilic v The Queen [2015] VSCA 331 at [67]. Bell NettleJ Terrick, Arthars and Ali and the injuries inflicted in this case that the sentence imposed in this case was "unjustifiably disparate" from the sentences imposed in those other cases. With respect, that is plainly not so. The circumstances of the offending in Terrick were very different from this case, and, but for the considerations noted above as to the offenders' Aboriginal descent and the application of the principle of double jeopardy, the sentences imposed on appeal  11 years and six months' imprisonment for each of the offences of intentionally causing serious injury  would have been greater. The circumstances of the offending in Arthars were also very different and, although the injuries inflicted in Arthars were severe, it is a matter for subjective perception, as to which views may reasonably differ, whether the injuries in Arthars were overall any worse than the injuries here. As has also been observed, the sentences imposed in Arthars were remarkably merciful, perhaps on account of the mitigatory considerations40, which did not arise in this case. Ali may be put to one side because of the different circumstances of the offending. As already explained, its only relevance for present purposes is as an indicium or confirmation of the sentencing practice identified in Zullo41 that offences of intentionally causing serious injury towards the upper end of the range of seriousness are liable to attract a penalty upwards of 15 years' imprisonment. The sentence of 14 years' imprisonment imposed in this case is not inconsistent with that practice. Admittedly, it is difficult to imagine worse injuries than were inflicted by Ali or that there could be any greater pain and suffering than the victim in Ali might perhaps have experienced for the short time that he lived, in a vegetative state, after Ali's attack on him. But that does not mean that the sentence imposed in this case is manifestly excessive. Whatever the supposed relativities of the injuries inflicted in each case, it remains that the physical and psychological pain and suffering inflicted on the victim in this case were immense and, according to the evidence on the plea, the consequences will continue to attend her for the rest of her life. Granted, Ali was older than the respondent and had numerous prior convictions, many for offences involving violence, and the respondent had relatively few prior convictions and none for offences involving violence. 40 See [30] above. 41 [2004] VSCA 153 at [10] per Nettle JA (Winneke P and Batt JA agreeing at [26], Bell NettleJ Granted, also, Ali stood trial and the respondent pleaded guilty and was found to be remorseful. But, as Judge Montgomery in effect recognised, the heinousness of the offence in this case was in a category of its own. It surpasses understanding that a man, even one as young as 22 years of age, could set alight the mother of his unborn child. Given the nature and gravity of the offence, the dire consequences for the victim and the personal circumstances and antecedents of the respondent, the sentence of 14 years' imprisonment was not unreasonable The secondary complaint The Crown's secondary complaint may be dealt with more briefly. The substance of it is that the Court of Appeal erred as a matter of principle by substituting their own finding of lack of premeditation for Judge Montgomery's finding that the offending was spontaneous, opportunistic and not planned; substituting their own characterisation of the respondent's antecedents as devoid of relevant offending for Judge Montgomery's description of the respondent as having numerous prior convictions, although none involving violence; and substituting their own assessment of the respondent's prospects of rehabilitation for Judge Montgomery's view that it was difficult to assess those prospects. No such substitution is apparent. Read in context, the Court of Appeal's description of the offending as unpremeditated presents as intended to convey the same meaning as Judge Montgomery's finding of spontaneity, opportunism and lack of planning. So also, the Court of Appeal's reference to the absence of relevant prior convictions appears in context as a reiteration of Judge Montgomery's observation that the respondent had no prior conviction for offences involving violence. And, although the Court of Appeal did refer to the respondent's prospects of rehabilitation in a fashion that, standing alone, might be thought suggestive of a positive or favourable assessment of them, in light of the absence of an explicit contradiction of Judge Montgomery's finding, it is not to be supposed that the Court of Appeal intended that effect. The summary offences It remains to mention that the Court of Appeal were also persuaded that the sentences imposed for the uplifted summary offences were manifestly excessive43, notwithstanding that their Honours gave no reasons for that 42 See Pham (2015) 256 CLR 550 at 568 [56] per Bell and Gageler JJ. 43 Kilic v The Queen [2015] VSCA 331 at [69]. Bell NettleJ assessment. Contrary to that conclusion, those sentences were not manifestly excessive. The offence of using a prohibited weapon entailed the respondent's use of the samurai sword when he thrust the sword through the open driver's window where Bond was sitting and also when he swung the sword at the plastic water bottle in order to demonstrate that it "would take some cunt's head off". The respondent had prior convictions for possession of a firearm whilst a prohibited person for which he was sentenced to three months' imprisonment in March 2013; possession/use of a prohibited weapon for which he was sentenced to a community correction order for 24 months, also in March 2013; carrying an imitation handgun, possession of a prohibited weapon and possession of a controlled weapon for which he was sentenced to a community correction order for 18 months in August 2012; and possession of a dangerous article for which he was sentenced in June 2010 to an undertaking to be of good behaviour for 12 months. The respondent committed the instant offences while on bail and serving the community correction order imposed in March 2013. The offence of dealing with property suspected of being proceeds of crime related to three stolen credit cards found by police in the respondent's possession when his premises were searched following the commission of the principal offence. The respondent had prior convictions for handling and receiving stolen goods for which he was sentenced to a community correction order for 24 months in March 2013, and for shop theft for which he was sentenced to a community correction order for 18 months in August 2012. The maximum penalty that could be imposed for each of the summary offences was two years' imprisonment44. Having regard to the nature of each of the offences and the respondent's antecedents, a sentence of 12 months' imprisonment for each offence with six months of each sentence to be served cumulatively upon the other sentences imposed was not at all excessive. Notice of contention Finally, it should be mentioned that the respondent filed a notice of contention that the decision of the Court of Appeal should be upheld but on the basis that the Court of Appeal erred in characterising the respondent's offence of intentionally causing serious injury as falling in the "worst category" of cases of 44 Control of Weapons Act, s 5AA; Crimes Act, s 195; Sentencing Act, s 113A. Bell NettleJ intentionally causing serious injury. As has been explained, the Court of Appeal were in error to describe the respondent's offence as falling within the worst category. But, once it is appreciated that the Court of Appeal used that expression in the sense of an instance of the offence of intentionally causing serious injury towards the upper end of the range of seriousness, the point is without relevant consequence. Conclusion and orders In the result, the appeal should be allowed. Orders 2 to 7 of the orders of the Court of Appeal should be set aside. In lieu thereof, it should be ordered that the appeal to the Court of Appeal be dismissed.

HIGH COURT OF AUSTRALIA PAUL JOHN COOK (As Trustee of the APPELLANT AND PETER ROBERT BENSON & ORS RESPONDENTS Cook v Benson [2003] HCA 36 19 June 2003 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation: G T Bigmore QC with M J Galvin for the appellant (instructed by Gadens Lawyers) M J L Rajanayagam for the first respondent (instructed by IFS Fairley) M N C Harvey for the second to fourth respondents (instructed by Clayton Utz) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Cook v Benson Bankruptcy – Avoidance of settlement of property – Roll-over of superannuation entitlements – Superannuation entitlements applied in payment of contributions to other superannuation schemes – Whether settlements of property – Whether trustees were purchasers – Whether for valuable consideration – Bankruptcy Act 1966 (Cth), s 120(1). trustees purchasers Words and phrases: "purchaser", "valuable consideration", "settlement of property". Bankruptcy Act 1966 (Cth), ss 120(1), (8). GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. The question in this appeal is whether s 120 of the Bankruptcy Act 1966 (Cth) ("the Act"), in the form in which it stood at the relevant time (September 1990), operated so as to render void as against the trustee in bankruptcy payments made as contributions to superannuation funds by a person who later became bankrupt. Section 120 of the Act provided: "120 (1) A settlement of property, whether made before or after the commencement of this Act, not being: a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration; or a settlement made on or for the spouse or children of the settlor of property that has accrued to the settlor after marriage in right of the spouse of the settlor; is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 2 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy. In this section, 'settlement of property' includes any disposition of property." The term "property" was defined, in s 5, to include real or personal property of every description. A disposition of property, therefore, included a payment of money. The appeal in this Court was conducted, by both sides, on the basis that the payments in question each constituted a settlement of property within the meaning of s 120, and that the issue was whether the recipients were purchasers for valuable consideration. No question of want of good faith arose. Although at one stage of the proceedings there had been a claim that the conduct of the first respondent involved fraudulent dispositions within s 121 of the Act, the Federal Court resolved that issue in his favour, and it was not pursued in this Court. The facts may be summarised as follows. The first respondent became a bankrupt on 21 July 1992, when a sequestration order was made against his estate. He had committed an act of bankruptcy on 18 September 1991, and the bankruptcy was deemed to commence on that date (s 115 of the Act.) There were three payments in question, which were respectively of $20,000, $40,000 and $20,000. They were made, in September 1990, at the first respondent's direction, out of an amount of $96,192.36 which became payable to him in his capacity as a member of the ISAS (Tas) Retirement Fund. The first respondent had been employed by Industrial Sales and Service (Tas) Pty Ltd ("ISAS") since 1972. He was a member of that company's superannuation scheme. ISAS ceased to carry on business on 20 April 1990, and went into liquidation on 4 June 1990. In consequence, the first respondent's employment was terminated. He became entitled to a lump sum benefit in the amount of $96,192.36. He was in his forties, well below the normal retirement age. He decided to "roll-over" an amount of $80,000 into other superannuation funds. Accordingly, he directed the making of the payments the subject of the appeal. The fact that the amount of $96,192.36, of which the $80,000 formed part, represented entitlements under another superannuation scheme was directly relevant to the appellant's attempt, in the Federal Court, to rely on s 121 of the Act. It provided a commercial explanation of the first respondent's conduct, unrelated to any attempt to defeat his creditors. On the face of it, what was involved was an ordinary commercial dealing, being a re-investment of funds representing the proceeds of superannuation benefits to which the first respondent had become entitled prematurely. His original intention had been to make provision for his retirement, and he wished to carry that intention forward. The three roll-over transactions involved an investment of $20,000 in a Legal & General Personal Super Investment Growth Bond, $40,000 in a Prudential Investment Bond, and $20,000 in a Mercantile Mutual Superannuation Bond. It will be necessary to attempt to define those transactions with greater particularity, to the extent to which the evidence enables that to be done. The appellant commenced proceedings in the Federal Court, claiming declarations that each payment was void as against the appellant. In addition to the first respondent, the appellant sued Legal & General Superannuation Services Pty Ltd as second respondent, Prudential Corporation Australia Ltd as third respondent, and Mercantile Mutual Custodians Pty Ltd as fourth respondent. The appellant sought an order for repayment by the second, third and fourth respondents of the amounts of $20,000, $40,000 and $20,000 respectively. The evidence adduced by the appellant as to the contractual arrangements pursuant to which the payments were made was sketchy. However, it was regarded by the parties as sufficient to enable them to present their competing arguments. In the case of the second respondent, there was a letter from Legal & General Life of Australia Ltd, dated 31 March 1994, confirming that, at that date, the first respondent held a certain number of "Stable Fund Units" of a certain value each, which at that date amounted in all to $27,442.19. There was also in evidence a copy of the "Legal & General Employed Persons Superannuation Fund Trust Deed". The deed provided that the trustee (identified in the deed as Legener (Australia) Limited) was to effect and maintain in its own name a policy on the life of each member of the fund with the Legal and General Assurance Society Limited. Such policy was to be held on the trusts of the deed. The trustee was to have no beneficial interest in it. Each member's contributions were to be applied in payment of the premium or premiums on the policy. Other forms of investment were also contemplated. Retirement and death benefits were payable in accordance with the deed. Clause 7 provided: "7. At any given date the benefit of a Member under the Fund shall consist of the Policy on his life, any other form of investment referred to in Clause 4(b)(1) and the amount (if any) of his Member's credit, including any interest thereon calculated to that date." (emphasis in original) Subject to presently irrelevant qualifications, benefits were not payable until a member's death or retirement date1. The precise relationship between the second respondent, (Legal & General Superannuation Services Pty Ltd), Legener (Australia) Limited, and Legal and General Assurance Society Limited, was not examined in evidence, and was not the subject of findings of fact in the Federal Court. It may be inferred that they are all members of the same corporate group, but the parties appear to have risen above any attempt to identify with precision the contractual relationships that resulted from the "roll-over". The evidence included a letter to the appellant's solicitor from the second respondent's solicitor, dated 13 August 1998, stating: 1 Superannuation schemes, such as those into which the first respondent entered, were regulated, and complying schemes enjoyed concessional taxation treatment. An inability to obtain benefits prematurely was part of the scheme of regulation - see Occupational Superannuation Standards Act 1987 (Cth) and Occupational Superannuation Standards Regulations, reg 11. "I am instructed that the trustee of the fund in which Mr Benson's superannuation is held is Legal and General Superannuation Services Pty Ltd." The proceedings in the Federal Court were constituted, and conducted, on the basis that the second respondent, Legal & General Superannuation Services Pty Ltd, was both the recipient of the amount of $20,000 which the appellant was suing to recover, and was also the trustee of the superannuation fund under which the first respondent was entitled to future benefits. In the case of the third respondent (Prudential Corporation Australia Limited), there was in evidence a letter, dated 21 September 1990, from The Prudential Assurance Company Limited to the first respondent, acknowledging receipt of his application, and enclosing his "Prudential Investment Bond policy", which was said to confirm his investment and to set out the terms and conditions of a policy. The first respondent also received a "Prudential Bond Certificate". This identified a policy number and identified the class as "Superannuation Class". The owner of the policy was Prudential Australian Superannuation Limited. The total initial contribution was said to be $40,000, and the "investment fund" was divided into two components: a capital fixed interest component of $12,000; and a capital guaranteed component of $28,000. The Prudential Superannuation Bond described itself as a "policy". Its conditions, together with the Bond Certificate, were said to form the basis of a contract of insurance between The Prudential Assurance Company Limited, and the first respondent. Prudential was also to maintain a number of investment funds for the purposes of the policy. The benefits payable to the first respondent were specified. There was also tendered a copy of the trust deed establishing The Prudential Personal Retirement Fund. The deed established a superannuation fund and set out the rules governing its operation. The trustee was identified as Prudential Australian Superannuation Limited or any trustee which took its place. The fund was vested in the Trust to be administered in accordance with the rules. Membership of the fund was by application. The deed contemplated that the trustee would take out a life insurance policy in respect of a member, using the member's contribution for that purpose. Death and retirement benefits were payable in accordance with the rules. In the Full Court, it was said that the third respondent was the trustee of the Prudential Fund. How and when this came about does not appear from the evidence, but the statement of fact was not challenged in this Court. Again, the proceedings were conducted on the basis that the third respondent was the recipient of the amount of $40,000. In relation to both the Legal and General Bond and the Prudential Bond, there was evidence that, in October 1999, the statutory funds of the Prudential Assurance Company Limited merged with those of the Colonial Mutual Life Assurance Society Ltd ("Colonial Mutual"). There was also evidence that, in June 2000, there was a merger between the statutory funds of Legal & General Life of Australia Ltd and those of Colonial Mutual. In both cases, the trustee of the superannuation fund in which the first respondent had an interest became Colonial Mutual Superannuation Pty Ltd. As at 29 November 2000, the value of the Legal and General policy was said to be $38,237.17 and the value of the Prudential policy was said to be $64,122.47. The basis upon which that value was calculated does not appear. The mergers occurred after the commencement of the proceedings, and resulted in no amendment to the proceedings. In the case of the fourth respondent (Mercantile Mutual Custodians Pty Ltd) there was tendered, in blank, a form of Application for Membership of Mercantile Mutual Life Employed Persons Superannuation Fund. The case was conducted on the basis that such a form was either signed by, or in some other way applied to, the first respondent. It contained the following paragraphs: I have been advised in writing of the benefits which I am entitled to receive from the Fund on joining the Fund, in the event of my retirement, death or disablement, the method of determining those benefits and any conditions relating to those benefits. In consideration of my admission to membership, I agree to abide by and be bound by the provisions of the Deed governing the Fund. I agree to Mercantile Mutual Custodians Pty Limited acting as Trustee of the Fund." The evidence showed that the first respondent became the holder of a Mercantile Mutual Personal Superannuation Bond on 18 September 1990. As at 24 February 1994, his "policy" was said to be "invested" in a "capital stable investment portfolio" which was then valued at $30,303.32. The trust deed governing the operation of the fund of which the first respondent was a member, and of which the fourth respondent was the trustee, provided for death and retirement benefits. Contributions received from a member were to be received by the trustee and invested in a life policy, which was to fund the benefits ultimately payable. In the case of each of the "roll-over" transactions, the substance of what occurred was as follows. The first respondent applied for membership of a superannuation fund. The fund was administered by a trustee. The general scheme was that the trustee would receive the amount contributed by the first respondent and apply it in taking out a policy on the life of the first respondent and in making other forms of investment. The first respondent was entitled to death and retirement benefits in accordance with the terms of the deed governing the fund. The detail of the manner in which the value of the first respondent's entitlements varied from time to time is not a matter of relevance to the present appeal. Each of the three payments in question was made for the acquisition of the rights secured by the respective deeds of trust. Those rights were enforceable by the first respondent against the respective trustees. In the Federal Court, there was a question as to whether the payments were settlements of property. That question was answered in the affirmative by Marshall J at first instance2, and by the Full Court3. It is not a live issue in this Court, but it is relevant to note what was said, in the context of a consideration of that issue and of the issue that was contested in this Court, as to the facts. Marshall J noted that it was submitted on behalf of the first respondent that the first respondent's interest in the funds which emanated from the ISAS superannuation scheme was never received by him, and, further, that any property that passed to the other respondents was immediately dissipated. Those arguments were rejected, and, since they have not been repeated in this Court, it is unnecessary to say more about them. The judge did not make any detailed findings as to the contractual arrangements between the first respondent and the other respondents. In the Full Court, Beaumont J treated the Legal and General transaction as typical. He considered the deed of trust executed by Legener (Australia) Limited as trustee. He referred to the qualifications for membership, the provisions for the trustee to take out a policy on the life of each member, the benefits provided under the policy by the insurer, the various options that were available, the application of a member's contributions towards payment of premiums on the policy, and the trustee's obligations to hold each policy on trust to be administered according to the provisions of the trust deed. He noted that provision was also made for contributions, to the extent not required for premium payments, to be invested in other ways. Death, retirement and other benefits were payable in accordance with the deed. 2 Cook (Trustee); In the matter of Benson [2000] FCA 1777. 3 Benson v Cook (2001) 114 FCR 542. "In my opinion, the transfer of the 'rolled-over' funds, effected ... on 17 September 1990 at the [first respondent's] direction, constituted a 'disposition of property' by the [first respondent] within the meaning of s 120(8). It is clear that, by then, the [first respondent] was beneficially entitled to that amount as a chose in action indefeasibly vested in him. He then directed [the company that held the funds] to transfer the funds (or choses in action) to the three assurance (superannuation) companies, to be held by them in their respective retirement funds." In considering the question whether there was valuable consideration for the settlements, Beaumont J said5: "Here the reality at the time of the 'roll-over' was that the bankrupt was many years from retirement age, so that unless his entitlement from the ISAS fund on its termination was 'rolled-over' into another bona fide superannuation fund, the entitlement would have been taxed. Common sense indicates that, to this extent, there was a strong practical incentive, perhaps a practical compulsion, to 'roll-over' the entitlement, an action in fact carried out in this case with the approval of the Australian Taxation Office. Moreover, the dealings in question involved far more than the constitution of a 'bare' trust. The contemplated role of the related assurance company, guaranteed by the fund's trustee, was of fundamental practical importance to the superannuation transaction. In return for premiums received, the fund's trustee promised the beneficiary that the assurance company would provide assurance cover. This involved the provision of a real and truly valuable quid pro quo by the fund's trustee. Those were not nominal, colourable, abnormal or collusive dealings of the kind aimed at by s 120". "It is accepted that the second to fourth respondents are trustees of the funds into which the [three amounts which together made up $80,000] were placed and that they are responsible for their further investment. It (2001) 114 FCR 542 at 555 [49]. (2001) 114 FCR 542 at 559-560 [70]. (2001) 114 FCR 542 at 567, 568 [109], [111]. was also assumed that they would receive something, by way of fees or charges, for their role. The letter of 17 September 1990 discloses that a bond or policy issued with respect to the monies received ... and that units were held by the appellant in particular types of investments. The description of one or more of them implies a guarantee of repayment of the monies initially paid in. The deeds or rules governing the funds, which provide the conditions relating to members' rights to benefits, also require a policy to be maintained upon the life of its members, the premiums for which are paid from contributions. Here the [first respondent's] rights can be seen to have been altered by the transaction. In lieu of the money to which he was entitled he now has future rights with respect to the fund and rights arising from his contracts with each of the respondents. The respondents have corresponding obligations which will require the repayment to the appellant of his initial investment together with an amount representing the monies earned by the fund relative to the investment. On any view it would seem to me that something more than a nominal consideration has been provided for the monies." Hely J set out the evidence summarised earlier in these reasons. He identified the subject matter of the settlement of property in a manner that will require further examination. However, he did not disagree with the facts found by the other members of the Full Court. The arguments in this Court did not challenge the accuracy of the facts found in the Full Court. The level of generality at which those findings were expressed was dictated by the lack of detail in the evidence. The appellant bore the onus of proof on the issues of present concern, and any incompleteness in the evidence is to his disadvantage. In the Full Court, Beaumont and Kiefel JJ held that property the subject of settlements under s 120 consisted of the amount to which the first respondent was entitled under the ISAS superannuation scheme (or, more precisely, $80,000, part of that amount), the disposition being the direction to transfer those funds to the second, third and fourth respondents to be received by them as contributions to their respective retirement funds, and the payments made pursuant to that direction. They considered that the substantial issue in the case was whether the settlements were made in favour of a purchaser in good faith and for valuable consideration. They resolved that issue in favour of the respondents. Hely J dissented. That is the point to which argument to this Court has been directed. The history of s 120, and the English legislation upon which it was based, is set out in the judgment of this Court in Barton v Official Receiver7. The Court said that the purpose of the English legislation was "to prevent properties from being put into the hands of relatives to the disadvantage of creditors"8. Of course, it is not confined to dispositions to relatives, and the width of the definition of property has already been noted. As Lockhart J, in the Full Court of the Federal Court, pointed out in Barton9, the concept of a "purchaser ... for valuable consideration", while it involves two elements, does not involve two separate and independent notions. It has repeatedly been held that the legislation uses those terms in a commercial, rather than a conveyancing, sense10. It does not refer to a purchaser in the limited sense of a purchase and sale, but to a person who in a commercial sense provides a quid pro quo11. A question that arose for decision in Barton was whether the concept of valuable consideration requires something more than a merely nominal consideration that would suffice to make a contract enforceable at common law12. In that case, a bankrupt had made a payment of $170,000 to an uncle in the form of an unsecured loan for 20 years, no interest being payable for the first five years, and interest being payable at 4.25 per cent per annum thereafter (which was, at the time, a very low rate). It was held that the uncle was not a "purchaser ... for valuable consideration". To constitute a purchaser for valuable consideration, "a nominal, trivial, colourable or fictitious consideration will not suffice"13. (1986) 161 CLR 75 at 80-84. (1986) 161 CLR 75 at 85. (1984) 4 FCR 380 at 395. 10 eg Hance v Harding (1888) 20 QBD 732; In re Pope; Ex parte Dicksee [1908] 2 KB 169 at 172. 11 Barton v Official Receiver (1986) 161 CLR 75 at 84. 12 (1986) 161 CLR 75 at 80. 13 (1984) 4 FCR 380 at 396; (1986) 161 CLR 75 at 86, 87. In the present case, the payments in question were made pursuant to arm's- length, commercial transactions. The payments, at the direction of the first respondent, out of the funds due to him under the ISAS superannuation scheme, by way of contributions to other, commercially marketed, superannuation schemes, were made in return for the obligations, undertaken by the trustees of those schemes, to provide him with the rights and benefits to which he would in due course become entitled under the rules of each scheme. Those rights and benefits constituted substantial and valuable consideration for the contributions of the first respondent. As Beaumont J pointed out in the Full Court14, the concept of "purchaser" in s 120 must be understood and applied in the light of the expanded concepts of "disposition of property" and "settlement". Since a payment of money, or a transfer of a chose in action, is capable of constituting a settlement, then the payee or transferee must be capable of being a "purchaser ... for valuable consideration". The second, third and fourth respondents, as trustees of the respective superannuation schemes, in return for the contributions to the schemes, undertook to provide the rights and benefits to which contributors would become entitled on death or retirement. The contributions fall within the expanded concept of settlements of property. A payment of money is, by definition, a disposition of property. If the recipient of the money, in the commercial sense relevant to the application of s 120, provides valuable consideration in return, then there is no reason to deny to the recipient the character of a purchaser. The trustees satisfy the description of purchasers for valuable consideration. Hely J, whose reasoning in this respect was supported by the appellant, denied the provision of valuable consideration by treating the case as analogous to a transfer of property to a trustee who agrees to hold it upon the terms of the trust and administer it accordingly. It may be accepted that, if the first respondent had simply paid $80,000 to a person to hold on trust for him, the trustee would not be a purchaser for valuable consideration. In such a case, no issue under s 120 would have arisen; the first respondent would have remained the beneficial owner of the $80,000 or the assets in which it had been invested, and the property of which he was the beneficial owner would have been available to his creditors. However, that is not what occurred in the present case. The trustees of the superannuation funds did not undertake to accept funds, hold them on trust for the first respondent, and administer them on his behalf. The rights and benefits to which contributors to the funds were entitled, although they might 14 (2001) 114 FCR 542 at 559 [67]. vary with the success or otherwise of the investment policies of the fund managers, were governed by the rules of the superannuation scheme. As Kiefel J pointed out, in at least one case those rights included a "capital guarantee". Hely J also referred to Tooheys Ltd v Commissioner of Stamp Duties (NSW)15. In that case, a deed, providing for the establishment of a pension scheme for the employees of a company, was made between the company and trustees. The company paid £50,000 to the trustees as an initial contribution to the fund. The deed was chargeable to stamp duty as a declaration of trust, and was therefore chargeable with the same duty as if it were an instrument of conveyance of the property comprised therein. It became necessary to consider the rate at which duty should be calculated. That turned upon whether the deed was the equivalent of a conveyance made upon a consideration in money or moneys worth of not less than the value of the property to which it related. The only parties to the dutiable instrument were the company and the trustees. Employees who might in the future become members of the fund would, upon joining, obtain rights by reason of the provisions of the deed, but they were not parties to it. Nor would they themselves be obliged to make contributions16. The question of consideration arose in relation to the position as between the parties to the deed; that is to say, the company and the trustees. Dixon CJ said17: "The company as the party directing the creation of the trust and the trustees as the parties creating the trust by the declaration of the trust obtained no consideration in money or money's worth." The payment of £50,000 by the company to the trustees was not made in return for any property, or right, received by or conferred upon the company in return. On the other hand, in the present case the first respondent made contributions in return for the undertaking by the trustees of the funds of obligations to pay death, retirement or other related benefits, to him or his nominees, in accordance with the rules of the respective funds. He obtained consideration in money's worth in return for the payments. There was a difference between the approach of the majority in the Full Court, and that of Hely J, to the identification of the property that was settled for the purposes of s 120. Beaumont and Kiefel JJ, consistently with the relief 15 [1960] SR (NSW) 539; (1961) 105 CLR 602. 16 (1961) 105 CLR 602 at 610. 17 (1961) 105 CLR 602 at 616. claimed by the appellant, treated the three payments of money as the relevant settlements of property, and enquired whether the first respondent had received valuable consideration for them. Hely J, on the other hand, observing that the amounts were applied in payment of premiums on policies of insurance on the life of the first respondent, identified the "settlement of the life policies on the trustees" as the relevant settlement of property, and enquired whether the trustees provided "valuable consideration for that settlement"18. He answered that question in the negative, pointing out that the trustees held the life policies on trust, and that "a trustee who promises to receive and hold property transferred to him ... does not thereby give valuable consideration for the property transferred"19. However, the settlements or dispositions of property which the appellant claimed to be void were the three payments of money, not the issue of the life policies. The Amended Statement of Claim made no reference to the life policies. It asserted that each of the payments of $20,000, $40,000 and $20,000 respectively was void as against the appellant, claimed declarations accordingly, and sought orders for repayment of those amounts. There is no reason to doubt that the property, and the only property, of which the first respondent divested himself by the impugned transactions was the $80,000. Once that is accepted, the question whether he received substantial and valuable consideration in return is to be answered in the affirmative. The first respondent never divested himself of the life policies, and they did not constitute the property which the appellant alleged was settled in terms of s 120. It is erroneous to ask what consideration the trustees gave for the life policies. The question is what consideration they gave for the $80,000. The majority in the Full Court were correct in treating the three payments, by way of contribution to the superannuation funds, as the settlements of property to which s 120 potentially applied, and in concluding that they were settlements made in favour of purchasers for valuable consideration. The appeal should be dismissed with costs. 18 (2001) 114 FCR 542 at 572 [137]. 19 (2001) 114 FCR 542 at 572 [138]. Kirby KIRBY J. This appeal20 concerns the meaning and application of s 120 of the Bankruptcy Act 1966 (Cth) ("the Act"). That is an important section designed to protect the interests of creditors in respect of dispositions of property of a person who becomes bankrupt. Save for specified exceptions, it provides for the retrospective "clawing back" by a trustee in bankruptcy of property disposed of by the bankrupt within a given time of the commencement of the bankruptcy. In this case, within the period, the bankrupt directed that a sum of $80,000 in money under his control should be paid to three corporations. He gave this direction knowing that four months earlier judgment had been entered against him for $35,216.25 which remained unpaid. Following a sequestration order made in respect of his estate, the trustee in bankruptcy moved to recover the $80,000 from the recipients to whom the payments had been made. The primary judge in the Federal Court (Marshall J)21 and the dissenting judge in the Full Court (Hely J)22, concluded that the trustee was entitled to succeed. The majority of the Full Court (Beaumont and Kiefel JJ)23 concluded otherwise. They held, relevantly, that s 120 of the Act did not permit the asserted recoupment. In another case in the Federal Court, although mainly concerned with the application of s 121 of the Act, Madgwick J expressed agreement with the approach adopted to s 120 in this case by the primary judge24. So stated, the conclusions of the primary judge, of Hely J in the Full Court and of Madgwick J in the later case, seem unremarkable. They appear to carry into effect the language and purposes of s 120 of the Act25. In such a disposition of money to corporations (and for purposes ultimately to the bankrupt's own benefit), a decision that such dispositions were within the retrospective operation of s 120 for the protection of creditors would not be surprising. Indeed, the 20 From a judgment of the Full Court of the Federal Court: Benson v Cook (2001) 114 FCR 542. 21 Cook (Trustee), In the matter of Benson [2000] FCA 1777. 22 (2001) 114 FCR 542 at 573 [142]. 23 (2001) 114 FCR 542 at 560 [71] per Beaumont J; 568 [113] per Kiefel J. 24 Official Trustee in Bankruptcy v Trevor Newton Small Superannuation Fund Pty Ltd (2001) 114 FCR 160 at 175 [40]. 25 See the Act, s 120 as it appears in application to bankruptcies occurring on and from 16 December 1996, following the Bankruptcy Legislation Amendment Act 1996 (Cth). By item 457 in the first Schedule to the amending Act, s 120 of the Act, in its previous terms, continues to apply to pending cases such as the present. Kirby contrary conclusion would seem inconsistent with the provision, which is only the latest manifestation of an unbroken chain of provisions in bankruptcy law to like effect26. the suggested significance, and deleterious consequences In support of the application for special leave following the judgment giving effect to the majority view in the Full Court, an affidavit was read for asserting bankruptcy administration and the rights of creditors, resulting from the majority approach. At the hearing of this appeal, that point was elaborated by argument. Allowing for an intervening amendment of the Act that has occurred, the trustee suggested that, without express statutory authority, the approach of the majority would effectively permit persons such as the bankrupt, facing the possibility of bankruptcy, to put beyond the reach of creditors very significant funds (including in money or money's worth) by a simple device, beneficial to the bankrupt, similar to that adopted in this case. Such considerations do not solve the legal question that is presented by this appeal. But they do render the opinion of the majority surprising when the terms of s 120 of the Act are read on their face. The appeal cannot be decided by intuition or impression. It requires analysis of the facts, of the precise language and intended operation of the section, of the decisional authority that has considered its meaning and of the issues of legal principle and legal policy that inform the correct approach to the section, as it is to be applied in the circumstances of this case. The facts Most of the facts relevant to my reasons are set out in the reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("the joint reasons")27. The facts so stated include the circumstance that Mr Peter Benson ("the first respondent") became entitled to a lump sum of $96,192.36 on the termination of his previous employment and that the sum of $80,000, in issue in this appeal, constituted the "rolling-over" of most of that sum into "other superannuation funds"28. Presumably, these facts are stated to support a suggestion that the payment 26 The language of s 120 gives effect to principles of bankruptcy law that can be traced back at least to the Bankruptcy Act 1869 (UK), s 91. 27 Joint reasons at [5]-[20]. 28 Joint reasons at [7]. Kirby involved "was an ordinary commercial dealing, being a re-investment of funds representing the proceeds of superannuation benefits" that fell in "prematurely"29. Because a full understanding of the facts of a case can sometimes affect an appreciation of how legislation was intended to operate, it is perhaps relevant to add some more facts to the foregoing30. In January 1990, whilst the first respondent's original employment (and original superannuation entitlements) were continuing, Bridge Wholesale Acceptance Corporation (Australia) Ltd commenced a proceeding in the Supreme Court of Victoria against the first respondent and R F Benson Pty Ltd claiming a sum of $222,588.32 together with interest and costs in respect of a floor plan bailment agreement concerned with a tractor dealership business in which he was engaged. On 16 May 1990 Esanda (Wholesale) Pty Ltd obtained judgment against the first respondent for an amount in the order of $35,216.25. That judgment was unpaid. On 20 April 1990, the first respondent's employment with ISAS31 was terminated when that company ceased to carry on business. That company was wound up on 4 June The first respondent was not therefore, as it were, a hapless employee who became a victim of the collapse of his employer with its superannuation scheme. He was a trustee of the ISAS superannuation fund. It was in that capacity, on 27 June 1990, that he wrote to the insurance company with whom, pursuant to its superannuation deed, ISAS had effected a retirement accumulation and group life insurance policy. In his letter the first respondent confirmed that the trustees of that fund had determined that he, as beneficiary, should receive 51.2% of the funds held by that insurer. It was pursuant to that letter that the insurer, on 17 September 1990, paid the sum of $96,192.36 in favour of the first respondent. That amount of money was duly received. When received, it was wholly within the first respondent's disposition. The first respondent could have purchased a sports car, a recreational boat, a block of land or some other asset which, subject to the Act, would have been available to his creditors upon his subsequent bankruptcy. Instead, he engaged a financial planner, Spectrum Financial Planners Pty Ltd ("Spectrum"), to pay the greater part of the money at his disposition into superannuation funds for his own benefit. Spectrum notified the first respondent that it had "invested" $80,000 29 Joint reasons at [8]; cf Trust Company of Australia Ltd v Commissioner of State Revenue [2003] HCA 23 at [61]. 30 Trust Company of Australia [2003] HCA 23 at [66]. 31 The same descriptions will be used as appear in the joint reasons. See joint reasons Kirby with the three corporate respondents in this appeal, as trustees of their respective superannuation funds. Each such fund was an Approved Deposit Fund within federal law32. Of course, the first respondent had a strong motivation to reinvest the lump sum of money that came into his control in this way. Had he not done so, the sum would have been taxed. The first respondent's act of bankruptcy occurred on 18 September 1991. On 21 July 1992 the sequestration order was made in respect of his estate. The question, in these circumstances, is whether, pursuant to s 120 of the Act, the payment of $80,000 directed by the first respondent within two years before the commencement of his bankruptcy were void against Mr Paul Cook ("the appellant"), as trustee of the first respondent's property. The appellant asserted that it was. The first respondent submitted that it was not. The corporate respondents took no partisan role. They submitted to the orders of this Court. The legislation None of the parties suggested that the Court needed to consider any of the provisions of the complicated federal legislation governing superannuation. In the circumstances, I am content to assume that this is so. Only necessity and duty would encourage me to enter once again upon the consideration of those provisions33. The critical words of s 120 of the Act34, applicable to this case, are confined: A settlement of property … not being: a settlement … made in favour of a purchaser … in good faith and for valuable consideration … is, if the settlor becomes a bankrupt and the settlement came into operation … within 2 years before … the commencement of the bankruptcy, void as against the trustee in the bankruptcy." 32 See Occupational Superannuation Standards Act 1987 (Cth), s 3(1). The relevant circumstances are described by Kiefel J: Benson (2001) 114 FCR 542 at 563 [90], 33 cf Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 118-119 [67]. 34 The relevant parts of the section are set out in the joint reasons at [2]. Kirby Many of the elements of the foregoing sub-section were accepted as applicable, or were found to apply and are not now in contest. Given the wide definitions of "property"35 and "settlement of property"36 adopted in the Act this outcome is unsurprising. Thus, although, at trial, the first respondent contested that there had been a "settlement of property" in the sense of a "disposition", that point was found against him by all judges of the Federal Court37. It is no longer in dispute. Similarly, there was no contest that the first respondent, as settlor, had become "a bankrupt" and that the relevant settlement had occurred within two years before the commencement of his bankruptcy. For the purposes of the appeal, the appellant accepted that the settlement upon the corporate respondents was made "in good faith". He made no criticism of the conduct of those respondents. Further common ground should be noted in order to afford the context of the decision. It was no longer contested for the first respondent, as it had been at trial, that s 116(2)(d) of the Act, as it applied at the relevant time, did not exempt from his property the original sum received by him as the payout of his ISAS superannuation entitlement. At that time, that provision of the Act only made reference to policies of life insurance and endowment insurance and not to superannuation as such38. Although, for the appellant, it had originally been asserted that the payments made to the corporate respondents were void against the trustee having regard to s 121 of the Act (which concerns "fraudulent dispositions") the primary judge, having found that the payments were void because of s 120, concluded that it was unnecessary to consider s 12139. In the Full Court, by notice of contention, the appellant re-agitated the s 121 question. However, the majority of that Court concluded that the application of s 121 was not established by the evidence40. That point has not been maintained in this Court. 35 The Act, s 5. 36 The Act, s 120(8): set out in the joint reasons at [2]. 37 [2000] FCA 1777 at [13] per Marshall J; (2001) 114 FCR 542 at 555-556 [51], 563 38 (2001) 114 FCR 542 at 546 [3] citing NM Superannuation Pty Ltd v Young (1993) 41 FCR 182 at 190. 39 [2000] FCA 1777 [15]; cf (2001) 114 FCR 542 at 546 [3]. 40 (2001) 114 FCR 542 at 560 [72], 568 [112]. Kirby The appellant accepted that if, at the relevant time, the first respondent had used the $80,000 to purchase a life insurance policy it would have been exempt from recoupment for the benefit of creditors in accordance with the Act as it then stood41. He also accepted that under the Act as it now stands, had the first respondent purchased a superannuation policy or policies, depending on the circumstances, they would now be exempt and unavailable to the creditors42. However, that express exemption was inapplicable at the relevant time. This was a point upon which the appellant laid emphasis43. Any "exemption" for the investment of the moneys in a superannuation fund (even one regulated in accordance with the federal legislation as may be accepted to be the case here) had to fall within the general language of s 120(1)(a). No express, specific and particular exemption applied. Despite the large area of agreement between the parties, now fully described, the two remaining issues, critical to the exemption claimed by the first respondent, remained. They were based on the language of s 120(1) of the Act. They concerned whether the corporate respondents could properly be described as "purchasers" of the settlement (disposition) of the sums of money respectively paid to each of them. And whether, in each case, such "settlement" was made "for valuable consideration" passing from the corporate respondents to the first respondent for the "settlement" as such. Analysis of authority on s 120 of the Act As might be expected in a provision having a long history and playing a crucial part in the operation of bankruptcy law, s 120(1) (and its predecessor and like provisions in this and other countries) has been examined by trial and appellate courts for over 150 years. Little that is new remains to be written. Indeed, the key to the residual questions in this appeal is to be found in close attention to the analysis of s 120 set out in the principal decision of this Court on the section, Barton v Official Receiver44. 41 The Act, s 116(2)(d). 42 By virtue of amendments introduced by the Superannuation Industry (Supervision) Consequential Amendments Act 1993 (Cth), s 116(2)(d)(iii) now includes "[t]he interest of the bankrupt in: (A) a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993)". 43 (2001) 114 FCR 542 at 546 [3], 560-561 [79]-[80]; cf Trust Company of Australia [2003] HCA 23 at [87]-[88]. 44 (1986) 161 CLR 75. Kirby The purpose of the section has been stated several times. It is "clearly framed to prevent properties from being put into the hands of relatives to the disadvantage of creditors"45. Although relatives, and particularly spouses, have been the most frequent actors in the dramas that have been played out in the cases concerning s 120, used as receptacles for the property of the future bankrupt within the period of the retrospective "clawback" allowed by the law, the joint reasons correctly point out that it is not only families as beneficiaries of settlements to which s 120(1) of the Act is addressed. So much is clear, from a reading of the full sub-section46. It refers not only to family arrangements ("in consideration of marriage", "for the spouse or children of the settlor") but also to other recipients of the bankrupt's property falling within the provision. In several cases, it has been pointed out that the words, critical to this appeal, "in favour of a purchaser … for valuable consideration" constitute a composite phrase. That phrase is to be read as a whole; not split into separate single verbal parts47. This insight involves no more than an application, in the present context, of the contemporary insistence that the normal unit of communication in the English language is not the single word but, at the very least, the sentence containing the relevant composite idea48. To derive the applicable meaning with any degree of certainty, it is usually necessary to read the paragraph, and perhaps the chapter, so that the sentence will be read and fully understood in its proper context. The bits and pieces approach to interpretation has now been discarded. Approaching s 120(1) and the critical words in this way, it is clear that the provision represents an important measure protective of creditors. It is enacted as a response to the common experience of the law that bankrupts, facing the prospect of bankruptcy, will often attempt, within a given time of that anticipated event, to divest themselves of property to people (usually family) whom they specially wish to favour, whom they trust and whose use of the property will generally inure to the advantage of the bankrupt, in the event that bankruptcy supervenes. Against fraudulent and semi-fraudulent dispositions of property of 45 In re A Debtor; Ex parte Official Receiver v Morrison [1965] 1 WLR 1498 at 1505; [1965] 3 All ER 453 at 457 per Stamp J approved in this respect in Barton (1986) 161 CLR 75 at 83. 46 The full terms of s 120(1) of the Act appear in the joint reasons at [2]. 47 eg Barton (1986) 161 CLR 75 at 79, 86. See also the reasons of Lockhart J in Barton v Official Receiver (1984) 4 FCR 380 at 396 cited in Benson (2001) 114 FCR 542 at 558 [63] by Beaumont J. 48 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397, citing R v Brown [1996] 1 AC 543 at 561. Kirby this kind, s 121 stands as guardian. Against other, non-fraudulent, dispositions, s 120 provides protection to creditors. In case of any ambiguity, it is the duty of courts giving effect to the Act, to apply such provisions so as to achieve, and not frustrate, the attainment of these purposes49. Read in this context, and in the light of these purposes, what is the meaning of the word "purchaser" when used to identify one of the categories of exemption from the trustee's powers of recoupment of property for the benefit of creditors? In the context, the word connotes a person who buys the property in question "in good faith and for valuable consideration". Such a person is to be viewed as a genuine acquirer of the relevant part of the respondent's property and not someone who receives it on some other basis, that does not warrant the exceptional exemption from the property that would otherwise be available to the creditors. The word may not be used in the strict sense of a "purchaser" as in a contract of purchase and sale50. But the very word "purchaser" connotes someone who buys something from another, acquiring something in exchange for something else that is valuable and is given in return. Ordinarily, love and affection would not be sufficient, alone, to make the recipient qualify for a description as a "purchaser" as that word is used in contemporary speech51. It is for that reason that special provision is made by s 120(1) for exemption of particular (non-"purchase") cases of familial settlements. However, for the most part, to be exempt, the acquirer of the bankrupt's property must qualify as a "purchaser". The purchase must not have been effected for "nominal or trivial or colourable" consideration52, but, in the terms of the Act, "for valuable consideration"53. 49 Bropho v Western Australia (1990) 171 CLR 1 at 20 approving Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 109-110. See also New South Wales v Taylor (2001) 204 CLR 461 at 478-479 [54]; Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28 at [22]. 50 In re Windle (A Bankrupt); Ex parte Trustee of the Property of the Bankrupt v The Bankrupt [1975] 1 WLR 1628 at 1637; [1975] 3 All ER 987 at 994; Barton (1986) 161 CLR 75 at 84; cf Trust Company of Australia [2003] HCA 23 at [17]-[18], 51 In re Abbott (A Bankrupt); Ex parte Trustee of the Property v Abbott [1983] Ch 45 at 57 per Sir Robert Megarry VC. 52 In re Abbott [1983] Ch 45 at 57. 53 The Act, s 120(1). Kirby Normally, in judging the validity of a contract by way of disposition, the common law does not concern itself with the sufficiency of the consideration paid by one party to a contract to another54. However, as this Court pointed out in Barton55, in relation to the section with which we are here concerned, the Act is "social legislation". It therefore requires a degree of vigilance against the risk that even in good faith (s 120) or fraudulently (s 121), property which, for social purposes, Parliament has decided must be available to the creditors of a bankrupt, is put beyond that purpose otherwise than strictly in accordance with the enacted exemption. This is why the cases have insisted that consideration must have moved from a person who answers to the description of "purchaser" to the bankrupt and replaces the property thus purchased with "valuable consideration". Ordinarily, if still existing, such "valuable consideration" will itself be recoverable by the trustee. The existence of such valuable consideration, in any case, assures the creditors against a transaction having the purpose, or effect, of defeating their interests. Bankruptcy is a "special code" of law56. The repeated judicial statements that transactions impugned under s 120(1) of the Act are to be judged in "a commercial sense"57, do not mean that proof that a bankrupt had good commercial reasons for divesting himself or herself of property would alone bring that disposition within the exemption in s 120(1). Were that so, in many or most cases, the bankrupt would have "commercial" reasons for so acting. It remains in each case to decide whether the party who acquired part of the bankrupt's property at the critical time did so as a "purchaser" and gave "valuable consideration" for the disposition concerned58. The recipients were not "purchaser[s] … for valuable consideration" When the problem presented by this appeal is analysed in this way, I would conclude that the primary judge and Hely J were right to decide that the corporate respondents were not entitled to the exemption provided by s 120(1) of the Act. Correctly, Hely J59 approached the problem, citing and applying what 54 Barton (1986) 161 CLR 75 at 79-80 citing Midland Bank Trust Co Ltd v Green [1981] AC 513 at 528. 55 (1986) 161 CLR 75 at 86. 56 Ex parte Hillman; In re Pumfrey (1879) 10 Ch D 622 at 625 per Jessel MR. 57 Barton (1986) 161 CLR 75 at 86. 58 cf In re Pope; Ex parte Dicksee [1908] 2 KB 169 at 172. 59 (2001) 114 FCR 542 at 571 [134]. Kirby this Court said in Barton60, namely that, to fall within s 120(1), a purchaser must have "given such valuable consideration as is sufficient in all the circumstances to make him a 'buyer' in a commercial sense of the interest passing to him under the settlement". Note that this Court used the word "buyer" in Barton (whose authority was accepted by all as governing this case) as a synonym for "purchaser" as appearing in the Act. It was in that sense that the primary judge used the word "buyer" at first in analogous circumstances in Official Trustee in Bankruptcy v Trevor Newton Small Superannuation Fund Pty Ltd62. instance61 and It is extremely difficult, if not impossible, to describe the corporate respondents in this case as the "buyers" of the respective sums making up the $80,000 paid to them at the direction of the first respondent. It is true that an entitlement to a sum of money may constitute a chose in action. A bundle of currency may amount to a form of personal property and thus may, in some circumstances be sold to a "buyer". However, this would ordinarily be possible only where the sale contemplated the purchase of foreign money for a quantity of local money or, possibly, different money for a quantity of local money that was subject to a risk of devaluation or withdrawal as legal tender. None of those circumstances applied here. It is therefore artificial in the extreme to describe the disposition of property made by Spectrum at the direction of the first respondent as a settlement "in favour of a purchaser". In this context, in the ordinary use of the language, the corporate respondents could not be described as "purchasers" or "buyers" in the commercial sense of the sums of money that they so received63. With respect, the mistake of the majority in the Full Court was to overlook the importance of context and of the insertion in the Act of the word "purchaser". As "The history of the legislation suggests that the element of 'purchaser' adds something to the requirement that the disposition be for valuable consideration, as the requirement that there be a purchaser as well as 60 (1986) 161 CLR 75 at 86. 61 [2000] FCA 1777 at [14]. 62 (2001) 114 FCR 160 at 175 [40]. 63 cf Trust Company of Australia [2003] HCA 23 at [76]-[77]. 64 (2001) 114 FCR 542 at 571 [133]. Kirby valuable consideration was introduced by s 91 of the Bankruptcy Act 1869 In the task of statutory construction, it is an elementary rule that a court must give weight to anything relevant in the history of the provision and to each component part of that legislative expression in question66. The additional mistake was in failing to appreciate that the purchase in question must be of the property that is actually settled, in the sense of disposed of to the recipient from whom the relevant trustee is seeking recoupment. Here, that "property" was the money sum of $80,000 divided into three lots, or the legal entitlement to that sum. It is that fact that renders it impossible to describe the corporate respondents as "purchaser[s]" of the property. The "valuable consideration" must pass for the "settlement of property" concerned67. The majority in the Full Court mistakenly looked at the payment by direction of the first respondent and to the fact that, thereafter, he received three superannuation policies, entitling him to insurance cover and the resultant future rights and benefits68. They thereby drew the inference that there was the "valuable consideration" required by the Act. However, that analysis overlooked the necessity to show that the "valuable consideration" was for the disposition of property as such. Here, the valuable consideration in question must be for the payment to the "purchaser" of the three sums comprising the $80,000 itself69. The first respondent did not receive consideration from the corporate respondents for any "purchase" of that sum. To the contrary, any benefits that he received were the result of a subsequent transaction, namely the issue of the three superannuation policies. Such "consideration" as was given by the companies that issued those policies was given in exchange for fees and entitlements thereafter payable by the first respondent pursuant to the respective superannuation deeds. For the actual disposition of the property ($80,000) there was, as such, no "valuable consideration". The "value" of the money sum went from the first respondent and returned to him. What the corporate respondents did was to purchase the 65 Citing In re Pope; Ex parte Dicksee [1908] 2 KB 169. 66 Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28 at [8], [83], [85]. 67 The "settlement of property" contested by the appellant was the disposition of the $80,000 to the corporate respondents, rather than the issuance to the first respondent of the superannuation policies, procured by the corporate respondents. 68 (2001) 114 FCR 542 at 559 [70], 568 [111]; see joint reasons at [23]-[26]. 69 See joint reasons at [37]. Kirby profits they would make by managing the respective superannuation funds70. That this is so is shown by the fact that the money sums were quickly transmuted into the three superannuation policies in question. To the complaint that the first respondent's superannuation assets would have been unavailable to the appellant, as trustee, had his former employer not ceased to trade, resulting in his demand for the payout from his original superannuation policy, the answer is clear. In 1993, the Parliament amended the Act71 to enlarge the scope of exemptions to include the interest of a bankrupt in "a regulated superannuation fund" within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth)72. Although subsequent amendments to legislation do not necessarily control the construction of statutory language as it existed prior to the amendment73, in some cases the perceived need for a specific exemption may reinforce an impression, derived from the pre-amendment statutory provisions, that they did not go so far as the later amending provisions did74. That is the conclusion that I have reached in this case. Conclusion: the property was available to the trustee The primary judge and Hely J in the Full Court were therefore correct to conclude that the two contested elements in s 120 of the Act did not apply to exempt the disposition of property made on the direction of the first respondent from the sum of $80,000 that he disposed of within two years before the commencement of his bankruptcy. The recipients were not "purchaser[s]". No "valuable consideration" was paid for the disposition of the property as such. This conclusion is reinforced by the dictum of Dixon CJ in Tooheys Ltd v It was common ground that the sum of $80,000, invested with the corporate respondents, had accumulated to a value of about $140,000. 71 The amendments were introduced by the Superannuation Industry (Supervision) Consequential Amendments Act 1993 (Cth), s 7. 72 See the Act, s 116(2)(d)(iii)(A), as now appearing. 73 Grain Elevators Board (Vict) v Dunmunkle Corporation (1946) 73 CLR 70 at 85- 86; R v Reynhoudt (1962) 107 CLR 381 at 388; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 351. 74 Taikato v The Queen (1996) 186 CLR 454 at 471-472; Trust Company of Australia [2003] HCA 23 at [89]-[91]; cf [87], [92]. Kirby Commissioner of Stamp Duties (NSW)75, to which Hely J referred in the Full Court76: "The placing of the trust fund in the trustee's hands was no consideration for the present or future equitable interests created." like effect were Commissioner of Stamp Duties (NSW)77: the remarks of Walsh J in Tooheys Ltd v "An acceptance of a trust and an agreement to hold the trust property upon the terms of the trust and to administer it accordingly, do not constitute the giving of consideration by the trustees for the property so accepted. If it were so, every trust would have to be regarded as created for full consideration." These observations have been endorsed in this Court78 and applied elsewhere79. The benefits that accrued to the first respondent by virtue of the settlement – in the sense of the disposition of the property to the corporate respondents – which were propounded as the "valuable consideration" provided by the corporate respondents for the money or money's worth they had "purchased" flow, as Hely J noted80, not from the provision by the corporate respondents of "valuable consideration" for the acquisition of the policies in question but from the terms of the trusts on which the policies were subsequently settled. In a commercial sense, the corporate respondents were not "buyers" of the $80,000. The two requirements to attract the exemption provided in s 120(1)(a), read severally and together, did not therefore attach. If one seeks an explanation of the division of opinion in the Full Court, it can be traced, in my opinion, to the different views taken by the judges concerning the weight to be given to the essential purpose of s 120 as a means of recoupment of divested property for the benefit of a bankrupt's creditors. It is 75 (1961) 105 CLR 602 at 616. 76 (2001) 114 FCR 542 at 572 [139]. 77 [1960] SR(NSW) 539 at 548. 78 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 442 per Gibbs CJ. 79 BL & M Grollo Homes Pty Ltd v Comptroller of Stamp [1983] 1 VR 445 at 450. 80 (2001) 114 FCR 542 at 572 [141]. Kirby that purpose which this Court, in its unanimous opinion in Barton, emphasised in reaching the conclusion stated in that decision. In words that Hely J repeated in his analysis of this case81, this Court in Barton said82: "A beneficiary under a settlement is not a purchaser within the meaning of the section unless he has given such valuable consideration as is sufficient in all the circumstances to make him a 'buyer' in a commercial sense of the interest passing to him under the settlement. …. [A] 'purchaser … for valuable consideration' within the meaning of s 120(1) of the Act is one who has given consideration for his purchase 'which has a real and substantial value, and not one which is merely nominal or trivial or colourable'83". The words in this passage from Barton that I have emphasised are critical. In their application to the present case, they sustain the approach of the primary judge and of Hely J, with whose reasoning I substantially agree. Orders The appeal should be allowed. The order of the Full Court of the Federal Court of Australia should be set aside. In place of that order it should be ordered that the appeal to that Court be dismissed. The first respondent should pay the appellant's costs in this Court and in the Full Court of the Federal Court. 81 (2001) 114 FCR 542 at 571 [134]. 82 Barton (1986) 161 CLR 75 at 86 (emphasis added). 83 Citing In re Abbott [1983] Ch 45 at 57.

HIGH COURT OF AUSTRALIA APPELLANT AND SOUTHERN CROSS MINE MANAGEMENT PTY LTD & ORS RESPONDENTS Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56 7 December 2007 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation P J Dunning SC with S A McLeod and S J Williams for the appellant (instructed by Conroy & Associates) No appearance for the first and third to tenth respondents W Sofronoff QC with A M Pomerenke for the second respondent (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Foots v Southern Cross Mine Management Pty Ltd Bankruptcy – Provable debt – Costs order – Trial judge gave judgment and awarded damages in favour of second respondent against first respondent and appellant – After judgment appellant became bankrupt upon presentation of own petition – After appellant's bankruptcy trial judge made order for indemnity costs against appellant – Whether costs order was a provable debt within the meaning of s 82 of the Bankruptcy Act 1966 (Cth) – Whether costs order was a debt or liability arising from an obligation before bankruptcy – Whether costs order was a contingent liability – Whether costs order was "incidental" to a provable debt. Bankruptcy – Stay of proceedings – Whether proceedings in which costs order was sought should have been stayed pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) – Whether leave to proceed should have been granted pursuant to r 72(1) of the Uniform Civil Procedure Rules 1999 (Q). Statutes – Interpretation – Relevance of legislative history and antecedent statutes – Relevance of decision in In re British Gold Fields of West Africa Words and phrases – "contingent liability", "costs order", "incidental", "liability", "provable debt". Bankruptcy Act 1966 (Cth), ss 58(3), 82, 153. Uniform Civil Procedure Rules 1999 (Q), r 72(1). GLEESON CJ, GUMMOW, HAYNE AND CRENNAN JJ. This appeal from the Queensland Court of Appeal concerns the interrelationship between federal bankruptcy law and the civil procedure of the courts of that State. The litigation arises out of a costs order made by the Supreme Court of Queensland on 3 February 2006 in favour of the second respondent, Ensham Resources Pty Ltd ("Ensham"), against the appellant, Mr Foots. He had become bankrupt on 15 September 2005, upon his own petition. Other respondents were joined in the appeal to this Court but Ensham was the only active participant. A significant part of the argument in this Court concerned the authority to be accorded in Australia to a 19th century English decision, In re British Gold Fields of West Africa1. The English case law concerning the bankruptcy statutes as they were developed in that century is part of the context for an understanding of the modern legislation in this country, using the term "context" in the wide sense spoken of in CIC Insurance Ltd v Bankstown Football Club Ltd2. Nonetheless, this should not obscure the consideration that the appeal essentially turns upon the construction of s 82 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") in particular the identification of the debts and liabilities which are provable in bankruptcy. When s 82 is construed it is apparent that in Australia British Gold Fields does not retain the significance for which the appellant contends. Atypically, this case does not involve an attempt by a creditor to bring its claim within s 82 so as to prove in the bankruptcy of the debtor. Rather, it is the bankrupt debtor, Mr Foots, who wishes to bring a claim against himself within the statutory definition. He does so apparently for two reasons. First, if the costs order made by the Supreme Court were a debt or liability provable in his bankruptcy within the meaning of s 82, the proceedings in which the costs order was made would have been subject to s 58(3) of the Bankruptcy Act. This requires the leave of the Federal Court or Federal Magistrates Court before a creditor takes any fresh step in such a proceeding and that leave was neither sought nor given. Conversely, if the costs order did not give rise to a provable debt, the Supreme Court was free to proceed, subject only to the requirements of Queensland procedure contained in r 72 of the Uniform Civil Procedure Rules 1999 (Q) ("the UCPR"). Secondly, if the costs order did produce a provable debt or liability, then Mr Foots would be free of it upon his discharge from bankruptcy. This is because the release provided by s 153 of the Bankruptcy Act (1997) 187 CLR 384 at 408. Crennan releases a bankrupt from debts which were provable in the bankruptcy, but not otherwise. The appellant fails to attain these objectives and his appeal should be dismissed. The facts In the Supreme Court of Queensland Chesterman J heard a complex multi- party action concerning the ownership of machinery at an open-cut coal mine. There were many claims and cross-claims, but the relevant outcome was that Ensham succeeded in its cross-claim against the appellant, Mr Foots, who was formerly its Chief Executive Officer. On 26 August 2005, Chesterman J gave his reasons for judgment, and found that Mr Foots breached his fiduciary and contractual duties of good faith towards Ensham, and that he was also liable pursuant to s 75B(1) of the Trade Practices Act 1974 (Cth) for breaches of s 52 of that Act by the first respondent, Southern Cross Mine Management Pty Ltd ("Southern Cross")3. At that stage, Chesterman J did not make any orders against Mr Foots, although he did do so in respect of other unsuccessful parties. On 1 September 2005, the matter returned before Chesterman J. He gave judgment for Ensham against Southern Cross and Mr Foots, and awarded damages in the sum of $2,460,000. As noted above, on 15 September 2005 Mr Foots entered bankruptcy. Thereafter, on 3 February 2006, the matter was again listed before Chesterman J. His Honour gave detailed reasons4, and ordered that Mr Foots pay Ensham's costs on an indemnity basis of its successful counter-claim against him. It appears that the costs order has not been taxed. The legislation In this Court, Mr Foots argues that the costs order made against him was a provable debt within the meaning of s 82 of the Bankruptcy Act as it was a debt or liability arising out of an obligation incurred before his bankruptcy. That "obligation" was said to arise from the judgment against him for the money sum awarded on 1 September 2005. Alternatively, Mr Foots submitted that the phrase "all debts and liabilities" in s 82 is broad enough to encompass an obligation that 3 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] (2006) 196 FLR 419. Crennan is incidental to a provable debt, even if the incidental obligation was not a necessary concomitant in law of the provable debt. However, Mr Foots did not submit that the costs order itself was a relevant "obligation" or that it was a "contingent" liability within the meaning of s 82. The soundness of the arguments advanced in support of the appeal must ultimately be tested against the requirements of the statute itself. Section 82 introduces Div 1 of Pt VI of that Act which is headed "Proof of Debts". The section identifies those debts and liabilities which are provable and relevantly provides: "(1) Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy. (2) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy. (3B) A debt is not provable in a bankruptcy in so far as the debt consists of interest accruing, in respect of a period commencing on or after the date of the bankruptcy, on a debt that is provable in the bankruptcy. The trustee shall make an estimate of the value of a debt or liability provable in the bankruptcy which, by reason of its being subject to a contingency, or for any other reason, does not bear a certain value. (5) A person aggrieved by an estimate so made may appeal to the Court not later than 28 days after the day on which the person is notified of the estimate. If the Court finds that the value of the debt or liability cannot be fairly estimated, the debt or liability shall be deemed not to be provable in the bankruptcy. Crennan If the Court finds that the value of the debt or liability can be fairly estimated, the Court shall assess the value in such manner as it thinks proper. In this section, liability includes: compensation for work or labour done; an obligation or possible obligation to pay money or money's worth on the breach of an express or implied covenant, contract, agreement or undertaking, whether or not the breach occurs, is likely to occur or is capable of occurring, before the discharge of the bankrupt; and implied engagement, agreement or an express or undertaking, to pay, or capable of resulting in the payment of, money or money's worth, whether the payment is: in respect of amount—fixed or unliquidated; (iii) in respect of time—present or future, or certain or dependent on a contingency; or in respect of the manner of valuation—capable of being ascertained by fixed rules or only as matter of opinion." (emphasis in original) Two aspects of s 82 should be noticed at once. First, not all of the debtor's debts and liabilities are provable in bankruptcy. Notably, the classes of provable debts are narrower than those encompassed by s 553 of the Corporations Act 2001 (Cth) as regards corporate insolvency5; the most obvious omission is of claims in the nature of unliquidated damages which arise "otherwise" than by reason of a contract, promise or breach of trust (s 82(2)). It was that sub-section which was at stake in Coventry v Charter Pacific Corporation Ltd6; the Court held that a statutory claim for unliquidated damages for misleading or deceptive conduct, which induced the claimant to contract not with the bankrupt but with a third party, was not a provable debt and might be pursued after discharge. 5 The interrelationship between proof of debts in bankruptcy and in corporate insolvency was considered in Sons of Gwalia Ltd v Margaretic (2007) 81 ALJR 525 at 557-558 [158]-[161]; 232 ALR 232 at 274-275. (2005) 227 CLR 234. Crennan Section 82 limits provable debts both by subject-matter, in that they must answer the statutory descriptions, and temporally, in that they must arise before (not after) bankruptcy. At first glance, neither criterion is fulfilled in the present case: this particular costs order was incurred after bankruptcy, and the appellant was under no obligation to pay those costs beforehand. A second aspect of s 82 flows from the first. Contrary to the appellant's submissions, there is no express or implied textual support for the notion of a debt being provable if it is incidental to, or consequent upon, a debt which is itself provable. Those debts which are provable are spelled out by the section: matters falling outside those categories are not provable. With respect to the Bankruptcy Act 1869 (UK) ("the 1869 Bankruptcy Act"), a forerunner of the Australian legislation, James LJ remarked in Ex parte Llynvi Coal and Iron Co. In re Hide7: "Every possible demand, every possible claim, every possible liability, except for personal torts, is to be the subject of proof in bankruptcy, and to be ascertained either by the Court itself or with the aid of a jury. The broad purview of this Act is, that the bankrupt is to be a freed man – freed not only from debts, but from contracts, liabilities, engagements, and contingencies of every kind." That statement was repeated with approval as applicable to the Bankruptcy Act 1898 (NSW) by AH Simpson CJ in Eq in Rickard v Caldwell8. But in considering s 82 of the Bankruptcy Act the proposition respecting the "broad purview" of the legislation obscures the controlling force of the current statutory description of what is and is not provable in bankruptcy. For example, in addition to the matters dealt with in that portion of s 82 which has been set out above, s 82 also excludes from proof9 such amounts as those payable under the Higher Education Support Act 2003 (Cth) and under proceeds of crime legislation. (1871) LR 7 Ch App 28 at 31-32. (1911) 12 SR (NSW) 1 at 3-4. s 82(3AB), s 82(3A) respectively. Crennan Something now should be said respecting s 58(3) of the Bankruptcy Act. The scope and operation of that provision turns on the proper interpretation of s 82 and the concept of provable debt. Section 58(3) provides10: "Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding." Rule 72(1) of the UCPR states: "If a party to a proceeding becomes bankrupt, becomes a person with impaired capacity or dies during the proceeding, a person may take any further step in the proceeding for or against the party only if— the court gives the person leave to proceed; and the person follows the court's directions on how to proceed." It will be noticed that the provision on stay of proceedings and the requirement for leave contained in s 58(3) of the Bankruptcy Act are expressed more narrowly than the requirements contained in s 72 of the UCPR. The latter applies to any "proceeding", whereas the former only applies to proceedings "in respect of a provable debt". No party contended that the federal statute covers the field to the exclusion of the UCPR by operation of s 109 of the Constitution. The decision at first instance Chesterman J referred to ss 58(3) and 82(1) of the Bankruptcy Act, and accepted that "[t]he application for costs against Mr Foots is either a legal 10 The expression "the Court" is so defined in ss 5(1) and 27 as to identify the Federal Court and the Federal Magistrates Court. In some circumstances the Family Court exercises bankruptcy jurisdiction (s 35A). Crennan proceeding or a fresh step in a proceeding"11. That acceptance was not challenged in this Court. His Honour then framed the issue as being12: "whether an order for costs made against Mr Foots would be a debt or liability, future or contingent, to which he was subject at the date of the bankruptcy, or to which he may later become subject by reason of an obligation incurred prior to the bankruptcy." That is, the stay in s 58(3) would only operate if the order for costs were a debt or liability within the meaning of s 82(1). His Honour concluded that, notwithstanding what had been said in 1899 in British Gold Fields13, modern authority established that such an order would not be a debt or liability of that nature14. He referred in particular to Glenister v Rowe15 and Australian authorities including Fraser Property Developments Pty Ltd v Sommerfeld (No 2)16. Thus, since the costs order would not be a debt provable in Mr Foots' bankruptcy, s 58(3) of the Bankruptcy Act was no impediment to the Court making a costs order. His Honour accordingly granted leave to Ensham pursuant to r 72 of the UCPR to proceed against Mr Foots, and granted its application for indemnity costs17. The decision of the Court of Appeal By majority, the Queensland Court of Appeal dismissed the appeal by Mr Foots against the decision of Chesterman J (Jerrard and Holmes JJA, Mullins J dissenting)18. Jerrard JA noted that the trial judge's strongly adverse 11 (2006) 196 FLR 419 at 424. 12 (2006) 196 FLR 419 at 424. 14 (2006) 196 FLR 419 at 427. 16 [2005] 2 Qd R 404. 17 (2006) 196 FLR 419 at 427-428. 18 [2006] QCA 531. Crennan findings in the principal judgment delivered 26 August 2005 made it "very likely" that a costs order would be made against Mr Foots. Nonetheless, Jerrard JA observed that19: "the liability created by the costs order – and none existed until it was made – was one to which, at the date of Mr Foots' bankruptcy, he might become subject before his discharge 'by reason of' the independent exercise of a discretionary judgment based on the result in the proceedings, the fact that there were proceedings, and on Mr Foots' conduct in those. It was not a liability to which he would potentially be subjected 'by reason of' his obligation to pay $2.4 million to Ensham. That obligation had existed independently of the necessity for, and the fact of, proceedings to explain its existence to Mr Foots. I agree with the submission of Mr Sofronoff [Counsel for Ensham] that the appellant accordingly offered no explanation as a matter of legal reasoning why a post-bankruptcy debt, which is incidental to, or attached to, or associated with, a pre-bankruptcy provable debt falls within any of the words of However, in the light of the full arguments of counsel Jerrard JA turned to the 19th century and other case law. It will be necessary to return to a discussion of some of those authorities later in these reasons. After his review of the authorities, Jerrard JA acknowledged that some support for the appellant's position could be found in the reasoning or results in a number of the earlier cases. However, his Honour concluded that20: "those supports are an inadequate basis to demonstrate a long established principle that costs ordered after bankruptcy are provable if judgment in the action in respect of which the costs were incurred was given before the bankruptcy, and if the judgment debt itself is provable. That proposition cannot sit with the language of s 82(1), and there are no unequivocal and authoritative examples of its application ... Accordingly, I agree with the learned trial judge that costs, ordered against Mr Foots after his bankruptcy, would not be a provable debt in it, even though incurred in proceedings in respect of a provable debt and in which judgment had been pronounced before bankruptcy." 19 [2006] QCA 531 at [14]. 20 [2006] QCA 531 at [48]-[49]. Crennan Holmes JA agreed with Jerrard JA. Her Honour gave particular attention to the historical context in which the 19th century bankruptcy cases were decided, namely the distinctive regimes for the award of costs before and after the commencement in England of the Judicature Acts of 187321 ("the 1873 Act") and 187522 ("the 1875 Act") and the Rules of the Supreme Court made under the latter statute. These are matters to which we will return. Referring to British Gold Fields, her Honour observed that the relevant costs order in that case was made pursuant to a particular power with respect to costs conferred by s 35 of the Companies Act 1862 (UK)23 ("the 1862 Companies Act")24: "Under s 35 … those costs were at the discretion of the court which made the rectification order. Lindley MR, delivering the judgment of the Court of Appeal, does not offer any explanation of how they could constitute a present or contingent liability at the date of the winding-up, rather reciting what were described as the rules established by earlier bankruptcy cases. That recitation contains no acknowledgment of the way in which the Judicature Act 1875 and the rules made under it had changed the incidence of costs." Holmes JA remarked that the approach in British Gold Fields to costs as an "incident" of, or "attached" to, a provable debt was25: "a product of the strong influence of earlier cases, decided at a time when success did enliven a statutory entitlement to costs, so that there was little cause to distinguish between the claim and the costs of winning it. To some extent, that view still held good for jury verdicts at the time when British Gold Fields was decided, because the party who obtained the verdict retained a statutory right to costs under the Rules, subject to displacement by a contrary order. But it is not, as Jerrard JA has explained, an approach which sits well with 20th and 21st century authority, and the fundamental change, in the awarding of costs, to 21 Supreme Court of Judicature Act 1873 (UK) (36 & 37 Vict c 66). 22 Supreme Court of Judicature Act 1875 (UK) (38 & 39 Vict c 77). 23 25 & 26 Vict c 89. 24 [2006] QCA 531 at [69]. 25 [2006] QCA 531 at [74]. Crennan exercise of discretion. Nor is it readily reconciled, as he points out, with the terms of s 82(1). I do not think it should now prevail." Thus, in the absence of an order before bankruptcy, the costs awarded against Mr Foots were not a provable debt. Mullins J dissented. She was impressed by what she took to be the approach to the 19th century bankruptcy law taken by Gleeson CJ, Gummow, Hayne and Callinan JJ when construing s 82(2) in Coventry26. Mullins J concluded that the holding in British Gold Fields remained applicable in Australia, and that it was not determinative that modern costs orders are made as a matter of discretion. As her Honour put it27: "The favourable exercise of the discretion to order costs does not weaken the link between the underlying provable debt and the order for costs in those circumstances where, in accordance with British Gold Fields, the basis for the costs being a provable debt in bankruptcy is that they are incidental to the provable debt." Mullins J went on to distinguish both Glenister and Sommerfeld as instances where the costs orders were not incidental to that which would otherwise be a Mullins J therefore would have allowed the appeal "[o]n the basis that the origin and history of s 82(1) of the [Bankruptcy] Act justifies reference to the dicta in British Gold Fields including the specific rule on which the appellant relies ...."29. Since the costs order against Mr Foots was a provable debt, leave of the Federal Court or the Federal Magistrates Court had been required pursuant to s 58(3) of the Bankruptcy Act in respect of the application for costs as a "fresh step" in the action. For the reasons which follow, the views of the majority in the Queensland Court of Appeal are to be preferred. 26 (2005) 227 CLR 234. 27 [2006] QCA 531 at [98]. 28 [2006] QCA 531 at [99]-[105]. 29 [2006] QCA 531 at [106]. Crennan The nature of a costs order As already remarked, in this Court, the appellant contended, first, that his exposure to an adverse costs order was, in the terms of s 82(1) of the Bankruptcy Act, a debt or liability arising from an "obligation" incurred prior to his bankruptcy, and, secondly, that it was a liability "incidental" to a provable debt. Before considering those submissions, several general propositions regarding an award of costs should be noted. First, the award is discretionary but generally that discretion is exercised in favour of the successful party; in Queensland, this general understanding is expressed in r 689(1) of the UCPR, which states: "[c]osts of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court considers another order is more appropriate". Further, although capable of estimation, the actual monetary value of an award of costs cannot be ascertained until those costs are taxed or otherwise assessed. In Oshlack v Richmond River Council30, this Court emphasised the breadth of the power exercised in making costs orders. There the trial judge had made no order as to costs despite the Council's success, and this decision was affirmed on appeal to this Court. Gaudron and Gummow JJ rejected a submission that there was an automatic rule that costs always follow the event31: "There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the [Land and Environment] Court Act [(1979) (NSW)] that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party. If regard be had to the myriad circumstances presenting themselves in the institution and conduct of litigation, and to the varied nature of litigation, particularly in the equity jurisdiction, it will be seen that there is nothing remarkable in the above propositions." 30 (1998) 193 CLR 72. 31 (1998) 193 CLR 72 at 88 [40]-[41] (footnote omitted). Crennan Their Honours also remarked upon the power to make a costs award otherwise than on a party and party basis32: "It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a 'solicitor and client' basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part." In the Supreme Court, Chesterman J made his costs order against the present appellant not on the usual party and party basis – now known as the "standard basis" in Queensland (UCPR r 703) – but on an indemnity basis in light of Mr Foots' manifest delinquency. In this respect at least, it cannot be said that the making of the costs order in this case followed a usual, let alone automatic, practice. Other examples of departure from this usual practice readily come to mind, including the making of costs orders against successful parties33, against non-parties34, against legal representatives35, Bullock orders36, Sanderson orders37, or orders that costs be awarded out of a fund such as a trust or estate. The approach taken in this country to the award of costs may be contrasted with the "American Rule" whereby in the absence of limited statutory exceptions each party bears its own costs38. However, the most important 32 (1998) 193 CLR 72 at 89 [44] (footnotes omitted). 33 Upon the grant of special leave to appeal to this Court a condition may be imposed that the applicant pay the costs of the respondent in any event. A recent example was Attorney-General for the Northern Territory v Chaffey (2007) 81 ALJR 1388; 237 ALR 194. 34 Knight v F P Special Assets Ltd (1992) 174 CLR 178. 35 Cf UCPR r 708. 36 After Bullock v London General Omnibus Co [1907] 1 KB 264. 37 After Sanderson v Blyth Theatre Co [1903] 2 KB 533. 38 Alyeska Pipeline Service Co v Wilderness Society 421 US 240 at 247 (1975); Sole v Wyner 167 L Ed 2d 1069 (2007). Crennan contrast for present purposes is that with the pre-Judicature system in England. It is the operation of the pre-Judicature system with respect to costs which infuses, and to some extent now undermines, many of the 19th century bankruptcy cases upon which the appellant relied. The discretion to award or refuse costs in common law actions did not appear until the general provision made by r 47 of the Rules of Procedure in the Schedule to the 1873 Act. Rule 47 stated: "Subject to the provisions of this Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the Court; but nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity." In the Rules made under the 1875 Act, r 47 was re-enacted as O 55, with the addition of the following proviso: "Provided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial for good cause shown the Judge before whom such action or issue is tried or the Court shall otherwise order." The enactment of those Rules was one of the many ways in which the newly created Supreme Court followed not the "brutal simplicities"39 of the procedures of the previous common law courts, but rather the procedures of the courts of equity. Before the Judicature Acts, costs in common law actions were creatures of statute but the general rule was that they followed the event. The procedural history was outlined in Knight v F P Special Assets Ltd40 and need not be rehearsed here. However, the rule that, at law, costs followed the event had one important consequence, namely that costs came to be seen as part and parcel of the jury's verdict and the judgment of the court. Blackstone wrote41: "[t]hus much for 39 Oshlack v Richmond River Council (1998) 193 CLR 72 at 86 [34]. 40 (1992) 174 CLR 178 at 182-183. 41 Commentaries on the Laws of England, (1768), vol 3 at 399. Crennan judgments; to which costs are a necessary appendage; it being now as well the maxim of ours as of the civil law, that 'victus victori in expensis condemnandus est'". After referring to the Statute of Gloucester 1278 (Eng)42, Blackstone observed that "even now, costs for the plaintiff are always entered on the roll as increase of damages by the court"43. Therein lay the origin of the expression that sometimes appeared in the cases, namely that of costs "de incremento", being an addition to, or augmentation of, the verdict returned by the jury. The irony of the present case is that had Ensham's claim for breach of fiduciary duty against Mr Foots been brought in a pre-Judicature Act court of equity, there could have been no suggestion that the ensuing costs order was automatic, or that it was necessarily incidental to the substantive judgment. As Dawson J observed in Knight v F P Special Assets Ltd, "in equity the power to award costs formed part of the discretionary authority of the Lord Chancellor and was not derived from statute"44. That was not to say that Chancery awarded costs on an unpredictable or irregular basis. As explained in Daniell's Practice of the High Court of Chancery, the discretionary nature of the award of costs meant simply that an equity court45: "is not, like the ordinary Courts, held inflexibly to the rule of giving the costs of the suit to the successful party; but that it will, in awarding costs, take into consideration the circumstances of the particular case before it, or the situation or conduct of the parties, and exercise its discretion with reference to those points. In exercising this discretion, however, the Court does not consider the costs as a penalty or punishment; but merely as a necessary consequence of a party having created a litigation in which he has failed; and the Court is, generally, governed by certain fixed principles which it has adopted upon the subject of costs, and does not, as is frequently supposed, act upon the mere caprice of the Judge before whom the cause happens to be tried." 42 6 Edw I c 1. 43 Commentaries on the Laws of England, (1768), vol 3 at 399. 44 (1992) 174 CLR 178 at 193. See also Oshlack v Richmond River Council (1998) 193 CLR 72 at 85-86 [33] where reference is made to the pre-Judicature position respecting costs in the Courts of Admiralty and of Probate and Divorce in addition to that in Chancery. 45 5th ed (1871), vol 2 at 1239 (footnote omitted). Crennan The similarity with the modern treatment of costs applications will be readily apparent. Obligation incurred prior to bankruptcy? What, then of the appellant's first submission? This is, that his exposure to an adverse costs order arose from an "obligation" incurred prior to his bankruptcy. The submission should be rejected: no such obligation arose until the costs order was made. This conclusion is consistent both with the Australian authorities upon which Chesterman J had relied and the 20th century English authorities regarding the proof of costs in bankruptcy, particularly In re A Debtor46, In re Pitchford47 and Glenister48. Each of these authorities emphasises the distinct nature of the proof of a costs order and the proof of an underlying debt49. The most that can be said, as Mummery LJ observed in Glenister, is that "[o]nce legal proceedings have been commenced there is always a possibility or a risk that an order for costs may be made against a party"50. But that risk is not a contingent liability within the sense of s 82(1). The order for costs itself is the source of the legal liability and there is no certainty that the court in question will decide to make an order. It should be remarked that in support of his reasoning in Glenister51, Mummery LJ referred to what had been said by Kitto J in Community Development Pty Ltd v Engwirda Construction Co52 and by Tadgell J in Federal Commissioner of Taxation v Gosstray53. The first submission by the appellant should be rejected. 49 See also McLellan v Australian Stock Exchange Ltd (2005) 144 FCR 327 at 50 [2000] Ch 76 at 84. 51 [2000] Ch 76 at 83. 52 (1969) 120 CLR 455 at 459. 53 [1986] VR 876 at 878. Crennan "Incidental?" Upon like considerations, and again contrary the appellant's submissions, it cannot be said that exposure to an adverse costs order is "incidental" to liability for the underlying judgment debt54. For reasons that will be explored later in these reasons, it is highly doubtful that the text of s 82 supports the notion of "incidental" liabilities that are not themselves provable debts. However, it is sufficient for present purposes to observe that, as a factual and legal matter, costs are no longer an "incident" of either verdict or judgment. As explained above, the making of an adverse costs order turns upon discretionary considerations that arise independently of the entry of judgment against the debtor. The pre-1869 statutes As indicated earlier in these reasons, the appellant sought to meet the adverse conclusions reached so far in these reasons, by recourse to 19th century case law, in particular the decision of the English Court of Appeal in British Gold Fields55. The reasoning in that case is said to supply a foundation upon which subsequent legislation, including s 82 of the Bankruptcy Act, was based and which controls its interpretation. However, an understanding of the 19th century cases requires attention to the bankruptcy statute law in England over that period. Those statutes did indeed include explicit provision for the proof of costs orders; and provision for such orders seems to have continued as a matter of judicial accommodation even after statute no longer provided any such clear textual support. Until the bankruptcy statute of 182556 ("the 1825 Act"), no special provision was made for the proof of costs, as distinct from the proof of debts more generally. The proof of costs had been a matter of some complexity, but in 1804 the reasons of Lord Eldon LC in Ex parte Hill57 shed some light upon the subject. The actual decision in the case was that costs might not be proved where the action at law was commenced before bankruptcy but the verdict, judgment 54 Cf McCluskey v Pasminco Ltd (2002) 120 FCR 326 at 338. 56 6 Geo IV c 16, repealed in 1849 by 12 & 13 Vict c 106. 57 (1804) 11 Ves Jun 646 [32 ER 1239]. Crennan taxation of costs all occurred after bankruptcy. and the Lord Chancellor clarified two propositions. First, at law, as there was no demand for costs until judgment, costs were not provable if bankruptcy intervened before judgment was given. In this regard the Lord Chancellor approved the decision in Ex parte Todd58. Secondly, in equity, costs were not provable until they had been taxed; the taxation constituted the demand, and costs ordered before bankruptcy but taxed thereafter thus were not provable. Lord Eldon approved the decision of Lord Thurlow LC in Ex parte Sneaps59, and remarked that60: However, "I apprehend, he held that, not upon any such ground of distinction as that the costs in Equity are in the discretion of the Court, but, considering an Order of this Court analogous to a proceeding at Law, that the costs could not be proved, unless ascertained by taxation; and he seems to approve the Law, as laid down by Lord Henley in Ex parte Todd." In addition, it should be mentioned that there was authority that, at law, costs were ascertained only by the entry of the judgment itself and not by the antecedent verdict61. That state of affairs changed upon the enactment of the 1825 Act. Section 58 stated: "if any Plaintiff in any Action at Law or Suit in Equity, or Petition in Bankruptcy or Lunacy, shall have obtained any Judgment, Decree or Order against any Person who shall thereafter become Bankrupt for any Debt or Demand in respect of which such Plaintiff or Petitioner shall prove under the Commission, such Plaintiff or Petitioner shall also be 58 The case is cited in the reports of Ex parte Hill (1804) 11 Ves Jun 646 at 650 [32 ER 1239 at 1240] and Goddard v Vanderheyden (1771) 3 Wils KB 262 at 270 [95 ER 1046 at 1050]; and is recorded in Cooke, Bankrupt Laws, 7th ed (1817), vol 1 at 200, 211. 59 (1783). The case is cited in the report of Ex parte Hill (1804) 11 Ves Jun 646 at 650 [32 ER 1239 at 1240] and is recorded in Cooke, Bankrupt Laws, 7th ed (1817), vol 1 at 211-212. 60 (1804) 11 Ves Jun 646 at 650 [32 ER 1239 at 1240]. 61 The case of Walter v Sherlock is cited in the report of Ex parte Hill (1804) 11 Ves Jun 646 at 652-653 [32 ER 1239 at 1241] and is recorded in Cooke, Bankrupt Laws, 7th ed (1817), vol 1 at 200. Crennan entitled to prove for the Costs which he shall have incurred in obtaining the same, although such Costs shall not have been taxed at the Time of the Bankruptcy." This measure was re-enacted in substantially the same form in 184962, with the addition in s 181 of a provision entitling successful defendants to prove for their costs as well. Section 149 of the Act of 186163 provided that: "A Person entitled to enforce against the Bankrupt Payment of any Money, Costs, or Expenses by Process of Contempt issuing out of any Court, shall be entitled to come in as a Creditor under the Bankruptcy, and prove for the Amount payable under the Process, subject to such ascertaining of the Amount as may be properly had by Taxation or otherwise." The significance of the reference to "Process of Contempt" was that orders for costs could be enforced by writ of sequestration or writ of attachment, disobedience of which was a contempt. In each of the bankruptcy statutes of 1825, 1849 and 1861, the proof of costs could indeed be said to be "incidental" to proof of the underlying debt, albeit not in the sense for which Mr Foots contends. In each statute, the existence of two statutory provisions (one for the proof of costs and one for the proof of the underlying debt) meant that the proof of costs was not an incidental matter in the sense of being subsumed by the proof of the underlying debt. Rather, the statute made separate provision for the proof of each matter; and as between the two provisions, it could be said that the proof of costs was the incidental or subsidiary one. Thus, so long as the creditor had obtained a judgment, decree or order in its favour before bankruptcy, it was possible to prove for the costs of obtaining that judgment, decree or order even though the costs had not yet been taxed. In this way, the United Kingdom legislature recognised the differing costs regimes at law and in equity, and provided a means by which they could be treated equivalently in bankruptcy. In particular, the discretionary nature of a costs award in equity was no bar to its proof. 62 12 & 13 Vict c 106. 63 24 & 25 Vict c 134. This repealed the 1849 statute. Crennan This statutory largesse was not, however, unlimited. The proof of costs was dependent on either the debtor being under an antecedent obligation to pay costs or else upon the giving of a judgment, order or decree before bankruptcy. Thus, in Re Weller; Ex parte Weller64, where a creditor obtained judgment and a costs order against a debtor who had executed and registered a deed of composition immediately before judgment was given, the costs award was not provable because it had arisen only after bankruptcy. This was the outcome, notwithstanding that the underlying debt was plainly provable. Turner LJ, with whom Lord Cairns LJ agreed, held that "the costs were in nowise due at the date of the execution of the deed, and the creditor could not have proved for them under a bankruptcy at that date"65. The 1869 Bankruptcy Act The statutory nexus between the giving of judgment and the proof of costs was broken by the 1869 Bankruptcy Act66 which contained no separate provision for the proof of costs. This nexus has remained broken. Since 1869, a costs order is not provable merely because it is a costs order, and – unlike the earlier statutes – it is not provable merely because judgment has previously been given in the creditor's favour. Thus, since 1869, a costs order is provable only if it falls within the requirements of the section regarding proof of debts generally (now, in Australia, s 82 of the Bankruptcy Act). With presently immaterial exceptions, s 31 of the 1869 Bankruptcy Act deemed to be debts provable in bankruptcy: "all debts and liabilities, present or future, certain or contingent, to which the bankrupt is subject at the date of the order of adjudication, or to which he may become subject during the continuance of the bankruptcy by 65 (1867) 17 LT 125 at 126. In argument ((1867) 17 LT 125 at 125), Lord Cairns LJ distinguished the admission to proof in Ex parte Harding (1854) 5 De GM & G 367 [43 ER 912] of a judgment for costs entered up after bankruptcy upon a pre-bankruptcy arbitration award, saying that the award itself had given the creditor the costs. Cf the remarks of Finkelstein J in McLellan v Australian Stock Exchange Ltd (2005) 144 FCR 327 at 333. 66 32 & 33 Vict c 71. Crennan reason of any obligation incurred previously to the date of the order of adjudication ..." The provenance of s 82(1) of the present Australian legislation is readily apparent. The post-1869 English cases The judicial interpretation of s 31 of the 1869 Bankruptcy Act in the years which followed owed as much to the underlying law of procedure or to earlier practice in bankruptcy as it did to the exposition of the text of s 31. For example, in In re Duffield; Ex parte Peacock67, in the Court of Common Pleas a verdict had been found for the defendants and this carried an entitlement to costs; a composition with creditors of the plaintiff followed before judgment was signed and the costs taxed. The effect of the reasoning in Duffield was that a proof for costs in such circumstances would be allowed. Mellish LJ spoke of the debtor's obligation arising out of the verdict and not the entry of judgment. The assumption seems to have been that an obligation had sufficiently arisen at the earlier stage. The result also resembles that which would have obtained under the bankruptcy statute of 1861 where s 149 had made specific provision for subsequent taxation of costs. A contrast may be seen three years later in In re Newman; Ex parte Brooke68. There a judgment and costs order in favour of a plaintiff in an action in tort (instituted before and tried after the commencement of the Judicature system69) were not provable because the judgment for the amount of the verdict and for taxed costs was not signed until after the bankruptcy of the debtor had intervened. Mellish LJ referred to the costs sharing the same fate as the damages, "being a mere addition or appurtenance to the damages" and thus following "the same rule as that to which they are attached"70. Section 31 of the 1869 Bankruptcy Act had not altered the "old law" that damages in a tort action did not found a provable debt before judgment was signed71. The approach taken to 67 (1873) LR 8 Ch App 682. 68 (1876) 3 Ch D 494. 69 On 1 November 1875. See Daniell's Chancery Practice, 7th ed (1901), vol 1 at 1. 70 (1876) 3 Ch D 494 at 497. 71 (1876) 3 Ch D 494 at 497. Crennan costs appears to be a reprise of the recently superseded common law procedure in relation to costs. The description of costs as an "appurtenance" to an underlying provable debt may also reflect, if inadequately, the change in the statutory scheme between 1861 and 1869. In the absence of s 149 of the 1861 Act, it may have been thought that debts arising from costs orders were not provable at all unless the order related to an otherwise provable debt. The absence of any obligation to pay costs at the time of bankruptcy was also at issue in Re Bluck; Ex parte Bluck72. There, the verdict for the defendant, judgment and costs order in a tort action all ensued after the bankruptcy of the plaintiff. The proof of the untaxed costs of the defendant was expunged by Cave J on the application of the bankrupt. The creditor put a submission reminiscent of that now advanced by Mr Foots. This was that "the obligation was incurred previous to the receiving order, as the bankrupt was under the obligation to pay whatever was awarded against him in case of an adverse judgment"73. Cave J rejected that argument74: "The contention was, that this was a contingent liability to which he might become subject by reason of an obligation incurred before his discharge; but it is impossible to see what that obligation is. There had been litigation, and that too commenced by the plaintiff, but where is the obligation? If a man brings an action he does not place on himself an obligation to pay the costs, that obligation arises when judgment is given against him. I quite agree that, if the obligation is there, the amount of the costs need not have been accurately ascertained." This litigation post-dated the commencement of the costs regime provided under the Judicature system, and for the reasons explained above, by 1887 it was no longer accurate to describe the giving of judgment as imposing an obligation to pay costs independently of the making of a costs order. However, the essential reasoning in Re Bluck still stands. It explains the conclusion in Vint v Hudspith75 73 (1887) 57 LT 419 at 419-420. 74 (1887) 57 LT 419 at 420. 75 (1885) 30 Ch D 24. Lindley LJ (at 27) described the case as showing the misfortune for the plaintiff of marrying an executrix before the passing of the Married Women's Property Act 1882 (UK). Crennan that the mere possibility, at the date of bankruptcy, of an obligation to pay costs cannot found a provable debt76. British Gold Fields Speaking in 1884 of the case law, Robson's Treatise on the Law of Bankruptcy rightly observed that "[t]he proof of costs has given rise to some rather nice distinctions, and the decisions have not been uniform"77. In 1898, immediately before the decision in British Gold Fields78, the seventh edition of Williams' Law and Practice in Bankruptcy attempted to summarise the position as follows79: "a successful plaintiff's costs can only be proved in the bankruptcy of the defendant in cases where the debt or claim in respect of which the costs are recoverable is itself provable, because a plaintiff's right to costs is a mere addition or appurtenance to the claim or cause of action, and must follow the same rule as that to which they are attached. … It seems to follow that where judgment has been signed before [bankruptcy] proof may be made for the costs, even though they have not been taxed, but it is doubtful whether a mere possibility of having to pay costs is provable." The decision in British Gold Fields was itself a further attempt at summary and synthesis of the case law. There, a number of shareholders applied under s 35 of the 1862 Companies Act80. (Section 35 and its legislative successors later were considered by Fullagar J in Grant v John Grant & Sons Pty Ltd81.) The shareholders in British Gold Fields sought removal of their names from the register and repayment of the subscription moneys for their shares which they had paid by reason of misrepresentations in the prospectus. Section 35 contained its own costs regime for applications under that section. It stated that "the Court may either refuse such Application, with or without Costs, 76 See the discussion of these cases by Finkelstein J in McLellan v Australian Stock Exchange Ltd (2005) 144 FCR 327 at 331-332. 77 5th ed (1884) at 283. 79 7th ed (1898) at 117-118. 80 25 & 26 Vict c 89. 81 (1950) 82 CLR 1 at 51-52. Crennan to be paid by the Applicant" and went on to empower the Court to award against the company costs of successful applicants. Two of the applications in British Gold Fields succeeded and the costs of those applications were awarded against the company. However, the company entered winding up before any order was made upon the remaining applications. In the winding up action those applicants obtained without opposition an order for rectification. They then were permitted by the liquidator to prove for the amount paid for their shares, but the liquidator refused the proof for their costs under s 35 of the 1862 Companies Act. On an appeal from the liquidator's decision, Wright J allowed the applicants to prove for their costs, and it was against that order that the liquidator unsuccessfully appealed to the Court of Appeal. Section 10 of the 1875 Act rendered applicable in corporate insolvency the rules found in s 37 of the current bankruptcy statute, the Bankruptcy Act 1883 (UK) ("the 1883 Bankruptcy Act")82. In British Gold Fields Mr Gore-Brown for the liquidator argued that the matter was governed by Re Bluck83, and that the applicants' costs were not provable as there had been no order for those costs made before bankruptcy. He was stopped by the Court in the course of his argument84, a deceptively encouraging sign because the Court (Lindley MR, Rigby and Collins LJJ) decided against him. Lindley MR, who delivered the judgment of the Court, held that85: "If an action is brought against a person, who afterwards becomes bankrupt, for the recovery of a sum of money, and the action is successful, the costs are regarded as an addition to the sum recovered and to be provable if that is provable, but not otherwise. If, therefore, what is recovered is unliquidated damages 'arising otherwise than by reason of a contract, promise, or breach of trust,' that sum is not recoverable unless judgment, or at least a verdict for it, has been obtained before adjudication, or now the receiving order; and if the sum recovered is not provable, neither are the costs of recovering it: In re 82 46 & 47 Vict c 52. 84 So much appears from the report of the case in (1899) 80 LT 638 at 638. 85 [1899] 2 Ch 7 at 11-12. Crennan Newman86; Re Bluck87. On the other hand, if what is recovered is provable, so are the costs of recovering it: see Emma Silver Mining Co v Grant88. But if an unsuccessful action is brought by a man who becomes bankrupt, then, if he is ordered to pay the costs, or if a verdict is given against him before he becomes bankrupt, they are provable: Ex parte Peacock89. On the other hand, if no verdict is given against him and no order is made for payment of costs until after he becomes bankrupt, they are not provable. In such a case there is no provable debt to which the costs are incident, and there is no liability to pay them by reason of any obligation incurred by the bankrupt before bankruptcy; nor are they a contingent liability to which he can be said to be subject at the date of his bankruptcy. This was the case of Vint v Hudspith90." Mr Foots seized upon this decision. There have been many occasions on which British Gold Fields has been cited as authority both in cases91 and in texts92. However, the value of British Gold Fields as a determinative authority in the present case is open to doubt on a number of fronts. 86 (1876) 3 Ch D 494. 88 (1880) 17 Ch D 122. 89 (1873) LR 8 Ch App 682. 90 (1885) 30 Ch D 24. 91 In re A Debtor [1911] 2 KB 652 at 655-656; In re Pitchford [1924] 2 Ch 260 at 265-267, 269-270; Re Hedge; Ex parte Goddard (1994) 50 FCR 421 at 422-423; McCluskey v Pasminco Ltd (2002) 120 FCR 326 at 339; McLellan v Australian Stock Exchange Ltd (2005) 144 FCR 327 at 332; Sommerfeld [2005] 2 Qd R 404 92 Examples include Lewis, Australian Bankruptcy Law, 2nd ed (1934) at 130; 11th ed (1999) at 110; McDonald, Henry and Meek, Australian Bankruptcy Law & Practice, (1928) at 146; McPherson, Law of Company Liquidation, (1968) at 334; 2nd ed (1980) at 324, 335; 3rd ed (1987) at 368; 4th ed (1999) at 535-536; (Footnote continues on next page) Crennan British Gold Fields is a case whose authority stems more from repetition than from analysis. This is itself a reason for caution, but a number of more specific grounds should be noted. First, with the exception of his reference to unliquidated damages, nowhere does the Master of the Rolls relate the stated principles to the text of s 37 of the 1883 Bankruptcy Act. Notwithstanding his Lordship's avowal that the cases to which he referred were "consistent and reasonable, and quite in accordance with the language of the section"93, it is not always clear that he had at the forefront of his mind the text of the applicable statute. Few of the cases seem to have given attention to any particular statutory text as distinct from generalised and sometimes anachronistic perceptions about past bankruptcy practice. Secondly, Emma Silver Mining94 does not stand for the proposition for which it is cited; namely that "if what is recovered is provable, so are the costs of recovering it"95. Nor was there any other authority that provided plain support for the conclusion Lindley MR reached. Thirdly, to the extent that repetition is itself a source of authority, it must be realised that British Gold Fields stands for a number of propositions, and not every subsequent citation supports the proposition for which the appellant presently contends. Fourthly, repetition and lack of analysis may have had the effect of perpetuating confusing distinctions of doubtful utility. Most importantly, what difference does it make whether the creditor's costs are incidental to a provable debt or not? If it does make a difference, what justifies the drawing of such a distinction? In the decision of the Queensland Court of Appeal in Sommerfeld it is said, with respect rightly, and by reference to British Gold Fields that "[a] potential or contingent liability for costs is not a provable debt unless an order for payment of those costs has been made before bankruptcy intervenes"96. It is then observed in the same paragraph that "[t]he case is not one in which it can be said that there is a provable debt to which an order for costs is or would be incidental in the sense laid down in [British Gold Fields]". The latter comment was made in passing, but what justification was looseleaf ed at [12.320]; Williams, Law and Practice in Bankruptcy, 8th ed (1904) at 124; 19th ed (1979) at 157. 93 [1899] 2 Ch 7 at 11. 94 (1880) 17 Ch D 122. 95 British Gold Fields [1899] 2 Ch 7 at 11. 96 [2005] 2 Qd R 404 at 408. Crennan there for assuming the result would differ if the litigation concerned a provable debt? Neither British Gold Fields nor Sommerfeld offers an explanation of the distinction, nor is one apparent from the text of the current or former bankruptcy statutes. It may well be, as counsel for Ensham suggested, that British Gold Fields reached the correct result but for the wrong reasons. In that case, counsel for the shareholders had submitted that fraud had been found against the company in the two applications completed before the winding up, that it was by then clear that the remaining applications were bound to succeed when heard and that the company would have to pay the costs under s 35 of the 1862 Companies Act, and that the bankruptcy statute had nothing to do with the case97. It may have been that the costs under s 35 were admissible to proof as costs of the winding up, rather than as being appurtenant to an underlying provable debt. Such a rationale would explain the apparent discrepancy between the result in British Gold Fields and that in Re Pitchford98. In the later case, despite the fact that the underlying debt was undoubtedly provable, the costs were held not to be, as there was no order that they be paid before bankruptcy intervened and there was no suggestion that they were costs of the bankruptcy itself. Lawrence J observed that "[w]hat was decided [in British Gold Fields] was that the applicants ought to be allowed to prove for the costs incurred by them in obtaining an order in the winding up for the rectification of the register of the company, as, without such an order, their proofs could not have been admitted"99. British Gold Fields may thus be of more value as an authority upon s 35 of the 1862 Companies Act than as an application of s 37 of the 1883 Bankruptcy Act. Whatever may be the proper explanation for the result, British Gold Fields should not now be accepted as authority for a proposition which compels a construction of s 82 of the Bankruptcy Act whereby an untaxed order for costs made after bankruptcy is a provable debt. 97 [1899] 2 Ch 7 at 9. 99 [1924] 2 Ch 260 at 270. Crennan Interpreting the Bankruptcy Act Contrary to what appears to have influenced the reasoning in this case of Mullins J, what was said in the joint judgment in Coventry100 respecting the utility when construing s 82(2) of the Bankruptcy Act and s 31 of the 1869 Bankruptcy Act and its judicial interpretation does not control the present case. In Coventry relevance of legislative history and prior case law lay in the exposition of the terms of the present legislation, not otherwise101. The particular issue concerned the content of the phrase "arising otherwise than by reason of a contract"; a matter of textual exposition upon which earlier authorities were of significant assistance. However, in the present case the appellant points to statements which at best sit uneasily with the statutory text. In like vein, in Sons of Gwalia102, this Court affirmed the primacy of the statutory text, freed from what were shown to be anachronistic 19th century judicial accretions. But what of the submission that the correctness of British Gold Fields has been assumed in the enactment of s 82 of the Bankruptcy Act and its predecessor, s 81 of the Bankruptcy Act 1924 (Cth)? In R v Reynhoudt, Dixon CJ said that103: "the view that in modern legislation the repetition of a provision which has been dealt with by the courts means that a judicial interpretation has been legislatively approved is, I think, quite artificial". Notwithstanding the appellant's submissions, that artificiality is all the more apparent when the judicial exposition in question is more a gloss than an interpretation of a particular text. Of course, this Court is not permitted to "arrive at [its] own judgment as though the pages of the law reports were blank"104. In Coventry, that is why in their joint judgment, Gleeson CJ, Gummow, Hayne and Callinan JJ turned to the 100 (2005) 227 CLR 234 at 253 [50]-[51]. 101 (2005) 227 CLR 234 at 243-244 [22]. 102 (2007) 81 ALJR 525; 232 ALR 232. 103 (1962) 107 CLR 381 at 388. See also Flaherty v Girgis (1987) 162 CLR 574 at 594; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329, 351. 104 Queensland v The Commonwealth (1977) 139 CLR 585 at 599 per Gibbs J. Crennan earlier authorities to give content to, and to elucidate the meaning of, the current statute. However, to the extent that it concerns the proof of a costs order made after bankruptcy, the decision in British Gold Fields neither gives content to, nor elucidates, s 82 of the Bankruptcy Act. Rather, what was said in that case is at odds with the natural and ordinary meaning of the legislation. In that regard, it should no longer be followed in Australia. Conclusions If the distraction of British Gold Fields is resisted when construing the text of the Bankruptcy Act, and the nature of a costs order is appreciated, several difficulties lie in the path of the admission to proof of the costs order made against Mr Foots. First, the order made falls outside s 82(1) because it was made after bankruptcy, and was thus not a liability "to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy" (emphasis added). Secondly, as explained earlier in these reasons, Mr Foots was under no antecedent obligation to pay costs until the order was made against him. Thirdly, there is no scope in the text or structure of the Bankruptcy Act for the notion of an obligation or liability "incidental" to a provable debt. The necessary corollary of the appellant's argument is the admission that such an obligation is not itself a provable debt, but is only "incidental" to one. If such an obligation is not a provable debt, when then should it be admitted to proof? Dressing the notion in the language of "incidence" does not alter matters: rather, it is apt to disguise the text of the Bankruptcy Act. It may be added that once these points are grasped, it will be seen that the decision of Lord Eldon LC in Ex parte Hill is of more than mere antiquarian interest105. Then, as now, a costs order could only be admitted to proof if it fell within the ordinary terms of the statutory provision governing proof of debts generally. No special judge-made rules were applicable to the proof of costs. It is perhaps regrettable that the law has taken 203 years to return to this simple and orthodox position. Had the costs order made by Chesterman J on 3 February 2006 been made and taxed before the appellant's bankruptcy ensued, it would have been a provable debt. Even if the order had not been taxed before bankruptcy, it would nonetheless have been provable as a debt incurred "by reason of an obligation 105 (1804) 11 Ves Jun 646 [32 ER 1239]. Crennan incurred before the date of the bankruptcy"; namely the antecedent making of the costs order. However, the order was made only after bankruptcy had already intervened, and the appellant's liability to meet that order did not arise from an obligation incurred before bankruptcy. Thus, it was not a provable debt, and the stay contained in s 58(3) of the Bankruptcy Act was not engaged. His Honour was therefore entitled to make the costs order against Mr Foots. If it be thought that the result reveals a lacuna in the text or operation of the Bankruptcy Act the questions whether and if so how changes should be made are for the Parliament. Order The appeal should be dismissed with costs. Kirby KIRBY J. Both sides in this appeal agree that the issue for decision is one of statutory interpretation. Both sides accept that the essential question is the meaning and application of s 82 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"). Both sides invoke judicial authority on this and earlier provisions to support their arguments. In the end, the answer to the issue before this Court depends upon what s 82 of the Bankruptcy Act requires. I differ over the approach evident in the reasons of Gleeson CJ, Gummow, Hayne and Crennan JJ ("the joint reasons"). Respectfully, I regard their Honours' analysis as being distracted by historical considerations, interesting and marginally useful though they may be. It is one thing to say that considerations of legal history "should not obscure the consideration that the appeal essentially turns upon the construction of s 82 of [the Bankruptcy Act] in particular the identification of the debts and liabilities which are provable in bankruptcy"106. It is quite another thing to pursue a detailed journey through the same English decisions that, in my view, are only of peripheral relevance to the elucidation of the command of the Australian Parliament that governs the outcome of this appeal107. The point of distinction in my reasoning and conclusion thus turns (as earlier appeals have done) on the correct approach to the task in hand. This appeal bears many similarities to the decision of this Court in Coventry v Charter Pacific Corporation Ltd108. In that case too, I disagreed with the majority reasoning which, I thought, had strayed from a textual consideration of the Bankruptcy Act and, instead, pursued a lengthy, fascinating but ultimately indeterminate examination of non-binding 19th century English authority109. In the result, the decision has been criticised110. In the present appeal the majority's scrutiny of 19th century English authority is, if anything, even more detailed and certainly lengthier than in 106 Joint reasons at [2]. 107 The correct approach has a constitutional foundation: Central Bayside General Practice Association Ltd v Commissioner of State Revenue (Vic) (2006) 228 CLR 168 at 196 [77]-[78], 201 [96]; Cornwell v The Queen (2007) 81 ALJR 840 at 879- 880 [181]-[185]; 234 ALR 51 at 104-105. 108 (2005) 227 CLR 234. 109 (2005) 227 CLR 234 at 258-259 [76], cf at 249-253 [35]-[51]. 110 McDonald, Henry and Meek, Australian Bankruptcy Law and Practice (Darvall and Fernon eds), 5th ed (rev) (2005), vol 1 at 4076-4079 [82.2.05]. Kirby Coventry111. Misled by the way in which the parties presented their arguments, with copious references to, and analysis of, the old cases (especially the decision of the English Court of Appeal in In re British Gold Fields of West Africa112), the joint reasons depart from the proper approach which they correctly identify at their beginning113. In doing so, they fail to observe the approach which this Court has laid down as the correct one for the construction of contested Australian statutory provisions. When the right approach to elucidating s 82 of the Bankruptcy Act is adopted, it leads to a conclusion opposite to that reached in the joint reasons. In my view, the appeal succeeds. Only the construction urged by the appellant gives effect to the language, purpose, context and policy of the contested provisions of the Bankruptcy Act. None of the 19th century English decisions binds this Court or controls its outcomes. The Court should be consistent in the way it approaches problems of statutory construction. Unless the approach is consistent, the outcomes become unpredictable. The task of other courts and of those administering the relevant law then becomes needlessly difficult. The facts and legislation The facts: The background facts are explained in the joint reasons114. For the purposes of the appeal, the central facts could not have been clearer. Mr Kenneth Foots ("the appellant") became embroiled in a substantial action in the Supreme Court of Queensland in which the plaintiffs, Southern Cross Mine Management Pty Ltd ("Southern Cross") and Mr Foots and his companies, were unsuccessful. The trial judge (Chesterman J) gave judgment for Ensham Resources Pty Ltd ("Ensham") and related companies on a counterclaim against Southern Cross and Mr Foots. That judgment was entered in the sum of $2,460,000. The primary judge found that no distinction could be drawn between Mr Foots and Southern Cross. Mr Foots was Southern Cross's alter-ego. The case for Southern Cross had been expressly conducted on the basis that Mr Foots was representing that company. The primary judge found that Mr Foots's dealings with Ensham, which was his employer, were "thoroughly dishonest and that his testimony, by which he sought to secure success in the action for himself and Southern Cross, was 111 Joint reasons at [38]-[60]. 112 [1899] 2 Ch 7. See joint reasons at [2], [38], [50]-[60]. 113 Joint reasons at [2]. 114 Joint reasons at [5]-[6]. Kirby untruthful"115. Reasons supporting these conclusions were published when judgment was given by the primary judge on 26 August 2005116. At that stage, the making of final orders for costs was postponed. Still less had the recoverable costs been assessed and found. However, no one would have been in any doubt (least of all Ensham, Southern Cross and Mr Foots) that, following the strongly worded reasons for judgment of the primary judge, the unsuccessful parties (including Mr Foots) were then facing a most substantial costs order against them. In other words, Mr Foots was liable to have such an order made. Its making was inevitable. Having regard to the historical developments explained in the joint reasons117, the equitable rule governing costs has prevailed in countries deriving their legal tradition from England. It has done so including in respect of actions at common law. Such costs are therefore now discretionary. Nevertheless, the discretion concerned is a judicial one. It is not arbitrary or idiosyncratic. It is generally subject to appellate review, although typically requiring leave118. It would therefore border on the fantastic to suggest that, in light of his published conclusions, the primary judge would relieve Mr Foots and his interests entirely from a costs order. Indeed, the only practical question that remained to be determined by the primary judge was whether, in light of his expressed conclusions, he would order Mr Foots to pay Ensham's costs on a basis other than the usual liability for party and party costs. The general power of the primary judge to order the payment of costs on an indemnity basis was not contested119. Any informed person reading the primary judge's reasons in disposing of Mr Foots's action would have then known that a costs order was certain and that an indemnity costs order was very likely. 115 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd (2006) 196 FLR 419 at 422 [13]. 116 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] QCA 233 per Chesterman J. 117 Joint reasons at [33]-[34]. 118 Latoudis v Casey (1990) 170 CLR 534 at 544-545; Oshlack v Richmond River Council (1998) 193 CLR 72 at 88-89 [40]-[44], 120-123 [134]. 119 See (2006) 196 FLR 419 at 423 [14]-[15] citing Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358; Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362; Rouse v Shepherd [No 2] (1994) 35 NSWLR 277; Re Talk Finance and Insurance Services Pty Ltd [1994] 1 Qd R 558. Kirby It would therefore have come as no surprise (the considerations presented by this appeal aside) when the primary judge ordered Mr Foots to pay Ensham's costs on an indemnity basis. Indeed, as the record shows, Mr Foots was not surprised. His submissions in opposition to a costs order did not condescend to the merits of such an order, beyond the issue of his bankruptcy. His Honour remarked120: "He was the architect and chief executive of the deception practised on Ensham. The only reason advanced against the making of the order is his bankruptcy which it is said precludes the order." Following the publication of the reasons and entry of judgment by the primary judge on 26 August 2005, Mr Foots moved quickly. On 15 September 2005, on his own petition, he became bankrupt. An order to that effect was made by the Federal Court. That order was made pursuant to the Bankruptcy Act, a federal statute. Under that Act, the order immediately affected the status of Mr Foots. It did not operate merely inter partes. It operated against the world. The legislation: Two provisions in the Bankruptcy Act, and not a collection of 19th century case law, now govern the outcome of this appeal. The provisions must be examined. The terms of s 82 of the Bankruptcy Act are stated in the joint reasons121. The critical words must be interpreted in the context of the entire section and of the Act as a whole. I will not repeat the entire language of s 82. However, it is important to note the key provisions (reproduced with emphasis added): "(1) Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy. (3B) A debt is not provable in a bankruptcy in so far as the debt consists of interest accruing, in respect of a period commencing on or after the date of the bankruptcy, on a debt that is provable in the bankruptcy. 120 (2006) 196 FLR 419 at 423 [18]. 121 Joint reasons at [8]. Kirby The trustee shall make an estimate of the value of a debt or liability provable in the bankruptcy which, by reason of its being subject to a contingency, or for any other reason, does not bear a certain value. If the Court finds that the value of the debt or liability can be fairly estimated, the Court shall assess the value in such manner as it thinks proper." The provisions of s 58 of the Bankruptcy Act should also be noted. Relevantly, the section is titled "Vesting of property upon bankruptcy – general rule". It states: "(1) Subject to this Act, where a debtor becomes a bankrupt: the property of the bankrupt … vests forthwith in the Official Trustee … (3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding. The provisions of r 72 of the Uniform Civil Procedure Rules 1999 (Q) ("the UCPR") read, so far as relevant: If a party to a proceeding becomes bankrupt, … a person may take any further step in the proceeding for or against the party only if – the court gives the person leave to proceed; and the person follows the court's directions on how to proceed. If a party to a proceeding becomes bankrupt … the court may, at any stage of the proceeding, order the trustee … to be included or substituted as a party for the original party. Kirby Subrules (1) and (2) apply subject to the Bankruptcy Act 1966 (Cth)". A notable difference between the requirements for leave in the Bankruptcy Act, s 58(3) and the UCPR, r 72(1) is that s 58(3) requires the leave of the Federal Court or the Federal Magistrates Court122 whereas r 72(1) requires the leave of the State (Queensland) court123. The decisions of the Supreme Court of Queensland The primary judge: Notwithstanding the supervening bankruptcy, the provisions of the Bankruptcy Act and Mr Foots's submission to the contrary, the primary judge proceeded with the determination of the outstanding orders for costs, including those sought by Ensham against Mr Foots. As noted in the primary judge's reasons, the outstanding costs for the litigation were "likely to exceed $2,000,000"124. This was only just short of the very substantial judgment earlier ordered. Purportedly acting under the UCPR, r 72 and exercising State jurisdiction, the primary judge gave Ensham leave to proceed against Mr Foots125. The primary judge expressly rejected the argument for Mr Foots that Ensham's step, seeking to secure the costs order against him, could not be taken consistently with his supervening bankruptcy and the requirements of the Bankruptcy Act126. Specifically, the primary judge rejected Mr Foots's argument that the post-bankruptcy order for the payment of costs was a "debt" or "liability" within s 82(1) of the Bankruptcy Act, such that that "fresh step" in proceedings against a bankrupt required leave of the Federal Court or the Federal Magistrates Court pursuant to s 58(3) of the Bankruptcy Act127. In the result, the primary judge made the order that is contested in these proceedings. That order provided that Mr Foots pay Ensham "costs of and incidental to the counter-claim against him, including the costs of this application and all reserved costs, and that those costs be assessed on the indemnity basis." 122 See Bankruptcy Act, ss 5 ("the Court"), 27. 123 See UCPR, r 3. 124 (2006) 196 FLR 419 at 428 [40]. 125 (2006) 196 FLR 419 at 427-428 [36]. 126 (2006) 196 FLR 416 at 428 [40]. 127 (2006) 196 FLR 419 at 424 [20]-[21]. Kirby The costs order was entered by the Supreme Court of Queensland on 3 February 2006. At no stage does the record disclose that the leave of the Federal Court or the Federal Magistrates Court was sought, or given, before that order was made and entered. Nor does the record indicate that Mr Foots's trustee in bankruptcy was involved in any way in approving (or contesting) the making of that order. The intermediate court: By majority128, the Queensland Court of Appeal dismissed Mr Foots's appeal against the costs order. The Court upheld that order. However, Mullins J dissented. Her Honour concluded that the grant of leave under r 72 of the UCPR and the costs order made against Mr Foots should be set aside; that the application should be adjourned until Ensham obtained leave of the Federal Court or the Federal Magistrates Court under s 58(3) of the Bankruptcy Act; and that Ensham pay Mr Foots's costs of the appeal and the costs hearings before Chesterman J on 16 and 22 November 2005129. Substantially, Mullins J reached her conclusion on the basis of her understanding of the approach to the task of interpretation mandated by the reasoning of the majority of this Court in Coventry130. On that basis, her Honour acted on what she took to be the requirement of 19th century English judicial decisions concerning the status of a costs order as a provable debt in bankruptcy, most notably the decision of the English Court of Appeal in British Gold Fields131. Doubtless, for similar reasons, given the approach adopted by the majority in Coventry, the judges in the majority in the Court of Appeal also devoted a great deal of their attention to examining the same English decisions132. In my respectful opinion, this is the misfortune inflicted on Australian courts by the historical approach taken in Coventry and now repeated in this appeal. The majority reached the conclusion opposite to Mullins J. They affirmed the primary judge's costs order. Instead of the courts spending their energies examining closely the text of the applicable statutory language; elucidating its apparent purposes; and identifying the policy to which it was seeking to give effect as a contemporary law of the Australian Parliament, judges are transformed into legal historians. It 128 Jerrard and Holmes JJA; Mullins J dissenting. 129 [2006] QCA 531 at [107]. 130 [2006] QCA 531 at [83]-[92]. 131 [2006] QCA 531 at [93]-[98] citing British Gold Fields [1899] 2 Ch 7. 132 [2006] QCA 531 at [15]-[34] per Jerrard JA; [56]-[77] per Holmes JA. Kirby is a role they can only fulfil imperfectly. It is not their essential function, for which they have been prepared by their training and experience. That function is to give effect to the will of the Australian Parliament, as stated in the statutory language in which that legislature has stated its will133. That will is to be identified by techniques of legal analysis in which considerations of history play a part, but no more than a subordinate one. The correct approach to the task of construction As it seems to me, respectfully, in the present appeal the majority depart from the instruction that this Court has given concerning the way in which Australian courts should address disputed questions of statutory interpretation134. Five principles are relevant: The textual analysis principle: The correct starting point for any analysis of a problem of statutory interpretation is the language of the statute itself135. It is not a mass of past judicial authority dealing with the same or similar statutory provisions. If there has been one principle of statutory interpretation upon which this Court has spoken with general unanimity in recent years, it has been the obligation to begin the ascertainment of the applicable law by analysing the text in issue. Any other approach fails to accord proper attention to the authentic voice in which the lawmaker has expressed the governing rule. Provided the rule is constitutionally valid, it is the duty of courts to give it effect. To the extent that advocates and courts continue to address themselves to judicial remarks (often obiter dicta) in earlier cases, they run the risk of failing to perform their proper functions as the Constitution envisages within the integrated Judicature of the Commonwealth; The contextual interpretation principle: The reading of contested statutory language must take place in the context of the entire section in question, the surrounding part of the Act and other relevant provisions of 133 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518; Chang v Laidley Shire Council (2007) 81 ALJR 1598 at 1611 [59]; 237 ALR 482 at 496-497. 134 Other cases include Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194 at 226-227 [88]; Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249 at 285 [113]. 135 Combet v The Commonwealth (2005) 224 CLR 494 at 567 [135], fn 150 where the relevant authorities are collected. Kirby the statute, read as a whole136. This principle recognises the risks that can arise in giving meaning to particular words viewed in isolation from the context in which those words appear. Necessarily, words take their colour from their context. Applying judicial observations, especially those written in a different context, to words or phrases appearing in a new and different context, without careful regard to that context, risks leading the decision-maker into error. Thus, in the present instance, applying remarks written in a different country, in respect of different statutes, with purposes distinct from those of the Australian Bankruptcy Act, endangers the correct elucidation of contested words appearing in that Act; The purposive construction principle: The Court must also give effect to the ascertained purpose of the legislature when it enacted the contested law. Statutory provisions137 and common law rules in this Court138, in other courts of high authority139 and in State courts140 repeatedly lay emphasis on the need to go beyond a purely semantic approach to the discovery of statutory meaning. The reasons for these developments in the approach to statutory interpretation are many and varied. I will not repeat them here. They are well known. The challenge is to ensure that they are observed consistently and to avoid temptations to revert to discarded techniques. Those techniques include purely grammatical approaches to interpretive questions or approaches that give undue attention to considerations of decisional history; and The foreign decisional authority principle: There is a fourth principle that needs to be stated in the present case. Since the termination of Privy Council appeals from Australia, no judicial authority of England or any other country binds any court of this nation. A question (not yet finally resolved) concerning the status of Privy Council holdings in Australian appeals at the time when the Privy Council was a part of the Australian judicial hierarchy need not be considered because it does not arise in this 136 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397 following R v Brown [1996] 1 AC 543 at 561. 137 Acts Interpretation Act 1901 (Cth), s 15AA; Acts Interpretation Act 1954 (Q), s 14A. 138 Bropho v Western Australia (1990) 171 CLR 1 at 20; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384-385 [78]-[81]. 139 Fothergill v Monarch Airlines Ltd [1981] AC 251 at 272-273, 275, 280, 291. 140 Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423-425. Kirby appeal. Specifically, the decisions of English superior courts, including the House of Lords and the English Court of Appeal, enjoy no special precedential function for reasoning in this Court or any other Australian court141. Earlier observations of this Court to the contrary must now be regarded as overruled142. This is not to say that the resource of English and other judicial decisions outside Australia is ignored. Where Australian legislation has an English or other foreign provenance, it will sometimes be useful to have recourse to the decisions of overseas courts143. However, not a single one of the decisions of the English judges in the 19th century over which the primary judge, the Court of Appeal (and now the majority in this Court) have laboured, obliges this Court to come to the same conclusion when giving effect to the relevant provisions of the Australian Bankruptcy Act. That Act is a major public statute of the Parliament of the Australian Commonwealth. It is enacted under a constitutional power permitting that Parliament to make laws for this country with respect to "bankruptcy and insolvency"144. Its validity is unquestioned. Our duty to the Act is therefore clear. It is a constitutional duty. We are sworn to obey it. We should not let ourselves become distracted by excessive attention to remarks written by judges who are not, and never were, part of Australia's integrated Judicature. The federal predominance principle: An appropriately circumscribed reference to the history of English decisions, which were precursors to the contested sections of the Australian Bankruptcy Act (ss 58 and 82), could not be objected to. It is the disproportionate attention to those authorities, as if they were still effectively binding and cast a shining light on the meaning that this Court should give to applicable provisions of the contemporary Australian Bankruptcy Act, that I resist. Our attention should be focused on the provisions of that Act, a statute of our Parliament, enacted in 1966, having daily consequences for the status, entitlements and obligations of Australian bankrupts and creditors in the 141 Cook v Cook (1986) 162 CLR 376 at 389-390 per Mason, Wilson, Deane and Dawson JJ; cf Viro v The Queen (1978) 141 CLR 88 at 118-122, 151, 166. 142 See eg Commissioner of Stamp Duties (NSW) v Pearse (1953) 89 CLR 51 at 64 (PC); Skelton v Collins (1966) 115 CLR 94 at 104, 122, 133, 139; Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 341, 349; Favelle Mort Ltd v Murray (1976) 133 CLR 580 at 590-591. 143 Stingel v Clark (2006) 226 CLR 442 at 453 [17], 464 [49], 480 [113]. 144 Constitution, s 51(xvii). Kirby 21st century. It is in that text, primarily, and not in history books or in superseded English decisional law, that we will find the answer to Mr Foots's appeal. Especially is this so because that text contains, in s 58(3) of the Bankruptcy Act, provisions mandating the supervision by federal courts over the orders of State courts affecting the estates of bankrupts. In this sense, the foreign decisional authority principle defends yet another interpretive principle that must be obeyed. This is the federal predominance principle. It holds that, where there is an inconsistency between federal and State legislative provisions, it is the federal law which, under the Constitution145, must be given predominance to the extent of the inconsistency. Where possible, the legislation should be construed to avoid any inconsistency. This is done because it will be assumed that the federal and State legislative provisions have been enacted with the postulate of federal priority clearly in mind. Application of the principles to the case An intuitive reflection: Before turning to analyse the application of ss 82 and 58 of the Bankruptcy Act in the normal way, it is as well to pause and notice the apparently unrealistic outcome reached by the majority judges below. Mr Foots has incontestably entered upon his bankruptcy and his civil status thereupon changed. The financial adventure that brought him to that status was, apparently, his litigation with Ensham. At the moment that he became bankrupt, he and his creditors (including Ensham) were fully aware of the damning reasons for judgment of the primary judge. Any informed person who, at that stage, suggested that there was the slightest prospect that Mr Foots would wholly escape a costs order against him (indeed a special order by reason of the strongly adverse findings) would have been laughed out of court. In the proper exercise of the discretion to award costs in that litigation, no Australian judge could have released Mr Foots from liability for those costs. To hold otherwise would, in effect, reward delay (or attempted delay) of entry into bankruptcy. Yet the scheme of the Bankruptcy Act is designed to expedite the commencement of bankruptcy, once relevant financial exigencies exist and are demonstrated. Only this approach will protect other creditors and persons dealing with someone in the position of Mr Foots. To treat the prospective costs obligation of Mr Foots (I use a neutral expression) as outside the scheme of s 82(1) would be seriously to defeat, or certainly to wound, the operation of the Bankruptcy Act in important respects. 145 Constitution, s 109. Kirby Potentially, it would encourage delay in the commencement of the bankruptcy; reduce the control of Mr Foots's trustee over the entirety of his relevant assets, debts and liabilities as at the time of the bankruptcy; permit a creditor to pursue, outside the bankruptcy, a most substantial obligation (in this case $2 million plus); and leave that large obligation outstanding for Mr Foots to face as a personal liability after he is ultimately discharged from bankruptcy. On the face of things, this does not appear to be the way in which the Bankruptcy Act was intended to operate. That this might be so is hinted at in the joint reasons, in the closing statement that the result reached by their Honours might reveal "a lacuna in the text or operation of the Bankruptcy Act"146. However, the so-called "lacuna" is not simply an inconvenient gap in the operation of that Act. It is such an unlikely outcome that it sends the judicial mind searching for whether it is truly the result intended and provided for by the Act. Gaps and inconvenient results can sometimes arise in the course of statutory interpretation147. However, where they threaten to undermine a fundamental purpose of the legislation in question, something more than an historical chronicle is, in my opinion, needed to attribute such a purpose and consequence to the Parliament of the Commonwealth. A textual analysis: This intuitive doubt that history should lead the reader to a result so manifestly antithetical to the purposes of bankruptcy, takes one back to the language of s 82, which, rather than history, should be the commencement and focus of the legal analysis in this appeal. In defining the obligations that are "provable in … bankruptcy", s 82(1) of the Bankruptcy Act distinguishes between "debts" and "liabilities". Thus, to be provable, it is not necessary that the "obligation" should be an already established or liquidated "debt"148. Certainly, before final orders were made by the primary judge, the obligations of Mr Foots for the costs of his litigation with Ensham did not amount to a "debt" in that sense. I am unconvinced that they did not amount to a "liability". 146 Joint reasons at [68]. 147 Sons of Gwalia Ltd v Margaretic (2007) 81 ALJR 525 at 548 [103]-[104]; 232 ALR 232 at 261. 148 Even the word "debt" should not be given a narrow or technical meaning; cf Gye v McIntyre (1991) 171 CLR 609 at 619; GM & AM Pearce v RGM Australia Pty Ltd [1998] 4 VR 888 at 895; British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 at 778; [1975] 2 All ER 390 at 409. Kirby Mr Foots (and others whom he controlled) launched the litigation, relevantly, against Ensham. To Mr Foots must be attributed knowledge that embarking upon such an action entailed risks and potential liabilities. Those risks included the risk that the litigation would provoke a cross-claim that would, as happened here, succeed. If he were to lose the cross-claim, the liabilities would certainly involve costs of the litigation. It would require a very starry- eyed view of litigious realities to attribute to Mr Foots a belief that he could litigate as he did, and lose, without any personal liability as to costs. Moreover, the "liabilities" provable in Mr Foots's bankruptcy included, as the language of s 82(1) of the Bankruptcy Act made plain, "future" and "contingent" liabilities. So who could deny that, at the time immediately after the excoriating reasons for judgment were published by the primary judge, Mr Foots had a future and contingent "liability" for the costs of the litigation, notably of the cross-action? Such liability for costs lay in the "future" because the final costs orders had not then yet been made. It was "contingent" because the primary judge had not yet exercised his powers and discretion. He had not yet made his orders and entered them in the form of a constitutional "judgment" or "order"149. They had not yet been assessed and found by a registrar or agreed between the legal representatives. But to suggest that the "liability" for the costs of the proceedings did not answer to the description of a "future" and "contingent" liability is to impose altogether too narrow a meaning upon the statutory words. On the face of things, the "liability" for costs was contingently established as a future liability in existence "at the date of the bankruptcy". It simply awaited the conclusion of steps which were, in this case at least, both formal and predictable. The contextual meaning: This conclusion, based on no more than the language of s 82(1) of the Bankruptcy Act, and giving the words their ordinary grammatical meaning, is reinforced when the context of s 82(1) is appreciated by reading that sub-section within the entirety of s 82. The provision in s 82(3B) governing liability for interest accruing suggests that the sub-section was considered necessary because, otherwise, interest accruing would be a "debt" or at least a "liability", absent the provisions of sub-s (3B). "Interest accruing" would ordinarily depend on a number of post-bankruptcy contingencies. These would include the accumulating size of the debt; the variable published interest rate; and any particular provisions of the credit contract. The special treatment of accruing interest supports a meaning for "debts and liabilities" contrary to that advanced for Ensham of legally accrued and formally determined obligations. Other sub-sections of s 82 of the Bankruptcy Act tend to reinforce this view of the character of "future" or "contingent" "debts and liabilities". Thus, 149 Constitution, s 73. Kirby s 82(4) contemplates that, at the moment of the bankruptcy, the precise "value of a debt or liability" may "not bear a certain value". That, indeed, is the case here. The "value" of Mr Foots's "future" or "contingent" liability for costs was not certain at the time of his bankruptcy. However, the Bankruptcy Act resolves that uncertainty by providing practical machinery. The trustee "shall make an estimate of the value of a debt or liability" (s 82(4)). If a person is aggrieved by the trustee's estimate, that person may "appeal to the Court", meaning the Federal Court or the Federal Magistrates Court150. It is then left to the Court to find the value of the debt or liability, so long as it "can be fairly estimated": s 82(7). The Court is given a broad latitude to determine the value "as it thinks proper" (s 82(7)). Given that courts must often make estimates of future contingencies, the notion that it would be beyond the capacity of the Federal Court or the Federal Magistrates Court, absent a final determination of cost orders by the primary judge and assessment of such costs, fairly to estimate what those orders should properly be, is fanciful. In s 82(7), the Act clearly contemplates that courts may be empowered to provide just such an estimate. The provision of this power is yet another indication in the statutory context that favours a meaning of the words "future … or contingent [liabilities]" that is both practical and just, and helps to carry forward the general purposes of the Act. To the extent that an historical excursus into 19th century English authority influences a different outcome, a contemporary Australian court should give effect to the command of the Australian Parliament in preference to the dicta (many of them conflicting) of earlier English and other judges. Especially is this so because only this approach is faithful to this Court's constitutional duty. That duty is to give effect not to what English legal history provides but to what the Parliament of the Commonwealth has provided, derived from the text and context of the Act, so as to apply a comprehensive statutory measure designed to deal with the financial affairs of a bankrupt's estate in contemporary Australia. To say that the future contingent liability for costs in a case such as the present slips out of the net that the bankrupt's estate is designed to catch, is unconvincing, at least to me. It is not a result required by the text or context of s 82(1). Nor is it suggested by the purpose of the Act. To the contrary, it tends to defeat that purpose – another reason why it should not be favoured. Answering the contrary analysis: I appreciate that the Bankruptcy Act uses the words "debts and liabilities" in a legal context. The word "liabilities" is therefore open to an interpretation that ascribes to it formality and certainty, as in already accrued "debts and liabilities", binding and enforceable at law. 150 Bankruptcy Act, ss 5 "the Court", 27 and 82(5). Kirby There are dicta, although in a different legal context (company winding up) that lend some support to this approach151. Further, as the joint reasons note152, s 82 of the Bankruptcy Act does not gather in all of the bankrupt's debts and liabilities to render them provable in bankruptcy. Claims in the nature of unliquidated damages arising "otherwise" than by reason of contract, promise or breach of trust are expressly excluded under s 82(2), the issue considered in Coventry153. Yet in all truth that Act does gather in nearly all of the bankruptcy debts and liabilities. That is its very purpose and its distinctive methodology, designed to tackle the problem that bankruptcy presents to the bankrupt, creditors and society. It is only when the correct approach to construing s 82(1) is adopted that the countervailing considerations are given proper attention. First, the grammatical meaning of "liabilities" (especially in juxtaposition to "debts") is certainly not confined to "liabilities" that are legally binding and enforceable. Thus, the Macquarie Dictionary154 defines a "liability" as "1. an obligation, especially for payment; debt or pecuniary obligations (opposed to asset). 2. something disadvantageous. 3. the state or fact of being liable: liability to jury duty; liability to disease." (emphasis in original) The adjective "liable" is defined primarily as "subject, exposed, or open to something possible or likely, especially something undesirable"155. The definition "under legal obligation; responsible or answerable" is given as a secondary meaning. To the extent that non-Australian dictionaries attribute as a primary meaning "obligation under the law"156, in construing the Bankruptcy Act applicable in Australia I would prefer the primary meaning ascribed to the word in the Australian dictionary. 151 Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455 at 459 per Kitto J. 152 Joint reasons at [9]. 153 (2005) 227 CLR 234. 154 Macquarie Dictionary, 7th ed (2005) at 822. See also Chambers English Dictionary, 7th ed (1988) at 823. 155 Macquarie Dictionary, 7th ed (2005) at 823. See also Chambers English Dictionary, 7th ed (1988) at 823. 156 Encarta World English Dictionary (1999) at 1085; see also The Shorter Oxford English Dictionary, 3rd ed (rev) (1965), vol 1 at 1134. Kirby In any event, for the reasons already stated, the contextual considerations (including in s 82(1), (3B), (4) and (7)) indicate, with sufficient clarity, that something different from immediately legally enforceable and certain "liabilities" is included in the statutory provision. The precise quantum of the "liability" need not be "certain". Thus, it may be "contingent", depending on the exact terms of the order for costs and then on any assessment of costs that may be required in default of agreement on the subject. There is no analogy between an accrued liability for costs of a failed action and successful cross-action and unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust157. The reasons of policy that exclude from the assets provable in the bankruptcy liability for a personal damages judgment have no bearing on the inclusion of the already accumulated costs of failed litigation. As it seems to me, there is an inconsistency in including in the bankrupt's estate the judgment debt but not the costs accrued in the proceedings that gave rise to that very judgment. They are obviously interconnected – temporally, causally and legally. All that is required is the happening of "future events" that will make the "liability" "certain" as well as the occurrence of "contingencies" (an order and costs assessment) that would make the amount of the "liability" known or knowable. Where those events have not occurred, the Act specifically empowers the trustee and the court to remove the residual uncertainty158. It follows that, in my opinion, "liabilities" in s 82(1) of the Bankruptcy Act should be interpreted to include obligations which (although they may be contingent or may not necessarily be immediately enforceable) are judged inevitable or highly probable at the time of the bankruptcy, such that they are capable of identification by the trustee or a court as envisaged by the Bankruptcy Act. The supervision by federal courts: There is one further important contextual consideration that needs to be given weight. It is found in s 58(3)(b) of the Bankruptcy Act. Section 82(1) should be read with this provision in mind. The purpose of s 58(3) is to effect an important objective of Australian bankruptcy law. It is to do so under the supervision of federal judicial officers in a federal court. The general purposes of bankruptcy law include the protection of creditors. But they also include the protection of bankrupts. If "provable debt" in s 58(3)(b) were given a narrow meaning, the result would be to diminish, to a 157 cf joint reasons at [9]. 158 s 82(4) and (7). Kirby potentially significant degree, the protections afforded to the bankrupt by s 58(3)(a). It would limit the role of the federal courts in supervising post- bankruptcy legal proceedings against a bankrupt in a way that is difficult or impossible to reconcile with the text and the purposes of the Bankruptcy Act in this regard. When this contextual consideration is given proper weight, it affords a further reason for refraining from assigning to the words "debts and liabilities" in s 82(1) of the Bankruptcy Act a meaning that is needlessly narrow. Although s 58(3)(b) refers only to a legal proceeding "in respect of a provable debt", this must be taken to be a shorthand description of a provable "debt" or "liability", as contemplated by s 82. No other meaning of s 58(3) would work in the Act, read as a whole. The purposes of bankruptcy law: In Coventry159, I made a number of general observations concerning the purposes of the Bankruptcy Act. These too are, in my view, relevant as providing a touchstone against which the preferred interpretation of s 82(1) of that Act will be found. I said160: "Other things being equal, in default of some textual reason for reaching a contrary conclusion, it is sensible to give meaning to s 82(2) of that Act such as advances the overall purposes of bankruptcy law as there provided and avoids frustrating those purposes." I cited in Coventry161 what Gibbs CJ said of those purposes in Storey v Lane162 (I recalled that his Honour had earlier served as the Federal Judge in Bankruptcy). In Storey, Gibbs CJ said163: "An essential feature of any modern system of bankruptcy law is that provision is made for the appropriation of the assets of the debtor and their equitable distribution amongst his creditors, and for the discharge of the debtor from future liability for his existing debts. In Hill v East and 159 (2005) 227 CLR 234. 160 (2005) 227 CLR 234 at 268 [114]. 161 (2005) 227 CLR 234 at 268 [115]. 162 (1981) 147 CLR 549. 163 (1981) 147 CLR 549 at 556-557. Kirby West India Dock Co164 Earl Cairns cited with approval the following passage from the judgment of James LJ in Ex parte Walton; In re Levy165: 'Now, the bankruptcy law is a special law, having for its object the distribution of an insolvent's assets equitably amongst his creditors and persons to whom he is under liability, and, upon this cessio bonorum, to release him under certain conditions from future liability in respect of his debts and obligations.'" Large purposes, personal, civic and economic, lie behind the facility of bankruptcy and the broad language in which s 82(1) of the Act is stated. As this Court said in Gye v McIntyre166, citing the words of Parke B in Forster v Wilson167, in interpreting the set-off provisions of the Bankruptcy Act, courts should strive to avoid unfairness if at all possible and especially where the provision has as its ultimate object "to do substantial justice between the parties, where a debt is really due from the bankrupt to the debtor to his estate". Equally so, where a contemporaneous liability is really due from the bankrupt to a creditor at the time of the bankruptcy. Given such purposes, I remain of the view that I expressed in Coventry168: "[I]t is reasonable to infer that the debts and liabilities of a bankrupt provable in his or her bankruptcy would not be given a narrow meaning. If the exceptions provided for demands of a particular kind were not held in close check, the important public, as well as private, objectives of the [Bankruptcy Act] would be undermined or frustrated. So much is obvious." From the bankrupt's point of view, one consideration central to the purposes of bankruptcy is that object stated by James LJ long ago in Ex parte Llynvi Coal & Iron Co; In re Hide169, but still relevant: 164 (1884) 9 App Cas 448 at 456. 165 (1881) 17 Ch D 746 at 756. 166 (1991) 171 CLR 609 at 618; cf GM & AM Pearce [1998] 4 VR 888 at 900. 167 (1843) 12 M & W 191 at 204; 152 ER 1165 at 1171. 168 (2005) 227 CLR 234 at 269 [116]. 169 (1871) LR 7 Ch App 28 at 32 cited with approval and applied to s 82 in Official Trustee in Bankruptcy v CS & GJ Handby Pty Ltd (1989) 21 FCR 19 at 24 per Morling, Beaumont and Burchett JJ. Kirby "The broad purview of this Act is, that the bankrupt is to be a freed man – freed not only from debts, but from contracts, liabilities, engagements, and contingencies of every kind. On the other hand, all the persons from whose claims, and from liability to whom he is so freed are to come in with the other creditors and share in the distribution of the assets." I do not see in the joint reasons any sustained reflection upon the purposes of the Act. Doubtless, the view has been taken that the language is intractable and demands a narrow view of "debts and liabilities" that excludes a post- bankruptcy order for costs – even one so coincident in time, cause and persons affected as the costs order in Mr Foots's case. However, in my respectful view, this is to turn the task of statutory interpretation on its head. Although it is true that the "free man" objective is not unqualified and there are various particular exceptions170, the overall purpose of bankruptcy law remains applicable, namely to give those brought under the discipline of the Bankruptcy Act a fresh start. To the extent that the statutory language permits, this Court should endeavour to advance, and not to frustrate, the attainment of this objective. Understanding the purpose of a statute helps to cast light on the meaning of the text, just as the context does. Knowing and understanding the purpose helps to remove lingering ambiguities and uncertainties. Excluding from Mr Foots's bankrupt estate the already accumulated, substantial, shortly to be ordered and readily predictable liability for the costs of his failed litigation, undermines the achievement of a central purpose of the Bankruptcy Act as I conceive the Federal Parliament to have intended it. The priority of federal superintendence: The Bankruptcy Act also evinces a clear purpose to maintain the superiority of federal superintendence of the bankrupt's personal affairs at the time of bankruptcy, and so reposes that superintendence in the federal courts having the authority stated in s 58(3). It cannot have been intended that, in a case such as the present, the applicable federal court would effectively be excluded. If this were permitted, it would obviously break down the protection provided both to creditors and bankrupts by the supervision of a federal court, necessarily with jurisdiction applying throughout the entire Australian Commonwealth. As the joint reasons note, UCPR, r 72 covers a broader range of proceedings than does s 58(3) of the Bankruptcy Act, and no party contended that the federal statute covers the field to the exclusion of the UCPR by operation of s 109 of the Constitution171. However, to the extent that r 72, in permitting a 170 Joint reasons at [12]. 171 Joint reasons at [14]. Kirby person to "take any further step in the proceeding" once the Queensland court has given leave, is inconsistent with the requirement in s 58(3) of the Bankruptcy Act that "it is not competent for a creditor … to take any fresh step" in respect of a provable debt except with the leave of the Federal Court or the Federal Magistrates Court, the latter requirement must prevail. It follows that both constitutional principle and arguments of practical convenience favour upholding the application of s 58(3) in a case such as the present. The requirement to obtain the leave of a federal court, imposed by s 58(3) is, at least, a requirement additional to that in r 72. Because s 58(3) must be read as applying not only to provable debts but also to provable "debts and liabilities", consistently with s 82(1)172, that requirement was engaged here. It was not complied with. Approaching statutory interpretation correctly I will refrain in these reasons from undertaking a detailed examination of the judicial authority referred to in the joint reasons. It is principally concerned with long since repealed English precursors to the Australian Bankruptcy Act. Altogether too much attention has been paid to it at the price of truly concentrating on the text, context and purpose of the applicable provisions of the Bankruptcy Act. I recognise that the joint reasons, after the lengthy historical excursus, ultimately accept that the task before this Court is one requiring textual analysis173. To that extent, there is common ground between the approaches that we severally favour. However, the extensive examination of the old English cases is, in my opinion, an immaterial distraction. It reflects superseded legal thinking. It risks diverting the mind of the decision-maker. It is time that the judges of this Court put it aside. I have started with the text. I have examined the context. I have considered the purpose. I have then given effect to the will of the Parliament of the Commonwealth as expressed in the Bankruptcy Act. In saying this, I mean, of course, no disrespect to the many English judges of the 19th century who have written on problems in some respects similar to those now before this Court. I have read and considered their reasons. I accept that history can sometimes be useful in the elucidation of statutory meaning, particularly where it helps to explain a distinctive legislative history. However, history should not distract a court, such as this, from performing the material task of statutory interpretation 172 See above these reasons at [120]. 173 Joint reasons at [61]-[64]; see also [2006] QCA 531 at [74]. Kirby in the correct way. Approach tends to affect outcomes. This is, I believe, such a case. Approach is therefore critical. When the correct approach is taken, there is no gap in the Bankruptcy Act. Any ambiguity, uncertainty or gap disappears upon a reflection on the language, setting and objectives of the legislation. A sensible and practical outcome is then reached. That outcome avoids this Court once again holding that the legislation has failed to hit its obviously intended mark174. Moreover, the outcome upholds the uniquely Australian purpose of maintaining the superintendence by a federal judicial officer in a federal court with national jurisdiction of decisions seriously affecting the financial affairs and estate of an Australian bankrupt at the time of the bankruptcy. Orders The appeal should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of Queensland should be set aside with costs. In place of those orders, this Court should order that the appellant's appeal from orders 1 and 2 of the judgment of Chesterman J in the Supreme Court of Queensland of 3 February 2006 be allowed. The respondent, Ensham Resources Pty Ltd, should pay the appellant's costs of the hearings before Chesterman J on 16 and 22 November 2005. The proceedings in the Supreme Court of Queensland should be adjourned pending any leave that may be granted in that regard by the Federal Court of Australia or the Federal Magistrates Court, conformably with these reasons. 174 Diplock, "The Courts as Legislators", in Harvey (ed), The Lawyer and Justice, (1978) 263 at 274, cited in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at

HIGH COURT OF AUSTRALIA ALPHAPHARM PTY LTD APPELLANT AND H LUNDBECK A/S & ORS RESPONDENTS Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42 5 November 2014 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S C G Burley SC with C Dimitriadis for the appellant (instructed by King & Wood Mallesons) R M Niall QC with K J Howard SC for the first respondent (instructed by Corrs Chambers Westgarth Lawyers) Submitting appearance for the second to fifth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Alphapharm Pty Ltd v H Lundbeck A/S Intellectual property – Patents – Extension of term – Application to extend time for applying for extension of term of patent – Section 71(2) of Patents Act 1990 (Cth) required application for extension of term of patent to be made during term of patent and within six months after latest of three specified dates – First respondent made application for extension of term of patent during term of patent but more than six months after latest of three specified dates – Whether Commissioner of Patents had power to grant extension of time. Words and phrases − "filing, during the term of a standard patent", "prescribed action", "relevant act". Patents Act 1990 (Cth), ss 70(1), 71(2) and 223. Patents Regulations 1991 (Cth), reg 22.11(4)(b). CRENNAN, BELL AND GAGELER JJ. The issue in this appeal is whether s 223(2) of the Patents Act 1990 (Cth) ("the Act")1 conferred power upon the second respondent, the Commissioner of Patents ("the Commissioner"), to extend the time within which the first respondent, H Lundbeck A/S ("Lundbeck"), may apply under s 70 of the Act for an extension of the term of its Australian Patent No 623144 ("the Escitalopram Patent")2. The appellant ("Alphapharm") appeals from a decision of the Full Court of the Federal Court of Australia dismissing an appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal"). There were two questions before the Tribunal concerning s 223(2). The first was whether s 223(2)(a) conferred power on the Commissioner to grant an extension of time in respect of an application for an extension of term filed during the term of the patent. The second, which depended on the first question being answered "yes", was whether the Commissioner's delegate erred in exercising the discretion to grant Lundbeck an extension of time within which to make an application for an extension of the term of the Escitalopram Patent3. By its decision, the Tribunal affirmed the delegate's decision to grant Lundbeck an extension of time within which to apply for an extension of the term of the Escitalopram Patent, notwithstanding opposition to that extension of time from Alphapharm and the third to fifth respondents in this appeal4. On the grant of special leave5, the appeal was limited to the question of whether the Full Court erred in finding that s 223(2)(a) of the Act conferred power on the Commissioner to extend the time within which Lundbeck could apply under s 70(1) for an extension of the term of the Escitalopram Patent, 1 As in force at the time of the hearing before the Administrative Appeals Tribunal (13-17 August 2012). 2 That description distinguishes the Escitalopram Patent from Lundbeck's earlier Australian Patent No 509445 ("the Citalopram Patent") (described below) and conforms with the descriptions given to both in complex, related patent litigation. See Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618; H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151. 3 See Act, ss 207, 209 and 210. 4 Alphapharm Pty Ltd v H Lundbeck A/S (2011) 92 IPR 628. 5 Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCATrans 079 (11 April 2014). Crennan Bell having regard to the provisions of s 223(11) of the Act and reg 22.11(4)(b) of the Patents Regulations 1991 (Cth) ("the Regulations")6. The Commissioner filed an appearance submitting to the jurisdiction of the Court. Relevant provisions Before setting out the detail of the relevant provisions it is convenient to make two general observations. First, the statutory context is provided not only by s 223 of the Act and reg 22.11, both of which concern extensions of time, but also by Pt 3 of Ch 6 (ss 70-79A) of the Act, entitled "Extension of term of standard patents relating to pharmaceutical substances"7 ("the extension of term scheme"), which came into operation on 27 January 1999. Secondly, like all Australian patent legislation since 1903, the Act and the Regulations prescribe many time limits within which an act permitted to be done is required to be done. A measure of the complexity of some of the time limits can be gauged by the types of cases in which an extension of time has been found to be justified8. It is (and has been) commonplace for the legislature to cast many 6 As in force at the time of the hearing before the Tribunal. Both the Act and the Regulations have subsequently been amended, but not in a manner material to this appeal. Relevantly, the Regulations have been amended by the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 (No 1) (Cth). 7 The expression "pharmaceutical substance" is defined in the Act, Sched 1 – Dictionary. 8 See for example Australian Paper Manufacturers Ltd v CIL Inc (1981) 148 CLR 551; [1981] HCA 64 (extension of time for making an Australian application based on a Convention application); Lehtovaara v Acting Deputy Commissioner of Patents (1981) 39 ALR 103 (extension of time for acceptance of a standard patent); Danby Pty Ltd v Commissioner of Patents (1988) 82 ALR 491 (extension of time for lodging a notice of opposition to the grant of a patent); Kimberly-Clark Ltd v Commissioner of Patents (1988) 84 ALR 685 (affirming the width of s 160(2) of the Patents Act 1952 (Cth) but refusing an extension of time for lodging a notice of opposition to the grant of a patent). See also Kimberly-Clark Corporation v Procter & Gamble Co (1992) 24 IPR 345 (extension of time to file evidence in support of a notice of opposition); Thomas v Jiejing Pty Ltd (1994) 29 IPR 441 (extension of time for acceptance of a patent application); Re Solar-Mesh Pty Ltd and Commissioner of Patents (1995) 38 ALD 136 (extension of time for lodging a (Footnote continues on next page) Crennan Bell such time limits in mandatory terms using the word "must"9, including those prescribed in respect of an application (once a petition) for an extension of term10. However, the potential for inflexibility to occasion serious injustice is (and has been) addressed both by the general power to extend time, as in s 223 of the Act (and, before it, s 160 of the Patents Act 1952 (Cth) ("the 1952 Act")), and by specific discretionary provisions to extend times – especially those cast in permissive terms11. Regulation 22.11(4)(a) provides a handy example of the different ways of extending times: the time requirements cast in mandatory terms in regs 5.3, 5.3AA, 5.4(a), 5.8(1)(a)(i) and 5.9A can be extended under the general power to extend times in s 223(2); whereas the time requirements cast permissively for the "prescribed actions" in reg 22.11(4)(a) can be extended by the specific discretionary power in reg 5.1012. notice of opposition to the grant of a patent); Re Sanyo Electric Co Ltd and Commissioner of Patents (1996) 36 IPR 470 (extension of time for payment of renewal fee); Re Application by Foldi (1997) 38 IPR 131 (extension of time for payment of renewal fee for a patent); Bausch & Lomb Inc v Allergan Inc (1997) 39 IPR 541 (extension of time to file notice of opposition to the grant of a patent); Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften EV v Amgen Inc (1997) 40 IPR 325 (extension of time to oppose application for an extension of time to pay renewal fees). See further Oz Technology Inc v Boral Energy Ltd (1999) AIPC ¶91-480 (extension of time for filing a notice of opposition to the grant of a patent). A similar point has been made in respect of applications for extensions of time made to the European Patent Office and the United Kingdom Intellectual Property Office in Cornish, Llewelyn and Aplin, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 8th ed (2013) at 168 [4-23]. 9 For an example from the Regulations, see regs 5.3, 5.3AA, 5.4(a), 5.8(1)(a)(i) and 10 For an early example, see s 84(1) of the Patents Act 1903 (Cth) ("the 1903 Act"), considered in In re Robinson's Patent (1918) 25 CLR 116 at 137-138; [1918] HCA 11 Earlier examples include s 84(7) of the 1903 Act (as amended by the Patents Act 1921 (Cth)) and ss 59(1) and 90(1) of the 1952 Act; reg 5.10 is a more recent example. 12 Regulation 5.10 provides a power to extend a "period prescribed ... by such further period as the Commissioner reasonably allows". Crennan Bell Extension of time Section 223, headed "Extensions of time", is a provision of general application. It is found in Ch 22 (ss 212-230), and relevantly provides: "(2) Where, because of: an error or omission by the person concerned or by his or her agent or attorney; or a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act. The time allowed for doing a relevant act may be extended, whether before or after that time has expired. ... a person may, as prescribed, oppose the granting under subsection (2) ... of the application. In this section: relevant act means an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications." Section 223 resembles, without duplicating, s 160 of the 1952 Act (as amended by s 28 of the Patents Act 1960 (Cth) and s 7 of the Patents Amendment Act 1989 (Cth) ("the 1989 Act")). In particular, s 223(2) follows closely the text and structure of s 160(2), but in plain English. Regulation 22.11 is directed to the Commissioner's power to grant an extension of time under s 223. The expression "relevant act" is employed in sub-ss (1), (2), (2A), (3), (3A), (7), (9) and (11) of s 223, invariably to identify a Crennan Bell time by which a relevant act is required to be done. Regulation 22.11(4)13 isolates "prescribed actions" so as to exclude certain time requirements from the remedial power under s 223 to extend times: "For the definition of relevant act in subsection 223(11) of the Act, each of the following actions is prescribed: an action or step prescribed in Chapter 5, other than an action or step taken under regulation 5.3 or 5.3AA, paragraph 5.4(a), subparagraph 5.8(1)(a)(i) or regulation 5.9A; filing, during the term of a standard patent as required by subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent; It should be noted that the period for which an extension of time is needed may be considerable, particularly if the application is opposed. The extension of term scheme As mentioned, Pt 3 of Ch 6 contains the statutory scheme for an extension of term. Section 70 governs applications for an extension of term. Relevantly, s 70(1) permits a patentee of a standard patent to apply to the Commissioner for an extension of the term14 of a standard patent if "requirements" set out in sub-ss (2), (3) and (4) are satisfied ("a s 70(1) application"). In essence, a patentee is not permitted to make a s 70(1) application until a patent for a pharmaceutical substance is granted and regulatory approval for marketing relevant goods has been obtained. For present purposes, the most important of the cumulative requirements are that goods "containing, or consisting of" a pharmaceutical substance per se15 must be included in the Australian Register of Therapeutic Goods ("the 13 As previously noted, the Regulations, including reg 22.11(4), have been amended since the hearing before the Tribunal. 14 The determination of "the term" is governed by ss 65(a) and 67 considered together. 15 Act, s 70(2)(a) and (3)(a). Crennan Bell ARTG")16, and the first regulatory approval17 for the substance must be at least five years after the date of the patent18. Further, the term must not have been previously extended under Pt 3 of Ch 6 of the Act19. Section 71(1) prescribes the form, and s 71(2) prescribes the timing, in respect of a s 70(1) application. Section 71(2) provides: "An application for an extension of the term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates: the date the patent was granted; the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection the date of commencement of this section." The requirement that a s 70(1) application be made during the term of the patent will be referred to in these reasons as "the first time requirement". The requirement to make such an application within six months after the latest of the dates specified in s 71(2)(a), (b) and (c) will be referred to as "the second time requirement". Paragraphs (a) and (b) of s 71(2) cover the circumstance of a patentee whose patent is granted on or after 27 January 1999, who may not apply for an extension of term under s 70(1) until a patent has been granted and a regulatory approval obtained. The order in which these two conditions are satisfied may vary from patent to patent. Paragraph (c) is directed to patentees whose patent was granted and a first regulatory approval was obtained before the commencement date of Ch 6, being 27 January 1999, making the relevant date under s 71(2)(c) 26 July 1999. 16 Act, s 70(3)(a). 17 See Act, s 70(5). 18 Act, s 70(3)(b). 19 Act, s 70(4). Crennan Bell A notice must be placed in the Official Journal that a s 70(1) application has been made and that the application is open to public inspection20. The Commissioner must accept a s 70(1) application if the Commissioner "is satisfied that the requirements of sections 70 and 71 are satisfied in relation to the application"21 and, if so satisfied, publish a notice of the acceptance in the Official Journal22. Interested parties may oppose the grant of an extension of term on the ground that one or more of the requirements of ss 70 and 71 are not satisfied23. The Commissioner must grant the extension of term if there is no opposition to the grant or if, in spite of opposition, the Commissioner's decision is that an extension should be granted. In that case a notice of grant must be published in the Official Journal24. Section 77 provides for the calculation of any extension of term by reference to the period between the date of the patent and the earliest first regulatory approval date, reduced by five years, so long as that does not result in a figure below zero25. However long the period of regulatory delay, the maximum extension of term permitted is five years26. The Commissioner may not grant an extension of term if "relevant proceedings in relation to the patent are pending"27. It is important to note that the interests of persons who may be affected by an extension of term are protected. A competitor who exploits a pharmaceutical substance during the term of a patent (including an extended term) for "purposes connected with obtaining the inclusion in the [ARTG] of goods" (colloquially, "springboarding") will not, subject to the satisfaction of various conditions, 20 Act, s 72. 21 Act, s 74(1). 22 Act, s 74(2)(b). 23 Act, s 75. 24 Act, s 76. 25 Act, s 77(1). 26 Act, s 77(2). 27 Act, s 79A. Crennan Bell infringe the patentee's exclusive rights28. A patentee is protected against the circumstance that an extension of term is granted after a patent term has expired29. Regulations 6.8 to 6.11 are directed to the Commissioner's power to extend the term of certain patents under Pt 3 of Ch 6 of the Act and prescribe the "information" and documents which must "accompany" a s 70(1) application (that is, which must be "filed" with the s 70(1) application)30. The issue The issue mentioned at the outset of these reasons comes down to competing constructions of reg 22.11(4)(b). Does reg 22.11(4)(b) exclude from s 223(2)(a) both of the time requirements in s 71(2) (Alphapharm's construction), or only the first time requirement – that an application for an extension of term must be made "during the term of the patent" (Lundbeck's construction)? There was no dispute that the regulation excludes the first time requirement from s 223(2)(a). These reasons will show that Lundbeck's construction is correct and that the appeal should be dismissed. Notwithstanding an awkwardness in its reasoning, the Full Court was correct to conclude that the Commissioner has power under s 223(2) to extend the time requirement calculated by reference to s 71(2)(a), (b) and (c). The background facts A little more needs to be said about the Escitalopram Patent. Lundbeck, a Danish pharmaceutical company, applied for the Escitalopram Patent31 on 13 June 1989 (the expiry date of which became 13 June 200932), for an invention 28 Act, s 119A, which came into operation on 25 October 2006 pursuant to the Intellectual Property Laws Amendment Act 2006 (Cth). Section 119A's narrower predecessor provision, s 78(2), continues to apply to any exploitation of patents that occurred prior to the commencement of s 119A. 29 Act, s 79. 30 See, for example, regs 6.8 and 6.11(5). 31 As a Convention application; see Act, Ch 8, Pt 2. 32 Pursuant to the operation of s 4 of the Patents (World Trade Organization Amendments) Act 1994 (Cth) ("the 1994 Act"), amending s 67 of the Act. (Footnote continues on next page) Crennan Bell entitled "(+)-Enantiomer of citalopram and process for the preparation thereof". There are six claims – claims 1 to 5 are product claims and claim 6 is a method claim, which, for present purposes, can be put to one side33. Claim 1 claims a compound (an enantiomer) known as "(+)-citalopram" and its non-toxic acid addition salts, and claims 3 and 5 claim a pharmaceutical composition comprising, as an active ingredient, that compound. The pharmaceutical substance disclosed in the complete specification, (+)-citalopram, is used to treat depression34. Citalopram, a racemate, also an invention of Lundbeck's, is the subject of the Citalopram Patent, dated January 1977 (the term of which was originally 16 years from that date35). A racemate, or racemic mixture, comprises two enantiomers in equal measure. Enantiomers are non-superimposable mirror images of each other and are designated (+) or (-) based on how they rotate polarised light. On 9 December 1997, Lundbeck's local subsidiary successfully obtained the inclusion of a pharmaceutical product called CIPRAMIL in the ARTG based on the Citalopram Patent. CIPRAMIL comprises two enantiomers: (+)-citalopram; and 16 September 2003, Lundbeck's local subsidiary successfully obtained the inclusion in the ARTG of a second pharmaceutical product, LEXAPRO, based on the Escitalopram Patent, which consisted of (+)-citalopram. In the complete specification of the Escitalopram Patent, it was explained that the isolated image enantiomer (-)-citalopram. the mirror Section 67 provides: "The term of a standard patent is 20 years from the date of the patent." The "date of the patent", in this case, is the date of filing of the relevant complete specification (s 65(a)). 33 Relevantly, the extension of term scheme under the Act covers standard patents for pharmaceutical substances per se pursuant to s 70(2)(a), hence patents for pharmaceutical methods or tablets do not fall within the scheme. It can be noted that pharmaceutical substances produced by a process that involves the use of recombinant DNA technology, the subject matter of s 70(2)(b), are not relevant to this case. 34 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618 at 625-627 [2]-[10]. 35 As explained below, until 1995, the term of a patent was 16 years and the increase of the term from 16 to 20 years occurred as a result of Australia's membership of the World Trade Organization and obligations under Art 33 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is Annex 1C to the Marrakesh Agreement establishing the World Trade Organization [1995] ATS 8, which entered into force in Australia and generally on 1 January 1995. Crennan Bell enantiomer (+)-citalopram is "therapeutically more active" and "more than 100 times more effective" in treating depression than the racemate36. Lundbeck's first application to extend the term On 22 December 2003 (thus, "during the term"), Lundbeck made a s 70(1) application for an extension of the term of the Escitalopram Patent based on the inclusion of LEXAPRO in the ARTG three months earlier, on 16 September 2003 (which appeared to conform with the time limit in s 71(2)(b), set out above). Any application to extend the term of the Escitalopram Patent based on the earlier inclusion of CIPRAMIL in the ARTG was required to be made by 26 July 1999 so as to conform with the time limit in s 71(2)(c), also set out above. On 27 May 2004, the Commissioner granted the extension of term sought, based on the inclusion of LEXAPRO in the ARTG. Pursuant to s 77, the term was extended by five years to 13 June 2014 and an entry was made in the Register of Patents37 ("the Register") to that effect. On 7 July 2005, Alphapharm notified the Commissioner of the earlier inclusion of CIPRAMIL in the ARTG. On 13 July 2005, the Commissioner determined that Lundbeck's application to extend the term of the Escitalopram Patent should have been based upon the inclusion of CIPRAMIL, not LEXAPRO, in the ARTG. This had the effect (when s 77 was applied) of reducing the extension of the term of the Escitalopram Patent from 13 June 2014 to 9 December 2012. Alphapharm's proceedings for revocation One day earlier, on 6 July 2005, Alphapharm commenced proceedings in the Federal Court of Australia seeking revocation of the Escitalopram Patent38 or, alternatively, rectification39 of the Register by removal of the entry recording the extension of term (the latter on the basis that Lundbeck's application for the 36 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618 at 625 [5], 648 [110]. 37 Act, s 186. 38 Pursuant to s 138 of the Act. 39 Pursuant to s 192 of the Act. Crennan Bell extension of term had been incorrectly founded upon the inclusion of LEXAPRO in the ARTG, as opposed to CIPRAMIL)40. The revocation proceedings initiated by Alphapharm included a sustained attack on the validity of the Escitalopram Patent, including attacks based on want of novelty and obviousness, citing as prior art the Citalopram Patent41. Lundbeck established the validity of claims 1, 3 and 5 of the Escitalopram Patent, which is important in the context of infringement42. Relevantly, on 24 April 2008, as part of those proceedings, the primary judge (Lindgren J) held that Lundbeck's application to extend the term of the Escitalopram Patent should have been based upon the inclusion of CIPRAMIL in the ARTG. The essential reason was that the racemate "contained" the pharmaceutical substance disclosed The consequence was not merely that the term of the extension should be shorter (as the Commissioner's delegate had found), but rather that the Register needed to be rectified by removing the record of extension of term of the Escitalopram Patent as being void ab initio44. Lundbeck's subsequent appeal to a Full Court of the Federal Court on that point was dismissed45, with final orders made on 12 June 2009. A subsequent application for special leave to appeal to this Court by Lundbeck was dismissed on 11 December 200946. Lundbeck's second application to extend the term Meanwhile, on 12 June 2009, after final orders had been made by the Full Court, and one day before the 20 year term of the Escitalopram Patent was due to expire47, Lundbeck made a second s 70(1) application to the Commissioner to 40 A full account of these and related proceedings can be found in Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618. 41 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618 at 627 [11]. 42 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618 at 739 [660], 746 [697]. 43 Act, s 70(3)(a). 44 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618 at 718 [544]. 45 H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151. 46 Alphapharm Pty Ltd v H Lundbeck A/S [2009] HCATrans 324. 47 In accordance with ss 65 and 67 of the Act. Crennan Bell extend the term of the Escitalopram Patent, this time based upon the inclusion of CIPRAMIL in the ARTG, coupled with an application under s 223(2) for an extension of time as required. Following the expiration of the 20 year term of the Escitalopram Patent (13 June 2009), Alphapharm and the third to fifth respondents launched generic pharmaceutical products containing (+)-citalopram, the pharmaceutical substance disclosed in the complete specification. On 9 February 2010, the Commissioner amended the Register by removing the entry relating to the extension of term until 9 December 2012. Consideration of the background facts shows: (1) Lundbeck experienced a relevant regulatory delay based on CIPRAMIL of nearly eight and a half years48; (2) the Federal Court litigation occupied the last four years of the term of the Escitalopram Patent, as extended by the 1994 Act; and (3) the extension of time sought by Lundbeck is from 26 July 1999 to 12 June 2009, being the date ("during the term") on which the second s 70(1) application was made. The upshot is that if the extension of term sought is granted (which depends significantly on the grant of an extension of time), infringers will, subject to any defences, be liable for damages for infringement from 13 June 2009 until 9 December 2012 in respect of any sales of products containing the pharmaceutical substance disclosed in the Escitalopram Patent. Without objection, this Court was informed, on the oral hearing, that Alphapharm is exercising its rights to oppose the grant of an extension of term to Lundbeck49. The proceedings Alphapharm and the third to fifth respondents opposed Lundbeck's application for the grant of an extension of time in respect of Lundbeck's second s 70(1) application50. These four oppositions were heard by a delegate of the Commissioner, and on 1 June 2011 the delegate granted Lundbeck the extension of time sought51. That decision was then appealed to the Tribunal. 48 From 13 June 1989 to 9 December 1997. 49 As it was permitted to do under s 75 of the Act. 50 Act, s 223(6). 51 Alphapharm Pty Ltd v H Lundbeck A/S (2011) 92 IPR 628. Crennan Bell Tribunal decision On 4 December 2012, the Tribunal affirmed the decision of the Commissioner's delegate to grant the extension of time sought. The Tribunal construed reg 22.11(4)(b) as identifying the first of the two time requirements in s 71(2) – that is, "filing" an application for an extension of term "during the term of the patent". The Tribunal described Lundbeck's submission, which it accepted52: "Lundbeck submits that the second time requirement that an application be filed within 6 months of the latest of the dates in s 71(2)(a)-(c) is not excluded by the definition in the regulation and is a relevant act in respect of which time can be extended. This time requirement in which to seek an extension of term is therefore capable of being extended. It is the requirement that an application for the extension of term must be made during the term of the patent that is not capable of extension." (emphasis in original) This led to the conclusion that since reg 22.11(4)(b), in its terms, operates only on the first time requirement referred to in s 71(2), the regulation does not preclude the grant of an extension of time from the due date (26 July 1999) to the later date sought (12 June 2009)53. As will be explained, that reasoning is correct. Full Court On 18 November 2013, the Full Court (Jessup, Jagot and Yates JJ) dismissed an appeal from the Tribunal brought pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth)54. In the Full Court, Yates J (with whom Jessup J and Jagot J agreed) said55: "Properly understood, reg 22.11(4)(b) distinguishes between separate actions and prescribes one, not the other. The result is that the action of 52 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648 at 53 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648 at 54 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508. 55 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 520-521 [51]. Crennan Bell filing the application under s 70(1) during the term of the patent is prescribed and cannot, therefore, be a relevant act to which s 223(2) refers. On the other hand, the action of filing the application within six months of the applicable date is not prescribed and is taken to be a relevant act to which s 223(2) can respond." An awkwardness appears in that reasoning in the first sentence, in describing the two time requirements as "separate actions" – especially as the whole of the paragraph in which this passage can be found indicates that the expression "separate actions" operates as a trope for separate time requirements. Once that is recognised, the reasoning is not relevantly different from that of the Tribunal. The awkwardness reflects the drafting of s 223(11) and reg 22.11(4), which exclude time requirements from the general remedial power to extend time under s 223(2)(a) by excluding "prescribed actions" from "relevant acts" covered by s 223(2)(a). Arguments The parties did not contest the established principle of statutory construction that, while it may be useful to read regulations together with the statute under which they were made in order to understand a legislative scheme, it is not legitimate to construe a statute by reference to the wording of regulations made under it56. Further, in conformity with the approach to statutory construction explained most recently by this Court, the parties' primary arguments were directed to the text of the relevant provisions57. However, both parties went on to draw support for their arguments on the meaning of the text of reg 22.11(4)(b) from the wider context58 – the legislative history, extrinsic 56 Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101 at 109-110 [19] per Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ; [2008] HCA 38. See also Hunter Resources Ltd v Melville (1988) 164 CLR 234 at 244 per Mason CJ and Gaudron J; [1988] HCA 5; Webster v McIntosh (1980) 32 ALR 603 at 606 per Brennan J. Section 228, in a familiar form, provides for the making of regulations not inconsistent with the Act. 57 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; [2012] HCA 55. 58 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ; [1997] HCA 2; Project Blue Sky (Footnote continues on next page) Crennan Bell materials and changes in legislative direction – as indicative of the general purpose and policy of the Act. Alphapharm Alphapharm submitted that the power of the Commissioner to extend time under the general remedial provision, s 223, was "specifically excluded" by reg 22.11(4)(b) in respect of a s 70(1) application. That argument was underpinned by the major premise that the correct construction of s 223(2) and (11) and reg 22.11(4)(b) required: first, an identification of a "relevant act" (or "action"); and, second, a determination of whether that "relevant act" (or "action") is "prescribed" under the regulation. The minor premise was that the "relevant act" (or "action") permitted by s 70(1) in relation to a patent was "filing an application to extend the term" of the patent. It was a short step then to a conclusion that reg 22.11(4)(b) was directed, in terms, to the single action of "filing" and, in particular, to contend that the words "as required by subsection 71(2) of the Act" (as they occurred in reg 22.11(4)(b)) comprehended both the first and second time requirements in s 71(2). Alphapharm relied on the awkwardness in the Full Court's reasons referred to above as demonstrative of error. Lundbeck Lundbeck submitted that s 71(2) involved two separate and independent time requirements and that reg 22.11(4)(b) should not be applied as if s 71(2) were concerned with a single time requirement. Lundbeck also relied on the different purposes of the first and second time requirements. The first was directed to the expiration of the term of the patent, and the second, it was said, was directed to delay in obtaining regulatory approval. The first time requirement was said to reflect an aspect of the law concerning extensions of time in extension of term applications (once petitions), which had subsisted since 190359. In contrast, the second time requirement was new and reflected the novel aspects of the extension of term scheme, in which delay in obtaining regulatory approval functions as a proxy for inadequate remuneration, which once needed to be proven. Emphasis was laid on the text of the regulation as limited, in terms, to the first time requirement. This was said expressly, alternatively implicitly, to not exclude the second time requirement from s 223(2)(a). Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 [78] per McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 28. 59 Apart from the lull in extension of term schemes between 1 July 1995 and 27 January 1999, discussed below. Crennan Bell The pre-existing law The pre-existing law and the legislative history should not deflect the Court from its duty to resolve an issue of statutory construction, which is a text-based activity60. However, both parties recognised that the task of statutory construction in this case required some appreciation of the pre-existing law and the legislative history of relevant provisions. Undoubtedly, questions of policy can inform the Court's task of statutory construction61. Long historical developments in the United Kingdom concerning extensions of term for patents were reflected in the 1903 Act62 and the 1952 Act63. These included developments in the curial jurisdiction to extend the time for presenting a petition to extend the term of a patent after the term had expired64. 60 See Northern Territory v Collins (2008) 235 CLR 619 at 623 [16] per Gummow ACJ and Kirby J; [2008] HCA 49. See also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]. 61 See Thomas v Mowbray (2007) 233 CLR 307 at 348-351 [80]-[93] per Gummow and Crennan JJ; [2007] HCA 33. See also Zheng v Cai (2009) 239 CLR 446 at 453 [18], 455-456 [28]; [2009] HCA 52; Assistant Commissioner Condon v Pompano Pty Ltd (2013) 87 ALJR 458 at 467 [23]-[24] per French CJ; 295 ALR 638 at 646; [2013] HCA 7. 62 Division 5 of Pt IV (s 84), entitled "Extensions of Patents". 63 Part IX (ss 90-96), entitled "Extension of Patents". 64 See Robinson's Patent (1918) 25 CLR 116 at 135-139; Sanofi v Parke Davis Pty Ltd [No 2] (1983) 152 CLR 1 at 14-15 per Mason ACJ, Wilson and Dawson JJ; [1983] HCA 32. See also Parke Davis Pty Ltd v Sanofi (1982) 43 ALR 487 at 503- Crennan Bell The extension of term regimes considered in In re Robinson's Patent 65 and Sanofi v Parke Davis Pty Ltd [No 2]66 (under the 1903 Act67 and the 1952 Act68 respectively) permitted an extension of term in respect of standard patents, covering any subject matter, on the grounds of inadequate remuneration (or, after 192169, on the grounds of war loss). Each regime contained a statutory time requirement, within which a petition to extend the patent term was required to be brought. In Robinson's Patent, Isaacs J found that, notwithstanding the mandatory language of the 1903 Act's statutory time requirement, the time could be extended because subsequent wartime legislation and regulations gave the Solicitor-General a general power to extend time for "doing any act under the [1903 Act]"70. Decades later, a majority in Sanofi (Mason ACJ, Wilson and Dawson JJ) rejected an argument that the statutory time requirement under the 1952 Act precluded the grant of an extension of time to bring a petition for an extension of term after the expiration of the term. In their joint judgment, their Honours 65 (1918) 25 CLR 116 at 137. 66 (1983) 152 CLR 1 at 14-16 per Mason ACJ, Wilson and Dawson JJ. 67 Section 84(1) of the 1903 Act relevantly provided: "A patentee may ... present a petition ... praying that his patent may be extended for a further term, but such petition must be presented at least six months before the time limited for the expiration of the patent." (emphasis added) 68 Section s 90(1) of the 1952 Act relevantly provided: "A patentee ... may ... present to a prescribed court, at least 6 months before the expiration of the term of the patent, or within such further period as a prescribed court allows, a petition praying that his patent be extended for a further term." 69 See s 84(6) of the 1903 Act (as amended by s 4 of the Patents Act 1921 (Cth)); s 95 of the 1952 Act. 70 Robinson's Patent (1918) 25 CLR 116 at 135. Crennan Bell observed that a consistent Australian practice, for over 80 years71, to permit a petition for an extension of term to be presented after the term of a patent expired was not inimical to the purposes of extension of term legislation. The purposes identified were to balance the interests of an inadequately remunerated inventor against the public interest in unrestricted use of the invention after expiration of the monopoly (that is, the term)72. To the extent that permitting an application to be made after the term of a patent had expired might prejudice a competitor, the court had jurisdiction under the 1903 Act and the 1952 Act to resolve the problem by imposing conditions on any grant of an extension of term or re-grant73. Because of the way in which the balance was struck under the extension of term regimes in the 1903 Act and the 1952 Act, patentees bore a heavy onus, as inadequate remuneration alone was not necessarily sufficient to warrant an extension74. All the circumstances of the case were relevant, including the nature and merits of an invention in relation to the public. Extensions of term were rare (at least until the 1970s) and proceedings for extensions of term (particularly if the patentee sought an "exceptional" term75) were complex and expensive76. As a 71 Derived from Robinson's Patent and Isaacs J's construction of the legislative scheme in the 1903 Act. 72 Sanofi (1983) 152 CLR 1 at 15-16. 73 Sanofi (1983) 152 CLR 1 at 15-16 per Mason ACJ, Wilson and Dawson JJ. See, generally, Ex parte Celotex Corporation; In re Shaw's Patents (1937) 57 CLR 19; [1937] HCA 31; Gillette Industries Ltd v Commissioner of Patents (1943) 67 CLR 529; [1943] HCA 25. See also In re Usines de Melle's Patent (1954) 91 CLR 42 at 50-51; [1954] HCA 32. 74 See, for example, In re Dunlop's Patent (1922) 31 CLR 579 at 580-581; [1922] HCA 43; Re NV Philips Gloeilampenfabrieken's Patent [No 2] (1967) 121 CLR 83 at 96-98; [1967] HCA 53. 75 Exemplified by E I Du Pont De Nemours v Commissioner of Patents (No 3) (1989) 15 IPR 296 at 311. 76 See, for example, Re Imperial Chemical Industries Ltd's Patent Extension Petitions [1983] 1 VR 1 (decided in 1979); Re Henri Vidal's Patent Extension Petition [1983] 1 VR 16; Re Sanofi's Patent Extension Petition [1983] 1 VR 25; Re Application of Eli Lilly and Co [1982] 1 NSWLR 526; Re Application of Merck & Co Inc [1983] 2 NSWLR 645. See, generally, Lawson, "How are pharmaceutical patent term extensions justified? Australia's evolving scheme", (2013) 21 Journal of Law and Medicine 379 at 385-386. Crennan Bell result, extensions of term (and the need to balance the competing interests of patentees and the public (including competitors)) became the subject of sustained policy debates in Australia (and elsewhere) for some 20 years before the extension of term scheme relevant to this appeal came into operation on 27 January 1999. The extension of term scheme for pharmaceuticals is simplified by comparison with the pre-existing law. As observed succinctly and correctly by senior counsel for Alphapharm, regulatory delay is now the proxy for inadequate remuneration and merit is now assumed for a pharmaceutical substance suitable for human use. Once the Commissioner is satisfied that the conditions in s 70 and the procedural time requirements in s 71 have been met (subject to opposition), the Commissioner can directly proceed to consider the date of the patent and the date of the first regulatory approval and apply s 77 to calculate an extension of term. The legislative history When first enacted, the Act77 introduced significant changes to Australian patent legislation, as recommended by the 1984 report of the Industrial Property Advisory Committee ("the IPAC")78, but not those relevant to extension of term provisions. Relevantly, in the IPAC Report, Recommendation 11 (in two parts) recommended retaining the standard patent term (then 16 years under the 1952 Act) and went on to recommend that procedures for "granting of extensions of the terms of standard patents be eliminated in toto"79. The federal Minister for Science responded in 1986. He said the Government approved the proposal in principle but was aware of special circumstances with pharmaceutical products where delays in obtaining regulatory approval eroded "the effective patent lives of these products"80. 77 Which came into force on 30 April 1991. 78 Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984) ("the IPAC Report"). The IPAC was commissioned in 1979 to review the 1952 Act. See, generally, Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 88 ALJR 261 at 302-303 [186]-[193]; 304 ALR 1 at 51-53; [2013] HCA 79 IPAC Report at 5 [11]. 80 "Government Response to the Report of the Industrial Property Advisory Committee, 'Patents, Innovation and Competition in Australia'", Official Journal of (Footnote continues on next page) Crennan Bell As foreshadowed, the 1989 Act (substantially re-enacted in the Act (as first enacted)) repealed Pt IX of the 1952 Act and substituted a new Pt IX, entitled "Extension of Certain Patents", limited to patents for pharmaceutical substances. The primary objects of a more limited extension of term scheme were explained in the second reading speech of the Minister for Justice for the relevant Bill81: "The Bill abolishes the present complex procedures for extending the term of a patent and replaces them with more straightforward procedures applicable only to pharmaceuticals This Bill implements the Government's response to recommendation 11 of the [IPAC Report] ... life for that The arrangements acknowledge pharmaceuticals for human use is reduced by the stringent and time-consuming evaluation procedures that the Department of Community Services and Health is required to conduct to ensure both the safety of patients and the efficacy of drugs." the effective patent The extension of term scheme enacted by the 1989 Act permitted a patentee to apply to the Commissioner "not later than 12 months before the end of the term of the patent"82. An extension of term of four years from a 16 to a 20 year term was permitted83. Competitors were permitted to springboard in the last two years of any extended term84. An application to extend the term had to be advertised and could be opposed85. Neither the 1989 Act nor the Act (as first enacted) contained any equivalent to s 71(2)(a), (b) and (c), for reasons which will become obvious. The immediate predecessor to s 223, s 160 of the 1952 Act, was also amended by the 1989 Act86. Section 160(4A) was added in order to limit any Patents, Trade Marks and Designs, 18 December 1986, vol 56, No 47 at 1466- 81 Australia, Senate, Parliamentary Debates (Hansard), 23 May 1989 at 2451-2452. 82 1952 Act (as amended by the 1989 Act), s 90(1). 83 1952 Act (as amended by the 1989 Act), s 95. 84 1952 Act (as amended by the 1989 Act), s 96. 85 1952 Act (as amended by the 1989 Act), ss 93, 94. 86 1989 Act, s 7. Crennan Bell relevant extension of time within which to apply for an extension of term87. The practical effect of that amendment was that, even if granted an extension of time under s 160(2), a patentee had to make the application expeditiously, no later than nine months before the expiration of the term. By comparison with the time requirements considered in Robinson's Patent and Sanofi, these provisions obviated any gap in the records of the Register. Such a gap could previously arise where a patent lapsed on expiration of the term but a patentee subsequently obtained an extension of time within which to petition for an extension of term88. This was a matter commonly dealt with under the pre-existing law by imposing conditions, as explained. Policy debates which continued in relation to the desirable term of a standard patent in Australia (and elsewhere) raised the suggestion that the term of all standard patents should become 20 years (rather than 16 years) with the possibility that patents for pharmaceutical substances be extended beyond a 20 year term because in the pharmaceutical industry research and development costs were high, imitation costs low, and regulatory delays significant89. As events transpired, the 1994 Act provided for the extension of term of all standard patents to 20 years and repealed Div 2 of Pt 3 of Ch 6 of the Act, as it had operated since the 1989 Act (as substantially re-enacted in the Act). Transitional provisions in the 1994 Act permitted a patentee who had been granted an extension of term beyond 16 years under the repealed provisions to take advantage of that extension to 20 years90. Because the term was extended to 20 years, the extension of term scheme limited to standard pharmaceutical patents, first instituted in 1989, was repealed91. 87 An application for an extension of time for more than three months could not be made in respect of "an act or step required to be done or taken for the purposes of Part IX" (which included the 12 month time limit within which an application for an extension of term could be made). 88 See In re Dunlop's Patent (1922) 31 CLR 579 at 580-581. 89 See, for example, Bureau of Industry Economics, The Economics of Patents, Occasional Paper 18, (1994) at ix, 24, 43-45. 90 1994 Act, ss 3, 4, 7, 8, 12, 13. 91 See Australia, House of Representatives, Patents (World Trade Organization Amendments) Bill 1994, Explanatory Memorandum at 1. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 18 October 1994 at (Footnote continues on next page) Crennan Bell The extension of term scheme relevant to reg 22.11(4)(b) was instituted by the Intellectual Property Laws Amendment Act 1998 (Cth) ("the 1998 Act")92. The principal objects of the 1998 Act were summarised in the Revised Explanatory Memorandum for the relevant Bill93: "The Bill amends the Patents Act 1990 to give effect to the government's decision to provide for an extension of term scheme for pharmaceutical patents. An extension of up to five years will be available for a standard patent relating to a pharmaceutical substance that is the subject of first inclusion on the [ARTG]. The scheme will apply to all existing 20 year patents, as well as those patents granted after the commencement date. The new arrangements make provision for 'spring-boarding' activities. This allows manufacturers of generic drugs to undertake certain activities at any time after the extension is granted solely for the purposes of meeting pre-marketing regulatory approval requirements." The rationale for reintroducing extension of term legislation was explained in detail94: "The development of a new drug is a long process, estimated to average around 12 years, which requires a new chemical entity to be patented early in the process in order to secure its intellectual property rights. However, considerable research and testing is still required before the product can enter the market. As a consequence, patentees of new drugs usually have considerably fewer years under patent in which to maximise their return. 2189; Australia, Senate, Parliamentary Debates (Hansard), 7 November 1994 at 92 The subsequent Australia-United States Free Trade Agreement required Australia to make extensions of term available for pharmaceuticals: [2005] ATS 1, Art 17.9(8). 93 Australia, Senate, Intellectual Property Laws Amendment Bill 1998, Revised Explanatory Memorandum at 2. 94 Australia, Senate, Intellectual Property Laws Amendment Bill 1998, Revised Explanatory Memorandum at 3-4. See also at 8-9. Crennan Bell It is expensive to bring a drug to market, around US$380 million, and involves considerable risk. As such, research based pharmaceutical companies rely heavily on patents to generate the substantial cash flows needed to finance the development of new drugs from the discovery stage, through the pre-clinical and clinical development phases, to eventual marketing. A country's patent system contributing to a company's decision on whether to invest or not. If Australia has a weak patent system, relative to it's [sic] competitors, there is a risk that investment in research and development will be lost to those offering stronger patent protection. important factor is also an The objective of this proposal is to provide an 'effective patent life' – or period after marketing approval is obtained, during which companies are earning a return on their investment – more in line with that available to inventions in other fields of technology. It is also intended to provide a patent system which is competitive with other developed nations." Section 223 was noted in the following terms95: "Section 71 sets out the requirements of the form and timing of the application. The extension of time provision under section 223 of the Patents Act 1990 will apply to all acts required to be done under the extension of patent term scheme provided that the relevant criteria are satisfied." The purposes of the extension of term scheme are to balance the competing interests of a patentee of a pharmaceutical substance whose exploitation of monopoly has been delayed (because of regulatory delay) and the public interest in the unrestricted use of the pharmaceutical invention (including by a competitor) after the expiration of the monopoly (that is, the term). Construction of reg 22.11(4)(b) It is not always appropriate to dissect a composite legislative expression into separate parts, giving each part a meaning which the part has when used in isolation, then combine the meanings to give that composite expression a 95 Australia, Senate, Intellectual Property Laws Amendment Bill 1998, Revised Explanatory Memorandum at 18. Crennan Bell meaning at odds with the meaning it has when construed as a whole96. Alphapharm makes errors of this kind. First, Alphapharm relies on words forming part only of the parenthesis in reg 22.11(4)(b) – "as required by subsection 71(2) of the Act" – to "read up" the regulation to encompass both the first and second time requirements in s 71(2). Time is critical to ss 223(2)(a) and 71(2) and reg 22.11(4)(b). The critical expression in the regulation is "during the term of a standard patent", which must be construed in its immediate context in accordance with the principles expressed by this Court in Project Blue Sky Inc v Australian Broadcasting Authority97. The part only of the parenthesis upon which Alphapharm relies so heavily merely identifies the statutory source of the critical time requirement. The text, syntax and immediate context of reg 22.11(4)(b) show that the natural and ordinary meaning of the "prescribed action" identified is the "filing (or making) of a s 70(1) application during the term of the standard patent" (that is, before the term of the patent has expired). Secondly, Alphapharm bases its preferred construction of reg 22.11(4)(b) on the proposition that it is only necessary to ask whether there is a "relevant act" (or "action") for the purposes of s 223(2)(a), then to ask whether it is "prescribed" under the regulation. That proposition detaches reg 22.11(4)(b) from its immediate context, and falls well short of establishing that reg 22.11(4)(b) encompasses both the first and second time requirements in s 71(2). The immediate context of reg 22.11(4)(b) is to be found in ss 223 and 71(2) of the Act. It can be observed generally that, subject to reg 22.11, there is no reason to suppose that s 223 of the Act lacks the broadly protective and remedial operation accorded to its immediate predecessor by numerous courts, including this Court98. 96 XYZ v The Commonwealth (2006) 227 CLR 532 at 543-544 [19] per Gleeson CJ, 592-593 [176] per Callinan and Heydon JJ; [2006] HCA 25. (1998) 194 CLR 355 at 381-382 [69]-[71] per McHugh, Gummow, Kirby and 98 See Australian Paper Manufacturers Ltd v CIL Inc (1981) 148 CLR 551 at 557 per Stephen J (Mason and Wilson JJ agreeing). See also Scaniainventor v Commissioner of Patents (1981) 36 ALR 101; Lehtovaara v Acting Deputy Commissioner of Patents (1981) 39 ALR 103 at 111-113; Kimberly-Clark Ltd v Commissioner of Patents (1988) 84 ALR 685 at 694-695. Crennan Bell As a general remedial provision, s 223 is concerned only with extensions of time. Section 223(2)(a) empowers the Commissioner to extend the time for doing a relevant act which has been required to be done within a certain time and has not been so done because of an error or omission by the person concerned or his or her agent or attorney. Section 223(11) limits the power to extend time under s 223(2)(a) by excluding a "prescribed action" from a "relevant act". Regulation 22.11 is likewise concerned only with extensions of time. All "prescribed actions" in reg 22.11(4) are subject to time requirements, which are to be excluded from the general remedial power to extend time. To focus on a single "relevant act" (or "one action") to the exclusion of time requirements, and to ask only whether that "relevant act" (or "one action") is "prescribed", as Alphapharm does, is to misapprehend the real purpose of s 223(2)(a) – to confer a general remedial power to extend time – and the derivative purpose of reg 22.11(4) – to exclude a limited number of times from that general power to extend time. Alphapharm's arguments, which depend only on asking whether a "relevant act" (or "action") is "prescribed", provide an incomplete and inadequate foundation for construing reg 22.11(4)(b). The correct description of the prescribed "relevant act" (or "action") under s 223(2)(a), for present purposes, is "making (or filing) a s 70(1) application in the time within which that is required to be done under s 71(2)". Section 71(2), which is critical to the task of correctly construing reg 22.11(4)(b), is concerned only with the timing of a s 70(1) application. It imposes two cumulative time requirements, both of which need to be satisfied to establish the "certain time" (in Alphapharm's words, "the deadline") by which a s 70(1) application must be made. The first time requirement, namely that a s 70(1) application must be made "during the term" of the patent (that is, before the expiration of the term of the patent), imposes a time requirement having a recognisable origin in earlier cognate provisions and associated practices explained in Sanofi99, which date back to 1903. As recognised in Sanofi, under the pre-existing law, courts were wary of granting an extension of term which might prejudice or inhibit the public interest (including the interests of commercial competitors) in exploiting a disclosed invention on the expiration of the term100. This reluctance was compounded by uncertainty in the Register which could occur if there was a gap 99 (1983) 152 CLR 1 at 14-15. 100 (1983) 152 CLR 1 at 14-16 per Mason ACJ, Wilson and Dawson JJ. Crennan Bell between the lapse of a patent (due to the expiration of the term) and the presentation of a petition after the term had expired, as was permitted under the pre-existing law. This could require the imposition of conditions on any extension of term or re-grant (as explained above). As correctly submitted by Lundbeck, were it not for reg 22.11(4)(b), the approach in Robinson's Patent, approved in Sanofi, may have authorised reliance on the general remedial power in s 223(2)(a) to extend the first time requirement in s 71(2) to a time after the term had expired. Regulation 22.11(4)(b), correctly construed, obviates the known problem of uncertainty in the Register which would follow if that were permitted. The second time requirement, which can be expressed using the formula "within six months of the latest of three specified dates" in s 71(2), has an entirely different and unrelated purpose, which is to require a patentee to make a s 70(1) application within six months of the satisfaction of all of the necessary conditions for the making of such an application, bearing in mind that the sequence of satisfaction may vary from patent to patent. The second time requirement has a rationale which is not dissimilar to the rationale for another discrete and distinct legislative requirement in relation to annual renewal fees (which must be paid to prevent a patent from lapsing). Those fees escalate sharply as the expiration date of the term of a patent approaches101. The escalation is directed to encouraging a patentee to consider the utility of continuing its monopoly and discouraging the maintenance, on the Register, of patents which are not being exploited. The second time requirement is directed to requiring a patentee to decide about extending its monopoly as soon as the requisite conditions are aligned. There is nothing in any of the extrinsic materials, or in the long policy debates on simplifying extensions of term, which would suggest any rationale for excluding the second time requirement from the remedial power to extend time under s 223(2)(a). Alphapharm's senior counsel conceded, correctly, that if Alphapharm's construction of reg 22.11(4)(b) were correct, the remedial power in s 223(2)(a) could never apply to extend time in relation to the second time requirement, no matter what the quality or provenance of any "error or omission" made in respect of that time. Alphapharm's construction would introduce an inexplicable asymmetry between a patentee and a competitor opposing a s 70(1) application. An opponent can access the general remedial power to extend times cast upon it in mandatory terms102. Had it been the legislature's intention to 101 Regulations, Sched 7, Pt 2, item 211. 102 See Act, ss 75 and 223(6); Regulations, reg 22.11(4)(a). Crennan Bell exclude the second time requirement in s 71(2) from the general remedial power in s 223(2)(a), that would have been simple to accomplish. Alphapharm's construction of reg 22.11(4)(b) gives the regulation an operation which is inconsistent with one of the principal objects of the extension of term scheme. Taking Lundbeck as an example of a patentee who has made a s 70(1) application during the term of the patent, a regulatory delay of nearly eight and a half years should give rise to a straightforward entitlement to an extension of term of nearly three and a half years103. Conclusions For the reasons set out above, reg 22.11(4)(b) has the meaning which its text taken as a whole, its syntax and the immediate context support – the only time requirement which is excluded by reg 22.11(4)(b), from the general remedial power to extend time in s 223(2)(a), is the first time requirement in The Tribunal did not err in concluding that s 223(2)(a) conferred power on the Commissioner to extend the second time requirement in s 71(2) from 26 July 1999 to 12 June 2009 and the Full Court did not err in dismissing the appeal from the Tribunal. Orders The appeal should be dismissed with costs. 103 From 13 June 2009 to 9 December 2012. KIEFEL AND KEANE JJ. Citalopram belongs to a class of drugs called selective serotonin re-uptake inhibitors, which are used in the treatment of depression. It is a racemate, comprising two different, mirror-image forms of the same chemical compound, called enantiomers. Enantiomers are designated (+) or (-) depending on how they rotate plane-polarised light. The first respondent, H Lundbeck A/S, was the holder of a patent which claimed, inter alia, a (+)-enantiomer of citalopram called escitalopram ("the patent"). The term of the patent expired on 13 June 2009, but not before the first respondent applied for its extension under s 70(1) of the Patents Act 1990 (Cth) ("the 1990 Act"). Section 70(1) provides: "The patentee of a standard patent may apply to the Commissioner for an extension of the term of the patent if the requirements set out in subsections (2), (3) and (4) are satisfied." Sub-section (2)(a) limits the patents which may be the subject of an application to those whose complete specification, in substance, discloses one or more pharmaceutical substances, and those substances fall within the scope of the claims of that specification. Sub-section (3)(a) requires that goods containing the pharmaceutical substance or substances be included in the Australian Register of Therapeutic Goods ("the ARTG"). Sub-section (4) provides that the term of the patent must not have been previously extended. Section 71(1) provides for the form of an application for extension of the term of a patent. Section 71(2) governs the time for making such an application. It provides: "An application for an extension of the term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates: the date the patent was granted; the date of commencement of the first inclusion in the [ARTG] of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection 70(3); the date of commencement of this section." The period of any extension of term is to be calculated according to s 77(1), but must not exceed five years (s 77(2)). The first respondent markets two products which contain escitalopram: CIPRAMIL and LEXAPRO. CIPRAMIL was first included in the ARTG on 9 December 1997, and LEXAPRO on 16 September 2003. The first respondent applied on 22 December 2003 to extend the term of the patent. That application identified the date that LEXAPRO was first included in the ARTG as the relevant date for the purposes of s 71(2)(b). The application was granted by the Commissioner of Patents ("the Commissioner"), without opposition, and the term of the patent was extended to 13 June 2014. A Delegate of the Commissioner subsequently determined that the term of the patent should have been extended only to 9 December 2012104. It was considered that the assessment of the period of extension under s 77(1) should have been based upon the date that CIPRAMIL, not LEXAPRO, was included in the ARTG. The Delegate ordered that the Register of Patents be amended accordingly. In an appeal from that determination to the Federal Court of Australia, Lindgren J held105 that, as the first respondent's application under s 70(1) for the extension of its patent was based upon the inclusion of LEXAPRO in the ARTG, the application did not comply with the time requirement in s 71(2). As a consequence, the extension granted was invalid. His Honour ordered that the Register be rectified106. On 11 June 2009, a Full Court of the Federal Court upheld107 that decision, and final orders were pronounced the following day. On 12 June 2009, which was the day prior to the expiration of the term of the patent, the first respondent filed an application under s 223(2)(a) of the 1990 Act for an extension of time within which to bring an application under s 70(1) for an extension of the term of the patent. It also filed another application under s 70(1), but the validity of that application depended on whether an extension of time could be granted under s 223(2)(a). Section 223(2) provides: "Where, because of: an error or omission by the person concerned or by his or her agent or attorney; or circumstances beyond the control of the person concerned; 104 Alphapharm Pty Ltd v H Lundbeck A/S (2006) 69 IPR 629. 105 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618. 106 Alphapharm Pty Ltd v H Lundbeck A/S (No 2) (2008) 78 IPR 338 at 344. 107 H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151; an application for special leave to appeal was refused on 11 December 2009: Alphapharm Pty Ltd v H Lundbeck A/S [2009] HCATrans 324. a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act." Section 223(11) provides that a "relevant act" means: "an action (other than a prescribed action) in relation to a patent ..." The Patents Regulations 1991 (Cth) designate certain actions as prescribed actions. At the time of the first respondent's application under s 223(2)(a), "(4) For the definition of relevant act in subsection 223(11) of the Act, each of the following actions is prescribed: filing, during the term of a standard patent as required by subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent". A Delegate of the Commissioner found the requirements of s 223(2)(a) to have been satisfied109 and granted the first respondent an extension of time for filing an application for extension of the term of the patent, over the opposition110 of the appellant and others. The Delegate's decision was upheld by the Administrative Appeals Tribunal111 ("the AAT") and a Full Court of the Federal Court112. Special leave to appeal from the decision of the Full Court was granted by Kiefel and Keane JJ, 108 The regulation has since been amended, in 2013, by replacing the words "as required by subsection 71(2)" in par (b) with "under subsection 71(2)". At the same time, the words "each of the following actions is", in the chapeau, were replaced with "the following are": see Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 (No 1) (Cth), Sched 3, item 7. 109 Alphapharm Pty Ltd v H Lundbeck A/S (2011) 92 IPR 628 at 641 [64]. 110 Patents Act 1990 (Cth), s 223(6). 111 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648. 112 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508. limited to the question whether s 223(2) confers power to extend the time within which the first respondent could apply under s 70(1) for an extension of the term of the patent. The task of statutory construction starts and ends with a consideration of the text of the statute in question113. Nonetheless, the submissions of the parties on the appeal necessitate some reference to the legislative history of ss 70 and 71, and of s 223 and the relevant regulation made under it. Patent term extensions The two statutes that preceded the 1990 Act – the Patents Act 1903 (Cth) ("the 1903 Act") and the Patents Act 1952 (Cth) ("the 1952 Act") – both permitted extension of the term of a patent where the court was of the opinion that the patentee's remuneration from the patent during its term had been inadequate114. Both the 1903 Act115 and the 1952 Act116 in their original forms required an application for an extension of the term of a patent to be brought at least six months before the patent expired. Section 90(1) of the 1952 Act also allowed an application to be brought "within such further period" as the court allowed. In Sanofi v Parke Davis Pty Ltd [No 2] 117, s 90(1) was held to permit an extension of the term of a patent to be made after the term had expired. In 1984, a report by the Industrial Property Advisory Committee ("the IPAC") entitled Patents, Innovation and Competition in Australia was submitted to the Commonwealth Minister for Science and Technology118. Two of its recommendations are presently relevant. The then existing term of a standard patent was 16 years. A majority of the IPAC recommended119 that there be no increase to that term. As explained below, although this recommendation was 113 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; [2012] HCA 55. 114 Patents Act 1903 (Cth), s 84(5); Patents Act 1952 (Cth), s 94(1). 115 Patents Act 1903, s 84(1). 116 Patents Act 1952, s 90(1). 117 (1983) 152 CLR 1; [1983] HCA 32. 118 Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984). 119 Recommendation 11(i); Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984) at 37, 39. initially approved by the Government in principle120, the term of standard patents was later extended to 20 years121. Of more direct relevance is the recommendation of the IPAC that existing procedures for seeking extensions of the term of a patent on the ground of inadequate remuneration should be abolished122. The Government approved this recommendation, subject to a qualification that it would "announce a decision at an appropriate time on pharmaceuticals and agricultural and veterinary chemicals for which effective patent life is eroded by regulatory delays"123. The Patents Amendment Act 1989 (Cth) ("the 1989 Amendment Act") amended the 1952 Act by replacing the provisions respecting extensions of the terms of all standard patents with provisions that applied only to certain patents relating to pharmaceutical substances. The new regime permitted the term of such patents to be extended by four years124. An application for such an extension was required to be made no later than 12 months before the end of the term of the patent125. Provision was no longer made for an application to be brought "within such further period" as the court allowed. When the 1990 Act came into force on 30 April 1991, it contained provisions to the same effect as those introduced by the 1989 Amendment Act126. Provisions permitting patent term extensions for pharmaceutical patents were temporarily removed from the 1990 Act by the Patents (World Trade Organization Amendments) Act 1994 (Cth) ("the WTO Amendment Act"), with 120 "Government Response to the Report of the Industrial Property Advisory Committee, 'Patents, Innovation and Competition in Australia'", Official Journal of Patents, Trade Marks and Designs, 18 December 1986, vol 56, No 47 at 1466, 121 Patents (World Trade Organization Amendments) Act 1994 (Cth). 122 Recommendation 11(ii); Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia, (1984) at 38-39. 123 "Government Response to the Report of the Industrial Property Advisory Committee, 'Patents, Innovation and Competition in Australia'", Official Journal of Patents, Trade Marks and Designs, 18 December 1986, vol 56, No 47 at 1470. 124 Patents Act 1952, s 95(2). 125 Patents Act 1952, s 90(1). 126 Patents Act 1990, Ch 6, Pt 3, Div 2. effect from 1 July 1995. The purpose of the WTO Amendment Act was to bring Australian patents legislation into line with the standards and principles prescribed for patents in the Agreement Establishing the World Trade Organization (1994)127. The principal amendment was to increase the term of standard patents from 16 to 20 years128, and it was said that the repeal of the patent term extension provisions was consequent on this amendment129. It was considered that, in light of the general 20 year patent term, a four year extension for pharmaceutical patents would "no longer be necessary"130. However, less than four years later, a patent term extension regime was reintroduced into the 1990 Act. The provisions presently under consideration, ss 70 and 71, were introduced by the Intellectual Property Laws Amendment Act 1998 (Cth) ("the 1998 Amendment Act"), with effect from 27 January 1999. The provisions introduced by the 1998 Amendment Act permitted a patent term extension of up to five years131 for a standard patent relating to a pharmaceutical substance that is contained in goods included in the ARTG. The Revised Explanatory Memorandum for the 1998 Amendment Act132 explained that providing for extension of the term of patents relating to pharmaceutical substances had the purpose of ensuring that research and development in Australia with respect to such substances would not be lost to jurisdictions offering stronger patent protection. The Revised Explanatory Memorandum noted that five year extensions of pharmaceutical patents were already available in the United States of America, the European Community and Japan, in recognition of the exceptionally long development time necessary in pharmaceutical research and to allow for compliance by patentees with regulatory requirements in the field. The aim of the amendments was said to be 127 Australia, House of Representatives, Patents (World Trade Organization Amendments) Bill 1994, Explanatory Memorandum at 1. 128 Patents (World Trade Organization Amendments) Act 1994, s 4. 129 Australia, House of Representatives, Patents (World Trade Organization Amendments) Bill 1994, Explanatory Memorandum at 2. 130 Australia, House of Representatives, Patents (World Trade Organization Amendments) Bill 1994, Explanatory Memorandum at 1. 131 Patents Act 1990, s 77. 132 Australia, Senate, Intellectual Property Laws Amendment Bill 1998, Revised Explanatory Memorandum at 3. to provide an "effective patent life", during which companies could earn a return on their investment, more in line with that available to inventions in other fields of technology. The current text of ss 70 and 71 is, in material respects, the same as that introduced by the 1998 Amendment Act. Extensions of time Under s 160 of the 1952 Act, the Commissioner of Patents had the power, in certain circumstances, to extend the time for doing an act or taking a step required to be done or taken within a certain time. As expanded by the Patents Act 1960 (Cth), s 160 provided that an extension of time would be granted to permit the act to be done or the step to be taken where the failure occurred by reason of an error or omission on the part of the Patent Office (s 160(1)), and could be granted where the failure occurred by reason of an error or omission on the part of the person concerned or the person's agent, or by reason of circumstances beyond the person's control (s 160(2)). The 1989 Amendment Act inserted sub-s (4A) into s 160 of the 1952 Act. That sub-section provided that an application could not be made under s 160(2) for an extension of time of more than three months with respect to an act or step required to be done or taken for the purposes of Pt IX. Part IX, as amended by the 1989 Amendment Act, contained the provisions governing extension of the term of a patent respecting a pharmaceutical substance. It will be recalled that, under the 1952 Act, an application for such an extension was required to be filed no later than 12 months before the end of the term of the patent133. The combined effect of this requirement and s 160(4A) was that an application for extension of the term of a pharmaceutical patent could not be filed less than nine months before the end of the patent term. In the Explanatory Memorandum for the 1989 Amendment Act, it was said134 that s 160(4A) "recognises the need to ensure that the new procedures for extensions of term operate expeditiously, leaving those involved and third parties with the minimum period of uncertainty consistent with the need to resolve matters fairly." Section 223 of the 1990 Act was introduced in substantially similar terms to s 160 of the 1952 Act. When the 1990 Act came into operation, s 160(4A) of the 1952 Act was reproduced in material respects as s 223(5). In 1995, s 223(5) 133 Patents Act 1952, s 90(1). 134 Australia, Senate, Patents Amendment Bill 1989, Explanatory Memorandum at 7. was repealed by the WTO Amendment Act. Section 223(5) had become otiose because of the repeal of the patent term extension provisions. However, when the current patent term extension regime was introduced by the 1998 Amendment Act, neither s 223(5) nor an equivalent provision was re-enacted. As noted above, the 1998 Amendment Act introduced the patent term extension provisions that are presently under consideration (ss 70 and 71). The Revised Explanatory Memorandum for the 1998 Amendment Act said135: "Section 71 sets out the requirements of the form and timing of the application. The extension of time provision under section 223 of the Patents Act 1990 will apply to all acts required to be done under the extension of patent term scheme provided that the relevant criteria are satisfied." At the same time as the 1998 Amendment Act commenced, the Patents Regulations 1991 were amended by the Patents Amendment Regulations 1998 (No 8) (Cth) ("the 1998 Amendment Regulations"). Regulation 22.11(3)(c), as thereby amended, was materially identical to reg 22.11(4)(b) (the regulation presently under consideration). The Explanatory Statement for the 1998 Amendment Regulations said: "Item 7 of Schedule 1 to the Statutory Rules substitutes a new paragraph 22.11(3)(c) of the Regulations. This paragraph prescribes the action of filing an application for extension of term under section 70 of the Act during the term of the patent as being an action for which an extension of time under section 223 of the Act is not available." The decisions below The AAT referred to the Revised Explanatory Memorandum for the 1998 Amendment Act, set out above, as supporting its opinion that it would be contrary to the remedial intention of s 223 for that section not to be available in relation to an application under s 70(1)136. The Full Court did not derive the same support from the extrinsic materials. the predecessor to reg 22.11(4)(b) was considered to provide no real guidance to the the Explanatory Statement accompanying In particular, 135 Australia, Senate, Intellectual Property Laws Amendment Bill 1998, Revised Explanatory Memorandum at 18. 136 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648 at construction of reg 22.11(4)(b), for it merely recited the substance of the words of the regulation137. In any event, the Full Court did not consider that recourse to the extrinsic materials was necessary138. The Full Court held that the AAT was correct to conclude that the Commissioner had the power under s 223(2) to extend the six month time limit in relation to the date applicable under s 71(2)139. In reaching that conclusion, it construed the words appearing in reg 22.11(4)(b) – "during the term of a standard patent under subsection 71(2) of the Act"140 – as specifically identifying the action that is prescribed. Those words did not, in the view of the Full Court, incorporate a second action referred to in s 71(2), namely filing the application within six months of the date applicable under s 71(2)(a)-(c)141. The Full Court concluded that s 223(2) could operate with respect to that second time limit. Like the Full Court, the AAT had also focused on the additional words appearing in reg 22.11(4)(b) after the word "filing". The AAT considered that the regulation thereby only excluded from the operation of s 223(2) applications filed after the expiry of the term of a patent142. The approach of the Full Court, mentioned above, was to similar effect. The effect of the approaches taken below is that the action identified in reg 22.11(4)(b) is not the filing of the application for extension of the patent, but the action of filing during the term of the patent143. 137 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 522 [58]. 138 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 521-522 [57]. 139 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 522 [59]. 140 The Full Court referred to the words as they appeared in reg 22.11(4)(b) following amendment in 2013. As explained above at [82], at the time of the first respondent's application under s 223 (in June 2009), the relevant words of the regulation were "during term of a standard patent as required by subsection 71(2) of the Act" (emphasis added). However, it is not suggested anything turns on this difference. the 141 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 520-521 [51]. 142 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648 at 143 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508 at 521 [51]. The provisions construed It has repeatedly been said by this Court144 that the process of construction of statutory provisions starts with the words of the statute, read in their context. Here, the process commences with a consideration of the text of ss 70, 71 and Section 71(2) is expressed to require that an application for extension of the term of a patent under s 70(1) be brought within the times specified. An application "must be made" during the term of the patent and within six months after the latest of the three dates listed in pars (a)-(c) of s 71(2). So expressed, the Commissioner's power to extend the term of a patent depends upon an applicant's compliance with s 71(2). At the same time, s 223(2) empowers the Commissioner to extend the time for doing a "relevant act" that has not been done because of an error or omission on the part of the person concerned or circumstances beyond the person's control. In the construction of ss 71(2) and 223(2), it may be observed that s 223(2) is an earlier, general provision which confers a broad authority to extend the period for doing an act, whereas s 71(2) is a later, specific provision containing a limitation as to the time within which a particular application may be brought. However, the construction of these provisions does not fall to be resolved by asking whether s 71(2) effects a limitation on s 223(2)145. Such an enquiry is not necessary because the text of reg 22.11(4)(b), made for the purposes of s 223(11), produces the result that s 223(2) has no operation with respect to an application under s 70(1) for extension of the term of a patent. The effect of reg 22.11(4)(b) is to confirm that the scheme for extension of the term of pharmaceutical patents mandates compliance with the time limits in s 71(2). The power given to the Commissioner by s 223(2) is to extend the time for a person to do a relevant act. The definition of "relevant act" in s 223(11) is "an action ... in relation to a patent" (emphasis added). The action in question with respect to the patent in this case was the making of an application to extend its term. 144 See, for example, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41. 145 See, for example, David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 275-276; [1995] HCA 43. Consistently with s 223(11), reg 22.11(4) identifies actions. It cannot do otherwise, for s 223(11) only permits an action in relation to a patent to be a prescribed action. The action identified in reg 22.11(4)(b) is the filing of an application under s 70(1). The operative part of reg 22.11(4)(b) refers to the action of "filing ... an application under subsection 70(1) of the Act for an extension of the term of the patent". Those words could hardly be clearer. The text of reg 22.11(4)(b) and s 223(11) limits the Commissioner's power to grant an extension of time, such that the power does not apply to filing an application under s 70(1). The first respondent submits that s 223(2) applied to each of the two time limits in s 71(2), separately and distinctly. It contends that reg 22.11(4)(b) would then be read as prescribing only the first time limit, namely that the application be filed within the term of the patent, and allowing s 223(2) to operate with respect to the second. This is how the Full Court construed the provisions. The difficulty with these approaches is that what is prescribed under s 223(11) and by reg 22.11(4)(b) is a "relevant act", and s 71(2) cannot reasonably be read as referring to two actions. There is but one action referred to in s 71(2) – making an application for extension of the term of a patent. That one action is to be done on a date that satisfies the two requirements as to time set out in s 71(2). It is that action to which s 223(2) would apply, were it not for The approaches of the AAT, the Full Court and the first respondent treat s 223(2) as permitting the enlargement of a time specified for the doing of an act, such as the time requirements found in s 71(2). However, s 223(2) does not contain such a power and does not operate in this way. It provides a power to permit the doing of an act which would otherwise be done outside the requirements as to time. Too much weight is given by the first respondent to the additional words appearing in reg 22.11(4)(b). Their obvious purpose is to identify the requirements of s 71(2) as relevant to the action of filing an application under s 70(1). These additional words cannot alter the effect of the operative part of the regulation, which must identify the "relevant act" which is excepted from the operation of s 223(2). Even if it did no more, the Explanatory Statement for the 1998 Amendment Regulations at least identified the action which the predecessor to reg 22.11(4)(b) prescribed – and, to that extent, confirmed its meaning146. 146 Acts Interpretation Act 1901 (Cth), s 15AB(1)(a). Resort the Revised Explanatory Memorandum for the 1998 Amendment Act regarding the operation of s 223(2) is not necessitated by any ambiguity in s 223(11) and reg 22.11(4)(b), read with ss 70 and 71147. The terms of these provisions are clear. Thus, the Revised Explanatory Memorandum should be understood to acknowledge simply that the scheme of the 1990 Act is that requirements for the timing of an application for extension of the term of a patent are contained in s 71(2). Section 223(2) will therefore apply to all acts to be done in connection with an extension of a patent term, other than the making of the application for extension itself. It may be accepted that s 223(2) is remedial in nature and should therefore be given a wide operation148. It may also be accepted that the effect of it not extending to applications under s 70(1) means that the time for making such an application cannot be extended, even in the case of an error or omission for which the patentee is not responsible. This effect must be taken as intended, given the clarity of the provisions. The legislative history of the scheme for extensions of the terms of pharmaceutical patents does not provide support for the first respondent's argument. It may be accepted that it has for some time been considered necessary to encourage research and development in the area of pharmaceutical substances, and that permitting extensions of patent terms, to allow patentees to recoup costs and to benefit from the patent, is a means of doing so. It does not follow that it was intended that the limits placed upon the time within which an application could be brought were not to be strictly complied with. The scheme specifically providing for extensions of the terms of pharmaceutical patents was first introduced in 1989 against a background where, as a matter of policy, extensions of the terms of patents more generally were disfavoured. It is true that pharmaceutical patents were treated as a special category, warranting a possible extension of the patent term for a finite period; but the provisions as to the time for bringing an application for extension were progressively tightened. The changes to those provisions did more than respond to the decision in Sanofi, which permitted an application to be brought even after the patent term expired. The 1989 Amendment Act required an application for extension of the term of a pharmaceutical patent to be brought no later than 12 months before the end of the patent term. The 1998 Amendment Act recalibrated the time limit to be a point during the patent term and within 147 Acts Interpretation Act 1901, s 15AB(1)(b)(i); and see Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 265 [33]; [2010] HCA 23. 148 IW v City of Perth (1997) 191 CLR 1 at 12, 27, 39, 58; [1997] HCA 30. six months of the last of three dates, being the date of the patent, the inclusion of the relevant pharmaceutical goods in the ARTG or the commencement of s 71. It must be accepted that the predecessor of s 223 of the 1990 Act, s 160 of the 1952 Act, was taken to apply to applications for extension of the term of a pharmaceutical patent. This is evident from s 160(4A), which was introduced by the 1989 Amendment Act and later reproduced as s 223(5) of the 1990 Act. Section 160(4A) was directed to such applications. It will be recalled that it had the effect of limiting to three months the period for which an extension of time could be given for the bringing of such applications. Section 223(5) was removed during the short period between 1995 and 1999, when no patent term extensions were provided for by the legislation. It is noteworthy that no similar provision was reintroduced into the 1990 Act when the current patent term extension regime was enacted, as might have been expected if it were intended that s 223(2) would apply to applications for extension of the term of a patent under s 70(1), as it had previously. The stated policy respecting the predecessor to s 223(5) was that it was necessary to minimise the period of uncertainty as to whether an application for extension of term would be made. There is nothing to suggest that there had been a reversal of that policy when the current regime was introduced. The non-inclusion of s 223(5) (or an equivalent provision) is more likely explained by the fact that the scheme implemented by the 1998 Amendment Act, along with the predecessor to reg 22.11(4)(b), no longer contemplated s 223(2) as applying to applications under s 70(1). A provision such as s 223(5) was simply no longer necessary. There is no doubting that the purpose behind s 70(1) is to benefit and encourage research and development. Other provisions of the 1990 Act, including those for advertisement of and opposition to applications for extension of the term of a pharmaceutical patent149, recognise that there are interests, other than those of a patentee, which are affected by an extension. The Explanatory Memorandum for the 1989 Amendment Act said as much, in its statement as to the policy behind s 160(4A), when extension provisions for pharmaceutical patents were introduced. Against this background, the requirements of s 71(2), the strictness of which is reinforced by the effect of reg 22.11(4)(b), may be taken as intended to provide those other interested persons with a level of certainty as to whether an application for extension of the term of a patent is to be made by a patentee. 149 Patents Act 1990, ss 72, 75. In any event, as was said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd150, legislative history and extrinsic materials cannot displace the meaning of statutory text; nor is their examination an end in itself. Orders The appeal should be allowed and the order of the Full Court of the Federal Court made on 18 November 2013 set aside. In lieu it should be ordered that the decisions of the AAT given on 4 December 2012 and the Delegate of the Commissioner of 1 June 2011 be set aside and the first respondent's application for an extension of time under s 223(2)(a) of the 1990 Act be refused. The first respondent should pay the appellant's costs of this appeal and the appeal below. 150 (2012) 250 CLR 503 at 519 [39].

HIGH COURT OF AUSTRALIA Matter No S536/2007 GILBERT GEDEON AND APPLICANT COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION AND ORS RESPONDENTS Matter No S544/2007 AND APPLICANT THE COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION AND ANOR RESPONDENTS Gedeon v Commissioner of the New South Wales Crime Commission Dowe v Commissioner of the New South Wales Crime Commission [2008] HCA 43 4 September 2008 S536/2007 & S544/2007 Matter No S536/2007 ORDER Application for special leave to appeal granted. Appeal treated as instituted, heard instanter and allowed. Set aside paragraphs 3 and 4 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 19 October 2007 and in their place order: appeal allowed; set aside the order of the Common Law Division of the Supreme Court of New South Wales made on 13 March 2007 and the order made on 10 January 2007 to the extent that it answered the second of the questions for separate determination and in their place: (i) declare that the authority to conduct controlled operation No 05/00556 granted on 8 February 2005 and the authority to conduct controlled operation No 05/01792 granted on 17 March 2005 are invalid; and (ii) order that the summons dated 17 July 2006 in the Common Law Division of the Supreme Court of New South Wales be otherwise dismissed. The second respondent pay the costs of the appellant in this Court and in the courts below. Matter No S544/2007 Application for special leave to appeal granted. Appeal treated as instituted, heard instanter and allowed. Set aside paragraphs 3 and 4 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 19 October 2007 and in their place order: appeal allowed; set aside the order of the Common Law Division of the Supreme Court of New South Wales made on 13 March 2007 and the order made on 10 January 2007 to the extent that it answered the second of the questions for separate determination and in their place: (i) declare that the authority to conduct controlled operation No 05/01038 granted on 22 February 2005 is invalid; and (ii) order that the summons dated 19 July 2006 in the Common Law Division of the Supreme Court of New South Wales be otherwise dismissed. The second respondent pay the costs of the appellant in this Court and in the courts below. On appeal from the Supreme Court of New South Wales Representation G O'L Reynolds SC with S B Lloyd and K A Stern for the applicant in S536/2007 (instructed by Matouk Joyners Lawyers) A C Haesler SC with M A Robinson for the applicant in S544/2007 (instructed by Legal Aid Commission of New South Wales) I D Temby QC with J G Renwick and P F Singleton for the second respondent in both matters (instructed by New South Wales Crime Commission) Submitting appearance for the first and third respondents in S536/2007 Submitting appearance for the first respondent in S544/2007 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gedeon v Commissioner of the New South Wales Crime Commission Dowe v Commissioner of the New South Wales Crime Commission Criminal law – Evidence – Unlawfully obtained – Part IAB of Crimes Act 1914 (Cth) ("Crimes Act") provided that person not liable for offences under Commonwealth, State or Territory law committed for purpose of controlled operation – Section 15M of Crimes Act provided for issue of certificate authorising controlled operation if authorising officer reasonably satisfied that, inter alia, unlawful activity in course of controlled operation would not seriously endanger health or safety of person – Section 16 of Law Enforcement (Controlled Operations) Act 1997 (NSW) ("LECO Act") provided that activity for purpose of controlled operation not unlawful despite other Act or law – Section 3(1) of LECO Act defined "controlled activity" as activity that would be unlawful but for operation of s 16 – Section 7 of LECO Act provided that authority to conduct controlled operation must not be granted if, inter alia, participant in proposed operation would engage in conduct likely to seriously endanger health or safety of person – Section 138 of Evidence Act 1995 (NSW) conferred upon trial judges discretion to exclude evidence obtained illegally. Criminal law – Evidence – Unlawfully obtained – Commissioner issued authorities ("Authorities") under LECO Act authorising controlled operations – No authorities issued under Pt IAB of Crimes Act – Authorities authorised informer to sell cocaine to applicants – Cocaine not recovered by law enforcement officers – Applicants charged with taking part in supply of prohibited drug contrary to Drug Misuse and Trafficking Act 1985 (NSW). Criminal law – Evidence – Unlawfully obtained – Whether Commissioner had power to issue Authorities where sale of cocaine without recovery strategy was decided at trial or upon judicial review to seriously endanger health or safety of person – Whether reference to "any other person" in s 7 of LECO Act confined to person in physical vicinity of authorised conduct or extended to person subject to foreseen and expected consequence of proposed controlled operation – Whether "controlled activity" within meaning of LECO Act extended to conduct unlawful by reason of contravention of Commonwealth law. Judgments and orders – Judicial review – Declarations – Whether jurisdiction to entertain application to declare Authorities invalid – Whether discretion to do so should be exercised – Matters bearing on appropriateness of making declaration touching conduct of criminal proceedings. Words and phrases – "controlled operation", "declarations", "seriously endanger health or safety". Law Enforcement (Controlled Operations) Act 1997 (NSW). Crimes Act 1914 (Cth). GUMMOW, KIRBY, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. Introduction These applications for special leave were heard together by a Court of six Justices under a referral made on 18 April 2008 when the applications first came before Gleeson CJ and Gummow J. The applicants seek to establish the invalidity of certain authorities for "controlled operations" which were issued under the Law Enforcement (Controlled Operations) Act 1997 (NSW) ("the LECO Act"). That statute, together with legislation in other jurisdictions1, was a response to the decision of this Court in Ridgeway v The Queen2. The appellant in Ridgeway had been convicted of an offence under s 233B of the Customs Act 1901 (Cth) ("the Customs Act") in relation to the possession without reasonable excuse of a prohibited import, namely heroin. The heroin had been imported as part of a "controlled" importation involving law enforcement officers who acted "undercover". This Court quashed the conviction. Ridgeway established two important propositions in the law of evidence as understood by the common law in Australia. The first proposition, negative in nature, is that the substantive defence of entrapment by government officers or agents, as applied in criminal trials in United States federal courts, has no application in Australia. The second proposition is that the discretion given trial judges by the common law to exclude evidence on the grounds of public policy extends to the exclusion of evidence of an offence, or an element of an offence, which has been procured by unlawful conduct by law enforcement officers. There was no attempt in these proceedings to reopen either of these propositions. 1 Crimes (Controlled Operations) Act 2008 (ACT); Police Powers and Responsibilities Act 2000 (Q), Ch 11; Criminal Law (Undercover Operations) Act 1995 (SA); Crimes (Controlled Operations) Act 2004 (Vic) (not yet proclaimed); Corruption and Crime Commission Act 2003 (WA), Pt 6, Div 4. See also Crimes Act 1914 (Cth), Pt IAB, discussed at [5]-[7] below. (1995) 184 CLR 19; [1995] HCA 66. Kirby Hayne Crennan said3: In the second reading speech on the Bill for the LECO Act, the Minister "The bill now before the [Legislative Assembly] overcomes the Ridgeway problem. It legitimises the actions of undercover officers and permits evidence obtained in authorised controlled operations to be classified as legal and prima facie admissible. Ultimately, of course, the question of admissibility of evidence will remain an issue for the court to determine in accordance with section 138 of the [Evidence Act 1995 (NSW) ('the Evidence Act')]. Importantly, there are limits to what can be authorised. Clause 7 expressly prohibits the approval of a controlled operation if there is likely to be any undue risk to the operatives involved or to any other person. Clause 7 also prevents approval of operations in which there is a risk of serious damage to the property of others. It is not appropriate to authorise controlled operations when there is a high risk of liability for damages." (emphasis added) At the federal level, the sequel to Ridgeway was the addition in 19964 to the Crimes Act 1914 (Cth) ("the Crimes Act") of Pt IAB (ss 15G-15X)5. A challenge to the validity of Pt IAB failed, in Nicholas v The Queen6, and the parties to these proceedings accepted that decision. As Pt IAB stood at the time of the events giving rise to the present litigation it was headed "Controlled operations for obtaining evidence about Commonwealth offences". As first enacted, and before changes made by the Measures to Combat Serious and Organised Crime Act 2001 (Cth), Pt IAB was limited to offences relating to narcotic goods. 3 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 20 November 1997 at 2322-2323. 4 By the Crimes Amendment (Controlled Operations) Act 1996 (Cth). 5 The Part was numbered 1AB when enacted. It was renumbered IAB by the Measures to Combat Serious and Organised Crime Act 2001 (Cth). (1998) 193 CLR 173; [1998] HCA 9. Kirby Hayne Crennan Section 15M provides for the issue of a certificate in respect of controlled operations under Pt IAB. The authorising officer may grant the certificate if "reasonably satisfied", among other matters, that: the operation will be conducted in a way that ensures that, to the maximum extent possible, any illicit goods involved in the operation will be under the control of an Australian law enforcement officer at the end of the operation; and any unlawful activity involved in conducting the operation will not: seriously endanger the health or safety of any person; or cause the death of, or serious injury to, any person; or (iii) involve the commission of a sexual offence against any person; or result in loss of, or serious damage to, property (other than illicit goods)". It will become apparent that s 7 of the LECO Act, the critical provision for this litigation, is cast in different terms to s 15M of the federal law. The importation of and subsequent dealings in prohibited imports may give rise to the laying of charges under federal and State law. There is in the Crimes Act no "roll-back" provision of the kind applied in Port MacDonnell Professional Fishermen's Assn Inc v South Australia7, whereby the operation of Pt IAB is withdrawn from any area in which the LECO Act operates. To the contrary, s 15GA of the Crimes Act provides for the concurrent operation with Pt IAB of State and Territory laws which are not "directly inconsistent" with Pt IAB8. (1989) 168 CLR 340 at 373-374; [1989] HCA 49. 8 See, generally, R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545 at 563-564; [1977] HCA 34; Master Education Services Pty Ltd v Ketchell [2008] HCA 38 at [12]. Kirby Hayne Crennan Section 229 of the Customs Act, with certain immaterial exceptions, forfeits all prohibited imports to the Crown in right of the Commonwealth. The "controlled operations" with which this litigation is concerned involved dealings by State law enforcement officers in prohibited imports, namely large quantities of cocaine, which by force of s 229 had been forfeited to the Commonwealth. Before this Court no point is sought to be taken respecting inconsistency between the Customs Act and the LECO Act. Part 2 of the LECO Act (ss 5-13A) provides for the giving by "the chief executive officer" for "a law enforcement agency" of an authority for that agency to conduct a "controlled operation". The second respondent in each proceeding ("the Commission") is such an agency (s 3(1)) and the first respondent ("the Commissioner") is its chief executive officer for the purposes of the LECO Act9. The Commission itself is constituted as a corporation by s 5 of the New South Wales Crime Commission Act 1985 (NSW) and the Commissioner is appointed by the Governor (s 5A). The effect of an authority for a controlled operation is identified in s 13 as being that it: authorises each law enforcement participant to engage in the controlled activities specified in the authority in respect of the law enforcement participants, and authorises each civilian participant (if any) to engage in the particular controlled activities (if any) specified in the authority in respect of that participant". A "civilian participant" is a participant who is not a law enforcement officer 9 Other "chief executive officers" include the New South Wales Commissioner of Police, the Commissioner of the Independent Commission Against Corruption and the Commissioner of the Police Integrity Commission. Kirby Hayne Crennan Section 16 of the LECO Act is a provision of central importance for this litigation10. It states: "Despite any other Act or law, an activity that is engaged in by a participant in an authorised operation in the course of, and for the purposes of, the operation is not unlawful, and does not constitute an offence or corrupt conduct, so long as it is authorised by, and is engaged in in accordance with, the authority for the operation." Section 138 of the Evidence Act confers upon trial judges a discretion to exclude evidence obtained improperly or illegally. If s 16 of the LECO Act applies to a particular activity sought to be led in evidence, then the scope for the operation of s 138 is thereby diminished, but if there has been no authorised operation to which s 16 can apply, the scope for the operation of s 138 is increased. It is with that prospect in mind that the applicants contend that s 16 can have no application to three authorities granted by the Commissioner on 8 and 22 February and 17 March 2005 ("the Authorities"). This is said to be because the Authorities are invalid, having been issued by the Commissioner in excess of the power conferred by the LECO Act. The facts For the purposes only of the present proceedings which seek to establish the invalidity of the Authorities, certain facts are agreed. On 8 October 2004 approximately 10 kilograms of cocaine were unlawfully imported into Australia. Thereafter the Commissioner authorised six controlled operations which utilised the services of an informer (codenamed "Tom"). He already had sold three kilograms of the imported cocaine. The first and sixth authorities (No 05/00556 granted 8 February 2005, and No 05/01792 granted 17 March 2005) were used to support sales by "Tom" to the applicant Mr Gedeon of, respectively, two kilograms and 750 grams of the imported cocaine. The second authority (No 05/01038 granted 22 February 2005) was used to support a sale by "Tom" to the applicant Mr Dowe of one kilogram of cocaine. None of the 10 Part IAB of the Crimes Act contains (ss 15I, 15IA, 15IB) exculpatory provisions in respect of authorised controlled operations which are more detailed than s 16 of the LECO Act. Kirby Hayne Crennan cocaine disposed of in these three operations was recovered by any law enforcement officer. Messrs Gedeon and Dowe are the applicants for special leave in these proceedings. The controlled operations had been planned in circumstances where the Commissioner and other New South Wales senior law enforcement officers had been briefed that it was unlikely that the cocaine would be recovered because the cocaine would be sold on to end users. The briefing had been given on 2 February 2005 at a meeting at which no member of the Australian Federal Police ("the AFP") was present. The AFP had participated at earlier stages, but this participation did not continue. No authorities were issued under Pt IAB of the Crimes Act. Before turning to consider the specific issues that are raised, something more should be said of the procedural history. The procedural history The applicants seek in this Court declarations that the Authorities are invalid. They also sought in the Supreme Court of New South Wales an order in the nature of certiorari, but do not appear to press for that relief in this Court. They failed to obtain any relief in the Supreme Court both before the primary judge in the Common Law Division (Hall J)11, and in the Court of Appeal (Spigelman CJ and Handley AJA; Basten JA dissenting)12. Handley AJA agreed with the reasons of Spigelman CJ. The proceedings in the Supreme Court were commenced by the applicants on 11 April 2006. Previously, on 9 May 2005, the applicants had been charged with taking part in the supply of a prohibited drug, contrary to the Drug Misuse and Trafficking Act 1985 (NSW). 11 The two relevant judgments of Hall J were delivered on 12 December 2006 and 6 March 2007 and are reported respectively as Dowe v Commissioner of the New South Wales Crime Commission (2006) 206 FLR 1, and Dowe v Commissioner of New South Wales Crime Commission (2007) 169 A Crim R 43. 12 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44. Kirby Hayne Crennan On 28 March 2006, at the committal proceedings in the Central Local Court, senior counsel for the Commissioner moved to have set aside a subpoena addressed to his client. He submitted that the Authorities had to be accepted for what they purported to be and that any question directed to the Commissioner which sought to "go behind" them could not be relevant. Counsel said that it might be possible to obtain declaratory relief in the Supreme Court, but that this was a matter for the applicants. There followed the institution of the Supreme Court proceedings. On 13 April 2006 the applicants were committed for trial. The trial of Mr Gedeon has yet to take place. Mr Dowe was convicted on 15 November 2007 after a trial in the New South Wales District Court before Hulme DCJ and a jury and on 7 March 2008 he was sentenced to a term of imprisonment of 12 years with a non-parole period of eight years. His appeal to the New South Wales Court of Criminal Appeal is pending. It should be noted that the conviction of Mr Dowe occurred after the delivery of the decision of the Court of Appeal upholding the validity of the Authorities. As Basten JA indicated in his dissenting reasons in the Court of Appeal, the applicants have an interest in challenging the validity of the Authorities. In the case of Mr Gedeon, this is the exclusion of evidence at his trial, pursuant to s 138 of the Evidence Act and, in the case of Mr Dowe, it is to found a complaint in his appeal against conviction that s 138 should have been applied in his favour at his trial. Declaratory relief The course of this litigation should not be taken as authority that the submissions made by counsel for the Commissioner on 28 March 2006 at the committal proceedings were correct. The reasoning in Ousley v The Queen13 supports the contrary position at least where, as here, the argument is that the issue of the Authorities was an administrative act beyond the statutory power conferred on the Commissioner. Further, s 138 of the Evidence Act, in speaking of "evidence ... obtained ... improperly or in contravention of an Australian law"14, in a situation such as that respecting the validity of the Authorities, 13 (1997) 192 CLR 69 at 79-80, 87, 105, 124, 147-148; [1997] HCA 49. 14 "Australian law" means a Commonwealth, State or Territory law (Dictionary, Pt 1). Kirby Hayne Crennan presents an issue under that section which calls for the trial judge to rule on a "collateral" attack. With respect to the exercise of the power to make the declaratory orders now sought by the applicants, authority in this Court affirms an important general principle. This is that power to make declaratory orders should be exercised sparingly where the conduct of criminal proceedings15. The fragmentation of the criminal process is to be actively discouraged. In any event, a declaration may be of limited utility where founded, as would be the case here, on facts admitted only for the purposes of the satellite litigation. the declaration would touch In Sankey v Whitlam16 Gibbs ACJ remarked: "I would respectfully endorse the observations of Jacobs P (as he then was) in Shapowloff v Dunn17, that a court will be reluctant to make declarations in a matter which impinges directly upon the course of proceedings in a criminal matter. Once criminal proceedings have begun they should be allowed to follow their ordinary course unless it appears that for some special reason it is necessary in the interests of justice to make a declaratory order." However, as the outcome in this Court in Sankey v Whitlam itself indicates, in particular circumstances the interests of justice may militate in favour of the making of a declaratory order. In the present litigation none of the respondents has at any stage suggested that the proceedings for declaratory relief were inappropriate. Indeed, the applicants moved in the Supreme Court in apparent response to the stance taken by the Commissioner during the committal proceedings. That stance reflected an appreciation that what was at stake was more than a question of the admissibility of evidence in the ordinary sense 15 Sankey v Whitlam (1978) 142 CLR 1; [1978] HCA 43. See also as to the undesirable fragmentation of the criminal process R v Iorlano (1983) 151 CLR 678; [1983] HCA 43; Yates v Wilson (1989) 168 CLR 338; [1989] HCA 68; R v Elliott (1996) 185 CLR 250; [1996] HCA 21. 16 (1978) 142 CLR 1 at 26. 17 [1973] 2 NSWLR 468 at 470. Kirby Hayne Crennan mentioned by Stephen J in Sankey v Whitlam18. There is a considerable public interest in the observance of due process by law enforcement authorities by putting beyond doubt important questions of construction of the LECO Act19. Sankey v Whitlam reached this Court by removal of a cause pending in the Supreme Court of New South Wales, upon application by the Attorney-General of the Commonwealth made pursuant to s 40 of the Judiciary Act 1903 (Cth). No threshold question of the grant of special leave arose. However, the considerations referred to above in the present litigation favour the grants of special leave. Further relevant, albeit not imperative, considerations are that the grants of special leave are unopposed and that the Court of Appeal divided in its dismissal of the appeals to that Court. The grounds advanced by the applicants before Hall J at first instance included the submission that critical provisions of the LECO Act were invalid by reason of inconsistency with provisions of the Customs Act, Pt IAB of the Crimes Act, and provisions of the Criminal Code (Cth). This submission was rejected and is not further pressed, but it did have the consequence that the federal jurisdiction of the Supreme Court was engaged20. The applicants, however, had in the circumstances outlined above the necessary interest for their standing to seek declaratory relief21. The contrary has not been submitted by the respondents. Special leave to appeal should be granted to both applicants. It is necessary therefore to turn to consider the substantive issues on the appeals. Something more should be said of the terms of the LECO Act. 18 (1978) 142 CLR 1 at 80. 19 cf the observations of Mason J in Sankey v Whitlam (1978) 142 CLR 1 at 83. 20 Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251; [2005] HCA 38. 21 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582, 595-596; [1992] HCA 10; Croome v Tasmania (1997) 191 CLR 119 at 126-127, 132-133; [1997] HCA 5. Kirby Hayne Crennan The provisions of the LECO Act The relevant provisions of s 5 of the LECO Act, which deals with the making of applications for authorities, are as follows: "(1) A law enforcement officer for a law enforcement agency may apply to the chief executive officer of the agency for authority to conduct a controlled operation on behalf of the agency. The chief executive officer may require the applicant to furnish such additional information concerning the proposed controlled operation as is necessary for the chief executive officer's proper consideration of the application." As indicated earlier in these reasons, the Commissioner is the relevant "chief executive officer" and the Commission is the "law enforcement agency". The expression "controlled operation" is defined in s 3(1) of the LECO Act as meaning an operation conducted for the purpose of: obtaining evidence of criminal activity or corrupt conduct, or arresting any person involved in criminal activity or corrupt conduct, or frustrating criminal activity or corrupt conduct, or carrying out an activity that is reasonably necessary to facilitate the achievement of any purpose referred to in paragraph (a), (b) or (c), being an operation that involves, or may involve, a controlled activity". A "controlled activity" means "an activity that, but for section 16, would be unlawful" (s 3(1)). "[C]orrupt conduct" has the same meaning as in the Independent Commission Against Corruption Act 1988 (NSW) (s 3(1)). The Authorities were directed to the obtaining of evidence not of corrupt conduct but of criminal activity. Section 6(1) of the LECO Act states: Kirby Hayne Crennan "After considering an application for authority to conduct a controlled operation, and any additional information furnished under section 5(3), the chief executive officer: (a) may authorise a law enforcement officer for the law enforcement agency concerned to conduct the operation, either unconditionally or subject to conditions, or (b) may refuse the application." The chief executive officer "may not" grant an authority "unless ... satisfied" of the matters listed in pars (a)-(d) of s 6(3). These are as follows: that there are reasonable grounds to suspect that criminal activity or corrupt conduct has been, is being or is about to be conducted in relation to matters within the administrative responsibility of the agency, that the nature and extent of the suspected criminal activity or corrupt conduct are such as to justify the conduct of a controlled operation, that the nature and extent of the proposed controlled activities are appropriate to the suspected criminal activity or corrupt conduct, that the proposed controlled activities will be capable of being the reporting to enable accounted for requirements of this Act to be fully complied with". in sufficient detail In considering the matters referred to in pars (a)-(d) of s 6(3), the chief executive officer "must have regard" to pars (a)-(c) of s 6(4). These are: the reliability of any information as to the nature and extent of the suspected criminal activity or corrupt conduct, the likelihood of success of the proposed controlled operation compared with the likelihood of success of any other law enforcement operation that it would be reasonably practicable to conduct for the same purposes, the duration of the proposed controlled operation". Kirby Hayne Crennan The critical provision, the construction of which is disputed, appears in s 7 of the LECO Act. This deals with certain matters which are not to be authorised. In particular sub-s (1) states: "An authority to conduct a controlled operation must not be granted in relation to a proposed operation that involves any participant in the operation: inducing or encouraging another person to engage in criminal activity or corrupt conduct of a kind that the other person could not reasonably be expected to engage in unless so induced or encouraged, or engaging in conduct that is likely to seriously endanger the health or safety of that or any other participant, or any other person, or to result in serious loss or damage to property, or engaging in conduct that involves the commission of a sexual offence against any person." (emphasis added) The effect of s 13A of the LECO Act is that the Authorities are "not invalidated by any procedural defect, other than a defect that affects the substance of [the Authorities] in a material particular". It will be apparent that if the Authorities were granted contrary to s 7(1), they suffer from more than a procedural defect, and that a matter of substance is involved. The contrary was not suggested and the respondents did not rely upon s 13A to save the Authorities if they were invalid. The submissions In their draft notices of appeal the applicants make three principal submissions. Two of them fix upon the words emphasised above in par (b) of s 7(1) of the LECO Act. First, it is said that the prohibition in that sub-section against controlled operations involving "conduct that is likely to seriously endanger the health or safety of ... any other person" turns, contrary to the unanimous view of the Court of Appeal22, not upon the state of mind of the chief executive officer of the agency but, rather, upon the objective determination of 22 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 57, 65, 68. Kirby Hayne Crennan this criterion as a "jurisdictional fact". In the course of oral argument, the submission was refined so as to treat par (b) of s 7(1) as concerned with the existence of power rather than the exercise of discretion. The second principal submission is that the reference in par (b) to "any other person" is not, contrary to the view taken by the majority in the Court of Appeal23, confined to persons in the physical vicinity of the authorised conduct; rather, that phrase encompasses harm to other persons which is the foreseen and expected consequence of the conduct in question. The third submission is that the majority in the Court of Appeal erred in finding that a "controlled activity" within the meaning of the definition in the LECO Act extends to conduct which continues to be unlawful by reason of contravention of a law of the Commonwealth24. Rather, it is submitted that "controlled activity" for the purpose of the LECO Act is confined to unlawful activity which is capable of being, and is in fact, rendered lawful by s 16 of the LECO Act; that section does not render lawful conduct which, while unlawful at common law or under New South Wales statute law, is also made unlawful by federal law25. Federal-State overlap In this Court, an earlier attempt by the applicants to argue that the authorising provisions of the LECO Act, a State law, were invalid by the operation of s 109 of the Constitution was not pressed. Accordingly, we put that consideration to one side and assume (as it appears safe to do) that there is no constitutional inconsistency. It is convenient, then, to notice first the applicants' third submission, although, in the result, we are of the view that the applicants are entitled to succeed on the propositions advanced in their interrelated first and second submissions. 23 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 61, 68. 24 It may be assumed, without deciding, that s 16 does render lawful activity in New South Wales which is unlawful under the statute law of another State or of a Territory. 25 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 53, 68. Kirby Hayne Crennan In his dissenting reasons, Basten JA accepted the applicants' third submission. He concluded that the activities the subject of the Authorities were not "controlled activities" within the meaning of the LECO Act because, "despite any putative operation of s 16"26, they would remain "unlawful". Possession of a prohibited import was an offence against s 233B of the Customs Act27; there was no certificate under s 15M of the Crimes Act; and there would be no defence of "reasonable excuse" to the offence under s 233B of the Customs Act. Basten JA expressed his conclusion as follows28: "The definition of 'controlled activity' [in s 3(1) of the LECO Act] should thus be construed to mean 'an activity that, but for section 16, would be unlawful, but would be rendered lawful by the operation of section 16, when engaged'. In other words, the definition implicitly embraces the effect of s 16, which is to render the activity lawful. If, because of a Commonwealth law, s 16 does not have that effect, and the activity remains unlawful, the definition of 'controlled activity' is not engaged. It follows, to the extent that authority is purportedly given for a controlled operation that involves or may involve a controlled activity, the authority will be invalid." The contrary construction accepts that in some instances approval will be required under both the federal and State controlled operations provisions if there is to be a fully effective dispensation for conduct unlawful under both federal and State legislation. No party contends that of its own force State legislation could dispense with the operation and requirements of a federal law and remove from its operation conduct which the federal law proscribes. No party contends that the LECO Act purports to do so upon its proper construction. The phrase in s 16 26 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 67. 27 Section 233B(1)(a)(iv). 28 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 62. Kirby Hayne Crennan "[d]espite any other Act or law" does not extend to the operation of a law of the Commonwealth29. The "other Act" must be a New South Wales statute30. However, it does not follow that an authority given under the LECO Act will be beyond the power of the Commissioner or other "chief executive officer" because there has been a failure to obtain concurrently a certificate under s 15M of the Crimes Act where federal criminal law may also be engaged by commission of the proposed "controlled activity". There is a need for approval under both statutory regimes if full protection for those involved is to be obtained. Further, the absence of a necessary approval under either scheme will be sufficient to raise at trial the operation of s 138 of the Evidence Act. But, s 138 apart, the State authority, within the scope of the State law and for its purposes (should that issue arise), will be effective without a certificate under s 15M of the Crimes Act. The third submission of the applicants, in the terms in which it was expressed, should not be accepted. There remain the first and second linked submissions, respecting par (b) of s 7(1) of the LECO Act. Paragraph (b) of s 7(1) of the LECO Act The expression "jurisdictional fact" was used somewhat loosely in the course of submissions. Generally the expression is used to identify a criterion the satisfaction of which enlivens the exercise of the statutory power or discretion in question. If the criterion be not satisfied then the decision purportedly made in exercise of the power or discretion will have been made without the necessary statutory authority required of the decision maker. The concept appears from the following passage in the reasons of Latham CJ in R v Connell; Ex parte The Hetton Bellbird Collieries Ltd31: 29 See Love v Attorney-General (NSW) (1990) 169 CLR 307 at 322-323; [1990] HCA 4. 30 Solomons v District Court (NSW) (2002) 211 CLR 119 at 130 [9]; [2002] HCA 47. 31 (1944) 69 CLR 407 at 429-430; [1944] HCA 42. See also the discussion by Mason J in R v Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113 at 125; [1978] HCA 60, using the expression "a preliminary question on the answer to which … jurisdiction depends". Kirby Hayne Crennan "The subject matter with which the Industrial Authority deals is, inter alia, rates of remuneration. There is power to deal with this subject matter in respect of rates of remuneration which existed on the specified date only if the authority is satisfied that the rates in question are anomalous. Unless this condition is fulfilled, the authority cannot act – it is a condition of jurisdiction." An instance in the LECO Act is the requirement in s 6(1) that the chief executive officer first have considered an application made under s 5 for the authority to conduct a controlled operation. The text of these provisions is set out earlier in these reasons. Section 7(1) of the LECO Act is expressed in the terms of prohibition and thus stands rather differently. The provision does not stipulate any criterion the satisfaction of which enlivens the exercise of a power or discretion. Rather, s 7(1) delimits the scope for any exercise of authority by a chief executive officer. There is no statutory power to grant an authority where the proposed operation involves any participant in the operation of any of the activities identified in pars (a), (b) and (c). That is the force of the expression "must not be granted" in s 7(1). It conveys the notion of a contraction in the content of what would be the power otherwise conferred by s 6. If it be established upon a "collateral" attack which is decided in a ruling at trial under s 138 of the Evidence Act, or other form of "collateral" attack or (if the proceeding be appropriate) upon judicial review, that, for example, the authority in question was in relation to a proposed operation involving any participant engaging in conduct that was likely to seriously endanger the health or safety of that or any other participant or any other person, then the grant of the authority was beyond power. No question of abuse of discretion or unreasonable decision making arises. The question is answered at an earlier stage of legal analysis. The contrary conclusion by the Court of Appeal32 appears to have proceeded from a misconstruction of the statutory provisions, in particular of the interrelation between ss 5, 6 and 7. 32 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 57, 65, 68. Kirby Hayne Crennan The remaining issue concerns the expression in par (b) of s 7(1), "to seriously endanger the health or safety of ... any other person". The majority in the Court of Appeal held33: "The words 'any other person' should be read ejusdem generis with the reference to 'participants' in the controlled operation so as to be confined to persons proximate to, that is, in the physical vicinity of, the operation upon whom the authorised conduct directly impinges." In this Court, counsel for the Commission did not support that construction. Rather, counsel submitted that the expression "any other person" is limited to those involved in the operation in question. This submission was developed by counsel as follows: "Now, the operational plan here did not go beyond the supply by [an officer of the Commission] to Tom and by Tom to Gedeon and thereafter the matter was beyond the control of this operation. It was a matter which may have caused harm at some point down the track, depending upon the quantities in which and the circumstances in which cocaine was ingested by end users, which end users would of course have been involving themselves in what might be described as 'interposed criminal conduct'." By way of contrast, in his dissenting reasons Basten JA contended that the Authorities could not properly have been granted because of the prohibition imposed by par (b) of s 7(1)34. The question of construction of par (b) of s 7(1) is not resolved by the application of any particular maxim or canon of statutory construction selected from among those which may jostle for acceptance. The preferable starting point appears from what was said by Dixon J in Cody v J H Nelson Pty Ltd35: 33 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 61, 68. 34 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 67. 35 (1947) 74 CLR 629 at 647; [1947] HCA 17. See also the discussion by Mahoney JA in Mattinson v Multiplo Incubators Pty Ltd [1977] 1 NSWLR 368 at Kirby Hayne Crennan "In the modern search for a real intention covering each particular situation litigated, however much help and guidance may be obtained from the principles and rules of construction, their controlling force in determining the conclusion is likely to be confined to cases where the real meaning is undiscoverable or where the court of construction, sceptical of the foresight of the draftsman or of his appreciation of the situation presented, is better content to supply the meaning by a legal presumption than subjectively." The first point to be made here is that the provision in par (b) of s 7(1) uses the expression "seriously endanger" health or safety and does not speak of damage to health or the sustaining of injury. The emphasis is upon exposure to danger or peril rather than upon the materialisation of that risk. The primary judge accepted evidence that a consequence foreseen by a senior officer of the Commission of the conduct of the controlled operations using the services of "Tom" was that, depending upon the extent of dilution, between 70,000 and 100,000 discrete dosage units of the cocaine would reach the streets36. With the agreement of Basten JA37, Spigelman CJ said38: "If the subsequent distribution to end users of the cocaine fell within the scope of the prohibited 'conduct' in which a participant would engage pursuant to an authority, within the meaning of s 7(1)(b), it was not, and could not be, contended that the health of those users was not 'seriously endangered'." In this Court, counsel for the Commission was asked: "Is the position of the [Commission] in this Court that it wishes to contend that delivery of six kilograms of cocaine to a variety of end users is not 36 Dowe v Commissioner of New South Wales Crime Commission (2007) 169 A Crim R 43 at 50. 37 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 66. 38 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 60. Kirby Hayne Crennan likely to seriously endanger the health or safety of any end user? Is that the position of the [Commission]?" Counsel responded: "We submit that it will not necessarily do so. There is a factual decision to be made in that respect and it is better made back in the Supreme Court." The difficulty with that submission is that par (b) of s 7(1) uses the term "likely" and does not speak in terms of the serious endangerment as a necessary consequence of engagement in the conduct authorised. That the term "likely" was employed advisedly in s 7(1) appears from the passage in the second reading speech in the Legislative Assembly which has been set out earlier in these reasons. The Minister spoke of "a high risk of liability for damages" as a reason for the express prohibition to be imposed by par (b) of s 7(1). That approach was consistent with the well-known statement of general principle which had been made in 1980 in Wyong Shire Council v Shirt by Mason J39. His Honour's statement begins40: "In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk." A reasonable person in the position of the defendant would have foreseen that the conduct of the activities the subject of the Authorities would involve a risk of seriously endangering the health of some at least of the numerous class of end purchasers of the cocaine. The contrary is impossible to reconcile with the legislative judgment, reflected both in federal and State law, prohibiting respectively the importation, supply and possession of such drugs. That prospect 39 (1980) 146 CLR 40 at 47-48; [1980] HCA 12. 40 (1980) 146 CLR 40 at 47. Kirby Hayne Crennan was sufficient to attract, as the legislative response to such a situation of risk, the prohibition in par (b) of s 7(1) of the LECO Act. The submission by the Commission that the phrase "any other person" is limited to participants in the operation reads down the ordinary meaning of that phrase and does so with the consequence of leaving the State exposed to the possibility of civil liability to a range of third parties, a hazard the legislature wished to avoid. Hypothetical examples of what might be thought to be extreme situations cannot determine the particular issue of the validity of the Authorities in the present litigation. It may, however, be said that in some of those situations issues of sufficiency of the causal link to the conduct authorised might be important. The point sought to be made here appears from what was said by Basten JA as follows41: "It is often helpful to test a proposed construction of a statute by reference to its possible operation in other circumstances. Nevertheless, there are risks in taking that exercise too far. The need to consider possible harm which might occur due to criminals seeking to 'escape from the crime scene' would also need careful analysis. It is at least possible that those circumstances would flow from the attempt to arrest the criminals, rather than from some conduct involved in the controlled operation. By analogy with conferral of immunity in other circumstances, it might be wrong to treat the controlled operation as continuing to the stage of an attempted arrest which would otherwise be authorised by law: cf Board of Fire Commissioners (NSW) v Ardouin42. Similarly, retaliatory acts by a person targeted in the operation, which may endanger the safety of participants or third parties might properly be said to flow, not from the authorised conduct, but from a belief of the person targeted that he or she had been betrayed to the authorities. Whether such a conclusion is open would need to be 41 Dowe v Commissioner of New South Wales Crime Commission (2007) 177 A Crim R 44 at 67. 42 (1961) 109 CLR 105; [1961] HCA 71. Kirby Hayne Crennan considered in specific circumstances as they arose, as would findings as to whether the risk were likely or unlikely to eventuate." We agree with these observations. The applicants are entitled to succeed on their interrelated first and second submissions. Orders Special leave to appeal should be granted and the appeals taken as heard instanter. Each appeal should be allowed with costs against the Commission; orders 3 and 4 of the Court of Appeal of the Supreme Court of New South Wales should be set aside and in their place (a) the appeal to that Court should be allowed with costs against the Commission and (b) a declaration should be made that the relevant Authorities are invalid and (c) the summons in the Common Law Division of the Supreme Court of New South Wales otherwise should be dismissed but with an order for costs against the Commission.

HIGH COURT OF AUSTRALIA KJERULF AINSWORTH & ORS APPELLANTS AND MARTIN ALBRECHT & ANOR RESPONDENTS [2016] HCA 40 12 October 2016 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 6 November 2015, except insofar as it orders in paragraph 1 that leave to appeal be granted, and in its place order that the appeal be dismissed with costs. The first respondent pay the appellants' costs of the appeal to this Court. On appeal from the Supreme Court of Queensland Representation S S W Couper QC with K N Wilson QC for the appellants (instructed by Australian Property Lawyers) D R Gore QC with M J Batty for the first respondent (instructed by Mahoneys Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Real property – Community titles scheme – Use of common property – Body Corporate and Community Management Act 1997 (Q) – Dispute between owners of lots in community titles scheme – Where one lot owner sought to use common property airspace to expand balconies – Where proposal put to body corporate for alteration of rights of lot owners to allow lot owner exclusive use of common property – Where proposal required resolution without dissent – Where motion defeated – Where proponent applied for dispute resolution – Where adjudicator concluded that opposition by other lot owners to proposal unreasonable – Whether adjudicator erred in approach to decision – Whether grounds for opposition to motion by individual lot owners unreasonable – Whether necessary to balance competing interests. Words and phrases – "adjudicator", "body corporate", "common property", "original design intent", "resolution without dissent", "unreasonable in the circumstances". Body Corporate and Community Management Act 1997 (Q), ss 94(2), 276, Sched 5, Item 10. FRENCH CJ, BELL, KEANE AND GORDON JJ. The Body Corporate and Community Management Act 1997 (Q) ("the BCCM Act") regulates the determination of disputes between the owners of lots in a community titles scheme. Here the dispute concerns a proposal for the alteration of the rights of lot owners to the common property of the scheme in order to allow one lot owner the exclusive use of part of the common property. Approval of the proposal required a resolution without dissent of the body corporate. The BCCM Act makes provision for an adjudicator to order that a proposal be approved, notwithstanding dissent by a lot owner, if the opposition to the proposal was unreasonable in the circumstances. The adjudicator appointed to resolve the dispute between the parties concluded that opposition by lot owners to the proposal was unreasonable and made an order deeming the motion supporting the proposal to be passed. The adjudicator's conclusion was overturned by the Queensland Civil and Administrative Tribunal ("the Tribunal") but upheld by the Court of Appeal of the Supreme Court of Queensland. For the reasons which follow, the adjudicator and the Court of Appeal erred in law, and the appeal to this Court must be allowed. Background The Viridian Noosa Residences is a residential building complex situated at Noosa in the State of Queensland. The complex is an architectural award winning development. The Viridian Noosa Residences Community Titles Scheme 34034 ("the Scheme") regulates the ownership of the complex. The Scheme was established on or about 1 June 2005, and is comprised of 23 lots of which some (including the first respondent's lot) are semi-detached dwellings in the nature of townhouses located at some distance from each other, although the townhouses are constructed in pairs sharing a common wall. Upon establishment of the Scheme, a body corporate for the Scheme was created ("the Body Corporate")1. The members of the Body Corporate are the owners of all lots included in the Scheme2. 1 BCCM Act, s 30. The Body Corporate was named as the second respondent in the appeal; it filed a submitting appearance. 2 BCCM Act, s 31. Bell Gordon Under the BCCM Act, the common property for a scheme is owned by the lot owners as tenants in common, the interest of each lot owner in a lot being inseparable from the lot owner's interest in the common property3. The body corporate may enforce rights related to the common property as if it were the owner of the common property4. and John Mainwaring ("the appellants") and Martin Albrecht ("the first respondent") are owners of lots in the Scheme. The first respondent owns Lot 11 (Unit 14). He has for some time wished to amalgamate the two balconies forming part of his lot so as to create one deck comprising the area of the two existing balconies and the space in between them and around them. To achieve this end, he requires the exclusive use of the common property airspace that lies between the two existing balconies, estimated to be an area of 5m². Under s 169(1)(b) of the BCCM Act, the by-laws for a community titles scheme may provide for the regulation of the use of the common property. These by-laws are included in the community management statement for a community titles scheme5. An "exclusive use by-law" is a by-law that attaches to a lot and gives the occupier of the lot the exclusive use to the rights and enjoyment of common property6. Pursuant to s 171 of the BCCM Act, where the addition of a new exclusive use by-law to the community management statement is sought, the new by-law must specifically identify the common property affected and be the subject of a resolution without dissent by the body corporate consenting to the recording of the new community management statement incorporating the new by-law. After several abortive attempts to procure the necessary approval to the proposed alterations from the Body Corporate, the first respondent moved at an extraordinary general meeting of the Body Corporate held on 10 August 2012 "that the Body Corporate consent to the owners of lot 11 extending the deck on the upper level of lot 11" and that the community management statement for the Scheme be amended by the inclusion of a by-law which would grant "the exclusive use and enjoyment of the common property airspace into which the 3 BCCM Act, s 35(1) and (3). 4 BCCM Act, s 36(1). 5 BCCM Act, s 66(1)(e). 6 BCCM Act, s 170. Bell Gordon extended deck protrudes". The first respondent's motion also proposed that the Body Corporate endorse its consent to, and take steps to record, the new community management statement. The motion was defeated with seven votes in favour, seven against, one abstention and eight owners not voting at all. The opponents of the motion were the first respondent's adjoining lot owners and six other lot owners, one of whom was the architect of the complex. On 24 September 2012, the first respondent applied to the Office of the Commissioner for Body Corporate and Community Management for a referral of the dispute between himself and the Body Corporate to an adjudicator. The first respondent sought an order under s 276 and Item 10 of Sched 5 of the BCCM Act that effect be given to his motion on the basis that opposition to the motion was, in the circumstances, unreasonable. Legislation It is convenient at this point to refer to the material provisions of the BCCM Act which establish the framework within which the dispute was to be decided. Chapter 6 of the BCCM Act provides for dispute resolution in relation to community titles schemes. Section 227(1)(b) defines "dispute" to include a dispute between "the body corporate for a community titles scheme and the owner or occupier of a lot included in the scheme". Section 228(1) provides that the purpose of Ch 6 is to establish arrangements for resolving, in the context of community titles schemes, disputes about, inter alia, contraventions of the Act and the exercise of rights or powers under the Act. Under s 238(1)(a), a person who is "a party to, and is directly concerned with, a dispute" to which Ch 6 applies may apply for an order to resolve the dispute. Section 269(1) provides for investigation by an adjudicator of such an application. It provides: "The adjudicator must investigate the application to decide whether it would be appropriate to make an order on the application." Section 276 relevantly provides: "(1) An adjudicator to whom the application is referred may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about – Bell Gordon a claimed or anticipated contravention of this Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or (3) Without limiting subsections (1) and (2), the adjudicator may make an order mentioned in schedule 5." Schedule 5 of the BCCM Act includes Item 10, which provides: "If satisfied a motion ... considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable – an order giving effect to the motion as proposed, or a variation of the motion as proposed." It can be seen that the state of satisfaction contemplated by Item 10 is a condition precedent both to the making of an order of the kind set out in Item 10 and to its characterisation as "just and equitable in the circumstances … to resolve a dispute". Item 10 fits with s 238(1)(a), which provides that a party to a dispute may apply for an order to resolve the dispute; and ss 269(1) and 276 provide for what the adjudicator must and may do respectively in relation to that dispute. The matter in dispute here is whether the opposition of the appellants to the first respondent's proposal was unreasonable. Section 289 of the BCCM Act provides that a person who is aggrieved by an order that an adjudicator makes for the application may appeal to the Tribunal, but only on a question of law. It was pursuant to this provision that the appellants in this Court appealed from the adjudicator to the Tribunal. The adjudicator In the proceeding before the adjudicator, the owners of Lot 10, which adjoined the first respondent's lot, relied upon the opinions of three architects to the effect that implementation of the first respondent's proposal would have an adverse effect upon their privacy. The first respondent relied upon the opinions of three other architects to the contrary. The adjudicator considered the competing architectural opinions, and photographs, diagrams and drawings, and Bell Gordon came to a preference for the opinions of the first respondent's architects7. The adjudicator found that the proposed extension would have no noticeable detrimental impact on the building's architectural integrity8. The architect who designed the complex (the fifth appellant) gave evidence that he had intentionally designed the decks with limited functionality so as to minimise noise emanating from the decks. His evidence was that the residences were designed intentionally to avoid large decks and so were designed with two smaller outdoor balconies. In this regard, the adjudicator considered that the Body Corporate had no obligation to ensure that the original architectural intent was complied with9. Further, the adjudicator was unpersuaded on the evidence that the proposed expansion of the first respondent's deck would increase the use of the deck and noise in a way which would disturb other occupiers10. She noted that if the use of the extended deck resulted in a disturbance, affected occupiers could pursue their concerns under the by-laws11. In addition, the adjudicator accepted12 evidence from one of the first respondent's architects that any slight increase in vision between Lots 10 and 11 would not interfere with the amenity of Lot 10. She held that any impact on privacy and views from Lot 10 would be minimal and that arising privacy issues could be ameliorated by additional privacy screening13. She considered that the privacy concerns of the owners of Lot 10 were not a sufficient basis to warrant the refusal of the motion14. There was some evidence from a valuer, contradicted by evidence from a real estate agent, that implementation of the first respondent's proposal would 7 Viridian Noosa Residences [2013] QBCCMCmr 351 at [63]. 8 Viridian Noosa Residences [2013] QBCCMCmr 351 at [61]. 9 Viridian Noosa Residences [2013] QBCCMCmr 351 at [55]. 10 Viridian Noosa Residences [2013] QBCCMCmr 351 at [66]-[67]. 11 Viridian Noosa Residences [2013] QBCCMCmr 351 at [69]. 12 Viridian Noosa Residences [2013] QBCCMCmr 351 at [76]. 13 Viridian Noosa Residences [2013] QBCCMCmr 351 at [77]. 14 Viridian Noosa Residences [2013] QBCCMCmr 351 at [77]. Bell Gordon have the effect of modestly enhancing the value of his lot even though he offered nothing by way of payment to his fellow lot owners to secure that benefit15. The adjudicator did not seek to reach a concluded view on this issue, finding that no other lot owners or the Body Corporate would have any material use for the 5m² of common property airspace required by the first respondent to extend his decks, and that his exclusive use of this airspace would not result in any loss of the use of the space by any other person16. The adjudicator regarded the application by the first respondent as involving an assertion of a contravention by the Body Corporate of its obligation to act reasonably, pursuant to s 94(2) of the BCCM Act17, in the exercise of its functions under s 94(1). Section 94 of the BCCM Act concerns the general functions and powers of a body corporate in relation to the administration of a community titles scheme. It provides: "(1) The body corporate for a community titles scheme must – administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme; and enforce the community management statement ... and carry out the other functions given to the body corporate under this Act and the community management statement. The body corporate must act reasonably in anything it does under subsection (1) including making, or not making, a decision for the subsection." The adjudicator considered that, if the opposition to the motion was unreasonable, then the resulting Body Corporate decision not to pass the motion 15 See Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 16 Viridian Noosa Residences [2013] QBCCMCmr 351 at [47]. 17 Viridian Noosa Residences [2013] QBCCMCmr 351 at [28]. Bell Gordon was unreasonable and so a contravention of s 94(2)18. The adjudicator seems to have viewed the dispute submitted to her as being within s 276(1)(a) of the It is convenient to note here that another view is that the dispute concerned the exercise of rights or powers under the Act, so that the dispute was within s 276(1)(b). That is the better view of the source of the adjudicator's authority for two reasons. First, it is focused upon Item 10 of Sched 5, which is the basis on which rights of lot owners exercisable under the Act and community management statement may be altered by the adjudicator. Secondly, it is the basis on which the first respondent relied in his application for a referral of the dispute to an adjudicator. The issue for the adjudicator was whether the votes of dissenting lot owners were unreasonable, not whether the decision of the Body Corporate was reasonable. It is apparent that the framing of the dispute by the adjudicator skewed her approach to its resolution. The adjudicator noted that individual owners may have acted against the motion in good faith, and in genuine reliance on architectural and other advice19. Nevertheless, addressing the dispute as one concerned with a contravention of s 94(2), she concluded: "On balance I am not satisfied that the Body Corporate acted reasonably in deciding not to pass [the motion]."20 On that footing, the adjudicator made an order deeming the motion to have been passed21. The Tribunal The appellants appealed to the Tribunal. As noted above, the appeal was limited to a question of law22. The Tribunal allowed the appeal and set aside the adjudicator's orders. 18 Viridian Noosa Residences [2013] QBCCMCmr 351 at [29]. 19 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. 20 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. 21 Viridian Noosa Residences [2013] QBCCMCmr 351 at [88]. 22 BCCM Act, s 289(2); see also Queensland Civil and Administrative Tribunal Act 2009 (Q), s 146. Bell Gordon The Tribunal concluded23 impermissibly substituted her own opinion as to the reasonableness of the Body Corporate's decision, and had not focused on whether the opponents' grounds of opposition were unreasonably held24. The Tribunal concluded that, in so proceeding, the adjudicator erred in law25. the adjudicator had that The Tribunal noted that the decks were intentionally designed with limited functionality and that all lot owners had acquired their lots fully aware of the limited functionality of the decks26. The Tribunal also noted that the adjudicator had not attempted to address the absence of compensation for the use of the common property airspace. The Tribunal held27 that the adjudicator had erred in failing to conclude that the circumstance that there was no compensation offered for the use of the common property was a reasonable basis to oppose the motion. The Court of Appeal The first respondent applied for leave to appeal on a question of law to the Court of Appeal of the Supreme Court of Queensland to challenge the decision of the Tribunal. The Court of Appeal (McMurdo P, Morrison JA and Martin J) granted the application for leave to appeal, allowed the appeal, set aside the Tribunal's orders and dismissed the appeal to the Tribunal. The Court of Appeal held that the 23 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 24 See eg Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 25 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 26 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [97]. 27 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at Bell Gordon Tribunal erred in concluding that the adjudicator had erred in law in her understanding of the task committed to her28. The Court of Appeal accepted29 that, as the reasons of both the adjudicator and the Tribunal acknowledge, views as to what was reasonable or unreasonable involved value judgments on which there was room for reasonable differences of opinion, with no opinion being uniquely correct30. Nevertheless, the Court of Appeal went on to hold that the Tribunal erred in concluding that the adjudicator had erred in law in making findings of fact to resolve those reasonable differences of opinion in favour of the first respondent. The Court of Appeal held that these findings of fact were open on the material before the adjudicator, and that she did not adopt the wrong approach in balancing the interests of the proponent and the opponents of the alteration in order to resolve the dispute31. The Court of Appeal said that the issue for the adjudicator was "whether the body corporate had complied with its obligation under s 94(2) BCCM Act to act reasonably."32 Later, the Court of Appeal said33: "Contrary to the [appellants'] contentions, the adjudicator was not limited to determining whether the [appellants'] opposition to the motion could have been reasonably held. She was required to reach her own conclusion after considering all relevant matters." In addition, the Court of Appeal held that, because the adjudicator found as a fact that the airspace was of no value to anyone other than the first 28 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374-376 [92]-[98]; [2015] QCA 220. 29 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [84]. 30 Norbis v Norbis (1986) 161 CLR 513 at 518 per Mason and Deane JJ; [1986] HCA 31 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374-375 [93]. 32 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 367 [58]. 33 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [82]. Bell Gordon respondent, she did not err in failing to regard the first respondent's failure to offer compensation as a reasonable basis to oppose the motion34. The appellants' submissions The appellants submitted that the Court of Appeal erred in proceeding on the basis that the adjudicator was required to reach her own conclusion as to the reasonableness of the decision of the Body Corporate in failing to pass the necessary resolution without dissent35. It was said that the Court of Appeal erred in approving of the adjudicator's approach. The appellants submitted that no balancing exercise was involved in the adjudicator's task, which should have been focused upon whether the opposition of lot owners to the first respondent's proposal was unreasonable. The appellants argued that to "balance" the right of the first respondent to improve his lot with the rights of the other owners to retain their (already existing) property rights fails to recognise that what is in issue under Item 10 of Sched 5 of the BCCM Act is the reasonableness of an insistence by a lot owner on maintaining his or her property rights under the Scheme. In that regard, each of the lot owners was entitled to vote in his or her own interests; only if the position adopted was unreasonable, having regard to those interests, could the adjudicator override that vote. The adjudicator did not find that their opposition to the motion was unfounded or vexatious. Indeed, the adjudicator expressly acknowledged that the lot owners voted against the motion in good faith and placed genuine reliance on architectural and other advice36. The appellants submitted that, had the Court of Appeal adopted the correct approach, it would necessarily have concluded that the opposition to the first respondent's motion was not unreasonable because it had a logical and rational basis. The appellants submitted that it is evident from the reasons of the adjudicator, and of the Court of Appeal, that the adjudicator approached the matter by making findings of fact as to whether the various "grounds" of opposition to the motion represented the better view of the particular issue on the evidence. They submitted that this is exemplified in the adjudicator's preference 34 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374-375 [93]. 35 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [82]. 36 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. Bell Gordon of the architectural opinions supporting the first respondent to the opinions supporting the appellants' opposition to the proposal. Further, the circumstance that there was a body of evidence supporting the opposition of the adjoining owners, and a real concern expressed about privacy and noise issues, shows that the opposition to the motion was, in the circumstances, not unreasonable. The appellants also referred to evidence before the adjudicator from the valuer and the real estate agent as to the value of the common property under consideration. It was submitted that, when there was evidentiary support for the use of the common property having some value to the first respondent, who offered nothing to his fellow lot owners in return, the adjudicator erred in concluding that it was not reasonable to oppose the motion because the common property was not worth anything to the dispossessed owners. The first respondent's submissions The first respondent submitted that the adjudicator did not misunderstand the task committed to her. It was said that the adjudicator's task was to conduct a merits review, and, in carrying out that review, to engage in an exercise of balancing the interests of the proponent of the alteration to the common property and the opponents of the alteration. The first respondent submitted that the approach taken by the adjudicator, and by the Court of Appeal, is supported by the judgments in this Court's decision in Waters v Public Transport Corporation37 in relation to the necessity of striking a "balance" between competing positions38, and of "weighing all the relevant factors" in determining whether the appellants' opposition was unreasonable39. In this regard, it was said that the interest of the proponent was a factor to be taken into account by opponents in order to ensure that their opposition was not unreasonable. The first respondent's submissions should not be accepted. 37 (1991) 173 CLR 349; [1991] HCA 49. 38 Waters v Public Transport Corporation (1991) 173 CLR 349 at 379 per Brennan J. 39 Waters v Public Transport Corporation (1991) 173 CLR 349 at 395 per Dawson Bell Gordon The task of the adjudicator The adjudicator described the issue which she was required to address as being "whether the opposition to [the] motion was unreasonable in the circumstances and whether the Body Corporate acted reasonably in refusing to give approval."40 As indicated above, to state the issue in this way was to fail to appreciate that s 94(2) of the BCCM Act did not govern the resolution of the matter. The determination of the dispute submitted for resolution by the first respondent's application turned on whether a resolution by the lot owners in relation to their property rights could be overridden under s 276 and Item 10 of Sched 5 of the BCCM Act, and that question concerned the quality of the grounds of opposition of each dissentient lot owner, not the reasonableness of the decision of the Body Corporate. Section 276 and Item 10 of Sched 5 are the provisions which were invoked by the first respondent. They are the specific provisions which authorise an adjudicator to override the legal effect of a failure to pass a resolution of lot owners required to be passed without dissent. It was no part of the function of the adjudicator under Item 10 of Sched 5 to seek to strike a reasonable balance between competing positions. The adjudicator's attention should have been focused squarely upon whether the opposition by a lot owner or owners to the passing of the resolution was unreasonable. The issue for the adjudicator should not have been confused with an issue as to whether the Body Corporate had failed to comply with s 94(2) of the BCCM Act by achieving a reasonable balance of the competing interests affected by the proposal. In this regard, the language of Item 24 of Sched 5 provides an instructive contrast with the language of Item 10 of Sched 5. The former provides: "If satisfied a decision to pass or not pass a motion at a general meeting of the body corporate was unreasonable – an order declaring that a motion was invalid or giving effect to the motion as proposed, or a variation of the motion as proposed." Item 24 of Sched 5 provides machinery for the enforcement of s 94(2). Under Item 24 of Sched 5, the focus of the adjudicator's concern is a decision of a general meeting of a body corporate, whereas under Item 10 the focus of the 40 Viridian Noosa Residences [2013] QBCCMCmr 351 at [4]. Bell Gordon task reposed in the adjudicator is whether the opposition of a lot owner to the motion is unreasonable. Neither the text, the subject matter, nor the purpose of the BCCM Act made it part of the function of the adjudicator to come to a view that, on balance, the position of the proponent or the opponents was correct41. The reliance by the Court of Appeal42 and by the first respondent in this Court upon the judgments in Waters v Public Transport Corporation43 was misplaced. That case was concerned with the duty of a decision-making body to reach a reasonable decision taking into account competing considerations44. A lot owner voting his or her opposition to a motion is not a decision-maker of this kind. The adjudicator's task under Item 10 of Sched 5 is not to determine whether the outcome of the vote of the general meeting of the Body Corporate was a reasonable balancing of competing considerations, but whether the opposition of lot owners to the proposal was unreasonable. Given that the adjudicator's concern with s 94(2) led her to address the wrong question, namely whether the Body Corporate's decision was reasonable, her ultimate conclusion was inevitably affected by an error of law. The same error infected the approach of the Court of Appeal. Once the Court of Appeal accepted, as it did, that the grounds of opposition to the proposal considered by the adjudicator raised questions in respect of which reasonable minds may differ as to the answer, it is impossible to see how opposition to the first respondent's proposal based on those grounds could be found to be unreasonable45. 41 cf Viridian Noosa Residences [2013] QBCCMCmr 351 at [61]. 42 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [82]. 43 (1991) 173 CLR 349 at 379, 395, 411. 44 Waters v Public Transport Corporation (1991) 173 CLR 349 at 362-365, 377-379, 45 cf McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at 430-431 [11]-[12], 443-444 [55]-[57]; [2006] HCA 45. Bell Gordon Unreasonable opposition In addition, there are specific errors which attend the Court of Appeal's the first respondent's proposal was the opposition that conclusion unreasonable. It is no light thing to conclude that opposition by a lot owner to a resolution is unreasonable where adoption of the resolution will have the effect of: appropriating part of the common property to the exclusive use of the owner of another lot, for no return to the body corporate or the other lot owners; altering the features of the common property which it exhibited at the time an objecting lot owner acquired his or her lot; and potentially creating a risk of interference with the tranquillity or privacy of an objecting lot owner. In the circumstances of the case, the Tribunal was correct to hold that the adjudicator erred in law in reaching that conclusion46; and the Court of Appeal erred in concluding otherwise. The first respondent argued that the function of the adjudicator under Item 10 of Sched 5 involved four steps: identification of a ground of opposition; inquiry as to whether that ground was a rational basis for opposition; (iii) consideration of whether that ground is reasonable, considered in the abstract; and determination whether in all the circumstances of the case, including the interests of the proponent, the ground of opposition is reasonable. The first two steps in this analysis may readily be accepted. It may be doubted whether the third step adds anything useful to a consideration of the issue. But it is at the reference to the interests of the proponent in the fourth step that the first respondent's analysis clearly breaks down. Nothing in the BCCM Act suggests that an opponent to a proposal acts unreasonably in failing to act sympathetically or altruistically towards a proponent who seeks to diminish the property rights of the opponent. The BCCM Act does not contemplate that the rights of a lot owner genuinely opposed to the reduction of his or her rights to common property attached to his or her lot may be overridden where that might 46 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [91], Bell Gordon be thought by an adjudicator to be a reasonable course to adopt, having regard to some standard of sympathy or altruism applicable between lot owners. Such a standard is not prescribed or suggested by the BCCM Act; rather, the Act allows opposition to a resolution to be overridden only where opposition by lot owners other than the proponent is unreasonable. The unreasonableness of the opposition to the first respondent's proposal is to be determined in a context in which lot owners voting in respect of the proposed resolution are exercising their right to vote as an aspect of their proprietary rights as owners of lots included in the Scheme. In this context, the unreasonableness with which Item 10 of Sched 5 is concerned is unreasonableness on the part of the opposing lot owners having regard to those lot owners' interests under the Scheme. The adjudicator was being asked to override rights attached to the property of the lot owners with respect to the common property. The requirement of a resolution without dissent is itself an acknowledgment that the by-laws function as terms of the charter of rights and duties which bind those who acquire lots in a community titles scheme under the BCCM Act. Other provisions of the BCCM Act which also require a resolution without dissent of a body corporate can be seen to be variations on the theme that the charter of rights and duties established between lot owners in relation to the use and enjoyment of their community title under the community management statement should, generally speaking, not be altered save with the consent of all parties to the compact47. Just as parties to a contract cannot, generally speaking, be obliged to give up contractual rights without their consent, so lot owners cannot be required to give up their property rights without consent to another lot owner save pursuant to Item 10 of Sched 5. true, as Of course, the first respondent argued, the unreasonableness of the appellants' opposition to the proposal can only be determined by considering the circumstances of the proposal and its likely effect upon the appellants' property interests; but to say that is distinctly not to demonstrate that opposition to the proposal is unreasonable if it is not informed by altruism or sympathy for the interests of the proponent, at the expense of the opponent's reasonable view of his or her own interests. that The Court of Appeal erred in holding that it was a consideration tending to show that the opposition to the proposed modification was unreasonable that the 47 See BCCM Act, ss 37, 40, 47A, 62, 74, 78, 85 and 91. Bell Gordon first respondent had a legitimate interest in improving his lot48. Nothing in the BCCM Act suggests that a lot owner may be required by an adjudicator to assist another lot owner to enhance that lot owner's interest, or be regarded as acting unreasonably in declining to do so, at least where the enhancement of the proponent's interest is reasonably viewed as adverse to the interests of the opponent. It was also an error on the part of the Court of Appeal to proceed on the basis that it was a consideration tending to show that the opposition to the proposed modification was unreasonable that the common property airspace required to give effect to the proposed modification was of no use to anyone but the first respondent49. A person with a property interest may reasonably insist on conserving that interest even if it is not presently being employed to that person's material advantage. That is so, if for no other reason than that he or she may reasonably expect to be offered something in return for agreement to part with it to another lot owner. Conclusion The power conferred by Item 10 of Sched 5 of the BCCM Act means that a lot owner's exercise of his or her right to vote may, in some cases, be overridden by an adjudicator50. Item 10 of Sched 5 is intended to operate in respect of a broad range of resolutions which are required to be passed without dissent. It must, therefore, be understood that it is neither necessary nor desirable to attempt an exhaustive statement of the circumstances in which such an order may be made. That having been said, opposition to a proposal that could not, on any rational view, adversely affect the material enjoyment of an opponent's property rights may be seen to be unreasonable. Opposition prompted by spite, or ill-will, or a desire for attention, may be seen to be unreasonable in the circumstances of a particular case. But, as is apparent from the foregoing reasons, the adjudicator, the Tribunal and the Court of Appeal all appreciated that this is not such a case. The proposal in question was apt to create a reasonable apprehension that it would affect adversely the property rights of opponents of the proposal and the 48 cf Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [83]. 49 cf Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [83]. 50 cf Hablethwaite v Andrijevic [2005] QCA 336 at [33]. Bell Gordon enjoyment of those rights. In these circumstances, opposition of the lot owners who dissented from the proposal could not be said to be unreasonable. Orders The appeal should be allowed. The order made by the Court of Appeal on 6 November 2015 should be set aside, except insofar as it orders in paragraph 1 that leave to appeal be granted, and in its place the appeal to that Court should be dismissed with costs. The first respondent should pay the appellants' costs of the appeal to this Court. Nettle NETTLE J. This is an appeal from a judgment of the Court of Appeal of the Supreme Court of Queensland (McMurdo P, Morrison JA and Martin J agreeing). The Court of Appeal allowed an appeal from a decision of the Queensland Civil and Administrative Tribunal (Member P Roney QC) ("the Tribunal"), which had allowed an appeal from orders made by an adjudicator under s 276 of the Body Corporate and Community Management Act 1997 (Q) ("the BCCM Act"). The facts of the matter and the relevant statutory provisions sufficiently appear from the joint reasons. The adjudicator concluded51 that she was not satisfied that the second respondent ("the Body Corporate") acted reasonably in deciding not to pass a motion to allow the first respondent ("Albrecht") to combine and extend the decks appurtenant to Lot 11 in the Viridian Noosa Residences at Noosa in Queensland, and, on that expressed basis, the adjudicator declared that the motion was not passed because of opposition that was unreasonable in the circumstances52. The Tribunal decided53 that the adjudicator erred in law in a number of material respects and that, applying the correct legal test, the adjudicator ought to have held that Albrecht had not established that the Body Corporate acted unreasonably. The Court of Appeal held54 that the Tribunal erred in identifying errors of law in the adjudicator's reasons that were not there. For the reasons which follow, the Tribunal was correct. The adjudicator did err in law in a number of material respects. On the material before the adjudicator, she should have held that it was not established that the opposition to the motion was unreasonable, and that Albrecht's application for an order giving effect to the motion as proposed should be dismissed. The adjudicator's reasoning Having set out the history of the matter and referred to some of the evidence and submissions, the adjudicator observed55 of the BCCM Act that s 94(2) imposed an obligation on a body corporate to act reasonably; that Sched 5 provided "examples of the types of orders that an adjudicator may make pursuant to section 276"; that "[b]efore any of those orders could be made, the issue will be whether a body corporate has complied with its obligation to act reasonably"; 51 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. 52 BCCM Act, s 276(1), (3); Sched 5, Item 10. 53 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 54 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 376 [98]; [2015] QCA 220. 55 Viridian Noosa Residences [2013] QBCCMCmr 351 at [24], [25], [28], [30]. Nettle and thus that "the central question in this application is whether the Body Corporate acted reasonably in deciding not to approve [Albrecht's] motion". It is apparent that the adjudicator viewed the dispute referred to her as one which involved an alleged contravention of s 94(2) of the BCCM Act constituted of the Body Corporate acting unreasonably in opposing the motion, and thus as a dispute falling within s 276(1)(a) of the BCCM Act. As is observed in the joint reasons, however, the dispute was, in reality, a dispute about the exercise of rights or powers under the BCCM Act and, therefore, a dispute which fell within s 276(1)(b). Since s 276(1)(b) explicitly provided for the resolution of disputes about the exercise of rights or powers under the BCCM Act, in contradistinction to a dispute about a claimed contravention of the BCCM Act by a body corporate failing to act reasonably, s 276(1)(b) operated to the exclusion of s 276(1)(a) according to the maxim expressum facit cessare tacitum56. Contrary, therefore, to the adjudicator's reasoning, the "central question" was not whether the Body Corporate had acted reasonably, but whether the adjudicator was satisfied that the motion had not been passed because of opposition that in the circumstances was unreasonable. As a consequence of that error, the adjudicator directed herself to the test of reasonableness under s 94(2)  which she opined57 was not the test of Wednesbury unreasonableness58 but rather a broad common sense test of objective reasonableness requiring "a balancing of factors the circumstances according to the ordinary meaning of the term 'reasonable'"  and stated that59: in all "an order of this nature enables an adjudicator to determine the balance between the need to protect the genuine interests of owners and their voting entitlements, and upholding the justifiable position of proponents [in] the face of unfounded or vexatious opposition." 56 R v Wallis (1949) 78 CLR 529 at 550 per Dixon J; [1949] HCA 30; cf Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 678-679 per Mason J; [1979] HCA 26; Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 586-592 [54]-[70] per Gummow and Hayne JJ; [2006] HCA 50. 57 Viridian Noosa Residences [2013] QBCCMCmr 351 at [33]-[34]. 58 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 59 Viridian Noosa Residences [2013] QBCCMCmr 351 at [38]. Nettle The adjudicator then undertook the "balancing" exercise which she had presaged. In favour of the motion, the adjudicator observed that the primary purpose of the proposal was to improve the amenity of Lot 11 by providing it with a larger deck and perhaps by improving the safety of the deck areas by removing a "trip hazard" the result of a change in level from the interior of the lot to the outside deck. She concluded60 that Albrecht had a "legitimate interest" in so improving the amenity of his unit, albeit one that had to be "balanced against impacts of the proposal on other lots and the scheme as a whole". As against the motion, the adjudicator referred to each of the concerns expressed by the opponents of the motion (some of whom are appellants in this Court) and rejected each of them seriatim. The first was that the proposal ceded to Albrecht the common property airspace between the two discrete nooks comprising the current decks. The adjudicator said that she rejected that as a reasonable basis of opposition because61: "I cannot see how the granting of exclusive use rights, and the corresponding alienation of common property, has of itself any material or adverse impact on any other person." The second basis of opposition was that the airspace between the nooks was valuable. One of the opponents adduced evidence from a sworn valuer that the airspace was worth at least $10,000 and possibly up to $20,000. That opponent based his opposition to the proposal in part on the fact that Albrecht was not offering any compensation for his acquisition of the airspace. The adjudicator dismissed62 that concern because the valuation was disputed and, although the airspace was of value to Albrecht, "no submission refutes that this air space is of no material use to any other owner or occupier". The adjudicator referred then to concerns expressed by several of the opponents that approval of Albrecht's proposal would make it difficult for the Body Corporate to refuse other, similar proposals in the future. She rejected those concerns on the basis that63: "if it were to be determined that one deck amalgamation would have no adverse impact on other owners or the scheme as a whole, I find it 60 Viridian Noosa Residences [2013] QBCCMCmr 351 at [42]. 61 Viridian Noosa Residences [2013] QBCCMCmr 351 at [47]. 62 Viridian Noosa Residences [2013] QBCCMCmr 351 at [46]. 63 Viridian Noosa Residences [2013] QBCCMCmr 351 at [49]. Nettle difficult identical improvements would generate an adverse impact." (emphasis in original) the cumulative effect of multiple to see how Evidently, the adjudicator also considered it to be significant that64: "[n]o evidence has been submitted that a similar deck extension, or indeed any other external alterations, has been proposed." The adjudicator turned next to concerns that the proposal would compromise the original design intent and architectural integrity. She rejected65 all of those concerns on the basis that, despite the written opinions of the leading architect who had designed the development ("Mainwaring"), who was an opponent of the motion and is an appellant in this Court, and two other notable architects, the proposal would not detract from the original design intent: "[T]hey [Mainwaring and the two other architects] appear to be importing a subjective view of the impact of the alteration rather than an objective one. Accordingly I am not convinced that they assist the dispute. Given his qualifications and history in the scheme, it was entirely understandable that owners would rely on the expressed views of Mr Mainwaring as to the impact [of] the proposal on the architecture of the scheme. However on balance I am of the view that his opinion takes into account considerations that are not relevant for the Body Corporate to have regard to when balancing the competing interests and acting reasonably. Having assessed the material submitted and the competing architectural opinions, I am not satisfied that the opponents of the proposal have demonstrated that the proposed modification materially offends the integrity of the architectural design of the scheme. ... I do not consider that any submission has demonstrated that the extension would have any noticeable detrimental impact on the appearance, structure or functionality of the architecture of the scheme." The adjudicator also dismissed concerns that the expansion of the deck would lead to added use and increased noise. She accepted that the expansion 64 Viridian Noosa Residences [2013] QBCCMCmr 351 at [51]. 65 Viridian Noosa Residences [2013] QBCCMCmr 351 at [58]-[61]. Nettle might lead to greater use of the deck, and a greater number of people on the deck on those occasions, but rejected that as immaterial because66: "I do not consider that it can be assumed that any increased use of the larger deck area will cause a disturbance. There is no demonstrable evidence it will do so." The adjudicator recognised that the design of the current nooks purposely "restricts the functionality of the decks" but dismissed that consideration on the basis that67: "I do not consider it is reasonable to oppose an improvement on the basis that it will make part of a lot more functional or useable." There was a body of evidence as to the impact of the proposal on the privacy and views of the occupants of other lots. Some of it supported the opponents' concerns. Some of it was directed to minimising any consequent loss of privacy or overviews. The adjudicator said68 that she preferred the latter evidence. She accepted that the proposal would increase the overview from the deck to the adjacent Lot 10 and, therefore, have an impact on Lot 10. But she stated that she did not consider that that was sufficient to make objection on that basis reasonable; and that, in any event, the impact on Lot 10 could "be addressed by additional privacy screening". There were also concerns about the aesthetic effects of the structural elements necessary to support the enlarged deck, compliance with the Architectural Design & Landscaping Code, planning approvals and other financial obligations potentially arising from the extension. But the adjudicator rejected69 all of those concerns as well because, she said, there was no evidence that they would be borne out. "On balance I am not satisfied that the Body Corporate acted reasonably in deciding not to pass Motion 1 at the EGM on 10 August 2012. 66 Viridian Noosa Residences [2013] QBCCMCmr 351 at [67]. 67 Viridian Noosa Residences [2013] QBCCMCmr 351 at [68]. 68 Viridian Noosa Residences [2013] QBCCMCmr 351 at [76]-[77]. 69 Viridian Noosa Residences [2013] QBCCMCmr 351 at [78]-[84]. 70 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. Nettle Individual owners may have voted against the motion in good faith, and in genuine reliance on architectural and other advice. However I consider they have relied on irrelevant and unsubstantiated considerations. The most substantive objection is the potential impact on Lot 10, but based on the evidence submitted, I consider that any impact will be so slight that it does not constitute a reasonable basis to refuse the proposal." The Tribunal's reasoning The Tribunal found that the adjudicator had made a number of errors of law. The first was to cast what was in effect an onus of proof on the individuals opposing Albrecht's motion. As the Tribunal observed71, the adjudicator was not empowered to make an order under Item 10 of Sched 5 unless she were first affirmatively satisfied that the motion was not passed because of opposition which in the circumstances was unreasonable. It was not enough to decide the matter, as the adjudicator stated she did, on the basis that she was not satisfied that the Body Corporate had acted reasonably. The Tribunal considered72 that the adjudicator's erroneous approach to that conclusion was compounded by her application of a similar approach in a number of places throughout her review of the stated bases of opposition to the motion. Secondly, the Tribunal stated73 that the exercise of deciding whether the motion was not passed because of opposition which in the circumstances was unreasonable did not necessarily, or even ordinarily, require any "balancing [of] competing interests"74. To act reasonably in the relevant sense did not imply even-handedness, a conciliatory approach to a dispute, or recognition of the interests or wishes of others. The fact that a lot owner might have had an interest in improving his or her lot was not a prima facie affirmative proposition, the pursuit of which can be assumed to be appropriate or supported by other lot owners. The question was not a "balancing act". A balancing act might have assisted if the adjudicator had been asked whether it was just and equitable for the Body Corporate to pass the motion. But that was not the question. The question was whether it was shown to be unreasonable to oppose the motion. And as a consequence of that fundamental error of approach, the adjudicator failed to consider whether and why it was shown to be unreasonable for property 71 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [92]- 72 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [94]. 73 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [97]- 74 Viridian Noosa Residences [2013] QBCCMCmr 351 at [59]. Nettle owners, who had purchased their units knowing that the decks were intentionally designed with limited functionality, to insist that the deliberately limited functionality of the decks not be altered. Thirdly, in relation to the integrity of the original design, the Tribunal observed that the adjudicator had assessed the issue on the expressed basis that she was "not satisfied that it is reasonable to seek to prevent any deviation from the original design intent"75. The Tribunal considered76 that to be an erroneous conception of the question. The issue was not whether any deviation from the original design intent was justified. The question was whether it was established that it was unreasonable for the objectors to insist on the original architectural vision for the scheme being maintained. As the Tribunal concluded, her misdescription of the question led the adjudicator to approach the matter erroneously according to whether, in her subjective view, it was appropriate to allow someone to alter the original design. Fourthly, the Tribunal found77 that there were indications in several places in the adjudicator's reasons that she had decided the matter by placing herself, as it were, in the shoes of the Body Corporate, posing the issue in terms of what a "just and equitable" balancing of interests required and deciding the issue on the expressed basis that the opponents of the motion had not demonstrated that the modification offended the integrity of the scheme. As a consequence, it appeared that the adjudicator had erred in failing to recognise as a consideration relevant to whether the withholding of approval was demonstrated to be unreasonable that each of the several objectors had spent some millions of dollars in purchasing their units, each regarding the scheme's award winning architecture and design principles as a matter of high priority in their purchase and, consequently, that each feared that those architecture and design principles would be compromised if Albrecht's proposal were allowed to proceed78. Fifthly, the Tribunal noted79, in an essentially similar vein regarding the privacy and noise issues, that, despite what might well be thought to be 75 Viridian Noosa Residences [2013] QBCCMCmr 351 at [56] (emphasis in original). 76 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [99]- 77 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 78 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 79 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at Nettle legitimate concerns, the adjudicator had disposed of the issues on the expressed basis that "[n]o submitter has demonstrated that the expansion of the deck will inherently increase the disturbance to other occupiers or users of common property compared with the potential use of the current deck configurations"80. As the Tribunal concluded81, that was an erroneous process of reasoning. The question which the adjudicator should have determined was whether it was unreasonable for any of the owners who opposed the motion to have harboured those concerns and therefore whether there was not a reasonable basis for their opposition to the motion. Further, the adjudicator disposed of the privacy issue after she had recognised that there would be some impact on the privacy of and views from Lot 10. That invited the conclusion not only that she had erred by casting what was in effect a burden of proof on the opponents but also that she had acted erroneously by exercising her own subjective judgment in what she conceived of as a balancing exercise aimed at assessing the appropriateness of allowing the improvements. Sixthly, in relation to the concern that the approval of the proposal would make it difficult to resist further similar proposals to amalgamate the decks of other units, the Tribunal observed82 that it was apparent, in holding that "[n]o evidence has been submitted that a similar deck extension, or indeed any other external alterations, has been proposed"83, that the adjudicator had erred by failing to take into account evidence that Albrecht had written to other lot owners stating that he made a "deep and abiding commitment" to ensuring that other lot owners would not be subjected to similar campaigns to prevent improvements to their lots and that Albrecht saw himself as paving the way for other owners to be permitted to make similar alterations. There was also a further indication of error in the adjudicator's conclusion that she did not consider concerns about opening the floodgates to be a reasonable basis for opposing the motion84. That was indicative of the adjudicator again casting an onus of proof on the opponents and thus failing to give proper consideration to the question of why opposition to the proposal based on fear that it would set a precedent was unreasonable. 80 Viridian Noosa Residences [2013] QBCCMCmr 351 at [66]. 81 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 82 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 83 Viridian Noosa Residences [2013] QBCCMCmr 351 at [51]. 84 Viridian Noosa Residences [2013] QBCCMCmr 351 at [53]. Nettle Seventhly, with respect to the absence of compensation issue, the Tribunal found85 that there was error in the adjudicator's perfunctory rejection of the sworn valuer's evidence as "disputed" and in thus failing to conclude that the absence of an offer of compensation was a reasonable basis for opposing the proposal. Evidently, the adjudicator's statement that the valuation was "disputed" was a reference to a letter from an estate agent, tendered by Albrecht, in which it was asserted that the airspace had "no value whatsoever". As the Tribunal observed86, the estate agent had no formal valuation qualifications and the adjudicator did not provide any reason for rejecting the opinion of the sworn valuer on the say-so of the estate agent. The Court of Appeal's reasoning McMurdo P gave the only reasons for judgment in the Court of Appeal. Morrison JA and Martin J agreed with her Honour's reasons. (i) The role of the adjudicator After setting out the facts and history of the matter, McMurdo P stated the law to be that87: "The role of the adjudicator in this case was to investigate [Albrecht's] application and to decide whether it was appropriate to give effect to his motion before Viridian's body corporate to allow him to extend his decks. She was not bound by the rules of evidence; must act as quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the application; and must observe natural justice. She had wide investigative powers to obtain information. If satisfied the opposition to the motion is in all the circumstances unreasonable, she could give effect to the motion and could make an order that is just and equitable in the circumstances (including a declaratory order) to resolve the dispute." (footnotes omitted) Although McMurdo P later qualified that observation88, it should be observed at once that it was not the role of the adjudicator "to decide whether it 85 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 86 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at 87 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 371-372 [80]. 88 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [82]. Nettle was appropriate to give effect to [the] motion". As the Tribunal stated89, correctly, the adjudicator's task was to decide whether the adjudicator was satisfied that the motion had not been passed because of opposition which in the circumstances was unreasonable. McMurdo P continued90: "[The adjudicator's] role under s 276 and Item 10 in Schedule 5 BCCM Act ... was to determine whether she was satisfied the body corporate did not pass [Albrecht's] motion because of opposition from the [opponents] that was in the circumstances unreasonable. ... [T]he adjudicator was not limited to determining whether the [opponents'] opposition to the motion could have been reasonably held. She was required to reach her own conclusion after considering all relevant matters." That may be accepted as a correct statement of the law provided it is understood that the requirement that the adjudicator "reach her own conclusion after considering all relevant matters" means that the adjudicator must reach her own conclusion after considering all matters relevant to whether she is satisfied that the motion was not passed because of opposition which in the circumstances was unreasonable. As the Tribunal emphasised, correctly, it does not mean that the adjudicator is to reach her own conclusion as to whether it would be reasonable to approve the motion. McMurdo P held91 that the Tribunal erred in identifying errors of law in the adjudicator's reasons. Her Honour concluded that there were no such errors and, it followed, that the Tribunal was not entitled to set aside the adjudicator's decision. (ii) Reversal of onus of proof Plainly, however, there were errors of law in the adjudicator's reasons, and the Tribunal identified them correctly. As was earlier observed92, the first error was the adjudicator's determination of the matter on the basis that "[o]n balance" she was "not satisfied that the Body Corporate acted reasonably in deciding not 89 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [98]. 90 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [82]. 91 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 376 [98]. 92 See [85] above. Nettle to pass [the motion]"93. As the Tribunal stated94, that was not the correct test. The correct test was whether the adjudicator was satisfied that Albrecht's motion was not passed because of opposition which was in the circumstances unreasonable. McMurdo P held that there was no error because, when the adjudicator's reasons are considered "in their entirety"95, it is clear that the adjudicator96: "conscientiously considered all the material and submissions relied upon by [Albrecht] and the [opponents], made findings of fact, all of which were open on that material, and was ultimately satisfied as a matter of fact that [Albrecht's] motion was not passed because of the [opponents'] opposition to it that in the circumstances was unreasonable." With respect, that is not so. Apart from the insufficiency of the adjudicator's consideration of the submissions and her questionable findings of fact  which are aspects of the reasoning that necessitate separate consideration below  it is manifest that the adjudicator never expressed herself to be satisfied that the appellants' opposition to the motion was unreasonable. And, as the Tribunal identified97, over and above the adjudicator's express conclusion that she was not satisfied that the Body Corporate acted reasonably in deciding not to pass the motion, the adjudicator so many times otherwise expressed herself to be unsatisfied that the grounds of objection were reasonable that it cannot realistically be supposed that she decided the matter on any other basis. As was earlier noticed, those occasions included the adjudicator's statement, when dealing with deviation from the original design intent, that "I am not satisfied that it is reasonable to seek to prevent any deviation from the original design intent"98 and her disposition of the noise issue on the basis that "[n]o submitter has demonstrated that the expansion of the deck will inherently increase the 93 Viridian Noosa Residences [2013] QBCCMCmr 351 at [87]. 94 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [92]- 95 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374 [92]. 96 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374 [91]. 97 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at [93]- 98 Viridian Noosa Residences [2013] QBCCMCmr 351 at [56] (emphasis in original). Nettle disturbance to other occupiers or users of common property compared with the potential use of the current deck configurations"99. (iii) Deviation from design intent Turning to the adjudicator's findings of fact, and beginning with the issue of whether it was unreasonable to refuse to pass the motion because Albrecht's proposal would result in a deviation from the original design intent, McMurdo P said that100: the architectural reports, made "The competing submissions and supporting material in this case, particularly the question of unreasonableness difficult to resolve. As the reasons of both the adjudicator and [the Tribunal] demonstrate, views as to what was reasonable or unreasonable involved value judgments on which there was room for reasonable differences of opinion, with no opinion being uniquely right.101 Had [the Tribunal's] views as to unreasonableness been the views of the adjudicator, and had the adjudicator made no errors of law, that finding would have been unassailable on a [Tribunal] appeal which was limited to a question of law: see s 289 [BCCM] Act." With respect, that is not correct either. The competing submissions and supporting material did not make the question of unreasonableness difficult to resolve. Nor is reasonableness something about which informed views are likely to, or should, differ. Reasonableness does not mean whatever the adjudicator considers to be just and equitable and it does not involve the application of discretionary considerations of the kind that were essayed in Norbis v Norbis102. The standard of reasonableness is objective103 and it is to be applied in this case at the time of rejection of Albrecht's motion taking into account all relevant factors including factors which were extant but which the parties may not have identified or appreciated at the time, as is implied by the words "in the 99 Viridian Noosa Residences [2013] QBCCMCmr 351 at [66]. 100 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372 [84]. 101 Norbis v Norbis (1986) 161 CLR 513 at 518 per Mason and Deane JJ; [1986] HCA 17. 102 (1986) 161 CLR 513. 103 See, in a different context, Department of Foreign Affairs and Trade v Styles (1989) 23 FCR 251 at 263 per Bowen CJ and Gummow J. Nettle circumstances" appearing in Item 10 of Sched 5 to the BCCM Act104. Item 10 of Sched 5 is not to be read as if it contained the words "in the opinion of the adjudicator"105, nor as if it otherwise threw the determination of what is unreasonable upon the subjective and unexaminable opinion of an adjudicator. Evidently, the BCCM Act so values the interests of lot owners in common property that, subject only to proven unreasonableness, it conditions the disposition of common property upon unanimity. It would require terms much different from and clearer than those in Item 10 of Sched 5 to substitute adjudicative discretion for a lot owner's objectively not unreasonable exercise of self-interest. The consequence of that error, with respect, is reflected in the following further observations of McMurdo P106: the highly "[Mainwaring], respected architect of Viridian, purposefully designed the decks so that they were discrete and did not interlink. He and other eminent architects opined before the adjudicator that the proposed deck extension would be harmful to the architectural integrity of Viridian, an architectural award winning development. Seven Viridian owners, having purchased their homes on the basis of Viridian's architectural merit, objected to [Albrecht's] motion for reasons including those based on these architectural opinions. On the other hand, the same number of equally respected architects opined that extending [Albrecht's] decks in the manner proposed would not have any detrimental impact on Viridian's architectural integrity and any appreciable change to its external appearance would be minimal. After considering the competing architectural opinions and relevant photographs, diagrams and drawings, the adjudicator preferred the opinions of [Albrecht's] architects. She found that the proposed extensions would have no noticeable detrimental impact on Viridian's architectural that she should balance [Albrecht's] interest in improving his lot against the impacts of the proposal on the other owners and on Viridian as a whole." (footnote omitted) She considered integrity. 104 See and compare Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31; Waratah Coal Pty Ltd v Mitchell [2013] 1 Qd R 90. 105 See and compare Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 at 143 per Gleeson CJ. 106 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 372-373 [86]-[88]. Nettle As already stated, the adjudicator's task was to determine whether she was satisfied that it was objectively unreasonable for the seven Viridian owners  who had purchased their homes recognising Viridian's architectural merit and whose disquiet at the damage which the proposal, if implemented, would likely do to the original design intent was supported by the closely reasoned opinions of three eminent architects  to oppose the motion. It was not for the adjudicator to reject one set of architectural opinions because she perceived them "to be importing a subjective view of the impact of the alteration"107. Axiomatically, both sets of opinions imported "a subjective view of the impact". Consequently, it was not open to the adjudicator to reject one of them on that basis while, in effect, preferring the other as if it did not. The inconsistency, and hence the error, in that reasoning is manifest. Moreover, as the Tribunal in effect observed, in view of the standing of the architects concerned, it could hardly be said that it was unreasonable to prefer one set of opinions over the other; and there is certainly nothing else in the legislation which purports to subjugate matters of reasonably defensible personal taste and preference to the demands of laissez-aller alteration. Consequently, even if the adjudicator's preferred architectural philosophy was the latter, it was not within the statutory task with which she was entrusted to impose it on those opposing Albrecht's motion. (iv) Noise and privacy Turning to the adjudicator's consideration of the noise and privacy issues, McMurdo P said this108: "The adjudicator was unpersuaded on the evidence that the proposed deck expansion would increase the use of [Albrecht's] decks and noise in a way which would disturb other occupiers or users of the common property and that the unsubstantiated risk of a potential nuisance was not a reasonable basis to refuse the proposal. She accepted the evidence from [Albrecht's] architect, Mr McKerrell, and concluded that there would be no greater overlooking of and from lot 10 than at present and that any slight increase in vision between the lots would not interfere with the amenity of lot 10. Any arising privacy issues could be ameliorated by a privacy blade and would not unreasonably interfere with the amenity of lot 10. This was not a sufficient basis to warrant the refusal of the motion." (footnotes omitted) With respect, McMurdo P's acceptance109 of that analysis repeats the adjudicator's error of approaching the question as one of whether the adjudicator 107 Viridian Noosa Residences [2013] QBCCMCmr 351 at [58]. 108 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 373 [89]. 109 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 374 [90]. Nettle was satisfied that the objections based on noise and the infringement of privacy were reasonable objections. It also repeats the misconception that the adjudicator's subjective perceptions of what would constitute acceptable, as opposed to unacceptable, effects on noise and privacy were somehow to be adopted as the appropriate basis of decision. The question was whether, given that the objections were bona fide and supported by a significant body of respectable architectural opinion, they were still somehow to be regarded as objectively unreasonable. As thus expressed, the question answers itself. (v) Precedent effect of approval Lastly there is McMurdo P's consideration of the precedent issue. Of that, her Honour said the following110: "As to the 'floodgates' argument, [the adjudicator] noted that there was no evidence of any similar pending applications by other owners to extend their decks. The history of [Albrecht's] proposal showed that no one had an automatic right to have such a proposal approved. Any future application would have to be determined on its merits. If the present application was found not to adversely impact on other owners or Viridian as a whole, it was difficult to see how the cumulative effect of multiple identical improvements would generate an adverse impact. The 'floodgates' argument, the adjudicator found, was not a reasonable basis for opposing the proposal." (footnotes omitted) As the Tribunal identified111, the difficulties with that sort of reasoning are manifold. First, since the type of deck modification which Albrecht proposed had the attractions for him which he contended it did, it was unreal to suppose that, if his proposal were approved, there would not then be others seeking to make similar deck modifications. After all, if some of the common property could be allocated to Albrecht to enable him to achieve his self-interested objectives, why would not others consider that more common property ought to be allocated to them so that they could achieve theirs? Secondly, as will be recalled, Albrecht had written to other owners stating that his "deep and abiding commitment [was to ensure] other unit owners [would] not be subjected to similar campaigns to prevent improvements to their residences" and that he saw himself as paving the way for other owners to be permitted to make similar alterations. Regardless, therefore, of whether there was evidence of other pending applications, it was distinctly possible that approval of the motion would lead to a multiplicity of applications to the Body Corporate for similar approvals; 110 Albrecht v Ainsworth (2015) ANZ ConvR ¶15-041 at 373 [88]. 111 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at Nettle and, as the Tribunal recognised112, it was easy to see how the cumulative effect of multiple identical improvements could generate an adverse impact. Thirdly, those further applications would necessitate the Body Corporate making further decisions as to whether it was reasonable to refuse them and in turn more division and conflict between owners would arise. The potential for that kind of disharmony may in itself have provided a reasonable basis to oppose the motion in this case. Errors of law It remains only to observe that one of the remarkable features of the Court of Appeal's judgment is that, apart from asserting that the Tribunal erred in holding that the adjudicator reversed the onus of proof and in holding that the adjudicator applied the wrong test, the Court of Appeal's reasons nowhere grapple with the Tribunal's detailed analysis of the adjudicator's specific errors of law. That is unfortunate for a number of reasons, but particularly because, if greater attention had been paid to the Tribunal's analysis of those problems, it might have led to a better understanding of the correct test and the correct method of its application. For the reasons given, the Tribunal was correct. Conclusion In the result, the appeal should be allowed and the orders proposed in the joint reasons made. 112 Re Body Corporate for Viridian; Ainsworth v Albrecht [2014] QCATA 294 at

HIGH COURT OF AUSTRALIA AGTRACK (NT) PTY LIMITED (TRADING AS SPRING AIR) APPELLANT AND RESPONDENT Agtrack (NT) Pty Limited v Hatfield [2005] HCA 38 10 August 2005 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Victoria Representation: R F Margo SC with R M Peters and M J Leeming for the appellant (instructed by Norton White) A G Uren QC with P F O'Dwyer SC for the respondent (instructed by Slater & Intervenors: H C Burmester QC with B F Quinn intervening on behalf of the Attorney- General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor's Office) M G Sexton SC, Solicitor-General for the State of New South Wales with J G Renwick intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia with A Rao intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office South Australia) P M Tate SC, Solicitor-General for the State of Victoria with S G E McLeish intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Agtrack (NT) Pty Limited v Hatfield Aviation – Carriage by air – Liability of carrier – Liability under Pt IV of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("Carriers Act") for damage sustained by reason of the death of a passenger resulting from an accident which took place on board an aircraft in the course of commercial transport operations – Liability enforceable for the benefit of such family members of deceased passenger as sustained damage by reason of the death – Passenger killed in aircraft accident – Action brought by family member – Whether action in exercise of right to damages brought within two years of the date on which the carriage stopped – Whether right to damages extinguished. Aviation – Carriage by air – Liability of carrier – Family member's statutory right to damages – Extinguishment – Whether extinguishment of right to damages by effluxion of time involves determination of a condition which is of the essence of the right to damages or merely bars enforcement of the right. Pleading – Statement of claim – Whether sufficient facts pleaded to raise a claim under Carriers Act, Pt IV – Whether explicit invocation of Carriers Act, Pt IV is necessary to raise such a claim – Relevance of rules of court of a State court where claim arises under federal law. Pleading – Amendment – Amendment to pleadings to place beyond doubt reliance upon Carriers Act – Whether such amendment permissible after date on which right to damages would be extinguished – Relevance of State limitation of actions legislation. Private international law – Choice of law – Cause of action accrues in Northern Territory – Action brought in Victoria – Cause of action arises under federal law – Whether common law choice of law rules applicable. Constitutional law (Cth) – Federal judicial power – Federal jurisdiction – Jurisdiction invested in State courts in matters arising under federal law – Whether federal jurisdiction engaged – Whether law of Victoria governs the action by reason of Judiciary Act 1903 (Cth) ("Judiciary Act"), ss 79, 80 – Whether federal claim properly pleaded according to rules of court of a State court. Constitutional law (Cth) – Inconsistency of laws – State law adopting Lord Campbell's Act invalid as inconsistent with Carriers Act, s 35(2) – Consequences of inconsistency – Relationship of s 109 of the Constitution with Judiciary Act, Words and phrases – "is extinguished", "action … brought". Civil Aviation (Carriers' Liability) Act 1959 (Cth), Pt IV. Judiciary Act 1903 (Cth), ss 39, 79, 80. Constitution, s 76(ii). GLEESON CJ, McHUGH, GUMMOW, HAYNE AND HEYDON JJ. On 14 August 1997, a Cessna aircraft carrying Mr S J Hatfield crashed and he was killed. The respondent (Mrs A C Hatfield) is his widow. The Cessna aircraft was operated by the appellant which carried on an aircraft charter business under the name "Spring Air". The effect of s 27 of the Civil Aviation Act 1988 (Cth) ("the CAA") was that the Cessna aircraft could not operate for commercial purposes in the air space over the territory of Australia1, except as authorised by an "Air Operator's Certificate" ("AOC") issued under the CAA. Spring Air held an AOC authorising charter operations by the Cessna. By writ and attached Statement of Claim filed on 22 January 1999 in the Supreme Court of Victoria, Mrs Hatfield claimed for her own benefit damages against Spring Air. By its Defence dated 24 March 1999, Spring Air admitted some allegations but denied that the claim against it was maintainable. These pleading steps were taken within two years of 14 August 1997. The significance of that anniversary will appear later in these reasons. The common law and Lord Campbell's Act The common law of Australia gave to Mrs Hatfield no action for damages against Spring Air for loss she suffered by reason of her husband's death2. That death took place in the geographical area of the Northern Territory where the plane crashed, but the action was brought in the Supreme Court of Victoria. Both the statute law of the Northern Territory and of Victoria made provision of the same nature as Lord Campbell's Act for recovery for a widow of a deceased husband3. However, federal law also makes provision of this nature in the limited circumstances to which Pt IV of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Act") applies. Where Pt IV of the Carriers' Act imposes a liability in respect of the death of a passenger, the liability is expressed by s 35(2) thereof as being in substitution for any civil liability of the carrier under any law in respect of that death. The result in the present case was that any operation of the law of the 1 By application of the definition of "Australian territory" in s 3(1) of the CAA and reg 206 of the Civil Aviation Regulations 1988. 2 Woolworths Ltd v Crotty (1942) 66 CLR 603. 3 Wrongs Act 1958 (Vic), Pt III; Compensation (Fatal Injuries) Act 1974 (NT). Northern Territory was displaced4 and the law of Victoria was, to this extent, rendered invalid by the operation of s 109 of the Constitution. Mrs Hatfield relies upon the application of the Carriers' Act to her claim for damages. She accepts the displacement by the Carriers' Act of any State or Territory equivalent of Lord Campbell's Act which otherwise may have applied. It is unnecessary here to consider which statute would have supplied the lex causae in such action instituted in the Supreme Court of Victoria and not involving the exercise of federal jurisdiction5. The Carriers' Act and choice of law rules Some further reference the connection between is necessary Mrs Hatfield's assertion of her right to recover damages under Pt IV of the Carriers' Act and the facts and circumstances located within the geographical area of the Northern Territory. The nature and consequences in law of that geographical connection should not be misunderstood. Mrs Hatfield does not bring an action in contract or tort. An action in tort or contract may, of course, attract federal jurisdiction as, for example, an action against the Commonwealth to which s 75(iii) of the Constitution applies, or an action in the diversity jurisdiction to which s 75(iv) applies. In contrast, Mrs Hatfield's rights flow purely and solely from Pt IV of the Carriers' Act. The Carriers' Act is expressed by s 6 as extending to "every Territory", a term which includes every Territory referred to in s 122 of the Constitution6. This emphasises the importance of the principle expressed in John Pfeiffer Pty Ltd v Rogerson7 that the Commonwealth of Australia is "a single law area with respect to matters within federal jurisdiction". Several further propositions stated in the joint judgment in John Pfeiffer are in point. First, federal jurisdiction is national in nature so that no question 4 Northern Territory v GPAO (1999) 196 CLR 553. cf Koop v Bebb (1951) 84 CLR 629; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 521-522 [27]. 6 Acts Interpretation Act 1901 (Cth), s 17. (2000) 203 CLR 503 at 518 [18] per Gleeson CJ, Gaudron, McHugh, Gummow arises in matters of federal jurisdiction which involves any choice of law between laws of competing jurisdictions; rather, what is required is identification of the applicable law in accordance with ss 79 and 80 of the Judiciary Act 1903 (Cth) ("the Judiciary Act")8. Secondly, by this means, there are "picked up" any applicable common law choice of law rules as modified by the statute law of the State or Territory in question9. There are no such common law choice of law rules applicable to the present action10. It is not, for example, an action in contract or tort. To the contrary of what appeared to be suggested in some of the submissions, there is no adoption here, by application of choice of law rules pursuant to the Judiciary Act, of the statute law of the Northern Territory as the lex loci delicti. Thirdly, the effect of the foregoing is that "if an action is brought in a State court exercising federal jurisdiction, the law of that State will govern the action no matter where the events in question occurred"11. Fourthly, that last step is subject to the overriding requirements of the Judiciary Act itself, in particular that found in the phrases in s 79 "except as otherwise provided by the Constitution or the laws of the Commonwealth" and "in all cases to which they are applicable". It will be necessary to return to the significance of those qualifications later in these reasons. The two issues The application of Pt IV of the Carriers' Act to the present facts and circumstances brings several difficulties for Mrs Hatfield's claim. Neither the writ nor the Statement of Claim in terms invoked rights under the Carriers' Act. Nor, indeed, was there any reference to any of the State or Territory equivalents of Lord Campbell's Act. Spring Air submits that the process nevertheless was (2000) 203 CLR 503 at 530 [53]. (2000) 203 CLR 503 at 531 [55]-[56]. See also Blunden v Commonwealth (2003) 78 ALJR 236 at 240 [18]; 203 ALR 189 at 194. 10 cf Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 at 434-436; Blunden v Commonwealth (2003) 78 ALJR 236 at 240 [18], 241 [23], 244 [40]; 203 ALR 189 at 194, 195, 199. 11 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 531 [57]. expressed in the form to be expected of a Lord Campbell's Act claim and not otherwise. From this, two further issues arise in the appeal. First, any right to damages otherwise conferred upon Mrs Hatfield by the Carriers' Act is treated by that statute as having been "extinguished" if "an action" had not been "brought" within two years of 14 August 1997. That is stipulated by s 34. The text of that provision is set out later in these reasons. Mrs Hatfield maintains that she did bring an action within that period by the Supreme Court proceeding. Spring Air denies this. The second issue arises as follows. If it transpires that Mrs Hatfield had not brought an action before 14 August 1999, was the Victorian Supreme Court, in exercise of its powers and procedures "picked up" by s 79 of the Judiciary Act, authorised to permit thereafter amendments to the pleadings to place beyond doubt Mrs Hatfield's reliance upon the Carriers' Act? Was this course open notwithstanding the use in s 34 of the Carriers' Act of the term "extinguished"? Spring Air contends the answer is "no". The Supreme Court proceedings A judge of the Supreme Court (Ashley J) in effect answered the second issue "yes", and thus in favour of Mrs Hatfield12. On 6 June 2001, his Honour granted leave to Mrs Hatfield to file an amended Statement of Claim plainly grounding her action in the Carriers' Act. The Court of Appeal (Ormiston and Chernov JJA, O'Bryan AJA) dismissed an appeal13. This outcome in the Court of Appeal involved an affirmation of the favourable answer to Mrs Hatfield on the second issue. As Chernov JA put it14, the grant of leave to amend was within the the Court the Supreme Court and appropriately given by powers of "[n]otwithstanding that [s 34 of the Carriers' Act] effectively extinguished [Mrs Hatfield's] cause of action before she had applied for leave to amend". The Court of Appeal should have answered "no" to the second issue. The term "extinguished" is used in s 34 to mean just that, and the reasons for so 12 Hatfield v Agtrack (NT) Pty Ltd (2001) 183 ALR 674. 13 Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63. 14 (2003) 7 VR 63 at 105. concluding are given later in this judgment. However, that does not mean that the appeal to this Court by Spring Air must succeed. By her Notice of Contention filed pursuant to leave granted during the hearing of the appeal, Mrs Hatfield submits that the first issue should have been decided in her favour. She contends that sufficient facts had been pleaded to raise a claim by her under Pt IV of the Carriers' Act, so that she had brought an action within two years after 14 August 1997 and there was no extinguishment by operation of s 34. These submissions by Mrs Hatfield should be accepted, with the result that the appeal to this Court should be dismissed. In order to explain how these conclusions are reached, it is necessary first to say something more respecting the Carriers' Act. The requirements of Pt IV of the Carriers' Act Part IV of the Carriers' Act (ss 26-41) does not apply to the carriage of a passenger to which the Warsaw Convention, the Hague Protocol or the Guadalajara Convention applies (s 27(1)). It has not been suggested that any of these Conventions applied to the carriage of Mr Hatfield by Spring Air. Part IV does not apply to the carriage of Mr Hatfield unless Spring Air was the holder of an airline licence or a charter licence. The term "charter licence" is defined (s 26(1)) as including an AOC which is in force under the CAA and authorises charter operations. This was admitted on the pleadings. The next relevant requirements in s 27(1) are that the carriage of the passenger be "under a contract for the carriage of the passenger" and be "in the course of commercial transport operations". The term "contract" includes "an arrangement made without consideration" (s 26(1)). The phrase "commercial transport operations" means "operations in which an aircraft is used, for hire or reward, for the carriage of passengers or cargo" (s 26(1)). A further relevant requirement of s 27(1) is that Mr Hatfield was carried by Spring Air under a contract for his carriage between a Territory and a place in Australia outside that Territory, or between a place in a Territory and another place in that Territory. In particulars given with her Statement of Claim, Mrs Hatfield alleged an agreement to carry her husband and two others on "a tourist flight through parts of the Northern Territory and the Kimberleys", which are situated in Western Australia. Section 28 creates a "strict" liability as follows: "Subject to this Part, where this Part applies to the carriage of a passenger, the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft or in the course of any of the operations of embarking or disembarking." Section 35 then makes particular provision respecting the liability imposed by Pt IV on a carrier in respect of the death of a passenger. Subject to immaterial qualifications found in s 37, s 35(2) states that this liability under Pt IV: "is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger". The statutory liability is enforceable for the benefit of such members of the family of the deceased passenger (including a widow) "as sustained damage by reason of his death" (s 35(3), (5)). The action may be brought by the personal representative of the passenger or by a family member, but only one action is to be brought (s 35(6)). Any provision of an agreement tending to relieve the carrier of liability or to fix a lower limit than that fixed by Pt IV is null and void A matter arising under the Carriers' Act These provisions of the Carriers' Act are an example of a federal law which creates new rights and duties. A controversy respecting the existence and enforcement of these rights and duties "accordingly supplies an appropriate subject or 'matter' upon which 'judicial power' or 'jurisdiction' may operate, whether the jurisdiction is given in the same breath or quite independently". The words are those of Dixon J in R v Commonwealth Court of Conciliation and Here, jurisdiction is conferred independently, by laws made in exercise of the power conferred upon the Parliament by s 77(i) and s 77(iii), with respect to "matters" which "arise under" the Carriers' Act within the meaning of s 76(ii) of the Constitution. One such law is s 39B of the Judiciary Act. This states that the original jurisdiction of the Federal Court includes jurisdiction in any matter arising under any laws made by the Parliament other than criminal matters. 15 (1945) 70 CLR 141 at 166. Another is the general investment of State courts by s 39(2) of the Judiciary Act with jurisdiction in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it. It is the investment of federal jurisdiction upon the Supreme Court of Victoria by s 39(2) which Mrs Hatfield submits was engaged here. The question whether a State court has exercised federal jurisdiction with which it is invested by a law of the Parliament supported by s 77(iii) of the Constitution may arise in various ways. In some cases, including Moorgate Tobacco Co Ltd v Philip Morris Ltd16 and LNC Industries Ltd v BMW (Australia) Ltd17, the answer to the question determined the competency of a pending appeal to the Privy Council. In other cases, the answer determines whether an appeal lies directly to this Court from an inferior court of a State because, within the meaning of s 73(ii) of the Constitution, this was a "court exercising federal jurisdiction"18. In Hume v Palmer19, Isaacs J observed of the decision of a magistrate convicting the appellant in a summary prosecution, despite an objection that the State law in question was invalid by operation of s 109 of the Constitution: "The Police Magistrate, consequently, whether he intended or not, or whether he knew it or not, was exercising Federal jurisdiction within the meaning of s 73 of the Constitution." The obligation imposed by s 78B of the Judiciary Act upon courts not to proceed in a pending cause, unless satisfied of compliance with the notice provisions of s 78B, turns upon the question whether that cause "involves a matter arising under the Constitution or involving its interpretation". A criterion similarly expressed governs the removal procedure in s 40(1). The removal procedure in s 40(2)(b) requires there to be "pending in a court of a State a cause involving the exercise of federal jurisdiction by that court". In the present litigation, the question of the exercise of federal jurisdiction arises in the context of a time stipulation in Pt IV of the Carriers' Act. 16 (1980) 145 CLR 457. 17 (1983) 151 CLR 575. 18 For example, H V McKay Pty Ltd v Hunt (1926) 38 CLR 308 at 313. 19 (1926) 38 CLR 441 at 451. It is well settled that a "matter" means more than a legal proceeding20 and that "an important aspect of federal judicial power is that, by its exercise, a controversy between parties about some immediate right, duty or liability is quelled"21. Further, federal jurisdiction may be attracted at any stage of a legal proceeding, as Barwick CJ emphasised in Felton v Mulligan22. Indeed, as early as 1907, this Court had remarked that federal jurisdiction may be raised for the first time in a defence23. In Re Wakim; Ex parte McNally24, Gummow and "The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim." Not all proceedings will be civil in nature. The appellants in Pioneer Express Pty Ltd v Hotchkiss25 had been convicted in a Court of Petty Sessions, on information laid under State law. Hume v Palmer26 was an earlier example. An appeal lay in these cases under s 73(ii) because the inferior court of the State nevertheless was a "court exercising federal jurisdiction". In Pioneer Express, "the jurisdiction became federal because some of the defences that failed were founded upon immunities which, according to the defendant's claim, arose under the Constitution of the Commonwealth". 20 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265. 21 Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 22 (1971) 124 CLR 367 at 373. 23 Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR (Pt 2) 1087 at 1136. 24 (1999) 198 CLR 511 at 585 [139]. 25 (1958) 101 CLR 536. 26 (1926) 38 CLR 441. 27 (1958) 101 CLR 536 at 543-544. Many of the "transport cases" reached this Court by a similar path. This illustrates the point that s 39(2) of the Judiciary Act invests a range of State courts with federal jurisdiction. Some of these are not courts of strict pleading; others are not courts of pleading at all and proceedings may be instituted with brief factual assertions. It should be added that, even under the traditional initiating writ might be uncommunicative of the legal and factual basis of the claim for damages made in the writ. law procedures, common the Whether federal jurisdiction with respect to one or more of the matters listed in ss 75 and 76 of the Constitution has been engaged in a legal proceeding is a question of objective assessment. If a party on either side of the record relies upon a right, immunity or defence derived from a federal law, there is a matter arising under s 76(ii) of the Constitution. It is not a question of establishing an intention to engage federal jurisdiction or an awareness that this has occurred. Immediate ascertainment of the factual basis of a justiciable controversy and of the attraction of federal jurisdiction in a proceeding will not always be possible by regard simply to allegations pleaded. If the attraction of federal jurisdiction itself is disputed, it may require evidence of the factual basis of the controversy to permit an answer to that question. It is unnecessary to pursue that aspect further in this case. Here, there was a Statement of Claim and a Defence which had been filed before the deadline of 14 August 1999. Regard may be had to both in deciding whether by that date an action under Pt IV of the Carriers' Act had been brought. The judgment of Ormiston JA In the Court of Appeal, Ormiston JA gave the leading judgment. His Honour would have favoured a holding in favour of Mrs Hatfield on the first issue were it not for the significance which he held should be given to the recent decision of a court of co-ordinate jurisdiction, namely that of the New South Wales Court of Appeal in Air Link Pty Ltd v Paterson28 ("Air Link [No 1]"). However, in a decision to be announced at the same time as that in the present appeal, special leave is granted to appeal from Air Link [No 1] and the appeal is allowed. The result is to reinforce the inclination of Ormiston JA in favour of Mrs Hatfield's submissions on the first issue. 28 [2002] NSWCA 85. Ormiston JA referred to the treatment in the pleadings of the AOC being a charter licence. Of a complaint that the pleadings did not squarely allege the carriage of Mr Hatfield as a passenger by Spring Air "in the course of commercial transport operations" as required by s 27(1) of the Carriers' Act, his Honour said29: "But the definition requires only that the 'operations' are those in which 'an aircraft is used, for hire or reward, for the carriage of passengers or cargo'. That is simply satisfied by the allegation that the company was carrying on the business of 'aircraft charter'. It is not the specific flight that had to be for reward;30 rather it was 'the operations' as a whole which had to be so characterised. An allegation that [Spring Air] carried on a charter business, as appeared in par 1 [of the Statement of Claim], was sufficient, so long as the particular flight was a 'carriage' [which was] 'in the course' of those operations and that was satisfied by the allegation in par 2 that [Mr Hatfield] 'had agreed' with [Spring Air] that he and other passengers be carried on a sight-seeing tour." Ormiston JA went on to conclude that the path of the flight was sufficiently defined by reference to the statement in the particulars that it was to be "through parts of the Northern Territory and the Kimberleys". His Honour added31: "Admittedly the starting and finishing points of the flight are not stated and this would have been important if the flight had commenced within one of the States, for it may then have been an intra-state flight. Here, it would have been clear enough that the flight began within the Northern Territory, to which Pt IV applies exclusively, and was not the subject of any State Acts imposing liability for intra-state flights. ... Moreover, the particulars of negligence to par 4 also alleged inferentially that one of the landing places during the flight was Timber Creek in the Northern Territory and that, by reason of the provisions of sub-s (3) of s 27, meant that Timber Creek was one of the finishing and starting points of the 29 (2003) 7 VR 63 at 73. 30 The 'contract for the carriage of the passenger' required by s 27(1) includes, according to the definition of 'contract' in s 26(1) 'an arrangement made without consideration'. 31 (2003) 7 VR 63 at 73-74 (footnote omitted). flight, even if one were to assume, as I would not, that the flight commenced outside the Territory."32 Ormiston JA also emphasised that the allegations in the Statement of Claim that the aircraft carrying Mr Hatfield crashed and that he died the same day indicated that the crash caused the death and that it was to be inferred that the allegation was that the death of Mr Hatfield resulted "from an accident which took place on board the aircraft" within the requirement of s 28. Finally, his Honour noted that, whilst the Statement of Claim described Mrs Hatfield as the "widow" of the passenger and expressed her loss in conventional terms applicable to claims under Lord Campbell's Act, there could be no doubt that she was a "family" member alleging that she had suffered damage within the meaning of s 35 of the Carriers' Act. The significance of State pleading rules There remains the submission, much pressed in oral argument in this Court, that it was essential for the attraction of federal jurisdiction that there appear on the face of the pleadings an invocation of Pt IV of the Carriers' Act. However, counsel for the Attorney-General of the Commonwealth, who intervened, correctly emphasised that it would be an error to focus upon such rules as there were in a particular State jurisdiction respecting pleading requirements, if the court be a court of pleading. It would be a further error to reason from those requirements to a conclusion as to whether an action had been brought within the meaning of s 34 of the Carriers' Act to enforce the right of a person to damages under Pt IV thereof. Rule 13.02(1)(b) of Ch I of the Rules of the Victorian Supreme Court applies to a claim which "arises by or under any Act" and requires the "pleading" 32 Section 27(3) of the Carriers' Act states: "For the purposes of this section, where, under a contract of carriage, the carriage is to begin and end in the one State or Territory (whether at the one place or not) but is to include a landing or landings at a place or places outside that State or Territory, the carriage shall be deemed to be carriage between the place where the carriage begins and that landing place, or such one of those landing places as is most distant from the place where the carriage begins, as the case may be." to identify the specific provision relied upon. When "picked up" by s 79 of the Judiciary Act, it may be taken that "Act" is to be understood as including a federal statute. However, there is no requirement in Pt IV that a plaintiff expressly invoke the Carriers' Act in any legal process. The Attorney-General correctly submitted that a separate and subsequent question may arise as to whether an action brought under Pt IV has been properly pleaded in accordance with any rules of pleading picked up by s 79 of the Judiciary Act. For example, if the relevant rules of court required that any particular statutory provision be referred to, it might be necessary for a plaintiff to amend. However, such amendments would not be disallowed on the basis that there had been a failure to comply with Pt IV of the Carriers' Act. As it happens, in the present case Ormiston JA had said33: "[I]f all the facts were otherwise properly contained in the statement of claim, there would ordinarily be little reason why an amendment should not be permitted to satisfy the rule. It would thus merely characterise a liability which the facts would otherwise establish." Conclusion respecting the first issue It is appropriate now to return to s 34 of the Carriers' Act. This states: "The right of a person to damages under this Part is extinguished if an action is not brought by him or for his benefit within two years after the date of arrival of the aircraft at the destination, or, where the aircraft did not arrive at the destination; the date on which the aircraft ought to have arrived at the destination; or the date on which the carriage stopped; whichever is the later." The first question posed by s 34 for the present case is whether Mrs Hatfield had brought an action by herself or for her benefit within two years after "the date on which the carriage stopped" by reason of the crash of the aircraft on 14 August 33 (2003) 7 VR 63 at 75. 1997. That, it would appear, was also "the date on which the aircraft ought to have arrived at the destination". The analysis by Ormiston JA of the pleadings as they stood by 14 August 1999 demonstrates that, within the two year period, Mrs Hatfield had brought an action in exercise of her right to damages under Pt IV. She was the widow of a passenger who had died as the result of an aircraft accident. She claimed to have suffered damage by reason of the passenger's death and claimed damages from the carrier. The facts alleged in the pleadings showed that Pt IV applied. Contrary to the submissions by Spring Air, it is unnecessary to show that within this period Mrs Hatfield had it in her mind, or her lawyers had it in their minds, that they were proceeding under Pt IV. Nor was it a requirement for compliance with s 34 that the Statement of Claim aver reliance upon Pt IV. Allegations that went beyond what was required to comply with s 34 were surplusage. The surplusage was liable to removal under procedural provisions picked up by s 79 of the Judiciary Act, but that did not deny that s 34 had been satisfied. That conclusion is sufficient to produce an answer in Mrs Hatfield's favour on the first issue. However, something more should be said of a further submission she made respecting the construction of s 34 of the Carriers' Act. It was contended that it was in any event sufficient that Mrs Hatfield had brought "an action" within time, albeit not one apt to exercise the right to damages under Pt IV. This construction involves disjoining the words "an action" in s 34 both from what precedes them and from what follows them. The phrase "if an action is not brought by him or for his benefit" is to be read as a whole. The concluding words respecting "benefit" clearly refer to the provisions in s 35 for liability in respect of death. In particular, s 35(3) states: "Subject to the next succeeding subsection, the liability is enforceable for the benefit of such of the members of the passenger's family as sustained damage by reason of his death." Likewise, the "action" spoken of in s 34 is one in exercise of the right to damages under Pt IV which is at peril of extinguishment. The submissions by Mrs Hatfield on this particular construction point should be rejected. Her case succeeds without the need to make them good. Conclusion respecting the second issue It remains further to consider the construction of the opening words of s 34 of the Carriers' Act "[t]he right of a person to damages under this Part is extinguished". Section 34 is to be construed having regard to the position of Pt IV in the structure of the legislation as a whole. In that regard, reference has already been made to the exclusion of Pt IV from carriage to which applies the Warsaw Convention, the Hague Protocol or the Guadalajara Convention. That carriage is dealt with respectively in Pt II (ss 10-19) (the Warsaw Convention and the Hague Protocol), Pt III (ss 20-25) (the Warsaw Convention without the Hague Protocol) and Pt IIIA (ss 25A-25C) (the Guadalajara Convention). Articles 28 and 29 of the Warsaw Convention (which appears as Sched 1 to the Carriers' Act) state: "Article 28 An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the Court having jurisdiction at the place of destination. Questions of procedure shall be governed by the law of the Court seised of the case. Article 29 The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. The method of calculating the period of limitation shall be determined by the law of the Court seised of the case." Of the relationship between the reference in Art 28 to questions of procedure and Art 29, Phillips LJ observed in Milor Srl v British Airways Plc34: 34 [1996] QB 702 at 707. "In my judgment, that general provision [Art 28] cannot give validity to a rule of procedure of the court seised of the case that is in conflict with an express provision of the Convention. By way of example, if the procedural law of the chosen forum imposed a 12-month limitation period, it does not seem to me that this could displace the two-year period of limitation laid down by article 29 of the Convention." Section 8(2) of the Carriers' Act states: "If there is any inconsistency between the text of a Convention as set out in a Schedule and the text that would result if the authentic French texts of the instruments making up the Convention were read and interpreted together as one single instrument, the latter text prevails." Article 36 of the Warsaw Convention reads: "The Convention is drawn up in French in a single copy which shall remain deposited in the archives of the Ministry for Foreign Affairs of Poland and of which one duly certified copy shall be sent by the Polish Government to the Government of each of the High Contracting Parties." Australia was one of those High Contracting Parties, as was recited in the preamble to the Carriage by Air Act 1935 (Cth) ("the 1935 Act"). In the work, Warsaw Convention35, Dettling-Ott writes of Art 29: "The original French text of the Convention names the limit of Article 29 as 'délai ... sous peine de déchéance'. 'Déchéance' should be translated as 'extinction'. The German translation uses the word 'Ausschlussfrist', the English translation [of] the term 'the right shall be extinguished' is used. The wording is clear ... A plaintiff will lose the rights to damages against the carrier if the time-limit of Article 29 expires. This notion is supported by the fact that French law uses the term 'déchéance' for a condition precedent (as a typical example Article 340-4 of the French Code Civil with a similar wording). 35 Giemulla and Schmid (eds), Warsaw Convention, (2003), Art 29, pars 15-16. In most countries the courts held that Article 29 contains [a] condition precedent. Commentators have also generally argued that Article 29 contains a condition precedent." (footnotes omitted) In Shawcross and Beaumont, Air Law36, it is said respecting Art 29: "If the right of action is 'extinguished', it would seem that it is completely destroyed and not merely rendered unenforceable by action." In Kahn v Trans World Airlines Inc37, the Appellate Division of the Supreme Court of New York gave detailed consideration to the travaux préparatoires of the Warsaw Convention. The Court concluded from these materials38: "Based upon the foregoing, it is abundantly clear that the delegates to the Warsaw Convention expressly desired to remove those actions governed by the Convention from the uncertainty which would attach were they to be subjected to the various tolling provisions of the laws of the member states, and that the two-year time limitation specified in article 29 was intended to be absolute – barring any action which had not been commenced within the two-year period. Moreover, it is equally clear from the delegates' discussion that the only matter to be referred to the forum court by paragraph 2 of the present article 29 was the determination of whether the plaintiff had taken the necessary measures within the two- year period to invoke that particular court's jurisdiction over the action." "[I]t is readily apparent that the time limitation incorporated in article 29 was intended to be in the nature of a condition precedent to suit, and that it was never intended to be extended or tolled by infancy or other incapacity. In addition, such an intent on the part of the draftsmen is fully consistent with one of the Convention's overall purposes – that of establishing 'a 36 4th ed (2005), vol 1, par VII[443]. 37 443 NYS 2d 79 (1981). 38 443 NYS 2d 79 at 87 (1981). 39 443 NYS 2d 79 at 87 (1981). uniform body of world-wide liability rules to govern international aviation'40." The South Australian Full Court reached a conclusion to similar effect in Timeny v British Airways plc41. The result is that there is a strong body of authority construing Art 29 of the Warsaw Convention as imposing a condition which is of the essence of the right to damages rather than providing for no more than a bar to the enforcement of an existing right. Such a distinction is well understood in Australian law and thus is readily accommodated in the drafting of s 34 of the Carriers' Act42. Section 4 of the Carriers' Act, as enacted, repealed the 1935 Act, which had given effect in Australia to the Warsaw Convention. The enactment of the Carriers' Act was precipitated by the adoption by Australia of the Hague Protocol to amend the Warsaw Convention. Since that time, provision also has been made (now in Pt IIIA) respecting the Guadalajara Convention. In the Second Reading Speech in the House of Representatives upon the Bill for what became the Carriers' Act, the Minister for Defence said43: "Part IV of the bill will apply the international rules, with certain modifications to domestic airline operators except when they are engaged in purely intra-state carriage, which is, of course, a matter for the States." The reservation respecting purely intrastate carriage was expressed before the litigation in Airlines of NSW Pty Ltd v New South Wales44 and Airlines of NSW 40 Reed v Wiser 555 F 2d 1079 at 1090 (1977). 41 (1991) 56 SASR 287. 42 See The Crown v McNeil (1922) 31 CLR 76 at 100-101; Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488-489; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276-277; Emanuele v Australian Securities Commission (1997) 188 CLR 114 at 130-131, 156; Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at 148-149 43 Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 44 (1964) 113 CLR 1. Pty Ltd v New South Wales [No 2]45. It will be recalled that the litigation produced a situation identified by Menzies J in Airlines [No 2]46: "It was urged that a decision of this Court leaving intra-State air transport services to the veto of both Commonwealth and State would create a situation of stalemate or deadlock. This argument is irrelevant. A constitutional division of legislative power which is not exclusive may sometimes mean that those who are subject to both Commonwealth and State control have two sets of restrictions to surmount before they can do that which they want to do. ... The answer to stalemate or deadlock in such circumstances is co-operation." In the Second Reading Speech upon the Bill for the Carriers' Act, the Minister went on47: "The most important objective in applying the principles of the convention to domestic aviation is to deprive the domestic carriers of their present right to contract out of all liability for damage howsoever caused, and to make them liable for proven damages up to [what was then] £7,500. Clause 32 of the bill provides that any contract attempting to fix a lower limit is null and void." Given the subject, scope and purpose of the statute as a whole, it is readily apparent that s 34 should be given a construction harmonious with that which applies to the international carriage dealt with under the Conventions, in particular with reference to Art 29 of the Warsaw Convention. The operation of s 79 of the Judiciary Act With respect to the proceeding instituted by Mrs Hatfield in the Supreme Court of Victoria, which, as has been indicated, invoked federal jurisdiction, s 79 of the Judiciary Act applied. This states: 45 (1965) 113 CLR 54. 46 (1965) 113 CLR 54 at 144. 47 Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April "The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable." Section 34(1) of the Limitation of Actions Act 1958 (Vic) ("the Victorian Limitation Act")48 states: "If a court would, but for the expiry of any relevant period of limitation after the day a proceeding in the court has commenced, allow a party to amend a document in the proceeding, the court must allow the amendment to be made if it is satisfied that no other party to the proceeding would by reason of the amendment be prejudiced in the conduct of that party's claim or defence in a way that could not be met by an adjournment, an award of costs or otherwise." The sidenote to s 34 reads "Abrogation of rule in Weldon v Neal (1887) 19 QBD 394". Much attention was given in the submissions to the Court to what Weldon v Neal decided, but, in the event, this is but a distraction from the questions to be decided on this appeal. It is accepted that, of its own force, s 34 of the Victorian Limitation Act could have no application to the litigation of a matter arising under a law of the Commonwealth49. The question is whether s 34 of the State Act is apt to be given binding effect by s 79 of the Judiciary Act. The terms of s 79 indicate that this can only be so if the case in question is one in which the State law is applicable50. Section 34 of the Carriers' Act, as indicated earlier in these reasons, is an integral part of the federal statutory right to damages. Section 34 is not a provision which adds a time limitation in respect of a right defined independently of s 34. Section 28 which creates the statutory right expressly does so "[s]ubject to this Part" and thus to s 34. It follows that, if an action was not brought by Mrs Hatfield or for her benefit within the two year 48 Reference also was made by the Court of Appeal to the similarly expressed Supreme Court Rules, Ch 1, r 36.01(6). 49 Solomons v District Court (NSW) (2002) 211 CLR 119 at 134 [21]. 50 See Solomons v District Court (NSW) (2002) 211 CLR 119 at 134-135 [23]-[24]. period required by s 34, what ensued was not the expiry of a relevant period of limitation, but the removal of a prerequisite for the existence of the right sought to be litigated. In those circumstances, s 79 did not operate to "pick up" the Victorian provision. The same conclusion may be reached by another route. Were s 34 of the State statute to be picked up by s 79, it would provide otherwise than as required by s 34 of the Carriers' Act. It would have "derogated from" the extinction wrought by s 34 of the federal statute51. Section 109 of the Constitution Something should be added respecting the operation of s 109 of the Constitution in the circumstances of Pt IV of the Carriers' Act. Earlier in these reasons it has been noted that s 35(2) of the Carriers' Act substitutes the liability under Pt IV in respect of the death of a passenger for any civil liability of a carrier "under any other law". To that extent, the State laws adopting Lord Campbell's Act are rendered invalid. A plaintiff who sued, say, in the diversity jurisdiction in a State court and sought to rely upon Lord Campbell's Act could not do so. By reason of s 35(2) and the operation of s 109 of the Constitution, that State statute would have ceased to be a law of a State within the meaning of s 79 of the Judiciary Act; there would be no subject-matter to be picked up by the operation of s 79. This operation of s 109 is anterior to any commencement or prosecution of a proceeding in a court. Section 79 begins to operate "only where there is already a court 'exercising federal jurisdiction', 'exercising' being used in the present continuous tense"52. The relationship between s 109 of the Constitution and s 79 of the Judiciary Act, which is sequential rather than concurrent, was further explained in Northern Territory v GPAO53. There the expression "threshold issue" was used. 51 Macleod v Australian Securities and Investments Commission (2002) 211 CLR 287 52 Solomons v District Court (NSW) (2002) 211 CLR 119 at 134 [23]. 53 (1999) 196 CLR 553 at 576 [38], 586 [76]. Conclusions The appellant, Spring Air, succeeds on the second issue but it is enough for the respondent, Mrs Hatfield, that she succeeds and Spring Air fails on the first issue to produce an outcome in her favour. The appeal should be dismissed with costs. Kirby KIRBY J. This appeal was heard, and is decided, at the same time as the proceedings in Air Link Pty Ltd v Paterson54, which raise similar issues. Two proceedings raise common issues Common defects of pleading: Each matter concerns an accident that allegedly occurred following air carriage of a passenger on a journey wholly within Australia. In consequence of the accident, claims of a right to damages were made. Proceedings based on such claims were commenced in State courts of competent jurisdiction. In each case, the pleading of the claim alleged an entitlement to recover damages. Such claims were expressed in terms of negligence and breach of contract. In neither case was the claim brought with express reference to the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Act"). That Act was not mentioned. Nor were all of the facts pleaded that would have been conventional and appropriate to the pleading of a claim based on the Carriers' Act. Two identical issues: When the defect of pleading was discovered, two critical issues arose in the courts below. The first was whether, notwithstanding the imperfections of the pleading, the plaintiffs' "right … to damages" under Pt IV of the Carriers' Act survived because the proceedings, as commenced, constituted "an action … brought" by the plaintiff or for the plaintiff's benefit "within two years after the date of arrival of the aircraft ... or … the date on which the carriage stopped". If the proceedings did not amount to "an action" so "brought", the right to damages was, by s 34 of the Act, "extinguished"55. The second issue, if it was found that the right to damages was "extinguished", was whether, in the circumstances, the "action" could be effectively revived by the exercise by the State court of powers conferred on it by State law to permit an amendment of the original statement of claim so as to re- express the cause of action as one based on Pt IV of the Carriers' Act. Resolution of the issues: In each case, the correct answer to the questions, presented by the foregoing issues, is that the proceedings brought by the plaintiff 54 [2005] HCA 39. 55 Carriers' Act, s 34. The terms of this section are relevantly identical to the provisions of the Convention for the Unification of Certain Rules Relating to International Carriage by Air, opened for signature at Warsaw on 12 October 1929, [1963] ATS 18, Art 29.1 ("Warsaw Convention"). Although the Warsaw Convention itself did not apply to the air carriage of the passenger, the application of its terms to domestic as well as international air travel was the policy of Pt IV of the Carriers' Act. Kirby within two years qualified as "an action … brought" within that limited time. Thus, the right of the plaintiff to damages was not extinguished by s 34 of the Carriers' Act. The conclusion below to the contrary was erroneous. It should be corrected. In consequence, the second question does not arise, at least on the premise hitherto found, or accepted, that the right to damages was extinguished. Nevertheless, as a matter of principle, where such rights are "extinguished", they cannot be revived by the purported application to them of State law. Any such law would subvert the applicable federal law effecting the extinguishment. The inconsistent State law does not therefore apply. To the extent that it purports to do so it would be invalid under the Constitution. The disposition of the present appeal Dispositions in the Supreme Court: The facts and circumstances of these proceedings are set out in other reasons56. So are the applicable provisions of State and federal law to which those now representing Mrs Ann Hatfield ("the respondent") pointed for a favourable answer on the second issue, in the hope of rescuing her from the predicament that arose out of the first57. The primary judge in the Supreme Court of Victoria (Ashley J) decided the first issue against the respondent58. He decided the second issue in her favour59. The Court of Appeal of Victoria confirmed both conclusions of the primary judge60. The respondent sought to protect herself from the challenge to the determination of the second issue, by filing a notice of contention in this Court stating that the first issue should have also been decided in her favour. An "action" was brought: My reasons for concluding that the primary judge and the Court of Appeal erred in the conclusion they respectively reached concerning the first issue are, in substance, the same as the reasons stated by me in disposing of the identical questions of principle in Air Link61. The alleged 56 Reasons of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ ("the joint reasons") at [1]-[2]; reasons of Callinan J at [90]. 57 The relevant legislation is referred to in the joint reasons at [19]-[23], [41]. 58 Hatfield v Agtrack (NT) Pty Ltd (2001) 183 ALR 674 at 681 [33]. 59 (2001) 183 ALR 674 at 698 [131]. 60 Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63. 61 [2005] HCA 39 at [75]-[84]. Kirby facts and the pleadings in the two cases are different. The State rules of court invoked to criticise the pleadings, and to suggest that their manifest defects deprived the claim so initiated of the character of "an action … brought … within two years", are different. However, there is no difference in the essential issue presented for decision. In each case, for the same reasons, the result on the first issue must be the same. The right to damages claimed by the respondent in this case is one conferred by federal law, namely the Carriers' Act. The fact of non-compliance with State laws on procedure and pleading is relevant to, but not determinative of, a plaintiff's compliance with the requirement in s 34 of the Carriers' Act. Nor is it determinative of the suggested extinguishment of the right to damages created by Pt IV of that Act if an action is not brought by or for the benefit of the plaintiff within two years of the date on which (in this case) "the carriage stopped". It remains, in each instance, for a court to give meaning to the phrase "action … is not brought" so as to fulfil the purposes of the federal law. Because that law deliberately chose, even in the case of air carriage within Australia, to apply the same language as appears in the Warsaw Convention, it is necessary to construe the contested phrase so as to achieve its purposes in the Carriers' Act but consistently also with its purpose in the Warsaw Convention. Approaching s 34 of the Carriers' Act in this way, I would conclude that the statement of claim filed on behalf of the respondent sufficiently identified the claim to "damages", brought by her or for her benefit in respect of the accident that occurred during the carriage by aircraft of her late husband. It thus constituted "an action … brought by" her within s 34 of the Carriers' Act. Amendment of an extinguished action is unlawful Conclusions on extinguishment: As in the decision in Air Link62, the foregoing conclusion, which logically comes first in disposing of the issues in the appeal, entitles the respondent to succeed on the issue raised by her in her notice of contention. Because the second issue was answered on an assumption that the right of action by the respondent had been extinguished, the reasoning on that point, at first instance and on appeal, has no remaining application. The premise for the observations is invalidated by the decision of this Court on the first issue. 62 [2005] HCA 39. Kirby Nonetheless, as other members of this Court63 have expressed their conclusions on the extinguishment issue I will simply say that I agree with those conclusions. My reasons are the same as those expressed by me in Air Link64. Agreement on other issues: I also agree with what is said in the joint reasons in this case that the Carriers' Act applied to displace or invalidate the Northern Territory or Victorian laws (whichever was otherwise applicable) in so far as such laws provide by statute for compensation to the relatives of a person who died in circumstances occasioning legal liability in another65; that the respondent's action is not properly one arising in tort or contract at all but one based solely on Pt IV of the Carriers' Act66; and that the action is one brought in federal jurisdiction67 with the consequences that flow from that fact68. Moreover, I agree that the attachment of federal jurisdiction occurs by operation of law. It is not dependent upon the intentions or expectations of the parties or those who plead initiating court process for them69. Consequences for the orders in this appeal Dismissal of the air carrier's appeal: It remains to consider the orders that follow from the foregoing conclusions. In disposing of this appeal, this Court is empowered to make the orders that ought to have been made by the courts below70. The Court of Appeal dismissed the appeal by Agtrack (NT) Pty Ltd (the appellant in this Court) ("Agtrack") against the orders of the primary judge. Those orders had been in the respondent's favour. They arose, in turn, on summonses brought both by Agtrack and by the respondent herself. The summons by Agtrack sought judgment in Agtrack's favour; alternatively that the proceedings be struck out or permanently stayed and "[s]uch 63 Joint reasons at [45]-[54]; reasons of Callinan J at [108]. 64 [2005] HCA 39 at [100]-[104]. 65 Joint reasons at [3]-[5]. 66 Joint reasons at [6]. 67 Joint reasons at [7]. 68 cf Truong v The Queen (2004) 78 ALJR 473 at 502-503 [164]-[166]; 205 ALR 72 69 cf joint reasons at [26] citing Hume v Palmer (1926) 38 CLR 441 at 451. 70 Judiciary Act 1903 (Cth), s 37. Kirby further order as the Court deems appropriate". The orders made by the primary judge included the order that Agtrack's summons be dismissed71. However, in accordance with his conclusion on the second issue, Ashley J acceded to relief sought in the summons brought for the respondent. His Honour granted leave to her to amend her statement of claim to raise a claim under the Carriers' Act72. The orders reflecting these conclusions were entered as a judgment of the Supreme Court of Victoria. There is no difficulty in this Court's confirming the dismissal of Agtrack's summons for it is consistent with the conclusion now reached on the first issue that the originating process, imperfect as it was as a pleading, sufficiently answered to an "action … brought" within the time limited by the Carriers' Act, disentitling Agtrack to peremptory relief. To that extent, it is sufficient for this Court simply to dismiss Agtrack's appeal, so affirming the order of the primary judge to that extent. Confirmation of amendment of pleading: But should the supplementary order made by Ashley J, permitting leave to the respondent to file an amended statement of claim, stand? Should it do so given that such order was premised, when it was made, on the conclusion that an "action [was] not brought" but that a power was available (now denied by this Court) to amend the initiating process retrospectively in a way that would repair the statement of claim in an action "extinguished" by s 34 of the Carriers' Act? Once it is accepted that the respondent's "right … to damages" under Pt IV of the Carriers' Act was not extinguished for want of the bringing of an "action" in time, such "action" is before the Supreme Court of Victoria. There is then no reason why, in respect of it, any applicable rules of the Supreme Court of Victoria should not be "picked up" so as to be available to that Court for the correction and improvement of the pleading, in order more precisely to state the issues for trial. Certainly, there is no inconsistency between amendment of the pleading of such an "action" and s 34 of the Carriers' Act, so long as a new and different cause of action, or a claim for damages outside the Carriers' Act, is not added to the one already brought (as concluded) in the action under that Act. The result of this analysis is that the disposition of the respondent's proceedings at first instance should stand. However, the reasoning sustaining that disposition is now different from that offered by the Supreme Court. That reasoning is overruled. 71 (2001) 183 ALR 674 at 699 [140] per Ashley J. 72 (2001) 183 ALR 674 at 699 [139] per Ashley J. Kirby This appeal calls attention once again to the need to frame claims arising out of air accidents in terms of the Carriers' Act, not the superseded common or statute law73. In this case, as in Air Link, it happens that the proceedings were commenced and the "action … brought" within the two year limitation provided by s 34 of the Carriers' Act. However, many other cases have arisen where, for ignorance or oversight of the limitation, the right to damages has been "extinguished". When that happens, the claim to damages is put beyond general powers of revival74. State and Territory rules for the amendment of pleadings cannot avail the extinguished action. Fortuitously for the respondent in this case, that outcome does not occur. Orders I agree in the orders proposed in the joint reasons. 73 Field, "'Turbulence Ahead': Some Difficulties for Plaintiffs with Air Carriers' Liability for Death and Injury under Australian Law", (2005) 13 Torts Law Journal 62. In the Court of Appeal in Agtrack (2003) 7 VR 63 at 67 [1] fn 3, Ormiston JA points out that none of the standard Australian torts textbooks makes clear the substitution of legal rights enacted by the Carriers' Act. 74 Shawcross and Beaumont, Air Law, 4th ed (2005), vol 1, par VII[443] referring to reported dismissals of actions brought out of time in Australia, England, Scotland, France, Greece, United States and Canada. Callinan CALLINAN J. These reasons should be read with the reasons for judgment in Air Link Pty Ltd v Paterson75. As in that case, the ultimate question here is whether the respondent brought action within the two years' limitation period prescribed by s 34 of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Act"). Factual matters To the outline of the facts in the judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ, I would add some of the paragraphs pleaded by the respondent in her statement of claim in its first, that is, its unamended form. "1. At all relevant times the Defendant was carrying on the business of aircraft charter under the name of Spring Air. On or about the 13th August, 1997, the Defendant, its servants and agents, had agreed with Stephen James Hatfield ('the deceased') and two others ('the passengers') to carry the deceased and the passengers on a sight-seeing tour in a Cessna 210 ('the aircraft'). On or about the 14th August, 1997, the aircraft, piloted by Peter Spanovskis, deceased ('the pilot'), and carrying the deceased and the passengers, crashed ('the accident'). The accident was caused by the negligence of the Defendant, its servants and agents, including the pilot and the chief pilot, Anthony Langdon Spring. [The respondent then pleaded a number of particulars of negligence which need not be set out.] It was an implied term of the agreement that the Defendant, its servants and agents, would take reasonable care for the safety of the deceased and the passengers on the said tourist flight ('the implied term'). In breach of the implied term, the Defendant, its servants and agents, failed to use reasonable care in the safety of the deceased and the passengers in the conduct of the tourist flight ('the breach'). 75 [2005] HCA 39. Callinan As a result of the breach and the negligence of the Defendant, its servants and agents, the deceased died on the 14th August, 1997. The Plaintiff brings this action as the widow of the deceased for her benefit." There then followed details of the respondent's dependency upon her late husband, and his likely earnings and prospects as are conventionally pleaded in actions brought under Lord Campbell's Act or its analogues in the States and Territories. The Warsaw Convention upon which the Act is based is intended to operate not only in many countries of greatly differing legal systems, but also in all jurisdictions of each of those countries. In Australia, it is easy to envisage a claim, for example, in respect of lost baggage, for a small amount in a magistrates' court. Until very recent times at least76, generally the formality and particularity of pleading required for the commencement of proceedings in a court varied according to the position in the hierarchy of the courts of the court whose jurisdiction was sought to be invoked. There can be no doubt however that the Act, which displaces any law which might otherwise be applicable, requires for its due invocation, that whatever is done in the jurisdiction sought to be enlivened, can be seen to amount to the bringing of an action, within two years of the event giving rise to it. This is so, even though the jurisdiction is federal jurisdiction, whether invoked in a State court vested with it pursuant to s 39 of the Judiciary Act 1903 (Cth) or otherwise. It is not suggested that the proceedings here could not be, or should not have been brought, as they were, in the Supreme Court of Victoria. It is accordingly necessary to ascertain whether what the respondent did here could properly be characterized as bringing an action within two years of her husband's death, and that in turn requires an analysis of the requirements for the bringing of an action in the Supreme Court of Victoria. Rule 5.01 of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) ("the Rules") defines "originating process" as a "writ, originating motion or other process by which a proceeding is commenced". Rule 5.02 provides that a writ should be in Form 5A which is as follows: 76 In some States uniform civil procedure rules relating to civil proceedings in more than one jurisdiction have been introduced: see for example Uniform Civil Procedure Rules 1999 (Q) which stipulate uniform procedures for the Supreme Court, District Court and Magistrates Courts in Queensland (r 3.1). Callinan IN THE SUPREME COURT OF VICTORIA BETWEEN "Form 5A WRIT and Plaintiff Defendant TO THE DEFENDANT TAKE NOTICE that this proceeding has been brought against you by the plaintiff for the claim set out in this writ. IF YOU INTEND TO DEFEND the proceeding, or if you have a claim against the plaintiff which you wish to have taken into account at the trial, YOU MUST GIVE NOTICE of your intention by filing an appearance within the proper time for appearance stated below. YOU OR YOUR SOLICITOR may file the appearance. An appearance is filed by – filing a 'Notice of Appearance' in the Prothonotary's office, 436 Lonsdale Street, Melbourne, or, where the writ has been filed in the office of a Deputy Prothonotary, in the office of that Deputy Prothonotary; and on the day you file the Notice, serving a copy, sealed by the Court, at the plaintiff's address for service, which is set out at the end of this writ. IF YOU FAIL to file an appearance within the proper time, the plaintiff may OBTAIN JUDGMENT AGAINST YOU on the claim without further notice. Callinan *THE PROPER TIME TO FILE AN APPEARANCE is as follows – (a) where you are served with the writ in Victoria, within 10 days after service; (b) where you are served with the writ out of Victoria and in another part of Australia, within 21 days after service; (c) where you are served with the writ in New Zealand or in Papua New Guinea, within 28 days after service; (d) where you are served with the writ in any other place, within 42 days after service. IF the plaintiff claims a debt only and you pay that debt, namely, $ and $ for legal costs to the plaintiff or his solicitor within the proper time for appearance, this proceeding will come to an end. Notwithstanding the payment you may have the costs taxed by the Court. FILED THIS WRIT is to be served within one year from the date it is filed or within such further period as the Court orders. Prothonotary There is provision of a space on the document for the inclusion of an indorsement. Rule 5.04(2) specifies the contents of an indorsement of claim which each writ must bear: a statement of claim; or a statement sufficient to give with reasonable particularity notice of the nature of the claim and the cause thereof and of the relief or remedy sought in the proceeding." Unless therefore the unamended writ and indorsement filed by the respondent within time, contained either a statement of claim, or a statement sufficient to give with reasonable particularity notice of the nature of the claim, and the cause thereof, and of the relief or remedy sought, she could not be regarded as having brought action within time as required by s 34 of the Act. Callinan I have concluded that this question should be answered in favour of the respondent. The fact that she had in mind a claim of the kind to which Lord Campbell's Act gives rise, and may have been completely unaware of the Act, its special provisions and its displacement of all other causes of action, does not defeat her right to proceed under the Act. As I have observed in Air Link Pty Ltd v Paterson, the words "cause of action" do not have one meaning for all purposes and all occasions. Rule 5.04 of the Rules does not even use the full expression "cause of action". There is no reason why "cause", the word actually used, should not be understood as the event or circumstances giving rise to the claim. So too, "the nature of the claim" can be understood as the type of claim, that is a claim for damages, just as the relief or remedy can be understood as a claim for damages arising out of, or as a result of the death of a passenger77 caused by an accident in the course of the operation of the aircraft78. That the accident may have been caused negligently is of no significance, and any pleading of that can be disregarded or struck out. Paragraphs 1, 2, 5 and 6 of the unamended statement of claim at least imply that the appellant was engaged in a commercial activity of aircraft charter, and that the deceased's engagement of it, and flight on its aircraft were of a commercial character. The language of implied terms used in par 5 in particular would hardly be apt otherwise. As to the route, destination and terminus of the flight, it is enough that one destination in the Northern Territory, to which the Act is applicable, at least is identified, that is Timber Creek. Although the statement of claim contains much that is surplusage to a claim under the Act, what it does contain is sufficient for a court to say that action has been brought by the filing of the writ, indorsed as it was, with the unamended statement of claim. At first instance Ashley J thought the respondent's unamended statement of claim deficient in failing to identify, not only the Act, but also the relevant specific provision of it enabling her to claim as required by r 13.02(1)(b) of the Rules which provides as follows: "(1) Every pleading shall – 77 Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 35. 78 Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 28. Callinan (b) where any claim, defence or answer of the party arises by or under any Act, identify the specific provision relied on". It is true that the respondent did purport, by heading her indorsement on the writ, "statement of claim", to elect to adopt alternative (a) of r 5.04(2) of the Rules. The fact however that she did so, does not mean that she has not complied with r 5.04, that is, by issuing a sufficient writ and by providing in it, as she did, the reasonable particularity that r 5.04(2)(b) requires. It would be anomalous if, having complied with one part of r 5.04, the respondent should be taken not to have issued a sufficient originating process because she failed to comply with another part of it, on the basis only that she misdescribed her indorsement as a statement of claim, that being so only because it did not identify the specific provision of an Act to be relied upon. Regard should be had also to r 14.01 which provides that: "Where an indorsement of claim on a writ constitutes a statement of claim in accordance with Rule 5.04, no statement of claim shall be served." It is important to notice that the rule uses the word "constitutes" and not "is or purports to be". In short, unless the indorsement constitutes a statement of claim, a statement of claim must be served within 30 days after the entry of an appearance as required by r 14.02 which also uses the word "constitute". What has happened here may therefore be analyzed in this way. Rule 5.04(2)(b) has been complied with by the respondent for the reasons that I have given. Despite that she and her advisers may have thought that they had filed a writ with an indorsement of claim containing a statement of claim, they did not do so because the indorsement lacking as it did the identification of the relevant specific provision did "not constitute a statement of claim" in fact. Indeed it was then open, indeed obligatory for the respondent to serve a document truly constituting a statement of claim 30 days after the appellant's appearance, or within such further time as the court might allow. Accordingly O 13 did not operate to deny, as was held below, that the respondent had done what was necessary to bring an action within two years of the relevant events as required by the Act. There is a further reason why the conclusion that I have just stated is the correct one. It is that the pleadings in the case should be read as a whole, and the defence containing all appropriate references to the Act having also been delivered before the expiration of the two years, should be read with the statement of claim and as giving to it all the particularity that either branch of r 5.04(2) requires. In addition to what I have said in Air Link Pty Ltd v Paterson, with respect to extinguishment, I would make the point that ss 79 and 80 of the Judiciary Act cannot operate to pick up a State rule, or rules of court such as those designed to Callinan alter the common law as stated in Weldon v Neal79, and which would, if operative, have the effect of amending or detracting from the operation of a federal enactment, here the Act. I would dismiss the appeal with costs. 79 (1887) 19 QBD 394.

HIGH COURT OF AUSTRALIA SOPHEAR EM AND THE QUEEN APPELLANT RESPONDENT Em v The Queen [2007] HCA 46 4 October 2007 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation S J Odgers SC with A Francis for the appellant (instructed by Legal Aid Commission of New South Wales) D C Frearson SC with J A Girdham for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Em v The Queen Criminal law – Evidence – Confessions and admissions – Discretionary grounds for exclusion – Unfairness discretion – Police covertly recorded a conversation with the appellant in a park – Appellant made certain admissions – Appellant not aware that he was being recorded – Appellant under mistaken belief that admissions to police could only be used against him in criminal proceedings if recorded electronically – Police deliberately omitted the second part of the standard caution, namely that anything said or done by the appellant could be recorded and used as evidence in court – Interpretation of s 90 of the Evidence Act 1995 (NSW) – Whether admitting evidence of admissions in these circumstances was unfair – Reliability of the admissions – Whether right to silence impugned – Whether jury should have been warned by the trial judge that an admission made in these circumstances may be unreliable. Words and phrases – "unfair". Evidence Act 1995 (NSW), ss 84, 85, 90, 137, 138. GLEESON CJ AND HEYDON J. After a trial in the Supreme Court of New South Wales before James J and a jury, Sophear Em ("the appellant") was convicted of murdering Joseph Logozzo; assaulting Joseph Logozzo with intent to rob him while armed with a dangerous weapon; and firing a firearm with disregard for the safety of Marianne Logozzo. He was sentenced to 25 years imprisonment for the first offence, 10 years imprisonment for the second offence and two years imprisonment for the third offence. At that trial the appellant was also charged with five other offences, namely that, being armed with a dangerous weapon, the appellant had robbed Michael Kress, his wife Beverly Kress, his daughter Alyson Kress, his son Jonathon Kress, and Ramzi Tamer, who was a friend of his daughter. In the course of the trial the appellant pleaded guilty to those charges. He received five concurrent sentences of imprisonment for 12 years in relation to them. The appellant's appeal to the Court of Criminal Appeal (Giles JA, Grove and Hidden JJ) against conviction and sentence was dismissed1. By special leave, the appellant appeals to this Court against the Court of Criminal Appeal's order dismissing his appeal to it against conviction. The Notice of Appeal makes two complaints. One is that the primary judge erred in overruling an objection to part of a confession recorded by police officers in a suburban park on 15 May 2002. The other complaint is in the alternative; that the jury should have been given a warning about the unreliability of the confession. If the first complaint is made out, the appellant contended that there should be no order for a new trial, but that he should be acquitted of the Logozzo offences. For the reasons given below, the appeal should be dismissed. The crimes The Logozzo home invasion. The three counts to which the appeal relates concern a "home invasion" on 7 January 2002. The home invaded was that of the Logozzo family in Cecil Hills, a suburb of Sydney. Mr and Mrs Logozzo arrived at their residence shortly after midnight. They were confronted by two men wearing dark clothes, balaclavas and large ski goggles. One was armed with a rifle and the other with a pistol. The men forced the Logozzos into their house. Other occupants of the house were threatened with the weapons, forced to leave the upstairs bedrooms in which they had been sleeping, and made to lie on the downstairs lounge room floor. The man with the rifle pointed it at Mr Logozzo and forced him upstairs so that property to be stolen could be identified. In the course of a struggle on the stairs and in the lounge room Mr Logozzo was shot in the chest by the man with the pistol. Mrs Logozzo ran to her husband's aid and 1 Em v The Queen [2006] NSWCCA 336. was shot in the hand by the man with the pistol. The intruders then fled. Mr Logozzo was taken to hospital but was pronounced dead. The Kress home invasion. On 17 January 2002 another home invasion took place nearby, at the residence of the Kress family in West Hoxton. Late in the evening Mr Michael Kress, his wife Beverly, their son Jonathon (aged 16), their daughter Alyson (aged 17) and her boyfriend, Ramzi Tamer, were at the Kress residence. At about 11.30pm Mr Kress opened his garage and stood at the open door smoking a cigarette. A car which had been stolen the previous day stopped opposite his driveway. Three men alighted from the car dressed in dark clothing and balaclavas. Two were wearing ski goggles. One carried a pistol, one a rifle and one a knife. The man carrying the pistol ran up the driveway and said: "Get in quick, don't shout, if you shout, I'll shoot you." The men forced all the occupants of the house to lie on the floor of the downstairs bar area, tied their hands and placed masking tape over their mouths. Numerous items of property were stolen. The man with the pistol told them to keep their heads on the ground for another ten minutes and not to call the police on pain of death. The appellant, who was 19 at the time of the offences, admitted being one of the three men, but gave evidence seeking to exculpate himself, which James J did not accept. The police investigation before the 24 April 2002 conversation The police received information leading them to believe that two persons who committed the Logozzo home invasion might have been parties to the Kress home invasion, and that on each occasion an AK47 assault rifle and a .32 handgun were used. On 16 February 2002 police officers executing a search warrant at premises in Canley Vale in connection with an unrelated matter found a fishing licence in the name of Mr Kress and a watch owned by Alyson Kress which had been stolen during the Kress home invasion, black electrical cable ties similar to those used to restrain the Kress family, and a balaclava. At that time the appellant and a friend of his, Mao Vann, were living on the premises. The watch was found in Vann's room. During the search, the appellant was asked: "Who is Michael Kress?" He replied: "Might be a friend of ours." On 22 February 2002 the appellant was interviewed by police officers in relation to the killing of a person on 9 February 2002. After being cautioned, he answered over 270 questions. The police then discovered that SIM cards registered in the name of two persons having an address of 1/119 Chester Hill Road, Bass Hill had been used in a mobile phone stolen during the Kress home invasion. This caused police officers to execute a search warrant on 24 April 2002 at 1/119 Chester Hill Road, Bass Hill, which were premises then occupied by the appellant. Until then the appellant had not been the subject of police interest in relation to either the Logozzo or the Kress home invasions. The appellant was made to wait in the lounge room for an hour while the house was searched. He was then taken to his bedroom while it was searched. In the appellant's bedroom the police found a carry bag containing, inter alia, black clothing, a balaclava, ski goggles, cable ties, two pairs of gloves, a roll of grey duct tape, and a sheath knife. He admitted that he owned those items, apart from the cable ties, but he said under questioning later that they had been used for fishing. Another occupant of the premises, Arno Do, was arrested in relation to a firearm found in the search. Liane Tran, who also occupied the premises, was taken to the police station for questioning about the use of her SIM card in a mobile phone stolen during the Kress home invasion. The 24 April 2002 conversation On 24 April 2002, following the search of the premises, the appellant was arrested. He was taken to Bankstown Police Station. He was questioned in an interview room about both the Logozzo and the Kress home invasions by Detective Senior Constable Bradley Abdy and Detective Senior Constable Michael McLean. Detective Abdy told the appellant he was to be asked about the Kress home invasion and administered the following caution: "I want you to know that you don't have to say or do anything unless you wish as anything you say or do may be recorded and later given in evidence at court." He was given a document to the same effect and a written summary of Pt 10A of the Crimes Act 1900 (NSW)2. He was also told that the interview would be recorded on a "video and audio machine". The following conversation then took place. The appellant said: "I'm not going to say anything to you if you turn that on. I don't want to look like a dickhead." Detective Abdy said: "I can turn the audio tapes on and leave the video off if you want?" The appellant said: "No, nothing." Detective Abdy said: "Well how about I turn the tapes on and you state that objection on them?" The appellant said: "I won't say a word if you turn it on." Detective Abdy said: "What about we write down what you say?" The appellant said: "No." Detective Abdy said: "Mick and I are going to ask you some questions anyway and it is up to you what you say." The detectives then put a number of damaging circumstantial matters to the appellant in relation to the Kress home invasion. After a few minutes the appellant twice said that he did not want anything recorded on the tapes. After the second refusal he said: "But what do you want to know, like where is the gun and stuff?" The detectives then left the room. On their return the following conversation took place. Detective Abdy said: "Well Sophear what is it going to be are you going to talk to us or not?" The appellant said: "Not if it's on the 2 This was in compliance with the following provisions of Pt 10A (now repealed) of the Crimes Act: ss 355(2), 356C(1) and 356M(1). See n 12 below. tapes." Detective McLean said: "There I've turned it off, even our phones are off." As he said this he turned the machine off. The appellant said: "What about a wire, like in the movies?" Detective Abdy said: "I'm not going to sit here naked with you mate, you'll just have to trust us. We have been up front with you from this morning and we haven't tried to trick you." The detectives then questioned the appellant for some time about the Kress home invasion and elicited admissions, including his possession of a silver pistol used in that home invasion. In answer to a question from Detective McLean: "Why did you pick that house anyway?", the appellant said: "They just looked rich, nice house, they had a Commodore in the driveway." The appellant declined to name the co-offenders. The detectives then left the room. On their return, before questioning him about the Logozzo home invasion, the following conversation took place. Detective Abdy said: "Sophear, there is one other thing that [we] want to speak to you about, so just listen to what we have to say. You don't have to say or do anything unless you want to. But whatever you say or do may be recorded and later given in evidence at court." The appellant said: "I don't want anything recorded." Detective Abdy said: "It is the same as before. Nothing in this room is turned on." The detectives then questioned the appellant about the Logozzo home invasion. Detective Abdy proposed turning the machine on, but the appellant began to cry. He asked to speak to a solicitor, and he was given an opportunity to do so. After the appellant returned to the interview room, the following conversation took place. Detective Abdy said: "What is it going to be mate? How about I just put the tapes in and you tell us whatever you want?" The appellant said: "No." Detective Abdy said: "What are you afraid of?" The appellant said: "I don't want to look like a dickhead." Detective Abdy said: "I told you before, I can leave the video out if you want." The appellant said: "No tapes." Detective McLean said: "We can record the conversation in our notebook and get you to sign it if you are happy with what has been written." The appellant said: "No I don't want to sign anything or have anything written down." Detective Abdy said: "Sophear we can't sit here all day. We are giving you a chance to tell us your side of the story. If you don't all we have is the statements from the other people in the house. If it was an accident, tell us, if you didn't shoot him tell us that." The appellant said: "I just don't want to talk about it just now, I have too much going on in my head, I want to say what happened in court." Soon afterwards the appellant was released from custody. The detectives then prepared a record of what had been said based only on their recollections, not on notes. It was set out as a word-for-word record, but Detective Abdy agreed it was unlikely that word-for-word accuracy had been achieved. However, in this Court counsel for the appellant conceded that there was no significant challenge at trial to the essential accuracy of the record, save in one relatively minor respect. At the trial, pursuant to s 281 of the Criminal Procedure Act 1986 (NSW)3, the primary judge excluded evidence of what had been said on the ground that it had not been tape recorded. 3 Section 281 provides: "(1) This section applies to an admission: that was made by an accused person who, at the time when the admission was made, was or could reasonably have been suspected by an investigating official of having committed an offence, and that was made in the course of official questioning, and that relates to an indictable offence, other than an indictable offence that can be dealt with summarily without the consent of the accused person. (2) Evidence of an admission to which this section applies is not admissible unless: there is available to the court: a tape recording made by an investigating official of the interview in the course of which the admission was made, if the prosecution establishes that there was a reasonable excuse as to why a tape recording referred to in subparagraph (i) could not be made, a tape recording of an interview with the person who made the admission, being an interview about the making and terms of the admission in the course of which the person states that he or she made an admission in those terms, or the prosecution establishes that there was a reasonable excuse as to why a tape recording referred to in paragraph (a) could not be made. (4) In this section: (Footnote continues on next page) The investigation after 24 April 2002 On 30 April 2002 police officers attended the appellant's residence and asked him whether, if they brought some photographs of different types of guns, he would be prepared to look at them and show them the type of .32 calibre pistol which, according to what he had said on 24 April 2002, he had been in possession of during the Kress home invasion but had later sold. He said he would have a look but that he might not point anything out. The police advised him to speak to a solicitor. In early May 2002 warrants (ST 02/149(c)-(f)) were issued by O'Keefe J, a judge of the Supreme Court of New South Wales, under s 16 of the Listening Devices Act 1984 (NSW) authorising Detective Abdy and Detective McLean each to wear a covert listening device transmitter and recorder for the purpose of recording conversations with the appellant. On 13 May 2002 the detectives attempted to speak to him at his residence but he was not there. The events of 15 May 2002 At about 11.55am on 15 May 2002 Detective Abdy and Detective McLean picked the appellant up from his residence. Each had been fitted with a covert listening device transmitter and recorder. Detective Abdy said they wanted to show the appellant some photographs and talk to him for five or ten minutes, and that they were not going to the police station. He went into their car. Detective Abdy said: reasonable excuse includes: a mechanical failure, or the refusal of a person being questioned to have the questioning electronically recorded, or the lack of availability of recording equipment within a period in which it would be reasonable to detain the person being questioned. There are equivalents in other jurisdictions: see Kelly v The Queen (2004) 218 CLR 216 at 228-230 [32]-[36]. "Mate, we're just gunna go and have a talk to you, I think there's a park or something up here. We're not going to take you to the police station or anything. So you know you're not under arrest, ok? As I told you before, we're going to come back and talk to you. Remember we said we might come back and show you some photos of some guns?" While driving to the park, Detective Abdy reminded the appellant of his visit to the police station on 24 April 2002. The conversation continued as follows. Detective Abdy said: "Remember they gave you a piece of paper that said you didn't have to say anything to the police?" The appellant said: "Yeah, I know that." Detective Abdy said: "You know that?" Detective McLean said: "And we told you that, you remember that?" Detective Abdy said: "And the same goes again. You don't have to say anything to the police if you don't want to, ok?" Very soon thereafter Detective McLean said: "You know. Mate, you don't have to talk to us if you don't want to." But the detectives did not then or at any other stage say that anything the appellant said might be recorded and given in evidence. In evidence and argument this omitted warning was described as "the second part of the caution". A little later the appellant asked: "So what, what do you want to know?" Detective Abdy said: "We want to know, you said when you did the home invasion at Hoxton Park. Do you remember that? Mate, I'm struggling to remember, I'm struggling to remember what you said. You said you picked the, why did you pick that house out?" The appellant then said: "I don't want to talk about that any more." The detectives then showed the appellant photographs of guns. In the course of the conversation the appellant said: "The one that was used at the shooting was an SK." He had earlier denied knowing anything about the Logozzo home invasion. During the balance of the conversation, the detectives repeatedly assured the appellant that he was not being tricked4. Detective Abdy said: "Mate, we didn't even take you to a police station, it's not hard, I mean we spoke to you once before and you wanted to talk to us, we're not, we're not trying to trick you or anything." A little later the appellant said: "I know how you guys work ... you try to con us", to which Detective Abdy said: "I'm not trying to, mate, I'm not trying to con you, we told you before, we're investigating a home invasion and a murder." A little later still Detective Abdy said: "Sophear, we haven't 4 At one point Detective Abdy is transcribed as saying: "We're not trying to trick you up" but the word "trick" appears to be an error for "trip". tried to trick you once, have we? We've brought you to a God damn park. We're not, we haven't got you in the police station." Detective McLean said: "Mate, you know you're under arrest[5]. We told you that as soon as you got in the car. Right. We told you that you don't have to talk to us if you don't want to, you know that, all right. We want to try and clear up a few things here." A little further on Detective McLean said: "Like Brad [Abdy] said, we're not here about tricking anybody." In the course of the conversation the appellant denied involvement in the Logozzo home invasion. But thereafter he behaved in such a fashion as arguably to make admissions in relation to that home invasion. Then at page 25 of the transcript of the conversation, Detective Abdy said: "Maybe you might feel better if you tell us. It's not as though we're going to slap the handcuffs on you and take you away otherwise we'd be at the police station if we were gunna do that, wouldn't we?" Below, this will be referred to as "Detective Abdy's p25 statement". It had great significance in the trial, because James J rejected the whole of the conversation taking place after it, in which the appellant gave a detailed account of his arrival at the Logozzo residence, the struggle, the shootings and the departure. Procedural history The trial of the appellant before James J was not the first trial he had faced on the charges relating to the Logozzo home invasion. There had been an earlier trial before Shaw J, which commenced on 1 September 2003, at which Shaw J made an order rejecting evidence of both parts of the conversation at the park on 15 May 2002. He did so on three grounds. He held that the evidence was inadmissible on the ground that it was obtained improperly within the meaning of s 138 of the Evidence Act 1995 (NSW) ("the Act")6. Secondly, he 5 The context suggests and counsel for the appellant accepted that the word "not" is wrongly omitted before "under arrest". 6 Section 138 provides: "(1) Evidence that was obtained: improperly or in contravention of an Australian law, or in consequence of an impropriety or of a contravention of an Australian law, is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained. (Footnote continues on next page) (2) Without limiting subsection (1), evidence of an admission that was made during or in consequence of questioning, and evidence obtained in consequence of the admission, is taken to have been obtained improperly if the person conducting the questioning: did, or omitted to do, an act in the course of the questioning even though he or she knew or ought reasonably to have known that the act or omission was likely to impair substantially the ability of the person being questioned to respond rationally to the questioning, or (b) made a false statement in the course of the questioning even though he or she knew or ought reasonably to have known that the statement was false and that making the false statement was likely to cause the person who was being questioned to make an admission. (3) Without limiting the matters that the court may take into account under subsection (1), it is to take into account: the probative value of the evidence, and the importance of the evidence in the proceeding, and the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding, and the gravity of the impropriety or contravention, and (e) whether the impropriety or contravention was deliberate or reckless, and (f) whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, and (g) whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention, and the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law." (Footnote continues on next page) held that the evidence should be excluded under s 90 of the Act7. Thirdly, he held that the evidence should be excluded under s 137 of the Act as unfairly Section 139(1) provides: "For the purposes of section 138(1)(a), evidence of a statement made or an act done by a person during questioning is taken to have been obtained improperly if: the person was under arrest for an offence at the time, and the questioning was conducted by an investigating official who was at the time empowered, because of the office that he or she held, to arrest the person, and (c) before starting the questioning the investigating official did not caution the person that the person does not have to say or do anything but that anything the person does say or do may be used in evidence." Section 139(5) provides: "A reference in subsection (1) to a person who is under arrest includes a reference to a person who is in the company of an investigating official for the purpose of being questioned, if: the official believes that there is sufficient evidence to establish that the person has committed an offence that is to be the subject of the questioning, or the official would not allow the person to leave if the person wished to do so, or the official has given the person reasonable grounds for believing that the person would not be allowed to leave if he or she wished to do so." 7 Section 90 provides: "In a criminal proceeding, the court may refuse to admit evidence of an admission, or refuse to admit the evidence to prove a particular fact, if: (a) the evidence is adduced by the prosecution, and (b) having regard to the circumstances in which the admission was made, it would be unfair to a defendant to use the evidence." prejudicial8. He rejected contentions that the evidence was inadmissible under s 849 and s 8510 of the Act. 8 Section 137 provides: "In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant." 9 Section 84 provides: "(1) Evidence of an admission is not admissible unless the court is satisfied that the admission, and the making of the admission, were not influenced by: violent, oppressive, inhuman or degrading conduct, whether towards the person who made the admission or towards another person, or a threat of conduct of that kind. (2) Subsection (1) only applies if the party against whom evidence of the admission is adduced has raised in the proceeding an issue about whether the admission or its making were so influenced." 10 Section 85 provides: "(1) This section applies only in a criminal proceeding and only to evidence of an admission made by a defendant: in the course of official questioning, or as a result of an act of another person who is capable of influencing the decision whether a prosecution of the defendant should be brought or should be continued. (2) Evidence of the admission is not admissible unless the circumstances in which the admission was made were such as to make it unlikely that the truth of the admission was adversely affected. (3) Without limiting the matters that the court may take into account for the purposes of subsection (2), it is to take into account: any relevant condition or characteristic of the person who made the admission, including age, personality and education and any (Footnote continues on next page) The Court of Criminal Appeal (Ipp JA, Hulme and Howie JJ)11 disagreed with Shaw J's conclusions in relation to s 138. It did so because he failed to find sufficient facts to support the conclusion that the appellant was under arrest or that s 139 applied; he failed to give reasons on that point; he took into account irrelevant considerations; and in other respects the exercise of "discretion", as it was described, miscarried. The Court of Criminal Appeal rejected Shaw J's conclusions in relation to s 90 on the ground that he took into account irrelevant considerations. And the Court of Criminal Appeal rejected his conclusions in relation to s 137 on the ground that reception of the evidence could cause no prejudice to the appellant in the relevant sense. In 2004 a second trial took place before James J. That trial led to the appellant's convictions. At that second trial James J admitted the evidence of the conversation in the park up to Detective Abdy's p25 statement. He said the meaning of that statement was: "if the accused spoke to the police he would not be arrested and what he said could not be used against him." James J held that it would be unfair, pursuant to s 90 of the Act, to use against the appellant admissions made after Detective Abdy's p25 statement. This appeal relates to the correctness of James J's decision not to reject the park conversation before Detective Abdy's p25 statement, and the Court of Criminal Appeal's concurrence in that course. Evidentiary gates through which the evidence passed Before assessing the applicability of s 90 to the first part of the 15 May 2002 interview, the other gates through which that interview passed may be listed. These were fully considered at a voir dire conducted before Shaw J at mental, intellectual or physical disability to which the person is or appears to be subject, and if the admission was made in response to questioning: the nature of the questions and the manner in which they were put, and the nature of any threat, promise or other inducement made to the person questioned." 11 R v Em [2003] NSWCCA 374. which the detectives gave evidence but the appellant did not. The transcript of that voir dire was before James J. Section 84. Before Shaw J the appellant argued that s 84 applied. Shaw J rejected that contention. He said: "I believe the police behaved properly in all of the circumstances. I accept the submission of the Crown Prosecutor that [the police in] honest belief, in pursuit of evidence relating to a serious and tragic crime, behaved in a way which was understandable." The submission that s 84 applied has not been put since. Section 85. Before Shaw J the appellant contended that s 85(2) applied. Shaw J rejected the contention. It was not repeated in the appeal to the Court of Criminal Appeal against Shaw J's order rejecting the evidence on other grounds. It was, however, advanced to James J. Reliance was placed on s 85(3)(b). Reference was made to what was said to have been persistent questioning; to the claims of the detectives that they were not trying to trick the appellant; to a representation by them that there was an important difference between an intentional shooting and an accidental one; and to Detective Abdy's p25 statement. Counsel for the appellant relied on the appellant having answered the questions by saying: "I don't know" or "I can't remember" or by asking a question. Counsel for the appellant submitted that some of the information which the appellant admitted in his answers had previously been conveyed by the detectives, and Detective Abdy did accept that on 24 April 2002 the appellant had been told that on 7 January 2002 one of the armed men had got into a struggle with Mr Logozzo on the stairs; that the other victims were tied up on the floor; and that the offenders used a red car. James J rejected these submissions. He said: "The questioning was not hostile or overbearing, or, in my opinion, unduly persistent or confusing or too leading. That the accused often claimed not to know or not to remember, and sometimes gave partial, indirect or equivocal answers or evaded answering questions, does not militate against a conclusion that the circumstances in which such admissions as were made were made, were such as to make it unlikely that the truth of those admissions was adversely affected." He said that the appellant's admissions of what he had been told before "were all given in response to non-leading questions by the police and, as spoken by the accused, sounded to me as answers given by the accused of his own accord and not as answers in which the accused was repeating what he had previously been told by someone else." James J concluded that the circumstances in which the admissions in the whole of the 15 May 2002 conversation were made were such as to make it unlikely that the truth of the admissions was adversely affected. The appellant did not contend to the Court of Criminal Appeal that James J had erred in relation to s 85. In this Court counsel for the appellant accepted James J's conclusion; but despite doing so, and despite the jury's conclusion beyond reasonable doubt that the admissions were reliable, the appellant did not concede that they were in fact reliable. Counsel for the appellant also said that James J's finding did not mean that one could say the evidence "is likely to be reliable", and said that there could be "a real risk that it is unreliable, even though it is not excluded by reason of [s] 85." Whatever technical merit these distinctions have, it is not necessary to inquire into their practical merits because counsel for the appellant said that the appellant's case on s 90 did not rely on any unreliability argument. This was said to be because the basis for any such argument rested on the appellant's evidence late in the trial, and hence could not have been taken into account by James J when he overruled the s 85 objection at an earlier stage. Section 138. Shaw J accepted the appellant's contention that the 15 May 2002 admissions should be excluded under s 138. The Court of Criminal Appeal reversed that decision. The appellant repeated the submission to James J. In particular, the appellant submitted that the evidence had been obtained improperly for one of three reasons. (a) At the time of making the admissions, the appellant had been "under arrest" within the meaning of s 355(2) of the Crimes Act 1900 (NSW) and the provisions of Pt 10A of that Act had been contravened12. 12 Part 10A of the Crimes Act was repealed by the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW), Sched 4.16[3], and replaced by Pt 9 of that Act. In Pt 10A, s 356C(1) provided that a person who is under arrest may be detained. Section 356M(1)(a) provided that a person who is detained must be cautioned, orally and in writing, that "the person does not have to say or do anything but that anything the person does say or do may be used in evidence". Section 355(2) provided: "A reference in this Part to a person who is under arrest or a person who is arrested includes a reference to a person who is in the company of a police officer for the purpose of participating in an investigative procedure, if: the police officer believes that there is sufficient evidence to establish that the person has committed an offence that is or is to be the subject of the investigation, or (Footnote continues on next page) (b) At the time of making the admissions, the appellant had been "under arrest" within the meaning of s 139(5) of the Act; in consequence, s 139(1) of the Act applied, but the appellant had not been cautioned in accordance with s 139(1)(c) of the Act. Those conducting the questioning of the appellant had made a false statement within the meaning of s 138(2)(b) of the Act, and the other requirements of s 138(2)(b) were satisfied, so that evidence of the admissions was to be taken to have been obtained improperly. Section 355(2)(a) and (c) of the Crimes Act corresponded in substance with s 139(5)(a) and (c) of the Act. The correctness of the first two contentions thus turned on the question of whether a full caution should have been given on the ground that the appellant was under arrest. It was submitted by the appellant to Shaw J that, while on 15 May 2002 Detectives Abdy and McLean did not believe there was sufficient evidence to establish that the appellant had committed the offences of 7 January 2002, they did believe that there was sufficient evidence to establish that the appellant had committed the offences of 17 January 2002. The latter submission was not put to James J. Instead reliance was placed on the evidence of another police officer. James J declined to act on that evidence, partly because that officer was not a person in whose company the appellant had been for the purpose of being questioned, and partly because he preferred another part of that officer's evidence. The appellant also submitted that the detectives had given the appellant reasonable grounds for believing that he would not be allowed to leave if he wished. James J, after referring to the fact that the conversation took place in a park, that the detectives repeatedly told the appellant he was not under arrest, that the appellant had been under arrest on 16 February and 24 April 2002, that the detectives had not placed any physical restraint on the appellant, and that Detective Abdy at one point asked the appellant whether he wished to go back to the car, rejected the submission. the police officer would arrest the person if the person attempted to leave, or the police officer has given the person reasonable grounds for believing that the person would not be allowed to leave if the person wished to do Hence neither s 139(5)(a) nor s 139(5)(c) applied, and nor did the equivalent parts of s 355(2). It followed that the detectives were not in breach of any duty to caution the appellant, and the first two contentions were rejected. As to the third contention, based on s 138(2)(b), James J found that Detective Abdy's p25 statement was a statement of fact about the present intention of the detectives, namely that if the appellant spoke to them about the murder, it was not their intention to arrest him and prosecute him. James J also found that the detectives knew that the statement was false, and knew or ought to have known that it was likely to cause the appellant to make admissions. Hence s 138(2)(b) and s 138(1) were satisfied. But after considering s 138(3) he declined to exclude the evidence. He said that, "because of the probative value of the evidence, the importance of the evidence and the nature of the offence, the desirability of admitting the evidence outweighs the undesirability of admitting evidence that was obtained in the way in which the evidence was obtained." The appellant did not challenge this conclusion either in the Court of Criminal Appeal or in this Court. Even if the s 138 objection had succeeded, it would not have caused the exclusion of the first part of the 15 May 2002 conversation. Section 137. The appellant submitted to Shaw J that the evidence should be rejected under s 137. Although the Court of Criminal Appeal did not find the matter clear, it thought that Shaw J had purported to apply s 137 in rejecting the 15 May 2002 conversation. The Court of Criminal Appeal disagreed with this outcome, on the ground that the arguments advanced to Shaw J did not justify applying s 137. One argument was that what the appellant said was not really an admission. The Court of Criminal Appeal rejected that argument on the ground that the question whether a statement by the appellant was an admission or not was a matter for the jury. Another was that the unfair prejudice caused by reception of the evidence was enormous. The Court of Criminal Appeal rejected that argument on the basis that there was no unfair prejudice arising from the probability of the jury using it for a purpose other than that for which it was tendered, or of the jury overreacting to it in an illogical or irrational manner. The only prejudice in the evidence was its capacity to prove that the appellant committed the offences, and that was not unfair. The appellant did not rely on s 137 thereafter. Police Commissioner's Code of Practice. The New South Wales Police Commissioner has published a Code of Practice for Custody, Rights, Investigation, Management and Evidence ("the Code"). It was in force at the material time. Amongst much else it establishes standards for questioning suspects. Before Shaw J the appellant contended, and Shaw J evidently agreed, that the Code had been contravened in that the appellant had been questioned so much after making it clear that he did not want to answer questions that the questioning amounted to "undue pressure". The Court of Criminal Appeal did not find it entirely clear whether this contravention was said to support exclusion under s 138 or s 90, but it disagreed with Shaw J: it held that even if there was a breach of the Code it was not sufficient to justify exclusion of the evidence. Neither that submission about the Code, nor any other, has since been advanced by the appellant. Section 135. The appellant did not contend before Shaw J, James J, either of the Courts of Criminal Appeal, or this Court that his confession should have been excluded under s 13513 of the Act. The position of the appellant in summary. In relation to the first part of the 15 May 2002 conversation, the appellant has thus run, failed in and later abandoned some allegations; failed to advance others; and, to some degree, made express concessions. The resulting position is as follows. There had been compliance with s 281 of the Criminal Procedure Act, the statutory provision directed to the question of the form in which the results of official questioning may be tendered in evidence. There had been no violent, oppressive, inhuman or degrading conduct employed or threatened towards anyone, and hence there had been compliance with s 84, the provision particularly directed to interrogation methods. The circumstances were such as to make it unlikely that the truth of the admission was adversely affected, and hence there had been compliance with s 85, the provision particularly directed to unreliable confessions. The police had not acted improperly or in contravention of any Australian law (cf s 138), and in particular they had not acted improperly in failing to caution the appellant because s 139(1)(c) did not apply; hence there had been compliance with s 138, the provision particularly directed to the rejection of illegally or improperly obtained evidence. The probative value of the evidence was not outweighed by the danger of unfair prejudice (cf s 137), and was not substantially outweighed by the danger that the evidence might be unfairly prejudicial, misleading or confusing, or cause or result in undue waste of time (cf s 135). There had been no breach of the Police Commissioner's Code. 13 Section 135 provides: "The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party, or (b) be misleading or confusing, or (c) cause or result in undue waste of time." Of course it is possible for accused persons to invoke s 90 successfully even if they fail to invoke, or successfully to invoke, any other ground of exclusion. The question is whether in the particular factual circumstances of this case the appellant has done so. Uncontested factual findings Before concluding that it was not unfair to admit the first part of the conversation in the park, James J made the following findings which are not challenged by the appellant: "[T]he accused knew on 15 May that the persons he was speaking to were police officers. On 15 May the accused was told several times by the police officers that he did not have to say anything to the police and he was reminded of the written summary under part 10A of the Crimes Act which he had been given on 24 April ... [T]he accused understood that he did not have to say anything to the police." He further found: "[T]he accused would not have spoken to the police on 15 May if he had known the conversation was being recorded; ... the police knew on 15 May that the accused would not speak to police if he knew that the conversation was being recorded; ... the accused did not know that the conversation was being recorded and believed that the conversation was not being recorded; ... the police knew that the accused believed that the conversation was not being recorded; and the police did not tell the accused that the conversation was being recorded." He found that the appellant believed on 24 April and still believed at the commencement of the conversation on 15 May that if a conversation he had with the police officers was not recorded, evidence of the conversation could not be used against him in criminal proceedings. James J found that this belief was one which the appellant had formed himself independently of anything said or done by the police officers. He found that up to the commencement of the conversation on 15 May 2002 the police officers had not set out to induce that belief in him. In these circumstances James J found that it was not unfair to use evidence of the first part of the conversation against the appellant. The Court of Criminal Appeal was prepared to determine the appeal on the assumption that the detectives were aware of the appellant's belief. That assumption is supported by the fact that the detectives did not believe that the appellant would have talked to them if he had thought the conversation was being recorded. Detective Abdy also believed that if he gave "the second part of the caution", warning that anything said might be recorded and used in evidence, the appellant might become aware that he was being recorded, and might refuse to talk. There is one other relevant and unchallenged finding of fact made by the first Court of Criminal Appeal, namely that the appellant "showed throughout the investigations that he was well aware of his rights and would exercise them whenever he thought it was in his interests to do so."14 The reasoning in the courts below It was common ground between the parties that what the appellant said in the first part of the 15 May 2002 interview included "representations", "previous representations" and "admissions" within the meaning of those expressions as defined in Pt 1 of the Dictionary to the Act; and that since the evidence was tendered by the prosecution, s 90(a) was satisfied. James J held that s 90(b) was not satisfied because nothing that happened before or during the conversation of 15 May 2002 up to Detective Abdy's p25 statement made it unfair to use evidence of what was said before then. The Court of Criminal Appeal agreed. In particular the Court of Criminal Appeal treated the case as being one in which the detectives did no more than fail to correct a belief of the appellant's which they knew to be erroneous, namely that the evidence could not be used against him. The Court of Criminal Appeal specifically rejected a submission, which had not been put to James J, that "albeit unintentionally, prior to [Detective Abdy's p25 statement] the detectives had said and not said things which would have tended to confirm the appellant's pre- existing belief that evidence of the conversation could not be used against him in criminal proceedings."15 The "things said and not said" on which the appellant relied before the Court of Criminal Appeal as confirmatory were four in number. The first three were16: In the police car Detective Abdy told the appellant that, as on 24 April 2002, he did not have to say anything to the police if he 14 R v Em [2003] NSWCCA 374 at [69] per Howie J (Ipp JA and Hulme J concurring). 15 Em v The Queen [2006] NSWCCA 336 at [60] per Giles JA (Grove and Hidden JJ concurring). 16 Em v The Queen [2006] NSWCCA 336 at [61] per Giles JA (Grove and Hidden JJ concurring). did not want to; the appellant submitted that he did not add, as had been said on 24 April 2002, that anything the appellant said may later be given in evidence in court. (ii) At the park Detective McLean reminded the appellant that nothing had been recorded on 24 April 2002, repeated that the appellant did not have to talk to the police if he did not want to, and said that all the police wanted was 'just a little bit of cooperation here'; the appellant submitted that again the detectives did not say that anything the appellant did say may later be given in evidence in court. (iii) When the conversation turned to getting lives back to normal and the detectives wanting 'to try and clear up a few things here', the appellant was again told that he did not have to talk to the detectives if he did not want to; the appellant submitted that the impression was given that the police were not investigating the appellant's involvement, but were just seeking to eliminate the involvement of others, and … again that the detectives did not say that anything the appellant said may later be given in evidence in court." The fourth was17: "The detectives told the appellant that they were not trying to con or trick him. The appellant submitted that the effect of what they said was to trick him, by confirming his pre-existing belief that evidence of what he said could not be used against him in criminal proceedings and giving him a false sense of security." The Court of Criminal Appeal rejected these arguments18: "[F]ailing to correct is very different from confirming. The fact that the detectives did not tell the appellant that anything he said may later be given in evidence in court was not confirmatory. The appellant already held the belief, it did not need confirmation, and the appellant gave no evidence in the voir dire enquiry that there was some kind of confirmation; confirmation was not in question. At least until [Detective 17 Em v The Queen [2006] NSWCCA 336 at [62] per Giles JA (Grove and Hidden JJ concurring). 18 Em v The Queen [2006] NSWCCA 336 at [65] per Giles JA (Grove and Hidden JJ concurring). Abdy's p25 statement] there was no holding out that, if the appellant did speak to the detectives, what he said could not be used against him: at that point the judge considered that what Detective Abdy said strengthened the appellant's belief and encouraged him to speak to the police ... I do not think that occurred at any earlier time." The appellant's arguments: the law The appellant's first complaint is that the first part of the 15 May 2002 conversation should have been excluded on the ground that it was unfair, within the meaning of s 90, to receive it in evidence. Central arguments. Counsel for the appellant said that the word "unfair" in s 90 was not defined in the Act, and could not be defined comprehensively and precisely. The "concept of unfairness" had "been expressed in the widest possible form" in s 9019. It was submitted that the court had to consider the whole of the circumstances in which the admission was made, and examine the effect of those circumstances on the fairness to the appellant of its use at the trial. The origins of s 90 lie in the Australian Law Reform Commission's Report on Evidence20. In the Bill annexed to the Commission's Interim Report21, there were clauses corresponding broadly to ss 84, 85 and 138. There was no clause corresponding to the common law discretion, discussed in R v Lee22, to exclude otherwise admissible confessions on the ground that it would be unfair to use them in evidence against the accused. The Report said23: "Several commentators made the point that the Lee discretion has been used to deal with the situation where the accused has chosen to speak to the police but on the basis of assumptions that were incorrect, whether because of untrue representations or for other reasons. The [proposed equivalent to s 85] does not deal with that situation. It is concerned with 19 R v Swaffield (1998) 192 CLR 159 at 193 [67] per Toohey, Gaudron and 20 Australian Law Reform Commission, Evidence, Report No 38, (1987). 21 Australian Law Reform Commission, Evidence, Report No 26 (Interim), (1985). 22 (1950) 82 CLR 133 at 151-155 per Latham CJ, McTiernan, Webb, Fullagar and 23 Australian Law Reform Commission, Evidence, Report No 38, (1987) at 90, par 160(b) (footnote omitted). circumstances affecting the truth of the admissions, not the choice whether or not to make the admission. The interim proposals included a discretion enabling the judge to exclude evidence obtained illegally or improperly. That discretion is capable of dealing with the matter but not in the way that the Lee discretion does. The Lee discretion focusses on the question whether it would be unfair to the accused to admit the evidence. The discretion to exclude illegally or improperly obtained evidence requires a balancing of public interests. It would, therefore, be less effective than the Lee discretion in the situation where the confession was obtained because the accused proceeded on a false assumption. There is a need for a discretion to enable the trial judge to exclude evidence of admissions that were obtained in such a way that it would be unfair to admit the evidence against the accused who made them. Such a discretion should be added to the proposal." The draft Bill annexed to the Report contained a clause 79, which is similar but not identical to s 90. The Report said: "This clause enacts an exclusionary discretion similar to that known as ... 'the Lee discretion' in existing law."24 The appellant did not contend that the common law and s 90 were identical, but said that they had considerable similarities, and that the common law was of some assistance in applying s 90. The appellant submitted that the primary focus of s 90 was on any incorrect assumptions made by accused persons and the reasons why they made them. The appellant submitted that the purpose of the corresponding common law discretion was "to protect the rights and privileges of the accused person."25 Among those rights and privileges is an entitlement to remain silent (statute apart) when questioned by police officers, and hence "the accused's freedom to choose to speak to the police", and a relevant issue is "the extent to which that freedom has been impugned."26 Arguments not calling for decision. The appellant also submitted that the specificity of ss 84, 85 and 138 contrasted with the generality of s 90. The appellant submitted that as a result of ss 84, 85 and 138, violence and the like, unreliability and unlawful or improper obtaining are not the touchstones of "unfairness" under s 90, for otherwise s 90 would not have independent work to do. But the appellant also submitted that the factors identified in ss 84, 85 and 24 Australian Law Reform Commission, Evidence, Report No 38, (1987) at 234, Appendix A, par 199. 25 R v Swaffield (1998) 192 CLR 159 at 189 [52] per Toohey, Gaudron and Gummow JJ; see also at 197 [78]. 26 R v Swaffield (1998) 192 CLR 159 at 202 [91] per Toohey, Gaudron and 138 were not irrelevant under s 90 – a submission which need not be dealt with, since the appellant did not submit that what the detectives did bore any resemblance to the conduct described in ss 84, 85 and 138. On the other hand, the appellant submitted that the factors to be weighed under s 138(3) were irrelevant to the s 90 discretion. He submitted that s 90 derived from R v Lee and s 138 from Bunning v Cross27, and that the factors relevant to the "public policy" discretion in the latter case were quite distinct from the fairness described in R v Lee. The argument is not without support in authority28 but one difficulty is that in R v Lee29 Latham CJ, McTiernan, Webb, Fullagar and Kitto JJ said: "No question of discretion can arise unless the statement in question is a voluntary statement in the common law sense. If it is non- voluntary it is ... legally inadmissible. If it is voluntary, circumstances may be proved which call for an exercise of discretion. The only circumstance which has been suggested as calling for an exercise of the discretion is the use of 'improper' or 'unfair' methods by police officers in interrogating suspected persons or persons in custody. It was with such cases in mind that Latham CJ, in McDermott v The King30, said that the trial judge had 'a discretion to reject a confession or other incriminating statement made by the accused if, though the statement could not be held to be inadmissible as evidence, in all the circumstances it would be unfair to use it in evidence against him.' In the same case Dixon J31 said: 'In referring the decision of the question whether a confessional statement should be rejected to the discretion of the judge, all that seems to be intended is that he should form a judgment upon the propriety of the means by which the statement was obtained by reviewing all the circumstances and considering the fairness of the use made by the police of their position in relation to the accused.' In our opinion the rule is fully and adequately stated in those two passages. What is impropriety in police methods and what would be unfairness in admitting in evidence against an accused person a statement obtained by improper methods must 27 (1978) 141 CLR 54. 28 For example, R v Swaffield (1998) 192 CLR 159 at 189 [52] per Toohey, Gaudron 29 (1950) 82 CLR 133 at 150-151. 30 (1948) 76 CLR 501 at 506-507. 31 (1948) 76 CLR 501 at 513. depend upon the circumstances of each particular case, and no attempt should be made to define and thereby to limit the extent or the application of these conceptions." Their Honours thus evidently thought that police impropriety was relevant to the exclusionary discretion on which s 90 is based. However, it is possible to decide the present appeal against the appellant without engaging in the process described in s 138(3), and hence the correctness of the appellant's submission that it is impermissible to take into account the propriety of the police conduct need not be dealt with. The appellant submitted that s 90 did not create a discretion, and hence that the Court of Criminal Appeal erred in applying the standard of review described in House v The King32 that is normally applied to discretionary decisions. It is unnecessary to resolve this argument, since whatever standard of review is applied, the conclusions of James J and the Court of Criminal Appeal are correct. The language in s 90 is so general that it would not be possible in any particular case to mark out the full extent of its meaning. Whether or not the appellant was correct to submit that the primary focus of s 90 was on incorrect assumptions made by accused persons, there is no doubt that it is one focus of s 90, and it is one which is relevant to the way in which counsel submitted the appellant's incorrect assumption should be viewed. In any particular case, the application of s 90 is likely to be highly fact-specific. Certainly it is on the facts of this particular case that the result must turn. The appellant's arguments: the facts The way the appellant's argument was put in this Court was different from the way it was put to the first Court of Criminal Appeal. There it was33: "[A]s the police knew that the accused would not answer questions if he believed the conversation was being recorded, the police intentionally tricked him into believing that the ... conversation was not being recorded and, thereby, obtained admissions that they would not otherwise have obtained but for the trick." 32 (1936) 55 CLR 499. 33 R v Em [2003] NSWCCA 374 at [101] per Howie J (Ipp JA and Hulme J concurring). Now the vice is said to lie not in tricking the appellant into a belief that the conversation was not being recorded, but in exploiting the appellant's belief that it could not be used in evidence. Further, there was a divergence between the appellant's written submissions to this Court and his oral submissions. The written submissions claimed to challenge James J's finding that up to the start of the conversation on 15 May 2002 the detectives had not set out to induce the mistaken assumption that if a conversation were not recorded, evidence of it could not be given against the appellant. In support of that challenge the appellant relied on his release without charge on 24 April 2002 despite having made full admissions about the Kress home invasion and his agreement to talk to the police provided that what he said was not recorded either electronically or by notes. However, that challenge was abandoned in oral argument. In oral argument the position taken up was that the detectives had not contributed to or caused the formation of the appellant's belief; they had merely acted in a way which contributed to its continued existence. According to counsel for the appellant, the effect of the detectives' conduct could be seen in several ways. One was the contrast between the formality of events on 24 April 2002, involving cautions and with recording machines and notebooks available, and the effect on the appellant of the informality of the discussion in the park, during which he was repeatedly told that he was not under arrest, was not to be taken to the police station and was not being tricked. Another was the contrast between the full caution given to the appellant on 24 April 2002 and the shorter version given on 15 May 2002, omitting the part relating to the recording of what was said and its possible use in evidence. Another, taken in juxtaposition with assurances that the appellant was not under arrest and was not obliged to talk if he did not want to, was Detective Abdy's statement: "We want to try and eliminate who else was involved". It was said that this "would have conveyed the message to the appellant that, outside the confines of arrest at the police station, the detectives were unable to use the conversations against him and they were instead seeking information to assist their investigation". It was said that all these circumstances "conveyed the message to the appellant that recorded conversations at the police station could be used against him in contradistinction to informal 'chats' with the police outside the station which could only be used for 'information purposes' when conducting investigations regarding the involvement of others." A somewhat different, perhaps inconsistent, submission was also advanced. It was that on 24 April 2002 the appellant had stipulated that he would only speak if the detectives agreed not to record electronically or write down what was said, to which the detectives agreed, and that they demonstrated continuing agreement to the terms of their dealings by releasing him without charge even though he had made a full confession to the Kress home invasion. Hence if they wished to alter the terms of those dealings, rather than assuring him that he was free to leave, they should have made the alteration very clear on 15 May 2002. It was submitted that the prosecution should not be allowed to take advantage of a departure from those terms. The appellant also relied on a claim that he had been "pressured to speak". The appellant's arguments: analysis Pressure? The last submission can be rejected at once. It is true that the detectives tried by various means to get the appellant to talk to them about the January crimes. But, as James J found without challenge at either level of appeal, the appellant was not under arrest, and the detectives had not given the appellant reasonable grounds for believing that he would not be allowed to leave if he had wished to. A reading of the whole of the recorded conversation up to Detective Abdy's p25 statement confirms the correctness of James J's finding that the questioning was not hostile, overbearing, unduly persistent, confusing or too leading. That finding was not challenged, and it is fatal to the submission that the detectives pressured the appellant to speak. The appellant's subjective mental state. At common law34, the onus of demonstrating that it would be unfair to accused persons to use the evidence lay on them. The onus lies in the same place under s 9035. The appellant's submissions depend to a considerable extent on whether the police conduct "conveyed" or "would have conveyed" any particular "message", on the effect on the appellant of any contrasts between the behaviour of the detectives on 24 April 2002 and their behaviour on 15 May 2002, and on the idea that the detectives "confirmed" the appellant's belief. In this respect the submissions face the difficulty that these are allegations going to the appellant's subjective mental state. All that can be concluded about that mental state depends on circumstantial inference. Here circumstantial inference falls well short of the best evidence, direct evidence from the appellant. The appellant's failure to give evidence on the voir dire thus increased his difficulties in discharging the onus of proof. An example is afforded by the appellant's argument that after leaving the police station on 24 April 2002 he believed the police would not be charging him because of an agreement he had made with 34 R v Lee (1950) 82 CLR 133 at 152-153 per Latham CJ, McTiernan, Webb, Fullagar 35 Compare ss 84 and 85, where the burden of proving the facts necessary for admissibility rests on the prosecution. them not to use what he had said to them. That that was his mental state is contradicted by an admission in his evidence in chief that after he returned home on 24 April 2002 he thought he "was going to be charged, arrested and taken away to gaol." Contrary to the appellant's submissions, it cannot be concluded that the police reinforced or contributed to the continuation of the appellant's mistaken assumption that what he said could not be used against him. The reasons why that is so are that once it was clear that the appellant believed that what he said could not be used in criminal proceedings, there is no evidence that he turned his mind to the question again, or that he had any doubt about it which might cause him to question it, or that he had any desire to search for confirmation. The effect of the appellant's concessions. It follows from concessions which the appellant necessarily and rightly made that the use against him of the first part of the 15 May conversation was not unfair. The appellant accepted that the mere fact that a conversation was being secretly recorded was not sufficient to make it "unfair" to the defendant to admit the recording into evidence. Yet decisions to record conversations with a particular accused person secretly are made because no recording would be possible if that accused person knew of the recording. Thus secret recordings often could not be made without some kind of trickery – a positive representation or conduct suggesting, and leading to the false assumption, that there was no recording being made, a deliberate failure to correct that false assumption, or conduct confirming that false assumption. The scheme of the Listening Devices Act 1984 (NSW), pursuant to which the detectives made their recordings, is that by reason of ss 5 and 10 it is a criminal offence to record a private conversation without consent of all parties unless an exception applies. The relevant exception is a warrant granted by an "eligible Judge" pursuant to the various safeguards set out in s 16. If no exception applies, evidence of the private conversation is inadmissible (s 13). This implies that if an exception applies, the evidence is admissible subject to the general law of evidence. Hence the appellant's concession that if his mistaken assumption consisted only in a belief that the conversation was not being recorded its use in evidence would not be unfair was rightly made. To reach the opposite conclusion would be for the judiciary, by exercise of its capacity to reach a judgment characterising conduct as "unfair" under s 90, to create an automatic and universal rule of exclusion in place of a provision calling for case-by-case judgment. For the courts to adopt such a rule would be to substitute their view about the merits of the statutory scheme involving judicially sanctioned covert surveillance as an aid to the detection of crime for that which has been adopted by the legislature. It is true that the appellant's mistaken assumption went beyond a belief that the conversation was not recorded to a belief that evidence of the conversation could not be given. And counsel for the appellant submitted that there was a "big difference" between speaking while falsely assuming that no recording was being made of what was said, and speaking while falsely assuming that what was said could not be used in criminal proceedings. The difference was said to be that in the former instance, accused persons would assume that, although the admission was unrecorded, police officers who heard it could give oral evidence of it. This would give accused persons the "limited benefit" of being able to advance an argument about the unreliability of the police evidence of what was said. In the second instance, ex hypothesi they could not: if accused persons falsely believed that what they said could not be used in evidence, "a very significant factor in exercising [their] right to silence is missing." One difficulty with the submission is that it attributes improbably subtle reasoning to the appellant, which cannot be inferred from the circumstances and which is unsupported by testimony from the appellant. But the most fundamental difficulty with the submission is that the appellant's belief that evidence of the conversation could not be given was integrally connected with his belief that the conversation was not being recorded. That is because, as counsel for the appellant said: "[T]he appellant incorrectly assumed that the conversation was not being electronically recorded and, as a result, incorrectly assumed that anything he said could not be used in evidence." (emphasis added) To conclude that while it is not unfair to use an admission which its maker did not believe was being recorded, it is unfair to use an admission which its maker did not believe could be used, when the reason for the second false assumption is the existence of the first, is illogical. The reliability of the evidence. At one point the appellant conceded that, as at common law, the reliability of evidence was a factor affecting the fairness of its use. Later the appellant withdrew that concession, and later still the appellant denied that the concession had ever been made. The appellant's final position appeared to be that it was irrelevant to the application of s 90 that the impugned evidence was reliable, although s 90 was capable of being triggered by conduct falling short of that described in s 85 but creating the risk of an unreliable confession. The appellant's original concession was correct. It is supported by common law authority36. Indeed in R v Swaffield37 Toohey, Gaudron and Gummow JJ said: "Unreliability is an important aspect of the unfairness discretion but it is not exclusive." Here the evidence was completely reliable in that there is no doubt about what the appellant said: the recording device worked efficiently. The appellant advanced only one reason why what he said was unreliable, and it was a contention put forward in the appellant's evidence at the trial. The contention was that the appellant falsely told the detectives of his involvement with the crimes in order to protect his friends. This does not reveal error in James J's decision to admit the evidence for two reasons. The first is that since the appellant did not give evidence on the voir dire, the contention was not before James J at the moment when the evidence was admitted. The second is that while ultimately the acceptability of the appellant's contention was for the jury, it lacked plausibility to a very significant degree. Not only is it the case, as James J found without any present challenge by the appellant, that the circumstances were such as to make it unlikely that the truth of the admissions was adversely affected, but even if the appellant's contention had been advanced in evidence on the voir dire, it could not have caused James J to regard the reliability of what the appellant said as suspect. It is highly implausible that anyone fearing prosecution for murder would admit to the murder in order to protect unnamed friends. Did the courts below misdirect themselves? The appellant submitted that it was not necessary for a finding of unfairness under s 90 in circumstances similar to the present for police officers deliberately to induce a person being questioned to hold an erroneous belief. The appellant also submitted that James J and the Court of Criminal Appeal wrongly assumed that this was crucial. So far as James J is concerned, the submissions put to the Court of Criminal Appeal and the somewhat different submissions put to this Court were not put to him. The question he dealt with appears to have been that which the parties were content for him to deal with, and where a conception as amorphous as "unfairness" is under consideration, it was not an error to fail to depart from the course they charted. Further, as the Court of Criminal Appeal pointed out, James J considered the whole of the circumstances and did not limit his attention to the detectives' intention38. So far as the Court of Criminal Appeal is concerned, it 36 R v Lee (1950) 82 CLR 133 at 153 per Latham CJ, McTiernan, Webb, Fullagar and Kitto JJ; R v Swaffield (1998) 192 CLR 159 at 189 [54], 195 [71], 196 [74], 197 [77]-[78] per Toohey, Gaudron and Gummow JJ. 37 (1998) 192 CLR 159 at 197 [78]. 38 Em v The Queen [2006] NSWCCA 336 at [58]-[59] per Giles JA (Grove and did not require that the appellant's mistaken assumption be caused by deliberate inducements by the detectives. It did not concentrate on the mental state of the detectives, but instead, after recording the appellant's submissions as set out above, rejected them. The Court of Criminal Appeal's references to the fact that whatever effect the conduct of the detectives had on the appellant's state of mind, it was unintentional, merely mirrored the appellant's submissions39. Its method, which conformed to the parameters set by those submissions, objectively analysed what the detectives did and whether that tended to confirm the appellant's mistaken assumption. It did not rest on the flaw which the appellant attributed to it. The significance of the park. The mere fact that the recording of the conversations was made in a park and not a police station cannot make it unfair to admit it into evidence. Section 281 of the Criminal Procedure Act requires confessions to be recorded; it does not require them to be recorded in a particular place, and many admissible confessions are made in places other than police stations. No provision in the Evidence Act or in any other statute requires them to be recorded in a particular place. Nor does the Police Commissioner's Code. The conduct of the detectives cannot be seen as undermining the statutory regime in s 281 and its equivalents elsewhere requiring confessions to be recorded. That is so partly because the appellant eschewed any such point as relevant only to s 138, on which he was not relying; and partly because whatever other criticism could be made of the detectives, they cannot be criticised for failing to comply with s 281: they did comply with it. in equity. The analogy with mistake The appellant's argument endeavoured to extend to s 90 a principle permitting a court of equity to rescind a contract where one party entered it under a mistake deliberately not corrected by the other40. That extension should not be made for the following reasons. Section 356M(1)(a) of the Crimes Act as it stood at the relevant time made it mandatory for police officers to warn persons being questioned that what they said could be used in evidence. Section 139(1) of the Act rendered a failure to give that warning a ground for excluding the evidence under s 138. The Police Commissioner's Code reflects the same requirements41. In the circumstances of this case there was no express obligation of any kind on the detectives to warn 39 Em v The Queen [2006] NSWCCA 336 at [60] and [66] per Giles JA (Grove and 40 Taylor v Johnson (1983) 151 CLR 422 at 432 per Mason ACJ, Murphy and the appellant that anything he said could be used in evidence. The appellant has not established that an implied obligation to have done so should be created by recourse to the doctrine of "unfairness" in s 90. It would be unusual to do so where the legislature had chosen not to do so; to do so would be to make a choice that the legislature had specifically declined to make. Counsel for the appellant submitted that it was unfair to permit the reception of evidence obtained from the appellant where the appellant was operating under a disability – a significant mistake of which the detectives were aware. The difficulty is that every day police officers take advantage of the ignorance or stupidity of persons whom they eventually prosecute, and a mistake of the kind the appellant was operating under was simply a species of ignorance or stupidity. Was the appellant's freedom to speak or not to speak impugned? In one formulation, the appellant's submissions identified as the central question whether his freedom to speak or stay silent had been impugned in the first part of the 15 May 2002 conversation. When all the circumstances analysed above are considered, it is impossible to conclude that that freedom was impugned. The appellant knew he was speaking to police officers. He knew they were investigating two home invasions, one involving a murder. He knew, having been cautioned several times on 22 February and 24 April 2002, that he was not obliged to speak to the police officers. He spoke to those officers knowingly and willingly. He gave a version of events. In his evidence before the jury he claimed that he planned to give that version – according to him, a non- incriminating mixture of denials, admissions, jokes and questions42. Apart from the admissions he made, that account of the version of events lacked credibility, but he certainly wanted his version of events to be accepted by the detectives. He had an awareness of his rights and a capacity to act on them. While s 281 compelled the detectives to record what was said if they wanted to tender it, the appellant possessed no right not to be recorded once the listening device warrants had been obtained from O'Keefe J. The appellant was free to leave. The questioning was not overbearing. As counsel for the appellant conceded, neither legislation nor the Police Commissioner's Code created any obligation on the detectives to caution him. The appellant did not know the conversation was being recorded, but he accepted that that did not make it unfair to receive the evidence. The appellant did not contend that he spoke because of any threat of violence, or any illegality, or any impropriety. He did not contend that the circumstances were likely to affect the truth of the admissions. He thought that the conversation could not be used against him in criminal proceedings, but that cannot of itself make it unfair for the conversation lies, evasions, 42 See below at [85]. to be received in evidence. The detectives kept secret from him the fact that the conversation was being recorded, and hence his freedom to speak was affected in the sense that a factor that was important to him was kept secret from him. But that is true of virtually all cases of lawfully authorised secret surveillance. Virtually all persons who are the subject of that type of surveillance have been deprived of the opportunity to make an informed choice about whether or not to exercise their right of silence. It is difficult to see the practical difference, for this appellant, between speaking where his freedom of choice to speak was impaired by ignorance about the fact that what he said was being recorded, and speaking where his freedom of choice to speak was impaired by ignorance about the fact that what he said could be used against him. He did not speak on 24 April 2002 until it was made clear that what he said would not be used against him since it was not being recorded; his decision to speak on 15 May 2002 where he thought what was being said was not being recorded was governed by a mental state in which the supposed lack of recording was inextricably linked with the supposed incapacity to use the material. For these reasons use of the first part of the 15 May 2002 conversation was not unfair to the appellant. The failure to give a warning It is now necessary to turn to the appellant's second complaint. At the trial the appellant attempted to explain away the admissions made on 15 May 2002 by saying that they were untruthful, and that the reason they were untruthful was that he wished to protect those of his friends who had been involved in the crimes, and those of his friends who were not involved. Counsel submitted that the appellant testified that since he believed what he said to the police could not be used against him, and since there was no other evidence of his involvement in the Logozzo home invasion, he expected never to be charged with the offences committed while it took place. The appellant's testimony on this point did not all emerge in chief, and at no point was it given clearly or convincingly. In final address counsel for the prosecution attacked its credibility. The appellant contends that James J ought to have warned the jury that if a person making an admission believes that it cannot be used against him, the primary basis for the assumption that admissions are reliable, namely that people do not usually make statements against interest unless they are true, is significantly diluted, so that the admission may be unreliable, and the jury should be cautious in determining what weight to give to the evidence. The giving by James J of this warning was said to have been necessary to ensure a fair trial because without it there was a perceptible risk of a miscarriage of justice. If this necessity and this risk existed, they were not seen by counsel for the appellant at the trial, experienced as she was and familiar as she was with the details and atmosphere of the trial43, as justifying a request to James J to give the direction which it is now said ought to have been given. Her failure to do so suggests that it was not necessary and that there was no risk. Further, there is great force in what Giles JA said in the Court of Criminal Appeal44: "There is some unreality in the proposition that belief that an admission about commission of a murder can not be used in criminal proceedings may prompt an untrue admission to the police. Even if the admission could not be used in criminal proceedings, it would be likely to excite police interest and provoke other police endeavours to prove, apart from the admission, commission of the murder. The admission is still against interest, with what that conveys for truth. In the present case, the conversation ... does not convey that what the appellant said to the detectives was affected by his belief that evidence of the conversation could not be used against him in criminal proceedings or by deflection of attention from his friends. He was not cooperative and was fencing with the detectives, and in my understanding of the conversation was well conscious that what he said to the detectives could be adverse to his interests even if it could not be used in evidence. Reliability through being against interest is not confined to use as an admission in criminal proceedings." In the absence of further testimonial articulation by the appellant of his thinking, it is not credible that the appellant would have falsely confessed to a murder, and run the risk of a relentless pursuit by the authorities for many years, merely to protect some friends. In any event, the appellant's tactics at the trial do not suggest an unequivocal acceptance of culpability in order to protect others. They seem to have been directed in part towards creating confusion through a series of equivocations and questions, while trying to avoid actually making any admissions. Thus at one point of his cross-examination he attempted to characterise what he said on 15 May 2002 thus: 43 Counsel who represented the appellant at the trial before James J did not represent him in the appeals to the Court of Criminal Appeal and to this Court. 44 Em v The Queen [2006] NSWCCA 336 at [69]-[70] per Giles JA (Grove and "Q. You see you were telling the police in the course of this conversation that you were one of the participants at the Logozzo home invasion? Q. You were? Q. Well you told us that already you were telling these things to attract attention to you as one of the participants in the Logozzo home invasion so that the people who committed that crime could escape their liability? A. I was implying to the police that I may have been involved but I never said that I was involved. I never said I drove there. I never said that I shot the person. I never said anything along those lines. The police are the ones that suggested this." Similarly, after the appellant while testifying at his trial accepted that he told the detectives: "You guys know that I did it", the questioning proceeded thus: "Q. And they said, 'We know what you did, what, you did the home invasion or you did the murder.' You said, 'That I did both'? A. I am saying that I did both as a question. A. Yes, I was. Q. Well, it doesn't sound like a question when we played the tape, does A. I don't know how it sounded like, but that was my intent." He was questioned about "Counter Strike", a popular computer game among teenagers. He accepted that he had suggested to the detectives that he had clothed himself in "Counter Strike" attire, that being similar to the clothing, weapons and equipment used by some of the criminals, and had run around in it. He accepted that that was not true. He attempted to explain away what he said to the detectives as "a joke". He said: "I didn't think that they would believe me." He accepted that he had said to the detectives that he had sold the pistol used in the Kress home invasion, but said that that was a lie. This behaviour revealed that the appellant did not think it was safe to make any admission he pleased with impunity. Much of what he said was capable of explanation – or at least he later attempted to explain it – as a joke or an equivocation or a question. In his summing up James J went through the transcript of the 15 May 2002 conversation, indicating what parts the prosecution relied on and referring to the appellant's explanations. He directed the jury to consider three questions: "1. Are you satisfied that the accused said what the Crown says that he said? 2. If you are satisfied that the accused said what the Crown says that he said, are you satisfied that the accused was intending by what he said to make a truthful statement? … 3. If you are satisfied that the accused said what the Crown says that he said and that the accused was intending by what he said to make a truthful statement, does what the accused said amount to an admission and what weight should be given to it." James J also gave the following direction: "I have referred to some answers and explanations given by the accused in his evidence about some particular parts of the conversation on 15 May sought to be relied upon by the Crown as being admissions. However, when he was giving evidence the accused gave some answers and some explanations which would apply to a number of the passages relied on by the Crown as being admissions. The accused said that he gave some of his answers on 15 May to protect his friends who he knew had committed the offences on 17 January, in order to deflect or divert police investigation away from them and to focus the police investigation on himself. He said in evidence-in-chief: 'I will use my position to help my friends get away with it.' He said in cross-examination: 'My plan was to make these two police officers think I was involved in order for my friends to get away with it.' In cross-examination he said: 'I was going to say to the police things that would implicate my involvement.' So that his friends could avoid criminal liability. The accused said that he was prepared to imply that he was involved in the offences in the Logozzo home: 'Because if I did not do this crime, how could I be charged for it.' He agreed with the Crown Prosecutor that he was confident in the belief that 'nothing could happen to you because you didn't do it.' Another explanation the accused gave for saying some of the things he said to the police, for example that he had sold a pistol to a man at Cabramatta, was that he wanted the police to stop searching people's houses. He also said in his evidence that on 15 May he had given a number of answers which he had intended to be non-committal, for example the answer, 'probably'." In the absence of any request for a further direction, those directions adequately brought to the jurors' minds the issues they had to consider. Giles JA gave the following reasons for finding the directions adequate45: "That the appellant believed that he was not at risk was not, on his evidence, founded on belief that what he said could not be used against him; it was because he was innocent. The Crown put to the jury that belief that what he said could not be used against him was a mark of reliability, not unreliability. The reliability of what he said was for the jury, and the matters bearing upon it as relied on by the Crown and the appellant were fully before the jury. That the appellant may have believed that what he said could not be used against him, not articulated by him in his evidence, could cut both ways as to reliability, but was something well open for the jury's appreciation and evaluation. In my opinion, a direction to the effect suggested was not necessary. Unreliability of any admissions in the conversation of 15 May 2002 was prominent in the appellant's case at the trial. The unreliability was in his evidence attributed to his strategy to protect his friends, but a feature of the strategy was that the appellant did not think himself at risk. That he was not at risk because he didn't do it, but also because the conversation was not being recorded and what he said could not be used against him, was a difficult conjunction, but it was exposed for the jury and it was well open to the jury to undertake the necessary assessment; I do not think there was a risk as described by Brennan J." Counsel for the appellant criticised this on the ground that it distorted the appellant's evidence. But the appellant did say: "If I did not do this crime, how could I be charged for it?" and "Nothing could happen to [him] because [he] didn't do it", and his belief that the evidence could not be used against him was 45 Em v The Queen [2006] NSWCCA 336 at [107]. The reference to "a risk as described by Brennan J" is a reference to Carr v The Queen (1988) 165 CLR 314 at not clearly articulated. A direction of the kind which counsel for the appellant now says should have been given might have had disadvantages for the appellant in casting aspersions on his reliability in certain respects: for if he was unreliable in those respects, why not also in the passages where he made distinct denials? The second complaint in the Notice of Appeal should be rejected. Orders Neither the use of the first part of the 15 May 2002 conversation nor the absence of the specific warning now identified by the appellant was unfair to the appellant. The trial over which James J presided was impeccably fair. The appeal should be dismissed. GUMMOW AND HAYNE JJ. The facts and circumstances giving rise to this appeal, and the text of the relevant statutory provisions, are set out in the reasons of other members of the Court. It is unnecessary to repeat any of that material. The central issue in the appeal is whether the primary judge's decision admitting in evidence, at the appellant's trial for murder, sound recordings of admissions the appellant made to police officers should have been held, in the Court of Criminal Appeal, to be wrong. The only ground advanced in this Court is that s 90 of the Evidence Act 1995 (NSW) ("the Act") was engaged and the power conferred by s 90 should have been exercised so as to refuse to admit the evidence. Section 90 states: "In a criminal proceeding, the court may refuse to admit evidence of an admission, or refuse to admit the evidence to prove a particular fact, if: the evidence is adduced by the prosecution, and having regard to the circumstances in which the admission was made, it would be unfair to a defendant to use the evidence." Section 90 appears in Pt 3.4 of the Act (ss 81-90) which is headed "Admissions". Some of these provisions (including s 84) apply in civil and criminal proceedings. Others, including ss 85, 86 and 90, apply only in criminal proceedings. Sections 85 and 86 apply only to evidence of admissions by the defendant; s 84 is not so limited. It should be observed that s 90 is cast in a form which differs from ss 84, 85 and 86. These set out rules whereby in stipulated circumstances evidence of certain admissions is not to be admitted. Section 90 empowers the court in a criminal proceeding to refuse to admit evidence adduced by the prosecution of an admission (not expressly limited to an admission by the defendant) where to use the evidence would be "unfair to a defendant". Part 3.11 (ss 135-139) is headed "Discretions to exclude evidence". The heading is misleading. Section 137 obliges the court in a criminal proceeding to refuse to admit evidence adduced by the prosecution where the danger of "unfair prejudice to the defendant" outweighs its probative value. Sections 138 and 139 are accurately described as providing a discretion to exclude improperly or illegally obtained evidence. In considering the case the appellant seeks to base upon s 90, it is necessary to read the Act as a whole, with particular reference to the operation of the provisions of ss 84, 85, 86, 137, 138 and 139. The particular questions about the operation of s 90 of the Act that are presented in this matter are questions that arise on the premise that evidence of the appellant's out-of-court admissions to police officers was not to be excluded under other provisions of the Act. It is important to identify the content of that premise. Doing that will not only identify the bases upon which the application of s 90 must be considered in this case, it will direct attention to some more generally applicable observations about its operation. In particular, it will reveal how the Act deals with a number of matters that otherwise might have loomed large in the determination of whether the use of evidence of an admission would be "unfair" to the defendant. The premise that evidence of the appellant's out-of-court admissions to police officers was not to be excluded under other provisions of the Act can be conveniently dealt with as six separate propositions. First, evidence of the admissions the appellant made was not to be excluded as having been influenced by violence or other conduct of the kind described in s 84. There was no suggestion of any conduct of that kind. Secondly, the evidence was not to be excluded under s 85, on the ground that the circumstances in which the admissions were made to police were likely to have adversely affected their truth. It was not suggested in this Court that this section was engaged. Thirdly, the evidence was not to be excluded under s 86 as it would be had it been unrecorded and unacknowledged. What the appellant said to the police was recorded in a sound recording and s 86 was accordingly not engaged. Fourthly, the evidence was not to be excluded under s 137. It was not submitted that the probative value of the evidence was "outweighed by the danger of unfair prejudice to the defendant". If that imbalance had been demonstrated, the trial judge would have been bound to exclude the evidence. Fifthly, the evidence was not to be excluded under s 138. Either it was not obtained improperly or in contravention of an Australian law or, if it was, the desirability of admitting the evidence outweighed the undesirability of admitting evidence obtained in that way. In particular, it was not submitted that either s 138(2) or s 139 applied to deem the evidence to have been obtained improperly. Section 138(2) provided that evidence of an admission made during or in consequence of questioning is taken to have been obtained improperly if (among other things) the person conducting the questioning: "made a false statement in the course of the questioning even though he or she knew or ought reasonably to have known that the statement was false and that making the false statement was likely to cause the person who was being questioned to make an admission". It is to be assumed that this provision was not said to be engaged in the present matter because the interviewing police officers said nothing that was false. The appellant's complaint was that their silence, coupled with what they did say, conveyed a misrepresentation that their conversation with the appellant was not being recorded. Section 139 provided that, in certain circumstances, evidence of a statement made during questioning by a police officer is taken to have been obtained improperly if the investigating official did not caution the person that the person does not have to say or do anything, but that anything the person does say or do may be used in evidence. It was accepted that the conditions specified in s 139 as the conditions in which a caution must be administered (lest evidence of what is said be deemed to have been obtained improperly) were not satisfied. Sixthly, and finally, it was accepted that s 281 of the Criminal Procedure Act 1986 (NSW), requiring that evidence of admissions by suspects not be admissible unless tape recorded, was satisfied and that no aspect of the New South Wales Police Code of Practice for Custody, Rights, Investigation, Management and Evidence (CRIME), regulating the interrogation of suspects, was breached. (The Code of Practice was published to provide "a succinct reference to the powers of police when investigating offences". It is a document that was intended to record rights and duties; it was not a source of those rights or duties.) Later in these reasons it will be necessary to return to the significance of the six propositions that have been stated. As pointed out at the commencement of these reasons, the central issue is whether the evidence of admissions should not have been admitted because, having regard to the circumstances in which they were made, it would be unfair to the defendant to use the evidence. That question requires consideration of whether there was identified some aspect of the circumstances in which the admissions were made that revealed why the use of the evidence, at the trial of the person who made the admissions, "would be unfair". That is, the focus of s 90 falls upon the fairness of using the evidence at trial, not directly upon characterising the circumstances in which the admissions were made, including the means by which the admissions were elicited, as "fair" or "unfair". Understanding s 90 in this way is consistent with the language of the section. It is also consistent with what was said in the Report of the Australian Law Reform Commission that recommended the enactment of what was to become s 90. In that report46 the proposal was to enact "an exclusionary discretion similar to that known as 'the Lee discretion[47]' in existing law". In R v Lee, this Court said48 that the discretion required asking "whether, having regard to the conduct of the police and all the circumstances of the case, it would be unfair to use his own statement against the accused". In Lee, the argument focused upon what was said49 to be the "'improper' or 'unfair' methods [used] by police officers in interrogating suspected persons or persons in custody". Yet, in that case, the Court emphasised50 that it is in the interests of the community that all crimes "should be fully investigated with the object of bringing malefactors to justice, and such investigations must not be unduly hampered". The content and application of this common law discretion have subsequently been examined by this Court on a number of occasions, including in Cleland v The Queen51, R v Swaffield52 and most recently Tofilau v The Queen53. When it is "unfair" to use evidence of an out-of-court admission at the trial of an accused person cannot be described exhaustively. "Unfairness", whether for the purposes of the common law discretion or for the purposes of s 90, may arise in different ways. But many cases in which the use of evidence of an out-of-court admission would be judged, in the exercise of the common law discretion, to be unfair to an accused are dealt with expressly by particular provisions of the Act other than s 90. Thus although the discretion given by s 90 is generally similar to the common law discretion considered in Lee, it is a discretion that will fall to be considered only after applying the other, more specific, provisions of the Act referred to at the start of these reasons. The questions with which those other sections deal (most notably questions of the reliability of what was said to police or other persons in authority, and what consequences follow from illegal or improper conduct by investigating 46 Australian Law Reform Commission, Evidence, Report No 38, (1987) at 234. 47 R v Lee (1950) 82 CLR 133. 48 (1950) 82 CLR 133 at 154. 49 (1950) 82 CLR 133 at 151. 50 (1950) 82 CLR 133 at 155. See also R v Jeffries (1946) 47 SR (NSW) 284 at 313. 51 (1982) 151 CLR 1 at 8-9, 17, 34-35. 52 (1998) 192 CLR 159. 53 [2007] HCA 39. See also Collins v The Queen (1980) 31 ALR 257 at 317. authorities) are not to be dealt with under s 90. The consequence is that the discretion given by s 90 will be engaged only as a final or "safety net" provision. That this is the way in which the Act, and s 90 in particular, operates is apparent when two circumstances that may be relevant to the exercise of the common law discretion (the reliability of the confession and the use of improper means to secure it) are considered. At common law, questions of reliability play an important part in considering the exercise of the common law unfairness discretion. As pointed out in Swaffield54, other considerations may be engaged. In particular, admitting evidence of a confession may, sometimes, disadvantage an accused in ways that are not readily remedied. Cases of the latter kind include cases where admitting evidence of the confession would put the accused at a particular forensic disadvantage. The circumstances considered by this Court in Foster v The Queen55 and in the Supreme Court of Victoria by Smith J in R v Amad56 are examples of such cases. Because the chief focus of the common law discretion falls upon the fairness of using the accused person's out-of-court statement, not upon any purpose of disciplining police or controlling investigative methods, the reliability of what was said out of court is important to the exercise of that discretion. As noted earlier, s 90 of the Act expressly directs attention only to the fairness of using the evidence at the trial of the accused. Section 85 deals with evidence of an admission made by a defendant in the course of official questioning, and provides that the evidence is not admissible unless the circumstances in which the admission was made "were such as to make it unlikely that the truth of the admission was adversely affected". It follows that consideration of the reliability of what was said in a statement made to police can have no part to play in the operation of s 90. (By contrast, questions of reliability may well have a role to play in the application of s 90 if the statement was not made in the course of official questioning or "as a result of an act of another person who is capable of influencing the decision whether a prosecution of the defendant should be brought or should be continued"57. But that is not this case.) 54 (1998) 192 CLR 159 at 197 [78]. 55 (1993) 67 ALJR 550 at 554-555; 113 ALR 1 at 7-8. 57 s 85(1)(b). Because s 85 was not engaged to exclude the disputed evidence in the present case, no question of the reliability of what this appellant said in the admissions now in question was relevant to the exercise of the discretion under s 90. The hypothesis upon which that discretion was to be exercised must be that the circumstances were not such as to make unreliable the admissions the appellant made. The second consideration that is relevant to the present matter, and assists in demonstrating that s 90 is to be understood as a safety net which catches a residuary category of cases not expressly dealt with elsewhere in the Act, where use of the evidence at trial would be unfair, is the consideration of improper police methods. The appellant's central complaint in the present matter was that the police deceived him. He thought that what he said to the police was not being recorded, but it was. This complaint lay at the heart of his contention that s 90 should have been applied to exclude the evidence. For present purposes, it may be accepted that what the police did and said (and most importantly what they did not say) caused or contributed to the appellant forming the belief that what he said was not recorded and would not be admissible in evidence. (We leave aside any question of whether the evidence led on the voir dire showed that the appellant in fact held this belief.) The question presented by s 90 was: why did these circumstances make the use at his trial of the evidence of what he had said unfair? But that question was to be asked and answered only after other questions presented by the Act had been considered. The appellant's argument, shorn of expressions like "trick" and "trickery", amounted to the propositions that what the police did, by interviewing the appellant as they did, was to be condemned, and that he had been misled into saying something that could be used in evidence against him. Neither of these propositions, whether taken separately or together, established that use at his trial of the evidence of what he said to police would be unfair. First, the proposition implicit in much of the appellant's argument, that what the police did is to be condemned, requires close attention to other provisions of the Act which regulate when evidence may be excluded. The operation of those other provisions denies the conclusion, implicit in so much of the appellant's argument, that what the police did in this case was not only to be condemned but was such as to require the exclusion of the evidence. Particular importance must be attached in this respect to the provisions of s 138 excluding evidence that is illegally or improperly obtained and to the particular amplifications of those general provisions by the deeming provisions of s 138(2) and s 139. Counsel for the appellant accepted that s 138 was not engaged. It follows either that the circumstances in which the admissions were obtained from the appellant were not such as to warrant description as "illegal" or "improper", as those words are used in the Act, or if they were, that the desirability of admitting the evidence outweighed the undesirability of admitting evidence that was obtained in the way it was obtained. If either of the deeming provisions was engaged (and it was not submitted that either was) the desirability of admitting the evidence of the appellant's admission must be assumed to outweigh the that was obtained as a result of undesirability of admitting evidence misrepresentation (if there was one) or without benefit of caution (if one was required). The very nature of the inquiries required under s 138 denies that the application of s 90 can be approached from a premise that attaches weight to an assertion that what was done by police was "improper". In particular, the discretion to exclude the evidence of what the appellant told police is not to be engaged by simply asserting that a full caution was required, or expected, or should have been administered to the appellant. If that assertion is well founded (and it was not demonstrated, in argument, why it was) it fell to be considered under s 138. It was not relevant to the exercise of a discretion under s 90. Nor was the discretion to be engaged by asserting that the conduct of the police is worthy of condemnation for more general (if unspecified) reasons. First, it was not suggested that what the police did was unlawful. Indeed, argument proceeded on the footing that the police recorded their conversation with the appellant under warrants issued under the Listening Devices Act 1984 (NSW) that permitted them to do just that. Secondly, as to the other limb of s 138, concerning improperly obtained evidence, either what the police did was not improper, or if it is asserted that it was (and again it was not demonstrated in argument why that was so) the significance to be attached to the impropriety of the conduct was to be judged according to the balancing exercise that was called for by s 138. It was not a matter that bore upon the exercise of the discretion under s 90. It also follows from the conclusions just expressed about the operation of s 138 that to begin examination of the operation of s 90 from a premise which attaches determinative significance to the fact that the appellant had the mistaken belief (caused or contributed to by the police) that what he said was not being recorded and would not be admissible in evidence would be erroneous. It would be erroneous because that would not take the operation of provisions like ss 85 and 138 into account. The relevant questions presented by the Act (in particular, by ss 85 and 138) are about the reliability of the admissions made to police, and the lawfulness and propriety of the methods used to obtain the admissions. Showing the admission acted under some misapprehension is not to the point. the person making that It is a truism that an Act must be read as a whole. When the Act that now is under consideration is read in that way, it is evident that the discretion given by s 90 is not to be understood as unaffected by the more particular provisions of the Act. Yet that, in essence, is what the appellant sought to argue. Evidence of only part of what the appellant said to police was admitted at his trial. The exclusion of the other part of that evidence is not in issue in this appeal. The conclusion reached in the courts below, that no error was shown in the trial judge refusing to exclude under s 90 the evidence of part of what the appellant said to police, was correct. The appellant's appeal on this ground fails. On the second issue agitated in the appeal, about what directions should have been given to the jury about the evidence of the admissions he made to police, we agree with Gleeson CJ and Heydon J. The appeal should be dismissed. Kirby 126 KIRBY J. The question in this appeal, which comes from a judgment of the Court of Criminal Appeal of New South Wales58, is apparently simple. Being a question concerning statutory language of broad generality, it is one that involves judgment and evaluation of issues about which minds can differ, as indeed they have. Doubtless, deep-lying values inform judicial responses to the question presented. Amongst such values are those concerned with the right to a fair trial conducted within a criminal justice system that adheres to the accusatorial principle. That principle dictates that it is for the prosecution to prove a criminal accusation against an accused59. In gathering evidence, police and prosecutors cannot ordinarily oblige a suspect to make admissions, and thus to furnish otherwise missing proof of guilt. Furthermore, even where a reliable admission is made, a court of trial may refuse to admit it if its use would, having regard to the circumstances in which it was made, be unfair to the accused. Sophear Em ("the appellant") was charged with a number of offences. In the Supreme Court of New South Wales, Shaw J concluded, on a voir dire, that admissions made by him in the course of a secretly recorded conversation with two detectives of New South Wales Police on 15 May 2002 ("the May conversation") should be excluded from evidence because their use would be unfair. His Honour applied s 90 of the Evidence Act 1995 (NSW) ("the Act")60. On appeal by the prosecution, Shaw J's ruling was vacated by the Court of Criminal Appeal61. The second trial judge, B M James J, admitted most of the contested evidence down to a point (on p 25 of the transcript of the May conversation) after which evidence about the conversation (and the admissions made in the course of it) was excluded62. This ruling reflected a hint contained in the reasons of the Court of Criminal Appeal63. 58 Em v The Queen [2006] NSWCCA 336. 59 See eg RPS v The Queen (2000) 199 CLR 620 at 630 [22]. 60 R v Em unreported, Supreme Court of New South Wales, 16 September 2003 ("Reasons of Shaw J"). 61 R v Em [2003] NSWCCA 374. 62 R v Em unreported, Supreme Court of New South Wales, 27 October 2004 at [148] ("Reasons of James J"). 63 [2003] NSWCCA 374 at [135]-[136]. Kirby Evidence of the May conversation up to the specified point was therefore adduced before the jury. The appellant was convicted of serious offences, including the murder of Joseph Logozzo ("the Logozzo offences"). His convictions were challenged. One ground of appeal related to the refusal of James J to exclude the May conversation in its entirety under s 90 of the Act. A second Court of Criminal Appeal heard the appellant's appeal against his conviction. It decided a number of issues64. The only questions remaining, following the grant of special leave to appeal to this Court, are: (1) the correctness of the decision of James J as to the exercise of the s 90 "unfairness" discretion; and (2) the correctness of the refusal of James J to give a warning to the jury about the use of the admissions made by the appellant. On both points, the second Court of Criminal Appeal affirmed the approach of James J. In my opinion, both James J and the second Court of Criminal Appeal erred in their approach to s 90 of the Act. The use of admissions that the appellant made during the May conversation was "unfair" within the terms of that provision. In the largely undisputed circumstances in which the admissions were elicited and recorded, the unfairness is clear. The conduct of police had the effect of derogating from the appellant's entitlement, as a person suspected of murder and other serious offences, to remain silent in the face of police questioning. The detectives took conscious advantage of a mistaken belief on the part of the appellant as to his legal position. The admissions were procured following the administration of a caution since admitted to have been incomplete. The caution omitted reference to the fact that any statements that the appellant made might later be used in evidence against him. In these circumstances, the initial ruling of Shaw J on the s 90 issue was correct, although for reasons different to those which his Honour advanced. It was unfair to the appellant to use any of the evidence of admissions made by him in the course of the secretly recorded conversation. That evidence should have been wholly excluded under s 90 of the Act. The convictions that followed its receipt into evidence must be quashed. The second Court of Criminal Appeal, which allowed those convictions to stand, fell into error. This Court should reverse that Court's orders. It should make orders of its own disposing of the appeal. 64 Em v The Queen [2006] NSWCCA 336. Kirby The facts The April conversation: The background facts are stated in the reasons of Gleeson CJ and Heydon J65. However, to explain the different conclusion to which I have come, it is essential (as both Courts of Criminal Appeal recognised66) to set out extracts from the two extended conversations with police in which the appellant was involved. Only this course will allow the appellant's complaint about the unfairness of using the contested evidence against him at trial to be properly appreciated. James J excluded from evidence the record of an earlier interview between Detectives Abdy and McLean and the appellant on 24 April 2002 ("the April conversation"). He did so on the basis that it was a reconstruction and not electronically recorded. However, what occurred at that interview, as the second Court of Criminal Appeal remarked, was material to the issue of whether or not the May conversation was admissible67. The April conversation was material in that, in contrast to the May conversation, it began with the provision of a full caution to the appellant. That caution reflected the requirements set out in the then current New South Wales Police Code of Practice for Custody, Rights, Investigation, Management and Evidence (CRIME) ("the Police Code of Practice"). That document counselled police officers to alert a criminal suspect first, that "You do not have to say or do anything if you do not want to" and, secondly, that "We will record what you say or do. We can use this recording in court." Following the administration of this caution, the following reconstructed exchange (which the appellant did not contest in this Court) took place between the appellant and Detective Abdy, the primary investigating detective assigned to the case68: "Abdy: The questions that I ask you I want to record on this video and audio machine and I'll give you a copy of the interview. Appellant: I'm not going to say anything to you, if you turn that on. I don't want to look like a dickhead. 65 Reasons of Gleeson CJ and Heydon J at [3]-[21]. 66 [2003] NSWCCA 374 at [24]-[45]; [2006] NSWCCA 336 at [22]-[43]. 67 [2006] NSWCCA 336 at [21]. 68 [2006] NSWCCA 336 at [22]-[23]. Kirby Abdy: I can turn the audio tapes on and leave the video off if you want? Appellant: No, nothing. Abdy: Well how about I turn the tapes on and you state the objection on them. Appellant: I won't say a word if you turn it on. Abdy: What about we write down what you say. Appellant: No. Abdy: If you won't be interviewed on the tape that's fine. We'll just speak to you. But we need the gun back so what do you think? Appellant: If I talk to you, I don't want anything recorded on the tapes. Abdy: It's better that we record what we say, it'll be just like a conversation, the same as the one we are having now. Appellant: No tapes. But what do you want to know, like where is the gun and stuff? Abdy: Yeah that would be a good start. We are going to leave the room and we'll be back in a couple of minutes." After Detectives Abdy and McLean returned, according reconstruction, the April conversation continued69: their "Abdy: Well Sophear what is it going to be, are you going to talk to us or not? Appellant: Not if it's on the tapes. McLean: There I've turned them off (turned ERISP machine off), even our phones are off. Appellant: What about a wire, like in the movies? 69 [2006] NSWCCA 336 at [24]. Kirby Abdy: I'm not going to sit here naked with you mate, you'll have to trust us. We have been up front with you this morning and we haven't tried to trick you. Appellant: No." The appellant then told the detectives about his involvement in the Kress home invasion. He made substantial admissions in relation to it. In his trial, he adhered to those admissions, pleading guilty to the charges for the Kress offences. He was convicted in respect of those offences and sentenced to twelve years imprisonment70. He is serving that sentence and will continue to do so. It is not in contest in this appeal. However, during the April conversation, the detectives also sought to question the appellant in relation to the Logozzo offences. The following exchange took place71: "Abdy: Sophear, there is one other thing that we want to speak to you about, so just listen to what we have to say. You don't have to say anything unless you want to. But whatever you say or do may be recorded and later given in evidence at court. Appellant: I don't want anything recorded. Abdy: It is the same as before. Nothing in this room is turned on. Mick [McLean] is actually from the Homicide Unit working at Green Valley with me and other police. We are investigating the murder of Joe Logozzo. Appellant: I know nothing." (emphasis added) The detectives put the known facts of the Logozzo murder to the appellant. They confronted him with suggested similarities between the Kress home invasion and that at the Logozzo residence. After a failed attempt on the part of the appellant to secure the attendance of a solicitor, the April conversation continued72: "Abdy: What is it going to be mate. How about I just put these tapes in and you tell us whatever you want. 70 R v Em [2005] NSWSC 212 at [85]. 71 [2006] NSWCCA 336 at [26]. 72 [2006] NSWCCA 336 at [28]. Kirby Appellant: No. Abdy: What are you afraid of? Appellant: I don't want to look like a dickhead. Abdy: I told you before, I can leave the video out if you want. Appellant: No tapes. Abdy: We can record the conversation in our notebook and get you to sign it if you are happy with what has been written. Appellant: No. I don't want to sign anything or have anything written down. Abdy: Well tell us that on the tapes. We need to know. Appellant: I will say at court what I did. Abdy: Alright I'll take you back to the charge room while we make further enquiries then." The April conversation then concluded. The appellant was released without charge. Detective Abdy later testified that he did not then think the admissions made by the appellant in respect of the Kress offences were sufficient to warrant charging him because they were not electronically recorded. He believed that "for that evidence to be admissible it had to be electronically recorded". Detective McLean gave similar evidence. Doubtless it was that belief, and the frustration caused by the April conversation, that led to a police application, early in May 2002, for warrants under the Listening Devices Act 1984 (NSW). The application was granted by O'Keefe J. Armed with the warrants, Detectives Abdy and McLean conducted the interview of 15 May 2002 that is the subject of contest in this appeal. The May conversation: The May conversation resulted in a record of 40 pages. The entire transcript was annexed to the ruling of James J admitting the evidence (and admissions) up to p 25. His Honour noted that "[m]uch depends on the general tenor of the conversation and on the context in which a number of things were said"73. It is not essential to reproduce the entire record, although I have had regard to it and to the recording itself. 73 Reasons of James J at [40]. Kirby The conversation commenced at the appellant's residence where the detectives arrived to request another talk with him: "Appellant: Where at? Abdy: No, we're not going to go to the police station or nothing, we've just got to show you some photos and talk to you for about five or ten minutes. We don't want to do it here, O.K." The detectives then drove the appellant not to a police station or some other official place, but to a nearby public park. It had been raining and it was cold. The appellant was cautioned to bring a hat. The following conversation was recorded: "Abdy: Mate, we're just gunna go and have a talk to you, I think there's a park or something up here. We're not going to take you to the police station or anything. So you know you're not under arrest, O.K.? As I told you before, we're going to come back and talk to you. Remember we said we might come back and show you some photos of some guns? Appellant: No. Abdy: Do you know the last time we, the last time when you got taken down the police station, Sophear? Appellant: Yeah. Abdy: Remember when we took you down there that time? Appellant: You kept me there for nine hours … I was exhausted. Abdy: Were you, fair dinkum. Remember they gave you a piece of paper that said you didn't have to say anything to the police. Appellant: Yeah, I know that. Abdy: You know that? McLean: And we told you that, you remember that. Abdy: And the same goes again. You don't have to say anything to the police if you don't want to, O.K. Appellant: Just making you guys happy. Kirby Abdy: You're just making us happy. No, mate, we only want to know, we only want to know the truth. Don't say things just to make us happy. McLean: You understand that though, don't you? Appellant: Yeah. McLean: You know. Mate, you don't have to talk to us if you don't want to." (emphasis added) At no stage during these preliminaries, or later in the May conversation, did the detectives warn the appellant (as they had before the April conversation) that anything he said would (or might) be recorded and later used in evidence against him. Instead, they repeatedly assured him that he was not being tricked by them. Instances of such assurances were: "McLean: Mate, you know yourself that day that nothing was recorded, you know that, so we're trying to remember to the best of our ability. Abdy: Mate, we didn't even take you to a police station, it's not hard, I mean we spoke to you once before and you wanted to talk to us, we're not, we're not trying to trick you or anything. McLean: We told you on the way down in the car, right, it's your right, if you don't want to talk to us you don't have to, you know that? Appellant: I'm talking to you. McLean: Yeah. Well, that's what we want, is just a little bit of cooperation here. Appellant: Yeah, I told you it, you guys know. I know you won't forget. Abdy: We're not trying to trick you up. … Appellant: I know how you guys work. Abdy: You know how we work? How's that? Appellant: You try to con us … Abdy: I'm not trying to, mate, I'm not trying to con you, we told you before, we're investigating a home invasion and a murder." (emphasis added) Kirby The appellant acknowledged that he was aware of the subject of the police investigation and that it was "pretty serious". Then Detective Abdy suggested to the appellant a reason for holding the conversation in the unusual location of a public park: "Abdy: Yeah, and you told us you did the home invasion. You remember you told us that? Hey? Mate, and you said you wanted to speak to us about a murder, you wanted to talk about the murder but you didn't want to talk to us, you didn't want it recorded at the police station. Do you remember talking to us about that? Appellant: (no audible reply) Abdy: Mate, you said you were going to tell your side of the story in court. You said all that to us, didn't you? McLean: I think you said, I'm not gunna deny it, but I don't want to talk to you about to [sic] right now, or something like that anyway, you know, you said, My head's spinning, or something like that. Appellant: I'm not going to deny it, I said, that I didn't do it or I'm not going to deny it. McLean: You know what you said. Appellant: Yeah, I know what I said. McLean: Well, what was it? Appellant: I'm not going to say that I did it and I am not gunna deny it." (emphasis added) There were further exchanges along these lines before the appellant reminded the detectives that they had actually invited him to the conversation to show him some pictures of guns. Once again, the detectives tried to reassure the appellant about the nature and circumstances of their conversation: "Abdy: Sophear, we haven't tried to trick you once, have we? We've brought you to a God damn park. We're not, we haven't got you in the police station. McLean: Mate, you know you're [not] under arrest. We told you that as soon as you got in the car. Right. We told you that you don't have to talk to us if you don't want to, you know that, all right. We want to try and clear up a few things here. Kirby Abdy: We want to try and eliminate who else was involved in it. All right. We'll give you some names and you tell us if they're involved in it." (emphasis added) There then followed questions concerning the possible involvement of the appellant's friends in the Logozzo offences: "Appellant: You can just say that I drove [to the Logozzo residence] … McLean: Well, no, we're not saying you drove, we just want the truth as to who drove. Mate, you know that. Like Brad [Abdy] said, we're not here about tricking anybody. Abdy: But we need, but we need to know who's involved … so people aren't gettin' spoken to by police every five minutes when they've got nothing to do with it really. Appellant: You guys know that I am involved, right, you think that I am involved … Abdy: What did you do? Appellant: Nothing. I told you guys everything already." (emphasis added) The detectives persisted: "Abdy: And that's the same gun you took to the house where the bloke was shot? Appellant: Is it? Abdy: I don't know, is it? You tell me. Appellant: I don't know. Abdy: Well, is it? How many guns did you take to the house where the bloke got shot? Appellant: Can't remember." After more exchanges of this kind it became clear that the detectives were becoming impatient with the appellant's responses: "McLean: No. Mate, what we're trying to work out is, right, who, who shot this bloke, all right, and, right, if it's the case that you shot him or if Kirby it's the case that Mao shot him, that's what we want to know, and we want to know, right, what, what your intention was, right. If you intended to kill somebody, well, or if it was an accident, that's what you need to tell us, all right, that's what I'm interested in and we're interested in. Do you understand that? Appellant: (no audible reply) McLean: Well, which one is it? Appellant: I don't want to talk about that. Abdy: Mate, when are you, when are you going to talk about it? Appellant: (no audible reply) Abdy: Who else can you talk [to] about it, apart from us? Appellant: I don't talk about it to no one. Abdy: How come? Appellant: Why would I want to talk to someone about it? Abdy: It's, it's obviously playing on your mind. Is that right? Appellant: Yeah. I'm the type of person, I keep things to myself." It was at this point in the conversation that the exchange took place (recorded on p 25 of the transcript) that led to the exclusion from evidence of the record that followed: "Abdy: Maybe you might feel better if you tell us. It's not as though we're going to slap the handcuffs on you and take you away otherwise we'd be at the police station if we were gunna do that, wouldn't we? Mate, one of these days you're gunna have to want to talk about it, aren't you? You can't keep it in forever, imagine was [sic] it's going to be like. When you, you're sitting here nodding your head, so I'm assuming you're meaning yes. Appellant: Yeah, I mean, yes." (emphasis added) James J concluded that the subsequent parts of the interview should be excluded by reason of s 85, s 90 or s 138 of the Act74. Those provisions deal 74 [2006] NSWCCA 336 at [44]. Kirby with the court's discretion to exclude evidence rendered unreliable by the circumstances of official questioning (s 85); evidence which it would be unfair to the defendant to use (s 90); and evidence illegally or improperly obtained (s 138). In the second Court of Criminal Appeal, as in this Court, the appellant, who was expertly represented, elected to confine his arguments to s 90 of the Act75. There is therefore no occasion to consider s 85 or s 138, or other provisions of the Act that were relied upon at earlier stages in the proceedings. The provisions in the Act governing the exclusion of evidence overlap, as the earlier common law exclusionary rules did. There might be reasons why, in a case such as the present, a court would be assisted by having available for consideration all of the possibly relevant provisions of the Act, so that the several provisions might be judged in relation to each other. However, the reliance of the appellant on s 90 alone to some extent simplifies and focuses the task before this Court. The legislation Section 90, which governs the outcome of this appeal, reads: "In a criminal proceeding, the court may refuse to admit evidence of an admission, or refuse to admit the evidence to prove a particular fact, if: the evidence is adduced by the prosecution, and having regard to the circumstances in which the admission was made, it would be unfair to a defendant to use the evidence." The formal preconditions for the application of s 90 were established. The proceedings against the appellant were criminal in character. The contested evidence of the May conversation was tendered as evidence of admissions. It was adduced by the prosecution. It was admitted before the jury. They found the appellant guilty. The findings on the s 90 issue Findings of Justice Shaw: As noted above, Shaw J concluded that the contested evidence should be excluded under s 90 of the Act. His Honour's conclusion was quashed on the basis that it was contaminated by a reference to the potential for "unfair prejudice" to the appellant. The first Court of Criminal Appeal held, correctly, that Shaw J's use of that term disclosed a running together 75 [2006] NSWCCA 336 at [44]. Kirby of the test for exclusion of evidence under s 90 of the Act and the test under Shaw J nominated various considerations in support of his conclusion which remain relevant to a proper exercise of the s 90 discretion77: "Some of the relevant circumstances raised by the evidence on the voir dire that go to whether this evidence should be excluded are that: Detective Abdy knew the accused would not speak with them if he knew he was being recorded; the accused repeatedly insisted that he did not wish to speak about the home invasions (though this is denied by [the detectives] on the basis that the 'body language' of the accused indicated that he would speak with them); some of the questioning was leading, verging on impermissible cross examination eliciting specific answers rather than allowing the accused to 'speak'; the conversation involved some level of subterfuge in that the police encouraged the accused to talk about whether the shooting was an 'accident' in circumstances where, pursuant to the felony murder rule, such circumstance is irrelevant to the charge of murder; Detective [McLean] expressed frustration and exasperation at the accused's request not to speak about the first home invasion". First Court of Criminal Appeal: In the first Court of Criminal Appeal, Howie J, who gave the Court's reasons, said that he was prepared to accept that it was open to Shaw J to make the listed factual findings on the evidence before him. His Honour also acknowledged that those findings were "relevant to a consideration of whether the evidence of the [May] conversation should be excluded under s 90"78. However, the application of that section was then dealt with in the following brief passage: 76 [2003] NSWCCA 374 at [112]. Section 137 of the Act provides: "In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant." 77 Reasons of Shaw J at [81] quoted [2003] NSWCCA 374 at [114]. 78 [2003] NSWCCA 374 at [115]. Kirby "I do have considerable doubts … about the last two dot points. But as I have come to the view that his Honour's discretion under that section miscarried by his having taken into account irrelevant considerations, it does not matter what view I take of these particular findings." Having rejected the conclusion of Shaw J, the first Court of Criminal Appeal did not proceed to re-evaluate the evidence in light of a correct understanding and application of s 90. The conventional approach to appellate review of a decision of this nature, which has miscarried for consideration of irrelevant matters, is that the appellate court will decide for itself whether, absent such matters, the decision itself was correct, or remit the discretion (or power) to be re-exercised at first instance, absent the erroneous consideration. In the present case a re-exercise of the discretion by the first Court of Criminal Appeal was to be expected, because that Court had accepted that at least three of the considerations mentioned by Shaw J were open on the evidence and relevant to the s 90 decision. But this did not occur. This Court is not, of course, considering an appeal from the orders and reasons of the first Court of Criminal Appeal. However, I have recounted the history of the proceedings before Shaw J and that Court in some detail for a reason. Shaw J upheld the objection to the admission of the record of the May conversation under s 90 of the Act. He thus concluded, as I do, that to use the evidence would be unfair to the appellant. The decision required consideration of a number of features of the circumstances in which the admissions that the prosecution relied on were made. Shaw J nominated a number of factors that were incontestably relevant to his conclusion under s 90. His Honour's decision then miscarried, as the appellate court found, because of a slip, involving reference to immaterial considerations. The appellate court then proceeded to consider whether evidence as to the May conversation should be excluded under s 137 of the Act. It was in that context that the Court hinted that the conversation as from p 25 of the transcript should be excluded79. It was left to inference that the earlier part of the transcript might be admitted. This was so notwithstanding the survival of some of the reasons nominated by Shaw J (and the existence of others to which reference might have been made) as to why it would be unfair to the appellant to use any of that evidence in the appellant's trial. The issue of unfairness was not determined by the first Court of Criminal Appeal. 79 [2003] NSWCCA 374 at [135]-[136]. Kirby The appellant himself had not given evidence on the voir dire before Shaw J. At the stage that Shaw J and the first Court of Criminal Appeal made their rulings on s 90, the relevant evidence was as high as it was going to reach. The record of all the police conversations with the appellant was closed. Normal appellate practice should have led the appellate court to consider for itself whether, although for different and fuller reasons, Shaw J had been correct in his conclusion that s 90 required exclusion of the entire May conversation for reasons of unfairness. However, that course was not adopted. In effect, the ruling was left to the second trial judge. Findings of Justice James: The appellant was then arraigned before James J. A second voir dire was held to determine whether evidence of the May conversation was admissible. To determine the s 90 issue, James J accepted as his criterion whether, in that conversation, the detectives had "impugned the accused's freedom to choose whether to speak to police"80. It was on the basis of that criterion that James J decided that what was said by the appellant after p 25 of the transcript should be excluded from evidence. His Honour concluded that "[i]t would be unfair to use against the accused evidence of admissions made by him after the words spoken by Detective Abdy" at that point and made a ruling to that effect81. In support of this ruling, James J made a number of findings. He considered that, on 15 May 2002, the appellant was aware that he was speaking with police officers and that he understood that he did not have to say anything to the police82. However, he also found that the appellant believed, both in April and in May, that "if a conversation he had with police officers was not recorded ('was off the record'), evidence of the conversation could not be used against him in criminal proceedings"83. James J also found (as the prosecution had conceded)84: "that the accused would not have spoken to the police on 15 May if he had known the conversation was being recorded; that the police knew on 15 May that the accused would not speak to police if he knew that the 80 Reasons of James J at [141]. 81 Reasons of James J at [141]. 82 Reasons of James J at [125]. 83 Reasons of James J at [130]. 84 Reasons of James J at [127]. Kirby conversation was being recorded; that the accused did not know that the conversation was being recorded and believed that the conversation was not being recorded; that the police knew that the accused believed that the conversation was not being recorded; and the police did not tell the accused that the conversation was being recorded". As the transcript of the May conversation showed, and as Detective Abdy acknowledged, the appellant was not, on 15 May 2002, given the "second part of the caution". This could have alerted him to the fact that statements made by him to police would (or might) be recorded and later used in evidence against him. In his testimony, Detective Abdy said that he believed that "if I gave him the second part of the caution [he might have] become aware that he was being recorded". When Detective Abdy was then asked "And then he would refuse to talk to you?" his answer was "He may have done so, I don't know". James J found that, until the point in the conversation corresponding to p 25 of the transcript, the detectives "had not set out to induce in the accused a belief that, if what he said to police officers was not recorded, evidence of what he said could not be used against him"85. The appellant did not challenge that finding in this Court. James J also found that the appellant's belief at the commencement of the conversation that unrecorded evidence could not be used against him in criminal proceedings was one that he "had formed himself, independently of anything said or done by the police"86. That conclusion was not impugned before the second Court of Criminal Appeal or in this Court. However, the appellant sought to press a submission that the detectives had contributed to (if not encouraged) the continued existence of the appellant's false belief. This last-mentioned contention finds some support in the fact that the detectives themselves acknowledged in their evidence that they had the same belief that unrecorded evidence could not be used against the appellant in a trial. Whereas the second part of the caution had been given to the appellant in the April conversation, Detective Abdy indicated to the appellant that one reason for meeting in the park on 15 May 2002 was that a conversation there would not be recorded. He said to the appellant: "[Y]ou wanted to talk about the murder but you didn't want to talk to us, you didn't want it recorded at the police station" (emphasis added). The only conceivable purpose of making this statement was to contrast an interview at the station (like the April conversation) and a recording-free chat in the park. The park was thus portrayed as a place for a safe, 85 Reasons of James J at [130]-[132]. 86 Reasons of James J at [130]. Kirby informal, "off-the-record" conversation, with no risk of a recording that might later be used in court against the appellant. Second Court of Criminal Appeal: The second Court of Criminal Appeal upheld James J's limited exclusion of the evidence of the May conversation under s 90. It concluded that there was no unfairness in the use of the balance of the evidence of that conversation, holding that, at most, the detectives had failed to correct an erroneous belief on the part of the appellant87. Until p 25 of the transcript they had not held out that what the appellant had said could not be used against him88. The reliability of what the appellant said was a matter for the jury89. The mere fact that trickery had been used was not, of itself, sufficient to render the admission of the evidence unfair to the appellant90. There was no affirmative holding out that what the appellant had said would not be used against him91. Thus, it was held to be within the "discretion" of James J to conclude that the evidence of the conversation down to p 25 of the transcript was not inadmissible for unfairness reasons, pursuant to s 90 of the Act92. The second Court of Criminal Appeal also rejected the complaint that the trial judge had failed to warn the jury that any admissions made by the appellant might not have been reliable due to his belief, at the time of the May conversation, that what he said was not being recorded and could therefore not be used against him93. This issue is the subject of the second substantive ground of appeal to this Court. That ground is only relevant if the complaint about the admission of evidence of the May conversation is rejected. Having regard to my conclusion on admissibility, the warning issue does not arise for separate decision by me. 87 [2006] NSWCCA 336 at [65]. 88 [2006] NSWCCA 336 at [65]. 89 [2006] NSWCCA 336 at [68]. 90 [2006] NSWCCA 336 at [73]-[74] citing R v Swaffield (1998) 192 CLR 159 at 202 [91], 220-221 [155]; cf Tofilau v The Queen [2007] HCA 39 at [146]. 91 [2006] NSWCCA 336 at [77] contrasting R v Noakes (1986) 42 SASR 489. 92 [2006] NSWCCA 336 at [78]. 93 [2006] NSWCCA 336 at [80]-[107]. Kirby The meaning of s 90 of the Evidence Act Textual considerations: The word "unfair" in s 90 is not defined either in the Dictionary at the end of the Act or elsewhere. However, the word is one of common use in the law. It must take its meaning from the context and purpose of its use94. Depending on such context, the word connotes "not fair"; "biased or partial"; "not just or equitable"; "unjust"; or "marked by deceptive dishonest practices"95. Unfairness, for the purposes of s 90, cannot be defined comprehensively or precisely. A general law on evidence (such as the Act) must cover the admission (or rejection) of evidence adduced in a vast range of predictable and unpredictable circumstances. Moreover, what is "unfair" will vary over time in response to changing community attitudes and perceptions. The language of s 90 of the Act expresses the concept of unfairness "in the widest possible form"96. This fact, and the fact that the power afforded under s 90 is to be exercised at the moment that evidence is tendered for admission before a court, indicates that the judgment must be made on a case-by-case basis, normally on the run97. The section envisages individual decision-making by reference to all relevant facts, not a priori rules of universal application. What would be "unfair" in one set of circumstances might not be so if just a few of the integers were changed. There are four textual features of s 90 that are relevant to the proper exercise of the power for which it provides. First, the section is limited in its application to evidence "adduced by the prosecution" in a "criminal proceeding". Thus, s 90 is confined in its operation to a particular type of trial which, in Australia, has distinctive features. Most importantly, criminal proceedings in this country normally observe an accusatorial principle by which it is for the prosecution to establish the criminal accusation. The defendant is not usually required by law to say or prove anything98. The specified context is thus that of 94 Thus, "unfair contracts" (see eg Blomley v Ryan (1956) 99 CLR 362; Stevenson v Barham (1977) 136 CLR 190); "unfair competition" (see eg Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414); "unfair dismissal" (see eg Blackadder v Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539). 95 The Macquarie Dictionary, Federation edition (2001) at 2045. 96 Swaffield (1998) 192 CLR 159 at 193 [67]. 97 cf Dietrich v The Queen (1992) 177 CLR 292 at 364. 98 cf RPS (2000) 199 CLR 620 at 633 [28]. Kirby admitting evidence of an admission which, by our law, normally a defendant is not required to make but which is contained in the evidence adduced by the prosecution and proffered against the defendant. Whether, in these circumstances, admission of the evidence would be "unfair" needs to be judged taking into account these peculiarities that lie deep in the Australian system of criminal justice99; The "unfairness" that enlivens s 90 is not at large. It is not related to broader considerations such as unfairness to the community, unfairness to investigating police, unfairness to witnesses or to any other person or thing. The sole consideration is unfairness "to a defendant". This focuses the inquiry on the effect of the "circumstances in which the admission was made" on the defendant as such. The impact on a wider range of persons or values must be considered, if at all, under other exclusionary rules provided by the Act, not under s 90; The unfairness "to [the] defendant" is also not at large. It is not addressed to unfairness to the defendant outside the courtroom. It is only in the criminal proceedings where that person is "a defendant" and the relevant evidence is tendered for admission, that the admission may be excluded because it would be unfair to the defendant to use it in such proceedings; and The criterion for rejection of the evidence is not the way in which it might later be used by the tribunal of fact. That would involve a concern with unfair prejudice to which other sections of the Act are directed, such as s 135 (a general discretion to exclude evidence) or s 137 (a special discretion to exclude prejudicial evidence in criminal proceedings). As noted above, the several provisions for the exclusion of evidence necessarily overlap in some circumstances. They operate alternatively and cumulatively. An accused person is entitled to invoke any and all of the provisions that are alleged to be relevant to the proceedings in hand. In a statute of general application, the existence of differently expressed powers of exclusion that may, in a given case, have more particular application to the circumstances of a trial, is not a reason for reading down the alternative grounds for exclusion provided by the Act, including A power in the court: The heading to s 90 is "Discretion to exclude admissions". Certainly, the decision of a court when s 90 is invoked is one 99 cf Azzopardi v The Queen (2001) 205 CLR 50 at 65 [38]. 100 cf reasons of Gummow and Hayne JJ at [122]. Kirby involving judgment and the evaluation of multiple considerations. Strictly speaking, it is a power conferred on a court to admit evidence of an admission or to refuse to admit the evidence to prove a particular fact101. It is not a discretion at large. The decision that s 90 requires is confined to the general or particular refusal to admit evidence envisaged by the opening words of the section. Once a court, in circumstances to which s 90 applies, concludes that it "would be unfair to [the] defendant to use the evidence", the section does not provide the court with an uncontrolled option to allow the evidence or to reject it or limit its use. If relevant unfairness to a defendant in the use of the evidence is demonstrated, the only discretion provided to the court is to refuse to admit the evidence of an admission at all or to refuse to admit the evidence to prove a particular fact. This construction, which follows from the character of the repository of the power selected by Parliament ("the court"), shifts the field of dispute, in a case such as the present, to the determination of whether or not "it would be unfair to a defendant to use the evidence". Some of the language of the second Court of Criminal Appeal proceeded on an assumption that a general "discretion" was conferred on the trial court to provide, or withhold, relief102. This constituted an error on that Court's part. It is an error relevant to the function of this Court in disposing of this appeal103. History of the s 90 provision: The legislative expression of the power to exclude evidence for unfairness was recommended by the Australian Law Reform Commission, whose reports104 gave rise to the Act and to counterpart legislation now operating in several Australian jurisdictions105. The Act and its 101 cf Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 at 222-225 per Earl Cairns LC; cf Solomons v District Court (NSW) (2002) 211 CLR 119 at 143 [50]; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 658 [310]; North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 154- 102 [2006] NSWCCA 336 at [78]. Giles JA there referred to "House v The King principles". 103 cf John Fairfax Publications Pty Ltd v Gacic (2007) 235 ALR 402 at 411 [30]. 104 Australian Law Reform Commission, Evidence, Report No 26 (Interim), (1985); Australian Law Reform Commission, Evidence, Report No 38, (1987) ("ALRC 105 Evidence Act 1995 (Cth); Evidence Act 2001 (Tas); Evidence Act 2004 (Norfolk Is). The enactment of a counterpart law has been recommended in Victoria: see (Footnote continues on next page) Kirby equivalents represent significant measures of reform. The provisions should not be read down because of the pre-existing law106. On the other hand, in its final report, upon which the Act was substantially based, the Commission retreated from an interim proposal to subsume the discretion to exclude evidence in criminal trials on unfairness grounds within other judicial powers conferred on trial courts107. It noted that several commentators on its interim proposals had objected to the suggested abolition of the unfairness discretion on the footing that that discretion, expressed in the decision of this Court in R v Lee108, was particularly helpful in dealing "with the situation where the accused has chosen to speak to the police but on the basis of assumptions that were incorrect, whether because of untrue representations or for other reasons"109. The Commission acknowledged that its interim approach "[did] not deal with that situation" because it addressed only the truth (reliability) of an admission, and "not the choice whether or not to make [it]"110. It accepted that the interim proposal had been111: "capable of dealing with the matter but not in the way that the Lee discretion does. The Lee discretion focusses on the question whether it would be unfair to the accused to admit the evidence. The discretion to exclude illegally or improperly obtained evidence requires a balancing of public interests. It would, therefore, be less effective than the Lee discretion in the situation where the confession was obtained because the accused proceeded on a false assumption." In supporting its decision to include amongst its final proposals a statutory expression of what it described as the "Lee discretion", the Commission noted a number of illustrations of cases which such a "discretion" would best address, Victorian Law Reform Commission, Implementing the Uniform Evidence Act, Report, (2006) at 11 (Recommendation 1). 106 cf Cornwell v The Queen (2007) 81 ALJR 840 at 874 [154]; 234 ALR 51 at 98. 107 ALRC 38 at 90 [160]. 108 (1950) 82 CLR 133. 109 ALRC 38 at 90 [160]. 110 ALRC 38 at 90 [160]. 111 ALRC 38 at 90 [160]. Kirby one of which was similar to the present case112. The Commission summarised its conclusion113: "There is a need for a discretion to enable the trial judge to exclude evidence of admissions that were obtained in such a way that it would be unfair to admit the evidence against the accused who made them. Such a discretion should be added to the proposal." Substantially, the added proposal in the Commission's final report became what is now s 90 of the Act114. In Lee, a Full Court of this Court endorsed statements made by Latham CJ and by Dixon J in McDermott v The King115. The latter had described the exclusionary rule for unfairness as applicable where the court forms "a judgment upon the propriety of the means by which [a confessional] statement was obtained by reviewing all the circumstances and considering the fairness of the use made by the police of their position in relation to the accused". This Court concluded in Lee that the unfairness rule was part of the Australian common law of evidence; that it was not excluded by the existence of a statutory provision permitting the rejection of involuntary confessions; and that it served a separate and justifiable purpose116. Specifically, the Court observed that the rule was to be understood in the context of a system of criminal justice in which police observed the obligation to caution suspects117. All of these postulates remain true today. They inform the way in which s 90 of the Act, designed to preserve the Lee discretion, was intended to operate in contemporary criminal trials. 112 ALRC 38 at 90, fn 18: "A person was interviewed for thirty minutes and repeatedly stated he did not want to answer questions. Later a further attempt was made to get answers but he still refused to answer. A third attempt was made and he finally gave answers and allegedly made admissions. They were excluded under the unfairness discretion." 113 ALRC 38 at 90 [160]. 114 See cl 79 of the Commission's draft Bill: ALRC 38 at 171. 115 (1950) 82 CLR 133 at 151 citing (1948) 76 CLR 501 at 506-507 per Latham CJ, 116 (1950) 82 CLR 133 at 150-151 discussing Evidence Act 1928 (Vic), s 141. 117 (1950) 82 CLR 133 at 159 referring to the English Judges' Rules and the Chief Commissioner's Standing Orders in Victoria. Kirby Elaboration of the exclusion: The fact that the unfairness discretion (including now in s 90 of the Act) falls to be exercised in criminal proceedings as they are normally conducted in Australia warrants a reminder of the fundamental principle explained by four members of this Court in Petty v The Queen118. It is a principle, applicable to "criminal proceedings", that should not in my view be undermined, but preserved and protected119: "A person who believes on reasonable grounds that he or she is suspected of having been a party to an offence is entitled to remain silent when questioned or asked to supply information by any person in authority about the occurrence of an offence, the identity of the participants and the roles which they played. That is a fundamental rule of the common law which, subject to some specific statutory modifications, is applied in the administration of the criminal law in this country. An incident of that right of silence is that no adverse inference can be drawn against an accused person by reason of his or her failure to answer such questions or to provide such information. To draw such an adverse inference would be to erode the right of silence or to render it valueless." As the Police Code of Practice applicable in this case recognised, the "right to silence" should be respected by police themselves. Of course, referring, without more, to that right will not suffice to establish that particular evidence must be excluded120. However, in appropriate circumstances, the unfairness discretion can be applied to uphold it and to deprive those who ignore or defy it of the fruits of their conduct. In R v Swaffield, the joint reasons in this Court acknowledged that the term "unfairness" lacks precision and demands an evaluation of all of the relevant circumstances121. As noted in Van der Meer v The Queen122, it is not concerned as such with unfair conduct on the part of police, but rather with whether it would be unfair to the accused to use his statement containing admissions against him123. Thus, unfairness is concerned with "the right of an accused to a fair 118 (1991) 173 CLR 95. 119 (1991) 173 CLR 95 at 99 per Mason CJ, Deane, Toohey and McHugh JJ. 120 RPS (2000) 199 CLR 620 at 630 [22]; Tofilau [2007] HCA 39 at [20]. 121 (1998) 192 CLR 159 at 189 [53] per Toohey, Gaudron and Gummow JJ. 122 (1988) 62 ALJR 656; 82 ALR 10. 123 Swaffield (1998) 192 CLR 159 at 189 [53] quoting Van der Meer (1988) 62 ALJR 656 at 666; 82 ALR 10 at 26. Kirby trial", and whilst the unreliability of an admission might be "a touchstone of unfairness", it is "not to be the sole touchstone"124. It might be "that no confession might have been made at all, had the police investigation been properly conducted"125. In Swaffield, the Judges' Rules in Queensland (equivalent to the Police Code of Practice applicable in this case) were recognised to be "a yardstick against which issues of unfairness (and impropriety) [could] be measured"126. In my own reasons in Swaffield, I also referred to the principles stated in Van der Meer127. I made reference by way of comparison to s 90 of the Uniform Evidence Acts, even though it was not there applicable128. I acknowledged that s 90 "reflects the common law unfairness discretion" and permitted changing social circumstances to be considered129. In discussing such changing circumstances, I accepted that "[m]odern surveillance technology and covert police operations are potentially effective means for [bringing wrongdoers to justice]"130. After reviewing overseas authority, I remarked131, in words to which I adhere (and which were cited in the second Court of Criminal Appeal in these proceedings132): "Subterfuge, ruses and tricks may be lawfully employed by police, acting in the public interest. There is nothing improper in these tactics where they are lawfully deployed in an endeavour to investigate crime so as to bring the guilty to justice. Nor is there anything wrong in the use of 124 Swaffield (1998) 192 CLR 159 at 189 [54]. 125 (1998) 192 CLR 159 at 189 [54] citing Van der Meer (1988) 62 ALJR 656 at 662; 82 ALR 10 at 20; Duke v The Queen (1989) 180 CLR 508 at 513. 126 (1998) 192 CLR 159 at 190 [55] citing Van der Meer (1988) 62 ALJR 656 at 666; 82 ALR 10 at 26. 127 (1998) 192 CLR 159 at 211 [129]. 128 (1998) 192 CLR 159 at 211 [130]. 129 (1998) 192 CLR 159 at 211 [131]. 130 (1998) 192 CLR 159 at 217 [147]. 131 Swaffield (1998) 192 CLR 159 at 220-221 [155]. 132 [2006] NSWCCA 336 at [74]. Kirby technology, such as telephonic interception and listening devices although this will commonly require statutory authority. Such facilities must be employed by any modern police service. The critical question is not whether the accused has been tricked and secretly recorded. It is not even whether the trick has resulted in self-incrimination, electronically preserved to do great damage to the accused at the trial. It is whether the trick may be thought to involve such unfairness to the accused … that a court the evidence notwithstanding its high probative value. In the case of covertly obtained confessions, the line of forbidden conduct will be crossed if the confession may be said to have been elicited by police … in unfair derogation of the suspect's right to exercise a free choice to speak or to be silent." (footnotes omitted) should exercise its discretion to exclude Swaffield, like this case, involved the secret recording of a conversation by an undercover police officer who, in disregard of the relevant Judges' Rules in Queensland, did not administer any caution at all to the suspect. The entire Court in that appeal concluded that the accused's admissions had rightly been rejected by the intermediate court. The joint reasons decided that this was so because the police conduct had impugned the suspect's freedom to choose whether to speak to the police or not. My own reasons represented a variation of the same principle. Consistency with the Court's approach in Swaffield requires that principle also to be applied in this appeal. Conclusion: the meaning of s 90: The unfairness provision in s 90 of the Act was clearly intended to confer a "power or discretion" on a court in criminal proceedings to reject prosecution evidence that was at least as broad as that provided by the previous common law. It may even be that s 90 casts a wider net133. For the purpose of deciding this appeal, it is unnecessary to resolve that question. Whilst the several provisions of the Act governing the exclusion of evidence may overlap in particular circumstances, each provision, when invoked, should be applied according to its own terms. The history of s 90 demonstrates that the section was preserved, and intended to apply, so as to address a particular and well-identified problem. It would be a serious departure from the text, inimical to the purposes of s 90, to impose on its broad language restrictions imported from the language of other exclusionary provisions in the Act. Essentially, that was the mistake that undermined the validity of the decision of Shaw J on the s 90 issue. It is a mistake that this Court should itself avoid. It would be no more tolerable to gloss s 90 by deliberate implication than to do so by a verbal slip, which is all that appears to have occurred in the reasoning of Shaw J. 133 cf Swaffield (1998) 192 CLR 159 at 193 [67], 211 [131]. Kirby There is nothing in the language, history or purpose of s 90 that would licence overlooking the statutory objective of protecting criminal suspects against unfairness in favour of other concerns (such as the need to clear up a serious murder where the accused has repeatedly insisted to police on his right to silence). Application of s 90 in this appeal Standard of review: The second Court of Criminal Appeal considered that, in reviewing the exclusionary ruling of James J, it was subject to the that House v The King134 imposes on appellate review of constraints "discretionary" decisions135. As already indicated, that was an error. Whether the function of the court under s 90 is described as involving a "power" or a "discretion" does not matter. Clearly, the judgment required is an evaluative one. This suggests that the appellate court should not ignore the antecedent exercise of the "power or discretion" or any advantages that the earlier court(s) enjoyed in making the contested decision. However, if, having reviewed all the circumstances, the appellate court comes to a firm conclusion that the admission of the challenged evidence "would be unfair to a defendant", it would be unthinkable that it would then deny relief and ignore the unfairness. The fundamental obligation of the Court of Criminal Appeal is to determine whether or not "there [has occurred] a miscarriage of justice"136. In a case such as the present, the appellate task is akin to that presented when a challenge is made to a judge's ruling that particular evidence is "relevant"137. The court acknowledges the function of the original decision- maker, and makes full allowance for the advantages he or she had in the circumstances. But, if it reaches a firm conclusion of its own, it is required to give effect to that conclusion. It is not subject to restraint on the basis that the decision is "discretionary" in the sense that, say, a decision to grant an adjournment, to award costs or to order security clearly is. Even if this view of the "power or discretion" in s 90 were incorrect, and the decision under the section was to be classified without qualification as a "discretionary" one, a clear conclusion that to admit evidence would be "unfair" to the defendant would allow a finding of error of the innominate kind, 134 (1936) 55 CLR 499. 135 [2006] NSWCCA 336 at [78]. 136 Criminal Appeal Act 1912 (NSW), s 6(1). 137 cf Smith v The Queen (2001) 206 CLR 650. Kirby occasioning a miscarriage of justice. It would authorise appellate intervention as, in my view, is required here. Uncontested considerations: To explain why use of the contested evidence would be unfair to the appellant, it is not necessary to engage in sophisticated reasoning. Decisions of the kind presented by s 90 often have to be made quickly, even instantaneously, in the course of the running of a criminal trial by reference to all the facts and circumstances as then known. I will not delay in this analysis to contest a number of the propositions endorsed in the reasons of other members of this Court, who reach a conclusion opposite to my own. I am prepared to concede that the mere fact that a conversation with a suspect is secretly recorded does not alone make later use of any admissions contained in the recording "unfair" to the suspect138. I also accept that the existence of warrants under the Listening Devices Act militates in favour of a secret recording of a private conversation comprising admissible evidence139. However, such a warrant does not absolve a court of the obligation to decide, in accordance with s 90, whether particular evidence adduced in criminal proceedings should be excluded as unfair to a defendant. In granting such a warrant, a judge has no means of anticipating later unfairness to a defendant arising out of attempted use of the recorded evidence and the way the questioning proceeds. I accept that, for example, the administration of a defective caution to a suspect does not give rise to a "right" to the exclusion of subsequent recorded evidence140. The unfairness to which s 90 refers must be found taking into account all the circumstances relevant to the procurement of the impugned admissions. I agree that it would be a mistake to attribute over-subtle reasoning to the appellant141. However, there is a clear and not particularly subtle distinction between a belief (often correct) that unrecorded evidence of admissions to police cannot be used in a subsequent criminal trial and a false assumption (encouraged by things said and done by police) that on a particular occasion police were not in fact recording a conversation. 138 Reasons of Gleeson CJ and Heydon J at [67]. 139 cf reasons of Gleeson CJ and Heydon J at [68]. 140 cf reasons of Gummow and Hayne JJ at [119]. 141 Reasons of Gleeson CJ and Heydon J at [71]. Kirby I will not consider postulated analogies to mistakes in equity142. Taking into account matters of that kind would gloss the statute and divert the court's attention from the judgment it must make as to "unfair[ness] to a defendant". I agree that such unfairness could arise because the circumstances in which an admission was made render it unreliable143. However, as noted above, it was recognised in Lee, and confirmed in other cases down to Swaffield, that reliability is "not … the sole touchstone" of unfairness144. In the present case, the fact of the sound recording would seem to preclude challenge to the reliability of the record of the May conversation. However, it is not the case that every electronically recorded admission, whenever and however made, is ipso facto admissible. Section 90 demands consideration of "the circumstances in which the admission was made". The fact that the admission is recorded is only one such "circumstance". It remains for the court to evaluate the proposed "use [of] the evidence" in the context of "criminal proceedings". The answer is not supplied by a judgment as to the motives of the detectives in adopting the course of conduct that they did. It may be accepted (as all the judges below agreed) that Detectives Abdy and McLean were frustrated, and anxious to secure evidence to solve a most serious crime. However, the governing consideration is not whether the detectives deliberately intended to deprive the appellant of his right to a fair trial. It is whether their conduct had that effect in the proceedings in which the contested evidence was admitted. I consider that the conduct did have that effect. To explain why, it is necessary for me to refer to five important considerations. Omission of a full caution: The most important consideration favouring the conclusion that use of the contested evidence was unfair to the appellant was the detectives' intentional failure to administer to him the second part of the caution set out in the Police Code of Practice. That caution includes the following warning: "We will record what you say or do. We can use this recording in court. Do you understand that?" There is nothing unusual in the second part of the caution. Giving such a caution is a regular feature of police practice in dealing with suspects, in Australia and in other common law countries. It is therefore a feature that will be normal in conduct anterior to "a criminal proceeding" to which s 90 of the Act 142 cf reasons of Gleeson CJ and Heydon J at [76]-[77]. 143 Reasons of Gleeson CJ and Heydon J at [73]. 144 Swaffield (1998) 192 CLR 159 at 189 [54]. Kirby applies. It recognises a suspect's "right to silence" and the character of an accusatorial trial. The rights of suspects in this respect are not to be undermined by courts unless derogation is expressly authorised by Parliament. The failure of the detectives to administer the second part of the caution to the appellant was incontestably a conscious one. It rested in the detectives' fear that, had the caution been given, the appellant would have said nothing, as was his legal right. For the purposes of s 90 of the Act, the vice of the incomplete caution did not lie in the detectives' deliberate transgression of the Police Code of Practice. Rather, it lay in their resulting failure to alert the appellant, whom they had under their control, to a vital consequence of continuing the conversation into which he had been drawn. The importance of the second part of the caution has been explained in many cases. In Miranda v Arizona145, the Supreme Court of the United States explained: "The warning of the right to remain silent must be accompanied by the explanation that anything said can and will be used against the individual in court. This warning is needed in order to make [a suspect] aware not only of the privilege, but also of the consequences of forgoing it. It is only through an awareness of these consequences that there can be any assurance of real understanding and intelligent exercise of the privilege. Moreover, this warning may serve to make the individual more acutely aware that he is faced with a phase of the adversary system – that he is not in the presence of persons acting solely in his interest." Although these remarks were made in the context of the requirements of the Fifth Amendment to the United States Constitution, they usefully explain the purpose of the caution obliged, in Australia, by both Judges' Rules and Police Instructions or Codes of Practice. In New South Wales, the caution might not be required under binding legislation. However, it is incontestable that it represents an established feature of police practice. It is founded on what is by now a "fundamental rule of the common law"146. It reflects the recognition, as noted in the Police Code of Practice, that147: "If you fail to caution at the appropriate time, or if the suspect does not fully understand it, any subsequent conversation or admission might be 145 384 US 436 at 469 (1966) (emphasis added). 146 Petty (1991) 173 CLR 95 at 99. Kirby ruled to be improperly obtained and inadmissible. Particular care should be taken in relation to vulnerable persons." In the present case, the detectives were quite aware of their obligation to give the appellant a full formal caution. At the beginning of the May conversation, they reminded him of the "piece of paper" they had given him in April. Notwithstanding this, their oral caution was limited to an intimation that "the same [went] again" in that the appellant "didn't have to say anything to the police". The omission of the second part of the caution was significant. It was clearly intended to influence the appellant's thoughts and actions. It was knowing, apparently carefully planned and, in the result, effective. If it was necessary on 15 May 2002 to repeat the first part of the caution, it was equally necessary to repeat the second part. Either this Court is serious about the right to silence and the need for police and like officials to caution suspects about the incidents of that right, or it is not. To condone the consequences that flowed after providing half a caution is, in effect, to accept that giving half the caution is adequate and the deletion of the other half results in no unfairness to a suspect. Recognising that millions of cautions containing both parts of the specified warning must have been administered over many decades, in this country and elsewhere, I find it impossible to brush aside the intentional administration of an incomplete caution to the appellant on the part of Detectives Abdy and McLean, both sworn officers of police. I acknowledge their frustrations. I am willing to accept the sincerity of their objectives. But if their conduct on this occasion is vindicated by this Court, we must face the reality that what they did will be repeated. By condonation, it may well become a common or general practice. I will not willingly accept that development. It carries with it the seeds of the destruction of a suspect's right to silence and the undermining of the accusatorial character of criminal proceedings. Before leaving this point, I would note that it would be incorrect to infer, if that is what is intended, that counsel for the appellant conceded that there was no obligation on the part of the detectives to caution the appellant148. To the contrary, it was a repeated theme of the appellant's submissions to this Court that a caution was required when the May conversation commenced and that it had to be the full caution, not just the first half. In this Court, the obligation to caution was expressly argued for the appellant to be one "arising from the circumstances of this case"149. Moreover, as 148 Reasons of Gleeson CJ and Heydon J at [78]. 149 [2007] HCATrans 142 at 39. Kirby was acknowledged from the Bench at the time this argument was put (encapsulating what was being submitted), "you either give it all or you give nothing. A misleading character, in a way, arises from giving half of it."150 Trickery and informed choices: The foregoing conclusion is reinforced by the fact that trickery was used by the detectives to overcome the appellant's obvious initial unwillingness to speak about the Logozzo home invasion, and to deprive him of an "informed choice" as to whether to make admissions or not to speak until appearing in court with the benefit of legal advice. The detectives arrived at the appellant's home and took him for what was presented as an informal chat in a public park on a specific and limited subject. They repeatedly emphasised that he was "not under arrest" and "not going to … the police station". They reassured him on a number of occasions that he was not being "tricked" or "conned". It was not, therefore, a neutral conversation with public officers in which he was allowed to say what he wished. It involved a course of conduct consciously designed to deceive the appellant into believing that he was engaged in an off-the-record conversation151. The detectives' reference to his earlier interview with them, following which he had not been arrested but released, renders still more apparent the unfairness of the trickery. It compounds the unfairness occasioned by the administration of only half of the official caution. Necessarily, the deception influenced everything that the appellant then proceeded to say and do in the course of the May conversation. It caused the attempted use of admissions contained in that conversation (including the first part thereof) to be unfair to the appellant. It violated the appellant's right in law to choose whether or not to make admissions that would later be used against him in his trial152. It engaged the application of s 90 of the Act. Selection of the park venue: Of itself, the fact that the meeting with the detectives on 15 May 2002 took place in a suburban park might seem innocuous. However, given the context, the detectives' selection of that venue for their second extended conversation with the appellant was far from so. Indeed, it was part of the deliberate deception designed to emphasise in the appellant's mind the distinction between a formal interview at the police station and an off-the-record chat in the park. 150 [2007] HCATrans 142 at 39. 151 cf Cleland v The Queen (1982) 151 CLR 1 at 13; R v Oickle [2000] 2 SCR 3 at 42- 152 Swaffield (1998) 192 CLR 159 at 201 [89]; cf Blackburn v Alabama 361 US 199 at 207 (1960) quoted Oickle [2000] 2 SCR 3 at 43-44 [70]. Kirby The detectives' repeated statements throw this fact into sharp relief: "[Y]ou don't want to go to the cop shop and talk"; "[W]e didn't even take you to a police station … we're not trying to trick you or anything"; "We've brought you to a God damn park. We're not, we haven't got you in the police station." Whilst trickery, deception and covert operations are an inevitable part of modern policing, the detectives' conduct on 15 May 2002 transgressed the threshold of acceptable police investigative behaviour in a material respect153. It rendered unfair the reception and use in criminal proceedings of the appellant's subsequent admissions. In effect, it deprived the appellant of his right to silence. With all respect, it is impossible to reconcile the outcome favoured by the other members of this Court in this case with the unanimous conclusion reached in Swaffield. Even if what the detectives did here was not illegal as such, there remains "the broader question" of whether it "was in violation of" the appellant's "right to choose whether or not to speak to the police"154. In Swaffield, no caution at all was administered. Here, the caution administered was incomplete, and even its limited effectiveness was undermined through trickery and deception, including that arising from the non-official venue chosen for the conversation. It is true, as Gleeson CJ and Heydon J point out, that many admissions are made by suspects at venues other than police stations155. However, this was not a case in which an admission was spontaneously volunteered or accidentally blurted out in an unexpected place. It is obvious that the detectives selected the park as a venue with a view to deceiving the appellant. It assisted them to deprive him of a free choice to speak to the police about the Logozzo offences. It denied him the right that he asserted in the April conversation to withhold his version until he was on trial in a court. As in Swaffield, the resulting admissions ought to have been excluded to avoid unfairness to him. This Court should so order so as to vindicate the appellant's right to silence, out of which he was tricked. Rejecting an unconvincing discrimen: My conclusion is further reinforced by what was the unconvincing discrimen that led to James J's exclusion of part only of the May conversation as from p 25 of the record. It was at that page that Detective Abdy reassured the appellant: 153 cf Tofilau [2007] HCA 39 at [188]. 154 Swaffield (1998) 192 CLR 159 at 202 [94]. See also at 224-225 [165]. 155 Reasons of Gleeson CJ and Heydon J at [75]. Kirby "It's not as though we're going to slap the handcuffs on you and take you away otherwise we'd be at the police station if we were gunna do that, wouldn't we?" Understood in its context, this was but one in a long series of reassurances by the police designed to distinguish an inferentially recorded conversation at the police station from a purportedly unrecorded off-the-record chat in the park. Statements to the appellant to the effect that "you might feel better if you tell us" and "one of these days you're gunna have to want to talk about it" were not significantly different from the pseudo-ingratiation with which the earlier 25 pages of the conversation were replete. If the "circumstances in which the admission was made" were such as to make it unfair to the appellant to use the evidence following p 25, the unfairness was, in my view, established long before the exchange recorded on that page. It was erroneous and artificial to choose the passage on p 25 as the point after which the record became inadmissible when that record was the product of a tactic that was unified, well planned and designed to procure the precise admissions that it did. Ignorance and stupidity: Finally, there is a statement in the reasons of Gleeson CJ and Heydon J with which I disagree. Gleeson CJ and Heydon J state that "every day police officers take advantage of the ignorance or stupidity of persons whom they eventually prosecute"156. Their Honours suggest that the appellant's incorrect belief about the availability of any admissions in the May conversation at a trial was simply a species of such "ignorance or stupidity". This approach implies that the educated and the clever enjoy a special position under the law which the ignorant and stupid do not. I could never agree with such a view. It is true that a well-advised, clever accused would probably not have gone to a park with detectives expecting to engage in an off-the-record conversation in such a place. Indeed, in all likelihood, no attempt would have been made to deceive and trick such a person, or to administer to him or her only half of the official police caution. However, the law, including the Act, exists to protect all defendants in criminal proceedings against relevant unfairness, not just the educated and the clever. The law is not silent for vulnerable people who are "ignorant" about their rights and who are regarded as "stupid". This point was made by this Court in 1950 in a powerful passage in Lee157: 156 Reasons of Gleeson CJ and Heydon J at [77]. 157 (1950) 82 CLR 133 at 159. Kirby "It is, of course, of the most vital importance that detectives should be scrupulously careful and fair. The uneducated – perhaps semi-illiterate – man who has a 'record' and is suspected of some offence may be practically helpless in the hands of an over-zealous police officer. The latter may be honest and sincere, but his position of superiority is so great and so over-powering that a 'statement' may be 'taken' which seems very damning but which is really very unreliable. The case against an accused person in such a case sometimes depends entirely on the 'statement' made to the police. In such a case it may well be that his statement, if admitted, would prejudice him very unfairly. Such persons stand often in grave need of that protection which only an extremely vigilant court can give them. They provide the real justification for the Judges' Rules in England and the Chief Commissioner's Standing Orders in Victoria, and they provide … a justification for the existence of an ultimate discretion as to the admission of confessional evidence." As far as I am concerned, nothing has changed in this respect since 1950. The expansion of covert police operations and techniques only heightens the continuing force of what the Court then said158. To adapt the words of Tobriner J in People v Dorado159, to limit the protection s 90 of the Act offers to defendants who are "stupid and ignorant" would be "to favor the defendant whose sophistication or status had fortuitously" made the need for protection unnecessary (or less necessary) in that defendant's circumstances. That could not be the purpose of s 90, and that provision should not be applied as though it were. Conclusion on application of s 90: In the light of the reasoning in Swaffield, it cannot seriously be suggested that a failure to provide a caution, whether contemplated by the Judges' Rules or a Police Code of Practice, is irrelevant to the fairness to the defendant of the use of evidence gathered after that failure. This is so whether no caution at all was administered (as in Swaffield) or whether the caution was only half given and then undermined by deception, tricks and the venue chosen for the conversation (as was the case here). The result is the same. The consequent admissions are subject to exclusion as their use would be unfair to the defendant. This Court should be consistent in its approach to such defaults. It should visit them with similar consequences. 158 Tofilau [2007] HCA 39 at [203]. 159 398 P 2d 361 at 369-370 (1965) quoted Miranda 384 US 436 at 471 (1966). Kirby Conclusions Exclusion of evidence and acquittal: For the foregoing reasons the decision of James J to admit the first 25 pages of the May conversation was erroneous. Having regard to the circumstances in which the admissions recorded in those pages were made, it was unfair to the appellant to permit their use. The appellant sought to have the evidence excluded pursuant to the power or discretion that s 90 of the Act confers. Shaw J was correct to conclude that the evidence should have been so excluded, although in his reasons he incorrectly included a reference to immaterial considerations. When the first Court of Criminal Appeal identified this error, it should have conducted its own analysis of the record, and concluded that s 90 of the Act applied nonetheless. When it failed to do so, James J should have so ordered. Because his conclusion gave rise to a miscarriage of justice affecting the appellant, the second Court of Criminal Appeal erred in failing to correct it. The suggested discrimen for permitting the evidence before, but rejecting it after, p 25 of the record was insubstantial and unconvincing. In his notice of appeal to this Court, the appellant at first sought an order for a retrial. However, in the course of oral argument, counsel for the prosecution conceded that, absent the evidence of the admissions made by the appellant on 15 May 2002, the case against him in respect of the Logozzo offences was insufficient to justify a retrial160. Necessarily, that concession precluded any later application of the "proviso" in the matter161. That this is the case serves to emphasise the grave consequences of the unfairness to the appellant occasioned by the course that the detectives embarked upon on 15 May The appellant remains convicted of the Kress offences, to which he pleaded guilty. He must serve the sentences imposed on him in respect of those offences. However, the convictions entered and sentences imposed in respect of the Logozzo offences cannot stand. In light of the prosecution's concession, a new trial should not be ordered. Adhering to established law: Self-evidently, resolving a serious murder is a matter of very high public importance for any society. However, s 90 of the Act (as well as the antecedent common law) provides that such resolution may not be achieved by reliance on admissions procured in circumstances that render 160 [2007] HCATrans 142 at 75. 161 Criminal Appeal Act 1912 (NSW), s 6(1). Kirby their use unfair to the suspect162. In evaluating fairness courts must take into account a suspect's right to silence and the concomitant entitlement "to choose whether or not to speak to the police"163. As the Supreme Court of the United States has recognised164: "The quality of a nation's civilization can be largely measured by the methods it uses in the enforcement of its criminal law." Necessarily, by its decisions, this Court sets the standards for police interrogation of suspects in this country. We are either serious or not serious about upholding the basic principles of the accusatorial trial; the "fundamental rule" of the accused's right to silence; and the privilege to speak only after a full and proper police caution is administered. The inference is becoming inescapable that despite a long line of decisions including McDermott, Lee, Petty, and Swaffield this Court has shifted its direction165. It is not now resolved to preserve the previously stated values. Such an alteration to the law is not warranted by the language of s 90 of the Act. It is not justified by analogical reasoning from basic common law principles. In my view, such a change should not be made by the Court but only by Parliament, accepting the seriousness of the step that is then taken, and imposing its own alternative restrictions and protections for the rights of suspects. Orders The appeal should be allowed. The orders of the Court of Criminal Appeal of New South Wales dated 3 November 2006 should be set aside. In place of those orders, this Court should order that the appellant's appeal to that Court be allowed. The subject convictions should be quashed and in their place a judgment of acquittal should be entered in respect of the relevant counts of the indictment. 162 cf Tofilau [2007] HCA 39 at [148]. 163 Swaffield (1998) 192 CLR 159 at 202 [94]. 164 Miranda 384 US 436 at 480 (1966) quoting Schaefer, "Federalism and State Criminal Procedure", (1956) 70 Harvard Law Review 1 at 26. 165 Tofilau [2007] HCA 39 at [203]-[209].

HIGH COURT OF AUSTRALIA CRI028 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT CRI028 v The Republic of Nauru [2018] HCA 24 13 June 2018 ORDER Appeal allowed with costs. Set aside the order of the Supreme Court of Nauru made on 11 May 2017, and in its place order that: the appeal be allowed; the decision of the Refugee Status Review Tribunal made on 13 August 2015 be quashed; and the matter be remitted to the Refugee Status Review Tribunal for redetermination according to law. On appeal from the Supreme Court of Nauru Representation W G Gilbert SC with A F L Krohn for the appellant (instructed by Clothier C J Horan QC with N M Wood for the respondent (instructed by Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS CRI028 v The Republic of Nauru Migration – Refugees – Appeal as of right from Supreme Court of Nauru – Where Secretary of Department of Justice and Border Control determined appellant not refugee – Where Refugee Status Review Tribunal affirmed Secretary's determination – Where appellant established well-founded fear of persecution – Where Tribunal found alternative "home area" – Whether Tribunal properly applied internal relocation principle – Whether Tribunal failed to consider family unity – Whether Supreme Court erred in affirming Tribunal's determination. Words and phrases – "family unity", "home area", "in all the circumstances", "internal relocation principle", "reasonableness of relocation", "relocation". Appeals Act 1972 (Nr), s 44. Nauru (High Court Appeals) Act 1976 (Cth), s 5, Sched, Art 1. Refugees Convention Act 2012 (Nr), ss 3, 4, 5, 6, 22, 31, 34, 43, 44. Convention relating to the Status of Refugees (1951) as modified by the Protocol relating to the Status of Refugees (1967), Art 1A(2). BELL J. The joint reasons set out the scheme of the Refugees Convention Act 2012 (Nr) ("the Refugees Act"), together with the procedural history and facts, which I gratefully adopt. I agree with their Honours' analysis of the "internal relocation principle", which the Refugee Status Review Tribunal ("the Tribunal") was required to apply to the determination of whether the appellant is a refugee. As their Honours explain, the Republic of Nauru ("Nauru") accepts that the Tribunal's characterisation of the area, described as K District, as a "home area" for the appellant did not relieve it of the need to consider whether the appellant's relocation to that district was reasonable. This acceptance left the appellant's third ground as the sole issue in the appeal: that ground contends legal error in the Tribunal's failure to take into account a "threat to family unity" in the assessment of the reasonableness of the appellant's relocation within Pakistan. The Tribunal proceeded upon acceptance that the appellant is a Sunni Muslim, that he married a Shia Muslim "for love", that his wife gave birth to their child in 2010, that between the date of their marriage and 2013 when the appellant left Pakistan they lived in Karachi, that his wife's family lived in Karachi, and that his wife did not want to move from Karachi. Given the Tribunal's finding that the appellant is at risk of persecutory harm in Karachi, and its acceptance that the appellant's wife is reluctant to move to K District, the appellant argues that the Tribunal was required to take into account the prospect that his wife and their child might remain in Karachi in assessing the reasonableness of the expectation that he relocate to K District (or elsewhere in Punjab), where he was not at risk of harm. Nauru accepts that consideration of the appellant's wife's situation and her reluctance to move to K District was material to the assessment of the reasonableness of his relocation. Nauru's first submission is that the occasion did not arise to address any suggested "threat to family unity" because at all times it was the appellant's case that, notwithstanding her reluctance, his wife and their child would accompany him to K District (or elsewhere in Punjab). Nauru's first submission relies on the assertion in the appellant's initial statement in support of his refugee status determination: "I have people who are dependent upon me as detailed above. I fear if we were to attempt to relocate anywhere within Pakistan my family and I would be exposed to an increased risk of being harmed by violence." And it relies on the appellant's further statement, made in support of his application for review of the Secretary of the Department of Justice and Border Control's determination (the "further statement"): Bell "My wife has never visited my family in Punjab, we could not move there because we do not have the support of my family. My wife was reluctant to move because she does not have any family outside of Karachi. In Pakistan it is very difficult and dangerous to move without a support network. I would not be able to find a job or accommodation without the connections. We would struggle to subsist outside of Karachi and we would be vulnerable to harm as an interfaith couple isolated from support networks." And it also relies on the submissions filed with the Tribunal on the appellant's behalf: "[I]t would be very difficult for [the appellant] to obtain employment should he relocate within Pakistan. This would make it extremely difficult for him to subsist, especially with his wife and child as dependents". In short, Nauru contends that the effect of the appellant's case was that relocation within Pakistan would be hard on the appellant, and on his wife and their child, but that the family would be united in facing that hardship. The Tribunal's finding, that the appellant could lead a relatively normal life without facing undue hardship in K District, on this analysis, is to be understood as posited on its acceptance of that case. The appellant did not, in terms, assert that his relocation to K District (or other location in Punjab) would entail separation from his wife and their child, who would remain in Karachi. The appellant had sought, unsuccessfully, to make a larger case against relocation: because theirs was a mixed marriage, he and his wife would have no support network outside Karachi and she risked becoming the victim of an honour killing. The rejection of that larger case said nothing as to the prospect that, despite her reluctance, his wife would move from Karachi to K District to be reunited with the appellant. The evidence was apt to suggest the contrary conclusion. The appellant was consistent in maintaining that his wife, a member of the Shia minority in Pakistan, did not wish to leave Karachi, where she had the support of her family. Notwithstanding that the appellant had been threatened and harassed in Karachi by Muttahida Qaumi Movement ("MQM") "goons" from 2009 until he left Pakistan, he and his wife had continued to make that city their home. In his further statement, the appellant acknowledged the strength of the MQM in Karachi, but claimed that, given his love for his wife, it was not reasonable for him to live outside Karachi. It was an assertion that provided no support for an assessment of the appellant's claim to be a refugee upon the assumption that, were he to relocate to a place in Pakistan outside Karachi where he was not at risk of persecutory harm, his wife and their child would accompany him. The submission that this assumption is implicit in the Tribunal's conclusion Bell that the appellant could lead a relatively normal life in K District is unsustainable. The Tribunal was required to give the appellant a written statement setting out its findings on any material questions of fact and referencing the evidence or other material on which those findings were based1. The Tribunal's analysis of the appellant's claim, invoking what it described as the "ordinary relocation principles", is contained in the following two paragraphs of its reasons: "[102] The [appellant] contends that he would lack support network elsewhere in Pakistan and have difficulty finding employment. With respect to the situation in [K District] the Tribunal rejects the suggestion that the [appellant] would lack a support network, for as explained above he lived and worked there for most of his life, and the Tribunal does not accept that he is estranged from his family. In any event, the Tribunal considers this aspect of the [appellant's] claims to have been exaggerated, for he twice relocated to Karachi for work despite having no relatives and little or no support network there, and evidently had no difficulty obtaining work. The Tribunal notes that the [appellant] has a very solid work history with experience in a range of jobs. [103] For these reasons, the Tribunal concludes that relocation would be reasonable for the [appellant] in the sense that he could, if he relocated, lead a relatively normal life without facing undue hardship in all the circumstances." The alternative way in which Nauru puts its case is to say it is evident, when the Tribunal's reasons are read as a whole, that consideration was given to the appellant's circumstances as a married man and father of a child in assessing the objective reasonableness of the expectation that he would move from Karachi, where he faced persecutory harm, to K District, with which he had a longstanding association and where he did not face the threat of harm. Nauru points to the Tribunal's earlier finding, which Nauru distils as that the appellant "had no subjective fear of returning to [K District], including with his wife", and to the further finding that despite her reluctance, the appellant's wife could go to K District with him. In circumstances in which the appellant's case did not identify any objective reason for finding that the family would experience difficulties making it unduly harsh to expect them to relocate, Nauru submits that these findings sufficed to support the Tribunal's conclusion in paragraph [103], set out above. 1 Refugees Convention Act 2012 (Nr), s 34(4). Bell The evidence raised as a distinct prospect that the appellant's wife and their child would not relocate with him to a place in Pakistan outside Karachi. It was necessary for the Tribunal to address the impact of relocation on the appellant taking that prospect into account. Whether, in the absence of an objective reason for finding that it would be unduly harsh for the family to move to K District, the Tribunal might have concluded that the appellant's relocation within Pakistan was a reasonable expectation is not an issue raised by the appeal. A fair reading of the Tribunal's reasons is that it did not have regard to the appellant's circumstances as a married man and father in its assessment of the reasonableness of his relocation within Pakistan. The Tribunal's statement, in connection with its discussion of K District as a "home area" for the appellant, that "[w]hile it might not be a home area for his wife, who has never lived there, it is the [appellant's] claims the Tribunal is assessing" reinforces that conclusion. So, too, does the Tribunal's finding that the appellant "holds no fear of returning to [K District], whether with his wife or not". The subject of maintenance of the appellant's family unity was obliquely raised in the course of the Tribunal hearing. The appellant said he had discussed his departure from Pakistan with his wife and sought her advice. The presiding member commented that it seemed odd that the appellant's wife would agree to him taking a dangerous journey overseas in preference to the alternative of moving to K District, where the couple "might have a few difficulties". The appellant appeared uncertain how to respond to this comment and another member of the Tribunal intervened, explaining "I mean she doesn't want to leave Karachi, but the alternative that you're providing her with is being separated indefinitely, and if you are to be reunited she'll be leaving Karachi anyway. She'll be leaving the country." The appellant replied through the interpreter, somewhat unresponsively, "[s]o we don't know about the future, but so she's living in Karachi at the moment. She got her – the support of her family". The issue was not further explored in evidence and was not the subject of any finding. This makes it unnecessary to address the merits of Nauru's written submission, not developed in oral argument, that the unity of the appellant's family was "equally or more greatly affected by his departure from Pakistan, leaving his wife and child in Karachi". I agree with the orders proposed in the joint reasons. GORDON AND EDELMAN JJ. The appellant, a citizen of Pakistan, applied under s 5 of the Refugees Convention Act 2012 (Nr) ("the Refugees Act") to be recognised as a refugee. The Secretary of the Department of Justice and Border Control ("the Secretary") refused the application. The appellant applied for merits review of that determination by the Refugee Status Review Tribunal ("the Tribunal"). Although the Tribunal found that the appellant had a well-founded fear of persecution in Karachi, where he resided immediately before leaving Pakistan, it affirmed the Secretary's determination on the basis that the appellant had another "home area"2 in Pakistan to which he could relocate and where he did not face a reasonable possibility of persecution. The Supreme Court of Nauru dismissed the appellant's appeal against the Tribunal's determination. In this appeal, which is brought as of right3, the central issue is whether the Supreme Court ought to have held that the Tribunal erred in law in its determination of the relocation issue. As these reasons will explain, the Tribunal did fall into error and the Supreme Court ought to have allowed the appeal. The appeal to this Court should be allowed. The Refugees Act The Refugees Act is "[a]n Act to give effect to the Refugees Convention; and for other purposes". Section 3 of the Refugees Act defines a refugee as "a person who is a refugee under the Refugees Convention as modified by the Refugees Protocol[4]". Section 4 provides: "(1) The Republic must not expel or return a person determined to be recognised as a refugee to the frontiers of territories where his or her life or freedom would be threatened on account of his or her race, religion, nationality, membership of a particular social group 2 The concept of a "home area" does not derive from the Refugees Convention but has been used from time to time in judicial reasoning. It will be necessary to return to this concept later in these reasons. s 44 of the Appeals Act 1972 (Nr); s 5 of, and Art 1 of the Schedule to, the Nauru (High Court Appeals) Act 1976 (Cth). See also BRF038 v Republic of Nauru (2017) 91 ALJR 1197 at 1203-1204 [35]-[41]; 349 ALR 67 at 73-74; [2017] HCA 4 Convention relating to the Status of Refugees done at Geneva on 28 July 1951 as modified by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. or political opinion except in accordance with the Refugees Convention as modified by the Refugees Protocol. (2) The Republic must not expel or return any person to the frontiers of territories in breach of its international obligations." Section 5 provides that a person may apply to the Secretary to be recognised as a refugee. Under s 6(1), the Secretary must determine an application to be recognised as a refugee. Section 6(3) requires the determination to be made as soon as practicable after the application is received. A person may apply to the Tribunal for merits review of a determination that the person is not recognised as a refugee5. The Tribunal is not bound by technicalities, legal forms or rules of evidence, and must act according to the principles of natural justice and the substantial merits of the case6. The Tribunal may exercise all the powers and discretions of the person who made the determination under review7. It may affirm or vary the determination, remit the matter to the Secretary for reconsideration, or set the determination aside and substitute a new determination8. Section 34(4) provides that the Tribunal must give the applicant for review and the Secretary a written statement that: sets out the decision of the Tribunal on the review; and sets out the reasons for the decision; and sets out the findings on any material questions of fact; and refers to the evidence or other material on which findings of fact were based." Section 43(1) of the Refugees Act provides that a person who, by a decision of the Tribunal, is not recognised as a refugee may appeal to the Supreme Court against that decision on a point of law. In deciding an appeal, the Supreme Court may make either (a) an order affirming the decision of the Tribunal, or (b) an order remitting the matter to the Tribunal for reconsideration9. s 31 of the Refugees Act. s 22 of the Refugees Act. s 34(1) of the Refugees Act. s 34(2) of the Refugees Act. s 44(1) of the Refugees Act. In the latter case, the Court may also make either an order declaring the rights of a party or of the parties or an order quashing or staying the decision of the Tribunal, or both10. The internal relocation principle Whether a person is a refugee for the purposes of the Refugees Act is determined by reference to the Refugees Convention as amended by the Refugees Protocol. Relevantly, Art 1A(2) of the Refugees Convention provides that a refugee is a person who: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country". (emphasis added) According to what is sometimes described as the internal relocation principle, a person is not a refugee if there is an area in the country of their nationality: (1) where the person would not have a well-founded fear of persecution; and (2) to which the person could, "in all the circumstances", reasonably be expected to relocate11. The second of these matters recognises that, although there may be a notionally "safe" area free of the risk of persecution, other factors may exist which make it unreasonable to expect a person to take refuge there. The area may not be "a viable or realistic alternative"12. The explanation given by the House of Lords in Januzi v Secretary of State for the Home Department13, and subsequently adopted by this Court14, is that the issue of relocation arises as part of the requirement in Art 1A(2) of the 10 s 44(2) of the Refugees Act. 11 Minister for Immigration and Border Protection v SZSCA (2014) 254 CLR 317 at 326-328 [23], [26]; see also at 332 [41]; [2014] HCA 45. 12 E v Secretary of State for the Home Department [2004] QB 531 at 543 [23] quoted in SZSCA (2014) 254 CLR 317 at 329 [30]. 13 [2006] 2 AC 426 at 440 [7]. 14 SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18 at 24-26 [15]-[22]; [2007] HCA 40; SZSCA (2014) 254 CLR 317 at 326-327 [23], 332 [40]. See also CRI026 v The Republic of Nauru [2018] HCA 19 at [42]. Refugees Convention that a person be outside the country of their nationality "owing to" a well-founded fear of persecution for one of the reasons identified in that article. If there is an area in the country of their nationality where the person would not have a well-founded fear of persecution (where protection of that country would be available), and the person could reasonably be expected to relocate there, they are not outside the country of their nationality owing to a well-founded fear of persecution. The "causative condition" in Art 1A(2) is not Whether a person could reasonably be expected to relocate to another area in the country of their nationality involves a comparison between the circumstances or conditions that prevail in the person's existing area of residence and those circumstances or conditions that prevail in the other identified area, with a view to assessing the impact of the relocation on the person16. The assessment is not concerned with comparing a person's quality of life in the other identified area with the basic norms of civil, political and socio-economic human rights recognised in international human rights instruments17. Importantly, the reasonableness of relocation "depend[s] upon the particular circumstances of the applicant for refugee status and the impact upon that person of relocation of the place of residence within the country of nationality"18. Put in different terms, the assessment of whether a person can relocate is not answered only by reference to the risk of harm. The assessment also requires consideration of the individual circumstances of the person, and what is practicable and reasonable for that person. As this Court said in SZATV v Minister for Immigration and Citizenship19, "[w]hat is 'reasonable', in the sense of 'practicable', must depend upon the particular circumstances of the applicant for refugee status and the impact upon that person of relocation of the place of residence within the country of nationality". The practical realities must be carefully considered20. And, as will be explained, the particular circumstances 15 SZSCA (2014) 254 CLR 317 at 326-327 [23]; see also at 332 [40]. 16 SZSCA (2014) 254 CLR 317 at 329 [30]. 17 Januzi [2006] 2 AC 426 at 441-448 [9]-[19], 457 [45]-[46], 459-460 [54]. 18 SZATV (2007) 233 CLR 18 at 27 [24]. 19 (2007) 233 CLR 18 at 27 [24]. 20 See, eg, Randhawa v Minister for Immigration, Local Government and Ethnic Affairs (1994) 52 FCR 437 at 442; SZATV (2007) 233 CLR 18 at 27-29 [26]-[32]; SZSCA (2014) 254 CLR 317 at 329 [31]-[32]; see generally at 327-330 [25]-[33]. may include the person's family situation. It will be necessary to return to those principles. Application for refugee status The appellant is a Sunni Muslim of Punjabi ethnicity. He was born in a district in the province of Punjab ("K District"). In 2004, he moved to Karachi, where he continued to reside apart from a period in 2006 and 2007 during which he returned to K District. Other than his wife and child, who remain in Karachi, the members of his immediate family still live in K District. The appellant departed Pakistan on 17 August 2013. He arrived in Australia at Christmas Island on 14 December 2013 and was transferred to Nauru on 19 December 2013. On 8 March 2014, the appellant applied to the Secretary to be recognised as a refugee, alleging that he had a well-founded fear of persecution on the basis of an imputed political opinion. The appellant stated that he feared he would be harmed by the Muttahida Qaumi Movement ("MQM"), its supporters and other violent and militant groups in Pakistan, because he had been imputed with the political opinion of opposition to the MQM. The appellant stated that State authorities would not protect him, and that he and his wife and child could not safely relocate to another place in Pakistan. On 14 March 2015, the Secretary refused the appellant's application. The Secretary rejected the appellant's claims that he had been threatened and assaulted by MQM members and supporters. The Secretary went on to conclude that the appellant did not have a well-founded fear of persecution because he did not face a reasonable possibility of harm in Karachi. In view of that conclusion, the Secretary did not consider whether the appellant faced a reasonable possibility of harm in K District or whether he could reasonably relocate. Proceedings in the Tribunal On 31 March 2015, the appellant applied to the Tribunal for merits review of the Secretary's determination under s 31 of the Refugees Act. The Tribunal affirmed the Secretary's determination on 13 August 2015. The Tribunal found that the appellant was threatened and harassed by members of the MQM. The Tribunal also accepted that the appellant had a well-founded fear of persecution in Karachi. However, the Tribunal considered the risk of harm to be localised, and was not satisfied that the appellant faced a reasonable possibility of persecution in the reasonably foreseeable future outside Karachi, including in K District. The Tribunal accepted that the appellant was in a mixed Sunni-Shia marriage but rejected his claim that this had led to significant problems with his family in K District. Rather, the Tribunal found that the appellant and his wife could have moved to K District but that his wife did not want to because she did not want to leave her own family in Karachi. Having made those findings, the Tribunal turned to the issue of relocation to K District. The Tribunal proceeded on the basis that "where a person has more than one home area, the decision maker is not required to assess whether or not it is reasonable to relocate from one area to the other, merely whether the person has a well-founded fear of persecution in each of the home areas". The Tribunal observed that the appellant had been born, raised and educated in K District and that his family continued to reside there. The Tribunal found that he had a "close, longstanding and ongoing connection" with K District and that K District was a "home area". It further concluded that "[w]hile it might not be a home area for his wife, who has never lived there, it [was] the [appellant's] claims the Tribunal [was] assessing". The significance of the Tribunal's finding that K District was a "home area" was later explained as being that "the ordinary principles of relocation do not apply in this situation". The Tribunal took the view that, once K District was identified as a "home area", it was unnecessary to ask whether there was a different area in Pakistan to which it would be reasonable to expect the appellant to relocate. The Tribunal went on to consider, in the alternative, what it described as "the application of the ordinary relocation principles". First, the Tribunal found that the appellant could practically, safely and legally relocate to an area within Pakistan where he would not face a well-founded fear of persecution. Second, the Tribunal rejected the contention that the appellant lacked a support network in K District, and stated that he had "evidently had no difficulty obtaining work" when he moved to Karachi. The Tribunal therefore concluded that relocation would be "reasonable" in that the appellant could "lead a relatively normal life without facing undue hardship in all the circumstances". Importantly, the Tribunal did not, in the section of its reasons dealing with the application of the relocation principle, expressly give consideration to the position of the appellant's wife or child. Appeal to the Supreme Court On appeal to the Supreme Court, Crulci J dismissed the appeal and made an order affirming the decision of the Tribunal21. The appellant contended, among other things, that the Tribunal was wrong to consider that principles relating to internal relocation, in particular principles concerning the reasonableness of relocation, did not apply if a person could relocate from one "home area" to another "home area". Crulci J rejected that contention, concluding that where a person "has ties or links to more than one area" in their country of nationality, it is sufficient for the Tribunal to assess whether that person has a well-founded fear of persecution in each of those areas. It was not necessary to consider "the relocation alternative principles". Accordingly, the Tribunal had made a "finding of fact" that K District was a "home area" and there was no legal error. Crulci J rejected a contention that, in its analysis of whether K District was the appellant's "home area", the Tribunal had erred by disregarding that he was married and had a child and, in particular, whether his wife would be safe in K District. Her Honour stated that the Tribunal did consider the appellant's family situation and that there was nothing to suggest that the appellant's wife and child were disregarded when considering whether K District was a "home area" for the appellant. Crulci J further held that the Tribunal made a determination that there was no risk of harm to the appellant and his wife if they were to go to K District, and that this determination was open to it. Issues on appeal The two principal issues on appeal were, first, whether the Tribunal erred in its approach to the principles relating to internal relocation and, second, whether the Tribunal failed to take into account a threat to family unity as a relevant consideration to the question of internal relocation. A third issue, which was framed on the assumption that designating K District as a "home area" had legal significance, does not arise. Principles relating to internal relocation In this Court, Nauru accepted – contrary to the express reasoning of the Tribunal – that characterising K District as a "home area" did not remove the 21 CRI028 v The Republic [2017] NRSC 32. need for the Tribunal to consider whether relocation to K District was reasonable in the manner described earlier. Nauru was correct not to endorse the approach expressly taken by the Tribunal. It was unhelpful and distracting for the Tribunal (and thus the Supreme Court) to focus on whether K District was a "home area" and to treat that label as eliminating the need to consider the reasonableness of the proposed relocation. The concept of a "home area" or a "home region" is not derived from the Refugees Convention. These terms have been used from time to time in judicial reasoning. There is nothing inherently objectionable or remarkable about their use in that context. But their sole function is as concise descriptors, which may be convenient in considering whether a person could reasonably be expected to relocate from one area in the country of their nationality to another. These terms do not displace the relevant and necessary inquiry. And there is no basis in the text or the purposes of the Refugees Convention to treat such descriptors as though they were terms in a statute to which meaning can and must be given. The decision of the Federal Court of Australia in SZQEN v Minister for Immigration and Citizenship22 should not be followed to the extent that it suggests otherwise. Indeed, the fact that it is not uncommon for a person to have lived in more than one place in a country (whether by reason of displacement or otherwise) or, for that matter, to have no identifiable "home area", reinforces that the concept of a "home area" may not only be a distraction but be inapposite. Where a person has established a well-founded fear of persecution in their country of nationality, a question may arise as to whether there is a place within that country to which the person could reasonably relocate (being an aspect of the ultimate question of whether the person was outside their country of nationality owing to a well-founded fear of persecution). In seeking to answer that question, it is neither helpful nor correct to interpolate or substitute a free-standing concept of a "home area", and to purport to make factual findings about whether a particular area is or is not such an area23. That approach may lead to legal error. The relevant question in the present matter was not whether K District was a "home area" but, rather, whether the appellant could reasonably be expected to relocate there. No doubt, the appellant's historical and familial ties to K District were among the circumstances which had to be considered when answering that 22 (2012) 202 FCR 514 at 523 [38]. 23 cf CRI028 [2017] NRSC 32 at [36]. question. The next question is whether, in the appellant's case, the Tribunal addressed and answered that question. Tribunal failed to consider family unity in internal relocation Nauru's primary submission in this Court was that the Tribunal's reasons, when "read as a whole", disclosed that the Tribunal properly considered whether it would be reasonable to expect the appellant to relocate to K District. This was despite Nauru having accepted that the Tribunal did not "in terms" address the reasonableness of the appellant moving to K District. Nauru's primary submission should be rejected. Neither in its principal thread of reasoning, nor in its alternative reasoning based on "ordinary relocation principles", did the Tribunal discharge its task of considering all of the circumstances relevant to whether the appellant could reasonably be expected to relocate. The appellant submitted in the Tribunal that he was not welcome in K District with his wife and child because he had married a Shia Muslim woman against the wishes of his family, and that he and his wife might be murdered in "honour killings" or otherwise harmed. The appellant also gave evidence that it would be "really a hard thing to do" to sell his house in Karachi and to establish himself and his wife and child in a new area. The Tribunal rejected the appellant's claims that his marriage to a Shia Muslim had led to any significant problems with the appellant's family in K District or that his immediate family or relatives would harm his wife. However, the Tribunal found that the appellant's wife, unlike the appellant himself, had never lived in K District; the family of the appellant's wife was in Karachi; and the appellant's wife did not want to move to K District because she did not wish to leave her family. The "particular circumstances"24 of the appellant included the fact that he had a wife and child who lived with, and, on his evidence, were dependent on, him. The question of the reasonableness of relocation to K District fell to be determined against that backdrop. As for the attitude of his wife, the appellant did not squarely assert in his evidence to the Tribunal that she had firmly resolved not to move with the appellant to K District. But it is apparent from the evidence, and the factual findings that the Tribunal actually made, that the appellant's wife did not wish to go to K District and that there were particular reasons – which could not be thought to be frivolous or trivial – for why she might be so unwilling. 24 SZATV (2007) 233 CLR 18 at 27 [24]. As is apparent, the Tribunal's determination contained two distinct and alternative threads of reasoning. In neither of those threads of reasoning did the Tribunal take into account the fact that the appellant had a wife and child at all, let alone its particular findings about the wife's wish not to relocate to K District. First, the Tribunal's principal thread of reasoning expressly focused on whether K District was a "home area" of the appellant. As noted earlier, that was a distraction and led to legal error. While the position of the appellant's wife (or child) may not have been relevant to whether K District was the appellant's "home area", that was not the question which the Tribunal had to determine. The question was whether K District was an area to which the appellant could, in all the circumstances, reasonably be expected to relocate. At the conclusion of its reasons for finding that K District was a "home area", the Tribunal stated that "[w]hile it might not be a home area for his wife, who has never lived there, it [was] the [appellant's] claims the Tribunal [was] assessing". It is not possible to read that statement as reflecting anything other than a conclusion that the wife's position was not relevant to the Tribunal's task. Contrary to the position adopted by the Tribunal, the wife's position was not only relevant to the Tribunal's task but an essential part of it. Second, in its alternative reasoning based on "ordinary relocation principles", the Tribunal purported to consider whether relocation within Pakistan was reasonable. In so doing, it focused entirely on whether the appellant had a "support network" elsewhere in Pakistan and on his prospects of employment, observing that he had twice relocated to Karachi for work (in 2004 and 2007). Other than those identified matters, there were no findings made in relation to, and there was no analysis of, the reasonableness of the stated and powerful reasons for his wife's reluctance to leave Karachi and move to K District. Those powerful reasons included that she was a Shia Muslim woman who had studied and grown up in Karachi, who did not want to leave her family and support networks in Karachi, as well as her fears of honour killings and other harm, including from her husband's family and extended family, on the grounds that she was a Shia Muslim woman and a Shia Muslim woman married to a Sunni Muslim of Punjabi ethnicity. The Tribunal failed to perform the task required of it in order to determine whether the appellant could relocate to another part of his country of nationality. The Tribunal did not deal at a factual level with specific objections raised by the appellant and, in particular, did not examine the material or make findings about whether the appellant as an individual with his wife and child could, as a matter of practical reality and so as to meet their basic needs as individuals and as a family, relocate to K District. No reference was made to the appellant's wife's attitude to relocation or to any other issues that might arise, in relation to relocation, from the fact that the appellant had a wife and child. It may be added that each of the appellant's previous relocations to Karachi predated the appellant's marriage to his wife, and his wife had never visited or lived in K District. On any reading of the Tribunal's determination, the Tribunal did not properly consider whether K District was an area to which the appellant could reasonably be expected to relocate, having regard to all the circumstances particular to the appellant. The Tribunal was instead distracted by an extraneous inquiry into whether K District was a "home area" of the appellant. Three final matters should be noted. First, in this Court, Nauru sought to meet the failure of the Tribunal to address the appellant's wife and child, in the context of the reasonableness of the appellant relocating to K District, by contending that the Tribunal "implicitly found" that the appellant's wife would move with him to K District. There is no basis for that "implicit" finding. And if such a finding had been made and relied upon in the context of the analysis of the relocation issue, it would have been a finding on a material question of fact which the Tribunal was obliged to include in its determination25. Second, as the preceding analysis demonstrates, even if that implicit finding were open (and it was not), that finding did not address the reasonableness of the stated and powerful reasons for the appellant's wife's reluctance to leave Karachi and move to K District. Third, Nauru did not contend that, had that finding been made, those identified omissions could have had no bearing on the outcome26. Whether that is in fact the case is a matter to be determined by the Tribunal. Conclusion For these reasons, the appellant should succeed on his first ground of appeal, by which he contended that the Tribunal erred in its approach to the principles relating to internal relocation; and his third ground of appeal, by which he contended that the Tribunal did not take into account a threat to family unity as a consideration relevant to the question of internal relocation. The second 25 See s 34(4)(c) of the Refugees Act. 26 Compare Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54 (cited in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 122 [104]; [2000] HCA 57) and SZBYR v Minister for Immigration and Citizenship (2007) 81 ALJR 1190 at 1202-1203 [55]-[59]; 235 ALR 609 at 624-625; [2007] HCA 26 with R (Osborn) v Parole Board [2014] AC 1115. ground of appeal, which was framed on the assumption that designating K District as a "home area" had legal significance, does not arise. The following orders should be made: Appeal allowed with costs. Set aside the order of the Supreme Court of Nauru made on 11 May 2017, and in its place order that: the appeal be allowed; the decision of the Refugee Status Review Tribunal made on 13 August 2015 be quashed; and the matter be remitted to the Refugee Status Review Tribunal for redetermination according to law.

HIGH COURT OF AUSTRALIA STATE OF NEW SOUTH WALES APPELLANT AND JAMES JOHN CORBETT & ANOR RESPONDENTS State of New South Wales v Corbett [2007] HCA 32 1 August 2007 ORDER Appeal allowed. Set aside orders 2 to 5 of the Court of Appeal of the Supreme Court of New South Wales made on 13 June 2006 and, in their place, order that the appeal to that Court be dismissed. The appellant to pay the respondents' costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation M G Sexton SC Solicitor-General for the State of New South Wales with M J Neil QC and P R Sternberg for the appellant (instructed by Crown Solicitor for New South Wales) J M Ireland QC with S G Moffet and J S Cooke for the respondents (instructed by Moloney Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS State of New South Wales v Corbett Police – Search warrants – Police conducted a search under apparent authority of a search warrant – Application for search warrant referred to offence under Firearms Act 1989 (NSW) when that Act had been repealed and replaced by Firearms Act 1996 (NSW) – An offence of unauthorised possession of a firearm existed under both Acts – Definition of "firearms offence" under the Search Warrants Act 1985 (NSW) continued to be identified by reference to the repealed Firearms Act 1989 (NSW) – Whether offence sufficiently stated in application – Whether search warrant valid – Savings and transitional provisions in Sched 3 to the Firearms Act 1996 (NSW). Police – Search warrants – Object of search and boundaries of search warrant unambiguous – Nature of offence critical – Whether transitional provisions require reference to repealed Act to be read as reference to corresponding provisions in the Firearms Act 1996 (NSW). Police – Search warrants – Whether applicant had reasonable grounds for belief in existence on premises of "a thing connected with a particular firearms offence". Statutory interpretation – Approach to interpretation of provisions regarding search warrants – Generally strict approach to interpretation of enabling provisions – Reasons for such strictness – Whether transitional provisions require reference to repealed Act to be read as reference to corresponding provisions in the Firearms Act 1996 (NSW). Words and phrases – "a thing connected with a particular firearms offence", "instrument", "corresponding provisions". Search Warrants Act 1985 (NSW), ss 4, 5(1)(b). Search Warrants Regulation 1994 (NSW), Form 1 in Sched 1. Firearms Act 1989 (NSW), s 5. Firearms Act 1996 (NSW), s 7(1), item 12 of Sched 3. GLEESON CJ. The facts and issues are set out in the reasons of Callinan and Crennan JJ. I agree that the appeal should be allowed and consequential orders made as proposed in those reasons. I agree generally with the reasons of Callinan and Crennan JJ. I also agree with Gummow J as to the issue of statutory construction raised by the terms of the Search Warrants Act 1985 (NSW). GUMMOW J. The appeal to this Court from the New South Wales Court of Appeal1 should be allowed. Orders 1-5 made by that Court and entered 4 July 2006 should be set aside and in place thereof the appeal to that Court should be dismissed. In accordance with the undertaking given by the State upon the grant of Special Leave, the State (the appellant), must bear the costs of the respondents of the appeal to this Court and the costs order (order 6) made in favour of the present respondents by the Court of Appeal should not be disturbed. The circumstances giving rise to the present litigation, an action in the District Court for trespass upon the property of the respondents at Goulburn, are explained in the reasons for judgment of Callinan and Crennan JJ. I agree generally with their Honours' reasons for allowing the appeal. However, I will deal specifically with the issue of statutory construction raised by the terms of the Search Warrants Act 1985 (NSW) ("the Search Warrants Act"). Paragraph (b) of s 5(1) of that statute provides for the making of applications for a search warrant where there are reasonable grounds for believing that there is in or on any premises "a thing connected with a particular firearms offence". The phrase "connected with" a particular offence is given content by s 4(1) of the Search Warrants Act. This makes it clear that the "thing", on the one hand, may have been used in the past for the purpose of committing the firearms offence or, on the other, may be intended to be used for the firearms offence. An appreciation of this time-scale is important for an understanding of the definition of "firearms offence" in s 5(2) of the Search Warrants Act. That phrase was defined in s 5(2) with reference initially to offences under the Firearms and Dangerous Weapons Act 1973 (NSW) and subsequently to offences under the Firearms Act 1989 ("the 1989 Act") and the Prohibited Weapons Act 1989 (NSW). At the time of the application for and the issue of the warrant with which this case is concerned, 3 June 1998, the 1989 Act had been replaced by the Firearms Act 1996 (NSW) ("the 1996 Act")2. However, the definition of "firearms offence" in s 5(2) of the Search Warrants Act was unchanged and still identified what by then was the repealed 1989 Act. Schedule 3 to the 1996 Act contained detailed savings and transitional provisions. Item 12 stated: "Except as provided by the regulations, a reference in any instrument (other than this Act or the regulations) to any provision of the Firearms 1 Corbett v State of New South Wales [2006] NSWCA 138. 2 Section 89 of the 1996 Act, which commenced 1 July 1997, repealed the 1989 Act. Act 1989, or the Firearms Regulation 1990, is to be read as a reference to the corresponding provision of this Act, or the regulations made under this Act, respectively." (emphasis added) Two points should be made here respecting Item 12. First, the term "instrument", as appears from the text of Item 12 itself, was sufficiently broad to include other New South Wales statutes, including the Search Warrants Act. Secondly, the phrase "corresponding provision" is apt to include provisions in the 1989 Act and 1996 Act which create offences the gist of which is the unauthorised possession of a firearm. The search warrant upon which this litigation turns was issued upon an application which was made under par (b) of s 5(1) of the Search Warrants Act and in purported compliance with the application form prescribed by regulations made under s 11(1) of that Act. The application form was prescribed Form 1 under the Search Warrants Regulation 1994 (NSW), and an "instrument" within the meaning of Item 12 in Sched 3 to the 1996 Act. Paragraph 2(a) of the prescribed form read: "I have reasonable grounds for believing that: (a) the things are connected with the following indictable offence/firearms offence/narcotics offence within the meaning of the Search Warrants Act 1985 (s 5(2))." A blank space was provided below. A footnote stated: "Delete whichever is inapplicable." It is to be expected that for some time after the repeal of the 1989 Act, the "reasonable grounds" basing some warrant applications would concern "a thing" used to commit a firearms offence while the 1989 Act was in force. The repeal of the 1989 Act would not remove a liability accrued under that statute to prosecution these circumstances, notwithstanding the supervening repeal of the 1989 Act, the reference in the prescribed form under the Search Warrants Act to s 5(2) of that statute, with its identification of the 1989 Act, would be appropriate on its face to the state of affairs, an earlier offence, with which the warrant application was concerned. in respect of such an offence3. Interpretation Act 1987 (NSW) s 30(1). Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 105-106; Byrne v Garrisson [1965] VR 523 at 525, 529. What of the situation, as in this case, of an apprehension after the repeal of the 1989 Act, of an intended use of a firearm to commit an offence? The statement in par 2(a) of the application form "within the meaning of the Search Warrants Act 1985 (s 5(2))" must be read with Item 12 in Sched 3 to the 1996 Act and thus to refer to the "corresponding provision" in the 1996 Act. There is no sensible doubt that s 7 was such a provision corresponding to s 5 of the 1989 Act. The gist of each might be expressed as "possession of firearm". These words were inserted in the blank space in par 2(a) of the form by Inspector Jago of Goulburn Local Area Command, the officer who made the search warrant application. Where then is the fatal defect alleged by the respondents? It is said to be the addition to the inserted words of the phrase "Firearms Act No. 25/1989 Sect 5(a)". But again, by dint of Item 12 in the transitional provisions to the 1996 Act, this is to be read as a reference to the corresponding firearm possession provision, namely s 7 of the 1996 Act. This operation of Item 12 upon the warrant application form at stake in the present case demonstrates the interaction between the Search Warrants Act on the one hand and the 1989 and 1996 Acts on the other. It gives effect to the ambulatory operation of the identification of the relevant "thing" in s 4 of the Search Warrants Act. The ambulatory operation allows for applications for warrants where there are reasonable grounds for the belief that in or on the premises there is a "thing" which is connected with a particular firearms offence for the purposes of which the "thing" is intended to be used, as well as a "thing" used in the past for the purpose of commission of an offence whilst the 1989 Act was in force. The appeal should be allowed and consequential orders made as indicated earlier in these reasons. Kirby KIRBY J. This appeal comes from a judgment of the Court of Appeal of the Supreme Court of New South Wales4. The facts, legislation and issues relevant to its determination are set out in the reasons of Callinan and Crennan JJ5. Search warrants and the rule of strictness A tension in the law: From its earliest days, this Court has insisted on a rule of strictness in expressing the law governing search warrants6. It has done so, despite a recognition that, as Brennan J observed, in Halliday v Nevill7: "There is … a tension between the common law privileges that secure the privacy of individuals in their own homes, gardens and yards and the efficient exercise of statutory powers in aid of law enforcement." In intermediate courts, opinions are sometimes expressed reflecting a perceived need to moderate the rule of strictness. This has followed the inconvenience that the application of the rule can sometimes occasion and a sympathy for those who seek and execute search warrants (generally police officers) who are accountable in law for defaults when the rule of strictness is rigorously applied. Instances of such opinions may be seen, for example, in the dissenting reasons in two important cases in the New South Wales Court of Appeal8. The dissents concern, and respond to, the tension to which Brennan J referred in Halliday. Notwithstanding such differences, intermediate courts in Australia have normally adhered to the rule of strictness. They have correctly interpreted that to be their duty, conforming to the unanimous reasons of seven Justices of this Court in George v Rockett9. Those reasons, in turn, constituted a strong 4 Corbett v State of New South Wales [2006] NSWCA 138. 5 Reasons of Callinan and Crennan JJ at [47]-[75]. 6 MacDonald v Beare (1904) 1 CLR 513 at 522 per Griffith CJ. (1984) 155 CLR 1 at 20. 8 Carroll v Mijovich (1991) 25 NSWLR 441 at 454 per Meagher JA (diss) and Cassaniti v Croucher (2000) 48 NSWLR 623 at 636 [52] per Heydon JA (diss). (1990) 170 CLR 104 at 110-111, 115. See reasons of Callinan and Crennan JJ at Kirby reaffirmation of a line of federal cases such as R v Tillett; Ex parte Newton10 and Parker v Churchill11, extracted and cited with approval in Rockett12. The rule of strictness in this area of the law can only be fully understood against the background of its history in common law countries13; the basic principles expressed in that history commonly reflected in the constitutions of most such countries14; and the development of instruments expressing relevant norms of the international law of human rights to which Australia is a party15. History of search warrant law: In the 18th century, departures from the rule of strictness became common in England and, even more so, its colonies. Such departures constituted one of the causes of the American War of Independence against Britain16. They helped to explain the language of the Fourth Amendment to the Constitution of the United States of America17. 10 (1969) 14 FLR 101 at 106 per Fox J. 11 (1985) 9 FCR 316 at 322. 12 (1990) 170 CLR 104 at 111-113. See also Crowley v Murphy (1981) 34 ALR 496 13 Described in MacDonald (1904) 1 CLR 513 at 522; Carroll v Mijovich (1991) 25 NSWLR 441 at 445-447. 14 See Constitution of the United States of America, Fourth Amendment; Canadian Charter of Rights and Freedoms 1982, s 8; Hunter v Southam Inc [1984] 2 SCR 15 See, for example, International Covenant on Civil and Political Rights, Art 17: "(1) No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation. (2) Everyone has the right to the protection of the law against such interference or attacks": [1980] ATS 23. See also Universal Declaration of Human Rights, Art 12. 16 See Declaration of Independence (1776). 17 The Fourth Amendment states: "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." It should be noted that the provision does not require a particular description or identification of the statutory provision relied on for the search or seizure. Kirby Concurrently, the departures eventually led in Britain itself to judicial and parliamentary reaffirmation of the rule of strictness18. The law of search warrants, so expressed in Britain, became part of the law inherited by the Australian colonies as they were established. Although Australia has not adopted a constitutional rule similar to the Fourth Amendment to the United States Constitution and its equivalents in other countries and has not expressly incorporated the relevant rules of international law in its domestic legislation, the rule of strictness is reflected both in legislative provisions governing search warrants and in judicial expositions of their requirements19. Reasons for strictness: What are the reasons that lie behind this rule of strictness? They include: (1) The protection of the ordinary quiet and tranquillity of the places in which people live and work and of their possessions as a precious feature of our type of society and the happiness of its people; (2) The avoidance of disruption and the occasional violence that can arise in the case of unwarranted or excessive searches and seizures; (3) The beneficial control of the agents of the State exerted because of their awareness that they will be held to conformity with strict rules whenever they conduct a search and will require statutory or common law that clearly supports their searches and seizures; (4) The incentive that strict rules afford for the maintenance of respect for the basic rights of individuals who become subject to, or affected by, the processes of compulsory search and seizure; and (5) The provision in advance to those persons of a warrant signifying, with a high degree of clarity, both the lawful ambit of the search and seizure that may take place and the assurance that an independent office-holder has been persuaded that a search and 18 Described in the reasons of Callinan and Crennan JJ at [87]-[88]. 19 See reasons of Callinan and Crennan JJ at [89]-[104]. See also New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 1985 at (Hon T W Sheahan); New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 20 March 1985 at 4666-4667 (Hon B J Unsworth); Rockett (1990) 170 CLR 104 at 110. Kirby seizure, within that ambit, would be lawful and has been justified on reasonable grounds. The Court of Appeal's decision In the present case, the Court of Appeal concluded that the application of the rule of strictness to the established facts required rejection of the lawfulness of the application for the search warrant and the resulting warrant pursuant to which the police search of the respondents' premises took place. In effect, the Court held that the strict rule applied because the police officer who applied for the search warrant relied on a specifically identified legal offence which did not then exist20. For the same reason, the Justice issuing the warrant could not, in law, have had "reasonable grounds" for acting as he did. Their grounds for so acting were, in both cases, not "reasonable" not because of any malice or evil intent on their respective parts. It was simply because, on the face of the application and therefore the resulting warrant, they each had respectively in contemplation an irrelevant, repealed and hence inapplicable legal foundation for acting as they each did. For the respondents, this limb of their argument was not based on a moral disapprobation, as such, of what the police officer and Justice had respectively done. Their submission simply required application to the uncontested facts of the rule of strictness expressed in the authority of this Court. The reference to the repealed statutory provision might have had no significant conscious effect on the decision of the two officials in question: the applicant police officer and the issuing Justice. Each of them might well have made the same decision if the correct statutory provision had been nominated. Indeed, each might well have done so if no specific statutory provision had been identified. The respondents' argument was thus a technical one. At base, it represented no more than the insistence of the application to the facts of this case of the rule of strictness in the law governing search warrants as long applicable in this country. The operation of the transitional provision In these reasons I would not wish to cast any doubt on the rule of strictness nor to water it down by any thought that it is subject to exceptions based on considerations such as convenience or overall fairness and justice. That is not the way in which I would resolve this appeal. 20 The reference to s 5(a) of the Firearms Act 1989 (NSW) rather than to s 7(1) of the Firearms Act 1996 (NSW). See reasons of Callinan and Crennan JJ at [70]. Kirby Obviously, because the rule of strictness is one of judicial approach, it must adjust to any applicable statutory provisions designed, in effect, to excuse or render inoperative, established, but immaterial, errors appearing on the face of a search warrant or ancillary documents. Similarly, it must adjust to cases where, by operation of law, the propounded error that, on a strict reading, might invalidate the application and resulting search warrant is revealed, on analysis, as no error at all. The appellant proffered each of these reasons to counter the respondents' appeal to the rule of strictness. In my opinion, it is the latter argument that carries the day for the appellant. It saves the subject application and ensuing search warrant from invalidation for the presence of a legal defect. My reasons follow those of Gummow J21. They rely on the transitional provision contained in item 12 of Sched 3 to the Firearms Act 1996 (NSW) ("the 1996 Act"). That item states: "Except as provided by the regulations, a reference in any instrument (other than this Act or the regulations) to any provision of the Firearms Act 1989, or the Firearms Regulation 1990, is to be read as a reference to the corresponding provision of this Act, or the regulations made under this Act, respectively." The reference in the application for the search warrant to the "Firearms Act No 25/1989 Sect 5(a)" was, by force of the transitional provision, to be read as a reference to the "corresponding provision" of the 1996 Act. Thus, by express statutory enactment, that item had the effect of replacing in the "instrument" (the application form and resulting search warrant) the reference to s 5(a) of the Firearms Act 1989 (NSW) ("the 1989 Act") with a reference to s 7 of the 1996 Act. In cases to which the transitional provision applied (such as this), it follows that there was no error, misdescription or material defect in the applicable search warrant or the resulting warrant issued pursuant to that application. By force of law, the supposedly incorrect reference to the 1989 Act was to be read as containing a correct reference to the "corresponding provision" by then in force, namely s 7 of the 1996 Act. The transitional provision and the respondents' arguments The respondents presented three arguments to defeat the foregoing conclusion. The first was that the reliance on the transitional provision had not been expressly raised in the appellant's notice of appeal. This objection has no substance. The point is sufficiently tendered by the general language of 21 Reasons of Gummow J at [6]-[13]. Kirby appellant's grounds 4 and 5. It involves an argument of law that was certainly advanced and dealt with by the Court of Appeal22. There is no procedural unfairness in this Court's now considering it23. Effectively the respondents acknowledged this by proceeding to argue the point both in their written and oral submissions. Secondly, the respondents contended that, whilst the application form for the search warrant24, the 1989 Act and other applicable regulations might be "instruments" within the transitional provision in the 1996 Act, an application for a search warrant was not an "instrument". It followed, so they argued, that the applicant police officer's reference to "Firearms Act No 25/1989 Sect 5(a)" in the application for the subject search warrant was not a reference in an "instrument" for the purpose of the transitional provision in the 1996 Act. This narrow construction of the transitional provision should be rejected. The ordinary meaning of an "instrument", when used in a legal context such as the present, is a "formal legal document in writing" or a "formal document of any kind ... that is drawn up and executed in technical form"25. As the Court of Appeal recognised26, depending on the circumstances, the word "instrument", appearing in an Act, might be given a wide scope or a narrow scope. Having regard to the present context, and the saving purpose of the transitional provision in question, its ordinary meaning should not be narrowly confined. As Gummow J points out27, the context, in which the 1996 Act and its accompanying regulations are expressly stated to be excluded from the definition of "any instrument", suggests that the word was to be broadly construed. Otherwise, the 1996 Act and regulations must be taken to have been within the 22 Corbett v State of New South Wales [2006] NSWCA 138 at [53]-[54] per Giles JA (McColl JA and Gzell J agreeing). 23 Coulton v Holcombe (1986) 162 CLR 1 at 7-9. 24 Form 1 as prescribed by a combination of s 11(1) of the Search Warrants Act 1985 (NSW) and s 4(a) of the Search Warrants Regulation (NSW). See reasons of Gummow J at [8]-[9]; reasons of Callinan and Crennan JJ at [54]-[55]. 25 Butterworths Australian Legal Dictionary, (1997) at 606. 26 [2006] NSWCA 138 at [53]. 27 Reasons of Gummow J at [6]-[7]. Kirby meaning of the word. To approach the meaning of "instrument" in this way conforms to many judicial elaborations of the word28. When this approach is adopted, an application for a search warrant is clearly to be regarded as an "instrument" that falls within the transitional provision, taking into account both the language and purpose of that provision. Thirdly, the respondents submitted that this conclusion would not help the appellant because the question would remain whether, in the "instrument" in contention, the applicant police officer had in contemplation an incorrect statutory provision and was thus "asserting a belief in relation to s 5(a) of the 1989 [Firearms] Act"29 which was unjustified in fact. This was the basis upon which the Court of Appeal rejected the appellant's appeal to the transitional provision. It might gain some support from the fifth of the reasons that I have suggested as explaining the persistence of the rule of strictness. If one of the purposes of such a rule, in relation to the search warrant issued on the basis of an application, is so that the person subject to it (or that person's representative) may know in advance the basis and limits of the permitted search, an appeal to a statutory fiction (substituting reference to other "corresponding" provisions for those expressly nominated) would normally be unknown and effectively unknowable to a recipient of the search warrant, confronted suddenly by the demand to submit to a search. The answer to this argument is found in the clear language of the transitional provision itself. In effect, that language is designed to address the fact that not uncommon slips can occur where one statute replaces another yet, effectively, the new statute retains the substance of many of the repealed provisions. That was the situation here with the enactment of the 1996 Act to replace the 1989 Act. In a transitional period, references to repealed provisions will often continue to be made although the circumstances will make it plain that the true intended reference is to the corresponding provisions of the new statute where applicable, not the old one. Thus, although the common law might be reluctant to import an imputed intention of such a kind, substituting one statutory provision for another expressly stated on an application form, Parliament can so provide, so long as it expresses its purpose clearly enough. 28 R v Hamilton Knight; Ex parte The Commonwealth Steamship Owners Association (1952) 86 CLR 283 at 319-320 per Fullagar J; Chittick v Ackland (1984) 1 FCR 254 at 263-264 per Lockhart and Morling JJ. 29 [2006] NSWCA 138 at [54]. Kirby In my opinion the transitional provision applicable to this case is sufficiently clear. With the authority of Parliament, the misreference in the "instrument" to provisions of the 1989 Act was "to be read as a reference to the corresponding provision" of the 1996 Act. In effect, Parliament had acknowledged that an applicant (police officer) might state in the instrument (and even have in his mind) an identified provision of the 1989 Act but everyone would understand that this was to be read as a reference to the 1996 Act. At least this would be so as long as the latter contained a provision that would truly answer to the requirement of being "corresponding". This s 7 of the 1996 Act plainly does in relation to s 5(a) of the 1989 Act. Accordingly, by force of the transitional provision there is an effective amendment of the "instrument", with a substitution for its reference to the superseded provision. So read, there was no error at all either in the application for the search warrant or in the warrant as issued. Conclusion and orders The consequence of this reasoning is that it is unnecessary for me to consider the other arguments advanced by the appellant as explained in the reasons of Callinan and Crennan JJ30. As I approach it, this is not a case in which there is any departure from (or qualification of) the rule of strictness which this Court has long adopted in expressing the law governing the requirements of precision and accuracy in applications for, and the issue and execution of, search warrants. Understood with the assistance of the transitional provision, there was no relevant inaccuracy or imprecision in the application form. There was no invalidating flaw based on the reference in that application to a section in the repeal provisions of the 1989 Act. Read with the aid of express statutory provisions, the nominated section of the 1989 Act is taken as a reference to the corresponding provision of the 1996 Act. Necessarily, in the context that is also taken to be a "corresponding provision" that was in the contemplation of the police applicant when he applied for the subject warrant. His evidence at the trial supports, and certainly does not contradict, this conclusion. It cannot be suggested that either of the respondents was in fact misled by the incorrect statutory citation. Mr Corbett was still in hospital when the search warrant was sought and executed. The reference to the provision of the 1989 Act would have had no more meaning for Mrs Corbett, as delimiting the ambit of the search, than would a concurrent reference to the transitional provision in the 1996 Act that had the effect of correcting the erroneous reference. The real 30 Reasons of Callinan and Crennan JJ at [83]-[85], [109]. Kirby indication of the applicable ambit of the search warrant was contained in the words of the application for the search warrant that remain unaltered, namely "Possession of Firearms". That phrase adequately, and accurately, identified the subject matter of the search that was then conducted. The new provision was thus "corresponding". So far as the issue raised in the Notice of Contention is concerned, I agree, for the reasons given by Callinan and Crennan JJ31, that the respondents' submissions on their Notice of Contention should be rejected on the basis that no error has been shown in the concurrent findings of fact below. As my conclusions on the other arguments canvassed in the appeal are immaterial to the orders that I favour, I will refrain from expressing them. The foregoing is sufficient to require that the appeal be allowed. 31 Reasons of Callinan and Crennan JJ at [106]-[108]. Callinan Crennan CALLINAN AND CRENNAN JJ. This is an appeal from a decision of the Court of Appeal of New South Wales32 remitting a matter to the District Court of New South Wales, following a finding that a search warrant obtained pursuant to the provisions of the Search Warrants Act 1985 (NSW)33 ("the Act") was invalid. On 4 June 1998, pursuant to that search warrant, officers of the New South Wales Police Service (for whom the appellant has accepted legal responsibility) entered and searched the respondents' property at Goulburn for firearms. The respondents later commenced proceedings against the appellant seeking damages for trespass, on the basis that the search warrant was invalid and did not authorise the entry of the police officers onto their property. This appeal turns on the language of s 5(1)(b) of the Act. That section requires an applicant for a search warrant to have reasonable grounds to believe that in or on nominated premises there will be "a thing connected with a particular firearms offence". The legislation The search warrant was issued pursuant to the power contained in Pt 2 of the Act, using the procedures set out in Pt 3. The application for the search warrant was made using Form 1 in the Search Warrants Regulation 1994 (NSW) ("the Regulations"). The respondents alleged two failures to comply with the provisions of the Act. First, it was contended that the application for the search warrant failed to state a particular offence to which the firearms the subject of the search were connected. That issue arose because the application contained a reference to a particular firearms offence by reference to a section in legislation which had been repealed and replaced by new firearms legislation. Secondly, it was contended that the officer who applied for the search warrant did not have a reasonable belief that the first respondent ("Mr Corbett") had any firearms in his possession at the relevant time. 32 Corbett v State of New South Wales [2006] NSWCA 138. McColl JA and Gzell J agreed with the reasons of Giles JA. 33 The Act applicable at the relevant time has since been repealed and replaced by the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW). Callinan Crennan The Act provided a complete statutory code in respect of search warrants in New South Wales34. Common law search warrants were abolished by s 24. It is convenient to set out the provisions of the Act, as they applied, which are material to these issues. Sections 4, 5 and 6 in Pt 2 of the Act relevantly provided: Definitions – things connected with offence etc For the purposes of this Part, a thing is connected with a particular offence if it is: a thing that was used, or is intended to be used, for the purpose of committing the offence. Application for warrant in respect of certain offences, stolen property etc (1) A member of the police force may apply to an authorised justice for a search warrant if the member of the police force has reasonable grounds for believing that there is or, within 72 hours, will be in or on any premises: a thing connected with a particular firearms offence, In subsection (1): firearms offence means an offence under the Firearms Act 1989, the Prohibited Weapons Act 1989 or regulations under either of those Acts, being an offence committed in respect of a firearm or a prohibited weapon within the meaning of those Acts. 34 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 1985 at 3859. See also s 10 of the Act. Callinan Crennan Issue of warrant An authorised justice to whom an application is made under section 5(1) may, if satisfied that there are reasonable grounds for doing so, issue a search warrant authorising any member of the police force: to enter the premises, and to search the premises for things of the kind referred to in section 5(1)." Section 5(2) defines "firearms offence" by reference to the Firearms Act 1989 (NSW) ("the 1989 Firearms Act") which at the relevant time had been repealed and replaced by the Firearms Act 1996 (NSW) ("the 1996 Firearms Act"). The Act was later updated to refer to the correct firearms legislation through the Statute Law (Miscellaneous Provisions) Act (No 2) 1998 (NSW)35. Before going further, the cognate sections can be noted. Section 5 of the 1989 Firearms Act provided: A person shall not: possess a firearm; or use a firearm, unless authorised to do so by a licence or a permit." Section 7(1) of the 1996 Firearms Act, in force at the relevant time stated: "(1) A person must not possess or use a firearm unless the person is authorised to do so by a licence or a permit."36 35 Sched 2.31, which made the relevant amendments, came into operation on 26 November 1998. 36 The definition of "firearm" differs only slightly between the two acts. "[F]irearm" was defined in s 3(1) of the 1989 Firearms Act as: a gun, or other weapon, that can propel anything wholly or partly by means of an explosive; or a blank fire firearm; or (Footnote continues on next page) Callinan Crennan Sections 11(1), 12A and 14 in Pt 3 of the Act relevantly provided: "11 Application for warrant in person (1) An application for a search warrant must be in writing in the form prescribed by the regulations and must be made by the applicant in person. Information in application for warrant (1) An authorised justice must not issue a search warrant unless the application for the warrant includes the following information: any other information required by the regulations. (2) An authorised justice when determining whether there are reasonable grounds to issue a search warrant is to consider (but is not limited to considering) the following matters: if the warrant is required to search for a thing in relation to an alleged offence – whether there is sufficient connection between the thing sought and the offence. an air gun, but does not include an antique pistol or anything declared by the regulations not to be a firearm." "[F]irearm" is defined in s 4 of the 1996 Firearms Act as "a gun, or other weapon, that is (or at any time was) capable of propelling a projectile by means of an explosive, and includes a blank fire firearm, or an air gun, but does not include anything declared by the regulations not to be a firearm." Callinan Crennan Form of warrant A search warrant shall be in or to the effect of the prescribed form." The prescribed form, Form 1, in Sched 1 to the Regulations, relevantly contained the statement: "(2) I have reasonable grounds for believing that: the things are connected with the following … firearms offence … within the meaning of the [Act] (s 5 (2))." A footnoted instruction to this part of the Form stated "Insert description of offence". The Act contained a saving provision in respect of defects in warrants as follows: "23 Defects in warrant A search warrant is not invalidated by any defect, other than a defect which affects the substance of the warrant in a material particular." The litigation The primary judge37, Charteris DCJ, determined that the defects alleged in respect of the search warrant and its issue did not render it invalid, and therefore the search warrant provided a defence to the respondents' action for trespass. In allowing the respondents' appeal, the Court of Appeal found that the search warrant was invalid because the application for the search warrant identified the offence as "Possession of Firearm, Firearms Act No 25/1989 Sect 5(a)". However, the Court of Appeal rejected the respondents' submission that the Acting Inspector of Police seeking the search warrant did not have reasonable grounds for a belief relating to the possession of firearms by Mr Corbett38. 37 Corbett v State of New South Wales, unreported, District Court of New South Wales, 22 October 2004. 38 [2006] NSWCA 138 at [86]-[87]. Callinan Crennan The appellant now appeals to this Court on the issue of the validity of the search warrant. The respondents have filed a notice of contention alleging error in the Court of Appeal's finding that the Acting Inspector seeking the search warrant had reasonable grounds for believing that there would be firearms located on the respondents' property. Background Mr Corbett, a police officer with the New South Wales Police Service since 1976, was based at the relevant time in rural New South Wales. In the 1980s, through the course of his work with the Police Service, Mr Corbett attended various traumatic incidents, including the bombing of a Hilton hotel, the Granville rail disaster and a serious plane crash near Goulburn, involving a number of fatalities. In about 1990 Mr Corbett was involved in a serious motor vehicle accident in which he suffered significant injuries, including head injuries. Throughout the 1990s, Mr Corbett experienced mental health problems, and attempted to commit suicide three times: once in 1992 and twice in 1998. In about 1992 Mr Corbett had held a shotgun to the head of his wife, the second respondent, and pulled the trigger. The primary judge noted that it was "[d]ue to the remarkably good fortune of the safety catch being engaged [that] the firearm did not discharge"39. A number of psychological and psychiatric reports were received in evidence at the trial, which identified a range of symptoms experienced at various times by Mr Corbett, including depression, fear, anger and anxiety, as well as possible diagnoses, including post-traumatic stress disorder or other mood disorders. Mr Corbett acknowledged that during the mid-1990s he had consumed alcohol to excess. The primary judge made a finding that Mr Corbett had experienced "a series of emotional and mental problems" and was "from time to time unstable", but that he was "no longer seriously ill". During the latter part of his career, Mr Corbett became involved with systems of police radio communication, and in particular he spent significant effort developing a rural radio network in the Goulburn area, which allowed police to have 24 hour radio contact. Previously, between certain hours late at night and early in the morning, police contact could only be made via telephones. A decision was taken in about 1997 to implement a new communications regime in which police radio systems would operate in conjunction with a mobile phone service provider. This development had the consequence that Mr Corbett 39 Corbett v State of New South Wales, unreported, District Court of New South Wales, 22 October 2004. Callinan Crennan would no longer have a position in the Goulburn area, and that the radio system he had established would no longer be used. The primary judge noted that Mr Corbett "became very concerned for police safety as a result of the proposed new communication system" and his Honour inferred that Mr Corbett "felt the system would fail police personnel and as a result the lives of police officers could be jeopardised". After his second suicide attempt in February 1998 Mr Corbett went on sick leave and has not resumed employment as a police officer since then. The facts The third time Mr Corbett attempted suicide, through an overdose of barbiturates in combination with alcohol, was on the night of 28 May 1998, while attending a communications conference in Wollongong. He had written a suicide note. While it is not necessary to set out its contents, the suicide note contained the words "Police will die". Of this, Giles JA in the Court of Appeal observed40: "Read in context and in their place in the note, these words expressed Mr Corbett's belief that the new communications regime would put police safety at risk; but at the time the suicide note was thought to carry a threat of harm to the police officers." After being discovered in his hotel room, Mr Corbett was eventually admitted to a psychiatric hospital in Port Kembla. The contents of the note were conveyed to certain police officers at Goulburn. It was known that Mr Corbett had a shooter licence or permit. On 29 May 1998 one of the local officers at Goulburn signed a suspension of that licence, to take effect until 31 August 199841. However, that suspension was not served on Mr Corbett immediately. The relevant form stated that the reason for the suspension was Mr Corbett's "attempted self-harm". On the afternoon of 3 June 1998, under instructions from Inspector Hines, who was then stationed at the Goulburn Police Station, Acting Inspector Jago applied to an authorised justice for a search warrant which would allow him and a number of other officers to search the respondents' property for unspecified firearms. 40 [2006] NSWCA 138 at [9]. 41 Under cl 17 of the Firearms (General) Regulation 1997 (NSW), a licence could be revoked if the Commissioner considered that it was not in the public interest for the person to whom it was issued to continue to hold the licence. Callinan Crennan The application for the search warrant, which had been generated as a pro forma form on a computer, had the following information (italicised here) entered into its various fields by Acting Inspector Jago: "I say on oath that: I have reasonable grounds for believing that there is, or within 72 hours there will be, on or in these premises, the following things: Unspecified firearms I have reasonable grounds for believing that: the things are connected with the following indictable offence/firearms offence/narcotics offence within the meaning of the [Act] (s 5(2)) Possession of Firearm Firearms Act No 25/1989 Sect 5(a), The grounds which I rely on are: Police are in possession of documents written by the offender, where threats are made against other persons, including serving police officers. He was in possession of a number of firearms during the recent 'amnesty', however a search of records failed to locate them as having been surrendered. Two recent attempts at self harm have been made by the offender, which included the ingestion of medication and then leaving the residence and wandering into bushland. The most recent attempt being last weekend, which caused him to be admitted to hospital at Port Kembla for treatment. He has made threats against Senior Officers within the Police Service and as a result concerns are held for the personal safety of the offender and other persons." The authorised justice placed an asterisk against the reference to the records of the firearms suggesting they had not "been surrendered". The handwritten additions read: "Pump action 12 gauge shotgun Has Current Firearms License. Action is being taken to suspend License. Callinan Crennan Person of Interest is a Police Officer." The actual search warrant could not be found, but the "form and content"42 were not in dispute. Whilst the entry in par 2(a) of the search warrant application "Firearms Act No 25/1989 Sect 5(a)" followed s 5(2) of the Act as it appeared to then stand, the entry was not, in fact, a reference to the legislation in force at the relevant time. As explained above, the 1989 Firearms Act had been repealed and replaced by the 1996 Firearms Act, although consequential amendments to s 5(2) of the Act were yet to be made. On 4 June 1998, while Mr Corbett was still in hospital, the suspension of his shooter licence was served on him by two local police officers. Once Inspector Hines had received confirmation of that service, he instructed Acting Inspector Jago to execute the search warrant. The search took approximately one hour and 15 minutes. No firearms were found. A report was then filed by Acting Inspector Jago with the authorised justice. The hearing before the primary judge There was evidence before the primary judge that Mr Corbett had at some point in time possessed a pump-action shotgun. Although records discovered later indicated that he had surrendered the shotgun during an amnesty in September 1997, the relevant records which were consulted just prior to the application for the search warrant were not conclusive on that point. There was also some suggestion of the existence of a second gun (a rifle), but Mr Corbett gave evidence before the primary judge that he had given this gun to his brother in the Northern Territory sometime before the 1997 amnesty. Evidence was also received relating to conversations which took place between Inspector Hines and Detective Smart, who was previously a member of the Police Force, about whether Mr Corbett was likely to have had firearms in his possession. Although certain aspects of the evidence of these conversations were unclear, the trial judge concluded that: "Mr Hines genuinely believed at that time that Mr Smart had raised the issue of firearms being potentially possessed by Mr Corbett at his property and … that Mr Hines conveyed that information to Acting Inspector Jago." 42 [2006] NSWCA 138 at [38]. Callinan Crennan The following exchanges took place between counsel and Acting [W]as it your belief that … at least upon service of the suspension notice there were reasonable grounds to suspect that the plaintiff was then in possession of firearms to which he was not lawfully entitled to have possession? Yes, that's correct. Did you personally turn your mind to which particular section of any Act it might be? Did you have a belief that there was a potential offence relating to unlawful possession of a firearm? Yes. Did you believe foundation for a warrant to issue? that the material created a proper Yes, I did. Did you believe it was a reasonable foundation? Yes." And further: "Charteris DCJ: What is the evidence, can you remind me, as to [who] wrote the reference to the Firearms Act in the document? [Counsel]: It came out of the system. It's part of the form; is that right? Yes. It's part of the macro that was used to create the document." Callinan Crennan This aspect of the document's creation was explored further in cross examination: "Q. … You had a selection of offences you could have highlighted? Yes. And you highlighted the Firearms Act offence? That's correct. And did you highlight or tick effectively the only firearms one? Was there a number of firearms ones? I believe there was only the one. Q. And this being a firearms matter then that's the reason you opted for that? Yes." Question The main question in this case was whether there was compliance with s 5(1)(b) of the Act when the application form for the search warrant set out a description of the offence which included an incorrect reference to a section of a statute which had been repealed and replaced. Subsidiary questions of compliance with statutory requirements all turned on that main question. The decision of the Court of Appeal Something more needs to be said about the decision of the Court of Appeal. Three issues were dealt with discretely. The first was whether the description of a particular offence in the application for the search warrant complied with the statutory requirements. The second issue was whether the applicant had reasonable grounds for believing there would be things connected with the offence on the property. The third issue was whether the actual search warrant, which was assumed to contain no reference to a particular offence43, complied with statutory requirements. 43 [2006] NSWCA 138 at [88]. Callinan Crennan With respect to the first issue, in concluding that the application failed to comply with statutory requirements, the Court of Appeal relied on differences between the 1989 Firearms Act and the 1996 Firearms Act. Each piece of legislation defined "firearm" and each contained a licensing regime. The latter legislation defined "firearm" more broadly and had what was described in the Court of Appeal as a "tighter" licensing regime44. In finding that Acting Inspector Jago's belief was a "belief in a non-existent offence"45, the Court of Appeal stated that any belief in the presence of unspecified firearms would necessarily require him to have considered the range of firearms and the firearms licensing regime covered by the applicable legislation46. By reference to Carroll v Mijovich47 and Cassaniti v Croucher48 the Court of Appeal found the warrant defective in a manner incapable of being cured49. In relation to the second issue, the Court of Appeal determined that Acting Inspector Jago had a reasonable belief that once the licence had been suspended, any firearms on the property were connected with the offence of possession of a firearm50. In its finding, on the third issue, that the actual search warrant (which was not available at trial) complied with the Act, the Court of Appeal inferred that the search warrant contained no reference to a particular offence51. The Court of Appeal then relied on the relevant form for search warrants under the Regulations, which did not require a reference to a particular offence, as an indication by the legislature that a description of the offence did not have to appear on the face of the warrant.52 44 [2006] NSWCA 138 at [63]. 45 [2006] NSWCA 138 at [60]. 46 [2006] NSWCA 138 at [65]. 47 (1991) 25 NSWLR 441. 48 (2000) 48 NSWLR 623. 49 [2006] NSWCA 138 at [60]. 50 [2006] NSWCA 138 at [86]. 51 [2006] NSWCA 138 at [88]. 52 [2006] NSWCA 138 at [111]. Callinan Crennan The first finding by the Court of Appeal regarding the application form, and what was required by s 5(1)(b), is the subject of this appeal. The second finding, relating to the "reasonable belief" of Acting Inspector Jago, is the subject of the notice of contention. The third issue, also raised in the notice of contention, was not pressed. Submissions The submissions of each party can be stated briefly. Each accepted the established principle that unless the entry and search of the respondents' property was authorised by the search warrant, a trespass would have been committed53. The appellant's primary submission in this Court was that there was no lack of compliance with the Act and that the incorrect reference to the 1989 Firearms Act in the application did not result in a material defect in the search warrant or vitiate the authorised justice's decision to issue the search warrant. It was contended that par 2(a) of the application form did not require that a particular legislative provision concerning the offence be stated. According to the appellant, it would have been sufficient for the purposes of the application form if Acting Inspector Jago had simply stated "possession of firearm". It was submitted that the particular reference to the 1989 Firearms Act, provided automatically by the computer system, was surplusage. In this Court, as well as before the Court of Appeal, the appellant argued that, in any event, the offence stated in the application for the search warrant (the unauthorised possession of a firearm under the 1989 Firearms Act) was "materially identical"54 to the cognate offence applicable under the 1996 Firearms Act. It was submitted by the appellant that the elements of the offence which must have been contemplated by Acting Inspector Jago when applying for the search warrant were the same for the old offence under the 1989 Firearms Act as for the then current offence: that is, a person possessing or using a firearm without authorisation to do so through a licence or permit. Once Mr Corbett's licence was suspended, it would have been illegal for him to possess a firearm. Transitional provisions in the 1996 Firearms Act were also relied upon55. 53 Coco v The Queen (1994) 179 CLR 427 at 436 per Mason CJ, Brennan, Gaudron 54 [2006] NSWCA 138 at [48]. Item 12 of Sched 3 to the 1996 Firearms Act provides: "Except as provided by the regulations, a reference in any instrument (other than this Act or the regulations) to any provision of the Firearms Act 1989, or the Firearms Regulation 1990, is to be read as a reference to the (Footnote continues on next page) Callinan Crennan Alternatively, it was contended that as the description of the offence in the application form, by reference to repealed legislation, did not affect the substance of the search warrant in a material particular, the savings provision in s 23 of the Act would apply to the search warrant. In a similar vein, it was contended that the substantial compliance with Form 1 under the Regulations fell within s 80(1) of the Interpretation Act 1987 (NSW)56. In essence, the respondents submitted that the erroneous reference in the application for the search warrant to s 5(a) of the 1989 Firearms Act (instead of s 7(1) of the 1996 Firearms Act) constituted a failure to comply with ss 5(1)(b) and 11(1) of the Act because Acting Inspector Jago could not have a reasonable belief in an identified offence which did not exist. It was said that this amounted to a failure to describe an offence, which meant that the application contained a defect of substance. The respondents then contended that the authorised justice was required by ss 6 and 12A(2)(b) of the Act to consider and be satisfied that there were reasonable grounds for believing that the things to be searched for were connected with the particular offence referred to in the application before issuing a search warrant. It was submitted that the justice could not have been so satisfied when faced with Acting Inspector Jago's application containing the erroneous reference to a section in legislation which had been repealed and replaced. In that context, the respondents, like the appellant, contended that by force of the transitional provision in the 1996 Firearms Act, the references to the 1989 Firearms Act in s 5(2) of the Act and in par 2(a) of Form 1 must be read as references to the corresponding provisions of the 1996 Firearms Act. That contention should be accepted57, for the reasons explained by Gummow J58. corresponding provision of this Act, or the regulations made under this Act, respectively." 56 Section 80(1) of the Interpretation Act 1987 (NSW) provides: "If a form is prescribed by, or approved under, an Act or statutory rule, strict compliance with the form is not necessary but substantial compliance is sufficient." 57 Section 3(1) of the Interpretation Act 1987 (NSW) provided at the relevant time that: "instrument means an instrument (including a statutory rule) made under an Act, and includes an instrument made under any such instrument". 58 See reasons of Gummow J at [6]-[13]. Callinan Crennan In support of their main argument, the respondents relied on the established principle that strict compliance with statutory conditions governing the issue of search warrants is required as explained in the judgment of this Court in George v Rockett59 ("Rockett"), which concerned s 679 of the Criminal Code "[I]n construing and applying such statutes, it needs to be kept in mind that they authorize the invasion of interests which the common law has always valued highly and which, through the writ of trespass, it went to great lengths to protect. Against that background, the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature's concern to give a measure of protection to these interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation." It is necessary to construe the requirement or condition in s 5(1)(b) of the Act in order to test whether the condition has been complied with strictly. In the reasons which follow, the requirement in s 5(1)(b) will be construed and applied by reference to its purpose of ensuring the proper identification of the object of the search. The need to have "reasonable grounds for believing" in the existence 59 (1990) 170 CLR 104 at 110-111 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. See also Halliday v Nevill (1984) 155 CLR 1 at 20 per Brennan J; cf Coco v The Queen (1994) 179 CLR 427 at 436 per Mason CJ, Brennan, Gaudron and McHugh JJ. 60 Section 679 provided: "If it appears to a justice, on complaint made on oath, that there are reasonable grounds for suspecting that there is in any house, vessel, vehicle, aircraft or place – Anything with respect to which any offence which is such that the offender may be arrested with or without warrant has been, or is suspected, on reasonable grounds, to have been, committed; or Anything as to which there are reasonable grounds for believing that it is intended to be used for the purpose of committing any such offence; he may issue his warrant". Callinan Crennan of the object of the search, described by reference to a particular offence, is directed to making sure that the search warrant is properly confined. Section 5(1)(b) of the Act The balancing of a person's private interest in the inviolability of his house, his "castle and fortress"61, against the public interest in the "gathering of evidence against, and the apprehension and conviction of, those who have broken the criminal law"62, lies behind the statutory requirement in s 5(1)(b) that an applicant for a search warrant needs to have reasonable grounds for a belief in respect of "a thing connected with a particular firearms offence". Accounts of the development of principles surrounding the issue and execution of search warrants can be found in MacDonald v Beare63, Crowley v Murphy64 and Carroll v Mijovich65. It is unnecessary to repeat all of what has been said before, except to assist in the resolution of the question which the facts here present. The grant of search warrants in respect of stolen goods constituted the first exception to the principle that a person's home was inviolable. Common law courts insisted that an applicant complaining about stolen goods properly identify the nature of the offence as part of identifying the object of the search: "there must be an oath that the party has had his goods stolen, and his strong reason to believe they are concealed in such a place"66. In Bostock v Saunders67 when dealing with a search warrant obtained by Commissioners of Excise, De Grey CJ described in more detail the precautions which the common law then imposed upon the grant and execution of a common law search warrant68: 61 Semayne's Case (1604) 5 Co Rep 91a at 91b [77 ER 194 at 195]. 62 Rockett (1990) 170 CLR 104 at 110 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. 63 (1904) 1 CLR 513 at 522 per Griffith CJ. 64 (1981) 34 ALR 496 at 513-514 per Lockhart J. 65 (1991) 25 NSWLR 441 at 445-446 per Kirby P. 66 Entick v Carrington (1765) 2 Wils KB 275 at 291-292 [95 ER 807 at 818]. 67 (1773) 2 Black W 912 [96 ER 539]. 68 (1773) 2 Black W 912 at 914 [96 ER 539 at 540]. Callinan Crennan "Every man's house is his castle. Lord Hale … lays down these guards upon executing search-warrants … even at common law: – 1. There must be an oath; 2. Grounds declared; 3. The warrant must be executed in the day-time; 4. By a known officer; 5. In the presence of the party informing. Yet though all these precautions are observed, the informer is liable to an action if nothing [is] found." De Grey CJ was referring to circumstances existing before the institution of a professional police force in England in 182969. A victim of crime could inform a justice and apply for a common law search warrant. These were subsequently executed by a local constable, in the presence of the victim or informer. General warrants, which did not particularise a person whose premises were to be searched or the objects of the search, were used for the purposes of controlling the writing and printing of seditious or radical political works, first by the Star Chamber70, then by the Secretary of State. In Australian Broadcasting Corporation v O'Neill71 there was discussion of the censorship of publications by the Crown first asserted by Ordinance in 1534 and enforced by a licensing system which was dismantled by 169572. In a trio of cases in the mid-18th century, after licensing of publications was no longer required, the common law courts struck down such general warrants73. In Wilkes v Wood74, Lord Pratt CJ (later Lord Camden) instructed a jury that a warrant which did not identify a particular object of the search was "totally subversive of the liberty of the subject"75. In Money v Leach76 69 Metropolitan Police Act 1829 (UK) 10 Geo IV c 44. 70 Which was abolished in 1640: Tronc, Crawford and Smith, Search and Seizure in Australia and New Zealand (1996) at 55. 71 (2006) 80 ALJR 1672 at 1685 [31] per Gleeson CJ and Crennan J; 229 ALR 457 at 72 See Entick v Carrington (1765) 2 Wils KB 275 at 292 per Lord Pratt CJ [95 ER 807 at 818] referring to Statute 13 & 14 Car 2 c 33 (which his Lordship called the "Licensing Act"). 73 Wilkes v Wood (1763) Lofft 1 [98 ER 489]; Entick v Carrington (1765) 2 Wils KB 275 [95 ER 807]; Money v Leach (1765) 1 Black W 555 [96 ER 320]. 74 (1763) Lofft 1 [98 ER 489]. 75 (1763) Lofft 1 at 18 [98 ER 489 at 498]. Callinan Crennan Lord Mansfield CJ found that a general warrant was invalid because no person was "named or particularly described"77 to identify the premises and object of the search. In Entick v Carrington78 ("Entick") the principle that an applicant for a warrant had to specify the object of the search was confirmed79. Those three cases led to the English Parliament's famous declaration by resolution in 1766 that general warrants were unlawful80. The need to specify the object of a search by reference to a particular offence is now a common statutory requirement, reflected in s 5(1)(b) of the Act. In the Second Reading Speech, the Attorney-General referred to Entick and acknowledged the continuing application of the common law principles described above: "freedom from arbitrary search was hard fought for in our constitutional history"81. Search warrants in aid of the criminal law may be issued in all jurisdictions in Australia82. All such legislation seeks to balance long established individual rights against the public interest in combating crime. A search warrant under the Act is a statutory authorisation to enter, search for and seize, a particular "thing". That purpose is easily distinguishable from the purpose of a charge, indictment, conviction, judgment or order. The requirement for strict particularity in the description of an offence in an indictment or charge is explained by Dixon J in Johnson v Miller83: 76 (1765) 1 Black W 555 [96 ER 320]. 77 (1765) 1 Black W 555 at 561 [96 ER 320 at 323]. 78 (1765) 2 Wils KB 275 [95 ER 807]. 79 (1765) 2 Wils KB 275 at 292 [95 ER 807 at 818]. 80 For a more detailed account see Tronc, Crawford and Smith, Search and Seizure in Australia and New Zealand (1996), particularly Ch 3. 81 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 1985 at 3859. 82 See, for example, Crimes Act 1914 (Cth); Law Enforcement (Powers and Responsibilities) Act 2002 (NSW); Police Powers and Responsibilities Act 2000 (Q); Police Offences Act 1935 (Tas); Search Warrants Act 1997 (Tas); Crimes Act 1958 (Vic); Police Act 1892 (WA); Misuse of Drugs Act 1981 (WA); Crimes Act 1900 (ACT); Police Administration Act (NT). 83 (1937) 59 CLR 467 at 489. Callinan Crennan "[A] defendant is entitled to be apprised not only of the legal nature of the offence with which he is charged but also of the particular act, matter or thing alleged as the foundation of the charge." The requirement for strict particularity in addition to a statement of the nature of the offence is imposed so as to define the issues with which the defendant must contend at trial; it also has the procedural consequence of avoiding duplicity in a charge or conviction thereon84. Similar considerations apply in respect of indictments which could not be amended at common law85 although surplusage which did not mislead an accused did not necessarily invalidate an indictment or lead to duplicity86. In Beneficial Finance Corporation v Commissioner of Australian Federal Police87 ("Beneficial Finance"), Burchett J said of the degree of particularity required of a reference to an offence in a search warrant88: "The authorities make it clear that the statement of the offence in a search warrant need not be made with the precision of an indictment. That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue. The purpose of the statement of the offence in the warrant is not to define the issues for trial; but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime. The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrant is not fulfilled, and it purports to be a general warrant of the kind the law decisively rejected in the 18th century." 84 Johnson v Miller (1937) 59 CLR 467 at 489-491 per Dixon J. 85 Maher v The Queen (1987) 163 CLR 221 at 230 per Mason CJ, Wilson, Brennan, 86 Kingswell v The Queen (1985) 159 CLR 264 at 287 per Brennan J. See also Smith & Kirton (1990) 47 A Crim R 43; R v McKinney & Judge, unreported, New South Wales Court of Criminal Appeal, 6 September 1993; R v Kaldor (2004) 150 A Crim R 271 at 293 [84] per Howie J. 87 (1991) 31 FCR 523. 88 (1991) 31 FCR 523 at 533. Callinan Crennan A similar approach to the construction of the requirements in s 5(1)(b) should be followed here. In R v Tillett; Ex parte Newton89, Fox J construed s 10(a) of the Crimes Act 1914 (Cth) as it then applied. It authorised search for, and seizure of, "anything" related to "any offence"90. In concluding that this meant that a warrant should refer to a particular offence and authorise seizure by reference to that particular offence, Fox J said91: "[F]orms of search warrant, whether or not prescribed by statute, but subject always to a contrary statutory intention, have always, since the famous debates and decisions of the eighteenth century in relation to general warrants … disclosed the nature of the particular offence relied upon". (references omitted) That approach has been relied upon and followed in numerous subsequent decisions of Full Courts of the Federal Court of Australia92. One such decision, Parker v Churchill93, concerned warrants containing a description of an offence which included an incorrect reference to a section in a statute. It was contended at first instance that the warrants in question did not disclose an offence known to the law94. On appeal to the Full Court of the 89 (1969) 14 FLR 101. 90 Section 10 provided: "If a Justice of the Peace is satisfied by information on oath that there is reasonable ground for suspecting that there is in any house, vessel, or place – anything with respect to which any offence against any law of the Commonwealth or of a Territory has been, or is suspected on reasonable grounds to have been committed; ... he may grant a search warrant ... to seize any such thing". 91 (1969) 14 FLR 101 at 113-114. Fox J referred to Holdsworth, A History of English Law, (1938), vol 10 at 659, 660, 667-672 and Burn, Justice of the Peace and Parish Officer, 27th ed (1836), vol 3 at 799. 92 Crowley v Murphy (1981) 34 ALR 496; Parker v Churchill (1986) 9 FCR 334; Beneficial Finance (1991) 31 FCR 523; Dunesky v Elder (1994) 54 FCR 540. 93 (1986) 9 FCR 334. 94 (1985) 9 FCR 316 at 319. Callinan Crennan Federal Court, Jackson J (with whom Bowen CJ and Lockhart J agreed on this point) said that unless a "reference to an incorrect section [of legislation] has the result that the warrant does not specify any offence, or makes the warrant ambiguous so that it is not possible to tell what offence is referred to,"95 such a reference does not invalidate an otherwise intelligible warrant. Subsequently, in Beneficial Finance96 Burchett J (with whom Sheppard J agreed and Pincus J substantially agreed) said of the question of the sufficiency of the statement of an offence in a search warrant97: "The question should not be answered by the bare application of a verbal formula, but in accordance with the principle that the warrant should disclose the nature of the offence so as to indicate the area of search." Obviously each statutory requirement or condition needs to be construed on its own terms and by reference to the statute in which it is to be found. However, common requirements for "reasonable grounds for believing" (or suspecting) imposed on an applicant (as here under s 5(1)(b)), or upon an issuing justice (as in Rockett98 or Beneficial Finance99) have a common derivation. The concern of the common law courts to avoid general warrants and to strictly confine any exception to the principle that a person's home was inviolable is the original source of common, although differently expressed, statutory requirements. These requirements have as their purpose the proper identification of the object of a search by reference to a particular offence. This in turn limits the scope of the search authorised by the search warrant. As stated in the judgment of this Court in Rockett100: "[T]he description of the object of the search is a reference point for delimiting the scope of the warrant. ... [T]he requirement of 'reasonable grounds for believing' ... performs the important function of preventing the authority to search and seize which a warrant confers from being worded in unjustifiably wide terms." 95 (1986) 9 FCR 334 at 340. 96 (1991) 31 FCR 523. 97 (1991) 31 FCR 523 at 543. 98 (1990) 170 CLR 104, dealing with s 679 of the Criminal Code (Q). 99 (1991) 31 FCR 523, dealing with s 10 of the Crimes Act 1914 (Cth). 100 (1990) 170 CLR 104 at 118. Callinan Crennan Section 5(1)(b) should be construed by reference to the principle that the applicant is required to state reasonable grounds for believing in a particular offence so as to ensure that the issuing justice knows the specific object of the search warrant and accordingly limits its scope. Strict compliance, in the sense described in Rockett101, is achieved when that purpose is fulfilled. To invalidate the warrant here because of the incorrect reference in the application would not serve that purpose. Here, the application stated an intelligible offence, namely "possession of firearm", an offence which had been well known in New South Wales for decades. Prior to the Act, successive firearms legislation contained provisions for obtaining search warrants in respect of firearms102. The reasonable belief, which the applicant was required by the statute to have, and state, was a reasonable belief that there was "a thing" (here, "unspecified firearms") connected with "a particular firearms offence" (here, "possession of firearm"). It was the nature of the offence which was critical, not the reference to the section of repealed legislation which had been replaced with cognate legislation. The nature of the offence had to be stated sufficiently to enable the issuing justice to understand the object of the search and to appreciate the boundaries of the authorisation to enter, search and seize. Here there could be no mistake about the object of the search or about the boundaries of the search warrant. Given the construction of s 5(1)(b) stated above, the Court of Appeal erred in its approach. The reference to the repealed Act in the application form was mere surplusage, which did not detract from the statement of the nature of the offence or render the description of the object of the search unintelligible or ambiguous. Accordingly, the applicant complied with the statutory requirements and the warrant is not invalidated by the description of the offence in the application form. The respondents' submissions concerning the issuing justice's obligations under ss 6 and 12A(2)(b) equally fail because they depended on the respondents' arguments in relation to s 5(1)(b) which have been rejected. Accordingly the appeal should be upheld. 101 (1990) 170 CLR 104 at 111. 102 See, for example: Gun License Act 1920 (NSW), s 14; Pistol License Act 1927 (NSW), s 14; Firearms Act 1936 (NSW), s 2, which inserted Pt IIA containing s 41I into the Police Offences Act 1901 (NSW); and Firearms and Dangerous Weapons Act 1973 (NSW), s 76. Callinan Crennan It is unnecessary to consider the appellant's alternative arguments directed to validating the search warrant, if it were found to be defective. Reasonable grounds As mentioned already, the respondents supported their Notice of Contention with the submission that Acting Inspector Jago's statement in the application was not reasonable, because the identified offence did not technically exist. In respect of whether Acting Inspector Jago had reasonable grounds for believing that there would be a firearm connected with the offence of unauthorised possession of a firearm, the primary judge made the following finding concerning Inspector Hines: "Taking into account his own knowledge of the two suicide attempts, the most recent suicide note, his conversations with Detective Smart and information he had received that Mr Corbett was mentally unwell, Inspector Hines formed the view that the situation raised the potential of a 'suicidal homicide' by Mr Corbett … [Inspector Hines] decided it was necessary to apply for a search warrant so as to ensure there were no firearms upon the property of Mr Corbett knowing that he was, in due course, to be discharged from hospital." The primary judge also observed that, in evidence, Mr Corbett had conceded that: "the police action to suspend his shooter's licence and conduct a search of his residence for weapons was 'possibly' motivated by a desire on the part of police officers to protect him as well as his family and the public." His Honour concluded: "There was sufficient reason for police to be alarmed at the time by the terms of the suicide note. Although there is nothing clearer than the window of hindsight, at the time of reading the suicide note it was clearly open to the police to conclude that the suicide note contained veiled threats." The Court of Appeal acknowledged that the relevant police inspectors "were concerned that Mr Corbett had a firearm and, in his fraught mental health, Callinan Crennan might cause harm, including to himself"103. The Court of Appeal further noted that "Acting Inspector Jago gave evidence that he believed that the suspension of the licence 'created what [he] believed to be an offence'" – that is unauthorised possession of a firearm104. Accordingly, the Court of Appeal rejected the respondents' contention that there were no reasonable grounds for belief that there would be firearms connected with an offence, located on the property. Given the conclusion stated earlier that s 5(1)(b) required Acting Inspector Jago to have a reasonable belief in an offence of a particular nature and his evidence relevant to that requirement, the Court of Appeal's conclusion should be upheld. Conclusions and orders For the reasons set out above, the statutory requirements were complied with and the search warrant was valid. In executing the search warrant, no trespass to the respondents' property was committed. The appeal to this Court should be allowed, and the notice of contention dismissed. Orders 2 – 5 of the Court of Appeal, dated 13 June 2006, should be set aside and in place thereof the appeal to that Court should be dismissed. In accordance with the undertaking given by the appellant upon the grant of special leave to appeal, the costs order made by the Court of Appeal should not be disturbed, and the appellant should pay the costs of the respondents of the appeal to this Court. 103 [2006] NSWCA 138 at [71]. 104 [2006] NSWCA 138 at [83].

HIGH COURT OF AUSTRALIA AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS Uelese v Minister for Immigration and Border Protection [2015] HCA 15 6 May 2015 ORDER Appeal allowed. Set aside paragraphs 2 and 3 of the order of the Full Court of the Federal Court of Australia made on 8 August 2013 and, in their place, order that: the appeal is allowed; the order of Buchanan J made on 18 April 2013 is set aside and, in its place, it is ordered that: a writ of certiorari issue directed to the second respondent, its 14 November 2012; decision made quashing a writ of prohibition issue directed to the first respondent, prohibiting him from giving effect to the respondent made on the decision of 14 November 2012; second (iii) a writ of mandamus issue directed to the second respondent, requiring it to determine the applicant's application for review according to law; and the first respondent pay the applicant's costs; and the first respondent pay the appellant's costs of the appeal. The first respondent is to pay the appellant's costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation N J Owens with D P Hume for the appellant (instructed by Marque Lawyers) G T Johnson SC with P M Knowles for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Uelese v Minister for Immigration and Border Protection Migration and citizenship – Visa cancellation – Character test – Administrative Appeals Tribunal – Migration Act 1958 (Cth), s 500(6H) precludes Tribunal from having regard to information presented orally in support of a person's case unless provided in written statement to Minister two days before Tribunal holds a hearing – Information arose regarding children during cross-examination of witness called on behalf of appellant – Tribunal required to consider best interests of minor children in Australia – Whether Tribunal erred in its application of s 500(6H) by not considering that information – Relevance of whether information could reasonably have been anticipated by appellant. Migration and citizenship – Visa cancellation – Character test – Administrative Appeals Tribunal – Whether Migration Act 1958 (Cth), s 500(6H) precludes Tribunal from adjourning hearing so that notice requirements may be met – Whether day on which Tribunal "holds a hearing" includes day on which hearing resumes. Words and phrases – "holds a hearing", "information presented orally in support of the person's case". Migration Act 1958 (Cth), ss 499, 500(6H), 500(6L), 501. Administrative Appeals Tribunal Act 1975 (Cth), ss 33, 40(1)(c). FRENCH CJ, KIEFEL, BELL AND KEANE JJ. A delegate of the Minister for Immigration and Border Protection ("the Minister") cancelled the appellant's visa on character grounds under s 501(2) of the Migration Act 1958 (Cth) ("the Act"). The delegate was obliged, by directions given pursuant to s 499 of the Act, to have regard to the best interests of any minor children of the appellant who would be affected by the decision. The delegate exercised his discretion on the understanding that the appellant is the father of three children. During the hearing of the appellant's application for review of the delegate's decision before the Administrative Appeals Tribunal ("the Tribunal"), it became apparent that the appellant is also the father of two other, younger children in Australia. This information had not previously formed part of the appellant's case; it was adduced in the course of the cross-examination of a witness called on behalf of the appellant. Section 500(6H) of the Act provides that the Tribunal must not have regard to any information presented orally in support of an application for review unless it has been provided in a written statement to the Minister at least two days before the hearing. The Tribunal proceeded to determine the appellant's application on the footing that s 500(6H) of the Act precluded consideration by it of the interests of the appellant's two youngest children. The Tribunal affirmed the delegate's decision. The appellant appealed unsuccessfully to the Federal Court of Australia, and then to the Full Court of the Federal Court of Australia. The appellant appeals to this Court, contending that s 500(6H) did not, on its proper construction, preclude consideration by the Tribunal of the interests of all his children, and that the Tribunal's failure to consider their interests was a jurisdictional error on its part. The appellant's contention should be accepted and his appeal to this Court allowed. Section 500(6H) does not preclude the consideration of information which is not presented by or on behalf of an applicant for review as part of his or her case. In the present case, the Tribunal, acting upon its erroneous understanding of the effect of s 500(6H) of the Act, truncated the review which it was required to undertake. In particular, the Tribunal failed to have regard to whether the interests of the appellant's two youngest children would be best served by cancelling his visa. As a result, the Tribunal did not conduct the review required by the Act, and consequently acted beyond its jurisdiction1. 1 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 369 [85]; [2013] HCA 18. Bell The statutory framework The appellant is a citizen of New Zealand. He was born in Samoa and moved to New Zealand with his family when he was three years old. He moved to Australia in 1998 at age 14, but is not an Australian citizen. He was granted a Class TY Subclass 444 Special Category (Temporary) visa, which allows him to remain in Australia indefinitely while he is a citizen of New Zealand. The appellant's parents, partner, children and extended family live in Australia. Section 501 of the Act provides that the Minister has a discretion to refuse or cancel a visa on character grounds. In particular, s 501(2) of the Act provides that the Minister may cancel a visa granted to a person if the Minister reasonably suspects that the person does not pass the "character test" and the person does not satisfy the Minister that he or she passes the character test. The appellant failed to satisfy the Minister that he passed the character test. Pursuant to s 501(6)(a), a person fails to satisfy the character test if he or she has a "substantial criminal record", which is defined in s 501(7)(c) to include a prison sentence of more than 12 months. The appellant has a history of criminal offences. He has served various periods of imprisonment. On 6 December 2011, he was sentenced to 36 months' imprisonment for recklessly causing grievous bodily harm in company. This was the longer of two sentences of over 12 months' duration imposed on the appellant. On 3 September 2012, during the appellant's most recent term of imprisonment, a delegate of the Minister exercised the discretion conferred by s 501(2) to cancel the appellant's visa. On 6 September 2012, when the term of imprisonment ended, the appellant received notice of the cancellation and was placed in immigration detention. Section 500(1)(b) of the Act and s 25(4) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") together provide that applications may be made to the Tribunal for review of a decision of a delegate of the Minister to cancel a visa under s 501 of the Act. The appellant made an application to the Tribunal for review of the delegate's decision. In the particular circumstances of the present case, a decision-maker under the Act was bound by written directions issued under s 499 of the Act, including Direction No 55 – Visa refusal and cancellation under s 501 ("Direction 55"), issued on 25 July 2012, when deciding whether a visa should be cancelled under Bell Direction 55 states by cl 6.3(2) that a non-citizen who has committed a serious crime should generally expect to forfeit the privilege of staying in Australia. Other circumstances are, however, also relevant to a decision in that regard. In particular, cl 6.3(6) states, inter alia, that: "the consequences of a visa refusal or cancellation for minor children … in Australia, are considerations in the context of determining whether that non-citizen's visa should be cancelled". Clause 7(1)(a) of Direction 55 provides that a decision-maker must take into account the considerations in Pt A or Pt B of Direction 55 "where relevant". Part A of Direction 55 is concerned with the considerations relevant to visa holders. Clause 8(4) provides that "primary considerations" should generally be given greater weight than "other considerations". The first of the primary considerations in Pt A is the protection of the Australian community from criminal or other serious conduct: cl 9(1)(a). Part A also includes cl 9.3(1) and (2), which provide that decision-makers "must make a determination about whether cancellation is, or is not, in the best interests of the child" if the child is under 18 years old at the time of the decision. Clause 9.3(4)(d) makes "[t]he likely effect that any separation from the person would have on the child" a primary consideration. In deciding to cancel the appellant's visa, the Minister's delegate was of the understanding that the appellant had three young children. The delegate accepted that the interests of these children would be best served if the appellant were to remain in Australia, but decided that the appellant's criminal conduct and the need for protection of the Australian community tipped the balance in favour of cancelling the appellant's visa. Of central importance in this matter was s 500(6H) of the Act, which provides that upon an application to the Tribunal for review of a decision made under s 501, the Tribunal: "must not have regard to any information presented orally in support of the person's case unless the information was set out in a written statement given to the Minister at least 2 business days before the Tribunal holds a hearing (other than a directions hearing) in relation to the decision under review." Bell The proceedings in the Tribunal The appellant had the benefit of legal representation at the hearing by the Tribunal. As a "body having functions or powers under [the] Act"2, the Tribunal was obliged, as the Minister's delegate had been, to apply Direction 55. Accordingly, the Tribunal was obliged to consider the best interests of any minor children in Australia affected by the decision3, and to have regard to factors including "[t]he likely effect that any separation from the person would have on the child"4. On 14 November 2012, the Tribunal affirmed the delegate's decision to cancel the appellant's visa for reasons similar to those given by the delegate5; but unlike the delegate, the Tribunal was aware that the appellant was the father of five children, not three as the delegate had understood the case to be. The interests, and indeed the existence, of the appellant's two youngest children, who at the time of the Tribunal hearing were four and five years of age6, did not form part of the appellant's case before the Tribunal. Statements provided on the appellant's behalf to the Tribunal prior to the hearing referred to the appellant having three children with his partner, Ms Peta Fatai. In the course of the cross-examination of Ms Fatai by the Minister's representative, she said that the couple had been separated for a period, and that during this separation the appellant had fathered two further children with Ms Jessie Vakauta7. It is not apparent from the record whether the particular questions which elicited this information were asked by the Minister's representative or by the presiding member of the Tribunal; but neither party 2 Act, s 499. 3 Direction 55, cll 7(1)(a), 8(1), 9.3(1)-(3); Act, s 499(2A). 4 Direction 55, cl 9.3(4)(d). 5 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at 6 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at [4]. 7 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at [4]; Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 18 [14]. Bell regarded this circumstance as significant. The existence of the two youngest children was confirmed in documents tendered by the Minister, which revealed that the children were amongst the appellant's visitors in prison. It was, and remains, unclear why the appellant did not acknowledge the existence of his two youngest children, or seek to make their relationship with him part of his case. The Tribunal merely noted that the appellant's legal representation had been arranged "at short notice"8; but before the Federal Court, at first instance9 and on appeal10, it was said that the appellant adopted this course on the basis of legal advice. The decision of the Tribunal The Tribunal regarded s 500(6H) of the Act as precluding consideration by it of the position of the appellant's two youngest children. In this Court, the Minister sought to argue that the Tribunal did take into account the information concerning those children. Given this contention by the Minister, it is necessary to refer to the detail of the Tribunal's reasons on this point. The Tribunal summarised11 its view of the effect of s 500(6H) of the Act as follows: "The effect of s 500(6H) of the [Act], which was acknowledged by Mr Uelese's representative, was that the Applicant was prevented from eliciting oral evidence that may have supported his case in relation to these children as there was no reference to them in any written statements provided to the Minister at least two business days before the hearing." The Tribunal went on to conclude12: "As already stated, Mr Uelese has been involved in an on and off relationship with Ms Fatai for approximately 12 years, and they have three 8 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at [7]. 9 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 18 [15]. 10 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 545 [37]. 11 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at [4]. 12 Re Uelese and Minister for Immigration and Citizenship [2012] AATA 793 at [64]. Bell children aged eleven, eight and six. No evidence was able to be led regarding a further two children of another woman, aged approximately five and four whose names appeared as visitors in a Department of Corrective Services Inmate Profile Document because there was no information relating to them contained in a written statement provided to the Minister at least two business days before the hearing as required by section 500(6H) of the Act. I cannot take any consideration of their situation into account in coming to a decision in this matter, although I note that Ms Fatai said that she knew their mother, and that the children come to the Uelese home. Without any information about these children, other than a small amount of information that was provided by Ms Fatai under cross-examination, I am unable to determine whether or not visa cancellation would be in the best interests of these children." (emphasis in original) It can be seen from the Tribunal's reasons that the Tribunal did not take account of the information concerning the appellant's two youngest children. The Minister's contention in this respect is untenable. The Tribunal could not have made its position any clearer than by the explicit statement: "I cannot take any consideration of their situation into account". The Federal Court The appellant appealed to the Federal Court, and then to the Full Court of the Federal Court13. The decision of the Tribunal is a "privative clause decision" under s 474(2) of the Act; and so, pursuant to s 476A(1) and (2) of the Act, the Federal Court had jurisdiction to review it only for jurisdictional error14. Before the Federal Court (Buchanan J) the appellant submitted that the Tribunal erred in failing to consider the interests of his two youngest children. The appellant argued that his failure to disclose information about the two youngest children was a result of advice from his legal representative, and was therefore not his fault. Buchanan J rejected this argument, holding that there was no suggestion of fraudulent activity on the part of the appellant's legal representative and that, accordingly, the circumstance that the appellant might 13 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13; Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534. 14 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 16 [7]. Bell have been poorly advised was not a defect in the proceeding before the Tribunal15. The appellant also argued that the Tribunal should have adjourned the hearing to allow evidence to be led in accordance with s 500(6H). Buchanan J rejected this argument, holding, in reliance on observations in Goldie v Minister for Immigration and Multicultural Affairs16, that an adjournment cannot overcome the requirement of s 500(6H) that information be presented by an applicant to the Minister in writing two days before a hearing17. The appellant's third argument was that the Tribunal should itself have pursued the issue of his two youngest children's interests when it became aware of the children's existence. As to this argument, Buchanan J held that the Tribunal was "confined in the steps it could take"18 and "obliged at all stages of the hearing before it ... to disregard any material emerging in oral evidence concerning Mr Uelese's two youngest children."19 Thus, it can be seen that Buchanan J accepted the Tribunal's view of the preclusory effect of s 500(6H) of the Act. The Full Court of the Federal Court In the Full Court (Jagot, Griffiths and Davies JJ), the first ground of appeal was that Buchanan J erred in not concluding that the Tribunal denied the appellant procedural fairness in failing to consider the best interests of the two youngest children. Secondly, it was said that Buchanan J erred in failing to conclude that the Tribunal committed a jurisdictional error in failing to warn the appellant that the best interests of the two children would not be considered, in circumstances where there was a legitimate expectation that those interests would have been considered. Thirdly, it was said that Buchanan J erred in failing to 15 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 18-19 16 (2001) 111 FCR 378 at 391 [31]. 17 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 19-20 18 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 18-19 19 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 20 [22]. Bell hold that the Tribunal was obliged, pursuant to Direction 55, to consider as a primary consideration the interests of all five of the appellant's children. The Full Court rejected the appellant's arguments, holding that s 500(6H) is a constraint on a decision-maker's obligations under s 499 to comply with Direction 5520; accordingly, there had been no denial of procedural fairness or disappointment of a legitimate expectation because "the content of the appellant's procedural fairness entitlements ... was necessarily affected by the statutory constraint imposed on the [Tribunal] by s 500(6H) of the Act."21 The Full Court took the view, supported by dicta in Goldie22, that the requirements of s 500(6H) of the Act are designed to prevent an applicant for review from changing the nature of his or her case23, and concluded that the Tribunal was precluded from having regard to the oral evidence about the two children and could not adjourn the hearing to enable the requirement of two days' notice to be met24. The Full Court also held that the Tribunal was not obliged to make its own inquiries into the issue because the appellant's case was presented on the basis that he had only three children25. The grant of special leave to appeal On 17 October 2014, Gageler and Keane JJ granted the appellant special leave to appeal to this Court. The grant of special leave was limited to two questions: whether the Full Court erred in failing to find jurisdictional error in the decision of the Tribunal that s 500(6H) of the Act prohibited it from having regard to information concerning the appellant's two youngest children; and 20 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 544-545 21 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 543 [29]. 22 (2001) 111 FCR 378 at 390 [26]. 23 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 543-544 24 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 544 [33]. 25 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 544 [33]. Bell whether the Full Court erred in failing to find jurisdictional error in the Tribunal's view that s 500(6H) precluded the grant of an adjournment to overcome the preclusory effect of that provision. The appellant's arguments The appellant submitted that s 500(6H) did not preclude the Tribunal from having regard to the information provided by Ms Fatai about the appellant's two youngest children. It was argued that information provided in the course of cross-examination of a witness called by an applicant, whether in response to questions from the Minister's representative or from the presiding member of the Tribunal, is not information "presented orally in support of" the applicant's case. The appellant argued that that information is "presented orally in support of the person's case" only if it is proffered by or on behalf of an applicant as part of his or her case. In support of this submission, the appellant relied upon the recent decision of the Full Court of the Federal Court in Jagroop v Minister for Immigration and Border Protection26, where it was said that the prohibition in s 500(6H) "would not preclude the [Tribunal] having regard to an applicant's answers in cross-examination", nor "information ... presented by an applicant in answer to the Minister's case, at least when the applicant could not reasonably have anticipated the evidence or issue raised". The appellant's second submission was that, even if s 500(6H) had the preclusory effect attributed to it by the Tribunal, it was open to the Tribunal to adjourn the hearing so that the requirements of s 500(6H) could be met. The appellant argued that "two business days before" the Tribunal "holds a hearing" means two business days before any day on which the Tribunal conducts a final hearing, including a day on which the Tribunal resumes hearing a part-heard proceeding adjourned at an earlier date. It was said that the language of s 500(6H) does not refer to two business days before the hearing commences but rather to when the Tribunal "holds a hearing" (emphasis added): a body holds a hearing on any day it sits. Parliament did not speak of "the hearing", in contrast to s 33(2) of the AAT Act, which uses the phrases "where the hearing ... has not commenced" and "where the hearing ... has commenced" (emphasis added). 26 (2014) 225 FCR 482 at 502 [97]. Bell The Minister's arguments In response to the appellant's first submission, the Minister argued that the appellant could reasonably be expected to have put the interests of his two youngest children in issue if he thought his case would be assisted by doing so. It was also said that the Tribunal was under no obligation to consider matters which did not form part of the appellant's case. The Minister argued that no occasion for considering the appellant's second submission arises in this case. Given that the appellant did not make an application for an adjournment, the Tribunal had no obligation to consider whether to exercise its discretion to grant an adjournment, or to actually grant one. In addition, it was said that the view expressed in Goldie should be applied: once a hearing has commenced, "the entitlement of the appellant to rely on information and documents crystallised"27 so that an adjournment may not be granted to allow an applicant to avoid the consequences of non-compliance with s 500(6H). The preclusory effect of s 500(6H) Considerations of text, context and legislative purpose28 support the appellant's argument that the Tribunal misunderstood the preclusory effect of s 500(6H). Textual considerations Section 500(6H) is directed, in terms, at information presented orally in support of an applicant's case. It is not directed at any information, however that information may come before the Tribunal. As a matter of ordinary usage, the phrase "presented … in support of the [applicant's] case" is apt to describe the active presentation of the case propounded by an applicant for review; but it is not at all apt as a description of the process of eliciting information under cross-examination. One would not ordinarily describe an answer given in response to a question posed on behalf of the Minister in the course of cross-examination as "information presented orally 27 Goldie v Minister for Immigration and Multicultural Affairs (2001) 111 FCR 378 28 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 [78]; [1998] HCA 28. Bell in support of the [applicant's] case". It is distinctly to strain the language of s 500(6H) to say that "information presented orally" in support of the case made by an applicant for review includes information elicited by the Minister's representative or by the Tribunal itself in the course of cross-examination of a witness called by the applicant. In addition, it is well settled that a construction "which appears irrational or unjust"29 is to be avoided where the statutory text does not require that construction. The view of s 500(6H) taken by the Tribunal in this case may be expected to lead to irrationality or injustice. For example, it would be irrational to hold that s 500(6H) precludes the Tribunal from receiving and acting upon an admission by an applicant for review elicited in the course of cross-examination that important aspects of the case he or she had presented in chief were false. And it would be distinctly unjust if the Minister could rely upon any answer elicited in cross-examination but the applicant could not. In this Court, the Minister did not seek to sustain the Tribunal's view of the preclusory operation of s 500(6H). That view had been rejected by the Full Court of the Federal Court in Jagroop30. The Minister accepted that s 500(6H) will not generally preclude the Tribunal from having regard to information provided in response to questions put to a witness in cross-examination, whether by the Tribunal or by the representative of the Minister. It was said, however, that this general proposition was subject to the qualification that any information provided to the Tribunal in support of the case of the applicant for review (rather than merely in answer to the Minister's case) will be excluded by s 500(6H) where the information could reasonably have been anticipated to be supportive of the case of the applicant at least two business days prior to the date on which the Tribunal holds a hearing. This qualification was said to be supported by observations in Jagroop31. It may be said immediately that if the gloss on s 500(6H) urged by the Minister were to be accepted, that would mean that it was necessary for the Tribunal to determine whether the information provided by Ms Fatai could reasonably have been anticipated, at least two days before the hearing in the Tribunal, to be supportive of the appellant's case. And in this case the Tribunal 29 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 509 [48]; [2013] HCA 35. 30 (2014) 225 FCR 482 at 499-500 [80]-[83]. 31 (2014) 225 FCR 482 at 502 [96]-[97]. Bell made no such inquiry. As a matter of principle, however, the gloss on the statutory language urged by the Minister should not be accepted. This aspect of the Minister's argument gains no support from the text of s 500(6H). The qualification propounded by the Minister is so awkward in its formulation that it cannot be regarded as implicit in s 500(6H). In addition, to accept the Minister's gloss would add a level of uncertainty to the operation of s 500(6H). An attempt to determine whether an applicant might reasonably have anticipated certain information as being supportive of his or her case two days before the hearing is likely to encounter complications by reason of the applicant's entitlement to legal professional privilege in respect of instructions to his or her legal representatives, and their advice. Further in this regard, the question of whether new information could be anticipated to be supportive of the applicant's case two days prior to the hearing calls for an exercise in hindsight which may vary with the circumstances that obtain when the Tribunal is required to determine whether it may have regard to the new information. This point may be illustrated by reference to the circumstances of the present case. Ms Fatai's information that the appellant was the father of two children not previously mentioned by him in relation to his application was not necessarily supportive of the appellant's case. It did not necessarily advance the appellant's case to reveal that there were five, rather than three, children who were entitled to depend upon him for material and emotional support and advancement, where that revelation was made in circumstances which at the same time revealed that he had failed to acknowledge even the existence of two of them. Considered on its own, Ms Fatai's information that the appellant's relationship with her and their children had been interrupted by another relationship could be seen as detrimental to any attempt by the appellant to present himself as a responsible member of a stable parental relationship who could be depended upon to provide for the welfare of his children if he were allowed to remain in Australia. It may be that the appellant could have given a satisfactory explanation in response to these concerns; the sclerotic effect of the Tribunal's view of s 500(6H) prevented any such explanation emerging. The important point for present purposes, however, is that the gloss on the statutory language urged by the Minister would add a new and unacceptable level of complexity and uncertainty to the task of the Tribunal. Bell The observations of the Full Court of the Federal Court in Jagroop32 to which the Minister referred were tentative observations which were appropriate in the circumstances of that case. Those observations do not support the Minister's gloss on the language of s 500(6H). The conclusion that Ms Fatai's responses in cross-examination were not within the preclusory language of s 500(6H) of the Act is in accord with considerations of context and statutory purpose to which reference may now be made. Contextual considerations Section 500(6H) does not expressly limit the power of the Tribunal to conduct a review or authorise the Tribunal to give less than the "proper consideration of the matters before [it]" required by s 33 of the AAT Act. Section 33(1) of the AAT Act provides generally that in a proceeding before the Tribunal the procedure of the Tribunal is within its discretion, that it is not bound by the rules of evidence, and that the proceeding is to be conducted with as little formality and technicality as, inter alia, a proper consideration of the matters before it permits. Section 40(1)(c) of the AAT Act provides that, for the purpose of reviewing a decision, the Tribunal may "adjourn the proceeding from time to time." Section 500(6H) should not be construed to restrict the flexibility of the Tribunal to ensure procedural fairness to the parties to a review beyond what is required by its terms. Specific powers under the AAT Act that would be restricted in their operation on the Tribunal's understanding of s 500(6H) include: s 39(1), which obliges the Tribunal to "ensure that every party to a proceeding ... is given a reasonable opportunity to present his or her case"; s 33(1)(c), which allows the Tribunal to "inform itself on any matter in such manner as it thinks appropriate"; and s 33(2A)(a), which allows the Tribunal to "require any person who is a party to the proceeding to provide further information in relation to the proceeding". 32 (2014) 225 FCR 482 at 502 [96]-[97]. Bell Considerations of purpose The apparent purpose of s 500(6H) was to prevent applicants from manipulating the system in an attempt to delay deportation. The Explanatory Memorandum to the Bill that led to the enactment of s 500(6A) to (6L) of the Act stated33 that: "These amendments are necessary in order to expedite review of decisions made by a delegate of the Minister under the new character provisions. The amendments balance the Government's concern to expedite review of character decisions against the need to ensure that the [Tribunal] has relevant information and sufficient time to properly review a particular decision to refuse to grant or to cancel a visa on the basis of a person's character." The purpose of ensuring the expeditious determination of applications for review under s 500 of the Act by requiring that the Minister be given "an opportunity to answer the case to be put by the applicant for review without the necessity of an adjournment of the hearing"34, which might result from a late change to the applicant's case, is not compromised by accepting that the preclusory effect of s 500(6H) is confined to information presented by or on behalf of the applicant for review in support of his or her case. Where information is adduced in cross-examination by the Minister or in response to inquiry by the Tribunal itself, it is inherently unlikely that the information is provided as part of an attempt to manipulate or delay the review process. The best interests of the appellant's children It is of particular importance that, in the circumstances of the present case, the Tribunal's erroneous understanding of s 500(6H) precluded it from making a determination about whether cancellation of the appellant's visa was or was not in the best interests of each of his children in Australia. Counsel for the Minister developed a submission that the interests of the appellant's two youngest children were not "relevant" to the Tribunal's review 33 Australia, Senate, Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Bill 1998, Explanatory Memorandum at 9, Item 21. 34 Goldie v Minister for Immigration and Multicultural Affairs (2001) 111 FCR 378 Bell within the meaning of cl 7(1)(a) of Direction 55. It was said that because the appellant had not included their interests in the case he sought to present to the Tribunal, their interests were not relevant. This submission should be rejected for a number of reasons. First, it depends upon a misreading of cl 7(1)(a) of Direction 55: the best interests of an applicant's minor children in Australia are "relevant" if such children exist and that fact is known to the Tribunal. Secondly, the Minister's submission seeks to import into the inquisitorial review function of the Tribunal notions appropriate to adversarial proceedings conducted in accordance with formal rules of pleading. That approach is inappropriate to the kind of review undertaken by the Tribunal. In Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs35, this Court cautioned against transposing the language and mindset of adversarial litigation to inquisitorial decision-making of the kind authorised by s 500 of the Act36. It is true, as the Full Court of the Federal Court rightly observed in Jagroop37, that both s 500 of the Act and the AAT Act "contemplate participation by both the applicant and the Minister in the [Tribunal] hearing." Section 500(6H) expressly contemplates that the applicant will present a "case"; and it is implicit that the Minister will also present a "case". That having been said, it would be to give undue weight to conceptions drawn from adversarial litigation to accept that the Tribunal was not required to take into account the interests of the appellant's two youngest children because he had not sought to advance their interests as a positive part of his case. Whether or not the appellant sought to make the interests of those children a positive aspect of his case, the Tribunal was obliged by s 499 of the Act and the terms of Direction 55 to take into account the interests of any minor children of which it was aware in determining his application for review. By virtue of s 499 and Direction 55, one of the primary considerations for the Tribunal concerned the interests of children who were not themselves represented in the proceedings before the Tribunal. The requirement of cl 9.3 of Direction 55 to consider the best interests of minor children in Australia affected by the decision is imposed on decision-makers in terms which are not dependent on whether an applicant for review argues that those interests are relevant as part of his or her "case". 35 (2005) 225 CLR 88 at 98 [24]; [2005] HCA 72. 36 See also Bushell v Repatriation Commission (1992) 175 CLR 408 at 424-425; [1992] HCA 47. 37 (2014) 225 FCR 482 at 501 [92]. Bell An aspect of the Minister's argument, developed by reference to the view that the Tribunal's functions were confined to a determination of issues relevant to the "case" presented by the appellant, was the contention that, if the Tribunal did misconstrue s 500(6H) by not considering the information adduced in cross-examination, that error did not affect the outcome of the review. The Minister argued that the paucity of evidence about the appellant's two youngest children in consequence of the way the appellant's case was presented meant that the Tribunal could not be satisfied one way or the other as to where the best interests of the appellant's children lay. This aspect of the Minister's argument must also be rejected. It is apparent that the paucity of evidence referred to in the last sentence of the passage from the reasons of the Tribunal cited above was not due to the unavailability of material evidence. The Tribunal not only declined to act upon the information which was put before it by Ms Fatai, but it also failed to make even the most cursory inquiry to follow up on this information. This is not a case like Paerau v Minister for Immigration and Border Protection38, on which the Minister sought to rely; here, the paucity of evidence was a consequence of the view taken by the Tribunal of the preclusory effect of s 500(6H). It is not necessary here to seek to chart the boundaries of the Tribunal's obligation to inquire after the best interests of the children of an applicant for review. There may be cases, hopefully rare, where the evidence presented by the parties does not alert the Tribunal that minor children in Australia may be affected by the decision. There may also be cases where the evidence is such that the only determination which can be made in obedience to cl 9.3(1) of Direction 55 is that cancellation is neutral so far as the best interests of any minor child are concerned. In this regard, it is to be noted that cl 9.3(1) requires a "determination about whether cancellation is, or is not, in the best interests of the child" (emphasis added). Sometimes the best decision "about" whether cancellation is, or is not, in the best interests of the child may be that it is neither. It is not necessary to canvass these possibilities further because the issue in this case is not whether the Tribunal failed to go far enough to discharge its obligation to conduct its review having regard to the interests of all the appellant's children; rather, the point is that the Tribunal, by reason of its misunderstanding of the effect of s 500(6H), failed to address one of the primary 38 (2014) 219 FCR 504 at 512 [27], 518 [69], 527-528 [118]-[119]. Bell considerations affecting the decision required of it. It failed to conduct the review required by the Act, and thereby fell into jurisdictional error39. Section 500(6H) and the power to adjourn Because s 500(6H) did not apply to preclude the reception by the Tribunal of information concerning the appellant's two youngest children, it is, strictly speaking, unnecessary to determine the question whether the Tribunal could and should have granted him an adjournment to enable the Tribunal to examine Ms Fatai's evidence at a later date and so deal with it on the merits. In addition, no adjournment of the hearing before the Tribunal was sought by the appellant's representative. On behalf of the Minister, it was said that this is a further reason not to deal with the adjournment issue. It is a matter for concern, however, that the failure on the part of the appellant's representative to seek an adjournment seems to have reflected a view, common to all parties, that s 500(6H), as understood in Goldie40, left the Tribunal no discretion to grant an adjournment to enable the parties to deal with Ms Fatai's "surprising" revelation. Further, the effect of s 500(6H) upon the power of the Tribunal to grant an adjournment was one of the principal issues agitated by the parties in this Court. In these circumstances, it is desirable that this Court should express its opinion on the issue41. In particular, it is desirable to make it clear that s 500(6H) does not fetter the power of the Tribunal to grant an adjournment in order to ensure that its review is conducted thoroughly and fairly. The source of the view that s 500(6H) restricts the power of the Tribunal to adjourn proceedings is the passage in Goldie42 where Gray J said: "Once the Tribunal began a hearing, the entitlement of the appellant to rely on information and documents crystallised. That entitlement was limited to information contained in a statement or statements given to the Minister … at least two business days before the hearing began. The resumption of an adjourned hearing is not a new hearing." 39 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 369 [85]. 40 (2001) 111 FCR 378 at 391 [31]. 41 Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 512; [1993] HCA 74. 42 (2001) 111 FCR 378 at 391 [31]. Bell Three points may be made in relation to this passage. First, the reference in Goldie to the "crystallisation" of an entitlement to rely on information is an inaccurate paraphrase of the language of s 500(6H). Section 500(6H) does not, on any view of its language, deny an applicant an "entitlement" to rely upon evidence adduced by the Minister or elicited by the Tribunal itself, if that evidence happens to be supportive of the applicant's case. Secondly, while s 500(6H) is obviously concerned to prevent the Minister being taken by surprise by late changes to an applicant's case, it does not suggest an intention to fetter the power of the Tribunal to grant an adjournment where the fair conduct of the review hearing requires it and where the applicant has not sought to surprise the Minister. Nothing in the text of s 500(6H) warrants the imposition of a rigid limit upon the otherwise flexible power of the Tribunal to ensure that the proceedings before it are conducted fairly to all parties. Thirdly, to say that the resumption of a hearing is not a new hearing is distinctly not to say that the notice requirements of s 500(6H) may not be satisfied by the exercise by the Tribunal of its power of adjournment where an appropriate case is made out for the exercise of its undoubted power in that regard under ss 33 and 40 of the AAT Act. If either party had sought an adjournment on the ground that it was surprised and disadvantaged by Ms Fatai's evidence and required an adjournment of the hearing to meet that disadvantage, then the question whether or not the fair determination of the application for review could only be achieved by granting the adjournment would have arisen for the Tribunal to resolve. It was argued by the Minister that applicants for review might cynically withhold oral evidence in order to have it presented later in the course of a hearing so as to precipitate an adjournment with its attendant delay. It may be noted immediately that delaying tactics of this kind would expose an applicant to the risk of a deemed affirmation of the decision under review by operation of s 500(6L). Section 500(6L) provides that, if the Tribunal has not made a decision upon the review within 84 days after the day on which the applicant was notified of the decision under review, the Tribunal is taken, at the end of that period, to have decided to affirm the decision under review. In any event, there is no reason to suppose that, in exercising its discretion, the Tribunal would not be mindful of the time frame established by s 500(6L) of the Act for the determination of review applications. In summary, the purpose of ensuring that reviews under s 500 are dealt with expeditiously does not require a blanket limitation on the Tribunal's power to adjourn a hearing. Section 500(6H) should not be given an operation beyond Bell that warranted by its language in order to pre-empt the hypothetical possibility that the Tribunal might grant adjournments, supinely or unreasonably, to an applicant seeking to take cynical advantage of surprises occasioned by information introduced late in support of his or her case. Conclusion and orders The appeal should be allowed. Paragraphs 2 and 3 of the orders of the Full Court of the Federal Court dated 8 August 2013 should be set aside and, in their place, it should be ordered that: the appeal to that Court be allowed; the order of Buchanan J dated 18 April 2013 be set aside and in its place order that: (iii) a writ of certiorari issue directed to the second respondent, quashing its decision made on 14 November 2012; a writ of prohibition issue directed to the first respondent, prohibiting him from giving effect to the decision of the second respondent made on 14 November 2012; a writ of mandamus issue directed to the second respondent, requiring it to determine the applicant's application for review according to law; and the first respondent pay the applicant's costs; and the first respondent pay the appellant's costs in that Court. The first respondent is to pay the appellant's costs of the appeal to this Court. Nettle NETTLE J. Section 500(6H) of the Migration Act 1958 (Cth) ("the Migration Act") provides that, in deciding an application by a person for review of a decision to refuse or cancel a visa on character grounds, the Administrative Appeals Tribunal ("the AAT") "must not have regard to any information presented orally in support of the person's case unless the information was set out in a written statement given to the Minister at least 2 business days before the Tribunal holds a hearing (other than a directions hearing) in relation to the decision under review". The two questions for decision in this appeal are: (a) whether "information presented orally in support of the person's case" includes a responsive answer given by a witness under cross-examination by counsel for the Minister or under questioning from the AAT; and (b) whether "a hearing" is a reference only to the first day of a hearing or includes a day on which a final hearing resumes after being adjourned part-heard. The facts The appellant was born in Samoa in 1984 and moved with his family to New Zealand at the age of three. He is a citizen of New Zealand but at the age of 14 he came to Australia and he has remained here ever since. Although he has not become an Australian citizen, he was granted a Class TY Subclass 444 Special Category (Temporary) visa which entitled him to stay in Australia so long as he remained a New Zealand citizen. Beginning at the age of 15, he acquired a history of convictions for criminal offences, including convictions for violent offences for which he was sentenced to imprisonment. The nature of the offences and the terms of imprisonment to which he was sentenced were such that he ceased to satisfy the "character test" set out in s 501(6) of the Migration Act43. That gave the first respondent ("the Minister") a discretion to cancel the visa44. 43 Section 501(6) of the Migration Act relevantly provides that: "For the purposes of this section, a person does not pass the character test the person has a substantial criminal record (as defined by subsection (7))". (Footnote continues on next page) Nettle On 10 May 2012, during his last term of imprisonment, the appellant was informed that the Minister was considering cancelling his visa and, on 6 September 2012, when the term of imprisonment concluded, he was notified that the Minister had cancelled the visa. The delegate of the Minister who made the decision was required to take into account a direction made under s 499 of the Migration Act – "Direction No 55 – Visa refusal and cancellation under s 501" ("Direction 55") – concerning matters relevant to the cancellation of a visa under s 501. Direction 55 includes the following: "6.3 Principles (1) Australia has a sovereign right to determine whether non-citizens who are of character concern are allowed to enter and/or remain in Australia. Being able to come to or remain in Australia is a privilege Australia confers on non-citizens in the expectation that they are, and have been, law-abiding, will respect important institutions, such as Australia's law enforcement framework, and will not cause or threaten harm to individuals or the Australian community. The length of time a non-citizen has been making a positive contribution to the Australian community, and the consequences of a visa refusal or cancellation for minor children and other immediate family members in Australia, are considerations in the context of determining whether that non-citizen's visa should be cancelled, or their visa application refused. In turn, s 501(7) relevantly provides that: "For the purposes of the character test, a person has a substantial criminal record if: the person has been sentenced to a term of imprisonment of 12 months or more". 44 Migration Act, s 501(2). Nettle Taking the relevant considerations into account (1) Decision-makers must take into account the primary and other considerations relevant to the individual case ... (4) Primary considerations should generally be given greater weight than the other considerations. Primary considerations – visa holders In deciding whether to cancel a person's visa, the following are primary considerations: Protection of the Australian community from criminal or other serious conduct; The strength, duration and nature of the person's ties to Australia; The best interests of minor children in Australia; (d) Whether Australia has obligations to the person. international non-refoulement 9.3 Best interests of minor children in Australia affected by the decision (1) Decision-makers must make a determination about whether cancellation is, or is not, in the best interests of the child. This consideration applies only if the child is, or would be, under 18 years old at the time when the decision to cancel the visa is expected to be made. If there are two or more relevant children, the best interests of each child should be given individual consideration to the extent that their interests may differ. In considering the best interests of the child, the following factors must be considered where relevant: (a) The nature and duration of the relationship between the child and the person ... Nettle The extent to which the person is likely to play a positive parental role in the future ... The impact of the person's prior conduct, and any likely future conduct, and whether that conduct has, or will have a negative impact on the child; The likely effect that any separation from the person would have on the child, taking into account the child's ability to maintain contact in other ways; (e) Whether there are other persons who already fulfil a parental role in relation to the child; Any known views of the child (with those views being given due weight in accordance with the age and maturity of the child); Evidence that the person has abused or neglected the child in any way ... Evidence that the child has suffered or experienced any physical or emotional trauma arising from the person's conduct." At the time of determining to cancel the visa, the delegate proceeded on the basis that the appellant had three children. He accepted that it would be in the interests of those children if the appellant's visa were not cancelled. The delegate took the view, however, that the gravity of the appellant's criminal conduct and the consequent risk to the community of the appellant reoffending so outweighed the interests of the three children that the appellant should not be allowed to remain in Australia. The appellant sought review of the delegate's decision under s 25(4) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") (read with s 500(1)(b) of the Migration Act) and was legally represented before the AAT. He relied on a number of written statements of evidence, including statements by himself, various members of his family, his de facto wife (Ms Fatai) and a psychologist, in support of his case. Several of the written statements referred to the appellant having three children born to him by Ms Fatai, aged eleven, eight and six respectively. Some of the written statements contained information bearing on the best interests of those children. There was also written evidence, in the form of a pre-sentence report in proceedings in the New South Wales District Court in late 2011, which referred to the three children. Thus, to begin with, the appellant's case before the Nettle AAT was put on the basis that he had just three children whose interests required "primary consideration". In the course of Ms Fatai's cross-examination by counsel for the Minister, it emerged that, in addition to the three children born of Ms Fatai, the appellant had two further children, aged approximately five and four at the time of the hearing, born to him by another woman with whom he had associated during a separation from Ms Fatai in 2005. Although it is not clear whether the information was elicited by questions asked by counsel for the Minister or questions asked by the AAT, Ms Fatai said that she knew the other woman and that the two further children came to the appellant's home. Counsel for the Minister also tendered two "Inmate Profile" documents issued by the New South Wales Department of Corrective Services which confirmed that the appellant had been visited in prison by both Ms Fatai and her three children and the other woman and her two children. The AAT took the view that, because the appellant had not given a written statement of information about the other two children to the Minister at least two business days before the hearing, the AAT was precluded by s 500(6H) of the Migration Act from having regard to Ms Fatai's oral evidence concerning the two children. It is not clear but it may also be that the AAT considered that the Inmate Profile documents tendered by counsel for the Minister were similarly excluded. In its reasons, the AAT stated: "Mr Uelese has three children aged eleven, eight and six with Ms P Fatai whom he says he plans to marry in early 2013 if he is permitted to stay in Australia. Mr Uelese also has two other children aged approximately five and four. The information about the other two children came to light during cross-examination of Ms Fatai. ... As already stated, Mr Uelese has been involved in an on and off relationship with Ms Fatai for approximately 12 years, and they have three children aged eleven, eight and six. No evidence was able to be led regarding a further two children of another woman, aged approximately five and four whose names appeared as visitors in a Department of Corrective Services Inmate Profile Document because there was no information relating to them contained in a written statement provided to the Minister at least two business days before the hearing as required by section 500(6H) of the [Migration] Act. I cannot take any consideration of their situation into account in coming to a decision in this matter, although I note that Ms Fatai said that she knew their mother, and that the children come to the Uelese home. Without any information about these children, other than a small amount of information that was provided by Ms Fatai under cross-examination, I am unable to determine whether or Nettle not visa cancellation would be in the best interests of these children." (emphasis in original) Decisions of the Federal Court and the Full Court of the Federal Court The appellant applied to the Federal Court for judicial review on several grounds, including jurisdictional error the result of the AAT failing to consider the interests of the other two children. Although self-represented at that stage of proceedings, he argued that he had relied on legal advice concerning the conduct of the hearing before the AAT and, thus, that it was not his fault that notice of the two children had not been given to the Minister before the hearing. He also submitted that, once it emerged that he had two further children, the AAT should have adjourned the hearing to allow him to give the necessary notice to the Minister and also that the AAT had been bound to inquire into the matter of its own motion. Buchanan J dismissed the application. He considered that he was bound to follow45 the interpretation of s 500(6H) adopted by the Full Court of the Federal Court in Goldie v Minister for Immigration and Multicultural Affairs46. In Goldie, Gray J, with whom R D Nicholson and Stone JJ agreed47, held that48: "Once the Tribunal began a hearing, the entitlement of the appellant to rely on information and documents crystallised. That entitlement was limited to information contained in a statement or statements given to the Minister, and to documents copies of which he had given to the Minister, at least two business days before the hearing began. The resumption of an adjourned hearing is not a new hearing." Buchanan J was also of the view that the exception in the case of fraud on the part of a legal adviser identified by this Court in SZFDE v Minister for Immigration and Citizenship49 was inapplicable, because there was no suggestion that the appellant's former legal adviser had been fraudulent50. 45 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 13 at 20 [22]. 46 (2001) 111 FCR 378. 47 (2001) 111 FCR 378 at 394 [40], [41]. 48 (2001) 111 FCR 378 at 391 [31]. 49 (2007) 232 CLR 189 at 193-194 [7] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ; [2007] HCA 35. 50 Uelese (2013) 60 AAR 13 at 18-19 [17]. Nettle In the result, Buchanan J held that the AAT's conduct of the matter was constrained by s 500(6H) and, since Ms Fatai's oral evidence concerning the other two children was excluded, the AAT had not erred in deciding that it was not possible to say whether cancellation of the visa would be in those children's best interests51. His Honour also said it was to be doubted that the AAT's assessment would have been markedly affected if it had taken the interests of the two children into account, but emphasised that "the real difficulty" was that s 500(6H) precluded consideration of Ms Fatai's oral evidence concerning those children52. The appellant appealed to the Full Court of the Federal Court on grounds that Buchanan J erred in not finding that the AAT had denied the appellant procedural fairness by failing to warn him that it was not disposed to take the interests of the two children into account, and committed jurisdictional error by failing to consider the best interests of the two children53. The Full Court unanimously rejected the appeal. Their Honours considered that the construction of s 500(6H) which was adopted in Goldie was correct54 – the legislative scheme was "designed to disadvantage an applicant for review" and "to advantage the Minister" by forewarning the Minister as to the entirety of the applicant's case such that he or she "is better able to respond"55 and, without exception, confining the applicant to that case. It followed, they said, that there was no error in the AAT excluding Ms Fatai's oral evidence concerning the two children, or in not affording the appellant an adjournment in which to serve a notice of information concerning the children, or in failing to inquire into the circumstances of the two children56. "Information presented orally in support of the person's case" The decision of the Full Court was handed down on 8 August 2013. Just over a year later, on 23 September 2014, a differently constituted Full Court 51 Uelese (2013) 60 AAR 13 at 20 [23]. 52 Uelese (2013) 60 AAR 13 at 19 [19]-[20]. 53 Uelese v Minister for Immigration and Citizenship (2013) 60 AAR 534 at 541 [23] per Jagot, Griffiths and Davies JJ. 54 Uelese (2013) 60 AAR 534 at 544 [32]. 55 Goldie (2001) 111 FCR 378 at 390 [26] per Gray J, cited in Uelese (2013) 60 AAR 534 at 543 [30] per Jagot, Griffiths and Davies JJ. 56 Uelese (2013) 60 AAR 534 at 544 [33]. Nettle handed down the decision in Jagroop v Minister for Immigration and Border Protection57. In the latter case it was held that, subject to one possible exception, the words "in support of the person's case" in s 500(6H) and (6J) relate only to information and documents presented as part of an applicant's case-in-chief and, therefore, do not apply to information or documents which an applicant may wish to present in answer to the Minister's case or to an applicant's response to a matter raised by the AAT of its own initiative58. The one possible exception was said to be the circumstances which arose in this case. Putting aside the possible exception for the moment, what was said in Jagroop about the meaning of s 500(6H) was correct. As the Full Court in Jagroop rightly observed59, the proscriptions in s 500(6H) and (6J) do not refer to "any" information presented or document submitted by an applicant. In terms, they are precisely limited to "information presented orally in support of the [applicant's] case" and "any document submitted in support of the [applicant's] case". An applicant's answer to a question asked of him or her or one of his or her witnesses in the course of cross-examination cannot rationally be conceived of as information presented orally in support of the applicant's case. According to ordinary acceptation, such an answer is information elicited orally at the instance of the Minister with the aim of derogating from the applicant's case and thereby or otherwise supporting the Minister's case. Of course, the Minister's cross-examination of an applicant or one of the witnesses called by an applicant could result in answers supportive of the applicant's case or which derogate from the Minister's case, just as may have occurred here. But it does not follow that the provision should be read as applying to answers of that variety. As the Full Court observed in Jagroop60, in many cases it would be impossible or impractical for an applicant to foresee evidence which might emerge in the course of cross-examination of the applicant or one of the applicant's witnesses, and so impossible or impractical for the applicant to give notice of it in advance. It is not to be inferred that the provision 57 (2014) 225 FCR 482. 58 Jagroop (2014) 225 FCR 482 at 500 [84] per Dowsett, Murphy and White JJ. 59 (2014) 225 FCR 482 at 502 [94]. 60 (2014) 225 FCR 482 at 499-500 [82]-[83]. Nettle was intended to require something which may prove to be impossible or impracticable61. The conclusion that s 500(6H) does not apply to answers given in cross- examination of an applicant or of an applicant's witness is also supported by the context in which the provision appears. Read in context, the expression "information presented orally in support of the person's case" in s 500(6H) will be seen to be aimed at achieving the same result in relation to oral evidence as the expression "document submitted in support of the person's case" in s 500(6J) is designed to achieve in relation to written evidence. The natural and ordinary meaning of "document submitted in support of the person's case" in s 500(6J) is of documentary evidence tendered by an applicant. It would be a most unusual use of language for it to extend to a document which counsel for the Minister might tender in the course of cross-examination of an applicant or one of the applicant's witnesses. If that were so, it would entitle the Minister to rely on parts of the document favourable to the Minister's case while excluding any part of the document which supported the applicant's case. Furthermore, because, as in Jagroop62, proceedings before the AAT are to some extent as much inquisitorial as they are adversarial, the AAT is entitled63 and, depending on the circumstances, may be bound to inform itself on any matter as it thinks appropriate, subject to the requirements of procedural fairness64. Hence, circumstances may not the Full Court observed 61 Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 350 per Gibbs J; [1975] HCA 28; Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 321 per Mason and Wilson JJ; [1981] HCA 26; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 509 [48] per French CJ, Hayne, Crennan and Kiefel JJ; [2013] HCA 35; see generally Pearce and Geddes, Statutory Interpretation in Australia, 8th ed (2014) at 79-81 [2.38]-[2.39]. 62 (2014) 225 FCR 482 at 501 [92]. 63 AAT Act, s 33(1)(c). 64 Bushell v Repatriation Commission (1992) 175 CLR 408 at 424-425 per Brennan J; [1992] HCA 47; and, in relation to the comparable functions of the Refugee Review Tribunal, see Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187] per Gummow and Hayne JJ; [1999] HCA 14; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 (2003) 77 ALJR 1909 at 1918-1919 [57] per Gummow and Heydon JJ; 201 ALR 437 at 450; [2003] HCA 60; Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 98 [24] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ; [2005] HCA 72; Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1127 [18], 1129 [25] per French CJ, (Footnote continues on next page) Nettle infrequently arise where it is necessary for an applicant to respond by way of oral submission to a matter raised by the AAT of its own motion. It should not be supposed that s 500(6H) was intended to prevent that occurring. Leastways, before a provision could be construed as having that effect, it would need to provide in very clear terms that the AAT may not have regard to any oral evidence or other material favourable to an applicant's case or which derogates from the Minister's case, regardless of whether it is adduced in chief or in cross- examination or in response to issues raised by the AAT, unless notice of that evidence or material has been given not less than two business days before the That leaves the possible exception identified in Jagroop of a case like the present. In effect, the Full Court in Jagroop attempted to rationalise the decision of the Full Court in this case as a possible exception to the view that s 500(6H) is limited to evidence or other material adduced in chief. The possible exception so identified was evidence favourable to an applicant's case adduced in the course of cross-examination of an applicant or an applicant's witness which raises facts which the applicant could reasonably have anticipated66. The existence of that exception should not be recognised. Upon its proper construction, s 500(6H) is limited to oral evidence adduced in chief in support of an applicant's case. For the reasons already explained, it cannot sensibly be construed as extending to oral evidence adduced in cross-examination of the applicant or of an applicant's witness favourable to the applicant's case, or which derogates from the Minister's case, or to an answer given or submission advanced in response to a matter raised by the AAT of its own motion. Though, as the Full Court discerned in Jagroop, it might not be quite as unreasonable if the reach of the provision beyond evidence adduced in chief were restricted to evidence adduced in cross-examination on matters of which an applicant had notice, the form of the provision is inapt to accommodate that construction. It would require reading in a large number of words which are not there67. Gummow, Hayne, Crennan, Kiefel and Bell JJ; 259 ALR 429 at 434, 436; [2009] HCA 39; and see generally Bedford and Creyke, Inquisitorial Processes in Australian Tribunals, (2006) at 28. 65 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 585 [51] per Gummow and Hayne JJ; [2006] HCA 50. 66 Jagroop (2014) 225 FCR 482 at 502 [96]. 67 Thompson v Goold & Co [1910] AC 409 at 420 per Lord Mersey; Taylor v The Owners – Strata Plan No 11564 (2014) 88 ALJR 473 at 483 [38] per French CJ, Crennan and Bell JJ; 306 ALR 547 at 557; [2014] HCA 9. Nettle First day of hearing There remains the second question of whether s 500(6H) requires notice to be given at least two business days before the first day of the hearing of an application for review or whether, upon its proper construction, it allows for the possibility of an adjournment of the hearing to afford an applicant additional time to give notice. Strictly speaking, the answer to the first question is sufficient to dispose of the appeal. But the second question was raised below and fully argued before this Court on the alternative basis that, if s 500(6H) were held to preclude the AAT from receiving the evidence elicited from Ms Fatai regarding the two other children, the appellant should have been granted an adjournment of the hearing in order to give the Minister the requisite notice of the evidence and thus rely upon it. In those circumstances, it is appropriate that the question be dealt with. The starting point is that s 500(6H) does not in terms refer to the first day of the hearing of an application for review. Rather, it refers to a time "at least 2 business days before the Tribunal holds a hearing (other than a directions hearing) in relation to the decision under review" (emphasis added). Among other significant things about that form of words are: the reference to a hearing as opposed to the hearing; the parenthetical exception of a directions hearing; and the words "in relation to the decision under review". If the intention were to require notice to be given "at least two business days before the first day of the hearing of an application for review", one might think that those words would have been chosen. In contrast, the selection of the indefinite article a in preference to the definite article the suggests that the drafter anticipated the possibility of more than one hearing in relation to an application for review. That impression is fortified by the reference to "the hearing of the proceeding" in s 33(2)(a) and (b) of the AAT Act (emphasis added), which distinguishes between the first day of the hearing of the proceeding and subsequent days for the purposes of the AAT making directions. The parenthetical exclusion of a directions hearing adds support to the conclusion that s 500(6H) envisages the possibility of more than one hearing. It suggests that it was foreseen that "a hearing ... in relation to the decision under review" is a sufficiently broad conception to include an interlocutory hearing in relation to the decision under review and hence that it was considered necessary to exclude directions hearings from the range of interlocutory hearings to which the provision would otherwise have attached. To some extent, that implies that the object of the provision was to require that notice be given at least two business days before the day of hearing of the matter the subject of notice. The choice of the expression "in relation to the decision under review" in contrast to, say, "of the application for review" is also consistent with a Nettle legislative recognition of the possibility of more than one hearing with respect to an application for review and thus suggests that the requirement to give notice should be taken as one to give notice at least two business days before the particular hearing at which the "information [is] presented orally in support of the person's case", as opposed to at least two business days before the first day of hearings in relation to the application for review. In Goldie, Gray J concluded that the purpose of s 500(6J) and (6H) is to give the Minister an opportunity to answer the case put by an applicant for review without need of an adjournment of the hearing; more precisely, to prevent an applicant for review from being able to change the nature of his or her case, thus catching the Minister by surprise and forcing the AAT into granting one or more adjournments to enable the Minister to meet the new case put68. His Honour added that if that were not sufficiently apparent from the terms of the legislation, it was clear from the Second Reading Speech in relation to the Bill by which the provisions were introduced69. Even if that be so, however, it cannot be allowed to detract from the meaning of the provisions which emerges from their terms70. According to the plain and ordinary meaning of s 500(6H), there can be more than one hearing in relation to an application for review. That is consistent with the notice requirement being a requirement to give notice not less than two days before the particular hearing at which the subject material in support of the applicant's case is presented in chief. So to construe the provision may not accord to the Minister all of the advantages which Gray J conceived to be the purpose of the provision but it is logical and it is consistent with what was stated in the Second Reading Speech to be the objective71. So long as notice be given not less than two business days before the particular hearing at which the material the subject of notice is presented in chief, the Minister will not be taken by surprise or, for that reason, need to seek an adjournment. (2001) 111 FCR 378 at 390 [25]. 69 Australia, House of Representatives, Parliamentary Debates (Hansard), 2 December 1998 at 1232. See also Australia, Senate, Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Bill 1998, Explanatory Memorandum at 3. 70 Re Coleman; Ex parte Billing (1986) 61 ALJR 37 at 39 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; 68 ALR 416 at 420; [1986] HCA 74; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41. 71 Australia, House of Representatives, Parliamentary Debates (Hansard), 2 December 1998 at 1232. Nettle Finally, there remains the question of whether, when a hearing is adjourned from day to day, the second and any subsequent day of the hearing should be regarded as part of the hearing which began on the first day or as a separate hearing for the purposes of the provision. Ordinarily, one would speak of each day of a hearing as part of the one hearing. So, as has been observed, if s 500(6H) had been drafted in terms akin to s 33(2)(a) and (b) of the AAT Act as requiring notice not less than two business days before the hearing of the application for review, there would be little reason to doubt that the requirement was to give notice not less than two business days before the first day of the hearing regardless of whether the hearing might be adjourned at the end of the first day and then continue for several days thereafter. But, as has been seen, in the case of s 500(6H) the use of the expression "a hearing ... in relation to the decision under review" contemplates the possibility of more than one hearing and thereby leaves open as a possible construction that each day's hearing may be regarded as a separate hearing for the purposes of giving notice. Since that construction would have the least impact on the ability of the AAT to deal with an application for review in the manner which it conceives to be best calculated to achieve a just disposition of the application, and would also be consistent with the perceived object of the provision of ensuring that the Minister is not taken by surprise, that construction should be preferred. So to conclude is not to overlook the 84-day time limit imposed by s 500(6L)(c). As counsel for the appellant submitted, there is no necessary inconsistency between that time limit and the possibility that, after a hearing has been adjourned, an applicant might give notice at least two business days before the day on which the hearing is to resume of material in support of the applicant's case which the applicant proposes to adduce in chief at the resumed hearing. The 84-day time limit is immutable and so may prove a powerful consideration in the AAT's determination whether to adjourn a hearing to enable an applicant to give notice of new or additional material which he or she seeks to adduce in chief in support of his or her case. But, properly understood, it goes no further than that. Consequences of failing to take into account the subject evidence It follows from what has been said that the AAT's refusal to take into account Ms Fatai's evidence concerning the two other children was to exclude a relevant material consideration. The AAT was empowered by s 33(1)(c) of the AAT Act to "inform itself on any matter in such manner as it thinks appropriate". To the extent the AAT considered that the evidence elicited from Ms Fatai was insufficient to make a determination as to the best interests of the two children, s 500(6H), properly construed, presented no barrier to the AAT taking the necessary steps to ascertain sufficient information for it to form a view. Nettle Counsel for the Minister contended that it was apparent from the following passage from the AAT's reasons earlier set out72 that, because of the paucity of evidence, any failure by the AAT to take account of the evidence made no difference: "Without any information about these children, other than a small amount of information that was provided by Ms Fatai under cross-examination, I am unable to determine whether or not visa cancellation would be in the best interests of these children." That submission should be rejected. Read in isolation, the passage of the reasons relied upon is equivocal. Read in context, it appears that what the AAT intended to convey was that, despite the limited written evidence about the children that was before the AAT, in the absence of Ms Fatai's oral evidence concerning the children the AAT was unable to determine whether or not visa cancellation would be in their best interests. So, far from demonstrating that Ms Fatai's evidence could not have made a difference to the AAT's decision, the cited passage read in context implies that her evidence, had it not been excluded, could well have proved critical or, at the least, could have made a difference. Conclusion For these reasons, I agree with the orders proposed in the joint judgment. 72 The full passage is excerpted at [90] of these reasons.

HIGH COURT OF AUSTRALIA OKS AND APPELLANT THE STATE OF WESTERN AUSTRALIA RESPONDENT OKS v Western Australia [2019] HCA 10 20 March 2019 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Western Australia made on 11 April 2018 and in lieu thereof substitute the following orders: appeal allowed; the appellant's conviction be quashed; and there be a new trial. On appeal from the Supreme Court of Western Australia Representation S A Vandongen SC with S Nigam for the appellant (instructed by Nigams Legal) A L Forrester SC with K C Cook for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS OKS v Western Australia Criminal practice – Appeal against conviction – Application of proviso that no substantial miscarriage of justice actually occurred – Criminal Appeals Act 2004 (WA), s 30(4) – Where jury found appellant guilty of indecently dealing with child under 13 years of age – Where credibility and reliability of complainant's evidence central issue at trial – Where complainant admitted and was alleged to having lied – Where trial judge directed jury not to reason that complainant's lies meant that all her evidence dishonest and could not be relied upon – Where Court of Appeal found direction by trial judge was wrong decision on question of law – Where Court of Appeal found no substantial miscarriage of justice occurred – Whether error in application of proviso. Words and phrases – "misdirection", "natural limitations of proceeding on the record", "no effect upon the jury's verdict", "proviso", "substantial miscarriage of justice", "sufficiency of evidence to prove guilt", "very significant weight", "weight to the verdict of guilty", "wrong decision on a question of law". Criminal Appeals Act 2004 (WA), s 30(4). BELL, KEANE, NETTLE AND GORDON JJ. The appellant was convicted before the Perth District Court (Judge Stevenson and a jury) of indecently dealing with the complainant, S, a child under the age of 13 years1. The trial took place nearly 20 years after the alleged offence. The central issue at the trial was the credibility and reliability of S's evidence. In the course of summing-up the case to the jury, the trial judge directed: "[D]o not follow a process of reasoning to the effect that just because [S] is shown to have told a lie or she has admitted she told a lie, that all of her evidence is in fact dishonest and cannot be relied upon" ("the impugned direction"). The appellant appealed against his conviction to the Court of Appeal of the Supreme Court of Western Australia (Buss P, Beech JA and Pritchard J) on a ground which contended that the impugned direction was a wrong decision on a question of law2. The Court of Appeal was unanimous in concluding that it was3. Their Honours held that, even though the ground of appeal might have been decided in the appellant's favour, the appeal should be dismissed under s 30(4) of the Criminal Appeals Act 2004 (WA) because no substantial miscarriage of On 16 November 2018, Bell, Keane and Nettle JJ gave the appellant special leave to appeal. In issue in the appeal is the correctness of the conclusion that the impugned direction did not occasion a substantial miscarriage of justice. This conclusion largely turned upon reasoning that, in the context of the summing-up as a whole, the impugned direction would have made no difference to the jury's verdict of guilty, which verdict for that reason should be accorded very significant weight5. As will appear, it was an error to so conclude. The 1 Criminal Code (WA), s 320(4). 2 Criminal Appeals Act 2004 (WA), s 30(3)(b). 3 OKS v Western Australia (2018) 52 WAR 482 at 507-508 [125] per Buss P, 532 [253]-[255] per Beech JA, 532 [259] per Pritchard J. 4 OKS v Western Australia (2018) 52 WAR 482 at 508 [130] per Buss P, 532 [258] per Beech JA, 532 [259] per Pritchard J. 5 OKS v Western Australia (2018) 52 WAR 482 at 509-510 [135]-[136] per Buss P, 532 [258] per Beech JA, 532 [259] per Pritchard J. Bell NettleJ appeal must be allowed and the appellant's conviction quashed. As the appellant recognises, the appropriate consequential order is that there be a new trial. The course of the trial On 4 April 2016, an indictment was signed charging the appellant that in March 1997 he indecently dealt with S, a child under the age of 13 years, by placing his hand on her vagina on top of her underwear (count one); in December 1998, he indecently dealt with S, a child under the age of 13 years, by placing his penis over her vagina on top of her underwear and moving up and down (count two); on the same date and place as charged in count two, he indecently dealt with S, a child under the age of 13 years, by stroking her vagina on top of her underwear (count three); and on a date between 6 March 1999 and 5 March 2000, he attempted to indecently deal with S, a child under the age of 13 years, by attempting to put his hand down the front of her pants (count four). On 21 November 2016, at the commencement of the trial, the prosecutor applied to amend counts one and three to delete the words "on top of her underwear". Consistently with the amendment, it was S's evidence that the indecent dealing charged in count one involved the appellant placing his hand directly on her vagina. S admitted to having lied to the police in her earlier accounts of this assault. She said that she had been ashamed. S did not give evidence of the incident charged in count three and the jury was discharged from giving a verdict on that count. S's evidence of her age at the date of the offence charged in count four did not establish that she was aged under 13 years and the jury was also discharged from giving a verdict on that count. The prosecution case was opened to the jury on the basis that the appellant moved into the family home in 1997 and began touching S sexually very soon afterwards. It was the prosecution case that the appellant continued to touch S sexually "almost every day or so" from when she was ten until she was about 13. S gave evidence that the offence charged in count one occurred on an occasion when the appellant was lying on the bed in her brother's bedroom, S was lying next to him, her mother was sitting on the end of the bed and her brother, B, was also present. The appellant was tickling S on her back as he told them a story. At some point her mother and B left and the appellant continued telling the story and tickling S. He manoeuvred S so that he could tickle her front. He stroked her chest and ultimately he rubbed her vagina. Bell NettleJ S gave evidence that the offence charged in count two occurred on an occasion when she was in her mother's bedroom wrapping a Christmas present. The appellant and her mother were lying on the bed. Her mother left the room to answer the telephone. The appellant made S sit on the end of the bed, saying words to the effect of, "I've been waiting for this". He pushed her onto the bed, adjusted his penis so it was over her vagina and simulated sex by moving up and down on S. Both S and the appellant were clothed, but S could see the appellant's erect penis through his shorts. In early 2001, S was interviewed by officers of the Department of Family and Children's Services ("the first Departmental interview") as the result of something she was heard to say while she was at a Naval Cadet camp. In the first Departmental interview S gave an account that the appellant was touching her chest and vagina on the outside of her clothes. In a further interview with other officers of the Department of Family and Children's Services in early 2001, S said that she and the appellant were play-fighting when he touched her on the chest and the touching had not been sexual ("the second Departmental interview"). In her evidence, S said that she had lied in the second Departmental interview. In February 2010, the appellant sent a request to be added to S's Facebook account as her friend. S responded negatively to the suggestion, saying, among other things, "[d]o u have any idea what u did to me as a kid?" After an interval of just over a fortnight, the appellant sent S a message in which he expressed his surprise at her response to his request to be a Facebook friend. There were no further communications between the two until July 2012, when S sent a message to the appellant saying "[j]ust thought I'd give you the heads up, im seeking legal advice!" Following this communication, the appellant and S exchanged Facebook messages with varying frequency until July 2015. The appellant repeatedly expressed his desire to meet S for coffee. S's responses included generalised allegations that the appellant had behaved wrongly towards her and that he was a "sick old man". Defence counsel acknowledged that the appellant's messages to S in 2014 conveyed his interest in engaging in sexual relations with her as an adult but he pointed to passages in the messages in which the appellant denied sexual misconduct with S when she was a child. S said that she had decided to complain to the police about the appellant's sexual abuse after receiving a Facebook message from him wishing her a happy birthday in 2014. S made her first statement to the police about the matter on 13 May 2015. On 16 July 2015, the appellant participated in an electronically recorded interview with the police in which he denied any offending against S. The Bell NettleJ interview was tendered in the prosecution case. The appellant did not give or adduce any evidence at the trial. It was his case that S had fabricated her allegations and that he did not commit any of the acts charged. The focus of defence counsel's closing submissions was on inconsistencies in S's evidence and on her admitted, or asserted, lies. Defence counsel submitted that the one issue for the jurors to resolve was whether they were satisfied to the criminal standard of the credibility of S's account. The submission appears to have been based on seven lies, or asserted lies, told by S. The first lie was in a telephone call that S made to the appellant around Mother's Day 2015. S explained that at the time of this call she was in a predicament brought about by her use of, and dealing in, methylamphetamine: her partner's car had been taken by "standover people" who were demanding payment of $3,500 for its return. She had attempted to kill herself with an overdose of some drug just before making the telephone call. Under pressure to raise money to secure the return of the car, S decided to contact the appellant, reasoning "there has to be somebody in this world that owes me this sort of money". S admitted that she lied to the appellant in the telephone call, telling him that she needed $20,000 to repay the debt. S said that she had been under the influence of a large quantity of benzodiazepines at the time and her memory of the call was poor. Allied to the first lie was S's acknowledgment that she lied to the investigating police by telling them that she had asked the appellant for $3,500 and not $20,000. A third lie, if the jury accepted that it was a lie, was one given in evidence at the trial. S said that she had told the investigating detective of her drug dealing. The detective denied that S had told him about that matter. A fourth, admitted lie was S's account in the second Departmental interview. The fifth admitted lie concerned an occasion when S was treated in hospital for a urinary tract infection. S said the account she gave the medical staff – that she had engaged in unprotected sex with a person at a party – was a lie. It was S's evidence that the urinary tract infection occurred after she had sexual intercourse with the appellant at her home. The sixth admitted lie was one S told her mother about an incident involving the appellant. The seventh admitted lie was S's account to the investigating police concerning the nature of the act charged in count one. The trial judge's directions to the jury concerning the approach it was to take to the evidence of S's lies, including the impugned direction, were as follows: Bell NettleJ "Members of the jury, it is for you to decide what significance the suggested lies in relation to the evidence of the complainant have to the issues in this case. The fact that a person has told a lie may be a factor in your assessment of their credibility. That is a matter for you to consider. You may wish to take it into account in assessing whether or not the complainant is telling the truth in relation to the touching the subject of counts 1 and 2 on the indictment. But do not follow a process of reasoning to the effect that just because she is shown to have told a lie or she has admitted she told a lie, that all of her evidence is in fact dishonest and cannot be relied upon. So, members of the jury, if you in your deliberations think she has told a lie or you accept when she says she did tell a lie that she did so, that is a factor you may take into account when you come to assess her credibility in relation to the alleged touching the subject of counts 1 and 2 in the indictment with which you are concerned." (emphasis added) The jury returned a majority verdict of guilty on count one and a verdict of not guilty on count two. The Court of Appeal As Buss P observed, the impugned direction appears to have been modelled on the direction proposed in Zoneff v The Queen as appropriate to a case in which there is a risk that the jury may engage in an impermissible process of reasoning in relation to lies told by an accused6. Plainly enough, the giving of such a direction is wholly inappropriate to the assessment in a criminal trial of the evidence of a complainant. Buss P rightly encapsulated the effect of the impugned direction as prohibiting the jury from "engaging in a process of reasoning, favourable to the appellant, in relation to fact-finding concerning S's honesty and reliability as a witness that was open to them"7. His Honour observed that it was open to the jury to decide that S was a dishonest and unreliable witness on the basis of lies which she admitted to having told or which the jury found she had told. In such an event, his Honour pointed out, it was open to the jury to find that S's evidence could not be relied upon to support a verdict of guilt on either count without evaluating all of the evidence that was 6 OKS v Western Australia (2018) 52 WAR 482 at 507 [121], citing Zoneff v The Queen (2000) 200 CLR 234 at 245 [24] per Gleeson CJ, Gaudron, Gummow and Callinan JJ; [2000] HCA 28. 7 OKS v Western Australia (2018) 52 WAR 482 at 507 [124]. Bell NettleJ relevant to those counts8. By giving the impugned direction, Buss P found, the trial judge had "intruded impermissibly on the function of the jury"9. The respondent did not contend, in its written submissions or on the hearing of the appeal in the Court of Appeal, that if the appellant's challenge to the impugned direction succeeded, the appeal should nonetheless be dismissed under the proviso. Following the hearing, by letter dated 25 October 2017, the Court of Appeal sought further submissions from the parties as to whether, in the event the appellant's challenge was made good, it was open to dismiss the appeal under the proviso. The respondent submitted that in the event the appellant's characterisation of the nature of the impugned direction was accepted, there could not be any scope for the application of the proviso. By letter dated 9 March 2018, the Court of Appeal outlined a basis upon which it might be open to dismiss the appeal under the proviso and invited the parties to make further submissions. The respondent filed a submission in response to this invitation withdrawing its concession as an "erroneously conservative" interpretation as to the non-engagement of the proviso in cases of this type. The basis outlined in the Court of Appeal's letter mirrored Buss P's reasons, with which Beech JA and Pritchard J agreed, for concluding that the impugned direction had not occasioned a substantial miscarriage of justice and that it was appropriate to dismiss the appeal under the proviso10. As noted, this conclusion depended on the assessment that the impugned direction would have had no significance to the jury's determination that the appellant's guilt of the offence charged in count one had been proved. This was because other directions given by the trial judge "required the jury to undertake a meticulous examination of S's evidence including by reference to her admitted or alleged lies"11. Buss P summarised those directions ("the other reliability directions") as follows12: the jury must scrutinise S's evidence with special care; 8 OKS v Western Australia (2018) 52 WAR 482 at 507 [123]. 9 OKS v Western Australia (2018) 52 WAR 482 at 507 [124]. 10 OKS v Western Australia (2018) 52 WAR 482 at 508-510 [131]-[139] per Buss P, 532 [258] per Beech JA, 532 [259] per Pritchard J. 11 OKS v Western Australia (2018) 52 WAR 482 at 509 [134]. 12 OKS v Western Australia (2018) 52 WAR 482 at 508-509 [132]. Bell NettleJ the crucial nature of S's evidence to the State's case, combined with the seriousness of the allegations made against the appellant, required the jury carefully to scrutinise and consider S's evidence; the fact that S had made prior inconsistent statements was a matter which the jury could take into account when assessing her credibility in relation to the allegations the subject of counts 1 and 2; if the jury accepted or found that S had told lies, that acceptance or finding could be taken into account by the jury in assessing her credibility in relation to the allegations the subject of counts 1 and 2; the jury must decide what significance S's admitted or alleged lies had in relation to S's evidence concerning the issues in the case; the jury could not convict the appellant of a count unless they were satisfied beyond reasonable doubt that S gave truthful, accurate and reliable evidence in relation to that count; and the jury could act on S's evidence to convict the appellant, if the jury was satisfied beyond reasonable doubt of its truth and accuracy, but it would be unsafe and dangerous to convict the appellant of a count on the uncorroborated evidence of S alone, unless the jury had first scrutinised her evidence with great care, had considered the circumstances relevant to her evidence to which his Honour had referred, and had taken full account of the Longman warning his Honour had given them." The differing verdicts returned on counts one and two, in Buss P's opinion, served to indicate the jury's understanding of the directions13. Acting upon the assumption that the jury understood and obeyed the other reliability directions and that the jury took full account of the "Longman warning"14, Buss P considered that it was open to give "very significant weight" to the verdict of guilty on count one. And his Honour said the verdict on count one was also 13 OKS v Western Australia (2018) 52 WAR 482 at 509 [133]. 14 Longman v The Queen (1989) 168 CLR 79; [1989] HCA 60. Bell NettleJ entitled to very significant weight given the jury's advantage in having seen and heard S and the other witnesses giving their evidence at the trial15. Buss P acknowledged the "natural limitations" of appellate review of the sufficiency of evidence to prove guilt to the criminal standard. His Honour's conclusion that the appellant's guilt was established on that standard plainly reflected the weight given to the verdict of guilty as part of the record16. The conclusion that there had not been a substantial miscarriage of justice also took into account that the impugned direction did not involve a denial of procedural fairness or some serious breach of the presuppositions of a criminal trial17. The submissions The appellant's argument adopts Buss P's analysis of the nature of the impugned direction, namely, that it intruded on the jury's fact-finding function by taking away a legitimate process of reasoning on which the defence relied. In the circumstances, the appellant argues that it was not open to find that the impugned direction would have had no effect on the jury's verdict. It follows, in his submission, that it was also not open to give the jury's verdict "very significant weight" in assessing whether his guilt had been proved beyond reasonable doubt. The respondent supports Buss P's analysis of the application of the proviso, submitting that the effect of the impugned direction was neutralised by the other reliability directions. The respondent also disputes that proof of guilt was wholly dependent on acceptance of S's evidence. While the respondent accepts the necessity for satisfaction of the credibility and reliability of S's evidence of the offence charged in count one, it submits that the appellant's Facebook messages, and one message in particular, substantially bolstered acceptance of S's evidence in this respect. In her evidence of the events leading up to the count one offence, S said that the appellant was telling a story about an occasion when he and other school boys set fire to some hay bales. When challenged about the cause of the fire they had put it down to "spontaneous combustion". S said that in 2015 at the suggestion of the police she recorded a telephone call with the appellant. During the call she asked whether he remembered the first story he told her, lying on her 15 OKS v Western Australia (2018) 52 WAR 482 at 509 [135]. 16 OKS v Western Australia (2018) 52 WAR 482 at 509-510 [136]. 17 OKS v Western Australia (2018) 52 WAR 482 at 510 [137]. Bell NettleJ brother's bed in the end bedroom of the family home. After this call the appellant sent S a Facebook message saying, "OH,,,Sorry [S].. i forgot,.....'Spontanious [sic] Combustion'..". An explanation for the differing verdicts, in the respondent's submission, is that this message provided independent support for acceptance of S's evidence of the offence charged in count one. A substantial miscarriage of justice? The central issue at the trial was the capacity of S's evidence to support the appellant's conviction for either offence in circumstances in which her credibility was under challenge. S admitted telling lies including to: the police with respect to the nature of the indecent dealing charged in count one; officers of the Department of Family and Children's Services with respect to the appellant's conduct; and the appellant with respect to the amount demanded of her by the "standover people". It was a matter for the jury to assess the significance of these lies to the credibility and reliability of S's evidence of the offences. There was an inconsistency between S's account that she told the investigating detective about her drug dealing and the detective's evidence on that subject. There may be more than one explanation for the inconsistency. Nonetheless, it was open to the jury to find S deliberately lied about that matter in evidence. It was within the jury's province to find that S's admitted lies or, if it so found, the lie given in evidence, without more, precluded acceptance of her evidence of the commission of the offences beyond reasonable doubt. It was that process of reasoning which the impugned direction took away. It is difficult to reconcile Buss P's recognition that an appellate court must act upon the assumption that jurors understand and obey the directions of law given by the trial judge18 with his Honour's conclusion that the impugned direction had no significance to the jury's determination19. Contrary to his Honour's analysis, the impugned direction qualified each of the other reliability directions. The jury was instructed that it could take into account a finding that S had told a lie or lies in assessing the credibility of her account of the offences charged in counts one and two, but that direction was to be understood as subject to the preclusion on reasoning from the fact of S's lies to a conclusion that S was 18 OKS v Western Australia (2018) 52 WAR 482 at 507 [120], citing Gilbert v The Queen (2000) 201 CLR 414 at 420 [13] per Gleeson CJ and Gummow J, 425 [31] per McHugh J; [2000] HCA 15 and Dupas v The Queen (2010) 241 CLR 237 at 248 [28]-[29]; [2010] HCA 20. 19 OKS v Western Australia (2018) 52 WAR 482 at 509 [134]. Bell NettleJ a dishonest witness whose evidence as a whole could not be relied upon. So, too, was the injunction to scrutinise S's evidence with special, or great, care subject to the same restriction. In confining the approach to the assessment of S's evidence in this way, the impugned direction was apt to lessen the weight which it was otherwise open to the jury to give to any finding made about S's lies including any finding that S lied in her evidence given at the trial. The conclusion that the impugned direction would not have affected the jury's verdict of guilty on count one was critical to Buss P's satisfaction that guilt had been established beyond reasonable doubt. That satisfaction was a necessary condition for the engagement of the proviso20. It was only by giving "very significant weight" to the verdict that his Honour was able to be so satisfied. There is evident difficulty in giving weight to the verdict of guilty in circumstances in which the prosecution case was dependent on the credibility of S's evidence and the jury's assessment of her credibility was wrongly circumscribed by the directions of law21. The respondent's reliance on the appellant's Facebook messages does not overcome the difficulty. Notably, Buss P made no reference to the Facebook messages. Whatever view might be taken of their content, they do not provide independent support for the occurrence of the indecent dealing charged in count one. The "Spontanious [sic] Combustion" message acknowledged an occasion when the appellant told a story while lying on a bed with S in the end bedroom of the family home. It was not an admission of having indecently dealt with S on that occasion. It is well settled that, in a case that does not involve a fundamental defect, the proviso cannot be applied "unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict"22. And as explained in Weiss v The Queen, there are cases in which the natural limitations 20 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]; [2005] HCA 81. 21 Collins v The Queen (2018) 92 ALJR 517 at 526 [36] per Kiefel CJ, Bell, Keane and Gordon JJ; 355 ALR 203 at 212; [2018] HCA 18. 22 Lane v The Queen (2018) 92 ALJR 689 at 695 [38] per Kiefel CJ, Bell, Keane and Edelman JJ; 357 ALR 1 at 8; [2018] HCA 28, quoting Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14 and Weiss v The Queen (2005) 224 CLR 300 at 317 Bell NettleJ of proceeding on the record do not permit the appellate court to attain that satisfaction23. This was such a case. The Court of Appeal's only gauge of the sufficiency of S's evidence to prove the appellant's guilt to the criminal standard was the verdict. It cannot be assumed that the misdirection had no effect upon the jury's verdict in circumstances in which the misdirection precluded the jury from adopting a process of reasoning, favourable to the appellant, that was open to it. Orders For these reasons there should be the following orders: Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Western Australia made on 11 April 2018 and in lieu thereof substitute the following orders: appeal allowed; the appellant's conviction be quashed; and there be a new trial. 23 (2005) 224 CLR 300 at 316 [41]; and see Baini v The Queen (2012) 246 CLR 469 at 480 [29] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; [2012] HCA 59; Castle v The Queen (2016) 259 CLR 449 at 473 [68] per Kiefel, Bell, Keane and Nettle JJ; [2016] HCA 46; Collins v The Queen (2018) 92 ALJR 517 at 526 [36] per Kiefel CJ, Bell, Keane and Gordon JJ; 355 ALR 203 at 212. Edelman EDELMAN J. I agree with the orders proposed in the joint judgment. And, subject to the addition of the brief remarks which follow, I agree with the reasons of their Honours. terms in similar The proviso in s 30(4) of the Criminal Appeals Act 2004 (WA) is in each Australian State and Territory24. expressed Section 30(4), which uses the common form of the proviso25, permits the Court of Appeal of the Supreme Court of Western Australia to dismiss an appeal, even if a ground of appeal might be decided in favour of the offender, "if it considers that no substantial miscarriage of justice has occurred" (emphasis added). The meaning and application of that simple expression, capturing immaterial errors and miscarriages, has resulted in hundreds of applications for special leave and appeals to this Court. The scope of this concept of materiality also continues to vex courts considering administrative law26 and appeals from civil decisions27. There are, broadly, two circumstances in which an appellate court will be unable to conclude that the error was immaterial, in the sense that no substantial miscarriage of justice has actually occurred. These are both sometimes described as circumstances where the proviso "does not apply" – although, of course, when the proviso is properly raised the appellate court is never relieved of its statutory duty to consider its application28; the appellate court must still consider whether or not a substantial miscarriage of justice has occurred. Both circumstances were initially relied upon by the appellant in this appeal. 24 See Criminal Appeal Act 1912 (NSW), s 6(1); Criminal Procedure Act 1921 (SA), ss 155(2), 158(2); Criminal Code (Qld), s 668E(1A); Criminal Code (Tas), s 402(2); Criminal Code (NT), s 411(2); Supreme Court Act 1933 (ACT), s 37O(3); cf Criminal Procedure Act 2009 (Vic), s 276. 25 Weiss v The Queen (2005) 224 CLR 300 at 303 [1]; [2005] HCA 81. 26 See, eg, Hossain v Minister for Immigration and Border Protection (2018) 92 ALJR 780 at 788 [30]-[31], 789 [40], 795 [72]; 359 ALR 1 at 9, 11, 19; [2018] HCA 34; Minister for Immigration and Border Protection v SZMTA [2019] HCA 3 at [45], cf at [89]-[90]. 27 See, eg, Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147; [1986] HCA 54; Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 143; [1991] HCA 61; Nobarani v Mariconte (2018) 92 ALJR 806 at 812- 813 [38]; 359 ALR 31 at 38-39; [2018] HCA 36. 28 Weiss v The Queen (2005) 224 CLR 300 at 316 [41]; Kalbasi v Western Australia (2018) 92 ALJR 305 at 339 [156]; 352 ALR 1 at 45; [2018] HCA 7. Edelman The first circumstance is where the nature of the error at trial, or the reason why the appeal is allowed, is so fundamental that it can be said, without more, that a substantial miscarriage of justice has occurred29. Logically, this is the anterior consideration. While there is no rigid or predefined formula to determine what amounts to a fundamental error, the category encompasses circumstances where there is a fundamental defect amounting to a serious breach of the presuppositions of the trial30. Some serious denials of procedural fairness may be examples of such a circumstance31. Another example is Lane v The Queen32, where the failure of the primary judge to give a necessary direction to the jury about the need to reach a verdict in which the jurors were unanimous about the factual basis for the conviction meant that it could not be known whether the jury, in reaching a verdict of guilty, had performed an essential step in the discharge of its function. It does not then fall to the appellate court to consider whether the appellant's conviction was inevitable33. To do so would substitute trial by an appellate court for trial by jury34. In written submissions on this appeal, the appellant argued that the error was one of this nature; however, senior counsel for the appellant did not press that argument to do so. The misdirection by the primary judge was not so fundamental to the trial that it could be said, without more, to have amounted to a substantial miscarriage of justice. He was correct not in oral submissions. The second circumstance where an appellate court will be unable to conclude that an error is immaterial is where, for any other reason, the appellate court is not satisfied that there has been no substantial miscarriage of justice. A miscarriage of justice in these circumstances will almost always be substantial 29 Quartermaine v The Queen (1980) 143 CLR 595 at 600-601; [1980] HCA 29; Wilde v The Queen (1988) 164 CLR 365 at 372-373; [1988] HCA 6; Glennon v The Queen (1994) 179 CLR 1 at 8, 12; [1994] HCA 7. 30 Wilde v The Queen (1988) 164 CLR 365 at 373. See also Kalbasi v Western Australia (2018) 92 ALJR 305 at 339 [155]; 352 ALR 1 at 44. 31 Weiss v The Queen (2005) 224 CLR 300 at 317 [45]. 32 (2018) 92 ALJR 689 at 697 [47]-[48]; 357 ALR 1 at 11; [2018] HCA 28. 33 Lane v The Queen (2018) 92 ALJR 689 at 695-696 [38]; 357 ALR 1 at 8-9. 34 Lane v The Queen (2018) 92 ALJR 689 at 698 [50]; 357 ALR 1 at 11, citing R v Baden-Clay (2016) 258 CLR 308 at 330 [66]; [2016] HCA 35. See also Kalbasi v Western Australia (2018) 92 ALJR 305 at 321 [67], 340-341 [162]; 352 ALR 1 at Edelman unless the appellate court considers that, without the error, conviction by the jury, acting reasonably, was inevitable. This is by far the most dominant verbal formula to describe material errors that are not of the first, fundamental, type35. In effect, the verbal formula directs attention to whether the appellant was deprived of a possibility of acquittal36. In considering whether conviction was inevitable the appellate court must consider whether, in light of the verdict given at trial, "the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty"37. Like the first circumstance where the proviso "does not apply", that consideration does not permit, in practical terms, a retrial by an appellate court proceeding wholly or substantially on the record. Review of the record of the trial by the appellate court must be for the purpose of assessing whether conviction by the jury, acting reasonably, was inevitable. The natural limitations of an appellate court conducting that exercise include the "disadvantage that the appellate court has when compared with the [jury] in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court, 35 Collins v The Queen (2018) 92 ALJR 517 at 526-527 [41]; 355 ALR 203 at 213- 214; [2018] HCA 18. See also Gallagher v The Queen (1986) 160 CLR 392 at 412-413; [1986] HCA 26; Wilde v The Queen (1988) 164 CLR 365 at 372; Festa v The Queen (2001) 208 CLR 593 at 631 [121], 636 [140], 661 [226]; [2001] HCA 72; Conway v The Queen (2002) 209 CLR 203 at 226 [63]; [2002] HCA 2; Arulthilakan v The Queen (2003) 78 ALJR 257 at 269 [62], 270-271 [68]-[69]; 203 ALR 259 at 275, 276-277; [2003] HCA 74; Kamleh v The Queen (2005) 79 ALJR 541 at 547 [29], 549 [39]; 213 ALR 97 at 104, 106; [2005] HCA 2; Darkan v The Queen (2006) 227 CLR 373 at 402 [95], 407 [117]; [2006] HCA 34; Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 106-107 [35]-[38]; [2012] HCA 14; Baini v The Queen (2012) 246 CLR 469 at 481-482 [33], 484 [40]; [2012] HCA 59; Lindsay v The Queen (2015) 255 CLR 272 at 276 [4], 301-302 [86]; [2015] HCA 16; Castle v The Queen (2016) 259 CLR 449 at 472 [65], 477 [81]; [2016] HCA 46; R v Dickman (2017) 261 CLR 601 at 605 [4]-[5], 620 [63]; [2017] HCA 24. 36 Wilde v The Queen (1988) 164 CLR 365 at 371-372; Kalbasi v Western Australia (2018) 92 ALJR 305 at 321-322 [71], 334 [136], 340 [160]; 352 ALR 1 at 21-22, 38, 46. See also Mraz v The Queen (1955) 93 CLR 493 at 514; [1955] HCA 59; Driscoll v The Queen (1977) 137 CLR 517 at 524-525; [1977] HCA 43; R v Storey (1978) 140 CLR 364 at 376; [1978] HCA 39; Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35; Filippou v The Queen (2015) 256 CLR 47 at 54-55 [15]; [2015] HCA 29. 37 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]. See Kalbasi v Western Australia (2018) 92 ALJR 305 at 339-340 [158]-[160]; 352 ALR 1 at 45-46. Edelman reading the transcript, cannot always fully share"38. Hence, "[t]here will be cases, perhaps many cases, where those natural limitations require the appellate court to conclude that it cannot reach the necessary degree of satisfaction"39. It can sometimes be a finely balanced matter whether to conclude that conviction was inevitable or, to put the matter positively, whether there was a possibility that, but for the error, the jury, acting reasonably, might have acquitted. In this case, for the reasons given in the joint judgment, the natural limitations of an appeal prevented the appellate court from concluding that conviction by the jury, acting reasonably, was inevitable. The circumstances which make this so are as follows: (i) the prosecution case could not have succeeded without the jury accepting relevant parts of the evidence given by the complainant; (ii) the evidence relied upon by the prosecution, apart from the complainant's oral evidence, was limited, with the Facebook messages perhaps being the most significant; (iii) the complainant had admitted that she had told some lies, and her credibility was challenged at trial in a real and substantial way; and (iv) the misdirection must be taken to have circumscribed the appellant's challenge to the complainant's evidence because, as Buss P rightly said, it "prohibit[ed] the jury from engaging in a process of reasoning, favourable to the appellant, in relation to fact-finding concerning [the complainant's] honesty and reliability as a witness that was open to them"40. The misdirection cannot therefore have been one which had no effect upon the jury, acting reasonably, in its verdict. Conviction was not inevitable. 38 Fox v Percy (2003) 214 CLR 118 at 126 [23]; [2003] HCA 22. 39 Weiss v The Queen (2005) 224 CLR 300 at 316 [41]. 40 OKS v Western Australia (2018) 52 WAR 482 at 507 [124].

HIGH COURT OF AUSTRALIA STATE OF NEW SOUTH WALES APPELLANT AND ANGELO LEPORE & ANOR RESPONDENTS New South Wales v Lepore [2003] HCA 4 6 February 2003 1. Appeal allowed in part. ORDER 2. Paragraph 2 of the order of the Court of Appeal of New South Wales made on 23 April 2001 set aside, and in its place, order that the judgment entered in the District Court on 16 April 1999 be wholly set aside and that there be a new trial. 3. Appellant to pay the costs of the appeal to this Court. 4. Costs of the new trial to abide its outcome. On appeal from the Supreme Court of New South Wales Representation: M G Sexton SC, Solicitor-General for the State of New South Wales with C T Barry QC and N L Sharp for the appellant (instructed by Crown Solicitor for the State of New South Wales) A S Morrison SC with J Oakley for the first respondent (instructed by Milicevic Solicitors) No appearance for the second respondent Interveners: B M Selway QC, Solicitor-General for the State of South Australia with J G Masters intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) B M Selway QC, Solicitor-General for the State of South Australia with J C Pritchard intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. HIGH COURT OF AUSTRALIA GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ Matter No B20/2002 VIVIAN CHRISTINA SAMIN APPELLANT AND STATE OF QUEENSLAND & ORS RESPONDENTS Matter No B21/2002 AND APPELLANT STATE OF QUEENSLAND & ORS RESPONDENTS Samin v Queensland; Rich v Queensland 6 February 2003 B20/2002 & B21/2002 Appeals dismissed with costs. ORDER On appeal from the Supreme Court of Queensland Representation: D O J North SC with R C Morton for the appellants (instructed by Shannon Donaldson Province Lawyers) P A Keane QC, Solicitor-General of the State of Queensland with P J Flanagan for the first and second respondents (instructed by Crown Solicitor of the State of Queensland) No appearance for the third respondent Interveners: B M Selway QC, Solicitor-General for the State of South Australia with J G Masters intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) B M Selway QC, Solicitor-General for the State of South Australia with J C Pritchard intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS New South Wales v Lepore Negligence – Liability of school authority – Alleged sexual assault on pupil by teacher – Whether school authority in breach of non-delegable duty of care – Concept of non-delegable duty – Whether school authority vicariously liable – Test for imposition of vicarious liability. Practice and procedure – Trial – Negligence – Trial of issues of liability and damage severed – Failure to make necessary findings of fact – Retrial. Words and phrases – "non-delegable duty", "vicarious liability". Samin v Queensland; Rich v Queensland Negligence – Liability of school authority – Sexual assault on pupil by teacher – Whether school authority in breach of non-delegable duty of care – Concept of non-delegable duty – Whether school authority vicariously liable – Test for imposition of vicarious liability. Words and phrases – "non-delegable duty", "vicarious liability". GLEESON CJ. If a teacher employed by a school authority sexually abuses a pupil, is the school authority liable in damages to the pupil? No one suggests that the answer is "No, never". In Australia, at least until recently, an answer "Yes, always" would also have been surprising. More information would have been required. One potentially important matter is fault on the part of the school authority. The legal responsibilities of such an authority include a duty to take reasonable care for the safety of pupils. There may be cases in which sexual abuse is related to a failure to take such care. A school authority may have been negligent in employing a particular person, or in failing to make adequate arrangements for supervision of staff, or in failing to respond appropriately to complaints of previous misconduct, or in some other respect that can be identified as a cause of the harm to the pupil. The relationship between school authority and pupil is one of the exceptional relationships which give rise to a duty in one party to take reasonable care to protect the other from the wrongful behaviour of third parties even if such behaviour is criminal1. Breach of that duty, and consequent harm, will result in liability for damages for negligence. We are not presently concerned with such a case. Our concern is with the more difficult problem of liability in the absence of such fault. The presence of fault on the part of the school authority, causally related to the harm to the pupil, will result in liability. In what circumstances may there be liability notwithstanding the absence of fault? In other common law jurisdictions, that question would be understood as a question about vicarious liability. The assumed relationship between authority and teacher is that of employer and employee. A further assumption is that there has been no want of care on the part of the authority, either in appointing or supervising the teacher, or in any other relevant aspect of the arrangements made for the care of pupils. The teacher has been guilty of intentional criminal conduct that has caused harm to a pupil. An employer is vicariously responsible for the wrongful act of an employee in some circumstances, and not in others. Either the law imposes vicarious responsibility on the school authority, or it does not. Does that conclude the matter? It has been argued that there is another possible basis upon which the authority may be found liable, even though there has been no want of care on its part, and even though the law refuses to treat it as vicariously responsible for the tort of its employee. If it exists, this must be a form of liability even more strict than vicarious liability. It must be, or at least encompass the possibility of, liability for the intentional wrongdoing of an employee the ordinary principles of vicarious responsibility do not entitle a plaintiff to succeed. This, it is contended, is the in circumstances where 1 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 265 legal consequence of what has been called the non-delegability of a school authority's duty of care. The argument is that the authority's duty to take reasonable care for the safety of pupils, because it is non-delegable, may become a source of liability for any form of harm, accidental or intentional, inflicted upon a pupil by a teacher. Three appeals in cases involving sexual abuse of pupils by teachers were heard together by this Court. The first is from a decision of the Court of Appeal of New South Wales2. Because of defects in the manner in which the case was decided at first instance, it was an unsatisfactory vehicle for the resolution of the issues involved. However, a majority of the Court of Appeal (Mason P and Davies AJA, Heydon JA contra) accepted in principle that the school authority (the New South Wales government) was liable on the basis of non-delegable duty. The extent of the liability was expressed by Mason P (with whom Davies AJA agreed) as follows3: "In my view the State's obligations to school pupils on school premises and during school hours extend to ensuring that they are not injured physically at the hands of an employed teacher (whether acting negligently or intentionally)." That is a proposition with wide implications. Because of the principle upon which it is said to rest, its significance extends beyond schools, and beyond activities involving the care of children. The ambit of duties that are regarded as non-delegable has never been defined, and the extent of potential tort liability involved is uncertain, but it is clearly substantial. The other two appeals are from the Court of Appeal of Queensland, which heard the cases together, and which declined to follow the decision of the New South Wales Court of Appeal4. There is thus a conflict of authority between intermediate courts of appeal in this country that requires resolution. The plaintiffs' claims In the first matter, the first respondent sued the appellant (the State of New South Wales) and the second respondent (the teacher) in the District Court of New South Wales. The events complained of occurred in 1978, when the first respondent, then aged seven, was attending a State primary school. He alleged 2 Lepore v State of New South Wales (2001) 52 NSWLR 420. (2001) 52 NSWLR 420 at 432. 4 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626. that he was assaulted by the second respondent. The assaults were said to have occurred in the context of supposed misbehaviour by the first respondent, and the imposition of corporal punishment for such misbehaviour. On a number of occasions, the first respondent, after being accused of misbehaviour, was sent to a storeroom, told to remove his clothing, smacked, and then touched indecently. On some occasions, other boys would be present, also ostensibly being punished. The behaviour of the second respondent was reported to the police. He was charged with a number of offences of common assault. He entered pleas of guilty. Sentence was deferred upon his entering into a recognizance to be of good behaviour. He was also fined $300. He resigned as a teacher. The second respondent took no part in the proceedings in the District Court, or in the subsequent appeals. Judge Downs QC, who was about to retire, dealt separately with the issue of the liability of the State and the teacher, and deferred questions as to damages to be heard by another judge. He heard evidence, and then delivered a judgment which found that the second respondent had assaulted the first respondent. Regrettably, the judgment left unresolved the nature and extent of the assaults. The learned judge did not accept all the evidence of the first respondent, but it was not disputed that the second respondent had struck the first respondent on his bare bottom. This was found sufficient to justify a finding of assault, and it resulted in liability on the part of the second respondent. As to the liability of the appellant, Judge Downs found that there was no failure on the part of the State to exercise proper care. He said: "It remains now for me to consider if the first defendant breached the duty it owed to the plaintiff. The evidence discloses that the second defendant in or about September 1978 firstly was a qualified teacher aged 23 years; secondly with between one and a half to two years experience as a primary school teacher; thirdly he worked under the direct supervision of the head mistress of … Infants School and the general supervision of the principal of its primary school; fourthly and that there were guidelines as to the nature of the supervision. As to this the inspector's report indicates that so far as the first defendant was aware the second defendant worked within those guidelines. The assaults alleged were deliberate and isolated acts of abuse which occurred in an enclosed room and which were inimical or totally foreign to the second defendant's duties as a teacher. Furthermore there was not any evidence before me: (1) over what period the various assaults took place; (2) the length of time that any one of the assaults might have lasted; (3) that any member of the staff at the school or of the department had any opportunity to witness the assaults; (4) that any member of the staff or of the department knew of the assaults; (5) that any member of the staff or of the department had any reason to believe that the second defendant might commit the assaults. For example there was not any evidence that any parent warned any member of the staff and the inspector, as I have already stated, found him to be a teacher with above average potential; (6) that the second defendant had a predisposition to commit such assaults; and finally (7) there is not any evidence as to what system of work or supervision might reasonably have been implemented so as to avoid the isolated assaults which took place. Bearing in mind all of these matters together with the fact that the evidence of the isolated acts fell from the lips of children who were aged 7 or 8 years more than 20 years after the event, the only conclusion I can come to is that there is no evidence that the first defendant breached the duty that it owed to the plaintiff. That completes my judgment on the issues that were before me." Regrettably, Judge Downs did not make any detailed findings about the nature of the teacher's conduct. That some assaults occurred was not in dispute. His Honour was apparently content to let the judge who was to deal with the issue of damages work out the extent of the assaults. The judge also failed to deal with an argument based on breach of a non-delegable duty. The first respondent appealed against the decision in favour of the appellant. The Court of Appeal was left with an unsatisfactory factual basis for a review of the decision. There was no challenge in the Court of Appeal to the factual findings absolving the Department of Education of negligence. The principal complaint was that the trial judge failed to address the issue of breach of a non-delegable duty of care. Neither at first instance, nor in the Court of Appeal, was the case against the appellant put on the basis of vicarious liability. There may have been an arguable case based on vicarious liability, even on a narrow view of the potential scope of such liability. Chastisement of a pupil is within the course of a teacher's employment5. On the account given by the first respondent, the inappropriate conduct seems to have taken place in the context of punishment for misbehaviour. However, no such argument was advanced, and the factual findings necessary for the purpose of considering such an argument were not made. Indeed, the judge was told by counsel that he "[did not] have to get into the area of the case about the barmaid and the hotel". This was obviously a reference to Deatons Pty Ltd v Flew6. The second and third matters both arose out of the conduct of a teacher (the third respondent) at a one-teacher State primary school in rural Queensland. 5 Ryan v Fildes [1938] 3 All ER 517. (1949) 79 CLR 370. In each case, the appellant was a young girl attending the school. At the relevant times (between 1963 and 1965) the appellants were aged between seven and ten. The third respondent has taken no part in the proceedings. He was sentenced to a lengthy term of imprisonment7. Each appellant alleged serious acts of sexual assault by the third respondent. Those acts, as particularised in the Statement of Claim, occurred, at school, during school hours, and in a classroom or adjoining rooms. Because no evidence has been taken, the full circumstances of the alleged assaults are not apparent. For example, it is not clear whether the third respondent's behaviour allegedly occurred in front of other pupils, or how he came to be in intimate physical contact with the appellants. In each case, the former pupil commenced action, in the District Court of Queensland, against the State of Queensland, the Minister for Education of Queensland, and the former teacher. We are not presently concerned with the action against the teacher. In relation to the claims against the State and the Minister (which reflected some uncertainty as to the identity of the school authority) each Statement of Claim alleged, in terms of a non-delegable duty, that the State was under "a duty to ensure that reasonable care was taken of [the appellant] whilst she was at the school" and that, in breach of the State's duty, the teacher sexually assaulted the appellant. It then alleged psychiatric injury and other harm to the appellant. There was no allegation of fault on the part of the school authority in relation to its conduct of the school, or appointment of the teacher, or failure to respond to warnings or complaints. It was simply alleged that the teacher sexually assaulted the appellants at school, and that this constituted a breach of the duty owed by the school authority to the appellants. Applications were made by the first and second respondents to strike out each Statement of Claim. Those applications failed in the District Court. There were appeals to the Court of Appeal of Queensland. The appeals were successful. The Court of Appeal (McPherson, Thomas and Williams JJA) ordered that each Statement of Claim be struck out, and that each plaintiff have leave to deliver a further Statement of Claim. The claims were argued solely on the basis of non-delegable duty. No reliance was placed on vicarious liability. In noting that fact, McPherson JA said: "Nothing can be clearer than that the assaults alleged to have been committed here were independent and personal acts of misconduct by [the teacher]. They were in no sense capable of being regarded as methods of conducting his teaching function, but were done in utter defiance and contradiction of it and of his duties as an employee of the State." 7 D'Arcy (2001) 122 A Crim R 268. The Court of Appeal of Queensland declined to follow the reasoning of the majority in Lepore, preferring the minority opinion of Heydon JA. In this Court, counsel for the appellants in the cases of Samin and Rich indicated that, pursuant to the leave to re-plead, reliance would be placed on vicarious liability. The Court was shown the proposed form of Amended Statements of Claim. The only difference from the original pleadings is that they assert that the school authority is vicariously responsible for the assaults perpetrated by the teacher, and give as particulars the opportunity which the school afforded the teacher to abuse his authority, the intimacy inherent in the relation between teacher and infant pupils, the power of the teacher and the vulnerability of the pupils, the fact that the teacher had sole control of the school, and the fact that the assaults occurred during school hours and at school premises. By reason of those matters, it is contended, the assaults "occurred in the course of or were closely connected with" the teacher's employment. Once again, there is no allegation of any act or omission of the school authority involving a want of care for the safety of the pupils. Apparently, the appellants did not, and do not, intend to take advantage of the opportunity to re-plead to seek to make out a case of direct liability based on some act or omission of the school authority. In all three cases, the issue is whether, there being no allegation of any fault on the part of the school authority in its systems or procedures, its appointment and supervision of staff, its arrangements for responding to complaints or warnings, or any other matter which might have given rise to a claim that the authority itself was guilty of a want of care, the acts of the teacher make the authority liable. In this Court, primary reliance is again placed on the principle of non-delegable duty, and the reasoning of the majority in the New South Wales Court of Appeal. However, in the alternative, it is now argued that the school authorities are vicariously liable. Recent decisions of the House of Lords8 and of the Supreme Court of Canada9 are said to support that alternative approach. It is not suggested that there is any procedural unfairness involved in permitting that argument to be raised at this stage. The non-delegable duty of care For more than a century, courts have described certain common law duties of care as "non-delegable" or "personal"10. The purpose and effect of such a 8 Lister v Hesley Hall Ltd [2002] 1 AC 215. 9 Bazley v Curry [1999] 2 SCR 534; Jacobi v Griffiths [1999] 2 SCR 570. 10 Kondis v State Transport Authority (1984) 154 CLR 672 at 685 per Mason J. characterisation of a duty of care is not always entirely clear11. However, in a number of cases, members of this Court have so described the duty owed by a school authority to its pupils. In Dalton v Angus12, Lord Blackburn referred to the inability of a person subject to a certain kind of responsibility to "escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor". His Lordship's reference to a responsibility of "seeing" a duty performed has echoes in later judicial statements. The concept was taken up in relation to the duty of an employer to take reasonable care for the safety of a workman. In Wilsons and Clyde Coal Co v English13, Lord Wright described the duty as "personal", and said that it required the provision of competent staff, adequate material, and a proper system of effective supervision. Lord Thankerton14 said that such duties "cannot be delegated", explaining that "the master cannot divest himself of responsibility by entrusting their performance to others". It would, perhaps, have been more accurate to say that the duties cannot be discharged by delegation. At all events, to describe a duty of care as "personal" or "non- delegable", in the sense that the person subject to the duty has a responsibility either to perform the duty, or to see it performed, and cannot discharge that responsibility by entrusting its performance to another, conveys a reasonably clear idea; but it addresses the nature of the duty, rather than its content. This point was made in relation to another class of case in which resort was had to the concept of a personal or non-delegable duty: cases concerning the relationship between hospital and patient. Cases of that kind caused difficulty for the application of the principle of vicarious liability because of the variety of professional skills and arrangements that may be involved in a hospital organization. In Gold v Essex County Council15, Lord Greene MR, referring to the duty of care undertaken by a hospital, said: "Apart from any express term governing the relationship of the parties, the extent of the obligation which one person assumes towards another is to be inferred from the circumstances of the case. This is true 11 Glanville Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180. 12 (1881) 6 App Cas 740 at 829. 13 [1938] AC 57 at 84. 14 [1938] AC 57 at 73, adopting the statement of the Lord Justice-Clerk in Bain v Fife Coal Co [1935] SC 681 at 693. 15 [1942] 2 KB 293 at 301-302. whether the relationship be contractual (as in the case of a nursing home conducted for profit) or non-contractual (as in the case of a hospital which gives free treatment). In the former case there is, of course, a remedy in contract, while in the latter the only remedy is in tort, but in each case the first task is to discover the extent of the obligation assumed by the person whom it is sought to make liable. Once this is discovered, it follows of necessity that the person accused of a breach of the obligation cannot escape liability because he has employed another person, whether a servant or agent, to discharge it on his behalf, and this is equally true whether or not the obligation involves the use of skill. It is also true that, if the obligation is undertaken by a corporation, or a body of trustees or governors, they cannot escape liability for its breach, any more than can an individual, and it is no answer to say that the obligation is one which on the face of it they could never perform themselves. Nor can it make any difference that the obligation is assumed gratuitously by a person, body or corporation which does not act for profit … Once the extent of the obligation is determined the ordinary principles of liability for the acts of servants or agents must be applied." His Lordship's insistence that the first step is to identify the extent of the obligation that arises out of a particular relationship, whether contractual or non- contractual, is important. In the context of employment, for example, a duty to take reasonable care for the safety of workers cannot be discharged by delegation; but delegation does not transform it into a duty to keep workers free from all harm. A duty to see that reasonable care is taken for the safety of workers is different from a duty to preserve them from harm. Some confusion may result from describing it as a duty to "ensure" that reasonable care is taken for the safety of workers, which may give rise to the misconception that the responsibility of an employer is absolute. Because the hospital cases were treated by Mason J (of this Court), in The Commonwealth v Introvigne16, as analogous, it is useful to note the state of the Australian law in relation to the duties owed by hospitals to patients at about the time Introvigne was decided. This appears from the decision of the Court of Appeal of New South Wales in Albrighton v Royal Prince Alfred Hospital17, which was decided two years before Introvigne. Reynolds JA, with whom Hope JA and Hutley JA agreed, said that the concept that a hospital fulfils its duty of care to persons treated in it by selecting and appointing competent medical staff had been discarded18. Referring to an argument that the hospital 16 (1982) 150 CLR 258 at 270. 17 [1980] 2 NSWLR 542. 18 [1980] 2 NSWLR 542 at 557. was in breach of a duty which it owed to the plaintiff, and of which it could not divest itself by delegation, he said that the precise content of the responsibility assumed by a hospital might vary with individual cases, and had to be determined by reference to the particular facts19. It is significant that the duty of care is personal or non-delegable; but it is always necessary to ascertain its content. The case of Introvigne raised an unusual problem. The plaintiff, a schoolboy aged 15, attended the Woden Valley High School in the Australian Capital Territory. One morning before class, he and some friends entertained themselves by swinging on a flagpole in the school grounds. As a result of their exertions, the truck of the flagpole became detached, and fell on the plaintiff's head. He was injured. The plaintiff's case was originally based on the allegedly defective condition of the flagpole. He sued the Commonwealth as occupier of the school premises. He also sued the designer of the flagpole. On the first day of the hearing, the plaintiff obtained leave to amend his Statement of Claim by alleging negligence on the part of the teachers. In particular, he alleged that the acting principal failed to arrange for adequate supervision in the school grounds. The plaintiff claimed that the Commonwealth was liable as a result of that failure. However, the Commonwealth was not the employer of the acting principal, or the other teachers. They were all employees of the New South Wales Department of Education which, at the relevant time, operated the Woden Valley High School on behalf of the Commonwealth pursuant to an inter- governmental arrangement. It was too late for the plaintiff to sue the State of New South Wales. The trial judge found no negligence. That finding was reversed on appeal. The factual issue is presently irrelevant. What was significant for future cases was the basis on which the Court attributed responsibility to the Commonwealth for the negligence of the teachers. Mason J, with whom Gibbs CJ agreed, said that, although the case had been presented by the plaintiff, and dealt with at first instance and in the intermediate appellate court, as one of vicarious liability20, the plaintiff was entitled to succeed on a different basis. He did not reject the possibility that the Commonwealth might have been vicariously liable for the negligence of the teachers21. However, he rested his decision on the ground that "[t]he duty … imposed on a school authority is akin to that owed by a hospital to its patient"22. In Gold, it had been held that the liability of a hospital arises out of an obligation 19 [1980] 2 NSWLR 542 at 561. 20 (1982) 150 CLR 258 at 264. 21 (1982) 150 CLR 258 at 271. 22 (1982) 150 CLR 258 at 270. to use reasonable care in treatment, the performance of which cannot be delegated to someone else. This is a "personal" duty. It is more stringent than a duty to take reasonable care; it is a duty to ensure that reasonable care is taken. The reason for its imposition in the case of schools is the immaturity and inexperience of pupils, and their need for protection. This gives rise to a special responsibility akin to that of a hospital for its patients23. Having regard to the existing authorities on personal or non-delegable duties, and in the light of what he said in later cases, it is clear that Mason J intended to make no distinction between a duty to ensure that reasonable care is taken and a duty to see that reasonable care is taken. It also seems clear that the increased stringency to which he was referring lay, not in the extent of the responsibility undertaken (reasonable care for the safety of the pupils), but in the inability to discharge that responsibility by delegating the task of providing care to a third party or third parties. Murphy J found against the Commonwealth both on the basis of non- delegable duty and on the basis of vicarious liability. He said that, because the Commonwealth assumed the role of conducting a school24: "In terms of the prevailing concepts of duty, the Commonwealth became fixed with certain non-delegable duties: To take all reasonable care to provide suitable and safe premises. The standard of care must take into account the well-known mischievous propensities of children, especially in relation to attractions and lures with obvious or latent hazards. To take all reasonable care to provide an adequate system to ensure that no child is exposed to any unnecessary risk of injury; and to take all reasonable care to see that the system is carried out. The Commonwealth also became vicariously liable to pupils and parents for the acts and omissions of the teaching and other staff (whether or not these were supplied by another entity or agency)." Brennan J held that the Commonwealth, as a school authority, was under a duty to provide adequate supervision of the pupils, and, as no such supervision was provided, there was a breach of duty25. 23 (1982) 150 CLR 258 at 270-271. 24 (1982) 150 CLR 258 at 274-275. 25 (1982) 150 CLR 258 at 280. The other member of the Court, Aickin J, died before judgment was delivered. What was decided in Introvigne was that, even though it may have been doubtful that the Commonwealth was vicariously liable for the negligent failure of the teachers to provide adequate supervision, (the doubt arising from the inter- governmental arrangement), nevertheless the Commonwealth was under a duty to provide reasonable supervision; it could not discharge that duty by arranging for the State of New South Wales to conduct the school; it had a responsibility to see that adequate supervision was provided; and the absence of adequate supervision meant that it had not fulfilled its responsibility and was in breach of its duty of care. That produced the same practical result as would have followed if the Commonwealth had employed the teachers; an outcome that would have been unremarkable but for the quirk of federalism encountered by the plaintiff when he belatedly amended his Statement of Claim. The failure to take care of the plaintiff which resulted in the Commonwealth's liability in Introvigne was a negligent omission on the part of the teachers at the school, acting in the course of their ordinary duties. The hospital cases, which were treated by Mason J as analogous, similarly involved negligence. A responsibility to take reasonable care for the safety of another, or a responsibility to see that reasonable care is taken for the safety of another, is substantially different from an obligation to prevent any kind of harm. Furthermore, although deliberately and criminally inflicting injury on another person involves a failure to take care of that person, it involves more. If a member of a hospital's staff with homicidal propensities were to attack and injure a patient, in circumstances where there was no fault on the part of the hospital authorities, or any other person for whose acts or omissions the hospital was vicariously responsible, the common law should not determine the question of the hospital's liability to the patient on the footing that the staff member had neglected to take reasonable care of the patient. It should face up to the fact that the staff member had criminally assaulted the patient, and address the problem of the circumstances in which an employer may be vicariously liable for the criminal acts of an employee. Intentional wrongdoing, especially intentional criminality, introduces a factor of legal relevance beyond a mere failure to take care. Homicide, rape, and theft are all acts that are inconsistent with care of person or property, but to characterise them as failure to take care, for the purpose of assigning tortious responsibility to a third party, would be to evade an issue26. 26 See Lister v Hesley Hall Ltd [2002] 1 AC 215 at 250 per Lord Millett. As will appear, courts of the highest authority in England and Canada, and courts in other common law jurisdictions, have analysed the problem of the liability of a school authority for sexual abuse of pupils by teachers in terms of vicarious liability. If the argument based on non-delegable duty, said to be supported by Introvigne, is correct, their efforts have been misdirected, and the conclusions they have reached have unduly restricted liability. If the proposition accepted in the Court of Appeal of New South Wales is correct, and represents the law in Australia, then the liability of school authorities in this country extends beyond that which has been accepted in other common law jurisdictions. Moreover, in this country, where a relationship of employer and employee exists, if the duty of care owed to a victim by the employer can be characterised as personal, or non-delegable, then the potential responsibility of an employer for the intentional and criminal conduct of an employee extends beyond that which flows from the principles governing vicarious liability. It is unconstrained by considerations about whether the employee was acting in the course of his or her employment. It is enough that the victim has been injured by an employee on an occasion when the employer's duty of care covered the victim. The employer's duty to take care, or to see that reasonable care is taken, has been transformed into an absolute duty to prevent harm by the employee. It is similar to the duty owed by the owners of animals known to have vicious propensities. In Burnie Port Authority v General Jones Pty Ltd27, a case concerning non-delegable duties of care, in which Introvigne was considered and applied, Brennan J identified the fallacy involved in an argument of the kind accepted by the majority in the New South Wales Court of Appeal. He referred to a case where an employer, who is subject to a personal (non-delegable) duty, entrusts performance to an independent contractor. In that connection, he quoted a passage from the judgment of Cockburn CJ in Bower v Peate28, and said29: "There is a difficulty with this passage if it is applied in a case where negligence is in issue. The difficulty lies in the words 'is bound to see to the doing of that which is necessary to prevent the mischief', for those words suggest that the duty is an absolute duty 'to prevent the mischief', a duty higher than a duty to exercise reasonable care. There are some cases, notably the rule in Rylands v Fletcher and the law of nuisance, where the act authorized to be done does impose on the employer of an independent contractor a duty higher than a duty to exercise reasonable care. Therefore, where the authorized act is or creates 27 (1994) 179 CLR 520 at 575-576. 28 (1876) 1 QBD 321 at 326-327. 29 (1994) 179 CLR 520 at 576-577. a non-natural use of land, or in the absence of preventive measures will create a nuisance, the duty of the employer is, in the one case, to prevent escape of the mischievous thing or, in the other, to prevent the occurrence of the nuisance. But the duty in negligence is not so demanding." The proposition that, because a school authority's duty of care to a pupil is non-delegable, the authority is liable for any injury, accidental or intentional, inflicted at school upon a pupil by a teacher, is too broad, and the responsibility with which it fixes school authorities is too demanding. In Kondis v State Transport Authority30, a case concerning an employer's duty to provide a safe system of work, Mason J developed what he had earlier said in Introvigne. He said that, when we look at the classes of case in which the existence of a non-delegable duty has been recognized, it appears that there is some element in the relationship between the parties that makes it appropriate to impose a duty to ensure that reasonable care and skill is taken for the safety of another's person or property. He went on31: "The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patients who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v Easton32 the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised." In cases where the care of children, or other vulnerable people, is involved, it is difficult to see what kind of relationship would not give rise to a non-delegable duty of care. It is clearly not limited to the relationship between 30 (1984) 154 CLR 672 at 684-687. 31 (1984) 154 CLR 672 at 687. 32 (1878) 4 VLR 283. school authority and pupil. A day-care centre for children whose parents work outside the home would be another obvious example. The members or directors of the club, which provided recreational facilities for children, considered by the Supreme Court of Canada in Jacobi v Griffiths33, presumably owed a non- delegable duty of care to the children who were sexually assaulted by the club's employee. It would be wrong to assume that the persons or entities potentially subject to this form of tortious liability have "deep pockets", or could obtain, at reasonable rates, insurance cover to indemnify them in respect of the consequences of criminal acts of their employees or independent contractors. Whether the organization providing care is public or private, commercial or charitable, large or small, religious or secular, well-funded or mendicant, its potential no-fault tortious liability will be extensive. Furthermore, if deterrence of criminal behaviour is regarded as a reason for imposing tortious liability upon innocent parties, three things need to be remembered. First, the problem only arises where there has been no fault, and therefore no failure to exercise reasonable care to prevent foreseeable criminal behaviour on the part of the employee. Secondly, it is primarily the function of the criminal law, and the criminal justice system, to deal with matters of crime and punishment. (Most Australian jurisdictions also have statutory schemes for compensating victims of crime.) Thirdly, by hypothesis, the sanctions provided by the criminal law have failed to deter the employee who has committed the crime. There is a further difficulty with the proposition under consideration. If a pupil is injured by the criminal act of another pupil, or of a stranger, then the possible liability of the school authority is determined by asking whether some act or omission of the school authority, or of some person for whose conduct it is vicariously responsible, was a cause of the harm suffered by the pupil. Why is a different question asked when the injury results from the criminal act of a teacher? There is no reason, either in principle or in authority, to treat the existence of a non-delegable duty of care as having the consequences held by the New South Wales Court of Appeal. In that respect, the reasoning of Heydon JA, and of the Queensland Court of Appeal, is to be preferred. The orthodox method of analysing the problem is that adopted by the House of Lords and the Supreme Court of Canada. On the assumption that there has been no fault on the part of the school authority, the question to be addressed is whether the authority is vicariously liable for the wrongdoing of its employee. 33 [1999] 2 SCR 570. Vicarious liability An employer is vicariously liable for a tort committed by an employee in the course of his or her employment. The limiting or controlling concept, course of employment, is sometimes referred to as scope of employment. Its aspects are functional, as well as geographical and temporal. Not everything that an employee does at work, or during working hours, is sufficiently connected with the duties and responsibilities of the employee to be regarded as within the scope of the employment. And the fact that wrongdoing occurs away from the workplace, or outside normal working hours, is not conclusive against liability. The antithesis of conduct in the course of employment is sometimes expressed by saying that the employee was "on a frolic of his own". The origin of that expression was explained by Diplock LJ in Morris v C W Martin & Sons Ltd34: "A coachman had a tendency, well-recognised in the nineteenth century, to drive off with his master's vehicle upon a 'frolic of his own' and sometimes to injure a passer-by while indulging in this foible. The only connection between the injury to the passer-by and the master's act in employing the coachman was that but for such employment the coachman would probably not have had the opportunity of driving off with the vehicle at all. At a period when judges themselves commonly employed coachmen, this connection was regarded as too tenuous to render the master vicariously liable to the passer-by for the injury caused by the coachman, at any rate if the master had exercised reasonable care in selecting him for employment. The immunity of the master from vicarious liability for tortious acts of a servant while engaged upon a frolic can be rationalised in a variety of ways. The master's employment of the servant was only a causa sine qua non of the injury: it was not the causa causans. It was not 'foreseeable' by the master that his employment of the servant would cause injury to the person who sustained it. The master gave no authority to the servant to create an Atkinian proximity relationship between the master and the person injured by the servant's acts. One or other of these rationalisations underlies the common phrase in which the test of the master's liability is expressed: 'Was the servant's act within the scope or course of his employment?'" To point to a vivid example of conduct by an employee that is not in the course of employment is a useful method of elucidating the concept, but it may be of limited assistance in resolving difficult borderline cases. It is clear that if the wrongful act of an employee has been authorised by the employer, the 34 [1966] 1 QB 716 at 733-734. employer will be liable. The difficulty relates to unauthorised acts. The best known formulation of the test to be applied is that in Salmond, Law of Torts in the first edition in 190735, and in later editions36: an employer is liable even for unauthorised acts if they are so connected with authorised acts that they may be regarded as modes – although improper modes – of doing them, but the employer is not responsible if the unauthorised and wrongful act is not so connected with the authorised act as to be a mode of doing it, but is an independent act. As Lord Wilberforce explained in Kooragang Investments Pty Ltd v Richardson & Wrench Ltd37, to hold an employer liable for negligent acts of an employee is usually uncontroversial; negligence involves performing an allotted task carelessly rather than carefully. Intentional and criminal wrongdoing, engaged in solely for the benefit of the employee, presents a more difficult problem. Even so, employers may be vicariously liable for such wrongdoing, even in cases where the wrongdoing constitutes a flagrant breach of the employment obligations. A major development in the law occurred with the decision of the House of Lords in 1912 in Lloyd v Grace, Smith & Co38. Until then, vicarious liability of an employer for the unauthorised fraud of an employee had been confined to conduct that was engaged in for the benefit of the employer. In that case, the managing clerk of a firm of solicitors defrauded a client of the firm. His employer was held liable to the client. The claim was based both on contract and tort39. It was dealt with in that manner. Earl Loreburn said40: "It was a breach by the defendant's agent of a contract made by him as defendant's agent to apply diligence and honesty in carrying through a business within his delegated powers and entrusted to him in that capacity. It was also a tortious act committed by the clerk in conducting business which he had a right to conduct honestly, and was instructed to conduct, on behalf of his principal." 36 eg Salmond on Torts, 9th ed (1936) at 94-95. 37 [1982] AC 462 at 472. 39 [1912] AC 716 at 721. 40 [1912] AC 716 at 724-725. The Earl of Halsbury41 explained the rationale of vicarious responsibility in such a case by quoting Holt CJ who had said: "for seeing somebody must be a loser by … deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser than a stranger". Lord Macnaghten said that the employer, having put the employee in the place of the employer to do a certain class of acts, must be answerable for the manner in which that agent has conducted himself in doing the business of the employer42. If the solicitors' clerk had assaulted the client, or stolen money from her purse, a different result would have followed43. In neither of those cases would the clerk have been undertaking duties imposed on him by the nature of his employer's business and the nature of his employment. His act would have been an "independent" act, of which no more could be said than that the employment created the opportunity for the wrongdoing. In Deatons Pty Ltd v Flew44, Dixon J explained the decision as concerning "one of those wrongful acts done for the servant's own benefit for which the master is liable when they are acts to which the ostensible performance of his master's work gives occasion or which are committed under cover of the authority the servant is held out as possessing or of the position in which he is placed as a representative of his master". It is the nature of that which the employee is employed to do on behalf of the employer that determines whether the wrongdoing is within the scope of the employment. An act of negligence may be easy to characterise as an unauthorised mode of performing an authorised act. An act of intentional, criminal wrongdoing, solely for the benefit of the employee, may be easy to characterise as an independent act; but it is not necessarily so, and there are many examples of cases where such conduct has been found to be in the course of employment. Morris v C W Martin & Sons Ltd45 was a case of bailment. The plaintiff sent a mink stole to a furrier for cleaning. The furrier, with the plaintiff's consent, sent it on to some cleaners. The employee who was given the task of cleaning the fur stole it. His employers were held liable. Applying Lloyd v Grace, Smith & Co, Diplock LJ and Salmon LJ held that, although what the employee did was dishonest, he was dealing with the fur in the scope or course of 41 [1912] AC 716 at 727. 42 [1912] AC 716 at 733. 43 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 246. 44 (1949) 79 CLR 370 at 381. his employment. Salmon LJ pointed out46 that the result would have been different if some other employee of the cleaner, who had no responsibility connected with the fur, had stolen it. It is useful to consider why this is so. All employees of the cleaner would have been under an obligation not to damage or steal the fur, and would have been personally liable if they had damaged or stolen it. But the employer was vicariously liable only for the conduct of the employee whose employment duties involved physical possession of, and dealing with, the fur. The leading Australian authority on the subject of vicarious responsibility for an assault by an employee is Deatons Pty Ltd v Flew47. That was the case that Judge Downs was told he need not be concerned about. The plaintiff sued a hotel barmaid and her employer in trespass. The barmaid had thrown the contents of a glass of beer, and then the glass itself, into his face. He lost an eye. There was conflicting evidence as to what led up to the incident. The plaintiff's version was that he simply asked to speak to the publican, and the next thing he remembered was that he woke up in the eye hospital. There was other evidence that he was drunk and aggressive, and that he had quarrelled with the barmaid, striking her and calling her names. The jury found against both defendants. The employer appealed. The Full Court of the Supreme Court of New South Wales ordered a new trial48. Jordan CJ, with whom Street and Maxwell JJ agreed, considered that there had been a misdirection by the trial judge in telling the jury that, if they accepted the plaintiff's version of events, the plaintiff was entitled to succeed. The only doubt he had was as to whether there should be a new trial or a verdict by direction for the employer. He said49: "If the evidence given on behalf of the plaintiff could be, and was, regarded as justifying the inference that the barmaid, without any reason connected with her employment, flung a glass in the plaintiff's face, being actuated by a mere irresponsible personal urge to injure him, it would follow that the employer incurred no liability. If a reasonable inference was that the barmaid's action was an instinctive act of self-defence against an assault made upon her whilst she was doing, and because she was doing, what she was employed to do, I think that it would be open to the jury to find that the employer was liable. A master who employs a servant in a capacity which exposes her to the risk of brutal violence may fairly be regarded as impliedly authorising her to defend herself against such 46 [1966] 1 QB 716 at 741. 47 (1949) 79 CLR 370. 48 Flew v Deatons Pty Ltd (1949) 49 SR (NSW) 219. 49 (1949) 49 SR (NSW) 219 at 222-223. violence. If, however, the reasonable inference is that, the plaintiff's assault upon the barmaid being over and done with, she threw a glass at him, not by way of self-defence or in order to induce him to depart, but as an independent act of personal retribution by way of vengeance for his misbehaviour towards her, the employer would not be liable … The fact that throwing the glass would be an excessive way of doing something that might otherwise be regarded as coming within the scope of her employment would not, I think, necessarily put it outside the scope, although a very gross excess might in a particular case go to suggest that the act complained of was purely personal and not within the scope of employment". The employer then appealed to this Court, contending, successfully, that it was entitled, not merely to a new trial, but to a verdict by direction. The Court considered that, on either version of the facts, the employer was not vicariously liable for the trespass: on the plaintiff's version what the barmaid did was a gratuitous, unprovoked act; the only alternative view open was that it was an act of personal retribution. Either way, it was not incidental to the work she was employed to do50. It was emphasised that it was not the duty of the barmaid to keep order in the bar. There were other people to do that. Her job was merely to serve drinks51. Her conduct was not an excessive method of maintaining order. It was "a spontaneous act of retributive justice"52. Both in the Supreme Court of New South Wales, and in this Court, the outcome turned upon application of the Salmond test. The test serves well in many cases, but it has its limitations. As has frequently been observed, the answer to a question whether certain conduct is an improper mode of performing an authorised act may depend upon the level of generality at which the authorised act is identified. If, on the facts, it had been possible to treat maintaining order in the bar as one of the barmaid's responsibilities, and if, on the facts, it had been open to regard her conduct as an inappropriate response to disorder, then the jury could properly have held the employer liable in trespass. However, the barmaid's only responsibility was to serve drinks, and throwing a glass of beer at a customer could not be regarded as an improper method of doing that. The level of generality at which it is proper to describe the nature of an employee's duties ought not to be pitched so high as to pre-empt the issue. The fact that an employer owes a common law duty of care to an injured person does not mean 50 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 379 per Latham CJ. 51 (1949) 79 CLR 370 at 381 per Dixon J, 386 per Williams J. 52 (1949) 79 CLR 370 at 382 per Dixon J. that it is appropriate to describe the employment duties of all the employees as including taking care of the person. When the specific responsibilities of an employer relate in some way to the protection of person or property, and an intentional wrongful act causes harm to person or property, then the specific responsibilities of a particular employee may require close examination. The defendants in Morris v C W Martin & Sons Ltd were sub-bailees for reward of the article stolen by their employee, and had a duty to protect it from theft. The employee was the person in charge of the article. The defendants in Lloyd v Grace, Smith & Co were fiduciaries. The clerk was the person who was managing the relevant transaction. Although the hotel proprietor in Deatons Pty Ltd v Flew owed a duty of care to customers at its premises, the barmaid's responsibilities were not protective. Stealing a fur stole is not an improper method of cleaning it, but as the employer was a bailee, with custodial responsibility, and it put the goods in charge of a particular employee, then it was proper to regard that responsibility as devolving upon the employee. The theft was so connected with the custodial responsibilities of the employee as to be regarded as in the course of employment; not because it was in furtherance of the employee's responsibilities, but because the nature of his responsibilities extended to custody of the fur as well as cleaning it. It is the element of protection involved in the relationship between school authority and pupil that has given rise to difficulty in defining the circumstances in which an assault by a teacher upon a pupil will result in vicarious liability on the part of a school authority. The problem is complicated by the variety of circumstances in which pupil and teacher may have contact, the differing responsibilities of teachers, and the differing relationships that may exist between a teacher and a pupil. Some teachers may be employed simply to teach; and their level of responsibility for anything other than the educational needs of pupils may be relatively low. Others may be charged with responsibilities that involve them in intimate contact with children, and require concern for personal welfare and development. The ages of school children range from infancy to early adulthood. Although attendance at school is compulsory for children between certain ages, many secondary school students remain at school for several years after it has ceased to be obligatory. Where acts of physical violence are concerned, the nature and seriousness of the criminal act may be relevant to a judgment as to whether it is to be regarded as a personal, independent act of the perpetrator, or whether it is within the scope of employment. A security guard at business premises who removes a person with unnecessary force may be acting in the course of employment. On the other hand, as Jordan CJ pointed out in Deatons Pty Ltd v Flew, extreme and unnecessary violence, perhaps combined with other factors, such as personal animosity towards the victim, might lead to a conclusion that what is involved is an act of purely personal vindictiveness. Sexual abuse, which is so obviously inconsistent with the responsibilities of anyone involved with the instruction and care of children, in former times would readily have been regarded as conduct of a personal and independent nature, unlikely ever to be treated as within the course of employment. Yet such conduct might take different forms. An opportunistic act of serious and random violence might be different, in terms of its connection with employment, from improper touching by a person whose duties involve intimate contact with another. In recent years, in most common law jurisdictions, courts have had to deal with a variety of situations involving sexual abuse by employees. In 1999, the Supreme Court of Canada dealt consecutively with two such cases. The judgments were handed down on the same day. The first case was Bazley v Curry53. A non-profit organization, which operated residential care facilities for the treatment of emotionally troubled children, required its employees to perform parental duties, ranging from general supervision to intimate functions like bathing and tucking in at bedtime. It employed a man who was a paedophile. He sexually abused a child. The question was whether the organization was vicariously liable for his wrongdoing. That question was answered in the affirmative. McLachlin J, who delivered the judgment of the Court, examined the considerations of policy underlying the concept of vicarious liability, and said54: "Underlying the cases holding employers vicariously liable for the unauthorized acts of employees is the idea that employers may justly be held liable where the act falls within the ambit of the risk that the employer's enterprise creates or exacerbates. Similarly, the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong (and is thereby its management and minimization). The question in each case is whether there is a connection or nexus between the employment enterprise and that wrong that justifies imposition of vicarious liability on the employer for the wrong, in terms of fair allocation of the consequences of the risk and/or deterrence." fairly and usefully charged with Later, McLachlin J elaborated her views on the concept of sufficiency of connection, saying55: 53 [1999] 2 SCR 534. 54 [1999] 2 SCR 534 at 557. 55 [1999] 2 SCR 534 at 559. "The fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer's desires." (emphasis in original) Factors to be taken into account, relevant to sexual abuse, were said to include the opportunity for abuse afforded to the employee, relationships of power and intimacy, and the vulnerability of potential victims. The focus of the test for vicarious liability for an employee's sexual abuse was said to be "whether the employer's enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm"56. Jacobi v Griffiths57, which was decided on the same day as Bazley, concerned the vicarious liability of a non-profit organization, which operated a recreational club for children, for sexual assaults upon two children by one of the club's employees. The employee was a program director, whose job was to organize after-school recreational activities. intimate association with the two victims, and assaulted them at his home. It was held that the club was not liable. He cultivated an Speaking for the majority, Binnie J began with an examination of a series of North American cases in which courts had dealt with attempts to make employers liable for sexual assaults by employees. He said58: "It is fair to say that these cases demonstrate a strong reluctance to impose no-fault liability for such deeply personal and abhorrent behaviour on the part of an employee." Dealing with the consideration that a sexual assault is almost never conduct that could advance the purposes of the employer's enterprise, Binnie J observed that, whilst that was not conclusive, it could not be dismissed as insignificant59. It was a factor relevant to the sufficiency of the connection between the criminal acts and the employment. He then examined cases concerning the nature of an employer's enterprise, and inherent and foreseeable 56 [1999] 2 SCR 534 at 563. 57 [1999] 2 SCR 570. 58 [1999] 2 SCR 570 at 597. 59 [1999] 2 SCR 570 at 602-605. risks60, pointing out that a combination of power and intimacy can create a strong connection between the enterprise and sexual assault. He cited the decision of the Supreme Court of California in John R v Oakland Unified School District61. Turning to considerations of policy, Binnie J said that Bazley proceeded upon the theory of "enterprise risk" as the rationale of vicarious liability, the employer being responsible because "it introduced the seeds of the potential problem into the community, or aggravated the risks that were already there, but only if its enterprise materially increased the risk of the harm that happened"62 (emphasis in original). Bazley was distinguished as a case where the sexual abuse occurred in a special environment that involved intimate private control, and quasi-parental relationship and power63. In Jacobi, on the other hand, the club offered group recreational activities in the presence of volunteers and other members. Those activities were not of such a kind as to create a relationship of power and intimacy; they merely provided the offender with an opportunity to meet children. The children were free to come and go as they pleased; and they returned to their mother at night. There was no close connection between the employee's duties and his wrongful acts64. John R v Oakland Unified School District65, cited in Jacobi, concerned a student who was allegedly sexually molested by his mathematics teacher while he was at the teacher's apartment, participating in an officially sanctioned study program. The Supreme Court of California held that the teacher's employer, the school district, was not vicariously liable. Arguelles J, for the majority, after discussing liability, said that deterrence and compensation would not be advanced by holding the school authority liable and, as to risk allocation, said66: the rationale of vicarious "But the connection between the authority conferred on teachers to carry out their instructional duties and the abuse of that authority to indulge in personal, sexual misconduct is simply too attenuated to deem a sexual 60 [1999] 2 SCR 570 at 606-610. 61 769 P 2d 948 (Cal 1989). 62 [1999] 2 SCR 570 at 610-617. 63 [1999] 2 SCR 570 at 595-596. 64 [1999] 2 SCR 570 at 618-621. 65 769 P 2d 948 (Cal 1989). 66 769 P 2d 948 at 956 (Cal 1989). assault as falling within the range of risks allocable to a teacher's employer." The concept of enterprise risk was identified as significant by the United States Supreme Court, which discussed vicarious liability in tort for sexual misconduct by employees, in the context of considering work-related sexual discrimination contrary to the Civil Rights Act of 1964, in Faragher v City of Boca Raton67. Souter J, for the majority, quoted with approval a statement that the employer should be liable for "faults that may be fairly regarded as risks of his business", and noted a long list of cases in which appellate courts in the United States had either held, or assumed, that sexual misconduct falls outside the scope of ordinary employment68. The concept of enterprise risk, and material increase of risk, has been influential in the North American cases. As a test for determining whether conduct is in the course of employment, as distinct from an explanation of the willingness of the law to impose vicarious liability, it has not been taken up in Australia, or, it appears, the United Kingdom. However, in Australia, and in the United Kingdom, as in Canada and the United States, the sufficiency of the connection between employment and wrongdoing to warrant vicarious responsibility is examined by reference to the course or scope of employment. In practice, in most cases, the considerations that would justify a conclusion as to whether an enterprise materially increases the risk of an employee's offending would also bear upon an examination of the nature of the employee's responsibilities, which are regarded as central in Australia. In Deatons Pty Ltd v Flew, for example, the fact that it was no part of the barmaid's responsibilities to keep order in the bar was important. If that had been part of her duties, then presumably there would have been an increased risk that any violent propensities on her part could result in harm to customers. In argument in the present cases, the Solicitor-General for Queensland pointed out that providing schools for children, and making attendance compulsory, does not increase the risk that they will be sexually abused; it probably reduces it. Much would depend on what they might otherwise be doing. That, however, is not the comparison that the Supreme Court of Canada was making. Attention was directed to the nature of the services being provided to the victims, and to whether those services were of a kind that increased the danger of abuse from an employee with criminal propensities. It is regrettable that the more intensive the care provided by an educational or recreational organization, the more extensive will be its risk of no-fault 68 524 US 775 at 793-797 (1998). liability for the conduct of its employees. Educational institutions may have a degree of choice in the level of care they set out to provide, and there is little practical wisdom in discouraging them from providing anything more than academic instruction. Even so, a decision as to course of employment necessitates an examination of the responsibilities of an employee, and certain kinds of responsibility, unfortunately, carry certain kinds of risk. It cannot be said that the risk of sexual abuse ought to be regarded as an incident of the conduct of most schools, or that the ordinary responsibilities of teachers are such that sexual assaults on pupils would normally be regarded as conduct (albeit serious misconduct) within the scope of employment. However, there are some circumstances in which teachers, or persons associated with school children, have responsibilities of a kind that involve an undertaking of personal protection, and a relationship of such power and intimacy, that sexual abuse may properly be regarded as sufficiently connected with their duties to give rise to vicarious liability in their employers. A recent decision of the House of Lords, Lister v Hesley Hall Ltd69 concerned a school, operated as a commercial enterprise, mainly for children with emotional and behavioural difficulties. Boarding facilities were provided for some of the pupils. A warden was in charge of the boarding annex. He and his wife, for most of the time, were in sole charge. The annex was intended to be a home, not a mere extension of the school environment, and the warden had many of the responsibilities of a parent. He sexually abused some of the pupils. The question was whether his employer was vicariously liable for his assaults. The House of Lords answered that question in the affirmative. Lord Steyn70, with whom Lord Hutton agreed71, asked "whether the warden's torts were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable", and answered in the affirmative. Lord Clyde72 also said that the issue to be considered was the closeness of the connection between the act in question and the employment. Lord Hobhouse of Woodborough said73: 70 [2002] 1 AC 215 at 230. 71 [2002] 1 AC 215 at 238. 72 [2002] 1 AC 215 at 232. 73 [2002] 1 AC 215 at 241. "Whether or not some act comes within the scope of the servant's employment depends upon an identification of what duty the servant was employed by his employer to perform … If the act of the servant which gives rise to the servant's liability to the plaintiff amounted to a failure by the servant to perform that duty, the act comes within 'the scope of his employment' and the employer is vicariously liable. If, on the other hand, the servant's employment merely gave the servant the opportunity to do what he did without more, there will be no vicarious liability, hence the use by Salmond and in the Scottish and some other authorities of the word 'connection' to indicate something which is not a casual coincidence but has the requisite relationship to the employment of the tortfeasor (servant) by his employer". Lord Millett said74: "In the present case the warden's duties provided him with the opportunity to commit indecent assaults on the boys for his own sexual gratification, but that in itself is not enough to make the school liable ... But there was far more to it than that. The school was responsible for the care and welfare of the boys. It entrusted that responsibility to the warden. He was employed to discharge the school's responsibility to the boys. For this purpose the school entrusted them to his care. He did not merely take advantage of the opportunity which employment at a residential school gave him. He abused the special position in which the school had placed him to enable it to discharge its own responsibilities, with the result that the assaults were committed by the very employee to whom the school had entrusted the care of the boys." I do not accept that the decisions in Bazley, Jacobi, and Lister suggest that, in Canada and England, in most cases where a teacher has sexually abused a pupil, the wrong will be found to have occurred within the scope of the teacher's employment. However, they demonstrate that, in those jurisdictions, as in Australia, one cannot dismiss the possibility of a school authority's vicarious liability for sexual abuse merely by pointing out that it constitutes serious misconduct on the part of a teacher. One reason for the dismissiveness with which the possibility of vicarious liability in a case of sexual abuse is often treated is that sexual contact between a teacher and a pupil is usually so foreign to what a teacher is employed to do, so peculiarly for the gratification of the teacher, and so obviously a form of misconduct, that it is almost intuitively classified as a personal and independent act rather than an act in the course of employment. Yet it has long been accepted 74 [2002] 1 AC 215 at 250. that some forms of intentional criminal wrongdoing may be within the scope of legitimate employment. Larceny, fraud and physical violence, even where they are plainly in breach of the express or implied terms of employment, and inimical to the purpose of that employment, may amount to conduct in the course of employment. If there is sufficient connection between what a particular teacher is employed to do, and sexual misconduct, for such misconduct fairly to be regarded as in the course of the teacher's employment, it must be because the nature of the teacher's responsibilities, and of the relationship with pupils created by those responsibilities, justifies that conclusion. It is not enough to say that teaching involves care. So it does; but it is necessary to be more precise about the nature and extent of care in question. Teaching may simply involve care for the academic development and progress of a student. In these circumstances, it may be that, as in John R, the school context provides a mere opportunity for the commission of an assault. However, where the teacher-student relationship is invested with a high degree of power and intimacy, the use of that power and intimacy to commit sexual abuse may provide a sufficient connection between the sexual assault and the employment to make it just to treat such contact as occurring in the course of employment. The degree of power and intimacy in a teacher-student relationship must be assessed by reference to factors such as the age of students, their particular vulnerability if any, the tasks allocated to teachers, and the number of adults concurrently responsible for the care of students. Furthermore, the nature and circumstances of the sexual misconduct will usually be a material consideration. It is necessary now to turn to the cases before the Court. The case of Lepore The majority in the New South Wales Court of Appeal, applying a principle based on non-delegable duty, according to which the State is obliged to ensure that pupils on school premises and during school hours are not injured physically at the hands of an employed teacher (whether acting negligently or established intentionally), incontrovertibly, and that there should be a new trial limited to damages. Heydon JA rejected that principle. However, he considered (correctly) that the fact-finding process at the first trial had miscarried, and that there ought to be a new trial on liability and damages. liability was the State's concluded that Although the plaintiff's case against the State at the first hearing before Judge Downs, in so far as it was based on strict liability rather than fault, was put in terms of breach of non-delegable duty rather than vicarious liability, and although vicarious liability was not argued in the Court of Appeal, nevertheless there is no reason in justice why, at a new trial, the plaintiff should not be permitted to amend his Statement of Claim and to seek to make out a case of vicarious liability. The fact-finding at the first hearing was so deficient that it is not possible to form a clear view as to the strength of such a case. However, the maintenance of discipline is clearly within the employment responsibilities of the teacher, and much, perhaps all, of the alleged misconduct appears to have taken place in the context of administering punishment for supposed misbehaviour. It may be possible that some or all of it could properly be regarded as excessive chastisement, for which a school authority would be vicariously liable. The relatively minor criminal charges laid against the teacher, and the modest penalties imposed, may be consistent with this view of the matter. Whether excessive or inappropriate chastisement results from the sadistic tendency of a teacher, or a desire for sexual gratification, or both, it is conduct in the course of employment, for which a school authority is vicariously liable. If, on the other hand, some or all of the conduct of the teacher was found to be so different from anything that could be regarded as punishment that it could not properly be seen as other than merely sexually predatory behaviour, then, in relation to such conduct, the plaintiff would have no case based on vicarious liability. There appears to have been nothing about the duties or responsibilities of the teacher that involved him in a relationship with his pupils of such a kind as would justify a conclusion that such activity was in the course of his employment. The proceedings at first instance comprehensively miscarried. There should be a new trial on all issues although, as will appear from the above, the argument based on non-delegable duty should no longer be treated as open, and the only potential basis for a case of vicarious liability depends upon finding that the relevant conduct amounted to excessive or inappropriate chastisement. Special leave to appeal was granted on condition that the appellant would bear the costs of the appeal in any event and would not seek to disturb the costs orders made in the Court of Appeal. The appeal should be allowed in part. Order 2 of the orders made by the Court of Appeal of New South Wales should be set aside. In place of that order it should be ordered that the orders made by Judge Downs on 16 April 1999 should be set aside and there should be a new trial. The appellant should pay the costs of the appeal to this Court. The cases of Samin and Rich The Court of Appeal of Queensland was correct to reject the only case advanced in argument before it, which was a case of strict and absolute liability based on non-delegable duty. However, the plaintiffs now seek also to make out a case of vicarious liability. Unless such a case is unarguable, then they should have an opportunity to do so. The Court of Appeal gave them unqualified leave to deliver a further Statement of Claim. All that this Court knows about the alleged facts is what appears in the proposed Amended Statement of Claim, which has been summarised earlier. One thing we do not have, that would be of importance to a claim of vicarious liability, is evidence as to the nature of the functions and responsibilities of the teacher at a one-teacher school in rural Queensland in 1965. Nor does the pleading provide a clear picture of the facts and circumstances of the alleged assaults. This is consistent with the approach that has so far been taken by the plaintiffs' lawyers, which has been that it is only necessary to show that the plaintiffs were sexually assaulted, at school, by a teacher. That is not sufficient to make the State vicariously liable. How much more is necessary? For the reasons given earlier, in order to make the State of Queensland vicariously liable for the teacher's sexual assaults, it would be necessary for the plaintiffs to show that his responsibilities to female pupils of the age of the plaintiffs at the time, placed him in a position of such power and intimacy that his conduct towards them could fairly be regarded as so closely connected with his responsibilities as to be in the course of his employment. That would involve making findings both as to his powers and responsibilities, and as to the nature of his conduct. It would not be enough that his position provided him with the opportunity to gratify his sexual desires, and that he took advantage of that opportunity. The appeals should be dismissed. Having regard to the manner in which the case has been conducted to date, there is no reason why the usual order as to costs should not follow. The appellants should pay the respondents' costs of the appeals. GAUDRON J. These appeals, which raise questions as to the liability of education authorities for sexual misconduct by teachers towards their pupils, were heard together. Facts and history of proceedings State of New South Wales v Lepore & Anor In this matter, the first respondent claims that he was sexually assaulted on a number of occasions in 1978 by his teacher who was employed by the Department of Education ("the Department") of the State of New South Wales. At the time, the first respondent was seven or eight years old and in second class at Heckenberg Primary School. On his account, the sexual assaults occurred after he was sent to a storeroom attached to the classroom on account of his misconduct in class. Following a trial limited to the question of liability, Downs DCJ found that the teacher assaulted the first respondent at least once by striking him on his bare bottom but refrained from making further findings as to the sexual assaults alleged. His Honour held that "[t]he assaults alleged were deliberate and isolated acts of abuse ... which were inimical or totally foreign to the [teacher's] duties". As there was no evidence that the Department knew of the assaults or the teacher's predisposition in that regard and no evidence that a system of work or supervision could reasonably have been implemented to avoid the assaults, his Honour held that there was no evidence that the Department had breached the duty of care it owed to the first respondent. A verdict was entered for the State. An appeal to the New South Wales Court of Appeal was, by majority (Mason P and Davies AJA, Heydon JA dissenting), allowed. The sole issue in the Court of Appeal was whether the State of New South Wales was liable for the teacher's assaults on the basis of its breach of a non-delegable duty of care. It was not put that the State, itself, had been negligent in, for example, failing to ensure proper supervision. Further, vicarious liability for the tortious conduct of the teacher was expressly disavowed. The majority in the Court of Appeal proceeded on the basis that the teacher had sexually assaulted the pupil. Mason P, with whose views Davies AJA expressed agreement, held that the State of New South Wales, as education authority, owed a non-delegable duty of care "to school pupils on school premises and during school hours ... to ensur[e] that they are not injured physically at the hands of an employed teacher (whether acting negligently or intentionally)." His Honour added that the duty is not absolute but limited to a duty to ensure that reasonable care and skill is exercised and that, in the case of intentional conduct, a school authority is not liable unless "the teacher's conduct is tortious as well as harmful", as, in his Honour's view, it was in the present case. In his separate concurring judgment, Davies AJA said that the State of New South Wales was liable because the actions of the teacher "resulted in [its] failure ... to take care for the safety and well-being of the students to whom it had a non-delegable duty of care." On the other hand, Heydon JA took the view that the fact finding process had miscarried at first instance and, thus, it was not appropriate to decide whether pupils are "owed strict duties by education authorities to prevent the type of harm here allegedly suffered". In this last regard, his Honour did not think the answer was automatically supplied by this Court's decision in The Commonwealth v Introvigne75 in which it was held that an education authority owes a non- delegable duty of care to students attending its schools. One other matter relevant to the fact finding process should be mentioned. In the Court of Appeal, Mason P held that the assault or assaults in question could not be characterised as "excessive chastisement". However, Davies AJA was of the view the assaults occurred in the course of the teacher "carrying out one of the duties he was employed to do", namely, to discipline pupils for misbehaviour. Samin v State of Queensland & Ors; Rich v State of Queensland & Ors The appellants in these cases were pupils at a one teacher school in Queensland between 1963 and 1965. It is not now in issue that, during those years, they were the victims of gross sexual misconduct on the part of a teacher employed either by the Minister for Education of Queensland ("the Minister") or the State of Queensland, itself. Nor is it in issue that the misconduct occurred on school premises and during school hours. Each of the appellants brought proceedings against the teacher concerned, the Minister and the State of Queensland in the District Court of Queensland alleging, as against the Minister and the State, that the teacher's assaults constituted breaches of the non-delegable duty of care owed to them. In each case, the Minister and the State of Queensland applied to have the Statement of Claim struck out as disclosing no cause of action against them. It was held by Botting J that the duty owed to the pupils was non-delegable and that, if the assaults were proved, breach of that duty would be established. In consequence, the strike-out applications were dismissed. The Minister and the State of Queensland successfully appealed from the decision and orders of Botting J to the Court of Appeal of the Supreme Court of Queensland. That Court held that breach of the non-delegable duty of care owed by education authorities to their pupils was not established simply by proof of 75 (1982) 150 CLR 258. injury. In the result, the Statements of Claim were struck out with leave granted to replead. Issues in this Court It was not contended in this Court that either the State of New South Wales or the State of Queensland or its Minister for Education could be held liable for the assaults in issue by reason of any acts or omissions on their part. Rather, the primary argument was that, by virtue of the non-delegable duty of care identified in Introvigne76, they were liable in negligence upon proof that the alleged assaults had occurred and that the pupils had thereby suffered damage. It was also contended in the first matter that the pupil was entitled to succeed on the basis that the State of New South Wales is vicariously liable for the actions of the teacher. The argument in this regard was made principally by reference to the recent decision of the Supreme Court of Canada in Bazley v Curry77 and that of the House of Lords in Lister v Hesley Hall Ltd78. And in the second and third matters, it was indicated that, pursuant to leave to replead, the pupils intend to put their cases against the Minister and the State of Queensland on the basis that they, too, are vicariously liable for the actions of the teacher. Non-delegable duties of education authorities It is not and, at no stage of these proceedings, has it been in issue that the duties owed by education authorities to their pupils are non-delegable. As already indicated, so much was established by the decision of this Court in Introvigne79. What is in issue is the nature of a duty of that kind. Within the law of negligence, certain relationships have been identified as giving rise to duties which have been described as "non-delegable"80 or 76 (1982) 150 CLR 258. 77 [1999] 2 SCR 534. 79 (1982) 150 CLR 258. 80 See, for example, Hughes v Percival (1883) 8 App Cas 443 at 446 per Lord Blackburn; Lloyd v Grace, Smith & Co [1912] AC 716; Morris v C W Martin & Sons Ltd [1966] 1 QB 716; Kondis v State Transport Authority (1984) 154 CLR 672; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313; Scott v Davis (2000) 204 CLR "personal"81, including master and servant (in relation to the provision of a safe system of work), adjoining owners of land (in relation to work threatening support or common walls), hospital and patient and, relevantly for these appeals, education authority and pupil82. The relationships which give rise to a non- delegable or personal duty of care have been described as involving a person being so placed in relation to another as "to assume a particular responsibility for [that other person's] safety" because of the latter's "special dependence or vulnerability"83. It has been said that a non-delegable or personal duty of care is "a duty ... of a special and 'more stringent' kind"84 and that it is a "duty to ensure that reasonable care is taken."85 In Scott v Davis, Gummow J said that a non- delegable duty "involves, in effect, the imposition of strict liability upon the defendant who owes that duty."86 To say that, where there is a non-delegable duty of care, there is, in effect, a strict liability is not to say that liability is established simply by proof of injury. As Gummow J pointed out in Scott, there must first be a duty of care on the part of the person against whom liability is asserted. And, obviously, there must also have been a breach of that duty and resulting injury. The law of negligence is concerned with a duty to take reasonable care to avoid a foreseeable risk of injury to another. As the law of negligence has developed, however, it has become possible, in the case of some relationships, to identify more precise duties of care. Thus, for example, it is not unusual to speak of an employer's duty to take reasonable care to provide a safe system of work. And in Introvigne, Murphy J identified the duties of an education authority as 81 See, for example, Hughes v Percival (1883) 8 App Cas 443 at 446 per Lord Blackburn; Lloyd v Grace, Smith & Co [1912] AC 716; Wilsons and Clyde Coal Co v English [1938] AC 57; Morris v C W Martin & Sons Ltd [1966] 1 QB 716; Kondis v State Transport Authority (1984) 154 CLR 672. 82 See Kondis v State Transport Authority (1984) 154 CLR 672 at 685-686 per 83 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. 84 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ referring to Kondis v State Transport Authority (1984) 154 CLR 672 at 686 per Mason J. 85 Kondis v State Transport Authority (1984) 154 CLR 672 at 686 per Mason J. 86 (2000) 204 CLR 333 at 417 [248]. duties "[t]o take all reasonable care to provide suitable and safe premises ... to provide an adequate system to ensure that no child is exposed to any unnecessary risk of injury; and ... to see that the system is carried out."87 There is a tendency to speak, in the case of an employer, of a duty to provide a safe system of work or, in the case of an education authority, a duty to provide a safe school environment, without acknowledging either that, in that context, "safe" means "free of a foreseeable risk of harm" or that the duty is a duty to take reasonable care. If the duty of an education authority to provide a safe school environment were not confined by considerations of foreseeability and reasonable care, it would result in strict liability in the sense that the authority would be liable upon proof of injury being sustained on school premises during school hours. But that would follow not because the duty of an education authority is non-delegable but because of the absolute nature of its non-delegable duty. There is another feature of the duty arising out of the particular relationships that have been identified as giving rise to a non-delegable duty of care which should be stressed. It is that the relevant duty can be expressed positively and not merely in terms of a duty to refrain from doing something that involves a foreseeable risk of injury. Thus, the relevant duty of adjoining owners can be expressed as a duty to take reasonable care to provide support; that of an employer, to take reasonable care to provide a safe system of work; that of a hospital, to take reasonable care to provide proper nursing and medical care; that of a school authority, to take reasonable care to provide a safe school environment. Once the relevant duty is stated in those terms it is readily understandable that the duty should be described as non-delegable. If a pupil is injured on school premises during school hours because reasonable care has not been taken to provide a safe school environment, the school authority is thereby shown to be in breach of its personal or non-delegable duty to provide a safe environment. And that is so no matter whose act or omission was the immediate cause of the pupil's injury or whose immediate task it was to do that which would have eliminated the risk of injury or to refrain from doing that which created that risk. The position was explained, albeit in somewhat different terms and in relation to an adjoining owner's duty of care, by Lord Blackburn in Hughes v Percival: "the duty went as far as to require him to see that reasonable skill and care were exercised in those operations which involved a use of the party-wall 87 (1982) 150 CLR 258 at 274-275. ... If such a duty was cast upon the defendant he could not get rid of responsibility by delegating the performance of it to a third person."88 Thus, to describe the duty of a school authority as non-delegable is not to identify a duty that extends beyond taking reasonable care to avoid a foreseeable risk of injury. It is simply to say that, if reasonable care is not taken to avoid a foreseeable risk of injury, the school authority is liable notwithstanding that it engaged a "qualified and ostensibly competent"89 person to carry out some or all of its functions and duties. Vicarious liability generally The absence of a satisfactory and comprehensive jurisprudential basis for the imposition of liability on a person for the harmful acts or omissions of others – vicarious liability, as it is called – is a matter which has provoked much comment90. It may be that the lack of a satisfactory jurisprudential basis is referable, at least in significant part, to the fact that certain cases have been decided by reference to policy considerations without real acknowledgement of that fact. It may also be that, in some cases, employers have been held vicariously liable on the assumption that they would not otherwise have been liable for the injury or damage suffered. Further, it may be that the failure to identify a jurisprudential basis for the imposition of vicarious liability has resulted in decisions which are not easily reconciled with fundamental legal principle. Until vicarious liability was imposed on employers for the deliberate criminal acts of employees, the critical consideration was whether the act in respect of which vicarious liability was asserted occurred "in the course of employment"91. And an act was said to have been done in the course of employment if it was authorised by the employer or was an unauthorised way of doing an act so authorised92. 88 (1883) 8 App Cas 443 at 446. 89 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. 90 See, for example, Bazley v Curry [1999] 2 SCR 534 at 545 per McLachlin J; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 54-56 [86]-[88] per McHugh J. 91 See Lloyd v Grace, Smith & Co [1912] AC 716; Salmond, Law of Torts, (1907) at 83; Salmond & Heuston on the Law of Torts, 21st ed (1996) at 443. 92 See Lloyd v Grace, Smith & Co [1912] AC 716; Salmond, Law of Torts, (1907) at 83; Salmond & Heuston on the Law of Torts, 21st ed (1996) at 443. To the extent that vicarious liability is imposed on employers by reason that an employee has either done something that the employer has authorised or has done something in the course of his or her employment, it is referable to the general law of principal and agent93. To the extent that vicarious liability is imposed for acts which constitute the doing of an authorised act in an unauthorised way, it will generally be the case that it can be justified on the basis of ostensible authority94, a species of estoppel by which a principal is precluded from denying his or her agent's authority. That the doctrine of ostensible authority is a species of estoppel is clear from the dissenting judgment of Vaughan Williams LJ in the Court of Appeal in Lloyd v Grace, Smith & Co95, one of three cases which are frequently cited as authority for the proposition that employers may be held vicariously liable for the deliberate criminal acts of their employees. In Lloyd v Grace, Smith & Co96, it was ultimately held in the House of Lords that solicitors were liable to their client to make good the defalcations of their managing clerk. At first instance, certain factual issues were determined by the jury, including that, in receiving certain title deeds from the client and in calling in a mortgage debt owed to her, he was acting in the course of his services as managing clerk97. A question arose in the Court of Appeal as to whether there was evidence to support those findings. Vaughan Williams LJ said this: "I think that there is evidence that there was such a holding out as would estop [the solicitors] from proving that [the clerk] had no authority to receive the deeds and take the instructions which were given him, even 93 See Lloyd v Grace, Smith & Co [1912] AC 716; Bazley v Curry [1999] 2 SCR 534; Jacobi v Griffiths [1999] 2 SCR 570; Scott v Davis (2000) 204 CLR 333; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Lister v Hesley Hall Ltd [2002] 1 AC 215; Salmond, Law of Torts, (1907) at 83; Salmond & Heuston on the Law of Torts, 21st ed (1996) at 443. 94 See Lloyd v Grace, Smith & Co [1912] AC 716; Bazley v Curry [1999] 2 SCR 534; Jacobi v Griffiths [1999] 2 SCR 570; Scott v Davis (2000) 204 CLR 333; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Lister v Hesley Hall Ltd [2002] 1 AC 215; Salmond, Law of Torts, (1907) at 83; Salmond & Heuston on the Law of Torts, 21st ed (1996) at 443. 97 [1912] AC 716 at 720. though at the time he took the instructions and received the deeds [the clerk] was minded to commit a fraud."98 Whether the facts of Lloyd v Grace, Smith & Co be analysed on the basis that the managing clerk was acting as agent for the solicitors in receiving the deeds and calling in the mortgage debt or that, by reason of his ostensible authority in that regard, the solicitors were estopped from contending otherwise, the question of the solicitors' liability to the client fell to be determined on the basis that, through their agent, they, the solicitors, received the title deeds and money in question. And upon their receipt, the solicitors clearly came under a personal obligation not to dispose of the deeds or money other than in accordance with their client's instructions. Although the decision in Lloyd v Grace, Smith & Co is explicable on the basis of the solicitors' personal obligation and, in consequence, their direct liability for the loss suffered, the language used in various speeches, including those of Earl Loreburn99, Lord Macnaghten100 and Lord Shaw of Dunfermline101, is the language of liability or legal responsibility on the part of a principal for the fraud of an agent acting in the course of his or her employment or with ostensible authority. The second of the three cases relevant to the vicarious liability of an employer for the criminal acts of an employee is Morris v C W Martin & Sons Ltd102. That case, which concerned the theft of a fur coat by an employee of a dry cleaning company that was the sub-bailee of the coat, can also be explained on the basis of a personal or non-delegable duty resulting in direct rather than vicarious liability. Indeed, Lord Denning MR would have decided it on that basis, saying that: "in the ultimate analysis [the decided cases] depend on the nature of the duty owed by the master towards the person whose goods have been lost or damaged. If the master is under a duty to use due care to keep goods safely and protect them from theft and depredation, he cannot get rid of his responsibility by delegating his duty to another. If he entrusts that duty to his servant, he is answerable for the way in which the servant 98 [1911] 2 KB 489 at 506. 99 [1912] AC 716 at 725. 100 [1912] AC 716 at 738. 101 [1912] AC 716 at 741. conducts himself therein. No matter whether the servant be negligent, fraudulent, or dishonest, the master is liable. But not when he is under no such duty."103 A somewhat similar view was taken by Salmon LJ who stated that: "[a] bailee for reward is not answerable for a theft by any of his servants but only for a theft by such of them as are deputed by him to discharge some part of his duty of taking reasonable care."104 In contrast to the view taken by Lord Denning MR in Morris, Diplock LJ rested his decision on the basis that "[w]hat [the employee] was doing, albeit dishonestly, he was doing in the scope or course of his employment in the technical sense of that infelicitous but time-honoured phrase [and the employers] as his masters are responsible for his tortious act."105 Precisely how it could be said that the employee was acting in the scope or course of his employment in stealing the coat was not explained. Nor is it easy to postulate on what basis it might be so said, unless, as was said by Salmon LJ, the employee had been "deputed ... to discharge some part of [the employer's] duty"106, or, the employer was estopped from contending otherwise. The third case which has been treated as authority that an employer may be held vicariously liable for the deliberate criminal acts of an employee is Photo Production Ltd v Securicor Transport Ltd107, which was concerned with the liability of a company that had contracted to provide security services to the plaintiff in that case. The question of the security company's liability for loss suffered when one of its employees started a fire in the plaintiff's factory was ultimately decided by reference to the terms of an exclusion clause. In the view of Lord Diplock, the security company had a primary obligation which, if breached, would have resulted in direct rather than vicarious liability108 but that primary obligation had been qualified by the exclusion clause with the consequence that no breach had occurred109. 103 [1966] 1 QB 716 at 725. 104 [1966] 1 QB 716 at 740-741. 105 [1966] 1 QB 716 at 737. 106 [1966] 1 QB 716 at 741. 108 [1980] AC 827 at 851. 109 [1980] AC 827 at 851. However, it was said in Securicor110 by Lord Wilberforce, with whom Lord Keith of Kinkel and Lord Scarman agreed, that, but for the exclusion clause, the security company would have been liable either for breach of its duty "to operate the service with due and proper regard to the safety and security of the premises" or on the basis of "vicarious responsibility for the wrongful act of [its employee]"111. Similarly, Lord Salmon expressed the view that the company "would have been liable for the damage ... caused by [its employee] whilst indubitably acting in the course of his employment"112. The observation of Lord Salmon in Securicor that the employee in question was "indubitably acting in the course of his employment" has to be understood in the context of the trial judge's inability to make a finding as to whether the employee "intended to light only a small fire ... or whether he intended to cause much more serious damage"113. That inability on the part of the trial judge led Lord Wilberforce to observe that the trial judge's findings "[fell] short of a finding that [the employee] deliberately burnt or intended to burn the [plaintiff's] factory."114 Notwithstanding that Lord Hobhouse of Woodborough later said in Lister that Securicor was "a case of arson"115, the latter case cannot, in my view, be accepted as authority for the proposition that an employee may be vicariously liable for the deliberate criminal acts of an employee. More fundamentally, as a general rule it is a misuse of language to speak of deliberate criminal acts as acts committed in the course of employment, unless that phrase imports only a temporal connection between the criminal act and the employment in question. Given that fundamental difficulty, a different approach to the question of vicarious liability for deliberate criminal acts was taken in the recent decision of the Supreme Court of Canada in Bazley and, to a lesser extent, in that of the House of Lords in Lister. 110 [1980] AC 827 at 853. 111 [1980] AC 827 at 846. 112 [1980] AC 827 at 852. 113 [1980] AC 827 at 840. 114 [1980] AC 827 at 840. 115 [2002] 1 AC 215 at 241. Canadian and United Kingdom approaches As already indicated, the argument that an education authority may be held vicariously liable to a pupil for sexual assault by a teacher was made principally by reference to the decisions in Bazley116 and Lister117. Both cases concerned sexual assaults on children who were in residential care because of their emotional or behavioural difficulties. In each case, the assaults were perpetrated by an employee of the organisation providing that care118. Neither case, it should be noted, was concerned with the provision of education in an ordinary day school setting. In Bazley, McLachlin J, who delivered the judgment of the Supreme Court of Canada, noted the difficulties of reconciling the decisions concerning vicarious liability119 and the policy considerations underlying the doctrine and, then, observed: Underlying the cases holding employers vicariously liable for the unauthorized acts of employees is the idea that employers may justly be held liable where the act falls within the ambit of the risk that the employer's enterprise creates or exacerbates. Similarly, the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong ... The question in each case is whether there is a connection or nexus between the employment enterprise and that wrong that justifies imposition of vicarious liability on the employer for the wrong, in terms of fair allocation of the consequences of the risk and/or deterrence."120 Her Ladyship concluded that "the test for vicarious liability for an employee's sexual abuse of a client should focus on whether the employer's enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm."121 In the result, the employer in that case was held liable on that basis. 116 [1999] 2 SCR 534. 118 See Bazley v Curry [1999] 2 SCR 534 at 539-540; Lister v Hesley Hall Ltd [2002] 1 AC 215 at 220. 119 [1999] 2 SCR 534 at 544. 120 [1999] 2 SCR 534 at 557. 121 [1999] 2 SCR 534 at 563. Before turning to the decision in Lister, it is convenient to note that in Jacobi v Griffiths122 (a decision handed down by the Supreme Court of Canada on the same day as Bazley), an employer was held, by majority, not to be vicariously liable for the sexual assaults perpetrated by a person employed as a program director for a youth club. The employee had sexually molested a brother and sister who participated in club activities and attended club outings. However, except for one incident involving the sister and associated with club activities, the assaults occurred in the director's own home and outside working hours. In Jacobi, it was said by Binnie J, on behalf of the majority, that, although the employee took advantage of the opportunity which his employment afforded him, the power which he "used to accomplish his criminal purpose ... was neither conferred by [his employer] nor was it characteristic of the type of enterprise which [the employer] put into the community."123 On the other hand, McLachlin J, speaking for the minority, considered that the employee "worked at a job where he was put in a special position of trust and power over particularly vulnerable people and used that position to carry out an abuse of the power with which he was conferred to carry out his duties" and that that "stronger connection" justified the imposition of vicarious liability124. In Lister, the House of Lords not only held an employer liable for the sexual assaults committed by its employee, the warden of a residential establishment, but expressly overruled the earlier decision of the Court of Appeal in Trotman v North Yorkshire County Council125. In that latter case, a child was sexually assaulted while sharing a bedroom with the deputy headmaster on a school holiday in Spain126. The House of Lords did not endorse the "material increase in risk" approach taken by the Supreme Court of Canada in Bazley. Rather, it based its decision on the "relative closeness of the connection between the nature of the employment and the particular tort"127, the "sufficien[cy of] connection between the acts of abuse ... and the work which [the employee] had 122 [1999] 2 SCR 570. 123 [1999] 2 SCR 570 at 621. 124 [1999] 2 SCR 570 at 586. 125 [1999] LGR 584. 126 [1999] LGR 584 at 592. 127 [2002] 1 AC 215 at 229 per Lord Steyn, with whom Lord Hutton agreed at 238. been employed to do"128 or on such connection of the unlawful acts with the duties of the employee that they fall within the scope of his or her duties129. Material increase in risk Ordinarily, if there is a material increase in a risk associated with an enterprise involving the care of children that is a foreseeable risk and, thus, it is the personal or non-delegable duty of those who run that enterprise to take reasonable care to prevent that risk eventuating. And so far as concerns enterprises engaged in the provision of residential care, it must now be acknowledged, as it was by Lord Millett in Lister, that: "in the case of boarding schools, prisons, nursing homes, old people's homes, geriatric wards, and other residential homes for the young or vulnerable, there is an inherent risk that indecent assaults on the residents will be committed by those placed in authority over them, particularly if they are in close proximity to them and occupying a position of trust."130 In most, if not all, of the situations of which Lord Millett spoke in Lister, it ought now be recognised that there is a personal or non-delegable duty on the authority concerned to take reasonable steps to minimise, if not eliminate, the opportunity for abuse by those to whom the employer has delegated its duties and functions. And if abuse occurs in circumstances in which an employee has seized an opportunity which could have been obviated by the use of reasonable care, the employer should be held directly liable. A residential institution or authority that does not take reasonable steps to institute a system such that its employees do not come into personal contact with a child or other vulnerable person unless supervised or accompanied by another adult should be held directly liable in negligence if abuse occurs in a situation in which there is neither supervision nor an accompanying adult. Further, it seems almost certain that, on that basis, there would be no different result in factually similar cases from those arrived at in Bazley and Lister. So, too, on that basis, it would be a breach of a personal or non-delegable duty of care resulting in direct liability to allow an employee to share a bedroom with a child entrusted to his care, as was the case in Trotman. 128 [2002] 1 AC 215 at 237 per Lord Clyde. 129 [2002] 1 AC 215 at 242 per Lord Hobhouse of Woodborough and at 245 per Lord Millett. 130 [2002] 1 AC 215 at 250. The fact that a person has materially increased the risk of criminal conduct on the part of an employee is directly relevant to the content of his or her duty of care. However, in my view, it has no bearing on whether that person should be held liable in the absence of fault on his or her part. Moreover, as the different opinions in Jacobi indicate, it does not provide a clear basis for determining whether a person should be held vicariously liable for the deliberate criminal acts of an employee. Vicarious liability: considerations of policy and principle As a matter of legal policy, there is no advantage and considerable disadvantage in holding a person vicariously liable in circumstances in which he or she is directly liable because of a breach of his or her personal or non- delegable duty, as was the case in Lloyd v Grace, Smith & Co131 and, also, in Morris v C W Martin & Sons Ltd132. That course is likely to lead the persons concerned to think, erroneously, that they have been held liable without fault on their part. Further, it seems at least arguable, in the case of those who are young or especially vulnerable, that they are better protected by identification of the content of the duty of care that is owed to them by those authorities and institutions that have assumed responsibility for their welfare than by the imposition of vicarious liability for the deliberate criminal acts of their employees. Further, if vicarious liability is to be imposed so that a person is to be held liable in damages for injury suffered without fault on his or her part, it ought to be imposed only in circumstances where it can be justified by reference to legal principle. To do otherwise is to invite disrespect for the law. As already indicated, to hold an employer liable for the authorised acts of an employee or acts done in the course of his or her employment, is simply to apply the ordinary law of agency. And as also indicated, where the issues concern the doing of an authorised act in an unauthorised way, it will ordinarily be the case that vicarious liability results from the ostensible authority of the person whose acts caused injury to the plaintiff. The difficulties that have arisen in relation to vicarious liability concern the absence of any real test for determining whether an act occurred in the course of or within the scope of employment. That difficulty is exacerbated in the case of deliberate criminal acts which, save, perhaps, for some temporal connection, cannot ordinarily be described as acts done in the course of or within the scope of employment. The only principled basis upon which vicarious liability can be imposed for the deliberate criminal acts of another, in my view, is that the person against whom liability is asserted is estopped from asserting that the person whose acts are in question was not acting as his or her servant, agent or representative when the acts occurred. And on that basis, vicarious liability is not necessarily limited to the acts of an employee, but might properly extend to those of an independent contractor or other person who, although as a strict matter of law, is acting as principal, might reasonably be thought to be acting as the servant, agent or representative of the person against whom liability is asserted133. Ordinarily, a person will not be estopped from denying that a person was acting as his or her servant, agent or representative unless there is a close connection between what was done and what that person was engaged to do. That was the focus of the attention of the House of Lords in Lister. However, that is not, of itself, the test of estoppel. Ultimately, the test is whether the person in question has acted in such a way that a person in the position of the person seeking the benefit of the estoppel would reasonably assume the existence of a particular state of affairs134. In the case of vicarious liability, the relevant state of affairs is simply that the person whose acts or omissions are in question was acting as the servant agent or representative of the person against whom liability is asserted. Conclusion and orders State of New South Wales v Lepore & Anor In this case it seems there may have been a close connection between the acts of the teacher and that which he was authorised to do, namely, chastise the plaintiff for his misbehaviour. Moreover and more to the point, it may be that by acquiescing in the teacher's use of the storeroom for the purposes of chastisement or, even, in having a secluded room which might be so used the State of New South Wales is estopped from contending that the teacher was not acting as its servant, agent or representative in doing what he did in that room. However, as 133 See Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 58 [94] per McHugh J. See also Scott v Davis (2000) 204 CLR 333 at 346 [34] per McHugh J. 134 See Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675 per Dixon J; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; The Commonwealth v Verwayen (1990) 170 CLR 394 at 428-429 per Brennan J; Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 506 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ; Giumelli v Giumelli (1999) 196 CLR 101 at 113 [9] per Gleeson CJ, McHugh, Gummow and Heydon JA held in the Court of Appeal, the fact finding process undertaken at first instance does not permit resolution of the question of vicarious liability. Accordingly, there must be a new trial. The appeal should be allowed in part, par 2 of the order of the Court of Appeal should be set aside and, in lieu, it should be ordered that the judgment and order of the District Court of 16 April 1999 be set aside and a new trial ordered. The costs of the first trial should abide the outcome of the new trial. In accordance with the conditions upon which special leave was granted, the State should pay the first respondent's costs in this Court. Samin v State of Queensland & Ors; Rich v State of Queensland & Ors In each of these matters, the appeal should be dismissed. As special leave was granted to enable the question of the liability of education authorities to be fully explored, there should be no order as to the costs of the appeals to this Court. McHugh 135 McHUGH J. The question in these appeals is whether a teacher's assault or sexual assault of a pupil constitutes a breach of a State education authority's duty to take reasonable care of the pupil or is a tort for which the authority is vicariously liable. In my opinion a State education authority owes a duty to a pupil to take reasonable care to prevent harm to the pupil. The duty cannot be delegated. If, as is invariably the case, the State delegates the performance of the duty to a teacher, the State is liable if the teacher fails to take reasonable care to prevent harm to the pupil. The State is liable even if the teacher intentionally harms the pupil. The State cannot avoid liability by establishing that the teacher intentionally caused the harm even if the conduct of the teacher constitutes a criminal offence. It is the State's duty to protect the pupil, and the conduct of the teacher constitutes a breach of the State's own duty. It is unnecessary to decide whether the State is also vicariously liable for the tort of the teacher who assaults or sexually assaults a pupil. Vicarious liability arises for the purposes of tort law when the law makes a person – usually an employer – liable for another person's breach of duty. In a non-delegable duty case, however, the liability is direct – not vicarious. The wrongful act is a breach of the duty owed by the person who cannot delegate the duty. State of New South Wales v Lepore The plaintiff, Angelo Lepore, sued the State of New South Wales and Trevor Michell, his former teacher, in the District Court for damages claiming that the teacher had assaulted him while he was a pupil at a school conducted by the State. Against the teacher, he claimed damages for assault; against the State, he claimed damages for breach of the duty of care owed by an education authority to a pupil under its control. The action was tried by Downs DCJ on a preliminary question concerning the liability of the defendants. After stating that it was undisputed that the teacher had struck the plaintiff and other children "upon their bare bottoms at least once over an unspecified period in or about September 1978", the learned judge said that he was satisfied that the teacher had assaulted the plaintiff. However, Downs DCJ held that there was no evidence that the State had "breached the duty that it owed to the plaintiff". His Honour's judgment indicates that he thought that the liability of the State depended on proof that it either knew or ought to have known that the teacher was likely to commit the assault or that it had failed to implement a system that would have avoided the assault. Nothing in his judgment indicates that he thought that the State owed the plaintiff a duty to ensure that reasonable care was taken of him while he was at school or that the duty was non-delegable. The plaintiff appealed against the order dismissing his action against the State of New South Wales. By majority, the Court of Appeal held that the State had breached the duty of care that it owed to the plaintiff. President Mason said: McHugh "In my view the State's obligations to school pupils on school premises and during school hours extends to ensuring that they are not injured physically at the hands of an employed teacher (whether acting negligently or intentionally)." His Honour also held that the duty of the State was non-delegable. Davies AJA agreed. Heydon JA dissented on the content of the duty. But his Honour thought that the trial was so unsatisfactory that he ordered a new trial of all issues. The duty of a school authority A school authority "owes to its pupils a duty to ensure that reasonable care is taken of them whilst they are on the school premises during hours when the school is open for attendance"135. In Ramsay v Larsen136, Kitto J said "whether the authority be a Government or a corporation or an individual, ... the school authority undertakes not only to employ proper staff but to give the child reasonable care". The duty of the school authority does not depend on an implied delegation of authority from the parents of the pupil. In the case of a State authority, the duty arises from exercising governmental power and setting up a system of compulsory education137. In the case of a private school authority, it arises from the contractual arrangement between the school and the pupil's parents or guardian. In each case, the duty arises because the school authority has control of the pupil whose immaturity is likely to lead to harm to the pupil unless the authority exercises reasonable care in supervising him or her and because the authority has assumed responsibility for the child's protection. In Richards v Victoria138, Winneke CJ, giving the judgment of the Full Court of the Supreme Court of Victoria, said: "The reason underlying the imposition of the duty would appear to be the need of a child of immature age for protection against the conduct of others, or indeed of himself, which may cause him injury coupled with the fact that, during school hours the child is beyond the control and protection of his parent and is placed under the control of the schoolmaster who is in a position to exercise authority over him and afford him, in the exercise of reasonable care, protection from injury". 135 The Commonwealth v Introvigne (1982) 150 CLR 258 at 269 per Mason J. 136 (1964) 111 CLR 16 at 28. 137 Ramsay v Larsen (1964) 111 CLR 16 at 25-26, 37. 138 [1969] VR 136 at 138-139. McHugh In Geyer v Downs139, Stephen J accepted that this reasoning of Winneke CJ correctly explained the rationale for imposing the duty of care in the case of the education authority-pupil relationship. Mason and Jacobs JJ agreed with the judgment of Stephen J. In Richards, the Full Court also rejected the argument140 that reasonable foreseeability was relevant in determining the existence of the duty. The Full Court held that the relationship of school authority and pupil gave rise to a duty of care "prior to and independently of the particular conduct alleged to constitute a breach of that duty"141. This Court accepted that principle in Victoria v Bryar142 where the Court unanimously held that the relationship of school authority and pupil belongs to the class of cases in which a duty of care springs from the relationship itself. The duty arises on the enrolment of the child. It is not confined to school hours or to the commencement of the teachers' hours of employment at the school. If the authority permits a pupil to be in the school grounds before the hours during which teachers are on duty, the authority will be liable if the pupil is injured through lack of reasonable supervision. In Geyer v Downs143, this Court held that the education authority was liable for injuries suffered by a pupil playing in the school grounds at about 8.45am although teachers at the school were not required to be on duty at that time. Stephen J said144: "It is for schoolmasters and for those who employ them, whether government or private institutions, to provide facilities whereby the schoolmasterly duty can adequately be discharged during the period for which it is assumed. A schoolmaster's ability or inability to discharge it will determine neither the existence of the duty nor its temporal ambit but only whether or not the duty has been adequately performed. The temporal ambit of the duty will, therefore, depend not at all upon the schoolmaster's ability, however derived, effectively to perform the duty but, rather, upon whether the particular circumstances of the occasion in question reveal that the relationship of schoolmaster and pupil was or was 139 (1977) 138 CLR 91 at 93. 140 [1969] VR 136 at 139-140. 141 [1969] VR 136 at 140. 142 (1970) 44 ALJR 174. 143 (1977) 138 CLR 91. 144 (1977) 138 CLR 91 at 94. McHugh not then in existence. If it was, the duty will apply. It will be for the schoolmaster and those standing behind him to cut their coats according to the cloth, not assuming the relationship when unable to perform the duty which goes with it." The duty extends to protecting the pupil from the conduct of other pupils or strangers and from the pupil's own conduct145. The measure of the duty is not that which could be expected of a careful parent. The statement of Lord Reid to that effect in Carmarthenshire County Council v Lewis146 is no longer law. Murphy and Aickin JJ rejected the parent analogy in Geyer v Downs147 saying that it was unreal to apply that standard to "a schoolmaster who has the charge of a school with some 400 children, or of a master who takes a class of thirty or more children". Importantly for the purposes of this case, the duty imposed on the education authority is non-delegable148. When a duty is non-delegable, the person owing it must ensure that the duty is carried out. If the duty is to take reasonable care of some person or property, the person must ensure that reasonable care is taken. Brennan CJ explained the nature of the defendant's liability in a non-delegable duty case in Northern Sandblasting Pty Ltd v Harris149 where his Honour said: "However, if the defendant is under a personal duty of care owed to the plaintiff and engages an independent contractor to discharge it, a negligent failure by the independent contractor to discharge the duty leaves the defendant liable for its breach. The defendant's liability is not a vicarious liability for the independent contractor's negligence but liability for the defendant's failure to discharge his own duty150. The duty in such a case is often called a 'non-delegable duty'." Although the task of performing the duty may be delegated, the person owing the duty is responsible for the conduct of those employed to perform the 145 Richards v Victoria [1969] VR 136 at 138-139. 146 [1955] AC 549 at 566. 147 (1977) 138 CLR 91 at 102. 148 The Commonwealth v Introvigne (1982) 150 CLR 258 at 264; Kondis v State Transport Authority (1984) 154 CLR 672 at 686. 149 (1997) 188 CLR 313 at 330. 150 cf Voli v Inglewood Shire Council (1963) 110 CLR 74 at 95. McHugh duty151. In McDermid v Nash Dredging & Reclamation Co Ltd, Lord Hailsham of St Marylebone said152 that a non-delegable duty does not mean the duty "is incapable of being the subject of delegation, but only that the employer cannot escape liability if the duty has been delegated and then not properly performed". In the same case, Lord Brandon of Oakbrook pointed out153 that, if a non- delegable duty is not performed, it is no defence that the employer "delegated its performance to a person, whether his servant or not his servant, whom he reasonably believed to be competent to perform it". If the duty is non-delegable and its performance has been entrusted to an employee, it is irrelevant that in failing to perform the duty with reasonable care the employee was acting outside the scope of his or her employment154. The defendant who is under a non-delegable duty is liable for the conduct of employees and independent contractors because the defendant has expressly or impliedly undertaken to have the duty performed. This is so even though, in the case of a defendant that is a company, it can only discharge its duty by employing natural persons. In Photo Production Ltd v Securicor Transport Ltd155, a case of contract, Lord Diplock said: "Where what is promised will be done involves the doing of a physical act, performance of the promise necessitates procuring a natural person to do it; but the legal relationship between the promisor and the natural person by whom the act is done, whether it is that of master and servant, or principal and agent, or of parties to an independent sub- contract, is generally irrelevant. If that person fails to do it in the manner in which the promisor has promised to procure it to be done, as, for instance, with reasonable skill and care, the promisor has failed to fulfil his own primary obligation. This is to be distinguished from 'vicarious liability' – a legal concept which does depend upon the existence of a particular legal relationship between the natural person by whom a tortious act was done and the person sought to be made vicariously liable for it." 151 Kondis v State Transport Authority (1984) 154 CLR 672 at 685; McDermid v Nash Dredging & Reclamation Co Ltd [1987] AC 906 at 910, 919, 920. 152 [1987] AC 906 at 910. 153 [1987] AC 906 at 919. 154 See Atiyah, Vicarious Liability (1967) at 271. 155 [1980] AC 827 at 848. McHugh Accordingly, where a company was under a duty to clean and return a fur coat, it was liable for the theft by an employee whose job it was to clean the fur156. Diplock and Salmon LJJ decided the case on the basis that the theft occurred within the employee's course of employment. On their analysis, it was a conventional case of vicarious liability. But Lord Denning MR decided the case on the ground that the bailee of the fur owed a non-delegable duty to take reasonable care of the fur. On this analysis, it was irrelevant whether or not the employee was acting within the course of his employment. His Lordship said157: "[W]hen a principal has in his charge the goods or belongings of another in such circumstances that he is under a duty to take all reasonable precautions to protect them from theft or depredation, then if he entrusts that duty to a servant or agent, he is answerable for the manner in which that servant or agent carries out his duty. If the servant or agent is careless so that they are stolen by a stranger, the master is liable. So also if the servant or agent himself steals them or makes away with them." The principle that Lord Denning MR applied is not limited to cases of bailment. Nor, although Photo Production158 was a contract case, are Lord Diplock's remarks limited to contract cases. They apply to a duty imposed by tort. If a contract expresses or implies a duty to take reasonable care, the general law will impose the same duty for the purposes of the law of torts. There cannot be one rule for the contract duty and a different rule for the general law duty. Their Lordships' statements, therefore, apply to any relationship where a defendant has a non-delegable duty to take reasonable care to protect the person or property of another. As Mason J pointed out in Kondis v State Transport Authority159, the source of the concept of a non-delegable common law duty of care is Pickard v Smith160 where the defendant was the occupier of a coal cellar underneath a railway platform. The Common Pleas held the defendant liable for injury to the plaintiff occurring when he fell through a trapdoor left open by a coal-merchant when delivering coal to the defendant. Williams J, giving the judgment of the Court, said161: 156 Morris v C W Martin & Sons Ltd [1966] 1 QB 716. 157 [1966] 1 QB 716 at 728. 158 [1980] AC 827 at 848. 159 (1984) 154 CLR 672 at 684. 160 (1861) 10 CB (NS) 470 [142 ER 535]. 161 (1861) 10 CB (NS) 470 at 480 [142 ER 535 at 539]. McHugh "The act of opening it was the act of the employer, though done through the agency of the coal-merchant; and the defendant, having thereby caused danger, was bound to take reasonable means to prevent mischief. The performance of this duty he omitted; and the fact of his having intrusted it to a person who also neglected it, furnishes no excuse, either in good sense or law." The decision seems contrary to the principle that an employer is not liable for the acts or omissions of independent contractors. However, the Common Pleas seemed to think that it was a clear case and by no means a novel one. The principle for which Pickard v Smith stands was soon after applied in Bower v Peate162 and by the House of Lords in Dalton v Angus163. In each case, the plaintiff had a right of support for buildings on the plaintiff's land from the defendant who was an adjoining owner. In each case, the defendant had caused work to be done on his land that caused a loss of support for the plaintiff's land. Despite the excavation work being carried out by independent contractors, the defendants were held liable for the loss of support. The principle of Pickard v Smith was also applied in Tarry v Ashton164 where the defendant was held liable for injury to a person on a highway that resulted from the disrepair of premises overhanging the highway. Subsequently, the principle has been applied in numerous cases. Thus, a hospital has a duty to exercise reasonable care in the treatment of a patient and cannot delegate the duty to other persons such as doctors or nurses165. Similarly, an employer cannot delegate the duty of care that it owes to an employee166. Again the occupier of a public hall is liable to entrants on the premises for the negligence of an architect in designing a safe platform for the hall167. And the 162 (1876) 1 QBD 321. 163 (1881) 6 App Cas 740. 164 (1876) 1 QBD 314. 165 Collins v Hertfordshire County Council [1947] KB 598; Cassidy v Ministry of Health [1951] 2 KB 343; Roe v Minister of Health [1954] 2 QB 66; Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553. 166 Wilsons and Clyde Coal Co v English [1938] AC 57; Kondis v State Transport Authority (1984) 154 CLR 672; McDermid v Nash Dredging & Reclamation Co Ltd [1987] AC 906. 167 Voli v Inglewood Shire Council (1963) 110 CLR 74. McHugh owner of land who allows a dangerous substance to be brought onto the land or who allows a dangerous activity to be performed on the land has a duty to ensure that reasonable care is taken to guard persons from the danger. The owner cannot delegate the discharge of that duty to others168. This Court has said that the law will identify a duty as non-delegable whenever a person has undertaken the supervision or control of, or has assumed a particular responsibility for, the person or property of another in circumstances where the person affected might reasonably expect that due care would be exercised169. However, the concept of non-delegable duties of care has been strongly criticised. Professor Fleming described a non-delegable duty as a disguised form of vicarious liability170. Professor Glanville Williams has gone further. He has said that it is a "fictitious formula"171. Perhaps a more accurate statement is that of Giles JA in Elliott v Bickerstaff172 where his Honour said "the so-called duty of care in truth is not a duty to take care but a mechanism for responsibility for someone else's failure to take care". However, as I later point out, this statement does not mean that the person owing the duty is liable only when someone else is liable. As Gummow J pointed out in Scott v Davis173, a difficulty with this Court's explanation of the rationale of non-delegable duties is that it suggests that many other duties whose performance is accepted as delegable should be classified as non-delegable. In Scott174, his Honour said that "[s]ome caution is required because the characterisation of a duty as non-delegable involves, in effect, the imposition of strict liability upon the defendant who owes that duty". However, the problem of determining whether a duty is non-delegable does not arise in this case. In The Commonwealth v Introvigne175, this Court held 168 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520. 169 Kondis v State Transport Authority (1984) 154 CLR 672 at 687; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550-552. 170 Fleming, The Law of Torts, 9th ed (1998) at 434. 171 Glanville Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 183. 172 (1999) 48 NSWLR 214 at 238. 173 (2000) 204 CLR 333 at 416-417 [246]-[248]. 174 (2000) 204 CLR 333 at 417 [248]. 175 (1982) 150 CLR 258 at 264. McHugh that the duty owed by an education authority to a pupil is non-delegable. And that proposition has been endorsed subsequently in this Court176. In Introvigne, the Commonwealth was held liable even though the school that it had established in the Australian Capital Territory was run by the State of New South Wales which was reimbursed by the Commonwealth for the cost of running the school. Thus, there was no question of the Commonwealth being vicariously liable for the negligent conduct of the State's employees. The Commonwealth's liability was direct and personal and its duty was non-delegable. In Introvigne, the plaintiff had been skylarking with friends in the school quadrangle before school commenced. The pupils had been hanging on the halyard of a flagpole. At a moment when the plaintiff was not swinging on the halyard, the truck of the flagpole, weighing about 7 kilograms, became detached and struck the plaintiff on the head. This Court held that the Commonwealth was liable notwithstanding that the State of New South Wales administered the public system of education in the Australian Capital Territory. Mason J said177: "By establishing a school which was 'maintained' on its behalf at which parents could enrol their children for instruction pursuant to the obligation imposed on them by the Ordinance, the Commonwealth, in my opinion, came under a duty of care to children attending the school. The nature and scope of that duty of care was co-extensive with the duty of care owed by any authority or body conducting a school to pupils attending the school. It was a duty to ensure that reasonable care was taken for the safety of the pupil which was breached in the circumstances of this case, in the two respects already mentioned. It was, as I see it, a duty directly owed by the Commonwealth for breach of which it is liable. It was not a case of vicarious liability for the omissions of the acting principal and the members of his staff, though had it been necessary to do so, the Commonwealth might have been found liable on this score. The fact that the Commonwealth delegated the teaching function to the State, including the selection and control of teachers, does not affect its liability for breach of duty. Neither the duty, nor its performance, is capable of delegation." Later, his Honour said178: 176 Kondis v State Transport Authority (1984) 154 CLR 672 at 685. 177 (1982) 150 CLR 258 at 271-272. 178 (1982) 150 CLR 258 at 273. McHugh "The Commonwealth had undertaken a governmental function for the conduct of which it was responsible, whether it employed its own teachers or arranged for teachers to be made available to it by a State." All parties to the present appeals accepted that the duty owed to the respective plaintiffs was non-delegable. The vital issue in all cases of non-delegable duties is to determine with precision what the duty is. As I have pointed out, in Introvigne, Mason J said that the duty was "a duty to ensure that reasonable care is taken of pupils attending the school"179. Further, the duty to take reasonable care requires the education authority to ensure that the supervision of the children is carried out with reasonable care. In Richards v Victoria180, the Full Court upheld a finding that the State of Victoria was liable where a schoolboy received serious injuries in a fight with another schoolboy during class in the presence of a teacher. Because the teacher, who was the person charged with performing the State's duty of reasonable care, should have foreseen the likelihood of injury to the plaintiff, the State was liable because reasonable care in the supervision of the plaintiff had not taken place. Similarly, in Victoria v Bryar181, this Court upheld a jury's verdict that the State was responsible for an injury suffered by a teenage pupil at a Victorian State school that resulted from another pupil using an elastic band to fire a paper pellet. In Bryar, the teacher performing the State's duty of supervision had seen the majority of his pupils engaged "in a concentrated exchange of paper pellets fired by means of elastic bands and that, he so far condoned this indiscipline as to do nothing about it"182. However, the duty to supervise – wide and constant as it is – is not as wide as Mason P appears to have formulated it in the present case. His Honour said that the duty "extends to ensuring that they are not injured physically at the hands of an employed teacher (whether acting negligently or intentionally)". The duty of the education authority is to take reasonable care to ensure that the pupil is so supervised that he or she does not suffer harm. It may be that is all that the learned President meant. But his formulation appears to suggest that there is an absolute duty to prevent harm to the pupil. If that is what his Honour meant, the formulation cannot be accepted as correct. 179 (1982) 150 CLR 258 at 271. 181 (1970) 44 ALJR 174. 182 (1970) 44 ALJR 174 at 175. McHugh If the education authority has delegated the performance of some aspect of its duty to a teacher, the authority will be liable if the teacher failed to take reasonable care for the safety of the pupil. However, the pupil does not have to point to any particular teacher as being responsible for the failure to take reasonable care for his or her safety. All that the pupil has to show is that, given the general situation that gave rise to the harm suffered, a reasonable education authority would have protected the pupil from the harm-causing event. That is a necessary consequence of the duty owed to a pupil being personal and non- delegable. Thus in Carmarthenshire County Council v Lewis183, the House of Lords upheld a finding that an education authority was liable for the death of a driver killed when avoiding a child who had wandered onto the road. It did so even though the teacher who was supervising the children at the relevant time was not guilty of negligence. The child had obviously gone through an open gate, and the plaintiff succeeded even though she could not point to the person responsible for the opening of the gate. In Geyer v Downs184, this Court held that the education authority was liable for injuries suffered by a pupil playing in the school grounds although teachers at the school were not required to be on duty at the time and none were present. Similarly in Watson v Haines185, the Supreme Court of New South Wales held the education authority liable for failing to devise an effective system to prevent injury to the plaintiff even though the plaintiff could not identify any particular officer of the authority who was liable. In the present case, the State of New South Wales by reason of its compulsory education system had a duty to ensure that reasonable care was taken in supervising the activities of the plaintiff and protecting him from harm while he was on the school premises during the times that students were known to be on school grounds. The State purported to perform this duty in a number of ways, one of which was to employ the second respondent, Michell, to teach and supervise the plaintiff during particular school periods. If Michell had failed to take reasonable steps to prevent injury to the plaintiff by another pupil or a stranger, the State would have been liable on the principles laid down by this Court in The Commonwealth v Introvigne. Likewise, the State would have been liable if by some negligent conduct on the part of Michell himself, the plaintiff had been injured. It makes no difference that the injury in this case was sustained by an assault even if the assault had sexual overtones. Just as the bailee in Morris v C W Martin & Sons Ltd186 could not escape liability, in Lord Denning's view, for theft by its employee, so the State of New South Wales 184 (1977) 138 CLR 91. 185 (1987) Aust Torts Reports ¶80-094. McHugh cannot escape liability for Michell's criminal assault. The duty of the State was to take reasonable care for the safety of the plaintiff, and the assault by his teacher breached the duty to take reasonable care of him. The plaintiff elected to sue the teacher for trespass to the person. But if it matters – and I do not think it does – the plaintiff could have sued the teacher in negligence. An action for negligent infliction of harm is not barred by reason of the intentional act of the person causing the harm. Historically, as long as a plaintiff did not make the intention of the defendant part of the cause of action, the plaintiff could sue in trespass to the person or by an action on the case for the direct infliction of force. At all events, that was the position before the enactment of the Common Law Procedure Act 1852 (UK) and its analogues in Australia187. Since the abolition of the forms of action, a plaintiff may, if he or she chooses, sue in negligence for the intentional infliction of harm188. By assaulting the plaintiff, Michell not only breached the duty of care that he owed to the plaintiff, but his assault constituted a breach of the employer's non-delegable duty to take reasonable care for the safety of the plaintiff. The various States involved or intervening in the appeals complained that to hold an education authority liable in cases such as the present would result in a massive increase in the legal liability of education authorities. They also asserted that it would make them liable for the criminal conduct of teachers acting outside the scope of their employment. The latter proposition may be correct. But it has been the law in this country at least since this Court's decision in Introvigne189 that an education authority is legally liable for the wrongs and neglects of those that it employs to carry out its duty to take reasonable care of its pupils. The doctrine of non-delegable duty no doubt makes the position of education authorities difficult. But they are not totally helpless to prevent teachers from assaulting or sexually assaulting pupils. Education authorities can: institute systems that will weed out or give early warning signs of potential offenders; deter misconduct by having classes inspected without warning; 187 Williams v Milotin (1957) 97 CLR 465 at 470-471. 188 Gray v Motor Accident Commission (1998) 196 CLR 1. 189 (1982) 150 CLR 258. The judgment of Kitto J in Ramsay v Larsen (1964) 111 CLR 16 suggests that this Court recognised the non-delegable nature of the duty as early as 1964. For his Honour said (at 28) that the duty was "not only to employ proper staff but to give the child reasonable care" (my emphasis). McHugh prohibit teachers from seeing a pupil without the presence of another teacher, particularly during recesses; encourage teachers and pupils to complain to the school authorities and parents about any signs of aberrant or unusual behaviour on the part of a teacher. No doubt there are other methods open to education authorities to combat the problem of teachers who, for their own gratification, use their power and position to exploit children. Given the nature of the offences, no system is likely to eliminate the abuse or sexual abuse of school children. In the case of schools in isolated areas with only one teacher, the difficulties of eliminating or reducing abuse may be very great. But whether or not there are any reasonably practicable methods by which education authorities can eliminate or reduce the incidence of abuse, long established legal principle and this Court's decisions require that they carry the legal responsibility for any abuse that occurs. Given the potential – often permanent – consequences of the sexual abuse of children, this result does not seem unjust. It is unnecessary to determine whether or not Michell was acting in the course of his employment when he assaulted the plaintiff, so that the State would be vicariously liable for Michell's conduct. The decisions of the highest courts in England and Canada suggest that, in most cases where a teacher has abused a pupil, the wrong will be taken to have occurred within the scope of the teacher's employment190. The education authority will therefore be vicariously liable for the wrong. The Australian common law, however, has adopted a simpler and stricter test of liability. The appeal of the State of New South Wales should be dismissed. Rich v State of Queensland The plaintiff pleaded that between January 1963 and July 1965 she was a pupil at a school operated by the State of Queensland and/or the Minister for Education of Queensland at Yalleroi. Her Statement of Claim alleged that they employed the third defendant, William Theodore D'Arcy, as a teacher at the school. Paragraphs 3 and 4 of her Statement of Claim provide: In the premises pleaded above, the First Defendant and/or the Second Defendant and/or the Third Defendant each owed to the 190 See in the Canadian context, Bazley v Curry [1999] 2 SCR 534. In England, see Lister v Hesley Hall Ltd [2002] 1 AC 215. McHugh Plaintiff a duty to ensure that reasonable care was taken of her whilst she was at the school. In breach of each of the Defendants' duties between 28 January 1963 and 1 July 1965 the Third Defendant assaulted the Plaintiff." The particulars of assaults declare that they took place in the classroom or the store-room at Yalleroi State School. Paragraph 3 of the Statement of Claim formulates the defendants' duty in identical terms to that formulated by Mason J in The Commonwealth v Introvigne191. Accordingly, the Statement of Claim disclosed a good cause of action. The Court of Appeal of the Supreme Court of Queensland erred in striking it out. The appeal should be allowed. Samin v State of Queensland The plaintiff's Statement of Claim alleges that between October 1963 and July 1965 she was a pupil at the Yalleroi State School, a school operated by the State of Queensland and/or the Minister for Education. Her Statement of Claim also alleges that the defendants employed the third defendant, William Theodore D'Arcy, as a teacher at the school. Paragraph 3 of the Statement of Claim is pleaded in identical terms to that in Rich v State of Queensland, as is Paragraph 4 except that the date 20 October 1963 is substituted for the date 28 January 1963. The particulars of assaults are different but they show that the assaults occurred in rooms at the school during school hours or during the lunchtime break. In my opinion the Statement of Claim in this case also showed a good cause of action. The Court of Appeal erred in striking out the Statement of Claim. The appeal should be allowed. 191 (1982) 150 CLR 258 at 271. STATE OF NEW SOUTH WALES v ANGELO LEPORE & ANOR This matter was heard at the same time as Rich v State of Queensland & Ors and Samin v State of Queensland & Ors. It was said to raise the same issues of principle as are considered in those matters. In this case, however, those issues are obscured by the unusual course that was taken in the proceedings at first instance. In particular, the primary judge did not make the findings of fact that were necessary to resolve the factual issues joined between the parties. It is this which must determine the outcome of the appeal to this Court, rather than the issues of principle. The claim Angelo Lepore, the first respondent to this appeal, commenced an action in the District Court of New South Wales claiming damages for personal injury allegedly suffered by him as a result of assaults committed by the second respondent while the second respondent was a teacher at a State primary school. (It is convenient to continue to refer to the first respondent as the plaintiff, and to the second respondent as the "former teacher".) By his amended statement of claim, the plaintiff alleged that "[d]uring 1978, on repeated occasions, the [former teacher] assaulted and sexually and indecently assaulted" him. He further alleged that the injuries he sustained "were occasioned by the negligence of the [State], its servant and/or agents". Thus, he alleged causes of action in trespass to the person against the former teacher, and negligence, or vicarious liability for negligence, against the State. His statement of claim did not, in terms, allege that the State owed him a non-delegable duty of care. On one view, the statement of claim may also have alleged that the State was vicariously liable for the trespasses committed by the former teacher, but it seems that such a claim was not pursued at first instance. The trial Before the action came on for trial in the District Court an order was made, it seems by consent, that the issue of liability would be tried separately. The primary judge (Downs DCJ) said this was a matter of agreement; Mason P, in the Court of Appeal, said it was the result of an order made on the plaintiff's application192. Nothing turns on identifying more precisely the origin of the course that was followed. It is enough that issues of liability and damage were 192 Lepore v State of New South Wales (2001) 52 NSWLR 420 at 422 [7]. severed. How the issue of liability could be severed effectively or conveniently from the issues of damage, when the plaintiff's claim against the State was pleaded in negligence, appears not to have been examined or considered at first instance. The issue of liability coming on for trial, it was treated by the primary judge as a trial of two questions: first, whether the State owed the plaintiff a duty of care which it had breached and, secondly, whether the former teacher had assaulted the plaintiff. The primary judge identified the plaintiff's contention about the State's breach of duty as being that the State had failed to take reasonable care to protect the plaintiff by failing to adopt a sufficient system for supervising the former teacher, and had failed to supervise him adequately when he was carrying out his teaching duties. Certainly these allegations were given as particulars of negligence in the amended statement of claim. But other, wider allegations of negligence were also made in that amended statement of claim. The particulars of negligence included an allegation that the State had failed "to protect the children in the care and control of teachers" at the school, and an allegation that the State had failed "in its duty to the [p]laintiff in loco parentis". No reference was made to these allegations in the primary judge's reasons and if, or how they were used in argument at first instance is not readily apparent. The plaintiff gave oral evidence in the District Court that he had been assaulted by the former teacher by being struck on the buttocks with a ruler. He also swore that the former teacher had required the plaintiff (and others) to undress before being beaten and that "then sometimes he used to just touch us and play with us or make the kids – each others play with each others …". A statement the plaintiff had given to police at a time much closer to the events of which he was speaking was tendered in evidence. In that statement he described not only beatings of the kind he described in his oral evidence but also some sexual assaults. Findings of the primary judge The primary judge made no express finding about the sexual allegations of the plaintiff. He noted that the plaintiff's oral evidence was not wholly consistent with the statement which he had earlier given to police and that there were some contradictions between the accounts which the plaintiff and other students at the school had given in statements to police or in oral evidence at the trial. The primary judge did not say which of these contradictory versions of events he preferred. The only finding he made was that the former teacher had "assaulted the plaintiff". He made no finding about what acts constituted that assault or whether more than one assault had taken place. He said: "Bearing in mind the tender ages of the children at the time and the lapse of more than 20 years, it is difficult to place much reliance upon any details of what the children alleged took place. Nevertheless it is undisputed that the [former teacher] struck each of the children upon their bare bottoms at least once over an unspecified period in or about September 1978. After all later in 1978 he pleaded guilty to having assaulted each of them once and he chose to absent himself from court before me. Consequently I am satisfied that the [former teacher] assaulted the plaintiff but it should be observed that I have not considered or made any findings on the issue of injury to the plaintiff thereby. That deals with the first [sic, second] question I was asked to consider." The finding that the former teacher had assaulted the plaintiff "at least once" in no sense constituted a finding about the former teacher's liability to the plaintiff for trespass to the person. It did not decide the issues of liability which had been tendered for decision. The plaintiff had alleged more than one assault and had alleged different forms of assault – some constituted by striking and others constituted by fondling. In his grounds of defence the former teacher had denied all these allegations. The finding made by the primary judge did not resolve the issues of liability that thus were joined in the action. As we have said, the primary judge treated the central allegation against the State as being an allegation that it had failed either to have a sufficient system of supervision of the former teacher or it had failed to supervise him properly. The primary judge concluded that there was "not any evidence" that the State breached the duty it owed to the plaintiff. The duty the primary judge identified, the existence of which he said was not disputed by the parties, was "the duty to the plaintiff that a teacher owes to a pupil". Yet in the course of final addresses to the primary judge, reference was made to The Commonwealth v Introvigne193 which deals with a very different duty from the duty alleged in the amended statement of claim. The plaintiff's pleading did not, or at the very least did not clearly, allege that the assaults by the former teacher constituted a breach by the State of a non-delegable duty of care which it owed the plaintiff. The closest the pleading came to such an allegation was to allege, as particulars of negligence, a failure to protect children at the school and a failure in the State's "duty to the [p]laintiff in loco parentis". Even so, it seems clear that the plaintiff wanted to rely on Introvigne. It also appears that there was no contention that the course of interlocutory proceedings, or the course of trial, prevented the plaintiff from 193 (1982) 150 CLR 258. putting his case in this way. Certainly, in the Court of Appeal, the plaintiff alleged that he had been entitled to succeed against the State in this way. The primary judge said that there was "not any evidence" about the period over which the alleged assaults took place and that "[t]he assaults alleged were deliberate and isolated acts of abuse". However, the primary judge made no finding about how many assaults were established by the evidence led, or any finding about the exact conduct constituting the assault or the assaults. It was, therefore, not open to the primary judge to go on to make the finding which he did, that there had been no want of adequate supervision by the State. That finding depended upon characterising the assaults as isolated acts of abuse. Had it been found as a fact that there had been only very few incidents of the kind alleged, it may have been open to the judge to describe them as "isolated" acts. But the primary judge appears to have confined his finding to the conclusion that the former teacher had struck the plaintiff (and some other children) "upon their bare bottoms at least once over an unspecified period in or about September 1978" (emphasis added). This made neither a positive finding that this happened only very occasionally, nor a negative finding that the evidence did not permit a more precise finding than that it happened once, and may have happened on other occasions. That being so, the primary judge's conclusion that there was no evidence that the State had breached the duty that it owed the plaintiff (because the assaults were isolated acts of abuse) is a conclusion that cannot be sustained. The liability to the plaintiff, both of the State and of the former teacher, depends critically upon resolution of the factual controversy revealed in the proceedings at first instance. On the pleadings, issue was joined about how many assaults occurred and what form they took. It is by no means clear that the parties conducted the case at first instance on the basis that each party was to be confined, in the case of the plaintiff to his statement of claim and in the case of the defendants to their grounds of defence, but the factual issues which were joined at trial included issues about how many assaults occurred and what form they took. Resolving those issues depended upon the assessment to be made by the judge of the evidence that was given. His reasons reveal that he had reservations about some of the evidence that was adduced. That being so, an appellate court cannot now resolve the factual issues that emerged from the pleadings and were in issue at trial. It follows that the orders made by the primary judge cannot stand. At the root of all of the difficulties presented by this case lies the decision to attempt to sever trial of issues of liability from trial of issues about damages194. Adopting that course in this case has led to procedural confusion. The trial at first instance miscarried. There must be a new trial with all its attendant cost and inconvenience to all those concerned. Because there was no challenge in the Court of Appeal to the order for separate trial, it was not open to that Court to set it aside and, therefore, neither can this Court. Nonetheless, the matter must go back for retrial and, the order for separate trials being an interlocutory order, there appears to be no reason preventing the District Court making a further order for trial of the whole proceeding in the ordinary way. In the Court of Appeal, Heydon JA concluded195 that the plaintiff should be at liberty to seek to amend his statement of claim to allege the duty which, on appeal, he contended arose from Introvigne, and that he should be at liberty to maintain some, but not all, of the allegations that he made in his amended statement of claim. No such liberty should now be granted and no such restriction should be imposed. The proceedings at first instance having miscarried as they have, it would be wrong to treat the plaintiff as if he were estopped by anything done in, or apparently decided at, that hearing. Whether he should now have leave to amend his pleading in any respect will depend upon the form of the proposed amendment and will, no doubt, be affected by what is decided in Rich v State of Queensland & Ors and Samin v State of Queensland & Ors. The appeal to this Court should be allowed in part, paragraph 2 of the order of the Court of Appeal made on 23 April 2001 set aside and, in its place, there be an order that the judgment entered in the District Court on 16 April 1999 be wholly set aside and there be an order for a new trial, the costs of that trial to abide its outcome. Consistent with the conditions upon which the State was granted special leave to appeal to this Court, the costs orders made by the Court of Appeal are undisturbed and the State should pay the respondents' costs of the appeal in this Court. 194 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 18 [52] per Gaudron J, 55 [168]-[170] per Kirby and Callinan JJ. 195 Lepore v State of New South Wales (2001) 52 NSWLR 420 at 448 [126]. SHEREE ANNE RICH v STATE OF QUEENSLAND & ORS VIVIAN CHRISTINE SAMIN v STATE OF QUEENSLAND & ORS These two appeals were heard at the same time as State of New South Wales v Lepore & Anor. All three matters were said to raise, as their central issue, whether a State is liable to a person who, while a pupil at a State school, was sexually assaulted by a teacher during school hours and on the school premises. The present appeals, in which the State of Queensland is respondent, arise from an application made by the State, as defendant to proceedings brought in the District Court of Queensland, to strike out the plaintiffs' statements of claim as disclosing no arguable cause of action. In each case that application failed at first instance but succeeded on appeal to the Court of Appeal of The plaintiffs' statements of claim are sufficiently set out in the reasons of other members of the Court. The central allegation, in each case, was that the State, the Minister for Education of Queensland, and the teacher who it was alleged had sexually assaulted the plaintiff, "each owed to the [p]laintiff a duty to ensure that reasonable care was taken of her whilst she was at the school". No allegation was made that the State or the Minister had acted without reasonable care, whether in selecting and supervising teachers or otherwise. The only person who was alleged to have acted improperly was the teacher – not by acting without reasonable care, but by deliberately committing sexual assaults on the plaintiffs. We were told that if the matters were to go to trial the State would not dispute that the several sexual assaults alleged by each plaintiff had occurred. Other facts and circumstances relating to the matter are sufficiently described in the reasons of other members of the Court and we need not repeat them. No distinction was drawn in argument between the State and the Minister. For present purposes, it is not necessary to consider whether there is any distinction that could be drawn or whether the Minister is properly joined having regard to the relevant provisions of the Crown Proceedings Act 1980 (Q). It is enough to refer only to the position of the State. Each statement of claim alleged that the State had breached a duty which it owed the plaintiff. In the Court of Appeal, counsel for the plaintiffs expressly disclaimed any alternative claim founded on vicarious liability of the State. In this Court, however, counsel accepted that such a claim would be made in each case if the statements of claim were found not to disclose an arguable cause of action. By leave, each plaintiff submitted a form of the statement of claim which 196 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626. she would seek to file if the present pleadings were to be held to be insupportable. It was accepted that it would be wrong to give leave to replead if claims founded on vicarious liability were bound to fail. Although the plaintiffs placed the chief weight of their argument on contentions founded on the present form of their pleadings, it is better to begin these reasons by considering the foreshadowed claim based on vicarious liability. First, the questions that must be considered in connection with vicarious liability bear upon the questions that arise in considering the duty which the plaintiffs alleged that the State owed them. Secondly, recent decisions in the United Kingdom197 and Canada198 holding employers liable for sexual assaults on children by employees have been founded on vicarious liability. Vicarious liability As was pointed out in Hollis v Vabu Pty Ltd199, any consideration of vicarious liability must begin by accepting, first200, that "[a] fully satisfactory rationale for the imposition of vicarious liability in the employment relationship has been slow to appear in the case law" and, secondly201, that "the modern doctrine respecting the liability of an employer for the torts of an employee was adopted not by way of an exercise in analytical jurisprudence but as a matter of policy". The content of rules governing the imposition of vicarious liability has changed and developed over time, although the verbal formulae applied to describe those rules have remained largely unchanged. Perhaps the largest of the changes that have occurred has been in the content given to "control" as the factor which distinguishes a relationship of employer and employee from a relationship of principal and independent contractor202. Despite all those caveats, there are several influences which can be identified as bearing upon questions of vicarious liability. First, there is "the 197 Lister v Hesley Hall Ltd [2002] 1 AC 215. 198 Bazley v Curry [1999] 2 SCR 534 and Jacobi v Griffiths [1999] 2 SCR 570. 199 (2001) 207 CLR 21. 200 (2001) 207 CLR 21 at 37 [35]. 201 (2001) 207 CLR 21 at 37 [34]; Darling Island Stevedoring and Lighterage Co Ltd v Long (1957) 97 CLR 36 at 56-57 per Fullagar J. 202 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40-41 [43]-[44]. cynical conclusion of the late Dr Baty … that the real reason [for finding vicarious liability] is that the damages are taken from a deep pocket"203. That is a consideration that finds other, less pejorative, expression as a "principle of loss-distribution"204 or as the need to provide a "just and practical remedy" for harm suffered as a result of wrongs committed in the course of the conduct of the defendant's enterprise205. Secondly, there is the sense that it is right and just to attribute responsibility to those who not only placed in the community an enterprise from which risk and damage has emerged, but also stood to gain in some way from its pursuit. In Hollis, it was said that206: "under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise". Or, as McLachlin J put it in Bazley v Curry207, "where the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong". Thirdly, there are the several considerations identified by Pollock in his Essays in Jurisprudence and Ethics, published in 1882. The rule making an employer liable for acts and omissions of servants was, he said208, "supposed to make employers more careful in their choice of servants, and in looking to the state of the plant and instruments of their business". That aim was "thought worth securing at the cost of some individual hardship" whereas "the use of care in choosing a contractor who is likely to be careful is too remote a benefit to the community to be enforced by indiscriminate penalties"209. Thus the distinction drawn between vicarious liability for the negligence of a servant and the absence of liability for the negligence of an independent contractor was said to find its 203 Soblusky v Egan (1960) 103 CLR 215 at 229 per Dixon CJ, Kitto and Windeyer JJ. 204 Atiyah, Vicarious Liability in the Law of Torts, (1967) at 22. 205 Bazley [1999] 2 SCR 534 at 553-554 [30]-[31]. 206 (2001) 207 CLR 21 at 40 [42]. 207 [1999] 2 SCR 534 at 548-549 [22]. 208 Pollock, Essays in Jurisprudence and Ethics, (1882) ("Pollock's Essays") at 130. 209 Pollock's Essays at 130. reason, in part, in the deterrent effect of holding an employer responsible for the negligence of employees. Pollock also recognised, however, that deterrence was not a complete explanation for the law's imposition of vicarious liability for the negligence of another. Because vicarious liability is imposed regardless of the fault of the party who is held vicariously responsible, it is imposed regardless of the capacity of that party to avoid the harm that occurs. In many cases, then, the deterrent effect of holding the party responsible is at best indirect, and it may be remote and speculative. Pollock pointed to the fact that there are circumstances in which a duty is cast upon a person independent of that person's own acts. He drew particular attention210 to duties in respect of the ownership of property, or the voluntary use of property in a particular way. Some of the examples he gave were of strict liability under the former rule in Rylands v Fletcher211, but they also included cases of cattle trespass, and the liability of an occupier of land to an invitee. To these he added212 a case which can be seen as one of vicarious responsibility or, as we suggest may be the better view, as a case only about what is sufficient proof of personal responsibility – Byrne v Boadle213. There, an employer, who occupied first floor premises where barrels of flour were stored, was held liable for injury done to the plaintiff when a barrel fell from the first floor to the street below, despite there being no evidence of how the accident happened. The employer was held responsible on the basis that such events do not occur without fault. There being no evidence suggesting that the employees had acted carefully, the employer was held liable. The common element which Pollock identified214, in the several different kinds of case he mentioned, was "that a man has for his own convenience brought about or maintained some state of things which in the ordinary course of nature may work mischief to his neighbours". Accordingly, where an employer conducted a business, and for that purpose employed staff, the employer brought about a state of things in which, if care was not taken, mischief would be done. 210 Pollock's Essays at 130. 211 (1868) LR 3 HL 330. 212 Pollock's Essays at 121. 213 (1863) 2 H & C 722 [159 ER 299]. 214 Pollock's Essays at 122. It was, he concluded, right to hold the employer responsible for loss sustained as a result of acts done in the course of that venture. But the liability to be imposed on the employer was liability for the way in which the business was conducted. Accordingly, the employer should be held responsible only for negligence which occurred in the course of the servant's employment215. Conduct of the business (and the employee's actions in the course of employment in that business) were the only state of things which the employer created and for which the employer should be held responsible. "Course of employment" was, in Pollock's view216, not some limitation to an otherwise more general liability of an employer; it was a necessary element of the definition of the extent of the liability. Before dealing further with the concept of course of employment it is useful to consider the three cases, two from Canada and one from the United Kingdom, which we mentioned earlier and which have examined vicarious liability for sexual assaults on children – Bazley, Jacobi v Griffiths217 and Lister v Hesley Hall Ltd218. It will also be necessary to refer to the more recent decision of the House of Lords in Dubai Aluminium Co Ltd v Salaam219. Before the decisions of the Supreme Court of Canada in Bazley (and Jacobi, decided on the same day as Bazley) and of the House of Lords in Lister, there would have been little argument that a teacher who sexually assaulted a pupil, whether at school or out of school, was not acting in the course of employment. Such an assault is the antithesis of the central task confided to a teacher which is to care for and teach the child. It could in no way be said to be a part of what a teacher is held out as being employed to do. Yet in both Bazley and in Lister an employer was held vicariously liable for sexual assaults on a pupil by a teacher. Lister v Hesley Hall Ltd Lister was decided after Bazley and Jacobi. It is, however, convenient to consider Lister before the two Canadian cases. Although the members of the House of Lords who decided Lister referred to Bazley, there was little analysis of the policy considerations examined by the Supreme Court of Canada in Bazley. 215 Pollock's Essays at 126. 216 Pollock's Essays at 126. 217 [1999] 2 SCR 570. 219 [2002] 3 WLR 1913; [2003] 1 All ER 97. Lord Steyn, with whom Lord Hutton agreed, described220 the determinative question as being whether the employee's torts "were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable". Because the sexual abuse was "inextricably interwoven" with the employee's carrying out of his duties, his Lordship gave an affirmative answer to the question he had posed. Lord Clyde saw the decisions in Bazley and Jacobi as consistent with the traditional approach recognised in England221 and as turning on the strength of the connection between employment and wrong. Lord Hobhouse of Woodborough considered222 it inappropriate to follow the reasoning in Bazley because, in his Lordship's view, that reasoning expressed the policy reasons for the rule arrived at in Bazley rather than identifying the criteria for the application of the rule. Both Lord Hobhouse223 and the fifth member of the House, Lord Millett224, placed chief emphasis on the employer's duty to the child being to care for and protect the child. The employer delegated performance of that duty to the employee who, in breach of his contractual duties to his employer, assaulted the child entrusted to his care. It is apparent, then, that no single principle can be identified as underpinning the decision in Lister. The analyses of Lord Hobhouse and Lord Millett have strong echoes of non-delegable duties. By contrast, the majority of the House located the result in what were said to be orthodox principles of vicarious liability. Dubai Aluminium Co Ltd v Salaam In Dubai Aluminium, the House of Lords again examined the principles of vicarious liability. The two leading speeches were given by Lord Nicholls of Birkenhead and Lord Millett. In each, further consideration was given to what connection is necessary, between a wrongful act or omission causing injury and 220 [2002] 1 AC 215 at 230 [28]. 221 [2002] 1 AC 215 at 237 [48]. 222 [2002] 1 AC 215 at 242 [60]. 223 [2002] 1 AC 215 at 240 [56]. 224 [2002] 1 AC 215 at 250 [82]. the employment relationship, to warrant holding the employer vicariously responsible for the employee's tort. Lord Nicholls said that225: "Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm's business or the employee's employment." (original emphasis) Lord Millett adopted a similar test226: "All depends on the closeness of the connection between the duties which, in broad terms, the employee was engaged to perform and his wrongdoing." But as Lord Nicholls recognised227, a test of closeness of connection: "affords no guidance on the type or degree of connection which will normally be regarded as sufficiently close to prompt the legal conclusion that the risk of the wrongful act occurring, and any loss flowing from the wrongful act, should fall on the firm or employer rather than the third party who was wronged". Bazley v Curry and Jacobi v Griffiths In Bazley, McLachlin J, writing for the Court, identified228 three general considerations which should guide the decision whether to hold an employer vicariously liable for the defaults of an employee: to confront the question whether liability should be against the employer rather than obscure the decision beneath semantic discussions of scope of employment and mode of conduct; 225 [2002] 3 WLR 1913 at 1920 [23]; [2003] 1 All ER 97 at 105-106. 226 [2002] 3 WLR 1913 at 1943 [129]; [2003] 1 All ER 97 at 128. 227 [2002] 3 WLR 1913 at 1920 [25]; [2003] 1 All ER 97 at 106. 228 [1999] 2 SCR 534 at 559-560 [41]. to identify the fundamental question as being whether the wrongful act was sufficiently related to conduct authorised by the employer to justify the imposition of vicarious liability; and to consider the sufficiency of the connection between the employer's creation or enhancement of a risk and the wrong done, by reference, in cases of intentional torts, to (i) the opportunity the enterprise gave the employee to abuse power; (ii) the extent to which the wrongful act furthered the employer's aims; (iii) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer's enterprise; (iv) the extent of power given to the employee over the victim; and (v) the vulnerability of potential victims to wrongful exercise of power. McLachlin J went on to say of sexual abuse by employees that229: "It must be possible to say that the employer significantly increased the risk of the harm by putting the employee in his or her position and requiring him to perform the assigned tasks. The policy considerations that justify imposition of vicarious liability for an employee's sexual misconduct are unlikely to be satisfied by incidental considerations of time and place. … Nor is foreseeability of harm used in negligence law the test. What is required is a material increase in the risk as a consequence of the employer's enterprise and the duties he entrusted to the employee, mindful of the policies behind vicarious liability." (original emphasis) In Bazley, the Supreme Court held that the operator of a residential care facility for treatment of emotionally troubled children was vicariously liable for sexual assaults committed by an employee engaged (with others) "to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime"230. By contrast, in Jacobi, the Court held (by majority) that a children's club, which operated a recreational facility for children, was not vicariously liable for sexual assaults committed by an employee engaged to supervise volunteer staff, and to organise after-school recreational activities and the occasional outing. In Jacobi, McLachlin J dissented, and would have held the club vicariously liable for the conduct of its employee, because the employee "worked at a job where he was put in a special position of trust and power over particularly vulnerable people and used that 229 [1999] 2 SCR 534 at 560-561 [42]. 230 [1999] 2 SCR 534 at 540 [2]. position to carry out an abuse of the power with which he was conferred to carry out his duties"231. As the differing outcomes in Bazley and Jacobi reveal, the considerations described by McLachlin J in Bazley give no bright line test for deciding whether vicarious liability is to be found. The question was approached in the Supreme Court of Canada as one of policy – should vicarious liability be found? And no doubt it was the same kind of question which Lord Steyn answered in Lister by saying that it was "fair and just" to hold the employer liable. We would accept that an important element in considering the underlying policy questions in cases such as the present is the nature and extent (the "sufficiency") of the relationship between the employee's authorised conduct and the wrongful act or, as was said in Dubai Aluminium, "the closeness of the connection" between the employment relationship and the wrongful act232. But adopting either of these tests simply restates, in other words, the problem presented by the concept of "course of employment". Analysis by reference to risk risk, and Creation and enhancement of the various subsidiary considerations to which McLachlin J referred in Bazley, may distract attention from what meaning should be given to course of employment – especially when the case is one concerning intentional wrongdoing rather than negligence. Consideration of risk, and associated questions, may distract attention from the underlying task of identifying what the employee was engaged to do. They are questions that require an abstract and generalised assessment of the risk that individual employees in an enterprise will choose to act unlawfully, and in direct breach of the terms of their employment. Thus the approach adopted in Bazley requires a court to ask whether a school authority creates a risk of sexual assault (or enhances that risk) by operating a school. That inquiry shifts attention from the risks which conducting the enterprise brings with it (through employees doing the tasks they are employed to do) to the risk that individuals will break the law and their employment contract while they are at work. The inquiry about risk becomes an inquiry about opportunity for wrongdoing. Conducting a school may certainly provide the occasion or the opportunity for a teacher to assault a pupil. But in what other sense can it be said that the 231 [1999] 2 SCR 570 at 586 [21]. 232 [2002] 3 WLR 1913 at 1920 [23], 1943 [129]; [2003] 1 All ER 97 at 105-106, 128. school authority creates (let alone enhances) the risk that a pupil will be sexually assaulted? The teacher is given authority over the pupil; the pupil is, inevitably, vulnerable to abuse of that power. According to the nature of the duties to be undertaken by the teacher there may be greater or lesser opportunity for assault. If the duties are intimate there may be greater opportunity than if they are not, but experience dictates that sexual assaults on young people are not confined to assaults by those who are required to perform intimate tasks for, or with a child. Such assaults are usually associated with the wrongful exercise of power over a child which is power derived from the holding of some place of authority (as parent, carer, religious or other leader) and is often preceded by a period of cultivation or grooming of the child. The opportunity for such conduct by a teacher is obviously provided by the role that is central to the teacher's task – of guiding and leading the child, both by example and otherwise, through the journey of learning. It is particularly instructive to consider the analysis which McLachlin J made of risk in Bazley. Two key points in that analysis were: first233, that "[a]s the opportunity for abuse becomes greater, so the risk of harm increases" and, secondly234, "the more an enterprise requires the exercise of power or authority for its successful operation, the more materially likely it is that an abuse of that power relationship can be fairly ascribed to the employer". If those are the key points to be considered in examining relevant risks, it would seem that a test which is cast in terms of creating or enhancing the risk of sexual assault leads inexorably to a conclusion that a school authority will always be vicariously liable for sexual assault by a teacher if the assault occurs on school premises or during school hours. That is a large conclusion. But in every school, teachers exercise power or authority, and in every school, no matter what may be the duties of the teachers, there is the opportunity for abuse, no matter whether the duties which the teacher is required to perform will inevitably require intimate contact with the child. Analysis by reference to risk in this way gives no significance to three facts. First, the conduct of which complaint is made is intentional conduct by the employee. Secondly, the conduct directly contravenes the contract of employment and is contrary to the very core of the task for which a teacher is employed. Thirdly, the teacher is not deterred from engaging in it by the sanctions of the criminal law. 233 [1999] 2 SCR 534 at 561 [43]. 234 [1999] 2 SCR 534 at 562 [44]. If the criminal law will not deter the wrongdoer there seems little deterrent value in holding the employer of the offender liable in damages for the assault committed. It might be said that it may encourage more careful selection of teachers, or better systems of work, in which the opportunities for misconduct are reduced in some way, but at best these must be seen as speculative and remote results. After all, the hypothesis for the debate is that the particular school authority has not itself been negligent, whether in selection or supervision of its staff. But, consistent with the fundamental nature of vicarious liability as a liability imposed where there is no fault by the employer, it may well be said that these considerations do not weigh heavily in the debate. For the purposes of argument it may, therefore, have to be assumed that to impose vicarious liability might possibly advance, in some indirect way, some deterrent or prophylactic purpose. If such an assumption must be made, it is one to which little significance can be given. That is not the case with the other matters we have mentioned – that there has been an intentional act by the employee in breach of the contract of employment and wholly contrary to the core of the task for which the teacher is employed. Here Pollock's insight into the place to be given in vicarious liability to the notion of course of employment becomes critically important. If a basis for imposing vicarious liability on an employer is that the employer should be liable as the person who creates the enterprise or the circumstances out of which the risk and damage emerges, it is an essential step in establishing vicarious liability to show that the risk and damage occurred in the course of employment. As we have said, that requirement is not an artificial limitation imposed for reasons extraneous to the principle which supports the finding of liability; it is an integral part of the definition of the liability. Conducting any enterprise carries with it a variety of risks. The paradigm kind of risk of which Pollock spoke was the risk that an employee, setting out on the employer's business, carried out a task carelessly and injured a third party. By contrast, if the employee, in the course of an activity wholly divorced from the conduct of the employer's business, happened to cause injury to another, the employer was not to be held liable even if the injury happened during work hours or in the workplace. The risk, for the occurrence of which the employer was to be held liable, was, therefore, the risk of injury caused by an employee in pursuing the employer's venture. The analysis made in Bazley is founded in the general proposition that those who conduct a business or other venture, and employ staff for that purpose, receive the benefits of the enterprise and should therefore also bear its burdens. Where the analysis made in Bazley departs from the proposition identified by Pollock is that the risks to be considered are not confined to those risks which attend the furtherance of the venture but include the risks of conduct that is directly antithetical to those aims. An approach not fundamentally different from Bazley has been adopted in some American jurisdictions where employers have been held vicariously liable for sexual assaults occurring as a result of authority or power given to the employee by the employment235. However, reference to the risk of wrongdoing carries with it a danger in this context that must be recognised. A wrongful act is alleged to have occurred. The risk has come to pass. It follows that an inquiry about the risk of a venture may, in the end, become an inquiry into whether, but for the attributes of the employment (control, authority, trust, access to persons or premises), the wrongful act could have occurred. If the act could not have occurred but for the employment, it will be said that the employer should be held to be vicariously liable because the employer should bear the burden of the risk of wrongdoing236. The inquiry would be about how the wrongdoer carried out the wrong, regardless of what he or she was employed to do. To adopt this approach would represent a radical departure from what hitherto has been accepted as an essential aspect of the rules about vicarious liability: the requirement that the wrongdoing be legally characterised as having been done in the course of employment. Duty of care owed by the school authority? Analysis by reference to risk may also obscure the importance of considering questions of that kind when deciding whether the school authority, or other employer, has itself breached a duty of care owed to the injured person. If the school authority should reasonably have taken steps to prevent the abuse of a pupil, because "the magnitude of the risk [of abuse] and the degree of the probability of the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have"237 were such as reasonably to require response, orthodox principles of negligence would be engaged. No doubt its occurrence, along with 235 See, for example, Mary M v City of Los Angeles 814 P 2d 1341 (1991); Applewhite v City of Baton Rouge 380 So 2d 119 (1979); cf White v County of Orange 212 Cal Rptr 493 (1985) all of which are cases of sexual assault by police officers. See also John R v Oakland Unified School District 769 P 2d 948 (1989); Jeffrey E v Central Baptist Church 243 Cal Rptr 128 (1988). 236 Ingram, "Liability of a Principal for Fraud or Abuse of Position by an Agent", (1995) 17 Whittier Law Review 85 at 104. 237 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48 per Mason J. it would be necessary to take account of what, at the time of an alleged assault, was reasonably known to a school authority about such matters. To transfer considerations of risk in the sense just identified to the field of vicarious liability does not assist the proper development of that field. The "course of employment" and intentional torts The difficulties to which the concept of course of employment has given rise in connection with vicarious liability are well known. As with other legal elements of vicarious liability238, the expression does not necessarily display its legal content by its semantic meaning. Contrary to what the phrase "course of employment" might be thought to mean, it may include within its reach some acts done by an employee in direct contravention of explicit and binding directions given to that employee by the employer. It may also include within its reach some acts that are contrary to law. Thus no one doubts that the employer who instructs an employee driver to drive within the road rules will be vicariously responsible if, contrary to that instruction, the employee speeds and causes injury to a third party. Why is that employee's conduct within the course of employment? Analysis of the concept of course of employment has often stopped with a bare recitation of Salmond's propositions239 – that an act is done in the course of employment if it is a wrongful act authorised by the employer, or a wrongful and unauthorised mode of doing an authorised act240. The notion of an unauthorised mode of doing an authorised act has evident difficulties in application. Especially is that so when the conduct of which complaint is made is, as in these cases, the commission of a criminal offence. It may be thought that the search for underlying principles which would give more precise content to the idea of "course of employment" in its application to intentional torts is not greatly assisted by identifying negative propositions. Even so, it is necessary to begin by noticing three of those negative propositions. First, Deatons Pty Ltd v Flew241 establishes that the fact that an intentional tort is committed by an employee while at work and during ordinary working 238 Hollis (2001) 207 CLR 21 at 38 [36]. 239 Salmond, Law of Torts, 1st ed (1907) at 83. 240 See, for example, Canadian Pacific Railway Co v Lockhart [1942] AC 591 at 599. 241 (1949) 79 CLR 370. hours will not always suffice to establish vicarious liability. Secondly, the fact that the conduct of which complaint is made constitutes a breach of the law may not suffice to deny vicarious liability. Lloyd v Grace, Smith & Co242 and Morris v C W Martin & Sons Ltd243 are often cited in this regard244. Lloyd also supports a third proposition. This is that the circumstance that the employee who practises a fraud upon a third party does so for the benefit of the employee not the employer, is no answer to the liability of the employer if the employer, whilst not authorising "the particular act", has placed the employee in a position "to do that class of acts"; the employer then "must be answerable for the manner in which that [employee] has conducted himself"245. It is important to recognise the tension between these propositions. The reference to "class of acts" posits a necessarily imprecise criterion of liability but what is involved is indicated by the statement of Gavan Duffy CJ and Starke J in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd246: "The class of acts which [the employee] was employed to do necessarily involved the use of arguments and statements for the purpose of persuading the public to effect policies of insurance with the defendant, and in pursuing that purpose he was authorized to speak, and in fact spoke, with the voice of the defendant. Consequently the defendant is liable for defamatory statements made by [the employee] in the course of his canvass, though contrary to its direction." The barmaid in Deatons, who threw a glass at a patron, committed an assault for which the employer was held not to be vicariously liable. The assault was held not to have been committed in the course of her employment. By contrast, in Lloyd, the employer of a solicitor's clerk was held vicariously liable 243 [1966] 1 QB 716. See also Photo Production Ltd v Securicor Transport Ltd [1980] 244 See, for example, Lister [2002] 1 AC 215 at 224 [17] and 225-226 [19] per Lord Steyn. 245 Lloyd v Grace, Smith & Co [1912] AC 716 at 733 per Lord Macnaghten, adopting the statement of Willes J in Barwick v English Joint Stock Bank (1867) LR 2 Ex 246 (1931) 46 CLR 41 at 47. See also Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 149-151 per Jordan CJ. when the clerk fraudulently conveyed real property to himself rather than in accordance with the client's instructions. The fraud was found to have been committed in the course of the clerk's employment. What is it that distinguishes the conduct of the fraudulent clerk in Lloyd from the conduct of the barmaid in Deatons? The answer given by Dixon J, in Deatons247, was that the barmaid's action was not "a negligent or improper act, due to error or ill judgment, but done in the supposed furtherance of the master's interests. Nor [was] it one of those wrongful acts done for the servant's own benefit for which the master is liable when they are acts to which the ostensible performance of his master's work gives occasion or which are committed under cover of the authority the servant is held out as possessing or of the position in which he is placed as a representative of his master (see Lloyd v Grace, Smith & Co248; Uxbridge Permanent Benefit Building Society v Pickard249)." It may be doubted that what Dixon J said was intended to describe exhaustively all the circumstances which would attract vicarious liability. The statement was made in connection with a claim that an employer was vicariously liable for an intentional tort. Nonetheless, there are two elements revealed by what his Honour said that are important for present purposes. First, vicarious liability may exist if the wrongful act is done in intended pursuit of the employer's interests or in intended performance of the contract of employment. Secondly, vicarious liability may be imposed where the wrongful act is done in ostensible pursuit of the employer's business or in the apparent execution of authority which the employer holds out the employee as having. What unites those elements is the identification of what the employee is actually employed to do or is held out by the employer as being employed to do. It is the identification of what the employee was actually employed to do and held out as being employed to do that is central to any inquiry about course of employment. Sometimes light may be shed on that central question by looking at a subsidiary question of who stood to benefit from the employee's conduct250. But that inquiry must not be permitted to divert attention from the more basic 247 (1949) 79 CLR 370 at 381. 250 Barwick v English Joint Stock Bank (1867) LR 2 Ex 259 at 265 per Willes J. question we have identified. That is why, in Lloyd, Lord Macnaghten rejected251 the proposition that actual or intended benefit to the employer was a necessary condition of vicarious liability. Rather, in Lloyd, the determinative finding was, as we have noted earlier, that the fraudulent clerk was authorised by his employer to act for the firm in a class of matters including the conveyancing transactions which Emily Lloyd instructed him to effect. At trial Scrutton J had found that it was within the scope of the clerk's employment to advise clients like Mrs Lloyd who came to the firm to sell property "as to the best legal way to do it, and the necessary documents to execute"252. The fraud was held to have been committed in the course of that employment253. By contrast, in Deatons, the barmaid who threw the glass did so in retaliation for a blow and an insult, not in self-defence and not in any way in the supposed furtherance of the employer's interests (whether in keeping order in the bar or otherwise)254. Nor, unlike Lloyd, was it a case where the act done was one to which the ostensible performance of the employer's work gave occasion, or which was committed under cover of the authority the employee was held out as possessing, or of the position in which the employee was placed as representative of the employer255. Many cases in which it is sought to hold an employer vicariously liable for the intentional tort of an employee can be determined by reference to the first of these elements. The act of which complaint is made can be seen to have been done in the intended performance of the task which the employee was employed to perform. Cases of excessive punishment by a teacher may fall within this category. So too will many cases where a store detective wrongfully arrests and detains a person or in that process assaults them. No doubt the examples could be multiplied. That kind of analysis is not available in cases of fraud. The commission of a fraud can seldom be said to have been in the intended performance of the employee's duties. In those cases, however, it will often be the case that what was done by the employee was done in the apparent execution of authority actually, or ostensibly, given to the employee by the employer. Dubai 251 [1912] AC 716 at 732. 252 Lloyd v Grace, Smith & Co [1911] 2 KB 489 at 494. 253 [1912] AC 716 at 730. 254 (1949) 79 CLR 370 at 381 per Dixon J. 255 Deatons Pty Ltd v Flew (1949) CLR 370 at 381 per Dixon J. Aluminium256 may be understood as being a case of this kind. Very often, however, such cases will yield to simpler analysis. The employer may be in direct breach of an obligation owed to the person who has been defrauded. That obligation may arise from a contract between the employer and the person who has been defrauded: a contract which can be seen as having been made by the fraudster on behalf of the employer. Or the obligation may be proprietary in nature as will often be the case where money or other property is to be held in trust for the person defrauded. Other direct obligations may be relevant. In Morris, there had been a bailment of goods. It was for the employer to demonstrate that its inability to return them in good order was not due to fault on its part. It may be doubted that it could have done so. In his note in the Law Quarterly Review about Lloyd257 Pollock pointed out that the solicitor was bound to attend to his client's work personally or if he delegated it, to supervise that work. That being so, the solicitor was in breach of his contract of retainer by not supervising the work of the fraudulent clerk258. Emily Lloyd could, therefore, have recovered on that basis. Moreover, having held out the clerk as authorised to act on his behalf, it may be that the solicitor was estopped from denying that what was done was authorised259. That was the preferred basis upon which, in Lloyd, Vaughan Williams LJ had placed his dissenting judgment in the Court of Appeal260. It may be, therefore, that extending vicarious liability to cases where the intentional conduct of which complaint is made was done in ostensible pursuit of the employer's business, or in the apparent execution of authority which the employer held out the employee as having, was an unnecessary extension of the concept of course of employment. It may also be that the content of concepts of ostensible pursuit and apparent execution of ostensible authority depends upon, or at least runs parallel with, whether a simpler basis of liability can be identified 256 [2002] 3 WLR 1913; [2003] 1 All ER 97. 257 (1913) 29 Law Quarterly Review 10. 258 Stoljar, "The Servant's Course of Employment", (1949) 12 Modern Law Review 44 259 Stoljar, "The Servant's Course of Employment", (1949) 12 Modern Law Review 44 260 Lloyd v Grace, Smith & Co [1911] 2 KB 489 at 506. in the fashion of the examples given. Those are questions which may require further consideration in cases which raise the issue. For present purposes, it is enough to conclude that when an employer is alleged to be vicariously liable for the intentional tort of an employee, recovery against the employer on that basis should not be extended beyond the two kinds of case identified by Dixon J in Deatons: first, where the conduct of which complaint is made was done in the intended pursuit of the employer's interests or in the intended performance of the contract of employment or, secondly, where the conduct of which complaint is made was done in the ostensible pursuit of the employer's business or the apparent execution of the authority which the employer held out the employee as having. The present cases To hold a school authority, be it government or private, vicariously liable for sexual assault on a pupil by a teacher would ordinarily give the victim of that assault a far better prospect of obtaining payment of the damages awarded for the assault than the victim would have against the teacher. But the party to pay those damages, the school authority, would itself have committed no wrong. And in no sense could it be said that the commission of the assault was an act done in furtherance of the aims of the school authority or as a result of its pursuing those aims by establishing the school concerned and employing its staff. The deliberate sexual assault on a pupil is not some unintended by-product of performance of the teacher's task, no matter whether that task requires some intimate contact with the child or not. It is a predatory abuse of the teacher's authority in deliberate breach of a core element of the contract of employment. Unlike the dishonest clerk in Lloyd, or the dishonest employee in Morris, the teacher has no actual or apparent authority to do any of the things that constitute the wrong. In Lloyd, the clerk had, and was held out as having, authority to act in conveying the property which Emily Lloyd had and which he took to his own use; in Morris, the employee had authority to receive the garment that he stole. When a teacher sexually assaults a pupil, the teacher has not the slightest semblance of proper authority to touch the pupil in that way. The rules governing vicarious liability exhibit the difficulty they do because they have been extended and applied as a matter of policy rather than principle. In the present cases the chief reason for holding the State responsible would be to give the appellants a deep-pocket defendant to sue. That is not reason enough in a case where the conduct of which they complain was contrary to a core element of the teacher's contract of employment. So to hold would strip any content from the concept of course of employment and replace it with a simple requirement that the wrongful act be committed by an employee. The wrongful acts of the teacher in these cases were not done in the intended pursuit of the interests of the State in conducting the particular school or the education system more generally. They were not done in intended performance of the contract of employment. Nor were they done in the ostensible pursuit of the interests of the State in conducting the school or the education system. Though the acts were, no doubt, done in abuse of the teacher's authority over the appellants, they were not done in the apparent execution of any authority he had. He had no authority to assault the appellants. What was done was not in the guise of any conduct in which a teacher might be thought to be authorised to engage. If the present pleadings reveal no arguable cause of action, leave to replead to allege vicarious liability of the State should have been refused. Should the present pleadings be struck out? Are the plaintiffs' claims, as they are now framed, arguable? The duty alleged In each case, the plaintiff alleged that the State owed her what is usually referred to as a non-delegable duty. The form in which it was expressed in the pleading, that the State owed the plaintiff a duty to ensure that reasonable care was taken of her when at the school, was evidently based on what was said by Mason J in The Commonwealth v Introvigne261. It is a formulation of the duty that may be understood in two radically different ways. Is the focus of the last phrase "reasonable care was taken of her" upon the reasonableness of the conduct of the person who is caring for the pupil or is it upon the condition of the child continuing to be in a state consistent with reasonable care? That is, the duty might be understood as a duty to ensure that those who have the care of the child act without negligence. Alternatively, it might be understood as a duty to ensure that the child is kept reasonably carefully and is, therefore, not harmed by any act or omission of those who actually have charge of the child. The distinction between the two ways in which the duty is understood is fundamental, but at times in the course of argument there appeared to be an elision of the two. As the reasons of other members of the Court demonstrate, identifying the ratio decidendi of Introvigne may be difficult262. Further, as Mason J pointed out in his reasons in Introvigne263, "[t]he concept of personal duty, performance of 261 (1982) 150 CLR 258 at 269-270. 262 See also Lepore v State of New South Wales (2001) 52 NSWLR 420 at 439-440 [99] per Heydon JA. 263 (1982) 150 CLR 258 at 270. which is incapable of delegation, has been strongly criticised". Explanations have been given in this Court of cases decided on the basis of non-delegable duties, notably by Mason J in Kondis v State Transport Authority264, and this explanation was accepted in the joint judgment in Burnie Port Authority v General Jones Pty Ltd265. No party suggested we should reconsider these cases. However, the doctrinal strength of the explanations of the cases has been questioned266. A reading of the cases suggests perhaps no more than pragmatic responses to perceived injustices or other shortcomings associated with the doctrine of common employment, the rules respecting vicarious liability and the rule in Rylands v Fletcher. The leading United States text concludes267: "It is difficult to suggest any criterion by which the non-delegable character of such duties may be determined, other than the conclusion of the courts that the responsibility is so important to the community that the employer should not be permitted to transfer it to another." The foregoing suggests the need for considerable caution in developing any new species of this genus of liability. In the present appeals it is as well to begin by considering how the concept of a non-delegable duty emerged. The origins of non-delegable duties Non-delegable duty is a concept which traces its roots to Lord Blackburn's statement in Dalton v Angus268 that "a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor". The statement was made in the context of a claim by a land owner for damages caused by removal of support from adjoining Lord Blackburn acknowledged that, since Quarman v Burnett269, it was settled law that a person was vicariously liable for the negligence of a servant, but not for the negligence of an independent contractor. But where, as is the case with the obligation of one land. 264 (1984) 154 CLR 672 at 687. 265 (1994) 179 CLR 520 at 550-552. 266 Scott v Davis (2000) 204 CLR 333 at 416-417 [248]. 267 Prosser and Keeton on Torts, 5th ed (1984) at 512. 268 (1881) 6 App Cas 740 at 829; see also Tarry v Ashton (1876) 1 QBD 314 at 319; Hughes v Percival (1883) 8 App Cas 443 at 446. 269 (1840) 6 M & W 499 [151 ER 509]. land owner not to withdraw lateral support from adjoining land, the duty is to ensure a result, it was held to be no excuse to say that the person who removed the support was not a servant of the owner but an independent contractor. That is a conclusion that turns on the nature of the duty in question rather than upon any distinction between responsibility for servants and responsibility for independent contractors. Further, it is a conclusion that reflects the particular context in which it was expressed. As was said in the earlier decision of Bower v Peate270 (referred to in Dalton v Angus), the answer to the contention that the land owner was not liable because he had delegated the task of excavation to an independent contractor could be placed on a broader ground, namely: "that a man who orders a work to be executed, from which, in the natural course of things, injurious consequences to his neighbour must be expected to arise, unless means are adopted by which such consequences may be prevented, is bound to see to the doing of that which is necessary to prevent the mischief, and cannot relieve himself of his responsibility by employing some one else … to do what is necessary to prevent the act he has ordered to be done from becoming wrongful." The subsequent application of Lord Blackburn's dictum to cases where the duty was to act with reasonable care, and where injury was not obvious and inevitable if care was not taken was, therefore, to apply it to a very different class of case. The taking of that step (unlike the injurious consequences mentioned in Bower v Peate) was by no means inevitable. Applying Lord Blackburn's dictum in this different context transformed a duty to act carefully into a duty to achieve a particular result. The step was taken to avoid the doctrine of common employment, a doctrine long since abolished in Australia. But for this, or some other device, an employee's claim seeking to hold the employer vicariously liable for the negligence of a fellow employee would have been defeated by that doctrine. In Wilsons and Clyde Coal Co v English271, it was held that the obligation of an employer to provide a safe place, staff, and system of work "is fulfilled by the exercise of due care and skill. But it is not fulfilled by entrusting its fulfilment to employees, even though selected with due care and skill" (emphasis added). Accordingly, an employer was held liable to an employee injured as a 270 (1876) 1 QBD 321 at 326. 271 [1938] AC 57 at 78 per Lord Wright. result of the negligence of a fellow employee. Due care and skill had not been exercised by the employee, and it was held that the employer's duty to exercise due care and skill was not fulfilled by choosing employees carefully. But for the doctrine of common employment, the same result could have followed from the application of orthodox principles of vicarious liability. Then, in Paine v Colne Valley Electricity Supply Co Ltd272, the liability of the employer was further extended: from being liable where an employee's negligence caused injury to another employee, to being liable for the negligence of an independent contractor. The doctrine of common employment did not intrude in any way in this case. The device which had been adopted to avoid the doctrine of common employment was extended to a case where its application was not necessary to avoid what was seen as the unjust consequences of that doctrine. The liability that was imposed was described as "personal" as distinct from vicarious. Yet the employer was not shown to have failed in any way and was being held liable because another person, for whom the employer would not ordinarily be vicariously responsible, had been negligent. As Professor Glanville Williams was later to say273, a desired result was reached "by devious reasoning and the fictitious use of language". The language of non-delegable duty was then taken up in relation to hospitals. The difficulties in identifying those for whose negligence a hospital should be vicariously responsible, revealed as early as Hillyer v Governors of St Bartholomew's Hospital274, were avoided by describing the duty owed by a hospital to its patient as non-delegable275. It was sought to anchor this development, too, in Lord Blackburn's proposition276 that a person fixed with a duty cannot escape responsibility by delegating its performance277. 272 [1938] 4 All ER 803. 273 Glanville Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 190. 275 Cassidy v Ministry of Health [1951] 2 KB 343 at 362-363 per Denning LJ. 276 Dalton v Angus (1881) 6 App Cas 740 at 829. 277 Cassidy [1951] 2 KB 343 at 363 per Denning LJ. Non-delegable duties in this Court In this Court, the concept of a non-delegable duty of care has been considered in detail in Introvigne, Kondis278 and in the joint reasons of five members of the Court in Burnie Port Authority279. As was said280 in Burnie Port Authority, "[i]t has long been recognized that there are certain categories of case in which a duty to take reasonable care to avoid a foreseeable risk of injury to another will not be discharged merely by the employment of a qualified and ostensibly competent independent contractor" or, we would add, a qualified and ostensibly competent employee. Their Honours went on to say that281: "In those categories of case, the nature of the relationship of proximity gives rise to a duty of care of a special and 'more stringent' kind, namely a 'duty to ensure that reasonable care is taken'282. Put differently, the requirement of reasonable care in those categories of case extends to seeing that care is taken." Several categories of cases in which the duty to take reasonable care is non-delegable were identified by Mason J in Kondis283 – adjoining owners of land in relation to work threatening support or common walls; master and servant in relation to a safe system of work; hospital and patient; school authority and pupil; and (arguably) occupier and invitee. Each is identified as a relationship in which the person owing the duty either has the care, supervision or control of the other person or has assumed a particular responsibility for the safety of that person or that person's property284. It is not suggested, however, that all relationships which display import a non-delegable duty. these characteristics necessarily 278 (1984) 154 CLR 672. 279 (1994) 179 CLR 520 at 550 per Mason CJ, Deane, Dawson, Toohey and 280 (1994) 179 CLR 520 at 550. 281 (1994) 179 CLR 520 at 550. 282 See Kondis v State Transport Authority (1984) 154 CLR 672 at 686. 283 (1984) 154 CLR 672 at 679-687. See also Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 44 per Wilson and Dawson JJ; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550. 284 Kondis (1984) 154 CLR 672 at 687; Burnie Port Authority (1994) 179 CLR 520 at What can safely be said is that all of the cases in which non-delegable duties have been considered in this Court have been cases in which the plaintiff has been injured as a result of negligence. The question has been whether a person other than the person who was negligent was to be held liable to the injured plaintiff for the damage thus sustained. In Kondis, the employer was held responsible; in Introvigne, the Commonwealth was held liable as the school authority in the Australian Capital Territory at the time. In the present cases, however, the question is different. Neither plaintiff suffered injury as a result of any negligent conduct of the teacher. It is not suggested that the State, as school authority, failed to act with reasonable care in selecting or supervising the teacher concerned. Rather, it is said that the liability of the State (as school authority) under its non-delegable duty extends to injury caused by deliberate criminal conduct of a teacher constituting a trespass to the person of the plaintiff. The ambit of a non-delegable duty to take reasonable care A duty to ensure that reasonable care is taken is a strict liability. There is a breach of the duty if reasonable care is not taken, regardless of whether the party that owes the duty has itself acted carefully. Not only is the liability strict, it can be seen to be a species of vicarious responsibility. Employers, hospitals, school authorities, all of whom owe a non-delegable duty, will be held liable for the negligence of others who are engaged to perform the task of care for a third party – no matter whether the person engaged to provide the care is a servant or an independent contractor. The early English cases, which first identified non-delegable duties to ensure that reasonable care was taken, offered no reason for departing from the generally accepted rule that a person was not liable for an accident that occurred without the fault either of that person or of a servant in the course of employment. Lord Blackburn's often quoted proposition, about not escaping responsibility by engagement of a contractor, if applied to cases of duties to act carefully as distinct from duties to achieve a particular result, proffers no basis for what appears to be the resulting conflation of two distinct propositions – one about personal responsibility to see that a duty is performed and the other about vicarious responsibility for the negligent performance of the task. At best, when applied in the context of duties to act carefully, the proposition appears to be the assertion of a conclusion about responsibility, rather than any demonstration of a reason for reaching that conclusion. That being so, its citation offers no certain basis for defining the breadth of the proposition that it is intended to state. The duty of an employer to provide a safe place and system of work and a safe staff is said to be non-delegable because "the employee's safety is in the hands of the employer" and because "[t]he employee can reasonably expect … that reasonable care and skill will be taken"285. In the case of a school authority, it is said286 that it is "the immaturity and inexperience of the children and their propensity for mischief that lie at the basis of the special responsibility which the law imposes on a school authority to take care for their safety". In each of these cases (and in other cases where non-delegable duties have been imposed) there is the common thread, identified in Burnie Port Authority287, of an undertaking of care, supervision or control of another. Two considerations identified by Pollock in connection with vicarious liability are seen to apply to these kinds of case. First, the person upon whom the duty is cast has chosen to undertake the venture in the course of which the plaintiff suffers injury. Secondly, to impose a duty upon the person who undertakes the venture may, in at least some cases, induce more careful conduct of that or similar ventures. No less importantly, a third feature identified by Pollock, namely, the course of employment, or the course of the venture, is an essential foundation for the duty that is imposed on the person who undertakes the care, supervision or control of another. That person owes the non-delegable duty to ensure that reasonable care is taken because that person has undertaken the care, supervision or control of another. The injury that is sustained is suffered because the care, supervision or control is inadequate. It is, for that reason, an injury suffered in the course of the venture undertaken by the employer, the hospital, the school authority. None of the considerations we have mentioned suggests that the person upon whom the duty is cast should be the insurer of those to whom the duty is owed. The duty that is identified is imposed on a person in relation to a particular kind of activity – employing others in some business or other venture, conducting a school or hospital. The duty concerns the conduct of that activity. It is not a duty to preserve against any and every harm that befalls someone while that activity is being conducted. Two examples may suffice to make good that point. Is a school authority to be held liable if, without any negligence on the part of it or its employees or contractors, a child is injured on school premises, during school hours, when the child stumbles and falls in the perfectly maintained and supervised school yard? 285 Kondis (1984) 154 CLR 672 at 688. 286 Kondis (1984) 154 CLR 672 at 686; The Commonwealth v Introvigne (1982) 150 CLR 258 at 271. 287 (1994) 179 CLR 520 at 551. Is the authority to be held liable if, without negligence on the part of it, or its employees or contractors, a child is struck and injured by a bottle thrown into the school yard by a passer-by? In each case the answer "no" should be given. In neither case was there any want of care by the authority; the authority did not fail to see that any person whom it employed or engaged to care for the pupil acted with reasonable care towards that pupil. That is, in neither case was there any default by the authority or any person to whom it delegated its task of caring for the pupil. Yet, as was pointed out earlier in these reasons, it might be said that, the child having been hurt, the authority did not ensure the result that no harm befell the pupil. Should the ambit of the non-delegable duty be extended? What is the result which those who owe a non-delegable duty must bring about? Is it absence of any kind of default by those who have the care, control or supervision of another? Is it absence of negligence by those persons? Is it absence of harm to the person concerned? Hitherto the duty has been understood to be that the party having the care, supervision or control of others will itself act with reasonable care and will ensure that all others to whom it delegates that task, whether as servant or as independent contractor, act with reasonable care. If the delegate acts without reasonable care, the party who owes the duty is held liable. It is said that the party has not performed its duty to take reasonable care of the person and to ensure that reasonable care is taken. That understanding of the duty should not be extended to include responsibility for intentional defaults by delegates. First, to hold that a non-delegable duty of care requires the party concerned to ensure that there is no default of any kind committed by those to whom care of the plaintiff is entrusted would remove the duty altogether from any connection with the law of negligence. No longer would the duty of the employer, the hospital, the school authority, be in any sense a duty to take reasonable care for the safety of the employee, the patient, the pupil. It would be a duty to bring about a result that no person (employee or independent contractor) who was engaged to take steps connected with the care of the plaintiff did anything to harm the plaintiff. This would introduce a new and wider form of strict liability to prevent harm, a step sharply at odds with the trend of decisions in this Court rejecting the expansion of strict liabilities288. It would sever the duty from its roots in the law of negligence. It would make the employer (the hospital, the school authority) an insurer of the employee (the 288 Scott v Davis (2000) 204 CLR 333 at 417-418 [250] per Gummow J. patient, the pupil) against any harm done by any person engaged by the former to care for the latter. Secondly, it would remove any need to consider whether the party concerned could or should have done something to avoid the harm. In the present cases, there is no allegation that the State failed to act with reasonable care in selecting and supervising teachers. Yet much of the argument in support of extending a non-delegable duty or imposing vicarious liability failed to give due weight to this fact. The unstated premise for the argument appeared, at times, to be that the State should be held responsible because it could and should have averted the injuries that were done to these appellants. Yet it is not suggested that the State was itself negligent in its choice or supervision of teachers. That being so, any deterrent or prophylactic effect that might be said to follow from extending the non-delegable duty of care of a school authority to include liability for intentional trespasses committed by teachers would, at best, be indirect. An allegation of negligence in choice or supervision of teachers, if made, would have required careful attention to matters like the extent to which, at the time of the assaults, school authorities could reasonably have known of the prevalence of such assaults. It would be wrong to ignore the fact that awareness of the risk of sexual assaults on young people by those having authority over them has grown over recent years. It is, however, not necessary to decide what steps it would have been reasonable for a school authority to take in the 1960s, when these assaults occurred, or the steps it would now be reasonable for such an authority to take. Thirdly, and no less importantly, extending a non-delegable duty of care, in the way for which the appellants contend, would give no room for any operation of orthodox doctrines of vicarious liability. It would be irrelevant to consider whether the party under the duty could or should be held vicariously liable for the defaults of the persons whose conduct caused the injury of which the plaintiff complains. Despite the difficulties that attend the content and application of principles of vicarious liability, it would distort the proper development of that aspect of the law to extend non-delegable duties in this way. It would do this by shifting the focus of attention away from an explicit consideration of whether vicarious liability should be imposed for certain kinds of intentional wrongdoing, to a discussion of the applicability of unusual principles intended to be a particular extension of ordinary negligence principles in certain limited circumstances. As Williams v Milotin289 makes plain, negligently inflicted injury to the person can, in at least some circumstances, be pleaded as trespass to the person, but the intentional infliction of harm cannot be pleaded as negligence290. The appellants allege intentional trespasses to the person, not negligence. The appellants' claims founded on an allegation of a non-delegable duty to ensure that care was taken of them are, therefore, bound to fail. Each appeal should be dismissed with costs. 289 (1957) 97 CLR 465 at 470. 290 See also Cousins v Wilson [1994] 1 NZLR 463 at 468. Kirby 272 KIRBY J. In Lister v Hesley Hall Ltd291, the House of Lords held that, as a matter of legal principle, in the circumstances of the case, a school was liable for the acts of an employee who had sexually abused children at the school. It was responsible for the wrongs done to the children and for the damage that they had suffered. In reaching their unanimous opinion to this effect, their Lordships were influenced by the approach taken by the Supreme Court of Canada to a similar question292. In that Court, in Bazley v Curry293, the liability of the employer of a childcare counsellor, working in a residential home for children with behavioural disorders, was unanimously confirmed in respect of the wrongs done to, and damage suffered by, a child who was sexually abused by the employee. The English and Canadian decisions are recent ones. The Canadian decision of Bazley was recently noticed and approved by this Court in another context294. There are some differences between the reasoning adopted in England and in Canada295. But there are also common elements to the decisions – most especially, each court adopted the guiding principle that the employer of the abusing employee, although itself without fault, would be treated by the law as vicariously liable to an abused child if a sufficiently "close connection" were shown between the employer's enterprise and the tortious conduct of the employee296. In coming to the conclusions that they respectively did, the English and Canadian courts challenged a number of legal assumptions that underlay the 292 Lord Steyn, in the leading speech (with which Lord Hutton agreed at 238 [52]), described the judgments of the Supreme Court of Canada in Bazley v Curry [1999] 2 SCR 534 and Jacobi v Griffiths [1999] 2 SCR 570 as the "starting point" for future consideration of these problems "in the common law world": see Lister [2002] 1 AC 215 at 230 [27], see also at 236-237 [48]-[49] per Lord Clyde, 245 [70] per Lord Millett; cf at 242 [60] per Lord Hobhouse of Woodborough. 293 [1999] 2 SCR 534. 294 In Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 39-40 [41]-[42]. 295 Giliker, "Rough Justice in an Unjust World", (2002) 65 Modern Law Review 269 at 276-278; Feldthusen, "Vicarious Liability for Sexual Abuse", (2001) 9 Tort Law Review 173 at 178. 296 See Bazley v Curry [1999] 2 SCR 534 at 548-549 [22], 556-559 [36]-[40]; cf Lister [2002] 1 AC 215 at 229-230 [25] per Lord Steyn (with whom Lord Hutton agreed at 238 [52]), 236-237 [48] per Lord Clyde, 243-244 [65] per Lord Millett; cf at 241-242 [59]-[60] per Lord Hobhouse of Woodborough. Kirby opposite opinion. The House of Lords was obliged not only to reverse the English Court of Appeal in the decision before it but also to overrule an earlier decision of that Court in Trotman v North Yorkshire County Council297. So too the Canadian court reversed a line of authority in that country, such as McDonald v Mombourquette298 and Boudreau v Jacob299. In taking the course that they did, the highest courts in the United Kingdom and Canada did not regard themselves as departing from the basic doctrines of the common law. Instead, they viewed their conclusions as a clarification, and application, of those doctrines in the context of a significant new problem which called forth a fresh examination of past decisional authority300. The new problem is the increase in the reported instances of physical and sexual assaults upon children by employees of organisations to whose care the parents and guardians of the children have entrusted them301. That problem is not confined to the United Kingdom and Canada. It exists also in Australia. Therefore, the central question presented by these appeals is whether the common law of Australia, re-examined in these proceedings, affords effective civil remedies to children who are damaged by an employee of an organisation in whose care they are placed. Or whether such claims fall outside the categories of liability recognised by the common law. In my opinion, the common law of Australia on this subject marches in step with that pronounced by the final courts of the United Kingdom and Canada. A test similar to that adopted in those countries applies as the law of Australia. Each of the plaintiffs in the present proceedings has a reasonably arguable cause of action against the educational authority concerned. Each should be permitted to advance such a claim upon amended pleadings. The reasons that persuaded 297 [1999] LGR 584. 298 (1996) 152 NSR (2d) 109 at 116-117 [22]. See Feldthusen, "Vicarious Liability for Sexual Torts", in Mullany and Linden (eds), Torts Tomorrow: A Tribute to John Fleming, (1998) 221 at 236-237. 299 (1997) 192 NBR (2d) 256. 300 Jacobi v Griffiths [1999] 2 SCR 570 at 610 [65]. 301 In England, the Home Office in 1999 estimated total child sex abuse cases in England and Wales at 76,000 a year. See Giliker, "Rough Justice in an Unjust World", (2002) 65 Modern Law Review 269 at 278. There is no reason to believe that, proportionately to the population, the numbers in Australia would be fewer than in England. Kirby unanimous decisions of the House of Lords and the Supreme Court of Canada should persuade this Court to accept similar legal principles governing liability. In none of the cases before the Court can it be said that the claims are so clearly lacking in a cause of action that the proceedings should be peremptorily terminated302. Three appeals and two categories of civil liability Three appeals are before this Court. One appeal is from a judgment entered by the New South Wales Court of Appeal303. That Court unanimously upheld an appeal by Mr Angelo Lepore from a judgment entered against him in the District Court of New South Wales. However, the Court of Appeal divided as to the course that should then be taken. A majority concluded that Mr Lepore had established legal liability against the State of New South Wales for assaults to which he alleged he was subjected by a teacher employed by the State at the primary school which he had attended. The majority favoured an order requiring a trial to be had for the determination of the damages payable to Mr Lepore by the State304. The minority judge in the Court of Appeal (Heydon JA) rejected the proposition that, within the findings of the trial judge, Mr Lepore had established that he was entitled to recover damages from the State. However, he agreed that the original trial had miscarried. He favoured a limited retrial at which Mr Lepore should be permitted to amend some of his pleadings305. Heydon JA was of the opinion that the severance of the issue of damages in the first trial; the conduct of that trial; the findings and conclusions of the trial judge; and the reasons provided important respects, unsatisfactory306. Although he came to a different solution to cure these defects, Davies AJA substantially agreed with Heydon JA's analysis. Their Honours' reasons in this regard were compelling. judgment were, to sustain his 302 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 303 Lepore v State of New South Wales (2001) 52 NSWLR 420. 304 Lepore v State of New South Wales (2001) 52 NSWLR 420 at 433 [64]-[65] per Mason P, 450 [139] per Davies AJA. 305 Lepore v State of New South Wales (2001) 52 NSWLR 420 at 447-448 [123]-[126] per Heydon JA. 306 cf Lepore v State of New South Wales (2001) 52 NSWLR 420 at 428-429 [41]-[42] per Mason P. Kirby The other appeals before this Court come from a unanimous judgment of the Court of Appeal of Queensland307. Those appeals are brought by Ms Sheree Rich and Ms Vivian Samin. They allege that, more than 35 years ago, when they were young girls, each was subjected to sexual assaults (amounting in one instance to rape) by a teacher employed by the State of Queensland in a "one teacher" school at Yalleroi in that State308. In these cases, the State did not contest the allegations of sexual assault. Those allegations had been the subject of a criminal prosecution of the teacher who had been convicted and sentenced in respect of them309. In neither proceedings, whether in the Court of Appeal or before this Court, did the respective teachers take an active part, although in each case, the teacher was named as a respondent to the appeal. In the case concerning Mr Lepore, the Registrar of this Court received a letter stating that the teacher had no funds, or relevant skills, to defend himself at trial or on appeal. In the other cases, the teacher is in prison serving his sentence. The resistance to each of the claims was therefore left to the governmental authorities responsible for providing the systems of public education respectively in the States of New South Wales and Queensland. In relation to children of the age of each of Mr Lepore, Ms Samin and Ms Rich, at the time of the alleged acts, attendance at school was a fulfilment of legal obligations making such attendance compulsory (and, hence, the provision of schooling facilities by the State obligatory in each case). Two foundations for the legal liability of the respective States were propounded. They were: a non-delegable and direct liability of the State to ensure that reasonable steps were taken for the safety of the children placed in the care of the school provided by the State; and a vicarious and derivative liability of the State for the torts committed by the relevant teacher. The factual background of the cases is set out in the reasons of other members of this Court. The procedural history of each case and the way each 307 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626. 308 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626 at 67,388-67,389 [3]. 309 D'Arcy (2001) 122 A Crim R 268. Kirby was argued in the courts below and in this Court are also described there. As is explained, the pleading of the respective claims did not, in any instance, initially advance the claim in terms of the second category of liability, namely the vicarious principle. Presumably this was because the view was taken by those advising Mr Lepore, Ms Samin and Ms Rich that they would face large problems in bringing home liability to the States concerned under that principle, having regard to the test for vicarious liability expressed by this Court in Deatons Pty Ltd v Flew310. In Mr Lepore's case, by explicit reference to Deatons, there was a specific disclaimer before Downs DCJ, and in the Court of Appeal, of any reliance on vicarious liability311. The same disclaimer was noted in the Queensland Court of Appeal in the claims of Ms Rich and Ms Samin312. In this Court, having regard to the developments of the common law in the House of Lords and the Supreme Court of Canada already mentioned, fresh attention was given to the possibility that vicarious liability might be established. It was not suggested that any relevant procedural injustice would be suffered by the States concerned in the examination of this legal question by this Court313. This was clearly a correct concession, given that the issue presented is one of basic legal principle. It involves the assignment of the respective cases to their correct legal category. If an applicable category is arguably established, it would remain, on the retrial (in Mr Lepore's case) or the trial (in the cases of Ms Rich and Ms Samin), for the relevant evidence to be adduced to which the applicable legal rule would then be applied. All of these appeals are before this Court to clarify the correct legal approach to these and like claims. It is desirable that this Court should establish the applicable principles. That is the obligation that the House of Lords and the Supreme Court of Canada accepted. This Court should do no less. Non-delegable duty Priority issue in appeals: For three reasons, it is appropriate to address first the claims made by Mr Lepore, Ms Samin and Ms Rich, based upon the alleged liability of each State to them pursuant to a school authority's primary or original, and non-delegable, duty of care to its students. 310 (1949) 79 CLR 370. 311 cf reasons of Gleeson CJ at [12]. 312 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626 at 67,394 [24]. 313 cf Coulton v Holcombe (1986) 162 CLR 1 at 7-8. Kirby First, there is a special category of liability of school authorities that has been considered by this Court in The Commonwealth v Introvigne314. The principle there stated has been accepted in later decisions315. The nature of the duty has not been doubted, although the scope and content of such duty is subject to dispute. However, no party in these appeals sought to challenge the correctness of the decision in Introvigne. None asked that it be overruled or qualified. Secondly, if it applies to the present cases, the non-delegable principle might avoid any necessity to reconsider the operation of the vicarious liability principle or the applicability in cases such as the present of what was said in Deatons. It would mean that the reconsideration of the modern doctrinal basis for vicarious liability could, once again, be postponed316. Any discussion of the influence of recent decisions in the Supreme Court of Canada and the House of Lords in England in this respect would then be deferred. Thirdly, one member of this Court, McHugh J, considers that the rule established in Introvigne provides a complete answer to the challenges by the States to each of the claims of Mr Lepore, Ms Samin and Ms Rich. McHugh J has expressed his opinion that the holding in Introvigne sustains each of their assertions that the educational authority was in breach of its non-delegable duty to take reasonable care for their safety. Because, in his Honour's view, Introvigne represents a "simpler and stricter test of liability" established by the Australian common law317, it is proper to have regard to it before other approaches are considered. I agree with McHugh J's view as to the logical priority of this question. I will therefore consider it first. Authority on non-delegable duties: A number of difficulties arise in identifying the "precise characteristics of relationships said to justify the imposition of the exceptional non-delegable duty of care"318. This is a reason 314 (1982) 150 CLR 258. 315 Kondis v State Transport Authority (1984) 154 CLR 672 at 685-686; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 575; Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 331-332. 316 cf Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 366-367, 392- 393; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 36 [32]. 317 Reasons of McHugh J at [166]. 318 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 395; cf Swanton, "Non-delegable Duties: Liability for the Negligence of Independent Contractors", (1991) 4 Journal of Contract Law 183 at 183 citing Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180. Kirby why, in the past, I have resisted efforts to expand the categories already identified such as employer/employee319; hospital/patient320; school authority/pupil321 and possibly occupier/contractual entrant in circumstances of extra-hazardous activities322. Thus, I was unwilling to accept the proposition that landlord/tenant had joined this select group323. At the heart of my reluctance lies a concern that I feel about the doctrinal foundations of this exceptional principle of tortious liability. The purpose of developing the doctrine of non-delegable duties seems to have been to ensure that, in cases in which courts have considered that liability "should", or "ought" to324, be imposed, the principles of vicarious liability, specifically the restriction on an employer's vicarious liability for the conduct of an independent contractor, should not act as a barrier to such liability. Liability on the basis of non-delegable duties has therefore been described as a "disguised form of vicarious liability"325. However, the non-delegable nature of the duty was not designed, as I read the cases, to expand the content of the duty imposed upon the superior party to the relationship, so as to enlarge that duty into one of strict liability or insurance. It was simply a device to bring home liability in instances that would otherwise have fallen outside the recognised categories of vicarious liability. Introvigne is the case propounded as establishing such a non-delegable duty on schools. Yet it is clear there from the reasons of Mason J that the scope of both forms of duty is the same: "The Commonwealth is … as liable for the acts and omissions of its borrowed staff as it would have been for staff directly employed by [it] as teachers in schools established by it."326 319 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 44. 320 Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553. 321 The Commonwealth v Introvigne (1982) 150 CLR 258. 322 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; cf Stevens v Brodribb Sawmilling Pty Ltd (1986) 160 CLR 16 at 29-30. 323 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 399-404. 324 cf Barak, "Mixed and Vicarious Liability – A Suggested Distinction", (1966) 29 Modern Law Review 160 at 160-161. 325 Fleming, The Law of Torts, 9th ed (1998) at 434. 326 The Commonwealth v Introvigne (1982) 150 CLR 258 at 273. Kirby In his reasons with respect to Mr Lepore, McHugh J, correctly in my opinion, draws attention to the distinction that is drawn in that case in the reasons of Mason P in the Court of Appeal between the assignment of the duty of care to the State, as provider of the school and its teachers, and the scope of the duty so assigned327. McHugh J rejects the formulation of the learned President so far as it suggests that the existence of a non-delegable duty imported an absolute duty to prevent harm to all pupils. However, that is an error that can easily occur if the non-delegable principle is pushed beyond its purpose of affording a means of bringing liability home to a superior party which is in the best position to accept such liability, so that, instead, it becomes a means of turning the superior into an effective insurer for all acts and omissions of its agents. One issue which is raised in the reasons of Gummow and Hayne JJ is whether intentional wrongdoing can form the basis of a finding of breach of a non-delegable duty328. I will outline my approach to this issue as it affects vicarious liability329. Prima facie it would be no different in relation to non- delegable duties. However, this is not an issue that directly arises because of the conclusion I reach concerning the applicability of non-delegable duties to these appeals. I will therefore reserve my position on that issue. Conclusion: In each of the present appeals, the teacher, sued as personally liable for the torts alleged (assault and battery and negligence), was not an independent contractor of the educational authority. Nor was he an employee of some other authority to which the State concerned had delegated, or contracted, its educational obligations with respect to each of the plaintiffs. constitutional or statutory impediment to recovery from the State for the wrongs of an employee was propounded. In each case, the teacher concerned was a State civil servant. For practical purposes, he could be treated as an employee of the State, or at least of the educational authority of the State, in question. This being the case, there was no issue in the litigation (such as arose in the peculiar circumstances of Introvigne) that necessitated consideration of the non-delegable duty principle in order to bring home liability (so far as it existed) from the teacher, or from some other independent authority or body, to the State concerned. Because each teacher was an employee, the applicable category for determining both the identification of the relevant superior and the scope of that superior's duty, was the common law principle of vicarious liability. Employers, 327 Reasons of McHugh J at [159]. 328 Reasons of Gummow and Hayne JJ at [256], [270]. 329 Below in these reasons at [309]-[314]. Kirby including employers such as a State of the Commonwealth, are vicariously liable for specified torts on the part of their employees. Special rules, such as the principle of non-delegable duty, developed over time to deal with specific circumstances, should not be applied when the broader basis of vicarious liability applies to the circumstances, as it does here. Such an approach is consistent with the recent decision of this Court in Tame v New South Wales330, where it was held that the specific rules relating to nervous shock must not distract attention from the underlying principle, that liability in negligence is imposed where it is reasonable to find that a duty of care exists. It follows that I cannot agree that any legal foundation is provided for Mr Lepore, Ms Samin or Ms Rich to maintain their respective actions against the States concerned based on the principle of the non-delegable duty of school authorities to ensure the reasonable care of pupils. Respectfully, I cannot therefore agree with the analysis, or conclusions, of McHugh J. Vicarious liability The pleadings: In this Court, Ms Rich and Ms Samin tendered an amended statement of claim which, like Mr Lepore in his original pleading, foreshadowed claims based upon the alleged vicarious liability of the State for the acts of the employed teacher concerned. Such pleadings present for decision the legal arguability of the claims based on the vicarious liability principle. As that argument is formally relevant to the orders disposing of Mr Lepore's appeal and is also critical to any future proceedings upon the amended statements of claim produced to this Court by Ms Rich and Ms Samin (and as the relevant issues are objectively important and have been canvassed at length in these appeals) it is appropriate to consider whether there is substance in such claims. The issue: In a number of recent cases in this Court, McHugh J and I have raised the question whether there should be a basic reconsideration of the common law doctrine governing vicarious liability331. That issue now falls for determination in light of decisions in the highest courts of the United Kingdom and Canada. There is a diversity of opinion in this Court. Gummow and Hayne JJ do not favour the analysis of risk adopted by the Supreme Court of Canada in Bazley332. Callinan J rejects the application of vicarious liability to 330 (2002) 76 ALJR 1348; 191 ALR 449. 331 eg Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 366-367 per McHugh J, 392-393 of my own reasons. 332 Reasons of Gummow and Hayne JJ at [214]-[224]. Kirby situations of intentional wrongdoing by employees333. For McHugh J the issue does not arise for decision. Gaudron J introduces an analysis based on the law of estoppel334. On the other hand, the reasons of Gleeson CJ are influenced by the analysis of vicarious liability in the English and Canadian decisions335. So are mine. Vicarious liability – an unstable principle: The joint reasons in this Court in Hollis v Vabu Pty Ltd336 remarked that a "fully satisfactory rationale for the imposition of vicarious liability in the employment relationship" was "slow to appear in the case law"337 and that no single explanation could be offered which was "completely satisfactory for all cases"338. Even now, none has really emerged. The history of the imposition of vicarious liability demonstrates that the foundation for such liability has been uncertain and variable. Initially, the responsibility of a person for wrongs committed by that person's wife or servants (or slaves) probably derived from medieval conceptions of property, and its incidents339. By the sixteenth century the common law of England had relieved an employer of liability for a servant's wrongs unless the employer had specifically commanded, or consented to, the act causing the wrong340. By the eighteenth century, the common law had changed again. It reintroduced the notion of liability for a servant's wrongs on the basis of a fiction that such wrongs derived from an implied command of the employer341. Under this theory, the employer's liability was direct, not derivative. Ultimately, the fiction of the 333 Reasons of Callinan J at [342], [350]. 334 Reasons of Gaudron J at [130]-[131]. 335 Reasons of Gleeson CJ at [64]-[72]. 336 (2001) 207 CLR 21. 337 (2001) 207 CLR 21 at 37 [35]. 338 (2001) 207 CLR 21 at 38 [35]. 339 Wigmore, "Responsibility for Tortious Acts: Its History", (1894) 7 Harvard Law Review 315 at 330-337; Holmes, "Agency", (1891) 4 Harvard Law Review 345 at 355-358, 363-364; cf Lister [2002] 1 AC 215 at 231 [34]. 340 Wigmore, "Responsibility for Tortious Acts: Its History – II", (1894) 7 Harvard Law Review 383 at 392; cf Scott v Davis (2000) 204 CLR 333 at 385-386 [160]- 341 Brucker v Fromont (1796) 6 T R 659 [101 ER 758]; cf Giliker, "Rough Justice in an Unjust World", (2002) 65 Modern Law Review 269 at 272. Kirby "master's tort" was abandoned. It was accepted that the employer's liability derived from the liability of the servant. Policy as the decisive factor: When a final court is called upon to respond to a new problem for society (such as civil liability for widespread complaints of sexual abuse of school pupils) it is inevitable that, as in the past, the common law will give an answer exhibiting a mixture of principle and pragmatism. The principle of vicarious liability, and its application, have not grown from a single, logical legal rule but from judicial perceptions of individual justice and social requirements that vary over time342. In any re-expression of the common law in Australia, it is normal now343 to have regard to considerations of legal principle and policy, as well as any relevant legal authority344. This is all the more relevant in these appeals where the focus is vicarious liability, the justification for which has long been accepted as ultimately based on legal policy345. Vicarious liability in the law of torts is, above all, a subject fashioned by judges at different times, holding different ideas about its justification and social purposes, "or no idea at all"346. This is not to say that the law of vicarious liability is totally lacking in coherency or that it is susceptible to expansion or contraction at nothing more than judicial whim. In Hollis, McHugh J said, rightly in my view347: "If the law of vicarious liability is to remain relevant in the contemporary world, it needs to be developed and applied in a way that will accommodate the changing nature of employment relationships. But any such developments or applications must be done consistently with the principles that have shaped the development of vicarious liability and the 342 Imperial Chemical Industries Ltd v Shatwell [1965] AC 656 at 685. 343 Contrast Rootes v Shelton (1967) 116 CLR 383 at 386-387 per Kitto J. 344 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 352; cf Feldthusen, "Vicarious Liability for Sexual Abuse", (2001) 9 Tort Law Review 173 at 178. 345 Imperial Chemical Industries Ltd v Shatwell [1965] AC 656 at 685; Rose v Plenty [1976] 1 WLR 141 at 147; [1976] 1 All ER 97 at 103; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 37-38 [33]-[35]; Lister [2002] 1 AC 215 at 243-244 [65]-[66]. 346 Williams, "Vicarious Liability and the Master's Indemnity", (1957) 20 Modern Law Review 220 at 231; cf Giliker, "Rough Justice in an Unjust World", (2002) 65 Modern Law Review 269 at 269. 347 (2001) 207 CLR 21 at 54 [85]. Kirby rationales of those principles. They should also be done in a way that has the least impact on the settled expectations of employers and those with whom they contract." Suggested rationales for vicarious liability: There are a number of bases for imposing liability vicariously. The main ones, outlined in the opinion of the Supreme Court of Canada in Bazley and cited in Hollis, are the fair and efficient compensation for wrongful conduct and "the deterrence of future harm"348. "Fair and efficient" compensation is concerned with the search for a solvent defendant whom it is just and reasonable to burden with the legal liability for damages. The basis upon which the Canadian Supreme Court concluded that a party can be justly burdened is through the application of an "enterprise risk" analysis, which I regard as persuasive349. Such analysis has its foundations in the argument that profit-making enterprises, which derive financial benefits from an operation, must bear the cost of any particular risks which such operation introduces into the community or exacerbates. At first glance it may seem difficult to accept that non-profit enterprises (such as public schools) should be the subject of such a burden, as the cost to them is not balanced by any financial gain. However, upon closer analysis, "enterprise risk" can be extended justifiably to such enterprises as public schools, with the result that the community bears the cost. The reasoning is essentially the same as for profit- driven enterprises. Schools undoubtedly benefit the community, with the education and development services they provide for students. In that way, the broader tax-paying community that "profits" from the enterprise should also bear the cost of any particular risks which evidence establishes would be closely associated with the functioning of such an institution. This analysis can be seen in the seminal description of vicarious liability written by Sir John Salmond nearly a century ago, but still instructive. Citing Barwick v English Joint Stock Bank350, Salmond justified the imposition of vicarious liability on the footing that, an employer, having placed "the agent … 348 (2001) 207 CLR 21 at 39 [41] citing Seavey, "Speculations as to 'Respondeat Superior'", in Harvard Legal Essays, (1934) 433 at 448. There is much debate concerning the basis for vicarious liability generally, as well as its application to novel situations. In relation to such liability arising from wrongs done on the Internet see Hamdani, "Who's Liable for Cyberwrongs?", (2002) 87 Cornell Law Review 901 at 943-949 where tests of power of supervision and direct financial interest are propounded. 349 cf Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 285- 350 (1867) LR 2 Ex 259 at 266. Kirby to do that class of acts, … he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in"351. The second policy basis of vicarious liability is deterrence. It is seriously unjust to leave the burden of the damage, and thus of prevention of harm, on the victim352. The only truly effective way of encouraging employers (in enterprises that expose vulnerable people to risks of sexual abuse) to reduce that risk by introducing effective precautions and other initiatives, is by imposing economic sanctions on employers in cases where harm is proved. So long as those who suffer such damage are left to bear it alone, there will be no, or no sufficient, stimulus upon employers to put in place the necessary preventive and supervisory precautions and remedies. I accept that this argument is less persuasive in the circumstances of the present appeals. The school may not have been able to prevent the assaults. As Gummow and Hayne JJ point out353, there already were criminal sanctions in place to deter such acts. However, they failed to have the desired deterrent effect. Nevertheless, deterrence is neither the main nor only factor to consider in judging whether vicarious liability is imposed by the law. It should be taken together with the risk analysis above and with a candid acknowledgment that vicarious liability is a loss distribution device available in the cases to which it applies. It is essential to examine the problem of liability from the point of view of the victims of criminal wrongdoings. Ordinarily (and in the circumstances of the present cases) such victims are completely innocent of any wrong. Commonly, at least in respect of those who pursue claims at law, they will have suffered harm and incurred medical and other costs. The teacher who performed the wrongs may not have assets sufficient to afford redress. The parents, or the pupils themselves in later life, will by hypothesis have been put to expense and have suffered damage. The parents or guardians will have entrusted the children to the school, acting in loco parentis, on the assumption that they will be cared for, not abused. The common law does not usually disappoint legitimate and reasonable expectations in such matters. 351 Salmond, The Law of Torts, (1907) at 84. 352 Feldthusen, "Vicarious Liability for Sexual Torts", in Mullany and Linden (eds), Torts Tomorrow: A Tribute to John Fleming, (1998) 221 at 225-226; Des Rosiers, "From Precedent to Prevention – Vicarious Liability for Sexual Abuse", (2000) 8 Tort Law Review 27 at 29. 353 Reasons of Gummow and Hayne JJ at [218]. Kirby Return to a classic formulation: With these policy considerations in mind, I now turn to examine the formulation of the extent of vicarious liability. The starting point for such an examination is the statement in the first edition of Salmond's text The Law of Torts. There, the author stated that "[a] master is not responsible for a wrongful act done by his servant unless it is done in the course of his employment. It is deemed to be so done if it is either (a) a wrongful act authorised by the master, or (b) a wrongful and unauthorised mode of doing some act authorised by the master."354 Where the employer has authorised the employee's conduct, there is no difficulty in assigning vicarious liability to that employer. Indeed, as Salmond pointed out, in such a case "liability would exist … even if the relation between the parties were merely one of agency, and not one of service at all"355. The difficulty that has been experienced with the foregoing formulation has concerned category (b). Many of the debates in the cases have involved the question whether, in the particular circumstances, the employee, although acting in a wrongful and unauthorised way, has been attempting to perform service for the employer in an unauthorised way or, as it has often been put, was simply engaged in a "frolic of his own"356. Intentional wrongdoing is not a bar: Before going any further, I should address an issue that, for one member of this Court, precludes the application of the principle of vicarious liability to the circumstances raised by these appeals. It is common ground that the acts alleged to have occurred to Mr Lepore, Ms Samin and Ms Rich were intentional. Indeed, some of them have been found to have been criminal. The issue is whether vicarious liability extends to such situations of intentional wrongdoing of an employee. Callinan J concludes that it does not. With respect, I disagree. It has been stated that Salmond's test, outlined above, does not fit well with intentional wrongs committed by an employee357. However, that test is merely the starting point from which the law has developed. Considering the instruction of past authority concerning the scope of an employer's vicarious 354 Salmond, The Law of Torts, (1907) at 83 (original emphasis). See also Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 50-51 [72]-[74], 58-60 [94]-[100] per McHugh J who decided that case on agency principles. 355 Salmond, The Law of Torts, (1907) at 83. 356 See reasons of Gleeson CJ at [41] where Morris v C W Martin & Sons Ltd [1966] 1 QB 716 at 733-734 is cited. See also Lister [2002] 1 AC 215 at 235 [44]. 357 Dubai Aluminium Co Ltd v Salaam [2002] 3 WLR 1913 at 1942 [123]; [2003] 1 All ER 97 at 126-127. Kirby liability for civil wrongs which also constitute deliberate crimes, this Court now has the benefit of the House of Lords and Canadian Supreme Court analysis. Even an express prohibition by an employer of a wrongful (including criminal) act would not, as Salmond pointed out358, excuse the employer from vicarious liability. He cited Limpus v London General Omnibus Co359 in support of this proposition. That was a case where the defendant was held liable for an accident caused when one of its drivers drove across the road to obstruct a rival omnibus. It was no defence that specific instructions had been given to drivers not to race with rivals. Nor, by inference, was it an answer that to race and drive the omnibus in that fashion would constitute a breach of road traffic or even of criminal laws. The gross inconvenience, not to say injustice, that would be created if liability attached for negligent driving of motor vehicles according to the civil standard but not for deliberate and criminal driving (causing the same or even greater damage) has been recognised by the courts. As McHugh J points out360, the deliberate infliction of force by one person on another is not a basis for exempting the employer of a wrongdoer from vicarious liability for trespass to the person or negligence. In the recent decision in Lister, Lord Millett makes the point that, despite clear law to the contrary, the "heresy"361 that an employer is not liable for the deliberate and criminal acts of an employee has proved "remarkably resilient" and difficult to excise. In this regard, the decision to that effect in Cheshire v Bailey362 has cast a long shadow. But it can no longer co-exist with a series of cases in England, Scotland and elsewhere holding employers liable for the criminal acts of employees. The cases in the United Kingdom are collected in the speeches in the House of Lords in Lister363. I will not repeat the analysis of 358 Salmond, The Law of Torts, (1907) at 84-85. 359 (1862) 1 H & C 526 [158 ER 993]. 360 Reasons of McHugh J at [162]. 361 Lister [2002] 1 AC 215 at 246 [72]; cf at 224-227 [16]-[20] per Lord Steyn (with whom Lord Hutton agreed at 238 [52]). 362 [1905] 1 KB 237 cited in Lister [2002] 1 AC 215 at 245-246 [71]. 363 They include Lloyd v Grace, Smith & Co [1912] AC 716; Central Motors (Glasgow) Ltd v Cessnock Garage and Motor Co (1925) SC 796; Morris v C W Martin & Sons Ltd [1966] 1 QB 716; Williams v A & W Hemphill Ltd (1966) SC (HL) 31; Rose v Plenty [1976] 1 WLR 141; [1976] 1 All ER 97; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827; and Racz v Home Office Kirby those cases by the House of Lords. The feeble attempts to distinguish some of the decisions (eg to show that Morris v C W Martin & Sons Ltd364 was a case of liability of a bailee, not vicarious liability of an employer) are not supported by the way later courts have regarded them365. Australian authority has also clearly maintained intentional wrongdoing of an employee is no necessary bar to vicarious liability. Isaacs J said so in this Court in Bugge v Brown366. He said that "[t]he master's responsibility may even exist where the law itself forbids the [employee's] act as criminal". Statements to a similar effect have been expressed in State Supreme Courts, such as "[t]here is no principle of law that an intentional tortious act by a servant can never be within the scope of his employment"367. In decisions of this Court, it has been assumed that intentional wrongs can be the basis of vicarious liability368. So they can. that It is appropriate to acknowledge the intermittent resistance (including in Australia) to the imposition upon another person of civil liability for the wrongs committed by an employee, especially where such wrongs amount to a deliberate criminal act. However, in the face of so many decisions upholding vicarious liability in such circumstances, a general exemption from civil liability based on the deliberate or criminal character of the employee's conduct cannot stand as good law. It is overwhelmed by too many exceptions. A different principle must therefore be found to differentiate the cases where vicarious liability is upheld from those where it is denied. Proposed criterion – a sufficiently close connection: The key to understanding how a broader principle is derived lies in the appreciation of the fundamental element in Salmond's original formulation, that the act of the employee be done in the "course of employment". I agree that the phrase should 365 eg Port Swettenham Authority v T W Wu and Co (M) Sdn Bhd [1979] AC 580 noted in Lister [2002] 1 AC 215 at 226 [19], 247 [76]. 366 (1919) 26 CLR 110 at 117. 367 Hayward v Georges Ltd [1966] VR 202 at 211; see also Macdonald v Dickson (1868) 2 SALR 32 at 35 per Hanson CJ, with whom Wearing J concurred. 368 See Deatons Pty Ltd v Flew (1949) 79 CLR 370, where each of the reasons assumes that the assault in question could have rendered the employer liable, but that on the facts, it did not occur within the scope of the barmaid's employment; see also Scott v Davis (2000) 204 CLR 333 at 357 [68] per McHugh J. Kirby be interpreted broadly369, viewing the activities of the employment in general terms rather than concentrating only on the particular actions or omissions of the employee in question. However, that does not give much guidance as to how the "scope" is to be determined. Some assistance may be gained by returning to examine Salmond's statement in context. In a passage not much noticed until addressed in the recent cases, Salmond continued his exposition of basic principle by stating370: "[A] master, as opposed to the employer of an independent contractor, is liable even for acts which he has not authorised, provided they are so connected with acts which he has authorised, that they may rightly be regarded as modes – although improper modes – of doing them." This statement has become the "germ"371 of the more modern analysis of scope of employment, that is, an examination of the connection between the enterprise and the acts alleged to constitute wrongdoing for which the employer should be held liable. This is the approach that has now been followed by the highest courts in Canada and the United Kingdom. In the recent case of Bazley, for example, the Canadian Supreme Court stated372: "[W]here the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong." This passage was cited with apparent approval in this Court in the joint reasons in Hollis, which then proceeded to demonstrate that the approach also found reflection in United States judicial authority373: "Earlier, in Ira S Bushey & Sons, Inc v United States374, Judge Friendly had said that the doctrine of respondeat superior rests 'in a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility 369 Lister [2002] 1 AC 215 at 234-235 [42]-[45]. 370 Salmond, The Law of Torts, (1907) at 83-84 (emphasis added); cf Salmond & Heuston on the Law of Torts, 21st ed (1996) at 443 and Lister [2002] 1 AC 215 at 371 Lister [2002] 1 AC 215 at 224 [15]. 372 [1999] 2 SCR 534 at 548-549 [22] (emphasis added). 373 (2001) 207 CLR 21 at 40 [42]. 374 398 F 2d 167 at 171 (1968); cf Dobbs, The Law of Torts, (2001), vol 2, §§334, 338. Kirby for accidents which may fairly be said to be characteristic of its activities'." Yet how is the relevant connection to be determined? As McHugh J stated, in the passage from Hollis referred to above375, vicarious liability must be determined "consistently with the principles that have shaped the development of vicarious liability and the rationales of those principles". The "connection" which satisfies the imposition of liability must, therefore, comply with the risk analysis considered above. Thus, it has been expressed as where the employment "materially and significantly enhanced or exacerbated the risk of [the tort]"376 or where there is a significant connection between the creation or enhancement of the risk and the wrong that it occasions within the employer's enterprise377; or alternatively, where the conduct may "fairly and properly be regarded as done [within the scope of employment]"378. As noted above379, the Canadian and English courts did not depart from precedent in establishing the "close connection" analysis. They merely developed and elaborated the traditional approach. Indeed, the "modern" connection analysis may find in Lord Denning's "organisation" test380. That test, which asks whether the work done is "an integral part of the business … [or] only accessory to it"381, was itself a development that arose out of judicial dissatisfaction with the "control" test as a basis for establishing a putative employer's liability. The control test has been intellectual roots its 375 These reasons at [301]. 376 Jacobi v Griffiths [1999] 2 SCR 570 at 585 [20] (original emphasis); cf Bazley v Curry [1999] 2 SCR 534 at 558-559 [40], 560 [42]. 377 Bazley v Curry [1999] 2 SCR 534 at 555-556 [34]-[35]. 378 Dubai Aluminium Co Ltd v Salaam [2002] 3 WLR 1913 at 1920 [23] (original emphasis); [2003] 1 All ER 97 at 105-106. 379 These reasons at [275]. 380 See Fleming, The Law of Torts, 9th ed (1998) at 416-417; Grunfeld, "Recent Developments in the Hospital Cases", (1954) 17 Modern Law Review 547 at 550. 381 Stevenson Jordan and Harrison Ltd v Macdonald and Evans [1952] 1 TLR 101 at Kirby questioned in later decisions of this Court and does not now state a universal rule382 – assuming that it ever did. This broad "connection" analysis cannot be subject to mechanical rules and technicalities, posing as objective criteria. To determine whether conduct is within the scope of vicarious liability I would favour the broader "connection" analysis adopted in England and Canada. That analysis avoids a return to the formulation of specific rules, with their own problems of comprehensiveness and difficulties of application. I regard such purported rules as involving an approach inconsistent with recent pronouncements of this Court. This Court should now give guidance on the general question of when, in all the circumstances, it is reasonable to impose liability on a party383. It fails in its duty when it presents formulae specific to one case but inapt to a range of situations. In saying this, I do not overlook the fact that determination of the "connection", necessary to establish legal liability, will itself involve value judgments and policy choices. Ultimately, these oblige the decision maker to answer the question whether, in the particular circumstances, it is just and reasonable to impose on the enterprise in question legal liability for the particular civil wrong done by its employee. Try as verbal formulae and specific rules might, they cannot ultimately escape the necessity to answer this basal question. A question of fact and degree: It could not be supposed that a legal principle of vicarious liability expressed to apply to cases of physical and sexual assaults upon pupils could be confined to teachers. Depending on the circumstances, any such principle might extend to the clergy, to scoutleaders and to daycare workers384. It might also have to extend to employers of gynaecologists, psychiatrists and university tutors. Nor would it easily be confined to potential victims who were school pupils. It might expand to other groups vulnerable to physical and sexual abuse, including the old, the mentally ill, the incarcerated, the feeble and so on. Liability might extend to incidents 382 See Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40-41 [43]-[45]; Ermogenous v Greek Orthodox Community of SA Inc (2002) 76 ALJR 465 at 481-482 [81]-[84] in my reasons; 187 ALR 92 at 114-115. 383 Tame v New South Wales (2002) 76 ALJR 1348 at 1382 [195] per Gummow and Kirby JJ; see also at 1409 [331] per Callinan J; 191 ALR 449 at 496, 533-534; Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54 at [240]-[244]. 384 Giliker, "Rough Justice in an Unjust World", (2002) 65 Modern Law Review 269 at Kirby outside school premises occurring on sports days, vacations385 and other events involving potential intimacy, made possible by the employment relationship. The potential breadth of possible liability does not detract from its existence where it is just and reasonable that it should apply. That is why the determination of liability, on the basis of the connection between the enterprise and the wrong, is inescapably a question of fact386 and degree387. There will inevitably be differences of opinion, as there were in Jacobi v Griffiths388, a decision of the Supreme Court of Canada delivered on the same day as Bazley. Lines have to be drawn. Judicial differences will exist about them. Distinctions of such a kind are inherent in the application of legal rules that are stated in terms of concepts. They are not a reason for adhering to earlier formulations that are themselves difficult to apply. Legislatures may, as they choose, impose arbitrary "caps" and limitations. However, the common law searches for basic principles informed by such notions as justice, reasonableness and fairness. Thus in Deatons, there was a significant difference between the analysis of Jordan CJ in the Supreme Court of New South Wales and that adopted by this Court. The former would have left it to the jury to decide whether, on the facts that the jury found, the employee's conduct constituted an unauthorised mode of carrying out her employment duties389. This Court held that there was no evidence to justify such a conclusion. Deatons was not overlooked by the House of Lords in Lister. Lord Millett referred to it but distinguished it on its own facts390. He pointed out that the employee in that case was not in charge of the bar. She was not authorised to maintain order. The publican was close at hand. The employee was found to have been paying off a private score of her own. It is unnecessary for this Court to overrule Deatons. But neither the statement of the basis for vicarious liability for an employee's conduct expressed 385 eg Trotman v North Yorkshire County Council [1999] LGR 584 cited in Lister [2002] 1 AC 215 at 227-228 [21]. 386 Dubai Aluminium Co Ltd v Salaam [2002] 3 WLR 1913 at 1918-1919 [16], 1919 [18], 1939-1940 [112]; cf at 1920 [24]; [2003] 1 All ER 97 at 104, 104-105, 124; cf at 106. 387 Lister [2002] 1 AC 215 at 230 [28]. 388 [1999] 2 SCR 570. 389 Flew v Deatons Pty Ltd (1949) 49 SR (NSW) 219 at 222 cited in Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 380. 390 Lister [2002] 1 AC 215 at 249 [81]. Kirby in that case, nor the statement by Salmond in his text earlier, represents a rigid formula to be applied inflexibly to all later cases391. With the House of Lords and the Supreme Court of Canada, I am of the view that more recent expositions of the law of vicarious liability require the application of a broader formulation to describe those cases where, by the common law, an employer assumes, derivatively, liability for the wrongs committed by an employee occurring on work premises and in work hours against vulnerable people put at risk by the employer's enterprise although such wrongs were deliberate and even constitute criminal acts on the part of the employee. Deatons does not, in my opinion, stand in the way of this conclusion. The more recent analysis by this Court of the issue of vicarious liability392 suggests that Australian law has already moved in the direction now favoured by the courts in the United Kingdom and Canada. Contrary authority over the course of a century is impossible to reconcile with a string of decisions examined by the House of Lords and the Supreme Court of Canada and similar decisions in Australia. Some guidance can be given concerning how the appropriate analysis should be undertaken. The decision in Bazley outlines a number of considerations relevant in a context such as the present appeals393. I agree generally with those statements. However, I would add that the expression "connection" potentially connotes either a causal or temporal connection between the acts alleged and the employment, or both. Whether the acts were conducted within school hours and on school property would be a relevant consideration, although not conclusive394. When the employment duties of teachers and other temporary guardians of children are viewed in this light, it is much easier to see instances of sexual abuse as "closely connected" to the employer's enterprise than it is if the focus is solely on the isolated sexual acts of the wrongdoers themselves395. However, the employment must represent more than the occasion for the performance by the teacher of his or her individual criminal and civil wrongs. 391 Lister [2002] 1 AC 215 at 233-234 [40]. 392 Notably in Scott v Davis (2000) 204 CLR 333 at 369 [105]-[106] and Hollis v Vabu Pty Ltd (2001) 207 CLR 21. 393 Bazley v Curry [1999] 2 SCR 534 at 560 [41.3]. 394 cf reasons of Gleeson CJ at [40]. 395 cf Bazley v Curry [1999] 2 SCR 534 at 549-550 [24]. Kirby In the present appeals, neither of the schools in which the plaintiffs claim they were sexually assaulted was a business enterprise. Yet each was certainly an enterprise, conducted by the respective States, which involved at least an "enterprise risk" that sexual abuse of young children, entrusted by parents or guardians to the care of teachers, would occasionally occur. That risk is, in a sense, arguably inherent in close intimacy between adults and vulnerable children that may arise in the specific circumstances of a school setting. By way of contrast, risks of sexual assault would not normally be introduced to the community by an engineering or accountancy enterprise as such. In the case of an educational authority, involving immature and vulnerable pupils, the risk, although small, is one that may be inherent in the conduct of the particular employer's enterprise. This may be so especially in the case of a "one teacher" school in a remote area where the restraints of supervision and school community are reasonably limited. However regrettable it may be, in certain circumstances, sexual and physical abuse can "fairly be said to be characteristic"396 of such enterprise in a small minority of cases. Depending on the circumstances, when such cases arise, it may be reasonable and just to conclude that vicarious liability exists on the part of the State for the wrongs done in conducting the employer's enterprise. In this sense, it may be one of the risks associated with that particular enterprise. By such formulations, in respect of Mr Lepore's claim, some at least of the assaults by the teacher of which Mr Lepore complained might fall within the scope of that teacher's authority to discipline a pupil. Depending on the evidence, the administration of corporal punishment might, therefore, be classified as within the course of the employment and the teacher's disciplinary authority at the relevant time. Depending on the circumstances, even the administration of such discipline by exposing one pupil's bare bottom to other pupils might, arguably, be so regarded. However, encouraging the pupils to touch each other and the teacher's fondling of pupils' genitals is different. This analysis of the actual conduct, if proved, demonstrates how permissible employment authority can sometimes merge into unauthorised and criminal conduct. In my view, it will remain conduct for which, derivatively and without differentiation, the employer might be liable if the conduct comprises acts closely connected with the employment so that it is just and reasonable that the employer be held liable on the footing that it is the employer's enterprise that has introduced the risk of such misconduct involving pupils, on the part of the small minority of teachers prone to such misconduct. 396 Ira S Bushey & Sons, Inc v United States 398 F 2d 167 at 171 (1968) cited in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40 [42]. Kirby As the Court of Appeal of Queensland remarked in the cases of Ms Rich and Ms Samin, the pleadings in those actions "were the very antithesis of what [the teacher] was employed to do"397. Nonetheless, it is equally clear that the acts pleaded assert that the teacher in question did what he did within the hours of the employment at the place at which he was employed to perform his work duties. Principle and policy favour restatement: It is not really feasible to apply the common law as stated in Salmond's first edition and restated in Deatons, as if decades of judicial decisions holding employers liable for criminal wrongs committed by employees that constitute criminal acts, had not occurred. Nor, in this Court, is it possible to ignore the more recent authority that has adopted an approach to vicarious liability similar to that stated by the Supreme Court of Canada in Bazley. As a matter of legal principle, it is impossible, and undesirable, to turn the clock of vicarious liability backwards. It is a subject where the law is in many ways unsatisfactory. Yet it is not improved by ignoring recent legal developments that have grown out of the recognition of the character of, and risks inherent in, the typical enterprise that employs others to perform the functions of the enterprise. There is no reason why the common law of Australia should be less protective of the legal entitlements of child victims of sexual assault on the part of teachers and carers than is the common law of England and Canada. In particular, there is no reason why the common law of Australia should protect those who claim against employers for fraud, theft of property and other property crimes by employees but not protect them for the crime of sexual assault by employees. Consistent with the developments of the common law elsewhere, and with developments that this Court has itself approved in general terms, the same principles of legal liability for the wrongs of employees should apply. It follows that, in my view, considerations of legal principle and policy, in addition to those of legal authority, favour the conclusion, as Mr Lepore, Ms Samin and Ms Rich contend, that the respective States may be vicariously liable for the legal wrongs done to them by the relevant teachers. That conclusion is reasonably arguable on the law of Australia as I would re-express it to be consistent with the recent pronouncements of the highest courts in the United Kingdom and Canada. 397 Rich v State of Queensland; Samin v State of Queensland (2001) Aust Torts Reports ¶81-626 at 67,394 [24] per Thomas JA; cf Trotman v North Yorkshire County Council [1999] LGR 584 at 591 [18]; Lister [2002] 1 AC 215 at 238 [53]. Kirby Conclusions and orders In the appeal concerning Mr Lepore's case, the conduct of the trial, the separation of the issues, the findings by Downs DCJ and his Honour's reasons are so unsatisfactory for the resolution of the issues joined between the parties that the only just solution is a fresh trial. In this, I agree generally with the approaches and conclusion of Heydon JA in the Court of Appeal398. However, alike with other members of this Court399, I agree that, in any retrial, Mr Lepore should not have liberty to maintain, by amendment of his statement of claim (or otherwise), his argument based on a supposed non-delegable duty of care. The retrial in the District Court should be restricted to the claim based on vicarious liability. It should allow factual findings to be made to permit a determination of whether the State of New South Wales is liable, vicariously, for the assaults, physical and sexual, committed on Mr Lepore by his teacher. It follows that I agree in the orders disposing of the appeal by the State of New South Wales as proposed by Gleeson CJ. In the appeals of Ms Rich and Ms Samin, I agree with Gleeson CJ400 and with Gummow and Hayne JJ401 that the Queensland Court of Appeal was correct to reject their claims, framed as they were in a pleading alleging liability based on a non-delegable duty. Such an approach was legally unavailable. Those appeals should therefore be dismissed with costs. However, the argument on the basis of vicarious liability is open to Ms Samin and Ms Rich. Leave to re-plead their claims was reserved by the Court of Appeal. Such leave extends, in my view, to a re-pleading alleging liability on the part of the State of Queensland based on vicarious liability. Whether liability on that basis would be established in fact would depend on the evidence adduced at the trial measured against the criterion of the connection between the particular employing enterprise and the acts alleged to constitute wrongdoing for which that enterprise is said to be vicariously liable. In no case, without more, is the deliberate and criminal character of those acts a complete answer to the claim of vicarious liability. To the extent that it held otherwise, the 398 Lepore v State of New South Wales (2001) 52 NSWLR 420 at 445 [113]-[114]. 399 Reasons of Gleeson CJ at [79] with whom Callinan J generally agrees on the issue of non-delegable duties: reasons of Callinan J at [340]; reasons of Gummow and Hayne JJ at [189]; cf reasons of McHugh J at [166]. 400 Reasons of Gleeson CJ at [82]. 401 Reasons of Gummow and Hayne JJ at [270]-[271]. Kirby Court of Appeal was wrong. The further proceedings of Ms Samin and Ms Rich should avoid the repetition of that error. Callinan Sheree Anne Rich v State of Queensland & Ors Vivian Christina Samin v State of Queensland & Ors These two appeals were heard at the same time as the appeal in State of New South Wales v Angelo Lepore & Anor. It is convenient to deal with them first because the amended pleadings which the appellants sought leave to file throw up more clearly the two issues involved in the three cases: whether education authorities owe a particular and exceptional species of non-delegable duty of care to children attending schools that they conduct; and, if they do not, whether those authorities may nonetheless be vicariously liable for criminal assaults, here assaults of a sexual nature, by teachers whom they employ, upon children at schools. I am indebted to the Chief Justice for his analysis, with which I agree, of the decision of this Court in The Commonwealth v Introvigne402, and also for his review of the case law on the topic of non-delegable duty of care in Australia and other jurisdictions403. Education authorities do not owe to children for whose education they are responsible (absent relevant contractual provision to the contrary) a particular or unique non-delegable duty of care, in practical terms, giving rise to absolute liability. There is no doubt that the ordinary standard of care in the case of such authorities is a very high one. Their duties include the engagement of reliable, and carefully screened, properly trained employees, and the provision: of suitable premises; an adequate system for the monitoring of employees; and, I would think, because, regrettably, the incidence of sexual abuse seems to have been more common than had previously been thought, an efficient system for the prevention and detection of misconduct of that kind. In saying what I have, I do not intend to state comprehensively a catalogue of the duties to which the relationship of education authority and pupil may give rise. But I do agree with the Chief Justice that absent fault on the part of an education authority, it will not be personally liable in situations of the kind with which these cases are concerned. I do however take a different view from the Chief Justice on the question of vicarious liability. As a clear and separate head of liability, vicarious liability appears to have been first recognised by Holt CJ in 1690 in Boson v Sandford404: 402 (1982) 150 CLR 258. 403 See reasons of Gleeson CJ at [19]-[36]. 404 (1690) 2 Salk 440 [91 ER 382]. Callinan "[W]hoever employs another is answerable for him, and undertakes for his care to all that make use of him." The very broad principle stated by his Lordship has not survived. The doctrine of common employment until its abolition by statute made a marked intrusion upon it. The important distinction between personal liability and vicarious liability is itself a clear indication that his Lordship's statement could not be given literal application. The underlying assumption that in the eyes even of strangers, master and servant are one has not been valid for a long time, particularly since the robust growth in articulateness and independence of employees and the organisations which represent them. Negligent, even grossly negligent conduct is one thing, intentional criminal conduct is, and always has been altogether another. In my opinion, deliberate criminal misconduct lies outside, and indeed usually will lie far outside the scope or course of an employed teacher's duty. In Modbury Triangle Shopping Centre Pty Ltd v Anzil405, with respect to a different type of situation, I said that "[t]he problem about criminal conduct is that at one and the same time, it may be both unpredictable in actual incidence, wanton and random, and, on that account, always on the cards." That passage was intended as a reminder that it is almost impossible for even the most diligent, suspicious and pessimistic to prevent criminal conduct at all times and in all circumstances. Nothing could be further from the due performance of a teacher's duty than for him to molest children in his care. To make an employer vicariously liable for such gross and improper departures from the proper performance of a teacher's duties as sexual assault and molestation are, would be to impose upon it a responsibility beyond anything that in my opinion it should reasonably bear. In argument, there was reference to cases in which employers had been held liable for criminal conduct on the part of their employees. One example was of a case of bailment for reward to which special consequences and liability attach406. Another, Lloyd v Grace, Smith & Co407, was a case which could have been brought in contract as well as tort. In Lister v Hesley Hall Ltd408, a case of sexual abuse by a warden of a boarding house, Lord Steyn (Lord Hutton agreeing) was in favour of a test, of 405 (2000) 205 CLR 254 at 297 [136]. 406 Morris v C W Martin & Sons Ltd [1966] 1 QB 716. 408 [2002] 1 AC 215 at 230 [28]. Callinan such a close connexion with the employee's duties and activities that it would be fair and just to hold the employer vicariously liable. His Lordship also spoke of [mis]conduct "inextricably interwoven with the carrying out by the [employee] of his duties"409. Both Lord Clyde410 and Lord Hobhouse of Woodborough411 also regarded "connexion" as an indicium of vicarious liability. In practice there would be few situations in which a "connexion" between the duties and the conduct would not be able to be demonstrated. Distinguishing between "opportunity" which would almost always be available to any teacher, and a "connexion" of the kind referred to by their Lordships would be very difficult. Cases would, as a practical matter, be decided according to whether the judge or jury thought it "fair and just" to hold the employer liable. Perceptions of fairness vary greatly. The law in consequence would be thrown into a state of uncertainty. I would not therefore be prepared to adopt their Lordships' or any like test. In my opinion, deliberate criminal conduct is not properly to be regarded as connected with an employee's employment: it is the antithesis of a proper performance of the duties of an employee. Furthermore, it cannot and should not be regarded as being "interwoven" with proper and dutiful conduct, let alone inextricably so. For myself I do not think that anything turns upon the fact that the teacher was a teacher in a one teacher school in rural Queensland, although of course that matter might be relevant in some cases, to the content of the duty of care directly owed by an education authority to the children attending a school of that kind. Neither the case that the appellants originally pleaded however nor the one raised by the proposed amended pleading turns upon any particular feature of a one teacher school. It follows that I would dismiss the appeals. It was agreed that the first respondent would pay the appellants' costs in any event. Accordingly I would order that the appeals be dismissed and that the first respondent pay the appellants' costs of the appeals to this Court. State of New South Wales v Angelo Lepore & Anor The facts and the relevant case law have been fully stated by the Chief Justice. 409 [2002] 1 AC 215 at 230 [28]. 410 [2002] 1 AC 215 at 237 [49]. 411 [2002] 1 AC 215 at 242 [59]. Callinan For the reasons that I give in Sheree Anne Rich v State of Queensland & Ors and Vivian Christina Samin v State of Queensland & Ors, which were argued at the same time as this case, I would hold that the appellant owed no non-delegable duty of care of the kind asserted to the first respondent. Is there here however, unlike in Rich's and Samin's cases, a basis upon which the appellant might be held to be vicariously liable for the actions of the teacher? If the teacher deliberately excessively chastised, or improperly in any way sexually touched or interfered with the child, the teacher committed a serious criminal act. For the reasons which I have given in Rich's and Samin's cases, the appellant would not, in those circumstances, be vicariously liable for the actions of the teacher. If however the teacher unintentionally but negligently exceeded what was reasonable in chastising the first respondent, then in those circumstances there could well be a basis for the imposition of vicarious liability upon the appellant. It is necessary to turn to the finding at first instance to ascertain what was established with respect to the teacher's actions. Among other things, the trial judge found that the assaults "were deliberate and isolated acts of abuse which occurred in an enclosed room" and "were inimical or totally foreign to the second [respondent's] duties as a teacher". Although the exercise of fact finding of the trial judge may have left something to be desired in part no doubt because of his adoption of a course which is to be discouraged of "splitting the trial", the findings of deliberation, and abuse inimical, or totally foreign to the teacher's duties, do amount to an unequivocal finding of improper, deliberate, and criminal conduct for which, for the reasons that I have given in Rich's and Samin's cases, the appellant cannot be vicariously liable. I would not regard the fact that the teacher was convicted on his own plea of guilt to a number of offences of common assault only, and that these attracted relatively light penalties as dictating any different outcome. Common assault is itself a crime which teachers are certainly not engaged to commit. In any event, there was before the trial judge credible evidence which he accepted, of conduct of a much more serious kind than that to which the teacher pleaded guilty in a criminal court. I would accordingly allow the appeal and order that judgment be entered for the appellant. By agreement the appellant is to bear the costs of the appeal to this Court and does not seek to disturb the costs orders made in the Court of Appeal which included orders with respect to the costs of the trial. I would order accordingly.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2007] HCA 30 20 June 2007 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation B G Devereaux SC with P E Smith for the appellant (instructed by Legal Aid Queensland) D L Meredith for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Practice and procedure – Cross-examination – Appellant convicted at trial before jury of certain sexual offences against intellectually impaired person – Whether "miscarriage of justice" under s 668E(1) of Criminal Code (Q) by reason of manner in which prosecutor conducted cross-examination of appellant – Role of trial judge during the cross-examination – Application of the "proviso" in the circumstances – Requirements of Weiss v The Queen (2005) 224 CLR 300. Criminal law – Practice and procedure – Directions to jury – Whether trial judge gave adequate directions on issue of consent as it related to cognitive capacity and intellectual impairment – Whether trial judge gave adequate directions on defence provided by s 216(4) of Criminal Code (Q) that accused had belief on reasonable grounds that person was not intellectually impaired. Words and phrases – "cognitive capacity to give consent", "intellectually impaired person". Criminal Code (Q), ss 24, 216, 229F, 348(1), 348(2), 349(2)(a), 668E(1). GLEESON CJ. I have had the advantage of reading, in draft form, the reasons for judgment of Hayne J. I agree, for the reasons given by Hayne J, that the appeal should be dismissed. I would add two brief observations. First, the argument that the conduct of the prosecutor during his cross- examination of the appellant resulted in an unfair trial, and a miscarriage of justice, involved a question of degree. As Mullins J pointed out in the Court of Appeal, the cross-examination of the appellant extended over 44 pages of transcript. In the course of that cross-examination, counsel made certain inappropriate comments. It is difficult for an appellate court, relying only on the written record, to assess the impact of undisciplined conduct by counsel. It is also difficult, away from the atmosphere of the trial, to measure the significance of the absence of intervention by the trial judge or by opposing counsel. Those difficulties are to be taken into account by way of caution in approaching any attempt to minimise the complaints made on behalf of the appellant. Even so, having read the whole of the evidence of the appellant, I would not interfere with the Court of Appeal's conclusions that the conduct of the prosecutor did not make the trial unfair. Secondly, I agree that, in the circumstances of this case, in order to raise for the jury's consideration the defence provided by s 216(4) of the Criminal Code (Q), it was not necessary for the appellant to go beyond saying that the complainant "seemed fine". The appellant did not have to show that he thought there was a real question about the complainant's intellectual capacity, and arrived at an answer to that question. Most of the beliefs that form the basis of our dealings with other people are more in the nature of undisturbed assumptions than conclusions based on a process of reasoning. It was for the members of the jury to decide, in the light of all the material before them, including their assessment of the appellant, and their observation of the complainant, whether the appellant's evidence that the complainant "seemed fine" established a belief by the appellant that the complainant was not intellectually impaired, and whether that belief was on reasonable grounds. The case was left to the jury on the basis that it was open to decide those issues favourably to the appellant on the basis of that limited evidence. It was not necessary, and it would probably not have been to the appellant's advantage, for the trial judge to give more elaborate directions on the point. It is not surprising that trial counsel did not seek further directions. Kirby Callinan KIRBY AND CALLINAN JJ. As we approach this appeal from the Court of Appeal of the Supreme Court of Queensland1, it concerns primarily the standard of conduct required of a prosecutor, as such conduct affects the entitlement of a person accused of criminal offences to a fair trial. The facts Mr Justin Libke (the appellant) was found guilty by a jury, and convicted, after a trial in the District Court of Queensland (Griffin DCJ) on one count of rape, two counts of unlawful carnal knowledge of an intellectually impaired person, one count of unlawful exposure of an intellectually impaired person to an indecent act, and of unlawful and indecent dealing with an intellectually impaired person. The verdicts on counts 2, 3 and 4 were lesser and alternate verdicts. The indictment alleged three counts of rape, one count of indecent dealing with an intellectually impaired person, and one count of sodomy of an intellectually impaired person. The complainant was 18 years old at the time of the events with which the Court is concerned. She is intellectually impaired. There was little or no contest about that at trial. Issue was joined, however, on the degree of impairment, and the extent to which impairment was apparent in her appearance, demeanour, speech and conduct generally. The appellant was 39 years old. He met the complainant at a park where they exercised their dogs. After they introduced themselves, the appellant asked the complainant how old she was. She told him that she was 18. The appellant described her as being of Asian appearance, and speaking with an "Asian-type accent", with a lisp. She seemed "fine", he was later to say in evidence, "in regards to her mental health". They met again at the park about two weeks later. The complainant told the appellant that her mother had been born in Malaysia and that her father was from England. The complainant neither said nor implied that she was in any way intellectually impaired. Nor did she mention that she had undertaken a special education course, or that she was unable to live unsupported. It was common ground that, on their second meeting at the park, when they were seated on a bench, the appellant touched the complainant's legs, put his hand in her shorts and his finger in her vagina. She agreed that she did not say "no". That was the subject of count one. The complainant accepted in cross- examination that when the appellant asked her in the park, "Do you want to fool 1 R v Libke [2006] QCA 242. Kirby Callinan around a little?", she said "Yes", but that she did not know what that meant. In a videotaped record of interview, the complainant was asked "What if somebody came along?" She responded that that was what the appellant was checking for, adding: "… I asked him at first like what he was doing and I kind of . . . I refused to let him do it. He goes, 'Why?' and I didn't answer him at first because I don't know why [indistinct]. I just didn't answer him because I [indistinct] know him. I don't know why [indistinct], yeah." The complainant was asked where her hands were when the appellant was touching her and she said they were by her side. She confirmed during cross- examination that she did not tell the appellant to stop or take his hands away. But when it was put to her that she responded or acted, as the appellant was touching her, as though she liked what the appellant was doing, she said "No". As to the circumstances surrounding this, the first charge, of digital rape, there was a dispute as to the implied invitation said to have been offered by the complainant to the appellant. Williams JA in the Court of Appeal took the view that the appellant's evidence departed from the matters put in cross-examination of the complainant. His Honour said2: "Counsel for the appellant in addressing this Court placed great emphasis on a passage in the cross-examination of the complainant as to her conduct immediately after the appellant touched her on the vagina with his finger; the critical questions and answers are as follows: 'And when he did that, put his fingers down your trousers to touch your vagina, you turned to face him, didn't you? – Yes. And you did that to allow him to touch your vagina more easily. Do you understand? You were doing that to enable him to touch you on the vagina. You tell me if you don't understand? – I understand. What I am suggesting is you turned your legs towards him and opened them slightly so it would make it easier for him to get his fingers to your vagina. That's what happened? – Yes.' That passage in the evidence was emphasised by defence counsel in his address, and was also referred to in the summing up. It clearly was of critical importance to the jury's deliberations. It is significant that at that [2006] QCA 242 at [12]-[15]. Kirby Callinan point in cross-examination counsel was apparently putting to the complainant the defence case; after the appellant touched her vagina she parted her legs to give him easier access. Though the complainant said that she understood what was being put to her, it was still a question for the jury as to the reliability of her responses to what was being put to her, and what weight, if any, should be attached to the adoption of what was put to her when considered in the light of all the evidence given at trial. That passage in the evidence of the complainant was the focus of attention during addresses and summing up also because in his evidence the appellant told a different story. His evidence was not that after he initially touched the complainant's vagina she opened her legs to make access easier, a scenario which might suggest cognitive consent on her part. Rather his evidence was to the following effect. Whilst they were sitting on the park bench and he was rubbing her legs, she 'swung her legs towards' the appellant, and when she did so 'I seen her pussy'. According to the appellant's evidence-in-chief: 'I just seen it, and then I just put my finger [in] her vagina.' Nothing of the sort had been put to the complainant in cross-examination, and she had not been asked any questions about the nature of the underwear she had on at the time. Under cross-examination by the Crown prosecutor the appellant said that the complainant's underwear was 'loose'; she had loose shorts and loose underwear. On that account the complainant either deliberately or accidentally displayed her vagina to the appellant and he immediately inserted his finger. Given the complainant's intellectual capacity and her obvious difficulty in understanding a number of things put to her in evidence, and given the propositions put to her in cross-examination which she apparently adopted, and given that those matters were not then confirmed by the appellant in his evidence but he gave a contrary version which was not put to the complainant, the jury may well have considered that the complainant's apparent adoption of the proposition that she opened her legs to give easier access to her vagina was deserving of little, or no, weight. As already noted it was for the jury in all the circumstances of the case to determine the significance to be attached to the adoption of the proposition put to her." We observe at this stage that, although we would not ourselves attach to the departure between the matters put and not put on behalf of the appellant, and the evidence that he subsequently gave, the same significance as his Honour did, we do agree that it was for the jury to evaluate the complainant's evidence as a whole on the issue of her actually consenting, or appearing to do so. Kirby Callinan All of the events the subject of the other charges occurred on the one occasion. We adopt the summary of it given by Mullins J in the Court of Appeal. Her Honour said3: "A couple of days later on 9 October 2002 the appellant telephoned the complainant at home and asked her if she wanted him to come over and she said that she did. The complainant let the appellant into the house. There was no one else at home. The appellant told the complainant that he could not stay for long. He asked her 'Do you want to have sex?' and the appellant gave evidence that the complainant responded affirmatively, but the complainant said that she did not say anything. The appellant asked her again whether she was 18 years old and she said she was. They went into the lounge room. The appellant undressed. The complainant then undressed. The complainant closed the blinds. The appellant gave evidence that at the park the complainant had told him when he came over to bring protection. In cross-examination the complainant said that she did not say anything like that. The complainant said that when the appellant was undressed she asked him if he had a condom and that he said 'Yes'. The appellant had brought a condom with him and he put it on. The complainant stated in her record of interview that they lay down on the lounge room floor and the appellant got on top of her and '… he kissed me and then he started, um, putting his penis in me' and described what happened: 'And do you think it went in – into your – into your body very far? -- Yeah, it went pretty far because it started hurting. Did it? -- Yeah. And then he took – and I told him in the middle of it, and then when I told him, he took it out, and then, um, after that he, um – before I told him it hurt it, like, um – no, when – after I told him it hurt, he said that he needed a wank, and then – that's when he first went in with his fingers and then he had something on this – um, on the condom as well.' This sexual intercourse was the subject of count 2. The complainant described seeing the appellant have 'a wank'. This was the subject of count 3. The complainant said that the appellant tried to put his penis back in her vagina again, but '… he didn't put it too far in because I told him it hurt'. The complainant said that the appellant then [2006] QCA 242 at [57]-[62]. Kirby Callinan turned her around so that she was on her knees and '… then he, um, stuck his penis in my arse after that, yeah, but it didn't hurt because he didn't stick it far' and that she 'didn't feel it'. This was the subject of count 5. In cross-examination the complainant agreed with the suggestion that when she was on her knees, the appellant was moving his penis in the area of her vagina. The complainant also agreed in cross-examination that they both then lay beside each other on the floor, the appellant felt her vagina with his finger and that he tried again to have intercourse with her. This was the subject of count 4. In cross-examination the complainant accepted the committal hearing she had agreed that she was attracted to the appellant in a sexual way and she agreed that she had said at the committal that the whole reason that she had wanted the appellant to come over to her house was because she knew that there would be sexual activity and that she had sexual feelings, urges and desires. that at The appellant said in evidence-in-chief that when they lay down on the lounge room floor, he lay on top of the complainant, but could not keep an erection. He said that he tried to stimulate himself whilst sitting up a bit and that they changed positions in that the complainant got on her knees and he attempted to insert his penis into her vagina from behind her. He said he was unsuccessful in doing that and denied putting his penis into the complainant's anus. The appellant said that they lay on the carpet again and that his penis entered the complainant's vagina 'a little way'. Both the complainant and the appellant got dressed and the complainant let the appellant out. The complainant stated that before the appellant left, he told her 'not to tell anybody at all'. The appellant stated that he did not make any such statement to the complainant." Almost the entirety of the complainant's evidence-in-chief consisted of video tapes of interviews of her made and tendered pursuant to s 93A of the Evidence Act 1977 (Q) (the "Evidence Act"). That section relevantly provides as follows: "93A Statement made before proceeding by child or intellectually impaired person In any proceeding where direct oral evidence of a fact would be admissible, any statement tending to establish that fact, contained in a document, shall, subject to this part, be admissible as evidence of that fact if – the maker of the statement was a child or an intellectually impaired person at the time of making the statement and had Kirby Callinan personal knowledge of the matters dealt with by the statement; and the maker of the statement is available to give evidence in the proceeding. If a statement mentioned in subsection (1) (the main statement) is admissible, a related statement is also admissible as evidence if the maker of the related statement is available to give evidence in the proceeding. (2A) A related statement is a statement – (a) made by someone to the maker of the main statement, in response to which the main statement was made; and (b) contained in the document containing the main statement. (2B) Subsection (2) is subject to this part. (3) Where the statement of a person is admitted as evidence in any proceeding pursuant to subsection (1) or (2), the party tendering the statement shall, if required to do so by any other party to the proceeding, call as a witness the person whose statement is so admitted and the person who recorded the statement." No point was sought to be taken by the complainant with respect to the conduct of the interviews, and the repetitive nature of some of the questions asked, in consequence of which the complainant may have been given the opportunity of rehearsing her evidence, and causing it to be reinforced in the minds of the jury as they watched and listened to the video tape. The complainant was cross-examined at some length about her conversations with the appellant: "You never told Justin what school you attended? -- No, I didn't. You never told him what your results were at school? -- No, we didn't talk much about anything. Alright. Well, I have to ask you these questions? -- Yeah, I know. You didn't tell him that you were doing a special educational course, did you? -- No, I didn't. You didn't tell him what subjects you were doing? -- No. Kirby Callinan You didn't tell him that you had any difficulties or disabilities, did you? -- No, I didn't. You could fully understand – apart from those words you said you didn't know what playing around meant, you could fully understand everything else he was saying to you? -- Yes. And you responded to what he was saying to you? You answered . . . ? -- Yes. . . . his questions or had a conversation with him? -- Yes. Was there anything else you remember him saying that you didn't understand? -- No, I don't. You didn't tell him, for instance, that you'd only done unpaid work experience? -- No. You didn't, or he didn't get you to count any money or anything like that? He didn't go shopping with you at any stage, did he? -- No. You didn't tell him you couldn't work a cash register or anything like that? You never told him that you have trouble travelling on a bus or train by yourself? -- No. And you had no difficulty in understanding – apart from that mucking around, the playing around – you didn't understand that – you had no difficulty in understanding what he was talking about? -- What do you mean? Well, you were able to converse with him? -- Converse – what do you mean converse? Talk, talk back and forwards? -- Yeah, we were just – … you had no difficulty in understanding what he was saying apart from that playing around, whatever you said, alright? -- Yeah. And did he appear to have any difficulty in understanding what you were saying? -- I don't think so." The complainant agreed that she had opened her legs slightly to make it easier for the appellant to insert his fingers into her vagina when they met in the Kirby Callinan park for the second time. She also agreed that she had given evidence at the committal hearing that the whole reason that she wanted the appellant to come over to her house was because she knew that there would be sexual activity, and that she did have sexual urges and desires. The prosecutor's questions and comments The appellant gave evidence at the trial. He was subjected to a scornful cross-examination punctuated by interruptions of answers and comments, but not, regrettably, objection by counsel or intervention by the trial judge. To understand how the cross-examination may have affected the outcome of the trial, a deal of it needs to be set out: "Well, you have heard her say you parked your car down the road? -- Yeah. Did you tell her you parked your car down the road? -- No, she said when she was closing the blinds – she goes, 'Where's your car?' Did she? -- Yeah. When she was closing the blinds? -- Yeah. This was when you and she were in the heat of passion, was it? -- No. She asked where your car was? -- No, no, when she was closing the blinds, the . . . Yes? -- The blinds to, you know. Well, this is when you were undressing . . . ? -- Yes, yeah. . . . in the course of your passions. She asked where your car was? -- Yeah, no, when she was closing the blinds she looked out the window and she says, 'Where's the car?', and I said, 'It's down the road.' You said, 'It's down the road'? -- Yeah. Why didn't you say it was just next door? -- I just said, 'It's down the road.' I didn't – it wasn't – it wasn't an issue. Yes, it is. I put it to you your car was in fact parked down the road because you wanted to keep as discreet as you could your presence at her house? -- Well, I was parked next door." Kirby Callinan The prosecutor questioned the appellant about his motives for telephoning the complainant from outside her house on the day of his visit to it: "But she answered the phone the second time, didn't she? -- Yeah. Right? -- Because . . . If you had been ringing to see whether she was the only occupant there that would have been a fair indication she was the only one home, wouldn't it? -- No, the music was up loud. Oh, yes. Look, I've heard all of that. I'm trying to convey to you I'm not buying it. I suggest you rang the second time just to check the coast and just see if, perhaps, you know, one of the other family might have been there and answered the phone? -- No, not at all. Not at all." On the topic of the first encounter in the park, the cross-examination included the following: "How long were you with her on that occasion? -- On the first time down the park? Yeah? -- Oh, maybe – how long was I talking to her or how long was I in the park? I can't . . . I asked you how long you were with her? -- On the first occasion? I never – well, it could have been half an hour. Half an hour? -- Could have been. With her in the park? -- Yeah. On the first occasion? -- Oh, could have been. Well, you're the person who's the historian. How long was it? -- I don't know if … . . . you just celebrated your 39th birthday, the first day of it. As a grownup man, you're telling us it was half an hour? -- Half an hour. I don't know. I don't know exactly how long it is. So I can't say – it could have been around half an hour. I didn't ask you how . . . ? -- No, I can't say then it was half an hour. I can't establish exact time. Not the exact time if you're saying it was about half an hour, that means it may have been 25, it might have been 35 minutes? -- It could have been. Kirby Callinan At least, anyway, in the vicinity of half an hour, right? -- It could have been. We can only stand upon you for this, you see. I don't recollect she was asked how long you were together? -- Pardon? Sorry, that may be a comment. I apologise for that. On your adult assessment, you were together for about half an hour? -- Yeah." The prosecutor interrupted the appellant when he was trying to respond to further questions about the complainant's and the appellant's first meeting: "Describe and tell to the jury what the circumstances were of your first encounter face-to-face with this young woman? -- We were in the park and I . . . 'We were in the park'? -- Yes. That doesn't tell us much, does it? -- I'm not quite sure what you're trying to say. I'm not trying to say a thing. I'm trying to get you to say something? -- I know." The prosecutor resumed asking questions about that occasion: "She talked to you first, did she? -- I can't remember. I can't remember if I introduced myself to her first or she introduced herself to me first. 'Introduced', that means giving names, does it? -- No, just saying 'Hello'. I can't remember if I introduced myself to her and she introduced herself to Look, I'm giving you every opportunity? -- Honestly, I can't remember. I'll shift to another topic whenever you're prepared to finish it. Is that what you're prepared to tell us, you don't know how the two of you first became acquainted? -- I thought – the way we became acquainted was in the park. Yes? -- And we just started talking. When you first became of her – aware of her existence as a human being within the Brisbane area? -- I just don't understand what – what – I honestly. Sorry, your Honour, I just – if you could explain. I'm not quite Kirby Callinan sure if I'm explaining myself right, or anything like that. But I don't know if I started the conversation first or she started it or I approached her or she approached me. I just can't remember that, I'm sorry. Now, that's the appearance. The accent. How long did it take you to appreciate she had an Asian accent? -- I worked with Asians at that stage, so it didn't bother me if she had an Asian accent or not. It doesn't bother anybody in this courtroom either, but how long did it take you to appreciate that she had as well as an appearance but also an Asian accent? -- How long did it take me to realise it? Yeah? -- Oh, I'm not quite sure. Within the half hour? -- Yeah, I . . . First couple of minutes? -- I can't recall. I really can't recall or . . . During? -- I'll be saying something which I – I don't know that I thought of at the time. We want honesty at all times, of course. So, during the course of that half hour, you don't know what stage, but well and truly within the half hour, you appreciated not only did she have an Asian appearance but she had an Asian accent; is that right? Is that right? -- Well, you're putting the question to me and . . . I am? -- I'm not quite sure of – of what the – what you're . . . HIS HONOUR: Don't, Mr Libke, worry at all about where [the prosecutor] is going, if he is going anywhere with the question. Just answer the questions to the best of your ability. -- Can you put the question to me again please? [THE PROSECUTOR]: Yes. During the course of around about half an hour interlude with her on that first occasion, you say very very shortly after seeing her, meeting with her, you realise she was of Asian appearance? -- Yes. During the course of that around about half an hour, how long did it take you to realise she had an Asian accent? -- I don't know if I – I don't know if it took – I don't know what time it took, sorry, I don't know. Kirby Callinan No, don't talk about knowing. I asked you did it ever appear to you or occur to you she was retarded? -- No. No? -- No, I didn't know she was retarded. Never at all? -- No. You have used the word 'no'. I'm trying to concentrate on the 'appear' to you to be? -- Appeared to me. Did she ever appear to you to be retarded? -- No. Anyway, as you say, she was very competent. You said the word two or three times she was very competent. What did you mean by that? -- She seemed confident. I didn't get the right word. Was it competent or confident? What word did you use? C-O-N-F-I-D-E-N-T; was that the word? -- Confident. Was that the word you used? -- Confident as in confident. In control of yourself? -- Yeah. Is that the word you used? -- Yeah. She was very confident. Well, what gave you the impression she was so confident? -- Because she – she –well, I'm just trying to think. She's just a confident person. I see? -- Because she approached me, she chats and . . . Did she run off at the mouth? -- Run off at the mouth? As you saw her on the video did she run off the mouth? -- How do you mean? As per the video that you saw did she run off the mouth like that when she was chitchatting with you? -- No. No? Her conversation was very chitchat and controlled, was it? -- Yes. And confident? -- Yes. Nothing unusual about it? -- Apart from her accent. Kirby Callinan Apart from the accent? -- Which I asked her about later on and she said – and . . . Apart from the accent was there anything unusual about her chitchat? -- I don't know what to say … Could you just answer was there anything unusual about her conversation, manner of speaking? -- It was, she had a bit of an accent. The accent was the only thing that . . . ? -- Well, I'd been working with Chinese and they had a thick accent. Yes. Did she have a thick Chinese accent, did she? -- It was similar to the people who were running the Cisco's Cantina at that time. I'm not saying the same but it was similar. Have any trouble understanding her? -- I have. Did you have any trouble understanding this girl? -- Some things, yeah. Such as? – K ------. K ------ Street? -- Yeah. So you weren't able to sort of zero in on what her address was? -- Yeah, I remember that. I put it to you of course that none of this happened, but anyway I'm just trying to analyse your version of it? -- Well, none of what happened? She turned – I put it to you your evidence is just a tissue of lies. That's what I'm putting to you, and I'm trying to work out just what it is that you're trying to tell us. She turned towards you? -- Mmm. I put it to you in short that you took advantage of this girl, you importuned her, knowing full well she was disabled, that's what I put to you? -- No sir. Now, you told her how you quit your job? -- I told her how I quit it. Sorry, you told her you quit your job? -- Yes. Kirby Callinan Now we've heard with great rhapsody this morning about how and why you quit your job, but did you tell her that you quit it because you weren't being paid enough? -- Oh, that was one of the reasons. (emphasis added) You heard her asked, 'What stuff were you talking about?' She answered, 'I don't know, just talking about movies, or something, and so was he' and then something indistinct, 'he wasn't interested anymore'? -- I can't remember talking about movies and DVDs. You're good changing the subject of the girl when you're talking with her in the park? -- Changing . . . Changing the subject. In other words, away from movies, that sort of thing, changing the subject to something else? -- No. Changing it on to more personal stuff? -- No." The appellant put the complainant's telephone number into his mobile telephone under the first three letters of her name. He was cross-examined about his "dishonesty" in doing so: "Your counsel opened the case to the jury by saying you were trying to cut off any inquiry your wife – your de facto might have made about it? -- Yeah. Is that why you did that? -- Yeah, that's another reason too. So another piece of dishonesty? -- Dishonesty? Well, another piece of cunning, deception if your de facto happened to have a look at your phone? -- Oh, yeah, I guess so, I . . . How long had you and the de facto been together for? -- Oh, about three years. About three years. Did your de facto situation with her occur to you as you were ringing from the freeway, or on the morning that you went to – with a condom in your pocket? -- Did it occur to me? Mmm? -- Yeah, I knew I was in a relationship. Kirby Callinan Alternatively, I put it to you that, in any event, you knew and had every reason and, in fact, did know, that she was of much less than normal intellect? -- I didn't know she was intellectually impaired. In other words, I put it to you that you knew that she was an intellectually impaired person? -- How do I know she is an intellectually impaired person? HIS HONOUR: No. I don't think I said to you before, Mr Libke, you can't ask questions. It's [counsel's] role … You're simply there to answer them. [THE PROSECUTOR]: I put it to you you had every reason to believe, to understand, to apprehend, to comprehend, to realise that she was an intellectually impaired person? -- No. I put it to you, further, you had every reason to understand, to believe, in fact, you did believe and you knew that and had every reason to know she was an intellectually impaired person when you had those dealings with her in the house? -- No. And the bottom line … is that you knew that girl was the victim of intellectual impairment? -- I didn't know that. And there was not the slightest indication to you that she was intellectually impaired; is that what you're saying, by word, thought, gesture? -- Intellectually impaired, no. I'll go through it again. By way of her words, there was nothing to indicate to you she was intellectually impaired? -- I got the impression she had a lisp, or something like that. We've heard about that one? -- Well, that's the truth." The appellant was cross-examined on the basis that his evidence of talking to the complainant about moisturiser was an invention: "Why would you have to be telling her, asking her about the rash on her leg and talking about moisturiser to her? -- I just suggested that it might need some moisturiser. See, I put to you that's just another one of these inventions of yours to try to cover every nook and cranny of the case against you. In other words, the rash on the legs, moisturiser, advice, therefore, that gives you a basis, you know, for explaining about how we came to be talking about legs? -- Kirby Callinan No. No, I didn't even think of it like that. I was just telling her – I don't know, that she had dried legs." The prosecutor was wrong to characterize the appellant's evidence about the moisturiser as an invention in light of the complainant's evidence to the same effect. The prosecutor then put what he described as a "general proposition" to the appellant. This exchange occurred: "In other words – anyway, I'm putting to you wherever you see a situation there that's a problem you will thrash around to try to make up some explanation for it, whether it's a van, whether it's next door, whether it's rashes, whether it's moisturiser, whatever. Whatever. Do you want to comment? -- No, you're commenting to me. Hopeless asking a question." After the appellant was found guilty by the jury, as described at the outset of these reasons, the trial judge convicted him and sentenced him to eight years' imprisonment. The appeal to the Court of Appeal The appellant unsuccessfully appealed against his convictions to the Court of Appeal of Queensland (Williams JA and Mullins J, Chesterman J dissenting on the conviction for rape). The sentence was unanimously reduced to five years' imprisonment. Before the Court of Appeal, the appellant did not present a specific ground of appeal relating to the conduct of the prosecutor. However, as his grounds of appeal were prepared without access to the record, he reserved his right to amend the grounds. Whether on this basis, or as relevant to other grounds of appeal, there is no doubt that, on the hearing of the appeal, the appellant complained "that he was not fairly treated by the prosecutor when he was cross-examined"4. An extensive portion of the reasons of Mullins J addressed that complaint. Her Honour records the prosecution submission that "in the context of the whole of the evidence given at the trial, the approach of the prosecutor did not cause the appellant to be unfairly treated"5. She also records the reliance of the [2006] QCA 242 at [82]. [2006] QCA 242 at [92]. Kirby Callinan prosecution, on the appeal, upon the "minimal intervention by the trial judge as indicative of how the cross-examination of the prosecutor was perceived at the trial". Her Honour observed that "the credit of the appellant was clearly in issue at the trial" and that "a vigorous cross-examination of the appellant was to be expected". Whilst deprecating "gratuitous comments" she stated that it was "a question of degree whether the number and content of such comments have prejudiced a fair trial". She concluded that the appellant had been "able to handle the cross-examination" and she was influenced by the lack of objection from the appellant's trial counsel6. The complaint about the prosecutor's conduct was described as involving few successful points and these were judged insufficient to warrant the intervention of an appellate court. Other members of the Court of Appeal, in their reasons, did not deal separately with this issue. By inference they concurred in Mullins J's analysis and conclusions on this point. In our view, and with respect to their Honours, this amounted to error. The appeal to this Court The appellant argued in this Court that a miscarriage of justice occurred by reason of the prosecutor's cross-examination of him, and commentary during The principles governing the conduct of a prosecutor are well settled. They were restated by Deane J in Whitehorn v The Queen7: "Prosecuting counsel in a criminal trial represents the State. The accused, the court and the community are entitled to expect that, in performing his function of presenting the case against an accused, he will act with fairness and detachment and always with the objectives of establishing the whole truth in accordance with the procedures and standards which the law requires to be observed and of helping to ensure that the accused's trial is a fair one. The consequence of a failure to observe the standards of fairness to be expected of the Crown may be insignificant in the context of an overall trial. Where that is so, departure from those standards, however regrettable, will not warrant the interference of an appellate court with a conviction. On occasion however, the consequences of such a failure may so affect or permeate a trial as to warrant the conclusion that the accused has actually been denied his fundamental right to a fair trial. As a general [2006] QCA 242 at [93]. (1983) 152 CLR 657 at 663-664. Kirby Callinan proposition, that will, of itself, mean that there has been a serious miscarriage of justice with the consequence that any conviction of the accused should be quashed and, where appropriate, a new trial ordered." In the same case, Dawson J said this8: "No doubt all of these observations are merely aspects of the general obligation which is imposed upon a Crown Prosecutor to act fairly in the discharge of the function which he performs in a criminal trial. That function is ultimately to assist in the attainment of justice between the Crown and the accused. In this respect the Crown Prosecutor may have added responsibilities in comparison with other counsel but it does not mean that his is a detached or disinterested role in the trial process." The role of prosecuting counsel is not to be passive. He or she may be robust, and be expected and required to conduct the prosecution conscientiously and firmly. Because a criminal trial is an adversarial proceeding, there is at least the same expectation of defence counsel. The obligation of counsel extends to the making of timely objections to impermissible or unacceptable questions and conduct. But it is also the duty of the trial judge to make appropriate interventions if questions of those kinds, capable of jeopardizing a fair trial, are asked. The duty of the trial judge is the highest duty of all. It is a transcendent duty to ensure a fair trial. Section 21 of the Evidence Act, which provides as follows, does not suggest that a trial judge, even in an adversarial system, may not or should not intervene: "21 Improper questions (1) The court may disallow a question put to a witness in cross- examination or inform a witness a question need not be answered, if the court considers the question is an improper question. In deciding whether a question is an improper question, the court must take into account – any mental, intellectual or physical impairment the witness has or appears to have; and any other matter about the witness the court considers relevant, including, for example, age, education, level of (1983) 152 CLR 657 at 675. Kirby Callinan understanding, cultural background or relationship to any party to the proceeding. (3) Subsection (2) does not limit the matters the court may take into account in deciding whether a question is an improper question. In this section – improper question means a question that uses inappropriate language or is misleading, confusing, annoying, harassing, intimidating, offensive, oppressive or repetitive." In this case we are unable to conclude that the appellant did have a fair trial. Whether a cross-examination and commentary during it were excessive will usually be a question of degree. It would not be appropriate to require a standard of perfection or to impose undue weight on the occasional accidental slips and mistakes that can occur in the heat of a trial. Further, it is true that the appellant's credit was in issue and a rigorous cross-examination was therefore to be expected. However, it was seriously objectionable for a counsel to say, during an address to the jury, that he or she "did not buy" something said by a party in evidence, or that "we've heard about that one". It is not acceptable for counsel to make that comment, that is, to express a personal opinion about a party's, or indeed any witness', evidence during cross-examination as the prosecutor did here. It was equally inappropriate for counsel to comment after the appellant had made a responsive answer "whenever you're prepared to finish it". In the same category are these comments: "That doesn't tell us much, does it?"; "I'm just trying to analyse your version of it" and, "hopeless" in commentary upon an answer. These are but a few examples of the inappropriateness of the cross- examination. Here, the sarcastic and repeated commentary as a whole went too far. The appellant's counsel's failure generally to object, regrettable as that may have been, provided no antidote to the infection of the trial that the prosecutor's questions and comments caused. The circumstances called for the trial judge to intervene. In his reasons Heydon J too has demonstrated the entirely unsatisfactory nature of the conduct of the trial of the appellant involved in the approach taken both by the prosecutor9 and the trial judge10 during cross-examination. In effect, they complement our own. Merely to offer judicial disapprobation to 9 Reasons of Heydon J at [118]-[130]. 10 Reasons of Heydon J at [133]. Kirby Callinan discourage11 unsatisfactory prosecutorial conduct of this kind in the future can be of no solace to an accused the subject of it. We are unable to accept that the "very egregiousness of the conduct generated safeguards against the dangers inherent in it" or that the conduct of the prosecutor "was such as to attract sympathy to the accused"12. It is at least as likely that the jury, considering the way the prosecutor as a public official, and the judge as the controller of the trial acted, took their cue from the improper them questions and comments, and apparent respectively, and inferred that they reflected a justified hostility to the appellant which they were bound to share. Clearly their verdict is more consistent with that reaction than with any sympathy. judicial acquiescence The appellant does not seek sympathy from this Court, simply orders that uphold for him and for future cases like his the proper standards of prosecutorial conduct enforced by vigilant judicial supervision. We are quite unconvinced that the course of the cross-examination did not result in a substantial miscarriage of justice. The orders we propose give effect to that conclusion. Miscarriage of justice and the "proviso" Every member of the Court accepts at least that the prosecutor's comments were inappropriate and should not have been made13, and that in making them he aligned himself personally with the prosecution case. Nor does any judge question that, even though the proceedings were adversarial, the trial judge could have intervened to check the persistently inappropriate commentary of the prosecutor. Weiss v The Queen14 does not stand in the way of allowing the appeal; indeed to the contrary. The principal issue in Weiss was whether the intermediate appellate court was right to apply the proviso in an appeal against conviction on the grounds of the wrongful reception of irrelevant prejudicial evidence. The appeal by the accused to this Court was upheld, essentially because the Court of Appeal had allowed itself to be deflected by the formulation of a question whether the test to be applied was whether the jury in whose charge the appellant had been put would inevitably have convicted him, or whether any notional 11 Reasons of Heydon J at [135]. 12 Reasons of Heydon J at [134]. 13 See reasons of Hayne J at [83]. 14 (2005) 224 CLR 300. Kirby Callinan reasonable jury would have done so, instead of applying the statutory language of the proviso. As always, the remarks of this Court in its reasons have to be read and understood in the context of the precise issue presented for its decision there. In Weiss, after reviewing the history of the statutory demise of the Exchequer rule in criminal cases and pointing out that in consequence, an appellate court was not obliged in all cases in which irregularities had occurred to uphold an appeal, the Court said this15: "Likewise, no single universally applicable criterion can be formulated which identifies cases in which it would be proper for an appellate court not to dismiss the appeal, even though persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt. What can be said, however, is that there may be cases where it would be proper to allow the appeal and order a new trial, even though the appellate court was persuaded to the requisite degree of the appellant's guilt. Cases where there has been a significant denial of procedural fairness at trial may provide examples of cases of that kind." The foregoing statement must be read with the several others16 made in this Court which emphasise that, once it is shown, as it has been to all members of this Court, that irregularities disadvantageous to the appellant occurred at his trial, it is for the prosecution to satisfy the appellate court that such irregularities have caused no substantial miscarriage of justice. This is clear from the oft cited passage of Fullagar J in Mraz v The Queen17: "It is very well established that the proviso to s 6(1) does not mean that a convicted person, on an appeal under the Act, must show that he ought not to have been convicted of anything. It ought to be read, and it has in fact always been read, in the light of the long tradition of the English criminal law that every accused person is entitled to a trial in which the relevant law is correctly explained to the jury and the rules of procedure and evidence are strictly followed. If there is any failure in any of these respects, and the appellant may thereby have lost a chance which was fairly open to him of being acquitted, there is, in the eye of the law, a miscarriage of justice. Justice has miscarried in such cases, because the 15 (2005) 224 CLR 300 at 317 [45]. 16 Driscoll v The Queen (1977) 137 CLR 517 at 524-525; Festa v The Queen (2001) 208 CLR 593 at 627 [110]; and TKWJ v The Queen (2002) 212 CLR 124 at 144- 17 (1955) 93 CLR 493 at 514. Kirby Callinan appellant has not had what the law says that he shall have, and justice is justice according to law. It is for the Crown to make it clear that there is no real possibility that justice has miscarried." As it is put in Stokes v The Queen18, an appellate court should only apply the proviso if the irregularity "could not reasonably be supposed to have influenced the result". If this cannot be ruled out, it may be impossible for a court to be satisfied that a substantial miscarriage of justice has not occurred. What occurred here could not justify the negative supposition required to deny the appellant a retrial. In our view this is so even if the irregularities were confined to the prosecutor's comments and did not extend, as we believe, to the questions that we have identified. Not only will there be cases in which it is proper to allow the appeal and order a new trial, even though the appellate court may be persuaded on the admissible evidence to the requisite degree of the appellant's guilt, but also, as much more often will be the case, even after a careful examination of the record for itself, it will simply be impossible for that court to assess the impact of the irregularities on the fairness of the trial. Ultimately, an appellate court may only apply the proviso if it is affirmatively satisfied that no substantial miscarriage of justice to the accused has occurred19. A significant denial of procedural fairness will not, of course, be the only occasion for allowing an appeal. The reasoning of the Court in Weiss does not suggest otherwise. What occurred in the present case plainly involved an interference with the fairness of the trial, whether it should be characterized as procedurally or otherwise irregular. Because of the repetition of the conduct, and the trial judge's abstention from reproof and checking of it, it can only be described as significant. At one end of the scale, the relevant conduct can be seen to have posed a real risk of a wrongful conviction. At the other end, it is difficult to see how it could have done otherwise than to prejudice the jury against the appellant. Justice is to be administered according to law. Justice, in strict terms, miscarries whenever there is a departure from proper process. Not every such departure will necessarily produce a substantial miscarriage of justice When however there is a departure from what the law requires, an appellate court, although it does not act upon a presumption that the departure has necessarily produced a substantial miscarriage of justice, proceeds upon the basis that, the 18 (1960) 105 CLR 279 at 284-285 per Dixon CJ, Fullagar and Kitto JJ. 19 cf Weiss (2005) 224 CLR 300 at 316 [42]. See also at 314 [35]. Kirby Callinan accused having been denied a trial according to law, he or she may well have been the subject of such a miscarriage. Although it is the duty of an appellate court to decide, that is to say, satisfy itself that a substantial miscarriage of justice has occurred before allowing an appeal, it must do that against the background of the much broader discretion that it enjoys than a jury does, for they may only acquit or convict. An appellate court is not bound to decide the case finally. In weighing the possible impact of an irregularity, an appellate court will often be unable to determine whether there has been no substantial miscarriage of justice. In such a case the prosecution can be seen to have failed to establish that the proviso should be applied. This is why an appellate court may order a retrial, as we would do here. We have undertaken for ourselves the exercise which Weiss20 reiterates should be undertaken. We have independently assessed the evidence, making due allowance for such natural limitations as apply to appellate processes. But in doing so, necessarily, we have had regard to the complexion that the evidence, counsel's addresses and the trial judge's summing up may well have assumed, by reason of the highly inappropriate remarks of the prosecutor, and more, the trial judge's apparent silent approval of them. In undertaking this exercise, we are not attempting to predict what a jury may or may not do21, but simply to make it clear that we are not convinced that a substantial miscarriage of justice has not occurred. Weiss is only part of the relevant law on the topic. What the law is presents a question for legal analysis of the relevant statute and of the several authorities which together bear upon it. Weiss was written against the background of, and should be read subject to, almost a century of elucidation of the language of the "proviso" in criminal appeal statutes. It certainly did not cast doubt on the existence of the forensic burden imposed on the prosecution to demonstrate innocuous harmless error once a mistake of law, or observance of the requirements of justice, or an irregularity has been proved to have occurred in a criminal trial. That is the position here. Weiss holds that in undertaking its assessment, the appellate court must keep in mind that the jury has returned a 20 (2005) 224 CLR 300 at 316 [41]; see also Driscoll v The Queen (1977)137 CLR 517 at 524-525 per Barwick CJ; R v Storey (1978) 140 CLR 364 at 376 per Barwick CJ; Morris v The Queen (1987) 163 CLR 454; M v The Queen (1994) 181 CLR 487; Festa v The Queen (2001) 208 CLR 593 at 631-633 [121]-[123] per 21 cf Weiss (2005) 224 CLR 300 at 314 [35]. Kirby Callinan verdict of guilty. The relevance and force of that consideration are capable of immense variation according to the degree of irregularity in the conduct of the trial. If an example for the last statement be required, Nudd v The Queen22 provides it. There, irregularities of a potentially serious kind on the part of counsel for the accused occurred. However, they were able to be, and unlike here were, satisfactorily repaired by the trial judge. In that case, for that reason, the jury's verdict of guilty could safely be taken to be both highly relevant and powerful. We agree with Hayne J that in this case, intervention by the trial judge would have prevented any suggestion of unfairness. That intervention however was not, as it should have been, forthcoming. Its absence was disregarded by the Court of Appeal. We cannot, and are not prepared to, disregard it in this Court. We would allow the appeal on this ground. Requirement of a retrial As we are of the opinion that the entry of a verdict of acquittal by this Court is not justified, and that there should be an order for a retrial, it is necessary to consider the other grounds of appeal which raise questions as to the directions appropriate to the offences of which the appellant was convicted and which will be required to be given at a retrial. Two of the other grounds of appeal involve consideration of the complainant's intellectual capacity. The case for the prosecution at trial was put on the basis that the complainant lacked the cognitive capacity to give consent to sexual intercourse or other sexual activity, and that the appellant must have known that the complainant was intellectually impaired. It was also argued by the prosecution that it had discharged the onus of negativing the defence of honest and reasonable mistake (as to the complainant's capacity to consent) under s 24 of the Criminal Code (Q). That section provides: "24 Mistake of fact (1) A person who does or omits to do an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as the person believed to exist. 22 (2006) 80 ALJR 614 at 645 [162] per Callinan and Heydon JJ; 225 ALR 161 at Kirby Callinan (2) The operation of this rule may be excluded by the express or implied provisions of the law relating to the subject." In a trial such as the present, the prosecution has to prove beyond reasonable doubt the happening of the events giving rise to the alleged criminal conduct. In that respect, the onus rests on the prosecution throughout. It obliges the prosecution to prove all relevant acts and omissions beyond reasonable doubt. At the trial, properly, the prosecutor did not contest that this was so. The onus, in relation to belief of intellectual impairment or not, however, lies squarely upon an accused. This is no doubt because of the need for special protection of intellectually impaired persons. The Criminal Code nonetheless does not treat consensual sexual activity with such a person as an offence of absolute liability: an accused will be entitled to an acquittal if he can prove a negative, a matter notoriously more difficult to prove than a positive; that he believed on reasonable grounds that the complainant was not intellectually impaired. Section 229F of the Criminal Code defines an intellectually impaired person in this way: "Meaning of intellectually impaired person A person is an intellectually impaired person if the person has a disability that is attributable to an intellectual, psychiatric, cognitive or neurological impairment or a combination of these; and that results in – a substantial reduction of communication, social interaction or learning; and the person's capacity for the person needing support." Section 208(4) of the Criminal Code refers to the belief of an accused person. It provides as follows: "(4) It is a defence to a charge of an offence defined in subsection (1)(c) or (d) to prove – that the accused person believed on reasonable grounds that the person was not an intellectually impaired person; or the act that was that circumstances, constitute intellectually impaired person." the offence did not, sexual exploitation of the the Kirby Callinan The trial judge here defined intellectual impairment for the jury. It would have been better, however, if he had sought to relate each of the necessary components of the definition directly to the evidence in the case so as to emphasize to the jury that the appellant's defence, the onus lying upon him, could succeed if they were satisfied on the balance of probabilities that the appellant believed that the complainant was not intellectually impaired. In this regard the jury's attention would need to be drawn to the apparently normal conversations that the appellant had had with the complainant, that is to say her not substantially reduced capacity for communication, her mature appearance, her ability to interact with him, and the absence, so far as he was aware, of her need for support, and in particular his evidence in cross-examination about these matters that we have set out. There are varying degrees of belief just as there are varying degrees of consciousness, cognition, awareness, sophistication, experience, maturity, gullibility and naivety. A person may understand some matters very well and others barely at all. In general, people are entitled to believe what they have no reason to suppose to be otherwise or what it would not occur to them to question. The presence or absence of a belief may be a matter of inference. In Jiminez v The Queen23 the majority judgment of this Court pointed out that the absence of a warning that a person was too fatigued to drive and might fall asleep, laid a foundation for an honest and reasonable belief that it was safe for an accused driver to continue driving24. Here the appellant's evidence was that he thought the complainant to be fine. He denied that he had reason "to believe, to understand, to apprehend, to comprehend, to realize that [the complainant] was an intellectually impaired person". She conversed with him about her interests and invited him to her house. She was physically mature. She spoke normally except for a slight accent and lisp. On the appellant's version she invited sexual overtures. This evidence did lay a foundation for a submission and directions of the explicit kind to which we have referred, as to a belief of the appellant that the complainant was not intellectually impaired. Having regard to the failure of the appellant's counsel to seek any redirections at trial, we do not consider that it is necessary for us to decide whether an appeal would be allowed on a challenge to the trial judge's directions on this issue. However, on any retrial, depending upon how the evidence falls out, directions should be given which give effect to what we have said. (1992) 173 CLR 572 at 575 per Mason CJ, Brennan, Deane, Dawson, Toohey and Gaudron, 585 per McHugh JJ. (1992) 173 CLR 572 at 583-584. Kirby Callinan The ground concerning the trial judge's directions with respect to the defence of honest and reasonable mistake of fact that the complainant did have the cognitive capacity to consent is not sustainable. The directions with regard to that defence were adequate. As we have foreshadowed, the appellant's submission that acquittals should be entered has not been made out. There was evidence upon which a properly directed jury could reach the verdicts that they did. However, they could only do this in a fair trial that met the high standards required by the law both of a prosecutor and of a trial judge presiding over it. Orders We would therefore allow the appeal; set aside order 1 of the orders of the Court of Appeal; order that the convictions of the appellant entered by the District Court of Queensland be quashed; and order a retrial of the offences of which the appellant was convicted. Hayne HAYNE J. The appellant was indicted in the District Court of Queensland on three counts of rape, one count of indecent dealing with an intellectually impaired person, and one count of sodomy of an intellectually impaired person. The same person was alleged to be the victim of all the offences charged. The first count of rape was alleged to arise out of an incident that had occurred in a park where the complainant and the appellant had each been walking a dog; the other counts concerned events occurring some days later at the complainant's home. The appellant pleaded not guilty. There was no substantial dispute at trial that the complainant was an intellectually impaired person. There was no substantial dispute that, on the occasion which was the subject of the first charge, the appellant had digitally penetrated the vagina of the complainant. There was no substantial dispute that some days later the complainant had invited the appellant to her home and that they had had sexual intercourse there. The appellant denied any anal penetration. The principal live issues at trial were issues about consent, and whether the appellant reasonably believed the complainant was not intellectually impaired. At trial, the appellant was convicted of the first count of rape (the digital penetration that took place in the park). He was acquitted of the other two counts of rape, the count of sodomy and the count alleging indecent dealing, but the jury returned verdicts of guilty to three alternative, lesser, offences: two offences of unlawful carnal knowledge with an intellectually impaired person, and an offence of exposing such a person to an indecent act. The appellant appealed to the Court of Appeal of the Supreme Court of Queensland against his convictions, and against the sentences imposed by the trial judge. His appeal against conviction was dismissed; his appeal against sentence was allowed25. By special leave, he has appealed to this Court against the dismissal of his appeal against conviction. The appellant's complaints in this Court focused chiefly upon two matters. Although not expressed this way in the notice of appeal, it is convenient to describe his principal contentions in the terms of the relevant appeal provision of the Criminal Code (Q) (s 668E). First, he alleged that there was "on any ground whatsoever the prosecutor's cross-examination of the appellant at trial was such as to make his trial unfair. Secondly, he alleged that there was a "wrong decision of [a] question of law"27 ... a miscarriage of justice"26 because 25 R v Libke [2006] QCA 242. 26 Criminal Code (Q), s 668E(1). 27 Criminal Code, s 668E(1). Hayne because insufficient and incorrect directions were given to the jury. In addition to these two submissions, to which most attention was directed in oral argument, the appellant submitted that there was "on any ground whatsoever ... a miscarriage of justice" because the conviction was unsafe and unsatisfactory. None of the matters raised by the appellant provides a sufficient basis for disturbing the order of the Court of Appeal dismissing the appeal against conviction. The appeal to this Court should be dismissed. It is convenient to deal first with the questions argued about the fairness of the trial and then deal separately with the issues about directions to the jury. The first questions require consideration of well-established and undisputed general principles; the second set of issues requires close attention to the applicable provisions of the Criminal Code. An unfair trial? that process, prosecuting counsel has a role A criminal trial in Australia is an accusatorial28 and adversarial29 process. is bounded by long-established duties and responsibilities30. Those duties and responsibilities are summarised when it is said that "[t]he duty of prosecuting counsel is not to obtain a conviction at all costs but to act as a minister of justice"31. In the Supreme Court of Canada, Rand J described32 the role of the prosecutor as being: that "not to obtain a conviction, it is to lay before a jury what the Crown considers to be credible evidence relevant to what is alleged to be a crime. Counsel have a duty to see that all available legal proof of the facts is presented: it should be done firmly and pressed to its legitimate strength but it must also be done fairly. The role of prosecutor excludes any notion of winning or losing; his function is a matter of public duty than which in civil life there can be none charged with greater personal responsibility. It 28 RPS v The Queen (2000) 199 CLR 620 at 630 [22] per Gaudron ACJ, Gummow, 29 Ratten v The Queen (1974) 131 CLR 510 at 517 per Barwick CJ. 30 R v Woodhead (1847) 2 Car & Kir 520 [175 ER 216]; R v Cassidy (1858) 1 F & F 79 [175 ER 634]; Adel Muhammed el Dabbah v Attorney-General for Palestine [1944] AC 156 at 167-169; Richardson v The Queen (1974) 131 CLR 116; R v Apostilides (1984) 154 CLR 563. 31 Randall v The Queen [2002] 1 WLR 2237 at 2241 citing R v Puddick (1865) 4 F & F 497 at 499 [176 ER 662 at 663] and R v Banks [1916] 2 KB 621 at 623. 32 Boucher v The Queen [1955] SCR 16 at 23-24. Hayne is to be efficiently performed with an ingrained sense of the dignity, the seriousness and the justness of judicial proceedings." (emphasis added) A central, even the central, element in that role is "ensuring that the Crown case is presented with fairness to the accused"33. The prosecution case is to be presented in the context of an adversarial process in which each side "is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in chief or in cross-examination shall be asked"34. But again, there are boundaries to that process. The choices that have been described are to be made "subject to the rules of evidence, fairness and admissibility"35. As Dawson J said in Whitehorn v The Queen36: "A trial does not involve the pursuit of truth by any means. The adversary system is the means adopted and the judge's role in that system is to hold the balance between the contending parties without himself taking part in their disputations." (emphasis added) It is not for the judge to attempt to remedy the deficiencies of a party's case. As was pointed out in Whitehorn37, and earlier in Richardson v The Queen38, the judge will frequently lack the knowledge and the information that would be necessary to making a decision about whether and how any deficiency would be remedied. But it is for the judge to "hold the balance between the contending parties". It is for the judge to ensure that the trial is conducted fairly. Unfairness may take many forms. Often what is unfair will constitute a departure from the ordinary rules that ensure the orderly conduct of a trial. Those rules encompass not only the rules of evidence but also such diverse matters as when and how counsel may address the judge and the jury. This is not to say that every departure from those rules is to be branded as causing unfairness. But, because the rules of orderly procedure are designed to safeguard 33 Richardson (1974) 131 CLR 116 at 119 (emphasis added). 34 Ratten (1974) 131 CLR 510 at 517 per Barwick CJ. 35 (1974) 131 CLR 510 at 517 per Barwick CJ. 36 (1983) 152 CLR 657 at 682. 37 (1983) 152 CLR 657 at 682. 38 (1974) 131 CLR 116 at 122. Hayne the fairness of the proceedings, what is unfair will often be a departure from those rules. In the present case, the appellant's complaint of unfairness focused upon what happened when the trial prosecutor was cross-examining him. He submitted that the cross-examination "was designed unfairly to undermine the appellant's credibility and included improper questions, in the sense that many questions were confusing, harassing, oppressive and repetitive" (emphasis added). He further submitted that the trial prosecutor "expressed or implied personal opinions and made impermissible comment". The text of the relevant passages from the trial transcript appears in the reasons of Kirby and Callinan JJ and it is unnecessary to repeat it here. The sting in the first of the propositions advanced by the appellant lies in the word "unfairly". There is no doubt that the trial prosecutor set out to undermine the appellant's credibility, but it was an essential part of the prosecutor's function to test the credibility of the account which the appellant gave. Was that done unfairly? It is important to notice that no objection was made at trial to the questions that the trial prosecutor put to the appellant. In particular, it was not said that any question, or series of questions, was confusing or oppressive. None was said to be harassing or repetitive. Failure to object to the questions at trial does not bar the appellant from complaining, on appeal, that the trial was unfair. Not least is that so because it must be recognised that counsel for an accused person may well hesitate before objecting to a line of questioning put in cross-examination of the accused, lest it appear to the jury that counsel feels a need to protect the witness. But responsibility for deciding whether objection should be taken to the way in which a question is put to a witness, or to the conduct of opposing counsel, is a responsibility that rests primarily with counsel, not with the judge. And where, as here, the cross-examination was interrupted by an adjournment, it is open to counsel for an accused to make any necessary protest in the absence of the jury and without further interruption of the cross-examination. But no such objection or protest was made in this case. Where, as here, no objection was taken at trial, but it is said on appeal that the examination of the appellant was unfair, it is important to examine carefully what has happened at trial to see in what respect there is said to have been an unfairness. In the present case, if comments made by the trial prosecutor are put to one side, the complaints of unfairness that now are made directed attention to the way in which the prosecutor set out to undermine the appellant's credibility. It was said that this was done "unfairly". The appellant identified a number of questions as evidencing this "unfairness". Some, the appellant said, were founded on a false or unproved assertion. Others, he submitted, made Hayne unwarranted criticism of evidence he had given. But leaving aside the prosecutor's intrusion of his comments on the evidence, the cross-examination, when read as a whole, betrays no unfairness to the appellant. Some questions might have been framed better than they were. Some carried imputations critical of the appellant's evidence. Some questions were founded on assertions that were not established or admitted. But the appellant was able to and did give the account he wished to give of the events about which he was asked. And whether the cross-examination was such as to distract the jury from a proper and dispassionate examination of the issues in the case requires consideration of not only those questions that were said to be designed unfairly to undermine the appellant's credibility, but also the various comments made by the trial prosecutor in the course of his examination of the appellant. More than once in the course of his cross-examination of the appellant, the trial prosecutor made a comment about the appellant's evidence. Sometimes the comment took the form of putting a proposition to the appellant ("I put it to you your evidence is just a tissue of lies") but then proceeding at once to pose some other question. At other points, the prosecutor directly intruded his own views about the worth of the appellant's evidence. Thus the prosecutor said, at one point, "Look, I've heard all of that. I'm trying to convey to you I'm not buying it." And at the end of his cross-examination, having asked the appellant whether he wanted to comment on the proposition that "wherever you see a situation there that's a problem you will thrash around to try to make up some explanation for it", the trial prosecutor expostulated, on being told that the appellant did not want to comment on the proposition, "Hopeless asking a question". The trial prosecutor should not have made any of the comments he did during the appellant's cross-examination. That was not the time for submission or argument about the effect of the answers that the appellant gave. The trial prosecutor's opinion about the veracity of the appellant's answers was wholly irrelevant to any issue in the case. Sometimes that opinion was conveyed directly: "I'm trying to convey to you I'm not buying it." At other times the opinion was conveyed indirectly by putting a proposition ("your evidence is just a tissue of lies") but not permitting the appellant to respond. The comments the trial prosecutor made, in the course of cross-examining the appellant, departed from the rules that ensure the orderly conduct of a trial. But that observation does not answer the critical question presented by the appeal provision of the Criminal Code, which is said to be engaged. That question is whether there was a "miscarriage of justice". More particularly, did the making of these comments, either standing alone, or in conjunction with other aspects of the prosecutor's cross-examination of the appellant, make the trial unfair? The trial prosecutor should not have aligned himself with the prosecution case, which is what he did whenever he conveyed to the jury his own opinion of the appellant's evidence. Would these repeated expressions of alignment with the Hayne prosecution case have distracted the jury from their task of assessing whether the evidence that was led at trial established the appellant's guilt beyond reasonable doubt? Would other aspects of the cross-examination have caused or contributed to that consequence? Both those questions should be answered "no". To discharge their function properly, the jury had to focus upon whether they were persuaded, beyond reasonable doubt, that the evidence established the appellant's guilt of any of the several offences they had to consider. The jury's verdicts, acquitting the appellant of some offences but not others, are consistent with their having paid close attention to their proper task. The comments which the trial prosecutor made were comments about matters in issue in the case. They were not comments that suggested (whether directly, or indirectly, by appealing to prejudice or passion) that the jury should follow some impermissible path of reasoning39. The trial prosecutor's alignment with the contention that the jury should be persuaded to that conclusion did not make the underlying prosecution case unfair. The trial prosecutor should not have made the comments he did but their making caused no miscarriage of justice. The appellant's complaint of miscarriage on account of the prosecutor's conduct fails. Although it is for these reasons that the complaint of miscarriage on account of the prosecutor's conduct should be rejected, it is as well to say something further about the role of the trial judge. It would have been both possible and desirable for the trial judge, at an early stage of the prosecutor's cross-examination, to have said something requiring him to desist from making comments on the evidence that was being given. There should have been no need to make the point at any length or to draw undue attention to it. If, for some reason, it had become necessary to engage in some sustained reproof or extended criticism of counsel, that should have been done in the absence of the jury40. But an early intervention from the judge would have prevented any suggestion of unfairness of the kind now said to have arisen from the conduct of the prosecutor. Trial judges are rightly reluctant to intervene in the course of counsel's cross-examination of a witness. That reluctance stems in large part from the fact that the trial judge will usually not know how counsel intends to set about the forensic task that is presented. Counsel's choices about the order, content and tone of cross-examination will usually be moulded by information that the trial judge does not know. Nothing that is said here should be read as denying the desirability of a trial judge avoiding such interventions as far as possible. But the obligation to ensure a fair trial will sometimes best be met by a timely reminder 39 cf R v DDR [1998] 3 VR 580. 40 RPS (2000) 199 CLR 620 at 625-626 [13]. Hayne to counsel of the need to observe the rules that regulate the orderly conduct of a trial. Misdirection? The appellant made three complaints about the directions that the trial judge gave the jury. First, he submitted that there was a failure to give adequate directions "on the question of consent as it related to cognitive capacity and intellectual impairment". Secondly, he submitted that the jury should have been told that "if the appellant honestly and reasonably believed that the complainant's capacity for communication, social interaction or learning was not substantially reduced, or, if he reasonably and honestly believed that the complainant was not a person needing support, he was entitled to be acquitted". The third complaint was related to the second, and was that flow charts given to the jury as part of the trial judge's directions "were inadequate in that they did not include a reference to an honest and reasonable but mistaken belief or to any defences available". Each of these arguments requires consideration of the central provisions of the Criminal Code that were engaged in this matter. Each of them also requires the proper identification of "the real issue or issues in the case"41. At first sight, identifying those issues in this case seems difficult. The indictment charged five counts. There were several statutory alternative offences that had to be considered. Several provisions of the Criminal Code were directly or indirectly engaged in the matter. But by the time the trial judge came to direct the jury, the real issues to be considered by the jury were more confined than might have been the case. As was said at the start of these reasons, there was no substantial dispute about whether the complainant was an intellectually impaired person. There were some significant factual disputes, including whether, as the charge of sodomy alleged, there had been an incident of anal penetration. There were some differences about what exactly had happened at the time of the digital penetration in the park. There was a dispute about whether the complainant had suggested to the appellant that he "bring protection" when he came to her home. But apart from these particular factual disputes, the issues that had to be considered by the jury related chiefly to whether the complainant consented to the particular acts in question, what the appellant knew or believed about her consent, and what the appellant knew or believed about her intellectual impairment. 41 Alford v Magee (1952) 85 CLR 437 at 466; cf Tully v The Queen (2006) 81 ALJR 391; 231 ALR 712. Hayne Three statutory concepts were engaged: the Code's definition42 of "consent", in connection with the offence of rape, as "consent freely and voluntarily given by a person with the cognitive capacity to give the consent", the Code's general provision43 about mistake of fact, and the provision44 that it is a defence to a charge of certain offences of sexual misconduct towards an intellectually impaired person that the accused "believed on reasonable grounds that the person was not an intellectually impaired person". Questions about the complainant's cognitive capacity to give her consent had particular application to the charges of rape. Did the prosecution prove beyond reasonable doubt that the complainant had not freely and voluntarily consented to what had occurred, or did the prosecution prove that she did not have the capacity to give her consent? Questions of mistake of fact also had particular application to the charges of rape. Did the prosecution prove beyond reasonable doubt that the appellant had sexually penetrated the complainant when he was not acting under a reasonable, but mistaken, belief that she was able to and was consenting? The appellant's belief about whether the complainant was intellectually impaired bore upon only those offences in which proof of her intellectual impairment was an element. the The first of the appellant's arguments about the sufficiency of the directions given the jury directed attention complainant's "cognitive capacity" and her "intellectual impairment". As already noted, those questions are separate. They were to be treated distinctly. Before considering the evidence that was given about those subjects, it is important to examine the relevant sections of the Criminal Code. to questions about Section 349(2)(a) of the Criminal Code provided that a person rapes another person if "the person has carnal knowledge with or of the other person without the other person's consent". Other forms of conduct also constituted rape but it is not necessary to notice those other aspects of the provision. Section 348(1) provided that in Ch 32 of the Code (the chapter within which the provisions concerning the offence of rape appeared) "'consent' means consent freely and voluntarily given by a person with the cognitive capacity to give the consent" (emphasis added). The meaning of "consent" was then amplified by the provisions of s 348(2), which identified circumstances in which consent to an act is not freely and voluntarily given, but again it is not necessary to notice the 44 s 216(4)(a). Hayne detail of these provisions. For present purposes it is the reference in s 348(1) to the requirement for "cognitive capacity to give the consent" that is important. The expression "cognitive capacity" was not defined in the Code. It is an expression the construction and application of which is assisted by reference to what may be said to be the related, but different, expression used in the Code – "intellectually impaired person". Section 229F of the Criminal Code defined an "intellectually impaired person" as a person that has a disability that is attributable to one or more of certain kinds of impairment ("intellectual, psychiatric, cognitive or neurological") and that "results in" two consequences: "(i) a substantial reduction of the person's capacity for communication, social interaction or learning" and "(ii) the person needing support". This definition of "intellectually impaired person" applied in those provisions of the Code that used the expression. Those provisions will require separate consideration in the present matter. The fact that a person meets the definition of an "intellectually impaired person" does not require the conclusion that the person lacks "cognitive capacity to consent" to sexual conduct. There are several reasons why that is so. First, and most obviously, the two expressions are different. It is to be assumed that they were intended to have different meanings. That is not to say, of course, that there can be no overlap in their application. No doubt there can and will be cases in which a person who is an "intellectually impaired person" will lack that capacity. But the question of cognitive capacity to consent to sexual conduct focuses attention upon the understanding of the person, in particular, that person's understanding of what it was that he or she was consenting to. The definition of "intellectually impaired person" directs attention to various causes of impairment ("intellectual, psychiatric, cognitive or neurological") and to the consequences of impairment that are described much more broadly than by reference to the concept of consent. Secondly, the Code, read as a whole, requires the conclusion that a person may have "cognitive capacity to give the consent" although that person meets the definition of "intellectually impaired person". The different and separate provisions made about sexual offences against an intellectually impaired person, and in particular the provisions of s 216(1), dealing with carnal knowledge of an intellectually impaired person, would have no work to do if such a person could never give consent to sexual intercourse. Unless "cognitive capacity to give the consent" is read as requiring a different inquiry from the definition of "intellectually impaired person", carnal knowledge of such a person would always constitute rape. The complainant was aged about 18 years at the time of the alleged offences. The appellant's trial was held about two years after the offences were said to have occurred. Expert evidence led at the appellant's trial proved that the Hayne complainant was an "intellectually impaired person". The evidence was that the complainant was assessed as having an intellectual capacity described as a "full scale IQ" of 61 and that "a person [who] has an IQ of below 70 [has] ... an intellectual disability". The complainant's "level of social reasoning" was said to be "within the eight to 10 year level" and "consistent with her level of intellectual maturity". It followed that, in the terms used in s 229F of the Criminal Code, her intellectual impairment results in a substantial reduction of her capacity for learning, and in her needing support. The trial judge told the jury that if they were to find that the complainant suffered from "some intellectual deficit, that does not necessarily mean that that deficit will deprive the complainant of the cognitive capacity to give or withhold consent". It follows from what has been said earlier in these reasons that this direction was correct. The trial judge then directed the jury to consider whether the prosecution had established to the requisite degree that the complainant had "given or withheld" her consent. In the course of that direction the trial judge told the jury to consider whether "the complainant was capable of giving consent" but gave no further direction about how the jury should decide that question beyond emphasising the need to identify the consent as "freely and voluntarily given". In the particular circumstances of this case, it was neither necessary nor appropriate for the trial judge to give the jury any further instruction about the meaning of "cognitive capacity to give the consent". It was not suggested that the complainant was not competent to give her account of events, or that her account of those events should not be received in evidence. She was cross-examined by trial counsel for the appellant. In the course of that cross-examination she was asked about the sex education she had received at school. She said that she understood what was meant by sexual intercourse and that she was aware of contraception and sexually transmitted diseases. In these circumstances, it may greatly be doubted that there remained any real issue about her cognitive capacity to consent to the sexual activity that was alleged to have occurred. To the extent that any issue about the complainant's cognitive capacity to give consent remained alive in the trial, it was sufficient to direct the jury, as the trial judge did, to ask whether she had freely and voluntarily consented to the appellant doing what he was alleged to have done. The appellant's written submissions on this branch of the argument emphasised that the prosecution bore the burden of proving lack of consent beyond reasonable doubt. Reference was made in that respect to Shepherd v The Queen45, a decision concerning the assessment of circumstantial evidence. Important as that decision is, it provides no relevant guidance to the resolution of 45 (1990) 170 CLR 573. Hayne this matter. The case against the appellant depended upon the evidence of the complainant. It may be accepted that her evidence about consent was capable of being portrayed as indistinct or equivocal. Whether it was, was a matter for the jury. Of course there were circumstantial aspects of the evidence that were to be taken into account by the jury. It will be a rare case when there are no circumstantial matters to consider when the evidence is being evaluated. But a direction of the kind described in Shepherd was not sought at trial, and it was neither necessary nor desirable to give such a direction in this case. There was no want of adequate directions to the jury on the real issues in the trial concerning cognitive capacity and intellectual impairment. The directions that were given have not been shown to have been erroneous. All of the relevant offences in which an element was that the victim was an intellectually impaired person were offences created by s 216 of the Criminal Code. That section created several different offences. For present purposes, only two need be considered. The section provided that it was an offence to have, or attempt to have, unlawful carnal knowledge of an intellectually impaired person46. It also made it an offence to expose such a person "wilfully and unlawfully" to an indecent act by the offender or any other person47. The appellant was convicted of two counts of the former offence and one of the latter. Section 216(4) of the Criminal Code provided that: "It is a defence to a charge of an offence defined in this section to prove – that the accused person believed on reasonable grounds that the person was not an intellectually impaired person; or that the doing of the act or the making of the omission which, in either case, constitutes the offence did not in the circumstances constitute sexual exploitation of the intellectually impaired person." It was not disputed that the burden of proving a defence under this section was on the defendant, and it was not disputed that the standard of proof of the defence was the balance of probabilities. At his trial, the appellant submitted, among other things, that he established a defence to all of the offences under s 216 that the jury was called on to consider. He submitted that he had established a defence by showing that he 47 s 216(2)(d). Hayne had believed at the time, on reasonable grounds, that the complainant was not an intellectually impaired person. The appellant did not give evidence that he had actively turned his mind to any question about the intellectual capacity of the complainant at any time before or during the events that gave rise to the charges. It would have been forensically difficult for the appellant if he had given evidence that he had thought about the question. Evidence of that kind could only provoke the further questions: Why? What was it about the complainant that made you think about this subject? Be this as it may, the highest point to which the appellant's evidence rose on this topic was when, in answer to a question from the trial judge, ("Now, tell me more about her. How did she appear to you? How was she talking to you?") the appellant said "Fine. She was friendly, confident. She – she seemed fine. She was attractive. I just – we just were talking." Although the trial judge sought to have the appellant expand upon what he meant by the word "fine", the most that the appellant said was "She seems fine, she seems okay." The appellant contended that the trial judge should have instructed the jury to consider the appellant's belief by reference to the two separate elements of the definition of "intellectually impaired person". That is, the appellant submitted that the trial judge should have directed the jury to consider whether the appellant had either a belief the complainant's capacity for communication, social interaction or learning was not substantially reduced, or a belief that the complainant was not a person needing support. There may be cases where such a direction would be appropriate. This was not one of them. The evidence which the appellant had given on this topic did not provide a basis for the jury to consider questions refined to the degree suggested. All that he had said was that she seemed "fine". The issue thus presented was sufficiently identified by asking whether the defendant had established to the requisite standard that he believed her not to be an intellectually impaired person. that Nor was it necessary to direct the jury, as the appellant submitted, that the question was one of "subjective" as opposed to "objective" belief. Even if it is possible to draw such a distinction, attempting to do so in this case would have introduced needless confusion. The statutory inquiry was about the appellant's belief. The trial judge made plain to the jury that this was the question to consider. In the course of the oral argument of the appeal in this Court, attention was given to whether the defence could be established without there being evidence that the accused had turned his or her mind to the intellectual capacity of the complainant. Although the appellant's grounds of appeal may not encompass this question it is as well to say that direct evidence that an accused person positively considered the extent of the intellectual capacity of the complainant is not essential to establishing the defence. There are circumstances in which a person may be said to hold a belief, and to hold that belief on Hayne reasonable grounds, even though the person does not consciously advert to the question. Often the absence of some indication of departure from what is generally assumed to be the norm will be an important consideration in deciding not only whether a person believes that the norm applies but also whether there were reasonable grounds for holding that belief. The evidence in the present case taking the form it did, it was neither necessary nor desirable for the trial judge to do more than pose the statutory question to the jury for their consideration. The last of the complaints made about the trial judge's directions to the jury concerned some written flow charts given to the jury in the course of the summing up. The trial judge gave these documents to the jury to assist their consideration of the sequence of steps that had to be taken in deciding first, whether the appellant was guilty of the offences charged in the indictment, and then, whether he was guilty of any of the statutory alternatives to those charges. The appellant pointed out that the flow charts did not refer to the defences that the jury may have to consider, and submitted that the trial judge did not make sufficiently plain to the jury that the documents were supplementary to, not in substitution for, the oral directions. It is enough to say that when the purpose of the documents was, as the trial judge told the jury, to "help [the jury] understand what I am about to say" and to describe when it would become necessary to consider an alternative charge, the provision of the flow charts constituted neither some wrong decision of a question of law nor, on any other ground, a miscarriage of justice. While it is clear that the flow charts did not contain all the directions that the jury needed, that was not their intention and the jury would not have understood that to be their purpose. The absence of reference to the defences did not constitute a misdirection. The final issue to consider is whether, as the appellant submitted, the convictions were unsafe or unsatisfactory. In the Court of Appeal, Chesterman J held48 that the appellant's conviction for rape should be quashed. In his Honour's view49, the complainant's evidence was "insufficient to prove the charge". He concluded50 that the jury could not have been satisfied beyond reasonable doubt "that the complainant did not consent, or that the appellant could not have honestly and reasonably believed that she had consented". 48 [2006] QCA 242 at [33]-[36]. 49 [2006] QCA 242 at [34]. 50 [2006] QCA 242 at [34]. Hayne It is clear that the evidence that was adduced at the trial did not all point to the appellant's guilt on this first count. But the question for an appellate court is whether it was open to the jury to be satisfied of guilt beyond reasonable doubt, which is to say whether the jury must, as distinct from might, have entertained a doubt about the appellant's guilt51. It is not sufficient to show that there was material which might have been taken by the jury to be sufficient to preclude satisfaction of guilt to the requisite standard. In the present case, the critical question for the jury was what assessment they made of the whole of the evidence that the complainant and the appellant gave that was relevant to the issue of consent to the digital penetration that had occurred in the park. That evidence did not require the conclusion that the jury should necessarily have entertained a doubt about the appellant's guilt. As for the other offences of which the appellant was found guilty, there was ample evidence demonstrating his commission of the acts constituting those offences. Did he believe, on reasonable grounds, that the complainant was not an intellectually impaired person? The answer to that question depended on what the jury made of the appellant's evidence. It was open to the jury to reach the conclusions they did. None of the appellant's grounds of appeal being made out, it is, of course, not necessary to go on to consider the application of the proviso. It is as well to emphasise, however, that the unanimous decision of this Court in Weiss v The Queen52 warned against attempting to describe the operation of the statutory language in other words, lest such expressions mask the nature of the appellate court's task in considering the application of the proviso. The Court expressly discountenanced53 any attempt to predict what a jury (whether the jury at trial, or some hypothetical future jury) would or might do. Rather, the Court said54 that "in applying the proviso, the task is to decide whether a 'substantial miscarriage of justice has actually occurred'". Unless, and until, a majority of this Court qualifies what is said in Weiss, the intermediate courts of Australia must continue to apply that decision. The appeal should be dismissed. 51 M v The Queen (1994) 181 CLR 487 at 492-493. 52 (2005) 224 CLR 300 at 313 [33]. 53 (2005) 224 CLR 300 at 314 [35]. 54 (2005) 224 CLR 300 at 314 [35]. 117 HEYDON J. I agree with Hayne J, and would add only the following remarks about the cross-examination. The criticisms made must be read keeping in mind that the cross-examiner was not represented in this appeal. The powers of a cross-examiner There were many respects in which the cross-examination of the appellant was in breach of ethical duties flowing from the position of the cross-examiner as counsel for the prosecution, and in breach of other ethical duties. For present purposes, what is important is that those breaches were also breaches of rules established by the law of evidence. While breaches of these evidentiary rules do not often result in appeals being allowed, while there are relatively few reported cases about them, and while writers have given less attention to them than to more fashionable or interesting subjects, there is no doubt that they exist and no doubt that they are well settled. They are rules which necessarily developed over time once it came to be established that oral evidence should be elicited, not by means of witnesses delivering statements, and not through questioning by the court, but by means of answers given to a succession of particular questions put, usually by an advocate, and often in leading form. A cross-examiner is entitled to ask quite confined questions, and to insist, at the peril of matters being taken further in a re- examination which is outside the cross-examiner's control, not only that there be an answer fully responding to each question, but also that there be no more than an answer. By these means a cross-examiner is entitled to seek to cut down the effect of answers given in chief, to elicit additional evidence favourable to the cross-examiner's client, and to attack the credit of the witness, while ensuring that the hand of the party calling the witness is not mended by the witness thrusting on the cross-examiner in non-responsive answers evidence which that witness may have failed to give in chief. To this end a cross-examiner is given considerable power to limit the witness's answers and to control the witness in many other ways. "Cross-examination is a powerful and valuable weapon for the purpose of testing the veracity of a witness and the accuracy and completeness of his story. It is entrusted to the hands of counsel in the confidence that it will be used with discretion; and with due regard to the assistance to be rendered by it to the Court, not forgetting at the same time the burden that is imposed upon the witness."55 55 Mechanical and General Inventions Co Ltd v Austin [1935] AC 346 at 359 per Viscount Sankey LC, quoting Lord Hanworth MR with approval (Lords Blanesburgh, Atkin, Macmillan and Wright concurring); approved in Wakeley v The Queen (1990) 64 ALJR 321 at 325; 93 ALR 79 at 86 per Mason CJ, Brennan, Deane, Toohey and McHugh JJ. Hence the powers given to cross-examiners are given on conditions, and among the relevant conditions are those which underlie the rules of evidence contravened in this case. Offensive questioning The most striking characteristic of the cross-examination in this case was its wild, uncontrolled and offensive character. A prosecutor must "conduct himself with restraint and with due regard to the rights and dignity of accused persons. A cross-examination must naturally be as full and effective as possible, but it is unbecoming in a legal representative – especially in a prosecutor – to subject a witness, and particularly an accused person who is a witness, to a harassing and badgering cross-examination."56 One reason why there is a rule prohibiting this type of questioning was put thus by Wigmore57: "An intimidating manner in putting questions may so coerce or disconcert the witness that his answers do not represent his actual knowledge on the subject. So also questions which in form or subject cause embarrassment, shame or anger in the witness may unfairly lead him to such demeanor and utterance that the impression produced by his statements does not do justice to his real testimonial value." (emphasis in original) Another was advanced by Lord Langdale MR when he deprecated "the confusion occasioned by cross-examination, as it is too often conducted", for it tended to "give rise to important errors and omissions"58. Yet another was suggested by an American judge: "a mind rudely assailed, naturally shuts itself against its assailant, and reluctantly communicates the truths that it possesses."59 In this case the questioning was conducted "without restraint and without the courtesy and consideration which a witness is entitled to expect in a Court of 56 S v Booi 1964 (1) SA 224 at 227-228 per O'Hagan J. See also S v Makaula 1964 (2) SA 575 at 577-578 per van der Riet J. 57 Wigmore, Evidence in Trials at Common Law, Chadbourn ed (1970), vol 3, at 173 58 Johnston v Todd (1843) 5 Beav 597 at 601-602 [49 ER 710 at 712]. 59 Elliott v Boyles 31 Pa 65 at 66 (1857) per Lowrie J. law", and, as a result, it was "indefensible"60. The cross-examination was improper because it was "calculated to humiliate, belittle and break the witness"61. Its tone "was often sarcastic, personally abusive and derisive"62. It resorted to remarks "in the nature of a taunt"63. It amounted to "bullying, intimidation, personal vilification or insult", none of which is permissible64. The cross-examination not only offended these common law rules. Many of the questions were annoying, harassing, intimidating, offensive or oppressive, contrary to s 21 of the Evidence Act 1977 (Q)65. Comments The cross-examination also contravened the rules of evidence in that many things said by the cross-examiner were not questions at all. To adopt the language of the Ontario Court of Appeal, counsel for the prosecution infringed the rules of evidence when he "regularly injected his personal views and editorial comments into the questions he was asking"66. One vice of comments made in 60 Mechanical and General Inventions Co Ltd v Austin [1935] AC 346 at 360 per Viscount Sankey LC (Lords Blanesburgh, Atkin, Macmillan and Wright concurring). 61 R v Thompson [2006] 2 NZLR 577 at 588 [68] per Hammond, Baragwanath and Potter JJ. See also R v R(AJ) (1994) 94 CCC (3d) 168 at 177 per Osborne, Doherty and Laskin JJA. 62 R v Bouhsass (2002) 169 CCC (3d) 444 at 447 [11] per Finlayson, Moldaver and Feldman JJA. See also R v Robinson (2001) 153 CCC (3d) 398 at 417 [40] per Rosenberg, Moldaver and Goudge JJA. 63 Rubin v State 211 NW 926 at 929 (Wisc, SC, 1927) per Owen J. 64 Randall v The Queen [2002] 1 WLR 2237 at 2242 [10] per Lords Bingham of Cornhill, Nicholls of Birkenhead, Hutton, Hobhouse of Woodborough and Rodger of Earlsferry. 65 It is set out by Kirby and Callinan JJ at [36]. There are similar provisions in jurisdictions other than Queensland: Family Law Act 1975 (Cth), s 101; Evidence Act 1995 (Cth), s 41; Evidence Act 1995 (NSW), s 41; Evidence Act 2001 (Tas), s 41; Criminal Procedure Act 1986 (NSW), s 275A; Evidence Act 1958 (Vic), s 40; Evidence Act 1929 (SA), ss 22 and 25; Evidence Act 1906 (WA), s 26; Evidence Act (NT), ss 13 and 16. 66 R v Bouhsass (2002) 169 CCC (3d) 444 at 447 [12] per Finlayson, Moldaver and Feldman JJA. the course of questioning is that although they may be potentially damaging in the jury's eyes, they are not questions, and thus the witness has no opportunity of dealing with the sting in the comments. Another vice is that the jury may regard counsel as a person of special knowledge and status and therefore pay particular regard to the comments – particularly where it is counsel for the prosecution who chooses "to throw the weight of his office" into the case67. The time for comments, at least legitimate ones – for disparaging comments based on evidence or the lack of it can be legitimate – is the time of final address68. "Statements of counsel's personal opinion have no place in a cross- examination."69 The role of prosecution counsel in the administration of justice should not be "personalized"70. Their own beliefs should not be "injected" into the case71. Thus in R v Hardy72 junior counsel (the future Gibbs J) for one of the accused asked a witness who had attended certain allegedly seditious meetings: "Then you were never at any of those meetings but in the character of a spy?" The future Lord Ellenborough CJ, appearing for the prosecution, objected to this line of questioning. Eyre LCJ said to defence counsel: "[Y]our questions ought not to be accompanied with those sort of comments: they are the proper subjects of observation when the defence is made. The business of a cross-examination is to ask to all sorts of acts, to probe a witness as closely as you can; but it is not the object of a cross- examination, to introduce that kind of periphrasis as you have just done." After junior counsel for the accused sent for leading counsel (the future Lord Erskine LC), and the point was debated further, Eyre LCJ upheld the objection73: 67 R v Robinson (2001) 153 CCC (3d) 398 at 418 [45] per Rosenberg, Moldaver and 68 Randall v The Queen [2002] 1 WLR 2237 at 2242 [10] per Lords Bingham of Cornhill, Nicholls of Birkenhead, Hutton, Hobhouse of Woodborough and Rodger of Earlsferry. 69 R v R(AJ) (1994) 94 CCC (3d) 168 at 178 per Osborne, Doherty and Laskin JJA. 70 R v S(F) (2000) 144 CCC (3d) 466 at 472 [13] per Labrosse, Weiler and 71 R v S(F) (2000) 144 CCC (3d) 466 at 474 [18] per Labrosse, Weiler and 72 (1794) 24 Howell State Trials 199 at 753-754. 73 (1794) 24 Howell State Trials 199 at 756. See also R v Ings (1820) 33 Howell State Trials 957 at 999 per Dallas LCJ. "I think it is so clear that the questions that are put are not to be loaded with all of the observations that arise upon all the previous parts of the case, they tend so to distract the attention of every body, they load us in point of time so much, and that that is not the time for observation upon the character and situation of a witness is so apparent, that as a rule of evidence it ought never to be departed from ...". Comments are particularly objectionable when they are sarcastic or insulting. They are even more objectionable when they are statements indicating the personal belief of prosecution counsel in the credibility or guilt of the accused: that is not something to be said in address, and a fortiori is not something to be said during questioning. Compound questions Partly by reason of the interspersing of both comments and questions between the accused's answers, and partly by reason of other defects in the form of the questions, some "questions" asked during this cross-examination were not single questions, but were compound questions. "A compound question simultaneously poses more than one inquiry and calls for more than one answer. Such a question presents two problems. First, the question may be ambiguous because of its multiple facets and complexity. Second, any answer may be confusing because of uncertainty as to which part of the compound question the witness intended to address."74 But compound questions have additional vices. It is unfair to force a witness into the position of having to choose which questions in a compound question to answer and in which order. Cross- examiners are entitled, if they can, to frame questions so as to seek a particular answer – either "Yes" or "No". Even though the answers desired by the cross- examiner to a compound question may be all affirmative or all negative, the witness may wish to answer to some affirmatively and some negatively. To place witnesses in the position of having to reformulate a compound question and answer its component parts bit by bit is unfair to them in the sense that it prevents them from doing justice to themselves. Some "questions" asked in this case contained at least four questions within them. Cutting off answers before they were completed On occasion during his cross-examination the accused's answers were cut off either by a comment or by some further question even though it was clear that there was more which the accused wished to say. "Evidence should ordinarily be 74 Wright and Gold, Federal Practice and Procedure: Evidence, (1993), § 6164 at 354, approved in State of Hawaii v Sanchez 923 P 2d 934 at 948 [25] (Hawai'i App, 1996) per Burns CJ, Watanabe and Acoba JJ. given without interruption by counsel."75 The cutting off of an answer by a further question, though always to be avoided as far as possible, can happen innocently when a questioner is pursuing a witness vigorously and the witness pauses in such a fashion as to suggest that the answer is complete; it can happen legitimately if a witness's answer is non-responsive. But very few of the interruptions here can be explained away on these bases. They were usually interruptions of responsive answers, often by offensive observations. The rule against the cutting off of a witness's answer follows from the encouragement which the law gives to short, precise and single questions. It is not fair to ask a question which is disparaging of or otherwise damaging to a witness and to cut off an answer which the cross-examiner does not like. The right of a cross- examiner to control a witness does not entail a power to prevent the witness from giving any evidence other than that which favours the cross-examiner's client. Questions resting on controversial assumptions The cross-examiner on occasion alleged that the accused was inventing evidence when in fact the proposition supposedly invented corresponded with evidence given by the complainant in the prosecution case. The cross-examiner also put implicitly unfounded assertions that the accused was being evasive. And the cross-examiner, in putting a question about the accused's dishonesty, wrapped up in it an assumption that there had been an earlier and different piece of dishonesty. A question put in chief which assumes a fact in controversy is leading and objectionable, "because it affords the willing witness a suggestion of a fact which he might otherwise not have stated to the same effect."76 While leading questions in the cross-examination of non-favourable witnesses are not intrinsically objectionable, "[w]itnesses should not be cross-examined on the assumption that they have testified to facts regarding which they have given no testimony. Such questions have a tendency to irritate, confuse and mislead the witness, the parties and their counsel, the jury and the presiding judge, and they embarrass the 75 Randall v The Queen [2002] 1 WLR 2237 at 2242 [10] per Lords Bingham of Cornhill, Nicholls of Birkenhead, Hutton, Hobhouse of Woodborough and Rodger of Earlsferry. 76 Wigmore, Evidence in Trials at Common Law, Chadbourn ed (1970), vol 3, at 171 [780]. According to Starkie, A Practical Treatise on the Law of Evidence, 4th ed, (1853) at 197, n (s), as early as 1818 Abbott J ruled in Hill v Coombe and Handley v Ward against questions which assumed facts to have been proved which had not been proved, or particular answers to have been given which had not been given. administration of justice."77 This is because a leading question put in cross- examination which assumes a fact in controversy, or assumes that the witness has in chief or earlier in cross-examination given particular evidence which has not been given, "may by implication put into the mouth of an unwilling witness, a statement which he never intended to make, and thus incorrectly attribute to him testimony which is not his."78 A further vice in this type of questioning is: "An affirmative and a negative answer may be almost equally damaging, and a perfectly honest witness may give a bad impression because he cannot answer directly, but has to enter on an explanation."79 Questions of this character are misleading and confusing, within the meaning of both the statutory and common law rules. Argumentative questions Another vice in the questioning in this case stemmed from the fact that some of the questions and observations of counsel for the prosecution did not seek to elicit factual information, but rather provided merely an invitation to argument80. Examples include: "That doesn't tell us much, does it?", "Look, I'm giving you every opportunity?", "I'll shift to another topic whenever you're prepared to finish it", and "We want honesty at all times, of course". In form these remarks seemed apt to trigger a debate about how much the accused's hearers had been told, whether he was being given every opportunity, whether he had finished a topic, and whether he was being honest. The vice in a particular 77 State v Labuzan 37 La Ann 489 at 491; 1885 WL 6095 (SC La, 1885) per 78 Wigmore, Evidence in Trials at Common Law, Chadbourn ed (1970), vol 3, at 171 [780]. The rule does not forbid questions being put to experts on assumed facts, controversial though the assumption may be: there is here no question of trapping or misleading the witness, because the witness is not invited to accept the truth of the assumption. Nor does the rule forbid counsel putting suggestions to witnesses that propositions are true which counsel is not in a position to support by calling evidence, so long as counsel believes in good faith and on a reasonable basis that the proposition is correct: Fox v General Medical Council [1960] 1 WLR 1017 at 1023; [1960] 3 All ER 225 at 230 per Lords Radcliffe, Tucker and Cohen; R v Lyttle (2004) 180 CCC (3d) 476 at 489-493 [47]-[66]; Ebanks v The Queen [2006] 1 WLR 1827 at 1839-1844 [26]-[31]. 79 Walker and Walker, The Law of Evidence in Scotland, (1964) at 361. 80 R v R(AJ) (1994) 94 CCC (3d) 168 at 178 per Osborne, Doherty and Laskin JJA. type of argumentative cross-examination was described thus by the English Court of Appeal:81 "One so often hears questions put to witnesses by counsel which are really of the nature of an invitation to an argument. You have, for instance, such questions as this: 'I suggest to you that ...' or 'Is your evidence to be taken as suggesting that ...?' If the witness were a prudent person he would say, with the highest degree of politeness: 'What you suggest is no business of mine. I am not here to make any suggestions at all. I am here only to answer relevant questions. What the conclusions to be drawn from my answers are is not for me, and as for suggestions, I venture to leave those to others.' An answer of that kind, no doubt, requires a good deal of sense and self-restraint and experience, and the mischief of it is, if made, it might very well prejudice the witness with the jury, because the jury, not being aware of the consequences to which such questions might lead, might easily come to the conclusion (and it might be true) that the witness had something to conceal. It is right to remember in all such cases that the witness in the box is an amateur and the counsel who is asking questions is, as a rule, a professional conductor of argument, and it is not right that the wits of the one should be pitted against the wits of the other in the field of suggestion and controversy. What is wanted from the witness is answers to questions of fact." Like several other of the rules discussed above, the rule against argumentative questioning rests on the need not to mislead or confuse witnesses. The effect of the rules on the value of testimony It is not unique in the law of evidence to find that the more closely the rules for admissibility are complied with, the greater the utility of the testimony from the point of view of the party eliciting it. It is certainly the case in this field. The rules permit a steady, methodical destruction of the case advanced by the party calling the witness, and compliance with them prevents undue sympathy for the witness developing. It is perfectly possible to conduct a rigorous, testing, thorough, aggressive and determined cross-examination while preserving the most scrupulous courtesy and calmness. From the point of view of cross-examiners, it is much more efficient to comply with the rules than not to do so. 81 R v Baldwin (1925) 18 Cr App R 175 at 178-179 per Lord Hewart LCJ, Rowlatt and Swift JJ. See also R v Ruptash (1982) 68 CCC (2d) 182 at 188-189. Role of the judge It was open to counsel for the accused to object to the questions criticised above, but there was no objection. He could well have judged that it was prudent not to do so. However, the permissibility of questioning of the type criticised in this case does not depend solely on whether there are objections from counsel representing the party calling the witness. "The failure of counsel to object does not ... give Crown counsel carte blanche ..."82. Trial judges have a responsibility independently of objections to prevent this type of questioning being employed83. "If counsel begin to misbehave [the trial judge] must at once exert his authority to require the observance of accepted standards of conduct."84 Here the trial judge occasionally intervened to control the witness's answers, but never to control counsel's questions. Miscarriage of justice While the breaches of exclusionary rules discussed above were capable of placing the accused in an unfair position, taken as a whole the breaches generated neither unfairness nor a miscarriage of justice. That is so partly because, despite interruptions, the accused was able to get his version of events across. It is so partly because at least the questions (as distinct from the comments) were not irrelevant and hence did not influence the jury towards an illogical approach to the issues. It is so partly because the uncontrolled ineptness of the questioning was such as to attract sympathy to the accused. Evidently designed to disparage and humiliate the accused, the questioning is likely to have rehabilitated him in the jury's eyes as he struggled with success towards advancing an account of the events to which the questioning related. The very egregiousness of the conduct generated safeguards against the dangers inherent in it. "[T]he adoption of an unfair conduct in cross-examination has often an effect repugnant to the interests which it professes to promote."85 Here the overly aggressive and unfair approach of the cross-examiner was one which was likely to have generated sympathy in 82 R v R(AJ) (1994) 94 CCC (3d) 168 at 180 per Osborne, Doherty and Laskin JJA. See also R v F(A) (1996) 1 CR (5th) 382. 83 See, for example, Elliott v Boyles 31 Pa 65 at 66 (1857) per Lowrie J ("Witnesses ... are entitled to the watchful protection of the court"); Rubin v State 211 NW 926 at 929-930 (SC Wisc, 1927) per Owen J. 84 Randall v The Queen [2002] 1 WLR 2237 at 2242 [10] per Lords Bingham of Cornhill, Nicholls of Birkenhead, Hutton, Hobhouse of Woodborough and Rodger of Earlsferry. 85 Evans, Appendix to Pothier, A Treatise on the Law of Obligations or Contracts (1826) vol 2 at 234. the jury for the accused. Even if it did not, the accused showed himself capable of pointing out the defects of the cross-examination in a dignified way, and overcoming them. The disapproval of the conduct of this trial to be found in all the judgments of this Court may discourage and prevent its repetition. But it is not the function of the Court to seek to discourage and prevent repetition by allowing an appeal unless there has been a miscarriage of justice. Despite that fact, dismissal of the appeal is not to be taken as complaisance in the conduct examined.

HIGH COURT OF AUSTRALIA IN THE MATTER OF QUESTIONS REFERRED TO THE COURT OF DISPUTED RETURNS PURSUANT TO SECTION 376 OF THE COMMONWEALTH ELECTORAL ACT 1918 (CTH) CONCERNING Re Gallagher [2018] HCA 17 9 May 2018 ORDER The questions referred to the Court of Disputed Returns by the Senate be answered as follows: Question (a) Whether, by reason of s 44(i) of the Constitution, there is a vacancy in the representation for the Australian Capital Territory in the Senate for the place for which Katy Gallagher was returned? Answer Yes. Question (b) If the answer to Question (a) is "yes", by what means and in what manner that vacancy should be filled? Answer The vacancy should be filled by a special count of the ballot papers. Any direction necessary to give effect to the conduct of the special count should be made by a single Justice. Question (c) What directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference? Answer Unnecessary to answer. Question (d) What, if any, orders should be made as to the costs of these proceedings? Answer Unnecessary to answer. Representation J T Gleeson SC with J E Mack appearing on behalf of Senator Gallagher (instructed by Maurice Blackburn Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth with P D Herzfeld and J D Watson appearing on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Gallagher Constitutional law (Cth) – Parliamentary elections – Senate – Questions referred to Court of Disputed Returns by Senate – Where senator was foreign citizen at date of nomination for election – Where renunciation of foreign citizenship registered after return as duly elected senator – Whether senator disqualified by reason of s 44(i) of Constitution because of foreign citizenship – Whether foreign law irremediably prevented participation in representative government. Words and phrases – "a subject or a citizen … of a foreign power", "constitutional imperative", "incapable of being chosen", "irremediably prevent". Constitution, s 44(i). KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ. On 31 May 2016 Senator Katy Gallagher lodged her nomination as a candidate for election to the Senate in the federal election to be held on 2 July 2016. Senator Gallagher had already served as a senator from 26 March 2015, having filled a vacancy left by the resignation of a senator. On 2 August 2016 Senator Gallagher was returned as a duly elected senator for the Australian Capital Territory. Section 44(i) of the Constitution in relevant part provides: "Any person who: is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power; … shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives." The temporal focus for the purposes of s 44(i) is on the date of nomination as the date on and after which s 44(i) applies until the completion of the electoral process1. That is because the words in s 44 "shall be incapable of being chosen" refer to the process of being chosen, of which nomination is an essential part2. It is not in dispute that on and after the date of her nomination for election as a senator, Senator Gallagher was a British citizen. It follows that Senator Gallagher was a citizen of a foreign power within the meaning of s 44(i)3. Senator Gallagher retained that status until 16 August 2016, when her declaration of renunciation of that citizenship was registered by the Home Office of the United Kingdom. On 6 December 2017 the Senate resolved that certain questions respecting a vacancy in the representation of the Australian Capital Territory in the Senate, for the place for which Senator Gallagher was returned, should be referred to the 1 Re Canavan (2017) 91 ALJR 1209 at 1213 [3]; 349 ALR 534 at 537; [2017] HCA 45. 2 Sykes v Cleary (1992) 176 CLR 77 at 100-101; [1992] HCA 60. 3 Sue v Hill (1999) 199 CLR 462 at 492 [65]; [1999] HCA 30. Bell Nettle Gordon Court of Disputed Returns. On 7 December 2017, pursuant to s 377 of the Commonwealth Electoral Act 1918 (Cth), the President of the Senate transmitted the following questions for the determination of the Court of Disputed Returns: (a) whether, by reason of s 44(i) of the Constitution, there is a vacancy in the representation for the Australian Capital Territory in the Senate for the place for which Katy Gallagher was returned; if the answer to Question (a) is "yes", by what means and in what manner that vacancy should be filled; (c) what directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; and (d) what, if any, orders should be made as to the costs of these proceedings. The Commonwealth Attorney-General and Senator Gallagher were each deemed to be a party to the reference pursuant to orders made by Kiefel CJ4 and made submissions as to the questions. Sykes v Cleary; Re Canavan The words "subject" and "citizen" of a foreign power, which appear in s 44(i), connote the existence of a state of affairs involving the existence of a status, or of rights referable to such a status, under the law of the foreign power5. The second limb of s 44(i) is concerned with the existence of a duty by a person to a foreign power as an aspect of the status of citizenship6. In Re Canavan7 this Court held that, subject only to an implicit qualification in s 44(i), to which reference will shortly be made, the words of 4 Commonwealth Electoral Act 1918 (Cth), s 378. 5 Sykes v Cleary (1992) 176 CLR 77 at 107, 110, 131; Re Canavan (2017) 91 ALJR 1209 at 1215 [21]; 349 ALR 534 at 540. 6 Sykes v Cleary (1992) 176 CLR 77 at 109-110; Re Canavan (2017) 91 ALJR 1209 at 1216 [26]; 349 ALR 534 at 541. (2017) 91 ALJR 1209 at 1214 [13], 1215 [19], 1223 [71]-[72]; 349 ALR 534 at Bell Nettle Gordon s 44(i) in their ordinary and natural meaning disqualify a person who has the status of a foreign citizen from being chosen or sitting as a senator or member of the House of Representatives. Section 44(i) will have this effect regardless of the extent of the person's knowledge of that status or his or her intention to act upon the duty of allegiance associated with that status8. Whether a person is a foreign citizen to whom s 44(i) applies is necessarily determined by reference to the law of the relevant country because it is only that law which can be the source of the status of citizenship or the rights and duties involved in that status9. And it is the law of that country which may enable a person to renounce his or her citizenship so that he or she may be freed from the disqualifying effect of s 44(i). In the joint judgment in Sykes v Cleary10 the possibility was identified that the continuance of foreign citizenship might be "imposed involuntarily by operation of foreign law" on an Australian citizen notwithstanding that the person had "taken reasonable steps to renounce that foreign nationality"11. If such a situation were to occur not only would an Australian citizen be disqualified from being elected but the foreign law would also practically determine whether s 44(i) was to apply to that person. This could not have been intended when s 44(i) was enacted, their Honours said, and it would be wrong to construe s 44(i) to disbar an Australian citizen who had taken reasonable steps to renounce that foreign nationality. Dawson J agreed12 that s 44(i) should not be given a construction that "would unreasonably result in some Australian citizens being irremediably incapable of being elected" to either House of Parliament. 8 Re Canavan (2017) 91 ALJR 1209 at 1216 [25]-[26], 1223 [71]; 349 ALR 534 at 9 Sykes v Cleary (1992) 176 CLR 77 at 105-106, 112-114; see also Sue v Hill (1999) 199 CLR 462 at 486-487 [47], 528-529 [175]; Re Canavan (2017) 91 ALJR 1209 at 1218 [37]-[38]; 349 ALR 534 at 544. 10 (1992) 176 CLR 77 at 107-108. 11 Sykes v Cleary (1992) 176 CLR 77 at 107. 12 Sykes v Cleary (1992) 176 CLR 77 at 131. Bell Nettle Gordon In Re Canavan13 this Court accepted that s 44(i) is subject to an implicit qualification which arises from the constitutional imperative underlying it. The constitutional imperative was stated to be "that an Australian citizen not be irremediably prevented by foreign law from participation in representative government"14. At least this could be so when the person has taken all steps reasonably required by foreign law to renounce his or her foreign citizenship15. No person the subject of the references in Re Canavan was subject to a foreign law which had the effect that the person would have been "irremediably incapable of being elected". It is Senator Gallagher's contention that British law should be taken to have operated in this way when she sought to renounce her British citizenship and that the constitutional imperative referred to in Re Canavan is engaged. British law relating to renunciation Senator Gallagher acquired the status of a Citizen of the United Kingdom and Colonies ("CUKC") by descent at her birth by reason of s 5 of the British Nationality Act 1948 (UK). Her father was born in England and was a British subject. She acquired the right of abode in the United Kingdom on the commencement of the Immigration Act 1971 (UK). In 1983 persons who were CUKCs having a right of abode were reclassified as British citizens under s 11(1) of the British Nationality Act 1981 (UK). Section 12(1) of the British Nationality Act 1981 provides that if a citizen makes a declaration of renunciation of British citizenship in the prescribed manner then, subject to further provisions not presently relevant, the Secretary of State shall cause the declaration to be registered. By sub-s (2), a person ceases to be a British citizen on registration of the declaration. The British Nationality (General) Regulations 2003 (UK) require a declaration of renunciation of British citizenship to be made to the Secretary of 13 (2017) 91 ALJR 1209 at 1214 [13], 1218-1219 [43]-[44], 1223 [72]; 349 ALR 534 14 Re Canavan (2017) 91 ALJR 1209 at 1214 [13], 1223 [72]; 349 ALR 534 at 539, 15 Re Canavan (2017) 91 ALJR 1209 at 1214 [13], 1223 [72]; 349 ALR 534 at 539, Bell Nettle Gordon They relevantly State at the Home Office and to satisfy the requirements of Sched 516. Schedule 5 to the Regulations contains requirements with respect to declarations the declaration contain of renunciation. "information showing that the declarant … is a British citizen". The Immigration and Nationality (Fees) Regulations 2016 (UK) provide for a fee to be paid at the time when a declarant applies to have a declaration of renunciation registered. A form of declaration is not prescribed but in practice the Home Office provides a form. It is the Form RN, which is accompanied by the Guide RN. include that The renunciation process At the time when Senator Gallagher applied to have her declaration of renunciation registered, the time between lodgement of a declaration of renunciation and registration varied. It could take in excess of six months; it could be expedited if good reason was shown to the Home Office. These matters were not known to Senator Gallagher, who made no enquiry as to them. Senator Gallagher completed a Form RN declaration of renunciation on 20 April 2016 and provided it, together with certified copies of her birth certificate and Australian passport, and her credit card details, to the Vetting Team of the Australian Labor Party, of which party she was a member. The Australian Labor Party, Australian Capital Territory Branch, had preselected her as a candidate for the Senate. The Vetting Team forwarded the form, the copy documents and the credit card details to the Home Office, which received them on 26 April 2016. Her credit card was debited with the amount of the relevant fee on 6 May 2016. On 20 July 2016 Senator Gallagher received a letter dated 1 July 2016 from the Home Office requiring further documents. The documents were said to be required "in order to demonstrate to the Secretary of State that you are a British citizen". The letter identified as necessary to be provided, in the case of a British citizen by descent who is not the holder of a British passport, the relevant birth certificates and the marriage certificates of the person's parents and grandparents. Senator Gallagher replied the same day enclosing a certified copy of her father's birth certificate, her parents' original marriage certificate and her original birth certificate. These documents were in her possession. Sometime before 30 August 2016, Senator Gallagher received advice from the Home Office that the declaration of renunciation had been registered. 16 British Nationality (General) Regulations 2003 (UK), regs 8 and 9. Bell Nettle Gordon Senator Gallagher's argument It is Senator Gallagher's contention that by 20 April 2016, when she submitted her declaration of renunciation, or at the latest 6 May 2016, when her credit card was debited with the required fee, she had taken every step required by s 12(1) of the British Nationality Act 1981 that was within her power to secure a release of her British citizenship. The reason why she did not cease to be a British citizen before the date of her nomination lay in matters outside her control, namely the time and manner in which the Secretary of State chose to perform the duty under s 12(1). It is submitted that the ability of the Secretary of State to choose the time and manner in which the duty was to be performed was an irremediable impediment to her participation in the 2016 election. The constitutional imperative referred to in Re Canavan was therefore engaged, entitling her to participate in the election. This is so irrespective of the differences of opinion expressed by the experts on British immigration law whom the parties had called as witnesses. The area of disagreement between the witnesses called by Senator Gallagher and by the Commonwealth Attorney-General to give evidence as to British citizenship law concerns whether the Secretary of State came under a duty to register Senator Gallagher's declaration of renunciation when the declaration and the information accompanying it was received. The view of the witness called by Senator Gallagher is that she did come under such a duty. It is not a view with which the witness called by the Attorney-General agrees. It is his opinion that the Secretary of State was required to be satisfied about the fact of Senator Gallagher's British citizenship and was entitled as a matter of law to refuse to register the declaration until so satisfied. The Commonwealth Attorney-General's argument The principal submission of the Commonwealth Attorney-General is that it is not enough for a candidate merely to have taken steps to renounce his or her foreign citizenship. Unless the relevant foreign law imposes an irremediable impediment to an effective renunciation, it is necessary that a candidate actually have divested himself or herself of his or her status as a foreign citizen before the commencement of the process of being chosen to which s 44(i) applies. The exception to s 44(i) does not apply to British law because that law does not either in its terms or in its operation render it impossible or not reasonably possible to renounce British citizenship. At the time of her nomination Senator Gallagher remained a foreign citizen and was incapable of being chosen. Bell Nettle Gordon The Attorney-General's alternative submission is that if it were sufficient for Senator Gallagher to have taken all steps reasonably required by British law to renounce her British citizenship prior to nomination, she did not do so. It is not necessary to resolve the issues arising from that submission. The Attorney-General's primary submission is clearly correct. It reflects the law stated in Sykes v Cleary and Re Canavan. The constitutional imperative A concern of the constitutional imperative discussed in Re Canavan is the ability of Australian citizens to participate in the representative government for which the Constitution provides. But the context for the constitutional imperative narrows its focus. The particular constitutional context for the imperative is s 44(i) and the disqualification it effects by reference to a person's status as a foreign citizen. Its concern, properly understood, is that an Australian citizen might forever be unable to participate in elections because a foreign law prevents that person from freeing himself or herself of the foreign citizenship which, if s 44(i) were to apply in its terms, would disqualify that person from nomination. The constitutional imperative thus requires that s 44(i) be seen as subject to an implicit qualification which gives effect to the constitutional imperative in circumstances where it may be said that the purpose of s 44(i) is met. Consistently with the limits which are accepted to apply with respect to the making of a constitutional implication, the qualification to s 44(i) can extend only so far as is necessary to give effect to the textual and structural features which support it17. There is no warrant for reading it, or the constitutional imperative upon which it is based, more widely. The qualification operates in its own terms. In Re Canavan the qualification to s 44(i) was expressed as an exception18: "A person who, at the time that he or she nominates for election, retains the status of subject or citizen of a foreign power will be disqualified by reason of s 44(i), except where the operation of the foreign 17 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567; [1997] HCA 25; MZXOT v Minister for Immigration and Citizenship (2008) 233 CLR 601 at 618 [20], 623 [39], 627 [54], 635 [83], 656 [171]; [2008] HCA 28. 18 Re Canavan (2017) 91 ALJR 1209 at 1223 [72]; 349 ALR 534 at 551. Bell Nettle Gordon law is contrary to the constitutional imperative that an Australian citizen not be irremediably prevented by foreign law from participation in representative government. Where it can be demonstrated that the person has taken all steps that are reasonably required by the foreign law to renounce his or her citizenship and within his or her power, the constitutional imperative is engaged." It may be observed from this paragraph, and from earlier passages in the reasons in Re Canavan19, that for s 44(i) to be read as subject to the exception two circumstances must be present. The first arises from the terms of the constitutional imperative. It is that a foreign law operates irremediably to prevent an Australian citizen from participation. The second is that that person has taken all steps reasonably required by the foreign law which are within his or her power to free himself or herself of the foreign nationality. A foreign law will not "irremediably prevent" an Australian citizen from renouncing his or her citizenship simply by requiring that particular steps be taken to achieve it. For a foreign law to meet the description in Re Canavan and Sykes v Cleary it must present something of an insurmountable obstacle, such as a requirement with which compliance is not possible. Consistently with the approach taken in Re Canavan, the operation of the foreign law and its effect are viewed objectively. In Re Canavan20 an example was given of a foreign law which operated in a way that would engage the constitutional imperative. The example was a foreign law which permitted renunciation of foreign citizenship but required foreign citizens to carry out the necessary acts of renunciation in the territory of the foreign power. Compliance with this requirement was not possible because it put the person at risk. So understood, the foreign law would irremediably disqualify the person. The operation of such a law was contrasted21 with one which required a foreign citizen to apply for the favourable exercise of a discretion to permit renunciation of that foreign citizenship. That is a step required by foreign law which is reasonably open to the person and must be taken. It was for this reason 19 (2017) 91 ALJR 1209 at 1214 [13]; 349 ALR 534 at 539. 20 (2017) 91 ALJR 1209 at 1223 [69]; 349 ALR 534 at 551. 21 Re Canavan (2017) 91 ALJR 1209 at 1222-1223 [68]; 349 ALR 534 at 550-551. Bell Nettle Gordon that it could not be concluded that in Sykes v Cleary Mr Kardamitsis had taken reasonable steps to divest himself of his foreign citizenship. The fact that he had expressly renounced his foreign allegiance in the course of a naturalisation ceremony was not sufficient22. Contrary to a submission made by Senator Gallagher, the "test" for the engagement of the constitutional imperative is not contained in the second sentence of the passage from Re Canavan set out above. It is not sufficient that a person in her position has taken all steps reasonably required by the foreign law which are within her or his power for the exception to s 44(i) to apply. The exception stated in Re Canavan23 requires for its operation that a foreign law operate in the way described. The "foreign law" referred to in the second sentence is the same body of law which operates to irremediably prevent the person's participation, as described in the preceding sentence. Both of the circumstances referred to in the passage from Re Canavan must be present for the exception to apply. It will not be sufficient that a foreign law operates in the way described. It is necessary in every case that all steps reasonably required which are able to be taken towards renunciation are taken. We do not understand Senator Gallagher to submit to the contrary. It may be added, for completeness, that all steps must be taken even though the foreign law will in any event operate to prevent renunciation being effected. The reason for such a requirement lies in the concerns of s 44(i) about a person's duty or allegiance to the foreign power. In Sykes v Cleary24, in a passage quoted in Re Canavan25, Brennan J explained that so long as the duty remained under foreign law it may be seen as an impediment to unqualified allegiance to Australia. It is therefore only after all reasonable steps have been taken under foreign law to renounce the status, and with it the duty, of foreign citizenship that it is possible to say that the purpose of s 44(i) would not be fulfilled by recognition of the foreign law. To this may be added, consistently with the objective approach applied in Re Canavan, that it is not until it is manifest that a 22 Re Canavan (2017) 91 ALJR 1209 at 1222-1223 [68]; 349 ALR 534 at 550-551. 23 (2017) 91 ALJR 1209 at 1223 [72]; 349 ALR 534 at 551. 24 (1992) 176 CLR 77 at 113-114. 25 (2017) 91 ALJR 1209 at 1219 [45]; 349 ALR 534 at 545-546. Bell Nettle Gordon person has done all he or she can towards renunciation that the exception should apply. Senator Gallagher's approach to s 44(i) is based upon a constitutional imperative which is different from or wider in its operation than that described in Re Canavan. The constitutional imperative of which Senator Gallagher speaks is said to be informed by a purpose to preserve participation in representative government and, consistent with that different or wider constitutional imperative, it is necessary that matters which are beyond the control of a candidate are to be taken into account with respect to the operation of the constitutional imperative. By way of example, if a snap election is called, the constitutional imperative should operate to permit a person to nominate, notwithstanding the terms of s 44(i). It is not necessary to address the various aspects of the constitutional imperative for which Senator Gallagher contends which find no expression in that stated in Re Canavan. The constitutional imperative there recognised does not demand that s 44(i) be read so that its effects are more generally ameliorated so as to ensure the ability of foreign citizens to nominate. Its command is much more limited. It is, in terms, "that an Australian citizen not be irremediably prevented by foreign law from participation in representative government"26. Identification of foreign law Senator Gallagher's argument as to the constitutional imperative contains one submission which is relevant to the identification of the foreign law to be considered in connection with the exception. It is submitted that the constitutional imperative cannot be made to depend upon the actions of foreign officials or exercises of discretion under foreign law which may be productive of arbitrary results. The submission may be dealt with shortly. The constitutional imperative, and the exception which it informs and of which it forms part, is concerned with how foreign law operates with respect to a renunciation of the status of foreign citizen. A law regarding citizenship and its renunciation may operate by reference to requirements of individuals. It may give powers, including discretions, to and impose duties on officials, including with respect to decision- 26 Re Canavan (2017) 91 ALJR 1209 at 1214 [13], 1223 [72]; 349 ALR 534 at 539, Bell Nettle Gordon making. To ignore these powers and their exercise would be to distort the reality of the foreign law and its effect. Moreover it is evident from the discussion in Sykes v Cleary27 and Re Canavan28 that a discretionary power is to be regarded as part of foreign law for the purposes of s 44(i). An irremediable impediment? Senator Gallagher does not identify any aspect of the relevant British law which operates to prevent her irremediably from nominating for an election. No requirement of the relevant provisions could be described as onerous. The procedure is simple. There was never any doubt that a decision to register would be made. The issue for Senator Gallagher was only ever to be the timing of the registration. Senator Gallagher's contention is that because she had done all that was required of her by British law and which was within her power to do, everything that occurred thereafter under British law which prevented her nomination is to be regarded as an irremediable impediment. Such a submission finds no support from what was said in Re Canavan. It is not sufficient for the exception to s 44(i) to apply for a person to have made reasonable efforts to renounce. In Re Canavan it was explicitly said29 that the majority in Sykes v Cleary did not suggest that a candidate who made a reasonable effort to comply with s 44(i) was thereby exempt from compliance with it. The questions in this reference turn upon one issue: whether British law operated to irremediably prevent an Australian citizen applying for renunciation of his or her British citizenship from ever achieving it. An affirmative answer cannot be given merely because a decision might not be provided in time for a person's nomination. The exception is not engaged by a foreign law which presents an obstacle to a particular individual being able to nominate for a particular election. 27 (1992) 176 CLR 77 at 108, 114, 132. 28 (2017) 91 ALJR 1209 at 1222-1223 [68]; 349 ALR 534 at 550-551. 29 Re Canavan (2017) 91 ALJR 1209 at 1221 [61]-[62]; 349 ALR 534 at 549. Bell Nettle Gordon The answers The questions referred for the determination of the Court of Disputed Returns should be answered as follows: (a) Yes. The vacancy should be filled by a special count of the ballot papers. Any direction necessary to give effect to the conduct of the special count should be made by a single Justice. (c) Unnecessary to answer. (d) Unnecessary to answer. GAGELER J. The questions referred by the Senate are set out in the joint reasons for judgment. For the following reasons, in addition to those set out in the joint reasons for judgment, I agree with the answers there proposed. The disqualification expressed in s 44(i) of the Constitution is relevantly that "[a]ny person" who is "a citizen … of a foreign power ... shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives". The disqualification serves the constitutional purpose of preventing a senator or member of the House of Representatives from being conflicted in the performance of his or her parliamentary or executive duties to the Commonwealth of Australia as a result of such allegiance and other duties as may be attendant under foreign law on being a citizen of another country. A person meets the description of a citizen of a foreign power so as to fall within the expressed ambit of the disqualification simply by reason of having the status of citizen of another country under the law of that country. The "constitutional imperative" recognised in Re Canavan30 is an implied exception to the operation of that disqualification. The implied exception serves the function of ensuring that the disqualification does not operate so rigidly as to undermine the constitutionally prescribed system of representative and responsible government which the disqualification is designed to protect. The centrally informing notion is that an Australian citizen who meets the qualifications for election as a senator or member set by ss 16 and 34 of the Constitution or by a law enacted by the Commonwealth Parliament under s 51(xxxvi) for the purpose of s 34 of the Constitution is not to be permanently disabled from participating in the parliamentary and executive government of Australia by a disqualification in s 44, with the possible exception only of an Australian citizen who "is attainted of treason" within the meaning of s 44(ii). That centrally informing notion is complemented in its application to s 44(i) by the notion that an arbitrary or intransigent operation of the law of another country cannot be permitted to frustrate the ability of such an Australian citizen to participate in the parliamentary and executive government of Australia. The implied exception to the operation of the disqualification expressed in s 44(i) is accordingly engaged where a person who has the status of citizen of another country under the law of that country, and who therefore falls within the expressed ambit of the disqualification, is an Australian citizen who irremediably retains the status of citizen of another country under the law of that country despite having taken all steps reasonably within his or her power to renounce that citizenship under the law of that country. Critical to recognise is that it is the irremediable nature of the retention of foreign citizenship in circumstances of the 30 (2017) 91 ALJR 1209 at 1214 [13], 1218-1219 [43]-[46], 1223 [72]; 349 ALR 534 at 539, 545-546, 551; [2017] HCA 45. Australian citizen having taken all steps reasonably available to him or her under the applicable foreign law to effect renunciation which justifies the implication of the exception to the operation of the disqualification and which sets the boundaries of the operation of the exception. The implied exception is not engaged merely because a person who has the status of citizen of another country under the law of that other country is an Australian citizen who has taken all steps reasonably within his or her power to renounce that citizenship under the law of that country. An Australian citizen who has done everything reasonably within his or her power to renounce his or her citizenship of another country under the law of that country remains within the ambit of the disqualification expressed in s 44(i) for so long as a process of renunciation provided for by the law of that country simply remains incomplete. Retention of foreign citizenship can hardly be said to be irremediable while it remains in the process of being remedied. The implied exception cannot be engaged unless and until such time as such process of renunciation as is provided for by the law of the other country can be characterised for practical purposes as a process that will not permit the person to renounce the foreign citizenship by taking reasonable steps, requiring if not that an impasse has actually occurred then at least that an impasse can be confidently predicted. Assuming Senator Gallagher to have done everything reasonably within her power to renounce her British citizenship under the law of the United Kingdom by 6 May 2016, the fact is that she remained a British citizen under the law of the United Kingdom until registration of her renunciation in accordance with that law on 16 August 2016. Retention of her British citizenship is shown to have been remediable by the fact of that subsequent registration. It follows that the implied exception to the disqualification expressed in s 44(i) of the Constitution was not at any time engaged. Senator Gallagher remained a citizen of a foreign power at the time of her nomination for election to the Senate on 31 May 2016 and was for that reason incapable of being chosen as a senator at the double dissolution election which occurred on 2 July 2016. Nothing turns on such uncertainty as may have existed as to the timing of the election in which Senator Gallagher sought to participate before the Prime Minister announced on 8 May 2016 that the Governor-General had accepted his request to dissolve both Houses of the Parliament and to call a double dissolution election to be held on 2 July 2016, or before the Governor-General on 16 May 2016 issued a writ for the election of senators for the Australian Capital Territory fixing the closing date for nominations as 9 June 2016. Sections 7, 12, 13, 28, 32, 33 and 57 of the Constitution (and, in respect of Territory senators, ss 42, 43 and 44 of the Commonwealth Electoral Act 1918 (Cth)) allow for a degree of latitude as to the timing of elections, which means that in practice the time at which a particular election to the Senate or the House of Representatives is announced or at which a writ is issued will ordinarily be attended by a measure of prior uncertainty. Uncertainty about the precise timing of the announcement of, or the issue of a writ for, a particular election accordingly forms part of the practical context within which each of the provisions of s 44 of the Constitution has the potential to operate to disqualify a particular potential candidate from participation in the process of being chosen in a particular election. Whatever the time of the announcement of the election or the issue of the writ, the process of being chosen to which each of the disqualifications in s 44 applies will always commence at the time of nomination and will continue until a candidate who is qualified to be chosen and who is not disqualified from being chosen as a senator or member of the House of Representatives is returned as elected31. No differently from any of the other disqualifications in s 44, uncertainty as to the precise timing of the announcement of an election and as to the precise timing of the issue of the writ has no bearing on the operation of the disqualification expressed The disqualification will always operate, and can be anticipated in advance of the announcement of a particular election or the issue of a particular writ always to operate, on and from nomination. implied exception. in s 44(i) or its Avoidance of the disqualification so as to preserve the ability to participate in a particular election therefore demands a degree of vigilance on the part of a potential candidate not simply as to the taking of available remedial action but also as to the timing of that available remedial action. Just as it was held in Sykes v Cleary32 to have been the responsibility of Mr Cleary to have ensured that his resignation as an officer of the Victorian teaching service took effect before his nomination for the election which occurred on 11 April 1992 if he was to escape the disqualifying effect of s 44(iv) so as to be capable of being chosen as a member of the House of Representatives in that election, it was the responsibility of Senator Gallagher to ensure that renunciation of her British citizenship took effect under the law of the United Kingdom before her nomination for the election which occurred on 2 July 2016 if she was to escape the disqualifying effect of s 44(i) so as to be capable of being chosen as a senator in that election. 31 Re Nash (No 2) (2017) 92 ALJR 23 at 28-31 [20]-[39]; 350 ALR 204 at 209-213; [2017] HCA 52. 32 (1992) 176 CLR 77 at 99-100; [1992] HCA 60. Edelman EDELMAN J. Section 44(i) of the Constitution renders a person incapable of being chosen or of sitting as a senator or a member of the House of Representatives if, among other grounds, the person "is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power". That sub-section contains no express provision for how to determine whether a person should be recognised as a subject or a citizen of a foreign power or as entitled to those rights or privileges. Nor does it contain any express constitutional constraint upon whether a recognised foreign law should apply for the purposes of s 44(i). There are, however, two constraints. The first constraint is that in some circumstances the foreign law will not be recognised. One manner of non-recognition can be from a rule of the common law, often reflecting international law. The second constraint is the constitutional implication that was described in Re Canavan as a "constitutional imperative"33. This reference is concerned only with the latter constraint but it is necessary in these reasons also to discuss the former because the two are not wholly independent. At Federation34, as now35, the general common law and international law rule was that the nature of a right or status acquired under the law of another country was to be determined by the law by which that right or status was acquired. However, it was, and is, well recognised at common law and in international law that exceptions exist to this general recognition rule. One of those exceptions is that a foreign law will not be recognised if the foreign law is inconsistent with local policy or the maintenance of local political institutions36. It has been said that "[i]t is difficult to conceive, upon what ground a claim can be rested, to give to any municipal laws an extraterritorial effect, when those laws are prejudicial to the rights of other nations, or to those of their subjects"37. Where this exception applies, "the judge will have to apply the domestic law 33 (2017) 91 ALJR 1209 at 1219 [43], 1223 [72]; 349 ALR 534 at 545, 551; [2017] HCA 45. 34 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, (1896) at xliii-xliv; Story, Commentaries on the Conflict of Laws, 8th ed (1883), 35 Re Canavan (2017) 91 ALJR 1209 at 1218 [37]; 349 ALR 534 at 544. 36 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, (1896) at 33-34. See also Savigny and Guthrie, A Treatise on the Conflict of Laws, 2nd ed (rev) (1880) at 76-77. 37 Story, Commentaries on the Conflict of Laws, 5th ed (rev) (1857), §32, referred to in Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 511-512 [50]; [2002] HCA 10 and The "Halley" (1868) LR 2 PC 193 at 203. Edelman more exclusively than [the general] principle allows, and must, on the other hand, leave the foreign law unapplied"38. The general rule, and exceptions, have been applied to foreign laws concerning citizenship39. In Sykes v Cleary40, Brennan J effectively treated the question of recognition, ie the general rule and the exceptions, as an anterior question, to be asked before considering the application of s 44(i). His Honour said that whether a person was a subject or citizen of a foreign power was a question for the law of that foreign power, subject to exceptions recognised by international law as well as exceptions sourced in public policy derived from both common law and the Constitution41. Similarly, in Sykes v Cleary42 and in Sue v Hill43, Gaudron J relied upon common law authorities44 in the context of discussion of circumstances when an Australian court might not apply a foreign law. Several examples of non-recognition of a foreign law as a result of this anterior question were given by Brennan J in Sykes v Cleary45. One of those was described as "an extreme example, if a foreign power were mischievously to confer its nationality on members of the Parliament so as to disqualify them all". In cases of such exorbitant foreign laws both public policy and international law require that the foreign law not be recognised. The test for exorbitancy, as expressed by Brennan J46, borrowing from Lord Cross of Chelsea 38 Savigny and Guthrie, A Treatise on the Conflict of Laws, 2nd ed (rev) (1880) at 76. 39 As to recognition in international law of the possibility of exceptions in relation to citizenship laws see Nottebohm Case (Liechtenstein v Guatemala) (Second Phase) [1955] ICJ Rep 4 at 20-21. 40 (1992) 176 CLR 77; [1992] HCA 60. 41 (1992) 176 CLR 77 at 112. 42 (1992) 176 CLR 77 at 135-136. 43 (1999) 199 CLR 462 at 528-529 [175]; [1999] HCA 30. 44 R v The Home Secretary; Ex parte L [1945] KB 7 at 10; Lowenthal v Attorney- General [1948] 1 All ER 295 at 299; Oppenheimer v Cattermole [1976] AC 249 at 45 (1992) 176 CLR 77 at 112-113. See R v Lynch [1903] 1 KB 444; R v The Home Secretary; Ex parte L [1945] KB 7; Lowenthal v Attorney-General [1948] 1 All ER 46 (1992) 176 CLR 77 at 113. Edelman Oppenheimer v Cattermole47, was "when the foreign law, purporting to affect nationality of persons who have had no connexion or only a very slender connexion with the foreign power, exceeds the jurisdiction recognized by international law". It is unnecessary on this reference to consider whether, in addition to the exceptions discussed by Brennan J, there are, or should be, any further exceptions in international law or public policy sourced in common law or legislation. Although Senator Gallagher referred in oral submissions to the example of exorbitancy, and although at times she submitted that parts of the relevant foreign law – the British Nationality Act 1981 (UK) – should not be "recognised", her focus was not upon this usually anterior question. Instead, her submissions correctly assumed that none of the existing, limited exceptions applied to prevent recognition of the foreign law. She relied instead upon the implied constitutional qualification upon s 44(i) to prevent the foreign law, assuming it to be recognised, having any application. The implied constitutional qualification was first discussed in Sykes v Cleary. In that case, the joint judgment of Mason CJ, Toohey and McHugh JJ48 and the separate judgment of Dawson J49 identified an implication, based on construction of s 44(i) in its context, that unqualified effect would not be given to the common law and international law rules that would otherwise require citizenship to be determined by the foreign state. Deane J, in dissent, also recognised a constitutional implication "which must be read into" s 44(i)50, although his Honour's broader implication did not command the support of a majority of the Court. In Re Canavan, this constitutional implication was described as a "constitutional imperative". Like the "constitutional imperative" said to underlie the freedom to communicate on political matters51 or the freedom to vote52, the 47 [1976] AC 249 at 277. 48 (1992) 176 CLR 77 at 107. 49 (1992) 176 CLR 77 at 131. 50 (1992) 176 CLR 77 at 127-128. 51 Wotton v Queensland (2012) 246 CLR 1 at 30 [76]; [2012] HCA 2. 52 Roach v Electoral Commissioner (2007) 233 CLR 162 at 182 [24]; [2007] HCA 43; Rowe v Electoral Commissioner (2010) 243 CLR 1 at 59 [161], 117 [368], 121 [384]; [2010] HCA 46; Murphy v Electoral Commissioner (2016) 90 ALJR 1027 at 1038 [34], 1069 [239]; 334 ALR 369 at 380, 422; [2016] HCA 36. Edelman the implication to maintain rationale of institution of representative government. However, just as there are significant, valid limitations that can be placed upon the ability to participate in representative government despite these implied freedoms, so too the implication which maintains the political institution of representative government in the context of s 44(i) cannot displace or ignore all significant limitations or burdens imposed by a recognised foreign law. the political for and election Significant limitations that are placed upon a person's ability to participate the in representative government by nomination Commonwealth Parliament are recognised in the Constitution. The limitations include ss 16, 34, 43, 44 and 45, and any valid law enacted by the Commonwealth Parliament under s 51(xxxvi)53. These qualifications show that there is no absolute right for every citizen to participate in representative government by nomination for and election to the Commonwealth Parliament. The existence of these express limitations thus militates powerfully against an implication in absolute terms that denies application to any foreign law that has the effect of constraining the same participation. Instead, the constitutional implication is narrowly tailored to ensure that a foreign law does not stultify a person's qualified ability to participate. It requires only that "an Australian citizen not be irremediably prevented by foreign law from participation in representative government"54. In that way the concrete implication is confined to that which is truly necessary to achieve the more abstract constitutional purpose55. The reference in the rationale for the implication to an "irremediable" prevention of participation includes circumstances where the foreign law would make participation permanently impossible. Hence, on the perhaps contestable assumption that the foreign citizenship law would be recognised by Australian law, one potential application of this constitutional imperative would be to a foreign citizenship law that provides no legal mechanism for renunciation of foreign citizenship56. Of course, although the constitutional imperative would mean that citizenship under such a foreign law would not disqualify a person under s 44(i), a person who would otherwise have been a citizen under that 53 See, eg, Commonwealth Electoral Act 1918 (Cth), ss 163, 164. 54 Re Canavan (2017) 91 ALJR 1209 at 1223 [72], see also at 1219 [44]; 349 ALR 534 at 551, see also at 545. 55 Goldsworthy, "Functions, Purposes and Values in Constitutional Interpretation", in Dixon (ed), Australian Constitutional Values, (2018) 43 at 56, quoting Hand, The Bill of Rights, (1958) at 29. 56 Sykes v Cleary (1992) 176 CLR 77 at 132. Edelman foreign law, and who wished to avoid disqualification under s 44(i), may still need to take steps to repudiate "any acknowledgment of allegiance, obedience, or adherence to a foreign power". However, as Senator Gallagher correctly submitted, "irremediable" is not limited only to circumstances of permanent impossibility. The constitutional imperative also applies to a foreign citizenship law the "operation"57 – that is, the legal or practical effect – of which imposes unreasonable obstacles upon the ability of a person to renounce his or her foreign citizenship. Unreasonableness is a relative term. In Re Canavan58, this Court gave a telling example of a law having this unreasonable practical effect. That example was a law requiring renunciation to be carried out in the territory of the foreign power, where the citizen's presence in that territory could involve risks to their person or property. The telling nature of this example lies in the unreasonableness required to engage the constitutional imperative. Senator Gallagher submitted that any foreign citizenship law that required action or inaction by foreign officials as part of a process of renunciation imposed such an unreasonable obstacle in that respect, and therefore ought not to be given effect. It was submitted that otherwise the foreign law could introduce arbitrariness, including discriminatory outcomes and the difficulty of having recourse to the administrative and legal processes of a foreign country. Senator Gallagher also submitted that the actions of foreign officials could otherwise affect the ability of a person to participate in election campaigning during the short period of time between nominations and the return of the writs. The relevant foreign law that was said to be the source of these unreasonable obstacles is s 12(2) of the British Nationality Act. Section 12 contains the statutory requirements governing renunciation of British citizenship. It provides: If any British citizen of full age and capacity makes in the prescribed manner a declaration of renunciation of British citizenship, then, subject to subsections (3) and (4), the Secretary of State shall cause the declaration to be registered. (2) On the registration of a declaration made in pursuance of this section the person who made it shall cease to be a British citizen. (3) A declaration made by a person in pursuance of this section shall not be registered unless the Secretary of State is satisfied that the 57 Re Canavan (2017) 91 ALJR 1209 at 1223 [72]; 349 ALR 534 at 551. 58 (2017) 91 ALJR 1209 at 1223 [69]; 349 ALR 534 at 551. Edelman person who made it will after the registration have or acquire some citizenship or nationality other than British citizenship; and if that person does not have any such citizenship or nationality on the date of registration and does not acquire some such citizenship or nationality within six months from that date, he shall be, and be deemed to have remained, a British citizen notwithstanding the registration. The Secretary of State may withhold registration of any declaration made in pursuance of this section if it is made during any war in which Her Majesty may be engaged in right of Her Majesty's government in the United Kingdom. For the purposes of this section any person who has been married, or has formed a civil partnership, shall be deemed to be of full age." Senator Gallagher submitted that s 12 should operate, but that the constitutional imperative meant that no operation should be given to s 12(2) because that sub-section involves the action of a foreign official. That submission should not be accepted. Although the constitutional implication is not confined to foreign laws that make participation in representative government impossible, the further one departs from a situation of impossibility, and the broader the operation given to "unreasonable obstacles" to renunciation, the more vague and uncertain becomes the implication and the more unpredictable becomes its operation. In turn, this undermines the implication itself. Senator Gallagher's submission, if accepted, would even treat as an unreasonable obstacle to renunciation a law that had the potential to allow efficient renunciation for some and extremely efficient renunciation for others. Although a foreign law should not be automatically excluded by the implication whenever any action of a foreign official is involved, some circumstances involving actions of foreign officials might still immediately engage the constitutional imperative. An example where this arguably might occur, to adapt from one given in oral submissions by the Attorney-General of the Commonwealth, is where the actions required for renunciation under the foreign law are: (i) submission of a form; (ii) payment of a fee; and (iii) certification by a foreign official that military service for the country has been served, in circumstances in which the country is, and has been, engaged in active combat with another state. If the constitutional imperative were engaged in the example above, there would be a further issue. The further issue concerns the steps that a person must take to renounce if a foreign law imposes unreasonable requirements. On one view, akin to the approach that Senator Gallagher submitted should apply to Edelman s 12(2), the constitutional implication would require the person to take the reasonable steps (futile under foreign law) of submitting the form and paying the fee, in order to satisfy (i) and (ii), before renunciation were deemed to take effect. On another view, the requirement to take all reasonable steps to renounce applies only where all the required steps are reasonable. In other words, if the constitutional imperative were engaged in the above example the person would not be required to take the futile steps of submitting a form and paying a fee as part of a process that was not "effective under the relevant foreign law"59 and could never lead to renunciation. However, as I indicated above, the person would still be required by s 44(i) to demonstrate that he or she is not "under any acknowledgment of allegiance, obedience, or adherence" to the foreign power. It is not necessary to resolve that issue in this case. Other circumstances involving the actions of foreign officials might engage the constitutional imperative in their practical effect. Again, although it is not necessary to express any concluded opinion, one example given in oral submissions was of a foreign law requiring renunciation to be processed by an official where, in its practical operation, such processing had not taken place after three years. Another might arguably be where a foreign official unreasonably refuses to exercise a discretion to allow renunciation when all steps had otherwise been taken60. perhaps difficulty Ultimately, the most fundamental for Senator Gallagher's submission that actions of foreign officials should be automatically excluded by the implication is that the submission shears the constitutional implication from its rationale of ensuring that an Australian citizen not be irremediably prevented by foreign law from participation in representative government. The submission treats as an "unreasonable obstacle" falling within the implication any foreign law that does not irremediably prevent participation, but which might have an arbitrary or discriminatory effect. This would require a different implication, one which is lacking in any textual or structural constitutional foundation. For these reasons, as well as generally those in the joint judgment, I would also answer the questions reserved as in the joint judgment. 59 Sykes v Cleary (1992) 176 CLR 77 at 113. 60 See Sykes v Cleary (1992) 176 CLR 77 at 131-132.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Bounds v The Queen [2006] HCA 39 20 July 2006 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation I L K Marshall with P G Giudice for the appellant (instructed by Moss & Co) K P Bates with L M Fox for the respondent (instructed by Director of Public Prosecutions for Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bounds v The Queen Criminal Law – Appeal against conviction – Miscarriage of justice – Appellant presented in District Court on an indictment charging two offences – The first count, possession of child pornography, alleged an indictable offence – The second count, possession of indecent or obscene articles, was a simple offence only and was wrongly joined in the indictment – No objection taken to the indictment at the appellant's trial – Whether there was a substantial miscarriage of justice because of the wrongful joinder of count two – Whether the conviction on count one should be quashed because the jury had before it evidence on count two which, but for the wrongful joinder of count two, would not have been admissible – Whether the whole indictment was a nullity. Words and phrases – "indictable offence", "simple offence", "substantial miscarriage of justice". Criminal Code (WA), ss 3, 689(1). District Court of Western Australia Act 1969 (WA), ss 8, 42. GLEESON CJ, HAYNE, CALLINAN AND CRENNAN JJ. On 28 May 2003, the appellant was presented in the District Court of Western Australia on an indictment charging two offences. The first count alleged that on 28 July 2001 he had in his possession child pornography, in the form of computer data. The second alleged that on the same date he had in his possession indecent or obscene articles, again in the form of computer data. The first count alleged an offence under s 60(4) of the Censorship Act 1996 (WA) ("the Censorship Act") which, in 2001, provided: "A person who possesses or copies child pornography is guilty of a crime, and is liable to imprisonment for 5 years." Because s 60(4) identified the offence as "a crime", it created an indictable offence1. The second count alleged an offence under s 59(5) and (8) of the Censorship Act which, in 2001, provided: "(5) A person must not possess or copy an indecent or obscene article. (8) A person who contravenes subsection ... (5) ... commits an offence and is liable to a penalty of – in the case of an individual, $5 000 or imprisonment for 6 months; in any other case, $25 000." Not being designated as a "crime" or "misdemeanour", this was a "simple offence"2. The Censorship Act was amended in 2003 and, in particular, the penalty provided by s 59(8) was amended3 to provide only a monetary penalty of $5,000. Interpretation Act 1984 (WA), s 67; The Criminal Code (WA), s 3. Interpretation Act, s 67; The Criminal Code, s 3. 3 Censorship Amendment Act 2003 (WA), s 41(1). Hayne Callinan Crennan The amendments came into force on 1 July 2003, two weeks before the appellant was sentenced. Although it was not suggested in this Court, or in the courts below, that the appellant's liability in respect of the matters alleged in the second count (concerning the possession of indecent or obscene articles) was to be determined otherwise than in accordance with the provisions of the legislation as it stood at the time of the alleged offending, this would appear not to take account of s 37(1)(e) of the Interpretation Act 1984 (WA) and s 10 of the Sentencing Act 1995 (WA). On their face those provisions appear to require that the appellant should have been sentenced on the basis that the lesser statutory penalty provided by the Censorship Act as amended applied. These matters not having been argued, and, as will shortly be explained, the appellant's conviction and sentence on count 2 not being in issue in this Court, the point need not be pursued further. In the District Court the appellant made no challenge to the indictment presented against him. He pleaded not guilty to both counts but was convicted and sentenced to a term of imprisonment on each count, suspended, in each case, for a period of 24 months pursuant to s 76 of the Sentencing Act. The appellant appealed to the Court of Criminal Appeal of Western Australia against his convictions. For present purposes it is necessary to notice only two of the grounds of appeal to that Court. The appellant alleged that the conviction and sentence on count 2 (alleging possession of indecent or obscene articles) should be quashed because an offence under s 59(5) of the Censorship Act is not an indictable offence "and ought not be tried upon an indictment". He further alleged that the verdict of the jury on count 1 "was unsafe and unsatisfactory as ... evidence concerning [c]ount 2 was wrongly put before the jury". The Court of Criminal Appeal (Murray, Steytler and McKechnie JJ) held4 that the conviction on count 2 should be quashed. The members of the Court expressed this conclusion in different ways. Murray J held5 that "as a matter of law this offence [count 2] was not triable on indictment and the conviction of it by the verdict of the jury was not open". Steytler J held6 that "the indictment was 4 Bounds v The Queen [2005] WASCA 1 at [3] per Murray J, [45] per Steytler J, [2005] WASCA 1 at [3]. [2005] WASCA 1 at [45]. Hayne Callinan Crennan a nullity, insofar as count 2 is concerned, and that the District Court did not have the necessary jurisdiction to embark upon a trial of that count, regardless of the appellant's failure to take the point prior to entering his plea of not guilty". McKechnie J concluded7 that the Supreme Court and District Court "have exclusive jurisdiction over indictable offences [and] Courts of Petty Session have exclusive limited jurisdiction over summary offences except where, circumstances, a statute expressly extends the jurisdiction of superior courts to summary offences". McKechnie J held that there was no express extension of jurisdiction engaged in this matter. The Court further held, by majority (Murray and Steytler JJ, McKechnie J dissenting), that the admission of evidence relating to count 2 had occasioned no substantial miscarriage of justice in relation to count 1. Accordingly, the Court ordered that the appellant's conviction on count 2 of the indictment be quashed but made no order affecting the appellant's conviction on count 1. No consequential order quashing the sentence imposed on the appellant in respect of count 2 was pronounced, but on the argument of the appeal to this Court it was accepted that the quashing of the conviction was to be taken as extending to quashing the sentence imposed. By special leave, the appellant now appeals to this Court, contending that the Court of Criminal Appeal should have quashed his conviction on count 1 (the count alleging possession of child pornography) and ordered a new trial. The contention was put in a number of ways but, in essence, all sought to contend that the jury had before it evidence which related to count 2 which, but for the joinder of that count in the indictment, would not have been admissible on a trial in respect only of count 1. The respondent in this Court did not contend that the Court of Criminal Appeal erred in quashing the conviction on count 2. There was, therefore, no examination of the difficult questions presented by that Court's conclusion that the indictment should be treated as, in part, a "nullity", despite the provision then found in s 590 of The Criminal Code (WA) that "[e]very objection to an indictment for any defect apparent on its face must be taken by motion to quash the indictment before the jury is sworn, and not afterwards" (emphasis added) and the availability of a plea8 that the Court has no jurisdiction to try the accused for the offence. In that regard, there seems little reason to think that the [2005] WASCA 1 at [98]. 8 The Criminal Code, s 616(7). Hayne Callinan Crennan criticisms made in the context of administrative law of the difficulties associated with terms like "void", "voidable" and "nullity"9 are of any less force in the present context. Neither party making any submission to the contrary, however, the present appeal must be determined on the basis that the Court of Criminal Appeal's decision to quash the conviction on count 2 is not in issue. At the hearing of the appeal to this Court, the appellant sought leave to amend his notice of appeal to allege, in effect, that because count 2 alleged an offence in respect of which the District Court had no jurisdiction, the whole indictment should be treated as a "nullity". The proposed ground has insufficient merit to warrant granting the leave that is sought. The leave sought should be refused. It is enough to say of the contention that there is no doubt that the District Court had jurisdiction to deal with the offence alleged in count 1 (the count alleging possession of child pornography). That count alleged an indictable offence. Joinder of a further count, which the parties now agree should not have been joined, would, no doubt, have grounded an application to quash the indictment in so far as it alleged that second count. But in so far as the indictment charged the appellant with an indictable offence, the indictment regularly invoked the jurisdiction of the District Court and, to that extent at least, the appellant's plea of not guilty required10 trial of the issues raised by the plea by a jury, subject to the accused making no election pursuant to Ch LXIVA of The Criminal Code for trial by judge alone. No objection having been taken to the indictment at the appellant's trial, there was, at trial, no "wrong decision of any question of law" within the meaning of the provision of The Criminal Code (s 689(1)) regulating the determination of appeals against conviction by the Court of Criminal Appeal. Nor was it submitted that the verdict of the jury on count 1 should be set aside on the ground that "it is unreasonable or cannot be supported having regard to the evidence"11 that was led at trial. Rather, the implicit assumption underpinning the appellant's contentions about his conviction on count 1 was that there was a miscarriage of justice because of the wrongful joinder of count 2. 9 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; Wade, "Unlawful Administrative Action: Void or Voidable?", (1967) 83 Law Quarterly Review 499 and (1968) 84 Law Quarterly Review 95; Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed (2004) at 618-626. 10 The Criminal Code, s 622. 11 The Criminal Code, s 689(1). Hayne Callinan Crennan Reference was made in argument of the appeal to this Court to what was said in the joint reasons of Brennan, Dawson and Toohey JJ in Wilde v The Queen12 that "where an irregularity has occurred which is such a departure from the essential requirements of the law that it goes to the root of the proceedings" the proviso to the common form criminal appeal statute has no application. The appellant contended that count 2 having been wrongly joined in the indictment and tried at the same time as count 1, there had been such a "radical or fundamental" error that the proviso had no application. It is not necessary to decide what was meant in the joint reasons in Wilde by reference to "such a departure from the essential requirements of the law that it goes to the root of the proceedings" or what it is that would set some errors apart from others as "radical or fundamental". That is not necessary because the focus of the present appeal is, and must be, upon the appellant's trial in respect of count 1. It is not in issue in this Court that he should not have been tried in the District Court in respect of count 2. In considering the trial of the issues arising on count 1 it is necessary13 to focus upon what happened at the appellant's trial in order to decide whether "no substantial miscarriage of justice has actually occurred". Two particular aspects of the course of the appellant's trial are to be noted. First, the prosecution opened the case to the jury on the basis that the appellant would admit, and trial counsel for the appellant did admit, that the material the subject of count 1 met the Censorship Act definition of "child pornography", and that the material the subject of count 2 met that Act's definition of "indecent and obscene article". The consequence of these admissions was that none of the images which were the subject of either count on the indictment was put in evidence. The jury was told nothing of what those images depicted beyond what was conveyed by their description, in the case of count 1 as "child pornography", and in the case of count 2 as "indecent and obscene" images – "three bestiality images" and images of women urinating. The second matter to be noticed about the course of the appellant's trial is that the case against him revealed in the evidence was overwhelming. At the time of the alleged offences the appellant was enrolled at Curtin University. At that time he lived in Esperance. Curtin University, with the local senior high school and the local shire, operated a computer laboratory at Esperance Community College. Curtin University students could, and the appellant did, have access to this computer laboratory out of hours. Access was 12 (1988) 164 CLR 365 at 373. 13 Weiss v The Queen (2005) 80 ALJR 444; 223 ALR 662. Hayne Callinan Crennan obtained to the laboratory, out of hours, by using a swipe card and a personal identification number. A student using the computers in the computer laboratory could save information to a home directory on the computer system to which only that student, and the computer system administrators, would have access. A student would obtain access to the student's home directory by entering a user name (comprising the first seven letters of the student's family name and the student's first initial) and the student's own password. The images that were the subject of the two charges were found on the appellant's home directory. Most of the images were found in a folder which the appellant had called "Countach for Animation\A23, Pshcology notes" but some was found in a folder on his home directory entitled "Some Stuff". Computer records tendered at trial revealed when the appellant's swipe card and personal identification number had been used to gain access out of hours to the computer laboratory. Computer records also revealed when the offending images had been downloaded onto the appellant's home directory. Some were downloaded late at night or in the early hours of the morning. All of the images the subject of the two counts had been downloaded when the appellant's swipe card and personal identification number had been used to gain access to the computer laboratory out of hours. The appellant did not dispute that he had been in the computer laboratory at the times shown by the records of out of hours entry. He did not suggest that he had given his swipe card or personal identification number to any other person. Thus the undisputed evidence at the appellant's trial was that all the offending images had been downloaded when he was in the computer laboratory. Further, the undisputed evidence showed that all the offending images had been downloaded onto the appellant's home directory, a directory to which a person other than the system administrators could gain access only by using the appellant's user name and the password which the appellant had devised. It was not suggested that a system administrator had downloaded the offending images. Towards the end of July 2001, a computer system administrator encountered difficulties in creating back-up tapes of the data stored in the system. On examining the home directories of the users who were storing the most data on the system, the system administrator, Mr Jones, discovered that the appellant's home directory contained a number of image files, four of which he examined and appeared to him to depict child pornography. On 30 July the University disabled the appellant's access to the system. On the same day the appellant asked why he could not gain access to the computer. He was given a letter asking him to meet the then acting program manager for the University at Esperance (Ms Michalanney). Hayne Callinan Crennan On 1 August the appellant met Ms Michalanney and Mr Jones. The notes which Mr Jones took at the meeting were tendered in evidence. They recorded that Ms Michalanney had "explained to [the appellant] about him having porn/child porn" on his home directory. The notes went on: "he admitted it by nodding head & muttering". They concluded: "When he was leaving said he wanted to make it clear it wasn't for himself – he wasn't like that, that he was only doing it for money – both [Ms Michalanney] and myself stopped him from saying any more – he seemed so calm & collected throughout." The appellant denied that he had downloaded the offending images. The computer records tendered in evidence showed that five of the 105 child pornography images were downloaded on 28 July 2001. (All of the images the subject of both counts were downloaded between 1 and 28 July 2001.) Although he denied downloading the offending images, the appellant said in evidence that on 28 July he had received some images from a person with whom he was communicating on line in a computer chat room. He said he thought that the images he received were pictures of a well-known band, called "Metallica", that he had been discussing with this person, but that he had not looked at the images that were sent to him before his access to the computer was denied on 30 July. He said that he intended to use the pictures of the band to frame and sell at a local market. Mr Jones, the system administrator, had earlier given evidence that to save an image in a particular folder (as all the offending images had been) "[you] ... actually have to see the thing to be able to say, 'Go and save this in that position'". This evidence was not challenged and would appear to be distinctly at odds with the account which the appellant gave in evidence of saving files which he thought were pictures of a band without seeing the images. But the evidence given by Mr Jones on cross-examination and the prosecution sought to make no point about it at the appellant's trial. this subject was not put the appellant Two other aspects of the evidence given at the trial should be mentioned. First, on 23 February 2001, very soon after the commencement of the appellant's first semester as an enrolled student, and before he had been issued with a swipe card enabling out of hours access to the computer laboratory, a word document was saved to his home directory which contained a list of web page addresses. Some of the addresses had names suggesting that indecent material was available there. Although the document was created at 5.23 pm, after the laboratory would ordinarily have closed (at 5.00 pm), students who had entered the laboratory during ordinary hours could remain after the laboratory had closed. Hayne Callinan Crennan The second aspect of the evidence to mention concerned a movie file saved to the appellant's home directory on the day the appellant's access to the computer system was terminated. The file was not the subject of either count on the indictment. With the consent of trial counsel for the appellant evidence was tendered that this file (a file described as depicting bestiality) was saved to the appellant's home directory and was saved at 11.19 am on that day. The saving of this file at that time was said, by the appellant's trial counsel, to support the possibility that someone other than the appellant had saved the offending material to his home directory because, so it was submitted, there was evidence from the appellant and from the system administrator, Mr Jones, from which the jury might conclude that the appellant's access to the computer had been terminated by 10.30 am or 11.00 am. The possibility that someone other than the appellant had saved the offending material to his home directory was said to be the greater when it was recognised, first, that the appellant's user name was fixed by the University according to a well known and readily applied system and, second, that the password the appellant used was, or at least was based on, the name of a band in which he played and which he advertised to other students. (The band was called "Gutrench" and the appellant used as his password either "Gutrench" or, when required by the system to reset the password, as users were required to do every 90 days, "Gutrench 1".) As noted earlier, the appellant's complaint about the effect of the wrongful joinder of count 2 was that it had led to the jury having before it a deal of evidence which would not have been admissible had the trial been confined to a trial of the issues raised by count 1. The evidence admitted at the appellant's trial about the downloading of the images the subject of count 2 was very limited. It would have been admissible on the trial of an indictment alleging only count 1. The evidence about downloading the images the subject of count 2 was confined to evidence showing that certain named files were stored in the appellant's home directory and that those files had been downloaded when the appellant was in the computer laboratory. That evidence was relevant to whether the appellant had downloaded the 105 images of child pornography found on his home directory. The description given on a few occasions in the course of the trial of the 11 files the subject of count 2 (as indecent or obscene and as files showing images of bestiality and of women urinating) was of little moment in the context of the appellant's trial. It would have been of no greater moment in the context of a trial focused only upon possession of 105 images of child pornography and would not have supported an application for exclusion of that evidence as being of greater prejudicial than probative effect. Hayne Callinan Crennan Particular complaint was made about the leading of evidence, by consent, about the downloading of a movie file on 30 July. It was said that the evidence was wrongly admitted and that no competent counsel could have consented to its admission in a trial confined to count 1. The argument advanced at trial about what this evidence showed depended upon the jury attributing a degree of accuracy to the estimates of time given in evidence greater than the witnesses who gave the estimates claimed. But be this as it may, the argument was advanced as an answer to both counts, not just count 1. The evidence being led by consent, there can be no question of it being wrongly admitted at the appellant's trial. Contrary to the appellant's contention, it would have been well open to competent counsel to consent to the leading of the evidence in a trial on an indictment alleging only count 1 for the argument that was founded on the evidence was advanced in answer to both counts. Leading the evidence about this file occasioned no miscarriage of justice. In her final address to the jury, trial counsel for the appellant submitted that, although the jury might find that the appellant possessed the images, it could not be satisfied beyond reasonable doubt that he knew the nature of the images that had been downloaded. Even without the evidence given of the appellant's conduct and statements made to Ms Michalanney and Mr Jones on 1 August, the case against him was overwhelming. In his evidence the appellant made some very speculative suggestions about who else may have downloaded the offending images. Taken as a whole, however, the evidence identified no person who could have stored, or had reason to store, these images in the appellant's personal directory. He accepted that he was in the computer laboratory when they were downloaded. Of course it was theoretically possible that someone could have guessed his password and it was very easy to work out what would be his user name on the computer system. But the coincidence of his presence in the computer laboratory when all the offending images were downloaded was not to be explained away by the possibility that someone else gained access to his home directory only when he was in the laboratory, out of hours, and often alone. His conduct and statements on 1 August could only exclude any residue of doubt about his guilt. There was no substantial miscarriage of justice. The appeal should be dismissed. Kirby KIRBY J. This is yet another appeal concerned, ultimately, with the 'proviso' governing the disposition of criminal appeals. The appeal comes from a divided decision of the Supreme Court of Western Australia (Court of Criminal Appeal)14. In that Court it was found that most of the grounds of appeal relied on by Mr Matthew Bounds ("the appellant") were without substance. However, the Court unanimously concluded that the appellant had been invalidly charged on indictment, and convicted, of a non-indictable offence contained in count 2 of the indictment15. On this basis, the appeal against the appellant's conviction on that count was allowed. That conviction was quashed. The Court of Criminal Appeal divided on what should then happen to the conviction on count 1. A majority (Murray J16 and Steytler J17) concluded that the conviction on that count was valid; that it should stand; and that the appeal should otherwise be dismissed. The dissenting judge (McKechnie J18) decided that the circumstances required the setting aside of the conviction on count 1, with an order for a retrial limited to that count. The dissenting judge was correct. This was not a case where the appellant's conviction, based on the jury's verdict in answer to the first count of the indictment, could be sustained by invoking the 'proviso'19, as then in force in Western Australia20. As the dissenting judge held, the mistaken inclusion of count 2 in the indictment, and the trial of the appellant on that count, involved a fundamental flaw in the conduct of the trial21. In the circumstances, this meant that the appellant's trial departed from law in a basic respect. The hypothesis upon which the 'proviso' operates was thus negated. It could not save the trial outcome. Alternatively, putting the appellant on trial on the second count subjected him to an unnecessary trial to that extent; involved him in important forensic disadvantages in a trial conducted on both counts; exposed him to additional prejudice that might have contaminated the jury's reasoning; and led to 14 Bounds v The Queen [2005] WASCA 1. 15 [2005] WASCA 1 at [12] per Murray J, [30]-[45] per Steytler J, [128] per 16 [2005] WASCA 1 at [12]. 17 [2005] WASCA 1 at [50]. 18 [2005] WASCA 1 at [132]-[134]. 19 Criminal Code (WA), s 689(1) (since repealed). 20 See now Criminal Appeals Act 2004 (WA), s 30(4). 21 Wilde v The Queen (1988) 164 CLR 365 at 373, cited [2005] WASCA 1 at [130]. Kirby the imposition of punishment, based on the jury's verdicts of guilty on both counts. It thus occasioned a substantial miscarriage of justice. The last point illustrates, at the outset, the unsatisfactory features of merely severing the second count and treating the appellant's trial as having been validly conducted on the first. The trial judge's remarks on sentencing make it clear that he sentenced the appellant on the basis of his conviction on each of the two counts on which the jury returned their guilty verdicts. Thus, he sentenced the appellant to 18 months' imprisonment on count 1 and to six months' imprisonment on count 2. After some notional remarks of what he would have done if the two terms of imprisonment were to be served immediately, the trial judge directed that "the two terms of imprisonment be suspended for the maximum period of 24 months"22. Obviously, the reference to 24 months related to the aggregate of the primary sentences on both counts. The Court of Criminal Appeal did not set aside so much of the sentence imposed on the appellant by the trial judge as related to count 2. To the extent that the order of the Court of Criminal Appeal is confirmed by this Court, so is that component of the appellant's sentence. There was no separate appeal against sentence, either in the Court below or in this Court. The 24 months suspended sentence has long since expired without the appellant's re-offending so as to revive the custodial sentence. The aggregate sentence imposed by the trial judge was (if I may say so) eminently sensible on the premises on which it was based. However, the outcome of the proceedings is now scarcely logical. The sentence on the second count was never quashed or varied. Nor was the appellant's notional custodial sentence on count 2 (which remains on his criminal record) reduced or varied. As will be shown, this is but one of many difficulties that results from the initial error of the prosecutor in presenting the appellant for trial on an indictment that included count 2. It was to test the consequences of the erroneous inclusion of count 2 on the indictment, and to resolve the differences that had arisen in the Court of Criminal Appeal, that the appellant was granted special leave to appeal to this Court. 22 Pursuant to Sentencing Act 1995 (WA), s 76. See remarks on sentencing of Muller DCJ, R v Bounds, unreported, District Court of Western Australia, 15 July Kirby The facts and legislation The facts: The indictment found by the prosecutor against the appellant was signed on 28 May 2003 by a "Consultant Crown Prosecutor". This was purportedly done pursuant to the Criminal Code (WA) ("the Code") and the Criminal Procedure Rules (WA). The first count charged the appellant that on 28 July 2001 at Esperance he "had in his possession child pornography, in the form of computer data". The marginal note referred to the Censorship Act 1996 (WA), s 60(4). The second count charged him "[f]urther that on the same date and at the same place [he] had in his possession indecent or obscene articles, in the form of computer data". The marginal note referred to the Censorship Act, The facts leading to the presentation of the indictment in the District Court of Western Australia, putting the appellant on trial on the foregoing charges, are set out in the reasons of Gleeson CJ, Hayne, Callinan and Crennan JJ ("the joint reasons"23). Also described there are some features of the conduct of the trial; the disposition of the appeal in the Court of Criminal Appeal24 and the course of argument before this Court25. The case presented against the appellant, to establish his guilt of the offence charged in count 1, was extremely strong. In effect, the challenge raised in the Court of Criminal Appeal, and now in this Court, is a technical one; although not entirely so. Technical arguments are no worse for that description if they are well founded in law. Especially so in criminal trials where liberty and reputation are at stake and where these values are commonly protected by insistence on adherence to statutory procedures. Reviewing the trial of the appellant as best one can do on the written record, one might indeed conclude that the evidence against him on count 1 was "overwhelming"26. However, even persons facing charges supported by "overwhelming" evidence are, according to our law, entitled to a trial that conforms to law in essential respects. This is what the appellant complains was missing in his case. At the time of the offences charged, he was 20 years of age and an affiliated university student27. Clearly, his conviction on count 1, will 23 Joint reasons at [1]-[5]. 24 Joint reasons at [6]-[8], [14]. 25 Joint reasons at [9]-[13]. 26 Joint reasons at [29]. 27 [2005] WASCA 1 at [52]. Kirby have serious consequences for his reputation, employment, international travel and future life. These considerations reinforce the importance of ensuring a trial that conforms to law. This means, so far as count 1 was concerned, a trial before a jury uncomplicated by extraneous and legally impermissible considerations. The legislation: The most important legislation in this appeal is that in which the 'proviso' is stated, as then applicable. Relevantly, at the time of the Court of Criminal Appeal's disposition, s 689(1) of the Code stated: "The Court of Criminal Appeal on any such appeal against conviction shall allow the appeal, if they think that the verdict of the jury should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence, or that the judgment of the court before whom the appellant was convicted should be set aside on the ground of a wrong decision of any question of law or that on any ground there was a miscarriage of justice, and in any other case shall dismiss the appeal: Provided that the Court may, notwithstanding that they are of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if they consider that no substantial miscarriage of justice has actually occurred." Before this Court, the prosecution accepted that the analysis of the legislation of Western Australia, contained in the reasons of McKechnie J28, was correct. According to that analysis, the District Court of Western Australia, in which the appellant's trial took place, secures its criminal jurisdiction by virtue of ss 8 and 42 of the District Court of Western Australia Act 1969 (WA). Neither the District Court nor the Supreme Court is granted general jurisdiction over matters triable summarily. Such jurisdiction is conferred upon the Courts of Petty Sessions pursuant to s 20 of the Justices Act 1902 (WA)29. By the operation of these statutes, read with the provisions of s 6730 of the Interpretation Act 1984 (WA), in the words of McKechnie J31: "the jurisdictional scheme becomes quite clear. Superior courts have exclusive jurisdiction over indictable offences. Courts of Petty Session have exclusive jurisdiction over summary offences except where, in 28 [2005] WASCA 1 at [91]-[123]. 29 [2005] WASCA 1 at [96]-[98]. 30 [2005] WASCA 1 at [99]. 31 [2005] WASCA 1 at [98]. See also at [36] per Steytler J. Kirby limited circumstances, a statute expressly extends the jurisdiction of superior courts to summary offences." At the time of the trial of the appellant, the Criminal Code Compilation Act 1913 (WA) provided that an "indictable offence" was triable only on indictment unless that Act, or some other written law, expressly provided otherwise. By s 4 of the lastmentioned Act, it was provided: "No person shall be liable to be tried or punished in Western Australia as for an indictable offence except under the express provisions of the Code or some other statute law of Western Australia" (emphasis added). As McKechnie J observed32, the expressly stated provisions of the statute law of Western Australia for the trial of "simple offences" were principally found in the Justices Act. Such proceedings are commenced by complaint not indictment. By s 1 of the Code "[t]he term 'indictment' means a written charge preferred against an accused person in order to his trial [sic] before some court other than justices exercising summary jurisdiction". The Code makes exhaustive provision for the procedures governing a trial on indictment33. One such provision of the Code is s 594. At the relevant time, it read: "... upon an indictment charging a person with an offence he may be convicted of any indictable or simple offence ... which is established by the evidence, and which is an element or would be involved in the commission of the offence charged in the indictment". This provision did not authorise the charging of a simple offence in an indictment. It merely permitted a conviction to be recorded in respect of a simple offence in circumstances where an indictable offence is charged but not proved but the evidence nonetheless establishes the commission of a simple offence and the conduct establishing the simple offence satisfies an element of the indictable offence. In s 602A of the Code, there is a provision which might appear at first blush to provide some support for the regularity of the appellant's conviction on count 2, otherwise reserved, as a simple offence, to the exclusive jurisdiction of a Court of Petty Sessions. This section, since repealed, stated: 32 [2005] WASCA 1 at [105]. 33 The Code, Chs LXII ("Indictments"), LXIII ("Effect of Indictment"). Kirby "A person may be convicted of and punished for an offence on indictment notwithstanding that the person might have been convicted of and punished for that offence summarily." However, as Steytler J34 and McKechnie J35 explained, s 602A was inserted into the Code at the same time as a number of provisions enabling certain indictable offences to be dealt with summarily36. The purpose of s 602A was to ensure that, despite such provisions, the indictable offences referred to could be tried on indictment. This interpretation is supported by the fact that s 602A appeared in Ch LXIII of the Code which dealt with "Effect of Indictment". It did not appear in Ch LXI titled "Jurisdiction: Preliminary proceedings: Bail" nor in Ch LXIV concerned with "Trial: Adjournment: Pleas: Practice". Furthermore, if s 602A were read to permit the inclusion in an it would have profound triable summarily, indictment of any offence consequences for the continued relevance of the distinction between offences triable summarily and on indictment, a distinction which is observed in the Code. It would also place criminal procedure in Western Australia out of line with that in other Australian jurisdictions. Such a course runs contrary to the principle that, so far as this can be achieved within the statutory language, statutes concerning the criminal law should be interpreted so as to promote uniformity in the criminal law throughout Australia37 and especially as between Code The final provision that might conceivably have affirmed the inclusion of a simple offence in an indictment was s 622 of the Code. That section, also since repealed, was titled "Trial by jury". It read: "If the accused person pleads any plea or pleas other than the plea of guilty, or a plea to the jurisdiction of the court, he is by such plea, without any further form, deemed to have demanded that the issues raised by such plea or pleas shall be tried by a jury, and, subject to [provisions for trial by judge alone], those issues are triable accordingly." 34 [2005] WASCA 1 at [37]-[38]. 35 [2005] WASCA 1 at [110]-[111]. 36 Criminal Code Amendment Act (No 2) 1987 (WA). 37 R v Barlow (1997) 188 CLR 1 at 32; cf Vallance v The Queen (1961) 108 CLR 56 38 Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 665; Charlie v The Queen (1999) 199 CLR 387 at 394 [14]. Kirby Did this provision mean that, on an irregularly joined count of an indictment charging a simple offence, if the accused pleaded not guilty (as the appellant did to both counts) s 622 commanded the jury to try the issues raised by that plea "accordingly", notwithstanding that the offence was a simple offence? This possible interpretation was raised with the parties during the course of argument before this Court. Properly so because, on one view, the fact that an accused had secured a jury trial of a "simple offence" (ordinarily triable summarily in a Court of Petty Sessions only) might be regarded as an advantage to be received with gratitude, not a burden to be complained about. However, such a construction of s 622 was convincingly rejected by McKechnie J. As his Honour stated39: "It is clear that the reference to 'plea' in s 622 in the context of the Criminal Code, can only mean a reference to a plea to an indictment: s 616. A document setting out particulars of a simple offence can never be an indictment, no matter what it purports because it does not set out the provisions for an indictable offence." Before this Court, the prosecution disclaimed any argument for the validation of the indictment in respect of count 2, whether on the basis of s 622, s 602A or any other provision of the Code. In short, the prosecution accepted the analysis of the interconnected provisions of Western Australian law to which McKechnie J referred, and with which the other judges agreed. In these circumstances it is proper for this Court to proceed on the footing that the offence provided in s 59(5) of the Censorship Act ought not to have been tried upon an indictment. It belonged exclusively to the jurisdiction of a Court of Petty Sessions. It was not within the jurisdiction of the District Court. The prosecutor's framing of the indictment to include count 2 was legally erroneous. There was no foundation in the law of Western Australia for the appellant to be tried by jury on that count. Still less could he be convicted and sentenced in respect of it. The 'proviso' in the legislative context: Given that the prosecution did not contest the correctness of this reasoning, it might appear superfluous for me to have set out the statutory provisions. However, it is not. The 'proviso', governing the disposition of the appeal in the present case, must be given effect in the context of the trial in which the suggested "wrong decision of any question of law" or a "substantial miscarriage of justice" has occurred. Those words only 39 [2005] WASCA 1 at [120]. See also at [39]-[40] per Steytler J. Kirby derive their meaning and application from their context. In order to understand the appellant's complaint of a relevant "wrong decision of any question of law" and a "substantial miscarriage of justice", it is essential to appreciate the scheme of the Western Australian legislation governing the prosecution respectively of indictable offences and simple offences. Any other approach would ignore part of the statutory context within which the 'proviso' operates. Given that the Parliament of Western Australia has gone to such pains to confine the respective jurisdictions of the District Court and of the Courts of Petty Sessions in the ways I have described, it is clear that the delineation of jurisdiction is not a mere legal trifle. Where Parliament has intended a court, such as the District Court, to have jurisdiction over the trial and punishment of simple offences, it has said so explicitly. Moreover, it has done so with high particularity. Such particularity may sometimes cause inconvenience where a mistake has occurred, as in the present case. But the provisions of the 'proviso' do not lend themselves to overriding obedience by prosecutors and trial courts to the scheme of the enacted law and the particular commands of Parliament which that law carries into effect. From the examination of the legislation, its purpose is therefore clear. Ordinarily, the District Court has no jurisdiction to try simple offences. Where, mistakenly, such offences are included by the prosecution in an indictment, there is no general power in the District Court, or any other court, to correct the mistake and to affirm the unauthorised exercise of jurisdiction. On the face of things, the decision by the prosecutor to proceed on the indictment with a simple offence and the decision of the District Court to try such an offence on indictment were legally invalid. A basic postulate of the parliamentary design has not been observed. In this respect, the person charged on an indictment in such a case has not had a trial as the written law of Western Australia contemplates. The issues Before this Court, the appellant sought leave to add a ground of appeal not argued in the Court of Criminal Appeal. The question of whether leave should be granted was reserved40. In my opinion, the appellant should have such leave, although I agree with the joint reasons41 that the point fails. The issues in the appeal, taking the added point first, are: 40 [2006] HCATrans 236 at [22]. 41 Joint reasons at [27]. Kirby The nullification of the indictment issue: Whether the inclusion in the indictment of the second count had the consequence that the entire indictment was a nullity so that it failed to engage the jurisdiction of the District Court at all, rendering the entire trial a nullity and requiring the quashing of the convictions on both counts on this basis, not simply the conviction on count 2? The proviso: fundamental error issue: Whether the inclusion of count 2 in the indictment and the conduct of the trial that then followed was such a "fundamental error" in the procedure of the trial that it went to the "root of the proceedings"? If so, the 'proviso' could have no operation with the consequence that the appellant's conviction on count 1 should also be quashed and a new trial ordered upon that count; and The proviso: miscarriage of justice issue: Whether in the event that the foregoing issues are decided adversely to the appellant, he is nonetheless entitled to succeed on the basis that the inclusion of count 2 in the indictment (and the consequences that this had for the evidence and conduct of the trial that followed) so contaminated the trial on count 1 as to occasion a substantial miscarriage of justice and to require a retrial of count 1 on this basis? The entire indictment was not a nullity The appellant's argument: Steytler J42 and McKechnie J43 in the Court of Criminal Appeal spoke of the consequences of the inclusion of a "simple offence" in the indictment, in respect of count 2, as producing a result that was, to that extent, a "nullity". The foundation for this conclusion, in each case, was the opinion that the source of the defect concerning count 2 could be traced to a lack of jurisdiction in the District Court to try the appellant on the offence stated in that count. Because there was no jurisdiction, the proceedings were a nullity and the document setting out the particulars was not, to that extent, an indictment. Both of the judges relied in this respect on an earlier decision of the Court of Criminal Appeal in Paciente v The Queen44. That also was a case where a second count, not capable of being the subject of an indictment, had been 42 [2005] WASCA 1 at [45] referring to Thompson (1975) 61 Cr App R 108; Cairns (1983) 87 Cr App R 287. 43 [2005] WASCA 1 at [120]. 44 Unreported, Court of Criminal Appeal (WA), 10 November 1992. Kirby included in the "indictment" with an indictable offence. On that occasion, the Court held that, because the second count alleged a simple offence, and was not capable of being the subject of an indictment, the initiating instrument was a "nullity in respect of that count"45. Unsurprisingly, in these proceedings, the Court of Criminal Appeal followed its own earlier authority, using the same language. Courts and nullities: The use of the description "nullity" to describe invalid administrative acts (such as the decision of an official or a tribunal made without jurisdiction46) presents difficulties given the drastic consequences that can flow from treating an apparently valid official act as if it never occurred. Such problems are greatly magnified when the official act in question is that of a court exercising judicial power. This is especially so where the court in question is a superior court and particularly where the court is (or enjoys the jurisdiction and powers of47) a State Supreme Court, having general jurisdiction and powers48. Once the jurisdiction of a court is validly invoked (as, arguably, the jurisdiction of the District Court was here on the basis of the inclusion of the first count in the indictment), it requires very clear language in the applicable legislation to produce a result that the official acts of the court are thereafter to be treated as "nullities", of no legal consequence49. This is an outcome from which courts ordinarily recoil50. Certainly, they do so when some other legal classification fulfils the consequence of a conclusion that the law (including a law as to the court's jurisdiction) has not been complied with. Other descriptions, apt to the orders of courts in such circumstances, may be "voidable" or simply "invalid" – so that the court's actions continue to have limited validity (and to 45 [2005] WASCA 1 at [42]. 46 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 47 District Court of Western Australia Act 1969 (WA), s 42. 48 Re Macks; Ex parte Saint (2000) 204 CLR 158 at 177 [20], 183-184 [48]-[49], 232 [206]; cf at 221 [173], 268-269 [307]-[308]. 49 Berowra Holdings Pty Ltd v Gordon [2006] HCA 32 at [87]. 50 Cf Ruddock v Taylor (2005) 79 ALJR 1534 at 1561-1562 [169]-[174]; 221 ALR 32 Kirby sustain official acts relying on their authority) until another court has set the orders aside51. I agree with the joint reasons that, in the present case, the District Court had jurisdiction to deal with the offence alleged in count 1. Therefore, to that extent, it had jurisdiction to try the issues presented by the indictment and by the appellant's plea to count 152. Authority supporting partial validity: A number of overseas cases support the proposition that a misjoinder of summary offences in an indictment can be cured by a court of criminal appeal quashing the conviction on the counts improperly joined. It was so decided in Callaghan v The Queen53 where Watkins LJ in the English Court of Appeal treated the problem as one to be dealt with under s 2(1) of the Criminal Appeal Act 1968 (UK) (the 'proviso'). His Lordship applied authority in the Court of Appeal including Bell54, where Lord "In our view it cannot be the law that a perfectly proper indictment containing one count alleging unlawful possession of cannabis resin can be made a complete nullity by the addition of counts contrary to rule 9 [of the Indictment Rules (UK)]". emphasised In Callaghan, Watkins LJ "prejudice or embarrassment to the appellant" was claimed to result from the Court's conclusion as to the validity of the indictment in respect of the counts properly included in it. This is not a concession made by the appellant in the present case. However, against the proposed added ground of appeal urged for the appellant, the sensible authority of the English Court of Appeal stands in contradiction. that no That authority was criticised by Professor Smith in a note addressed to the decision in Callaghan55. He suggested that "the proceedings flowing from the 51 See Smith v East Elloe Rural District Council [1956] AC 736 at 769-770 applied in Ruddy v Procurator Fiscal, Perth [2006] UKPC D2 at [55] per Lord Carswell. His Lordship described the concept of nullity as "more than a little elusive, not to say slippery". 52 Joint reasons at [11]. 53 (1991) 94 Cr App R 226. 54 (1984) 78 Cr App R 305 at 311. See also R v Newland [1988] QB 402; R v Follett 55 (1992) Criminal Law Review 191 at 192. Kirby arraignment of the appellant upon" an indictment containing a nullity "must surely be a nullity". However, this criticism was rejected in a later decision of the English Court of Appeal in Smith56. Henry LJ, for the Court, concluded that neither authority nor principle supported the consequence of total invalidation of the proceedings by reason of the inclusion of a count, or counts, that were invalidly joined57. A somewhat similar conclusion was reached by the Supreme Court of the United States in United States v Lane58, although by the application of different statutory provisions. In that case, a federal District Court had denied pre-trial motions for severance of charged offences said to have been misjoined in violation of the Federal Rules of Criminal Procedure, r 8(b). Following conviction in the subsequent jury trial on all counts, a Court of Appeals reversed the convictions and remanded the proceedings for new trials. It ruled that the misjoinder was prejudicial per se. The majority of the Supreme Court of the United States concluded that, in the face of "overwhelming evidence of guilt" the misjoinder had been "harmless". It was therefore subject to the Court's "harmless error analysis" on the basis that appellate relief was reserved to errors involving misjoinder "affecting substantial rights". By this approach, retrials are granted only if the misjoinder results in "actual prejudice" because it "had substantial and injurious effect or influence in determining the jury's verdict"59. The similarity of the issues, and of the language used, in the legislation and judicial authority concerning the 'proviso' in Australian cases is obvious. The tendency of high appellate courts in England and the United States is to deny the proposition that a misjoinder of counts, which ought lawfully to have been separated, nullifies a trial per se. Even in the context of a resulting denial of constitutional rights in the United States, it does not result in nullification of the whole proceeding on the basis that a misjoinder is prejudicial without more. In every case, a more substantive enquiry is enlivened. That enquiry is concerned with any effect that the misjoinder has had on "substantial rights" of the accused and any "substantial and injurious effect" it might have had on the jury's verdict. Conclusion: nullity not proved: The two last-mentioned considerations reflect the second and third issues in this appeal to which I will now turn. 56 [1997] 1 Cr App R 390 at 393-395. 57 [1997] 1 Cr App R 390 at 394-395. 59 Kotteakos v United States 328 US 750 at 776 (1946). Kirby However, for reasons similar to those offered by the English Court of Appeal and by the majority in the Supreme Court of the United States, I would reject the appellant's argument on his added ground. The inclusion in the indictment of a count referring to a "simple offence", triable summarily, was legally erroneous. So much is not now contested. It required the quashing of the conviction that followed the jury's verdict of guilty on count 2. But, of itself, it did not require the invalidation per se of the entire indictment or of the proceedings in the District Court which the indictment initiated. To this extent, the order of the Court of Criminal Appeal quashing the conviction on count 2 alone is sustained. The 'proviso': a fundamental error arose The appellant's argument: The appellant submitted that the error that had occurred in the conduct of his trial was to be classified as "fundamental" or going "to the root" of the trial so that the 'proviso' could not apply to rescue the outcome of the remainder of his trial. This submission was based essentially on the scheme of the Western Australian legislation dealing with the trial of indictable and simple offences, providing that simple offences should only be tried in a Court of Petty Sessions and omitting any judicial power to correct a mistaken assignment of jurisdiction where such was proved. The appellant referred to the reasoning of McKechnie J60, relying on this Court's authority. The point of distinction concerning fundamental errors was made in Wilde v The Queen61, where Brennan, Dawson and Toohey JJ explained: "It is one thing to apply the proviso to prevent the administration of the criminal law from being 'plunged into outworn technicality' (the phrase of Barwick CJ in Driscoll v The Queen62); it is another to uphold a conviction after a proceeding which is fundamentally flawed, merely because the appeal court is of the opinion that on a proper trial the appellant would inevitably have been convicted. The proviso has no application where an irregularity has occurred which is such a departure from the essential requirements of the law that it goes to the root of the proceedings. If that has occurred, then it can be said, without considering the effect of the irregularity upon the jury's verdict, that the accused has not had a proper trial and that there has been a substantial miscarriage of justice. Errors of that kind may be so radical or fundamental that by their very nature they exclude the application of the proviso." 60 [2005] WASCA 1 at [128]-[132]. 61 (1988) 164 CLR 365 at 373. 62 (1977) 137 CLR 517 at 527. Kirby In the recent re-examination of the law on the 'proviso' in Weiss v The Queen63, this Court reserved the application of the 'proviso' to "a serious breach of the presuppositions of the trial". The appellant submitted that what had happened in his trial was such a breach. Contrary arguments: The respondent argued that the proper approach to this issue was to consider the acknowledged departure from the law governing a trial on indictment and to evaluate that departure against the overwhelming evidence presented at trial on count 1. Purely formal defects have been held to engage the 'proviso'64. This was how the respondent portrayed the error that had occurred in the appellant's trial. It was no more than a mistake in the drafting of the indictment and (as has been found) it did not render the entirety of that document, or the proceeding that followed, a nullity. For the respondent, the mistake was akin to the type of peripheral errors that engaged the 'proviso' as explained by Brennan CJ in Green v The Queen65. There, his Honour said that the exception for fundamental errors: "applies only to fundamental irregularities which demonstrate that no proper trial has taken place. It does not apply when there is no more than an erroneous ruling on the admissibility of evidence or a misdirection on a particular point of fact or law arising in the trial." In Weiss66, this Court pointed out that one of the purposes of the enactment of the 'proviso' in criminal appeal statutes had been to overcome the "Exchequer rule" which had previously prevailed. By that rule67, as it was understood, the courts generally renounced any discretion to uphold the validity of a trial "where evidence formally objected to … is received by the Judge, and is afterwards thought by the Court to be inadmissible". In such a case, it had been held, the losing party had a right to a new trial. The same right appeared where other legal mistakes were demonstrated. This rule was grounded in notions inhering in the qualities attributed to the verdicts of juries in preference to the conclusions of judges. 63 (2005) 80 ALJR 444 at 455 [46]; 223 ALR 662 at 675. 64 Mackay v The Queen (1977) 136 CLR 465 at 470, 472; cf at 473. 65 (1997) 191 CLR 334 at 346-347. 66 (2005) 80 ALJR 444 at 451 [26]; 223 ALR 662 at 669. 67 Crease v Barrett (1835) 1 Cr M & R 919 at 933 [149 ER 1353 at 1359]. See Weiss (2005) 80 ALJR 444 at 448 [13]; 223 ALR 662 at 665-666. Kirby The history, language and purpose of the 'proviso' shows that it was intended to introduce a new approach. It is one by which appellate courts are afforded their own role and legitimacy to examine the substance of the complaint and to judge for themselves, on the record, whether any error requires a retrial of the accused (or in exceptional cases an acquittal). Similar debates have arisen in the United States of America in the context of the jurisprudence on "harmless error". They are reflected in the opinions written in Lane68. Whilst, in that case, the majority of the Supreme Court upheld the jury's verdicts on the counts improperly joined in the charges against the accused, Brennan J (with the concurrence of Blackmun J) and Stevens J (with the concurrence of Marshall J) reached the opposite conclusion. Those opinions reflect the debates that have occurred in this Court in the present appeal. Thus, in Lane, Brennan J, by tracing the statutory developments in the United States, emphasised that reversal should be "limited to prejudicial errors"69. He acknowledged that the test for harmless constitutional error was stricter than for its statutory counterpart70. He concluded that a misjoinder of charges would not ordinarily rise to the level of having a "substantial influence" on the outcome, even in cases involving a constitutional claim71. However, he agreed with Stevens J that an exception arose where the whole of the statutory context showed that the legislation that had been breached was designed to protect "wider values". He did not consider that misjoinder of charges alone fell within this exception72. The dissenting order of Brennan J in Lane, agreeing with Stevens J and supported by Blackmun J and Marshall J, rested on the shared opinion of the minority judges that the harmless error enquiry was normally a task for the intermediate court, not the Supreme Court, given the requirement to examine the entire record thoroughly and the difficulty of discharging that requirement in the final court because of the many demands upon it. Having regard to its other duties, the minority feared that the final court would be bound to perform this important function "perfunctorily"73. 69 474 US 438 at 458 (1986). 70 474 US 438 at 460 (1986). 71 474 US 438 at 461 (1986). 72 474 US 438 at 462 (1986). 73 474 US 438 at 464 (1986). Kirby On the other hand, Stevens J, whilst sharing that opinion, was also of the view that harmless error analysis was inappropriate in at least some cases where charges had been invalidly joined and a jury trial conducted on that basis. He said that such exceptions arose74: "in at least three situations: (1) when it is clear that a statute or Rule was not intended to be subject to such a rule; (2) when an independent value besides reliability of the outcome suggests that such analysis is inappropriate; and (3) when the harmlessness of an error cannot be measured with precision". In the opinion of Stevens J, misjoinder of a charge in the proceedings "clearly falls" into the first category. Partly this was so because of the "deep abhorrence" of the law to the notion of "guilt by association". It was, in effect, part of the law's highly specific approach to criminal charges75. The source of the rule forbidding the joinder of charges appeared in a separate statutory provision. That provision was one which the legislature intended to be observed. Conclusion: a basic error: I accept that different conclusions are available on this issue. The nature of the controversy and the breadth of the language of the 'proviso' virtually assures the existence of differences of judicial views. Such differences may reflect the diverse values that judges accord to considerations of principle and pragmatism, as they regard them. Those differences appear in many cases in this Court concerned with the 'proviso'76. They are also reflected in the foregoing differences of opinion in the United States Supreme Court. I leave aside, in this case, any considerations derived from international human rights law77. I pass by the defects of a trial on the record, for mistake at the trial is the very presumption inherent in the application of the 'proviso' by an appellate court78. Additionally, that consideration is of less significance in this 74 474 US 438 at 474 (1986) (footnotes omitted). 75 See in Australia R v De Simoni (1981) 147 CLR 383 at 389, 395; cf MacKenzie v The Queen (1996) 190 CLR 348 at 367. 76 See, eg, Green v The Queen (1971) 126 CLR 28 at 31; Jones v The Queen (1997) 191 CLR 439; Darkan v The Queen [2006] HCA 34. 77 See Darkan [2006] HCA 34 at [139] referring to Art 14.2 of the International Covenant on Civil and Political Rights. 78 Darkan [2006] HCA 34 at [143] referring to Weiss (2005) 80 ALJR 444 at 454 [39]; 223 ALR 662 at 673. Kirby case because of the admissions made for the appellant at the trial of count 1 and the narrow focus of the resulting contest. The critical consideration on this issue is only appreciated when the detailed Western Australian legislation on criminal procedure is fully understood. That is why I have set it out above. When that is done, it can be seen that the bifurcation of indictable and simple offences, incapable of explicit repair in case of a mistake, was a deliberate policy stated in the written law made by the Parliament of Western Australia. In the face of such particularity in the enacted law, I am unconvinced that the general language of the 'proviso', read in its context, authorises a judge to treat a breach of the written law as immaterial or simply to be repaired by invoking the 'proviso'. In effect, I agree with the approach of Stevens J in Lane79: "The harmfulness of misjoinder is … the type of error that has consequences that are difficult to measure with precision. These concerns may or may not outweigh the societal interests that motivate the Court today, but they are surely strong enough to demonstrate that the draftsmen of the Federal Rules acted responsibly when they adhered to the time- honored rule [on misjoinder]. The misjoinder Rule that they crafted is clear, and should be respected. Misjoinder affects 'substantial rights', and should lead to reversal." By parity of reasoning, the misjoinder of count 2 in the prosecution indictment of the appellant did not render that indictment, or the proceedings it put in train, a complete nullity. But it was contrary to the express law of Western Australia and, so far as count 2 was concerned, could not be cured by consent or by judicial authorisation. In such circumstances this Court should give effect to the language and purpose of the specific statute law of Western Australia on that subject and treat it as fundamental (as matters of jurisdiction commonly are). The appellant was completely innocent of any part in the error that occurred. The decisions to present the defective indictment, and to proceed with the trial upon it, were decisions of officials acting for the State. The case is an important one for the appellant and for the community. The appellant and the community are entitled to have a retrial that conforms to the written law and has no jurisdictional flaw involving the inclusion of an extraneous non-indictable accusation80. 79 474 US 438 at 475 (1986) (footnotes omitted). 80 Truong v The Queen (2004) 78 ALJR 473 at 510 [154]; 205 ALR 72 at 110; Fingleton v The Queen (2005) 79 ALJR 1250 at 1281 [157]; 216 ALR 474 at 515- Kirby The 'proviso': substantial miscarriage of justice is shown The appellant's argument: This conclusion is sufficient to support an order allowing this appeal. However, in the Court of Criminal Appeal, McKechnie J offered a second reason for such an order. This was that, apart from undermining the basic postulate of a lawful trial, the inclusion of count 2 in the indictment and the subsequent trial upon it occasioned a substantial miscarriage of justice to the appellant by permitting the intrusion of extraneous information, in the form of an invalid criminal accusation, evidence and directions that had nothing to do with the proper trial on count 1. Such information might have influenced the jury's verdict on that count81. Explaining his conclusion on this point, McKechnie J said82: "The essence of the prosecution case was that the applicant was in possession of prohibited material, some of which was child pornography and some of which was obscene and indecent material. There is no necessary causal link in the chain of reasoning which required the prosecution to lead evidence of the possession of obscene and indecent material to sustain proof on count 1. It may be that the evidence would be admissible but the applicant was denied the opportunity of advancing an argument to the contrary by reason of the joinder of counts 1 and 2." Contrary arguments: The arguments against this proposition are expressed in the joint reasons83. They include the narrowness of the issue upon which the jury were ultimately required to focus by reason of the admission made for the appellant at trial (effectively the "possession" issue); the evidence of admissions relevant to that issue allegedly made by the appellant at the time of the initial interview; the difficulties for the theory of an alternative offender (a hacker) because of the coincidence of the appellant's visits to the computer laboratory and the timing of the downloading of the images; the suggested arguability of the relevance of the material the subject of count 2 to proof of the offence in count 1; and the affirmative need which the appellant might have felt to prove the receipt of at least one of the images referred to in count 2 in order to establish the downloading of such images after the time that he alleged his own access to the computer facility was disengaged. 81 [2005] WASCA 1 at [133]. See also Conway v The Queen (2002) 209 CLR 203 at 82 [2005] WASCA 1 at [133]. 83 Joint reasons at [24]-[30]. Kirby I give due weight to each of these arguments. On the other hand, the appellant's trial was affected by the inclusion in it of a separate and different criminal accusation concerned with the possession of indecent or obscene articles, repeatedly described in the trial as relating to acts of "bestiality" (which in law ordinarily means the offence of sexual penetration by or of an animal84). It is true that the admission, made at the outset of the trial (to the effect that the images in the articles relevant to the second count were "indecent or obscene") obviated the jury's examination of the actual material (with the additional prejudice that might have entailed). Nevertheless, the record of the trial is repeatedly interrupted with reminders before the jury that the appellant was facing two counts not one, the second of which involved articles including images of "bestiality". This was referred to in the examination of Mr Bradley Frazer, a fellow student and friend of the appellant. It was repeatedly referred to in the examination of Detective Thomas. It was explained in the closing address by the appellant's trial counsel in describing the evidence relating to the second count. It was referred to, and explained briefly, in the trial judge's summing up. True, the mentions were confined. However, they were unlikely to have been forgotten by the jury. "Bestiality" is an unusual and vivid word, rare in everyday speech. The appellant was tarred with the accusation that necessitated repeated reference to it in his trial. In the minds of the jury, the references doubtless would have conjured at least some notion of sexual activity with animals which some of the jurors may have found especially disgusting. In an age when indecent or obscene materials are available in Australia in large quantities and great varieties, it might be expected that the jury would treat the accusation of possessing "bestiality" images with worldly commonsense. But they might not have done so. It was difficult enough for the appellant to contest the charge concerning child pornography in the first count without adding to his burdens (invalidly as it turns out) another accusation involving images of "bestiality". Because we cannot know the way that the jury reasoned to their conclusion (and because they were instructed by the trial judge to consider count 2 separately and to reach a unanimous conclusion on that count), it is possible that the inclusion of reference to the "bestiality" images excited antagonistic feelings on the part of at least some jurors85. Of course, the jury may have treated the "bestiality" images as relatively harmless, a view which the Parliament of Western Australia appears to have 84 Cf Bourne (1952) 36 Cr App R 125. 85 Cf Domican v The Queen (1992) 173 CLR 555 at 565-566; Festa v The Queen (2001) 208 CLR 593 at 654-655 [202]-[204]; Darkan [2006] HCA 34 at [157]- Kirby taken by reducing the penalty for possession of such indecent or obscene articles, doubtless in response to contemporary social realities86. On the other hand, there are 10 categories of images that are reportedly used as part of the sexual repertoire of persons with a sexual interest in children87. The categories were developed by the COPINE Centre in Europe. Similar classifications have been accepted in England in Oliver's case88. The categories of child pornography developed by the English Court of Appeal and by COPINE range from "nudist" to the most serious category, described as "sadistic/bestiality". This is COPINE Category No 10 out of 10 or Category No 5 out of 5 of the English Court of Appeal. In each case it is the most serious category. Depending on the actual images in the particular case, it cannot be said that "bestiality" images are universally regarded as trivial or insignificant. At least in conjunction with child pornography, they may be viewed as very serious indeed. For all that this Court knows, the jury (or members of it) might have taken a grave view of the subject. If Scalia J in the Supreme Court of the United States in Lawrence v Texas89 could include "bestiality" by name amongst a catalogue of evils deserving community denunciation and justifying proscriptive legislation on the grounds of morality, we in this Court can hardly deny the possibility that some Australian jurors might share the same opinion. The impermissible inclusion of the second count in the indictment deprived the appellant of a trial that was free from any reference to this extraneous factor. It deprived him of the chance of avoiding this added complication in his trial. Specifically, it deprived him of the forensic choices that the separate trial of the offences referred to in the two counts would have entailed. Trials of offences of possessing child pornography are sensitive and difficult because they occur in a society concerned about child abuse but flooded with erotic images90. The response of individual jurors to accusations of the possession of images of "bestiality" is particularly hard for appellate judges to 86 See joint reasons at [4] referring to Censorship Amendment Act 2003 (WA), 87 Krone, "Issues facing judges in sentencing online child pornography offenders", (2006) 18 Judicial Officers' Bulletin 25 at 26-28. 88 Oliver [2003] 1 Cr App R 28 at 466-467 [10]. 89 539 US 558 at 590 (2003). 90 Howitt, "Pornography and the paedophile: Is it criminogenic?", (1995) 68 British Journal of Medical Psychology 15; Marshall, "The Use of Sexually Explicit Stimuli by Rapists, Child Molesters, and Nonoffenders", (1988) 25 Journal of Sex Research 267. Kirby assess and predict. The risk of a substantial miscarriage of justice from such contamination is not negligible. Conclusion: a substantial miscarriage shown: I therefore conclude on this issue in the same way as McKechnie J did in the Court of Criminal Appeal. The appellant was legally entitled to have the count alleging possession of child pornography decided by the jury without any immaterial reference to a criminal accusation of possessing other images, including images of bestiality. With all respect to those of the contrary view, I do not believe that the prosecution, in a trial limited to possession of child pornography, would attempt to prejudice the jury by including evidence of an extraneous and different form of material including of bestiality. The care taken in this trial to avoid showing the jury the actual images indicates the correct approach, which the prosecution observed. Nor do I consider that the tender of such material would have been permitted in a trial if that trial had been limited to the indictable offence of possession of child pornography. A judge guarding the fairness of the conduct of such a trial would be properly careful to restrict extraneous, and possibly prejudicial, evidence. By impermissibly charging the two offences in the one indictment, an inter-mixture necessarily occurred. Descriptions or conceptions of the contents of the images became inevitable. It is that inter-mixture, before the jury, that presents the risk of a substantial miscarriage of justice. It is that risk that withholds the application of the 'proviso'. This is not a case where the trial judge was able to correct the error of law at the trial by giving accurate instructions to the jury91. On the contrary, the impermissible misjoinder was not noticed until after the trial. Consequently, the trial judge gave the jury directions on the legal requirements of the second count. He received their verdict on that count. And he proceeded to enter a conviction on that basis which, it is common ground, was legally invalid. Conclusion and orders The offence of which the appellant has been convicted is a very serious one for him, a young man who convinced the trial judge that he was not motivated by paedophilic designs92. To carry the burden of such a conviction in life demands a trial freed of the errors that occurred here. The trial was 91 Nudd v The Queen (2006) 80 ALJR 614 at 637 [110]; 225 ALR 161 at 189-190. 92 Remarks on sentencing of Muller DCJ, R v Bounds, unreported, District Court of Western Australia, 15 July 2003 at 215. Kirby fundamentally flawed by the impermissible inclusion of an irrelevant and legally inadmissible criminal accusation. The trial also involved a substantial miscarriage of justice because such inclusion permitted contamination of the evidentiary considerations before the jury by a factor that might have prejudiced the appellant. Ultimately, my conclusion is that stated by Gleeson CJ, and given effect by this Court, in Antoun v The Queen93: "Strong as the case against the [appellant] may be, [he was] entitled to a fair hearing." The appeal should be allowed. The judgment of the Supreme Court of Western Australia (Court of Criminal Appeal) should be set aside. In place of that judgment it should be ordered that the appeal to that Court be allowed; the appellant's conviction quashed; and a new trial ordered. 93 (2006) 80 ALJR 497 at 503 [23]; 224 ALR 51 at 57.

HIGH COURT OF AUSTRALIA AND APPELLANT THE TREASURER OF THE STATE OF NEW SOUTH WALES RESPONDENT Zhu v The Treasurer of the State of New South Wales [2004] HCA 56 17 November 2004 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 20 December 2002 and, in place thereof, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: J C Kelly SC with S A Benson and M F Galvin for the appellant (instructed by Walker Hedges & Co) B W Walker SC with M B J Lee for the respondent (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Zhu v The Treasurer of the State of New South Wales Tort − Interference with contractual relations − Contract between the plaintiff and TOC Management Services Pty Ltd ("TOC") authorised and obliged the plaintiff to sell memberships in an "Olympic Club" to residents of China − Sydney Organising Committee for the Olympic Games ("SOCOG") interfered with the plaintiff's contract − Whether SOCOG had obligations to protect intellectual property under the Olympic Charter and the contract by which Sydney hosted the 2000 Olympic Games − Whether the plaintiff contravened the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth), s 12 − Whether SOCOG's interference with the plaintiff's contract was justified. Tort − Interference with contractual relations − Defence of justification − TOC owed contractual obligations to SOCOG not to engage in certain conduct − Contract between TOC and the plaintiff obliged the plaintiff to engage in conduct contrary to the contract between TOC and SOCOG − Whether SOCOG held "proprietary" or "quasi-proprietary" rights − Whether SOCOG held an "actually existing superior legal right" − Whether SOCOG's conduct was "reasonably necessary" − Whether SOCOG was justified in interfering with the contract between TOC and the plaintiff. Contract − Deed Poll − Plaintiff executed Deed Poll in favour of SOCOG − Plaintiff was required to execute Deed Poll pursuant to contract between the plaintiff and TOC − Plaintiff did not know there was a separate contract between SOCOG and TOC − Whether Deed Poll and contracts inconsistent − Construction of Deed Poll and contracts − Whether the plaintiff's activities required SOCOG's prior written consent − Whether the plaintiff breached the Deed Poll or his contract. Words and phrases – "interference with contractual relations", "justification", "proprietary right", "quasi-proprietary right", "superior legal right", "reasonably necessary". Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth), s 12. Sydney Organising Committee for the Olympic Games Act 1993 (NSW). GLEESON CJ, GUMMOW, KIRBY, CALLINAN AND HEYDON JJ. It is a truth almost universally acknowledged – a truth unpatriotic to question – that the period from 15 September 2000 to 1 October 2000, when the Olympic Games were held in Sydney, was one of the happiest in the history of that city. The evidence in this case, however, reveals that the preparations for that event had a darker side. Mr Peter Tao Zhu ("the plaintiff") was born in the People's Republic of China ("China") in 1962. He migrated to Australia in 1989 and became an Australian citizen on 16 April 1997. On 11 March 1999, the plaintiff entered an agreement ("the Agency Agreement") with TOC Management Services Pty Ltd, the second defendant ("TOC"). It authorised and obliged him to sell memberships in an "Olympic Club" ("the Club") to residents of China. It is now not controversial that the Agency Agreement was breached when TOC purported to terminate it on 5 November 1999. Nor is it now controversial that TOC was persuaded to commit that breach by the first defendant, the Sydney Organising Committee for the Olympic Games ("SOCOG"). SOCOG also interfered with the Agency Agreement in two other ways – by preventing TOC from performing it, and then by causing the New South Wales police to arrest the plaintiff. In December 1999, the plaintiff sued for interference with contract. Bergin J, sitting in the Equity Division of the Supreme Court of New South Wales, conducted a 20 day trial between 30 July and 11 September 2001. On 23 November 2001, she gave judgment for the plaintiff against SOCOG in the sum of $4,234,319. That figure included $95,000 in aggravated damages for injury to the plaintiff's feelings as a result of the arrest and $200,000 in exemplary damages by reason of SOCOG's "high-handed and reprehensible" behaviour in relation to all three interferences1. After hearing argument on 29 and 30 October 2002, the New South Wales Court of Appeal (Sheller, Giles and Hodgson JJA) allowed an appeal on 20 December 20022. It found that SOCOG had established the defence of justification. It said that SOCOG had a right and duty under the Sydney 2000 1 Zhu v Sydney Organising Committee for the Olympic Games [2001] NSWSC 989 2 Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380. Kirby Callinan Games (Indicia and Images) Protection Act 1996 (Cth) ("the Indicia Act") and the Sydney Organising Committee for the Olympic Games Act 1993 (NSW) ("the SOCOG Act") to interfere with the Agency Agreement, because the plaintiff had allegedly made unauthorised use of the name "The Olympic Club", the "Games Logo" and a "Club Logo". The Games Logo depicted, below lines suggesting the roof of the Sydney Opera House in silhouette, a figure of a runner above the words "Sydney 2000" and five interlinked rings well known as a symbol of the Olympic movement (the "Olympic Symbol"). The Club Logo incorporated the Games Logo in conjunction with the words "The Olympic Club". The name "The Olympic Club", the Games Logo and the Club Logo are referred to below as "the intellectual property rights". By special leave granted on 2 December 2003, the plaintiff has appealed to this Court. Various questions arise about the legislative, contractual and other arrangements pursuant to which the Olympic Games were conducted in Sydney in 2000, and about the defence of justification in the tort of interference with contract. These questions should be answered favourably to the plaintiff and the appeal should be allowed. The issues in the appeal were numerous and complex. Discussion of them below is organised as follows. Background events Parties The trial SOCOG's arguments in the Court of Appeal The Court of Appeal's conclusion and assumption The relevant instruments Olympic Charter Host City Contract Establishment Agreement Licence Agreement Deed Poll The Court of Appeal's reasoning SOCOG's complaints about the plaintiff's conduct in Australia SOCOG's complaints about the plaintiff's conduct in China Kirby Callinan SOCOG's contentions on the plaintiff's chain of title The plaintiff behaved lawfully in Australia Effect of cl 3.3(h) of the Licence Agreement on cl 3.3(g) Clauses 1 and 3 of the Deed Poll Effect of cl 5 on cll 1 and 3 of the Deed Poll Section 12(1) of the Indicia Act The letter of 30 August 1999 The legality of the plaintiff's conduct in China Olympic Charter Bye-law, par 11.2 Clause 9.1(a) of the Agency Agreement Section 12(1) of the Indicia Act Clauses 3.3(g) and (h) of the Licence Agreement The Deed Poll SOCOG's argument on justification Justification: the correct approach Preliminary difficulties in SOCOG's argument Interference in legal relations between other parties Kitto J's analysis of contractual rights as "quasi-proprietary" [123]-[124] The status of Kitto J's reasoning Authorities for a wider approach Was SOCOG's conduct "reasonably necessary"? Conclusion on defence of justification Justification questions which need not be considered Orders Background events SOCOG. SOCOG was constituted by the SOCOG Act. Section 6(1) of the SOCOG Act gave SOCOG the same legal capacity and powers as a company under the Corporations Law, and hence the legal capacity and powers of a natural Kirby Callinan person. Section 9(1) of the SOCOG Act provided that the primary objective of SOCOG was to organise and stage the Games of the XXVII Olympiad, as the Act grandly called them, in Sydney in the year 2000, in accordance with the rights and obligations conferred and imposed under the Host City Contract. That contract was a contract between the International Olympic Committee ("IOC"), the Council of the City of Sydney and the Australian Olympic Committee Inc ("AOC") dated 23 September 1993. SOCOG became a party to the Host City Contract on 4 February 1994. Section 10(2)(d) of the SOCOG Act provided that one of SOCOG's functions was "establishing a marketing program in consultation with" the IOC and the AOC. Section 10(2A) provided that SOCOG "has and always has had power to enter into agreements … for the granting of sponsorship or licence rights or rights relating to the manufacture, distribution, marketing or sale of goods or services associated with the Games". Section 11(a) and (b) provided that in exercising its functions SOCOG was to take into account, to the fullest extent practicable, the Olympic Charter and the Host City Contract. Under a "Bye-law" to rr 12-17 of Ch 1 of the Olympic Charter ("the Olympic Charter Bye-law"), SOCOG was obliged by par 10 to secure compliance by third parties with the Bye-law, par 11.2 of which forbad the use of rights (including the intellectual property rights) in China or Australia without the written approval of the Chinese Olympic Committee and itself respectively3. Clause 48(iii) of the Host City Contract conferred an entitlement on the IOC Executive Board to terminate that contract and withdraw the Games from Sydney if SOCOG violated that contract, the Olympic Charter or the applicable law4. The Olympic Club Trust. On 26 September 1997, a trust deed was executed establishing the Olympic Club Trust. The trustee was TOC. The unit holders were the AOC, SOCOG and Synthesis Consulting Pty Ltd ("Synthesis"). Synthesis was a company the directors of which included two directors of TOC, namely Mr William Sherbon ("Mr Sherbon") and Mr Stefan Wisniowski ("Mr Wisniowski"). Among the shareholders of both Synthesis and TOC were Mr Sherbon and companies associated with Mr Sherbon and Mr Wisniowski, Sherbon and Associates Pty Ltd and Bipolar Group Pty Ltd. From 17 September 1997, Mr Keith Wyness ("Mr Wyness") began serving as Managing Director of TOC. 3 See [55] below. 4 See [56] below. Kirby Callinan The Olympic Club Establishment Agreement. On 5 December 1997, TOC, SOCOG, AOC and Synthesis entered into The Olympic Club Establishment Agreement ("the Establishment Agreement"). In essence, the Club was to comprise a series of contractual relationships between TOC and individual members through which members could obtain various advantages, particularly "the Olympic Benefits". The Olympic Benefits included tickets, or the chance of obtaining tickets, to events at, and related to, the Olympic Games, and rights to participate in other activities related to the Olympic Games. The Club Committee. The Establishment Agreement made provision for the establishment of the Club Committee. The Committee was to have seven members. SOCOG appointed two, one being Mr Paul Reading ("Mr Reading"), the Commercial Director of SOCOG. The AOC appointed two. Synthesis appointed two – Mr Sherbon and Mr Wisniowski. The seventh member was Mr Wyness, as "chief executive officer" of TOC. While the role of TOC was to manage the Trust and the Club from day to day, the role of the members of the Club Committee was to oversee TOC and the Club in a manner akin to that of directors in a company. The Olympic Club Licence Agreement. On 14 May 1998, SOCOG and TOC entered an Olympic Club Licence Agreement ("the Licence Agreement") by which SOCOG recognised TOC's right to use, inter alia, the intellectual property rights in conjunction with the operation of the Club. The Licence Agreement also contained provisions permitting TOC to license others to use them. The emergence of the plaintiff. In December 1997, Mr Angus Noble ("Mr Noble") began acting as the Commercial Director of TOC. Through a company engaged by TOC to sell Club memberships to the general public, Mr Noble was introduced to the plaintiff, who thought there would be a market for selling memberships to residents of China as part of an accommodation and travel package for the Olympic Games. Negotiations between the plaintiff and Mr Noble culminated in the execution of five important documents on 8, 10 and 11 March 1999. The letter of clarification dated 8 March 1999. On 8 March 1999, Mr Noble signed a letter to the plaintiff which the plaintiff also signed. The document set out the principles to be embodied in the Agency Agreement between the plaintiff and TOC, executed on 11 March 1999. Kirby Callinan The first letter of authority. Also on 8 March 1999, Mr Wyness signed a letter as Managing Director of TOC over the common seal of TOC in the following terms: "To whom it may concern. Mr Peter T Zhu is an Authorised Agent of The Olympic Club and is hereby Authorised on an exclusive basis in the territory of the [People's] Republic of China to sell Olympic Club international memberships to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games as a component of a travel and accommodation package, for the period 1 April 1999 to 30 June 1999." That letter was typed on the letterhead of the Club, which included the Club Logo. The letter to the Chinese Olympic Committee. On 10 March 1999, the plaintiff was supplied by Mr Noble as Commercial Director of TOC with a letter in the following terms: "Chairman Chinese Olympic Committee Dear Sir, The Olympic Club of the Sydney 2000 Olympic Games is pleased to advise that Mr Peter Tao Zhu has been chosen as the Exclusive Authorised Agent of the Club to market International Memberships to residents of the [People's] Republic of China in China. The Olympic Club has chosen Mr Zhu as its first exclusive Authorised Agent for Overseas Memberships after lengthy consultations, discussions and investigations. We are therefore pleased to introduce Mr Zhu to your Committee. We respectfully request you provide such assistance as your Committee deems appropriate to Mr Zhu in his work of enlisting People's Republic of China residents to join The Club via these International Memberships." That letter too was typed on the letterhead of the Club and displayed the Club Logo. Kirby Callinan The Agency Agreement. On 11 March 1999, the plaintiff and TOC executed the Agency Agreement. It appointed the plaintiff as exclusive "Agent" for an "Initial Term" from 1 April 1999 to 30 June 1999, with an "Option" for a "Further Term" from 1 July 1999 to 30 September 2000. The plaintiff was obliged to sell 2,000 International Memberships to "Mainland Chinese" in the Initial Term, ie by 30 June 1999. That was a condition precedent to the exercise of the Option. The plaintiff was obliged to sell a further 8,000 International Memberships in the Further Term, ie by 30 September 2000. In consideration of his appointment as Agent, the plaintiff had paid TOC A$30,000 on 8 March 1999. Mr Noble handed the plaintiff the original of the letter of authority dated 8 March 1999, pursuant to cl 7.1(b) of the Agency Agreement. The Deed Poll. Pursuant to a promise to do so in cl 9.1(b) of the Agency Agreement, the plaintiff signed a Marketing Restriction Deed Poll ("the Deed Poll") in favour of SOCOG which restricted his right to use the intellectual property rights without SOCOG's written consent. The plaintiff's activities. Mr Noble supplied the plaintiff with Club letterhead, Club satchels and other merchandising material for use in his agency, which included material bearing the Club Logo. The plaintiff began to endeavour to attract Club members. He appointed various sub-agents, including Mr Zhang Zhao Ming. He met senior Chinese officials both in Sydney and in China, and obtained from them oral but not written approval to solicit memberships in China. The exercise of the Option and the second letter of authority. The plaintiff informed Mr Noble that he was having trouble meeting the target of selling 2,000 memberships by 30 June 1999, which would mean that he could not satisfy one of the conditions precedent to exercising the Option. Mr Noble agreed to allow its exercise and extend the term to 31 December 2000, provided the plaintiff paid a further $200,000. In fact, the plaintiff paid $230,006 on or about 31 May or 1 June 1999, and the Agency Agreement was extended to 31 December 2000. The plaintiff was given a letter of authority, dated 4 June 1999, and signed by Mr Wyness, which was in identical terms to that dated 8 March 1999, save that the term was changed to the period 1 April 1999 to 31 December 2000. The trial judge found that, within SOCOG, Mr Reading was "well aware" of that letter. The plaintiff was also given credit for 743 International Memberships, which were available for placement among his customers. Thereafter, assisted by Mr Zhang Zhao Ming, he continued to work to attract members. The transfer of the Club to SOCOG. Unknown to the plaintiff, by July 1999 the Club was encountering serious financial difficulties. The money it had Kirby Callinan obtained from the plaintiff was one of the few things keeping it alive. The trial judge found that the exercise of the Option and the extension of the Agency Agreement on 4 June 1999 took place "in circumstances of pressing financial need in TOC", and, like the entry into the Agency Agreement on 11 March 1999, was attended "with some sense of urgency". The trial judge also found that "pressure was placed on the plaintiff to sell as many memberships as possible up to a maximum 10,000 as quickly as possible so that TOC would receive funds from the plaintiff to ease its pressing financial burden." On 22 July 1999, Mr Sherbon informed SOCOG representatives and the six other members of the Club Committee that Ernst & Young had advised that TOC should be put into administration immediately. He said he was gravely concerned that such "regrettable action" would create public controversy and have a significant negative impact on the Club members; that it would further seriously erode "the general public's perception of SOCOG and the Olympic Movement" and that it would "reflect poorly on the Government". SOCOG takes over the Club. As a result of a mediation on 30 July 1999, it was agreed by AOC, SOCOG, TOC and Synthesis that SOCOG should take over responsibility for running the Club. This was announced in a press release on 3 August 1999. Although it contained some terminological inexactitudes, such as saying that the purpose of the transfer was to achieve "synergistic benefits", it did truthfully say that SOCOG was to "assume sole control of the Olympic Club". That process was overseen by Mr Reading. Ms Moiya Ford ("Ms Ford") was seconded from the ACT Government to work for SOCOG as Program Manager of the Club. She exerted SOCOG's control by giving directions to Mr Wyness, who reported to her. Counsel for SOCOG conceded that thereafter the Club and TOC were in all respects acting in accordance with the wishes of SOCOG. On 24 August 1999, Mr Reading asked Mr Wyness: "Who is Peter Zhu – I have seen some documents in which you refer to him as being an agent of the Olympic Club?" Those documents were the second letter of authority dated 4 June 1999 and the letter of clarification of 8 March 1999 setting out key aspects of the relationship contemplated by the Agency Agreement. Mr Wyness replied: "Some sort of arrangement has been reached with Peter Zhu regarding the Olympic Club in China". This was an extraordinary reply, in view of: the fact that Mr Wyness had signed the first letter of authority, dated 8 March 1999, and the second letter of authority dated 4 June 1999; the fact that he must have been well aware of TOC's execution of the Agency Agreement (which had been contemplated in the letter of clarification of 8 March 1999 and cl 7.1(b) of which required the first letter of authority to be provided to the plaintiff); and Kirby Callinan conversations which the plaintiff had had with Mr Wyness and Mr Noble in the previous months. The trial judge found that towards the end of that conversation, Mr Reading said: "Well it's a bit of a worry[,] I don't want loose cannons running around – I know we want to try to make this thing work but you know the position regarding getting approvals – the Police are looking at this fellow – my advice to you is that you protect yourself by [reining] him in – if you had plans for China I suggest you had better do what you can to stop them. I don't want [TOC] or SOCOG to be exposed." SOCOG assures the Chinese Government that the Club is genuine. The day after that conversation, on 25 August 1999, Mr Wang Zhiang, Cultural Consul of the People's Republic of China on the Consul General's staff in Sydney, sought and received assurances from SOCOG officers at SOCOG's premises in the absence of the plaintiff that the Club was "genuine". One of those officers sent Mr Reading a written report on the meeting, expressing disquiet about the "deal" to bring 10,000 Chinese members of the Club to Sydney. Mr Reading wrote on that message: "Please tell Wang that no deal is in place." The trial judge found that there was no evidence that Mr Wang Zhiang was so informed; had he been, the information would not have been correct, since the Agency Agreement was still on foot. The Deed of Release and Termination. On 13 September 1999, TOC, SOCOG, AOC and Synthesis executed a Deed of Release and Termination. SOCOG agreed to take over the obligations of TOC under the member contracts. It was agreed that the Trust would terminate from 20 September 1999. That Deed thus purported to effect a novation of the member contracts, though without the necessary consent of the members. Of more immediate importance, it also made no valid provision for the interests of other persons who had contracts with TOC as trustee, such as the plaintiff. The existence and terms of the Deed were to be kept confidential. Mr Reading's direction to Mr Wyness to terminate the Agency Agreement. In mid-September 1999, Mr Reading telephoned Mr Wyness and asked him to terminate the relationship with the plaintiff. The breach of the Agency Agreement. The plaintiff was not informed of the events just described until he had a conversation with Mr Wyness on 21 October 1999. The plaintiff protested about SOCOG's wish to terminate the Agency Agreement and Mr Wyness undertook to see whether he could help. Kirby Callinan Mr Wyness, after some paltering, wrote the following letter to the plaintiff on 5 November 1999: "We refer to the agency agreement executed in March 1999, for the Territory of the People's Republic of China (the agreement). We further refer to our meeting of Tuesday October 19 [scil October 21] 1999 at which time we notified you that your appointment as an agent of the Olympic Club had terminated on the following grounds: The term of appointment was stated in the agreement to terminate on 30 June 1999 subject to you exercising your option to extend that term, and you failed to exercise your option. In any event, you failed to perform the preconditions to exercising your option which are set out in clause 5 of the agreement, in that you only sold 743 memberships as at October 19 1999 in breach of your agreement to sell 2000 memberships. you failed to pay AUD$700,000 by 30 June 1999 or at all. At our meeting you agreed your appointment had been terminated. The Olympic Club will of course fulfil its contractual obligations with respect to the memberships sold by you and we await notification from you as to when you require delivery of the membership kits. We otherwise call upon you to return all property which belongs to or was supplied to you by the Olympic Club and you should cease to associate yourself with or represent yourself as having any form of association with the Olympic Club. We thank you for your assistance and cooperation." On 18 November 1999, the plaintiff replied to that letter, took issue with its allegations and maintained that the Agency Agreement was "still in full force and effect". The arrest and prosecution of the plaintiff. On 6 December 1999, the plaintiff was arrested on his arrival at Sydney Airport from China. He was detained for 12 hours and in that period his house was searched. His passport Kirby Callinan and all the documents relevant to the conduct of the Agency Agreement were seized and retained for some months. On 26 April 2000, the plaintiff was charged with obtaining money by deception and attempting to obtain money by deception. On 16 October 2000, the Director of Public Prosecutions advised the plaintiff's solicitor that all charges would be withdrawn. Parties On 22 December 1999, the plaintiff commenced proceedings against SOCOG, TOC and Mr Wyness. Later, he arrived at a settlement with Mr Wyness. His case against TOC was stayed when a liquidator was appointed to TOC in August 2000. The trial judge gave judgment against the only remaining defendant, SOCOG. By the time the Court of Appeal allowed the appeal, the present respondent had been substituted for SOCOG5. It is convenient to refer to the party opposing the plaintiff at all material times as "SOCOG". The trial SOCOG concessions. SOCOG conceded that TOC remained legally bound to perform the Agency Agreement at least until its purported termination on 5 November 1999. It conceded that it instructed TOC to terminate the Agency Agreement, and that the other ingredients of the tort of interference with contract were present. It conceded that the grounds for termination stated in the letter of 5 November 1999 were not soundly based. But in all other respects SOCOG fought the trial hard. The plaintiff's credibility. SOCOG criticised the plaintiff's reliability and credibility on numerous grounds6. The trial judge rejected all these attacks. 5 With effect from 31 October 2001, s 55 of the SOCOG Act transferred the assets, rights and liabilities of SOCOG to the Olympic Co-ordination Authority. Section 6 of the Olympic Co-ordination Authority Dissolution Act 2002 (NSW) then transferred those assets, rights and liabilities to the present respondent with effect from 1 July 2002. It even obtained a 10 day adjournment to call named witnesses to give evidence via video link from China with a view to giving the lie to a particular aspect of the plaintiff's evidence, but did not in fact call them. Kirby Callinan Invalid termination of Agency Agreement. The trial judge found that TOC's purported termination of the Agency Agreement on 5 November 1999 was not valid. She rejected SOCOG's arguments that the letter of 4 June 1999 varying the Agency Agreement and consenting to the exercise of the Option was not a contractual document; that the plaintiff procured the exercise of the Option by misrepresentation; and that there were numerous repudiatory breaches of the Agency Agreement by the plaintiff, including acts of dishonesty, justifying termination of it by TOC. She did find some breaches of the Agency Agreement, but held that, whether taken separately or together, they would not have justified termination. First interference: Deed of Release and Termination. The trial judge found that SOCOG had sufficient notice of TOC's contractual obligations to the plaintiff under the Agency Agreement, and was aware that entry by SOCOG into the Deed of Release and Termination on 13 September 1999 with TOC, AOC and Synthesis would cause TOC to breach the Agency Agreement. This was because the performance of the Deed of Release and Termination caused TOC to transfer the "business" of the Club to SOCOG, leaving TOC unable to perform its obligations to the plaintiff under the Agency Agreement. Second interference: the Agency persuading TOC Agreement. The purported termination of the Agency Agreement on 5 November 1999 as a result of Mr Reading's directions to Mr Wyness7 was a breach of contract because the grounds assigned were baseless and there were no other grounds which were valid. to repudiate Third interference: indirect interference by causing the plaintiff's arrest. The trial judge found that the plaintiff was arrested because the police believed that he had been raising money by representing himself as a person who was entitled to sell Club memberships in China without having authority to do so. That belief was based on information from Ms Ford, which was communicated to them directly at a meeting on 3 December 1999 – in particular, information that the plaintiff was using non-genuine membership certificates. The trial judge found that the plaintiff would not have been arrested on 6 December 1999 had the police been informed by SOCOG of the following facts: that the plaintiff had obtained at least 657 Club memberships; that the plaintiff had paid over $260,000 to TOC; that the purported termination of the Agency Agreement on 5 November 1999 was under challenge by the plaintiff in correspondence; that Mr Wang 7 See [29] above. Kirby Callinan Zhiang had, on 25 August 1999, sought and received assurances from SOCOG officers in the absence of the plaintiff that the Club was genuine; that SOCOG had delivered many blank membership certificates to the plaintiff; and that he was entitled to issue them or have them issued. The trial judge found that since the Agency Agreement remained on foot until the plaintiff terminated it by commencing proceedings on 22 December 1999, SOCOG's inducement of the police to arrest the plaintiff on 6 December 1999 was "unlawful and an intentional infliction of harm to the plaintiff. It amounted to an indirect interference with the contractual relationship." The trial judge called SOCOG's conduct in relation to the arrest "quite extraordinary", "high handed and disgraceful", springing from "a refusal to deal in good faith" and "reprehensible". In this Court, SOCOG denied that the arrest of the plaintiff was an interference with contract on the ground that it did not prevent the plaintiff from carrying out the Agency Agreement, and from taking advantage of the opportunity it afforded to make profits in the period between the arrest on 6 December 1999 and the termination of the Agency Agreement on 22 December This submission fails. Before the trial judge it was common ground that the arrest of the plaintiff prevented him from carrying out the Agency Agreement. SOCOG did not contend at trial that the arrest had not caused the plaintiff loss. It argued only that it had not caused the arrest. SOCOG's conduct of the trial precludes it from now contending that inducing the arrest of the plaintiff was not a separate and independent tort of interference with contract8. 8 SOCOG also contended that there was no independent illegality in its conduct – neither in the form of an unlawful arrest as between the police officers and the plaintiff, nor in the unlawful procurement by SOCOG of an arrest through the innocent medium of the police officers. This submission faces numerous problems. Contrary to SOCOG's argument, the allegation was probably made in the pleadings, and it was common ground at the trial that the arrest was independently unlawful because it was made without reasonable cause, which explains why the trial judge made no explicit finding on the point. It is unlikely that the trial judge would have concluded that SOCOG's inducement of the police to effect the arrest was an indirect interference with the Agency Agreement without deciding either that the arrest was without reasonable cause or that its procurement was independently tortious, particularly in view of the critical language she employed. The Court of Appeal must have shared her Honour's view, since it would not (Footnote continues on next page) Kirby Callinan SOCOG's arguments in the Court of Appeal SOCOG abandons most challenges. As will be apparent from what has been written above, the trial was decided on the basis that the requisite mental element of the tort of interference with contract was established. That has not been challenged either in the Court of Appeal or this Court. In its Defence, SOCOG had admitted that at least by about mid-September 1999 it knew that TOC had appointed the plaintiff as its agent to sell to residents in mainland China International Memberships of the Club. In its written submissions at the trial, SOCOG said "[t]here is no issue that SOCOG instructed [TOC] to terminate the Agency Agreement and that the other ingredients of the cause of action were present" and Bergin J proceeded on that basis. In the Court of Appeal, most of SOCOG's grounds of appeal contended that TOC's conduct was not a breach of contract, but was rather the exercise of a lawful right to terminate the Agency Agreement. Two related to the arrest of the plaintiff. All these grounds were abandoned when the appeal was opened. SOCOG relies only on justification. The only ground argued was that SOCOG's interference with the contract was justified by its "equal or superior right". SOCOG's contention was that the trial judge had overlooked categories of misconduct by the plaintiff which, though they may not have justified TOC in terminating the Agency Agreement, justified SOCOG in interfering with it. SOCOG's pleading. More than a year after the commission of the torts alleged to be justified and the commencement of proceedings, the justification defence was first pleaded in par 17 of a Further Amended Defence, filed on 22 February 2001 ("the Defence"). The following particulars of justification were given: Pursuant to the [Indicia Act] the First Defendant enjoyed statutory rights and bore statutory responsibilities in respect of the Sydney otherwise have described the arrest as "an ill-considered infringement of [the plaintiff's] basic rights". SOCOG did not contest the justice of this language. No ground of appeal to the Court of Appeal took the point. However, for reasons given below at [165]-[166] it is not necessary to decide whether SOCOG's third interference involved independent illegality. Kirby Callinan 2000 Games indicia and images. Those obligations included the obligation to maintain a register of licensed [users] of the indicia and images (s 16) and the responsibility to exercise its statutory rights of standing pursuant to s 43(3) to obtain injunctive relief in respect of contraventions of s 12 in respect of the indicia and images9. (ii) By reason of the Plaintiff's breaches alleged at paragraph 14 above, the First Defendant was entitled to obtain an injunction to restrain the Plaintiff from using any of the indicia or images in respect of the promotion, marketing or sale of the travel packages which the Plaintiff was purporting to promote, market and sell in the Government of the People's Republic of China. (iii) By reason of: the nature of the First Defendant's status and function as the Organising Committee for the Sydney 2000 Games; the obligation owed by the First Defendant with respect to The Olympic Club pursuant to the Deed of Termination and Release; the principle embodied in clause [5(g)] of the Establishment Agreement10; the First Defendant had a responsibility to protect the reputation and goodwill of the Olympic movement, The Olympic Club and the Sydney 2000 Games. (iv) The First Defendant repeats the Plaintiff's breaches alleged in paragraphs 11, 12, 13 and 14 above." 9 Section 12(1) provided: "A person, other than … a licensed user … must not use Sydney 2000 Games indicia or images for commercial purposes". The Indicia Act was in force at the time of the events in issue, but ceased to have effect from 31 December 2000: s 55. 10 See [57] below. Kirby Callinan In order to understand the last allegation, it is necessary to bear in mind that par 11 alleged breaches of express and implied obligations owed to TOC under the Agency Agreement. Paragraph 12 alleged breaches of fiduciary duties. Paragraph 13 alleged breaches of obligations owed to SOCOG in the Deed Poll. Paragraph 14 alleged breaches of obligations under the Indicia Act. However, the allegations were much narrower by the time argument was presented to this Court: SOCOG claimed it had a right to end the Agency Agreement because the plaintiff promoted and sold travel packages using the intellectual property rights without the prior written consent of SOCOG and the Chinese Olympic Committee. Paragraph 17 of the Defence at trial. SOCOG informed the Court of Appeal that it had advanced these arguments to the trial judge, but she had overlooked them. The problem arose because the claim in par 17 of the Defence that SOCOG was justified in procuring termination of the Agency Agreement by TOC relied on the many earlier allegations in pars 11-14 about the plaintiff's conduct. SOCOG informed the trial judge that the justification issue involved only "the application of a different legal principle to the same facts". It is therefore not surprising that she did not deal with the rejected factual arguments afresh in relation to justification, and assumed that no outstanding question existed. As the Court of Appeal said, the justification defence was presented "as being linked to conduct said to justify summary dismissal by TOC of the plaintiff." The immensely detailed arguments in support of the justification defence advanced in this Court occupied the better part of a day of oral argument; the corresponding arguments put to the trial judge occupied about 10 lines of the 79 pages of SOCOG's written submissions and six lines in the transcript of oral argument. The Court of Appeal said, rather mildly, that SOCOG had not placed proper emphasis at trial on the point on which it succeeded on appeal. It therefore refused to disturb the trial judge's order that the plaintiff have his costs of the trial, and refused to make any order that the plaintiff pay the costs of the appeal11. The Court of Appeal's conclusion The Court of Appeal held that SOCOG had made out the justification defence. It held that the Agency Agreement had "required" the plaintiff to contravene s 12 of the Indicia Act, which forbad him to "use Sydney 2000 Games 11 SOCOG did not cross-appeal against the Court of Appeal's costs orders and accepted these strictures. Kirby Callinan indicia or images for commercial purposes", unless he were a "licensed user"12. It held that SOCOG had responsibilities under the Olympic Charter, the Host City Contract and the SOCOG Act to terminate the Agency Agreement. In order to understand the Court of Appeal's reasoning, it is necessary to identify an assumption on which the Court of Appeal operated and to summarise the statutory and other background, while noting some matters which were common ground. The Court of Appeal's assumption The assumption was that in the course of marketing Club memberships, the plaintiff referred to "The Olympic Club" and used the Club Logo, and hence the Games Logo. That assumption, although its truth was not demonstrated, and although it will have to be examined below, was correct. On that assumption, it was common ground that application of the relevant definitions in ss 7, 8 and 9 of the Indicia Act led to the conclusion that the use of the word "Olympic" in the phrase "The Olympic Club" and the words "Sydney 2000" in the Club Logo meant that these were "Sydney 2000 Games indicia"; and that the Club Logo, which incorporated the Games Logo, was also a "Sydney 2000 Games image", because it was a representation that, to a reasonable person, would suggest a connection with the Sydney 2000 Olympic Games. Hence, on the assumption on which the Court of Appeal operated, the plaintiff fell within the language of s 12(1) of the Indicia Act unless he was a licensed user. The relevant instruments Olympic Charter. The first instrument on which SOCOG relied was the Olympic Charter. The Charter opened by stating in mystical terms some "Fundamental Principles" about what was styled "Olympism". But Ch 1 then quickly moved to questions of power, property and money. Rule 3(1) described the "Olympic Movement" as including the IOC, the National Olympic Committees ("NOCs") and the Organising Committees of the Olympic Games ("OCOGs"). Rule 1 provided that any person or organisation belonging to the Olympic Movement was bound by the Olympic Charter and was to abide by the decisions of the IOC, the "supreme authority of the Olympic Movement". Rule 12 Further, s 13A rendered secondary participants in the conduct of persons caught by s 12 liable. Kirby Callinan 11 provided that the IOC owned all rights relating to the Olympic Games including rights relating to their "exploitation" and "reproduction". Rule 15 defined an Olympic emblem ("Olympic Emblem") as an integrated design associating the Olympic Symbol with another distinctive element. (An example would be the Games Logo.) Rule 17 provided that all rights to the Olympic Symbol belonged exclusively to the IOC. After r 17 there appeared the Olympic Charter Bye-law. From it three points emerged. The first was the paramount control of the IOC. The IOC was empowered to take all appropriate steps to obtain the legal protection of the Olympic Symbol (par 1.1 of the Olympic Charter Bye-law). Even if national law or trademark registration granted to a NOC the protection of the Olympic Symbol, that NOC was only to use the ensuing rights in accordance with instructions from the IOC Executive Board (par 1.2). Secondly, each NOC was responsible to the IOC for the observance, in its country, of rr 12-17 of the Olympic Charter and their Bye-law (par 2). NOCs and OCOGs were allowed to design their own Olympic Emblems, subject to approval by the IOC Executive Board (pars 7.1-7.6). The Olympic Emblems of a NOC were to be speedily registered within the relevant country, and NOCs were to take all possible steps to protect them (par 7.7). Paragraph 7.7 continued: "Similarly, the OCOGs must protect their Olympic emblems, in the manner described above, in their countries as well as in other countries as decided in consultation with the IOC Executive Board." That is, in Australia the obligation to protect the Games Logo lay with SOCOG. Thirdly, a territorial system of protection was established. Paragraph 10 provided that any OCOG (eg SOCOG) wishing to use its Olympic Emblem for profit-making purposes, "either directly or through third parties" (such as TOC and the plaintiff), was obliged to comply with the Bye-law and secure its observance by third parties. Paragraph 11 provided that all contracts and arrangements, including those concluded by an OCOG, were to be signed or approved by the relevant NOC and were to be governed by various principles. SOCOG placed great stress on par 11.2: "[T]he Olympic emblem of an OCOG as well as any other Olympic- related symbols, emblems, marks or designations of an OCOG, may not be used for any advertising, commercial or profit-making purposes Kirby Callinan whatsoever in the country of an NOC without the prior written approval of such NOC". That is, the Club Logo was not to be used in China without the prior written approval of the Chinese Olympic Committee – not subsequent approval nor oral approval. Paragraph 12 made provision for the Chinese Olympic Committee to take half the net profits of the exploitation of the emblems in China. And par 10 imposed a "duty" on SOCOG to ensure that par 11.2 was complied with by TOC and by the plaintiff in relation to his Chinese activities. That "duty" was said to be backed up by s 11(a) of the SOCOG Act, which provided that in exercising its functions SOCOG was to take into account, to the fullest extent practicable, the Olympic Charter. In this Court it was argued that that duty was enforceable by mandamus at the instance of a State Minister. Host City Contract. By cl 33(a) of the Host City Contract, the City of Sydney and the AOC acknowledged that the IOC owned all rights concerning the marketing of the Sydney Games. By cl 33(b), the IOC Executive Board was given power to assign, license or convey the IOC's rights to SOCOG, provided the Board was satisfied as to the protection of the IOC's proprietary rights. Clause 34 imposed a duty on the City, the AOC and SOCOG to ensure adequate protection of various forms of intellectual property. Clause 35 provided that various intellectual works and creations developed by or on behalf of or for the use of the City, the AOC or SOCOG should be vested in and remain in the ownership of the IOC. Clause 48(iii) provided that the IOC Executive Board was entitled to terminate the Host City Contract and withdraw the Games from Sydney if there was a violation by SOCOG "of any material obligation set forth in this Contract, the Olympic Charter or the applicable law." Before rights of termination and withdrawal could be exercised, the IOC Executive Board was required to serve SOCOG with a notice calling on SOCOG to remedy the breach of contract. Establishment Agreement. Clause 5(g) of the Establishment Agreement provided that if all the AOC and SOCOG representatives on the Club Committee were reasonably of the opinion that an activity of TOC was likely to affect the goodwill or reputation of the Olympic movement adversely, they could compel TOC by direction to cease that activity. Clause 7 granted TOC the right to use the intellectual property rights, subject to the terms of the Agreement. Clause 25(c) provided that, except as permitted by the Establishment Agreement or a "Transaction Document" (such as the Licence Agreement), TOC would not, without SOCOG's consent, use the intellectual property rights. Clause 27(a) provided that TOC was to procure that each person with whom it dealt "in the Kirby Callinan course of carrying out its functions in relation to the Club" executed a document in the form of the Deed Poll. Licence Agreement. Clause 3.1(a) confirmed the grant by cl 7 of the Establishment Agreement to TOC of approval to use the intellectual property rights. By cl 3.1(b), SOCOG granted TOC, inter alia, the rights and opportunities set out in Appendix A1 solely with respect to the Club. Among those rights was "[t]he right in Australia … to use [the intellectual property rights] on Consumer Communication Vehicles in connection with the promotion and advertising of the Olympic Club to indicate a relationship or association with the Games or SOCOG". That expression was defined as meaning: "letterheads, stationery, display materials and other advertising, promotional and public relations materials approved by SOCOG to promote the Olympic Club pursuant to [Appendix A1]." The materials on which the plaintiff exercised the intellectual property rights fell within this definition. In particular, it may be inferred that they were approved by SOCOG. By its execution of the Licence Agreement, SOCOG was aware that rights had been granted to TOC in relation to those materials and that TOC might authorise agents to use them. It was therefore aware that its approval might be sought. Two of the Club Committee were SOCOG representatives. The fact that officers of TOC handed documents over to the plaintiff supports an inference that they were approved by SOCOG, since it is inherently unlikely that TOC would have done so without SOCOG approval. The inference that arises from the circumstances is strengthened by SOCOG's failure to call evidence from Mr Reading or any other SOCOG officer denying its validity. But, alternatively, even if the evidence is insufficient positively to establish that SOCOG approved the documents used by the plaintiff, it was for SOCOG, in seeking to make out its justification defence, to prove that it did not grant approval. This it did not do. By cl 3.3(g), a provision much emphasised by SOCOG, TOC was prohibited from allowing any other person to use the Club Logo without first obtaining SOCOG's written consent. Clause 3.10 prohibited TOC from entering any agreements with third parties (eg the plaintiff) inconsistent with its obligations under the Licence Agreement. By cl 3.7(a), TOC agreed to exercise the rights and opportunities granted under the Licence Agreement in compliance with the Olympic Charter (including par 11.2 of the Bye-law). Deed Poll. Finally, the Deed Poll executed by the plaintiff provided: Kirby Callinan "In order to protect the rights of SOCOG, [AOC], [IOC], the Olympic movement and the official sponsors, suppliers and others who are from time to time authorised to use those rights (Olympic Bodies), the Covenantor is required to execute this deed in favour of SOCOG. The Covenantor will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or [association] with the Olympic [Bodies], the Sydney 2000 Olympic Games (the Olympic Games) or the 1998 or 2000 Australian Olympic teams (the Teams). The Covenantor acknowledges that it has no right to use any intellectual property belonging to any Olympic Body, including but not limited to, any Olympic logo, mark or design. The Covenantor agrees that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it has no right to use and it will not use for any purpose, including, but [not] limited to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which [included the Club Logo]. … The Covenantor further agrees that, without the prior written consent of SOCOG (which SOCOG may withhold in in any marketing, promotion or its absolute discretion), advertisement it will not: use any 'Sydney 2000 Games images' or 'Sydney 2000 Games indicia' (as those terms are defined in the [Indicia Act]). The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body." Since TOC was authorised to use the relevant rights, it was an Olympic Body. The Court of Appeal's reasoning The Court of Appeal said that officers of TOC had misled the plaintiff and encouraged him to "engage in conduct which flouted the Olympic Charter and Kirby Callinan the [Indicia Act]"; that some officers of SOCOG were aware of this and did nothing to prevent it until TOC ran into financial trouble; and that although SOCOG now conceded that the plaintiff was entitled to damages against TOC, at the trial it had "fought a lengthy contrary case and suffered total defeat". The Court of Appeal strongly criticised the plaintiff's arrest. However, despite being troubled by these matters, the Court of Appeal decided that SOCOG's defence of justification succeeded13: "The language of s12 of the [Indicia Act] is unequivocal. Subsection (1) prohibits a person, not a licensed user, using Sydney 2000 Games indicia and images for commercial purposes. Not only was Zhu acting contrary to this dictate so too were his sub-agents. Clause 48 of the Host City Contract entitled the IOC Executive Board to terminate that contract and to withdraw the Games from Sydney if there was a violation by SOCOG of any material obligation set forth in the Olympic Charter or the applicable law. The legislation under which SOCOG was constituted required SOCOG to take into account 'to the fullest extent practicable' the Olympic Charter, (s11). … … SOCOG was justified in procuring the termination of the Agency Agreement. That agreement if allowed to remain in place required continued illegal conduct not only by Zhu but by others. The agreement permitted Zhu commercially to exploit intellectual property owned by the IOC on behalf of the Olympic Movement in a country outside Australia, the [People's] Republic of China, without the consents of any of the Olympic bodies who were required to consent and in particular by the relevant Chinese bodies. … [SOCOG had a] right to bring this otherwise illegal conduct to a stop. As SOCOG claimed, it was its duty and responsibility as the organising committee of the Sydney Games to do so. Zhu's contractual rights to exploit Olympic intellectual property in Mainland China under the terms of the Agency Agreement derived from TOC. The [Licence] Agreement made it plain that TOC had no authority to grant such rights. The superior right SOCOG calls in aid is an absolute one based on its constitution and statute. Moreover those who aided and abetted or were directly or indirectly knowingly concerned in or a party to the contravention by a person of s12 of the [Indicia Act] were taken 13 Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380 at [184]-[186]. The words to which emphasis has been added are important parts of the plaintiff's argument in this appeal. Kirby Callinan themselves to have contravened s12: s13A. SOCOG's responsibility also required it to ensure compliance with the Olympic Charter and the Host City Contract. These were not responsibilities and duties which SOCOG could barter away. Nor was there any way so long as the Agency Agreement continued that the illegality of Zhu's activities and those of the sub-Agents could be escaped. Even if it be accepted that Zhu's arrest interfered with the Agency Agreement by inhibiting his ability to perform it, that had no relevance to SOCOG's entitlement to rely upon its statutory responsibilities and duties to procure termination of the Agency Agreement." The correctness of the Court of Appeal's reasoning The plaintiff argued that the first central proposition in the Court of Appeal's reasoning was that the Agency Agreement "required continued illegal conduct … by" the plaintiff. The plaintiff argued that that proposition was false. The Agency Agreement did not require the plaintiff to contravene s 12(1) of the Indicia Act by using the intellectual property rights without licence from SOCOG. Rather, it forbad him to use them without appropriate consents. By cl 9.1(b), the plaintiff covenanted to execute the Deed Poll. By cll 1 and 3(d) of the Deed Poll, the plaintiff covenanted that he would not, without SOCOG's consent, use the intellectual property rights. The plaintiff argued that a second central proposition in the Court of Appeal's reasoning was that the Agency Agreement permitted the plaintiff to exploit the intellectual property rights in China "without the consents of any of the Olympic bodies who were required to consent and in particular by the relevant Chinese bodies." The plaintiff said that that proposition was also false. So far as the proposition referred to SOCOG's consent, it was falsified by the Deed Poll. So far as the proposition referred to the consent of the Chinese authorities, it was falsified by cl 9.1(a) of the Agency Agreement, in which the plaintiff covenanted to do: "all things and sign all documents reasonably necessary to obtain the appropriate and the Government of the [People's] Republic of China and the Chinese Olympic Committee". required approvals and authorisations from In short, the plaintiff contended that the Agency Agreement granted permission to do things with the consent of various persons; that permission could not be tortured into a contractual requirement to act without consent. The Kirby Callinan truth was that the Agency Agreement did not require illegal conduct, but prohibited it. Had it required illegal conduct, a question would have arisen as to whether it was enforceable. In this Court, SOCOG rightly accepted that, if the passage quoted above14 was given its natural meaning, the plaintiff's criticisms of it were unanswerable. In particular, SOCOG accepted, consistently with its Defence, and with its concession to the Court of Appeal that the plaintiff was entitled to damages from TOC for repudiation of the Agency Agreement, that the Agency Agreement "was not illegal in its inception or inevitably illegal in its performance." An alternative construction of the Court of Appeal's reasoning However, SOCOG submitted that the Court of Appeal's language should be given a special construction, and that, on that construction, the reasoning was sound. SOCOG submitted that the Court of Appeal meant to indicate acceptance of the following argument: that exploitation of the intellectual property rights by the plaintiff required SOCOG's consent under cl 3.3(g) of the Licence Agreement and cll 1 and 3 of the Deed Poll; that SOCOG had a complete discretion whether or not to give that consent; that it had not been and never would have been given; that the only way in which the plaintiff wished to perform the Agency Agreement was using the intellectual property rights in the belief that the Agency Agreement permitted and perhaps required this; and hence that his conduct could never have been lawful. In these circumstances, it was lawful for SOCOG to engage in acts of interference with the contract rather than taking "wasteful inefficient steps such as letters before action, such as direct negotiation, such as talking, such as litigation", including the "more time consuming and expensive" course of applying to a court for an injunction to restrain the plaintiff's unlawful conduct. Alternatively, SOCOG submitted that if the Court of Appeal did not mean that, it had misunderstood SOCOG's argument, but that that argument ought to be accepted by this Court. It is impossible to give the Court of Appeal's language the construction suggested. It follows that the orders of the Court of Appeal can only be upheld if the argument which SOCOG put to this Court, and said it put to the Court of Appeal, is correct15. 14 See [62]. 15 It may be remarked in passing that if SOCOG is not a legally unmeritorious litigant, it is a singularly unfortunate one: for its sole argument in this Court is one (Footnote continues on next page) Kirby Callinan It is proposed now to deal with the following questions. According to SOCOG, what activities of the plaintiff in Australia and in China triggered SOCOG's supposed duty and right to interfere? In what way did SOCOG say those activities were unlawful? Which of those activities were in truth unlawful? Did SOCOG establish a defence of justification? SOCOG's complaints about the plaintiff's conduct in Australia SOCOG complained of two incidents in Australia. The request for SOCOG approval. On 30 August 1999, Mr Zhang Zhao Ming wrote a letter to Mr Wyness on behalf of the plaintiff, seeking the approval of TOC and SOCOG for the use in China of what the trial judge described as "the Olympic Club folder, an application form for International Membership, a document relating to Membership Privileges and Benefits, a Membership Card and a Fact Sheet in Chinese". These materials were enclosed and the Club Logo appeared on some of them. There was no reply. The September 1999 transaction in Australia. In September 1999, negotiations took place in Sydney between Mr Zhang Zhao Ming and another sub-agent of the plaintiff with Mr Ya Fa Wang, who was representing a group of companies in China. Mr Ya Fa Wang prepared a contract under which, in return for a promise by the group to pay $217,500, 25 of their employees were to attend the Games. Olympic Club Membership Certificates were to be issued to the 25 employees at a press conference in Shanghai. On 22 September 1999, Mr Ya Fa Wang made an initial payment of $72,500 to Mr Zhang Zhao Ming and the other which it says the trial judge overlooked and the Court of Appeal misunderstood. It may also be observed that SOCOG's argument that it would never have consented is inconsistent with its attempts to establish a defence of justification. On that argument either the Agency Agreement would not have come into force for want of compliance with a condition precedent, or it would have been discharged for impossibility of performance. Either way, there would have been no actionable interference with it, because it would not have been in force at the times of the interferences relied on. In that event, TOC would have been obliged to return the money it had received from the plaintiff. SOCOG's insistence that TOC need not return that money is inconsistent with the argument that it was impossible for the Agency Agreement ever to be performed on the ground that SOCOG would never have consented to performance. Kirby Callinan sub-agent. On 4 November 1999, Mr Zhang Zhao Ming handed the Membership Certificates to Mr Ya Fa Wang in Australia. SOCOG's complaints about the plaintiff's conduct in China While SOCOG did not point to any specific incident, it was common ground that in publicising the International Memberships in China, the plaintiff used the intellectual property rights. SOCOG's contentions on the plaintiff's chain of title SOCOG's complaints about the plaintiff's conduct in both Australia and China turned on the plaintiff's title to use the intellectual property rights. It was common ground that, by reason of the Host City Contract and related transactions, SOCOG had the capacity to license the use of the intellectual property rights in Australia and, with the consent of the Chinese Olympic Committee, in China. The controversy turned on how far it had done so. Australia. SOCOG contended that while TOC was entitled to use the intellectual property rights in Australia pursuant to the Licence Agreement, cl 3.3(g) of that Agreement prohibited TOC from allowing "any other person to use the Club Logo or otherwise deal with it without first obtaining SOCOG's written consent". Hence, it was said, TOC had no power to license the plaintiff to use the intellectual property rights unless SOCOG's written consent was first obtained; SOCOG's consent to their use by the plaintiff was also necessary under s 12(1) of the Indicia Act and cll 1 and 3 of the Deed Poll, and it was never granted. China. SOCOG contended that not even TOC had a right to use the intellectual property rights in China because the Licence Agreement only authorised their use in Australia. First, SOCOG said that the plaintiff's use of the rights in China ignored the requirement of par 11.2 of the Olympic Charter Bye- law requiring the prior written consent of the Chinese Olympic Committee. Secondly, SOCOG said (even though it was not a party to the Agency Agreement) that cl 9.1(a) of the Agency Agreement16 had not been complied with. Thirdly, SOCOG said that, again, its written consent had not been obtained under cll 1 and 3 of the Deed Poll. Finally, it said that the plaintiff was not a licensed user within the meaning of s 12(1) of the Indicia Act. 16 See [64] above. Kirby Callinan The plaintiff behaved lawfully in Australia In SOCOG's view of the world, the whole human scheme was acrawl with requirements for its prior written consent, without which not a sparrow could fall. Since SOCOG said it had never given prior written approval to, and had never licensed, the plaintiff's use of the intellectual property rights, it accused the plaintiff of having been allowed by TOC to use the intellectual property rights without complying with cl 3.3(g), of contravening cll 1 and 3 of the Deed Poll, and of contravening s 12(1) of the Indicia Act. These accusations fail. In summary, first, cl 3.3(h) of the Licence Agreement obviated the need for the plaintiff to obtain SOCOG's prior written consent as required by cl 3.3(g). Secondly, cll 1 and 3 on their true construction did not require SOCOG's prior written consent, and even if they did, cl 5 of the Deed Poll rendered cll 1 and 3 subject to the plaintiff's right to use the intellectual property rights granted by TOC pursuant to its powers under cl 3.3(h). Thirdly, SOCOG's grant of power in cl 3.3(h) to TOC to authorise an agent such as the plaintiff to use the intellectual property rights was a licensing of the plaintiff's use of them within the meaning of s 12(1) once SOCOG exercised that power. The basis for those three conclusions is as follows. Effect of cl 3.3(h) of the Licence Agreement on cl 3.3(g). Clause 3.3(h) of the Licence Agreement, to which, unlike cl 3.3(g), SOCOG did not draw attention, provided: "[TOC] may, notwithstanding [cl 3.3(g)], authorise its employees, agents and contractors to use the Club Logo in relation to the Olympic Club and in a manner consistent with this Agreement". Clause 3.1(b) read with Appendix A1 gave TOC the right to use the Club Logo on "Consumer Communication Vehicles"17. The effect of cll 3.1(b) and 3.3(h) was that TOC was permitted to authorise the plaintiff, its agent, to use the Club Logo on the materials employed in the two Australian incidents of which SOCOG complained. TOC did authorise him to use the Club Logo when it provided the plaintiff with the first letter of authority dated 8 March 1999 and the second letter of authority dated 4 June 1999, each of which was typed on the letterhead of the Club, which included the Club Logo. TOC also granted to the plaintiff the right to use the intellectual property rights when it provided the 17 See [58] above. Kirby Callinan plaintiff with the Club letterhead and approximately 100 "Welcome Kits" for members containing satchels and other merchandising materials for use by the plaintiff in the execution of his duties under the Agency Agreement. Thus although cl 3.3(g) prohibited TOC from allowing any other person to use the intellectual property rights without the prior written approval of SOCOG, cl 3.3(h) obviated the need for that approval as far as the plaintiff was concerned. Clauses 1 and 3 of the Deed Poll: true construction. Sheller JA rightly pointed to a radical tension between cll 1 and 3 of the Deed Poll, on the one hand, and the Agency Agreement, on the other18: "By the Deed Poll Zhu covenanted not, without the prior written permission of SOCOG, to represent, hold out, market, promote, or advertise in any way that he had any connection or association with the Olympic bodies, the Sydney 2000 Olympic Games or the 1998 or 2000 Australian Olympic teams and acknowledged that he had no right to use any intellectual property belonging to the Olympic body, including but not limited to, any Olympic logo, mark or design. By the Deed Poll Zhu agreed that, without the prior written consent of SOCOG, he had no right to use and would not use for any purpose including any marketing, promotion or advertising purpose any words, phrases, symbols or images which, in SOCOG's opinion, suggested any connection or association between the plaintiff and any Olympic body, the Olympic Games or any of the teams. Standing alone these covenants would be extraordinary ones when combined with an agreement enabling the covenantor to sell to people in Mainland China International Memberships of a club with a logo which incorporated Sydney 2000 Games indicia, and thereby, to provide Olympic benefits including tickets to the Olympic Games, Olympic Arts Festival events, access to the Official Dress Rehearsal of the Opening Ceremony, Club member recognition on a special memorial, privilege rights to become a volunteer and involvement rights in the torch relay." Sheller JA pointed out that the plaintiff's obligation to execute the Deed Poll stemmed from cl 9.1(b) of the Agency Agreement, in which he agreed to refrain: 18 Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380 Kirby Callinan "from, in any way, utilising the … Club Logo or this Agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and the Agent agrees to execute the … Deed Poll presented to him at the time of executing this Agreement." And his Honour pointed out that cl 7.1(b) of the Agency Agreement obliged TOC to provide the first letter of authority dated 8 March 1999. He then said19: "It is plain enough that the Deed Poll must be read as an integral part of the contract between Zhu and TOC. It would be absurd to read it as intended to contradict and defeat the Agency Agreement. While courts should give the words of a written agreement the natural meaning that they bear, in giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense." Sheller JA concluded that if the plaintiff operated within the limits of the Agency Agreement and the first letter of authority issued pursuant to cl 7.1(b), he would not be in breach of the Deed Poll. That reasoning is correct. The Deed Poll had to be executed because under cl 27(a) of the Establishment Agreement, TOC agreed to: "procure that each person with whom it deals in the course of carrying out its functions in relation to the Club … executes a deed in the form of the [Deed Poll] … in favour of SOCOG under which the person agrees, amongst other things, not to represent, hold out, promote or advertise its connection with SOCOG, the AOC or the Games without SOCOG's prior written permission." The Deed Poll was a standard form instrument designed to apply to TOC's dealings with a wide range of persons. The execution of the Deed Poll pursuant to an obligation in, and at the same time as, the Agency Agreement meant that it had to be given a construction conformable with the Agency Agreement. It was necessary to construe the Deed Poll so as to avoid it making commercial 19 Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380 Kirby Callinan nonsense or working commercial inconvenience20. Its commercial purpose – the purpose of reasonable persons in the position of TOC and the plaintiff – was relevant21. That, in turn, required attention to "the genesis of the transaction, the background, the context, the market" in which the parties were operating, as known to both parties22. The plaintiff knew nothing of the Licence Agreement23. The genesis, background and context of the Agency Agreement and the Deed Poll as known to the plaintiff and TOC suggested the same purpose as that suggested by the express terms of the Agency Agreement – to attract International Members of the Club in China. A construction of the Deed Poll conformable with the Agency Agreement meant that cll 1 and 3 bound the plaintiff if he was acting outside the Agency Agreement but not if he acted within its terms. The function of the Deed Poll was to buttress the prohibition in cl 9.1(b) on the plaintiff using the intellectual property rights for purposes other than selling the International Memberships. The contrary construction advanced by SOCOG is nonsensical in view of the express obligations on TOC under the Agency Agreement. One was to supply the first letter of authority under cl 7.1(b): it was on Club letterhead, which included the Club Logo, and was intended to be widely used, since it was addressed "To whom it may concern". Another express obligation on TOC was to "do all things reasonable to assist in introducing the [plaintiff] to the Chinese Olympic Committee" under cl 7.1(h), pursuant to which it supplied the letter to the Chinese Olympic Committee of 10 March 1999: that too was on Club letterhead including the Club Logo. Another express obligation was to supply the second letter of authority pursuant to cl 7.1(e): like the first letter of authority, it was on Club letterhead, and was intended for wide use. Another 20 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314 per Kirby P. 21 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 351 per Mason J. 22 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 350 per Mason J, quoting Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995-996 per Lord Wilberforce; [1976] 3 All ER 570 at 574. 23 It was confidential: Licence Agreement cl 12.1 and Establishment Agreement Kirby Callinan express obligation was to supply an "International Membership Welcome Kit" for each new International Member pursuant to cl 7.1(c). That expression meant: "[A]n Olympic Club satchel, Welcome magazine, Video, CD, Membership Certificate, Member pin, Australian Souvenir such as the $5 … Sydney Olympic Coin as produced by [TOC] or its suppliers in Australia, and subject to Sydney Olympic Committee approval, one complimentary the Opening Ceremony Dress Rehearsal at Olympic Stadium". to attend invitation The parties to the Agency Agreement must have contemplated that the Club Logo might be extensively employed in this array of items. Over 100 Welcome Kits were in fact provided. SOCOG's construction is also inconsistent with the implied duty of cooperation between TOC as principal and the plaintiff as agent, pursuant to which TOC supplied all the material bearing the Club Logo. is also inconsistent with SOCOG's construction the fundamental obligation on the plaintiff created by cl 9.1(d) "to do all things reasonably necessary and expeditious to sell up to 10,000 International Memberships" in China, and with the condition precedent to the exercise of the Option created by cl 5.1(a) to sell 2,000 International Memberships in China by 30 June 1999. It would have been very hard for the plaintiff to do these things unless he could have held himself out as being associated with an Olympic Body (eg TOC) or the Olympic Games, yet this would place him in contravention of cll 1 and 3 of the Deed Poll construed as SOCOG would have it. Whether or not TOC had the right to appoint the plaintiff as the exclusive agent to market Club Memberships in China, and whatever SOCOG's purpose was in procuring the execution of the Deed Poll, it cannot have been the objective intention of the plaintiff and TOC that the Deed Poll should operate to prohibit the plaintiff from holding himself out as being associated with Olympic Bodies or the Olympic Games when marketing International Memberships in China. Clauses 1 and 3 of the Deed Poll: effect of cl 5. The trial judge decided that even if without cl 5 there was a breach of cll 1 and 3, cl 5 prevented that result. Her reasoning may be put thus. TOC was an "Olympic Body" because it was authorised (by the Establishment Agreement and the Licence Agreement) to use the rights of SOCOG, AOC and IOC. It was also authorised in turn to authorise the plaintiff to use those rights (cl 3.3(h) of the Licence Agreement). Kirby Callinan By reason of cl 5, cll 1 and 3 were subject to those rights, and the prior written consent of SOCOG was not necessary24. That reasoning is correct. Section 12(1) of the Indicia Act. The words "licensed user" as employed in s 12(1)25 meant a user who had been licensed – that is, a person who had been authorised to do something which would otherwise be unlawful26. SOCOG's grant to TOC of the right to authorise its agents to use the Club Logo meant that, once TOC authorised the plaintiff to do so as an agent, he became a person authorised by SOCOG to use the intellectual property rights. The Indicia Act did not specify any formal requirements in relation to licences. Where SOCOG licensed a person, s 15(1) obliged it to make an entry in the register of licensed users containing the particulars set out in s 17. Licensing was to take effect when the entry was made in the register (s 15(2)), but SOCOG did not dispute the Court of Appeal's view that registration did no more than provide evidence of the grant of a licence; it was not itself a source of rights. Since the burden of proof that the plaintiff was not licensed rested on SOCOG, and since SOCOG could not rely on its failure to fulfil its duty to make an appropriate entry in the register, SOCOG failed to discharge its burden of proving that the plaintiff was not a licensed user27. The letter of 30 August 1999. There is an additional reason why the 30 August 1999 letter was not a breach of any statutory or contractual obligation on the part of the plaintiff. The sending of that letter with its enclosures could not have been a breach of s 12(1) of the Indicia Act because it was not a "use" of Sydney 2000 Games indicia or images for "commercial purposes". 24 Zhu v Sydney Organising Committee for the Olympic Games [2001] NSWSC 989 at [353]-[355]. In the Court of Appeal, Hodgson JA (Giles JA concurring) said this reasoning was "arguably" correct: Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380 at [206]. 25 See footnote 9 above. 26 Federal Commissioner of Taxation v United Aircraft Corporation (1943) 68 CLR 525 at 533 per Latham CJ. 27 It is not necessary to consider whether cl 3.3(h) of the Licence Agreement only gave TOC power to authorise the plaintiff, as an agent, to use the Club Logo, but did not give the plaintiff power to authorise his own agents to do so, since SOCOG did not take the point. Kirby Callinan SOCOG argued that the 30 August 1999 letter was an application to TOC for its written approval to use the Club Logo pursuant to cl 9.1(c) of the Agency Agreement, not an application to SOCOG for consent or a licence. However, the letter said: "We are looking forward to having the approval of [TOC] and SOCOG." The letter was not only an application to TOC under cl 9.1(c), but also an (unnecessary) application for a licence from SOCOG, and an (unnecessary) application for the written consent of SOCOG before the plaintiff undertook conduct which might have required it (eg under cll 1 and 3 of the Deed Poll). It would be absurd to treat a request for consent as contravening any provision requiring consent. Conclusion. For all these reasons, the plaintiff's conduct in Australia complained of by SOCOG was not in fact unlawful. It is now necessary to consider the plaintiff's activities in China. The legality of the plaintiff's conduct in China SOCOG's argument was that the plaintiff's conduct in China had not received the prior written consent of the Chinese Olympic Committee as required by the Olympic Charter Bye-law, par 11.2; he had not complied with cl 9.1(a) of the Agency Agreement; he had contravened s 12(1) of the Indicia Act; he had been allowed by TOC to use the intellectual property rights without complying with the requirement in cl 3.3(g) of the Licence Agreement for SOCOG's prior written consent; and he had contravened cll 1 and 3 of the Deed Poll. Olympic Charter Bye-law, par 11.2. Although the Chinese Olympic Committee gave its prior consent to the plaintiff's conduct, it was not in writing. Paragraph 11.2, the text of which has been set out at [55] of these reasons, required written approval of an NOC for the use of Olympic-related symbols in its country for commercial purposes. The significance of this is discussed below28. Clause 9.1(a) of the Agency Agreement. Clause 9.1(a) of the Agency Agreement required the plaintiff to do all things and sign all documents necessary to obtain the required approvals and authorisations from the Chinese Government and the Chinese Olympic Committee. This the plaintiff did. On 10 March 1999, in Sydney the plaintiff met the Chinese Consul General who said 28 See [109], [167]-[168]. Kirby Callinan that he would arrange meetings between the plaintiff and Mr Tu Mingde, the Director of the Liaison Department of the State Sport General Administration and Chief Secretary of the Chinese Olympic Committee, and Mr Shaozu Wu, the Minister for Sport in China. In China, on 23 March 1999, the plaintiff met Mr Tu Mingde. According to the evidence, Mr Tu Mingde did not oppose the plaintiff's activities and said that when they commenced, the plaintiff should contact him, at which time the Chinese Olympic Committee would consider them. Indeed, Mr Tu Mingde advised the plaintiff to "hurry up", and said that if the plaintiff had problems, he (Mr Tu Mingde) could assist in solving them. On 5 July 1999, the plaintiff met senior Chinese officials in Beijing, one being the Vice Minister of the State Sport General Administration Ministry and the Vice President of the Chinese Olympic Committee, and the other being a representative of the office of the Minister for Sport. He described his plan to sell International Memberships in China as part of a tour package for Chinese citizens to travel to Sydney. According to the evidence, those officials approved the project and said letters of support and authority were not needed. One of the officials said that they would give the plaintiff whatever support he needed. Thus the senior officials to whom the plaintiff spoke approved his conduct both before he started it and after that time, and said it was not necessary for him to do anything more than receive their oral approval. There was no evidence that the Chinese Olympic Committee ever complained to the AOC or SOCOG about his activities. The plaintiff did not breach cl 9.1(a) of the Agency Agreement. Section 12(1) of the Indicia Act. Nor was the plaintiff's conduct in China in breach of s 12(1) of the Indicia Act, because that Act did not apply to China. Prima facie the prohibition created by s 12(1) against "use" of property29, contained as it was in a statute relating to intellectual property, would be construed as applying only to use in Australia30. That is reinforced by s 15B of the Acts Interpretation Act 1901 (Cth), which provides that federal Acts are to be taken to have effect in and in relation to the coastal sea of Australia as if it were part of Australia: that suggests that, in the absence of express provisions, those Acts have no wider effect. One express provision supporting a slightly wider 29 See footnote 9 above. 30 Norbert Steinhardt and Son Ltd v Meth (1961) 105 CLR 440 at 443-444 per Fullagar J (revd on other grounds (1962) 107 CLR 187); Estex Clothing Manufacturers Pty Ltd v Ellis and Goldstein Ltd (1967) 116 CLR 254 at 267 per Kirby Callinan application than that achieved by s 15B was s 5 of the Indicia Act, which extended it to Christmas Island, Cocos (Keeling) Islands, Norfolk Island, the waters above the continental shelf of Australia, and the air space above Australia and the continental shelf of Australia. But that provision in itself suggested no wider extraterritorial application. The Indicia Act had no equivalent to s 5(1) of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") which provides that particular provisions extend to conduct outside Australia by Australian citizens or persons ordinarily resident in Australia. Section 6(b)(i) of the Indicia Act provided: "In addition to its effect apart from [s 6], [the Indicia Act] also has the effect that it would have if each reference to use for commercial purposes were a reference to … use for commercial purposes by any person in the course of … trade or commerce with other countries". But that provision did not relate to the geographical reach of the Indicia Act. It, and the other provisions of s 6 of the Indicia Act, were designed, like those in s 6 of the Trade Practices Act, only to give the Indicia Act wider constitutional support. Even if the textual pointers against extraterritorial operation were inconclusive, the same conclusion would flow from the fact that s 12(1) was enacted in the context of, and no doubt with knowledge of, the instruments pursuant to which the Olympic movement operated and the Sydney Games were to be conducted31. Under one of those instruments, the Olympic Charter Bye- law, par 11.232, the Chinese Olympic Committee had a veto over and a power to permit use of SOCOG-related intellectual property in China. The better construction of s 12(1) is that it did not give Australian courts jurisdiction to interfere with the Chinese Olympic Committee's rights in China. It was common ground that the Indicia Act permitted the seizure and forfeiture of imported goods, and the grant of remedies against the importation of goods, where the goods had already had applied to them Sydney 2000 Games indicia or images: s 10(2). But beyond that, as SOCOG eventually conceded, s 12(1) did not apply to any conduct of the plaintiff in China, only to conduct within Australia and the areas indicated in s 5. 31 The Ministerial Second Reading Speech in the Senate reveals awareness of the obligations created by the Host City Contract and suggests a close involvement of SOCOG with the Bill: Australia, Senate, Parliamentary Debates (Hansard), 8 May 32 See [55] above. Kirby Callinan Clauses 3.3(g) and (h) of the Licence Agreement. The plaintiff contended, but invalidly, that cl 3.1 of the Licence Agreement granted TOC the right to use the Club Logo outside Australia, and that cl 3.3(h) granted TOC the right to authorise the plaintiff to do so. Clause 3.1(a) was not itself a grant of rights; it merely confirmed that TOC had been granted certain rights and approvals under the Establishment Agreement. Those rights and approvals included the right and licence to use the intellectual property granted by cl 7(c), but cl 7(d) provided that they were to be subject to the terms of the Licence Agreement when executed. Clause 3.1(b) of the Licence Agreement granted the rights in Appendix A133, but that grant was limited to Australia. It is necessary to read cl 3.1(a) with cl 3.4, which approved the use by TOC of the intellectual property rights, but only "in Australia". While cl 3.3(h) of the Licence Agreement permitted TOC to authorise its agents to use the Club Logo in relation to the Club, the use had to be "in a manner consistent with this Agreement". The rights of an agent purportedly authorised by TOC under cl 3.3(h) could not be greater than the rights of TOC itself. Hence neither cl 3.3(g) nor cl 3.3(h) apply, since the Licence Agreement did not give either TOC or the plaintiff any rights in relation to China. Inapplicability of cl 5 of the Deed Poll. It follows that the reasoning set out above34, which led to the conclusion that cl 5 of the Deed Poll prevented cll 1 and 3 from applying, is not available. TOC had no rights to grant to the plaintiff in China. Were cll 1 and 3 of the Deed Poll contravened? However, the construction of cll 1 and 3 in a manner consistent with the Agency Agreement, discussed above35, is as sound for conduct in China as it was for conduct in Australia. Clauses 1 and 3 did not require SOCOG's prior written consent to conduct of the plaintiff which was within the Agency Agreement itself, as his conduct was. That conclusion is not affected by the fact that the Licence Agreement did not authorise the purported grant by TOC of permission to use the Club Logo in 33 See [58] above. 34 See [86]. 35 See [77]-[86]. Kirby Callinan China by its conduct at the time of and after the execution of the Agency Agreement. Some entity claiming to own, or otherwise to have the right to protect, the intellectual property rights may have had curial standing to prevent the plaintiff from acting as he did in China, whether that entity was the Chinese Olympic Committee or the IOC or some other body. But, s 12(1) apart, SOCOG never contended that it had standing. Further, it did not prove Chinese law and did not allege any breach of Chinese law. It pointed to no trademark or design registration. It did not accuse the plaintiff of any breach of copyright. No claim was made that the Trade Practices Act, or any equivalent Australian legislation, was contravened. The plaintiff was not said to be guilty of passing off. In each instance it is understandable why no such contention was advanced. But even if some breach of duty by the plaintiff could have been advanced, it was a breach of duty distinct from a breach of cll 1 and 3. Thus the only one of SOCOG's complaints that it made out was non- compliance with par 11.2 of the Olympic Charter Bye-law, requiring written approval of the Chinese NOC for the use of Olympic-related symbols. SOCOG's argument on justification SOCOG submitted that Romer LJ was correct in saying, in Glamorgan Coal Co Ltd v South Wales Miners' Federation36: "I think it would be extremely difficult, even if it were possible, to give a complete and satisfactory definition of what is 'sufficient justification', and most attempts to do so would probably be mischievous. … I respectfully agree with what Bowen LJ said in the Mogul Case37, when considering the difficulty that might arise whether there was sufficient justification or not: 'The good sense of the tribunal which had to decide would have to analyze the circumstances and to discover on which side of the line each case fell.' I will only add that, in analyzing or considering the circumstances, I think that regard might be had to the nature of the contract broken; the position of the parties to the contract; the grounds for the breach; the means employed to procure the breach; the relation of the person procuring the breach to the person who breaks the contract; and I think also to the object of the person in procuring the breach." 36 [1903] 2 KB 545 at 573-574. 37 Mogul Steamship Co Ltd v McGregor Gow & Co (1889) 23 QBD 598 at 618-619. Kirby Callinan Mogul had concerned an action for the tort of conspiracy but Bowen LJ had advanced the following general propositions38: "[I]ntentionally to do that which is calculated in the ordinary course of events to damage, and which does, in fact, damage another in that other person's property or trade, is actionable if done without just cause or excuse." He also said39: "If it was bona fide done in the use of a man's own property, in the exercise of a man's own trade, such legal justification would, I think, exist not the less because what was done might seem to others to be selfish or unreasonable". The "line" which Bowen LJ drew and which Romer LJ inadvertently introduced to the tort of contractual interference was between such selfish or unreasonable conduct and those acts purely "done with the intention of causing temporal harm"40 and which thus lacked legal justification. Later in these reasons it will be necessary to refer further to the confused genesis of the doctrine of justification in the tort of contractual interference. Secondly, SOCOG submitted that no remedy should be given where the justice of the case required that it not be given, or did not require that it be given; that the tort of interference with contract was wide, and perhaps widening, and defendants needed some insulation from its rigours; that the function of the justification defence was to achieve these goals; and that they were best achieved by treating the relevant conduct as tortious only if it were done "without just cause or excuse". Thirdly, SOCOG submitted that there were two inconsistent sets of legal rights: the plaintiff's contractual rights against TOC, and SOCOG's rights. SOCOG accepted that it had no superior statutory right positively authorising the 38 (1889) 23 QBD 598 at 613. 39 (1889) 23 QBD 598 at 618. 40 (1889) 23 QBD 598 at 618. Kirby Callinan commission of the tort and no superior proprietary right of a conventional kind41. SOCOG's rights arose from the right to protect the intellectual property which had been purportedly, but wrongly, granted by TOC to the plaintiff and of which it was the custodian. SOCOG said it was necessary to engage in a flexible discretionary "balancing exercise", weighing social and individual interests, to determine which set of rights should prevail. SOCOG submitted that its rights entitled it to interfere, using "brusque efficiency", with the plaintiff's contractual rights even though it might have been possible, in some less brusque way like negotiation or litigation, to ensure that the plaintiff did not interfere with those rights. SOCOG argued that it was more efficient for it to "wreck the contract" by preventing TOC and the plaintiff from performing it than to take measures to prevent its allegedly unlawful performance. It submitted that the defence of justification did not depend on a defendant selecting the most attractive course of conduct, but on recognition of an entitlement to protect its own interests. It argued that the Court of Appeal's finding of justification should not be disturbed merely because this Court might have reached a different conclusion if approaching the matter for the first time. Justification: the correct approach Preliminary difficulties in SOCOG's argument. SOCOG had no "rights" against the plaintiff in relation to his Australian conduct, since it was all lawful. Any duty SOCOG had to take action against the plaintiff in relation to his conduct in China could only have flowed from an absence of prior written consent from the Chinese Olympic Committee as stipulated in par 11.2 of the Olympic Charter Bye-law. SOCOG submitted that par 10 imposed a duty on it to ensure compliance with par 11.2, and that, under cl 48(iii) of the Host City Contract, the IOC Executive Board could have withdrawn the Games from Sydney unless it fulfilled that duty. SOCOG also argued that s 11(a) and (b) of the SOCOG Act required it, in exercising its functions, to take into account, to the fullest extent practicable, the Olympic Charter and the Host City Contract. SOCOG's justification submission assumed that it had a legal duty to prevent TOC from entering a contract that purported to grant rights to use the intellectual property rights in China without the prior written consent of the 41 Thus SOCOG did not contend that it owned the intellectual property rights. It did not contend that it could have sued under any statute save the Indicia Act, and it accepted that that Act itself gave no right to interfere with the Agency Agreement as distinct from seeking the remedies provided in it. Kirby Callinan Chinese Olympic Committee. Even if that assumption were correct, SOCOG would have to go further and show that it had legal rights against the plaintiff once TOC entered the Agency Agreement, or legal obligations to curtail the plaintiff's conduct thereafter. This it did not do. (a) Neither s 11 nor any other provision of the SOCOG Act granted any statutory right of action to SOCOG against the plaintiff. (b) While cl 5(g) of the Establishment Agreement empowered the AOC and SOCOG representatives on the Club Committee to direct TOC to cease a particular activity, it did not empower them to direct, or to obtain a court order directing, the plaintiff to cease any activity. Even if, contrary to the conclusions reached above42, there were breaches of cll 1 and 3 of the Deed Poll, SOCOG could have claimed damages against the plaintiff, but they would be nominal only unless SOCOG could prove a loss. SOCOG would have grave difficulties in obtaining injunctive relief: it was a volunteer under the Deed Poll, it was not a party to the Agency Agreement and SOCOG failed to communicate a refusal of the plaintiff's request of 30 August 1999 to SOCOG for consent to use the intellectual property rights. The Host City Contract, cl 48(iii), only gave an entitlement to the IOC Executive Board to terminate the Host City Contract and withdraw the Games from Sydney if there had been a breach of the Olympic Charter by SOCOG, but SOCOG never attempted in argument to establish any such breach. Any contention that there was a breach stemming from pars 10 and 11.2 of the Olympic Charter Bye-law would face the following obstacles. First, it would be remarkable if the Chinese Olympic Committee could not waive the requirement that its prior written approval be granted, in view of the fact that the requirement apparently existed for the benefit of that Committee, and in view of the territorial structure which the IOC devised in the Olympic Charter to protect the intellectual property. According to the uncontested evidence, the requirement probably was waived by the Chinese Olympic Committee's express oral consent to the plaintiff's conduct, and its statement that it was unnecessary to give the plaintiff a document indicating its consent in writing43. 42 See [77]-[86]. 43 See [94]-[95] above. Kirby Callinan Secondly, although SOCOG attempted to place a considerable distance between itself and TOC, if SOCOG bears some responsibility for any misconduct on the part of TOC in entering the Agency Agreement, on the basis of the considerable control over TOC which SOCOG was in a position to exercise, it is hard to see how that circumstance is compatible with a justification defence. Thirdly, any breach of the Olympic Charter capable of remedy could only have been remedied after service of a notice of breach under cl 48(iii) of the Host City Contract. No such notice was ever given or, so far as the evidence indicated, suggested. Fourthly, it is wholly unrealistic to imagine that, even if SOCOG was in breach of its duty to ensure compliance with par 11.2 of the Olympic Charter Bye-law (which it did not demonstrate), the IOC Executive Board would have acted under cl 48(iii) on the ground of the plaintiff's rather modest activities. Against the overall background of the Games of the XXVII Olympiad in Sydney and the international "Olympism" to which they were to contribute, the plaintiff's activities in China scarcely loomed large. In truth, SOCOG had no legal rights and corresponding duties of the kind alleged, but nevertheless attempted to vindicate the interests of itself and the related entities that it wanted to protect by the most direct means, independently of any concern for legality. But there were more general problems in SOCOG's approach. SOCOG argued that the statement by Romer LJ in Glamorgan Coal Co Ltd v South Wales Miners' Federation44 was approved in R v Archdall and Roskruge; Ex parte Carrigan and Brown45 when Knox CJ, Isaacs, Gavan Duffy and Powers JJ applied it to the words "without reasonable cause or excuse" in s 30K of the Crimes Act 1914 (Cth). Section 30K provided: "Whoever … without reasonable cause or excuse, by boycott or threat of boycott of person or property … hinders the provision of any public service by the Commonwealth … shall be guilty of an offence." Whatever force those statements have with respect to s 30K, R v Archdall cannot be regarded as a decision approving the words of Romer LJ in relation to interference with contract. It did not purport to approve those words in that context; no argument was directed in support of or against those words as a correct statement of the law in relation to interference with contract; and the tort of interference with contract was not in issue in that case. 44 [1903] 2 QB 545 at 573-574. 45 (1928) 41 CLR 128 at 136-137. Kirby Callinan However, R v Archdall does serve to illustrate the varied uses in the law of the notion of justification. At the time Romer LJ in Glamorgan adopted what had been said by Bowen LJ in Mogul in another context, the phrase "without just cause or excuse" on occasion was used in apposition to "maliciously". This was done by Lord Davey in The Royal Baking Powder Co v Wright Crossley & Co46 when stating as an element of the tort of slander of title that the statements "were made maliciously – ie, without just cause or excuse". In many of the earlier cases, justification had been found in the bona fide assertion of the defendant of a claim of right, being a rival title to the property in question47. "Malice" in the sense of spite or ill-will has not been required for the tort of contractual interference, but there remains a requisite mental element, the presence of which has not been disputed in this litigation. A review of the cases such as Glamorgan Coal Co Ltd v South Wales Miners' Federation decided a century ago has led to the suggestion that48: "[i]n these cases the question was whether there was 'just cause or excuse' for the inducement of the breach of contract and this is only another aspect of the idea of 'wrongful intention'." That was how Dixon J saw the matter. In James v The Commonwealth49, after stating that the principle in Lumley v Gye50 was wide enough "to include within its protection civil rights which exist independently of contract", so as to encompass the procuring of breaches of the duty of a common carrier to carry the dried fruit of Mr James, his Honour continued51: 46 (1900) 18 RPC 95 at 99. 47 Newark, "Malice in Actions on the Case for Words", (1944) 60 Law Quarterly Review 366 at 372-374; Prosser, "Injurious Falsehood: the Basis of Liability", (1959) 59 Columbia Law Review 425 at 428-429. 48 Fridman, "Malice in the Law of Torts", (1958) 21 Modern Law Review 484 at 499. 49 (1939) 62 CLR 339. 50 (1853) 2 El & Bl 216 [118 ER 749]. 51 (1939) 62 CLR 339 at 370-371. Kirby Callinan "In more than one respect, however, the elements of the cause of action are ill defined. Sometimes malice is said to be an ingredient; but this seems to mean no more than that the defendant must have knowledge of the existence of the civil right or of the facts from which it arises and must act without lawful justification. What constitutes a lawful justification is a matter of some difficulty52. The question which appears to me to arise in the present case under the head of justification or excuse is whether the bona-fide execution of a law for the time being upheld as valid by the competent judicial power amounts to just cause or excuse notwithstanding that the law is afterwards found to be invalid." Dixon J answered this question in the affirmative. But the present significance of Dixon J's remarks and of the tangled legal history of which he was aware is the caution those remarks suggest in adoption of any loose notion of "lawful justification" as a defence to the tort of contractual interference. Accordingly, the primary difficulty with the approach SOCOG would have this Court take is that in Australian law the defence of justification does not depend upon a discretionary "balancing" of social and individual interests53. The statement of Romer LJ in Glamorgan Coal Co Ltd v South Wales Miners' Federation may be relevant, at a high level of generality, to the elucidation of the law, but appears never to have been decisive of the outcome in any particular case. Another difficulty was that, so far as SOCOG's case relied on a desire to protect its own interests as organiser of the Sydney Games, it collided with authorities establishing that justification cannot be found in mere self-interest. So far as it rested on a duty or desire to protect the interests of others, those others were entities linked with SOCOG, for example the AOC, the IOC, the Olympic movement, and all persons enthusiastic for the Games to proceed. 52 See Glamorgan Coal Co Ltd v South Wales Miners' Federation [1903] 2 KB 545, particularly at 573, 575; [1905] AC 239; Brimelow v Casson [1924] 1 Ch 302; Winfield, Textbook of the Law of Tort, (1937) at 624; Salmond, Law of Torts, 7th ed (1928) at 634, §159(4); Sayre, "Inducing Breach of Contract", (1923) 36 Harvard Law Review 663 at 677-686, 702; Note, "Inducing Breach of Contract – Problems of Intent and Justification", (1926) 39 Harvard Law Review 749; Jenks, A Digest of English Civil Law, 3rd ed (1938), §983, note b. 53 cf Restatement of Torts, 2d, vol 4, Ch 37, §§767-773 (1977). Kirby Callinan Further, SOCOG's invocation of justification did not deal with the detail of the reasoning in the relevant authorities, to which it is now necessary to turn. Interference in legal relations between other parties. Analysis of justification in terms of a search for a right in the defendant which is superior or equal to that of the plaintiff compels attention to the function of the tort. It is instructive to compare the tort with other instances where the law grants remedies against a third party who interferes in the legal relations between two other persons – where a third party procures or takes advantage of a breach of duty owed by a trustee to a beneficiary; where a third party procures or takes advantage of a breach of duty by some other fiduciary to the principal; where a third party not bound by a court order thwarts its operation; or where a third party aids, abets, counsels or procures a breach of duty created by statute. Intervention against a third party who obtains trust property from a trustee in breach of trust is based on the need to protect the proprietary interests of the beneficiaries. Intervention against a third party who obtains some other advantage as a result of a trustee's breach of trust is based on the need to ensure that the trust receives property which, if it were to be acquired at all, should have been acquired for the trust. Intervention against persons who knowingly assist other fiduciaries to breach their duty is based on the need to deter conduct that directly undermines the "high standard" required of fiduciaries, and on the inequitable character of permitting those persons to retain benefits resulting from their conduct54. Intervention against persons who, though not personally bound by a court order, procure those who are bound by it to contravene it, or otherwise thwart it, rests on a different basis: those persons are not liable as accessories who aided and abetted the persons bound by the order, but are directly liable for independent contempts committed by themselves in obstructing the course of 54 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397 Kirby Callinan justice55. Statutory extensions of primary statutory prohibitions to catch conduct of accessories rest on goals peculiar to the particular statute56. On what basis are defendants who interfere with contracts to which they are not party liable? Kitto J's analysis of contractual rights as "quasi-proprietary". In Attorney-General for New South Wales v Perpetual Trustee Co (Ltd)57, Kitto J drew attention to the ancient common law rule that "where A is prevented from fulfilling his obligations to B by reason of an injury wrongfully inflicted upon him by C, B has no right of action against C in respect of his loss". He also drew attention to the exception that existed "where A's obligations arise out of a relationship of master and servant existing between B and himself". He then said that the principle on which the exception rested58: "provides a remedy for the wrongful invasion of a quasi-proprietary right which a master is considered to possess in respect of the services which his servant is under an obligation to render him. If that right is invaded by a wrongful injury to the servant which disables him from performing his due service, the injuria to the master is collateral to, and not consequent upon, the injuria to the servant". He explained the existence of "this quasi-proprietary right or interest" as arising from59: 55 Seaward v Paterson [1897] 1 Ch 545 at 555 per Lindley LJ; Z Ltd v A-Z and AA-LL [1982] QB 558 at 578-579 per Eveleigh LJ; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 255 per Lockhart J and 266 per Gummow J; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 395 [30] per Gaudron, McHugh, Gummow and Callinan JJ. 56 For example, the Trade Practices Act, ss 75B(1) and 80; Corporations Act 2001 (Cth), s 1324. 57 (1952) 85 CLR 237 at 294. 58 (1952) 85 CLR 237 at 294-295. 59 (1952) 85 CLR 237 at 295. Kirby Callinan "a notion which originally was a corollary of the ancient conception of the relationship of master and servant as one of status … That conception has gone, but the notion of a right in the master, as a species of property, that others shall not, by their wrongful acts, deprive him of the benefit of the relation between himself and his servant has not been abandoned. An infringement of that right entitles the master to recover damages." Kitto J pointed out that though the right of an employer to claim damages for loss of services by physical injury to employees was never extended to contracts for the provision of services as distinct from contracts of service, the right of a plaintiff receiving the services of another person to sue a defendant who enticed that other person away, or continued to employ that other person in breach of his or her contract with the plaintiff, was recognised, certainly by the time of Lumley v Gye60. In that case the contract of an opera singer with the plaintiff, a theatre manager, to perform only in his theatre, which was interfered with by the defendant, was clearly a contract for services. Kitto J said that "by parity of reasoning a right of action has been conceded for every interference with contractual relations committed knowingly and without justification"61. He continued62: "The conception which has led to this development of the law may be said to be that a person has a right, a right in rem, in respect of the contractual rights, the rights in personam, which he possesses as against the other party to his contract." The status of Kitto J's reasoning. Kitto J's thesis that though as between the plaintiff and the other party to the contract the rights are rights in personam, as between the plaintiff and a defendant who interferes with a contract the rights are "rights in rem" or "quasi-proprietary" did not explain the distinction between "quasi-proprietary" and "proprietary" rights. The distinction seems to rest on the view that proprietary rights are stronger than quasi-proprietary rights in that while the former are marked by a combination of characteristics like alienability of benefit and burden and a right to exclusive possession or use enforceable against the world (for example, the rights of the owner of land in fee simple 60 (1853) 2 El & Bl 216 at 227 [118 ER 749 at 753] per Crompton J; De Francesco v Barnum (1890) 63 LT 514 at 515 per Fry LJ. 61 (1952) 85 CLR 237 at 296. 62 (1952) 85 CLR 237 at 296-297. Kirby Callinan absolute in possession, or of the absolute owner of a chattel or a share or a patent), quasi-proprietary rights do not have the totality of those characteristics. Their principal, but not always sole, characteristic is that they are protected from third party interference. The thesis may also have an element of circuity. It seeks to answer the question: "Why is a plaintiff's right to performance of a contract protected against third party interference?" It gives the answer: "Because it is quasi-proprietary." But that raises the question: "Why is it quasi- proprietary?" The answer is: "Because it is protected against third party interference."63 However, whether or not that is so, Kitto J's thesis has significant support. First, in Lumley v Gye itself, Erle J, in answering an objection that the Court ought not to extend the cases permitting masters to recover against defendants who procured a breach of contract between master and servant, said that the existing authorities rested64: "upon the principle that the procurement of the violation of the right is a cause of action, and that, when this principle is applied to a violation of a right arising upon a contract of hiring, the nature of the service contracted for is immaterial. It is clear that the procurement of the violation of a right is a cause of action in all instances where the violation is an actionable wrong, as in violations of a right to property, whether real or personal, or to personal security". While this did not equate all contractual rights to quasi-proprietary rights, it did treat contractual rights as having an analogy with proprietary rights. Secondly, Kitto J's characterisation also commonly appears in American cases. "That the interest of an employer or an employé in a contract for services is property is conceded. Where defendants in combination or individually 63 This tendency to circuity is a common problem in discussing property rights. See Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34 per Windeyer J for a related difficulty in the protection of non-statutory trademarks by injunction. 64 (1853) 2 El & Bl 216 at 232 [118 ER 749 at 755]. Kirby Callinan undertake to interfere with and disrupt existing contract relations between the employer and the employé, it is plain that a property right is directly invaded."65 Thirdly, subject to the established limits on the grant of specific performance and injunctions, in Australian law each contracting party may be said to have a right to the performance of the contract by the other. It is not true here to say: "The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, – and nothing else."66 As Sir Frederick Pollock pointed out in a letter to Holmes J dated 17 September 1897, if that statement was true, "how can it be wrong to procure a man to break his contract, which would then be only procuring him to fix his lawful election in one way rather than another?"67 The relevant volume contains no reply to that letter or to the question. But Holmes J returned to the subject on reading the following words in the 8th edition of Pollock's Principles of Contract, published "Mr. Justice O.W. Holmes … suggests that every legal promise is really in the alternative to perform or to pay damages: which can only be regarded as a brilliant paradox. It is inconsistent not only with the existence of equitable remedies, but with the modern common law doctrine that premature refusal to perform may be treated at once as a breach." Holmes J in a letter of 12 March 1911 said69: 65 Jersey City Printing Co v Cassidy 53 A 230 at 232 (NJ Ct of Ch 1902). See also, for example, Tubular Rivet & Stud Co v Exeter Boot & Shoe Co 159 F 824 at 829 (1st Cir 1908); R an W Hat Shop Inc v Sculley 118 A 55 at 58-59 (Conn SC Error 1922); Sorenson v Chevrolet Motor Co 214 NW 754 at 756 (Minn SC in Banc 1927); DeLong Corp v Morrison-Knudsen Co Inc 244 NYS 2d 859 at 863 (NY 66 Oliver Wendell Holmes, "The Path of the Law", (1897) 10 Harvard Law Review 457 at 462. See also Holmes, The Common Law, (1882) at 301: "The only universal consequence of a legally binding promise is, that the law makes the promisor pay damages if the promised event does not come to pass." 67 Howe (ed), The Pollock-Holmes Letters, (1942), vol 1 at 80. 68 Pollock, Principles of Contract, 8th ed (1911) at 192 n (k). 69 Howe (ed), The Pollock-Holmes Letters, (1942), vol 1 at 177 (emphasis in original, footnote omitted). Kirby Callinan "I stick to my paradox as to what a contract was at common law: not a promise to pay damages or, etc, but an act imposing a liability to damages nisi. You commit a tort & are liable. You commit a contract and are liable unless the event agreed upon, over which you may have no, and never have absolute, control, comes to pass." This riposte did not deal with the tort of interference with contract, nor with the existence of equitable remedies. The breadth of the latter was noted by Windeyer J in Coulls v Bagot's Executor and Trustee Co Ltd70. He said that damages are inadequate if they cannot satisfy the demands of justice, and that justice to a promisee might well require that a promisor perform the promise, save for exceptional cases like promises to render a personal service. "There is no reason today for limiting by particular categories, rather than by general principle, the cases in which orders for specific performance will be made." "It is … a faulty analysis of legal obligations to say that the law treats a promisor as having a right to elect either to perform his promise or to pay damages. Rather … the promisee has 'a legal right to the performance of the contract'."72 A fourth factor suggesting that the plaintiff's right to contractual performance from another contracting party is protectable against third parties in a quasi-proprietary manner is the nature of injunctive relief. In days when lawyers insisted more commonly than they do now that, negative covenants apart, injunctions could not be granted in the auxiliary jurisdiction of equity unless in aid of a proprietary right, it was common for injunctions, interlocutory and final, to be granted against interferences with contract. Thus in Woolley v Dunford73 Wells J said that an injunction was available not only to protect 70 (1967) 119 CLR 460 at 503. 71 (1967) 119 CLR 460 at 504. 72 Quoting Alley v Deschamps (1806) 13 Ves Jun 225 at 228 [33 ER 278 at 279] per Lord Erskine. 73 (1972) 3 SASR 243 at 297. Kirby Callinan "proprietary rights or rights in possession, [stricto] sensu", but also to protect "rights created by a concluded contract" which were being tortiously interfered with. There are numerous instances where the right to contractual performance is called a "chose in action". The expression suggests that, like a chose in possession, the right is proprietary. Many choses in action are alienable, and alienability is a common feature of rights called "proprietary". Another respect in which a proprietary character can be seen in the rights protected by the tort is illustrated by the role of notice. A defendant who is unaware of a plaintiff's contract is not liable; a defendant who is aware is liable provided all the other conditions of liability are satisfied. While liability for interference with some items of property is strict, that is not universally true: the knowledge requirement in the tort of interference with contract resembles a rule of priority between competing proprietary claims74. The conventional explanations for recognising private property rights have tort under to contracts protected by to apply equally the been said consideration75: "[F]irst the argument that the private property institution extends the range of choices open to human beings and thus increases their freedom; secondly the argument that the institution makes possible the existence of a market for scarce commodities which will ensure that they are allocated so as to maximize social wealth; thirdly, the argument that the private property institution provides a suitable reward (and hence an incentive) for productive endeavour." There is also support for Kitto J's analysis in texts76: 74 Epstein, "Inducement of Breach of Contract as a Problem of Ostensible Ownership", (1987) 16 Journal of Legal Studies 1 at 2-3. 75 Bagshaw, "Inducing Breach of Contract", in Horder (ed), Oxford Essays in Jurisprudence (Fourth Series), (2000) 131 at 133, see also 134-137. 76 Rogers, Winfield and Jolowicz on Tort, 16th ed (2002) at 628. Kirby Callinan "[C]ommercial contractual relations had become valuable rights which could be regarded as entitled to at least some of the protection given by the law to property". On the other hand, there have been critics of the quasi-proprietary theory, principally in the United States77. In particular, Kitto J's view has been attacked as "crude" and as part of a process by which "[i]nstinctively, certainly nonchalantly, common-law judges made recourse to property conceptions"78. This language does little justice either to the reasoning of Kitto J or to the difficulty of finding any alternative to it. Many of the criticisms of Kitto J's reasoning are directed to the goal of reformulating the tort in a manner quite inconsistent with its well-settled elements in Australian law. The arguments in the present case did not suggest that Kitto J's reasoning does not represent the law in Australia and did not suggest any alternative to it. Jordan CJ's approach. "Property" is a comprehensive term which is used in the law to describe many different kinds of relationship between a person and a subject-matter; the term is employed to describe a range of legal and equitable estates and interests, corporeal and incorporeal79. Accordingly, to characterise something as a proprietary right (and, a fortiori, a quasi-proprietary right) is not to say that it has all the indicia of other things called proprietary rights. Nor is it to say "how far or against what sort of invasions the [right] shall be protected, because the protection given to property rights varies with the nature of the right"80. But, statute apart, where reliance is placed on the defence of 77 For example, Dobbs, "Tortious Interference with Contractual Relationships", (1980) 34 Arkansas Law Review 335; Perlman, "Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine", (1982) 49 University of Chicago Law Review 61; Carty, An Analysis of the Economic Torts, (2001) at 70-72. The arguments are summarised by McChesney, "Tortious Interference with Contract Versus 'Efficient' Breach: Theory and Empirical Evidence", (1999) 28 Journal of Legal Studies 131. 78 Palmer, "A Comparative Study (From a Common Law Perspective) of a French Action for Wrongful Interference with Contract", (1992) 40 American Journal of Comparative Law 297 at 332 and 333 n 144. 79 Yanner v Eaton (1999) 201 CLR 351 at 365-367 [17]-[20] per Gleeson CJ, Gaudron, Kirby and Hayne JJ, 388-389 [85] per Gummow J. 80 Carpenter, "Interference with Contract Relations", (1928) 41 Harvard Law Review Kirby Callinan justification to protect a right which is equal or superior to the contractual right of the plaintiff, logic suggests that the protected equal right of the defendant will normally have a similar character to the right of the plaintiff – ie a quasi- proprietary character – while a superior right will be proprietary. Logic is a dangerous guide in relation to terms as subtle, fluid and lacking in fixed and uniform criteria as "proprietary" and "quasi-proprietary", but Jordan CJ's analysis of superior rights in Independent Oil Industries Ltd v The Shell Co of Australia Ltd81 certainly suggests that a right which is "superior" to the plaintiff's contractual right must be proprietary. That was a case in which the plaintiff was a petrol wholesaler selling to retail dealers on the condition that the dealers would sell the plaintiff's petrol at a retail selling price fixed by the plaintiff from time to time. The defendants were also petrol wholesalers. They sold petrol to the same retail dealers on condition that if the dealers observed a margin prescribed between the price at which the petrol was purchased from the defendants and the price at which it was sold to the public, and also sold all corresponding grades of petrol at the same price, the dealers would be supplied with petrol by the defendants at a price less than the retail price. The defendants, but not the plaintiff, increased their prices with the result that the retail selling price of the plaintiff's petrol, which corresponded in grade to that of the defendants, was less than that of the defendants'. The defendants then, pursuant to their conditions of sale, refused to supply petrol, except at the full retail price, to dealers who sold the plaintiff's petrol at the lower rate. This course resulted in the dealers receiving no profit on the resale of the defendants' petrol. Certain dealers thereupon broke their agreements with the plaintiff and increased the price of the plaintiff's petrol beyond the selling price fixed by the plaintiff. Nicholas J granted an interlocutory injunction restraining the defendants from inducing dealers to commit breaches of their contracts with the plaintiff, but the Full Court of the Supreme Court of New South Wales discharged it. The Full Court held that the tort of interference with contract had not been committed. The contracts between the retailers and the plaintiff were terminable at will by the dealers. If the contracts were terminated, the only breach by the dealers of their contracts with the plaintiff not to sell the petrol sourced from the plaintiff above the price fixed by the plaintiff would arise in relation to petrol still in the dealers' tanks. The Full Court held that the evidence revealed no attempt by the defendants to induce the dealers to sell the petrol still in their tanks at a higher price. In effect, it held that the defendants were seeking 81 (1937) 37 SR (NSW) 394 at 415. Kirby Callinan the lawful termination of the dealers' contracts with the plaintiff, not their breach82. Hence the outcome of the case did not turn on justification for a proved tort, but on failure to prove the tort. Independent Oil Industries Ltd v The Shell Co of Australia Ltd does, however, contain a valuable analysis of the defence of justification which has been much neglected by both judge and jurist. Jordan CJ (Long Innes CJ in Eq and Davidson J concurring) cited Lord Lindley's reference to "cases in which a person, whose rights will be violated if a contract is performed, is justified in endeavouring to procure a breach of such contract."83 Jordan CJ said justification in that sense rested on the principle that "an act which would in itself be wrongful as infringing some legal right of another person may be justified if shown to be no more than reasonably necessary for the protection of some actually existing superior legal right in the doer of the act". He illustrated the operation of the principle thus84: "[A]n occupier of land may after notice lawfully eject a trespasser, and anyone may lawfully defend himself, by acts which would in other circumstances constitute the tort of assault." The legal strength of the trespasser's position could not be improved, and the legal strength of the occupier's position could not be reduced, by the fact that the trespasser had entered the occupier's land pursuant to a contract with a third party. Nor could the third party complain. Thus he extended the example85: "If A without authority from B employs C to cut down trees upon B's land, B may lawfully procure C not to commit the trespass, just as he may lawfully prevent him from committing it." 82 Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 419-420. 83 South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 at 254. 84 Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 415. 85 Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 416. Kirby Callinan He gave another example of justification in the relevant sense as follows86: "If one person without authority employs another to sell the land or goods of a third party, neither of them can complain if the third party procures the other not to perform a contract which cannot be performed without violating his superior legal right". "[I]t does not appear to have yet been authoritatively decided that anything short of the protection of an actually existing superior legal right will justify the wilful procuring of a breach of contract". For that he cited South Wales Miners' Federation v Glamorgan Coal Co Ltd88, where the Earl of Halsbury LC said that justification could not be founded upon a belief that the plaintiff would be benefited by the defendant procuring a breach of the contract to which the plaintiff was party, and strongly suggested that justification could not be founded upon moral or religious grounds, or upon any duty or moral right to tender advice. Jordan CJ concluded by saying that if Brimelow v Casson89 decided to the contrary it was inconsistent with authority, namely South Wales Miners' Federation v Glamorgan Coal Co Ltd90. That case was, of course, decided shortly before the enactment of the Trade Disputes Act 1906 (UK), and later legislation both in the United Kingdom and here, conferring defences on trade unions in relation to economic torts. Further, Jordan CJ was writing at a time when decisions of the House of Lords were normally followed without question by Australian courts and when social conditions affecting 86 Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 415. 87 Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 416. 88 [1905] AC 239 at 244-245. 89 [1924] 1 Ch 302 (where union officials were held to be justified in interfering with contracts between theatre owners and an impresario who paid the actresses he employed so little as to force them into prostitution). 90 [1905] AC 239 at 244-245 per the Earl of Halsbury LC, 246 per Lord Macnaghten, 255 per Lord Lindley. Kirby Callinan allegations of interference with employment contracts were somewhat different from those existing today. It is unnecessary to consider the correctness of Jordan CJ's observations in relation to the particular context of an employment relationship, which was not the context of the case before him and which is not the context of the present case. Subject to that reservation, the general principle remains. Ordinarily, to justify the wilful attempt of a stranger to procure a breach of contract, a superior legal right must be established. It appears to follow that by "actually existing superior legal right" Jordan CJ meant a right in real or personal property, not merely a right to contractual performance. The former type of right may be seen as superior to the latter because the former is proprietary, while the latter is at most quasi- proprietary, in the sense which Kitto J appeared to be employing. Two competing rights to contractual performance involving no proprietary interest would be equal rights, neither being superior to the other; but Jordan CJ did not mention the protection of an equal right as a form of justification. The conclusion that by "superior legal right" Jordan CJ meant a right to real or personal property is also indicated by the fact that he limited his examples of persons justified in interfering with contracts to the owners of rights in real or personal property that were inconsistent with rights created by contracts between other persons. It is also suggested by the fact that after giving the example of one person employing another to sell the land or goods of a third, he referred, with the preface "cf", enigmatically suggesting partial acceptance and partial doubt, to Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales91 and Smithies v National Association of Operative Plasterers92. In the latter case, Buckley LJ said: "No doubt there are circumstances in which A is entitled to induce B to break a contract entered into by B with C. Thus, for instance, if the contract between B and C is one which B could not make consistently with his preceding contractual obligations towards A, A may not only induce him to break it, but may invoke the assistance of a Court of Justice to make him break it. If B having agreed to sell a property to A subsequently agrees to sell it to C, A of course may restrain B by injunction from carrying out B's contract with C, and the consequence may ensue that B will be liable to C in damages for breaking it." 91 [1902] 2 KB 88 at 95. 92 [1909] 1 KB 310 at 337. Kirby Callinan The reference to entitlement in the first sentence, leading to the illustration given in the second sentence, is open to several interpretations. First, where A holds a covenant from B which imposes upon B a valid restraint upon B entering into or performing a contract with C, it may be that the tort of inducement has no application at the instance of C where A seeks to enforce the restraint which binds B. In such a case, the correct legal characterisation may be that there is no inducement because A is not relying upon "some power or influence independent of lawful authority". The words are those of Dixon J in James v The Commonwealth93 to which further reference will be made. Secondly, while the language in the second sentence of that passage is wide enough to cover a competition between mere contractual rights, in the third sentence Buckley LJ appears, by the words "a property", to have meant real property. An agreement for valuable consideration to sell property confers, if the agreement be specifically enforceable, the special equitable interest of the nature recently considered in Tanwar Enterprises Pty Ltd v Cauchi94. Buckley LJ then referred to Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales. Darling J's judgment in that case contains what appears to be the first judicial reference to a defendant being able to find justification in a right which is "equal or superior" to the plaintiff's95. Darling J earlier said96: "It may well be that a person, or many persons acting in concert, would have a right to demand the fulfilment of a contract entered into with him or them, even though such fulfilment involved him who performed it in breaking a contract made by him with another person. Many examples may be put – for instance, a man who had affected to sell the same article to two separate purchasers could not possibly perform one contract without breaking the other, if both insisted on their rights, yet it could not render the purchaser, who insisted on his contractual rights, liable at the suit of the other purchaser." 93 (1939) 62 CLR 339 at 373. 94 (2003) 77 ALJR 1853 at 1860-1861 [43]-[47] and 1870-1871 [96]; 201 ALR 359 at 369-370 and 383. 95 [1902] 2 KB 88 at 96. 96 [1902] 2 KB 88 at 95. Kirby Callinan Darling J's example appears to postulate a contract for the sale of an "article" which is specifically enforceable on the ground that damages would not be an adequate remedy – because, for example, the article is of special value to the purchaser. So read, Darling J's proposition is correct as far as the first purchaser is concerned. However, it cannot be correct so far as the second purchaser is concerned. Before completion, each purchaser is claiming an equitable interest of a special and limited nature97. The second purchaser's claim must fail, being an equitable claim in competition with that of a prior equitable claimant who is first in time and who has done nothing to lose priority98. That reveals that the example is not one of competition between rights, but one in which while the first purchaser has a right, the second has no right at all. In short, Jordan CJ's reference to the statements of Buckley LJ and Darling J supports the view that an "actually existing superior legal right" is required, and that such superiority is not established by priority between merely contractual rights. Superiority is conferred by the proprietary nature of the right99 or, as in James v The Commonwealth100, must be found in statute. No such statutory right or duty exists in the present case, as explained earlier in these reasons. This approach to the defence of justification should be accepted for Australia101. An English example of a superior right was discussed in Edwin Hill & Partners v First National Finance Corp plc102. The defendants lent money to a 97 Tanwar Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853 at 1860-1861 [43]- [47]; 201 ALR 359 at 369-370. 98 Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) (1965) 113 CLR 265 at 276 99 For an example of a United States case in which the transferee of a proprietary right was held justified in asserting that right against a later transferee, see Tidal Western Oil Corporation v Shackelford 297 SW 279 (Tex Civ App 1927). 100 (1939) 62 CLR 339 at 373. 101 Subject to what is said at [138] above. 102 [1989] 1 WLR 225; [1988] 3 All ER 801. Kirby Callinan property developer to enable him to develop a particular property and secured the loan by charges on the property. The property developer engaged the plaintiffs as architects but was unable to get the development started. He fell into financial difficulties. The defendants agreed to make further advances in order to finance the development, provided the plaintiff architects were dismissed. The plaintiffs were dismissed, in breach of contract. It was held that the defendants had unlawfully interfered with the plaintiffs' contract, but that they had made out a defence of justification. It was common ground that if the defendants had relied on their legal rights, called in the loan, and exercised their power under the charge to sell the land or appoint a receiver, this would inevitably have led to the termination of the plaintiffs' contract, but without any tortious liability on the part of the defendants to the plaintiffs103. Stuart-Smith LJ (Nourse LJ and Sir Nicolas Browne-Wilkinson V-C concurring) said104: "[T]he law may grant legal remedies to the owner of property to act in defence or protection of his property; if in the exercise of these remedies he interferes with a contract between A and B of which he knows, he will be justified. If, instead of exercising those remedies, he reaches an accommodation with A, which has a similar effect of interfering with A's the contract with B, he accommodation may be to the commercial advantage of himself or A or both." justified notwithstanding is still that Similarly, there are United States authorities holding that a mortgagee105 or lessor106 is entitled to exercise its proprietary rights adversely to the interests of persons contracting with the mortgagor or lessee, even if those contracts are interfered with. Authorities for a wider approach. SOCOG's argument depended on the proposition that, though it did not have any property right of the type discussed in these cases or in Independent Oil Industries Ltd v The Shell Co of Australia Ltd, 103 The correctness of this assumption is discussed by O'Dair, "Justifying an Interference with Contractual Rights", (1991) 11 Oxford Journal of Legal Studies 104 [1989] 1 WLR 225 at 233; [1988] 3 All ER 801 at 808. 105 Meason v Ralston Purina Co 107 P 2d 224 (Ariz SC in Banc 1940). 106 O'Brien v Western Union Telegraph Co 114 P 441 (Wash SC in Banc 1911). Kirby Callinan it had contractual rights equal to or superior to the plaintiff's rights. In Edwin Hill & Partners v First National Finance Corp plc107 there is a dictum that justification for interference with the plaintiff's contractual rights could be based upon an equal or superior right in the defendant derived from contractual rights. And Clerk & Lindsell on Torts108 states: "The fact of an earlier contract with a defendant inconsistent with the claimant's contract may well afford a justification to the defendant for procuring a breach of the latter". This proposition primarily rests on the more general dicta of Buckley LJ in Smithies v National Association of Operative Plasterers109 and Darling J in Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales110, together with statements of other judges referring to them111. As discussed112, their generality is sharply qualified by the proprietary character of the rights of the defendants in the examples given. The proposition that a defendant can invoke as justification for interfering with the plaintiff's right to contractual performance a contractual right equal to it finds no support in the statements of Jordan CJ on behalf of the Full Court of the Supreme Court of New South Wales in Independent Oil Industries Ltd v The Shell Co of Australia Ltd. The Full Court only supports the existence of justification in superior, ie, proprietary rights: SOCOG's concession that it had no proprietary rights is fatal if Jordan CJ is correct113. And the examples employed by Buckley LJ and Darling J, as distinct from their more general statements, do not support the proposition that a defendant who makes a contract 107 [1989] 1 WLR 225 at 233; [1988] 3 All ER 801 at 808. 108 18th ed (2000) at [24-64]. See also Fleming, The Law of Torts, 9th ed (1998) at 764; Balkin and Davis, Law of Torts, 3rd ed (2004) at [21.15]. 109 [1909] 1 KB 310 at 337. 110 [1902] 2 KB 88 at 96. 111 Pratt v British Medical Association [1919] 1 KB 244 at 265 per McCardie J. 112 See [139]-[144] above. 113 Subject to the reservation at [138] above. Kirby Callinan with a person who enters an inconsistent contract with the plaintiff can rely on the justification defence, unless the defendant's contract was a specifically enforceable contract to sell property which passed an equitable interest. Darling J's statements, untied to examples, are too general to give guidance as to the law. Judge Learned Hand stated the following principle after referring to the English cases114: "If A has promised one performance to B and has later promised the same performance to C, A cannot satisfy both promises. If he chooses to perform his contract with C he remains liable to B and that liability is measured by the value of what B has lost, though, as we have said, the remedy is not the same thing as performance. There is no justification for allowing A the liberty to choose which of the two obligees he will grant the advantage: he is the wrongdoer. While it is true that B and C are equally innocent, there must be a choice between them, and if A is eliminated as chooser the basis for choice can only be he who has the earlier claim. He may justly insist on preference; it cannot be a wrong against A that he seeks to induce C not to enforce that performance to which as between them B himself has the preferred claim." However, this reasoning is unpersuasive. Judge Learned Hand appears to approach the matter as if there were competing claims to subject-matter, identified as "the same performance", which are to be resolved in favour of the claim which is earlier in time. One result would be that the party who contracted twice would have an answer to an action for breach of the second contract, that it was obliged by law to perform the first contract. It is not apparent why there should be that defence. The reason for this outcome appears to be the denial to a dual contract-maker of the choice of party to whom performance is tendered. Even if that be accepted, it does not follow that, in the above example, B should have an action in tort against C, and C an action in tort against B, as a consequence of C or B (as the case may be) urging A to perform its contract with 114 Hendler v Cuneo Eastern Press Inc 279 F 2d 181 at 185 (2nd Circ CA 1960). He quoted Darling J's statement about the sale of the same article to two purchasers in Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales [1902] 2 KB 88 at 95 and cited Buckley LJ's reference to it in Smithies v National Association of Operative Plasterers [1909] 1 KB 310 at 337. Kirby Callinan that party where that performance will prejudice the other contract. In James v The Commonwealth115, Dixon J said that what amounts to procurement or inducement for the purpose of the tort was a "matter of some obscurity". He went on to refer to the distinction drawn by Salmond between creating a reason for breaking a contract and pointing to reasons which already exist116, and to the necessity of "an element of impropriety, or of reliance upon some power or influence independent of lawful authority"117. Where each of B and C has a right to performance, in the sense described above, of its contract with A, it may be that for either to insist upon that performance involves no necessary element of impropriety independent of lawful authority. Another example may be that already discussed, where A enforces a covenant imposing a valid restraint upon B entering into or performing a contract with C. Reference has been made to the concessions respecting the constituent elements of the tort upon which the trial was conducted118. The application of the law concerning inducement and procurement in tripartite circumstances cannot be satisfactorily explored without a detailed factual context to serve as background. That makes this an inappropriate occasion further to pursue this aspect of the law. Further, in any event, Judge Learned Hand's proposition cannot assist SOCOG. It cannot be said that TOC promised one performance to SOCOG and later promised the same performance to the plaintiff. The most that can be said is that TOC was only granted a right to use or license its agents to use the intellectual property rights in Australia, not China, but purported to license an agent to use the intellectual property rights both in Australia and China. Nor is it a case in which SOCOG sought to induce the plaintiff not to enforce performance of the Agency Agreement; rather it induced TOC not to perform it. SOCOG did not place reliance, either in its Defence or its arguments, on the general statement of Buckley LJ in Smithies v National Association of Operative Plasterers quoted above119. On analysis, that case does not assist 115 (1939) 62 CLR 339 at 371. 116 (1939) 62 CLR 339 at 371. 117 (1939) 62 CLR 339 at 373. 118 At [42] above. Kirby Callinan SOCOG. In Buckley LJ's example, "A" is SOCOG, "B" is TOC, and "C" is the plaintiff. The contract interfered with was the Agency Agreement, between TOC ("B") and the plaintiff ("C"). The initial question is: were there "preceding contractual obligations" arising between TOC ("B") and SOCOG ("A"), having the result that the Agency Agreement was a contract which TOC could not make consistently with those preceding contractual obligations? The answer to that question is "Yes". In the Licence Agreement, TOC promised SOCOG not to "authorise the use of [the intellectual property rights] on or in relation to any goods or services of [TOC] or any third person, except as expressly permitted in this Agreement": cl 3.5(a). Contrary to that promise, in the Agency Agreement TOC did authorise the plaintiff to use the intellectual property rights in China, which was not expressly permitted by the Licence Agreement. But does the rest of Buckley LJ's statement apply? If it did, SOCOG would have been entitled to induce TOC to breach the Agency Agreement and entitled to invoke the assistance of a court to make TOC cease to perform it. The validity of the former proposition appears to be linked to the latter: it would be bizarre if defendants could gain by self-help advantages greater than those which they could obtain from the court. Thus the question becomes: could SOCOG have obtained an injunction against TOC performing the Agency Agreement, or against the plaintiff performing, or obtaining any advantage from, the Agency Agreement? The position of the parties must be assessed at the moment when SOCOG interfered with the Agency Agreement. Here there were three key dates. The first was 30 July 1999, when it was agreed that SOCOG should take over responsibility for running the Club (an agreement converted into formal terms by the Deed of Release and Termination on 13 September 1999). The second was 5 November 1999, when TOC repudiated the Agency Agreement after being persuaded by SOCOG to do so. The third was 6 December 1999, when the plaintiff was arrested. At none of these dates had the plaintiff committed the tort of interfering with the Licence Agreement. For the plaintiff to enter the Agency Agreement with TOC, being an agreement inconsistent with TOC's obligations under the earlier Licence Agreement, was not tortious unless the plaintiff had notice of the Licence Agreement, which he did not. To continue to deal with TOC would have been tortious after the plaintiff obtained notice of the Licence Agreement120, provided 120 D C Thomson & Co Ltd v Deakin [1952] Ch 646 at 694 per Jenkins LJ. Kirby Callinan that that dealing caused SOCOG loss – for the tort is only actionable on proof of damage121. There is no evidence that the plaintiff knew of the Licence Agreement until after he terminated the Agency Agreement on 22 December 1999 by commencing proceedings, and after that date there is no doubt that he did not interfere with the Licence Agreement. Nor is there any evidence or allegation that the making and performance of the Agency Agreement caused SOCOG any loss. The trial judge found that the plaintiff had performed the Agency Agreement without actionable breach, and SOCOG has abandoned all challenges to that finding. Proper performance by the plaintiff of the Agency Agreement could do nothing but assist the interests of SOCOG by bringing to the Games from China 10,000 visitors who might not otherwise have come. For that reason it is highly unlikely that SOCOG could have obtained an injunction against the plaintiff at any time. It is equally unlikely that SOCOG could have obtained an injunction against TOC which would have had the effect of depriving the plaintiff, as an innocent third party, of his rights under the Agency Agreement122. Since the court would not have assisted SOCOG in any attempt to stop the performance of the Agency Agreement, it seems that Buckley LJ's approach does not require that the extra-curial attempts by SOCOG to stop its performance be treated as justification. In Griffiths v Commonwealth Bank of Australia123, Lee J said: "[I]t may be said that … justification … will depend upon whether the interferor has sought, bona fide, to protect an equal or superior right to that of the interferee. A test of the standing of the right sought to be promoted would be whether it was capable of supporting injunctive relief to restrain the other party from exercising the contractual rights subjected to interference." This goes beyond the instance of competing specifically enforceable contracts to sell the same property: it is possible to protect one's contractual rights by injunction even though they create no proprietary right124. Lee J's statement was 121 Jones Brothers (Hunstanton) Ltd v Stevens [1955] 1 QB 275 at 281-283 per Lord Goddard CJ, Hodson and Romer LJJ. 122 Maythorn v Palmer (1864) 11 LT 261. 123 (1994) 123 ALR 111 at 119. 124 Brown v Heffer (1967) 116 CLR 344 at 351-352 per Windeyer J. Kirby Callinan not only tentative, but also obiter, since he found that the test propounded was not met by the defendant on the facts. Nor is it satisfied on the present facts because of the difficulties SOCOG would have faced in obtaining an injunction. This appeal may be decided on the footing that SOCOG's conduct does not meet the criteria for a defence of justification, whether they be as indicated by Jordan CJ in Independent Oil Industries Ltd v The Shell Co of Australia Ltd, by Buckley LJ in Smithies v National Association of Operative Plasterers or as canvassed in any of the other authorities. James v The Commonwealth125 apart, what is striking is the absence in Anglo-Australian law of occasions where such a defence, however understood, has succeeded. James v The Commonwealth, it should be added, was a case where the superiority of right flowed from statute, not reasons found purely in the general law. The rarity of instances of success probably reflects the high store placed on compliance with contractual obligation by English law and by the common law systems derived from it. The assertion of justification by a stranger to interfere with such compliance necessarily impinges on the general approach of the law. It is for that reason that justification requires either the authority of statute or some other superior right if the interference is to be lawful. However, in stating the law for Australia, it should now be accepted that, where the superiority of right rests in some characteristic of the general law, then, as indicated above, and as perceived by Jordan CJ, temporal priority of other purely contractual rights will not suffice. Was SOCOG's conduct "reasonably necessary"? Even if SOCOG's conduct had fallen within some existing judicial test, it would not constitute justification for an additional reason. According to Jordan CJ in Independent Oil Industries Ltd v The Shell Co of Australia Ltd126 an act of interference may be justified "if shown to be no more than reasonably necessary for the protection of some actually existing superior legal right in the doer of the act." This "reasonably necessary" requirement is consistent with two statements in Building Workers' Industrial Union of Australia v Odco Pty Ltd127. There the 125 (1939) 62 CLR 339. 126 (1937) 37 SR (NSW) 394 at 415. 127 (1991) 29 FCR 104 at 144, 146 per Wilcox, Burchett and Ryan JJ. Kirby Callinan Full Court of the Federal Court of Australia said: "There is good reason for the rarity of cases where justification has been shown. In a society which values the rule of law, occasions when a legal right may be violated with impunity ought not to be frequent." The Court concluded that: "The matter was quite susceptible of determination by … means [other than interference with contract]". Jordan CJ's requirement is supported by Dixon J's opinion that "the law always countenances resort to the courts … as the proper means of determining any assertion of right"128: equally, the law discountenances refusal to resort to the courts and the employment of self-help without notice instead. It is also supported by Simonds J's denial of justification in Camden Nominees Ltd v Forcey129 on the ground that the defendants had curial remedies to which they did not resort. That may not defeat the defence of justification in every case, but it supports the relevance of an inquiry into whether the defendant's interference was reasonably necessary. The "reasonably necessary" test directs attention to how a reasonable and prudent person or body in SOCOG's position would have behaved130. If SOCOG had been able to prove the cause of action it claimed to have against the plaintiff under s 12 of the Indicia Act, it could have sought an injunction under s 43, an interlocutory injunction under s 44, an order for corrective advertisements under s 45 or damages under s 46. None of these forms of relief were sought. Instead, a course of action was embarked upon which was precipitous, high-handed and oppressive in its consequences. SOCOG was a statutory body created by the Parliament of New South Wales. Its conduct in the present case fell far short of the conduct conventionally expected of bodies exercising powers granted by an Australian Parliament. Its conduct was so unsatisfactory that it may have been acting beyond its statutory power. 128 James v The Commonwealth (1939) 62 CLR 339 at 373. 129 [1940] Ch 352 at 365; cf Pete's Towing Services Ltd v Northern Industrial Union of Workers [1970] NZLR 32 at 54. Jordan CJ's requirement may also explain Romer LJ's reference to "the means employed to procure the breach" in Glamorgan Coal Co Ltd v South Wales Miners' Federation [1903] 2 KB 545 at 574: see [105] above. 130 Stanford v Roberts [1901] 1 Ch 440 at 444 per Buckley J; In re Chemists' Federation Agreement (No 2) [1958] 1 WLR 1192 at 1206 per Devlin J. Kirby Callinan However, the plaintiff did not challenge the conduct of SOCOG on this ground, and it is unnecessary to take this matter further. SOCOG's submission that its conduct demonstrated "brusque efficiency", or efficiency of any sort, is negated by the events of this litigation. SOCOG never contended in 1999, and did not demonstrate in this appeal, that the plaintiff had any suspicion that TOC lacked power to authorise him to use the intellectual property rights or that TOC was in breach of the Licence Agreement in entering the Agency Agreement. SOCOG never sought to tell the plaintiff about its concerns, to share with him any information it had about TOC's shortcomings, to gain from him any information he had, to negotiate concessions from him, to reason with him, to check with the Chinese authorities whether they were happy with him, or to remind him and them of par 11.2 of the Olympic Charter Bye- law. Its officers refused to deal with the plaintiff in good faith, and evaded attempts by the plaintiff's representatives to speak with them. Because SOCOG never sought to obtain an injunction against the plaintiff, it never went through the salutary experience of pondering the consequences of the undertaking as to damages it would have had to offer as the price for an injunction – an experience which is strongly conducive to calm and clear thinking. Any of the above steps would have been far more efficient than doing what SOCOG actually did. Instead of undertaking them, it formed an opinion that the plaintiff was a "loose cannon", even though there was no reasonable basis for applying that hoary metaphor from the age of fighting sail to the plaintiff. What SOCOG did went outside its statutory duty under s 9(2)(a) and (c) of the SOCOG Act in carrying out its primary objective of organising the Sydney Games, namely "to act in a financially sound and responsible manner" and "to use its best endeavours to avoid the creation of debts and liabilities (including debts and liabilities that are or are likely to become the responsibility of the State) that will extend or are likely to extend beyond the time by which SOCOG must be wound up". Instead it created a huge judgment debt owed by the Treasurer years after the time when SOCOG was to be wound up, which was at the latest 31 March 2002131. Further, one function of the Agency Agreement was to permit the exploitation of Olympic-related intellectual property in China. The Chinese authorities to whom the plaintiff spoke supported the conduct he wished to carry out in performance of the Agency Agreement. The Olympic Charter Bye-law, 131 SOCOG Act, ss 52 and 54. Kirby Callinan par 11.2, exclusively confided the key decisions about who was to exploit those intellectual property rights to the Chinese Olympic Committee, which had a financial interest in the exploitation of them by reason of par 12. SOCOG's interference with the Agency Agreement caused it to contravene s 11(a) of the SOCOG Act in that it did not appear to take into account to the fullest extent practicable par 11.2 of the Olympic Charter Bye-law. Very senior officials of both the Chinese Government and the Chinese Olympic Committee knew of and positively encouraged the plaintiff's activities. There is no evidence that the Chinese Olympic Committee would not have authorised the plaintiff's conduct in writing if SOCOG had made it plain that it insisted on this. The interference with the Agency Agreement not only deprived the Chinese Olympic Committee of an opportunity to obtain part of the proceeds of the plaintiff's activities, but also pre-empted any further attempt on the plaintiff's part to obtain that Committee's written approval before he undertook any further activities. If the plaintiff's conduct in China was anyone's business, it was the business of the Chinese Olympic Committee, not SOCOG. Had the plaintiff been informed in 1999 of the difficulties which SOCOG relied on by way of justification from 2001 onwards, he might have been able to overcome them. In short, SOCOG could not rely on s 11(a) of the SOCOG Act to justify its interference with the Agency Agreement so far as par 11.2 and any breach by the plaintiff of the Deed Poll in relation to China (if, contrary to what was held above, there was one) were concerned, because its interference might have been injurious to the interests of the Chinese Olympic Committee132. Finally, once it became clear that the plaintiff was not prepared to be cowed by the high-handed treatment he received, the lack of reasonableness in SOCOG's conduct is indicated by the grave risks it ran, which have now fallen in – it caused a lengthy trial which wasted much judicial time, it attracted hard but correct judicial criticisms, and it became subject to a very high damages award. 132 The plaintiff also argued that the Olympic Charter contained a contractual promise by SOCOG to the Chinese Olympic Committee not to deprive the Committee of the right to decide what use should be made of the intellectual property rights in China. He submitted that the defence of justification was not open if it depended on a breach of SOCOG's promise. In view of the lack of attention given in argument to the contractual status of the Olympic Charter, it is undesirable to rule on that contention. Kirby Callinan What SOCOG did was not reasonably necessary to protect it in relation to the very narrow breaches by the plaintiff found above. Even if the whole of SOCOG's allegations of unlawful conduct against the plaintiff had been made good, it would still be unable to rely on the justification defence, because, for the reasons just set out, it was not reasonably necessary to protect even that very wide conception of its rights. Conclusion. For the above reasons the defence of justification failed. Justification questions which need not be considered. SOCOG argued nevertheless that a contractual right could be equal to or superior to the contractual rights of the plaintiff under the Agency Agreement, even though it came into existence after the Agency Agreement. There is some authority for133 and some against that argument134. Since the present appeal does not raise this question – for whatever rights SOCOG had pre-existed the Agency Agreement – it is not necessary to decide it. The plaintiff advanced further reasons for rejecting the justification defence. First, the rights on which SOCOG said from 2001 it could rely were not the matters on which it in fact relied in 1999, and hence they could not constitute justification135. Secondly, the plaintiff contended that the third form of interference engaged in by SOCOG, the procurement of the plaintiff's arrest, was independently unlawful, and that the defence of justification did not apply to independently unlawful conduct136. Each of these two questions is difficult. 133 Swiss Bank Corporation v Lloyds Bank Ltd [1979] Ch 548 at 575 per Browne- Wilkinson J. Taken at its highest, Darling J's statement in Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales [1902] 2 KB 88 at 95 is to the same effect, but it is subject to the qualifications discussed above. See also British Homophone Ltd v Kunz (1935) 152 LT 589 at 592-593 and The "Kaliningrad" and "Nadezhda Krupskaya" [1997] 2 Lloyd's Rep 35 at 40. 134 Pritchard v Briggs [1980] Ch 338 at 415 per Goff LJ. 135 SOS Kinderdorf International v Bittaye [1996] 1 WLR 987 at 993 (not cited below); cf Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359. 136 The plaintiff relied on Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots [1991] 1 VR 637 at 677-678 and argued that Latham v Singleton [1981] 2 NSWLR 843 at 867-869 was wrong. Kirby Callinan Little argument was devoted to the second. As it is not necessary to decide them, it is not desirable to say anything about them. Orders The appeal should be allowed with costs. The orders of the Court of Appeal should be set aside and in lieu thereof it should be ordered that the appeal to that Court should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANTS AND SIMON ARMS RESPONDENT Houghton v Arms [2006] HCA 59 13 December 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation D J O'Callaghan SC with M D Rush for the appellants (instructed by Deacons) P J Riordan SC with D W Bennett for the respondent (instructed by Middletons) D R Williams QC with S Bhojani for the Director of Consumer Affairs of Victoria appearing as amicus (instructed by Department of Justice) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Houghton v Arms Trade practices − Misleading or deceptive conduct in trade or commerce – Where appellant employees of a corporation made misleading or deceptive statements to respondent in the course of their employment − Where the corporation was sued for contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Commonwealth Act") by reason of the conduct of the appellants − Where the appellants were also sued for contravention of s 9 of the Fair Trading Act 1999 (Vic) ("the State Act") − Whether each appellant was a "person" for the purposes of s 9 of the State Act − Whether conduct of each appellant was "in trade or commerce" for the purposes of s 9 of the State Act. imposing accessorial Statutes − Statutory construction − Construction of s 9 of the State Act − Where the Commonwealth Act and the State Act have concurrent and overlapping operation − Where the Commonwealth Act had, but the State Act did not have, provisions in a contravention − Where the Commonwealth Act had, but the State Act did not have, provisions deeming conduct engaged in on behalf of a corporation to have been engaged in by the corporation − Whether s 9 of the State Act is to be construed so as not to apply to persons who were not engaged in trade or commerce on their own account. liability upon persons "involved" Words and phrases – "in trade or commerce". Trade Practices Act 1974 (Cth), ss 52, 75, 75B, 82, 84. Fair Trading Act 1999 (Vic), ss 9, 159. GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The litigation The action giving rise to this appeal was instituted by the present respondent (Mr Arms) in the Federal Court of Australia. He sought declaratory relief and damages in respect of alleged misleading and deceptive conduct. It was admitted on the pleadings that each of the first appellant (Mr Houghton) and the second appellant (Mr Student) was an employee of WSA Online Limited ("WSA"). WSA was the first respondent to the action but was subject to a deed of company arrangement. At the trial before Ryan J, Mr Arms recovered judgment against WSA in the sum of $58,331, but his claims against Mr Houghton and Mr Student were dismissed1. WSA on the one hand and Mr Houghton and Mr Student on the other had had separate representation. Mr Houghton and Mr Student thereafter have maintained their joint representation. WSA has not been a party to the subsequent steps in the litigation. An appeal by Mr Arms against the dismissal of his claims against Mr Houghton and Mr Student was allowed by the Full Court (Nicholson, Mansfield and Bennett JJ)2 essentially on the basis that an employee acting within the scope of actual authority could be liable for misleading or deceptive conduct. The orders of Ryan J were varied, with the result that judgment was entered against all three respondents. The particular order now read: "There be judgment for [Mr Arms] against [WSA, Mr Houghton and Mr Student] in the sum of $58,331.00." It is against these Full Court orders that Mr Houghton and Mr Student appeal to this Court. The Court received written and oral submissions by the Director, Consumer Affairs, Victoria, who administers the relevant State legislation. The submissions were presented as amicus curiae but their effect was to support the respondent, Mr Arms. 1 Arms v WSA Online Limited [2005] FCA 943. 2 Arms v Houghton (2006) 151 FCR 438 at 448. Crennan The nature of the dispute for the provision by means of an Mr Arms traded under the name "Australian Cellar Door" and formulated a proposal internet web site, www.auscellardoor.com.au, of a service for the direct marketing of the products of small to medium independent wineries. The expectation was that direct "cellar door" sales would attract sales tax at a much lower rate and would avoid the need for the payment by the wineries of the margin, usually in the order of 30 per cent, required by agents or distributors when sales were effected by retail outlets. WSA was engaged to provide advice and services on web site design, construction and administration. Mr Student was described in the dealings with Mr Arms as "WSA Online project manager" and he introduced his fellow employee, Mr Houghton, to Mr Arms as the "guru of interactive website design and development". At a meeting in late January 2000, or shortly thereafter, Mr Houghton told Mr Arms that he was aware of a financial transactions product called "ANZ e-Gate" which would be "perfect" for the requirements of Mr Arms' business. It was said that this facility would enable customers to pay by means of all major credit cards with funds clearing directly into the account of the relevant winery, in return for the payment by the winery of a small transaction fee. Thereafter, either Mr Houghton or Mr Student told Mr Arms that wineries could be added to the auscellardoor web site (incorporating the ANZ e-Gate facility) "by simply filling in a form" and paying a small set-up fee. However, WSA was told by the ANZ Bank in meetings conducted by Mr Houghton that WSA should obtain an e-Gate licence from that bank and then sub-licence Australian Cellar Door or others of its clients requiring a facility of that kind. WSA was also told that each winery would be required to have an ANZ credit card merchant facility which was plugged into the ANZ e-Gate engine; each winery would be subject to an approval process consisting of a completed application form, financial data and, perhaps, a business plan. Later, in February 2000, WSA and the ANZ Bank agreed that the ANZ e-Gate licence would belong to WSA and the credit card merchant facilities would belong to the individual wineries who had signed up with auscellardoor. On 23 June 2000, Mr Student told Mr Arms that Mr Houghton had made a mistake in describing the operation of the ANZ e-Gate facility and that Australian Cellar Door would have to arrange for each participating winery to become a "merchant" accredited by the ANZ Bank, and for separate merchant accreditation to be obtained of Diners Club and American Express. Mr Student Crennan further said that to achieve that accreditation each winery would have to provide to those three entities acceptable profit and loss statements for the last two years and a business plan. At that stage, Australian Cellar Door had already enrolled about 30 wineries and its web site was to be launched within five days. In that time it was impossible for Mr Arms to arrange for the wineries to comply with the conditions necessary for them to become individual merchants. To preserve the credibility and goodwill of his business with the wineries, Mr Arms converted Australian Cellar Door into a retailer with a mark-up or commission limited to the 5 per cent which Mr Arms had told the wineries they would be charged under the system which he had been forced to abandon. Sales tax was now payable at a higher rate on the transactions because the retailer was Australian Cellar Door, not the wineries. Mr Arms operated his business in this fashion at a loss for 12 months until June 2001. He then adopted a quite different business structure and moved from loss to profit-making. Ryan J accepted that representations had been made to Mr Arms, the substance of which was that, in order to run his business effectively and operate the auscellardoor web site, Mr Arms was not required to obtain any documentation from the wineries other than a form, with provision for banking details; WSA had engaged in that conduct when it was incumbent upon it to alert Mr Arms to the existence of the additional requirements of the ANZ Bank, or to ascertain that there were no such additional requirements in order for a winery to become an ANZ e-Gate merchant. Ryan J found that, had Mr Arms known the true position, he would have changed the auscellardoor web site to a profitable method of trading by November 2000, not June 2001, and would not have lost the sum of $58,331 from the seven month "set back". However, Ryan J also held that neither Mr Houghton nor Mr Student could be said, in any sense, to have been engaged in trade or commerce on his own account as distinct from being an employee of WSA. Because "no independent trading or commercial interest can be imputed to [Mr Student] or [Mr Houghton] in the present case"3, it followed that the applications against them had to be dismissed. On appeal, that Mr Houghton and Mr Student did not actually have an independent commercial interest was a finding of fact. However, the Full Court ultimately determined that Ryan J's conclusion the Full Court noted [2005] FCA 943 at [109]. Crennan that Ryan J had erred in law in concluding that it was not "open to him at law" to find them liable under s 9 of the Fair Trading Act 1999 (Vic) ("the FT Act")4. Mr Houghton and Mr Student submit as appellants in this Court that the primary judge was correct and that the Full Court erred in its decision to the contrary. For the reasons which follow, the submissions of the appellants should be rejected and the appeal dismissed. The structure of the litigation Something more first should be said of the framework of the Federal Court action. As applicant, Mr Arms initially claimed declarations that WSA had contravened s 52 of the Trade Practices Act 1974 (Cth) ("the TP Act")5 and that Mr Houghton and Mr Student were "involved" in that contravention within the meaning of s 75B(1), thereby rendering them, as well as WSA, subject to the recovery under s 82(1) of the TP Act of the amount of the loss or damage suffered by Mr Arms6. (2006) 151 FCR 438 at 448. 5 Section 52 states: "(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)." Part V (in which s 52 appears) no longer applies to the supply of financial services within the meaning of Pt 2 Div 2 of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). Section 51AF of the TP Act provides for this excision from the TP Act. Section 12DA of the ASIC Act deals with the misleading or deceptive conduct in relation to financial services, as defined in s 12BAB thereof. 6 Section 75B(1) provides that a reference in Pt VI of the TP Act (which includes s 82) to a person involved in a contravention of a provision of Pt IV or Pt V shall be read as referring to a person who: "(a) has aided, abetted, counselled or procured the contravention; [or] (Footnote continues on next page) Crennan The particular claim under s 75B(1) was that the individual respondents had been knowingly concerned in, or parties to, the contraventions of s 52 by WSA. Pursuit of that claim would have involved proof of the mental elements indicated by Yorke v Lucas7, something not required to establish the direct or primary contraventions of s 52 alleged against WSA8. The claim of accessorial liability under s 75B(1) was expressly abandoned when an amended application was filed. Instead, the trial was conducted on the pleading that the individual respondents had contravened a State law, s 9 of the FT Act. The Victorian legislation Part 2 of the FT Act (ss 7-32) is headed "Unfair Practices" and s 9 states: "(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Part is to be taken as limiting by implication the generality of sub-section (1)." The term "engaging in conduct", which accommodates the phrase "engage in conduct"9, is defined in s 3 so as to include refusing to do an act and refraining (other than inadvertently) from doing an act. Section 159 appears in Pt 11 of the FT Act, which is headed "Enforcement and Remedies". Section 159(1) states: has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention". Section 82(1) renders liable in damages not only the person whose conduct contravened a provision of Pt IV or Pt V, but also "any person involved in the contravention". (1985) 158 CLR 661. 8 Yorke v Lucas (1985) 158 CLR 661 at 666, 675-676. Interpretation of Legislation Act 1984 (Vic) ("the Interpretation Act"), s 39. Crennan "A person who suffers loss, injury or damage because of a contravention of a provision of this Act may recover the amount of the loss or damage or damages in respect of the injury by proceeding against any person involved in the contravention." The FT Act replaced the Fair Trading Act 1985 (Vic) ("the 1985 Act"), together with the Consumer Affairs Act 1972 (Vic) and the Ministry of Consumer Affairs Act 1973 (Vic). The new legislation was designed to continue the application to individuals and partnerships, by the 1985 Act, of prohibitions upon misleading or deceptive practices that were prohibitions cast in the same terms as those in the TP Act. The TP Act had rested principally on the corporations power. The 1985 Act had been modelled upon the TP Act, partly to take advantage of the body of case law which had developed in the preceding decade and partly to implement an agreement between State and Territory Ministers to use the federal statute "as the basis upon which uniform legislation is to be Part V of the TP Act (ss 51AF-75AS) encompasses a range of provisions dealing not only with unfair practices but also with the implication of certain conditions and warranties in consumer transactions. Section 6 gives these provisions an operation in some circumstances which does not rely upon the corporations power. Section 75, with an exception respecting offence provisions (of which s 52 is not one11), stated a legislative intention that Pt V not "exclude or limit the concurrent operation of any law of a State or Territory". The validity of that provision, as respects the operation of State law and the operation of s 109 of the Constitution, was upheld in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation12. The similarities between the text of s 52 of the TP Act and s 9 of the FT Act, and between s 82(1) and s 159(1) will be readily apparent. However, several points should be noted. First, s 159 differs from s 82(1) by omitting any reference to the party whose conduct contravened the statute and referring only to 10 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 28 May 1985 at 20. See also Zeus & Ra Pty Ltd v Nicolaou (2003) 6 VR 606 at 625. 11 See s 79, which creates offences in respect of certain conduct in relation to contraventions of Pt VC of the TP Act (ss 75AZA-75AZU). 12 (1977) 137 CLR 545 at 561-565 per Mason J, with whom Barwick CJ, Gibbs and Crennan those involved in the contravention13. The legislative assumption appears to be that involvement in a contravention includes the actor whose conduct occasioned the contravention. Secondly, at the relevant time14, the FT Act contained no counterpart to s 75B(1) of the TP Act, so that there was no statutory exegesis of the phrase "any person involved in the contravention" appearing in the damages provision in s 159(1). The reason for this lacuna in the FT Act (covering the period 1999-2003) was not explained. Thirdly, the opening words of s 9(1) are "[a] person", whilst those of s 52(1) are "[a] corporation". However, when s 52(1) is read with the additional operation given it by s 6 of the TP Act, it is apparent that, in some circumstances, s 52(1) applies immediately to individuals. On the other hand, in accordance with ordinary principles of construction, and subject to any apparent contrary intention, a body corporate may answer the description of "a person" in s 9(1) of the FT Act15. It is not expressly limited to "natural persons". What is disclosed by the foregoing is a measure of concurrent and overlapping operation of the normative structure of the federal and State laws dealing with misleading or deceptive conduct in trade or commerce and the remedies for such contraventions. (No party suggested that this presented any constitutional question.) This concurrent and overlapping operation of the two normative structures is reflected in the jurisdictional arrangements for the courts exercising federal jurisdiction in cases such as the present. Accrued jurisdiction In respect of the individuals, Mr Houghton and Mr Student, the Federal Court had accrued jurisdiction to determine the non-federal claim made against them under the FT Act. It was this claim which Ryan J dismissed, the Full Court allowed and is now before this Court. 13 The earlier Victorian statute, the 1985 Act, had, in s 37(1), followed closely the terms of the federal provision. 14 Before the insertion of a new s 145 by s 58 of the Fair Trading (Amendment) Act 2003 (Vic) ("the 2003 Amendment Act"). The 1985 Act had included in s 31 a provision following s 75B(1). 15 Interpretation Act, s 38; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 324. Crennan The expression "accrued jurisdiction" appears in authorities including Fencott v Muller16 and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd17. In Edensor, the Court saw no harm in the continued use of the term "accrued jurisdiction" provided it be borne in mind that, whilst there might be several claims made in litigation, there was but one "matter", and that jurisdiction conferred with respect to that matter is not "discretionary" and ordinarily is to be exercised by the court concerned18. The appellants were joined by the Full Court in the order for damages made against WSA but, by following a distinct and different statutory path from that followed for WSA. In particular, the appellants emphasise that the State legislation lacked an accessorial provision but was applied to fix them with liability without proof of the mental element that would have been required for proof of their accessorial liability under the federal law. The appellants' case It may be observed that (a) while on the face of things WSA was amenable to claims against it of contravention both of s 52(1) of the TP Act and of s 9 of the FT Act, only the former was relied upon and damages were sought against it under s 82(1) of the TP Act; (b) while the extended operation of s 52(1) given by s 6 of the TP Act19 in the present circumstances was not said to apply directly to Mr Houghton and Mr Student, they may have been amenable to the combined operation of ss 52, 75B and 82 of the TP Act had the claim of accessorial liability not been dropped; and (c) Mr Houghton and Mr Student were "persons" to whom s 9(1) of the FT Act apparently was addressed directly and who suffered the liability to damages imposed by s 159 of the FT Act. Mr Houghton and Mr Student, the present appellants, challenge proposition (c). The grounds upon which the appellants put their case are related and fix upon their character as individuals who acted in the course of their employment by WSA. It is said that WSA, but neither of the appellants, could answer the 16 (1983) 152 CLR 570. 17 (2001) 204 CLR 559. 18 (2001) 204 CLR 559 at 585-586 [52], 638-639 [218]. 19 For example, by including the conduct of individuals using postal, telegraphic or telephonic services (s 6(3)). Crennan description "a person" in s 9(1) of the FT Act, and further that the individuals were not "for themselves" acting "in" trade or commerce as required by s 9(1), as distinct from acting in the trade or commerce of the company. The second submission may be dealt with forthwith and rejected. The first submission will require more detailed consideration, but also should be rejected. "In trade or commerce" The text and structure of the comparable provisions of the two laws are not identical, but, as submitted by the respondent, it may be accepted that the construction of the phrase "in trade or commerce" as it appears in s 52 of the TP Act which was given by this Court in Concrete Constructions (NSW) Pty Ltd v Nelson20, applies to s 9 of the FT Act21. In Concrete Constructions, Mason CJ, Deane, Dawson and Gaudron JJ construed the expression "in trade or commerce" as referring only to conduct with the character of an aspect or element of trading or commercial activities or transactions22. The representations to the effect that in order for Mr Arms effectively to operate the auscellardoor web site, he would not be required to obtain from the wineries any documentation other than a form with provision for banking details, undoubtedly were of this nature. in his judgment Moreover, in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation23. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, 20 (1990) 169 CLR 594. 21 See Prestia v Aknar (1996) 40 NSWLR 165 at 182; Fasold v Roberts (1997) 70 FCR 489 at 528. 22 (1990) 169 CLR 594 at 603-604. 23 (1990) 169 CLR 594 at 613. Crennan for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity24. Mr Arms was engaging in trade and commerce under the name "Australian Cellar Door" and by means of the auscellardoor web site. He enlisted WSA to provide services and advice for the purposes of his business. It was the business of WSA to provide such advice and services. It is not to the point that Mr Houghton and Mr Student themselves were not business proprietors or that their activities were an aspect or element of the trade or commerce of WSA (and of Australian Cellar Door) but not of "their" trade or commerce. Mr Houghton and Mr Student nevertheless engaged in conduct in the course of trade or commerce and were thus within the ambit of the FT Act. Did s 9 of the FT Act otherwise not apply to the appellants? Reference has been made earlier in these reasons to the absence from the Victorian legislation between 1999 and 2003 of an equivalent of the accessorial provision of s 75B(1) of the TP Act. There was a further curiosity of the legislation in that period, as follows. Section 84(2) of the TP Act was described by Lockhart J in Walplan Pty Ltd v Wallace25 as both in form and substance a deeming and enlarging provision of general application to civil and criminal proceedings under the TP Act, designed to facilitate the proof of the responsibility of a corporation. However, the FT Act, before a new s 144 was substituted in 200326, had a provision of this nature applying only for prosecution purposes and not for the purposes generally of the FT Act. Section 84(2) states: "Any conduct engaged in on behalf of a body corporate: by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or 24 See Fasold v Roberts (1997) 70 FCR 489 at 531. 25 (1985) 8 FCR 27 at 36, 38. 26 By s 56 of the 2003 Amendment Act. The 1985 Act had included in s 39(2) a provision following s 84(2). Crennan by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent; shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate." (emphasis added) The validity of s 84(2) was upheld in Fencott v Muller by Gibbs CJ27. The upshot of the legislative history in Victoria is that, because the critical events occurred between 1999 and 2003, s 9 of the FT Act falls for application in a context in which there is no counterpart of s 75B(1) or s 84(2) of the TP Act. The appellants are fixed with the findings by the primary judge respecting the conduct in which they engaged, being certain acts and omissions. As indicated earlier in these reasons, these were "in trade or commerce". Why then are the appellants not persons who contravened the prohibition imposed by s 9 of the FT Act? As a general proposition, and as Lord Rodger of Earlsferry stressed in Standard Chartered Bank v Pakistan Shipping Corpn (Nos 2 and 4)28, in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read "[a] person, as principal, must not ...". The main purposes of the FT Act include (s 1(a)) the promotion and encouragement of "fair trading practices". As Bell J pointed out in Astvilla Pty Ltd v Director of Consumer Affairs29, and as relied upon by the present respondent, to read down the word "person" in s 9(1) to exclude employees would not promote that object. 27 (1983) 152 CLR 570 at 583; cf per Mason, Murphy, Brennan and Deane JJ at 600, 28 [2003] 1 AC 959 at 973-974. See also at 968 per Lord Hoffmann. 29 [2006] VSC 289 at [148]. Crennan It is no answer that a provision such as s 75B(1) of the TP Act, had it been found in the FT Act, could have drawn in parties who were neither officers nor employees of a principal. Further, while s 84(2) assisted the case against WSA under the TP Act, the effect of s 75 and the decision in General Motors Acceptance Corporation30, is that no field of liability thereby was covered to the exclusion of any operation of s 9 of the FT Act. It is unnecessary to determine whether, in addition to the appellants, WSA might have been held liable in damages under s 159 of the FT Act as well as in respect of its liability under s 82 of the TP Act, and the procedural consequences of such an outcome31. Even in the absence in the FT Act of a facilitative provision to the effect of s 84(2) of the TP Act, it may be that, had it been shown that the appellants were "an embodiment" of WSA in the sense described by Lord Reid in Tesco Supermarkets Ltd v Nattrass32, liability of WSA would have been direct. No question then would have arisen respecting the applicability of tortious notions of vicarious liability to contraventions of s 9 of the FT Act. But, as the respondent stressed, there were no such allegations, findings or evidence in this case to found any application of the reasoning in Tesco. The appellants claimed support from what had been said in Hamilton v Whitehead33 by Mason CJ, Wilson and Toohey JJ. The respondent was managing director of a company which was charged with offences against s 169 of the Companies (Western Australia) Code. The respondent was charged as being knowingly concerned in the commission of those offences. The charges against the respondent were brought under a section imposing accessorial liability. A submission by the respondent that a person who subsumes his personality in a company cannot be guilty both as a principal offender in his corporate persona and as an accessory was rejected. The respondent was "the mind of the company" so that it was liable as principal; but that did not gainsay 30 (1977) 137 CLR 545. 31 See as to "double satisfaction", Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 at 32 [1972] AC 153 at 170; see also as to this "organic theory", Walplan Pty Ltd v Wallace (1985) 8 FCR 27; Hamilton v Whitehead (1988) 166 CLR 121 at 127. 33 (1988) 166 CLR 121. Crennan his liability as an accessory under the particular section providing for accessorial liability. So far as the reasoning in Hamilton has any bearing upon the construction of s 9 of the FT Act, it assists the respondent not the appellants. Their Honours stressed34, with reference to remarks of Bray CJ in R v Goodall35, that recognition of the distinct legal identity of a corporation had the consequence that in law the act of an individual might be both a corporate act and the separate act of the actor as an individual. In the present case, whether or not the acts of the appellants were also the acts in law of WSA (a matter discussed above), they were the conduct of persons which contravened the prohibition in s 9 of the FT Act. Conclusions and orders The attack on the outcome in the Full Court fails. The appeal should be dismissed and the appellants pay the costs of the respondent. 34 (1988) 166 CLR 121 at 128. 35 (1975) 11 SASR 94 at 100-101.

HIGH COURT OF AUSTRALIA PARKES SHIRE COUNCIL APPELLANT AND SOUTH WEST HELICOPTERS PTY LIMITED RESPONDENT Parkes Shire Council v South West Helicopters Pty Limited [2019] HCA 14 8 May 2019 ORDER Appeal dismissed. The appellant pay the respondent's costs of and incidental to the appeal. On appeal from the Supreme Court of New South Wales Representation N J Williams SC with P K Williams for the appellant (instructed by Moray J T Gleeson SC with T J Brennan for the respondent (instructed by Norton White) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Parkes Shire Council v South West Helicopters Pty Limited Aviation – Carriage of passengers by air – Accident – Carrier's liability – Where respondent engaged by appellant to carry out survey using helicopter – Where passenger aboard helicopter killed in crash – Where Pt IV of Civil Aviation (Carriers' Liability) Act 1959 (Cth) applied – Where s 28 provided that carrier liable for damage sustained by reason of death of passenger – Where s 35(2) substituted liability under s 28 for any civil liability of carrier under any other law in respect of death of passenger – Where s 34 imposes time limit on availability of right of action created by s 28 – Where widow, daughter and son of passenger brought claims in tort against appellant and respondent for damages for negligently inflicted psychiatric harm resulting from death of passenger – Where claims brought outside time limit prescribed by s 34 – Whether claims precluded by Act. Words and phrases – "any civil liability of the carrier under any other law", "by reason of the death of the passenger", "claim", "damage sustained", "Hague Protocol", "in respect of the death of the passenger", "Montreal Protocol No 4", "negligently inflicted psychiatric harm", "tort", "Warsaw Convention". Civil Aviation (Carriers' Liability) Act 1959 (Cth), ss 28, 34, 35(2), 37. KIEFEL CJ, BELL, KEANE AND EDELMAN JJ. The sole issue in this appeal is whether a claim under the general law of tort for damages for negligently inflicted psychiatric harm1 consequent upon the death of a passenger during air carriage to which Pt IV of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the CACL Act") applies2 is precluded by that Act. The appellant, a regional local authority, engaged the respondent to assist it to carry out by helicopter a low-level aerial noxious weed survey. On 2 February 2006, a helicopter operated for that purpose by the respondent, and piloted by Mr Shane Thrupp, an employee of the respondent, was carrying two of the appellant's officers, Mr Malcolm Buerckner and Mr Ian Stephenson. The helicopter struck power lines and crashed, killing all three occupants. A number of claims were made as a result of the accident3. This appeal is concerned with claims brought against both the appellant and the respondent by Mr Stephenson's widow, daughter and son ("the Stephensons") for damages for negligently inflicted psychiatric harm resulting from the death of Mr Stephenson. These claims were commenced in 2009, that is, more than two years after the date of the crash and outside the time fixed by s 34 of the CACL Act for the commencement of claims under that Act4. At first instance, each of the Stephensons was successful in his or her claim against the appellant and the appellant, in turn, obtained judgment for contribution against the respondent as co-tortfeasor under s 37(b) of the CACL Act. The respondent's appeal to the Court of Appeal of the Supreme Court of New South Wales was successful, and the issue now comes before this Court. 1 An expression that is today preferable to "nervous shock". See Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 394; [1970] HCA 60; Jaensch v Coffey (1984) 155 CLR 549 at 559-560; [1984] HCA 52; Tame v New South Wales (2002) 211 CLR 317 at 386 [204]; [2002] HCA 35 and the foreword of Sir Thomas Bingham to Mullany and Handford, Tort Liability for Psychiatric Damage (1993) at vii. It was common ground that Pt IV of the CACL Act applies, pursuant to s 4 of the Civil Aviation (Carriers' Liability) Act 1967 (NSW). 3 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 67-68 [1]-[4]. 4 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 68 [6]. Bell Edelman loss suffered by For the reasons that follow, the Stephensons were entitled to claim against the respondent for damages for them by reason of Mr Stephenson's death pursuant to s 28 of the CACL Act. Section 35(2) of the CACL Act substituted that entitlement for any claim that might otherwise have been brought under domestic law. The Stephensons' entitlement to claim under s 28 of the CACL Act was extinguished by s 34 of that Act before their proceedings were commenced5. Accordingly, the appeal to this Court should be dismissed. The Conventions The liability of international air carriers to passengers has been the subject of a number of multilateral conventions to which Australia is a party. The first is the Convention for the Unification of Certain Rules Relating to International Carriage by Air (1929) ("the Warsaw Convention"). The Warsaw Convention has been amended several times, including by the Hague Protocol to Amend the Warsaw Convention (1955) ("the Hague Protocol") and by the Additional Protocol No 4 to the Warsaw Convention (1975) ("the Montreal Protocol No 4"). Various iterations of the Warsaw Convention are given force by the CACL Act. It is unnecessary for present purposes to discuss the interaction between the CACL Act and the Conventions6. Article 17 of the Warsaw Convention provides: "The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking." Article 24 of the Warsaw Convention originally provided: In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention. 5 Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 270-271 [59]; [2005] HCA cf Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 199-202 [13]-[23]; [2005] HCA 33. Bell Edelman In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights." The Montreal Protocol No 4 amended Art 24. Section 1 of the amended Art 24 provides: "In the carriage of passengers and baggage, any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention, without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights." In the United Kingdom it has been held that Art 24 of the Warsaw Convention has the effect that claims falling within Art 17 may only be brought "subject to the conditions and limits set out in this Convention". In Sidhu v of Craighead, with whom British Lord Browne-Wilkinson, Lord Jauncey of Tullichettle, Lord Mustill and Lord Steyn agreed, said of the Convention: Lord Hope Airways Plc7, "The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international code, which could be applied by the courts of all the high contracting parties without reference to the rules of their own domestic law. The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law." In Stott v Thomas Cook Tour Operators Ltd8, Lord Toulson, with whom Lord Neuberger of Abbotsbury, Baroness Hale of Richmond, Lord Reid and Lord Hughes agreed, referred with approval to the observations of Lord Hope in Sidhu. Lord Toulson noted9 that a similar approach had been adopted by the Supreme Court of the United States in El Al Israel Airlines Ltd v [1997] AC 430 at 453. [2014] AC 1347 at 1369 [29]-[30], 1370 [34]. [2014] AC 1347 at 1370-1373 [35]-[43]. Bell Edelman Tseng10 and subsequently by the United States Court of Appeals for the Second Circuit in King v American Airlines Inc11. These decisions do not address the particular issue before this Court, but they make the important point that the purpose of the Warsaw Convention is both to create, and at the same time to limit, the liability of a carrier "for damage sustained in the event of the death" of a passenger. It is to be noted, however, that the purpose of the Convention is not confined to the creation and limitation of the liability of a carrier for the death of a passenger. Legislation The CACL Act is a legislative response to the Warsaw Convention. By s 11(1) of the CACL Act, the Warsaw Convention as amended by the Hague Protocol has the force of law in Australia, and by s 25K of the CACL Act the Warsaw Convention as amended by the Hague Protocol and the Montreal Protocol No 4 has the force of law in Australia. It is the CACL Act that is determinative of the issue before the Court. In Pt IV of the CACL Act, s 28 provides: "Subject to this Part, where this Part applies to the carriage of a passenger, the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft or in the course of any of the operations of embarking or disembarking." The provision of critical importance to the resolution of this appeal is s 35(2). It is desirable to set s 35 out in full: "(1) The provisions of this section apply in relation to liability imposed by this Part on a carrier in respect of the death of a passenger (including the injury that resulted in the death). Subject to section 37, the liability under this Part is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger. 11 (2002) 284 F 3d 352. Bell Edelman the next succeeding subsection, Subject enforceable for the benefit of such of the members of the passenger's family as sustained damage by reason of his death. liability the To the extent that the damages recoverable include loss of earnings or profits up to the date of death, or funeral, medical or hospital expenses paid or incurred by the passenger before his death or by his personal representative, the liability is enforceable for the benefit of the personal representative of the passenger in his capacity as personal representative. For the purposes of subsection (3), the members of the passenger's family shall be deemed to be the wife or husband, de facto spouse, parents, step-parents, grandparents, brothers, sisters, half-brothers, half-sisters, children, step-children and grandchildren of the passenger, and, in ascertaining the members of the passenger's family, an illegitimate person or an adopted person shall be treated as being, or as having been, the legitimate child of his mother and reputed father or, as the case may be, of his adoptors. The action to enforce the liability may be brought by the personal representative of the passenger or by a person for whose benefit the liability is, under the preceding provisions of this section, enforceable, but only one action shall be brought in respect of the death of any one passenger, and such an action, by whomsoever brought, shall be for the benefit of all persons for whose benefit the liability is so enforceable who are resident in Australia or, not being resident in Australia, express the desire to take the benefit of the action. The damages recoverable in the action include loss of earnings or profits up to the date of death and the reasonable expenses of the funeral of the passenger and medical and hospital expenses reasonably incurred in relation to the injury that resulted in the death of the passenger. In awarding damages, the court or jury is not limited to the financial loss resulting from the death of the passenger. Subject to the next succeeding subsection, the amount recovered in the action, after deducting any costs not recovered from the defendant, shall be divided amongst the persons entitled in such Bell Edelman proportions as the court (or, where the action is tried with a jury, the jury) directs. (10) The court may at any stage of the proceedings make any such order as appears to the court to be just and equitable in view of the provisions of this Part limiting the liability of the carrier and of any proceedings which have been, or are likely to be, commenced against the carrier, whether in or outside Australia." It can be seen that s 28 of the CACL Act implements Art 17 of the Warsaw Convention by creating a liability that is distinct from any liability that might arise under domestic law. Putting to one side the liability created by s 28 for personal injury, the liability created by s 28 is relevantly for "damage sustained by reason of the death" of a passenger. It is that liability that s 28 creates which s 35(2) substitutes "for any civil liability of the carrier under any other law in respect of the death of the passenger" (emphasis added). The substitution so effected is clearly intended to be comprehensive. Apart from the effect of the language of s 35(2) itself, there are express indications in sub-ss (3), (5) and (6) of s 35 that persons other than the passenger whose death has occurred are within the contemplation of the section as persons who may sustain damage by reason of the death of the passenger, so that any claim they might otherwise have under the general law is within the scope of s 35(2). Section 34 imposes a temporal limit on the availability of the right of action created by s 28. It provides: "The right of a person to damages under this Part is extinguished if an action is not brought by him or for his benefit within two years after the date of arrival of the aircraft at the destination, or, where the aircraft did not arrive at the destination; the date on which the aircraft ought to have arrived at the destination; or the date on which the carriage stopped; whichever is the later." Section 37 is concerned with the liability of a carrier to indemnity and contribution. It provides: Bell Edelman "Nothing in this Part shall be deemed to exclude any liability of a carrier: to indemnify an employer of a passenger or any other person in respect of any liability of, or payments made by, that employer or other person under a law of the Commonwealth or of a State or Territory providing for compensation, however described, in the nature of workers' compensation; or to pay contribution to a tort-feasor who is liable in respect of the death of, or injury to, the passenger; but this section does not operate so as to increase the limit of liability of a carrier in respect of a passenger beyond the amount fixed by or in accordance with this Part." Section 37 expressly preserves the operation of principles of domestic law governing indemnity or contribution by quarantining the operation of these principles from s 35(2). That said, the "liability of a carrier" referred to in the concluding words of the section is plainly that created by s 28. Section 37 tends to confirm that the words of s 28 comprehend the possibility of a liability to third parties to the carriage relationship for damage sustained by them by reason of the death of a passenger. In this regard, it would not have been necessary to provide that s 35(2) is subject to s 37 if "the liability under this Part", that is, the liability created by s 28, was not intended to be substituted for liabilities that might arise to persons other than passengers. The decision at first instance In the Supreme Court of New South Wales, Bellew J held that the Stephensons' claims in tort for damages for negligently inflicted psychiatric harm did not fall within the ambit of s 35(2) of the CACL Act12. His Honour concluded that because the Stephensons' claims were to be determined at common law rather than under the CACL Act, they were not extinguished by the operation of s 34 of the CACL Act, and allowed them. In reaching this conclusion, Bellew J considered himself bound by the decision of the Full Court of the Federal Court of Australia in South Pacific Air Motive Pty Ltd v Magnus13. 12 Stephenson v Parkes Shire Council (2014) 291 FLR 319. 13 (1998) 87 FCR 301. Bell Edelman Magnus In Magnus, an aeroplane flying from Sydney to Norfolk Island crashed shortly after take-off. Although no passengers died in the crash, a representative proceeding was brought on behalf of both passengers and non-passengers for physical and psychological injury14. The Full Court (Sackville J, Hill J agreeing injury by and Beaumont J dissenting) held non-passengers were outside the ambit of Pt IV of the CACL Act, and so were not out of time. that claims for psychiatric the Court held this conclusion even unanimously that the claims by passengers for psychological injuries were out of time by reason of s 34 of the CACL Act15. His Honour rejected a submission that s 35(8) of the CACL Act indicated that s 35(2) encompassed psychiatric harm claims brought by non-passengers16. An important aspect of his Honour's reasoning was that17: though "The duty of care owed by a carrier to a non-passenger not to expose him or her to a risk of nervous shock, is independent of the carrier's duty to the passenger ... Had the drafters [of the CACL Act] intended to bring nervous shock claims by non-passengers within s 35 of the [CACL] Act, much clearer language than that used in s 35(8) would have been used." Hill J, agreeing with Sackville J, observed that18: "Claims against carriers clearly falling outside the terms of the Conventions can easily be imagined. A plane might crash and injure a bystander; a plane might crash and damage property; a plane might run into another plane and injure the pilot or passengers in that other plane; a non-passenger might observe a plane crash and suffer physical damage. There is nothing in the Conventions which suggests that there was any intention to limit the liability of carriers in such situations. In these 14 (1998) 87 FCR 301 at 303-304. 15 (1998) 87 FCR 301 at 318, 319, 344. 16 (1998) 87 FCR 301 at 348-349. 17 (1998) 87 FCR 301 at 349. 18 (1998) 87 FCR 301 at 321. Bell Edelman situations the person injured has no contractual relationship with the carrier. No notice of limitation of liability will be drawn to the attention of such a non-passenger suffering loss or damage arising out of an aircraft action. So it can not be said, at least to the extent of the above claims, that the Conventions were intended to be a complete code in respect of non-passengers. Clearly, however, the Conventions were intended to be a complete code with respect to passengers. Likewise there is nothing in the [CACL] Act which suggests that that Act was intended to govern claims by non-passengers of the kind to which I have referred above." Beaumont J, in dissent, held that on a literal reading of the CACL Act "a person other than a passenger could fall within ... Pt IV, if he or she sustained psychological damage by reason of the death or personal injury of a passenger"19. His Honour went on to conclude that there was no reason, "by adopting a purposive method of interpretation, why such a literal construction should not be "It is apparent that Pt IV was intended to operate exclusively, as a code, in the event of the death or personal injury of a passenger in an aircraft accident. In that area, Pt IV provides some benefits not available under the general law, yet is also restrictive of the rights of a plaintiff at common law in some respects." It may be said immediately that the dissenting view of Beaumont J better accords with the approach of the House of Lords in Sidhu than the dicta of Sackville J and Hill J. Beaumont J was rightly focused upon the evident intention of the CACL Act to create uniform and exclusive rules as to the liability of a carrier for events involving injury to or the death of passengers in accordance with the intent of the Warsaw Convention. Sackville J acknowledged that the circumstance that the duty of care owed by a carrier to a non-passenger not to expose him or her to a risk of psychiatric harm is independent of the carrier's duty to the passenger "may not be a major 19 (1998) 87 FCR 301 at 318. 20 (1998) 87 FCR 301 at 318. 21 (1998) 87 FCR 301 at 318. Bell Edelman consideration in the interpretation of the Warsaw Convention"22. Indeed, in 1929 such an independent duty of care was still in very early stages of development in England and Australia23. Nevertheless, Sackville J proceeded to focus upon the legal basis under domestic law for the claim, rather than upon the logically anterior question posed by the text of the CACL Act, which was whether the liability asserted by the plaintiff was "in respect of the death of the passenger". The ingredients of a claim for damages under domestic law were relevant only if a claim under domestic law had not been excluded by s 35(2) of the CACL Act. In effect, Sackville J must be taken to have read s 35(2) as if it spoke only of a liability "for the death of the passenger". Hill J was evidently swayed to take a view different from that taken by Beaumont J because his Honour was impressed by the consideration that "[a] plane might crash and injure a bystander [or] damage property", and claims under domestic law in respect of damage arising in this way could not sensibly be regarded as excluded by the Warsaw Convention or the CACL Act. With respect, there can be no doubt that such claims are outside the scope of the Convention and the CACL Act. But it is far from obvious that that is so because of the absence of a contract between the carrier and the injured party, rather than because the damage postulated in the examples given by Hill J is plainly not "damage sustained in the event of the death or wounding of a passenger" within Art 17 of the Convention. The decision of the Court of Appeal The Court of Appeal of the Supreme Court of New South Wales (Basten and Payne JJA; Leeming JA dissenting) allowed the respondent's appeal by majority24. Basten JA concluded25 that "the preemptive scope of the Convention depends not on the qualitative nature of the act or omission giving rise to the claim but on when and where the salient event took place". 22 (1998) 87 FCR 301 at 349. 23 Tame v New South Wales (2002) 211 CLR 317 at 376-377 [178]-[181]; Bourhill v Young [1943] AC 92 at 111. 24 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63. 25 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 89 [90], quoting Stott v Thomas Cook Tour Operators Ltd [2014] AC 1347 at 1372 [42]. Bell Edelman Basten JA observed that the decision in Magnus was, "at best, of limited and indirect relevance"26. Basten JA was correct in this regard in that Magnus was not directly concerned with the operation of s 35 because it was not concerned with the death of a passenger and liabilities said to be "in respect of" that death. In addition, in Magnus only Sackville J referred to the operation of s 35 of the CACL Act. Basten JA went on to say27: "[T]he approach adopted [by the majority in Magnus] in relation to the Convention (and the Carriers' Liability Acts) appears to assume that each is restrictive of rights under domestic law and should be read narrowly for that reason. However, that is to see only one side of the picture. The fact that the liability of the carrier is not dependent upon establishing negligence, but only damage sustained by reason of an accident on an aircraft, may be highly beneficial to the passenger." Basten JA concluded that it is not possible, as a matter of the ordinary use of language, to characterise the Stephensons' claims as other than assertions of liability "in respect of" Mr Stephenson's death. On that basis, his Honour concluded that the claims were excluded by s 35(2) of the CACL Act, and should have been dismissed28. In dissent, Leeming JA held that s 35(2) did not preclude a non-passenger's claim for damages for negligently inflicted psychiatric harm. In so holding, his Honour referred in particular to three considerations29: "(1) The first is the significance to be given to the contract of carriage, and the regime reflecting a compromise between the contracting parties, rather than affecting the tortious claims of non-passengers for breaches of duties owed by the carrier directly to them ... (2) Secondly, that is confirmed by what I regard as the weight of persuasive authority, reflected in the majority judgments in [Magnus] ... 26 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 103 [158]. 27 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 103-104 [159]. 28 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 104 [163]. 29 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63 at 150-151 [350]. Bell Edelman (3) Thirdly, I place some weight on the totality of legislation in this area, including legislation conferring rights upon non-passengers who suffer injury ..." The scope of s 35(2) of the CACL Act The reasoning of Basten JA is to be preferred. As a matter of the ordinary and natural meaning of s 35(2) of the CACL Act, the Stephensons' claims asserted the civil liability of the respondent in respect of the death of a passenger. There was an immediate and direct relationship between the asserted liability of the carrier and the death of the passenger. The Stephensons were entitled to claim damages from the respondent pursuant to s 28 of the CACL Act. That entitlement was, by reason of s 35(2), exclusive of their entitlement to claim damages for negligence under the law of tort. So, as Basten JA explained, there is no reason to seek to read down s 35(2) in order to preserve the rights of the Stephensons to make a claim in respect of Mr Stephenson's death. In this regard, s 35 did not deny their claims; the Stephensons each had a claim under the CACL Act. Indeed, s 35(2), by dispensing with the need to prove negligence on the part of the respondent, facilitated the prosecution of those claims. An integral aspect of the scheme was, however, that s 34 limited the temporal availability of those claims. As to the first of the considerations referred to by Leeming JA, the liability contemplated by Art 17 of the Warsaw Convention and s 28 of the CACL Act is event-based; it is not concerned to draw upon the legal character of the event as a matter of domestic law. In particular, it is not fault-based in terms of the domestic law of civil wrongs, nor, importantly, is it tied to a contractual relationship between carrier and passenger. The persons who may sustain damage that may be the subject of a claim under s 28 are not confined to those who are carried pursuant to a contract of carriage. Section 35(2) of the CACL Act, in providing for substitution for other forms of civil liability, being those arising "under any other law", employs language that comprehensively describes any basis, and any legal theory, which might ground a carrier's civil liability other than the provisions of Pt IV. The dicta in Magnus on which Leeming JA relied should not be followed. The only limitation upon the liabilities comprehended by s 35(2) is that they be "in respect of" the death of the passenger. The broad relational phrase "in respect of", used in this context, is distinctly inappropriate to confine the operation of the CACL Act so as to defer to the domestic law of the place where the liability of the carrier is sought to be established. Bell Edelman The third consideration referred to by Leeming JA is focused upon the "rights of non-passengers". But the focus of ss 28 and 35(2) is upon the liability of carriers for damage in respect of the death of a passenger. It was the evident intention of the Warsaw Convention and the CACL Act to limit that liability notwithstanding the domestic law of participating nations. The "cardinal purpose"30 of the CACL Act in giving effect to the Convention was to achieve uniformity in the law relating to liability of air carriers, so that, in those areas with which the Convention deals, it contemplates a uniform code that excludes resort to domestic law. A construction of Pt IV consistent with the purpose of the Convention is to be preferred, especially given that by s 11(1) of the CACL Act the Warsaw Convention as amended by the Hague Protocol has the force of law in Australia, and s 25K has the same effect in respect of the Warsaw Convention as amended by the Hague Protocol and the Montreal Protocol No 4. Orders The appeal should be dismissed. The appellant should pay the respondent's costs of and incidental to the appeal. 30 El Al Israel Airlines Ltd v Tseng (1999) 525 US 155 at 169. GORDON J. Parkes Shire Council engaged South West Helicopters Pty Limited to undertake an aerial survey to determine the presence of noxious weeds. On 2 February 2006, a helicopter piloted by an employee of South West Helicopters took off from an aerodrome in Parkes, New South Wales, with two council employees – Ian Stephenson and Malcolm Buerckner – to conduct the survey. Whilst in flight, the helicopter struck an overhead power line, exploded and crashed. All three persons on board were killed. The Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Liability Act (Cth)") regulates the civil liability of an air carrier for damage by reason of the death of a passenger, or personal injury suffered by a passenger, resulting from an accident which took place on board an aircraft or in the course of embarking or disembarking31. There was no dispute that the helicopter flight was regulated by Pt IV of the Carriers' Liability Act (Cth), as applied to air carriage within New South Wales by the Civil Aviation (Carriers' Liability) Act 1967 (NSW) ("the Carriers' Liability Act (NSW)"). Section 35(2), in Pt IV of the Carriers' Liability Act (Cth), relevantly provides that liability of a carrier under that Part "is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger" (emphasis added). Proceedings were commenced in 2009 in the Supreme Court of New South Wales by Mr Stephenson's widow, daughter and son, against Parkes Shire Council and South West Helicopters. Mr Stephenson's widow, daughter and son each brought a claim for psychiatric injury resulting from Mr Stephenson's death. Mrs Stephenson also brought a claim on her own behalf and on behalf of her children under the Compensation to Relatives Act 1897 (NSW). Mrs Stephenson and her children did not make a claim against the owner of the power lines, Essential Energy, but Essential Energy was joined by South West Helicopters. There were, relevantly, cross-claims brought by South West Helicopters and Essential Energy as well as related proceedings between these corporate entities. The complexity of the proceedings led to a number of judgments. The trial judge – Bellew J – relevantly held that all three defendants and cross-defendants were negligent and apportioned responsibility between South West Helicopters (70 per cent), Parkes Shire Council (20 per cent) and Essential Energy (10 per cent). In relation injury resulting from the claims for psychiatric Mr Stephenson's death, Bellew J found that s 35(2) of the Carriers' Liability Act 31 Carriers' Liability Act (Cth), s 28. (Cth) did not preclude Mr Stephenson's widow and children claiming – separately to the Carriers' Liability Act (Cth) – against South West Helicopters. A majority of the Court of Appeal of the Supreme Court of New South Wales (Basten JA, with whom Payne JA agreed) disagreed and allowed an appeal on that issue. Leeming JA dissented. The question in this appeal is whether s 35(2) of the Carriers' Liability Act (Cth) precluded Mrs Stephenson and her children from pursuing their tortious claims against South West Helicopters because the claim was not instituted within the two-year limitation period in s 34 in Pt IV of the Carriers' Liability Act (Cth). That question is raised by Parkes Shire Council because Mrs Stephenson and her children obtained judgment against the Council for nervous shock under the common law of tort as affected by the Civil Liability Act 2002 (NSW). Mrs Stephenson also obtained judgment against Parkes Shire Council under the Compensation to Relatives Act. Parkes Shire Council obtained judgment against South West Helicopters, as a co-tortfeasor, under s 37(b) of the Carriers' Liability Act (Cth), up to the statutory limit of $500,00032. Parkes Shire Council contends that s 35(2) of the Carriers' Liability Act (Cth) should be construed as permitting Mrs Stephenson and her children to bring tortious claims against South West Helicopters, contrary to the conditions and limits of the Carriers' Liability Act (Cth), with the result that the Council would be entitled to a greater level of contribution from South West Helicopters as a co-tortfeasor. As the majority of the Court of Appeal of New South Wales correctly concluded33, the contentions of Parkes Shire Council should be rejected. Where damage is sustained by reason of the death of a passenger in the course of air carriage (including claims by non-passengers for nervous shock flowing from the death of the passenger), the civil liability of an air carrier is imposed exclusively by, and is subject to the conditions and limits of, the Carriers' Liability Act (Cth). Any right Mrs Stephenson and her children had to damages for nervous shock against South West Helicopters under the Carriers' Liability Act (Cth) had been extinguished because their claims were not brought within the prescribed two-year limitation period34. 32 Carriers' Liability Act (Cth), s 31. 33 South West Helicopters Pty Ltd v Stephenson (2017) 356 ALR 63. 34 Carriers' Liability Act (Cth), s 34. The scheme The Carriers' Liability Act (Cth)35 provides that the following conventions have the force of law in Australia in relation to international carriage by air to which the relevant convention applies36: the Convention for the Unification of Certain Rules Relating to International Carriage by Air (1929)37 ("the Warsaw Convention") (Pt III); the Warsaw Convention as amended at The Hague, 195538 (Pt II); the Guadalajara Convention39 (Pt IIIA); and the Montreal No 4 Convention40 (Pt IIIC) (together, "the Conventions"). the Conventions is set out in separate schedules to the Carriers' Liability Act (Cth)41. The text of Part IV of the Carriers' Liability Act (Cth), headed "Other carriage to which this Act applies", extends the carriers' liability for air carriage established by the Conventions to Australian domestic, inter-State carriage42 through the 35 Since the time of the accident the subject of this appeal, the Carriers' Liability Act (Cth) has been amended. The Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999 ("the 1999 Montreal Convention"), now also has force of law in Australia: see Pt IA of and Sch 1A to the Carriers' Liability Act (Cth), inserted by the Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Act 2008 (Cth). 36 Some specified exclusions, which are not presently relevant, may be put to one side. 37 See Carriers' Liability Act (Cth), Sch 1. 38 Carriers' Liability Act (Cth), Sch 2. 39 Convention, Supplementary to the Warsaw Convention, for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person Other than the Contracting Carrier (1961): see Carriers' Liability Act (Cth), Sch 3. 40 Warsaw Convention as amended at The Hague, 1955, and by Protocol No 4 of Montreal, 1975: see Carriers' Liability Act (Cth), Sch 5. 41 Carriers' Liability Act (Cth), s 8(1). 42 Carriers' Liability Act (Cth), s 27. See also Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 269-270 [52]-[53]; [2005] HCA 38. enactment of provisions that are in similar, but not identical, terms to the articles of the Conventions given effect by Pts II, III, IIIA and IIIC43. Unlike Pts II, III, IIIA and IIIC, Pt IV does not give effect to Australia's international obligations under the Warsaw Convention and its successors. Instead, it "extends the principles of the amended convention[44] to all domestic carriage by air within Federal competence but with certain modifications which are considered more appropriate for domestic purposes"45. Certain provisions of Pt IV46 are then applied to the carriage by air of a passenger within a given State (not being carriage to which the Conventions or Pt IV of the Carriers' Liability Act (Cth) applies) by the operation of State legislation47. In New South Wales that is achieved by the Carriers' Liability Act (NSW). As with the introduction of Pt IV of the Carriers' Liability Act (Cth) and its application to domestic air carriage within the competence of the federal Parliament48, the introduction of the Carriers' Liability Act (NSW) was to "make the carrier absolutely liable for damage sustained by reason of the death ... or injury" up to a fixed limit "or a higher sum which might be mutually agreed upon in the contract of carriage"49. Those provisions applied through the Carriers' 43 In addition, s 25L in Pt IIIC extends the operation of ss 35-39 in Pt IV to carriage to which the Montreal No 4 Convention applies in the same way as those provisions apply to carriage under Pt IV. 44 At the time Pt IV was introduced, the Warsaw Convention as amended at The Hague, 1955. 45 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 903. 46 Other than ss 27, 40 and 41 in Pt IV. Part IVA, concerning carriers' obligations with respect to insurance against liability to passengers for death or personal injury, is also extended to intra-State carriage. 47 See Carriers' Liability Act (NSW), ss 4 and 5; Civil Aviation (Carriers' Liability) Act 1961 (Vic), ss 4 and 5; Civil Aviation (Carriers' Liability) Act 1962 (SA), ss 5 and 6; Civil Aviation (Carriers' Liability) Act 1964 (Qld), ss 4 and 5; Civil Aviation (Carriers' Liability) Act 1961 (WA), ss 5 and 6; Civil Aviation (Carriers' Liability) Act 1963 (Tas), ss 4 and 5. 48 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 903, 905-906. 49 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 7 November 1967 at 2881. Liability Act (NSW) are administered and enforced as if they were provisions applying as laws of the Commonwealth instead of as laws of the State50. Thus, the scheme by which the Conventions are given effect in Australian municipal law51 has three inter-connected limbs: the Conventions are given the force of law in Australia with respect to international air carriage; elements of the Conventions are restated as separate provisions in the Carriers' Liability Act (Cth), including in Pt IV with respect to domestic, inter-State air carriage; and Pt IV is then applied to intra-State air carriage by State legislation. The Conventions The "cardinal purpose"52 of the Warsaw Convention (and its successors53) is to "achiev[e] uniformity of rules governing claims arising from international air transportation"54 of persons, baggage and goods. It responds to the prospect of a "jungle-like chaos"55: concerns about a lack of predictability with respect to carrier liability or the rights of passengers, as a consequence of multiple legal regimes potentially applying simultaneously to international air carriage and related conflict of laws issues. The rules laid down are, in effect, an "international code"56. In the areas with which it deals, the code is "intended to be uniform and to be exclusive also of any resort to the rules of domestic 50 See Carriers' Liability Act (NSW), s 6A. 51 See Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 202 [25]; [2005] HCA 33. 52 El Al Israel Airlines Ltd v Tseng (1999) 525 US 155 at 169. See also In re Mexico City Aircrash of October 31, 1979 (1983) 708 F 2d 400 at 415-416. 53 See Thibodeau v Air Canada [2014] 3 SCR 340 at 367-368 [41]. 54 Tseng (1999) 525 US 155 at 169, citing Eastern Airlines Inc v Floyd (1991) 499 US 530 at 552 and Zicherman v Korean Air Lines Co Ltd (1996) 516 US 217 at 230. See also Grein v Imperial Airways Ltd [1937] 1 KB 50 at 75; Tseng (1999) 525 US 155 at 167, 169-170; Agtrack (2005) 223 CLR 251 at 268 [50], quoting Reed v Wiser (1977) 555 F 2d 1079 at 1090; Thibodeau [2014] 3 SCR 340 55 Reed (1977) 555 F 2d 1079 at 1092. See also Grein [1937] 1 KB 50 at 75. 56 Grein [1937] 1 KB 50 at 74-75. 57 Sidhu v British Airways Plc [1997] AC 430 at 453. Article 17 in Ch III of the Warsaw Convention imposes a form of liability on air carriers which is not dependent on proof of negligence. That Article establishes the conditions of liability for death or personal injury to a passenger58. The official version of the Warsaw Convention is in French59. The English translation60 set out in the Schedules61 to the Carriers' Liability Act (Cth) reads: "The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking." (emphasis added) Article 17, as it appears in each of the successive Conventions, has the force of law in Australia in respect of carriage to which Pts II, III and IIIC apply62 and, in Pt IV, was translated into s 28, headed "Liability of the carrier for death or injury". That section imposes "strict" liability on carriers63 and provides: "Subject to this Part, where this Part applies to the carriage of a passenger, the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft or in the course of any of the operations of embarking or disembarking." (emphasis added) 58 Tseng (1999) 525 US 155 at 162. 59 See Warsaw Convention, Art 36. 60 Acknowledging the possibility of inconsistency arising between the authentic French versions and English translations, s 8(2) of the Carriers' Liability Act (Cth) provides: "If there is any inconsistency between the text of a Convention as set out in a Schedule [to the Carriers' Liability Act (Cth)] and the text that would result if the authentic French texts of the instruments making up the Convention were read and interpreted together as one single instrument, the latter text prevails." 61 Article 17 was not amended by the successor Conventions which Australia had ratified and implemented at the time of the accident the subject of this appeal: see Art 17 in each of Schs 1, 2 and 5; cf Art 17 in Sch 1A to the Carriers' Liability Act (Cth), inserted by the Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Act 2008 (Cth). 62 See Carriers' Liability Act (Cth), ss 11, 21, 25K. 63 Agtrack (2005) 223 CLR 251 at 260 [22]. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 905. Article 22 of the Warsaw Convention provides a cap on the liability of the carrier "for each passenger". That cap has the force of law in Australia in respect of international carriage and a cap is also prescribed, for carriage to which Pt IV applies, in s 31 of the Carriers' Liability Act (Cth). At the time of the accident, the prescribed cap was $500,000. Article 23 contains a prohibition on carriers contracting out of, or seeking to reduce, that cap. A similar prohibition is included in s 32 in Pt IV of the Carriers' Liability Act (Cth). The scheme also contains a limitation on the period in which an action can be brought against a carrier. Article 29 of the Warsaw Convention as amended at The Hague, 1955, provides that the right to damages is extinguished if the action is not brought within two years. The method of calculating the limitation period is left to be determined by the law "of the Court seised of the case"64. Again, that Article is given the force of law in Australia in respect of international carriage and has its equivalent in s 34 of the Carriers' Liability Act (Cth) for carriage to which Pt IV applies. It also prescribes the method of calculation of the limitation period. Although the Conventions are intended to be, and are, construed as an international code for air carriage, the code is not absolute. The Conventions recognise65 that there are matters which are not to be unified but are left to the domestic law of a signatory. Aspects of Art 24 of the Warsaw Convention were of that kind. Article 24, in the English translation66, originally read as follows: In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention. In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights." (emphasis added) The first part of Art 24(2) ("[i]n the cases covered by Article 17 the provisions of the preceding paragraph also apply"), when read with Art 24(1), 64 Art 29(2) of the Warsaw Convention as amended at The Hague, 1955. 65 See, eg, Warsaw Convention, Arts 12, 13, 14, 16(1), 22(1), 24(2), 28(1), 29(2), 34. See also Mankiewicz, The Liability Regime of the International Air Carrier: A Commentary on the Present Warsaw System (1981) at 13. 66 As set out in Sch 1 to the Carriers' Liability Act (Cth). operates to impose the conditions and limits in the Warsaw Convention on any action for damages however founded arising out of the death, wounding or bodily injury of a passenger in the course of carriage. Article 24(2) then goes on to provide that, in those events, the auxiliary67 questions about who has the right to bring suit (the identity of the plaintiffs) and what are their respective rights (the heads of damage for which they may sue and the legal basis on which they may sue for that damage) are left for determination by domestic law (the local law identified by the law of the forum under its choice-of-law rules). The effect of Art 24(1) is to ensure that actions covered by Arts 18 and 19, as well as Art 17 subject to Art 24(2), are only able to be brought against a carrier in accordance with the Conventions – that is, subject to the conditions and limitations in the Conventions – and not otherwise. That limitation in Art 24(1), and the first part of Art 24(2), is implemented in Pts II and IV (and applied in Pts III and IIIC68) of the Carriers' Liability Act (Cth). In Pt IV, in respect of the death of a passenger, it is implemented in It is necessary to set out the full text of s 35, headed "Liability in respect of death", which provides: "(1) The provisions of this section apply in relation to liability imposed by this Part on a carrier in respect of the death of a passenger (including the injury that resulted in the death). Subject to section 37, the liability under this Part is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger. the next succeeding subsection, Subject enforceable for the benefit of such of the members of the passenger's family as sustained damage by reason of his death. the liability To the extent that the damages recoverable include loss of earnings or profits up to the date of death, or funeral, medical or hospital 67 Tseng (1999) 525 US 155 at 170, citing Zicherman (1996) 516 US 217 at 221, 227, 68 Respectively by operation of ss 24 and 25L. 69 In respect of personal injury to a passenger, s 13 (Pt II) and s 36 (Pt IV) are in similar terms. expenses paid or incurred by the passenger before his death or by his personal representative, the liability is enforceable for the benefit of the personal representative of the passenger in his capacity as personal representative. For the purposes of subsection (3), the members of the passenger's family shall be deemed to be the wife or husband, de facto spouse, parents, step-parents, grandparents, brothers, sisters, half-brothers, half-sisters, children, step-children and grandchildren of the passenger, and, in ascertaining the members of the passenger's family, an illegitimate person or an adopted person shall be treated as being, or as having been, the legitimate child of his mother and reputed father or, as the case may be, of his adoptors. The action to enforce the liability may be brought by the personal representative of the passenger or by a person for whose benefit the liability is, under the preceding provisions of this section, enforceable, but only one action shall be brought in respect of the death of any one passenger, and such an action, by whomsoever brought, shall be for the benefit of all persons for whose benefit the liability is so enforceable who are resident in Australia or, not being resident in Australia, express the desire to take the benefit of the action. The damages recoverable in the action include loss of earnings or profits up to the date of death and the reasonable expenses of the funeral of the passenger and medical and hospital expenses reasonably incurred in relation to the injury that resulted in the death of the passenger. In awarding damages, the court or jury is not limited to the financial loss resulting from the death of the passenger. Subject to the next succeeding subsection, the amount recovered in the action, after deducting any costs not recovered from the defendant, shall be divided amongst the persons entitled in such proportions as the court (or, where the action is tried with a jury, the jury) directs. (10) The court may at any stage of the proceedings make any such order as appears to the court to be just and equitable in view of the provisions of this Part limiting the liability of the carrier and of any proceedings which have been, or are likely to be, commenced against the carrier, whether in or outside Australia." (emphasis added) As will be self-evident, s 35(2), similarly to Art 24(1), expressly provides that the liability under Pt IV is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger70. The balance of s 12 (Pt II) and s 35 (Pt IV) then provides the answers to what have been earlier described as the auxiliary questions71. For carriage to which the Conventions apply, this is necessary, through s 12, to fill the gap that is left by the second part of Art 24(2). Although Pt IV does not apply the Conventions but rather extends the substance of the Conventions to domestic, inter-State carriage, the purpose behind the provisions can be taken to be the same. That is, the balance of ss 12 and 35 responds to the fact that the Conventions provide no guidance on who may sue or their respective rights. Those sections are an answer to, rather than a translation or implementation of, the balance of Art 24(2). Indeed, during the Second Reading Speech for the Civil Aviation (Carriers' Liability) Bill 1959 (Cth), the then Minister for Defence, in addressing Pt IV and, in particular, s 35, not only recognised that "[t]he convention is completely silent on the matters to be taken into account in assessing damages resulting from death … so that the assessment of damages is governed by domestic law" but also went on to note that the Bill dealt with aspects of problems arising from common law principles, through parts of s 3572. One of the examples given by the Minister was that s 35(8) makes it clear that a court in assessing damages is free to include compensation for matters not involving direct pecuniary loss such as loss of consortium where a spouse is killed, or, in the case of a claim on behalf of infants, additional compensation for loss of a parent's care and guidance. Finally, s 35(2) is subject to s 3773, which provides that: "Nothing in this Part shall be deemed to exclude any liability of a carrier: to indemnify an employer of a passenger or any other person in respect of any liability of, or payments made by, that employer or 70 Section 12(2) is to the same effect in respect of liability under Pt II. 71 See Agtrack (2005) 223 CLR 251 at 260 [22]-[23]. 72 Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 73 Which is in substantially the same terms as s 14 in Pt II of the Carriers' Liability Act (Cth). other person under a law of the Commonwealth or of a State or Territory providing for compensation, however described, in the nature of workers' compensation; or to pay contribution to a tort-feasor who is liable in respect of the death of, or injury to, the passenger; but this section does not operate so as to increase the limit of liability of a carrier in respect of a passenger beyond the amount fixed by or in accordance with this Part." As Basten JA74 explained in the Court of Appeal, although the provisions in Pt IV might suggest a degree of independence from the Conventions, when the sections are read in the context of their counterpart provisions in the Conventions there is a degree of uniformity. Section 35 has a similar75 counterpart in Pt II76, and both ss 28 and 35 are drawn from the Conventions in the manner just described. The matters left to Australian domestic law do not affect the uniform operation of the code in defining international carriers' liability. Indeed, the most important objective in applying the principles of the Conventions to domestic air carriage, it was said, was to "deprive the domestic carriers of their present [common law] right to contract out of all liability for damage howsoever caused"77. The primary focus for the purposes of this appeal is the intention of the Commonwealth and New South Wales Parliaments, not just the intentions of the framers of the Conventions. However, there was no dispute that ss 28 and 35 in Pt IV should be given a construction harmonious with other substantively similar sections in different Parts of the Carriers' Liability Act (Cth) and the 74 South West Helicopters (2017) 356 ALR 63 at 90 [98]. 75 Note that s 12 and s 35 differ slightly as s 12 contains, as its sub-s (11), the following: "The second sentence of paragraph 4 of Article 22 of the Warsaw Convention, as amended by the Hague Protocol, shall not be construed as applying to an action to which this section applies that is wholly or partly for the benefit of a person or persons other than the plaintiff, but the court may, in such an action, deal with any question of costs in such manner as it thinks proper having regard to the operation of that sentence in cases to which it applies." 76 With the provision in Pts II and IV respectively applying to carriage under Pts III and IIIC. 77 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 905. Conventions78, which have the force of law in Australia and which were the basis on which ss 28 and 35 were included in the Carriers' Liability Act (Cth). Exclusivity principle Article 24 of the Warsaw Convention gives effect to what has been described as the "exclusivity principle"79 – that a claim falling within, relevantly, Art 17 "can only be brought subject to the conditions and limits set out in [the] Convention". That, in turn, directs attention to the scope of Art 17. The scope of Art 17 does not depend on the qualitative nature of the act or omission that gives rise to the claim but when and where the "event" took place80. The essential element of a claim within Art 17 is an event – relevantly, the death of a passenger, in an accident on board a flight (or in the course of embarking or disembarking). If the basis of the claim satisfies the terms of Art 17, the liability of the carrier is limited to that provided by the terms of the applicable convention81. On the other hand, if there is no claim within the terms of Art 17, there is no remedy. As Lord Hope of Craighead explained in Sidhu v British Airways Plc, the whole purpose of Art 17, read in context, was to prescribe the only circumstances in which a carrier would be liable to the passenger for claims arising out of that person's international carriage by air82. That principle has been 78 Povey (2005) 223 CLR 189 at 202 [24]-[25], 230-231 [128]-[134]; Agtrack (2005) 223 CLR 251 at 270 [54]; Air Link Pty Ltd v Paterson (2005) 223 CLR 283 at 303-304 [49]; [2005] HCA 39. 79 Stott v Thomas Cook Tour Operators Ltd [2014] AC 1347 at 1370-1373 [34]-[44]. See also Thibodeau [2014] 3 SCR 340 at 366 [38]. 80 Stott [2014] AC 1347 at 1372 [42]. 81 Stott [2014] AC 1347 at 1369 [29]-[30], 1370-1371 [34]-[40], citing Sidhu [1997] AC 430 and Tseng (1999) 525 US 155. 82 [1997] AC 430 at 447, cited in Stott [2014] AC 1347 at 1370 [34]. applied the United States83, Hong Kong84, Canada85 and New As has been seen, s 28 of the Carriers' Liability Act (Cth) was drawn from Art 17, although the text of Art 17 and s 28 differs. Putting those differences aside, which are not presently relevant, it is apparent that Art 17, as well as s 28, draws on three different concepts – damage, the death of the passenger and the accident which caused the damage. Thus, Art 17 and s 28 relevantly impose liability on a carrier where (1) there has been a death of a passenger; (2) that death resulted from an accident which took place in the course of a flight; and (3) there is "damage sustained by reason of the death" of the passenger (s 28) or "in the event of the death" of the passenger (Art 17). The distinctions between these three concepts are important. The damage sustained is distinct from the accident, and both the damage and the accident are distinct from the death88. The damage is sustained by reason of the death of the passenger if it is factually caused by it. Damage can be sustained by a non-passenger. And the damage can be physical, mental or pecuniary89. Put in different terms, liability under Art 17 and s 28 depends on when and where the event – relevantly, the death of the passenger – took place. That Art 17 and s 28 are in that form is unsurprising. Each was intended to, and does, resolve complex conflict of laws questions that could arise where air travel crosses borders. What the scheme imposes is a single, unified, indivisible form of strict liability on the carrier upon a defined event – relevantly, the death of a passenger during carriage by air. 83 See Tseng (1999) 525 US 155 at 160-161. 84 Ong v Malaysian Airline System Bhd [2008] 3 HKLRD 153 at 160-162 [15]-[20]. 85 Thibodeau [2014] 3 SCR 340 at 365-367 [37]-[40]. 86 Emery Air Freight Corporation v Nerine Nurseries Ltd [1997] 3 NZLR 723 at 87 See, eg, Cauchi v Air Fiji [2005] Tonga LR 154; Hennessey v Aer Lingus Ltd [2012] IEHC 124 at [5.3]-[5.4], [6.5]. 88 See Povey (2005) 223 CLR 189 at 204-205 [34]. 89 See Zicherman (1996) 516 US 217 at 223-224. The subsequent changes made to Art 2490 do not detract in any way from the exclusivity principle. As Ginsburg J (delivering the opinion of the Supreme Court of the United States) stated in El Al Israel Airlines Ltd v Tseng91, the Montreal Protocol No 4 clarified, but did not change, the domain of exclusivity. That leaves the second part of Art 24(2), which provides that the exclusivity principle applies, insofar as liability under Art 17 is concerned, "without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights". As Ginsburg J explained in Tseng, the drafters of Art 24 of the Warsaw Convention intended to resolve whether the air carrier was liable but to leave to the domestic law determination of compensation92. Thus, by the express terms of Art 24(2), the Warsaw Convention provides no "unified rule" as to who has a right to bring a suit against a carrier in the event of the death, wounding or other bodily injury suffered by a passenger or what rights that person might have, including what damages they might recover93. The effect is to leave those matters to domestic law94, including matters to be taken into account in the assessment of damages95. 90 Article 24 was reformulated in the Montreal No 4 Convention, and then again in the 1999 Montreal Convention, when it was renumbered as Art 29. It now reads: "In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable." 91 (1999) 525 US 155 at 174-175. 92 (1999) 525 US 155 at 170, 174-175. See also Sidhu [1997] AC 430 at 447. 93 Zicherman (1996) 516 US 217 at 226-227. 94 See Zicherman (1996) 516 US 217 at 223-225, 227; Tseng (1999) 525 US 155 at 95 Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April What the international code does prescribe is that: first, in the event of, relevantly, death, the carrier is liable; second, the extent of that carrier's liability is capped; and, third, any claim sounding in damages from that liability will be extinguished if not commenced within the two-year limitation period. The Conventions are also limited to "international carriage"96. They were intended to supersede domestic laws only insofar as they covered international carriage, leaving domestic law "applicable only to the internal flights" of each of the signatory countries97. With respect to claims against carriers arising from international carriage, domestic courts "are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to the setting alongside the Convention of an entirely different set of rules which would distort the operation of the whole scheme"98. the Sea of That the Conventions, and Art 24 in particular, operate in that manner is illustrated by the facts in Zicherman v Korean Airlines Co Ltd99, a decision of the Supreme Court of the United States. A Korean Air Lines flight (KE007) was shot down over Japan, killing everyone on board. Two non-passengers, the mother and sister of a passenger on board the flight, sought to recover damages for "grief and mental anguish, for the loss of the decedent's society and companionship, and for the decedent's conscious pain and suffering"100. Scalia J, writing for the Court, after reviewing the relevant preparatory work for the Warsaw Convention and the post-ratification conduct of the signatories to the Warsaw Convention, held that the liability imposed by Art 17, and then capped by the Warsaw Convention, was exclusive but subject to the conditions and limits in subsequent articles. Scalia J also recognised that Art 17 could extend carriers' liability to liability for harm including purely psychological harm done to third parties but did not affect the substantive questions of who may bring suit and what they may be compensated for: these questions are to be answered by the domestic law selected by the courts of the contracting states101. That is, the question whether any person could recover 96 See Grein [1937] 1 KB 50 at 76. 97 Reed (1977) 555 F 2d 1079 at 1090. 98 Sidhu [1997] AC 430 at 454. 100 Zicherman (1996) 516 US 217 at 219. 101 Zicherman (1996) 516 US 217 at 225. damages for certain harm, and if so what kind of damages, was left to the domestic law102. In Zicherman, the applicable domestic law, the Death on the High Seas Act, only permitted recovery of pecuniary losses and, accordingly, damages for grief and mental anguish could not be recovered by the non-passenger plaintiffs103. Had the domestic law permitted the non-passengers to recover damages for grief and mental anguish, the Court would have permitted recovery. This is because, as the Court recognised, Arts 17 and 24(2) of the Warsaw Convention permitted compensation only for legally cognisable harm, as a result of the death of the passenger in the course of the flight, but left the specification of what harm was legally cognisable to the applicable domestic law104. Zicherman was followed by the Supreme Court of the United States in Tseng. The issue in Tseng was whether a passenger was able to recover damages for purely psychological injury when Art 17 relevantly imposed liability on a carrier only where there was "bodily injury" caused by an accident on board an aircraft (or embarking or disembarking)105. Relevantly for this appeal, the Court considered Arts 17 and 24(2) and, in particular, held that Art 17 applied to all personal injury claims stemming from an accident on board an aircraft (or embarking or disembarking) – if recovery was not allowed under the Conventions, it was not available at all106. The Court held that Art 17 was concerned with an event – the accident107. That construction did not refer to the identity or capacity of the plaintiff to sue: it was event-based. The Court considered that its decision was to the same effect108 as the decision of the House of Lords in Sidhu. Since Tseng, a number of courts have adopted the reasoning in that decision, namely, that Art 17 directs attention to "when and where an event takes place in evaluating whether a claim for an injury to a passenger is preempted" so 102 Zicherman (1996) 516 US 217 at 226-228. 103 (1996) 516 US 217 at 230-231. 104 See Zicherman (1996) 516 US 217 at 231. 105 (1999) 525 US 155 at 160. 106 Tseng (1999) 525 US 155 at 161. 107 Tseng (1999) 525 US 155 at 168-169. 108 Tseng (1999) 525 US 155 at 175-176. that "the scope of the Convention is not dependent on the legal theory pled nor on the nature of the harm suffered"109. Section 35(2) of the Carriers' Liability Act (Cth) The question which arises then is how, if at all, those two aspects of Art 24 are reflected in Pt IV of the Carriers' Liability Act (Cth). Part IV does not give effect to Australia's international obligations under the Conventions. Instead, it "extends the principles of the amended convention to all domestic carriage by air within Federal competence but with certain modifications which are considered more appropriate for domestic purposes"110. Those modifications are, first, that domestic carriers are not given a defence for taking all necessary measures to avoid damage111 and, second, that even if the damage results from an act or omission done with intent to cause it, the limitation on liability will still apply112. The modifications were aimed at greater certainty surrounding the extent of the liability of carriers in the domestic sphere113. The matters left to Australian domestic law do not affect the uniform operation of the code in defining international carriers' liability. However, Pt IV is still to be given a construction which is harmonious with that which applies to the international carriage dealt with under the Conventions114, as is any State Act applying those provisions to intra-State carriage. The qualification that those international rules are applied to domestic airline operators only insofar as the federal Parliament is competent to do so is important. Regulation of domestic operators engaged in purely intra-State 109 King v American Airlines Inc (2002) 284 F 3d 352 at 360-361, quoted in Stott [2014] AC 1347 at 1372 [42]. See also Tseng (1999) 525 US 155 at 171; Ong [2008] 3 HKLRD 153 at 175-176 [71]; Thibodeau [2014] 3 SCR 340 at 379 [68]. 110 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 903. 111 cf Warsaw Convention, Art 20. 112 cf Warsaw Convention, Art 25; Warsaw Convention as amended at The Hague, 1955, Art 25. 113 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 906. 114 Agtrack (2005) 223 CLR 251 at 270 [54]. carriage was recognised, at the time the Bill was before Parliament, as a matter for the States115. It was recognised that it was "very desirable" to have uniform rules applying to all classes of domestic carriage and that, in the long run, such uniform rules could be achieved by a number of methods116. As already noted, some of the provisions of Pt IV – excluding ss 27, 40 and 41 – apply to intra-New South Wales carriage by operation of s 5 of the Carriers' Liability Act (NSW). The effect of the introduction of the Carriers' Liability Act (NSW) was to "make the carrier absolutely liable for damage sustained by reason of the death ... or injury" up to a fixed limit "or a higher sum which might be mutually agreed upon in the contract of carriage"117. It was observed during the Second Reading Speech for the Bill for the introduction of the Carriers' Liability Act (NSW) that, at the time, the liability of operators in relation to purely intra-State carriage was covered by common law principles. The necessity to prove negligence meant that "the passenger's right to sue for damages [was] thus of little value in many cases, because in serious aircraft accidents, it [was] usually extremely difficult, if not impossible, to prove negligence"118. It is necessary to turn to the text of s 35 of the Carriers' Liability Act (Cth) and, in particular, s 35(2). As has been seen, s 35(2) relevantly provides that "the liability under [Pt IV] is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of the passenger" (emphasis added). The liability under Pt IV is to be found in, and is created by, s 28. Section 35(2) states that the liability in s 28 is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger. The phrase "in respect of" is a phrase of the widest import119. In its 115 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 905. 116 See Australia, House of Representatives, Parliamentary Debates (Hansard), 7 April 1959 at 908. 117 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 7 November 1967 at 2881. 118 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 7 November 1967 at 2882. 119 See Unsworth v Commissioner for Railways (1958) 101 CLR 73 at 87-88, 90-91; [1958] HCA 41. terms, s 35(2) refers to, and requires there to be, some discernible and rational link or connection between the two matters identified: the basis of the liability – carriage by air – and the death of the passenger. Liability, as has been seen, is event-based. Section 35(2) does not expressly address who may have sustained the damage. That is left to s 35(3)-(10). For example, it is apparent that s 35(2) is not limited to damage sustained by the deceased passenger: s 35(3) expressly provides that "the liability is enforceable for the benefit of such of the members of the passenger's family as sustained damage by reason of his death" (emphasis added). Moreover, "damage" is not defined in the Carriers' Liability Act (Cth), the Carriers' Liability Act (NSW) or the Conventions. And "damage" cannot be limited to economic or financial loss. Not only is the word "damage" used in s 28 in relation to both the death of a passenger and the personal injury of a passenger, but s 35(8) provides that "[i]n awarding damages, the court … is not limited to the financial loss resulting from the death of the passenger". The question which then arises is the manner in which Australia has implemented the second part of Art 24(2). As has been seen, s 35(3)-(10) of the Carriers' Liability Act (Cth) address some of those questions. In other respects, the applicable law is addressed by the States. Thus, given that the connection sought to be made is between the civil liability of the carrier and, in this case, the death of the passenger, the liabilities caught by s 35(2) are intended to, and do, extend to liabilities to non-passengers including a claim by them under the Compensation to Relatives Act, for loss of consortium120 and for solatium121. In addition, a claim by an employer for loss of an employee's services122, a Lord Campbell's Act claim123, and a claim for nervous shock suffered on learning of the death of the passenger under the Civil Liability Act would fall within s 35(2), with the central element in each claim being the death of the passenger. 120 See generally State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 at 421-422; [1966] HCA 56. 121 See generally Public Trustee v Zoanetti (1945) 70 CLR 266; [1945] HCA 26. 122 See generally Barclay v Penberthy (2012) 246 CLR 258 at 279-283 [28]-[40]; [2012] HCA 40. 123 See Agtrack (2005) 223 CLR 251 at 256-257 [3], [5]. See generally Grein [1937] That is, like its counterpart in Art 24(1) from which it is drawn, the field of exclusivity in s 35(2) is greater than the scope of liability under s 28 (and its counterpart, Art 17)124. That construction of s 35(2) is reinforced by other sections in Pt IV of the Carriers' Liability Act (Cth). Section 31 contains a cap on liability, in respect of each passenger, by reason of the injury or death of that passenger from an accident; s 32 contains a prohibition on carriers contracting out or seeking to reduce that cap; s 33 addresses the liability of servants and agents of a carrier and, where that servant or agent proves that they acted within the scope of their employment and authority, provides that the servant or agent is entitled to avail themselves of the cap; and s 34 contains a limitation on the period in which an action can be brought against a carrier. Next, s 37 expressly removes or carves out from the field of exclusivity claims for contribution and indemnity against the carrier in two distinct fields125. It provides that "[n]othing in this Part shall be deemed to exclude any liability of a carrier" (a) to indemnify an employer of a passenger for workers' compensation payments or (b) to pay contribution to a tortfeasor who is liable in respect of the death of, or injury to, the passenger. That construction of s 35(2) – that it is to be construed consistently with the exclusivity principle of the Conventions – is further reinforced by the last few lines of s 37: that "this section does not operate so as to increase the limit of liability of a carrier in respect of a passenger" beyond the cap in s 31. These carve outs would be unnecessary if s 35(2) were construed as not recognising, and then creating in the Act, the exclusivity principle in Art 24. Thus, s 35(2) leaves no room for an action to sue under domestic law other than within the conditions and limits in Pt IV on an action for damages arising out of the death of a passenger in the course of air carriage. And one of the conditions and limits is, as has been noted, the two-year limitation period. Centrality of the contract Parkes Shire Council emphasised the contractual relationship between passenger and carrier, and the need for close connection between plaintiff and passenger, for liability to be caught by s 35(2) of the Carriers' Liability Act (Cth). 124 Tseng (1999) 525 US 155 at 168-172, 174-175; Sidhu [1997] AC 430 at 447. 125 See United Airlines Inc v Sercel Australia Pty Ltd (2012) 289 ALR 682 at 699 [67], As Leeming JA said in the Court of Appeal, in dissent, "[t]he fundamental approach taken in all of the conventions is to identify the contract for international carriage and to ask by reference to the place of departure and the place of destination what conventions apply"126. Article 1(2) of the Warsaw Convention makes that clear. It provides: "For the purposes of this Convention the expression 'international carriage' means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention." That is to say, for carriage with multiple stops and layovers, the interim stops do not matter. The terms of Art 1(2) are unsurprising. They are consistent with the purpose underpinning the Warsaw Convention and its successors: to avoid the "jungle-like chaos"127 that could result if questions of liability in respect of international carriage were left to domestic laws to resolve. The origin and destination of air carriage are just as important with respect to Australian domestic travel. In Air Link Pty Ltd v Paterson128, this Court considered an accident alleged to have occurred during a stopover within Australia. Mr Paterson, a passenger, claimed to have been injured while disembarking a flight from Cobar (NSW) to Dubbo (NSW) but, because his ticket was for travel from Cobar to the Gold Coast (via Dubbo and Sydney), his travel was within the scope of the Carriers' Liability Act (Cth) (rather than the Carriers' Liability Act (NSW)). Thus, a passenger's contract of carriage will determine whether the uniform rules apply in respect of the death of a particular passenger, and by which of the various methods the uniform rules apply. But that is not the same as saying that the absence of a contract between a non-passenger plaintiff and a carrier means that liability of the carrier to that non-passenger in respect of the 126 South West Helicopters (2017) 356 ALR 63 at 139 [299]; see also at 143 [319]. 127 Reed (1977) 555 F 2d 1079 at 1092. 128 (2005) 223 CLR 283. death of a passenger falls outside the Conventions or Pt IV. As has been seen, liability covered by the Conventions and Pt IV is event-based. Aspects of the Conventions, including the manner in which the uniform rules are given effect under Australian law, support the conclusion that they are intended to be broadly applicable and wholly exclusive in respect of all liability129, not just that which would arise from a contractual relationship between carrier and passenger. One of the core principles underpinning the Warsaw Convention was the idea of a compromise for the purpose of achieving uniformity130. Carriers previously had the ability to contract out of all liability131. In return for giving up that right and, perhaps more fundamentally, for having imposed upon them a provision that removes the need for proof of negligence, both the extent of carriers' liability (in monetary terms) and the period during which claims could be brought were strictly limited under the Warsaw Convention. It would go against the spirit of the negotiated compromise and the concept of an exclusive, uniform, international code for convention signatories to conclude that carriers would still be "on the hook" for claims arising out of, or in relation to, damage resulting from a death for which they were not otherwise liable simply because there was no direct contractual relationship between the plaintiff and the carrier. Moreover, such a contention is inconsistent with the manner in which the uniform rules are given effect in Australia. For example, s 42 of the Carriers' Liability Act (Cth)132 imposes the limits of the carriers' liability on stowaways – persons without any contractual arrangement with the carrier. 129 Subject to the two express exemptions in s 37 of the Carriers' Liability Act (Cth). 130 See Sidhu [1997] AC 430 at 443, 446-447; Tseng (1999) 525 US 155 at 170-171; Thibodeau [2014] 3 SCR 340 at 369-370 [46]. See also Povey (2005) 223 CLR 189 at 230-231 [131], 232 [137]; Air Link (2005) 223 CLR 283 at 309 [72], 312 [82], 323 [124]. See generally Flynn, "The Interpretation of the Warsaw Convention in Wrongful Death Actions" (1979) 3 Fordham International Law Journal 71 at 76. 131 With respect to contracting out of liability to dependants, in 1955 the Supreme Court of Queensland upheld a provision endorsed on a passenger's ticket as being effective to bar any recovery by dependants: Martin v Queensland Airlines Pty Ltd [1956] St R Qd 362, especially at 368, 378. 132 See also Carriers' Liability Act (NSW), s 6; Civil Aviation (Carriers' Liability) Act 1961 (Vic), s 6; Civil Aviation (Carriers' Liability) Act 1962 (SA), s 7; Civil Aviation (Carriers' Liability) Act 1964 (Qld), s 6; Civil Aviation (Carriers' (Footnote continues on next page) Finally, the combined effect of s 35(2) and s 37 is to ensure that carriers are liable to indemnify an employer of a passenger or to pay contribution to a tortfeasor who is liable in respect of death or injury to a passenger. Those are the only matters to which the exclusivity in s 35(2) is to be read as subject. The agreement or arrangement between the passenger and the carrier is important for establishing whether (and through which part of the framework) the uniform rules apply. But the absence of a direct contractual relationship between a non-passenger plaintiff and a carrier does not prevent a claim by that non-passenger plaintiff from being caught by the uniform rules. To the extent that the decision of the Full Court of the Federal Court in South Pacific Air Motive Pty Ltd v Magnus133 holds to the contrary, that part of the decision should not be followed. The Full Court held, by majority (Hill J and Sackville J, Beaumont J dissenting), that claims by non-passengers for psychological injury are not governed by the Carriers' Liability Act (Cth)134. A core step in the reasoning of each of the majority judges was the absence of a contractual relationship (a ticket) between the carrier and a non-passenger135, with the result that the parents of the passengers in that case were permitted to bring claims for nervous shock after all claims under Pt IV had been extinguished. The majority's reasoning is contrary to the cardinal purpose of the Conventions and misstates the significance of the contract or arrangement between passenger and carrier to questions of liability. No separate treatment of non-passengers Parkes Shire Council submitted that the negotiating history of the Warsaw Convention supported a construction of Art 17 which drew a distinction between the liability of the carrier for passengers and freight, on the one hand, and liability to third parties, on the other hand. Parkes Shire Council submitted that the former were covered by the Conventions, whereas the latter were not. the scheme, That contention should be rejected. the Conventions and the exclusivity principle makes clear, such a contention is contrary to the terms of Art 17 and the way in which that Article has been interpreted in Australia and internationally. the analysis of Liability) Act 1961 (WA), s 7; Civil Aviation (Carriers' Liability) Act 1963 (Tas), 133 (1998) 87 FCR 301. 134 Magnus (1998) 87 FCR 301 at 322, 349-350; cf at 318-319 per Beaumont J. 135 See Magnus (1998) 87 FCR 301 at 346-347, 350; see also at 320-322; cf at 318 per The second basis on which Parkes Shire Council contended that non-passengers were to be treated separately to passengers under the Carriers' Liability Act (Cth) was that their claims are "derivative". That contention needs some unpacking. The Court of Appeal, including Leeming JA, correctly concluded that claims under the Compensation to Relatives Act are caught by s 35(2) of the Carriers' Liability Act (Cth). As Leeming JA explained, claims under the Compensation to Relatives Act are "very closely connected with the passenger's death"136. His Honour described those claims as derivative137. That description, or division, of claims as derivative or non-derivative is distracting and should not be adopted. As has been explained, the exclusivity principle, and the liability imposed on a carrier, is event-based138 – any action for damages however founded arising out of the death, wounding or bodily injury of a passenger in the course of carriage. The exclusivity principle is not concerned with the identity of the plaintiff. It is concerned with whether there is an event – relevantly, the death of a passenger in an accident in the course of carriage. Claims by Mrs Stephenson and her children for pure mental harm under the Civil Liability Act arise out of the death of a passenger (Mr Stephenson) in the course of carriage. Section 30 of the Civil Liability Act limits recovery for pure mental harm arising "wholly or partly from mental or nervous shock in connection with another person (the victim) being killed, injured or put in peril by the act or omission of the defendant"139 to witnesses at the scene or "close member[s] of the family"140 of the victim. In setting the scope of the duty of care, s 32(1) provides that "[a] person (the defendant) does not owe a duty of care to another person (the plaintiff) to take care not to cause the plaintiff mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care were not taken" (emphasis added). 136 South West Helicopters (2017) 356 ALR 63 at 137 [291]. 137 See South West Helicopters (2017) 356 ALR 63 at 135 [286]; see also at 101 [147], 102 [150] per Basten JA. 138 See [72], [76] above. 139 Civil Liability Act, s 30(1). 140 Civil Liability Act, s 30(2). Those circumstances are described in s 32(2) as including: "(a) whether or not the mental harm was suffered as the result of a sudden shock, (b) whether the plaintiff witnessed, at the scene, a person being killed, injured or put in peril, the nature of the relationship between the plaintiff and any person killed, injured or put in peril, (d) whether or not there was a pre-existing relationship between the plaintiff and the defendant." In addition, and perhaps most relevantly, s 30(4) provides: "No damages are to be awarded to the plaintiff for pure mental harm if the recovery of damages from the defendant by or through the victim in respect of the act or omission would be prevented by any provision of this Act or any other written or unwritten law." (emphasis added) On any view, liability of a carrier under the Civil Liability Act for pure mental harm suffered by a passenger's family members in the event of their death is "civil liability of the carrier under any other law in respect of the death of the passenger" under s 35(2) of the Carriers' Liability Act (Cth). The question, and the answer, are directed to the occurrence of an event. They are not concerned with whether the claim is derivative or non-derivative. And even if the Civil Liability Act did not contain a provision to the effect of s 30(4), the result would be the same. Conclusion The literal words of s 28 are broad, capturing "damage sustained by reason of the death of the passenger". No basis has been identified for giving those words a narrower construction than their literal meaning, which meaning extends to psychiatric injury sustained by family members of a passenger after the passenger's death. And s 35(2) is equally broad. With two very limited exceptions, it applies to make liability under s 28 (and related limitations) a substitute for any civil liability of the carrier under any other law in respect of the death of the passenger. Any liability to Mr Stephenson's family that might have been found to exist under the Civil Liability Act for psychiatric injury resulting from the sudden shock of Mr Stephenson's death was liability under "any other law" in respect of the death of Mr Stephenson. Section 35(2) therefore operated to preclude the Stephenson family from bringing a claim in respect of that psychiatric injury other than in accordance with Pt IV of the Carriers' Liability Act (Cth), namely within the two-year limitation period prescribed in s 34 of the Carriers' Liability Act (Cth). Orders The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S122/2002 AND APPELLANT ALLAN TROY BERRYMAN & ANOR RESPONDENTS Matter Nos S125/2002 and S126/2002 WENTWORTH SHIRE COUNCIL APPELLANT AND ALLAN TROY BERRYMAN & ANOR RESPONDENTS Wentworth Shire Council v Berryman [2003] HCA 34 18 June 2003 S122/2002, S125/2002 and S126/2002 ORDER In each matter: Appeal allowed. Set aside paragraphs 1, 2 and 3 of the order of the Court of Appeal of New South Wales made on 11 April 2001. Remit matter to the Court of Appeal of New South Wales for determination of the issues not so far dealt with and the cross-appeal regarding the assessment of the contributory negligence of the first respondent. First respondent to pay the costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation: Matter No S122/2002 D F Jackson QC with G I Charteris for the appellant (instructed by McMahons National Lawyers) M L Williams SC with P R McGuire for the first respondent (instructed by Carroll & O'Dea) P R Garling SC with J M Morris for the second respondent (instructed by Matter Nos S125/2002 and S126/2002 P R Garling SC with J M Morris for the appellant (instructed by Phillips Fox) M L Williams SC with P R McGuire for the first respondent (instructed by Carroll & O'Dea) D F Jackson QC with G I Charteris for the second respondent (instructed by McMahons National Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Wentworth Shire Council v Berryman Negligence – Contributory negligence – Passenger in defective vehicle with intoxicated and inexperienced driver – Whether reasonable person would have foreseen a risk of serious injury – Facts and circumstances relevant to contributory negligence. Negligence – Contributory negligence – Motor Accidents Act 1988 (NSW), s 74(2) – Whether passenger was "aware or ought to have been aware" that driver's ability was affected by alcohol – Objective or subjective test – Facts and circumstances to be taken into account. Negligence – Contributory negligence – Motor Accidents Act 1988 (NSW), s 74(6) – Whether passenger a "voluntary passenger". Appeal – Contributory negligence – Application of apportionment legislation – Factual considerations – Utility of earlier judicial decisions – Whether relevant to disclose common approaches at trial and on appeal – Whether relevant to disclose purpose of statutory amendments obliging finding of contributory negligence in specified circumstances. Words and phrases – "aware or ought to have been aware", "just and equitable in the circumstances of the case", "responsibility for the damage", "voluntary passenger". Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 10. Motor Accidents Act 1988 (NSW), s 74. McHUGH J. When Sally Inch Joslyn noticed that the first respondent, Allan Troy Berryman, was falling asleep at the wheel of the vehicle in which they were travelling, she insisted that she drive the vehicle. Shortly after Ms Joslyn commenced to drive, the vehicle overturned causing injury to Mr Berryman. The accident occurred at about 8.45am. The driving capacity of both parties was affected by their intoxication. They had been drinking at a party until about 4.00am. The vehicle also had a propensity to roll over, and its speedometer was broken. Section 74(2) of the Motor Accidents Act 1988 (NSW) requires a finding of contributory negligence if an injured person was a voluntary passenger in a motor vehicle and "was aware, or ought to have been aware" that the driver's ability to drive was impaired by alcohol. Section 74(6) of the Act declares that a person "shall not be regarded as a voluntary passenger ... if, in the circumstances of the case, the person could not reasonably be expected to have declined to become a passenger in or on the vehicle." However, s 74 does not otherwise affect the common law rules of contributory negligence. The issues in these appeals are: whether Mr Berryman was guilty of contributory negligence at common law; whether, within the meaning of s 74(6), Mr Berryman was a "voluntary passenger" in the vehicle; whether, in determining for the purposes of s 74(2) that a passenger was or ought to have been aware that the driver's ability was impaired by alcohol, regard can be had to facts and circumstances occurring before the passenger entered the vehicle; whether Mr Berryman was aware, or ought to have been aware, that Ms Joslyn was incapacitated by reason of her intoxication. In my opinion, Mr Berryman was guilty of contributory negligence at common law and by reason of the direction in s 74 independently of the common law. He was guilty of contributory negligence at common law because a reasonable person in his position would have known that Ms Joslyn was affected by alcohol by reason of her drinking during the previous 12 hours, that the vehicle was defective and that, by becoming a passenger, he was exposing himself to the risk of injury. He was guilty of contributory negligence by reason of the direction in s 74 because he was a voluntary passenger and ought to have been aware that Ms Joslyn's ability to drive was impaired by alcohol. Statement of the case Allan Troy Berryman suffered severe injuries when a utility motor vehicle in which he was a passenger, but which he owned, left the road and overturned on a country road in New South Wales. He sued the driver, Sally Inch Joslyn, McHugh and the Wentworth Shire Council for damages in the District Court of New South Wales, claiming that Ms Joslyn had driven negligently and that the Council was negligent in failing to provide proper warning signs1. The action was heard by Boyd-Boland ADCJ. His Honour found Ms Joslyn guilty of negligence. He also found that the Council was guilty of negligence in not erecting a sign that adequately warned of the danger of the curve where the accident occurred. He held Ms Joslyn 90% and the Council 10% responsible for the accident. However, his Honour reduced the damages by 25% because of the contributory negligence of Mr Berryman in allowing Ms Joslyn to drive when he ought to have been aware that she was unfit to drive. Mr Berryman appealed to the Court of Appeal of New South Wales contending that the trial judge erred in finding that he was guilty of contributory negligence. Alternatively, he contended that the trial judge should have found a smaller percentage of contributory negligence. Ms Joslyn and the Council cross- appealed against the percentage of contributory negligence attributed to Mr Berryman. They contended that the trial judge should have made a finding of up to 80% contributory negligence. The Court of Appeal (Priestley JA, Meagher JA and Ipp AJA) allowed Mr Berryman's appeal, holding that he was not guilty of contributory negligence2. This Court gave special leave to Ms Joslyn and the Council to appeal against the judgment of the Court of Appeal. The material facts The accident occurred at about 8.45am on a Sunday. Shortly before the accident Mr Berryman had been driving the vehicle. Ms Joslyn noticed that he was dozing off. She must have remonstrated with him for doing so because he said to her, "well, you drive the car then." She then took over the driving. Ms Joslyn did not have a driver's licence, having lost her licence after being convicted for driving while under the influence of intoxicating liquor. Mr Berryman knew that she had lost her licence and, according to Ms Joslyn, she had told him that she had not driven for over three years. However, the Court of Appeal appears to have accepted that he was unaware that she had not driven for three years. After driving about one kilometre, Ms Joslyn lost control of the vehicle while driving around a sharp corner. The vehicle overturned. As a result, 1 Berryman v Joslyn unreported, District Court of New South Wales, 5 November 2 Berryman v Joslyn (2001) 33 MVR 441. McHugh Mr Berryman suffered serious injuries. The vehicle had a propensity to roll – having overturned on two previous occasions. Ms Joslyn did not know what speed she was travelling when the accident occurred because the speedometer of the vehicle did not work. The trial judge found that it was broken. On the previous night, Mr Berryman had gone to a party at a property near Dareton, a town in south-western New South Wales. He arrived at the party at about 9.00pm. With a short interruption, he drank alcohol until about 4.00am, when he went to sleep on the front seat of his utility. He had no further alcohol that morning. A sample of blood taken on the Sunday morning indicated that at about 8.45am he probably had a blood alcohol level of .19g/100ml. Ms Joslyn had also been a guest at the party. During the evening, she also consumed a large amount of alcohol. At about 4.30am, she was seen to be "quite drunk and staggering about". Eventually, she went to sleep on the ground beside Mr Berryman's vehicle. Later that Sunday morning, Ms Joslyn and Mr Berryman decided to drive to Mildura to have breakfast, a journey that took about 20 minutes. She had had no more than three hours sleep (and may have had only two hours sleep) before embarking on the journey which resulted in Mr Berryman's injuries. She had no further alcohol that morning. A sample of blood taken from her indicated that at about 8.45am she probably had a blood alcohol level of .138g/100ml. After Ms Joslyn and Mr Berryman had eaten, they commenced to drive back to Dareton. Mr Berryman drove until shortly before the accident. Upon these facts, Boyd-Boland ADCJ said that, having decided to stay overnight, Mr Berryman "should have contemplated his vehicle might be driven by [Ms] Joslyn". His Honour also said that Mr Berryman had had no regard to the consequences of his own alcohol consumption, and that he had allowed Ms Joslyn to drive despite his knowledge of her alcohol consumption. His Honour found that, at the time Mr Berryman allowed Ms Joslyn to drive, he was capable of taking her condition into account. His Honour also said that Mr Berryman "ought also to have realised the lack of experience and qualifications of [Ms] Joslyn particularly given his knowledge of the propensity of his vehicle to roll over." The Court of Appeal held that the relevant facts were confined to those that Mr Berryman observed, or ought to have observed, when Ms Joslyn took over the driving. Meagher JA said "one must view matters as they stood at the time of handing over control of the car, (not as they were in the previous 24 hours), a task which his Honour did not really undertake."3 Meagher JA went on to say "there is no evidence that either [Mr Berryman or Ms Joslyn] were (2001) 33 MVR 441 at 446 [21]. McHugh drunk at the time, and certainly no evidence that at the time Mr Berryman had any reason to think that [Ms] Joslyn was affected by intoxication."4 Section 74 Section 74(2) directed the trial judge to find Mr Berryman guilty of contributory negligence if he "was aware, or ought to have been aware" that Ms Joslyn's ability to drive the utility "was impaired as a consequence of the consumption of alcohol". Neither in the Court of Appeal nor at the trial was any issue raised as to whether s 74 applied to the facts of the case. Nor was any issue raised as to whether Mr Berryman was "a voluntary passenger in or on a motor vehicle" within the meaning of s 74(6) of the Act. However, upon the facts of the case, these issues are squarely raised. Even if Mr Berryman was not guilty of contributory negligence at common law, s 74 might require a finding that he be deemed guilty of contributory negligence. Accordingly, this Court cannot avoid dealing with the issue, an issue that is squarely raised by the law that governs the case5. Apparently treating the case as one turning on common law principles, the Court of Appeal held that Mr Berryman was not guilty of contributory negligence. As I have indicated, the learned judges did so because they thought that Mr Berryman was not aware that Ms Joslyn's ability to drive the vehicle was impaired at the time that he became a passenger. They evidently took the view that, at least in a case like the present, the contributory negligence of a plaintiff has to be evaluated by reference to what the plaintiff knew or could have observed when he or she became a passenger. As will appear, I do not think that the common law test is so limited. But s 74(2) directs the court to determine whether the passenger ought to have been aware of the driver's impairment. This introduces an objective test. So the fact that Mr Berryman was unaware of Ms Joslyn's impaired ability to drive, does not necessarily prevent a finding that he was guilty of contributory negligence under s 74. However, it is convenient to deal first with the issue of contributory negligence at common law. The common law rules of contributory negligence The Court of Appeal erred in confining the facts and circumstances relevant to contributory negligence to those observed or observable by Mr Berryman when he became a passenger. Although judges and juries have often taken a benign view of conduct alleged to constitute contributory (2001) 33 MVR 441 at 446 [21]. 5 Attorney-General (NSW); Ex rel McKellar v The Commonwealth (1977) 139 CLR McHugh negligence and some decisions concerned with intoxication support the reasoning of the Court of Appeal, the basic principles of the law relating to contributory negligence show that the relevant facts and circumstances were not as confined as that Court held. At common law, a plaintiff is guilty of contributory negligence when the plaintiff exposes himself or herself to a risk of injury which might reasonably have been foreseen and avoided and suffers an injury within the class of risk to which the plaintiff was exposed6. In principle, any fact or circumstance is relevant in determining contributory negligence if it proves, or assists in proving, a reasonably foreseeable risk of injury to the plaintiff in engaging in the conduct that gave rise to the injury suffered. For historical reasons associated with the consequences of a finding of contributory negligence, judges and juries in earlier times took a lenient view of what facts constituted contributory negligence. And some modern cases concerned with passengers accepting a lift from intoxicated drivers have also taken a lenient view of the passengers' conduct. But in principle, any fact or circumstance which a reasonable person would know or ought to know and which tends to suggest a foreseeable risk of injury in accepting a lift from an intoxicated driver, is relevant in determining whether the passenger was guilty of contributory negligence in accepting the lift. Until the middle of the 20th century, the contributory negligence of a plaintiff was a defence to an action for negligence, even if the negligence of the defendant far outweighed the contributory negligence of the plaintiff. No one with experience of common law jury trials could fail to believe that juries often – perhaps usually – avoided the harshness of the rule by taking a benign view of the plaintiff's conduct. On some occasions, juries even appeared to compromise by reducing the plaintiff's damages to accord roughly with his or her responsibility for the damage suffered. Eventually, judges also came to dislike the harshness of the contributory negligence rule. They weakened it by holding that the onus was on the defendant to prove contributory negligence, even though historically contributory negligence was said7 to negative the causal connection between the defendant's negligence and the plaintiff's damage. If that was so, the onus should have been on the plaintiff to negative the plea. The common law judges further weakened the harshness of the rule by inventing the "last opportunity" rule8. In 6 Nance v British Columbia Electric Railway Co Ltd [1951] AC 601 at 611; Jones v Livox Quarries Ltd [1952] 2 QB 608 at 615; Froom v Butcher [1976] QB 286 at 7 Butterfield v Forrester (1809) 11 East 60 [103 ER 926]. 8 See Alford v Magee (1952) 85 CLR 437 for a discussion of this rule. McHugh employment cases, they went so far as to effectively obliterate the efficacy of the rule. They did so by holding that regard had to be had "to the long hours and the fatigue, to the slackening of attention which naturally comes from constant repetition of the same operation, to the noise and confusion in which the man works, to his pre-occupation in what he is actually doing at the cost perhaps of some inattention to his own safety."9 For a time, this Court even held10 that contributory negligence was not a defence to an action for breach of statutory duty. Ultimately, however, it felt compelled11 to follow a House of Lords decision12 to the opposite effect. In the case of a passenger who accepted a lift from an intoxicated driver, Australian courts showed a marked reluctance to use contributory negligence as the ground upon which the law might or ought to deny a right of action to the passenger. But this reluctance does not seem to have been the product of any sympathy for the passenger. Australian courts recognised that contributory negligence was an appropriate and available category for characterising the passenger's conduct. But generally they preferred to hold either that the driver had not breached any duty of care owed to the passenger or, more often, that the passenger had voluntarily accepted the risk of suffering the relevant harm. Perhaps the Australian courts thought that, if contributory negligence was the ground for denying liability, juries would take a benign view of the conduct of unmeritorious passengers and hold that the passenger's conduct in accepting a lift with an intoxicated driver was not unreasonable. Preferring no breach of duty as the mechanism for determining liability enabled the courts to control the issue – whether there was any evidence of breach of duty being a question for the judge and not for the jury. Moreover, the passenger had the onus of proving breach. The other preferred alternative was to characterise the conduct of the passenger as the voluntary assumption of the risk of harm (volenti non fit injuria). That was a jury issue. It therefore gave the court less control of the issue, and the onus was on the defendant to establish the defence. But the defence of volenti non fit injuria meant that the plaintiff would invariably fail once it was established that he or she knew of the driver's intoxication. In that respect, it had considerable advantages over contributory negligence in controlling the claims of the passenger who, together with the driver, had embarked on a drinking spree and then accepted a lift from the driver. 9 Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 at 178-179. 10 Bourke v Butterfield & Lewis Ltd (1926) 38 CLR 354. 11 Piro v W Foster & Co Ltd (1943) 68 CLR 313. 12 Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152. McHugh The reluctance of Australian courts to use contributory negligence as the ground of disentitlement was surprising having regard to the comments of the editor of the Law Quarterly Review concerning such cases and the United States jurisprudence. In Dann v Hamilton13, Asquith J had held that the defence of volenti non fit injuria did not apply to a passenger who knowingly accepted a lift from an intoxicated driver. In Dann, the driver "was under the influence of drink to such an extent as substantially to increase the chances of a collision arising from his negligence"14. Despite this finding, Asquith J rejected the plea of volenti. His Lordship appears to have taken it for granted that the driver owed a duty of care and that it had been breached. Curiously, contributory negligence Dann was powerfully criticised15 by was not pleaded as a defence. Dr A L Goodhart, the editor of the Law Quarterly Review, who argued "that judgment should have been entered for the defendant on the ground that the plaintiff was guilty of contributory negligence." Neither Asquith J nor Dr Goodhart appeared to think that no breach of duty was the appropriate ground for denying liability. United States jurisprudence also held that a passenger, like the plaintiff in Dann, was disentitled to sue because his or her conduct constituted contributory negligence16. Some years before Dann was decided, the issue arose for decision in the Full Court of the Supreme Court of New South Wales. In Finnie v Carroll17, the Full Court held that the trial judge had erred in refusing to direct the jury that the plaintiff could not recover if the jurors concluded that the driver's intoxication caused the collision and the plaintiff knew of that condition18. Gordon J, who gave the judgment of the Court, said19 that the defendant's immunity did not arise from the application of the maxim volenti non fit injuria. It arose "because there was no breach of any duty A owed to B to protect him from that danger of which he was fully aware when he accepted the invitation." As in Dann, the issue of contributory negligence appears to have been regarded as irrelevant. 14 [1939] 1 KB 509 at 515. 15 "Contributory Negligence and Volenti Non Fit Iniuria", (1939) 55 Law Quarterly Review 184 at 185. 16 Restatement of the Law of Torts, vol 2 (1934), §466. 17 (1927) 27 SR (NSW) 495. 18 (1927) 27 SR (NSW) 495 at 498. 19 (1927) 27 SR (NSW) 495 at 499. McHugh Another 20 years elapsed before the issue came before this Court for the first time in The Insurance Commissioner v Joyce20 (Latham CJ, Rich and Dixon JJ). Latham CJ and Dixon J both held that the passenger's entitlement to sue could be defeated on any one of three grounds: no breach of duty, volenti non fit injuria and contributory negligence. Latham CJ held that the passenger's claim failed because of contributory negligence and the voluntary acceptance of an obvious risk21. Rich J held that the plea of volenti non fit injuria had been made out22. Dixon J preferred to decide the case on the basis that a passenger who "knowingly accepts the voluntary services of a driver affected by drink ... cannot complain of improper driving caused by his condition, because it involves no breach of duty."23 However, Latham CJ and Dixon J disagreed as to the conditions that gave rise to the various defences. Latham CJ said24 that, if the passenger was sober enough to know and understand the danger of driving with the defendant in a drunken condition, he was guilty of contributory negligence and had also voluntarily assumed an obvious risk. But his Honour also said that, if the passenger was not sober enough to know and understand the danger, he had disabled himself from avoiding the consequences of the negligent driving and was guilty of contributory negligence. In contrast, Dixon J said25 that "for the plaintiff, who was not driving the car, to drink until he was too stupid to observe the defendant's condition can hardly be considered contributory negligence of which the accident was a reasonable or natural consequence." His Honour also held26 that the pleas of no breach of duty and volenti non fit injuria both required "some degree of actual knowledge on the part of the passenger of the alcoholic conditions he is accepting." Dixon J would have dismissed the defendant's appeal on the ground that the defendant had not established any of the three grounds of disentitlement. On this issue, Dixon J was clearly right and Latham CJ and Rich J wrong. Both Latham CJ and Rich J overlooked that the onus was on the defendant to prove the defences of volenti and contributory negligence and that on the evidence it was not possible to say whether those defences were made out. But as I later indicate, I disagree with the analysis by 20 (1948) 77 CLR 39. 21 (1948) 77 CLR 39 at 48. 22 (1948) 77 CLR 39 at 49. 23 (1948) 77 CLR 39 at 57. 24 (1948) 77 CLR 39 at 47. 25 (1948) 77 CLR 39 at 60. 26 (1948) 77 CLR 39 at 57. McHugh Dixon J of the defence of contributory negligence in the case of an intoxicated passenger. The issue of the appropriate ground of disentitlement again came before the Court in Roggenkamp v Bennett27 where the trial judge had held that the plaintiff, having accepted a lift with an intoxicated driver, had failed to establish a breach of the duty owed to him. Like the trial judge, Webb J held that the defendant had not breached the duty of care that he owed to the passenger. However, McTiernan and Williams JJ dismissed the plaintiff's appeal on the ground that the defence of volenti non fit injuria had been established. In Jansons v The Public Curator of Queensland28, Lucas J also held that the plaintiff's claim failed because the defendant had proved that the plaintiff had voluntarily assumed the risk of injury as the result of the driver's intoxication. And in Jeffries v Fisher29, the Full Court of the Supreme Court of Western Australia upheld the trial judge's finding that the plaintiff had voluntarily assumed the risk of suffering the harm sustained. But these four cases were the high water mark of the defence of volenti in cases where the driver was intoxicated. Since then the defence has failed in numerous cases – invariably on the ground that the passenger failed to appreciate the risk of harm or did not intend to take the risk30. is difficult to escape the conclusion that the introduction of apportionment legislation has influenced the courts in characterising the conduct of the passenger as contributory negligence, rather than as a voluntary assumption of risk or as a determinant of the standard of care owed by the driver to the passenger. Apportionment legislation enables the court to apportion respective the plaintiff's damages according responsibility responsibility of the plaintiff and the defendant for that damage31. Since the the for 27 (1950) 80 CLR 292. 28 [1968] Qd R 40. 29 [1985] WAR 250. 30 See, for example, Duncan v Bell and State Government Insurance Office (Queensland) [1967] Qd R 425; Dodd v McGlashan [1967] ALR 433; O'Shea v The Permanent Trustee Company of New South Wales Ltd [1971] Qd R 1; Sloan v Kirby and Redman (1979) 20 SASR 263; Banovic v Perkovic (1982) 30 SASR 34. 31 Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 4(1); Wrongs Act 1954 (Tas), s 4(1); Law Reform (Miscellaneous Provisions) Act 1956 (NT), s 16(1); Wrongs Act 1958 (Vic), s 26(1); Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9(1); Law Reform Act 1995 (Q), (Footnote continues on next page) McHugh introduction of apportionment legislation, contributory negligence has been the preferred characterisation of the conduct of the plaintiff who accepts a lift from a driver known to be intoxicated. In New South Wales32 and in South Australia33, the legislature has even intervened to abolish the defence of volenti non fit injuria in motor accident cases. Instead, legislation34 makes knowledge of the driver's intoxication a matter of contributory negligence and apportionment. But the defence of volenti is still available – at least theoretically – in other States and Territories. What then of the issue of no breach of duty in cases where the passenger knows that the driver's ability is impaired by alcohol and suffers injury as the result of that impairment? Has it survived the judicial and legislative demise of the doctrine of volenti? While the reasoning of this Court in Cook v Cook35 and Gala v Preston36 stands, the answer must be: "Yes". The plea of no breach of duty – perhaps even a plea of no duty in an extreme case – is still open in the case of a passenger who accepts a lift with a driver known to the passenger to be seriously intoxicated. In Cook and Gala, this Court applied the now rejected doctrine of proximity to hold that in exceptional cases the content of the duty of care owed by a driver to a passenger varies in proportion to the passenger's knowledge of the driver's capacity to drive. In Cook, the Court held37 that, where the passenger has invited an inexperienced and unlicensed driver to drive, the standard of care "is that which is reasonably to be expected of an unqualified and inexperienced driver in the circumstances in which [the driver] is placed." In so holding, the majority judgment relied on the no breach of duty statements contained in the judgments of Latham CJ and Dixon J in Joyce and the judgment of Webb J in Roggenkamp. In Gala, Mason CJ, Deane and Gaudron JJ and I held that no relevant duty of care was owed by a driver to a passenger in respect s 10(1); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 7; Civil Law (Wrongs) Act 2002 (ACT), s 41. 32 Motor Accidents Act 1988 (NSW), s 76. 33 Wrongs Act 1936 (SA), s 24K(6). 34 Wrongs Act 1936 (SA), s 24K(1); Motor Accidents Act 1988 (NSW), s 74. 35 (1986) 162 CLR 376. 36 (1991) 172 CLR 243. 37 (1986) 162 CLR 376 at 384. McHugh of the driving of a stolen car in circumstances where both parties had consumed large quantities of alcohol. We said38: "[E]ach of the parties to the enterprise must be taken to have appreciated that he would be encountering serious risks in travelling in the stolen vehicle when it was being driven by persons who had been drinking heavily and when it could well be the subject of a report to the police leading possibly to their pursuit and/or their arrest. In the special and exceptional circumstances that prevailed, the participants could not have had any reasonable basis for expecting that a driver of the vehicle would drive it according to ordinary standards of competence and care." Now that this Court has rejected the doctrine of proximity, it may be that it would no longer follow the reasoning in Cook and Gala. Moreover, the notion of a standard of care that fluctuates with the sobriety of the driver is one that tribunals of fact must have great difficulty in applying. While Cook and Gala stand, however, they are authorities for the proposition that, in special and exceptional circumstances, it would be unreasonable to fix the standard of care owed by the driver by reference to the ordinary standard of care owed by a driver to a passenger39. In some cases, knowledge by a passenger that the driver's ability to drive is impaired by alcohol may transform the relationship between them into such a category. It is unnecessary in this case to say any more about the authority of Cook and Gala. Neither in this Court nor in the courts below has Ms Joslyn suggested that she did not breach the duty of care owed to Mr Berryman. Intoxication and contributory negligence The test of contributory negligence is an objective one. Contributory negligence, like negligence, "eliminates the personal equation and is independent of the idiosyncrasies of the particular person whose conduct is in question."40 One exception to that rule is that, in considering whether a child is guilty of contributory negligence, the standard of care is tailored to the age of the child41. It may be the law that, in the case of an aged plaintiff, the standard of care is also 38 (1991) 172 CLR 243 at 254. 39 Gala v Preston (1991) 172 CLR 243 at 253. 40 Glasgow Corporation v Muir [1943] AC 448 at 457. 41 McHale v Watson (1966) 115 CLR 199. McHugh tailored to the age of the plaintiff. In Daly v Liverpool Corporation42, Stable J thought so, saying: "I cannot believe that the law is quite so absurd as to say that, if a pedestrian happens to be old and slow and a little stupid, and does not possess the skill of the hypothetical pedestrian, he or she can only walk about his or her native country at his or her own risk. One must take people as one finds them. There is no hypothetical standard of care. We must all do our reasonable best when we are walking about." This statement suggests that the physical and mental deficits of each plaintiff must be taken into account in determining whether that person was guilty of contributory negligence. Support for such a proposition can be found in the judgment of Jordan CJ in Cotton v Commissioner for Road Transport and Tramways43 where his Honour said: "It is conceived that contributory negligence in the sense in which it is now being considered occurs only when a person fails to take all such reasonable care as he is in fact capable of. I am not aware of any case in which a person has been held to be guilty of contributory negligence standard, some through notwithstanding that he had been as careful as he could." arbitrary general application of the In McHale v Watson44, Kitto J held, correctly in my opinion, that this statement of Jordan CJ does not represent the law. Kitto J said45 that "[i]n so far as his Honour's observations suggest a subjective standard for contributory negligence they ought not, I think, to be accepted." The statement of Jordan CJ, like that of Stable J in Daly, is inconsistent with the established rule that "[i]n theory, a plaintiff is required to conform to the same standard of care as a defendant, with due allowance for the fact that here the enquiry is directed to what is reasonable for his own safety rather than the safety of others."46 No one would now suggest that the standard of care expected of a defendant is that which the defendant "is in fact capable of." To introduce such a standard into the law of contributory negligence would not only contradict the objective test of contributory negligence, it would impose on tribunals of fact the almost 42 [1939] 2 All ER 142 at 143. 43 (1942) 43 SR (NSW) 66 at 69. 44 (1966) 115 CLR 199. 45 (1966) 115 CLR 199 at 214-215. 46 Fleming, The Law of Torts, 9th ed (1998) at 318. McHugh insuperable task of determining what standard of care the plaintiff was "in fact capable of." Ever since Lynch v Nurdin47, common law courts have accepted that, in determining whether a child is guilty of contributory negligence, the relevant standard of care is that to be expected of an ordinary child of the same age. But otherwise the plaintiff is held to the standard of care expected of an ordinary reasonable person engaging in the conduct that caused the plaintiff's injury or damage. No exception should or could in principle be made in the case of the passenger accepting a lift from an intoxicated driver. It is true that the reasoning in some decisions48 concerned with a passenger accepting a lift with an intoxicated driver appears to suggest that this class of case, like those concerned with children, is another exception to the general rule that the test for contributory negligence is an objective test. But, in principle, intoxicated drivers cannot be an exception to the general rule. Cases like Banovic v Perkovic49, Nominal Defendant v Saunders50 and McPherson v Whitfield51 cannot be followed in so far as they hold or suggest that a passenger is guilty of contributory negligence in accepting a lift from an intoxicated driver only if the passenger knew, or was aware of signs indicating, that the driver was intoxicated. In my view, the law on this subject was correctly stated by Cooper J in Morton v Knight52 and by Clarke JA in McGuire v Government Insurance Office (NSW)53. The issue in a case like the present is not whether the passenger ought reasonably to have known of the driver's intoxication from the facts and circumstances known to the passenger. The relevant facts and circumstances include those which a reasonable person could have known by observation, inquiry or otherwise. In cases of contributory negligence outside the field of intoxicated passengers and drivers, the courts take into account as a matter of 47 (1841) 1 QB 29 [113 ER 1041]. 48 Banovic v Perkovic (1982) 30 SASR 34 at 36-37; Nominal Defendant v Saunders (1988) 8 MVR 209 at 215; McPherson v Whitfield [1996] 1 Qd R 474. 49 (1982) 30 SASR 34. 50 (1988) 8 MVR 209. 51 [1996] 1 Qd R 474. 52 [1990] 2 Qd R 419. 53 (1990) 11 MVR 385 at 388. McHugh course those facts and circumstances that the plaintiff could have discovered by the exercise of reasonable care54. In Morton, Cooper J relied, correctly in my opinion, on the reasoning in the judgments of this Court in O'Neill v Chisholm55 and held that the relevant facts and circumstances included those which a reasonable person would have ascertained. The test applied by all members of the Court in O'Neill, including Walsh and Gibbs JJ who found no contributory negligence, was whether the passenger ought to have realised that alcohol had impaired the driver's capacity to drive. Hence, the issue is not whether a reasonable person in the intoxicated passenger's condition – if there could be such a person – would realise the risk of injury in accepting the lift. It is whether an ordinary reasonable person – a sober person – would have foreseen that accepting a lift from the intoxicated driver was exposing him or her to a risk of injury by reason of the driver's intoxication. If a reasonable person would know that he or she was exposed to a risk of injury in accepting a lift from an intoxicated driver, an intoxicated passenger who is sober enough to enter the car voluntarily is guilty of contributory negligence. The relevant conduct is accepting a lift from a person whose driving capacity is known, or could reasonably be found, to be impaired by reason of intoxication. In other areas of contributory negligence, a plaintiff cannot escape a finding of contributory negligence by pleading ignorance of facts that a reasonable person would have known or ascertained. A pedestrian or driver who enters a railway crossing in the face of an oncoming train cannot escape a finding of contributory negligence because he or she was not, but should have been, aware of the train. Nor does it make any difference that the pedestrian or driver had defective hearing or sight. Contributory negligence is independent of "the idiosyncrasies of the particular person whose conduct is in question."56 Similarly, the fact that the passenger's intoxicated condition prevents him or her from perceiving the risks attendant on driving with an intoxicated driver does not absolve the passenger from complying with the standard of care required of an ordinary reasonable person. If an intoxicated pedestrian falls down a manhole that a sober person would have seen and avoided, it seems impossible to hold that the pedestrian was not guilty of contributory negligence because the pedestrian's condition prevented him or her from seeing the danger. At all events, it seems 54 See, for example, O'Connor v South Australia (1976) 14 SASR 187; Preston Erections Pty Ltd v Rheem Australia Ltd (1978) 52 ALJR 523; 21 ALR 379; Purcell v Watson (1979) 26 ALR 235; AWA Ltd v Daniels (t/as Deloitte Haskins & Sells) (1992) 7 ACSR 759. 55 (1972) 47 ALJR 1. 56 Glasgow Corporation v Muir [1943] AC 448 at 457. McHugh impossible to so hold without introducing a subjective standard into this area of law. And I can see no reason in principle or policy for distinguishing between the intoxicated pedestrian and the intoxicated passenger. Mr Berryman was guilty of contributory negligence at common law Once it is accepted that the relevant circumstances were not confined to what Mr Berryman perceived or should have perceived when he became a passenger in his vehicle, a finding of common law contributory negligence on his part is inevitable. The relevant facts which an ordinary reasonable person would know or would infer point overwhelmingly to Mr Berryman's lack of care for his safety in becoming a passenger. First, Ms Joslyn had lost her driver's licence and probably had not driven for some time. Second, she was insisting on driving a vehicle whose speedometer did not work and which had a tendency to roll over and she had had no experience of driving the vehicle. Third, Ms Joslyn had been drinking for about the same length of time as Mr Berryman who was unfit to drive. Fourth, the amount of alcohol consumed by Ms Joslyn, the time that had elapsed since she stopped drinking and her lack of sleep confirmed that she also was probably unfit to drive. Mr Berryman's inability to keep awake and his agreement to stop driving increased the probability that her drinking and lack of sleep made her unfit to drive. Upon these facts, a reasonable person would have foreseen that, as a passenger in a car driven by Ms Joslyn, he or she was exposed to a risk of serious injury as the result of the defective nature of the vehicle, her drinking, her lack of sleep, her probable lack of recent driving experience and her lack of experience of driving this defective vehicle. Moreover, there was no reason why the hypothetical ordinary person, as the owner of the vehicle, could not have parked it by the side of the road until he or Ms Joslyn was capable of driving. In those circumstances, the learned trial judge was correct in finding Mr Berryman guilty of contributory negligence at common law. Voluntary passenger I now return to the issue whether Mr Berryman was guilty of contributory negligence under s 74 of the Act. That depends in the first place on whether Mr Berryman was a voluntary passenger in the motor vehicle. In my opinion, he was. Under s 74(6), he was a voluntary passenger unless he "could not reasonably be expected to have declined to become a passenger" in the vehicle. A number of factors indicate that it was reasonable for him to have declined to become a passenger in his own vehicle. First, he knew Ms Joslyn did not have a licence and that she had been drinking for about the same length of time as he had. Second, given his own blood alcohol level, his inability to keep awake and his agreement to stop driving, I infer that he knew that his capacity for driving was affected by the alcohol that he had consumed. Third, because that is so, he either knew or ought to have known that the driving ability of Ms Joslyn was also McHugh likely to be affected by the liquor that she had consumed. Fourth, there was no reason why he could not have parked his vehicle by the side of the road until he or Ms Joslyn was capable of driving. In those circumstances, he has failed to establish that he could not reasonably be expected to have declined to become a passenger in his vehicle. Contributory negligence under s 74 of the Act Under s 74(2) of the Act, Mr Berryman was guilty of contributory negligence if he "was aware, or ought to have been aware" that the driver's ability to drive was impaired by alcohol. The question posed by s 74 is a narrower one than that posed by the common law. Under the common law, the defective nature of the vehicle and Ms Joslyn's lack of experience with that vehicle were factors that, combined with her alcohol consumption, made an overwhelming case of contributory negligence. In combination, they pointed to a reasonably foreseeable risk of injury to a person accepting a lift from her. The statutory test is not concerned with foreseeability of risk. It poses the simple question whether Mr Berryman knew or ought to have known that Ms Joslyn's driving ability was impaired by the alcohol that she had consumed. The use of the term "ought" in s 74(2) suggests a test of objective reasonableness. Accordingly, the question posed by this limb of s 74(2) is, would a reasonable person have known that intoxication impaired Ms Joslyn's ability to drive? Section 74(2) is silent, however, as to the circumstances that the reasonable person may take into account in determining that question. Are they confined to the circumstances known to the passenger? Do they include circumstances that the passenger ought to have known? Are they confined to circumstances that exist at the time that the driver commences to drive the passenger? Counsel for Mr Berryman contended that at common law – he did not deal with the question under s 74(2) – "a driver must be exhibiting obvious signs of intoxication before a finding of contributory negligence can be made in these circumstances." If that was so, the relevant circumstances under s 74 are confined to those that demonstrate "obvious signs of intoxication". But, as I have pointed out, at common law the circumstances were not so limited, and there is no reason to give the "ought to have known" limb of s 74(2) a more restricted scope than exists at common law. The trial judge found that Ms Joslyn was not showing objective signs of intoxication shortly after the accident. He inferred that she was not showing these signs when she took over driving. Given this finding, it is difficult to conclude that Mr Berryman knew, when he became a passenger, that her driving ability was impaired. Indeed, his agreement to give up driving and to allow her to drive suggests that he thought that she was competent to drive. At all events, it suggests that he believed that she was in better condition than he was to drive. McHugh But, accepting that he was not aware that her driving condition was impaired, he "ought to have been aware" that it was. In determining whether he "ought to have been aware", the relevant facts and circumstances must include all those facts and circumstances occurring in the previous 12 hours of which he was, or ought to have been, aware. They included the fact that Ms Joslyn had been drinking heavily until at least 4.00am when Mr Berryman left the party. When he went to bed at about 4.00am, "the people who were still at the party were all staggering drunk". Those people included Ms Joslyn, although Mr Berryman said in evidence that he could not recall what condition she was in. Given the fact that Ms Joslyn was certainly "staggering drunk" at 4.00am and the accident occurred about 8.45am, I think that Mr Berryman ought to have been aware that Ms Joslyn's driving ability was impaired. She must have been very intoxicated at 4.00am. At about 4.30am, she was seen to be "quite drunk and staggering about". A sample of blood taken from her indicated that at about 8.45am, she probably had a blood alcohol level of .138g/100ml. Mr Berryman was neither aware, nor ought he have been aware, of this fact. But that Ms Joslyn should have such a high reading, nearly five hours after Mr Berryman left the party, shows how intoxicated she must have been at 4.00am. A reasonable person in Mr Berryman's position would have been aware that she was probably still affected by alcohol when he became a passenger in the vehicle. Add to this, that Mr Berryman's driving ability was impaired by reason of the alcohol that he had consumed, and it is an almost necessary conclusion that he ought to have been aware of a similar impairment in Ms Joslyn's driving ability. In my opinion, Mr Berryman was guilty of contributory negligence for the purposes of s 74 of the Act. Order The appeals of Ms Joslyn and the Council should be allowed with costs. The judgment of the Court of Appeal of the Supreme Court of New South Wales in each case should be set aside. The proceedings in each matter should be remitted to the Court of Appeal for the hearing and determination of each appeal and cross-appeal to that Court in accordance with the reasons of this Court. Callinan GUMMOW AND CALLINAN JJ. This case is concerned with the application of s 74 of the Motor Accidents Act 1988 (NSW) ("the Act") to a case in which an intoxicated owner of a motor vehicle who relinquished its management to a similarly inebriated person suffered injuries as a result of the latter's negligent driving. The facts Mr Berryman who was then 22 years of age, drank sufficient alcohol in the company of Sally Inch Joslyn on Friday evening, 25 October 1996, to be so intoxicated as to feel "fairly crook" on the following morning. He worked during the day on Saturday, rested for a time, and then, at about 9pm went to a party at a With one property near Dareton in south-western New South Wales. interruption, at about 11.30pm, Mr Berryman spent his time at the party, until about 4am, drinking alcohol. By that hour he must have been, indeed he admitted that he was, and as the objective evidence of the amount of alcohol in his bloodstream some hours later established, beyond doubt, quite drunk. He went to sleep on the front seat of his utility motor vehicle. In his evidence he claimed to have no further recollection until he heard a scream, and realized that he was a passenger in his vehicle which was turning over. Mr Berryman had been friendly with Ms Joslyn before the Friday night preceding the accident. He was aware that she had lost her driving licence on her conviction for driving a motor vehicle with a blood alcohol content of 0.15g/100ml. Ms Joslyn said that she and Mr Berryman spent the Friday evening drinking together until after midnight at hotels in Wentworth. Afterwards they returned to Ms Joslyn's residence where they continued drinking. Ms Joslyn took a bottle of whisky with her to the party on the following Saturday evening. She travelled as a passenger in a car with three other women. Ms Joslyn drank from the bottle at the party. Whether anyone else also did so she was unable to say. Again, as the objective evidence of alcohol in her blood showed, she too must have been seriously adversely affected by the consumption of it. The reading, some hours later, was in her case, 0.102g/100ml. Indeed Ms Joslyn was observed by others at the party to be "quite drunk and staggering about" at 4.30am. Early in the morning of the Sunday Ms Joslyn had placed her swag on the ground beside Mr Berryman's vehicle and had gone to sleep. Ms Joslyn said she did not know where the keys to the vehicle were when she fell asleep but she knew she had them when she woke not long after daylight, having heard Mr Berryman moving about in his vehicle. No one else was up at that time. There was a discussion between her and Mr Berryman, to whom she gave the Callinan keys to his vehicle which he drove, with Ms Joslyn as a passenger into Mildura, along the road upon which the vehicle was later to overturn. The journey took some 15 to 20 minutes. When they arrived at a McDonald's café, Mr Berryman entered, ordered food, paid, drove towards the river, stopped and ate the food. He did not drink alcohol in that time. Ms Joslyn said Mr Berryman had commenced the drive back to Dareton, but, at some time after they entered Hollands Lake Road she noticed he was dozing off. She must have reproached him for doing so for he said, "Well, you drive the car then." He stopped the vehicle and exchanged places with Ms Joslyn. She then commenced to drive it and did so to the point of the accident. Ms Joslyn had last driven a vehicle three years earlier. She had at some time previously told Mr Berryman of that. She did not see the curve until the last minute. "It was just there all of a sudden and it turned really sharply and the car wouldn't go round the bend." By the time the vehicle entered the curve Ms Joslyn had been driving, she estimated, for a couple of minutes at most. She could not say at what speed she travelled as the speedometer of the vehicle was broken. Describing the curve where the vehicle left the road and overturned, she said that it looked as if it were just a simple curve "and then it goes right back around sharply". That was something she realized when she was already in the curve. Mr Berryman suffered serious injuries in the accident. The trial Mr Berryman sued for damages in the District Court of New South Wales. The action was tried by C J Boyd-Boland ADCJ. His Honour made these rather generous findings in favour of Mr Berryman: "Having made the decision, along with others, before the party commenced, to stay overnight at the party, the Plaintiff should have had in contemplation that he might have to later become a passenger in his own motor vehicle because of the alcohol he anticipated consuming. Although I think he did not give the matter consideration, he should have contemplated his vehicle might be driven by Miss Joslyn who was his companion for the evening and ought to have considered the prospect of a journey such as that undertaken to Mildura. He did not do so. He had no regard to the consequences of his own alcohol consumption but more significantly, as it turned out, despite saying in evidence he would not have allowed Miss Joslyn to drive, because of his knowledge of her alcohol consumption, he did just that. It was obvious to him before he Callinan went to sleep that Miss Joslyn would not be fit to drive on the following morning. I believe, at the time of change over of drivers, he did not consider that issue, but should have done so and was capable of so doing. The failure to take these matters to account was contributory negligence. The Plaintiff ought also to have realised the lack of experience and qualifications of Miss Joslyn particularly given his knowledge of the propensity of his vehicle to roll over. My assessment of the degree of the Plaintiff's contributory negligence has been reduced from what it would otherwise be because I find ... at the time of the hand-over Miss Joslyn exhibited none of the obvious signs of intoxication which one would expect to be present. That, it seems to me, could have influenced the Plaintiff if he had properly put his mind to the issue of Miss Joslyn's capacity. It warrants a reduction in the assessment of his contributory negligence which, but for that factor, I would have fixed at 331/3%. The level of reduction would be the same against [Ms Joslyn and the Council] there being no real difference in their arguments and in the defences pleaded on this issue. I find it appropriate to reduce the Plaintiff's verdict by virtue of his contributory negligence by 25%. His verdict against [Ms Joslyn and the Council] will be reduced accordingly." His Honour then turned to the case against the Wentworth Shire Council ("the Council")57: "Having found, on a balance of probabilities, it was the Council who erected a sign which was inadequate and misleading, and failed to erect signs which were proper, given the nature of the curve, I find, in this instance, the Council carried out that work without due care and skill for the safety of the road users. The work which Council performed was not carried out in accordance with the standard at the time … We are not concerned, as the [Council] argues, with standards for road construction, nor whether this road was constructed to contemporary standards. We are not dealing with some very minor back road but one in use to the extent of 200 vehicles per day ... We are dealing with the failure by Council to properly signpost and warn of the danger of a road with a compound curve ... and I find that the Council failed to do that and was thus guilty of misfeasance. The primary cause of this accident remains the conduct of [Ms Joslyn] whose approach to the curve was nothing less than reckless, for the reasons already stated. However I find 57 The case was tried before this Court decided Brodie v Singleton Shire Council (2001) 206 CLR 512. Callinan the [Council] to be liable to contribute an amount of 10% to the verdict of the Plaintiff and there will be a verdict in favour of the Plaintiff and The trial judge next rejected a defence of joint illegal enterprise, a matter which is not the subject of an appeal to this Court. Judgment was entered for Mr Berryman with costs against Ms Joslyn for the sum of $1,496,314.77 and against the Council for the sum of $750,000. His Honour further ordered that Ms Joslyn have credit in respect of the first judgment sum for any amount paid by Ms Joslyn pursuant to s 45 of the Act. The appeal to the Court of Appeal Mr Berryman appealed to the Court of Appeal of New South Wales on the ground that the trial judge should either have not found any contributory negligence on his part, or ought to have found it in a smaller percentage than he did. Ms Joslyn and the Council each cross-appealed against the percentage of contributory negligence attributed to Mr Berryman, the Council asserting that it should have been up to 80%, and Ms Joslyn against the apportionment of liability against her of 90%. The Court of Appeal (Priestley JA, Meagher JA and Ipp AJA)58 upheld Mr Berryman's appeal by holding that he was not guilty of any contributory negligence at all. The leading judgment was given by Meagher JA with whom the other members of the Court agreed. In giving his judgment Meagher JA made no reference to the Act. His Honour's conclusions are to be found in the following passage59: "His Honour, as I have said, made a finding of 25% contributory negligence against the plaintiff. The only action of his which could possibly have amounted to contributory negligence was permitting Miss Joslyn to drive instead of him. In this regard, one must view matters as they stood at the time of handing over control of the car, (not as they were in the previous 24 hours), a task which his Honour did not really undertake. One must also, if one concludes that at the time of handing over Mr Berryman was too drunk to appreciate what was happening, a situation as to which there is no evidence in the present case, judge the question of contributory negligence on the hypothesis that the plaintiff did 58 Berryman v Joslyn (2001) 33 MVR 441. 59 (2001) 33 MVR 441 at 446 [21]. Callinan have sufficient foresight to make reasonable judgments. But, although at the time of the accident the blood alcohol levels of Miss Joslyn and Mr Berryman were estimated as being 0.138g/100ml and 0.19g/100ml respectively, there is no evidence that either of them were drunk at the time, and certainly no evidence that at the time Mr Berryman had any reason to think that Miss Joslyn was affected by intoxication. Indeed, quite to the contrary. Of the people who were present who gave evidence, all said that Miss Joslyn showed no signs of intoxication. His Honour so found. Despite, therefore, one's reluctance to overrule a trial judge's finding on apportionment (Podrebersek v Australian Iron and Steel Pty Ltd60), it seems quite impossible to justify his Honour's conclusion on contributory negligence. I would be in favour of reducing it from 25% to The Court of Appeal entered judgment, of $1,995,086.36 and $750,000 against Ms Joslyn and the Council respectively. The Council's appeal against Ms Joslyn was dismissed with costs. The Court of Appeal held that the maintenance and control of the road resided in the Council: accordingly there was no basis for a review of the trial judge's finding of negligence against the Council for failing to erect adequate signage. The Council's defence of "joint illegal activity" asserted against Mr Berryman and Ms Joslyn was again rejected. The appeal to this Court The grants of special leave to Ms Joslyn and the Council to appeal to this Court were confined to the question whether the Court of Appeal was justified in holding that Mr Berryman was not guilty of contributory negligence. In 1988 important changes were made to the law relating to contributory negligence in New South Wales by the enactment of the Act. Section 74 deals as respect of motor accidents. follows with contributory negligence Sub-section (1) states: "The common law and enacted law as to contributory negligence apply to claims in respect of motor accidents, except as provided by this section." The "enacted law" included at the time of trial s 10(1) of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) which introduced the principle of apportionment. Sub-section (2) of s 74 requires that a finding of contributory negligence be made in the cases enumerated in pars (a)-(d) of that sub-section. 60 (1985) 59 ALJR 492; 59 ALR 529. Callinan Paragraphs (c) and (d) deal with failures to wear seat belts and protective helmets. Paragraph (a) requires a finding of contributory negligence: "where the injured person or deceased person has been convicted of an offence in relation to the motor accident under [specified road transport legislation] unless the plaintiff satisfies the court that the concentration of alcohol in the person's blood or the alcohol or other drug, as the case requires, involved in the commission of the offence did not contribute in any way to the accident". It is par (b) which speaks to the facts of the present appeals by providing: "where: the injured person (not being a minor) or the deceased person was, at the time of the motor accident, a voluntary passenger in or on a motor vehicle, and the driver's ability to drive the motor vehicle was impaired as a consequence of the consumption of alcohol or any other drug and the injured person or the deceased person was aware, or ought to have been aware, of the impairment". This is to be read with s 74(6) which states: "A person shall not be regarded as a voluntary passenger in or on a motor vehicle for the purposes of subsection (2)(b) if, in the circumstances of the case, the person could not reasonably be expected to have declined to become a passenger in or on the vehicle." Finally, s 74(8) provides: "This section does not exclude any other ground on which a finding of contributory negligence may be made." The reference in s 74(2)(b) to the impairment by alcohol of the ability of the driver to drive as something of which the injured person "was aware, or ought to have been aware" reflects the common law requirement that the standard of care expected of the plaintiff be measured against that of a person of ordinary prudence and not merely by reference to subjective attitudes of the particular Callinan plaintiff61. Suggestions to the contrary, apparently made by the Full Court of the Federal Court in Nominal Defendant v Saunders62 were in error. Section 76 abolished the defence of volenti non fit injuria except with respect to motor racing. "76 Defence of voluntary assumption of risk Except as provided by subsection (2), the defence of volenti non fit injuria is not available in proceedings for damages arising from a motor accident but, where that defence would otherwise have been available, the amount of any damages shall be reduced to such extent as is just and equitable on the presumption that the injured person or deceased person was negligent in failing to take sufficient care for his or her own safety. If a motor accident occurs while a motor vehicle is engaged in motor racing, the defence of volenti non fit injuria is available in proceedings for damages brought in respect of the death of or injury to: the driver of the vehicle so engaged, or a passenger in the vehicle so engaged, other than a passenger who is less than 18 years of age or who otherwise lacked capacity to consent to be a voluntary passenger. For the purposes of subsection (2), a motor vehicle is engaged in motor racing if it is participating in an organised motor sports event or an activity that is an offence under [specified road transport legislation]." That the defence of volenti non fit injuria was abolished is not without significance. Its abolition requires, as no doubt the legislature intended, that courts focus on the question whether there has been any, and if any, how much contributory negligence. To decide the appeals without reference to the Act, in particular, the key provision, s 74, as the Court of Appeal did, necessarily involved an error of law 61 Sungravure Pty Ltd v Meani (1964) 110 CLR 24 at 36-37; Purcell v Watson (1979) 26 ALR 235 (HC); Astley v Austrust Ltd (1999) 197 CLR 1 at 14 [30]. 62 (1988) 8 MVR 209 at 215-216. Callinan calling for the intervention of this Court. But that is not the only error of law. To have regard to the alleged absence of indicia of intoxication at the time of the relinquishment of the steering wheel by Mr Berryman to Ms Joslyn only, and as if it were conclusive of what the former knew or ought to have known of the latter's condition, was to substitute a subjective test of the reasonableness of Mr Berryman's conduct for the objective test that s 74(2)(b) of the Act requires and the common law, which posited the standards of a reasonable person, formerly required in New South Wales in motor vehicle accident cases. In our opinion the Court of Appeal also manifestly erred in fact. This is therefore a case in which this Court should intervene to review the factual findings both at first instance and in the Court of Appeal. Both Mr Berryman and Ms Joslyn were undoubtedly intoxicated from at least 4am on the day of the accident until, and after the accident. Despite that evidence was given that Ms Joslyn was not in fact manifesting obvious signs of intoxication not long after the accident, it seems to us to be highly unlikely that signs would not have been there to be seen by those able to see, or not otherwise distracted by more pressing concerns. However, in view of the clearly objective test posed by s 74(2)(b) of the Act, of what the injured person "ought" to have known, it is unnecessary to explore that matter any further. Of what ought Mr Berryman have been aware? Clearly he ought to have been aware of all of the matters to which we referred in outlining the facts of this case, which include, as a matter of irresistible inference, that he must have set out to become, and did become intoxicated, in company with others of a similar mind and of whom Ms Joslyn was one. What a person ought to have known is not comprehended simply by what a person knew or observed at the moment before an accident, or at the moment at which that person became a passenger in a vehicle in the charge of, or driven by an intoxicated person. A person in the position of Mr Berryman ought to have known, and in fact would have known (if he had not precluded himself from knowing by his own conduct) that Ms Joslyn's capacity must have been impaired, and probably grossly so, by the amount of alcohol she had drunk, not only during the immediately preceding evening, but also on the night before that. Furthermore Mr Berryman either knew, or ought to have known that the effects of two consecutive evenings of immoderate consumption would have had a compounding effect of tiredness and reduced attentiveness upon both of them. The Court of Appeal erred in failing to have regard to, and to apply s 74 of the Act. It further erred in looking to Ms Joslyn's condition as it momentarily appeared to others after the accident. The Court of Appeal should have had regard to the events in which the passenger and the driver had participated over the preceding 36 or so hours before the accident. Callinan Factually the Court of Appeal erred in not finding that Mr Berryman's and Ms Joslyn's faculties, and accordingly their capacities to observe, react, assimilate, and deal with information and to drive a motor vehicle must have been seriously impaired by the consumption of alcohol. The appeals to this Court by Ms Joslyn and the Council have been heard together. The appeals should be allowed with costs. Orders 1, 2 and 3 made by the Court of Appeal on 11 April 2001 should be set aside. Each matter should be remitted to the Court of Appeal to deal with the issues not so far dealt with as well as Ms Joslyn's appeal respecting the assessment of only 25% contributory negligence against Mr Berryman. Kirby KIRBY J. These appeals come from a judgment of the New South Wales Court of Appeal63. They concern a defence of contributory negligence in personal injuries claims brought by the common first respondent (Mr Allan Berryman). He suffered very serious injuries as a result of a motor vehicle accident that happened on 27 October 1996. His injuries occurred when he was travelling as a passenger in his motor vehicle driven by the appellant in the first appeal (Ms Sally Joslyn). That vehicle overturned in the course of negotiating a bend in a road for which, it was found, there had been inadequate warning signage provided by the appellant in the other appeals, the Wentworth Shire Council ("the Council"). In her filed defence, Ms Joslyn admitted a breach of the duty of care that she owed to Mr Berryman. The primary judge (Boyd-Boland ADCJ), sitting without a jury in the District Court of New South Wales, found negligence on the part of Ms Joslyn. He also found negligence in the Council. The primary judge entered judgment against the appellants in favour of Mr Berryman in a sum totalling more than $2 million. He found that Ms Joslyn was liable to contribute 90% towards Mr Berryman's damages and the Council 10%. He upheld each appellant's defence of contributory negligence. Ordinarily, he said, he would have reduced Mr Berryman's damages by a third64. However, he ultimately found it appropriate to "reduce the … verdict by virtue of [Mr Berryman's] contributory negligence by 25%"65. On appeal to the Court of Appeal, the finding of the primary judge that the defence of contributory negligence had been established by the appellants was reversed66. Many other issues were canvassed. However, special leave to appeal to this Court was confined to "the contributory negligence issue". During argument before this Court that issue was further limited to whether an error had been made in the decision of the Court of Appeal that the defence of contributory negligence had not been established. Although there have been cases in which this Court has reassessed contributory negligence for itself67, in the present appeals this Court made it plain that any reassessment would have to be performed by the Court of Appeal, a course necessitated by the issues on the record. 63 Berryman v Joslyn (2001) 33 MVR 441. 64 Berryman v Joslyn unreported, District Court of New South Wales, 5 November 1999 ("reasons of the primary judge"). 65 Reasons of the primary judge at 19. 66 Per Meagher JA; Priestley JA and Ipp AJA concurring. 67 eg Pennington v Norris (1956) 96 CLR 10 at 17. Kirby In the Court of Appeal, Ms Joslyn and the Council had challenged the primary judge's assessment of contributory negligence. Ms Joslyn had urged that a much greater deduction (of up to 80%) was required. So far, her challenge to the quantification of the deduction for contributory negligence has not been answered. Nor has Mr Berryman had consideration of his alternative argument that, contributory negligence being assumed, the apportionment of 25% should be reduced. Those issues fell away when the Court of Appeal concluded that the evidence did not warrant the conclusion that contributory negligence had been established. Because of the broadly expressed criteria for the adjustment of awards of damages for contributory negligence, it is comparatively rare for appellate courts to interfere in the assessment of a trial judge on that issue68. However, these appeals enlist this Court's attention because they concern an instance of alleged contributory negligence where the injured person was a passenger in a motor vehicle who was affected by the consumption of alcohol at the time of his journey69. The appeals present a question as to the approach that should be taken to the assessment of the deduction for contributory negligence where a person in a motor accident, not actually responsible for driving the vehicle causing the accident, is nonetheless said to be liable to lose part of the damages otherwise recoverable as the consequence of "fault" on that person's part. Specifically, a question is presented as to the relevance of the passenger's intoxication for the decisions made by that person where it appears that such intoxication may have diminished, or removed, the passenger's capacity to make rational and self- protective decisions regarding his or her safety. Of special relevance to the resolution of these questions in the present appeals is the application to one of them of legislation enacted to govern contributory negligence decisions in respect of motor accidents involving claims by passengers who are intoxicated when injured in such accidents. The background facts The factual background is described in the reasons of Gummow and Callinan JJ ("the joint reasons")70. If the lens of the facts is widened so as to take 68 eg A V Jennings Construction Pty Ltd v Maumill (1956) 30 ALJR 100 at 101; Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492 at 494; 59 ALR 529 at 532; Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 at 69 See The Insurance Commissioner v Joyce (1948) 77 CLR 39; O'Neill v Chisholm (1972) 47 ALJR 1. 70 Joint reasons at [52]-[60]. Kirby into account the entire course of the conduct of Mr Berryman and Ms Joslyn, from the moment they respectively arrived at the property of Mr and Mrs Crisp until the moment Mr Berryman was injured, a different response might follow from that which results from narrowing the lens to focus exclusively on the events immediately before the accident happened. The broader focus might commence with the fact that on Friday 25 October 1996, two days before the accident, Mr Berryman and some friends commenced consuming alcoholic drinks and continued to do so until the Sunday morning, a few hours before Mr Berryman was injured. The occasion for this sustained course of alcohol consumption was the approaching 21st birthday of a friend, Mr Rowan Crisp71. It was for that purpose that Mr Berryman, Ms Joslyn and others had gathered at the Crisp home. There is no doubt that, objectively, at the time of the accident, all of the named actors were affected by the alcohol they had consumed. Evidence, accepted by the primary judge, demonstrated this clearly. A sample of blood taken from Ms Joslyn at 11.00am on Sunday 27 October 1996, after the accident, showed a blood alcohol concentration of 0.102g/100mL. Recalculated to the probable level at approximately 8.45am, the time of impact, this, according to Professor Starmer, disclosed a blood alcohol level of 0.138g/100mL in Ms Joslyn's case72. In the case of Mr Berryman the respective levels were 0.16g/100mL at 10.35am, with an estimated level at the time of impact of 0.19g/100mL73. Both Mr Berryman and Ms Joslyn were found to have been seasoned drinkers74. This would have reduced somewhat the effect of alcohol consumption on their cognitive and motor capacities. However, the primary judge accepted the evidence of Professor Starmer that, at the time of the accident, the "crash-risk" had been increased in the case of Ms Joslyn "more than 20-fold", over and above that of a sober driver. Moreover, he accepted Professor Starmer's opinion that the "risk of a crash would have been even greater in [her] case because she had not driven for three years after she had lost her license for a drink driving offence"75. As well, because Ms Joslyn had slept for no more than three hours and possibly as little as two before setting out with Mr Berryman, the 71 Berryman (2001) 33 MVR 441 at 444 [16]. 72 Reasons of the primary judge at 13. 73 Reasons of the primary judge at 13-14. 74 Reasons of the primary judge at 14. 75 Reasons of the primary judge at 14. Kirby primary judge also accepted Professor Starmer's opinion that the effect on her of alcohol consumption was likely to have been increased by the effects of hangover. She was impaired, fatigued, in control of a vehicle which the evidence showed was prone to roll over and which had a broken speedometer. She was also inexperienced in driving. In the case of Mr Berryman, even greater physiological effects of alcohol intake were identified by the evidence. He had gone to sleep at about 4.00am on Sunday 27 October 1996 in a state of high intoxication. Before he did so, he had been mainly "talking with the boys" at the party but had also spent time talking in close proximity to Ms Joslyn. He agreed that at the time he went to bed at 4.00am "the people who were still at the party were all staggering drunk". One of those people was Ms Joslyn, although Mr Berryman qualified his recollection by saying that he could not recall her condition. Nevertheless, it appears incontrovertible that, over the lengthy period of Mr Berryman's consumption of alcohol, he would have been aware, in a general sense, that Ms Joslyn was also drinking heavily over the same time. There followed intervals of sleep, longer (and commencing somewhat earlier) in the case of Mr Berryman. When, upon waking at about 7.00am Mr Berryman set out with Ms Joslyn for Mildura for breakfast, he would, objectively, have known that he, and probably Ms Joslyn, were still affected by the alcohol they had consumed. Mr Berryman agreed that he would not have willingly allowed her to drive his vehicle on the Sunday morning. He knew, from something told to him before the accident, that Ms Joslyn did not have a driver's licence. He was aware of the propensity of his vehicle to roll if approaching a corner too fast. He was also aware that alcohol consumption could adversely affect the ability of a driver to accomplish such manoeuvres. He knew that it was against the law to permit an unlicensed driver to drive a motor vehicle and that it was illegal to permit someone seriously affected by alcohol to do so. Answers affirming these points were given in evidence by Mr Berryman in the course of reconstructing events. To the foregoing facts had to be added evidence from witnesses, accepted as reliable by the primary judge, concerning the appearance of Ms Joslyn when she was observed soon after the accident. Thus the primary judge accepted the testimony of Constable Favelle, Mr Smythe and Mr Walker and of Ms Deane that Ms Joslyn did not show signs of intoxication at the accident scene. This was despite "the presence of beer bottles and the upturned Esky, at the accident scene, [which] would have raised, in the minds of those attending … the question of the part consumption of alcohol played in the accident"76. It was the evidence of the witnesses that led his Honour to conclude that "at the time [Mr Berryman] 76 Reasons of the primary judge at 15-16. Kirby authorised Miss Joslyn to take over the driving of the vehicle it is unlikely she was exhibiting, to [him], obvious signs of intoxication"77. It was on the basis of these findings that Mr Berryman presented his challenge to the finding of contributory negligence to the Court of Appeal. According to Mr Berryman the "real cause" of the accident and of the damage he had suffered in consequence, was solely the actions of Ms Joslyn in commencing to drive the vehicle and in doing so in the manner that she did and with her knowledge of her lack of a driver's licence, want of recent driving experience and objective condition of intoxication. According to Mr Berryman, the damage he had suffered could not reasonably be attributed to any fault on his part in handing Ms Joslyn the keys of his car on the return journey from Mildura. He had done this after Ms Joslyn observed him falling asleep at the wheel and said something to him. Mr Berryman argued that, in such circumstances, Ms Joslyn had the responsibility to refuse to drive, to allow him to sleep it off or to wait for, or summon, help. It was his submission that the crucial time to judge the issue of contributory negligence was the moment when he handed her the keys. Objectively, in the state in which he was at that time, combining intoxication and fatigue, he was not in a position to make a rational decision appointing Ms Joslyn as his driver. To the extent that his previous consumption of alcohol was relevant, it had disabled him from making responsible choices. He was not, therefore, to be treated as at fault for the damage that had followed. Findings at trial and on appeal Findings at trial: The primary judge recognised that the resolution of the issue of contributory negligence depended, in part, upon the period of time to which regard was to be had in resolving the issues presented78. After referring to a number of cases in which like questions had arisen79, he concluded that, in this case, he was required to open the lens of the facts and take the broader focus80. His Honour therefore addressed his attention to a period starting "well before [Mr Berryman] went to bed on Sunday morning" up to the time Ms Joslyn commenced to drive. He found that, objectively, Mr Berryman "ought to have recognised her capacity to drive was affected by her excess consumption of alcohol and the other factors referred to by Professor Starmer which included 77 Reasons of the primary judge at 16. 78 Reasons of the primary judge at 16. 79 eg Williams v Government Insurance Office (NSW) (1995) 21 MVR 148; McPherson v Whitfield [1996] 1 Qd R 474. 80 Reasons of the primary judge at 18. Kirby fatigue and lack of experience"81. Although he accepted that Mr Berryman did not actually give the matter consideration, he found that he should have contemplated the prospect of a journey such as was undertaken to Mildura and that, had he done so, it would have been obvious to him before he went to sleep, that Ms Joslyn would not be fit to drive his vehicle on the following morning. He went on82: these matters "I believe, at the time of change over of drivers, he did not consider that issue, but should have done so and was capable of so doing. The failure to contributory negligence. account was take [Mr Berryman] ought also to have realised the lack of experience and qualifications of Miss Joslyn particularly given his knowledge of the propensity of his vehicle to roll over." It was in these circumstances that the primary judge turned to the apportionment. He fixed the reduction for contributory negligence at 25% rather than a third because "at the time of the hand-over Miss Joslyn exhibited none of the obvious signs of intoxication which one would expect to be present". Findings on appeal: The reasons of the Court of Appeal were given by Meagher JA. After reciting the long interval during which the main actors had been consuming alcohol, followed by the short intervals of sleep, the visit to Mildura and the changeover of driving on the return journey to the Crisps' home, Meagher JA went on83: "The only action of [Mr Berryman's] which could possibly have amounted to contributory negligence was permitting Miss Joslyn to drive instead of him. In this regard, one must view matters as they stood at the time of handing over control of the car, (not as they were in the previous 24 hours), a task which his Honour did not really undertake. One must also, if one concludes that at the time of handing over Mr Berryman was too drunk to appreciate what was happening, a situation as to which there is no evidence in the present case, judge the question of contributory negligence on the hypothesis that the plaintiff did have sufficient foresight to make reasonable judgments. But, although at the time of the accident the blood alcohol levels of Miss Joslyn and Mr Berryman were estimated as being 0.138 g/100 ml and 0.19 g/100 ml respectively, there is no evidence that either of them were drunk at the time, and certainly no evidence that at the time Mr Berryman had any reason to think that 81 Reasons of the primary judge at 18-19. 82 Reasons of the primary judge at 19. 83 Berryman (2001) 33 MVR 441 at 446 [21]. Kirby Miss Joslyn was affected by intoxication. Indeed, quite to the contrary. Of the people who were present who gave evidence, all said that Miss Joslyn showed no signs of intoxication. His Honour so found." It was with these words (and a sideways glance at the rule of restraint in disturbing apportionments for contributory negligence84), that Meagher JA concluded that contributory negligence had not been proved. The defence should therefore have been dismissed. The apportionment was overruled. The cross- appeal seeking an increase in the apportionment was rejected. The issues The following issues arise for decision by this Court: (1) Whether the Court of Appeal erred in disturbing the conclusion of the primary judge on contributory negligence given the advantages enjoyed by that judge and the rule of restraint established in regard to such factual decisions. (The rule of restraint issue); (2) Whether the Court of Appeal erred in law in failing to base its decision on the contributory negligence issue upon the legislation governing that issue as it applied to each of the appeals before it. (The statutory provisions issue); and (3) Whether the Court of Appeal otherwise erred in its determination of the facts upon the basis of which it concluded that contributory negligence had not been proved in the circumstances of the case. (The factual evaluation issue). I will deal with each of these issues in turn. However, first, it is useful to say something about the approaches taken in earlier cases to problems of a similar kind. 84 His Honour referred to Podrebersek (1985) 59 ALJR 492; 59 ALR 529. See Berryman (2001) 33 MVR 441 at 446 [21]. Kirby Conflicting approaches to cases of intoxicated passengers Course of authority: In Liftronic Pty Ltd v Unver85, I pointed out that "contributory negligence, and apportionment, are always questions of fact"86. It is a mistake to endeavour to elevate into rules of law observations "however eloquent, uttered by judges, however eminent, about the facts of some other case"87. Nevertheless, as more decisions upon such questions fall to be made by judges rather than by juries as they once were, and as judicial reasons are examined on appeal, it is probably inevitable and in the interests of judicial consistency (which is a hallmark of justice88), that trial judges and appellate courts should look to the way earlier decision-makers have resolved like factual questions. Those decisions do not yield binding principles of law. However, they do provide some guidance as to the approach that has been taken to the solution of problems, the recurring features of which take on a monotonous similarity when different cases are compared. When appeals such as the present ones reach this Court, it is also desirable for the Court to inform itself of the way in which the issues for decision are being approached by courts subject to its authority. This will help this Court to provide to judges, lawyers, insurance assessors and litigants appropriate guidance for the making of decisions with a measure of confidence that they will not be subject to correction for errors of law or of approach to commonly repeated facts. Furthermore, an understanding of this decisional background is specially relevant in these appeals. It helps to explain the reasons for, and purposes of, the provisions of the enacted law that was adopted, in part at least, to overcome some of the approaches disclosed in the cases. These sometimes evidence the judicial reluctance to find contributory negligence against intoxicated drivers and passengers that ultimately provoked Parliament to enact the statutory law that is critical to the decision in at least one of these appeals. The seeds of the controversy were first considered by this Court in The Insurance Commissioner v Joyce89. Like the present case, that was one in which, 85 (2001) 75 ALJR 867 at 885 [90]; 179 ALR 321 at 345. 86 Citing McLean v Tedman (1984) 155 CLR 306 at 315; SS Heranger (Owners) v SS Diamond (Owners) [1939] AC 94 at 101; Hicks v British Transport Commission [1958] 2 All ER 39; Balkin and Davis, Law of Torts, 2nd ed (1996) at 338 n 37. 87 Sungravure Pty Ltd v Meani (1964) 110 CLR 24 at 37 per Windeyer J. 88 cf Lowe v The Queen (1984) 154 CLR 606 at 610-611 per Mason J. 89 (1948) 77 CLR 39. Kirby after a motor vehicle accident had occurred, objective evidence demonstrated that the driver had been affected by consumption of alcoholic liquor. The question arose as to whether the claim for damages of the passenger, who had been sitting beside the driver, was defeated in consequence. Attention was given to three legal bases on which such a case might fail90: that no duty of care was owed to a passenger where a driver was known to be intoxicated; that the defence provided by the voluntary assumption of risk applied in such circumstances; and that the defence of contributory negligence (which at common law was a complete answer to a plaintiff's claim) forbade recovery. Differing views were expressed in Joyce concerning the preferable basis for resolving a challenge to such a plaintiff's entitlement to succeed. However, it was upon the issue of contributory negligence (which, at that time91, was somewhat controversial in such cases in England92) that conflicting opinions were stated, reflections of which have been seen in Australian judicial approaches ever since. Thus, Latham CJ was prepared to regard the category of contributory negligence as apposite to the circumstances where both driver and passenger were intoxicated. However, he went on93: "If in the last stage of the journey the plaintiff was sober enough to know and understand the danger of driving with [the driver] in a drunken condition, he was guilty of contributory negligence, and he also voluntarily encountered an obvious risk and his action should fail. But if he was not sober enough to know and understand such a danger, then there is no reason to believe that his inability to appreciate the danger was other than self-induced. If he drank himself into a condition of stupidity or worse, he thereby disabled himself from avoiding 90 Joyce (1948) 77 CLR 39 at 45-47 per Latham CJ, 56-59 per Dixon J; cf Cook v Cook (1986) 162 CLR 376 at 386 and Hogg, "Guest Passengers: A Drunk Driver's Defences", (1994) 2 Torts Law Journal 37. 91 Following Dann v Hamilton [1939] 1 KB 509. 92 See eg Goodhart, "Contributory Negligence and Volenti Non Fit Iniuria", (1939) 55 Law Quarterly Review 184 noted in Joyce (1948) 77 CLR 39 at 58 per Dixon J. 93 Joyce (1948) 77 CLR 39 at 47. Kirby the consequences of negligent driving by [the driver], and his action fails on the ground of contributory negligence." It was this last approach to the consequence of self-induced defects of cognition and understanding, fatigue and incapacity that caused Dixon J, in his dissenting opinion, to express a contrary view94: "But for the plaintiff, who was not driving the car, to drink until he was too stupid to observe the defendant's condition can hardly be considered contributory negligence of which the accident was a reasonable or natural consequence." this Court and other courts Similar divisions of opinion, upon the same subject, have appeared in later in somewhat similar factual decisions of circumstances. In O'Neill v Chisholm95, this Court, by majority96, restored the trial judge's decision to reduce a plaintiff's damages by a third on the basis that he had been lacking in care for his own safety in becoming a passenger in the defendant's vehicle, taking into account the defendant's then visible state of insobriety. Crucial to the approach of all members of the Court in O'Neill was an investigation of what the plaintiff passenger "knew or ought to have known" of the condition of the driver so far as his sobriety was concerned. It was only on the question of whether the objective evidence warranted a finding of contributory negligence that the judges differed. In the Supreme Court of South Australia in Banovic v Perkovic97, the trial judge had rejected the defence of contributory negligence on the ground that the driver had not demonstrated outward signs of intoxication. It was on that evidentiary footing that King CJ, in the Full Court, affirmed that there was "no basis for a finding of contributory negligence"98. Cox J agreed99. So did Walters J, with expressed reluctance in light of the objective blood alcohol 94 Joyce (1948) 77 CLR 39 at 60. 95 (1972) 47 ALJR 1. 96 Barwick CJ, McTiernan and Stephen JJ; Walsh and Gibbs JJ dissenting. 97 (1982) 30 SASR 34. See also Spicer v Coppins (1991) 56 SASR 175 in which contributory negligence (which had been rejected at trial) was found on appeal by the majority: Legoe and Matheson JJ; Bollen J dissenting. 98 Banovic (1982) 30 SASR 34 at 38. 99 Banovic (1982) 30 SASR 34 at 42. Kirby evidence100. The decision illustrates the importance commonly attached by trial courts in such circumstances, to the appearance of the driver at the time the journey is commenced and whether there are then observable signs of intoxication. In Morton v Knight, in the Supreme Court of Queensland, Cooper J found that contributory negligence had been established in the case of an intoxicated passenger who accepted a lift home from a driver who was found to have been "observably drunk to a marked degree", when that condition was such as to have been obvious to a reasonable sober person101. Cooper J dismissed the argument that a passenger could rely on his or her own self-induced insobriety to sustain a conclusion of unawareness about the driver's condition. While his Honour found contributory negligence to be proved, he described the passenger's conduct as "passive", resulting from "placing himself in a position of danger within the car" and thus having no "causative potency" so far as the negligent conduct of the driver or the accident were concerned102. In 1990, the New South Wales Court of Appeal considered an appeal by a passenger against a 20% reduction of damages for contributory negligence following injuries sustained in a car accident on the basis of objective evidence, despite the passenger's denial of any awareness that the driver was seriously affected by alcohol at the time of the accident. Clarke JA held that the passenger "ought reasonably to have recognised" the driver's unfitness to drive, treating the passenger's own intoxication as no excuse103. In 1995 in the Queensland Court of Appeal, in McPherson v Whitfield, Macrossan CJ (with the concurrence of McPherson JA) drew a distinction between the case where the passenger knew, or ought reasonably to have known, that the driver would be in charge of a vehicle in which he or she might travel as a passenger and the case where such reliance on the driver was unforeseeable104. In his reasons in McPherson, Lee J, in considering the relevance of a passenger's state of intoxication and in support of the approach of King CJ in Banovic (and 100 Banovic (1982) 30 SASR 34 at 38. 101 [1990] 2 Qd R 419 at 423. 102 Morton [1990] 2 Qd R 419 at 430, citing Davies v Swan Motor Co (Swansea) Ltd [1949] 2 KB 291 at 326. 103 McGuire v Government Insurance Office (NSW) (1990) 11 MVR 385 at 388. 104 [1996] 1 Qd R 474 at 478-479. Kirby other decisions105), rejected the approach taken by Cooper J in Morton. He said106: "To say that a sober person in those circumstances would have detected the driver's condition is not to the point. It is the passenger's conduct which must be judged and unless the defendant can point to some specific causative act of contributory negligence on his part his allegations in that respect must fail." In Williams v Government Insurance Office (NSW)107 the New South Wales Court of Appeal dealt with a case in some ways similar to the present. There, the plaintiff and defendant had been drinking together for some time. They then travelled together in the plaintiff's vehicle. However, as the defendant's husband, who had been driving the vehicle, was falling asleep in consequence of his alcohol consumption, the defendant protested. The plaintiff handed the keys to the defendant and got in the back seat of the car to lie down. The defendant drove off and the accident occurred, injuring the plaintiff. The trial judge in Williams found contributory negligence and reduced the plaintiff's damages by 80%. All members of the Court of Appeal upheld the conclusion that contributory negligence had been established108. In my reasons I suggested that the primary responsibility for the plaintiff's damage rested on the driver109: "The keys put [the driver] in a position of choice. Driving the vehicle assigned to her extremely heavy and obvious obligations. Handing her the keys did not exempt her thereafter from her own responsibility. It permitted her to drive the vehicle. It did not oblige her to drive." 105 eg Nominal Defendant v Saunders (1988) 8 MVR 209 at 210, 214-215; Spicer (1991) 56 SASR 175 at 179-180, 182-184; Owens v Brimmell [1977] QB 859 at 106 McPherson [1996] 1 Qd R 474 at 484. 107 (1995) 21 MVR 148. 108 Williams (1995) 21 MVR 148 at 158. Cole JA (with whom Meagher JA agreed) found no error in the apportionment. I would have reduced the apportionment to 109 Williams (1995) 21 MVR 148 at 158 (emphasis in original). In my reasons I referred to Teubner v Humble (1963) 108 CLR 491 at 504. Kirby In Nominal Defendant v Saunders, the trial judge in the Supreme Court of the Australian Capital Territory found that the signs of the driver's intoxication "were there for the plaintiff to see but he was too drunk to see them"110. His Honour dismissed the defence of contributory negligence on the basis that the defendant carried the onus to prove contributory negligence and, because the passenger was not conscious of the intoxicated condition of the driver, had failed to do so. The Full Court of the Federal Court rejected the appeal against that dismissal, with reasoning similar to the decision of the Court of Appeal in the present case. In his reasons, Fox J observed111: "The mere fact that a driver is inebriated at the time of the accident does not establish the defence [of contributory negligence], nor does the mere fact that the passenger is in such a condition at that time do so. It is to be remembered too that the allegation of negligence will normally relate, not to the drunkenness, but to the manner of driving. The defence will be based on what the passenger knew as to the driver's condition or behaviour, or what he would have known had he at a relevant time been taking reasonable care for his own safety … Whether or not the danger should have been apprehended, and what should have been done about it are matters to be measured according to the test of the reasonable man." Spender and Miles JJ in Saunders regarded it as critical to ascertain whether the evidence established that the passenger "knew that it was likely that he would be the passenger of [the driver]"112. Their Honours' reasoning, in rejecting contributory negligence, treated as determinative the onus resting on the defendant to establish the defence and the need for the defendant to prove that the journey with the intoxicated driver was reasonably foreseeable before the passenger became incapable of deciding whether or not to so proceed. Two emerging approaches: Broadly speaking, therefore, two approaches have emerged in the decisions of Australian courts relevant to the defence of contributory negligence where that defence is raised against the claim of a passenger who agrees to travel with a driver who, after an accident, is shown objectively to have been intoxicated. On the one hand there are cases (of which Morton113 is the clearest instance) in which the approach taken by the judges invites consideration of the 110 (1988) 8 MVR 209 at 213. 111 Saunders (1988) 8 MVR 209 at 209-210. 112 Saunders (1988) 8 MVR 209 at 216. 113 [1990] 2 Qd R 419. Kirby entire context of the passenger's conduct, including its "causative potency", while rejecting any suggestion that a passenger's self-intoxication can be a complete answer to the defence of contributory negligence constituted by the passenger's entering the vehicle and proceeding on a journey when he or she ought to have known (but for such intoxication) that the driver was not in a condition to drive114. On the other hand are the cases which focus more particularly on the conduct immediately preceding the accident. They consider (including by reference to the passenger's own state of sobriety, capacity and appreciation) whether he or she was then, and could with reasonable foreseeability have anticipated being, in a position to decline the proffered opportunity to travel in the vehicle driven by an intoxicated driver. Illustrations of this approach include Banovic115, Saunders116 and McPherson117. Once judges replaced juries in cases of this kind and were obliged by law to give reasons for their decisions, it was inevitable that such reasons would expose, in common factual situations, differing judicial consideration of mixed questions of fact and law. This Court should not ignore the differences with the solecism that each case turns on its own facts. Of course it does. But where the facts are common, and frequently repeated, the emergence of substantially differing judicial approaches to their legal consequences demands elucidation and authoritative choice by this Court of the preferable opinion. Subject to what follows, the resolution of the issues raised by the present appeals affords the opportunity to clarify the general approach that the law requires. The rule of restraint issue The first issue to be decided concerns the rule of restraint118. Three factors reinforce the need for restraint in disturbance of decisions about contributory negligence and apportionment: The issue of contributory negligence is essentially a factual question, and therefore the primary judge (or jury) will have 114 [1990] 2 Qd R 419 at 429. 115 (1982) 30 SASR 34. 116 (1988) 8 MVR 209. 117 [1996] 1 Qd R 474. 118 That rule is described by Barwick CJ in O'Neill (1972) 47 ALJR 1 at 3. Kirby relevant advantages over an appellate court that will often be critical for the determination of the issue119; The apportionment legislation conferred upon the decision-maker a power to reduce the recoverable damages "to such extent" as the court determines "having regard to" a consideration expressed in very general language ("the claimant's share in the responsibility for the damage") that evokes the exercise of a quasi-discretionary judgment120 upon which different minds may readily come to different conclusions121; and The broad criteria by which such decisions are made at trial (including by reference to what "the court thinks just and equitable" in the case122) make it difficult, absent a demonstrated mistake of law or fact, to establish the kind of error that, alone, will authorise an appellate court to set aside the decision and any apportionment of the trial judge and to substitute a different decision or apportionment on appeal. In Liftronic, also a contributory negligence appeal, Meagher JA, in the Court of Appeal, was insistent upon the rule of restraint123. His dissent in that respect was later upheld by a majority of this Court124. I disagreed, pointing out that restraint had to be distinguished "from paralysed inertia or repudiation of jurisdiction"125. I remain of the view that unthinking application of restraint can amount to a negation of the judicial duty. Once error is shown, whether of law or fact, the appellate court is authorised to alter any apportionment for contributory negligence made at trial which is shown to have been affected by such error. 119 O'Neill (1972) 47 ALJR 1 at 3, 4, 6. 120 Liftronic (2001) 75 ALJR 867 at 878 [64.4]; 179 ALR 321 at 335. 121 British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201 applied in Podrebersek (1985) 59 ALJR 492 at 494; 59 ALR 529 at 532; cf Liftronic (2001) 75 ALJR 867 at 878 [64.3]; 179 ALR 321 at 334-335. 122 Relevantly Law Reform (Miscellaneous Provisions) Act 1965 (NSW), ss 10(1) and 123 A point noted in Liftronic (2001) 75 ALJR 867 at 885 [90]; 179 ALR 321 at 345. 124 per Gleeson CJ, McHugh, Gummow and Callinan JJ; myself dissenting. 125 Liftronic (2001) 75 ALJR 867 at 879 [65.3]; 179 ALR 321 at 337. Kirby Correctly, Ms Joslyn and the Council urged the advantages which the primary judge enjoyed in reaching his conclusion about contributory negligence and in evaluating all of the circumstances of the case. The trial lasted eleven days. The primary judge's opinion as to Mr Berryman's "share in the responsibility for the damage" depended upon his evaluation of the entirety of the evidence. This fact presented a sound reason for restraint. However, I am not convinced that the Court of Appeal overlooked this consideration. Reference was expressly made to the decision of this Court in Podrebersek v Australian Iron & Steel Pty Ltd126 in which the rule of restraint is stated. The Court of Appeal accepted the necessity to demonstrate error. It follows that the complaint raised by the first issue fails. The statutory provisions issue Differential statutory application: Of greater concern is the omission of the Court of Appeal to refer to, and apply, new statutory provisions that had been enacted by the New South Wales Parliament to govern conclusions on the issue of contributory negligence where that defence was raised in the case of a motor accident. So far as the given reasons of the Court of Appeal are concerned, no distinction was drawn between the general provisions of the enacted law amending the common law doctrine of contributory negligence127 and the particular provisions enacted to govern contributory negligence in cases of motor accidents. It may be that the omission can be explained by the failure of the parties to direct the attention of that Court to the legislation. It may be that it was because the Court, from many like cases, was well familiar with the applicable law. However, with respect, the statute needed to be referred to, not least because of the different statutory regimes that applied respectively to the appeal and cross-appeal concerning Mr Berryman's claim against Ms Joslyn and the appeal concerning his claim against the Council. In the former, the relevant statutory regime was s 74 of the Motor Accidents Act 1988 (NSW). In the latter, the relevant regime was the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) ("the 1965 Act"). The 1965 Law Reform Act: The familiar language of the 1965 Act needs to be stated because it is mentioned in the particular case of contributory 126 (1985) 59 ALJR 492 at 493-494; 59 ALR 529 at 532. 127 In the Law Reform (Miscellaneous Provisions) Act 1965 (NSW), Pt 3. That Act was amended by the Law Reform (Miscellaneous Provisions) Amendment Act 2000 (NSW). These amendments were not in force at the date relevant to these proceedings. Kirby negligence in respect of motor accidents, being part of the "enacted law" referred to in the provisions governing motor accidents128. At the applicable time, s 10 of the 1965 Act stated, relevantly: "10(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage … (2) Where damages are recoverable by any person by virtue of the foregoing subsection subject to such reduction as is therein mentioned, the court shall find and record the total damages which would have been recoverable if the claimant had not been at fault." A number of comments may be made on these provisions. The primary object of the 1965 Act was to reverse the rule of the common law that forbade recovery if contributory negligence was shown on the part of the plaintiff in however small a degree. It is in the second part of s 10(1), in establishing the substituted rule, that the new approach is established. Secondly, s 10(1) read with s 10(2) ("if the claimant had not been at fault") is not concerned, as such, with moral culpability129. Courts are not authorised under the 1965 Act to punish a claimant because he or she became intoxicated by consumption of alcoholic liquor or because courts regard that state as morally reprehensible. The focus of the sub-section is different, and more limited130. As in the application of any statutory provision, a court must give it effect in terms of its language and to achieve its expressed object. Thirdly, s 10(1) does not address attention to the extent to which any act or omission on the part of the claimant caused the accident, as such. To approach the issue of contributory negligence in that way would be to misread the provision. The "responsibility" for which s 10(1) provides is that which is "just and equitable having regard to the claimant's share in the responsibility for the damage". Such "damage", as the opening words of s 10(1) make clear, is the damage which the person has suffered as a "result partly of his own fault and 128 Motor Accidents Act, s 74(1). The terms of the section are set out in the joint reasons at [69]. 129 Pennington (1956) 96 CLR 10 at 16. 130 Talbot-Butt v Holloway (1990) 12 MVR 70 at 74. Kirby partly of the fault of any other person or persons". In judging the question of culpability, the decision-maker will have regard to the fact that the respective acts of a driver and a passenger will ordinarily have posed quite different dangers. Thus, "the defendant who was driving the [vehicle] … was in charge of a machine that was capable of doing great damage to any human being who got in its way"; on the other hand "the plaintiff's conduct posed no danger to anyone Fourthly, a clue is given to the operation of s 10 by the definition of "fault" in s 9 of the 1965 Act. This clarifies the object to which s 10(1) is directed. By that definition, relevantly, "fault" means "negligence, or other act or omission which gives rise to a liability in tort or would, apart from this Part, give rise to the defence of contributory negligence". In a motor vehicle accident in which a passenger alone was injured, it is difficult to see how surrendering the keys to a vehicle to a person who then assumed the responsibility of driving the vehicle would constitute the kind of negligence or act or omission giving rise to a liability in tort except in a temporal sense. However, the presence of that definition appears to postulate an application of s 10(1) that looks at "fault" in a broad, and not a narrow, way. Such an approach would also be in harmony with the language and apparent object of the sub-section. In particular, it is comparable with the statutory direction to resolve issues of "responsibility" by reference to what is "just and equitable". This is enacted law that contemplates bold strokes of judgment in the assignment of "responsibility". It recognises that a search for mathematical precision or an objective evaluation of culpability is illusory. The Motor Accidents Act: Greater guidance is afforded where the defence of contributory negligence is to be decided in accordance with the Motor Accidents Act132. That Act was enacted by the New South Wales Parliament to introduce reform of the previous law designed to enhance recovery in the case of "motor accidents" but to ensure that damages were more affordable. It repealed the original legislation133 and returned the law in that State to a "modified 131 Talbot-Butt (1990) 12 MVR 70 at 88 per Handley JA referring to Pennington (1956) 96 CLR 10 at 16; Karamalis v Commissioner of South Australian Railways (1977) 15 ALR 629 at 635; Cocks v Sheppard (1979) 53 ALJR 591; 25 ALR 325. See also Williams (1995) 21 MVR 148 at 156. 132 Section 74 of the Act has been superseded by s 138 of the Motor Accidents Compensation Act 1999 (NSW). 133 Transport Accidents Compensation Act 1987 (NSW). Kirby common law scheme for compensating motor accident victims"134. The concern that led to the provision regulating contributory negligence in connection with defined motor accidents was said to be that "a crisis point" had been reached in the award of damages in such cases135. It was for this reason that the provisions that became ss 74 and 76 were included in the Motor Accidents Act. The Attorney-General, supporting in Parliament the introduction of those provisions, described the Bill as "another significant reform to common law rules, which should have a large impact by placing responsibility for safe conduct on all road users"136. By s 76 of the Act, the defence of voluntary assumption of risk (volenti non fit injuria) was abolished (save, later, in certain presently irrelevant cases of motor racing)137. Instead of considering cases to which that defence would otherwise have applied, an approach of apportionment was to be substituted. It was to be applied "on the presumption that the injured person … was negligent in failing to take sufficient care for his or her own safety". Thus, in proceedings for damages arising from a "motor accident" in New South Wales, one of the three legal categories mentioned in Joyce was abolished. Effectively, it was subsumed within contributory negligence as that defence had earlier been reformed by statute. Of equal importance in the Motor Accidents Act were three changes introduced by s 74 of that Act. That section was enacted to supplement "[t]he common law and enacted law"138. First, s 74 obliges ("shall") a court to make a finding of contributory negligence in specified cases. Three of those cases are immaterial to the present appeals but indicate the genus with which Parliament was concerned: convictions of certain offences under traffic law; injuries to certain persons who were not wearing a seatbelt as required by law; and injuries to persons not wearing a protective helmet when required139. The category that is expressly relevant to the appeal of Ms Joslyn is stated in s 74(2)(b). That paragraph reads, relevantly: 134 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 November 1988 at 3827 (Attorney-General Dowd). 135 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 November 1988 at 3832 (Attorney-General Dowd). 136 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 November 1988 at 3833 (Attorney-General Dowd). 137 The relevant provisions are set out in the joint reasons at [71]. 138 Motor Accidents Act, s 74(1). 139 Motor Accidents Act, s 74(2)(a), (c), (d). Kirby "A finding of contributory negligence shall be made in the following cases: (b) where: the injured person … was, at the time of the motor accident, a voluntary passenger in or on a motor vehicle, and the driver's ability to drive the motor vehicle was impaired as a consequence of the consumption of alcohol … and the injured person … was aware, or ought to have been aware, of the impairment". The parliamentary instruction that a court "shall" make a finding of contributory negligence in the specified cases may not be ignored when it applies to the facts. It represents the expressed will of the legislature acting within its powers. Clearly enough, it was enacted to arrest, or correct, any disinclination that might exist on the part of the decision-maker to give effect to such a finding. Once the precondition in the identified categories is fulfilled, the duty of the decision-maker ("shall") is enlivened. The finding of contributory negligence must then be made. Secondly, in s 74(3) of the Motor Accidents Act, Parliament has avoided the more complex statement of the criteria found in s 10(1) of the 1965 Act. There is no reference to the respective "faults" of the persons involved. Nor is there a reference to the "responsibility for the damage". In s 74(3) provision is simply made for the reduction of the damages recoverable "as the court thinks just and equitable in the circumstances of the case". It is not entirely clear whether this more limited formula replaced the previous statement of the "enacted law" set out in the 1965 Act. On the face of things, it appears to do so and thus leaves wholly at large the reduction for contributory negligence, made by reference to nothing more than what "the court thinks just and equitable". If this is the effect of s 74(3), as I think it is, it introduces into appellate review of decisions on apportionment for contributory negligence in cases of motor accidents an even greater obstacle to the demonstration of appealable error140. Thirdly, perhaps as a means of safeguarding parties against arbitrary determinations under s 74(3), provision is made by s 74(4) of the Motor Accidents Act for the court to state its reasons "for determining the particular percentage". Typically, statements of reasons enhance the availability of 140 See also Motor Accidents Act, s 74(8). Kirby appellate reconsideration where the reasons disclose that extraneous or irrelevant considerations have been given effect141. An erroneous oversight: Enough has been said of the provisions of the relevant statutes, which were differentially applicable to the claims of Mr Berryman against Ms Joslyn and the Council, to indicate why the failure of the Court of Appeal expressly to address attention to the statutory language constituted error. In particular, in the case of the judgment against Ms Joslyn, in respect of what was undoubtedly a "motor accident" within the Motor Accidents Act, if the applicable law was to be applied accurately, it was essential for the primary judge and the Court of Appeal to give explicit attention to the requirements of s 74 of that Act. Prima facie, the requirement of s 74(2)(b) of the Motor Accidents Act was engaged. At the very least, even if, because of alcohol consumption, it could be said that "the driver's ability to drive the motor vehicle was impaired as a consequence of the consumption of alcohol" (as seems clearly to have been established in the case of Ms Joslyn) but that the "injured person" (Mr Berryman) was not in fact "aware" of that impairment at the relevant time of her driving the motor vehicle by reason of his own intoxication and fatigue, the question would remain, within s 74(2), whether Mr Berryman "ought to have been aware … of the impairment". In this case, the issue of contributory negligence was not therefore to be decided by reference to general considerations affecting contributory negligence at common law, as modified by the apportionment statute. It was governed by "enacted law". The duty of the Court of Appeal was therefore to apply that enacted law. This is yet another instance in which applicable statute law has been overlooked in favour of judge-made law142. When a statute applies (as it did here) it is fundamental that it must be given effect according to its terms. There is nothing to suggest that any of the considerations of the relevant statutes were addressed by the Court of Appeal. Instead of attention being focussed on the meaning of s 74(2)(b)(ii) (as should have been the case) the appeals were 141 cf Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666; Pettitt v Dunkley [1971] 1 NSWLR 376 at 388. 142 Some of the recent instances include Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 89 [46]; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 545 [63]; Allan v Transurban City Link Ltd (2001) 208 CLR 167 at 184-185 [54]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 111-112 [249] and Conway v The Queen (2002) 209 CLR 203 at 227 [65]; cf Hayne, "Letting Justice be Done Without the Heavens Falling", (2001) 27 Monash University Law Review 12 at 16. Kirby determined without reference to the considerations that the governing sub- paragraph of statute law required. Nor can this be regarded an immaterial error. The clear purpose of s 74(2) of the Motor Accidents Act was to address what must be taken to have been a determination on the part of the New South Wales Parliament that findings of contributory negligence should be made in certain identified cases and, by inference, that the disinclination of the courts to so find, evident in the cases to some of which I have referred, was to be corrected in furtherance of the solution to the "crisis point in the calculation of damages" mentioned by the Attorney- General and in pursuance of the "large impact" deemed desirable "by placing responsibility for safe conduct on all road users"143. When, in that statutory context, it is asked whether Mr Berryman "was aware, or ought to have been aware" of the fact that Ms Joslyn's ability as a driver to drive the motor vehicle was "impaired as a consequence of the consumption of alcohol" a different answer might be given than if the issue was wholly at large or was to be determined solely by reference to the considerations of "responsibility for the damage" mentioned in the 1965 Act. In the Motor Accidents Act, once the conditions were fulfilled (including those stated in s 74(2)(b)) the requirement to make a finding of contributory negligence was obligatory. Applying this statutory provision, contributory negligence was therefore complete in the present case. All that had to be shown was that Mr Berryman was "aware, or ought to have been aware" of Ms Joslyn's "impairment". This did not require demonstration by the appellants of the fact that he was aware or ought to have been aware of the precise degree of incapacity that existed or of total inability on the part of Ms Joslyn to drive the vehicle. According to the undisputed evidence, Mr Berryman was certainly aware that Ms Joslyn had been consuming alcoholic drinks for many hours. To his knowledge, she had only a short interval of sleep when they set out for Mildura. Mr Berryman was also aware of the particular propensities of his vehicle that were relevant to any other driver's ability to drive it. To the extent that, because of impairment of cognition and fatigue, Mr Berryman did not actually focus upon, and consider, the issue of Ms Joslyn's ability to drive the motor vehicle, the question remains whether he "ought to have been aware" of these considerations. It could not be said that the possibility of a journey to Mildura for breakfast, of his falling asleep at the wheel and handing the ignition keys to Ms Joslyn was something unforeseeable to Mr Berryman when he proceeded 143 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 November 1988 at 3832-3833 (Attorney-General Dowd). Kirby upon his course of alcohol consumption on the evening and morning before his accident. Already, as the primary judge found, he had left the party by his vehicle at about 11.00 to 11.30pm "to secure cigarettes"144. His continued use of the vehicle, although he was increasingly affected by alcohol consumption, was thus readily foreseeable. It was far from unlikely that the hand-over to Ms Joslyn of the keys of the vehicle would occur and that she would then accept the implied invitation and continue the return journey which Mr Berryman felt incapable of completing. In the circumstances it cannot be said that he was other than "a voluntary passenger in … a motor vehicle" from the moment he exchanged his place at the wheel with Ms Joslyn. The oversight establishes error: It follows that, to find that there was no contributory negligence at all on the part of Mr Berryman, and in particular to do so without reference to the applicable statute law, constituted legal error. That error requires that the appeals be upheld and that the appeals and cross-appeal to the Court of Appeal be redetermined by that Court. That must be done by reference to the statute law governing each appeal to that Court. The factual evaluation issue In the light of the foregoing conclusion, and the consequential need to return the proceedings to the Court of Appeal, it is strictly unnecessary to resolve all the other complaints made for Ms Joslyn (supported by the Council) in respect of the factual errors that were said to underpin the conclusion that was reached, reversing that of the primary judge. Although a different statutory regime governs the resolution of the defence of contributory negligence in the proceedings between Mr Berryman and the Council, there is no reason to think that the conclusion of the Court of Appeal was right in the Council's case, although wrong in the "motor accident" proceedings concerning Ms Joslyn. The mere fact that, at the time Ms Joslyn took the keys and accepted Mr Berryman's express or implied invitation to drive his vehicle, she did not appear to be affected by alcohol intoxication is much less significant in this case than it might be in other factual circumstances. If, for example, a passenger, without knowledge of a driver's insobriety, accepted an invitation to travel in a vehicle, the initial appearances of the driver could be very important to the statutory question of what was "just and equitable in the circumstances of the case"145. Similarly, it could be important to what a court thinks is "just and 144 Reasons of the primary judge at 12. 145 Motor Accidents Act, s 74(3). Kirby equitable having regard to the claimant's share in the responsibility for the damage"146. Such considerations were scarcely determinative in Mr Berryman's case because, before he became seriously inebriated as he did, he was able to, and did, observe Ms Joslyn engaged in a similar pattern of extended consumption of alcohol. Although Mr Berryman went to sleep at 4.00am, and may not have seen Ms Joslyn, as described, "staggering drunk" at about that time, it cannot seriously be suggested that it was not open to the primary judge to infer that Mr Berryman was aware of her extensive drinking. Her deceptive appearance of sobriety at the time he offered her his keys and exchanged positions with her at the wheel, whilst not irrelevant, could not in the circumstances enjoy the factual significance which the Court of Appeal assigned to them147. Other witnesses who saw her after the accident might say that she showed no signs of intoxication. But Mr Berryman knew differently. This will commonly be the case where a driver and passenger have engaged, together or close by, in an extended bout of alcohol consumption over a continuous interval148. A second factual error lay in the Court of Appeal's conclusion that the only action on the part of Mr Berryman that could possibly have amounted to contributory negligence was permitting Ms Joslyn "to drive instead of him"149. With respect, this represented an undue narrowing of the questions to be resolved, whether under the legislation governing motor accidents or under the general legislation provided in the 1965 Act. Even if the particular requirements of the Motor Accidents Act were ignored, the 1965 Act looks at the issue of "responsibility" more globally. As a price for relieving a claimant from the total disqualification which the common law had previously provided in the case of contributory negligence, the 1965 Act authorises the court, deciding the claimant's entitlement of damages, to reduce any such damages that would otherwise be recoverable by reference to "his own [partial] fault". All that is provided by way of criteria is the definition of "fault"; the direction to the consideration of the "claimant's share in the responsibility for the damage"; and the authorisation to make the deduction "to such extent as the court thinks just and equitable". 146 The 1965 Act, s 10(1). 147 Berryman (2001) 33 MVR 441 at 446 [21]. 148 As in Saunders (1988) 8 MVR 209; McGuire (1990) 11 MVR 385; Morton [1990] 2 Qd R 419; Williams (1995) 21 MVR 148; McPherson [1996] 1 Qd R 474. 149 Berryman (2001) 33 MVR 441 at 446 [21]. Kirby Having regard to the matters which Mr Berryman knew when he made it possible for Ms Joslyn to drive his vehicle, it is impossible to say that the trial judge erred in determining that his conduct in setting out on the journey to Mildura and later enabling Ms Joslyn to drive part of the return, engaged s 10(1) of the 1965 Act in respect of his claim against the Council. To the extent that Mr Berryman disabled himself from making rational choices by drinking so much alcohol that he was greatly affected by it and seriously fatigued, it was open to the primary judge to conclude that it was "just and equitable" that his recovery should be reduced because he shared in the responsibility for the damage that followed. In short, Mr Berryman ought to have known that in setting out to Mildura what happened might occur, as it quickly did. In providing the keys and exchanging places with Ms Joslyn he made that possibility an actuality. I do not say that Mr Berryman's "share in the responsibility for the damage" was as large as that of Ms Joslyn. My general view on such matters remains as I stated it in Williams150. The comparable roles of Ms Joslyn and Mr Berryman in the "causative potency" of the events leading to Mr Berryman's damage appear to me to be quite different151. Ascertaining the responsibility of an intoxicated passenger That returns me to the earlier cases of intoxicated passengers. With respect, I differ from Hayne J152 concerning the utility of considering the decisions in which factual issues of this kind have been decided. This is a staple diet of trial courts and intermediate courts throughout Australia. Two broad approaches can be seen in the cases. The analysis of the relevant provisions of the Motor Accidents Act and the 1965 Act assists in identifying the preferable one. It is the approach that gives effect to the purposes of the apportionment legislation that is to be favoured. This Court has a responsibility to make that clear. Of the judicial approaches discussed, the one that takes the broader focus of considering the entire course of conduct by the intoxicated passenger is preferable to that which narrows the lens to focus exclusively on the events immediately preceding the accident. This is the approach that the statutes in issue here, and both of them, require. The Court of Appeal reached the finding of no contributory negligence on the part of Mr Berryman by adopting the narrower approach. That affirmed, in 150 (1995) 21 MVR 148. 151 cf Talbot-Butt (1990) 12 MVR 70 at 88. 152 See reasons of Hayne J at [158]. Kirby effect, Mr Berryman's submission that at the time immediately before the accident, he was, as a result of alcohol consumption and fatigue, deprived of the ability to make rational choices and therefore could not be held to have been at fault in law for the damage that ensued. But the words of the statutory provisions and their objects invite consideration of all the relevant facts in a less restrictive allocation of responsibility for the damage. Section 10(1) of the 1965 Act looks at fault in a broad way and s 74(2) of the Motor Accidents Act confers a discretion on the judge to decide the issue of contributory negligence by reference to whether the passenger "ought to have been aware" of the driver's impairment, the exercise of which also requires a broad focus, by reference to the objective evidence as well as the question of foreseeability of risk to a passenger in a car driven by an intoxicated driver. The parties will now have the opportunity to canvass their respective factual arguments on the challenges to the apportionment made by the primary judge – Mr Berryman asserting that such apportionment was appealably excessive and Ms Joslyn asserting that it was appealably inadequate. Each will advance their respective arguments, as will the Council, on the footing that the primary judge, who considered the broader factual context, was correct to find some contributory negligence on the part of Mr Berryman proved. Such contributory negligence was established, both under the Motor Accidents Act (in the claim against Ms Joslyn) and under the 1965 Act (in the claim against the Council). Orders Each appeal should therefore be allowed with costs. I agree in the orders proposed in the joint reasons. Hayne 153 HAYNE J. The facts and circumstances giving rise to these appeals are set out in the joint reasons of Gummow and Callinan JJ. I do not repeat them. I agree that each of the appeals to this Court should be allowed with costs. I do not agree, however, that the primary judge was shown to have erred in assessing the level of contributory negligence as he did. I would therefore restore the judgment of the primary judge. As the reasons of the other members of the Court demonstrate, the evidence at trial warranted, indeed compelled, the conclusion that Mr Berryman was contributorily negligent. The primary judge found the ability of the driver of the vehicle at the time of the accident, Ms Joslyn, to drive the vehicle was impaired as a consequence of her consumption of alcohol. (He found as a fact that her blood alcohol level at the time of the accident was about 0.138 grams per 100 millilitres.) On these findings of fact, s 74(2)(b) of the Motor Accidents Act 1988 (NSW) was engaged. Section 74(2) required the primary judge to make a finding of contributory negligence. The question was then what reduction in damages recoverable did the court think "just and equitable in the circumstances of the case"153. The primary judge gave careful attention to this question and concluded that a reduction of 25 per cent was appropriate. There is no basis for concluding that the primary judge erred in making the factual findings which he did. The Court of Appeal did not expressly say that the primary judge had erred in this way. Rather, the Court of Appeal addressed a different question: one which it was said154 the primary judge did not. The question which the Court of Appeal appears to have considered to be determinative was whether, at the time he handed control of the car to Ms Joslyn, Mr Berryman should have observed that she was affected by intoxication. That is a narrower and different question from the question presented by s 74(2)(b) of the Act. The relevant statutory question – ought the injured person to have been aware of the impairment of the driver's ability to drive as a consequence of the consumption of alcohol – invited attention to wider considerations. They included all matters reasonably bearing upon the injured person's knowledge of impairment, not just observations which it was open to the injured person to make at the time of handing over control of the vehicle or getting into the vehicle as a passenger. The primary judge considered these matters. The Court of Appeal did not. 153 Motor Accidents Act 1988 (NSW), s 74(3). 154 Berryman v Joslyn (2001) 33 MVR 441 at 446 [21]. Hayne Findings about apportionment of responsibility are not lightly to be disturbed155. In Podrebersek v Australian Iron & Steel Pty Ltd156, five members of the Court said: "A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v Macgregor (Owners)157. Such a finding, if made by a judge, is not lightly reviewed. The task of an appellant is even more difficult when the apportionment has been made by a jury: Zoukra v Lowenstern158." So much follows from the nature of the task that is undertaken in making such an apportionment. As was said in Podrebersek159: "The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris160) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd161; Smith v McIntyre162 and Broadhurst v Millman163 and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which 155 Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492; 59 ALR 529; Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301; Wynbergen v Hoyts Corporation Pty Ltd (1997) 72 ALJR 65; 149 ALR 25; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867; 179 ALR 321. 156 (1985) 59 ALJR 492 at 493-494; 59 ALR 529 at 532. 157 [1943] AC 197 at 201. 159 (1985) 59 ALJR 492 at 494; 59 ALR 529 at 532-533. 160 (1956) 96 CLR 10 at 16. 161 [1953] AC 663 at 682. 162 [1958] Tas SR 36 at 42-49. 163 [1976] VR 208 at 219. Hayne must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance." Section 74(3) of the Motor Accidents Act required the primary judge to undertake this process. No error is shown in his Honour's conclusion. As Kirby J pointed out in Liftronic Pty Ltd v Unver164, contributory negligence and apportionment are always questions of fact. It is, therefore, wrong to elevate what was said in past cases about the facts of those cases to any principle of law165. That is, it is wrong to attempt to deduce from what has been said in such cases, often decided in a different legal context from that provided in this case by the Motor Accidents Act, any general principles to be applied in cases where passengers suffer injury as a result of the negligence of a drunken driver. Each case turns on its own special facts. It is, therefore, neither necessary nor appropriate to review any of the regrettably large number of decisions, in Australia and elsewhere, in which factual issues of that kind have been decided. The applicable rule is that prescribed by the Motor Accidents Act. The manner of making the necessary apportionment is described in Podrebersek. I would, therefore, order, in each appeal: Appeal allowed with costs. Set aside par 2 of the orders of the Court of Appeal of New South Wales made on 11 April 2001 and in its place order that the appeal in Allan Troy Berryman v Sally Inch Joslyn & Anor be dismissed with costs. 164 (2001) 75 ALJR 867 at 885 [90]; 179 ALR 321 at 345. 165 Sungravure Pty Ltd v Meani (1964) 110 CLR 24 at 37 per Windeyer J; Easson v London and North Eastern Railway Co [1944] KB 421 at 426.

HIGH COURT OF AUSTRALIA APPLICANT S270/2019 APPELLANT AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION RESPONDENT Applicant S270/2019 v Minister for Immigration and Border Protection [2020] HCA 32 Date of Hearing: 5 August 2020 Date of Judgment: 9 September 2020 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S E J Prince SC with S G Lawrence and I Chatterjee for the appellant (instructed by Purcell Lawyers) S P Donaghue QC, Solicitor-General of R S Francois for the respondent (instructed by Mills Oakley) the Commonwealth, with Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Applicant S270/2019 v Minister for Immigration and Border Protection Immigration – Visas – Cancellation of visa – Revocation of cancellation – Where s 501(3A) of Migration Act 1958 (Cth) provides that Minister must cancel visa if satisfied person does not pass character test because they have substantial criminal record and person is serving sentence of imprisonment on full-time basis – Where s 501CA(4) provides that Minister may revoke decision to cancel visa if conditions in s 501CA(4)(a) and (b) are met – Where s 501CA(4)(a) requires that person makes representations in accordance with invitation from Minister – Where s 501CA(4)(b) requires that Minister is satisfied person passes character test or there is another reason why decision should be revoked – Where appellant held visa which was not protection visa – Where appellant's visa cancelled under s 501(3A) and Minister declined to revoke cancellation under s 501CA(4) – Whether Minister obliged to, and failed to, consider whether non-refoulement obligations were owed to appellant when exercising power under s 501CA(4). Words and phrases – "another reason", "cancellation", "discretion", "fear of persecution", consideration", "non-refoulement", "refugee", "revocation", "substantial criminal record", "sufficient evidence", "visa". "international "mandatory relevant law", Migration Act 1958 (Cth), ss 501(3A), 501CA. KIEFEL CJ AND The facts relevant to this appeal are set out in the reasons of Nettle, Gordon and Edelman JJ. At issue on this appeal is the decision of the respondent ("the Minister") not to revoke the cancellation of the appellant's visa. The sole ground upon which special leave was granted was that the Minister was obliged to and failed to consider whether non-refoulement obligations were owed to the appellant when exercising the discretionary power under s 501CA(4) of the Migration Act 1958 (Cth). This was a ground which had not been raised in the courts below. On the application for special leave to appeal, it was submitted by counsel for the appellant that the ground "arises on the materials in evidence below", which is to say that it was capable of determination by this Court on the available evidence. Unfortunately that has not proved to be the case. The appellant's ground of appeal required him to establish, in the first instance, that protection obligations such as those owed to a refugee were or are owed to him. It is only if such obligations were or are owed that an issue as to whether the appellant could be returned to Vietnam without harm could arise. Much of the argument on the appeal was directed to whether there was sufficient evidence to permit a conclusion to be reached on that initial premise. But there were other difficulties with the state of the evidence. The appellant accepted that even if he established that the Minister was required to consider Australia's non-refoulement obligations and that the failure to do so constituted jurisdictional error, he would need to show that there was at least a possibility that the Minister's consideration of that issue would have resulted in a decision to revoke the cancellation of the visa1. But there was no sufficient evidence from which the Minister could have concluded that if the appellant was now returned to his country of origin he remained at risk of harm. Such evidence as there was suggests that much has changed since he left Vietnam. It follows that the question of principle which underpinned the grant of special leave does not arise. In the absence of a factual context we do not consider it either necessary or appropriate to comment upon whether s 501CA(4) of the Migration Act might oblige the Minister to consider whether non-refoulement obligations are owed when deciding whether to revoke a decision to cancel a visa that is not a protection visa. To answer what is in the circumstances largely a hypothetical question is not useful and may mislead. 1 Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 445 [45], [48] per Bell, Gageler and Keane JJ. In our view the proper course is to revoke the grant of special leave, dismiss the application for special leave and order the appellant to pay the costs of the application and this hearing. NETTLE, GORDON AND EDELMAN JJ. This appeal from a decision of the Full Court of the Federal Court concerns the validity of the decision of the respondent ("the Minister") under s 501CA(4) of the Migration Act 1958 (Cth) not to revoke the cancellation of the appellant's Class BB Subclass 155 Five Year Resident Return visa, which is not a protection visa. The appellant was granted special leave to appeal on one ground to the effect that when exercising the discretionary power under s 501CA(4) to revoke the cancellation of the visa, the Minister was obliged to, and failed to, consider whether non-refoulement obligations were owed to the appellant. Three questions were raised on appeal: did the material before the Minister raise the issue of whether Australia owed any non-refoulement obligations with respect to the appellant; if so, did the Minister decide to defer consideration of that issue because any such obligations could be considered if the appellant made an application for a protection visa; and, finally, whether the Minister was required to consider Australia's non-refoulement obligations in making a decision under s 501CA(4) of the Migration Act. For the reasons that follow, the appeal should be dismissed. The appellant made no claim to fear persecution or serious harm so as to raise the issue of whether Australia owed any non-refoulement obligations and, in the circumstances of this matter, non-refoulement obligations were not a mandatory relevant consideration under s 501CA(4) of the Migration Act. Facts The appellant was born in Vietnam but left Vietnam aged seven. After eight years in a refugee camp in Hong Kong and aged 15, the appellant arrived in Australia on 7 June 1990 on a humanitarian visa2. The visa did not have as a criterion that the appellant was entitled to protection under the Convention relating 2 The proceedings below were conducted on the basis that the appellant arrived in Australia on a Funded Special Humanitarian (subclass K4B12) visa. On appeal to this Court, the Minister contended that the appellant likely arrived in Australia on a Code 200 (Refugee) visa. The appellant accepted that the appeal could be conducted on the latter basis. to the Status of Refugees as modified by the Protocol relating to the Status of Refugees ("the Refugees Convention")3. On 15 November 1994, the appellant was granted a Class BB Subclass 155 Five Year Resident Return visa. On 22 November 1994, on that visa, the appellant departed Australia for Vietnam and then returned to Australia on 9 February 1995. The appellant is married to an Australian citizen, a woman he met as a child in the refugee camp in Hong Kong. They have three children, all Australian citizens. The appellant also has a lengthy criminal record. On 27 August 2004, the appellant was sentenced at the Sydney District Court for five offences including aggravated break and enter with intent and received various sentences of imprisonment aggregating to a total effective sentence of four years and six months' imprisonment with a non-parole period of two years and six months. On 13 September 2013, the appellant was sentenced at the Sydney District Court for an offence of aggravated break and enter with intent in company (which had occurred on 10 December 2010) and sentenced to six years' imprisonment with a non-parole period of three years and six months ("the 2013 Sentencing"). Cancellation of visa On 26 April 2016, the appellant's visa was cancelled pursuant to s 501(3A) of the Migration Act because he was serving a sentence of imprisonment of therefore had a substantial criminal record4 12 months or more and ("the decision"). On that same day, 26 April 2016, the appellant was sent a notice of the decision, a copy of Direction No 65 – Migration Act 1958 – Direction under section 499 – Visa refusal and cancellation under s 501 and revocation of a mandatory cancellation of a visa under s 501CA ("Ministerial Direction 65") and a number of other enclosures including a revocation request form. Ministerial Direction 65 was explained in the notice of decision in these terms: 3 Convention relating to the Status of Refugees done at Geneva on 28 July 1951 as modified by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 4 Migration Act, s 501(6)(a) and (7)(c). "the Minister has issued [Ministerial Direction 65] which identifies issues that are relevant to the revocation consideration. A copy of [Ministerial] Direction 65 is enclosed for your information. You should address each paragraph in PART C of the Direction that is relevant to your circumstances. Please note that if the decision-maker who makes the decision regarding whether or not to revoke the decision to cancel your visa is a delegate of the Minister, they must follow [Ministerial] Direction 65. If, however, the Minister makes a revocation decision personally, he or she is not bound by [Ministerial] Direction 65, although [Ministerial] Direction 65 provides a broad indication of the types of issues that the Minister is likely to take into account in deciding whether or not to revoke the decision to cancel your visa." (emphasis added) It will be necessary to return to the Direction later in these reasons. Request to revoke cancellation of visa The appellant filled out the revocation request form on 12 May 2016 and sent the revocation request to the Department of Immigration and Border Protection ("the Department"). The form specifically asked the appellant to "provide your reasons as to why the Minister or his/her delegate should revoke the mandatory cancellation of your visa". It also asked the following: "Do you have any concerns or fears about what would happen to you on return to your country of citizenship? ... If yes, please describe your concerns and what you think will happen to you if you return". The appellant ticked "yes" to the first question and wrote "see letter attached" in response to the second question. The attached letter did not contain any claim to fear persecution or other serious harm. The letter set out that, at the 2013 Sentencing, the judge had "referred to the [appellant's] traumatic experience of ... being [a] refugee in a Hong Kong refugee camp for a number of years at such a young age" and the "desperate circumstances" in the early years of his life. The letter stated that the appellant's wife was also a refugee having fled Vietnam to Hong Kong and then to Australia. The letter, however, went on to state that: the appellant did not wish to return to his country of birth; he had no ties to Vietnam; he did not know what he would do once he arrived in Vietnam; he did not have a place to live or to work in Vietnam; he did not know his way around the country; and he did not want to live with his brother due to his brother's previous criminal record. On 24 November 2016, in a letter from the Department, the appellant was provided with particulars of information, including an "International obligations and humanitarian concerns assessment" ("the Assessment") dated 28 December 2006. The letter stated that the Department had received the information, including the Assessment, and that the information may be taken into account when making the decision whether to revoke the cancellation of his visa. The appellant was invited to comment on that information. Part C of the Assessment, headed "Non-Refoulement Obligations", listed 22 relevant considerations or questions, all of which were assessed not applicable to the appellant. The Assessment concluded that no non-refoulement obligations were owed with respect to the appellant. In relation to the first consideration – "[a]re there indications that a pattern of gross, flagrant or mass violations of human rights may exist in the State of reference?" – the comments section of the Assessment recorded that "[i]t must be noted that [the appellant] has not indicated a fear of returning to Vietnam on the basis of any Convention reason. He was only seven years old when he left Vietnam and has returned only briefly since, that being relevant consideration, the Assessment stated that the appellant was a person who had never been held to fall within Art 33(1) of the Refugees Convention because, as the comments section explained: to another relation "[The appellant] arrived in Australia as the holder of a Funded Special Humanitarian (subclass K4B12) visa. The criteria for that visa did not require an assessment under the Refugees Convention. Accordingly, [the appellant] had never been assessed in respect of Article 33(1) of the Refugees Convention prior to 19 December 2006, when a Protection Obligations Assessment was undertaken by a Protection visa delegate in the NSW Office request by NSW Compliance Cancellations/Refusals, Sydney office. That assessment found that [the appellant] did not fall within Article 33(1)." response to a On 2 December 2016, the appellant responded to the Department's request for comment in the letter of 24 November 2016. The appellant's comment, or lack of comment, is telling. His submission relevantly stated: "My wife, like me, escaped Vietnam as a child fleeing the post-war terrors. She also spent years in the refugee camp in Hong Kong and I could never ask her to retrace that dreadful history by returning to the place of her fear." He attached letters from his wife and three children. He made no response to the invitation to comment in relation to the Assessment. On 17 January 2017, the Minister5 declined to revoke the earlier cancellation. Issue Section 501CA(4) states: "The Minister may revoke the original decision if: the person makes representations in accordance with the invitation; and the Minister is satisfied: that the person passes the character test (as defined by section that there is another reason why the original decision should be revoked." (emphasis added) The key question is whether the Minister was required to consider whether Australia owed non-refoulement obligations to the appellant as "another reason" under s 501CA(4)(b)(ii). The answer is no. Whether Australia owed non-refoulement obligations not raised The Department invited the appellant to provide reasons why he did not now wish to return to Vietnam and, in particular, to comment on the Assessment. There was nothing in any of the material submitted by the appellant in support of his revocation request that indicated or suggested that he now held a subjective or well-founded fear of persecution in Vietnam. The fact that the appellant told the Department in December 2016 that "[m]y wife, like me, escaped Vietnam as a child fleeing the post-war terrors. She also spent years in the refugee camp in Hong Kong and I could never ask her to retrace that dreadful history by returning to the place of her fear", does not advance the appellant's case. Australia's non-refoulement obligations are 5 The revocation decision was signed by the Assistant Minister for Immigration and Border Protection. However, the parties accepted that the revocation decision was made by the Minister personally. forward-looking6. On a fair reading of the material before the Minister, the appellant made no claim that gave any reason to require the Minister to consider Australia's non-refoulement obligations. As the Minister submitted, the only available inference from the material the appellant submitted in support of his revocation request is that he does not have any such fear. The appellant's contention that he refrained from referring to his fears of returning to Vietnam in his responses to the Department because of the terms of Ministerial Direction 65 should be rejected. There is no finding, and nothing before this Court to suggest, let alone support a finding, that the appellant decided against including material to support his non-refoulement claims because of the terms of that Direction. As the factual summary records, the appellant was provided with the Assessment and asked to comment on the Assessment, which he did. The material provided by the appellant to the Department stated that he and his wife fled the "post-war terrors" in Vietnam and that they both suffered traumatic experiences in a refugee camp in Hong Kong, at a young age, for a number of years. The fear described by the appellant may be accepted. But the fear in issue is more specific. The question is whether the appellant now has a subjective or well-founded fear of persecution in Vietnam. None has been identified. And, in any event, the contention that the appellant refrained from referring to his fears pertinent to his non-refoulement claims because of the terms of Ministerial Direction 65 was not raised below. Had it been, it could have been tested by the Minister in cross-examination, which is no longer possible now. In the result, it would be unjust to permit the appellant to raise it for the first time on appeal7. Similarly, the appellant's contention that the Minister was obliged to consider whether the appellant had ceased to be a refugee in accordance with Art 1C of the Refugees Convention does not arise. Even if the appellant falls within Art 1C(5) of the Refugees Convention (and it is unnecessary to decide that question), the material he provided to the Department did not suggest that the Refugees Convention still applies despite Art 1C(5) or that there are compelling 6 Chan v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 at 389; Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 at 495 [58], 499 [74]; Minister for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) 222 CLR 1 at 27 [74]. (1999) 197 CLR 510 at 578 7 Coulton v Holcombe (1986) 162 CLR 1 at 7-8. reasons, arising out of previous persecution, for him refusing to avail himself now of the protection of Vietnam. In light of these conclusions, it is unnecessary to address the other issues raised in this appeal. It is, however, appropriate to say something further about s 501CA(4). Non-refoulement obligations not a mandatory relevant consideration under s 501CA(4) Although mandatory relevant considerations may be identified by reference to the text, subject matter, scope and purpose of the statute8, there is nothing in the text of s 501CA, or its subject matter, scope or purpose, that requires the Minister to take account of any non-refoulement obligations when deciding whether to revoke cancellation of any visa that is not a protection visa where the materials do not include, or the circumstances do not suggest, a non-refoulement claim9. That conclusion is reinforced by the fact that non-refoulement is addressed separately in the Act in provisions concerning the grant of protection visas (being a class of visa created specifically to allow decision-makers to grant visas to persons who cannot be removed from Australia consistently with its non-refoulement obligations under international law)10 and in the context of removal11. Given those express provisions, it would be contrary to the apparent scheme of the Act to construe general provisions concerning the cancellation of visas of all kinds on character grounds, or the revocation of mandatory cancellations on such grounds, as requiring consideration of non-refoulement, or at least in cases where the specific provisions concerning protection visas are available to an applicant who wishes to invoke them and non-refoulement has not been squarely raised. It is 8 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40; Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 591 See also Minister for Immigration and Border Protection v Le (2016) 244 FCR 56 10 See, eg, Migration Act, ss 5H, 5J, 35A, 36, 37A, 91A-91X. 11 Migration Act, s 197C. unnecessary to decide, however, whether consideration of that matter can be deferred where a non-refoulement claim is made in a revocation request12. Put in different terms, it is through express provisions in the Act that Australia's non-refoulement obligations under international law have been implemented in Australian domestic law13; and, if a non-citizen affected by cancellation seeks to have the Minister consider non-refoulement and remains free to apply under those express provisions for a protection visa14, the Minister is not required to consider non-refoulement unless a claim for a protection visa is made. It follows in this matter that, although the s 501CA(4) discretion is wide, it must be exercised by the Minister considering the claims and material put forward by the applicant. If no non-refoulement claim is made – as in this case – non-refoulement does not need to be considered in the abstract. In those circumstances, it would only need to be considered at a later time, if the applicant applied for a protection visa. The appellant has not done so. Conclusion and order For these reasons, the appeal is dismissed with costs. 12 cf BCR16 v Minister for Immigration and Border Protection (2017) 248 FCR 456 13 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 33 [101]. See also CPCF v Minister for Immigration and Border Protection (2015) 255 CLR 514 at 627 [385], 650-651 [490]-[491]. 14 See AZAFQ v Minister for Immigration and Border Protection (2016) 243 FCR 451

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPLICANT AND UNIT TREND SERVICES PTY LTD RESPONDENT Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 1 May 2013 ORDER Special leave to appeal granted. Appeal allowed. Set aside orders 2, 7 and 8 of the orders of the Full Court of the Federal Court of Australia made on 5 October 2012 and, in their place, order that: the issue of remission of penalty in relation to the declaration pursuant to s 165-40 of the A New Tax System (Goods and Services Tax) Act 1999 the Administrative Appeals Tribunal for further consideration; (Cth) be remitted (b) Unit Trend Services Pty Ltd pay the Commissioner of Taxation's costs of, and incidental to, the appeal and cross- appeal in the Full Court; and any monies paid into the Federal Court by Unit Trend Services Pty Ltd as security for costs be paid out of court to the Commissioner of Taxation together with accretions, if any. Unit Trend Services Pty Ltd pay to the Commissioner of Taxation his costs of, and incidental to, the appeal. On appeal from the Federal Court of Australia Representation B D O'Donnell QC with S R Lumb for the applicant (instructed by McInnes Wilson Lawyers) F L Harrison QC with P G Bickford for the respondent (instructed by MS & Cliff Lawyers Pty Ltd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Unit Trend Services Pty Ltd Taxation – GST – Application of margin scheme – Anti-avoidance – Respondent representative member of GST group of companies – Where margin scheme applied to supply of units in property development – Where respondent engaged in "scheme" and obtained "GST benefit" – Whether s 165-5(1) of A New Tax System (Goods and Services Tax) Act 1999 (Cth) engaged – Whether GST benefit "not attributable to" making by respondent of choice, election, application or agreement expressly provided for by the GST law. Words and phrases – "not attributable to". A New Tax System (Goods and Services Tax) Act 1999 (Cth), Div 165, ss 165-5, FRENCH CJ, CRENNAN, KIEFEL, GAGELER AND KEANE JJ. The Commissioner of Taxation ("the Commissioner") seeks special leave to appeal from a decision of the Full Court of the Federal Court of Australia1 ("the Full Court") upon a question concerning the interpretation of s 165-5(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act"). The question agitated by the application is whether GST benefits obtained by the respondent, Unit Trend Services Pty Ltd ("Unit Trend"), are not attributable to the making of a choice, election, application or agreement (collectively "a choice") that is expressly provided for by the GST Act. This question was resolved by the Administrative Appeals Tribunal ("the Tribunal") in favour of the Commissioner2, and subsequently on appeal by the Full Court in favour of Unit Trend. For the reasons that follow we would grant the Commissioner's application for special leave and allow the appeal. The reasons set out the material provisions of the GST Act, the facts of the case, which are not in controversy, the reasons of the Tribunal and the Full Court in summary, followed by discussion of the arguments raised by the parties in this Court. The GST Act Division 165 contains the anti-avoidance provisions of the GST Act. They operate to nullify schemes which have the purpose or effect of reducing GST, increasing refunds, or altering the timing of payment of GST or refunds3. Such effects are described as GST benefits. In broad summary, Div 165 applies where: there is a scheme, from which an entity gets a GST benefit; the entity or some other entity entered into or carried out the scheme for the sole or dominant purpose of getting the GST benefit; alternatively to (b), the principal effect of the scheme was that the entity or some other entity gets the GST benefit; and 1 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29. 2 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497. 3 A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 165-1. Crennan the GST benefit is not attributable to the making by the entity of a choice expressly provided for under the Act. Where those requirements are satisfied, the Commissioner is empowered to make a declaration negating the GST benefit4. Section 165-10(1) explains what is involved in the getting of a GST benefit relevantly as follows: "An entity gets a GST benefit from a *scheme if: an amount that is payable by the entity under this Act apart from this Division is, or could reasonably be expected to be, smaller than it would be apart from the scheme or a part of the scheme". (Terms which are defined within the Act are marked with an asterisk.) The term "scheme" is defined by s 165-10(2) in these terms: "A scheme is: arrangement, any undertaking: agreement, understanding, promise or (i) whether it is express or implied; and (ii) whether or not it is, or is intended to be, enforceable by legal proceedings; or any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise." Section 165-5 describes the circumstances in which Div 165 operates. It now provides: "General rule This Division operates if: 4 A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 165-40. Crennan an entity (the avoider) gets or got a *GST benefit from a *scheme; and the GST benefit is not attributable to the making, by any entity, of a choice, election, application or agreement that is expressly provided for by the *GST law, the *wine tax law or the *luxury car tax law; and taking account of the matters described in section 165-15, it is reasonable to conclude that either: an entity that (whether alone or with others) entered into or carried out the scheme, or part of the scheme, did so with the sole or dominant purpose of that entity or another entity getting a *GST benefit from the scheme; or the principal effect of the scheme, or of part of the scheme, is that the avoider gets the GST benefit from the scheme directly or indirectly; and the scheme: is a scheme that has been or is entered into on or after 2 December 1998; or is a scheme that has been or is carried out or commenced on or after that day (other than a scheme that was entered into before that day). Territorial application It does not matter whether the *scheme, or any part of the scheme, was entered into or carried out inside or outside Australia. Creating circumstances or states of affairs (3) A *GST benefit that the avoider gets or got from a *scheme is not taken, for the purposes of paragraph (1)(b), to be attributable to a choice, election, application or agreement of a kind referred to in that paragraph if: Crennan the scheme, or part of the scheme, was entered into or carried out for the sole or dominant purpose of creating a circumstance or state of affairs; and the existence of the circumstance or state of affairs is necessary to enable the choice, election, application or agreement to be made." It is to be noted that s 165-5(3) was not part of the GST Act at the time in question but was added by the Tax Laws Amendment (2008 Measures No 5) Act 2008 (Cth). Ordinarily, the amount of GST on a taxable supply is 10% of the value of the taxable supply5; but by s 75-10 of the GST Act as it stood at the time of the transactions in question, if the margin scheme applied, the GST was calculated by reference to the increased value, after acquisition and before supply, of the thing supplied, rather than by reference to the whole value of the thing supplied. Further, s 38-325 of the GST Act permits relief from GST in the case of a supply which involves the sale of a going concern. The facts Unit Trend is the representative member of a GST group of companies6 which included Simnat Pty Ltd ("Simnat"), Blesford Pty Ltd ("Blesford") and Mooreville Investments Pty Ltd ("Mooreville"). Each of those companies was a wholly owned subsidiary of Raptis Group Limited ("Raptis"). By a contract completed on 20 April 1999, Simnat purchased a parcel of land at Surfers Paradise on the Gold Coast for $30 million. Simnat obtained development approval from the Gold Coast City Council to construct three high- rise towers containing residential apartments on the land. These towers are referred to as "Tower I", "Tower II" and "Tower III". On 31 July 2001 Simnat engaged another Raptis company, Rapcivic Contractors Pty Ltd ("Rapcivic"), to construct Tower I. Simnat sold units in Tower I to members of the public. The "margin scheme" under Div 75 of the 5 A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 7-1 and 9-70. 6 Approved by the Commissioner for that purpose under s 48-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). Crennan GST Act7 was applied to those sales by business activity statements ("BAS") lodged as the sales progressed. By a contract dated 1 July 2002, Simnat engaged Rapcivic to construct Tower II. Simnat began selling units in Tower II off the plan. On 13 December 2002, a survey plan was registered. It subdivided the original block so that the land on which Towers II and III were to be constructed was subdivided into separate lots with separate titles. On 14 April 2004 a contract was executed for the sale of Tower II by Simnat to Blesford ("the Tower II contract"). This sale was agreed to be the supply by Simnat of a "going concern"8. The sale was completed on 7 May 2004. At this time, the construction of Tower II was at an advanced stage (construction was completed in June 2004) and Simnat was the nominated vendor of 230 of the 289 apartments in Tower II. The Tower II contract provided for the price to be determined by an independent valuer9. It was subsequently fixed at $149.8 million. By the Tower II contract, Simnat assigned to Blesford all of its right, title and interest in each unit contract in Tower II10. The benefit of the building contract for Tower II was also assigned by Simnat to Blesford. By a contract dated 29 January 2003, Simnat engaged Rapcivic to construct Tower III. Simnat began selling units in Tower III off the plan. On 15 April 2004 (the day after the Tower II contract) a contract for the sale of Tower III by Simnat to Mooreville ("the Tower III contract") was executed. Once again, the sale was agreed to be the supply by Simnat of a "going concern". The sale was completed on 23 November 2004. At the time of transfer, Tower III was at an advanced stage of construction and Simnat was named as the vendor of 142 of the 241 units. 7 Settlements (supplies) made prior to 17 March 2005 were governed by Div 75 as it stood prior to the commencement of the Tax Laws Amendment (2005 Measures No 2) Act 2005 (Cth), and settlements on or after 17 March 2005 were governed by Div 75 as amended. 8 Special Condition 3.1 of the Tower II contract. 9 Special Condition 17.1 of the Tower II contract. 10 Special Condition 6.1 of the Tower II contract. Crennan The Tower III contract also provided for the price to be determined by an independent valuer. It was subsequently fixed at $109.5 million. The Tower III contract also provided for an assignment to Mooreville of all contracts for sale of units in the building that Simnat had entered into. The benefit of the building contract for Tower III was also assigned by Simnat to Mooreville. Blesford and Mooreville completed the construction of Towers II and III and continued marketing and selling the remaining apartments. Following completion of Towers II and III, Blesford and Mooreville settled all sales of units in the respective Towers (including contracts entered into by Simnat as well as contracts which they had entered into with end buyers). The margin scheme was applied to the sales to the end buyers. Unit Trend chose to apply the margin scheme on the basis that the price paid by Blesford and Mooreville to Simnat was the relevant consideration for the purpose of determining the margin upon which GST would be determined. Unit Trend, as the group's representative entity, reported GST payable on sales of units in Towers II and III on that basis in its monthly BAS returns commencing in May 2004. The Commissioner issued a declaration to Unit Trend under s 165-40(a) of the GST Act negating a total GST benefit in excess of $21 million. Following an unsuccessful objection by Unit Trend, Unit Trend applied to the Tribunal for a review of the Commissioner's decisions. The decision of the Tribunal The Tribunal found that there was a "scheme"11 which comprised the following elements12: "(a) a group of companies that engage in property development (at least including companies A and B); company A owns or buys land proposed for development, and undertakes the development to a point where the development has 11 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 56- 12 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at Crennan substantially progressed, and the overall value of the development is considerably higher than the price A paid for the land; company A sells the partially completed development to company B at market value. The timing of the sale is to occur at a time when the market value is significantly higher than the price A paid for the land; the sale by A to B is to be free of GST (either because it is a sale of a going concern, or because A and B are within a registered GST group under Division 48); company B completes the development, and sells to end buyers. Any sales made by A to end buyers would be honoured and completed by B; upon transfer to end buyers, company B would choose to apply the margin scheme in respect of its liability for GST (calculated based upon consideration B provided to A)." In determining whether Unit Trend "got" a GST benefit from the scheme, the Tribunal found13 (in respect of all contracts that settled prior to 17 March 2005) that, absent the scheme: there would have been no transfer of Towers II and III to Blesford and Mooreville, Simnat would have continued as the owner and developer of Towers II and III, Simnat would have been the vendor under contracts for the sale of units in Towers II and III, and Simnat would have completed all contracts of sale; Simnat would have elected to apply the margin scheme in respect of all sales; the GST (on the sale to end buyers) would have been calculated on the margin between: Simnat's sale price to the end buyers; and 13 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at [97], [100]-[102]; Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 58-59 [119]-[123], 66 [156]. Crennan the value of what was sold to the end buyers based upon a proportion of the value of the property as at 1 July 2000. The Tribunal found14 for the purpose of s 165-5(1)(a) of the GST Act that the GST benefit got by Unit Trend from the scheme (on all sales that settled prior to 17 March 2005) was the GST payable on the difference between the sale price to the end buyer and a proportionate share of the value of the property as at 1 July 2000, less the GST payable on the difference between the sale price to the end buyer and a proportionate share of the $149.8 million and $109.5 million paid by Blesford and Mooreville respectively to Simnat. In respect of that were settled before 17 March 2005 and in respect of which Simnat was the original contracting party, the Tribunal found that: those contracts of sale the dominant purpose of those who entered into and carried out the scheme was to secure the GST benefit15; and the principal effect of the scheme was the achieving of the GST benefit16. The choices and agreements relied upon by Unit Trend before the Tribunal in relation to s 165-5(1)(b) were17: the choices made by Blesford and Mooreville to become members of the GST group, [being] a choice made under s 48-5 of the GST Act; 14 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at 15 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at 16 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at 17 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at [105]; Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 Crennan the agreement by Simnat and Blesford that the supply of Tower II was of a going concern, [being] an agreement made under s 38-325(1)(c) of the GST Act; the agreement by Simnat and Mooreville that the supply of Tower III was of a going concern, [being] an agreement made under s 38-325(1)(c) of the GST Act; the choices made by Blesford and Mooreville to apply the margin scheme, [in respect of supplies to end buyers, each being] choices made under s 75-5 of the GST Act [by the monthly BAS returns]." In relation to s 165-5(1)(b) of the GST Act, the Tribunal concluded18: "We take the view that the purpose of s 165-5(1)(b) is to preserve entitlements to benefits (measured in terms of reductions in GST that would otherwise apply) as a consequence of specified legislative provisions which create those benefits. We take the view that this exclusion does not extend to benefits that have some connection with choices that are provided for where the benefit is not explained by the choice but is explained by something else – in this case the sales of Tower II and Tower III by Simnat to Blesford and Mooreville. The GST benefit here is attributable to the use of the higher amount as the consideration for the acquisition used in the calculation of the margin under the margin scheme rules." (footnote omitted) Accordingly, the Tribunal affirmed the Commissioner's declaration in relation to the application of the anti-avoidance provisions of Div 165 in so far as the proceedings concerned supplies made prior to 17 March 200519 pursuant to contracts originally entered into by Simnat. Unit Trend appealed to the Full Court of the Federal Court. On the appeal Unit Trend did not dispute the existence of the scheme found by the Tribunal. 18 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at [110], citing Pagone, Tax Avoidance in Australia, (2010) at 149. 19 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at Crennan The decision of the Full Court The Full Court, by Bennett and Greenwood JJ (Dowsett J dissenting), held that the anti-avoidance division, Div 165, did not apply in relation to the supplies up to and including 16 March 2005, and that, accordingly, the Tribunal's decision should be set aside20. Their Honours held that the GST benefit was attributable to the making of a choice or agreement expressly provided for by the GST Act. The majority regarded s 165-5(1)(b) as inviting an inquiry into causality. Their Honours considered the possibility that that inquiry was whether the making of a statutory choice was the predominant or direct cause of the GST "[T]he language of s 165-5(1) in the context of the Division as a whole, preventing the Division from operating, seems to more properly contemplate causation in an allocative sense asking whether the nexus between the GST benefit and the exercise of the statutory choice is sufficiently close to provide an answer to the question, is the choice etc made by the taxpayer as expressly provided by a GST law, the predominant cause or the direct cause of the GST benefit? In that sense, the subsection does not import by its terms in the context of the Division and the Act a concept of causation in which the relevant choice etc is simply one of a number of contributory causes, as a sufficient connection. Otherwise, the Division would seem to have little field of operation." Nevertheless, their Honours went on to consider, and to apply, "a concept of causation in which the relevant choice etc is simply one of a number of contributory causes"22. In this regard, their Honours began23: 20 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 77 21 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 75 22 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 75 23 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 75 Crennan "However, if, having regard to the legislative purpose, a view is formed that 'attributable to' imports the notion of causation in the sense of 'some connection' or a 'causal link alone' or a test of attributability that does not involve any qualification or limitation conveyed by such terms as 'sole, dominant, direct or proximate' or the notion that 'a contributory causal connection is quite sufficient', then, clearly enough, Unit Trend has satisfied that test of causation and the GST benefit is attributable to a causal link alone consisting of the exercise of one or more choices expressly provided for by the Act. The GST benefit in this case is sourced in the scheme having regard to all of the elements of that scheme as found on the facts. Section 165-5(1)(b) asks whether the GST benefit obtained from the scheme is caused in an allocative sense by the choices made by the taxpayer in the sense of belonging to the choices, elections or agreements expressly provided for by the GST law." It may be noted that the focus of their Honours' attention was upon the word "attributable", not upon the phrase actually used by s 165-5(1)(b), "not attributable". This focus may have influenced their ultimate conclusion that s 165-5(1)(b) invites attention to a notion of causation which is satisfied by "some connection" between the GST benefit and the exercise of a statutory choice. The majority went on to identify the choices associated with the getting of the GST benefit and to conclude that the GST benefit in question was "attributable" to choices expressly provided by the GST Act24. The choices were: The supply and acquisition of land as part of a going concern and intra- group transactions giving rise to GST-free transfers. Application of the margin scheme to end sales. Absent those choices the GST benefit on the end purchaser transactions would not have arisen. It was therefore attributable to those choices for which the GST Act expressly provided. 24 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 75- Crennan The majority seem to have proceeded to this conclusion on the footing that s 165-5(1)(b) invited the application of a "but for" test of causation. Their "But for the making of the choice or election to transfer Towers II and III as a going concern in conformity with s 38-325(1)(c), a GST liability would have arisen by reason of the settlement of each transfer." In the result, their Honours held26: "It follows including that for all settlements up 16 March 2005, Div 165 did not operate because it was excluded as the GST benefit on the end purchaser transactions was attributable to the choices etc made by Unit Trend as described. It also follows that the Tribunal's decision affirming the Commissioner's objection decision in relation to settlements by Simnat of Simnat contracts up to and including 16 March 2005 must be set aside." to and Dowsett J, in his dissent, rejected the approach urged by Unit Trend to the effect that any causal connection between the GST benefit and the making of a statutory choice was sufficient to remove the GST benefit from the scope of Div 165 of the GST Act. In his view the provision seemed to contemplate a direct link between the benefit and the relevant choice. He thought it most unlikely that Parliament intended that an outcome attributable to numerous choices would be excluded from the general operation of Div 165. His Honour said27: "Where one benefit is attributable to the interaction of numerous choices, it would be more accurate to attribute such benefit to that interaction, rather than to individual choices, taken discretely. The position may be otherwise where the scheme yields discrete benefits, each of which is attributable to a different, discrete choice." 25 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 76 26 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 77 27 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 44 Crennan As his Honour observed, the scheme which produced the GST benefit included the intra-group sales, which lay at the heart of the scheme, even if the various choices made under the GST Act were necessary integers of it. His "the GST benefit was attributable to the events of which such sales were necessary parts, in other words, the scheme. In those circumstances, the benefit was attributable to the scheme, and not to any particular choice expressly provided for by the GST law." As appears from what follows, we agree with the conclusion of Dowsett J. We do not find it necessary to come to a final conclusion as to whether the reference in s 165-5(1)(b) to "a choice" includes multiple choices each expressly authorised by the GST Act. The Commissioner's arguments The Commissioner submits that the decision of the majority in the Full Court does not "best achieve the purpose or object" of Div 16529, in that the purpose of s 165-5(1)(b) was to prevent the anti-avoidance provisions in Div 165 applying to a person merely by reason of the exercise of a right to make a choice expressly provided for by the GST Act30. Because the word "scheme" is defined by the GST Act in wide terms, it can readily encompass the making of a choice expressly provided for by the GST Act. Accordingly, s 165-5(1)(b) is intended to make Div 165 inapplicable where the GST benefit is produced by an individual statutory choice, taken discretely31, but only in such a case. The Commissioner also argues that a mere contributory causal connection with a statutory choice is not sufficient to remove a scheme from Div 165. The Commissioner says that there must be a connection between the statutory choice 28 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 44 29 cf s 15AA of the Acts Interpretation Act 1901 (Cth). 30 cf Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 74-75 [192] per Bennett and Greenwood JJ; see also at 43 [41] per Dowsett J. 31 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 44 Crennan and the GST benefit which is closer than that which is represented by an affirmative answer to a "but for" test. Rather, there must be a relationship of proximate or immediate cause and effect between the making of a choice expressly provided for by the GST Act and the getting of the GST benefit32. This argument draws upon the view of Dowsett J that there must be a "direct link" between the GST benefit and the choice33. Unit Trend's arguments Unit Trend advances three arguments with a view to sustaining the decision of the Full Court. Unit Trend's first argument is that s 165-5(1)(b) proceeds on the footing that a scheme which confers a GST benefit may be removed from the scope of Div 165 of the GST Act by a statutorily authorised choice which is but one element or step in a scheme which has generated the GST benefit. things, to construe s 160ZK(5) of In support of that approach, Unit Trend relies upon Federal Commissioner of Taxation v Sun Alliance Investments Pty Ltd (In liq)34. In that case this Court was concerned, among other the Income Tax Assessment Act 1936 (Cth). It is important to note that s 160ZK(5) provided that, if a company made a distribution in respect of a share to a company that was a controlling shareholder, and, to the extent that the distribution was a dividend, the company was entitled to a rebate under s 46 or s 46A, then the company was entitled to a rebatable dividend adjustment. A rebatable dividend adjustment was the amount of the distribution that could reasonably be taken to be attributable to profits that were derived by the company before the controlling shareholder acquired the share. In this Court's reasons for judgment35 it was said that s 160ZK(5) "presents an inquiry as to the existence of a sufficient link between that ... 32 cf Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568 at 598 [101]; [2005] HCA 26. 33 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 44 34 (2005) 225 CLR 488; [2005] HCA 70. 35 Federal Commissioner of Taxation v Sun Alliance Investments Pty Ltd (In liq) (2005) 225 CLR 488 at 514 [77]. Crennan distribution and profits derived by the company before a specified event". Unit Trend relies on the following passage36: "It is the concept of causation, rather than source, with which s 160ZK(5) is concerned. In determining whether the plaintiff's loss of the employment was Local Government Act 1972 (UK), Donaldson J in Walsh v Rother District Council said37: 'attributable provisions the '[T]hese are plain English words involving some causal connection between the loss of employment and that to which the loss is said to be attributable. However, this connection need not be that of a sole, dominant, direct or proximate cause and effect. contributory causal connection is quite sufficient.' Nothing, either in the text of s 160ZK(5) or in its objects as expressed in the Explanatory Memorandum on the Bill for the Amending Act, indicates that a narrower meaning should be presently ascribed to that phrase." Unit Trend's second argument is to the effect that a GST benefit arose only on the making of each choice to apply the margin scheme to an end sale. On this view, the relationship between the choice to apply the margin scheme and the GST benefit satisfies even the test of proximate or immediate cause urged by the Commissioner. That is said to be because the GST benefits in question were not "got" from the scheme identified by the Tribunal, but directly by the choices to apply the margin scheme after the sales of the developed product by Blesford and Mooreville were completed. These choices were made in the monthly BAS returns after May 2004. Thirdly, Unit Trend argues that the addition of s 165-5(3) to Div 165 of the GST Act, since the transactions in question were effected, reflects an appreciation on the part of the Parliament that, without s 165-5(3), s 165-5(1)(b) was not apt to exclude GST benefits of the kind in question from the scope of Div 165. This argument is advanced, both against the grant of special leave to appeal, and in support of the decision of the Full Court. 36 Federal Commissioner of Taxation v Sun Alliance Investments Pty Ltd (In liq) (2005) 225 CLR 488 at 514-515 [80]. 37 [1978] 1 All ER 510 at 514. Crennan Discussion As French CJ, Hayne, Crennan, Bell and Gageler JJ said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd38: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text". Context and purpose are also important. to Contract In Certain Lloyd's Underwriters Subscribing No IH00AAQS v Cross39 French CJ and Hayne J said: "The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority40, '[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute' ... That is, statutory construction requires deciding what is the legal meaning of the relevant provision 'by reference to the language of the instrument viewed as a whole'41, and 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'42." (emphasis of French CJ and Hayne J) With that observation in mind, it is to be noted that s 165-5(1)(a) poses a question which must be answered before one enters upon the inquiry invited by s 165-5(1)(b). That question is whether "an entity ... gets or got a GST benefit from a scheme". Under s 165-10(1)(a) an entity gets a GST benefit from a scheme "if … an amount that is payable by the entity under [the GST] Act … is, or could reasonably be expected to be, smaller than it would be apart from the 38 (2012) 87 ALJR 98 at 107 [39]; 293 ALR 257 at 268; [2012] HCA 55. 39 (2012) 87 ALJR 131 at 138 [24]; 293 ALR 412 at 418; [2012] HCA 56. 40 (1998) 194 CLR 355 at 381 [69]; [1998] HCA 28. 41 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320; [1981] HCA 26; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]. 42 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397 per Dixon CJ; [1955] HCA 27; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]. Crennan scheme or a part of the scheme". Under the scheme found by the Tribunal, the amount of GST payable by Unit Trend is smaller than it would be without the scheme because of the intermediate sales by Simnat to Blesford and Mooreville. The GST benefit got from the scheme, and which Div 165 is being invoked to negate, is the benefit obtained as a result of the intermediate sales by Simnat to Blesford and Mooreville; the GST benefits associated with the choices to effect the sales as intra-group sales of a going concern are not in issue. Section 165-5(1)(b) assumes that, in accordance with s 165-5(1)(a), an identified GST benefit has been "got ... from a scheme"; and proceeds from this postulate to invite attention to whether the particular GST benefit "got" from the scheme is "not attributable" to the making of a choice expressly provided by the GST Act. When s 165-5(1)(a) and (b) are read together, s 165-5(1)(b) may be read exegetically as: "the getting of the GST benefit by the avoider from the scheme is not attributable to the making of a choice", and it can be seen that the "non-attribution" with which s 165-5(1)(b) is concerned is the absence of statutory entitlement to get that GST benefit by the making of a choice authorised by the GST Act. It is to be noted that the crucial phrase in s 165-5(1)(b) is "not attributable to". To consider the application of s 165-5(1)(b) as if it were concerned with whether a GST benefit is "attributable" to a choice is apt to distort somewhat the inquiry invited by the text by leading one to embark on an inquiry as to whether the GST benefit in question is an effect of the making of a statutory choice as distinct from the scheme. Section 165-5(1)(b) is necessarily concerned with a GST benefit which has been "got" from a scheme but which is, nevertheless, "not attributable to" a choice expressly provided by the GST Act. Section 165-5(1)(b) is concerned to include, within the scope of Div 165, GST benefits got from a scheme in which the exercise of a statutory choice has had some operation. On this analysis, the words "not attributable to" in s 165-5(1)(b) do not invite an inquiry as to causality to differentiate the effects of the scheme from the exercise of a statutory choice. Rather, the phrase is concerned with whether the GST benefit in question, which (ex hypothesi) has been got from the scheme, is not one to which the exercise of a statutory choice has entitled the taxpayer. It should be noted that the observations in Sun Alliance on which Unit Trend relies were made in a markedly different context. While the word "attributable" was considered in Sun Alliance to be concerned with a contributory cause rather than source, the phrase "not attributable to" in s 165-5(1)(b) is used in a context in which a causal link is assumed to have been established in terms of the getting of a benefit from a scheme in which a statutory choice is an element. The expression "not attributable to" in s 165-5(1)(b) is not concerned to Crennan identify another relationship of cause and effect which might or might not proceed on a different level of cause and effect from that expressed by "got … from". Rather, the expression is, in its context, concerned with the absence of a statutory entitlement to the GST benefit in question. Considerations of relatively recent legal history lend support to the view that it is the absence of such an entitlement which justifies inclusion of that GST benefit within the scope of the anti-avoidance provisions of Div 165. It has long been recognised in Australia that the tension between general anti-avoidance provisions and specific provisions allowing the taxpayer a choice, which if exercised will yield the taxpayer a benefit, is to be resolved in favour of the specific provisions43. Section 165-5(1)(b) may readily be seen to exhibit the same intent as was ascribed to s 260 of the Income Tax Assessment Act 1936 (Cth) by Dixon CJ, Kitto and Taylor JJ in W P Keighery Pty Ltd v Federal Commissioner of Taxation44, namely, "to protect the general provisions of the Act from frustration, and not to deny to taxpayers any right of choice between alternatives which the Act itself lays open to them." It is tolerably clear from the legislative history of s 165-5(1)(b) that its purpose was to ensure that those GST benefits got from a scheme, but not attributable to the making of a statutory choice, are not immunised against the possible operation of the general anti-avoidance effect of Div 165. In its original form in the A New Tax System (Goods and Services Tax) Bill 1998 ("the GST Bill"), Div 165 did not contain what would become s 165-5(1)(b). The provision was subsequently The Supplementary Explanatory Memorandum tabled in the Senate in support of the amendments to the GST Bill ("the SEM") included, at par 1.118, the following explanation of the mischief at which s 165-5(1)(b) was directed: included as an amendment to the GST Bill. "Queries have been made about the scope of the current Division 165. It has been suggested that the Division may have unintended effects and may apply to transactions not intended to defeat GST law. In particular, it has been suggested that the exercise of an explicit option under the GST law may trigger the anti-avoidance provisions." 43 See W P Keighery Pty Ltd v Federal Commissioner of Taxation (1957) 100 CLR 66 at 92; [1957] HCA 2. 44 (1957) 100 CLR 66 at 92. Crennan The terms of the SEM confirm that the mischief at which s 165-5(1)(b) was directed was the possibility that, because of the wide definition of "scheme", Div 165 might bring within its reach a GST benefit, the getting of which is attributable to the making of a choice expressly provided for by the GST Act. It is evident that the insertion of s 165-5(1)(b) was intended to ensure that the GST Act did not contradict itself by allowing the general anti-avoidance provisions of Div 165 to trump specific provisions of the Act which allow an entity to get a GST benefit. That view is confirmed by s 165-1 of the GST Act. Section 165-1 is an "explanatory section" within the meaning of s 182-10(1) of the GST Act. It may, pursuant to s 182-10(2)(b), be considered "to confirm that the provision's meaning is the ordinary meaning conveyed by its text, taking into account its context in this Act and the purpose or object underlying the provision". When what became s 165-5(1)(b) was added to the GST Bill, s 165-1 was amended to include in the explanation of what Div 165 is about the following: "This Division is aimed at artificial or contrived schemes. It is not, for example, intended to apply to: an exporter electing to have monthly tax periods in order to bring forward the entitlement to input tax credits; or a supplier of child care applying to register under the Childcare Rebate Act 1993 (registration would make the supplies of child care GST-free); or a supplier choosing under section 9-25 of the A New Tax System (Wine Equalisation Tax) Act 1999 to use the average wholesale price method for working out the taxable value of retail sales of grape wine; or a bank having its car fleet serviced earlier than usual, and before 1 July 2000, so that the servicing does not, at least initially, bear the GST." The upshot of this analysis is that s 165-5(1)(a) and (b) require a GST benefit got from a scheme to be subject to scrutiny by reference to the other criteria in s 165-5 if the getting of the benefit referred to in s 165-5(1)(a) is not an entitlement the source of which is the making of a choice expressly authorised by another provision of the GST Act. Crennan That being so, reference to the undisputed facts shows that the GST benefit in question was not attributable to the making of a statutory choice provided by the GST Act. As we have said, the relevant GST benefit is not that to which Unit Trend was entitled by reason of intra-group sales or sales of a going concern. By reason of the statutory choices of the Raptis companies to become members of a GST group, and the agreements to transfer Towers II and III as going concerns, there was no GST payable on the intra-group transfers of those Towers. But the GST benefit in question was not attributable to those choices. The GST benefit got from the scheme reflected the amount agreed to be paid to Simnat as the consideration for the transfer of Towers II and III, which in turn reflected the increase in the value of the properties by reason of the work done upon them. That GST benefit was not something to which Unit Trend was entitled as a matter of the exercise of any statutory choice. It was what the majority in the Full Court characterised as "a commercial election or choice" involved in the transfer of the properties to Blesford and Mooreville in accordance with the scheme after the substantial increase in the value of the properties. This brought about the uplift in the intermediate cost base from which the GST benefit was got45. The result may also be explained by reference to s 165-10(1)(a). In accordance with s 165-10(1)(a), a GST benefit is an amount payable by or to an entity under the GST Act that is, or could reasonably be expected to be, smaller or larger "than it would be apart from the scheme or a part of the scheme". Under s 165-10(1)(a), the GST benefit the entity gets or got from the scheme is the difference, as to quantification, between: (a) an amount that would be payable by the entity under the GST Act absent Div 165 with the scheme in existence; and (b) such amount as would have been payable by the entity under the GST Act without the scheme in existence. Determination for the purpose of s 165-5(1)(b) of the GST Act of whether the GST benefit so identified "is not attributable" to the making by an entity "of a choice … that is expressly provided for" by the GST Act or another relevant law involves consideration of how the entity referred to in s 165-5(1)(a) got or is getting the GST benefit identified for the purpose of s 165-5(1)(a). It looks to the same factual and counterfactual analysis required by s 165-10(1)(a). The 45 Unit Trend Services Pty Ltd v Commissioner of Taxation (2012) 205 FCR 29 at 76 Crennan identified GST benefit is not attributable to the making of a choice by the entity or some other entity if: (a) the GST Act or another relevant law does not operate to confer the identified GST benefit by reference to that choice; or (b) the choice made in fact as part of the scheme would have been made in any event without the scheme. The choice made by Blesford and Mooreville under s 48-5 of the GST Act to become members of the GST group, and the agreements for the supply of Towers II and III as going concerns made between Simnat and Blesford and between Simnat and Mooreville respectively, as provided for by s 38-325(1)(c) of the GST Act, were choices that resulted in no GST being payable on the supplies by Simnat to Blesford and Mooreville. They were not choices and agreements by reference to which the GST Act operated to confer the GST benefit which the Tribunal identified as having been got by Unit Trend, being a reduction in the GST payable on supplies to end buyers. The choice made by Blesford and Mooreville under s 75-5 of the GST Act to apply the margin scheme in respect of supplies to end buyers was the same choice as would have been made, albeit by Simnat, without the scheme. For these reasons, we reject Unit Trend's first argument. Unit Trend's second argument, namely that the GST benefit "got" by it from the scheme is attributable solely to its election to apply the margin scheme at the conclusion of sales of the developed products by Blesford and Mooreville, should also be rejected. This argument is framed in terms of when the GST benefit "arose". To frame the question in this way is to divert attention from the real issue, which is concerned with the GST benefit "got" from the scheme. That scheme included all the steps identified by the Tribunal. It is important to bear in mind that s 165-5(1)(b) is concerned with the actual GST benefit which has been "got" from the scheme. By virtue of s 165-10(1)(a), that benefit is a matter of monetary value got from the scheme, rather than of legal forms or the timing of the getting of the benefit. The actual GST benefit in question here cannot be identified as a matter of monetary value without recognising the decisive effect of the uplift from the sales by Simnat to Crennan Blesford and Mooreville upon the intermediate cost base. As the Tribunal explained46: "The GST benefit here is attributable to the use of the higher amount as the consideration for the acquisition used in the calculation of the margin under the margin scheme rules. This higher amount is not the product of the election to adopt the margin scheme but is a result of the transfers of Tower II and Tower III and the consideration agreed to be paid for them. We take the view that a development group, such as Raptis, which acquires land in respect of which no input tax credits are available, will always sell the developed product under the margin scheme if the end purchasers, such as those who purchased from Raptis, would not be able to enjoy any benefit of input tax credits. Accordingly, we consider that the margin scheme would have been applied to any sales of completed apartments in the development in any event. Thus the GST benefit arises not out of any election or choice but from the effect of the transfers of Tower II and Tower III." As to the third argument advanced by Unit Trend, the insertion of sub-s (3) into s 165-5 in 2008 did not affect the meaning of (ie the causal connection required by) the phrase "not attributable to" in s 165-5(1)(b). In applying s 165-5, whether or not the case falls within s 165-5(1)(b) must be addressed before addressing s 165-5(3). It is only if the GST benefit is attributable to a statutory choice that one then addresses whether it was the purpose of the scheme to create the occasion for the exercise of that choice47. The insertion of s 165-5(3) in Div 165 cannot be regarded as an acknowledgement by the Parliament that, without it, Div 165 would not have encompassed a situation such as that of present concern. Section 165-5(3) ensures the application of Div 165 to the case where the scheme was entered into for the purpose of generating the statutory choice relied upon by the avoider. Section 165-5(1)(b) may apply without the need to invoke s 165-5(3) where the statutory choice arises as a step in a scheme. There may be cases where the avoider has not manipulated circumstances to confect the occasion for the 46 Unit Trend Services Pty Ltd v Commissioner of Taxation [2010] AATA 497 at 47 cf par 1.56 of the Explanatory Memorandum to the Tax Laws Amendment (2008 Measures No 5) Bill 2008. Crennan making of a statutory choice, but nevertheless the GST benefit can be seen to be not attributable to that choice. Having regard to the Tribunal's findings as to the terms of the scheme here in question, this is such a case. On those findings, which were not challenged on the appeal to the Full Court or in this Court, it is clear that s 165-5(3) was not necessary to bring this GST benefit within Div 165. Conclusion and orders The appeal should be allowed and the following orders made: Special leave to appeal granted. Appeal allowed. Set aside orders 2, 7 and 8 of the orders of the Full Court of the Federal Court of Australia made on 5 October 2012 and, in their place, order that: the issue of remission of penalty in relation to the declaration pursuant to s 165-40 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) be remitted to the Administrative Appeals Tribunal for further consideration; (b) Unit Trend Services Pty Ltd pay the Commissioner of Taxation's costs of, and incidental to, the appeal and cross-appeal in the Full Court; and any monies paid into the Federal Court by Unit Trend Services Pty Ltd as security for costs be paid out of court to the Commissioner of Taxation together with accretions, if any. Unit Trend Services Pty Ltd pay to the Commissioner of Taxation his costs of, and incidental to, the appeal.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Gillard v The Queen [2003] HCA 64 12 November 2003 ORDER 1. Appeal allowed. 2. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 21 December 2000 dismissing the appellant's appeal and, in lieu thereof, order that: (a) the appellant's appeal to that Court be allowed; (b) the appellant's convictions be quashed; and (c) there be a new trial. On appeal from the Supreme Court of South Australia Representation: D H Peek QC with J A Richards for the appellant (instructed by Lipson Street Chambers) S A Millsteed QC with A P Kimber for the respondent (instructed by Director of Public Prosecutions (South Australia)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gillard v The Queen Criminal law – Murder – Joint criminal enterprise – Appeal against conviction – Misdirection by trial judge – Failure to leave manslaughter to jury – Whether jury properly instructed would necessarily have returned verdict of guilty of murder – Whether failure to leave manslaughter to jury occasioned substantial miscarriage of justice. Criminal Law Consolidation Act 1935 (SA), s 353(1). GLEESON CJ AND CALLINAN J. The appellant, and a co-accused Gerald David Preston, were convicted of the murder of two men and the attempted murder of another. The appellant contends that the trial judge failed to leave manslaughter to the jury as a possible verdict in relation to each of the two men who were killed, and that this constituted a wrong decision on a question of law. That contention (which was rejected by the Full Court of the Supreme Court of South Australia1) is supported by the respondent. The difference between the parties to the appeal is whether the case is a proper one for the application of the proviso to s 353(1) of the Criminal Law Consolidation Act 1935 (SA). The principal questions for decision are whether, on the facts, there was a viable case of manslaughter to be left to the jury and, as it was put in Gilbert v The Queen2, whether it is clear that a jury, properly instructed, would necessarily have returned a verdict of murder. Those two questions address the problem by reference to different stages of the proceeding, but they turn upon substantially the same considerations of law and fact. The trial judge left the case to the jury as murder (and attempted murder) or nothing. If there was no viable case of manslaughter to be considered, then there was no wrong decision on a question of law. If, on the other hand, there was such a case (as has been contended consistently by the prosecution) then the proviso will apply only if it is clear that a jury, properly instructed, would necessarily have convicted the appellant of murder (and attempted murder). The essential facts may be summarised as follows. It is convenient (save for the purpose of dealing with one argument in relation to the proviso) to concentrate attention upon one only of the victims, Les Knowles. It is also convenient first to explain the case against Preston, who did the killing. The prosecution case, accepted by the jury, was that Preston, a man of well-known violent propensities, was hired to kill Knowles. There was evidence that Knowles was the subject of police investigations in relation to drug dealing. He conducted a car repair workshop. There was evidence that he kept large amounts of cash there. The prosecution alleged that a man named Tognolini, and/or a group named the Hells Angels, wanted Knowles killed, and agreed to pay Preston to kill him. The appellant had a long association with Preston, but in a subservient role. The prosecutor put to Preston in cross-examination that the appellant was his "errand boy". There was evidence that the appellant had a history of psychological problems and alcoholism. Preston told the police that the appellant was "thick and simple". 1 R v Gillard and Preston (No 3) (2000) 78 SASR 279. (2000) 201 CLR 414 at 422 [19]. Callinan At Preston's request, the appellant stole a van, and used it to drive Preston to the repair shop. Also at Preston's request, shortly before the pair arrived at the repair shop, the appellant made a telephone call to the shop to check that Knowles was there. Both men were disguised. Preston was armed with a loaded gun. He walked from the van into the repair shop, shot and killed Knowles and another man, and fired at a third. He then rejoined the appellant in the van and they drove off together. The appellant later destroyed the van. The case against Preston was straightforward. So also was the case against the appellant, as it was left to the jury. The prosecution alleged that the appellant was a party to the plan to kill Knowles and that he was well aware of the intention with which Preston acted. In support of that case, the prosecution invited the jury to accept that the appellant must have known that Preston was armed with a loaded gun. There was evidence as to the process involved in loading and cocking the weapon, intended to show that it was very unlikely that Preston, who began shooting almost as soon as he entered the repair shop, could have put himself in a position to do that without the appellant's knowledge. The appellant, who gave no evidence at the trial, made admissions to the police that he had stolen the van, driven Preston to and from the repair shop, made the telephone call to establish that Knowles was there, worn a hood to disguise his appearance, and later destroyed the van. He asserted, however, that he had no knowledge of Preston's intention to kill Knowles, and that he thought that what was involved was a robbery. He denied knowing that Preston was armed with a gun. The proposition that the appellant did not know that Preston was armed was implausible. On his own admissions, the appellant knew that Preston, wearing a mask or hood over his face, was entering the car repair shop, where Knowles and a number of employees were present, for a hostile and criminal purpose. Even if that purpose was robbery, rather than murder, it would have required considerable audacity on the part of Preston to attempt the task unarmed. The appellant did not explain how he thought Preston might have carried out the robbery without a weapon. The man he was supposedly intending to rob was not a person to be trifled with; he was not alone; and car repair shops usually contain items which might be used to beat off an unarmed intruder. It was well open to the jury to reject the suggestion that the appellant did not know that Preston was carrying a loaded gun, and to conclude that, insofar as they were considering the hypothesis that the appellant believed that he was assisting a robbery, what was involved, to the appellant's knowledge, was an armed robbery. The robbery hypothesis was evidently taken seriously by the jury. They asked questions directed to the possibility that Preston was carrying out a contract killing, but the appellant believed he was carrying out a robbery. Ultimately, they took several days to consider their verdict. The trial judge Callinan directed the jury that, in order to convict the appellant, the prosecution had to prove that Preston and the appellant shared a common purpose to kill Knowles, and had to exclude as a reasonable possibility that the appellant was acting with the purpose of participating in robbery. The prosecution argued at trial, and on appeal, that such a direction was erroneous in two respects: first, the jury should have been told that, even on the robbery hypothesis, there was a view of the facts consistent with the appellant's guilt of murder; and secondly, that the jury should also have been told that, on the robbery hypothesis, they could convict the appellant of manslaughter. Counsel for the appellant now accepts, and asserts, that at least the second part of that argument is correct. The essence of the appellant's complaint is that, the case against him having been put to the jury as murder or nothing, there was a miscarriage of justice because the jury were deprived of the opportunity of considering an intermediate possibility, manslaughter. Hayne J, in his reasons for judgment, has summarised the principles as to criminal complicity based upon participation in a common enterprise, as stated in McAuliffe v The Queen3. The Full Court considered those principles, but they rejected the alternative case of murder, or manslaughter, based upon an acceptance of the robbery hypothesis. Duggan and Bleby JJ, with whom "The prosecution also submitted to the trial judge that the alternative verdict of manslaughter should be left to the jury. It was said that if the jury found that Preston intended to commit the crime of murder, but Gillard contemplated that a robbery only might be committed and if Gillard was aware of the fact that Preston was carrying a gun, then there would be a sufficient basis for a finding that Gillard committed the offence of manslaughter. According to the submission, Gillard would be guilty of manslaughter in these circumstances if he was a party to the commission of an unlawful and dangerous act, namely, the presentation of the gun." They then turned to McAuliffe, and said that there had to be a meeting of minds in relation to the criminal design. If Preston had murder in mind, and Gillard contemplated a robbery only, it was difficult to identify a relevant common purpose. They said that they did "not think that the jury could find an agreement or understanding which would satisfy the requirement of a defined and common criminal purpose". (1995) 183 CLR 108. Callinan The prosecution submission, in its reference to robbery, plainly meant armed robbery with a loaded gun as the weapon. For reasons already stated, it was clearly open to the jury to consider that, even if the appellant only contemplated robbery, that was the kind of robbery in question. Such a robbery is an act of serious violence. The presentation of a loaded weapon in the course of such a robbery involves an assault in circumstances which clearly expose the victim to an appreciable risk of serious injury4. On the prosecution case, there was a common purpose between Preston and the appellant that at least involved the stealing of a van, driving Preston, disguised, and armed with a loaded gun, to the repair shop to confront Knowles, driving Preston away from the repair shop, and destroying the van in order to evade detection. That the purpose was for Preston to confront Knowles is evident from the telephone call made to the premises by the appellant shortly before he and Preston arrived. There was a common criminal design, and it included the hostile use of a loaded gun. The appellant and Preston both had the purpose of engaging in an act of criminal violence. The level of violence contemplated by one exceeded that contemplated by the other, but that does not necessarily mean that the other is exonerated. In the present context, we are concerned with the culpability of the appellant by reason of his complicity in the conduct of Preston. The Full Court said that, upon the robbery hypothesis, "Gillard had been duped by Preston". But the case is not about the vitiating effect of misrepresentation upon a contractual agreement. The question is whether, if the appellant thought he was participating in an armed hold-up, and Preston intended from the outset to kill Knowles, the appellant can be liable for culpable homicide by reason of such common purpose as they entertained. To say that Preston's purpose was different from that of the appellant does not answer the question. There was a substantial commonality of purpose, and the question is as to the legal significance of the difference. It is established that, consistently with the principles stated in McAuliffe (or statutory provisions to similar effect), where death results from a joint enterprise involving violence, and the level of violence contemplated by one participant exceeds that contemplated by another, one may be guilty of murder and the other guilty of manslaughter. Gilbert was such a case. Examples from various jurisdictions were examined in R v Barlow5. 4 Wilson v The Queen (1992) 174 CLR 313 at 332-335. (1997) 188 CLR 1. Callinan In Markby v The Queen6, Gibbs ACJ said (omitting references): "If ... two men attack another without any intention to cause death or grievous bodily harm, and during the course of the attack one man forms an intention to kill the victim, and strikes the fatal blow with that intention, he may be convicted of murder while the other participant in the plan may be convicted of manslaughter. The reason why the principal assailant is guilty of murder and the other participant only of manslaughter in such a case is that the former had an actual intention to kill whereas the latter never intended that death or grievous bodily harm be caused to the victim, and if there had not been a departure from the common purpose the death of the victim would have rendered the two participants guilty of manslaughter only. In some cases the inactive participant in the common design may escape liability either for murder or manslaughter. If the principal assailant has gone completely beyond the scope of the common design, and for example 'has used a weapon and acted in a way which no party to that common design could suspect', the inactive participant is not guilty of either murder or manslaughter. If however the use of the weapon, even if its existence was unknown to the other party, is rightly regarded as no more than an unexpected incident in carrying out the common design inactive participant may be convicted of manslaughter."7 the The concluding sentence of that passage, raises what, as it appears to us, is the potential significance of the supposition that Preston "duped" the appellant, although the reference to the possibility that the existence of the weapon was unknown to the other party is not presently material. In R v Collie8, the deceased was abducted by a number of men, including L. According to L, the abduction was for the purpose of interrogation, and a firearm was to be used only as a threat in order to keep the deceased under restraint. Unknown to L, his companions intended from the outset to kill the victim, and they did so. The Full Court of the Supreme Court of South Australia rejected a contention that, on that version of events, L was guilty of manslaughter. King CJ, with whom Cox J and Debelle J agreed, said9: (1978) 140 CLR 108 at 112-113. 7 See also Reid (1975) 62 Cr App R 109 at 112. (1991) 56 SASR 302. (1991) 56 SASR 302 at 315-316. Callinan "The question of law is whether the statement, so construed, amounts to a confession to the crime of manslaughter. There can be no doubt that it was a confession to engaging in an unlawful act consisting of a false imprisonment of and an assault upon the deceased in common with the other two men, and an act which was dangerous by reason of the carrying of the loaded firearm. The statement also conveys that murder was not within [L's] contemplation. In those circumstances, if the death of the deceased resulted from the unlawful and dangerous act, [L] would be guilty of manslaughter .... But not all deaths occurring in the course of an unlawful and dangerous enterprise which does not include murder in its scope result in criminal liability for manslaughter on the part of the participants. Questions of causation arise. In the present case I feel no doubt that if the death had resulted from the accidental discharge of the loaded firearm [L] would be guilty of manslaughter. If one of the participants had formed, through panic or anger, a sudden intention to wound or kill the deceased, I think ... that that would be regarded as a result of the dangerous act of carrying a loaded firearm as part of the joint enterprise and that [L] would be guilty of manslaughter. That, however, is not what [L's] statement conveys. It conveys that the death of the deceased was the result of a deliberate act which could only have been premeditated and which indicated that his companions had entertained the intention to kill from the beginning. In those circumstances, it seems to me that the death cannot be regarded as having been caused by the dangerous nature of the enterprise into which [L] had entered. The cause of the deceased's death was unrelated to any danger created by imprisonment of the deceased or the carrying of the loaded firearm for the purpose of restraining him. The cause was the murderous intention entertained, unknown to [L], by the other two participants. In those circumstances I do not think that a verdict of manslaughter was open upon [L's] statement and there is no basis in the evidence upon which manslaughter could have been left to the jury as a possible verdict." The distinction, drawn by King CJ, between the case where a co- participant forms an intention to kill during the event, and a case where such an intention existed from the outset, may be factually significant in some circumstances, but it cannot be determinative in all cases as a matter of principle. In the present case, on the robbery hypothesis, the appellant was a party to a common design which involved the hostile confrontation of Knowles with a loaded gun. According to the principles stated in McAuliffe, the culpability of the appellant in the event that Preston shot and killed Knowles would depend upon the scope of their common design, and what he foresaw as a possible incident of Callinan the design. If he foresaw, as a possible incident of carrying out the common design, that Preston might shoot Knowles with intent to kill or cause grievous bodily harm, then he would be guilty of murder10. If he foresaw, as a possible incident, that Knowles might shoot Preston but without foreseeing such intent, then he would be guilty of manslaughter. That need not depend upon whether Preston decided on the spur of the moment to kill Knowles, or whether the killing was premeditated. Furthermore, there is a difficulty in treating intention as a cause of death. The cause of death is the act that brought it about. The issue is the accused's criminal responsibility for that act. A question that arose was whether the death of Knowles was causally related to an act for which the appellant was criminally responsible. The act causing his death was the presentation and discharge of the weapon by Preston. The issue is whether, and to what extent, the appellant was criminally responsible for that act. The resolution of that issue depends upon the scope of the common criminal design, and the foresight of the appellant. Collie was not followed in a recent decision of the Full Court of the Supreme Court of South Australia. In R v Zappia11, a case decided after the Full Court's decision in the present case, the appellant was convicted of manslaughter. The appellant and a co-offender went to the deceased's apartment. The appellant's case was that he knew the co-offender intended to threaten the deceased with a gun. There was evidence that the appellant knew the gun was or might be loaded. The co-accused shot and killed the deceased. The appellant said he did not expect this to happen. The conviction was upheld. Doyle CJ, with whom Lander J and Martin J agreed, referred to counsel's submission that if, unknown to the appellant, the co-offender intended to kill the victim from the outset, and then killed the victim deliberately, the jury could not convict of manslaughter unless satisfied that the deliberate killing of the victim "was not an unexpected event completely outside the scope of the joint enterprise"12. The submission was put alternatively in terms of causation. Reliance was placed upon Collie. Doyle CJ distinguished that case as turning on its own facts and preferred to follow the statement of principle made by Gibbs ACJ in Markby13. 10 McAuliffe v The Queen (1995) 183 CLR 108 at 117-118. 11 (2002) 84 SASR 206. 12 (2002) 84 SASR 206 at 221 [66]. 13 (2002) 84 SASR 206 at 227 [80]. Callinan He said14: "As I observed earlier, the relevant direction was given on the basis that the jury was satisfied that Mr Zappia knew Mr Kamleh was carrying a loaded gun and intended to use it to threaten Mr Rasti. That is an important point. Mr Zappia knew that a dangerous weapon was being taken to the scene. Having regard to the nature of the joint enterprise ... an inevitable conclusion was that if, in the course of the confrontation, Mr Kamleh formed an intention to kill, that was no more than an unexpected incident in the carrying out of the common design ... . Would it make any difference if it were a reasonable possibility that Mr Kamleh formed the intention to kill relatively early in the piece, perhaps shortly before, or as the men entered the apartment? My view is that in the circumstances of this case it would not. The joint enterprise that is posited was, all along, to confront Mr Rasti, and to use the loaded pistol to threaten him. I do not consider that it makes any difference when Mr Kamleh formed the intention to kill." We agree with that approach. The present case illustrates the artificiality of a distinction, in the circumstances under consideration, based upon when an intention to kill was formed by a primary offender. The appellant stole a van and used it to deliver Preston to Knowles' premises, having first checked to make sure that Knowles was present. On the assumed facts, he knew that Preston was armed with a loaded gun. He waited outside the premises to assist Preston to escape. Preston shot Knowles with intent to kill. There is no reason why the existence and degree of the responsibility of the appellant for the killing of Knowles should depend upon whether Preston decided to kill him on the spur of the moment, or shortly before they arrived at the premises, or whether that was his intention from the time when he arranged for the appellant to assist him. In McAuliffe15, the Court said: "There was no occasion [in Johns v The Queen16] for the Court to turn its attention to the situation where one party foresees, but does not agree to, a crime other than that which is planned, and continues to participate in the venture. However, the secondary offender in that situation is as much a party to the crime which is an incident of the agreed venture as he is when 14 (2002) 84 SASR 206 at 227 [82], [83]. 15 (1995) 183 CLR 108 at 117-118. 16 (1980) 143 CLR 108 at 130-131. Callinan the incidental crime falls within the common purpose. Of course, in that situation the prosecution must prove that the individual concerned foresaw that the incidental crime might be committed and cannot rely upon the existence of the common purpose as establishing that state of mind ... As Sir Robin Cooke observed, the criminal culpability lies in the participation in the joint criminal enterprise with the necessary foresight ... That is in accordance with the general principle of the criminal law that a person who intentionally assists in the commission of a crime or encourages its commission may be convicted as a party to it." The general principle there referred to extends to the possibility that a person who intentionally assists in homicide may be guilty of manslaughter even though the principal offender is guilty of murder. The existence of that possibility assumes a difference in the intentions of the two parties. The secondary party may not know of, or foresee, the principal offender's murderous intention, but may foresee the possibility of the act causing death as an incident of the common design. The essence of the reasoning in the above passage is that, when the secondary party continues to participate in the venture without having agreed to, but foreseeing as a possibility, the act causing death, that party is regarded as intentionally assisting in the commission of a crime. In the present case, if a jury decided that the appellant foresaw as a possibility that Preston would fire the loaded gun at Knowles, and continued to participate with that foresight, then he would be intentionally assisting in the commission of culpable homicide. The level of his own culpability would depend upon whether he foresaw that Preston might act with intent to kill or cause grievous bodily harm. In our view, there was a viable case of manslaughter to be left to the jury, and the refusal to leave that case was a wrong decision on a question of law. This raises the question of the proviso. Gilbert decides that it is not an answer to the appellant's argument to point out that, since the jury were properly (albeit conservatively) instructed on the elements of murder, and since they convicted the appellant of murder, there is, on that account alone, no miscarriage of justice. It is unnecessary to repeat the reasons for that. The jury were wrongly deprived of an opportunity to consider an intermediate position. The respondent sought to distinguish Gilbert on the following ground. One of the counts on which the jury convicted the appellant was one of attempted murder. In relation to that count, there was no intermediate possibility of manslaughter. That is so, but the distinction does not answer the problem to which Gilbert was addressed. If, in relation to the two counts of murder, the jury were (by hypothesis) not properly instructed in the law of culpable homicide, then that could have affected the outcome of the whole trial. Although the error related directly only to the first and second counts, once it is accepted that the nature of the error is such as to affect the verdicts on those two counts it is impossible to dismiss the possibility that it also affected the verdict on the third count. Callinan The substantial question to be considered in relation to the proviso is that which was considered by the Court of Appeal of Queensland in Gilbert, and upon which that Court divided. It is whether a jury, properly instructed, would necessarily have returned a verdict of murder. The facts of Gilbert were, in a number of respects, similar to those of the present case. The accused drove the victim and a co-offender to a lonely place, where the co-offender bashed and killed the victim. The accused said that all he knew was that the co-offender intended to assault the victim. The accused was convicted of murder. It was agreed on all sides that the trial judge had erred in not leaving manslaughter to the jury. A majority in the Court of Appeal decided there was no miscarriage of justice because, having regard to his knowledge of the co-offender's violent propensities and the victim's physical weakness, a jury would inevitably have concluded that the accused foresaw that the co-offender would act with intent to cause grievous bodily harm. The dissentient disagreed, for factual reasons that are presently irrelevant, as did a majority in this Court. In the present case, while it was well open to a jury to find that the appellant foresaw that Preston might shoot Knowles, or others in the repair shop, it was not inevitable that, properly instructed, and given manslaughter as an alternative to consider, they would find that he foresaw that Preston would act with intent to kill or cause grievous bodily harm. It is difficult for this Court to know what the jury would have made of the appellant. There was evidence as to his personality and background that indicates strongly that he is not a clear and capable thinker. He did not give evidence, but the jury saw him over a long period, and heard acquaintances describe his capabilities. They had his interview with the police. Much would depend upon their assessment of him. That is quintessentially a jury question. A loaded gun used in the course of an armed robbery is obviously dangerous, and it is easy to foresee that it might be discharged. But it is not inevitable that a jury would find that the appellant subjectively foresaw that Preston would shoot with intent to kill or cause grievous bodily harm. When an appellate court is concerned with an issue about the subjective foresight of a person who may be regarded by a jury as being of limited capacity, there is a danger in concluding too readily that a jury inevitably would reach a certain finding, especially where that conclusion is based on logic, and on a rational assessment of objective circumstances which the person involved might not have made. We would allow the appeal, set aside the orders of the Full Court of the Supreme Court of South Australia, order that the appeal to that Court be allowed, that the convictions be quashed, and that there be a new trial. GUMMOW J. I agree with the statement by Hayne J of the principles respecting joint criminal enterprise and with what his Honour says as to the formulation and application of those principles by the Full Court. I agree also with what Hayne J says under the heading "Reconsideration of McAuliffe neither sought nor required". In the present case there was, as Hayne J explains, a wrong decision by the trial judge on a question of law in not directing the jury that a verdict of manslaughter was an available outcome. The issue then is whether the proviso to s 353(1) of the Criminal Law Consolidation Act 1935 (SA) should have been applied. In Gilbert v The Queen17, Callinan J, one of the majority, said: "The appellant was entitled to a trial at which directions according to law were given. It is contrary to human experience that in situations in which a choice of decisions may be made, what is chosen will be unaffected by the variety of the choices offered, particularly when, as here, a particular choice was not the only or inevitable choice." The other members of the majority, Gleeson CJ and Gummow J, spoke to similar effect18, with particular reference to the judgment of McLachlin J in R v Jackson19. That reasoning applies to the circumstances of the trial in the present case. The appeal should be allowed and consequential orders made as proposed 17 (2000) 201 CLR 414 at 441 [101]. 18 (2000) 201 CLR 414 at 421-422 [16]-[20]. 19 [1993] 4 SCR 573 at 593. Kirby KIRBY J. Mr Kevin Gillard ("the appellant") appeals from a judgment of the Full Court of the Supreme Court of South Australia (sitting as the Court of Criminal Appeal)20. His appeal raises two questions. The first is whether, contrary to the ruling of the primary judge, and of the Full Court affirming that ruling21, the jury should have been instructed that it was open to them to return verdicts of guilty of manslaughter in answer to the counts of the indictment charging the appellant with murder. The second issue arises if the first is decided in the affirmative. It is whether the appeal should nonetheless be dismissed by the application of the "proviso"22. The propounded ground is that the jury's verdicts of guilty of murder followed correct instructions about that offence and were open, indeed inevitable, when considered in the context of the evidence. Upon that footing, it is suggested that any misdirection resulted in no substantial miscarriage of justice. A basic quandary is raised by the first question. To the extent that courts expand joint criminal liability for offences, by enlarging the scope of the doctrine of common purpose, they expose accessories to full liability for acts which they did not perform and may not actually have intended. Because manslaughter is an offence that permits a differentiation of culpability for homicide, it has a potential, in circumstances where it applies, to allow a jury to ameliorate the operation of the doctrine of common purpose. But given the way that the doctrine has been developed by this Court, it is difficult to find a clear point of differentiation that would permit a principled distinction to be made between guilt of murder and guilt of manslaughter. Such differentiation must be clear because, in Australia, decisions on such questions are usually made by juries. An unsatisfactory appeal Earlier disclaimer of manslaughter: To say the least, there are features of this appeal that are less than satisfactory. They make the provision of answers to the two questions that it raises more than usually difficult. Not only did the representatives of the appellant fail at the trial to reserve the point now argued. They resisted an attempt of the prosecution to persuade the trial judge to instruct the jury that verdicts of manslaughter were available. They convinced the judge to confine the jury to a choice between "murder and nothing". That choice presented certain forensic advantages to the appellant. He 20 R v Gillard and Preston (No 3) (2000) 78 SASR 279. 21 (2000) 78 SASR 279 at 291 [346]. 22 Criminal Law Consolidation Act 1935 (SA), s 353(1), "proviso". Kirby fully exploited them. However, in the event, the strategy did not result in the verdicts of acquittal for which he hoped. Instead, the jury returned verdicts of guilty of murder about which the appellant now complains. Having secured, but lost, the advantages of the dichotomy which he urged at his trial, the appellant now wants another trial with a further chance to contest the indictment under new rules. It is easy to feel a sense of distaste about allowing such a course to succeed. The joint trial of the appellant and his co- accused, Mr Gerald Preston, lasted four and a half months. At the time, it was the longest criminal trial in South Australian history. Any retrial would be a little shorter because of the termination of the proceedings against Mr Preston. But it would still be very long. It would involve great public expense. There would be substantial inconvenience to witnesses and to a second jury that would have to be summoned. Absence of argumentative contradiction: The appeal raises important questions concerned with the law of manslaughter as an offence of unlawful homicide short of murder23. In the context, the appellant's complaint about the directions given to the jury cannot be resolved without consideration of the law of common purpose, variously so described as "common design, concert [or] joint criminal enterprise"24. That subject arises here in the context of the rules of the common law not in elaboration of a statutory provision, such as s 8 of the Criminal Code (Q) considered in R v Barlow25. In South Australia, no statute defines the scope of criminal liability in a case involving joint involvement in a crime with an alleged common purpose. Judges must therefore state the extent of the criminal liability by reference to common law doctrine. In recent years the contours of that doctrine have expanded significantly. This has attracted critics and proposals for law reform. It has produced serious difficulties for judicial exposition of the law in ways apt for accurate jury decision-making26. It follows that the determination of the questions to be decided in this appeal requires this Court to embark once again upon an area of the law that has been criticised for its lack of precision. It is especially in such a case that this Court must expound the law not simply for the parties but for other cases presenting similar problems, including under statutory provisions to the extent that these contain statements of criminal liability similar to those upheld by the 23 cf Stanton v The Queen (2003) 77 ALJR 1151 at 1162 [64]-[66]; 198 ALR 41 at 24 McAuliffe v The Queen (1995) 183 CLR 108 at 113. 25 (1997) 188 CLR 1. 26 R v Barlow (1997) 188 CLR 1 at 23 per McHugh J. Kirby common law27. Simply reaching for another verbal formula is scarcely a proper response. The performance of the Court's function in the present appeal was impeded by the fact that, as in the Full Court (but not at trial), the appellant and the prosecution were in agreement that the primary judge had erred in failing to give the jury instruction about the availability of verdicts of manslaughter. So far as the parties to the appeal were concerned, it involved the applicability of the proviso and nothing else. This Court did not therefore have the advantage of competing contentions about the law of manslaughter, and of joint criminal liability, that might have sharpened the consideration of the suggested errors of law that had occurred in the trial judge's directions. In consequence, the arguments of the parties afford a less than perfect platform from which to embark upon an examination of the correctness of the reasoning of the Full Court on the central issue of the appellant's joint criminal liability. No party before this Court supported the Full Court's reasons. The best that we could therefore do was to consider that Court's decision for ourselves against the backdrop of recent opinions in this Court on common unlawful purpose28, the reasoning on the point in successive decisions of the South Australian Full Court29, and authority elsewhere grappling with the same problems. The disadvantage that I have described is more than theoretical. Where criminal liability is imposed on the basis of a common unlawful purpose, one person (the secondary offender) is rendered liable for the acts of another person (the principal offender) although the secondary offender has not actually performed the acts in question and may not have agreed to, or specifically intended, that such acts take place. To this extent, the doctrine of common purpose imposes criminal liability upon secondary offenders in a way that sometimes appears to offend fundamental principles of our criminal law. By those principles (limited exceptions apart) criminal liability ordinarily attaches only to the doing of criminal acts with a requisite criminal intention. 27 Barlow (1997) 188 CLR 1 at 44. 28 Such as Markby v The Queen (1978) 140 CLR 108; Johns (TS) v The Queen (1980) 143 CLR 108; Royall v The Queen (1991) 172 CLR 378; McAuliffe v The Queen (1995) 183 CLR 108 and Barlow (1997) 188 CLR 1; cf Chan Wing-Siu v The Queen [1985] AC 168; Hui Chi-Ming v The Queen [1992] 1 AC 34. 29 R v Collie (1991) 56 SASR 302 at 315-316; R v Zappia (2002) 84 SASR 206 at 221 [66], 227 [80], [83]. See reasons of Gleeson CJ and Callinan J ("joint reasons") at Kirby Where a joint criminal enterprise results in homicide, it may be understandable that the prosecution would wish to include an option for the jury to return a verdict of guilty of manslaughter. In a particular case, this could make it more acceptable to a jury to apply the legal fiction involved in the law of common purpose, rather than to focus attention exclusively on the accused's involvement in the criminal acts and whether a necessary intention on the part of the accused was proved. It was a demand for such focus (and a resistance to the temptation for jury compromise) that sustained the appellant's objection at trial to the judge's giving instructions to the jury that they could return verdicts of manslaughter. Arguably, the basic legal principle lying behind the reasoning of King CJ in R v Collie30 (and of the Full Court in the present case31) rests upon an insistence on what those judges saw as the fundamental principle of criminal liability. According to that principle, criminal actions and intentions must normally coincide. Liability for what are said to be acts done pursuant to an unlawful common purpose should therefore be confined to liability for acts performed within a proved common intention and not otherwise. Because of the way this appeal developed, no party sought to support such a theory of liability for common purpose, as expressed by the Full Court in this case. No party attempted to reconcile that Court's reasoning with this Court's pronouncements on the subject. Although it would have been in the prosecution's immediate interest to do so, in order to save the verdicts in the appellant's long trial, before this Court the prosecution persisted with its submission at trial and in the Full Court that verdicts of manslaughter were available. From a functional point of view, that submission was understandable. But the result was that the argument of this appeal was lop-sided. Faced with an appeal in which neither of the contesting parties had any desire to support the reasoning of the Full Court, I must approach the issue of principle without the assistance normally derived from competing submissions. To the usual disadvantages felt in such a case must be added an intuitive feeling that there could be larger reasons of principle and policy to support the approach taken by the Full Court in Collie and in this case than appear on the face of those decisions or than this Court was able to extract from the reluctant parties. Confinement of the argument and materials: There is another difficulty. The appeal was argued on the basis that the law of common purpose liability was 30 (1991) 56 SASR 302. See joint reasons at [18]. 31 Duggan and Bleby JJ; Lander J concurring. See joint reasons at [10]-[11]. Kirby that stated in recent decisions of this Court, especially McAuliffe v The Queen32. Such an approach was understandable, given that McAuliffe, in particular, was a recent, unanimous decision of this Court. Nevertheless, it is an opinion that has been criticised as incompatible with the fundamental norms of criminal liability33; as inconsistent with other authority34; and in need of reconsideration, not least to derive principles that can be clearly and simply explained to juries in the place of the present "potentially confusing" state of the law35. Although it is unusual for recent authority to be reconsidered, the Court will sometimes do so where it is convinced that the authority is seriously wrong and productive of injustice or confusion. It will sometimes do so even in respect of recent decisions that involved all, or nearly all, members of the Court36. In the present case the parties did not advance submissions to assist this Court to re-express what it had said in recent cases, in the light of subsequent doctrinal and practical criticisms. On the contrary, when during argument counsel were asked whether there had been academic or professional writing about the problem before the Court, we were told by counsel for the appellant that he had been unable to find anything that was in point. Subsequent inquiry has disclosed that there is extensive literature about unlawful joint enterprises where death results37 and about the decisions on the doctrine of common purpose 32 (1995) 183 CLR 108. 33 Gray, "'I Didn't Know, I Wasn't There': Common Purpose and the Liability of Accessories to Crime", (1999) 23 Criminal Law Journal 201 at 209-210 ("Gray") referring to R v Powell [1997] 3 WLR 959 at 963 per Lord Mustill, 981 per Lord Hutton (Lord Goff of Chieveley and Lord Jauncey of Tullichettle concurring); [1997] 4 All ER 545 at 548, 566. 34 eg Giorgianni (1985) 156 CLR 473 at 506. 35 Gray (1999) 23 Criminal Law Journal 201 at 217. 36 eg Re Patterson; Ex parte Taylor (2001) 207 CLR 391, an earlier decision reached by six Justices of the Court in Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 was overruled. 37 Cato, "Foresight of Murder and Complicity in Unlawful Joint Enterprises Where Death Results", (1990) 2 Bond Law Review 182; Brown et al, Criminal Laws: Materials and Commentary on Criminal Law and Process in New South Wales, 3rd ed (2001) at 1362. Kirby in Australia38, England39, the United States40, Canada41 and elsewhere. Law reform bodies have also recently addressed the problem of accessorial liability. They have done so at the national level in Australia42, and in South Australia43, England44, Canada45 and elsewhere. Such materials have analysed the history, 38 Odgers, "Criminal Cases in the High Court of Australia – McAuliffe and McAuliffe", (1996) 20 Criminal Law Journal 43 at 45 ("Odgers"); Gray (1999) 23 Criminal Law Journal 201 at 205. 39 K J M Smith, A Modern Treatise on the Law of Criminal Complicity, (1991) at 214-222; J C Smith, "Criminal Liability of Accessories: Law and Law Reform", (1997) 113 Law Quarterly Review 453 at 454-456; Law Commission, Consultation Paper No 131, Assisting and Encouraging Crime, (1993) at 58-62. 40 Stark, "The natural and probable consequences doctrine is not a natural result for New Mexico – State v Carrasco", (1998) 28 New Mexico Law Review 505; Chism, "State v Carson: A misguided attempt to retain the natural and probable consequence doctrine of accomplice liability under the current Tennessee code", (1998) 29 University of Memphis Law Review 273; Mueller, "The Mens Rea of Accomplice Liability", (1988) 61 Southern California Law Review 2169. See also New York Penal Law §20.00 and the Model Penal Code §2.06. See also LaFave, Criminal Law, 3rd ed (2000) at 636 and People v Prettyman 926 P 2d 1013 at 1015, 1019 (Cal 1996) endorsing liability of the confederate for crimes committed as a "natural and probable consequence" of the crime originally aided and abetted. 41 Stuart, Canadian Criminal Law: A Treatise, 4th ed (2001) at 617-618 citing R v Logan [1990] 2 SCR 731 and R v Jackson [1993] 4 SCR 573; cf the Canadian Criminal Code s 21(2) referred to in Barlow (1997) 188 CLR 1 at 37-39. 42 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters (1990) at 205-208. 43 South Australia, Criminal Law and Penal Methods Reform Committee of South Australia, The Substantive Criminal Law, 4th Report (1977) at 300-309. The Committee proposed a redefinition of the common law doctrine by reference to the principle of recklessness. It recommended that an accomplice should be liable for a collateral offence if a substantial risk had been adverted to. The report was written before Johns (1980) and McAuliffe (1995). It has not been implemented. 44 Law Commission, Consultation Paper No 131, Assisting and Encouraging Crime, (1993) at 57-64. The Law Commission's Website states that the final report on this subject will be issued in 2004. 45 Law Reform Commission of Canada, Secondary Liability: Participation in Crime and Inchoate Offences, Working Paper 45, (1985) at 28. Kirby current state and defects of the law on this subject in ways useful to the functions of this Court as the final appellate court of the nation. A missed opportunity: It should be said once again that this Court is not simply a second court of criminal appeal. To receive a grant of special leave there must be something special about the case. Research in, and reference to, professional and academic writing is imperative to assist the Court to fulfil its constitutional function. Although in other respects the argument of this appeal was thorough and careful, an acquaintance with the literature to which I have referred would have revealed significant doctrinal problems in the state of current authority. It would have identified considerations of legal principle and legal policy that should have been addressed, or at least called to the Court's notice. As it is, by the way it was argued, we are virtually forced to resolve this appeal on a footing that I, at least, find quite unsatisfactory. It misses an opportunity to clarify and simplify the task of trial judges and the juries they instruct. In such matters, these are important functions of this Court46. Yet I must answer the questions argued within the inherent limitations that I have mentioned. The evidence supporting exculpation and inculpation Reflecting different culpabilities: Most of the facts, relevant to my analysis, are set out in other reasons47. A consideration of them indicates that the jury had a critical decision to make concerning the culpability of the appellant in the acts performed by Mr Preston (the primary offender), in murdering Mr Les Knowles, another employee in Mr Knowles' workshop and wounding a third person. A rational system of criminal law would present such a question of potentially differential culpability for decision by the tribunal of fact (here a jury). Evidence supporting exculpation: I will not go over all of the evidence that would tend to exculpate the appellant from guilt of Mr Preston's murders. However, the relevant features of the evidence would certainly include: (1) The clear evidence that Mr Preston alone fired the shots at the victims and did so pursuant to a pre-existing plan which he had made to kill Mr Knowles for a fee that he alone subsequently collected; (2) The discharge of the firearm occurred out of sight of the appellant who remained in the van which he was driving as a get-away vehicle, consistent with his shared purpose of participating only in a robbery; (3) The appellant's background as a person with mental problems, who 46 cf Zoneff v The Queen (2000) 200 CLR 234 at 260-262 [64]-[68]. 47 Joint reasons at [1]-[8]; reasons of Hayne J at [99]-[102]. Kirby had only recently been discharged from a psychiatric hospital to resume his itinerant life; (4) The appellant was dominated by Mr Preston, to whom he looked up, who was the "ringmaster" of their joint enterprise and who, for his part, regarded the appellant as an "idiot", not an equal player; (5) The appellant's lack of past convictions for acts of violence or the use of firearms and his reputation and identity as a small-time thief with severe alcohol problems and few friends; (6) The appellant's omission to change his name or identity in Brisbane where he went after the offences and his immediate declaration to the police who apprehended him that the purpose of the enterprise was "nicking", ie stealing or robbery, not homicide; (7) The consistency of that stated purpose with the proved reputation of Mr Knowles as being involved in drug dealing, with the foreseeable possibility of his having cash on his premises so as to support a motive of robbery (a fact confirmed by the subsequent police investigation); and (8) The then recent residence of the appellant in the same suburb as Mr Knowles, with the available inference that he was aware of the likelihood of the presence of cash on the Knowles premises. inculpation: As against Evidence supporting these evidentiary considerations, favourable to the appellant, others lent support to the prosecution case. This was that the appellant was an active participant in a joint enterprise to kill Mr Knowles, or that such an outcome (or the infliction of grievous bodily harm) was within the contemplation of the appellant and Mr Preston, foreseen as a possible incident of the execution of their joint activity or contemplated as a possibility, despite which the appellant persisted with his involvement. The chief elements in the evidence that supported this case were that (1) The appellant stole a van, then hid it and then drove Mr Preston to the crime scene and later away from it: such actions being necessary to the performance of what Mr Preston intended to do; (2) The appellant, at the request of Mr Preston, telephoned Mr Knowles before their arrival at his premises to check that he was present, found and reported that he was; (3) Mr Preston was carrying a firearm. On the evidence, it would have been open to the jury to infer that he loaded and cocked it in or near the van and then proceeded into Mr Knowles' premises; (4) Although the appellant denied that he had knowledge that Mr Preston entered the workshop with a loaded firearm, common sense would have suggested that it was unlikely that Mr Preston would have confronted Mr Knowles and other persons in the workshop with a criminal purpose without a weapon of some kind; (5) The appellant knew that a fast departure was essential after whatever was to occur in the Knowles workshop between Mr Preston and Mr Knowles; and (6) He waited outside to facilitate their joint departure. Having effected it, he took steps to hide and then destroy the van so as to remove evidence inculpating Mr Preston and himself in what had taken place. Kirby Traditional and extended common purpose liability Two bases of common purpose liability: Upon the basis of these competing elements in the evidence, it was open to the jury, particularly in the absence of oral evidence from the appellant himself48, to infer that, if not actually sharing the contract killer's intention to shoot and kill Mr Knowles or the other victims, the appellant remained present at the scene; joined in the performance of serious criminal acts; knew that homicide (or the infliction of grievous bodily harm) was within contemplation of Mr Preston; or foresaw it as a possible incident of carrying out their criminal activity together. (Traditional common purpose). Alternatively, it would have been open to the jury to conclude that, even if homicide (or the infliction of grievous bodily harm) was outside the scope of the common purpose to be imputed between the appellant and Mr Preston, it was contemplated by the appellant as a possibility in the carrying out of the enterprise in which the appellant continued to participate on such a basis and with such knowledge49. (Extended common purpose)50. If to the requisite standard, the jury were to conclude that the evidence established either the traditional or extended doctrine of common purpose, the appellant would be guilty of the murder of Mr Knowles and of the other employee shot at the same time, as well as of attempted murder of the third employee. This would be so despite the fact that the appellant had fired none of the shots, was not party to the contract killing, had not expressly agreed to the use of the firearm in the way that Mr Preston was found to have intended, did not personally intend the death of, or grievous bodily harm to, any of the victims and thought that the real reason for his participation was an aggravated form of "nicking", ie participation in the criminal act of an armed robbery as a get-away driver. The first error of the Full Court: In the foregoing circumstances, the doctrine of common purpose, as it has been expounded by this Court, especially in McAuliffe, would throw its net over the appellant. By a legal fiction, it would uphold the conclusion of the jury that the appellant was equally liable with Mr Preston for the murders and attempted murder. 48 The appellant's case in this regard relied on the recorded interview with police that was received in evidence before the jury. 49 McAuliffe (1995) 183 CLR 108 at 114. 50 This is why extended common purpose has been described as "reckless accessoryship": Odgers (1996) 20 Criminal Law Journal 43 at 45. Kirby To the complaint that joint liability for the proved common purpose was thereby cast too widely, so as to catch a co-offender who did not perform the critical acts and shared no intention concerning the consequences caused by those acts, the law's answer, as stated by this Court, is as follows: Those who participate in activities highly dangerous to life and limb share equal responsibility for the consequences of the acts that ensue. This is because, as the law's experience shows, particularly when dangerous weapons are involved in a crime scene, whatever the actual and earlier intentions of the secondary offender, the possibility exists that the primary offender will use the weapons, occasioning death or grievous bodily harm to others. The law then tells the secondary offender not to participate because doing so risks equal inculpation in such serious crimes as ensue. There are legitimate criticisms of the law of common purpose so stated. However, those criticisms were not argued in this appeal. It follows that they cannot be addressed by this Court. Within the extended law of common purpose, particularly in McAuliffe, the fact that the acts of Mr Preston lay outside the scope of the common purposes agreed, expressly or tacitly, between the appellant and Mr Preston was not conclusive of the appellant's joint criminal liability for the acts that Mr Preston performed. Perhaps that should be the common law. But it is not the Australian common law as stated by this Court. To the extent that the Full Court in the present case, and earlier in Collie, suggested otherwise (as I think it did) it erred. On this basis, a first error of law has been shown on the part of the Full Court. It warrants the intervention of, and correction by, this Court. Common purpose homicide: The scope for manslaughter The problem and its solution: This conclusion brings me to the central point in the appeal. It concerns the availability of manslaughter as an alternative verdict in a case of the present kind. Unlike the scope of the law of common purpose, the availability of manslaughter in such a case is not the subject of legal authority that affords a ready solution to the question. Accordingly, this Court must approach the problem by seeking its solution on the basis of the adaptation of existing authority by logical and analogical reasoning as enlivened by any consideration of any pertinent matters of legal principle and legal policy51. Against the availability of manslaughter: There are several arguments against requiring a judge, in a case of this character, to inform the jury that they may return a verdict of manslaughter. 51 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 347. Kirby The most important is that the scope of criminal liability, on the footing of common purpose for the acts of the principal offender, is now stated so broadly as to leave little apparent room for an intermediate culpability for an unlawful homicide that does not amount to murder. Finding a clear point of differentiation that would separate murder from manslaughter in such a case (except as an act of mercy on the part of the jury52) is not an easy task. If a person, who did not perform the acts causing the homicide and did not actually intend the death of, or grievous bodily harm to the victim, can still be liable for murder on the basis of the "traditional" or "extended" common purpose doctrine53, it is difficult to identify the case that will somehow fall outside such joint liability, authorising the jury to return a verdict of manslaughter. If, within current doctrine, such a difficulty appears for this Court, it will also present itself to legal advisers, counsel at trial and trial judges in explaining the point of differentiation to the jury which has the responsibility of deciding the issue. I will illustrate this point by reference to the present case. If the appellant falls within the ambit of the crime of murder, because of the common criminal purpose which the law discerns between himself and Mr Preston, the scope for an intermediate liability for the crime of manslaughter by unlawful dangerous acts causing death is contracted. It shrinks as the scope of the legally imputed Even more so, if the appellant only ever contemplated robbery or armed robbery and Mr Preston at all times intended a contract killing (so that, in this sense, the murder by Mr Preston lay outside the scope of any true common purpose shared by the co-offenders) but it was independently contemplated by the appellant as a possibility that in the carrying out of the enterprise someone might get killed or seriously injured and yet he continued to participate in it with that knowledge, where is the space for manslaughter, being an unlawful killing that is not murder? How, apart from a reference to indeterminate notions such as "lesser responsibility" or "diminished culpability" could a person, such as the appellant be found not guilty of the joint liability offence of murder but guilty instead of manslaughter? How could a jury, faithful to their duty, draw a logical and principled distinction in such a case so as to sustain a verdict of not guilty of murder but guilty of manslaughter? Most importantly how, otherwise than as an 52 MacKenzie v The Queen (1996) 190 CLR 348 at 367-368, referring to R v Kirkman (1987) 44 SASR 591 at 593 per King CJ. 53 The "traditional" statement appearing in Johns (1980) 143 CLR 108 at 130-131; the "extended" rule being stated in McAuliffe (1995) 183 CLR 108 at 114. 54 This is the application of Johns (1980) 143 CLR 108 at 130-131. Kirby act of mercy, not the application of a legal rule, could the distinction be explained to a jury by a judge by reference to a discernible principle of law? Secondly, upon one view, the introduction of any such differentiation could divert the jury from their duty to give effect honestly to the policy of the law that has been held to sustain common purpose criminal liability for murder on the part of secondary offenders. If that policy is socially justified and legally required, it must be applied. It obliges clear judicial instruction to the jury concerning the rules that the law has laid down, seemingly to discourage, in cases of this kind, accessorial participation in crimes in which firearms and other dangerous weapons are present. True, availability of a conviction of manslaughter might encourage pleas of guilty and convictions of co-offenders in borderline cases. But it might do so at a price of diminishing the attainment of the objective of the law of common purpose liability. Because of the broad ambit of that law as presently declared by this Court, the alternative might present a jury with a temptation to return a verdict that amounts to a compromise, not one according to law. Thirdly, the same point can be made from the point of view of the secondary offender. This I take to have been the reasoning behind the decisions of the primary judge and of the Full Court both in Collie and in the present case. By obliging the jury to consider, and to consider only, the charge of murder by joint liability for a common purpose, a clear decision is required of them. It is reflected in a verdict of guilty or not guilty of murder. It would have been open to the prosecution to charge the appellant with other substantive criminal offences arising out of his activities with Mr Preston. For example, of being an accessory before the fact or after the fact of murder; of stealing the get-away van; of the wilful destruction of the van; perhaps of conspiracy with Mr Preston to commit a robbery and the other crimes to which the appellant admitted in his interview with police. But instead, the prosecution, as was its perfect right, proceeded to charge the appellant with two murders by common purpose. The lengthy deliberation of the jury and their recorded questions suggest the problem which those charges presented in the case of the appellant. Equally, acquittal of the appellant might have seemed an inappropriate response by the jury to the serious conduct disclosed by the evidence and even admitted by him. It is in such circumstances that the existence of a lesser available offence, manslaughter, could sometimes prove an irresistible temptation to a jury. Yet a verdict of guilty of manslaughter might involve a compromise that, in a particular case, punished the accused for the criminal acts and intentions of the co-offender without the jury having considered properly and accurately the accused's acts and intentions according to the law of common purpose liability. Kirby Manslaughter is available: Despite these arguments, I have concluded that the better view of the common law is that verdicts of guilty of manslaughter were an option available to the jury upon the counts of the indictment charging the appellant with murder. The risk of compromise verdicts may be avoided or diminished by appropriate judicial instructions. The conflicting evidence in the present case indicates why, as a matter of legal principle, the common law accepts the availability of manslaughter as a verdict in such circumstances. The jury have the right to resolve the issue of culpability which that evidence presented. First, the crime of murder has always been treated by the common law as falling in a special category55. As a general rule, "under the … common law, it remains within the power of the jury to find a verdict of manslaughter, even although it means disregarding the direction [of the judge on legal liability for homicide]"56. There is no good reason why a case such as the present should be treated as an exception to that general rule. There is every reason why it should not. Secondly, as I remarked in Barlow57, it is "[o]nly if differential verdicts are permitted [that] the trier of fact (usually a jury) [is] able to distinguish between the culpability of the accused and to avoid artificial consequences which may offend the sense of justice. Wherever possible, such consequences should be avoided, particularly because most serious criminal trials in Australia are still conducted before juries whose function is to reflect, in a general way, the community's sense of justice." Thirdly, despite the possibility that the prosecution may have established, according to the letter of the law, that a secondary offender (such as the appellant in this case) was jointly liable with Mr Preston of murder by common purpose, it may still arise in such a case that the "offender responsible in law for the actions of another" may "have a different intention" from that other58. Thus, as I put it in Barlow59, "[t]he mind of the one may not go exactly with the hand of the other." As this can be the reality of criminal conduct, even where offences are performed 55 R v Saunders [1988] AC 148 at 160. 56 Packett v The King (1937) 58 CLR 190 at 213 per Dixon J; see also Brown v The King (1913) 17 CLR 570 at 578-579; Beavan v The Queen (1954) 92 CLR 660 at 57 (1997) 188 CLR 1 at 40. 58 Barlow (1997) 188 CLR 1 at 40. 59 Barlow (1997) 188 CLR 1 at 40. Kirby with some degree of common intention, a rational approach to deciding criminal liability will still permit a reflection of the different states of mind of the respective participants. Just as in Barlow60 I was of the view that it would "require the clearest language in the [Queensland criminal] code to expel that interpretation … because it accords with the sense of justice and of rationality as with the purposes of the criminal law"61, so in this case "[t]he avoidance of incongruity and the risk of injustice to a particular accused in a joint trial is a proper objective of the criminal law"62. Thus, "[a]rtificial rigidities which may occasion injustice should be avoided unless the [law] truly compels them.63" It does not compel them here. Fourthly, the acceptance of the availability of a verdict of manslaughter is also consistent with the emphasis which the law has placed, more so in recent times, on the actual state of mind of an accused person. As was said in McAuliffe64, "the test has become a subjective one and the scope of the common purpose is to be determined by what was contemplated by the parties sharing that purpose"65. The force of these comments was rather undermined in McAuliffe by permitting criminal liability to be established there by reference to what a secondary offender contemplated "as a possibility in carrying out the enterprise". Possibilities are infinite in their variety66. Nevertheless, the availability of a verdict of manslaughter allows a jury to give effect to its view about the culpability of the secondary offender by reference to whether that offender did, or did not, foresee that the possibility existed that the principal offender might act with intent to kill or cause grievous bodily harm. Fifthly, acknowledging the availability of manslaughter as a possible verdict in such cases gives effect, as Cooke J put it in R v Tomkins67, to the "community's sense that a man who joins in a criminal enterprise with the knowledge that knives (or other weapons such as loaded guns) are being carried 60 (1997) 188 CLR 1 at 40. 61 cf R v Jervis [1993] 1 Qd R 643. 62 Barlow (1997) 188 CLR 1 at 40-41 citing R v Darby (1982) 148 CLR 668 at 677. 63 Barlow (1997) 188 CLR 1 at 41 citing King v The Queen (1986) 161 CLR 423. 64 (1995) 183 CLR 108 at 114. 65 Citing R v Johns [1978] 1 NSWLR 282 at 287-290 per Street CJ. 66 Odgers, (1996) 20 Criminal Law Journal 43 at 46. 67 [1985] 2 NZLR 253 at 255. Kirby should bear a share of criminal responsibility for an ensuing death; but that, if he did not think that the weapons would be intentionally used to kill, it may be unduly harsh to convict him of murder". I cited this passage in Barlow68. The same general approach was adopted in the Privy Council in a Hong Kong appeal69 and in the English Court of Appeal70. A compatible approach seems to have been added by the Supreme Court of Canada71. We should accept the same approach in expressing the Australian common law. Sixthly, so far as a differentiation between verdicts of murder and manslaughter permit a jury, in a given case, to record their opinion of the culpability of an accused, and, in a joint trial, to indicate their conclusions about the comparative culpabilities of primary and secondary offenders, such differentiation furthers the purposes of criminal justice. It facilitates distinctions in sentencing, conceding that manslaughter is a crime that can vary greatly in gravity depending on the particular circumstances72. Seventhly, to the extent that, after consideration of the foregoing legal authorities, there is any residual doubt about the availability of manslaughter, the evidence called in the trial of the appellant indicates why, as a matter of legal policy, the common law should include the availability of such a verdict. Assume, for example, applying McAuliffe, that the jury were to conclude that the murder of Mr Knowles and the death and serious injury to the other victims lay outside the scope of any actually agreed common purpose between the appellant and Mr Preston. Assume further that the jury were to conclude that, to the extent that he thought about it, the appellant might have contemplated that homicide was a theoretical and remote possibility in the carrying out of the enterprise in which he persisted but that he did not actually foresee it or really consider that Mr Preston might act with intent to kill or cause grievous bodily harm to the victims. In such a case, it would be open to the jury to return a verdict in the appellant's case of not guilty of murder but guilty of manslaughter. 68 (1997) 188 CLR 1 at 36-37. 69 Hui Chi-ming v The Queen [1992] 1 AC 34 at 46-47. 70 R v Stewart [1995] 3 All ER 159 at 169. See also "Case and Comment on R v Dunbar", (1988) Criminal Law Review 693 at 694-695. 71 R v Jackson [1993] 4 SCR 573 at 586. 72 Markby v The Queen (1978) 140 CLR 108 at 112-113; Wilson v The Queen (1992) 174 CLR 313 at 331-335. Kirby Eighthly, great care on the part of a trial judge is needed to ensure that, by posing the possibility of a verdict of manslaughter, the judge does not effectively deprive an accused of a verdict of acquittal. To the extent that, following McAuliffe, the law in Australia has made it more difficult in joint crimes involving any contemplated possible use of dangerous weapons to avoid conviction on the footing of the doctrine of common purpose, a final reason for accepting the availability of manslaughter is that it ameliorates the potential overreach of the doctrine of common purpose as it is presently expressed. A more radical cure for such overreach must await legislation that defines the law of joint criminal liability more precisely and in closer harmony with the basic principles of the criminal law73. Or an appeal to this Court in which a direct challenge is made to the correctness of McAuliffe and other decisions and in which any suggested overreach of joint liability could be cut back and the law re- expressed conformably with basic principle. There is much to be said for clarification or reform of this area of the law by reference to the fundamental rules of the criminal law74. After the decision in this appeal, the law will remain difficult for judges to explain, difficult for juries to apply and difficult for appeal courts to decide in the appeals that will inevitably follow convictions in such disputable cases. Conclusion and concurrence: In the result, I have reached a conclusion similar to that stated in the joint reasons of Gleeson CJ and Callinan J75. The appellant has therefore made out an error of law on the part of the Full Court. That Court was mistaken in refusing to uphold the submission that the trial judge had erred in rejecting the argument of the prosecution that he should leave to the jury the availability of finding the appellant not guilty of murder but guilty of manslaughter. In this Court, the prosecution correctly accepted that, if there were misdirections on the availability of verdicts of manslaughter on the first two counts, the absence of any specific error of direction in relation to the third count could not alone save the trial or the conviction on that count. 73 For example, in accordance with the recommendations of the Review of Principles of Criminal Commonwealth Criminal Law, Interim Report: Responsibility and Other Matters (1990) or of another law reform body in Australia or overseas. 74 Reflected in Parker v The Queen (1963) 111 CLR 610 at 632. 75 Joint reasons at [25]-[26]. Kirby Pending further clarification of the law of joint liability for homicide on the basis of the doctrine of common purpose, to the extent that there is uncertainty, and in order to give a clear rule for application at trials, I agree in the reasons of Gleeson CJ and Callinan J. Re-examination of the common purpose doctrine It is necessary for me to respond to the observations of Hayne J to the effect that reconsideration of the holding of this Court in McAuliffe was neither This Court is not a second level court of criminal appeal. We have special responsibilities for the health of legal doctrine in Australia. Upon such questions, the Justices of this Court are not captives to the assumptions, concessions or agreements of parties77. There is no constitutional impediment to the consideration of new points in appeals. A view of the Constitution that would have imposed a procedural straitjacket, destructive of the power of this Court to correct serious injustices, has been rejected78. The Justices have their own responsibilities to the law, especially where the law appears unclear, uncertain or arguably unjust and in need of re-formulation. There are, of course, judges who are uninquisitive and unconcerned about such matters. I am not one of them. Nor am I alone. During the hearing of this appeal, both Callinan J and I asked questions about relevant academic and professional writing about the law under consideration79. This is not exceptional. It is normal for this and other final courts. As I then pointed out, in raising the point, we do not now require that such authors must be dead before their views are considered. Despite some rearguard resistance from formalists, the common law has made progress in this respect in recent decades. This Court is no exception. I decline to return to the dark ages. Others may do so as they please. 76 Reasons of Hayne J at [113]-[120]. 77 See eg Roberts v Bass (2002) 77 ALJR 292 at 320 [143]; 194 ALR 161 at 199. 78 Gipp v The Queen (1998) 194 CLR 106 at 116 [23] per Gaudron J, 153-155 [134]- [138] of my own reasons, 169 [185] per Callinan J; cf at 128-129 [65] per McHugh and Hayne JJ dissenting; Crampton v The Queen (2000) 206 CLR 161 at 171 [10] per Gleeson CJ, 182-184 [47]-[50] per Gaudron, Gummow and Callinan JJ, 206- 207 [122] of my own reasons. 79 Gillard v The Queen, High Court of Australia transcript, 1 April 2003, lines 2395- Kirby For parties, bound by the holdings of this Court and with a sole motivation to win a case for their respective interests, it will not always be deemed tactical or prudent to question authority, especially if it is recent and they judge that the case can be won without addressing the point. Occasionally, advocates are unaware of the problem. Sometimes they have insufficient time or inadequate fees to explore it fully. Judges have a different motivation and a higher duty80. The common law develops by interstitial movements and by the power of ideas. When legal doctrine is deemed unstable, unclear, or unjust, there is an inherent tendency for ideas to be explored over time until a more stable foundation and restatement of the law is achieved. Often that occurs in the form of legislation. Sometimes it takes the form of a judicial restatement of a common law principle. The process may take decades. If it is to start, it must start somewhere. It will not start if judges act mechanically and suppress doubts that arise for them in proceedings that they are called upon to decide. In the present case, for reasons that I have already explained81, this Court was placed in a specially difficult position by the agreement of both parties before this Court that a verdict of manslaughter was available. The ambit of the doctrine accepted by the Court in McAuliffe made it proper to scrutinise that proposition with special care because of the absence of a contradictor. Resort to analysis of McAuliffe and cases like it was therefore necessary and uniquely appropriate. For an area of the law which is suggested to be devoid of real controversy, the subject of McAuliffe and related issues has elicited a very large body of writing and criticism. It was directly relevant to the availability of manslaughter raised by this appeal. To the extent that an accused is liable for mere possibilities that were (or were to be taken as) contemplated, the scope of accessorial responsibility for murder is extended. The scope of manslaughter is arguably diminished. The suggestion that published legal analysis should be ignored because of criticism of a judicial decision by an author who was counsel in a case is one that I would reject. The analysis is either good or bad, useful or useless according to its terms. Authors do not own ideas once they are expressed. In the case note in question on this issue, the author disclosed his involvement as counsel and invited allowance for that fact82. What he wrote was published as editor of a journal on criminal law. The author's identity was irrelevant. His ideas happen to be useful. This Court is evaluating and expressing the law of a nation. It 80 Australian Communication Exchange Ltd v Deputy Commissioner of Taxation (2003) 201 ALR 271 at 283 [51]. 81 See above at [44]-[49]. 82 Odgers, (1996) 20 Criminal Law Journal 43 at 44. Kirby should not take a confined view of its sources. It follows that I cannot agree with what Hayne J has written. Consideration of the proviso Relevant considerations: Having reached the foregoing opinion, that two errors have been shown on the part of the Full Court, the only remaining question is whether the appellant's convictions could be sustained on the basis of the proviso83. Setting aside the outcome of such a lengthy trial, on a ground which the appellant originally rejected, is extremely unpalatable. This is especially so because he was found guilty of two murders following judicial instruction on the law of murder which, so far as it went, was not criticised. Clearly, there was evidence to sustain the convictions of murder, depending upon the view that the jury took of that evidence. However, if the availability of returning a verdict of guilty of manslaughter (and of not guilty of murder) should have been made known to the jury, it is impossible to say that such knowledge would have proved irrelevant in this case and that the verdicts of guilty of murder would inevitably have followed. Unlike Mr Preston, the appellant had a number of points to make in his defence. Depending on the view of the appellant's culpability taken by the jury, by reference to whether or not he foresaw that Mr Preston might possibly act with intent to kill or cause grievous bodily harm to the victims, the jury could have returned verdicts of guilty of manslaughter. In such circumstances it cannot be said that the appellant's convictions of murder were inevitable84. Those convictions are not insulated from appellate correction because the point was not taken at trial85. If the jury were deprived of the opportunity to consider verdicts of manslaughter, potentially more favourable to the appellant than those that they returned, the deprivation of that chance undermines the integrity of the trial86. At least it does so in this case where the convictions entered are of murder and carry the heaviest penalty known to the law87. 83 Criminal Law Consolidation Act, s 353(1). 84 See eg De Gruchy v The Queen (2002) 76 ALJR 1078 at 1088 [65]; 190 ALR 441 at 456; MFA v The Queen (2002) 77 ALJR 139; 193 ALR 184. 85 Conway v The Queen (2002) 209 CLR 203 at 233 [82]; Heron v The Queen (2003) 77 ALJR 908 at 915 [38]-[42]; 197 ALR 81 at 90-91 and cases there cited. 86 Gilbert v The Queen (2000) 201 CLR 414 at 422 [19]-[20], 441-442 [101]-[103]. 87 Charlie v The Queen (1999) 199 CLR 387 at 399 [27]. Kirby Conclusion: proviso inapplicable: It follows that the case is not one for the application of the proviso88. The appeal must be upheld. Orders I agree in the orders proposed by Gleeson CJ and Callinan J. 88 cf joint reasons at [29]. Hayne HAYNE J. On 15 August 1996, the appellant and another man, Gerald David Preston, drove to a car repair workshop in suburban Adelaide in a van that the appellant had stolen. Leaving the appellant in the driver's seat of the van, Preston got out of the van and went into the workshop where he fired three shots from a pistol, killing two men and wounding a third. The appellant and Preston were charged in the Supreme Court of South Australia with two counts of murder and one count of attempted murder. Each was convicted on all three charges. The appellant did not give evidence at his trial. He had told police that he stole the van thinking that he "was going nicking, stealing" and that he drove Preston to the workshop believing that there was to be a "robbery". The appellant wore a hood; Preston wore either a "mesh-like outfit over his face" or a hood. The appellant denied knowing that Preston was armed with a gun. He said that he did not hear anything during the "couple of minutes" Preston was out of the van and in the workshop. Before going to the workshop, the appellant, at Preston's request, had telephoned the premises to ask if Les Knowles was there. (Mr Knowles was one of the men who was later shot dead.) He was told that Mr Knowles was at the workshop. Before Preston fired at each victim he asked, "Are you Les?". At trial, the prosecution submitted that the judge should direct the jury that the appellant could be found guilty of manslaughter. The practitioner then appearing for the appellant submitted that no such direction should be given. The trial judge did not instruct the jury about manslaughter, putting matters in a way which obliged the jury to acquit the appellant altogether if the jury were not satisfied that the appellant and Preston had both been parties to a common design to kill either Mr Knowles or Mr Knowles and others. In particular, the trial judge directed the jury, and repeated in answer to a specific question from the jury, that the prosecution must prove that the appellant was party to a common design to kill. Accordingly, if the prosecution did not exclude, as a reasonable possibility, that the appellant had only the purpose of participating in a robbery, the jury should return a verdict of not guilty on all counts. On appeal to the Full Court of the Supreme Court of South Australia, the appellant contended, contrary to the submissions made on his behalf at trial, that the jury should have been instructed about manslaughter. Again, the prosecution, as respondent to the appeal, submitted that manslaughter had been open on the evidence led at trial. The Full Court concluded89 that, contrary to the submissions of both parties, manslaughter had not been an available verdict. 89 R v Gillard and Preston (No 3) (2000) 78 SASR 279 at 291 [346]. Hayne By special leave the appellant now appeals to this Court, contending that the jury should have been instructed that manslaughter was an available verdict. In argument in this Court, the respondent maintained that manslaughter had been an available verdict. That is, the respondent accepted that, at the appellant's trial, there had been a wrong decision on a question of law90. It contended, however, that no substantial miscarriage of justice had actually occurred91 and that, accordingly, the proviso to s 353(1) of the Criminal Law Consolidation Act 1935 (SA) applied. The parties to the appeal were right in contending that it had been open, on the evidence led at trial, for the jury to conclude that the appellant was not guilty of murder or attempted murder but was guilty of manslaughter of the two victims who had died. There was a wrong decision on a question of law and, therefore, unless the proviso to s 353(1) was engaged, the Full Court was bound to allow the appeal, quash the appellant's convictions and order a new trial. (It was not contended in that Court, or on appeal to this Court, that s 354(2) might be engaged and a verdict of guilty of manslaughter substituted92.) The appeal must be allowed. It cannot be said that there has been no substantial miscarriage of justice unless it is right to have regard to the findings of fact which, consistent with the proper application of the directions in fact given at trial, the jury must have made to reach the verdicts they did. The decision of Gilbert v The Queen93, the correctness of which was not challenged by either party, precludes that chain of reasoning. Gilbert contemplates, even perhaps requires, that an appellate court must consider the possibility that the jury did not apply the directions they were given but, instead, chose to return a verdict of guilty rather than acquit the accused despite not being satisfied to the requisite standard of all the matters which the trial judge's directions required them to consider. Joint criminal enterprise The Full Court's conclusion, that a verdict finding the appellant guilty of manslaughter was not available on the facts of the case, depended upon the application to those facts of the principles about criminal complicity. Those 90 Criminal Law Consolidation Act 1935 (SA), s 353(1). 91 Criminal Law Consolidation Act, s 353(1). 92 cf Pemble v The Queen (1971) 124 CLR 107. 93 (2000) 201 CLR 414. Hayne principles, as the Full Court recognised94, were considered by this Court in McAuliffe v The Queen95. It is as well to restate them. As was pointed out in McAuliffe96, the terms "common purpose", "common design", "concert", "joint criminal enterprise" are used more or less interchangeably to invoke a doctrine by which the complicity of a secondary party in the commission of a crime may be established. It is a doctrine which is separate from the liability of an accessory before the fact, who counsels or procures the commission of the crime; it is separate from the liability of a principal in the second degree, who aids or abets in the commission of the crime. Joint criminal enterprise, or acting in concert, depends upon the secondary party (here, the appellant) sharing a common purpose with the principal offender (here, Preston) or with that offender and others97. In its simplest application, the doctrine of joint criminal enterprise means that, if a person reaches an understanding or arrangement amounting to an agreement with another or others that they will commit a crime, and one or other of the parties to the arrangement does, or they do between them, in accordance with the continuing understanding or arrangement, all those things which are necessary to constitute the crime, all are equally guilty of the crime regardless of the part played by each in its commission98. The doctrine has further application. It is not confined in its operation to the specific crime which the parties to the agreement intended should be committed. "[E]ach of the parties to the arrangement or understanding is guilty of any other crime falling within the scope of the common purpose which is committed in carrying out that purpose"99. The scope of the common purpose is to be determined subjectively: by what was contemplated by the parties sharing that purpose100. And "[w]hatever is comprehended by the understanding or 94 (2000) 78 SASR 279 at 289 [337]. 95 (1995) 183 CLR 108. 96 (1995) 183 CLR 108 at 113. 97 (1995) 183 CLR 108 at 114. 98 (1995) 183 CLR 108 at 114. 99 (1995) 183 CLR 108 at 114. 100 (1995) 183 CLR 108 at 114. Hayne arrangement, expressly or tacitly, is necessarily within the contemplation of the parties to the understanding or arrangement"101. As McAuliffe reveals102, the contemplation of a party to a joint enterprise includes what that party foresees as a possible incident of the venture. If the party foresees that another crime might be committed and continues to participate in the venture, that party is a party to the commission of that other, incidental, crime even if the party did not agree to its being committed. In such a case, as was said in McAuliffe103, "the prosecution must prove that the individual concerned foresaw that the incidental crime might be committed and cannot rely upon the existence of the common purpose as establishing that state of mind". To hold the individual liable for the commission of the incidental crime, when its commission is foreseen but not agreed, accords with the general principle that "a person who intentionally assists in the commission of a crime or encourages its commission may be convicted as a party to it"104. The criminal culpability lies in the participation in the joint criminal enterprise with the necessary foresight105. Reconsideration of McAuliffe neither sought nor required In his reasons, Kirby J suggests that there may be a need to re-express the law relating to complicity. Neither party to the present appeal suggested that this should be done. Both accepted that the principles to be applied are those stated in McAuliffe. No need to re-express the law relating to complicity has been shown. Intermediate and trial courts must continue to apply McAuliffe. In his reasons, Kirby J refers to some criticisms that have been made of the principles stated in McAuliffe106. It is necessary to approach those criticisms with two considerations well in mind. First, care must be exercised before adopting arguments advanced in McAuliffe, but rejected by the Court in that case, 101 (1995) 183 CLR 108 at 117. 102 (1995) 183 CLR 108 at 117. 103 (1995) 183 CLR 108 at 117-118. 104 (1995) 183 CLR 108 at 118. 105 (1995) 183 CLR 108 at 118. 106 Cato, "Foresight of Murder and Complicity in Unlawful Joint Enterprises where Death Results", (1990) 2 Bond Law Review 182; Odgers, "Criminal Cases in the High Court of Australia (McAuliffe v McAuliffe)", (1996) 20 Criminal Law Journal 43; Gray, "'I Didn't Know, I Wasn't There': Common Purpose and the Liability of Accessories to Crime", (1999) 23 Criminal Law Journal 201. Hayne when they are restated in the form of academic criticism of the decision by counsel who appeared for the appellants107. Secondly, and more fundamentally, the criticisms of principle that are advanced all proceed from a premise that doctrines of complicity should be confined in their operation so as to render one person (A) criminally liable for the conduct of another (B) only if A has been shown to have agreed to B engaging in that conduct. Putting the same point another way, the criticisms proceed from the premise that A should not be held criminally liable for the conduct of B if A foresaw that B may commit the relevant act but did not agree that B should do that. It is said that only if A agrees to B's conduct is there a sufficient coincidence of act and intent to warrant holding A criminally liable for what B did. The common law in Australia, both before108 and after McAuliffe, did not, and now does not, confine the liability of participants in a joint criminal enterprise to liability for those offences which it is shown that the parties have agreed will be committed. And as the reasons in McAuliffe reveal, that is not a uniquely Australian view. It is the position at which the Privy Council arrived in Chan Wing-Sui v The Queen109 and Hui Chi-ming v The Queen110 and at which the English Court of Appeal arrived in R v Hyde111. Further, none of the law reform agencies to which reference is made by Kirby J, with the possible exception of the Canadian112, has yet proposed that the law should be confined in the manner now suggested. In Canada some suggestions for reform of the law relating to complicity were made in a Working Paper published by the Law Reform Commission of Canada in 1985. Those suggestions included that no one should be liable for furthering an offence without intending that the offence be committed, but it was accepted that there are cases where a person should be held liable even if the offence committed differed from that intended. It is not necessary to explore how those two propositions were to be reconciled. They do not appear to have subsequently been implemented by legislation or adopted in decided cases. 107 Odgers, "Criminal Cases in the High Court of Australia (McAuliffe v McAuliffe)", (1996) 20 Criminal Law Journal 43. 108 Johns v The Queen (1980) 143 CLR 108. 112 Law Reform Commission of Canada, Secondary Liability: Participation in Crime and Inchoate Offences, Working Paper 45 (1985) at 36. Hayne is not confined The Criminal Code (Cth) (enacted to give effect to the recommendations of the Criminal Law Officers Committee of the Standing Committee of Attorneys-General) the manner now suggested by commentators. Section 11.2(3) of that Code provides that a person is taken to have committed an offence committed by another if he or she aids, abets, counsels or procures the commission of that offence and intended either that his or her conduct would aid, abet, counsel or procure the commission of that offence, or that "his or her conduct would aid, abet, counsel or procure the commission of an offence and have been reckless about the commission of the offence (including its fault elements) that the other person in fact committed" (emphasis added). The South Australian law reform proposals to which reference has been made also provided for liability in cases where what was done went beyond what was agreed by reference to the concept of recklessness. In this context, foresight of the relevant possibility is central to the notion of recklessness. Common purpose principles rightly require consideration of what an accused foresaw, not just what the accused agreed would be done. The accused is held criminally responsible for his or her continued participation in a joint enterprise, despite having foreseen the possibility of events turning out as in fact they did. It does not depend upon identifying a coincidence between the wish or agreement of A that an act be done by B and B's doing of that act. The relevant conduct is that of A – in continuing to participate in the venture despite foresight of what may be done by B. If liability is confined to offences for the commission of which the accused has previously agreed, an accused person will not be guilty of any form of homicide in a case where, despite foresight of the possibility of violence by a co-offender, the accused has not agreed to its use. That result is unacceptable. That is why the common law principles have developed as they have. In this case the jury were not told to consider all of the possibilities that the appellant may have had in mind. What was done was to confine their consideration to the single possibility that the co-accused might deliberately shoot the victims. Central to the appellant's case at trial was that all that he intended was robbery. One possibility to which the jury should have had regard, in the circumstances of this case, was that, in the course of robbery, the co-accused would engage in the unlawful and dangerous act of presenting a loaded weapon at the victim. The Full Court's decision At the appellant's trial, there was evidence from which it was open to the jury to conclude that the appellant had agreed and intended to participate only in some "nicking" or a "robbery", whereas Preston had gone to the workshop Hayne intending to commit a contract killing. The Full Court considered113 that "[i]f Preston had murder in mind and Gillard contemplated a robbery only, it is difficult to identify a relevant common criminal purpose". That was because, in the Full Court's view114, "crucial to the concept inherent in the doctrine that a non-perpetrator authorises the perpetrator to do all that is required to carry out the common design" is that "there must be a meeting of minds in relation to the criminal design". joint criminal enterprise. To focus attention, as this part of the Full Court's reasoning did, upon notions of "authority", may distract attention from the central elements of the law relating the understanding or arrangement of the alleged participants, and the scope of the common purpose of the parties to the understanding or arrangement. Notions of "authority" might be understood as excluding liability for crimes which the secondary party did not agree would be committed but foresaw might be. But as McAuliffe shows, the secondary party is culpable in such a case – because the secondary party participates in the joint criminal enterprise with the necessary foresight. Those central elements are More fundamentally, however, references to a meeting of minds may invoke notions, analogous to principles of the law of contract, which would require a complete identity between the individual purposes of each participant in the enterprise before common purpose could be found. In particular, references to a meeting of minds might be taken to suggest that if one person contemplates the commission of one crime, but another contemplates the commission of a different crime, there can be no common purpose between them. That is not right. Where common purpose is alleged, it is essential to identify what the parties did agree upon and what it was that each contemplated might occur. That requires attention to, and identification of, the acts and omissions which the parties agreed upon, rather than the identification of the particular crime constituted by the acts which each intends should be performed. To show that not everything that each party had in mind was agreed by all other participants does not deny that there was an arrangement or understanding, amounting to an agreement, to commit a crime. 113 (2000) 78 SASR 279 at 290 [339]. 114 (2000) 78 SASR 279 at 290 [338]. Hayne Was manslaughter an available verdict? In the present case, one available view of the facts was that the appellant contemplated that a "robbery" was to take place and that Preston contemplated the deliberate shooting of Mr Knowles. The "robbery" to which the appellant referred in his interviews with police could have been understood by the jury as intended to encompass more than the dishonest appropriation of property. In particular, one available view of the facts was that the appellant contemplated that Preston would confront one or more of those in the workshop and, by threats of violence, cause them to hand over property. (The appellant spoke of money and drugs.) If, contrary to the appellant's denial, the jury concluded that the appellant knew that Preston was armed with a pistol, an available view of the facts was that the appellant contemplated the presentation of that weapon in the course of the robbery. On that view of the facts, it would have been open to the jury to conclude that the appellant and Preston had shared a common purpose: that Preston would enter the workshop and point the weapon at one or more of those at the premises. The pointing of the weapon would be a criminal purpose, it being intended to do so at least as an assault on the victim. The existence of a common purpose identified in this way would not be denied if the jury concluded that the appellant and Preston had different ideas about why the weapon was to be produced (Preston's intention being to use it to kill and the appellant's intention being that it should be used to intimidate or frighten). Rather, the common purpose of the two parties would be more limited than the larger purposes intended by one of them. The question for the jury would then have become, what did the appellant contemplate might happen if Preston presented a firearm in the workshop? If, as the prosecution contended at trial, the jury were to conclude that Preston must have produced the weapon and cocked it in the van before he got out, it would be open to the jury to conclude that the common purpose of the parties extended to the pointing of a loaded and cocked firearm at one or more of those in the workshop. If that were so, and if the prosecution failed to establish its principal contention, that the appellant had contemplated the deliberate use of the weapon to kill or do grievous bodily harm, the appellant would, nonetheless, be guilty of manslaughter by unlawful and dangerous act. On this hypothesis, Preston would have gone beyond what had been agreed and contemplated by the appellant when he deliberately shot those in the workshop, but the presentation of the loaded and cocked firearm would have been within the scope of the common purpose. It follows that the trial judge's decision to not direct the jury that manslaughter was an available verdict in the trial of the appellant was a wrong decision on a question of law. Section 353(1) of the Criminal Law Consolidation Hayne Act required that the appeal to the Full Court be allowed unless the proviso to that section was engaged. The proviso to s 353(1) What the appellant contemplated might happen on the afternoon that Preston shot the three men was quintessentially a question for the jury at his trial. He had made statements to the police to the effect described earlier, but what conclusions about his state of mind should be drawn from the evidence given about those statements and all the other evidence led at his trial was a matter for the jury. The jury were instructed that they could not convict the appellant of the charge of murdering Mr Knowles, who was alleged to have been the person whom Preston had been paid to kill, unless the appellant was party to a common purpose to murder Mr Knowles. They were instructed that if the joint enterprise was limited to the murdering of Mr Knowles, and what happened to the other two victims was spontaneous unplanned activity by Preston, the appellant was not guilty of the second count of murder or of the count of attempted murder. They were further instructed that, if satisfied that the appellant had been party to a joint enterprise to murder Mr Knowles, and that he foresaw that in the course of carrying out that plan, another might be murdered, or an attempt might be made to murder another, the appellant would be guilty of the second count of murder and the count of attempted murder. Central, however, to the instructions the jury were given was the proposition that they could convict the appellant of murdering Mr Knowles if, and only if, they were satisfied that the appellant had been party to a joint criminal enterprise with Preston to murder Mr Knowles. They were directed that if they were not satisfied of that fact, to the requisite standard, they must acquit the appellant on all counts. If the jury applied the instructions they were given, they could not have returned the verdicts they did without being satisfied beyond reasonable doubt that the appellant was party to a joint criminal enterprise to murder Mr Knowles. If he was party to an enterprise of that kind, manslaughter was not an available verdict and the failure to leave it to the jury would have led to no substantial miscarriage of justice. Can this Court, or more accurately, could the Full Court of the Supreme Court of South Australia, in considering the application of the proviso, proceed from the premise that the jury at the appellant's trial must have made this finding? In Gilbert115, a majority of the Court concluded that if manslaughter should have been, but was not, left to a jury as an available verdict on the 115 (2000) 201 CLR 414. Hayne appellant's trial for murder, the verdict of guilty of murder did not preclude the possibility that the jury may have failed to apply the instructions they were given. No party in this appeal sought to reopen the decision in Gilbert. It follows from what was decided in Gilbert that, in deciding here whether no substantial miscarriage of justice has actually occurred and thus, whether the proviso to s 353(1) of the Criminal Law Consolidation Act applies, account may not be taken of the findings implicit in the jury's verdicts at the appellant's trial. It must be assumed that the jury may have chosen to disregard the instructions they were given, and convict the appellant of murder and attempted murder, rather than return verdicts of not guilty. Once it is accepted that the jury may have disregarded the instructions they were given, it is not permissible to reason, as the respondent submitted, from the fact that the jury returned verdicts of guilty on all three counts to the conclusion that the jury must therefore be taken to have applied the trial judge's instructions. Once it is said, as it was in Gilbert, that the jury may have disregarded the instructions they were given, it cannot be said that some levels of disobedience may be less probable than others. If account cannot be taken of findings made by the jury at the appellant's trial, it is not possible for this Court to say that he did not lose a chance of more favourable verdicts than those returned116. The appeal must be allowed, the orders of the Full Court of the Supreme Court of South Australia set aside and in their place there be orders allowing the appellant's appeal to that Court, quashing his convictions and directing that a new trial be had. 116 Mraz v The Queen (1955) 93 CLR 493.

HIGH COURT OF AUSTRALIA Matter No B52/2016 CLIVE FREDERICK PALMER PLAINTIFF AND MARCUS WILLIAM AYRES, STEPHEN JAMES PARBERY AND MICHAEL ANDREW OWEN IN THEIR CAPACITIES AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ) & ORS DEFENDANTS Matter No B55/2016 PLAINTIFF AND MARCUS WILLIAM AYRES, STEPHEN JAMES PARBERY AND MICHAEL ANDREW OWEN IN THEIR CAPACITIES AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ) DEFENDANTS Palmer v Ayres Ferguson v Ayres [2017] HCA 5 Date of Order: 10 November 2016 Date of Publication of Reasons: 8 February 2017 B52/2016 & B55/2016 ORDER In each matter: The question reserved for the consideration of the Full Court pursuant to s 18 of the Judiciary Act 1903 (Cth) is answered as follows: Question: Is s 596A of the Corporations Act 2001 (Cth) invalid as contrary to Chapter III of the Constitution in that it confers non-judicial power on federal courts and on courts exercising federal jurisdiction? Answer: The writ of summons is dismissed. The plaintiff pay the defendants' costs. Representation D F Jackson QC with L T Livingston and L M Jackson for the plaintiff in B52/2016 (instructed by JW Smith & Associates) P Zappia QC with N H Ferrett and T R March for the plaintiff in B55/2016 (instructed by Haseler Law) T P Sullivan QC with C M Muir and A C Stumer for the first defendants in B52/2016 and the defendants in B55/2016 (instructed by King & Wood Mallesons) B W Walker SC with C G C Curtis for the second defendants in B52/2016 (instructed by HWL Ebsworth Lawyers) T M Howe QC, Acting Solicitor-General of the Commonwealth with J A Watson and R J May for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) P J Dunning QC, Solicitor-General of the State of Queensland with A D Keyes for the State of Queensland, the Attorney-General of intervening (instructed by Crown Law (Qld)) R M Niall QC, Solicitor-General for the State of Victoria with B C Gauntlett for the State of Victoria, intervening (instructed by Victorian Government Solicitor) the Attorney-General for C D Bleby SC with W V Ambrose for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Palmer v Ayres Ferguson v Ayres Constitutional law (Cth) – Judicial power – Mandatory examination of persons about corporation's examinable affairs – Where plaintiffs former directors of corporation in voluntary liquidation – Where liquidators applied for and obtained order for issue of summons under s 596A of Corporations Act 2001 (Cth) requiring plaintiffs to attend for examination about corporation's examinable affairs – Whether s 596A invalid as contrary to Ch III of Constitution – Whether s 596A gives rise to "matter" that engages judicial power of Commonwealth – Whether power conferred by s 596A incompatible with or outside judicial power of Commonwealth. Words and phrases – "examinable affairs", "federal jurisdiction", "judicial power", "matter". Constitution, Ch III. Corporations Act 2001 (Cth), ss 596A, 597. KIEFEL, KEANE, NETTLE AND GORDON JJ. Queensland Nickel Pty Ltd ("QN") was placed under administration pursuant to s 436A of the Corporations Act 2001 (Cth) ("the Corporations Act"). The creditors of QN subsequently resolved, pursuant to s 439C(c) of the Corporations Act, that QN be wound up in insolvency and QN's then administrators – John Park, Kelly-Anne Trenfield, Stefan Dopking and Quentin Olde – be appointed QN's liquidators. Pursuant to ss 511 and 472(1) of the Corporations Act, by an order of the Federal Court of Australia, Marcus William Ayres, Stephen James Parbery and Michael Andrew Owen were subsequently appointed additional liquidators of QN for limited purposes and designated "Special Purpose Liquidators" of QN. The Special Purpose Liquidators applied to the Federal Court for, and obtained, an order for the issue of a summons under s 596A of the Corporations Act requiring, among others, two former directors of QN – Clive Frederick Palmer and Ian Maurice Ferguson – to attend for examination about QN's examinable affairs. The Special Purpose Liquidators also applied for, and obtained, an order under ss 596D(2) and 597(9) of the Corporations Act, requiring each of Mr Palmer and Mr Ferguson to produce at their examination specified books in their possession relating to QN or to any of its examinable affairs (together "the Summons Order"). Mr Palmer and Mr Ferguson both attended the Federal Court and were each examined. Mr Palmer and Mr Ferguson then each filed a writ of summons in this Court seeking, amongst other relief, a declaration that the Summons Order was invalid, a declaration that s 596A of the Corporations Act does not constitute a valid conferral of power upon the Federal Court to the extent that it is exercised in conjunction with s 511 of the Corporations Act, and an injunction permanently restraining the Special Purpose Liquidators from further pursuing proceedings pursuant to the Summons Order. In each proceeding, pursuant to s 18 of the Judiciary Act 1903 (Cth), the following question was reserved for the consideration of a Full Court: "Is s 596A of the Corporations Act 2001 (Cth) invalid as contrary to Chapter III of the Constitution in that it confers non-judicial power on federal courts and on courts exercising federal jurisdiction?" Mr Palmer contended that the power of a court to summon a person for examination under s 596A of the Corporations Act ("the s 596A power") was invalid as contrary to Ch III of the Constitution on six bases: the s 596A power does not fall within the "core" or "practical conception" of judicial power under s 71 of the Constitution and does not satisfy the functional test identified by NettleJ Griffith CJ in Huddart, Parker & Co Pty Ltd v Moorehead1 or by Kitto J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd2; the s 596A power is not incidental or ancillary to the exercise of judicial power, at least in respect of a voluntary winding up; the s 596A power is not sufficiently analogous to pre-Federation judicially exercised powers to qualify as judicial power or, alternatively, reasoning from historical analogues should no longer be followed; the s 596A power is incompatible with, or falls outside, the judicial power of the Commonwealth; and, finally, there was no "matter" in the constitutional sense to engage the judicial power of the Commonwealth. Mr Ferguson adopted Mr Palmer's submissions but expanded the contention that the s 596A power is incompatible with, or falls outside, the judicial power of the Commonwealth. In that respect, Mr Ferguson contended that the s 596A power poses a real risk to the court's actual or perceived independence and impartiality, and offends the separation of powers. At the end of oral argument, this Court made orders in each proceeding that the question reserved be answered "no", the writ of summons be dismissed and the plaintiff pay the defendants' costs. These are our reasons for joining in those orders. Statutory framework Chapter 5 of the Corporations Act deals with various forms of external administration, including winding up by the court and voluntary winding up. Part 5.9 of Ch 5 comprises three Divisions of miscellaneous provisions applicable to external administration. Divisions 1 and 2 apply to all forms of external administration3. Division 1 – with which these proceedings are concerned – deals with examining a person about the examinable affairs of a corporation and comprises ss 596A to 597B. Division 2 deals with orders against a person in relation to a corporation subject to external administration. to specific forms of external Division 3 contains provisions applicable administration. (1909) 8 CLR 330 at 357; [1909] HCA 36. (1970) 123 CLR 361 at 374; [1970] HCA 8. 3 See Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501 at NettleJ Section 596A, in Div 1 and entitled "Mandatory examination", relevantly provides: "The Court is to summon a person for examination about a corporation's examinable affairs if: an eligible applicant applies for the summons; and the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending [on the occurrence of a specified event]." (emphasis added) "Court" includes the Federal Court and the Supreme Court of a State or Territory4. Jurisdiction with respect to civil matters arising under the Corporations Act is conferred on the Federal Court and the Supreme Court of each State and Territory by s 1337B of the Corporations Act. Two criteria must be satisfied before a court is to summon a person under s 596A for examination about a corporation's examinable affairs. First, an "eligible applicant" must apply for the summons. A liquidator of the corporation, amongst others, is an "eligible applicant"5. Second, the court must be satisfied that the person to be summoned is either a current officer or provisional liquidator of the corporation, or a former officer or provisional liquidator during or after the two years ending on the occurrence of a specified event. If those criteria are satisfied, the court is to summon that person ("the examinee") "to attend before the [c]ourt" at a specified place and time on a specified day "to be examined on oath about the corporation's examinable affairs"6. ss 9 and 58AA(1) of the Corporations Act. s 9 of the Corporations Act. s 596D(1) of the Corporations Act. NettleJ "[E]xaminable affairs", in relation to a corporation, means7: the promotion, formation, management, administration or winding up of the corporation; or any other affairs of the corporation (including anything that is included in the corporation's affairs because of section 53); or the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs because of paragraph (a) or (b)." As is apparent from par (c) of the definition of "examinable affairs", that term includes the business affairs of entities and persons connected with a corporation8. A "corporation" includes a body corporate9, and a "body corporate" includes a body corporate that is being wound up10. Section 53 also provides an extended meaning of "the affairs of a body corporate" and, as a result, extends what may constitute the "examinable affairs" of a corporation. A summons may also require the examinee to produce at the examination specified books in the examinee's possession that relate to the corporation or to any of its examinable affairs11. In certain circumstances, a court must require the examinee to file an affidavit about a corporation's examinable affairs, even if the examinee has been summoned for examination under s 596A12. The court controls the conduct of the examination13. The court may give directions about, among other things, the matters to be inquired into, and the s 9 of the Corporations Act. 8 See ss 9 and 64B of the Corporations Act for the meaning of "connected entity" and when entities will be connected with a corporation. ss 9 and 57A(1)(b) of the Corporations Act. 10 s 9 of the Corporations Act. 11 s 596D(2) of the Corporations Act. 12 s 597A of the Corporations Act. 13 ss 596F and 597 of the Corporations Act. NettleJ procedure to be followed, at the examination14. The court may put questions to the examinee, or "allow" questions to be put to the examinee, "about the corporation or any of its examinable affairs as the [c]ourt thinks appropriate"15. At the examination, the examinee must not make a false or misleading statement or, without reasonable excuse, refuse or fail to answer a question that the court directs them to answer or produce documents that the summons requires them to produce16. The examinee is not excused from answering a question put to them at the examination because it might tend to incriminate them or make them liable to a penalty17. However, if, before answering a question, the examinee claims that the answer might tend to incriminate them or make them liable to a penalty, and the answer might in fact do so, that answer is not admissible in evidence against that person in a criminal proceeding or a proceeding for the imposition of a penalty, other than in the conduct of the examination or a proceeding in respect of falsity of an answer18. The court may order that a written record of the questions put to, and answers of, the examinee be produced and signed by the examinee19, and, except for any specific answers for which the examinee has claimed privilege against self-incrimination, the signed written record of an examination may be used in evidence in any legal proceedings against the examinee20. If satisfied that a summons was obtained without reasonable cause, the court may order that some or all of the examinee's costs be paid by the applicant for the summons or by any person who took part in the examination21. 14 s 596F(1)(a) and (b) of the Corporations Act. 15 s 597(5B) of the Corporations Act. 16 s 597(7)(b), (c), (d) of the Corporations Act. 17 s 597(12) of the Corporations Act. 18 s 597(12A) of the Corporations Act. 19 s 597(13) of the Corporations Act. 20 s 597(14) of the Corporations Act. 21 s 597B of the Corporations Act. NettleJ Constitutional framework Section 71 of the Constitution relevantly states that: "The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction." (emphasis added) Section 75 specifies the constitutionally conferred original jurisdiction of the High Court. Section 76(ii) provides that the Parliament may make laws conferring original jurisdiction on the High Court in any matter "arising under any laws made by the Parliament". Section 77 provides that: "With respect to any of the matters mentioned in [ss 75 and 76] the Parliament may make laws: defining the jurisdiction of any federal court other than the High Court; defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States; (iii) investing any court of a State with federal jurisdiction." (emphasis added) The Federal Court, created by the Federal Court of Australia Act 1976 (Cth) as a superior court of record and a court of law and equity, has such original jurisdiction as is vested in it by laws made by the Parliament22. As seen earlier, s 1337B of the Corporations Act provides a specific conferral of jurisdiction on the Federal Court, and the Supreme Court of each State and Territory23. 22 s 19(1) of the Federal Court of Australia Act 1976 (Cth). See also s 39B(1A)(c) of the Judiciary Act 1903 (Cth). 23 See Gordon v Tolcher (2006) 231 CLR 334 at 345 [29], 346 [32]; [2006] HCA 62. NettleJ Jurisdiction, or the authority to adjudicate, and judicial power are different concepts24. "[F]ederal jurisdiction" in s 71 of the Constitution means "authority to exercise the judicial power of the Commonwealth … within limits prescribed"25. Parliament, under s 77(i) of the Constitution, has the legislative power to give to a federal court created by it "jurisdiction to exercise any judicial power of the Commonwealth, which the Parliament may think fit to confer upon it"26. And, "[i]t is a necessary condition of federal jurisdiction, in the sense of authority to exercise the judicial power of the Commonwealth, that the matter in which the jurisdiction of the court is invoked is 'capable of judicial determination' or 'justiciable'"27. Matter The plaintiffs contended that, although Parliament had conferred federal jurisdiction on federal and State courts, conferral in respect of s 596A was invalid because there was no "matter" in the constitutional sense to engage the judicial power of the Commonwealth. The basis of that contention was that the examination commenced under s 596A was an inquisitorial or investigative exercise that did not concern "some immediate right, duty or liability to be established by the determination of the Court"28. That contention should not be accepted. It proceeds from a misunderstanding of the concept of "matter" as it is to be understood in the constitutional sense. "Matter" in the constitutional sense A "matter", as a justiciable controversy, is not co-extensive with a legal proceeding, but rather means the subject matter for determination in a legal 24 CGU Insurance Ltd v Blakeley (2016) 90 ALJR 272 at 279 [25]; 327 ALR 564 at 571; [2016] HCA 2. 25 CGU Insurance (2016) 90 ALJR 272 at 279 [24]; 327 ALR 564 at 571 quoting Ah Yick v Lehmert (1905) 2 CLR 593 at 603; [1905] HCA 22. 26 CGU Insurance (2016) 90 ALJR 272 at 279 [24]; 327 ALR 564 at 571 quoting Ah Yick (1905) 2 CLR 593 at 604. 27 CGU Insurance (2016) 90 ALJR 272 at 279 [26]; 327 ALR 564 at 571. 28 cf In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; [1921] HCA 20; Abebe v The Commonwealth (1999) 197 CLR 510 at 524 [25], 555 [118]; [1999] HCA 14; CGU Insurance (2016) 90 ALJR 272 at 279 [26]; 327 ALR 564 at 571. NettleJ proceeding29 – "controversies which might come before a Court of Justice"30 (emphasis added). It is identifiable independently of proceedings brought for its determination and encompasses all claims made within the scope of the controversy31. What comprises a "single justiciable controversy" must be capable of identification, but it is not capable of exhaustive definition. "What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships"32. The requirement that, for there to be a "matter", there must be an "immediate right, duty or liability to be established by the determination of the Court"33 reinforces that the controversy that the court is being asked to determine is genuine, and not an advisory opinion divorced from a controversy34, and, further, that only a claim is necessary. A matter can exist even though a right, duty or liability has not been, and may never be, established35. "Matter" before the Federal Court The Special Purpose Liquidators of QN applied to the Federal Court under s 596A for an order that defined persons, former directors of QN, be summoned to attend before that Court to provide information about the examinable affairs of 29 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265-266. 30 South Australia v Victoria (1911) 12 CLR 667 at 675; [1911] HCA 17; Abebe (1999) 197 CLR 510 at 523-524 [24]; Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 31 Fencott v Muller (1983) 152 CLR 570 at 603; [1983] HCA 12. 32 Fencott (1983) 152 CLR 570 at 608. 33 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; Abebe (1999) 197 CLR 510 at 524 [25]; see also at 555 [118]; CGU Insurance (2016) 90 ALJR 272 at 279 [26]; 327 ALR 564 at 571. 34 Hooper (1999) 96 FCR 1 at 15 [51]. 35 See Abebe (1999) 197 CLR 510 at 528 [32]; Hooper (1999) 96 FCR 1 at 15 [55]. NettleJ The application under s 596A was made by the Special Purpose Liquidators to aid the performance of their statutory functions and powers36: first, to establish what are the assets of the corporation, including whether there are rights and obligations that could be realised, secured or litigated for the benefit of the unsecured creditors generally; and, second, to get in all of those assets. The s 596A power looks forward, using the concept of "examinable affairs" of the corporation, to the possibility that information gathered in the course of an examination under s 597 will support a claim for relief against the examinee or some other person. Section 596A looks forward to such a claim as a "matter": a controversy relating to the pecuniary rights or liabilities or wrongdoing of the corporation and the examinee or some other person. The contrary view of Gaudron J in Gould v Brown37 is, with respect, not correct. The view of Brennan CJ and Toohey J38 and Kirby J39, which reflects a forward-looking understanding of s 596A, is to be preferred to that of Gaudron J, which looks backward to the circumstance which led to the corporation being in external administration. Put another way, the s 596A power is a procedure that gives a liquidator the right to seek to examine certain persons involved in the corporation about the affairs of that corporation and thereby seek to establish, and then enforce, a potential right to relief against those with liabilities to the corporation, including alleged wrongdoers. Although the application arose out of events that had already occurred, the claim – one of potential rights, liabilities or wrongdoing – 36 See, eg, ss 501 and 506 of the Corporations Act (voluntary winding up); Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 338-339, 352; [1990] HCA 8; Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592 at 599 [5]; [2005] HCA 20; Commissioner for Corporate Affairs v Harvey [1980] VR 669; Re Quatrovision Pty Ltd (in liq) and the Companies Act 1961 [1982] 1 NSWLR 95 at 103; Ilhan v Cvitanovic (2009) 73 NSWLR 644 at 648-649 [19]-[20]. See also In re Contract Corporation (Gooch's Case) (1872) LR 7 Ch App 207 at 211; Gronow, McPherson's Law of Company Liquidation, 5th ed (looseleaf) at 1-052 [1.130], 8-2056 [8.500]; Goode, Principles of Corporate Insolvency Law, 3rd ed (2005) at 120-121 [5-02]. 37 See (1998) 193 CLR 346 at 403-404 [66]-[67]; [1998] HCA 6. 38 Gould v Brown (1998) 193 CLR 346 at 386-388 [31]-[33]. 39 Gould v Brown (1998) 193 CLR 346 at 499-500 [327]-[328]. NettleJ was a controversy where rights and liabilities could be established by a determination of the court made in due course in possible further litigation by reference to legal rules, principles or standards40. In that context, the Summons Order made by the Federal Court under s 596A was made in the exercise of judicial power. Indeed, an order made under s 596A, and the other provisions in Div 1 of Pt 5.9, determine whether, and the extent to which, the examinee may not remain silent but rather is obliged to be examined about the examinable affairs of a corporation. Such an order also determines whether, and the extent to which, there is an intrusion on the examinee's privilege to keep confidential books and papers in their possession or control. That the application under s 596A for a summons is made ex parte, and that the criteria for the making of an order may in some cases clearly be satisfied, does not deny that the court must be satisfied, by evidence, that the criteria are met. The resolution of the "matter" yields, as its immediate result, an order for examination with direct loss of privileges for the examinee the subject of the order. Rights and liabilities are determined by that judicial determination – they are not merely affected41. That alone, independent of the role of the liquidator as one class of "eligible applicants", suffices to create the necessary "matter". But the making of a summons order by a court not only decides and declares the right of the eligible applicant (here, the Special Purpose Liquidators) to apply for and be granted the order, it determines the rights, status or obligations of the applicant and the examinee (here, each former director), who were, and remain, subject to the jurisdiction of the court. Here, a right to examine was granted to the applicant (the Special Purpose Liquidators) and, as a result, the examinee (each former director) was obliged to attend the court, to produce specified books not otherwise compellable to be produced and to answer questions without the benefit of the privilege against self-incrimination. The examinee was obliged to do those things on the basis that the evidence given by the examinee could be used in certain subsequent legal proceedings against the examinee. 40 See Abebe (1999) 197 CLR 510 at 524-525 [25]; Hooper (1999) 96 FCR 1 at 41 Stellios, The Federal Judicature: Chapter III of the Constitution, (2010) at NettleJ Moreover, once a summons order is made, the power to examine the examinee (here, each former director) is and remains subject to the court's control. The court has the duty and ability to control the questions to be put to the examinee. The court can set aside a summons order if it thinks that it should not have been made on the grounds that it was an abuse of process or for other reasons42. In any event, the court can also order costs against either an applicant for the summons or a person who took part in the examination. Not incompatible with judicial power of the Commonwealth The s 596A power is not incompatible with, and does not fall outside, the exercise of the judicial power of the Commonwealth. The court, in exercising the s 596A power, is not involved in a fact-gathering exercise or an investigative function divorced from a controversy. The making of a summons order is a procedure designed to lead to a controversy regarding potential rights and liabilities in possible further litigation43. It is a procedure directed at the future exercise of judicial power, in aid of anticipated adversarial proceedings, analogous to other pre-trial procedures44. The s 596A power is not a new power History alone does not provide a sufficient basis for defining the exercise of a power as judicial power45. As these reasons demonstrate, it is neither necessary nor appropriate to rely on a purely historical basis to define the s 596A power and its processes as an exercise of judicial power46. But it is relevant to observe that the s 596A power is not, in any sense, a new power. 42 See Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 200 [143]-[144], 43 See, eg, In re North Australian Territory Company (1890) 45 Ch D 87 at 91, 96. 44 See, eg, PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 89 ALJR 975 at 983 [47]; 325 ALR 168 at 179; [2015] HCA 36; Hooper (1999) 96 FCR 1 at 45 R v Davison (1954) 90 CLR 353 at 366-369, 382; [1954] HCA 46; White v Director of Military Prosecutions (2007) 231 CLR 570 at 595 [48]; [2007] HCA 46 Contra Saraceni v Jones (2012) 42 WAR 518 at 563 [237]. NettleJ Long before the reforms effected by the Supreme Court of Judicature Act 1873 (UK), the Court of Chancery permitted the filing of a bill of discovery in which the applicant sought no relief except the provision of information by the defendant which was sought in aid of the pursuit of a possible claim in another court in which processes of discovery were not available47. In Norwich Pharmacal Co v Customs and Excise Commissioners, Lord Reid, referring to the rationale of the Chancery practice, said48: "I am particularly impressed by the views expressed by Lord Romilly MR and Lord Hatherley LC in Upmann v Elkan (1871) LR 12 Eq 140; 7 Ch App 130. They seem to me to point to a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers." That duty and its rationale apply with equal, if not greater, force to an officer of a corporation. A corporation, a creature of statute49, has powers and rights to act as a corporation so long as it obeys the laws under which it was incorporated. Supervision of a corporation, and its officers, was and remains reserved by the legislature to the courts. Rhetoric aside, analogies with abuses of inquisitorial powers in the seventeenth century are inapposite – there is no Star Chamber. intrusion upon If the conditions in s 596A are satisfied, that section allows a judicially supervised the confidentiality of books and papers in their possession or control and their right to silence. In Hamilton v Oades, Mason CJ said that the purpose of the statutory examination power now conferred by s 596A was "to create a system of the examinee the right of to preserve 47 Finch v Finch (1752) 2 Ves Sen 491 at 494 [28 ER 315 at 316-317]; Cardale v Watkins (1820) 5 Madd 18 [56 ER 801]; Angell v Angell (1822) 1 Sim & St 83 [57 ER 33]; McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 644; Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 203-204 [9]-[10]; Hooper (1999) 96 FCR 1 at 9 [24]-[25]. 48 [1974] AC 133 at 175. 49 See, eg, Companies Act 1862 (UK) (25 & 26 Vict c 89). See also Hale v Henkel 201 US 43 at 74-75 (1906). NettleJ discovery"50. Discovery was the creature of the courts of equity themselves, and courts of equity adopted a forward-looking perspective51 to allow an inquiry to ensure that justice was done in litigation that may have been in the offing52. Section 596A is a statutory measure directed at the same end. Such a measure is not beyond judicial power simply because it is framed by the legislature rather than by the courts themselves. Given the examinee's involvement in the examinable affairs of the corporation, the rationale of the statutory intrusion upon the examinee's privacy is, if anything, stronger than the rationale that long sustained the availability of pre-action discovery in Chancery. Plaintiffs' other contentions about judicial power For the reasons stated, an application under s 596A is a "matter" in the constitutional sense and its determination engages the judicial power of the Commonwealth. Section 596A does not confer non-judicial power on federal courts or on courts exercising federal jurisdiction. The plaintiffs' other contentions do not arise. 50 (1989) 166 CLR 486 at 497; [1989] HCA 21. 51 Mercedes Benz AG v Leiduck [1996] AC 284 at 306. 52 See Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509. GAGELER J. "The framers of a Constitution at the end of the nineteenth century may be supposed to have known that there have been in this world many forms of Government, that the various incidents and attributes of those several forms had been the subject of intelligent discussion for more than 2,000 years, and that some doctrines were generally accepted as applicable to them respectively"53. The framers of the Australian Constitution selected, adapted and melded elements of the substantially overlapping constitutional traditions of the United Kingdom and the United States as those traditions were understood to have developed to the end of the nineteenth century. They did so to produce a framework for the creation, at the beginning of the twentieth century, of a distinctly Australian system of national governance. That framework the Australian people, in which representative and responsible government under the rule of law had come to be established and to operate in each of the colonies which were to become States, chose to approve. The objectively discernible mutual intentions of the framers and of the people would miscarry, and the system of national governance which the framers laboured to see created would be diminished, were the product of their labour sought to be "construed merely by the aid of a dictionary, as by an astral intelligence … without reference to history"54. themselves acquainted with the manner Nowhere is an appreciation of the historical context within which the Australian Constitution was brought into existence more important than in seeking to understand the "judicial power of the Commonwealth", which s 71 vests solely in this Court, in federal courts which the Commonwealth Parliament chooses to create in accordance with s 72 and in courts which the Commonwealth Parliament chooses to invest with "federal jurisdiction" with respect to one or more of the nine categories of "matter" specified in ss 75 and 76. The difficulty and the danger of attempting to formulate some all- encompassing abstract definition of the judicial power of the Commonwealth was acknowledged from its inception55, was repeatedly recognised in judicial pronouncements throughout the twentieth century56 and has been reiterated in this century57. 53 Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087 at 1106; [1907] HCA 76. 54 (1907) 4 CLR 1087 at 1109. 55 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 720; Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 321. 56 For example Love v Attorney-General (NSW) (1990) 169 CLR 307 at 320; [1990] HCA 4; Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 532; [1991] (Footnote continues on next page) For present purposes, an understanding of the nature and scope of the judicial power of the Commonwealth is enhanced by close attention to the reasoning of the plurality of this Court in R v Davison58. Dixon CJ and McTiernan J (with whom Fullagar J agreed) there pointed out that many functions have traditionally been undertaken by courts of law and equity from which elements of various definitions of judicial power formulated for differing purposes in the early twentieth century are "entirely lacking"59. They added that there are also many functions which can be committed to a court which might equally be committed to an administrator60. Dixon CJ and McTiernan J continued61: "The truth is that the ascertainment of existing rights by the judicial determination of issues of fact or law falls exclusively within judicial power so that the Parliament cannot confide the function to any person or body but a court constituted under ss 71 and 72 of the Constitution and this may be true also of some duties or powers hitherto invariably discharged by courts under our system of jurisprudence but not exactly of the foregoing description. But there are many functions or duties that are not necessarily of a judicial character but may be performed judicially, whether because they are incidental to the exercise of judicial power or because they are proper subjects of its exercise." Their Honours went on to explain, by reference to the analysis of Holmes J in Prentis v Atlantic Coast Line Co62, that where the legislature has prescribed that a particular act or thing be done through the application of a judicial process, "the character of the proceeding or of the thing to be done HCA 32; Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188-189; [1991] HCA 58. 57 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 22 [51]; [2004] HCA 49; TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 553 [27]; [2013] HCA 5. 58 (1954) 90 CLR 353; [1954] HCA 46. 59 (1954) 90 CLR 353 at 367-368. 60 (1954) 90 CLR 353 at 369. 61 (1954) 90 CLR 353 at 369-370. 62 211 US 210 at 226-227 (1908). becomes all important" in that "[t]he nature of the final act determines the nature of the previous inquiry"63. Within that exposition of principle lie two important conceptions. Each had been the subject of earlier judicial articulation and each came to be developed more fully in later cases. The first is of the existence of an area of judicial power within which a particular act or thing done is directed to an ultimate end that can be achieved only through the exercise of judicial power. At the centre of that exclusive area is what has subsequently been described as the "unique and essential function" of the judicial power of "the quelling of … controversies [as to legal rights] by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion"64. Also within that exclusive area of judicial power and more difficult to catalogue are some, but by no means all, other functions that have in the past been exercised only by courts. The second conception is of an area of judicial power, within "[t]he borderland in which judicial and administrative functions overlap"65, and within which a particular act or thing done by a court through the application of a judicial process is directed to an ultimate end that might equally be achieved through the application of a non-judicial process66. Beyond those two conceptions lies the area of non-judicial power. Where the Commonwealth Parliament confers a power to do a particular act or thing on a court, it must be assumed in the absence of some indication to the contrary that the Parliament intends and requires that power to be exercised by that court through the application of a judicial process67. If the act or thing is capable of being done through the application of a judicial process, the question whether the power to do it is within the judicial power of the Commonwealth turns on the end to which the act or thing is directed. 63 (1954) 90 CLR 353 at 370. See earlier Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 304. 64 Fencott v Muller (1983) 152 CLR 570 at 608; [1983] HCA 12. 65 Labour Relations Board of Saskatchewan v John East Iron Works Ltd [1949] AC 66 See Pasini v United Mexican States (2002) 209 CLR 246 at 253-254 [12]; [2002] HCA 3 and the cases there cited; White v Director of Military Prosecutions (2007) 231 CLR 570 at 595 [48]; [2007] HCA 29. 67 R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 305; [1957] HCA 81; R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 628; [1981] HCA 51; Thomas v Mowbray (2007) 233 CLR 307 at 329 [17], 341 [59]; [2007] HCA 33. Where what the court is empowered to do is to make an order requiring or permitting the conduct of an inquiry or investigation, the question whether the power to make that order is within the judicial power of the Commonwealth therefore turns on the end to which the inquiry or investigation is directed. That is so notwithstanding that the mere making of the order might in a technical, but artificial, sense be said to quell a controversy about whether the order itself should be made. Of the import of the endorsement in Davison of the analysis of Holmes J in Prentis, Mason J explained in Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission that the exercise of a power to compel the provision of information is not inherently an exercise of judicial power but that68: "It may constitute an element in the exercise of judicial power when the power is part of the proceedings of the court, its object being to aid the court or the parties to obtain and present evidence in those proceedings. Then the exercise of the power by the court or the parties in proceedings in the court is for the purpose of enabling the court to hear and determine the lis and is, accordingly, incidental to, if not an element in, the exercise of judicial power." The position is no different in principle where the power conferred on a court to compel the provision of information has as its object to assist an applicant for the exercise of that power in the pursuit of a claim of legal right which is the subject of a proceeding in another court or which may not yet have become the subject of a proceeding at all. A power of that kind was traditionally exercised by the Court of Chancery in issuing bills of discovery69 and is now often enough exercised by courts making orders for preliminary discovery in accordance with modern rules of civil procedure70. The making of an order for preliminary discovery, as the Full Court of the Federal Court demonstrated in Hooper v Kirella Pty Ltd71, fits comfortably within the paradigm case of an exercise of judicial power in that it is directed ultimately to the resolution of a claim of legal right. That is so notwithstanding that the information sought is 68 (1982) 152 CLR 460 at 472; [1982] HCA 65. 69 See generally Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 445-446; Breen v Williams (1996) 186 CLR 71 at 119-121; [1996] HCA 57. 70 For example Federal Court Rules 2011 (Cth), Pt 7, Div 7.3; Uniform Civil Procedure Rules 2005 (NSW), Pt 5; Supreme Court (General Civil Procedure) Rules 2015 (Vic), O 32. 71 (1999) 96 FCR 1. essential to the pursuit of the claim and notwithstanding that the claim might well be shown by that information when obtained to be incapable of being established. It is at this point in the analysis that there arises an important question of principle. What if the power conferred on the court to make an order compelling the provision of information is exercisable without any requirement for there to be a lis – in the sense of a claim or controversy as to legal right – in aid of the resolution of which the making of the order is directed? What if, to adopt language used by Gaudron J in Gould v Brown72 to describe the power to order the examination of an examinable officer in relation to the examinable affairs of a corporation then conferred by ss 596A and 596B of the Corporations Law, it is "simply a power to obtain information"? Questions of that kind arose in this Court in the exercise of its appellate jurisdiction in Cheney v Spooner73 and again in Rees v Kratzmann74. In Cheney v Spooner, the appeal was from an order made under s 16 of the Service and Execution of Process Act 1901 (Cth) giving a liquidator leave to serve in Victoria a summons for examination concerning the affairs of a company in voluntary winding up which had been issued by a Master in Equity of the Supreme Court of New South Wales under s 123 of the Companies Act 1899 (NSW). In the course of holding the summons for examination to answer the statutory description in s 16 of a "summons … requiring any person to appear and give evidence … in any civil or criminal trial or proceeding", Isaacs and Gavan Duffy JJ referred to the winding up, which had been initiated by petition to the Supreme Court, as "a distinct judicial proceeding". They said that the summons required the giving of "evidence" in that proceeding on the basis that it provided the liquidator with "the means of obtaining information, that is evidentiary facts, enabling him to come to a conclusion as to ultimate facts" in the discharge of his "responsibility of working out the affairs of the company"75. No constitutional issue was raised, however, and s 16 was subsequently held not to be confined to process judicial in nature76. 72 (1998) 193 CLR 346 at 404 [67]; [1998] HCA 6. 73 (1929) 41 CLR 532; [1929] HCA 12. 74 (1965) 114 CLR 63; [1965] HCA 49. 75 (1929) 41 CLR 532 at 537. 76 Ammann v Wegener (1972) 129 CLR 415; [1972] HCA 58. See also Dalton v NSW Crime Commission (2006) 227 CLR 490; [2006] HCA 17. In Rees v Kratzmann, the appeal was from a decision of the Full Court of the Supreme Court of Queensland dismissing an appeal from a direction of a single judge of that Court that the respondent, a former managing director, not be allowed to answer a certain question in the course of being publicly examined in relation to the affairs of a company pursuant to an order which had been made under s 250 of the Companies Act 1961 (Q). Preliminary objection was taken to the jurisdiction of this Court to hear the appeal on the ground that, the appeal arising only in the course of a public examination, there was no lis between the parties and that the order appealed from was for that reason not a decree, order, judgment or sentence within the meaning of s 73 of the Constitution. The objection was overruled. Without giving reasons, the Court directed that the hearing of the appeal proceed77, thereby treating the order of the Full Court of the Supreme Court as one made in the exercise of judicial power78. One explanation for the outcome of the preliminary objection in Rees v Kratzmann might be that, irrespective of whether the making of the order under s 250 of the Companies Act had been an exercise of judicial power, the question which arose in the course of the examination as to the scope of the order involved a justiciable controversy79. The same explanation might be given of the basis on which an application for special leave to appeal was entertained without objection in Mortimer v Brown80, and of the basis on which appellate jurisdiction was exercised without objection in Hamilton v Oades81, where the issue was whether the common law privilege against self-incrimination was abrogated by the equivalent provision in s 541 of the Companies (New South Wales) Code. The question of whether a power legislatively conferred on a court to order an examination in relation to the examinable affairs of a corporation is judicial in nature was raised squarely for the consideration of this Court for the first time in Gould v Brown. The issue was whether the power to make such an order, then conferred by ss 596A and 596B of the Corporations Law applying as State legislation under the Corporations (New South Wales) Act 1990 (NSW), was validly conferred on the Federal Court. Only three members of the Court of 77 (1965) 114 CLR 63 at 65. 78 See Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 38 [63]; [2002] HCA 27 and the cases there cited. 79 Cf Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 513; [1997] HCA 3; Zarro v Australian Securities Commission (1992) 36 FCR 40 at 60-61. 80 (1970) 122 CLR 493; [1970] HCA 4. 81 (1989) 166 CLR 486; [1989] HCA 21. six – Brennan CJ and Toohey J and (in a separate judgment) Gaudron J – found it necessary to address whether the power was judicial in nature, and all three found it necessary to do so only to the extent that the power was available to be exercised in respect of a corporation that had been the subject of a winding-up order made by the Federal Court. The view of Brennan CJ and Toohey J was that "[t]o the extent that the power to order and conduct examinations is available for exercise in the course and for the purposes of a winding up, it is an incident of the judicial power of winding up and has a judicial character"82. The view of Gaudron J, more sceptical and tentatively expressed, was to substantially similar effect save that her Honour took the view that the power could only be exercised by the court which had ordered the winding up83. The question was not raised in the appeal to this Court in Spinks v Prentice84, in which other issues were raised as to the validity of the conferral on the Federal Court of power under the Corporations Law set out in s 82 and applying as Territory legislation under s 5 of the Corporations Act 1989 (Cth). Gummow and Hayne JJ85, with whom Gleeson CJ relevantly agreed86, expressly declined to address the issue. Gaudron J reiterated87 the view she had expressed in Gould v Brown. The question was raised again in this Court in Saraceni v Jones88, on an application for special leave to appeal from a decision of the Court of Appeal of the Supreme Court of Western Australia89. The Court of Appeal had formally answered a question referred for its consideration to the effect that the exercise of power by the Supreme Court to make an order for examination under s 596A of the Corporations Act 2001 (Cth) and to conduct an examination under s 597 in relation to a corporation in receivership and where the property of the corporation is in the possession of a mortgagee or its agent under Pt 5.2 of the Corporations 82 (1998) 193 CLR 346 at 389 [35] (footnote omitted). 83 (1998) 193 CLR 346 at 403-405 [66]-[70]. 84 Reported with Re Wakim; Ex parte McNally (1999) 198 CLR 511; [1999] HCA 27. 85 (1999) 198 CLR 511 at 596 [176]. 86 (1999) 198 CLR 511 at 546 [25]. 87 (1999) 198 CLR 511 at 546-547 [27]. 88 (2012) 246 CLR 251; [2012] HCA 38. 89 Saraceni v Jones (2012) 42 WAR 518. Act constitutes an exercise of the judicial power of the Commonwealth90. Refusing special leave to appeal, three members of this Court expressed the view that the actual orders of the Court of Appeal were not attended by doubt91. That expression of view is of persuasive value but it does not have precedential effect92. The question of whether the power to make an order for examination under s 596A of the Corporations Act is judicial in nature returned to be squarely raised in this Court in these proceedings in its original jurisdiction, which challenge orders made by the Federal Court for examinations into the examinable affairs of a corporation in voluntary liquidation. At the conclusion of the hearing before the Full Court of this Court, I joined in making orders which included an order formally answering in the negative a question reserved for the consideration of the Full Court asking in unqualified terms whether s 596A of the Corporations Act is invalid as an attempted conferral of non-judicial power on a federal court or on another court exercising federal jurisdiction. My reasons for considering s 596A of the Corporations Act to be a valid conferral of judicial power embrace neither of two somewhat extreme positions advanced in the course of argument by the defendants and by some who intervened to support validity. The argument at one extreme was that it was sufficient to characterise the power as a judicial power that the examination might yield some information that might be used to pursue some claim of legal right. The argument at the other extreme was that it was sufficient to characterise the power as a judicial power that a broadly analogous power of examination can be seen to have been exercised by courts in the Australian colonies in 1900 under provisions modelled broadly on s 115 of the Companies Act 1862 (UK)93. The first pays insufficient attention to the importance of constitutional history. The second relies on a misinterpretation of what was said by Kitto J in Davison, which results in a conception of constitutional history that is too narrow. The separate reasons for judgment of Kitto J in Davison contain the following statement94: 90 Saraceni v Jones (2012) 42 WAR 518 at 566 [254]. 91 Saraceni v Jones (2012) 246 CLR 251 at 257 [4]. 92 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 117 [52], 133 [112], 134 [119]; [2015] HCA 37. 93 25 & 26 Vict c 89. 94 (1954) 90 CLR 353 at 381-382. "It may ... be said that when the Constitution of the Commonwealth prescribes as a safeguard of individual liberty a distribution of the functions of government amongst separate bodies, and does so by requiring a distinction to be maintained between powers described as legislative, executive and judicial, it is using terms which refer, not to fundamental functional differences between powers, but to distinctions generally accepted at the time when the Constitution was framed between classes of powers requiring different 'skills and professional habits' in the authorities entrusted with their exercise." The statement too readily misinterpreted is that which immediately follows. His Honour said95: "For this reason it seems to me that where the Parliament makes a general law which needs specified action to be taken to bring about its application in particular cases, and the question arises whether the Constitution requires that the power to take that action shall be committed to the judiciary to the exclusion of the executive, or to the executive to the exclusion of the judiciary, the answer may often be found by considering how similar or comparable powers were in fact treated in this country at the time when the Constitution was prepared. Where the action to be taken is of a kind which had come by 1900 to be so consistently regarded as peculiarly appropriate for judicial performance that it then occupied an acknowledged place in the structure of the judicial system, the conclusion, it seems to me, is inevitable that the power to take that action is within the concept of judicial power as the framers of the Constitution must be taken to have understood it." The significance of the second of those statements of Kitto J lies in its connection with the first and in the weight properly to be accorded to his Honour's reference to what had come "by" 1900 "consistently" to be "regarded as peculiarly appropriate for judicial performance". His Honour was writing in the context of considering the characterisation of the power to order sequestration, which had been exercised judicially for centuries. What Kitto J can be taken to have meant in Davison can only fully be understood by considering what he there said together with what he said subsequently in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd96, to which it will be appropriate in due course to turn. There is no inconsistency. 95 (1954) 90 CLR 353 at 382. 96 (1970) 123 CLR 361; [1970] HCA 8. The appropriate perspective on what Kitto J said in Davison is that adopted by Jacobs J in R v Quinn; Ex parte Consolidated Food Corporation97. An argument advanced in that case, relying on what Kitto J had said in Davison, was that the particular function of removing a trademark from a register fell within the exclusive area of judicial power because it had in practice been conferred only on courts between 1875 and 1938. Rejecting that argument, Jacobs J (with whom Barwick CJ, Gibbs, Stephen, Mason and Murphy JJ relevantly agreed) said98: "The historical approach to the question whether a power is exclusively a judicial power is based upon the recognition that we have inherited and were intended by our Constitution to live under a system of law and government which has traditionally protected the rights of persons by ensuring that those rights are determined by a judiciary independent of the parliament and the executive. But the rights referred to in such an enunciation are the basic rights which traditionally, and therefore historically, are judged by that independent judiciary which is the bulwark of freedom." His Honour continued99: "On the other hand the course of legislation in comparatively recent times does not, in itself, provide a foundation for the historical approach. If the legislation requires the exercise of a power to determine questions the determination of which will affect what are traditionally regarded as basic legal rights, the judicial nature of the power springs from the effect which the exercise of the decision-making function under the legislation will have upon the legal rights rather than from the history of similar legislation reposing the function in a judicial tribunal." The perspective on the significance of history adopted by Jacobs J in Quinn is as important to determining whether a particular function is inherently non-judicial (so as to lie beyond that which is capable of being conferred on a court) as it is to determining whether a particular function is exclusively judicial (so as to be capable of being conferred only on a court). The primary question in each case is not as to how the function might have been exercised in practice at or around 1900. The answer to that narrow temporal question will be relevant, but it cannot be determinative. The aim is not simply to take a snap-shot of the 97 (1977) 138 CLR 1; [1977] HCA 62. 98 (1977) 138 CLR 1 at 11. 99 (1977) 138 CLR 1 at 12. historical position at a moment in time. The fundamental question is as to how the particular function is now to be characterised having regard to the systemic values on which the framers can be taken to have drawn in isolating the judicial power of the Commonwealth and in vesting that power only in courts. The aim is to be faithful to those values. The task of assigning content to the judicial power of the Commonwealth "is one of construing the Constitution as it stands", Windeyer J explained in Tasmanian Breweries, yet that task of construing the Constitution as it stands is one which it is "impossible to do … on the assumption that Montesquieu had never lived … or that those who framed our Constitution did not copy s 71 from s 1 of Art III of the Constitution of the United States"100. Of the concept of judicial power to which s 71 refers, his Honour went on to state101: "The concept seems to me to defy, perhaps it were better to say transcend, purely abstract conceptual analysis. It inevitably attracts consideration of predominant characteristics and also invites comparison with the historic functions and processes of courts of law." Windeyer J was explaining that the concept of the judicial power of the Commonwealth needs to be understood by reference to the reason for that power being separated and reposed only in courts of law. He was also explaining that the reason for the judicial power of the Commonwealth being separated and reposed only in courts of law needs to be understood against the background of the at first common and then divergent constitutional histories of the United Kingdom and the United States, and the powerful ideas which that history generated. That explanation by Windeyer J in Tasmanian Breweries is wholly consistent with the frequently quoted statement of Kitto J in the same case that "a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons"102. That description was of what I have already described as the paradigm case of an exercise of judicial power. Importantly, Kitto J added that "[i]t is right, I think, to conclude from the cases on the subject that a power which does not involve such a process and lead to such an end needs 100 (1970) 123 CLR 361 at 392. 101 (1970) 123 CLR 361 at 394. 102 (1970) 123 CLR 361 at 374. to possess some special compelling feature if its inclusion in the category of judicial power is to be justified"103. By framing his description of judicial power in Tasmanian Breweries in "general and ahistorical terms"104, Kitto J cannot be taken to have been ignoring the importance of what he had described in Davison as "distinctions generally accepted at the time when the Constitution was framed". Nor can he be taken to have been ignoring or marginalising the lessons of history. With reference to his Honour's description of the paradigm case of an exercise of judicial power, and similar descriptions that are to be found in other cases, Professor Zines observed105: "Indeed, in a sense, the concept of judicial power referred to above is itself derived from historical examination, that is, of what courts have done. From this has been distilled those features that are pre-eminently or exclusively judicial, which have been arrived at by having regard to social values and the reasons for preserving the separateness of judicial power." His Honour's requirement, outside the paradigm case, for "some special compelling feature" to justify inclusion in the category of judicial power expressly invokes a normative frame of reference. Of similar effect to the observations of Windeyer J in Tasmanian Breweries and Jacobs J in Quinn is an observation of Cardozo CJ which was quoted by Mason and Deane JJ in Hilton v Wells106 and (in part) by French CJ and Kiefel J in Wainohu v New South Wales107 as applicable to the Australian Constitution108: "From the beginnings of our history, the principle has been enforced that there is no inherent power in Executive or Legislature to charge the judiciary with administrative functions except when reasonably incidental to the fulfilment of judicial duties. ... The exigencies of government have 103 (1970) 123 CLR 361 at 374-375. 104 Cf White v Director of Military Prosecutions (2007) 231 CLR 570 at 595 [49]. 105 Zines, The High Court and the Constitution, 5th ed (2008) at 221. See now Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 223. 106 (1985) 157 CLR 57 at 82; [1985] HCA 16. 107 (2011) 243 CLR 181 at 202 [30]; [2011] HCA 24. 108 In re Richardson 160 NE 655 at 657 (1928). made it necessary to relax a merely doctrinaire adherence to a principle so flexible and practical, so largely a matter of sensible approximation, as that of the separation of powers. Elasticity has not meant that what is of the essence of the judicial function may be destroyed". Not unimportant for present purposes is that Cardozo CJ made that observation in the context of holding invalid, as incompatible with the separation of powers under the Constitution of the State of New York, a statutory provision which allowed the Governor, in any proceeding for the removal by him of a person from public office, to direct that evidence be taken before a justice of the Supreme Court109. What then does history relevantly teach about the relationship between a power of investigation or inquiry and the essence of the judicial function? Baron de Montesquieu's The Spirit of Laws was first published in 1748. "Of the Constitution of England", he then famously observed (according to an English translation of 1751)110: "Again, there is no liberty, if the power of judging be not separated from the legislative and executive powers. Were it joined with the legislative, the life and liberty of the subject would be exposed to arbitrary controul; for the judge would be then the legislator. Were it joined to the executive power, the judge might behave with all the violence of an oppressor." Borrowing from and providing "an essentially English interpretation of Montesquieu"111, Sir William Blackstone wrote in the first book of his Commentaries on the Laws of England, published in 1765112: "In this distinct and separate existence of the judicial power ... consists one main preservative of the public liberty; which cannot subsist long in any state, unless the administration of common justice be in some degree separated both from the legislative and also from the executive power. Were [judicial power] joined with the legislative, the life, liberty, and property, of the subject would be in the hands of arbitrary judges, 109 Cf Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 12-13; [1996] HCA 18. 110 Montesquieu, The Spirit of Laws, (1751), vol 1 at 185-186. 111 Vile, Constitutionalism and the Separation of Powers, (1967) at 105. 112 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 7 at 259-260. whose decisions would be then regulated only by their own opinions, and not by any fundamental principles of law; which, though legislators may depart from, yet judges are bound to observe. Were it joined with the executive, this union might soon be an overballance for the legislative. For which reason, by the statute of 16 Car I c 10 which abolished the court of star chamber, effectual care is taken to remove all judicial power out of the hands of the king's privy council; who, as then was evident from recent instances, might soon be inclined to pronounce that for law, which was most agreeable to the prince or his officers. Nothing therefore is more to be avoided, in a free constitution, than uniting the provinces of a judge and a minister of state." In Huddart, Parker & Co Pty Ltd v Moorehead113 Isaacs J referred to that passage, amongst other passages, in Blackstone as "a key" to the meaning of the judicial power of the Commonwealth. After quoting that passage in Blackstone, together with statements concerning the separation of the judicial power of the Commonwealth in R v Kirby; Ex parte Boilermakers' Society of Australia made by a majority of this Court114 and in R v Richards; Ex parte Fitzpatrick and Browne115 (the first made in the context of emphasising the role of the courts in maintaining the federal system and the second emphasising the role of courts more generally in determining whether the other arms of government had acted in "excess of power"), Deane J said in Re Tracey; Ex parte Ryan116: "Therein lie the main point and justification of the doctrine of the separation of judicial from executive and legislative powers upon which the Constitution is structured. To ignore the significance of the doctrine or to discount the importance of safeguarding the true independence of the judicature upon which the doctrine is predicated is to run the risk of undermining, or even subverting, the Constitution's only general guarantee of due process." Blackstone's linking of the separation of judicial power to the dissolution of the Court of Star Chamber by the Habeas Corpus Act 1640117 is for present purposes significant. There was a time, in the seventeenth century, when the Court of Star Chamber, a judicial arm of the Privy Council, acted as "the curious 113 (1909) 8 CLR 330 at 382-383; [1909] HCA 36. 114 (1956) 94 CLR 254 at 270; [1956] HCA 10. 115 (1955) 92 CLR 157 at 165-166; [1955] HCA 36. 116 (1989) 166 CLR 518 at 580; [1989] HCA 12. 117 16 Car I c 10. eye of the state and king's council prying into the inconveniencies and mischiefs which abound in the Commonwealth"118. Its procedures notoriously included the "oath ex officio" which the Puritan John Lilburne, who famously refused to take it in 1637, described as "the inquisition Oath". By that procedure, without necessity for prior particularisation of the subject-matter on which he was to be examined, a defendant would be told to swear at the outset of a proceeding "[t]hat you shall make true answer to all things that are asked of you" and would be punished for contempt if he refused119. The Habeas Corpus Act 1640, after providing for the dissolution of the Court of Star Chamber120, went on to provide that "from henceforth no Court, Council or Place of Judicature, shall be … constituted … which shall have, use or exercise the same or the like Jurisdiction"121 as well as to declare that neither the King nor his Privy Council were to have jurisdiction, power or authority "to examine or draw into question, determine or dispose of the Lands, Tenements, Hereditaments, Goods or Chattels of any the Subjects of this Kingdom; but that the same ought to be tried and determined in the ordinary Courts of Justice, and by the ordinary Course of the Law"122. From that time forward the general rule, to which it is possible that exceptions might be found were the books to be trawled, has been that courts administering common law do not exercise common law or statutory powers to inquire into subject-matters unconnected with the determination of some claim of legal right. A "court of justice" has been conceived of as distinct from a court of investigation, such as a coroner's court123 or a court of marine inquiry124. 118 Hudson, "A Treatise of the Court of Star Chamber", in Hargrave (ed), Collectanea Juridica, (1792), vol 2, 1 at 126, quoted in Holdsworth, "Conspiracy and Abuse of Legal Process", (1921) 37 Law Quarterly Review 462 at 466 and in R v Weaver (1931) 45 CLR 321 at 339; [1931] HCA 23. 119 See Levy, Origins of the Fifth Amendment, (1968) at 100-101, 106, 271-283. 120 Section III. 121 Section IV. 122 Section V. 123 Royal Aquarium and Summer and Winter Garden Society Ltd v Parkinson [1892] 1 QB 431 at 446-447, quoted in Ammann v Wegener (1972) 129 CLR 415 at 436. 124 R v Turner; Ex parte Marine Board of Hobart (1927) 39 CLR 411 at 442, 450; [1927] HCA 15. The issuing of a search warrant, for example, has never been conceived of as an exercise of judicial power125 or as of a nature that is susceptible of becoming an exercise of judicial power even if it might be capable of being exercised judicially126. Even the conduct of a preliminary inquiry to determine whether a sufficient basis exists to commit a prisoner for trial – a "plainly inquisitorial" feature of criminal process undertaken by justices of the peace since the middle of the sixteenth century127 having "the closest, if not an essential, connexion with an actual exercise of judicial power"128 – has been seen not itself to be an exercise of judicial power but rather to be the performance of an executive or ministerial function: the inquisitor acting not as a "Court of Justice" but as "an officer deputed by the law to enter into a preliminary enquiry"129. In Rees v Kratzmann130, Windeyer J explained: "There is in the common law a traditional objection to compulsory interrogations. … The continuing regard for this element in the lawyer's notion of justice may be, as has been suggested, partly a consequence of a persistent memory in the common law of hatred of the Star Chamber and its works. It is linked with the cherished view of English lawyers that their methods are more just than are the inquisitional procedures of other countries." His Honour immediately continued131: "But, strong as has been the influence of this attitude upon the administration of the common law, of the criminal law especially, it must 125 Hilton v Wells (1985) 157 CLR 57 at 67. 126 Love v Attorney-General (NSW) (1990) 169 CLR 307 at 320-322; Grollo v Palmer (1995) 184 CLR 348 at 359-360, 386; [1995] HCA 26. 127 Azzopardi v The Queen (2001) 205 CLR 50 at 96-97 [136]; [2001] HCA 25. 128 R v Murphy (1985) 158 CLR 596 at 616; [1985] HCA 50. 129 Cox v Coleridge (1822) 1 B & C 37 at 51-52 [107 ER 15 at 20], quoted in Ammann v Wegener (1972) 129 CLR 415 at 435. See also Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 356-357, discussed in R v Murphy (1985) 158 CLR 596 at 616. 130 (1965) 114 CLR 63 at 80. 131 (1965) 114 CLR 63 at 80. be admitted that in the Chancery Court it had less place: and in bankruptcy jurisdiction it has been largely displaced." The extent to which equity, administered by the Court of Chancery, was a counterpoise to the common law in this respect should not be overstated. A bill of discovery in equity, as I have already noted, was a process directed to the pursuit of a claim of legal right. It was not available to assist the prosecution or defence of a criminal action132. There was, moreover, by 1736, "no rule more established in equity, than that a person shall not be obliged to discover what will subject him to a penalty, or any thing in the nature of a penalty"133. A unifying theme of the core area of equitable jurisdiction exercised exclusively by the Court of Chancery might well be said to have been supervision of administration134. That is a particularly apt description of the role of a court administering equity in relation to the Court of Chancery's most significant creation – suggested by Professor Frederic Maitland at the turn of the to be "the most distinctive achievement of English twentieth century lawyers"135 – the trust. Fundamental to the law of trusts is that the court has jurisdiction to supervise, and in appropriate circumstances to intervene in, the administration of a trust. Indeed, a test of the validity of a trust is that it must be of such a nature that it can be administered by a court136. Appurtenant to that jurisdiction is a capacity for a court on application in appropriate circumstances 132 Montague v Dudman (1751) 2 Ves Sen 396 at 398 [28 ER 253 at 254], quoted in Naismith v McGovern (1953) 90 CLR 336 at 340, see also at 341-342; [1953] HCA 133 Smith v Read (1736) 1 Atk 526 at 527 [26 ER 332 at 332], quoted in R v Associated Northern Collieries (1910) 11 CLR 738 at 744; [1910] HCA 61. See also Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 520; [1993] HCA 74. 134 See generally Turner, "Equity and Administration", in Turner (ed), Equity and Administration, (2016) 1, especially at 16-20. 135 Maitland, Equity, Also The Forms of Action at Common Law: Two Courses of Lectures, (1909) at 23. 136 Morice v Bishop of Durham (1805) 10 Ves Jr 522 at 539-540 [32 ER 947 at 954]; In re Baden's Deed Trusts [1971] AC 424 at 439-440; McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 633-637. both to advise a trustee137 and to compel the provision of information by a trustee138. Supervision of administration is also an apt description of the role of a court administering equity in relation to "one of the oldest remedies"139 in the Court of Chancery – the appointment of a receiver, who as an officer of the court and subject to its direction is "to take possession of, get in, or recover, property for the benefit of the persons who are ultimately determined to be entitled to The longstanding statutory jurisdiction of the Court of Chancery to supervise the administration of insolvent estates was of the same ilk141. In In re Condon; Ex parte James142, a trustee in bankruptcy was described as "an officer of the Court", having "inquisitorial powers", whose duty it was "to hold money in his hands upon trust for its equitable distribution among the creditors". The jurisdiction with respect to companies in winding up, which the Court of Chancery came to exercise in the middle of the nineteenth century, fitted much the same pattern143. The winding up of a company has appropriately been described in generic terms as a process, "comparable to an administration in equity", that "consists of collecting the assets, realising and reducing them to money, dealing with proofs of creditors by admitting or rejecting them, and 137 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at 93-94 [71]-[74]; [2008] HCA 42. 138 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 421-422, 444; Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 at 724 [36], 730 [54]. 139 Hopkins v Worcester and Birmingham Canal Proprietors (1868) LR 6 Eq 437 at 140 Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 5th ed (2015) at 956. 141 Jones, "The Foundations of English Bankruptcy: Statutes and Commissions in the Early Modern Period", (1979) 69(3) Transactions of the American Philosophical Society 5 at 49-51. 142 (1874) LR 9 Ch App 609 at 614. 143 Companies Act 1862 (UK) (25 & 26 Vict c 89), s 81. distributing the net proceeds, after providing for costs and expenses, to the persons entitled"144. The legacy of the jurisdiction so exercised by or conferred on the Court of Chancery, as Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ remarked in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia145, is that in modern times "courts are well accustomed to the exercise of supervisory jurisdiction upon applications by trustees, receivers, provisional liquidators and others with the responsibility for the conduct of administrations". Within the context of administration, the statutory powers first reposed in the Court of Chancery in the middle of the nineteenth century to make orders for the examination of bankrupts146 and of officers and other persons in relation to the affairs of companies in winding up147, which came correspondingly to be conferred on the Supreme Courts of the Australian colonies by the end of the nineteenth century148, could not be regarded as anomalous. But they were regarded as "extraordinary"149 and could "only be described as being sui generis"150. Of the power to make an order for the examination of a bankrupt, Jessel MR said in In re Wright; Ex parte Willey151: "Now that is a very grave power to entrust to any Court or any man, viz, power to summon any other man whom you suspect (for mere suspicion will do) to be capable of giving information, and to get any information from him, although that information may be extremely hostile to the interests of the man himself. It is a power which, so far as I know, is found nowhere except in bankruptcy and the winding-up of companies 144 Re Crust 'N' Crumb Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76 at 78. 145 (1998) 195 CLR 1 at 47 [80]; [1998] HCA 30. 146 10 & 11 Vict c 102. 147 Companies Act 1862 (UK) (25 & 26 Vict c 89), ss 115, 138. 148 See Dalton v NSW Crime Commission (2006) 227 CLR 490 at 509 [50]. 149 In re North Australian Territory Co (1890) 45 Ch D 87 at 93. 150 In re Rolls Razor Ltd (No 2) [1970] Ch 576 at 592. 151 (1883) 23 Ch D 118 at 128. (which is a kind of bankruptcy); it is a very extraordinary power indeed, and it ought to be very carefully exercised." In In re Greys Brewery Co152, Chitty J referred to s 115 of the Companies Act 1862 (UK) – the provision originally conferring power on the Court of Chancery to order an examination in relation to the affairs of a company in winding up – as the "'Star Chamber' clause". How then, in light of that history, should this Court approach the characterisation of a power to order an examination conferred on a court by what those who support its validity argue to be a modern equivalent of that "'Star Chamber' clause"? We must be careful not to slip into "Montesquieuan fundamentalism"153. We must bear in mind that the Constitution as a whole was framed as "an instrument of government meant to endure and conferring powers expressed in general propositions wide enough to be capable of flexible application to changing circumstances"154. We must recognise that "[t]he modern regulatory state arrived after 1900", with consequences which include that "modern federal legislation creates rights and imposes liabilities of a nature and with a scope for which there is no readily apparent analogue in the pre-federation legal systems of the colonies"155 and that "[d]eciding whether a governmental power or function is best exercised administratively or judicially is a regular legislative exercise"156. We must also be sensitive to the consideration that "the exercise of powers, independently, impartially and judicially, especially when such powers affect the liberty of the individual, would ordinarily be regarded as a good thing, not something to be avoided"157. Fidelity to the values which inform the separation of the judicial power of the Commonwealth nevertheless requires that we be extremely cautious about accretion to the judicial power of a power to inquire which is unrelated or tenuously related to the core judicial function of quelling controversies about 152 (1883) 25 Ch D 400 at 408. 153 Wainohu v New South Wales (2011) 243 CLR 181 at 201-202 [30]. 154 Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 81; [1945] HCA 41. 155 White v Director of Military Prosecutions (2007) 231 CLR 570 at 595 [48]. 156 Thomas v Mowbray (2007) 233 CLR 307 at 327 [12]. 157 Thomas v Mowbray (2007) 233 CLR 307 at 329 [17]. legal rights. To admit that an inquiry into a subject-matter is in the public interest is very different from admitting that the conferral of a power to conduct such an inquiry on a court accords with the constitutional structure that has been created to secure the enduring interests of the Commonwealth. Our job is to take a long-term view. In Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd158, French J held that s 596A of the Corporations Act is limited on its proper construction to requiring the making, on the application of an "eligible applicant", of an order for examination of a person who is or was during a prescribed period an officer or provisional liquidator about the "examinable affairs" of a corporation that is in "external administration" within the meaning of Ch 5 of the Corporations Act. That holding has not been challenged. External administration within the meaning of Ch 5 includes winding up by order of the court in the event of insolvency under Pt 5.4 or on other grounds under Pt 5.4A. External administration also includes voluntary winding up, by special resolution of the company, under Pt 5.5. Commencement of winding up results in each case in the appointment of one or more liquidators (which may include a "special purpose" liquidator)159: who is or are subject to the supervision of the court160; who, on cause shown, can be removed by the court161; and who can apply to the court for the determination of questions arising in the winding Other forms of external administration within the meaning of Ch 5 are many and varied, but they have in common the temporary control over the property or affairs of a company (or other body under Pt 5.7) subject to the supervision of the court. They include administration of a company's affairs with a view to executing a deed of company arrangement under Pt 5.3A, which may be triggered by the appointment of an administrator163 who is to have control of the business of the company164, as well as administration conducted by an 158 (2007) 156 FCR 501. 159 Sections 472, 495 and 511 of the Corporations Act. 160 Section 536 of the Corporations Act. 161 Sections 473 and 503 of the Corporations Act. 162 Sections 479 and 511 of the Corporations Act. 163 Section 435C of the Corporations Act. 164 Section 437A of the Corporations Act. administrator under such deed of company arrangement as the creditors of the company might resolve that the company execute under Pt 5.3A165. They include such administration as might be conducted by a person appointed to administer a compromise or arrangement approved by a court between a company and its creditors or members under Pt 5.1. Finally, they include such administration as might be conducted by a "controller" of property of a corporation, being a receiver or another person having possession or control of that property for the purpose of enforcing a security interest166. Under Pt 5.2, a controller, like a liquidator: is subject to the supervision of the court167; can be removed by the court168; and can apply to the court for directions arising in the performance or exercise of any of the controller's functions or powers169. Eligible applicants for an order under s 596A are limited to liquidators (including provisional liquidators), administrators, and the Australian Securities and Investments Commission (and persons appointed by it to be applicants)170. Examinable affairs, although broadly defined, do not extend beyond the affairs of the corporation and connected entities or matters connected to those affairs171. The purpose of Pt 5.9, it has repeatedly been recognised, is to aid persons who have the responsibility of the external administration of a corporation in carrying out their duties172, and it has been recognised that an examination could be restrained as an abuse of process were it to be conducted for an improper purpose such as a purpose of establishing guilt173. Moreover, as Martin CJ 165 See Re Sons of Gwalia Ltd; Ex parte Love (2008) 218 FLR 49 at 67-68 [71]-[72]; Ariff v Fong (2010) 79 NSWLR 392 at 408 [55]. 166 Section 9 of the Corporations Act, definition of "controller". 167 Section 423 of the Corporations Act. 168 Section 434A of the Corporations Act. 169 Section 424 of the Corporations Act. 170 Section 9 of the Corporations Act, definition of "eligible applicant". 171 Section 9 of the Corporations Act, definition of "examinable affairs". 172 Evans v Wainter Pty Ltd (2005) 145 FCR 176 at 216 [245]. See also New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 613; Meteyard v Love (2005) 65 NSWLR 36 at 40 [7]. 173 Meteyard v Love (2005) 65 NSWLR 36 at 40 [8], quoting Hamilton v Oades (1989) 166 CLR 486 at 498. explained in Saraceni v Jones174, the court making an order under s 596A has an important role in supervising under ss 596F and 597 the conduct of the examination it has ordered, being a role which coincides closely with what Barwick CJ described in Rees v Kratzmann175 as "the traditional judicial function of ensuring that the examination is not made an instrument of oppression, injustice, or of needless injury to the individual". Construed and confined in that way, the duty s 596A imposes on a court to order an examination does not take the court beyond the role of supervising an administration. The section meets in its entirety the description given by Lockhart J in BP Australia Ltd v Amann Aviation Pty Ltd176 and adopted by Brennan CJ and Toohey J in Gould v Brown177 of "part of the processes … which ultimately protect and adjust the rights of companies, their creditors and in some cases contributories" in which the overall role of the court is "supervisory". Not all of the processes of administration in question are triggered by a court order, but the supervisory role of the court in relation to each is not materially different. The persons who may apply for an order for examination under s 596A, the persons who may be examined and the subject-matter of an examination resulting from such an order, all go beyond the persons and subject-matter of an examination capable of being ordered in the exercise of powers conferred on courts in the Australian colonies before 1900. They do not, however, do so in a manner or to an extent that engages any more acutely the concerns which have resulted, as a general rule, in the exclusion of a mere power to inquire from the concept of judicial power. On that basis, which I understand to correspond with the substance of the reasoning of French J in Highstoke and to be consistent with the observations made on refusing special leave to appeal in Saraceni v Jones178, I consider s 596A to confer a judicial power. The concept of a "matter" was chosen by the framers for inclusion in ss 75, 76 and 77 of the Australian Constitution in preference to the expressions "cases" and "controversies" in §2 of Art III of the United States Constitution in order to ensure that federal jurisdiction would not be confined to cases in which 174 (2012) 42 WAR 518 at 534 [66]. 175 (1965) 114 CLR 63 at 66. 176 (1996) 62 FCR 451 at 475. 177 (1998) 193 CLR 346 at 387-388 [33]. 178 (2012) 246 CLR 251 at 256-257 [3]-[4]. there were parties but would encompass all "such matters as can arise for judicial determination"179. In the paradigm case of an exercise of the judicial power of the Commonwealth that is directed to the quelling of a controversy about legal rights, the "matter" extends, if not to the entirety of the circumstances giving rise to the totality of the controversy, then to at least so much of the circumstances as give rise to so much of the controversy as is committed by the Parliament to the judicial determination of a court exercising federal jurisdiction180. Outside the paradigm case, the "matter" might be otherwise defined. For example, the jurisdiction that was conferred on the Family Court by s 63(1) of the Family Law Act 1975 (Cth)181 "in relation to matters arising under" Pt VII of that Act in proceedings in relation to the custody, guardianship or welfare of a child is a statutory jurisdiction similar to the parens patriae jurisdiction traditionally exercised by the Court of Chancery. In that context, the "matter" has been treated as properly identified as "the welfare of a child"182. The "matter" to which the exercise of the judicial power of supervision under Pt 5.9 of the Corporations Act (of which s 596A is a part) is directed is that appropriately identified as external administration under and in accordance with the Corporations Act. It is a matter within s 76(ii) of the Constitution. 179 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 31 January 1898 at 320. See Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 765. 180 Abebe v The Commonwealth (1999) 197 CLR 510; [1999] HCA 14. 181 See now s 69H of the Family Law Act 1975 (Cth). 182 Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 257; [1992] HCA 15.

HIGH COURT OF AUSTRALIA PRINCE ALFRED COLLEGE INCORPORATED APPELLANT AND ADC RESPONDENT Prince Alfred College Incorporated v ADC [2016] HCA 37 5 October 2016 ORDER Appeal allowed with costs. Set aside the order of the Full Court of the Supreme Court of South Australia made on 10 November 2015 and the order of that Court made on 24 March 2016, and in their place order that the appeal be dismissed with costs. On appeal from the Supreme Court of South Australia Representation M C Livesey QC with B J Doyle and K G Handshin for the appellant (instructed by Wallmans Lawyers) B W Walker SC with E Holmes for the respondent (instructed by Astrid Macleod Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Prince Alfred College Incorporated v ADC Limitation of actions – Extension or postponement of limitation periods – Extension of time in personal injury matters – Principles upon which discretion exercised – Where extraordinary delay – Where deficiencies in evidence due to passage of time – Where absence or death of witnesses – Where loss of documentary evidence – Where earlier decision by claimant not to institute proceedings – Whether just in all the circumstances to grant extension of time. Tort – Vicarious liability – Course of employment – Where boarding school employed housemaster – Where housemaster sexually abused boarder – Consideration of correct approach to vicarious liability of employer for intentional criminal acts of employee – Whether employment gave "occasion" for wrongdoing – Whether employee placed in special position vis-à-vis victim – Whether features of special position warrant finding of liability. Procedure – Courts and judges generally – Determination of issues – Whether appropriate for trial judge to determine all litigated issues. Words and phrases – "authority", "close connection", "control", "course or scope of employment", "extension of time", "extraordinary delay", "fair and just", "intimacy", "occasion", "opportunity", "power", "special features", "special position", "trust", "vicarious liability". Limitation of Actions Act 1936 (SA), s 48. FRENCH CJ, KIEFEL, BELL, KEANE AND NETTLE JJ. In 1962 the respondent was sexually abused by one Dean Bain. The respondent was then 12 years old and a boarder at the Prince Alfred College ("the PAC"). Bain was employed by the PAC as a housemaster. In December 2008 the respondent brought proceedings against the PAC in the Supreme Court of South Australia. In those proceedings the respondent alleged that the PAC was liable in damages to him on three alternative bases: that it breached its non-delegable duty of care that it owed him; that it was negligent and breached its duty of care; and that even if the PAC was not itself at fault, it was vicariously liable for the wrongful acts of its employee, Bain. This Court considered issues of this kind in New South Wales v Lepore1, a case involving the sexual abuse of a child by a teacher at a school. The Court held, by a majority, that a school's non-delegable duty of care with respect to a pupil did not extend to the intentional criminal conduct of a teacher, in the nature of sexual abuse2. The question of the school's vicarious liability for those acts was also considered, but no majority view emerged from the judgments. The respondent required an extension of time within which to bring the proceedings. Section 48 of the Limitation of Actions Act 1936 (SA) ("the Limitations Act") permits a court to extend the time prescribed for instituting an action. The power is discretionary. The respondent was required to show that it was just in all the circumstances for the court to extend the limitation period3 and that the PAC would not be significantly prejudiced if the discretion was exercised in his favour4. The primary judge, Vanstone J, dismissed the respondent's claims. Her Honour found that no case for the PAC's liability had been established on any of (2003) 212 CLR 511; [2003] HCA 4. 2 New South Wales v Lepore (2003) 212 CLR 511 at 534-535 [36]-[39], 598-601 3 Limitation of Actions Act 1936 (SA), s 48(3)(b). 4 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25. Bell Nettle the bases claimed5. Her Honour then said that she would have refused an extension of time on the basis that the effluxion of time was so great that the PAC would be prejudiced in its attempts to defend the claims6. Each of the members of the Full Court (Kourakis CJ, Gray and Peek JJ) allowed the appeal from the primary judge's decision as to liability on the basis that the PAC was vicariously liable and held that an extension of time should have been granted7. Gray J would also have found the PAC in breach of its duty of care. The PAC appeals from that decision. The respondent, by notice of contention, seeks to argue that the Full Court should have found that the PAC breached its duty of care to the respondent and that the issue of non-delegable duty of care was wrongly decided in New South Wales v Lepore. The appeal must be allowed on the basis that the Full Court erred in holding that the respondent should have been granted an extension of time, under the Limitations Act, within which to bring his proceedings against the PAC. The extraordinary delay of over 11 years between the time of an apparent resolution of any claim against the PAC and the commencement of proceedings was not justified by the circumstances of this case and meant that a fair trial on the merits was no longer possible. The Court generally encourages primary judges to deal with all issues, even if one is dispositive, so that any appeal may be final. However, in this case, it was inappropriate for the primary judge to determine the question of liability due to her Honour's finding that an extension of time should not be granted. For the same reason, this Court, in upholding the primary judge's conclusion as to the extension of time, could not determine the question of liability for itself. Nevertheless, the principles governing the liability of an employer for the intentional criminal act of an employee are relevant to the question of extension of time. This is because it is within the framework of those principles that the possibility of a fair trial on the merits, relevant to the extension 5 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [108], [138], 6 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [229]-[231]. 7 A, DC v Prince Alfred College Inc [2015] SASCFC 161. Bell Nettle question, must be considered. Moreover, as a result of the differing views expressed in the judgments in this Court in New South Wales v Lepore, there is a need for some guidance to be provided by this Court to intermediate appellate courts so as to reduce the risk of unnecessary appellate processes arising out of the existing uncertainties. The respondent's evidence It was not in dispute that the respondent had been subjected to abuse by Bain. Bain was convicted in 2007 of two counts of indecent assault against the respondent and of other offences involving two other boarders at the PAC. The primary judge found that the abuse of the respondent continued for some months. The respondent gave evidence that there was a senior housemaster and three housemasters, of which Bain was one, in charge of the three dormitories in the boarding house of the PAC in which the respondent resided. He said that the housemasters were present during meal times. The prefects supervised the day- to-day activities of the junior boys including study, showering and "lights out" and disciplined them when rules were broken. The prefects could, if necessary, send boys to the senior housemaster for discipline. The respondent said that Bain was rostered on two to three times a week and was often around during shower time. He often told stories to the boys in the dormitory after lights out. The respondent said that the other housemasters did not supervise lights out and did not come into his dormitory. The respondent gave evidence that the abuse commenced on an occasion when Bain was telling a story after lights out. Bain placed the respondent's hand on Bain's penis. The second incident occurred while Bain was telling a story after lights out when he fondled the respondent's genitals under the bedding. Thereafter the respondent attended at Bain's room at Bain's request on about 20 occasions and was there molested by Bain. On another occasion the respondent said that he was taken by Bain to a house where they spent the night together, during which Bain molested him again. Bain was dismissed from his employment shortly after the PAC came to hear of the abuse of the respondent. The boarders were told of the dismissal and told not to talk about it outside of the school. The respondent was told by the school chaplain that he could talk to him if he needed help. The respondent suffered symptoms of psychological injury and they continued, intensifying in their effects from time to time. After marrying and having children the respondent described feeling an abnormal depth of fear for Bell Nettle his children's welfare. By the early 1980s he was suffering anxiety and was drinking heavily. In the 1990s he started attending "Alcoholics Anonymous" meetings. Up until 1996 the respondent was otherwise coping with his family life and his businesses, which were successful. In 1996 the respondent's son began attending the PAC. Attending sports days and functions at the PAC triggered flashbacks and dissociation. The respondent felt "panicky" and suffered nightmares. He consulted a psychologist. The expert evidence was that he had been suffering from post-traumatic stress disorder. The primary judge found that it had been undiagnosed from the early onset of the symptoms. The respondent's condition was made worse by hearing Bain's voice on the radio in early 1997. He resumed drinking. In March and April 1997 the respondent sought legal advice. During meetings with his lawyers the need for an extension of time, in which to bring a claim for damages against the PAC, was discussed. The respondent was advised of the risk that time would not be extended, of the costs of litigation, and that his chances of success against the PAC were less than 50 per cent. The respondent decided not to sue the PAC at that time. An important factor in this decision was that he considered it had done the right thing by dismissing Bain. At a meeting in May 1997 with representatives of the PAC the respondent advised them that it was not his intention to sue the PAC, but that he was seeking its acceptance of what had happened as well as financial assistance. In September 1997, there was a further meeting between the respondent, his lawyers and representatives of the school. The PAC offered to pay the respondent's medical and legal fees to that point, as well as to meet his son's school fees of about $10,000 per year for the following three years. The respondent accepted this offer. In August 1997, the respondent commenced civil proceedings against Bain. In September 1999, the respondent reached a settlement with Bain pursuant to which Bain agreed to pay $15,000 to the respondent. By early 2002 the respondent felt very debilitated. He had attempted self-harm. He was admitted to a psychiatric clinic for a month between 11 June and 9 July 2002 and he commenced seeing a psychiatrist. He was readmitted in August 2003, suffering from suicidal thoughts. In late 2004 the respondent stopped working. He was not coping and his marriage was deteriorating. He contacted the PAC again, seeking further Bell Nettle financial assistance, such as by way of a wage or pension, but he received no offer. He was readmitted to a psychiatric clinic. After discharge his symptoms became more severe. In 2005 the psychologist whom he had been seeing expressed the opinion that the respondent would not work full-time again. His business failed and he was required to sell his family home. In April 2005 he asked the PAC for $1 million and a refund of his school fees on account of his desperate financial circumstances. The PAC did not accede to this request. The respondent engaged in part-time work until September 2011. He was readmitted to the psychiatric clinic on a number of occasions between 2005 and By the time the proceedings were commenced in December 2008 a number of persons who may have been witnesses in the proceedings had died. They included the persons who had been the headmaster, the senior master and the school chaplain of the PAC in 1962. The senior housemaster was ill and unable to give evidence. The psychologist whom the respondent first consulted had destroyed his notes. Liability – the decisions below The primary judge held8, by reference to New South Wales v Lepore, that the non-delegable duty of care which the PAC owed to the respondent did not extend to a duty to protect him against the intentional criminal conduct of Bain, in the absence of fault of its own. The respondent's case that the PAC breached its duty of care to him had three limbs: it failed to make proper enquiries before employing Bain; it failed to supervise Bain; and it did not respond appropriately when it learned of the abuse that the respondent had suffered. The primary judge held9 that this case was not made out. Her Honour was not satisfied that any enquiry which the PAC could have made of Bain's referees would have resulted in information about rumours 8 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [108]. 9 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [138], [151], Bell Nettle concerning his conduct at a previous school being provided10. It had not been established that the PAC could have obtained information about his criminal record at that time. Moreover, there was no practice of schools undertaking criminal record checks at the time11. The primary judge was unable to find on the evidence before her that the systems in place, or the level of supervision of housemasters, were so deficient as to amount to a breach of duty. It was found that it would have been wholly impractical to prevent a housemaster being alone with a boarder12. The evidence did not permit the primary judge to make sufficient findings to determine whether the PAC breached its duty to the respondent in its response to learning of Bain's conduct13. The primary judge was unable to make findings relevant to the question of vicarious liability because of the state of the evidence. There was insufficient evidence of a reliable nature about Bain's designated role upon which to base a conclusion that what he did was done in the course of employment, her Honour explained14. Any conclusion about whether the activities generally undertaken by Bain in the dormitories after lights out were within the role assigned to him by the PAC was necessarily speculative15. Nevertheless, on the assumption that these activities were part of Bain's assigned role, her Honour concluded that the sexual abuse was "so far from being connected to Bain's proper role that it could neither be seen as being an unauthorised mode of performing an authorised act, nor in pursuit of the employer's business, nor in any sense within the course of Bain's employment"16. 10 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [133]. 11 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [134]. 12 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [151]. 13 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [166]. 14 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [174]. 15 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [177]. 16 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [179]. Bell Nettle The PAC did not, by any requirement of Bain, "create or enhance the risk of Bain sexually abusing the [respondent]"17. In the Full Court, Gray J would have allowed the appeal on the ground that the PAC had breached its duty of care to the respondent in each of the respects alleged18. Although the primary judge had pointed to a dearth of evidence as to these matters, his Honour was unable to accept that the PAC could not have done more. Each member of the Full Court found the PAC to have been vicariously liable, but the approaches taken by their Honours differed from that taken by the primary judge and differed as between themselves. In the view of Kourakis CJ, the primary judge had taken an unduly narrow approach to vicarious liability, namely to enquire as to whether Bain had been specifically directed to settle the boarders after lights out. The legally relevant question was a wider one. It was whether those actions were within the scope of Bain's employment duties and whether the sexual abuse took place in the ostensible performance of those duties19. Gray J surveyed the judgments in New South Wales v Lepore, which, in turn, considered a number of Canadian and United Kingdom authorities. His Honour observed20 that Bain had consistent access to the boys and was placed by the school in a position of authority, trust and intimacy in relation to them. It was foreseeable, his Honour considered21, that boarding house staff, to whom the PAC had delegated its duty of care, were in a position of trust and able to take advantage of boarders. His Honour's conclusion of vicarious liability therefore seems to have been based upon a breach of duty of care rather than whether the PAC, regardless of the fact that it was not at fault, should be liable for Bain's acts. 17 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [179]. 18 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [92], [100], [106], [149]. 19 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [4]. 20 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [128]. 21 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [129]. Bell Nettle Peek J undertook an even more detailed analysis of "[t]he developing doctrine of vicarious liability in Australia", the differing judgments in New South Wales v Lepore, the importance of the relationship between the boarders and persons having a quasi-parental role to the question of vicarious liability, and developments in English case law. His Honour's resolution of the issue of vicarious liability focused upon the combination of power, intimacy and subservience present in the relationship. In his Honour's view the abuse was "so closely connected" to the employment "as to make it just to impose vicarious liability"22. The sexual abuse was "inextricably interwoven" with the master's carrying out of his duties so as to render it "fair and just to impose vicarious liability"23. The notice of contention The respondent submits that the PAC should have been found liable in negligence for the reasons given by Gray J. However, his Honour identified no error in the primary judge's reasoning on the available evidence. His Honour's view, that the PAC could have done better in all three respects identified by the respondent, was not based on any evidence and was purely speculative. So far as concerns the PAC's non-delegable duty of care owed to the respondent, the respondent contends that New South Wales v Lepore was wrongly decided. However, submissions for the respondent do not address the matters required to invoke the authority of this Court to reconsider a previous decision24. They are addressed to arguments which were rejected by the majority in New South Wales v Lepore. The only issue necessary to be considered with respect to liability is therefore vicarious liability. 22 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [261]. 23 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [261]. 24 Queensland v The Commonwealth (1977) 139 CLR 585; [1977] HCA 60; John v Federal Commissioner of Taxation (1989) 166 CLR 417; [1989] HCA 5; Wurridjal v The Commonwealth (2009) 237 CLR 309; [2009] HCA 2; Beckett v New South Wales (2013) 248 CLR 432; [2013] HCA 17. Bell Nettle Vicarious liability The judgments of the courts below in this case reflect the divergent views about the approach to be taken to the question of vicarious liability both generally and in cases of the kind here in question. Differing views were also expressed in New South Wales v Lepore. New South Wales v Lepore itself was decided against the background of developments in Canada and the United Kingdom, the catalyst for which appears to have been cases of this kind – concerning the sexual abuse of children in educational, residential or care facilities by persons who were placed in special positions with respect to the children. Since New South Wales v Lepore there have been further developments in each of these jurisdictions. It is therefore understandable that trial courts and intermediate appellate courts in Australia are left in an uncertain position about the approach which should be taken. A general basis for vicarious liability? Vicarious liability is imposed despite the employer not itself being at fault. Common law courts have struggled to identify a coherent basis for identifying the circumstances in which an employer should be held vicariously liable for negligent acts of an employee, let alone for intentional, criminal acts. There have been concerns about imposing an undue burden on employers who are not themselves at fault, and on their business enterprises. On the other hand, the circumstances of some cases have caused judges to exclaim that it would be "shocking" if the defendant employer were not held liable for the act of the employee25. No doubt largely because of these tensions vicarious liability has been regarded as an unstable principle, one for which a "fully satisfactory rationale for the imposition of vicarious liability" has been "slow to appear in the case law"26. Vicarious liability has not to date been regarded as a form of absolute liability, although policy choices, and the questions posed for the determination of vicarious liability, can lead in that direction. The traditional method of the common law of confining liability, in order to reflect some balance between competing interests, is the requirement that the employee's wrongful act be 25 Lloyd v Grace, Smith & Co [1912] AC 716 at 738 per Lord Macnaghten. 26 Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 37 [35]; [2001] HCA 44. See also Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161 at 166 [11]; [2006] HCA Bell Nettle committed in the course or scope of employment27. At the least this provides an objective, rational basis for liability and for its parameters. Difficulties, however, often attend an enquiry as to whether an act can be said to be in the course or scope of employment. It is to some extent conclusionary and offers little guidance as to how to approach novel cases. It has the added disadvantage that it may be confused with its use in statutes, where it has a different operation. In statutes providing compensation for injury suffered by employees it operates as a limit upon a right to compensation28; in the common law it is an essential requirement for vicarious liability. But it has not yet been suggested that it should be rejected. It remains a touchstone for liability. Long ago, Sir John Salmond proposed tests for determining whether an act was in the course of employment29. They were whether the act (a) is authorised by the employer; or (b) is an unauthorised mode of doing some other act authorised by the employer. He went on further to explain that an employer would also be liable for unauthorised acts provided that they are "so connected" with authorised acts that they may be regarded as modes, although improper In recent decisions of the courts of Canada and the United Kingdom this explanation appears to have provided a springboard for the development of tests which have regard, more generally, to the connection between the wrongful act and the employment and, in the United Kingdom, to what a judge determines to be fair and just. As appears from those decisions, the new tests of connection were devised not only to provide an explanation for cases of the kind to which they were initially addressed – involving the sexual abuse of children in educational, residential or care facilities by employees having special positions with respect to the children – but also to serve as a basis for vicarious liability which might apply more generally. 27 This is not confined to the common law: see Markesinis and Unberath, The German Law of Torts: A Comparative Treatise, 4th ed (2002) at 696 as to the equivalent "in the exercise of the function assigned to him". 28 See eg Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 5A, 6, 6A. 29 Salmond, The Law of Torts, (1907) at 83. 30 Salmond, The Law of Torts, (1907) at 83-84. Bell Nettle The identification of a general principle for vicarious liability has, however, eluded the common law for a long time. In EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia, Binnie J counselled31 that: "Overly frequent resort to general principles opens the door to subjective judicial evaluations that may promote uncertainty and litigation at the expense of predictability and settlement." Of course, if a general principle favours the imposition of liability it may be said to provide some level of certainty. And, if a general principle provides that liability is to depend upon a primary judge's assessment of what is fair and just, the determination of liability may be rendered easier, even predictable. But principles of that kind depend upon policy choices and the allocation of risk, which are matters upon which minds may differ. They do not reflect the current state of the law in Australia and the balance sought to be achieved by it in the imposition of vicarious liability. Since the search for a more acceptable general basis for liability has thus far eluded the common law of Australia, it is as well for the present to continue with the orthodox route of considering whether the approach taken in decided cases furnishes a solution to further cases as they arise. This has the advantage of consistency in what might, at some time in the future, develop into principle. And it has the advantage of being likely to identify factors which point toward liability and by that means provide explanation and guidance for future litigation. Such a process commences with the identification of features of the employment role in decided cases which, although they may be dissimilar in many factual respects, explain why vicarious liability should or should not be imposed. Earlier English and Australian authorities The decision of the House of Lords in Lloyd v Grace, Smith & Co32 has been referred to with approval on many occasions. It holds an important place in the development of the law relating to vicarious liability because it corrected the 31 EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45 at 70 [41]. Bell Nettle view, then current, that there should be no recovery for an employee's wrongful act unless it is undertaken in furtherance of the employer's interests. The case is no less important for the features it identifies in relation to the employee's role, and thus whether certain intentional acts of an employee warrant the imposition of liability on the employer. The question then is, what are these features? The employee in Lloyd v Grace, Smith & Co was a managing clerk who conducted the conveyancing business of the defendant, a firm of solicitors, unsupervised. The plaintiff sought advice regarding two properties she owned. She was introduced to the managing clerk for that purpose and left to his attentions. The clerk induced the plaintiff to give him the deeds to the properties for the purpose of their sale and to sign two documents. The documents conveyed the properties to him. The firm was held liable for his conduct because it took place in the course of his employment. Earl Loreburn spoke of the clerk having been entrusted with the client's business as a representative of the firm33 and Lord Shaw of Dunfermline of the apparent authority by which he was able to commit the fraud34. Lord Macnaghten, with whom Lord Atkinson agreed, pointed out35 that the plaintiff thought the clerk was a member of the firm and implied that she was not to know the limits of his authority. His Lordship observed36 that the partner of the firm who had appointed the employee "put this rogue in his own place and clothed him with his own authority". Morris v C W Martin & Sons Ltd37 has been described as a classic example of vicarious liability for intentional wrongdoing38 even though most of the judgments did not deal with that topic and decided the matter on the basis of bailment. The owner of a mink fur sent it to a furrier. With her permission the furrier delivered it to the defendants for cleaning. The employee who was given 33 Lloyd v Grace, Smith & Co [1912] AC 716 at 724. 34 Lloyd v Grace, Smith & Co [1912] AC 716 at 740. 35 Lloyd v Grace, Smith & Co [1912] AC 716 at 728, 738-739. 36 Lloyd v Grace, Smith & Co [1912] AC 716 at 738. 38 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 225 [19] per Lord Steyn. Bell Nettle charge of it for that purpose stole it. The Court of Appeal held the employer liable. Diplock LJ applied39 "the principle laid down in Lloyd v Grace, Smith & Co" to the facts of that case and said: "They [the employer] put Morrissey as their agent in their place to clean the fur and to take charge of it while doing so. The manner in which he conducted himself in doing that work was to convert it. What he was doing, albeit dishonestly, he was doing in the scope or course of his employment". Diplock LJ made it plain that, for an act to be said to be in the course of employment, something more was necessary than that the employment merely create an opportunity for the wrongful act to take place40. This is a view which has been consistently applied41. It could have been said of the facts of Deatons Pty Ltd v Flew42, referred to below, that more was required than that the barmaid had access to glasses which could be thrown at customers. And, as will be seen, some Canadian cases concerning sexual abuse show that more is necessary for liability than that the employment puts an employee in a place where children are present. These are cases where the employment provides an opportunity for the act to occur, but the act cannot be said to be in the course or scope of the employment. Lloyd v Grace, Smith & Co was referred to with approval by Dixon J in Deatons Pty Ltd v Flew43, a case in which it was sought to render the employer liable for an assault by an employee. On the plaintiff's version of events, which had been accepted by a jury, he was the victim of an inexplicable and unprovoked attack by a barmaid when he asked to speak to the licensee. She 39 Morris v C W Martin & Sons Ltd [1966] 1 QB 716 at 736-737. 40 Morris v C W Martin & Sons Ltd [1966] 1 QB 716 at 737. 41 Jacobi v Griffiths [1999] 2 SCR 570 at 598 [45], 600 [51], 619 [81] per Binnie J; Lister v Hesley Hall Ltd [2002] 1 AC 215 at 229 [25], 235 [45], 237 [50], 241 [59], 244 [65], 247 [75], 249-250 [81]-[82]; New South Wales v Lepore (2003) 212 CLR 511 at 546 [74] per Gleeson CJ. 42 (1949) 79 CLR 370; [1949] HCA 60. 43 (1949) 79 CLR 370. Bell Nettle responded by throwing a glass at him and he suffered the loss of the sight of an eye. Dixon J held44 that the barmaid could not be said to have acted in the course of her employment in taking that action. Her actions were entirely unconnected with her employment. His Honour described45 the barmaid's act as one of personal "passion and resentment" not done in furtherance of the employer's interests, under his express or implied authority or as an incident to, or in consequence of, anything she was employed to do. She did not throw the beer or glass in the course of maintaining discipline or order, for which she was not in any event authorised. More relevantly, for present purposes, his Honour said46, by reference to Lloyd v Grace, Smith & Co, that it was not one of those acts for which an employer may be liable because they were acts "to which the ostensible performance of his master's work gives occasion or which are committed under cover of the authority the servant is held out as possessing or of the position in which he is placed as a representative of his master". Although the term "authority" is used in Lloyd v Grace, Smith & Co and Morris v C W Martin & Sons Ltd, it was not just ostensible authority which was decisive of those cases. Fundamentally, those cases were decided by reference to the position in which the employer had placed the employee vis-à-vis the victim of the wrongful act, as the passage from Diplock LJ set out above makes plain. In the words of Dixon J, the position is one to which the apparent performance of the employment "gives occasion" for the wrongful act47. In Lloyd v Grace, Smith the client's perspective, was indistinguishable from that of a partner of the firm. Because of what the clerk's position conveyed to the client, the clerk was able to secure the client's trust and confidence so that she unhesitatingly complied with his requests with respect to the deeds and the documents. In Morris v C W Martin & Sons the position of the employee was again one of trust, but is perhaps more simply explained by reference to the level of control he was given over the property. the clerk, from the position of 44 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 380. 45 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 381-382. 46 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 381. 47 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 381. Bell Nettle As will be seen, in cases involving the sexual abuse of children at educational, residential or care facilities, Canadian courts have taken an approach to vicarious liability which, although expressed in terms of an "enterprise risk theory", emphasises features analogous to the considerations which proved determinative in Lloyd v Grace, Smith & Co. Canada Bazley v Curry48 involved sexual abuse by an employee who, unknown to a children's foundation which conducted residential care facilities for the treatment of emotionally troubled children, was a paedophile. His role with respect to the children was effectively that of substitute parent. There could therefore be little doubt about the power and control which he was able to exert over the children in his charge. However, in finding the employer liable, the Supreme Court of Canada did not focus on these features as determinative of liability, but attempted to state a wider, more general, theory. The theory of liability stated in Bazley v Curry is that it is appropriate to impose liability where there is "a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom"49. The requirement of connection might be based on what had been said by Salmond50, as referred to above. However, the risk-allocation aspect of the theory is based largely on considerations of policy, in particular that an employer should be liable for a risk that its business enterprise has created or enhanced. Such policy considerations have found no real support in Australia or the United Kingdom. The "enterprise risk theory" was not disapproved in later cases in Canada. It was explained. In Jacobi v Griffiths, which was handed down the same day as Bazley v Curry, Binnie J said51 that the theory was "an effort to explain the existing case law, not to provide a basis for its rejection". And in later cases involving vicarious liability for sexual abuse the question of the connection between the abuse and the employment, or the enterprise, has been approached 48 [1999] 2 SCR 534. 49 Bazley v Curry [1999] 2 SCR 534 at 559 [41] (emphasis omitted). 50 As suggested by Lord Steyn in Lister v Hesley Hall Ltd [2002] 1 AC 215 at 224 51 Jacobi v Griffiths [1999] 2 SCR 570 at 610 [65] (emphasis omitted). Bell Nettle by reference to factors such as the authority and the power that the employee was able to exercise. The employer in Jacobi v Griffiths was a club which offered group activities for children at its premises and employed a program director for that purpose. He sexually abused children on occasions at his home, outside working hours. Binnie J, writing for the majority (L'Heureux-Dubé, McLachlin and Bastarache JJ dissenting), distinguished the two cases on their facts. Bazley v Curry, his Honour explained, involved persons having authority and power. By contrast, the program director had "no job-created authority to insinuate himself into the intimate lives of these children"52. The club did not confer any meaningful "power" over the children53. The activities for which he was engaged took place as group activities in a public place, not at his home54. In two further cases, John Doe v Bennett55 and EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia56, a similar approach was taken. In the former, which involved the actions of a priest, the Court proceeded on the footing that the enquiry is one of authority and that central to that enquiry lies the question of the power and control given to the employee57. In the latter case, which involved the acts of a man employed as a baker, boat-driver and odd-job man at a school, Binnie J identified58 the "critical inquiry" as concerning the powers, duties and responsibilities conferred on the employee. His Honour concluded59 that whilst the employment relationship 52 Jacobi v Griffiths [1999] 2 SCR 570 at 597 [43]. 53 Jacobi v Griffiths [1999] 2 SCR 570 at 621 [83]. 54 Jacobi v Griffiths [1999] 2 SCR 570 at 596-597 [43]. 55 [2004] 1 SCR 436. 56 [2005] 3 SCR 45. 57 John Doe v Bennett [2004] 1 SCR 436 at 446 [21]. 58 EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45 at 51-52 [2]. 59 EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45 at 75-77 [48]. Bell Nettle provided the employee with an opportunity to commit the wrongful acts, his assigned role fell short of what is required to attract vicarious liability. His employment did not put him in a position of "power, trust or intimacy with respect to the children"60. The United Kingdom In Lister v Hesley Hall Ltd, the abuser was a warden of a boarding house where pupils of the school, conducted by his employer, resided. The boarding house was intended to be the boys' home and the warden's role was one of complete supervision. As might be expected, it was found that his conduct in that role enabled him to establish control over the boys that he abused. Lord Steyn referred to Lloyd v Grace, Smith & Co and Morris v C W Martin & Sons Ltd as cases of high authority but not, it would appear, as offering guidance. His Lordship considered the decisive factor in the former to be that the client had been invited by the firm to deal with its managing clerk61 and in the latter that the employee had been given custody of the fur62. His Lordship did not identify the factors as furnishing a solution to whether the abuse could be said to have occurred in the course of employment, as might have been done. Rather, Lord Steyn appears to have considered that cases after Lloyd v Grace, Smith & Co necessarily focused "on the connection between the nature of the employment and the tort of the employee"63. The focus shifted from the features of decided cases to a search for a more general principle. The cases referred to by Lord Steyn in this regard (aside from Morris v C W Martin & Sons Ltd) did not involve an employee having any special authority or control. They may be seen as being far removed from the circumstance where an employee is placed in such a position as to enable the commission of a wrongful act. One case involved a driver deviating from his authorised route when conveying passengers to a specified destination64; the 60 EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45 at 78 [51]. 61 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 224 [17]. 62 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 226 [19]. 63 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 224 [17]. 64 Williams v A & W Hemphill Ltd [1966] SC (HL) 31. Bell Nettle other a milkman who disobeyed his employer's order not to allow children to help him on his rounds65. It may be accepted that these cases could be explained, in part, by reference to some internal connection of the tortious act and the employment. It is not necessary for present purposes to further explain them. Lord Steyn determined vicarious liability in Lister v Hesley Hall Ltd on the basis that the employer undertook to care for the boys through the service of a warden. This spoke of "a very close connection between the torts of the warden and his employment"66. The other members of the House of Lords agreed with The question ultimately posed in Lister v Hesley Hall Ltd contained the means by which the requisite "closeness" of the connection was to be assessed. It was "whether the warden's torts were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable" (emphasis added)68. In answering "yes", Lord Steyn described69 the sexual abuse as "inextricably interwoven" with the carrying out by the warden of his duties. Pausing at that point, it may immediately be accepted that the finding of vicarious liability in each of Lloyd v Grace, Smith & Co, Morris v C W Martin & Sons Ltd and other cases to which Lord Steyn referred may be explained by reference to there being a connection between the wrongful act and the employment. In most cases in which an act is found to have occurred or to have not occurred in the course of employment, the act can be said to be connected, or unconnected, to the employment. In Deatons Pty Ltd v Flew, Dixon J described the barmaid's acts, which did not give rise to liability, as "quite unconnected with her occupation or employment"70. But it is also to be observed that a test of 65 Rose v Plenty [1976] 1 WLR 141; [1976] 1 All ER 97. 66 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 227 [20]. 67 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 231 [34], 232 [37] per Lord Clyde, 238 [52] per Lord Hutton, 243 [63] per Lord Hobhouse of Woodborough, 245 [70] per Lord Millett. 68 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 230 [28]. 69 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 230 [28]. 70 Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 380. Bell Nettle connection does not seem to add much to an understanding of the basis for an employer's liability. As has been seen from Lister v Hesley Hall Ltd, a further requirement – that the connection be sufficient to make it "fair and just" to impose liability – is necessary. However, as was earlier observed, that requirement imports a value judgment on the part of the primary judge which, even if explained by reasons, will not proceed on any principled basis or by reference to previous decisions. As was said in Sullivan v Moody71, albeit in a different context, "[t]he question as to what is fair, and just and reasonable is capable of being misunderstood as an invitation to formulate policy rather than to search for principle". Lister v Hesley Hall Ltd was applied more recently in Mohamud v Wm Morrison Supermarkets plc72. There an employee serving at the sales counter of a petrol station responded offensively and aggressively to a request by the claimant, a customer, and then demanded that he leave. When the customer did so the employee followed him to his car and subjected him to two serious physical attacks. The employee's supervisor was unsuccessful in his attempts to stop the employee from acting as he did. In the judgment of Lord Toulson JSC, with whom the other members of the Supreme Court agreed, it was said that two matters should be considered: first73, what functions or "field of activities" have been entrusted by the employer to the employee or, in everyday language, what was the nature of his job? This question is to be approached broadly. The second74 is whether there is a sufficient connection between the position for which he was employed and his wrongful conduct "to make it right for the employer to be held liable under the principle of social justice which goes back to Holt CJ". The statements made by Holt CJ, to which reference is made in Mohamud75, suggest that a broad approach be taken to the liability of an employer. 71 (2001) 207 CLR 562 at 579 [49]; [2001] HCA 59. 73 Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 693 [44]. 74 Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 693 [45]. 75 Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 684-685 [12]-[16]. Bell Nettle In Mohamud it was considered that the employee's conduct, in the manner of answering the customer's request, was inexcusable, but within the field of activities assigned to him76. This would appear to be uncontroversial. The employee was clearly authorised to respond to enquiries. But this would not explain why the employer should be liable for the conduct of the employee which followed. The explanation given for the employer being held liable in Mohamud was that, because the employer had entrusted the employee with the position of serving customers, it was just that the employer should be held responsible for the employee's abuse of it77. The requirement was made out because there was an "unbroken sequence of events" and a "seamless episode", which involved the employee "following up on what he had said to the [customer]". This might show, in a temporal and causal sense, that there was a connection, but it would not give the answer to why it was fair and just to impose liability for the assaults. It does not explain how the actions could or should be said to be in the course or scope of the employment. In one sense Mohamud had regard to the position in which the employee was placed by the employer, but, unlike cases like Lloyd v Grace, Smith & Co, it was not explained how that meant liability should be attracted. There were no special features of his employment which would be associated with the offending. His want of authority, power or control over customers was confirmed by the fact that he was clearly subject to supervision. It is apparent that the carrying out of his employment duties did not provide the "occasion" for the offending. New South Wales v Lepore and Deatons Pty Ltd v Flew At the time that New South Wales v Lepore was decided neither Mohamud nor the Canadian cases following Jacobi v Griffiths had been decided. It could not then be discerned how the test for vicarious liability propounded in Lister v Hesley Hall Ltd might be applied more widely or how the Canadian cases of the kind here in question would come to focus attention on features of the employment in order to determine liability. It can, however, be observed that the Canadian approach to the "enterprise risk theory" did not attract any significant support in New South Wales v Lepore, and the recent test favoured by the United 76 Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 693-694 [47]. 77 Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 693-694 [47]. Bell Nettle Kingdom courts also did not attract unqualified support from members of the Court. It is well known that different approaches were taken to the question of vicarious liability in New South Wales v Lepore. Gleeson CJ appears to have been disposed to a consideration of whether the sexual abuse could be regarded as sufficiently connected with the responsibilities given to persons associated with school children so as to give rise to vicarious liability78. However, his Honour did not suggest that the question of liability should be answered by reference to whether the connection made it fair or just, but rather that the nature of the teacher's responsibilities might justify a conclusion that there is a sufficient connection for the abuse "fairly to be regarded as in the course of the teacher's employment"79. The responsibilities to which his Honour referred were those "that involve an undertaking of personal protection, and a relationship of ... Gleeson CJ's approach appears to have anticipated that later taken in the Canadian cases. And, as earlier explained, the Canadian approach is consistent with that taken to vicarious liability in Lloyd v Grace, Smith & Co and Deatons Pty Ltd v Flew. In the former, features were identified as arising from the special position in which the employment placed the managing clerk, and in the latter, it was explained that liability might arise where the employment provided the "occasion" for the wrongful act. Gaudron J considered that liability could be founded on a person being estopped from asserting that the person whose acts are in question was not acting as his or her employee, agent or representative when the acts occurred. Her Honour said that the test is whether the person seeking the benefit of the estoppel (the person injured) would reasonably assume the existence of a particular state of affairs81. Given her Honour's earlier references to Lloyd v Grace, Smith & Co and Morris v C W Martin & Sons Ltd, it may be open to infer that her Honour drew something from these cases about the position in which the employer had placed the employee. 78 New South Wales v Lepore (2003) 212 CLR 511 at 544 [67]. 79 New South Wales v Lepore (2003) 212 CLR 511 at 546 [74]. 80 New South Wales v Lepore (2003) 212 CLR 511 at 544 [67]. 81 New South Wales v Lepore (2003) 212 CLR 511 at 561 [130]-[131]. Bell Nettle McHugh J rested his judgment on the issue of the existence of a non- delegable duty of care. Gummow and Hayne JJ considered82 that recovery against an employer should not be extended beyond what was to be taken as the two kinds of cases identified by Dixon J in Deatons Pty Ltd v Flew, namely where the employee acted in intended pursuit or performance of the contract of employment or where the conduct occurred in the ostensible pursuit or apparent execution of authority which the employer held out the employee as having. With respect, that may be too narrow a view of what was held in that case. As has been explained, there is another aspect to Dixon J's approach, which draws from Lloyd v Grace, Smith & Co. The other basis for liability to which his Honour referred was the "occasion" which the apparent performance of the employment provided for the wrongful, intentional act to be committed. It is that aspect of Deatons Pty Ltd v Flew which is of particular relevance here. The relevant approach In cases of the kind here in question, the fact that a wrongful act is a criminal offence does not preclude the possibility of vicarious liability. As Lloyd v Grace, Smith & Co shows, it is possible for a criminal offence to be an act for which the apparent performance of employment provides the occasion. Conversely, the fact that employment affords an opportunity for the commission of a wrongful act is not of itself a sufficient reason to attract vicarious liability. As Deatons Pty Ltd v Flew demonstrates, depending on the circumstances, a wrongful act for which employment provides an opportunity may yet be entirely unconnected with the employment. Even so, as Gleeson CJ identified in New South Wales v Lepore83 and the Canadian cases show, the role given to the employee and the nature of the employee's responsibilities may justify the conclusion that the employment not only provided an opportunity but also was the occasion for the commission of the wrongful act. By way of example, it may be sufficient to hold an employer vicariously liable for a criminal act committed by an employee where, in the commission of that act, the employee used or took advantage of the position in which the employment placed the employee vis-à-vis the victim. 82 New South Wales v Lepore (2003) 212 CLR 511 at 594 [239]. 83 (2003) 212 CLR 511 at 544 [67]. Bell Nettle Consequently, in cases of this kind, the relevant approach is to consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. In determining whether the apparent performance of such a role may be said to give the "occasion" for the wrongful act, particular features may be taken into account. They include authority, power, trust, control and the ability to achieve intimacy with the victim. The latter feature may be especially important. Where, in such circumstances, the employee takes advantage of his or her position with respect to the victim, that may suffice to determine that the wrongful act should be regarded as committed in the course or scope of employment and as such render the employer vicariously liable. That approach may be tested against the Canadian cases earlier referred to and against Lister v Hesley Hall Ltd and Mohamud. It is consistent with the process of reasoning in the more recent Canadian cases in emphasising that, although it is not enough to found vicarious liability that employment provides an opportunity for the commission of a wrongful act, in cases of this kind, factors such as authority, power, trust, control and intimacy may prove critical. It is consistent in result with Lister v Hesley Hall Ltd, although different in process of reasoning, for it is apparent that the role assigned to the warden in that case placed him in such a position of power, authority and control vis-à-vis the victims as to provide not just the opportunity but also the occasion for the wrongful acts which were committed. Mohamud is not a case of this kind. However, it is apparent that the role assigned to the employee in that case did not provide the occasion for the wrongful acts which the employee committed outside the kiosk on the forecourt of the petrol station. What occurred after the victim left the kiosk was relevantly unconnected with the employee's employment. The approach of focusing on any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim, is also designedly different from the approach in Mohamud. This is because such a test of vicarious liability, requiring no more than sufficiency of connection – unconstrained by the outer limits of the course or scope of employment – is likely to result in the imposition of vicarious liability for wrongful acts for which employment provides no more than an opportunity84. 84 See Morgan, "Certainty in vicarious liability: a quest for a chimaera?", (2016) 75 Cambridge Law Journal 202 at 205. Bell Nettle In the present case, the appropriate enquiry is whether Bain's role as housemaster placed him in a position of power and intimacy vis-à-vis the respondent, such that Bain's apparent performance of his role as housemaster gave the occasion for the wrongful acts, and that because he misused or took advantage of his position, the wrongful acts could be regarded as having been committed in the course or scope of his employment. The relevant approach requires a careful examination of the role that the PAC actually assigned to housemasters and the position in which Bain was thereby placed vis-à-vis the respondent and the other children. It is evident from the primary judge's reasons with respect to liability that her Honour was alert to the importance of the evidence concerning the actual role assigned to Bain by the PAC to any determination of liability. The evidence did not permit her Honour to determine that question. Much of the evidence necessary to a determination had been lost. That raised a question as to whether the PAC could have a fair trial on the issue of liability. Further, as will be seen from what follows, the PAC would be prejudiced in other ways if it were required to defend an action at this late juncture. These matters were considered in more detail by her Honour when the question of the application for the extension of time to bring proceedings and the position of the PAC were considered. It is necessary to turn to those matters before determining whether a decision on vicarious liability is possible. An extension of time? The Limitations Act required the respondent to bring his action against the PAC by 17 July 1973, three years after his 21st birthday85. In 1996 the respondent was diagnosed with post-traumatic stress disorder. He had suffered symptoms of psychological damage for some years. In 1997 he accepted the PAC's offer of some financial assistance. He brought proceedings against Bain which subsequently settled. It was not until December 2008 that he brought the present proceedings. As mentioned at the outset of these reasons, s 48 of the Limitations Act permits a court to extend the time for instituting proceedings. The court may extend time if it is satisfied that facts material to the plaintiff's action were not ascertained until after that time and the action is instituted within 12 months after those facts were ascertained. That requirement was found in the respondent's 85 Limitation of Actions Act 1936 (SA), ss 36, 45. Bell Nettle favour. The proceedings below turned upon the exercise of the court's discretion to grant an extension. The decisions below At the hearing before the primary judge the respondent claimed that his failure to institute the action within the limitation period resulted from the conduct of the PAC. The respondent argued that the conduct of the headmaster and the chaplain at the assembly held soon after Bain was dismissed caused the respondent to suppress the trauma of Bain's abuse, and that the failure of the PAC to provide counselling and report Bain to the police resulted in the respondent's failure to disclose the abuse and take legal action earlier. The primary judge found that the PAC's conduct did not cause the delay. Her Honour found that the "considerable lapse of time between the [respondent's] disclosure of the abuse and diagnosis in 1996 and his institution of these proceedings in 2008 undermine[d]" the argument that the failure to bring the claims earlier resulted from events occurring in 196286. Further, her Honour found that in 1997 the respondent made an informed decision, which was "rational and sensible", not to sue the PAC87. A further issue was as to whether the respondent discovered facts material to his case within 12 months before instituting the action. Her Honour found88 a psychiatric opinion given in December 2007, that the respondent would never fully recover or be able to manage a business again, to be a fact material to the respondent's case. That requirement of s 48 of the Limitations Act was therefore satisfied. The primary judge then turned to the question whether it was just, in all the circumstances, to grant the extension of time. Her Honour took into account the length of the delay, which she described as "extraordinary"89, the deliberate decision of the respondent not to sue in the decade before he instituted his claims, and that he reversed this decision "because he simply ran out of money and … 86 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [198]. 87 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [198]. 88 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [204]. 89 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [216]. Bell Nettle options for improving his financial position"90. The delay since 1996 told "especially" against the exercise of any discretion in favour of the respondent because he "could have, had he so chosen, sued the school much earlier"91. The primary judge also took into account the relative insignificance of the psychiatrist's 2007 prognosis as a reason for the respondent's decision to institute proceedings. Her Honour said that by 2007 he had been treated by mental health professionals for almost 10 years and "well knew of the pervasive impact of his various disorders"92. Her Honour said that, "[m]ost importantly", there was actual prejudice suffered by the PAC by reason of the delay93. Her Honour referred to the "marked disadvantage" to which the PAC was put by reason of the "absence, either by death or ill health, of a number of critical witnesses"94. There was also the loss of documentary evidence, mainly since 1996. In particular, the loss of the psychologist's notes dating back to 1996 was described as "of great significance"95. The primary judge rejected the respondent's argument that the PAC had suffered less prejudice, by reason of the effluxion of time, in relation to the vicarious liability claim. The delay had two principal effects, in her Honour's opinion. It left the PAC in the position of "warding off inferences and being unable to call evidence on that issue"96 and it prevented the court from undertaking a close examination of Bain's role and being able to draw any conclusion about it97. It is also to be borne in mind that, although most of Bain's 90 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [219]-[220]. 91 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [221]. 92 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [222]. 93 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [223]. 94 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [223]. 95 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [227]. 96 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [228]. 97 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [174], [228]. Bell Nettle wrongful acts against the respondent were committed in the boarding house, one was committed outside the school, where, depending upon the evidence, the extent of Bain's authority vis-à-vis the respondent might be judged differently from his authority and influence over the respondent in the boarding house. Depending on all the facts and circumstance of a given case, it is at least conceivable that unlawful acts committed by a housemaster in a boarding house would be seen to attract vicarious liability, whereas some or all of other such unlawful acts committed by the housemaster elsewhere in or beyond the school would not. In the course of argument for the respondent it was conceded that acts outside the school might well fall into a different category from those which took place in the boarding house. The dearth of evidence that now exists would make any conclusion about Bain's role, authority and influence during the occasion of offending outside the school at least as difficult and possibly even more incapable of probable ascertainment. Each of the members of the Full Court held that the respondent should be granted an extension of time in which to bring proceedings. Kourakis CJ considered that the difficulty of assessing the extent and depth of the respondent's post-traumatic stress disorder resulting from the lapse of time "could sufficiently be addressed by taking a conservative approach to the assessment of damages rather than by denying [the respondent] any redress at all"98. His Honour did "not give much weight" to the respondent's acceptance of compensation from the PAC and his failure to bring proceedings in 199799. In particular, his Honour said that the "reluctance to bring proceedings is symptomatic of the very injury caused by the wrong alleged against [the PAC]"100. Gray J found that the delay resulted from the PAC's conduct, in particular the statements made at the assembly when Bain was dismissed, and that the respondent's conduct was reasonable in the circumstances101. His Honour held that it was just to grant the extension of time because of the nature and extent of the harm suffered by the respondent, as well as the fact that the PAC had the 98 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [23]. 99 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [24]. 100 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [24]. 101 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [146]-[147]. Bell Nettle opportunity to undertake an investigation and maintain proper records, both in the aftermath of learning of the abuse, and when the respondent approached the PAC for assistance in the 1990s102. Peek J gave no reasons for his conclusion that time should be extended103. The exercise of the discretion In considering the exercise of the discretion under s 48(3) of the Limitations Act, two fundamental propositions established by this Court's decision in Brisbane South Regional Health Authority v Taylor104 must be borne in mind. First, an applicant for an extension of time must prove the facts which enliven the discretion to grant the extension and also show good reason for exercising the discretion in his or her favour105. An extension of time is not a presumptive entitlement which arises upon satisfaction of the pre-conditions that enliven the discretion106. The onus of persuasion is upon the applicant for an extension of time107. The exercise of the discretion to grant an extension of time must take account of the reasons for the limitation regime, and the discretionary nature of the decision to be made must be respected when conducting appellate 102 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [148]. 103 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [264]. 104 (1996) 186 CLR 541. 105 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544 per Dawson J, 547 per Toohey and Gummow JJ, 551, 553-554 per McHugh J, 573 per 106 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544 per Dawson J, 554 per McHugh J. 107 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544 per Dawson J, 547 per Toohey and Gummow JJ, 551, 553-554 per McHugh J, 567 per Bell Nettle review of a primary judge's decision108. In Brisbane South Regional Health Authority v Taylor, McHugh J said109: "The enactment of time limitations has been driven by the general perception that '[w]here there is delay the whole quality of justice deteriorates'110." Secondly, the purpose of the legislative conferral of the discretion is to ensure a fair trial on the merits of the case. The loss of evidence which will tend against the prospects of a fair trial will usually be a fatal deficit in an argument that good reason has been shown to exercise the discretion to grant an extension111. As McHugh J pointed out in Brisbane South Regional Health Authority v Taylor112, the justice of a plaintiff's claim is seldom likely to be strong enough to warrant a court reinstating a right of action against a defendant who, by reason of the delay, is unable fairly to defend itself or is otherwise prejudiced. His Honour had earlier observed113 that, in cases of long delay, prejudice may exist without the parties or anyone else realising that it exists. Kourakis CJ considered that the primary judge was in error in her Honour's approach to vicarious liability and that this provided a basis for the re-exercise of the discretion114. But even if it be accepted that her Honour took too narrow an approach to vicarious liability, it could not be said that her Honour was wrong to regard the absence of witnesses of the events of 1962 and the circumstances surrounding them as a forensic disadvantage which weighed against the grant of the extension of time. It has rightly been said that the absence of witnesses which affects the ability of a party to mount a defence 108 House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40. 109 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551. 110 R v Lawrence [1982] AC 510 at 517. 111 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544, 112 (1996) 186 CLR 541 at 555. 113 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551. 114 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [21]. Bell Nettle cannot readily be dismissed as a real forensic disadvantage because "what has been forgotten can rarely be shown"115. It was said on the respondent's behalf that the absent witnesses were not critical and could not have given evidence on the vicarious liability issue which would have assisted the PAC's case; but it is difficult for a party to assert that the absence of witnesses who might have been expected to be able to give evidence on an issue is immaterial to the prospects of a fair trial of an issue where the absence of the witnesses is due to that party's delay. As the primary judge herself observed116, because of the dearth of evidence no conclusion could be drawn about Bain's role, a matter critical to the question of vicarious liability. It could not be assumed that the position in which Bain was placed by his assigned role provided the "occasion" for the offending. The evidence on the respondent's case was that no other housemaster was present in dormitories after lights out and that the prefects were given the role of supervising the boys after that time. This raised a real question about what the role of housemaster entailed, a question which could not fairly be answered given the loss of relevant evidence. In addition, Kourakis CJ did not take into account that the loss of the psychologist's notes significantly prejudiced a fair trial of the respondent's claims against the PAC. The PAC sought to advance a case that the respondent's disorders were not "linked to his abuse by Bain" but were associated with issues as to anxiety and alcohol abuse which the respondent was said to share with other members of his family117. In this regard, the PAC was able to point to the circumstance that the referral to the psychologist from the respondent's general practitioner attributed the respondent's symptoms of "destructive anxiety, inadequacy and inability to concentrate, make decisions and handle pressure plus the physical symptoms of tremor" to financial pressures and abuse of alcohol118. The PAC sought to develop an argument that it was only after the period of treatment by the psychologist that the respondent reported to the expert witnesses called on his behalf in terms which suggested post-traumatic stress disorder119. 115 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551 citing Barker v Wingo 407 US 514 at 532 (1972). 116 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [228]. 117 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [94]. 118 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [97]. 119 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [81]. Bell Nettle As the primary judge observed120, the argument was, in effect, that the psychologist had inadvertently coached the respondent. In these circumstances it may have been preferable for her Honour not to make a finding with respect to the cause of the respondent's disorder. Indeed it would have been preferable not to decide the issue of liability at all. These problems with respect to the PAC's evidence were necessary to be taken into account in the exercise of the discretion conferred by s 48 of the Limitations Act. They could not be ignored by saying that the damages to be awarded to the respondent, should his claims ultimately succeed, may be reduced to reflect the delay during which evidence has been lost. To say that is simply to acknowledge that a fair trial on the merits of the case in order to do justice according to law is no longer possible. The lengthy delay, rightly described as "extraordinary" by the primary judge, weighed little with Kourakis CJ and Gray J and not at all with Peek J. Where a trial is conducted long after the events which gave rise to the dispute, the risk that the trial will be a mere simulacrum of the process of doing justice becomes greater with the passage of time. The onus is upon the party claiming an extension of time to show that a fair trial may be had now, notwithstanding that passage of time. That onus is not discharged by saying that the putative defendant should have been more astute to conserve its own interests by anticipating litigation that did not eventuate until many years after the expiration of the limitation period. Kourakis CJ's view, that the PAC could and should have protected its position, fails to recognise that it was reasonable for the school to consider that, after its assistance to the respondent in the late 1990s, the respondent's decision to pursue Bain and not the school would be adhered to. It is an error of principle not to regard the arrangements made by the respondent with the school as significant. Where an injured party makes a deliberate decision not to commence proceedings, there must be strong reasons to permit proceedings to be brought against a defendant who reasonably considered that the dispute had been laid to rest. It has been recognised that there is an element of oppression involved in bringing an action so long after the circumstances which gave rise to it have passed121. That oppression is 120 A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [227]. 121 R B Policies at Lloyd's v Butler [1950] 1 KB 76 at 81-82; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552. Bell Nettle aggravated where a party conveys the impression that he or she will not bring proceedings on certain terms and then, when the terms are met, changes his or her mind. The courts are unlikely to countenance changes of mind where the other party has acted to its detriment. While the PAC did not bargain with the respondent for a release from any claim against it, there can be little doubt that both sides understood that the arrangements made in September 1997 were to bring any issue between them to an end. In addition, the view that the respondent's failure to commence proceedings earlier than he did was explicable by a reluctance to litigate on the part of the respondent which was "symptomatic of the very injury caused by the wrong alleged against [the PAC]"122 cannot be reconciled with the indisputable fact that the respondent did bring proceedings against Bain in 1997. The respondent urged the view taken by Gray J, that the primary judge failed to have regard to the fact that the PAC could have investigated the abuse committed by Bain when the respondent first complained to it in 1997 and kept its records of that investigation. However, it is difficult to see that any failure to investigate at this point in time is a factor which weighs in favour of a grant. It has been said that in weighing prejudice a court should not undertake a comparison of the prejudice suffered by a defendant before the expiration of a limitation period and that suffered thereafter123. For these reasons the Full Court was wrong to extend time under s 48(3) of the Limitations Act. A determination as to liability? The primary judge heard the issue of liability together with questions about whether an extension of time was necessary and should be granted. Section 48(5) of the Limitations Act, which allows for a question as to an extension of time to be determined after the close of pleadings, in practical terms permits this course. It is, however, a question for the court, having regard to the circumstances of the case, whether it is an appropriate course. In the present 122 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [24]. 123 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544, Bell Nettle case, even if there were considered to be good reasons to hear the evidence relating to liability and the extension at the same time, that does not mean that the issue of liability should have been decided once it was obvious that there were problems arising from the state of the evidence and the position in which the PAC was placed. It is not apparent why the primary judge determined the issue of liability prior to the issue of extension of time. The question whether an extension of time is to be granted is one necessarily antecedent to the determination of any issue in the proceedings relating to liability to which the extension is relevant. Moreover, in a case of this kind – where there had been a very long delay in commencing proceedings and the defendant had raised questions of prejudice arising from its inability to obtain evidence – it was essential that those matters, as relevant to the question of extension, be first considered. It is the consideration of those matters which will point to the appropriateness or otherwise of determining any remaining issue in the action where an extension is not to be granted. In some cases it may be possible to deal with an issue such as vicarious liability when the court has refused an extension of time. It is a matter of long-standing practice in most trial courts that, where possible, all issues be the subject of adjudication. The practice is based upon the desirability of avoiding the need for a new trial in the event that an appeal on one issue is successful. However, as has been observed124, it is no more than a rule of convenience. It is not something which should invariably be done without consideration of the appropriateness of that course of action in the circumstances of the case. Here, there were difficulties in the way of findings of fact necessary to a determination of the issue of liability and they affected all three of the respondent's claims. Even the question of whether a non-delegable duty of care was owed by the PAC to the respondent, which was approached by the Full Court largely as a question of law125, requires a finding that there be a breach of the PAC's duty to take reasonable care in all the circumstances. That requires in the first place that the nature and content of the particular duty and responsibility owed to the respondent be identified. 124 Nevin v B & R Enclosures Pty Ltd [2004] NSWCA 339 at [74]. 125 A, DC v Prince Alfred College Inc [2015] SASCFC 161 at [6], [114]. Bell Nettle The primary judge identified real deficiencies in the available evidence. In particular, questions about the role conferred on Bain, critical to the issue of vicarious liability, could only be answered by resort to speculation. That was reason enough not to attempt to determine the issue of liability. There are other, fundamental, reasons why the issue of liability should not have been decided. The first concerns the position of the court and coherence in its reasoning. A court cannot conclude that it would not be just in all the circumstances to grant an extension of time because a proposed defendant cannot properly defend the claims to be brought against it and then proceed to decide whether it could be held liable with respect to those claims. The second reason has regard to the position of the PAC in the event that liability was determined. It is not to the point, of course, that the primary judge was of the view that the PAC did not breach its own duty of care and could not be held liable for the acts of Bain. Whatever view her Honour reached exposed the PAC to an appeal on the basis of findings on evidence which was, on the primary judge's own assessment, incomplete so far as concerned the position of the PAC. It is true that trial courts are sometimes obliged to determine issues on evidence which is deficient. In such cases the courts do the best that they can on the available material. But that circumstance arises where a court is obliged to make findings in order to determine issues joined in a duly constituted proceeding. Here the refusal to grant the extension of time denied the proceeding that status. For these reasons the primary judge should not have decided the issue of liability and the Full Court should not have revisited it. Consistently, this Court is not in a position to determine it either. Conclusion and orders An extension of time under the Limitations Act should not have been granted by the Full Court. The appeal should be allowed with costs and the orders of the Full Court of the Supreme Court of South Australia given on 10 November 2015 set aside. In lieu thereof it should be ordered that the appeal to that Court be dismissed with costs. On 24 March 2016, the Full Court of the Supreme Court of South Australia also ordered that costs for the appellant in that Court (the respondent in Bell Nettle this Court) be reduced to 90 per cent of the costs of the appeal, and 80 per cent of the costs of the trial. That order should now also be set aside. GagelerJ 122 GAGELER AND GORDON JJ. The respondent, whilst boarding at Prince Alfred College in the 1960s, was sexually abused by Dean Bain, a housemaster employed by the College. Some, but not all, of the acts of abuse occurred on the College's premises. There were two issues on appeal to this Court. Should the respondent have an extension of time under s 48 of the Limitation of Actions Act 1936 (SA) ("the Limitation Act") to bring these proceedings against the College in respect of that sexual abuse and, if so, what is the basis of liability, if any, of the College to the respondent for Bain's conduct? This appeal should be allowed on the basis that no extension of time under s 48(3) of the Limitation Act should be granted to the respondent. No extension of time It was not in dispute that the respondent was abused by Bain and that Bain was convicted in 2007 of two counts of indecent assault against the respondent and of other offences against two other boarders at the College. As the other reasons for judgment explain, in September 1997, the respondent made a deliberate decision to bring proceedings against Bain, but not against the College, and instead to enter an arrangement with the College that was to resolve the issues between them. But after a delay of some 11 years, the respondent changed his mind and instituted this action against the College. The respondent's deliberate decisions not to bring proceedings earlier against the College, and then, after a lengthy delay, to institute this proceeding against the College, demonstrate that the Full Court of the Supreme Court of South Australia was wrong to extend the time under s 48(3) of the Limitation Act126. That is sufficient to dispose of the appeal. It is unnecessary and inappropriate to address the primary judge's conclusion that an extension of time should be refused because the effluxion of time had resulted in there being a "dearth of evidence" on Bain's role at the College127. That finding assumes the primary judge identified and applied the proper test for vicarious liability. 126 R B Policies at Lloyd's v Butler [1950] 1 KB 76 at 81-82; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552; [1996] HCA 25. 127 See A, DC v Prince Alfred College Incorporated [2015] SASC 12 at [228]. GagelerJ Vicarious liability for intentional wrongdoing Judges make and develop the common law, as distinct from discovering and declaring it128. Identification, modification or even clarification of some general principle or test requires that judgments be made. Those judgments are best made in the context of, and by reference to, contestable and contested questions. In this case, because of the refusal to grant the respondent an extension of time, there cannot be any resolution of contestable and contested questions. That consideration is important. The course of decisions in this Court129 and the courts of final appeal in the United Kingdom and in Canada reveals that decisions concerning vicarious responsibility for intentional wrongdoing are particularly fact specific. Decisions in the United Kingdom130 and Canada131 recognise that resolution of each case will turn on its own particular facts and that existing cases provide guidance in the resolution of contestable and contested questions. The overseas decisions also expose a difficulty in undertaking any analysis by reference to generalised "kinds" of case. Why? Because the "[s]exual abuse of children may be facilitated in a number of different circumstances"132. The decisions of Bazley v Curry133 and Jacobi v Griffiths134 in the Supreme Court of Canada are instructive. Both involved the sexual abuse of children by employees. Judgment in each was delivered on the same day by an identically constituted court. In Bazley, the employer was held vicariously liable 128 See Dixon, "Concerning Judicial Method", in Jesting Pilate and Other Papers and Addresses, 2nd ed (1997) 152 at 155, 157-158. 129 See Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 381-382; [1949] HCA 60. 130 Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 at 378 [26] cited in Mohamud v Wm Morrison Supermarkets plc [2016] AC 677 at 692 [41], 694 [50]. 131 Bazley v Curry [1999] 2 SCR 534 at 545 [15] cited in Jacobi v Griffiths [1999] 2 SCR 570 at 590 [31], John Doe v Bennett [2004] 1 SCR 436 at 445 [20] and EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45 at 69 [38]. 132 Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1 at 26 [85]. 133 [1999] 2 SCR 534. 134 [1999] 2 SCR 570. GagelerJ in a unanimous judgment. In Jacobi, the Court, by a majority of four judges to three, held that the employer was not vicariously liable. The particular facts of each case were critical, both for drawing comparisons with decided cases and to avoid drawing generalised conclusions based on perceived similarities. We accept that the approach described in the other reasons as the "relevant approach" will now be applied in Australia. That general approach does not adopt or endorse the generally applicable "tests" for vicarious liability for intentional wrongdoing developed in the United Kingdom or Canada (or the policy underlying those tests), although it does draw heavily on various factors identified in cases involving child sexual abuse in those jurisdictions. The "relevant approach" described in the other reasons is necessarily general. It does not and cannot prescribe an absolute rule. Applications of the approach must and will develop case by case. Some plaintiffs will win. Some plaintiffs will lose. The criteria that will mark those cases in which an employer is liable or where there is no liability must and will develop in accordance with ordinary common law methods. The Court cannot and does not mark out the exact boundaries of any principle of vicarious liability in this case. For those reasons, we agree with the orders proposed in the other reasons.

HIGH COURT OF AUSTRALIA KMC AND APPLICANT DIRECTOR OF PUBLIC PROSECUTIONS (SA) RESPONDENT KMC v Director of Public Prosecutions (SA) [2020] HCA 6 Date of Hearing: 6 February 2020 Date of Order: 6 February 2020 Date of Publication of Reasons: 18 March 2020 ORDER Extension of time for permission to appeal against sentence and permission to appeal be granted. Appeal allowed. The sentence imposed by the sentencing judge on 17 August 2017 be set aside. The matter be remitted to the sentencing judge for re-sentencing according to law. Representation S A McDonald with B J Doyle for the applicant (instructed by Legal Services Commission of South Australia) C D Bleby SC, Solicitor-General for the State of South Australia, with M E Boisseau and F J McDonald for the respondent and for the Attorney- General for the State of South Australia, intervening (instructed by Office of the Director of Public Prosecutions (SA) and Crown Solicitor for the State of South Australia) M G Sexton SC, Solicitor-General for the State of New South Wales, with J S Caldwell for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor's Office (NSW)) M E O'Farrell SC, Solicitor-General for the State of Tasmania, with J L Rudolf for the Attorney-General for the State of Tasmania, intervening (instructed by Office of the Solicitor-General for the State of Tasmania) K L Walker QC, Solicitor-General for the State of Victoria, with K A O'Gorman for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G A Thompson QC, Solicitor-General of the State of Queensland, with F J Nagorcka for the Attorney-General of the State of Queensland, intervening (instructed by Crown Solicitor (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS KMC v Director of Public Prosecutions (SA) Criminal law – Sentence – Offence of persistent sexual exploitation of child – Where applicant convicted of persistent sexual exploitation of child contrary to s 50(1) of Criminal Law Consolidation Act 1935 (SA) ("CLCA") – Where Chiro v The Queen (2017) 260 CLR 425 handed down after sentencing – Where Chiro required sentencing judge to ask jury to identify underlying acts of sexual exploitation found proved or otherwise sentence on basis most favourable to offender – Where not known which alleged acts of sexual exploitation jury found had been proved beyond reasonable doubt – Where applicant not sentenced on basis of facts most favourable to applicant – Where s 9 of Statutes Amendment (Attorney-General's Portfolio) (No 2) Act 2017 (SA) ("Amending Act") provided that sentence imposed for offence against s 50 of CLCA not affected by error or otherwise manifestly excessive merely because, relevantly, sentencing court sentenced person having regard to acts of sexual exploitation it determined proved beyond reasonable doubt – Whether s 9(1) of Amending Act engaged – Whether sentencing remarks identified acts of sexual exploitation determined by sentencing court to have been proved beyond reasonable doubt. Words and phrases – "acts of sexual exploitation", "extension of time", "facts most favourable", "persistent sexual exploitation of a child", "proved beyond a judge", "sentencing remarks", reasonable doubt", "sentence", "sentencing "underlying acts". Criminal Law Consolidation Act 1935 (SA), s 50. Statutes Amendment (Attorney-General's Portfolio) (No 2) Act 2017 (SA), s 9. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ. The applicant was charged in the District Court of South Australia with one count of persistent sexual exploitation of a child against s 50(1) of the Criminal Law Consolidation Act 1935 (SA) ("the CLCA"), as then in force. The "Particulars of Offence" alleged that over a period of not less than three days, between 1 March 2013 and 6 February 2016, the applicant committed more than one act of sexual exploitation of the victim, a person under the age of 17 years, by (a) performing an act of cunnilingus upon her; (b) causing her to perform an act of fellatio upon him; (c) inserting his penis into her anus; and (d) urinating on her. After a trial before a judge and jury, the jury returned a unanimous verdict of guilty. The jury was discharged without being asked any questions as to the basis of its verdict. In August 2017, the applicant was sentenced to imprisonment for ten years and three days, with a non-parole period of five years, with the sentence back-dated to 19 July 2017. The issue in this Court is whether the applicant was sentenced according to law. The respondent, the Director of Public Prosecutions (SA), seeks to uphold the validity of the sentence on the basis that it was consistent with s 9(1) of the Statutes Amendment (Attorney-General's Portfolio) (No 2) Act 2017 (SA) ("the Amending Act"), an Act passed after the applicant was sentenced. For the reasons given below, s 9(1) was not engaged and the applicant was not sentenced according to law. Section 50 of the CLCA At the time the applicant was tried and sentenced, s 50(1) and (2) said: "(1) An adult person who, over a period of not less than 3 days, commits more than 1 act of sexual exploitation of a particular child under the prescribed age is guilty of an offence. Maximum penalty: Imprisonment for life. (2) For the purposes of this section, a person commits an act of sexual exploitation of a child if the person commits an act in relation to the child of a kind that could, if it were able to be properly particularised, be the subject of a charge of a sexual offence." Section 50(4) of the CLCA altered the ordinary requirements for particularity in a charge for a criminal offence. In Chiro v The Queen, Bell Nettle Gordon Edelman which concerned sentencing for an offence committed against s 50 of the CLCA, Bell J explained the operation of s 50(4) in these terms1: "The actus reus of the offence is the commission of more than one act of sexual exploitation of the same child over a period of not less than three days. An act only qualifies as an act of sexual exploitation if it is an act that, were it able to be properly particularised, could be the subject of a charge of a sexual offence. The inability to properly particularise is addressed in s 50(4)(b), which provides that the Information need not be pleaded with the degree of particularity that would be required if the act were charged as an offence under another section of the CLCA. It suffices if the prosecution avers with sufficient particularity the period during which the acts of sexual exploitation are alleged to have occurred and the conduct on which the prosecution relies as comprising the acts of sexual exploitation [s 50(4)(a)]. The latter requirement does not necessitate the identification of particular acts of sexual exploitation or the occasions on which, or places at which, or the order in which, acts of sexual exploitation occurred [s 50(4)(b)(ii)]." It was not disputed in Chiro that the s 50 offence was "comprised of discrete underlying offences", rather than a "course of conduct" per se2. The plurality (Kiefel CJ, Keane and Nettle JJ) held that each of the underlying acts of sexual exploitation comprises an element of the actus reus of the offence and it was for the jury to find the acts which constitute the actus reus, not the sentencing judge3. The plurality further held that this necessitated a jury direction requiring extended unanimity – that is, agreement by the jury "that the Crown [had] proved beyond reasonable doubt that the accused committed the same two or more underlying acts of sexual exploitation separated by not less than three days"4. Thus, the plurality stated that "the judge should request that the jury identify the underlying acts of sexual exploitation that were found to be proved unless it is otherwise apparent to (2017) 260 CLR 425 at 452 [56] (footnotes omitted). (2017) 260 CLR 425 at 437-438 [22]-[23]. 3 Chiro (2017) 260 CLR 425 at 447 [42]. 4 Chiro (2017) 260 CLR 425 at 435-436 [19]. Bell Nettle Gordon Edelman the judge which acts of sexual exploitation the jury found to be proved"5. Where a jury is not questioned as to the basis of its verdict, the plurality held, "the offender will have to be sentenced on the basis most favourable to the offender"6. If this is not done, it is possible that the court would breach the principle that "an accused is not to be sentenced for an offence which the jury did not find the accused to have committed"7. Bell J, also in the majority, wrote separately. Her Honour said that "it is the role of the judge to determine the facts relevant to sentencing, subject to the constraint that the determination must be consistent with the [jury's] verdict"8. Where the offence is one against s 50, "[t]o sentence the appellant on the basis that he committed all of the particularised acts upon which issue was joined is to deprive the requirement of consistency with the verdict of practical content"9. In Chiro, the sentencing judge did not ask the jury what acts it had found to have been committed10. Rather, the judge sentenced Chiro on the basis of those facts which the judge herself was satisfied had been committed11 and made findings that she was satisfied that Chiro had committed each of the acts alleged 5 Chiro (2017) 260 CLR 425 at 430 [1]. 6 Chiro (2017) 260 CLR 425 at 451 [52]. 7 Chiro (2017) 260 CLR 425 at 448 [44], citing R v De Simoni (1981) 147 CLR 383 8 Chiro (2017) 260 CLR 425 at 456 [70]. 9 Chiro (2017) 260 CLR 425 at 457 [71]. (2017) 260 CLR 425 at 451 [53]. 11 Chiro (2017) 260 CLR 425 at 433 [14]. Bell Nettle Gordon Edelman in the Information12. The sentence was therefore found to be infected by error and manifestly excessive13. Amending Act After the applicant was sentenced, and the decision in Chiro had been handed down by this Court, the South Australian Parliament passed the Amending Act. It commenced operation on 24 October 201714. The object of Pt 4 of the Amending Act was to overcome the effect of Chiro15. Section 9(1) of the Act says: "A sentence imposed on a person, before the commencement of this section, in respect of an offence against section 50 of the [CLCA] ... is taken to be, and always to have been, not affected by error or otherwise manifestly excessive merely because – the trial judge did not ask any question of the trier of fact directed to ascertaining which acts of sexual exploitation, or which particulars of the offence as alleged, the trier of fact found to have been proved beyond a reasonable doubt and the person was not sentenced on the view of the facts most favourable to the person; and the sentencing court sentenced the person consistently with the verdict of the trier of fact but having regard to the acts of sexual exploitation determined by the sentencing court to have been proved beyond a reasonable doubt." Section 9(1) applies where four events occurred in sentencing: (i) the trial judge did not ask any questions of the trier of fact directed to ascertaining which 12 Chiro (2017) 260 CLR 425 at 434 [15]. 13 Chiro (2017) 260 CLR 425 at 452 [53]. 14 See Acts Interpretation Act 1915 (SA), s 7(1). 15 South Australia, Legislative Council, Parliamentary Debates (Hansard), 19 October 2017 at 8021-8023. See also South Australia, House of Assembly, Parliamentary Debates (Hansard), 19 October 2017 at 11650. Bell Nettle Gordon Edelman acts of sexual exploitation (or particulars of the offence as alleged) it found had been proved beyond reasonable doubt; (ii) the offender was not sentenced on the view of the facts most favourable to the offender; (iii) the sentencing court sentenced the person consistently with the verdict of the trier of fact; and (iv) the offender was sentenced "having regard to the acts of sexual exploitation determined by the sentencing court to have been proved beyond a reasonable doubt". As is apparent, s 9(1) of the Amending Act was drafted on the basis that all judges who had passed a sentence for an offence against s 50 of the CLCA had done so in the same manner as the sentencing judge in Chiro16. The sentencing judge in this matter did not do so. Removal to the High Court and disposition In 2019, the applicant applied for an extension of time, and permission, to appeal against his sentence to the Full Court of the Supreme Court of South Australia on the grounds that the sentence and the non-parole period were manifestly excessive and that, contrary to Chiro, the sentencing judge had not sentenced the applicant on the basis most favourable to him consistent with the verdict of the jury. The respondent sought to uphold the sentence on the basis that it was valid by reason of s 9(1) of the Amending Act. The applicant contended that the Amending Act did not apply to him and that, if it did apply, the Amending Act was constitutionally invalid because s 9(1): (i) constituted an impermissible legislative direction to the Supreme Court of South Australia as to the exercise of its jurisdiction; (ii) impermissibly removed the jurisdiction of a Supreme Court to review a sentencing decision for jurisdictional error, contrary to Kirk v Industrial Court (NSW)17; and (iii) impaired the institutional integrity of the Supreme Court of South Australia, contrary to Kable v Director of Public Prosecutions (NSW)18. 16 See [8] above. (2010) 239 CLR 531. (1996) 189 CLR 51. Bell Nettle Gordon Edelman On the application of the Attorney-General for the State of South Australia, the whole of the cause was removed into this Court pursuant to s 40(1) of the Judiciary Act 1903 (Cth). The Attorneys-General for the State of New South Wales, the State of Victoria, the State of Queensland and the State of Tasmania also intervened. Prior to the hearing before the Full Court, the parties were informed that the Court would be assisted by submissions as to whether the sentencing judge did make a finding as to which of the alleged underlying acts of sexual exploitation by the applicant were proved beyond reasonable doubt within the meaning of s 9(1)(b) of the Amending Act. If the sentencing judge had not made the necessary findings within the meaning of s 9(1)(b), the Amending Act would not apply to the applicant and the constitutional questions raised by the applicant would not arise19. After hearing from the parties on whether s 9(1)(b) applied to the applicant, the Court announced that it was unanimously of the view that the applicant should be granted an extension of time for permission to appeal against sentence and permission to appeal, the appeal should be allowed, the sentence imposed by the sentencing judge on 17 August 2017 be set aside and the matter be remitted to the sentencing judge for re-sentencing according to law. These are our reasons for making those orders. Section 9(1) not engaged In determining whether s 9(1) is engaged in this case and, in particular, in determining whether the sentencing judge made a finding as to which of the alleged underlying acts of sexual exploitation by the applicant were proved beyond reasonable doubt, it is necessary to say something further about the trial, the trial judge's directions to the jury and his Honour's sentencing remarks. 19 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 359 [56]; Knight v Victoria (2017) 261 CLR 306 at 324 [32]; Clubb v Edwards (2019) 93 ALJR 448 at 479-480 [135]-[138], 519 [326]-[330]; 366 ALR 1 at 33-34, 87 and the authorities there cited. Bell Nettle Gordon Edelman The applicant's trial and the trial judge's directions The particulars of the offence, as set out earlier20, were that over a period of not less than three days, between 1 March 2013 and 6 February 2016, the applicant committed more than one act of sexual exploitation of the victim, a person under the age of 17 years, by (a) performing an act of cunnilingus upon her; (b) causing her to perform an act of fellatio upon him; (c) inserting his penis into her anus; and (d) urinating on her. In his summing up, the trial judge said that it was necessary for the jury to find that the applicant had committed at least two acts of sexual exploitation, whether of the same type or different types, over a period of not less than three days. Thus, the trial judge said that it was not necessary for the jury to find that the applicant had committed all of the acts alleged in the Information in order to find him guilty of the offence. Consistent with authority21, the trial judge further directed the jury that extended unanimity was required: it was necessary for the jury members to agree on the occasions and types of sexual offences which constituted the acts which the jury found to be proved. As stated earlier, the jury returned a unanimous verdict of guilty and was discharged without being asked any questions as to the basis of its verdict. Sentencing remarks The sentencing remarks are short. At the outset, the sentencing judge records that the offending occurred from when the victim was six years of age until she was approaching nine years of age and that, over that time, the applicant "subjected [the victim] to a range of sexual acts on a frequent basis". The sentencing judge said that: "There were three distinct occasions of sexual offending by you that she recalled. I will briefly mention these three occasions. She also gave evidence of other abuse that she said occurred frequently." 20 See [1] above. 21 KBT v The Queen (1997) 191 CLR 417 at 422, 431, 433; R v Little (2015) 123 SASR Bell Nettle Gordon Edelman The three occasions are then specified. The sentencing judge considered both the victim impact statements and the "personal circumstances" of the applicant. It is in the latter context that the sentencing judge said that the applicant "regularly cared" for the children of his partner (including the victim) when his partner was absent and that "[i]t was during these absences that this offending took place". The "offending" is not specified. The sentencing judge referred to the limited prior criminal history of the applicant. The sentencing remarks continued: "I turn to sentence. ... Your offending is a serious example of this type of offending involving multiple acts of penile-anal penetration, cunnilingus and fellatio and urinating upon a child. In the circumstances, the only appropriate sentence is one of imprisonment ... [The victim] was a very young child when you began sexually abusing her ... This is serious offending considering the young age of the complainant, your position in the family and the duration of time over which the offending occurred." The term of imprisonment was then set, along with a non-parole period22. Issues and submissions There was no dispute that s 9(1)(a) was satisfied in this case. The trial judge did not ask any questions of the jury directed to ascertaining which acts of sexual exploitation (or particulars of the offence as alleged) it found had been proved beyond reasonable doubt and the applicant was not sentenced on the view of the facts most favourable to him. The issue was whether, within the meaning of s 9(1)(b), the applicant was sentenced "having regard to the acts of sexual 22 See [2] above. Bell Nettle Gordon Edelman exploitation determined by the sentencing court to have been proved beyond a reasonable doubt". The applicant submitted that s 9(1) of the Amending Act was not engaged because nowhere in the sentencing remarks were the necessary findings made by the sentencing judge. The applicant accepted that acts were identified by the sentencing judge, but submitted that recounting evidence did not constitute a finding as to that evidence. Next, the applicant accepted that the sentencing judge referred to the unanimous jury verdict, but submitted that his Honour did not identify what was proved by that verdict. Moreover, the applicant submitted that the sentencing judge did not say that he had to be satisfied of matters "beyond reasonable doubt"23. The lack of findings made "beyond reasonable doubt" was in contrast to the sentencing remarks at issue in Chiro24. two There were further aspects the applicant's argument. First, the applicant submitted that the sentencing remarks did not refer to or address the applicant's arguments during the sentencing hearing concerning the unlikelihood of some of the offending having occurred. Second, it was submitted that during the course of that hearing, the sentencing judge had said that it was not his role to place himself in the position of the jury – the jury was the "trier[] of fact". These arguments were said to support the view that the sentencing judge did not see his role as requiring him to make findings of fact for himself. Counsel for the respondent (who also appeared for the Attorney-General for the State of South Australia) submitted that s 9(1) was engaged and, in particular, for the purposes of s 9(1)(b), that the acts of sexual exploitation determined by the sentencing court to have been proved beyond reasonable doubt were those particularised in the Information. It was submitted that those acts could be expressed at the same level of generality as they appeared in the Information. The respondent then addressed the passages in the sentencing remarks which referred, in general terms, to a range of sexual acts on a frequent basis and other abuse that the victim said in evidence occurred frequently. The respondent submitted that where, as here, the case depended entirely on the victim's evidence, the remarks should be read in the context of the trial as a whole and taken as a 23 cf R v Olbrich (1999) 199 CLR 270 at 281 [27]. (2017) 260 CLR 425 at 434 [15]. Bell Nettle Gordon Edelman summary of the judge's findings, with those findings extending to all incidents referred to in the victim's evidence. Moreover, the respondent submitted that sentencing remarks are not reasons for judgment and are not to be read with a hyper-critical eye but on the presumption that the sentencing judge knows sentencing law25. The respondent also submitted, correctly, that there is no verbal formula for making findings or rejecting arguments26. Sentencing remarks and s 9(1)(b) The question in this case is not whether the sentencing remarks are sufficient or acceptable in a general sense. The question is whether they are sufficient to engage s 9(1) of the Amending Act. They are not. Although exchanges between counsel and judge can sometimes be relevant, in answering the question whether s 9(1) is engaged nothing useful in this case can be taken from the discussion between counsel and the sentencing judge prior to sentencing. Ultimately, what matters is what the sentencing judge said in the sentencing remarks. Contrary to s 9(1)(b) of the Amending Act, his Honour did not make findings as to what acts of sexual exploitation he found to have been proved beyond reasonable doubt. The evidence recounted in the sentencing remarks included the conduct particularised in the Information but the sentencing remarks also referred to other conduct possibly not the subject of the Information. And when the sentencing remarks turn to address the sentence to be imposed, they refer to "multiple acts" of four different types of offending and, later, the duration of time over which the offending occurred. For s 9(1) to be engaged, the acts of sexual exploitation determined by the sentencing court to have been proved beyond reasonable doubt must be identified. The sentencing remarks in this case do not record the sentencing court having identified those acts and do not record the sentencing court having made findings that those acts of sexual exploitation had been proved beyond reasonable doubt. The sentencing remarks do not state whether the three specific occasions of sexual offending recalled by the victim were proved, 25 R v Reiner (1974) 8 SASR 102 at 114-115. 26 cf Douglass v The Queen (2012) 86 ALJR 1086; 290 ALR 699. Bell Nettle Gordon Edelman or whether more or less was found to have been proved, and proved to the requisite standard. The way in which a sentencing judge sentences a person "having regard to the acts of sexual exploitation determined by the sentencing court to have been proved beyond a reasonable doubt" is not formulaic. As the plurality accepted in Chiro, the s 50 offence was "comprised of discrete underlying offences", rather than a "course of conduct" per se, with each of the underlying acts of sexual exploitation constituting an element of the actus reus of the s 50 offence27. Where, as here, the jury was discharged without being asked any questions as to the basis of its verdict, s 9(1)(b) is engaged if the sentencing judge makes findings as to what acts of sexual exploitation had been proved28. Given the nature of the offence and the generality of the Information, there may be cases where the evidence of the acts of sexual exploitation – the underlying acts constituting an element of the actus reus – may be found by the sentencing judge to be proved not on a specific date or dates but over a specified period of time, perhaps occurring with a particular regularity. And absent legislative provisions to the contrary, where a sentencing judge takes facts into account in a way that is adverse to the interests of the accused, the facts found to be proved by the sentencing judge must be established beyond reasonable doubt29. For the benefit of all involved, the sentencing remarks would, out of an abundance of caution, ordinarily record that this was the approach adopted. Conclusion The applicant was not sentenced on the basis of the facts most favourable to him. His sentencing was therefore contrary to what the law (as stated by Chiro) required. Section 9(1) of the Amending Act was not engaged. Questions of the constitutional validity of that provision do not arise. (2017) 260 CLR 425 at 437-438 [22]-[23], 445 [37]. 28 cf Chiro (2017) 260 CLR 425 at 447 [42]. 29 Olbrich (1999) 199 CLR 270 at 281 [27]; Filippou v The Queen (2015) 256 CLR 47

HIGH COURT OF AUSTRALIA APPELLANT AND THE STATE OF WESTERN AUSTRALIA RESPONDENT Washer v The State of Western Australia [2007] HCA 48 8 November 2007 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation D Grace QC with C B Boyce for the appellant (instructed by the Office of David S Vandongen with S F Rafferty for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Washer v The State of Western Australia Evidence – Admissibility – Relevance – Appellant convicted of conspiracy to possess a prohibited drug with intent to sell or supply it to another – Appellant had been previously acquitted of a conspiracy covering different times, parties and object, to possess a prohibited drug with intent to sell or supply it to another – Trial judge admitted evidence tending to show the appellant was a drug dealer (the "drug dealing evidence") – The drug dealing evidence had been adduced in the earlier trial in which the appellant was acquitted – Trial judge directed the jury not to use the drug dealing evidence to infer that a person who dealt in drugs on one occasion was more likely to do so subsequently – Whether the drug dealing evidence was relevant to the offence of which the appellant was convicted – Whether evidence that the appellant had been acquitted of the previous charge was relevant and admissible. Words and phrases – "the full effect of an acquittal", "the full benefit of an acquittal". GLEESON CJ, HEYDON AND CRENNAN JJ. Following a trial before Wisbey DCJ and a jury in the District Court of Western Australia, the appellant was convicted of conspiring with John Di Lena and Andrea Scott, between 18 May 2000 and 2 June 2000, to possess a prohibited drug, methylamphetamine, with intent to sell or supply it to another contrary to the Misuse of Drugs Act 1981 (WA). The alleged conspiracy involved the proposed importation into Western Australia from Queensland of a large quantity (1.96 kg) of methylamphetamine. It was alleged that John Di Lena was the principal organiser of the transaction, and that the appellant's role was to provide part ($55,000) of the funds used to acquire the drugs. The alleged conspiracy related to a specific parcel of methylamphetamine which was purchased in Queensland but which, in the events that occurred, fell into the hands of the authorities before it reached Western Australia. The planned importation turned into something of a fiasco. At an earlier trial, before Fenbury DCJ and a jury, the appellant had been acquitted of a charge that, between 13 April 2000 and 21 March 2001, he conspired with Gavin Whitsed and William Bowles to sell or supply a prohibited drug, namely methylamphetamine. The alleged conspiracy was said to have extended over about a year, and to have covered an ongoing business of the supply of drugs by the three conspirators to other persons. An alleged agreement between the three men to participate in a business of supplying drugs to third parties was of the essence of that alleged conspiracy. Some of the evidence, including evidence obtained by covert police surveillance of conversations between the appellant and Messrs Whitsed and Bowles, and evidence of physical property found in certain premises occupied by the appellant, which had been relied on at the earlier trial, was tendered by the prosecution at the trial with which this appeal is concerned. The admissibility of that evidence is not in issue in this appeal. In the course of the trial, counsel for the appellant sought, through cross-examination of a police witness, to adduce evidence of the fact of the appellant's acquittal at the earlier trial. Counsel began to question the witness about the charge of conspiracy the subject of the earlier trial, objection was taken by the prosecutor, and, after argument in the absence of the jury, Wisbey DCJ disallowed the line of questioning on the ground that it was "not appropriate to ask this witness about another charge and the outcome of that other charge." Having appealed unsuccessfully against his conviction to the Court of Appeal of the Supreme Court of Western Australia1, the appellant now appeals, 1 Di Lena v Western Australia (2006) 165 A Crim R 482. Crennan by special leave, to this Court. The grounds of appeal are narrower than those in the Court of Appeal. The first ground is that Wisbey DCJ erred in not allowing the appellant's counsel to adduce evidence of the fact that the appellant had been charged with, and acquitted of, the conspiracy the subject of the earlier trial. The second ground is that Wisbey DCJ should not only have received the evidence of the acquittal but should have directed the jury "that they were bound to give the [a]ppellant the full effect of his acquittal". The two grounds are inter-related. The admissibility of the evidence of the acquittal depended upon its relevance, and a useful practical test of its relevance is to ask what the trial judge could or should have said to the jury as to the use they could make of it in their deliberations. the appellant acknowledged that, in the circumstances of this case, it would make little sense to a jury simply to tell them "to accord an accused the full benefit of his earlier acquittal". Counsel went on, therefore, to propose a form of direction that might properly and usefully have been given. That is a matter to which it will be necessary to return. Before dealing with questions of principle, however, it is necessary to examine, with some particularity, the relationship between the two trials. In his written submissions, counsel for The alleged conspiracies were distinct in terms of parties and object, although there was some overlap in terms of time and in the evidence relied upon by the prosecution. It is not argued that a verdict of guilty at the trial presently in question inevitably controverted the earlier acquittal, or that the earlier acquittal precluded the tender of particular evidence, or that the proceedings on the indictment were an abuse of process and should have been stayed on the grounds applied in R v Carroll2. As was pointed out in Carroll3, there are cases where, at a later trial of other allegedly similar conduct by an accused, evidence of conduct may be adduced even though the accused had earlier been charged with, tried for, and acquitted of an offence said to be constituted by that conduct. Whether, in such a case, evidence of the fact of the earlier acquittal is relevant and ought to be admitted is a question that can be answered only by reference to the particular circumstances. The answer to the question is neither "yes, always" nor "no, never". Relevance depends upon whether the evidence could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceedings4. That can be determined only by an analysis of the (2002) 213 CLR 635. (2002) 213 CLR 635 at 651 [50]. 4 Goldsmith v Sandilands (2002) 76 ALJR 1024 at 1025 [2]; 190 ALR 370 at 371. The definition of relevance is taken from the Evidence Act 1995 (Cth), s 55. That (Footnote continues on next page) Crennan facts in issue in the proceedings, and the circumstances which bear upon the question of probability. It also requires consideration of the process of reasoning by which information as to the fact of the acquittal could rationally affect the assessment of the probabilities. The word "rationally" is significant in this context. In order to establish relevance, it is necessary to point to a process of reasoning by which the information in question could affect the jury's assessment of the probability of the existence of a fact in issue at the trial. The prosecution case at trial The appellant was tried jointly with John Di Lena and Andrea Scott. All three, like Whitsed and Bowles, and most of the others who featured in the evidence, were members of a motorcycle club. Scott was Di Lena's de facto partner. In his remarks on sentence, Wisbey DCJ said: "[E]ach of you being at the relevant time members of the Rebels Outlaw Motorcycle Gang arranged through contacts in Brisbane, presumably members of two kilograms of methylamphetamine. The state asserted that you, Mr Di Lena, were the principal organiser of the transaction and you, [the appellant], involved in financing to the extent of $55,000, a sum sufficient it would seem to give you a substantial beneficial interest in the drug and the control of it. the same group, to purchase The arrangement was that an associate by the name of Fisher would fly to Brisbane to collect the drug and transport it back to Western Australia. As arranged, Fisher flew to Brisbane but for reasons which were never identified at trial it became necessary for him to acquire a Hertz Rent-A-Car to return to Western Australia with the drug. Because he did not have the requisite financial capacity, the necessary credit facility was arranged by agreement with Ms Scott, who undertook with Hertz Rent-A-Car to have the hiring charges debited to her credit card account. In the event the transaction was frustrated when Fisher's travelling companion [Ms Lennon] left him in a motel in northern New South Wales, taking the car and the drug concealed in the car. The police became involved; Fisher was apprehended, and a subsequent covert operation revealed the participation of each of you in the agreement to unlawfully acquire the drug". legislation does not govern the present case, but the definition reflects the common law. Crennan The following summary of the evidence relied on by the prosecution is taken from the reasons of Roberts-Smith JA, with whom Wheeler JA and Pullin JA agreed, in the Court of Appeal. On 19 May 2000, Di Lena flew to Brisbane, allegedly for the purpose of making arrangements for the drug transaction. He returned to Perth on 22 May. Fisher flew to Brisbane on 28 May. From there, he made phone calls to Di Lena and to an associate of Di Lena. On 30 May, Ms Lennon flew to Brisbane to join Fisher. As part of a covert surveillance operation, the appellant's phone calls were being monitored. Some of Di Lena's phone calls were being monitored as from 10 July. There were listening devices installed in their homes, in the case of the appellant as from 9 June 2000. On 30 May, the day Ms Lennon flew to Brisbane, the appellant was recorded as saying in a phone conversation that he was in a hurry to go to Brisbane and would be there for about a week. The appellant travelled to Brisbane and remained there until 6 June 2000. In the meantime, the arrangements with Hertz were made by Andrea Scott in Perth. Fisher collected the car from Hertz in Brisbane. He and Ms Lennon left Brisbane on 31 May 2000 in the car. When they were at a town in northern New South Wales, on 31 May, they quarrelled, and Ms Lennon drove off in the car. Two days later, still in New South Wales, the car ran out of fuel. Lennon was spoken to by police, who searched the car and found concealed in it 1.96 kg of methylamphetamine. She was arrested. In the meantime, Fisher was making telephone calls as part of frantic attempts to find Ms Lennon and the drugs. He was arrested on 6 June. On the same day, the appellant returned to Perth. In mid-June, police investigated the hiring of the car, and established Andrea Scott's complicity. On 29 June 2000, the appellant had a conversation with a person named Page. It contained what were said to be references to drug dealing, but it did not appear to relate to the importation from Queensland. On 30 June 2000, the appellant had a conversation with Gavin Whitsed at the appellant's home. The conversation, according to the prosecution case, was generally about drug dealing, but in the course of it there was specific reference to the Brisbane transaction. It was not the prosecution case that Whitsed was involved in that transaction. The appellant told Whitsed certain things about the proposed importation and said that he believed Di Lena should go to Brisbane urgently to sort the matter out. He said "they" were "spinning out", that he had given over "fifty grand upfront" and that it was "killing him". He went on to describe to Whitsed his arrangements with Di Lena. He criticised Di Lena's handling of the matter. Crennan On 3 July, the appellant had a conversation at his home with William Bowles. Again, it was not the prosecution case that Bowles was involved in the Brisbane transaction. The conversation included discussion of what the prosecution said were sales of drugs. As he had done with Whitsed, the appellant said a number of things about the Brisbane transaction and spoke critically of Di Lena. On 7 July, there was a further conversation in which the appellant criticised Di Lena and said it looked as if the appellant would have to "go over east and sort it out". He said there were problems with the suppliers in the east. On 11 July there was a recorded conversation at the appellant's home between the appellant and Whitsed. It did not include any reference to the Brisbane transaction, but referred to transactions which the prosecution alleged were drug transactions. On 12 July 2000, the police executed a covert search warrant at the appellant's house and found, in the kitchen, a set of scales and a grinder containing traces of methylamphetamine. On 19 July, the appellant and Di Lena travelled together by air to Brisbane. They were under police surveillance. They returned to Perth together on 23 July. On 24 July, in a telephone conversation between Di Lena and Whitsed, Di Lena made references to the appellant saying the appellant was "doing what he should have been doing all along." A conversation between Di Lena and Scott at their home on 7 September 2000 was recorded. It contained extensive discussion of the Queensland matter including what the prosecution said was criticism of Fisher. On 13 September, there was a conversation between Di Lena and Scott in which they discussed a request by the police to interview Scott. On 21 September 2000, police seized a number of items, including some scales and a grinder with traces of methylamphetamine located at the appellant's house (which was different from the house he was occupying in July). The police also seized an account book of the appellant which contained an entry: "29.5, 55,000 J". On the prosecution case, J was a reference to John Di Lena. This entry was said to be specific evidence of the appellant's role in the Brisbane transaction. The appellant was interviewed by police on 21 September 2000. Although he acknowledged being a member of the Rebels motorcycle organisation he denied any association with methylamphetamine. He said he owned a pressure cleaning business and a timber business. His recent visits to Brisbane, he said, were purely social. In a later interview on 22 March 2001, when the secretly recorded conversations were played to him, the appellant denied he was talking about drugs. He denied that the grinder with traces of methylamphetamine belonged to him. As to the scales, he suggested that some drug dealer may have entered his house surreptitiously and made clandestine use Crennan of them. The entry in his account book, he said, could have related to dealings in shares or commodities. He denied that it had anything to do with drugs. At the trial, the prosecution called Ms Lennon as a witness. She gave an account of the events in Queensland. The appellant did not give evidence. The "drug dealing evidence" As has been noted, the prosecution tendered evidence of conversations, or parts of conversations, between the appellant and others, including Whitsed and Bowles, which were alleged to relate to drug dealing other than the specific transaction involving the importation from Queensland. The prosecution also tendered physical evidence such as the scales and grinder which was not specifically linked to that importation. These forms of evidence were described in argument as "the drug dealing evidence". It is because some of that evidence had been tendered as part of the evidence at the earlier trial concerning an alleged conspiracy with Whitsed and Bowles that the present issue arises. There is no ground of appeal in this Court relating to the admissibility of that evidence, but it is material to note how it was used at the (second) trial. To the extent to which the evidence of the conversations and the physical evidence did not relate specifically to the importation from Queensland but, as alleged by the prosecution, showed that the appellant was a dealer in drugs, the Court of Appeal said its admissibility was governed by s 31A of the Evidence Act 1906 (WA), concerning propensity evidence, which is admissible if it has significant probative value and that probative value (to put it briefly) outweighs any risk of an unfair trial. The Court of Appeal held that part of the probative value of the evidence was that it went to prove the element of intent to sell or supply in the offence with which the appellant was charged. It is necessary to bear in mind that, at the time the evidence was led, it was not known whether the appellant would give evidence, or what answer he might seek to make to the prosecution case. In the Court of Appeal, it was argued for the appellant that the quantity of drugs the subject of the proposed importation was so great that it would have been fanciful to deny intent to sell or supply. As Roberts-Smith JA pointed out, no admission of the element of intent was made at trial, and, in the circumstances, the prosecution was obliged to lead, in its case, evidence to prove that element. Roberts-Smith JA, dealing with arguments as to the admissibility of the evidence, and referring to both appellants in the Court of Appeal, said: "The drug dealing evidence here had substantial probative force to [support] a proposition that the appellants' association with each other and with others concerned in giving effect to the conspiratorial agreement [eg Crennan Fisher], was not an innocent association, but an aspect of the appellant[s'] drug dealing business. It similarly tended to negate the suggestion advanced on behalf of the appellants, that they were talking about things other than methylamphetamine, and that the book entry was to do with share or commodity trading. The evidence also tended to prove the element of intent to sell or supply. Indeed, it was not put otherwise either to us or at trial: the argument was not that the evidence did not have probative value in that way, but rather that it ought not to have been led because it was unnecessary as that element was not in issue." Five particular conversations were in question. The first was the conversation on 29 June 2000 between the appellant and Page. They discussed the weight of something that was supposed to be six or seven grams, but had been weighed at only four grams. The appellant said it is "a lot for one person to be using", and then spoke about drug abuse, and said "if you stop dealing they'll just get it from someone else". The second conversation was between the appellant and Whitsed on 30 June 2000. Part of the conversation referred to dividing amounts or quantities between various people. There was then what was, according to the prosecution, a reference to Di Lena and a discussion which involved the appellant describing to Whitsed the proposed importation from Queensland, and the roles in it of the appellant and Di Lena. The conversation left that topic and returned to what the prosecution alleged was general discussion of drug dealing (although there was no specific reference to drugs). The third and fourth conversations were between the appellant and Bowles, on 3 and 7 July 2000. The fifth conversation was between the appellant and Whitsed on 11 July 2000. Evidence of the second, third, fourth and fifth conversations had been led at the earlier trial concerning the appellant's alleged conspiracy with Whitsed and Bowles. Evidence of the first conversation (with Page) had not been led at the earlier trial. The evidence of some of the conversations went beyond propensity evidence. Some of it related specifically to the Queensland transaction. It was also relevant to show the association between the appellant, Di Lena and Fisher. At the trial, the prosecution did not allege, or set out to establish, that the appellant was a party to any agreement with Whitsed or Bowles concerning the supply by the three of them to others of drugs. The defence case (unsupported by evidence from the appellant) was that the items that were discussed between the parties to the conversations did not include drugs but were items of legitimate commerce. The prosecution case was that the items were, or included, drugs. The inference for which the prosecution contended did not involve accepting that the appellant, Whitsed and Bowles were themselves parties to an agreement by which the three of them would supply drugs to others. The inference that they were talking about drugs did not depend upon any view about the roles of Crennan Whitsed and Bowles in any drug dealing. At the earlier trial, the prosecution had alleged that all three men were parties to a conspiracy to supply. It was not put to the jury at the trial with which this appeal is concerned that it was necessary, or even material, to consider whether there was a general conspiracy relating to drug supply between the appellant, Whitsed and Bowles. On the contrary, the jury were told not to speculate about Whitsed and Bowles. Wisbey DCJ directed the jury that evidence suggesting that the appellant was a dealer in drugs could only be used to determine whether the appellant intended to sell or supply the methylamphetamine from Queensland in the event that he came into possession of it. It was not to be used for the purpose of reasoning that, if the appellant had dealt in drugs on other occasions, he was more likely to have been involved in the Brisbane transaction. The earlier trial At the earlier trial before Fenbury DCJ and a jury, the appellant, Whitsed and Bowles were acquitted of conspiring, between 13 April 2000 and 21 March 2001, to sell or supply methylamphetamine. The evidence at that trial included evidence of the four conversations set out above, and of the items (scales and grinder) earlier described. A video recording of an interview between the police and the appellant on 22 March 2001 was tendered at both trials. In that interview, the appellant denied that any of the recorded conversations were about drugs. It was not alleged that Whitsed and Bowles were parties to the conspiracy to possess the Queensland parcel of methylamphetamine. The conspiracy to which they and the appellant were allegedly party was a general conspiracy to supply, extending over a period of about a year. The acquittal at the earlier trial established as between the appellant and the prosecution that the appellant was not guilty of that alleged conspiracy. It did not establish that the appellant was innocent of drug dealing, or that his conversations with Whitsed and Bowles were not about drugs. No argument put to the jury at the trial before Wisbey DCJ controverted the decision at the earlier trial. It cannot be said that the two verdicts were inconsistent. It cannot even be said that the verdict at the trial presently in question casts doubt upon the correctness of the verdict at the first trial. The trial before Wisbey DCJ concerned a specific transaction. The evidence against the appellant included an accounting entry which, in the context of the whole of the evidence, could have been regarded as providing strong support for the prosecution case. The fact that the appellant was a drug dealer was directly relevant to the intent with which he took part in the alleged transaction, and the evidence of his discussions with Whitsed and Bowles (and Page), if it bore the complexion the prosecution put upon it, tended to show that Crennan the appellant was a drug dealer. Parts of it also tended to show that the appellant was personally involved in the importation from Queensland. In argument in this Court, an attempt was made by counsel for the appellant to identify some inconsistency between the case for the prosecution at the trial before Wisbey DCJ and the acquittal at the earlier trial. The attempt was unsuccessful. Furthermore, and significantly, the attempt to demonstrate such inconsistency necessarily required consideration of details of the conduct of the earlier trial that would have been unavailable to the jury at the later trial. When invited to identify a conclusion by the jury that would be inconsistent with the verdict at the first trial, counsel referred to a conclusion that the appellant's conversations with Whitsed and Bowles revealed an intention on the part of the appellant to sell or supply drugs. When it was pointed out that the verdict at the earlier trial at the most acquitted the appellant of an intent to sell or supply drugs in combination with Whitsed and Bowles, counsel submitted that this paid insufficient attention to the way the earlier trial was conducted. That was not shown to be correct, but even if it were so, how would the jury at the second trial know in sufficient, or any, detail how the earlier trial was conducted? For example, this Court was told in argument that, although the appellant did not give evidence at the earlier trial, a witness was called to give evidence that he and the appellant had dealings in gold, and the defence at the earlier trial relied on that evidence to support a suggestion that the items discussed between the appellant, Whitsed and Bowles could have been gold, or some other innocent commercial items. The same witness, however, was not called at the trial before Wisbey DCJ. Furthermore, the earlier trial was not concerned with the Queensland importation. If the jury at the earlier trial had heard all the evidence given at the later trial about that matter, it might well have influenced their interpretation of other parts of the conversations. Although there was some overlapping of the evidence, there were also substantial differences. It is impossible to know why the jury at the earlier trial acquitted the appellant of conspiring with Whitsed and Bowles to supply drugs to third parties. They may have doubted that the conversations between the appellant and Whitsed and Bowles related to drugs. They may have doubted that the conversations showed more than that the appellant was in the business of dealing in drugs on his own account. They may have concluded positively that the appellant was a legitimate businessman. It is not possible to tell; and it could not be suggested that the jury at the trial before Wisbey DCJ should have been invited to re-examine the conduct of the earlier trial in order to reach their own conclusion about what the jury at the earlier trial must have decided. Crennan Was the earlier acquittal relevant? In the present case, the question is whether, at the trial before Wisbey DCJ, the judge should have admitted evidence of the fact that the appellant had been charged with conspiring, between April 2000 and March 2001, with Whitsed and Bowles, to supply drugs to third parties, that the evidence relied on in support of that charge had included some of the evidence relied on at the current trial, and that a jury had acquitted the appellant of that alleged offence. In some other cases, the question of the significance of a prior acquittal has been presented in a different manner, perhaps by way of a plea in bar, or an argument about abuse of process, or a complaint about directions given to a jury. In whatever way the problem arises, and whether it takes the form of a question of admissibility of evidence, preclusion of proceedings, or the exercise of a discretion to stay proceedings, the underlying legal principles relating to double jeopardy require, in their application, an accurate identification of the effect of the earlier acquittal and its relationship to the later charge. Where the issue arises as one of the admissibility of evidence, then relevance is likely to be the focus of argument. Relevance will be decided in the light of the legal principles applicable to the prosecution and defence of the charge against the accused, as related to the facts and circumstances of the particular case. If, in this case, the appellant had a legal right, by reason of his acquittal, to be given the benefit of an assumption relevant to the assessment of the other evidence in the case, then evidence of the acquittal would be relevant. If the fact of the acquittal had some logical connection with the assessment of the probabilities concerning some fact or facts in issue, the evidence would be relevant. In either case, however, a decision about relevance requires consideration of the effect of the acquittal. Accepting that the appellant was entitled to "the full benefit of the acquittal"5, the question is what that "full benefit" entailed. In Garrett v The Queen6, the complainant and the accused had a long- standing sexual relationship, in which there were episodes of violence. The complainant had alleged that the accused raped her in November 1975. He was charged, tried, and, in early 1976, acquitted. In July 1976, the complainant again alleged that the accused raped her. The accused's defence was that the intercourse was consensual. The prosecution adduced, at a trial of the charge concerning the 1976 rape, evidence of the alleged 1975 rape and of the charge and the acquittal, on the basis that those events made it improbable that, in mid- 1976, the complainant would have consented to intercourse. This Court held that 5 Garrett v The Queen (1977) 139 CLR 437 at 445 per Barwick CJ. (1977) 139 CLR 437. Crennan the evidence was inadmissible. The Court also held that, by directing the jury that the acquittal of the accused was "neutral" on the question whether what occurred in 1975 was an act of rape, the trial judge had erred. Barwick CJ said that "it was not neutral and, if the prosecutrix were rightly permitted to give the evidence she gave, the acquittal was a dominant fact of which the applicant was entitled to full credit. To have said that the acquittal was neutral was to deny the applicant the full benefit of the acquittal and not to lay that emphasis upon it for which the circumstances called."7 The Chief Justice did not suggest that the expression "full benefit of the acquittal" was either necessary or sufficient for the purpose of a direction to a jury. It was used by Barwick CJ in stating his opinion of the legal error in the trial judge's direction. In most cases, for a trial judge simply to tell a jury that an accused should be given the full benefit of his or her acquittal would convey little. A likely response would be a request from the jury for an explanation. At that stage, the trial judge would have to address the question earlier identified: what, in the particular circumstances of the second case, does giving the accused the "full benefit" of the earlier acquittal entail? The admonition cannot be left hanging in the air. There could be cases in which its meaning would be reasonably clear; in other cases it may be quite obscure. To use it without further explanation would always be dangerous, and sometimes positively misleading. The appellant placed much reliance upon R v Storey8, a decision of this Court not long after Garrett. The Court divided four to three, and there was a division within the majority as to the admissibility of the critical evidence. The appellant, however, relied upon the case for what was said about directions to a jury concerning a prior acquittal. The respondents were tried for rape, having been acquitted earlier of forcibly abducting the prosecutrix with intent that she be carnally known. The offences arose out of a single incident. The defence to the charge of rape was consent. The headnote to the report of the case fairly summarises the consensus as being that evidence tending to show that an accused was guilty of an offence of which he has been acquitted may be admitted if it is otherwise relevant and if the jury can be and is directed not to interpret it in such a way as to deny the acquittal. The relationship between the earlier charge of forcible abduction and the later issue of consent was direct. Much of the reasoning of the members of the Court was taken up with a discussion of the application to criminal proceedings of the doctrine of issue estoppel. In that (1977) 139 CLR 437 at 445. (1978) 140 CLR 364. Crennan respect, the case has now been overtaken by Rogers v The Queen9 and Carroll10. Members of the Court made general statements about appropriate jury directions. For example, Barwick CJ said11: "The correct principle relevant to the admissibility in a subsequent trial of evidence given in an earlier trial which has resulted in an acquittal is, in my opinion, no more than this: that a verdict of acquittal shall not be challenged in a subsequent trial: the accused in the hearing of a subsequent charge must be given the full benefit of his acquittal on the earlier occasion. Evidence which was admissible to establish the earlier offence is, in my opinion, not inadmissible merely because it was tendered in the earlier proceedings: but it may not be used for the purpose of challenging, or diminishing the benefit to the accused of, the acquittal. Such evidence will be admissible, provided it is relevant to the subsequent charge or to a defence to it but must only be allowed to be used to support that charge or negative a defence. Where evidence which would tend to prove the earlier charge or some element of it is admitted in the subsequent charge, the jury must be duly warned that they must accept the fact of the earlier acquittal and not use the evidence in any wise to reconsider the guilt of the accused of the earlier offence or to question or discount the effect of the acquittal. I find no need myself to subsume that principle under the principle that matters decided having passed into judgment must be accepted as true in the sense of the judgment, ie, as it is said, they form res judicata. It is, of course, a res judicatum that the accused was acquitted: found not guilty of the offence charged. But, as I think, no inference can be drawn from the acquittal that any particular fact was found or negatived by the jury so as to make that fact a res judicatum. But the citizen must not be twice put in jeopardy, that is to say, as relevant to the present discussion, must not be placed at the risk of being thought guilty of an offence of which he has been acquitted, or of in any sense being treated as guilty. It is the use of the evidence given on the prior occasion to canvass the acquittal which, if allowed, would offend the rule against double jeopardy, giving that rule a generous application. The principle that the accused in the subsequent trial must be given the full (1994) 181 CLR 251. 10 (2002) 213 CLR 635. 11 (1978) 140 CLR 364 at 372-373 (reference omitted). Crennan benefit of the acquittal thus might be regarded as akin to but not a mere extrapolation of the principle of autrefois acquit, both being grounded upon the protection of the law against double jeopardy. But, to my mind, they are distinct principles. In my opinion, the remarks of Lord MacDermott in Sambasivam v Public Prosecutor Federation of Malaya, sufficiently established the basic principle though, as I have indicated, I would take the reference to res judicata to be confined to the fact of acquittal and not to extend to any fact supposedly found or denied in arriving at that verdict." (emphasis added) On the facts of that case, the use of the evidence of forcible abduction to negative consent in the later trial could properly be described as an attempt to canvass the acquittal. Jacobs J compared cases where the earlier charge was of an offence which comprised only one element and cases where it comprised a number of elements. He said that where there was only one element of the earlier offence, that element cannot be proved at a later trial. Where there are multiple elements then it is not open to the jury at the later trial to conclude that all elements are proved at the later trial and the jury must be directed clearly and specifically to that effect12. "From this survey of the authorities it will have been seen that there is a well-established principle that a verdict of acquittal once given is binding and that the Crown cannot in subsequent proceedings seek to show that the accused was guilty of an offence of which he has previously been acquitted. Whether this principle is regarded as an extension of autrefois acquit, or as an application of the rule against double jeopardy, does not much matter. Since the Crown cannot challenge an acquittal, and the accused is to be taken as entirely innocent of the offence of which he was previously acquitted, it must follow that evidence will be inadmissible if its only relevance is to show that the accused was guilty of an offence of which he has been acquitted. The evidence in question in Sambasivam's Case should in my opinion have been excluded entirely, as their Lordships hinted, but no objection was taken to it at the trial. However evidence otherwise relevant is not rendered inadmissible by the fact that it may tend to show that the accused was guilty of an offence of which he has been 12 (1978) 140 CLR 364 at 408-409. 13 (1978) 140 CLR 364 at 387-388. Crennan acquitted. Where such evidence is admitted it will sometimes be necessary to warn the jury that the accused having been acquitted in the previous proceedings is to be taken as entirely innocent of the offence with which he was then charged. Such a warning will hardly be necessary if the question whether the accused has committed that offence is not raised in the later proceedings, and it would not be likely to occur to the jury to consider that question." (emphasis added) In R v Z14, the House of Lords considered an issue that was summarised by Lord Hutton, at the commencement of his reasons, as follows15: "[T]he issue which arises on this appeal is whether relevant evidence which the Crown wishes to adduce as part of its proof to establish the guilt of the defendant for an offence is inadmissible because it shows that the defendant had, in fact, been guilty of an earlier and different offence of which he had been acquitted." That is not the issue in the present appeal. It is unnecessary for the purposes of this appeal to consider whether the approach of their Lordships to the issue was different from the approach of this Court in cases such as Garrett, Storey, Rogers or Carroll. Lord Hobhouse of Woodborough16, dealing with the considerations of fairness relevant to a discretion to receive or exclude similar fact evidence, pointed out that the fact that an earlier trial ended in an acquittal may be a factor to be put in the balance, in the exercise of the discretion. It was submitted that the present case is indistinguishable from R v Young17, a Victorian case concerning the reception of evidence described as similar fact, or propensity, evidence. The submission should be rejected. There, the Court of Appeal of Victoria was concerned with a charge that the appellant indecently assaulted boys. Evidence was led of earlier incidents, in respect of which the appellant had been charged and acquitted. The incidents would not have been relevant if they had not been incidents of indecent assault. What the Court of Appeal said about the matter demonstrates the difference from the present case, where the prosecution did not invite the jury to conclude that the 15 [2000] 2 AC 483 at 488. 16 [2000] 2 AC 483 at 510. Crennan appellant was a party to a conspiracy with Whitsed or Bowles. The Court of "In the present case the vice inherent in the Crown case, of which the applicant complains, does not arise out of a challenge to the earlier acquittals whereby the prosecution sought a directly contrary finding or verdict in the later trial, but by reason of its calling evidence seeking to establish that the applicant had been guilty of indecent assaults on three other occasions in respect of which there had been final verdicts of acquittal. It matters not whether one calls it similar fact, propensity or 'guilty passion' evidence: what was wrong was that the Crown sought to use it in a way which challenged the findings explicit in the earlier three acquittals. It did that by asking the jury to accept, admittedly for the limited purposes to which such evidence may be adduced, that these incidents were indecent assaults, so that it thereby sought to undermine what was already the subject of a binding judgment of the court." In this case, the prosecution did not ask the jury to accept that the conversations between the appellant and Whitsed and Bowles showed the appellant making or pursuing an agreement with Whitsed and Bowles that the three of them would supply drugs to other people. It asked the jury to accept that the appellant, at the time of the proposed importation from Queensland, was a drug dealer, and from that to infer, among other things, that he intended to sell or supply to others his share of the amount imported. It was neither explicit nor implicit in the acquittal at the earlier trial that the appellant was not a drug dealer. For the purposes of the law, the acquittal established that the appellant was not a party to a conspiracy with Whitsed and Bowles to supply drugs to others; nothing more, and nothing less. Should the jury, nevertheless, have been told that? Anticipating the comment that the suggested relevance of that information could be tested by considering an appropriate direction to the jury, explaining its possible significance, counsel for the appellant formulated a proposed direction in the following terms: "The acquittal is relevant to help weigh the evidence of the propensity evidence [sic]. From the acquittal you may infer innocence. The fact of the earlier acquittal may make it less likely that the accused conspired to deal in drugs with the intent to sell on the occasions other than the charged 18 [1998] 1 VR 402 at 423. Crennan occasion. The acquittal may thereby make it less likely that the accused conspired to possess drugs with the prohibited intent on this occasion". It has already been noted that the trial judge directed the jury that they were not to use the evidence of drug dealing to reason that a person who dealt in drugs on one occasion would be more likely to deal in drugs on another. The evidence was said to be available to be used for the purpose of showing that, since he was a drug dealer, it was likely that the appellant intended to sell his share of what was to come from Queensland. The conversations also had other purposes of direct relevance in that they connected the appellant with the Queensland transaction and with the other participants in it, and it was open to the jury to find that they included admissions by the appellant of participation in the Queensland transaction. The inference of intent to sell might have been thought almost irresistible from the sheer quantity involved. That, indeed, was an argument relied on by the appellant on the question whether the drug dealing evidence should have been excluded. Let it be supposed that the jury had been informed that the appellant had been charged previously with being a party to an agreement (not related to the Queensland importation) with Whitsed and Bowles, that he had been acquitted, and that the jury must therefore act on the basis that there was no agreement to supply between those three men. That would have been a complete statement of what was involved in the benefit of the acquittal. There was no process of reasoning whereby that information would have made less plausible any step in the prosecution case as it was finally left to the jury. There was nothing more that the jury could properly have been told. If the jury had been told that the earlier acquittal established that the appellant was not a drug dealer, or that he was not talking about drugs in his conversations with Whitsed and Bowles, that would have been untrue. If the trial judge had told the jury they must give the appellant the full benefit of his acquittal without further explanation, that would have been mischievous. No doubt there are cases in which the reception at a later trial of evidence of conduct that has been the subject of an earlier trial will make evidence of the fact of acquittal at the earlier trial relevant and admissible. However, as Gibbs J recognised in Storey, it will not be so in every case. It was not so in this case. Conclusion The appeal should be dismissed. Kirby KIRBY J. This Court has hitherto affirmed a principle that: "Where evidence which would tend to prove [an] earlier charge or some element of it is admitted in [a] subsequent charge, the jury must be duly warned that they must accept the fact of the earlier acquittal and not use the evidence in any wise to … question or discount the effect of the acquittal."19 This principle is founded on considerations of legal policy upheld by the common law. It was conventionally observed in the Crown's prosecution practice20. The reasons for the principle include a recognition of the conclusiveness of an acquittal, as between the parties to an earlier criminal adjudication, so that the acquittal is treated as binding in all subsequent proceedings in respect of matters necessarily inherent in that adjudication21. However, the principle also gives effect to a wider protection of an accused from repeated vexation arising out of similar or overlapping evidence22. A further foundation for the rule is the principle of public policy whereby courts respect the institution of jury trial; treat the jury of citizens as the "constitutional tribunal" of fact23 in matters committed to their verdicts; and regard a jury's verdict of acquittal in a criminal trial as legally equivalent to a determination in law that the accused is innocent of that accusation24. In Australia, it will rarely, if ever, happen that, following acquittal of one charge, an accused person will thereafter be prosecuted for exactly the same charge or for another charge on the basis of exactly the same evidence. Statutory warrant aside, the prosecution would rarely, if ever, be so brazen. Such conduct could invite the application of the principle of res judicata, given effect by a plea 19 R v Storey (1978) 140 CLR 364 at 372 per Barwick CJ; see also at 391 per Stephen J, 397 per Mason J, 425 per Aickin J. 20 See Pearce v The Queen (1998) 194 CLR 610 at 638-640 [95]-[98]. 21 Sambasivam v Public Prosecutor, Federation of Malaya [1950] AC 458 at 479 (PC) per Lord MacDermott. 22 cf Davern v Messel (1984) 155 CLR 21 at 67 per Deane J. 23 Hocking v Bell (1945) 71 CLR 430 at 440 per Latham CJ citing Mechanical and General Inventions Co Ltd v Austin [1935] AC 346 at 373 per Lord Wright. 24 Director of Public Prosecutions v Shannon [1975] AC 717 at 772 per Lord Salmon; Williams, "A Judgment of Innocence: The Effect of an Acquittal in Australian Law", (1987) 61 Australian Law Journal 134. Kirby of autrefois acquit, or possibly a plea in bar or an application for a stay of the proceedings25. In this case, having earlier been found not guilty by a jury (and acquitted) of a drug-related conspiracy, the appellant was tried again on another such conspiracy. At his second trial, evidence and argument were proffered before the second jury, in some respects identical to that advanced in the first trial. In the second trial, the appellant sought to adduce evidence of his earlier acquittal. He did so in order that the second jury would take that acquittal into account in their deliberations. That application was denied by the judge at the second trial. The jury in that trial found the appellant guilty of the second charge and he was convicted. An appeal against his conviction was dismissed by the Court of Appeal of Western Australia26. Now, by special leave, the appellant appeals to this Court seeking a new trial at which he would be given the full benefit of his earlier acquittal before a new jury. In my view, the appellant has made good his complaint about the refusal of the judge at the second trial to permit him to prove his earlier acquittal and to direct the jury on the use that they might make of that fact. However, in the circumstances of the overwhelming evidence of the appellant's guilt of the offence charged in the second trial, the case is, as the respondent argued, one for the application of the "proviso"27. The appeal should be dismissed. But on that ground. The facts Mr Raymond Washer ("the appellant") was first presented on indictment for trial in the District Court of Western Australia. His first trial took place before Fenbury DCJ and a jury in September 2004. The indictment contained a single count of conspiracy with co-accused, Messrs Whitsed and Bowles, to supply a prohibited drug contrary to the Misuse of Drugs Act 1981 (WA), ss 6(1)(c) and 33(2)(a). The jury found the appellant and his co-accused not guilty of the charge and they were acquitted. 25 Rogers v The Queen (1994) 181 CLR 251 at 276-277; Pearce (1998) 194 CLR 610 at 614 [9], 620 [28]-[29], 637-638 [92], 645-647 [108]-[112]; Island Maritime Ltd v Filipowski (2006) 226 CLR 328 at 339-341 [30]-[32], 343-344 [43], 345-346 26 Di Lena v Western Australia (2006) 165 A Crim R 482. 27 Criminal Appeals Act 2004 (WA), s 30(4). Kirby Six months later, in March 2005, also in the District Court of Western Australia, the appellant was tried on a charge of a separate drug-related conspiracy with different co-accused, Mr John Di Lena and Ms Andrea Scott. The second trial took place before Wisbey DCJ and a new jury. It was in this trial that the prosecution tendered evidence of drug dealing on the part of the appellant ("the drug dealing evidence") some of which coincided exactly with evidence that had been tendered against him in his first trial28. The appellant challenged the admissibility of this overlapping evidence. However, Wisbey DCJ admitted the evidence. His Honour held that the prosecution could lead it in proof of "the element of intent to sell or supply and to rebut innocent association" between the alleged conspirators29. By implication, Wisbey DCJ found that the evidence had probative value and afforded relevant proof of the offence charged in the second indictment. The drug dealing evidence included recorded conversations between the appellant, on the one hand, and Messrs Bowles, Whitsed and Page, on the other. Most of that evidence had been tendered in the first trial. So was evidence of items discovered in searches made of the appellant's premises in July and September 2000. That evidence was consistent with the appellant's being "involved in drug dealing at a time approximate to the period of the alleged offence"30. The police found, among other things, scales and a grinder with traces of methylamphetamine located on top of the refrigerator. A business and expenditure recorder was found in the bus in which the appellant was living at the time of the September search31. An entry in this recorder was said to reflect a substantial financial transaction between the appellant and Mr Di Lena. At trial and in the Court of Appeal, the appellant challenged Wisbey DCJ's ruling that the drug dealing evidence was admissible in the second trial. The appellant accepts that the Evidence Act 1906 (WA), s 31A was designed to abrogate the test for the admission of propensity evidence favoured by the majority of this Court in Pfennig v The Queen32. He acknowledges that the section was intended, in effect, to enact the test for admissibility of such evidence 28 See also the reasons of Gleeson CJ, Heydon and Crennan JJ ("the joint reasons") at 29 (2006) 165 A Crim R 482 at 492 [47]. 30 (2006) 165 A Crim R 482 at 492 [47]. 31 (2006) 165 A Crim R 482 at 490 [38]. 32 (1995) 182 CLR 461. Kirby propounded by McHugh J in that decision33. Nonetheless, the appellant submitted that the drug dealing evidence did not satisfy the conditions for admissibility described in s 31A(2)(a) and (b) of the Evidence Act. That submission was rejected by the Court of Appeal, which upheld the admissibility of the drug dealing evidence34. The appellant sought special leave to challenge that determination. Special leave was refused on that point. As the reasons of Gleeson CJ, Heydon and Crennan JJ ("the joint reasons") indicate, the admissibility of the drug dealing evidence in the appellant's second trial was not in issue in this appeal35. This left the appellant with his second (and alternative) objection to the conduct of his second trial. This objection was raised in that trial once the drug dealing evidence had been ruled admissible. The appellant submitted that he should be permitted to adduce evidence before the second jury that some of that evidence had been proffered by the prosecution and relied on by it in the first trial where the prosecution failed. The appellant contended that, otherwise, the prosecution would be allowed, in effect, to impugn the first jury's verdict (and the resulting acquittal); that he would be denied a benefit of that verdict by the course being adopted; and that the second jury should be informed of the first jury's verdict and of their duty, in their deliberations, not to impugn that verdict with its imputed finding that he was innocent of the earlier conspiracy charge. The prosecutor objected to the second jury's receiving any such evidence. Wisbey DCJ upheld that submission. He ruled against the line of questions proposed by the appellant's counsel. Argument on the point was taken in the absence of the second jury36. They, therefore, had no knowledge of the earlier proceedings. Specifically, they were completely unaware of the earlier use of some of the drug dealing evidence; of the verdict of the first jury; and of the appellant's acquittal. Wisbey DCJ held that the second case "is nothing about" the first37. 33 (1995) 182 CLR 461 at 528-530 per McHugh J. 34 (2006) 165 A Crim R 482 at 498-499 [78]-[85], 501 [93]-[94], 511 [148]. 35 Joint reasons at [3]. 36 The exchange is set out in (2006) 165 A Crim R 482 at 508-509 [133]-[134]. There are parallels in the comment of Holt LCJ in R v Harrison (1692) 12 How St Tr 833 at 864. 37 (2006) 165 A Crim R 482 at 508 [134]. Kirby The Court of Appeal upheld the ruling of Wisbey DCJ in this respect38. It did so on the basis of its understanding of the comments of Gibbs J in R v Storey39. His Honour had there suggested a qualification to the general principle, stated at the outset of these reasons, that a person, acquitted of an earlier charge, was entitled to the "full benefit" of that acquittal: "Where such evidence is admitted it will sometimes be necessary to warn the jury that the accused having been acquitted in the previous proceedings is to be taken as entirely innocent of the offence with which he was then charged. Such a warning will hardly be necessary if the question whether the accused has committed that offence is not raised in the later proceedings, and it would not be likely to occur to the jury to consider that question." The appellant was granted special leave by this Court to permit argument on the principle governing his case; the application of that principle in the circumstances; and whether any error of law or miscarriage of justice had occurred. In essence, the first question presented by this appeal is whether the appellant's case fell within the primary rule stated in Storey or within an exception. The second question is presented by the "proviso" governing the outcome of criminal appeals. The legislation The relevant offences: Because of the exclusion of issues of admissibility of the drug dealing evidence from the grant of special leave, it is unnecessary to note the language of the Evidence Act concerning propensity evidence in trials in Western Australia. However, it is appropriate to set out the provisions of ss 33(2) and 6(1) of the Misuse of Drugs Act. Those provisions express the offences for which the appellant successively stood trial. At the relevant time, s 33(2) provided: "A person who conspires with another to commit an offence (in this subsection called 'the principal offence') commits – if the principal offence is an indictable offence under section 6(1) … the indictable offence, but is liable on conviction to the penalty referred to in section 34(1)(b)". 38 (2006) 165 A Crim R 482 at 485 [1], 511 [148], 522 [191]. 39 (1978) 140 CLR 364 at 388; cf (2006) 165 A Crim R 482 at 510 [141]. Kirby By s 6(1) of the same Act, provision is made for "[o]ffences concerned with prohibited drugs generally". At the relevant time the sub-section provided: "Subject to subsection (3), a person who – (a) with intent to sell or supply it to another, has in his possession; (b) manufactures or prepares; or sells or supplies, or offers to sell or supply, to another, a prohibited drug commits an indictable offence…". "Proviso" in criminal appeals: In light of the respondent's submissions before the Court of Appeal, and in this Court, it is also necessary to notice the new provision applicable in Western Australia, governing criminal appeals. That provision has been removed from the Criminal Code of the State40. Section 30 of the Criminal Appeals Act 2004 (WA) now relevantly provides: "(1) This section applies in the case of an appeal against a conviction by an offender. (2) Unless under subsection (3) the Court of Appeal allows the appeal, it must dismiss the appeal. The Court of Appeal must allow the appeal if in its opinion – the verdict of guilty on which the conviction is based should be set aside because, having regard to the evidence, it is unreasonable or cannot be supported; the conviction should be set aside because of a wrong decision on a question of law by the judge; or there was a miscarriage of justice. (4) Despite subsection (3), even if a ground of appeal might be decided in favour of the offender, the Court of Appeal may dismiss the appeal if it considers that no substantial miscarriage of justice has occurred." 40 Formerly s 689(1) of the Criminal Code (WA). See Krakouer v The Queen (1998) 194 CLR 202 at 216 [36]. Kirby Full credit for an earlier acquittal History of the principle: The principle which the appellant invoked in this appeal has a long history in our law. Well before the recent concerns about fundamental human rights, Blackstone wrote about the foundation for the principle41: "If the jury therefore find the prisoner not guilty, he is then for ever quit and discharged of the accusation". To similar effect, Chitty observed that42: "When the prisoner is acquitted upon the merits, upon a sufficient indictment, he is for ever free and discharged from that accusation … [T]he general principle [is] that an acquittal is to be taken as a complete establishment of innocence." In essence, the rule was propounded as a necessary consequence of the jury's verdict of not guilty on the conspiracy charged in the first trial. The appellant argued that when, in an attempt to establish the second conspiracy in the second trial, the prosecution sought to rely on evidence, some of which it had tendered in the first trial, he was not obliged to sit quietly and accept this course of conduct. He could not plead autrefois acquit, because the successive offences charged were not the same. The case was not one of res judicata. Interlocutory stays for abuse of process are but rarely granted. However, if he could establish, in the second jury's mind, that it was inherent in the first jury's verdict, based on the overlapping evidence, that he was innocent of drug dealing in respect of which the drug dealing evidence was tendered in the second trial, he was at least entitled to have that argument considered by the second jury and given due weight by them. They were entitled to know of the verdict and thus of the conclusion of the first jury, for whatever consequence it might have for their deliberations when some of the same evidence was tendered in the second trial. If he were denied this opportunity, the appellant suggested, the first jury's verdict would be disrespected. The "discharge of the accusation" and "complete establishment of innocence" would turn out to be hollow. The risk of prosecutorial harassment by invoking the same evidence in a later charge would be enlarged. In my view, there is more to these arguments than is acknowledged in the joint reasons. Those reasons reflect the conclusion of the second trial judge and the Court of Appeal that, because the second conspiracy involved a 41 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 27 at 355. 42 Chitty, A Practical Treatise on the Criminal Law, (1816), vol 1 at 648-649. See also Friedland, Double Jeopardy, (1969) at 129. Kirby different crime, there was no relevant overlap and no appropriate "benefit" to extend to the appellant. This represents an unduly narrow appreciation of the governing legal principle. Scope of full benefit: Because, in the present case, no question of res judicata arises, expressed (relevantly) in a plea of autrefois acquit43, and nor was there any plea in bar or application for a stay to prevent abuse of the court's process, and because arguments as to the admissibility of the drug dealing evidence are not before this Court44, the issue of principle arising is confined to what a judge in a second criminal trial should do where, to some extent at least, there is an overlap between the charges, evidence and arguments in the two trials, in the first of which the accused was acquitted. Sometimes (perhaps usually) an accused might make a tactical decision to let sleeping dogs lie. After all, raising the fact of an earlier criminal trial, albeit for a different offence, might possibly place the accused in an unfavourable light. It could provide an odour of criminality which might be the last thing that the accused would want to have revealed to the second jury. However, where, as here, the accused weighs the tactical disadvantages; seeks to demonstrate the degree of overlap; and wishes to use it to his own forensic advantage before the second jury, should the second trial judge forbid that course? Is the second jury entitled to know of the verdict of the first? Is it possible that this might assist them to accord proper respect to the earlier verdict? Could it help them to reach a proper and lawful verdict on the issues before them? Similar questions of principle had to be decided by the Privy Council on appeal from the Court of Appeal of the Supreme Court of the Federation of Malaya in Sambasivam v Public Prosecutor, Federation of Malaya45. In Sambasivam, the accused was tried for two firearms offences and was acquitted of one of those offences, that of being in possession of ammunition contrary to law. A retrial was ordered on the other firearms offence, that of carrying a firearm. On the retrial, the assessors were not told that the accused had been found not guilty of one of the firearms offences with which he had been charged in the first trial. The assessors were therefore not instructed to treat the accused as entirely innocent of the matters of which he had been acquitted. 43 R v Wilkes (1948) 77 CLR 511 at 518-519. 44 See above these reasons at [53]. Kirby Reversing the Court of Appeal's decision, the Privy Council found that the error involved in the procedure adopted at the second trial undermined the acceptability of the verdict of guilty at that trial. The error justified setting that Lord MacDermott, who gave the reasons of the Privy Council, in an opinion that has proved influential and has been applied many times in this "[A] verdict is binding and conclusive in all subsequent proceedings between the parties to the adjudication. The maxim 'Res judicata pro veritate accipitur' is no less applicable to criminal than to civil proceedings. Here, the appellant having been acquitted at the first trial on the charge of having ammunition in his possession, the prosecution was bound to accept the correctness of that verdict and was precluded from taking any step to challenge it at the second trial." Their Lordships made it clear that what was not permissible in the second trial was to tender, as unqualified, evidence that had been used in the first trial and was part of the foundation on which, in the first trial, the accused had been acquitted of a charge thereby decided in his favour49: "[T]he second trial ended without anything having been said or done to inform the assessors that the appellant had been found not guilty of being in possession of the ammunition and was to be taken as entirely innocent of that offence. … [T]hat should have been made clear when the statement had been put in evidence, if not before. Their Lordships … cannot avoid the conclusion that the effect of the omission was to render the trial unsatisfactory in a material respect. Had the assessors realized that only a part of the statement could be relied on, they might have attached greater weight to the other criticisms regarding it and rejected it altogether. And had they done so it by no means follows that they would have been prepared to accept the testimony of the [prosecution witnesses] 46 [1950] AC 458 at 480. 47 Kemp v The King (1951) 83 CLR 341 at 342; Mraz v The Queen [No 2] (1956) 96 CLR 62 at 68; Garrett v The Queen (1977) 139 CLR 437 at 444-446; Storey (1978) 140 CLR 364 at 372-373, 387, 397, 408-410, 424-425; Rogers (1994) 181 CLR 251 at 277-278; R v Carroll (2002) 213 CLR 635 at 648 [37]. See also Filipowski (2006) 226 CLR 328 at 343 [41]. 48 [1950] AC 458 at 479. 49 [1950] AC 458 at 480. Kirby in preference to that of the appellant. What they would have done … must, of course, remain a matter of conjecture. But the uncertainties are sufficiently reasonable to jeopardize the verdict reached and to justify the view … that it ought not to stand." The principle expressed in Sambasivam involves nothing more than basic fairness to a person who has earlier been acquitted, on overlapping evidence, of a different offence. The Privy Council's decision makes it plain that analysis of the degree and nature of the overlap is required in every case. It is not necessary for the accused to establish with certainty that the second verdict was actually affected by lack of knowledge of an evidentiary overlap with the evidence that resulted in the earlier verdict. (Obviously, in the nature of jury trial, such certainty could not be attained because a jury does not give reasons for its decision.) It is enough that the "uncertainties are sufficiently reasonable" to have required the issue to be openly ventilated and considered in the second trial50. Before long, the principle in Sambasivam was being applied in this Court. Moreover, it was applied in circumstances similar to the present case where the accused person was seeking to place before a second jury evidence of an acquittal before the first jury; and seeking directions to the second jury that they must give him or her the "full benefit" of that acquittal. Australian applications: In Garrett v The Queen51, Barwick CJ (with the concurrence of Stephen, Mason and Jacobs JJ)52 gave effect to the principle of Sambasivam in the context of a second trial for rape where the jury were directed as to the use that they should make of the evidence of an earlier acquittal. The trial judge had instructed the second jury that (the incidents subject to the charges being different) the acquittal on the earlier charge was a neutral fact and that no inference should be drawn from it, for or against the accused or the complainant53. The intermediate court upheld this ruling54. Barwick CJ explained why it was erroneous55: 50 [1950] AC 458 at 480. 51 (1977) 139 CLR 437. 52 (1977) 139 CLR 437 at 446. 53 (1977) 139 CLR 437 at 442-443. 54 R v Garrett (1977) 15 SASR 501. 55 (1977) 139 CLR 437 at 445. Kirby "To have said that the acquittal was neutral was to deny the applicant the full benefit of the acquittal and not to lay that emphasis upon it for which the circumstances called. … [I]n my opinion the former acquittal could not be called in question by evidence led by the Crown in the subsequent trial. This conclusion does not depend on the purpose which the Crown sought to achieve by the admission of the evidence. It depends entirely on the tendency of the evidence itself. … [T]he direct tendency of the evidence of the [complainant] was to establish rape on the former occasion. It inevitably challenged the verdict of acquittal." In the following year, in Storey56, the same basic principle was restated. The debate in Storey substantially concerned the application of the doctrine of issue estoppel in criminal proceedings. That aspect of the matter does not concern us now57. However, Barwick CJ took the occasion to restate the basic rule governing the course to be taken by a judge in a trial, where the prosecution relied upon evidence that overlapped with evidence relied upon in an earlier trial in which there was an acquittal. His Honour said58: "Such evidence will be admissible, provided it is relevant to the subsequent charge or to a defence to it but must only be allowed to be used to support that charge or negative a defence. Where evidence which would tend to prove the earlier charge or some element of it is admitted in the subsequent charge, the jury must be duly warned that they must accept the fact of the earlier acquittal and not use the evidence in any wise to reconsider the guilt of the accused of the earlier offence or to question or discount the effect of the acquittal." Allowing that the extent of any overlap in evidence and the purposes of the propounded use of the same prosecution evidence in successive trials will necessitate careful analysis (and that assessments of such evidence may differ), the principles successively stated by Barwick CJ in Garrett and Storey have been applied many times in intermediate courts in Australia. 56 (1978) 140 CLR 364. 57 See Rogers (1994) 181 CLR 251 at 255-256 per Mason CJ, 272-278 per Deane and 58 (1978) 140 CLR 364 at 372 (emphasis added). Kirby In R v Young59, the decision of the Court of Appeal of Victoria recognised that it would be rare that an accused would face a direct prosecution contradiction of the earlier acquittal. It is of the nature of the problem presented in these cases that the issue will be more subtle60. Thus, in Young, that Court said61: "[T]he vice inherent in the Crown case … does not arise out of a challenge to the earlier acquittals whereby the prosecution sought a directly contrary finding or verdict in the later trial, but by reason of its calling evidence seeking to establish that the applicant had been guilty of indecent assaults on three other occasions in respect of which there had been final verdicts of acquittal. It matters not whether one calls it similar fact, propensity or 'guilty passion' evidence: what was wrong was that the Crown sought to use it in a way which challenged the findings explicit in the earlier three acquittals. It did that by asking the jury to accept, admittedly for the limited purposes to which such evidence may be adduced, that these incidents were indecent assaults, so that it thereby sought to undermine what was already the subject of a binding judgment of the court. In that sense the applicant was not being given the 'full benefit of his acquittal'". Correctly, the Victorian Court of Appeal pointed in Young to the fact that the governing principle is broader than one forbidding only a direct contradiction of the earlier acquittal. For such a contradiction res judicata and the plea of autrefois acquit (not to say relief by way of a stay of proceedings for abuse of process or possibly the discretionary exclusion of evidence) stand as adequate protections for the accused. A broader principle is required where the contrariety is less absolute and the undermining of the first jury's verdict is more subtle62: "It is not merely the possibility that the evidence might 'tend to overturn' a verdict already entered but the likelihood that the jury will be invited to reach conclusions directly contrary to the effect of the acquittal, albeit for the purpose of determining guilt on another charge, and it is that sort of attack by a side wind which is seen to be contrary to the requirement that a properly entered verdict must be treated as 'incontrovertibly correct'." 60 See [1998] 1 VR 402 at 422-423. 61 [1998] 1 VR 402 at 423 per Ormiston and Charles JJA and Vincent AJA (emphasis added). 62 Young [1998] 1 VR 402 at 422 (emphasis added). Kirby The broader principle is endorsed by the decisions of this Court in Garrett and Storey. Overseas authority: The trend of Canadian judicial authority has been similar to that expressed in the Privy Council and in Australian courts63. However, more recently, in R v Z64, the House of Lords has departed from, or qualified, the Sambasivam doctrine. Substantially, the effect of the decision in Z has been to confine the earlier principle to cases where the accused is put on trial again for the offence of which an acquittal was earlier entered or is in some way to be punished again for that same offence65. The position adopted in the decision in Z appears to have been followed in New Zealand66 at a time when the courts of that country were still subject to appeal to the Privy Council. Whether the approach adopted in the House of Lords in Z may be reconciled with the reasoning in this Court in Garrett and Storey was a matter of dispute between the parties. Certainly, the decision in Z appears to favour a much narrower expression of the governing rule. It is one that runs the risk of effectively defining the rule out of existence. Neither party urged on this Court a reconsideration of the principles stated in Sambasivam, Garrett and Storey or an embrace, instead, of the approach stated in Z. And, even in Z, Lord Hobhouse of Woodborough acknowledged that "[f]airness requires that the jury hear all relevant evidence"67. In the United States of America, the problem now before us arises in cases where an accused has invoked the double jeopardy clause in the Constitution68. This is not an occasion to explore the somewhat confusing decisional law on that provision. However, with respect to the particular question now before this Court, the trend of United States authority appears to be in favour of the right of 63 R v Arp [1998] 3 SCR 339 at 381-383 [76]-[78]; see also Grdic v The Queen [1985] 1 SCR 810. 65 See [2000] 2 AC 483 at 487 per Lord Hope of Craighead, 499 per Lord Hutton, 510 per Lord Hobhouse of Woodborough. 66 R v Degnan [2001] 1 NZLR 280; cf R v Gee [2001] 3 NZLR 729. 67 [2000] 2 AC 483 at 510. 68 The United States Constitution, Fifth Amendment relevantly provides: "nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb". There is a provision in some ways similar in the International Covenant on Civil and Political Rights, Art 14.7: see Pearce (1998) 194 CLR 610 at 631 [75]. Kirby an accused person to place before a second jury the fact of acquittal in an earlier jury trial, in rebuttal of evidence received again in a second trial and as a procedure inherent in the guarantee of fairness of criminal trials expressed by the Supreme Court of the United States69. Academic support: Commentary on the resulting state of judicial authority, and on the requirements of fairness applicable to such cases, appears to endorse the principle of allowing an accused to place before a jury evidence of an earlier acquittal (accompanied by an appropriate judicial direction on the use to be made of that evidence) in circumstances where the prosecution leads "similar fact" evidence and such evidence had been tendered in support of the earlier charge of which the accused was acquitted. The commentaries sometimes justify this course on the basis that it amounts to the accused employing the earlier acquittal as a "shield", in defence against any unfair attempt by the prosecution to use the same evidence twice, albeit in respect of offences that are technically different. The substantial unanimity of academic opinion on this point lends support to the appellant's submission that the trial judge and the Court of Appeal took too narrow a view of the legal rule that was to be applied in the circumstances of this case70. Conclusion: using acquittal as a shield: The result of this review of authority, principle and policy is, in my view, this. The courts below (and now a majority of this Court) have adopted an unduly narrow approach to the rule which, in a second trial, following an earlier acquittal, permits an accused (1) to prove before the second jury the fact of the earlier acquittal; (2) to seek by evidence and argument to demonstrate that inherent in the earlier acquittal was a decision adverse to the prosecution on the particular evidence and argument that it wishes to offer in the second trial; and (3) to secure from the judge at the second trial directions that the acquittal at the first trial is to be given "full effect" and is not to be undermined or disregarded by the use made there of the identical or similar overlapping evidence. The majority in this appeal is reluctant to give 69 Dowling v United States 493 US 342 at 362 (1990) per Brennan J. See also Hess v Alaska 20 P 3d 1121 (2001). 70 Hirst, "Contradicting Previous Acquittals", (1991) Criminal Law Review 510 at 519; New Zealand, Law Commission, Evidence: Reform of the Law, Report No 55, Vol 1 (1999) at 67; Mirfield, "Res Judicata Rejected", (2001) 117 Law Quarterly Review 194; Mahoney, "Evidence", (2002) New Zealand Law Review 101 at 110; Stuesser, "Admitting Acquittals as Similar Fact Evidence", (2002) 45 Criminal Law Quarterly 488 at 507; McDonald, "The Admissibility of 'Acquittal Evidence' in Criminal Trials: Toward Reform", (2003) 34 Victoria University of Wellington Law Review 639 at 657, 661-662. Kirby effect to this rule. However, in my view, legal authority and legal principle suggest that its application was appropriate. Two remaining issues: Two questions remain. The first is whether, in the circumstances, the refusal of the trial judge to permit the appellant to prove to the second jury the fact of his acquittal in the first trial, and the failure of the trial judge to direct the jury on the fact of acquittal and the way the drug dealing evidence should be considered by them, amounted to a "wrong decision on a question of law" or "miscarriage of justice". The second issue, if the first is decided in favour of the appellant, is whether, in the circumstances of this case, notwithstanding any such error(s) "no substantial miscarriage of justice has occurred"71. The exclusion of proof of acquittal was erroneous The different offences: The majority of this Court has accepted the respondent's argument that, having admitted the drug dealing evidence, the trial judge in the second trial was correct in refusing to permit the appellant to prove his acquittal in the first trial and in declining to direct the jury about the fact of acquittal of the first conspiracy and about the way that evidence should be In the Court of Appeal, the prosecution conceded that "most, if not all, of the recorded conversations had been led against the appellant on his earlier trial"73. In this Court, the respondent did not contest the generality of that concession. It pointed out that a conversation that was recorded on 29 June 2000 was not in fact adduced in evidence at the first trial. Nonetheless, the other recorded conversations were certainly tendered in evidence at both trials. To that extent, the prosecution evidence in both trials overlapped. The evidentiary differences: On the other hand, there is no denying the fact that there were differences between the issues under consideration before the successive juries in the first and second trials: The conspiracy, the subject of the first trial, was to sell or supply a prohibited drug to another contrary to s 33(2)(a) of the Misuse of Drugs Act; whereas at the second trial it was to possess a prohibited drug with 71 Criminal Appeals Act 2004 (WA), s 30(4). 72 Joint reasons at [41]-[42]; reasons of Hayne J at [113]. 73 (2006) 165 A Crim R 482 at 502 [97]. Kirby intent to sell or supply it to another. The first conspiracy engaged s 6(1)(c) of the Misuse of Drugs Act. The second engaged s 6(1)(a); The alleged participants in the two conspiracies were different. The first conspiracy allegedly involved the appellant with Mr Whitsed and Mr Bowles. In the second, it allegedly involved him with Mr Di Lena and Ms Scott; (3) Although the two conspiracies were alleged to overlap in time, the first referred to a much longer interval (13 April 2000 to 21 March 2001). The second was shorter and much more precisely defined (18 May 2000 to 2 June 2000); (4) Necessarily, the offence in the second trial being more specific and narrower, the drug dealing evidence was tendered only by reference to those narrower issues; In the second trial, Wisbey DCJ told the jury not to speculate about the role of Messrs Whitsed and Bowles74. This was so although the evidence of conversations between the appellant and those men was before the second jury and common to both trials. In his first trial, the appellant's case had been that their discussions could have been related to gold or some other innocent commercial purposes75; and The earlier trial was not concerned with the importation of drugs to Western Australia from Queensland, as was the conspiracy alleged in the second trial76. I understand the conclusion, reached in the joint reasons, contrary to mine on this point. As the Privy Council's reasoning in Sambasivam shows, we are not dealing here with certainties but with "uncertainties [that] are sufficiently reasonable to jeopardize the [second] verdict reached"77. Nevertheless, with due respect to those who have reached a different conclusion, it is my opinion that the better view of the application of established authority is that the trial judge in the second trial, in the light of the overlapping evidence tendered and submissions made in the two trials, ought to have permitted the appellant to prove before the second jury the verdict of acquittal in the first trial. It was an ingredient that 74 See the joint reasons at [23]. 75 See the joint reasons at [27]. 76 See the joint reasons at [18]. 77 Sambasivam [1950] AC 458 at 480. Kirby potentially stood in the appellant's favour. I shall state the factual considerations that bring me to this conclusion. Overlap between the two trials: The following common features of the overlapping evidence should be noted: The appellant was an accused in each trial and was the one participant in common, affected by the overlapping evidence; In each trial the basic offence charged was the same, namely statutory conspiracy; In each trial, the conspiracy related to a drug prohibited by the Misuse of Drugs Act. Indeed, it was the same drug, namely methylamphetamine; (4) Although the purposes of the conspiracies were different (being respectively to "sell and supply" in the first trial and to "possess" the prohibited drug in the second), the indictment in the second trial charged the appellant with conspiring to possess methylamphetamine "with intent to sell or supply to another". There was therefore a significant coincidence in the actual offences alleged which the successive juries were required to consider; There was also an overlap in time between the two offences. The second alleged conspiracy fell entirely within the interval during which the first conspiracy was said to have occurred. Accordingly, this was not a case (as sometimes happens) of completely different conspiracies, alleged to have occurred successively and at different times. The coincidence in time raises a possible interpretation that the drug dealing evidence was part of coincident or inter-connected criminality; (6) Although there was much different, and additional, evidence to support the charge in the second indictment against the appellant, the prosecution's reliance on the drug dealing evidence makes it difficult to deny that some coincidence of reasoning on the part of the jury to guilt of the second offence might have arisen out of their evaluation of that evidence. In particular, the use by the prosecution of the recorded conversations involving Messrs Whitsed and Bowles (the alleged co-conspirators in the first conspiracy) left it open to the second jury to infer that whatever arrangement the appellant was discussing with Messrs Whitsed and Bowles, it was the same as, or materially similar to, that alleged with Mr Di Lena and Ms Scott; In the opening and closing addresses of the prosecutor in the second trial, express reference was made to the conversation between the appellant and Mr Whitsed of 30 June 2000 which had been critical in the prosecution's Kirby case in the first trial. Thus, in that opening, the prosecutor said: "[T]he conversation is generally about drug dealing between Washer and Whitsed, but then it progresses on to be specific about the failure of this drug deal." By this comment, the question is immediately presented as to whether the appellant was entitled to have the jury in the second trial told that the charge "generally about drug dealing between Washer and Whitsed" had been the subject of an earlier prosecution; that the appellant had been found not guilty and acquitted of that offence; that, in law, he was to be treated therefore as innocent of that offence; that the first jury's verdict was to be respected by the second jury and given full effect by that jury; and that no inferences were to be drawn from that conversation with Mr Whitsed that the appellant was guilty of the second conspiracy with Mr Di Lena and Ms Scott, now under consideration; Similarly, in relation to a conversation between the appellant and Mr Whitsed on 11 July 2000, proved in both trials, the prosecutor told the second jury: "On 11 July 2000, in another recorded conversation at Washer's house, Washer and his colleague Whitsed embark on a lengthy discussion about drug transactions within the Rebels club in Perth. Particularly discussing amounts of drugs and moneys outstanding. This kind of evidence about drug transaction[s] the [S]tate says is relevant to prove a number of things: firstly, it's to prove that Washer is not talking about sand or carrots or sausages or anything innocent, he's talking about drugs; secondly, it's to show that Washer's intention or his intention when those drugs arrived in Perth, the ones from Queensland, his intention was his share of it at least was to sell or supply them as part of his … moneymaking venture." The judge could direct the jury (as he did) not to speculate about the appellant's dealings with Messrs Whitsed and Bowles. However, such a direction would be somewhat uninstructive in the light of the affirmative statements made by the prosecutor. Arguably, the appellant was entitled to have the negative impact of these conversations (and the proof of his business relationship with Mr Whitsed) redressed and corrected by having the judge at the second trial tell the jury about the earlier charge; the appellant's acquittal upon it; and the consequence that such acquittal had for the use that the jury might make of the evidence presented by the prosecution in both trials; and (9) Once the drug dealing evidence was admitted at the second trial, the use that the jury might make of it was (subject to any clear directions from the trial judge) entirely a matter for them. To say the least, it was possible Kirby that the second jury, uninformed about the first jury's verdict of not guilty, might have treated such evidence as damning of the appellant and proving that he was a drug dealer generally and therefore a drug dealer specifically, conspiring as alleged in the second indictment. To the respondent's protestations before this Court that such reasoning on the part of the jury was furthest from the prosecution's intentions, a question immediately arises. If the conversations with Messrs Whitsed and Bowles were designed to prove that Mr Washer "is not talking about … anything innocent", was the appellant not entitled to have the second jury informed that, notwithstanding any conclusion that they might otherwise reach about such evidence, an earlier jury had, in fact, found the appellant not guilty of the offence with which he was then charged? And that this jury finding was to be treated as a finding that he was innocent and given full effect by the second jury? An error of law occurred: I can understand the reluctance on the part of Wisbey DCJ, in the second trial, to permit the appellant to open the fact of his acquittal in the first trial. I accept that, once the fact of the acquittal is opened, confining proof about the evidence, submissions and significance of the first trial would present difficulties for the judge conducting the second trial. I acknowledge that there were dangers, then, of confusion on the part of the second jury. Moreover, as the joint reasons point out in this Court, there were difficulties in formulating precisely a judicial direction to assist the second jury as to the "full effect" that they were to give to the jury's verdict in the first trial78. I make due allowance for all of these problems. The fact remains that the prosecution, both by the evidence that it called before, and the submissions that it made to, the second jury, brought about a definite overlap between the matters presented to the second jury and those which had been passed upon by the verdict of the first jury. The prosecution should not have it both ways. In particular, it could not tell the second jury that the appellant's recorded conversation with Mr Whitsed was not "anything innocent" (but was talking about drugs) when the first jury's verdict arguably implied that that jury concluded that the conversation was not proved to be about drugs at all but rather something that was indeed legally innocent. By their verdict, the first jury were taken to have found the appellant innocent of a conspiracy to deal in drugs with Messrs Whitsed and Bowles, a matter of which the second jury should have been informed and which they should have taken into account in their deliberations. The appropriate directions: In the end, the principles stated in this Court in Garrett and Storey should not have been ignored in the circumstances 78 Joint reasons at [40]-[41]. Kirby presented by the prosecution evidence and argument in the appellant's second trial. It is true, as Gibbs J pointed out in Storey79, that a warning not to impugn (but to give full effect to) an earlier jury verdict will not be necessary if the question "whether the accused has committed that offence is not raised in the later proceedings". However, by introducing the overlapping evidence of suggested drug dealing of the appellant with Messrs Whitsed and Bowles and by then expressly contending before the second jury trial that such evidence showed a lack of innocence in the appellant's conversations, the prosecutor, in the second proceeding, was arguably impugning the earlier verdict. At least, the prosecutor was placing an interpretation before the second jury that they might look on differently if they were informed of the verdict of the first jury. As a matter of law, the appellant therefore became entitled to attempt to rebut at least the common part of the prosecution's case by invoking the evidence of this acquittal that stood in his favour. If that is what he wished to do, he was entitled to prove the outcome of the earlier trial. He was also entitled to have the judge tell the second jury that they must remove from their deliberations any otherwise adverse inferences of guilt of drug dealings by the appellant with Messrs Whitsed and Bowles appearing in his recorded conversations with them. In respect of those conversations, the second jury were required to take into their deliberations the conclusive fact that the appellant was found innocent of conspiracy with Messrs Whitsed and Bowles. I can appreciate why, forensically, the prosecution fought to keep this fact from the second jury. However, the considerations that I have outlined suggest that the appellant's request was correct in law. It was also fair. It should have been upheld. Conclusion: an erroneous decision: It follows, in my view, that Wisbey DCJ erred in law in rejecting the appellant's application to be allowed to prove what had happened at his earlier trial. In light of the ruling, the form of the directions that would then have been appropriate did not arise. In any event, any difficulties presented by formulating such directions cannot be determinative. It is inherent in the approach taken in Garrett and Storey that proper directions to a second jury can be formulated. So much is also inherent in the overseas decisions that endorse the requirement for such jury directions in proper cases. It is not necessary for this Court to attempt to formulate the judicial directions here. The directions would be founded on the evidence that was adduced about the first trial (or, as I would expect, they would commonly follow an agreement reached between counsel). Essentially, no more was claimed than that the second jury should have been acquainted with the verdict reached by the 79 (1978) 140 CLR 364 at 388. Kirby first; an instruction on what was in law inherent in that verdict, especially with respect to the overlapping evidence of the conversations with Messrs Whitsed and Bowles; and directions to the second jury that it was their duty not to impugn the effect of the earlier finding of innocence with respect to the drug dealing evidence but to give full respect and force to it in their deliberations. The contrary view is not, in my opinion, consistent with the rule expressed by Barwick CJ in Garrett and Storey. No party challenged the correctness of those decisions. They are decisions that conform to much earlier law and ensure basic fairness and transparency in criminal trials. They are consistent with established common law authority. They are also conformable with the fundamental norms of human rights. The appellant has therefore established error of law in the conduct of his second trial. But has "no substantial miscarriage … occurred"? A proper case for the "proviso" Appellant's submission: The appellant submitted that, if this Court reached the foregoing conclusion, there would be no scope for the operation of the "proviso". He argued that the jury's verdict was tainted by the admission of the drug dealing evidence, absent any evidence of his acquittal (and innocence) in respect of dealings described in part of that evidence. I accept that this is a powerful submission. In this country, an accused person is normally entitled to have the trial conducted on the basis of admissible evidence tendered by a party, appropriate submissions and accurate directions on the governing law. Not only is this the assumption upon the basis of which the "proviso" is written into the law. This too is generally a fundamental civil right, reflected in the provisions of the International Covenant on Civil and Political Rights ("the ICCPR")80. Approach to the "proviso": On the other hand, recent authority of this Court has emphasised the requirement, in every case where the "proviso" is invoked, that the appellate court should consider the entirety of the record for itself, in order to answer the question posed by the common form in which the "proviso" is expressed in cases of appeals against criminal convictions81. Relief is not automatic when errors in rulings on evidence occur or where misleading addresses go uncorrected or judicial directions are imperfect or inadequate. To 80 The ICCPR, Art 14.2 reads: "Everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law." 81 Weiss v The Queen (2005) 224 CLR 300 at 316 [41]. See also Dietrich v The Queen (1992) 177 CLR 292 at 338. Kirby say otherwise, would be to restore the Exchequer rule which it was "the legislative objective [of] the proviso … to do away with"82. In this case, in the approach that I favour, it falls to this Court to apply the "proviso". When all of the evidence in the present appeal is reconsidered and weighed, the result, in my opinion, is an outcome similar to that reached by this Court in Festa v The Queen83 and Nudd v The Queen84. The evidence adduced by the prosecution, even wholly omitting the overlapping evidence which the appellant sought to qualify, was convincing, overwhelming and ultimately unanswered by the appellant. The general nature of that evidence is described in the joint reasons85. I will not repeat it. In this Court, the respondent submitted that, had the appellant been permitted to adduce evidence of his earlier acquittal, it would have been prejudicial to his case as revealing that he had previously been charged with an offence involving the same prohibited drug as was the subject of his second trial. However, this cannot be a complete answer to the appellant's invocation of Garrett, Storey and the other decisions on which he relied. Where an accused seeks to adduce evidence of an earlier acquittal, he or she must make risky tactical decisions. It is not for the prosecution to render such decisions unavailing by propounding a concern for the prejudice they may occasion to the person seeking to make them. By the same token, proof of the earlier verdict and the ensuing acquittal, even with clear judicial instructions on the limited use to be made of it, was not wholly neutral for the appellant. Whatever the judicial warning, it is inescapable that some jurors might have reasoned: "where there's smoke there's fire". If the appellant's considered decision was that he wished to prove his earlier acquittal and to have judicial instructions concerning its effect, the law, in my view, entitled him to embark on that course. Nevertheless, when this Court, on appeal, comes to consider for itself the "proviso", it is entitled to put into the balance the clear forensic consequences to the appellant that such a course involves. The verdict of acquittal in the first trial was relatively confined in its effect. 82 Weiss (2005) 224 CLR 300 at 315 [38]. 83 (2001) 208 CLR 593 at 604 [28], 633 [124]-[127], 657 [213], 662 [229]-[230], 671 84 (2006) 80 ALJR 614 at 622 [20], 637 [109], 645 [162]; 225 ALR 161 at 169, 189, 85 Joint reasons at [6]-[17]. Kirby Conclusion: no substantial miscarriage: Inescapably, where the "proviso" is invoked, there are "borderline" cases86. In the end this is not one. the appellant was overwhelming and effectively The evidence against undisputed. I have therefore concluded that, although the appellant has established that a "wrong decision on a question of law by the judge" at trial occurred, uncorrected by the Court of Appeal, "no substantial miscarriage of justice has occurred"87. That conclusion requires an outcome adverse to the appellant. Order The appeal should be dismissed. 86 Nudd (2006) 80 ALJR 614 at 637 [109]; 225 ALR 161 at 189. 87 Criminal Appeals Act 2004 (WA), ss 30(3)(b) and 30(4). Hayne 107 HAYNE J. I agree with Gleeson CJ, Heydon and Crennan JJ that the appeal should be dismissed. At his trial for conspiracy to possess a prohibited drug, with intent to sell or supply the drug, the appellant sought to adduce evidence that he had previously been charged with, but had been acquitted of, another and different offence of conspiracy. It will be convenient to refer to this other offence of conspiracy as the "earlier charge" and to refer to the appellant's trial for that offence as the "earlier trial". The trial that gives rise to the present appeal will be referred to as the "later trial". At both trials, evidence was adduced which the prosecution alleged showed that the appellant dealt in drugs. The evidence included physical evidence such as scales and a grinder bearing traces of methylamphetamine found at the appellant's house. It included recordings of conversations the appellant had had with others. It is convenient to refer to this as the "drug dealing evidence". The appellant did not submit that the drug dealing evidence was not admissible at his later trial. In particular, he did not submit that his acquittal of the earlier charge prevented the prosecution at the later trial adducing the drug dealing evidence that had been led at his earlier trial. Rather, he contended that he was entitled to supplement the drug dealing evidence led at the later trial by proving that he had been charged with, but acquitted of, the earlier charge. Were the facts that there had been the earlier trial, and that the appellant had been acquitted of the earlier charge, relevant to any fact in issue in the later trial? As the reasons of Gleeson CJ, Heydon and Crennan JJ demonstrate, neither the fact that there had been the earlier trial, nor the fact that the appellant had been acquitted of the earlier charge, was shown to be relevant to any fact in issue in the later trial. In the later trial (the trial that gives rise to the present appeal) the appellant was alleged to have conspired with John Di Lena and Andrea Scott, between 18 May 2000 and 2 June 2000, to possess a quantity of methylamphetamine that was to be brought from Queensland to Western Australia with the intent to sell or supply that substance. The earlier charge had alleged that, between 13 April 2000 and 21 March 2001, the appellant had conspired with Gavin Whitsed and William Bowles to sell or supply methylamphetamine. The dates of the alleged conspiracies overlapped. the same kind of drug (methylamphetamine). But the parties to the alleged conspiracies differed and it was not suggested, at the earlier trial, that the drugs which the prosecution said that the appellant and Mr Whitsed and Mr Bowles had agreed to sell or supply included the shipment that was the subject of the later charge. They related Hayne What the jury at the earlier trial had made of any of the drug dealing evidence cannot be known. All that is known is that the appellant was acquitted of conspiring, between 13 April 2000 and 21 March 2001, with Mr Whitsed and Mr Bowles, to sell or supply methylamphetamine. The appellant's acquittal on that earlier charge is incontrovertible88. He did not, between those dates, conspire with Mr Whitsed and Mr Bowles to sell or supply methylamphetamine. But knowing, and accepting, that the appellant did not do that, says nothing about whether he conspired with persons other than Mr Whitsed and Mr Bowles to possess some other drugs. And unless a logical connection was identified between the fact of his acquittal on the earlier charge and some fact in issue at his later trial, evidence of the fact of the acquittal (or of the fact that there had been a trial that resulted in that verdict) was irrelevant at the later trial. The appellant identified no such connection. The evidence was rightly excluded as irrelevant. It is unnecessary to consider what directions to the jury would have been necessary if the evidence had been admissible. The appeal should be dismissed. 88 Rogers v The Queen (1994) 181 CLR 251; R v Carroll (2002) 213 CLR 635.

HIGH COURT OF AUSTRALIA Matter No S57/2022 APPELLANT AND JAMES KELLAND HARDINGHAM & ORS RESPONDENTS Matter No S58/2022 RP DATA PTY LIMITED APPELLANT AND JAMES KELLAND HARDINGHAM & ORS RESPONDENTS Realestate.com.au Pty Ltd v Hardingham RP Data Pty Limited v Hardingham [2022] HCA 39 Date of Hearing: 11 October 2022 Date of Judgment: 14 December 2022 S57/2022 & S58/2022 ORDER Matter No S57/2022 Appeal allowed in part. Set aside the orders of the Full Court of the Federal Court of Australia made on 8 September 2021, 13 September 2021, and 1 October 2021 and, in their place, order that the appeal and cross-appeal be dismissed with costs. The first and second respondents pay the appellant's costs. Matter No S58/2022 Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia made on 8 September 2021, 13 September 2021, and 1 October 2021 and, in their place, order that the appeal and cross-appeal be dismissed with costs. The first and second respondents pay the appellant's costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with H P T Bevan SC for the appellant in S57/2022 and the third respondent in S58/2022 (instructed by King & Wood Mallesons) R Cobden SC with J Sleight and G R Rubagotti for the first and second respondents in each matter (instructed by Neville Hourn and Borg Legal) M D Martin KC with A F Messina for the appellant in S58/2022 and the third respondent in S57/2022 (instructed by Mills Oakley) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Realestate.com.au Pty Ltd v Hardingham RP Data Pty Limited v Hardingham Contract – Informal agreements – Implied term – Inferred term – Copyright – Where real estate agencies informally commissioned professional photographer and his company to take photographs and prepare floor plans of properties for use on platforms concerning marketing of properties for sale or lease – Where photographs and floor plans provided to each agency were uploaded to platform operated by Realestate.com.au Pty Ltd ("REA") – Where REA's terms and conditions provided that agency granted licence to REA to use and sub-license copyright in photographs and floor plans – Where REA sub-licensed copyright in photographs and floor plans to RP Data Pty Ltd ("RP Data") – Where RP Data kept photographs and floor plans from historical sales on subscription website – Whether agencies' licence and right to grant sub-licence limited to period of marketing campaign for sale or lease of property. Words and phrases – "all the circumstances", "business efficacy", "copyright", "implied term", "inferred term", "informal contract", "intention", "licence", "mutual understanding", "objective theory of contract", "reasonable person", "words and conduct". KIEFEL CJ AND Mr Hardingham is a professional photographer and the sole director of Real Estate Marketing Australia Pty Ltd ("REMA"). REMA's business has been the supply of photographs taken and floor plans made of residential properties by Mr Hardingham in an editable digital form to real estate agencies for use in the marketing of those properties for sale or lease. Upon receipt of the photographs and floor plans the commissioning agencies used the images in their marketing in various ways such as in brochures. One of those ways was by uploading them to the realestate.com.au platform operated by Realestate.com.au Pty Ltd (”REA"). The platform of REA is used by a majority of real estate agencies in Australia. REA then provided the images to RP Data Pty Limited, which operates a website and provides a service, RP Data Professional, to which real estate agencies subscribe. The images provided by REMA to the agencies would appear on RP Data Professional within a few days of upload. The images would remain on REA's platform and RP Data Professional after the completion of the sale or lease of the property the subject of the images. They remained as part of the historical information about completed transactions presumably for purposes such as the assessment of price for future sales. In proceedings brought in the Federal Court, Mr Hardingham and REMA claimed that RP Data had infringed and continued to infringe the copyright in a large number of the photographs and floor plans. The claims involved a substantial number of such works. With the consent of the parties the Court ordered that questions of liability for infringement of the copyright in the works relating to twenty properties, chosen by Mr Hardingham and REMA, be heard and determined separately from and before the determination of questions of infringement of the copyright in other works and questions of relief. It does not appear to have been in issue in the proceedings that the photographs and floor plans were original artistic works within the meaning of s 32(1) of the Copyright Act 1968 (Cth), or that Mr Hardingham was the author of those works and that he was the owner of the copyright in the works. It appears that Mr Hardingham granted REMA a licence to use and to sub-license the use of the works, at first informally, and then, in April 2018, by way of a formal deed of licence. It was also not in issue in the proceedings that in using the works as it did, RP Data would infringe the copyright in them if it did so without a licence referable to Mr Hardingham or REMA. Attention was necessarily directed to the terms of the licence, which it was not disputed that REMA gave to the agencies, which permitted the agencies in turn to sub-license the use of the works. The licence issue The agreements between REMA and the real estate agencies were not in writing. There was no express oral agreement for the grant of a licence by REMA to the agencies in terms which would enable them to license to REA. Nevertheless, Mr Hardingham and REMA knew that the agencies uploaded the images to the REA platform and that it was necessary that they do so. The primary judge found1 that it was central to the objective of marketing sought to be achieved by all parties. Consistently with that mutual understanding, Mr Hardingham and REMA's case was conducted on the basis that a licence was granted by REMA to the agencies and that that licence permitted the agencies to grant a sub-licence. But they contended that the licence which the agencies had was subject to a limitation. The limitation was that the images were to be used only for the purpose of marketing the property the subject of the images for a sale or lease. Once a sale or lease of the property was completed, the licence came to an end. A licence subject to these limitations would not have permitted the agencies to accept the terms of the licence required by REA. The written subscription agreement which REA required the agencies to enter into included a term that, in consideration of REA granting the agency the right to upload listings to its platform, the agency "grant[s] ... an irrevocable, perpetual, world-wide, royalty free licence" to do many things including to license other persons. Clearly enough a term as broad as this would have authorised REA to sub-license to RP Data on terms which included permitting RP Data to maintain the images on its RP Data Professional service after the completion of the sale or lease of the property the subject of the images. The primary judge found2 that, objectively viewed, Mr Hardingham, REMA, and the agencies conducted themselves on the basis that the agencies had the right to upload the works to REA's platform in accordance with the terms and conditions required by REA. Mr Hardingham and REMA either knew or assumed that REA was permitted to make the works available after marketing campaigns had ended and the relevant sale and lease transactions had been completed. His Honour further found3 that Mr Hardingham and REMA knew that the agencies had to grant REA a licence on REA's terms. They knew that there was an agreement between RP Data and REA by which RP Data was provided with the 1 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 506 [79]. 2 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 504-505 [70]-[71]. 3 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 505 [71]-[72]. content which had been uploaded to the REA platform and that RP Data made those works available to its subscribers. His Honour held4 that the objective circumstances relating to the twenty transactions were such that it is either: (1) to be inferred from the conduct of the parties including their course of dealings; or (2) to be implied into the agreements between them, in order to give business efficacy to those agreements, that Mr Hardingham and REMA agreed that the agencies were authorised, by way of a licence, to upload the images to REA's platform and to grant to REA a licence in the form required by REA. As mentioned earlier, his Honour considered5 uploading the works to REA's platform to be central to the objective sought to be achieved by the parties. That objective could not have been achieved unless the agencies could grant a licence to REA on the terms and conditions it usually required. It followed, his Honour concluded6, that Mr Hardingham and REMA authorised, consented to, or permitted (which is to say licensed7) the agencies to sub-license the works to REA on REA's usual terms and conditions, which would include authorising REA to grant a sub-licence to RP Data. The sub-licence to RP Data did not go beyond that which was permitted by the sub-licence granted to REA by the agencies. Copyright was not infringed. The majority in the Full Court (Greenwood and Rares JJ, Jackson J dissenting) allowed Mr Hardingham and REMA's appeal8. Greenwood J9 (Rares J agreeing) considered that any inference as to the terms upon which the agencies could grant a sub-licence to REA required actual knowledge of the precise scope of the term. This was necessary because of the gravity of the effect of REA's usual terms and conditions. Their Honours, for reasons which differed, did not consider that the requirements for the implication of a term were satisfied. 4 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 506 [78]. 5 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 506 [79]. 6 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 506 [80]. See Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 499 [38], citing Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 at 49. 8 Hardingham v RP Data Pty Ltd (2021) 395 ALR 644. 9 Hardingham v RP Data Pty Ltd (2021) 395 ALR 644 at 671-672 [99]. The Full Court made orders restraining RP Data from infringing the copyright. Ascertainment of terms In a case such as this where the terms of an agreement between the parties have not been articulated, those terms must be ascertained by reference to the parties' words and conduct. The words and conduct of each party must be understood by reference to what the words and conduct would have led a reasonable person in the position of the other party to believe10. The ultimate question is what reasonable people with knowledge of the background circumstances then known to both parties would be taken by their words and conduct to have agreed. In Hawkins v Clayton11, in reasoning adopted by Brennan CJ, Dawson and Toohey JJ in Byrne v Australian Airlines Ltd12 and by Dawson and Toohey JJ in Breen v Williams13, Deane J said that the first step in ascertaining what was included in the agreement is one of inference of the actual intention of the parties, taking account of the circumstances disclosed by the evidence. It is only when that first enquiry is complete that consideration might be given, in an appropriate case, to whether a term may be implied as a matter of imputed intention14. Although Deane J in Hawkins v Clayton used the word "intention", indeed "actual intention", it must be understood as it is used in a contractual context15. In Ermogenous v Greek Orthodox Community of SA Inc16, it was said that the word "intention" describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and 10 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]. (1988) 164 CLR 539 at 570. See also Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 442 per McHugh and Gummow JJ. (1995) 185 CLR 410 at 422. (1996) 186 CLR 71 at 90-91. 14 Hawkins v Clayton (1988) 164 CLR 539 at 570. 15 cf Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (2002) 209 CLR 95 at 105-106 [25], referring to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348-353; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45. actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. In Pacific Carriers Ltd v BNP Paribas17, this Court confirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. The conditions necessary to ground the implication of a term are well known18. Apart from being reasonable and equitable, capable of clear expression and non-contradictory of the express terms of the contract, to be implied a term must be necessary to give business efficacy to the contract (which will not be satisfied if the contract is effective without it), and it must be so obvious that "it goes without saying"19. In Hospital Products Ltd v United States Surgical Corporation20, Deane J cautioned against an over-rigid application of the criteria for the implication of a term. In particular, his Honour said, there should not be such an approach to "business efficacy" where a term otherwise satisfies the requirement that it be "so obvious that it goes without saying". In Hawkins v Clayton21, his Honour said that a term may be implied if it is "necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case". This general statement was approved in Byrne v Australian Airlines Ltd22. At this point it might be thought that there had been something of a departure from the criterion that a term be obvious. But in Hospital Products, Deane J had clearly stated obviousness to be a criterion and so too had McHugh and Gummow JJ in Byrne v Australian Airlines Ltd23. If a resolution of their approach is necessary, Hely J of the Federal Court may be thought to have (2004) 218 CLR 451 at 461-462 [22]. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]. 18 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282- 283, applied in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347. 19 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. (1984) 156 CLR 41 at 121. (1988) 164 CLR 539 at 573. (1995) 185 CLR 410 at 422, 442. (1995) 185 CLR 410 at 446. provided one in Yau's Entertainment Pty Ltd v Asia Television Ltd24, as Jackson J in the Full Court in the present case observed25. Hely J pointed out that it is unlikely that a term which "fails to meet the obviousness criterion would be one which is necessary for the reasonable or effective operation of the contract" (original emphasis). Inferences and implications At first instance the issue in this case – what the licence from REMA to the agencies authorised the agencies to agree to when sub-licensing to REA – was approached by reference to two enquiries: what may be said to be inferred from all the circumstances and what may be implied. This may be seen to reflect the approach taken by Deane J in Hawkins v Clayton26. There his Honour observed that there are limits to what may be inferred from all the circumstances, and inferences may overlap with implications27. In Breen v Williams28, Dawson and Toohey JJ observed that the line between an inference and an implication will not always be easy to draw. The approach taken by Deane J should not distract attention from the full enquiry as to the rights and liabilities of the parties, which in the first place has regard to their words and conduct – here their conduct in particular – taking account of all the circumstances in which they took place. In focusing attention on the distinction between an inference and an implication his Honour should not be understood to be limiting that enquiry. His Honour himself said that it was necessary to have regard to the "circumstances disclosed by the evidence"29. His Honour's discussion of the enquiries there undertaken should be understood as referable to the facts of that case. The principal question for the Court in Hawkins v Clayton was whether and to what extent a firm of solicitors was obliged to bring to the attention of an executor of a will, and those who may be taken to have had an interest under it, the (2002) 54 IPR 1 at 8 [35]. 25 Hardingham v RP Data Pty Ltd (2021) 395 ALR 644 at 689 [179]. (1988) 164 CLR 539 at 570. 27 Hawkins v Clayton (1988) 164 CLR 539 at 569-570. (1996) 186 CLR 71 at 91. 29 Hawkins v Clayton (1988) 164 CLR 539 at 569. existence of the will and its contents following the death of the testatrix, who had left the executed will in the custody of the firm. As to the first enquiry, Deane J observed that it was "obviously" in the contemplation of both the testatrix and the firm that the will might remain in the firm's custody at the time of her death. That being so, his Honour found that one might infer a term by which the firm assumed continuing responsibility for its safe custody. His Honour described as "[c]loser to the borderline between inference and imputation"30 a further term that the firm was authorised to communicate the contents of the will to the executor and others having an interest under it when the testatrix died, but appears to have considered it to have been open to draw such an inference. On the other hand, whether it was a term of the agreement between the firm and the testatrix that when she died the firm was under an obligation to take any positive steps to locate some or all of the persons named in the will, in his Honour's view, was an enquiry beyond the stage of inclusion of terms by inference. His Honour said "[i]t simply cannot be inferred or assumed as a matter of actual fact that the testatrix ever directed her mind to that question or that, if she did, there was any actual joint intention of herself and [the solicitor] which can be expressed as a contractual term"31. His Honour concluded that a term such as this would have to be implied32. But it is to be noted that there was little else in the surrounding circumstances and the dealings of the parties in that case which could be said to have informed their mutual understanding. The present case Mr Hardingham and REMA bear the onus of establishing infringement of copyright. Their case for infringement depended upon the scope of the licence given to the agencies, and the sub-licence which the agencies could grant to REA being limited in the way contended for. Mr Hardingham, REMA, and the agencies dealt with each other in the context of an industry where residential properties were marketed for sale or lease in a particular way. How things were done to achieve this objective forms part of the circumstances in which their conduct is to be considered. This is not to equate what was understood to occur, and the reasons for it, with an industry practice akin to a custom or usage, from which a term might be implied. Rather it is relevant to 30 Hawkins v Clayton (1988) 164 CLR 539 at 570. 31 Hawkins v Clayton (1988) 164 CLR 539 at 570. 32 Hawkins v Clayton (1988) 164 CLR 539 at 571. the question of what might be considered to be the mutual understanding on which they dealt. Most agencies in Australia conducted their marketing using the REA platform. This was well known. Mr Hardingham, REMA, and the agencies knew that REA uploaded photographs and floor plans of a property to be marketed to its platform and that it then maintained them there after the completion of the sale or lease as available to its subscribers as historical transactions. REA had done so since the platform came into existence in 2003 and over the course of the dealings between the parties. This is hardly consistent with the licence to be given by the agencies to REA being limited in the way contended for. Within a few days of REA uploading the images they appeared on RP Data's service and remained there post sale or lease. This too must have been apparent to Mr Hardingham and REMA. And prior to their entry into the relevant transactions, Mr Hardingham and REMA understood that RP Data had a contractual relationship with REA by which REA licensed it not only to use the data but in terms which allowed RP Data to keep the data in its service. Although Mr Hardingham and REMA may be taken to have understood what had transpired between the agencies, REA, and RP Data in relation to the transactions in question, they said nothing. They made no objection. No question of estoppel on the part of Mr Hardingham and REMA has been raised in the proceedings but that is not to say that their silence has no relevance to what may be taken as conveyed to the agencies. An agreement and its terms may be inferred from the acts and conduct of the parties, including the absence of their words. In tacit light of surrounding circumstances understanding33. Here, that tacit understanding may be understood to have been evident to the agencies in light of what was taken to be part of the mutual understanding on which the parties conducted their contractual relationships. that absence may evidence a The silence of Mr Hardingham and REMA when they well knew what REA and RP Data did with the images, and for how long they continued to use them, is consistent with an acceptance of what was necessary to achieve the intended marketing. Both Mr Hardingham and REMA and the agencies appreciated that it could only be achieved if the agencies submitted to REA's terms to upload the images to its platform. The agencies were no doubt led to believe by the conduct of Mr Hardingham and REMA that they knew and accepted that as a commercial reality. In these circumstances it is not possible to conclude that it was intended Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117. that the agencies could only license REA on the basis of the limitation contended for. In these circumstances no question as to whether a term needs to be implied in the sub-licence to REA arises. Conclusion and orders The appeals should be allowed. We agree with the orders proposed by Gordon J, including the orders as to costs. GORDON J. Mr Hardingham34 is a professional photographer and the sole director of Real Estate Marketing Australia Pty Ltd ("REMA")35. Since its incorporation in 2009, REMA has been commissioned by various real estate agencies to produce photographs and floor plans of properties for use in marketing campaigns for the sale or lease of the properties. In 2018, Mr Hardingham and REMA ("H/REMA") brought proceedings in the Federal Court of Australia against RP Data Pty Ltd36 alleging that RP Data had, contrary to s 36 of the Copyright Act 1968 (Cth), infringed, and was continuing to infringe, H/REMA's copyright in a number of its photographs and floor plans37. RP Data operates the website www.corelogic.com.au. Through that website, subscribers can access a product called "RP Data Professional". RP Data Professional includes reproductions of a number of H/REMA's photographs and the photographs and floor plans from floor plans. RP Data obtained Realestate.com.au Pty Ltd ("REA")38. REA is a wholly owned subsidiary of REA Group Ltd. REA Group supplies online residential property listing services to real estate agencies, including through the realestate.com.au website and mobile applications (collectively, "the realestate.com.au platform"). There was no dispute that on each occasion that H/REMA was engaged by a real estate agency to provide photographs and floor plans of a property, the contract between H/REMA and the agency included a term that H/REMA granted the real estate agency a licence to use the photographs and floor plans for the purpose of marketing the property in question, and a right to grant a sub-licence for that purpose (which would include granting a sub-licence to REA and RP Data). The central issue was and remains the scope and terms of that licence and sub-licence and, in particular, whether the licence and the right to grant a sub-licence to REA and RP Data to use the photographs and floor plans was limited to the period of the agency's marketing campaign to sell or lease the property, or extended after the campaign. 34 The first respondent in both appeals. 35 The second respondent in both appeals. 36 The appellant in appeal S58 of 2022 and third respondent in appeal S57 of 2022. It was common ground that, for the purposes of the Copyright Act, the works in issue were original artistic works in which copyright subsisted, that Mr Hardingham was the author of each of the works and that ownership of the copyright vested in him and was the subject of an exclusive licence granted by him to REMA. 38 The appellant in appeal S57 of 2022 and third respondent in appeal S58 of 2022. The trial judge ordered that questions of liability for infringement of copyright of the photographs and floor plans in respect of 20 properties39 ("the Works") were to be heard and determined separately and before the hearing and determination of questions of any infringement of other works and questions of pecuniary relief. The 20 contracts between H/REMA and different agencies for preparation of the Works were entered into on various dates between September 2014 and June 2018. The agencies were not parties to the proceeding. After the order for the separate question, RP Data was granted leave to file a cross-claim against REA asserting that if RP Data had infringed copyright, REA was liable to indemnify RP Data in respect of any loss or damage under the data licence agreements between RP Data and REA by which RP Data had obtained access to electronic versions of the Works. Framing the question H/REMA bore the onus of establishing infringement of copyright, with the result that it bore the onus of establishing that the licence to use the Works, and the right to grant a sub-licence which it granted to the agencies, did not extend beyond the marketing campaign40. The contracts between H/REMA and the agencies were informal, in the sense that they were not written agreements. So far as the evidence went, when an agency commissioned H/REMA to take photographs of a property or prepare a floor plan, nothing was said by either H/REMA or the agency about what licence H/REMA gave the agency to use the Works or what sub-licence the agency could grant. The central question in this case is what would the words and conduct of the parties (H/REMA and each agency), when judged in light of what the parties knew, have led a reasonable person to conclude were the terms of the contract between them. More particularly, when both parties (H/REMA and each agency) knew that the Works that H/REMA provided to the agency to use in campaigns would be provided to RP Data and made available through RP Data Professional and neither H/REMA nor the agency said anything to the contrary, would a reasonable person conclude from what the parties knew, said and did at the time 39 The 20 properties identified were chosen by H/REMA. 40 Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 94-95, 119-120; Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528 at 543-544; Acohs Pty Ltd v Ucorp Pty Ltd (2012) 201 FCR 173 at 202 [169], citing Purkess v Crittenden (1965) 114 CLR 164 at 168; Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [No 2] (2012) 204 FCR 494 at 540-541 [207]. of each contract that H/REMA permitted use of the Works by RP Data after the campaign had ended? The answer is "yes". Principles The rights and liabilities of parties under a contract – whether oral, in writing, or partly oral and partly in writing – are determined objectively41. The concern is "not with the real intentions of the parties, but with the outward manifestations of those intentions"42. As this Court said in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd43: "It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean." And where the contract is commercial, it is necessary to ask what reasonable persons engaged in the respective businesses of the parties would have understood the words and conduct to mean44. As this Court held in Toll, a person who signs a contractual document conveys a representation to a reasonable reader of that document that the person 41 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [46], citing Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656 [35] and Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 350, 352. See also Taylor v Johnson (1983) 151 CLR 422 at 429; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Chitty on Contracts, 34th ed (2021), vol 1 at 1107 [15-004]. 42 Taylor (1983) 151 CLR 422 at 428. See also Toll (2004) 219 CLR 165 at 179-180 [41]; Byrnes v Kendle (2011) 243 CLR 253 at 275 [59]. (2004) 219 CLR 165 at 179 [40] (emphasis added). 44 Bergl (Australia) Ltd v Moxon Lighterage Co Ltd (1920) 28 CLR 194 at 199; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 589 [22]; Pacific Carriers (2004) 218 CLR 451 at 462 [22]; Electricity Generation Corporation (2014) 251 CLR 640 at 656-657 [35]; Mount Bruce Mining (2015) 256 CLR 104 at 116 [47]. has read and approved its terms or is willing to take the chance of being bound by its contents45. If the document on its face appears to be a complete contract, it will contain the whole of the contractual terms46. Extrinsic evidence cannot be adduced to subtract from, add to, vary or contradict those terms, except in limited circumstances47. And a term will be implied only if, among other things, it is necessary to make the contract work48. The approach differs when a court is confronted with an informal contract. The first task is to consider the evidence and to find the relevant terms of the contract49. Ascertaining the terms is a question of fact50. The issue is not one of (2004) 219 CLR 165 at 180-181 [45]. See also Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 483-484 [33]-[35]. 46 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 at 143-144; Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507 at 517. See also Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at 401 [90(1)-(2)]. 47 See, eg, Codelfa Construction (1982) 149 CLR 337 at 347; Equuscorp (2004) 218 CLR 471 at 484 [36]. See also Lewison, The Interpretation of Contracts, 7th ed 48 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. See also Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 188-189 49 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 537 [55], citing Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 442. See also Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) 54 IPR 1 at 9 [37]; Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742 50 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1 at 14 [27], 20 [54], 77 [245]-[246]. See also Deane v The City Bank of Sydney (1904) 2 CLR 198 at 209; Handbury v Nolan (1977) 13 ALR 339 at 341-342, 346, 348-349. See also Moore v Garwood (1849) 4 Ex 681 at 684-685, 689-690 [154 ER 1388 at 1389, 1391-1392]; Bolckow v Seymour (1864) 17 CB (NS) 107 at 120-121 [144 ER 43 at 49]; Palmer v Bank of Australasia (1895) 16 LR (NSW) (L) 219 at 223-224; Gardiner v Grigg (1938) 38 SR (NSW) 524 at 532; Carmichael v National Power Plc [1999] 1 WLR 2042 at 2049-2050; [1999] 4 All ER 897 at 903-904; Masterton Homes (2009) 261 ALR 382 at 402 [90(4)]; Thorner v Major [2009] 1 WLR 776 at 794-795 [58], 800-801 [82]-[83]; [2009] 3 All ER 945 at 965, 970-971; King v Adams [2016] NSWSC 1798 at [65]; Moore v Aubusson [2020] NSWSC 1466 at [332]. See also Lewison, The Interpretation of Contracts, 7th ed interpretation, because there are no definitive words to interpret51; "we are here concerned not with construing a contract but with evidence as to what the terms of a contract were"52. The issue is one of fact and substance, not mere form53: what did the parties – here H/REMA and each of the agencies – agree54? In determining that question in the absence of a written document containing, or a conversation constituting, the agreement in the relevant aspect – here the scope of the licence and the ability to grant a sub-licence between H/REMA and each agency – it is necessary for the court to consider the full range of circumstances, at least as those circumstances existed at the time of the contract55. In making factual findings of a term or terms of such a contract, the evidence of witnesses as to words written or spoken by the parties (and their knowledge of relevant matters at the time of the contract) must be weighed alongside the objective surrounding facts (which are undisputed or which are established by other objective evidence) and also with the apparent logic of events56. It may be difficult in this process to distinguish between terms of the contract based solely or centrally upon words used by the parties and those based only in part on those words but also upon surrounding facts and the logic of events. The task is to ascertain what the words and conduct of the parties would have conveyed in all the circumstances to a reasonable person who had the 51 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]. 52 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1221; [1976] 3 All ER 817 at 824. 53 Handbury (1977) 13 ALR 339 at 341. 54 King [2016] NSWSC 1798 at [65]-[69] and the authorities cited. See also Handbury (1977) 13 ALR 339 at 341-342, 346, 348-349; Liverpool City Council v Irwin [1977] AC 239 at 253-254. 55 County Securities [2008] NSWCA 193 at [8]. See also Palmer (1895) 16 LR (NSW) (L) 219 at 223-224; J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078 at 1083; [1976] 2 All ER 930 at 935; Handbury (1977) 13 ALR 339 at 341-342, 346, 348-349; Masterton Homes (2009) 261 ALR 382 at 402-403 [90(4)-(5)]; King [2016] NSWSC 1798 at [66]. See also Lewison, The Interpretation of Contracts, 7th ed (2020) at 147-148 [3.92]; cf 204-205 [3.189]-[3.190]. 56 Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at 603 [15]-[16]; Fox v Percy (2003) 214 CLR 118 at 129 [31]; Maggs v Marsh [2006] BLR 395 at 400 [26]; Re Hillsea Pty Ltd [2019] NSWSC knowledge reasonably available to the parties57. The essential question is whether the parties' conduct – what was said and not said and the evident commercial aims and expectations of the parties in the context of what they knew – reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent to be legally bound in some particular respect58. Put in simpler terms, the intention of H/REMA and each agency, objectively ascertained, about the scope of the licence and the ability to grant a sub-licence is to be identified from what was said and not said, from what was done, and from what they reasonably knew or ought reasonably to have known59. As is evident, that approach requires consideration and application of basic contractual principles, not reference to, or application of, a taxonomy of contractual terms as express or implied. A taxonomy of that kind depends on what content each "category" is given. If, as may be suggested, terms are separated into expressed (in the sense of being said) or implied (in the sense of being unexpressed or unsaid), it has long been recognised that a term will be implied upon conditions including the necessity to give business efficacy to a contract but, also, that there may be terms which represent the obvious presumed intention of the parties. Expressing the taxonomy in binary terms is apt to confuse the two different cases. Further, given the ascendancy of the objective theory of contract and its "command of the field"60, there is now little, if any, distinction between the latter 57 Crown Melbourne (2016) 260 CLR 1 at 20 [53]-[54], citing Gardiner (1938) 38 SR (NSW) 524 at 532; see also 77 [246], citing Thorner [2009] 1 WLR 776 at 800-801 [81]-[83]; [2009] 3 All ER 945 at 970-971. See also British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] QB 303 at 310-311; County Securities [2008] NSWCA 193 at [150], [204]. See also Codelfa Construction (1982) 149 CLR 337 at 352; Toll (2004) 219 CLR 165 at 179 [40]; Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 at 1112 [14], 1121 [42]; Byrnes (2011) 243 CLR 253 at 284 [98]. 58 cf Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at 525 59 Crown Melbourne (2016) 260 CLR 1 at 77 [246], citing Thorner [2009] 1 WLR 776 at 800-801 [81]-[83]; [2009] 3 All ER 945 at 970-971. See also Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117-11,118; Carmichael [1999] 1 WLR 2042 at 2049; [1999] 4 All ER 897 at 903; Branir (2001) 117 FCR 424 at 525 [369]; County Securities [2008] NSWCA 193 at [2]. 60 Toll (2004) 219 CLR 165 at 179-180 [40]-[41] and Byrnes (2011) 243 CLR 253 at 275 [59], both citing Taylor (1983) 151 CLR 422 at 429. case of an "implied" term by reference to the obvious presumed or imputed intention of the parties, and the identification of the "express" terms of an agreement by reference to the objective intention of the parties. Older cases decided before the ascendancy of the objective theory of contract should be approached with caution. So, for example, the approach in Hawkins v Clayton61 was that, where the contractual terms were "left largely unarticulated by the parties", the term could only be inferred to be a term of the contract if the court was satisfied as a matter of actual fact that the contracting parties directed their minds to the question. If not, the term had to be implied by the flexible application of criteria from BP Refinery (Westernport) Pty Ltd v Shire of Hastings62. That approach no longer applies. When dealing with an informal contract, finding what was the objective intention of the parties requires consideration of the whole of the evidence, not just evidence about what was said. As will be seen, a reasonable observer would conclude from the conduct of H/REMA and the agencies, including what was said and not said, the evident commercial aims and expectations of the parties and the surrounding circumstances, that there was an understanding or agreement – a manifestation of mutual assent – that the licence to use the Works and the ability to grant a sub-licence for the use of the Works granted by H/REMA to each agency extended beyond the campaign63. Accordingly, RP Data did not infringe H/REMA's copyright in the Works. Facts It is necessary to make some more detailed reference to the facts of this case. The following summary is drawn from the reasons of the decisions below. The primary evidence adduced in respect of the arrangements between H/REMA and the real estate agencies was "minimal" and consisted primarily of Mr Hardingham's affidavit evidence and invoices issued by REMA. Since its incorporation in 2009, H/REMA has been commissioned by various agencies to produce photographs and floor plans of properties for use in marketing campaigns for the sale or lease of the properties. The separate question was limited to photographs and floor plans in respect of 20 properties – "the Works" – which were taken and prepared between September 2014 and June (1988) 164 CLR 539 at 570-571. (1977) 180 CLR 266, as discussed in Hawkins (1988) 164 CLR 539 at 571-573. 63 King [2016] NSWSC 1798 at [65]-[69]. Mr Hardingham's evidence, which applied to each contract the subject of the separate question, was that H/REMA was usually engaged to supply photographs and floor plans to agencies as a result of a telephone call from an agent. Typically, an agent on behalf of an agency would say to Mr Hardingham "Hi James, we have just listed [property address]. The campaign is due to start [date]. Can you attend this week to take the photos for the campaign?". Sometimes he would be asked to prepare a floor plan. Neither REA nor RP Data was a party to the oral agreement made between H/REMA and the agency for each of the Works. The parties proceeded at trial on the basis that Mr Hardingham took the photographs and prepared the floor plans. H/REMA provided the agencies with the photographs and floor plans in an editable digital form and the agencies paid invoices issued by REMA. As H/REMA acknowledged, each of the agencies then uploaded the photographs and floor plans to the realestate.com.au platform. H/REMA knew that one of the principal purposes for which the Works had been commissioned was to enable the Works to be uploaded to that platform. REA operates the realestate.com.au platform. Many agencies in Australia list and advertise residential properties for sale or lease on behalf of vendors and landlords on this platform. The evidence at trial established that the overwhelming majority of Australian real estate agencies use the realestate.com.au platform and, as a matter of practical commercial reality, would use the platform in marketing properties. REA supplies these residential property listing services to agencies by selling "listing subscriptions" to the agencies. Each subscription agreement included an express acknowledgement by the agency that the "terms stipulated in this form and in the Terms and Conditions contained on our website [www.realestate.com.au/terms] form part of this Agreement". The terms and conditions included an express licence granted by the agency to REA: "5. Your acknowledgements You acknowledge and agree that at all times during the Term of this Agreement: in consideration for us granting a right to upload listings to the Platform and the other services we provide, you grant us an irrevocable, perpetual, world-wide, royalty free licence to publish, copy, licence to other persons, use and adapt for any purpose related to our business any content you provide to us during the Term, and this licence survives termination of this Agreement by you or us; Obligations were also imposed on the agency including that only the agency, or an authorised third party, would upload listings to the realestate.com.au platform; that the agency would ensure that any statement made to REA or any content or material supplied was not unlawful, was not provided for an improper purpose and was not misleading or deceptive; and that any material supplied would not include information that infringed the intellectual property rights of third parties or would otherwise expose REA to any liability, legal proceedings or other sanction. On 28 January 2014, solicitors for H/REMA wrote to RP Data alleging that RP Data had infringed their clients' copyright, including by reproducing images on its website. In a letter of reply dated 9 April 2014, RP Data's solicitors said: "The facts as we know them are from the point at which your client provides the images to its agent clients the images are then used by the agent client at it/his/her discretion either as owner of the copyright or licence. During the course of any marketing campaign the agents, who are clients of your client provided those images to the listing portal realestate.com.au ('REA'). RP Data acquires the rights to use and display data and photographs from a range of third parties including REA. RP Data has a specific contract with REA which governs its relationship with REA. For the purposes of your contentions however that agreement is entirely irrelevant. What is however relevant is the terms of the express licence granted by your clients [sic] agent client base to REA. Those terms are to be found on its webpage in the page headed 'Legal Information'. We specifically direct your attention to the provisions under the heading 'Contributions'. The relevant terms of the REA webpage to which you should have reference is as follows: http://www.rs.realestate.com.au/cgi-bin/rsearch?a=v&t=res&id=13. So as to avoid any confusion we set out below the relevant portion of those terms and conditions which affect your client's position: 'To the extent that any Contributions are proprietary in nature, you grant REA a worldwide, nonexclusive, royalty-free, perpetual, transferable and irrevocable licence to use, reproduce, modify, adapt, translate, distribute, publish, create derivative works from and display and publicly perform your Contributions throughout the world in any medium, whether currently in existence or not. You also grant each user of our websites a nonexclusive licence to use, reproduce, adapt, translate, distribute, prepare derivative works of, display and perform your Contributions as permitted by REA and these terms. You grant: REA, in respect of Contributions to its website the right to use your name or the name you submit with the Contribution, and, the right to represent and warrant that: you own and control all of the rights to the Contributions; or you have the lawful right including all necessary licences, rights, consents, and permissions to use and authorise REA to display the Contributions'. These are the pertinent terms that your client's customers agree to when making contributions to REA. As you will see they are very clear in that your client's customers grant REA a licence to use the images over which your client claims copyright. That licence permits REA to transfer the licence and to use or distribute those images to third parties including RP Data. The reason that REA has such terms is so that it can carry on business in the real estate space knowing that these types of disputes regarding copyright will not arise." (emphasis added) The term in the letter was not, in fact, the same as the REA licence64 but the differences do not affect the result. The substance of what H/REMA was told and knew was the same. H/REMA did not reply to that letter for nearly four years. The Works were all provided by H/REMA to the agencies after receipt of the letter of 9 April 2014. As will be explained, the knowledge of H/REMA and the agencies was important. Before H/REMA took the photographs or prepared the floor plans in respect of any of the 20 properties that were the subject of the separate question, H/REMA knew that: the photographs and floor plans were being commissioned by the agencies in part in order for those agencies to upload them to the realestate.com.au platform; the photographs and floor plans remained on the realestate.com.au platform as historical information in relation to completed transactions and were not removed; and 64 See [57] above. (3) within a few days of an agency uploading the photographs and floor plans to the realestate.com.au platform, they appeared on RP Data Professional and continued to be made available to the public, including as historical information in relation to completed transactions. Next, from at least early 2014 (that is, before Mr Hardingham took the photographs and prepared the floor plans in respect of any of the 20 properties the subject of the separate question), H/REMA knew that, in order for the agencies to upload content to the realestate.com.au platform under REA's terms and conditions, the agencies had to: grant to REA "an irrevocable, perpetual, world-wide, royalty free licence to publish, copy, licence to other persons, use and adapt for any purpose related to [REA's] business any content [the agency] provide[d] to [REA]"; agree not to upload content which infringed third party intellectual property rights; and indemnify REA for loss and damage "as a result of any claim ... brought by a third party ... in connection with any content or material uploaded ... in connection with" the agencies' agreement with REA. And, from the same time, H/REMA also knew that there was an agreement between REA and RP Data under which RP Data was provided the content uploaded to the realestate.com.au platform and that RP Data made the content so obtained available to paying subscribers to RP Data Professional, albeit H/REMA did not know the precise terms of that agreement. The trial judge The trial judge, Thawley J, found that H/REMA did not establish that RP Data infringed copyright in respect of any of the Works. His Honour found that uploading the Works to the realestate.com.au platform was "central to the objective sought to be achieved by the parties". His Honour held that H/REMA had authorised, consented to or permitted the agencies to sub-license the copyright in the Works to REA on REA's usual terms and conditions, which included authorising REA to grant a sub-licence to RP Data. His Honour found that the sub-licensing arrangement could be "inferred" from the conduct of H/REMA and the agencies, including their course of dealings, or, alternatively, it should be "implied" into the agreements between H/REMA and the agencies in order to give business efficacy to those agreements. The trial judge therefore concluded that, for the purposes of the Copyright Act65, the actions of RP Data were "deemed to have been done with the licence of the owner of ... copyright". That is, RP Data's acts were authorised by the sub-licence granted by the agencies to REA, being a licence which bound the owner of the copyright, and it was not established that RP Data's acts went beyond what was permitted by the licence granted by H/REMA to the agencies and the sub-licence granted by the agencies to REA. The Full Court H/REMA appealed. The Full Court of the Federal Court (Greenwood and Rares JJ, Jackson J dissenting) allowed the appeal on the basis that it was not satisfied that a term should be implied or inferred that H/REMA conferred authority on the agencies to grant sub-licences to REA on its "usual terms and conditions". The Court made orders restraining RP Data, whether by itself, its servants, agents or otherwise howsoever from infringing the copyright in the Works by reproducing or authorising reproduction in a material form of, in Australia, any of the Works, or communicating or authorising communication of any of the Works to the public within or outside Australia, without the licence What were the terms? As the question framed earlier in these reasons shows, the terms of the licence and sub-licence are to be identified by assessing the whole of the evidence – what was done, said and not said (and, where it is relevant, what H/REMA and the agencies knew at the time that they made their contract) – to decide what a reasonable person in the position of each party would have understood were the terms of the bargain in that particular respect. In this case, both REA and RP Data asserted that the licence which H/REMA gave each agency permitted those agencies to sub-license the use of the Works to REA and to RP Data. None of the agencies were called to give evidence at trial. The evidence that was available, as explained above, was given by Mr Hardingham and was minimal. H/REMA did not assert that anything was said or done in the course of H/REMA's dealing with any of those agencies which sought to limit what use might be made of the Works. Hence, there being no dispute that, so far as the agencies were concerned, the agencies, REA and RP Data had always intended to use the Works in the way that they did, attention and 65 Copyright Act, ss 15, 36. 66 The Full Court also ordered that the proceedings be remitted to the trial judge for the determination of the issues not included in the separate question, and the determination of the cross-claim. argument focused only on what H/REMA knew about the use that would be made of the Works. In other words, H/REMA's words and conduct must be weighed against the surrounding facts which were undisputed or which were established by other objective evidence. As the trial judge found, H/REMA and the agencies knew that the Works were being sought for a purpose which included uploading the Works to the realestate.com.au platform. Those parties knew that this was to occur in accordance with REA's usual terms and conditions including terms by which the agencies permitted REA to make further use of the Works. As we have seen, H/REMA knew the content and effect of those terms and conditions. H/REMA, in deciding whether to perform the work, dealt with the agencies with that knowledge and continued to deal with the agencies by accepting their requests to supply photographs and floor plans for valuable consideration. Those facts applied to each of the agreements that yielded the Works. What H/REMA knew about intended use of the Works is important because it may inform what the words and actions of H/REMA would have led a reasonable person in the position of the agency (the counterparty to the agreement) to believe to be the rights and liabilities governing their relationship67. And it will inform that understanding if, as here, H/REMA knew that the agency, REA and RP Data would use the Works after the campaign had ended. It will inform that understanding because, nothing being said to the contrary, permission to use68 what was provided in the way that it was, was a term of the bargain that H/REMA and each of the agencies made. A reasonable observer would conclude, from the parties' words and conduct in the context of that knowledge, that there was a common understanding that the licence granted by H/REMA to the agency to use and sub-license the use of the Works extended beyond the campaign69. It is for those reasons that the trial judge was right to decide that the contract between H/REMA and each agency in relation to the Works included a term that H/REMA granted the agency a licence to use the Works for the purposes of the campaign to sell or lease the property, together with a right to sub-license the use of the Works by RP Data after the campaign. Accordingly, RP Data did not infringe H/REMA's copyright in the Works. 67 Toll (2004) 219 CLR 165 at 179 [40]; cf 180-181 [42]-[45], 183 [49]-[50]. 68 See, eg, Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 69 See authorities cited at fnn 57-59 above. The wrong way to frame the question in this case In the course of their reasons for judgment, the members of the Full Court extensively reviewed a number of decisions of this Court70 and other courts71 addressing whether a term is "implied" or "inferred" by the court. In applying those authorities, the Court took three steps which meant that it framed the wrong question. The first was to speak of the "actual intention" of the parties, the second was to approach the case through a rigid taxonomy of "express", "inferred" and "implied" terms, and the third was the tendency at times to conflate "inferred" and "implied" terms and to treat both as requiring some level of necessity. It is necessary to address each step. First, as these reasons have identified, this is a case requiring regard to the basic principle that the terms of a contract are to be identified objectively, not by reference to the "actual intention" of the parties72. The test is what the reasonable observer would make of what passed between the parties73. Second, in informal contracts, terms a reasonable person would conclude are terms of the bargain based on what the parties said and did, understood in light of what they knew, might be, and sometimes have been, described as "inferred" terms74. It may be that describing them in that way suggests that they are a species of implied term, and indeed such terms have been described as "implied"75. But whether the description "inferred" or "implied" is correct depends entirely on what "inferred" or "implied" is intended to convey. As Dawson and Toohey JJ observed in Breen v Williams76, "the line between inference and implication will 70 Codelfa Construction (1982) 149 CLR 337; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; Hawkins (1988) 164 CLR 539; Byrne (1995) 185 CLR 410; Breen v Williams (1996) 186 CLR 71; Barker (2014) 253 CLR 169. 71 Liverpool City Council [1977] AC 239; BP Refinery (1977) 180 CLR 266; Yau's Entertainment (2002) 54 IPR 1; Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2015] VSCA 190. 72 cf Hardingham v RP Data Pty Ltd (2021) 395 ALR 644 at 687 [170]. 73 See [43] and [45]-[48] above. 74 Hawkins (1988) 164 CLR 539 at 570-572; Byrne (1995) 185 CLR 410 at 422, 442; Breen (1996) 186 CLR 71 at 90-91. 75 Liverpool City Council [1977] AC 239 at 254; Hawkins (1988) 164 CLR 539 at 571; Breen (1996) 186 CLR 71 at 102-103. (1996) 186 CLR 71 at 91. not always be easy to draw". And, in the present case, the use of either word is liable to lead to definitional disputes which would be wholly unproductive. The contracts between H/REMA and the agencies in this case were not written. Dividing the terms of the bargain between those that were express and those that are inferred or implied also may distract attention from the proper inquiry. In particular, describing terms which the parties did not spell out in full in their oral exchanges as "implied" terms will distract if it suggests that what is set out in BP Refinery77 should be applied before identifying those terms of the contract. It should not. As Lord Wilberforce said in Liverpool City Council v Irwin78, the function of the court is "simply ... to establish what the contract is, the parties not having themselves fully stated the terms". The first task is to identify what a reasonable person would conclude were the terms of the bargain based on what the parties said and did, understood in light of what they knew. Third, if the reference to "inferred" terms is directed simply to establishing the terms of an oral contract as a matter of fact, then there is no requirement for necessity79. The cases relied on by the Full Court as requiring some level of necessity before "implying" or "inferring" such a term do not mandate that outcome80. So much was made clear by what was said in the authorities, which distinguish between formal and informal contracts, and emphasise that, for the latter, the first task is to identify the terms81. In Byrne v Australian Airlines Ltd82, the Court cautioned against automatic or rigid application of the BP Refinery criteria to informal contracts. There may be a term that went without saying not because the term is necessary to make the contract work but because it was so obvious it went without saying. And here the term was of that latter kind (not the former). Saying that the five requirements in BP Refinery can or should be applied "flexibly" suggests that there can be degrees of "necessity" when a court is determining, as an objective matter, what is necessary to make a contract work. I do not accept that. "Flexibility" is not to be used to diminish the importance of the requirement that terms are implied in a contract only if the term is necessary to (1977) 180 CLR 266. [1977] AC 239 at 254. 79 See [45]-[48] above. 80 BP Refinery (1977) 180 CLR 266 at 283; Codelfa Construction (1982) 149 CLR 337 at 345-346; Hawkins (1988) 164 CLR 539 at 571-573; Byrne (1995) 185 CLR 410 at 422, 442, 446; Breen (1996) 186 CLR 71 at 90-91, 102-103; Barker (2014) 253 CLR 169 at 185-187 [21]-[23]; Bell v Lever Brothers Ltd [1932] AC 161 at 226. 81 See Byrne (1995) 185 CLR 410 at 422, 442; Breen (1996) 186 CLR 71 at 90-91. (1995) 185 CLR 410 at 422, 442. See also Hawkins (1988) 164 CLR 539 at 571-572. make the contract work. Discarding that requirement would be a very large step and no reason has been given for taking it. Either a term is necessary to make the contract work or it is not. Either the contract is effective without it, or it is not83. But there are terms that are not necessary, yet go without saying, and were not said by the parties, yet are objectively part of the contract. The relevant term in this case was of that latter kind. It was so obvious it went without saying because of what was said and not said, what was known, and what was done. Where the contract is informal, there may well be terms that are implied by reference to the BP Refinery tests but that is not the whole universe of unexpressed terms. The terms to which BP Refinery directs attention are those which are not expressed but are necessary to make the contract work. That is a different question. It necessarily comes after the first task of identifying what were the terms of the contract. Additionally, in the circumstances of this case, concepts such as "course of dealing"84, "industry practice"85 or "professional practice"86 also distract attention from the proper inquiry. The question here – what were the terms of the licence and sub-licence granted, given what H/REMA knew, said to the agencies, and did not say to the agencies – is a different question to whether there was a course of dealing between H/REMA and the agencies. The latter question inevitably requires proof by evidence of what is said to be the consistent course of dealing between them and how, if at all, that course of dealing could be said to extend to authorising the sub-licence to RP Data87. But in this case there was not shown to be any course of dealing between two parties: there were dealings between H/REMA and a number of different agencies. It is also a different question to a contention that so-called industry practice usually includes a particular term. Such a contention involves precise identification of the industry, evidence and findings of a particular practice or term in that industry and then attribution of that practice to the relevant parties. In this case, those inquiries raise difficult questions not required to be 83 BP Refinery (1977) 180 CLR 266 at 282-283. 84 See, eg, McCutcheon v David Macbrayne Ltd [1964] 1 WLR 125 at 129, 138; [1964] 1 All ER 430 at 433, 439; Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 at 90, 104, 105, 113, 130; Byrne (1995) 185 CLR 410 at 422, 442. 85 See, eg, British Crane Hire [1975] QB 303 at 310-311; Hospital Products (1984) 156 CLR 41 at 121; Byrne (1995) 185 CLR 410 at 422. 86 See, eg, Hawkins (1988) 164 CLR 539 at 573; Byrne (1995) 185 CLR 410 at 422, 87 cf Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 235-242. addressed and which have not been answered, including, for example, whether the industry industry, professional photography or some other industry. industry, an aspect of real estate that the REA's costs of the hearing of the separate question before the trial judge The liability of REA to indemnify RP Data under the cross-claim was not the subject of the separate question. However, before the trial judge, REA adduced evidence on the separate question in defence of the claim against RP Data and made submissions in relation to the liability of RP Data to H/REMA. The trial judge ordered H/REMA to pay REA's costs of the cross-claim brought against REA by RP Data, except the costs of and incidental to the hearing of the separate question (the "cross-claim costs order")88. The short point is that before the trial judge REA was given leave to appear and argue the separate question but, unlike RP Data, was not given its costs of the hearing. REA filed a cross-appeal in the Full Court of the Federal Court seeking to set aside the cross-claim costs order and, in its place, seeking an order that H/REMA pay all of its costs. As Greenwood and Rares JJ held that the appeal should be allowed and that H/REMA was entitled to relief against RP Data, their Honours set aside the cross-claim costs order. The Full Court therefore allowed the cross-appeal but made different costs orders the effect of which was that RP Data would pay H/REMA's costs of the hearing of the separate question (including any extra costs caused by reason of RP Data's joinder of REA), and, as between RP Data and REA, the costs of and incidental to the hearing of the separate question were reserved. RP Data was ordered to pay REA's costs of the cross-appeal. In this Court, REA sought an order that the proceeding be remitted to the Full Court of the Federal Court for determination on the merits of REA's cross-appeal to that Court. That aspect of the proceeding concerns only the question of costs before the trial judge. His Honour provided detailed reasons for decision. REA did not show any error of principle and the decision is not so unreasonable as to bespeak error. The proceeding should not be remitted. Conclusion and orders For those reasons, in S57 of 2022 the appeal should be allowed, in part. In S58 of 2022, the appeal should be allowed. In each appeal, the first and second respondents, H/REMA, should pay the costs of the appeal. The orders made by the Full Court of the Federal Court of Australia on 8 September, 13 September and 88 Hardingham v RP Data Pty Ltd [No 2] [2019] FCA 2138. 1 October 2021 should be set aside and, in their place, order that the appeal and the cross-appeal be dismissed with costs. EdelmanJ Fundamental propositions of contract law in these appeals In communication between people, meaning can only be conveyed by expression in words and by implications from conduct and circumstances. There is no communication that is not expressed or implied. But there can be a fine line between expression and implication. Understanding the expressed meaning of words almost always requires recognising implications from conduct and circumstances. It is fundamental to the objective theory of contract, which is "in command of the field" of contract law89, that a contract cannot exist without communication. The subjective views of the parties are irrelevant: "having it in your own mind is nothing"90. The terms of a contract − express or implied − therefore arise from the communication between the parties, understood in context, including by drawing inferences to identify the implied content of communication. Although the distinction between express and implied terms can be fine, it has long been accepted that there is a particular test to be applied for the recognition of an implied term91. The distinction cannot be ignored. Once these matters are appreciated, two very basic errors are exposed. First, there is no third category of contract term called an "inferred term". Contract terms are communicated either expressly in words or impliedly from conduct and circumstances: "If a term is not expressed in a contract, there is only one other way in which it can come into it and that is [as an] implication."92 89 Taylor v Johnson (1983) 151 CLR 422 at 429. See also Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179-180 [40]-[41]; Byrnes v Kendle (2011) 243 CLR 253 at 275 [59], 285 [100]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [46]. 90 Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 at 692. 91 See BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. That test was recognised in decisions including Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 605-606 and Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347. See also at 344, 392, 404. 92 McCutcheon v David Macbrayne Ltd [1964] 1 WLR 125 at 134; [1964] 1 All ER 430 at 437. See also Eggleston v Marley Engineers Pty Ltd (1979) 21 SASR 51 at 62; Tetra Pak (Aust) Pty Ltd v Johnstones Transport Industries Pty Ltd (unreported, EdelmanJ The insistence that there is no category of contract term called an "inferred term" does not deny the relevance of the process of inference in discerning the existence of express terms. Nor does it deny that the process of inference is essential to the identification of implied terms. Inference is a method of legal reasoning that can identify the existence of an express term or the content of an implication. There is therefore a "critical distinction" between an implication and an inference93. Secondly, "[i]t is not analytically right" to say that there is a separate category of informal contracts (that is, contracts that are not, or not entirely, evidenced in a written form) which are governed by different rules94. We have a common law of contract, not different common laws for different categories of contract. Of course, context can affect the application of contractual rules. Hence, the more comprehensive a written contract appears to be, and the more apparent that the instrument has been drafted professionally95, the more difficult it will be to establish that the words chosen do not bear their ordinary meaning or that the parties have omitted to express a term in the written document. However, the basic rules of communication remain the same whether the contract was entirely written, partly written and partly oral, partly written and partly by conduct, partly written and partly oral and by conduct, entirely oral, partly oral and partly by conduct, or entirely by conduct. The issue on these appeals concerns the existence and content of a contract term that is not expressed in any words and is implied from the conduct of the parties and the circumstances. The dispute between the parties concerns the rules that govern the recognition of the existence and the content of implied terms in Supreme Court of New South Wales, 20 October 1988) at 17; Pondcil Pty Ltd v Tropical Reef Shipyard Pty Ltd (1994) ATPR (Digest) ¶46-134 at 53,651; Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 at 104; Circle Freight International Ltd v Medeast Gulf Exports Ltd (unreported, Queen's Bench Division, 19 June 1987); Cape Industrial Services Ltd v Ledwood and Construction Ltd [2000] All ER (D) 1168 at [160]. 93 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368 [120], referring to Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118. 94 Society of Lloyd's v Clementson [1995] LRLR 307 at 330, quoted in Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) 54 IPR 1 at 9 [36]. 95 Ridd v James Cook University (2021) 95 ALJR 878 at 884 [17]; 394 ALR 12 at EdelmanJ informal contracts. The dispute should be resolved consistently with the fundamental propositions set out above. The first and second respondents to these appeals are Mr Hardingham, a professional photographer, and his company, Real Estate Marketing Australia Pty Ltd ("REMA"). REMA contracted with various real estate agencies (who are not parties to these appeals) to produce and supply photographs and floor plans of properties that the agencies would market for sale or lease. REMA was the exclusive licensee of Mr Hardingham's copyright over the photographs and floor plans. The photographs and floor plans supplied by REMA to the agencies were displayed on the internet sites of the other two parties to these appeals, Realestate.com.au Pty Ltd ("REA") and RP Data Pty Limited ("RP Data"). The agencies contracted, on REA's standard written terms and conditions, to provide the photographs and floor plans to REA. REA then provided the photographs and floor plans to RP Data. Mr Hardingham and REMA submitted that the contract between REMA and each agency contained a term to the effect that the licence provided to each agency would terminate upon the sale or lease of the relevant property. They submitted that the contracts authorised the agencies to sub-license the use of the photographs and floor plans, but the sub-licence could only be for the purpose of a marketing campaign to sell or lease the properties. Those terms were not expressed in words by any of the parties at any stage. By definition, if those terms existed, they must have been implied terms. REA and RP Data submitted that the contracts between REMA and the agencies contained a term to the effect that the agencies were authorised to license the use of the photographs and floor plans on REA's standard terms and conditions, which included authorising REA to grant a sub-licence of the kind conferred on RP Data. Again, that term was not expressed in words at any time and so, if it existed, it must have been an implied term. At every stage of the litigation below, each judge correctly approached their task by identifying whether the disputed term was express or implied and then determining the content of the disputed term. The primary judge in the Federal Court of Australia (Thawley J) accepted that in the circumstances of the case, including the conduct and (reasonable) knowledge of the parties, the contracts contained an implied term broadly in the form proposed by REA and RP Data. A majority of the Full Court of the Federal Court of Australia (Greenwood J, with whom Rares J agreed) allowed an appeal, concluding that the contracts contained an express term that a licence to use the photographs and floor plans, and to sub-license the use of the photographs and floor plans, was limited to use for the purposes of the marketing campaign for the sale or lease of the relevant property. EdelmanJ In dissent in the Full Court, Jackson J held that the contracts contained an implied term as identified by the primary judge. His Honour's conclusion, and that of the primary judge, as to the existence and content of the implied term was correct. The appeals should be allowed. The background in more detail The principal parties before the primary judge were, on the one hand, Mr Hardingham and REMA, and, on the other hand, RP Data. The principal claim was brought by Mr Hardingham and REMA against RP Data for infringement of copyright. An order was made for the determination, as a preliminary issue, of the claim for infringement of copyright in respect of photographs and floor plans relating to 20 properties. RP Data joined REA as a third party to the proceeding by making a cross-claim, asserting that REA was liable to indemnify RP Data in respect of any loss or damage if copyright had been infringed. REA had provided the photographs and floor plans to RP Data pursuant to a contract between REA and RP Data, which included a warranty that the provision and use of the data would not breach third party intellectual property rights. That cross-claim was not the subject of the proceeding or these appeals. No evidence was given by anyone from the numerous agencies who had contracted with REMA in the relevant transactions. One consequence of this was that there was minimal evidence of the contractual arrangements between REMA and the agencies. As will be explained later in these reasons, that gap in evidence should not be filled by a court speculating that the parties may have used words amounting to an express licence and which formed a term of the contracts. But inferences can be drawn, based on the matters reasonably known to REMA and the agencies, as to any terms that were implied in the circumstances. Copyright generally subsists in works, including an "original ... artistic work", the author of which was a "qualified person"96. Before the primary judge and the Full Court of the Federal Court it was assumed that Mr Hardingham, as the professional photographer who took the photographs and produced the floor plans of the properties, was a qualified person who held the copyright in the photographs and floor plans. Mr Hardingham provided REMA, the company of which he was the sole director and which contracted with the agencies, with an exclusive licence to use and sub-license the photographs and floor plans. 96 Copyright Act 1968 (Cth), ss 32(1), 32(2), 32(4). EdelmanJ A licence is a freedom from a duty: "an authority to do something which would otherwise be wrongful or illegal or inoperative"97. A licence granted by the holder of copyright to use a work that is the subject of copyright thus provides the licensee with a freedom from the duty not to infringe copyright. Section 15 of the Copyright Act 1968 (Cth) extends this freedom to third parties where the licensee is authorised by the holder of copyright to provide a sub-licence98. It provides that "an act shall be deemed to have been done with the licence of the owner of a copyright if the doing of the act was authorized by a licence binding the owner of the copyright". Mr Hardingham and REMA did not dispute that REMA provided a licence to the agencies to use the photographs and floor plans which authorised the agencies to sub-license the use of those works to REA. But their case was that the licence and sub-licence were limited to the duration of the marketing campaign for the sale or lease of the properties. The issues on these appeals reduce to whether: (i) the contracts between REMA and the agencies contained a licence which authorised the agencies to provide the photographs and floor plans to REA on the limited terms submitted by Mr Hardingham and REMA or (ii) the licence to the agencies extended to sub-licensing the use of those works to REA on REA's standard terms and conditions, which included perpetual use by REA and the power for REA to sub-license the perpetual use of those photographs and floor plans to RP Data. The licence was necessarily a term of the contracts between REMA and the agencies. And since the contracts were between REMA and the agencies, the relevant facts from which the content of the licence can be inferred can only be words and other conduct between REMA and the agencies and circumstances of which REMA and the agencies should reasonably have been aware. On the objective theory of contract, private communications between Mr Hardingham and REMA, on the one hand, and RP Data, on the other, cannot inform the meaning of a term between REMA and the agencies. 97 Federal Commissioner of Taxation v United Aircraft Corporation (1943) 68 CLR 525 at 533; H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208 at 226 [90]; 399 ALR 184 at 204. 98 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 583 [10]; Corby v Allen & Unwin Pty Ltd (2013) 297 ALR 761 at 774 EdelmanJ The proper approach to recognising implied terms (i) The first task: identifying the express terms of a contract Contract terms are either expressed in words or not expressed in words. If a term is expressed in words, whether written or oral, it is called an express term. If the term is not expressed in words, then it must be a term that is implied from the circumstances, including the conduct of the parties. As to express terms, since language is imperfect, the meaning of many express terms will include implications, such as explicatures arising from the words expressed and implicatures supplementing the words expressed: "language itself could not function if it did not sit atop a vast infrastructure of tacit knowledge about the world"99. Nevertheless, the term, as a whole, remains an express term: the implication, from the words in their context, is "included in and part of that which is expressed"100, is "contained in the express words of the contract"101, or is a necessary supplement to the words of the term. In interpreting an express term, implications derived from and "underlying the words" make sense of the "parties' expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it"102. The process is still one of interpreting the words expressed between the parties. The term as a whole – including any implications from the words – remains an express term. 99 Pinker, The Blank Slate: The Modern Denial of Human Nature (2002) at 210. 100 Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118, cited in Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368 [120], MZAPC v Minister for Immigration and Border Protection (2021) 95 ALJR 441 at 478 [166]; 390 ALR 590 at 632. See also Merchant Service Guild of Australasia v Newcastle and Hunter River Steamship Co Ltd [No 1] (1913) 16 CLR 591 at 624, quoted in R v Rigby (1956) 100 CLR 146 at 151, MZAPC v Minister for Immigration and Border Protection (2021) 95 ALJR 441 at 478 [166]; 390 ALR 590 at 632. 101 Carlton and United Breweries Ltd v Tooth & Co Ltd (unreported, Supreme Court of New South Wales, 11 June 1985) at 19; summarised in (1985) 6 IPR 319 at 320. See also Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 164 [28]; Rankin Investments (Qld) Pty Ltd v CMC Property Pty Ltd [2021] QCA 156 102 Whishaw v Stephens [1970] AC 508 at 517, 522; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at 658-659 [100]. EdelmanJ It is only when an implication is sufficiently independent of the express terms, and can be seen as the subject of an entire term, that it will be treated as an implied term. But there can be a very fine line between, on the one hand, an implication contained in an express term and, on the other hand, an implied term103. An example of the fine line between an implication forming part of an express term and an implication that is a separate implied term can be seen in the reasoning in this Court in Milne v Sydney Corporation104. In that case, the written words of the contract included that the contract was "for the carrying out of the mechanical repairs to the plant" and that the Council was "desirous of having certain repairs ... done". One issue was whether the defendants were required to employ the plaintiffs exclusively to carry out all the necessary repairs to the plant or whether the plaintiffs would only carry out those repairs which the Town Clerk might choose to notify. Griffith CJ held that the obligation of exclusivity was a separate implied term of the contract105. By contrast, Isaacs J held that the obligation of exclusivity arose from "a proper interpretation of the actual words of the party charged"106, and so formed part of an express term. It is extremely well established that the first step in determining the terms of a contract and their meaning, whether formal or informal, is to identify the express terms and to ascertain their meaning. In Byrne v Australian Airlines Ltd107, McHugh and Gummow JJ described the "first task" to be undertaken in respect of contracts where "the parties have not spelled out all the terms of their contract [in words]" as being a task "to consider the evidence and find the relevant express terms". These remarks of McHugh and Gummow JJ have been quoted or referred to in Australia with approval on many, many occasions108. In Roxborough v 103 H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208 at 227 [93]-[94]; 399 ALR 104 (1912) 14 CLR 54. 105 (1912) 14 CLR 54 at 65-67. 106 (1912) 14 CLR 54 at 75. 107 (1995) 185 CLR 410 at 442 (emphasis added). 108 Skeggs v Metropolitan Transport Trust (unreported, Supreme Court of Tasmania, 4 June 1997) at 8; Highland Harvesters Pty Ltd v K J & S M Williams Pty Ltd (unreported, Supreme Court of Tasmania, 2 October 1998) at 4; A R Griffiths & Sons Pty Ltd v Richards [2000] 1 Qd R 116 at 125; Hardchrome Engineering Pty Ltd v Kambrook Distributing Pty Ltd [2000] VSC 359 at [130]; Narni Pty Ltd v National Australia Bank Ltd [2001] VSCA 31 at [18]; Yau's Entertainment Pty Ltd v Asia EdelmanJ Rothmans of Pall Mall Australia Ltd109, Gummow J recognised that as part of the first task of identifying the express terms, and ascertaining their meaning, the express terms might be "deduced or inferred objectively from the documents" where there had been a course of dealing between the parties. No party to these appeals suggested that this long-established "first step" of identifying express terms before implied terms should be discarded for some or all informal contracts. The parties were correct not to do so. An informal contract is not of a fundamentally different nature from a formal, written contract. Indeed, in some cases, the terms of an informal contract might be far more carefully formulated than those of a formal contract. For instance, an informal contract made by a process of following a carefully prepared script in a recorded telephone call might involve far more preparation than a simple "formal" contract with terms scribbled on the back of an envelope. In both instances, express terms must be identified before the test for implied terms is applied. Only after the first step is completed, so that the express terms have been identified and interpreted, should the court undertake the next step of identifying, by inference, the implied terms of the contract. Thus, in the Supreme Court of the (with whom United Kingdom, Lord Neuberger of Abbotsbury PSC Lords Sumption and Hodge JJSC agreed) has reiterated that110: Television Ltd (2002) 54 IPR 1 at 8 [32]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [159]; Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350 at 378 [107]; Rand v Uni-Roof Safe-T-Rail Pty Ltd [2009] NSWSC 26 at [26]; Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [41]; Aqua-Marine Marketing Pty Ltd v Pacific Reef Fisheries (Australia) Pty Ltd [No 5] [2012] FCA 908 at [54]; Iacullo v Remly Pty Ltd [2012] NSWSC 191 at [83]; Wolfe v Permanent Custodians Ltd [2012] VSC 275 at [135]; Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2015] VSCA 190 at [178]; Yulema Pty Ltd v Simmons [2015] NSWSC 640 at [51]; AAP Industries Pty Ltd v Rehau Pte Ltd [2017] NSWSC 390 at [64]; Masters Home Improvement Pty Ltd v North East Solution Pty Ltd (2017) 372 ALR 440 at 455 [60]; Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd [2019] VSC 559 at [147]; Muthu v Radeshar Pty Ltd [2022] FCA 1157 at [62]. See also Muriti v Prendergast [2005] NSWSC 281 at [193]; Short v Crawley [2005] NSWSC 928 at [6]; Junge v Junge [2013] NSWSC 1842 at [64]. 109 (2001) 208 CLR 516 at 537 [55]. See also La Rosa v Nudrill Pty Ltd [2013] WASCA 110 Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742 at 756-757 [28]. EdelmanJ "it is only after the process of construing the express words is complete that the issue of an implied term falls to be considered. Until one has decided what the parties have expressly agreed, it is difficult to see how one can set about deciding whether a term should be [recognised as] implied and if so what term." (ii) The second task: identifying implied terms (a) Identifying implied terms generally As explained above, contractual implications can have two effects. First, they assist in understanding express terms. Secondly, they can constitute a separate implied term. Both types of implication are recognised by a process of inference from the circumstances, including the conduct of the parties. Neither implication is "an addition to the instrument" because both "only spell[] out what the instrument means"111. In short, "[e]very implication which the law makes is embodied in the contract just as effectively as if it were written therein in express language"112. Once the express terms of a contract have been identified and interpreted, including with all the implications they contain, the second task is to identify any implied terms. An implied term will be sufficiently separate from the express terms of a contract and will not be expressed in words communicated between the parties. The recognition of an implied term occurs by inference from all the circumstances. As will be explained below, these appeals concern the existence and content of an implied term. A basic source of confusion in terminology and in thought can be seen in the common statement that implied terms are terms that are "implied into" a written contract. Implied terms are not "implied into" a contract at all113: they already exist in the contract. Implied terms are therefore recognised by the court, not created by the court. Nor does it make sense to suggest that there are different categories or classes of implied term according to whether a contract can be categorised as "informal". The same basic process of inference applies to identify an implied term 111 Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1993 [18]; [2009] 2 All ER 1127 at 1133. 112 Hart v MacDonald (1910) 10 CLR 417 at 427. 113 Garner (ed), Black's Law Dictionary, 11th ed (2019) at 904-905, "imply", quoting Garner, Garner's Dictionary of Legal Usage, 3rd ed (2011) at 430-431. EdelmanJ whether a contract is wholly in writing, mostly in writing, partly in writing or not in writing at all. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings114, in a passage repeatedly approved in this Court115, a majority of the Privy Council set out five criteria for the recognition of an implied term: "(1) [the implication] must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." Each of the BP Refinery criteria is flexible and is assessed as at the time the contract was made. As will be seen below, it can be especially important that the criteria are not applied in an "over-rigid" way in informal contracts116. "Reasonableness" and "equity" are elastic notions. Their content is assessed from the perspective of a reasonable person in the position of the contracting parties and will vary accordingly. That which is necessary for "efficacy" involves a range from highly ineffective to highly effective and "business efficacy" will depend upon the extent to which the contract concerns business. It is simply impossible to say that there is a single requirement of "necessity for business efficacy" that applies in the same way to every contract in every circumstance. So too, "obviousness" and "clarity" are concepts that describe a spectrum of possibilities which will be more demanding where the express terms of the contract are thorough and clear. Finally, although contradiction of an express term of the contract is a criterion of greater specificity, the more tension that exists between a proposed implied term and an express term, the less likely the court will recognise such an implied term. The reason that the five criteria are flexible is important. The criteria serve only to answer the ultimate question: what would have been intended by a 114 (1977) 180 CLR 266 at 283. 115 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 606; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347. See also at 344, 392, 404. 116 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at EdelmanJ reasonable person in the position of the contracting parties117? Hence, in Commonwealth Bank of Australia v Barker118, French CJ, Bell and Keane JJ rightly described the implication of terms as "an exercise in construction". And, since the ultimate question for identifying express and implied terms is the same, as Mason J (Stephen and Wilson JJ agreeing) said in Codelfa Construction Pty Ltd v State Rail Authority of NSW119, in identifying implied terms "the court is no more confined than it is when it construes the contract". (b) Implied terms in informal or partly informal contracts These principles apply to informal, or partly informal, contracts just as they apply to formal contracts. The flexibility of the five criteria, and their nature as guidelines to the ultimate question, can be particularly evident in the instance of an informal contract which contains very little expressed in writing by the parties. Many of the terms of such a contract must go without saying since few have been said. There is no need for the implied terms to be as obvious or as clearly expressed as express terms because few of the other terms are expressed at all. And the implied terms will not be likely to contradict an express term of the contract since few terms have been expressed. The usual focus in informal contracts will therefore be on the first two criteria: (i) reasonableness and equity, and (ii) the necessity for the implied terms to make the contract effective. It has even been said that it is questionable whether reasonableness and equity will add anything where the other criteria, particularly the need for the term to make the contract effective, are satisfied120. Byrne121 is an example of the flexibility of the five criteria. The employment of the appellants in that case was governed by a written award made under the Conciliation and Arbitration Act 1904 (Cth). A clause of the award provided: "Termination of employment by an employer shall not be harsh, unjust or unreasonable." One question in that case was whether the express provision in the 117 See The Moorcock (1889) 14 PD 64 at 68; Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1994-1995 [24]-[25]; [2009] 2 All ER 1127 at 118 (2014) 253 CLR 169 at 186 [22], referring to Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1994 [22]; [2009] 2 All ER 1127 at 1134. 119 (1982) 149 CLR 337 at 353. 120 Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742 at 754-755 [21]. 121 (1995) 185 CLR 410. EdelmanJ award had been "imported" by the award into the employment contract. If so, it would have been incorporated as an express term albeit with the "juristic source" in the award rather than an express promise122. A separate question was whether the contract contained an implied term which was to the same effect as the award provision123. Both arguments were rejected. As to the implied term argument, Brennan CJ, Dawson and Toohey JJ commenced by referring to the five criteria to be considered before an implied term will be recognised124. Their Honours then said this, relying upon a judgment of Deane J125: "[T]he cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face ... [A] rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual [express] terms of the contract must first be inferred before any question of implication arises." Their Honours explained that in such an informal contract the test for an implied term was that proposed by Deane J in another earlier case, where his Honour said126: "[A] court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties." Putting to one side the confusion in language in the latter quotation concerning the process of inference that identifies the implied term, three aspects 122 See Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 at 431. 123 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 418. 124 (1995) 185 CLR 410 at 422, referring to BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. 125 (1995) 185 CLR 410 at 422, referring to Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 121. 126 Hawkins v Clayton (1988) 164 CLR 539 at 573, quoted in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422. EdelmanJ of this reasoning should be emphasised. First, as explained above, it is a long-standing proposition of law that before the existence of any implied terms can be considered, the first task is to identify the express terms of the contract. Secondly, the elastic criteria in BP Refinery should never be rigidly applied. The flexibility can be seen to be especially important in those informal oral contracts or contracts by conduct that are not carefully expressed or communicated. In such cases, a proposed implied term need not be as reasonable, necessary, obvious, or clear as it would in a case, for example, of a formal contract that has been expressed in hundreds of pages drafted by professionals. In between these extremes might be a contract that is partly formal and partly informal, such as one that has been expressed partly orally and partly by carefully written terms. Thirdly, Brennan CJ, Dawson and Toohey JJ were not suggesting that the rules for recognising implications, by inference, are different in cases where there is a "formal contract, complete on its face" compared with cases where there is not. But the rules will apply differently and, as explained above, the flexibility of those rules means that, where there is an informal contract made without considerable care, the usual focus from the five criteria will be upon reasonableness and equity and upon business efficacy. But, to reiterate, the five criteria in BP Refinery apply to all contracts only as an analytical framework for determining the ultimate question: what would have been intended by a reasonable person in the position of the contracting parties? Those Australian and English authorities that have suggested the contrary are not correct. Since the five criteria apply to all contracts − even wholly informal contracts where all the terms must go without saying − McHugh and Gummow JJ were correct to emphasise in Byrne127, echoing the words of Deane J in Hospital Products Ltd v United States Surgical Corporation128, that in informal contracts "it still is necessary to show that the term in question would have been accepted by the contracting parties as a matter so obvious that it would go without saying". (c) Implied terms in informal contracts arising from custom or dealing As this Court said in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd129, "[t]he circumstances in which trade custom or usage may form the basis for the implication of terms ... have been 127 (1995) 185 CLR 410 at 446. See also Breen v Williams (1996) 186 CLR 71 at 105; Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) 54 IPR 1 at 8 [34]. 128 (1984) 156 CLR 41 at 121. 129 (1986) 160 CLR 226 at 236. EdelmanJ considered in many cases". In addition to implied terms that arise from a trade or industry custom, there are also many cases in which it has been recognised that an implied term might be based upon a "past course of dealing between the parties"130. Where an industry custom is not expressed in words between the parties, the custom can form the basis of an implied term of the contract between the parties. In such circumstances, the effect of the BP Refinery criteria, particularly reasonableness and obviousness, is that before an implied term based on custom is recognised, there "must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract"131. This case does not concern any alleged industry custom. As to an implied term arising from a course of dealing, the dealing does not need to reflect an industry practice but must reflect a clear and obvious practice between the parties. Many instances of a course of dealing involve a practice that has been expressed in words on previous occasions as an express term, although not on the relevant occasion. Sometimes those words expressed as part of the course of dealing are treated as the basis of an implied term on the relevant occasion132. In many cases, however, it might be better regarded as an express term if the inference is that, on the relevant occasion, the parties incorporated, by their conduct, the previously expressed term. The first task: identifying the express terms in REMA's contracts with the real estate agencies Much of the evidence at trial, and before the Full Court, was not before this included communications between Court. That evidence may have 130 Hawkins v Clayton (1988) 164 CLR 539 at 573. See also Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422; Breen v Williams (1996) 186 CLR 71 at 80; A R Griffiths & Sons Pty Ltd v Richards [2000] 1 Qd R 116 at 125; Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) 54 IPR 1 at 7 [30]; Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350 at 378 [106]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [158]; Pegela Pty Ltd v Oates [2010] NSWCA 186 at [14]. 131 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 236. 132 McCutcheon v David Macbrayne Ltd [1964] 1 WLR 125 at 128; [1964] 1 All ER 430 at 432; Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71 at 76; Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd [1986] WAR 131 at 140, 144-145, EdelmanJ Mr Hardingham (for REMA) and the agencies on the relevant occasion or as part of a course of dealing. Those communications could have formed the basis of some express terms. In the Full Court, Greenwood J, with whom Rares J agreed, described four express terms of the oral agreement between REMA and the real estate agencies133: "Mr Hardingham for REMA was to attend the nominated property (usually with the agent) and take one or more photographs of the property and, where relevant, originate a floor plan of the property"; "[Mr Hardingham and REMA] were to undertake the tasks and provide the works to the agency in consideration of the payment of a fee"; "the works would be provided to the agency in an 'editable digital form'"; and "the agency enjoyed the right to 'use the works in a marketing campaign' for the sale or lease of the property by the owner in which the agent was acting as agent for the owner (and in circumstances where the marketing campaign was due to commence very shortly after the works were produced by [Mr Hardingham and REMA])". The first three of these terms, and their nature as express terms, were uncontroversial on these appeals. The fourth was disputed. Greenwood J derived the fourth express term from the content of the typical oral exchange between Mr Hardingham and the agencies134: "Agent: 'Hi [Mr Hardingham], we have just listed [property address]. The campaign is due to start [date]. Can you attend this week to take the photos for the campaign?'" At its highest, this oral exchange, together with implications from context, might reveal an express term that Mr Hardingham would take photos of the particular property for the agent, and that Mr Hardingham would provide the photos to the agent a reasonable time before the campaign began. But there is absolutely nothing expressed in the words of the oral exchange that could give rise to an express term concerning the scope or conditions of any licence to use the 133 Hardingham v RP Data Pty Ltd (2021) 395 ALR 644 at 651 [22]-[26]. 134 Hardingham v RP Data Pty Ltd (2021) 395 ALR 644 at 646 [6]. EdelmanJ photographs. Nor was there even any evidence referred to by the primary judge or the Full Court of words expressed by the parties concerning floor plans. It is unlikely that there was any evidence at trial that could have established an express term concerning any terms of a licence to use the photographs and floor plans. The primary judge observed that "[t]he evidence adduced in respect of the arrangements between [Mr Hardingham and REMA] and the agencies was minimal, consisting primarily of Mr Hardingham's affidavit evidence and invoices issued by REMA"135. Following the oral hearing of these appeals, this Court asked the parties to provide it with Mr Hardingham's two affidavits. Consistently with the observations of the primary judge, the affidavits are entirely bereft of any evidence of words expressed between the parties at the time of contracting concerning a licence to use the photographs and floor plans. The lack of any words expressed by the parties concerning a licence precludes this Court from concluding that there was an express term of the contracts between REMA and the agencies concerning a licence. A contract term cannot be an express term if it is not expressed in words. The second task: an implied licence term in REMA's contracts with the real estate agencies The primary judge identified a number of circumstances from which it could be inferred that the contracts between REMA and the agencies contained an implied term of a licence permitting the agencies to supply the photographs and floor plans to REA on REA's standard terms and conditions. Some of those circumstances were framed in terms of the actual knowledge of Mr Hardingham and REMA but, consistently with the objective theory of contract, they must be taken as conclusions of matters that would have been known by a reasonable person in the position of each of the parties. Those circumstances, by which fees were set and the express terms were agreed, included that a reasonable person in the position of each of REMA and the agencies would have known that136: "the photographs and floor plans were being commissioned by the agencies in part in order for those agencies to upload the works to the [REA] platform"; such photographs and floor plans, of which there were many thousands, had "remained on [the REA] platform as historical information in relation to completed transactions and were not 135 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 491 [8]. 136 Hardingham v RP Data Pty Ltd (2019) 147 IPR 489 at 503-505 [62], [68]-[72], [77]. EdelmanJ removed" and that the standard terms and conditions of the contracts between the agencies and REA purported to give REA a licence to do so; (3) REA's terms and conditions permitted it to provide RP Data with the photographs and floor plans and that within a few days of upload to REA's website the photographs and floor plans would appear on the website of RP Data, including as historical information in relation to completed transactions; and the agencies could not, in any practical sense, contract out of terms and conditions that permitted the above consequences. In short, a reasonable person in the position of the parties would have known that one of the very purposes of REMA providing the photographs and floor plans to the agencies was so that the agencies could provide them to REA, and that the agencies had no real choice other than to accept a term requiring them to provide a licence to REA to use the photographs and floor plans indefinitely and to provide them to RP Data. In these circumstances, the natural and obvious implication contained in the contracts between REMA and the agencies is that the agencies would have a licence to use the photographs and floor plans on the standard terms and conditions of the contracts between the agencies and REA. In the informal circumstances of the contracts, that implied term is plainly reasonable and equitable, necessary for business efficacy, obvious and clear, and does not contradict any of the limited express terms. Conclusion For the reasons given by Gordon J137, this proceeding should not be remitted to the Full Court of the Federal Court for determination of REA's cross-appeal concerning costs. And for the reasons set out above, orders in both appeals should be made as proposed by Gordon J.

HIGH COURT OF AUSTRALIA CHIEF EXECUTIVE OFFICER OF CUSTOMS APPELLANT AND NAZIH EL HAJJE RESPONDENT Chief Executive Officer of Customs v El Hajje [2005] HCA 35 3 August 2005 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 17 December 2003 and remit the matter to that Court for its further hearing and determination. On appeal from the Supreme Court of Victoria Representation: C M Maxwell QC with P D Nicholas for the appellant (instructed by the Australian Government Solicitor) D B Baker with G J Herbert for the respondent (instructed by Michael J Gleeson & Associates Pty Ltd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Chief Executive Officer of Customs v El Hajje Customs and excise – Averment provision – Whether ultimate fact in issue in an excise prosecution is not properly the subject-matter of an averment provision – Whether Excise Act 1901 (Cth), s 144(1) draws a distinction between an ultimate fact in issue and other facts – Whether primary judge erred in finding that the material in the respondent's possession, custody or control was manufactured or partly manufactured goods. Constitutional law (Cth) – Whether the High Court should consider constitutional issues if not necessary to decide a case – Effect of absence of notice under Judiciary Act 1903 (Cth), s 78A. Constitutional law (Cth) – Averment provisions – Compatibility of statutory averment provisions with the judicial power and functions provided for by Ch III of the Constitution. Constitutional law (Cth) – Interpretation of Commonwealth statutes – Relevance of Constitution where not raised by parties – Whether High Court practice requires that constitutional questions not be considered in such cases – Whether any such consideration involves procedural unfairness to law officers entitled to notice of constitutional issues – Whether Constitution a necessary contextual consideration in interpretation of Commonwealth statutes. Interpretation – Statutes – Federal legislation – Relevance of the Constitution (Cth) – Whether necessary contextual consideration influencing or affecting meaning of law – Whether failure of parties to raise issue obliges Court to ignore constitutional considerations – Whether procedural fairness, including failure of parties to give notice to law officers of constitutional questions, obliges Court to ignore any constitutional considerations not raised by parties. Words and phrases – "averment", "excise duty", "ultimate fact in issue". Constitution, Ch III. Excise Act 1901 (Cth), ss 117, 144. Judiciary Act 1903 (Cth), s 78A. Excise Tariff Act 1921 (Cth). Excise Tariff Amendment Act (No 1) 2000 (Cth). McHUGH, GUMMOW, HAYNE AND HEYDON JJ. Since first enacted in 1901 the Excise Act 1901 (Cth) ("the Act") has contained averment provisions, the evident intention of which has been to facilitate proving Excise prosecutions. Since 1918 the Act has provided1 that: "In any Excise prosecution the averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim shall be prima facie evidence of the matter or matters averred." The appellant, Chief Executive Officer of Customs ("Customs"), brought an Excise prosecution against the respondent in the Supreme Court of Victoria alleging contravention of s 117 of the Act – a provision dealing with the unlawful possession of excisable goods upon which Excise duty had not been paid. Customs' Amended Statement of Claim contained some averments. At first instance2, the respondent was convicted and fined. He appealed to the Court of Appeal of Victoria. That Court held3 that the ultimate fact in issue in an Excise prosecution is not properly the subject-matter of an averment. In this case the ultimate fact in issue was understood as being whether tobacco in the respondent's possession, custody or control (described as "cut tobacco") was manufactured, or partly manufactured goods. The appeal was allowed and the conviction and fine set aside. Customs now appeals to this Court. The appeal should be allowed. The averment provisions of the Act do not draw a distinction between the ultimate fact or facts in issue and other facts. The facts In the early hours of 21 February 2000 the respondent was driving a rented truck in Broadford, Victoria, when intercepted by police. Customs was later to allege that the truck was carrying (among other things) "a quantity of cut tobacco weighing 691.48 kilograms" wrapped in 72 plastic bags each containing "a number of smaller plastic bags, each of which contained approximately 500 grams of cut tobacco". Customs also alleged that the truck was carrying 15 bales of leaf tobacco, but that allegation may be put to one side for present purposes. 2 CEO of Customs v El Hajje [2002] VSC 286. 3 El Hajje v Chief Executive Officer of Customs (2003) 180 FLR 224 at 230 [21]. Section 117 of the Excise Act In February 2000, s 117 of the Act provided4 that no person other than a manufacturer shall, except by authority, have in that person's possession, custody or control, any manufactured or partly manufactured excisable goods upon which Excise duty has not been paid. Contravention of that provision constituted an offence punishable upon conviction as provided by s 129 of the Act. The proceeding which gives rise to the present appeal was instituted against the respondent in the Supreme Court of Victoria on 30 August 2000. Subsequently, a number of amendments were made5 to those provisions of the Act regulating the production and manufacture of tobacco, and to the provisions of s 117 regulating the unlawful possession of excisable goods. In addition, s 129 of the Act was repealed6 and a new Pt XA introduced7 to create a system of infringement notices for offences under s 117(2) (the unlawful possession of excisable goods) and s 117B(2) (unlawfully selling excisable goods). The appeal to this Court was conducted on the basis that those amendments do not bear upon the particular issue at the centre of this appeal, namely, the reach of the averment provisions of s 144 of the Act. The Excise Tariff Act Neither the reasons of the primary judge nor the reasons of the Court of Appeal describe the statutory steps that lie behind saying that the ultimate fact in issue was whether the tobacco in the respondent's possession was manufactured or partly manufactured goods or was properly referred to as "cut tobacco". It is necessary to trace those steps and when that is done, it emerges that references to "cut tobacco" found in the reasons of the courts below (and no doubt adopted from the pleadings and argument in the case) are references that obscure some aspects of the relevant legislative provisions. Section 5(1) of the Excise Tariff Act 1921 (Cth) ("the Tariff Act") imposed the duties of excise specified in the Schedule to that Act. Section 5(2) of the 5 By the Excise Amendment (Compliance Improvement) Act 2000 (Cth), which commenced operation on 7 September 2000. 6 Excise Amendment (Compliance Improvement) Act, Sched 1, item 58. 7 Excise Amendment (Compliance Improvement) Act, Sched 1, item 59. Tariff Act provided that, where a section of another Act, passed before or after the commencement of that sub-section, amended the Schedule to the Tariff Act, unless the contrary intention appeared, that section imposed duties of excise in accordance with the Schedule as so amended on all goods dutiable under the Schedule as amended and in force on that day. Section 6 of the Act (the Excise Act 1901) provided that that Act is incorporated and should be read as one with (among other things) any instruments made under the Act and with any other Act relating to excise in force in the Commonwealth. By the Excise Tariff Amendment Act (No 1) 2000 (Cth) ("the 2000 Tariff Amendment"), the relevant provisions of which had effect on and from 1 November 19998, a definition of "tobacco" was inserted in the Schedule to the Tariff Act. "[T]obacco" was defined9 as "tobacco leaf subjected to any process other than curing the leaf as stripped from the plant". In addition, the Schedule to the Tariff Act was amended to describe the relevant excisable goods in item 6 of the Schedule ("the Articles") as: "Tobacco (other than tobacco delivered under item 9A of the Schedule) in stick form not exceeding in weight 0.8 grams per stick actual tobacco content other". (Item 9A referred to tobacco, cigars, cigarettes and snuff for use in certain medical or other scientific research programmes.) The 2000 Tariff Amendment also repealed the former item 8 of the Schedule to the Tariff Act (which had referred to cigarettes "and fine cut tobacco") and substituted a new form of item 8 making no reference to "cut" or "fine cut" tobacco. Following the amendments made to the Schedule to the Tariff Act by the 2000 Tariff Amendment there was, therefore, no reference in the Schedule to "cut tobacco". Rather, the central feature of the definition of the relevant excisable good was that tobacco leaf had been subjected to any process other than curing the leaf as stripped. 8 Excise Tariff Amendment Act (No 1) 2000 (Cth), s 2(2). 9 Schedule to the Excise Tariff Act 1921 (Cth) as amended by item 1 of Sched 1 to the 2000 Tariff Amendment. In February 2000, by notice published in the Gazette10 in accordance with the Tariff Act's provisions11 about the indexation of rates of duty, the rate of excise duty for goods classified to item 6B of the Schedule to the Tariff Act was fixed at $239.44 per kilogram. The proceeding below In the proceeding in the Supreme Court of Victoria, Customs claimed (a) declarations that the respondent had committed offences against the Act, (b) the conviction of the respondent for those offences, (c) orders imposing penalties on the respondent and requiring him to pay the amounts of Excise duty allegedly evaded, and (d) a declaration that the tobacco it was alleged that he had had in his possession, custody or control was or had been forfeited to the Crown. The proceeding was commenced by writ of summons and a statement of claim was endorsed on the writ. An Amended Statement of Claim was later filed. The Amended Statement of Claim concluded by stating that "[t]o the extent permitted by law the Plaintiff avers the matters set out in paragraphs 2 to 8, inclusive, paragraphs 11 and 12 and paragraphs 14 to 19, inclusive". It is, therefore, necessary to set out those parts of the Amended Statement of Claim that were thus averred, omitting some particulars that were given in this pleading about the tobacco. Paragraphs 2 to 8 provided: "2. At all material times the Defendant neither held nor had he been issued with: a licence to manufacture excisable goods or products, (known as an Excise such as cut Manufacturer's Licence); or tobacco a licence to store excisable goods or products (known as a Warehouse Licence) under the Excise Act 1901. At no time was an entry ever lodged with Customs by the Defendant or under his name on which excise duty had been paid 10 Commonwealth of Australia Gazette, S49, 3 February 2000. 11 s 6A. for goods entered for home consumption under Item 6B of the Schedule to the Excise Tariff Act 1921. The cut tobacco On 21 February 2000 in Sugarloaf Creek Road, Broadford in the State of Victoria, near its intersection with Glenaroua Road, the Defendant had in his possession, custody or control manufactured or partly manufactured excisable goods, namely a quantity of cut tobacco weighing 691.48 kilograms ('the cut tobacco'). The cut tobacco is and was at all material times goods manufactured or partly manufactured by a person not licensed as a manufacturer of tobacco products under the Excise Act 1901. No excise duty had been paid on the cut tobacco by the Defendant or by anyone else. At no time did the Defendant have any permission or authority to have the cut tobacco in his possession, custody or control. On and at all material times prior to 21 February 2000 the Defendant was aware and knew that excise duty was payable on: cut tobacco; and tobacco of the kind referred to in paragraph 4." Paragraphs 9 and 10 did not contain matter that was averred. Paragraph 10 alleged that on 21 February 2000 the duty of excise applicable to cut tobacco of the kind referred to in par 4 of the pleading was payable under the description "Tobacco – Other" at the rate of $239.44 per kilogram as specified in item 6B of the Schedule to the Tariff Act. Paragraph 11, the matters in which were averred, pleaded that the amount of excise duty payable on the cut tobacco was Paragraphs 12 and 13 of the Amended Statement of Claim concern some baled leaf tobacco allegedly found in the truck being driven by the respondent. The primary judge found that the contravention in respect of this tobacco was not made out12. These allegations may therefore be put aside from consideration. Customs further averred the matters set out in pars 14 to 19 of the Amended Statement of Claim. Those paragraphs read as follows: "14. At no time did the Defendant have any permission or authority to have proclaimed material in his possession, custody or control, or to store or keep proclaimed material. 15. On and at all material times prior to 21 February 2000 the Defendant was aware and knew that he had no permission or authority to store or keep: proclaimed material; and tobacco of the kind referred to in paragraph 12. 16. Neither the Defendant nor any other person has paid or tendered the duty of excise on the cut tobacco in the sum of $165,567.97 or any part thereof, or in any other sum. The conduct referred to in paragraphs 2-8, 12 and 14-16, inclusive was engaged in by the Defendant with intent to: evade the payment of excise duty which was payable on the cut tobacco; and defraud the revenue. The Defendant intentionally evaded excise duty in the sum of $165,567.97 in respect of the cut tobacco. In the premises: on 21 February 2000 at Broadford in the said State the Defendant did contrary to subsection 117(1) of the Excise Act 1901 have in his possession, custody or control manufactured or partly manufactured excisable goods, namely a quantity of cut tobacco, upon which excise duty had not been paid; and 12 [2002] VSC 286 at [10]. on 21 February 2000 at Broadford in the said State the Defendant did contrary to subsection 117(1) of the Excise Act 1901 keep or store proclaimed material, namely a quantity of leaf tobacco." (Again, the allegation in par 19(b) concerned the baled leaf tobacco and may be ignored.) The trial The respondent appeared in person at the trial of the proceeding. Oral evidence was given. Customs called those members of the police force who had intercepted the truck being driven by the respondent and those officers described the tobacco found in the truck. Investigators employed by the Australian Taxation Office and the Australian Customs Office gave evidence of an interview conducted with the respondent, of the weight of the cut tobacco, and of the calculation of duty payable in respect of the tobacco. An employee of the truck hire company gave evidence of the hire of the truck. The respondent gave evidence in his defence. He gave an account of the circumstances which led to his driving the truck. He said that he knew that he was not allowed to carry tobacco and that the man who had loaded the truck with tobacco did not have a licence. The primary judge, however, said of the respondent's evidence that there were many aspects which caused his Honour "to suspect that it is a less than candid and accurate account"13. What, if any, consequences follow from that fact is not immediately relevant to the issues that must be determined in this appeal. The primary judge said in his reasons14 that the basic facts in the matter were not in dispute. He then identified three matters. First, the primary judge said that the respondent was intercepted in Broadford en route to Sydney in a hired truck containing about 1,500 kilograms of tobacco and four tyres and some wheel rims. Secondly, he said that the cut tobacco portion of the goods was manufactured excisable goods upon which duty had not been paid. Thirdly, he said that the duty payable on the cut tobacco was $165,567.97. Whether the primary judge was right to describe these as matters not in dispute was not relevant to and was not explored in argument in this Court. We therefore express 13 [2002] VSC 286 at [9]. 14 [2002] VSC 286 at [5]. no view about whether the second of these matters (that the cut tobacco was manufactured excisable goods upon which duty had not been paid) may permit or require some examination in the further hearing of this matter on remitter. The Court of Appeal The respondent appealed against the orders made by the primary judge other than the order declaring the cut tobacco forfeit. Four grounds of appeal were stated: two alleged that the primary judge should not have found that cut tobacco is manufactured goods; the third ground alleged that s 129 of the Act was not "relevant to the conduct" of the respondent, and the fourth alleged that the respondent had not been afforded a fair hearing at the trial. The last of these grounds was rejected by the Court of Appeal. What was meant by the third ground (that s 129 was not relevant to the respondent's conduct) was not explored in that Court's reasons. The first two grounds were regarded as determinative. The reasoning that led the Court of Appeal to its conclusion, that an ultimate fact in issue cannot be averred, proceeded15 from the proposition that tobacco leaf might be cut for purposes which have nothing to do with manufacture into a product suitable for consumption. The averment of the matters alleged in par 4 of the Amended Statement of Claim, that the goods in the possession, custody or control of the defendant were "manufactured or partly manufactured excisable goods, namely a quantity of cut tobacco weighing 691.48 kilograms", was identified16 as an averment that the goods fell within a statutory description. Reference was then made17 to the statement of Fullagar J in Hayes v Federal Commissioner of Taxation18 that: "[w]here the factum probandum[19] involves a term used in a statute, the question whether the accepted facta probantia[20] establish that factum probandum will generally ... be a question of law." 15 (2003) 180 FLR 224 at 229 [17]. 16 (2003) 180 FLR 224 at 230 [20]. 17 (2003) 180 FLR 224 at 230 [20]. 18 (1956) 96 CLR 47 at 51. 19 The proposition to be established or fact in issue. Fullagar J refers elsewhere ((1956) 96 CLR 47 at 51) to factum probandum as "the ultimate fact in issue". As these reasons later show, the use of the singular may be distracting. And in this case it was said21 that the facts constituting manufacture not being averred, and no facts other than the ultimate fact in issue being averred, that fact "was not properly the subject matter of an averment". Two points must be made at once about this reasoning. First, the point at issue in Hayes was whether, an appeal being restricted by the relevant legislation22 to an appeal on point of law, the appeal that had been instituted was competent. The distinctions drawn by Fullagar J in that case were directed to that issue, not any question about the operation of averment provisions. Secondly, the fact that tobacco leaf might be cut for purposes other than manufacture into a product suitable for consumption is beside the point. What was averred in this case was that the respondent had possession, custody or control of manufactured or partly manufactured goods of a kind described as "cut tobacco": a term not found in the Act or the Tariff Act. The relevant excisable goods were "tobacco" as that term was defined in the Schedule to the Tariff Act23: "tobacco leaf subjected to any process other than curing the leaf as stripped from the plant" (emphasis added). What are manufactured or partly manufactured goods must be understood in the light of that definition. Either of the two points just identified may constitute a sufficient basis to conclude that the reasoning of the Court of Appeal was erroneous, but it is necessary to begin the examination of the issue at an anterior and more fundamental point: the relevant text of the Act and, in particular, s 144. The averment provisions of the Act The effect to be given to the averments that Customs made in the Amended Statement of Claim depends upon the construction and application of s 144 of the Act, sub-s (1) of which was set out at the start of these reasons. It is as well, however, to set out the whole of s 144. It provided: In any Excise prosecution the averment of the prosecutor or plaintiff contained in the information, complaint, declaration or 20 The material evidencing the proposition. 21 (2003) 180 FLR 224 at 230 [21]. 22 Income Tax and Social Services Contribution Assessment Act 1936 (Cth), s 196(1). 23 As amended, with effect from 1 November 1999, by the 2000 Tariff Amendment. claim shall be prima facie evidence of the matter or matters averred. This section shall apply to any matter so averred although: evidence in support or rebuttal of the matter averred or of any other matter is given by witnesses; or the matter averred is a mixed question of law and fact but in that case the averment shall be prima facie evidence of the fact only. (3) Any evidence given by witnesses in support or rebuttal of a matter so averred shall be considered on its merits and the credibility and probative value of such evidence shall be neither increased nor diminished by reason of this section. Subsection (1) shall not apply to: an averment of the intent of the defendant; or proceedings for an indictable offence or an offence directly punishable by imprisonment. This section shall not lessen or affect any onus of proof otherwise falling on the defendant." "Excise prosecutions" were defined elsewhere in the Act24 as "[p]roceedings by the Customs for the recovery of penalties under any Excise Act or for the condemnation of goods seized as forfeited". Both parties expressly contended that no question of the constitutional validity of s 144 (or any other provision of the applicable legislation) arises in this appeal. It followed that no notice was given under s 78B of the Judiciary Act 1903 (Cth) that the appeal involved a matter arising under the Constitution or involving its interpretation. As explained in Re Patterson; Ex parte Taylor25, the precept that this Court should not decide constitutional questions unless necessary for the decision 25 (2001) 207 CLR 391 at 473-474 [248]-[252] per Gummow and Hayne JJ. of the case is a settled practice, dating from the early days of the Court26. There is no reason to depart from that practice, and especially is that so when the parties disavow any argument of the point. Moreover, to express a view on a question of the constitutional validity of a federal statute, without providing an opportunity to make submissions to the Attorneys-General entitled by s 78A of the Judiciary Act to intervene in the proceedings for that purpose, denies procedural fairness to the polities whom those Attorneys represent. Section 144 must be understood in the context provided by other provisions in that part of the Act (Pt XI) in which it is found. In particular, it is to be understood in the context of s 136 and its provision that every Excise prosecution "may be commenced prosecuted and proceeded with in accordance with any rules of practice (if any) established by the Court for Crown suits in revenue matters or in accordance with the usual practice and procedure of the Court in civil cases or in accordance with the directions of the Court or a Judge". Some aspects of the operation of this provision, and the equivalent provision made in the Customs Act 1901 (Cth)27, were recently considered by this Court in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd28. For present purposes, what is important is that the averment provisions of s 144 may find application in proceedings in which there are pleadings prepared according to the rules of pleading applicable in civil proceedings. It is, of course, necessary to notice, and give due weight to, the elaboration of the way in which averments may and may not be used which is contained in the provisions of the section itself. That elaboration owes much to the history of averment provisions in Commonwealth Customs and Excise legislation. Some matters of history As originally enacted, both the Act and the Customs Act contained averment provisions29. In this respect, they followed what had been done in earlier, colonial Customs legislation30. The application of the averment 26 Attorney-General for NSW v Brewery Employés Union of NSW (1908) 6 CLR 469 at 590 per Higgins J. 28 (2003) 216 CLR 161. 29 Excise Act 1901 (Cth), s 144; Customs Act 1901 (Cth), s 255. 30 See, for example, Customs Act 1890 (Vic), s 268. provisions of the Customs Act, and provisions like them, generated a deal of litigation. In 1909, Higgins J said of the then form of s 255 of the Customs Act31 that it was a provision "meant to throw the burden of proof on the defendant in Customs cases of disproving the charge". He said also32 that "[i]n all Customs Acts such provisions, apparently subversive of the first principles of justice, are to be found, for experience has shown them to be necessary in consequence of the peculiar difficulty of proving offences against the Customs." In Baxter v Ah Way and subsequent cases33, there was a deal of debate about the reach of averment provisions. Did averments reverse the burden of proof? Could a matter of mixed fact and law be averred? What significance was to be attached to an averment if evidence was led on the subject-matter of the averment? These questions were addressed in a new form of averment provision introduced into the Act in 191834 and into the Customs Act in 192335. The form of averment provisions introduced was substantially identical to the form of s 144 set out earlier in these reasons. First, as is apparent from the text of s 144, an averment is prima facie evidence of the matter or matters averred36; it does not alter the incidence of the final burden of proof37. Secondly38, an averment which 31 Baxter v Ah Way (1909) 10 CLR 212 at 216. 32 (1909) 10 CLR 212 at 216. 33 See, for example, Adelaide Steamship Co Ltd v The King and The Attorney-General of the Commonwealth (1912) 15 CLR 65; Symons v Schiffmann (1915) 20 CLR 277; Schiffmann v Whitton (1916) 22 CLR 142; Gabriel v Ah Mook (1924) 34 CLR 591; Williamson v Ah On (1926) 39 CLR 95. 34 Excise Act 1918 (Cth), s 17. 35 Customs Act 1923 (Cth), s 35. 37 s 144(5); R v Hush; Ex parte Devanny (1932) 48 CLR 487 at 507-508; Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 216 CLR 161 at 166 [1] per Gleeson CJ, 166 [3] per McHugh J, 173 [34] per Gummow J, 207-208 [142] per Hayne J. 38 cf Adelaide Steamship Co (1912) 15 CLR 65 at 102 concerning the effect of the averment provisions in the Australian Industries Preservation Act 1906 (Cth). was not confined to an allegation of fact, but alleged a matter of mixed fact and law, still had work to do – as "prima facie evidence of the fact only"39. Thirdly40, the new form of averment provision made plain41 that if evidence was led about a matter averred, the averment provisions of the Act still applied and the evidence given by witnesses in support or rebuttal of that matter was to be considered on its merits, the credibility and probative value of the evidence being neither increased nor diminished by reason of s 14442. Fourthly, the intent of the defendant could not be averred43. Averments in the information, complaint, declaration or claim Section 144 permits the making of averments in the information, complaint, declaration or claim. At least in the case of proceedings brought according to the usual practice and procedure of a State or Territory Supreme Court in civil cases44, it would be expected that the claim would conform to rules of court governing pleadings which require the pleading of material facts, not the evidence by which those facts are to be established45. And it may follow that any averments would be averments of material facts alleged in the pleading, not averments of evidence by which those material facts were to be proved. But if that does follow, it would be a consequence of the application of pleading rules which would permit matter embarrassing to the trial of the proceeding (as, for 39 s 144(2)(b). 40 cf Symons v Schiffmann concerning the effect of the former s 255 of the Customs Act. See also Adelaide Steamship Co. 41 s 144(2)(a). 43 s 144(4)(a). 44 s 134(1)(a), (b) and (c); s 136. 45 Supreme Court Rules 1970 (NSW), Pt 15 r 7(1); Supreme Court (General Civil Procedure) Rules 1996 (Vic), r 13.02; Supreme Court Rules 1987 (SA), r 46.04; Uniform Civil Procedure Rules 1999 (Q), r 149; Rules of the Supreme Court 1971 (WA), O 20 r 8(1); Supreme Court Rules 2000 (Tas), r 227(1); Supreme Court Rules (NT), O 13 r 2; Supreme Court Rules 1937 (ACT), O 23 r 4. See also Federal Court Rules (Cth), O 11 r 2. example, allegations of evidence as distinct from material fact) to be struck out46. Be this as it may, it is apparent from R v Hush; Ex parte Devanny47 that no encouragement has been or should be given to the preparation of averments that descend to matters of evidence rather than material fact lest the oppression evident in the 61 paragraphs of averment relied on in Hush be repeated. Section 144 speaks of "the matter" (or "the matters") averred. The averment must be "contained in the information, complaint, declaration or claim". It is, therefore, for the drafter of the process by which the Excise prosecution is commenced to frame the averment, and the Act is otherwise silent about how that is to be done. In particular, there is no textual footing in the Act for drawing some distinction between the ultimate fact in issue and other facts or evidence. Reference to the ultimate fact in issue in connection with Excise prosecutions might be understood as suggesting that there will always be a single determinative issue of fact in such a proceeding. Seldom will that be so. In the present case, demonstrating a contravention of s 117 required proof that: the respondent had certain goods in his possession, custody or control; the respondent was not a manufacturer; the respondent had no authority to have the goods in his possession, custody or control; the goods were manufactured or partly manufactured; and the goods were of a kind chargeable with excise. None of these facts was to be singled out as more significant than the others. If any of these elements was not admitted by the respondent it could be described as an ultimate fact in issue. Nothing in the Act shows why it could not be averred. The difficulty that lies beneath the use of the expression "ultimate fact in issue" is that it seeks to draw a distinction between, on the one hand, some or all 46 cf Hush (1932) 48 CLR 487 at 504-505 per Rich J. 47 (1932) 48 CLR 487. of the factual elements that must be established in the proceeding and, on the other, some other kinds of fact or evidence. That is not a useful distinction to be drawn in this context. That there is no statutory warrant for drawing the distinction is reason enough not to do so. Moreover, the distinction seems to be no more than the distinction that is drawn in common form rules of court between pleading material facts and the evidence by which those facts will be established. Reference to cases like Hayes48 does not support or require the conclusion that material facts or the ultimate fact or facts in issue cannot be averred. The distinction which Fullagar J made in Hayes49 was between the proposition to be established and the material evidencing the proposition. That is a distinction found in the writings of Bentham50 and Wigmore51. It is a distinction drawn by those authors in the context of describing the law of evidence as being concerned with the relationship between what is to be proved (the proposition to be established, whether as an ultimate fact in issue or subsidiary fact relevant to an issue) and the manner of its proof. As Bentham said52, "[e]vidence is a word of relation". But in the present context a distinction between ultimate fact and facts adduced to prove that ultimate fact is inapposite. The averment provisions are concerned with what is to be proved. The Act provides that what is averred is to be prima facie evidence of the matter averred. Thus the Act prescribes a manner of proof (to the point of being prima facie evidence) of the matter averred. The matter averred is not then to be subdivided further, whether between material facts and evidence, or between ultimate facts and evidence, or between ultimate facts in issue and other facts going to the proof of those facts. What reference to Hayes does bring to attention, however, is that a pleading of the material facts alleged in an Excise prosecution may contain allegations which, on analysis, are allegations of mixed fact and law. In the present case, par 4 of the Amended Statement of Claim alleged (and it was averred) that the respondent had in his possession, custody or control "manufactured or partly manufactured excisable goods". The allegation that the 48 (1956) 96 CLR 47. 49 (1956) 96 CLR 47 at 51. 50 Bentham, Rationale of Judicial Evidence, (1827), vol 1, bk 1, ch 1 at 17-23. 51 Wigmore on Evidence, Tillers rev (1983), vol 1, §2 at 13-15. 52 Rationale of Judicial Evidence, (1827), vol 1, bk 1, ch 1 at 17. goods were "excisable" goods was an allegation of legal conclusion. And if the allegation that the goods were "manufactured or partly manufactured ... goods" was to be understood as no more than an allegation that the goods met the statutory description in s 117 of the Act, that too would be an allegation of law. But read in its context, this part of par 4 of the pleading is to be understood as making allegations of mixed fact and law: that the tobacco had been subjected to one or more manufacturing processes and, for that reason, fell within the reach of s 117. The former is an allegation of fact; the latter may be an allegation of law. Section 144(2)(b) then provided that, to the extent that the allegation averred was one of fact, the allegation was prima facie evidence of that fact. This in turn leads to a further aspect of the matter foreshadowed in Labrador Liquor. Customs sought the conviction of the respondent. The elements of the offence alleged had therefore to be established beyond reasonable doubt53. The averments of fact were prima facie evidence of the facts averred but it remained a matter for the primary judge, and the Court of Appeal on appeal, to say, on the whole of the material that was adduced at trial, whether the facts averred were established to the requisite degree of proof54. Because the Court of Appeal in this case reached the conclusion which it did about the effect of the averments, that Court did not consider whether the necessary facts were established to the requisite degree and the respondent's contentions in that Court, that the primary judge erred in finding that the material in the respondent's possession, custody or control was manufactured or partly manufactured goods, remained undetermined. It will be necessary to remit the matter to the Court of Appeal for it to consider that question. A further question foreshadowed There is then a further question which has not hitherto been raised in the proceedings in the courts below but was foreshadowed in the course of the hearing in this Court. The respondent now wishes to contend, and the appellant accepted in oral argument in this Court, that the fine imposed on the respondent at first instance exceeded the maximum allowed by law. This was said to follow from the operation of s 4F(2) of the Crimes Act 1914 (Cth)55 in conjunction with 53 Labrador Liquor (2003) 216 CLR 161. 54 (2003) 116 CLR 161 at 207-208 [142]. 55 Section 4F(2) provides: "Where a provision of a law of the Commonwealth reduces the penalty or maximum penalty for an offence, the penalty or maximum penalty as (Footnote continues on next page) the amendments made to the Act by the Excise Amendment (Compliance Improvement) Act 2000 (Cth). The latter Act repealed s 129 of the Act56 with its reference to a minimum penalty of twice the duty that would have been payable and substituted57 a new form of s 117 specifying only maximum penalties. Because this is not a question that arose in the appeal to the Court of Appeal (there being no appeal to that Court brought against sentence) it is not part of the matter that is before this Court. It will be necessary, therefore, for application to be made to the Court of Appeal on remitter to enlarge the grounds of appeal in that Court to raise this question of sentence. The parties being agreed that the sentence passed by the primary judge should be quashed, it will, of course, be a matter for that Court, if the appeal to that Court otherwise fails, whether it fixes the penalty itself or remits the matter for consideration of that aspect of the matter by a single judge of the Supreme Court. Orders The appeal to this Court should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of Victoria made on 17 December 2003 should be set aside and the matter remitted to that Court for its further hearing and determination. reduced extends to offences committed before the commencement of that provision, but the reduction does not affect any penalty imposed before that commencement." 56 Excise Amendment (Compliance Improvement) Act 2000, Sched 1, item 58. 57 Sched 1, item 52. Kirby KIRBY J. This appeal, from the Court of Appeal of the Supreme Court of Victoria58, concerns an averment contained in a statement of claim59 filed in that Court. By the statement of claim, the Chief Executive Officer of Customs ("Customs") (the appellant) sought orders against Mr Nazih El Hajje (the respondent). Those orders included an order for the conviction of the respondent; an order imposing a penalty on him; and a claim for declarations and orders for interest and costs. This relief was sought under the Excise Act 1901 (Cth) ("the Act"). As developed at trial in the Supreme Court (where the respondent was not legally represented), the case concerned an allegation that, without lawful authority, the respondent had been found in possession of manufactured or partly manufactured goods, contrary to s 117 of the Act, upon which no excise duty had been paid and that he was liable accordingly. The manufactured or partly manufactured goods in question were alleged to have been a quantity of "cut tobacco". In seeking to prove its case, as it was held to have done at trial60, Customs relied upon averments expressed in its statement of claim. In the absence of contradictory evidence by or for the respondent, Customs alleged that it had proved the breaches of the Act to the requisite legal standard. However, the Court of Appeal decided that the averments relied on by Customs did not supply the evidence constituting the alleged breach of the Act, sufficient to uphold the orders made at trial. Accordingly, that Court set aside the orders of the primary judge and entered a general judgment for the respondent. Now, by special leave, Customs appeals to this Court. The facts and legislation The facts: The facts, so far as they appear from the pleading and from the evidence adduced at the trial, are stated in the reasons of McHugh, Gummow, Hayne and Heydon JJ ("the joint reasons")61. Those facts include the terms of the statement of claim, including the averments relied on by Customs "[t]o the extent permitted by law"62; the circumstances of the police interception of the respondent; the course of the trial; and the findings of the primary judge. 58 El Hajje v Chief Executive Officer of Customs (2003) 180 FLR 224. 59 The statement of claim was amended by order of the primary judge in the Supreme Court of Victoria (Byrne J) on 18 July 2002. 60 Chief Executive Officer of Customs v El Hajje [2002] VSC 286 at [9]. 61 Joint reasons at [5], [15]-[18]. 62 Statement of claim, par 20. Kirby The legislation: Likewise, the provisions of the Act expressing the offence found at trial (s 129 of the Act read with s 117) and the history and terms of the Act and of the Excise Tariff Act 1921 (Cth) are sufficiently described in the joint reasons63. Those reasons also set out the terms of s 144 of the Act, providing, in any excise prosecution, for averments to be pleaded which, by force of that section, are to be "prima facie evidence of the matter or matters averred"64. The function of an averment is "to allege, against the accused matters which, as alleged, constitute an offence"65. As such, an averment provision such as that appearing in s 144 of the Act66: "does not place upon the accused the onus of disproving the facts upon which his guilt depends but, while leaving the prosecutor the onus, initial and final, of establishing the ingredients of the offence beyond reasonable doubt, provides, in effect, that the allegations of the prosecutor shall be sufficient in law to discharge that onus". In common law pleadings, averments (sometimes called "verifications") were of two kinds: common and special. Common averments were applied to ordinary cases. Special averments were used when the matter pleaded was intended to be tried on the record or by some method other than trial by jury67. The word "averment", as it came to be used in statutes of the 20th century, generally referred to "the essential part of the offence"68. So far as they are 63 Joint reasons at [8]-[13]. 64 Joint reasons at [26]. 65 Ex parte O'Sullivan; Re Craig (1944) 44 SR (NSW) 291 at 299 per Jordan CJ. See also Neil Pearson & Co Pty Ltd v Comptroller-General of Customs (1995) 38 NSWLR 443 at 460-461. 66 R v Hush; Ex parte Devanny (1932) 48 CLR 487 at 507-508 per Dixon J. As to standard of proof see Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd ("Labrador") (2003) 216 CLR 161. 67 Jowitt (ed), The Dictionary of English Law, (1959), vol 1 at 188. 68 Baxter v Ah Way (1909) 10 CLR 212 at 216 per Higgins J. See also Anderson, "Averments" (1945) 19 Australian Law Journal 102 at 102-103. Paul in "The 'Averment of the Prosecutor' in Criminal Charges", (1940) 14 Australian Law Journal 4 at 6 wrote that "'Archbold on Criminal Pleadings' (27th ed) ... seems to speak of averments as including every material ingredient of the offence charged". Kirby lawful and effective, averments clothed with the authority of s 144 are thus a great boon to prosecutors. They are aimed at relieving prosecutors of having to prove essential matters. Whilst not shifting the legal onus, they certainly relocate the evidentiary and forensic onus. In practice, they therefore have a significant potential to burden defendants in resisting proceedings brought against them. To that extent, they have a tendency to undermine the accusatorial nature of criminal process which is an important feature of criminal law and procedure in Australia69. The decisional history of the case Decision of the primary judge: The joint reasons describe the decision of the primary judge70. On the basis, partly, of the averments in the statement of claim, the primary judge concluded that the goods found in the respondent's possession were "manufactured excisable goods" upon which duty had not been paid and that they were in the respondent's possession without lawful authority71. His Honour found that the unpaid excise duty payable on those goods, namely the "cut tobacco", was $165,567.97. He convicted the respondent of the offence against s 117 of the Act and ordered him to be fined $331,135.9472. As well, the goods were condemned as forfeit to the Crown – an order of the primary judge that, curiously, was not the subject of appeal73, nor included in the contest in this Court. Decision of the Court of Appeal: In the Court of Appeal, various grounds of appeal were rejected by Buchanan JA (who gave the reasons of that Court)74. They need not trouble this Court. Ultimately, his Honour reached the point concerning proof of the case that was found to be determinative and is the subject of the present challenge. After describing the evidence at trial relating to what the Customs officers found, and the description they gave in evidence about the tobacco in the respondent's truck, Buchanan JA pointed out that no witness had stated facts 69 cf RPS v The Queen (2000) 199 CLR 620 at 630 [22]. 70 El Hajje [2002] VSC 286. 71 El Hajje [2002] VSC 286 at [5]. 72 El Hajje [2002] VSC 286 at [12]. By s 129 of the Act, the penalty imposed was twice the amount of duty payable on the excisable goods. 73 See amended notice of appeal, 13 September 2002. 74 (2003) 180 FLR 224 at 228 [14] (Phillips and Batt JJA concurring). Kirby constituting the alleged steps in the "manufacture" of tobacco75; nor did any statutory definition of "manufactured" supply that omission. He concluded that the word "manufactured" was a word of general denotation, to be given meaning according to its ordinary acceptation in the English language. Buchanan JA went "It could hardly be said that every cut tobacco leaf constituted manufactured or partly manufactured tobacco. Tobacco leaf might be cut for purposes which have nothing to do with manufacture into a product suitable for consumption. I do not think that tobacco leaf cut to enable it to fit into bags so that it could be transported could properly be described as manufactured or partly manufactured tobacco." taking the meaning of this rather strict view of the word "manufactured" in this context, and of the evidence, Buchanan JA was affected by the reasoning in the then recent decision of this Court in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd77. That decision concluded that the appellant was required to prove such a case at trial to the standard of proof beyond reasonable doubt. In such circumstances, a measure of strictness in the construction of the legislation having punitive consequences and strictness in the assessment of the evidence adduced at trial was not unorthodox78. The issue, thus presented, was whether any defects in the evidentiary foundation provided at the trial were cured by Customs' averments and by the legal effect given to them by s 144 of the Act. Buchanan JA determined that question against Customs. He did so (as noted in the joint reasons)79 by reference to his Honour's understanding of the principles stated by Fullagar J in this Court in Hayes v Federal Commissioner of Taxation80. He also referred to the decision of the Full Court of the Federal Court of Australia in Collector of Customs v Pozzolanic Enterprises Pty Ltd81: 75 (2003) 180 FLR 224 at 228 [15]. 76 (2003) 180 FLR 224 at 229 [17]. 77 (2003) 216 CLR 161. 78 See R v Adams (1935) 53 CLR 563 at 567-568; Beckwith v The Queen (1976) 135 CLR 569 at 576. 79 Joint reasons at [23]. 80 (1956) 96 CLR 47 at 51. 81 (1993) 43 FCR 280 at 287. Kirby "The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law". Accepting this approach to the lawful ambit of Customs' averments, Buchanan JA reached his conclusions. In fairness to those conclusions, which are thoughtful and require response from this Court, I will set out the passage that explains the approach taken by the Court of Appeal82: "In the present case, the facts that constituted manufacture were not averred. The averment stated no facts other than the ultimate fact in issue, the factum probandum. In my view, in this case that was not properly the subject matter of an averment. The position would have been different if the matter averred had been a statement that it is a process in the manufacture of tobacco that tobacco leaf be cut in a particular manner and that tobacco leaf cut in that manner was in the possession of the appellant. The averment, however, did not take that form. It was a statement that the appellant had cut tobacco in his possession and cut tobacco constituted manufactured goods. As I have said, tobacco can be cut otherwise than in the process of the manufacture of goods. The averment implied that particular circumstances existed and fell within the statutory description of manufactured or partly manufactured excisable goods. The existence of those circumstances involved questions of fact, but the circumstances were not averred. The averment omitted to state any facts that showed that the tobacco in the possession of the appellant was cut in a manner that converted the tobacco into manufactured or partly manufactured goods." The question before this Court is thus whether the foregoing approach was correct or demonstrated legal error. In light of the Constitution, the applicable statutory law, legal authority on averments and the facts of the present case, has it been shown that the Court of Appeal erred in adopting the foregoing approach and in the conclusion in favour of the respondent to which that approach led it? The issues The following issues arise from the foregoing description of the case: The constitutional issue: Whether, having regard to the Constitution, either as a matter of power or so as to ensure that the applicable statutory provision and judicial determination remain within power, the strict approach to the permissible content of averments in proceedings brought 82 (2003) 180 FLR 224 at 230 [21] (citation omitted). Kirby in federal jurisdiction, as adopted by the Court of Appeal, should be upheld in the circumstances of this case. Must s 144 of the Act be read, for constitutional reasons, so as to avoid averments in federal jurisdiction that amount to averments of matters of law; or matters of mixed law and fact involving the "application of a legal standard"83? The pleading issue: Having regard to the answer to issue 1, or irrespective of its answer, is it a settled principle of the law of pleadings that averments may not be pleaded which foreclose the resolution of the real, or ultimate, issue by a court in proceedings, so that, tested against such a standard, the approach adopted by the Court of Appeal was correct in the present circumstances and this notwithstanding the terms of s 144 of the Act? The statutory issue: In the light of the answers to issues 1 and 2, and having regard to the provisions of s 144 of the Act, did the Court of Appeal err in failing to give effect to the averments relied on by Customs in this case, to the extent that any averment of mixed law and fact, pleaded by Customs, was nonetheless applicable by virtue of the operation of s 144 of the Act, and therefore available to Customs in its proceedings against the respondent? The remitter issue: Having regard to the answers to issues (1), (2) and (3), is it necessary to remit to the Court of Appeal, for reconsideration, the outstanding questions (a) whether the decision at trial ought to have been in favour of the respondent, having regard to the standard of proof applicable to the case as explained in Labrador84, and (b) whether, taking into account the applicable law, the fine imposed on the respondent must in any event be varied. The constitutional issue How the issue arises: Neither party to this appeal, whether in the Court of Appeal or in this Court, raised any specific question concerning the Constitution or submitted that it was relevant to the resolution of the issues in this case. Both 83 cf R v Palmer [1981] 1 NSWLR 209 at 214 per Glass JA. See now Uniform Evidence Acts, s 80(a); Anderson, Hunter and Williams, The New Evidence Law: Annotations and Commentary on the Uniform Evidence Acts, (2002) at 255; Heydon, "The Impact of sections 76-80 of the Evidence Acts 1995 on Opinion Evidence: Recent Cases", (1999) 18 Australian Bar Review 122 at 128. See also Naxakis v Western General Hospital (1999) 197 CLR 269 at 306 [110]. 84 (2003) 216 CLR 161. Kirby in written and oral submissions, Customs and the respondent asserted that no constitutional issue arose85. The Constitution is the supreme law of the nation. It is not for parties, by their pleadings, conduct of their cases or agreement86, to impose on a court an obligation to make orders and decide issues without regard to the Constitution where it is relevant87. By command of the Constitution itself, this Court and all Australian courts are obliged to obey its requirements88. No provision of statute89, nor any rule of the common law or of court practice, could negative that fundamental duty90. From the earliest days of the Commonwealth (as pointed out in the joint reasons)91, averments have been a feature of excise prosecutions and of the federal legislation providing for them. The supposed justification for provisions in the Act such as s 144, stated from early times, was the existence of similar United Kingdom practice. This rested on the suggested "peculiar difficulty" of otherwise proving offences against the Customs92. This line of authority has been accepted for a century, without substantial questioning as to whether the practice of pre-federation British statutes, concerning Customs offences, could be imported without modification, into the quite different constitutional environment of the Australian Commonwealth, with its express provisions for an independent judicature and the separation of the judicial power of the Commonwealth, with all that that implies. Legal minds can sometimes be locked in the history books. Blinded by history they may fail to perceive a new legal problem. 85 See [2005] HCATrans 34 at 50, 1267. 86 See eg Lambert v Weichelt (1954) 28 ALJ 282. 87 See eg Croome v Tasmania (1997) 191 CLR 119 at 127-128, 132. 88 Constitution, covering cl 5. 89 eg Judiciary Act 1903 (Cth), s 78B. 90 Solomons v District Court of New South Wales) (2002) 211 CLR 119 at 154-155 [87]-[91]; Roberts v Bass (2002) 212 CLR 1 at 54 [143]. 91 Joint reasons at [1]. See also Labrador (2003) 216 CLR 161 at 207-208 [140]- 92 Baxter v Ah Way (1909) 10 CLR 212 at 216 per Higgins J. See also the cases referred to in the joint reasons at [32] fn 33. Kirby No one denies the importance of legal history and the guidance it gives for the resolution of contemporary questions. However, in the Australian context, all such questions, and the answers they suggest, must ultimately be measured, where relevant, against the Constitution. The earlier resolution of such questions in the United Kingdom, where no equivalent constitutional questions arose, cannot be determinative of the resolution of such questions in Australia. So much is self evident; but it needs to be stated in this case. The special problem of grafting averment provisions, such as appear in s 144 of the Act, onto federal legislation in Australia, was perceived from the start by some of the early judges of this Court. They did not, however, in my respectful view, give sufficient attention to whether a difficulty was presented by in Baxter v Ah Way93, Higgins J a constitutional acknowledged that the averment provisions in the Customs Acts of the Commonwealth were "meant to throw the [evidentiary] burden of proof on the defendant … of disproving the charge". His Honour declared that such a shift of onus was "apparently subversive of the first principles of justice". However, he justified such "subversion" by reference to what he declared was "necessary in consequence of the peculiar difficulty" of such cases. impediment. Thus, This justification of supposed necessity (or prosecutorial convenience) is scarcely convincing when viewed from a constitutional standpoint. It will often be difficult for the prosecution to prove elements in criminal offences. In our system of government, that is conventionally regarded as rightly so. For centuries, this has been the response of our law to complaints of prosecutorial "difficulty" and suggestions of "necessity" to overcome them. As early as 1477, Brian CJ, addressing the peculiar difficulty faced by the prosecution in proving that an accused acted as he did with the intent requisite to establishing the offence charged observed that "[t]he thought of man is not triable, for the devil himself knows not the thought of man"94. Yet it remained for the prosecution to prove the element of intent in offences at common law and the "difficulty" of doing so did not afford a reason to bend the rule95. When it comes to constitutional requirements, it is not the usual answer (and may not be a valid answer) to enact laws that reverse the onus of proof and impose on the accused a duty to show an innocent intention and then to say that 93 (1909) 10 CLR 212 at 216. 94 Year Book (1477) 17 Edw IV 1. 95 Greene v The King (1949) 79 CLR 353 at 357. The principle is expressed in the Latin maxim cogitationis poenam nemo patitur. Kirby such laws are enacted to meet practical difficulties, otherwise arising. Doubtless, officials and prosecutors find "peculiar difficulty" in proving offences having particular features. Counter-terrorism and anti-drug trafficking legislation springs to mind. Yet the answer to such difficulties is not necessarily to uphold averments to overcome all problems of proof or invariably to shift the evidentiary burden (or even the legal burden) to the accused. The constitutional answer to whether such expedients are available is by no means clear cut. Test it this way. There is a serious question as to whether it would be possible under the Constitution, to reverse the onus of proof of every federal offence or to provide that all relevant elements of fact and law necessary to constitute an offence could henceforth be averred by the Commonwealth and thus bind federal courts, in the trial of such offences, to a trivial function incompatible with that of a judicial body of the type envisaged by the Constitution. There must be a limit to the extent to which federal legislation could impinge on the activities of federal courts where the result would be to rob them of substantial functions as courts of the kind that the Constitution contemplates. In the past, issues such as this have sometimes been decided by this Court by reference to the question whether attempts to permit averments and to alter the burden of proof in federal matters are constitutionally infirm because they have lost the essential connection with "the root of the existence of federal power"96. However, this is not the source of constitutional infirmity that concerns me. My concern relates to the compatibility of averment provisions in certain forms with the implications about judicial power and the judicature inherent in Ch III of the Constitution. That issue has previously been raised by this Court97. However it was not fully explored in Baxter, nor pursued in detail in R v Hush; Ex parte Devanny where observations were made that were critical of the practice of relying on averments in federal prosecutions, evident in an extreme form in the latter case98. The problem was clearly on the mind of Griffith CJ delivering the 96 See eg, Wynes, Legislative, Executive and Judicial Powers in Australia, 4th ed (1970) at 124-125 cited by Gibbs J in Milicevic v Campbell (1975) 132 CLR 307 at 97 Adelaide Steamship Co Ltd v The King (1912) 15 CLR 65 at 102; R v Hush; Ex parte Devanny (1932) 48 CLR 487 at 515; cf R v Associated Northern Collieries (1911) 14 CLR 387 at 404. 98 (1932) 48 CLR 487 at 510. Evatt J said (at 513-514) that the initiating document in that case was an "amazing" one, consisting of 27,453 words, designed to "induce the magistrate to accept this queer medley as satisfactory proof of everything averred". Kirby judgment of this Court in Adelaide Steamship Co Ltd v The King, where his Honour reserved the point with these words99: "We express no opinion on the point taken by [counsel] that [the averment provision], read literally, is an attempted interference with the judicial power of the Commonwealth, by seeking to impose upon the Courts the duty of passing sentence without trial." Thus, from the early days of this Court the need to contemplate constitutional limitations upon statutory averment provisions has been noted but not finally decided – perhaps awaiting a more extreme instance of offence to the judicial power and functions provided for in Ch III of the Constitution. It is true that s 144 of the Act, relied on by Customs in the present appeal, does not go to such extremes. Thus, it does not provide that an averment shall be conclusive evidence of the matters averred100; that it will be accepted whatever evidence is otherwise given by witnesses101; that it will bind the Court in the resolution of any question of law102; that it will apply to prove the intent of the defendant103; that it will govern indictable offences tried before juries as s 80 of the Constitution provides and bind such juries104; or that it will alter the onus of proof otherwise falling on the defendant105. 99 (1912) 15 CLR 65 at 102. See also R v Hush; Ex parte Devanny (1932) 48 CLR 487 at 515 per Evatt J: ("No Court exercising the judicial power of the Commonwealth could allow the prosecutor's ex parte statement of what the document means to outweigh the Court's own construction of the document."); cf R v Associated Northern Collieries (1911) 14 CLR 387 at 404 per Isaacs J: ("So far as its validity is concerned ... it is desirable to state that I do not abstain from acting upon [the averment provision] from any present doubt as to its constitutionality. It is a stringent provision casting the initial burden of proof upon the defendants in certain cases, but as I read the section that is all. It still leaves it to the judicial tribunal to determine on recognised principles the issue of guilt or innocence upon any evidence that may be adduced.") 100 cf the Act, s 144(1). 101 cf the Act, s 144(2)(a). 102 cf the Act, s 144(2)(b). 103 cf the Act, s 144(4)(a). 104 cf the Act, s 144(4)(b). 105 cf the Act, s 144(5). Kirby However, legislation providing for averments can be amended by the Parliament in circumstances of supposed "necessity" and "peculiar difficulty" for prosecutors. Constitutional questions then present themselves. They must be resolved by reference to considerations of basic principle. At the very least, the imposition upon federal courts (or State courts exercising federal jurisdiction) of a supposed duty to decide a "matter … [that] is a mixed question of law and fact" potentially intrudes upon the capacity of such courts to decide such issues independently, and especially as they involve to any important degree a "question of law". Similarly, where a "legal standard" is involved, it is doubtful, in my view, that it is competent for the Federal Parliament to instruct federal courts (or courts exercising federal jurisdiction) to apply such a standard in any way differently than the law and the independent discharge of the judicial function demand. On the face of things, any attempt in federal legislation to provide in that way would be an intrusion by the legislature into the function of the judicial branch of government and invalid under the Constitution to that extent. The issue is not argued: None of the foregoing questions has been argued in this appeal. This is so although they were raised by me during the oral submissions. The passage of time and the accumulation of experience have resulted in a greater appreciation on the part of this Court of the importance of the constitutional separation of the judicature106; of the necessity to preserve that separation as a central feature of the federation; and of the implications that derive from the operation of the judicature as the Constitution envisages107. Today, issues such as the foregoing, when raised, would not be approached, as in the past, only in terms of whether averments, or other federal procedural laws, had lost their essential connection with the requisite federal legislative power. They would now be decided by reference, as well, to whether such enactments were inconsistent with Ch III of the Constitution, and with the implications to be derived from its provisions. In my reasons in Labrador108 I noted that the appellant in that case put in issue a constitutional argument. It was an argument that was advanced defensively. It suggested that, if the federal Acts in question in that case, on their proper construction, permitted proof of the guilt of the elements of the offences alleged against the appellants to be determined according to a civil standard of 106 see eg The Queen v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; Re Wakim; Ex parte McNally (1999) 198 CLR 511. 107 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 108 (2003) 216 CLR 161 at 176-177 [49]. Kirby proof, such a construction would offend implications inherent in s 71 of the Constitution. In the event, having regard to the conclusion that the criminal standard of proof applied, the constitutional question did not have to be addressed109. Had it been necessary, this Court would, in that case, have had to consider the respondents' arguments about the due process implications said to arise from Ch III of the Constitution110. In two extra-curial papers, Justice McHugh has recently argued that such questions will require the attention of this Court before long111. In the latest of those papers, Justice McHugh predicted that "constitutional practitioners will see a rich lode of constitutional ore in Ch III of the Constitution112. I agree. Perhaps blinded by the way such issues have been addressed in the past, the parties to the present appeal did not venture upon any such exploration. It involved questions they were not prepared to argue. However, that does not mean that the issue is irrelevant to the task of interpretation before this Court and to the disposition of this appeal. The Constitution and interpretation: It is impossible to disjoin interpreting a federal law (such as the Act) from the Constitution. The basic law provides the most important contextual element for elucidating the meaning to be attributed to a statutory provision whilst remaining constitutionally valid. It provides the life-blood of power and it charts the constraints and restrictions that necessarily inform the law's meaning. Attempts to disconnect the task of interpretation from the constitutional source are merely extreme examples of the belief, now generally discredited, that words alone in the written law yield legal meaning. Context is as important as text. In the Australian Commonwealth, in respect of federal laws, context inevitably includes the Constitution. Some of the dicta in the reasons of this Court in its early days, suggesting disregard for constitutional considerations, can only be understood today as relics of the former literalistic and purely verbal approach to statutory interpretation that focused on words and ignored context. We should not now restore that approach for it is not the way meaning is derived from written language in everyday life113. 109 Labrador (2003) 216 CLR 161 at 191 [93]. 110 Relying on Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580 per Deane J; Dietrich v The Queen (1992) 177 CLR 292 at 326, 362. 111 eg McHugh, "Does Chapter III of the Constitution protect substantive as well as procedural rights?", (2001) 21 Australian Bar Review 235 at 238-240. 112 McHugh, "Review of Australian Constitutional Landmarks", (2004) 7(1) Constitutional Law and Policy Review 21 at 24. 113 Palgo Holdings Pty Ltd v Gowans (2005) 215 ALR 253 at 263 [37]. Kirby This is why today the starting point for legislative construction is commonly a consideration of any applicable constitutional norms. This is not simply a view that I have expressed114. Other members of this Court have also approached the problem of meaning in particular cases from the starting point of any relevant considerations of constitutional context115. In other countries, with written constitutions constraining governmental power, it is a commonplace to approach the ascertainment of the meaning of legislation by reference to any relevant constitutional considerations. Thus, the South African Constitutional Court has recently affirmed116: "The Constitution is now the supreme law in our country. It is therefore the starting point in interpreting any legislation." Similarly, the Supreme Court of Canada has said that the values expressed in the constitutional Charter of Rights and Freedoms "must be at the forefront of statutory interpretation"117. In the United States too, it is generally accepted that constitutional norms inform performance of the task of judicial interpretation118. Indeed, in the United States, the debate has moved beyond this point. It is now more concerned with elucidating contemporary 114 Re Colonel Aird; Ex parte Alpert (2004) 78 ALJR 1451 at 1465-1467 [81], [83]- [84]; 209 ALR 311 at 331-332; Solomons v District Court of NSW (2002) 211 CLR 119 at 155 [91]; Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue of Victoria (2001) 207 CLR 72 at 88 [41]. 115 Coleman v Power (2004) 78 ALJR 1166 at 1199 [184] per Gummow and Hayne JJ; 209 ALR 182 at 227; Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1103 [10], 1105- 1106 [19]-[20], [22] per Gleeson CJ, 1121 [111] per Gummow J; 208 ALR 124 at 128, 130-131, 153; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492-493 [28], [30]-[32] per Gleeson CJ; CDJ v VAJ (1998) 197 CLR 172 at 196 [90] per McHugh, Gummow and Callinan JJ. 116 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs [2004] (4) SA 490 at 521 [72] (citation omitted). 117 Symes v Canada [1993] 4 SCR 695 at 794 per L'Heureux-Dubé J (in dissent). See also Slaight Communications Inc v Davidson [1989] 1 SCR 1038 at 1078 per Lamer J; Hills v Canada (Attorney General) [1988] 1 SCR 513 at 558 per Dickson CJ, Wilson, La Forest and L'Heureux-Dubé JJ. 118 eg Eskridge, Frickey and Garrett, Legislation and Statutory Interpretation, (2000) at 347; Sunstein, "Interpreting Statutes in the Regulatory State", (1989) 103 Harvard Law Review 405 at 459. Kirby methodologies of statutory interpretation that conform to the Constitution119. The basic premise is not contested. No statute and no rule of court practice in this country could excuse ignoring the Constitution, where it is relevant to a task of interpretation. The joint reasons120 suggest that reference to the constitutional background is impermissible in this appeal because of the past practice of this Court and the provisions of s 78B of the Judiciary Act 1903 (Cth). This is not correct. The practice referred to is confined to avoiding decisions on constitutional questions that are unnecessary to the issues in a matter. In the present case, it is relevant, and not unnecessary, to construe the averment provisions by reference to constraints deriving from the Constitution. I reject the opinion that the Constitution can be ignored or that this Court's practice requires that course. Many recent cases prove the contrary. Nor, in the ultimate, is there any procedural unfairness to the polities or persons referred to in s 78B of the Judiciary Act121. In this appeal, the constitutional norms are not, ultimately, determinative. But that does not mean that they may be ignored in fulfilling the task committed to this Court. Where federal legislation is in issue, the Constitution provides the background against which statutory interpretation takes place. In this sense, the Constitution is always the starting point even if only sub-consciously. Furthermore, many interpretative principles are themselves a product of constitutional elaboration. Parties, by their arguments and pleadings, cannot oblige a court to ignore a consideration important to interpretation – least of all where that consideration is found in the Constitution. 119 See eg Scalia, A Matter of Interpretation: Federal Courts and the Law, (1997) at 35; Bank One Chicago v Midwest Bank & Trust Co 516 US 264 at 279 per Scalia J (1996); Mashaw, "Textualism, Constitutionalism and the Interpretation of Federal Statutes", (1991) 32 William and Mary Law Review 827 at 839; Manning, "Textualism and the Equity of the Statute", (2001) 101 Columbia Law Review 1; Eskridge, "All About Words: Early Understandings of the 'Judicial Power' in Statutory Interpretation, 1776-1806", (2001) 101 Columbia Law Review 990; Manning, "Response: Deriving Rules of Statutory Interpretation from the Constitution", (2001) 101 Columbia Law Review 1648; Rosenkranz, "Federal Rules of Statutory Interpretation", (2002) 115 Harvard Law Review 2085. In the Australian context see Corcoran, "The Architecture of Interpretation: Dynamic Practice and Constitutional Principles", in Corcoran and Bottomley (eds), Interpreting Statutes, (2005) 31 at 33-38. 120 Joint reasons at [27]-[28]. 121 cf joint reasons at [28]. Kirby The Constitution and this case: It follows that, by force of legislation122 and of necessity, federal statutes must be read, so far as possible, to conform to constitutional requirements. There are therefore limits to the extent to which an averment provision in federal legislation, such as s 144 of the Act, can diminish the function of federal courts in resolving controversies and deciding matters presented by law. It is not possible to reduce federal courts (or State courts exercising federal jurisdiction) to cyphers of the Executive Government by the simple expedient of shifting the burden of proof to persons accused of penal offences and imposing upon courts the resolution of questions that involve legal determinations, otherwise than in accordance with the applicable law as decided by such courts. Doubtless because the Parliament itself is alert to such limitations123, enactments providing for the legal effect of averments (and practices adopted by prosecutors) prevent most cases from arising that might involve an excess of federal legislative power. Nevertheless, provisions such as s 144 of the Act must be read against the constitutional background that I have outlined. Although these considerations are not expressed in their reasons (doubtless because they were not raised in argument) I take them to have informed the general approach of the judges in the Court of Appeal to the issue which that Court identified in the present case. The concern of the Court of Appeal was about the matters properly preserved in this country to the decision of the judiciary. In the case of federal legislation in Australia, that concern rests ultimately upon constitutional considerations. In so far as it considered that an averment might not conclusively determine what was a question of law,124 or oblige a court finally to decide what was an "ultimate fact", the Court of Appeal was protecting the irreducible jurisdiction of a court exercising federal jurisdiction. In doing so, the Court of Appeal's instincts were, in my view, correct. They reflected the approach to be taken conformably with the requirements of Ch III of the Constitution and of the judicature that the Constitution establishes. The Constitution establishes courts intended to have real functions, not tribunals forced by statute (through averment provisions or otherwise) to rubber stamp assertions made by the Executive and 122 Acts Interpretation Act 1901 (Cth), s 15A. 123 Australian Parliament, House of Representatives, Standing Committee on Legal and Constitutional Affairs, Modern-day usage of averments in customs prosecutions, (2004) at 7-12 [1.19]-[1.32] and ch 2. See Else Mitchell, "A Note on Averments", (1945) 19 Australian Law Journal 178 at 178-179. 124 cf Brady v Thornton (1947) 75 CLR 140 at 147. Kirby its agencies, including Customs. This Court, as the ultimate guardian of the Constitution, should be vigilant against the risks of averment provisions that would have a consequence of reducing the judicial function to nothing of substance because all matters of substance are settled by enacted presumptions, whether by a reversed onus or conclusive averments. A constitutional court, such as this, must always be looking down the years. It must do so lest an extreme case, close to the boundary of constitutional power, becomes a precedent for impermissible governmental and legislative action that endangers the basic constitutional design. Because these precise constitutional questions were not argued in this appeal, it is impossible to decide them without the assistance necessary for that purpose. In default of argument, I am not finally convinced that s 144, as it may be read in the present context, is constitutionally invalid. Thus, I do not presently regard that section as offensive to Ch III or as unconnected with the requisite federal head of legislative power125. Nevertheless, in addressing the remaining issues, it is, in my view, essential to keep in mind the need to interpret the Act, and specifically the provisions of s 144, in a way that conforms to the fundamental presuppositions of the Constitution concerning the function of the judicature in resolving federal controversies in a manner compatible with the function of courts, performing their duties as the Constitution envisages them. The pleading issue A strict approach to pleading: In the inference that it drew from the reasoning of Fullagar J in Hayes126, the Court of Appeal adopted a stringent view about the extent to which averments could bind a court to a conclusion that the statutory ingredients in issue had been established by the matters averred. Because of the constitutional considerations that I have mentioned, I am far from convinced that the approach adopted by Fullagar J, and accepted by the Court of Appeal in this case, was inappropriate or inapplicable to the question for decision127. If, in effect, a party is to be tried and found guilty of a federal offence, it is legitimate to demand that the facts be proved to the requisite standard and that real questions concerning the legal ingredients of the offence remain for determination by the relevant court. Two elements in this case occasion concern. They proved determinative for the Court of Appeal. The first is that the facts alleged to constitute 125 See eg Constitution, s 90; cf Ha v New South Wales (1997) 189 CLR 465. 126 (1956) 96 CLR 47 at 51. See joint reasons at [38]. 127 cf joint reasons at [38]-[39]. Kirby "manufacture", so as to bring the tobacco leaf in question within the requirement for the imposition of excise duty under the Act, were not averred (assuming that to be permissible) or otherwise proved. The second concern is that one of the averments, relied upon by the prosecution, expressly asserts a legal (statutory) standard. This averment is found in par 19 of the statement of claim which includes the contention (summarising Customs' case) that the respondent "contrary to subsection 117(1) of the Excise Act 1901 [had] in his possession, custody or control manufactured or partly manufactured excisable goods, namely a quantity of cut tobacco …" (emphasis added). Is it permissible for Customs, in an averment purportedly having effect under s 144 of the Act, to bind the court deciding the case (and the defendant) to a view of the Act as to what is "excisable" or not? In other words, is it permissible for the appellant, with the consequences that s 144 of the Act enacts, to assert that the goods in question are "manufactured" and that they are "excisable", although those are the central questions to be decided by a court, performing its functions as a court, on the basis of the application of the enacted law to the facts, as found? The statutory provision: In my view it was not competent for Customs to plead that the goods, the subject of its proceedings, were "excisable". That was equivalent to a statement that the goods met all the legal and factual requirements to engage the Act. It was thus a statement of law, or of a legal conclusion, that offended applicable pleading principles that confine the pleader to an expression of the facts necessary to the applicable law, leaving it to the court concerned to apply that law and reach its conclusions128. Nevertheless, in this case, I would be willing to treat the word "excisable" in the statement of claim as immaterial surplusage, appearing as it does in the paragraph that simply summarises what is contended. Of greater concern is the question that led the Court of Appeal to its eventual conclusion, namely that it was impermissible for Customs to treat "manufactured" as a matter of fact and that, necessarily, it involved the application of a legal standard that it was for the Court to ascertain and apply, not for a party to assert in an averment that purportedly attracted legal consequences. The provisions of s 144(2)(b): This consideration brings me to s 144(2)(b) of the Act which states that: "This section shall apply to any matter so averred although: 128 See joint reasons at [39]. Kirby the matter averred is a mixed question of law and fact but in that case the averment shall be prima facie evidence of the fact only." Clearly, this provision was drafted with a view to avoiding constitutional issues of the kind that I have mentioned. There may be questions as to the validity of the paragraph, to the extent that it attempts by averment provisions, to affect a court exercising federal jurisdiction in the resolution of any "question of law". I say this, notwithstanding the moderated consequence of any such determination as set out in the provisions of the Act that I have quoted. However, in this case, the respondent has not mounted such a challenge. I am disinclined to make it for him. Unless the provision is constitutionally invalid, it is the duty of an Australian court to give effect to it, although a court would read it (so far as its language permitted) to avoid constitutional infirmity or excess. Determining whether "cut tobacco" is, as such, "manufactured" or not, within the meaning of the Act, involves a "mixed question of law and fact". As such, it attracted s 144(2)(b) of the Act according to its terms. To that extent, the averments in the statement of claim, so asserting, had the consequences for which s 144(2)(b) of the Act provided. The statutory issue Duty to the legislation: So long as a federal law is valid, courts must give effect to it in accordance with its language and so as to achieve its apparent purposes129. Because the respondent did not attack the validity of s 144 of the Act, and specifically of s 144(2)(b), the question for the Court of Appeal was whether that paragraph had the effect that Customs asserted. It was not whether, in accordance with general principles of the common law of pleading or otherwise, the averment in par 19 of the statement of claim was too wide. The Court of Appeal did not address the correct question of the application of s 144(2)(b) of the Act. It was not enough that there should be distinctions between questions of fact and questions of law130. Here there was a question of mixed fact and law. Unless s 144(2)(b) was wholly invalid, or unless it should be read down in some way, the Court of Appeal was obliged to give it effect in accordance with its terms. Relevantly, those terms are clear. 129 Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 77 ALJR 1019 at 1029 [68]; 197 ALR 297 at 310. 130 El Hajje (2003) 180 FLR 224 at 230 [20]. Kirby Assuming that it was permissible to read s 144(2)(b) down, so that if an ultimate question of law were presented it would not be a "mixed question of law and fact" within that paragraph, there was certainly evidence which, together with the operation of the averment, was available to the primary judge for use in resolving the applicable question for decision. As the Court of Appeal itself noted, one witness at the trial described the tobacco found in the appellant's truck as "cut tobacco". On occasion, that witness equated this to "manufactured tobacco", although he did not descend into greater detail in his description of the form or character of the cutting131. Another witness described the tobacco as "cut tobacco ready for use"132. This evidence, together with the averment, applicable in terms of the Act as to mixed questions of law and fact, was available to the primary judge to assist in reaching a conclusion that the cut tobacco in question was indeed "manufactured". It therefore sustained the decision at trial. Conclusion: error is shown: The result is that, so long as s 144(2)(b) of the Act is a valid law of the Commonwealth, it permitted the primary judge to conclude, as he did, that the cut tobacco was "manufactured or partly manufactured … goods, namely ... of cut tobacco"133. Although reaching that conclusion involved the application of a legal standard, it did so in a manner permitted by s 144(2)(b) of the Act. The only way that the respondent could have overcome that conclusion was by challenging the validity of that law. This he failed, and in this Court declined, to do. In another case where the validity of s 144(2)(b) of the Act was directly challenged and subjected to a test by reference to the requirements of the Constitution (including the requirements implicit in Ch III) a different conclusion might possibly be reached. But in this appeal, no different conclusion should be adopted. To that extent, I agree with the joint reasons that s 144 of the Act does not provide an adequate statutory foundation for the distinction drawn by the Court of Appeal. This is so even if that paragraph is read down so as to avoid an impermissible intrusion into the functions of the judiciary deciding matters involving pure questions of law. The remitter issue On the basis explained in the joint reasons, I agree that the remaining questions in the appeal134 cannot be resolved by the simple restoration of the 131 (2003) 180 FLR 224 at 229 [17]. 132 (2003) 180 FLR 224 at 229 [17] fn 6. 133 El Hajje [2002] VSC 286 at [12]. 134 [2005] HCATrans 34 at 1880. See joint reasons at [40]. Kirby orders of the primary judge. The outstanding questions should therefore be remitted to the Court of Appeal135. Orders I therefore agree in the orders proposed in the joint reasons. 135 cf Labrador (2003) 216 CLR 161 at 208 [144], 209 [149].

HIGH COURT OF AUSTRALIA GEOFFREY MARK ROBERTS & ANOR APPELLANTS AND RODNEY PIERS BASS RESPONDENT Roberts v Bass [2002] HCA 57 12 December 2002 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Supreme Court of South Australia dated 8 September 2000 and in place thereof order that: the appeal to that Court is allowed with costs; the judgment of the District Court of South Australia dated 24 March 2000 is set aside and in its place: there be judgment for the second-named appellant, Kenneth Allan Case, with costs; and there be a new trial of the action against the first-named appellant, Geoffrey Mark Roberts, the costs of the first trial of the action against Mr Roberts to abide the result of the new trial. On appeal from the Supreme Court of South Australia Representation: S M Littlemore QC with P A Heywood-Smith for the appellants (instructed by D A Trim QC with N J T Swan and H M Heuzenroeder for the respondent (instructed by Lempriere Abbott McLeod) Intervener: R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Defamation – Defences – Qualified privilege – State election – Publication of electoral material – Reciprocity of interest – Proof of malice – Improper motive – Whether intention to cause political damage constitutes an improper motive – Relevance of honest belief in truth of statement – Relevance of reckless indifference to truth or falsity of published material – Relevance of knowledge of falsity of published material – Relationship of common law qualified privilege to extended qualified privilege as identified in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. Constitutional law (Cth) – Implied limitation upon laws restricting freedom of expression concerning governmental and political matters – Whether constitutional question arises having regard to issues before the State trial and appellate courts – Whether constitutional implication may be disregarded – Whether general common law relating to the occasion of qualified privilege is compatible with the Constitution – Whether general common law relating to malice is compatible with the Constitution – Whether common law needs to be developed to ensure compatibility – Ingredients of malice in the circumstances of the case – Whether malice established in communications published in a State electoral campaign. Words and phrases – "malice". GLEESON CJ. The appellants were found at trial to have injured the respondent by the publication of false and defamatory matter in the course of a State election in South Australia, and ordered to pay damages. The decision of the trial judge was upheld by the Full Court of the Supreme Court of South Australia, save to the extent that the amount of the damages awarded against the first appellant was increased1. The facts are set out in the reasons for judgment of Callinan J. The issues presented to this Court for decision have been influenced, and in some respects artificially shaped, by the manner in which the cases of the respective parties were conducted in the South Australian courts. In my view, that produces two consequences. First, the parties should be held to the cases they presented in the South Australian courts. Secondly, the present appeals provide an unsuitable occasion for the development of the law, assuming, in the light of the recent decision of this Court in Lange v Australian Broadcasting Corporation2, that it requires further development. The need for the common law to conform to the Constitution is difficult to reconcile with the co-existence of two significantly different tests for qualified privilege in the context of political debate: the first, the test for common law qualified privilege as recognised in Braddock v Bevins3; the second, the test formulated by this Court in Lange. However, the proceedings were conducted in the South Australian courts on that assumption. The trial judge did not coin the phrase "extended form of qualified privilege". He took that expression from the joint judgment of seven members of this Court in Lange. Although that judgment spoke of the "development of the common law"4, it referred to the common law "categories of qualified privilege"5, and declared that it should be recognised that those categories should be "extended" to take account of the interest that each member of the Australian community has in discussion about government and political matters6. If, as was the common assumption in the present litigation, there is one category of common law privilege relating to communications to thousands of 1 Roberts v Bass (2000) 78 SASR 302. (1997) 189 CLR 520. (1997) 189 CLR 520 at 566. (1997) 189 CLR 520 at 571. (1997) 189 CLR 520 at 571. electors in the course of an election, of the kind recognised in Braddock v Bevins, and another category relating to communications to the general public about political matters, of the kind recognised in Lange, then it seems clear that there is a substantial difference between them. Why this should be so, as a matter of principle, is difficult to understand. The law of defamation, including the law as to qualified privilege, strikes a balance between competing interests. Those interests include the public interest in freedom of political debate, which is essential to the functioning of representative democracy. Why should the balance that applies when a newspaper with a wide circulation publishes an article about the Prime Minister, or the Leader of the Opposition, differ from the balance that applies when someone distributes throughout an electorate a pamphlet urging electors to vote against the sitting member? One difference between what was described in Lange as the extended category of qualified privilege, and the pre-existing category of common law privilege, is that a requirement of reasonableness of conduct applies to the former, but not to the latter. Because of the way in which the present proceedings were conducted, it will be necessary to return to the subject of malice in relation to the pre-existing category. Neither irrationality, nor prejudice, constitute or establish malice. In Lange, it was said that the interest that members of the Australian community have in receiving information on government and political matters would be met sufficiently, in the case of widespread publication which would have failed to attract a common law defence of qualified privilege, by requiring the publisher to prove reasonableness of conduct. In the case of this "extended defence of qualified privilege in its application to communications with respect to political matters" the defence would also be defeated if the person defamed proves that the publication was actuated by common law malice7. In the present case, "the extended defence of qualified privilege" was held at trial to have been defeated by want of reasonableness in the conduct of both appellants. That issue was not pursued in the Full Court. The tactical reason for that is fairly plain. Notwithstanding the extensive distribution of the material in question (two of the publications were distributed to more than 12,000 letter boxes), the trial judge found that it was published on what was, at common law, an occasion of qualified privilege. In the Full Court, the respondent did not challenge that finding. The test of reasonableness, required for the "extended category", involves an added burden for a defendant. It suited both appellants to have the case decided on the basis that it was the pre-existing common law category of qualified privilege that was relevant. They both had findings of malice against them. Given that there was no challenge to the finding that the publications were made on an occasion of common law qualified privilege in the (1997) 189 CLR 520 at 574. pre-existing category, if the appellants could displace the findings of malice they would succeed. If they could not displace the findings of malice, it was, no doubt, regarded as unlikely that they could displace the findings that their conduct was unreasonable. Thus, the battleground became the original or pre- existing category of common law qualified privilege. The respondent permitted that, by not challenging the trial judge's finding that the occasion of each publication fell within that category, and the appellants accepted that position, which involved a less onerous test for them. On the assumption, accepted by the parties at trial and in the Full Court, that there remains a category of common law qualified privilege that can apply to publications to electors, even to more than 12,000 electors, which is governed by the law as expounded in Braddock v Bevins, and not Lange, and in the light of the trial judge's unchallenged finding that the publications presently in question were made on an occasion of qualified privilege, the focus of attention became the question of malice, or, as it was described in Lange8, "common law malice". The kind of malice that defeats a defence of qualified privilege at common law is bound up with the nature of the occasion that gives rise to the privilege. In Horrocks v Lowe9, Lord Diplock explained: "The public interest that the law should provide an effective means whereby a man can vindicate his reputation against calumny has … to be accommodated to the competing public interest in permitting men to communicate frankly and freely with one another about matters in respect of which the law recognises that they have a duty to perform or an interest to protect in doing so. What is published in good faith on matters of these kinds is published on a privileged occasion. It is not actionable even though it be defamatory and turns out to be untrue. With some exceptions … the privilege is not absolute but qualified. It is lost if the occasion which gives rise to it is misused. For in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit – the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege." (1997) 189 CLR 520 at 574. [1975] AC 135 at 149. The public interest was said to be in communicating "frankly and freely". His Lordship went on to point out that "express malice" is the term of art by which the law describes the motive of a person who "uses the occasion for some other reason". He said that, broadly speaking, it means malice in the popular sense of a desire to injure the person who is defamed. That is clear enough in most of the cases which attract a defence of qualified privilege. For example, if the privileged occasion is the making by A of a report to B about the character or conduct of C, in pursuance of a duty or interest, then if the dominant motive for the making of a defamatory statement in the report is a desire to injure C, that defeats the privilege. The occasion has been misused. In that context, an honest expression of opinion about C's character or conduct is the obverse of a statement made with the dominant motive of injuring C. Such a contrast may not be available when the occasion of privilege is political debate or an electoral contest. Electors have an interest in receiving information and opinions concerning the merits of candidates for election. That interest was described by Lord Greene MR, delivering the judgment of the Court of Appeal in Braddock v Bevins10, as an interest "to have what is honestly believed to be the truth communicated". The correlative duty was described as a duty to electors "to inform them honestly and without malice of any matters which may properly affect their choice in using their suffrages"11. At some points in the argument for the appellants, their embrace of Braddock v Bevins appeared to be less than whole-hearted. The meaning of the word "honestly" in those statements is clear enough. It is not to be overlooked. However, a motive, even a dominant motive, of damaging the electoral prospects of a candidate for election may be perfectly consistent with an honest expression of opinion, or an honest assertion of fact, about the candidate. Statements made with such a motive are the stuff of which political debate is made. In such a context, the popular meaning of malice, which Lord Diplock said is "broadly speaking" what it means for the law relating to qualified privilege, requires refinement. A motive of injuring a candidate by diminishing his or her prospects of election does not constitute malice; that would be repugnant to the very basis of the privilege in electoral contest. At the same time, a motive of injuring a candidate's prospects of election by damaging his or her reputation is not a defence. It would be wrong to think that, because such a motive does not constitute malice, it negates malice. If it were so, electoral contests would for practical purposes constitute a defamation- free zone. The privilege would be virtually absolute, not qualified. And "the extended defence of qualified privilege" recognised in Lange, which was held to 10 [1948] 1 KB 580 at 591. 11 [1948] 1 KB 580 at 591. conform to the requirements of the Australian Constitution, would be but a pale reflection of the common law defence. The freedom of political speech inherent in the Constitution's concept of representative democracy would be much more limited than the freedom given by the common law in relation to the distribution of material to thousands of voters in an electorate. As the facts of this case show, there is a large middle ground between the publication of political statements to "tens of thousands" contemplated by the judgment in Lange12 and the limited publications said to be, "more often than not … to a single person"13, referred to in the same judgment as exemplars of occasions that fall within the pre-existing category of common law qualified privilege. If publication to more than 12,000 voters is an occasion of pre-existing common law privilege, and the privilege is defeated only by malice, with no added test of reasonableness, a conclusion that the freedom of political speech necessitated by the Constitution gives rise to a privilege that can be defeated, not only by malice, but also by want of reasonableness, may appear surprising. Acting (with the reservations earlier expressed) upon the common assumption that there are two categories of qualified privilege in relation to political communications, and that the present cases can and should be decided according to the law that applies to the category that existed before Lange, the test of malice must be whether the matter in question was published for the purpose that was said in Braddock v Bevins to attract the privilege, that is to say, the honest expression of views about a candidate for election. The fact that such views might be wrong-headed, or prejudiced, or carelessly formed, or even irrational, would not constitute, or demonstrate, malice. But it would be inconsistent with the purpose of the privilege to use the occasion, not for the honest expression of views, but for the publication of defamatory matter, knowing it to be false, or not caring whether it was true or false. Recklessness is a word sometimes used to describe the last-mentioned state of mind; but it does not simply mean carelessness, even in a high degree. It means "indifference to its truth or falsity"14. As Braddock v Bevins makes clear, when, in the course of an election contest, political views damaging to the reputation of a candidate, deliberately intended to harm his or her prospects of election, are published, what attracts the qualified privilege is interest in the honest expression of views, no matter how strongly put, and no matter how unreasonable they may be. The purpose of the privilege is not to protect dishonesty, or to permit the communication of anything 12 (1997) 189 CLR 520 at 572. 13 (1997) 189 CLR 520 at 572. 14 Horrocks v Lowe [1975] AC 135 at 153. that is represented to be a view, whether or not it is in fact genuinely held. A statement made in the course of political debate in an election campaign does not become honest merely because it serves a purpose of damaging the reputation, and therefore the electoral prospects, of a candidate. The genuineness of a belief that it is in the public interest that a candidate should be defeated does not cast a mantle of honesty over anything and everything that may be said in order to achieve that objective. The end does not justify any means. A strongly held opinion that a member of Parliament should be voted out of office does not mean that anything said about the member with the object of persuading electors to a like opinion must be treated as honest, and that the use of the privileged occasion is necessarily proper. It is evident, from parts of the reasoning of the trial judge and the Full Court, that it was argued on behalf of the appellants that it did not suffice to establish malice merely to show that they did not have a positive belief in the truth of the allegations of impropriety levelled at the respondent. As will appear, in the case of the first appellant, that argument was beside the point, and, in the case of the second appellant, the issue was not determinative of the outcome. It may be observed that mere absence of positive belief in the truth of what is published, if that be all there is to it, does not establish malice. However, lack of positive belief in the truth of a statement is a description that might be applied to different states of mind. Whether lack of belief is evidence of reckless indifference to truth or falsity, may depend upon the nature of what is said, and the occasion on which it is said. It may be, for example, that if a person publishes an allegation of serious impropriety or unfitness about another, in circumstances where community standards would recognise a moral obligation to make an attempt to ascertain the truth beforehand, and the person has no idea whether the allegation is true or false, it is open to conclude that the person is recklessly indifferent to the truth or falsity of the allegation, within the meaning of what was said in Horrocks v Lowe. That is a question of fact. But mere absence of a positive belief in the truth of what is said does not constitute malice. As I have indicated, in my view, having regard to the evidence and the findings of fact, this is not an issue that arises in relation to the appeal of the first appellant, but it is of some relevance to the appeal of the second appellant. That is the background against which the findings of fact made in the South Australian courts must be examined. It is important, in that respect, to note the findings of the trial judge as to the defamatory imputations conveyed by the matter complained of, which were accepted in the Full Court, and are not the subject of the appeals to this Court. In the case of the "Nauru Postcard", the trial judge said: "In my opinion, the ordinary and reasonable reader would interpret that postcard as meaning that: Their elected member was, at the expense of the taxpayer, enjoying a holiday; The plaintiff's holiday at Nauru was for his own enjoyment, and not in the proper pursuit of his duties as a member of the seat of Florey; (iii) The 'Clean Government Coalition' was a group whose aim was to ensure proper parliamentary behaviour and in this case the actions of the local member were not proper; and the opening words 'This is the postcard your politician Sam Bass should have sent you …' [refer] to a course of action which the plaintiff, as their member, should have followed but deliberately refrained from doing so. In summary it is an effective document implying that the elected member had embarked on a holiday at a paradise resort and in doing so had misused taxpayers' money and this fact was discovered by an organisation involved in 'Clean Government'. The publication was clearly aimed at disparaging the plaintiff's reputation, the aim being to lower the plaintiff in the estimation of his fellow constituents. I therefore find that the words reflect on the integrity of the plaintiff and portray him as a member of parliament who has misused public moneys for his own personal benefit to the detriment of his constituents and, as such, are defamatory of the plaintiff." The trial judge described the "Free Travel Times Pamphlet" as "an inflammatory document which clearly reflected on the integrity of the plaintiff … and contained [a] forged purported copy of his Frequent Flyer Activity Statement". As to the frontispiece, he said the reasonable and ordinary reader would take it that the respondent had been on holiday in Nauru at government expense and was the most travelled parliamentarian for the year and that, rather than attending to his electoral duties, he was content to lie in the sun in Nauru eating and drinking. The second page contained the forged mock-up of a frequent flyer points statement. The respondent had never been involved in a frequent flyer programme. As to the third page, it was held that the ordinary and reasonable reader would take it to mean that the respondent, in an underhanded way, had used his position as a member of Parliament to accrue frequent flyer points for his own use and for the use of members of his family. The final page portrayed the respondent as among the politicians who had blatantly misused parliamentary entitlements. In the case of the "Orange Pamphlet" (which was the only publication in which the second appellant was involved) the trial judge found that it conveyed the following imputations: "(a) That the plaintiff had spent $32,000.00 of taxpayers' money on overseas travel. That the plaintiff had spent $32,000.00 of taxpayers' money for overseas travel for the purpose of his own enjoyment and not for the proper purpose of such travel, namely to enhance the plaintiff's knowledge of issues relevant to the better performance of his role as a member of Parliament. That the plaintiff had taken numerous overseas trips for his own benefit and enjoyment at the taxpayers' expense. That the plaintiff had taken numerous overseas trips for his own benefit and enjoyment and not for the intended purpose of such trips, namely to enable him to better serve the interests of the Parliament of South Australia and the members of this electorate. Contrary to his responsibility as the member of Parliament for Florey failed to take appropriate steps to prevent clandestine arrangements being put in place in respect of the management of the Modbury Hospital, contrary to the interests of the members of the electorate of Florey and the public of South Australia generally. That the plaintiff had put the rights of those interested in the right to possess and utilise guns ahead of the safety of members of ordinary families. That the plaintiff had not spent sufficient time in his electorate to properly discharge his duties as the member of the seat of Florey. That the plaintiff was not spending sufficient time in the electorate of Florey to enable him to adequately fulfil his duties as the member for Florey. That if the plaintiff was elected to the member of Florey and then subsequently elected as Speaker of the House of Assembly then he would spend less time than the time that he was currently spending in the electorate." The publication of the "Free Travel Times Pamphlet" attracted the intervention of the Electoral Commissioner, and ultimately the first appellant pleaded guilty to electoral offences in relation to it. The trial judge found that the respondent was a man of the utmost integrity; that he adopted a highly ethical approach to his parliamentary activities; that he had not misused his travel or other entitlements; that his attendance at the Nauru conference was for parliamentary purposes; that there was no basis for any criticism of his travel; that he was not a member of any frequent flyer scheme; and that his conduct in relation to the Modbury Hospital and firearms control provided no basis for criticism. It is necessary to consider separately the appeal of each appellant. The first appellant The damages awarded against the first appellant, Mr Roberts, by the Full Court were $100,000. That was made up of $20,000 for the first publication, $35,000 for the second, and $45,000 for the third. The fact that the third publication, and to a substantial extent the second publication, occurred after, and notwithstanding, the intervention of the Electoral Commissioner was regarded as an aggravating factor. As Martin J pointed out in the Full Court, the first appellant had, over a period of some months, engaged in a course of conduct that demonstrated ill-will towards the respondent. The tone of the first appellant's attack on the respondent was set by his identifying himself, in the first of the presently relevant publications, as the representative of a so-called "Clean Government Coalition". The implications of a representation that the respondent had become the target of a group of the campaigners for "clean government" were obvious, and coloured accompanying material. This is reflected in the trial judge's finding as to the imputations. The trial judge made the following finding about the conduct of Mr Roberts, and the light thrown upon his behaviour by what occurred after the intervention of the Electoral Commissioner: "One would consider bearing in mind the views of the Electoral Commissioner that he would take some care in the preparation of further material to be publicly circulated. However, his actions thereafter show almost a contempt about these matters. Mr Roberts continued with the preparation and circulation of approximately 12,650 election day handouts referring to 'numerous junkets at your expense including trips to the United Kingdom and Nauru', and, if elected 'Qualify to spend another $32,000 of taxpayers' money on overseas travel'. This is the action of a person whose aim is solely to remove Mr Bass from office in total ignorance of the true factual matters, or, for that matter having no care or concern whether the matters were true or false providing his aim was achieved." Later, the trial judge said: "The evidence does, in my opinion, establish that [the appellants] published the defamatory material without 'considering or caring whether it be true or not'. On occasions during his evidence, [the first appellant] admitted to having prepared the publications in spite of his indifference to the truth of their content … Evidence of [the first appellant's] conduct on other occasions may also be used to infer that the material was published for some improper motive … This is of particular significance in assessing the conduct of [the first appellant]. From the initial publication his actions were reckless without any enquiry as to the accuracy or otherwise of the published material. His failure to take any positive steps to stop the FTT pamphlet from being distributed or in any way concern himself with a retraction notwithstanding repeated requests from the Electoral Commissioner to do so, and his subsequent actions in preparing and distributing the election morning pamphlet, establishes, in my view, his malicious conduct." In the Full Court, Prior J said that the first appellant "was properly identified as a person with an improper motive and no honest belief in the truth of what he published". As the passages quoted above show, if all that Prior J meant by that observation was that the first appellant did not have a positive belief in the truth of what he published, then the trial judge's findings went much further than that. Indeed, the evidence showed that part of what the first appellant published was actually fabricated by him. It may be doubted that Prior J intended such a limited meaning. The sentence was followed by a footnote reference to two cases, one of which was Horrocks v Lowe. The page references to that judgment include the passage earlier cited in these reasons, and they also include a passage in which Lord Diplock stated that recklessness meant indifference to truth or falsity, and was not to be equated with carelessness. Williams J recorded that "[i]t was common ground between the parties that the publications took place on privileged occasions". He set out the findings of the trial judge, which I have already quoted, and said that, in his opinion, they were adequately supported by the evidence. He also noted the trial judge's finding that the first appellant published the defamatory matter without considering or caring whether it be true or not. He agreed with that finding. In that connection he referred to the first appellant's persistence in his conduct after a time when, whatever might have been the position earlier, he had been told that his allegations of impropriety lacked foundation. Williams J cited the judgment of Hunt J in Barbaro v Amalgamated Television Services Pty Ltd15, which, in turn, referred to Horrocks v Lowe. Relying on what had been said by Hunt J, Williams J rejected an argument advanced on behalf of the first appellant that a mere absence of honest belief in the truth of a published statement did not establish malice. It should be noted, however, that the findings of the trial judge, adopted by Williams J, went beyond a finding merely that the first appellant had no belief in the truth of what he published. Martin J agreed that the first appellant "did not possess an honest belief in the truth of the published statements", and he also agreed with the trial judge that the first appellant acted with an improper motive. In explaining his reasons, he quoted what Lord Diplock said in Horrocks v Lowe. In the course of the quotation he emphasised the following statement16: "If [a defendant] publishes untrue defamatory matter recklessly, without considering or caring whether it be true or not, he is in this, as in other branches of the law, treated as if he knew it to be false. But indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true." The findings made by the trial judge, and accepted by the Full Court, concerning the first appellant, which were amply supported by the evidence, clearly established malice. It is true that there are passages in the reasoning of the trial judge, and the members of the Full Court, probably influenced by what Hunt J said in Barbaro, which reflect a view that it would have been sufficient to constitute malice if all that appeared was that the first appellant lacked belief in the truth of what he published. To an extent, those passages appear to have been made by way of response to the argument of counsel for the appellant; but that argument was beside the point. It completely underestimated the factual strength of the case against the first appellant. He did not merely lack belief in the truth of what he published. He actually concocted some of it himself; and he was found to have been recklessly indifferent to the truth or falsity of the accusations of impropriety he levelled at the respondent. On the concurrent findings of fact made against the first appellant, which have not been shown to be in error, a conclusion of malice was virtually inevitable. 15 (1985) 1 NSWLR 30 at 50-51. 16 Horrocks v Lowe [1975] AC 135 at 150. The second appellant The position in relation to the second appellant, Mr Case, is more difficult. The damages awarded against him were $5,000. He was one of a group of people who decided to "target" the respondent and seek to secure his electoral defeat because of their opposition to the privatisation of the Modbury Hospital, and their perception that the respondent supported privatisation. The second appellant's views on that subject were described by the trial judge as "passionate". There is nothing wrong with that. The judge also thought the group's opinion of the role of the respondent in relation to moves to privatise the hospital was unfair. So are many political opinions. The second appellant, who was described as "intelligent and capable", had a limited involvement in the publications. He had nothing to do with the first two. As to the third, he turned up on election day at a polling booth to which he had earlier been allocated, planning to assist the respondent's political opponents. He was given copies of the third publication, the orange pamphlet, which he proceeded to distribute. His evidence was that there was nothing in the pamphlet that struck him as a cause for concern. Apart from what it said about the Modbury Hospital, which was the subject of particular interest to him, he had no knowledge of the matters alleged against the respondent, but was content to distribute the card as campaign material. The trial judge found that the views of the second appellant were so strong "that he would adopt any means to achieve the aims of his group of removing Mr Bass from office". That can hardly have been meant to be taken literally. The judge also found that the second appellant published the defamatory material (that is to say, handed out the orange pamphlet) without considering or caring whether it be true or not. That finding was made in conjunction with the same finding against the first appellant, and was elaborated by reference to facts which related to the first appellant. Both appellants had common legal representation, and in a number of places in the judgment they are treated as being in much the same position. It is important not to allow the second appellant to be caught in the undertow of the powerful case against the first appellant. In dealing with the Lange issue of reasonableness, the trial judge made a finding which appears also to have influenced his conclusion on malice. He criticised the second appellant for not making enquiries as to the truth of adverse material in the orange pamphlet, apart, of course, from the subject in which he was personally interested, that is to say, the Modbury Hospital. The first appellant actually knew of the falsity of some of that material, and was found to have been recklessly indifferent to the truth of the rest. As to the second appellant, the trial judge said: "Mr Case's whole rationale of his actions and view of the conduct of the plaintiff was totally flawed and governed mainly by the aim of 'targeting' the plaintiff. He made no enquiries but proceeded to hand out the … pamphlet not caring whether the stated matters were true or false." Two observations may be made. First, "targeting" an election candidate is not improper. It is part of legitimate political struggle. Whether or not it goes beyond what is legitimate may depend on the methods employed. Secondly, the fact that a worker at a polling booth makes no enquiries about the truth of the indicate reckless contents of electoral propaganda does not necessarily indifference to the truth or falsity of the contents of the propaganda. It depends on the circumstances. If, for example, a worker at a polling booth is asked to distribute a pamphlet accusing a candidate of a serious crime, then failure to make further enquiries might well indicate indifference to the truth or falsity of the accusation. The allegations in the orange pamphlet are not in that category, and what they meant to the first appellant was very different from what they would be likely to have meant to the second appellant. In the Full Court, Prior J, who said he agreed with both the other members of the Court, did not deal separately with the issue of malice in relation to the second appellant. Williams J rightly rejected the idea that "targeting" the respondent was itself an improper purpose. He referred to the trial judge's finding that both appellants acted without considering or caring whether the published material was true or false. However, as has been noted, in this respect the facts relating to the second appellant were materially different from those relating to the first appellant, and the differences were not examined. Martin J, on the other hand, made detailed reference to the different position of the second appellant. He said that, after anxious consideration, he concluded that the trial judge erred in finding that the second appellant possessed a dominant motive to injure the respondent. He then went on to consider whether the judge was correct in finding that the defence of qualified privilege also failed because Mr Case did not possess an honest belief in the statements or because he published the untrue defamatory matter "recklessly, without considering or caring whether it be true or not". He referred to Lord Diplock's warning that, in this context, recklessness does not mean mere carelessness. As to the first of the two alternatives, Martin J doubted that the evidence justified a finding that the second appellant did not possess the belief he claimed, which was that he looked at the card and thought it sounded right. However, he found it unnecessary to decide the issue. He said that the conclusion that the second appellant was "indifferent within the meaning of the test posed by Lord Diplock" was reasonably open. On that basis, he dismissed the appeal of the second appellant. Thus, two members of the Full Court, (Williams J, with whom Prior J agreed), upheld the finding of malice against the second appellant on the basis of an acceptance of the trial judge's finding that he was recklessly indifferent to the truth or falsity of what he published. In so far as the finding of malice rested on the trial judge's finding that the second appellant was recklessly indifferent to the truth or falsity of what he published, it was legally orthodox. However, the reasoning in support of the primary finding is open to criticism. First, it insufficiently distinguished the positions of the two appellants. Secondly, and more particularly, it made insufficient allowance for the practical position of a person who undertakes to distribute electoral propaganda at a polling booth on election day, and who ordinarily would not be expected to have the capacity to verify the accuracy of such propaganda. Thirdly, it appears to have been affected by an erroneous view that "targeting" a candidate is itself improper. Martin J, in reviewing the trial judge's decision, correctly rejected that approach, but did not appear to examine the way in which it affected the finding of indifference, which he upheld. In my view, the evidence did not support the finding that the second appellant was recklessly indifferent to the truth or falsity of what he published. In the circumstances of the case, which include the nature of the activity in which he was engaged, and the contents of the orange pamphlet as they would reasonably have appeared to him, failure to make enquiries about the material other than that concerning the Modbury Hospital was not evidence of reckless indifference, and the mere fact that the second appellant did not have a positive belief in the truth of that material was therefore not evidence of malice. Conclusion The first appellant's appeal should be dismissed with costs. The second appellant's appeal should be allowed with costs. The orders of the Full Court of the Supreme Court of South Australia should be set aside. It should be ordered that the second appellant's appeal to that Court be allowed with costs, that the orders against the second appellant made by the trial judge be set aside, and that there should be judgment for the second appellant in the action. The respondent should pay the costs of the second appellant of the trial, the appeal to the Full Court, and the appeal in this Court. McHugh GAUDRON, McHUGH and GUMMOW JJ. By grant of special leave, Geoffrey Roberts and Kenneth Case appeal against an order of the Full Court of the Supreme Court of South Australia17 dismissing their appeal against an award of damages for defamation made by the District Court of South Australia. The respondent, Rodney Bass, sued Roberts for defaming him in three publications issued during the course of an election campaign for the State seat of Florey in South Australia. Bass sued Case for defaming him in the third of these publications. The common law, and not South Australian statute law, provided the principles of defamation law applied by the District Court. When the publications were made, Bass was the Member for Florey and Roberts was an elector in that electorate and Case was an elector in the adjoining electorate. Roberts and Case were opposed to Bass being re-elected. The principal issues in the appeal are whether the evidence justified various findings made by the trial judge and the members of the Full Court and, if so, whether they constituted malice for the purpose of the law of qualified privilege in the context of publications in an electoral contest. There is also an issue as to whether the parties can depart from the positions that they adopted in the Full Court on the question whether the publications were made on occasions of qualified privilege. In the Full Court, Bass did not appeal against the trial judge's finding that the occasions were privileged. In this Court he contends that the occasions were not privileged. In the Full Court, Roberts did not appeal, and Case did not press his appeal, against the trial judge's findings that the publications were not protected by the extended defence of qualified privilege recognised by this Court in Lange v Australian Broadcasting Corporation18. They now wish to rely on the extended defence of qualified privilege. Proceedings in the District Court In the District Court, Lowrie DCJ held that all three publications contained imputations that were defamatory of Bass. The first defamation was contained in a mock postcard – "the Nauru postcard" – that Roberts sent to all the households in the electorate. The trial judge found that words on the postcard reflected on the integrity of Bass and portrayed "him as a member of parliament who has misused public moneys for his own personal benefit to the detriment of his constituents". 17 Roberts and Case v Bass (2000) 78 SASR 302. 18 (1997) 189 CLR 520. McHugh The second defamation was contained in an election pamphlet that Roberts also sent to all households in the electorate – "the Free Travel Times pamphlet" – a document that purported to show a copy of Bass' Frequent Flyer Activity Statement with Ansett Airlines. Lowrie DCJ found that the Frequent Flyer Activity Statement was a forgery and that the pamphlet had a number of defamatory meanings. They included: that Bass, while attending a resort in Nauru, was neglecting his responsibilities to his constituents; that he had taken advantage of his position as a Member of Parliament to obtain a free holiday for his own purposes; that on numerous occasions he had used his position as a Member of Parliament to accrue Frequent Flyer Points for his own and for his family's use and benefit; and that he had taken overseas trips in the course of his parliamentary duties that were not taken in the interests of his constituents. The third defamation was contained in a "How to Vote Card" – "the Orange pamphlet" – that was distributed at polling booths on election day. Roberts prepared the Orange pamphlet, and Case was one of those who distributed it on polling day. The trial judge found that it had the nine meanings alleged in the plaintiff's Statement of Claim. They included: that Bass had spent $32,000 of taxpayers' money for overseas travel for the purpose of his own enjoyment and not for the proper purpose of such travel; that he had taken numerous overseas trips for his own benefit and enjoyment at the taxpayers' expense; that, contrary to his responsibility as the Member for his electorate, he had failed to take appropriate steps to prevent clandestine arrangements being put in place in respect of the management of a hospital contrary to the interests of the electorate; that he had put the rights of those interested in possessing and using guns ahead of the safety of members of ordinary families; that he had not spent sufficient time in his electorate to properly discharge his duties as the Member for Florey; and McHugh that, if he was elected and subsequently elected as Speaker of the House of Assembly, he would spend less time than the time that he was currently spending in the electorate. Lowrie DCJ found that, in publishing the documents, the main intention of Roberts and Case "was to injure [Bass] and to lower his estimation in his fellow persons by making them think less of him". His Honour found that various factors pointed "to a conclusive finding that the defendants intended to injure [Bass]". The learned trial judge also said: "The evidence does, in my opinion, establish that the defendants published the defamatory material without 'considering or caring whether it be true or not'." His Honour said: "In summary, [Bass] submitted, and I have accepted, that the conduct of [Roberts] was tantamount to using any area of apparent criticism of [Bass] to injure his reputation and cause him to lose office. This purpose is not a proper motive. Furthermore, I am also of the view that [Case's] actions in the distribution of the [Orange] pamphlet on the day of the election was motivated by actual malice. The actions of [Case] were not as recklessly blatant as that of [Roberts]." Lowrie DCJ said that Case's "dominant motive was to injure [Bass'] reputation and remove him from office and, as such, it was an improper motive". His Honour viewed the conduct of Case as malicious. Appeal to the Full Court The Full Court (Prior, Williams and Martin JJ) upheld the verdicts in favour of Bass. In doing so, the Full Court also upheld the findings of malice against Roberts and Case, although their Honours' reasoning for making those findings differed. Prior J said (footnote omitted)19: "It is plain from the findings made by the trial judge that neither appellant had an honest belief in the truth of what was published. Case was properly found to be recklessly indifferent to the truth or falsity of the material he published. Roberts was properly identified as a person with an improper motive and no honest belief in the truth of what he published." 19 Roberts and Case v Bass (2000) 78 SASR 302 at 304-305 [2]. McHugh Williams J set out20 various findings of the trial judge concerning malice. They included the finding that Roberts "could not possibly have believed the imputations to be true". They also included the finding that Case's whole rationale was "governed mainly by the aim of 'targetting' [Bass]" and that he had handed out the Orange pamphlet "not caring whether the stated matters were true or false". "These are strong findings; in my opinion they are adequately supported by the evidence. Roberts was told that his allegations lacked foundation some eight days before polling day, but he persisted with the thrust of his allegations of impropriety. Case acknowledged that the plaintiff had been selected because he was a 'soft target'. He could not provide any basis for a belief in the allegations. I reject the submission made on the part of the appellants that they should be treated as having honest beliefs in the relevant respect." Williams J also rejected the appellants' submission "insofar as it would imply that, in the present circumstances, a defence of qualified privilege can be available in the absence of the defendant's honest belief in the truth of the published statement"22. His Honour said, however, that upon the evidence he was "unable to identify any improper purpose attaching to the actions of either defendant and in this respect I would disagree with the conclusion of the trial judge"23. Williams J said24 that the facts were "consistent with the defendants becoming over-enthusiastic in the support of their electoral cause". His Honour said that the appellants did "not appear to have any special desire to hurt the plaintiff otherwise than in terms of his prospects of re-election". Martin J said25 that "the evidence was sufficient to justify the conclusion reached by the learned trial judge that Mr Roberts possessed a dominant motive 20 Roberts and Case v Bass (2000) 78 SASR 302 at 314 [32]. 21 Roberts and Case v Bass (2000) 78 SASR 302 at 314 [33]. 22 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [41]. 23 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [43]. 24 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [44]. 25 Roberts and Case v Bass (2000) 78 SASR 302 at 325-326 [82]. McHugh to injure the plaintiff". His Honour said that the evidence also justified the finding that Roberts had "engaged in a course of conduct over some months which was demonstrative of his ill-will toward the plaintiff". Although Martin J found that the primary concern of Case was to achieve the defeat of the plaintiff at the election, his Honour held that such a purpose "does not amount to malice that would defeat a claim of qualified privilege"26. Martin J also held "that the learned trial judge erred in concluding that Mr Case possessed a dominant motive to injure the plaintiff"27. Nevertheless, his Honour found that Case's defence of qualified privilege failed because he "did not possess an honest belief in the statements or because he published the untrue defamatory matter recklessly, without considering or caring whether it be true or not"28. Martin J said29 that Case had claimed that the Orange pamphlet accorded with his views and knowledge, that he had looked at it and that he thought that it sounded right. However, his Honour said Case did not claim to believe that Bass had previously spent $32,000 of taxpayers' money on overseas travel. Case had placed a different interpretation upon a statement in the Orange pamphlet concerning the spending of $32,000. He had denied that the statement meant that Bass had previously spent $32,000 on overseas travel. In his view, it meant that Bass had previously been qualified to spend that amount on travel and, if elected, he would again qualify to spend the same amount on travel during the period of his tenure. Martin J said that, in the view of the trial judge and all members of the Full Court, Case's interpretation was incorrect. Accordingly, Case did not claim to believe in the truth of the statement as interpreted by the trial judge and the Full Court and was guilty of malice. Qualified privilege The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or Communications made on such occasions are privileged because their making interest receive 26 Roberts and Case v Bass (2000) 78 SASR 302 at 335 [95]. 27 Roberts and Case v Bass (2000) 78 SASR 302 at 336 [100]. 28 Roberts and Case v Bass (2000) 78 SASR 302 at 336 [100]. 29 Roberts and Case v Bass (2000) 78 SASR 302 at 337 [102]. 30 Adam v Ward [1917] AC 309 at 334 per Lord Atkinson. McHugh promotes the welfare of society31. But the privilege is qualified – hence the name qualified privilege – by the condition that the occasion must not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement. The learned trial judge found the occasion of each publication was privileged. In doing so, he applied the principles underlying the statement of the English Court of Appeal32 "that statements contained in the election address of one candidate concerning the opposing candidate, provided they are relevant to the matters which the electors will have to consider in deciding which way they will cast their votes, are entitled to the protection of qualified privilege". However, his Honour held that the publications were not protected by the extended defence of qualified privilege recognised by this Court in Lange33. The learned trial judge did so because he found the conduct of Roberts and Case in publishing the defamatory matter was not reasonable. Freedom of communication and the Constitution In Lange, the Court unanimously held that freedom of communication on matters of government and politics is an indispensable incident of the system of representative government created by the Constitution34. The Court emphasised35 that "[c]ommunications concerning political or government matters between the electors and the elected representatives, between the electors and the candidates for election and between the electors themselves were central to the system of representative government, as it was understood at federation". Hence, this litigation is concerned with matters at the heart of the constitutional freedom of communication respecting political or government matters. In Lange, the Court pointed out36 that, although the constitutional freedom confers no rights on individuals, it invalidates any statutory rule that is 31 Toogood v Spyring (1834) 1 CM & R 181 at 193 per Parke B [149 ER 1044 at 32 Braddock v Bevins [1948] 1 KB 580 at 590-591. 33 (1997) 189 CLR 520. 34 (1997) 189 CLR 520 at 559. 35 (1997) 189 CLR 520 at 560. 36 (1997) 189 CLR 520 at 560. McHugh inconsistent with the freedom. It also requires that the rules of the common law conform with the Constitution, for "the common law in Australia cannot run counter to constitutional imperatives"37. It is necessary therefore to determine the extent to which, if at all, the common law rules concerning the traditional defence of qualified privilege applicable in this case are consistent with the constitutional freedom of communication. In determining whether a rule of the common law is consistent with the constitutional freedom of communication, two questions have to be answered38. First, does the rule effectively burden the freedom? Second, if so, is the rule reasonably appropriate and adapted to serve a legitimate end compatible with the constitutionally prescribed system of representative and responsible government? If the answer to the second question is "no", the common law rule must yield to the constitutional norm, for the common law's impact on the freedom cannot be greater than that permitted by the constitutional norm. In Lange, the Court held that the law of defamation effectively burdened the constitutional freedom39 and that the law of qualified privilege, as traditionally understood, did not qualify that burden in a way that was consistent with the freedom in respect of governmental and political matters published to the general public. The publication complained of in Lange concerned a television programme broadcast across Australia. Under the common law as previously understood, the law of qualified privilege did not generally recognise an interest or duty to publish defamatory matter to the general public40. Hence, without that privilege, the common law imposed an unreasonable restraint upon the constitutional freedom41. That necessitated the development of the common law as expounded in the balance of the judgment of the Court. Three points in particular should be noted concerning the development of the defence of qualified privilege in Lange. First, in extending the law of qualified privilege to protect publications concerning governmental and political 37 (1997) 189 CLR 520 at 566. 38 (1997) 189 CLR 520 at 567. 39 (1997) 189 CLR 520 at 568. 40 (1997) 189 CLR 520 at 570. It might do so in exceptional circumstances: Adam v Ward [1917] AC 309; Loveday v Sun Newspapers Ltd (1938) 59 CLR 503. 41 (1997) 189 CLR 520 at 571. McHugh matters to mass audiences, the Court imposed as a condition of the extended privilege that the publisher's conduct be reasonable. But the Court emphasised42: "reasonableness of conduct is imported as an element only when the extended category of qualified privilege is invoked to protect a publication that would otherwise be held to have been made to too wide an audience. For example, reasonableness of conduct is not an element of that qualified privilege which protects a member of the public who makes a complaint to a Minister concerning the administration of his or her department. Reasonableness of conduct is an element for the judge to consider only when a publication concerning a government or political matter is made in circumstances that, under the English common law, would have failed to attract a defence of qualified privilege." Second, in Lange43, the Court held that, having regard to the subject matters of government and politics, the motive of causing political damage to the plaintiff or his or her party is not an improper motive that would destroy a defence of qualified privilege. The Court also held that the vigour of an attack or the pungency of a defamatory statement concerning such matters cannot, without more, discharge the plaintiff's onus on the issue of malice. Third, in some respects the Court's development of the law of qualified privilege extended beyond what was required for conformity with the constitutional norm44. The present case concerns publications relating to the record and policies of a candidate for election to State Parliament for the seat of Florey. They were directed to, and generally received by, a limited class of persons − the electors in the seat of Florey. As will appear, the traditional common law defence of qualified privilege protects such publications because the reciprocity of interest required for the traditional defence is present. As will also appear, given the decision in Lange, that privilege will not be lost because the publisher intends to cause political damage to the candidate or his or her party. Nor will the privilege be lost merely because of the vigour of an attack on a candidate for election to Parliament that is contained in a defamatory statement concerning the record and policies of the candidate. Without more, the vigour of the attack is not evidence 42 (1997) 189 CLR 520 at 573. The reference to the English common law is to that inherited in Australia and understood aside from the requirements of the constitutional norm: cf Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 221 per Lord Cooke of Thorndon. 43 (1997) 189 CLR 520 at 574. 44 (1997) 189 CLR 520 at 571. McHugh of improper motive. As pointed out below, the privilege will be lost only if it is used for a purpose other than that for which it is granted − in this case, the communicating of information, arguments, facts and opinions concerning Bass and his policies to the electors of Florey. Thus, although the common law rules of defamation make defamatory statements concerning a candidate for election actionable and impose a burden on an elector's freedom of communication, those rules also protect an elector who uses the occasion for the purpose that gives rise to the constitutional freedom. Hence the burden does not affect what is required to give effect to the constitutional freedom. Accordingly, the second of the two questions posed in Lange is answered by saying that, in the present case, the common law rules governing traditional qualified privilege are reasonably appropriate and adapted to serve a legitimate end compatible with the constitutionally prescribed system of representative and responsible government. As we have indicated, Bass did not appeal against the trial judge's finding that the occasions were privileged. And Roberts did not appeal, and Case did not press his appeal, against the trial judge's findings that the defence of extended qualified privilege did not protect the publications. All parties now wish to depart from the positions that they adopted in the Full Court. In our view, having conducted their cases in the manner that they did in the Full Court, they should not be allowed to depart from the courses they then adopted. Moreover, the holding of the parties to their cases does not cause any injustice to any of the parties. At all stages, including in this Court, it has been assumed that the decision in Braddock v Bevins45 gives effect to the common law of Australia. That assumption was correctly made. In any event, if that decision was contrary to the common law of this country, the common law rules would have to be amended to conform to the Constitution. It is a serious mistake to think that Lange exhaustively defined the constitutional freedom's impact on the law of defamation. Lange dealt with publications to the general public by the general media concerning "government and political matters". It was not concerned with statements made by electors or candidates or those working for a candidate, during an election, to electors in a State electorate, concerning the record and suitability of a candidate for election to a State Parliament. Such statements are at the heart of the freedom of communication protected by the Constitution. They are published to a comparatively small audience, most of whom have an immediate and direct 45 [1948] 1 KB 580 at 590-591. McHugh interest in receiving information, arguments, facts and opinions concerning the candidates and their policies. In that context and constitutional framework, the application of traditional qualified privilege requires a holding that qualified privilege attaches to statements by electors, candidates and their helpers published to the electors of a State electorate on matters relevant to the record and suitability of candidates for the election. Nothing in Lang v Willis46 generally, and nothing in the judgment of Dixon J in that case in particular, requires a contrary finding. All that Dixon J said47 in Lang is that election speeches made to a large audience of unidentified persons are not privileged even though "the speaker deals with matters in which the electors have an interest". Those remarks were made nearly 60 years before this Court recognised the impact that the Constitution has on the law of defamation in respect of governmental and political matters. And the remarks were not directed to statements made by electors, candidates or their helpers to electors in a State electorate concerning the record and suitability of a candidate for election by those electors. Roberts and Case, if held to their cases in the Full Court, will retain the advantage of a finding of qualified privilege. And they are entitled to rely on the impact that the constitutional freedom of communication has on the law of malice in respect of publications concerning political matters that are protected by conventional qualified privilege. As we have pointed out, intentionally causing political damage to the plaintiff or his or her party is not an improper motive where a statement on political matters is protected by conventional qualified privilege. Nor can the vigour of an attack or the pungency of a defamatory statement, without more, be evidence of improper motive in respect of such a statement. Malice An occasion of qualified privilege must not be used for a purpose or motive foreign to the duty or interest that protects the making of the statement. A purpose or motive that is foreign to the occasion and actuates the making of the statement is called express malice. The term "express malice" is used in contrast to presumed or implied malice that at common law arises on proof of a false and defamatory statement. Proof of express malice destroys qualified privilege. Accordingly, for the purpose of that privilege, express malice ("malice") is any improper motive or purpose that induces the defendant to use 46 (1934) 52 CLR 637. 47 (1934) 52 CLR 637 at 667. McHugh the occasion of qualified privilege to defame the plaintiff. In Browne v Dunn48, Lord Herschell LC said that malice "means making use of the occasion for some indirect purpose". Early in the history of the law of qualified privilege – which did not come into the common law until the end of the 18th century – Lord Campbell CJ said that malice was "any indirect motive, other than a sense of duty"49. Similarly, in an action for slander of title, Parke B50 said that "acting maliciously means acting from a bad motive". "If the occasion is privileged", said51 Brett LJ, "it is so for some reason, and the defendant is only entitled to the protection of the privilege if he uses the occasion for that reason." In Horrocks v Lowe52 – the leading English case on malice – Lord Diplock said: "So, the motive with which the defendant on a privileged occasion made a statement defamatory of the plaintiff becomes crucial. The protection might, however, be illusory if the onus lay on him to prove that he was actuated solely by a sense of the relevant duty or a desire to protect the relevant interest. So he is entitled to be protected by the privilege unless some other dominant and improper motive on his part is proved. 'Express malice' is the term of art descriptive of such a motive." Improper motive in making the defamatory publication must not be confused with the defendant's ill-will, knowledge of falsity, recklessness, lack of belief in the defamatory statement, bias, prejudice or any other motive than duty or interest for making the publication. If one of these matters is proved, it usually provides a premise for inferring that the defendant was actuated by an improper motive in making the publication. Indeed, proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive53. But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief 48 (1893) 6 R 67 at 72. 49 Dickson v Earl of Wilton (1859) 1 F & F 419 at 427 [175 ER 790 at 793]. 50 Brook v Rawl (1849) 19 LJ Ex 114 at 115. 51 Clark v Molyneux (1877) 3 QBD 237 at 246. 52 [1975] AC 135 at 149. 53 Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 327 per Jordan CJ, Davidson and Halse Rogers JJ agreeing; Horrocks v Lowe [1975] AC 135 at 149-150 per Lord Diplock. McHugh the defendant was under a in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication54. Even knowledge or a belief that the defamatory statement was false will not destroy the privilege, the communication55. In such cases, the truth of the defamation is not a matter that concerns the defendant, and provides no ground for inferring that the publication was actuated by an improper motive. Thus, a police officer who is bound to report statements concerning other officers to a superior will not lose the protection of the privilege even though he or she knows or believes that the statement is false and defamatory unless the officer falsified the information56. Conversely, even if the defendant believes that the defamatory statement is true, malice will be established by proof that the publication was actuated by a motive foreign to the privileged occasion57. That is because qualified privilege is, and can only be, destroyed by the existence of an improper motive that actuates the publication. legal duty to make If the defendant knew the statement was untrue when he or she made it, it is almost invariably conclusive evidence of malice. That is because a defendant who knowingly publishes false and defamatory material almost certainly has some improper motive for doing so, despite the inability of the plaintiff to identify the motive58. In Barbaro v Amalgamated Television Services Pty Ltd59, 54 Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 327-329 per Jordan CJ, Davidson and Halse Rogers JJ agreeing. 55 Clark v Molyneux (1877) 3 QBD 237 at 244 per Bramwell LJ; Stuart v Bell [1891] 2 QB 341 at 351 per Lindley LJ; British Railway Traffic and Electric Co v The CRC Co and The London County Council [1922] 2 KB 260 at 271 per McCardie J; Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 318 per Jordan CJ, Davidson and Halse Rogers JJ agreeing; Oldfield v Keogh (1941) 41 SR (NSW) 206 at 213-214 per Jordan CJ, Halse Rogers and Street JJ agreeing. 56 Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 335-336 per Jordan CJ, Davidson and Halse Rogers JJ agreeing. 57 Watt v Longsdon [1930] 1 KB 130 at 154-155 per Greer LJ. 58 Clark v Molyneux (1877) 3 QBD 237 at 247 per Brett LJ; Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 329 per Jordan CJ, Davidson and Halse Rogers JJ agreeing. 59 (1985) 1 NSWLR 30 at 51. McHugh Hunt J said that "[i]n some of the older authorities, an absence of honest belief on the part of the defendant is treated merely as some evidence of an indirect motive which alone is said to constitute express malice, but the better view, in my opinion, is to treat the two as different kinds of malice". His Honour cited no authority for this novel proposition. Some years later, in Hanrahan v Ainsworth60, Clarke JA said that, since Horrocks, "it has been accepted that if it is proved that a person has made a defamatory statement without an honest belief in its truth or for a dominant improper purpose ... malice will be made out". The knowledge and experience of Justice Hunt in defamation matters is well recognised. But with great respect to his Honour and Clarke JA, they erred in asserting that lack of honest belief defeated a defence of qualified privilege. There is no basis in principle or authority for treating knowledge of falsity or lack of honest belief as a separate head of, or equivalent to, malice. In the law of qualified privilege, the common law has always regarded malice as the publishing of defamatory material with an improper motive. Knowledge of falsity is "almost conclusive evidence" that the defendant had some improper motive in publishing the material and that it actuated the publication. That judges have treated knowledge of falsity as almost conclusive evidence of malice is no ground, however, for treating it as a separate head of, or equivalent to, malice. In some circumstances, lack of honest belief in what has been published may also give rise to the inference that the matter was published for a motive or purpose that is foreign to the occasion of qualified privilege. Nothing in Lord Diplock's speech in Horrocks61 supports treating the defendant's knowledge or lack of belief as a separate head of, or equivalent to, malice. Indeed, Lord Diplock expressly said62 that, if it is proved that the defendant did not believe that what he or she published was true, it was "generally conclusive evidence" of improper motive. As we have said, malice means a motive for, or a purpose of, defaming the plaintiff that is inconsistent with the duty or interest that protects the occasion of the publication. It is the motive or purpose for which the occasion is used that is ultimately decisive, not the defendant's belief in the truth of the matter. As Cotton LJ said in Clark v Molyneux63: 60 (1990) 22 NSWLR 73 at 102-103. 62 [1975] AC 135 at 149-150. 63 (1877) 3 QBD 237 at 249-250. McHugh "The question is not whether the defendant has done that which other men as men of the world would not have done, or whether the defendant acted in the belief that the statements he made were true, but whether he acted as he did from a desire to discharge his duty." The conceptual difficulties with using lack of honest belief as equivalent to malice have increased since Rules of Court have required plaintiffs to plead the meanings on which they rely even when those meanings are the natural and ordinary meanings of the publication. When the author of a written or oral statement gives evidence, that person is invariably asked whether he or she intended to convey each of the pleaded meanings. If the author denies intending any of those meanings and the tribunal of fact finds that the publication had that meaning, the author is then said to have no honest belief in the defamatory meaning and, relying on Barbaro, that the privilege is destroyed. That is exactly what occurred in the present case in respect of Case. Martin J held that, because Case did not claim to believe in the truth of a statement as interpreted by the trial judge and the Full Court, he was guilty of malice. In Austin v Mirror Newspapers Ltd64, the Judicial Committee had to consider a similar problem in considering the issue of reasonableness under the statutory defence of qualified privilege given by s 22 of the Defamation Act 1974 (NSW). The Judicial Committee held, correctly in our opinion, that an author may have an honest belief in what he or she writes even though the author does not intend the writing to have one of the defamatory meanings found by the jury. Lord Griffiths, giving the Advice of the Committee, said65: "Although the answer to the interrogatory is evidence that can be used in an attempt to defeat a defence of comment it does not follow that it will necessarily defeat the defence of statutory qualified privilege. Words are often capable of more than one meaning, and because the jury may attach to them a defamatory meaning which the writer did not intend, it does not follow that the writer did not honestly believe in the truth of what he wrote and reasonably intended a different meaning to be given to his language. In this case Mr Casey gave evidence and said that he did honestly believe in the truth of what he wrote. The trial judge believed him and the answer to the interrogatory is a wholly insufficient basis to undermine the opinion of the trial judge which the Court of Appeal were free to accept." (Emphasis added) 64 (1985) 3 NSWLR 354. 65 (1985) 3 NSWLR 354 at 362. McHugh These remarks of Lord Griffiths apply where the issue is the malice of the defendant. The defence of qualified privilege would be dramatically curtailed if defendants had to intend and believe in the truth of every meaning that a judge or jury later gave to the publication. The privilege is not curtailed if lack of belief in a particular meaning is merely some evidence from which it may be inferred in some circumstances that the defendant was actuated by an improper motive. Nor is it curtailed if one applies the doctrinally sound view of Cotton LJ66 that the question is not "whether the defendant acted in the belief that the statements he made were true, but whether he acted as he did from a desire to discharge his duty [or interest]". In our opinion, neither lack of honest belief nor knowledge of falsity ipso facto destroys a defence of qualified privilege. But knowledge of falsity is "almost conclusive evidence" of improper motive, except where the defendant is under a legal duty to publish the defamation. In exceptional cases, the sheer recklessness of the defendant in making the defamatory statement, may justify a finding of malice. In other cases, recklessness in combination with other factors may persuade the court that the publication was actuated by malice. In the law of qualified privilege, as in other areas of the law, the defendant's recklessness may be so gross as to constitute wilful blindness, which the law will treat as equivalent to knowledge. "When a person deliberately refrains from making inquiries because he prefers not to have the result, when he wilfully shuts his eyes for fear that he may learn the truth", said this Court in R v Crabbe67, "he may for some purposes be treated as having the knowledge which he deliberately abstained from acquiring." In less extreme cases, recklessness, when present with other factors, may be cogent evidence that the defendant used the occasion for some improper motive. This is particularly so when the recklessness is associated with unreasoning prejudice on the part of the defendant. In Royal Aquarium and Summer and Winter Garden Society v Parkinson68, Lord Esher MR said: "If a person charged with the duty of dealing with other people's rights and interests has allowed his mind to fall into such a state of unreasoning prejudice in regard to the subject-matter that he was reckless whether what 66 Clark v Molyneux (1877) 3 QBD 237 at 249-250. 67 (1985) 156 CLR 464 at 470. 68 [1892] 1 QB 431 at 444. McHugh he stated was true or false, there would be evidence upon which a jury might say that he abused the occasion." Fifteen years earlier, as Brett LJ, Lord Esher MR had said69: "[I]f it be proved that out of anger, or for some other wrong motive, the defendant has stated as true that which he does not know to be true, and he has stated it whether it is true or not, recklessly, by reason of his anger or other motive, the jury may infer that he used the occasion, not for the reason which justifies it, but for the gratification of his anger or other indirect motive." In Lord Diplock's speech in Horrocks70, there are passages that standing alone suggest mere recklessness or indifference to truth and falsity is sufficient to constitute malice. But we do not think that Lord Diplock was intending to change the law, as it was laid down by Lord Esher MR in the above quotations. In fact, in Horrocks Lord Diplock referred71 to Lord Esher MR's judgments in these cases as correctly stating the law. Furthermore, Lord Diplock introduced his discussion of "recklessness" by saying72 that, if the defendant "publishes untrue defamatory matter recklessly, without considering or caring whether it be true or not, he is in this, as in other branches of the law, treated as if he knew it to be false" (emphasis added). This statement makes it clear that Lord Diplock was using the term "reckless" in the sense of "wilful blindness", as explained by this Court in Crabbe73. Further, mere lack of belief in the truth of the communication is not to be treated as if it was equivalent to knowledge of the falsity of the communication and therefore as almost conclusive proof of malice. The cases contain many statements to the effect that the privilege will be lost if the defendant did not honestly believe in the truth of a defamatory statement made on a privileged 69 Clark v Molyneux (1877) 3 QBD 237 at 247. 71 [1975] AC 135 at 152. 72 [1975] AC 135 at 150. 73 (1985) 156 CLR 464 at 470. McHugh occasion74. If those statements mean no more than that qualified privilege is lost when the defendant knows or believes the defamatory statement is false, they are in accord with settled principle and authority. But if they mean that the defendant loses the privilege unless he or she has a positive belief in the truth of the publication, it is not easy to reconcile them with basic principle. They are not reconcilable, for example, with the principle that recklessness as to the truth or falsity of a publication, short of wilful blindness, will not destroy an occasion of qualified privilege unless it appears that the recklessness is accompanied by some other state of mind. A person who is reckless as to whether the statement is true or false has no positive belief in the truth of the statement. Yet as the above statements of Lord Esher MR in Royal Aquarium and Clark show, recklessness, short of wilful blindness, is not enough to destroy the privilege. It must be accompanied by some other state of mind. Where that is so, the recklessness is evidence that the publication was actuated by the accompanying state of mind, be it anger, hatred, bias or unreasoning prejudice. As Jordan CJ pointed out in "All that the Royal Aquarium Case decides is that if a defendant is proved to be affected by a particular prejudice and is proved to have made a defamatory statement on a privileged occasion, not to serve the legitimate purposes of the occasion but to indulge this prejudice, express malice is made out. In such a case, proof of the prejudice may serve both to explain how the defamatory statement came to be made, and also to justify the inference that it was made for the purpose of indulging the prejudice." The proposition that the defendant must have a positive belief in the defamatory imputation is also difficult to apply to the case of a true innuendo. In many – perhaps the great majority of – such cases, an innocent statement is transformed into a defamatory statement by reason of external circumstances known to a recipient or recipients of the innocent statement but unknown to the publisher. If lack of belief in the truth of the defamatory statement defeated the privilege, the publisher would not be protected even though he or she honestly believed in the truth of the innocent statement. The proposition that the defendant must have a positive belief in the defamatory imputation is also inconsistent with the proposition that malice is not 74 Horrocks v Lowe [1975] AC 135 at 150 per Lord Diplock; Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 51 per Hunt J; Hanrahan v Ainsworth (1990) 22 NSWLR 73 at 102-103 per Clarke JA. 75 (1939) 40 SR (NSW) 311 at 323. McHugh proved merely because a person does not intend and therefore does not believe in a defamatory meaning found by the judge or jury76. As Austin77 shows, a person may have an honest belief in what he or she publishes although he or she has no belief in the truth of a defamatory imputation that that person has published. Where malice is the issue, the case for holding that mere lack of belief is not equivalent to knowledge of falsity or malice is overwhelming. That is because the ultimate issue is always whether the publication was made for a purpose foreign to the duty or interest that protects the occasion of the publication, not whether the defendant believed the matter to be true. Moreover, there are many statements in the cases that indicate that it is only knowledge or belief in the falsity of the defamatory statement that will ordinarily be treated as conclusive evidence of an improper motive. In Jenoure v Delmege78, Lord Macnaghten, giving the Advice of the Judicial Committee, said: "The privilege would be worth very little if a person making a communication on a privileged occasion were to be required, in the first place, and as a condition of immunity, to prove affirmatively that he honestly believed the statement to be true. In such a case bona fides is always to be presumed." This statement was made in the context of a decision that the trial judge had wrongly placed the onus on the defendant to prove that he believed the truth of the communication. But it also emphasises that the onus is on the plaintiff to show that the publication was actuated by an improper motive. In White v Mellin79 – an action for injurious falsehood – Lord Herschell LC, after referring to a statement by Lopes LJ that it was actionable to publish, maliciously and without lawful occasion, a false statement disparaging the goods of another, said that it would be necessary to show that the statement was intended to injure the plaintiff and was not published bona fide or was published with knowledge of its falsity. In Shapiro v La Morta80 – another case of injurious falsehood – Lush J said that the publication of a statement which to 76 Austin v Mirror Newspapers Ltd (1985) 3 NSWLR 354 at 362. 77 (1985) 3 NSWLR 354 at 362. 78 [1891] AC 73 at 79. 79 [1895] AC 154 at 160. 80 (1923) 40 TLR 39 at 41. McHugh the defendant's "knowledge is false and calculated to injure is malicious". In the same case on appeal, Atkin LJ said that "a statement made by a man who knows that it is likely to injure and knows that it is false is made maliciously"81. In Godfrey v Henderson82, Jordan CJ referred to the way that the plaintiff in that case might prove malice and said: "He might be able to establish that the defendant, in reflecting on the accuracy of his circular, was in fact animated by some particular illegitimate purpose ... or, without being able to put his finger on any improper purpose, he might be able to show that the defamatory statement was, in whole or part, false to the defendant's knowledge. If he could prove the latter, it would be open to a jury to find that the statement must have been made for some improper purpose." (Emphasis added) In drafting his Defamation Code, Sir Samuel Griffith also took the view that to establish malice – lack of good faith under the Code – the plaintiff must show a belief in the untruth of the defamatory material. In Horrocks, Lord Diplock spoke of both a positive belief and a lack of honest belief by the defendant in the truth of the defamation. But it is clear that he was referring to the defendant's knowledge of the falsity of the defamatory material or recklessness in publishing that amounted to wilful blindness. In a key passage that is frequently overlooked, Lord Diplock said (footnotes omitted)83: "So the judge was left with no other material on which to found an inference of malice except the contents of the speech itself, the circumstances in which it was made and, of course, the defendant's own evidence in the witness box. Where such is the case the test of malice is very simple. It was laid down by Lord Esher himself, as Brett LJ, in Clark v Molyneux. It is: has it been proved that the defendant did not honestly believe that what he said was true, that is, was he either aware that it was not true or indifferent to its truth or falsity? In Royal Aquarium and Summer and Winter Garden Society Ltd v Parkinson Lord Esher MR applied the self-same test." (Emphasis added) Thus, when Lord Diplock applied the law of malice to the facts in Horrocks and defined honest belief, he made it clear that the plaintiff had to 81 Shapiro v La Morta (1923) 40 TLR 201 at 203. 82 (1944) 44 SR (NSW) 447 at 452. 83 [1975] AC 135 at 152. McHugh prove that the defendant was aware of the falsity of the publication or so wilfully blind to it that knowledge of its falsity was imputed to him. An earlier passage in Lord Diplock's speech84 also shows that by lack of honest belief, he meant knowledge of falsity: "If it be proved that he did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty or desire to protect his own legitimate interests can justify a man in telling deliberate and injurious falsehoods about another, save in the exceptional case where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person." (Emphasis added) Statements in the cases to the effect that the defendant will lose the protection of the privilege unless he or she had an honest belief in the truth of what that person published must be understood in the light of two matters. First, honesty of purpose is presumed in favour of the defendant. It is for the plaintiff to prove that the defendant did not use the occasion honestly or, more accurately, for a proper purpose. Second, in many – perhaps most – cases, a defendant who has no belief in the truth of what he or she publishes will know or believe that it is untrue. It is understandable therefore that judges will often say that qualified privilege is destroyed when the defendant has no honest belief in the truth of the matter but really mean that it is destroyed when the defendant knew that the matter was false. Indeed, as the quotation that we have just set out shows, Lord Diplock does that very thing in Horrocks85. Lack of honest belief in the law of qualified privilege does not mean lack of belief; it means a belief that the matter is untrue. Because honesty is presumed, the plaintiff has the onus of negativing it. That is to say, the plaintiff must prove that the defendant acted dishonestly by not using the occasion for its proper purpose. Unless that is kept in mind, there is a danger that reference to the honesty of a defendant will reverse the onus of proof. If the tribunal of fact rejects the defendant's evidence that he or she positively believed in the truth of what he or she published, it does not logically follow that the plaintiff has proved that the defendant did not believe in the truth of the publication or had an improper motive. Rejection of the defendant's evidence, combined with other evidence, may lead to the conclusion that the defendant had no belief in the truth of the publication or knew that it was false. But mere 84 Horrocks v Lowe [1975] AC 135 at 149-150. 85 [1975] AC 135 at 149-150. McHugh rejection of the defendant's evidence does not logically and automatically lead to any conclusion as to what his or her state of mind was. "[B]y destroying that evidence you do not prove its opposite."86 When the plaintiff proves that the defendant knew the defamatory matter was false or was reckless to the point of wilful blindness, it will constitute almost conclusive proof that the publication was actuated by malice. A deliberate defamatory falsehood "could not have been for a purpose warranted by any privilege; and hence it is unnecessary to determine what the exact purpose was in order to ascertain whether the privilege has been lost for the particular defamatory statement which has been proved to be wilfully false"87. When the plaintiff can only prove that the defendant lacked a belief in the truth of the defamatory material, however, it will be no more than evidence that may give rise with other evidence to an inference that the publication was actuated by malice. In some cases, proof of lack of belief will not even be evidence from which an inference of malice can be drawn. Thus, the circumstances of the case may be such that the defendant is entitled to communicate defamatory matter even though he or she has no belief in its truth. In Clark88, Bramwell LJ said "a person may honestly make on a particular occasion a defamatory statement without believing it to be true; because the statement may be of such a character that on that occasion it may be proper to communicate it to a particular person who ought to be informed of it". This passage was approved by Lindley LJ in Stuart v Bell89 where the Court of Appeal held that the defendant had a social or moral, but not legal, duty to report to the plaintiff's employer that the plaintiff was suspected of stealing. In a case like the present, persons handing out how-to-vote cards may honestly believe that they are informing the electorate of their candidate's views and may not themselves have thought about whether much or any of the content of the how-to-vote card is true. Such persons will not lose the protection of the occasion because they had no positive belief in the truth of any defamatory matter in the how-to-vote card. It is proper for them to communicate their 86 Hobbs v Tinling [1929] 2 KB 1 at 21 per Scrutton LJ. 87 Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 329 per Jordan CJ, Davidson and 88 (1877) 3 QBD 237 at 244. 89 [1891] 2 QB 341 at 351. McHugh candidate's views to voters, and they do not lose their protection because, although acting for the purpose of the privileged occasion, they had no positive belief in the truth of the defamatory matter. If the common law did hold that lack of belief or lack of honest belief in the truth of the defamatory matter was equivalent to knowledge of falsity or malice, it would have to be developed in respect of electoral communications to accord with the freedom of communication in respect of political matters that the Constitution protects. Earlier in these reasons we explained that, in determining whether the common law rules concerning qualified privilege in respect of electoral communications are consistent with that freedom, Lange90 requires two questions to be answered. First, do those rules effectively burden the constitutional implication of freedom of communication on political matters? Second, if so, are those rules reasonably appropriate and adapted to serve a legitimate end that is compatible with the constitutionally prescribed system of representative and responsible government? The first question posed by Lange is answered affirmatively in cases like the present because the law of defamation by providing for damages for defamatory publications has a chilling effect on freedom of communication on political matters. The second question would have to be answered negatively if lack of belief or lack of honest belief in defamatory electoral material would destroy a defence of qualified privilege. The Australian electoral process works, and can only effectively work, with the help of the thousands of volunteers who at election time, and sometimes earlier, provide services to the candidates and political parties. Distributing election material in the form of posters, pamphlets and how-to-vote cards is one of the most important of those services. For the purpose of the law of defamation, these volunteers are publishers who are as legally responsible for the material they distribute as its author. In many cases, the volunteers although honestly believing that they are providing information on electoral matters to the voters in the electorate, have no positive belief in the truth of what they are distributing. Often enough, they are persons, brought in from outside the electorate, to assist a candidate or political party and are unfamiliar with the particular issues that concern the electorate. In many cases, they will be handing out material they have not even read. To hold such persons liable in damages for untrue defamatory statements in that material because they had no positive belief in their truth would be to impose a burden that is incompatible with the constitutional freedom of communication. If, contrary to our view, the common law made a positive belief in the truth of electoral statements a condition of the defence of qualified privilege, it would be inconsistent with the 90 (1997) 189 CLR 520 at 567. McHugh Constitution and would have to be developed to accord with the Constitution's requirements. Carelessness of expression or carelessness in making a defamatory statement never provides a ground for inferring malice91. The law of qualified privilege requires the defendant to use the occasion honestly in the sense of using it for a proper purpose; but it imposes no requirement that the defendant use the occasion carefully. Even irrationality, stupidity or refusal to face facts concerning the plaintiff is not conclusive proof of malice92 although in "an extreme" case it may be evidence of it93. And mere failure to make inquiries94 or apologise95 or correct the untruth when discovered96 is not evidence of malice. Finally, in considering whether the plaintiff has proved malice, it is necessary that the plaintiff not only prove that an improper motive existed but that it was the dominant reason for the publication. In Godfrey97, Jordan CJ said: "It is of the utmost importance in the case of statements made on occasions of qualified privilege, that the privilege which the law casts around such statements should not be nullified by a readiness to treat as evidence of express malice destroying the privilege anything which does not definitely, and as a matter of commonsense, point to the actual existence of some express malice which was really operative in the making of the statement; and substantial evidence is required, not surmise 91 Clark v Molyneux (1877) 3 QBD 237 at 244 per Bramwell LJ; Moore v Canadian Pacific Steamship Co [1945] 1 All ER 128 at 133 per Lynskey J. 92 Clark v Molyneux (1877) 3 QBD 237 at 249 per Cotton LJ; Horrocks v Lowe [1975] AC 135 at 150 per Lord Diplock. 93 Turner v Metro-Goldwyn-Mayer Pictures Ltd [1950] 1 All ER 449 at 463 per Lord Porter. 94 Clark v Molyneux (1877) 3 QBD 237 at 249 per Brett LJ. 95 Horrocks v Lowe [1975] AC 135 at 152 per Lord Diplock. 96 Howe and McColough v Lees (1910) 11 CLR 361 at 372 per Griffith CJ, Barton J agreeing. 97 (1944) 44 SR (NSW) 447 at 454. McHugh or a mere scintilla: Oldfield v Keogh98. Any other approach to the subject would in substance destroy the doctrine of qualified privilege altogether." The trial judge and the Full Court erred in their findings of malice The trial judge The learned trial judge, accepting the view of Hunt J in Barbaro99, said that "an absence of a genuine belief in the truth of the defamatory statement" as well as improper motive constitutes malice. For the reasons that we have given, Lowrie DCJ erred in so doing. Neither the learned trial judge nor the members of the Full Court identified the nature of the duty or interest of the defendants and the recipients of the publication that gave rise to the qualified privilege. Without doing so, they could not correctly determine whether the publications were made for a purpose foreign to the occasion that gave them qualified privilege. As we have pointed out, the publications were protected by qualified privilege because they were publications made by an elector during an election, to electors in a State electorate, and by a person handing out how-to-vote cards, concerning the record and suitability of a candidate for election to a State Parliament. They put information, arguments, facts, and opinions concerning Bass, a candidate for election, and his policies. Neither defendant could be guilty of malice in respect of a publication unless he had used the occasion of publishing for some purpose foreign to the occasion. That is to say, used it for some purpose other than putting information, arguments, facts and opinions concerning Bass and his policies. It need hardly be said that proof that Roberts and Case put untrue matter to the electorate did not itself establish a purpose foreign to that occasion. The learned trial judge found that the "main intention" of the defendants was "to injure [Bass] and to lower his estimation in his fellow persons by making them think less of him". His Honour said all three publications were part of a strategy designed to have this effect and "this is not a proper motive". Lowrie DCJ said that Roberts used "any area of apparent criticism of [Bass] to injure his reputation and cause him to lose office". His Honour went on to say that "[t]his purpose is not a proper motive". Lowrie DCJ also made similar findings against Case. Publishing material with the intention of injuring a candidate's political reputation and causing him or her to lose office is central to the electoral and 98 (1941) 41 SR (NSW) 206 at 214. 99 (1985) 1 NSWLR 30 at 50-51. McHugh democratic process. There is nothing improper about publishing relevant material with such a motive as long as the defendant is using the occasion to express his or her views about a candidate for election. That purpose is not foreign to the occasion that gives qualified privilege to such publications. The Constitution's protection of freedom of communication on political and governmental matters would be of little effect if an elector was liable in damages because he or she had the motive of injuring the political reputation of a candidate for election to the legislature. The imputations made against Bass concerned the performance of his duties as a parliamentarian. The publications were aimed at lowering his reputation as a politician and parliamentarian. They were not directed to matters foreign to his political or parliamentary reputation. Roberts' and Case's motives in publishing the material, as identified by the trial judge, were not improper motives given the occasion of the publication. The learned trial judge erred in finding that Roberts and Case were guilty of malice because they sought to injure the reputation of Bass and cause him to lose office. Williams and Martin JJ were correct, therefore, in holding that the intention to defeat Bass at the election was not an improper purpose or motive. The learned trial judge also held that the evidence established "that the defendants published the defamatory material without 'considering or caring whether it be true or not'". His Honour said that Roberts "admitted to having prepared the publications in spite of his indifference to the truth of their content". His Honour gave as an example that, "when asked whether it had occurred to him that [Bass] might not have been a member of the frequent flyer program in preparing the [Free Travel Times] pamphlet, [Roberts'] answer was that 'it was not something I drew my mind to'". But to hold this answer to be recklessness in any relevant sense would be to equate it with carelessness or failure to check material. Roberts' evidence shows that he did not seek independent confirmation for his beliefs, that he jumped to conclusions from inadequate material and that his reasoning was often illogical. But these matters are insufficient to justify a finding that he used the occasion for an improper purpose when he published the pamphlet. In Horrocks, Lord Diplock said100: "In ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by a rigorous search for all available evidence and a judicious assessment of its probative value. In greater or in less degree according to their temperaments, their training, their intelligence, they are swayed by prejudice, rely on intuition instead of reasoning, leap to conclusions on inadequate evidence and fail to recognise the cogency of material which might cast doubt on the 100 [1975] AC 135 at 150. McHugh validity of the conclusions they reach. But despite the imperfection of the mental process by which the belief is arrived at it may still be 'honest,' that is, a positive belief that the conclusions they have reached are true. The law demands no more." Cases where recklessness alone will defeat an occasion of qualified privilege are likely to be rare. Usually, they will be cases where the defendant had or was given information which gave a reason for supposing that what the defendant intended to publish was false but the defendant nevertheless published the matter without further inquiry or investigation. Failure to inquire is not evidence of recklessness unless the defendant had some indication that what he or she was about to publish might not be true. When the law concerning malice is properly understood, no basis exists for finding that Roberts published the defamatory material in the Nauru postcard or the Orange pamphlet without "considering or caring whether it be true or not". None of the matters referred to by counsel for Bass come close to establishing recklessness in the sense of wilful blindness. They show, for example, that Roberts concluded that Bass' trip to Nauru "was a holiday" and that his constituents were not going to benefit from him attending the Nauru Speakers' Conference. Having formed that view, Roberts made no "attempt to find out in more detail what was going to occur at the conference and what role Mr Bass would play at the conference". Nor did he "particularly care because it was typical of somebody who'd gone over the top in relation to their role and it was just yet another abrogation of responsibility to the constituents who were paying him". This evidence indicates that Roberts, having formed an adverse view about the nature of Bass' trip and representation of his constituents, leapt to a conclusion on inadequate evidence and thought that the details of what Bass was going to do on this "junket" were immaterial. Roberts' reasoning process is open to serious criticism and led him to an unfair conclusion concerning the nature of Bass' trip to Nauru. But no matter how irrational his reasoning might seem to a judge, it is unfortunately typical of "reasoning" that is often found in political discussions. If Roberts' conduct on this matter was held to constitute malice sufficient to destroy the privilege of communicating electoral material to voters, the freedom of communication protected by the Constitution would be little more than a grand idea of no practical importance. After reading Roberts' evidence and the trial judge's discussion of it, and making full allowance for his Honour's advantage in seeing and hearing Roberts give evidence, we see no ground for concluding that Roberts was guilty of malice in distributing the Nauru postcard or the Orange pamphlet, if those documents are considered independently of the Free Travel Times pamphlet. There is no evidence on which it could be found that he was wilfully blind to the truth or falsity of their defamatory contents or published them for a purpose foreign to the McHugh occasion. The actions of Roberts in respect of those documents were, as Williams J said in the Full Court, "consistent with [him] becoming over- enthusiastic in the support of [his] electoral cause"101. Roberts' conduct in publishing the Free Travel Times pamphlet is in a different category. First, he and his helpers fabricated Bass' Ansett Frequent Flyer Statement. Although the trial judge found that publication of this fabricated document also contained defamatory imputations, we doubt that this was so. But for present purposes, that is a matter of no moment. Knowingly publishing untrue non-defamatory statements to justify a defamatory statement will ordinarily be evidence that the defendant was using the occasion for an improper purpose. In Mowlds102, Jordan CJ pointed out: "Now, the authorities show, if authority be needed, that evidence that a defamatory statement made on a privileged occasion was false to the knowledge of the person who made it is, save in certain exceptional circumstances, evidence that it must have been made for some improper purpose. We think also that evidence that a person on a privileged occasion, in the course of justifying a former line of conduct, has made statements defamatory of the plaintiff, and has also made statements which he knew to be untrue for the purpose of justification, supplies evidence that he was using the occasion for some improper purpose." Thus, even if the Ansett Frequent Flyer Statement did not itself give rise to any defamatory imputations, Roberts' conduct in fabricating that statement to justify the other imputations in the Free Travel Times pamphlet supplies evidence from which it might be inferred that he used the occasion for an improper purpose. This evidence is further supported by the trial judge's finding that he allowed the Free Travel Times pamphlet to continue to be distributed after receiving a complaint from Bass' solicitors and the Electoral Commissioner. Unfortunately, however, the trial judge did not determine whether the fabrication of the Ansett Frequent Flyer Statement and the continued distribution showed that Roberts was not using the occasion to provide the electors with information concerning Bass but was using it for some unidentified purpose, foreign to the occasion. Moreover, if the learned trial judge had found that Roberts was actuated by malice in respect of the Free Travel Times pamphlet, he might have been able to use that finding as evidence of malice in respect of the 101 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [44]. 102 (1939) 40 SR (NSW) 311 at 327. McHugh earlier and later publications. However, before doing so, the trial judge would have to have taken into account Chief Justice Jordan's warnings in Mowlds103: "Where, however, the 'express malice' relied on is not malice in the colloquial sense but malice in the technical sense of a desire to promote some object not warranted by the privileged occasion, it does not follow that the proof that the defendant desired to promote the object on some other occasion supplies evidence that he desired to promote it on the privileged occasion. There must be something which justifies the inference that the desire existed on the privileged occasion also and was then indulged. Much less would it be evidence of express malice on some particular privileged occasion that the defendant had been guilty of a different form of express malice on another privileged occasion in a case in which independent personal illwill was not established. Suppose, for example, that in a libel action it is complained that the defendant on each of two privileged occasions made a statement which was defamatory of the plaintiff but was prima facie covered by the privilege. No evidence is given of any personal animus against the plaintiff on either occasion. Evidence is, however, tendered which would justify the inference that on the first occasion the defendant made the statement for the illegitimate purpose of injuring a particular religion, and on the second occasion for the illegitimate purpose of discrediting a particular political doctrine. It is clear that this would supply evidence of the existence of express malice on each occasion. But the malice proved on each occasion would supply no evidence of malice on the other. In order that malice on one occasion may supply evidence of malice on another, the malice proved must be a desire to serve a purpose or to indulge a feeling which may fairly be inferred to have existed on the other occasion also and to have animated the defendant on that occasion also." The learned trial judge also found that Case was "motivated by actual malice" although his actions "were not as recklessly blatant as that of" Roberts. His Honour said "that he was so imbued with the purported ideal of public ownership of the administration of the Modbury Hospital that there was a complete failure on his part to enquire into any relevant factual issues with the result that his reasoning on various topics was patently flawed". But failure to inquire is not evidence of malice or recklessness in publishing unless the publisher has been put on notice that his or her views may be wrong. In Horrocks, Lord Diplock pointed out104 that "indifference to the truth of what he 103 (1939) 40 SR (NSW) 311 at 328-329. 104 [1975] AC 135 at 150. McHugh publishes is not to be equated with carelessness, impulsiveness or irrationality". Case's reasoning and conclusions fell short of what is to be expected of a judge, lawyer or scientist. But the evidence provides no ground for concluding that he was recklessly indifferent to the truth of what he published. On the contrary, he appears to have held a strong belief that the statements in the Orange pamphlet were true. His evidence indicates that he strongly believed that what was being said about Bass was justified. It is not to the point that his premises did not justify his conclusions or that he failed to inquire into the matter more deeply. Counsel for Bass pointed to evidence of Case where he said that he had "no idea" and "didn't have a clue" how much Bass had spent on overseas travel. But these answers were given in a context where Case had said that what Bass had spent was not an issue for him. Case said: "The issue was that he was qualified to spend $32,000 as an MP in his previous time and he would be qualified again to spend it. I mean as I say, the issue of how much he actually spent I didn't have a clue. I just knew he'd been on numerous overseas trips. In fact, as it turns out, numerous trips." Case's answers were related to what he claimed was the issue raised by the Orange pamphlet. The meaning that he put on the words "Qualify to spend another $32,000 of taxpayers' money on overseas travel" in that pamphlet was rejected by Lowrie DCJ and by the Full Court. But this does not mean that he believed that what he published was untrue or was recklessly indifferent to the truth in not having a "clue" as to what Bass had spent on overseas travel. The various errors in the reasoning of the learned trial judge mean that his findings on malice cannot stand. Moreover, there was no evidence upon which the trial judge could find malice on the part of Case. Nor was there evidence that would support most of the findings of the trial judge in respect of Roberts. In so far as there was evidence of malice on the part of Roberts, the flaws in the learned trial judge's reasoning mean that the matter will have to go for a new trial unless the reasons of the Full Court have corrected those errors. The Full Court Unfortunately, many of the errors found in the judgment of the trial judge also affect the reasoning of the members of the Full Court. Prior J entirely accepted the findings of the trial judge on malice. Williams J also upheld most of these findings of Lowrie DCJ although he set aside one adverse finding by the learned trial judge. Consequently, their Honours' findings of malice must be set aside. Martin J also accepted important findings of the trial judge in respect of Roberts. Those findings also must be set aside. So must his Honour's findings McHugh that Case lost the protection of qualified privilege because he "did not possess an honest belief in the statements or because he published the untrue defamatory matter recklessly, without considering or caring whether it be true or not"105. When the law of malice is correctly applied, there was no evidence upon which it could be found that Case was actuated to achieve any purpose foreign to the occasion. Orders The appeals should be allowed. The orders of the Full Court should be set aside. In lieu thereof, the appeal of Case to that Court should be allowed, the verdict of the trial judge should be set aside and a verdict entered in favour of Case. The appeal of Roberts to the Full Court should also be allowed, the verdict against him should be set aside and a new trial of the action against him should be ordered. The respondent should pay the costs of this appeal, the appeal to the Full Court and Case's costs in the District Court. Otherwise, the costs of the first trial should abide the result of the new trial. 105 Roberts and Case v Bass (2000) 78 SASR 302 at 336 [100]. Kirby 121 KIRBY J. In Lange v Atkinson106, the Privy Council remarked upon the "high content of judicial policy in the solution of the issue raised by [the] appeal" which (as in this case) concerned the law of qualified privilege. Their Lordships observed that "different solutions may be reached in different jurisdictions without any faulty reasoning or misconception", having regard to the "necessary value judgment" involved in defining and applying the defence107. Nearly 70 years earlier, Evatt J in this Court affirmed that this area of the common law is guided by the "common convenience and welfare of society"108. Because what is regarded as "politic or right"109 will depend upon "a close consideration of public policy or public expediency, including a careful weighing of the good and evil likely to flow from the recognition … of the defence of qualified privilege"110, it is scarcely surprising that the scope of qualified privilege at common law and the occasions when it may be enjoyed and lost have varied significantly since the defence was first developed. In Australia, as elsewhere, a number of considerations have affected such questions. They include the creation of a distinct society with its own values, the changing nature and technology of communications through which those values are commonly expressed111 and the enactment of particular laws that respond to such changes112. Transcending all of these factors is the Constitution, establishing a particular kind of government for the nation. In the constitutional prescription are important implications about the conduct of the representative democracy, federal and State, for which the Constitution provides113. 106 [2000] 1 NZLR 257 (PC) at 263. 107 [2000] 1 NZLR 257 (PC) at 263 referring to Australian Consolidated Press Ltd v Uren (1967) 117 CLR 221 at 241; [1969] 1 AC 590 at 644. 108 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632 at 654-658 citing Toogood v Spyring (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1050]. 109 Marlborough v Marlborough [1901] 1 Ch 165 at 172 per Vaughan Williams LJ. 110 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632 at 655 per Evatt J. 111 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 76 ALJR 1 at 37 [172]; 185 ALR 1 at 50; Australian Law Reform Commission, Unfair Publication: Defamation and privacy, Report No 11 (1979) at 23-25 [38]-[41]. 112 eg Broadcasting Services Act 1992 (Cth), s 216B and Sched 5 ("Online services"). 113 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. See also Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Stephens v West (Footnote continues on next page) Kirby The adaptation of the law of defamation to a constitutional text (and, in particular, of that part of that law that deals with qualified privilege and the associated issue of malice) is not a problem that has confronted judges in England or New Zealand, at least until recently114. In contrast, such an adjustment of the common law of defamation had long been recognised in the United States of America115. At least since the Canadian Charter of Rights and Freedoms116, it has been recognised in Canada117. Until a decade ago, except in the most general way, it was not recognised as relevant in Australia118. Since that time, it has become apparent that freedom of communication concerning political or governmental matters is necessary if the Australian people, as electors, are to exercise a free and informed choice in the manner contemplated by the Constitution. Australian Newspapers Ltd (1994) 182 CLR 211; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 76 ALJR 1; 185 ALR 1. 114 Decisions in England are now affected by the Convention for the Protection of Human Rights and Fundamental Freedoms done at Rome on 4 November 1950, ETS No 005, Art 10 incorporated into domestic law by the Human Rights Act 1998 (UK). See Reynolds v Times Newspapers Ltd [2001] 2 AC 127. Decisions in New Zealand are affected by the New Zealand Bill of Rights Act 1990 (NZ) affirming New Zealand's commitment to the International Covenant on Civil and Political Rights done at New York on 19 December 1966, ATS 1980 No 23: see Burrows, "Freedom of the Press under the New Zealand Bill of Rights Act 1990", in Joseph (ed), Essays on the Constitution (1995) 286. 115 New York Times Co v Sullivan 376 US 254 at 285-286 (1964); Gertz v Robert Welch Inc 418 US 323 (1974); Harte-Hanks Communications Inc v Connaughton 491 US 657 at 685-687 (1989). 116 This forms Pt I of the Constitution Act 1982 (Can). A freedom of speech was recognised as early as 1960: see Canadian Bill of Rights 1960, c 44, s 1(d). 117 Edmonton Journal v Alberta (Attorney General) [1989] 2 SCR 1326; Hill v Church of Scientology of Toronto [1995] 2 SCR 1130. Public discussion of political concerns as an aspect of the Constitution was referred to in earlier cases such as Re Alberta Statutes [1938] SCR 100 at 132-133 per Duff CJ. 118 Before Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211. The implied constitutional freedom of political communication was foreshadowed by Murphy J in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 88. Kirby It is against this background of evolving legal understandings that these appeals from the Full Court of the Supreme Court of South Australia119 must be approached. In such changing circumstances, it is unsurprising that the parties, and the courts below, should have experienced a measure of difficulty in identifying the legal principles that were applicable to the case. The same problems have arisen in this Court. As I approach these appeals, this Court has the duty to clarify the applicable law – not only for the resolution of the present dispute but also to afford guidance for cases that will present similar questions in the future. The facts In Chakravarti v Advertiser Newspapers Ltd120, I remarked that the law of defamation was unnecessarily complicated. The present case, reduced to its essentials, should have been relatively straightforward. Unfortunately, it did not prove to be so. The dispute concerns the publication of three printed documents (the Nauru postcard; the pamphlet "Free Travel Times"; and the how to vote card). Each document concerned Mr Rodney Bass (the respondent), then a member of the South Australian Parliament, standing for re-election. Each of the publications was created by the first appellant, Mr Geoffrey Roberts. He authorised each for the purposes of the applicable South Australian electoral The second appellant, Mr Kenneth Case, was connected directly only with the third publication, namely the how to vote card (or more accurately "how not to vote", because that card propounded on both sides the simple message "When you vote, put Sam Bass last"). Mr Case's function was to hand the card to electors as they came to cast their votes in the State general election held on 11 October 1997. In the result, Mr Bass was narrowly defeated. After the poll, Mr Roberts was prosecuted by the Electoral Commissioner for an offence against electoral law, by publishing electoral material that was factually false122. Eventually, he pleaded guilty to that offence. He was convicted and punished. These appeals concern the civil consequences of what occurred. 119 Roberts and Case v Bass (2000) 78 SASR 302. 120 (1998) 193 CLR 519 at 561 [106]. 121 Electoral Act 1985 (SA), ss 112 and 116. 122 Electoral Act 1985 (SA), s 113. Kirby The issues Narrowing the contest: Various contests raised by the appellants at trial and on appeal, such as the defence of fair comment and the defamatory meanings attributed to the words published, are not before this Court. Nor are we concerned with the so-called Polly Peck123 principle or the fact that, in the case of the judgment against Mr Roberts, the damages were increased by the Full Court. The excision of the foregoing matters confines the issue for our decision to the application of the defence of qualified privilege to the matters found to have been defamatory. Each of the publications having occurred in South Australia, it was common ground that the answer was to be found by elucidating the requirements of the common law. The proceedings were conducted on the footing that there was no relevant State legislation. However, in light of the Australian cases over the past decade, the common law with respect to qualified privilege must now, where relevant, be considered with close attention to the The applicable legal principles mould themselves to the Constitution. constitutional requirements. They may not be inconsistent with (nor impose an impermissible burden upon) the constitutional presuppositions124. Nor can they overlook the Constitution in a case to which it is relevant. In my opinion, in such a case, the Constitution, being the nation's supreme law, is not to be trifled with or ignored. The pleadings: In order to understand the course that these proceedings took before they reached this Court, it is crucial to appreciate the way in which the freedom of communication concerning political or governmental matters, explained in Lange v Australian Broadcasting Corporation125 and in earlier cases126, was treated in relation to the appellants' defences of qualified privilege. 123 Polly Peck (Holdings) Plc v Trelford [1986] QB 1000. 124 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562-566; cf Lipohar v The Queen (1999) 200 CLR 485 at 557 [179]-[180]; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 534-535 [66]-[71], 557 [142]; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 76 ALJR 1 at 44 [206]-[210]; 185 ALR 1 at 60-61. 125 (1997) 189 CLR 520. 126 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211. Kirby In their respective defences in the District Court, the appellants did not raise two separate defences, such as the so-called "traditional" or "ordinary" qualified privilege and "extended" or "constitutional" qualified privilege. They simply pleaded, in answer to the whole of Mr Bass' statement of claim, that the documentary publications complained of by him were "published on occasions of qualified privilege". Their defences went on to say that each publication was on "a matter concerning government and political matters affecting the electors … and the choice for electors at an election". In his replies, Mr Bass pleaded that the defence was not available as the publications had been made with actual malice. Further, he pleaded that the appellants had no reasonable grounds for believing that the imputations complained of were true and had taken no proper steps to verify the accuracy of the imputations; that they well knew that the imputations were untrue; that they failed to take steps to seek a response from Mr Bass; and that they failed to publish a retraction. The trial: At trial, on the issue of qualified privilege, the primary judge severed what he described as "the traditional head of qualified privilege"127 from what he described as "the extended form of qualified privilege"128. In effect, he treated them as separate and "alternative" defences of qualified privilege. He first held that each of the publications complained of was made on a privileged occasion for the purposes of "traditional" qualified privilege129. However, he concluded that Mr Bass had established malice on the part of each of the appellants so that, according to the approach of the common law, their defences of "traditional" qualified privilege failed in respect of both appellants and each of the three publications. Reflecting what he inferred to be reliance by the appellants on the principles established by Lange, the primary judge went on to deal with what he described as the "extended form of qualified privilege". He concluded that it could not, in the context of political and governmental discussion, be defeated merely because such discussion had the motive of causing political damage to an opponent130. He held that the "most important difference" between the "extended" privilege and "traditional" qualified privilege was that the former 127 Bass v Roberts & Case unreported, District Court of South Australia, 24 March 2000 ("reasons of the primary judge") at [243] per Lowrie DCJ. 128 Reasons of the primary judge at [261]. 129 Reasons of the primary judge at [249]. 130 Reasons of the primary judge at [263]. Kirby required that the publication be "reasonable" in all of the circumstances131. By analysis of the facts surrounding each of the publications, and by findings that he made in relation to the conduct of each of the appellants, the primary judge decided that their actions had not been reasonable. Each of the appellants therefore failed at trial in their defences of qualified privilege. Common ground: Although they had failed at trial, the appellants had at least succeeded in establishing that their respective publications had occurred on occasions of qualified privilege. Accordingly, when they appealed to the Full Court, it was natural that, in their joint notice of appeal, they should raise no challenge to the conclusion that they were each entitled to the benefit of qualified privilege. Before the Full Court, Mr Bass did not file a notice of contention seeking to dispute the finding that the publications had occurred on occasions that attracted qualified privilege. His contest lay elsewhere, principally in connection with his argument that the qualified privilege had been lost by malice on the part of each of the appellants. Mr Bass did present a cross-appeal to the Full Court. However, this was confined to the issue of damages. It was common ground in the Full Court that all of the appellants' publications attracted qualified privilege, subject to that defence being lost by proof of malice132. Even in argument before this Court, no challenge was made on behalf of Mr Bass to the contention that each of the publications with which the appellants were concerned was made on an occasion of qualified privilege at common law as that privilege has hitherto been understood. Mr Bass repeatedly disavowed any challenge to that finding. His counsel declined to take up a suggestion that the audience to whom each of the publications in question had been made was too wide to attract "traditional" common law qualified privilege. That hypothesis had been raised with counsel upon the basis that the "essential"133 reciprocity between a legal, social or moral duty or personal interest of the publisher and the corresponding interest of the audience to receive the publication might have been absent in the circumstances of the publications in this case. 131 Reasons of the primary judge at [264]. 132 Roberts and Case v Bass (2000) 78 SASR 302 at 315 [36] per Williams J, 322-323 133 Adam v Ward [1917] AC 309 at 334. Kirby The decision of the Full Court In the Full Court, the judges divided in their treatment of the issue of qualified privilege. In his reasons, Prior J accepted the findings of the primary judge that Mr Roberts was a person with an improper motive and with no honest belief in the truth of what he had published. Mr Case "was properly found to be recklessly indifferent to the truth or falsity of the material he published"134. In these circumstances, Prior J concluded that the defence of qualified privilege failed on the footing that neither appellant had an honest belief in the truth of what was published. This represented an attempted finding that each appellant had, in law, acted with malice in publishing the documents complained of. It was not a finding that qualified privilege was unavailable to the occasions involved. Prior J also agreed that both "defences" of qualified privilege failed, but did not address the "extended" privilege, nor did he address the application of the Constitution to the common law of qualified privilege or the associated issue of malice. The second judge in the Full Court, Williams J, likewise gave no separate explicit attention to the implications of the Constitution for the qualified privilege, which each of the appellants was entitled to invoke. However, he did note that, in relation to publications made in the context of an election, "an interest or duty of informing the electorate … of a candidate" is sufficient to found the privilege and that the motive of injuring Mr Bass' electoral prospects was not an improper one135. His Honour quoted the finding of the primary judge that the appellants "did not believe the imputations to be true"136. However, in his opinion, the establishment of an absence of honest belief was determinative of the presence of malice137. In relation to motive, he disagreed with the conclusions of the primary judge. So far as he was concerned, the facts were consistent with the appellants' becoming "over-enthusiastic in the support of their electoral cause". His Honour specifically rejected the conclusion that the appellants had any "special desire to hurt [Mr Bass] otherwise than in terms of his prospects of re-election"138. 134 Roberts and Case v Bass (2000) 78 SASR 302 at 304-305 [2]. 135 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [44]. 136 In the text of the primary judge's reasons it appears as "untrue" but it was common ground that the word should be read as "true" and the Full Court so read that passage: Roberts and Case v Bass (2000) 78 SASR 302 at 314 [32]. 137 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [41]. 138 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [43]-[44]. Kirby The third judge in the Full Court, Martin J, also gave no attention to the significance of the Constitution for the content of qualified privilege at common law, invoked for the appellants. He agreed that the publications had occurred on occasions of privilege139. But in respect of Mr Roberts, he concluded that the finding of a dominant motive to injure Mr Bass was correct140. So far as Mr Case was concerned, he accepted that his primary intention had been to achieve the electoral defeat of Mr Bass. Such a purpose, Martin J held, "does not amount to malice that would defeat a claim of qualified privilege"141. Upon the basis of his analysis of the evidence, Martin J would not, therefore, have drawn the conclusion that Mr Case possessed "a dominant intention to injure" Mr Bass142. Nevertheless, he deferred to what he took to be the primary judge's advantages in judging that Mr Case lacked an honest belief in the truth of the how to vote card that he had handed to electors. He regarded as determinative for Mr Case's liability for defamation the fact that he had acted recklessly in publishing that document, indifferent to the truth or otherwise of its contents143. Clearly, the failure of the Full Court to deal with the constitutional consequences for qualified privilege at common law can be traced to an indication which the appellants' then counsel gave to that Court that the appellants did not pursue their appeal against the primary judge's rejection of the constitutional "defence"144. Yet the question remains whether, in discharging its function of finding, and applying, the relevant principles of the common law, notwithstanding the common ground of all of the parties and the concession for the appellants just mentioned, it was correct for the Full Court (any more than it would be for this Court) to ignore the impact of the Constitution upon the common law applicable to this case. Courts cannot apply erroneous law by concession Inadmissibility of erroneous legal concessions: Like the courts of South Australia, this Court is not in a position to accept an incorrect understanding of the law. It cannot accept an agreement of the parties that does not reflect the binding law of qualified privilege, moulded to the Constitution where it applies. 139 Roberts and Case v Bass (2000) 78 SASR 302 at 322 [76]. 140 Roberts and Case v Bass (2000) 78 SASR 302 at 325-326 [82]. 141 Roberts and Case v Bass (2000) 78 SASR 302 at 335 [95]. 142 Roberts and Case v Bass (2000) 78 SASR 302 at 336 [98]. 143 Roberts and Case v Bass (2000) 78 SASR 302 at 337 [103]. 144 See reasons of Callinan J at [272]-[273]. Kirby The Constitution cannot be ignored as a result of mistakes or misunderstandings of the parties or judges in earlier proceedings. Subject to law, parties can agree between themselves as they like. But if they invoke the courts of this country they cannot expect the courts to go along unquestioningly with their erroneous understandings of the law. Given that there is but one common law in Australia and that it cannot be inconsistent with the constitutional text and structure, but adapts and moulds itself to that text and structure in circumstances to which the Constitution is applicable, it is impossible, at least after Lange and its companion decisions, to accept that any rule of the Australian common law as to qualified privilege stated before the significance of the Constitution in these matters was appreciated, can survive into contemporary expositions of the common law if it does not respect the constitutional norm whenever that norm is applicable to a matter complained Emergence of constitutional implications: In his reasons, Callinan J145 complains that the constitutional implication, detected in the cases culminating in Lange, took more than 90 years to be perceived. That is true. But it is the nature of the elucidation of a written constitution. It took more than 50 years for the implication relating to judicial power to be detected in the Boilermakers' Case146. It took nearly 100 years for the implication governing the independence of the State judiciary to be detected in Kable v Director of Public Prosecutions (NSW)147. Some implications, such as that of due process in judicial proceedings, are still in the course of evolution148. Others have only just begun their journey to acceptance149. If it takes years and diverse opinions in this Court to throw light on the requirements of the constitutional implication of free speech, that is not a reason to reject the duty to state the law as it stands. Inconvenience has never been a reason for refusing to give effect to the Constitution. If it had been, the Bank 145 Reasons of Callinan J at [285]. 146 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254. 147 (1996) 189 CLR 51. 148 Leeth v The Commonwealth (1992) 174 CLR 455. See Parker, "Protection of Judicial Process as an Implied Constitutional Principle", (1994) 16 Adelaide Law Review 341. 149 eg Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 363 [81]-[82], 372-373 [114]-[117] (judicial impartiality). Kirby Nationalisation Case150, the Communist Party Case151 and the Cross-Vesting Case152 would have been differently decided. When the Constitution speaks, this Court must give it effect. The fact that it causes some adjustments to the previous common law of qualified privilege or that it may take time to be fully elucidated is scarcely a reason for the Court to stay its hand. In the eye of the Constitution, which speaks to centuries, that is neither here nor there. Addressing the constitutional implication The limited grant of special leave: In a case raising highly technical questions, much evidence, multiple issues presented by separate defences, divisions of opinion in the Full Court and not a little uncertainty about the relevant law, it was almost inevitable that this Court would limit the grant of special leave so as to confine the appeals to issues of general importance. So it did. The first ground upon which special leave was granted concerns the appeal by Mr Roberts. It asks whether the Full Court had wrongly held that the defence of qualified privilege was capable of being defeated by a dominant motive to injure Mr Bass "when the dominant motive attributable or capable of being attributable to [Mr] Roberts was no more than a desire to cause political electoral damage" to Mr Bass. The second ground, relating to the appeal by Mr Case, concerns whether, once it was found by the Full Court that Mr Case did not publish the how to vote card pursuant to an improper motive, the Full Court had failed to consider whether the proper purpose of the publication was its dominant purpose (in irrelevant) or, which event any extraneous malice would be rendered alternatively, had applied an incorrect test as to the existence of actual malice "in a case involving the publication of political advertisements during an election campaign". The third ground asks whether the Full Court misconceived its approach to the issue of "improper purpose" or "dominant motive" such as could defeat the defence of qualified privilege and whether it had failed to identify any motive or purpose that the appellants may have had, other than a desire "to cause political and electoral damage" to Mr Bass. 150 Bank of NSW v The Commonwealth (1948) 76 CLR 1; The Commonwealth v Bank of NSW (1949) 79 CLR 497; [1950] AC 235. 151 Australian Communist Party v The Commonwealth (1951) 83 CLR 1. 152 Re Wakim; Ex parte McNally (1999) 198 CLR 511. Kirby The fourth ground concerns the Full Court's reliance on the primary judge's findings about what the appellants may, or may not, have believed in a case where such assessment "must have been affected by the … judge's misconception as to what could or could not constitute an 'improper purpose'". The fifth ground raises the question whether the Full Court should have proceeded on the basis that, to establish actual malice in a trial involving the publication of political advertisements during an election campaign, it was necessary for Mr Bass to prove malice "with convincing clarity" so that only false statements "made with a high degree of awareness of their probable falsity" would be sufficient to establish such malice. There are three further grounds upon which special leave was granted. I pass them over to come to the last ground. It asserts that (with emphasis added) "[t]he Full Court in the application of the appropriate test should have found that neither Appellant had the requisite 'actual malice' to defeat the identified qualified privilege". Notification of the constitutional issue and argument: In light of the foregoing grounds, and questions raised by the Court during the hearing of the special leave application, notices were given pursuant to s 78B of the Judiciary Act 1903 (Cth). Such notices signified that, in these appeals, a question arose under the Constitution or involving its interpretation. One of the law officers (the Attorney-General for Western Australia) intervened to present arguments concerning the implication "for the common law of defamation and qualified privilege" of the constitutional rule protecting freedom of communication on political and governmental matters. It was not only the Attorney-General for Western Australia who made submissions on the Constitution. The written submissions of all the parties included, and much of the oral argument concerned, the consequences of the requirements and implications of the Constitution for the defence of qualified privilege and the related issue of malice153. Quite properly, these issues have been fully argued before this Court. Absence of procedural unfairness: There is no risk of procedural unfairness in addressing the constitutional issues in these appeals154. At trial, no party before this Court was denied the opportunity to present evidence relevant to 153 It was the subject of detailed oral submissions by the parties and intervener: see esp transcript of the proceedings in this Court at 13, 30-36, 41, 65, 67-71. 154 Coulton v Holcombe (1986) 162 CLR 1 at 7-8. Kirby the issues that this Court must now determine. During oral argument of these appeals, counsel for Mr Bass conceded, properly, that he was unable to point to any disadvantage suffered by his client in the consideration of the constitutional principles in the appeals, by virtue of the manner in which that question had been argued in the courts below. Mr Bass could not identify any disadvantage in the appeals taking a different, and larger, direction in this Court. That is a course that is not infrequently taken when matters come to this Court, with its particular constitutional perspectives155. In any case, it would be too mechanistic to hold that the parties, and particularly the appellants, having failed to advance the constitutional arguments in the Full Court, should now be fixed with the outcome in that Court, because it disposed of the case on the issues that the parties presented to it. A matter of general importance: The resolution of the constitutional issue is also a matter of general legal importance. Those representing Mr Bass recognised the significance of clarifying the legal rule applicable in a case such as his. Indeed, counsel for Mr Bass raised the question whether, once the protection of qualified privilege is found to be "rooted in another source, namely the extended Lange privilege", the foundation for the "traditional qualified privilege" any longer exists in such a case. Reference was made, in this regard, to an observation in the United States courts following New York Times Co v Sullivan156, that the constitutional protection of free speech there provided "gives at least as much protection as the common law privilege. Thus, in the context of a media defendant and public figure, there is no longer any need for the common This last submission renders it imperative, in my view, that this Court should clarify the scope and operation of the "common law privilege" applicable to this case. The constitutional issues have been fully canvassed before this Court. The procedural requirements necessary to identify the "matter" before the Court are sufficiently covered both by the grounds of appeal upon which special leave was granted and by the notices given under the Judiciary Act. There is no suggestion of any res judicata or issue estoppel that would forbid consideration 155 A recent similar example is Solomons v District Court (NSW) (2002) 76 ALJR 1601 at 1614 [65]-[67]; 192 ALR 217 at 234-235. 157 Nevada Independent Broadcasting Corp v Allen 664 P 2d 337 at 344 fn 6 (Nev Kirby of the matter158. This Court should therefore decide the appellants' respective appeals, so far as it may do so, applying the correct legal principles159. It is expedient and in the interests of justice for the Court to do so. This Court is engaged in the disposition of appeals as contemplated by the Constitution160. It is not involved in a game of legal charades. Qualified privilege in a constitutional context Application to State elections: Mr Bass did not contest that the principles stated in Lange (and the preceding cases) concerning the freedom of political communication, although derived from the federal Constitution, applied equally to political or governmental matters enabling the people to exercise a free and informed choice as electors in State elections. This was a proper concession. Indeed, the point was expressly contemplated by the joint reasons in Lange161. That being so, once a matter is one involving "discussion of government or politics at State or Territory level"162, it is amenable to protection by qualified privilege, as that principle is affected by the implied constitutional freedom. I do not doubt that, outside cases to which the Constitution applies, there will still be lively debates concerning the scope of qualified privilege at common law and the extent to which, in a particular matter, the element of reciprocity between the communicator and the receiver of the communication is established to give rise to the defence. However, fidelity to the Constitution, consistency in its application, and conformity to the Court's authority in Lange and in other cases, deny the co-existence of inconsistent principles once the circumstances attract the operation of the Constitution. Then, it is only possible to have one legal rule. That is the rule of the common law adapted to the Constitution. Any narrower, or other, common law rule cannot survive. Putting it quite bluntly, in 158 cf Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 657, 674- 676; The Commonwealth v Verwayen (1990) 170 CLR 394 at 409-413, 422, 444, 159 cf Water Board v Moustakas (1988) 180 CLR 491 at 497; Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 284; Tyson v Brisbane Market Freight Brokers Pty Ltd (1994) 68 ALJR 304 at 310-311; 120 ALR 1 at 11; Iyer v Minister for Immigration and Multicultural Affairs [2000] FCA 160 Constitution, s 73(ii). 161 (1997) 189 CLR 520 at 571-572; cf Levy v Victoria (1997) 189 CLR 579 at 633. 162 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 571. Kirby the context of a case such as the present, because of the Constitution, such a rule does not represent the common law at all. Limited relevance of reasonableness: One issue should be clarified at the outset. At trial, and to some extent in this Court, the existence of a requirement of reasonableness was raised. This occurred in the context of a discussion of Lange, beginning with the statement of the primary judge that, in order for a publisher to rely on the "extended form of qualified privilege", he or she must prove that the publication was reasonable163. However, the requirement of reasonableness only arises when the privilege is invoked "to protect a publication that would otherwise be held to have been made to too wide an audience"164. There may indeed be difficulties in the application of this test. However, it was clearly and correctly held by the primary judge, and agreed with by the Full Court and the parties, that the publications the subject of these appeals were not made to "too wide an audience". Therefore, the Lange requirement of reasonableness does not arise in these appeals. It is not a requirement attaching to circumstances of qualified privilege here merely because of the relevance of the constitutional freedom of political communication. Were it otherwise, far from protecting the freedom of expression in circumstances to which the Constitution applied, the common law would have added a new and general obligation to establish reasonableness of conduct, resulting in a potential reduction of privileged speech. This would be contrary to the object of the elaboration of the constitutional implication as it affects the common law. The Constitution, in matters that it touches, enlarges free speech. It does not add to restrictions and burdens upon it. A two-stage approach: The decision in Lange did not therefore establish a to every situation of general requirement of reasonableness applicable publication regarding governmental or political matters. However, it did clarify the way in which the constitutional freedom of such communication affects the law. If the common law, in this case the law of qualified privilege in defamation as it has hitherto been understood, would otherwise impair the constitutionally protected freedom, it must be developed in order to make it consistent with the constitutional implication. It cannot be incompatible with that implication. Lange clarified the approach that must be taken in order to determine any inconsistency. That approach asks two questions: (1) does the law burden the freedom of communication about governmental or political matters; and (2) if so, is the law "reasonably appropriate and adapted to serve a legitimate end the 163 Reasons of the primary judge at [264]. 164 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 573 (emphasis added). Kirby fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of … government"165. The threshold – reciprocity of interest: It is undisputed that the law of defamation strives to achieve a balance between the protection of individual reputation and freedom of communication. In determining that balance, there is also a constitutional imperative to consider, that of ensuring that freedom of communication about governmental and political subjects is maintained. It is clear that the common law of defamation could otherwise burden the constitutional freedom. Thus, the determinative question is how that burden can be fashioned to be "reasonably appropriate and adapted" (or "proportionate") to the legitimate end of the protection of reputation, in order to ensure conformity with the Constitution. In these appeals, the aspect of the law of defamation that requires clarification, in order to ensure such validity, is the common law of qualified privilege and, specifically, the law of malice. The threshold issue of reciprocity of interest was not contested in this Court, nor was it addressed in the Full Court. However, it does need some clarification. Electors have an interest in receiving information concerning a candidate in governmental elections. Although this has not always been representative explicitly government, that prescription confirms that such an interest and corresponding duty exists166. It follows that this Court cannot now return to, and consider as applicable to this case, the common law as stated, for example, in Lang v Willis167 before the significance of the constitutional implication was appreciated. the constitutional prescription of founded It is difficult to be critical of the parties or the judges in the courts below for having failed to mention Lang. The scope of qualified privilege at common law, in the context of an election address, was only considered by one of the judges in the majority in that case, namely Evatt J168. The other judges who, with his Honour, took the view that qualified privilege at common law would not necessarily attach to the occasion of an electoral meeting, were in dissent169. To 165 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. The second test was also there stated by reference to the alternative formulation of the proportionality of the law in question to the constitutional requirement: see 166 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 571. 167 (1934) 52 CLR 637. 168 Lang v Willis (1934) 52 CLR 637 at 672. 169 (1934) 52 CLR 637 at 656 per Starke J, 667 per Dixon J. Rich J did not address the issue except to say, at 650, that the relevant section of the Defamation Act 1912 (Footnote continues on next page) Kirby ascertain the binding ratio decidendi of Lang, the opinions of the dissenting judges must be disregarded170. There is, therefore, no binding authority arising out of Lang relevant to the issue in these appeals. The comments in Lang related to a situation described as publication to an "unidentified" audience, where it could not be shown that each recipient of the material had a relevant interest in the subject matter. In contrast, the publications in the present appeals were made, at the widest, to the residents of the relevant electorate, most of whom would, inferentially, have had an interest in the material and would, substantially, have been electors in the State election. This would be a sufficient basis for establishing reciprocity of interest, even if Lange had not gone so far as to affirm that "each member of the Australian community" has an interest in giving and receiving "information, opinions and arguments concerning government and political matters"171. Even before this Court's decision in Lange, views had been expressed in Australia and England that made the limited comments in Lang look decidedly old-fashioned and needlessly restrictive. Thus, in England, in Braddock v Bevins172 (a decision to which the primary judge in this case referred) it was said to be "scarcely open to doubt" that statements made in an election address of a candidate concerning his opponent, provided they were relevant to the matters which the electors would have to consider in deciding which way they would cast their votes, were "entitled to the protection of qualified privilege"173. More recently, in Australia, in Calwell v Ipec Australia Ltd174, Jacobs J remarked: "It is for the greatest public good that views on the political attitudes … of members of the Houses of Parliament should be able to be expressed without inhibition. The public are entitled to the views on such a subject (NSW) applicable to that case provided "a wider protection than that afforded by the doctrine of privilege at common law". However, he did not describe the scope of such privilege. McTiernan J, at 687, considered it unnecessary to address the issue of privilege. 170 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 417-418 [56]. 171 (1997) 189 CLR 520 at 571. 173 [1948] 1 KB 580 at 590. 174 (1975) 135 CLR 321 at 335-336. Kirby of political commentators, expert or inexpert. The views expressed, and the imputations thereby made, may be correct or incorrect, but the public has an interest in hearing them whatever they may be and it is for the public good that interest should not be stultified." When one considers what was said in the series of decisions culminating in Lange, it becomes clear that the remarks in Lang must be viewed today as overtaken by later authority. Lang was not, as such, overruled in Lange, nor in the earlier decisions upon which Lange is based. This was because, on the subject of qualified privilege, there was no binding rule to occasion such an overruling175. However, Lang was mentioned in the joint reasons in Lange. It was referred to as a prelude to the paragraph that immediately followed in which this Court concluded that176: "[T]he common law doctrine as expounded in Australia must now be seen as imposing an unreasonable restraint on that freedom of communication, especially communication concerning government and political matters, which 'the common convenience and welfare of society' now requires. Equally, the system of government prescribed by the Constitution would be impaired if a wider freedom for members of the public to give and to receive information concerning government and political matters were not recognised." Electoral opinions – the constitutional heartland: Once it was plain that these proceedings concerned publications made in circumstances directly connected with the election of Mr Bass to a State Parliament177 (and thereby involved "discussion of government or politics at State … level"178) it became highly artificial and probably impossible for the Full Court to consider the submissions of the parties without regard to the Constitution. In a real sense, these appeals concerned the very heartland of the matters of governmental and political concern enlivening the implications of the Constitution to which the decisions in Lange and the earlier cases referred. However, with every respect, the Full Court proceeded as if the Constitution were silent on the matters before 175 cf Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 292. 176 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 570 (footnote omitted). 177 cf Constitution, s 107. 178 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 571. Kirby The purpose of federal, State and Territory elections in Australia is to ensure the selection of a chosen candidate or candidates to hold public office. The purpose of those who support candidates for such elections is necessarily to harm their opponents, at least electorally. Often, if not invariably, this purpose will involve attempts to harm the reputation of an opponent. In the nature of political campaigns in Australia, it is unrealistic to expect the genteel conduct that may be appropriate to other circumstances of privileged communication. Political communication in Australia is often robust, exaggerated, angry, mixing fact and comment and commonly appealing to prejudice, fear and self-interest. In this country, a philosophical ideal that political discourse should be based only upon objective facts, noble ideas and temperate beliefs gives way to the reality of passionate and sometimes interchange. Communications in this field of discourse including in, but not limited to, the mass media, place emphasis upon brevity, hyperbole, entertainment, image and vivid expression179. The contemporary world of Australian politics has moved far from the meeting described in Lang. Yet, even such meetings were commonly pretty robust. irrational and highly charged Because this is the real world in which elections are fought in Australia, any applicable legal rule concerning qualified privilege (and the related notion of malice) must be fashioned for cases such as the present to reflect such electoral realities. Otherwise, before or after the conduct of elections, attempts will be made to bring to courts of law, under the guise of legal claims, the very disputes that it was the purpose of the representative democracy, established by the Constitution, to commit to the decision of the electors. Instead of the merits of contesting candidates being decided by thousands of citizens in vigorous exchanges before the electorate, the contest will be presented for decision to a small number of jurors or to a single judge, and reviewed on appeal by courts of small numbers. Instead of the evaluation of electoral, political and governmental conduct, excesses and aspersions being left with the electors at the ballot box, these matters will be analysed, over many days, by judges solemnly weighing their own opinions about the perceived truth or falsity, fairness or injustice of the respective assertions. Instead of political enthusiasts feeling able to express their opinions passionately, they will become tongue-tied for fear of being dragged into complex and expensive litigation and obliged to explain and justify their statements and opinions. Instead of volunteers being willing to hand out how to vote cards on election day, the pool will dry up because it will become known that such people may later be subject to cross-examination in a court of law as to 179 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 565; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 76 ALJR 1 at 46 [218]-[219], cf at 54-59 [258]-[277]; 185 ALR 1 at 62-63, 74-80. Kirby the "research" they have undertaken about the truth or falsity of the documents that they have distributed180. Conclusion – the Full Court erred: These factors demonstrate once again the considerations that affect the legal status of communications in this country where they attract the operation of the Constitution. They illustrate the variety of matters that have to be taken into account in deciding whether a particular communication made in, or in relation to, a State election has occurred on an occasion of qualified privilege and whether any such privilege has been lost by proof of malice. Unfortunately, these questions were not considered in that way by the Full Court. Misled by the parties, that Court dealt with the appeal as if Lange and the cases that had preceded it had not been written. Yet in my opinion, those authorities were crucial to determining the availability and scope of any qualified privilege and to deciding the circumstances in which any such privilege was lost181. The Full Court thus erred in its process of reasoning. However, it did not err in its conclusion that qualified privilege applied to each of the three communications in question in these appeals. Each was made on an occasion of qualified privilege, as the primary judge held and as Mr Bass conceded. This was so, ultimately, because the Constitution required that the common law of Australia extend such privilege to them. Whatever the general authorities of the common law here and overseas may otherwise say, they could not result in a conclusion, in a case such as this, that deprived such occasions of the defence of qualified privilege. The applicable law in South Australia (without any relevant intrusion of statute) was not, therefore, fashioned because of a decision of English judges in Braddock v Bevins. It was defined by the influence of the Constitution on the common law of this country, protecting the heartland of electoral discussion of matters of government and politics in a State of the Commonwealth. It might be argued that, because of coincidental advances in the general common law of qualified privilege, it was ultimately unnecessary to invoke the Constitution to uphold the occasions in question as privileged. However, it is essential to understand how the Constitution affects the definition of the occasion of qualified privilege, and its scope, before turning to the related issue of malice. In 180 "Research" is the word used by the primary judge: reasons of the primary judge at 181 cf the position in Canada: Hill v Church of Scientology of Toronto [1995] 2 SCR Kirby order to define the content of the applicable common law of malice, it is necessary first to appreciate the occasions to which qualified privilege attaches and the scope of that privilege. For both the privilege and the exception of malice, the constitutional setting in a case such as the present is critical. Malice in a constitutional context Reconsideration by the High Court: When this Court turns to apply the law correctly, can it be said that, in accordance with the common law as adapted to the Constitution, either or both of Mr Roberts and Mr Case lost the qualified privilege applicable to the occasions of their communications? Specifically, did they do so by reason of proof of malice on their parts? In this context does malice arise because of an absence of a genuine belief of the publisher in the contents of the matter complained of? In electoral communications is it necessary, as the courts below considered, for the person speaking or writing of a candidate to check the truth of everything that is said? Or would such a standard impose an undue restraint on the cut and thrust of electoral speech in Australia and thus represent a constitutionally impermissible burden on the freedom? Although the Full Court did not address these questions in such terms, in my opinion this Court must do so if it is to decide these appeals in accordance with law. The Court may be assisted by the findings and reasons of the primary judge and the evidence adduced at trial, so far as it is undisputed. The question becomes whether those findings and reasons lead to the conclusion that the primary judge reached. If not, does the evidence (or lack of evidence) permit this Court to give effect to its own conclusions? Or must the cases be returned for retrial? Malice – the critical issue: In this way, the real focus of these appeals becomes that of considering the common law of malice as it operates as a disqualifying factor in the law of qualified privilege. There are two elements to note. The first is the general rule that, if an improper purpose is the actuating motive for a publication, the qualified privilege otherwise attracted to it by the occasion of its making is destroyed. The second is the relevance of the state of mind of the publisher as to the truth or untruth of the contents of the published material and the way in which such a state of mind is to be found or inferred. Derivative malice: There is one preliminary issue that should first be addressed. It involves a question that was not argued before this Court, but which is referred to in the reasons of Callinan J182. It concerns whether, notwithstanding any conclusion as to the individual liability of Mr Case, he was jointly responsible with Mr Roberts for the publication of the how to vote card 182 Reasons of Callinan J at [306]. Kirby with which he was associated, and was thus infected by any malice affecting the conduct of Mr Roberts. In the event of a conclusion of malice on the part of Mr Roberts, I would not be prepared to find against Mr Case on such a footing. In Egger v Viscount Chelmsford183, Lord Denning MR expressed the opinion that where a plaintiff seeks to rely on malice to rebut a defence of qualified privilege, he or she must prove malice against each person who is charged with malice. The decision in Smith v Streatfeild184 to the contrary, and remarks in Adam v Ward185, were criticised by his Lordship as erroneous, on the footing that the correct view of the law is that each defendant is answerable severally for a joint publication and each is entitled to his or her own several defences. This was merely applying the basic rule that "[a] defendant is only affected by express malice if he himself was actuated by it"186. Lord Denning's opinion attracted the support of Harman LJ187 and Davies LJ came to the same conclusion188. The last noted the opinion expressed in this Court by Knox CJ in Webb v Bloch189, which had merely accepted the principle in Smith v Streatfeild. Compliance with English legal authority was the habit of those times. Harman LJ pointed out that a person was liable for the malice of their agents; that was a proposition beyond dispute. But otherwise, each person's malice must be judged individually. As a matter of legal principle, I find this reasoning compelling. The evaluation of the alleged malice of the conduct of each publisher falls to be decided separately in the case of each claim for qualified privilege. Outside issues of agency, it would ordinarily be inconsistent with constitutionally protected communications about governmental and political matters for the common law to burden one individual with the legal consequences of the purpose and intent of another so that the first was deprived of the implied constitutional protection. In my opinion, there is no substance in the argument to the contrary. 183 [1965] 1 QB 248 at 265. 186 Egger v Viscount Chelmsford [1965] 1 QB 248 at 265. 187 Egger v Viscount Chelmsford [1965] 1 QB 248 at 266-267. 188 Egger v Viscount Chelmsford [1965] 1 QB 248 at 270-273. 189 (1928) 41 CLR 331 at 359. Kirby Improper motives: It is clear that, at least in circumstances in which the constitutional freedom applies, such as the present case, an object to destroy the election prospects of a candidate is not an improper motive190. The primary judge, with whom Prior J and Martin J agreed in the Full Court, concluded that Mr Roberts possessed an improper motive. Although the primary judge concluded that Mr Roberts' motive went "beyond the mere desire to foil [Mr Bass'] prospects of re-election", that it extended to a desire to make people "think less of him"191, the reputation that was the target of the publications was Mr Bass' reputation as a politician. I would therefore agree with the analysis in the joint reasons that the motive of Mr Roberts, in these constitutionally protected circumstances, fell within the protected motive of damaging a candidate's re-election prospects. It follows that, by the common law adapted to the Constitution, such a motive was not malice disqualifying Mr Roberts from a defence of qualified privilege otherwise available to him192. State of mind as to truth or falsity: The joint reasons have outlined the way in which the following issues are relevant to a defence of qualified privilege: the publisher's honest belief in the published material; recklessness in publishing without consideration for the truth or falsity of the material; and knowledge of the falsity of the published material. I am in general agreement with those reasons so far as they apply to the context of malice at common law in circumstances attracting the protection of the constitutional freedom of political communication. However, I would reserve the position of the common law outside such situations. That issue does not need to be decided in the present appeals. Consequences for the appeal of Mr Case Malice and the how to vote card: In respect of Mr Case, the only relevant communication is the how to vote card. He was not involved in the publication of the Nauru postcard or the "Free Travel Times" pamphlet. The evidence was that Mr Case had participated in a group that was upset with Mr Bass' performance as a member of the South Australian Parliament, most especially in relation to a proposal to privatise the management of a public hospital. Mr Case acknowledged that he was "quite passionate" about the issues connected with the hospital193. He was distressed that Mr Bass would not make arrangements for 190 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 574. 191 Reasons of the primary judge at [254]. 192 Joint reasons at [107]. 193 Roberts and Case v Bass (2000) 78 SASR 302 at 326 [84]. Kirby him to meet the Minister for Health. It was in this context that Mr Case decided to "target" Mr Bass. However, this was all by way of background. The actual distribution of the how to vote card did not occur until polling day. Up until two days before that day, Mr Case had been overseas for some 10 or 11 days. On his return, Mr Case contacted the Modbury Hospital Action Group. He was allocated a polling booth within Mr Bass' electorate of Florey. Mr Case attended the booth on the morning of the election. It was common ground that it was then, for the first time, that he saw the two pamphlets that he was expected to distribute. The one that was the subject of Mr Bass' proceedings against Mr Case was the how to vote card. Mr Case agreed that he had read the card. He said that there was nothing in it that caused him concern. He distributed the card between approximately 8 am and 10 am on election day. During the trial, Mr Case was examined, at length, concerning his beliefs about the truth or otherwise of the statements contained on the two sides of the how to vote card. He sought to explain, and even to support and justify, the factual assertions and opinions contained on the card. Arguably this was not necessary. He had neither printed nor authorised it. He had merely distributed it on election day. He had done so only to electors presenting at the polling booth that he had manned. Conclusion – no evidence of malice: With all respect to the primary judge, it is unconvincing in these circumstances to suggest that Mr Case was obliged to check and verify the accuracy of the statements contained in the how to vote card before he could publish it on election day194. Such a requirement of the common law would not conform to the constitutionally protected entitlement to have, and express, opinions about candidates in any electoral campaign. The notion that, on the morning of the poll, Mr Case should have inquired of Mr Bass about the truth or otherwise of the words complained of on that card, or that he should have given Mr Bass an opportunity to answer the allegations before handing out the card, strikes me as having no relationship to the realities of the distribution of such materials in State general elections as these are conducted in Australia. Were the common law of malice to have such a consequence, thereby depriving a person such as Mr Case of the qualified privilege that otherwise attached to the occasion of the publication, it would be inconsistent with the freedom implied from the Constitution. For this reason the common law adapts itself to the constitutional norm. In the context of distributing electoral material such as the how to vote card, to distribute such material without first having checked the truth of its content or offering the person referred to in the material the opportunity to comment on and correct any errors, does not constitute malice. 194 cf Rares, "No Comment: The Lost Defence", (2002) 76 Australian Law Journal Kirby It is necessary to test the conduct of Mr Case by reference to what it was feasible for him to do when he arrived at the polling booth and was presented with the how to vote card that was there waiting for him. The notion that he should there and then have undertaken "research", investigated the Hansard reports of the debates in the State Parliament, inquired into the exact amounts received by Mr Bass as travel allowances or otherwise taken responsibility for the contents of the card, strikes me as unrealistic and unreasonable. If such a standard were upheld by this Court as the legal requirement imposed upon the thousands of citizens, with varying degrees of involvement, knowledge and concern, who take part as volunteers on election days to hand out voting propaganda for competing candidates and political parties, a very significant restraint would be imposed on this form of civic political involvement. If each volunteer-distributor were personally liable for the truth of the contents of such political communications, the pool of volunteers (already sometimes hard to muster) would dry up. That would not be consistent with the proper conduct of parliamentary elections in Australia as envisaged by the Constitution. The common law, informed by the Constitution, does not impose such an unrealistic standard. When qualified privilege at common law is found applicable to the occasion, the privilege is not lost by proof that a person distributing a how to vote card cannot subsequently support as true each and every statement of fact contained on the card. Although Mr Case had some prior association with the group for whom the how to vote card was produced, he was not personally responsible for its production nor for its contents. That responsibility (as the printed inscription on the card showed) was accepted by This is not to say that every distribution before or on election day is exempt from the law of defamation. It is certainly not to embrace the public figure approach adopted in the United States, which has not been accepted in Australia195. Within the adjusted common law principle of qualified privilege and the associated law as to malice that limits the availability of that privilege, the primary judge's finding that Mr Case's actions had lost the privilege was erroneous. There was no evidence to sustain such a conclusion. Mr Case's appeal must therefore succeed. 195 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 184-187. See also Australian Law Reform Commission, Unfair Publication: Defamation and privacy, Report No 11 (1979), Appendix F, "The American Public Figure Concept". Kirby Consequences for the appeal of Mr Roberts Malice and the false publication: The primary judge's conclusions concerning Mr Roberts were clearly influenced by the view that he took about the publication of "Free Travel Times"196. However broadly one accepted the scope of freedom of communications in electoral publications in the context of robust campaigning for and against a candidate in a State election, it would not, in my view, extend to the publication of a deliberately false document, known to be an untrue and damaging concoction, specifically created by the publisher to give an impression of verisimilitude as a basis for attacking the integrity of an electoral candidate. When the falsity of the document is actually known to the publisher, the defence of qualified privilege otherwise attracted by the common law and protected by the Constitution, would be lost. Publication in such circumstances would be affected by malice. To the extent that the common law so provided it would be compatible with the Constitution, which does not throw its protective cloak over deliberate and knowingly or recklessly false communications. Not only was Mr Roberts personally responsible for the false frequent flyer activity statement presented as a true document in his publication "Free Travel Times", he continued (as the primary judge found) to cause that document to be published even after he had been told that he must desist. He did so in spite of the Electoral Commissioner's directives that he should withdraw it from publication and issue a retraction. Instead of doing this, Mr Roberts allowed the publication to be circulated right up to the election day. I would therefore be inclined to the view that the finding against Mr Roberts with respect to that document should stand. Malice and the other publications: The positions of the Nauru postcard and of the how to vote card are much more disputable. In the context of electoral communications of the kind in question, addressed to those receiving them, I would not myself be inclined to consider that, in isolation from the others, either of those documents lost the qualified privilege of the occasion of their publication by reason of malice proved on the part of Mr Roberts. In this regard I agree in the analysis of the joint reasons as it applied to this case. However, the findings of the primary judge do not permit this Court to substitute its own conclusions in this regard. Regrettably, there must be a retrial at least in relation to those publications. A rule of the common law that held persons such as Mr Case and Mr Roberts liable in damages for untrue defamatory statements in electoral material simply because those publishing such materials had no affirmative belief 196 Reasons of the primary judge at [268]. Kirby in their truth would be one that imposed an impermissible burden on electoral communication. Such a burden would be incompatible with the constitutionally protected freedom of political communication. Even if the general common law otherwise made a positive belief in the truth of a statement a condition of the defence of qualified privilege (a question I do not need to decide in these appeals) it would be inconsistent with the Constitution to require that a publisher must have such a belief in an electoral context such as the present. No agreement of the parties that was different or contrary to this could be given effect to by this Court in disposing of these appeals. To do so would be to defy the constitutional prescription. We cannot be party to such a distortion of the law, for this Court's origin derives from, and its duty is owed to, the Constitution. Conclusions and orders In the result, I have reached a conclusion very similar to that in the joint reasons and generally on like grounds. I agree in the disposition of Mr Case's appeal as there proposed. So far as Mr Roberts' appeal is concerned, I agree that there must be a retrial, certainly with respect to the publication of the Nauru postcard and the how to vote card. This is necessary to allow specific findings to be made as to whether malice affected the qualified privilege attaching to those publications. At first, I was inclined to order that the publication of the "Free Travel Times" pamphlet be treated in isolation from the other publications. The judgment entered in the Full Court against Mr Roberts in relation to that publication would not then be disturbed but there would be a retrial of Mr Roberts' liability in relation to the two remaining publications. That course would give effect to the decision in the trial of the action by Mr Bass against Mr Roberts to the fullest extent possible, consistent with the correct legal principles as I see them. For three reasons, however, I have decided against that course. First, a conclusion as to the existence of malice with respect to one publication in a connected series can sometimes be relevant to the conclusion about whether malice has infected the other publications, so as to deprive them of the defence of qualified privilege197. It would therefore be preferable for the issue of malice on the part of Mr Roberts, as it concerns all of the publications in this case, to be decided in a retrial where the three publications are under scrutiny together. Secondly, once it is decided that there must be a retrial with respect to two of the publications, to secure findings as to the existence or the absence of malice according to the correct principles, the urgency and utility of this Court's 197 Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 327-330. Kirby substituting its own opinion about whether malice was proved in relation to the publication of "Free Travel Times" is greatly diminished. In the result, such findings could not obviate the necessity of the retrial that must be had. Thirdly, although the Full Court increased the amount of the judgment in favour of Mr Bass in respect of the publication of each of the matters complained of against Mr Roberts, those judgments were part of a composite response to the entirety of the course of publication in which Mr Roberts had been engaged. Part of the aggregate judgment was obviously intended as a vindication for the entirety of the harm done to Mr Bass which could not be segmented precisely into separate sums, ignoring the impact of the whole. In these circumstances, it is not ultimately desirable (even if it is legally permissible) to enter judgment for Mr Bass upon part only of the causes of action for which he brought his proceedings. It follows that, although (had it stood alone) I would otherwise have been inclined, in Mr Roberts' appeal, to dismiss the challenge to the finding of malice in respect of his publication of "Free Travel Times", which he knew to be false but continued to publish, I have come, in the end, to the conclusion that the proper course is to order that there be a retrial of Mr Bass' action against Mr Roberts. In that retrial, in the circumstances of this case, the law of qualified privilege and disqualifying malice to be applied is that explained in the joint reasons. I therefore agree in the orders proposed in the joint reasons. Hayne 203 HAYNE J. In 1997, the respondent, Mr Bass, stood as a candidate for election to the seat of Florey in the House of Assembly in South Australia. Mr Bass was the sitting member, having been elected in 1993. The first appellant, Mr Roberts, authorised the publication, during the election campaign, of three documents – a picture postcard, a pamphlet of four pages and, on polling day, a how-to-vote card – all of which were directed to persuading voters not to vote for Mr Bass. Mr Roberts was not himself a candidate at the election and, in publishing what he did, he was not acting on behalf of any candidate or party. On polling day, the second appellant, Mr Case, handed out copies of the last of these documents – the how-to-vote card – which invited voters to "Put Sam Bass Last". The proceedings Mr Bass sued the appellants and others in the District Court of South Australia alleging that each of the three documents I have mentioned defamed him. Each of the appellants pleaded in his defence, among other things, that each document which he had published was published on an occasion of qualified privilege "and was a matter concerning government and political matters affecting the electors of Florey and the choice for electors at an election". In reply, Mr Bass pleaded that the defence of qualified privilege was not available, the publication in each case allegedly being made with actual malice, and without reasonable grounds for believing the imputations in the documents were true, without taking any proper steps to verify the accuracy of the imputations, and well knowing that the imputations were untrue. The trial judge gave judgment for Mr Bass against both appellants. Judgment was entered against the first appellant for $64,800 (being $55,000 general and aggravated damages, $5,000 exemplary damages, and $4,800 interest) and against the second appellant for $5,400 (being $5,000 general damages, and $400 interest). On the appellants' appealing to the Full Court of the Supreme Court of South Australia, their appeal was dismissed, and the respondent's cross-appeal against the amount of damages assessed against the first appellant was allowed198. Those damages were reassessed at $100,000. The facts and issues The issues in this Court centre upon the availability of a defence of qualified privilege. Those issues arise in this way. Each of the documents published by the appellants was defamatory of Mr Bass. Each was found to convey to the reader (in effect) that Mr Bass had misused his position as a member of the House of Assembly by spending taxpayers' money on overseas travel not for the proper performance of his parliamentary duties but for his own 198 Roberts v Bass (2000) 78 SASR 302. Hayne benefit and enjoyment, or, through a frequent flyer scheme for the benefit of his family. The imputations conveyed by each document were found to be false. So, for example, the second document, the pamphlet, reproduced what appeared to be a copy of a form of statement issued to Mr Bass as a member of a frequent flyer scheme. This document, on which only the heading and Mr Bass's address were not obscured by an overprinted block reading "Bring the Frequent Flyer Back to Earth", was a concoction of the first appellant, Mr Roberts. Mr Bass was not a member of that, or any other, frequent flyer scheme. It is not necessary to set out the text of the documents or to notice their contents in more detail. Each appellant published the document or documents which he did in order to bring about Mr Bass's electoral defeat. Each intended therefore, at least to that extent, to cause harm to Mr Bass by publishing the document or documents concerned. The trial judge found that the appellants did not believe the imputations conveyed by the documents were true. In the case of the first appellant, Mr Roberts, the trial judge found that he "could not possibly have believed the imputations [in the documents] to be true". Although the trial judge said that he held the same view of the second appellant, Mr Case, his reasons, taken as a whole, reveal that there were some differences in the appellants' states of mind. The trial judge found that Mr Case had made no inquiries about the accuracy of what was said in the how-to-vote card and that he had published it (by handing it out on election day) not caring whether the matters stated in it were true or false. That finding may be contrasted with the finding about Mr Roberts' state of mind, it being clear that after the second document (the pamphlet) was published, Mr Roberts had been asked both by the solicitors for Mr Bass, and by the State Electoral Commissioner, to withdraw the pamphlet from circulation. Both the solicitors and the Electoral Commissioner told Mr Roberts that the document contained false statements. The Electoral Commissioner asked Mr Roberts to publish a retraction which would state that Mr Bass was not a member of a frequent flyer scheme and retracting "[a]ny suggestion that Mr Bass used public money for private holidays". Mr Roberts did not do that. And on polling day he published the how-to-vote card which contained substantially the same imputations as those in the pamphlet which he had been told were false and had been asked to retract. Mr Roberts later pleaded guilty in a Magistrates Court to charges that, by publishing the pamphlet and the how-to-vote card, he had in each case published an electoral advertisement which contained statements purporting to be statements of fact that were inaccurate and misleading to a material extent. Qualified privilege On the appeal to this Court, argument focused only on whether the appellants should have succeeded in a defence of qualified privilege as that Hayne defence was understood before the decision in Lange v Australian Broadcasting Corporation199. Thus the argument focused upon whether the appellants, in publishing documents found to be false and defamatory, had been motivated by what, at common law, amounted to malice. In particular, it was said that the central question was whether the appellants' purpose, in publishing what they did, was a purpose other than communicating to the electors of Florey their views about Mr Bass's suitability as a member of the House of Assembly. The appeal to this Court took the course I have described because of what had happened in the courts below. At trial it was found that neither of the present appellants had acted reasonably. For that reason it was held that the principles described in Lange (often referred to as the extended defence of qualified privilege, in its application to communications with respect to political matters) afforded no defence to either appellant. The appellants did not pursue this issue in the Full Court. At trial it was found that each of the publications was made on an occasion of qualified privilege as the principles governing that privilege were understood before Lange. In the Full Court the respondent did not contest that finding. The consequence is that we are required to consider the issues on the assumptions that the principles enunciated in Lange cannot be engaged but the principles governing qualified privilege as they stood before Lange are engaged. For the reasons that follow, I consider that this provides an artificial and flawed basis for consideration of the arguments, but there is no choice except to deal with the matter on the basis which the parties have chosen. It is important to emphasise, however, that doing so leads to conclusions which may find no application in any case in which proper attention can be given to the relationship between the principles that were established in Lange, and the principles governing qualified privilege as they stood before the decision in that case. To explain why that is so, it is necessary to begin by identifying the change in the common law that was made in Lange. Although it may be suggested that the Court's earlier decisions in Theophanous v Herald & Weekly Times Ltd200 and Stephens v West Australian Newspapers Ltd201 or Australian Capital Television Pty Ltd v The Commonwealth202 and Nationwide News Pty 199 (1997) 189 CLR 520. 200 (1994) 182 CLR 104. 201 (1994) 182 CLR 211. 202 (1992) 177 CLR 106. Hayne Ltd v Wills203 should be treated as the watershed, rather than Lange, it is convenient to proceed by reference to the joint reasons of the whole Court in Lange. Occasions of qualified privilege Before Lange, apart from a few exceptional cases204, the common law categories of qualified privilege protected only occasions where defamatory matter was published to a limited number of recipients. As was pointed out in Lange205, if a publication was made to a large audience, a claim of qualified privilege at common law was rejected unless, exceptionally, the members of the audience all had an interest in knowing the truth. Further, publication beyond what was reasonably sufficient for the occasion of qualified privilege was unprotected206. And, as again was pointed out in Lange207, it was because privileged occasions are ordinarily occasions of limited publication, that honesty of purpose in the publisher was seen as the appropriate protection for individual reputation: "[a]s long as the publisher honestly and without malice uses the occasion for the purpose for which it is given, that person escapes liability even though the publication is false and defamatory." Each of the publications which gave rise to this matter was published to a large audience and was published in the context, and apparently for the purposes, of a political campaign directed against the re-election of Mr Bass. In Lang v Willis208, three Justices considered whether election speeches made to large audiences of unidentified persons were occasions of qualified privilege. Two of those Justices (Starke and Dixon JJ) were in dissent and it is possible to discern some differences in the breadth of the proposition stated by each of the Justices who considered the question. Nonetheless, as noted in Lange209, the better view is that their Honours rejected the proposition that such speeches were made on what was necessarily an occasion of qualified privilege, even if matters of 203 (1992) 177 CLR 1. 204 cf Adam v Ward [1917] AC 309; Loveday v Sun Newspapers Ltd (1938) 59 CLR 205 (1997) 189 CLR 520 at 572. 206 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632. 207 (1997) 189 CLR 520 at 572. 208 (1934) 52 CLR 637 at 656 per Starke J, 667 per Dixon J, 672 per Evatt J. 209 (1997) 189 CLR 520 at 570. Hayne general interest to electors were dealt with in the speeches. The breadth of the audience to whom such speeches were made was seen as denying the existence of that community of interest and reciprocity of duty and interest which lay at the heart of the then understanding of qualified privilege210. Two of the three publications of which complaint is made in this matter were made to an audience which included, but was not limited to, electors. The first two of the documents (the postcard and the pamphlet) were each published by delivering them to houses in the electorate, regardless of whether those who lived there were electors. It may be accepted, at least for the purposes of argument, that the postcard and the pamphlet were intended to influence electors. But it was inevitable, given the chosen method of distribution, that the documents would come into the hands of a wider audience. In this respect, the publications were no different from a publication made by advertisement in a local newspaper. As the trial judge recognised in this matter, the fact that a publication may have come to the attention of persons other than those having a relevant interest in the subject-matter does not necessarily require the conclusion that the occasion was not privileged211. As Parke B said in Toogood v Spyring212, "the simple fact that there has been some casual bye-stander [to the publication] cannot alter the nature of the transaction". Those who were not electors had no relevant interest in the subject-matter of the publications and yet each publication was made to households in exactly the same way as any other piece of unsolicited advertising or literature distributed to all who live in a given geographic area and thus to persons who were not electors. The circumstances of the publication of the postcard and pamphlet may be contrasted with the circumstances considered by the English Court of Appeal in Braddock v Bevins213. There, a written election address, circulated only to electors, was held to be published on an occasion of qualified privilege. The third publication in this matter (the publication of the how-to-vote card) has obvious similarities with the circumstances considered in Braddock. It was distributed by handing it to those who attended polling booths. It may, 210 See, for example, Loveday v Sun Newspapers Ltd (1938) 59 CLR 503 at 511 per Latham CJ, 515 per Starke J, 523 per Dixon J. 211 See, for example, Guise v Kouvelis (1947) 74 CLR 102 at 120-122 per Dixon J. 212 (1834) 1 Cr M & R 181 at 193-194 [149 ER 1044 at 1050]. Hayne therefore, very well have had a more limited publication than the earlier publications. Publications to the public and to electors about political matters Lange held that what had been understood, until then, to be the common law rule about qualified privilege failed to meet the constitutional requirement that "'the people' … be able to communicate with each other with respect to matters that could affect their choice in federal elections or constitutional referenda or that could throw light on the performance of Ministers of State and the conduct of the executive branch of government"214. Accordingly, Lange held that the common law of defamation, and in particular the common law rules of qualified privilege, should be developed to reflect the requirements of the Constitution. The development made in Lange had two related aspects. Lange extended the recognised categories of qualified privilege (to communications made to the public on government or political matters215) and required a different criterion of operation in that new category (reasonableness of conduct216). This criterion of reasonableness was said in Lange217 to be "an element for the judge to consider only when a publication concerning a government or political matter is made in circumstances that, under the English common law, would have failed to attract a defence of qualified privilege" (emphasis added). That is, Lange held that communications of political matter to audiences in circumstances which would not fall within that earlier understanding of an occasion of qualified privilege could be privileged, but only if a different test was met. Lange did not hold that any different test was to be applied if the publication did fall within that earlier understanding of an occasion of qualified privilege. It is important to notice that the decision in Lange proceeded from two premises, first, that each member of the Australian community has an interest in disseminating and receiving information, opinion and arguments concerning government and political matters that affect the people of Australia218 but, second, that this interest did not suffice to found a claim to qualified privilege according to then understood principles. The interest which was identified was 214 (1997) 189 CLR 520 at 571. 215 (1997) 189 CLR 520 at 573. 216 (1997) 189 CLR 520 at 573. 217 (1997) 189 CLR 520 at 573. 218 (1997) 189 CLR 520 at 571. Hayne not restricted to the interest of electors or of federal electors in matters of federal politics. As was pointed out in Lange219, discussion of matters concerning, for example, the United Nations, and discussion of government or politics at State, Territory or local government level could fall within the new or extended category of qualified privilege. And this new or extended category was a category the operation of which was not confined to publications to electors. In these circumstances, there appears much to be said for the view that widespread publication about government or political matters, even if restricted to electors, should not be found to be a publication invoking the pre-Lange principles of qualified privilege. The better view may well be that a publication about government and political matters made to a large audience, even if it is drawn only from the body of electors, should fall for consideration on the same basis as publications made to both electors and others. A publication to electors generally, despite what was said in Braddock220 about the common interest which electors have, might be thought not to be an occasion of qualified privilege as those occasions were understood at common law before Lange. That would be consistent with what was said in Lang v Willis and it would be consistent with the coherent development of the common law after Lange. The development of the common law which Lange made was scarcely necessary if qualified privilege would be attracted to every case where the communication of political matter was said to have been aimed at electors generally or even where the communication was made only to those who, together, formed the body of electors. Further, and very importantly, to distinguish between the principles to be applied in cases where a how-to-vote card or other form of political advertising is handed to voters as they approach the polling booth, rather than published in the local newspaper or dropped in letterboxes in the electorate, would be to draw a distinction which would be very difficult to justify if it required the application of a different criterion of operation. I am nonetheless precluded by the course that the proceedings have taken from having the benefit of argument on these questions. I mention the matters which I have only because, if I do not, the conclusions that are reached in dealing with the issues the parties have tendered may well be misunderstood. In particular, there is a risk that the conclusions reached in this Court may be thought to distort the proper development of the law relating to malice. To explain why that is so, it is necessary to notice some particular features of political communications. 219 (1997) 189 CLR 520 at 571. 220 [1948] 1 KB 580 at 589-591. Hayne All three kinds of communication I have identified (handing to voters, publishing in the local newspaper and dropping copies in letterboxes) are evidently aimed at persuading voters. In the nature of electoral contests, all will be intended to work some detriment to those whose candidacy is not favoured. All may seek to do so by any of a very diverse set of methods intended to persuade the reader – statements of what are said to be facts, statements of opinion, predictions of future conduct, reason, caricature, irony, sarcasm. The list might be extended without limit. While the platonic ideal may be that the political debate would be confined by reason, and thus be confined to a contest between ideas that can be held by reasonable persons, experience reveals that this is not always so. Not all political views would be regarded as falling within the range of ideas considered by the hypothetical right thinking members of society to be reasonably tenable. If these views are to be disseminated widely, and to be disseminated for the express purpose of inflicting detrimental consequences on electoral rivals, application of a test of honesty and absence of malice has obvious difficulties. These become more acute as the views being tested become more extreme and their holding more a matter of visceral and passionate conviction than analytical reason. It is precisely because what is said in a political campaign may not be founded in reason, yet be views that are sincerely and, in that sense, honestly held, that Lange required the focus to be shifted from the honesty of the publisher to the reasonableness of the publisher's conduct. Only by making that shift is account properly taken of the political nature of the subject-matter of the publication and the size of the audience to which it is published. That is not to deny the significance of honesty. As was said in Lange221, "[i]n all but exceptional cases, the proof of reasonableness will fail as a matter of fact unless the publisher establishes that it was unaware of the falsity of the matter and did not act recklessly in making the publication." But ignorance of falsity and absence of recklessness will not always suffice to demonstrate that the publisher acted reasonably. And adopting a criterion of reasonableness of conduct avoids at least some of the difficulties that are presented in considering the honesty of purpose of a publisher of political matter. Thus, even if Lang v Willis and Lange do not require that a publication made only to the body of electors was not an occasion of qualified privilege according to pre-Lange principles, there seems much to be said for the view that such a publication invokes only the extended rules about qualified privilege established in Lange, not the earlier common law rules. However, that is not the basis upon which the appeal has been conducted. 221 (1997) 189 CLR 520 at 573. Hayne On the bases that the parties have accepted, that each publication occurred on an occasion of qualified privilege according to principles understood before the decision in Lange, and that the central question is whether the appellants, in publishing the documents, were motivated by what, at common law, amounted to malice, I agree with the conclusions reached by Gleeson CJ. For the reasons his Honour gives, no error is shown in the conclusion reached in both courts below that the first appellant acted with malice. By contrast, and again for the reasons given by Gleeson CJ, the second appellant was not shown to have been recklessly indifferent to the truth or falsity of what he published. I agree in the orders proposed by Gleeson CJ. Callinan CALLINAN J. The principal issue raised by this appeal is whether the author and distributor of certain defamatory matter before and during an election, were entitled to defend claims for damages made against them by the person defamed on the basis of qualified privilege. Facts Before entering politics the respondent served with distinction as a police officer for 33 years: he had also served as secretary of the Police Association. The respondent became a Member of the Parliament of South Australia. There he acted for a time as speaker of the House to which he was elected. He had travelled overseas, including to Nauru, at public expense but had not expended anything like $32,000 in doing so. Nor was he ever a "Frequent Flyer", entitled to accumulate mileage points to defray the cost of other flights. Such travel as he undertook was authorised by relevant parliamentary guidelines and was for parliamentary purposes. Mr Bass had taken a close interest in legislation to control the use of firearms. In some respects, in his opinion, legislation proposed following mass murders at Port Arthur in Tasmania was an overreaction. In others, he thought the legislation lax and unnecessarily complex. For example, he gave uncontradicted evidence as follows: "[M]any of my amendments that were accepted by the Police Minister, made the Act a lot easier to understand, made it workable by the police, and an example is, under the definitions, they wish to have a definition of action, the registerable part of a firearm, which was absolute lunacy, which would have meant any person with a screw, spring or split washer at home, would have been in possession of an action of a firearm, and many of the parts that they were trying to define as a firearm were identifiable. It was my amendment, moved in the House and accepted by the Police Minister, that the frame be the definition of a firearm, because without the frame, you have no firearm. You can have all the other parts that they wish to have as a definition, and they haven't got a gun. So that amendment actually brought the legislation into a workable legislation so the police could take action. The frame, in most cases, also bears the registered number, or the number that the gun could be registered, and that was accepted throughout all those amendments in relation to that. Some of the amendments I also moved, would have made the legislation a lot safer, if they had been implemented and I just mention too, it was one of my amendments that the drinking of alcohol while you had a loaded firearm, would be an offence, and this was an amendment that was suggested by the firearms fraternity. So it would have meant if that amendment would have got up, no-one could have a loaded firearm within six hours of drinking alcohol. Another amendment that I put forward, Callinan which I might say was rejected by the parliament, would have seen legally qualified medical practitioners have a legal obligation to report to the Registrar of Firearms, any person he believed that was unstable that had firearms in his possession, the same with the clubs who sacked or expelled a member, whose possession of a firearm was a condition of being a member of a club, to make it an obligation that they notify the Registrar of Firearms immediately, and these amendments would have, in fact, increased the effectiveness of the legislation, and made it a lot safer for the families of South Australia." On 13 October 1995 the respondent wrote a letter to the second appellant, stating that Healthscope (a company) had been operating the Modbury Hospital for eight months, that if the second appellant thought it appropriate he should contact the administration of the hospital direct with his concerns, and that if any further concerns then arose, he, the respondent would have them investigated by the proper authorities. The letter continued: "I understand you have already contacted the Health Minister and he has declined to meet personally with you and that you have been advised of the reason why. After reading the transcript of the Matthew Abraham Show which aired on 18 August 1995 I totally agree with the comments of the Minister. I understand the Minister has also invited your group to communicate in writing any concerns you have regarding the Modbury Hospital." He then invited the second appellant to contact the Federal Minister for Health in relation to funding by the Commonwealth. The second appellant was interested, passionately so, it might not unfairly be said, in the privatisation of the Modbury Hospital which was situated in an electorate adjoining the one in which he resided. The hospital did however receive patients from several electorates including the one of his residence. He was, as the evidence shows, intransigently opposed to the privatisation. The respondent, as appears from his letter, supported it. The second appellant's strong views can be gauged from his evidence as follows: "One was that Sam Bass had actively taken actions and spoken out against the interests of the group, which was to restore the Modbury Hospital to public hands. So we felt that as a local member in that district, that the interests of returning the Modbury Hospital to public hands would be best served by getting rid of Sam Bass. That was one reason. Another reason was that Sam Bass's record on the hospital issue was one that we could argue quite easily, because on two occasions he had refused to help us in the issue of the privatisation. So we could categorically go to the electorate and say that he wasn't doing what he should be doing as the Callinan local member, and therefore you people out there shouldn't be voting him back in. That was in regard to the hospital. We were also aware that he tripped off overseas in the death knock of his term of office, when everybody was saying there is going to be election next week, or next month, or whatever, and in the face of all of the stuff about politicians going overseas, he went overseas. We just thought that was like jam on our toast. It would mean the public, and it was all over the place, that the public were already going to be against him on that issue, and there was that. And the third issue was in regard to the gun legislation where he actively opposed the Howard propositions and he was publicly known for doing that. So all we were doing was adding the Modbury Hospital action stuff to it, and we figured we would defeat him. That would benefit us in two ways. One is, we would get rid of a local member that was no good to us or, in fact, no good to the electorate, as we believe, and it would also bring greater attention to the Modbury Hospital issue, because we could claim that as a group that issue had been significant in defeating him and therefore if the Liberals got back into power, that would put more pressure on them to actually do something about the Modbury Hospital contract." A general election was to be held on 11 October 1997. On or before that date the first appellant authorised and distributed three documents. Having become aware of one of those documents, a pamphlet entitled "Free Travel Times" ("FTT") before the election, the respondent caused his solicitors, on 3 October 1997, to write to the first appellant to warn him that its contents were defamatory, and that it contravened s 113 of the Electoral Act 1985 (SA) 222. The first appellant responded on 3 October 1997 with an undertaking 222 "Misleading advertising (1) This section applies to advertisements published by any means (including radio or television). (2) A person who authorises, causes or permits the publication of an electoral advertisement (an advertiser) is guilty of an offence if the advertisement contains a statement purporting to be a statement of fact that is inaccurate and misleading to a material extent. Maximum penalty: If the offender is a natural person – $1 250; If the offender is a body corporate – $10 000. (3) However, it is a defence to a charge of an offence against subsection (2) to establish that the defendant – (a) took no part in determining the content of the advertisement; and (Footnote continues on next page) Callinan that he would take steps to stop the distribution of the FTT. The FTT was nevertheless distributed extensively to but not exclusively to a substantial number of the residences and business premises in the electorate of Florey. This was so despite the intervention of the Electoral Commissioner who sought a retraction of some, at least, of the material on the ground of its falsity. After the election, the first appellant pleaded guilty to two counts of publishing an electoral advertisement containing statements of purported facts that were inaccurate and misleading to a material extent. The first document of which the respondent complained was a postcard. On the face of it was a reproduction of a photograph of a beachfront, palm- fringed hotel and the words, "Greetings from Nauru". The other side of the postcard bore these words: (b) could not reasonably be expected to have known that the statement to which the charge relates was inaccurate and misleading. (4) If the Electoral Commissioner is satisfied that an electoral advertisement contains a statement purporting to be a statement of fact that is inaccurate and misleading to a material extent, the Electoral Commissioner may request the advertiser to do one or more of the following: (a) withdraw the advertisement from further publication; (b) publish a retraction in specified terms and a specified manner and form, (and in proceedings for an offence against subsection (2) arising from the advertisement, the advertiser's response to a request under this subsection will be taken into account in assessing any penalty to which the advertiser may be liable). (5) If the Supreme Court is satisfied beyond reasonable doubt on application by the Electoral Commissioner that an electoral advertisement contains a statement purporting to be a statement of fact that is inaccurate and misleading to a material extent, the Court may order the advertiser to do one or more of the following: (a) withdraw the advertisement from further publication; (b) publish a retraction in specified terms and a specified manner and form." Callinan "Dear Taxpayer, This is the postcard your politician Sam Bass should have sent you from the Pacific island paradise where he is enjoying a winter break at your expense. Geoff Roberts Clean Government Coalition P.S. When you vote, put Sam Bass last." The second document, the FTT contained printing in colour on A4 sized pages on each side and was headed "Free Travel Times". It showed a caricature of the respondent on the first page, and on the second, a completely false "Ansett Australia Frequent Flyer Activity Statement" in the name of Mr Bass. The third page was headed "How Sam Bass travelled the world and how taxpayers picked up the tab". It is a reasonable inference from the third page of the document, contrary to the facts, that each of the overseas destinations was reached after a separate and complete journey, rather than as a stopping place on another journey. For example, the so-called trip to Hong Kong was a stop-over lasting a night while the respondent was en route to London. On the back page there appeared the heading, "Bring the Frequent Flyer Back to Earth!" and a collage of various newspaper headlines about overseas travel by other Parliamentarians. One of the newspaper headlines stated "The bills MPs are refusing to pay", and another, "Minister pays back tenors ticket". There is no suggestion that the respondent misused his travel allowance or ever had occasion to reimburse the Treasury in respect of any money misspent. The caricature depicts the respondent at leisure, reclining, dressed only in bathing togs and sunglasses, in an exotic setting of palm trees, holding a drink in one hand, and an ice cream in the other, and being attended by a formally clad waiter holding a postcard. The words "Flat Out Working for You!" appear in large heavy print at the bottom of the page. The words "Parliamentary Traveller of the Year" and "Its [sic] from Adelaide … reads 'wish you were here' from your constituents" also appear. Over the purported activity statement the words "Bring the Frequent Flyer Back to Earth!" appear in heavy print. I reproduce the four pages of the document: Callinan Callinan Callinan Callinan The first appellant also authorised and arranged for the distribution at polling booths on election day of an orange card approximately 21cm by 10cm Callinan ("PSBL"). On one side it was headed "3 things Sam Bass has done as Member for Florey". There followed allegations about his parliamentary activities. On the reverse side it was headed "3 things Sam Bass will do if you vote him back in" and contained further allegations about his future conduct. At the foot of the page, and highlighted, was the comment "When you vote, PUT SAM BASS LAST". I set out a copy of that document. The second appellant handed out copies of the PSBL to electors on the day of the election after having been absent from South Australia until two days before it. He volunteered to an "action group" to distribute material critical of the respondent on polling day at a polling booth. This is his description of his preparations, reflections and actions with respect to the relevant material: I was just told that if I turned up at the polling booth at 8 o'clock, all the gear would be there for me. Callinan Q. Did you, in fact, attend the Ardtornish polling booth at or about 8 am on 11 October. Yes. Did you locate a box. A. Yes, there was a box there, just a cardboard box with all the stuff in Q. What did it have in it. It had the two pamphlets, our pamphlet which we produced and the 'Put Sam Bass Last' card. Could the witness be shown P4. Is that the document that you refer That's right. The other document, being the document I think you had in front of you just a moment ago, which was [a pamphlet distributed by the Modbury Hospital Action Group]. Is that the other one that was in the box. Yes. I take it you had seen [it] before. Yes. Had you seen the other document, the orange document. This one here. (INDICATES) No. Q. When you saw it, did you read it. Yes. Q. Was there anything in it which caused you any concern. Q. What did you then proceed to do. I just grabbed them and put them together as I handed them out. For how long did you stay at that polling booth that day. Callinan A. My recollection is that I was there from 8 until 10 or thereabouts." At no time did either appellant seek to obtain the respondent's views about his travels or any details of them from him. Neither had any knowledge of the actual details of his stance on laws for the control of firearms. In the event, the respondent was defeated at the election by about 520 votes. The proceedings in the District Court The respondent brought an action for defamation against a number of people, including the appellants in the District Court of South Australia. It is with the claim against the latter only that this Court is concerned. The respondent pleaded that the FTT conveyed the following imputations: "(a) That the [respondent] had corruptly used his position as a member of Parliament to obtain a holiday at Nauru for his own benefit. That the [respondent] whilst attending the Nauru Resort was neglecting his responsibilities to his constituents in the seat of Florey in the Parliament. That the [respondent] had taken advantage of his position as a member of Parliament to obtain a free holiday for his own purposes. That the [respondent] had used his position as the member of Parliament to accrue Frequent Flyer Points for his own use and for the use of the members of his family. That the [respondent] had on numerous occasions used his position as a member of Parliament to accrue Frequent Flyer Points for his own benefit and for the benefit of the members of his family. That overseas trips taken by the [respondent] in the course of his Parliamentary duties were in fact undertaken not in pursuit of his duties as a member of Parliament and the interests of his constituents in the seat of Florey but for his own interests and recreational pursuits." The respondent pleaded these imputations in respect of the PSBL: "(a) That the [respondent] had spent $32,000.00 of taxpayers' money on overseas travel. That the [respondent] had spent $32,000.00 of taxpayers' money for overseas travel for the purpose of his own enjoyment and not for Callinan the proper purpose of such travel, namely to enhance the [respondent's] knowledge of the better relevant performance of his role as a member of Parliament. issues That the [respondent] had taken numerous overseas trips for his own benefit and enjoyment at the taxpayers' expense. That the [respondent] had taken numerous overseas trips for his own benefit and enjoyment and not for the intended purpose of such trips, namely to enable him to better serve the interests of the Parliament of South Australia and the members of this electorate. Contrary to his responsibility as the member of Parliament for Florey failed to take appropriate steps to prevent clandestine arrangements being put in place in respect of the management of the Modbury Hospital, contrary to the interests of the members of the electorate of Florey and the public of South Australia generally. That the [respondent] had put the rights of those interested in the right to possess and utilise guns ahead of the safety of members of ordinary families. That the [respondent] had not spent sufficient time in his electorate to properly discharge his duties as the member of the seat of Florey. That the [respondent] was not spending sufficient time in the electorate of Florey to enable him to adequately fulfil his duties as the member for Florey. That if the [respondent] was elected to the member of Florey and then subsequently elected as Speaker of the House of Assembly then he would spend less time than the time that he was currently spending in the electorate." And as to the meaning of the contents of the postcard the respondent pleaded these imputations: "(a) That the [respondent] had taken a holiday trip to Nauru at the expense of the taxpayers of the seat of Florey. That the [respondent's] holiday at Nauru was for his own enjoyment, at the expense of the taxpayers of the seat of Florey, and not in the proper pursuit of his duties as a member of Parliament and as the member of the seat of Florey." Callinan By his amended defence, the first appellant first denied that the imputations pleaded by the respondent were conveyed. He then asserted that some of the facts stated in the respective documents were true, including that the respondent had travelled overseas at the expense of taxpayers. He pleaded in the alternative that the words complained of were fair comment on a matter of public interest, the conduct of the respondent as a Member of Parliament and as a candidate for election. Other matters said to be true were that the respondent had enjoyed numerous "junkets" at public expense, including trips to the United Kingdom and Nauru, that he had stood by and done nothing to stop "secret deals" at the Modbury Hospital, that he had put gun rights ahead of the public's safety, and that he had enjoyed a winter break at taxpayers' expense. The first appellant also set up defences of qualified privilege in respect of each of the three documents and the totality of them. That in so doing the first appellant was relying on a defence of common law qualified privilege ("conventional qualified privilege") and not any extended form of it of the kind referred to by this Court in Lange v Australian Broadcasting Corporation223 appears from a particular which is common to the defence in respect of each of the publications: "[p]ublication was only made to persons who could be expected to be enrolled as electors". This view of the first appellant's pleading is reinforced by the emphasis placed upon reciprocity in par 24.10 of the amended defence which was as follows: "In the premises, the [first appellant] had an interest and the electors of Florey had a reciprocal and corresponding interest (or apparent interest) in the matters the subject of the documents and postcard. " Paragraph 24.12 which sets up that the mode, manner and extent of publication were reasonable in the circumstances, does not appear to me to raise what I will refer to, for convenience, as the "Lange defence", because of its juxtaposition with par 24.5 and the absence of any other expression in the pleading to indicate reliance upon such a defence. The respondent filed a reply denying several of the facts (including reasonableness of the appellants' conduct) alleged in the amended defence and that the words complained of were fair comment: and further alleging that the first appellant published the relevant matter with actual malice. The respondent pleaded that malice should be inferred from the language used, the form of the documents, and these circumstances: "(b) The publication of FTT was made shortly prior to the election referred to in paragraph 2 of the Statement of Claim. 223 (1997) 189 CLR 520. Callinan The depiction of the [respondent] in the caricature … was such as to lower the reputation of the [respondent] and hold him up to ridicule and contempt. The depiction of the [respondent] was such as to suggest excessive consumption and sloth on the part of the [respondent]. The words and layout of the words 'Parliamentary traveller of the year' were such as to suggest that the [respondent] travelled more than any other parliamentarian when the [first appellant] had no basis for making such allegation and such allegation was not true. The words 'flat out working for you' in conjunction with the caricature was such as to suggest extreme sloth and failure to attend to his duty by the [respondent]. The reference to 'frequent flyer' in association with the depiction of a false Ansett Australia Frequent Flyer Activity Statement when the [first appellant] had no basis for suggesting the [respondent] was a member of Ansett Frequent Flyer and such was not in fact the case. that The depiction of apparent newspaper cuttings on the final page of FTT in association with the identification of the [respondent] suggested such cuttings were relevant to the [respondent's] activities when the [first appellant] had no basis for such suggestion and such was not the case. The get up and layout of the FTT was such as to suggest a serious abuse by the [respondent] of his position as a member of Parliament when there was no basis for such suggestion and such was not the case. The failure of the [first appellant] to contact or seek the truth in relation to any travel of the [respondent] from the [respondent] prior to publication." Additionally, the respondent contended that the first appellant had not acted reasonably, and had no reasonable basis for believing the matter published to be true. The second appellant's defence with respect to the PSBL which he distributed on the day of the election was, in relevant respects, the same as the first appellant's defence and included an allegation identical to pars 11.5 and 24.12 of the first appellant's defence as well as one of the reasonableness of his conduct. Callinan The respondent's action was heard by Lowrie DCJ without a jury. One of the witnesses at the trial was the Electoral Commissioner. He accepted that he could request, but not direct a retraction of electoral material. He had had much experience with respect to the distribution of such material. His request that a suitable retraction be distributed within three days was influenced by his past experience and knowledge that the period proposed was adequate224. The trial judge carefully reviewed the evidence of the parties. His Honour found that the publication which the Commissioner had requested be retracted had continued to be delivered after his request and that there was no attempt to publish any retraction225. Some time before polling day, his Honour found, the first appellant was well aware that the respondent was not a member of any frequent flyer club, had not taken any personal advantage of rights of travel on parliamentary business, and had never used public money for private purposes226. Notwithstanding this knowledge, the first appellant continued to prepare and circulate more than 12,000 pamphlets which referred to "numerous junkets at [the public] expense". His Honour was satisfied that the first appellant had neither care nor concern whether the matters stated were true or false providing that the first appellant's aims could be achieved227. As to the second appellant, his Honour was satisfied that he was prepared to adopt any means to achieve the aims of his group to remove the respondent from office. He took no steps to prove the accuracy or otherwise of the pamphlet he distributed on the day of the election228. His Honour considered the meaning to be given to the documents. He was satisfied that the postcard conveyed that the respondent "had embarked on a holiday at a paradise resort and in doing so had misused taxpayers' money"229: that the publication was clearly aimed at the disparagement of the respondent's reputation and reflected on his integrity, portraying him as a Member of Parliament who had misused public money. The primary judge analysed the FTT to conclude that it conveyed similarly defamatory imputations, in stronger, if any, terms than the postcard, and 224 Bass v Roberts and Case [2000] SADC 35 at [82]-[85]. 225 Bass v Roberts and Case [2000] SADC 35 at [194]. 226 Bass v Roberts and Case [2000] SADC 35 at [196]. 227 Bass v Roberts and Case [2000] SADC 35 at [197]. 228 Bass v Roberts and Case [2000] SADC 35 at [267]. 229 Bass v Roberts and Case [2000] SADC 35 at [213]. Callinan that it was highly defamatory of the respondent230. His Honour then considered the meaning of the third document, the PSBL and held that it conveyed the nine imputations which the respondent had pleaded. After rejecting the appellants' contentions that the publications were not defamatory, his Honour dealt with a defence of fair comment on a matter of public interest. He accepted that wide latitude should be allowed to the expression of even ignorant or prejudiced opinions if they were honestly held231. It was his opinion however that no fair-minded person could possibly attribute to the respondent the substance of the allegations that had been made against him in the documents. The facts upon which any comments were based were not true. Such comments as were made were misstated and distorted. Accordingly, the defence of fair comment failed. The primary judge turned to the defence of qualified privilege. He was prepared to accept that the appellants had pleaded their case on alternative bases, conventional qualified privilege and its extended "Lange" form in respect of communications on government or political matters232. I would make two observations about his Honour's approach. That a communication is in respect of government and political matters may well be relevant to a defence of conventional qualified privilege if reciprocity of interest and the other conditions for its invocation are present. The decision in Lange would add nothing in that situation except that the Court may have suggested that the fact of a political contest might affect the meaning of malice as it had previously been understood in a traditional common law sense233. The second observation is that it is by no means clear on the appellants' pleadings that they did intend to raise a Lange defence. It may be, that in the course of evidence and submissions, it became apparent that they had so intended. For present purposes however, as will appear, it is relevant that the primary judge made all necessary findings with respect to, and gave full consideration to the availability or otherwise of a Lange defence234. 230 Bass v Roberts and Case [2000] SADC 35 at [222]. 231 Bass v Roberts and Case [2000] SADC 35 at [234]. 232 Bass v Roberts and Case [2000] SADC 35 at [242]. 233 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 234 Bass v Roberts and Case [2000] SADC 35 at [242]. Callinan The defence of conventional qualified privilege failed. His Honour held that reciprocity, or sufficient reciprocity of interest had been demonstrated235. The occasion of each publication was therefore a privileged one236. But, his Honour also held, the respondent had established malice sufficient to defeat or rebut the plea of qualified privilege. In so deciding, his Honour was attentive to the fact, as Lange holds237, that it might not be improper, and therefore not malicious, for a person to have a motive of causing political damage to a person or to that person's party in a case in which a defence based on that case is properly raised238. He next said that it was an open question whether, in a case of conventional qualified privilege, a motive of causing political damage might still, in some circumstances, constitute malice. It was unnecessary, however, for the trial judge to answer that question in this case because the appellants' "main intention was to injure the [respondent] and to lower his estimation in his fellow persons by making them think less of him." All three publications were part of a strategy designed to have this effect239. It was his opinion that the improper conduct of the appellants was compounded by, on the part of the first appellant, his indifference to the truth of the defamatory matter, and on the part of the second appellant, his indifference to the truth, by his abstention from doing any research or making any inquiries about its accuracy before he distributed it240. Other matters also gave rise to his Honour's inference of malice. One of these was the first appellant's failure to take positive steps to discontinue the distribution of the FTT and his failure to retract it. The actions of the second appellant, his Honour thought, might not have been as recklessly blatant as those of the first appellant, but nonetheless, the former's motive to injure the respondent's reputation and remove him from office was improper and malicious. He expressly found that "the [appellants'] dominant purpose went far beyond the mere desire to foil the [respondent's] prospects of re-election." The primary judge next dealt at some length with the possibility of a Lange defence. He was alive to the relevant aspects of it. But, even so, he held, the defence was defeated and must be rejected in this case because the actions of the appellants were not reasonable ones. They made no attempt to check the accuracy of the material. Some of it they knew, or must have known to be false. 235 Bass v Roberts and Case [2000] SADC 35 at [246]. 236 Bass v Roberts and Case [2000] SADC 35 at [249]. 237 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 574. 238 Bass v Roberts and Case [2000] SADC 35 at [252]-[254]. 239 Bass v Roberts and Case [2000] SADC 35 at [254]. 240 Bass v Roberts and Case [2000] SADC 35 at [256]. Callinan The respondent was given no opportunity to answer the allegations. The appellants did not, and could not possibly have believed, particularly in the case of the first appellant, the imputations to be true241. It is unnecessary to deal with a Polly Peck242 defence which was also pleaded, because his Honour rejected it and it was not relied upon in this Court243. Compensatory damages in the sum of $55,000 and exemplary damages of $5,000 were awarded against the first appellant, and $5,000 by way of compensatory damages were awarded against the second appellant. The appeal to the Full Court of the Supreme Court of South Australia The appellants appealed to the Full Court of South Australia (Prior, Williams and Martin JJ). Neither before, nor during the hearing of the appeal, whether pursuant to r 95.05 of the Rules of the Supreme Court of South Australia244 or otherwise, did the respondent contend that the occasion of each of the publications was not an occasion of conventional qualified privilege. Indeed, as I read his submissions and those of the appellants, the real issue upon which the parties joined was of "malice" or no. The appellants jointly relied upon one notice of appeal. The first five grounds are essentially complaints about findings of fact made by the trial judge and the primary judge's conclusion that the documents were defamatory of the 241 Bass v Roberts and Case [2000] SADC 35 at [261]-[271]. 242 Polly Peck (Holdings) plc v Trelford [1986] QB 1000. 243 Bass v Roberts and Case [2000] SADC 35 at [277]. 244 "95.05 Where a respondent wishes to contend that the decision of the Judge or Tribunal appealed from should be affirmed on grounds other than those relied upon by that Court or tribunal, he shall not less than three clear days before the first day of the appeal sittings for which the appeal is set down: (a) file a notice of his contention stating the grounds relied upon in support thereof; (b) lodge at the Registry three copies of such evidence or documents as are relevant but not included in the appeal book; (c) serve copies of the material lodged under this Rule, on each other party to the appeal." Callinan respondent. The sixth ground is that the primary judge failed to identify and distinguish between fact and comment. The ensuing grounds amount to complaints about the primary judge's findings of motive and improper purpose and whether the appellants' conduct was capable of constituting "actual malice". There is a reference in the grounds to "the traditional plea of qualified privilege" and to the trial judge's finding "in respect to the extended defence of qualified privilege [that] the [second appellant] failed to act reasonably." It is not possible, in my opinion, sensibly to read the notice of appeal as raising as a ground, any alleged error on the part of the primary judge with respect to his Honour's finding, adverse to the first appellant that a Lange defence was not open to the first appellant. This appears clearly enough from the specific reference to "the extended defence" in relation to the second appellant who does appear to have sought to raise it at that stage, and the absence of any like reference on the part of the first appellant. Lange defence abandoned During the course of the appeal to the Full Court the appellants abandoned the defence of fair comment. They also abandoned, it seems to me, any possible reliance upon a Lange defence, even in relation to the second appellant, albeit that they may have done so on the basis of a misconception about their prospects of success on the defence of traditional qualified privilege. Counsel for the appellants said this during argument in the Full Court: "[I]t became obvious to the appellant[s], when the respondent did not challenge his Honour's finding, that all three publications were the subject of qualified privilege, that it was unnecessary. In 4.3 [presumably of the written submissions], we make the point that His Honour specifically found that the privilege, which existed, was the traditional Toogood v Spyring duty reciprocal duty of privilege. It was not the extended Lange privilege associated with publications in government on political matters. What his Honour found was that here the [appellants], having an interest in this election, published the materials only to electors in the electorate, and there was a reciprocal duty which existed, so it was the traditional common law qualified privilege that he was concerned with. The point that we make, in 4.3, is that as a result of that this court is not concerned with the issue of 'reasonableness'. The court will appreciate, as a result of the Lange decision, in respect of media publishers, they are now entitled to publish defamatory material to the world at large. In respect of when or what they address is a matter of Callinan government or political nature, but quite apart from having to run the traditional gauntlet of malice, they have, as well, to overcome the hurdle of reasonableness, and here we're not concerned with reasonableness." Prior J queried the meaning of what the appellants' counsel had said. His Honour pointed out that the primary judge did deal with the Lange defence. In response, counsel for the appellants said this: "He does. I don't understand it would be subject of any challenge, I think he does it to cover all the bases. It was a live issue before him, because if his Honour had found, contrary to what he did find, that the publication was too wide, that the traditional qualified privilege didn't apply. Then there was a further argument that had to be put to him. In that circumstance he then had to address his mind to the extended privilege, and he, having found for the [appellants] on the first traditional qualified privilege, it wasn't really necessary for him to go ahead then to deal with the Lange privilege, but his Honour did, and no doubt for good reasons. That finding may have been the subject of challenge in this appeal court and then it would have been appropriate that the extended privilege had also been addressed by him. I don't think this court needs to be concerned about what his Honour says on the extended privilege on those pages." The appeal failed. The cross-appeal succeeded with respect to the first appellant and was rejected so far as the second appellant was concerned. The respondent's compensatory damages were reassessed at $20,000 for the postcard, $35,000 for the FTT, and $45,000 for the PBSL distributed on the day of the election. The members of the Court divided on some issues. "The published material was defamatory of the plaintiff having the defamatory meanings contended for and found made out at the trial. The defences of qualified privilege failed. It is plain from the findings made by the trial judge that neither appellant had an honest belief in the truth of what was published. [The second appellant] was properly found to be recklessly indifferent to the truth or falsity of the material he published. [The first appellant] was properly identified as a person with an improper 245 Roberts and Case v Bass (2000) 78 SASR 302 at 304-305 [2]. Callinan motive and no honest belief in the truth of what he published246." (Emphasis added) After setting out some of the trial judge's findings as to the first appellant's state of mind Williams J said this247: "These are strong findings; in my opinion they are adequately supported by the evidence. [The first appellant] was told that his allegations lacked foundation some eight days before polling day, but he persisted with the thrust of his allegations of impropriety. [The second appellant] acknowledged that the plaintiff had been selected because he was a 'soft target'. He could not provide any basis for a belief in the allegations. I reject the submission made on the part of the appellants that they should be treated as having honest beliefs in the relevant respect." (Emphasis added) His Honour made this finding about the motives of the appellants248: improper purpose might be one where "Upon the evidence I am unable to identify any improper purpose attaching to the actions of either [appellant] and in this respect I would disagree with the conclusion of the trial judge. The typical case of dominant the defendant unnecessarily uses a privileged occasion simply to vent his spleen upon the plaintiff: see, for example, in Angel v H H Bushell & Co Ltd249, where the defendant sought to gratify feelings of animosity arising out of a failed business transaction by reporting the facts to a business referee who had previously recommended the plaintiff as trustworthy. Another example of improper motive would be where the defendant is seeking to obtain some private advantage unconnected with the privilege250. The privilege for matter published in an election campaign is based upon an interest or duty of informing the electorate of the merit (or lack of merit) of a candidate and this privilege extends to statements made on behalf of other candidates. In my view the facts are consistent with the 246 Horrocks v Lowe [1975] AC 135 at 149-150; Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 50, 51. 247 Roberts and Case v Bass (2000) 78 SASR 302 at 314 [33]. 248 Roberts and Case v Bass (2000) 78 SASR 302 at 316 [43]-[44]. 249 [1968] 1 QB 813 (see especially at 831). 250 See Horrocks v Lowe [1975] AC 135 at 150. Callinan [appellants] becoming over-enthusiastic in the support of their electoral cause. They do not appear to have any special desire to hurt the plaintiff otherwise than in terms of his prospects of re-election. The plaintiff bore the onus of proof on this matter: I would not uphold the trial judge's finding as first appellant's] improper motive, although [the intransigence when faced with the true facts is not to his credit." (Emphasis added) The third member of the Court, Martin J expressed this view on the question of motive. After detailed reference to Lord Diplock's speech in Horrocks v Lowe251 his Honour said252: "Applying those principles to the defence of qualified privilege advanced by [the first appellant], if the plaintiff proved that the dominant motive of [the first appellant] for the defamatory publications was a desire to injure the plaintiff, the defence failed. In my opinion, the evidence was sufficient to justify the conclusion reached by the learned trial judge that [the first appellant] possessed a dominant motive to injure the plaintiff. [the first appellant] engaged in a course of conduct over some months which was demonstrative of his ill-will toward the plaintiff. His conduct when faced with requests by the Electoral Commissioner to correct his errors confirmed his ill-will as did the tenor and content of his evidence. In my opinion, therefore, in this respect the finding of the learned trial judge should be upheld." (Emphasis added) With respect to the second appellant Martin J was of the opinion that his primary concern was to achieve the defeat of the respondent at the election, and that his motives were not malicious. But his Honour held that the second appellant had been shown to be indifferent to the truth about the respondent and was therefore liable to him. He said253: "The professed beliefs of [the second appellant] as to other statements were based on inadequate evidence and were influenced by both his enthusiasm for the cause of the Modbury Hospital and his desire to see the plaintiff removed from office. Notwithstanding those inadequacies, I doubt that the evidence justified a finding that [the second appellant] did not possess those professed beliefs. However, it is not necessary to decide this issue. The learned trial judge was satisfied that [the second appellant] was indifferent within the meaning of the test posed 251 [1975] AC 135 at 149. 252 Roberts and Case v Bass (2000) 78 SASR 302 at 325-326 [82]. 253 Roberts and Case v Bass (2000) 78 SASR 302 at 337 [103]-[104]. Callinan by Lord Diplock. That conclusion was reasonably open on the evidence. In particular, [the second appellant] was indifferent to the imputation in the statement that the plaintiff was of such a character that he placed more importance on the rights of persons with respect to firearms than the safety of the electors' families. Having reviewed the evidence, I am also satisfied that [the second appellant] was indifferent to the truth of the imputation apparent from the card viewed in its entirety that the plaintiff had engaged the discharge of his parliamentary responsibilities. in discreditable conduct For these reasons, in my opinion the appeals by the [appellants] against the findings of liability should be dismissed." (Emphasis added) The appeal to this Court The appellants appeal to this Court from the dismissal of the appeals to the Full Court of the Supreme Court of South Australia. In their joint notice of appeal to this Court, the appellants use two expressions, "dominant motive" and "express malice" to which later reference will be required. The notice of appeal does not, in terms, seek to raise a Lange defence. Having, at best, pleaded it obscurely at first instance, and having renounced any intention of seeking to show that the appellants acted reasonably during the appeal to the Full Court, they would not now, in any event, be entitled to rely upon it254. Nonetheless, in this Court, an attempt was made, as will appear, to invoke some aspects at least of what was said by this Court in Lange, notwithstanding that the primary judge's finding of unreasonableness on their part stands unchallenged, and in my opinion is unchallengeable. The appellants' grounds of appeal include that the first appellant's dominant motive, to cause political and electoral damage to the respondent could not, in effect, be a malicious motive: that because Williams J and Martin J in the Full Court found that the second appellant did not publish pursuant to any improper purpose, their Honours should have, but failed to consider whether, the, or a "proper purpose" of his publication was the dominant purpose of the publication, in which event any "extraneous malice" would be rendered irrelevant; alternatively, in the case of the second appellant "extraneous malice" should be ignored or disregarded because the publication was of political advertisements during an election campaign. The grounds of appeal also seek to set up that the Full Court failed to identify any motive other than a desire to cause political and electoral damage to 254 University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481; 60 ALR 68. Callinan the respondent, and that the primary judge's assessment of improper purpose coloured his findings about the appellants' beliefs, and therefore provided an unreliable foundation for the conclusions of the Full Court. Other factual matters were raised, that during an election "actual malice" needs to be established with convincing clarity, and that false statements are unexceptionable unless made "with a high degree of awareness of their probable falsity". The appellants' notice of appeal further contends that there was a failure on the part of the Full Court to identify any false statements, and that one at least of the members of the Full Court, Martin J, treated the trial judge's finding of "actual malice" as an unreviewable finding of fact. The thrust of the appellants' written submissions is that even in a case of conventional qualified privilege, the decision of this Court in Lange exerts an influence: that in some way "express malice" assumes a different form and complexion in a political context during an election campaign. Contrary to their express disavowal in the Full Court of reliance upon a Lange defence, the appellants tried to argue the reasonableness of their conduct, and indeed asked this Court to give them the benefit of "the extended Lange privilege". They also urged that "the implied Constitutional freedom of expression affect[ed] the matter", specifically that an appellate court's approach to express malice should be coloured by the existence of an implied constitutional freedom of expression. Lange defence unavailable and untenable With respect generally to the Lange defence I would adhere to the opinions I expressed in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd255. It is unnecessary, however, for me to decide whether I am bound to, or should apply it, in this appeal for a number of reasons. But I would add this to what I said in Lenah. Freedom of speech is no more under threat today than it was when the Constitution was drafted. That situation owes nothing to Lange. It is a situation that has existed throughout at least the last 40 years. Indeed, if anything, the contrary is the case. This has explicitly recently been recognized in the United States and the United Kingdom by practitioners and academic observers of the art of journalism256. Australia is not unique in this 255 (2001) 76 ALJR 1 at 71-72 [338]; 185 ALR 1 at 97. 256 Writing of the media and others in the New Statesman on 4 June 2001 the journalist John Lloyd deplored the relentless attacks to which politicians are being subjected today: "[t]hey do not consider … the truly radical thought that politicians assist rather than destroy the maintenance of civil society; that they are precious rather than disgusting individuals in a time of media dominance; that they defend rather than pollute the public sphere" ("The Scorn of the Literati", New Statesman, 4 June Callinan respect. The same trends are readily apparent here. The expression "chilling effect [upon political discourse]" is no more than a metaphor, and, like many metaphors, an extravagantly inaccurate one. And, if proof be needed of the undesirability of the importation, after more than 90 years, into the Constitution of an hitherto undetected judicial implication, this case provides it. It will take years, years of uncertainty and diverse opinion for the Court to reach a settled view of the elements of the defence and the way in which it is to be applied. Lange certainly does not exhaustively define its impact on the law of defamation. I doubt whether any case, or series of cases will ever do so, and, as defamation is not a head of federal constitutional power, legislation can never be enacted to resolve the recurrent uncertainties to which it gives rise. Furthermore, as the Chief Justice in his reasons in this case points out257, the need for the common law to conform to the Australian Constitution [and therefore, I would add, the need at all for a new form of constitutional defence] is difficult to reconcile with the co-existence of different tests for qualified privilege in the context of political debate. The first reason why a Lange defence must fail, as I have already intimated, is that it is simply not available to the appellants because it was expressly abandoned. That the appellants may have done this because of a misconception about their prospects of success on appeal on a conventional qualified privilege defence, or that the reasonableness or otherwise of their conduct was, in their view, irrelevant to such a defence, cannot avail them on appeal. They are bound by their conduct of the appeal to the Full Court. The fact that the defence is a "constitutional defence" makes no difference. If it were otherwise, a party might be able to abandon and revive at will a particular defence as it appeared to that party to be expedient to do so from time to time. This was an ordinary piece of litigation between citizens. No party is bound to rely on every apparently available defence, whether it is a constitutional one or not. On any view of the merits, the appellants' conduct was unreasonable. It should not be assumed, as the appellants appear to have done, that findings of conduct sufficient to defeat a defence of conventional qualified privilege will be irrelevant to any question of the reasonableness of publishers' conduct and vice versa. It is difficult to imagine how anybody could be thought to be acting reasonably who is moved to act by spite, recklessness, utter indifference to the truth, abstention from inquiry about it, or failure to warn or give notice to the subject of the defamatory matter, and, who commits an offence in, or in connexion with the publication of it. Conduct which is malicious so as to defeat a conventional qualified privilege defence, conduct which is in contumelious disregard of a plaintiff's rights so as to give rise to an award of exemplary 257 Reasons of the Chief Justice at [3]. Callinan damages, and unreasonable conduct generally, whether relied on for the purposes of demolishing a Lange defence or otherwise are likely to have much in common. A defendant's conduct right up to the moment of verdict is not only relevant to the issues of both aggravated and exemplary damages, but also will usually throw light upon a publisher's motives, purposes and true intentions at the time of publication. The manner of conduct of the actual trial by a defendant is itself capable of providing a basis for a finding of malice in publication258. Something in addition needs to be said about recklessness generally and in the context of a Lange defence. With respect to the latter, nothing could be clearer than the Court's pronouncement259 that it is for "the publisher to prove reasonableness of conduct." Negligence is simply a want of reasonable care. That would therefore defeat a constitutional defence. Recklessness, a type of excessive conduct beyond mere carelessness also undoubtedly must do so. And as the Court further said260, "as a general rule, a defendant's conduct … will not be reasonable unless the defendant had reasonable grounds for believing that the imputation was true, took proper steps, so far as they were reasonably open, to verify the accuracy of the material and did not believe the imputation to be untrue." Recklessness is, and has always been available as providing a basis for a finding of malice. Bases for findings of malice What the appellants' submission also ignores, are the content and tone of the language used in the defamatory publications. The language itself, in some, indeed many cases may be sufficient to give rise to an inference of malice. In this case, the dogmatic, categorical, and unpleasant tone and content of each of the documents go at least some way towards establishing malice: taken with the other matters referred to by the primary judge they provide ample grounds for a firm conclusion about it. Both in their submissions and in their grounds of appeal, the appellants refer to "express malice" or "actual malice". There is a reference to malice in the judgment of Lord Nicholls of Birkenhead NPJ in Tse Wai Chun Paul v Cheng. His Lordship said this of it261: 258 Australian Consolidated Press Ltd v Uren (1966) 117 CLR 185 at 192 per McTiernan J. See also The Herald and Weekly Times Ltd v McGregor (1928) 41 CLR 254 at 267-268 per Isaacs J as to proof of state of mind. 259 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 574. 260 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 574. 261 [2001] EMLR 777 at 783 [23]. Callinan "In ordinary usage malice carries connotations of spite and ill-will. This is not always so in legal usage. In legal usage malice sometimes bears its popular meaning, sometimes not. It is an imprecise term. Historically, even within the bounds of the law of defamation, malice has borne more than one meaning. Historically, defamation lay in publishing the words complained of 'falsely and maliciously'. In this context malice meant merely that publication had been a wrongful act, done intentionally and without lawful excuse262. This was sometimes called malice in law, as distinct from malice in fact. But even malice 'in fact', otherwise known as express malice or actual malice, may cover states of mind which are not malicious in the ordinary sense of the word. This is so in the context of the defence of qualified privilege. It is no wonder that Lord Bramwell described malice as 'that unfortunate word'263." The modern common law need draw no distinction between malice and express or actual malice. Malice may include a variety of motives such as improper motive, dishonest purpose, indirect motive, collateral purpose, spite or ill-will, but not, necessarily, it may be said, the motive of damaging a candidate's political prospects. The qualifying words "actual" or "express" add nothing except uncertainty and should be avoided, particularly when, in practice, malice is usually to be inferred in greater or lesser degree from a combination of two or more of the matters capable of providing evidence of it. The appellants used the terms "dominant purpose" and "dominant motive" in their submissions. Lord Nicholls in Tse Wai Chun Paul v Cheng also used those expressions throughout his judgment. The latter was used by Lord Diplock in Horrocks v Lowe264. Its use, also, in my respectful opinion, may mislead. The expression "absence of malice"265 aptly captures the essential quality of the 262 See Bayley J in Bromage v Prosser (1825) 4 B&C 247 at 255 [107 ER 1051 at 263 See Abrath v North Eastern Railway Co (1886) 11 App Cas 247 at 253. 264 [1975] AC 135 at 149, 150. 265 In the seventh edition (1974) of Gatley on Libel and Slander, the last edition before the decision of the House of Lords in Horrocks v Lowe [1975] AC 135, the expression "absence of malice" or "without malice" occurs repeatedly. For example: at pars 612; 807; 808 (with respect to an offer of amends under the Defamation Act 1952 (UK)); 1301 and 1330 ("absence of any malicious motive" on the question of mitigation of damages). After Horrocks v Lowe the expression "dominant motive" appears, presumably because of its use then by Lord Diplock (see for example par 16.3 in the ninth edition (1998) of Gatley). See also however the criticism of Horrocks v Lowe at par 16.6 of that edition. "Absence of malice" is (Footnote continues on next page) Callinan purpose or motive required of a defendant to enable him or her to enjoy the benefit of a defence of qualified privilege. In order to defeat a defence of qualified privilege therefore, it will suffice for the plaintiff to demonstrate that the publication was not made out of a non-malicious motive, or motives: the presence of a malicious motive will colour and inescapably taint the conduct of a publisher. It follows that the appellants' submissions to the extent to which they rely upon a distinction between some lesser motive than a dominant motive, and a dominant motive, and between malice on the one hand, and express or actual malice on the other, are not well founded and do not advance the appeal. Even if they were useful and valid expressions, the appeal would fail, because of the factual findings which have been made against the appellants on the issue of conventional qualified privilege. Appellants' grounds of appeal misconceived In their written submissions the appellants put this: "The Appellants anticipated a cross-appeal on the common law finding, but none was forthcoming. In those circumstances the Appellants considered that there was no need for them to take on the additional onus of establishing reasonability266. They advised the Full Court accordingly and did not pursue their Appeal to the Full Court against the Trial Judge's rejection of the Lange defence." Notwithstanding the appellants' abandonment of reasonableness in the Full Court, the absence of any reference to a Lange defence in the appellants' notice of appeal to this Court and the paragraph in the written submissions that I have just quoted, during oral submissions the appellants put this proposition: "[B]ut we say that, indeed, the appellants did establish reasonableness, that [sic] Lange defence was pleaded and pressed as an alternative and the the expression used with apparent approval in this Court, for example in Smith's Newspapers Ltd v Becker (1932) 47 CLR 279 at 291 per Rich J; Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 142 per Menzies J; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 243, 249 per Brennan J; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 133 per Mason CJ, Toohey and Gaudron JJ, 145 per Brennan J, 175 per Deane J and Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 572 where the Court uses the expression "without malice". 266 Makeig v Derwent [2000] NSWCA 136. Callinan appellants asserted there was no obligation in material such as this to seek the response of a political opponent. That was not reasonable. That would never happen, to distinguish it from the situation a [sic] the mass medium." The primary The misconceptions continue. judge's finding of unreasonableness did not depend simply upon the failure of the appellants to seek a response from the respondent. Their unreasonableness had many aspects: the content and tone of the published matter, in the case of the first appellant, the compilation of a false and highly damaging document, the frequent flyer statement in the respondent's name, the failure to make any genuine inquiries about its subject matter before its publication, the deliberate attempt to humiliate, and therefore to ridicule the respondent by depicting him as, in effect, an uncaring, dishonest sybarite luxuriating in a tropical paradise at public expense, and worst, persistence in the publication of false matter after his attention had been drawn to its falsity, and in doing so, committing a quasi-criminal offence which he admitted afterwards by pleading guilty, and for which he was punished. It is also important to keep in mind that by the time the matter had reached the Full Court, the appellants had abandoned any claim of fair comment and made no attempt there or here to identify any such comment in the published material. So far as the second appellant is concerned, to turn up as a volunteer on the day of the election, to distribute defamatory matter in the form of the PSBL without having made any inquiries about its accuracy at all, well knowing, as he must have done, that the respondent would dispute, to say the least, many of the purportedly factual allegations contained in it, to distribute the material in a claimed state of indifference as to its truth; and being determined, as the trial judge found, to oust the respondent from Parliament at the election, were collectively well capable of being regarded as unreasonableness and malice on the part of the second appellant, even if the last taken alone might not be. The ambiguous question that the second appellant was asked, presumably after deliberation by his counsel, and which evoked a negative response would do nothing to dispel the inference of malice available against the former: "Was there anything in [the card] which caused you any concern?" It is necessary to deal with yet another misconception upon which the appellants' appeal was based. It is that a finding of malice and perhaps unreasonableness, is either a finding of law or a finding of mixed law and fact. A finding of malice is quintessentially a finding of fact. It stands in the same category as a finding whether a defamatory imputation is conveyed by a publication. Whether the evidence is capable of giving rise to a finding of malice is, just as, whether matter is capable of conveying a defamatory imputation, a question of law for a trial judge. But when a trial judge finds the relevant Callinan capacities, then it is entirely a matter for the jury, or a judge sitting alone, to decide as a question of fact whether the capacities have been realized. Often, animosity, collateral purpose, intransigence and other elements of malice, or unreasonableness will appear peculiarly from the way in which a witness conducts himself or herself in giving evidence. A fact finder's advantages in relation to these matters will generally be very real ones. Lange defence would fail if it were available Even if it were available in this case, the Lange defence would inevitably fail for the reasons that I have stated. Malice made out What then remains? I would accept that the imminence of an election and the heat of the emotions to which politics give rise are not irrelevant to a determination whether a publisher's conduct or motive is malicious. But the law of this country has not reached the stage of tolerating, for the purposes of deciding whether a defence of conventional qualified privilege will succeed, or countenancing blatant lies. The frequent flyer compilation in respect of the respondent was no more than a set of blatant lies, persisted in, even after an independent authority (the Electoral Commissioner) pointed out its falsity. On account of it, and without reference to other aspects of the first appellant's conduct, his defence of conventional qualified privilege had to fail. Nor has the law of this country reached the stage of accepting utter indifference or recklessness (the two may be equated with each other) with respect to the truth or falsity of defamatory matter, as a basis for defending its publication, on the ground of conventional qualified privilege, even in an electoral situation. For the first appellant to seek to explain and justify an innocent state of mind on the basis that "[there was no]thing in [the PBSL] which caused [him] any concern" is to treat his obligation to act non-maliciously with contempt. There is no question on the whole of his evidence that he was prepared to go to practically any lengths to discredit the respondent. In a political context, it may fairly readily be accepted that hasty words will be said, and actions taken. But urgency of itself cannot provide an excuse, because urgency, very often, including in political affairs, is no more than a self- imposed imperative. Take the situation of the second appellant. He had been out of South Australia for some time before the election. He volunteered to distribute what turned out to be defamatory matter at short notice, thereby depriving himself of any opportunity to verify its accuracy. The most cursory of inspections of the PSBL, which he distributed for some hours on the day of the election, should have put him on his guard. The first statement contained in it was clearly open to the interpretation that the respondent had already spent Callinan $32,000 of taxpayers' money on overseas travel. There is no suggestion of any knowledge on the part of the second appellant as to the duration and dates that the respondent spent out of his electorate, or would, in the future, need to spend in his electorate, if he were to become the speaker. To say, as the PSBL asserted, that the respondent had had numerous junkets at the electorate's expense was not only false but also was founded upon no reasonable basis in fact known to the second appellant. The respondent's position on gun laws was, as will be the case with many political issues, incapable of being reduced to a simple proposition. If a person chooses to do so, then inevitably he or she will run the risk of both oversimplification and misrepresentation. As H L Mencken said267, "there is always a well-known solution to every human problem – neat, plausible, and wrong." To say, as the PSBL did, that the respondent put gun rights ahead of the electorate's families' safety, in proximity to a reference to the tragic Port Arthur massacre, was to run a very high risk of misrepresentation, which the second respondent was prepared to, and did take. There is no reason why this Court should do anything to encourage recklessness and misrepresentation as to factual matters simply because they occur in electoral contests. Invariably, the laws of this country require a reasonable period of notice of an election. The candidates are obliged to nominate well ahead of one. They know, and can expect that some hurtful things will be said about them, but their candidature does not provide an excuse for people to tell lies about them. There is always sufficient time for rivals and detractors to inform themselves about facts relevant to a candidate's political conduct and opinions. If the facts cannot be ascertained, whether because those who would misstate them have allowed themselves insufficient time to do so or otherwise, then they must face the risk of being answerable for those misstatements in defamation proceedings. There is no public interest in the purveying of falsehoods. It would be a sad day if elections were to provide an excuse for dishonesty. Free speech does not mean freedom to tell lies, or a holiday from the truth during an election campaign. To the contrary, honesty of purpose and language and the taking of reasonable care in the dissemination of material can only enhance the electoral process and good, responsible and representative government. The interest of electors is not in being misled, but in having "what is honestly believed to be the truth communicated"268. Other possible grounds of liability of the second appellant In passing, I mention another basis upon which the second appellant might well have been held to have been malicious with respect to the PBSL although it 267 Mencken, "The Divine Afflatus", in Prejudices: Second Series, (1920) 155 at 158. 268 Braddock v Bevins [1948] 1 KB 580 at 591 per Lord Greene MR. Callinan was written and provided by the first appellant to the second appellant who only published it by distributing it. It is that any personal malice on the second appellant's part did not have to be proved against him in the circumstances. In Webb v Bloch Knox CJ said this of two defendants who participated in the publication of defamatory matter269: "It is unnecessary to consider whether the evidence establishes that they were personally guilty of malice, for they are jointly responsible with the defendants Bloch and Pratt for the publication of the libel and so joint tortfeasors with them; and in such a case the malice of one or more of the joint tortfeasors defeats the privilege of all those responsible in law for the publication of the defamatory matter (Smith v Streatfeild270)." I do not however reject the second appellant's appeal on that basis as no argument was addressed to the Court with respect to it. In this case, the trial judge drew a clear distinction between the damage caused by the first appellant and the damage caused by the second appellant, a distinction which was not, in my opinion, ungenerous to the second appellant. The Full Court took the view that the damages awarded against the first appellant should be increased, thus further enlarging the difference between the respective awards. That the second appellant "targeted" the respondent may not itself have established malice, but it was certainly relevant to the question of it. The "targeting" taken with all of the other factors, self-imposed urgency, absence of any inquiry, capacity to read and understand the material being distributed, the content of that material, and the second appellant's long-standing antipathy to the respondent and what he stood for made a finding of malice against him irresistible. Even if, as I do not think could possibly be the case here, the second appellant had no opinion about the truth of the matter he was distributing, or was indifferent to its truth, he would still in any event be guilty of malice271. It is simply not possible for a disseminator of highly offensive defamatory matter to say credibly that he had no opinion about its reliability. The conclusions that I have reached make it unnecessary for me to decide, assuming the point to be open to the respondent, which I very much doubt in view of the respondent's apparent acceptance of the contrary, whether the occasions of the publications were not ones of qualified privilege. If I were, however, required to decide the point, I would be very much inclined to agree 269 (1928) 41 CLR 331 at 359; see also Isaacs J at 365-366; Adam v Ward [1917] AC 309 (Egger v Viscount Chelmsford [1965] 1 QB 248 contra). 271 See Gatley on Libel and Slander, 7th ed (1974), par 722. Callinan with the reasoning and conclusions of Hayne J with respect to it. Lange would, in my opinion, produce the consequence that conventional qualified privilege will only be available as a defence in circumstances in which reciprocity truly exists. In my opinion, there was abundant evidence upon which the primary judge could find that the conduct of both appellants was malicious, in the sense in which that word is used in relation to conventional qualified privilege. The finding of fact, on malice, was not only open, but was also, in my opinion, inevitable for the reasons that I have stated. I would dismiss the appeal with costs.